International Trade Administration Commission of South Africa & Competition Tribunal on 2012 Strategic Plans

Economic Development

12 March 2012
Chairperson: Ms E Coleman (ANC)
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Meeting Summary

The International Trade Administration of South Africa (ITAC) briefed the Committee on its 2012 Strategic Plan. The presentation focused on the establishment of ITAC, the key strategic objectives, the situational analysis and the strategic drivers. ITAC also focused very briefly on the procedure for conducting tariff investigations, trade remedies and import and export controls.

ITAC’s strategic objectives and strategic drivers included:
•Ensuring appropriate contribution to employment creating growth and development through provision of its international trade instruments agenda
•Ensuring strategic alignment and continued relevance within the Economic Development Department (EDD) and national agenda
•Ensuring organisational efficiency and effectiveness through business support services

In terms of the situational analysis, the global financial crisis and its adverse impact on the domestic economy presented new challenges for ITAC. Time frames were shortened from 12-9 months on remedies and 12-6 months for ordinary customs tariff investigations. The vast majority of applications for tariff support and remedies were in respect of relatively low priced imports from the emerging economies. Tariffs, in particular, for high value added and labour intensive industries remain a critical intervention to retain and create jobs. According to the World Trade Organisation’s (WTO’s) latest reports, governments have largely continued to resist protectionist pressures.

Members asked how report lines worked with ITAC now that the International Trade Administration Act has been transferred to the Minister of Economic Development. They also asked about the Southern African Customs Union Tariff Board, ITAC's impact on employment, what it was doing to promote its image to the public, and what the entity meant when it said that the government had resisted the use of protectionist measures for trade goods. Members were interested to know how ITAC was protecting local industries from the negative effect of cheap goods flooding the market. Coupled with this – what was ITAC's anti-dumping strategy and was it effective. They asked if ITAC had the capacity to monitor and evaluate trade flows effectively, if it had budgeted specifically for learnerships which was part of the Department of Higher Education and Training's new initiative, and what it was doing to contribute to the competitiveness of South African goods.   

The Competition Tribunal also briefed the Committee on its 2012 Strategic Plan. The Tribunal’s presentation focused on its organisational environment, policy mandate and legislative mandate. Other aspects covered in the presentation included the role of the Tribunal, the strategic outcomes, the capacity challenge, the new Case Document Management (CDM) system, and the entity's finances.

Capacity was a major challenge within the entity. There were currently three vacancies stemming from the resignation of three part-time tribunal members. The Tribunal had approached the Minister to appeal for an additional full-time tribunal member. The Tribunal’s budget was based on an estimated number of cases – a system that had been fairly accurate over the past few years. Operational costs had also been consistent over the past few years. The entity spent 94% of its budget in 2008, 87% of its budget in 2009, 70% of its budget in 2010 and 80% of its budget in 2011. The five-year budget was guided by National Treasury guidelines. The budget set aside for 2012/13 was based on the number of estimated cases and staff requirements. The budget also took into account the funds needed for an extra full-time Tribunal member. The Tribunal’s income was made up of grants from the Department of Economic Development and fees received. Expenses were incurred on personnel, training, professional services, recruitment costs and administration expenses.

Members examined how the issues of competitiveness and public interest influenced the Tribunal's decisions, how the three vacancies for Tribunal members came about, and if part of the budget was set aside for learnerships and skills development. The Committee wanted to know if the Tribunal had noticed any trends over time in terms of mergers and if the new CDM system would assist with this function. They also asked about the amount of mergers adjudicated for 2011, whether the Tribunal felt any political pressure during their decision-making processes, if “professional services” was another term for consultations, how the use of consultants affected the budget, and if there were any people with disabilities in the entity's staff complement. Members wondered to what extent the Tribunal worked with ITAC and other institutions to ensure that the fulfilled their legislative mandate, which required the entity to ensure that Small and Medium and Micro Enterprises had an equitable opportunity to participate in the economy, and to spread the ownership stakes of the historically disadvantaged. The Committee also noted that the Tribunal seemed to under-spend on their budget every financial year. They understood that the Tribunal found it difficult to budget for the filing fee, but something had to be done because there were millions of Rands that were not being spent.

Meeting report

Briefing by ITAC on their Strategic Plan
Mr Siyabulela Tsengiwe, Chief Commissioner of the International Trade Administration of South Africa (ITAC), informed the Committee that ITAC was a relatively new institution established by the International Trade Administration (ITA) Act of 2002 that came into effect in June 2003. The entity was established to streamline, rationalise and modernise an institution with a long history dating back to 1923. The administration of the ITA was transferred to the Minister of Economic Development except for the decision-making powers on individual tariff and trade remedy investigations that were retained by the Minister of Trade and Industry. The core functions include:
•Tariff investigations for the agriculture, chemicals, textiles, clothing and footwear, metals and machinery and motor sectors. 
•Trade remedies for anti-dumping, countervailing, and safeguards.
•Import and export control for import permits, export permits and enforcement.

ITAC’s strategic objectives and strategic drivers included:
•Ensuring appropriate contribution to employment creating growth and development through provision of its international trade instruments agenda
•Ensuring strategic alignment and continued relevance within the Economic Development Department (EDD) and national agenda
•Ensuring organisational efficiency and effectiveness through business support services

In terms of the situational analysis, the global financial crisis and its adverse impact on the domestic economy presented new challenges for ITAC. Time frames were shortened from 12-9 months on remedies and 12-6 months for ordinary customs tariff investigations. The vast majority of applications for tariff support and remedies were in respect of relatively low priced imports from the emerging economies. Tariffs, in particular, for high value added and labour intensive industries remain a critical intervention to retain and create jobs. According to the World Trade Organisation’s (WTO’s) latest reports, governments have largely continued to resist protectionist pressures.

In the past five years, there had been a steady rise in applications for tariff increases and approvals. On approvals for duty reductions and rebates there had been a moderate decline. Of the three trade remedies instruments, the most frequently invoked is anti-dumping. ITAC would be playing a more strategic role in the use of import and export controls. The operationalisation of the SACU Tariff Board poses risks for the future. ITAC warned that monitoring trade flows, identifying opportunities and threats required a dedicated capacity.

The New Growth Path (NGP) had placed job creation at the centre of economic policy. ITAC was particularly interested in the direction of trade policy and sectors that had been prioritised for job creation (Jobs Drivers). The NGP had advocated developmental trade policies that promote exports of value added manufacturing, address unfair competition against domestic manufacturers, support new trade opportunities, and uphold commitments on applicants for tariff changes and rebates addressing areas of investment and employment creation.

Sectors that were of particular relevance to ITAC that had been prioritised for job creation (job drivers) included infrastructure, the green economy, the agriculture value chain, the mining value chain and manufacturing sectors.

The procedure for conducting tariff investigations took approximately six months. First, a receipt of application is made. Once this was deemed as properly documented it was handed over to the Exco-sub committee. A preliminary determination was made and a notice was put out in the government gazette. A final submission was made, which was handed over once again to the Exco-sub committee. The Commission made a final determination, a report was made to the Minister of Trade and Industry who delegated the duty to the Deputy Minister of Finance. The final step was a publication notice by SARS.

Trade remedy instruments enabled fair trade in order to sustain domestic production, retain and create jobs and promote international competitiveness. Anti-dumping measures were taken against injurious dumped imports. Dumping was used to refer to a situation where goods were sold to a foreign market at prices less than the country of origin. Firms engaged in geographical price discrimination to maximise profits. The problem arose when dumping threatened and/or caused injury to domestic manufacturers (Decline: Prices; Sales Volumes; Profits; Market shares; Job losses etc.). Since Dumping was regarded as an unfair trade practice the WTO Agreement set out the rules for acting against dumping that causes injury. South Africa was an old and active user of the instrument with the first law on AD having been enacted in 1914. It took approximately ten months to complete an anti-dumping investigation from ensuring there is proper documentation to a SARS publication.

Countervailing measures were used against subsidised imports that threatened and/or caused injury (i.e. decrease in prices; loss of market share; decrease in profits; decrease in sales volumes; job losses etc.) to the domestic manufacturer. Safeguards were actions against trade that may be regarded as fair but overwhelmed domestic producers. Safeguards were used against an unforeseen surge of imports that threatened and/or caused injury to the domestic producers.

In terms of import controls, the objective was to enforce health, safety, environmental, and technical standards that arose from domestic law and international agreements. The objective of export controls was to ensure health, safety, environmental and technical standards.

Discussion
Ms S van der Merwe (ANC) stated that ITAC was an institution that South Africans could be proud of. The strategic report showed this. She asked how the report lines worked now that the International Trade Administration Act had been transferred to the Minister of Economic Development while the Minister of Trade and Industry retained the decision-making powers on individual tariff and trade remedy investigations. She also noted that the Minister of Economic Development had to report the outcome of the tariff investigation to the Deputy Minister of Finance. The Committee needed clarity on the reporting lines.

The Chairperson agreed that this was an important area of clarity for all the Members.

Mr Tsengiwe explained that the current reporting lines were working well. There was a clear separation of functions that fell under Minister Ebrahim Patel and those that fell under Minister Rob Davies. Minister Patel was responsible for overseeing the whole administration of ITAC, giving them policy and strategic direction, and reporting. The only functions that Minister Davies was responsible for was to consider recommendations made by the Competition Commission on specific investigations such as on tariff and trade remedies. Once the Minister of Trade and Industry had approved a recommendation from the Commission, he made a request to the Minister of Finance. The Minister of Finance then delegated this function to the Deputy Minister of Finance. The request was made to the Finance Ministry because tariff amendments were made under the Customs and Excise Act of which the Minister of Finance is the custodian.

Ms van der Merwe asked ITAC to focus on the operationalisation of the SACU Tariff Board, which ITAC said “poses risks”. This was something that the Committee was very interested in. She was interested in developments around the SACU issue and other initiatives between the tripartite relationship developed recently with the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA).

Mr Tsengiwe replied that the SACU agreement that South Africa was party to provided for a number of institutions that had to be established, including the SACU tariff board that would be responsible for the joint setting of tariffs and joint determination of trade policy. Once the tariff board was operational, it would change ITAC’s business process significantly. Currently, once investigations were conducted, recommendations were made to the Minister of Economic Development who would request finance to implement them. Once the tariff board was implemented, ITAC’s recommendation would go to the SACU tariff board that would evaluate ITAC’s report and make a recommendation to the SACU Council of Ministers, who would then make a decision on tariff and trade remedies. The SACU Council of Ministers met four times a year, so Members could imagine the length of time it would take to get decisions on tariff and trade remedies. SACU had been working on the establishment of these institutions for years, but nothing tangible had happened so far. ITAC would wait and see what happened, but if the tariff board became operational, then there were certain risks that would have to be managed.

He reminded the Committee that the Department of Trade and Industry (DTI) was responsible for trade agreements like the ones between the EAC, COMESA and SADC. ITAC only came in to advise on the provisions for the agreement that had to do with tariffs and trade remedies, as well as import and export controls. So, ITAC did not have anything much to do with the tripartite alliance besides giving eh DTI technical assistance.

Mr Z Ntuli (ANC) stated that he understood ITAC promoted investment and employment in the country. The Committee needed to know specifically what ITAC’s impact was on employment. He asked ITAC to elaborate on what it meant when it said that the government had resisted protectionist measures.

Mr Tsengiwe answered that it was difficult to put a number on the impact ITAC made on employment because the organisation made an indirect impact through its instruments. For example, if ITAC provided a tariff increase for clothing to enable local clothing manufacturers to compete with low-cost imports from China, there would be other incentives provided by the government for the same clothing industry. So, after things stabilised, it was difficult to say what ITAC’s impact was on employment and what the impact was of government’s incentives. The two were very difficult to separate.

He explained that because of the economic crisis, countries all over the world were tempted to use protective measures. This fear had not been realised; countries had resisted resorting to increased protectionist measures such as high tariff barriers that would impact negatively on international trade and affect global economic growth. There was an acknowledgment that there were a few countries that had put up trade restrictive measures. But, these were not so significant that it had made an impact on global trade. South Africa had also increased its tariffs on selected products; however, the country had reduced duties on other products.

Mr K Mubu (DA) asked what ITAC did to promote the image of the organisation to the public. He was not sure how well-known the organisation was to the man on the street. In terms of the impact of Chinese goods on the South African textile industry, what kinds of tariffs were imposed on these goods? Cheap, Chinese good were being sold all over the country. He asked what control measures ITAC were using to protect industries from the negative effect of cheap Chinese goods flooding the market. ITAC also made reference to anti-dumping measures taken from March 2011. He wanted to know what value, in Rands, it would have cost the country if these goods had been allowed to come into the country.

Mr Tsengiwe replied that ITAC had outreach programmes and provincial workshops covering all provinces to inform the public about the organisation. However, due to the nature of the work it did, it was likely that the ordinary man on the street may not be aware of the entity. He assured the Committee that relevant stakeholders, the industry and business people were very much aware of ITAC’s presence.

Mr Tsengiwe also addressed the question on anti-dumping. He said that ITAC did not have any mechanism to measure in Rands how much it would have cost the country if those imports had been allowed in.

Ms Rika Theart, Senior Manager: Tariff Investment, ITAC, explained that the current customs duty on textiles was 22% and the World Trade Organisation (WTO) bound rate was 25%, which gave ITAC limited space to increase duties to protect those textiles, should the need arise. However, ITAC was also looking at imposing rebate provisions, especially in the case of clothing imports, that will be subject to permit conditions that are very strict. This ensured that only qualifying producers would be able to make use of the rebate provisions. ITAC also participated in the Nedlac task team – The Customs Fraud and Illegal Import Task Team – that focused specifically on the clothing and textile sector because of the huge challenges experienced with illegal imports under declaration.

The Chairperson asked why ITAC had decided to prioritise those particular strategic drivers (page 11 of the presentation), which they also classified as sectors of particular relevance. She asked how it would assist in creating more jobs for the country. She wanted to know if ITAC had a strategy for anti-dumping that the Members could get their hands on. If there was a strategy in place, how effective was it?

Ms Tsengiwe replied to the question on the strategic drivers. He said he would clarify the matter using one example of infrastructure. He told Members that there was a South African company that assembled electric pylons and telecommunications structures that was struggling to compete with cheaper inputs from India. Indian producers had been winning huge tenders in South Africa to supply companies like Telkom and Eskom. The local company approached ITAC, who did the proper analysis and saw there was a huge disadvantage to local companies. ITAC then increased the tariff to allow local companies to compete with cheaper foreign goods. In this way, ITAC could contribute to domestic production and job creation. Without this, local companies would be wiped out by cheaper imports from countries like India.

The Chairperson stated that the organisation should be able to say round about how many jobs the organisation had saved through these types of interventions and how it would contribute to job creation in the future. 

Mr Tsengiwe clarified that ITAC was working on a mechanism for monitoring and evaluating the performance of those sectors and industries that they have assisted in the past in terms of investment and employment. ITAC is unable to set targets for job creation; however, it should be able to monitor industries that they assisted.

The Chairperson asked if the Committee would see this in ITAC’s third or fourth quarter report.

Mr Tsengiwe assured the Committee that it would share some of these stories with the Committee.

He continued with the response to the Chairpersons question on anti-dumping. He stated that there were anti-dumping regulations that stipulated the procedure to be followed with regards to anti-dumping investigations. It also covered substantive anti-dumping issues that had to be considered. ITAC also had a draft anti-dumping policy that articulated the entity’s approach to anti-dumping. It was a policy that was still under consideration by Minister Patel.

Ms D Tsotetsi (ANC) noted that monitoring was one of the measures to monitor the impact of ITAC’s actions or objectives. She asked if the organisation had the capacity to monitor and evaluate trade flows effectively.

Mr Tsengiwe replied that when it came to the function of monitoring trade flows, ITAC was in the process of building this capacity. The entity was also in the process of establishing an office of the Chief Economist for ITAC where the function to monitor trade flows would reside.

Mr X Mabasa (ANC) asked what ITAC was doing to contribute to the competitiveness of South African products. He wanted to know if ITAC had a relationship with the Higher Education and Science and Technology sectors since many people ended up in the manufacturing industry.

Mr Tsengiwe made an example of where ITAC would increase import duties for a domestic manufacturer. The reason would be because the domestic selling price of that domestic manufacturer is significantly higher than the prices of competing imports. So, the domestic manufacturer would have a competitive disadvantage. The disadvantage would be off-set by increasing the tariff. However, when ITAC provided tariff increases, it also emphasises that in the long run, such protected industries should improve their efficiencies and economies of scale so that they could compete with other industries without protection.

Mr Ntuli stated that the Higher Education and Training Green Paper said that all major government entities were going to be required to have a budget for learnerships and training. He did not see this in ITAC’s plans.

Mr Tsengiwe answered that ITAC was in the process of preparing for the learnership programmes. ITAC would also be employing eight interns for a period of twelve months. There was a budget for this that would come out of the HR budget.

Ms Tsotetsi asked how ITAC selected the interns.

Ms Tsengiwe stated that the positions were advertised in the national newspapers. They also focused on exposing women to these opportunities.

The Chairperson noted that 75% of ITAC’s budget was allocated towards compensation of employees and the rest was allocated to goods and services. She asked if it was happy with this allocation given its capacity challenges.

Mr Tsengiwe answered that ITAC had sufficient staff for the work that it did. The challenge that the entity had was that their staff members were not recognised and rewarded given the nature of their work. ITAC has embarked on a job evaluation exercise and hoped to complete this in a few months. A submission would be made to EDD to upgrade positions.

The Chairperson asked where the Deputy Commissioner was. This person should have attended the meeting, as he/she was accountable to the Committee.

Mr Tsengiwe explained that this meeting coincided with ITAC’s monthly commission meetings, so the Deputy Commissioner was attending that meeting.

The Chairperson noted that there were no further questions and thanked ITAC. This was not the last engagement with ITAC’s strategic plans. The Committee also wanted to create time for a workshop on tariffs.

Briefing by the Competition Tribunal on their Strategic Plan
Mr Norman Manoim, Chairperson of the Competition Tribunal, reminded the Committee that the Tribunal regulates mergers and adjudicates prohibitive practice cases such as cartels, abuse of dominance and resale price maintenance. The Tribunal consisted of 10 members appointed by the President. It also included a secretariat of 15 that provided administrative assistance to the panel members.

The entity’s policy mandate was to focus on employment in the NGP, which was consistent with the objectives of the Competition Act and public interest considerations that the Tribunal was obliged to consider. The Tribunal was an adjudicate body and was limited in its ability to set objectives. Therefore, it had little influence in terms of the outcomes and policy drivers identified by EDD that assisted government.

The Tribunal’s legislative mandate consists of:
•Ensuring that small and medium-sized enterprises have an equitable opportunity to participate in the economy
•Promote a greater spread of ownership, particularly of historically disadvantaged people
•Promote employment and advance the social and economic welfare of all South Africans
•Expand opportunity for South African participation in the world economy
•Recognise the role of foreign competiton
•Provide consumers with competitive prices and product choices

Strategic Outcomes:

Strategic Outcome 1: Promote and maintain competition within South Africa through the implementation of the Competition Act
The focus is on promoting and maintaining competition within South Africa by holding hearings and adjudicating matters brought before the Tribunal that pertain to large and intermediate mergers, interim relief cases, procedural matters, opposed as well as unopposed prohibited practices within the adopted delivery timeframes.

Strategic Outcome 2: Educate and create awareness of competition matters to the Tribunal's stakeholders
The point was to educate and to create awareness of competition matters to stakeholders by communicating the activities and decisions of the Competition Tribunal by way of the internet, press releases, the Government Gazette as well as internal publications within the adopted delivery timeframes.

Strategic Outcome 3: Strengthen the Tribunal's organisational capability and performance to deliver on its legislative mandate
The focus was on enhancing the expertise of Tribunal members and staff by sending them on planned international as well as local conferences and training courses. The idea was also to improve the Tribunal's service to customers through obtaining positive feedback on the performance of the Tribunal.
75% of the customers surveyed every two years were satisfied with the service of the Tribunal.

Challenges
Capacity was a major challenge within the entity. There were currently three vacancies stemming from the resignation of three part-time tribunal members. The Tribunal had approached the Minister to appeal for an additional full-time tribunal member.

Ms Janeen De Klerk, Head of Corporate Services in the Tribunal, informed the Committee about the implementation of the new Case Document Management (CDM) system that would manage cases electronically. It had taken the Tribunal 18 months to develop and load each case on the system. The CDM would allow for the verification of data, would keep track of the entity’s rollout and would act as a reporting tool.

Finances
Ms De Klerk stated that the Tribunal’s budget was based on an estimated number of cases – a system that had been fairly accurate over the past few years. Operational costs had also been consistent over the past few years. The entity spent 94% of its budget in 2008, 87% of its budget in 2009, 70% of its budget in 2010 and 80% of its budget in 2011.

The five-year budget was guided by National Treasury guidelines. The budget set aside for 2012/13 was based on the number of estimated cases and staff requirements. The budget also took into account the funds needed for an extra full-time Tribunal member. The Tribunal’s income was made up of grants from the EDD and fees received. Expenses were incurred on personnel, training, professional services, recruitment costs and administration expenses. A separate budget is needed for appeals court processes because of the admin services the Tribunal provided them with.

Discussion
Mr Ntuli wondered how the Tribunal measured if competitiveness or public interest played a bigger role in their decisions. He wanted to know how the vacancies came about for the three part-time tribunal members and whether the entity had a budget set aside for learnerships and skills development.

Mr Manoim explained that competitiveness and public interest were very difficult issues. The Wal-Mart opinion from the Competition Appeals Court grappled with this issue. There was no easy answer. First, the merger had to be examined on the “peer-competition” ground and came to a conclusion. Thereafter, the public interest aspect had to be assessed and the Tribunal had to ask if the merger would negatively affect public interest. It could be that the merger negatively affected competition but had a positive effect on public interest. In this case, the merger could be approved. This situation had never arisen in twelve years. Typically, cases always showed that mergers had not created a competition problem, but they had a negative impact on public interest. Other industries could also be affected. This must also be considered. There were cases, such as the Wal-Mart case, where the effect on public interest was so negative that one had to say no to the merger. In other cases, the negative effect on public interest could be dealt with adequately by applying certain measures and conditions such as putting a moratorium on retrenchments. This would allow the merger to go through, at the same time protecting public interest. This became more difficult when the effect on public interest was not measurable.

Mr Manoim replied that one of the vacancies came about when one tribunal member left. The other two resigned because they could not give more of their time to the Tribunal.

Mr Manoim stated that the Tribunal did not have learnerships; it had case managers that were graduate law students or economists that served under a kind-of apprenticeship for approximately three years. They were learning on the job and were able to move on to very good jobs. The Tribunal also recruited university students that were studying full-time. They were employed as interns and worked for the Tribunal during vacations. The interns did a variety of work and were paid. The Tribunal was trying to get the interns back as much as possible for skills training.

Ms De Klerk added that the current budget catered for three or four interns at approximately R75 000. The interns received R240 a day plus travelling costs. The Tribunal tried to recruit from universities. It could not do too much however, based on its capacity.

Mr Ntuli asked if the Tribunal was aware that the Ministry for Higher Education and Training had said that part of the budget had to be set aside for skills development.

Mr Manoim replied that the Tribunal did not, but it had a budget in place for training. 

Ms De Klerk added that she was also not aware of the initiative, but 6% of the Tribunal’s budget was allocated to training staff and internships. The Tribunal would follow up on this matter.

Ms van der Merwe asked if the Tribunal had analysed or found any trends over time in terms of mergers. Some mergers were smaller than others, but the Committee wanted to understand what was happening in the economy. She asked if the new case management system would help the Tribunal to detect trends.

Mr Manoim replied that at the moment the information that it had was not being used as well as it could be. The Competition Commission was in a better position to do analysis of trends for the Tribunal because it had the research capacity and because not all merger cases were passed to the Tribunal. However, the Tribunal could still contribute more to analysing trends. More should be put into this. The case management system could help with the issue, but because the Tribunal’s focus was so limited, its data set could be seen as less reliable than the Commission’s.

Mr Mubu asked how many mergers had been adjudicated for 2011. He wanted to know if the Tribunal ever felt political pressure or pressure from trade unions during its decision-making process. He noted that the Tribunal usually only managed to spend approximately 80% of its budget. On the five-year budget plan, there was a line item called “professional services”. He asked if this was another term for consultation fees.

Mr Manoim did not have the figures for how many mergers had been adjudicated. The last annual report contained these statistics. These figures would be updated for the next report. As far as he knew, the Tribunal dealt with 55 large mergers.

He explained that for the twelve years he was at the Tribunal he did not feel any pressure from any parties. The Ministers had all been very respectful of the entity. This did not mean that certain cases did not create any pressure on the Tribunal. The media created pressure because people tended to voice their opinions through them. However, this did not push the decision either way. He assured the Member that the Executive has been very respectful of the Tribunal’s processes.

Ms De Klerk clarified that the budget for professional services in the strategic plan was spent on fees paid to the Commission, fees paid to the DTI, bank charges, legal fees, recording services, internal and external audit fees and fees associated with audit committees, technical services fees, and a small amount is for consultants. Approximately 10% of the Tribunal’s salary bill was allocated to management consulting such as job grading. 

Mr Mabasa asked if there were any people with disabilities in the staff complement.

Ms De Klerk admitted that the Tribunal did not have any staff with disabilities. The Tribunal had been trying over the last year to start an initiative with DeafSA to employ someone from their organisation as an intern. The Tribunal was in the process of considering an application at the moment.

The Chairperson asked if the Tribunal had learnt any lessons from the Walmart/Massmart case. She wondered if the entity had embarked upon any arbitration to avoid long court processes. To what extent did the Tribunal work with institutions like ITAC, the National Treasury and related departments in ensuring that it met the mandate of the Act that required the Tribunal to ensure that Small and Medium and Micro Enterprises (SMMEs) had an equitable opportunity to participate in the economy, and to spread the ownership stakes of the historically disadvantaged? The Tribunal said it had a shortfall but that it intended to cover it with a surplus from 2009 that the entity could not utilise. How can the Tribunal give the Committee the assurance that the money will be spent?

Mr Manoim replied that the Tribunal worked with ITAC and the National Treasury, but not really on issues regarding SMMEs. Where public interest issues arise that affect other departments, the Tribunal asks them to come forward and make representations in hearings.

Ms De Klerk addressed the matter of the shortfall. She explained that the Tribunal received a portion of the filing fees that the Commission received for mergers and acquisitions. Any firm lodging a merger or acquisition has to pay a filing fee based on a number of factors depending on their size and turnover. The Tribunal received a portion of this. In addition to this, the Tribunal received a grant from the EDD via the National Treasury to cover its expenses. Historically the surplus occurred, not because of under spending, but because of the filing fees that were generated. In discussion with EDD and the National Treasury, it was agreed that the EDD would not increase the Tribunal’s grant substantially over the next two years, and the accumulated surplus would be drawn down over the period of the MTEF to fund the shortfall on the budget. Between 2012/13 and 2013/14, the grant from the EDD would only increase by R800 000, whereas the budget will be slightly higher. Once the surplus was drawn down, the Tribunal would have to negotiate with the National Treasury and the EDD for a larger grant.

The Chairperson noted that the Tribunal found it difficult to budget for the filing fee, but something had to be done. There were millions of Rands that were not being spent. The Committee needed to understand the reason why the Tribunal’s budget was under spent.

Ms De Klerk clarified that it was not that the Tribunal always under spent on its budget. The real reasons for the surplus being under spent was explained to the EDD – the Tribunal had received more filing fees than was budgeted for. The strategic plan would show the Committee its total budget requirements and the expected filing fees. The accumulated surplus would be shared over 2011/12 to 2014/15. The Tribunal had not asked the Treasury for more money because of the accumulated surpluses. The National Treasury had allowed the Tribunal to use its funding to draw down its requirements over the period of the MTEF.

The Chairperson clarified that this was an “unending” permission from Treasury.

Ms De Klerk agreed saying that the Tribunal still had to apply every year to Treasury to roll over the cash balance. The Treasury has given the Tribunal historical permission for this, but it still had to ask permission for a roll over every year. 

The Chairperson stated that this should have been clarified first. It gave an impression that there was a recurring fund that the Tribunal was unable to utilise.

Ms Tsotetsi asked how often the Tribunal made use of consultants and how it impacted on the entity’s budget.

Ms De Klerk answered that consultation fees made approximately R700 000 of the professional fees. Currently, the Tribunal only had one consultant for broad policy development from records management to documenting cases management. There was another consultant that assisted with computer software. The Tribunal had consultants but did not use them to a large extent. They were used where the entity does not have the capacity, nor is likely to develop capacity. The Tribunal only has 18 employees so it is not likely to have a person with experience in everything.

A Member asked how far the Tribunal was in fulfilling its legislative mandate.

Mr Manoim replied that it was difficult to evaluate the legislative mandate of an adjudicate body. It would be better to ask the question of whether the Tribunal was achieving the correct standard of adjudication. The Tribunal used peer reviews and other experts to evaluate the organisation’s decisions. Workshops were held with these other entities and the information was deemed confidential, as they cannot be put in the public domain. The Tribunal was also in the process of putting together customer service surveys focusing on other functions of the entity. A few years ago, the OECD did a review of the Tribunal’s legislation and evaluated the entity’s performance. It was a reasonably favourable review.

The Chairperson stated that the entity was expected to accomplish a lot according to their mandate and it was important for them to comment on their progress so far. The Tribunal was mandated to provide consumers with competitive prices and product choices. How far had the Tribunal come with this according to their assessment? Surely, this had been done. For instance, the mandate also said that the Tribunal had to promote efficiency, adaptability and development of the economy. This was quite easy to comment on. The mandate spoke to recognising the role of foreign competition. The Tribunal had spoken about this in the meeting today. She wondered if the Tribunal looked at its mandate when it started to strategise. It was something the entity had to deal with in terms of conducting its own assessments. 

Mr Manoim responded that it was difficult to quantify the progress the Tribunal made on its mandate.

The Chairperson said that the Committee did not expect the Tribunal to answer the question right away. They were giving the entity homework to do. Members wanted the entity to think about the progress it made and look at it objectively.

Mr Manoim said it was important to distinguish an adjudicate mandate with a prosecutorial mandate. The former was different from the latter in that the adjudicate mandate asks the Tribunal to hear cases that are brought to it. The cases were brought to the Tribunal by the people.

The Chairperson stated that the Committee understood what Mr Manoim was saying but Members still needed to understand how the decisions taken by the Tribunal has impacted on the general economy. How far had the Tribunal ensured that there was growth in the country? How were new businesses encouraged to participate in the market? This was what the Committee needed to know. The Tribunal had to go back and look at these matters.

The Chairperson thanked the Tribunal and noted that time was running out. She thanked Mr Manoim for a continuous job well done.

The meeting was adjourned.

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