Co-operatives Second Amendment Bill; Support Programme for Industrial Innovation (SPII); Technology & Human Resources for Industry Programme (THRIP); briefings

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Trade and Industry

19 June 2012
Chairperson: Ms J Fubbs (ANC
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Meeting Summary

Co-operatives Second Amendment Bill
The Department of Trade and Industry (dti) briefed the Committee on the Co-operatives Second Amendment Bill [B18-2012] (Section 76) which contained amendments to the Cooperatives Act applicable to provinces. Co-operatives fell under the three spheres of government which therefore needed to implement the establishment of satellite branches of the Co-operatives Development Agency through a Memorandum of Understanding (MOU). The amendments also set out, in detail, the functions and responsibilities the Agency would have as there had been no clarity in the previous legislation which resulted in it being an area of tension. The clauses dealt with the following matters:
▪ Functions of the Co-operative Development Agency 
Applicability of intergovernmental relations framework policies and legislation
Intergovernmental structures 
Functions of intergovernmental structures 
Administrative and procedural arrangements 
Establishment and functions of Inter-Provincial Coordination Committee on Co-operatives 
Establishment of Provincial Interdepartmental and Municipal Coordinating Structure 
Dispute and conflict resolution
Framework for intergovernmental relations

Members asked whether each sphere budgeted for the same tasks (on the Tribunal for example) as mentioned in the first Cooperatives Amendment Bill (the Section 75 Bill). Members asked if the outcomes could not be obtained through the existing legislation and whether the structures could not be simplified as there were financial implications. Members said that provinces were suspicious of receiving new responsibilities without new funding. Members asked where the co-operative academies would be situated.

Public hearings would be held from Tuesday 24 July.

Support Programme for Industrial Innovation (SPII)
The dti said the SPII and Technology and Human Resources for Industry Programme (THRIP) programmes which support industrial innovation and which turned university research and development into prototypes. SPII operated through matching grants and was administered by the Industrial Development Corporation (IDC). SPII project approvals totaled R73m for 52 projects located mainly in Gauteng and the Western Cape and in the areas of electronics and manufacturing. Total sales in 2010/11 amounted to R193.2m with R&D costs accounting for 61.6% of sales. 441 jobs were created and R11.1m in company tax was paid. The programme was historically strong in the electronics field and was biased towards the Information and Computer Technology field but the dti were trying to improve participation in other provinces and projects other than electronics.

Members asked why the programmes numbers were dwindling; why the disabled were not mentioned as beneficiaries of the projects; how people with workable projects were identified; and was the money spent on a project measured against its output. Members were unhappy with the spatial distribution of projects and wanted a list of the projects.

Technology and Human Resources for Industry Programme (THRIP)
THRIP was a programme for the benefit of university students and industry which was administered by the National Research Fund (NRF) on a cost sharing basis. If companies were confronted with a problem it could approach a university to assist with finding a solution through funding support. 248 THRIP projects, totaling R144.5m were approved last year. The Department related success stories in the development of a translation application for translating from English into North Sotho/Sepedi, in the development of low dose x-rays for medical imaging and in new nuclear pharmaceuticals for the detection of cancer at an early stage.

Members asked what the relationship between the dti and the Department of Science and Technology was; how programmes were communicated to ordinary people; and how new technology, when developed, was rolled out for the public benefit.

Meeting report

Co-operatives Second Amendment Bill Briefing
Mr Jeffrey Ndumo, Chief Director of Co-operatives in the dti, said that the Co-operatives Second Amendment Bill [B18-2012] (a Section 76 Bill) dealt with amendments applicable to provinces. Co-operatives fell under the three spheres of government which therefore needed to implement the establishment of satellite branches of the Co-operatives Development Agency through a Memorandum of Understanding (MOU). The amendments also set out, in detail, the functions and responsibilities the Agency would have as there had been no clarity in the previous legislation which resulted in it being an area of tension. He then outlined the core amendments:

Clause 91D Functions of the Co-operative Development Agency:
To be effective the Agency needed a provincial footprint and therefore had to enter into a MOU with provinces or municipalities for the establishment of satellite offices of the Agency. MinMec structures would monitor the implementation of the MOU.
 
Clause 91CC
Applicability of intergovernmental relations framework policies and legislation: These amendments were to ensure effective co-operation amongst the three spheres of government and dealt with the applicability of inter-governmental relations framework policies and legislation.

Clause 91DD
Intergovernmental structures: These amendments provided clarity on the role of the three spheres of government, the flow of information between the three spheres and the alignment of their policies.

Clause 91EE
Functions of intergovernmental structures: This detailed the functions of inter-governmental structures.

Clause 91FF
Administrative and procedural arrangements: This indicated that the administration and procedural arrangements had to comply with the framework for inter-governmental relations.

Clause 91GG
Establishment, composition and functions of Inter-Provincial Coordination
Committee on Co-operatives
: In the past, attempts at co-ordination had been avoided or ignored and these amendments sought to address this.

Clause 91HH Establishment of Provincial Interdepartmental and Municipal Coordinating Structure:
To ensure co-ordination within provincial and municipal spheres by giving clarity on what needed to be done. It also dealt with the development of provincial co-operative strategies and the co-ordination of co-operatives development.

Clause 91II Dispute and conflict resolution
Any dispute must be resolved in accordance with the framework in Clause 91JJ.

Clause 91JJ
Framework for intergovernmental relations:
This dealt with developing and publishing a framework for inter-governmental relations in accordance with co-operative development. He said the guidelines would be part of the regulations.

Discussion
Mr X Mabasa (ANC) asked if each sphere budgeted for the same tasks (on the Tribunal for example) as mentioned in the first Cooperatives Amendment Bill (the Section 75 bill).

Mr Sipho Zikode, dti Deputy Director-General for Empowerment and Enterprises Development, replied that the dti might have to participate within the structures to ensure that work was done in the structures.

Ms S van Der Merwe (ANC) asked if the outcomes could not be obtained through the existing legislation and whether the structures could not be simplified as there were financial implications.

Mr G Hill-Lewis (DA) added that provinces were suspicious of receiving new responsibilities without new funding.

Mr Zikode replied there were some existing structures but that they worked in isolation and that the aim of the legislation was to form a report back structure for example the MinMec. He acknowledged that the provinces should not be burdened with the budget.

The Chairperson asked where the co-operative academies would be situated.

Mr Ndumo replied that the academies would be the responsibility of the Department of Higher Education which would work to strengthen the existing academies.

The Chairperson asked what the financial implications were.

Mr Ndumo replied that the dti had done business case studies for Agency and Tribunal. Inter-governmental structures were part of existing costs and it was more about refining the reporting in these inter-governmental structures.

The Chairperson said the structures and their plans needed to be made available.

Mr Ndumo said some provincial structures already existed while others needed to be established and that these structures needed to do what needed to be done. The dti would accept the National Assembly’s position if it was felt that it should be structured through regulations but the dti had felt it should be in legislation to give it the necessary weight to be acted upon.

The Chairperson said public hearings would be held from Tuesday 24 July.

Support Programme for Industrial Innovation (SPII) Briefing
Mr Zikode said SPII and Technology and Human Resources for Industry Programme (THRIP) were two programmes to support industrial innovation and they turned university research and development into prototypes. The programme had started in 1993 as the Industrial and Electronic Support Programme, focusing mainly on electronics. SPII operated through matching grants and was administered by the Industrial Development Corporation (IDC). SPII schemes operated in three areas: the Product Process Development Scheme which developed new products or processes through a grant of 50 - 85% of development costs up to a max of R2m; through a Matching Scheme where grants qualify for between 50 - 75% based on BEE criteria up to a maximum of R5m and through a Partnership Scheme for larger scale Research and Development (R&D) of over R5m with a conditional repayment scheme attached. SPII project approvals totaled R73m for 52 projects located mainly in Gauteng and the Western Cape and in the areas of electronics and manufacturing. Total sales in 2010/11 amounted to R193.2m with R&D costs accounting for 61.6% of sales. 441 jobs were created and R11.1m in company tax was paid.

Mr Ephraim Baloyi, Director for Innovation and Technology in the dti, said the programme was historically strong in the electronics field and was biased towards the Information and Computer Technology field but that they were trying to improve participation in other provinces and projects, other than electronics. He gave as a success story the Nortech parking application which eased the search for parking bays at parking garages.

Discussion
Ms Van Der Merwe asked why the programmes’ numbers were dwindling.

Mr Mabasa asked why the disabled were not mentioned as beneficiaries of the projects.

Ms C Kotsi (COPE) asked how people with workable projects were identified. Was the money spent on a project measured against its output?

Mr G Selau (ANC) was unhappy with the spatial distribution of projects.

Mr Baloyi said the numbers had decreased as the budget was significantly cut and had decreased to R52m. The decline in projects was also because the private sector had cut research and development budgets due to the economic situation.

About the target groups, he said there was a deliberate intent to increase black entrepreneurship in technological innovation and development, to build up a competitive edge and that the disabled were not discriminated against.

Regarding the identification of projects, he said they were working on going to the communities and inviting people to apply for the grants.

He replied that Research and Development was measured as a percentage of sales.

The Chairperson wanted a list of the projects.

Technology & Human Resources for Industry Programme (THRIP: briefing
Mr Zikode said THRIP was a programme for the benefit of university students and industry which was administered by the National Research Fund (NRF) on a cost sharing basis. If companies were confronted with a problem, it could approach a university to assist with finding a solution through funding support. He noted that 248 THRIP projects, totaling R144.5m, were approved last year.

Mr Baloyi related success stories in translating from English into North Sotho/Sepedi, low dose x-rays for medical imaging and new nuclear pharmaceuticals in the detection of cancer at an early stage.

Discussion
The Chairperson asked what the relationship between the dti and the Department of Science and Technology was.

Mr Zikode said that the NRF administered the fund as it dealt with higher learning and it fell under the Department of Science and Technology.

Mr Baloyi said that the NRF was better positioned to provide information on researchers and had good links with universities.

Ms Van Der Merwe asked how programmes were communicated to ordinary people.

Mr Baloyi said the dti went to universities and Science Councils to tell them about the programme. Researchers had to find willing companies. The dti did not support projects if registered students were not supported in the project.

Mr Zikode said the dti marketing division and the dti website advertised the programme but perhaps it needed to do more by advertising in journals.

Mr Baloyi said that if equipment was bought for a project from government funds then it was registered with the university asset register for research purposes and it was not the property of the company.

Mr Hill-Lewis asked how new technology, when developed, was rolled out for the public benefit.

Mr Baloyi said projects were for a maximum period of three years. Once the university completed its component, then the company had to complete the equipment.

Mr Zikode said that if industry commercialised the research, the Department needed to put conditions on the fees charged. A lot of technology was leaving South Africa and this needed to be tightened up on by Government.

Ms Kotsi said the Department of Health should also be involved.

Mr Selau pointed out that black student numbers were decreasing.

Mr Baloyi said student numbers were decreasing as projects had become more expensive and so researchers took fewer students and enterprises did not want to spend money because of the economic situation. The dti had identified this and had thus had set a target of 2 200 students for this year.

The Chairperson noted that a study visit had been proposed to Kenya and the provinces at the end of July, subject to the approval of the House chairperson.

The meeting was adjourned.

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