Lotteries Amendment Bill [21-2013]: public hearings (day 1)

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Trade and Industry

14 August 2013
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

A number of submissions were made during the public hearings on the Lotteries Amendment Bill. The Funding Practice Alliance provided an oral submission, focusing on four main points. Firstly, it was concerned with the proposal that funds could be distributed without a formal application being submitted, based on research by the Lotteries Commission. It believed this to be poor funding practice that did not provide for sufficient accountability. Secondly, it argued that civil society organisations (CSOs) understood the needs of the community better than the Commission, and were thus in a better position to conduct or share research. Thirdly, it was concerned about the potential licensing of an organ of state to run the National Lottery, saying that such an institution was very complex, requiring specific expertise, knowledge and infrastructure. It urged that a repeat of the 2007 instance, where no distribution had been made for the year, be avoided, and instead the Miscellaneous Fund be designated as a ‘Reserve Fund’, with 5% allocation, to allow for continuance of lottery business if the National Lotteries Board (NLB) was not operational. Fourthly,  it was concerned at the proposed deletion of the requirement, in section 32, that the Minister consider provincial and local interests before taking action, which it saw as disregarding CSOs and non-recognition of the differing needs across the country. Finally, FPA urged that a clear statement be included indicating the purpose of the legislation, and the long term goals of the National Lotteries Distribution Trust Fund. Members questioned the statements around distribution of funding, whether a statement with a long-term goal was appropriate, why there appeared to be such scepticism about CSOs pursuing government aims, why the FPA, as a research organisation itself, took issue with the Commission’s research, and why it was so concerned with having a written application.

The Community Chest broadly welcomed the Bill, but made a number of suggestions. It described the extent and nature of its funding over the years. It noted that the Community Chest and other CSOs could provide support to the NLB. It believed that due diligence processes were very important and said greater efficiency was needed. It proposed that non-qualifying entities go through a provincial or local route, to avoid backlogs in the system. It shared concerns with the FPA abut an organ of state’s involvement, saying that this presented too many risks of corruption and individual interests. It urged for good governance and suggested how it could be achieved. Finally, it urged that CSOs like itself should not be seen as in competition to or duplication of the NLB, citing the fact that its own lottery had been brought to a halt, which had brought the Community Chest substantial revenue, but the proposed replacement funding by the NLB had never materialised.  Members’ concerns to the Community Chest included the issue of funding projects of national interest, the difference between the United Way and Community Chest, the potential for corruption and how the Bill sought to avoid it, the proposed relationship between the Community Chest and the Fund, and how a body to run the NLB should be set up.

The South African Institute of Professional Accountants welcomed the clear accountability process, increased professionalism, elimination of overlapping functions and the extension of powers of the Board in the Bill. However, it also had some concerns, including also the idea that an organ of state run the National Lottery. The Institute was concerned with the lack of clear definition for ‘worthy good causes’ and recommended that this be expanded on. It welcomed the new provisions around contraventions. It praised support of government priorities, but was concerned that this provision was capable of creating an unequal platform for applicants. It was suggested that a ten year term on the Board was too long. This latter point was taken up by Members.

Badisa, citing its own position as an example, said that the Bill’s new criteria for applications, and particularly the fact that the NPO number was one of the criteria, had the potential to negatively impact some organisations. In the Charities Sector the amount requested by organisations could not exceed R2 million. Badisa pointed out that although it operated under a single NPO number, to ensure accountability and consistency, it in fact operated 164 community programmes with over 700 000 beneficiaries, and its restriction to this amount would severely impact on its already reduced activities. Members questioned what role Badisa played, and in what provinces, asked what steps it had taken to try to deal with financial challenges without affecting the community it served, and stressed that the Lottery funding should never be seen by any applicant as a guaranteed and continuing source of funding.

The Arterial Network South Africa explained that it lobbied for better governmental policy and practice for the arts culture and heritage sector in South Africa. A number of concerns were set out. It was worried about the appeals process, saying that this should be further removed from the board, under section 10, and believed that the requirements in section 26 for full time members was not desirable. It also was worried about a single distributing agency, questioning if this would not mean less expertise, and too much work, was concerned about duplication of functions with a variety of other statutory bodies that were responsible for the distribution of funding for arts, culture and heritage, and thought unrealistic responsibilities were given to the Minister. Members asked for further clarity on the question of having full-time members, and sought some clarity on how the arts, culture and heritage sector was currently funded.
 

Meeting report

Lotteries Amendment Bill: Public Hearings
Funding Practice Alliance Submission

Ms Janine Ogle, Coordinator, Funding Practice Alliance, welcomed the opportunity to present the submission of the Funding Practice Alliance (FPA). As background, Ms Ogle stated that the Alliance was made up of three organisations: Community Development Resource Association, Inyathelo – The South African Institute for Advancement, and the Social Change Assistance Trust. As a civil society organisation (CSO), the FPA was formed to respond to challenges related to funding that impacted the civil society sector. This included activities such as research into the size and scale of funding to CSOs, good funding practices, state and society power relations, and mutual accountability. In 2011, the FPA published a research report on the National Lotteries Distribution Trust Fund (NLDTF) and the National Development Agency (NDA), which gave it the experience to make comments on the Lotteries Amendment Bill (the Bill).


Ms Ogle pointed out that the full written submission provided a more detailed commentary on the Bill and that her presentation was only focused on four aspects.

The first comment noted that one of the major changes was the ability of the National Lotteries Board (the NLB) to distribute funds, without an application having been submitted, as set out in clause 10(c)(q). This was of great concern to the FPA and as the Alliance strongly objected to it,  considering this insertion to represent poor funding practice in the donor community as well as in the civil society sector. The FPA believed that organisations should always be obliged to submit an application that indicated the need for funding, as well as the activities/projects/programmes that were to take place should funds be granted. Without such an application, no consensus on the use of distributed funds could be reached.

In addition, the FPA argued that CSOs understood the needs of a community better than the Commission, and as such there was no need for the National Lotteries Commission to conduct its own research. The FPA proposed that the Committee solicit the opinion of other donor agencies with regards to this issue, which it was prepared to supply to the Committee.

The second focus related to the new section 13A(1) that would permit the possibility that the Minister licence or authorise an “organ of state” to run the National Lottery. The FPA objected; it was not assuming that government was incompetent but pointed out that the National Lottery required complex requirements, needed to be run very tightly, and that specific expertise, knowledge and infrastructure were needed. The FPA applauded the Department of Trade and Industry (dti) for its attempts to ensure that the 2007 scenario, when the Lottery was not operational for six months and did not generate any form of revenue, would recur. However, the FPA argued that it was not possible to establish a National Lottery structure within six months, and as such, this was not a viable solution. It requested that the Committee ask the dti for alternative solutions. The FPA proposed that the Miscellaneous Fund should be designated as a ‘Reserve Fund’, where 5% allocation was to be set aside for instances when the lottery was not operational. This would allow CSOs to continue to receive funds, so as not to hinder to ongoing projects.

The third comment related to provincial concerns. Point 30(g) of the submission, which referred to Section 32 of the principal Act, noted that the requirement for the Minister to consider provincial and local interests before taking action was to be deleted. The FPA had two concerns: firstly, it was  unclear why this clause was being deleted, as it did not address any of the policy issues raised by the dti, and secondly, the deletion implied a disregard for the differences between the work of CSOs and the organisational formations that existed within civil society and across the country. Ms Ogle emphasised that taking provincial civil society interests and concerns into account was a key factor that was intended to enable the National Lotteries Commission to respond more effectively to societal needs and challenges. Communities across the country were not faced with the same challenges, and FPA asked that the deletion be reconsidered. In addition, given the impact that the deletion of this clause was to have on the Provinces, FPA requested that the NCOP must deliberate on the Bill.

The fourth comment of FPA related to the Act and its purpose. Presently, FPA saw the Act as lacking a clear statement of intent as to the long-term purpose of the Act and the NLDTF. The Lotteries Act should clearly state the kind of society it wanted to support and the kind of activities and initiative that the NLDTF funds were to support. The statement should also clarify that the kinds of organisations to be supported were both those providing for immediate needs and those who were oriented towards long-term development.

The understanding of the FPA was that the NLB and the NLDTF were established to distribute funds to civil society in order to improve South African society. The statement that the NLB was to consider Government plans and priorities in regard to fund distribution implied that the work of CSOs was not aligned with government policies. However, FPA regarded it as unnecessary, because all CSOs worked towards the public good and all their activities aimed to improve communities. Whilst the role of the CSOs was not to implement government plans and priorities, this was not to say that the work of CSOs was against the national plan; it was rather guided by the needs of communities. The allocation of funds from the NLDTF strictly in accordance with the national plan and priorities would alter the nature of the civil society sector in South Africa, as organisations would no longer look at community assessment.

Overall, Ms Ogle expressed FPA’s satisfaction that the Bill had finally been tabled, but pleaded for the changes outlined, to ensure that a vital source of income would not be lost to the civil society sector, which continued to ensure that even those communities that government was not able to reach were not excluded.

Discussion
Mr G McIntosch (COPE) was interested in the last comment on the purpose of the Act. He requested more clarity from the FPA on how its funds were distributed and the amounts. He had some concern about the suggestion for a statement on the Act’s long-term goals, as this was viewed to be a dependence on the Lotteries funding. He also showed concerns regarding government alignment, saying there was often a perception that alignment with government policies defied the public good. He asked how FPA would aim to resolve the contradiction between seeking long-term goals yet not wanting alignment with government.

Ms Ogle replied that the Bill as it stood lacked a clear statement of the purpose of the NLDTF. FPA understood that the Bill aimed to establish agencies and provide direction on how licensees were appointed. It did not, however, provide a clear understanding of the role of the Lottery as a fund. This could allow the goals and activities of the Fund to change over time, which would ultimately lead to lack of consistency.

Mr B Radebe (ANC) asked how the FPA, as an institution who conducted research, questioned the Lotteries Commission research process or found it irrelevant. He believed that if the Commission was to work ethically, it was to generate its own knowledge, and that proper research capacities were required in order to make informed decisions.

Ms Ogle replied that the Lotteries Fund was not seeking to set up a research office but rather wanted to go out into the communities and conduct field research on their needs. The FPA was arguing that this form of research had already been done by CSOs and there was no need for a duplication of the process, but rather a partnership.

Mr Z Wayile (ANC) stated that there appeared to be some scepticism in regards to working with the government. He stated that government was a custodian of development, which is why there were a number of policies that responded to the issues of society. He took issue with the view that the work must be done by the private sector.

Ms Ogle replied that the scepticism emerged from the experiences in 2007, when there was no revenue generated from the Lottery whatsoever. She argued that the proposal put forward would not in fact address this issue, hence the need for an alternative. FPA was not stating that the government should not to run the lottery because it was not capable of doing so, but was suggesting that the current proposal was insufficient. The dti needed to find a way to ensure that if the events of 2007 did recur, there was another alternative to address them.

The Chairperson alerted FPA to the fact that a large majority of international agencies adopted the funding practice where funds were provided without an application. She did not agree with the concerns of FPA in that regard.

Ms Ogle replied that if there was no written agreement, then the binding nature must come from verbal meetings and agreements. She was concerned that a verbal agreement alone would be regarded as sufficient, without any application or written confirmation. Ms Ogle also raised the issue of public versus private funds and reminded the Committee that the National Lottery was a public fund, and that funding without applications opened up opportunities for the funds to be disbursed as private funds.

Western Cape Community Chest submission
Mr Lorenzo Davids, Chief Executive Officer, Community Chest, stated that the Community Chest was in full support of the FPA’s submission. He explained that the Community Chest distributed R20 million in 2012/13, and R13 million in 2013/14, to 365 non-profit organisations (NPOs) in the Western Cape. On a national scale, it had distributed over R50 million to 700 NPOs. This was done on a strict due diligence process.

The Community Chest had six comments on the Amendment Bill, as follows:
- Community Chest believed it had the capacity to assist the NLDTF, as a channel for its Application, Adjudication and Allocation Processes
- It submitted that organisations that had undergone strict due diligence processes for funding within a given year must be able to make reference to this process in their application to NLDTF. This was intended to decrease turnaround time and increase efficiency and speed. It was recommended that NLDTF engage with civil society in regard to due diligence matters. The due diligence process of the Community Chest were analysed by several institutions and was determined to be open, transparent and engaged with beneficiaries
- NLDTF should approve the due diligence processes of a number of the major grant makers. This would promote public-private partnerships and the use of these partnerships to serve as the adjudication and pre-screening processes of the NLDTF. This would also mean that grassroots organisations did not have to go through separate due diligence processes repeatedly with every funder. Essentially, the proposal called for synergy of the due diligence processes of grant makers across the sector.
- Entities excluded from NLDTF funding required more efficient management in order to decrease the backlog in the system. It was recommended that non-qualifying applicants be dealt with at the local/provincial level rather than flooding the NLDTF system. NLDTF should therefore develop a provincial/regional system where non-qualifying applicants and non-funded areas were assessed at a local level. At the moment, the lack of clarity on who was fit to qualify for funding created a clog in the system.
- The Community Chest was concerned with the potential of an organ of state running the National Lottery, as there was a risk of abuse of power. Any plan that provided the State with control over the disbursement of funds to civil society groups had the potential of being used to serve political purposes instead of meeting the actual needs of the communities

In regard to the last matter, Mr Davids stressed that the Community Chest wanted to see the references to an organ of state completely removed, and recommended that the State rather look at improving the role of civil society groups, which should alleviate pressure from the NLDTF.

Mr Davids further emphasised that good governance was a key aspect, and should be advanced by the Bill. The principal Act was to serve the developmental interests of civil society, and therefore any action with the potential for any conflict of interest must be combated, in the interest of society, and corrupt individuals should not have any opportunities. For this reason, the Community Chest also submitted that no individual with any relationship to the NLDTF was to be allowed to influence or benefit from the resources, contracts, work or distribution of the NLDTF. Mr Davids stated that corruption was always possible if space was created for it to happen. He recommended that any misunderstandings must be dealt with upfront in the legislation, to promote public confidence that the distribution would be free of corruption.

Mr Davids pointed out that the Community Chest ran the most successful Lottery system in the 1990s, as it generated roughly R8 million per annum in income, all of which was distributed to good causes. The National Lottery, however, had forced the Community Chest to cancel its lottery, against a promise that the National Lottery would continue to give funding to the Community Chest that it could distribute to its beneficiaries. This had never happened. He pleaded that the work of the Community Chest and other grant makers should be regarded as an asset to the work of the NLDTF, rather than disregarded as duplication of the work of the NLDTF.

Finally, Mr Davids tabled a number of supporting documents, including the track record of Audited Financial Statements, external monitoring and evaluation systems and others. He urged the Committee to take its responsibility seriously, as the legislation was capable of advancing an effective and well functioning civil society.

Discussion
Ms S van der Merwe (ANC) stated that the government should be the will of the people, but that clearly it faced limitations, and the role of the lottery came in to supplement what the government could not do. For this reason, there should be no conflict between government and lottery. She questioned what fundamental objection there was to funding projects of national interest. She also asked the dti to consider the first two submissions, particularly on the matter of duplication.

Mr Davids replied that civil society organisations were always servants of the people and their issues. The notion that CSO work was at odds with government policies was not the issue, for government priorities were not at odds. However, the point was rather that CSOs operated on the ground and at this level was able to, and did advocate for individual issues. As such, the national lottery should not to be used only for government priorities. The national lottery was defined as money “for good causes” other than what the government was already providing.

Mr McIntosh commended Mr Davids on a strong argument, and said it would be important for the Committee to consider it. He asked what the United Way was, and its relationship to the Community Chest

Mr Davids replied that the global movement was known as the United Way in 150 countries, but in South Africa, it was named the Community Chest.

Mr Radebe wanted to bring attention to comments 4 and 5 of the submission. Conflict of interest and corruption were one of the issues that the Committee asked the dti to deal with in 2009. He asked if  the Community Chest was taking reference from that clause that was added in the amendment?

Mr Davids replied that corruption was a significant issue and it was important to continue to highlight the ways in which the legislation sought to deal with it.

Mr N Gcwabaza (ANC) asked the Community Chest in what capacity it wanted to work with the NLDTF, and whether it was suggesting that it be an employee of the institution. He also commented on point 4, saying that the amendment had been introduced precisely to avoid a repeat of 2007, and to ensure that anther body was in place that could be prepared to take over, so that organisations could continue to benefit. He noted the Community Chest suggestion that the clause be removed, and asked what kind of alternative it was proposing, should there be a repeat of 2007 incidents.

Mr Davids replied that his submission was clear that the appropriate body would be the Community Chest and other grant makers. The precise nature and structure of that body was a matter for further discussion and dialogue, as he did not currently have any fixed idea of how it should look.

South African Institute of Professional Accountants submission
Dr Thomas Hoeppli, Economic Research Analyst, South African Institute of Professional Accountants (SAIPA), welcomed the objectives of the Bill, in particular the provisions for a clear accountability process, for professionalism, the elimination of overlapping functions between the Minister and the Board, as well the extension of the powers of the Board.

SAIPA, like the other submissions, expressed concern about the provision that an organ of state to run the lottery, because it was far more difficult to ensure compliance by such an organ, as opposed to a private organisation.

SAIPA suggested that the wording referring to ‘worthy good causes’ in the proposed new section 4(2A)(3) left room for misuse of funds, as it lacked a clear definition of what ‘worthy good causes’ included, and guidelines should be added.

Dr Hoeppli noted that the proposals for section 5(b) stated that at least four members of the board should not be members of any sphere of government. SAIPA, however, believed that none of the board members should be employed in government, particularly if organs of state were to be licensees. This was to avoid conflicts of interest and ensure independence of the board. Section 5(c) indicated that a member of the board may hold office for a period up to 10 years, but SAIPA viewed this as too long, said it could lead to excessive power, and said there was too little space for change and innovation with this time frame.

SAIPA welcomed the new section 6(3A)(1)(b), which said the Minister was not allowed to appoint a person to the board who was a political office bearer, because this maintained the independence of the board and ensured the objectivity of its decisions. SAIPA also welcomed section 6(3A)(2) which stated that the Minister could not be prevented from subjecting any member to a probity test. However, SAIPA recommended that the clause should specify in which instances a probity test was allowed, and how it was to be conducted.

There were concerns that the proposed section 13(13A)(4) could provide a platform for potential corruption. Dr Hoeppli questioned why the license could not to be given to the “other person” through the official process, if the organ of state did not wish to, or was unable to conduct the lotteries.

SAIPA welcomed the new section 16(1)(C) in relation to contraventions.

It argued for the replacement of the term ‘board’ in section 24 and 26(c) to ‘distributing agency.’

SAIPA praised the statement around the support for government priorities, but argued that section 30(f), which stated that the Board must take into account general development in the Republic and government priorities, made it possible to create an advantage for organs of state, and could make the platform for applicants unequal.

Dr Hoeppli concluded that the Bill successfully addressed some of the earlier challenges identified, but submitted that its proposals would further enhance the ill.

Discussion
Mr Radebe commended SAIPA on a good presentation. He did not, however, regard 10 years on the Board as too long, since each member had to start from ‘ground zero’.  

Dr Hoeppli replied that it was difficult to find a balance, because if the time was too short, this did not provide for continuity. He himself could not suggest what the ideal time would be, but had the sense that, say, four years was too short, and ten was too long.

BADISA submission
Reverend Averell Rust, Chief Executive Officer, Badisa, explained the origin of the name “Badisa” which was essentially an acronym of the Afrikaans words "Ba-rmhartig, Di-ens/Di-akonaat en Sa-am" (Compassion, Service, Together).

He congratulated the dti on all the positive improvements made by the Bill. However, he wanted to make some comment.

Rev Rust noted that Badisa was not convinced that the Bill yet provided a desirable solution to assist organisations from being negatively impacted by the criteria set for applications. Badisa requested that the dti or NLB should hold public consultations with NGOs before the criteria were finalised.

He noted that one of the concerns related to the guidelines for the Charities Sector, which noted that the amount requested by these organisations should not to exceed R2 million. Badisa operated under a single NPO number, but managed 164 community-based programmes and branches. Under the guidelines at present, Badisa, which served 700 000 beneficiaries, would only be able to apply for a maximum of R2 million, although another organisation who served only a handful of beneficiaries could apply for the same amount.  The reason that Badisa ran as a single entity with one NPO registration number was to ensure that it adhered to a consistent set of values, a high standard of service to clients and beneficiaries, good governance and transparent financial management. It argued that the registration number should not be part of the criteria, but instead there should be a focus on services rendered and the number of beneficiaries. He drew Members’ attention to the types of programmes and branches that Badisa ran (see attached document for full details).

Rev Rust commented on the new section 32(3)(b), which indicated that the NLB was to take into account government priorities, and said Badisa was already in line with those priorities, and, as one of the largest social services organisations nationally, it regarded its services as an important part of government. Badisa currently received R105 million in subsidies from the government. However, despite this, it still experienced a shortfall of 40%, particularly in statutory services. He reiterated that if Badisa was limited to making application for R2 million, to serve all 700 000 beneficiaries, there would be unequal distribution in three provinces, which would be discriminatory to the beneficiaries. In the past, Badisa had received large sums of its funding from the NLDTF. In 2010/2011, Badisa received R49 288 411, which dropped to R13 311 623 in 2011/12 and, with the current amendment, it was likely to drop to R2 million. Badisa had already closed down seven of its branches owing to financial difficulties. The Greater Good SA survey had established that, of the 695 NGOs surveyed, up to 60% experienced serious cut backs in their finances, which resulted in 43% making cuts in personnel whilst 60% also had to cut on activities.

Rev Rust concluded that Badisa would be in crisis if it was not in a position to apply equally with others for funding, and this would affect both the organisation and the numerous beneficiaries. It requested that alternatives be considered that would not penalise organisations such as itself.

Discussion
Mr McIntosh noted that only three provinces were mentioned, and asked if Badisa operated in the other six. He asked if the orphanage in the Eastern Cape was still run by Badisa.

Rev Rust replied that Badisa worked only in Western, Northern and Eastern Cape. Other branches connected to the Church did not receive funding from the NLB, but were structured differently, as some had their own NPO registration number, whilst others were structured similar to Badisa, but were not part of the union.

Mr Radebe appreciated the recognition of government priorities. He asked the dti to consider what could be done around the allocation challenges.

Mr Wayile asked what measures were put into place to ensure that the communities where offices had to close did not suffer from setbacks. He asked if Badisa had a five-year strategy plan, which might provide support in assessing future challenges, including financial ones.

Rev Rust replied that offices closed for financial reasons. Because South Africa was now regarded as a middle-income country, there was more difficulty in accessing international funding. Badisa tried its best to secure the services that it provided. For example, whilst one of its HIV/AIDS programmes was recently closed down, Badisa had managed to ensure that the beneficiaries would not suffer, by passing it on to other offices. However, this passing on of programmes would lead to those offices becoming overstretched. In regard to the longer-term strategy, Badisa was currently forced to look at renewable processes, and an eighteen-month assessment of sustainability was being done. Badisa was seriously considering establishing a social business or social enterprise, to provide revenue for services offered by Badisa. Ongoing financial challenges within the NGO and civil society sector forced Badisa to resort to these measures.

The Chairperson pointed out that the NLB did not have a vision of being permanent funders for a particular organisation. Whilst this did not imply that Badisa’s submission would be ignored, she did want to stress, as she had with other organisations, that they should not perceive Lottery funding as permanent.

Rev Rust replied that Badisa’s policy was not to budget for money that it might receive from the NLB, so anything it did receive was over and above what was budgeted, and it was dependent on getting that money. Badisa had applied for R260 million annually from NLB, but had never received anything close to that.

Arterial Network South Africa submission
Mr Valmont Layne, Secretary General, Arterial Network South Africa, explained that this submission was being made by the Arterial Network (ANSA) not to seek funding for itself or other members in the sector, but rather to look at improving the sector. ANSA was part of a continental network of arts practitioners, researchers, policymakers, organisations and businesses. Its membership comprised both individuals and organisations such as the Visual Arts Network of South Africa and the Limpopo Arts and Culture Association. It key mission was to lobby for better governmental policy and practice for the arts and culture in South Africa.

ANSA saw the following as key principles:
- Promotion of efficiency and impact along the lines of the National Development Plan
- Maximisation of coherence and minimisation of duplication within and between different public agencies
- Minimisation of opportunities for the abuse of the system by CSOs, political interests or individual interests

ANSA welcomed several aspects of the Bill, including the streamlining of processes of application and adjudication, the segmentation of proposals according to their financial value, the relaxation of technical requirements for applicants falling into the lower financial value segments, and the establishment of a review mechanism (although there was concern that this mechanism should show a higher degree of independence from the NLB)

Its main concerns related to the proposed amendments to sections 10 and 26 of the Act.

Ms Yvette Hardie, Deputy Chair, ANSA, said ANSA had noted substantial duplication of functions with a variety of other statutory bodies that were responsible for the distribution of funding for arts, culture and heritage. There were over 50 independent experts organised into panels, making decisions on approximately 10% of the available funding. ANSA therefore suggested, in regard to funding for the arts, culture and heritage sector, that there should be:
-delegation of no less than 75% of the NLDTF funding to Department of Arts and Culture agencies
- an independent part-time panel, supported by competent professional staff
- clarity on the focus and desired impact of remaining NLDTF funding
- minimal legislative intervention  

More detail was provided in the attached document, but Ms Hardie briefly outlined that:
-ANSA was also concerned that the problems perceived with the Act were misdiagnosed
-ANSA questioned if the consistent references made to ‘a’ (in the singular) distributing agency meant that there would be a collapse of the three agencies, as this would lead to further narrowing of expertise
- In relation to section 10 ANSA suggested that the sheer volume of appeals to be lodged would be too much for the Board, which would be unable to address them timeously. It proposed that a sub-structure be appointed
- ANSA was concerned that the NLB was being given carte blanche to fund any organisation without criteria, which had the potential to lead to abuse. This could be addressed through the alignment of the existing statutory bodies
- The requirements in section 26, for eight full time members was not desirable, as it would detract from independence
- The Minister was given an unrealistic responsibility to deal with substantial conflict.

ANSA asked the Committee to consider its comprehensive submissions in great detail, suggesting that they could lead to a very different picture of the NLB and, in particular, of distributing agencies.

Discussion
Mr Radebe referred to the issue of having full-time members for distributing agencies, and said that more members meant more budget was required. He wondered what ANSA had to suggest, given that some distributing agencies were called upon infrequently.

Ms Hardie agreed that there were high costs in maintaining excess staff. Currently, the Arts Council was using 25% of its income to cover just the basic running costs of the organisation.

Mr Wayile raised the issue of independence, and the difficulty in maintaining it, particularly given political and individual interests.

The Chairperson said that the key principles of the Bill were very clear, and the Committee was well aware of the challenges that could arise, and would be looking at a number of issues raised by several organisations.

Mr McIntosh required clarity on the 80% that the departments of Arts, Culture and Heritage received from the NLB, asking if they were dependent only on NLB, or if the provinces or municipalities provided other grant funding.

Ms Hardie tabled one of the graphs from the presentation, noting that 87% of the funds were received from the NLB, with 4% income from the Provincial Heritage Councils, 6% from the National Arts Council and 3% from the National Film and Video Foundation. It was a reality that the sector was highly dependent on the NLB.

Mr Layne emphasised that the numbers did not represent the funding for just the Arterial Network, but were for the sector as a whole.

The Chairperson thanked all for the submissions and said the Committee would be looking forward to hearing the dti’s responses.

Adoption of Minutes
The revised minutes of 24 July, 30 July and 31 July 2013 were provided to the Members, with all the revisions suggested in previous discussions. All three were adopted.

The meeting was adjourned.

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