Committee Report on Trade and Industry 2014 Budget

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Trade and Industry

15 July 2014
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Portfolio Committees on Trade and Industry and Small Business Development met to consider and vote on the draft budget document to be presented to Parliament.  The Chairperson noted the inclusions from respective parties the evening prior to the Committee meeting, and requested further alterations and additions from the Members present.

Technical amendments were made to the budget during the meeting, with substantive alterations being deliberated on by the Members.   It was suggested that all government departments should provide detailed reports explaining their purchases and their alignment with the endorsed 70% for local procurement.   Compliance would contribute towards realising an increase in employment.

There was debate among Members with regard to the Mineral and Petroleum Resources Development Amendment (MPRDA) Bill, and the percentages attached to concessional access.  A Member said that a directive should be given for the MPRDA process to be concluded, as the issue had been protracted.  The processes of state-owned bodies were being interrogated.  The Chairperson said that the Committee should ensure that the MPRDA was implemented rigorously, in addition to all laws.

Despite objections from Members, the budget was accepted by a majority vote and would be discussed upon its adoption by the House.

Meeting report

Opening Remarks
The Chairperson said that three inputs had been submitted from the respective parties. The budget would be considered without a direct reading of the text, and she would personally make the amendments to the grammar of the document after the meeting.

Budget Report
The Chairperson presented the Draft Budget Vote 36 Report, with additions made the night before, and asked Members to indicate proposed additions and alterations. She went through the document, paragraph by paragraph, and requested that Members indicate any changes for each paragraph.

Mr G Hill-Lewis (DA) asked that the Chairperson’s personal note, in parenthesis, be removed.  He said that the budget figures related to information on International Trade and Economic Development (ITED) were unrealistic, and the figures did not correlate.   

Ms Jodi Scholtz, Group Chief Operating Officer, DTI, said that the budget figures were stated in real terms, which created a disparity between the inclusion of real and nominal figures. The Chairperson requested an adjustment, and asked that the use of both nominal and real terms be indicated in the document.

Mr X Mabasa (ANC) suggested that all of the initials of the President should be used. This alteration was made to the document.

Mr D Macpherson (DA) asked if the indication that the mining industry is “profit-driven,” was redundant.

Mr F Shivambu (EFF) said that the mining industry required profit-maximisation at all costs.

Mr Macpherson said Mr Shivambu’s statement was an opinion which he would accept if Mr Shivambu provided evidence.

Mr B Mkongi (ANC) proposed that the discussion over semantics be concluded.  The aim of the meeting was to contextualise the information.

The Chairperson asked if the Committee should not be doing rigorous oversight regarding the plan of action noted in the document.

Mr Shivambu suggested that all Departments should provide detailed reports explaining their purchases and their alignment with the endorsed 70% for local procurement.   He noted that local production did not refer to local retailers.  This compliance would contribute towards realising an increase in employment.

The Chairperson said the Legacy report had noted that local retailers were now using locally produced resources.

The Chairperson said that the Committee was required to provide oversight by means of Departmental lists on procurement during this financial year.

Mr Macpherson said that the Department did not enforce the law, but acknowledged that there were mechanisms which could be implemented for the Department to receive these reports.  The Department should not embark on law-enforcement, as it would involve engagement and suggest that the Department was acting beyond its mandate.  The challenge was to identify if the retailers were procuring their resources from local producers.

The Chairperson said that Members should avoid “wild” statements.  Enforcement of this plan was a challenge, however, and the Committee would undertake to source the relevant documents from Treasury.

Mr C Mathale (ANC) said that the need to enforce could be supported through legislation to create consequences for non-compliance. He recommended regulation.

Mr Shivambu said that legislation would be a strong instrument, rather than a broad policy directive, and recommended its implementation.

Mr R Chance (DA) noted that the Committee on Small Business Development promoted the industries of small businesses through localising production chains, which created the potential for small businesses to contribute to the economy.

Mr Hill-Lewis said that specific measures for regulating local and state procurement existed.

The Chairperson said that regulation could be addressed quickly, as opposed to legislation.

Mr Shivambu referred to the codes of good practice, and said that they could not be relied on solely. Small scale producers should contribute and be included in the legislation to empower people.

The Chairperson said that compliance was a measure of enforcement and that procurement should be ear-marked for critical oversight.

Mr Hill-Lewis agreed with the Chairperson with regard to oversight, and said that government departments did not pay suppliers within an equitable timeframe.

Ms Scholtz said that the Department could not request the private sector to procure locally, and the document should indicate this.

Mr Shivambu said that the document should indicate that South Africa had no intention of signing the agreement document, in alignment with the statement made by the Minister.

Mr Macpherson cautioned the Committee against using the phrase “never,” as it bound the government adversely.

The Chairperson emphasised the Committee’s support for industrialisation.

Mr Shivambu referred to the research clause, and enquired about the process required for the Recycling and Economic Development Initiative of South Africa (REDISA).  He said that the programme required greater oversight to contribute towards the aims of the Committee.

The Chairperson said that review of the beneficiation issue related to the programme would be included in the conclusion of the document.

Adv A Alberts (FF+) recommended that legislation submitted to the Committee be reviewed in order to identify implications, in addition to research, indicating success in order to measure its rationality and find alternatives.

The Chairperson agreed that research was valuable. The Committee should not be withheld from making provisions without the necessary research and precedent.   However, the Department should provide reasons for their proposals, accompanied by research.

Mr Lewis-Hill proposed a technical amendment which related to including the Special Economic Zone (SEZ) areas.  He recommended that both “human and financial resources” were used to replace the term ‘resources’.

Mr Hill-Lewis said that there was debate regarding the Mineral and Petroleum Resources Development Amendment (MPRDA) Bill, and that the document should not make reference to it, owing to the current disagreements pertaining to it.

Mr Shivambu said that a directive should be given for the MPRDA process to be concluded, as the issue had been protracted.   He noted that the processes of state-owned bodies were being interrogated.

The Chairperson said that the MPRDA was not being implemented, and this Committee should ensure that it was implemented rigorously, in addition to all laws.

Mr Hill-Lewis noted a repetition in the document regarding concessional access.

Mr Shivambu disagreed with Mr Hill-Lewis, and proposed the inclusion of decisive action.

Mr Mkongi agreed with Mr Shivambu, and proposed the merging of clauses relating to concessional access.

The Chairperson requested Adv Alberts’s input regarding the merging of the clauses.

Adv Alberts replied that the semantics were open to interpretation.  The percentage allocation referred to by the Committee required a goal and a timeline.

Mr Mkongi agreed with Adv Alberts, and proposed that a “reasonable” percentage be made on an “incremental basis”.

Mr Mathale proposed that the percentage should be specifically indicated as 20%.

Mr Chance noted that demand was not being considered, and that a mechanism was required to create the required demand. He said that beneficiation had not occurred, owing to a lack of demand.

Mr Shivambu said that the concern was not simplistic, and extended far beyond supply and demand.   He proposed that either 50% or 20% be used as the percentage allocation.

Mr Macpherson said that Mr Shivambu was attempting to simplify the information into a “woodwork class of economics” and that the Committee was pre-empting something that was not fundamentally law.   He advised the Committee not to make recommendations for a new law, instead of compiling a report.

The Chairperson said that the commodity boom was over, and that South Africa was in a difficult economic situation.

Dr Z Luyenge (ANC) expressed concern that Committee Members should treat each other with respect and cooperation, to comply with the decorum standards of Parliament.  He agreed with the use of a percentage on an incremental basis.

Mr Hill-Lewis said that the term “concessional” referred to a broad number of interventions, and allocating a specific figure was problematic, as it did not have a basis from the industry.  The notion of supply and demand may come from first year economics, but it was relevant.  He urged that the determination be evidence-based and expert-led.

Mr Mkongi said that Members were legislators and that their input to the Committee was valued.  Members should not be “threatened” by industry experts.  He said that 50% would be the base of the policy discussion, and that industry would discuss this.

The Chairperson appealed to the Members, and said that petty and denigrating comments in the meeting needed to be denounced.   The meeting required adult, robust engagement.

Mr Mkongi said that the Committee had received a presentation on the raw materials of the country, and in order to protect these resources, the percentage was required.

Mr Shivambu said that supply and demand did not apply within this context, as localisation of beneficiation required the acknowledgement of various other aspects.

The Chairperson referred to the need to grow the economy and beneficiation.  She said that a percentage would not be allocated in the report.

No further alterations to the document were requested by the Members.

Adoption of Report

Mr Mathale proposed that the budget be adopted, with the alterations.

Mr Hill-Lewis said that party caucuses informed the representatives’ responses to the Committee, and said that he could not support the adoption of the budget.

Adv Alberts said that he agreed with Mr Hill-Lewis.

Dr Luyenge noted that there should be differentiation between the work of the Committee and House debates

The Chairperson requested hands in favour of the Committee report, and noted that it would be taken to the House for adoption.

The ANC Committee Members agreed with the report.

Mr Shivambu and Adv Alberts did not agree with the reports, as they were dissatisfied with an inclusion.

The Members of the DA abstained, as they had to caucus with their constituency.

The Chairperson noted the reservations, and said that the majority of the Committee had agreed to the report.  It would therefore be taken to the House for adoption.

The meeting was adjourned.


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