Liquor Products Amendment Bill: deliberations

Agriculture, Land Reform and Rural Development

16 August 2017
Chairperson: Ms M Semenya (ANC)
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Meeting Summary

Some alcoholic beverages taste better when they were old, while others explode in store rooms.

These were among Members’ comments during deliberations when the Portfolio Committee on Agriculture, Forestry and Fisheries was discussing proposals made by South African Breweries (SAB) on the Liquor Products Amendment Bill.

The submission from SAB was focused on wanting a general reservation of rights and a caveat relating to matters to be prescribed in the unpublished regulations; a definition of class designations; a definition of “specially authorised liquor” and the deletion of Section 10; an unchanged Section 6; alignment between the Liquor Products Act and the Excise Act; and the amendment of Section 27 dealing with the limitation of powers of the Minister and the obligation to consult.

The Parliamentary Legal Advisor also took the Committee through proposals on Clauses 1 to 19 of the Bill. The Committee agreed to most of the proposals, except for Clause 15 of Section 27 and Clause 19, and indicated it would deliberate further on them.

Members wanted to know what the policy regulations were regarding craft beer; wanted to establish if non-alcoholic beer would be subject to additional taxation; enquired how African beer was going to be regulated; and commented that the exclusion of African beer from the definitions was likely to create loopholes.

Meeting report

DAFF response to SAB submission

Mr Mooketsa Ramasodi, Acting Director-General: DAFF, pointed out that the Department would be responding to the submission made by the SAB. He said the Department had compiled the responses and acknowledged that the SAB had participated in the discussions.

Mr Dipepeneneng Serage, Chief Director for Food Inspection and Quarantine Services: DAFF, took the Committee through the responses to comments from the SAB on the Liquor Products Amendment Bill.

Regarding the SAB’s comment of wanting general reservations of rights and a caveat relating to matters to be prescribed in the unpublished regulations – beer definitions under Section 6 -- DAFF indicated the SAB had been part of the Liquor Products Act Forum (LPAF)  since 2009, and had been in agreement with the draft Liquor Product Amendment Bill and the beer definitions at the time. The SAB had been instrumental in drafting concept definitions for beer and traditional African beer that would be published for comment once the Bill had been approved by Parliament. The SAB would be fully consulted in finalising the draft regulations prior to publication for comments. DAFF noted the provisions of the Bill would come into operation only at the same time and date as the relevant subordinate legislation. Without the subordinate legislation, the provisions of the Bill could not come into effect.

Mr Serage referred to the definition of “class designation” found in Section 1 and “beer” definition under Section 6, and reported that SAB had requested the prescribed class designation for the permissible alternative designations in the draft amendment to the regulations be published for comment. Table 10 of the Regulations currently prescribed the permissible alternative class designations for all the categories of liquor products. This would be amended to include the alternative class designations as agreed with industry stakeholder members in the LPAF. This would be published for comment as part of the consultation process.

With regard to the definition of “specially authorised liquor” and the deletion of Section 10, DAFF indicated that SAB did not want Section 10 to be deleted because it wanted to maintain this section to provide for innovation going forward, without having to amend the Act again. The whole structure of the Act was designed to be flexible and foster innovation. “Specially authorised liquor” would be fully accommodated under the new category of “Other fermented beverages”, which also provided for all possible future developments, without the unconstitutional limitation of the “Specially authorised liquor” category.

About no amendments made on Section 6, which deals with alcoholic fruit beverages, Mr Serage pointed out the SAB was incorrect in its statement that no amendment had been made to Section 6. This section had been amended by the insertion of the wording, “reconstituted juice or a mixture of juice and reconstituted juice,” to allow the use of concentrate or reconstituted juice, as previously only the juice from fresh fruit could be used.

Pertaining to the alignment between the Liquor Products Act and the Customs and Excise Act, he informed the Committee that the DAFF was in constant liaison with Treasury and SARS regarding the alignment of the Acts. SARS and Treasury had been consulted at the time of drafting the beer definition and were in agreement. He noted that only a minimum of 35% of malted barley and malted wheat was required in terms of the proposed definition. SARS had subsequently introduced a tariff line for malt beer with a minimum of 50% malt.

Concerning the amendment of Section 20 on the methodology of analysing samples, Mr Serage pointed out that Section 20 (2) already made provision for the proposal by SAB in broad terms. The detail with regards to the technical requirements of the analysis would be prescribed in the regulations to allow for flexibility as and when the type of analysis changed, and to make provision for new technology and analysis techniques.

Lastly, about amendments to Section 27, which deals with the limitation of powers of the Minister and the obligation to consult, he reported that proposals to amend this section would not only limit legislative powers, but make Parliament subject to private standards. Consultation was a constitutional requirement because it was further enhanced by the obligations contained in the Promotion of Administrative Justice Act (PAJA).

Discussion

Mr N Paulsen (EFF) asked if non-alcoholic beer may be subjected to additional taxation, as it went through a process that removed the alcohol, and sugar was added in the process. He pointed out that the distilling process differed from those that had alcohol because the content was different.

Mr Serage stated that the Liquor Products Act did not go as far as taxation. The Liquor Act and the Liquor Products Act were different. In this instance, the Liquor Products Act was concerned about the content of the alcohol.

Ms A Steyn (DA) asked questions about craft beer, particularly its fermentation process, because people tended to mix it with other illegal ingredients during the production phase. She wanted to know what the policy regulations were saying about this tendency, because regulations on craft beer were last talked of five years ago.

Ms Wendy Jonker, Manager: Liquor Products Inspection and Quarantine, DAFF, replied that they still received more new information about craft beer, as it was more of an innovative type of beer. The Bill had been structured in a way that it made provision for innovation and flexibility, and allowed space for new technology. The DAFF was still working on the regulation of craft beer, and it would consult further on this matter to make sure that additives were catered for in the Bill. Other additives like herbs and cranberries would be considered in the making of craft beer. There was a discussion going on regarding this matter, and it would be published for comment.

Mr P van Dalen (DA) wanted to find out about carbonation of ALS drinks. He asked if this was dealt with in the Bill. He pointed out that some beverages tasted better when they were old or had reached their expiry date and that others exploded in the store rooms, especially those in the plastic containers. He enquired if such issues had been addressed in the Bill.

Ms Jonker said that carbonation was an issue that would be dealt with in the Regulations section. Carbonation and alcohol level limits had never been agreed upon and further consultation was still necessary. There were arguments that there should be carbonation because it limited the time for packaging use, and corks would be added so that there was no alcohol that posed a risk. If there was no consensus reached, then a decision would be taken so that some beverages were carbonated.

 Concerning expiry dates, she said that on products not packaged in glass, the current legislation required that the production and expiry dates be stated. Unfortunately, expiry dates were not an international trend. The legislation for light white wines prescribed that after 18 months they had to be retested, especially products that were going to be exported, because it may happen that when they reached their destined markets, they had reached their expiry dates. She emphasised that the expiry date should be on products that were not in the glass.

Ms Steyn commented that the Department was making legislation to work with the industry, but the real issue was that there were so many loopholes, and people were getting away with murder. Some of these products packaged in certain ways exploded because of their high alcohol content, which kept on fermenting. Regulations needed to make sure citizens were protected.

The Chairperson reminded the Committee about the issue of African beer, because there was no need to consult traditional leaders as it formed part of their customs. Therefore the issue of an African beer was going to remain as was. However, if it had additives, it would no longer be considered an African beer. It would be categorised as other beers, regulated, and go through the process of being tested.

Ms Steyn asked who was going to regulate African beer, because people used it during their ceremonies and that there was no definition for it. She reasoned that if it was excluded from the definitions, this would create loopholes and people would add more ingredients under the name of “African beer”.

The Chairperson said that Africans who drink African beer would be able to tell what it was, and when it was not. It was important not to undermine people’s customs. If it contained extra ingredients, it would no longer be considered an African beer. She said it was important not to over-regulate. People who did the testing would be able to confirm if the African beer was authentic or not.

Mr Bheki Cele, Deputy Minister, DAFF, said they were not going to create the mentality of ‘Big Brother’ with the African custom. He said there should be no problem when people make ‘umqombothi’ to bring their bride home. Some people deviated by adding more ingredients outside of the customary ceremonies. That was what must be regulated. ‘Big Brother’ within the African customs limited the growth of the customs.

Mr Serage said that Sub-Clause 6 (b) covered all the issues that had been discussed. Regulations could be enforced only on individuals deviating from the custom.

The Chairperson said that law enforcement could intervene on those who deviated.

Legal Advisor on Bill’s proposals

Ms Phumelele Ngema, Parliamentary Legal Advisor, took the Committee and the DAFF through the proposals on the clauses of the Bill, clause by clause.

She said Clause 1 dealt with definitions the Committee had to go through and consider. She noted that on the definition of ‘liquor products and liquor’, the DAFF had indicated its responses by minimising the unintended consequences in terms of licensing. The concern could be addressed in the Schedule (Laws Amended) to the Bill with respect to changing the definition of ‘liquor and liquor product’. The Committee agreed with the proposal.

On Clauses 2 and 3, she indicated there would be no changes in the provisions. The alcohol content of 0.5 % that was being suggested for alcohol beverages would remain the same and would be aligned with international standards.

For Clause 4 in Section 6, the proposed corrections in the introduced Bill were not going to have any changes. From 6 (a) to 6 (c), all the definitions that would be repealed needed to be looked at. The responses from the Department had not yet provided any changes.

Ms Steyn had concerns about the use of sugar and its regulation, and wanted to know if this would be covered in the Bill.

Ms Jonker assured her it would be covered in 6 (c).

Ms Ngema said that Section 10 would be repealed in respect of the submissions and presentations made in the introduced Bill. The Department had also suggested it be repealed. The Committee then agreed with the proposals.

Ms Ngema said Clause 11 of the Principal Act was not going to change, as it was a substitution of the expression of the word ‘beer’. That would be looked at so that there were no consequential corrections that needed to be done. There would be no changes in Clause 8 because it had been agreed any product with an alcohol content of 0.5% onwards would be classified as a liquor product. Any product with an alcohol content below 0.5% was fruit. The Committee agreed with the proposals.

Ms Ngema indicated that Clause 10 would see changes.

Mr Serage said there was an issue with the separation of responsibilities, because there was a hierarchical structure. In many Acts, there was an Executive Officer or Administering Officer within that particular line. In this field, one got to place a person who may not be part of the deliberation process.

The Chairperson asked if it was not the responsibility of people who possessed such expertise and skills. She said this created problems, because it should be clear to people who were assigned with responsibilities of what was expected from them, as they had the required skills.

Mr Serage said that the power was separated, and so were the responsibilities, because when a decision was made, it was known who took the decision in terms of a particular Act without creating any confusion.

Ms Ngema said there would be changes to Clause 12 of Section 20. From the deliberations it was clear changes had to be made regarding the analysis of samples.

The Committee agreed with the proposals.

In Clause 15 of Section 27 which deals with regulations by the Minister, it was stated the Regulations should be submitted to Parliament for approval.

The Chairperson said the Committee would deliberate on this matter, clause by clause.

Ms Ngema said that grammatical mistakes would be corrected in Clauses 17 and 18. Clause 19 would see changes once consideration was given and the Department had deliberated. The memorandum of the Liquor Act of 1989 needed to be changed.

The meeting was adjourned. 

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