Debt Relief Framework for Committee Bill: principles and process

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Trade and Industry

14 September 2017
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee deliberated on the principles and process to follow for its Committee Bill on Debt Relief.

Committee members reviewed whom the Bill was intended for, whether it was the poorest of the poor, blanket debt relief, or those who had debt from illegal lenders. A senior counsel legal opinion was requested on the constitutionality of the deprivation of the property of creditors. Some Members felt that the Committee Bill was being fast tracked and that they needed to wait for the research they had requested from National Treasury.  There was an accusation of delaying the process on purpose but this was later withdrawn as a misunderstanding between the two political parties. It was agreed that they were on the same page but differed on the process.

Unanimity was reached when Members agreed that the different political parties in the Committee could make submissions and submit these directly to the Parliamentary Legal Advisor who would use them to draw up a Framework Draft Bill by the start of the fourth quarter of Parliament in early October. The Committee could then critically engage with it and make changes as they saw fit. The Parliamentary Legal Advisor undertook to ensure that the Bill was constitutional. National Treasury would provide the research by the end of October 2017.

Meeting report

Adv Charmaine van der Merwe suggested that the Committee start with questions on the legal principles of the Bill and then move on to the framework of the Bill.

Mr D Macpherson (DA) said that he did not agree with the suggestion the previous day that it would be difficult for senior counsel to give the Committee an opinion until such time as a formal position was taken on what the Bill was to look like. He wanted assurance that a legal opinion would be sought. He was not asking for a legal opinion to question Adv van der Merwe’s bona fides. He was concerned with how the Copyright Amendment Bill had been signed off by the State Law Advisors when there were clear constitutional problems with the Bill. Mr Macpherson said he did not want the Committee to get into a position down the line where the Committee Bill would go through some mediocre media process and the Committee did not have a senior counsel opinion.

The Chairperson interjected and said she was stopping Mr Macpherson on process. It was not the prerogative of Adv van der Merwe to seek senior counsel opinion. It was up to the Committee to discuss this and then they would instruct Adv van der Merwe to seek senior counsel.

Mr Macpherson said he disagreed with the Chairperson. Adv van der Merwe could solicit senior counsel even if the Committee did not request her to do so. She needed to satisfy that in her mind.

The Chairperson said that decision would be made by the Committee and not Adv van der Merwe, and she wanted to be very clear about that.

Mr Macpherson said he was not sure if the Chairperson could pronounce on that.

The Chairperson said that she could and she wanted that to be made clear.

Mr Macpherson asked on what ruling the Chairperson was making that decision.

The Chairperson said that she was telling Mr Macpherson that as Chairperson of the Committee, the decision to engage senior counsel remained a Committee decision. Mr Macpherson was a member of the Committee and could put his position forward when the Committee discussed engaging senior counsel.

Mr Macpherson said he objected.

Mr A Williams (ANC) had a question on whether the debt relief measures are deprivation or expropriation of the property of a creditor. Could the Committee expropriate debt? He wanted to know if deprivation of property would be able to handle been challenged in the Constitutional Court, should the Bill be challenged.

Ms C Theko (ANC) said that the Committee needed to get clarity on the No Income, No Assets (NINA) process, and if it would be covered under the Bill, and if it would be constitutional, as well as who would be covered and who would not in the debt relief process. What measures would the Committee need to take to ascertain this. If the Bill is a Committee Bill, a decision needs to be taken and the process fast forwarded so that when the Committee returns for the fourth quarter, all the documents would be ready.

Adv van der Merwe recommended that the Committee request senior counsel opinion so that the Committee could see that opinion. If she requested senior counsel opinion it would be to inform her actions. When the National Assembly Rules were reviewed in the past year, a requirement was made that Committee Bills had to be certified as constitutional and comply with the drafting style of normal Bills.

Adv van der Merwe said that the Chief Parliamentary Legal Advisor had certify that the Bill was constitutional. She would certify the Bill only if she was satisfied that the Bill was indeed constitutional. That was the assurance that she would give Mr Macpherson.

Adv van der Merwe said that deprivation was the umbrella name for interfering with the rights of someone’s property. Deprivation included “any interference with the use, enjoyment, or exploitation of private property involved some deprivation in respect of a person having title or right to do to or in the property concerned”. There were various types of deprivation. One type was where the state benefitted, and this was expropriation. As the state would not receive any benefit from debt relief in the sense of ownership, this was not expropriation but deprivation because the Committee Bill would be interfering with a property right.

Adv van der Merwe said that looking at all the examples in the world such as the “Fresh Start” in Croatia, and the India example, the NINA approach would best comply as was done in New Zealand, Wales, and the United Kingdom (UK). The approach did not imply that the Committee Bill needed to go to the extent of those programmes in the countries mentioned as it was a misnomer to mention NINA because it was not that there was no income or no assets involved. There was a minimum income and minimum assets were allowed. The process in place however ensured that the relief measure was transparent and brought an element of fairness and allowed the state to say that the decision to deprive a creditor of property was not arbitrary. There was a clear process in place and reasons were given. There could be no criticism against the process.

The Act in New Zealand was quite extensive and that was not what the Committee wanted to do. In the framework, Adv van der Merwe proposed empowering the Minister to set up through legislation a more intricate process that allowed one to reach more people and broaden the category of people offered debt relief. Caution was given however on what powers could be given to the Minister. The full NINA process could rather be done through regulations building on the debt relief that the Committee was embarking on.

Adv van der Merwe said that the proposed draft bill currently provided for the entity that made the decision (whether the National Credit Tribunal or another entity) to have the option of a case by case basis to allow for the element of fairness when granting a debt relief measure.

Mr Williams said that the Committee would then not be defining deprivation in the Committee Bill. He proposed that Adv van der Merwe come up with a draft committee bill by the start of the fourth quarter in the first week of October. It should include the points highlighted to satisfy the law of general application rule and that it is not arbitrary.

Mr Macpherson asked the Chairperson’s guidance because Mr Williams was making proposals. When would the Committee be making proposals because he had a few of his own. He wanted to have a discussion about the process going forward.

The Chairperson said that the Committee would be submitting proposals at a later stage. But at a pertinent point where they felt that a proposal was needed, then they should put it forward. The meeting was scheduled for clarity and deliberation, but Members needed to allow for an element of flexibility.

Mr Macpherson said that the Committee had spent a lot of time looking at all the permutations and possibilities. He was not sure who the Committee Bill spoke to. The reason the Committee was not aware of to whom the Bill spoke was because they had not seen the research they had requested from National Treasury. The Committee could still move in a direction without the research if they could establish what the core principles were they wanted to see in the Bill, what they wanted it to do, and who they aimed the Bill to speak to. A clear distinction needed to be made between debt relief, debt forgiveness, and extinguishing of debt because the terms were been used interchangeably, and they all meant three different things.

Mr Macpherson needed to take feedback from the Committee back to his political party and have discussions and on what the proposals from his party would be on the Bill. But that could not be done unless the Committee understood what the principles were and who the Bill was speaking to, whether the poorest of the poor, blanket debt relief, or people who had debt with illegal debt providers who did not have receipts for their debt. He proposed that the Chairperson allow Committee members from all the political parties to make written submissions to the Committee on what they wanted to see in the Bill. Once the Committee had a clearly defined group of people the Bill was speaking to, and agreed principles by consensus of the different political parties, the Committee would have a good foundation to say to Adv van der Merwe - bring us a draft Bill that the Committee can now pick apart.

The Chairperson said that there seemed to be a definition challenge that the Committee faced as to what the Bill covered and what it meant.

Ms Theko said that the Committee needed to come up with a document that could be included in the draft Bill which would provide Adv van der Merwe with Committee input so she could proceed. The Committee had been engaging on the matter and they therefore could not go backwards.

The Chairperson said that Ms Theko was referring to some sort of framework.

Mr Macpherson said that without knowing what the research indicated and to whom the Bill would be referring, it was difficult and problematic to instruct Adv van der Merwe to develop a framework. The research from National Treasury might indicate something different. She would then have to start over again.

Mr Macpherson cautioned the Committee that once the document was on the table, it would be difficult to start changing it. He appealed to Committee members to find consensus on the principles of the Bill before they could move forward.

Mr Williams said that the subcommittee on debt relief, with the DA was represented, met on numerous occasions before Mr Macpherson became a Committee member. On those occasions they had reached consensus that the Committee Bill would give debt relief measures to people would be the poor, people on a minimum wage, and to the NINA category. He said Mr Macpherson was fundamentally stalling the process because there was massive resistance from people all over, especially creditors. The Committee should go forward with the draft Bill and it would not be difficult to make amendments since the Bill was not coming from the Executive, but rather from the Parliamentary Legal Advisor who was effectively a consultant to the Committee.

The Chairperson said that the Committee needed to first establish principles, which was what they did when went to the National Assembly to request permission for a Committee Bill. The Committee had made it clear that they were not looking at comprehensive powers, but they wanted to ring-fence particular areas that were vulnerable such as farm workers and domestic workers.

The Chairperson asked what was meant by the extinguishment of debt since the Committee was of the view that it meant a complete write off, but that was not what it meant. So definitions were important.

The Chairperson said that the Committee would not have a framework by the end of the meeting.

Mr Macpherson said that there was no attempt to stall and stop the process. If Members were going to come to the Committee with those views then the ANC should have just said that they were doing it their way and did not want to listen to other parties and engage and just get on with it. But if they wanted to have consensus and political buy-in then they needed to work together. His intention was not to stall but to deliver a good Bill that helped the people who needed debt relief.

Ms Theko said that she had a feeling Mr Macpherson wanted to drag out the process.

Ms Theko said that if Mr Macpherson wanted to make a submission, then he could submit it to Adv van der Merwe so that she could compare his suggestions with what she was intending with the Bill; then she could inform the Committee.

The Chairperson said the problem the Committee faced was interchanging members from all the parties. In some cases when members left the Committee they did not inform their parties about what was going on in the debt relief subcommittee. This was why Mr Macpherson was in the dark. If all the political parties wanted to make submissions, then they could submit these to Adv van der Merwe. These could be colour coded with their party colours to easily identify which party made what submission.

Mr Macpherson asked who the Committee was speaking to because he did not know what the research said.  He asked how the framework spoke to other pieces of legislation such as the National Credit Act (NCA).

Adv van der Merwe replied that the information the Committee received was to ring-fence certain areas. Regardless of who they targeted, the law of general application rule covered all areas. The Bill would be referring to the indigent, and part of this was child-headed households. Debt relief and debt forgiveness referred to the same thing. But relief was broader than forgiveness. She said that it was important to have a framework in place so that the Committee could scrutinize it. The Committee needed to choose a name for the Bill that they were comfortable with. There would need to be options for the Committee to consider which categories to include when looking at debt relief. Adv van der Merwe said that when the Executive amended a Bill, there was a process involving multiple consultation and engagement, but the process was different in this respect for a Committee Bill.

Adv A Alberts (FF+) said that it was important to consider the South African economy as a whole, since it could not be harmed by something the Committee introduced unilaterally. One needed to invite all the role players to help kick start the economy. The Committee needed to get the information from National Treasury as well as from interested parties making submissions so that the Committee could mitigate any problems.

The Chairperson said that they did not want to create an environment that hampered financial inclusion. The Committee was trying to develop a framework they could work with.

The Chairperson said that the Committee was going to ring-fence as it only wanted to deal with a small aspect, but Treasury and the National Credit Regulator would be dealing with the bigger problems.

The Chairperson said that what they were working on was to develop a sort of framework for a Draft Bill, and not a Bill. Public engagement would be requested once a Draft Bill was ready. A Draft would be available for public engagement in November to allow for period for comments. The research from NT would have been available at the end of October 2017 and the Committee could use that together with comments from the public into their framework draft bill. Since Members would not be in Parliament in December, the Committee would consider the Framework draft Bill during their study visit from 12-20 January 2018.

Mr Macpherson said that one good thing was that the Framework Draft Bill would be crafted as an Amendment Bill of the National Credit Act. This would allow the Committee to deal with many outstanding items in the Act that the National Credit Regulator was supposed to be dealing with.

Mr Williams said that it was important not to raise the expectations of citizens. The DA and ANC were very much on the same page. What they had differences on was the process. Mr Williams withdrew his statement that the DA was stalling the process.

The Chairperson said that after listening to the briefing yesterday and the deliberations today, she proposed that Adv van der Merwe draft a Framework for a draft Bill, and that Members could communicate directly with Adv van der Merwe and make submissions as they saw fit so that by the beginning of the fourth term on 3 October 2017, Adv van der Merwe could bring to the Committee a framework Draft Bill with all of the Members' submissions.

Mr Macpherson said that he was happy to agree to providing submission that would inform the drafting of a Framework Draft Bill.

The Chairperson said that the Framework Draft Bill would be in the format of a Bill.

Adv Alberts said that he understood that the Framework Draft Bill could be amended by Committee members. It would not be cast in stone but the Committee could redesign it as they saw fit.

Mr Macpherson said that Adv Alberts was alluding to his point and in that case he was comfortable to make a submission to Adv van der Merwe as long as there would be further opportunity to feed into the Draft Framework Bill once it was submitted.

The Committee approved the decisions of the meeting and the Committee Programme for the fourth term.

Meeting adjourned.




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