Liquor Bill: deliberations

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
6 August 2003
LIQUOR BILL: DELIBERATIONS

Chairperson:

Presentation on Amendments to the Liquor Bill
Liquor Bill [B23-2003]
Liquor Bill [Final Draft]

SUMMARY
The Department presented the revised draft of the Liquor Bill and detailed the amendments clause by clause. Members raised concerns with regards to what extent the Bill was going to bring about a viable distribution in the industry so as to counter the dominant players, creating greater levels of competition in the industry and an easier entry to the industry.

MINUTES
Briefing on proposed amendments by the Department of Trade and Industry
Dr Alistair Ruiters (Director General) and Ms Astrid Ludin (Deputy Director General: Consumer & Corporate Regulation) noted that the proposed amendments were informed and guided by the comments that had been raised by retailers and wholesalers and other parties (see presentation document). However the following areas still need attention:
- Ability of manufacturers to import and distribute as part of manufacturers registration
- Ability of retailers to distribute to other registered person or firms

Prof. Turok (ANC) was concerned that the social objective of the Bill was not brought out strongly. He proposed that the word "community" be inserted somewhere in the definition so as to incorporate the public interest in the Bill.

Chapter 1 Definitions, application and interpretation of act
Clause 1 Definitions
Ms Ludin (DDG) apprised members that the revised Bill has attempted to provide for the following changes:
- a definition of a retailer, minor and a private collector
- in the definition reference is made to the traditional beer to the effect that a definition of liquor has been changed to cover a traditional beer.
- a definition of a manufacturer and micro-manufacturer has been redrafted
- the intentions and objectives of the Bill had been re-clarified

Discussion
The Chairperson asked for the difference between "traditional beer" and "sorghum beer".

Ms Ludin (DDG) pointed out that the definition of a traditional beer has not been finalised. Hence the existing definition of a traditional beer was still a transitional provisional definition.

Mr Nefolovhodwe (Azapo) proposed that the final definition of a traditional beer be clearly defined so that the inspectors do no harass people who are not supposed to be harassed.

Ms Ludin (DDG) explained that the purpose behind providing a definition for a "traditional beer" was to prevent the importation of foreign dangerous substances.

Clause 2 Objects of the Act
Ms Ludin (DDG) explained that chief among the objectives of the Bill was to reduce the socio-economic and other costs of alcohol abuse as well as promote the development of a responsible and sustainable liquor industry.

Prof Turok (ANC) proposed that somewhere in the objectives there was a need to add an element of community participation.

Clause 3 Application
The Chairperson asked if it was possible to set out a threshold for selling liquor so that small sales of liquor could be covered under the regulations.

Ms Ludin (DDG) proposed the insertion of a clause that would exclude small sales.

Chapter 2 Objects
Ms Ludin noted that one of the contentious issues was the constitutionality of some provisions in Chapter 2. The premise being that the Constitution did not provide for the national government to set norms and standards except in those areas of concurrent competence with the provinces.

Mr Lockey (ANC) asked to what extent was the Bill going to bring about a viable distribution in the industry so as to counter the dominant players.

Dr Ruiters (Director General) explained that this would covered under Chapter 3.

Mr Nefolvhodwe (Azapo) referred to Clause 6 of the Final Draft of the Bill dealing with Prohibition of Concoctions and Additives and asked for the meaning and definition of an "impotable liquid".

Dr Ruiters pointed out that the department did not want to define the concept of impotable liquid as it would restrict manufacturers in the industry.

Mr Lowe (DA) proposed that department provide a list, though not conclusive, of all the impotable liquids.

The Chairperson referred to Clause 8 of the Final Draft of the Bill and asked for some clarity for the use of the phrase "subject to the Income Tax Act of 1962".

Mr Lowe (DA) asked how the department was planning to implement Clause 9 (Advertising restrictions).

Ms Ludin (DDG) explained that some elements of Clause 9 were areas which were covered in other pieces of legislation, for example consumer law as well as by the advertising authority. And some of the issues would be clarified through case law.

The Chairperson referred to Clause 10 and asked if there was a need to prescribe an age restriction.

Ms Ntuli (ANC) was of the view that Clause 10 would be open to some abuse, hence it was better to keep the age restriction at age 18.

Dr Ruiters pointed out that in order to create a good social fibre in South Africa it was important to create an opportunity for intervention though legislation. However there was a need to reformulate the clause so as to make parents act more responsibly.

Chapter 3 Registration of Liquor Manufacturers and Distributors
Ms Ludin noted that Chapter 3 was aimed at regulating the transfer of registration from the registered persons to unregistered persons as well as between registered persons. However the Minister may vary the conditions for the transfer of registration after a period of five years taking into account the changing conditions in the market.

Mr Lockey (ANC) asked to what extent were these processes going to create greater levels of competition in the industry so that there would be an easier entry into the market.

Dr Ruiters pointed out that as the department, they could not legislate on the supply chain or a strategy for the industry on how it should commercially run its business. The onus would lie with the applicant to explain the way it intends to distribute liquor in the market. The aim of the legislation was to restructure the liquor industry so as to promote the development of diversity in ownership through BEE initiatives and corporate social responsibility. However government did not want to be specific on how the industry should achieve those objectives. Government's role was to monitor the ethos and behaviour of the participants. Hence the issue was whether the instruments envisaged through the Bill were sharp enough to achieve the objectives of access and diversity.

The Chairperson asked how the department was going to ensure the implementation of diversity.

Dr Ruiters replied that there would be registration forms which would require the applicant to set out all the information needed which would include activities of his/her operation, information with regards to cross shareholders and BEE score cards

The Chairperson referred to Clause 13(1)(c)(ii) and asked for the relevance of the phrase "having regard to any financial interests that the applicant has in the liquor industry".

Ms Ludin explained that they would come up with a better formulation for that clause, however the financial interest of the applicant would still be one of the considerations. She further pointed out that government's role was to encourage investment only to the extent that it did not promote monopoly and abuse of power in the industry

The Chairperson pointed out that Clause 13(c)(ii) as it stood, could be easily misconstrued and asked the department to come up with a better formulation.

Clauses 14 - 24
No comments were made in respect of these clauses.

Chapter 4
Ms Ludin noted that there were no substantial changes made to Chapter 4

Chapter 5 Offences and Penalties
Ms Ludin referred only to Clause 34 which provided that any person found distributing liquor in contravention of the Act would have to forfeit that product and it would be destroyed at his/her cost.

Chapter 6 National Liquor Policy
Ms Ludin explained that the composition of the council has been changed to include the Director General or any person designated or assigned by him/her.

No comments were made in respect of this chapter.

Chapter 7 Regulations and Notices
Ms Ludin pointed out that one of the purposes of this chapter was to define the powers of the Minister to make regulations .

Chapter 8 General Provisions
Ms Ludin explained that they have removed all the provisions providing for appeal against the powers of Minister exercised in terms of delegated powers, as it might subject the Minister to various legal challenges.

Schedule 1
Ms Ludin noted that Schedule 1 dealt with transitional measures from repeal laws to provincial legislation. The schedule also sets out norms and standards for provincial liquor laws. The schedule further provides for the transitional definition for a traditional beer.

The Chairperson referred to Item 5 of the Schedule and proposed that there was a need to register a staff pub attached to a huge liquor manufacturer.

He then briefly outlined the issues that had been raised during the deliberations and these included:
- the need to provide a definition of a methylated spirit
- the need for the objectives of the Bill to make reference to community participation
- the need to provide a definition of concoction especial in respect of a traditional beer
- meaning of the phrase "subject to the Income Act 62"
- need to sort out the principle underling Clause 10
- selling of liquor to employees under transitional provisions

He proposed that the Committee could report to Parliament by way of a memorandum or reject the previous tabled Bill. The committee members chose the former. The committee agree to further deliberate on the Bill around the 21 August 2003.

The meeting was adjourned