National Credit Amendment Bill; Tripartite Free Trade Agreement

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Trade and Industry

21 August 2018
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Department of Trade and Industry highlighted the potential opportunities and threats of the COMESA-EAC-SADC Tripartite Free Trade Area, and suggested ways in which such threats could be mitigated. The presentation was intended to address concerns previously raised by Committee Members. The briefing also focused on implementation of the agreement, protection using rules of origin and the movement of business persons.

Members asked about mechanisms to prevent trans-shipments from third parties, especially the East, and to prevent the dumping of substandard goods in the country. How would South Africa’s challenged standard-setting bodies be able to ensure that the entire tripartite group of countries met the standards expected if they were not coping within South Africa itself?

Members were concerned that Africa did not have the money and queried where money would come from for capacity building? What was the strategy for specific countries, especially those in which South Africa had invested quite heavily? What had been done to allow free movement of persons? What were the challenges that South Africa might experience with intellectual property rights?

After extensive deliberation, the Committee formally adopted its report on the Tripartite Free Trade Area and recommended that the House ratify the Agreement.

The Committee agreed in the light of the legal advice given, to hold a closed session with the International Trade Administration Commission (ITAC) so it could inform the Committee of its investment policies and other matters to which the Committee had to be privy in order to perform its oversight function.

On the ‘Debt Intervention’ National Credit Amendment Bill, the original plan had been to conduct a clause-by-clause reading of the Bill, but a number of issues had arisen at the previous meeting and the Committee had requested a report back on changes made. Secondly, National Treasury, which had had some reservations, had requested the opportunity to make a presentation. That turn of events unsettled some Members who had come prepared for the clause-by-clause reading.

The Committee approved the drafting changes Parliamentary Legal Services had made after the previous meeting. Thereafter, National Treasury indicated that it strongly supported the Bill, especially as the categories of people that the Bill was seeking to relieve, had to be assisted as soon as possible. Treasury presented a number of specific concerns. The first concern was about the powers that the Bill gave to magistrates to remove interest rates and fees from both secured and unsecured debt. Those powers should be limited to unsecured credit agreements. After extensive deliberation, this was flagged so that Members, especially the Chairperson, could consider the implications of such a change.

The second clause of concern related to credit life insurance. The intention was that if consumers had insurance, then they would not need to access debt intervention in future. Treasury suggested that rather than stating this obligation in the Act, the Minister should be empowered to draft regulations requiring the consumer to enter into and maintain credit life insurance. The proposal was accepted as it created flexibility.

Treasury queried whether ‘credit life assurance’ was the correct term or whether it should be ‘credit insurance’. Both forms of insurance were defined in the Act. After an extensive debate, the Committee determined that ‘credit life insurance’ was correct as the money owing during the life of the credit would be covered by the insurance in the event of the consumer, for specified reasons, was unable to repay the debt. Debt was the focus of the Bill, not protecting whatever product the consumer had purchased.

The Minister of Trade and Industry was responsible for credit but the Minister of Finance was responsible for insurance, therefore it was essential that the Ministers consulted on the matter of credit life insurance. The question that was thoroughly discussed was whether the Ministers had to agree or merely to consult, and if they needed to agree, was that implied by the phrase ‘in consultation’. Ultimately the item was flagged for a decision at the following meeting.

Treasury noted that Clause 29 seemed to put into place a process for funding that was different from the prescribed Treasury process for accessing funds from the national budget. It was not egregious, but it seemed that the Bill wanted to go around constitutional processes.

Clause 29(b) dealt with how the threshold for debt intervention applicants and the amount of unsecured debt could be amended. Treasury agreed with the paragraph in principle but there was a language concern. What was legally meant by “after having considered the following factors”? Lawyers differed in that it could mean only those factors could be considered, or it could mean those factors and also any other relevant factors could be considered. To ensure clarity, Treasury was proposing “after having considered only the following factors...” Treasury also proposed an addition which would require the Minister to consult with stakeholders in determining the threshold of debt intervention applicants and the amount of unsecured debt. The principle of consulting stakeholders was warmly welcomed by the Committee, although there was some discussion as to how to sequence the subsections relating to the process.

The Committee noted that the Bill had not come from the Executive and when the Executive had budgeted, funding had not been allocated for this Bill. The question was whether to attempt to conduct financial literacy training using those pockets of funding currently available in the system or whether to formally apply for a budget. The matter was flagged.

The Committee decided to allow parties time to consider the proposed changes and that the flagged items would first be addressed, before a clause-by-clause reading of the Bill on Tuesday 28 August 2018.
 

Meeting report

Opening remarks
The Chairperson appreciated the guide to international treaties that had been handed to the Committee. The agenda had been changed as the Committee would begin with the Tripartite Agreement. The Committee had been granted permission to work during plenary that afternoon and the following afternoon. Permission had also been given for Thursday afternoon but that might not be necessary. The Committee did not want to sit in Committee during every plenary.

The Committee Secretary announced that the Chair of the Forum of Chairs had approved, in principle, a closed meeting for the Committee’s engagement with the International Trade Administration Commission (ITAC), subject to the Committee’s agreement to hold a closed session. A decision would need to be made.

The Chairperson informed the Committee, especially those Members who had been away, that the Committee had received a full explanation from the Parliamentary Senior Legal Counsel that, where legislation allowed confidentiality, the Committee had to adhere to it and hold a closed meeting. The confidential information had to be retained in the Committee. She explained that she would put it to the Committee to decide if it wanted to meet with ITAC.

She noted that the former Secretary General of the United Nations, Kofi Annan, had passed away recently. He had done a lot to promote peace in Africa. She asked for a moment of silence for a great man.

Mr B Radebe (ANC) asked to reflect on the man of stature, Kofi Annan. He had been a citizen of Ghana, the first independent state in Africa and the Ghana with had given Africa, Kwame Nkrumah. He had been a pan-Africanist par excellence who had fought for a united Africa so that it could grow economically. Kofi Annan did a lot of things for Africa. The Millennium Goals were only achieved because they were shepherded by Kofi Annan. When he was at the United Nations, Africa was on the agenda. He was a true son of the soil of Africa. All African citizens would forever be indebted to him. He proved that there was excellence in Africa. He promoted multilateralism and condemned the invasion of Iraq. In his retirement, he was one of the Elders appointed by former President Mandela and was sent to troubleshoot all over the continent. Africa was a better continent than it had been before because of the contributions of Kofi Annan. African citizens should lay down their flags out of respect for him.

The Chairperson thanked Mr Radebe for the tribute and stated that Kofi Annan would be sorely missed by the world community, especially Africa.

Mr D Macpherson (DA) noted that the Committee had planned to formally consider the Committee Bill that day and he was concerned about the lack of participation across political parties during the very serious work on the Bill. They had the right not to be there, but it was a very technical Bill. He asked for a discussion between the Chairperson and Members who were not in attendance.

The Chairperson informed Mr Macpherson that she had approached them following their absence the previous week. She asked the Secretary to write to the whips of all the parties not in attendance, especially the Freedom Front and EFF. The Committee was in the final weeks of the Bill and legislation was a priority, so Members should be released for attendance at the meetings. She had suggested that the EFF be asked to send a substitute that day. The Secretary was requested to make the phone call. Mr Esterhuizen of the IFP should not be at the Portfolio Committee on Energy meeting, unless they were finalising a Bill.

COMESA-EAC-SADC Tripartite Free Trade Area (TFTA) ratification
The Chairperson explained that a full briefing had been held on 13 June 2018 and there had been many, many questions. DTI would now address those questions. It was not a briefing on the Bill. She had hoped for a joint meeting with the Standing Committee on Finance but that had not been possible.

Ms Xolelwa Mlumbi-Peter, DTI Deputy Director General:  International Trade and Economic Development Division (ITED), gave a brief background of the Tripartite Agreement before addressing the questions. The TFTA, signed by South Africa in July 2017, would facilitate harmonisation of trade regimes; free movement of business persons; joint implementation of regional infrastructure projects and programmes; development of regional value chains; and legal and institutional arrangements for regional cooperation. The ratification request related only to the trade liberalisation element of the agreement.

Potential threats to South Africa included trans-shipment where a third-party import gained access through neighbouring countries but that could be addressed through rules of origin and customs cooperation facilitated by the TFTA. It was a major risk that third-party countries would flood the market through a member with the most liberal trade regime. Therefore, the rules of origin were particularly important and most rules of origin in the Agreement emphasized the need for substantial processing or transformation to take place in the region. Another threat was the influx or dumping of substandard goods. That required effective border management. But, it had to be noted that the TFTA itself promoted intra-regional trade in compliance with South African standards.

After the agreement was finalized, the DTI would request SARS to implement the preferential tariff treatment, including amending the necessary schedules to the Customs and Excise Act. The TFTA had been used as a basis for engaging in the ongoing African Continental Free Trade Agreement (AFCFTA) negotiations. Ratification by South Africa would send a strong signal of its commitment to regional integration and bring South African exporters a step closer to enjoying preferential treatment under the TFTA.

Discussion
Mr Macpherson asked about the benefits for South Africa and the legal protection for South African exports as the TFTA made provision for dispute mechanisms de-linked from the South African courts. But South Africa did not offer that within the country. It was interesting, but hypocritical, to get a benefit that South Africa did not offer. Trans-shipment into South Africa was not a new thing and was happening unabated. It was a customs thing. He gave an example of clothes entering South Africa, allegedly from Mauritius but they were actually Chinese goods. Mauritius exported more clothes than they had looms to produce fabric in the country.

He welcomed the fact that business people were able to visit South Africa. On an oversight visit, he had been informed of a business that was on the verge of closing down because their executives were being prevented from entering the country. He was interested in what Home Affairs was doing. He welcomed regional free trade but did not want it to undermine South African industries by things such as agriculture subsidies. It required effective monitoring and efficient customs systems. They would have to stamp out trans-shipments into South Africa because the East would use the gap to import into South Africa under false rules of origin. Home Affairs would have to come to the table.

The Chairperson asked Mr Macpherson what he meant by South African industry being undermined by agricultural subsidies. Which countries had agricultural subsidies? He should share his studies.

Mr Macpherson explained that he had said, “like agricultural subsidies’, as an example of the types of subsidies some countries offered.

The Chairperson stated South Africa, for one, did not provide agricultural subsidies.

Mr Radebe supported the Tripartite Agreement. As he had earlier said, Kwame Nkrumah, the former President of Ghana, had stated that Africa should industrialize and trade within itself. It was good that the dream was coming to reality in their lifetime. He wanted to raise national value chains. South Africa was almost self-sufficient in the auto industry and could produce parts, integrate a car and put it to work but if South Africa was going to have industrial trade, there was a threat to that industry which it currently did not experience. Certain components of the Airbus were made inland which meant that the manufacture of the Airbus might be threatened. Was South Africa going to expose itself to such shenanigans when moving forward?

He also referred to the dumping of substandard goods. He saw that the TFTA promoted trade in compliance with South African standards. Would the standard setting bodies be able to cater for the entire tri-partite group of countries to ensure that standards were the same as for the country itself? There were already so many challenges in the South African Bureau of Standards (SABS) and in the National Regulator for Compulsory Specifications. If there was a challenge within the country, how would South Africa be able to cope with trade from the TPTA, or from the continent as a whole? On capacity and sharing experiences, where would money come from for the capacity building? Africa did not have the money. He feared that the treaty was raising unrealistic expectations.

Mr D Mahlobo (ANC) stated that it was a matter arising. The Department had clarified risks and mitigation. He noted that the high level TFTA had been agreed to, the Executive had signed, and Parliament would have to conclude the process. There were challenges in implementation and a mechanism had to be found to deal with the challenges. During the course of implementation, the Executive had to be held to account to ensure South Africa was not exploited, and other states not exploited by South Africa. The country’s political vision of peace and friendship, and not being a pariah state, meant doing business with Africans.

Agreeing to the TFTA was an important step. Implementation protocols should be developed. New capacity would be required in the state, as well as infrastructure. The movement of goods and services would have to improve. There would be financial implications in implementing the TFTA. Other countries were not at the same level of development. It was important to check where the money would come from. There had to be capacity so that decisions could be properly implemented.

A single AU passport did not mean that people could just cross borders – not at that stage. Capacity had to be built for examining goods coming in at the borders. Government would have to share the technical implementation plan. They needed a plan for each country. For example, what was the strategy for the Democratic Republic of Congo (DRC)? South Africa had invested a lot in that country, in South Sudan, and in Burundi but the graph showed nothing much in the way of trade. The strategy for each country had to look at advantages and disadvantages. Nelson Mandela had done much to help Rwanda and South Africa should be trading with Rwanda. The graph presented was a very important indicator, but it had to show what could be done differently.

Mr Mbuyane said South Africa needed to strengthen the monitoring and evaluation of the strategies of the rules of origin, such as the dumping of sugar. The TFTA was easing the burden but the country needed to strengthen how it dealt with substandard challenges.

Ms P Mantashe (ANC) agreed with the Free Trade Agreement but asked what had been done to allow free movement of persons. She had asked that question in June. She reminded Mr Macpherson that Europe had agricultural subsidies, but he would not mention that because they were his friends.

The Chairperson referred to Phase 2 which indicated that the Agreement would introduce not only trade and services but also intellectual property rights. She asked what the challenges were that South Africa might experience with intellectual property rights, given that the Committee was currently dealing with Copyright. She referred to the conclusion of the negotiating process. The Southern African Customs Union had negotiated with Egypt. Had Egypt sent a protocol on tariff offers for which it had asked for a response? South Africa might wish to adopt the same approach as Egypt.

Response
Ms Mlumbi-Peter responded to Mr Macpherson that the treaty was in line with the World Trade Organisation process that facilitated efficient resolution, so nothing was being established out of the norm. The only difference for SADC was that the dispute mechanism was linked to the tribunal process. The dispute mechanisms were specific. In the protection of investment, South Africa had chosen that route because a debate was taking place about arbitration. The European Union was talking about establishing a multilateral investment court because everyone was mindful of the shortcomings and risks of arbitration on investment.

Trans-shipment required a very efficient and functional customs system to deal with illicit trade. DTI was working closely with the South African Revenue Service (SARS), which was a stakeholder in the process. Members might be aware that the Border Management Authority (BMA) would improve coordination at the border and address current shortcomings in the border area. On the movement of business persons, the Department had established InvestSA which could assist with problems with business visas. There was a need to monitor and assess the implementation process, especially about country of origin. The BMA would assist with that. SARS was also addressing shortcomings and DTI was discussing with SARS about closing the gaps in the system.

On subsidies, Ms Mlumbi-Peter noted that African countries did not subsidise because of the limited availability of funds and so there was unlikely to be a problem with subsidised goods when it came to African countries. The risks to South African goods from subsidized goods came from countries outside of the continent. There was currently a discussion on subsidies at WTO. Export subsidies had been addressed but domestic subsidies still had to be addressed. Should subsidies arise in terms of the TFTA, South Africa could implement trade remedies. The Agreement made provision for anti-dumping duties and through the ITAC process, such practices could be investigated, and duties imposed. Mechanisms had been built into the agreement.

The DDG agreed with Mr Radebe that the arrangement was long overdue in the integration of the continent. The African Continental Free Trade Market would provide a market of over R1 billion people. The regional value chain offered mutually beneficial outcomes. In the case of autos, there were already functional arrangements in terms value chains. For example, Lesotho was producing leather car seats for cars manufactured in South Africa and Botswana was producing electric wiring for dashboards. When it came to negotiating with third parties, it was easier to develop a common position because they all had a common stake and that helped to prevent cheap imports. If South Africa was seen to be contributing towards the development of African countries, that would prevent barriers to trade from being put on South African goods. South African institutions would have to be capacitated. DTI was aware of challenges in the standard-setting bodies and was currently addressing some of the challenges in those bodies.

The Agreement ensured that expertise was shared on the challenges experienced and even capacity could be shared in the region. Going forward, there might be discussions about how the region could collaborate so that, as the countries traded, they protected capacity in the region.

Funding for capacity building would be found within each country. Each country would offer training. For example, countries would come to South Africa to learn about ITAC. Egypt could offer similar training, so capacity could be leveraged but also the UN Economic Commission for Africa and UNTAG offered capacity building, and the WTO provided capacity from time to time. The intention was to leverage capacity and not to put pressure on finances.

She agreed with Mr Mahlobo and would not repeat his points but, as far as the movement of people was concerned, it would be done in accordance with national laws as he had indicated. Trade Invest Africa had country strategies to leverage the multilateral trade agreements to advance each country’s trade objectives.
The investment-led trade strategies by Trade Invest Africa were also assisting to advance programmes of mutual benefit. DTI agreed that there was a need to strengthen monitoring of compliance to rules of origin and to develop a system to authenticate rules of origin certificates.

The DDG informed Ms Mantashe that protocol on the movement of business persons had been concluded. The Ministers had approved the agreement and it was going through the legal vetting process and then it would come to Parliament for ratification. The agreement would assure the issuing of visas in accordance with national laws.

In response to the Chairperson’s question about Phase 2, and intellectual property and competition, the DDG stated that the aim was to negotiate a model policy framework for states to draw from in developing legislation. The intention was to develop guidelines to assist with the process. The position that South Africa would take in those negotiations would be aligned to the Intellectual Property (IP) policy. The aim was to advance IP rights, but to protect South Africa’s IP policy. The development of pharmaceuticals would be important in the region. When one spoke of IP, it would be necessary to advance public health but at the same time to ensure IP was protected in order to promote innovation. It would be a balanced approach.

In looking at trade concessions, DTI had to prepare an offer for the start of the negotiations to give concessions in accordance with the modalities that had been agreed upon. In terms of the Tripartite Agreement, 60% of the tariffs had to be zero so that the offer was in line with those modalities. 25% was phased down over a period of eight to five years. A country had to indicate which of the tariff lines would be in the phased-down approach. 15% was sensitive and subject to negotiations. The offer had been completed with Egypt and it was important to engage in the actual negotiation process.

The Chairperson stated that she heard an element of convergence. There were concerns that were important. Everyone agreed that there was a need for an agreement on common rules of origin as industries should not be undermined, but, notwithstanding that, there was a need to move forward on decisions of a flexible regional integration. Even the EU had not agreed on everything. Members had not spent as long on an agreement, ever, in the Committee so she was confident that the Members had applied their minds.

She asked the DDG to return to the Committee from month to month to keep the Committee up to speed. Parliament had said that there was a cavalier approach to ratification and the Committee needed to follow the implementation process.

As it was a ratification process, the Chairperson requested that someone formally propose the adoption of the report. Mr Mahlobo proposed that the Committee supported the ratification, including a mechanism for tracking as requested by the Committee. Mr Macpherson seconded the motion.

Mr Macpherson asked a question of process. Did the Report go to the House for ratification?

The Chairperson confirmed that the Report would go to the House but there would hardly be a debate. There would, however, be an opportunity for comments from political parties.

The Chairperson formally read the Committee Report on the Agreement establishing a Tripartite Free Trade Area among the Common Market for Eastern and Southern Africa, the East African Community and the Southern African Development Community dated 21 August 2018. The Portfolio Committee on Trade and Industry, having approved the request by Parliament on the Agreement establishing the Tripartite Free Trade Area among the Common Market for Eastern and Southern Africa, the East African Community and the Southern African Development Community, recommends that the House, in terms of section 231(2) of the Constitution, approve the said Agreement. Report to be considered.

The Chairperson thanked all Members saying that it was a great step forward establishing an agreement between Southern African and the East African Commonwealth. She thanked the DDG and her team for driving the process and supporting Cabinet’s policy.

Decision on ITAC closed meeting
The Chairperson said that the Committee needed to take a decision on whether the meeting with ITAC would be closed to the public. The Committee had heard from senior legal counsel in Parliament who had stated that ITAC could insist on a closed meeting as it was in their Act. She needed a proposal to hold a closed session with ITAC on 28 August 2018 in accordance with the Rules of Parliament.

Mr Macpherson stated that he was happy to have a closed meeting as long as the information was market-sensitive. However, if ITAC had demanded a closed meeting just to avoid the cameras, he would not be happy. If the information that ITAC presented was not confidential, he could not support it and it would become a big issue.

The Chairperson explained that ITAC could not mislead Parliament as there were rules and laws against that. Should the information not be confidential, the Committee would censure ITAC and develop sanctions against them. The Committee was working within the framework of the parliamentary rules.

Mr Radebe proposed that a closed meeting with ITAC be held on 28 August 2018. The proposal was seconded by Mr Macpherson.

The Chairperson noted that the matter had been agreed to. She reminded Members that it was a criminal offence to take something out of a closed meeting and severe action would be taken against a Member of Parliament who did that. She had to make that very clear.

Mr Radebe said that it was true that no one could remove anything from the room but because it was the Chairperson’s first closed meeting, he suggested that she meet with her counterparts in Intelligence who frequently held closed meetings.

The Chairperson agreed to consult with those for whom closed meetings were a regular occurrence.

‘Debt Intervention’ National Credit Amendment Bill
The Chairperson announced that the Committee would not be concluding the Amendment Bill that day, as planned. The conclusion was dependent on discussions. She noted that Mr Macpherson had submitted an apology for the next day due to a by-election in his constituency.

Mr Macpherson said that he had been assured that the Bill would be finalised that day and it was news to him that the Bill was not to be finalised.

The Chairperson agreed that she had planned to finish today, but deliberations were still ongoing. She could not guarantee that they would finish the Bill, as it did not work like that. She would have liked to push the Bill through, but she could not. Issues had come up the previous week and she had a responsibility to avoid the Constitutional Court. She apologised to those who had thought it would finish this week. Parties had requested the Chairperson for an opportunity to take the Bill to their caucuses.

Mr Macpherson explained that the DA could only consider a Bill after it had been through the clause-by-clause reading and only then could the party make its decision.

The Chairperson stated that the clause-by-clause reading would take place the next day. She requested Mr Macpherson to ask his alternate to attend the meeting on the following day.

Mr Macpherson expressed his frustration as he had been there since the beginning of the Bill and he had believed that he would be involved to the end. That was why he had phoned the Chairperson to discuss his arrangements for the week. He understood that a Committee did not revolve around an individual, but he had been there from the beginning and he had pertinent points that he wanted to make in the clause-by-clause reading. He had been led to believe that was what would happen today. He thought that it bad form to change the arrangements, which meant that he was excluded.

The Chairperson said the Committee would begin the process today but would have to continue on the 22nd

The Chairperson recognised the DTI DDG, Dr Evelyn Masotja, and her colleagues, the NCR CEO, Ms Nomsa Motshegare, Prof Joseph Maseko, National Consumer Tribunal Chairperson. Adv Gideon Hoon, State Law Advisor and Adv Johan Strydom, DTI Legal Advisor, would join the meeting that afternoon.

The Chairperson noted that there were processes, such as the certification of the Bill by Parliamentary Legal Services, that she had not taken account of in her timeline. She hoped that the challenges with Treasury had been resolved by Ms Masotja and her team. The Amendment Bill handed out today incorporated the changes made. The Chairperson wanted to address the clauses where changes had been made. Adv van der Merwe would lead and leave the ones relating to Treasury until later.

Mr Macpherson again expressed his concern about the way it was being handled. The Committee had always done a clause-by-clause reading in a single session and that was not going to be the case. He asked that the Committee discuss the issues and then look at the entire Bill in a full sitting.

The Chairperson stated she would be doing that, but the Committee had to hear from National Treasury, Parliamentary Legal Services and the DTI. The Committee had asked for these inputs and Members had to pay attention to what those people had to say and then the Committee would go through it clause-by-clause.

Changes implemented following the previous meeting
Adv van der Merwe presented the re-worked clauses as requested by the Committee at the previous meeting.

Clause 14: Section 87
It had not been clear that the Tribunal could reduce the interest rate in a debt intervention case because that information was contained Section 86 in the principal Act. The decision had been to repeat Section 86 in the Bill. The relevant part of Section 86 had been added as Clause 14(b)(dd).

Clause 15: Section 87A(3) Cost of credit
The next change was on ‘the cost of credit’. The Bill had referred readers to Section 101(1) for the definition of ‘cost of credit’. However, Members had felt that it was insufficiently clear what was meant by ‘cost of credit’ and people might not refer to Section 101 in the principal Act. There could be confusion with the colloquial meaning which excluded the principal debt. In a number of places in the Bill, the term ‘cost of credit’ had been replaced with ‘of the amounts contemplated in Section 101. The first place in which the change had been made was in Clause 15: Section 87A(3). The change also applied consequentially in line 52 on page 11; line 56 p 11; page 13 line 20; line 23 p 13; line 25 p13.
 
Clause 29: Section 171(a)(Bb)(ii)(cc)
In Clause 18 a reference had been made to the Debt Counsellors Rule System but because it was owned by a private organisation, the reference had been replaced by a reference to the original agreement, the Industry Guidelines issued by the National Credit Review Task Team Agreement of 2010.

Clause 29: Section171(b)(3)(c)
The Committee had determined that it would be too onerous for the Minister to review the implementation every 12 months and that had been changed to once every 24 months.

The Chairperson asked if Members who had been at the previous meeting agreed that their concerns had been factored in to the latest version. Did DTI have any difference of opinion?

DTI DDG, Dr Evelyn Masotja, was happy with the amendments.

Mr Macpherson was confused at first as he could not see where the Minister would send the report to be approved, but he then found the reference to the process in the Bill.

The Chairperson asked Treasury to clarify a number of clauses. The Chairperson asked if Ms Gibson or Ms Olaotsi Matshone, National Treasury Chief Directort, would be presenting. There was a slight delay with the printing of the Treasury presentation.

Certification and tagging of National Credit Amendment Bill
The Secretary reminded the Committee that after it had to come to agreement on the full Bill at the clause-by-clause reading, it had to ask for certification by Parliamentary Legal Services as it was a Committee Bill. Also, the Bill would have to be submitted to the Joint Tagging Mechanism (JTM) for classification. Once completed, the Committee Report would be brought to the Committee for adoption.

Adv van der Merwe explained that the Chief Parliamentary Legal Advisor or someone delegated by him would certify the Bill. As she was working with the Committee, she would certify the Bill. Unless the content of the Bill changed significantly, she had the certificate ready and would only need to print it for the Committee. The JTM was a different matter. While her legal opinion was ready for the JTM, the approved Bill had to be attached and so could not be submitted until the Committee had approved the Bill. The Legal Office usually chased the JTM tagging and it could take between one and four days. However, she might have to ask the Chairperson to chase it up.

The Chairperson noted that the Committee was looking at the completion of the processes within six days after the adoption of the Bill. The Committee Report on the Bill could only be adopted after the tagging.

Mr Macpherson suggested that the Committee agree to sit on a specific day when there would be no interruptions and Members could address the Bill uninterrupted. On a matter of process, when it came to the clause-by-clause reading, how did the Chairperson want to deal with any proposed changes? Should proposals be circulated before time or did she want them to be tabled during the meeting?

The Chairperson stated that changes were done on the spot, as had been done in the past, but noted that the Committee needed a venue with a working screen and projector. Some of the venues used recently had not been conducive to deliberations but she had no control over the venue. The Committee wanted to devote a day to it, but their formal consideration was on 28 August 2018. It depended on what happened on the day.  The Committee had not expected Treasury to be giving input only today and not the previous week. Mr Momoniat, National Treasury DDG, had deployed the previous Unit Head, Ms Katherine Gibson, who was currently in a different unit, to present to the Committee.

‘Debt Intervention’ National Credit Amendment Bill: National Treasury proposed amendments
Ms Katherine Gibson, National Treasury: Chief Director Financial Sector Conduct, stated that National Treasury supported the Bill, especially since the categories of people that the Bill was seeking to relieve, had to be assisted as soon as possible.

Clause 12: Section 86(b)(ccA)
The addition of (ccA) widened the scope of the Bill to include secured loans and that concerned Treasury. The focus of the Bill was on those who could not access existing insolvency measures. The focus was debt intervention, and not to improve debt review. She noted that the definition of "debt intervention applicant” was limited to unsecured debt. However, powers were given to magistrates to remove interest rates and fees on secured debt. She understood concerns about the process where certain credit providers were not playing ball, but many credit providers were participating in DCRS. There was one situation where they could come to an agreement and another where no agreement could be reached, but that was a very narrow category of credit providers. Firstly, (ccA) was outside the scope of the Bill and the clause gave too much power, including secured lending. Less than 20% of credit providers participated in DCRS in terms of the number of credit providers, not in terms of volume and value. 80% to 90% of the market resolved debt issues through the DCRS.

Treasury proposed to limit the clause regarding magistrates. The Tribunal powers were limited by virtue of the definition. The proposal was to add the words “in relation to unsecured credit agreements” at the beginning of Section 26(b)(ccA).

The Chairperson confirmed that she understood the proposed amendment. She asked Adv van der Merwe for her opinion.

Adv van der Merwe reminded Members that while the debt intervention had limited scope, the Bill did not have a limited scope. For example, reference to monetary life credit agreement had been added. The Committee had permission to address other issues and was not limited to debt intervention. The phrase at the end of preamble: “all consumers must be afforded protection through fair, transparent, sustainable and responsible processes” allowed the Committee to go broader than the debt intervention, although the Committee had tried to limit itself to debt intervention.

The reason for the clause was that the Committee had been made aware that, in a court case related to a debt review, the court could not make an order to limit interest rates as it was a creature of statute and that was not in the statute. The situation applied to all debt reviews and was not limited to debt intervention. The Committee had prescribed guidelines for magistrates who had to consider incremental deductions. It was intended to apply to debt review and debt intervention. She could not say if the Committee had intended secured or unsecured debt, but the intention in the clause applied to both.

Dr Masotja stated that the intervention was to close the gap where magistrates could not make orders. It was therefore intended to be wider and to apply to secured and unsecured debt.

Ms Gibson noted that no distinction was made between where there had been a voluntary agreement and where there was no agreement. If that distinction were captured, the magistrate would not have the power where there was an agreement. An impact assessment had been done on unsecured debt, but no impact assessment had been done on secured credit.

The Chairperson agreed that they were important points. However, a decision had been taken that they could not wait for the study.

Mr Mahlobo reminded the Committee of the intention. The realities of secured or unsecured debt was not important. It was a dispute mechanism and so why would the Committee limit the powers of the magistrate? There was a case study where the magistrate had said that he did not have the powers to make a determination. How did one arrive at the quantum? The Minister would gazette a prescription so that there would always be guidelines. To limit it would not serve the purpose.

Mr Williams thought that clause was acceptable as it stood because there was a gap and people were falling through the gap. He accepted the advocate’s explanation.

Mr Macpherson located the clause in the principal Act under Debt Review. What might happen because zero interest rate had been opened to secured credit, was that debt review would be undermined. Secured and unsecured debt were very different in nature. Secured debt was for house or car. It created a complex problem for secured lenders if debt on assets could be eliminated. It spoke to a target group way beyond the original target of the poorest of the poor. The Committee was flying blind without an assessment study. If the target was the poorest of the poor, the Bill should be focussed on those people. He supported the recommendation that the magistrate should focus on unsecured debt. He could not recall whether the court case referred to had been about secured credit. A move to put a zero interest rate on secured credit would create uncertainty in the market.

Mr Cachalia stressed that to avoid unintended consequences, it would be wrong not to avail themselves of an assessment study of secured loans. It was crucial. He suggested that the Committee take note of National Treasury’s suggestions about voluntary versus contested agreements.

Mr Radebe supported retention and agreed with Mr Mahlobo and Mr Williams. In South Africa the final arbiter in any dispute was a court of law. Granting those powers to the magistrate could not do any harm.

The Chairperson stated that her only concern was the rationale for the Bill was that the poor were excluded from other measures to relieve debt. The three statutory measures, sequestration, administration and debt review, all required some form of disposable asset. That constituted unfair process because the poorest of the poor had no assets. The target was the most vulnerable consumers. The Committee could not forget that rationale. To make use of the debt review process, a consumer had to earn at least R7 500 per month. She was going to exercise her powers as Chairperson and flag this clause. The Bill had to achieve the intention and political parties had to discuss the proposal until they were satisfied that it met the intention.

Mr Mahlobo thanked the Chairperson for reading the objectives of the Amendment Bill but the point that she was referring to was included in the process map. One could not confuse objectives and the dispute mechanism. The proposal did not resolve the problem of resolving disputes. When a decision had to be made, the magistrate was in the best position to adjudicate.

The Chairperson was aware that the Committee should not limit the powers of the adjudicator. The Committee had to weigh up the options. She appealed to Members to allow the clause to be flagged until she too could see the green light that it seemed many Members of the Committee could see.

Clause 19: New Section 106(b)
Ms Gibson referred to the clause about credit providers being obliged to add insurance on that product. It was requiring something in primary law when the Committee did not know the consequences of that requirement. The intention was that if consumers had insurance, then they would not need to access debt intervention. That was a good premise. Treasury suggested that the Minister be given more flexibility so that rather than stating the obligations in the Act, which would require an amendment to the Act to change the clause, the Minister should be empowered to require the consumer to enter into and maintain credit life insurance. That would give flexibility so that the Minister might amend the requirement, subject to the learned experience, to mitigate the risk of unintended consequences down the line. 

Mr Macpherson acknowledged that it was the clause that he had suggested. It was important, and that was why he had suggested the clause. It was a way to mitigate those that fell into unemployment or disability and could not pay a credit provider. It was a sound principle to protect people against unintended consequences. The Committee had discussed with the insurance business what the product looked like, but they had never received the information about what the insurance would cost. How could he as legislator defend the clause when he did not know how much the insurance cost, whether it was affordable or not? He did not know whose fault it was that the Committee did not have that information. National Treasury had spoken of unintended consequences, but National Treasury also did not have the information that the Committee had been looking for, so he could not apply his mind to the point that Ms Gibson had applied her mind.

The Chairperson suggested that there were sometimes unintended consequences that one could not account for.

Mr Radebe said that the National Treasury proposed amendment was acceptable and if the insurance was problematic, the Minister could make the necessary changes.

The Chairperson understood that the point had been discussed in the study group.

Mr Mahlobo was covered by Mr Radebe. He noted that there were certain variables. The Ministers would have discussions on the impact. He supported the amendment. Mr Macpherson was talking about the modality of how decisions would be made. Had the Bill been an Executive Bill, a technical assessment would have been made available. However, the Committee did not have those resources. It was a question of ensuring that the mechanism would not be abused so the Portfolio Committee would have to use its oversight mandate. He seconded the proposal made by Mr Radebe.

Adv van der Merwe stated that it was policy decision but if it was accepted, she would amend the clause.

DTI agreed with the proposal as it did not affect the credit life insurance and the Department might need to consult and work around the issue because there was need for the product in the market. National Treasury’s proposal created flexibility.

Clause 19: New Section 106(b) (new 8); Clause 29: Section 171
National Treasury stated that the new Section 106(b) would have to be changed to include provisions for the Minister to make regulations. Treasury queried whether ‘credit life assurance’ was the correct term or whether it should be ‘credit insurance’.

Clause 29: Section 171
Another amendment that Treasury recommended was in Clause 29 that amended Section 171 about financial literacy. Treasury proposed the deletion of the requirement: “…must consult the Minister of Finance” as that was unnecessary. Ms Gibson stated that DTI had informed her that the Department preferred the use of the term ‘financial literacy’.

Mr Mahlobo agreed with credit insurance. Life insurance was onerous and excluded some people. He also agreed with the need for regulations. It was very important. However, he did not see that it could do any harm for the Minister to consult with the Minister of Finance, so he did not support that amendment.
It could have implications around concurrence.

Mr Macpherson said that the term had to be ‘credit life insurance’ because credit life insurance also covered death, disability and six months of unemployment. It was an encompassing product.

The Chairperson asked if Mr Macpherson was correct in his definition of credit insurance meant

Ms Gibson stated that credit insurance was broader than credit life insurance. If you specify life, then it has to do with life events and the requirements were more stringent. If one did not have insurance, one had to carry on paying even when one was no longer in possession of the goods that might have been stolen or lost. She did not have a fixed view on the matter. Did the Committee want to protect against life events or non-life insurance as well? If it were in the Regulations, there would be flexibility for the Minister to specify the type of insurance. If the Committee specifically wanted to cover life events only, the term ‘credit life insurance’ had to be used.

Mr Mahlobo said that legislators were always on the side of the people. The legislation talked to different ways of becoming indebted or insolvent; therefore, the broader the definition, the better. The question for whoever made the decision about insurance was: Was the insurance good enough for anything that might happen and did not expose the consumer to debt that he could not pay. Credit insurance was currently applicable and was sufficient.

Mr Macpherson informed Ms Gibson that the product was not credit insurance. It was not right for credit providers to insure the product. They could only protect the amount of credit. It was the consumer’s responsibility what the consumer did with unsecured credit. Consumers could not pass on what they did with the unsecured credit to the credit provider.

Mr Williams said that the intention was to protect the credit itself. That was what the Bill was insuring. People themselves could insure products but he did not see the poorest of the poor buying cell phones. They would more likely be buying food. The insurance was to insure the credit amount. People could insure their products if they wanted to, but he doubted that the poorest of the poor would want insurance. If the consumer could not pay his debts, that insurance had to kick in.

Adv A Alberts (FF+) confirmed that it was the capital amount lent that had to be insured, not the product. It was up to the individual to take out insurance on the product.

Adv van der Merwe wanted to clarify another aspect. In the proposal from Treasury, Section 106(8)(b) stated that ‘the Minister may, in consultation with the Minister of Finance’. The term ‘in consultation’ meant that the Minister of Finance had to agree. In Section 106(8)(a) the limits of rates for insurance had to be agreed upon by both Ministers, remembering that the Minister of Finance was responsible for insurance. Did the Committee also want agreement between the Minister of Finance and Minister of Trade and Industry in Section 1068(b)? If so, the phrase was ‘in consultation’. If the Committee wanted the Minister to discuss with the Minister of Finance and did not need agreement, it had to be worded differently.

Ms Nomsa Motshegare, NCR CEO, reminded the Committee that it had introduced credit life insurance caps and had determined that the Minister had to consult with the Minister of Finance because the Minister of Finance was responsible for insurance.

Mr Siphamandla Kumkani, DTI Acting Chief Director: Policy and Legislation, aligned himself with the points made by Mr Macpherson and Adv Alberts. He wanted to take the Committee back to why they had included credit life insurance. In the event that one died, was disabled or retrenched, credit was covered. Even the Credit Act spoke of credit life insurance which covered death, disability and retrenchment. The target group were not even aware that they had credit life insurance and did not even know they could claim. If it were mandatory, even if consumers did not know about it, they were covered.

Prof Joseph Maseko, National Consumer Tribunal Chairperson, informed the Committee that ‘life’ in credit life insurance referred to the life of the credit, not the life of the person or product. Once the debt had been paid off, the insurance would lapse because it was no longer covering anything. The clauses in the policy would indicate what was covered. There was not a generic term for insurance as policies were agreed upon via contract and not via the law. If there was a clause covering death, then it was so.

The Chairperson stated that was a very helpful and clear explanation.

Mr Williams asked if the Committee could go back to the implications of the Clause 19 amendment suggested by Treasury. The Committee was talking about credit insurance versus credit life insurance and he wanted to know the implications of the amendment before the Committee made a decision.

Adv van der Merwe stated that the Act defined both because credit insurance included credit life insurance, but it also included an agreement covering loss or damage to property, loss or theft of an access card, etc.
Credit life insurance was defined as including payment of debt in the event of death, terminal illness, unemployment, or other insurable risk that was likely to impair the insurer’s ability to earn an income or resulted in the consumer being unlikely to cover the debt. That was why the Committee had chosen to go with credit life insurance.

The Committee had specifically written the commencement clause so that it was not implementable on gazetting. It would become an Act but would not be immediately operational. The President would promulgate when it would become operational, after discussion with the Minister. The delay was to give the NCR time to get organised. That clause also needed time and so would be delayed operationally. If the Minister operationalised it through the Regulations, it was same as delaying the clause. Did the Committee want it included in the agreement with the Minister?

Mr Mahlobo said that there was 8(a) and 8(b). Both of the subsections related to the principal Act. The cost of credit was defined in the principal Act but although credit life insurance was related to the principal Act, there needed to be consultation. All monetary issues had to go to the Minister of Finance. ‘Consultation’ did not mean that the Minister approved but that the Ministers came to an understanding of how it would work. The notes were very helpful, but it was a good confusion. How were the relevant people made aware of, or conscientised about what was in the Bill?

The Chairperson asked if he agreed with National Treasury and wished to change to credit insurance. Or should it be credit life insurance?

Mr Mahlobo said that after the explanation given by Prof Maseko, he realised that the insurance had to be determined in context, so his opinion was that it had to remain ‘credit life insurance’.

Mr Radebe said that the Committee was making an amendment, but he had gone back to the principal Act and read the explanation for credit insurance and credit life insurance. The Committee should not deviate from ‘credit life insurance’.

Mr Macpherson stated that ‘credit life insurance’ should be used and Minister of Finance should be consulted so the phrase should be ‘in consultation’.

The Chairperson observed that everyone agreed that the Minister of Finance should be consulted.

Mr Mahlobo stated that the lawyers had to assist. The more it was discussed; the more problems arose. He asked why 8(b) had to be added. If one looked at 8(a), it covered a much wider scope and actually included credit insurance. Subsection 8(b) was just a process and could only be done via a regulation. 8(a) had to be read with 8(b), so why should the Minister not be instructed to do it all in 8(a)? The paragraph was virtually repeated and was confusing.

Mr Williams said that in respect of ‘in’ or ‘after’ consultation, he proposed ‘after’.

The Chairperson asked if in matters of finance, there should be concurrence with the Minister of Finance.

Adv van der Merwe could not advise the Committee. She explained that ‘in consultation’ demanded the agreement of the Minister of Finance before the Minister of Trade and Industry could prescribe the regulation. However, ‘after consultation’ meant that the Minister of Trade and Industry had to consult the Minister of Finance, but he could go ahead even if the Minister of Finance did not agree.

In terms of 8(a), the word ‘may’ gave the Minister discretion. 8(b) included the word ‘must’ because the Bill made provision for credit life insurance and therefore the Committee needed the Minister to prescribe. There could be no discretion. Subsections 8(a) and 8(b) were completely separate paragraphs and did not have to be read together because there was no introductory paragraph. On a practical level, the Minister of Finance had to agree on a limit, or it was possible that he simply would not give a limit. Therefore ‘in consultation’ would make sense, but ‘after consultation’ gave more power to the Minister of Trade and Industry.

The Chairperson clarified the two paragraphs 8(a) and 8(b). The first one dealt with the cost of credit and the second one dealt with the principle, so she did not want to see the two conflated.

Mr Mahlobo suggested that the use of the word ‘life’ in paragraph 8(b) was not correct because (a) and (b) were read together. The advocate was assuming that Ministers might not agree. However, there was always a dispute mechanism if Ministers did not agree. If the Ministers did not agree, one Minister would not go ahead, so the Committee need not worry about that point. However, any money-related matter had to include consultation with the Minister of Finance who had fiduciary responsibilities. Subsection 8(b) was clarifying a process and not creating an anomaly with 8(a). Treasury and the advocate could correct the wording.

Ms Mantashe agreed that consultation was sacrosanct. She also appealed that for ‘life’ to remain in paragraph 8(a).
 
The Chairperson aligned herself with the principle noted by Ms Mantashe. In the principal Act, it was clear that credit life insurance was related to the life of the credit, which clarified the matter for her. She noted that the line above 8(a) referred to credit insurance and not credit life insurance. She asked Adv van der Merwe to look into that.

Ms Gibson agreed that paragraphs 8(a) and 8(b) seemed to read together. It was better, notwithstanding her first thought, to keep credit life insurance in 8(b). 8(a) said that the Minister may set credit caps for all aspects of credit. 8(b) related to a category that had been identified as absolutely essential for debt intervention consumers, so the clause created additional requirements for the Minister for that particular category. 8(b) connected to 8(a) in that both paragraphs created empowering provisions for the Minister. National Treasury believed that the term ‘in consultation’ was necessary as the Minister of Finance dealt with insurance.

Ms Masotja suggested ‘after consultation’ because while it still required consultation, it provided more flexibility and ensured there would be no interruption of service delivery.

Mr Cachalia recommended that the Committee kept “in consultation” for the reasons advanced by Mr Mahlobo.

The Chairperson consulted the principal Act. She noted that Section 106(b) was a new section. Earlier on she had found the phrase ‘in consultation’ in the principal Act with respect to credit life insurance and she wanted alignment.

Mr Mahlobo suggested to the Chairperson that she had guided the meeting and that the legal advisor would address it. She could flag it, but he knew that it was usually ‘in consultation’. The last point raised by Ms Gibson, had to be flagged. If even in the Committee, everyone had a different understanding, he wondered what would happen in implementation. He did not want to confuse anyone.

Adv van der Merwe stated that ‘in consultation’ was used in Section 106 and the reason was that the Minister was prescribing in an industry that affected another Minister. Generally, ‘in consultation’ was not frequently used because it limited the power of a Minister, but the Minister of Finance was responsible for insurance. Credit fell squarely within the arena of Trade and Industry, which was the responsibility of the Minister of Trade and Industry. However, making insurance a requirement when taking out credit could fall within the area of credit which was the responsibility of the Minister of Trade and Industry. It was a policy decision because it had policy implications. She could not, therefore, make the decision for the Committee.

The Chairperson agreed that credit was the mandate of Trade and Industry, but the insurance industry fell under the Minister of Finance, not Trade and Industry. The clauses referred to different things.

The Chairperson reminded the Committee they had been going through items that National Treasury had raised. She asked the Committee Whip if the Committee wanted to leave the flagged points for the next day.

Mr Radebe agreed that the Committee needed time to think about the flagged items and they should be held over to the next meeting.

Clause 29: financial literacy
Ms Gibson noted that there had been discussion on Clause 29 on financial literacy. Whenever there was funding for anything, this was a very lengthy and laborious process. Clause 29 seemed to put into place another process for funding. She took the point that it was not egregious, but it seemed that the Bill wanted to go around constitutional processes.

Clause 29(b) talked about how the thresholds of debt intervention applicants and the amount of unsecured debt could be amended. Treasury agreed with the paragraph in principle but there was a language concern. What was legally meant by “after having considered the following factors”? Lawyers differed in that it could mean only those factors could be considered, or it could mean those factors and also any other relevant factors could be considered. To ensure clarity, Treasury was proposing “after having considered only the following factors...”

Given the importance of the thresholds which could change the category of people that the Bill was trying to reach, it had to be very clear. Thresholds would change with inflation. National Treasury had to take those factors into account but also wanted to add “after consultation with relevant stakeholders” and that a summary of the consultations had to be presented to the National Assembly.

The Chairperson addressed Clause 29 financial literacy. She asked for Members’ views.

Mr Mahlobo agreed because it was a limited process.

Ms Mantashe asked National Treasury to repeat the point about the financial literacy programme.

Ms Gibson explained that it was about how the financial literacy would be funded. It was unclear what it was saying. It was either that the Minister would discuss with the Minister of Finance that DTI would use part of its existing budget for the financial literacy or the formal process for obtaining the DTI budget, which was a specific process prescribed in law. If DTI was looking for separate funding for the financial literacy, DTI could not talk to the Minister of Finance and would have to follow a much longer prescribed budgeting process.

The Chairperson recapped. Every department and minister would cost out the budget for the financial literacy, combine that with the department’s budget and follow the streamlined budgeting process. However, if a department went outside the process, the department had to consult the Minister of Finance.

Ms Mantashe went back to the DTI presentation of 1 August 2018 that explained that the funds would be scratched from all over. If DTI needed to budget, they had to follow the budgetary process. However, DTI stated that the R47 million could be obtained from three sources: the Payment Distribution Agencies (PDA), increased registration fees, and the funds already allocated for financial literacy training. That was important because financial literacy training was important for the Bill. Funding should not hinder the process.

Mr Williams asked if the Committee had left in the reference to consulting the Minister, if it would then refer to that unique process that Ms Gibson had mentioned. Would it be the first time that it had ever happened?

Ms Gibson did not know if it was unique or not. If an additional budget was required, the Department would have to follow the formal process with the Minister and National Treasury because it would come off the national budget. If it was existing funds that the DTI had and would reallocate, then she thought it happened all the time, but she did not know how one dealt with the specific budget.

The Chairperson explained that the Bill had not come from the Executive and when the Executive had budgeted, funding had not been allocated for this Committee Bill. The only way to get funding would be to go through the Adjustments Appropriation process. The Department would explain that the Bill had come from Parliament and so funding had not been allocated.

Mr Cachalia understood the distinction between the normal budget and an additional budget. However, if the Committee was legislating for funds from outside sources, whose authority was required? That was what Ms Mantashe was enquiring about and that was pertinent.

Mr Mahlobo understood that although it was a Committee Bill, the Committee was not doing it alone. The relevant Departments were involved and should have factored the requirements into their budgets. There were short term solutions, but, depending on the roll-out, the departments would factor in the other budgeting processes. The Committee was not going to legislate on existing powers. National Treasury and Finance could find minimum resources but, if additional resources were required, they would follow the correct processes.

The Chairperson took the point about consulting the Minister of Finance. She asked Ms Mantashe where she saw the process.

Ms Mantashe requested that the clause remain as it stood because it was not going to be implemented the day after the Bill was passed. There would be time for the Department to plan to implement the Bill.

The Chairperson was not sure where the Committee was. She understood Mr Mahlobo to say that the departments would have time to plan and follow normal budgetary processes.

Mr Mahlobo suggested that the Committee should not try to hold back. Implementation should never be held back because the relief was desperately needed by the people. There was some comfort in knowing that resources could be mobilised. Whether they would be adequate or not, one could not say but there were no other processes for funding than by following the appropriate procedures.

Mr Williams suggested that if there was already a system in place, there was no need for special measures.

Ms Mantashe agreed that the clause could be flagged.

The Chairperson flagged the clause until Thursday.

Mr Williams was not happy with ‘only’ in the paragraph as it was a limitation and he did not want to limit the Minister’s scope. There could be something else. The legislation should not limit the process.

The Chairperson asked Ms Gibson if she had said that there were two views, one limited to the factors and the other more open, but that she had wanted to limit the criteria.

Ms Gibson explained that there were two legal views on the matter, but the majority of legal opinions had suggested that the paragraph would be limiting as it stood. A court would probably find that it was limited because it implied limitation, although it did create some space for adding other factors. The Bill was trying to ensure that people in the group were not lost to the debt intervention category through no fault of their own, but as a result of other issues. That intention could be added.

Mr Mahlobo had said that it was very explicit and very specific. There was no need to add ‘only’.

Mr Williams addressed the addition of the stakeholders in the consultation process. He was in agreement that the target market had to be defended but the South African market should be consulted because it was also the Members’ job to defend South Africa and not allow for a banking collapse or something like that.
He added that the line that started “or” was unnecessary and the (i) was necessary (slide 7).

Adv van der Merwe stated that the principle was that before the Minister could make any adjustment, he had to table it in the National Assembly, and he had to have consulted, if that adjustment was within certain parameters. Outside of those specific parameters, there was a specified process. Treasury had made a second proposal.

The Chairperson stated that consultation with stakeholders and presenting a summary of submissions to Parliament were accepted. She read the paragraph: (i) after consultation with relevant stakeholders table the adjusted amount in the National Assembly, together with the rationale for the adjustment and a summary report of the consultation. The following paragraph beginning with ‘Or’ was an alternative proposal.

Mr Mahlobo stated that he was happy with (i) but rejected the alternative proposal.

Mr Williams agreed with (i) and did not want the proposed alternative.

Adv van der Merwe requested an opportunity to ensure that the paragraph was in the correct place and that the sequence of events was correctly stipulated.

Mr Mahlobo supported the advocate’s proposal.

Mr Kumkani commented that if the Committee was going to include “after consultation” in (i), then the Bill would be repeating exactly what was captured in Clause 29(b). “The Minister may once every 12 months, by notice in the Gazette and after having considered the following factors…” The Minister had to get the inputs before he could gazette. By issuing the government gazette, the Minister was starting the consultation process.

The Chairperson stated that Mr Kumkani was talking to page 18 line 55. She explained that there were two processes. Firstly, one published a gazette for the public to comment on proposals and then one gazetted any changes made.

Mr Williams did not think that the two clauses were a repeat. The first gazette contained the Minister’s proposed figures and then he would hold consultations with the stakeholders before he finalised his decision on the figures. The first clause did not take stakeholders into account.

The Chairperson noted that earlier Adv van der Merwe had suggested that the clause might need to be positioned elsewhere in the Bill.

Ms Gibson agreed with Mr Williams’ understanding of the process. Even when the Act was promulgated, it would be by gazette. The paragraph not only stipulated what point in time the Minister should consider the matter, but it also indicated the format in which stakeholders had to be informed.

Mr Mahlobo seconded Mr Williams. His explanation was straight to the point. Everyone would understand it when it was inserted in the appropriate place in the Bill.

The Chairperson expressed her concern about those who were not engaging in the deliberations. She hoped that they were active listeners. She pointed out that that Adv van der Merwe had earlier indicated that the paragraph had to be re-positioned. Did she have a suggestion as to where she would like to place it?

Adv van der Merwe stated that her main concern was that the paragraph used the words ‘before’ and ‘after’ in the same sentence. That had to be corrected. She agreed that it would read better if the activities were in the order of occurrence.

The Chairperson told the meeting that the Committee had agreed on consultation but Adv van der Merwe had wondered if it was in the wrong place in the Bill

Adv van der Merwe suggested that it could be included in Clause 29 on page 19, line 21. She could put in a (i), (ii), (iii) but she needed leeway to make it read well.

Ms Motshegare suggested that everyone was confusing the situation and that the meeting should allow Adv van der Merwe to make the Bill read correctly.

Mr Williams agreed. The advocate knew the intent of the Committee and it was up to her to ensure that the Bill could be understood.

The Chairperson noted that there was no objection. The Committee would allow Adv van der Merwe to present the paragraphs in the correct order and correctly written. She thanked Ms Gibson and Treasury for their engagement. It was good of Ms Gibson to offer alternatives, but the Committee would go with the suggested amendments to the wording already in the Bill.
           
Closing remarks
The Chairperson noted that the Committee had flagged various clauses and she asked that parties consider them. She asked Mr Cachalia to inform Mr Macpherson what had been flagged. The Committee could not go through it speedily.

Mr Cachalia asked if the process was going to go ahead the following day, despite Mr Macpherson’s plea. He was not sure how she would square that.

The Chairperson asked all parties to ensure that Committee Members attended in person or that the parties sent substitutes. She did not want to delay the Bill, but she could not just move ahead without Committee Members at the meeting. The IFP was to ensure that someone was in the Committee as Mr Esterhuizen was at the Energy meeting, where there was no Bill on the table. The EFF was also absent from the deliberations.

The programme for the following day was discussed and it was decided that it would be best to deal with the flagged items in the first hour followed by the clause-by-clause reading of the National Credit Amendment Bill on 28 August 2018. Voting on the Bill would probably take place on that day. The Committee would perhaps have to defer the steel and sugar meeting and the briefing on the Performer’s Bill.

Mr Radebe stated that parties had to look at the flagged clauses with which they were uncomfortable and be able to propose something.

The Chairperson appealed to the NCR and NCT to attend the meeting.

The meeting was adjourned.

 

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