National Gambling Amendment Bill: deliberations

Meeting report

Opening remarks

The Acting Chairperson informed the Members present that he was waiting for a quorum. As Members were coming from a sitting in the House, he would begin proceedings with the intention of holding a discussion until a full quorum was achieved. He explained that the President had been responding to questions and Members of Parliament had been expected to attend the House sitting. He noted that people had come a long way to attend the Committee meeting and others had prepared give input but also that Members had had a very long day and so he intended to keep the meeting sharply focused.

The Committee Secretary noted that there were sufficient Members to proceed with the meeting but there were too few Members to vote.

The Acting Chairperson observed that additional Members were arriving. He recalled that the previous week, stakeholders had provided input into the Bill. The Committee had to focus on the two substantive issues that had arisen from the public hearings. The first issue was the introduction of a regulator to replace the board in the National Gambling Board and it was a question of the powers of the Regulator. The second issue was around the governance challenges, i.e. the National Gambling Policy Council, which had experienced serious challenges with attendance and the quorum. Those were the only points to be discussed in respect of the Council. Members had to determine whether to regulate governance matters. Members were not to go all over the place.

The Acting Chairperson reminded the Committee that, on 30 October 2018, Mr A Williams (ANC), supported by the Committee, had requested that the parliamentary Legal Advisor prepare an opinion on how, in the light of the constitutional democracy and gambling being a concurrent function, the national government could exercise authority over the norms and standards. At the public hearings, some of the provincial authorities had explained that some of the issues were covered by cooperative law and were covered by the Intergovernmental Relations Act. The real question was about how the function could be improved within the current law and how to ensure compliance within the norms and standards.

The Acting Chairperson informed the Committee that the parliamentary legal advisor assigned to assist the Committee with the National Gambling Amendment Bill had resigned with immediate effect the day after the previous meeting. The Committee had asked Adv Frank Jenkins, from the Parliamentary Constitutional and Legal Services Office, to provide a legal opinion on the Bill. He had indicated that he could not attend the meeting that day owing to a prior commitment but would be able to provide the requested opinion on 12 November 2018. However, Adv Veounia Grootboom, Senior State Law Advisor, from the Office of the Chief State Law Advisor, would respond to the query of the Committee regarding concurrency. It would be an oral opinion.

The Acting Chairperson stated that the Committee would not do a clause-by-clause reading as requested by the team. He informed the DDG in the Department of Trade and Industry that she could only address the clauses dealing with the Registrar and the clauses dealing with the Council. After that there would be consequential amendments but the Committee would look at that at the next meeting on the National Gambling Amendment Bill.

The agenda comprised only those two issues in the National Gambling Amendment Bill and a short discussion on the Committee programme. Mr G Cachalia (DA) proposed the adoption of the minutes. Mr B Radebe (ANC) seconded the proposal.

The Acting Chairperson requested Adv Grootboom to respond to the questions of the Committee regarding concurrence and how to deal with norms and standards. The Committee had to remember that a final opinion would be received from Adv Jenkins.

Legal opinion on concurrence and norms and standards – Adv Grootboom

Adv Grootboom stated that the Office of the State Law Advisor, had gone through the redrafted Bill and the provisions that had been retained were constitutional. She contextualised the concurrent functions within the general framework of legislation. There were three pointers. Firstly, South Africa was a constitutional democracy and therefore had to adhere to the Rule of Law and everything had to adhere to the Constitution. Secondly, there was the issue of Cooperative Governance and section 40 of the Constitution required national, provincial and local governments to work together and to cooperate in legislation. Then the Constitution determined areas of concurrent function but it did not give parameters or say how to share those functions and responsibilities. Section 146 of the Constitution provided guidance by stating under which circumstances national government would prevail over provincial government.

The Committee’s question had been: how did one deal with norms and standards while adhering to concurrent functions and ensuring compliance with the norms and standards? Adv Grootboom explained that Section 146 said that if national legislation set norms and standards, national legislation would prevail over provincial legislation but it would be implemented from a policy perspective and there should be no interfering with provincial responsibilities. The intention was that it had to come from a mutual and cooperative perspective.

She added that the long title of the Bill stated that stricter regulation was required and that was why there would be a national norms and standards. If there was a legitimate government purpose, which should be stated in the legislation, then national government could set norms and standards. If a province did not comply, the person answerable was the national Minister.

Adv Grootboom stated that the National Gambling Regulator would be able to evaluate compliance and send out inspectors to ensure that norms and standards were being complied with. The inspectors would not interfere with the normal working of the provincial inspectors.

Clauses 14 and 15 in the Bill suggested that the issue with norms and standar­­ds would be dealt with moving forward.

The Acting Chairperson reminded the Committee that the actual opinion from parliamentary Legal Office would be with the Committee on 12 November 2018. On that day, he did not want a confirmation of what the Constitution or the Act relating to Cooperative Governance said. He wanted a clear delineation between what national and provincial did. In the legislation, there should be clear boundaries between national and provincial, and where collaboration was required.

Mr B Radebe (ANC) appreciated the response but added that the devil was in the detail and the Committee would await the written opinion.

The Acting Chairperson agreed. The Act had to delineate what was a national and what was a provincial function or there would be problems. In terms of governance, there always had to be indications of how governance would work. In governance terms, the National Gambling Policy Council was non-functional.

National Gambling Amendment Bill: Deliberations

The Acting Chairperson stated that the Committee would address the Bill. Members had to be very focused as he did not want to cut them off. He would try to guide them. One of the issues was the change of the name from the National Gambling Board (NGB) to the National Gambling Regulator (NGR) and if there was a change from NGB to NGR, what did it mean in terms of the related clauses? There would also be consequential amendments but they could only be concluded after the Committee had received the legal opinion.

The Acting Chairperson added that the other issue raised was that of the Chief Executive Officer (CEO). Initially, there had been the question of two deputies but the Department of Trade and Industry (DTI) had confined itself to only one deputy. The question then raised related to the checks and balances. What would the consequences be of assigning too much authority to one person? What would be the decision-making process? What was the recourse in the event of something going wrong? The recent history of the country showed an abuse of trust that was normally given to individuals, especially where there was a lot of interest, such as in the gambling sector. It was easy to misstep and if one mis-stepped, what could be done?

 

Lastly, the Acting Chairperson noted the question of what tools the Regulator needed to do his work. One of the tools was the electronic monitoring system and the question asked was why the system currently in place, the National Electronic Monitoring System, could not be used. Those were technical issues.

 

Mr Macpherson had raised the concern that the Amendments were only cosmetic but there were some fundamental issues that had to be addressed in the Amendment Bill. He asked Members to be focused and to the point. The DDG from DTI would present the issues. The Committee should note the technical changes where the word ‘Board’ was replaced by ‘Regulator’.

 

Presentation on the National Gambling Amendment Bill by DTI

Dr Evelyn Masotja, DDG: Consumer and Corporate Regulation Division, DTI, said that she was accompanied by colleagues from the DTI and the National Gambling Board. She would move through the issues as quickly as possible in a focussed way.

The public submissions had raised certain technical legal issues which would be addressed by the parliamentary Legal Advisor.

Clause 38 Replacement of section 64 in the principal Act

The establishment of the Regulator was a major Amendment to the Act. The Regulator would be a public entity and a juristic person with jurisdiction throughout the country. It would align with the Public Finance Management Act and it would be governed by a CEO. That was the crux of the Bill. There was an additional proposal made that that section should also talk to the independence and the impartiality of the institution. The public had suggested that that area should be strengthened. 

Clause 39 Amendment of section 65 in the Principal Act

The clause added additional functions of the Regulator. One of the areas which the Regulator would look into was the socio-economic issues of gambling. Some of the submissions had spoken to the role of the Regulator concerning problem gambling. That was in addition to the National Responsible Gambling Programme. The country was experiencing so many problems with gambling that there was a need for both mechanisms to address problem gambling.

The Acting Chairperson informed Members that the main issues relating to the changing of the Board into a Regulator was in sections 64 and 65. He asked the Committee for their views on the matter of the Regulator.

Discussion on Regulator

Mr D Macpherson (DA) did not, in principle, have a problem with a Regulator, but he did have a problem if the Regulator could infringe on the exclusive mandates of the provinces. (g) and (h) seemed problematic in that the Regulator could: “(g): advise the Council, in consultation with the Minister, on the maximum number of any kind of licenses relating to casinos, racing, gambling and wagering that may be awarded in the Republic or in any particular province; and (h) advise the Council, in consultation with the Minister, on matters of national policy relating to casinos, racing, gambling and wagering and on the determination of national norms and standards regarding any matter in terms of this Act that should apply generally throughout the Republic;”

Licensing and determining licensing in any form of gambling was a provincial competency. He wondered if that was not taking away the right of the province to determine licensing because the next step would be that the Minister would start determining how many licences a province might issue for specific modes of gambling. In terms of casinos, there were a maximum number of casino licenses nationally and that was divided up per province. The provinces then issued the licences. If the Amendment just said gambling, that would apply to any mode of gambling and he wondered how that would relate to the provinces’ rights to issue licences.

Mr Macpherson was also interested in how the Regulator would conduct its own education campaign as the National Lottery Commission had a campaign as well as the National Responsible Gambling Programme. There might then be an overlapping of responsibilities.

Mr Macpherson referred to Sections 76A which dealt with the powers of the national inspectorate. That seemed to duplicate the functions of inspection and enforcement. One might have the situation where a national inspector went into a province to inspect gambling without the knowledge or participation of the provincial boards. He was concerned that some of the powers and functions of the Regulator might be problematic in how they spoke to the exclusive mandate of the provinces.

Mr Radebe noted that the Committee was not taking decisions but reflecting on issues. What the Committee had to look at was the issue of the electronic monitoring. What would happen if the Regulator found a misdemeanour in a casino and he informed the provincial board but it did not respond? What then was the procedure to be followed? The cooperative type of governance should be implemented but if there was no action, then the Regulator had to respond.

The Acting Chairperson asked the DDG to respond to the issues raised.

Response by DDG, DTI, to issues relating to the Regulator

The DDG responded to Mr Macpherson on the issue of interference in provincial gambling boards by the National Regulator. The previous week, the NGB Administrator had shown that the number of licences and number of gambling activities had grown because there was a focus on revenue. There was a strong need for national monitoring. A good example was that of the bingo terminals that were proliferating. The numbers were astronomical. No one was asking about the impact of gambling on the lives of people participating in those activities and the socio-economic problems created by gambling.

Dr Masotja thought that an intergovernmental framework with national and provincial, based on national standards, should ensure that the numbers did not become a problem. In fact, already, there was a problem. It was not about interference; it was about governance addressing the balance between economics and the social imperatives. There was a need for control and how much gambling should be allowed in the country. Negotiations should take place in the intergovernmental framework. There was a need for control but DTI did not see the Regulator taking over provincial responsibilities.

When it came to the Responsible Gambling Programme, she indicated that DTI believed the NGR had a role to play in dealing with problem gambling and to come up with different programmes. Current initiatives were insufficient and the NGR would come into the space and support those who were participating in the gambling programmes, while also performing its oversight role.

In terms of inspections, the Committee had heard, during the previous meeting on the Bill that the current NGB could only investigate on invitation. That had to be changed to combat the existing levels of illegal gambling in the country. DTI did not see the role as interference per se. There was a need for the Regulator should be able to go to any province, if need be, and work together with the province, to ensure compliance with gambling regulations.

The previous week, the DDG had given the Committee examples of how, when a punter could not get fairness, he or she went to the NGB but the NGB did not have any powers to support such punters. Everyone spoke about illegal internet cafes and different forms of gambling that could not be controlled. Why not increase capacity in the country by having a Regulator? The Regulator had to be empowered when it came to inspection and enforcement. There was a serious gap and DTI thought that the Regulator should play a role in filling the gap.

Regarding the electronic monitoring system that Mr Radebe had raised, the DDG agreed that there was a need to empower the Regulator to be able to intervene if any challenges were picked up in the provinces. There had to be oversight. It was necessary.

Dr Masotja asked the Acting Chairperson if the NGB Administrator could also provide input.

The Acting Chairperson said that everyone needed to be focused. Mr Macpherson had raised an issue of principle. He had an issue regarding the determination of the number of licences that could be issued. Provinces issued licences, some of which should be issued by national. The most important issue was around concurrence. He referred to Clause 27(h) and 27(m) which stated that the NGR could:

“(h) advise the Council, in consultation with the Minister, on the maximum number of any kind of licenses relating to casinos, racing, gambling and wagering that may be awarded in the Republic or in any particular province;

(m) provide a broad-based public education programme about the risks and socio-economic impacts of gambling;”.

The Administrator could respond to those paragraphs because they were the paragraphs that Mr Macpherson had referred to. Mr Radebe had said that the NGR needed a tool or an electronic monitoring system but to what extent did the NGR have a monitoring function and how much of the monitoring was a provincial function? The Committee needed to understand more of that tension of who did what and to what extent. That inherent tension had to be clarified.

Ms Caroline Kongwa, Administrator, NGB, referred to the powers of the province in the current National Gambling Act. Mr Macpherson had asked about the Minister’s powers to determine the maximum number of licences and whether it was an encroachment on provincial powers. In section 30, the powers of the provincial licensing authority were determined. It had exclusive jurisdiction within its province pertaining to licences to “investigate and consider applications for, and issue licences”; “to conduct inspections to ensure compliance” with legislation and licences; “to impose on licensees administrative sanctions”, and to “issue offence notices in respect of offences”. The Act clearly gave exclusive power to the Minister to set the maximum number of licences. The maximum number of licences was intended to cap the figure. It did not determine what provinces should give licences to, year on year. Section 45 dealt with socio-economic aspects. The Minister had the power to adjust the number of licences in response to a number of criteria as per section 45:

“(i)address  the  incidence  and  social  consequences  of  compulsive  and  addictive gambling;      

(ii) promote black economic empowerment; or       

(iii) promote‐(aa) new entrants to the gambling industry; (bb)  job creation within the gambling industry;      (cc)diversity of ownership within the gambling industry;  (dd) efficiency of operation of the gambling industry; or (ee)  competition within the gambling industry. “

 

That section had been uncontested. It had not been a matter of contention. Regarding the Limited Pay-Out Machines (LPMs), they had also not been a matter of contention. Provinces conducted socio-economic impact studies before they decided to roll-out machines or further licences. When they reached the threshold determined by the Minister, the Minister had to conduct social impact studies and consider the dynamics of each province and what had been rolled out in each province.

Ms Kongwa said that it was the view of the NGB that there was no challenge there.

The Acting Chairperson referred Members to the National Gambling Act and the Amendment Bill. There was no real change but there might be implementation challenges. In principle, Members were not opposed to NGR as there was no real change. He was noting that for record purposes. The delineation between what provinces ought to do and what the NGR had to do was clear except that, from time to time, norms and standards might have to be developed. The question of the socio-economic issues had been dealt with and licences could not just be issued without considering the socio-economic conditions. Decisions were not just commercial decisions, but also considered the impact on the community.

The Acting Chairperson responded to Mr Macpherson’s concern about civic education by saying that the only concern was implementation. There had been no change. There had been no movement except the change of nomenclature from Board to Regulator.

Presentation on Governance: NGR Committee

Dr Masotja referred to the appointment and functions of the CEO and the Deputy CEO in Clause 28, sections 65A and 65B. Section 65C dealt with the National Gambling Regulator Committee. The committee had been recommended to address the issue of having a CEO.  The Minister would establish the committee from time-to-time. It had prescribed functions and would support the Regulator with governance and decision-making to ensure that the independence of the CEO was addressed.

 

The DTI had undertaken an entity rationalisation project that recommended that institutions with Regulators did not necessarily need a Board in order for them to be effective, such as the National Credit Regulator. Those entities were functioning effectively with a CEO and in consultation with the Minister.

 

The Acting Chairperson asked Members to reflect on the appointment of the Regulator and the committee to be appointed from time to time to assist the CEO.

Discussion

Mr Radebe noted that the committee might provide checks and balances in terms of the CEO. It was also important for the committee to would work with the CEO and the Minister on particular issues. He approved of the appointment being from time to time because the committee would then assist with a particular intervention. It was something worth considering going forward.

The Acting Chairperson added that the CEO was about governance rationalisation. It was not unique and the DTI had replaced a board with a Regulator before.

Ms P Mantashe (ANC) asked the DDG to explain the role played by such a committee in other institutions. When would the committee be called in? Was the independent CEO going to work alone and only where he felt he needed a Committee for certain decisions, would he call the Committee? Basically, he was working on his own. She was not comfortable with that situation.

The Acting Chairperson alerted the Committee to the fact that in section 65B, the CEO had only five functions but he was subject to the Public Finance Management Act (PFMA) and reported to the Minister. The CEO was an accounting officer in terms of the PFMA. The role of an accounting officer was clearly defined. He asked DTI for a schematic diagram to show how the CEO, committee and Minister related to each other.  Section 65C defined the committee in terms of composition.

 

Ms Theko understood the functions of the committee but asked if it was a permanent committee or an ad hoc committee and was it newly appointed each time that it was called or was it fulltime with terms for which it was appointed.

Mr Macpherson asked for an example of what the committee would do. What would it be required to consider? Would it be operational, would it decide the colour of the new curtains or was it a policy committee? Establishing committees like that was creating a parallel structure to the Regulator. That was a concern.

Mr Macpherson noted the requirements of committee members: impartial, fit and proper. However, many people in various functions of government had proven to be not fit or proper. He cautioned against a political person appointing people on the basis of being fit and proper as that was subjective. He said that Regulator should be appointing people who would complement the work for a specific reason. He reminded the Committee of the workstreams in SASSA that were parallel structures but did not achieve outcomes. The NGR committee was very opaque and fuzzy. He was not sure about the intention of the committee.

The Acting Chairperson asked DTI to respond but noted that if a law was not clear, it was reduced to any other business. It became problematic. The CEO had a clearly defined role and reported to the Minister. Could the Minister not appoint a specialist consultant? DTI had to be specific as to what the committee had to do. The Regulator could not make decisions about the committee. There did not seem any rationale for the committee. It seemed that it was creating a structure and it would become a quasi-board.

 

Dr Masotja pointed out that the NGB had had a Board before. There had been an outcry in the public submissions that a CEO was making decisions that might impact on provinces independently. It was for that reason there was a committee.

 

The Acting Chairperson stated that the functions of the CEO were clearly defined. However, DTI could not give a concrete example of what the committee would do. If DTI wanted the committee to remain, DTI had to present the exact functions of the committee. It could not be open-ended. The Portfolio Committee would not give a blank cheque. Did the DDG have any idea of the functions of the committee?

The DDG stated that she had been trying to give a rationale. She asked if she could come back to the issue on 12 November 2018.

The Acting Chairperson that there was no objection to the committee at that stage but DTI had to address the vagueness of what they would be doing. The Portfolio Committee wanted to know the exact scope. Dr Masotja could respond on 12 November 2018. The issue was closed.

Mr S Mbuyane (ANC) asked about the committee and whether it was part-time or fulltime. If it was part-time, the CEO would be on his own.

The Acting Chairperson stated that everything related to the CEO had been approved, but the Portfolio Committee was awaiting clarity on the NGR Committee and the report on 12 November would answer Mr Mbuyane’s question.

Discussion of Governance: the National Gambling Policy Council Quorum

The Acting Chairperson referred the Committee to Clause 24, section 63A:

“Despite section (63)(6), if a motion has been tabled at a meeting of the Council at which less than five voting members contemplated in section 61 are present, the motion may be passed at the next meeting of the Council, if it is supported by—

(a) the Minister; and

(b) the majority of the other voting members of the Council present at that meeting”

The Acting Chairperson noted that the section was self-explanatory. He asked for the views of the Committee.

Mr Macpherson asked whether the policy council was actually relevant and whether there was a need for it. He argued that it might not be relevant and should be moved to more of a MINMEC type of discussion where the Minister and MECs met quarterly. If the idea was to continue with the policy council, to keep the status quo was a challenge because it was a mechanism to render the body non-quorate. Should a decision be made by two or three people the second time around? He did not think that would be good for anyone.

Mr Macpherson asked what the desired outcomes of the policy council were. Could those outcomes be achieved via a different forum? If not, then the Committee would have to look at how to make the policy council work.

The Acting Chairperson said that there was no question about the quorum. Five out of nine provinces was a majority. It was about the nomenclature. It was called a policy council but it was actually a MINMEC of the Minister of Trade and Industry and the MECs of Economic Development. The principal Act showed the functions of the council. It was, in reality, about cooperative governance and inter-governmental relations. He referred to sections 61 and 62. Section 62 (a) to (f) was about policy coherence plus political oversight.

Ms Mantashe stated that the whip of the majority party had said that the Members of that party would look into things. They could not take discussions as they had not had a meeting. She had the capacity to contradict the speaker but she would keep quiet.

Mr Radebe said that the issues raised by Mr Macpherson were valid but there were specific functions and there were issues about cooperative governance. It would be premature to do away with the council. Members wanted the DDG to respond.

The DDG said that the Acting Chairperson had outlined why the council was needed and she agreed with his explanation.

The Acting Chairperson stated that the Minister of Trade and Industry was working with MECs for Economic Development or MECs for Small Business. It was very much like a MINMEC. Changing the nomenclature might put the Committee on thin ice.

Ms Mantashe asked if an ordinary person would understand that it was a MINMEC if it was not explained as such. Legislation should be understood by the person on the street.

The Acting Chairperson suggested that that could be addressed in a definition.

Closing Remarks

The Acting Chairperson summarised the way forward. The Committee would receive a legal opinion on 12 November 2018 dealing with concurrence between national and provinces regarding norms and standards.

The roles and functions of the provinces and national were clearly defined. The issue of the Committee was unclear. What did DTI have in mind? The question raised by Mr Mbuyane had to be addressed: was it a full-time, part-time or ad hoc Committee? The issues of the national monitoring tool had been raised. How far did the monitoring go and how could there be optimisation by piggy backing on operators’ systems? The quorum was not an issue, nor were the technical amendments. Once those issues had been resolved, the Committee could go to the clause-by-clause reading.

 

The Acting Chairperson stated that there were still major issues in the gambling sector and DTI had to say how those issues would be dealt with. The DA had raised the issue sharply and the ANC had some concerns. However, the Committee would consider the current Bill to be phase one.

Committee programme

The Acting Chairperson stated that the following day there would be a three-line whip in the House so the Committee could not meet in the afternoon. The Committee would deal with the Copyright Amendment Bill. The following afternoon, on Thursday, the Committee would meet to deal with the Performer’s Protection Amendment Bill and would continue with that Bill on the Friday morning.

Ms Theko stated that she would apologise to the Labour Portfolio Committee on Wednesday and attend the Trade and Industry Portfolio Committee meeting on Wednesday but Friday was a challenge.

Mr Macpherson informed the Acting Chairperson that the Committee had been very accommodating of him and so it was important that he accommodated the Committee. He offered his apologies for the following day but Friday was a challenge.

The Acting Chairperson stated that the team should circulate the Copyright Amendment Bill so that the Committee could go through the Bill clause by clause and then deal with the legal opinion on 13 November 2018. He agreed that the Friday meeting should be cancelled. He asked the whip for his opinion.

Mr Radebe stated it was illegal in the Portfolio Committee for Trade and Industry to skip Friday’s. But the issues being raised were valid. The President had told Members in the ANC caucus that morning that they had to do something in relation to the elections every weekend. He added that the Committee was waiting for legal opinions so it could not really move forward.

The Acting Chairperson stated that the Committee could conclude the Performer’s Protection Amendment Bill on Thursday that week if the documents were properly packaged. On Friday Members would be able to do the other work that they had to do.

The meeting was adjourned.