Performers’ Protection Amendment Bill & National Gambling Amendment Bill: consideration

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Trade, Industry and Competition

14 November 2018
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Portfolio Committee on Trade and Industry addressed the final issues with the Performer’s Protection Amendment Bill before embarking on a reading for an in-principle agreement.

The technological protection measures had been inserted in the Bill but the definitions had not been inserted. Those definitions, taken from the Copyright Amendment Bill, had been inserted. In addition, because the penalties for reporting requirements were considered very harsh by the public, the Committee had added a paragraph giving the courts the right to take circumstances into consideration and to impose a lesser sentence where the circumstances warranted a lesser sentence, as had been done in the Copyright Bill.

Following a clause-by-clause reading, the Performer’s Protection Amendment Bill was approved in principle by the Committee.

The Department of Trade and Industry briefed the Committee on amendments to the National Gambling Amendment Bill following the consideration of public submissions on the Bill. One of the challenges was that gambling was a concurrent function between national government and provincial governments in which it was the responsibility of the provincial licencing authorities to issue licences, but cooperation between the two levels of government was a matter of concern.

A key feature of the Bill was the establishment of a National Gambling Regulator to replace the dysfunctional and disestablished National Gambling Board. A major concern in the public submissions had been that the board had been replaced by a single Chief Executive Officer. Although there were entities under the ambit of the Department that were running well with only a Chief Executive Officer, the Department had included in the Bill, a committee of five members that would be appointed for a three-year period but would meet on an ad hoc basis to advise and support the Chief Executive Officer. The Portfolio Committee was not happy with the structure and with the functions that it was to perform.

The Parliamentary Legal Advisor agreed with Committee Members that the committee was a quasi-board. The State Law Advisor indicated that, constitutionally, it was advisable to create a structure to assist the Chief Executive Officer. The Committee noted that the National Credit Regulator, who had far more weighty responsibilities, operated successfully without a board or a committee. In addition, the Administrator who was currently managing the National Gambling Board had done so quite successfully without a supporting structure. As the Department was not opposed to removing the committee from the legislation, the Portfolio Committee instructed the Department to remove the committee from the Bill.

The Legal Advisor explained that gambling fell squarely under Schedule 4 of the Constitution. Looking at potential conflicts, one had to ensure that the province had the competency to make the legislation. If a province was not competent to make the legislation, there was no conflict because the legislation would be null and void. The Constitutional Court had stated that a test of conflict was whether one could obey both laws at the same time. As far as determining norms and standards, monitoring and having a national inspectorate, there was no conflict as one could adhere to both provincial and national legislation in those instances. The Department added that the inspectorate would conduct joint inspections with provincial inspectors, which was the same principle used in the Liquor Act.

The National Gambling Board pointed out a particular failing of gambling equipment test laboratories that tested according to technical standards, not the legal standards and provincial licensing authorities issued licences on the basis of the technical reports that did not necessarily adherence to the law. The matter was particularly prevalent in relation to electronic bingo terminals which had no legal testing standards. The Committee agreed that such issues would be addressed in a second Gambling Amendment Bill that would be the work of the Sixth Parliament.

The Chairperson requested the Department to adjust the Bill in respect of the formulation of the committee and to use the National Credit Regulator model in creating a National Gambling Regulator.

Meeting report

Opening remarks
The Chairperson welcomed everyone and informed Members of the Committee that twice guests or stakeholders, with whom the Committee had engaged, had complained that the Committee did not focus or apply its mind when presenters were responding to Members’ questions. She appealed to Members not to fiddle with keyboards and to show the courtesy of listening to those who were responding to their questions.

The adoption of the agenda was proposed by Ms L Theko (ANC) and seconded by Mr A Williams (ANC).

The Chairperson stated that she would be dealing with minutes as and when she could over the next couple of meetings.

Mr J Esterhuizen (IFP) apologised for his absence the previous day.

The Chairperson stated that she had been briefed on the progress with the Performer’s Protection Amendment Bill and that there was just one issue to be dealt with and then the Committee could move on to an in-principle agreement on the Bill before sending it to Creda Printers.

Consideration of the Performer’s Protection Amendment Bill
Dr Evelyn Masotja, DDG: Consumer and Corporate Regulation Division, DTI, stated that she would highlight a few items in the Bill that had been changed following the public submissions. The previous week, some proposals had been made and there was an issue with the technological protection measures (TPMs) that had been inserted in the Bill but the definitions had not been inserted. Those definitions had been inserted.

Clause 1 Section 1 Definitions
Section1(e) (e)
by the insertion after ‘‘Copyright Act’’ of the following definition: ‘‘ ‘copyright management information’ has the meaning assigned to it in the Copyright Act;’’;

Section 1((l) …‘technologically protected work’ has the meaning assigned to it in the Copyright Act;
 ‘technological protection measure’ has the meaning assigned to it in the Copyright Act; ‘technological protection measure circumvention device’ has the meaning assigned to it in the Copyright Act;’’;

Dr Masotja explained that the definitions linked the use of the terms in the Performer’s Protection Amendment Bill to the Copyright Amendment Bill.

Clause 5 Section 4 
Dr Masotja explained that the penalties for reporting requirements were considered very harsh by the public.  The Committee had added the right of the courts to take circumstances into consideration and to impose lesser sentences where the circumstances warranted a lesser sentence, as had been done in the Copyright Bill.
Section 4(c)(1B)(d) If the court is satisfied that substantial and compelling circumstances exist, which justify the imposition of a lesser sentence than the minimum sentence prescribed in paragraph (b), it shall enter those circumstances on the record of the proceedings and must thereupon impose such lesser sentence.’’. 

Clause 4 Section 5
Section 5(5) “8” had been replaced by “8A” for the sake of consistency as “8A” referred to audiovisual works.

The Chairperson asked whether there were any other amendments that the Committee had requested. As there were none, the three proposed Amendments to the Bill were accepted. The Chairperson indicated that the Committee would go through the Bill page-by-page for an in-principle agreement.

Performer’s Protection Amendment Bill in-principle agreement
The Committee agreed to the long title and Clauses 1 to 9 in principle.

Clause 10
Line 21 Change of date: “… as added by the Performer’s Protection Amendment Act, 2019.”
The Committee agreed to the long title in principle, with the amendment.

Clause 11
Change of the year 2016 to 2019: “This Act is called the Performer’s Protection Amendment Act, 2019, …”
The Committee agreed to the short title in principle, with the amendment.

The Chairperson asked the Committee to check that the Memorandum reflected, and was in line with, the Bill. She went through the Memorandum page-by-page.

The Chairperson declared that the Bill was ready to be sent to Creda Printing. She asked how it was to be sent as she did not want errors or delays.

The Committee Secretary explained that he would send an electronic copy and receive a proof copy from Creda which the team would check to ensure that the amendments were correct. He hoped to receive the Creda copy of the Bill that evening so that he could send it to Members in time for them to present the Bill to their caucuses the following day.

The Chairperson noted that Creda received an electronic copy of the Bill so there was no re-typing involved. There was no excuse for the mistakes that had come into Bills lately. She requested the Secretary to speak to the Secretary of Parliament about the matter as she did not want a delay. She asked that the Secretary ensure that there were no errors and that it be received from Creda Printing timeously.

The Secretary had distributed the Report on the Copyright Bill to Members and would distribute a Report for the Performer’s Protection Amendment Bill that day. He requested that Members submit comments by 14:00 on Thursday 15 November 2018 so that the changes could be made before the Committee meeting that evening.

Consideration of the Committee Minutes
Minutes of 31 October 2018: Amendments: 5.1.4 – removal of the word ‘Agreed’. The adoption of the minutes was proposed by Mr Williams and seconded by Mr S Mbuyane (ANC). The Chairperson requested that the Secretary note against the apology exactly where the person had been. On occasion, apologies were not accepted.

Minutes of 6 November 2018: the adoption of the minutes, without amendments, was proposed by Mr B Radebe (ANC) and seconded by Mr Mbuyane.

Minutes of 7 November 2018: the adoption of the minutes, without amendments, was proposed by Ms Theko and seconded by Mr Williams.

Mr Macpherson explained that neither of the DA Members were at the meeting of 8 November 2018 because there had been a sitting in the House and permission had been given to the Committee without consulting the Opposition Chief Whips. The DA Chief Whip had, therefore, insisted that the Members attend the House sitting.

Committee Business
The Chairperson explained that the Committee programme would have to be adjusted as a lot of work had to be done. She was studying the programme with a view to not sitting on a Friday. She was also trying to avoid meeting when the House was sitting. The following week was the visit of the German Federal Republic presidential delegation. The Committee had to deal with the Report of the High Level Panel as it related to the DTI mandate. The legacy review would take place on Wednesday. The Committee would have to work late either on Wednesday or on Thursday.

Mr Radebe asked that the programme be held in abeyance until the Secretary returned.

The Chairperson noted that Adv Grootboom from the Office of the Chief State Law Advisor was in attendance but noted that she was still awaiting a parliamentary legal advisor. At that point, Adv Frank Jenkins arrived and the Chairperson welcomed the Senior Legal Advisor from the Constitution and Legal Services Office (CLSO), who had been attending another Committee meeting.

The Chairperson requested the Department of Industry to make a presentation on the National Gambling Amendment Bill.

Consideration of the National Gambling Amendment Bill
Dr Masotja stated that some amendments had been made to improve the clarity of the Bill. There were also amendments in response to the public input. The background to the Bill was that gambling was a concurrent function between national government and provincial governments. Although South Africa was not a federal state, in certain areas where provinces had exclusive powers, things were different across the provinces. In some legislation, such as the Gambling legislation, SA had favoured a quasi-federal approach. That approach had not always worked, as seen in the dysfunction of the National Gambling Board (NGB). The legislation currently lacked the necessary features to allow for a National Gambling Regulation (NGR).

There were risks to having a CEO without a board but DTI had entities that were running well with only a CEO. A committee of five members had been suggested for the NGR, but it was an uncommon format of committee. The B-BBEE legislation permitted specialist committees so it was not a unique concept. The committee was not intended to replace the board and would not be involved in governance but only provide guidance in respect of technical issues.

To address concerns that were raised during the public hearings, it was important that the proposed section 65C be improved to specify the purposes of the committee. It had to provide for the period of appointment and remuneration that had to be determined by Minister of Trade and Industry in consultation with the Minister of Finance. The decisions of the Committee could only be reviewed by the Minister where the CEO was involved in the decision-making.

Key functions of the committee would be to:
-review unlawful winnings reports and determine whether to forfeit or refund punter
-review limited pay-out machines (LPMs) Regulation 3(2) Applications Report and to issue recommendations to PLAs
-review of the section 65 Authoritative Advisory Report and issue recommendations to the NGR via the Minister and the National Gambling Policy Council (NGPC)
-conduct studies on the outlook of the gambling industry regulatory framework to inform policy and/ legislative developments

The role of the NGR inspectorate was clarified: The NGR inspectorate would conduct joint inspections with provincial inspectors. The inspectorate was based on the same principle as that used in the Liquor Act.

Alternate Dispute Resolution
Ms Caroline Kongwa, Administrator, National Gambling Board, spoke on the Alternate Dispute Resolution. The proposals needed to be ironed out.

The National Gambling Policy Council (NGPC) was intended to resolve disagreements between the NGB and the Provincial Licensing Authorities (PLAs). However, the NGPC had experienced challenges in functioning due to non-attendance by provinces. That was being addressed through the amendment to the quorum of the NGPC in the Bill. There was no mechanism to deal with the issues of NGR versus licensees. The formation of an independent committee would offer a mechanism for dealing with such disputes as well as unlawful winnings. It would be a value-add to have a dispute body that reported to the CEO.

Ms Kongwa pointed out a particular failing of gambling equipment test laboratories that tested according to technical standards but not the legal standards. PLAs issued licences on the basis of technical reports but that meant that there was not necessarily adherence to the law. The matter was particularly prevalent in relation to electronic bingo terminals which had no legal testing standards.

The entire value chain had to be strengthened and constantly measured by the national gambling regulator, as the effective regulation of gambling revolves around one key driver: punter protection.

The Chairperson thanked DTI for the briefing.

Ms Theko was concerned about the issue of the ad hoc committee which would be appointed for three years. As she understood an ad hoc committee, it was appointed to deal only with a specific item and when that matter was complete, it ceased to exit. So was it an advisory committee to advise the CEO? She was looking for a definition of the committee. She wanted a committee where the members would have to meet strict requirements before being appointed. There was confusion as to what type of board it was and she wanted that confusion cleared up.

Mr D Macpherson (DA) was worried about where the Bill was going. He asked Members to consider whether that was the best way to deal with something as important as gambling legislation. The Committee was dealing with it in a rushed and piecemeal manner. That was not a good way to deal with legislation. He was taken aback by the DDG’s presentation which had made it messier. Her explanation of the ad hoc committee sounded like a board. If it looked and sounded like a board, why not keep or reinstate the board?

Mr Macpherson stated that one of the issues highlighted in the public hearings had been the non-relationship between the NGB and National Lottery Commission (NLC). That had either not been addressed or DTI did not believe it was a gap, so there had been no attempt to address that problem. DTI was trying to paint a picture of the committee that the Portfolio Committee had spoken against quite strongly. The DTI had tried to re-package the same committee and put a bow on it. It was problematic.

Mr Macpherson had spoken to the provinces and could tell DTI that the Bill would be blocked in the National Council of Provinces (NCOP), and they had every right to do so, because it was intruding on provincial mandates. The Committee recognised that there were concerns and challenges in the NGB and it had been on the table for a number of years but it was problematic and clumsy to deal with it in the way that it had been presented and would lead to more problems. The next administration would spend an extraordinarily long time cleaning up. He wanted the Portfolio Committee to meet without DTI and to discuss the matter. The Administrator could continue in her position as she was doing extremely well and he congratulated her on her work in the NGB.

Mr Mbuyane asked what model DTI had used to benchmark the committee as DTI had said that it was not a common model. If the proposal was an appointment for three years, why was it called an ad hoc committee? How much reference had been made to the National Credit Regulator (NCR) model? How far was the proposal regarding the coordination between the national and provincial representatives on the National Gambling Policy Council to deal with ongoing court cases? Section 146 schedule 4 of the Constitution provided for concurrency. Had DTI consulted the CLSO? The conflict between national and provincial issues meant that national and local governments were not working concurrently and the matter needed to be addressed.

Mr Radebe was concerned about the committee. The Portfolio Committee had had a serious concern the previous week as it seemed to be a quasi-board and was not well-defined. He agreed with the national electronic monitoring system and the Regulator but the Minister could appoint relevant consultants or organisations to give support on particular issues. So why appoint the Committee which was like a quasi-board?

The Chairperson acknowledged that she had not been there the previous week but her concern was that DTI had said that the ad hoc committee was not an attempt to form another board as it would not be involved in governance, but only in technical issues. The difference between a board and a committee was not whether it was involved in governance only. It was not a logical argument. She asked Adv Jenkins to confirm her understanding of the difference between a committee and a board. There were boards that dealt with technical issues only. DTI could comment on that point. The ad hoc nature was also a concern. If it could sit for up to three years, was it ad hoc or a permanent committee? She stood to be corrected by the advocate but it did sound like the establishment of a board. Why was it not a board?

The Chairperson turned her attention to a technicality: the laboratory tests. The laboratories were not required to test against the legislation. She had thought that they would have to do so.  The test reports showed a visible failure in the fact that electronic bingo terminals (EBTs) had no standards so the licences did not allow them to be put in casinos, but they could be put in other venues. She did not think that was right but she required a technical explanation. Not all of the Portfolio Committee Members were punters. She asked Adv Jenkins to respond to the committee/board issues.

Dr Masotja stated that DTI saw the committee as an advisory committee and not a board. ‘Ad hoc’ meant that the Committee would meet from time to time over the three years of its appointment. The advisory function would occur when there was a need to call the committee.  She had noted Mr Macpherson’s concerns about the piecemeal approach to the legislation but the approach had been a Portfolio Committee decision.

She added that the concept of the committee had come about while discussing the Bill with the State Law Advisor who had proposed the committee to address the gap once the board had been disestablished. The intention was not to replace the board, but to support the CEO so that he did not make all decisions himself.
As far as the relationship between the NGB and the NLC was concerned, the public submissions had indicated that it was a longer term process and had its own huge policy implications.

Dr Masotja told Mr Mbuyane that it had not been a DTI decision to bring in the committee, so there had been no benchmark but DTI had looked at other committees. As far as the quorum was concerned, gambling legislation needed concurrency and the National Gambling Policy Council could work well. It was being addressed. The advocate could talk to that point.

Dr Masotja noted Mr Radebe’s concerns about the committee and hoped that the functions would clarify why the committee was justifiable. The NGB had said that it would welcome support. She agreed that the Minister could appoint consultants. Ultimately, the Portfolio Committee should take the decision regarding the proposed committee. She noted that the Chairperson’s point and agreed that there had been specialised boards with specific functions.  She added that the intention of the term ‘ad hoc’ was to indicate that the Committee would not have a fixed meeting schedule but would meet as needed over a three-year period.

Ms Kongwa explained that electronic bingo had not been provided for in the National Gambling Act (NGA). The current Bill only looked at governance issues and DTI wanted to come back to technical issues in a later Bill with more substantive issues. Currently, under the National Standards Act, the gambling machines had to be checked against certain standards. The South African Bureau of Standards (SABS) had formed a working committee with NGB, Provincial Licencing Authorities and manufacturers to develop standards against which gambling machines and devices would be tested. Those standards had ten parts. There was no specific test for bingo machines. There was a test for casino machines, one for LPMs, etc. Electronic gaming terminals, including bingo terminals, would be tested against the casino standards. SABS produced a technical report, which ensured compliance but did not say that it could only be placed on a casino floor, saying that it was not their responsibility to do so.

Ms Kongwa explained that the technical report went to the National Regulator for Compulsory Specifications (NRCS) who checked against the technical specifications and sent the reports to the provincial licensing authorities (PLAs) whose decision it was to licence. The licence stated that it could be placed in a bingo establishment. That was where it was going wrong. PLAs could licence as long as the machines met the standard, regardless of the legislative intentions. DTI had included amendments to address the issue in the first draft of the Bill. If NGB did not regulate the gaps in the value chain, that kind of thing was likely to occur in various ways.

The Chairperson asked Mr Mbuyane to repeat his question on section 146.

Mr Mbuyane said that section 146 schedule 4 of the Constitution provided for functional areas of concurrence between national government and provincial governments. What was DTI doing to assist with resolving conflicts?

Dr Masotja responded that DTI was aware of the issues of concurrency and it was trying to address that issue with the local gambling board processes. However, Adv Jenkins had been asked to look into the issue.

The Chairperson noted that others wished to speak but she asked Adv Jenkins if he could respond to some of the issues that had been raised.

Adv Jenkins stated that there two big issues that seemed to be of concern: the proposed committee and concurrency and potential conflicts. He had read through the clause in the Bill on the committee and he could understand the Portfolio Committee’s concern. There was confusion around the true nature of the NGR committee. A board was engaged with governance functions and was governed by a statute, articles of association or memorandum of incorporation to indicate meeting schedules, functions, etc but, fundamentally, the board took decisions and was accountable for those decisions. On the other hand, a committee, in general, was a sub-structure and not the apex of an organisation. It was well below the apex, such as a committee of a board or a Committee of the House of Assembly, such as the Portfolio Committee. A committee did not take decisions but made recommendations. In the latest draft of the Bill, the Minister could review decisions of the committee. That created the confusion for him. What decisions could the committee take that were binding and reviewable? It could only make a recommendation to the CEO. That had to be considered.

Adv Jenkins explained that, both in the case of the committee and the concurrency issues, legislation was intended to be a sharp instrument. He understood the committee to be appointed for three years and which would meet ‘ad hocly’, or on an ad hoc basis, whereas a board would meet on a regular basis. Did the committee advise the CEO? But, if the decisions had to be made in conjunction with the CEO, then there would be questions of responsibility for the decision. A committee did not take responsibility for decisions. The responsibility was that of the body to which it reported.

Adv Jenkins stated that gambling fell squarely under Schedule 4 of the Constitution, which dealt with gambling and wagering. National and provincial concurrent legislation had to arise from Schedule 4, so there was potential there. If one spoke of conflict between national and provincial legislation, it had to be legislation arising from schedule 4. Looking at potential conflicts, one had to ensure that the province had the competency to make the legislation. If a province was not competent to make the legislation, there was no conflict because the legislation would be null and void.

Adv Jenkins addressed the issue of conflict. It was like going from friendship to an affair. The Constitutional Court had stated that a test of conflict was whether one could obey both laws at the same time. If yes, there was friendship. If one could not, there was a potential conflict. The Constitution said that when there was a conflict, a court had to reasonably try to align the two positions to get rid of the conflict and if that did not work, to go to concurrency in section 146 that said national legislation would prevail over provincial legislation. He wanted to address the issue of norms and standards, monitoring and the inspectorate but he did not see the conflict. One could adhere to both provincial and national legislation in those instances so it was concurrent.  National was not intruding on provincial functions. However, if a conflict persisted, national legislation was the prevailing legislation and provincial legislation stood back. When there was no longer a conflict, the provincial legislation once again took effect.

The Chairperson referred to the comment and response on the piecemeal approach. She explained that it was the result of the Committee decision that, given the juncture of the Fifth Parliament, it was not possible to complete the comprehensive piece of legislation proposed by DTI. Dealing with the comprehensive piece of legislation would have been first prize, but given the timing, it was not possible. The Committee had decided that, for the purpose of good governance, the current Bill be dealt with. The Administrator had been in her position in the NGB since September 2014. Mr Macpherson and a colleague had originally ascertained a number challenges within the board and the Minister had ultimately disestablished the board. The administrator had been put in a custodial position. DTI and the Committee had chosen to go the National Gambling Regulator route and not to replace the board. The Chairperson agreed that it was not a comprehensive piece of legislation, but it would put a structure in place that could contemplate future legislation.

Mr Macpherson stated that it was not the Committee that had wasted four years. It had taken the DTI four years to bring a Bill. The Committee assumed that the NGR was the only model. There had been no discussion to consider other models. He found the DDG tended to note concerns but did little about those concerns and brought the same thing back, with bows. Governance in SoEs and entities had been disastrous. It was incumbent on the Portfolio Committee to ensure that any new structure was solid and sound in law and could get the job done. The Portfolio Committee was not in a position to do that.  The DDG had said that it was an advisory committee but her presentation had indicated that the committee was there to appoint operators and monitors, forfeit or refund a punter, etc., so it could not be just an advisory committee. That was not an advisory Committee in terms of Adv Jenkins’ description.

Mr Macpherson continued addressing the national electronic monitoring system. It was a huge project that would cost hundreds of millions of Rand to bring it to the fore. The Portfolio Committee could not approve a system without knowing costs, understanding how the system worked and the views of the provinces. He asked for a third time: had DTI engaged with provinces? The DTI talked about the eradication of illegal gambling but that was applicable both nationally and provincially. With respect to the inspectorate, provincial law enforcement could not make arrests; only national could arrest. Arrests had to be undertaken by the South African Police Services (SAPS). Concerning the movement of gambling equipment between the provinces and across the border, he did not understand the NGB’s function in that respect. Were people from the inspectorate going to be stationed at the border?

Mr Macpherson appealed to the Committee to hold a discussion without DTI to discuss the matter. Everyone wanted want new gambling legislation but if the Bill went ahead, it would require the Portfolio Committee to spend the better half of new Administration cleaning up the mess. It was the DTI that had only just brought the matter to the Committee and it was not the job of the Committee to get DTI out of its hole. The Committee had to pass legislation that was enforceable and could drive economic growth.

Mr Mbuyane wanted an answer regarding the use of the NCR as a model.  He also asked how the Bill was going to be dealing with the licencing issue. He asked Adv Jenkins about licensing given the NLC, the bookmakers and the bets. He was not sure how best to deal with the matter in the Bill to reduce the conflict.

Mr Radebe wanted to latch onto the issue of the current administrator because he had come into the Committee late in that Administration. He wanted to receive any reports showing the changes made, successes and challenges experienced by the Administrator. He was looking for a report on the Administrator.

Mr Radebe added that the Policy Council was very important, and had to be dealt with to create a link between national and provincial. The Committee was approaching the matter in a piecemeal fashion, and he understood frustration of Mr Macpherson, but the issue of the board was very important and had to be resolved. It was also essential to deal with the quorum on the National Gambling Policy Council because the link between national government and provinces was very important. The electronic monitoring system would begin to address the problem gamblers in the country and, if the provinces could not do it, the NGR had to set up the system. If a problem gambler’s issues were not resolved, that person ended up going to social development, which came back to the government again. He needed a report on the work of the Administrator but the issue of the committee in the Bill was very problematic.

The Chairperson stated that convergence was being reached by the Members who were not happy about the committee. There were annual reports from the Administrator and those would be made available to Mr Radebe. She thought that most Members had reached the point of concern about the manner in which licences were issued, especially after the debacle about licences issued at midnight in KwaZulu-Natal. Gambling was prevalent in every corner of the country and even on pavements in seaside resorts. One never saw this ten years ago. It was clearly a challenge that could not be effectively monitored. She noted that Mr Macpherson had also made a point about the cost of the national electronic monitoring system.

Mr Macpherson agreed that he had and asked to make a point to assist Mr Radebe, whom he respected enormously. Mr Macpherson stated that the monitoring system was about compliance and not the mechanism to do the monitoring of problem gamblers. He agreed that there had to be a mechanism for addressing the problem gamblers but the national monitoring system was not that mechanism. That was for monitoring compliance.

The Chairperson asked the DTI to respond, especially to the question of the particular model used. She agreed that the reports and the records would show that Ms Kongwa and her team had done very sound work. It had been a mess when she had walked in there. She reassured Dr Masotja that the robust discussion in the Committee was in no way a reflection of her competency and everyone would agree on that. Dr Masotja had only recently come into the situation and had been expected to clean the “Stygian stables”, so to speak.

Dr Masotja responded to Mr Mbuyane’s question about the model used. The committee had come into the Bill during the certification process following the concerns that the board was being withdrawn and making the CEO solely responsible. However, the DTI had engaged in an entity rationalisation process where the DTI had looked at boards versus institutions with a CEO. The NCR was an example of such a model but it did not have a committee such as had been added to the NGR. DTI had found that, for a Regulator, it was more effective to have a CEO who was governed by legislation such as the Public Finance Management Act (PFMA) and that approach had been implemented. However, the inclusion of a committee was a response to public concerns that the CEO had to make decisions alone. 

In response to the concerns of Mr Macpherson, Dr Masotja explained that the responses were not the same but DTI was responding within the same framework and with the same rationale. Regarding the central monitoring system, she explained that that function had been removed from the committee and should have been removed from the presentation, although she had noted as she was presenting that slide, that it was no longer one of the functions of the committee because of the governance issues related to the matter. The function in respect of the forfeiting of unlawful winnings was to provide advice only.

Dr Masotja responded to the question about the consultations with the provinces. In March 2018, the comprehensive Bill had been presented to a quorated NGPC meeting. The issues of the establishment of a regulator and the quorum were not raised. Issues of the lotteries and other matters had been discussed. Nevertheless, provinces had been consulted at that meeting, and they were also involved in the public submissions to Parliament. The National Liquor Act was a concurrent function in terms of the Constitution, and DTI had an agreement with SAPS who sent officers with the inspectors every time they went out. The Gambling inspectorate could work in the same way. She saw joining the inspectorates of national and provincial as an opportunity to work together.

Ms Kongwa said that the monitoring of the machines was already a function of the NGB in terms of section 23 of the NGA. The transfer of machines was linked to the national register but at a provincial level, the PLAs had to monitor transfer of gambling machines etc. NCEMs resided at national level and there were no provincial NCEMs. In provinces there were monitoring systems that operators used to monitor machines in terms of management systems within a venue. The central electronic monitoring systems would be operated by the operators who would monitor the management of the machines on a national basis. There was no provincial electronic system.

The DDG responded to the question that Mr Mbuyane had asked. DTI could provide a report on the Administrator of the NGB.  She added that the Administrator had received a clean audit report for the past three years.

Mr Macpherson asked Dr Masotja to provide a copy of the DTI rationalisation report to the Committee as he would like to understand the move to rationalise boards. Regarding the NCEMS, he stated that unless the Committee had an idea of how it would work, the cost of the system, why there was a 6% levy, etc, it would be impossible to approve the monitoring system. He did not dispute the need for an overarching monitoring system, but he could not give a blank check for a system when he did not know how it was going to function. The money made from the system of almost R1 billion per annum would go back to Treasury. Why would there be such a high levy, only to give it back to Treasury each year? He needed a document to understand what was envisaged by the system. He asked the Administrator to provide the Committee with such a document.

The Chairperson asked the DDG to take the Committee through the last version of the National Gambling Amendment Bill so that the Committee could be sure that DTI understood what the Committee was asking for. As she understood it, there were two big issues: the committee and the monitoring system and so on.

Mr Macpherson was not comfortable to go ahead with discussing the Bill as a number of issues and concerns had been raised by the Committee in respect of the Bill. He asked for a Committee discussion, without DTI, even for 30 minutes, before the Committee went ahead. He understood that the Chairperson wanted to get a in-principle discussion but that, all too often, became the final version of the Bill.

The Chairperson stated that she did not want to follow the same process as had been done with the Performer’s Protection Amendment Bill as the Committee disagreed with DTI as to what should be in the Bill. She thought that the Committee could just check that the DTI understood what the Committee wanted DTI to address by going through the Bill. She had thought that there was some convergence in what Members did not want in the Bill. She wanted to go through what needed to be changed in the Bill. She asked Mr Radebe if he had a proposal.

Mr Radebe said that the Bill had been presented to Parliament and the Speaker’s Office had referred it to the Portfolio Committee. To consider whether to engage with the Bill was not an option. The Committee had to engage with the Bill, even if, in the end, the Committee decided to reject the Bill.

The Chairperson explained that she was actually talking about the process of engaging with the Bill. As there was not a counterproposal to Mr Macpherson’s, she agreed that the Committee should have a discussion. However, DTI would not be asked to leave. The Department did not need to participate.

Mr Radebe agreed that parliamentary Committee meetings had to be open and the Committee could not kick out those who were involved in the Bill. He agreed that the Department could be asked not to engage.

The Chairperson then asked whether Members had issues that they wished to raise.

Mr Mbuyane said that he was not challenging the proposal by Mr Macpherson. He believed that it was better for the DTI to remain and hear what the position of the Committee was.

The Chairperson agreed that meetings should not be closed, but it was a Committee decision.

Mr Macpherson suggested to his colleagues in the Committee that there were a number of issues that the Committee was uncomfortable about, both collectively and individually. The worst thing that a legislator could do was to produce rushed legislation just to do something, when there was a temporary solution. The DTI was responsible for the delay in producing legislation, despite knowing that there had been a problem for the past four years. The Committee had been presented with only one model for the regulator and he wanted to see other models, e.g. as with the National Credit Amendment Bill where the Committee had shopped around to find what best suited the circumstances.

Mr Macpherson recalled that the Chairperson had said that gambling had occupied the first year of her appointment to Parliament. If the Committee adopted a Bill as incoherent as the current Bill was, Parliament would spend the first part of the Sixth Parliament trying to amend the amendment. So the best course of action, noting the concerns and the situation of the Administrator, and the fact that it was only seven months to the election, would be that the Bill be re-introduced by the Executive, or as a Committee Bill, in the new Parliament. At that stage, all the information would be on hand and a considered Bill could be formulated. It was on that basis that he thought the Committee should view the Bill as undesirable, but should highlight, in the legacy report, that the gambling legislation was one of the most urgent matters for the Committee.

The Chairperson noted that it was unfortunate that Adv Alberts had left the meeting as it was good to have as many views as possible. She asked if there were any other comments.

Mr Radebe said that he understood the issues raised by Mr Macpherson but DTI had brought in a comprehensive Bill but had then reduced it to a Bill that addressed the three most important issues: the issue of the ad hoc Administrator that could not continue; the issue of a quorum in the matter of concurrency had to be addressed, and a monitoring system had to be set up. The reports stated that provinces did not provide information. Therefore, a national monitoring system was necessary. The public service did not make a profit so that had to be addressed and he suggested that the issue of the committee be removed from the Bill so that the Bill could move forward. The board should be replaced with a CEO and the Committee could review that position in the next Parliament if it was necessary to do so.

The Chairperson asked if Mr Macpherson would agree, i.e. to remove the committee from the Bill.

Mr Macpherson suggested that DTI had designed a system to have a Regulator work with a committee so it was not possible to have the Regulator without a committee. Who would do the work of the committee if it was not there? Time was not on their side to unpack the issue. He was hesitant to put something to Parliament just because there was urgency. The Administrator had managed for four years so he did not know why it could not wait seven months for the new Parliament. He would have to apply his mind to simply making major changes to the Bill.

The Chairperson asked for additional inputs. She sensed the unease. She was not putting it to a vote as she wanted to achieve consensus. She did not agree with Mr Macpherson that the committee was integral to the Bill. The committee had to give advice but the request for advice could be outsourced. It would not be the first time that advisors had not been appointed, and work outsourced. She asked the DDG for input in respect of the Committee in the Bill. What were the implications of removing the committee? What was the motivation for even having the committee? Was it the only structure through which DTI could achieve what it wanted to achieve?

The DDG stated that the entity rationalisation had led to entities being led by CEOs. The insertion of a committee in the NGR framework had not come from the DTI; it had come via the public input and the certification of the Bill processes. It was not the DTI’s original intent. DTI said that the way in which the NGB currently functioned with the Administrator was a good example of what could work. DTI had wanted a CEO who would work within the framework of the gambling legislation and other legislation such as the PFMA having had discussions with the Minister, the DDG could say that he would agree with the removal of committee. The DTI did not see any implications were the CEO to function without the committee. The committee was not the main thing. DTI wanted a stable structure with a CEO. The mandate could always be changed once there was a structure.

Ms Theko said that, although the Portfolio Committee was against the committee, she wanted an explanation from the advocate who had certified the Bill as to why there had been an insistence on such a structure. She just wanted a legal opinion on the matter.

Adv Veounia Grootboom, State Law Advisor, had certified the Bill for constitutionality. She explained that under the National Gambling Act, the board had been a juristic person of more than nine members and had functions throughout the Act. There was already a CEO, who was a member of the board. When a law was made, it had to have a governance purpose and had to be legitimate. DTI had explained about the rationalisation but one regulator never looks the same as another. In that instance, there had been an insertion of additional functions. To rationalise, there had to be an understanding of what was to be achieved and how it would be achieved by the rationalisation.
Adv Grootboom explained that the question that arose, when rationalising from nine persons to one person, was how the CEO would make decisions. The State Law Advisor wanted something to show how decisions would be made. For example, the CEO had to make a decision about unlawful winnings and it had to be an objective decision. If a court had to review the decisions made by the CEO, it might be determine that the decisions had been subjective. That was one reason for proposing a Committee to assist in the decision making. There had to be a rational connection between having a board of nine persons and simply reducing the number of persons making the decisions to a single person. Section 1 of the Constitution applied in respect of the rationality required.

The Chairperson asked whether the Bill would be constitutional without a Committee. Was a Committee essential?

Adv Grootboom stated that each Regulator was different but the expertise required for a Gambling Regulator would be broad and DTI would have to suggest a structure and its functions to support the CEO. The CEO would not necessarily have the expertise to make all the decisions. The form would not have to be a Committee. DTI had to make the decision as to what structure could assist the CEO to make decisions.

The Chairperson asked Adv Grootboom if she was saying that the Bill was unconstitutional without a committee or some structure. She wanted that point very clear from a legal point of view. The Committee would determine policy.

Adv Grootboom stated that the opinion of the Office of the Chief State Law Advisor was that there had to be a committee or a structure of some kind in the Bill.

Mr Macpherson suggested that clarity was needed on a number of fronts. He was worried about the way the lawyers were looking at each other. He asked that the issue be parked and that the lawyers consulted and came back to the Committee once they had reached a decision. The Committee should not be taking positions when there was uncertainty.

Adv Jenkins agreed with the State Law Advisor that legislation had to address an issue, not a difficulty. There had to be a rational connection.  DTI could accept that the Regulator could take the decisions. There had to be expertise on the matter. He informed the Committee that he had recently advised the Portfolio Committee on the Water Services Act in which they had created advisory committees that disappeared after addressing issues. He thought that it could be thrashed out. He did not think that it was a constitutional crisis.

Ms Theko said that she had an answer to her previous question of what was meant by ad hoc. DTI had to go and do some work and then come and present to the Committee.

Mr Mbuyane said that the Chairperson should ask for a written legal opinion from the Legal Advisor to get clarity and then there would not be any arguing with the legal advisors.

Mr Radebe stated that when the concept of the Gambling Regulator had been presented to the Committee, there had been a cross-reference to the NCR model. There was no committee there. There were about five million punters in South Africa but the NCR CEO dealt with 24 million active creditors and so the CEO dealt with much weightier issues than the NGR, without a committee. He wanted DTI go back and look at the model of the NCR. It was not good to change horses midstream. DTI should explain how the current proposal related to the NCR.

The Chairperson asked the DDG and her team to take on board the concerns and the proposals made and incorporate the key issue relating to the formulation of the committee and to take on board the NCR model. She expected the re-adjusted proposal by the evening of the following day. If the work had been done, the Portfolio Committee could look at an in-principle agreement the following day.

Mr Radebe asked that he be given the report on the Administrator.

The Chairperson recognised the DTI team, including the officials and the NGB team, the Legal Advisor and the State Law Advisor.

Minutes of 30 October 2018: The Chairperson asked that acronyms be written out the first time that the name was used. The adoption of the minutes was proposed by Mr Williams and seconded by Ms Theko.

Minutes of 8 November 2018: The register was amended to show that Adv A Alberts (FF+) was absent. The adoption of the minutes was proposed by Ms Theko and seconded by Mr Radebe.

The Chairperson thanked the Committee Secretary for the improved minutes.

Committee programme
The Chairperson asked who was going to the SAFDA Annual Meeting in Durban.

The Secretary stated that Mr Radebe, Mr Williams, Ms Theko, Mr Mbuyane and Ms Ntlangwini wished to attend.

The Chairperson stated that she might also attend. She added that in light of the resolution to call DTI back with the National Gambling Amendment Bill, the Secretary would announce a change to the programme.

The Secretary stated that the programme on the following evening would have to make time to deliberate on the National Gambling Amendment Bill after the clause-by-clause reading of the Copyright Amendment Bill and the Performer’s Protection Bill. The meeting would not finish before 22:00. On 20 November the formal consideration was not possible so that date for the National Gambling Amendment Act consideration would be moved to 21 November 2018. The Bill had to be ready for the House agenda for 27 November 2018 when the Minister was available. The legacy report had to be addressed and the Sugar Association of South Africa would be scheduled only if there was time.

Closing Remarks
The Chairperson thanked the DTI team, including the officials and the NGB team, the Legal Advisor and the State Law Advisor.

The meeting was adjourned.


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