The Department of Trade and Industry presented a 10-Year Review of Industrial Policy and Action Plan and briefed the Committee on key focus areas for the year ahead. The Department requested the Committee to endorse the report so that the Plan could get support going ahead as there had been some successes, although there were still many challenges. The presentation addressed the policy context, industrial policy core objectives, constraints and bottlenecks, the 10-year legacy review of transversal and sectoral achievements, and the lessons learnt.
The Department was firm in its view that industrialisation was the energy of the economy. Support for manufacturing had been withdrawn and free trade was strongly promoted by major economies in favour of the Fourth Industrial Revolution and a post-industrial economy. However, the Fourth Industrial Revolution had hollowed out those economies and only low level jobs in the service industry were available. The manufacturing economy provided value-add where wages were higher and, for every job created in manufacturing, four other jobs were created downstream. Manufacturing provided 1.7 million jobs but was responsible for 5 million jobs in total out of 16 million jobs in the country. Industrialisation and transformation were two sides of the same coin.
The Department of Trade and Industry noted a number of constraints and bottlenecks in implementing the Action Plan, inter alia, policy coherence and program alignment across government; adherence to procurement prescripts; customs fraud together with illegal imports; the dominance and concentration of ownership and control; high administered prices for electricity, water and gas, as well as port tariffs and logistical costs; and a technology diffusion, skills deficit and mismatch. Failure to fully implement the localisation policy had been an own goal.
The Industrial Policy and Action Plan focused on procurement, industrial financing and special economic zones. Sectoral work included automotive, clothing textiles leather and footwear, mineral beneficiation and metal fabrication, capital and rail transport equipment. Business Process Services had created 50 000 jobs, especially for young people.
Members asked how the economy was supporting the National Development Plan. Questions were raised about the shambolic pavilion that South Africa had hosted at a major industrial exhibition in China and how did South Africa expect to do business and trade with others when it could not put its best foot forward. Members asked about the threat to property rights and the link to capital flight, asked what more could the Department do to get SA out of the hole, why was the growth rate of other African countries higher than South Africa’s growth rate and what were other African countries doing that SA was not doing.
Members were worried about the quality of basic education given the skills sets that the country needed. Was the DG engaging with the Minister of Basic Education in that regard? How was the Department going to ensure that there was a state of readiness when it came to skills?
A Member wanted to see a diagram or a picture of the power dominance, and which companies were controlling which sectors? How were they extracting value and inhibiting job creation?
Other Members wanted to know if there was a back-up plan for the Eastern Cape which was dependent on the motor industry. Could the country have been doing something more useful with the money? For how long were the incentives going to be provided? Why could SA not produce a chassis when it had plenty of iron ore? How did the Department support the manufacture household goods, such as furniture?
The Department of Trade and Industry briefed the Committee on its Second Quarter Report for 2018-19. The Department reported a change in business and consumer confidence over the past year. The trade deficient was improving and green shoots of development were emerging. There was a positive trade balance with Africa and exports to Africa had increased by R 6 billion, to a total of R 87 billion. Even the trade deficit with BRICS, created by buying cell phones and exporting raw materials, was narrowing because more value-added products were being exported, especially wine to China and citrus fruit to Russia. Export sales were key and had achieved R1.4 billion, which was above the target of R1.2 billion.
The Department had 52% women in management and had the best track record in government. The Department had spent R3.4 billion. There was a 20% variance against projected expenditure which was normal because incentives were only paid after machinery had been bought. The Department was on track to come in under 1% underspend of its budget.
Members asked why South Africa was lagging within the BRICS group and whether it was beneficial to the country to belong to the group, especially considering the change in government in Brazil. Was SA engaging with the United Kingdom so that the country could position itself in respect of Brexit? Why were some of the departmental programmes below the norm in terms of expenditure to date? Was there an acceleration plan and would the team be able to pick up the pace? Were there mitigating factors, especially if one looked at the areas of under-expenditure? The Chairperson asked the Department to address the question of recapitalisation of the National Empowerment Fund and the National Metrology Institute of South Africa.
The National Gambling Amendment Bill had been cleaned up by the technical team overnight and all duplication of clauses in the principal Act had been removed. The Department of Trade and Industry presented the clean Bill to the Committee. The section dealing with the objectives and functions of the National Gambling Regulator that had been of concern the previous day had been deleted. A definition of a gambling machine or device had been added and references to limited pay-out machines had been removed and replaced by “every gambling machine or gambling device” to extend the monitoring to other modes of gambling, including those that that might be introduced in the future. The function of the National Gambling Regulator to collect and retain monitoring fees, as opposed to the fees going to National Treasury, as agreed by the Committee, had been added.
After a clause-by-clause reading, the Committee approved the adoption of Clauses 1 to 45 of the National Gambling Amendment Bill. The DA objected to each clause, except Clauses14 and 32 which were approved with no objections. The Chairperson read through the Report on the National Gambling Amendment Bill, 2018 which was adopted with amendments, the inclusion of a minority view. There were no objections to the report.
The Chairperson opened the meeting by commenting on recent Bills that the Committee had dealt with, including the National Credit Amendment Bill, which was a Committee Bill. She believed that it had alerted the courts to some of the challenges because on 8 November 2018, the Supreme Court of Appeal dismissed Micro Finance South Africa’s application for special leave to appeal a judgement of the full court of the North Gauteng High Court in favour of the National Credit Regulator (NCR) and the Department of Trade and Industry (DTI) on the regulations reducing the interest rate on the short term loan. The regulations reduced the interest rate on a short term loan from 5% to 3%. Ms Nomsa Motshegare, CEO of the NCR, had said that the NCR truly welcomed the decision. The regulations remained in force, which meant that consumers paid 5% interest on the first short-term loan and 3% interest on additional short-term loans in a calendar year.
The Chairperson handed out the details of the judgement to Committee Members.
Mr D Macpherson (DA) jokingly reminded the Committee that it had paid tribute to a journalist who had retired, but she had returned and he wondered if the Committee should withdraw the tribute and hold it in abeyance.
The Chairperson responded that she had clarified the matter with Ms Linda Ensor. She stated that an organisation might require the services of a particularly valuable employee, even after she had retired, and would call on the person from time to time. She asked Ms Ensor if she was correct in saying that most pensioners could do with a little extra petty cash.
The Chairperson referred to the South African Farmers Development Association (SAFDA) function over the forthcoming weekend, which a number of Members would be attending. SAFDA was one of the Committee’s great achievements in that the Committee had been able to effectively address a piece of apartheid legislation, although it was still on that journey.
The Committee Secretary noted that five members were going to KZN to attend the annual function of the SAFDA. Logistical arrangements had been made.
The adoption of the agenda was proposed by Mr Macpherson and seconded by Adv A Alberts (FF+).
The Chairperson welcomed the team from the Department of Trade and Industry (DTI. She asked them to brief the Committee on the Industrial Policy Action Plan (IPAP), the flagship programme of the DTI and to present a legacy review.
Industrial Policy and Action Plan (IPAP) 10 Year Review and 2018/19
Mr Lionel October, Director-General, DTI, thanked the Committee for its support for localisation and industrialisation. It was the 10th year of running IPAP. There had been some successes but, of course, there were still many challenges but he hoped that the Committee could endorse the report so that they could get support going ahead.
Mr October indicated that his colleague would be making the presentation but he would first give an overview of the policy context. The presentation would address the IPAP Policy Context, industrial policy core objectives, constraints and bottlenecks, the 10-year legacy review of transversal and sectoral achievements, and lessons learnt, and then the IPAP 2018/19 focus areas.
Mr October stated that industrialisation was the energy of the economy. Support for manufacturing had been withdrawn in favour of the Fourth Industrial Revolution and a post-industrial economy by the United States, the United Kingdom and Europe. Free trade had been strongly promoted but the Fourth Industrial Revolution had hollowed out those economies and only low level jobs in the service industry were available. In the US, people worked for Amazon for a minimum wage and not for the auto plants that had paid high wages. The manufacturing economy provided value-add. Wages were higher and, for every job created in manufacturing, four other jobs were created downstream.
In SA there had been racial capitalism or racial industrialisation in which companies adopted an exploitative model where low wages were paid to blacks who sat at the bottom of the pile and could never gain skills or own manufacturing plants. There was a skewed management and ownership of manufacturing which had to be transformed and so industrialisation and transformation were two sides of the same coin.
The country had relied on mineral resources and had grown when mineral and commodities prices boomed in the 1960’s but reliance on those resources had led to a depression in 1973 when prices dropped. There was a need to diversify into other sectors, including agriculture. Manufacturing provided 1.7 million jobs but was responsible for 5 million jobs in total out of 16 million jobs in the country.
The Chairperson asked people to pay attention. Mr G Cachalia (DA) and Mr Macpherson explained that they were looking up details relating to the presentation on their electronic devices.
Ms Thandi Phele, Acting DDG: Industrial Development Division, DTI, noted a number of constraints and bottlenecks, inter alia, policy coherence and programme alignment across government; adherence to procurement prescripts; customs fraud together with illegal imports; the dominance and concentration of ownership and control; high administered prices for electricity, water and gas as well as port tariffs and logistical costs; and a technology diffusion, skills deficit and mismatch.
The 10-Year Legacy Review focused on procurement, industrial financing and special economic zones. Sectoral work included automotive, clothing textiles leather and footwear, mineral beneficiation and metal fabrication, capital and rail transport equipment. Business Process Services had been particularly successful in creating jobs.
Looking at 2018/18, Ms Phele briefed the Committee on the economic environment and transversal and sectoral focus areas.
The Chairperson thanked Ms Phele for an excellent presentation.
Ms Malebo Mabitje-Thompson, DDG: Industrial Development, DTI, informed the Committee that Capita, which was one of the investors in business processing in SA for a number of global companies, would be servicing a global airline from Maitland in Cape Town. They would also be launching a site in Mitchells Plain on the outskirts of Cape Town. She would be attending the launch in Maitland that day.
Mr D Mahlobo (ANC) congratulated the team on the launch later that day. Lots of work had been done but it was necessary to perfect certain things because it was a 10-year review. He would not comment on structural issues because the Department would understand those things better than he but the DTI had to remember that it was coordinating SA as a whole and so needed to get the narrative right. He noted that government spoke in tongues and people had to try and understand what was meant. He suggested that the DG should repeat SA’s economic policy to investors all the time, even if it was repetitious. The DG needed to firm things up in the economy policy. There were too many different views of the economy.
Mr Mahlobo asked how the economy was supporting the National Development Plan (NDP). People needed to foreground their work with the NDP. He referred to the slide on constraints and bottlenecks, saying that those points should not come at the start of the presentation. That slide should have come at the end and should have included some elements of mitigation. It was important to leave that slide to the end when one would be able to recognise the bottlenecks and constraints. Some people had decided to hijack the policy narrative. One of the concerns noted by investors was policy uncertainty. In the main, it was about the contradictions of leaders when they spoke. It was okay to have many voices but the message had to be a single message. Policy was not uncertain. The policies were there but some people did not articulate the policy correctly.
Political instability was an issue but the balances and checks were there. Governance was an issue. Mr Mahlobo also raised the administration crisis, especially where it happened in municipalities. However, businesses would invest where the municipality was well-administered.
The other the question was one of labour. Mr Mahlobo stated that people looked at comparisons with other countries and the cost of labour was an issue, as was the skills mismatch, and also the industrial action. Infrastructure was a problem but it should be separated from administration. There had been a problem about the security of electricity and water, and transport. Those were fundamental issues in getting the narrative in focus.
The Chairperson asked Members to try and restrict their input to five minutes.
Mr Macpherson told the DG that what had been said that day really got his hackles up and, in fact, even the way the problem was presented got his hackles up. Even what Mr Mahlobo had said when he had spoken about policy uncertainties and leaders contradicting themselves annoyed him. It was ironic because Mr Mahlobo had sat in the very Cabinet where those contradictions continued to play out. He wondered whether Mr Mahlobo could tell the Committee what his views were when he was in Cabinet and whether he had tried to stop the policy uncertainty.
Mr B Radebe (ANC) called for a point of order.
The Chairperson stated that she did not take points of order in Committee but she cautioned Mr Macpherson that he was not in the House and the Committee forum was not the place to engage on such issues.
Mr Macpherson stated that it was, nevertheless, a fact. He noted that the constraints and bottlenecks listed in the presentation were all things that the Department and government had the opportunity to change but did nothing about them. DTI was trying to pretend that the challenges had not existed for 10 years when they had. The same things had been said for 10 years and nothing was done about it. He could not understand what was stopping anything being done about administrative prices, and policy uncertainty. SA produced less than it had ten years earlier.
The Chairperson asked for the source of his statement.
Mr Macpherson retorted that the Chairperson had admonished him earlier when he was looking for the statistics on his phone so he could not be too sure at that time.
The Chairperson asked for his sources either then or at the end of the meeting.
Mr Macpherson agreed to do so. He did not believe the industrial policy could be called a success when the country was producing less than it had 10 years ago. Fewer people were employed in the manufacturing sector than 30 years ago. He would show the Committee the source. Gold production was 5% of the total world production but 30 years ago it had been 30% of world production. The country produced less, employed fewer people and yet DTI wanted to claim that the industrial policy was a success. It could not be. One could not drive industrialisation and manufacturing when there was no local demand. Why was there no local demand? Because one could not create demand when people had no money in their pockets. Government taxed people, increased Vat and had increased electricity costs, etc. The country had some of the highest corporate tax in the world, especially compared to Mauritius and countries across the border.
Mr Macpherson suggested that DTI should put the industrialisation policy aside and ask what it would actually take to drive the economy. Minister Davies had to stop blaming the world markets as it was completely not true that world markets were to blame. Competitors of the country were flying and yet South Africa was in the position that it was. The keys to the country’s success and the keys to manufacturing in South Africa lay within the country.
He told the DG that he had heard about the shambolic pavilion that South Africa had hosted in China. How did SA expect to do business and trade with others when it could not put its best foot forward?
The Chairperson told Mr Macpherson to conclude. She stated that Mr Macpherson had made several statements that were not acceptable in the Committee. He had referred to them as factual.
Mr Macpherson asked the Chairperson to explain which statements she was referring to as he would not know what she was referring to.
The Chairperson would not repeat the statements as they should not have been made in the Committee, but she would send the details to him via email. He had underlined the point by saying that it was factual. Seeing that he had said it publicly, she wanted proof. She did not think that it was an appropriate discussion for a Committee meeting.
Mr Macpherson and the Chairperson engaged in a dialogue on the matter. The Chairperson stated that she would send an email with the details. She would inform the Speaker of the ruling that she had made as Mr Macpherson had made inappropriate statements in the Committee. She would not take a point of order as she did not agree with the practice.
Adv A Alberts (FF+) stated that everyone had to be aware that SA was in very, very deep trouble with the economy. There were external factors, but many factors were of SA’s own making. He acknowledged the successes but unemployment was rising and there was government uncertainty on a number of issues, and property rights was the most important one at the time. With the threat against property rights, capital was taking flight from SA at an extraordinary rate. What more could DTI to get SA out of the hole? He knew that it was not an easy question to answer but he did not think that enough was being done, given the situation the country was in and given the level of poverty. Why was the growth rate of other African countries higher than South Africa’s growth rate? What were other African countries doing that SA was not doing? Mauritius, for example, had a growth rate of about 8%, although, obviously, from a lower base.
Adv Alberts noted that other departments were co-responsible for outcomes to be achieved. He was worried about the quality of basic education given the skills sets that the country needed. Was the DG engaging with the Minister of Basic Education in that regard?
He wanted to see a diagram or a picture of the power dominance. Which companies were controlling which sector and how were they extracting value and inhibiting job creation? It would give a better understanding of what could be achieved by de-concentrating the ownership and how it could be achieved. That linked to the Competition Act under Minister Patel’s Department. How could DTI link with that Department? The Finance Department was also involved. It would give a picture of the economic constitution and what needed to be changed to bring about equitable ownership, but also growth in the economy.
Mr Radebe appreciated the report. It showed that the DG had been in the struggle. He had been General Secretary of the South African Clothing and Textile Union, which was why he was so was articulate about the issues and able to conceptualise the problems of SA.
Mr Radebe conceded that gold might have been 30% of the world’s gold in the past but gold was a finite product and the more gold that had been extracted, the less there would be to extract. That was not a problem. Secondly, he addressed, with animation, the question of why SA was growing at a lesser rate than other African countries. The issue was momentum and the bigger the economy, the more difficult it was to shift it. The economies that the Members were referring to were very small. It was the natural scientific phenomenon of momentum.
He added that the issue of skills was critical. It was not the problem of the Department; it was the problem of Dr Verwoerd and apartheid and correcting that would be a long-term process. Black children were not trained to participate in the economy so one could not expect, by a strike of lightning, that suddenly the youth would have all the skills!
Mr Radebe wanted to appreciate the wonderful job done by DTI to help the black sugar farmers with the government gazette of the previous month although control was still concentrated under the old regime. What was the DTI doing to allow the farmers to move into other areas such as ethanol? The black farmers were running at a loss. How was DTI going to deal with the fact that they did not have sugar mills?
He moved rapidly on to the issue of policy and the administration prices and said that some Members of the Committee had said DTI should do something about the high price of electricity but those same people were pushing renewable energy and forcing Eskom to sign contracts with the renewable energy companies. Eskom was going to pay a much higher price for the renewable energy, which made electricity much more expensive.
Mr Radebe stated that one of the most successful industries was the auto industry. If one went to Australia, one would find that the auto industry there had gone belly-up. One could not manufacture only for SA. There were a billion people in Africa and one had to look at that market. The German delegation had said that 90% of vehicles were manufactured for export. South Africa could not look inward. The country was not under apartheid. If the country looked inward, it was going to sink!
The other challenge was the issue of increasing local content in cars. The country could not take a big bang approach as that would be disruptive, so how was DTI going to push that? Whatever industry the country had, it had to grow it. On the issue of agro-processing, the courts had decriminalised marijuana. Canada had done the same thing and, in a month, the country had run short of marijuana, so they had to import it. How could SA supply them with Durban poison?
Ms Mantashe stated that there was no legislation to decriminalise marijuana so people could not do business with marijuana. She had really appreciated the presentation by DTI. Some people in the Committee had said that there had been no movement in ten years of IPAP, but that was not true. If it were not for IPAP, South Africa would be nowhere.
Ms Mantashe was worried about the motor industry moving out of SA in the coming ten years. The German delegation had said that, over the past ten years, BMW had been running at a R10 billion loss. The Eastern Cape was dependent on the motor industry. What was the back-up plan for the Eastern Cape? Mineral resources were running down. What cushion did DTI have for the motor industry?
She added that people were running away from the procurement systems. They said they did not buy local because it was so much more expensive. How was DTI going to make people buy local? Was there a monitoring tool to see whether people were buying local and from the black industrialists? She thought price was an excuse for not buying local. She needed DTI to dig deeper into the situation.
Mr Cachalia said that Mr Macpherson had provided some statistics that he would substantiate, regarding the decline in the economy. Those statistics spoke volumes about the country. The South African economy was in a parlous state and it was getting worse. That was the takeaway that people had. The Committee had been presented with a ten-year review and not a 300 year review with the focus on the distant past. There was a laundry list of endeavours and spend and select achievements highlighted. But 10 million people were unemployed and the gross domestic product (GDP) per capita was well below international levels. The issues had to be addressed in a far more realistic and cogent fashion.
Mr Cachalia noted that the initiatives had not been costed. He meant costed in terms of return of investment and opportunity cost. That was key. Could the country have been doing something more useful with the money? That was the measure. How long were the incentives going to be provided? He raised the dangers of protectionism. Protectionism resulted in inefficiencies, lack of competitiveness, tariffs lending to potential monopolies, misdirection of resources and an impact on consumer choice. The Department was not a political entity and so should produce a balanced report in that regard.
Ms Mantashe spoke of the concerns of the German delegation. That had to be underlined in no uncertain terms. The continuous viability of German investments, both as a supplier and as an investor in the automotive industry upside and downside, had to be taken into account. The Germans had raised questions quite bluntly. They had talked openly about concerns about equity and B-BBEE legislation and other regulatory issues that hamstrung them and strangled their businesses. Bosch was a huge company and refused to part with equity as they were 99% owned by charities and they could not disempower their charities to contribute to the black empowerment policy and the creation of black industrialists. Perhaps South Africa should give more thought to creating a million black entrepreneurs as that would give the economy far more traction.
The Chairperson stated that the five-year review of the incentive programme, recently presented by DTI, had provided some of the answers to the incentives questions.
Mr Cachalia had heard the earlier presentation but it had not answered all his questions, especially in respect of the opportunity cost, the most important area.
Ms L Theko (ANC) was concerned about skills. How did DTI ensure that there was a state of readiness when it came to skills? It was about technology, even in farming. A lot of people would be out of jobs because of the technology. She raised the issue of illegal imports. How was the country affected by the intervention from China? She thanked DTI for it had made the Committee campaign for support in the House easier.
The Chairperson congratulated DTI on developing the apprenticeship for tool and dye making. For several years, the Committee had requested new apprenticeships in the area and 1 800 students in the pipeline with 30% female and 80% in work placement was impressive. The Committee had raised the matter for a long time and so she thanked DTI.
The Chairperson stated that every year she raised a concern about the parts in the auto industry. So much was being done and local content was up to about 30% to 40% with a target of 60%. The Committee had raised an issue after visiting ArcelorMittal years ago and she would raise it again. Why could SA not produce a chassis? Nine years ago the Committee had received a long-winded story about the right filament but it seemed that it was still an issue. SA had iron ore. Why could SA not manufacture its own chassis? She was putting that on the table again.
The Chairperson stated that, along with other people in the room, she had read the International Monetary Fund (IMF) and World Bank reports and she did not agree with all the statements about South Africa doing worse than other emerging economies. Other reports said that SA was doing better than Turkey and Argentina and so. South Africa did not want to measure itself at that level but the reports did not have the same depressing view. She agreed that political leadership and stability was important, but the IMF had suggested that SA had a really good opportunity to underpin political stability.
The Chairperson had an interest in business process servicing (BPS) because it had become a big issue but had been a rare issue nine years earlier. When did business process servicing become the big issue that it was because she did not remember that interest 20 years ago? It was growing and escalating and had a very high labour absorption rate.
She was impressed by the transversals. Nedlac had suggested more should be done on relationships and transversals and DTI had attempted to do that. She noted the point by Mr Cachalia when he cautioned about incentives becoming a form of protectionism. It was a wise caution. If it became a protectionist measure, it would reduce efficiency.
The Chairperson also referred to the Halaal industry. DTI had said it would sell milk and cheese to Dubai. What had happened? Was it goodbye, Dubai? Concerning the support for localisation, she asked if there was a limit on applications that could be made on agro-processing. Was that open or had it been exhausted? How did DTI support household goods, furniture, tiles, etc.? Were all imported or was some of it produced locally?
The DG stated that he would leave the difficult questions to his DDGs but he would give some high level responses. The Chairperson’s first question was important. 15 years earlier no such industry as business process servicing was in the country. President Trump was always complaining that jobs in America were being sent off-shore which meant that things that countries such as the US used to do had moved to low cost countries such as India. It was low cost to run call centres in India.
DTI had developed an incentive programme 15 years ago to attract off-shoring such as Amazon, Lufthansa and British companies. To do so, DTI had had to offer incentives. South Africa had some advantages, such as the straight English of South Africans and the BPS incentive. Currently the industry employed 45 000 people. It was labour intensive and suitable for young people, although the centres were sometimes referred to as sweat shops. London had a 50% turnover rate, but the industry was stable in South Africa. Ms Mabitje-Thompson was attending a launch at a centre in Kensington where 2 000 young, committed and highly qualified people were working.
Ms Mabitje-Thompson added that DTI had built up a highly successful film industry based on incentives to entice Hollywood producers.
The DG agreed with Mr Mahlobo that getting the story line correct was important and that the Department should talk about successes. Challenges and constraints should be put in context to show that, as a country, there had been some successes and the country had been able to create a successful BPO industry, a film industry, an auto industry and retain the textile and clothing industry and so on.
He noted that Mr Macpherson had highlighted some of the points made under constraints. DTI admitted the constraints and bottle necks, but had no control over those issues. Electricity prices rose and manufacturing came to DTI to complain and so DTI had to tell other departments about it. The cost of doing business was increasing, so that had to be highlighted as a constraint. DTI fought against raising electricity prices and carbon tax. The Minister spoke up on the issues in Cabinet, even ensuring that the carbon tax was kept to a minimum.
Concerning the question of the China exhibition, the DDG accepted the criticism and gave an assurance that things would improve when it came to exhibitions. The Minister had asked the Department to improve and it would do so. The Department would be contracting private firms to assist with pavilions in future. He added that despite the problems, companies had received orders of R 90 million after spending R 5 million. The return in investment was 95:1.
Labour and costs of skills were high because there were no economies of scale in the country and factories were running at 80% because people were earning a decent wage. SA had impoverished the market base. There was low purchasing power even as opposed to a small country like Belgium which had a larger demand than SA. High paying jobs were important. Cheap wages did not create a demand. Companies were inefficient because they produced too little and had no economies of scale. Other BMW factories produced 500 000 units, working shifts throughout the day and night. Unit labour costs were low because of high production. In SA only 10% of people had been able to afford cars so there was a low demand for cars. South Africa produced 100 000 units but could produce more. Other countries increased and moved ahead while SA was constantly improving working conditions. He assured Mr Cachalia that DTI did not hanker after the past but the past had affected the economic structure.
The DG thanked Adv Alberts for the input. He said that the companies that DTI worked with ran training academies, such as Mercedes Benz and Toyota. DTI offered B-BBEE and equity equivalence and had discussed and consolidated that in a meeting with the German delegation the previous day. Germans were very good at training, such as the Mercedes Benz training. German companies would be doing much more in terms of skills training as part of their B-BBEE equivalent.
The dominance of concentration was a result of the removal of economic assets. In the past, Black people could not have a farm and they could not run a business.
An exercise looking at dominance and concentration would assist but economic assets had been taken away from people. None of the large strategic companies worked with small businesses and the small businesses were black businesses. Those companies imported and exported. In Germany, big companies worked closely with small companies, whereas in SA big companies only worked for themselves and excluded black businesses. It was not about de-concentrating but getting them involved in localisation.
The DG thanked Mr Radebe for giving away his age when talking of his union work. He pointed out that in 1994, nine million people had been employed in the country and currently the country employed 16 million people. That meant that 7 million jobs had been created and the economy had expanded two and a half times. The proportions might be right but the numbers were bigger. Nevertheless, DTI accepted that there was a massive unemployment rate, partially as a result of the international situation, but partly the fault of the country. Localisation was an own goal and the country was importing things that it should be manufacturing.
Ms Phele noted the point made that DTI should be looking at the African market. Concerning the automotive industry, she stated that DTI was looking at value chains across the region and the development of a bigger market for the SA automotive industry. There was a need to take a complementary approach and to work with African countries, sharing the value chain, production and development of the sector.
Ms Phele addressed the question of the sugar industry, noting that the Committee had met with representatives of the sugar industry. DTI was looking at diversification in the sugar industry to enable better growth of sugar cane, but also to allow the farmers to better use their capabilities. The work was continuing and a report would be brought to the Committee in the new year.
She stated that the DG had mentioned localisation and there were a couple of things that the Department should have done things better. There were also issues of corruption, but DTI had enjoyed success in specific focussed goals, especially in the re-capitalisation programme and she should have concentrated more on those issues as there were a whole lot of stories to be told in that area. DTI needed to better monitor localisation and had put forward a number of programmes to address non-compliance. The Procurement Bill would address those issues once Cabinet had approved it. The Bill would ensure that the state structures were used to embed local manufacturing.
Ms Phele stated that the country was already developing skills to cope with the Fourth Industrial Revolution. The apprenticeship for valve manufacturing was one example. The model would be repeated in a number of sectors so that the country would be responsive to the technology needs. DTI was having a conversation with the Department of Higher Education about improving the vocational education system to ensure that the country provided an education that enabled the development of the right skills. DTI was aiming to replicate the apprenticeship process. Skills had to match the needs.
Ms Mabitje-Thompson referred to Adv Albert’s request for a graphic. She thought that it would be worthwhile to do a graphic that showed the concentration. The black industrialist programme was partially intended to address that. DTI did not have the choice between the numbers of black industrialists and entrepreneurs. They had to do both. While DTI supported black industrialists, all the other incentives supported entrepreneurs. Entrepreneurs and industrialists had to be supported as transformation was essential and otherwise there would be a bottleneck. Durban industrialist was looking at training people because his business was expanding so fast. Where black industrialists were being grown, DTI was using the same principles of focussed support used for other industries and it was making sure that transformation was real.
Ms Zukiswa Kimani, Chief Director: Industrial Policy, DTI, addressed the comment on tariffs. Counterfeit came in many shapes and forms and what SA was currently facing was mis-declarations and under-invoicing. In 2010, in addressing the challenges in the clothing and textile sector, DTI had established a reference price system to try and see where the challenges were. The Department had worked with the industry, labour and SARS to find the challenges. They had discovered goods coming into SA at prices that were below production costs. There was currently a task team in Nedlac looking at customs fraud. DTI had also engaged with SARS because there were governance issues and there had been some leaks over a couple of years, but currently DTI was looking at scaling up the programme, and expanding into the plastic, scrap and steel sectors because they faced the same challenges.
She responded to Ms Mantashe, saying that DTI used SABS to do local content verification to reduce non-compliance. DTI was targeting 60 projects for verification and would present outcomes of that verification process at the end of year.
There was a great deal of interest in IPAP, so the Chairperson allowed follow-up questions.
Mr Macpherson asked whether DTI had considered an independent panel to review the IPAP programme after ten years, its relevance, its successes, shortcomings and what could be done in the next ten years. If not, he would strongly recommend DTI do so. It was easy for DTI to see the successes and the challenges but not see what could take it forward. It was not meant personally, but he thought it would be useful for DTI to consider such a review.
Mr Macpherson noted that the DG had said that he did not have control of the strategic levers. The Department could not say the same things in ten years’ time. DTI could not say that that was not in its ambit. If the DTI could not do it, who else could do it?
Mr Macpherson added that was also his criticism of the Minister. What was the Minister doing in Cabinet to address the issues and to call for changes? Maybe those amongst the Committee who had been in Cabinet could say whether he had ever done so. The carbon tax was disastrous for the manufacturers, but it was going ahead. DTI was simply ignored.
Mr Macpherson stated that no one disagreed that it was a problem of economic assets but the assets that people did not have could not be created out of nothing. The only way to do it was to put people into jobs, allow them to climb the opportunity ladder and participate in the company that they worked for. DTI had to put people into jobs. He hoped the Committee took onboard the sharp points made by the German delegation. Bosch had said that it could not continue with a R600 million loss in SA over 10 years and now the company had to incur further losses to comply with legislation that it simply could not comply with. If there was not a way around it, SA had to move on, which meant 500 people out of jobs. DTI had to do a review of what was wanted in the manufacturing sector and what was wanted to create jobs. People could not get assets if they did not have jobs. How could it be made easier to manufacture in the country? IPAP was too broad and idealistic and did not get to the realities. DTI had indicated hands-off areas and so could not break the deadlock, which an independent panel might be able to do.
Adv Alberts thanked the DTI team for the answers. His questions were sector-specific. The film industry concerned him. The Americans were very concerned about the Copyright Bill. He wanted DTI’s view about how to address their concerns as Hollywood put millions of Rand in the economy each year.
Adv Alberts asked about the Special Economic Zones (SEZs). The OR Tambo SEZ had a lot of potential that needed to be unlocked. It did not seem to be taking off. He thought that the Ekurhuleni Municipal Council and the Airports Company South Africa (ACSA) played a role in that regard. What were the dynamics? In general, one SEZ had to be a laboratory where different choices could be experimented with. One mechanism should be to allow tax incentives. That was how Mauritius had drawn in the financial sector. DTI should see if people would work for less than the minimum wage, but would create so much value that wages would rise spontaneously.
He asked about the Aerospace framework. What types of investments would be attracted and would they be from overseas? What was the status of the aviation park that had been created in Tshwane?
Mr Radebe said that the Committee knew that the Department had created own goals e.g. in the purchase of locomotives. The Committee had been told that even when the locomotives were being made in South Africa, the technicians would wait until their South African counterparts had gone to lunch and then they would do the key parts of the job so that there was no transfer of skills. How was DTI going to ensure that there was no repeat of that? He was happy that the Auditor-General and even the South African Police Services had been roped in to look at the matter. The African Union wanted South Africa to manufacture locomotives for Africa, but how was DTI going to lock the Black industrialists into that programme?
The Chairperson remarked that the North and South China Rail had nearly derailed SA.
Mr Mahlobo said some people wanted the people to forget the history and to forget that the economic assets of black South Africans had been taken away. Those people had come to the country with nothing and had created assets. There was a need to tell the truth.
Mr Mahlobo noted that the high level approach of looking at successes was good. He was happy that SA had achieved successes. It was a case of dog eat dog situation. Those who were members of the peoples’ movement understood that economic assets were not just about jobs. It was about creating a new economic system. It was about issues of ownership. It was not just about employment and giving people jobs. The country had to transform the economic landscape. Economic integration was critical.
There were balances and checks for administratively priced services, unlike in the Western Cape where the Council had chosen to increase the prices of water. There was public participation in the setting of prices. He knew, however, that it was a constraint. It was not only about the price, but also about the availability of commodities.
He did not want DTI to think that Mr Macpherson’s view was that of the Committee. The DTI had to understand that the ANC did not share the views of the opposition. The ANC understood where it had come from and where it was going to.
Mr Cachalia said that he understood that there was consensus in the Committee about the need to grow assets, but the country could not grow assets by boosting government employment. It did not bode well for fiscal targets or address the bloated government wage bill, but it was done because people were looking after their legacy. The fact was that primary industry had declined, followed by secondary industries and tertiary industries were flat, if not no-go at all. Speaking of assets, the country needed to grow income per capita. Income per capita had been flat over ten years. South Africa was heading backwards.
Mr Cachalia stated that common theory said that fixing the economy needed to be investment fed, and export led. But SA was not doing it properly. Investments were down and trade was down. He suggested that SA needed to focus on competitiveness and a conducive environment to grow industry for export purposes.
Mr Cachalia suggested that DTI should ask the German delegation what they wanted in order to stay on in SA and what they desired to ensure additional investment and to fix the problems that they faced in each area, and what they desired for protecting and growing and not destroying what they had built up.
The Chairperson noted that time was against the Committee. She requested the DG to respond briefly. She asked for clarification about the BPS industry. The DG had said that there were graduates in the business processing centres. She had assumed that a BPS job was a stopgap while they were seeking positions within the field of their own qualifications.
The DG noted that some of the questions would be answered in the next presentation. He told Mr Macpherson that there were independent reviews for all sectors every five years and the programme was then tweaked, where necessary. IPAP, however, was a policy position. Every country needed an economic policy.
The DG proposed that all political parties agreed on the importance of manufacturing. IPAP was broad but it was underpinned by specific sectors and, from the high level, there was a drilling down to the detail in each sector. The country had achieved success in a few sectors such as the auto industry, film, and textile and clothing. He agreed that jobs were key but they flowed from investment. He added that the Minister of Trade and Industry had made history because SA had not had an industrial policy 10 years ago and he had persuaded Cabinet on that point, so SA currently had an industrial policy and an action plan.
The DG told Adv Alberts that Ms Mabitje-Thompson had spent time in Hollywood because DTI had reviewed the incentive programme and she had been requested to brief Hollywood film people on the new incentives. He added that film was a very big industry in the country. Concerning copyright, he stated that different business people had different views on copyright. Google and many of the big industries were supportive and had said that it was more innovative and would grow the economy. The US did not protect copyright as much as was done in SA but it was for the policy makers to strike the balance for the industry. He noted that Amazon was investing in SA.
The DG stated that DTI was passionate about aerospace and defence because there was a lot of potential growth, and a lot of spinoffs for Denel and Aerosud. Aerosud made components for Boeing, Airbus and the emergent Chinese companies in aerospace. The aim of the aerospace village was to create black component suppliers around Aerosud but the programme had to stop because of corruption but things were progressing around the aerospace village. He agreed with Mr Cachalia that the economy had to be investment fed and export led.
On the question of the Germans, the DG said that the Minister and the Department had spent lot of time engaging with the delegation. The German companies were most advanced. BMW and Mercedes Benz had made massive investments in the country but the Germans still had to embrace B-BBEE. The German companies had been slow to embrace B-BBEE whereas the US and the French had led the way in adhering to B-BBEE legislation. Ten US companies had addressed the issue of economic empowerment and the French company, Total, had led the way. He had explained to the Germans that they could do equity equivalence such as skills development and creating opportunities in the supply chain. Mercedes Benz and BMW would put money into building black suppliers. It could be done but they had to overcome resistance to transformation. Amazon had just come into the country and it had already done equity equivalent, as had IBM and Microsoft.
Ms Phele said that lessons had been learnt from the locomotive contracts. Targets had been put in the Dumela contracts in Tshwane. SA was building the coaches and was conscious about procurement. She would be making a presentation on 4 and 5 December 2018 that would deal with that issue.
Ms Mantashe reminded the Committee that when everyone was against the industrial policy, the Minister had stood firm. She pointed out that DTI had not responded to her question about creating a cushion against the auto industry in Eastern Cape.
The DG said that the auto industry was a success story and DTI was confident that the production would double between then and 2035. The proposed Auto Industrial Programme was on the table in Cabinet that morning and he was watching his phone for news of whether it had been approved. Some of the companies such as Ford and Mercedes Benz had already started increasing but the country had to have a programme or SA would be like Australia and all auto industries would close down.
The Chairperson thanked DTI for the presentation on the economic policy. She commented that IPAP was so basic it was called e-pap. There would always be a robust conversation when something as important as IPAP was on the table and such oversight was healthy. She thanked DTI for the presentation.
The Chairperson requested the DG and CFO to be brief in their presentation of the Second Quarter report.
Second Quarter Report 2018-19 - DTI
Mr October agreed that brevity was the soul of wit. He would not spend time on the economics as that discussion had already taken place. He referred to the divergence, as pointed out by Mr Macpherson, between low growth in SA and high growth in competitors. Over the past year, there had been a change in business and consumer confidence. The trade deficient was improving and green shoots of development were emerging. The country was starting to turn the corner in respect of the trade deficit. There was a positive trade balance with Africa and confidence in the continent was growing. Exports to Africa had increased by R 6 billion, totalling R 87 billion in exports to the continent. Even the trade deficit with BRICS, created by buying cell phones and exporting raw materials, was narrowing because more value-added products were being exported, especially wine to China. The trade balance was becoming positive, almost for the first time.
The country had been beefing up the automotive industry and had exported cars worth R180 billion. There had been improvements in the sugar industry. Boat building was becoming an important industry and Armscor had designated local procurement. The problem with arms deals was that there was a lot of corruption and importation.
The signing of the African Continental Free Trade Agreement had been an important matter and as SA was the 46th country to sign, the DG hoped that it would come into effect soon. The Golfinho Liquefied Natural Gas (LNG) project in Mozambique project was in the pipeline and SA steel would be used in the construction of the LNG project. Because finance is being provided by South Africa, the quid pro quo was using SA steel.
Export sales were key and had achieved R1.4 billion above the target of R1.2 billion. In future, DTI would bring in private sector participation to assist with expo stands at industrial conventions.
Liquor abuse community awareness session was conducted in Moloto in Mpumalanga in June 2018. 300 people had attended the session. The National Liquor Authority had successfully launched the online Case Management System in May 2018 and would ensure that registrants and consultants enhanced their ability to make use of the system for liquor license applications and renewals.
The DTI had 52% women in management and had the best track record in government. DTI had spent R3.4 billion. There was a 20% variance against projected expenditure but that was normal because incentives were only paid after machinery had been bought, etc. DTI was on track to come in under 1% underspend of its budget.
Although CFO was in attendance and would answer questions, Mr Khan did not present.
Mr Macpherson knew that DTI undertook road shows to communities in respect of legislation but he wanted to know why they those road shows were being conducted in respect of legalisation that was not going to be considered in Parliament. What was the rationale?
Adv Alberts asked about the trade numbers. Why was SA lagging within the BRICS group and whether it was beneficial to SA to belong to the group? He also asked about the future of group considering the change in government in Brazil. Was SA engaging with the United Kingdom so that the country could position itself in respect of Brexit?
Mr A Williams (ANC) thanked the DG for the presentation. He noted the emphasis on job creation, which was important to the country in its current situation but he thought that more emphasis should be placed on transformation within a developmental state. He did not want the country to end up with wealthy industrialists across the colour line and a massive working class that would simply pit the wealthy against the poor.
Mr Mahlobo said that Mr Williams was correct about the transformation imperative. He asked about the Programmes that were below the norm in terms of expenditure to date. What was the concern? Was there an acceleration plan and would the team be able to pick up the pace? Were there mitigating factors, especially if one looked at the areas of under-expenditure? He also noted the advances made.
The Chairperson asked the DG also to address the question of recapitalisation of the National Empowerment Fund (NEF) and the National Metrology Institute of South Africa (NMISA).
Mr October told Mr Macpherson that he would have to discuss the matter of training with the relevant DDG but the programme would have been planned in advance as DTI had been quite serious about the legislation and about informing communities. However, the programmes had been abruptly stopped and he would be addressing the issue of whether programmes would continue in the next quarter or whether adjustments would have to be made.
He informed Adv Alberts that SA had a trade deficit with BRICS because China had economies of scale with its 1.2 billion people and it was a manufacturing juggernaut. SA could never compete with the economies of scale but had to develop niche products. They could produce anything cheaper than SA could. Even the Mercedes Benz plant in China, run by a South African, was massive. Aerosud was doing well, aerospace products and products such as wines, rooibos tea etc. did well. In Russia, SA had broken into the citrus market. SA needed to break in with key products. SA had to remain, regardless of the political environment as the country needed to take advantage of the markets. The BRICS market was the largest in the world.
Mr October assured Mr Mahlobo that there was no trade-off between transformation and jobs. SA needed both and they always went together. Solly Sachs, father of Albie Sachs, had written an article about the poor whites in SA in the 1930’s and that was overcome through one thing: the creation of the manufacturing sector. At that stage there was only mining and agriculture and whites could not compete with cheap black labour so they were saved by manufacturing, such as the clothing industry in Johannesburg. So manufacturing dealt with poverty and exclusion. It was no contradiction. Growth and manufacturing would solve the country’s problems.
DTI had recapitalised the National Metrology Institute of South Africa (NMISA) and it was busy securing its building. He had written to the Department of Public Works to expedite the building for NMISA.
The NEF had not received any new grants because of the tight fiscus so the only solution was to merge with the Independent Development Corporation (IDC) so that they could use the asset base of IDC. The merger had been to Cabinet which had asked DTI to do some more work and to be a bit more ambitious in how NEF was integrated with IDC.
Mr Shabeer Khan, CFO, DTI, said that the initial recapitalisation of NMISA had been via the Competitive Economic Support package introduced by National Treasury in 2011 but that had come to an end in 2018. DTI had to re-prioritise funding for the re-capitalisation programme. DTI had looked at multiple options but the most feasible option was a process of phasing in the recapitalisation over a number of years.
Regarding the financial performance, looking especially at the Trade and Investment (TISA) programme, he explained that the problem was the currency exchange rate at the moment. The programme had a footprint in many countries and when the invoices came back from overseas, the exchange rate had changed and it cost more to pay the invoices. DTI was not underspending, but rather overspending on that budget.
Mr Khan stated that the mid-year performance of DTI did not present any real concerns. The largest portion of underspending was in the Incentives Programme. That was slow because of the economy and so demand was low and a lot of investment had not taken place, but also the process of doing due diligence before paying out incentives took time. That programme usually caught up going forward and the recent statements suggested that the money was flowing. However, DTI could adjust the incentives budget, if necessary.
Mr Mahlobo said that the Incentive Programme was doing well but the preparatory phrase should avoid the spiking up and down. On face value, it looked bad with the spikes The CFO should note that a linear progression would not look good. It was a damp spot on the good work.
The Chairperson requested clarification on Special Economic Zones and economic transformation. Would DTI be able to reach the projection? She was also concerned about the Incentive Development Programme where there was a sizable difference. Would DTI reach its projection? She understood that the programme ended in September.
Mr Macpherson asked who the Chief Director was who was assisting DDG Masotja. Was Mr MacDonald Netshitenzhe still employed by the DTI and, if so, in which Division was he employed?
The Chairperson accepted the question as it would come under Administration, and staffing.
Ms Mantashe noted that 65% of the SEZ budget was still available. Why was there such a huge amount unspent?
Mr Khan informed Ms Mantashe that SEZ Programme also housed the Broad-Based Black Economic (B-BBE) Commission which was not a publicly listed entity and was paid from Programme 3. The Commission was supposed to procure new buildings and ICT infrastructure, but they were awaiting National Treasury approval and DTI was holding the funds.
Regarding the Industrial Parks, an Industrial Park Symposium had been held a week earlier. DTI was looking at the second phase. The money for incentives would come out of the Incentive Programme but infrastructure etc. would come out of the Industrial Development Programme. The Incentives budget was behind but there were investments in the pipeline and DTI was working closely with investors to ensure compliance and so that the funds could be dispersed.
The Chairperson summed up his response, stating that essentially the funds were committed, but not yet dispersed.
Mr October explained that Mr MacDonald Netshitenzhe was a Chief Director in DTI. He had been Acting DDG for the Consumer and Corporate Regulation Division (CCRD) for a long period of time. Ms Zodwa Ntuli had been seconded and then employed by the BEE Commission. Dr Evelyn Masotja had since been appointed permanently to the position. Mr Netshitenzhe was a valued member of the DTI and was working with the National Food Consumer Commission and the listeriosis issue as well as doing policy work, and he was finalising the treaties. He had been taken off the stakeholder issues because he tended to be rather robust at times.
The Chairperson noted that some responses were outstanding but she would refer the outstanding questions to DTI for written responses as she wished to move on to the National Gambling Amendment Bill.
National Gambling Amendment Bill
The Chairperson welcomed Advocate Frank Jenkins from the Constitutional and Legal Services Office in Parliament. She also welcomed DTI officials Adv Strydom, the Chief Legal Advisor, Dr Evelyn Masotja, DDG of CCRD, and Dr Ria Nonyane-Mokabane, Chief Director, Policy Drafting. The Chairperson thanked the DG for staying on for the Gambling Bill.
The Chairperson asked Dr Masotja to address the pertinent clean-ups and corrections.
Presentation of corrections to the National Gambling Amendment Bill
Dr Masotja stated that the technical team had cleaned up the Bill and she would go through the corrections very quickly. She began with the section that was of concern the previous day, the one which dealt with the objectives and functions of the National Gambling Regulator (NGR).
The clause had been cleaned up. Previously the section on the National Gambling Regulator Committee had been removed and now all duplications of what was contained in the principal Act had been removed. There were no implications as the same subsections appeared in the Act. The clause ended at paragraph (g).
Section 1 Definitions
A definition of a gambling machine or device had been added.
Clause 3 Section 10A
Originally the section relating to the register of unlawful gambling operators had been section 11A but the number was used in the Act so it had been changed from 11A to 10A.
Section 10A(3): the word ‘wrongfully’ had been removed because it gave the impression that the NGR could be guilty of putting an incorrect name in the register of unlawful gambling operators.
Clause 12 Section 27
Section 27(1)(a), relating to the national central electronic monitoring system, had been moved from section 29 because it related to the collecting of fees and where it was in section 29, it read as if the machine would collect the fees. Section 27 was a more appropriate context. There were no implications.
The technical team had also found an omission in the principal Act in section 27(3)(a)(i), the word “central” was missing and needed be to inserted in section 27(3)(a)(i) in the principal Act. The consequential amendment of adding an additional paragraph to the subsection was also made.
‘‘27(3)(a) Standards for—
(i) The operation of the national central electronic monitoring system;”
Mr Mahlobo stated that the Committee accepted the amendment.
Dr Masotja acknowledged Ms Caroline Kongwa of NGB and her team who had just arrived.
Section 27(e )(4)(a): the term “limited pay-out machines” was removed and replaced by “every gambling machine or gambling device”. The intention was to extend the monitoring to other modes of gambling, including those that might be introduced in the future.
Section 27(f )(b) contained a consequential amendment to the above paragraph.
Section 27(g) was split into (a) and (b) in order to omit the reference to the Council in the paragraph relating to a gambling licence as the licence did not apply to the Council.
“(g) by the substitution of subsection (6) of the following subsection:
‘‘(6) A contravention of subsection (4)(a) is a breach of licence, subject to administrative sanctions in terms of this Act or the applicable provincial law.’’
Clause 17 Section 35
The words “as amended by section 23 of Act 10 of 2008” were added.
Clause 24 Section 62
There was a numbering issue in the subsection and to end the subsection with a catch-all paragraph, paragraph (g) was being moved to become (eA). The result was that “any other matter” would be the last paragraph.
Clause 25 Section 63
Section 63 (3): the correction related to the inclusion of “provincial” to correctly refer to the “provincial licensing authority”.
Clause 29 section 68
The function of the NGR to collect and retain monitoring fees, as opposed to going to National Treasury, as agreed by the Committee, had been added.
‘‘(eB) collecting and retaining the monitoring fees for all modes of gambling; and’’
Clause 34 Section 68
The word “procedure” was replaced by “proceedings”.
34(a)(2): “(b) [attend, participate in or influence the proceedings during a meeting of the board, if, in relation to the matter before the board, that member has] perform duties on behalf of the National Gambling Regulator whilst having an interest—"
34(a)(2)(b): “(ii) that precludes the Chief Executive Officer or staff …”
The word “member” was removed .
Clause 36 Section 73
Section 73(1)(a) and (b) had been cleaned up as there was some duplication of section 65. References to the CEO’s appointment had been removed.
73 “(1) The Chief Executive Officer—
(a) must appoint suitably qualified and experienced persons as staff of the National Gambling Regulator in line with the structure approved in consultation with the Minister who—
(i) must assist in the administration and running of the National Gambling Regulator; and
(ii) are accountable to the Chief Executive Officer.
(2) Sections 65A(2) and (3), read with the changes required by the context, apply to each staff member to be appointed in terms of this Act.
(3) The Chief Executive Officer, in consultation with the Minister, may determine the remuneration, allowances, employment benefits and other terms and conditions of appointment of staff of the National Gambling Regulator.”
Clause 38 Section 75
Consequential amendments making the CEO responsible and not the board.
Ms Mantashe wanted clarity on section 87 which ended with ‘and”. “And” what?
Dr Masotja explained that another subsection followed on after the word ‘and’ in the principal Act.
The Chairperson asked Mr Macpherson about the minority report on the Bill.
Mr Macpherson stated that he wanted to put a motion of desirability or undesirability before the Committee proceeded.
The Chairperson stated that Mr Macpherson did not have a choice of desirability or undesirability at that point in the process. That choice had been made by the Committee at beginning.
Mr Macpherson submitted that he had only just received the final version of the Bill and, at that point, he wanted to have an opportunity to motivate for desirability.
The Chairperson stated that she had thought that Mr Macpherson would submit his view in a minority report. The Committee had already had a motion of desirability. She asked Adv Jenkins for his views on the matter.
Adv Jenkins confirmed that the redrafting of the Bill did not require a second vote on desirability.
The Chairperson suggested that Mr Macpherson expressed a minority view and included his view there.
Mr Macpherson wished to make known information about the Bill and referred to a document that should have been made available to Committee Members much earlier in the process for them to properly apply their minds. He had only been given the document after requesting it and it was very relevant to the Bill.
The Chairperson said that what he wished to express, could be expressed in the House. She noted that it was a section 76 Bill so the process was ongoing and he could express his opinion during the process. Documents could be received at any time. He had to express his views in the House.
Mr Macpherson was adamant that the Committee could not say that it had applied its mind if it had not reasonably considered an internal document from the DTI on the elements of a regulator that had only been provided the previous day. The document should have been provided much earlier. He cautioned the Chairperson that the Committee should consider his point on the matter as it related to an internal document.
The Chairperson said that she had heard Mr Macpherson.
Mr Radebe stated that the agenda had been adopted and it indicated a clause-by-clause reading. No document had been presented. The document about rationalisation had been made available the previous Friday. The Committee was a multi-party Committee and the parties would differ, but the ANC wanted to proceed. The Committee had discussed what it was supposed to discuss. The Committee was on the point of proceeding with the clause-by-clause reading.
The Chairperson stated that she had made her ruling and Mr Macpherson could take the matter up with the Speaker, but she was proceeding.
Mr Macpherson stated, for the record, that the Chairperson was heading for legal problems with the Bill if she chose to proceed.
The Chairperson repeated that she had made her ruling.
Clause-by-clause reading of the National Gambling Amendment Bill
The Chairperson read the Bill clause by clause. Members proposed and seconded the adoption of each clause.
The Committee approved the adoption of Clauses 1 to 45 of the National Gambling Amendment Bill.
The DA objected to each clause, except Clauses14 and 32 which were approved with no objections.
Report on the National Gambling Amendment Bill, 2018
The Chairperson read through the Report. When she had completed the reading, she invited Mr Macpherson to give his minority view.
Mr Macpherson made the following points:
Point 5 should state that the Committee had resolved “by way of a vote”, as he considered it an important factual point that the DA had not consented.
Point 6 had to include the date of the communication.
Section B: 1. The DA was of the view that the Committee did not sufficiently apply its mind to the different options available in terms of the NGR’s structure and functioning.
2. No screening, identification, assessment and support (SIAS) was done for the Bill or the NCEMS.
3. The DA was of the view that the Committee’s refusal to consider online gaming to be included on 16 October 2018 was an omission.
Mr Macpherson said that in terms of Rule 166(4)(a),(b) (i) and (ii), a Committee may not submit a minority report. If the report is not a unanimous report, it must (i) specify in which respect there was no consensus and (ii) in addition to the views represented in the majority, it must express any views of a minority.
He submitted that those were the views of the DA and that was what had to be captured in the report.
The Chairperson asked Adv Jenkins for advice on the rule quoted by Mr Macpherson.
Adv Jenkins explained that Rule 288(3) stated that it was a Committee report and if it was not unanimous, the report must specify in what respect there was no consensus, and, in addition, the views representing the minority. The point was that it was a Committee report and, through the process of debate, the Committee had to agree what would go in the report.
The Chairperson asked if there was another minority view.
Mr Williams quickly stated that if the report said that it was the DA’s view that various things had not been done, he accepted those points in the report.
Mr Mahlobo moved for the adoption of the report but with some amendments. On page 1, paragraph 5, the Secretary could advise but he thought that the bullet point should be numbered. He added that an important point had been missed. When he had been chairing, three issues had been considered: the third issue was NCEMS and related matters. At the time, the Committee had agreed that it was a technical Amendment Bill and that the substantive matters would be noted in the legacy report so that they could be attended to urgently. It was very important to state that as others would say that the ANC had not wanted other issues included in the Bill. Those people wanted to claim some political milestones. He also thought that ‘communication’ should be replaced with ‘communique’. Also in point 8, it had been a Wednesday, not a Tuesday.
Mr Mahlobo said that, with those proposed amendments, it was a true recording of the processes undertaken, and he moved that the report be adopted.
Mr Mbuyane seconded the adoption of the report.
The Chairperson asked if there were any objections to the report.
There were no objections.
The Chairperson said that she did not agree with Mr Macpherson on the matter but the DA Members were in regular attendance and she thanked them.
Mr Radebe asked when the Bill was to be submitted for inclusion in the Announcements, Tabling and Committee Reports.
The Committee Secretary stated that he had to do it that evening.
The Chairperson stated that the Bill would be ATC’d that evening. She remarked that the House was a robust forum and one expected that in a democracy. She looked forward to a robust engagement in the Parliament of South Africa which was the people’s Parliament.
Mr Mahlobo thanked the Chairperson and the technical team. It might have been a technical Amendment, but everyone had to celebrate the hard work done.
The Chairperson thanked Mr Mahlobo for his hard work when he was chairing in her absence as he had assured that the Committee had reached the point of finalising the Bill.
The meeting was adjourned.
- National Gambling Amendment Bill: adoption; Industrial Policy Action Plan 2018/19; DTI Quarter 2 performance 2
- National Gambling Amendment Bill: adoption; Industrial Policy Action Plan 2018/19; DTI Quarter 2 performance 1
- National Gambling Amendment Bill: adoption; Industrial Policy Action Plan 2018/19; DTI Quarter 2 performance 3
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