Legacy Report of Economic Development Portfolio Committee

Economic Development

05 March 2019
Chairperson: Ms E Coleman (ANC)
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Meeting Summary

Find here once available - Legacy Reports 

The Committee discussed and approved its legacy report. The content adviser took the Members through the areas where amendments had been made. The issues raised during the previous meeting were addressed and the report was concluded.

A Member suggested that the legacy report would not be complete without reference to the forensic investigation into the irregular expenditure identified by the Auditor General at the Competition Commission. However, the Chairperson said that although the Committee had been aware of the investigation, it had not discussed it.

Members agreed that the amended report was a fair reflection of the Committee’s worlk during the past five years, and approved its adoption.

Meeting report

The Chairperson said the essence of the meeting was to finalise the Portfolio Committee’s legacy report.

Draft Legacy Report

Mr Mandisi Tyumre, Committee Content Adviser, took the Members through the changes that were proposed, many of which were minor. On page 4 of the draft report, which referred to the ‘qualification in terms of the function of the Committee,’ he noted that Members requested that the points should be clearly indicated for ease of reading by using ‘bullets.’ They further requested the use of a ‘bullet’ to reflect the fact that they were not exposed to dealings with international bodies.

He referred them to key areas for future work. In that regard, on the discussion around the assessment, which was proposed for the next Parliament, there was a point made that there should be requisite expertise by the institution to undertake the work. He noted that the line had been amended. What the expertise would look like would be determined by the next Parliament, but the point had been reflected.

On the next page, which would be bullet number two, there was a proposal to include other initiatives like the black industrialists’ programme, but there was another view that the sentence already included a qualifier and had taken care of the provision for the programme. The next bullet was to make changes, instead of promoting the provision. The amendment was to reflect that “we strengthen the implementation to ensure compliance with the preferential procurement policy framework by government,” and delete the word ‘department’ because of the need to go beyond the department.

The last bullet, in the later section, which said: ‘we must exercise oversight over the implementation of the commission amendment, and particularly with regard to the outcomes of the forensic audit into the Competition Commission...’ was a new proposal that came in during the previous week before the sitting, and had been duly effected.

Mr Tyumre suggested that the work must be undertaken by the Committee in the next Parliament and that there must be a follow-up on it. On the recommendation, instead of being specific in regard to the colloquium on line 4, reference was made to the development of a capacitation programme, rather than referring to it as colloquium. On page 7, under the purpose of the report, it was suggested that the report should make a recommendation and provide the way forward. He said the points were well made, since a recommendation flowed from the report. On page 16, the only correction under item two was on statistics of Committee activities with regard to legislation which was corrected. The only legislation was the Competition Amendment Bill and the Infrastructure Act, which was new in the term.

Mr Tyumre moved to page 18, under the first two bullets, only tourism was mentioned but it was amended to reflect ‘manufacturing’ because the focus was the auto industry, the green economy and the pharmaceutical industry. The subsequent changes were that references were made to more sectors than the initial ones. Still on page 18, under “challenges encountered during Committee briefing”, under ‘technical challenges,’ reference was made to instances of legacy and the receipt of documents from the departments. The point which was made there was that Members were not given enough time to prepare as a result of these challenges.

On page 19, under the “issues for follow up,” it was observed that the first sentence was too long and should be cut. It was also suggested that the information be depicted by bullets for ease of reference. On page 21, the only correction there was the reference to the Competition Amendment Bill. It had been corrected and referred to as ‘Act,’ because at the point of the publication of the report, it would have become an Act passed in February this year (2019).

On page 22, under content-related challenges under the last bullet, reference was made to the fact that the Competition Amendment Bill was technical in nature, and there was not sufficient assistance technically for the Committee during the processing of the bill. Under “issues to follow up” on page 23, the last bullet reflected that Parliament must ensure that Members were supported with technical expertise during the processing of the bill even prior to the other stages. There were no changes on oversight visits, rather there was a proposal for a heading on scientific and industrial research on page 41. He said the heading was not there initially. Page 42 was a follow up on the heading also.

On page 48, it was suggested that the first bullet on technical challenges be deleted-- it made reference to last minute changes on oversight. There was also a slight correction there because the bullet talked about the absence of a provincial executive and accounting officers ‘in some provinces,’ but it was corrected to reflect ‘in most provinces.’

Under content-related challenges, with regard to the veracity of information on project profile, correction had to be effected to show cases of isolation. It was an exceptional situation, and during that time when the province was under the present administration, information were not properly disseminated and was found to be contradictory from what Members had been given prior to that engagement. That correction was made to allow the point to be applied to the North-West.

The bullet that referred to the Department, national and provincial, not providing full information was taken out and the rest of the bullet point was left. On the recommendation, the first bullet point on Parliament setting up ground rules was deleted, and adjusted to refer to ‘Standard Operating Procedures’ instead of ‘Rules’ because there was a flow from the strategic plan of the institution during the period, and this was captured in the Annual Performance Plan (APP) of Parliament. Whatever improvements were needed in terms of the oversight exercise were reflected there, so there would be standard operating procedures to implement the decisions. On the last part, the meeting could not finalize the bullet under recommendations. He noted that upon a second consideration of the issues on the bullet, it was discovered that they flowed from the recommendations that were extracted from the Committee report on the oversight visit.

He gave the example of the promotion and sustainability on government investment initiatives, such as the Industrial Development Zones, where there were specific reference on page 29 to people having been given R2 million by government, but were encountering challenges at different points which left them in a difficult financial situation. He added that the bullet was taken from that situation, which was extracted from the Committee report.

Another example was the case of the exposure of South African businesses to below-cost imports, with reference to the middle men, and the report on that visit was still challenging. He also made it clear that throughout the oversight report, there were issues around localisation and that informed the last bullet in the recommendations.  

He reminded the Members that the meeting had ended at that point. He further referred them to point 55, where he indicated an additional bullet under the summary of outstanding issues in the interactions with the Department, but said it would be better discussed in the course of the meeting.

Discussion

The Chairperson asked if Members were happy with the presentation and the areas reported by the content adviser.

Members expressed their satisfaction on the areas reported.

The Chairperson commencing from page 49, went through the report page by page. She reminded Members that the Malaysian oversight study tour had been dealt with. The report was dealt with and adopted, and had formed part of the present discussion of Committee. Members were requested to express any challenges which they observed from the lessons learnt.

The Chairperson referred Members to point 7 – the draft report of the Portfolio on Economic Development on its activities undertaken during the Fifth Parliament (2014-2019) on international agreement -- and argued that none was referred to the Committee. On statutory appointments, she observed that during their term, there were no appointments done through them and the Committee was never involved in any petition. She was not sure of the importance of the word ‘term.’ On the obligation conferred on the Committee by legislation, by virtue of the fact that the Minister is the secretariat, she expressed doubt as to whether the Committee had an oversight role over that. She requested Members to look into that. She noted, however, that whereas the bill was referred to the House for processing, the implementation did not lie in one department. She reminded Members that efforts had been made, but it was realised that the clause in the bill that was supposed to ensure that the particular Act was reported through the Committee, was not present -- the provision had been taken out. She had followed up on the matter and reported to the Committee severally. Other than that, the Committee has no direct responsibility over the matter.

She added that based on that, the House Chairperson of Committees had been tasked to set up a committee involving all those dealing with social and economic infrastructure so as to create an avenue where the executive could account to the legislature. She suggested that the paragraph on infrastructural development be deleted, because nothing of such a nature was done during the term of the Committee.

Mr S Tleane (ANC) agreed with the Chairperson, and advised Members not to invite unnecessary attention from the readers of the report. The task of the Committee was to report on what had been done without being too technical -- rather to monitor and coordinate. The report was largely about coordination.

The Chairperson got a positive nod from all Members on the matter.

She then referred to the Competition Amendment Act. She contested the provision of the bill which conferred an obligation on the Committee. She pointed out there was also an Act. She sought clarification on what was required of the Committee as regards the provision. Her argument was that if the obligation conferred by legislation was other than for oversight purposes, the Committee would not be able to act because tit did not have powers to appoint the board. Even in terms of the Competition Act, it was only the Minister or President who had the power to appoint the board. Even the Act of the Industrial Development Corporation (IDC) did not confer on the Committee the power to appoint. The obligation was on the Minister or President to appoint, including their subsidiaries. The only power of the Committee was to amend the Act. She further argued that the obligations were not conferred by the legislation, but by the Rules of the House and by the Constitution. As lawmakers, anything could only be referred to them, not conferred. It could be referred to them by the Speaker for them to deal with. She suggested that the issue be clarified or deleted, and the word “none” be written in the space.

Mr Tyumre appreciated the Chairperson’s views and direction, and suggested that rather than putting the word “none,” the Committee could make reference to its inherent obligation to oversee relevant legislation. That would make the legislation relevant to the Committee and create the obligation on their part.

The Chairperson asked Members they agreed with the proposal to include all other legislation.

Members agreed to the proposal.

The Chairperson further asked if Members agreed with the recommendation on issues for follow up.

She read the recommendation to everyone, and it was approved.

The Chairperson went to point 11 on ‘Summary of Outstanding issues on Committee’s interaction with Entities,’ and asked for the views of Members.

She went on to the joint engagement with the Portfolio Committee on Health on the pharmaceutical sector with regard to the challenges identified in the oversight report. She reminded Members of the joint meeting they had with the Departments of Health and Trade and Industry. She commented that there had been no follow up. She recounted that the meeting was a briefing by the Department on the tender on how antiretrovirals were acquired in relation to the issues which the managing director of Aspen had addressed.

Mr Tleane said there were more than just the Committee group which may have to do some follow up. He suggested that the heading should not read ‘department/entity,’ because there should be an Act that made them ‘department',’ in order to cover up for other portfolio committees on issues that needed to be finalised. He suggested the inclusion of a line in the report that dealt with matters of cluster work. He emphasized that cluster work was important and should be indicated somewhere in the report, preferably towards the end of the report.

The Chairperson asked if it had to do with the coordination of the economic cluster.

Mr Tieane agreed with the Chairperson, and suggested that this cluster work should be improved on by the 6th Parliament.

The Chairperson suggested better coordination of the economic cluster work by the relevant authority. She also added that the improvement was meant for purposes of sharing and collective work in relation to issues of common interest.

Dr M Cardo (DA) reminded the Chairperson of the planned discussion with the Minister on the forensic investigation into the Competition Commission.

The Chairperson said she had discussed this with the Minister, but the Minister had not got back to the Committee on the matter. The Minster had made a pronouncement on the matter in the legislature, but it had not been brought to the Committee for discussion, therefore it could not be an outstanding matter for the Committee. It would be unfair for the Committee to deal with issues relating to the forensic audit when it had not been discussed. She disclosed that when the matter arose during the plenary, the Minister had made it known that the forensic audit had been established, and that he had appointed an advocate and an attorney to look into the matter, especially with issues involving the misappropriation of funds. This was what she considered the only snag.

Dr Cardo asked if there were no interactions with the Auditor General (AG). The AG had demanded a breakdown of details of the irregular expenditure which the Attorney General had identified in the previous financial year. The AGl’s office had set up a committee for a detailed breakdown of the irregular expenditure. He reminded the Members that the Committee secretary, Mr Peter-Paul Mbele, had distributed the emails. Also, what the Minister had mentioned in the House was a panel to look into the administrative strengthening of the Competition Commission so that it could properly implement the Competition Amendment Act. The forensic investigation was a separate matter. The directive had come from the National Treasury, and they had asked the Economic Development Department (EDD) to institute a forensic audit around the Commission’s expenditure and the procurement service provider.

In response, the Chairperson said her understanding of the matter, from what Dr Cardo had said, was to put up a forensic audit on the matter relating to the Competition Commission. She asserted that the matter had not been discussed. However, the Auditor General had been asked about the irregular expenditure, not necessarily by the Committee. The response she had received did not relate to the forensic or actual misappropriation, but the general irregular expenditure, and during the Budgetary Review and Recommendation Report (BRRR), there had been a recommendation that the departments should look into the cases of irregular expenditure of the competition authority. That issue was covered. But in relation to the recommendation of Dr Cardo, although there had to be a forensic audit of the competition authority; that recommendation could not be taken because during the term of the Committee, the issue had not been discussed.

Dr Cardo asked how the 6th Parliament would not lose focus of the issue and deal with it if it was not discussed by the present Committee.

The Chairperson sought the views of other Members on the issue

Mr Tleane said that what the Committee was trying to do was to unpack the works that were done earlier, after which the works would be dissected and analysed for the 6th Parliament to look at. They could not advise without first engaging. It was based on the Committee’s performance as they engaged on a particular matter, that told them whether the matter had been well executed or whether there was a need for additional work in the future. They had not really engaged with it, because it had been brought up during a fleeting moment. Those who would be there in the future may do the extra work, and the Minister would be able to expand on those issues. The Committee Members could then take it from there. For now, however, the Committee did not have anything on the subject. He discouraged the attempt to invite unnecessary probing into the report that could not be properly explained.

The Chairperson said that aside from irregular expenditure, the Committee was not aware of any other issues. The issue of the expenditure would be addressed during the BRRR meeting through a report to Parliament. She reminded Members that all parties had been given platforms to open up the discussion. With regard to currency, the BRRR meeting where annual reports and audited statements were considered, had not addressed the audited statements. She advised that if the matter was put in the legacy report, it would misinform the in-coming Parliamentarians. Also, in addressing the matter raised by  Dr Cardo, she agreed that the matter had been discussed, the AG had been briefed and presentations had been made as a Committee in the report, but no reference had been made to a forensic audit.

Mr A Cele (ANC) wanted the Chairperson to clarify the red table on page 53 in regard to the IDC application.

Mr I Pikinini (ANC) clarified the meaning of the red table.

The Chairperson referred the Committee to page 54, and reminded members about the Liquefied Petroleum Gas (LPG) issue. The Committee had received a big blue report after the Speaker had referred the matter to it and Members had engaged on it. She asked for their views, and wanted clarification from the Committee secretary, who had reported that the matter was not referred for report

Mr Mbele said the matter was not referred to the Speaker, with the request that the Committee must report back to the House, but rather it was for the Committee to facilitate a discussion at that time. He noted that the Committee only had a conversation with the Portfolio Committee on Energy, which could be included under matters outstanding.

The Chairperson reminded them that it was not for reporting, but for the purpose of interaction. She noted, however, that there were outstanding issues that were not contained in the report. She also reminded them about their supposed meeting with the Committees on Energy, Trade and Industry and Public Enterprises, because of the need for implementation since the various departments had their different regulations and the Treasury also issued its practice notes. The Committee was supposed to have discussed all these issues, but all efforts to organise the meetings had failed due to inconsistencies, so the programme could not materialise. The programme of Parliament kept on changing and the availability of other sister committees were also a challenge because of the changes. These issues had been raised; alongside other issues which Parliament was suppose to take notice of. This was the only matter referred to the Committee apart from the legislation. Another challenge was the inability to meet with other sister committees. This aspect would be covered by the recommendations and included as a challenge.

Members agreed to this view by the Chairperson, that rather than using the word ‘non,’ the word ‘challenge’ should be used.

The Chairperson said there would be a strategic plan attached. Members should look into the master attendance register to enable them to properly fill in their performance register.  She referred to page 4, the second bullet, and said it should be amended to include not only bodies, but also platforms. It was not all about ‘dealing,’ but also ‘belonging,’ because unless the opportunity was given, the Committee may not be able to engage effectively. That was what made one formally recognised as belonging to a class and participate. One performed better when one was exposed.

She asked Members whether the report was a good representation of what they had done during their five years in Parliament.

Mr Pikinini  confirmed that the report represented what had been done, and thanked Members.

Mr Cele also confirmed that the report was objective and a good representation of what the Committee had done.

Dr Cardo felt more work should have been done on the Competition Commission report. He felt there were structural and organisation issues where there may have been an unwillingness to confront. There were serious problems and the next Parliament may lose sight of the problems because of the way it had been dealt with. Another issue he raised was that of the International Trade Administration Commission (ITAC). It had formerly been under the DTI, but had later come under Economic Development. It had not really appeared before the Committee except during the BRRR annual report. He expected the next Parliament to address the challenges that ITAC was facing, which they themselves had mentioned.

In her response, the Chairperson said much could have been done but this was all the Committee could do for this term. She recalled that the Committee had engaged ITAC on a lot of issues pertaining to their work. Engaging with them had been affected after the Committee had been informed that the role of economic development was only around policy, and the other role was under trade and industry. Most of the work done was at the committee level, but they had engaged with ITAC during the time of the previous chairperson. Unfortunately, most of the time the Committee could not get the information needed and there were other issues it could not pursue because those issues were outside the purview of the matters dealt with by the Minister.

In terms of the competition authority, the Chairperson said the Committee had themselves pushed for amendment which dealt with structural issues of the institution, hence the discussion on continuous building of capacity at the institution. The new amendment referred to lots of structural changes. The President himself was proud of the law which, if pursued, would impact on the general economy as a whole. The problem would be the implementation. The 6th Parliament must pay attention to the issues in the report. As regard the tribunal, there were challenges, because the Commission could only be successful if the Tribunal fast tracked the process of clearing all issues before it and if they worked together with the law enforcement agencies. Unfortunately, the law enforcement agencies which they thought would fast track the facilitation of the punishment to those who disobeyed the rules had not been effective, and that talked to the nature of the area the Committee was working on, because “where there is business there would always be challenges,” but the competition authorities would continually have those kinds of challenges.

She reiterated that the Committee had done commendably well, though it could have done better.

Mr Cele moved the adoption of the report.

The meeting was adjourned.

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