Broad-Based Black Economic Empowerment Bill, Liquor Bill, National Gambling Bill: briefing

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ECONOMICS AND FOREIGN AFFAIRS SELECT COMMITTEE
3 September 2003
BROAD-BASED BLACK ECONOMIC EMPOWERMENT BILL, LIQUOR BILL, NATIONAL GAMBLING BILL: BRIEFING

Chairperson:
B J Tolo (ANC)

Document handed out
Presentation on proposed amendments to Black Economic Empowerment Bill
Final Draft of Broad-based BEE Bill [B27B-2003]as voted on 20 August 2003
Draft Code of Good Practice issued in terms of section 9 of the BBE Bill
Presentation on Liquor Bill
Liquor Bill [B 23B - 2003] as voted on by the National Assembly 20 August 2003
Presentation on National Gambling Bill
National Gambling Bill [B48—2003]

SUMMARY

In its briefing the Department outlined the changes effected to the Broad-based Black Economic Empowerment Bill and the Liquor Bill as a result of the public hearings. On the National Gambling Bill, the Deputy Director General apprised members with the background to the Bill and the schematic overview of the Bill.

MINUTES
Broad-based Black Economic Empowerment Bill: briefing
Mr October took the Committee through the history of the Bill and the changes that had been effected after the public hearing. He outlined the key issues that were raised during the public hearings which include the composition and powers of the advisory council; the definition of based Black Economic Empowerment (BEE); the absence of provisions dealing with the financing of BEE and, the meaning of "black" in the context of the Bill.

The important changes that had been effected after the public hearings include:
- the revised draft seeks to expand the structure of the initial Bill without departing from the principle of creating an Enabling Act
- objectives of the Bill had been redrafted to capture the broadening ownership, skills and participation management
- the Minister's discretion has been redefined
- reporting of State Owned Enterprises would now be dealt with through shareholder compacts
- the composition of the Advisory Council is set out more clearly
- the role of the Advisory Council has been redefined to include promotion of the sector charters and to facilitate partnerships between organs of states and private sector
- the requirement for public entities to implement the code of good practice has been made more explicit
- there is clear alignment between the Strategy document and the Bill

Discussion

Mr Conroy (NNP) asked whether the definition of "black" in terms of the Bill was referring to Africans, coloureds and Indians in South Africa or to all black people in Africa.

Mr October (DTI) pointed out that the intention of the Bill was to deal with inequality within South Africa. The definition of 'black' in the Bill was consistent with definitions in other legislation such as the Employment Equity Act.

Mr Bhengu (IFP) commented that the intention of the Bill had been well put but that the strategy to concretise the intentions of the Bill was still not clear. He asked what capacity did the State Owned Enterprises have in helping the emerging BEE companies. He also asked for the rationale for the Advisory Council being chaired by the President.

Mr October explained that the Department wanted the Council to be a champion of empowerment as well as to have a high status. To achieve BEE, three factors would determine success:
-access to finance
-access to a proper market
-proper management of the BEE companies.
The strategy document attempts to deal with access to finance, and institutions such as the IDC and the NEF have been identified as vehicles for funding. He further noted that procurement would allow preferential access for BEE to the market.

Mr Bhengu (IFP) asked if the Department envisaged some sort of rural economic strategy.

Mr October pointed out that the NEF would specifically target funding the micro-entities. Hence there was no need for a separate rural economic strategy.

The Chair asked how the Advisory Council was going to advise a Present who was chairing it.

Mr October pointed out that that the arrangement was very unique and would ensure that BEE would always be on the national agenda and there was an urgency to create a high profile council.

Mr Bhengu (DTI) noted that the charters were intended to sensitise the various sectors of the economy, but the Bill had to set out what would happen if the sectors fail to comply with the charters.

Mr October conceded that there was a need for strong mechanism to monitor the sectors. However it was difficult in practice to monitor compliance. He pointed out that since the State was the biggest procurer, it could use its procurement and licensing to induce various sectors to be transformed through charters. Without being too prescriptive to the private sector, the government will require a flexible approach that will allow each sector to determine the form and manner in which it will contribute to BEE within the broad parameters of the legislation. In support of the Department's view on voluntary compliance, he mentioned the experience in other African countries and Malaysia. They have a strong compliance mechanisms on the sectors but their mechanisms are not working because sectors will always find a way of evading compliance.

Liquor Bill: briefing
Ms Ludin (Deputy Director General) and Mr Jeremiah Mela (Director: Licensing and Inspections Consumer and Corporate Regulation Division) briefed the Committee. The changes that had been effected as a result of the hearings were outlined:
- sorghum beer would receive the same treatment as other forms of liquor
- the criteria for the implementation of the three tier system has been specified clearly and the restrictions on buying and selling have been removed
- the public interest issues have been clarified
- all constitutional matters in respect of national and provincial competence have been clarified.

Ms Ludin also explained the purpose of each chapter and the schedules (see document).

Discussion

Mr Conroy (NNP) asked what would happen if a manufacturer imports alcohol and bottled it in South Africa, could such products be considered a South African product?

Ms Ludin said that the labelling of a liquor product was dealt with under the Product Labelling Act.

Ms Ramodibe (ANC) asked what the implications of the Bill were for the production of sorghum beer. She also asked at what stage were retailers expected to be registered.

Ms Ludin pointed out that the Bill seeks to recognise that people do brew sorghum beer for traditional activities and the Bill would exclude persons who manufacture or bottle beer with no intention of selling it. However if one produced liquor for selling, one would have to be registered under the Act.

She continued that at national level the Bill seeks to regulate the major manufacturers and the Bill excludes small types of activities which could be regulated under the provincial laws. She pointed out that in terms of the Constitution, retail licensing was an exclusive provincial competence.

Mr Conroy (NNP) asked whether the Bill would cover other retailers like Pick & Pay and Checkers who were already distributing wine.

Mr Raju (DA) asked whether the Bill allowed for the police to raid the taverns and shebeens.

Ms Ludin pointed out that they had not given police general powers. However the Bill allows them to accompany the inspectors and help in the case of seizures but they had not been given explicit powers. Retail was not regulated under the Bill but the retail supermarkets will be regulated under the provincial laws.

National Gambling Bill: briefing
Ms Ludin (DDG) outlined the background to the Bill and gave an overview of the gambling industry before going through each chapter of Bill (see document).

She pointed out that the initial intention was to make amendments to the Gambling Act of 1996. However due to the volume of amendments it was necessary to repeal the Act in its entirety and a number of regulations that had been created through the old Act had been incorporated into the Bill. The Bill's main objective was to clarify the exercise of the concurrent national and provincial jurisdiction. Furthermore it aimed to exercise greater control over gambling and to give effect to co-operative governance as well as to recognise the negative socio-economic impact of gambling. In terms of the proposed Bill the gambling industry was now required to satisfy certain public objectives and these include:
- Black Economic Empowerment
- employment creation
- creation of new fixed investment and infrastructure
- generate revenue

Ms Ludin pointed out that the gambling industry was generating R68 billion gross revenue every year and that the total revenue for government from the industry was just under R 500 million. She also noted that recent research revealed that the number of problem gamblers in South Africa as proportional to regular gamblers was higher than in developed countries.

Discussion
Mr Conroy (NNP) pointed out that there was no need for a national register for the gambling machines as there were provincial registers already.

Ms Ludin pointed out that the register was kept by the manufacturers and not by the provinces and the manufacturers could not be held accountable for a machine that has been transferred to another province and used in illegal gambling. Hence there was a need for a national register in order to track the machines moving from province to province.

Mr Raju (DA) asked what criteria were being used to determine the siting of the casinos. He was concerned that casinos were built near to where poor people reside.

Ms Ludin replied that during the issuing process of the gambling licence, the National Gambling Board was obliged to consider the social impact of the siting of the casino.

Mr Lucas (ANC) was concerned that the Bill was silent about the corporate responsibility for casinos. He also asked why there were ATM machines inside the casinos.

Ms Ludin referred the members to Clauses 13, 14, 15, 17 and 53. These clauses prohibit the casinos from providing and also prohibits casinos from installing ATM machine inside the casinos or to advertise to the public in an misleading way. Clause 17 prevents the construction of casinos next to schools.

She pointed out that the proposed Bill was touching on areas of concurrent jurisdiction and the role of the national government was to maintain national norms and standards.

The Chairperson thanked the department for its presentation.

The meeting was adjourned.

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