Social Assistance Bill and the South African Social Security Agency Bill: deliberations

Meeting report

SOCIAL DEVELOPMENT PORTFOLIO COMMITTEE
19 September 2003
SOCIAL ASSISTANCE BILL AND SOCIAL SECURITY AGENCY BILL: DELIBERATIONS

Relevant documents:
Social Assistance Bill [B57-2003]
South African Social Security Agency Bill [B51-2003]

SUMMARY
The Legal Department briefed the Committee on the main legal concerns around the Bill. A concern was management of the rights of citizens to social assistance and provision of a mechanism in the Constitution to allow the President to assign powers from provincial to national level. Advocate Masutha also addressed the Committee on related legal technicalities within the Bill.

MINUTES
Advocate W Krull of the Department pointed out that the main concern was the gap between national and provincial legislation. If the transition was not properly managed, there would not be any legal provision for social assistance. A related issue was that of managing the rights of citizens to access as well as the administration and operation of social assistance. Beneficiaries should not even be aware of the change in legal administration and there should not be any interruption at the front end of operations.

Advocate Krull stated that MPs could not prescribe to provincial legislatures. The Constitution could provide legislation for national administration and also provide the President with powers of assignment, but not for provincial counterparts. Ideally, there should be a mechanism in the Constitution to allow the President to assign powers from provincial to national level. Clause X in the Bill provided that the power of the Director-General be delegated to provinces. It was vital that co-operation and support from key roleplayers be secured, particularly from the various provinces so that the transition from provincial to national level could be facilitated. Such issues where provincial legislatures acted independently had already been raised at MINMEC. A great deal depended on the co-operation of the MECs and their respective legislatures.

Ms G Borman (DA) asked whether the Mashaba case would influence legislation. The process was bound to be drawn out and complicated. She asked whether centralisation would work if all provinces bought into the concept or whether Constitutional and legislative problems could still arise.

Ms J Chalmers (ANC) commented that the issue was fundamental to the success of the Agency and should have been given more thought in legal terms. She asked what developments had taken place at MINMEC meetings.

The Chairperson mentioned that KwaZulu-Natal had been entirely convinced of the concept of centralisation.

Advocate M Masutha submission
Advocate Masutha (ANC) said the argument presented by the Department could be dismissed out of court. The court's decision could not be pre-empted at that point.

The Social Assistance Act
A difficulty question regarded the extent to which the Social Assistance Act had been assigned. The assigning provision in the Interim Constitution, Section 235 (8), stated that the President could assign functions from the national to the provincial sphere except those functions that fell within the scope of section 126 (3) of the Interim Constitution. The latter was identical to the current section 146(2) of the Constitution. Both provisions stated that where certain criteria were met by the national legislation, this prevailed over any provincial law. This included situations where national law was required to set uniform norms and standards to maintain economic security, internal unity and so forth. If there was a provincial law providing for grants and a national law providing for the same, the national law would prevail.
Making Regulations
The Committee and the Department were confronted with a situation where both wanted to pass a national law that would provide for the function in the national sphere. It could be argued that certain functions of the Social Assistance Act had not been assigned. In the 1997 Welfare laws, there was clarity as to who was responsible for making regulations under the assigned law. A provision stated that regardless of the extent to which the assignment had been affected, the power to make regulations must be deemed not to have been assigned. With retrospective effect the regulations made on 1 March 1996 assigned the Act to provinces. If the power to make regulations had been assigned, it would have meant that the entire set of regulations used to administer grants since 1996 was invalid.

The second measure taken was to enact a provision stating that no social grants could be provided in terms of any assigned or provincial law, and that only the Social Assistance Act applied (as amended by the Welfare Laws Amendment Act). Social grants would then be a national function in accordance with the Welfare Laws Amendment Act. This provided for the Minister and the Director-General to delegate powers to provinces to administer grants as a national function. The provision was not operational except insofar as the abolition of the Maintenance Grant and the introduction of the Child Support Grant was concerned. If the provision had been operational from 1997, the national Minister and Director-General would have been legally liable and responsible for the payment of grants.

The Equitable Share Mechanism
On the eve of submitting a Presidential Minute, it was discovered that at the level of Treasury, the mechanism to allocate resources for the payment of grants was done through the Equitable Share mechanism. In terms of this mechanism, provinces were entitled to a fair share of national funds. Once the money has been allocated in bulk to the various provinces, it was up to the province to choose how to apply those resources. There was no control over this at national level. A situation known as the moral hazard would then prevail whereby the national Minister would have to appear in court and explain why beneficiaries were not receiving grants. The Minister would not have control over the funds that had been set aside to pay grants because he did not control provincial treasuries. As a result, section 20 could not be operational as it would suppress the assigned law. The Welfare Laws Amendment Act could be totally operational because the legal duty would be reallocated to the national sphere. Legal responsibility to pay the Child Support Grant vested in the national Minister and Director-General, who would have to bear responsibility for any failures. Litigation had thus far been around other grants and not the Child Support Grant. Provinces had been taken to court and issued Contempt of Court orders because the Welfare Laws as amended, had not been operational.

The Social Assistance Act took effect on the basis that national and provincial functions had been assigned. There needed to be a phased-in shift from an equitable share allocation of provincial treasuries to direct national allocation. The Agency was given the power to administer this, but as stated in Chapter two, the overall responsibility to ensure that there were grants to honour that legal obligation would rest with the Minister. The administrator would have to ensure that when it assumed responsibility, it was ready to honour every application. The powers of the DG would be delegated to the Agency, as provided for in Clause X.

Transition
The transition of the legal responsibility from the provincial to the national sphere had to be considered. Proclamation Act 7 had transferred that responsibility to provinces. If the function was moved to the national sphere, the question would remain around which mechanism to put in place. One way of doing this would be to insert a provision of the end of the Social Assistance Bill similar to section 20, saying that the function to pay grants should be in terms of the national law. It should further provide that Presidential proclamation could stagger the implementation of this provision and operate the clause in one or more provinces at a time. The only obstacle to this approach was that the national sphere could not make a law in respect of a single province. The national law would have to be one of general application.

Assignment
Looking at assignment provisions, it seemed that the Constitution only focused on the transfer of powers from the national to provincial sphere as a one-way flow. The question arose whether the President could proclaim that the function to pay grants was to be exercised by the national sphere. The option to provide a trumping provision to restrain provinces from paying grants seemed more plausible. The proposed Social Assistance Bill might define social assistance in a different way to that of the Social Assistance Act. Where there were two laws dealing with social grants and providing differently, the risk of beneficiaries in the same situation not accessing equal benefits, should be considered. For example, the current Bill did not provide for Social Relief of Distress while the assigned Social Assistance Act did. While the Act still applied, it entitled beneficiaries to Social Relief of Distress. The difficulty with the staggered approach would be that people would be able to claim where the new law applied and not where the old law applied.

The Chairperson interrupted at this point and argued that the discussions on technicalities should take place outside the Committee. These matters should be discussed by the Legal Department. He asked for a quick response from the Department on the matters raised by Advocate Masutha.

Advocate Krull commented that the issues raised by Advocate Masutha were of merit and the Legal Department would realign itself with the opinions of the State Law Advisors in this regard. A number of Constitutional issues needed to be addressed regarding the powers of the President and the provincial authorities. The matter of staggering on a geographical basis should also be taken into consideration.

The Chairperson agreed and asked that a solution be proposed at the following meeting that would enable the Committee to make progress on the issue.

Mr S Jehoma from the Department stated that a difficult issue was the outsourcing and consolidation of the payment grant. There has been some reluctance to move more beneficiaries to the banks. This has only been undertaken with vigour in the Eastern Cape and in Gauteng. Advocate Masutha's contribution was much appreciated.

Advocate Krull requested that Members give general approval in respects of the Bill regarding any aspects where the amendments were needed, and asked if the Committee supported the Bill at that stage.

Advocate Masutha queried the route of assigning functions directly to the Agency, as opposed to having these functions within the Department and then delegating to the Agency. The matter had been resolved at a policy level and progress was made. With regard to the Bill, the role of the Agency in providing services beyond from the Social Assistance function was being considered. The Bill generally provided for this future possibility. However, it would not be automatically ready to take on Road Accident Fund and other functions without the necessary statutory amendments to both respective laws. There was no intention to provide for that because there was no time to deal with the detail involved. A general intent might needed.

The Chairperson pointed out that the state function of grant payments should be passed on to the Agency. The extent to which the Committee had discussed the matter illustrated the variety of problems that needed to be resolved. The Department would have to take these into account and present solutions so that the Committee could achieve finality on the matter.

Mr Jehoma said the Government would definitely use the Agency for other services but lacked knowledge around legal mechanisms to enable such functions. The State Law Advisors would be consulted but the Department hesitated to impose an obligation that needed to be implemented before everything was ready.

Advocate Masutha added that some kind of broad statement of intent ought to be included in the objectives or preamble of the Bill. Perhaps this would not be necessary because Parliament could effect the necessary legislation in future to enable the Agency to take over other social security functions. Such a statement would entrench the concept in the Bill.

Mr D Plaatjies from the National Treasury responded to the comment on the delegation of powers to the Agency. The South African Revenue Service (SARS) had often been used as an example of one of the more effective public entities. SARS was not independent and responsibility lay with the Minister. The responsibility then rested with the National Treasury because SARS funds were transferred from National Treasury to fulfil its functions. Treasury's view on the shift from provincial to national level was that the responsibility for delivering social grants rested with the Department, and was then delegated to the Agency.

Advocate Masutha referred to a clear distinction between an administrative function and an executive function. The former rested in the Minister that all social grants were made available. Under the current Social Assistance Act, certain powers rested with the Minister and others rested with the Director-General. Effectively, Director-General functions would be the Agency functions. The overall responsibility to pay grants rested with the Minister. The same approach would apply in the case of SARS.

The meeting was adjourned.