Air Traffic and Navigation Services Company Amendment Bill, Airports Company Amendment Bill; with Deputy Minister

NCOP Transport, Public Service and Administration, Public Works and Infrastructure

26 August 2020
Chairperson: Mr M Mmoiemang (ANC: Northern Cape)
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Meeting Summary

Video: SC on Transport, Public Service & Administration, Public Works & Infrastructure (NCOP) 26 Aug 2020

The Department of Transport, in a virtual meeting, briefed the Committee on the Air Traffic and Navigation Services Company Amendment Bill, and the Airports Company Amendment Bill.

The Department said the objectives of the Bills are to align the principal Acts to the Companies Act and the Public Finance Management Act. The Bills seek to amend the principal Acts, because the Acts did not provide for appeal mechanisms, and a provision empowering the Minister to make economic regulations.

Some of the key features of the amendments are to give legal status to the approach document; to outline the procedure for the selection and appointment of members for the appeals committee, and also the regulating committee; to provide the procedure for appeals, and also to authorise the Minister to make regulations.

The Committee appreciated the importance of the amendments, but raised concerns with the procedure for the appointment of members as the Bills do not provide for the exact period the members. It makes reference to the Minister being able to determine, and pass regulations to this effect.

Members suggested, instead of the period to be provided for in the Regulations which the Minister is empowered to make, the tenure of office for members must be provided for in the Act itself. Members queried the provision seeking to empower the Minister with regulatory authority.

Meeting report

Opening remarks by the Chairperson
The Chairperson said the Bills were passed by the National Assembly. The Committee must finalise the process according to Section 75 of the Constitution.

Opening remarks by the Deputy Minister of Transport: Ms Dikeledi Magadzi
The Air Traffic and Navigation Services Company is a Sate-Owned Company (SOC). It was established in 1993 for the acquisition, establishment, development, provision, maintenance, management, and operation, of the air navigation infrastructure, air traffic services, and navigation services. The Company is a public entity listed as such in Schedule Two of the Public Finance Management Act.

The Deputy Minister highlighted the challenges which led to the amendment of the Acts. The Bill will amend the Air Traffic and Navigation Act of 1993, and strengthen the economic regulatory framework. The Air Traffic and Navigation Act is currently not aligned to the Public Finance Management Act and the Companies Act. The empowerment of the traffic navigation systems is to provide services subsidiary services outside the Republic of South Africa. The main objective is to ensure investments outside of the Republic of South Africa are protected. This will avoid or minimise the risk which could affect the Air Traffic and Navigation Services Company.

Deputy Minister Magadzi said the lack of an appeal mechanism is one of the challenges which led to the amendments.  The approach document acts as the guideline when the Company submits a permission application, but it has no legal status. There is no empowering provision to use the Approach Document.

In addition, the Minister is not empowered to make economic regulations. These are regulations on the procedure which must follow when enforcing compliance, and the procedure for lodging a complaint, or an appeal.

The Deputy Minister highlighted the proposed amendments to the Act. Clause One of the Bill will amend Section One of the principal Act by inserting certain definitions- ‘the Airport Company’, ‘the appeals’ Committee’, ‘Approach Document’, ‘Companies Act’, ‘Director General’, ‘relevant activities’, ‘subsidiaries’, and ‘economic regulation’, among others. These definitions will be inserted to assist with a better understanding of the principal Act.

Clause Two of the Bill will amend section two of the principal Act to align the principal Act with the Companies Act, by deleting references to the repealing provision of the Companies Act.

Clause Three of the Bill will amend section five of the principal Act. It extends the period for the Company publishing any airport charge, to a month prior to the charge coming into operation. The extended period will allow the users of the air navigation services infrastructure, particularly airlines and other operators directly affected by the new tariffs, sufficient time to prepare for implementing new tariffs, as issued.

In addition, clause three will insert paragraph (g) in section 5(2) of the principal Act. It will ensure any activity or business, other than the relevant regulated business inside or outside the Republic, will be provided by the subsidiary. The Air Traffic and Navigation Services Company will do so in a way which will not substantially or adversely expose the core business or relevant activities to financial risk.

Clause three also amends subsection 5(iii) of the principal Act to empower the Company to venture into other businesses. This is to increase its revenue from sources other than air traffic charges or relevant activities. This clause supports the proposed Section 5(2)(g), which encourages the Company to not only rely on income from the air traffic services or relevant activities.

The Deputy Minister highlighted clause four of the Bill. It will amend Section 11 of the principal Act by giving the approach document a legal status. It will also extend the period of amendment for the conditions of the permit. Section 11(2) will be amended with a provision for the Company to apply to the Committee for a permit, by no later than the last month of the fourth financial year. The permit will be allowed to run for a full five years without amendments.

Currently, the permission is under review after every three years. The Company must apply in the first three months of the third financial year.

The Deputy Minister said Section 11(6)(A) will be inserted into the principal Act to remedy a situation in which an existing permission lapsed because of delays in issuing the new permit. The provision allows the Air Navigation and Tariff Services Company to continue levying tariffs. Such delays are normally caused by the prolonged consultations between the Committee, the Company, and the user- airline representatives. It is a result of differences in views on the economic regulator’s decisions regarding tariffs, capital expenditure, project, capex, and operational expenditure, among others

Deputy Minister Magadzi said clause five of the Bill will insert sections, 11A –11C, which are new sections, into the principal Act. The sections provide for appeal mechanisms, including the procedure for hearing appeals, and the decisions of the appeals committee.  The appeals procedure is for when the Company, or an aggrieved person, decides to appeal against the decision of the committee.

Clause six of the Bill will amend Section 13 of the principal Act by setting out the manner an aggrieved person, or the Company will lodge an appeal with the Appeal’s Committee.

Clause seven will insert Section 13(a) into the principal Act. It provides for offenses and penalties in  instances when a person wilfully disrupts proceedings, fails to attend as summoned by the Appeals Committee, fails to satisfy the answers to the questions put to him/her, or after being sworn in or making affirmations, gives false evidence. Such person is guilty of an offense which warrants being penalised accordingly.

Clause eight will amend Section 14 of the principal Act by authorising the Minister to make economic regulations. It does this by notice in the Gazette, after consultations with the committee. The regulations will provide for the procedure to be followed in the event of non-compliance by the Company, and the form to be used when lodging complaints to the committee. The Minister will also be authorised to make regulations about the form to be used, and the manner in which to lodge an appeal with the appeals committee.

Clause nine will amend the long title of the principal Act because of the amendments to be incorporated into the principal Act once the Bill is enacted.

Clause ten will amend certain expressions, citations, and words, which will be used in the principal Act. It will lead these expressions, citations and words, to reflect the present dispensation.

Clause 11 will be the standard provision dealing with the short title and commencement of the envisaged Act.

Several stakeholders, such as the Airports Company South Africa SOC Ltd (ACSA), Air Traffic and Navigation Services SOC Ltd (ATNS), Airline Association SA (AASA), and the Board of Airlines Southern Africa (BARSA), were consulted for concurrence, regarding the Bill.

The Select Committee for Public Service Administration, Public Service and Infrastructure will look into the Bill. The Deputy Minister asked Adv Adam Masombuka, from the Department of Transport, to take the Committee through the presentations on the structure of the Bills.

DoT Presentations
Adv Masombuka, Chief Director: Legal Services, Department of Transport (DoT), presented on the two Bills: the Airports Company Amendment Bill, which seeks to amend the Airports Company Act, and the Air Traffic and Navigation Services Company Amendment Bill, which seeks to amend the Traffic and Navigation Services Act.

He said the principal Acts to be amended are insufficient because it does not provide for the appeals mechanism. It also does not contain provisions which empower the Minister to make regulations in matters connected to economic regulation.

Adv Masombuka said the key features of the Bills are designed to give legal status to the approach document, align it with the Companies Act and the Public Finance Management Act, lay out the procedure for appointment of committee members, and also for appeal mechanisms.

The following stakeholders were consulted: the Regulating Committee, Airports Company South Africa SOC Limited (ACSA), Air Traffic and Navigation Services SOC Limited (ATNS), Airline Association SA (AASA), and the Board of Airlines Southern Africa (BARSA).

The Chairperson thanked the Advocate for elaborating further on the grounds set by the Deputy Minister. He said the Department has to play a role in strengthening the errors identified. He specifically referred to the appeals mechanism, strengthening regulation, ensuring there is alignment between the Bill and the principal Act, and also the Companies Act.

Ms Fatima Ebrahim, Parliamentary Legal Advisor, said they are happy with the Bill. The issues picked up, and the minor changes suggested, were addressed during the Portfolio Committee process which went through the National Assembly. As a result, their concerns were captured.

Mr M Rayi (ANC, Eastern Cape) thanked the Chairperson, the Deputy Minister, and the Advocate for the presentation on the two Bills. He said the two Bills seemed to address similar issues, and as a result, his questions are for both Bills. His first question was related to the amendments allowing both companies to conduct business outside the Republic. He asked what kind of business is referred to, which will be outside the Republic.

Mr Rayi’s second question was on the two Committees referred to in the Bills, the regulations committee, and the appeals committee.

Regarding the first committee, there is no indication on the period of appointment for those appointed to the committee. He asked for what period an appointment is. He made reference to amendment 11(E), which talks of the replacement of members of a committee, and the appointment of replacements. The appointed person will have to serve the remainder, of the unexpired part, of the period for which the member was appointed. The Bill is silent regarding this. Amendment 11(H) speaks on the vacation of office, and termination of appointment.

Referring to 11(D)(ii), Mr Rayi said, for him, this section is irrelevant, as it does not refer to any particular period. There is no indication on how many years make up the unexpired portion of the period. Similarly, as the Bill does not provide for the number of years, a person will be expected to serve as a committee member.

On the appeals committee, Mr Rayi said, the Bill does not explain the period. All it says is, the Minister will determine the period for which the appeals committee is appointed. It does not say how this will be, or if it will be in the regulations.

He asked for clarity on what the provision meant by saying the Minister will determine the period for which the appeals committee will be appointed.

Mr Rayi raised a question regarding the regulations - the Minister is empowered to make economic regulations. He asked what the role of the regulations committee is, specifically related to economic regulations. He asked what it is the committee is regulating which is different from what the Minister will be regulating.

Mr Rayi said, regarding the definitions, economic regulation relates to the issue of price controls. He asked what it is therefore, that the Minister will be regulate in terms of price controls. He asked what it is the regulation committee will be doing with regards to its work.

Mr T Brauteseth (DA, KZN) said he consulted with his Portfolio Committee colleagues and they are generally impressed with the two Bills. However, he wants to confirm with the Select Committee where it is in the process. According to his understanding, the matter might still go to the National Assembly for a second reading. As a result, the two Bills are still being revised and the alterations and sticking points raised will be dealt with. He asked Members to confirm where in the stage the Committee is and when it anticipates the Bills to come back for approval.

Mr Brauteseth said he was initially concerned about the Minister becoming the de facto regulator. He was advised it is actually a good idea because if the services the Department of Transport provides work well, there will be no need for all the other regulators to be involved. The Department is taking a step in the right direction towards having the regulation of all services falling under the Department. He asked if the Members can confirm if it is the end goal. Is the Department trying to get rid of, and slow down all the various regulators involved in the transport sector?

Ms B Mathevula (EFF, Limpopo) asked if the Department will invest in expanding the aviation industry and airways, to encourage more passengers to use air transport.  Secondly, she asked if the Bill will be open and transparent in making sure the committee, together with the appeals committee, are appointed in a transparent manner.

Ms Ebrahim outlined the process followed with the Bills. The confusion could have been caused because the Bill was initially introduced in 2018, but it lapsed. It was then reintroduced, passed by the National Assembly on 3 March 2020, and was now under consideration by the Select Committee.

Adv Masombuka, answered regarding the transparency of the procedure for the appointment of the appeals and regulations committees. He said there is a gap and, as a result, the Department decided the procedure for appointment must call for nominations. People will be nominated, following which there will be a selection process. This is how the process will be transparent. The procedure is laid down in the Bill. The process for the appointment of the committee members will be transparent because it will be the members of the public nominating fit and proper persons, recommending them to the Minister, for appointment.

Adv Masombuka answered the concern about the Minister being empowered to have regulation making powers. He said a gap was realised regarding regulations, and the gap can be closed by empowering the Minister to make those regulations. The Minister will be making regulations to clarify the principal Act, specifically, the Amendment Act. The implementers of the Act, the regulation committee, or the appeals committee, will be implementing it while guided by the regulations. Regulations provide guidance on how to implement the legislation.  

Adv Masombuka highlighted the intention of the provision, which is not to make the Minister the regulator himself. Rather, the regulations will be drafted, and the Minister will approve and issue the regulations in the Gazette

The Bills almost address similar issues. Both companies regulated by the principal Acts are in the same monopoly. This is why the Department is not going to appoint appeals committees in both Bills. The very same appeals committee which will be utilised to look into matters pertaining to ACSA will also deal with issues pertaining to ATNS.

The two companies will provide services outside the Republic similar to those provided in the country. The ATNS Company will also provide air navigation services, even outside the borders of the Republic. ACSA airport related services will be based on agreements with other countries.

On the period for the appointment of the appeals committee, the approach is for the Minister to determine the process, and the time period within which to serve as committee members.

Normally, all entities within the Department are appointed for a period of three years, with eligibility for further appointment for a period not exceeding three years. The term of office for the regulating committee is three years, and if a member appointed for a period of three years vacates the office during the second year of office, the remaining gap from the term of office is one year.

To fill in the gap, the Minister might have to appoint a person to fill the position for the remainder of the particular year. During the third year, calls will have to be made for nominations for a full term for the particular regulating committee, or appeals committee.

This provision is to avoid a situation where another member serves his first term, and the other his third term. As a result, the Department will give a term of three years for the whole committee. If a member vacates office during the second year of term, the Minister is empowered to appoint another person for a one year period to fill in the gap for the remainder of a year.

Ms Phumelele Ngema, Parliamentary legal advisor, said the Bill could go back to the National Assembly in the case of amendments. The process runs according to Section 75(c) of the Constitution.

Having assisted with the ACSA Bill, she acknowledged the appointment term is not indicated in the Bill, even if reference is made to Section 11 of the principal Act. Section 11 is in accordance with Section 15 of the principal Act, and can be addressed by the Minister through the regulations.
The time of three years is possibly indicated in the regulations, even though the Act does not speak to it.

Ms Ngema referred Members to Section 11 of the principal Act, as well as Section 12, and Section 5. It sets out the functions of the Company. The sections furnished answers to the questions the Members asked about economic charges. Since the principal provisions of the Act answer some of the questions asked, the Amendment Bills only seek to extend or empower the existing provisions, without taking away so much of what already exists in the principal Act.

Mr Rayi said when the Committee deliberates on the other processes, Members need to have the principal Act. He said he wanted to check if the principal Act clarified the period of appointment. He raised concerns saying after the adoption of the Bill, no one from the Committee will know what the regulations entail. He emphasised the importance of having such matters clarified in the Act itself rather than leaving it to regulations. The Select Committee does not participate in its adoption, this way. He asked the Committee Secretary, Committee Assistant, and the Researcher, to furnish Members with copies of the principal Act and its regulations, if it has regulations, during future sessions.

Mr Rayi acknowledged there were no regulations for the appeals, because the provision is a new amendment into the principal Act. He said the Select Committee had no knowledge of what the Minister’s determination will be. It could be in the form of a gazette, or regulation. If the Minister for some reason is not happy with the decision of the appeals committee, he can disband the appeals committee as there is no particular period it is entitled to, according to the Act.

Mr Rayi said the clause is specific, as it makes reference to the “remainder of the unexpired portion of the period”. Yet, the said period is not specified in the Act. He thought it confusing to quote something which is related to another section in the Bill, but is not specified in the Bill itself. The clause is supposed to refer to the regulations, and not to the “unexpired portion of the period” which is not specified in the Bill.

AdvMasombuka said it is an operational issue, because once a transparent process is run by the Minister for the appointment of a Board, a regulation body or appeals committee, the members will be given appointment letters. It will indicate the appointment period.

From this particular period, the Department will be able to determine the remainder of the period in the event an appointed member vacates office mid-term. Another person will then have to be appointed for the remainder of the period.

Mr Rayi said the appointment letters must be guided by law. For example, one Minister may appoint these members and give a particular period, and another may give a different period. There is no guiding law regarding the time period for the appointment. There must therefore be a specific section in the Bill speaking to the time period, even if it refers to the regulation rather than the Bill being silent. If there are regulations, the period must be specified.

The Chairperson said both Bills make reference to the approach document and the rationale behind attempting to legalise the approach document. He asked what the thrust of the approach documents are, if it is the same or not – what is the situation?  

AdvMasombuka said the approach document is supposed to be operational for both companies. It will be operational for the regulating committee, guiding its clients, which are the two companies, on how to lodge permit applications. Historically, the approach document is a significant document. It is not referred to in the legislation. This is why it is referred to as the guiding document for the regulating committee, for when the companies make application for permits.

Mr Brauteseth said it did not make sense to pass a Bill referring to regulations without having sight of the same. He asked when the Select Committee is going to be furnished with the regulations and if specific references can be made to time period.

The Economic Regulator Act was also to provide guidance to Ministers in general when involved in economic regulations. He asked for comments on passing the Economic Regulation Bill. He asked how it affects these two Bills.

Adv Masombuka said the intention is that all regulation committees within the Department must be incorporated in the same Bill. Currently, the said Bill is being introduced in Parliament, and it will reach the Select Committee. When it does, the Select Committee will see how it is going to synchronise with Bills. The aim is to synchronise all regulation committees, so it can be one regulation committee for the transport industry.

The Deputy Minister thanked the Chairperson and the Members of the Select Committee for the important questions raised. She said the Department is going to factor in some of the issues raised.
She thanked the Select Committee for coming up with the amendments. The amendments are important. It helps the two entities to have a sense of business in its day-to-day affairs.

The Airports Company does business in Ghana, Brazil, and India. There has never been legislation regulating this. There is a need for laws regulating how state-owned companies conduct business when it goes international. The law must dictate the things to be considered, and those to be guarded against in the event there are problems. The question is how the Department deals with the situation.

The Deputy Minister said Members must note, with traffic and navigation, the Republic controls ten percent of the space in the southern hemisphere. It is very important to keep it in mind.

The Department must work on how best it can maximise revenue generation outside of South Africa, in Africa, and the world. It is important for the Department, particularly in the aviation industry, to become competitive in Africa and also globally.

She said she appreciates the level of engagement by the Select Committee, and said the Department is looking forward to providing the Select Committee with the regulations so the Committee can acquaint itself with it, once it has been made.

The Chairperson thanked the Deputy Minister. The team led by the Deputy Minister was able to clearly outline the thrust of the Bill, the need therefore to strengthen the appeal mechanisms, to ensure certain documents are given legal status, and also to ensure there is an alignment between the principal Act and the Companies Act. Challenges were also put forward regarding the limitations related to the principal Act.

The Deputy Minister and the Advocate managed to outline the key features of the proposed amendments. The Select Committee is happy with the way the Department was able to engage with other stakeholders. The meeting brought out the need to ensure the arm of the Executive is strengthened in terms of the regulations. The Committee is looking forward to taking the bill-making process to its conclusion. There is much clarity regarding the letter and spirit of the Bill.

The Chairperson said, as the Select Committee, it is mindful that the matter is finalised by the National Assembly. It will ensure in the next meeting that the Committee is able to deal with the report, as it prepares for taking the Bill to the plenary. He thanked the Members.

The meeting was adjourned.

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