Housing Consumer Protection Bill: proposed amendments
23 November 2022
Chairperson: Ms R Semenya (ANC)
On a virtual platform, the Portfolio Committee deliberated on its proposed amendments (A-list) to clauses 2, 7, 11, 15, 16, 32, 41 and 88 of the Housing Consumer Protection Bill.
The Department first addressed outstanding concerns raised by Members about the establishment of a non-profit company to provide insurance to housing consumers and about temporary residential units. The Committee debated at length and agreed to delete clause 39 dealing with the establishment of a non-profit company. Members said that establishing a non-profit company would require extensive funding and capacity within the Department and there was not a strong enough rationale to include clause 39 and providing for possible eventualities was unwise as it created expectations which could be enforced.
• Clause 2 was not finalised as a Member proposed an amendment after questioning whether certain wording would defeat the purpose of the exemption provided for. The drafters said they would look into the implications of the change wording.
• Clause 7 aimed to deal with the issue of vacancies and provided for a six month time period within which vacancies had to be filled. Members agreed that this time period was sufficient.
• Clause 11 was supported.
• Clause 15 dealt with the appointment of the CEO and CFO and it was not finalised as Members suggested that minimum competencies for these positions be provided for.
• Clause 16 was supported.
• Clause 32 provided for an oversight role by the Member of Mayoral Committee (MMC) or Member of Executive Council (MEC) and as requested the drafters removed their involvement in the release of funds. Members were concerned that the clause could render the Bill ultra vires in terms of duties that were already established in terms of the relevant finance management laws and suggested the removal of the reference to MECs and MMCs. The drafters would re-evaluate the clause.
• Clause 41 was not finalised as Members asked for proper consideration of the submission by builders requested waiving all three sets of fees for minor works as all costs would ultimately be borne by the consumer. The matter was flagged for further research.
• Clause 88 was not discussed.
The Committee went on to raise matters that were not addressed in the A-list. Members said the Bill was silent on whether a housing consumer would be covered by the home warranty fund for the work of an unregistered homebuilder. Most of these questions were answered by the state law advisor but the Department and legal advisers would iron out the outstanding issues and revert to the Committee on 25 November.
Department & Legal Advisor response to questions
The Chairperson asked the Department of Human Settlements (DHS) and the State Law Advisor to answer questions arising from the 18 November deliberations. She said Mr Herron had raised the constitutionality of the Bill based on the assignment of MECs and MMCs. Another Member had asked about the establishment of a non-profit company (NPC).
Ms Thiloshini Gangen, Parliamentary Legal Advisor, said that the Department had prepared a document explaining the Temporary Residential Units (TRUs) and NPC. Mr Herron’s issue was addressed in the A-list
Mr Paul Masemola, DHS Acting Head: Legal Services, introduced the team from the Department.
Ms Rashnee Atkinson, DHS Acting DDG: Research, Policy, Strategy and Planning, went through the Department’s response to the questions. The establishment of an entity such as an NPC or similar was in the interest of ensuring affordability and accessibility to housing finance products such as insurance. The NPC would need to undergo all due diligence to be registered as a financial service provider. Alternatively, the National Home Builders Registration Council (NHBRC) could enter into partnership with the private sector based on reduced costs to the end user.
On the TRUs, the scope of the Bill did not cover temporary structures. The norms and standards of the TRUs was determined by the policy and code, which was not similar to those of permanent structures. Consumers who had challenges with the structure of TRUs had to register their complaints in terms of the codes and not the NHBRC. The ultimate goal was to protect the rights of the consumer through the provision of information on recourse.
Ms E Powell (DA) requested that the Committee be taken through the A-list.
The Chairperson said the Committee first needed to resolve the outstanding issues in light of the Department’s response.
Ms Powell said Committee members had raised a number of issues; only two of which were covered by Department’s response and a number of which had not been addressed in the A-list.
The Chairperson said the Committee had to indicate if it was satisfied with the Department’s response. If so, the Committee could proceed to the A-list and debate and determine if their inputs had been incorporated. If the inputs had not been incorporated, the Committee could amend the Bill itself.
Mr A Tseki (ANC) agreed that the Committee could add to the A-list. On the TRUs, the Department had not completed its response. Any concern about a TRU was not a NHBRC matter but was the responsibility of the Department to address.
Ms Powell said in last week’s discussion, the Committee was not concerned about the phrasing or the legalities of the NPC registering as a financial services provider as it was explained that the necessary compliance measures would be enforced should the NPC be established. The Committee’s concern was on the substantive nature of the necessity of government establishing an NPC that would compete with the private sector.
The rationalisation DHS gave today was that by establishing an NPC, the contributions of ordinary members of the public would be lower and the NPC would be able to compete with the private sector. This service offering was not within the purview of government. There were a multitude of banks, mortgage lenders and insurance providers who had existing already competitive offerings to the private sector on insurance. The establishment of an NPC would require all sorts of income and funding streams for staff establishment, premises, running costs and all of the operating costs that would be required in addition to the existing service offerings of the National Department. The performance metrics of the Department and its various entities indicated that it had achieved 41% of its targets last year so it was battling to achieve even the very basics.
At this point it was prudent that the Committee deliberate on the substantive nature of clause 39 and if it believed it was wise, prudent and necessary for government to be extending its service offerings via this legislation. She submitted that the Committee call the Minister of Human Settlements before the Committee to engage if it was prudent to proceed with clause 39.
In the summary document of the Bill presented at public hearings, there was no clarity provided to the public for the reason the NPC would be established. It did not say anywhere in the summary that the purpose of the NPC would be to offer private sector insurance that would compete with mortgage lenders and insurance providers. The Committee had not had enough robust engagement with existing financial service sector providers or mortgage lenders. If the Committee proceeded, there would be huge backlash from financial service providers and banks and clause 39 would cause a headache. Ultimately her request was that clause 39 be removed from the Bill.
Mr Tseki asked if the Committee was already dealing with the A-list or the outstanding issues because Ms Powell was dealing with the A-list.
Ms Powell said that was why she had asked that all inputs be dealt with at once.
The Chairperson repeated her earlier explanation. The Committee would proceed in dealing with the outstanding issues as per the Department’s response and then proceed to deliberations on the A-list, having noted issues raised by Members such as the one raised by Ms Powell.
Adv M Masutha (ANC) said when the Committee discussed the TRUs, there were concerns about standards and ensuring safety and human habitability of the units, even though they were temporary in nature. There was also the question of what “temporary” actually meant given that some units were the only alternative means of abode for some. He was uncertain how the concerns were resolved because the response was it was for the Department to deal with. This did not clarify the policy around TRUs. He questioned if this should be in the Bill or regulated elsewhere.
There was a concern about the financial sector and the interplay between this Portfolio Committee seeking to make housing more affordable and accessible through various interventions that relate to financial aspects. In this instance, the narrow focus was on affordable insurance cover accepting that insurance was but one of a series of financial services for housing where the Department had a role to play. Playing this role in an interactive and mutually reinforcing way with other state actors such as regulatory institutions was an area that was fairly murky to him and he requested to be educated on this. He wanted a comprehensive picture on how the Department interfaced with the economic cluster, particularly Treasury on policy matters. He wanted to understand the legislative interfaces between the provisions of housing legislation to financing affordable financial products to housing on the one hand, and the role of Treasury or the financial sector in not only regulating, but providing the necessary products. He wanted to get a picture of the collaborative relationship between what the housing portfolio sought to do within the framework of the financial sector of the government side and the providing sector on the private side in order to have a similar framework of financial support that was affordable to those who need it, with specific focus to housing in an integrated fashion.
In the beginning he raised the issue of cross-referencing. He saw little cross-referencing between this Bill and other legislative frameworks that impacted some of the policy matters that the Bill sought to address. He had asked if there had been sufficient consultation between DHS and the economic sector, especially the public and private financial sector. He was given assurance that the Bill went through all those consultations and that there was harmony, collation and collaboration between what the Bill sought to achieve and what the other sectors had in their policy and legislative frameworks to deal with the issues. It would have been nice to see this in the way the Bill was drafted in such a way that specific issues were cross-referenced with the specific regulatory framework that governed the financial services sector, to the extent this was necessary.
In his drafting experience, it was important not to assume that laws would talk to each other. Laws had to be made to talk to each other by being specific where a particular provision impacted on another provision in another sector. He was not sure to what extent that had been applied here and maybe his frustration was based on ignorance and lack of understanding of the mechanics of this legislation.
Dr N Khumalo (DA) agreed with some of the points made by the Members. She supported the proposal by Ms Powell because of the potential impact and consequences that clause 39 carried. It would be a good idea for the Committee to ensure that they had the backing and support of the relevant financial sector in terms of clause 39.
The Chairperson remarked that DHS had a financial institution or an aspirant bank which was providing assistance through the National Housing Finance Corporation (NHFC). Why did it then want an NPC? She asked Mr Masemola to clarify this.
Mr Masemola replied to Adv Masutha that there were consultations which included the Banking Association of South Africa and other institutions. Ms Powell’s concern was if it was desirable for government to be taking part in insurance considering that the Department and its entities were not performing well and thereby adding a burden that should best be left to the private sector. clause 39 was not saying it must happen. First there would be assessments if there was a need for the NPC and if so, it would be established in line with legal prescripts. The fact remained that there was nothing precluding government from taking steps to ensure that it protected its people. For example, SASRIA was a government insurance company and therefore it was not a new phenomenon for government to decide after making assessments that there might be a need to enter that space. The decision to enter the space would not be haphazard and there would be compelling reasons at the time as well as consultations around it. The clause was an enabling clause that would avoid the need for an amendment when the need arose. Government needed to ensure that it improved the protection of consumers and that was the intention of the clause. It would not be implementable now and would only be implementable when it was necessary and after consultations.
Mr C Malematja (ANC) said that DHS was saying that the clause was there in case there was a need. It was very dangerous to provide a platform for in case something might arise because people could misuse the platform. While it was good to tighten up the Bill, it must not allow for misuse. Instead, there were existing institutions that were supposed to perform their duty to ensure they protect consumers. Rather enforce those existing institutions to achieve the Bill’s objectives. The danger of creating an NPC was that if the government entered a marginally profitable market with the intention of performing non-profitably, it would cause a problem to existing profit companies and they would say that government was behaving like a conglomerate. These companies would say government wanted to own and participate in everything and thereby destabilise the market considering it did not want to profit. He agreed that clause 39 should not be considered.
The Chairperson suggested the position should be that DHS should strengthen its financial institutions for it to provide the service. This would make DHS move with speed in establishing the bank which would actually play a role and equally compete with the private sector and defend the interests of the people.
Adv Masutha said Mr Malematja had made a powerful statement. In his experience of legislative drafting, one would not want to swallow the whole elephant in the first stab at drafting as there would always be outstanding issues that could be dealt with later. How urgent, how strategic, how central, how critical, and how unavoidable was clause 39? If it was just one of those provisions that dealt with possible eventualities as seemed to have been the motivation here, he suggested that the drafters re-evaluate the clause and allow the Bill to deal with other more important and pressing issues. He emphasised that once something was put in legislation, expectations were raised. If the commitments in the legislation were not actualised, those with interest would push through the courts to operationalise it. They could use common law instruments such as a mandamus compelling DHS to give expression to what Parliament expressed as a wish in the legislation. It was important not to force every little thing during the first stab at a legislative reform programme. The legislative programme was so extensive. Did the Department have the capacity to manage the implementation of the legislation? Or did the Department want to confine itself to that which it had the capacity and resources for at this point in time? He emphasised to DHS that legislation was not a White Paper where DHS could express its aspirations for the next 100 years. Once legislation was in place, it established rights which could be invoked almost immediately after it came into operation.
In the meeting chat, Dr Khumalo said she agreed with Adv Masutha 200%. There was not a strong rationale to include clause 39 if there was not yet an identified need for it.
Ms Powell said she did not think Mr Masemola was from Department. He was from the Ministry as a Parliamentary Liaison Officer. Mr Masemola compared clause 39 to SASRIA. SASRIA was a totally different ball game because it covered high risk riot insurance that the private sector did not cover and therefore it was a false equivalence to compare clause 39 to SASRIA. She seconded Adv Masutha’s comment that it was indeed dangerous to include this provision that provided for the establishment of any given entity or vehicle in case it was needed down the line. The NPC could be established later via its own piece of legislation if necessary. Ultimately the clause extended the purview of the Bill far beyond its intended mandate. She asked the Chairperson to repeat her proposal as it was not clear.
The Chairperson explained that DHS had the NHFC which was a financial services provider. The NHFC was in the process of establishing a bank which would compete with the market. The issue was not about competing with the private sector because competition was allowed where government was looking out for the interests of the people. Why was DHS not using the NHFC if it felt the need for such an entity? With a bank, DHS would be able to participate in financial competition in terms of the market instead of establishing an NPC. Mr Masemola had not actually responded on this.
Mr T Malatji (ANC) said the most important principle the Committee needed to agree on was that when Parliament made laws, it made laws for the benefit of the people, specifically to enable those who were disadvantaged to be advantaged. The Committee needed to focus on this principle because they could be seen as not wanting to engage with resolving socio-economic challenges. It sounded like the Committee wanted to protect the previously advantaged or the captains of the industry such as banks that were beneficiaries when legislation like this did not exist. He reminded them that they were a people-driven Parliament that was biased towards the poorest of the poor.
Mr Tseki said clause 39 had the word “may”, meaning that it was not instructive. Based on the discussions, he suggested that the Committee suspend dealing with this clause until the end. He suggested that Ms Powell was representing a particular class and when that class was being contested in terms of power, people like her would stand up.
Ms Powell raised a point of order. Mr Tseki was casting aspersions on her character. This was a very important meeting. Mr Tseki had suggested that she represented only the views of a certain class. She requested the Chairperson to ask Mr Tseki to withdraw his comments.
The Chairperson asked that Mr Tseki withdraw his comments.
Mr Malatji said he did not think that Mr Tseki was out of order in his analysis. If Ms Powell had a different view, it was not an issue that was out of order. There was nothing out of order by saying that a Member’s politics represented a certain class.
The Chairperson said that in terms of the rules, any casting of aspersions had to be done with a substantive motion. If Mr Tseki had a substantive motion, he could continue through this rule which could then be debated in the house.
Adv Masutha said there was no need to invoke the rules. The spirit of collegiality had to prevail.
The Chairperson called Adv Masutha to order because she had already made a ruling that Mr Tseki was to withdraw his comments. There was a rule on casting of aspersions. In a Committee meeting, rules of Parliament were not suspended, they continued to be upheld. This was a mini Parliament. She repeated her request for Mr Tseki to withdraw.
Mr Tseki withdrew and said he would bring a substantive motion in future. He was going to support clause 39 based on how it was written but acknowledged that the clause was viewed differently based on various Members’ inputs. He suggested that clause 39 be dealt with at another time.
Dr Khumalo said it was important that when the Committee debated, they debated ideas based on the interests of the people of the country. Discussion on what Members thought of each other would derail the Committee. She suggested that the Committee move forward on the basis of three members who submitted that the clause be left out. It was important for the Committee to see eye to eye and have a common understanding and be a united front. Mr Malematja’s view aligned with Ms Powell’s view which aligned with Adv Masutha’s view which aligned with hers. So there was consensus to a certain extent. The Committee should move forward based on these submissions.
The Chairperson said the view was that clause 39 of the Bill should not be included in the Act. There was no Member saying that it could not be addressed in future. She requested that the Committee proceed to deal with the A-list.
Ms Powell seconded this.
Adv Masutha asked that the Committee Report note that the Committee agreed that the NPC matter be deferred for future consideration.
Ms S Mokgotho (EFF) agreed that clause 39 be excluded from the Bill for now.
Proposed Amendments to Housing Consumer Protection Bill (A-list)
Clauses 2, 7, 11, 15, 16, 32, 41, 88 had proposed amendments. Ms Gangen read each clause and the Committee provide input:
Adv Masutha asked if the words “may not be contrary to the objectives of this Act” would defeat the purpose of the exemption. “The objectives of this Act” could be construed as precisely regulating everybody. He requested clarification on these words to avoid any risk of contradiction.
Mr Tseki assumed that the A-list was written by the Parliament and Department legal teams. He asked if the teams could provide a minute-long explanation of what informed the amendment in order to proceed smoothly.
Adv Masutha asked if he could assist the drafters by proposing an alternative formulation for Clause 2 in order to save time.
The Chairperson asked the drafters to provide an explanation first and if Adv Masutha still insisted, he could proceed with his proposal.
Ms Gangen replied that during deliberations Adv Masutha had raised a question about how the powers of the Minister were exercised, if in terms of a directive or regulations. The state law advisor had then explained that the intention was that there were two ways in which the power would be exercised: 1) by way of an application; 2) in terms of a government gazette which was more generic. She welcomed further input and suggestions.
Mr Tseki supported the explanation.
Adv Masutha said he suspected precisely that if he had offered a counter-formulation, it would have saved time because Ms Gangen’s answer was not relevant to his question. His question was on the very last phrase in the clause which was stating that whatever exemption the Minister made, it should not be contrary to the aims and objectives of the Act. As he understood, the aims and the objectives of the Act negated the purpose of the clause. He wanted to offer a counter-formulation so that the team could agree or disagree. His connection became unstable and he was inaudible.
The Chairperson requested that Adv Masutha write down his formulation on the chat.
Adv Masutha said it would be tricky but would try with his unstable network connection.
Dr Khumalo said she might be out of order but suggested that the Committee consider meeting in-person due to the technological challenges that were putting the Committee’s work in jeopardy. Members would benefit as they all wanted to hear everyone’s input which could be valuable.
The Chairperson said that Dr Khumalo was indeed out of order.
Adv Masutha said he could talk to the drafters offline as it was an administrative nightmare to rewrite his input in the chat.
The Chairperson reminded him that this was still a draft and the Committee would have an opportunity to make inputs. If he had network problems, in two hours after load shedding had ended, he could give his input. If he was still having difficulties, he could interact with Parliamentary Legal Services offline who would then bring his issues to the Committee for engagement.
In response to Adv Masutha, Mr Masemola reminded the Committee that the objectives of the Bill were to protect consumers. Any exemptions must not be contrary to protecting consumers themselves. That was the intention of those words.
The Chairperson clarified that Mr Masemola was appointed as Acting Legal Officer of DHS after Ms Powell had earlier said he was from the Ministry.
In the meeting chat, Ms Powell said this was cadre deployment at its finest.
Adv Masutha suggested that he step back, listen and not participate due to his connectivity issues.
The Chairperson repeated her earlier suggestion. Clause 2 would be finalised later when the Committee could hear Adv Masutha. She requested that the state law advisor call Adv Masutha.
Mr Sisa Makabeni, State Law Advisor, requested Adv Masutha’s number and suggested that he provide his input in the meeting chat.
The Chairperson said that due to Adv Masutha’s partial blindness, this would be a challenge. She requested that the Committee secretary provide his number to Mr Makabeni.
Adv Masutha reiterated that it would be cumbersome to redraft an entire clause on the chat and that it would have been simpler to explain his point. He would wait until he could explain to the drafters what formulation he was proposing because it was a simple solution.
The Chairperson assured Adv Masutha that the Committee was not taking a decision on clause 2 until such time the drafters could come back with his input.
Ms Gangen said the clause attempted to deal with the filling of vacancies.
Ms Powell asked how the clause addressed the specification of a time period by which vacancies had to be filled as that was the concern that was raised. The clause was still somewhat open-ended. The concern was that there was a phenomenon in DHS where board positions remained vacant for a long period of time with acting board members. The Committee had asked that there be a specific time period. The proposed amendment did not address this concern.
Ms Gangen noted Ms Powell’s request for a specific time period. As this was the very first draft, a reasonable time period could be considered.
Mr Makabeni said the time period was provided for on page 9 in line 42. Six months was the period in which the Minister was required to appoint a replacement.
Ms Powell read clause 7(5) in the Bill in conjunction with clause 7(4). If someone resigned with six months of their term left to go, the six month provision after such an expiry meant that that vacancy could still remain open for half a year. She suggested that a time period be specified in clause 7(4) for this to be tightened.
The Chairperson said in terms of the process as understood, six months was little. When there was a vacancy, the Minister would advertise the vacancy, make a short-list and appoint an appointment committee. Taking those factors into consideration, the six month period was fair.
Mr Tseki supported the clause 7 amendment.
The Chairperson said the Committee should agree that six months was not long taking into consideration the process that had to unfold after the vacancy arose.
Ms Powell supported the clause 7 amendment.
Ms Gangen said the clause aimed to address concerns raised by Members about the frequency of meetings and that a minimum amount of meetings should be specified.
Mr Tseki supported the amendment.
Ms Powell supported the amendment.
Ms Gangen said the clause dealt with the appointment of the CEO and CFO. The concern was what the “qualifications” and “experience” would entail. The Board would now be able to determine what qualifications and experience the CEO and CFO would require without being too prescriptive.
Mr Tseki said the Committee did not want to leave the powers only with the Council hence the insertion of “as determined by the Board.” The Board needed to give guidance on the decisions made by Council.
Ms Powell acknowledged Ms Gangen’s rationale about not wanting to be too prescriptive and the range of varying expertise that may be required for the positions of CEO and CFO. The discussion the Committee had was About the Department of Public Service and Administration (DPSA) framework and the alignment of the position with the qualifications required in terms of the remuneration guidelines.
Ms Powell drew the legal advisers’ attention to clause 6(3) of the Bill which discussed the composition of the board. The drafters of the legislation had very adequately listed in 6(3)(a)-(j) the range of knowledge and expertise that was required for board members. If the Bill was prescriptive in this regard, why was it not possible to do the same with CEOs and CFOs? For example, if a CEO needed legal skills. A CFO managing the finances of the Council would require a degree in chartered or management accounting. Those were basic minimum requirements that any CFO had to have. The problem that the Committee had was that when making legislation, they needed to imagine the worst possible scenario in terms of political governance. In a dystopian scenario, there was a politically appointed Minister who served on behalf of the President who himself was elected by their political party. That politically appointed Minister then appointed the board members from potentially a range of unqualified cadres. Then those unqualified cadres determined the criteria and the qualifications on which the CEO and the CFO were appointed. This could result in politically captured, incompetent and inept management. This was why when legislation was being drafted, lawmakers needed to imagine the worst possible scenario and needed to be prescriptive. The question remained that if it was possible for the drafters to stipulate experience and knowledge for board members in clause 6, why was it not possible to at least list minimum competencies or explicitly defer to guiding legislation or guidelines such as making reference to the DPSA remuneration guidelines framework? She did not accept that it was not possible to be prescriptive here. It was certainly possible to be prescriptive where a CFO was concerned. She did not think that the concerns raised by Members had been covered by inserting the clause “as determined by the Board” especially given the range of scenarios that potentially confronted the country after 2024.
Ms Mokgotho agreed that the Bill should include minimum requirements for a person to occupy positions such as CFO and CEO. Qualifications, experience, skills and knowledge of that particular work were important. These should be stipulated in the Bill.
Ms Gangen noted Ms Powell’s submissions. While she used the word “prescriptive”, she did not say that they had to be prescriptive but that they did not want to be too prescriptive. The drafters would take the Members’ comments into consideration and re-craft to insert minimum qualifications.
The Chairperson said they must be subject to the DPSA framework.
Mr Masemola agreed to go back and work on the clause. He said that the CEO was not governed by the Public Service Act (PSA) but they would go back and enhance the clause.
Ms Gangen said the concern around the clause was the possibility of concurrent terms. The insertion of the word “only” closed this gap.
Mr Tseki supported the clause.
Ms Gangen said the clause addressed concerns about the MMC and the MEC being involved with the release of funds for housing projects.
Mr Masemola said the concern raised by Mr Herron was taken into account. Indeed it might be in contradiction with the Public Finance Management Act (PFMA) in that the responsibilities of finances would not be with the MMC so it was important to recraft the provision and remove the responsibility where legally it would not be supported.
Ms Powell said she was still concerned about clause 32. Ideally what had to happen was that the relevant administrative official dealt with the project pipelines, the contractual agreements, the procurement, the risk management and the delivery of social housing projects at an administrative level. That was the person who carried fiduciary duties in terms of the PFMA and who was the responsible party in law at the municipal level. She understood that this was an overarching clause that provided for an MEC or an MMC or his/her delegate – but ultimately it was the responsibility of an MEC or an MMC. In an executive mayoral system, the MMC carried delegated powers of the executive mayor and there were varying systems and arrangements in terms of the MMC cabinet. This clause was not satisfying Mr Herron’s concern that the provision may render the Bill ultra vires in terms of duties already established in the finance management laws that governed the country. Would it not be more prudent to remove the reference to MECs and MMCs entirely and rather substitute with the relevant provincial director general, national director general and municipal manager or executive director at the varying levels of government? She was concerned that a duty was being placed on a political appointee when it was really the municipal manager and the director of the provincial government that carried that duty.
The Chairperson said that in terms of the PFMA, MEC or MMC had the responsibility of finance oversight. The PFMA even specified that the CEO and the CFO had to brief the MEC on a monthly basis about finances. The PFMA and the PSA gave Ministers, MECs and MMCs the responsibility of oversight on the budget and therefore the clause sufficed.
Ms Powell acknowledged the Chairperson’s reasoning and said that she completely understood that the MEC and MMC were responsible for oversight functions and for guiding and steering the programmes and projects of the Department in line with the political vision of the party that they represented. But predominantly, the function of implementation of and compliance with legislation was a function of an administration. For example, executive mayors already derived their functions which were essentially oversight functions from existing legislation: the Municipal Systems Act and the Municipal Structures Act. She was concerned that this provision placed compliance obligations at the feet of the wrong person. This compliance obligation should be given to an administrative official and not a politically appointed leader who was responsible for oversight and vision. The legal teams could advise.
The Chairperson said the Act gave them those powers. The MECs and MMCs were the ones that appointed those officials and had to ensure that they appointed the correct people and monitored what they did. The Act said they had to provide oversight of the finances and the strategic plan of their Department as the executive because if an MEC employed a wrong person, the MEC had to take responsibility. Alternatively, the executive mayor had to take responsibility through the MMC.
Mr Makabeni agreed that it an oversight role was played by the MEC and MMC. Other pieces of legislation involved in the provision of social housing, for example the Housing Act, had a huge role for the MEC. The role that was played by the operational officials would not be taken away from them but the oversight role of the political heads would still be there in terms of this provision. The drafters were not being prescriptive hence they removed that provision that said they must ensure that funds were not released.
Adv Masutha requested clarification if the Committee was dealing with oversight powers or delegation powers for the allocation, use and accountability of funds between national, provincial and local.
Mr Masemola said the initial clause talked about the MEC or MMC not releasing the funds. Looking at the PFMA, it created the problem that it was not really the responsibility of the political head to release funds. It was realised that the clause would create challenges which was why it was changed to acknowledge only the oversight role of the political head and not to be involved in the releasing of funds.
Adv Masutha asked if releasing of funds was the responsibility of provincial treasury similar to the responsibility of national government to release funds to national departments. Once released, they became the responsibility of the accounting officer to administer the funds. The political head’s role at national, provincial or local level has been suggested to be exercising oversight over the utilisation of those resources. He was trying to follow the discussion.
Mr Tseki said that while he sympathised with Adv Masutha, the Committee needed to avoid dealing with broad or general issues. Here the Committee was inserting and deleting based on what had been written already. He was not sure how to assist Adv Masutha and while he was sensitive to his situation, currently he was not taking the Committee forward.
Adv Masutha withdrew his question and said the Committee could proceed with the discussion.
The Chairperson asked if Members could agree that the inserted clause had dealt with the concern Members had about the PSA and PFMA in that the executive authority had an oversight responsibility and must be accountable to their Department and Council.
To reconcile the Chairperson and Ms Powell’s concerns, Dr Khumalo proposed that the clause read “A MEC or MMC or his or her delegate must ensure sufficient oversight compliance with this Act…”
Ms Gangen said she had no objection to Dr Khumalo’s proposal subject to what her legal colleagues had to add.
Mr Masemola agreed to re-look at the clause to enhance it.
Ms Gangen reminded the Committee that fees was a contentious issue in the Bill. To address this concern, the clause linked clause 41(5) with clause 40(2). The attempt was to ensure that the fees were proportional and transparent in their calculation and the criteria used to get to the fee.
Ms Powell said the A-list page reference did not correlate with the Bill. The Committee had raised the financial burden on small and emerging home builders having to pay a once-off registration fee, an annual fee and an enrolment fee. Master Builders South Africa (MBSA), an association which represents more than 4 000 contractors and employers in the industry, raised a concern that enrolment fees for minor alterations created an administrative burden for the regulator which was already not coping with enrolments. This was now subject to CPI which was something; but it did not address the concern by MBSA. Its concern was that charging enrolment fees for this Act which now covered minor alterations of any kind was creating a financial and administrative burden for emerging and small homebuilders, given that they had to pay a registration fee and annual fees as well. This was not a wording or legal issue, it was a substantive issue for the Committee to deliberate on. In the interests of developing pro-poor legislation, would the Committee consider waiving at least one of the three fees for minor alterations? There were three separate fees for putting a door frame in, for example. The Committee needed to take into consideration the submissions by the industry, especially an association as big as MBSA. The Committee needed to take cognisance of the potential backlash it could face from the industry if it did not accede to the MBSA request.
Mr Tseki called for order and said that Ms Powell was always threatening the Committee when she assumed the platform and when she felt the Committee was not going to agree with her input.
The Chairperson said that because Members were deliberating in the Committee, Members had to convince other Members, not threaten them. Mr Tseki was in order.
Ms Powell asked in what way she threatened anybody during her submissions. It was a statement of fact that the Committee would, given the submission by MBSA, face backlash. This was not a threat.
The Chairperson said Ms Powell was out of order. Ms Powell should allow other Members to talk to her proposal. What if they agreed with her? Why did she have to have that attachment on her input?
Ms Powell said she was free to make any submission to the Committee that was in line with the rules of Parliament. Her submission was a statement of fact as evident in MBSA’s submission and not a threat.
The Chairperson said those were MBSA’s words and the Committee was not sure of that submission.
Ms Powell said she was asking for a deliberation by the Committee.
The Chairperson said that when Members said they felt threatened, indeed Ms Powell was actually channelling them. She must allow them to speak on her proposal.
Ms Powell said the Chairperson could not edit the style of her submission. If the Chairperson was going to rule her out of order in line with the National Assembly Rules, she requested reference to the specific rule.
The Chairperson maintained that Ms Powell was out of order. If she was not happy with her ruling, she knew what to do.
Ms Powell said she would abide by the Chairperson’s ruling but insisted that the Chairperson refer to the specific rule in terms of which she was ruled out of order.
The Chairperson said she did not have the rules book in front of her.
Ms Powell questioned the Chairperson for chairing a meeting without the rules book.
The Chairperson said she had the rules book. If Members felt threatened by her input, Ms Powell did not have to attach her views. She had to allow Members to debate on her matter and Members were allowed to differ. She requested Members to speak on Ms Powell’s suggestion to waive one of the fees for minor alterations.
Dr Khumalo agreed with Ms Powell.
Mr Tseki acknowledged the cost issues raised by MBSA. He was not representing MBSA like Ms Powell. He suggested that there be research on the MBSA submission to convince Parliament of its proposals. The Committee could not ignore the MBSA submission as it said that the costs would affect the same people that the legislation was trying to assist. He proposed that the matter be flagged until the Committee received proper advice, not just legally but financially as well if there was the capacity to do so.
Ms Powell clarified that her concern was over the three separate fees and she proposed that the Committee consider waiving the enrolment fee only in respect of minor alterations and renovations. The concern was that funds collected for the enrolment of home consumers that arose from alterations or minor renovations would in fact be funding a warranty for major defects. She acknowledged Mr Tseki’s suggestion that some kind of funding feasibility study be conducted to motivate it from a financial sustainability perspective. She suggested in clause 34 that waiving the enrolment fee for minor alterations would be adequately offset by an appropriation from Parliament.
The Chairperson suggested that the matter be flagged as proposed by Mr Tseki.
Adv Masutha suggested that a list of all the financial implications of the Bill be reflected to create a holistic picture of these. These would include clauses on the charging of fees, the financing through appropriation and the overall cost of implementing the Bill. He was unsure how the Committee would be consolidating all of this because they were not dealing with it in a holistic manner. He requested DHS and Committee to reflect on how to deal with the Bill in a more scientific way moving forward [Adv Masutha had network connectivity issues].
Mr Masemola replied that the intention of the enrolment fee was to ensure that a warranty was available to the consumer. He was not sure what Ms Powell meant when she referred to minor alterations. This Act would apply where alterations or renovations would require the submission of building plans to a municipality in terms of the National Building Regulations and Building Standards Act. Minor alterations did not need to be enrolled but those that required building plans meant there was a change in the actual house plan which needed registration. This registration was warranted by the need to ensure that the structure of the house was still intact. Clause 2(1)(b) provided when it was necessary to enrol a project.
In the meeting chat, Ms Roekeya Bardien, MBSA Executive Director, asked the Committee to please consider waiving all the fees for minor works as all costs would ultimately be borne by the consumer.
The Chairperson said the matter would be finalised when dealing with the A-list again.
There were no discussions on this clause.
Mr Makabeni, State Law Advisor, said he had talked to Adv Masutha who proposed that in clause 2(5)(b), all the words after “notice” be removed up to the word “Act”. He proposed that clause 2(5) read “Notwithstanding any provision of this Act, the Minister may, after consultation with the Council…”
Mr Tseki said if the state law adviser and the legal team agreed, then he supported the proposal.
Mr Masemola suggested that as and when they dealt with the still outstanding items in the A-list, they would finalise this issue in terms of the proposal.
The Chairperson asked if Mr Masemola was indicating that DHS was not comfortable with Adv Masutha’s input.
Mr Masemola replied that Mr Makabeni only shared Adv Masutha’s proposal and was not necessarily agreeing with it. The legal team would have to look at the real implications of the change because if it resulted in the same meaning, there was no reason to make the change. Normally when drafting, the current clause was how it would be written.
Ms Gangen said she had no difficulty with Adv Masutha’s proposal but she also had no difficulty in how clause 2 was currently drafted. However the legal team’s aim was to make the Bill as tight and neat as possible taking into account Members’ concerns. If Adv Masutha wanted to draft clause 2 differently and it did not change the meaning and content of the clause, she had no objection.
Mr Tseki said it seemed as if DHS was not happy with the proposed amendment. The Committee in its finalisation of the Bill would have to agree or disagree and take the majority decision forward. Could the Committee find synergy between Adv Masutha’s proposal and the original amendment? The legal team and Adv Masutha as an advocate were assets of the Committee. He requested that the A-list include issues that were raised in the previous meetings.
The Chairperson said that Parliament's legal team, DHS and the state law advisor should bring back the matter for its finalisation to the Committee..
Matters not addressed in the A-list
The Chairperson asked Members if the issues addressed represented their engagement in the last meeting of 18 November and if they had any other matters to raise for discussion
Ms Powell said the Committee raised concern about clause 25 on the implications for a homebuilder that did not register. The failure to register did not affect a builder’s liability or obligations as in clause 28 Liability of unregistered homebuilder. However, the Bill was silent on whether the work they performed would be covered by the home warranty fund.
In clause 29(2)(b), it was unclear what was meant by the facilitation of a "cost-effective procurement process" and it would not be clear to the housing consumer who read the Bill either. Was the clause prescriptive or was it merely a guideline? Must builders implement this in their building projects? She asked for the clause to be clarified. She suggested the insertion of the word “guideline” after the words “a cost-effective procurement process”. Members raised concern about clause 31(1)(b) and asked for the consideration of the inclusion of a minimum period of approval, the burden of which would be placed on the Council. While the Council in this clause was empowered to essentially stop construction if they had not issued an approval for the building, the Committee was asking that the Council in the interest of fairness be prescribed a minimum period for those approvals to be given. On clause 31(2)(b), she had asked a question around the provision of financial guarantees. What kind of financial guarantee was this? How much was it? Was it cash or a bank guaranteed cheque? If builders were stopped from building or the condition for the approval of building was a financial guarantee, small to medium companies would be hindered from performing their work if they had to provide financial guarantees as well. She sought clarity on how this provision would be executed.
Mr Tseki said he had an issue that the Bill was missing the definition of 'employee'. In clause 80 it referenced liability of an employee. He differed with that liability. The liability of a contractor lay with the contract owner and not an employee. He requested that the definition of employee be checked.
Mr Tseki suggested that the costs and registration requirements be postponed. In many of the public hearings, contractors asked for registration options such as registration every three years or that they be required to register when they got jobs. For some, two or three years would pass without them getting a job yet they had to pay an annual fee. NHBRC would advise differently based on their assets and liabilities as well as costs. He requested that the Committee look into the implications of the annual registration for ordinary people when finalising this clause.
Dr Khumalo said the Committee had discussed legislating some controls around board meetings but this was not reflected in the A-list. She was not sure how the Committee intended to ensure that these controls were legislated.
The Chairperson said this was clarified but the legal team could return to this and if Dr Khumalo did not agree, the Committee would see how to deal with the matter.
Mr Masemola said the Department would meet with Parliamentary Legal Services and State Law Advisers to iron out the issues that had been raised and revert back with answers.
Mr Makabeni agreed with Mr Masemola’s proposal. clause 29(2)(b) was dealt with last time and it was clarified that it was not prescriptive. clause 29 Register of enrolments spoke to the purpose of the register which was to identify enrolled homes and inform housing consumers thereof and be a cost-effective procurement process in the building of a home. This would allow a consumer to know before entering into the procurement process if a builder was registered or not, if they had been wayward in any way, and if houses they had built had been subject to structural defects amongst other information.
On the financial guarantees, the Council could clarify what kind and how much the guarantees would be. He did not have this information. Certain other concerns that the Committee had were ideal issues to be dealt with in terms of the exemption envisaged in the Act.
Mr Tseki's concern about idle builders who still needed to register annually was an ideal issue that the Council needed to be aware of and could approach the Minister to deal with in terms of the exemption provision. The Committee must keep in the back of their minds that that the exemption provision could be used for situations that were not ideal for homebuilders or consumers.
In the meeting chat, Dr Khumalo asked if Parliament Legal Services was present to provide guidance.
Mr Tseki asked for guidance on the next steps towards the finalisation of the Bill.
The Chairperson said that this was a draft A-list and there were still a few issues that needed to be finalised. The Committee would in the next meeting adopt the A-list and then proceed to the B Bill which was the final stage of the deliberations by the Committee.
Ms Gangen confirmed that the Chairperson was correct in saying that the frequency of board meetings was dealt with in the A-list. On the way forward, Parliamentary Legal Services would go back with concerns raised in the Committee and would redraft the A-list. At the next meeting, they would go through the changes, it would be adopted and then the Committee amendments would be incorporated in the B Bill.
The Committee Secretary indicated that the A-list was supposed to be adopted today but because there were outstanding issues, the Committee would have to come back on Friday 25 November. If by Friday the Committee managed to agree on the A-list, it would then be adopted. This would mean the Committee would need another meeting to consider the B Bill and adopt its Committee Report on the Bill.
The Chairperson agreed and asked if the legal teams would be ready.
Ms Gangen replied the team would be ready on Friday.
Ms Powell said she understood that this was an exceptionally tight deadline for the legal advisers to work with but could the Chairperson confirm that the Members would be sent the A-list the night before the Friday meeting so they could go through it and ensure that their submissions and the consensus achieved by the Committee on the exclusion of certain clauses had indeed been reflected in the A-list.
The Chairperson confirmed that the legal team would do so. The Committee would then see how to prioritise the finalisation of the Bill because prior to Parliament rising, the report on the Bill had to be submitted to National Assembly for adoption. The Committee would ensure that it met its target so that next year they could deal with other Committee matters. She thanked the legal team.
The meeting was adjourned.
Semenya, Ms MR
Khumalo, Dr NV
Malatji, Mr T
Malematja, Mr C N
Masutha, Adv TM
Mkhize, Dr Z
Mokgotho, Ms SM
Powell, Ms EL
Sihlwayi, Ms NN
Tafeni, Ms N
Tseki, Mr MA
Download as PDF
You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.
See detailed instructions for your browser here.