Copyright & Performers’ Protection A/Bs: Final Mandates; Western Cape Nineteenth Gambling and Racing Amendment Act Repeal Bill: briefing

Meeting report

The Chairperson asked for all the Members to introduce themselves. Thereafter, she handed over to the Minister.

Ms Maireille Wenger, Western Cape Minister of Finance, Economic Opportunities and Tourism, explained that Provincial Treasury, would brief the Committee on the WC Gambling Amendment Act Repeal Bill.

Briefing on the WC Nineteenth Gambling and Racing Amendment Act Repeal Bill

Ms Shirley Robertson, Chief Director: Policy Services, WC PT, took the Committee through the WC Nineteenth Gambling and Racing Amendment Act Repeal Bill.

The Bill was tabled in the Western Cape Provincial Parliament (WCPP) on 21 February 2019, with the objective to amend the WC Gambling and Racing Act, to promote and facilitate the financial self-sufficiency WC Gambling and Racing Board. The Bill was assented to by the Premier on 17 June 2021 and was published four days later. However, it was not brought into operation because of the negative impact of the COVID-19 pandemic on the gambling and racing industry.

This led to a significant structural change in the industry and raised the importance of provincial policy to be responsive to the dynamic gambling and racing environment. To do this, the department has instituted a comprehensive review of the industry and its environment.

In relation to the Twentieth and Twenty-First Gambling and Racing Amendment Bills, 2022, the department has so far received a legal opinion on the drafts of the two bills, as well as a specialised tax legal opinion – specifically on the Twenty-First Amendment Bill.

(See Presentation)

Following the conclusion of the presentation the Chairperson opened the floor for discussion.

Discussion

Mr A Van der Westhuizen (DA) found it interesting that the department’s decision to introduce the Nineteenth amendment so that it became financially independent remained. When the Committee initially considered the amendment he did not understand how the department’s proposal to change the end destination for funding would make a significant difference.

He noted there has been a high increase in the collection of revenue by the gambling industry, following the significant decrease during the COVID-19 pandemic. To him it seemed that the department sought some of this increased revenue the industry has collected.

Regarding the general legal opinions mentioned in the presentation, he said that usually when drafting legislation a department has to consider its long-term effects, while the minor changes will be dealt with in the regulations. Then, he asked what the legal opinions had said on the Twentieth and Twenty-First Amendment Bills.

Ms N Nkondlo (ANC) asked how it was justified for the Bill to be brought to the WCPP for it to consider its repeal two years after it was assented to by the Premier – especially given the cost and time spent on the drafting and public participation process. Two, she asked what the reasons were for the Bill to be brought before the Committee. Moreover, she asked if the department had costed the process of repealing the Bill.

Then, she asked what the legal opinions mentioned in the presentation were related to. Moreover, she asked if the department could provide copies of these opinions.

The Chairperson also asked why the Bill was being repealed two years after it was assented to by the Premier.

Two, she asked what steps the department will take following the finalisation of the policy assessment finalised in February of this year.

Three, she asked how the Gambling Board will be funded in the interim.

Mr G Brinkhuis (Al Jama-ah) asked how much the repeal process would cost the WCPP.

Ms Robertson, in response to the comment made on the department’s motivation to make the Board self-sufficient, mentioned that the gambling revenue has steadily been on the increase, while the structure of the industry has been changing. She clarified that there was a difference between fees and revenue, with the latter being tax revenue that is collected by the department to be allocated in the provincial fiscal framework and budgeting process, whereas the fees respond and provide for the Board’s self-sufficiency. Until the fees are resolved, there is a transfer from the provincial fiscus in addition to existing fees.

On why the Bill was only being repealed two years after it was assented to by the Premier, she said that the department did not have the required data in 2021, largely due to the effects of the hard lockdown, to anticipate the scale and long-term impact on the industry. The department noted several changes to the structure of the industry following the reopening of the country. As such, it would be imprudent to continue with the Amendment Act in its current form.

The intention of the policy review process is to provide an evidence-based and well-researched and founded approach to a proactive policy with the associated legislation, as previously requested by the Committee, she outlined.

Regarding the question on how much the repeal process would cost the WCPP, she indicated that the department would analyse the data on the cost of the repeal process.

Further engagements with the Committee would focus on the Twentieth and Twenty-First Amendments.

Ms Astrid Muller, State Law Advisor, highlighted that the legal opinions related to the Twentieth and Twenty-First Amendment Bills are confidential. The reference made by the department in the presentation should not be understood to mean that the department waived its privilege of confidentiality of the opinions.

Mr Van der Westhuizen pointed out that no response was provided to the question relating to the costs of introducing a Bill and then repealing it.

Thereafter, he asked the department to provide the Committee with a graph of the change in the amount of fees generated over the years.

While he understood the explanation for the legal opinion to remain confidential, he felt that it was important for the Committee to know given that may be the reason as to why the Bill is being repealed. As such, he asked if the legal opinions had any influence on the request for the Committee to repeal the Bill.

Ms Nkondlo asked why the legal opinion was confidential even for the Committee given that Members are lawmakers, and they will have to process the repeal request. During the consultation process of the Amendment Bill the industry threatened to take the department to court because they felt that certain aspects of it were unconstitutional. She asked if there had been a lawsuit or opinion that led to the department deciding to make a request for the repeal of the Bill.

Minister Wegner explained that the department will have to look at cost saving and efficiency gains for the Board’s funding. However, the Board still has savings due to the new office accommodation.

Referring to the Members’ frustrations about the continuous amendments to an old Act, she agreed that the department had to review the policy environment for gambling because it could not continue amending the legislation on an annual basis – and this is exactly what it has embarked on.

In response to the question of why the legal opinions were confidential to the Committee, she clarified that the legal opinions mentioned in the presentation had no influence on the repeal request – rather, they were placed to show the work that is underway parallel to the repeal request. Also, the legal opinions were incomplete.

Ms Muller clarified that the legal opinions deal specifically with the Twentieth and Twenty-First amendment Bills, which deal with relocation, whereas the Nineteenth Amendment and Repeal Bills deal purely with the repeal of that Act.

Ms Nkondlo said that her questions on the costs of introducing a Bill and then repealing it, and if there was any lawsuit from the industry on the constitutionality of the Bill.

Mr Van der Westhuizen proposed that the Committee quantify the costs incurred by the WCPP in considering and adopting the Nineteenth Amendment Bill.

Given that the tax income revenue had increased, he assumed that the fees had also, indicating that there was potential for the Board to gain financial independence. In general, the government does not like to ring-fence sources of income. For example, the levy on fuel, for example, was motivated many years ago to go towards the maintenance of the provincial roads. If the nineteenth amendment bill would be repealed, the fees would be sent to the PT who would then draft a budget for the Board. He asked if the department was motivated to repeal the Bill because it sought to pool the revenue in the province.

Mr David Savage, Head, WC DoFEOT, said that the repeal process has not been resource-intensive. At present, the department does not have information on the costs incurred by the WCPP and can only provide guidance on how to calculate them if required.

In response to the question on the board fee income, he mentioned that the department can compile a document and provide it to the Committee on the changes over time.

Referring to the question on whether the department was motivated to repeal the Bill because it sought to pool the revenue in the province, he explained that in economic theory when you want to preserve the independence of an economic regulator so that it is a neutral party in the environment, ring-fencing the funds is the best available option so that the regulator can become self-sufficient and not be subjected to any outside influences.

The reason for the department’s different approach was due to the change in the structure of the industry and the tax incidents. Further to that, there are different tax regimes that apply to different parts of the gambling industry as a whole. With these changes the industry’s income is expected to be negatively impacted because it is subject to different various tax regimes.

Hence the department wants to respond to the growth in online gambling, whilst not introducing a regime that may not deliver a fair incident of the assignment of costs to the industry, but still looking to achieve long-term self-sufficiency for the Board. Discussions are ongoing on how to reduce costs and find efficiencies in the Board.

In response to the question if there was any lawsuit from the industry on the constitutionality of the Bill, he said that he was unaware if there had been a lawsuit against the Bill.

Ms Muller confirmed that there is pending litigation in respect of the Amendment Act, but not this particular Bill. The department made several considerations before deciding to embark on the repeal process, she added.

Mr Savage said that the department had initiated this request to respond to the dynamic changes in the industry which have changed the structure of the tax base.

Ms Nkondlo asked what the legal opinion recommended. Moreover, she asked if there was a lawsuit from Sun International Grandwest Casino on the constitutional nature of the Bill, and what the implications of this were. She said that the responses provided by the department had differed on these two questions. Nonetheless, she suggested a resolution that the Committee request for the department to provide answers to the questions in writing.

The Chairperson noted the resolution. She informed the department that the Committee would then deliberate on the repeal request of the Amendment Bill.

She proposed that the Committee look to have one public hearing on the Bill in Cape Town, which will be done in a hybrid format some time in October.

Mr Van der Westhuizen felt that only the industry players would be interested in submitting proposals to the Committee on the Bill. 

Ms Nkondlo requested that before the Committee considered finalising a date for the public hearings, it should first obtain all the outstanding information from the department, such as the costing of the initial public consultation process for the Bill, the repeal process, and the legal opinions, particularly the one relating to the Sun International lawsuit. She proposed that the department provide the answers during a follow-up meeting with the Committee.

The Chairperson asked if the Committee was permitted to take these resolutions on the Bill.

Ms Zaheedah Adams, Committee Secretary, said that it was permitted.

The Chairperson asked if the Member wanted a breakdown in costs of the department or only the WCPP.

Ms Nkondlo stated that the Committee would require both, given that it was a joint process between it and the department.

The Chairperson asked for clarity whether the Committee could request the costing on the repeal Bill.

Ms Adams said that the Members would have to be more specific on how they intended to conduct the public consultation process.

The Chairperson asked if the Member wanted a retrospective costing of the entire process.

Ms Nkondlo confirmed that was what she wanted.

Mr Van der Westhuizen said that in the past the chairpersons of the Committee were provided quotes to advertise through the various newspapers from the supply chain processes.

He agreed with the proposal made by Ms Nkondlo for the department to provide further clarity on the costing of the process, and he wondered if this would run parallel to the public consultation process. Thereafter, he recommended that the Committee place its advertisements in the national newspapers on a Saturday, and that it should also obtain a quote on how much it will cost to advertise on social media.

The Chairperson confirmed that the Committee would seek to engage with the department whilst undergoing the public consultative process. However, she felt it would be better for the Committee to request that the department submit the answers in writing.

Mr I Sileku (DA) asked if public interest had been expressed on the Bill since the advertisement was released in December 2022.

Ms Adams indicated that the advertisement in December 2022 was done by the department, not the Committee.

After that, she informed Members that advertising the public consultation process on social media would be complicated. However, she supported the recommendation for a hybrid public consultation process.

Ms Nkondlo supported the proposal for the Committee to hold a hybrid public consultation process.

Mr Sileku also supported the proposal.

The Chairperson asked which newspapers the Committee should advertise the Bill in.

Ms Adams said that it could be advertised on Die Burger and Vukuzenzele.

Ms Nkondlo proposed that the Committee consider advertising the Bill in community newspapers.

Mr Van der Westhuizen asked if the Committee could receive further information on the statement by the department that there are differences between the various sub sectors in the gambling industry. Also, he proposed that the Committee request the WCPP research division to provide it with insight into the funding practices of other provinces’ gambling boards and their current financial performance.

Moreover, he asked if the Committee could request for the department to submit a report on the total fees raised, the transfers received by the gambling board over the past five financial years, together with a summary of the assets and liabilities of the gambling board at the end of each financial year, as well as the amounts of cash and other liquid assets it has on hand.

Ms Nkondlo asked if the Committee could receive further information on the specific structural issues which were affected by the Covid-19 Pandemic that were touched on by the department earlier.

Thereafter, she proposed that the Committee debate the viability of the Gambling Board and its current location, and what the benefits were of it transitioning to an independent institution. Further, she agreed with the proposal that the Committee request for the research division of the WCPP to provide it with insight into the funding practices of other provinces’ gambling boards and their current financial performance.

Copyright Amendment Bill (CAB) and the Performers’ Protection Amendment Bill (PPAB)

The Chairperson mentioned that the Committee would then deliberate on the final mandates for the CAB and the Performers’ Protection Amendment Bill (PPAB).

She reminded Members that the Committee has deliberated on three versions of the CAB.

Thereafter, she asked if Members supported the amendments to the Bill or not.

Mr Van der Westhuizen indicated that the Committee had previously raised objections to the proposed amendments to the Copyright Act. As such, he proposed that the Committee mandate its representatives in the National Council of Provinces (NCOP) not to support the Bill.

Ms Nkondlo proposed that the Committee mandate the representatives in the NCOP to support the adoption of the Bill.

Mr Sileku agreed with Mr Van der Westhuizen’s proposal.

The Chairperson said that the legislation had to find a balance of empowering people, supporting the creative industries and creating an environment that is conducive for growth. For her the central issue in the Bill was the debate on fair use and fair dealing, which she felt was not adequately dealt with. As a result, she supported the proposal that the Committee mandate its representatives in the NCOP not to support the Bill.

The majority of the Members, besides the ANC, agreed with the proposal for the Committee to mandate its representatives in the NCOP not to support the adoption of the Bill.

The Chairperson then asked if Members supported the PPAB or not.

Mr Van der Westhuizen proposed that the Committee mandate the representatives in the NCOP not to support the adoption of the Bill.

Mr Sileku supported Mr Van der Westhuizen’s proposal.

Ms Nkondlo proposed that the Committee mandate the representatives in the NCOP to support the adoption of the Bill.

The majority of the Members, besides the ANC, agreed with the proposal for the Committee to mandate its representatives in the NCOP not to support the adoption of the Bill.

Final Committee mandate report on the CAB

The Chairperson took Members through the final Committee mandate report on the CAB.

Thereafter, she requested a mover for the adoption of the report.

Mr Van der Westhuizen moved for the adoption of the report.

Mr Sileku seconded the mover for the adoption of the report.

The Committee duly adopted the report, with reservations from the ANC.

Final Committee mandate report on the PPAB

The Chairperson took Members through the final Committee mandate report on the PPAB.

Thereafter, she requested a mover for the adoption of the report.

Mr Van der Westhuizen moved for the adoption of the report.

Mr Sileku seconded the mover for the adoption of the report.

The Committee duly adopted the report, with reservations from the ANC.

The Chairperson thanked the Members for their contribution to the deliberations on the two Bills. She also thanked the Committee staff for the support they provided to Members during the process.

The meeting was adjourned.