Department Legislative Programme, Strategic Plan and Budget Vote 32: briefings

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE

Director-General’s PowerPoint presentation: Working towards Growth, Employment and Equity
Department Legislative Programme 2005
Department Legislative Programme 2005: Annexure A

SUMMARY
The Department Director-General presented the Committee with a comprehensive overview of their strategic plan, budget and legislative programme for 2005. The briefing was presented in three parts. The first part dealt with what had been achieved in the past year, the second provided insight into the vision of the Department over the next three years and the last part of the briefing detailed how the budget supported the strategic plan. The common theme amongst Members seemed to be how the strategic plan tied in with the issues raised in the President’s State of the Nation Address.

MINUTES

Legislative programme
Department legal representatives, Mr M Moletsi and Mr J Strydom, provided the Committee with an overview of the legislative programme for 2005. The Committee was again reminded of the goals of the DTI i.e. to accelerate the growth rate, create new employment opportunities and to reduce economic inequalities. Seven objectives were identified to achieve the goals. Increasing the contribution of small businesses to GDP, significant progress on broad based BEE and increasing the level of direct investment overall and in priority sectors were amongst those mentioned. Mr Moletsi introduced each of the Bills stating its objective and its anticipated date of introduction. The list of bills included the Co-operatives Bill, National Credit Bill, Consumer Bill, Interim Companies Amendment Bill, Enterprise Development Bill, Close Corporations Amendment Bill, Patents Amendment Bill, Designs Amendment Bill, Sugar Bill, Counterfeit Goods Amendment Bill and the Trademarks Amendment Bill.

Discussion
Professor B Turok (ANC) urged the Department to not only focus on growth, but development as well, as these went hand in hand. He also asked about the progress being made on amending the Companies Act.

Mr Moletsi noted that the Bill amending the Companies Act would be introduced in 2006. The anticipated date for completing the initial draft of the Bill was April 2005 and by December 2005 it was hoped to have it ready for consultation. The Bill would thus be ready for introduction to Parliament in 2006.

Mr Ruiters noted that the Companies Act was a complex piece of legislation. The amendment bill would take at least three years to complete. He added that the Department had been working on the Enterprise Bill for the last 14 months. He always insisted upon a policy underlying a particular piece of legislation.

Professor Turok asked whether it would not be best if Members of Parliament were involved with the Bill early on. Mr Moletsi welcomed Members’ participation in the process.

The Chairperson commented that as soon as a draft on the Bill was available, the Committee would engage with the Department.

Mr S Rasmeni (ANC) asked what factors drove the Department’s choice of bills to be dealt with. He made specific mention of the Industrial Development Corporation Act that had been referred to the Department for amendment as a result of concerns that it did not address transformation properly.

Ms S Njikelana (ANC) asked whether the DTI had an overall legislative strategy and what informed its programme. She also asked why the Sugar Bill was introduced anew and why the existing Act had not been amended.

Mr Moletsi stated that the strategic direction and programme of the Department was amongst others influenced by its goals, objectives, international benchmarking, problems relating to implementation and complaints received. He conceded that the Department lagged behind on certain pieces of legislation and appreciated the concerns raised by Members.

Mr Strydom said that the Department dealt with numerous pieces of legislation and that it had a monumental task of keeping them in line with the Constitution. He explained that the IDC Act had been amended as much as 23 or 24 times since its introduction in 1948. Minister Erwin had undertaken to amend it a further time but the Department was still in the process of doing it.

Mr Strydom explained that the Sugar Act dated back to 1979 and was a very short principal Act. The Act however had a lengthy proviso that provided for an agreement by the Minister in consultation with the sugar industry. It was thus decided to do away with the old Act as a whole due to the unacceptability of the proviso.

Professor Turok asked whether the Department’s programme was in line with the President’s state of the nation address. He also asked to what extent the proposed Bills would address the issues of poverty, unemployment, the second economy, and inequality as raised in the state of the nation address. It was asked whether the Committee would be receiving the regulations attached to pieces of legislation that had been passed.

Mr Ruiters responded that the legislative programme corresponded to the issues raised in the President’s state of the nation address. He explained this by way of the example of the Enterprise Bill. The Bill made provision for a total of over R900 million to be spent by the Department on new enterprises in SA. Mr Ruiters however felt that the regulatory framework had not given the Department enough leeway to respond to market conditions. He asked that a framework should be created that would allow the Department to respond more effectively. New businesses should be able to apply to the Department for assistance without the assistance of consultants as they charged a 5-10 percent fee.

Dr E Nkem-Abonta (ANC) commented that the time allocated for interaction on the legislative programme was far too short. He also felt that the DG and the Minister attended far too few Committee meetings.

Mr Ruiters explained that it was not a conscious decision on his part not to attend meetings. Time constraints had not allowed him to attend as many meetings as he would have liked. He nevertheless emphasized that he had had close interaction with the Committee via DTI representatives.

The Chairperson said that he had undertakings from the Minister and Deputy Minister to attend Committee meetings.

Ms Chang (IFP) said that it was puzzling why unemployment was increasing when the economic growth rate was increasing. She also asked what the priorities of DTI were and how it intended to increase access to markets.

Mr Ruiters said that the answers to many of the questions raised would be evident from the presentation on the strategic plan and budget. He stated that the numbers of customers to the DTI had increased tremendously over the last three years. The D-G felt that DTI should be given the opportunity to spread its wings and to grow. Mr Ruiters however pointed out that with growth, departmental capacity needed to increase. He noted that more staff was already needed in the Black Economic Empowerment (BEE) Unit.

Department Strategic Plan and Budget
The D-G presented the Committee with a comprehensive overview of DTI’s strategic plan and budget. Due to the great amount of detail contained in the presentation, the D-G chose only to highlight key issues. The briefing was delivered in three parts.

Part One dealt with achievements for 2004/2005. The D-G listed key outputs delivered in:
- increasing the contribution of small enterprises to the economy
- significantly progressing broad –based black economic empowerment
- raising the level of investment in the economy
- increasing market access opportunities and increasing exports

Mr Ruiters noted that the outputs did not necessarily reflect all the work that DTI had performed. A great deal of process work had been done, the results of which were not always evident.

Part Two dealt with the DTI’s vision for 2005-2008. The strategic plan was DTI’s blueprint to achieve growth, employment and equity. The mission and vision of DTI had been aligned with government’s broader economic policy goals and its objectives were aligned with government’s economic programme of action. Key performance indicators were being used to keep a check on the achievement of strategic objectives and improvements in strategic planning had improved spending. The D-G once again elaborated on the inroads that DTI had made in the areas mentioned in Part One above and touched on the flagship projects that had been initiated. The perspective however differed from that of Part One in that the emphasis was on DTI’s vision for the future. The achievement of a more competitive economy, greater access to redress for economic citizens, contributing towards African economic development and bridging the gap between the first and second economy were also elaborated on in detail.

Part Three dealt with how the budget supported the strategy. The DTI followed the approach that better planning meant better budgeting, less under-spending and a balanced budget. The D-G noted that even though it seemed that there had been an average increase over the years 2001/02 – 2004/05 of 13.7% in the budget, the average increase from 2005/06 – 2007/08 was more along the lines of 1.1%. Mr Ruiters was proud of the fact that no financial irregularities could be found within DTI. The Department had received an award for being the most consistent government performer. The D-G strongly felt that the budget needed to increase significantly in order for the Department to function optimally. He pointed out that he had implemented drastic measures to cut down costs. Mr Ruiters proceeded to give the Committee a breakdown of the percentages allocated to various areas of activities within the Department.

The D-G said that 1999 – 2004 had been a period of consolidation for the Department. The DTI was now ready for improved delivery to economic citizens. Mr Ruiters concluded with the statement that the challenge facing DTI was to demonstrate impact on the economy in the areas of economic growth, employment and equity.

Discussion
Mr Rasmeni commended the DTI for the work it had done. He was however concerned about the shortages in staff in the Department given the huge workload. Mr Rasmeni also asked to what extent was DTI staff aware of the strategic plan and its objectives of keeping it in line with the issues raised in the President’s state of the nation address. It was further asked whether staff had access to information and training. Mr Rasmeni lastly asked how the strategy addressed economic development at local government level.

Mr Ruiters said that in 1999 a total of 1400 posts had existed. The number of posts were thereafter reduced to 700 but was once again increased to 1014. In 2004, DTI had a total of 298 vacancies of which 178 had since been filled. The D-G said that training was a priority but often trained personnel were also lost to the private sector or even to other government departments.

Ms B Ntuli (ANC) noted that much had been said about building skills technology and infrastructure in order to make upcoming enterprises competitive. She asked how the process would be co-ordinated between national, provincial and local level. Ms Ntuli asked for timeframes on the Women’s Economic Empowerment Strategy. More detail was requested. Timeframes were also requested for the launching of the DTI retail outlet. Greater detail was requested on the implementation of the DTI strategic plan.

The D-G said that programmes were being rolled out in provinces, with priority being given to those that were weaker. He emphasised that local government was most definitely involved in the process as nothing could be done without the involvement of local authorities. The retail outlet pilot project was to be opened on the DTI campus itself.

Dr M Sefularo (ANC) referred to entrepreneurship and the possibility of linking it to other DTI agencies. He commented that there was a bill that dealt with intergovernmental relations and asked how DTI plugged into it. It was also asked what DTI’s relationship with the Department of Science and Technology was on the issue of developing competitive skills, science and technology.

The D-G said that he tried to keep abreast of developments in other spheres of government by "shadowing" them.

Dr Nkem–Abonta felt that much of the strategy focused on the issuing of grants. He was concerned about the implications it would have on raising the tax burden. He pointed out that the strategy was silent on cluster policies. It was widely used by Brazil and the advantage was that it led to less dependence on subsidies. He asked why women economic empowerment had not been included under Black Economic Empowerment (BEE). He asked whether women were not part of BEE. It was asked whether the Department would have separate strategies for the disabled and the aged as well. He felt that the strategy was of too general a nature. It did not have measures in place for outcomes of activities that the Department wished to engage in. It was felt that no clear strategies were outlined.

Mr Ruiters pointed out that the Department had considered cluster policies. The D-G noted that the Annual Report would provide greater detail on issues that Members felt the strategic plan did not address.

Mr N Godi (PAC) asked where the process on technical missions to India and China was. He asked which Department was to lead the process on skills, technology and infrastructure development.

The D-G said that India and China were high on DTI’s agenda. Problems had been encountered with China on the importation of clothing but the matter was being looked into.

Professor Turok suggested that the DTI listen more to concerns raised by Members. He felt that it was not good enough for DTI agencies to focus on the retail sector alone. He was glad to hear that the Department was adopting a hands-on approach to dealing directly with customers. He felt DTI to be the heart of production in SA. The issue was not about just creating jobs. It was about creating employment opportunities that were productive. He supported the idea of increasing DTI’s budget as long as it was linked to performance. The comment was made that the domestic economy was just as important as foreign investment. He made the point that he had been "sweating it out" trying to develop a policy on the second economy without any help from DTI. He asked the DTI to lend him support so that a clear, focused policy on the second economy could be developed. Reference was made to DTI’s aversion that BEE was reproducing the production base in SA. He was against the token handing out of shares under the guise of BEE. He called for a total restructuring of the economy.

Ms D Ramodibe (ANC) said that Members needed specifics on what projects DTI was engaged in at grassroots level. This information could then be taken back to Members’ respective constituencies.

The D-G said that a report with specifics on details of projects, jobs created etc. had been compiled and sent to the Committee. He noted that all the statistics of DTI’s initiatives were available.

Ms N Khunou (ANC) stated that progress reports should be forwarded to the Committee regularly on the efforts being made to close the gap between the first and second economy. She asked how much money had been allocated to grants and how easy it was to access them.

The D-G agreed to furnish the Committee with quarterly reports and whatever information it needed.

Mr Bhutana (ANC) stated that no timeframes had been given on the implementation of economic growth and development programmes. Information was also requested on where the programmes were to be implemented.

Mr Ruiters said that timeframes were usually between 12 and 36 months.

Ms Chang asked why rebates had been given to the motor vehicle industry when it was highly mechanised. Greater rebates should be afforded to the clothing industry as it was labour intensive.

Mr Ruiters said that it was not possible to have programmes similar to the Motor Industry Development Programme for every sector. It would be far too costly to SA. The point was made that the clothing and textile industry was very complex and that even world-wide it was trying to redefine itself.

The D-G noted that time constraints would not allow for all the questions to be answered individually but that he had attempted to cluster them together where appropriate. He emphasised that the strategy was correct in its focus on delivery. The D-G pointed out that almost in every instance on every policy that was drafted from 1994-1999, DTI had set up new institutions as was required. After 1999 DTI evaluated the institutions and was now in the process of proposing changes where needed. He pointed out that the Department was not fixated with what it had done in the past. A specific format had been adopted in the strategic plan and budget. The theme was to give content to development. The issue was not about delivery but whether the Department was delivering efficiently. The D-G said that the idea was firstly to be bold enough to review the policies of DTI and thereafter to know where delivery was to take place. The point he was trying to make was that there were operational issues that needed to be contended with.

The Chairperson expressed the Committee’s appreciation for the excellent manner in which Mr Ruiters had served DTI over the last decade and wished him all the best in his future endeavours.

The meeting was adjourned.