Skills Development Levies Bill [B28-99]: briefing and voting

LABOUR & PUBLIC ENTERPRISES SELECT COMMITTEE
17 March 1999
SKILLS DEVELOPMENT LEVIES BILL [B28-99]: BRIEFING AND VOTING

Documents handed out:
Slide presentation on Skills Development Levies Bill

SUMMARY
Mr Falkov, Director of the Human Resource Development in the Department of Labour, briefed the committee on the Skills Development Levies Bill. The committee passed the Bill without amendments and it would be debated in the House on Thursday.

MINUTES
Mr Falkov started off with the background to the Bill. Various countries were investigated to determine their level of skills development. Through research it had been concluded that the levels of education and training in South Africa were too low. A funding mechanism would be required for the levels to increase. A few options had been examined and it was decided that the levy grant scheme would be the most viable. Firms would see the grant as an incentive when paying the levy.

One of the market failures which the levy grant scheme addressed was high labour turnover - companies loosing their most skilled employees regularly. Another failure which the scheme addressed was information failures - companies not aware of the benefits of training. As a result of the levy scheme, companies would be able to train all their employees, not just a certain group.

Mr Falkov highlighted some of the changes to the Bill compared to the one presented to the NEDLAC negotiations. Initially the base of levy excluded fringe benefits, now it included all remuneration. This prevented employers from maneuvering salaries, possibly more fringe benefits and less base salary. The allowable collection costs was initially 1%, but heeding to the advise given by SARS, it had been increased to a maximum of 2% of total levies collected.

The definition of what a leviable amount was looked at. The amount had to include employees who earned R19 000.00 per annum, which was below the income tax threshold. The exclusions from the calculation of remuneration included pensions, retiring allowances, etc.

Any public service employer and religious or charitable institutions were some of the sectors which would be exempted from paying a levy.

The diagram of the distribution of levies paid by the commissioner (section 8) was explained. The employer would pay a levy to the South African Revenue Services (SARS) which would transfer levies to the National Revenue Fund and would inform the Labour Director General of the employer names in each SETA (Sector Education and Training Authority) as well as the amount collected. The Director General is responsible for calculating the levy allocations as well as authorising the transfer thereof. This authorisation was divided into 80% for each SETA and 20% plus all revenue for the National Skills Fund where no SETA exists. The National Skills Fund paid SARS up to 2 % to cover collection costs. Employers could pay the levy to SETA directly if they follow a strict criteria laid out in the Bill. The Auditor General would audit all SETA's accounts.

Mr Falkov informed the committee that the amendments to the Skills Development Act were of a technical nature and there was no need to explain them.

The Chairperson, Ms Mutsila (Northern Province, ANC), opened the floor for questioning. Mr Swanepoel (North West, NNP) wanted to know who was going to introduce the Bill in the House. The answer was the Labour Minister.

Mr Mongwaketse (Northern Cape, ANC) asked who would be responsible to use the levies given to the SARS. It would be split between the National Skills Fund and the SETA accounts, replied Mr Falkov. In section 10(b)(3) of the Skills Development Act the criteria was set out for disbursements.

Mr Mudau (Mpumalanga, ANC) asked what evaluation mechanism would be in place for training. A performance contract would have to be undertaken with SETA was the response.

Mr Swanepoel asked about the tagging of the Bill. He said that it was a money Bill, but it had been tagged as a section 75 Bill. Should it not be tagged as a section 77 Bill? Ms Rabinowitz, from the Department of Labor, replied that it was a section 77 Bill, but it followed the section 75 procedure. The committee could either accept or reject the Bill, but no amendments could be made. If it was rejected, it would be sent back to the Minister of Finance. The NCOP Chamber could discuss the Bill but could not vote on it.

The members passed the Bill without amendments. Mr Marias (Western Cape, NNP) requested a debate on the Bill in the House as it would be the last time for those who were leaving parliament to do so. This was agreed to.

The meeting adjourned.