Standards Bill & National Regulator for Compulsory Specifications Bill: public hearings

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Trade and Industry

23 January 2008
Chairperson: Mr B Martins (ANC)
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Meeting Summary

The Committee held public hearings on the Standards Bill and the National Regulator for Compulsory Specifications Bill. The National Association of Automobile Manufacturers of South Africa, the National Laboratory Association, Business Unity South Africa and the Retail Motor Industry made submissions.  All the submissions generally supported the Bills and were pleased that there would be a separation of powers. However, concerns were expressed about the technical capacity of South African Bureau of Standards (SABS). High staff turnover at SABS was resulting in testing taking too long and problems in cash flow to small suppliers, or loss of production. The submissions expressed support that the Bills would stop random changing of procedures without informing business. The size of the Boards was not at issue, however the submissions stressed firstly that it was important that not only people with technical expertise were on the Board, but that other skills such as finance and human resources should also be utilised. Industry should also be represented. Suggestions were made for the amendment of Clauses 23 and 24 of the Standards Bill, for greater clarity on the processes, and for amendment of Clause 14 of the NRCS Bill. Comments were also made that the standards should be more readily accessible than their current published and expensive format. Questions by Members addressed the issue of the independence of the regulator, some of the problems identified at the Bureau of Standards, the difference between South African and international standards, and the composition of the Boards.  


Meeting report

 

Standards Bill and the National Regulator for Compulsory Specifications (NRCS) Bill public hearings:
National Association of Automobile Manufacturers of South Africa (NAAMSA) submission

Mr Ian Charlton, Consultant: NAAMSA, explained that in the submission there was an error, and that the reference to Section 3 should be to Section 13 of the National Regulator for Compulsory Specifications Bill (NRCS). NAAMSA had worked closely with South African Bureau Standards (SABS) for a number of years. Their biggest concerns related to Section 13, specifically in Section 13 (1)(a) and (1)(b), which stated that the Minister was entitled to make a specification mandatory. This was supported by NAAMSA. Before a specification was made mandatory it had to go through the processes under the Standards of South Africa (STANSA), and SABS specification development system. These processes ensured full stakeholders’ participation and adequate consultation with all the role-players. Subsection 13(c), however, appeared to override subsections (a) and (b). The Minister would be able to make any standard mandatory. NAAMSA was not sure what that meant and wondered if it would allow the Minister to bypass all the STANSA processes. NAAMSA proposed that subsection (c) be deleted.

There were difficulties in the past when the regulators were randomly changing some procedures that had interdependency with the standards that had been developed according to due process. In industry it had been found that even the slightest change in the procedures or in the supporting information that was required in terms of the compulsory standard could have a greater effect on business than the compulsory standard itself. They asked for a guarantee, if not an amendment (proposed wording was given) that would enshrine those procedures and supporting roles in the Bill as processes and procedures that had to be developed in the STANSA processes, and become standards in themselves. NAAMSA supported that everything should go through the STANSA process. They would want an end to ad hoc changes that caught industry by surprise.

There was nothing in the Bill to permit the regulator to require something that was not expressly provided for in the legislation. There were additional requirements made by the regulator that industry was deemed to agree to, in order to go through the processes to market the new vehicles in the market. There was nothing in the Bill that gave the power to the regulator to make requirements in addition to those stated in the law. He added that as long the regulator had to go through the STANSA processes NAAMSA would be happy.

The levy, or the fee, would be paid per unit per vehicle. In the past these fees had gone to testing and certification, standards developments for the automotive industry and the regulatory function. The fees paid from NAAMSA alone had probably amounted to between R15 million and R30 million a year. The financial income to the SABS that used to serve a multitude of automotive functions was now being channelled to serve only one of those functions - being regulatory - and the fees had risen considerably over the years. NAAMSA wondered what had been done with the funds, as it would have thought that the income should have been used to improve standards and test equipment to enable them to move forward.

Mr Charlton raised further concerns around the service levels from the SABS on testing and certification, and the regulatory function. The staff changes in the SABS would further affect service delivery. If the service delivery were to continue to drop, it would mean that processes would not be completed in time for the launch dates of vehicles and this could have other serious consequences for the industry.

Discussion
Professor B Turok (ANC) asked for clarification on the STANSA process.

Mr Charlton explained that the STANSA process meant that there would be an engagement in technical committees that produced a technical regulation. The membership of the committee was carefully selected. It was in line with the International Standards Organisation (ISO) processes and referred to in the World Trade Organisation Technical Barriers to Trade (WTO TBT) agreement. Every stakeholder could have representation on the technical committee.

Prof Turok wanted to know if NAAMSA supported the Bills, and if so why.

Mr Charlton replied that NAAMSA supported the Bills, subject to the deletion of Subsection 13 (c), and subject also to the proposed amendment that said any proposed regulation would also be put through the STANSA process. He noted that an international group had undertaken a review of the SABS, and had recommended that there should be a separation of services.

Ms F Mahomed (ANC) wanted examples of the poor service delivery of SABS and their inability to deal with the technical demand.

Mr Charlton replied that the levies had increased and promises of additional staff members did not occur. One of NAAMSA’s biggest concerns was whether SABS could retain their staff. If not, the necessary processes could not be done quickly; the vehicles could not be tested quickly and therefore could not be sold.

Mr S Rasmeni (ANC) wanted more information about the regulatory problems and the standards of testing.

Mr Charlton replied that NAAMSA supported the notion that certain testing services should be open to free and fair competition by the private sector and not subsidised. Some of the testing services would have to be government-run. There was a concern that there was a split in the skill base. Previously there was sharing of information and knowledge, but now that seemed to be lost to a degree. There had been high staff turnover at the SABS and the new incumbents that were trained were moving to the private sector. The constant renewal and retraining were perhaps lowering the skills base.

Dr P Rabie (DA) wanted to know if South African standards were on par with the rest of the world.

Mr Charlton replied that the standards were not up to date with international norms. NAAMSA had taken a high level decision to reach those norms to a greater extent. In order to move forward it became more expensive to acquire testing equipment. He added that even though the country’s standards did not meet international norms, many of the vehicles sold did meet those requirements and others met the minimum requirements.

The Chairperson asked if the vehicles that were currently being sold were meeting the required standards.

Mr Charlton replied that there was a series of compulsory South African standards that were being met. Many of the vehicles sold here were also up to date with the international standards. NAAMSA would support the process to adopt more of the international standards.

Prof Turok was confused and concerned that there were international vehicles being sold that did not meet the international standards.

Mr Charlton replied that there were four levels of compliance. There was non-compliance with South African Standards, compliance with South African Standards (that were not as good as the international standards), vehicles being manufactured locally and exported that met international requirements and finally vehicles that were being manufactured locally and exported that exceeded the international requirements.

National Laboratory Association (NLA) submission
Mr John Wilson, Director: National Laboratory Association, submitted that the NLA was a strong supporter of the initiative of the Bills. It would prefer to see a clear and independent regulator. The NLA strongly supported the provision of the Advisory Forum and encouraged the State to continue with the plan to implement the Bills as soon as possible. There would be an increased harmonisation between the different state departments.

Discussion
Mr Rasmeni asked what was the view of the NLA on the size of the boards of the two entities.

Mr Wilson replied that the size of the board should be kept small. It was better in order not to distribute work. The board should comprise of people who understood what was the purpose of the entity. In the past there was a good system of volunteers. It was important to have members of other institutes on the board so that each of the entities should work together.

Mr Rasmeni asked at whose expense the advisory forums should operate.

Mr Wilson felt that these did not need to be an expensive or large event. He felt that the State should carry that cost.

Ms Mahomed commented that the Committee was pleased that the NLA had no issues with the Bills. She asked if the NLA had any problems regarding capacity on the part of the SABS.

Mr Wilson replied that there were regulators that did not properly understand the process. If there were a single unified body the various support structures would be available for those regulators.

Ms B Ntuli (ANC) asked for elaboration on his view that there should be a ‘clear independent regulator’. She asked if the Bill was satisfactory.

Mr Wilson replied that currently the regulator was within SABS and it was not independent. He gave the example of the regulation for the wiring standards and testing of homes. This was a case of a badly written and badly implemented regulation, which had arisen from lack of understanding. 

Ms Ntuli noted that if the regulator was totally independent then this meant it had to be private, and she asked how would it then receive funding.

Mr Wilson replied that advisory forums would remain State driven but needed to be independent from other organisations, and that it had to be clear who was the regulator.

Business Unity South Africa (BUSA) submission
Dr Laurraine Lotter, Representative: Business Unity South Africa, explained that BUSA welcomed the introduction of the Bills. They had participated intensively in the National Economic Development and Labour Council (NEDLAC) process and supported the reports. They supported most of the provisions yet took the view that there would be technical difficulties. The implementation of the Bills would be difficult, but BUSA was prepared to work with government to ensure successful implementation. The industrial policy context needed to be considered. The industrial policy needed to provide the enabling framework. It was important for government to look at a more linked strategy between trade and industry. There had been sufficient consideration given to the Bills and that to a large extent the Bills had addressed most issues.

She explained why she supported the establishment of two entities. She started with the Standards Bill, using an example of her industry. In terms of global trade it was recognised that in South Africa, where appropriate, international standards were adopted. The State needed to ensure that there were stringent regulations about chemicals and the use of them. In order to do this, the chemicals had to be classified. There was an international system that gave a broad guide that allowed for classification. The challenge was to take those international requirements and convert them into a document that could be used in South Africa. That required a technical committee. Once the technical part was done, the regulator was able to take the outcome of the technical work and incorporate it into a much simpler technical regulation. In order to ensure that those technical requirements were then met the regulator made use of facilities, which in turn needed to be accredited. In some cases, especially with products, the Department of Trade and Industry (DTI) had a particular task. The use of an independent regulator was appropriate.  Currently the regulator and the compliance testing facility were one entity. This made it difficult for the Board to really try and promote commercially, as well as to run a regulatory system. The separation of the two would lead to a better system. There was also the problem in certain areas of testing, where there was a compulsory system in place, such as the SABS testing system. Because the regulator had to use those facilities there could be a wait of six to eight weeks before the product was tested. In that time the product could not be sold. These two Bills would allow the regulator to look for additional facilities. Engagement with stakeholders was becoming increasingly more important, because business was becoming more complex. It was important for a standard-setting authority and a regulatory authority to be kept abreast of the new innovations in various fields. Industry was usually first to be informed of these things. It was important for industry to have early warning if there were to be changes in either technical standards or the way in which the standards would work. The government consultancy forum was important.

The main area of concern of BUSA was that in the original version of the Standards Bill there was a clause that dealt with the incorporation of national regulation in legislation. That wording was removed. She strongly urged that the clause be reinserted. It was a valuable provision. Another area that caused confusion was Clauses 23 and 24. The original version had two different standards. The first was a compulsory standard that set out how national standards were drafted. However, there appeared to be confusion and a lack of distinction between compulsory and voluntary matters. It was thought that Clause 23 would deal with compulsory standards and Clause 24 would deal with all other national standards. She suggested that both be reviewed. Subclauses 23 (4)(5) and (6) should be removed from their current position and placed under clause 24, and slightly redrafted. The change would be more accurate.

A difficult area that should be considered, perhaps not for this Bill, was the accessibility of the standards. Currently the standards were available to be purchased, but legislation was available freely or at nominal charge from the Government Printer. Publications on standards were expensive and consideration should be given to making the standards more accessible. The Bills did not prohibit this.

Ms Lotter then moved to the NRCS Bill, which also had areas for consideration. There should be a more direct possibility of using accredited facilities that were not owned by the regulator.  For some products there was a voluntary and a compulsory regulation. Most would have both tests, but that would mean two tests and two levies. At the moment there was an exemption for those, which it was suggested should be entrenched in this Bill. Conditions for issue of sales permits as well as for regulations should also be spelt out expressly in the Bill.

Under certain circumstances where goods were being tested, or there was a dispute with the testing facility, there was the possibility that the regulator could grant a sales permit for that good to be sold. That should be made clearer in the Bill under Clause 14.

Dr Lotter concluded that the two Bills presented a coherent and complementary approach, that BUSA supported the two Bills and hoped the drafting concerns could be addressed.

Discussion
Ms Ntuli wanted clarification on the suggestions for clauses 23 and 24 and what exactly was required.

Dr Lotter replied that clauses 23 and 24 should not be removed. The titles of both clauses were however confusing. She suggested that Clause 23’s title should read ‘South African National Standard for Development of National Standard’. It was a very specific standard. She suggested that Section 23(a) should be changed to ‘develop and maintain a South African National Standard for Development of National Standards’. The whole text would then be amended, up and including clause 23(3). Subclauses (4)(5) and (6) actually related rather to matters addressed in Clause 24, and should be moved to that clause.

Ms Mahomed asked for specific suggestions regarding the wording of the redrafting.

Dr Lotter replied that in Clause 14(4) in the NCRS Bill there was no reference to the conditions. In subclause (5) there were exemptions for different reasons and the phrase ‘sales permit’ was not used. However, subclause (6) referred to ‘sales permit contemplated in subsection (5)’. She suggested that in subclause (6) the Minister should be allowed to make regulations as contemplated in subclauses (4) and (5). The Department may have a technical reason for the wording. Furthermore, she suggested that the portion set out on page four of the written submission under the heading ’27 bis: Incorporation of South African National Standards in laws’ be reintroduced into the Bill.

Ms Mahomed asked if BUSA had experienced any challenges with SABS and if there could be improvements.

Dr Lotter replied that challenges extended to a number of matters. If the people on the technical committee did not understand their responsibility to the greater good, and not for individual good, they could block several technical issues. Another challenge was to get people who were willing to serve on technical committees. Businesses were not adversaries of the institutions, but instead the business community merely wanted clear, consistent approaches to regulation.

Mr Rasmeni asked if BUSA thought the Bills would empower Small Medium and Micro Enterprises (SMMEs) and if the Bills would assist in transformation.

Dr Lotter replied that one of the biggest challenges facing the emerging entrepreneur was the incredible regulatory burden that was faced. It was difficult for a small company to understand all the laws and requirements. This was especially so if the company produced a product with safety or health issues. If the national standards were set out clearly and unambiguously and the Bills set out exactly what was required it would be easier for those companies to comply. However, what should also be considered was that the Board’s constitution should allow for representation from SMME and emerging entrepreneurs. She suggested that some sort of policy approach should be utilised. The Bills themselves were not transformatory in nature, but an approach could be developed.

Mr Rasmeni wanted Dr Lotter’s opinion on the size of the boards.

Dr Lotter replied that the Department was wise to give a range of 10 to 13 members as opposed to giving a set number. Consideration should be given to ensuring that a wide range of skills should be included amongst the members of the board. The board could not only comprise of technically skilled people but of people skilled in finance and human resources. The size of the board was not such an issue. The Chairman of the Board, though, should be effective.

Retail Motor Industries (RMI) submission
Ms Ferose Oaten, President: Retail Motor Industries, explained to the Committee that the RMI was an organisation that represented 7800 members in the motor retail sector. In principle the RMI had no problem with the Bills. Their main thrust was to create mechanisms for consultation and influence strategic direction. Most of their members had some sort of relationship with the SABS. While the members of the RMI were implementers of the standards, they actually had very little input on capacity or service delivery. It was important that there was sufficient capacity and technical expertise. Geographical proximity could become problematic, and a small business or entrepreneur, by having to wait for a result, could experience cash flow problems. There was no real recourse for small businesses. The process of waiting was quite costly. There should be a mechanism of accountability for service delivery.

The RMI agreed that there should not be a unilateral declaration of a compulsory specification without due process.

RMI requested that the Standards Bill should allow for representation on the Board of the automotive industry. The establishment of the Advisory Forum was important because it was an opportunity to use the skills of the organisation to influence strategic direction.

The RMI supported the Bills, but felt that in any establishment of any new entity there should be representation to influence the direction into which that entity was going. 

Discussion
Ms Ntuli understood that the automotive industry was vital to the South African economy, but wanted to know that if the automotive industry were to be represented on the Boards to influence strategic direction, would this not affect the objectivity of the boards.

Ms Oaten replied that the Board was made up of between 10 to13 people, with many sectors that needed to comply and be represented, and she therefore doubted that it would become a problem.

Dr Rabie commented that the presenter had made a valid point in that there should be consultation between the different bodies.

Mr Rasmeni asked if the RMI wanted representation specifically provided for in the Bill.

Ms Oaten replied that there should be nothing in the Bill that would exclude potential board members.

Ms Mahomed wanted to know how many members there were in RMI.

Ms Oaten replied that there were 7800 members. 150 were vehicle body builders that needed the services of homologation and could not sell until that service was complete. There had been a problem with vehicle test stations, because of past capacity problems within SABS, where during the evaluation process, the person had to pay rent. The RMI had a keen interest to ensure that there was a voice that could influence direction.

The Chairperson thanked the presenters and adjourned the meeting.

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