Contact person: MS THULI MAHLANGU

Prepared by: Adrian Grieve (with Conrad Barberton)

Cornerstone Economic Research cc was established by Conrad Barberton in August 2001. The aim of Cornerstone is to provide quality economic research and consulting services to the public sector. It focuses on issues relating to the development of the intergovernmental fiscal relations system in South Africa, the development of good governance frameworks for fiscal and financial management, particularly related to the implementation of the Public Finance Management Act, and the costing of policy and legislation. Cornerstone also provides training on budgeting, financial management, performance management, strategic planning, costing and other aspects of public sector management. Clients include the National Treasury, the Department of Justice and Constitutional Development, the Association of Public Accounts Committees (APAC), a number of provincial legislatures, various donor agencies and NGO’s. A list of recent work relevant to this proposal is provided below.

Introduction

Objective of Paper: Scoping the fiscal and budgetary implications

The objective of this paper is to provide the national Department of Social Development with a scoping that identifies the significant fiscal and budgetary implications of the proposed Older Persons’ Bill (hereafter referred to as "the Bill") and to suggest ways in which these implications might be evaluated or calculated. It must be emphasised that this is an initial exercise, and therefore is not intended to supply cost information on these implications.

It is understood that the Department intends initiating a far more extensive costing project in order to evaluate and calculate the actual fiscal and budgetary implications of the Bill, in so far as this is possible in the absence of the envisaged regulations to be issued in terms of the Bill.

Given the nature of the Bill, and the focus of policy costing in South Africa, this paper focuses on identifying the intergovernmental fiscal implications and budgetary implications taking into consideration:

fiscal risks (provisions that create implicit or explicit obligations for the state);

administrative costs and cost drivers (additional processes, personnel, management practices and procedures, information and reporting etc.);

institutional arrangements (new committees, units, associations etc.); and

delegation/assignment of functions to provincial/local government.

In addition, it must be noted that the Bill partially repeals the Aged Persons Act 81 of 1967, as amended (hereafter referred to as "the existing Act"). However, many of the provisions of the Bill in chapters II and III are very similar to those repealed from the existing Act. Therefore, in those chapters this paper merely highlights the differences between the new provisions and the existing provisions in order to ascertain what the new cost factors are. However, in this respect two matters must be noted:

This assumes that government is currently performing all its obligations under the existing Act; and

Sections 5 and parts of section 6 of the existing Act have been substituted by sections of the Aged Persons Amendment Act 100 of 1998, but those substituted sections have not been put into operation by proclamation as yet. Therefore, in the case of those sections this paper points out the costing differences between those sections as amended up until prior to the 1998 Amendment and the provisions of the Bill and it also points out the costing differences between the amended (but as yet inoperative) sections and the provisions of the Bill.

Issues arising from the scoping exercise

As noted this scoping exercise is not intended to supply actual cost figures on the fiscal and budgetary implications. Nevertheless, areas that are likely to prove particularly important in terms of their fiscal and budgetary implications include:

The transfer of fiscal and administrative responsibilities from provincial to national government;

The broadening of the definition of the institutions to be regulated; and

The introduction of the proposed "Ombudsperson" and National Consultative Forum on Aging.

This scoping exercise also highlights the following fiscal and budgetary issues:

The need for a thorough option analysis of various proposals in the Bill.

The need to analyse the fiscal risks, service delivery risks and litigation risks that the Bill may give rise to, especially given the way it expands upon certain constitutional rights.

The need to clarify the intergovernmental fiscal implications of various provisions in the Bill;

The need to have information on the proposed regulations issued in terms of the Bill to be able to cost the fiscal and budgetary implications of the Bill.

These issues emerge as themes in the chapter-by-chapter scoping of the fiscal and budgetary implications that follows.

Also included in the chapter-by-chapter scoping are comments on the provisions included in the Bill. These comments are classified into those which comment on the actual content of the provisions ("Substantive Comments") and those which comment on the way in which the content is presented or possible errors which may have crept in unawares ("Drafting Comments").

Sector fiscal and budgetary implications of the Bill

The cost drivers for the various sectors can be summarised as follows.

Appointment of additional Social Service Professionals by either the national or provincial spheres of government (or both spheres) to render the registration, inspection and monitoring services described in Chapters 2, 3 and 4. These functions have been significantly expanded upon primarily due to the very wide definition given to ‘facility’, as compared to ‘home for the aged’ in the current Act.

The establishment and funding (or the payment of subsidies) to organisations established or supported by the Minister in terms of section 4.

Provision and resourcing of additional facilities and services for the care of older person’s in section 5

The payment of subsidies to the organisations involved in providing facilities and services to older person’s as envisaged in section 5.

The cost of extending the definition of older person to all persons over the age of 60 years, as compared to the current Act.

The cost of extending the definition of frail persons to all persons, excluding children, as compared with the current Act.

The cost of extending frail care in facilities in compliance with section 14(i).

The establishment and operation of a register of facilities providing services to older persons;

The establishment and operation of a register of persons unfit to provide care to older persons.

The cost of providing access to certain basic services mentioned in section 14;

The establishment and funding of the ombudsperson for older persons in Chapter 4.

The establishment and funding of the National Consultative Forum on Older Persons in Chapter 4.

The additional responsibilities associated with holding enquiries in terms of section 16 and 17.

Possible increase in the number of court actions due to the nature of the rights granted by the Bill, the definition of facilities and the proposed admissions procedures.

The funding of basic health services as envisaged in section 14;

Responding to decisions made with respect to older persons in need of care as envisaged in section 20

The Bill makes the Minister responsible for the establishment and funding of a range of facilities and services that are currently funded and provided by the provincial sphere of government. It is therefore not clear whether the intention of the Bill is to ‘nationalise’ such functions, and so remove the funding responsibility for the provinces. Or whether the intention is that the Minister will assign these responsibilities to the provinces. Either way, the Bill has important intergovernmental fiscal implications. Clarity is required on these issues before such intergovernmental implications can be assessed.

Chapter-by-chapter scoping of the fiscal and budgetary implications

In the sections that follow there are a number of tables that present information required to calculate the fiscal and budgetary implications of a particular aspect of the Bill. The information is divided into three categories as follows:

Demand for variables: these variables indicate the volume of a particular service that is required, e.g. the number of existing "facilities".

Process and input variables: these variables give information on the different types of inputs required to deliver the service, e.g. the forms required.

Cost variables: these variables give the cost of the different inputs used to provide the various services.

If the relevant information can be gathered, the next step would be to calculate the fiscal and budgetary implications of the Bill. In very simple terms the cost of providing a particular service can be expressed as follows:

The greatest challenge in any costing exercise is not the actual calculation, but gathering the information with which to make the calculation. The following sections lay the foundation for this information gathering exercise by indicating the kinds of information that need to be collected.

Chapter I: Interpretation, Application and Objects of the Bill

In relation to Chapter 1, the following ‘costing issues’ need to be considered and evaluated:

Possible Cost Implications of Definitions (s.1)

Each definition in section 1 needs to be evaluated from a fiscal risk (arising from litigation based on these definitions) and cost perspective. Consideration might be given to changing certain of them in the light of fiscal risks or cost implications.

The following definitions are of particular concern from a cost perspective:

"facility" – in the provisions of the Bill which are similar to the provisions of the existing Act, the phrase "home for the aged", which appears in the existing Act, has been replaced with the word "facility". The word "facility" is, however, defined much more broadly than the phrase "home for the aged". This means that all the registration, administration, monitoring and other costs which were applicable to homes for the aged have now been extended to other institutions. All new obligations and costs also have a broader application.

As will be pointed out, it would seem that not all the provisions of the Bill which refer to a "facility" would be properly applicable to every class of facility, resulting in wasted expenditure and other anomalies (such as the conflict between sections 7 and 8 referred to later). Therefore it would seem prudent to consider narrowing the definition of "facility" or defining different classes of "facility", which can then be easily excluded from the operation of certain sections.

"frail person" – in the Bill this phrase appears instead of "debilitated person" in the existing Act. Although "debilitated person" is defined as excluding somebody who requires constant medical care and "frail person" is defined as somebody who requires constant care (but says nothing about medical care), it is submitted that this makes little difference. In either case what is in view is somebody who is unable to care for themselves but does not require medical care. However, what does make a costing difference is that "frail person" in the Bill includes adults of all ages and not just those over 60, which is part of the definition of a "debilitated person" . Naturally this broadens the applicability of the Act and increases demand for services and therefore increases the fiscal burden. Accordingly, the population of "frail persons" under the age of 60 needs to be estimated in order to calculate the increase in costs involved.

"older person" – in the Bill this phrase has taken the place of "aged person" in the existing Act. However, an "aged person" in the existing Act is a man over the age of 65 or a woman over the age of 60, whereas in the Bill an "aged person is anyone (man or woman) over the age of 60. This means that the bill is now more widely applicable as it applies to men between the ages of 60 and 65, who were previously excluded. This creates an increased demand for variables, which needs to be costed for each of the applicable variables.

Cost Implications of the Application of the Bill (s.2)

The existing Act is a common national act. However, given the way responsibilities for the concurrent function of welfare have been divided, the administrative burden and the fiscal responsibility lies with provincial government.

This Bill proposes to change all of that as it places both the administrative burden and the fiscal responsibility with national government (though there is the possibility of the minister delegating his powers to a provincial Member of Executive Council). However, according to s.40(1), the Bill will not repeal the existing Act in so far as it relates to provincial government (it only repeals it in relation to the administration of national government). This means that provincial government would still be capable of establishing, maintaining and subsidising "homes for the aged".

These facts raise several issues, which must be thoroughly explored:

Whether national government would continue to provide funding through the equitable share to provincial government for this purpose or whether national government would divert all funding to its own programme;

Whether provincial governments are likely to continue any such programmes without national government funding for it;

Whether provincial governments are likely to allocate funds to such programmes even if they receive the funds from national government for that purpose, if they perceive national government to have taken over responsibility for this function;

Provincial governments will still require funding for certain resources which the Bill requires them to continue supplying (such as health care workers and social workers); and

In so far as the bill places increased demands on provincial resources, such as health care workers and social workers, this will result in an unfunded mandate.

In addition, the Bill states that state-owned and state-managed "facilities" are bound by the legislation (s.2(3)). Therefore, in so far as the definition of "facilities" exceeds the old definition of "homes for the aged", the obligation of the state to register and administer those facilities in terms of the Bill is also increased to include those "facilities" which are something other than residential or frail care facilities. The number of such facilities and how each will be affected by the Bill must therefore be ascertained.

The Bill specifically excludes non-South African citizens from its operation, except where there are agreements between South Africa and the person’s country of origin. It would appear that this is an attempt to save resources and apply resources for the benefit of South African citizens. However, this provision would appear ill-conceived, having regard to the following issues:

The provision not only excludes non-South African citizens from the benefits of the Bill, but it excludes them from the obligations. This would suggest that a non-South African can own or manage a "facility" without registering it and without complying with the provisions of the Bill;

This provision is likely to face constitutional challenges, which would require the state to incur costs;

This provision is not likely to create significant savings for the state as much of the state’s funding of this Bill does not go to designated persons (unlike pensions, for example, where the state pays money directly to individuals), but goes to institutions which will be used by non-South African citizens and South African citizens alike.

The only area in which the fiscus would save based on this provision would be in the investigation of the circumstances of individual non-South African citizens by a social worker, magistrate or the Ombudsperson – all of which would be precluded from assisting non-South African citizens based on this Bill. And this would be open to constitutional challenge based on non-discrimination.

Cost Implications of Stating Objectives (s.3)

The practice of explicitly stating the objectives of an Act in the Act itself is fairly recent. The question that arises from a costing perspective is whether such a statement of objectives creates more rights and/obligations than are set out in the rest of Act, or whether such a statement increases the likelihood of litigation succeeding against the state for failing to take some action or to provide certain services (e.g. failing to protect an older person from abuse)? Either way, the possible fiscal risks and other cost implications that the presence of a statement of objectives has need to be evaluated so an informed decision can be taken as to whether such a statement of objectives should be included, and if so, what it should say.

Cost Implications of Programmes to be Supported (s.4)

Any organisation which runs a programme aimed at any of the things listed in s.4 will, it seems, constitute a "facility", since the definition of facility is so wide. This section therefore illustrates the "demand for variables" factor referred to above. Any organisation which ran such a programme would have to be registered, monitored and submit reports and would be entitled to apply for subsidy. Careful consideration of this list may therefore lead to a re-consideration of the necessity for distinguishing between different categories of "facility" in order to provide a more efficient and constructive use of funds and of resources.

In addition, there may be additional costs to setting out general principles of funding and assistance as set out in s.4. The practice of explicitly stating general principles to be used in interpreting the Act or in evaluating other legislation or administrative actions is fairly recent. As with the ‘statement of objectives’, the question is whether such a statement of principles creates more rights and/obligations than are set out in the rest of Act, or whether such a statement increases the likelihood of litigation succeeding against the state for failing to take some action or to provide certain services (e.g. failing to take any steps towards the exemption of older persons from tax)? Either way, the possible fiscal risks and other cost implications that the presence of such general principles need to be evaluated so an informed decision can be taken as to whether such principles should be included, and if so, what they should cover.

Comments

The following substantive comments are made with reference to Chapter I:

Having regard to the problems associated with the wide definition of a "facility" and having regard to the problems of conflict between sections, it is suggested that consideration be given to revisiting this definition in order to clarify it and to possibly introduce different classes (such as those which must register and those which only have to register if they wish to obtain funding, for example);

The term "luncheon clubs" requires definition;

Clarification is required as to whether "facility" includes "frail care";

The word "monitor" as used in s.9 and s.12 requires definition or clarification by way of regulation;

The word "reside" in s.10 requires definition;

Currently the Bill applies to state-owned or state-managed facilities (s.2(3)), but does not apply to the state itself. It is recommended that consideration be given to including the state in the list of persons and entities to which the provisions apply (s.2(1));

It is recommended that the exclusion of non-South African citizens be reconsidered, having regard to the issues set out above (s.2(4));

In s.4(b) reference is made to organisations which are aimed at "the participation of older persons in decision-making at all levels". This needs to be clarified to explain what kind of decision-making is referred to. Is it decision making with relevance to older persons or is it all kinds of decision-making in government that older persons are being encouraged to be involved in? Either way, clarity is required;

According to s.4, it would appear that the department can only establish or support to organisations which run applicable programmes – it may not run any such programmes itself. This may need to be reconsidered;

The introduction part of s.4 is not appropriate for some items as it requires the minister to establish, maintain or support "organisations that run programmes" aimed at the various items set out. For example, with reference to item (o), how would the minister establish, maintain or support an organisation aimed at the exemption of older persons from the payment of property rates and taxes? This sounds like the minister establishing a lobby group to lobby the government of which he is a member to change the law. It seems more sensible that the minister would be mandated to establish an organisation which, rather than running such a "programme", would investigate and present to government the feasibility of exempting older persons from the payment of property rates and taxes. It is recommended that each item in s.4 be checked in order to ensure that it fits with the introductory portion in the way that is intended; and

Much of the essence of s.4 is repeated in s.5 (having regard to the broad definition of "facility" in s.1). Therefore consideration could be given to eliminating s.4 altogether and merely ensuring that all the different items are included in the definition of "facility". This could also be done more effectively if distinctions were made between different classes of "facility". Distinctions could also be made between what the department can do itself and what organisations it can support and/or between organisations which "run programmes" and others which have aims which are to be promoted.

The following drafting comments are made with reference to Chapter I:

In s.2(1) the words "and to every" must be inserted before the word "individual". A failure to do so would mean that the Bill only applies to older persons if they are looking after other older persons;

In s.4(m) the words "the provision of" must be added to the beginning in order to provide continuity with the stem of s.4.

Chapter II: Ensuring an Enabling and Supportive Environment for Older Persons

The structures and processes set out in Chapter II of the Bill do not differ markedly from those in the existing Act. However, there are certain differences in definition and some additional processes which present costing implications which need to be considered and evaluated as follows:

The fact that this chapter provides for national government to take on and administer what was previously the function of provincial government requires consideration of the following:

The source of funds used by provincial governments to perform their mandate and whether or not those funds will still be available to them;

The likelihood of any provincial government continuing to provide subsidies and to register homes for the aged; and

The likelihood of the minister delegating his powers to provincial MECs.

If 1.1 does not match 1.2, then a provincial government will either have an unfunded mandate or a windfall.

The cost effectiveness of keeping one set of records and a single administration for the purposes of monitoring "facilities" as against keeping a set of records at each provincial administration for the monitoring of "homes for the aged".

The institutions which may be established, maintained or subsidised in terms of s.5 , which must register and/or notify the minister in terms of s.7 and/or s.8, which must be monitored in terms of s.9 and s.12 and which will submit reports in terms of s.13 are decided by reference to the definition of a "facility". As mentioned earlier, the breadth of this definition, especially having regard to the limited definition of "home for the aged" in the existing Act, represents a considerable increase in fiscal burden in regard to each of the above sections of the Bill (it is here assumed that "facility" includes "frail care"). The number of facilities involved needs to be estimated. However, it should be noted that the wider definition of "facility" does not impact on any costs associated with s.10 of the Bill (Residents Committees) as s.10 requires the older persons to "reside", which would seem to restrict the application of s.10 to those facilities which are defined as "homes for the aged" in the existing legislation.

There is a conflict between s.7 and s.8. In s.7 it is clear that any manager of a "facility" must be registered. In s.8 it indicates that certain managers of certain types of facility need only "notify" the minister and are only required to register if they wish to apply for a subsidy. The resolution of the conflict between these sections has the potential to reduce the fiscal burden imposed by the wide definition of "facility". This can be resolved by introducing classes of facility, some of which will be required to comply with s.7 while others are only required to comply with s.8. Therefore a policy decision needs to be taken, balancing need for registration and monitoring against cost, in order to ascertain which classes of facility require registration and all it’s incumbent procedures and which do not.

Assuming that certain non-residential and non-frail care facilities are only required to comply with s.8 as opposed to s.7, then s.7 will present a new procedure (notification) for a new class of facility. The number of such facilities needs to be counted (taking into account those which will volunteer to be registered in order to be eligible to apply for subsidies), together with the inputs required to keep records (staff, administration, record storage, etc). All these things will represent an increased cost. However, the increase in cost would be considerably less than if they were all required to comply with s.7.

Assuming that "frail care" is a "facility", the inclusion of adults under the age of 60 also increases the fiscal burden by introducing a greater demand for variables. The extra facility volume that this represents must be calculated in order to properly estimate total demand for variables. Naturally this will increase subsidy applications (s.5), registration volume (s.7), notifications (s.8), monitoring requirements (s.9 and s.12) and reporting and action required by Residents’ Committees (s.10 – assuming that s.10 will ultimately include functions for the Residents’ Committees as per the existing legislation).

The Bill provides for a breach of a condition to be investigated by the new "ombudsperson", rather than the minister appointing a "designated body" to investigate such things. The "ombudsperson" is a permanent appointee, while it appears that a designated body in the existing Act was appointed whenever the minister had "reason to believe" a condition was not complied with. Therefore if the minister never appointed a "designated body" or if he only did so rarely, the staffing and equipping costs would be significantly less than those required by an "ombudsperson". However, a permanent "ombudsperson" would perhaps be more efficient, which could introduce other savings. Therefore the number of designated bodies appointed, how they have been remunerated, for what periods and the investigative load they have born should be ascertained so as to enable comparison with the expected costs and efficiency of the "ombudsperson".

The provision in s.9(3)(d) that all assets bought with government or donor money must be handed over on deregistration, closing down or transfer is a fiscal saving. Estimation thereof would require details of deregistration, closure and transfer rates as well as the average value of asset contribution to facilities.

An official assessment tool for admissions, an admissions policy, an admissions panel and an appeal procedure are new innovations introduced into the admission process by (s.11). If these policies or tools are to be provided by the department, the costs of drafting and providing such policies or tools must be accounted for, the extra cost of monitoring compliance must be factored in and the costs in state resources (such as courts and court staff) must be accounted for taking account the risk of challenges both to the policies and to the decisions made as a result of or counter to the policies.

The new provisions regarding monitoring by a social worker (s.12) require "monitoring" rather than "inspecting". The word "monitor" requires definition. If it is intended to require more than "inspect", then this will increase the number of social workers required (over and above increases required by other definitions). The existing provisions state that a social worker "may" visit and inspect a facility, whereas the Bill says this must be done at the request of the Director-General. Whether this requires an increase or decrease in visits and monitoring remains to be seen and is wholly dependent on how often the Director-General requires visits by social workers.

It is not known whether such visits and monitoring would be undertaken according to a regular, systematic schedule or on an ad hoc basis. The following table indicates the information that will be required to cost (or assess the saving of) an increase or decrease in visits or monitoring as well as any change required by "monitoring" as opposed to "inspecting" on:

Comments

The following substantive comments are made with reference to Chapter II:

It appears that although the definition of "facility" is very broad, the word is used in this chapter as if it were still equivalent to a "home for the aged" in the existing Act. As a result, there are problems with the applicability of some of the provisions to the term "facility" as defined in s.1;

The conflict between s.7 and s.8 needs to be sorted out either by means of class definitions or in some other way;

The applicability of s.7 to facilities other than residential and frail care facilities along with the costs and the benefits needs to be carefully considered;

S.7(8) provides a window for registration of all currently "subsidised" facilities. However, it is submitted that the window should apply to all currently existent facilities otherwise any existing un-subsidised facility will immediately be rendered unlawful upon the passing of this Bill;

The use of the words "owner" and "manager" are not consistently used nor are they properly distinguished in the Bill. For example, s.9(2) requires an owner to report to the minister if he is unable to comply with any condition, but conditions are not given to owners but to managers, according to s.7;

S.9(3) should not apply to "transfer" of a facility, but only to deregistration or closure, otherwise the transfer of the facility may result in the facility being rendered incapable of performing as a facility. The section also constitutes an expropriation (without value given) of all assets donated to the facility. The fairness and constitutionality of such a provision needs to be considered;

The word "reside" in s.10 is undefined. The question arises whether a frail care person or a person in temporary accommodation "resides". It may be impossible for a frail care facility or a facility that provides mostly temporary accommodation to include residents on the Residents’ Committee;

There is no provision for the functions of the Resident’s Committee in s.10 (unlike in the existing Act); and

In s.11 the responsibility for producing the "official assessment tool", "admissions policy", "admissions panel" and admissions appeal procedure needs to be allocated. In addition, consideration needs to be given as to whether the provisions of s.11 should be extended to those facilities that a person is not "admitted" to because they are not residential or frail-care facilities.

The following drafting comments are made with reference to Chapter II:

In s.5(b) the word "these" must be dropped to avoid restricting government subsidies to facilities which it has established or already maintains in terms of s.5(a);

In s.8(3) the word "older" must be added before the word "persons";

In s.9(d) moving "to the Department" to immediately after the word "over" would greatly aid comprehension;

In s.11(1) the word "must" needs to be changed to "shall" in order to avoid the impression that no person is required to, but he may if he wishes; and

In s.13(1)(a) the phrase "during that financial year, and" refers to the whole of s.13(1)(a) and not merely to s.13(1)(a)(ii) and therefore it’s indentation must be decreased to place it level with the words "compliance with".

Chapter III: Protection for Older Persons

Older Persons’ Rights (s.14)

Legislating rights creates both explicit and implicit fiscal and financial obligations for the state. In addition where certain rights are made to have horizontal application in certain instances, this may have financial implications for individuals, organisations and businesses. Both the cost implications for the state, and the cost implications for individuals, organisations and businesses should be evaluated.

Section 14 of the Bill contains a list of older persons’ rights that the Bill proposes to legislate.

The first question that needs to be asked is: To what extent does the Bill propose extending or adding to the rights that older persons have already in terms of the Constitution? Obviously it is only in instances where the Bill is increasing such rights that it can be said to be increasing the explicit and implicit fiscal and financial obligations of the state. Where it is simply restating rights that have already been granted by the Constitution there is no change in the status quo. Having said that, restating certain rights may make them more easily enforced which would have fiscal and financial consequences that would need to be evaluated.

Therefore each of the proposed rights needs to be analysed and evaluated to establish to what extent they add to and extend the existing rights granted in terms of the Constitution. Once this has been done the next questions from a costing perspective are:

What are the explicit and implicit fiscal and financial implications of adding to and extending the constitutional rights already granted?

Are the standards that the proposed rights set, affordable and sustainable, given the state’s current resources and likely future resources? Or should the standards be adjusted in certain instances to make them more affordable?

Should any of the rights be qualified in any way? For instance, as is done in the Constitution, i.e. "the state must take reasonable legislative and other measures within its available resources, to achieve the progressive realisation of this right."

When examining the cost implications of rights it is important to look beyond just the fiscal and financial implications, but to take into consideration the broader costs and benefits as well. Such an evaluation of costs and benefits can supply valuable additional information for policy makers to consider when deciding on what rights to legislate and how to frame them in order to ensure they are indeed practical and meaningful.

Most of the rights contained in s.14 have no ascertainable fiscal effect. However, the right to "reasonable access to assistance" (s.14(b)) and the right to "have access to basic care" (s.14(e)) place a burden on the state to make "assistance" and "basic care" available. That does not mean that they have to be free to every person, but that they have to be accessible. This requires the state to invest in or subsidise community centres or facilities, medical facilities and social welfare facilities across the country in order to ensure that older persons have access to them. That being so, the fiscal burden of these rights could be substantial both in terms of setup costs or capital investment and in terms of ongoing maintenance and provision of services (even assuming that the services are not provided free of charge).

The right to "remain in the facility even though continuous care is required" could also have some fiscal effect in that it means that each "facility" will be required to ensure that it is capable of providing "continuous care". This could place an unnecessary burden on some facilities and could also increase the need for subsidies as well as the expense of running state-owned or state-managed institutions. The number of facilities requiring an "up-grade" to the required level of services would need to be ascertained together with how much extra expenditure and subsidy would be required to allow for this.

It would also need to be determined which spheres of government, and which departments will be responsible for funding the fulfilment of these different rights. Given that national and provincial spheres of government and a range of departments are involved, the intergovernmental fiscal implications and the budgetary implications will be significant and require analysis.

Effect of Definitions

Although the definition of "abuse" is expanded slightly from the definition in the existing Act, it is submitted that this has insignificant fiscal effect as the definition does not widen the range of actions prohibited, but merely more specifically defines them.

However, the breadth of meaning in the words "facility" and "frail person" (including adults under the age of 60) means that there will be significantly more institutions for social workers to monitor and that there should therefore be more enquiries to be conducted in terms of s.16 and s.17. This results in a need for more social workers, prosecutors, magistrates, court staff, courts, police, forms, investigators and so on.

Register of Abuse

The existing Act only requires the minister to keep a register of all notification of abuse. According to the Bill, the minister would also be obliged to keep a register of persons convicted of abuse of older persons (s.19(1)(b)).

In addition, s.19(2) of the Bill prohibits any person listed on the register from operating a facility. This implies not only that the minister must use the register of persons so convicted in order to prevent them from being registered as managers of a facility. It implies that the procedure for registration of facility managers must include a check that the management of the facility would not include a person prohibited from managing such facility.

Naturally the setup, management and use of such a register require considerable resources in staff, computers and other administration facilities. If this Bill is administered by national government from a single location this would be fairly simple. However, if the minister were to delegate his powers to provincial MECs in accordance with s.37(2), this could be fairly complicated as each province would either have to provide information to and have access to a national database or each province would have to have access to the database of every other province. The following table identifies some of the categories of costs associated with the establishment and running of the proposed Register:

If the government decides to proceed with establishing and running the proposed Register, a detailed study needs to be conducted so as to develop different options as to how the Register can best be structured and managed, and each option should be costed. Important issues that the proposed study will need to deal with include:

The likely volume of cases the Register is likely to process in a year;

The volume of information the Register will be keeping on record

Reliable and cost-effective methods of gathering information

Protocols for gathering, storing and accessing different types of information

The litigation risk posed by the Register (for example, if a person listed challenges his listing).

Reporting Need for Care and Protection

The Bill provides an entirely new mechanism in s.20 for reporting and dealing with older persons who require care or protection. The following fiscal issues need to be considered:

This section places extra demands on the staff and administrative facilities of the Director-General’s office as s.20(1) requires various professionals to report to the Director-General any person in need of care or protection and it requires the Director-General to investigate such reports and to take steps to ensure the well-being and safety of the older person (s.20(4));

This section places extra demands on social workers as s.20(2) provides for members of the public to voluntarily report to social workers any older persons in need of care or protection and the social worker is required to investigate such reports and take steps to ensure the well-being and safety of the older person (s.20(4));

The definition of an older person who needs care or protection includes a very wide range of items (s.20(5)). Each of the 9 specified items needs to be assessed in terms of how much it will increase the volume of older persons requiring care and protection and therefore and also what "prescribed steps" will be required by the social worker and which institutions and facilities will be involved in ensuring the well-being of that particular category of older person requiring care and protection. Obviously costs will be affected by the volume of older persons, the nature of the prescribed steps to be taken, number of people involved and the cost to the institutions and facilities who will attend to the older person’s needs;

When the Director-General or a social worker takes "the prescribed steps" to ensure the safety and well-being of an older person, this would place extra demands on other unidentified public institutions or on "facilities" for older persons in those cases in which the report was substantiated;

The demands on social workers would constitute an unfunded mandate since the social workers would in all likelihood be provincial government employees;

The demands on other unidentified public institutions could also result in unfunded mandates, depending on what institutions are brought into play by "the prescribed steps" which would be specified by regulation (such institutions may include hospitals which are a provincial competency);

Considerable risk could attach to the wide-ranging categories included in the definition in s.20(5). As this category is broadened, so the resources of the Director-General will be strained, not merely in terms of staff to handle the reports and take "the prescribed steps", but also in terms of space in the institutions and facilities which will be required to accommodate such older persons. The provisions of s.20 do not provide the Director-General with any way out should there be no place to accommodate the older person and therefore the Director-General could face litigation both for failures to act and for failures to provide the necessary facilities for such persons;

It is impossible to cost the effects of this section without having reference to the regulations which would spell out the steps to be taken by the Director-General and social workers as well as which other institutions and facilities would be involved.

Other Provisions

It should be noted that s.16 and s.17 are essentially a reversion to the original s.5 and s.6 of the existing Act. The new s.5A and s.6(1),(2),(5),(8),(9),(10) & (11) amendments to the existing Act, (which have been enacted but never made operative) provide for enquiries to be conducted before a "designated body". It is submitted the reversion to the use of the magistrate and prosecutor is likely to reduce the fiscal burden considerably as the expense of creating a properly trained and equipped "designated body" to do this job only would have been a waste of resources. This means that, although the fiscal burden of these sections of the Bill will be greater than it has been (because of the definition factors), it will not be as heavy as the fiscal burden of the s.5A and s.6 amendments to the existing Act would have been. Accordingly, if the increased costs of the s.5A and s.6 amendments have already been budgeted for, this could be seen as a saving.

The fact that a person prosecuted in terms of s.17(11) can no longer raise the defence that no accommodation could be found for the older person concerned means that convictions on this charge should increase, resulting in increased administration expenses for fines and increased prison sentences, with the accompanying extra burden on the Department of Correctional Services.

The insertions of the word "abuse-related" in s.18(1)(b) seems to reduce the duty on medical personnel to report injuries to old persons as the existing act requires them to report every injury. However, in reality the limitation to "abuse-related injury" is unlikely to make much difference as it would seem that medical personnel have always interpreted the provision as being restricted to an abuse-related injury.

Comments

The following drafting comments are made with reference to Chapter III:

The word "registered" must be inserted before each instance of the word "facility" in s.16(1);

In s.16(2) the word "should" needs to be replaced by "must" in order to prevent the section sounding advisory rather than prescriptive; and

In s.20(4) the word "being" must be deleted or the section will have the effect of requiring the Director-General or social worker to take steps before the process of substantiating the report is complete.

Chapter IV: Institutional Arrangements

The Ombudsperson for Older Persons (ss.21-28)

Chapter IV provides for the appointment of an "Ombudsperson for Older Persons", 9 Deputy Ombudspersons and the establishment of an Office of the Ombudsperson for Older Persons. From a costing perspective the most important question is: Is the Ombudsperson for Older Persons the most cost-effective means of monitoring the implementation of the proposed Bill?

To answer the above question one would need to consider what other options exist, and then compare all these options by means of a cost-benefit evaluation or analysis. Three alternative options are:

Allocating the functions of the Office of the Ombudsperson to the National Consultative Forum which is also proposed by this Bill;

Creating a unit within the national Department of Social Development tasked with monitoring the implementation of the Act (it could be referred to as the Old Persons’ Act Monitoring Unit);

Requesting that the Human Rights Commission monitor the implementation of the Act.

Without carrying out the abovementioned cost-benefit evaluation or analysis it is not possible to say which of the above three approaches to monitoring the implementation of the Act is likely to be most cost-effective, or whether the proposed "Ombudsperson" is a cost-effective mechanism.

A number of aspects in the proposal to establish an Ombudsperson suggest that it may not be the most cost-effective approach to monitoring the implementation of the Act as compared the option of establishing a monitoring unit within the Department. These include:

The salaries of the Ombudsperson, 9 Deputy Ombudspersons and a Chief Administrative Officer are likely to be substantially higher than those of government officials appointed to head a monitoring unit within the Department, for example.

The salaries of staff in the Office of the Ombudsperson are likely to be substantially higher than those of government officials appointed to a monitoring unit within the Department.

The establishment of the Office of the Ombudsperson for Older Persons, along with 9 provincial offices, will involve creating 10 new administrative structures, whereas such structures already exist within the Department. In addition there are economies of scale within the Department that are unlikely to be present in the Office of the Ombudsman.

Some economies of scale at least could be attached to entrusting the National Consultative Forum with the tasks (or a circumscribed portion of them) and there is the possibility of creating a more versatile and less expensive structure within such a Forum.

Obviously, these direct cost considerations should be evaluated within the context of a broader cost-benefit evaluation or analysis that takes into account the possible benefits of having the monitoring of the Act undertaken by an independent person, with the status accorded to the position of "Ombudsperson for Older Persons".

The following table identifies some of the categories of costs associated with the establishment and running of the proposed Office of the Ombudsperson for Older Persons:

If the government decides to proceed with establishing the Office of the Ombudsperson, a detailed study needs to be conducted so as to develop different options as to how the Office can best be structured and managed, and each option should be costed. This information should be presented to Cabinet so that it can take an informed decision on the issue. Important issues that the proposed study will need to deal with include:

How many inspections and other investigations is the Office likely to conduct each year?

How many complaints is the Office likely to receive each year?

What staff establishment is required to carry out this workload without undue delay?

Protocols for gathering, storing and accessing different types of information.

The litigation risk posed by the Ombudsperson.

In addition to the above, the following "costing issues" need to be considered and evaluated:

Impact of the salary differential between the Office and the Department. As noted above it is likely that the Office of the Ombudsperson will offer higher salaries than those offered by the Department, since the former is to function outside of the civil service. This differential could cause a significant loss of skills from the Department as officials move across to the higher paid positions with the Office;

The ability of the Office to attract donor funding. It is possible that the Office may be better positioned to attract donor funding than the Department. However, donor funding is generally of temporary nature and so this advantage is only likely to be important in the early years of the Office’s existence; and

Function overlap and double costs. As noted in the comments below, it seems that the function of the "Ombudsperson" is not that of a traditional ombudsman. His primary function would not seem to be investigation of complaints against the state for failures to uphold the rights of its citizens, but rather as a monitoring device for the implementation of the Act and for receipt of complaints against facilities. As such, his function would appear to overlap excessively with the functions of the Director-General’s office, the functions of social workers and the functions of magisterial enquiries as set out in Chapter III. In so far as the work of the Director-General’s office, the social workers and the judicial system may require monitoring for the purpose of a more integrated view, this may be done more cost effectively through the National Consultative Forum.

The National Consultative Forum on Aging (ss.29-36)

The costing considerations for the National Consultative Forum proposed by the Bill include the following:

The type and volume of work and administration involved. In this respect some analysis of s.31 is required in order to pinpoint what actions the forum is likely to take in order to perform its mandate, how often it will take them and what the costs of different actions to be taken will be;

Having analysed the functions of the forum in greater detail it will be necessary to consider whether the forum is likely to be a full-time body which has a constant resource need or whether it is more like to function in an ad hoc fashion with resources required on a more irregular basis;

The cost of setting up an office and/or of making facilities available on a more irregular basis;

The cost of reimbursing the forum members. In this regard, it would appear that the Bill anticipates that the forum members will have other forms of remuneration. In s.33(7) provision is made for them to be paid "allowances and disbursements", which would not seem to cover payment of a salary. Nevertheless, if they are to do their jobs properly, such allowances and disbursements could constitute significant expenses;

The staff required for the office, the hours for which they will be required and the cost of remunerating each of them;

The costs of conducting meetings and the number of meetings to be held each year (a minimum of 3 in terms of the Bill);

The nature of records to be kept, the means of keeping such records and the cost thereof ;

The time and cost involved in producing reports and communicating with the various role-players in the Older Persons’ Sector; and

The need for consulting special advisers and professionals and to enter into agreements for the provision of services by such professionals in terms of s.36(2)..

The following table identifies some of the categories of costs associated with the establishment and running of the proposed National Consultative Forum:

Comments

The following substantive comments are made with reference to Chapter IV:

The "Ombudsperson" does not appear to be in the mould of a traditional ombudsman. The major part of his work does not seem to be the protection of the rights of the individual as against the state, but rather the protection of the rights of the old person as against those who provide services to the old person. In this scenario, the interests of the state and of the old person are more often than not on the same side. The old person wishes to be treated properly and the state wishes to ensure that the subsidies it pays are properly utilised. Therefore, it may be that the very expensive separate structure required to ensure the independence of a traditional ombudsman is not required here;

Much of the work of the "Ombudsperson" overlaps with the work of the Director-General, the social workers and the judicial system as set out in Chapter III. Therefore, it may be overkill to add to all of those a large, complicated and expensive network of 10 offices to do the same work;

If it is necessary to collate feedback from policy and practice by tracking the work of the Director-General, the social workers and the judicial system, this can best be done by the National Consultative Forum, who are likely to enjoy a good relationship with NGO’s, social workers and so on. Again, it may not be necessary to have a traditional ombudsman to do this; and

Consideration needs to be given to clarifying what is meant by "the older persons’ sector" in s.32(3).

Chapter V: General and Supplementary Provisions

The following issues arising out of Chapter V need to be given careful consideration:

If the minister delegates powers to MECs, this could result in unfunded mandates. Therefore the funding of the provincial functions needs to be discussed and arranged with the provinces and the appropriate intergovernmental forums such as the Budget Council;

If the main administrative powers are delegated to the provinces, this could result in hidden extra costs such as:

the extra cost of maintaining, updating and providing information from registers such as the register of abusers of older persons; and

the extra cost of the National Consultative Forum having to consult to and provide information and reports to 9 MECs as well as to the minister;

S.37(5) envisages the DG of the national Department of Social Development being allowed to delegate powers and responsibilities placed on him or her by this Act to the provincial Director General. It is submitted that such a delegation of powers would not be constitutional. The HODs of provincial departments of social development are accountable to their MECs of social development. They are not subordinates of the Director-General of the national Department of Social Development. Therefore any envisaged delegation of the Director-General’s powers and responsibilities would have to be done by the Minister assigning such powers and responsibilities to the MECs by agreement, and the MECs would then assign them to the HODs of the provincial departments of social development. Obviously such assignments of powers and responsibilities carry with them budgetary responsibilities which would need to be assessed in the light of the maxim ‘funds follow function’.

The effects of all the penalty provisions in the Act, including s.38, need to be taken into account, with consideration given to how many trials are likely to be run, how many convictions obtained, what portion of those are likely to be fines and what portion imprisonment, as well as the costs involved in each of these, including possible unfunded costs to other departments, such as the Department of Justice and the Department of Correctional Services;

As noted previously, to evaluate the full fiscal and budgetary implications of the Bill it is necessary to have access to the proposed regulations that the Minister intends issuing in terms of the Act, and more particularly in terms of this Chapter;

It is apparent from s.40(1) read with s.2 of the existing Act that provinces still have the power to grant subsidies to "homes for the aged". The likelihood of provinces continuing to do so must be considered and national subsidy policy needs to be guided accordingly – which will, of course, have an effect on both provincial and national budgets, and on the division of revenue process;

In terms of s.41, it is possible to phase in the Act over a period which may be less of a fiscal shock. However, such an approach needs to be carefully considered and planned in order to ensure that as each section is rendered operative, all the fiscal effects are budgeted for so that the budgetary time-table properly mirrors the timetable for putting the different sections into operation.

Comments

It appears that the provisions of s.38 could conflict with the provisions of the other sections of the Bill which prescribe penalties. To avoid this, it should be specified that the provisions of s.38 only apply where no other sentence is provided for in this Bill.

The subsection number in s.40 is incorrect as there is no subsection (2).