ATC170621: Report of the Portfolio Committee on Small Business Development on the Motion of Undesirability of the Red Tape Impact Assessment Bill [B 13-2016], dated 21 June 2017

Small Business Development

REPORT OF THE PORTFOLIO COMMITTEE ON SMALL BUSINESS DEVELOPMENT ON THE MOTION OF UNDESIRABILITY OF THE RED TAPE IMPACT ASSESSMENT BILL [B 13-2016], dated 21 June 2017
 

1.         Introduction and referral of the Bill

The Portfolio Committee on Small Business Development (“the Committee”) received referral papers from Announcements, Tabling and Committee Report (ATC) of Tuesday, 18 October 2016 which was the Red Tape Impact Assessment Bill [B13 – 2016]. The Bill had been introduced in the National Assembly, proposed as a section 75 and was published in the Government Gazette Number 39907 of 7 April 2016.  

 

2.         Consideration of the Bill

2.1        Presentation by the initiator of the Bill

In consideration of the Bill, Mr HCC Kruger, MP, the initiator of the Bill, tabled and presented the Bill in the Committee’s meeting of Wednesday, 08 February 2017. This presentation followed a legal explanation on the processing of a private members’ Bill by the Committee. The presentation of the Bill outlined the intent, intended consequences and the purpose of the Bill. A reference was made to the 2004 SBP report on the cost of red tape for small businesses, which states that generally, small businesses suffer a loss of 9% of their annual turnover to compliance and regulatory matters.

 

2.2        Presentation by the Department of Small Business Development

On Wednesday, 15 February 2017 the Department of Small Business Development (“the Department”) through Ms Elise Koekemoer, Acting Deputy Director-General made a presentation on the view of the Department on the proposed Bill. The presentation discussed red tape as a global challenge and the Department’s existing initiatives regarding red tape reduction. The Department also commented on specific chapters and sections of the Bill and gave their overall perspective on the proposed Bill.

 

 

2.3        Presentation by the Department of Planning, Monitoring and Evaluation (DPME)

On Wednesday, 22 February 2017, Ms Pulane Kole, Chief-Director in the Socio-Economic Impact Assessment Systems Unit (“SEIAS”) in the DPME made a presentation on SEIAS. The presentation outlined the introduction and background of SEIAS; its objectives and implementation within the policy and planning framework; application SEIAS and process map; implementation progress and key learning points on implementation. The presentation unfortunately did not focus sufficiently on whether the Bill would complement or duplicate the endeavours of SEIAS.

 

2.4        Presentation by the Committee Support Staff

On Wednesday, 10 May 2017 the Content Advisor, Mr Sibusiso Gumede made a presentation on the Bill. Mr Gumede restated that during the meeting of the 23rd April 2017 the Portfolio Committee had resolved that the Secretariat must: -

• Synthesise inputs/public comments into a single document;
• Solicit financial implications of the Bill from Treasury and;
• Develop a brief summary/report with key issues for attention.

 

In an effort to point members to key topics for consideration when debating the Bill, Mr. Gumede indicated the number and names of the entities that responded to the invitation for public comments as published in the government gazette. He further highlighted the seeming expanded scope of the Bill in relation to the mandate of the Department; a possible duplication with a chapter in the National Small Business Act; the classification of the Bill; financial implications of the Bill; and concerns about the Bill’s impact on the separation of powers doctrine.

 

Advocate van der Merwe assured members that the Bill does not constitute a duplication of the tools offered by the National Small Business Act to combat red tape; that the Bill is correctly classified; and that the processes proposed by the Bill would not constitute interference with the separation of powers doctrine. She indicated that the cost of implementation of the Bill should be carefully considered. Advocate van der Merwe lastly explained the meaning of desirability and/or non-desirability and the steps to be followed when pursuing a Bill of this nature.

3.         Deliberations on Red Tape Impact Assessment Bill

Members deliberated extensively on the Bill. The sponsor of the Bill moved to allay reservations that members of the Committee may have citing, among others, the broken window principle. He emphasised the point that while the Bill is intended for small businesses, big business will automatically benefit from it. He further pointed out that the Bill seeks to address one of the bottlenecks that the Committee had identified during its inception such as access to finance, training and skills development, red tape and access to markets. 

Members were receptive to the initiative and applauded the effort, however a number of comments and contributions were made. Some of the concerns were: the extent of consultations with the provinces taking into consideration that the Bill is likely to affect them; the burden on the fiscus in light of the fact that the Department’s budget is already insufficient; a risk of duplication; the location of the Bill (the DPME, which is responsible for a similar assessment process). Members further argued that the Bill was too comprehensive and that its scope goes beyond the economic into the social cluster. The fact that existing efforts to combat red tape have not been evaluated was also a concern. Two motions were proposed, namely that the Bill is desirable and a counter motion against desirability. The first motion for desirability proposed the following options for consideration: -

• Declare the Bill desirable subject to series of evaluations i.e. Socio Economic Impact Assessment process of the DPME and National Treasury to establish its cost effectiveness;
• To refer the Bill to another Department such as DPME, EDD, or DTI; or
• To incorporate Bill under the National Small Business Act currently being reviewed.

As neither of the motions were withdrawn, voting was conducted. Two members were in favour while five members were not in favour of the motion of desirability. One member abstained. The Committee resolved that the proposed Bill was undesirable.

 

Votes in favour of the motion of the desirability of the Bill:         2 (two)

Votes against the motion of the desirability of the Bill:    5 (five)

Abstention:                                                                               1 (one)

 

Report be considered.