TUESDAY, 18 SEPTEMBER 2001 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY
                                ____

The House met at 14:01.

The Deputy Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.

                          NOTICES OF MOTION

Mr D M GUMEDE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes that the United States is gearing itself to retaliate with the use of maximum force in the wake of the recent attack on the World Trade Centre and the Pentagon;

(2) further notes that the United States is mobilising the international community to support ``the new war’’ it is going to embark on;

(3) wishes to restate our condemnation of those who were involved in the terror acts and the need for those who committed this horrendous act to be brought to book;

(4) calls upon the United States not to embark on actions that will result in -

   (a)  the killing of innocent, unarmed and helpless civilians,
       especially women and children;


   (b)  the spreading of anti-Islam and anti-Arab sentiments; and


   (c)  spiralling violence, bloody wars and terrorism; and

(5) further calls on the United States and the international community to work towards strengthening world peace.

[Applause.]

Mr W J SEREMANE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move:

That the House notes -

(1) that the ANC is constantly sidelining Parliament, and that while it sold itself as a party for the people, it has become a party that arrogantly thinks it knows what is best for the people, instead of listening to them;

(2) that Parliament is meant to be the throbbing heart of our democracy where public representatives are meant to do the people’s business; and

(3) that the DA has, therefore, decided to launch a post-box-to- parliament campaign which will stretch over the next five weeks, in order to reconnect ordinary people who are marginalised by the ANC and their elected representatives and give them back their voice in government.

Mr J H SLABBERT: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP:

That the House -

(1) notes with concern and sympathy the extensive damage the unexpected cold weather has caused in Northern KwaZulu-Natal and the Free State;

(2) further notes the great loss of livestock that the farmers in these areas have suffered, in particular the Vryheid area where more than 2 000 head of cattle, plus hundreds of sheep and game were killed; and

(3) calls upon the Government to investigate the situation thoroughly and assist the farmers.

Mr M U KALAKO: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes that two Stellenbosch brothers were arrested for allegedly sending a hoax e-mail to major corporations, claiming South African involvement in the American terror attacks;

(2) further notes that the two brothers appeared in the Stellenbosch Magistrate’s Court yesterday;

(3) condemns this hoax unreservedly as an irresponsible act that gives the Republic of South Africa a bad name; and

(4) commends the police for acting swiftly and bringing these alleged culprits to book.

[Applause.]

Mr M C J VAN SCHALKWYK: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the New NP:

That the House condemns the following acts of sabotage against the value of the rand:

(1) Eastern Cape Premier Stofile’s reported statement that the terrorist attacks on the United States were not acts of cowardice, but rather of tactics;

(2) the vastly disruptive strike action by Cosatu against privatisation and the lack of political will within the governing alliance to proceed with real privatisation;

(3) the inflammatory statements by the PAC secretary-general, in support of the Zimbabwe land grabs;

(4) Minister Steve Tshwete’s as yet unsubstantiated allegations of a plot against the President; and

(5) the policy of silent diplomacy and appeasement towards the increasingly dictatorial government of President Robert Mugabe of Zimbabwe.

[Applause.]

Prof L M MBADI: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the UDM:

That the House -

(1) notes -

   (a)  with alarm the killing of seven people in taxi-related violence
       between Qumbu and Mount Frere; and


   (b)  the killing of two people at Engcobo, as well as numerous other
       reports relating to taxi violence;

(2) expresses its concern that these attacks undermine the National Taxi Conference resolutions that are aimed at stabilising this volatile situation; and (3) calls on taxi-owners and drivers to unite and stabilise the industry that they are dependent on for their livelihood.

Ms P N MNANDI: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes that Israeli Prime Minister, Ariel Sharon, pledged to call off military raids if Mr Yasser Arafat declares a truce;

(2) believes that -

   (a)  the need for a peaceful resolution of the Middle East crisis is
       long overdue; and


   (b)  both leaders must have the political will to work for a peaceful
       resolution of political problems in the Middle East; and

(3) calls on Prime Minister Ariel Sharon and the leader of the Palestinian Authority and the Palestine Liberation Organisation to resume negotiations for everlasting peace in the Middle East.

[Applause.]

Mrs R M SOUTHGATE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ACDP:

That the House -

(1) notes that the irresponsible and reckless driving of White Mohapi, brother of the Speaker of the Free State Legislature, who was allegedly driving at 210 km/h, is unacceptable; and

(2) calls -

   (a)  for a further enquiry as to why he was driving a vehicle
       belonging to the provincial legislature when he is not employed
       at the legislature; and


   (b)  on the ANC-led government in the Free State to be honest and
       transparent when dealing with this issue and not to allow it to
       be swept under the carpet.

Mnr C AUCAMP: Mevrou die Speaker, ek gee hiermee kennis dat ek op die volgende sittingsdag namens die VF sal voorstel:

Dat die Huis met sorg kennis neem van die besluit van die Minister van Onderwys en sy ministersraad om privaatskole se reg tot eie matriekeksamen onder sertifikasie van die Onafhanklike Eksamenraad te beëindig, en wel op grond van die volgende:

(1) die Grondwet stel drie vereistes vir privaatskole, naanlik nie- diskriminasie, registrasie by die owerheid en standaarde gelyk aan dié van staatskole en minister Asmal het nou arbitrêr ‘n vierde vereiste bygevoeg toe hy sy rede vir die maatreël aangegee het as dat privaatskole ``nie die filosofiese grondslag en Suid-Afrikaanse waardes van Kurrikulum 2005 deel nie’’;

(2) die hoofrede vir die voorsiening van privaatskole in die Grondwet is juis om voorsiening te maak vir die diversiteit in etos, filosofie en wettige lewensbeskoulike differensiasie; en

 3) die beoogde optrede van die Minister is ongrondwetlik en die AEB het
    reeds sy regsadviseurs opdrag gegee om hulle voor te berei om die
    filosofiese imperialisme grondliggend aan dié besluit in die
    Konstitusionele Hof te beveg. (Translation of Afrikaans notice of motion follows.)

[Mr C AUCAMP: Madam Speaker, I hereby give notice that on the next sitting day I shall move on behalf of the FF:

That the House notes with concern the decision by the Minister of Education and his ministers’ council to suspend the right of private schools to their own matriculation examination under certification of the Independent Examination Board, on the basis of the following:

(1) the Constitution prescribes three requirements for private schools, namely nondiscrimination, registration with the authorities and standards equal to those of public schools, and Minister Asmal has now arbitrarily added a fourth requirement by indicating that his reason for the measure is that private schools ``do not share the philosophical basis and South African values of Curriculum 2005”;

(2) the primary reason for providing for private schools in the Constitution is precisely to make provision for the diversity in ethos, philosophy and legitimate ideological differentiation; and

(3) the envisaged action by the Minister is unconstitutional and the AEB has already instructed its legal advisers to prepare themselves to challenge the philosophical imperialism which is fundamental to this decision in the Constitutional Court.]

Dr A S NKOMO: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes that -

   (a)  Mr Stephen Lewis, the United Nations envoy on HIV and Aids,
       visited South Africa recently; and


   (b)  Mr Lewis has remarked that South Africa has high levels of
       HIV/Aids awareness;

(2) recognises, along with the Abuja Conference and the United Nations General Assembly’s special session on HIV and Aids, that primary prevention remains the most effective measure, amongst many, in the campaign to combat the spread of HIV/Aids; and

(3) welcomes the finding by the UN envoy on HIV/Aids, Mr Stephen Lewis, as this augurs well for the South African Government’s plan to rein in and stem the tide of HIV and Aids.

[Applause.]

Mnr A J BOTHA: Mevrou die Speaker, ek gee hiermee kennis dat ek op die volgende sittingsdag namens die VF sal voorstel: Dat die Huis -

(1) simpatie betoon met die boere van die Vrystaat en KwaZulu-Natal wat ongekende veeverliese gely het tydens die onlangse abnormale weerstoestande;

(2) besef dat die volle omvang van die skade nog nie bepaal is nie, maar dat dit reeds bekend is dat derduisende stuks groot- en kleinvee en wild verkluim het;

(3) daarop let dat die ongekende weerstoestande en voorafgaande veldbrande die gemeenskappe só swaar getref het dat vele beswaarlik die ekonomiese verliese, wat na beraming R30 miljoen kan beloop, sal oorleef; en

 4) die Regering versoek om 'n noodtoestand te verklaar om hierdie
    onvoorsiene ramp te hanteer. (Translation of Afrikaans notice of motion follows.)

[Mr A J BOTHA: Madam Speaker, I hereby give notice that on the next sitting day I shall move on behalf of the FF:

That the House -

(1) expresses sympathy with the farmers of the Free State and KwaZulu- Natal who have suffered unprecedented stock losses during the recent abnormal weather conditions;

(2) realises that the full extent of the damage has not yet been determined, but that thousands of head of large and small stock and game are already known to have frozen to death;

(3) notes that the unprecedented weather conditions and preceding veld fires have hit the communities so hard that many will have difficulty in surviving the economic losses, which could amount to an estimated R30 million; and

(4) requests the Government to declare a state of emergency to deal with this unforeseen disaster.]

Mrs L R MBUYAZI: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP: That the House -

(1) applauds the officials who last week swooped on several Cape Town companies believed to have routed frozen fish contaminated with mercury through their offices to markets in the European Union;

(2) notes with dismay that about 350 false South African Bureau of Standards (SABS) certificates were used in the scam; and

(3) urges the relevant authorities to persist with this and other operations in order to stop similar scams from taking place in the future.

Ms E THABETHE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes that -

   (a)  an ANC candidate, Comrade Tuoane Marokoane, won the by-elections
       in ward 793-0013 in the Ekurhuleni metro with 87,5%; and


   (b)  the ANC won these elections overwhelmingly despite a sustained
       attack on the ANC and the mayor, Comrade Bavumile Vilakazi;

(2) believes that the outcome of these elections confirms the support for the ANC and our agenda for transformation; and

(3) congratulates Comrade Tuoane on his victory in these elections.

Dr S J GOUS: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move:

That the House -

(1) notes that according to the findings of the Medical Research Council’s report, ``The Impact of HIV/Aids on Adult Mortality in South Africa’’ -

   (a)  40% of the deaths of those aged between 15 and 49 last year were
       due to the pandemic; and


   (b)  HIV/Aids will soon outstrip all other causes of death in South
       Africa;

(2) further notes the Government’s feeble attempts to eradicate this disease by allocating only 0,6% of the health budget for 2000/01 to combating HIV/Aids; and

(3) hopes this report removes any doubts about the existence of HIV/Aids and its catastrophic impact on South Africa and that we will finally see a much more determined attack from the country’s leadership to eradicate this virus from our country.

Mr S ABRAM: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move:

That the House -

(1) notes that -

   (a)  run-away veld fires and the freak cold spell last week have
       affected commercial farmers, farm workers and pastoralists, and
       this has assumed catastrophic proportions;


   (b)  veld fires have devastated grazing and fodder supplies, caused
       loss of human life and stock and property, whilst the freak cold
       spell has caused the deaths of thousands of cattle, sheep, game
       and other livestock, including birds; and


   (c)  the relevant provincial departments of agriculture are meeting
       today with role-players to assess damages and consider the way
       forward; and

(2) calls on the Government to extend aid and assistance to all those who have suffered losses in an important sector of our economy.

Mr P A GERBER: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes -

   (a)  that over 1 000 delegates across the country attended the first
       national minibus taxi conference in Durban and that the South
       African National Taxi Association was formed; and


   (b)  the new executive, which was elected at the conference, endorsed
       the Government's plan to recapitalise the country's ageing
       fleet;

(2) believes that the formation of the new SA National Taxi Association is a positive step for stakeholder participation in the Government’s transport policy and the regulation of this industry; and

(3) welcomes the formation of the new national taxi association.

                 CELEBRATION OF THE JEWISH NEW YEAR

                         (Draft Resolution) The CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move without notice:

That the House -

(1) notes that today is Rosh Hashana, which celebrates the Jewish New Year, year 5762;

(2) believes that in these times of world turbulence, strife and terror, it is critical that all peace-loving people stand together, whatever their nationality, creed or faith, to strive for peace and protection of the lives of the innocent; and

(3) wishes all members of the Jewish community a “shana tovah” and well over the fast.

Agreed to.

               PROVINCIAL TAX REGULATION PROCESS BILL

                         (Draft Resolution)

The CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move without notice:

That the Provincial Tax Regulation Process Bill [B 51B - 2001] be referred back to the Portfolio Committee on Finance for further consideration and report during the course of this afternoon.

Agreed to.

          REV BEYERS NAUDÉ AWARDED FREEDOM OF JOHANNESBURG

                         (Draft Resolution)

The CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move the draft resolution printed in my name on the Order Paper, as follows:

That the House -

(1) notes the outstanding contribution towards reconciliation and transformation made by Rev Christiaan Frederick Beyers Naudé;

(2) acknowledges the courage displayed by “Oom Bey” when he resigned from the Broederbond in 1963, leaving the white Dutch Reformed Church and joining the African Dutch Reformed Church in Alexandra Township, and began to preach the principles of nonracialism, democracy, nonsexism, peace and reconciliation;

(3) recognises that as a result of his courageous stand, the apartheid government led a conservative backlash against him, he was ostracised by neighbours and his former friends and colleagues, his home was raided by the security police, his passport was withdrawn, and in 1977 he was banned; and

 (4)    congratulates Rev Beyers Naudé on his being awarded the Freedom
     of the City of Johannesburg and on the renaming of DF Malan Drive
     as Beyers Naudé Drive.

[Applause.]

Agreed to.

                    PENSION FUNDS AMENDMENT BILL

                       (Second Reading debate)

The DEPUTY MINISTER OF FINANCE: Madam Speaker and hon members, the Bill before the House today proposes to amend the Pension Funds Act of 1956. This is in order to achieve four broad objectives in connection with housing loans. Firstly, it seeks to clarify certain provisions of the principal Act; secondly, to ensure the protection of members; thirdly, to extend housing assistance to more members; and fourthly, to ensure that we curb possible abuses.

In terms of existing legislation, uncertainty existed as to the conditions under which a pension fund may furnish guarantees to financial institutions and whether it could recover amounts owing to it from members immediately when they default on loan repayments. Only members who had property registered in their names qualified for housing assistance. The amount owed by a member on a housing loan at his or her retirement, could have depleted the whole pension benefit.

We have a number of amendments that seek to achieve clarification on certain provisions of the principal Act. The first amendment seeks to update the definition of fair value. A further amendment makes it clear that a fund may furnish a guarantee to an institution for it to grant a loan to a member under the same condition as a loan granted directly by the fund. Another amendment allows the fund to deduct the money owing to it, through a guarantee or a direct loan on the date of transfer if the loan or guarantee cannot be transferred or settled. The fund is also permitted to deduct any amounts owing to it when a member defaults on a loan repayment, where the fund made a direct loan or a guarantee was furnished. The final amendment which seeks to clarify provisions of the principal Act provides that the fund can deduct the amount it is owed from the benefit to which the member becomes entitled to on the termination of membership, at the time of transfer to another fund or on default.

As regards amendments to ensure the protection of the fund and members, we have an amendment that allows members to negotiate a lower rate of interest with financial institutions in the case of a guarantee furnished by the fund than that which is prescribed for a direct loan by the fund. The fact that the loan to the member by the fund is fully guaranteed, should make this possible. A further amendment also provides that the outstanding loan shall not exceed one third of the members’ benefit at retirement. This will secure a cash-flow income for the member after retirement. Further amendments make it clear that the amount of benefits pledged is the amount at the time of granting the loan. On the extension of housing assistance to more members, an amendment to section 199(5) extends ownership to the right of occupation of immovable property by virtue of the operation of any custom or law. This will enable more members to avail themselves of the housing assistance from their funds.

Joint ownership of the property by the member and his or her spouse also qualifies for housing assistance. To ensure that we curb possible abuses, we have effected amendments that empower the Minister to make regulations and prescribe conditions for loans or guarantees should it become necessary. We also enabled the Minister to prescribe additional conditions for the purposes under which a fund may grant a loan or furnish a guarantee.

This is a Bill that has been widely consulted on and was thoroughly debated in the portfolio committee. In summary, one should say that the Bill seeks to achieve the following things. It clarifies the position of a pension fund to issue guarantees for a housing loan by stating it explicitly. Secondly, it broadens the concept of home ownership. Thirdly, it allows institutions not to be bound by the prescribed interest rates. Fourthly, it ensures that members retain two thirds of their benefits after paying off their home loans at retirement. Finally, it enables pension funds to recover outstanding loans when a member defaults on a loan or is transferred to another fund.

We would respectfully recommend that the House approves this Bill. [Applause.]

Mr M M S LEKGORO: Modulasetulo, lehono ke ema mo pele ga Ngwako wo ke bolela e le letsatsi la International Peace. [Chairperson, today I stand before this House and speak on this day of International Peace.]

I feel very honoured to be given this opportunity to speak on this important topic of expanding the provision of housing through the Pension Funds Amendment Bill. This is more so because today we find ourselves in an environment that is tense after the developments that took place recently. Modern economic developments have made our lives dependent on financial services provided by a variety of financial service institutions such as banks. We depend on these organisations to finance our education, housing and other important services. These services are fast becoming part of our way of life and culture. They contribute to the improvement of the quality of our lives. For this reason, these services must be expanded to reach as many people as possible.

Today most people, young and old, have difficulty in accessing home loans provided by different banks. This difficulty is mainly because most of these people do not have securities to back up their home loans. On the other hand, banks are reluctant to take risks by financing people without sound financial security. The unfortunate effect of this situation is that thousands upon thousands of working people, including those with significant pension savings, are refused home loans. As a result, these people turn to the state for their housing needs.

This aggravates the already unbearable dependence on the state in that people who could be providing for themselves, now look to the state for their housing needs. The Bill before the House seeks to make an intervention in this particular regard. It will make it possible for members of pension funds with substantial savings to use their individual accumulated savings, to guarantee their home loans.

This Bill introduces a paradigm shift in the pension regime in that it starts to look at the house as one of the main items which a pensioner should of necessity have at the time of his or her retirement. Gone will be the days when a pension means lump-sum cash payments and monthly payments to the pensioner. Pensions will now start including important things like a house and so on.

Let us look at this matter this way. It cannot be argued that a pensioner with all the resources provided for by the current pension funds, but without a home, is adequately provided for. This amendment will serve to ensure that workers qualify to purchase houses early in their lives as opposed to a situation where they work for many years without qualifying for a house or a housing loan, only to take their savings at the end of their lives when they go on pension to purchase a house.

The amendment is crafted carefully to ensure that the resources of the pensioner are not unnecessarily eroded at the time of retirement. Only a third of the pensioner’s savings in a pension fund would be used for this purpose. In a situation where a loanholder defaults the money will be used to settle the loan. This will prevent the possibility of a loss of one’s house or the replacement of one’s family.

It should be understood that payment from the pension fund in the case of a default will be a matter of last resort. The board of the fund will always find alternative ways to settle in case of a default, but in a case where there is no other alternative the pension fund will be used in this regard. In case of a default the fund does not have to wait for a person to reach his pensionable age. The payment can be made whilst the pensioner is in the employ of the company or still a member of a fund.

The arrangement proposed in this Bill is crucial for most members of the working class, as these people do not have any savings other than their pension. This is also to help Africans avoid costs they usually incur in securing home loans, because they are required to get special policy vehicles to guarantee their home loans, which increases the cost of getting a home loan. The arrangements proposed by this Bill create a better risk environment for financial institutions, as the risk in respect of such loans which are backed by pension funds, will be zero.

Our society has inherited serious abnormalities. These include large income gaps, the reluctance of financial institutions to deal with poor people and so forth. This leaves working people very vulnerable. It is because of this situation that our policy development approach should be geared towards the needs of the poor and working people. Failure to do this will worsen the condition of these vulnerable groups. We must review our statutes continuously to create opportunities and possibilities for these vulnerable groups.

This amendment deliberately focuses on banks and mutual banks because banks are the institutions best equipped to deal with home loans. It also makes provision for those pension funds which previously administered home loans to transfer the burden of that administration to banks.

It is our belief that this Bill will create an environment whereby most people who previously could not gain access to home loans will be gaining access, which will mean that those people who previously could not have houses will have their situation improved, in that they will be in a position to get access to housing without having to rely on the state. Therefore the ANC supports this Bill.

Mr K M ANDREW: Madam Speaker, this Bill aims to address three main issues. Firstly, it authorises pension funds to furnish guarantees to third parties in respect of housing loans, which is highly desirable because it will widen the availability of such loans. It could reduce costs because if pension fund members are able to find a lower rate outside, given the fact that the bond is now guaranteed, it will assist them to get their loans cheaper, so that pension funds themselves do not feel obliged to go into the mortgage loan business, which is not what they are there for in the first instance.

Secondly, it extends the concept of residential property ownership to cater for a variety of circumstances and a variety of leaseholds, title deeds and so on, that apply in our society. Thirdly, it extends the power of the Minister to prevent abuse of these funds for this purpose.

We therefore believe that the Bill will achieve two important objectives. Firstly, it will facilitate housing, and particularly housing for poorer people and, secondly, it does not of itself erode pensions although, of course, if the member of the pension fund defaults then it can erode the member’s pension fund, but the Bill itself does not do so. The DP will therefore be supporting this Bill.

However, let me make one comment and ask the hon the Deputy Minister a question, because once again we are dealing with a pension fund issue on an ad hoc basis. About five years ago we were promised that there was going to be a comprehensive review of retirement funding, including taxation of retirement funds and many other aspects. There have been numerous commissions over the past ten to 15 years on the subject and yet we still do not have a comprehensive approach to retirement funding.

I would like to ask the Deputy Minister, who is not actually listening, the following questions. Five years ago, even before he became chairperson of the portfolio committee, when he was an ordinary member, he will recall that we were promised that there was going to be a comprehensive review of retirement funding, the taxation thereof and so on. Today we are still waiting and we are dealing with another Bill which, despite its merits, is still being dealt with on an ad hoc basis in relation to the preservation of pensions and so on. I would like the hon the Deputy Minister, when he responds, please to tell us when we are going to see that comprehensive review. [Applause.]

Mr H J BEKKER: Madam Speaker, currently a registered pension fund may grant housing loans to its members from its own members’ fund. This Bill will now allow the pension fund to provide guarantees to banks, building societies and other financial institutions against the pledge of its members withdrawal benefit. This will then be utilised for home loans and the renovation of existing buildings.

The fact that funds will now be able to provide guarantees to financial institutions for extending home loans to its members should be welcomed, as this will undoubtedly allow more people access to housing finance. This is particularly true for those people that are experiencing problems with housing finance due to the banks’ reticence to take on high-risk loans. A pension fund guarantee based on the member’s withdrawal benefit should convince banks to extend housing finance to such members as it indeed takes very few risks.

The ability to negotiate lower interest rates directly with the financial institution will also now be possible, and that will enable more fund members to afford a housing loan and to save on the interest part of their repayments because, again, the banking institution would rather give a lower interest rate to a person with such a guarantee than to a person who has to negotiate on his own.

The fact that the guarantee will be limited to a third of the member’s ultimate withdrawal benefits should also be supported as it protects the actuarial health of the fund and the member’s retirement planning. This would mean that the repayment of the bond should be structured in such a way that the member should at least have two thirds of his retirement fund free when he goes on pension.

The Bill will lead to a situation where more pension funds will be willing to provide loan guarantees instead of administering the loans themselves, which obviously could result in savings on administrative costs in the long term. In all, the Bill should be applauded as an innovative method of opening access to housing finance for people who might otherwise not have qualified for home loans. In addition, this Bill might play a positive role in decreasing the housing shortage in South Africa.

It may interest members that, of course, with our own pension fund for MPs we wrote these guarantees into the rules at the time. As such, we are now in the position that we actually ran ahead of what is happening here. I think that all members would, indeed, subscribe to this particular aspect. The IFP will definitely support this Bill.

Dr P J RABIE: Madam Speaker, hon Minister, hon Deputy Minister, this is a technical Bill which basically enables members of a pension fund to use their fund as security for a loan from the pension fund to obtain a private residence. This is a positive piece of legislation, because it widens the legal definition of ownership and enables an individual, through right of occupation, to obtain surety.

South Africa finds itself in the position of being one of the developing economies. This piece of legislation will allow members of pension funds to develop and attain ownership of a dwelling by right of historic occupation. To satisfy our present housing needs, it is imperative to involve the private sector, especially financial institutions, which will, eventually, result in the creation of the much-needed employment opportunities in the building, retail and manufacturing sectors of the economy.

This Bill must also be seen in the context of the decline in the cost of mortgage finance which resulted in a resurgence in trading activity in the real estate market and a number of gains in residential property, and the rise of real estate share prices over the past two and a half years. This was the trend till last Tuesday. I would like to elaborate upon this and quote from the annual economic report of the Reserve Bank:

Since September 1998 to June 2001 the companies in the real estate sector have increased by 71%; and from January 1999 to June 2001 the prices of building, construction and engineering went up by 104%.

However, South Africa faces a number of profound economic challenges, namely job creation, rural development, poverty alleviation and skills management. Access to finance is one of the factors that are hindering the participation of a fair proportion of our population. We trust that this particular Bill will lead to better and more employment opportunities.

The significance of this Bill is that it has the ability to increase landownership amongst all sectors of society and will give South Africans access to capital and land. What South Africa needs at present is an economic growth rate of at least 7% to 8%. In order to attain this rate, we will have to attract and encourage as many South Africans as we can to use all of their sources of income to spur all activities. The DA supports this particular Bill.

Dr G W KOORNHOF: Madam Speaker and hon members, the most important feature of this Bill is that the right of property ownership is extended to include the right to occupy land, other than under a lease agreement. It opens new and exciting opportunities for people in informal settlements in urban areas and for people living on tribal land. It is good news for persons in the lower income groups of South Africa. It is estimated that 12 000 home loans are granted per month to people in lower income groups, 80% of such loans being obtained through pension funds, with the average loan amounting to R13 000.

The Bill therefore not only extends property ownership, but also expands access to capital. This is a small step towards eventually making the majority of South Africans the proud owners of a home or land. This may, if implemented correctly and utilised on a wide scale, unlock billions of so- called dead capital in our society, where people will be able to buy and sell property through legal systems and institutions.

The UDM urges Government to utilise the opportunity to expand private property ownership even beyond the limits envisaged in this Bill, to the poor people of our society. Poor people may not owe much, but the home that they will proudly occupy will represent the vast majority of their life savings.

Another feature of this Bill is that, for the first time, a registered pension fund may provide a guarantee to a person as security for that person to obtain a housing loan from a bank. The bank, due to the security of a guarantee, will be in a position to offer such applicants favourable interest rates. A member, being granted a housing loan against a guarantee by the pension fund, may purchase a dwelling, or land and erect a dwelling on it, or make additions, alterations and repairs to the dwelling. A final feature of this Bill is that property ownership may vest in a member or a spouse or both.

In conclusion, the final test of the success of this Bill is that banks must now comply with it. This must be measured regularly. The UDM supports the Bill.

Mr L M GREEN: Madam Speaker, hon Ministers and members, the pension fund is a lucrative industry with an estimated R80 billion in surplus. The question of who holds ownership over the surplus is the issue of contention. Does the surplus belong to the fund or the employer? This Bill aims to clarify that issue. What this Bill aims to do is to apply treatment that is fair and equal to all.

Companies and shareholders must be held accountable on how they manage contributions to a pension fund. In the past, contributors to the fund had very little to say over how the surplus must be administered. This Bill provides equitable guidelines to ensure that the future of the pension fund remains profitable for all.

This Bill allows pension funds to provide financial institutions with guarantees as security for housing loans for members. This provision is very commendable. We, therefore, as the ACDP, support this Bill wholeheartedly.

Mnr P J GROENEWALD: Mevrou die Speaker, die vraag is in terme van die Wysigingswetsontwerp op Pensioene wat dit vir die man op straat beteken. Ons het hier gehoor dat die impak en die effek van hierdie wysiging dit nou moontlik maak dat pensioenfondse aangewend kan word om te verseker dat die lede daarvan, ‘n huisverband kan bekom by ‘n finansiële instelling. Die groot voordeel natuurlik daaraan verbonde is dat mens ‘n laer rentekoers kan beding.

Die VF wil ook vandag voorstel dat hierdie Parlement ondersoek moet instel in terme van finansiële instellings wat goedkoop lenings kan gee teen laer rentekoerse. Wat bedoel ek daarmee? As mens vandag ‘n huis koop en jy betaal tussen 20 en 30 jaar aan daardie huis af, betaal mens byna vyf keer die prys van die huis. ‘n Huis wat R100 000 gekos het, kos op die ou einde byna R400 000. Ons moet ondersoek instel na finansiële instellings en kyk of dit moontlik is dat sulke instellings verplig kan word om ‘n maksimum rentekoers in te stel vir huisverbande. [Tyd verstreke.] (Translation of Afrikaans speech follows.)

[Mr P J GROENEWALD: Madam Speaker, the question is, in terms of the Pension Funds Amendment Bill, what does it mean for the man in the street. We heard here that the impact and the effect of this amendment now makes it possible for pension funds to be utilised to ensure that their members can obtain a home loan at a financial institution. The great advantage attached to that of course is that one can negotiate a lower interest rate.

Today the FF also wants to propose that this Parliament should launch an investigation in connection with financial institutions that can grant inexpensive loans at lower interest rates. What do I mean by that? If one buys a house today and one pays it off over between 20 and 30 years, one pays nearly five times the price of that house. A house which cost R100 000 would eventually cost almost R400 000. We should investigate financial institutions and see whether it is possible to compel such institutions to introduce a maximum interest rate for home loans. [Time expired.]]

Dr S E M PHEKO: Madam Speaker, the PAC supports the Pension Funds Amendment Bill. Its purposes are to clarify the position regarding the power of a registered pension fund, guarantee housing loans granted to members by persons other than the fund and extend the concept of ownership.

The amendment to section 19(5)(a) of the Act proposes the definition of fair value'' instead ofmarket value’’ of the property for the purposes of housing schemes. The PAC appreciates this new and appropriate language to the stale capitalist language of ``market value’’ which has the connotation of exploiting the poor and enriching those who are already rich.

The Bill seems to be an improvement on the Pension Funds Act of 1956. One can only quarrel with it when it comes to gender. In many places it speaks of him'' but nother’’, or of he'' but notshe’’. In other cases, as if as an afterthought, it suddenly remembers that there are he's'' and she’s’’ in the English language and tries to atone for this by saying: ``If he, the member, were to terminate his or her membership of the fund’’. [Time expired.]

Miss S RAJBALLY: Madam Speaker, the MF finds the security of guarantee that the Bill places on pension funds, which in turn seeks to ensure favourable rates of interest in the offering of loans to its members, in order. This clarification given to registered pension funds to furnish guarantees appears favourable, and the MF recognises that the success of these funds depends on procedures to regulate this.

The MF finds the broadening of the term ownership'' to allow for a variety of circumstances and to cater for situations better, as well as the definition given tofair value’’, accommodating.

The MF firmly supports the regulations regarding the amount of loans and guarantees, clearly allowing for a mechanism that the registered pension fund must comply with, and also the extension of the Minister’s powers to make further regulations. However, what procedures are in place to ensure that the making of such regulations by the Minister is in order? The MF notes the accommodation that the Bill makes for correction, in case of default, which is reassuring. The MF supports the Pension Funds Amendment Bill.

Mnr C AUCAMP: Mevrou die Speaker, die algemeengeldende beginsel in die kompeterende mark van vandag is: ``Skoenmaker, hou jou by jou lees.’’ Daarom verwelkom die AEB dit dat pensioenfondse nie self nie, maar by wyse van waarborge aan finansiële instellings, gaan help met behuising en die lenings daarvoor, en die sekuriteit gaan bied.

Hierdie wetgewing het baie positiewe aspekte. Dit sal ‘n vryer mark tot gevolg hê, kompetisie vir laer rentekoerse sal op hierdie wyse verhoog word, en die subsidiëring van huiseienaars deur ander lede van die fonds sal deur die nuwe wetgewing uitgeskakel word. Hierdie wetsontwerp behoort ook baie te help om die sogenaamde ``red-lining’’ van sekere woonbuurte vir huislenings uit te skakel en almal te help om huiseienaarskap te kan bekom.

‘n Groot gevaar in die gebruik van pensioenvoorsiening vir lenings is dat die uiteindelike pensioen deur skuld verteer kan word. Daarom word die beskerming van twee derdes van pensioenkapitaal teen lenings ook verwelkom.

Die AEB verwelkom die verbreding van die begrip ``huiseienaarskap’’ en steun hierdie wetgewing, en glo dat dit ‘n bydrae kan lewer tot gesonde en effektiewe finansiering vir behuising sonder om eventuele pensioeninkomste daardeur in gevaar te stel. Ons steun die wetsontwerp. (Translation of Afrikaans speech follows.)

[Mr C AUCAMP: Madam Speaker, the generally applicable principle in the competitive market today is: ``Cobbler, stick to your last.’’ That is why the AEB welcomes the fact that pension funds themselves are not going to help with housing and loans for that purpose and offer security, but that all this is going to take place through guarantees to financial institutions.

This legislation has many positive aspects. It will result in a freer market, competition for lower interest rates will be increased in this way and subsidising of home owners by other members of the fund will be eliminated by means of the new legislation. This Bill should also contribute greatly to eliminating the so-called red-lining of certain residential areas and helping everyone to attain home ownership.

A great danger in using pension money for loans is that the eventual pension could be consumed by debt. That is why the protection of two thirds of pension capital against loans is welcome.

The AEB welcomes the expansion of the concept ``home ownership’’ and supports this legislation, and believes that it could make a contribution to sound and effective financing of housing, without endangering eventual pension income in doing so. We support the legislation.]

The DEPUTY MINISTER OF FINANCE: Madam Speaker, I would like to thank all members who have participated in this debate. I think that there is agreement that this is a measure that will go a long way towards addressing the critical problem of access to finance, so that people will be able to help themselves to own their own houses.

In relation to the issue that was raised by the hon Ken Andrew, I just want to say that the recommendations that came out of that process have not been lost. An issue that we have sought to take into account as part of the process, is the work of the committee which is led by the Minister of Social Development.

There is a comprehensive process to look at our social security system in order to identify gaps that exist. It is expected that this committee is going to be tabling its report very shortly, I think during the course of this year. We have taken the view that we need to take that into account as well, as we seek to take forward the work that was done. One understands that this is a process that has taken a bit of time, but we have taken the view that we need to await the results of that process. Having said so, work is continuing.

Regarding some of the more immediate issues, for example the UIF, this is an element of our social security system. Measures have been taken recently to stabilise the fund, but also, through improvements in the legislation, to improve compliance and administration of the UIF. So, with regard to some of the more immediate and pressing issues, we have taken particular measures, while the more comprehensive process is still going on.

I would like to thank all members for supporting the Bill. [Applause.]

Debate concluded.

Bill read a second time.

          FINANCIAL INSTITUTIONS (PROTECTION OF FUNDS) BILL

                       (Second Reading debate)

The DEPUTY MINISTER OF FINANCE: Madam Speaker, in opening this debate on the Financial Institutions Bill, it must be understood that consumer protection and extended powers for the registrar to enforce that protection lie at the root of this piece of legislation. The existing Financial Institutions Act, which is being repealed and replaced by this particular Bill, has been a most useful regulatory tool in the hands of the registrar, as it applies to all financial institutions under the supervision of the Financial Services Board.

In essence the Bill regulates the investment, safe custody and administration of the funds and trust property of a principal by financial institutions. The Financial Institutions Act is a law which the registrar has applied in bringing about curatorships over the businesses of a large number of institutions, notably the Masterbond group, the Owen Wiggins group, the IGI insurance company and First Central Insurance Ltd, which was the latest casualty.

The Bill that we are looking at today is the successor to this Financial Institutions Act of 1964, which in turn was replaced by the Financial Institutions Act of 1984. Scrutiny of this Bill will clearly show the genealogical line of this legislation. While the emphasis in the two Acts was mainly on the regulation of funds and trust property administered by financial institutions, this Bill, while retaining that regulation, extends into the field of enforcement powers, at the instance of the registrar. This has proved to be a shortcoming in the two previous Acts.

In summary, the first part of the Bill that we are looking at seeks to regulate the investment, safekeeping, custody and administration by financial institutions of funds and trust property. The second part is aimed at consumer protection, sought to be achieved by adequate and effective enforcement measures granted to the regulator. The provisions which are contained in the first part are almost a replica of the provisions to be found in the previous two Acts I have referred to. The important issue of the coverage by the Bill of FSB-supervised financial institutions was raised by the portfolio committee. ``Financial institution’’ in this Bill is therefore defined as any person or institution referred to in the definition of a financial institution in section 1 of the Financial Services Board Act, 1990, and any medical scheme contemplated in section 1 of the Medical Schemes Act.

Accordingly, the Bill covers the defined category of financial institutions, including banks, that conduct trust business on behalf of principals, as well as medical schemes. Furthermore, the Registrar of Medical Schemes, in terms of the Medical Schemes Act, can exercise the extended powers granted to the registrar as defined in this Bill.

The provisions of the second part of this Bill deal with enforcement measures and apply not only to financial institutions, but also to associated institutions and unregistered persons. Clause 5, which deals with curatorship orders, succeeds an equivalent provision in the current Act. The same applies to clause 6. Clause 7 is a new clause and enables the registrar to declare certain practices as irregular or undesirable which, although new in this Bill, is by no means strange in regulatory laws. This is a preventative measure aimed at the eradication of undesirable practices and consequential losses to the public.

This Bill has been extensively consulted on, with various recommendations having been received from groups that have taken an interest in the Bill. Accordingly, we would recommend that the National Assembly approve this Bill. [Applause.]

Prof B TUROK: Madam Speaker, some three years ago I received a telephone call from somebody who wanted to remain anonymous, saying that he had certain documents that he wanted to show me in connection with a very big scam in this country. I was then about to visit Pretoria and this person lodged assertive documents in the hotel that I was staying in. Because he did not want me to identify him, I knew neither his name nor his appearance, but the assertive documents related to the Masterbond scandal. Most of us will remember that scandal. I was then bound to look into the whole question of Masterbond and then there was a court case and the culprits were put in prison for a long period of time.

Masterbond was put under curatorship in terms of the Financial Institutions Act. That Act has as its objective the protection of the public against bad management in financial institutions. The result has been that something like 70 institutions are now under curatorship in terms of the very same Act.

When the Portfolio Committee on Finance discussed this particular Bill, certain issues came to the fore which may be of interest to the House. One of the issues was: What is the regulatory function of Government as opposed to the self-regulation that many people in the professions and business constantly call for? Should we have a system whereby people regulate themselves? Or should the Government perform a regulatory function?

What we were told in the committee was that there were rogues operating with abandon in certain areas of the finance system. It became very clear that we needed a strong regulatory state institution which would insist on sound corporate governance in the private sector. People on this side of the House are often complaining about management and governance in the public sector. But what we learnt in the Portfolio Committee on Finance is that we have to address the question of sound corporate governance in the private sector. We were told - I hope some members will listen to what I am about to say - that certain insurance brokers were contravening almost every law, that they were not paying over money, and that they were not accepting any risk for themselves. This is why we need a state, and a strong state, with strong regulatory powers which is going to attend to these rogues operating in the insurance environment and similar investment environments.

Let us look at what self-regulation means. The Financial Services Board told our committee that with respect to the short-term insurance industry, self-regulation simply does not work. The Financial Services Board does not even know how many intermediaries there are out there, operating unregistered, unrecognised and unsupervised. So, when our committee hears these constant appeals for self-regulation by certain professions and industries, we become a bit sceptical because we have been told by none other than the Financial Services Board that we must watch out because there are rogues at work in that sector. I have no doubt that there are many members of this House who have been caught out by sharpshooting brokers and investment advisers who are not regulated. From now on they will be regulated. Members should please pay attention, their money is at risk!

Then there is the question of trust funds. We are all aware of the fact that there are many trust funds out there in the finance industry, and that we need to codify the way they operate. This Bill tightens up the statutory codification of the law on trusts and it deals with some very important principles which I think we should all bear in mind. People who deal in trusts have a fiduciary duty when they deal with trust property and trust funds. There are certain values in the Bill which we need to pay attention to. People who deal in trusts are required to exercise good faith, proper care, diligence, the declaration of private interests, and they must ensure that the trust funds that they look after are totally separate from other funds for which they are responsible. And if in any case there is any kind of personal financial interest, they have to declare in writing in the minutes of the meetings of various boards that they have those personal interests. I think we are all aware that in the NGO community and in the trust industry as a whole, there is often a duplication and an overlap between the personal interests of the people who are involved and the trust money that they control. This Bill is intended to ensure that there is absolutely no improper advantage for the person holding the trust funds.

In our discussions, various issues arose about the nongovernmental organisations who also have trust funds. A financial institution was defined as any person who or which deals with trust property as a regular feature of his, her or its business. NGOs often have trust funds but they do not use trust property as a regular feature of the business, which means they do not fall directly under the Act. And yet we are aware of the fact that there are trust funds in NGOs, and that there are NGOs which operate as trusts. It is important that this legislation and the Financial Services Board are concerned with these things. We have been given an assurance that complaints will be taken up by the Financial Services Board and that section 21 companies will also be scrutinised to a limited degree in this respect.

Finally, let me say that there are unregistered operators in institutions which work in the field of insurance, financial institutions and services. These have to be monitored and caught, and this Bill will enable Government to ensure that these crooks are brought to book. [Applause.]

Mr K M ANDREW: Madam Speaker, the primary purpose of this Bill is to improve the enforcement of the previous Bill in respect of financial institutions and the funds that they handle.

I think the essence of the Bill is captured by the clause in which it is made clear that people entrusted with other people’s funds and investments must, and I quote: ``ÿ.ÿ.ÿ. observe the utmost good faith and exercise proper care and diligence’’. Unfortunately, this has not always been so and the case of Masterbond, which has been mentioned, is one of the most famous in our country.

One hopes that this legislation will act as an additional deterrent and will also empower the authorities to intervene before investors’ money is lost, and not only afterwards. The DA will be supporting this Bill, but I would like to point out that, due to the workload that we sit with in the Portfolio Committee on Finance, there are, in fact, some drafting or typographical errors in the Bill as tabled, which will need to be corrected in due course.

Mr H J BEKKER: Madam Speaker, this Bill repeals and replaces the Financial Institutions (Investment of Funds) Act. The new name will be the Financial Institutions (Protection of Funds) Bill.

This Bill will now extend the remedies of the regulator for the sake of protecting consumers of financial services. The importance of this Bill is that it will not only apply to financial institutions, but also to associated institutions and even to unregistered persons.

The Bill deals extensively with curatorships and gives them greater clarity, and makes this function much more effective and regulatory in nature. This is a preventative measure, aimed at the eradication of undesirable practices and consequential losses to the public.

My colleagues have already mentioned some of these undesirable practices that have taken place and I am not going to dwell on that any further. Without much further ado, I am just saying that the IFP will support this Bill.

Dr P J RABIE: Madam Speaker, hon Minister and hon Deputy Minister, this Bill is an update to provide for the investment, safe custody and administration of funds and trust property by financial institutions.

This Bill is significant because in the past a fair number of South Africans have invested vast sums of money with questionable institutions which have abused the trust the investors placed in them. The result of this is that the state today has to provide for these unfortunate and, regrettably, often elderly citizens, with limited disposable income. This Bill stipulates the duties of persons dealing with funds and trust property.

South Africa is becoming an integral part of the global economic order. An important proviso for economic growth, however, is that the public and the private sector must conduct all business activities in a fair and transparent manner. The accusation is often levelled by international investors that some businessmen in South Africa have become wealthy as a result of their participation in insider share trading ventures.

Regrettably, in the recent past a number of executives of a well-known institution have also unilaterally approved bonuses for themselves. When it became public, however, they fortunately withdrew this. If this action had taken place, it would have had a fairly negative impact upon the shareholders of this particular institution. As some of the other speakers have said, the same principle regarding fairness and transparency also applies to the public sector. Nobody is above the law.

The very controversial arms procurement deal, our spiralling crime rate and allegations of corruption that relate to a number of public office bearers, constitute a serious threat to our socioeconomic wellbeing, in the sense that we need direct foreign investment and, whether we like it or not, corruption is a deterrent to direct foreign investment. The only way of reducing our alarmingly high rate of unemployment is to attract foreign investors to create economic wealth in this country.

Chapter 2 of this Bill provides for more effective enforcement measures and oversight by the Financial Services Board. What is significant, however, is that any director, member or agent of a financial institution will have to declare their interest in writing regarding all their activities, and if they take particular actions which may impede the wellbeing of that particular business.

Furthermore, the powers of enforcement and of the registrar are very clearly defined in this particular Bill. It is also welcomed that any person who fails to comply with any provision of this Act is guilty of an offence and is liable to a monetary fine or imprisonment.

The DA supports this Bill. The Bill will force financial institutions to manage their business in a responsible and equitable manner, and create a business culture where the rights of all stakeholders are respected and protected, not abused.

Dr G W KOORNHOF: Madam Speaker and hon members, this Bill may seem to be simple in format and content, but it has wide-ranging implications for financial institutions and persons not currently regulated in terms of legislation. By adopting this Bill today, institutions and persons who are operating outside the regulatory net will now be brought into this net and should therefore be supported.

Many of us will still recall the sagas surrounding Masterbond and Supreme Holdings, which managed to slip through the net of regulations, with devastating effects for investors who lost millions of rands in precious savings. This type of activity, where transgressors are unregistered insurers, unregistered investment managers or questionable institutions whose activities resemble those of financial institutions, all of whom are operating outside the net, should be stopped. It will happen with the passing of this Bill, providing a greater amount of protection for customers of financial institutions.

The sting in this Bill lies in the extension of powers to the registrar, making it possible for him or her to establish a curatorship over so-called associated institutions and/or unregistered institutions. The registrar has further powers to call for specified information, to apply to a court for an order restraining the conduct of business and to publish names in shame.

The powers granted in this Bill to curators and regulators therefore attempt to pre-empt foul play by dishonest operators, thereby eradicating undesirable practices and consequential losses to the public. The registrar may achieve this by declaring certain practices irregular or undesirable.

Persons found guilty of an offence in terms of this Bill may be liable to a fine or imprisonment for a period of up to 15 years, forfeit any profit made in the process, compensate the institution for damage suffered and jeopardise a future career in any financial institution.

We think this is a good Bill, and the UDM will support it.

The DEPUTY SPEAKER: Order! As I call upon the next hon member, may I ask hon members please to lower their voices as they talk to each other? Some of you are conducting your conversations so loudly that I can even hear what you are saying.

Mr L M GREEN: Madam Speaker, hon Ministers and members, the Masterbond saga remains one of South Africa’s great fraudulent schemes that must never be repeated. It is our view that this Bill successfully regulates control over such occurrences, and we are sure that such an occurrence will never happen again in the history of South Africa.

Since South Africa’s integration into the international market, many challenges have been expected, and we must continue to provide a secure financial haven for both local and foreign investment initiatives. In this regard, strengthening our regulation of and control over the financial sector will assist with the strengthening of our domestic economy.

The powers and functions of the registrar become vital in this regard and we therefore commend the Ministry for taking the proper precautions. The powers of the registrar, which are spelled out in clause 6 of this Bill, send a very clear message to would-be investors and therefore the ACDP supports this Bill.

Mnr P J GROENEWALD: Mevrou die Speaker, dit is omtrent daagliks dat ‘n mens ‘n koerant oopmaak en waar ‘n mens lees van groot skandale in terme van finansies, van die publiek wat hul laaste pensioengeldjies of beleggings gaan belê by ‘n finansiële instelling om dan aan die einde van die dag uit te vind dat hulle geld eintlik weggeraak het.

‘n Goeie voorbeeld is van die oud-weermaggeneraals wat ook deel was van die finansiële instelling waar hulle miljoene rande verloor het. Daar is van hierdie mense wat nou moet gaan koeksisters bak en op straat verkoop. Die VF verwelkom hierdie wysigingswetsontwerp, omdat dit ‘n poging is om juis die weerlose publiek daar buite te probeer beskerm om nie slagoffers te word van swendelaars wat hul misbruik nie. Die VF glo nie dat mens dit ooit honderd persent kan stop nie, maar hier is minstens ‘n poging en die VF verwelkom dit. (Translation of Afrikaans speech follows.)

[Mr P J GROENEWALD: Madam Speaker, almost every day when one opens a newspaper, one reads about big financial scandals, about the public investing their last bit of pension money or investments with a financial institution, only to find at the end of the day that their money has actually disappeared.

A good example is that of the former Defence Force generals who were also part of the financial institution where they lost millions of rands. Some of these people now have to make koeksisters and sell them in the street. The FF welcomes this amending Bill because it is an attempt to protect the vulnerable public outside from becoming victims of fraudsters who take advantage of them. The FF does not believe that one could ever stop this totally, but this is at least an attempt, and the FF welcomes it.]

Miss S RAJBALLY: Madam Speaker, the MF notes that this Bill was taken back by its promoters in 1999, to accommodate other clauses to ensure the efficient and effective protection of consumers of financial services. It is important and reassuring for a consumer of financial services to be protected in his or her financial practices.

It not only instils confidence in the system, but also senses professionalism in maintaining confidentiality. The Bill sets out to provide for and consolidate laws relating to the investment, safe custody and administration of funds and trust property by financial institutions and to enable the registrar to protect such funds and trust property. The MF applauds the department on its improvements to the Bill and appreciates the Bill’s accommodation of clarity, explanation and definition of powers and process which will in turn ensure the proper activation of its clauses and aims. The MF supports the Financial Institutions (Protection of Funds) Bill.

Mnr C AUCAMP: Mevrou die Speaker, menige hartseer verhaal kan vertel word van Jan Burger wat ‘n finansiële instelling of kwasi-instelling blindelings vertrou het, meestal met sy pensioengeld of sy swaarverdiende neseier en dan kaal uitgestap het. Hierdie wetsontwerp sterk die kontrole oor finansiële instellings om eerlike, bo-die-tafel besigheid te doen. Sodoende beskerm die wet die individu teen korporatiewe uitbuiting.

Daar is natuurlik die vraag na balans en of staatsregulering gewens sou wees. Iewers in die Bybel staan mos dat dit my vrystaan om met my eie goed te maak wat ek wil. Feit is, hierdie is egter nie eiegoed nie. Dit is fondse van die publiek en om dit oneerlik of onder ‘n swendelary aan te wend, is eintlik ‘n kriminele saak en daarom kom die staat ten volle in die spel. Die AEB ondersteun hierdie wetgewing en ons vertrou dat dit ook weldra uitgebrei kan word na ander dienste wat gelewer word waar die publiek sonder skroom misbruik word. (Translation of Afrikaans speech follows.)

[Mr C AUCAMP: Madam Speaker, many a sad story could be told about John Citizen who blindly trusted a financial or quasi-financial institution, mostly with his pension money or his hard-earned nest egg and then lost everything. This Bill strengthen the control over financial institutions to conduct honest above-board business. Thus the law protects the individual against corporate exploitation.

There is of course the question of balance and whether state regulation would be advisable. Somewhere in the Bible it is, after all, stated that it is up to me what I want to do with my own possessions. But the fact of the matter is, these are not own possessions. These are the funds of the public and to apply them dishonestly or fraudulently is actually criminal and therefore the state becomes a full-fledged player in the game. The AEB supports this legislation and we trust that it will soon be extended to other services that are delivered where the public is summarily exploited.]

The DEPUTY MINISTER OF FINANCE: Madam Speaker, once more I would like to thank members who have participated in the debate and supported the Bill. I do think that from the issues that have been raised by members, there are issues that one needs to pick up and make a few comments on.

In the interventions of a number of members, the issue of the Masterbond scandal came up. And I would basically like to say that it is my understanding that the final report of the Nel Commission on the Masterbond scandal has been tabled with the Minister for Justice and Constitutional Development. One of the things that we look forward to is that, out of that, a comprehensive process can evolve that will see us as a country dealing with a lot of issues that have been thrown up by the Masterbond scandal. Quite clearly, one of the central issues that we shall have to deal with is the issue of the role, the accountability and the liability of the accounting profession. The accounting profession came out very strongly, as having been one of the major failures in the Masterbond group. I just thought that I should made that point.

Secondly, on the issue of regulation by Government, vis-à-vis self- regulation, we are, of course, dealing with this issue on an ongoing basis, because in the environment in which we operate today, where we are opening up our own environment for participation by other companies from other countries, we do not expose our people to swindling and abuse by companies that originate from elsewhere. And so do the issues around regulation and tightening, while ensuring that we are still able to compete effectively in the global environment. And I think that these are some of the issues in the context of the announcement that was made by the Minister earlier this year, that we shall be moving towards a single regulator.

These are the issues that we shall have to deal with in that context, because, certainly, if we are moving in that direction, we shall have to look at issues of capacity, because today we has the scale and the size of organisations or companies and the scale and size of transactions that exist. They do warrant that credible capacity is in place to be able to regulate? One have conglomerates that offer a whole range of services - banking services, asset management services and insurance services. They operate globally. How does one make sure that such companies are properly regulated. These are issues that we shall have to deal with in the context of the policy announcement by the Minister earlier in the year.

On the issue of abuses by brokers, financial advisors and intermediaries, I would like to draw attention to the fact that in the course of last year, we put in place two sets of policy holder protection rules. These relate to the short-term and the long-term insurance Acts. We put these rules in place, whilst at the same time we were working on a comprehensive piece of legislation, which will shortly be debated in this Parliament. This is the Financial Advisory and Intermediaries Services Bill. It seeks to comprehensively regulate the functioning and the accountability of the financial advisors and financial intermediaries. So, this is something that Parliament will have an opportunity to deal with comprehensively.

Finally, I should make the point that, clearly South Africa has to be shaken out of complacency in terms of issues of regulation, ensuring that there is effective regulation, but also ensuring that there is effective consumer education and effective consumer protection. But, we should also give a voice to consumer groups. I think this is a culture that has not fully taken hold in South Africa. And I think that if we are to achieve our objectives of ensuring that we have sound institutions and that the interests of consumers are protected, we shall have to deal with these things. We shall be seeing a number of laws that turn out to be more comprehensive in their coverage and scope, such as the collective investment schemes, security services legislation and so on. I would like to thank members for supporting this Bill. [Applause.]

Debate concluded.

Bill read a second time.

               PROVINCIAL TAX REGULATION PROCESS BILL

                       (Second Reading debate)

The MINISTER OF FINANCE: Madam Speaker, this Bill empowers provinces to take another important step forward in exercising their constitutional powers and give effect to the vision of a unitary but fiscally decentralised system of government. This Bill is required not only for constitutional reasons, but for sound fiscal and governance reasons.

I want to focus for a moment on the constitutional - legal aspects. If I may retrace our steps in this regard, about five years ago we gathered in the Constitutional Assembly as freely elected representatives of our people, to work out a scheme of Government best suited to the people of our democratic Republic. Conscious of the divisions, inequalities and unfair discrimination from which we emerged, we adopted as a supreme law of our Republic a magnificent Constitution so as to amongst others, ``build a united and democratic South Africa able to take its rightful place as a sovereign state in the family of nations.’’

We devised for this single sovereign and democratic state a Government constituted as ``national, provincial and local spheres of government which are distinctive, interdependent and interrelated.’’ To ensure these three features - which are the distinctiveness, interdependence and interrelation

• could in practice be real, we set out principles of co-operative government and intergovernmental relations within which each of these spheres, and the organs of state within them, would have to function.

These principles of co-operative government and intergovernmental relations require that each sphere of government and its organs of state should respect the constitutional status, institutions, powers and functions of government in the other spheres.'' It shouldnot assume any power or functions except those conferred on them in terms of the Constitution.’’ Thirdly, they should ``exercise their powers and perform their functions in a manner that does not encroach on the geographical, functional or institutional integrity of government in another sphere’’ and co-operate with one another in mutual trust and good faith by, amongst others, fostering friendly relations and co-ordinating their actions and legislation with one another.

Mr T D LEE: [Inaudible.]

The MINISTER: If this debate is too complex for Mr Lee, why does he not go outside to have a smoke?

In giving effect to this vision, Chapter 13 of the Constitution required national Government to table and pass several pieces of legislation. Much of this has been achieved, as demonstrated by the Intergovernmental Fiscal Relations Act, which we passed in 1997, the Financial and Fiscal Commission Act of the same year, the Public Finance Management Act of 1999, the Borrowing Powers of Provincial Government Act of 1996 and four Division of Revenue Acts which we have passed to date. This Bill is the last piece of intergovernmental fiscal legislation applying to provinces and required by the Constitution. [Interjections.]

The DEPUTY SPEAKER: Order! Could someone please find out where that cellphone is? Or has someone poured water into the system? [Interjections.]

The MINISTER: Through the Intergovernmental Fiscal Relations Act of 1997, the nine MECs of finance and I have developed a great team spirit, as we seek to translate these fine constitutional principles into practice. Hence, the Budget Council, which will be meeting in this city two days, indeed, promotes and facilitates intergovernmental relations in a manner few ever contemplated.

On the constitutional and legal front, we have completed all the enabling legislation necessary to support our provincial fiscal framework. Now I want to point out the fiscal and economic rationale for the Bill as it stands before us.

The economic arguments for devolving some taxation powers to subnational governments are generally accepted in highly developed countries. They revolve around the need to promote fiscal accountability of governments to the electorate. The theory that supports decentralisation of taxation authority is the idea that revenue sources match expenditure responsibilities. Although there is consensus on this guiding principle, this seldom occurs in practice and taxation powers vary widely. For example, ratios of own revenues to total revenues range from around 4% in Italy to 80% in the USA and Canada. To bridge their remaining imbalances, most countries combine authority for own revenue sources with transfers from national governments.

Although the conventional arguments may apply less so in a developing country, as other factors such as the redistribution between and within provinces must be taken into account, the economic arguments also apply, if only on the margin. In South Africa, given our revenue-sharing model, we are at a lower end with regard to provincial taxation powers. Our provincial total revenues this year are budgeted at about R121 billion, with less than 4% of that total coming from own revenues, mainly motor vehicle licences, hospital fees and gambling proceeds. Before focusing on our approach to provincial taxation, we must take into account other fiscal arrangements, particularly those related to grants. The system of equitable share and conditional grants was first implemented in 1998 after considering the recommendations of the FFC for the previous two years. This system is both transparent and fair. Further, provinces have also developed their capacity to manage and spend these funds in a responsible manner, proving that they are now ready to exercise their taxation powers more effectively.

The FFC first raised the issue of provincial taxes in reports in 1996 and

1. Thereafter, at the request of the Budget Council, the Katz commission investigated provincial tax options. However, considering that South Africa is a unitary rather than federal system and given the phase of our evolution as a Government, the commission recommended caution in assigning significant revenue sources to provinces. Devolved taxes will allow provincial governments to differentiate the level of services they offer and to be held accountable for the overall level of expenditure, instead of only for the efficient allocation of a fixed total.

The Bill before this House is a cautious step in the assignment of revenue sources to provinces. The executive representatives of the different provinces who sit on the Budget Council have subjected it to scrutiny and debate. I am most indebted to them and to the hon members of the Portfolio Committee on Finance for their collective wisdom. They have ensured that this Bill, in the fulfilment of the requirements of section 228(2)(b) of the Constitution, advances co-operative government.

As set out in the long title of the Bill, its purpose is to regulate an intergovernmental process that must be followed by provinces in the exercise of their powers in terms of section 228 of the Constitution to impose taxes, levies, duties and flat-rate surcharges on the tax base of any tax, levy or duty imposed by national legislation and to provide for matters connected therewith.

The Provincial Tax Regulation Process Bill of 2001 provides for a process driven and directed by two fundamental principles. Firstly, that the provinces’ power to impose a provincial tax must not be exercised in a ``a way that materially and unreasonably prejudices national economic policies, economic activities across provincial boundaries or the national mobility of goods, services, capital or labour’’. Secondly, compliance with the principles of co-operative government set out in Chapter 3 of the Constitution, and which I have alluded to above.

The process set out in this Bill itself is aimed at assisting provinces to ensure their taxation powers are exercised within the limits of the Constitution. It provides, in the event of a dispute between a province and national Government about compliance with constitutional requirements, for referral to the Constitutional Court for its determination whether or not a proposed tax is constitutional.

As indicated earlier, this Bill partially fulfils the requirements of section 228(2)(b) of the Constitution. To ensure compliance with the requirements of this section, it contemplates that Parliament enact further legislation. This further legislation will - in respect of a provincial tax proposal that does not materially and unreasonably prejudice national economic policies, which includes the tax policies of the Republic, economic activities across provincial boundaries and the national mobility of goods, services, capital or labour - determine the tax base within which such provincial tax may be levied.

The two-phase regulatory process takes into account the dual qualification provided for in the specific and guaranteed taxing power of the provinces, namely that the provincial taxing power should not prejudice national policies and that the provincial taxing power must be regulated by an Act of Parliament. The thrust of section 228 of the Constitution is accordingly simple. It vests the circumscribed taxing power in provinces. The exercise of such power, however, may not be used to trench upon national economic policies and related matters. Such an exercise must also be regulated by an Act of Parliament.

The Bill’s approach is practical and it is constitutional. The Bill also takes account of those who are paid by the word and twice for a verb, whom my learned friends have been quick to remind me of, and that the Constitutional Court, when giving positive certification to what we had crafted regarding the provinces’ taxing powers, an ex parte chairperson of the Constitutional Assembly held that the term ``regulate’’ in section 228(2)(b) connotes a broad managing or controlling rather than a direct authorisation function. Such broad managing, in the words of the Constitutional Court, serves to ensure coherence in the taxing system. Regulation is, according to the Constitutional Court, therefore aimed at directing and commanding that which has been authorised to be regulated.

I place this Bill before the House. I am saying that it has been duly considered. It has been debated with our colleagues in the provincial governments, those responsible for fiscal matters, and I trust that it will enjoy the support of this entire House. [Applause.]

Ms B A HOGAN: Madam Speaker, the Provincial Tax Regulation Process Bill is a pioneer Bill in the sense that it is one of the Bills which arise out of the requirements of the Constitution and is therefore untested constitutionally.

The committee was faced with an invidious position when we received this Bill, because it was accompanied, already, by two legal opinions, one of which said that the Bill was constitutional and the other saying that it was not. We had to make a decision. The problems accompanying the differences in the legal opinions which we received was compounded by the fact that the opinions that we received were based on a prior version of the Bill, not the one placed before us. We were therefore placed at even more of a disadvantage to judge the merits of the opinions placed before us.

This committee then asked for a further opinion based on the Bill before us, and that opinion satisfied most committee members that we could go forward on this Bill. In fact, as the ANC we are very much convinced that this Bill is what is envisaged in the Constitution.

There are matters, which we looked at, that form the core of the constitutional issues related to this Bill: The first one relates to the question whether this Bill regulates a province’s powers to impose a tax or whether it permits a province to authorise a particular tax. In our understanding of this Bill it definitely regulates that power and does not permit. Certainly, we made certain amendments, which made that very unambiguous, that a province is not permitted by the national Minister to impose a tax, but that the exercise of that power is regulated by the Minister.

The second issue which arose as a constitutional issue was the question which relates to whether one Act was envisaged by the Constitution or whether we could have a series of Acts regulating each individual tax, on other words, a tax-by-tax series of laws. The issue is that a single regulatory Bill cannot conceivably cover every form of taxation that a province is entitled to impose and therefore a battery of Bills are envisaged on a tax-by-tax basis, whereby each taxing power of a province will be regulated. That, in terms of the legal opinion that we have before us, is constitutional and we are of the opinion that we should move ahead to the NCOP to hear further debate on this issue. But, certainly, it makes sense and there is a lot of merit in the argument that no single tax Bill can regulate all the taxes before us.

Another constitutional issue that arose before us was the question of whether the Minister has a right to exercise his or her mind on the constitutionality of a particular tax that comes before him or her, as proposed by a province. It is absolutely clear that a Minister must exercise his or her mind. The Minister is enjoined by the Constitution to ensure that a Bill that comes before him or her meets certain conditions as set out in the Constitution.

However, we have said in the Bill that if, in the last instance, after the Minister has referred this Bill back to the province for re-examination, the Minister is still of the opinion that it might not pass constitutional muster, that Minister can refer the particular tax to the Constitutional Court for a further judgment on this issue. It is quite clear in the Constitution that this is what is the envisaged role of the Constitutional Court.

Finally, with regard to the issues of co-operative governance, the powers of a province to unilaterally impose the taxes that are granted them in terms of this Constitution are quite clear. However, that has to be balanced against the clauses in the Constitution which enjoin all spheres of Government to operate on principles of a co-operative basis. And this particular Bill which is before us at the moment is one that is specifically directed towards spelling out what the procedures would be to ensure that this Bill gives an outline of what procedures provinces must undergo so as to ensure that they are co-operating with other provinces and institutions in the manner envisaged by the Constitution.

Therefore, a process is set out in the Bill which includes that a province wishing to impose a tax has to make those proposals to the Minister. That province has to do its homework. It has to ensure that it understands how that tax is going to affect people in that province. It has to ensure that other provinces are consulted. It has to give some idea of the revenue that is going to be garnered by this tax. In other words, a province has to demonstrate that it has applied its mind to the implementation of such a tax.

Once a province has done that, the Minister refers discussion on this particular tax to a budget council, and that is where co-operative governance really finds its feet. It is debated and discussed there, as well as recommendations that come from the Financial and Fiscal Commission. Once that debate is taking place, if the Minister is assured, on reasonable grounds, that this particular tax does not interfere with the national economic policies of the country and other constitutional requirements, the Minister can then table a Bill legislating this form of tax into existence.

If the Minister is not of the opinion that this Bill is constitutional, the Minister can refer it back to the MEC for further consideration. If, after that consideration, the Minister is satisfied that his concerns have been addressed, the process can go ahead. If, however, he is not of the opinion that his concerns have been addressed or if there are still lingering doubts, this proposal can be referred to the Constitutional Court for further adjudication.

It is quite clear that this Bill deals with a regulatory process that provinces will have to undergo in order to meet the requirements of co- operative governance. The real test will come when one has the battery of Bills that will come before this House, regulating each tax as envisaged by each province.

We spent a considerable amount of time in the committee debating each clause of the Bill backwards and forwards. The majority of members of this committee are of the opinion that this Bill does, indeed, meet the constitutional requirements set out in the Constitution, and we would now want to see this Bill going to the NCOP, where the provinces have to go through the extended mandating process.

We believe that this process will further enrich deliberation on this Bill when we hear the voice of each province coming forward, which we in our committee have not yet had the benefit to hear. So we look forward to the debates in the NCOP because we certainly believe that that House will further bring light and further enrich this Bill. The ANC supports this Bill. [Applause.]

Mr K M ANDREW: Madam Speaker, I would first like to address myself to some of the process problems that we had with this Bill. They also relate to the workload of the Portfolio Committee on Finance and its ability to give the attention needed to all the Bills that come to it.

As a committee, we were trying to accommodate the NCOP cycle and get the Bill to be dealt with, but that caused a number of problems. The result was that, for example, last Friday the committee met to adopt the Bill, but it was required to adopt the Bill which was only handed out at the committee meeting, and the members had had no time to look at the Bill in the version that was before them. The three-day rule was dispensed with by the Whips so that we could debate it today, which is one or two working days after it was adopted by the committee.

The final Bill that we are actually debating, as tabled in Parliament, was only handed out at the Portfolio Committee on Finance meeting this morning, again, during the meeting. In each of these stages there were, in fact, numerous changes in the Bill. So, it was not as if it was simply a case of printing something that one already had. We had changes all along the way. I believe that this is simply not acceptable as it puts all members, not only opposition members, but all members of the committee, in the invidious position of trying to do justice to legislation which they have not had the time to study in detail.

I have great understanding for and sympathy with the chairperson who goes out of her way to allow all opinions to be expressed and debated, and for the legislation to be considered properly. But, at the same time, she has the unenviable task of trying to arrange a committee programme to cope with an unmanageable workload. The Constitution, in section 228, grants the power to impose certain taxes to provinces, and it requires Parliament to regulate that power by way of legislation. The reality is that provinces, for the foreseeable future, will receive the majority of their funds by way of their equitable shares from the national Budget. But that does not mean that their limited taxing powers are unimportant. On the contrary, governments, in all spheres, are more careful with, and accountable for, expenditure when they are obliged to justify to the public the taxes which they have imposed.

We also need to bear in mind that the issue of appropriate constitutional powers and responsibilities is as important as achieving taxation efficiency. Although taxation efficiency is not in any way irrelevant, we should not exaggerate the desirability of standardised taxation across provinces. In fact, some variations and experimentation can be very helpful in assessing the pros and cons of different taxes.

The challenge facing us is to achieve the correct balance between the provinces’ powers to impose some taxes and Parliament’s obligation to regulate the exercise of that power in the letter and spirit of the Constitution. The hon chairperson of the committee has indicated various things, but I would also like to put on record that the Treasury has agreed to submit this Bill for further legal opinion from senior counsel before the NCOP is required to make a decision on it.

The hon the Minister and the hon chairperson of the committee have outlined much of the Bill and I am not going to go through the same detail. But what is critical is when one gets to the point of the earlier processes when the Minister decides whether, in his opinion, the proposal is constitutional or not; and if so, he introduces a regulating Act, and if he does not think it is constitutional he refers it back to the MEC for reconsideration. The proposal for the new tax is then reconsidered by the MEC who returns it to the Minister in its original or amended form; the Minister then tables the Bill in Parliament or refers it to the Constitutional Court for a ruling.

The problem with this Bill is that it tilts the balance unduly and perhaps even unconstitutionally away from the intention of the Constitution to grant provinces certain taxation powers. For example, there is no limit on the time that the Minister may take when considering the proposal and the comments received. Secondly, even after the Minister has decided to introduce a Bill, the Minister, in agreement with the Budget Council, not necessarily with the agreement of the MEC concerned, can delay the introduction of the Bill beyond the 90-day time limit imposed by the Bill that we are considering today. Thirdly, the Bill itself may not permit the tax base or the desired tax rate contained in the original provincial tax proposal, even though the Minister has already satisfied himself or herself that the original proposal and I quote `` will not be in breach of section 228(2)(a) of the Constitution.’’

These provisions are an unreasonable intrusion into the powers granted to provinces by the Constitution. All sorts of unconvincing rationalisations have been given for this, but the real reason, I suspect, is that the Minister, understandably, has no confidence in the ability of most of the provincial governments that are controlled by the ANC to manage their financial affairs responsibly.

However, that is no reason to unduly limit the powers of provinces capable of managing their own financial affairs. The DA will not be supporting this Bill.

Mr H J BEKKER: Madam Speaker, the Constitution of the Republic empowers provinces to impose certain taxes, levies and duties, excluding income tax, VAT, general sales tax, rates on properties, and customs duties. Even though it took five years to bring this framework Bill before Parliament, it should be supported in that it finally creates a framework for provincial governments to levy certain taxes.

This certainty has long been lacking in the financial relationship between national and provincial government. Now, at least, there will be coherence of the tax system on a national and a provincial basis. The fact that this Bill establishes an extensive consultative framework should be applauded. It is in the national economic interest that provincial tax intentions should not be at odds with Government’s macroeconomic policy, but the vice versa also applies in this case.

While, at the same time, providing provinces with some leeway in the collection of revenue, the IFP, as the doyen of federalism, of course, would have gone much further in terms of this taxation. We would have done it the constitutional way if it had depended on the IFP. Nevertheless, we support this Bill, because it is a move in the right direction in giving more powers to provinces and is in line with our policy.

Of course, the hon Andrew has referred to certain grey areas, the constitutionality and those particular aspects, but we believe that this should be dealt with at a time when it is applicable. Let us hear out the constitutional realities on this but until such time for that matter, let us support this Bill. [Applause.]

Dr P J RABIE: Madam Speaker, hon Minister, hon members, the aim of this Bill is to regulate the intergovernmental process that must be followed by provinces in exercising their powers in terms of section 228 of the Constitution, and to impose taxes, levies and duties, and the flat-rate surcharges on the tax bases of any tax, levy or duties imposed by national legislation.

This is, again, a technical Bill and the Portfolio Committee on Finance initially received two legal opinions regarding the constitutionality of this Bill. An amended legal opinion was also given when the Bill was amended, which stated, as the chairperson has said, that this particular Bill was constitutional. My considered opinion is that this is fairly questionable. Whether it is constitutional or not, I welcome the decision by the Treasury that they will ask for another legal opinion to analyse and evaluate the provisions to see whether they really correspond with the Constitution.

Madam Speaker, allow me to thank the chairperson of the Committee on Finance, Ms Barbara Hogan, for the thorough and impartial way in which she conducted the meetings and hearings regarding this particular Bill. This Bill needs very, very thorough scrutiny, because some of the subclauses are inconsistent with regard to the powers of the MEC and the Minister, and the period the Minister has to respond, regarding the Constitution, to the various provinces.

This Bill states that the SARS is responsible, as the collecting agent, for provincial taxes, unless another agent is designated. As a South African, I think what is very important regarding this Bill is that we will have to review the tax burden placed upon millions of South Africans. I believe that there is room and place for every sphere of government, but we will have to ask other questions, whether we can carry on unilaterally levying taxes and rates upon people when we often do not think in terms of value for money. By levying taxes and rates, we do not always solve problems. I think what is very important is that we have reached a crossroads regarding taxes and levies. This, again, is something which must be considered in its full context.

The National Council of Provinces will really have to evaluate and analyse this Bill. We found ourselves at a crossroads, as the hon the Minister has said, with regard to our Constitution. But the real fact about this is that there is a discrepancy regarding the income, the degree of development and scholastic standards within these respective provinces. It is very important to see, if this particular Bill is implemented, how it will affect the socioeconomic status in each of the provinces.

Again, as some other speakers have said here, this Bill seeks to foster the autonomy of provinces, but I am not sure whether it may not negatively impact upon that autonomy. Therefore the DA will not support this Bill.

Dr G W KOORNHOF: Mev die Speaker, agb lede, hierdie wetsontwerp word oorweeg terwyl die Ouditeur-generaal bevind het, na aanleiding van ‘n oudit van vyf provinsies gedurende 1999-2000, dat daar provinsies is wat nie al hul bestaande inkomste ingesamel het nie. Tasbare voorbeelde word in die verslag genoem. Tensy provinsies hierdie swak plekke uitskakel en finansiële bestuurstelsels opskerp, gaan die aansoek om ‘n nuwe provinsiale belasting te hef koste-oneffektief wees.

Ons voorbehoud met die wetsontwerp is dat dit nie die totale las van die Suid-Afrikaanse belastingbetaler mag verhoog nie. Terselfdertyd moet die belastingstelsel nie meer gekompliseerd gemaak word nie. Daar moet verder nie toegelaat word dat die administratiewe las op besighede verder verhoog nie, met spesifieke verwysing na klein sakeondernemings.

Daar word beraam dat die nasionale Regering se belastinginkomste reeds byna 25% van die bruto binnelandse produk bedra, wat hoog is in vergelyking met Japan se 19% en die VSA se 21%. In die toepassing van hierdie wetsontwerp sal die sentrale Regering dus ‘n fyn balans moet handhaaf. Aan die een kant kan nie toegelaat word dat die belasting-inkomste verhouding tot BBP verhoog word nie. Enige nuwe provinsiale belasting moet dus eers baie sorgvuldig oorweeg word. Aan die ander kant is daar ‘n verbintenis tot die devolusie van mag, ook belastingmagte, na provinsies en plaaslike owerhede. Dit is vanselfsprekend dat hierdie devolusie van mag gepaard sal gaan met beter regering en ‘n verbetering in dienslewering. (Translation of Afrikaans paragraphs follows.)

[Dr G W KOORNHOF: Madam Speaker, hon members, this Bill is being considered while the Auditor-General has found, after an audit of five provinces during 1999-2000, that there are provinces which have not collected all their existing revenue. Concrete examples are mentioned in the report. Unless provinces eradicate these weaknesses and improve financial management systems, the application to levy a new provincial tax is not going to be cost-effective.

Our reservation about the Bill is that it should not increase the total burden of the South African taxpayer. At the same time, the tax system should not become more complicated. Furthermore, the administrative burden on companies should not be allowed to increase, with specific reference to small businesses.

It is estimated that the national Government’s tax revenue already constitutes nearly 25% of the gross domestic product, which is high in comparison with Japan’s 19% and the USA’s 21%. In the implementation of this Bill central Government will thus have to maintain a delicate balance. On the one hand, the tax revenue relationship to GDP cannot be allowed to increase. Any new provincial tax must therefore first be considered very carefully. On the other hand, there is a commitment to the devolution of power, including power with regard to taxation, to provinces and local authorities. Naturally this devolution of power will be associated with better government and an improvement in service delivery.]

The introduction of new taxes must go hand in hand with improved service delivery. We hope that provinces will get their act together, administratively and financially, before they propose a new tax. Each provincial tax structure should also take account of the revenue assigned to the local government sphere, as was recommended by the Financial and Fiscal Commission.

The UDM will not oppose a constitutional provision that allows an Act of Parliament to regulate powers of provinces and to regulate the process, and also gives practical effect to one of the most important chapters in our Constitution, namely that of co-operative governance.

We now need common sense and cool heads in all spheres of government to implement this Bill in a responsible manner. We will support the Bill.

Miss S RAJBALLY: Madam Speaker, the MF notes the authority that the Constitution of the Republic gives provincial legislatures, in section 228(1)(a), that it may impose taxes, levies and duties other than income tax, value-added tax, rates on property or custom duties. The MF respects the authority that the Constitution places in the hands of provincial legislatures.

However, the MF agrees that, to ensure the proper utilisation and efficiency of this power, a system of regulation is needed. This will also allow for transparency and a system of checks and balances. The MF acknowledges the regulation and procedures the Bill stipulates in respect of provincial legislation concerning the power to impose tax on certain sectors. The MF realises the pressure involved in imposing taxes and feels that the period of application, working through the Minister, and the clarification and control that the Bill inculcates, are in order. These provisions should not be seen as a curtailing of provincial legislative powers, but rather as a regulatory system ensuring correct implementation.

The MF supports the Provincial Tax Regulation Process Bill.

Mr C AUCAMP: Madam Speaker, the underlying principle of this Bill is that of co-operative government. The Constitution gives us the framework for co- operative government. This Bill regulates the intergovernmental process to be followed by provinces in the exercise of their power, in terms of section 228 of the Constitution, to impose taxes and certain charges.

In ‘n sekere sin is hierdie wetsontwerp bloot ‘n konkretisering van wat reeds in die Grondwet staan. Persoonlik kon ek nie juis iets vind wat nie in beginsel reeds in die Grondwet vervat is nie. Daar kan besware wees teen oorregulering, dat daar te veel beslommernis kan inkom, en ook oor die lang tydsverloop vir ‘n provinsie om dan so ‘n bepaalde belasting deurgevoer te kry. Aan die ander kant moet dit verwelkom word dat as ‘n bepaalde belasting een maal goedgekeur is, dit dan ook vir ander provinsies moontlik sal wees. Met ander woorde, as hulle in die Noordelike Provinsie hondebelasting ingestel het, kan die Wes-Kaap dit ook doen. So behoort dit die saak te steun.

Die AEB steun die beginsel van federalisme, die afwenteling van gesag, ook van die bevoegdheid van provinsies om belasting te hef, maar ons kan ook nie dat provinsies nou lukraak belastings hef, tensy ons nie die totale belastingopset hersien nie, ook dié van die sentrale Regering. Binne die huidige sentrale belastingraamwerk glo ons dat hierdie wetgewing voldoende is, en sal ons hierdie wetsontwerp steun. (Translation of Afrikaans paragraphs follows.)

[In a certain sense this Bill is simply putting into concrete terms what is already contained in the Constitution. I personally could not find anything that is not already in principle included in the Constitution. There may be objections to overregulation, there being too much red tape, and then also to the long period of time involved in provinces passing such a tax. On the other hand it must be welcomed that once a tax has been approved, it would also be possible to introduce the same tax in other provinces. In other words, if they introduced dog tax in the Northern Province, the Western Cape could do the same. The matter should therefore receive support in this fashion.

The AEB supports the principle of federalism, the devolution of power, as well as the authority of provinces to levy taxes, but we cannot have a province introducing taxes willy-nilly without reviewing the entire tax dispensation, including that of central Government. Within the present central tax framework we believe that this legislation is adequate, and we shall support this legislation.]

Mr B A MNGUNI: Madam Speaker, it is a constitutional right of provinces to impose taxes in order to generate revenue. This is enshrined in section 228(2)(b) of the Constitution. However, provinces have to exercise this right within guidelines as determined by Parliament. An ordinary person on the ground might think that we are now moving into a federal state. We are not. South Africa is still a unitary state. It is only that we are abiding by the Constitution, as required, and are giving some powers to the provinces, also to promote the principle of co-operative governance.

Clauses 2(b) and 3(1) of this Bill promote co-operative governance. The Minister has already alluded to that. The hon member Barbara Hogan, who is the chairperson of the Portfolio Committee on Finance, has already said a lot on co-operative governance. During negotiations most parties argued that provinces needed more powers. And we are providing that now. According to the Constitution provinces are getting some of these powers.

I will try to limit my criticism as this is my maiden speech. However, as individuals, hon members may raise a concern that since we are giving provinces powers to impose taxes, what about the tax burden on individuals, or investors for that matter? I think the Bill adequately addresses that situation. In accordance with section 44(4) of the Constitution, the principle of co-operative governance set out in Chapter 3 of the Constitution does address those issues - that no province can impose taxes that will interfere with the economy of other provinces or with the economy of the country at large.

I do believe and trust that we have capable and responsible leaders who will ensure that whatever taxes are imposed at provincial level will not at any stage upset our macroeconomic fundamentals. As explained by my colleague, hon member Hogan, the processes of this regulatory Bill clearly state that the Minister may consult any other organ of state or interested persons, including the Budget Council. So, I do not foresee any problem where provinces impose taxes, or run their finances in such manner that they render the provinces financially ungovernable.

I would like to disagree with hon member Ken Andrew that the Bill is taking away powers of provinces to impose taxes, as the Minister has 90 days after the responsible MEC has presented his his proposal to consider the Bill to ensure that it is constitutional and to ensure that the Bill or the Minister does not usurp the powers of the provinces. That is why there are 90 days after the MEC has made a presentation to the Budget Council for the Minister to consider that.

As I come from a province, and being a former chairperson of a finance committee, I know ANC provinces are running their finances properly. [Interjections.] I have every faith in the MECs that they will continue doing so. I do believe that this debate needs to go down to the provinces and be robustly debated in the NCOP, because it is provinces themselves that are going to be imposing these taxes. [Applause.]

The MINISTER OF FINANCE: Madam Speaker, may I take the opportunity to congratulate the hon Aaron Mnguni on his maiden speech. He is a wonderful addition to the House.

Let me express appreciation to all the parties supporting this Bill. I think the hon Koornhof has summed up the spirit. Common sense and cool heads are what brought us to this point. We understand that the Bill, because it deals with the powers of provinces, will have to be routed through the NCOP in what clearly is going to be a fairly long process. But I think in that process we must look towards this Bill being further enriched. I accept the spirit that we legislate for the worst conditions.

However, I would just like to deal with some of the issues that some of the members have raised. Firstly, the hon Andrew raised the issue of process. I would, in the spirit of taking responsibility, apologise. It was not something over which we had complete control. We are very appreciative of the workload of the Portfolio Committee on Finance. This was pushed to the front of the queue to accommodate a cycle that we did not entirely control. I thank the committee for having dealt with what was clearly an imperfect process and for the spirit in which it did so.

The hon Andrew said we must consider the pros and cons of different taxes through learning. However, we came to this point through learning. Part of what we have learnt is reflected in the Constitution in the way in which we tried to put together a very divided past. One should talk to people who have lived in Soshanguve for a long time. Because the taxes across the road, in Mabopane, were different, people shopped in Mabopane. Or people who lived in King William’s Town could utilise similar opportunities in Bisho. We must avoid that kind of artificial distinction between our people. Part of what we try to capture, as is certainly reflected in the way in which the Constitutional Court certified the Constitution, is to move from that divided past to something that allows Parliament to regulate, by way of legislation, going forward.

In respect of the responsibilities of the Minister to determine what is constitutional, I think we must start from the premise that, as members of the executive, we take an oath of office that requires of us to obey, respect and uphold the Constitution and all other laws of the Republic. In so doing, I think we must be permitted then to exercise judgment on what is constitutional and what is not. We are not taking the responsibility away from provinces. We are creating a loop whereby, having considered these issues, we then talk to the provinces. If there are irreconcilable differences we will then refer the matter to the Constitutional Court. But I would like to believe that this is entirely within the spirit and letter of the Constitution.

In respect of the point the member raised about our being intrusive, again, the premise of the Constitution is not that we are a federation. The premise is abundantly clear and the powers that the Constitutional Court gave us in certifying the Constitution are such that they circumscribe the powers of provinces and they ask of national Government to ensure the coherence of the tax system. That power is one we need to understand because it was carefully crafted in the process of certification.

In respect of the issue of time - clearly nobody would want to uphold a request by a province, correctly put, unreasonably - we have created in this legislation the responsibility to go back to the Budget Council with progress reports on how we are applying our minds to the situation. So it is not meant to take anything away from the provinces. I want to assure the hon Andrew that all the issues that he has raised were carefully considered and have been crafted into the legislation. But, perhaps more importantly, I am quite amused by the fact that the hon Rabie arrived at the same answer along a very different route. He says that we have to guard against the provinces unilaterally imposing taxes and levies. He is correct about that. That is in fact what the hon Andrew is saying we must allow for. There is complete contradiction in that. I can understand why theirs is known as the ``Dooie Alliansie’’. But speaking on behalf of the New NP and coming at the issue in the way that he does, I think I take seriously the issues that were raised. The Constitutional Court had advised that we should guard against the unilateral imposition and construction of a fiscal Tower of Babel. This is what we have tried to do. We will bring the additional legislation back to Parliament. It is a complex process but it does place us in a position where we live out the spirit of section 228(2)(b), close up that the way in which the powers would be regulated would be through Acts of Parliament.

It does impose a further load on the Portfolio Committee on Finance, but we trust that they will take it in exactly the same spirit and one that requires us to live out the Constitution to uphold both the letter and the spirit thereof. I thank all members, and especially the members of the Portfolio Committee on Finance for the diligence in dealing with this Bill and ask that we be allowed to send it on to the NCOP. [Applause.]

Debate concluded.

Amendments to the Bill, as contained in the report (see Announcements, Tablings and Committee Reports, p 984) put, namely:

CLAUSE 3

     1. On page 3, in line 59, after "reservations" to insert:


          , the Minister must deal with the proposed provincial tax in
          terms of subsection (6), and if it does not


          CLAUSE 4


     1. On page 4, in line 5, to omit "3(7)" and to substitute "3(6)".

Amendments agreed to.

Bill, as amended [B 51B - 2001 and B 51C - 2001], read a second time (Democratic Party and New National Party dissenting).

                  COUNTERFEIT GOODS AMENDMENT BILL

                   TRADE PRACTICES AMENDMENT BILL

                       (Second Reading debate)

The MINISTER OF TRADE AND INDUSTRY: Madam Speaker, colleagues in the House, the amendments to these Acts are in essence technical, but they are necessary in order that we may have a more effective body of legislation to deal with counterfeit goods and the practice of ambush marketing.

The first amendment to the Counterfeit Goods Act deals with the need to update our Act to accommodate prohibited marks, unregistered trademarks and well known marks. Within the system of intellectual property there are allowances for unregistered trademarks and well-known marks. Each national jurisdiction has to establish how well-known marks are recognised. There are various criteria set out by the World Intellectual Property Organisation and the first amendments of this Act are designed to allow us to seize products that violate these provisions for unregistered trademarks and well-known marks. In addition, we have made an adjustment to the Act to remove some lack of clarity as to the compatibility of this Act with the Constitution as a whole and other Acts in the criminal justice system. The amendment to the Trade Practice Bill is to deal with ambush marketing.

This is a problem that emerges particularly in regard to sponsorships, and one of the reasons we have addressed this now is the upcoming World Cricket Cup. Many of the sponsors wanted to know whether we would be able to deal with ambush marketing. Ambush marketing is the use of a major occasion to advertise one’s products without making any contribution to the sponsorship of that occasion. I would suggest that these amendments are in essence technical, although not unimportant, and I would urge the House to support them.

Mrs B N SONO: Madam Speaker and hon members, the object of the Bill is to bring the Counterfeit Goods Act of 1997 into line with the provisions of Chapter 3 of the trade-related aspects on intellectual property rights agreement.

A number of international conventions, treaties and multinational agreements currently affect a large number of sectors in the economy. For example, the mining sector, the textile and wine industries, and even the gender sector, etc.

The DP regards the Counterfeit Goods Amendment Bill as the Trade and Industry ministry’s response to micro managing the dynamics of globalisation. Accelerated structural reforms have, therefore, become a necessity in positioning the country’s strategically. Therefore, the DP will support this Bill.

Relating to the Trade Practices Amendment Bill, the DP has no objections to its aims and objectives, and therefore we will support it as well. Hopefully the Bill will assist in bringing to an end certain practice known as ambush marketing, but we question the ability and capacity of the law enforcement agencies to bring these offenders to book in the light of the already high level of serious crime incidents in the country.

The amendment to section 19 of the Act, which is aimed at increasing the penalties for contravention for failing to comply with the provisions of the Act, in the DP’s view, will not necessarily singly act as a deterrent.

We should note that capacity is a real problem, and the DP believes that certain policies which have a direct bearing on service delivery need to be reviewed, and we would be happy to make inputs into such a process. [Applause.]

The SPEAKER: Order! There are far too many private meetings going on and there is a lot of noise. Kindly conduct your private business outside the Chamber.

Dr R H DAVIES: Madam Speaker, I noticed that the absence of the hon Mr Bruce this afternoon has raised the tone of the debate. [Laughter.]

We are dealing here with two pieces of intellectual property legislation. The Minister has explained their major purposes. Both these Bills, and particularly the Counterfeit Goods Amendment Bill, underwent considerable scrutiny in the committee, which explains the rather lengthy time between their initial tabling and their presentation today before the House.

With respect to the Counterfeit Goods Amendment Bill, the committee had no problem at all with the principle of extending the provision of the Counterfeit Goods Act to cover fraudulent and misleading trade in counterfeit of goods bearing well-known international marks. This is not only because we have international obligations but, more importantly, because committee members are concerned about protecting members of the South African public against being misled into thinking that they are buying some international brand of product, when in actual fact they are being presented with a counterfeit.

I think that the committee also clearly recognised that trading in counterfeit foreign goods can displace local jobs. The problem which we had in the committee was a rather technical one. We were a bit concerned about whether the formulation in the Bill could lead to a situation in which legitimate South African businesses, using the mark which some foreign concerns cloned as a well-known international mark, could find themselves inadvertently, and contrary to the spirit of the Bill, vulnerable to action under the Counterfeit Goods Act.

After much consultation and discussion with the legal people we were finally persuaded that this would not happen. The definition of well-known international marks is subject to the provisions of section 35 of the Trade Marks Act and subordinate to the processes which are laid out in that Act for recognition of well-known marks.

This amending Bill will, therefore, close an important loophole in the Counterfeit Goods Act. Big, small and medium businesses in this country need to know that henceforth trade in counterfeit foreign goods will be outside of the framework of the law. We recognise that this will have an impact on some small businesses and other businesses that have up to now been conducting themselves on this basis.

Last week our committee hosted a presentation of the Proudly South African Campaign. And I would suggest that the Proudly South African Campaign, which I hope we will have an opportunity to discuss at greater length in this House, does offer an alternative way forward to some of those who may, up to now, have seen their future as a line in trade in counterfeit foreign goods.

The Trade Practices Amendment Bill, as the Minister indicated, will ban ambush marketing. It addresses the lacuna in our law that has been of some concern to sponsors of major events and should successfully strengthen our ability to negotiate the hosting of major sporting and other occasions.

The committee, again, discovered that this particular law may once again restrict some existing practices of some businesses that are operating on the margins of some events. However, we received assurances that all major events that are hosted in South Africa would include provision for small and medium businesses to find a place in the production of materials and the provision of services for such events.

Once again, therefore, we are perhaps adversely affecting the current operations and some businesses will open up, we hope, more sustainable and viable opportunities in other directions.

The ANC will, therefore, be supporting the passage of these Bills. [Applause.]

The SPEAKER: Order! Hon members, I have appealed to you not to conduct meetings. You are paying no attention. I am appealing to the Whips to please keep their members in order. Mr H J BEKKER: Madam Speaker, the Counterfeit Goods Amendment Bill should be supported as it aims to bring the Counterfeit Goods Act of 1997 into line with the Tripps agreement, to which South Africa is a signatory.

By extending the definition of intellectual property rights to include those trademarks that have protection under the Paris Convention mentioned in the Trade Marks Act, South Africa will extend protection to goods that are well known and protected under the Paris Convention. Such goods can now be seized and destroyed.

It is vitally important that South Africa extends the same level of protection to trademarks and other intellectual property rights as its main trading partners. This protection is one of the cornerstones of the free market and property rights, and should not be endangered at all. Notwithstanding the extension of protection, it might be worthwhile to address the fate of the seized goods in other legislation. At the moment these goods are destroyed. But a number of calls have been made for these goods to be donated by the state to welfare agencies or for use in emergencies such as during the recent flooding in the Western Cape. Although controversial, such a move should at least be debated, not that we say that it should be supported. But let us have a debate about that particular aspect.

The Trade Practices Amendment Bill should be supported as it will explicitly prohibit marketing activities referred to in trade as ambush marketing. In such cases, unscrupulous marketers piggyback on the legitimate marketers who may have paid large sums of money to secure exclusive coverage of marketing events. Clearly, the practice is illegal, but in the past it was not penalised under the common law. This Bill clearly defines ambush marketing as an offence and sets certain penalties in terms of the Trade Practices Amendment Bill.

Marketing or advertising rights can be regarded as ceded intellectual property rights and should, therefore, enjoy the same level of protection that is afforded to property rights in the Constitution. Both the Counterfeit Goods Amendment Bill and the Trade Practices Amendment Bill are being supported by the IFP. The IFP will support these Bills. [Applause.]

Dr R T RHODA: Madam Speaker, ambush marketing, which is what the amendment to the Trade Practices Act seeks to prevent, infringes on the rights of intellectual property owners. Ambush marketing occurs when a trader seeks to utilise the public value of an event, for instance, a major sports tournament or a concert, to gain benefit from it despite not having any involvement in or connection with that event, or having made any financial contribution to entitle him or her to derive benefit from it.

If event sponsors are not afforded sufficient protection for their significant capital outlay in sponsoring events, events will not receive adequate sponsorship. The consequence of this is that South Africa’s ability to compete for high profile international events, such as the Soccer World Cup, the Olympic Games and Cricket World Cup 2003, will be adversely affected. The amendment to the Trade Practices Act seeks to address the problem by criminalising ambush marketing, as well as create simple remedies to prevent it.

The worth or value of intellectual property to a country can be illustrated by the fact, for example, that more than 5% of the gross domestic product of the United States of America is generated by the copyright industry, particularly the income flowing from the exploitation of copyright of protected works. This contribution to the United States’ GDP is greater than the contribution of agriculture. It is thus little wonder that the United States of America places such a high priority on foreign countries affording proper protection to American intellectual property.

Only recently the United States stood on the verge of a trade war with communist China, which would have entailed an American boycott of trade with China on account of the failure by China to give proper protection to American copyright works. The Chinese government, backing down and taking appropriate steps, averted this trade war and gave appropriate assurances to the United States of America that future American copyright works would be properly protected.

On a very much smaller scale, South Africa now finds itself in the same position as China. Overseas governments have decided that South Africa is currently affording inadequate protection to famous trade marks. A situation has arisen that local South African businesses have appropriated famous trade marks and have, thereby, precluded overseas companies using those trade marks from entering into the South African market and doing business here. The situation has led to South Africa being placed on the so- called section 301 ``watch list’’ operated under the United States’ Trade Act.

In the event that South Africa is not perceived by the United States as granting improved protection for famous American trade marks in future, this country could, in due course, find itself in a similar position to China and at the receiving end of American trade reprisals. These international developments underline the considerable importance of intellectual property and the value attached to it in the modern world. South Africa, as a country which wishes to attract foreign investment, should be at pains to ensure at all times that its intellectual property laws create a receptive environment for foreign investment in South Africa.

It is a simple fact of life that foreign creators of intellectual property are not willing to utilise their intellectual property in a country unless they are satisfied that such property will enjoy satisfactory protection. South Africa’s future as a country could depend, to a significant degree, on the extent to which it gives proper protection to intellectual property rights.

Mr C T FROLICK: Madam Speaker and hon members, the Counterfeit Goods Act of 1997 defined intellectual property as contained in the Trade Marks Act of 1993, which also introduced the concept of well-known and famous marks. When section 1 of the Counter Goods Act of 1997 was enacted, it did not contemplate the inclusion of a well-known or famous trademark. Section 35 of the Trade Marks Act of 1993, on the other hand, recognises a well-known mark.

The Counterfeit Goods Amendment Bill intends to broaden the definition of intellectual property to include well-known and famous marks. The proposed amendment before us will thus afford rights to local proprietors of rapidly growing trade marks in South Africa, and will also afford protection to proprietors who have used their trade marks abroad, but have not yet registered them in our country.

The purpose of introducing the amendments contained in the Trade Practices Amendment Bill is to widen the scope of the application of section 9 of the Act, in which marketing was previously not viewed as a crime. This resulted in no corrective action being taken.

The high costs associated with hosting or staging major public events and the sponsors’ right to gain publicity by aligning themselves with these events need sufficient protection. Insufficient protection of sponsors’ rights would result in events not receiving adequate sponsorship. The consequences could be that South Africa’s ability to compete for high- profile international events could well be compromised.

The UDM supports the amending Bills.

Mrs C DUDLEY: Madam Speaker and hon members, the ACDP is firmly of the opinion that people own their intellectual property and we believe these rights should be protected.

Biblical laws speak very clearly about property. First of all, it declares that all property belongs to God, which includes the earth itself and all creation.

Secondly, God established man in the possession of property under God, as a basic aspect of the life of the family and as an essential of the economy of the family.

Thirdly, God made property man’s basic earthly security. Every attack on private property is therefore an attack on man’s liberty, and theft of any form of property is not to be tolerated.

We also believe that we should honour our agreements, and for these reasons, the ACDP will vote in favour of these Bills.

Dr S E M PHEKO: Madam Speaker, the PAC supports the Counterfeit Goods Amendment Bill, which is to amend the Counterfeit Goods Act of 1997, so as to redefine intellectual property rights.

Legislation concerning intellectual property is concerned with the legal rights associated with creative efforts, commercial reputation or goodwill. This law deters others from copying the work of another and provides remedies should this happen. It protects the rights of the originators to exploit the benefits of their creations. There are several areas and given rights that, together, make up intellectual property. These are copyright, patents, registered designs, trade marks, the law of confidence, rights of performance, design rights, trade libel and passing off.

Intellectual property law is a new discipline, especially in Africa. That is why there have been such massive copyright infringements of African manuscripts, music, patents and inventions in Africa. For instance, products such as aloe, well known and used by many African societies, have now been patented by foreigners and are being sold back to African people at exorbitant prices, and the thieves now enjoy the monopoly of a lot of intellectual property, illegitimately so.

This Bill is timely. If the subject matter is a piece of music, the owner of the copyright has the exclusive right to make copies of the music. The related duty is a duty owned by all others not to infringe the right of the originators of intellectual property.

African musicians in this country have died paupers because their intellectual property rights were violated. The PAC believes that this Bill, when it becomes law, will protect many intellectual property rights which in this country were not sufficiently protected. The PAC will vote for this Bill.

Miss S RAJBALLY: Madam Speaker, the MF sees the structure that the department is giving by broadening the definition of intellectual property to include well-known and famous marks. The MF disapproves of the ambiguity and unleashed power inspectors were given to act without warrant. The MF hereby respects the order the amendments incorporate by clarifying the need for a warrant and responsibility on the part of inspectors.

Unfortunately, the earlier Bill caused a bit of confusion regarding civil and criminal proceedings, and the terms related to the Act. Note that the amendment has corrected this by clarifying that civil and criminal proceedings can be brought against people in terms of this Bill. The MF also notes as in order the provision that the Bill has made to allow attorneys, who have authority to appear in the High Court, to appeal before Commissioners of patents courts.

The previous trade practices Bill instituted a control mechanism to prevent harmful trade practices from being conducted. However, it is also noted that though this Act was in place and correctly instituted, its definition of harmful practices was narrow. The MF commends the department on its amendment to this Act, having now inculcated a broader scope to harmful trade practices, namely, ``ambush marketing’’.

The MF finds all unjust and parasitic trade practices unfair and intolerable. Many events are held to assist shortages and needs in order to attend to escalating problems such as health, poverty, disaster, and to assist charities.

Finding sponsors for such events is not easy and those who do sponsor are merited for their contributions. The leeching of enterprises unrelated to the event in gaining publicity is intolerable, and MF applauds the department in noting this offence and marking it as unlawful.

The MF supports the Counterfeit Goods Amendment Bill and the Trade Practices Amendment Bill.

Ms C C SEPTEMBER: Madam Speaker, broad agreement exists on the need for expansion of our domestic markets, together with giving effect to these strategies, giving effect so as to utilise our productive resources, our employment opportunities and ending illegal trade practices.

The Counterfeit Goods Amendment Bill, which seeks to bring South Africa into line with trade-related aspects on intellectual rights agreements, also brings certainty in respect of where property rights are being stolen. More importantly, it goes further and gives certainty, at least to an inspector, when issuing a warrant where transgression of the law seeks to occur.

As the `Proudly South African’ campaign is being launched in two weeks’ time, this Bill comes at an opportune time to help avoid any embarrassing moments in the campaign on trademarks, brand marks and ownership of such. As the campaign unfolds, we must be alive to the fact that in terms of the issue of label of origin, indigenous trademarks would want to find solutions. Acting against counterfeit goods ends the illegal operations of rogue companies and places more demand on one’s domestic markets.

These amending Bills force us to follow good trade practices and therefore, we as the ANC would want to offer an important component of consumer awareness to our people, particularly those who are new to economic activity, our constituency offices to roll out this mass training against illegal trade practices, counterfeit goods, the stealing of property rights, etc, and the public campaign of ``Proudly South African’’ must include informing South Africa that one cannot, on the one hand, want to be proudly South African, but, on the other, do so through illegal means of trading.

A further appeal would be to include the members of Parliament in the kind of training that has already started through customs and excise on brand names, labels, etc. It is so that, as public representatives, we seek to end illegal trade practices. We do not necessarily have to be concerned about whether the police and all these people would be able to cope, and that we would have to take the responsibility for taking that on our shoulders.

I was told that in the days of Jan Smuts, he apparently introduced a requirement that when goods left South Africa they carried a label. I would want hon members to investigate whether such a law exists, because it will prevent us from reinventing the wheel. The ANC would support the Bills. [Applause.]

The MINISTER OF TRADE AND INDUSTRY: Madam Speaker, thanks to all parties and members in the House who have supported the amendments. I just want to comment very briefly. Firstly, the hon member Sono raised the question of capacity and ambush marketing. I think we can give some comfort here in that, with regard to ambush marketing, it is those who are transgressed against who would really take the action. I think most instances are relatively easy to investigate.

With regard to some of the points raised by both hon member Rob Davies and the PAC, I think that good practice in trademarks and intellectual property is to the benefit of all. We are, as South Africa, beginning to take an increasingly prominent role and leadership role in trying to define intellectual property rights for intellectual knowledge and for many of our natural products in Africa. And I think we cannot ask that our rights are protected elsewhere if we do not protect those rights here in South Africa. I therefore think the integrity of this policy is solid and sound.

Let me briefly also deal with the hon Hennie Bekker’s proposal about donating seized goods. We have used seized goods in certain cases, particularly in emergencies, and very recently we did that again. But I would be very reluctant about a blanket proposal of this type, because, quite frankly, one of our biggest problems by far is that donations can re- enter the market. I think unless we can be absolutely assured that there is strict control over products, we will not be prepared to release these products.

I would like to take issue very quickly with hon member Rhoda. I think it is entirely inaccurate to suggest that South Africa does not have adequate protection and we have objected very strongly to any indication by the US that we had gone 301 in respect of these issues. I think that would be unacceptable to us in the extreme. Our courts, in addition, have shown that they are capable of administering this matter. The famous McDonalds case is a case in point. We would therefore resist very strongly indeed any attempt to place us on 301. The principle of 301 in any event is something South Africa strenuously objects to. One cannot have unilateral action in a multilateral trading system.

Let me say that we would welcome any request for members of Parliament to receive training on this matter. I will deal with this more fully tomorrow. I think we have had a very successful series of seminars across the country, dealing with this whole issue of counterfeit goods and illegal importation of those goods, and I am sure MPs will be a very important component of that, if they so wish. I thank members for their support. [Applause.]

Debate concluded.

                INDUSTRIAL DEVELOPMENT AMENDMENT BILL

                       (Second Reading debate)

The MINISTER OF TRADE AND INDUSTRY: Madam Speaker, it is clearly a day for economic legislation. This amendment to the Act relating to the Industrial Development Corporation is designed to update the Act to deal with some of the realities of the present day for the IDC. The Act is a relatively old one, first passed in 1940, and certainly since then very important changes have taken place in the IDC, since 1994 in particular. We will be considering other amendments over time, to modernise this Act and bring it into line with the practices of the IDC.

I think the IDC is a structure that we are very proud of. I think it certainly ranks as one of the premier development corporations in the world today. And in South Africa’s economic investment processes it plays a very important role, as it does in promoting modern and efficient export processes in South Africa.

There are four main areas that we are amending in the proposed Bill. Firstly, the Bill seeks to adjust some of the objectives of the IDC to take into account practices in which it has become very important. These are in the areas of new aspects of the economy, particularly knowledge-intensive aspects, tourism and general development activities related to these, involvement in the spatial development initiatives and IDCs and, increasingly, to provide venture capital for small and medium enterprises.

We have also widened the definition to specifically make mention of co- operatives, and to allow it to invest more broadly in Southern Africa and Africa. I think this is an important new dimension for the IDC. What we find in practice is that the IDC plays an important role in major investment projects, certainly in SADC and increasingly in Africa as a whole. In many respects it is possibly Africa’s premier development corporation, and we should allow it to play a role in assisting other economies in Africa. And in the context of the MAP programme, I think this is very important.

Other amendments made to the Bill are mainly of a technical nature, relating to the powers of the managing director and to modernising the Act by removing a single reference to gender as always being ``he’’. We would urge support for these amendments. They allow the IDC to play the role that it is playing very successfully in the economy.

And, as I have indicated to the committee, in the very thorough consideration of this matter, we accept the proposition that the Act is an old one and will need to be updated. We will begin that process and are already in the process of making further amendments for discussion during the next session of Parliament. [Applause.]

Mrs B N SONO: Madam Speaker, hon Members, the biggest challenge confronting South Africa remains that of reconstruction and development. The narrow but intense focus of the Government since the demise of apartheid has been the implementation of state-determined transformation policies. A great deal of attention has been devoted to policy implementation, re-engineering of state machinery and simply taking over the reign of Government.

The reconstruction and development policy provides the framework for the restructuring of the industrial landscape of the country to achieve the vision and goals of transformation, reconstruction and developmental needs of our society. The area of anticipated concern to the DP relates to the issue of systems, that is right policies that lead to poor outcomes. Understandably, to be credible the Government’s policy cannot change willy- nilly.

This Bill endeavours to focus and extend the scope of the activities of the IDC, in line with the trade and industrial policy of the Government, with special reference to the promotion of entrepreneurial activities of the IDC in the area of small and medium enterprises. The Bill also proposes that the IDC be explicitly empowered to promote the economic empowerment of the historically disadvantaged.

One of the original objectives of the IDC, which has been successfully accomplished, was to encourage investment in large industrial projects. The danger is that if there is any movement away from that objective, especially if this involves high-risk small businesses, it could undermine confidence in the IDC’s debt holding abroad and thus frustrate any further investment in large industrial projects.

This deep apprehension must be seen against the fact that there are other institutions that would be more appropriate to empower the SMMEs, such as the Development Bank of South Africa. The resuscitation of South Africa’s industrial base should drive the focus of the Government’s agenda.

The Government needs to outline an expanded role in labour-intensive public projects to achieve the targeted economic growth of 6%. There is a dire need to develop sufficient industrial capacity to sustain the new envisaged objectives of the IDC. To use the words of the Finance Minister, Trevor Manuel: A new interface is needed between those who have the needs and those who manage the money. At least then there would be clear justification for policy shifts when they are made and credibility would be maintained.

Nowhere in the world does government itself successfully finance a high- risk project where there is little or no track record of success. This fact is well known to foreign investors who provide the bulk of the IDC’s finance.

The IDC’s reputation in internation capital markets is very high and it is one of the few advantages that this country has. The official Opposition is of the view that the Trade and Industry committee has not had any justification for adjusting the objectives of the IDC.

Until the matter has been aired substantially and there has been an opportunity for interested parties to air their views, the official Opposition will maintain the concern articulated earlier. Even the Minister has articulated here that this is still in the amending stage. Until the Portfolio Committee on Trade and Industry has been exposed to this, the official Opposition will retain its position.

Dr R H DAVIES: Chairperson, the Industrial Development Corporation has quite a critical role to play in promoting industrial development both in this country and in the Southern African region, as well as on the broader African continent. It is in fact the fourth largest South African public corporation measured in terms of assets and the fifth largest in terms of net income. With assets worth some R17,4 billion it ranks 29th in the South African giant league.

The IDC’s core strategy includes, and I quote: ``identifying and supporting opportunities not yet addressed by the market’’. Pursuing this objective of playing a role in leading industrial development, the IDC in the past has often played a strategic vanguard role in ensuring that major development projects get off the ground, both in this country and elsewhere in the region.

The legislation and the mandate under which this corporation operates is thus of critical importance. As the hon the Minister indicated just now, the IDC operates under an Act which was passed in 1940, when Jan Smuts was the prime minister of this country, and, if I am not mistaken, Jan Hofmeyr was the minister of economic affairs. This Act has been amended a number of times since then and the corporation also operates under a mandate which was given to it after 1994.

The present amending Bill, as the Minister indicated, has a limited number of objectives. One of these, which in my view is one of the most important, is to give the IDC the statutory right to operate beyond the borders of South Africa in the Southern African region and on the broader African continent as a whole. The corporation is already involved in some 30 projects in nine SADC member countries. These include an aluminium smelter plant, mining, agriculture, manufacturing projects and tourism, but it has had to secure authorisation for this on a case-by-case basis from the Cabinet.

The present Bill will liberate the IDC from this constraint and enable it to make its contribution to regional integration and the realisation of the goals of the MAP. This aspect of the Bill has secured broad support and no controversy whatsoever in the committee. The second objective is to raise the corporation’s gearing ratio from the current 75% of its share capital to the still prudent 100% of its share capital and reserves. At the committee stage we had to ensure that there was agreement and concurrence from the national Treasury and this took some time to process, but finally that aspect now appears to command broad support.

The Bill also makes a number of other amendments, including extending the definition of its activity beyond manufacturing, narrowly conceived, and also making a number of other incidental amendments to the corporation’s objectives. During the course of our processing the Bill, we were approached by Cosatu, which urged us to approve some further amendments to the amending Bill, and also to make some other amendments to the principal Act itself which we did not envisage in the amending Bill. I am pleased to say that we were able to accommodate some of the proposals made by Cosatu. This included a clause defining one of the IDC’s objectives as being to foster the development of co-operatives as well as small, medium and micro enterprises.

The IDC in fact offers some of the best terms and conditions to qualifying small businesses. I believe it is significant that within this ambit we will now form co-operatives in our country. With regard to some of the other proposals in the Cosatu submission, the committee felt that these raised a number of broader strategic issues that would have required careful consideration and further input from other stakeholders. Several proposals made regarding co-operative governance would probably have commanded broad support in principle, but raised questions as to whether they should be included in the principal Act and mandate or were in fact covered by the Public Finance Management Act.

Other proposals would have required us to do what the hon Sono has suggested, which would have been to go through much more detailed discussions and negotiations with other stakeholders. The committee was not in principle averse to pursuing such a task, but felt that it was not warranted to hold up the present amending Bill pending the completion of such a process. This is particularly the case if we bear in mind that this is in fact being tagged as a section 76 Bill, which would probably have meant that it would not have been completed before the end of the year.

Instead, we recommended that the Ministry and the department initiate a process of relooking at the principal Act, which, as I said, was passed in 1940 and contains a number of obsolete provisions, but I am very pleased that we heard from the Minister just now that the department and the Ministry will indeed follow up such a process.

With these few remarks, I take pleasure in indicating that the ANC will be supporting the Bill. [Applause.]

Mr H J BEKKER: Mr Chairperson, the Cabinet has recently extended the mandate of the Industrial Development Corporation to expand its operations into Africa in line with the finalisation of the SADC trade protocol. There is, therefore, a need to amend the Industrial Development Act in order to enable the IDC to legitimately carry out its extended mandate.

The fact that the Bill proposes to change the IDC’s objective to include the economic development of Southern Africa and Africa should be supported, as it will provide the Government with a vehicle to play a more active developmental role in the region and on the continent. This should be used to ensure that South Africa’s participation in the New Africa Initiative goes beyond lip service and that it extends to concrete development projects.

The Industrial Development Corporation’s objectives will now also include the empowerment of historically disadvantaged communities and persons through its investments. This will be important, especially as underfinanced empowerment companies will be able to enter capital-intensive industries such as manufacturing, mining and telecommunications.

The fact that the chairperson of the IDC will now be a nonexecutive director, and that he or she will not be allowed to be the managing director, should also be supported, as this practice is in line with the King report on corporate governance.

The IFP supports the legislation.

Dr R T RHODA: Mr Chairperson, the IDC is a self-financing, state-owned development finance institution. Its primary objectives are to contribute to the generation of, and to create a balance in, sustainable economic growth in Southern Africa, and to further the economic prosperity of all citizens. The main admendment seeks to allow the IDC to extend its activities beyond the borders of the RSA for the benefit of the Southern African region specifically, and the rest of Africa in general. This is to be welcomed.

I am, however, not certain why we need so many other amendments to achieve this. Certainly there is no need to change the main objectives of the IDC. I am sure we will all agree that economic integration is of critical importance to the Southern African Development Community, for it not only carries the politically beneficial element of co-operation between neighbouring countries and a louder voice in global forums, but also, hopefully, numerous potential benefits for the region’s economy.

I believe economic integration will enhance intraregional trade on the back of preferential access to a wider potential export market, and will present numerous opportunities for profitable cross-border investments targeting the individual country’s natural resource endowments and competitive advantages. Furthermore, it should be conducive to efficiency gains, promote the transfer of technology and skills, assist regional players in attaining economies of scale, and, among other things, improve access to information.

Regional integration will, I believe, also enhance the visibility of individual countries as potential markets, as suppliers of goods and services and as global investment destinations. It appears that the IDC has already progressively intensified its involvement in the SADC region, acting as a catalyst for investment in productive capacity, identifying sound investment opportunities, promoting inward investment and, if I am correct, I think we are providing extended credit facilities to SADC buyers of South African capital goods and related services.

With regard to our own home, South Africa, and endeavours to focus on and extend the scope of the activities of the IDC to link with the trade and industry policy of Government, with special reference to the promotion of entrepreneurial activities by the IDC in the area of small and medium enterprises, it is proposed that the IDC be explicitly empowered to promote the economic empowerment of historically disadvantaged communities and persons. In other words, it concerns promoting the development of small enterprises, increasing opportunities for black economic empowerment, reducing inequality and poverty, and facilitating access to sustainable economic activity and empowerment for all in South Africa. These are very fine words, but when our people approach these wonderful institutions for assistance they virtually enter a different world. The DTI empowerment schemes, especially those aimed at small business, are far too complicated to access and understand clearly. The bulk of our historically disadvantaged, highly-skilled workforce are unfortunately not acquainted with the sophisticated business and legal terminology used in most of the DTI documents and applications. We need, I think, a more entrepreneur- friendly Department of Trade and Industry.

We support the Bill.

Mr C T FROLICK: Mr Chairperson and hon members, the purpose of the Bill is to amend the Industrial Development Act and to extend the focus and functions of the IDC beyond the borders of South Africa to include Southern Africa, as agreed to in the SADC protocol.

The Bill also empowers the managing director to delegate certain powers to other structures of the corporation. It repeals certain obsolete gender- insensitive and discriminatory provisions. The Bill further extends the activities of the IDC in line with the trade and industrial policies of Government, with special emphasis on the promotion of small and medium enterprises.

The amendments support the economic empowerment of historically disadvantaged communities and persons. During the public hearing stage of proceedings, organised labour proposed several valid amendments. Although not pertaining to the objectives of this Bill, we are sure that that will form part of the broader discussion in future.

Amongst the amendments proposed, which the UDM supports, were provisions for making employment an explicit objective of the IDC, providing broader support for SMMEs and co-operatives, providing for the extension of differential interest rates, developing a developmental focus and not only a narrow business orientation, broader developmental criteria for the selection of IDC investments and compliance of IDC investment projects with labour legislation. Common agreement was reached within the committee that the activities of the IDC needed to be placed within the broader framework of industrial development policy in Southern Africa. Discussion on a broader industrial development framework for South Africa, set within the bigger economic developmental picture, is something which we must strive for with vigour. The UDM supports the Bill.

Mrs C DUDLEY: Mr Chairperson, an important ethical question we should be asking ourselves is: Should taxpayers’ money be spent outside of South Africa?

Whilst it can be convincingly argued that what is good for the region is good for South Africa, does Government, firstly, have the right to use our limited resources to develop neighbouring countries? South African taxpayers’ money should surely be used only in South Africa. However, project money, on the other hand, raised elsewhere, ie from the IFC or the World Bank or from banks abroad, would be perfectly acceptable.

Secondly, it is important that the IDC does not lose its primary focus. It should continue to do what it does well, and do it in the national interest. Large projects with enormous spin-offs for the region, especially long-term projects with an intergenerational view, are clearly the IDC’s forte. In this regard they have a proven track-record of making things happen which would not normally happen, due to the risk companies take for longer-term projects or the cost of money for such projects.

It is our opinion that the impact the IDC has should not be diffused by drawing their focus to smaller projects for which Khula was established. The stainless steel project in Sasol is an example of where the IDC facilitated enormous spin-offs for beneficiation downstream of the primary industry, without changing its focus.

Lastly, the ACDP is concerned about the reference in the Bill to the rest of Africa generally. I believe this should refer to neighbouring countries or SADC instead, as the danger of casting the net too wide is a reality. Development in the rest of Africa must be secondary to what is done in South Africa and where these projects are undertaken, there must be clearly determined linkages to benefits for South African companies.

In spite of these reservations, the ACDP will vote in favour of this Bill.

Miss S RAJBALLY: Chairperson, the economic empowerment of the historically disadvantaged, communities and persons, and the repeal of absolutely gender- insensitive and discriminatory provisions are all attractive advancements to the MF. The MF hereby commends the department for this. The rapid globalisation and the need for the Republic to make its stance, not only for South Africa, but Africa as a whole, is important and due.

The MF notes that the provisions of this Bill supports this. However, the global market is often as ruthless as it is welcoming, and we have to tread carefully to ensure that our position is taken up efficiently and effectively, and is well built.

The MF notes that such an advancement may not be successful solely because of the larger industries, but with the incorporation and catering for small and medium entrepreneurs, our markets will be set for success. The potential of an entity to perform should not be judged by size. However, through the eagerness and determination for growth and success, and the attainment of prestigious competitors, the global market is attainable.

The MF expresses its support and believes in South Africa’s strength and ability. As a united force represented and established with organisation, procedures and an establishment plan, we may all make our mark with a modicum of success.

The MF supports the Industrial Development Amendment Bill.

Mr S M RASMENI: Chairperson, the vision of the Industrial Development Corporation, as stated in its budget presentation, is to build a leading generation of commercially sustainable industrial development and innovation for the benefit of South Africa and Southern Africa. We see the introduction of the Industrial Development Amendment Bill as an instrument for fulfilling this vision. We, from the ANC, welcome the introduction of this amending Bill and support its passing with amendments.

The Bill seeks to extend the activities of the IDC beyond the borders of South Africa, into Southern Africa and Africa. The Bill endeavours to focus and extend the scope and the activities of the Industrial Development Corporation in line with the trade and industry policy of our Government, with special reference to the promotion of entrepreneurial activities by the IDC in the area of small and medium enterprises. It is proposed that the IDC be explicitly enabled to promote the economic empowerment of historically disadvantaged communities and persons.

To the members of the Portfolio Committee on Trade and Industry and indeed other people, including Cosatu, the Bill provides a golden opportunity to bring into reality the vision of our industrial policy, namely, the empowering of emerging entrepreneurs, supporting manufacturing, tourism development, agro-industries and small-scale mining.

We as the policy-makers note and recognise the importance of the IDC with a loan book of R22 billion and encourage the provision of loans to black entrepreneurs. We support the recent press statements that the group plans to further increase the number and value of financing authorisations to black businesses over the next few years.

When asked to explain funding for previously disadvantaged communities and persons, the IDC told us that they only provided funding from a minimum of R1 million upwards. Our knowledge and experience tell us that the previously disadvantaged communities need funding from the range between R20 000 to R1 million. This is the area where the majority of small businesses and enterprises are concentrated. The majority is in the rural areas. We will be consulting the IDC on this matter.

The majority of loans, understandably, go to the three major cities: Johannesburg in Gauteng, Cape Town in the Western Cape, and Durban in KwaZulu-Natal. But if we are to structurally break from the legacy of the past, then, these trends will need to be changed. We want to see a meaningful role played by the IDC in promoting the empowerment of previously disadvantaged communities in order to realise the sustainable economic activity and employment of all South Africans in particular and Africans in general.

We, as the ANC, support this Bill. [Applause.]

The MINISTER OF TRADE AND INDUSTRY: Mr Chairperson, I would just like to deal with a few matters that have arisen which, I think, should be cleared up. Firstly, the hon Sono seemed to feel that the IDC was entering a new terrain with SMMEs. This is not the case. Our approach that we have taken to the amendment is that, in the legislation, the general objectives of the corporation should be stated. More detailed aspects should be dealt with in the mandate. Accordingly, it was felt that we should clarify that one of the objectives is to deal with SMMEs. However, we should also clarify that the corporation had been dealing with these enterprises for some time. In the last five years, some 369 SMMEs were financed. In year 2000 alone and over the five- year period nearly R4 billion were provided for 1 200 SMMEs, thus creating some 35 000 jobs.

So, our view is that this is not an increased risk for the IDC at all. This is an activity that we are undertaking. The hon Rasmeni pointed out that the limit that we go to is for loans of R1 million. We in the Department of Trade and Industry would strongly argue for that. It is the case that the IDC will not specialise in micro or very small enterprises. It is a specialised financing organisation dealing, in the main, with those activities and enterprises that are in the capital market.

Let me also say that, I think, the IDC, as I indicated in my opening remark, is a premier financing organisation on the African continent and probably one of the top development financing organisations in the world. Accordingly, we have to be conscious of its ability to enter capital markets and the DTI is very vigilant in that respect.

We want the IDC to be able to enter capital markets at very good rates. Accordingly, I think, we must be cognisant of the fact that how we manage the IDC must be within the constraints of the capital markets. But, as a developmental organisation owned by Government, we can extend its mandate into areas that the markets themselves may not go into.

Let me point out to the hon member Rhoda that we had to make these additional amendments. Our purpose is to define the objectives very carefully. Probably one of the most important amendments made to the objectives is to extend the area of financing possibilities to aspects of the economy that are not traditionally or strictly seen as industrial. I think this is just a realisation that the economy is changing, things are changing, and that sectors such as tourism, information technology, logistics and other aspects which would not be classified strictly under the SAIC classifications as industrial, need to be expanded. We needed to make these changes.

Let me say very quickly that the last time the IDC received taxpayers’ money was a long, long time ago. Yes, the hon member is correct, it is a state-owned corporation. It was capitalised with taxpayers’ money. But it is, essentially, a self-financing organisation. In this regard, we think it is entirely valid for it to enter activities in Africa. Bear in mind that Eskom, Transnet and other self-financing corporations enter African terrain, because we have an economy integrated with most of Africa. I therefore think this is a justified position.

I want to stress that the IDC will not replace Khula. Khula is not a direct retail financer. The IDC does not go to very small enterprises, which Khula would be prepared to guarantee. The IDC really exists in the terrain of small and medium enterprises, certainly not micro. It is not competing with Khula in any respect in that regard.

I would like to thank hon members for the support for these amendments. I think they are important, and they bring the IDC into line with the realities and allow it to continue its very critical function in the South African and African economies. [Applause.]

Debate concluded.

Bill read a second time.

The House adjourned at 17:28. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

                      FRIDAY, 14 SEPTEMBER 2001

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    The following Bill was introduced by the Minister of Health in
     the National Assembly on 13 September 2001 and referred to the
     Joint Tagging Mechanism (JTM) for classification in terms of Joint
     Rule 160:


     (i)     Mental Health Care Bill [B 69 - 2001] (National Assembly -
          sec 76) [Explanatory summary of Bill and prior notice of its
          introduction published in Government Gazette No 22598 of 21
          August 2001.]


     The Bill has also been referred to the Portfolio Committee on
     Health of the National Assembly.


     In terms of Joint Rule 154 written views on the classification of
     the Bill may be submitted to the Joint Tagging Mechanism (JTM)
     within three parliamentary working days.


 (2)    The Minister of Trade and Industry submitted the
     Wysigingswetsontwerp op Nagemaakte Goedere [W 27 - 2001]
     (Nasionale Vergadering - art 75) to the Speaker and the
     Chairperson on 14 September 2001. The Counterfeit Goods Amendment
     Bill [B 27 - 2001] (National Assembly - sec 75) was introduced in
     the National Assembly by the Minister on 21 May 2001.


 (3)    The Minister of Trade and Industry submitted the
     Wysigingswetsontwerp op Nywerheid-ontwikkeling [W 32 - 2001]
     (Nasionale Vergadering - art 75) to the Speaker and the
     Chairperson on 14 September 2001. The Industrial Development
     Amendment Bill [B 32 - 2001] (National Assembly - sec 75) was
     introduced in the National Assembly by the Minister on 11 June
     2001.


 (4)    The Minister of Trade and Industry submitted the
     Wysigingswetsontwerp op Handelspraktyke [W 34 - 2001] (Nasionale
     Vergadering - art 75) to the Speaker and the Chairperson on 14
     September 2001. The Trade Practices Amendment Bill [B 34 - 2001]
     (National Assembly - sec 75) was introduced in the National
     Assembly by the Minister on 14 June 2001.

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Minister of Finance:

 (1)    Report and Financial Statements of the South African Reserve
     Bank for 2000-2001.


 (2)    Annual Economic Report of the South African Reserve Bank for
     2001.

1. The Minister of Public Enterprises:

 Report and Financial Statements of the Department of Public Enterprises
 for 2000-2001, including the Report of the Auditor-General on the
 Financial Statements of Vote 23 - Public Enterprises [RP 135-2001].

1. The Minister for Justice and Constitutional Development:

 (1)    Government Notice No R.521 published in the Government Gazette
     No 22360 dated 15 June 2001, Amendment of Schedules 1 and 2 to the
     Drugs and Drug Trafficking Act, 1992, made in terms of section 63
     of the Drugs and Drug Trafficking Act, 1992 (Act No 140 of 1992).


 (2)    Government Notice No R.597 published in the Government Gazette
     No 22435 dated 2 July 2001, Determination under section 170A(4)(a)
     of the Criminal Procedure Act, 1977 (Act No 51 of 1977), of the
     persons or the categories or classes of persons who are competent
     to be appointed as intermediaries.


 (3)    Proclamation No R.117 published in the Government Gazette No
     22530 dated 27 July 2001, Commencement of the Special
     Investigating Unit and Special Tribunals Amendment Act, 2001 (Act
     No 2 of 2001).


 (4)    Proclamation No R.118 published in the Government Gazette No
     22531 dated 31 July 2001, Establishment of the Special
     Investigating Unit, the Appointment of the Head of the Special
     Investigating Unit and the Establishment of the Special Tribunal
     in terms of the Special Investigating Units and Special Tribunals
     Act, 1996 (Act No 74 of 1996).


 (5)    Government Notice No R.646 published in the Government Gazette
     No 22469 dated 20 July 2001, Establishment of branch offices of
     the Office for Witness Protection, made in terms of section 2(2)
     of the Witness Protection Act, 1998 (Act No 112 of 1998).

1. The Minister of Water Affairs and Forestry:

 Report and Financial Statements of the Trans-Caledon Tunnel Authority
 for 2000-2001.

                      MONDAY, 17 SEPTEMBER 2001

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    The Joint Tagging Mechanism (JTM) on 17 September 2001 in terms
     of Joint Rule 160(3), classified the following Bills as section 75
     Bills:


     (i)     Animal Identification Bill [B 49 - 2001] (National
              Assembly - sec 75).


     (ii)    Interception and Monitoring Bill [B 50 - 2001] (National
              Assembly - sec 75).


     (iii)   Financial Advisory and Intermediary Services Bill [B 52 -
              2001] (National Assembly - sec 75).


    (iv)     Births and Deaths Registration Amendment Bill [B 53 - 2001]
              (National Assembly - sec 75).


     (v)     Agricultural Debt Management Bill [B 54 - 2001] (National
              Assembly - sec 75).


     (vi)    Repeal of Volkstaat Council Provisions Bill [B 59 - 2001]
              (National Assembly - sec 75).


     (vii)   Defence Bill [B 60 - 2001] (National Assembly - sec 75).


     (viii)  Higher Education Amendment Bill [B 61 - 2001] (National
              Assembly - sec 75).


     (ix)    Commission for the Promotion and Protection of the Rights
              of Cultural, Religious and Linguistic Communities Bill [B
              62 - 2001] (National Assembly - sec 75).


     (x)     Postal Services Amendment Bill [B 63 - 2001] (National
              Assembly - sec 75).


     (xi)    Telecommunications Amendment Bill [B 65 - 2001] (National
              Assembly - sec 75).


     (xii)   Veterinary and Para-Veterinary Professions Amendment Bill
              [B 66 - 2001] (National Assembly - sec 75).


     (xiii)  Academy of Science of South Africa Bill [B 67 - 2001]
              (National Assembly - sec 75).


 (2)    The Joint Tagging Mechanism (JTM) on 17 September 2001 in terms
     of Joint Rule 160(4), classified the following Bills as section 76
     Bills:


     (i)     Provincial Tax Regulation Bill [B 51 - 2001] (National
              Assembly - sec 76).
     (ii)    Education Laws Amendment Bill [B 55 - 2001] (National
              Council of Provinces - sec 76).


     (iii)   National Health Laboratory Service Amendment Bill [B 56 -
              2001] (National Council of Provinces - sec 76).


     (iv)    General and Further Education and Training Quality
              Assurance Bill [B 57 - 2001] (National Council of
              Provinces - sec 76).


     (v)     Disaster Management Bill [B 58 - 2001] (National Assembly
              - sec 76).


     (vi)    Animal Health Bill [B 64 - 2001] (National Council of
              Provinces - sec 76).

National Assembly:

1. The Speaker:

 The following changes have been made to the membership of Portfolio
 Committees, viz:


 Education:


 Discharged: Benjamin, J.

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Minister of Defence:

 Report and Financial Statements of the Department of Defence for 2000-
 2001, including the Report of the Auditor-General on the Financial
 Statements of Vote 7 - Defence for 2000-2001 [RP 138-2001].

1. The Minister for Agriculture and Land Affairs:

 Report and Financial Statements of the Agricultural Research Council
 for 2000-2001, including the Report of the Auditor-General on the
 Financial Statements for 2000-2001 [RP 136-2001].

1. The Minister of Water Affairs and Forestry:

 (1)    Report and Financial Statements of the Bloem Water Board for
     1999-2000.


 (2)    Report and Financial Statements of the Amatola Water Board for
     1999-2000.

1. The Minister of Minerals and Energy:

 Report and Financial Statements of the National Electricity Regulator
 for 2000-2001, including the Report of the Auditor-General on the
 Financial Statements for 2000-2001 [RP 108-2001].

COMMITTEE REPORTS:

National Assembly:

1. Report of the Portfolio Committee on Finance on the Provincial Tax Regulation Bill [B 51 - 2001] (National Assembly - sec 76), dated 14 September 2001:

   The Portfolio Committee on Finance, having considered the subject of the Provincial Tax Regulation Bill [B 51 - 2001] (National Assembly - sec 76), referred to it and classified by the Joint Tagging Mechanism as a section 76 Bill, reports the Bill with amendments [B 51A - 2001].

2. Report of the Portfolio Committee on Education on the Higher Education Amendment Bill [B 61 - 2001] (National Assembly - sec 75), dated 12 September 2001:

   The Portfolio Committee on Education, having considered the subject of the Higher Education Amendment Bill [B 61 - 2001] (National Assembly - sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Bill with amendments [B 61A - 2001].

   The Committee further reports that the New NP and the DP opposed the Bill on the grounds that too much power is vested in the Minister and because of the repeal of the private Acts.

                  TUESDAY, 18 SEPTEMBER 2001 ANNOUNCEMENTS:
   

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    The following Bill was introduced by the Minister of Labour in
     the National Assembly on 18 September 2001 and referred to the
     Joint Tagging Mechanism (JTM) for classification in terms of Joint
     Rule 160:


     (i)     Basic Conditions of Employment Amendment Bill [B 70 -
          2001] (National Assembly - sec 75) [Explanatory summary of
          Bill and prior notice of its introduction published in
          Government Gazette No 22642 of 31 August 2001.]


     The Bill has also been referred to the Portfolio Committee on
     Labour of the National Assembly.


     In terms of Joint Rule 154 written views on the classification of
     the Bill may be submitted to the Joint Tagging Mechanism (JTM)
     within three parliamentary working days.

COMMITTEE REPORTS:

National Assembly:

1. Report of the Portfolio Committee on Finance on the Provincial Tax Regulation Process Bill [B 51B - 2001] (National Assembly - sec 76), dated 18 September 2001:

   The Portfolio Committee on Finance, having considered the Provincial Tax Regulation Process Bill [B 51B - 2001] (National Assembly - sec 76), recommitted to it, reports the Bill with amendments [B 51C - 2001], as follows:

   CLAUSE 3

   1 On page 3, in line 59, after “reservations” to insert:

       the Minister must deal with the proposed provincial tax in
       terms of subsection (6), and if it does not
   
   
       CLAUSE 4
   

   1. On page 4, in line 5, to omit “3(7)” and to substitute “3(6)”.