WEDNESDAY, 14 NOVEMBER 2001 __

          PROCEEDINGS OF THE NATIONAL COUNCIL OF PROVINCES
                                ____

The Council met at 14:00.

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

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.

                     LEAVE OF ABSENCE TO MEMBER

                         (Draft Resolution)

The CHIEF WHIP OF THE COUNCIL: Chairperson, I move the motion printed in my name on the Order Paper, as follows:

That leave of absence be granted to Mr B Willem for the period August 2001 to December 2001.

Motion agreed to in accordance with section 65 of the Constitution.

                        ROAD SAFETY STRATEGY

                             (Statement)

The MINISTER OF TRANSPORT: Chairperson, hon members, delegates, I come before hon members today to talk about the very important issue of road safety, but this is not a routine pep talk on driving carefully over the approaching holiday season. This is the announcement of a launch date for my department’s completely new strategy for safer roads in South Africa.

On 20 November at the the MTN Sundome in Gauteng I will have the privilege of going to the public of South Africa with our new document, The Road to Safety 2001-2005. I can tell hon members that there is already considerable excitement and expectation, not only in Government but right across the transport industry. The Road to Safety - that is the heading of the document - represents a decisive moment of opportunity to change our country’s whole approach to road safety.

The strategy is a product of over 18 months of intensive consultation between Government, the entire land transport sector, technical innovators, safety pressure groups, NGOs and many civil society organisations. We have listened to everyone and incorporated many suggestions. We think that what we have now come out with is a solid, practical, doable set of programmes, projects and baseline positions for legislation and negotiation with the industry.

We think that the strategy is solid for two main reasons; firstly, because it already has strong industry support behind it; and, secondly, because its central approach is to build partnerships and a sense of joint ownership at every level.

What is so significant about The Road to Safety? What is its relationship to the Arrive Alive programme? The answers to both questions are interlinked. The key thing about the strategy is that it is proactive, not reactive. We have taken time out to step back from the daily pressures of enforcement, adjudication and persuasion and looked at the whole picture of what makes roads safe or dangerous for the users. We have pulled everything apart and put it back together again in blocks that fit together, reinforcing and supporting one another at every point.

We started out from the absolute basics: facts and questions. For example, drivers drive on roads. How qualified are they to drive and what are their attitudes? Pedestrians walk along and cross our roads. How well are they trained and educated to do these apparently simple things? Drivers drive in vehicles. How fit are these vehicles to be on the road? What is the condition of our roads infrastructure? Where, when and how do most of the crashes on our roads take place? How do we get the right combination of forces to the right places at the right times? What are our enforcement and regulatory systems? Where are they failing? What are the key issues that have in the past given rise to public cynicism about the possibility of winning the battle for safety? How do we fight against widespread aggression, irresponsibility and contempt for the law amongst many of our road users? And, finally, how do we convince people that the battle is winnable? How do we build the critical mass of public support that will lead to a new culture of voluntary law compliance, responsibility and mutual respect? There are many questions.

The Road to Safety asks all these questions and gives us a framework for answering them positively. It does not pull any punches about what is wrong with the systems and structures that we have relied on up to now. The strategy shows how they can and must be corrected and transformed. The strategy does not run away from the problem of resource constraints. It recognises that there is no bottomless well of fiscal resources to fund every urgently necessary corrective project. Instead, it prioritises creative and imaginative use of existing human resources, skills and ingenuity wherever they may be located in our society. It throws the door wide open to partnerships of every kind in every sector of road safety.

The Road to Safety challenges all three spheres of government. It challenges the transport industry, civil society organisations, and each and every individual South African to come to the party. It proposes a combination of various elements, that is Government intervention through systems overhauls and legislation; an all-out war on fraud and corruption in driver licensing and vehicle testing and registration; regulation and self-regulation in the road freight and public passenger transport sectors; the application of technological innovations in the vehicle safety field; the user-pays principle wherever applicable; public-private partnerships; and passenger and community empowerment initiatives.

In short, the strategy says that the responsibility for safety on our roads belongs to all of us, and that each one of us can make a contribution. This can be anything from joint sponsorship of a major project to taking an active role in one’s community road safety forum, to taking one’s friend’s car keys away when she or he says, ``Ag, I have only had a couple over the limit,’’ and not allowing her or him to drive.

I will save the details of the projects and processes that the strategy sets forth until the day of the launch, which is 20 November as I indicated, when I will ask all of our people to sit down and think very hard about the different kinds of contributions which they could make. What I want to say today is: From now on, The Road to Safety is our guide to action and commitment while at the same time the Arrive Alive campaign continues stronger, more focused and more concentrated on its core operational functions of enforcement, education and communication - 365 days a year, seven days a week and 24 hours a day. Just as the whole aim in the Road to Safety strategy is to get proposals off paper and into real, concrete, jointly owned projects, so in Arrive Alive do we want to show members what we have already started to achieve by making a clear separation between strategic reform and day-to-day operations.

From October last year, when I signalled the beginning of this major shift in the orientation of the Arrive Alive campaign, we have been steadily finding our way towards better co-ordination and accountability. When I say ``we’’, I mean national and provincial governments together. All law- enforcement and communication programmes undertaken at national, provincial and metropolitan or local level are now considered to be part of the Arrive Alive campaign, even though some activities do not qualify for additional Arrive Alive funding.

Provincial Arrive Alive business plans now have to be developed in strict accordance with the national plan, and all key operational action plans must follow the logic of this plan. To qualify for funding, all provincial and local traffic authorities must submit detailed monthly reports on expenditure and programmes undertaken.

Arrive Alive’s terms of reference have been expanded to include: firstly, much better co-operation between traffic law enforcement and the judiciary to increase the provision of dedicated regional and roadside traffic courts and to radically speed up the adjudication process and the finalisation of summonses and notices issued; secondly, greatly improved information collection, analysis and reporting systems for better decision-making and better reporting on achievements; thirdly, more sharply targeted awareness, communication and advertising initiatives in support of specific law- enforcement actions; fourthly, the more systematic education of schoolchildren, adults and communities on pedestrian and other road safety issues; and fifthly, community participation in the identification of hazardous locations on the road and street network, supported by low-cost remedial engineering works to make the road environments safer.

Let me just comment on this last point. I will tell the members what was achieved in just one such project that I visited last year, right here on our doorstep in the Western Cape in the Winelands District Council area. This is a live issue for a number of members of the Public Services and Minerals and Energy select committees who, on Monday this week, joined their colleagues from the National Assembly portfolio committee on a very similar fact-finding trip to the Winelands. For those members of the NCOP who did not make the trip, let me paint a picture for them and invite them to visit the project, to see for themselves what can be done if there is co- operation between all stakeholders and role-players.

What was done was that five different localities were identified - Simondium, Koelenhof, Vlottenburg, Jamestown and Elsenberg. The local communities and schools were fully engaged in identifying the key danger spots, and there was detailed and thorough consultation among all these people - the council, that is the local authority; the traffic department, its engineers and the local NGO which is called Women on Farms. It is remarkable what results one achieves when women begin to participate in programmes. The result of this particular consultation was that, together, they came up with simple practical solutions that were affordable, and they worked.

On the physical side, these included: first, new pedestrian walkways and bridges; second, specially widened sand and cement sidewalks; third, new overhead lighting; fourth, traffic island improvements; and fifth, new speed reduction warning signs and new pedestrian traffic lights. That is on the physical side - some work which had to be done with a little bit of expense, but manageable under the circumstances.

On the human side, the steps included the widespread promotion of pedestrian reflective bands in all the local schools. In other words, we have children wearing reflective bands so that they are easily visible. Also, there is the daily monitoring of pedestrian crossings, which means community participation.

Thirdly, we have the use of additional local transport to help children get to school safely in the mornings and get home safely in the evenings. This means a programme of co-operation between the different levels of government, local law-enforcement authorities and local communities together with the schools. As I was saying, this co-operation has worked in so far as this particular project is concerned.

One may ask: What were the results from a safety point of view? I can say to the members now that, the space of one year, from 1998-99 to 1999-2000, collisions between vehicles and pedestrians came down by 41% in this district, and pedestrian deaths dropped by an incredible 82% in the same period - a remarkable result because of simple things which we could all do together without a great deal of expense. In just this one area of road safety, we can start to get a glimpse of what we could achieve over the next five years by generalising but practicalising a partnership approach to every corner of the country.

I respectfully suggest to hon members that this is one area of active participation in which all of us could immediately become involved when we go back to our home bases after Parliament rises. My department, with the support of the CSIR, is ready to make available some very practical, well- tested toolkits, if I could put it that way, for setting up community road safety initiatives of the kind I have just outlined. My staff, both in Pretoria and the few who are here in Cape Town, are ready and waiting to be of assistance as well.

In conclusion, I want to say that what we do not want - and I am sure that this House also does not want it - since this is just a debate is merely an academic discussion. I think what hon members and delegates would want is information which would empower them to go back to local communities, and to participate in programmes, or launch or initiate such programmes which will make a positive impact on the road safety situation on our roads.

I want to suggest that one of the key areas of intervention is with regard to pedestrians’ safety, and in the same way that these pilot projects have yielded the results, I am very confident that if we were to go to our local communities and initiate programmes based on that experience, we can begin to make a difference on our roads throughout our country.

With one eye on the launch of the Road to Safety programme, which takes place on 20 November, and with another on the long summer holiday lying ahead of us, let me invite members respectfully to join us in this exciting new beginning for road safety in our country, and, at the same time, wish everyone a safe and peaceful festive season and new year. May all the members arrive alive! [Applause.]

Ms P C P MAJODINA: Chairperson, on behalf of the Select Committee on Public Services, I want to congratulate the hon the Minister of Transport, Comrade Dullah, on the presentation of the final draft of The Road to Safety: 2000- 2005.

The road safety strategies of our Government are the blueprint for the complete overhaul of our country’s road safety and traffic management system and structures.

The final draft that has been presented today by the hon the Minister, or rather, the statement that he has just read to us, has gone through a rigorous process of consultation and fine-tuning, and we proudly say that it carries the blessings of all relevant stakeholders because its aim is very clear, which is to create a framework for co-ordinated action between all stakeholders, which will lay a firm basis in terms of which road users will display greater responsibility and mutual respect.

To ensure strict compliance with road traffic legislation and to create enforcement and adjudication measures that will work, the Minister must, as a matter of fact, ensure that we enforce the law, especially on long- distance trips where drivers should be forced not to drive more than four hours, especially in the public transport sphere, where they must relieve each other. Some measures proposed for road safety in terms of vehicle fitness include additional funding for provinces to ensure compliance of public vehicle stations and consultation with flight and public transport operators and unions on the implementation of a standard national code of practice, and this has been long overdue.

The increase in funding to the provinces is most welcome, because it will enable the provinces to review the operational systems and procedures of their vehicle testing stations and implement new management systems, procedures and training standards.

In addition to these focused areas of the road safety strategy, it highlights a number of areas where problems exist, such as inconsistencies in sentences for road traffic offences, the high rate of youth casualties on the road, the low level of specialist road safety knowledge and skills among teachers, and the fragmentation of statistics on road accidents. Some of the measures proposed to address the problems include interacting with the Department of Justice and the National Director of Public Prosecutions.

Having outlined the most important objective of the road safety document, all that remains to be said revolves around the actions proposed by the document together with the Arrive Alive campaign. The question of retreading of tyres needs to be looked at, because they are the cause of most accidents.

Forward to the zero tolerance approach to speeding, driving under the influence of alcohol and overloading. MEC Sbu Ndebele said in his speech yesterday that the Minister must arrest those who drink and drive and penalise them when they are sober. [Applause.]

Mr C ACKERMANN: Chairperson, will the next speaker be making his maiden speech since he is speaking here after two and a half years? [Laughter.]

Mr G R KRUMBOCK: Deputy Chairperson, it is in fact not my maiden speech. In addressing the Road Traffic Transport Board in July 2001, the hon the Minister of Transport stated that:

South Africa’s new road strategy will be a partnership involving all our people. It must become an instrument for turning road safety into a national crusade.

Therefore, when the hon the Minister of Transport speaks of a national crusade, one is perhaps entitled to feel optimistic that the depth of the magnitude of the problem is appreciated by the Minister.

The Arrive Alive campaign has proved that focused attention to speeding vehicles and the booking of reckless drivers does have a positive effect on bringing the road deaths and injuries down. We welcome the manner in which the Arrive Alive campaign has been restructured to go beyond the focus on roads only during the ultra-busy holidays periods at Easter and Christmas. A planned and co-ordinated year-round enforcement strategy with visible policing will be a vital component in this regard. We also welcome the issuing of reflective armbands and sashes in red spot areas near, for example, schools and churches, and the greater availability of Breathalyser testers.

The setting up of roadside courts and issuing of spot fines and the proposed ``sin bin’’ for sleeping-off by intoxicated drivers are further positive moves which should be augmented and supported. The menace on our roads remains the inordinately high number of unlicensed, speeding and drunken drivers, the overloading of cargo trucks and, last but not least, the growing amount of fraud and corruption in driver training, licence testing, vehicle testing of roadworthiness and the vehicle registration system.

Any strategy for road safety will fail if inadequate attention is paid to these all-important areas. In other words, law enforcement is of paramount importance in the whole strategy of road safety in South Africa.

The final point, in conclusion, is that the lack of road use knowledge by mostly rural people remains a national tragedy. When one peruses statistics pertaining to road deaths, one is dismayed by the number of pedestrians who become victims unnecessarily. This is unacceptable in a country such as ours and requires immediate attention. [Applause.]

Dr P J C NEL: Voorsitter, hier aan die begin van my toespraak wil ek die agb Minister bedank vir die ywer wat hy en sy departement aan die dag lê in hul pogings om ons paaie te beveilig en ons padsterftes te laat afneem. Soos wat my party die Arrive Alive projek gesteun het, en steeds nog steun, steun ons ook heelhartiglik die Road to Safety 2001-2005 wat op 20 November geloods gaan word. (Translation of Afrikaans paragraph follows.)

[Dr P J C NEL: Chairperson, at the beginning of my speech let me thank the hon the Minister for the diligence he and his department have displayed in their efforts to safeguard our roads and reduce the number of road deaths. In the same way that my party has supported, and still supports, the Arrive Alive project, we also wholeheartedly support the Road to Safety 2001-2005, which is to be launched on 20 November.]

In the briefing by the department, the selection committee was told that the Road Safety project would now become the parent of the Arrive Alive campaign. At the time, it sounded a bit odd to me, because I have never heard about a child being born before the parent.

Ek glo dat die bedoeling opreg is, en dat Arrive Alive nou die veiligheidsarm gaan wees wat sewe dae ‘n week, 24 uur ‘n dag, en reg deur die jaar sy rol as verkeersbestuurskoördineerder sal kan speel. Ons is dankbaar dat dit nie meer net ‘n seisoenale aksie sal wees nie. Ek wil ook die hoop uitspreek dat die doelstellings wat gestel word, naamlik ‘n 5% afname van padsterftes per jaar tot 2004 en 10% jaarliks tot 2009, wel bereik sal kan word, en dat sukses behaal sal word oor die hele spektrum van padveiligheidsprojekte.

Al die projekte wat die agb Minister vandag bekend gestel het, is belangrik. Om egter die belangrikste doelstellings te kan bereik, benodig die agb Minister die nodige fondse. Die opgradering van die padinfrastruktuur en die bekamping van oorbelading van swaarvoertuie alleen, benodig miljarde rande. Behoorlike wetstoepassing, met ander woorde zero toleransie vir spoedoortredings, bestuur onder die invloed van drank, dwelms en selfone, en ook om korrupsie en bedrog wat gepleeg word by die toetsing van voertuie en die uitreiking van bestuurs- en padvaardigheidslisensies te beveg, gaan ook miljarde rande kos.

As daar nie aansienlik meer goed opgeleide verkeersbeamptes, wat behoorlike salarisse ontvang, aangestel gaan word nie, sal dié doelstellings nie bereik word nie. (Translation of Afrikaans paragraphs follows.)

[I believe the intention to be sincere, and that the Arrive Alive project will now become the safety arm which, for seven days a week, 24 hours a day and throughout the year, will be able to play its role as traffic control co-ordinator. We are grateful that it will no longer be just a seasonal action. I also want to express the hope that the goals that have been set, namely a reduction in road deaths of 5% per year until 2004 and 10% per year until 2009, can be reached and that success will be achieved across the whole spectrum of road safety projects.

All of the projects introduced by the hon the Minister today are important. However, in order to reach the most important goals the Minister needs the necessary funds. Upgrading the road infrastructure and combating the overloading of heavy vehicles alone requires billions of rands. Proper law enforcement, in other words zero tolerance for speeding offences, driving under the influence of alcohol, drugs and cellphones, as well as combating the corruption and fraud committed in the testing of vehicles and the issuing of drivers’ and roadworthy licences is also going to cost billions.

If significantly more well-trained traffic officers, who receive decent salaries, are not going to be appointed, these goals will not be reached.]

There is a huge task lying ahead for us all. I believe that with this realistic approach to road safety, the Department can reach its goal. I therefore beg today for the support of all members in this House and for Parliament’s support in the form of sufficient funds. I would like to wish everybody in this House a very happy Christmas and festive season, and to all the people travelling on the roads a very safe and pleasant journey. Please arrive alive and intact. [Applause.]

Mnu M J BHENGU: Sihlalo, ngicabanga ukuthi lingatholakala isu mhlawumbe lokuba kube khona ukuphepha emigwaqeni esiyisebenzisayo.

Kukhona isu lokuphepha elingenziwa lalabo abashayela izimoto, kube khona elingenziwa lalabo abasebenzisa umgwaqo, abahamba ngezinyawo kanye nelalabo abathuthwa yizimoto. Ngakho-ke kusho ukuthi mhlawumbe umNyango lo ungazama ukuthi wenze uphenyo lokuhlola ukuthi kungenziwa kanjani lokho.

Lokho kudingeka kube uphenyo olunzulu oluzokwenza ukuthi kwehle lokhu kufa okungaka okwenzekayo kubantu bakithi. Sibonile ukuthi isiqubulo lesi esithi ``Arrive Alive’’ sisebenzile. Kodwa-ke asisebenzanga ngokuphelele. Kukhona okusadinga ukuthi kwenziwe kumbe kusona noma kube khona isu elisha, noma mhlawumbe sona isiqubulo senziwe ngcono. Ngiyavumelana mina nalo mbono othi makube khona okuthize okwenziwayo mayelana nokuthi kucutshungulwe ukuthi kushaywe umThetho wePhalamende oqinisa imithetho yemigwaqo ukuze abantu abasebenzisa umgwaqo bazi ukuthi kukhona imithetho enjalo.

Sengathi ingenyuka inhlawulo yalabo abangayigcini imithetho yemigwaqo ngoba abantu bakithi abasayihloniphi impilo yabantu njengokuthi nje umuntu ashayele ephuzile noma esebenzisa umakhalekhukhwini. Izinto lezo engicabanga ukuthi kungafuneka ukuthi imithetho iqiniswe kuzo. Ngakho-ke ngicabanga ukuthi ngiyavumelana … (Translation of Zulu paragraphs follows.)

[Mr M J BHENGU: Chairperson, I think a plan to bring about safety on our roads can be found.

A plan can be made for those who drive cars, those who use roads, like pedestrians and passengers. Therefore, this means that the Department should investigate how this can be done.

This means that there should be a thorough investigation into how to reduce the number of people who are dying on our roads. We have noticed that the Arrive Alive campaign has worked well, but not satisfactorily. Something needs to be done to it or we need to come up with a new plan. Maybe we should come up with an improved campaign. I support the opinion that something must be done concerning the investigation into passing an Act of Parliament which will strengthen road laws so that road users will know that such legislation has come into existence.

I would like the penalty for those who violate road rules to be increased, because some drivers do not respect people’s lives, like those who drive while they are drunk or using a cellphone. Those are the things on which we should strengthen laws. Therefore I think I agree with …]

Mr A E VAN NIEKERK: Chairperson, I am rising on a point of order. There is no translation service at the moment.

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): I am told there is no translation. Anyway, continue Mr Bhengu.

Mnu M J BHENGU: Sihlalo, ngakho-ke ngibona ukuthi uNgqongqoshe ubhekene nenselele lapho yokuthi kulesi sikhathi esawengamele lo mNyango, kubalulekile ukuthi azame ukwenza uphenyo olunzulu lokuthola ukuthi ngempela, ngempela yini engenziwa. Akulungile lokhu esikubona kwenziwa amatekisi namabhasi, ebulala abantu bakithi ngendlela enje, lapho umuntu ethola ukuthi kufa khona amashumi ngamashumi noma amakhulu ngamakhulu. Yize umuntu engenaso isibalo senani labantu abafayo, siye sibone ukuthi bayafa abantu bakithi.

Ngicabanga ukuthi luyadingeka uphenyo. Imigwaqo ehamba izimoto ezithutha abantu bakithi ayilungile. Nayo iyaphonsa esivivaneni sokuthi bafe abantu bakithi. Ngakho-ke ngiyavumelana nalo mbono oshiwo uDokotela uNel wokuthi akube khona i``holistic approach.’’ (Translation of Zulu paragraphs follows.)

[Mr M J BHENGU: Chairperson, I feel that the hon the Minister is faced with the challenge, while he is still the Minister of this department, which is important, to try to launch a thorough investigation into what needs to be done. What taxis and buses are doing is unacceptable, as they kill our people, and people die in tens or hundreds. Although I do not have the statistics, we see that our people are being killed on the roads.

I think we need an investigation. Roads used by cars that transport people are not good. This contributes to the death of our people. Therefore I share Dr Nel’s opinion that there should be a holistic approach.]

Mr M J TLHAGALE: Chairperson, hon Minister and the honourable House, I wish to commend the hon the Minister for the trouble he takes to ensure safety on our roads. Precautionary measures are being advanced for the safety of the public in general, but they are very often bedevilled by the consumption of alcohol over the prescribed limits. Very often our young people are the worst culprits regarding the consumption of alcohol and the abuse of drugs.

The case of Odendaal of the Free State, who, whilst under the influence of liquor, tied Mosoko Rampuru to his bakkie and dragged him until he died, is one of the appalling incidents that bedevil race relations. However, as some commentators see it, elements of racism could have been paramount, rather than the consumption of alcohol.

Speeding is another contributing factor that is frustrating the road safety strategy and the Arrive Alive campaign. Many pedestrians have lost their lives as a result of speeding, and very often a speeding vehicle is less controllable than a slow-moving vehicle.

The use of a cellphone whilst driving is a distraction and has resulted in many collisions owing to the divided attention of the driver. One is aware that it has been outlawed, but its prohibition has not been vigorously enforced so as to serve as a deterrent to other prospective drivers.

The new road safety strategy that the hon the Minister intends to put in place shortly seems to be comprised of achievable elements, and it has our undivided support. [Applause.]

Ms B THOMSON: Chairperson, hon Minister and members, there are two critical choices facing any nation in terms of its road safety strategy. Choice one is to adopt an attitude that says that road fatalities are a natural consequence of having motor vehicles on the roads. In this case, a road safety strategy would merely revolve around reacting to accidents by providing on-the-spot assistance and medical treatment.

The second choice, which is the one we have made, is to accept that road accidents are occurrences that are caused by a number of underlying problems which, if properly addressed, can reduce the number of road fatalities.

As a country, we have committed ourselves to a preventative approach to road safety. We believe that safer, more secure roads with better drivers, more reliable vehicles and a better regulated public transport system is not only much more cost-effective, but will also save lives.

The new road safety strategy that was just announced by the Minister of Transport provides a framework for the achievement of the above objectives by co-ordinating the actions among national, provincial and local transport departments. It directs itself towards addressing the underlying causes that have given rise to our road safety problems by taking responsibility for system and structural reforms, by mobilising fiscal resources and by building partnerships with the private sector, nongovernmental organisations and communities. Its key objectives are to prevent road accidents, to save lives and money, to preserve our road infrastructure, and to achieve a systematic reduction in road fatalities between now and the year 2009.

Addressing the underlying causes that have given rise to the high number of road fatalities has a subjective and an objective nature. On the subjective side, the problems include the disregard for road traffic legislation, aggression towards other roads users and disregard for the basic rules of safe road usage. These are human errors that need to be addressed by changing the mind-set of road users. On the objective side, the causes that have given rise to the carnage on our roads relate to the quality of our roads, driver competence, vehicle fitness, and regulatory and monitoring systems.

Over the past few years a number of initiatives have been undertaken to address both the subjective and objective causes that give rise to the large number of fatalities on our roads. For example, new measures were put in place to deal with vehicle and driver fitness.

In terms of driver fitness, legislation has already been enacted which formalises and regulates driver training schools, the accreditation criteria for owners have been tightened and properly graded, and skills requirements for trainers have been introduced.

In terms of vehicle fitness, a major concern is the allegation of corruption taking place at some vehicle testing stations where some unroadworthy vehicles are passed in exchange for money. Investigations have been undertaken into these vehicle testing stations to assess their compliance with statutory requirements and to root out corruption.

The Road to Safety strategy builds on this and other initiatives. I have no doubt that this strategy will ensure the long-term sustainability of our whole road safety initiative.

Sithi kumhlonishwa uNgqongqoshe phambili nomzabalazo wokufika uphila kanye nomzabalazo wakhe wendlela eya ekuphepheni. [We would like to say to the hon the Minister: Forward with the Arrive Alive campaign and also your campaign on safety.]

Debate concluded.

                  TELECOMMUNICATIONS AMENDMENT BILL

            (Consideration of Bill and of Report thereon)

The MINISTER OF COMMUNICATIONS: Chairperson, hon members, comrades and friends, after having participated in some of the discussion sessions at ITU Telecoms 2001, which is being held in Johannesburg this week, I am convinced that in South Africa the fruits of more than nine months of intense consultations with stakeholders are beginning to ripen.

Our country remains on the right path regarding the direction of the telecommunications sector. We stand at the threshold of delivering a telecommunications law that will make a difference in the lives of millions. Whether we are rich or poor, the scourge of poverty is with us. Our people are yearning for telecommunications legislation that can help to address this scourge.

They expect of all of us, the executive, the legislatures and the industry players, to deliver a sector that will not just be about technology but will contribute to the reconstruction and development of society, a sector that addresses the needs of the majority of our people.

Today I stand before this House to highlight some of the issues that will enable us to bridge the digital divide that will enhance local economic development, promote economic empowerment and provide safety and security for all. The importance of this Bill for provinces is often underestimated. The issue of the roll-out of infrastructure is pertinent to the economies of provinces. This roll-out means jobs and increased access. Universal access means access to tools, particularly information and communications tools for the development of communities.

Experience has shown that big companies do not always service the lower end of the market, if at all. Experience has shown that restructuring without creating competition often leads to substituting public monopoly for private monopoly. By introducing small, medium and micro enterprises, we have tried to handle this contradiction.

The Bill provides for the licensing of small and medium enterprises, including co-operatives in areas where the teledensity is less than 5%. The more successful these groups become, the more competition will exist in the sector, and this will therefore lead to the lowering of tariffs.

SMMEs licensed in these areas will be allowed to provide Voice over Internet Protocol, fixed, mobile and public pay telephones. This will ensure that rural areas and marginalised small towns are effectively brought into the new economy. Priority will be given to the small and medium enterprises which are owned by women, youth and the disabled and are controlled and managed by them. The focus will particularly be on blacks. Some of the funding for this initiative will come from the Universal Service Fund, which has been increased to 0,5% of all operator turnover.

This Bill allows for public emergency communications which will be re- engineered to offer compatible and nationally accessible services. The importance of this for local government cannot be underestimated. A single emergency number, 112, has been allocated. This number will be available free of charge and will override any other call. Young and old, literate or illiterate, rural or urban, will be able to easily access emergency services. Provincial and local governments are urged to work with us in the expansion of this service. Provision has been made for the creation of a private telecommunications network for public schools and further education and training institutions. The network will ensure that public schools have access to the Internet. To facilitate this, public schools will be entitled to a 50% discount on Internet connection. We ask provinces to ensure that school governing bodies, school administrators and teachers champion access to this network.

The Bill also allows for the empowerment of the disadvantaged. According to the Bill, up to 30% of all major operators will be set aside for empowerment purposes. This will benefit blacks, women and people with disabilities. The provincial and national social and business structures and their leadership, for example societies, stokvels, women’s groups and professional associations, must create for themselves vehicles so that they can participate in the empowerment process.

With regard to the outstanding amendments, this House has been presented with the following considerations: the introduction of carrier preselection at the end of 2003 and number portability in 2005. Both of these are competition enablers.

This House has also been given the task to look at the definition of fixed-mobile''. The definition offixed-mobile’’ has been reworked to clarify that fixed-mobile is not the same as mobile licences. Through the work that members of this House have done, they can bear testimony themselves to the fact that our country is heading for a big information revolution.

But this revolution could be stillborn unless we support the regulator and defend its integrity. I have no doubt that through unity in action, we will succeed.

I particularly wish to thank the members of this House and the select committee under the leadership of Mr Fenyane who spent days and nights unravelling the complexities of this Bill for management liberalisation, managing the competing interests which were very heavily invested interests. It was no easy task.

I am particularly grateful for their sensitivity and their concern to ensure that there is co-operation with the executive. This co-operation did not compromise their independence from the executive but rather allowed the final product to be in the best interests of all and particularly to contribute to a better life for all in our country.

I therefore would like to invite members to adopt the Bill, including the suggested amendments. [Applause.]

The CHAIRPERSON OF THE NCOP: Hon members, before we proceed with the debate, I just want to draw members’ attention to the fact that I have requested a photographer to take a photograph of this sitting. The reason for that, and for allowing a stranger on the floor of the House, is that this Chamber as it looks this week will be very altered by February next year when we reconvene. Therefore we thought it important to have a record of ourselves and this Chamber in this year at this time. Hence the presence of the person just now.

If I could ask members to desist from moving in and out so that we could indeed have the photograph taken and conclude the matter.

Mr S L E FENYANE: Chairperson, let me at the outset indicate that research in the telecommunications industry projects that Africa will experience phenomenal growth in this industry despite apparent downturns on other continents. The research company DMI Knowledge projects an annual growth of 33% for the mobile market and 25% for the land line or fixed line market. It is predicted that in the next five years, between R6 billion and R8 billion will be poured into the continent of Africa in this industry.

These developments paint a rosy scenario for Africa and compel one to acknowledge that immense opportunities beckon for job creation and rapid economic growth. Let me hasten to inform members that in our exultation about the probable benefits that might accrue in our favour, we should not lose sight of the fact that in this industry the only thing that is certain is uncertainty, precisely because communications as an industry is at the core of capitalism in the new world order.

The Bill in front of us has been drafted in sync with these projected developments, mindful of the fact that the industry is fraught with volatility that is punctuated with a profusion of twists and turns. The Bill addresses managed liberalisation of the telecommunications industry by introducing a competitor to Telkom in the year 2002. Consumers will decide either to use Telkom or the second national operator. It is hoped that competition will reduce the price of telephony drastically. Hope, however, should not be confused with reality.

According to the IDG report, only 4 million people in Africa have access to the Internet, and about 2,5 million of these people are found in South Africa alone. In order to enhance Internet usage the Bill makes provision that would allow public schools a 50% discount on calls to access the Internet. Our children would then be afforded the opportunity to surf the Internet for their homework and assignments.

In order to address the plight of women and historically disadvantaged persons, the Bill makes provision for the regulator, Icasa, to give regard to licence applications which include women as equity shareholders - that is, key features in major applications for telecommunications licences should be a 30% set-aside equity shareholding for persons from historically disadvantaged groupings and the presence of women’s groupings as equity shareholders.

The Bill makes provision for the use of the Universal Service Fund to help SMMEs in the provision of telecommunications infrastructure and services in designated underserviced areas where teledensity is currently below 5%. The department is painfully aware that SMMEs are not able to access funds from commercial banks in South Africa as a result of the surreptitious redlining of certain areas by these commercial banks. During the drive for the African Rennaissance it has been discovered that African countries are currently not able to speak with one another without the use of a middle person who resides outside of Africa. The Bill makes provision for Sentech to play a pivotal role in the rerouting of inter- Africa telecommunications traffic so that when one country in Africa talks to another in Africa, it should do so through a facility that is situated in Africa.

Sentech currently has the capacity to carry this traffic from one country to another in Africa. It also has the capacity to carry this traffic beyond the borders of South Africa. In line with international developments, Sentech will also be granted a licence to provide multimedia services for the promotion of conversions of telecommunications, broadcasting and information technology.

Allow me to share with members the following observation that has inspired me immensely. It is said that there exists in the Namib Desert a plant called Welwitschia mirabilis, which has miraculously withstood the harshest conditions known to mankind. This plant survives by harvesting moisture in the air that it captures in its leaves. It then shares the moisture with the few animals that chew on its leaves for their survival. As these animals chew its leaves, they strengthen the Welwitschia plant and afford it the power to overcome illness. Other desert animals use this plant for shade and during their visitation they respond to the call of nature next to the plant, thus fertilising the base of that plant to keep it nourished.

They do other ill-defined things there, and the plant gets further fertilised in the process. This plant symbolically indicates that surviving, even in the desert, is possible if those who are condemned to be there by fate collaborate, co-operate and share for their mutual survival. It symbolically indicates that there is hope in hopelessness, help in helplessness and strength in weakness.

In the same vein we say South Africa will help Africa. In the process South Africa itself will be helped. We ask politely that Sentech should be allowed to interconnect Africa so that when Judgment Day dawns we should be able to answer the Almighty and say in unison: Father, we have liberated Africa from the morass of ignorance and want.

Mok Onitsha of Nigeria said:

I have been flayed, slaved, scoffed, jailed, Eating in chains, bludgeoned before maids; I’ve fought in others’ armies, been hailed, Feasted with gods, oh, and sung with birds

Hero, beggar, fool, I’ve all by turns, Known dietetic sweetness and mental treason; Cold heart, hot temper, each in me burns, Stubborn with power, beauty in all season.

This should be history when we talk about Africa, particularly regarding matters of economic growth and telecommunications development. What the Bill is attempting to do through Sentech is to introduce the concept of handicapping in telecommunications. Those who play or follow golf are familiar with this concept of handicapping. It is a theory that seeks to level the golfing playing fields so as to allow the less accomplished competitor the opportunity to take part and stand a chance of winning the competition.

Indeed, our survival will be sustained if we can enhance the survival of others around us. We can make it if we try. I move that we support the Bill and thereby rewrite and redefine the telecommunications history of South Africa. [Applause.]

The CHAIRPERSON OF THE NCOP: We hope you are also going to be poetic, Dr Nel. [Laughter.]

Dr P J C NEL: Voorsitter, hierdie baie belangrike stuk wetgewing kom oor ‘n lang pad vol slaggate, amper so erg soos in die Vrystaat, en hy het ook erg wipplank gery. Gedurende die hantering van die wet in die portefeulje komitee was daar ‘n ongekende aantal instellings wat voorleggings gemaak het waarvan die dokumentasie, volgens een van die sprekers in die Nasionale Vergadering, bykans 70 kilogram geweeg het. Dit is ook geen wonder nie, want hierdie wetsontwerp hanteer die voortbestaan en die rigting van die pad vorentoe van ‘n multimiljardrandbedryf wat ‘n baie belangrike diens lewer waarin miljarde rande van buitelandse belegging betrokke is.

Daar was selfs ook ‘n verteenwoordiger van die Amerikaanse handelsinstituut wat insette gelewer het.

Hewige debatte is gevoer en vyf-voor-middernagwysigings is in die wetsontwerp aangebring. Daar is nie minder nie as 13 bladsye wysigings in die portefeuljekomitee en twee bladsye in die gekose komitee goedgekeur. Baie belangrike veranderings is op die nippertjie aangebring.

My party steun ook graag die wysiging wat daarvoor voorsiening maak dat dit nie vir die tweede nasionale operateur nodig sal wees om die laaste deel van telefoonlyne na wonings self aan te lê en te betaal nie. Dit beteken dat die tweede operateur meer mededingend sal kan wees, wat net tot voordeel van die gemeenskap kan wees, ook vir dié wat nie voorheen die voorreg gehad het om ‘n telefoon in hulle huise te kan hê nie.

Ons steun ook die wysiging wat die definisie van die sogenaamde vasgestelde selfoonlisensie só verander het dat die operateur van hierdie nuwe soort diens nie meer as die trefmyle van een selfoonmas mag gebruik nie en ook nie toegelaat sal word om oor te skakel van die een mas na ‘n ander nie. Dit behoort die selfoonoperateurs baie gelukkig en die klimaat meer gunstig te maak vir buitelandse beleggings, wat broodnodig is vir die suksesvolle instelling van die tweede operateur.

Ten spyte van dit alles is my party van mening dat Telkom steeds ‘n monopolie oor sekere dienste het wat die “Value-added Network Service” insluit. Ons het die gevoel in die gekose komitee gekry dat Telkom steeds bevoordeel word. Telkom is wel toegelaat om ‘n mondelinge voorlegging aan die gekose komitee te doen, maar Icasa en Sentech is op grond van ‘n tegniese punt verbied om voorleggings te doen. In die skriftelike voorlegging wat Icasa wel aan die komitee gedoen het, was aanbevelings wat sinvol was, maar hulle is geïgnoreer. Ek voel dat hulle saak aangehoor moes wees.

Ek voel ook steeds sterk daaroor dat te veel mag in die hande van die Minister setel ten opsigte van die toekenning van die nodige lisensies en te min mag in die Onafhanklike Kommunikasie-owerheid van SA, Icasa, wat kragtens die Grondwet as reguleerder moet optree. My persoonlike gevoel is dat daar nog vele hofsake kan volg. Om dié redes sien die Nuwe NP nie sy weg oop om die wetsontwerp in sy huidige vorm te steun nie. (Translation of Afrikaans speech follows.)

[Dr P J C NEL: Chairperson, this very important piece of legislation has come a long way, over a road full of potholes, almost as bad as those in the Free State, and it also seesawed quite badly. When the legislation was dealt with the Act in the portfolio committee an unprecedented number of institutions made submissions, and the documentation in this regard, according to one of the speakers in the National Assembly, weighed approximately 70 kg. No wonder, because this Bill deals with the continued existence and the direction of the way forward of a multibillion rand industry that delivers a very important service in which billions of rands in foreign investments are involved.

There was even a representative from the American commercial institute who made submissions. Heated debates took place and last minute amendments were made to the Bill. No fewer than 13 pages of amendments were approved in the portfolio committee and two pages in the select committee. Very important changes were made at the very last minute.

My party would also like to support the amendment that provides that it will not be necessary for the second national operator to lay the last portion of telephone lines at residences and to pay for this itself. This means that the second operator can be more competitive, which will only be to the benefit of the community, including those who did not previously have the privilege of having a telephone in their homes.

We also support the amendment that changes the definition of the so-called `` fixed cellphone licence’’ to such an extent that the operator of this new sort of service may not use more than the range of one cellphone mast and will also not be allowed to change from one mast to another. This should make the cellphone operators very happy and the climate should be more conducive to foreign investment, which is extremely necessary for the successful establishment of the second operator.

Notwithstanding all of this my party is of the opinion that Telkom still has a monopoly on certain services which include the ``Value-added Network Service’’. We got the impression from the select committee that Telkom was still being favoured. Telkom was, in fact, allowed to make an oral presentation to the select committee, but Icasa and Sentech were prohibited from making presentations on the grounds of a technical point. In the written submission which Icasa did make to the committee, there were recommendations that were meaningful but they were ignored. I feel that their case should have been heard.

I also still feel strongly that there is too much power in the hands of the Minister with regard to the awarding of the necessary licences and that too little power is vested in the Independent Communications Authority of SA, Icasa, which, according to the Constitution, must act as regulator. My personal feeling is that many court cases could ensue. Due to these reasons the New NP does not see its way clear to supporting the Bill in its current form.]

Ms C S BOTHA: Chairperson, I am reading this on behalf of Mr Lever.

Telecommunications has always played an important role in our economy. With the advent of the digital age and what has become known as ``convergence of technologies’’, telecommunications has taken on a new significance as an engine of economic initiative and growth.

If we, as an economy, wish to draw the maximum benefit from the opportunities that the technology developments have to offer, the regulatory environment must be appropriate to attract and allow investment, development, innovation and growth in the industry. The amendments in this Bill and the policies they give effect to have to be measured against these aspirations.

The extent of lobbying that took place in regard to this Bill is indicative of the fact that the stakes are extremely high. Lobbying took place right up to the very last minute. No doubt the lobbying will continue, as the amendments that the select committee proposed and passed will be referred back to the portfolio committee for its consideration.

A disturbing feature of the process in the select committee is that one of the major stakeholders, and this has been referred to by Dr Nel as well, namely Telkom, was allowed an opportunity to make oral and written representations to the select committee. Other stakeholders were not invited to do the same. In fact, when other stakeholders requested the same opportunity, it was denied. These other stakeholders were invited to make written representations instead, and they were confined to making written representations only, and there was talk of confining representation to the proposed amendments only. I wish to bring this to hon Mr Fenyane’s attention.

There are a number of important principles that have to be brought out into the open and emphasised. Firstly, every stakeholder is entitled to be treated equally by the committees. This is a right, it is not a privilege. Secondly, the select committee is an independent body, which is obliged to apply its mind to the legislation in its entirety. Consequently, although it is within the purview of the committee to regulate the evidence which it is prepared to hear, it should be slow to confine stakeholders to particular topics, and it should never treat stakeholders in an unequal manner. Turning to the Bill itself, licences in the telecommunications industry are meant to be issued by the independent regulator. This Bill bypasses the independent regulator and grants Sentech a licence by statute. It further guarantees Eskom and Transnet an equity interest in the second fixed line operator. While there may be synergies, benefits and potential to unlock value in Transnet and Eskom by involving them in the second fixed line operator, it would be healthier to amend their statutes, if necessary, to allow them to form a consortium with each other or other parties, and to apply for a licence from the independent regulator. This is, after all, why we have set up an independent regulator.

The Bill introduces a concept called the fixed mobile service, and I do not know why they did not come up with a better name for that service. This initially created a lot of uncertainty over its intended purpose. It seems that, originally, it might have been intended to give public switched telecommunication services the right to obtain mini regional cellphone services. In its present form, the definition would appear to prohibit this

• a change we support. It seems that a fancy term has been coined simply to describe a wireless local loop, which does not make it any clearer to me either.

The select committee has approved a new clause requiring the regulator to set a framework for number portability and caller preselection. We support these mechanisms which encourage consumer choice and competition, but we express here, as we did in the committee, the view that the introduction of carrier selection in December 2003 is very late in the day for the second national operator. The second national operator will have the use of Telkom’s facilities as of right only until May 2004. Four or five months of carrier select or carrier preselection is a very short period in which to establish its consumer base. It is true that the second national carrier can enter into agreements with Telkom to lease facilities after May 2004, but, judged on past performance, our concern is that Telkom may block access or make it difficult. The Bill does not properly meet the demands of true liberalisation. In addition, it usurps important functions of the independent regulator, in that it awards Sentech a licence and it also allocates equity in the second fixed line operator’s licence to two state-owned entities, and it allocates radio frequency spectrum.

For these reasons, the DP opposes the Bill. [Applause]

Mr M J BHENGU: Madam Chairperson, I want to say that this Bill has not had an easy passage through both Houses because of the 14 pages of amendments in the National Assembly. Now further critical additions were actually inserted by the NCOP and that attests to this fact.

I wish to congratulate the hon the Minister and the hon chairperson of our select committee for the way they have handled such a difficult Bill. The IFP finds itself very much able to support this Bill, because these last- minute amendments which have been effected by the NCOP have actually convinced us to see to it that we have to support it.

Carrier preselection and number portability are essential enablers of competition, and the time has come for Telkom’s monopoly to come to an end. This House today is actually making this possible. For the IFP, democracy means the freedom for one to choose those who govern one. In the context of today’s debate we believe that the very same democracy must also allow South African consumers to choose. There are service providers who are doing just that and this Bill is making one choose a reality in enabling a second national operator in competition to Telkom, and introducing Cell C in competition to Vodacom and MTN.

Value is also being added to our signal distributor, Sentech, and it too has been enabled to offer competition by way of its international telecommunications gateway. At long last the value-added network service or Vans providers have also been given some respite from the iron grip of Telkom, in that they have finally actually been more accurately defined.

We hope this will go a long way towards dissolving the ongoing and acrimonious litigation between themselves and Telkom. It will also enable the Vans industry to more readily offer its customers more choice in the way of new and innovative services. We have reservations with regard to many of the complex matters this Bill has attempted to address relating to both telecommunications and broadcasting. We all know that a multimedia service is actually a broadcasting service and the definition has been changed from a digital broadcasting service to a telecommunications service.

But we need new and innovative policy and legislation that appropriately deals with the worldwide rapid convergence of telecommunications and broadcasting. This will not be easy because in South Africa, as we all know, the issue of broadcasting occupies a special place in our Constitution and must be regulated by an independent authority, which is at present the Independent Communications Authority of South Africa or Icasa.

The multibillion telecommunications and broadcasting sectors are all shouting with one voice that Icasa lacks capacity and resources, and is unable to fulfil its statutory mandates and is subject to executive interference. This has been amply demonstrated by the ongoing pantomime of its regulations and recommendations being routinely scuppered and/or ignored by the department.

Most of its proposals regarding this very Bill are a case in point and for confirmation I recommend a comparison between Icasa’s submission and the now hopefully final draft of the Bill. Icasa is therefore unable to offer stability and certainty to these interlinking industries and this must also be addressed as a matter of urgency.

Investors will tell us that they are nervous. [Time expired.] Mr Z S KOLWENI: Chairperson, policies reflected in this Bill include preferential procurement policy with a specific focus. Preference of up to 30% of the equity is held by persons in historically disadvantaged groups including women. This 30% may be given for ownership in major telecommunication licences. Giving preference to historically disadvantaged persons is a milestone and is encouraging.

SMMEs, including co-operatives, will be granted a licence to provide telecommunications services, including ``Voice over Internet Protocol’’ in areas with a teledensity of up to 5%.

In pursuing this dream the Department of Communications will have to ensure that the rural SMMEs benefit from this and mechanisms are in place to ensure the dissemination of information to these people so that they can fully exploit this opportunity. Sentech will be licensed to provide international gateway communication and multimedia services. For these purposes, Sentech will operate as a carrier of carriers and will not provide international services directly to consumers or end-users. Like other licensees, Sentech will be given universal service obligations.

Public emergency centres will be established and operated through a nationwide accessible public emergency number, namely 112, free of charge. All public schools will be entitled to a 50% discount for Internet connections. A private network will be established to link public schools. This is encouraging. However, schools in the rural areas will not be benefiting from this, as they do not have access to the Internet.

A private network will also be established to provide maritime services for the safety of life at sea. There will be no broadband licensing. Broadband services will be available through the licensed telecommunications companies. Carrier preselection and number portability will begin in 2005. There will be no restriction on foreign ownership.

In conclusion, the policy directions of the Bill are very progressive. However, they are meant for a First World economy. The South African economy has a rural sector that still needs to be developed in terms of telecommunications. As long as this sector is still underdeveloped, it will enjoy minimal benefits out of this process.

Whilst this Bill is in line with the preferential procurement policy of the Government, there are still unresolved issues of fronting that need special attention.

The MINISTER OF COMMUNICATIONS: Chairperson, I would like to thank the members for the support of this Bill. It is quite clear that they did not sit at the meetings but actually followed what was happening and understood the responsibility that has been placed upon all of us, especially the responsibility that is placed on the Minister, who takes the final responsibility. The Minister therefore cannot allow that havoc occurs in the sector.

We all know that in this world, especially these days, we do not have a perfect market. The market is very imperfect. Many people say that the market should decide. They are assuming that there is a perfect market out there and there is not such a thing. Clearly, during this ITU conference it has constantly been told to us that the market is not perfect. There are circumstances under which it may be perfect.

I have had discussions with people from different parts of Europe. Germany took 15 years to get a regulatory framework in place. We had a few years with people that did not have the same kind of experience. It is the responsibility of all of us, including the Minister, that we support a regulator and give such a regulator integrity. Nothing that we do as the legislature, as the executive, even as Icasa itself, will give Icasa that integrity, unless we also have the support of the media. The media did in fact undermine its integrity. We need to be able to separate fact from fiction, and not in fact exacerbate what may be discussions between the Minister and Icasa as a contestation for power. Such contestation does not exist.

A regulator is indeed important, particularly a credible regulator. But that regulator follows policies. It is important that the discussion between the executive and the regulator takes place in order to make sure that what the regulator does regulate is in synchronicity with the policies that have been out there.

Currently, no country, including the countries that we referred to - the USA, etc - has been able to have a regulatory environment that one could say is completely stable and in which nothing happens. If we look at the litigation in the United States’ courts at the moment, and throughout the world, especially after 11 September, the state of the telecommunications industry is in flux. This is important, and I think we are being praised for having gone the way we have.

I spoke with many people from Russia yesterday. Since the changeover from the old system to the new, Russia still has not had a regulatory system, and they are looking to us for guidance. I hope we will not be pessimistic about ourselves and the directions that we have taken, for example around the issue of Sentech.

The Sentech direction that we have taken is not unique. If one looks at European countries, similar directions have been taken. Therefore, I think what we did was to make sure that we are able to manage the changes, to look at what the future might hold. As the chairperson of the select committee has said, we do also have responsibilities, not only for ourselves but also for the development of this continent in terms of what we have called our African Renaissance and the renewal of Africa.

We will do everything in our power to empower everyone who must participate in the sector. We hope that with your help as members of this House, who will also be very close to the ground to see where problems may arise, that we will rise to the occasion and make sure that any problems are taken out of the way, including difficulties that may exist with regard to the regulator.

Dr Nel has mentioned the fact that …

… dit was ‘n lang pad. Dit was ‘n pad vol slaggate. [… it was a long road. It was a road full of potholes.]

He is right about that, and he is also right about the vested interests. There was 70kg of paper that this committee had to go through, because this is an industry in which the interests amount to many billions of rand. We are small fry in it. The important task for this Government is to make sure that the small fry that are in it, as we are in South Africa, defend particularly the rights of the consumers, especially those at the lower end, not those at the higher end.

Therefore, we needed to walk this path. I appreciate the support for this Bill, and wish to say for those that had concerns about the second national operator and the usurpation of the powers of the regulator, that that was not the intention and it shall not be the intention, because we need an independent regulator. We also want to understand what we mean by that regulator.

For me it is the integrity of that regulator that is particularly important. It is not only important for South Africa, it is important for the region, the continent and the world. I thank members for having supported this Bill. [Applause.]

Debate concluded.

Bill, subject to proposed amendments, agreed to in accordance with section 75 of the Constitution.

               PROVINCIAL TAX REGULATION PROCESS BILL

 (Consideration of Bill and of Report of Select Committee on Finance
                              thereon)

The DEPUTY MINISTER OF FINANCE: Madam Chair, hon members, the Provincial Tax Regulation Process Bill empowers provinces to take another important step forward in exercising their constitutional powers and gives effect to the vision of a unitary, but fiscally decentralised system of Government. The Bill is required not only for constitutional reasons, but for sound fiscal and governance reasons.

I would like to begin with the constitutional and legal aspects, and in this regard retrace our steps a little bit. About five years ago we gathered in the Constitutional Assembly as the freely elected representatives of our people to work out the 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 the supreme law of our Republic, a Constitution, so as to, amongst other things, 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 that this distinctiveness, interdependence and interrelation could, in practice, be real we set out principles of co-operative government and intergovernmental relations, with which each of these spheres and 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 respect the constitutional status, institutions, powers and functions of government in the other spheres; not assume any power or function except those conferred on them in terms of the Constitution; 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, among other things, fostering friendly relations and co-ordinating their actions and legislation with one another.

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 of 1997, the Financial and Fiscal Commission Act of 1997, the Public Finance Management Act of 1999, the Borrowing Powers of Provincial Government Act of 1996, and four division of revenue Acts.

This Bill is the last piece of intergovernmental fiscal legislation applying to provinces and required by the Constitution.

Through the Intergovernmental Fiscal Relations Act, the nine MECs of Finance and the Minister of Finance have developed a great team spirit as they seek to translate these fine constitutional principles into practice. The Budget Council, which will be meeting in this city two days from now, 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 would like to point out the fiscal and economic rationale for the Provincial Tax Regulation Process Bill. 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 their 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 revenue 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 the national government. Though the conventional arguments may apply less in a developing country, and other factors such as 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 the 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, in other words, from revenue raised in the province: mainly motor vehicle licences, hospital fees and gambling proceeds. For as long as this fiscal capacity remains so low, our system of government is open to moral hazard or the risk of rewarding those provinces that manage their finances poorly.

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 1996 and 1997 recommendations of the FFC. 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 of 1996 and

1. Thereafter, at the request of the budget council, the Katz commission investigated provincial tax options. However, considering that South Africa has a unitary rather than a 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 that they offer and be held accountable for the overall level of expenditure instead of only for the efficient allocation of a fixed total.

The taxation powers of provinces also take into account that developing countries such as South Africa operate in a global environment where macroeconomic targets such as tax-to-GDP ratio matter. The whole approach to taxation that we are adopting ensures that we do not compromise our capacity for macroeconomic or fiscal management.

Coming to the Bill itself, it 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. We are most indebted to them. They have ensured that this Bill, in its part 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 power in terms of section 228 of the Constitution - to impose taxes, levies, duties and flat rate surcharges on the tax basis of any tax, levy or duty imposed by national legislation, and to provide for matters that are related to that.

The Bill provides for a process that is driven and directed by two fundamental principles: firstly, that the provinces’ power to impose a provincial tax must not be exercised in a way that materially and unreasonably prejudices (a) national economic policies, (b) economic activities across provincial boundaries and (c) the national mobility of goods, services, capital or labour, and secondly, compliance with the principles of co-operative government set out in Chapter 3 of the Constitution which we have referred to above. These are the two main principles that underpin this particular Bill.

The process set out in the Bill is itself aimed at assisting provinces to ensure that 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 a proposed tax is constitutional. As earlier indicated, the 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 should enact further legislation.

This further legislation will be in respect of a provincial tax proposal that does not materially and unreasonably prejudice national economic policies, which includes the tax policy for the Republic. Economic activities across provincial boundaries and the national mobility of goods, services, capital or labour determine, among other things, the tax base on which such provincial tax may be levied, the rate band within which a province may impose such provincial tax and the collecting agent for such provincial tax if it is not going to be the SA Revenue Service.

This two-phase regulatory process takes into account the dual qualification provided to the specific and guaranteed taxing power of the provinces, namely that, one, the provincial taxing power not prejudice national economic policies and related matters and, two, 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 a circumscribed taxing power in provinces. The exercise of such power, however, may not be used to trample upon national economic policies. Such exercise must also be regulated by an Act of Parliament.

The Bill’s approach is practical and constitutional. It accepts the reality that, given that there will, in many instances, be major variances between taxes or categories of taxes, we could not, as crafters of the Constitution, have conceivably contemplated that when it came to the regulation of varying taxes we would have been so naive as to believe that one size fits all.

The Bill also takes into account that those who are paid by the word, twice for a verb, that is my learned friends the lawyers, have been quick to remind us that the Constitutional Court, when giving a positive certification to what we had crafted on the provinces’ taxing powers in 1996, held that the term regulate'' in section 228(2)(b) of the Constitution connotes a broad managing or controlling rather than a direct authorisation function. Such broad managing or controlling of the exercise of provincial taxing powers is, in the words of the Constitutional Court, to ensure the coherence of the taxing system’’.

Regulation, in terms of section 228(2)(b) of the Constitution, is, according to the Constitutional Court, therefore, aimed at directing and commanding that which has been authorised to be regulated.

Earlier I ventured to say that we crafted the Constitution as a bridge from a divided apartheid state to a united nonracial, nonsexist and democratic state. The residents of Soshanguve will readily provide anecdotes of the very short drives, if not walks, that they took to neighbouring Mabopane to purchase whatever goods they needed.

They took such drives and walks because they saw fit to exploit an incoherence in the taxing system. It made sense to them to take advantage of the unrealistic tax regime of the former Bantustan of Bophuthatswana. The residents of King William’s Town will give the same jurisdiction for what became a sudden boom in the economy of Bisho.

These stories of inequitable cross-border trade and, at times, cross-border smuggling emphasise that high in the minds of the freely elected representatives of the people in the Constitutional Assembly must have been the fact that if the Republic’s taxing system was to be coherent, the provinces’ power to impose taxes, levies, duties and surcharges had to be directed and commanded to ensure that, amongst other things, the rate bands within which such taxes are imposed do not, in fact, contribute to harmful tax competition among the provinces and are within our macroeconomic and fiscal framework. This must be right.

Ms Q D MAHLANGU: Chairperson, Deputy Minister, members of the House and special delegates, first of all I want to talk about the first public hearings that the select committee had in 1999 when it was considering the seventh Katz commission report which, among other things, was cautioning that, before thinking of introducing this tax and giving powers to the provinces, South Africa, as a country, should be in a position to understand the implications those taxes would have, taking into account the inequities that existed throughout the country in different provinces. For instance, Gauteng could afford to introduce such taxes, but in other provinces the situation was different.

What came out of those hearings was again confirmed when we had other hearings during August and September 2001, when we were considering the FCC report for the next financial year. When we went to the Eastern Cape the members of the legislature expressed serious concern about this type of tax, that it should not disadvantage poor provinces vis-à-vis those who can afford it. In this case I am talking largely about Gauteng and the Western Cape life. The rest are very poor and have extremely low fiscal capacity.

However, in considering this legislation, we should take into account what the Deputy Minister has mentioned, that South Africa is a unitary state with a centralised fiscal system. Therefore the provincial tax regulation has to be viewed in that context. Currently most provinces have a very low fiscal capacity, and they get 96% of their budget from central Government. Only 4% is what they can tax. This is an indication that as much as this Bill is important, it may not yield the necessary results that we are hoping for. It will go a long way in addressing some of the problems because a cent is better than nothing.

Again, both the 2000 and 2001 Intergovernmental Fiscal Reviews were tabled and reflected that provinces do not collect the very same taxes that they can collect currently, and to us that poses a question whether provinces have the capacity to collect these taxes or whether there are proper mechanisms on how these taxes are supposed to be collected.

In considering the legislation, the committee invited the SA Revenue Service to the committee to respond to the following issues. Firstly, we wanted to check whether there would be any financial implications for provinces in the event the SA Revenue Service became their collecting agency. Secondly, we wanted to check whether the SA Revenue Service would be able to have the administrative capacity to collect this tax. The answer was that they would be able to collect tax on behalf of the provinces, and that they had restructured the revenue services and therefore had the capacity to do so.

In response to the first question regarding the financial implications to provinces, the SA Revenue Service said that the financial implications would not be more than 2% of what it would have collected. So in our understanding that question has already been addressed, and we hope the situation and the scenario does not change.

This Bill does not prescribe what type of legislation provinces should introduce. It is only enabling legislation which should guide provinces on what particular processes they are supposed to follow if they intend to introduce tax. If one province has applied for a particular tax, all other provinces can piggyback on that motivation and go ahead and introduce it.

The Bill goes to a great extent in outlining how the MEC should go about doing things and about the role of the Minister and others, but I am not going to go into that detail.

The last two points I would like to make before I sit down are as follows. I think it is important to dispel some of the notions raised in the committee, such as the fact that the Bill cannot pass the constitutional test. The committee was given several legal opinions by the department, and we also checked with the parliamentary law advisers as to whether the Bill was indeed constitutional, since it does not describe or give the Minister powers that are beyond his jurisdiction. What it does is to simply outline the process and the framework. From time to time provinces will be able to introduce their particular taxes and prescribe their tax base, analyse the financial implication on citizens and how is it going to be collected and so on. I urge the NCOP to support the Bill. Dr E A CONROY: Mnr die Voorsitter, agb Adjunkminister en kollegas, beide my dogters het op ‘n vroeë ouderdom hul onafhanklikheid probeer bewys deur etenstye self in beheer van die lepel te probeer wees. Soms het van die pap onvermydelik op die vloer beland, maar in die proses het hulle toe reeds begin om vir hulself te sorg. Kragtens artikel 227 van die Grondwet is elke provinsie geregtig op ‘n billike deel van die inkomste wat nasionaal gevorder word om hom in staat te stel om basiese dienste te verskaf en sy toegewese funksies te verrig.

Ons as verteenwoordigers van provinsies in hierdie agb Huis behoort heeltemal begrip te hê vir die provinsies se begeerte om ook op die nasionale gebied hul selfstandigheid te toon. Ook die opstellers van die Grondwet het begrip daarvoor gehad, want in artikel 228 word daar verder bepaal dat ‘n provinsiale wetgewer belastingsheffings en regte, maar met die uitsondering vir inkomstebelasting, BTW, algemene verkoopsbelasting en eiendomsbelasting of doeaneregte ter aanvulling van sy inkomste kan oplê. Die bevoegdheid van ‘n provinsie om belastingheffings, regte en bobelasting op te lê, word kragtens dieselfde artikel in die Grondwet egter beperk in soverre die genoemde bevoegdhede nie uitgeoefen mag word nie, op ‘n wyse wat die nasionale ekonomiese beleid, die ekonomiese bedrywighede oor provinsiale grense of die nasionale beweeglikheid van goedere, dienste, kapitaal of arbeid wesenlik en onredelik benadeel. Subartikel 2(b) bepaal egter duidelik dat die vordering van provinsiale belastings ingevolge ‘n wet van die Parlement gereguleer moet word en dit is daarom dat hierdie wetsontwerp oor die reguleringsproses van provinsiale belasting vandag in hierdie Huis gedebatteer word. (Translation of Afrikaans paragraphs follows.)

[Dr E A CONROY: Mr Chairperson, hon Deputy Minister and colleagues, both my daughters tried to prove their independence at a very early age by trying to be in control of the spoon at meal times. Sometimes some of the food would unavoidably end up on the floor, but in the process they already started looking after themselves. In accordance with section 227 of the Constitution every province is entitled to an equitable share of the revenue raised nationally to enable it to provide basic services and perform the functions allocated to it.

We, as the representatives of the provinces in this honourable House, should have complete understanding for the provinces’ desire to show their autonomy at national level. Even the drafters of the Constitution had understanding for this, because in section 228 it is further determined that a provincial legislature may impose tax levies and duties, with the exception of income tax, VAT, general sales tax and property rates or customs duties, to supplement its income.

The power of a province to impose tax levies, duties and surcharges is, however, limited in accordance with the same section in the Constitution in so far as the mentioned powers may not be exercised in a way that materially and unreasonably prejudices the national economic policy, the economic activities across provincial boundaries, or the national mobility of goods, services, capital or labour. Subsection 2(b) clearly determines, however, that the collection of provincial taxes must be regulated in terms of an Act of Parliament and it is for this reason that this Bill about the regulation process of provincial taxes is being debated in this House today.]

This is an enabling Bill which is intended to give effect to the above- mentioned powers derived from the Constitution. Provinces, however, are not obliged by the Bill to raise their own taxes and neither does the Bill specify certain taxes which a province may collect. It merely focuses on the process whereby their rights in terms of the Constitution should be regulated. It also defines the manner in which the Minister of Finance will exercise his policy oversight role.

Hierdie wetsontwerp het nie net met die regulering van provinsiale belastingbevoegdhede te maak nie, maar verwys spesifiek na die proses waarvolgens die bevoegdhede uitgeoefen mag word. Provinsiale belastingvoorstelle moet byvoorbeeld tien maande voor die begin van die belastingjaar aan die Minister van Finansies voorgelê word.

Die voorlegging moet ‘n gedetailleerde ontleding bevat van onder andere die redes en die motivering vir die voorgestelde belasting, sleutelaspekte van die beoogde belasting soos die belastingbasis, of die ekonomiese aktiwiteit waarop die belasting gebaseer gaan word, aspekte van die invorderingsadministrasie, beramings van die inkomste wat daarmee gegenereer gaan word en die ekonomiese impak wat dit sal hê. Laastens is daar die besonderhede van die proses van konsultasie wat met die belanghebbendes gevoer is. Wat die invorderingsadministrasie betref, het die Suid-Afrikaanse inkomstediens reeds aangedui dat dit oor voldoende kapasiteit beskik om belastings doeltreffend namens provinsies en sonder ‘n noemenswaardige toename in administrasiekoste in te vorder. (Translation of Afrikaans paragraphs follows.)

[This Bill does not only deal with the regulation of provincial tax powers, but refers specifically to the process whereby the powers should be exercised. Provincial tax proposals should, for example, be submitted to the Minister of Finance ten months before the start of the tax year.

The submission should contain a detailed breakdown of, inter alia, the reasons and the motivations for the proposed taxes, key aspects of the envisaged taxes such as the tax basis or the economic activities on which the tax is going to be based, aspects of the collection administration, estimations of the income which would be generated through that and the economic impact which this would have. Lastly, there are the details of the process of consultation with the people concerned. With regard to the collection administration, the South African Revenue Service has already indicated that it has sufficient capacity to collect tax effectively on behalf of the provinces without a significant increase in administration costs.]

The Auditor-General made some disturbing findings in his report on financial management by provincial administrations in that: Some provinces did not collect all the income that was due to them, and a number of registering authorities did not pay licence fees collected on their behalf to the provinces concerned. Income was lost as not all motor vehicles were licensed, and patient fees were materially undercollected at certain hospitals.

In addition, tariffs for patient fees and licences were neither consistent nor reviewed timeously, and the collection of gaming income was not always effective.

Although we have some reservations as to whether the provinces are able to exploit optimally all the other sources of income already at their disposal, the National Treasury has indicated that this problem is in the process of being corrected. The New NP supports the Bill. [Applause.]

Mr T B TAABE: Madam, Chair of Chairs, I noticed that there are probably quite a number of presiding officers here this afternoon. I do not know whether … No, let me leave it at that. The CHAIRPERSON OF COMMITTEES: Order! Hon member, are you coming up with the preamble to your speech? [Laughter.]

Mr T B TAABE: Let me not respond to that, Madam Chair, and just quickly deal with the issues at hand.

Madam Chair, hon Deputy Minister and hon members of this House, I wanted to deal with the broader constitutional and legal aspects of the provincial tax regulation process, but given the manner in which the Deputy Minister dealt with the constitutional and legal aspects of the legislation, I think it would be an exercise in futility, honestly, on my part to want to do that. I feel also that I need to deal very quickly with clause 4 of the Provincial Tax Regulation Process Bill before this House this afternoon. This clause basically establishes that Sars be the collecting agent for a provincial tax approved in terms of this process.

The point is made in this particular clause that this should be the case, unless the Minister designates another person or body for this purpose. The Bill goes further to say that the Minister of Finance, in this instance, will only designate another agency to be the collecting agent when the province submitting that tax proposal proves that such other agency will be able to collect the tax more efficiently and cost-effectively than an institution such as the SA Revenue Service.

I must point out that the view of the Select Committee on Finance in this regard is to fully support this position, precisely because of a number of reasons. Firstly, if this does not happen, any duplication in respect of the collection agencies will lead to inefficiencies, and secondly, might very well lead to additional compliance costs for the taxpayer. We felt that Sars would then be the only logical collection agency for provincial taxes that are linked to tax bases that it already administers, that are likely to affect a large number of taxpayers and for which an agency would otherwise have to be created. The point was also made, and we are in full agreement on this, that given the wide range of possible provincial taxes, there may be cases, however, in which another agency will have the necessary infrastructure and involvement in a particular sector that makes it the logical choice to act as the collection agency for that tax.

We also felt that in order to ensure that Sars, in this instance, is aware of and has had an opportunity to evaluate the administrative feasibility of a proposed provincial tax, it was therefore proposed that a requirement be inserted in terms of clause 4 in that Sars be consulted before the submission of the proposed provincial tax to the Minister. We felt that it was quite significant that such a clause be inserted.

In closing, I wanted to deal with an issue which was raised very sharply at the level of the select committee and by other provinces in relation to the possible impact of provincial taxes on local government taxes. This issue was raised very sharply, and we are of the view as the select committee that a provincial tax cannot directly impact on any local government tax for the following reason. Local government can only impose two types of tax in terms of the constitutional powers vested in section 229 of the Constitution, which is, one, property tax and, two, surcharges on fees for services provided by a municipality, for example electricity and water.

The point was made, with which we fully agree, that any other tax is not right, but could be authorised by national legislation. A case in point is obviously the current RSC turnover and payroll taxes, which are basically dealt with at the level of the committee. The view was that this tax will have to be phased out, or authorised by national legislation once the transitional period is over.

Hon members of the select committee are quite familiar with the issue I am raising here, and that provinces cannot impose a property rates tax in terms of section 228(1)(a) of the Constitution, which specifically forbids this power, that is the power to impose a tax. A province also cannot impose a surcharge on a property rates tax in terms of section 228(1)(b) of the Constitution.

In closing, we are of the view that all right-minded South Africans and, indeed, members of this House must support the amendments basically to the Provincial Tax Regulation Process Bill. [Applause.]

Mnr J L THERON: Voorsitter, agb adjunkminister, die Grondwet van Suid- Afrika maak daarvoor voorsiening dat provinsies die mag het om belastings te hef. Die Grondwet bepaal ook dat die provinsiale belasting deur nasionale wetgewing gereguleer moet word.

Wat is die voordeel van die wetsontwerp? Die wetsontwerp op die regulering van provinsiale belasting het besliste voordele wat onderstreep kan word. Dit is beslis ‘n positiewe stap dat provinsies belastings kan hef. Dit sal beslis die provinsies se posisies versterk sodat hulle ekonomiese en sosiale opheffing en groei in hul provinsies kan bewerkstellig. Dit is verder ook beslis ‘n positiewe aspek dat die provinsies self kan besluit watter belasting hulle wil hef tot voordeel van dié bepaalde provinsie.

Dit is so dat die situasies, byvoorbeeld die ekonomiese en sosiale ontwikkeling in die verskillende provinsies verskil en daarom is dit goed dat elke provinsie belasting kan hef wat die beste sal voldoen aan sy bepaalde omstandighede.

Dit is duidelik en voordelig uit die voorgestelde wetsontwerp dat provinsies nie belasting kan hef nie wat teenstrydig is met nasionale ekonomiese beleid, ekonomiese aktiwiteite wat oor provinsiale grense strek of die nasionale beweeglikheid van goedere, dienste, kapitaal of arbeid sal beperk.

Dit is positief dat die wetsontwerp duidelik uitspel dat provinsiale belastings nie die samehang van die nasionale belastingstelsel oor al drie vlakke van regering mag benadeel nie.

Dit is ‘n positiewe aspek dat die finansiële en fiskale komitee eers moet kommentaar lewer voordat die parlement provinsiale belasting in ‘n wet kan aanvaar.

Volgens die finansiële en fiskale komitee sluit die beste belastings wat provinsiaal gehef kan word, die volgende in: ‘n toeslag op persoonlike inkomstebelasting, ‘n heffing op brandstof en belasting op weddenskappe en dobbelary.

Die komitee toon aan dat die toeslag op persoonlike inkomstebelasting die belangrikste bron van belasting inkomste is. Die finansiële en fiskale komitee beveel aan dat belastingruimte geskep moet word vir provinsiale belastings sodat die vlak van die belastinglas, volgens nasionale doelwitte, behou word.

Wat is ons voorbehoude? Ons het belangrike voorbehoude oor die voorgestelde wetsontwerp. Die belangrikste hiervan is dat die wetsontwerp oorreguleer en te veel mag in die hande van die Minister van Finansies plaas.

Eerstens, selfs wanneer al die konsultasieprosesse van die provinsiale wetgewing afgehandel is en die minister tevrede is dat aan al die grondwetlike aspekte voldoen is, kan daar steeds onaanvaarbare oponthoude wees voordat provinsies toestemming kry om die belastings in te stel.

Tweedens, die toestemming wat provinsies kry vir provinsiale belasting hoef nie noodwendig ooreen te stem met die oorspronklike voorstel van die provinsie nie, dít nadat reeds aanvaar is dat die belasting in ooreenstemming met die voorskrifte van die Grondwet is.

Derdens, die ruimte of band wat aan die provinsies toegestaan word, kan ook te beperkend wees. ‘n Provinsie kan byvoorbeeld besluit om ‘n bepaalde belasting teen 6% in te stel en die minister kan besluit ‘n ruimte van tussen slegs 2% en 4% word toegelaat. Dit kan noodwendig nadelig op die provinsie se vermoë tot dienslewering en sy prestasievermoë inwerk.

Vierdens is ons ook nie oortuig dat die minister nasionale belasting genoegsaam gaan verlaag om só vir die provinsies ruimte te skep om belasting te hef nie. Ons vertrou dus dat provinsiale belasting nie gebruik gaan word om belastingkoerse op te jaag nie. Ons weet almal dat belastingkoerse in Suid-Afrika te hoog is en verlaag moet word om die ekonomie te stimuleer en werk te skep. Ons vertrou dat dit nie weer ‘n kwessie van gee met die een hand en neem met die ander sal wees nie.

Vyfdens, is daar die kwessie van gelyke belasting in provinsies. Die probleem wat hier aangepak moet word, is dat dié provinsies wat die belasting die nodigste het, die kleinste belastingbasis het. Ons meen dit is ‘n ernstige probleem wat aangepak sal moet word.

Dit is belangrik dat gelykheid in provinsies aangepak moet word. Dienslewering in al die provinsies behoort naastenby op dieselfde vlak te wees. Daar kan dus nie toegelaat word dat die omvang van belasting wat in die provinsies gehef word, te veel van mekaar verskil nie. Ten slotte, in die lig van al die bogenoemde voorbehoude, is dit duidelik dat ons nie die wetsontwerp kan steun nie. Die DP stem teen die wetsontwerp. (Translation of Afrikaans speech follows.)

[Mr J L THERON: Chairperson, hon Deputy Minister, the Constitution of South Africa provides that provinces have the power to impose taxes. The Constitution also determines that provincial taxation must be regulated by national legislation.

What is the benefit of the Bill? The Provincial Tax Regulation Process Bill has definite benefits which can be underlined. It is certainly a positive step that provinces can impose taxes. It will certainly strengthen the provinces’ positions so that they can achieve economic and social upliftment and growth in their provinces. Furthermore, it is also certainly a positive aspect that provinces themselves can decide which tax they want to impose to the benefit of the province in question.

The situations, for example the economic and social development in the different provinces, differ and for this reason it is good that each province can impose taxes which will best meet the needs of its particular circumstances.

It is clear and beneficial from the proposed Bill that provinces cannot impose taxes which are inconsistent with national economic policy or economic activities which extend across provincial boundaries, or will restrict the national mobility of goods, services, capital or labour.

It is positive that the Bill clearly spells out that provincial taxes may not negatively affect coherence in the national tax system across all three tiers of Government.

It is a positive aspect that the Financial and Fiscal Commission must first comment before Parliament can adopt a provincial tax in an Act.

According to the Financial and Fiscal Commission, the best taxes which can be imposed provincially include the following: surcharge on personal income tax, a levy on fuel and taxation on betting and gambling.

The commission has indicated that the surcharge on personal income tax is the most important source of tax revenue. The Financial and Fiscal Commission recommends that room should be created for provincial taxes so that the level of the tax burden, according to national objectives, is maintained.

What are our reservations? We have important reservations about the proposed Bill. The most important of these is that the Bill overregulates and puts too much power in the hands of the Minister of Finance.

Firstly, even when all the consultation processes of the provincial legislation have been completed and the Minister is satisfied that all the constitutional aspects have been complied with, there can still be unacceptable delays before provinces receive permission to implement the taxes.

Secondly, the permission which provinces receive for provincial taxes does not necessarily have to correspond with the original proposal of the province, and that once it has already been accepted that the tax is in accordance with the prescripts of the Constitution.

Thirdly, the scope or band granted to the provinces can also be too restrictive. For example, a province can decide to implement a specific tax at 6% and the Minister can decide that a range of only between 2% and 4% is allowed. This could impact negatively on the province’s ability to deliver services and its ability to perform.

Fourthly, we are also not convinced that the Minister is going to lower national taxation sufficiently to create room for the provinces to impose taxes. We therefore trust that provincial taxation is not going to be used to drive up tax rates. We all know that tax rates in South Africa are too high and must be reduced to stimulate the economy and create jobs. We trust that this will not once again be a matter of giving with one hand and taking with the other.

Fifthly, there is the issue of equal taxation in provinces. The problem which must be tackled here is that those provinces which need the taxes the most, have the smallest tax bases. We feel that this is a serious problem that will have to be addressed.

It is important that equality in provinces be addressed. Service delivery in all the provinces should be at nearly the same level. We can therefore not allow taxes imposed in the provinces to differ from one another too greatly.

In conclusion, in the light of all the aforementioned reservations, it is clear that we cannot support the Bill. The DP votes against the Bill.]

Mr J F AULSEBROOK (KwaZulu-Natal): Madam Chair, hon Deputy Minister, hon members of this House, firstly I will deal with the process that this Bill, with too many other Bills, goes through in the NCOP.

As a second House, we are too often put under extreme time constraints to process legislation and, as a result, are expected to rush through the formalities that amount to little more than rubber stamping Bills after they have gone through the NA process. This Bill is a classic example and I appeal to members of this House to honour their constitutional responsibility and not to allow the NCOP to become a mere appendage of the NA. In this case, members of the Select Committee on Finance would not even consider dramatic improvements, let alone drafting improvements and other more substantial changes that are in the interest of all provinces, because of these timeframes.

Turning to the Bill itself, in supporting this Bill which is before us and as envisaged in section 228 of the Constitution, we as a province will approach the implementation with great caution and suggest other provinces do likewise. Creating tax room nationally for provinces to surcharge income tax at this present time, has no rational argument to support it.

Let us consider the FFC’s proposal to review the current equitable share formula in anticipation of this Bill being adopted. It reaffirms the view that the following provincial taxes constitute the most feasible form of provincial own revenue sources. One, a surcharge on personal income tax, two, another fuel levy and, three, gambling and betting taxes.

We in KwaZulu-Natal are not in favour of changing the equitable share formula to accommodate the impact of provincial taxes on our provincial revenue. The quantum of these taxes is, in any case, likely to be quite small as a proportion of the total provincial revenue and it is not considered necessary or wise to destabilise the provincial equitable share formula to accommodate the changes anticipated from the introduction of provincial taxes. We do subscribe to the rationale of the provincial fiscal effort, but strongly believe that the provincial revenue has to be tightened on the basis of what is currently available, both in terms of estimation and collection before we venture into more complex methods of improving provincial revenues.

We share the National Treasury’s concern over the FFC’s proposal on a provincial surcharge on personal income tax. This is likely to be difficult to administer and its introduction would at best be premature.

The approach, as was contained in the draft Provincial Tax Regulation Bill, was instead favoured by us, whereby it was left to the discretion of individual provinces to propose specific provincial taxes in their area of jurisdiction. We however believe that the complexities … [Time expired.] [Applause.]

Mr V C XABA (KwaZulu-Natal): Madam Chair, hon Deputy Minister of Finance, today we are debating a ground-breaking piece of legislation.

KwaZulu-Natal welcomes the Bill as it takes our policy development forward, thus maturing our young democracy.

The Bill lays a firm foundation for future debates on the imposition of tax. This is a positive development. However, it must be borne in mind that a proposal for a new tax does not, in any way, suggest an additional source or sources of revenue, but introduces an additional form of tax which individuals and/or businesses will have to be further burdened with.

This development should be welcomed in that it does not say to provinces, from the day the Bill is made law, that they must begin to formulate their tax proposals. Instead it sets out a process which a province which desires to impose tax should follow. It seeks to regulate an intergovernmental process that must be followed by provinces in the exercise of the power given to them in terms of the Constitution to impose certain taxes, levies, duties and so on.

However, it must be stated that concerns have been expressed that if provinces do impose their own taxes at this stage that may result in a situation where a change in the tax rate can influence the movement of resources across provincial boundaries. It has also been said that that might actually create competition amongst provinces which may lead to a province with a strong tax base, like Gauteng or the Northern Cape, imposing affordable low rates and thereby becoming attractive to businesses across the country.

Battling provinces, which happen to be largely rural, like the Eastern Cape and KwaZulu-Natal, may find it not attractive at this stage to consider provincial tax or taxes of a substantive nature as this may squeeze a number of people or businesses that are beneficial to their respective provinces out of those provinces.

Another concern which has been expressed is that any suggestion of an additional tax burden on individuals or businesses can complicate our tax laws and increase administrative costs, which may negate the proposed tax benefit.

The experience of countries which have succeeded in tax law reforms shows more benefit in simplified tax laws. That is the direction South Africa was also moving towards. There is also fear that if the national Government were to provide tax room to free up space for provincial taxes that might diminish the amount to be divided between the spheres of government.

So it is a Bill that must be welcomed with some measure of caution.

Mr J P GELDERBLOM: Madam Chair, after the success of Pieter Marais in his court interdict today … [Applause.] [Interjections.] … it is an honour to be here this afternoon.

The Western Cape supports this Bill … [Applause.] … although we continue to question the constitutionality of the provision that separate regulatory legislation is required for each type of provincial tax which a province may choose to impose.

It is apparent from this provision, as contained in clause 2(2), that the Provincial Tax Regulation Process Bill is but the first of an entire series of regulatory Bills governing the area of provincial taxes. This raises serious constitutional reservations which are best summarised by Prof Christina Murray in an article in last month’s issue of Idasa’s Budget Watch:

In its current formulation, the Bill does not seem to be the Act which gives effect to the terms of section 228 of the Constitution. Section 228 envisages an Act ``in terms of which a taxing power will be regulated’’.

This Bill does not set out the terms on which the provincial taxing power can be regulated. It merely creates the procedural framework to the enactment of the Act that will give effect to the terms of section 228 and give the Minister the task of introducing regulatory legislation at a later stage.

This means that the Bill is at best only part of the legislation required by section 228. It regulates the process a province must follow to exercise its taxing powers, but does not regulate the taxing power itself, nor does it provide a framework for the regulation of the taxing power by regulations made by the Minister. That is left for future legislation, contemplated in clause 3(6) of the Bill.

Moreover, although the Bill seems to promise the section 228 legislation in its requirement that the Minister must introduce it, the Bill does not, and could not guarantee that it will be passed. It is always open to Parliament to decline to pass a Bill introduced by the executive.

Generally, however, the Bill has been though a process of considerable ameliorative amendment, and we are particularly gratified that it now acknowledges the specific role of provincial legislatures in passing provincial tax legislation.

There are, however, three areas of concern which I wish to highlight. The first of these relates to the costing of this Bill in terms of section 35 of the Public Finance Management Act. As the Financial and Fiscal Commission has pointed out, the Bill has cost implications for provinces in the sense that they are required to conduct detailed studies of the financial implications and impacts of any proposed tax.

Secondly, the Bill is silent on the mechanism to be employed in the event of a deadlock in the negotiation process with the SA Revenue Service, which is the designated collecting agent for a provincial tax. Again I turn to the submissions of the FFC to the select committee. While the regulations on collection require that agreement be reached with Sars before the imposition of a tax, it is not clear what the capacity limitations of the collection agent are. Therefore, the capacity limitations of Sars may prejudice certain provinces when they wish to impose new taxes. There should be an indication of how disputes or disagreements between Sars and provinces are going to be addressed.

Thirdly, we are concerned about the limited information that is to be submitted to the provincial legislatures in terms of section 5(3). It is our opinion that the same information which is furnished to the national Minister of Finance in terms of section 3(2) should also be made available to the provincial legislatures.

This legislation has been a long time in the making and the provinces can only welcome the fact that the Bill has now reached the end of its road in the legislature. It goes a long way towards satisfying our belief that while the collection of revenues from existing provincial sources could, in many instances, be improved upon, those provinces which have demonstrated effective management of both their income and expenditures should be entitled to explore further revenue sources with greater elasticity and creativity.

There now only remains the need to accelerate the process of identifying appropriate provincial tax options and including them on the allowed list. This matter has been under consideration for several years, and it is a source of concern that efficient and well-managed provinces should be further hamstrung while the Treasury grapples with the possible problems which may be posed by those provinces which are less able to efficiently manage budgeting and cash management processes.

In conclusion, the Western Cape supports the Bill, subject only to the constitutional reservation which I have raised. [Applause.]

Mr M I MAKOELA: Madam Chairperson, during this interesting period it is emerging that patriotic and committed citizens of this country, those with progressive minds, have come to realise that opposing just for the sake of opposing has no more place in the politics conducted in this House.

It is a pity that Mr Theron has gone, but we will save that for another occasion. Let me once more emphasise that, as has already been mentioned by the hon the Deputy Minister and the chairperson, South Africa is not a federal state, but a unitary state. Therefore, as much as the Constitution confers upon provinces certain powers to safeguard the national interests and uniformity of purpose, the overriding powers will always reside with the national Government.

Hence the assignment to the national Government by section 228(2) of the Constitution of the role of co-ordinating and monitoring the provincial powers of the imposition of certain taxes by an Act of Parliament, and the requirement that all proposals for the imposition of new provincial taxes will have to go via the national Government, through the Minister of Finance to safeguard, among other things, the coherence in the national tax system across all three spheres of government. Contrary to reservations in some quarters, this does not in any way diminish the powers of provinces to determine their own taxes nor does it seek to impose the will of the Minister and, therefore, the will of national Government on provinces, but only determines a uniform process to be followed should a province decide to impose certain taxes. The Northern Province welcomes the Bill. This is contrary to what the hon Aulsebrook has just mentioned in that KwaZulu-Natal raised some reservations that the provinces supported. The Northern Province did not support that.

We welcome the Bill because it opens the way for provinces to exercise their constitutional powers and, more especially, because the responsibility for initiating provincial tax proposals and the determination of the kind of taxes to be imposed rest with provinces, with no restriction on specificity as long as the kind of tax proposed is not prohibited by the Constitution.

The main objective for this Government remains the improvement of the quality of life of all the people in the country. Therefore any opportunity that will enable provinces to raise extra revenue, thereby improving their capacity to roll out programmes that will help correct historical inequities in the accessing of public services, social development, health and education, should be highly welcome by this House. We therefore support the Bill. [Applause]

The DEPUTY MINISTER OF FINANCE: Chairperson, I would like to thank hon members for their participation and support for this Bill, with the exception of one or two people in this House who did not. I would like to just pick up on a few of the points raised by various members.

I think it was the hon Theron, if I am not mistaken, who raised the point on the limitations that could be placed on the rate that could be charged by a province and how that might impact on service delivery. I think in raising this issue the important thing not to forget is also the potential negative economic impact of excessive rates that may be charged by a province. So one must not only think in terms of the revenue that will be realised because one is charging a higher rate, but also link this to a point raised by the gentleman from KwaZulu-Natal. He said that we must recognise that the sources are the same. This is simply an additional tax that one is imposing. We need to be conscious of those things. We must be conscious of the fact that one is not necessarily talking about a new tax base, one is really talking about the same people or businesses which would be paying these very same taxes.

The issue around timeframes that has been raised in processing legislation, I think, is really something we should not be arguing about, but rather recognising as something to improve upon. The issue of harmful tax competition - the whole issue about a tax impacting on economic activities across provinces or impacting on the movement of goods and services across provinces - is actually a much wider issue. We are dealing with this issue not just in the context of SADC this issue is being dealt with worldwide in terms of how tax dispensations can actually pervert economic consequences.

Right now we are dealing with this issue in the context of SADC, because I think we are potentially approaching what is called ``the race to the bottom’’ in which each country wants to have the lowest floor of tax rates. Now, in the context of trying to build a region that might not promote that objective. I am just saying that the issue around the impact of the tax across provinces is an important issue, which, I think, we need to keep in full view all the time so that we do not have what I would call perverse consequences in the way this would impact on economic activities in provinces. So while it is important for us to have this legislation, this is an issue that we need to approach cautiously.

Regarding the concern that there might be delays in the Minister passing the regulatory legislation, I do not know why that issue is arising because that is a legal requirement. This is what clause 3(6)(b) of the legislation says. So I do not know why there would be concern that the Minister might delay passing that regulatory framework.

Again, with regard to disputes with the Revenue Service, I also do not know why that concern is arising, because we designate the Revenue Service as the agency that will do the collections unless, of course, another entity is identified to do that on the basis that we can show that such an entity can do that efficiently and effectively. So I do not know why that issue does arise.

I think that those are minor concerns, some of which I do not think we should be overly worried about. I would like to thank all hon members for participating in the debate. [Applause.]

Debate concluded.

Bill agreed to in accordance with section 65 of the Constitution.

                 PENSION FUNDS SECOND AMENDMENT BILL

            (Consideration of Bill and of Report thereon)

The DEPUTY MINISTER OF FINANCE: Chairperson and hon members, we introduce today, for the consideration of this House, the Pension Funds Second Amendment Bill, commonly referred to as the Pension Surplus Bill.

The Bill is an expression of our movement towards a more democratic society in that it redresses past injustices by providing a mechanism to equitably and in a sustainable manner apportion actuarially determined surpluses that have accrued over the years and introduces new obligations for the provision of minimum benefits in private pension funds, registered under the Pension Funds Act of 1956.

This Bill ensures that past practices, which unjustly affected our people, are rectified, and provides mechanisms to ensure that surpluses do not arise or are not artificially created to serve the greed of the privileged few who remain behind in such funds. The broad themes surrounding the pension surplus debate concerned the right of access to surplus and the coverage of such a surplus. It addressed the question of whether it is appropriate to use surplus to redress past inequities. We adopted what we term a stakeholder approach as we were drafting this legislation. Through this approach we say that the surplus that exists in a pension fund, although belonging to the fund, may be apportioned between the broad categories of employees and members of the fund in a prescribed manner after taking into account the financial history of the particular fund.

The following principles guided Government’s position on this stakeholder approach: equity; the elimination of risk-sharing between employer and employee; protecting the savings performance of the industry; the separation of the past from the future; and the preservation of stability in this sector.

Broadly speaking, these are the issues that we used to help guide us as we entered the debate and the negotiations around this particular legislation. We believe that this approach is one that should be equitable to all parties, in particular the risk and the reward should be shared between the stakeholders.

Furthermore, the solution should not adversely impact the general economic situation in the country. We also had macroeconomic concerns as we approached this particular debate. This stakeholder approach is contrary to the views of labour, which states that the surplus belongs to members of the fund. It is contrary to the views of business, which states that the surplus is by right that of the employer, as it bore the risk in guaranteeing the pension promise to its member employees.

As an important principle, therefore, Government felt that former members, current members and the employer should all participate in the actuarial surplus. No one group has an exclusive claim, except to the extent that former members and pensioners needed to be topped up to minimum benefit levels as a prior charge to redress issues of inequity. Thereafter, all should participate in a distribution of the residual surplus, after taking into account the financial history of the fund. The latter will inform the board as to where the surplus came from and guide them as to who best should enjoy it.

Under this dispensation, in regard to former members: If they received less than the amount needed to satisfy their reasonable expectation, there is moral justification for topping them up, because they were inadequately informed and educated at the time of transfer or retrenchment. All members have a reasonable expectation that benefit improvements would be considered if there is a surplus in a fund. If no such improvements were awarded while the former members belonged to the fund, despite the generation of surplus, the former members were denied a chance of benefit improvements after they were moved out of that fund.

With regard to members, they will have a reasonable expectation that benefit improvements will be considered. As far as the employer is concerned, conservatism by the actuary and unexpected real returns often meant that employers paid more than was needed to fund the benefits. Therefore the employer has a reasonable expectation of enjoying lower future contributions, a so-called contribution holiday.

In adopting this stakeholder approach, the Pension Funds Second Amendment Bill attempts to propose a solution, with Solomonic wisdom, to the long- standing legal problem of who owns the pension surplus accruing in private pension funds with an estimated value of R80 billion as at 31 December 2000.

The Bill specifically only provides for the apportionment of surpluses existing, at the time of the enactment of the Bill, between the stakeholders, being members, former members and the employer. The Bill lawfully gives these stakeholders rights to such assets and prescribes how such assets may be utilised.

The Bill further provides for minimum benefits in respect of pension funds to be paid in future in defined circumstances, such as cases of transfer or retrenchment.

These minimum benefits are introduced to ensure that members’ reasonable expectations are satisfied in future. Members will now receive reasonable value in future in respect of their contributions, rights and reasonable expectations, leaving any surplus generated in future to be managed by the board of the fund in accordance with its rules.

These minimum benefits are extended backwards as a standard against which former members’ benefits or transfer values will be compared. Amounts paid to former members will be topped up to this standard as part of the surplus utilisation. A technical committee representative of the stakeholders will determine the actuarial assumptions underlying the minimum benefit standard. There will be wide consultation before the principles behind these assumptions are fixed. The committee’s recommendation will require the approval of the Minister of Finance before being published in the Gazette.

By requiring a top-up to the amounts paid in respect of former members who left a fund after 1 January 1980, and in equitably apportioning surplus after this top-up, the Bill in many respects answers the plea of workers to right some of the wrongs of the past. In introducing minimum benefits to be paid in future, the Bill will prevent wrongs which still happen today, and which, if nothing is done, will continue to happen in future.

In establishing rights to surplus once apportioned, the Bill will answer a plea from employers, and the retirement fund industry, to bring certainty to the use to which surplus assets can be put. In doing this, the Bill answers a plea from our Supreme Court of Appeal to legislate so as to give the courts guidance and to avoid the current situation where the courts have to address the issue on a case-by-case basis, with guidance primarily from foreign retirement funding environments. In one of the cases that took place in our courts, the only other experience that could be found was a Canadian experience on how to deal with the issue of distribution of surplus.

This Bill represents the completion of a long and gruelling process of negotiation. I would just like to briefly sketch, for the benefit of the members, the background to and the history of this Bill. Until late 1999 employers were effectively denied any opportunity to access in cash the surplus assets in pension funds.

Following the Financial Services Board’s Appeal Board decisions in the Lintas and the Paarl Widows’ and Orphans’ Pension Fund cases, the registrar was instructed to allow funds to amend their rules to pay the residual surplus on liquidation to the employer in certain circumstances. These rulings opened a floodgate to payment of assets from a pension fund directly to the employer on liquidation of the fund.

This was potentially very serious, because the mass transfer of members from defined benefit funds to defined contribution funds, many of which were sponsored by trade unions, as opposed to the employer, had left many defined benefit funds with lots of surplus funds ripe for liquidation. Further, these funds had few members, many of whom were senior employees with whom the employer could easily strike a balance. In these ripe circumstances, efforts to access the funds for the benefit of employers intensified. Obligations started piling up at the Registrar’s Offices seeking to access these surplus funds.

In September 1999 the Supreme Court of Appeal in the Tek Corporation Provident Fund case ruled that neither members nor the employer had legally enforceable rights to the surplus. After quoting from a Canadian judgment, the Supreme Court of Appeal stated that the broad policy issues raised by surplus debates ``would be better resolved by legislation than by a case-by- case consideration or individual plans’’.

The court stressed the need for trustees to exercise their fiduciary duties to work towards the aims of the fund concerned, as embodied in its rules. It also proposed that the stakeholders of the fund, including the employer, negotiate the distribution of the surplus and amend the rules to give effect to the distribution.

As Government we recognised that a change to the law was urgently needed if the process was to be managed without inequity to a significant group of former members. Its concerns were based on the belief that past transfers and retrenchments were inequitable, with hindsight, and part of the reason for this was an inequality of knowledge and access to professional advice at the time of the original events.

The issue here is that there was an imbalance that existed between employers and employees, or workers, at the time a lot of workers transferred out of pension funds into either defined contribution funds or provident funds. The bulk of the members had moved out of the funds already on transfer terms which had been negotiated in the formative years of many of our trade unions, without the parties having an equal understanding of defined benefit funding and equal access to professional advice.

Sometimes these former members left with only their own contributions accumulated with a low rate of interest. Seldom did they enjoy any form of the actuarial surplus or the difference between the fair value and the actuarial value of assets, which protected the fund against a fall in the stock market.

In the absence of Government action to introduce an equitable and acceptable Bill, former members of funds would be denied any voice forever regarding any claim to and any share in the accrued surplus. This would largely have been the case if the process suggested by the courts was allowed to proceed without legislative intervention, because the negotiations suggested would have excluded former members, such as those who had already transferred out of defined benefit funds.

Once the surplus was paid out to the employer and the residual defined benefit funds had been liquidated, former members would be forever denied access to surplus, much of which had been accumulated while they were members.

As both business and labour were important stakeholders, the pension surplus issue was referred to Nedlac to gain consensus on the principles and content of the Pension Surplus Bill, which was envisaged as the principal output of that process. I think, for obvious reasons, the Nedlac process failed to deliver a consensus. Literally, the parties stood on the extreme opposite ends of this particular issue, with the workers believing that the surplus is theirs and nobody else’s and business believing that surplus in a fund is theirs and theirs only. One could not achieve consensus in that situation.

The process in Nedlac, however, was extremely helpful in providing Government with a better understanding of the basis of both parties’ concerns. After 18 months of discussions in Nedlac, it was clear that business and labour were far apart on the major issues of principle and were not coming any closer despite intensive discussions.

Business failed to effectively table a mandated position on which negotiations could even begin. This remained the position even at the end of the Nedlac process when, as Government, we had to make a decision to legislate by taking the matter out of Nedlac’s hands and finalising the Bill on the stakeholder principle and its underlying principles.

A number of parties made written and oral representations. We would like to commend organisations such as Cosatu, the Association of Retired Persons and Pensioners, the Actuarial Society of SA and the Life Offices’ Association for the detailed input they submitted and their argument on the main points of principle. We would also like to thank the Pension Fund Adjudicator for his input on discrimination and dispute resolution. These comments helped us to refine this particular Bill. The gazetted Bill provided for equitable apportionment in a process that should satisfy regulations. The draft regulation answered the important questions such as: How far back should a fund go to determine the former members who may participate? How much should these former members get? What methods could be used to distribute the balance of the surplus? These are matters that will be determined in regulations.

The principles behind those regulations are the following: the issue of adding back surplus that may have been improperly utilised by the employer; retrospective review back to 1 January 1980; topping up to minimum benefit levels as a prior charge, in other words, if there is an existing surplus the first charge on that surplus is to top up to minimum benefit levels of members or former members; and equitably distributing the balance that exists. There are many issues that the regulations are going to deal with, but I do not want to get into those particular issues.

In conclusion, the implementation of this Bill will not be without practical difficulties. These will include the existence of past records and accurate employer data, informing the general public of the provisions of this Bill and tracing former members. These are all of the challenges that are going to face us as we implement this Bill.

We are aware of these challenges, but we also think it is important for us to deal with the inequities that took place in the past, and to come up with a dispensation to then regulate the issue of a surplus distribution going forward. A successful outcome can only be achieved if business and labour approach the principles embodied in the Bill within the letter and the spirit of the legislation.

To conclude, I would like to revert to the title of an address to the Institute of Retirement Funds’ conference of May 2000. The slot given to discussion of retirement fund surplus was aptly entitled: ``Surplus - the ongoing saga.’’

A good saga, ladies and gentlemen, has features such as passion and greed; people who have been denied what would satisfy their expectations by others who were more powerful than themselves; a story which stretches across generations; and a happy ending.

The saga around the entitlement to the distribution of pension fund surplus has all of these features, except the last one - that of a happy ending. In placing the Bill before the House, may it be the beginning of a happy ending. [Applause.]

Ms Q D MAHLANGU: Chairperson, I am not going to repeat most of the things the Deputy Minister has talked about. I think this was a very complex and difficult piece of legislature. Just to give members some idea, on the day of the meeting we had to negotiate to bring the two stakeholders together in agreeing on the Bill as the committee was going to finalise it.

I think some of the indications tell us that even at this late stage both business an labour are not satisfied with the Bill as it is. However, I think the process must continue. The select committee, including the officials who were present at the meeting, agreed that the Bill must be passed with the few amendments that the committee proposed, and that the department should come back to Parliament from time to time if any difficulties are experienced in the process of implementation. It was clear that if we were going to agree on the issues raised by both labour and business, we were not going to pass this legislation by today.

I just want to talk about three issues. I think one of the most important points to come out of the committee was around the principle of record- keeping.

I think, as all hon members know, that records can only be kept for seven years and, therefore, some hon members expressed concerns regarding the practicality of getting records dating back to 1980. However, we were assured by the Financial Services Board that different pension funds do have such records. So they will be able to furnish those records as and when they are needed.

Furthermore, even if those records are not found, a public process could be embarked upon in terms of which all those who used to be members of pension funds could be invited to come and submit information. And I think that from time to time pension funds do give their members individual statements. We think that these fears are unfounded.

The second point is around the retrospectivity of the Bill. On Monday morning, before the committee met, we had a fourth submission from a law firm which clearly indicated that they still had concerns about the Bill, and also that in their view the Bill was unconstitutional. We think that the process should continue.

The fears that business in particular has expressed around these issues are, in our view, unfounded. They are unfounded because when people were disadvantaged by different pension funds that discriminated against them in the 70s, 80s, 90s, etc, no one said that was unconstitutional. This Bill is supposed to correct the wrongs that have been perpetuated for the past years; now some people say that the Bill is unconstitutional. So in our view their fears are unfounded.

Some white businesspeople, who did not make submissions to the TRC to state what they did during the apartheid era, now have the guts to come to the committee and say that the Bill is unconstitutional, forgetting all the things that they did. So in our view their fears are not justified.

I think the two issues that I have just dealt with show that both business and labour fear the unknown. They both do not know what is going to happen when this Bill is finally implemented. In the view of the committee, hon members should allow the process leading to the implementation of the Bill to run its course. Upon implementation, when problems arise, the department could then come before the committee and before members of Parliament and, either through questions or motions, engage the Minister of Finance so as to get some progress in that regard.

Mainly, these are the two issues I wanted to touch upon. The Deputy Minister has dealt with the rest.

The committee has proposed three technical amendments, which I call upon this House to support. [Applause.]

Ms C S BOTHA: Chairperson, hon Minister, the substance of the Pension Funds Second Amendment Bill has been a hot topic for years in boardrooms and on the shop floor. The reason is, to an extent, that it has all the public appeal of the story of Robin Hood. Unfortunately, as in the story, although the action has more appeal, it does not have legal sanction.

The objective of the Bill is to bring clarity to the question of ownership and equitable distribution of current surpluses. It seeks to avoid future build-up of such surpluses. A substantial effort has been made to ensure that the principles of fairness and equity are built into the legislation rather than forcing people to resort to these Robin Hood tactics.

Unfortunately, trying to combine in this procedure remedy for both past and future action creates a whole raft of legal problems. In the past the acts that created this surplus were lawful in terms of the Pension Funds Act, the rules of the fund, applicable jurisprudence and the common law. And as a result stakeholders and investors who subsequently invested in funds have attained certain rights or at least benefit expectations. These actions are now being undone with retrospective effect and are being declared retrospectively improper.

Why should employers, we can well ask - and the point has been argued this afternoon - who used pension fund surpluses to gain a contribution holiday or to boost reserves of their companies or to give additional perks to a select band of employees, not be made to give back these gains when it is quite clear that they obtained this prize - the pension fund surplus - by dubious argument rather than fair means? But this is where the rub lies. However unfair the action seems from today’s vantage point, it was done, at the time, within the ambit of the law, and, as the Minister has pointed out, was also international practice.

This is a major problem for the DP. Do we decide that two wrongs - I direct this to Mr Makoela - make a right, and that we can retrospectively correct the wrongs of the past? Unfortunately, to do so one must do it within the legal framework. It would have felt, at least temporarily, like a moral victory, but we cannot. We are now erecting a new paradigm precisely to move away from government-by-force which allowed pension funds to do the morally wrong thing within the sanction of the law.

There is another major practical stumbling block - the tracing of contributors, as many as 900 000 in some funds, to whom back payments must be calculated. Business South Africa proposed that the back payments be limited to the compulsory seven-year record-keeping period, but the Bill has insisted on a 22-year period back to 1980. Common sense tells one that this is going to be almost impossible to comply with.

Additionally, the Bill will allow funds that were either badly administered or depleted before this Bill became law and therefore have no distributable surpluses, to be freed from the compulsion to pay back.

If the present Bill becomes law, logic dictates that a case should be made against such trustees in order to recoup the money. Instead, the unfairness is compounded by the comment of the Financial Services Board, which, in speaking for the Treasury and in refuting the objections raised to this anomaly, said: ``The employer can, instead of funding a deficit, walk away from the fund in deficit through liquidating the fund and distributing the inadequate assets amongst the members, thereby passing the risk to the members’’. Surely, this is an unacceptable line of argument.

As we will raise in connection with the Unemployment Insurance Bill, the DP also has a problem with the public sector being excluded from the ambit of the Bill. This is creating a separate class of employer and giving rise to new inequalities.

We do not dispute that the decisions were made based on a few cases of failure of regulation by the previous government within unequal power relations - to use our feminist terminology - and that, therefore, reviewing these decisions is now appropriate. Many of the proposals in the Bill will remedy the situation. But in the light of what we perceived to be its constitutional ambiguity, its administrative burden and its selective attribution of stakeholder responsibilities, the DP cannot support the Bill. [Interjections.]

Mr Z S KOLWENI: Chairperson, I must really indicate that a lot has been factored upon in my statement. But I just need to gallop through and highlight a few points. [Interjections.]

The key objective of the Bill is to make provision for the apportionment of actuarial surpluses for minimum benefits. Business South Africa is concerned about the retrospective nature of this Bill. It believes that it is improper to apportion a surplus which exists in the fund to persons who left the fund more than 20 years ago.

In their view those persons were treated correctly in terms of the rules and contractual obligations of the fund at that time. The Select Committee on Finance was, of course, as our chairperson has mentioned, privileged to be briefed by the Financial Services Board on the retrospective element of the Bill, in terms of which it argued that members of the pension funds are provided every year with a benefit statement that entails critical information used to determine the benefit payable. Therefore, that information could be used as data that would go back 20 years.

In conclusion, I must make the point that the ANC stands firm on its view that the Bill, as presented by the Portfolio Committee on Finance in the National Assembly, reflects an appropriate compromise between the views of Cosatu and Business SA. Therefore, as the ANC we support this amending Bill. [Applause.]

Dr E A CONROY: Mnr die Voorsitter, agb Adjunkminister en kollegas, hierdie wysigingswetsontwerp is daarop gerig om die Wet op Pensioenfondse, Wet 24 van 1956, te wysig, deur die daarstelling van minimum waardes wat in die toekoms deur aftreefondse onder gedefinieerde omstandighede, soos byvoorbeeld verplasing en afdanking, betaalbaar sal wees.

Die belangrikste wysiging is egter genoodsaak deur die surplusfonds van ongeveer R80 miljard wat deur die jare deur pensioenfondse opgebou is. Die groot vraag wat ontstaan het is: Aan wie behoort die surplus? Behoort dit aan die werkgewers of behoort dit aan die werknemers? Met hierdie wysigingswetsontwerp word daar gepoog om ‘n billike toedeling van die bestaande surplusfonds tussen lede, voormalige lede en die werkgewer te bewerkstellig en ‘n proses daar te stel waarmee ‘n billike verdeling verkry kan word.

Om ‘n beeld van die onderhawige probleem te vorm, is dit nodig dat daar ‘n duidelike onderskeid getref word tussen, eerstens, die gedefinieerde voordeelfonds, met ander woorde die fonds wat bepaal dat ‘n sekere bedrag aan die werknemer betaal sal word die dag wanneer hy of sy aftree, en tweedens, die gedefinieerde bydrafonds. Laasgenoemde is ‘n pensioenfonds waarin beide die werkgewer en werknemer vasgestelde bydraes stort, waarná die bedrag, wat aan die werknemer by aftrede uitkeerbaar is, gelykstaande sal wees aan beide sy of haar en die werkgewer se bydraes, asook die rente wat intussen daarop verdien is en die beleggingsgroei wat die bedrae oor die jare gerealiseer het.

Hoewel intensiewe konsultasies en onderhandelings oor hierdie kwelvraag binne die raamwerk van Nedlac plaasgevind het, en waartydens besigheid en arbeid klaarblyklik beide met logiese en oortuigende aktuariële argumente vorendag gekom het, kon aanvaarbare konsensus nie bereik word oor wie die surplus toekom nie. Aangesien daar nie in die onderhandelings ‘n aanvaarbare ooreenkoms tussen die besigheidsektor en arbeidsektor bereik kon word nie, moet hierdie aktuarieel-tegniese wysiginswetsontwerp as ‘n aanvaarbare kompromis tussen die twee uiteenlopende sienings aanvaar word. Die Nuwe NP steun die wysigingswetsontwerp. [Applous.] (Translation of Afrikaans speech follows.)

[Dr E A CONROY: Mr Chairman, hon Deputy Minister and colleagues, this amending Bill is aimed at amending the Pension Funds Act, Act 24 of 1956, by the setting of minimum values that will in future be payable by retirement funds, under stipulated circumstances, for example transfers and dismissals.

The most important amendment is however necessitated by the surplus fund of about R80 billion that has been built up by the pension funds through the years. The big question that has arisen, is: Who does the surplus belong to? Does it belong to the employers or does it belong to the employees? This amending Bill is seeking to procure a reasonable apportionment of the existing surplus funds to members, previous members and the employer and to bring about a process through which a fair dispensation could be achieved.

To form a picture of the problem in question, it is necessary that there should be a definite distinction between, firstly, the defined benefit fund, in other words the fund which states that a certain amount should be paid to the employee on the day on which he or she retires, and secondly, the defined contributory fund. The latter is a pension fund in which both the employer and the employee deposit set amounts, thereafter the amount, which is payable to the employee on retirement, will be equal to both his or her and the employer’s contributions, as well as the interest earned on it in the meantime and the investment growth that was realised by the amounts over the years.

Although intensive consultations and negotiations on this thorny issue took place within the framework of Nedlac, during which business and labour apparently both came up with logical and convincing actuarial arguments, an acceptable consensus on who is entitled to the surplus could not be reached. Because an acceptable agreement could not be achieved between the business sector and the labour sector during the negotiations, this actuarial-technical amending Bill should be seen as an acceptable compromise between two divergent views. The New NP supports the amending Bill. [Applause.]]

Mr T RALANE: Chairperson, Deputy Minister, the ANC supports the objectives of the Pension Funds Second Amendment Bill. The Bill clarifies the vexed question of ownership and the equitable distribution of current surpluses in respect of defined benefit pension funds. The Bill further avoids the build-up of such surpluses and provides for and brings clarity to minimum individual reserves and minimum benefits in respect of pension increases. Much effort and substantial consultation has gone into the legislation currently before this Parliament. A substantial effort has been made to ensure that the principles of fairness and equity are incorporated into the legislation. However, I would like to pay special attention to the proposed section 30(3) of the Bill that makes the employer liable for the deficit. If a fund is terminated or dissolved and the fair value of its assets is less than its minimum individual reserves, the shortfall would represent a debt to the fund by the employer, while Business SA considers that it would be unreasonable to require an employer to meet such a deficit as the Board of Trustees and not the employer would have been responsible for investment decisions. Business SA, therefore, argued that this provision should be deleted.

Our response, however, is that this argument is weak for the following reasons. Firstly, the employer appoints as many as 50% of the members of the board. For the board to adopt an investment strategy which is imprudent would require the participation of these employer-appointed members who can be expected, in any event, to report back to the employer on an issue such as an investment strategy.

Secondly, nothing prevents the rules from requiring that the employer be consulted before the investment strategy is adopted by the board. This would protect the employer against such imprudence.

During the hearings on this Bill, Business SA argued that members and former members of pension funds should have no right of recourse to the dispute resolution process. The members of the Select Committee on Finance, however, endorsed the Bill in this regard.

The Bill seeks that members and former members have a right to complain to the board. The board of pension funds is obliged to inform the registrar of these complaints and the action taken. The registrar then has the right to refer he matter to the specialist tribunal. If the members and former members are aggrieved at the registrar’s refusal to refer the apportionment to the specialist tribunal, they may lodge an appeal to the Financial Services Board’s appeal board.

The registrar will therefore decline to refer cases in which there are outstanding complaints at his peril. In all likelihood, unless a complaint is obviously trivial, referral to the specialist tribunal will take place.

The ANC votes in favour of the Bill before this House. [Applause.]

The DEPUTY MINISTER OF FINANCE: Chairperson, again I would like to thank members for participating in the debate, particularly those who have supported the Bill. I see that the hon Sandra Botha is not here.

An HON MEMBER: She is here.

The DEPUTY MINISTER: Oh, is she here? [Laughter.] [Interjections.] I thought she had run away. I would like to say to her that the problem is that she kisses frogs. [Laughter.] She must stop kissing frogs, then she can read the South African situation correctly, because I think she is missing the point. The point here is not so much about legality.

In any case, even if we were arguing issues of legality, it does not mean that something that is legal at a particular point cannot be wrong. I think that is part of the history of South Africa. A lot of things that were done under the auspices of the law were actually wrong. We can go elsewhere - the German situation and the crimes that were committed against the Jews, for example. Those are issues that are being dealt with today, and these were things that were done within a legal framework.

When I say that she is missing the point, I think the issue here is this: In the past a lot of abuse occurred in pension funds as members were transferred or retrenched out of pension funds either into provident funds or, as I said, retrenched. People were transferred or retrenched and given less than their fair value of what belonged to them in the pension fund. In cases in which surpluses were used in the past by employers, they used that in an inequitable fashion.

What is even worse today, which would really, really duplicate the wrongs that were done in the past, is that we have funds today out of which most of the members have been transferred, and those funds remain with huge surpluses and few members. If we say that we are going to distribute that surplus to the few members who are remaining, when there were gross abuses that were done in the past against those members who were transferred out of those funds, then one is missing the point - the issue. The Pension Funds Act did not sanction the kinds of abuses that occurred. The Pension Funds Act is the legislation that we still use today. We are looking at reviewing it, simply because there are so many changes that have taken place. It is an old Act, but it is still an Act we are using to date, and we are not challenging the validity of that legislation.

The issues we are trying to address are equity and fairness. That is what we are dealing with here. I think we must note the ruling of the courts in the Tek Corporation case, in terms of which it was said that it is best for us to have a legislative framework to manage the whole issue of surplus, and who has a right and how one distributes surplus.

We are very clear on this. The legislation separates - it is not confused - the past from the future. The past comes in to the extent that we feel we must address issues of historical inequity that took place. We will do that once and for all, and then going forward we will have a sound framework within which to manage the issues of the surplus that accumulates in pension funds.

The issue of liquidation of funds, which was raised by a member here, is something that we have considered as an absolute last resort in order to avoid situations in which pension funds can collapse. Out of this whole process we would still like to see healthy pension funds in South Africa, which is something that we have today. We would not like to undermine that, even as we address the historical inequities that took place. This is an option that arises really almost as a last resort when there cannot be, through the processes that we establish, a way of dealing with a deficit that may exist in a particular fund.

Those are just some of the issues that I thought I should pick up on. I would like to thank members again. [Applause.]

Debate concluded.

Bill, subject to proposed amendments, agreed to in accordance with section 75 of the Constitution (Democratic Party dissenting).

   POLICIES AND CHALLENGES PERTAINING TO PERSONS WITH DISABILITIES

                      (Subject for Discussion)

The MINISTER IN THE PRESIDENCY: Chairperson, I thought the Deputy Minister of Finance was talking about my pension. [Laughter.] It gives me particular pleasure to speak here this evening and to commend this House for taking the decision to debate this very important human rights cause. Could I therefore convey my sincerest congratulations to all of the members who are responsible for focusing their attention today on the question of people with disabilities.

This cause requires a far higher public profile than it has at present. It seems to me that it is not only the Office on the Status of Disabled Persons, but certainly the elected institutions that we have in our country, including the media, that have to give a higher public profile to this particular subject.

Let me start with a quotation from President Mbeki, who at that time was the Deputy President, in a foreword he wrote to the Integrated National Disability Strategy. This is what he said:

Among the yardsticks by which to measure a society’s respect for human rights, to evaluate the level of its maturity and its generosity of spirit is by looking at the status that it accords to those members of society who are most vulnerable, the disabled people, the senior citizens and its children.

The concept of a caring society is strengthened and deepened when we recognise that disabled people enjoy the same right as we do and that we have a responsibility towards the promotion of their quality of life.

We must stop seeing disabled people as objects of pity but as capable individuals who are contributing immensely to the development of society.

The central challenge therefore that all of us face is how best we integrate people with disabilities into all avenues of life. Since 1994 much progress has certainly been made. Yet we cannot but admit that vast challenges remain, not the least of which a deeply ingrained mind-set that relegates the disabled to the margins of society. We must not be satisfied until there is full integration and participation of persons with disabilities in society, as a basic tenet of human rights.

This must go hand in hand with the eradication of inequalities based on race, gender and religion, all of which were so powerfully experienced under apartheid. Let us ensure that in every aspect of life - from train and taxi to Tuynhuys, from hamlet and hospital to metropolis - there is justice for disabled people.

It would be ironic were it to happen that freedom was achieved from apartheid, freedom was achieved from sexism and gender discrimination, freedom was achieved from mind control, detention and repression, and yet disabled persons in our society remained unfree.

The challenges we have faced since 1994 essentially had to do with the extent to which we could translate these universally held positions into concrete realities for people with disabilities; how to implement programmes, to change mind-sets and to transform the social landscape to create a truly democratic people-centred society where South Africans in general, and people with disabilities in particular, can share in the benefits of such a society in the broader sense.

In view of our human rights approach, we have deliberately moved away from the medical/welfare model of disability that viewed it within the context of pity, and located power over disabled persons in the hands of the medical and welfare professions. We consider the restoration of the dignity and the right to determine one’s own future to be cornerstones of our process of integrating people with disabilities into society.

We would rather see disabled people working productively within their capacity, to contribute to the economy and to their own wellbeing than sitting in the sheltered atmosphere of hand-outs and no real work; and very little activity generally. Where they require physical or other forms of assistance, it is the duty of society to provide this. From the beginning of our democracy, we took deliberate decisions to include people with disabilities on our election lists and our national legislature in consequence included no less than ten members with disabilities.

It is a matter of some pride, it seems to me, that it would be accurate to say, I think, that we have more people with disabilities in our South African Parliament than almost any other parliament in the world. [Applause.]

Can I digress for a minute and appeal to the representatives of all the political parties here, including the ANC? When we have the next election in 2004, I hope all political parties will include more people with disabilities when they draw up their lists. Parties should not put them at the bottom of their lists, they should put them at the top so that they can get elected. [Applause.]

This really is an appeal to all the political parties. I am not making propaganda for the ANC. The truth of the matter is that the overwhelming majority of people with disabilities come from the ANC list. This is an appeal to all the other political parties.

We have got to ensure that more people with disabilities get elected into national Parliament, into provincial legislatures, into local government positions. I can add that almost every single important commission that is set up by either the Cabinet or through the parliamentary process now includes a person with a disability.

After the second democratic election in 1999, we established in our Parliament a joint monitoring committee on disabled youth and children. The chief was one of them. This parliamentary committee has all the powers and responsibilities of parliamentary committees to monitor, evaluate and oversee the programmes of Government in these areas. I hope they do their job, but, never mind.

We also established in the Presidency the Office on the Status of Disabled Persons, which takes specific responsibility for advancing, evaluating and monitoring the administrative policy on disability, ensuring that all Government departments pull their weight and also clearly liaising with all civil society structures dealing with the issues of disability.

We are currently starting a liaison and communication side of this office. It is very important to understand that this office is located in the Presidency. The President himself has to take overall political responsibility for this question.

Since not only elected structures need attention, a representatively constituted SA Federal Council for the Disabled was established to bring together all disability groupings and NGOs to make a fully representative body, pushing for the transformation of the disability sector.

In addition we have several pieces of legislation that directly address the concerns of disabled persons, specifically as they relate to discriminatory practices in the workplace. The most notable among these are the Promotion of Equality and Prevention of Unfair Discrimination Act and the Employment Equity Act.

The former deals directly with the question of environmental accessibility and defines reasonable accommodation in the workplace. The latter outlaws discrimination on the basis of disability when recruiting personnel. I would suggest that, in addition to having a welcome look into its heart on the question of race, the advertising industry should consider the position of disabled people too and actively include them in its activities and campaigns and thus help to change traditional mind-sets.

Yesterday President Mbeki spent quite some time speaking about imbizos and how it is necessary to go to the rural areas, off the nice tarred roads onto the most difficult potholed roads. I ask that when the NCOP representatives go on their provincial visits, they should go to these areas and see what is happening to people with disabilities. Are we doing enough? Are the local government structures doing enough? And if we are not, then they should come back, compile a report and make concrete proposals as to how we can address these issues. I just hope that the NCOP itself will begin to take this as one of its critical tasks when it carries out its own provincial visits. Hon members of the NCOP should not just leave it to the portfolio committee. To fulfil one’s duty in the committee is very important, but it cannot function unless the rest of the members of Parliament also take it seriously.

But there are other things. The Department of Labour drafted us a code of good practices for when we are monitoring and evaluating. What one needs to do is say that here is Government’s policy, here is legislation, what is happening in this country in terms of the implementation of this legislation?

For example, are we doing enough within the Public Service itself to implement our own legislation? What is happening in the private sector? That is what I would understand by monitoring and evaluation, not sitting there and deciding whether this Minister is a good Minister and whether the committee is going to call this Minister to its meeting. The Minister will come to your meeting.

The question is: Do we have the capacity, do we have the drive, do we have the commitment to do the hard work? It is very hard work to monitor. One must go and read, one must go and talk, one must look for indicators and that is why I said earlier that I hope that the parliamentary committees will do their bit of the work, because if we do not, people with disabilities will remain within the legislation itself.

I want to make a last point. The OAU has declared the first decade of this new millennium as the African Decade of Disabled Persons. It seems to me that it is necessary for our elected institutions to ensure that when we talk about implementing this new partnership for African development, that this African decade for persons with disabilities remains a central focus of what we want to do in that part. In my view if, on our side, we are not doing enough, it is the responsibility of institutions like Parliament to come and say, ``You are not doing enough, you need to do more,’’ and so on and so forth.

My appeal to this House is that we have to do something about this African decade. The truth of the matter is that if we do not do anything about it in South Africa, very little is going to happen elsewhere on our continent. We therefore do have a very important responsibility towards people on the rest of our continent. [Applause.]

Mr P D N MALOYI: Chairperson, hon Minister in the Presidency, hon members, hon Chairperson of the GMC who is sitting up there in the gallery, we once more express our sincere appreciation to the Chairperson and the team around her, those wise men and women, for having agreed and having allowed us to hold this important and significant debate on policies and challenges pertaining to people with disabilities.

We invited persons from the disability sector to be part of this debate. The intention was that some of us would sit over there, listening to us as we speak. I regret to inform the Chairperson that some of our colleagues from this sector could not join us, due to the fact that our gallery is not fully accessible. It is not fully accessible.

Earlier today the Chairperson of the NCOP did indicate that, starting from next week, this House will be repaired or refurbished. We hope that when we come back next year, it will be accessible to people with disabilities.

Before 1994 the apartheid regime treated people with disabilities as sick persons who should be given pensions or grants, people who should be locked up and kept out of sight. They were not believed to have the capacity to work for themselves and their families. No effort whatsoever was made to integrate or empower them. Obviously the approach of the previous regime was therefore based on what is called ``the medical model’’.

With the advent of the ANC to power, the new Government, in conjunction with Disabled People South Africa and the disability rights movement, changed from that model to a social model. This model moves from the premise that disabled people are first and foremost human beings and need to be treated as such.

It means that disabled people need to be integrated into the mainstream of society as much as possible. This, therefore, breaks down into disabled children going to mainstream schools, living at home with their families and being provided quality assistive devices so as to enable them to lead active lives like all of us.

They should have access to accessible transport. Hopefully the recapitalisation programme will take this into consideration. We have had a number of meetings with the Minister of Transport, and he indicated that this is part of the criteria which are being used, namely that as we plan the new transport system we will have to consider accommodating people with disabilities. We should also be treating disability as a criterion for affirmative action. Disabled people should generally have their human rights protected and entrenched, as is the case now in our new Constitution.

Moreover, disabled persons should also be provided with space and opportunity to use their creative, artistic and intellectual capacity to the maximum, obviously not only for their own benefit, but also for the benefit of the entire community.

We are proud to announce that the ANC-led Government has pioneered the cause of giving disabled people a resounding voice in the affairs of this country through passing legislation to promote the human rights of disabled persons. Examples of such documents and legislation are the White Paper on the Integrated National Disability Strategy, the White Paper on learners with special needs, the South African Library for the Blind Act, the Labour Relations Act, the Employment Equity Act, the Basic Conditions of Employment Act, the Promotion of Equality and Prevention of Unfair Discrimination Act and many others. I could go on and on, but we would finish very late.

The other critical achievements include the Constitution and its Bill of Rights, which prohibits discrimination on the basis of disability and recognises sign language as a language of the deaf people and as a language that needs to be protected.

Another major recognition of the right of people with disabilities and their contribution globally culminated in the founding of the international day for people with disabilities, which is 3 December. Disabled Peoples’ International pushed for its founding, and it was adopted by the UN and the OAU in 1992. The objective of the day is to highlight progress achieved and what further work needs to be done with regard to people with disabilities.

Our Government is more than committed to mobilising the state as a whole in this critical terrain of struggle. Many of our people on the African continent are disabled, and this is as a result of conflicts and wars and their legacies. There are other painful consequences of war and conflicts, such as unemployment and displacement.

It is against this backdrop that we welcome the declaration of an African Decade of Disabled Persons by the disabled people’s organisation in 1988. Subsequent to this declaration the 35th assembly of heads of states and governments of the OAU declared 3 December 1999 to 3 December 2009 the decade of disabled persons in Africa, and also expressed their unwavering commitment and support for the efforts of these organisations.

Let met remind members that our President launched the South African chapter of the decade on 5 December 1999. This decade is significant, given the level of disability caused by the past and present conflicts on our continent, Africa.

Due to the fact that I do not have enough time, will you allow me to conclude by saying: As members of Parliament, as citizens of this lovely country, South Africa, we have a responsibility to occupy our rightful place on the global stage, and at the same time make a meaningful input in the development of humanity.

As I said in the previous debate, hope was a rare commodity during the apartheid period, but under this new era of democracy, hope is no more an illusion. [Applause.]

Mev J WITBOOI: Voorsitter, agb Minister en lede, vir solank ‘n groot liggaam soos die Wêreld Gesondheid Organisasie nog nie daarin kon slaag om die woord ``gestremdheid’’ raak te omskryf nie, sal ons hierdie debat moet voortsit.

Hoe definieer ons gestremdheid? Is die fisiese gestremdheid wat met die eerste oogopslag waarneembaar is die enigste tipe gestremdheid wat in ag geneem word wanneer beleid oor die aspek geformuleer word? Hoe akkommodeer en hoe handel ons met daardie tipes gestremdhede waarvan ons eers bewus word tydens direkte interaksie met andere?

My persoonlike ondervinding het my genoop om tydens my werksaamhede in my bedieningsgebied, en ook tydens my daaglikse omgang met mense, dieper te kyk na hierdie ``stille gestremdheid’’ in ons gemeenskappe. Vergun my om vandag in die tyd tot my beskikking oor hierdie stille gestremdheid te praat.

Ek is die ma van ‘n 23-jarige, hoogs intelligente en andersins begaafde jongman wat baie swaar hakkel. Die pad na volwassenheid was nie vir hom maklik nie. Tydens sy primêre skooljare moes hy baie keer die spotnaam van hakkelaar verduur. Ek het baie keer saam met hom seergekry en ineengekrimp wanneer mense in sy teenwoordigheid grappe oor hakkelary tot groot vermaak vertel het.

Sy eerste werk, wat hy na sy N3-sertifikaat as motor- en dieselwerktuigkundige aanvaar het, het hy as ‘n gebroke jongman verlaat omdat hy deur ‘n ongevoelige werkgewer as gevolg van sy spraakprobleem uitgelag is. Baie dae en maande se pastorale berading het hom nie heeltemal van hierdie nare ondervinding genees nie, en hy, soos ek later uitgevind het vele ander in soortgelyke omstandighede, vermy vandag nog omstandighede waar hulle in ‘n poging om werk te bekom aan mondelinge onderhoude blootgestel word. Hulle wil nie meer seerkry nie.

Ek wil vandag hier vra dat hierdie gebrek ook as ‘n gestremdheid gedefinieer moet word, en dat wanneer werknemers ‘n aanduiding moet gee van hoeveel gestremdes hulle aan diens het, daar gekyk sal word na hoeveel doofstommes en mense met spraakgebreke van hierdie werkerskorps deel uitmaak.

Daar is ‘n potensiële sterk mark van jongmanne en -vroue wat hulself nie sal spaar om Suid-Afrika te maak werk as hulle net gehelp word om uit hierdie wurggreep van stille gestremdheid te beur nie. ``Stille gestemdheid’’ omdat hulle net stil word, en later heeltemal wegraak.

Ek dank die Minister vir die vordering reeds gemaak om die lewensgehalte van die gestremdes te verbeter. Die komiteevoorsitter en -lede moet bedank word vir die ekstra myl wat hulle loop om die vordering te monitor. Dit is ‘n voorreg om op die komitee te dien.

In die Weskus, waar ek vandaan kom, is daar ‘n gesegde wat lui: ``Jy is soos ‘n kraan wat drup’’. Dit beteken jy hou nie op nie. Ek gaan nie ophou praat nie, want die doofstommes kan nie praat nie, en die hakkelaars is nog nie gereed om vir hulself te praat nie. (Translation of Afrikaans speech follows.)

[Mrs J WITBOOI: Chairperson, hon Minister and members, for as long as a huge body such as the World Health Organisation cannot succeed in defining the word ``disability’’ we will have to carry on with this debate.

How does one define disability? Is the physical disability which is perceivable with the first glance the only type of disability which should be taken into account when policy is formulated around this aspect? How does one accommodate and deal with those types of disabilities of which we only become aware during direct interaction with others? My personal experience has compelled me to look more closely at this quiet disability in our communities during my activities in my ward as well as during my daily association with people. Allow me today, in the time at my disposal, to talk about this quiet disability.

I am the mother of a 23-year old, highly intelligent and otherwise talented young man who stutters severely. The road to adulthood was not easy for him. During his primary school years he had to endure the nickname of stutterer on many occasions. On many occasions I felt the hurt with him and cringed when people in his presence made jokes about stuttering.

His first job, which he accepted after he obtained his N3 Certificate as motor and diesel mechanic, he left as a broken young man because he was laughed at by an unfeeling employer as a result of his speech problem. Many days and months of pastoral counselling did not entirely heal him of this terrible experience, and he, like many others in similar circumstances, later found out, still chooses to avoid circumstances where in an attempt to find work they are subjected to oral interviews. They do not want to get hurt any longer.

Today I want to ask here that this imperfection also be seen as a disability, and that when employers have to give an indication of how many disabled people they have in their employ they should look at how many deaf mutes and how many people with speech disabilities make up part of their workers’ corps.

There is a potentially strong market of young men and women who will not spare themselves to make South Africa work if they are only helped to get out of this stranglehold of quiet disability. ``Quiet disability’’ because they become quiet and eventually later completely disappear.

I thank the Minister for the progress made to improve the quality of life of disabled people. The chairperson of the committee and committee members should be thanked for the extra mile they walked to monitor the progress. It is a privilege to serve on this committee.

On the West Coast, where I am from, there is a saying which goes: ``You are like a dripping tap’’. This means that you never stop. I am not going to stop talking because the deaf mutes cannot talk for themselves and the stutterers are not yet ready to talk for themselves.]

Ms E C GOUWS: Chairperson, hon Minister, hon members, I read this on behalf of my colleague the hon Raju. There is a serious lack of reliable information on the nature and prevalence of disability in South Africa. This is because, in the past, disability issues were viewed chiefly within a health and welfare framework.

Another factor is the tendency of society to view people with disabilities as a single group. Thus, people in wheelchairs become the popular representation of persons with disabilities. This, of course, ignores the diversity of disability and the variety of needs experienced by persons with different types of disability. It is critical to note that disability does not only affect the disabled individually, but also the family and the immediate community.

The majority of people with disabilities in South Africa have been excluded from the mainstream of society and have thus been prevented from accessing fundamental social, political and economic rights.

The political and economic inequalities of the apartheid system played no small part in the exclusion experienced by people with disabilities and their families. Social attitudes, too, have perpetuated stereotypes of disabled people as dependent and in need of care. Democratic South Africa must ensure that the discriminatory and weak legislative framework that sanctions and reinforces exclusionary barriers is a thing of the past.

In the South African situation, poverty, unemployment and social isolation play a dominant role as key forms of exclusion responsible for the cumulative disadvantage of disabled people. People with disabilities face extreme levels of inequality and discrimination. Different social, economic and political factors interact and create underdevelopment, marginalisation, unequal access to resources and a lack of service provision.

One of the challenges for the Government is to seriously address the critical problem of inaccessibility faced by people with disabilities. This refers to buildings, communications intended for deaf and blind people, services such as public transport, and opportunities for social interaction such as sport and recreation.

Only yesterday the hon the President addressed this august House and spoke passionately of how South Africa cannot ignore the plight of poor people with regard to proper access to roads, clinics, housing, education, social welfare, etc. If the challenges of infrastructure are immense for ordinary citizens, how much greater is this challenge to provide infrastructure for the wellbeing of people with disabilities?

The issue of gender equality is currently receiving high priority, with the status of women high on the Government’s agenda. Capacity-building programmes and organisations addressing special social problems of women are on the increase, and rightly so. My party pleads this afternoon for a similar commitment and resolve to place the needs of people with disabilities on a par with the needs of women. Indeed, the Constitution of the Republic of South Africa dictates that the improvement of the equality of life of disabled persons is just as important as the improvement of the quality of life of women, youth and children.

We therefore ask Government bureaucracy not to make life more difficult than they are when addressing the pragmatic needs of our distressed and disabled fellow South Africans. [Applause.]

Mrs C NKUNA: Hon Chairperson, hon Minister, hon special delegates, hon colleagues, firstly allow me to congratulate the hon Lewis Ndzimande, a member of the National Assembly and a disabled person who is the chairperson of Disabled People of SA. Secondly, also allow me to congratulate the chair of the joint monitoring committee, the hon Hendrietta Bogopane, who is chairing so excellently. We also congratulate the other members of this committee. [Interjections.]

It is my pleasure to address this House on policies and challenges that pertain to people with disabilities. I would like to pay special attention to the role of Parliament in advancing the rights of disabled people.

When our parliamentarians review and monitor legislation, and exercise their oversight role on national departments and the national Budget, great care must be taken to ensure that parliamentarians include disability- friendliness as one of their variables in executing their oversight functions.

By so saying, there is terminology which we use that is not acceptable. I am not going to dwell too much on it. But, for example, instead of saying a particular person uses a wheelchair, we say he or she is wheelchair bound or is confined to a wheelchair. Such utterances are not needed in this community. We should rather say: This particular person uses a wheelchair. Amen.

People with disabilities are very vulnerable to the misuse of language and terminology where terminology has the effect of labelling people with disabilities, stereotyping them, discriminating against them and, ultimately, creating a culture of nonacceptance of diversity.

While our national Constitution and Acts such as the Promotion of Equality and Prevention of Unfair Discrimination Act, outlaw discrimination based on disability, parliamentarians need to take additional measures to ensure that this legislation has relevance for the many disabled people.

Government is in favour of an affirmative action programme for disabled persons in terms of which all Government departments and statutory bodies have disabled people comprising at least 2% of their staff. Parliamentarians, when exercising their oversight functions, must ensure that all requirements that pertain to disabled people are fulfilled. It is alarming that some national departments have not employed a single disabled person.

The plight of disabled persons, moreover, is not the concern of just one sphere of government. All spheres of government are equally responsible for highlighting the needs of disabled people. The specific needs of disabled people are not limited to national, provincial or local competencies. They are multisphere needs of a concurrent competency.

The usual response to the needs of disabled people is, for example, an increase in welfare grants to disabled people, and disabled children being relocated to special schools that are remotely located from the urban centres. The more appreciated approach to the needs of disabled persons and which the ANC Government supports is one of integration into mainstream society.

Allow me this time to commend and congratulate the headmaster of a school, the Harry Oppenheimer Agricultural High, which is in Potgietersrus in the Northern Province. Two disabled learners were taken from the Letaba School for the Disabled and admitted to the Helen Franz School for the Handicapped. The principal admitted them without asking a lot of questions. They are doing so well, and their teachers are saying they are happier than they were at their previous institutions.

Disabled persons may have specific needs, such as access to wheelchairs, sign language or Braille facilities. In all other instances, however, disabled persons are capable of functioning just like any nondisabled person.

There is one example with which members of this House should be familiar, namely Advocate Zak Yacoob, who is currently a Constitutional Court judge. Some of us present may recall that he is a well-known political activist and anti-apartheid lawyer from the days of the UDF. He is openly labelled as the ``blind advocate’’. The question of his competency is not taken into consideration but his physical disability gives him that name. The approach to the needs of disabled persons is not to increase their reliance on welfare grants but to facilitate their access to society and permit them to live ordinary lives while their individual needs and specifications are addressed. Persons with disabilities have the same needs as nondisabled people with such minor exceptions as access to assistive devices. In all respects, such as the right to have families and to procreate, the ability to be managers and the right to be economically independent, they are exactly the same as the rest of society.

The words of the disabled lawyer Albie Sachs are most enlightening. He is also a well-known freedom fighter and a Constitutional Court judge. He said, after returning from exile, that he felt liberated for the first time only after meeting disabled people in South Africa and learning that disabled people were fighting and not waiting for their rights to be achieved. [Time expired.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Hon member, I am afraid that your time has expired. Mrs C NKUNA: Very well, Chairperson.

There is a document that the House should look at. It is about the employment of disabled people. When looking at this document, we see that the equation is not balanced with regard to the employment of disabled people. The disabled are not allowed and not given an opportunity to apply for these posts. With regard to telephone switchboard operators, there is that short note which states that they should apply for that. [Applause.]

Mr K D S DURR: Chairperson, I think what we miss today is the presence of our colleague, Mr Willem. We moved a resolution today giving him leave of absence. He is our colleague, he is disabled. He is confined to a wheelchair. He has had a stroke and he would have made a tremendous contribution to this debate, had he been with us. We miss him and wish him well. We are sorry that he has not been able to make the great contribution that he would have liked to make today.

When we talk about disabled people, we are not talking about a peripheral group. Some 13% of the public are disabled in one way or another. The aged people are. Some people are temporarily disabled, others permanently. It has been my privilege to spend a lifetime working amongst disabled and disadvantaged people.

The Minister has said that we should do something about it. I think he is right. One of things that we can do about it is to visit every one of our villages and towns in our constituencies to see whether the public buildings are accessible to people that are disabled in one way or another. We can do that and we can draw the attention of our town or city authorities to problems.

Lying at the heart of the problem of the disabled is the question of access. If one does not have access to a building, one can have all the skills in the world but one will not be able to work there. Access to buildings and physical access to jobs is absolutely vital. The Government has made enormous progress in recent years and we are grateful for that. [Time expired.]

Mr G A LUCAS: Chairperson, I think it is a bit unfair for Mr Durr to always receive only one minute. We cannot help it. It is how Parliament works and we must respect the Rules of Parliament. We are all party to making them.

A nation which neglects and discriminates against its disabled citizens is itself a disabled nation. It therefore means that such a nation requires special attention to unlock it from its ignorance and disability. Accordingly, no country, no people can ever claim to be free if its disabled citizens are not free.

Thanks to the people of this country under the leadership of an ANC-led Government, gradually, step by step, we have set our country on the correct path, towards prosperity for all its people.

Accordingly, as we move forward on this path of building a prosperous society and improving the quality of the lives of all our people, the disabled citizens of our country are not spectators. They themselves are active participants in the reconstruction of our country. Clearly, this demonstrates the resolve of our people and its Government in ensuring that we create a people-centred, people-driven reconstruction of our country.

The ongoing work being done by our Government and other progressive NGOs like the DPSA in ensuring the integration of the needs of our disabled into the mainstream needs to be commended.

Over the past seven years we have seen the gradual development and implementation of progressive policies which cater for the special needs of all our disabled. Whether it is with respect to education, health, housing, or economic development, all our policies, without exception, have been and continue to be sensitive to the needs of our disabled citizens. Practical steps are being taken to ensure that we adhere to our progressive policies. For example, Housing has budgeted for the provision of assistive devices for disabled people needing houses. The state has also, through Public Works, embarked upon the reconstruction of most of our public buildings to ensure that they are accessible to the needs of the disabled, so that they can participate in public processes.

We have recently seen the case of Baby Tshepang, a young baby from Upington. She is lying quietly in the Kimberley hospital under extreme pain and grief. She is the face of the many children in our society who are subjected to the worst form of human abuse by those who are supposed to take care of them.

I am raising this, primarily because amongst those who are disabled, are those who have been abused in the past. Baby Tshepang is also going to be disabled, not because of natural acts, but primarily because of those who cannot control their natural desires. Clearly such acts by morally bankrupt individuals must be condemned in the strongest terms by all our people. I think all the members of this House will contribute to the funds set up to address the needs of Baby Tshepang. She should be able to recover from that horrendous act and be able to address her permanent disability, because of those acts which were uncalled for.

Once again the festive season is upon us. Let us appeal to all our people to uphold the rule of law. Let us not drink and drive, primarily because that increases the rate of disability in our communities. Let us not drive recklessly, because we might increase the rate of disabilities in our communities. Let us do everything possible to make sure that at the end of the year, when we return again to Parliament, all our people are safe and that we have not increased the number of disabilities, primarily because of our reckless behaviour on our roads. It is important to take this message out to all our people: It is important to uphold the law, so that we do not create unnecessary disabilities within our communities.

I wish to call upon all our people and members of this House and Parliament as a whole. On 3 December we will be recognising the International Day of Disability. Let all of us in our own constituencies be part of such activities and make sure that we mark these activities with the importance they deserve and highlight issues of disability.

The DPSA has produced a booklet. It is called an empowerment tool. It is a pocket guide book on disability and equity. I deem it appropriate for all our members to have such booklets, primarily because they are important and they are able to explain in detail the work that we are doing as Government and NGOs on the plight of the disabled. What is required from all of us is to contribute towards improving the quality of life of the disabled and making sure that they are part of the mainstream of our society.

The MINISTER IN THE PRESIDENCY: Chairperson, as I said the last time I was here, I wish I came more often to this House. It is a very pleasant House to be in. Let me thank all the speakers who spoke for the views they expressed. I would like to touch on one of the views.

However, I want to start with the advert that has been distributed by Mrs Nkuna. First of all, I thought there was only one Parliament in this country and that it was in this building, but I see it is called the Western Cape provincial parliament. I thought they were a legislature. I think it is wrong. It actually is discriminatory to have two adverts. One of them encourages disabled persons to apply; in another one, nothing is said at all.

I will ask the Office on the Status of Disabled Persons to actually write and complain to the provincial legislature about it. I say thanks for bringing this to my notice. I was going to ask you a question, Chairperson. When hon member Maloyi was speaking, he said, ``Chairperson, allow me to conclude’’. Now what would have happened if the Chairperson did not allow him to do so? [Laughter.] What was he going to do? But since the Chairperson gave him time to conclude and he did not give time to Mr Durr to conclude, I am not sure that there is not some form of discrimination in this House.

Can I start with some of the things that Mrs Witbooi spoke about. I think all of us were moved by her input today. One of the things she said when speaking about her own son was that she also shrank in pain when people made jokes about her son’s stutter. And that is precisely the problem. For too long those of us who have members of our families who have disabilities shrank in pain, instead of standing up and fighting this thing. When she did that, she was still young. I think we should stop shrinking in pain, we should shriek with anger. We should not allow this to happen, not to our own families, not to anybody else we know, and not to anybody even in the public. I think we have now reached a stage at which it is possible to do so.

The other specific issue that she raised, which I think needs some serious thought, is the proposal that perhaps a speech defect should also be regarded as a disability. I think, certainly, the Presidency would want to look at that and see what the implications are of that. I do believe that it is worthwhile looking at, because she is right - sometimes we do not pay sufficient attention to that part of it. I thank her very much for bringing that to my notice.

I hope Ms Gouws reads more of Mr Raju’s speeches. One can tell that he is a good speech writer, but he has a better person to read the speeches for him. [Laughter.] He might do it more often - write the speeches and ask her to read them.

It is true what Mr Raju said, if he said it and not Ms Gouws. There is a lack of reliable information in some respects. What we are hoping for is that the new census that we are carrying out will give us a more accurate picture about not only the quantitative numbers of people with disabilities, but, to some extent, also the breakdown. This is because if one looks at the census form correctly, one sees that there are specific questions that are asked in the census form that relate to people with disabilities.

We tried to put the question in such a way that somebody like me who does have a hearing aid, though I do not have it at the moment, does not go and put himself down as being disabled, because then the numbers will become impossible to deal with. We put this in a specific manner in the hope that a great deal more specifically related information will come out of the census over the next two years.

Mr Raju also said that gender equality is high on the agenda, perhaps we should do the same for people with disabilities. I prefer to look at it in another way. We should not put up a Chinese wall - whether we are dealing with the Office on the Rights of the Child, the Office on the Status of Disabled Persons, and the Office on the Status of Women, all three of which are in the presidency - and then say there is poverty and underdevelopment.

It is how we take an integrated, cohesive approach that matters, because if we can empower an African women who is disabled in a rural area, we will be able to deal with all of these questions at the same time. I accept Mr Raju’s approach, with which I have full sympathy, but I think what is necessary for us to do is also to concentrate on seeing how we can have this more integrated, cohesive approach to the particular question, so that at the same time we are also able, for example, to find ways and means to strengthen the capacities of the African girl child in the rural areas.

I think that is the kind of approach that we should take. That would inform, it seems to me, the work that the parliamentary portfolio committee needs to do. If one brings the things together, then one will have a better picture and idea about whether or not even the limited resources that are allocated for these kinds of specific programmes are actually achieving the objectives that were set out. That is quite important for us to do.

Lastly, I agree with the speakers who said that it was absolutely critical that we are very directly involved all the time with regard to dealing with issues of conflict resolution on our continent. If we think we have difficulties and problems with regard to people with disabilities, we just have to go to Mozambique, Angola, Sierra Leone and the Congo to see how much bigger, how much worse this specific problem is in those areas.

The way we want to deal with conflict resolution on the continent is also to create the conditions in which we do not increase the number of people with disabilities on our continent. That would apply to not drinking and driving over Christmas. I hope the hon member listens to his own message. [Laughter.] If he listens to his own message we will listen to him. I thank the NCOP very much and whenever the hon members invite me they should please note that I shall be here. I love this House. [Applause.]

Debate concluded.

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Order! I wish to take this opportunity to recognise our visitors on the gallery, some of whom have disabilities. I wish to say that we are very grateful that they are with us and have heard what members have said. Thank you very much. Before we go on, I have been alerted that Mr Lucas will read a motion on this issue.

              BARRIERS FACING PERSONS WITH DISABILITIES

                         (Draft Resolution)

Mr G A LUCAS: Chairperson, the deputy chairperson, Mr Maloyi, was supposed to do this, but he decided to abandon his duty. [Laughter.] I move without notice:

That the Council -

(1) notes with concern the extensive barriers which still exclude persons with disabilities from society and from opportunities for development, training, employment and equal participation;

(2) further notes that these barriers manifest themselves most profoundly in the -

   (a)  high percentage of disabled children  of  school-going  age  who
       find themselves outside the formal school system;


   (b)  marginalisation experienced  by  disabled  children  within  the
       formal school system;


   (c)  inaccessibility of most tertiary institutions  to  persons  with
       disability;


   (d)   negative  and  insensitive  approach  to  and  ignorance  about
       disability as a human rights issue by health personnel;


   (e)  inadequate provision of appropriate rehabilitation  services  in
       rural areas; and


   (f)  lack of  resources  and  accessible  facilities  for  sport  and
       recreation;

(3) acknowledges the successes achieved by the Government since 1994 in promoting the rights of disabled persons, including the adoption of the Bill of Rights, the enactment of legislation such as the Promotion of Equality and Prevention of Unfair Discrimination Act, the Employment Equity Act and the Skills Development Act, the development of the White Papers on the Integrated National Disability Strategy and on Learners with Special Needs, the establishment of Disability Desks within The Presidency and Premiers’ Offices and, last but not least, the many elected public representatives in national and provincial parliaments as well as in local government councils who are disabled;

(4) calls on the -

   (a)  Department of Transport and the private sector  to  continue  to
       work to ensure that at least 10% of  public  transport  is  made
       accessible to disabled persons as a matter of urgency;


   (b)  Department of Education to accelerate the implementation of  the
       landmark White Paper on Learners with Special Needs;


   (c)  Department of Sport and Recreation and  the  private  sector  to
       continue to give support to Disability Sports South  Africa  and
       to change the paralympic team name  "Amakrokokroko"  to  a  more
       sensitive and acceptable one; and


   (d)  Government and the private  sector  to  actively  pursue  skills
       development and job-creation programmes  which  target  disabled
       persons; and

(5) is of the view that the Council’s public gallery should be made fully accessible for disabled persons as a matter of urgency.

Motion agreed to in accordance with section 65 of the Constitution.

                    NATIONAL PARKS AMENDMENT BILL

            (Consideration of Bill and of Report thereon)

Rev P MOATSHE: Chairperson, hon Ministers present here, hon members, the National Parks Amendment Bill is supported by all the parties here. We are not going to debate this Bill, but only highlight what it entails.

This Bill seeks to bring the SA National Parks in line with the definition ``association not for gain’’ contained in paragraph (b)(ii)(cc) of the VAT Act. The Bill also proposes and opens up the possibility for the SA Revenue Service to allow donations by taxpayers to the SA National Parks as deductions from income tax.

This Bill stems from the fact that the SA National Parks is registered as an enterprise for purposes of the Value-Added Tax Act of 1991. In terms of the VAT Act, the SA National Parks must pay VAT on any consideration received by it in relation to its supply of goods or services. The definition of ``consideration’’ in the VAT Act includes any payment for the supply of goods or services whether in money or otherwise and whether voluntarily or not.

This connotation means that according to the SA Revenue Service the SA National Parks is obliged to pay VAT on any donation or sponsorship it receives. Therefore, in terms of this definition payments made as an unconditional gift to any association not for gain'', as defined in the VAT Act, are, however, not regarded asconsideration’’.

This Bill, therefore, tries to bring the SA National Parks within the ambit and scope of some other society, association or organisation with objects similar to its own. It does this by providing for donation or transfer of its assets, after liquidation or winding up, to some other society, association or organisation with objects not for gain.

All the parties support this amending Bill. [Applause.]

Debate concluded.

Declaration of vote:

Mrs A M VERSFELD: Chairperson, although the DP supports the Bill’s aim to bring some parks within the ambit of an ``association not for gain’’, the DP is still deeply concerned about the way in which some parks are managed.

Dr Robinson started in 1991 with a cash shortage of R22 million. He retired six years later, in 1997, and left a surplus of R14,3 million. During this time investments grew from R26,7 million to R100,3 million, which means a 27% rise.

Mr Msimang, who took over from Dr Robinson, turned this cash surplus of R14,3 million into a deficit of R3,8 million in one year. After 3 years the deficit stands at R52,7 million, which translates into a R67 million deficit overall. Investments dropped to R36,8 million, of which …

The DEPUTY CHAIRPERSON OF COMMITTEES: Order, hon member! The CHIEF WHIP OF THE COUNCIL: Chairperson, I think the hon speaker is really confused about the declaration by a political party and a statement that should be part of a debate. In terms of the Rules what she is stating is certainly inappropriate for a declaration by a political party. She should address, in a declaration, the aspects in the Bill that the party supports or has reservations about. But, certainly, she cannot come here and make a speech or provide details on things that we are not familiar with.

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! I am sure the hon member has understood that.

Mrs A M VERSFELD: Yes, I have, but I have said what I wanted to say. [Laughter.]

Bill agreed to in accordance with section 75 of the Constitution.

                   MEDICAL SCHEMES AMENDMENT BILL

            (Consideration of Bill and of Report thereon) The MINISTER  OF  HEALTH:  Chairperson,  hon  members,  thank  you  for  the opportunity to present the  Medical  Schemes  Amendment  Bill.  The  central purpose of this Bill is to further  regulate  an  industry  on  which  large numbers of our people depend for essential health services.

As with most pieces of regulatory law, this Bill has been contested and debated quite hotly on its route to this House. I believe that the process has refined the Bill and made it a better piece of legislation. I also believe that the legislation remains true to its original intention, which is to encourage private provision of health services for those sections of our society who can afford to purchase it by building safeguards into the system and ensuring it works better for the beneficiaries.

Many members will recall the hard battle we fought to pass the principal Act, that is the Medical Schemes Act, in 1998. At that time the medical schemes industry was experiencing significant cost escalations, and coverage of the elderly and sick was in decline. The financial regulation of schemes was also weak and the financial stability of many schemes in doubt. The time was long overdue for Government to step in and take responsibility for the sector, recognising that health care is not a commodity that can be left purely to the dynamics of the marketplace.

The principal Act aimed to achieve four main objectives, that is to reintroduce community rating in medical schemes; to improve access to medical schemes for people who were previously excluded; to mandate a prescribed minimum benefit package to ensure that all members had essential hospital cover; and to improve financial management and governance of the schemes.

The Act was not universally popular and its critics predicted that it would result in further cost escalations and a reduction in scheme membership, which would threaten the future of many medical schemes.

Although the Act has only been in operation since January 2000, I believe that there are already signs that our critics overreacted at the time. The audited returns provided to the Council for Medical Schemes are beginning to show the early impact of the Act. Firstly, membership of medical schemes has not decreased despite economic conditions that are not favourable to the growth of this sector.

While we would like to have seen a substantial increase in numbers, we have had to content ourselves with the fact that the proportion of members from vulnerable groups, such as the elderly, has shown some growth.

It is difficult to say precisely which features of the 1998 Act had this effect, but it is likely that the amnesty provision played a very important part. This allowed members to join schemes at an advanced stage without higher premiums being imposed. Of course the success of our legislation must be measured not only in terms of the growth in membership, but also in the composition of membership.

The viability of medical schemes lies in the notion of cross-subsidy between members who are young and healthy, and those who are older and have a much greater need of health care. We need to monitor the ability of the sector to attract younger members in the period ahead.

One of the more troubling trends revealed by the audited returns is the fact that a sharp rise in administration costs is the main factor in the overall increase in medical schemes’ spending. In 2000 administration costs grew by 26%, while claims went up by just 6%. Furthermore, the administration costs are much higher in the open schemes than in the closed schemes where membership is tied to employment in a particular sector or business organisation. This is certainly a trend that is not in the interests of members and that also requires careful monitoring.

On the good news front, the average solvency ratio of schemes is at an encouraging 20,5%, twice the statutory minimum of 10%. But, again, we see significantly different patterns in the open schemes from those that prevail in the closed schemes, with the closed schemes having much more substantial reserves.

The solvency level for open schemes presented a mixed picture. While it averaged at 13% last year, about one third of these schemes were below the statutory requirement. We are monitoring the situation extremely closely with a view to possible intervention.

Experience with the Act has not only vindicated our own policy positions, but also taught us some very valuable lessons. The amending Bill I am presenting to hon members today is a response to some of these lessons, not the least of these lessons being insight into the nature of regulation. When it comes to medical schemes we have a vested interest in their healthy growth and their stability. Regulation with development is the notion that guides our actions. We would regard our endeavours as a failure if we achieved clear administration and good consumer practices, but stifled growth in the sector. With this in mind, we approached the question of regulation with the view that self-regulation is first and foremost desirable. Government control and punitive action should be held in reserve as the ultimate sanction. We have tried to embody this essence in the Bill I am about to present. The Bill itself seeks to strengthen the Medical Schemes Act of 1998 in a number of ways. Firstly, it seeks to improve protection for members. The most significant portion of amendments regarding reinsurance, waiting periods and marketing of medical schemes are all intended to enhance member protection. Secondly, it seeks to enable the regulator, that is the Council for Medical Schemes, to take a proactive rather than a reactive approach in dealing with medical schemes.

Thirdly, the Bill seeks to promote efficient administration and good governance of medical schemes by, among other things, insisting on the independence of individuals in key positions. The Bill also reduces red tape by allowing schemes to make more routine decisions without having to revert to the council for approval. As is the case with most amending legislation, the Bill also tidies up definitions and clumsy phrasing and eliminates duplication.

It is impossible in the time allotted to cover every detail of what is a fairly technical piece of legislation. So I am going to highlight only the most significant provisions. I will begin with the thorny question of reinsurance. This has been the most contentious and the most challenging issue we have had to address in this year. I must say that the extent of the opposition we have had to face in addressing this issue has been most worrying, when one considers the magnitude of problems that we uncovered in examining this practice of medical schemes.

The view that we have taken is that reinsurance can be a very valuable tool in protecting schemes in times of financial difficulty, but it cannot be applied as a one-size-fits-all solution for all medical schemes. Ultimately, every member who contributes to a medical scheme has the right not to be charged an artificially inflated premium. Every member should be free of the risk that the scheme’s solvency is compromised because the trustees have not exercised due care in entering into a reinsurance contract.

Health care coverage in this country, as we all know, is already prohibitively expensive, and we cannot afford any unjustified expenditure. Experience has taught us that reinsurance requires careful evaluation to ensure that the interests of members are not in any way compromised. Although some medical schemes have taken the view that the registrar of medical schemes should not interfere in the scheme’s decision to reinsure, we insist that the practice must fall under his or her watchful eye.

After much debate, we have agreed on a formulation that not only satisfies our policy concerns, but also addresses the concerns expressed by the industry about the need to strengthen the powers and responsibilities of medical schemes’ trustees.

Our approach is a more proactive one, which would prevent inappropriate reinsurance arrangements rather than simply seeking to deal with the consequences of such arrangements. The final formulation allows the registrar to keep track of all insurance contracts and to raise concerns when such contracts are not in the best interests of schemes’ members.

However, the final decision on whether or not to reinsure is left in the hands of the board of trustees who, after all, must take full fiduciary responsibility for the financial position of their schemes. The interaction between the registrar and the trustees is indeed a process in which the two parties complement each other and where the expertise of the registrar serves as a resource for the trustees.

On the question of waiting periods, we have had very constructive discussions with the industry. The intention of waiting periods is to protect schemes against adverse selection, that is opportunistic behaviour by some medical scheme members who may delay joining a scheme until they require expensive medical treatment and then, having had the treatment, simply leave the scheme afterwards.

Unfortunately, the formulation in the principal Act has had some unintended consequences in which some schemes have used it to impose waiting periods on members who are not necessarily engaging in opportunistic behaviour. To address this, we have inserted two definitions of waiting periods in the amending Bill and these stipulate the circumstances in which general and condition-specific waiting periods may be imposed on members. The underlying principle is to consider the member’s history of membership in other schemes, and to use this as a basis for determining whether waiting periods may apply.

In addition, the Bill stipulates that members who change schemes because of a change in employment or because their employer changes or terminates the scheme, may not face waiting periods. The provisions aim to strike a fair balance between protecting schemes from adverse selection and protecting new members from inappropriate use of waiting periods.

The impact of brokers on the stability of medical schemes is another matter we have been concerned about. Although the principal Act placed a limit on the remuneration of brokers, there is evidence to suggest that this area of regulation needs tightening up. Some schemes have experienced a situation in which members shift between schemes without any clear gains in terms of benefits. The question therefore arises whether perverse incentives enjoyed by brokers are responsible for this unnecessary movement that pushes up administration costs.

For this reason, the Bill enhances the powers of the Minister to regulate the conduct and remuneration of brokers. The Bill also strengthens the consumer’s protection by restricting the marketing of medical schemes to those individuals and entities that are actually registered as medical schemes in terms of the Act. It also prohibits conditional selling of medical scheme products in terms of which members are coerced into buying other products in order to be allowed to join particular medical schemes. The consumer is further protected by additional powers that are assigned to the Minister in terms of the Bill. These include the power to regulate managed health care contracts and to impose penalties on medical schemes or administrators for late payment of claims. The latter will strike a cord with many health care providers who have struggled to get payment out of the schemes.

Managed health care appears to have yielded mixed results in our country. Our own experience and the nature of the complaints received by the regulator suggest that there is still much work that needs to be done in this area. At provincial level, we need to increase our understanding of the potential impact of managed health care on our public hospitals.

In the area of promoting good governance of medical schemes, the Bill firmly introduces the clause on ensuring the independence of principal officers, trustees and auditors of medical schemes. It does this by prohibiting any broker, or any person employed by the scheme’s administrators, from taking on any of these positions. It further promotes transparency and ensures the independence of trustees by requiring that trustees disclose, on an annual basis, any remuneration or benefits accruing to them.

The complexity of the medical schemes’ environment has brought home to us the need to pre-empt problems, rather than try to remedy them after the fact. For this purpose, the Bill empowers the registrar to request financial statements from the scheme as frequently as once every three months, and to determine the degree of urgency that applies in getting responses to her or his queries.

It is also vital that the registrar has the power to order inspections of schemes in order to monitor compliance with the Act but we recognise that the registrar’s powers in this regard must be balanced with the rights of the trustees to exercise full responsibility for their schemes. For this reason, we have tried to reverse those instances in the principal Act where we have overregulated. For instance, medical schemes are no longer required to get prior approval from the Council for Medical Schemes in order to undertake a number of fairly routine activities.

I view the passing of this Bill by the NCOP as a vote of confidence in our vision of a national health system in which the private and public sectors have complementary roles to play in increasing access to health care for all.

We all have a responsibility to build this nation so that the promises of our future eclipse the shame of our past. One critical way of doing this is to assert our common humanity through providing caring and supporting social services, including, of course, health services for all. To do this, we must control the overall cost of health care and ensure that the burden of this cost is spread fairly amongst all of us.

Our free services must be reserved for the large number of extremely poor people who cannot afford to buy health care. Reasonable and affordable options must be available for those who cannot purchase health services. This Bill, therefore, has implications for the nation as a whole, and not simply for those who provide or subscribe to medical schemes.

A year ago South Africans were generally ashamed when the World Health Organisation put our country near the bottom of a global log table on health care. What the World Health Organisation was saying was that our services represented very poor value for money, not that the care itself was substandard. It will take much more than this Bill to elevate us in the WHO rankings, but every action in the right direction counts and we believe that passing this Bill today is a significant step in the right direction.

I would like to thank the Department of Health and the Council for Medical Schemes for the sterling work they have put in to prepare this amending Bill. I must also acknowledge the contributions made by the medical schemes and other industry stakeholders in improving some of the earlier formulations. On this evidence, I am convinced that we are equal to the task that lies ahead and that, ultimately, we will create a national health system which extends quality care to all our citizens.

I feel confident that the NCOP will give its full support to this Bill. [Applause.]

Mr B J MKHALIPHI: Chairperson, hon Ministers and colleagues, I rise on behalf of the chairperson of the Select Committee on Social Services, Mrs Loretta Jacobus, who is unable to be here today.

It is not a mere coincidence that this amending Bill follows quite closely on the heels of the principal Act. The national Department of Health saw fit, as is their brief, to keep an eye on what were groundbreaking policies in the medical schemes industry, that is the Medical Schemes Act, 1998. What they found there prompted the drafting of this amending Bill. Firstly, I would like to compliment the department on their quick response to a potentially volatile situation. However, the response from the industry has been mostly lukewarm. They once again raised the issue of the industry being undermined by what they perceived to be too frequent regulatory intervention and unyielding authorities.

We all remember the harsh criticism that was levelled against the department at the time of the passing of the principal Act. The gist of this criticism accused the Government of single-handedly bringing an industry to its knees, but contrary to the predictions of doom, the medical scheme industry is still alive and well today.

What Government has never backed away from, is ensuring that health care in the public sector and the private sector is affordable, transparent and nondiscriminatory and that those administering the services to the public do so with a social conscience. In private health care, I believe that the Government is fully prepared to give prior consideration to affordability rather than profit. The ideal would, of course, have been a mandatory social health insurance system that is affordable and accessible to all. But in the absence of such a state-owned and maintained social health insurance system, we will still have to ensure that our people have the best services possible and are not ripped off by unscrupulous members of the medical schemes industry, bent on profits above human and health needs.

We are here today because the national department has been inundated with information pointing out violations on the ground and how some sectors of the industry abused the principal Act for financial gain through perverse incentives.

The amendments as refined by the parliamentary committees therefore seek to redress some negative fallout that has crept into the industry.

The five steps taken have already been mentioned by the hon the Minister and I will not repeat them. I am sure that the hon Ms Jacobus would agree to that. When this Bill was being discussed in the committee stage all parties supported it, except of course the usual objectors, namely the DP. Therefore the Select Committee on Social Services endorses this amending Bill as submitted. [Applause.]

Ms E C GOUWS: Chairperson, the main objectives of the amendments are to regulate the practice of reinsurance, regulate waiting periods and expand the powers of the registrar. These should be in the interests of the consumers, but it appears that the service providers are going to be prejudiced by overregulation.

Bearing in mind the increased burden on the public health sector and that healthy private-public partnerships are vital to a healthy nation, the DP supports the amendments in principle, with the notable exceptions of the amendments in the proposed section 29A ad section 29(c).

The amendments in the proposed new section 29A focus on the issue of waiting periods. It prejudices most medical schemes and removes vital protection against adverse selection. No provision is made to curb voluntary scheme-hopping by the opportunistic consumer.

Clause 29(5)(c) is prescriptive and challenges the constitutionality of legal contracts. There is very little acknowledgement of the positive value of legitimate reinsurance to the consumer.

The ever-growing power of the council and the registrar is concerning. The proposed amendment to the Medical Schemes Act has far-reaching implications for all concerned. Thank you, however, to the council and the Department of Health for properly consulting all relevant stakeholders.

The DP supports the Bill. [Applause.]

Dr P J C NEL: Chairperson, hon Minister, the medical schemes industry of South Africa is an important industry and is playing a pivotal role in making the delivery of health services in South Africa possible.

For many reasons it is an industry that is in a status of flux and requires clarity to operate effectively during periods of change. Important to me as a medical doctor, is the protection of the interests of members of the public. In an attempt to do so, the Bill addresses different issues.

Firstly, to protect the interests of the beneficiaries, inter alia, clause 7 prohibits medical schemes from discriminating on the basis of age. Secondly, this Bill prohibits the marketing of unregistered schemes, and in future it will be an offence to market or promote any entity without being registered as a medical scheme.

Clause 14 allows the registrar to request financial statements on a quarterly basis from the board of trustees. This will protect the members of medical aids which get into financial trouble against the schemes’ closing down unexpectedly and leaving members uncovered.

One of the greatest problems that medical schemes are experiencing at the moment is that their administration costs are increasing dramatically. One of the many reasons could be the fact that patients abuse the schemes in many ways, inter alia by waiting until they are very ill before joining a medical scheme, the so-called adverse selection, as the hon the Minister has already mentioned.

Clause 10 of the Bill provides for waiting periods. Medical schemes can now impose a general waiting period of three months and a condition, namely a specific waiting period of 12 months, for patients suffering from specific chronic ailments, upon a person who applies for membership. This could, however, be seen as unfair and discriminating and the implementation of this clause will be easier said than done.

The reinsurance issue has been dealt with by the Minister comprehensively.

My party sincerely hopes that this amendment Bill will bring more stability to the medical scheme industry. I believe that if that happens, at the end of the day the beneficiary will benefit the most.

The New NP, in spite of some reservations, do support the Bill.

I request all members of this House to please not abuse their medical scheme. Do not cut the throat of the goose that lays the golden egg. [Applause.]

Nkk J N VILAKAZI: Sihlalo, mhlonishwa Ngqongqoshe wezeMpilo, umThetho- sichibiyelo esibhekene nawo wama-medical schemes ulusizo futhi ubhekela isimo esibi esiye sivele uma kukhona ogulayo, ingabe ulimele noma udinga ukuhlinzwa ngodokotela noma ephethwe umkhuhlane nezinye izifo ezidinga ukukhokhelwa njalo, amahlalakhona. Inkinga ifika ibe khona lapho umkhokhi wemali esetshelwa yilabo be-medical scheme ukuthi yinani lemali ethile azoyithola, okunye makazikhokhele kukho. Kwesinye isikhathi kuye kuthiwe makakhokhe ngoba uyobuyiselwa uma eseletha incwadi kadokotela. Lokho kuba yingxaki kumkhokhi wemali ngoba imali yakhe isuke idonswa eholweni lakhe ukuze igade khona ukugula. Uma sekuthiwa makakhokhe, akunambitheki neze neze lokho kithina esikhokhayo.

Okufike kube yinkinga futhi enganambitheki kubakhokhi bemali yilapho i- medical scheme inikeza isabelo esincane esingekwazi ukukhokhela isidingo somuntu. (Translation of Zulu paragraphs follows.)

[Mrs J N VILAKAZI: Chairperson, hon Minister of Health, the amending Bill concerning medical aid schemes is helpful and will correct a bad situation when someone is ill, injured or needs an operation or has a fever or other illnesses that need to be paid for regularly, like chronic diseases. The problem occurs when a member is told by the scheme that there is no money for a particular illness, therefore he must pay for himself. Sometimes he is told to pay, because he will be refunded when he brings the doctor’s letter. This becomes a problem to a member, because money is always taken from his salary to take care of such things. When one is told to pay, it becomes difficult, especially if one has been making contributions.

Another thing that gives members of medical aid schemes problems, is when a scheme gives a small amount of money which does not cover a member’s needs.]

This amending Bill has been hailed as a means of bringing affordable care to the poor, but from the look of things it is going to be a hard blow to the contributor, who will pay more, but get less benefits. At the present moment our medical scheme allocates R5 000 for optical care, but only gives members 50% of this allowance, regardless of the reason given. It is therefore more profit-centred than patient or client-centred.

The IFP feels that there has been insufficient consultation regarding this Bill. There are financial aspects which may lead to unexpected nasty problems in future, and which could have been avoided before passing the Bill.

Mr J O TLHAGALE: Chairperson, hon Ministers present in the House, the Bill before this House seeks to assist members of medical aid schemes to get value for their money by extending some of their rights to their dependants.

In compliance with the provisions of the country’s Constitution for nondiscrimination on whatever grounds, the Bill prohibits discrimination against clients on the grounds of age. Gone are the days when a medical scheme could declare that its membership is open to members up to a certain age, thus excluding the older people. Members of the board of trustees of the medical schemes would henceforth be neutral people in order to guard against conflicts of interest.

In these hard times we notice the proliferation of medical schemes, some of which are dubious. Clause 6 of the Bill seeks to curb these unscrupulous vultures by providing protection to consumers.

Since I have only one and a half minutes at my disposal, I only want to add that the UCDP supports the Bill. [Laughter.] [Applause.]

The MINISTER OF HEALTH: Chairperson, I would like to thank all those who have participated in this debate on the Medical Schemes Amendment Bill. Thank you very much for supporting it. What surprised me is that the ACDP did not participate in this debate. I do not know whether supporting the Bill is an end of the year present for me. As a matter of fact, Mr Durr is not even here.

Let me just say I do not think I should go into a lengthy discussion about this debate, because the principal Act itself was debated at length. I do not know for whom Ms Gouws has been speaking, because, as I mentioned, we have really had very constructive discussions with the industry, the providers therefore, on all the aspects. But I want to thank her for nevertheless supporting the Bill. I think it is also an end of the year present for me.

I would like to thank everybody.

Ngithanda ukusho kuNkk Vilakazi ukuthi ngibona ukuthi akawufundisisanga kahle lo mThetho-sivivinywa ngoba into ozama ukuyenza ukukhusela bona ikakhulukazi labo akade ekhuluma ngabo okungabantu abangenamandla, abangenamali, osekukudala behlupheka futhi okungabantu abakade bengakwazi ukuba amalungu ama-medical aid schemes. Iyona njongo-ke leyo yalo mThetho- sivivinywa.

Ngiyethemba-ke ukuthi abantu abangamalungu e-IFP bayavumelana nathi ukuthi kuyaqala ngqa eNingizimu Afrika ukuthi sibavulele ithuba lokuthi nabo bakwazi ukungena babe ngamalungu ama-medical aid schemes. Ngizocela ukuthi leliya lungu lizame-ke ukuwufundisisa ngempela lo mThetho-sivivinywa.

Ngenkathi siwudingida ngale emKhandlwini kaZwelonke, bavumelana nathi abantu be-IFP ngaphandle kuka-Rabinowitz. Naye sambuza ukuthi kahle kahle wayekhulumela obani ngoba ngokolwazi lwethu, lo mThetho-sivivinywa ukhusela bona labo bantu amalungu athi asibakhuseli. Kuyinjongo yalo Hulumeni ukuthi ngaso sonke isikhathi sizame ukuthuthukisa izinga labantu bakithi osekukudala behlupheka emphakathini nasemindenini yabo. (Translation of Zulu paragraphs follows.) [I would like to mention to Mrs Vilakazi that I think she did not read the Bill well, because it aims at protecting the people she was referring to as powerless, poor, and experiencing hardship and people who are eligible to be members of medical aid schemes. That is the aim of this Bill.

I hope IFP members agree with us that it is the first time in South Africa that we are giving them an opportunity to become members of medical aid schemes. I would like to ask that hon member to read the Bill carefully.

When we discussed it in the National Assembly, members of the IFP agreed with us, except Rabinowitz. We even asked her on whose behalf she was speaking, because as far as we know this Bill protects all people, including those who, according to members of Parliament, are being excluded by us.

It is the purpose of this Bill that we should try always to improve the level of our people who have been experiencing hardship for quite a long time.]

Thank you very much for supporting the Bill.

Ngifuna ukusho ukuthi sesifike esikhathini lapho iPhalamende lizosukuma livale kulo leli sonto. Lokho kuzosipha ithuba lokuthi siye kophumula. Kodwa, ngaphambi kokuba siphumule kufuneka sikhumbule ukuthi kufuneka siye kubantu esibamele siyothi ukusebenza kancane. Ukuphumula ngesikhathi sikaKhisimuzi noncibijane kusho ukuthi sizothola ithuba lokuthi sibe nezihlobo zethu nabangani bethu, sithakase futhi sijabule. Obesekusele ukuthi mina ngifisele amalungu uKhisimuzi omuhle nokuthi unyaka omusha awuqale ngendlela efaneleyo. Sesiyobonana ngonyaka ozayo. Ngiyawethembisa- ke amalungu ukuthi ngaleso sikhathi ngiyobe sengiwugogo okwesibili. [Ihlombe.] (Translation of Zulu paragraph follows.)

[I would like to say that we have now reached the time that Parliament will close this week. That will give us an opportunity to rest. But before we rest, we should go back to people whom we are representing and do some work for them. To rest during Christmas and New Year means that we will get the opportunity to meet with our friends and relatives, and be happy. Now I need to wish members of Parliament a happy Christmas and to start the new year in a proper way. See you next year and I promise you, by that time I will be a granny for the second time. [Applause.]]

Debate concluded.

Bill agreed to in accordance with section 75 of the Constitution.

              PRIVATE SECURITY INDUSTRY REGULATION BILL

            (Consideration of Bill and of Report thereon)

The DEPUTY MINISTER OF SAFETY AND SECURITY: Chairperson, hon members, when the new democratic Government was elected in 1994, it clearly expressed its commitment to addressing broad issues relating to transformation. As part of this transformation process, the need to review legislation passed during the apartheid era was identified in order to bring South African legislation into line with the new democratic and constitutional dispensation which we have today.

One of the legislative reforms was the passing of the Security Officers Amendment Act of 1997, which required the Minister of Safety and Security to reform the regulatory framework of the private security industry. In terms of that amending Act the Minister was required to draft a new Bill, and it is this Bill that we have before us and that we are considering today.

As part of drafting the new Bill, various sectors were taken into account, including the fact that the existing Security Officers Act of 1987 had become outdated, given the changes in the nature of the industry. The industry has changed significantly and is no longer confined solely to the guarding and protection of persons and premises. These changes have resulted from, one, the growth and proliferation of new sectors of the private security industry, such as the providers of security equipment, private investigators and technologically advanced service providers; two, the capacity of private security companies to obtain arms legally, and three, concerns that the industry possibly contains some elements who have the potential to engage in abuses and the implications of such abuse for the security of the state.

The industry has shown phenomenal growth. According to statistics supplied by the Security Officers’ Interim Board, there were in excess of 6 000 active private security businesses registered with the board by the year

1. Of these, 3 232 were active registered guarding businesses, 609 active registered cash-in-transit businesses and 878 active registered armed response businesses. It has been estimated that there are approximately 652 persons involved in private investigations, and 844 in other categories.

During this period, there were approximately 165 314 active registered security guards employed by the industry. This figure excluded security guards employed as in-house security personnel who are not currently registered as security guards. The estimates for in-house security personnel varied from 60 000 to 200 000. The Private Security Industry Regulation Bill now brings in-house security providers under the regulatory framework.

A further consideration was that the industry was fraught with infighting, competing interests and allegations of wrongdoing. There was a perception that the inclusion of representatives of employers and employees from the private security industry in the regulatory board did not contribute to proper and effective regulation because of the vested and competing interests. This had serious implications for the credibility of the board. All these concerns needed to be addressed, and the Private Security Industry regulation Bill has been crafted to do this.

The Bill expands on the objects and functions of the future Regulatory authority, to enable it to regulate the industry and to exercise effective control over security service providers, both in the public and in the national interest, as well as in the interest of the security industry itself. The future regulatory authority is tasked to encourage ownership and control of security businesses by persons who are historically disadvantaged, as well as to promote their empowerment and advancement.

In addressing the need for proper and effective regulation of the industry, the Government felt very strongly that those entrusted with the task of regulating the industry should not have any interest in the private security industry. The reasons for this are obvious.

Indeed, the Bill provides for such a regulatory authority which will act through a council that is independent of the industry. The Government is convinced that such independence will contribute immensely to better regulation in the interests of all concerned. However, the voice of the industry will not be ignored. Indeed, provision to listen to the voices of the private industry through committees which the council is empowered to appoint, is captured in the Bill. In cases of need the council will have access to the inputs and expertise of the representatives from the private security industry through such committees.

National security and the protection of the individual are the highest priorities of any responsible government. The Government is acutely aware of the sensitive nature of the private security industry and the need to avoid and eliminate the dangers associated with the involvement of irresponsible persons in the industry and that includes international criminal syndicates, which in some cases have used the security industry as a cover for their nefarious activities.

It is in this context that the Bill provides for strict entry requirements. One of the entry requirements is that any person who wants to be registered as a security service provider must be a citizen of South Africa or have permanent resident status in South Africa.

Since the advent of our new democratic order and our country’s entry into the international community of nations as well as the implications of globalisation there has been a renewed interest on the part of foreigners in investing in various business ventures in South Africa, including the private security sector. This interest manifested itself in the past few months when several South Africa businesses were purchased by foreign businesses for individual amounts ranging from approximately R400 million to R630 million each.

The decision to allow foreign investment in the security sector does not, in any way, compromise the security of our country, given the fact that there are sufficient safeguards in the Bill itself to ensure that this is the case. The decision allows the use of capital and expertise from foreign sources to the best advantage of South Africa as a whole. The advantage of such foreign shareholding and investment would be the bringing in of skills, expertise and technological know-how, which will benefit not only the security industry, but also the broader South African economy.

In addition, one such obvious spin-off of the foreign shareholding element will be the enhancement of black economic empowerment. As a matter of fact, this specific issue was widely canvassed by the department and the leading companies from abroad that are currently involved in the industry. There is no doubt that this commitment by these companies will translate into the consolidation of the emerging black businesses in this sector. Indeed, the future regulatory authority has, as indicated earlier, the important object of encouraging ownership and control of security businesses by historically disadvantaged persons and promoting the empowerment and advancement of such persons. This aspect of the transformation and empowerment agenda must be vigorously pursued.

As part of the protection of our national interests, the Bill further provides that any applicant who is a former member of any military security police or intelligence force or service in South Africa or elsewhere must submit a prescribed clearance certificate from his or her previous employer. It does, also, clearly prohibit persons who are employed by the SAPS, the SANDF, the Scorpions, NIA, the secret service and the Correctional Services from moonlighting as security service providers. Moonlighting is frowned upon and will be a criminal offence.

The Bill further provides for a code of conduct for both the security service providers and the inspectors. The inspectors have been given powers to ensure that security service providers comply with the requirements of the Bill. The private security industry has acquired capabilities and is undertaking operations which may infringe on every person’s right to privacy and as such infringe upon constitutional rights. These practices need to be limited by regulation so as to ensure that the rights enshrined in the Constitution continue to be protected. We are referring here to things such as the tapping of people’s telephones and so on, which some of these security companies are capable of.

I am confident that the Bill contains sufficient provisions to regulate the private security industry in the interest of all stakeholders. Whilst the regulatory authority is tasked to regulate and control the private security industry, the authority itself will not be above scrutiny. The regulatory authority will be accountable to the Minister and ultimately to Parliament.

The process of drafting this Bill has been a very difficult one. The contributions from all concerned have been very useful and appreciated. I want to take this opportunity to thank the various people who assisted in this process, including the chairperson of the select committee, the members of the select committee and the national secretariat and the legal division of the SA Police Service, as well as the interdepartmental work group which contributed to developing the policy which informed the Bill. [Applause.]

Kgoshi M L MOKOENA: Chairperson, many of us have seen the best of our presiding officers and the Chief Whip in this Chamber. Some of us were fortunate enough to see the best of them last night. It was a marvel to watch. [Interjections.] The Ellis Park soccer disaster on 11 April 2001 has taught us a very big lesson. The commission of inquiry led by Judge Ngoepe is busy trying to find out exactly what took place before the actual disaster on that fateful night. Lawyers are at each other’s throats, trying to clear their clients.

The question which is being asked by the commission is: Which private security company was in charge that day? There was more than one security company in charge of security that night. They were there to make sure that those soccer fans were safe. They were happy to be there.

But immediately after that disaster, no security company wanted to take responsibility for what had happened. The commission is trying very hard to know which security company was in charge of security. Of course, it is not going to be easy for the commission to establish who was responsible.

Why is it so difficult? It is so because at present security companies are not properly registered or not registered at all. They are not even regulated. In some instances, there is no record as to how many staff members are there, and who are managing that company. The Private Security Industry Regulation Bill seeks to solve some of these problems.

The Bill provides for the registration of security offices and for the inspection of security service providers. It establishes a security industry regulation authority to regulate the security industry. The Government’s concern in this industry is basically that once people are engaged in the business of providing security and are making money out of the provision of security to others, they need some form of regulation.

As members might be aware, the definition of ``security service’’ has been broadened to include categories such as in-house security, private investigators and locksmiths. This is significant because security service providers must register in order to provide services. Failure to register means that they practise illegally. Broadening the definition of security service providers increases the categories of people that must register and therefore increases the categories of people that will be regulated in terms of the Bill.

There is a transitional clause in the Bill that allows for the phasing in of regulation of different categories of service providers.

The Bill also establishes an independent security industry regulatory authority to exercise effective control over the practices of the security service providers. The numbers quoted by the Deputy Minister shows that private security personnel outnumber the police by a ratio of approximately 4 to 1. This justifies strongly why strict regulation is necessary.

I think we should acknowledge the positive role played by private security in combating crime. In many shopping centres, industrial areas or residential areas, the use of security companies has increased as have their personnel and their operations. When merely walking from here to Regis House one is likely to meet no fewer than five different uniformed guards or security personnel. Are they registered?

The Bill introduces the council for the authority. Members who are going to serve in this body must demonstrate that they are not connected with the private security industry. The role of the council is to oversee and control the function of the authority. There will be other structures which will assist in the smooth running of the industry.

This Bill will, in a way, solve the problem of the fly-by-night operators. These companies have no plans, no offices and no constitution, and are often run by a husband and wife team. They use their bedroom as an office. Their planning and their meetings are held in their bedrooms after hours. Obviously, this kind of arrangement cannot be tolerated. That is the reason why the regulation requirements have been expanded and broadened to ensure stricter entry.

One other issue which causes some discomfort to some stakeholders is the fact that the code of conduct is legally binding to security service providers whether registered or not. As long as security service providers are paid after providing a service, they have to be regulated. They have to be bound by that code of conduct. We cannot give them a blank cheque, particularly in our time.

Many of us have a problem with foreigners who own security companies in South Africa. There is no way a foreigner can protect our people without being in partnership with local citizens. We need their skills and expertise. Very few countries, if any, would allow a foreigner to protect the other country’s citizens without the involvement of the local people.

In this Bill we allow foreigners to be shareholders in these security companies. This is done to dispel the myth that this Bill is against or will discourage foreign investment. Any person outside the borders of this country can operate in this country as long as they meet all the requirements.

Having removed all these uncertainties, I, Mathupa Mokoena, cannot see any tangible reason why this Bill cannot be supported.

Mr J L THERON: Chairperson, I am reading this speech on behalf of the hon Lawrence Lever. For reasons that are all too familiar to us, the private security industry has become a major industry in our economy and employs more people than the SA Police Service.

The private security industry has not been without its controversies. There were the abuses in training and certification procedures that were publicised in the nation’s media. An element in the industry abused its workers and paid them less than the minimum wage, and there were a number of other unscrupulous practices. Fly-by-night operators plagued the industry. Everyone agrees that the industry needs to be properly regulated.

Unfortunately, the passage of this Bill itself through the portfolio committee in the National Assembly was not without its controversies. I refer here to the provisions that, in effect, would have excluded foreign investors from this industry. These provisions were initially placed in the Bill, despite the fact that as a nation we are desperately trying to attract foreign direct investment to alleviate the plight of those suffering as a result of the pressing problem of structural unemployment in our economy.

Fortunately, by the time the Bill reached the select committee, sanity had prevailed and this prohibition had been removed from this Bill. There is, however, no telling how much damage the mere suggestion of such a prohibition had on our nation’s campaign to attract foreign direct investment.

There are, however, still problems with this Bill. The industry is to be regulated by a regulatory authority. This regulatory authority is to be governed and controlled by a council, which is to be set up in terms of clause 6 of the Bill. This council will be appointed by the Minister, in consultation with the Cabinet, and will consist of a chairperson, a vice- chairperson and three additional members.

Employers and employees in the private security industry will not have any direct representation on the council, despite the fact that levies collected from the industry will support the regulatory authority. It was argued that no person who has a vested interest in the industry should have control of the council. There is merit in this argument.

However, the DP is not asking for the industry to have control of the council, but merely for it to have representation on the council. It was further argued that the industry could be represented through committees established in terms of clause 13(1) and clause 13(2) of the Bill. This is true, but there is no obligation to set up these committees.

In short, the DP objects to the fact that the stakeholders in the industry are not guaranteed any representation on the council or its committees, even if such committees are established. The other major difficulty with the Bill relates to the provisions of clause 26 dealing with suspension of registration as a security service provider. In terms of this section, if there is a prima facie case of improper conduct or commission of an offence ranging from high treason to crimen injuria, the registration of the security service provider may be suspended.

For the sake of those of us who are not lawyers, prima facie in this context means any allegation from anyone which on the face of it is not false; and crimen injuria means calling someone a nasty name with intent to hurt their feelings. The difficulty here is that people in the industry can be deprived of their livelihood if somebody makes a malicious allegation which later, on proper investigation, turns out to be false, and there is no proportionality in that they can be deprived of their livelihood for an insignificant offence.

There are other less important difficulties in that the definition of ``locksmith’’ is too broadly cast, and the poor unfortunate individual who repairs shoes and cuts keys on the street corner will have to comply with the provisions of the Bill, unless these people are expressly excluded by the Minister. Accordingly, the DP opposes the Bill. [Applause.]

Mrs E N LUBIDLA: Chairperson, governments throughout the world have expressed alarm at the rapid increase of private security industries in their respective countries. In South Africa we have gone a step further by exploring the implications of the burgeoning private security industry, not only on the state but on society in general.

Our exploration into the implications of the growing private security industry has led us to conclude that effective regulation of this industry is in the best interests of the country.

While we must acknowledge the important role the industry plays in contributing to meeting the demands of South Africans in respect of their safety and security and in terms of providing employment opportunities, we must at the same time recognise the dangers of leaving the industry unregulated.

A significant portion of the industry is run by ex-military and police officers. Some people would say: So what? Why should we worry about that? The reason why we should worry about this is because the industry, by its very nature, gives rise to certain sensitivities, owing to the capacity of some businesses to be highly armed to engage in investigations and to intercept and monitor voice-activated equipment. This can easily be abused by elements who gained experience in the military or police.

Secondly, in some instances there are currently members of our security services who may have an interest in private security businesses. This has implications for our national security because of the potential conflict of interests between such members charged with protecting the interests of the state and the interests of the private security industry.

The regulation of the industry is not only important for the protection of our national security, but is also vital to prevent monopoly of the industry by a few companies.

The past few years have seen a number of takeovers and mergers that are placing control of the industry in the hands of a few security companies. This has serious implications for Government policies which seek to address economic inequalities by promoting small and medium businesses and increasing economic opportunities for historically disadvantaged South Africans.

In addition, there are a number of other problems in the industry, which will continue unless some sort of regulation is exercised over the private security industry. Here, I am specifically referring to the abuse of employees by employers, such as underpayment and long hours of work; abuse of the public by security officers; registration as security officers or companies as a means to access arms and Government contracts; involvement in criminal activities; and unscrupulous behaviour such as smear campaigns to undermine competitors for lucrative contracts.

The objectives and principles of the Private Security Industry Regulation Bill are to ensure that the industry operates in a professional, transparent and accountable manner. It also places an obligation on the industry to uphold the principles of democracy and to promote transformation. [Time expired.] [Applause.]

Mnr P A MATTHEE: Voorsitter, die beskerming van elke persoon se reg op lewe en persoonlike veiligheid en sekuriteit en elkeen se reg om nie onregmatiglik van sy of haar eiendom ontneem te word nie, is grondliggend tot die welstand en maatskaplike en ekonomiese ontwikkeling van elke individu.

Die onaanvaarbaar hoë vlakke van misdaad, en veral dié wat die persoonlike veiligheid en sekuriteit van mense bedreig, het ‘n ongekend e groei in die private beveiligingsbedryf tot gevolg gehad. Dit is ‘n multimiljardrandbedryf waarin buitelandse aandeelhouers blykbaar sowat R3 miljard belê het.

Die wetsontwerp het buitelandse aandeelhouding aanvanklik verbied. Ons is bly daar is uiteindelik besluit om daarvan afstand te doen. Dit is egter, soos reeds aangedui, steeds ‘n vereiste ingevolge klousule 23(1) dat ‘n beveiligingsonderneming slegs deur ‘n Suid-Afrikaner of ‘n persoon wat permanente verblyfreg in Suid-Afrika het, bestuur kan word. Slegs sodanige persone kan direkteure van ‘n beveiligingsmaatskappy wees. Hoewel die meeste buitelandse aandeelhouers blykbaar nie daarvan gehou het nie, was hulle bereid om dit te aanvaar.

Die Nasionale Vergadering het verskeie goeie wysigings aan die oorspronklike wetsontwerp aanvaar. Die definisie van ‘n private ondersoeker is byvoorbeeld vereng sodat ouditeure, advokate, prokureurs en forensiese wetenskaplikes nie daardeur geraak word nie. Poligrafiste is byvoorbeeld uitgehaal en daar is ook ‘n wysiging aangebring dat die regulerende owerheid aan die parlement moet verslag doen. Die invoeging van ‘n gedragskode vir inspekteurs was ‘n goeie wysiging.

Soos in die debat in die Nasionale Vergadering aangedui, bestaan daar egter steeds sekere probleme oor dié wetgewing. Ons meen byvoorbeeld dit is verkeerd om sleutelmakers as verskaffers van beveiligingsdienste te beskou en in die proses aan die verreikende regulering van die wetsontwerp te onderwerp. Onses insiens sal dit ‘n baie negatiewe invloed op klein sake in die bedryf hê.

Ons wil ook hê werknemers en werkgewers in die beveiligingsbedryf moet verteenwoordiging op die raad van die beveiligingsbedryf se regulerende owerheid kry. Dit is moeilik verstaanbaar dat dié mense wat die geld verskaf sodat die owerheid kan funksioneer, nie in die raad verteenwoordig is nie.

‘n Derde probleem wat uitgewys is, is dat die minister té veel mag het om riglyne vir die raad neer te lê en om selfs verantwoordelikheid vir sekere funksies van die raad te aanvaar indien daar in die uitvoering van ‘n funksie nie aan die sogenaamde aanvaarde standaard voldoen word nie.

Dit is ongetwyfeld baie belangrik om die private beveiligingsbedryf behoorlik te reguleer. Die oorgrote meerderheid Suid-Afrikaners kan egter nie die dienste van die private beveiligingsbedryf bekostig nie en daarom kan dié bedryf nooit die rol vervul van ‘n polisiediens wat behoorlik toegerus is wat personeel en toerusting betref nie.

Ek wil die hoop uitspreek dat ons in Suid-Afrika daarin sal kan slaag om misdaadvlakke in die volgende paar jaar só te laat daal dat die vraag na private beveiligingsdienste eerder sal afneem as toeneem.

Soos in die ander Huis kan ons ongelukkig, as gevolg van die redes genoem, nie die wetsontwerp in sy huidige vorm volledig ondersteun nie. [Applous.] (Translation of Afrikaans speech follows.)

[Mr P A MATTHEE: Chairperson, the protection of every person’s right to life and personal safety and security and everyone’s right not to have his or her property unlawfully taken away from them, is fundamental to the welfare and social and economic development of every individual.

The unacceptably high levels of crime, especially those that threaten the personal safety and security of people, have led to unprecedented growth in the private security industry. This is a multibillion rand industry in which foreign shareholders have apparently invested approximately R3 billion.

The Bill initially prohibited foreign shareholding. We are pleased that it was decided to do away with this in the end. However, as already indicated, according to clause 23(1) it is still a requirement that a security enterprise may only be managed by a South African or a person having permanent residential status in South Africa. Only such persons may be directors of a security company. Even though most foreign shareholders apparently disliked this, they were prepared to accept it.

The National Assembly accepted various good amendments to the original Bill. The definition of a private investigator, for example, has been narrowed so that auditors, advocates, lawyers and forensic scientists will not be affected by it. Polygraphists, for example, have been removed and there has also been an amendment to the effect that the regulatory authority must report to Parliament. The addition of a code of conduct for inspectors was a good amendment.

As indicated in the debate in the National Assembly, however, certain problems still exist with regard to this legislation. For example, we are of the opinion that it is wrong to regard locksmiths as providers of security services and in the process to subject them to the far-reaching regulation of the Bill. In our opinion this will have a very negative influence on small enterprises in the industry.

We would also like employers and employees in the security industry to have representation on the council of the security industry’s regulatory authority. It is difficult to understand why those people who provide the money for the authority to function are not represented on the council.

A third problem which has been pointed out is that the Minister has too much power in laying down guidelines for the council and even accepting responsibility for certain functions of the council in the event that so- called acceptable standards are not adhered to in the execution of a function.

It is definitely very important to properly regulate the private security industry. The greater majority of South Africans, however, cannot afford the services of the private security industry and therefore this industry can never fulfil the role of a police service that is properly equipped with regard to personnel and equipment.

I would like to express the hope that we in South Africa will succeed in reversing the crime levels during the next few years to such an extent that the demand for private security services will decrease rather than increase. As in the other House, we unfortunately cannot, as a result of the above- mentioned reasons, fully support the Bill in its current form. [Applause.]]

Mr T B TAABE: Chairperson, hon Deputy Minister and members of the House, it gives me great pleasure as a member of the Select Committee on Security and Constitutional Affairs to be accorded this tremendous opportunity to be able to address members on this important piece of legislation. It is important precisely because it gives us once more the opportunity to execute the mandate of the majority of our people on whose behalf I proudly speak in this Chamber this afternoon; to lead them and to create conditions of security in the areas where they live, work, play, worship and probably enjoy themselves.

The protection, therefore, of every person’s rights to life and to the security of the person as well as the right not to be deprived of property is fundamental to the wellbeing and to the social and economic development of every person. It is in this context that the strategic role of the security industry in protecting these rights is realised.

It has become clear that regulatory reform of the private security industry in this country is an absolute necessity. The fact is that the existing Act, as was pointed out earlier by the hon the Deputy Minister, is obsolete.

In case - if I may, through you, Madam Chair, offer a free English lesson - it is not clear to the hon Theron of the DP what ``obsolete’’ means, it means that this legislation that we are trying to deal with this afternoon is basically outdated. I could probably go on to to assist him by explaining exactly why we feel that there is a necessity for the legislation to be amended in the manner in which we are amending it.

The fact is that the very nature of this industry has changed. The question could then be asked: Where do we begin? Clearly, we must deal with the concerns of our people about the elements in the industry who have the potential, as has been pointed out earlier on, to engage in abuse, given the very nature of the activities of some members within the industry.

The industry is no longer confined - this point too was made earlier on, and I think it is important that we emphasise it - to the guarding and protection of persons and premises. It is very important that we repeat the point over and over again, for the sake of those who want to oppose this legislation, so that they begin to understand exactly what informs the views that we are articulating in this House this afternoon.

This shows that there is a strong case for the regulation being proposed in this legislation. We do not need private armies in this country that want to masquerade as legitimate private security entities so that they can continue with what the Deputy Minister has referred to as the kind of nefarious activities that they have been carrying out in this country, and are still engaging in. I think it was necessary for this point to be emphasised. The Deputy Minister has dealt with the prerequisites, as provided for in the legislation, for registration, membership and whatnot, so I am not going to deal with them, but I felt that it would be important to deal with an issue of national interest.

Regulation is necessary, in the first place, to protect the national interest in respect of the potential threats to state security because certain elements abuse their powers and functions. Secondly, it is necessary to deal with the potential impact of the conflict between the activity … [Time expired.] [Applause.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Order! I am sure Kgoshi Mokoena was right to say that the impact of yesterday is beginning to show. [Laughter.]

The DEPUTY MINISTER OF SAFETY AND SECURITY: Chairperson, I will be very brief.

The first point I wish to make is that when the Bill emerged from the Cabinet it did not have any provision to prevent an investment. The DP and others never tire of telling the executive not to interfere with the portfolio committees, whereas they are the ones who came with the idea of preventing an investment. We are the ones who had to overrule the portfolio committee. Now, how does one deal with a situation where someone announces that they are going to oppose the Bill because the executive made the mistake of providing for foreign investment? And that is a terrible blunder, because we did not.

The Bill, as published originally, has nothing like that. Some people in the portfolio committee thought: ``Let us teach the executive a lesson,’’ and usually they are supported by the opposition. They are the ones who always say that the executive must not interfere and allow Parliament - the portfolio committees are now referred to as Parliament - to change the laws. That is what has happened. So please, let us not hear this sort of thing anymore, that somebody came with a Bill which provided for the exclusion of investment. That statement did not come from the executive, for which it had to take the flak from foreign countries in view of agreements that we have signed on the matter of investment.

But what I would like to say is that we are only talking about investment, not control. We still insist that the boards and the control of security companies must be in the hands of South Africa. That is common practice in most countries. They do allow one or two members, for instance in France, Brazil, etc, on the board. But, generally, all countries restrict membership of the boards of private security companies to their citizens, and there is nothing strange about that.

The biggest companies in this country are regulated by the registrar of companies and they are not represented in the regulatory body which regulates public and private companies. Why is it so strange to have an independent regulatory body regulate what is now a big, private security industry and why should the industry regulate itself? It is not a professional body. These are not doctors or something, but businesses.

One has people sitting on the regulatory body, representing big financial interests, and who, therefore, can manipulate the regulatory authority. Whilst it is regarded as a necessity, I do not think that it is proper for people to have big companies as part of the regulatory authority. Who regulates Anglo American Corporation or any of the big companies? Are they represented in the regulatory machinery of this country? They are not? So let us be really reasonable about this.

South Africa has become a blackmailers’ paradise, with allegations flying this way and that way, in the media, in Parliament, everywhere, with no judicial process. It has become a habit, which certainly was not the case some years ago. Now it is easy for one to make any allegations about the President or somebody else. As a result, we receive complaints about possible allegations against private security companies, whereas everybody is busy making allegations, with no judicial process, inside and outside of politics.

The locksmiths have for years been lobbying to be included in this private security industry, and they have got reasons for doing so. I do not know why people now turn around and say they must ask the locksmiths why they have been agitating to be included and not excluded from the private security industry regulations. I know what they are trying to do.

We are talking about locksmiths, but what about the shops where one can go and produce a key and ask for its duplicate? I think the locksmiths are trying to pull one by demanding that we close those very convenient shops in which we buy keys. The chaps that run the shops that sell keys, etc, are not locksmiths and are not members of the organisation of locksmiths. One must ask them why they have always demanded to be included in the industry.

As soon as people bear arms, they are not the same as people who sell chocolate. The private security companies are very necessary, but they have to have modern firearms and they have to carry all these heavy weapons. Is one saying that one does not require to regulate such people? Does one want such people to be private armies, going around without regulations? How can we accept that type of thing? One has 200 000 chaps armed to the teeth in a country that has no regulations. What is that?

So we want to regulate the type of arms they carry and all kinds of things, because they are armed, and people who are armed are different from everybody else. This is not just a business, it is run by people who are armed and represent a security problem because they are organised as armies. How can one just allow them to roam about the place without strict controls?

So I think, really, that we must think about it and realise that there was a need to produce a piece of legislation such as this one. I do not think that in terms of this Bill the Minister of Safety and Security will have powers that he does not have already. What powers are we talking about that he does not have in relation to security? The Minister must have those powers in order to be able to exercise proper control over armed groups of people.

If one wants to protect one’s house or garage without weapons and without a group of armed men around one, there will be no restrictions. There will be no regulation. We do not regulate people with a whole lot of weapons in their houses. They have licences for rifles and hunting rifles. We do not regulate that. We only regulate the possession of the firearm, but if one has people who are now organised people as a group and are armed, then whatever their purpose is one must have proper regulation.

Let us not have double standards - that it is all right for Australia or France to regulate the private security industry, but South Africa must not regulate the security industry. [Applause.]

Debate concluded.

Bill agreed to in accordance with section 75 of the Constitution (New National Party dissenting).

                     UNEMPLOYMENT INSURANCE BILL

            (Consideration of Bill and of Report thereon)

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Order! I take this opportunity to welcome the Minister of Sport and Recreation, and ask him to address this House of behalf of the Minister of Labour.

The MINISTER OF SPORT AND RECREATION: Chairperson, today on behalf of my colleague, I present to this Council the new Unemployment Insurance Bill. The finalisation of the process of introducing this Bill to the NCOP marks a new chapter in the history of the Unemployment Insurance Fund, as it attempts to address the systematic inefficiencies of the past.

A very brief historical review of the fund shows that within five years of this decision the fund started to experience financial difficulties. The state responded to calls for assistance during 1984, 1989 and 1994. The Bill before the Council goes to the heart of the current problems facing the fund. It is aimed at ensuring that we achieve a lasting resolution to the financial woes that, for a very long time, have plagued the fund.

During the period of attempting to resolve the funding crisis, the fund has continued tirelessly to provide a safety net for the most vulnerable workers in our country. Through various administrative interventions, the fund has never had occasion to turn away any legitimate claimant. Today also represents the fulfilment of the commitment the Minister of Labour, Membathisi Mdladlana, made in June 1999, when he unveiled his 15-point programme of action to restructure the fund.

Unemployment insurance is an important policy area as it contributes towards the improvement of the social safety net to mitigate economic hardships for the unemployed. The Bill pays particular attention to extending unemployment insurance coverage beyond the current levels. This is aimed at enhancing the sustainability and cost-effectiveness of the fund and at creating an environment conducive to improved compliance.

Amongst the reforms being proposed is the increase of coverage to bring every working person within the UIF net. This is to ensure that the fund’s income is increased, whilst low-income earners are compensated at income levels that are acceptable and are able to deal with the issue of poverty relief. It is estimated that these measures will bring in additional income of R215 million a year, together with the benefits of better and easy management of wage audits and earnings declarations.

It is also anticipated that with the transfer of revenue collection to Sars, which is to be enabled through the Unemployment Insurance Contributions Bill, the fund will stand to benefit from its current tough compliance regime.

Where is the background to this? The need for the restructuring of the Unemployment Insurance Fund arises from the obligations placed on the state by the Constitution, the policy environment of the Reconstruction and Development Programme and labour market policy considerations.

The Department of Labour’s approach has been informed by the report of the Presidential Commission to Investigate Labour Market Policy in 1996, the International Labour Organisation’s country studies and extensive consultation with the relevant stakeholders.

The restructuring of the Unemployment Insurance Fund seeks to address the following shortcomings within the current legislation: one, the limited and nonviable nature of coverage; two, weak enforcement and compliance measures; three, the lack of financial sustainability and the depletion of the fund’s financial reserves; four, the rigid benefit structure; five, discrimination against certain categories of employees; and lastly, the lack of a comprehensive database of contributors.

In 1996 a three-person task team, comprising experts from labour, business and academia, was appointed. Their task was to perform a situational analysis of the administration of unemployment insurance, conduct a comparative analysis based on international norms, and make recommendations regarding the findings and the financing thereof.

The task team recommended that: one, coverage be extended to all workers with minimum exclusions; two, gender discrimination be removed by separating maternity and unemployment benefits; three, a progressive or graduated benefit schedule be implemented; four, the existing types of benefits be retained; five, stricter enforcement and compliance measures be introduced; six, a computerised database be introduced; seven, all stakeholders be included in the processes and structures of the UIF; and lastly, limited executive powers be given to the UIF board. In November 1998, after several reports were tabled on the financial status of the fund, Cabinet approved the release of the task team report for public comment. In December 1998 a report was released on the restructuring of the UIF. The document was published in the Gazette and the public was invited to make relevant submissions to the unemployment insurance board, which was given the responsibility of drafting new legislation.

On 2 February 2000 Cabinet approved two new Bills - the Unemployment Insurance Bill and the Unemployment Insurance Contributions Bill. The latter Bill deals with the collection of unemployment insurance contributions from employers, and is intended to consolidate collections under a single administration. As we have said, Sars will take that responsibility.

The Unemployment Insurance Bill will be administered solely by the Department of Labour, and the Unemployment Insurance Fund will have the singular responsibility for the administration and the adjudication of claims. This practice and approach is in line with those adopted by similar institutions the world over.

With regard to problems being addressed, the draft legislation will address a number of difficulties currently that are facing the UIF as a result of weaknesses within the current legislation. The fund’s obligations have expanded in an unsustainable manner. This is due to the fact that coverage has been extended to a growing number of low-income contributors whose risk of unemployment is high, whilst the relative number of those with a low risk of unemployment has dwindled. Higher-income earners with the lowest probability of unemployment are excluded.

Currently, litigation procedures impose scant fines on employers who fail to make their unemployment insurance contributions. In addition, the costs entailed in taking a defaulting employer to court are unduly high. The current system of contribution collection and payroll declarations by employers is very inadequate and requires a complete overhaul. The use of contributors’ record cards as the only means of determining benefits payable to contributors has exposed the fund to potential abuse by both employers and employees, especially employers.

The Act discriminates against women and certain other categories of contributors and potential beneficiaries. What are the key changes that are being introduced? We have spoken about the wide coverage. Within the framework of the new legislation, coverage of workers within the labour market will be extended.

For the first time in the history of unemployment protection in this country, it will include domestic and seasonal workers, and employees earning above the current UIF annual income threshold of R97 188. This inclusion of higher-income groups as UIF contributors will be determined by a maximum income threshold to be determined from time to time by the law.

Regarding the graduated benefit schedule, when the UIF was first introduced in South Africa in 1946 - some of the hon members were not yet born then - the legislators intended that the income replacement ratios of the lowest paid workers should be much higher than those of the better paid. This graduated benefit schedule lasted only until 1977 when it was replaced with the current scheme of 45% income replacement. It is now proposed that this graduated benefit schedule be reintroduced and that benefits be based on income replacement ranging from 60% for low-income earners to 38% for the middle and high-income earners.

Maternity benefits were first introduced by the UIF in 1954, again older than even the Minister - of Labour, not of Sport and Recreation. [Laughter.] A female contributor must be paid benefits for maternity leave whether or not she is capable of and available for work. The UIF provides 45% of the last wage for a maximum period of six months. However, drawing maternity benefits means that women workers, therefore, use up their unemployment benefits. Given that it is obviously only women who apply for maternity benefits, this provision discriminates against women. The new legislation, therefore, proposes to eliminate this discrimination by separating maternity and unemployment benefits so that employees who go on maternity leave can do so without having to draw down their unemployment benefits.

The new UIF Bill seeks to address the legacy of high levels of employer defaulting and noncompliance by proposing the introduction of tougher penalties and fines on those employers who fail to comply. This measure is further strengthened by proposals to bring the UIF collection regime under the ambit of Sars. It makes life easier because it will not be the department but Sars which does the collection. Those employers who default will have to deal with Sars.

The Bill will bestow on the department wide-ranging powers aimed at dealing with aspects of noncompliance such as underdisclosure of employee earnings, working and drawing nonpayment, and deliberate misrepresentations. These measures are deemed sufficient to bring an end to the scourge of employer and employee fraud. It will also enhance our capacity to identify and prosecute defaulters. These measures will also bring further enhancement to the controlled environment within which the fund has to operate.

It is further proposed that an electronic contributor database be created, which will contain individual contribution records for each contributor. This will eliminate paper-based operations including the current blue card system. It will also eliminate the potential for fraudulent claims because each claimant can be prequalified for benefits even before she reports to the office of the Unemployment Insurance Fund. Above all, this measure will increase compliance by requiring employers to submit declarations of those in their employ, their income and any other details that may be prescribed by the law.

The Government’s approach to the Unemployment Insurance Fund is that while its primary role is to provide a social safety net for the unemployed, it should be able to finance its statutory obligations from the income generated from contributions and other sources available to it. Only in exceptional circumstances of high unemployment arising from economic restructuring can the state be expected to assist during that particular transition. In the event where state funding has to be requested, the Bill sets out clear and onerous procedures and requirements for such funding from the fiscus.

In order to ensure sound financial management and to address the uncertainties regarding the financial viability of the fund, the UIF Bill sets out clear roles and guidelines on financial management in line with the PFMA. The Bill also proposes the requirement for the performance of annual actuarial assessments to determine the soundness of the fund’s finances and reserves to finance statutory commitments and to advise the Minister of Labour on the availability of funding alternatives without having to resort to the fiscus.

Regarding entitlement and benefits, the Bill proposes the retention of all five statutory benefits, in other words for unemployment, maternity, illness, adoption and dependence of disease. However, benefits will be accumulated and limited up to 34 weeks in any given four-year period. This measure will eliminate the loophole that exists in the current Act.

As members would have realised from the aforementioned, Government is very serious about addressing problems facing the unemployed by providing some form of safety net. I note and concur with the select committee amendments agreed to in respect of the definitions of employee and the remuneration in order to align these with the Unemployment Insurance Contributions Bill, which was introduced today in the National Assembly. The Bill before this House is the culmination of the joint efforts of the staff of the Department of Labour, the National Treasury, the Select Committee on Labour and Public Enterprises and social partners. We wish to extend to them our gratitude on the dawn of the new Unemployment Insurance Fund. [Applause.]

Mr S L E FENYANE: Chairperson, I know that members have had a long day and I am not going to extend the torture that has been endured by members throughout the day. I must also indicate that the Minister of Labour in loco duly surprised me by mentioning almost everything that I was going to say. Moreover, since he is not the real Minister but just a Minister in loco, he indeed surprised me. I salute him for that. I shall have to skip many clauses that I wanted to make reference to. I shall try not to bore members.

The Bill in front of us deals essentially with an unemployment benefit fund. Its main purpose is to establish an unemployment fund to which employers and employees should contribute to ascertain its sustainability. At the moment, the Fund is typically bankrupt. It depends solely on an overdraft facility for its financial upkeep. This Bill is a product of an elaborate consultative process that included labour, business, members of the academia, Nedlac and other eminent authority figures in our society. The Portfolio Committee on Labour further subjected it to a rigorous public hearings process. All those who participated in it agreed that it is a difficult piece of legislation to deal with.

I would like to urge members to support this Bill. I know that there are other outstanding issues in this Bill which have not been properly addressed. However, I would like to caution that we do not have the luxury of time to dither and procrastinate, as the fund is in a deficit, and many unemployed persons are queueing for benefits that may not accrue to them if we do not pass this Bill. We are definitely going to have to revisit these outstanding issues.

However, let us pass the Bill now, since we are not able to stop time. Neither do we have a crystal ball which can help us predict future eventualities. Let us pass it now. I know members are tired. Let us just pass the Bill. We will revisit it later to look at other things. I would urge everyone to support this Bill. [Applause.]

Ms C S BOTHA: Mr Chairperson, at the outset, I would like to say that the DP would very much like to support more of the Bills the ANC passes. Will they please write them in such a way that we are able to do so? [Interjections.]

Almal is seker bekend met die sogenaamde bloukaartstelsel. Dit is ‘n staatsintervensie om mense wat hul werk verloor, met ‘n gedeeltelike en tydelike betaling te ondersteun, terwyl hulle ander werk soek. Dit is die essensie van die werkloosheidsversekeringswetsontwerp. Daar was geen prinsipiële verskille tussen komiteelede oor wat met hierdie wetgewing bereik behoort te word nie. Die voorstelle wat tot verbetering van die huidige funksionering van die fonds sal lei soos invordering deur Sars, ‘n verbeterde databasis, beskermende maatreëls om gebruikers se toegang tot voordele te vergemaklik en die staat se toetrede om huidige tekorte aan te vul, word allerweë verwelkom. (Translation of Afrikaans paragraph follows.)

[I am sure that everyone is acquainted with the so-called blue card system. This is a state intervention aimed at supporting people who have lost their jobs with a partial and temporary payment, while they are looking for other jobs. That is the essence of the Unemployment Insurance Bill. There were no objections in principle amongst committee members as to what should be achieved by this legislation. The proposals which will lead to the improvement of the present functioning of the fund, such as collection by Sars, an improved data base, protective measures to facilitate users’ access to benefits and intervention by the state to supplement present deficits, are widely welcomed.]

However, there are some real practical problems with the execution of this Bill. For example, I cannot see the provision for only excluding workers who work less than 24 hours per month from UIF benefits even being observed in practice. This kind of provision will cause employers to avoid, if not evade the law. Instead of achieving its objective to increase the sensitivity of our legal framework to the imperative to create jobs, it is likely to hamper it.

We need to appreciate the administrative burden imposed on employers who are likely to give temporary relief to the unemployed, if they are obliged to observe this kind of record-keeping. I am just looking at practical considerations as well as my own experience. It is simply not realistic to expect this. At the same time, seasonal workers are recognised only after three months of employment. In itself, it is problematic to implement, but, at least, more manageable than the aforesaid.

However, the issue about which we feel most strongly is the exclusion of the state from the ambit of the Bill. Not only does this create a separate class of employer, for which the definition of employer was specifically amended to allow this, but no cogent argument could be brought to justify this position. In fact, the department itself admitted that the exclusion could be successfully challenged in court.

This exclusion also limits the principle of cross-subsidisation and resultant stabilisation of the fund for which it seems patently unfair to single out the private sector employer. It can also be challenged by public sector employees who are not covered by the provisions of the Bill. I may say that this was also asked to be addressed in the report by the committee in the National Assembly.

In the first draft of the Bill, domestic workers were also excluded. This committee or the whole of the committee objected unanimously. The 12-month window period, which is now being given to the department to produce measures to include domestic and seasonal workers in the benefits of the Bill, should not have arisen. There is no justification why this was not accomplished in the period during which this Bill was in the incubator. Want ons is al sedert 1996 besig met hierdie wetsontwerp. [Because we have been working on this Bill since 1996.]

We fully expect the department to remedy the situation within the 12-month limit that they have been given.

The Bill has been successful in dealing with maternity benefits and rights from unemployment insurance, and progress is revealed in that it does not prevent women who have access to maternity benefits from also accessing unemployment benefits. However, it appears that the Bill seeks to protect both the state and employers from bearing adequate financial responsibility. [Time expired.] [Applause.]

Dr P J C NEL: Mevrou die Voorsitter, een van die grootste wesenlike probleme waarvoor die Regering van die dag te staan kom, is verseker die geweldig hoë werkloosheidsyfer, en daarom is dit so noodsaaklik dat voorsiening gemaak word vir die oorlewing van diegene wat daardeur geraak word.

Die huidige finansiële status van die Werkloosheidversekeringsfonds is ‘n goeie aanduiding van watter afmetings werkloosheid reeds in ons land aangeneem het. Hierdie is ‘n probleem wat bó partypolitiek verhef moet word, en dit is verseker ‘n uitdaging vir alle partye om hande te vat en na oplossings te soek.

Die ou wet het baie leemtes gehad en die stuk wetgewing wat ons vandag hier hanteer, het dit ten doel om die swakhede aan te pak. Die Nuwe NP steun dan ook die wenslikheid van die wysigingswetsontwerp en die wysigings wat dit ten doel het om verbeterings in die ou wet aan te bring. Daar bestaan egter kommer oor vele leemtes in die wysigingswetsontwerp.

Die huidige finansiële status van die fonds en die ernstige kontantvloeiprobleme wat dit tans beleef, wek ernstige kommer oor die lewensvatbaarheid van die fonds in die toekoms. Klousule 3 (1)(c) bepaal dat werknemers in die nasionale en provinsiale staatsdiens uitgesluit word van deelname aan die fonds. Dit beteken dat die grootste werkgewer in die land uitgesluit word as bydraer tot die fonds.

Dit is na ons mening diskriminerend en inkonsekwent, en teenstrydig met een van die hervormingsmaatreëls in die wetsontwerp, naamlik om nie te diskrimineer teen sekere kategorieë werkers nie. [Tussenwerpsels.] Dit klink vir my voorts asof dit ook teenstrydig met die bepalings van die Grondwet kan wees.

Hierdie aangeleentheid verg verseker verdere ondersoek met die oog op hersiening. Daar is ook nog nie behoorlik ondersoek gedoen oor die finansiële impak wat die voorgestelde kraamvoordele op die fonds se finansies gaan hê nie. Dít moet nog verder ondersoek word. Die voordele vir huiswerkers is nog nie deeglik deurtrap nie. Dít moet nog verder ondersoek word. Wat baie belangrik is, is dat die Unemployment Insurance Contributions Bill is nog nie goedgekeur nie.

Hierdie stuk wetgewing het nog ver te veel los ente wat in die lug hang en ek voorsien dat dit binnekort weer gewysig sal moet word. Ek dink die agb voorsitter van die gekose komitee stem met my saam. Die Nuwe NP kan nie, met die beste wil in die wêreld, ‘n wetsontwerp soos hierdie in sy huidige vorm steun nie. [Tussenwerpsels.] (Translation of Afrikaans speech follows.)

[Dr P J C NEL: Madam Chairperson, one of the biggest real problems facing the Government of the day is most certainly the alarmingly high unemployment figures, and that is why it is so essential that provision is made for the survival of those who are affected by this.

The present financial status of the Unemployment Insurance Fund is a good indication of what proportions unemployment has already reached in our country. This is a problem that should be beyond party politics, and it is certainly a challenge to all parties to take hands and seek resolutions.

The old Act had many shortcomings and the objective of the piece of legislation that we are dealing with here today is to tackle the weaknesses. The New NP supports the desirability of the amending Bill and the amendments that seek to make the improvements to the old Act. There is concern, however, about many shortcomings in the amending Bill.

The current financial status of the fund and the serious cash flow problems that it is at present experiencing give serious cause for concern about the viability of the fund in the future. Clause 3(1)(c) provides that employers in the national and provincial public service should be excluded from participation in the fund. This means that the largest employer in the country is excluded from being a contributor to the fund.

In our view this is discriminatory and inconsistent, and contradictory to one of the reform measures in the Bill, namely not to discriminate against certain categories of workers. [Interjections.] Furthermore, it sounds to me as if it could also be contradictory to the provisions of the Constitution.

This matter requires further investigation with a view to review. Nor has there been adequate investigation into the financial impact of the proposed maternity benefits on the finances of the fund. This should be investigated further. The benefits for domestic employees has not yet been thoroughly considered. This should be investigated further. What is very important is that the Unemployment Insurance Contributions Bill has not yet been approved.

This piece of legislation still has far too many loose ends up in the air and I foresee that it will have to be amended again in the near future. I think the hon chairperson of the select committee agrees with me. The New NP cannot, with the best will in the world, support a Bill such as this one as it stands at present. [Interjections.]]

Mnu M J BHENGU: Mphathi wohlelo, ngisukuma nokusho ukuthi umThethosivivinywa lona kwale kancane ungaphumeleli, njengoba esho uMphathi woHlelo umfowethu uFenyane nelungu elihloniphekile lakwaBotha. Kwale kancane nje ukuthi ungaphumeleli, kodwa-ke ngobuchule nangobunzulu bomqondo womfowethu uFenyane uphumelelile, ngoba uyakwazi ukuzibona izikhala. Ngisho ukuthi-ke ngiyavumelana nomfowethu uFenyana nxa ethi kukhona izinto ezithize ezisalele ezibucayi ezidinga ukuthi zibhekwe. Mina engikubona kubucayi okusalele, ngukuthi lo mThethosivivinywa uyasebenza yini njengokulawula kwe-PFMA. Nakho okubalulekile engifisa ukuthi uSihlalo wekomidi lethu akubheke ngoba kubucayi. Ngakho-ke, siyawuvuma thina ngoba siyazi ukuth nxa umuntu ephelelwe umsebenzi kuba njani lapho sekulele ikati eziko. Kuba ngcono uma kukhona into enjengalena ngoba uyakwazi ukuthi ayothola ukuze izingane zithole iyambazana.

Ngiyabonga ukuthi umfowethu uFenyana uthe kuzolungiswa. Kodwa nakhu engifuna ukugcina ngakho: ukuthi le nto eshiwo nguMongameli izolo lapha kule Ndlu ibalulekile. Uthe, ``Leli zwe nxa likhuluma umhlaba wonke uyalalela.’’ Ngikusho lokho ngoba kuyingozi ukuthi sakhe umthetho simi ngezinyawo, sigijima. Uma umuntu akha umthetho kufanele ahlale phansi, angajahwa kuthiwe nasi isikhathi siphela, phuthuma phuthuma. Uma senza njalo kuyobe kusho ukuthi esikwenzayo senza le nto yokuthi sishaye nje isitembu; kuyingozi-ke lokho. Ngicabanga ukuthi uma sifunde leyo nto kuyoba kuhle kabi, ngoba akufuneki ukuthi sibe yizitembu. [Ihlombe.]

Ngikusho lokhu ngoba kuyingozi ukuthi sakhe umthetho sime ngezinyawo, sigijima. Uma umuntu akha umthetho kufanele ahlale phansi, angajahwa kuthiwe: nasi isikhathi siphela phuthuma, phuthuma. Uma senza lokho singabe senza lokhu okuthiwa ukushaya isitembu okuyinto eyingozi-ke nokho. Ngicabanga ukuthi uma sifunde leyo nto kuyoba kuhle kabi ngoba akufunakali ukuthi sibe izigxivizo zokushaya izitembu. [Ihlombe.] (Translation of Zulu speech follows.)

[Mr M J BHENGU: Chairperson, I stand up to say that this Bill nearly failed, as the chairman, Mr Fenyane, and hon Botha have said. It nearly failed, but through the expertise of Mr Fenyane it was a success, because he knows how to make things a success.

I mean I agree with Mr Fenyane when he says that there are a few important things that need to be checked. What I think needs to be checked is whether this Bill is in line with the PFMA. That is the only thing I would like the chairman of our committee to look at because it is crucial. Therefore, we agree, because we know what it is like when someone has been retrenched and has no food. It is better if there is something like this, because he could get something so that his children can have food.

I would to thank Mr Fenyane, because that matter will be corrected. I would like to conclude by saying that what the President said yesterday was crucial. He said: “When this country talks, the whole world listens.” I am saying this because it is dangerous to make laws while we are standing on our feet, or even running. When one makes laws, one needs to sit down. One must not be rushed, like telling him that he is running out of time. If we do that it will mean that we are just rubber stamps, and that is dangerous. I think if we can learn that, it will be good, because we should not just be rubber stamps. [Applause.]]

Ms M P THEMBA: Chairperson, hon Minister and hon members, I actually do not want to waste members’ time by responding to the DP, which does not want to be transformed. [Interjections.] We are sweating so much every day to try and show them the way, but they are so hard to crack. [Interjections.]

The CHAIRPERSON OF COMMITTEES: Order!

Ms M P THEMBA: Chairperson, the Bill before the House today contributes to a move away from the legacy of the past, as Dr Nel has said. The Act was passed by white men only; there were no women in that forum. In this instance it deals with the delinking of maternity and unemployment benefits. The current position is that women drawing maternity benefits use up their unemployment benefits. This practice discriminates against women.

This Bill proposes that maternity and unemployment benefits be separated so that employees who go on maternity leave do so without having to deplete their unemployment benefits. In support of this Bill, I would like to reiterate that this Government’s commitment to the concept of equality means more than treating all persons in the same way. Equal treatment of persons in an unequal situation will perpetuate rather than eradicate injustice.

True equality between the different genders can only emerge from efforts directed towards correcting these situational imbalances, which I believe this Bill has done enough to address. To combat gender-based discrimination we would like the Unemployment Insurance Board to be composed of both men and women, so as to recognise the importance of the economic and social contributions of women in this country.

This Bill also provides for a measure bringing the UIF collection regime under the ambit of the functions of the SA Revenue Service and its enabling Act, the Income Tax Act of 1962. This will address the high level of employer default and noncompliance by employers by introducing tougher penalties. The UIF restructuring proposed in the Bill will, inter alia, address the limited and nonviable nature of coverage, weak enforcement and compliance measures, the lack of financial sustainability and development of the fund’s financial reserves, the rigid benefits structure, discrimination against certain categories of employees and the lack of a comprehensive database of contributors.

It will also increase compliance by requiring employers to submit declarations listing those in their employ, their income and any other detail that may be prescribed in this default. [Interjections.]

This Bill provides, as the Minister has said, that these benefits be accumulated up to and limited to 34 weeks in any given four-year period. This means that it also provides a measure that will eliminate loopholes that exist in the current Act.

In conclusion I must point out that this piece of legislation has been a comparative analysis, based on international norms, and, therefore, we in the ANC proudly support the initiative [Applause.]

The MINISTER OF SPORT AND RECREATION: Chairperson, I would like to mention a point that was raised earlier, namely the exclusion of state employees and domestic workers. The Bill provides for the Ministers of Labour, of Finance and for the Public Service and Administration to, first of all, investigate the possibility of including civil servants and the implications thereof on the fiscus, and to report to Parliament within seven months. The reason for this approach is that the inclusion of civil servants will result in the change of the remuneration structure of civil servants. Secondly, civil servants will also need to contribute to the fund. For this reason it is important that such employees be consulted at the bargaining council.

Secondly, we are talking about the exclusion of domestic workers. Domestic workers are not excluded. What is required is for the department to be given 12 months to investigate the modalities of collection from domestic workers’ employers and domestic workers themselves, given the unique nature of domestic workers.

I wanted to comment on this issue, but also to thank all the members who have participated in this debate today. Yes, there will be some questions asked, but I do believe, even as an acting Minister, that the best thing is to move forward and add on whatever that needs to be added on, but not to break the process just to be spoilsports of some sort. Remember, I am the Minister of Sport. [Laughter.]

I believe that the parties that do not play ball as we expect them to, need to be taught what it is to play sport. Maybe they will understand, later, when they get tackled. Not that some of them are at an age where they can be tackled anyway. [Applause.]

Debate concluded.

Bill, subject to proposed amendments, agreed to in accordance with section 75 of the Constitution. The Council adjourned at 20:30 ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

ANNOUNCEMENTS:

National Council of Provinces:

1. The Chairperson:

 (1)    Bills passed by National Council of  Provinces  on  14  November
     2001: To be submitted to President of the Republic for assent:


     (i)     Provincial Tax Regulation  Process  Bill  [B  51D  -  2001]
           (National Assembly - sec 76).


     (ii)    National Parks Amendment  Bill  [B  38  -  2001]  (National
           Assembly - sec 75).


     (iii)   Medical Schemes Amendment Bill [B  80B  -  2001]  (National
           Assembly - sec 75).


     (iv)    Private Security Industry Regulation Bill [B  12B  -  2001]
           (National Assembly - sec 75).


 (2)    Message from National Assembly to National Council of Provinces:


     Bill  passed  by  National  Assembly  on  14  November   2001   and
     transmitted for concurrence:


     (i)     Revenue Laws Second Amendment Bill [B 84 - 2001]  (National
           Assembly - sec 77).


     As the Joint  Committee  on  Revenue  Laws  Second  Amendment  Bill
     reported on the Bill (see  Announcements,  Tablings  and  Committee
     Reports, p 1374), it  was  not  referred  to  a  committee  of  the
     Council. It has been put as an Order of the Day on the Order  Paper
     of the Council for consideration.

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Minister of Public Works:

 Written explanation, dated 12 November 2001,  from  the  Department  of
 Public Works in  terms  of  section  65(2)(a)  of  the  Public  Finance
 Management Act, 1999 (Act No 1 of 1999), setting out  the  reasons  why
 the  department  could  not  table  its  Annual  Report  and  Financial
 Statements for 2000-2001 in time:


 Dear Mr Mfenyana


 This Memorandum serves to inform the Parliament that the Department  of
 Public Works  is  unable  to  table  the  2001  annual  report  as  per
 provisions of section 40(1)(d) of the Public  Finance  Management  Act,
 1999 and Regulation 111J of the Public Service  Regulations,  1999  (as
 amended).


 National Treasury  Guidelines  for  Annual  Reporting  (December  2000)
 directs that the annual report should include  audit  reports.  Due  to
 outstanding issues, of material nature,  the  Auditor-General  has  not
 finalised the Department of Public Works' audit report.


 In view of the above, the tabling of  the  report  during  the  current
 sitting of Parliament is not possible.


 We hope for the Parliament's indulgence in this regard.


 Regards,


 TAMI SOKUTU
 DIRECTOR-GENERAL 2.    The Minister of Trade and Industry:


 (a)    Report and Financial Statements of the Department of  Trade  and
     Industry for  2000-2001,  including  the  Report  of  the  Auditor-
     General on  the  Financial  Statements  of  Vote  32  -  Trade  and
     Industry for 2000-2001.


 (b)    Report and Financial Statements of  the  Competition  Commission
     for 2000-2001, including the Report of the Auditor-General  on  the
     Financial Statements for 2000-2001 [RP 150-2001].

1. The Minister of Health:

 (1)    Government Notice No R.691 published in  Government  Gazette  No
     22495 dated 27 July 2001, Regulations  relating  to  additives  for
     use in food  in  general  in  accordance  with  good  manufacturing
     practice, made  in  terms  of  section  15(1)  of  the  Foodstuffs,
     Cosmetics and Disinfectants Act, 1972 (Act No 54 of 1972).
 (2)    Government Notice No R.723 published in  Government  Gazette  No
     22549  dated  10  August  2001,  Regulations  regarding   processed
     foodstuffs, made in terms  of  section  15(1)  of  the  Foodstuffs,
     Cosmetics and Disinfectants Act, 1972 (Act No 54 of 1972).


 (3)    Government Notice No R.747 published in  Government  Gazette  No
     22563 dated 17 August  2001,  Amendment  of  regulations  governing
     microbiological standards for foodstuffs and related matters,  made
     in  terms  of  section  15(1)  of  the  Foodstuffs,  Cosmetics  and
     Disinfectants Act, 1972 (Act No 54 of 1972).


 (4)    Government Notice No R.911 published in  Government  Gazette  No
     22694  dated  28  September  2001,  Regulations  governing  certain
     solvents in foodstuffs, made in  terms  of  section  15(1)  of  the
     Foodstuffs, Cosmetics and Disinfectants Act, 1972  (Act  No  54  of
     1972).
 (5)    Government Notice No R.765 published in  Government  Gazette  No
     22584 dated 24 August 2001, Regulations relating to the conduct  of
     enquiries into alleged unprofessional conduct,  made  in  terms  of
     section 61(1)(h) read with section 61(4) of the Health  Professions
     Act, 1974 (Act No 56 of 1974).


 (6)    Government Notice No R.887 published in  Government  Gazette  No
     22673  dated  21  September  2001,  Regulations  relating  to   the
     suspension of practitioners, made in terms of  section  61(1)  read
     with section 15B(1)(a) of the Health Professions Act, 1974 (Act  No
     56 of 1974).

COMMITTEE REPORTS

National Council of Provinces:

1. Report of the Select Committee on Finance on the Adjustments Appropriation Bill [B 82 - 2001] (National Assembly - sec 77), dated 14 November 2001:

   The Select Committee on Finance, having considered the subject of the Adjustments Appropriation Bill [B 82 - 2001] (National Assembly - sec 77), referred to it, reports that it has concluded its deliberations thereon.

2. Report of the Select Committee on Security and Constitutional Affairs on Employment Benefits of TRC staff, dated 14 November 2001:

   The Select Committee on Security and Constitutional Affairs, having considered documents regarding the remuneration, allowances and other employment benefits of the staff of the Truth and Reconciliation Commission, tabled on 21 May 2001 in terms of section 9(2)(a) of the Promotion of National Unity and Reconciliation, 1995 (Act No. 34 of 1995), referred to the Committee, recommends, pursuant to section 9(2)(b) of the Act, that the determination is in order and that the Council take no further action.

3. Report of the Select Committee on Security and Constitutional Affairs on Directives in terms of section 4 of the Criminal Procedure Amendment Act, 1997, dated 14 November 2001:

   The Select Committee on Security and Constitutional Affairs, having considered Directives in terms of section 4(1) of the Criminal Procedure Amendment Act, 1997 (Act No. 76 of 1997), in terms of which legal aid or legal representation is rendered or made available for purposes of section 3 of the Act, tabled on 16 February 2001 in terms of section 4(2)(b) of the Act, referred to the Committee, reports that it cannot support the said Directives in view thereof that the Constitutional Court in S v Steyn 2001(1) BCLR 52 (CC) held that the provisions of sections 309B and 309C of the Criminal Procedure Act, 1977 (Act No. 51 of 1977), are unconstitutional.

4. Report of the Select Committee on Security and Constitutional Affairs on Directives in terms of section 7 of the Criminal Matters Amendment Act, 1998, dated 14 November 2001:

   The Select Committee on Security and Constitutional Affairs, having considered Directives in terms of section 7 of the Criminal Matters Amendment Act, 1998 (Act No. 68 of 1998), in terms of which legal aid or legal representation is rendered or made available for purposes of section 3(a) of the Act, tabled on 16 February 2001 in terms of section 7(2)(b) of the Act, referred to the Committee, reports that it does not have any objection to the said Directives.

5. Report of the Select Committee on Finance on FFC hearings, dated 5 November 2001:

 The Select Committee on Finance, having  conducted  hearings  with  the
 Financial and Fiscal Commission (FFC), reports as follows:
 A.     Introduction


     This Report is an analysis of the debate  by  the  members  of  the
     Committee who attended hearings to discuss the  FFC  Submission  on
     the Division of Revenue for 2002-03. The FFC has been  mandated  by
     the Constitution, Chapter 13, to make  recommendations  as  to  how
     nationally collected revenue should be  divided  between  national,
     provincial and local government. In the  FFC's  latest  submission,
     June 2001, the emphasis has been placed on  formulating  policy  on
     the equitable division of revenue to local governments.


 B.     Provincial Revenue Powers


     This  section  of  the  FFC  submission  examines   approaches   to
     strengthening  provincial  tax  authority  to  meet   the   general
     constitutional requirements  and  the  general  principals  of  tax
     design. It leads to the devolution of  national  revenue  power  to
     provincial revenue autonomy. It is an issue which  has  raised  the
     most concerns in the FFC hearings in almost all of  the  provincial
     houses. Below is a list of concerns expressed and  debated  by  the
     members  present  at  the  FFC  hearings,  followed  by  a  general
     summation.


     1. The administration cost of a  decentralised  tax  authority  and
          fears of such cost being passed on to the local taxpayer.


     2.  Political  merits  of  decentralising  tax  authority  and  tax
          reliability,  with  accountability  of   these   decentralised
          levels.


     3. Fears of FFC recommendations creating  new  sources  of  revenue
          instead  of  exploiting  existing  sources,  alluding  to  the
          inefficiency of decentralising tax authorities and/or  to  the
          disincentives for provinces to fully exploit their own revenue
          potential.


     4.  Whether  the  Provincial  Tax  Regulation  Bill  satisfies  the
          constitutional requirements for regulating provincial  revenue
          powers.


     5. The  difficulty  of  implementing  an  equalisation  grant  when
          introducing provincial taxation.


     6. The gains in provincial revenue may be too small to  offset  the
          cost accrued in complicating the equitable share formula.


     Some of the concerns expressed above are all  issues  that  feature
     prominently in standard economic text on public finance  and  local
     government,  with  convincing  arguments  for   and   against   the
     decentralisation of revenue  powers  from  national  to  provincial
     government. The most talked about issue is the additional  cost  to
     the  tax-payer  due  to   the   collection   of   taxes   and   the
     administration to oversee such collection.


     Personal income tax by its nature is a broad-based income tax  with
     no substitutes and, in terms of  revenue,  is  the  most  efficient
     tax. In addition, the administration cost is minimal as  collection
     and distribution of personal income tax is  already  undertaken  by
     SARS. FFC recommendations that the  surcharge  on  personal  income
     tax be  identified  as  one  of  the  sources  of  provincial  tax,
     alleviate some of  the  problems  associated  with  additional  tax
     burdens placed on local authorities.


     Also, the FFC  recommendations  and  policy  stance  on  provincial
     revenue powers  are  subject  to  change,  pending  provincial  tax
     legislation. On this issue, nothing is yet categorical. For a  more
     detailed report of the consequences  of  revenue  decentralisation,
     refer to the Committee's Report on the Katz Commission Report.


 C.     Equitable Share Formulae and impact thereof


     The  formulae  developed  and  proposed  by   the   FCC,   is   for
     municipalities to  find  an  equilibrium  between  their  equitable
     share and the total  cost  of  all  service  responsibilities,  the
     maximum possible cost recovery and their revenue-raising  capacity.
     Points raised by members at the FFC hearing were:


     1. Provinces will be able to manipulate the formula  by  increasing
          CSR and decreasing CR and RRC and thus increasing their equity
          share.


     2. The interpretation of the constitutional  mandate  with  respect
          to basic services, i.e. what  is  to  be  implemented  in  the
          formula?
     3. The potential of municipalities  to  raise  their  own  revenue,
          which will be deducted from  their  equitable  share,  knowing
          that this  might  disadvantage  themselves  in  terms  of  the
          allocation from the national government.


     In regard to the formula and identification of  backlogs,  the  FFC
     has suggested that the  data  be  collected  nationally  to  expose
     inefficiency within municipalities. It is important  that  the  tax
     base  for  each  municipality  is   identified   to   ensure   that
     municipalities  maintain  efficiency  in  revenue  collection   and
     distribution in order to sustain equity share  equilibrium  in  the
     formula. This is also true  for  provincial  and  local  government
     formulae derived by the FFC.


 D.     Equitable Share: Income Disparity between Provinces


     In some districts the per capita income  from  regional  levies  is
     R10, while in others it is R1 000. This  is  not  only  because  of
     lack of revenue effort  but  also  because  of  a  lack  of  formal
     economic  activity  essential  for   broadening   the   tax   base,
     especially in the rural areas. The funding  of  basic  services  as
     suggested by the FFC should come  from  converted  regional  levies
     into a general revenue source and the  funding  for  infrastructure
     directly from national government.[4] This  is  in  agreement  with
     standard public finance theory, as the disparity between  provinces
     and municipalities in their ability to deliver free basic  services
     would  cause  people  to  vote  with  their  feet   and   move   to
     municipalities able  to  deliver  these  services.  Issues  raised,
     were:


     1. Economic activity  is  an  element  of  the  current  provincial
          formula: Eight per cent  of  the  provincial  equitable  share
          allocation consists of an "economic  output  share"  which  is
          based  on  the  distribution  of  total  remuneration  in  the
          country.


     2. Did the FFC model  take  into  account  the  skewed  development
          across provinces?


     3. The determination of capital grants in the capital  grant  model
          and the data to be used in asset compilation  of  the  various
          provinces.


 E.     Provincial and Municipal Borrowing


     Borrowing by provinces are  subject  to  the  Provincial  Borrowing
     Powers Act. While borrowing may be considered as a route to  tackle
     infrastructural backlogs, the temptation is there to subsidise  the
     tax-payer through this borrowing.


     The FFC suggest that long-term loans be at or near market rates  in
     order to entice the private sector into the market.  However,  this
     may be a bit  unrealistic,  as  a  market  discipline  approach  is
     almost unattainable on its own.


     The point was made that if provinces should borrow (Budget  Council
     agreed to no provincial borrowing at this stage), they should  have
     control over their revenue, as they are held accountable for  their
     borrowing  and  should  be  held  accountable   for   capital   and
     infrastructure development.


     Results of experiments conducted in respect of borrowing  by  local
     government suggest that municipallities  with  a  buoyant  tax  and
     transfer base tend to  finance  capital  expenditure  largely  from
     revenue.


     There is, however, problems  in  the  municipal  borrowing  sector,
     with  lenders  staying  out  of  the  market  due  to  factors   of
     uncertainty of  restructuring  and  redemarcation  processes  which
     have eroded the creditworthiness of some  municipalities.  However,
     if municipalities were dependant directly  and  entirely  upon  the
     financial markets, it  is  unlikely  that  they  would  have  equal
     access to loan finance. Smaller  and  poorer  municipalities  would
     probably have more difficulty in borrowing and would pay  more  for
     it.


     The nature of debt and its trends in  local  government  are  still
     under  investigation  by  the   National   Treasury,   and   debate
     continues.  The  Committee  is  anticipating  the  tabling  of  the
     Municipal  Finance  Management  Bill,  which  largely  deals   with
     financial management issues and borrowing by municipalities.


 F.     Free Basic Services


     There is a need for a guiding framework to define  constitutionally
     mandated basic services. The Committee  is  aware  that  government
     departments at all levels are unable to give an  indication  as  to
     how much it costs the government to provide a  particular  service.
     The Committee is of the view that this is important and  should  be
     thoroughly researched.


 G.     Health Care


     1. The FFC's proposal over the medium  term  is  to  determine  the
          proportion  of  primary  health  care  funding  allocated   to
          municipalities by  provinces,  and  to  ensure  that  this  is
          equitably distributed amongst municipalities.


 H.     Committee Comments


     1  The Committee endorses the view that  any  borrowing  should  be
          for capital projects or infrastructure development.


     2. The Committee proposes that the Department of Finance  considers
          the FFC proposal that there must be  a  framework  which  will
          guide the utilisation of the contingency reserves and which is
          informed by objective criteria.


     3. The Committee is concerned about the extent to  which  the  FFC,
          in their proposals, has taken  into  account  the  often  poor
          state of financial management capacity in the municipalities.


     4. Australia being used as a capital benchmark for  our  model  was
          raised  as  a  serious   concern,   since   the   social   and
          developmental conditions are not the same.


     5. What are the  terms  of  reference  within  which  the  FFC  are
          obliged to operate? Besides the FFC Act,  there  is  only  the
          Constitution and the Intergovernmental Relations Act, with  no
          other regulations governing FFC inputs.


     6. Provision  should  be  made  for  the  delivery  of  free  basic
          services.


 I.     Conclusion


     The  extent  to  which  provinces  make  use  of  or  discuss   FFC
     recommendations on a yearly  basis  is  questionable.  The  2003-04
     recommendations should be released  timeously  with  a  view  to  a
     smooth running process to ensure participation of legislatures  and
     local government.


     Amongst conceptual issues debated, was the constitutional  role  of
     the FFC, which stills seem to be vague. The  Committee  is  of  the
     opinion that the need is still there for a  thorough  understanding
     of the aims of the FFC,  i.e.  to  provide  a  fair  set  of  rules
     whereby provincial and local government is given an equal  starting
     point  from  which  to  maintain  an  equilibrium  in   local   and
     provincial government formulae. What this  fair  set  of  rules  is
     actually saying, is that  local  government  and  provinces  should
     equip  themselves  to  survive  the  market  forces  driving  their
     economies.


     Change is not often  easy.  It  is  these  markets,  with  all  its
     failures  to  deliver  on   public   goods,   which   will   ensure
     accountability, efficiency, optimal  allocation  of  resources  and
     good governance in the lower spheres  of  government  in  the  long
     run.

The Committee hopes that the 2001 census and other surveys will help to give proper and adequate data for informed policy-making and to ensure equitable distribution of resources.