WEDNESDAY, 18 SEPTEMBER 2002 __

          PROCEEDINGS OF THE NATIONAL COUNCIL OF PROVINCES
                                ____

The Council met at 14:02.

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.

                          NOTICES OF MOTION

Mr K D S DURR: Chairperson, I give notice that at the next sitting of the Council, I shall move:

That the Council -

(1) notes the serious questions arising around the planting of genetically modified or GM crops;

(2) further notes that -

   (a)  independent research done at US universities shows that GM crops
       produced lower yields  and  reduced  profits  while  using  more
       pesticides;


   (b)  many American farmers are concerned about GM crops  and  the  US
       National Family Coalition and  the  National  Farmers  Union  of
       Canada have called for a ban or moratorium on GM crops;


   (c)  studies done at an Egyptian university show GM  B-spliced  foods
       damage the intestines of laboratory rats;


   (d)  insurance companies in Australia and UK deem GM crops and  foods
       too dangerous to insure;
   (e)  the European Union has just voted for  even  stricter  GE  food-
       labelling laws;


   (f)  supermarkets in Australia and New  Zealand  are  going  GM  free
       while the Japanese, the world's biggest importer  of  food,  are
       rejecting GM foods;


   (g)  although China grows GM cotton, it  has  banned  the  commercial
       growing of GM soya, maize, wheat and rice;


   (h)  in 1998, Mexico banned the planting of GM maize to  protect  its
       indigenous maize varieties;


   (i)  Namibia and Botswana have said they will not buy  GM  food  from
       South Africa; and


   (j)  Zimbabwe and Malawi have only accepted GM food aid under  severe
       pressure while Mozambique will not even allow GM food into their
       ports or transport it across that country;   (3) calls upon the provinces  and  the  central  government  to  place  a
   moratorium on the use of GM crops until such time  as  the  situation
   can be properly assessed.

                      FAMINE IN SOUTHERN AFRICA

                         (Draft Resolution)

Mr P A MATTHEE: Chairperson, I hereby move without notice:

That the Council -

(1) notes the remarks of the UN Secretary General’s special envoy for humanitarian needs, Mr James Morris, on 16 September 2002 to the effect that the famine facing Southern Africa is far worse than initially estimated and that new evidence points to at least 14,4 million people being affected - a dramatic increase from the 12,8 million estimate made just four months ago;

(2) also notes that -

   (a)   the  humanitarian  crisis  in  Southern  Africa  is  not   only
       devastatingly real but also worsening faster than was originally
       projected;


   (b)  the combination of disease and hunger has resulted in the untold
       tragedy of families who are  being  destroyed  by  the  HIV/Aids
       pandemic;


   (c)  worst hit are Zimbabwe and Zambia, where many households already
       have little or no food remaining;


   (d)  in both these countries a humanitarian  disaster  will  only  be
       averted if urgent action is taken; and


   (e)  the United Nations still has a major funding  shortfall  in  its
       efforts to avert this disaster; and

(3) requests the Deputy President to inform the Council, either personally or through one of the Cabinet Ministers, as soon as is feasible, on what steps, if any, the Government is taking in respect of this Southern African famine now threatening 14,4 million people.

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

                SAFETY OF SA POLICE SERVICES MEMBERS

                         (Draft Resolution)

Mrs J N VILAKAZI: Chairperson, I hereby move without notice:

That the Council-

(1) is concerned about the murders and safety of the members of the South African Police Service despite their goodwill in ensuring the safety and security of the public at large;

(2) notes that there are safety precautions that they should also follow to ensure their safety, like wearing bullet-proof vests, but that this is omitted by them in most cases;

(3) further notes that in criminal activity there is no 100% absolute safety, but that these safety precautions have a positive impact on lowering the number of police deaths; and

(4) resolves that the senior management of the SAPS should regulate the wearing of bullet-proof vests as an obligation for all police officials, especially those who deal directly with crime.

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

                REVIEW OF INFLATION-TARGETING POLICY

                         (Draft Resolution)

Ms C-S BOTHA: Chairperson, I hereby move without notice:

That the Council -

(1) notes -

   (a)  the 4th interest-rate hike by the Reserve Bank  Monetary  Policy
       Committee last week;


   (b)  that inflation factors, both locally and  globally,  indicate  a
       combined rising in inflationary pressures independent  of  rates
       policy; and


   (c)  that National Treasury adopted a policy of  inflation  targeting
       in 2000, which has literally left the Reserve Bank with no place
       to hide;

(2) proposes that Minister Manuel -

   (a)  instead of criticising the Reserve Bank for not using the escape
       clause, which would have further damaged their credibility;


   (b)  alternatively, not criticising the Minister  of  Public  Service
       and Administration when she introduced an inevitable wage spiral
       with her Public Service wage hikes;


   (c)  undertakes to review  the  inflation-targeting  policy  and  the
       specific measures taken to target inflation.

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Is there any objection? There is an objection and in the light of the objection the motion may not be proceeded with. The motion without notice will now become a notice of motion.

             COMPENSATION TO VICTIMS OF ASBESTOS MINING

                         (Draft Resolution) Mr A E VAN NIEKERK: Voorsitter, ek stel sonder kennisgewing voor:

Dat hierdie Raad -

(1) kennis neem van die duisende slagoffers van die asbesbedrywighede van vroeër waarvan die oorgrote meerderheid in die Noord-Kaap gevestig is of was, deur ‘n Engelse hofbevel teen die mynmaatskappy Cape PLC vergoeding sou ontvang het;

(2) verder kennis neem dat daar nog geen vergoeding tot dusver betaal is nie;

(3) kennis neem dat Cape PLC beweer dat hulle sekuriteit by die banke geleen het, maar dat Barclays en die Bank van Skotland traag is om die uitbetalings te doen;

(4) hom uitspreek teen die onbegryplike verskoning vir nie-betaling wat aangevoer word en ‘n beroep doen op die betrokke Ministers van die Suid-Afrikaanse Regering om die slagoffers by te staan; en

(5) ook kennis moet neem van die lyding van die mense wat deur asbestose getref is - sedert hierdie eis begin is, het daar reeds 300 eisers gesterf. (Translation of Afrikaans notice of motion follows.)

[Mr A E VAN NIEKERK: Chairperson, I move without notice:

That the Council -

(1) notes that the thousands of victims of past asbestos activities, the vast majority of whom are or were established in the Northern Cape, were to have received compensation on the basis of an English court order against the mining company Cape PLC;

(2) further notes that thus far no compensation has yet been paid; (3) also notes that Cape PLC alleges that they supplied surety to the banks, but that Barclays Bank and the Bank of Scotland are slow in making the payments;

(4) voices its concern at the incomprehensible excuse for nonpayment that is being put forward and appeals to the relevant Ministers of the South African Government to assist the victims; and

(5) finally notes the suffering of the people affected by asbestosis - since the claims began, 300 claimants have already died.]

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

                    DISCIPLINARY ACTION BY SARFU

                         (Draft Resolution)

Mr N M RAJU: Chairperson, I hereby move without notice: That the Council-

(1) notes that the disciplinary committee of Sarfu has suspended two prominent Springboks, André Venter and Robbie Fleck, for seven days from playing rugby;

(2) further notes that this punishment was meted out as a result of their unsavoury scuffle at the completion of last week’s Currie Cup clash between the Free State Cheetahs and Western Province and that the scuffle resulted in ugly injuries;

(3) supports the disciplinary action taken by Sarfu against these Springboks; and

(4) states categorically that players in representing their country, whether in rugby or any other code, must at all times conduct themselves in a manner becoming role-models to younger South Africans aspiring to emulate their national heroes.

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

    CONSIDERATION OF REPORT OF SELECT COMMITTEE ON FINANCE - FFC
                           RECOMMENDATIONS

Ms Q D MAHLANGU: Chairperson, I think you must understand that this is my first time to speak after the Chamber has been so renovated. It should be understood in that context that I inserted the card wrongly. I was disempowered. Yes, it is true indeed.

Chairperson, colleagues and special delegates from provinces who are present here today, the report we are seeking to table as a select committee today deals with the Financial and Fiscal Commission’s recommendations for the financial year 2003-04. I think it is very important for members to take cognisance of that because from time to time when these issues are raised, members say they do not know what formula informs the allocation of resources among the three spheres of Government. So it is quite important that members understand exactly what is the role of this recommendation in this instance. The report has been tabled. It is in the ATC today, so members can go through the report if they want to get more details about it. However, I will touch on a few issues and other members of the committee will add.

Section 214(2) of the Constitution states that when the recommendations of the FFC are considered, the following factors in paragraphs (a) to (j) must be taken into account: One, the national interests - and the FFC makes such proposals; two, any provision that must be made in respect of the national debt and other national obligations; three, the needs and interests of the national government, determined by objective criteria; four, the need to ensure that the provinces and municipalities are able to provide basic services and perform the functions allocated to them; five, the fiscal capacity and efficiency of provinces and municipalities - their ways and means of being able to raise funds other than what they get from the national Government. It is quite important that the FFC takes that into consideration in coming up with the formula; six, the development and other needs of provinces, local government and municipalities; seven, economic disparities within and among the provinces - we all know that all provinces as they currently stand and in many respects still represent many disparities, inequalities and inequities, so in coming up with a formula, all these things must be taken into consideration; eight, obligations of the provinces and municipalities in terms of national legislation; nine, the desirability of stable and predictable allocations of revenue shares. In this instance the division of revenue seeks then to give effect to this as per what is demanded in the Constitution; and lastly, the need for flexibility in responding to emergencies or other temporary needs, and other factors based on similar objective criteria. All these things must be taken into account.

So it is quite important that when we talk about this formula we bear the section 214(a)-(j) objectives in mind and that they must be taken into account when coming up with this formula. I just want to touch on few things. With regard to the revenue of provinces, the document of the FFC makes recommendations that national Government should give up room and allow provinces more scope to tax. I think what must be understood in this context is that, as I said earlier, there are a lot of inequities, inequalities and disparities amongst provinces. So whatever decision one takes in giving more tax powers to provinces, one has to understand that Gauteng and the Western Cape, as they stand now, will continue to be at a better advantage than all the other rural provinces combined. So all these things are very, very important in my view.

What is currently prevailing in the provinces is that road traffic revenues are currently what provinces are able to generate. But as we noted from the inter-governmental fiscal review last year, many provinces still have not adjusted their own revenue in terms of car licences and all those kinds of things in making sure that they generate these kinds of revenues. Therefore, the question of them asking for more powers becomes questionable. Secondly, they still can be able to generate revenue from hospital and patients’ fees. I think the improvement of hospitals and how the revenues are collected in hospitals become important if provinces want to see themselves collecting more revenue. Lastly, they also can collect revenue on horse-racing and gambling. I am sure a lot of hon members do undertake such activities and I think it is in the interest of provincial government for people to go for horse-betting and gambling and so forth, but obviously they must not become addicted.

Basically, within these parameters I have just outlined, provinces are currently able to collect revenues, but they are not collecting and using the scope and the framework they are allocated with. I think also the document of the FFC outlines the fact that there is a Provincial Tax Regulation Process Act in place, which provinces can use, within that framework, to propose to the Minister through the Budget Council and further request us that they want to introduce more taxes. Not even a single province has taken up this proposal in this instance. I think it is quite important, as I said earlier on, if one looks at the issue of raising revenue. In provinces these issues are taken into account. When provinces want more powers, what is it that they are doing with their current powers?

The other issue that is being raised in the document is around local government proposals. The document talks about municipal borrowing and financial markets, as there is a lesser appetite for the private sector and for a lot of lending institutions to lend money to the provincial and national governments. However, there is bigger appetite for the municipalities as they are getting more mature. So it is quite important that there are proper rules and frameworks that govern this kind of a borrowing - if it has to happen. It should not be a willy-nilly thing. The committee does stand by the view that municipalities, as time goes on, should be allowed to borrow, but should be allowed to borrow for capital expenditure and things that cannot be budgeted for within their own revenue mechanisms or from equitable share or conditional grants.

Secondly, it talks about the FFC’s recommendation that primary health care should be decentralised towards the district municipalities and they should be the service authorities. I think the committee also agrees that primary health care should be dealt with at a district level, because I think when one visits the constituency and clinics around our constituencies - I found that in my constituency - one finds that those under the care of municipalities are better off than those at the provincial level. I think it does make sense that such primary health care, in particular, should be dealt with at district level. The mechanisms of transferring such funds must be followed by functions and the committee supports that.

The third issue around the local government recommendations relates to the remuneration of councillors. I think what is being proposed here - and the committee agrees with this recommendation - is that councillors should be remunerated from the municipalities’ own revenue and/or from the equitable share of the different municipalities, because if councillors are going to be paid directly from the national equitable share or from the provincial equitable share, then they should be able to account to the people who pay them. Therefore, in that instance municipalities do not account to either provincial or National Government and it does make a lot of sense for municipalities to pay their own councillors from their own equitable share.

The document also deals with the restructuring of the electricity sector and so forth and my colleagues will deal with some of these issues at a later stage.

I think the FFC has consistently raised the question around the usage of the contingency reserves, which usually are funds put aside for unforeseeable and unavoidable circumstances, like the disasters and many other things which might happen during the course of the financial year. These funds are reserved for that, but the FFC has been calling, and even again in this proposal they are calling, for objective criteria to determine how these resources are supposed to be utilised. The committee has expressed a view on that. Since I do not want that to take up most of my time, I want to go to the recommendations. My colleagues can deal with some of these issues later on.

There is a proposal around the restructuring of the social security system, which has been dealt with to some extent by the Taylor Commission and is currently before Cabinet. It seeks to say that the social security funds, in particular the pension payout of different kinds and payments of Child Support Grants and all those kind of things, should be removed from provinces to national Government. The FFC makes such a recommendation and the committee did not take any particular view on the matter - but it is one of the recommendations that the FFC has made. I am not sure exactly what kind of disparities and what impact it will have on provinces if such function is taken away from provinces back to national Government.

The last few issues I want to talk about are around the review of the equitable share formula that is currently in existence. There is a need for the review as and when the new data is available. The new data, as we all know, will become available sometime this year as and when the results of Census 2000 are issued. It will be important for this formula to be reviewed, because increasingly we have seen that there is a lack of information on a number of things which are supposed to inform how the revenue is supposed to be divided throughout the country. In some instances, one will find that other provinces have more people and others have more poor people than the others, but the allocation of resources does not live up to that reality and therefore the review pending the availability of the necessary data becomes a relevant point to raise in this instance.

The last two issues I want to raise relate to the recommendations that the committee has made on several occasions. The FFC has consistently made a recommendation that some of the conditional grants should be phased out and we fully concur. Those grants must be removed, because, in one way or the other, if conditional grants are going to continue to increase, the autonomy of the provinces to have control of particular funds is taken away. Those particular grants should find ways and mechanisms of being incorporated into the equitable share of provinces. However, on the question around the conditional grants on HIV/Aids, we said that we do agree that it should remain as a conditional grant because we do not have enough information.

Earlier on, when we were debating Statistics South Africa’s Budget Vote, we said a mortality study was being conducted by the three agencies. It is seeking to try and find out what exactly South Africans are dying from and it has got a particular timeframe. As and when this information becomes available, it will be important that the decision of whether the HIV/Aids programme funded through conditional grants or from any other mechanism should - pending this information that I just talked about - be reviewed.

Lastly, there is a request from provinces and even by municipalities themselves that central government and provinces should try and find ways and mechanisms of helping municipalities that do not have capacities to build these capacities. I do not think that that request and outcry is out of order, because section 154(1) of the Constitution does indicate that national and provincial governments should play a role in capacitating and ensuring that municipalities do have the capacity. In the light of the new demarcation that has just taken place, many municipalities are finding it difficult to have capacity. I think it is in our interest to see them having capacity and even to deliver the basic services to the poor people that we are all representing here.

Lastly, the functions and powers relating to the distribution of social grants must remain with provinces, as I have just said. In our view capacity constraints exist at different levels and some national departments, in my view, do not have capacities. In some instances, some of these departments do not necessarily transfer funds according to the division of revenue transfer processes and therefore they frustrate municipalities in terms of delivering. Therefore, in my view the failure of a national department to transfer funds is not because of the failure of the municipality, but is because of a lack of capacity in the particular department at national level. I think it is important to qualify when we talk about the lack of capacity in other spheres of government. I think from now onwards, we must move away from just making generalisations and try and find mechanisms of making sure that we help where we are supposed to help.

And lastly, Chair, the question around the … [Interjections.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr L M Mushwana): Order! This is the fifth ``lastly’’. I am not sure when you will stop. [Laughter.] Your time has expired. [Applause.]

Mr J L THERON: Mr Chairperson, the submission of this report on the Financial and Fiscal Commission, the FFC, is made in response to a request to the FFC from the parliamentary Select Committee on Finance as part of the public hearings on the Division of Revenue Bill.

The terms of reference for the FFC were the assessment and performance of conditional grants during the previous year; the output of grants; the flow, timing and size of grants; the capacity at national and provincial government departments to facilitate the allocation, operation and running of these grant programmes and other related matters pertaining to these grants.

The commission noted that it did not give conditional grants any detailed treatment in its previous submissions on the Division of Revenue Bill. It is therefore the intention of the commission to pay more attention to the use of conditional grants in its future submissions on the Division of Revenue Bill.

I now want to look at the Financial and Fiscal Commission’s position on the use of conditional grants. The FFC noted, in its recommendations for the 2001-2004 MTEF cycle, that the use of conditional grants should be limited and promote constitutional intentions with respect to decentralisation and the principles of good governance applicable to subnational governments.

Furthermore, the FFC noted the importance of conditional grants as an instrument for speeding up access to basic services, given the national norms and standards. Of course, conditional grants are used also for capacity-building and skills development in provinces and at local government level. The DP supports these objectives of the FFC regarding conditional grants.

The objectives of the conditional grant … [Interjections.] Ek dink jy moet liewer luister en nie so baie praat nie! [I think that you should rather listen and talk less!]

The objectives pertaining to conditional grants, as identified by National Treasury, are the following: ensuring the fulfilment of national policy objectives involving the provision of standard levels of access to government services; compensating for interjurisdictional spillovers, for example tertiary hospital grants; and effecting transition by supporting capacity-building and structural adjustments at subnational level. We can note here, for instance, the new Disaster Management Bill that is on its way. A lot of capacity-building and skills development are necessary in the provinces and that is why we have these grants going to the provinces and local government. A further objective of the Treasury is to address backlogs and regional disparities in economic and social infrastructure.

The types of conditional grant can be classified in the following ways. There are block grants, service delivery grants, traditional grants and special allocation grants.

Let me turn to the current conditional grants framework. The fact that both provincial and national government are accountable for the use of conditional grants has been cited as the major cause of the inefficiency of the conditional grant system. Reforms that have been put in place at National Treasury, coupled with the advent of the Public Finance Management Act, are expected to deal with accountability and performance issues.

Let me refer to the size of the provincial conditional grants. Conditional grants constituted between 15% (in 1998-1999) and 13% (in 2001-2002) of transfers from national to sub-national governments. Approximately 85% of conditional grants were attached to the provincial sphere. Conditional grants constituted 13% of provincial expenditure in 1999-2000 and just below 12% of provincial expenditure this year.

Whilst the relative importance of conditional grants to provincial budgets is declining, it is rising for municipalities. The relative importance of conditional grants varies between functions. Conditional grants finance relatively small portions of the Education and Welfare budgets. By contrast, over 20% of the Health budget is funded through conditional grants. The Housing budget is almost entirely funded through conditional grants.

When looking at the composition of provincial conditional grants for the financial year 2000-2001, 41% of the total value of the provincial conditional grants was generated by the Health sector. The second highest allocation was for the housing fund at 23,9% to the total. This was followed by the National Treasury’s supplementary grants allocation of about 17,6%. In 2001-2002 the allocation to HIV/Aids under the three departments of Education, Health and Welfare amounted to 0,9% of conditional grants to provinces, up from 0,4% in 2000-2001.

I now want to concentrate a little on the grants for HIV/Aids. The HIV/Aids grant was initiated in 2000-2001 in order to assist provinces in providing life-skills training in all primary and secondary schools; providing increased access to voluntary counselling and testing and, lastly, for developing and piloting community-based care models. The responsibility for achieving the objectives of this grant lies with the departments of Health, Social Development and Education, although the Health department plays the major role in co-ordinating this.

There have been problems of underspending since the inception of the HIV/Aids grants, but the extent of such underspending is narrowing. Problems that have been identified include a lack of human and infrastructure capacity; lack of appropriate skills; NGOs still learning the process of submitting appropriate business plans; lack of synergy; transfer payments disbursed late; inadequate administrative support, etc.

In conclusion, the DP and the DA support the submissions of the FFC as discussed above and therefore support the committee’s report regarding these aspects. [Applause.]

Mr Z S KOLWENI: Mr Chairperson, hon members, I must also add to this debate. The Financial and Fiscal Commission has once again executed its constitutional responsibility with distinction. The FFC is entrusted with the responsibility of making recommendations on policy matters pertaining to intergovernmental and fiscal relations.

A key feature of the FFC report is that the commission addresses issues arising from its submission of May 2000 and also follows up on some of the proposals made in the submission on the Division of Revenue 2002-2003.

Also covered in the report are recent developments in the intergovernmental fiscal relations system relating to social security reform and local government. The submission emphasises the importance of addressing fiscal issues across all spheres of Government.

The report introduces the theme of cross-cutting issues, which relate to the equitable share and affect all three spheres of Government. Examples of cross-cutting issues that are covered in the report are, namely, restructuring of electricity; the distribution industry; implications of HIV/Aids for the health, welfare and education sectors; framework for a comprehensive social security programme; and disaster management.

With regard to the FFC submission on Division of Revenue 2002-2003, the FFC notes that Government response was generally positive. The FFC proposals pursue an approach that seeks to translate constitutional provision services into a formula-based approach for the division of revenue. Government’s view is that such an approach would be impracticable.

The following are some of the reasons; namely, lack of concise definitions of constitutionally mandated basic services associated with each sphere; absence of objectively determined norms and standards for basic services and other constitutional functions; unavailability of data that would enable the complete adoption of such an approach.

Both national Government and the FFC, however, agree that the process of regularly reviewing and adapting the formula should be maintained. In addition national Government holds the view, which the FFC shares, that a review of the current division of revenue formula should take place only once the results of Census 2001 are released.

In the past, local government was essentially an extension of provincial government, and it was widely believed that provincial and/or national Government would intervene to support a municipality that ran into financial troubles. Black municipal structures had little or no access to credit, built much less of an infrastructure, and also provided far fewer services.

Today the environment of the municipalities is vastly different. Municipalities have amalgamated in a manner that includes well-serviced areas and unserviced areas. Infrastructure and services must now be provided to all citizens, and this will demand a great deal of investment. National policy is that local government should provide the bulk of these services, and that private investment, both equity and debt, should be attracted to meet additional needs.

This policy makes it necessary for legislation to stipulate the borrowing powers of municipalities unambiguously. Government has repeatedly emphasised the fact that private finance will need to form an important source of funding for capital investments in the municipal sector.

Municipalities will have to raise private finance on their own books and bear the responsibility of servicing the debt. This policy shift from national guarantees to local responsibilities for private debt is the cornerstone of the municipal finance Bill currently debated in Parliament by affected committees. This Bill clarifies the rights and obligations of borrowers and creditors. [Applause.]

Dr E A CONROY: Geagte Voorsitter en kollegas, die Finansiële en Fiskale Kommissie het die mandaat, kragtens artikel 9 van die Wet op Interregerings

• Fiskale Betrekkinge van 1997, om 10 maande voor die Minister van Finansies se Begrotinsgrede voorleggings oor die verdeling van inkomste tussen die drie vlakke van regering aan die Parlement te maak. Hoewel die Minister nie verplig is om die FFK se aanbevelings in ag te neem nie, moet hy tog met die FFK oorleg pleeg en op dié instelling se aanbevelings reageer.

Dit is dan ook nodig dat daar wyd oor die FFK se voorleggings en aanbevelings met rolspelers op nasionale, provinsiale en plaaslike regeringsvlakke gekonsulteer word en is dit ook die doel met die openbare oorlegplegingsvergaderings wat vanjaar weer eens deur die Gekose Komitee oor Finansies in die verskillende provinsies gefasiliteer is. Die doel was en is steeds om met hierdie soort oorlegplegingsvergaderings interaksie en debat oor die aanbevelings te bevorder.

Belangrike en selfs brandende aspekte wat dringende aandag verg, het in vanjaar se FFK voorleggings en toeligtingsessies na vore getree. (Translation of Afrikaans paragraphs follows.)

[Dr E A CONROY: Hon Chairperson and colleagues in terms section 9 of the Intergovernmental Fiscal Relations Act of 1997, the Financial and Fiscal Commission has the mandate to make submissions to Parliament regarding the division of revenue between the three tiers of government 10 months before the Minister of Finance’s Budget Speech.

Although the Minister is not compelled to take into account the FFC’s recommendations, he does have to consult the FFC and respond to this institution’s recommendations.

It is then also necessary to consult widely on the FFC’s submissions and recommendations with role-players at national, provincial and local government levels and this is also the purpose of the public consultation meetings, which were once again facilitated by the Select Committee on Finance in the various provinces this year. The aim was and still is to promote interaction and debate about the recommendations with this type of consultative meeting.

Important and even burning aspects that require urgent attention emerged in this year’s FFC submissions and information sessions.] Consensus on the policy framework for municipal borrowing is of the utmost importance. Private - sector investment in local government infrastructure is vitally important for improved delivery of basic services. There should therefore be some flexibility which allows easy access to loans. A lack of uniformity in the local government sphere and the consequent unequal access to finance markets, which is highlighted as a burning issue, is recognised in the FFC’s report. An assymmetrical approach to the municipal borrowing market, with different municipalities being treated differently, is emphasised by the FFC.

Die aard van vanjaar se aanbevelings val binne die bestek van die aanbevelings wat die FFK reeds in die jaar 2000 vir die mediumtermyn- uitgaweraamwerk oor die betrokke siklus gemaak het. Hul aanbevelings vir die volgende fiskale jaar moet binne daardie siklus gesien word.

Sleutelelemente van die aanbevelings in verband met plaaslike bestuur sluit in dié ten opsigte van munisipale lenings en finansieringsmarkte waaroor aanbeveel word dat daar ‘n kombinasie van markdissipline en ‘n op reëls gefundeerde benadering moet wees.

Op plaaslike regeringsvlak is daar ook, onder meer, na die wetsontwerp oor munisipale finansiële bestuur, die verdeling van magte en funksies tussen distriks- en plaaslike munisipaliteite, die vergoeding van munisipale raadslede en herstrukturering van die elektrisiteitsverspreidingsbedryf verwys. (Translation of Afrikaans paragraphs follows.]

[The nature of this year’s recommendations falls within the scope of the recommendations which the FFC already made in the year 2000 for the Medium- Term Expenditure Framework for the relevant cycle. The recommendations for the following fiscal year must be viewed within that cycle.

Key elements of the recommendations regarding local management include those dealing with municipal loans and finance markets, with regard to which it is recommended but there should be a combination of market discipline and a rules-based approach.

At the local government level references are also made, inter alia, to the Bill on municipal financial management, the division of powers and functions between district and local municipalities, the remuneration of the municipal councillors and the restructuring of the electricity distribution industry.]

With regard to provincial government, the provincial tax regulation Bill, early childhood development and HIV/Aids were highlighted.

Another aspect of the FFC report that needs mentioning is the assessment of municipal disaster management funding in the context of the intergovernmental system as a whole. The introduction of a central funding mechanism for disaster management and the appropriate division of responsibilities between district and local municipalities is recommended.

Reaksies uit die provinsies op die FFK se voorstelle behels onder meer dat ‘n hersiening van die billike inkomsteverdeling die data van Sensus 2001 in ag moet neem; dat die grense van streekselektrisiteitsverspreiders, die sogenaamde SEV’s, in ooreenstemming met munisipale grense gebring word; dat die voorstelle dat munisipaliteite vergoed word vir die verliese wat hulle as gevolg van oorplasings na die SEV’s mag ly, verwelkom word; dat sekere voorstelle vir die strukturering van rampbefondsing gemaak word, en dat munisipale raadslede vergoed word uit munisipale inkomste waarby hul billike aandeeltoekennings ingesluit is.

Die Gekose Komitee se gevolgtrekkings en aanbevelings, soos reeds deur die agb voorsitter van dié komitee in haar rede vermeld, asook die aanvaarding van die verslag, word deur die Nuwe NP gesteun. (Translation of Afrikaans paragraphs follows.)

[Reactions from the provinces to the FFC’s proposals entail, inter alia, that a review of the equitable revenue division should take into account the data from Census 2001; that the boundaries of regional electricity distributors, the so-called REDs, should be brought in line with municipal boundaries; that the proposals that municipalities be remunerated for the losses that they might suffer as a result of transfers to the REDs, be welcomed; that certain proposals for the structuring of disaster funding be made, and that municipal councillors be remunerated from municipal revenue in which the equitable share allocations are included.

The select committee’s conclusions and recommendations, as already mentioned by the hon chairperson of this committee in her speech, as well as the adoption of the report, is supported by the New NP.]

Mr T RALANE: Chairperson, Deputy Minister and hon members, I endorse the view by my colleagues that the Financial and Fiscal Commission has once again executed its constitutional responsibility with distinction. The FFC has taken the debate on provincial contingency reserves much further.

Originally the FFC proposed that a study be undertaken to determine objective criteria for the utilisation of national contingency reserves. The FFC expressed its concern that the use of contingency funds ultimately affects the amount of money available for equitable share funding, and that provinces need financial stability, predictability and flexibility. Hence the FFC has proposed criteria for the use of contingency reserves.

The National Treasury’s response was that the concern raised by the FFC was important, but argued that the current process for allocating contingency reserve funds involves substantial consultation.

Government maintains an open consultative process for dividing contingency reserve funds, taking into account unforeseeable and unavoidable spending commitments across spheres. National Government is not convinced that it is more efficient for every province to have its own contingency fund.

Government will nonetheless explore, with the FFC, opportunities to improve mechanisms for provincial contingency reserves. This will include the use of criteria for allocating unexpended contingency amounts.

Government will consult with the FFC and make appropriate recommendations to amend the Public Finance Management Act and/or its regulations to ensure stability and practicability in the use of contingency reserves. The FFC has, in its submission currently before us, succeeded in taking the debate on contingency funds much further.

In its submission, the FFC explains that contingency reserve is deducted from nationally collected revenues before equitable shares are allocated. That is, it is top-sliced''. This means that the reserve is not allocated to one sphere of Government but is available for specified contingencies. Because it is administered nationally, it is often called the national contingency reserve’’. This, as the FFC correctly points out, is misleading because it implies that the reserve is allocated to the national sphere. For this reason, the top-sliced contingency reserve is referred to, in their submission, as the ``central contingency reserve’’. We as members of the Select Committee on Finance welcome this shift in our conceptual understanding of national contingency reserve.

The paradox is that this improved understanding of national contingency reserve weakens the case of the second recommendation of the FFC on contingency reserves. The FFC recommends that provinces and municipalities should have their own contingency funding strategies, appropriate to their own circumstances. It argues that if there is a central contingency reserve for adverse economic and natural disasters, should not provinces and municipalities budget for contingencies?

At present the situation is that four provinces have made provisions for contingency reserves. In addition, a fifth province has budgeted for a surplus, implying that the forward revenue estimates have not been appropriated in their entirety. In Gauteng 99% of the total revenue estimates for the 2001-02 budget year has been made available for expenditure only. One province, that is Mpumalanga, has budgeted both for a surplus and a contingency reserve. Only one province, the Free State, has the contingency reserve set aside as a separate item, Vote 13, on its Provincial Appropriation Bill.

As a member of the Select Committee on Finance, I am inclined to take the view that the creation of a provincial and municipal contingency fund will not work, for three reasons: Firstly, if the amount allocated is excessive, this could result in nonspending. This nonspending could impact negatively on our national agenda of enhancing delivery of social services; secondly, since both provincial and local government could access the reserves from the national contingency, creation of additional contingency reserves by other spheres would be an unnecessary duplication of functions; and thirdly, this proliferation of contingency reserves creates major difficulties for the provincial legislatures’ and municipalities’ oversight functions. An important implication of the simultaneous creation of national, provincial and municipal contingency reserves is that provinces and municipalities have increased discretion on the allocation and distribution of provincial and local government equitable shares.

When a province and/or a municipality appropriates an amount for contingency reserves, it means that such a province has more discretion over the use of its reserves and, in a sense, over its share of nationally raised equitable share. This increases the oversight responsibilities of provincial legislatures and municipalities.

Therefore, we in the Select Committee on Finance adopt the new conceptual approach of the FFC, namely the central contingency reserve, but argue that it should be the only reserve fund for contingency purposes and that it should be accessible to all spheres of Government. [Applause.]

Ms J M L FUBBS (Gauteng): Honourable Chairperson and members of the NCOP, we certainly support the principles, the spirit and the detail of the report of the NCOP’s Select Committee on Finance. One of the points made by the chairperson of that committee is the importance of developing capacity in all three spheres of government.

In the division of our resources our Constitution entrenches our commitment to create a society in which all our people can develop their full potential in an environment that works to eliminate poverty. Indeed South Africa has moved from a highly centralised system of governance to a post- apartheid system characterised by three distinctive, interdependent and interrelated spheres of government. It is a system that introduced to the world the concept of co-operative governance. It is a system that is afrocentric rather than eurocentric. It is a political system that strives to eliminate imbalances in the delivery of social services in all our provinces.

The constitutional role of the Financial and Fiscal Commission seeks to actually underpin this commitment in the Constitution. Thus the division of resources should be informed by the need to avoid conflict, to preserve the peace, national unity and also the need for all spheres of government to exercise their powers in a manner that does not encroach on the functional or institutional integrity of a government in any other sphere.

South Africa has a history of fighting for human rights in public finance, and this occurs within the context of human rights. Our Bill of Rights provides for such a framework. And indeed this particular submission of the FFC seeks to underpin the Bill of Rights. The proposals of the FFC that are contained in the Division of Revenue have made a valiant effort to address the equitable arrangements that impact on the delivery of resources, especially those linked to sections 27 and 29. That is, the right to have access to health care, food, water and social security and the right to basic education.

Although decentralising basic public service provision to provincial or local government can enhance efficiency, these basic public services are at the same time among the most important policy instruments for achieving national equity goals. These goals, explicitly stated or not, include the aim that people ought to have equal access to these opportunities of education, housing, health care and socio-economic security.

The FFC proposals on the pressures faced by some municipalities to provide effective services actually complement National Treasury’s agreement to review the formula after this medium-term expenditure period. However, Gauteng differed from the FFC on the opinion that the delivery of social grants should be undertaken by National Government, given that the motivation of a lack of capacity was applicable to all three spheres of government. The proposals of the FFC on the Disaster Management Funding were supported. Gauteng also welcomed the review by the FFC of the Central Contingency Reserve, but noted that section 6 of the National Treasury Regulations on the PFMA does not provide specific criteria to define unforeseeable and unavoidable expenditure.

With respect to the cross-cutting issues, we have already addressed the social grants in particular and the issue of insufficient capacity. One also wishes to refer to the Intergovernmental Fiscal Relation System. The increasing pick-up of constitutional mandates requires a review of the IGFR. However, in the opinion of Gauteng, any such changes that may be envisaged should be undertaken with caution, and preferably at the end of the current MTEF period. Before this is done, what should come under examination should be the several proposals that we have also seen in the NCOP report.

In respect of the capital grants and the proposals made by the FFC, certainly it does present a constructive framework in which to analyse infrastructural needs. However, it may be useful for the FFC to take into account the National Treasury’s concerns with the capital grant proposal. Indeed the commission could perhaps expand its capital grant research project to include the refinement and extension and development of the current model to encompass other basic infrastructural services being provided by provinces and municipalities.

In respect to the financial implications, Gauteng believes that there are no serious financial implications for the fiscus because many of the FFC proposals deal with policy options that are already in operation. Nevertheless, one can refer to the tariff support to low-income consumers to be financed primarily by a national grant to REDs for the provision of free electricity and, to a lesser extent, the consumer cross-subsidy and also the proposal for capital electrification for low-income consumers to be financed by National Government and that provision for this should be made in the MTEF estimates. The reference to comprehensive review of the social security system may also have financial implications, depending on the finance models proposed.

Notwithstanding this, the province was of the opinion that these proposals do much to broaden the options available to National Treasury. Many of our recommendations have been captured in the NCOP report. Suffice to say that one of our great concerns was that the problems that exist in the provinces are equally applicable to the national sphere of government, so the centralisation of payment of social grants would not alleviate the problem. It is incumbent on the National Government to set minimum standards for defining the right of access to social security and progressive realisation of constitutional obligations.

There is also a need for more integrated planning and allocation at national and provincial spheres of government for more effective use of allocations. The process of implementation thus becomes critical. Indeed this would address the cross-cutting challenges posed by HIV/Aids, among other issues. The regional electricity distributors boundaries should also be aligned, and indeed that is directly contained in the NCOP report. Suffice to say that we support the report again and we do believe that this FFC submission has done much to expand our thinking in how to be more creative in the models we develop, but also how to be more realistic in the challenges facing our country.

Mr M I MAKOELA: Thank you hon Deputy Chairperson, hon Deputy Minister. Let me limit my discussion of the FFC proposals on provincial taxes, which proposals are as follows: That criteria against which the Minister of Finance measures provincial tax proposals should be specified, that provinces should be allowed maximum flexibility in determining tax rates within tax bands and that guidelines should be developed with regard to tax room and equalisation measures where certain taxes have implications for the equitable share revenue pool and the regulations for dispute resolution, especially where a province may fail to reach an agreement with Sars on certain tax proposals, should be specified, and to include a clause for dealing with the impact on local government finances of a proposed provincial tax or surcharge. Quickly then, Chairperson, in response to the above recommendations I would say that provinces cannot impose corporate income tax, Vat, excise levies or property taxes. And although provinces cannot impose personal income tax, they may nevertheless impose a surcharge on personal income tax and on the fuel levy.

However, in terms of the Constitution the right to impose a tax or surcharge is subject to national legislation and national economic objectives. National Government has enacted the Provincial Tax Regulation Process Act of 2001. Under this regulatory process national Government reviews each proposed provincial tax for consistency with national economic and fiscal policy and to ensure that it does not have any adverse economic consequences for other provinces.

If national Government approves the provincial tax option, that tax becomes part of an allowed list of taxes that any province may then impose, once enacted by each provincial legislature. The approval process requires the national Government to consult with provinces and with the constitutional Financial and Fiscal Commission. The allowed list will be in the form of the legislation adopted by national Parliament. In general provinces have accepted that the surcharge on the personal income tax is not feasible for the foreseeable future. Currently options considered include the surcharge on the fuel levy and some smaller taxes.

The introduction of any new taxes to provinces may require an adjustment in the revenue-sharing formula, to prevent poor provinces from losing out to richer provinces. In addition, given the success of the central revenue collection agency, Sars, there is a strong preference for any substantial provincial taxes in future to be collected by this agency, rather than setting up new revenue services in provinces.

Local government has more fiscal capacity than the provinces. Municipalities can raise property tax and turnover or payroll regional levies on businesses as well as user charges on the provision of electricity and water.

Municipalities collect their revenue directly through their collection agencies. However, local governments generally do not collect a significant portion of revenue due, resulting in deficits at the end of the financial year. No additional taxes are at present being planned for local government. The focus is on reforming the current design of local taxes and modernising collection and the billing system. The budgeting system is also being modernised and will be based on more realistic revenue projections.

In conclusion then, Chairperson, one would say that as much as Government is expected to take into consideration the FFC recommendations, when dealing with the division of revenue, it will not be possible for National Treasury to take all of the recommendations on board. However, one can start to recognise the narrowing of the gap between the two. [Applause]. The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L MUSHWANA): Order! I take this opportunity to welcome the hon the Deputy Minister and call upon him to address the House.

The DEPUTY MINISTER OF FINANCE: Chairperson, hon members, mine really is not to address the House more than to acknowledge the debate that has taken place this afternoon and to indicate that at the National Treasury, we will gladly receive the report of the select committee based on the hearings held on the recommendations of the FFC.

As the hon members know, we normally give formal responses to the recommendations of the FFC. We will do so in due course because there is a process that we also follow in dealing with the recommendations of the FFC. Unfortunately, we are not able to respond in this forum, this afternoon. But perhaps there are a few points that one would like to make just in relation to some of the points members raised during the course of the debate. I think it is important to mention that indeed, the issue of reviving the municipal debt market, ensuring that we can create an environment in which municipalities are able in their own right to have access to the capital markets is very much part of the process that we are engaged in right now, of passing through Parliament the envisaged Bill on the municipal finance management, but also in seeking to create a viable framework to deal with financial emergencies in municipalities.

It is important to mention that part of our objective is not just to improve financial management but also to enhance the ability of local government to access the capital market. In doing so, it is important that we are able to provide certainty even to the creditors so that it is much easier and they can be more confident to enter into those kinds of arrangements with local authorities.

Of course, in doing this, particularly in seeking to create a viable framework to deal with financial emergencies, we have to look at our Constitution. I think the important issue of the municipal debt situation and ensuring that municipalities can in their own right access the capital markets is not only that it raises additional capital for local authorities, it will help to enhance fiscal responsibility on the part of local authorities. Because progressively, we will have to reverse the era of bail - outs where Government entities managed their affairs in the belief and understanding that, should they run into trouble, they will be bailed out.

Fiscal responsibility is one issue which I think all of us would like to promote. I think the chair of the finance committee in the Gauteng province made an important point about finding a balance between creativity and being realistic in terms of what is possible.

Finally, about the point raised by the last speaker, it is important that we continue to focus on the importance of building certain basic capabilities within local authorities. And so the ability of local authorities to deliver basic services, to do proper billing for services provided and the ability to collect revenues that are due to the local authority, I think these are things that should really constitute a critical focus in what we seek to achieve within local government.

But, I would like thank hon members for their participation in the debate. And as I have said, we will gladly receive the report of the committee. [Applause.]

Debate concluded.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.

          FINANCIAL ADVISORY AND INTERMEDIARY SERVICES BILL

  (Consideration of Bill and of Report of Select Committee thereon) The DEPUTY MINISTER OF FINANCE: Chairperson and hon  Members,  I  forgot  to say earlier that today is the first time that I enter this hallowed  Chamber since the revamping and I must say, it looks good. I  think  there  is  more friendship in this House as a result  of  this  new  arrangement.  Everybody must be feeling like hugging each other. [Applause.]

In South Africa there has been no formal system of regulating financial advisors and intermediaries. This implies that there has been no recourse for consumers who have been sold financial products that are either ill- suited to their needs or that do not deliver the promised returns.

The Policy Board for Financial Services and Regulation in 1996 accepted the task of conceptualising and designing appropriate legislation to cover this regulatory deficiency. After several meetings and workshops the Policy Board in December 1998 produced a basic framework for this law.

The Financial Services Board was mandated to draft legislation and to conduct the necessary consultation process. Following extensive consultations, the range of financial products that were to be defined in the Bill was expanded significantly to cover most financial products and instruments, including bank deposits. A major revision of the ambit of the Bill occurred when intermediary services were made subject to the terms of the Bill, in addition to the furnishing of advice, thereby bringing into the regulatory net virtually all the activities of the entire broker fraternity in the long-term and the short-term insurance industries, as well as those of portfolio or fund managers.

What is important to understand is that the Bill has a functional and not an institutional approach. It regulates a function, not a person or an institution directly. Therefore, if a person performs a function of advice or intermediary service, that person will have to be licensed under the Bill irrespective of whether that person is a product supplier who may already be licensed under some other law or an intermediary or broker or an investment manager. In each instance, the advice or intermediary service must relate to a financial product that embraces almost every investment or insurance product or financial instrument in the marketplace.

Effective regulation is to be achieved through a number of mechanisms. Firstly, a financial services provider must be licensed in terms of the Bill and will have to comply with certain prescribed, fit and proper criteria relating to honesty, integrity, competency, operational ability and financial soundness. A licence may be granted subject to certain conditions and restrictions, which creates the opportunity for differentiation or categorisation of providers in accordance with the type and level of service rendered. Unreasonable entry barriers may thus be obviated.

Secondly, the Bill imposes responsibilities on financial services providers with regard to their representatives for whose conduct the financial services provider is liable. A representative engages in the same activities as its principal but does so for or on behalf of the financial services provider, either because he or she is an employee of or holds a mandate from the provider. Representatives also need to meet the criteria relating to honesty and competency.

What this means is that an insurance company cannot just walk away from an irregularity that has occurred on the basis that such irregularity was done by a representative, because such a representative is either employed by the company or has a mandate from the company. It is therefore important for such companies to ensure a certain level of standards on the part of those that market its products on its behalf.

In order to establish a professional group of financial services providers in South Africa, the Bill lays down standards for the market conduct of both providers and representatives. The focus is the needs of the consumer, the right of the consumer to be treated fairly, full disclosure of any relevant matter and the responsibility of the industry players to act professionally and to place the interest of the consumer above their own.

A system of compliance is created in order to monitor adherence to the law through the appointment of compliance officers, through record keeping, proper accounting and, where appropriate, auditing requirements. Due care has been taken to ensure effective law enforcement in the event of transgressions by financial services providers or representatives.

Consumer complaints will be dealt with through a formal, yet expeditious and cost-effective dispute resolution mechanism in the form of the office of the Ombud for Financial Services Providers. The design of the office is to meet the constitutional requirements of independence and impartiality. A determination by the Ombud will have the effect of a civil judgment and will be executable through the ordinary judicial process. In addition, civil remedies are available to the Registrar, such as class actions on behalf of deprived clients. The Registrar, who is empowered to declare certain practices as undesirable, may impose administrative penalties.

Finally, criminal sanctioning is provided for through heavy fines and terms of imprisonment. Like other Acts administered by the Financial Services Board, the Bill creates a Registrar, being the executive officer of the Financial Services Board. There will also be an advisory committee with whom the Registrar must consult on important issues affecting the implementation of the Bill.

An outstanding feature of the Bill is its flexibility of application. This will enable the regulator to rectify unintended consequences, to address cases of hardship and to ensure pragmatism in the application of the Act.

In conclusion, I am happy to state that the controversy over the position of the health brokers, that is whether their market conduct should be regulated under this Bill, rather than under the Medical Schemes Act, has been sensibly resolved. The essential element of the agreement concluded is that intermediaries in the medical schemes environment, that is health brokers, will like all other intermediaries be subject to the common framework provided by this Bill, thereby establishing an integrated approach to market conduct regulation.

The Bill before the Council today is the final product of intensive deliberations during the consultative process. All major industry players, consumer organisations, governmental institutions and regulators have expressed support for the Bill. It is proposed that a sound case has been made for the adoption of the Bill in the interest of consumer protection.

Ms Q D MAHLANGU: Chairperson, I think what is worth noting is that Dr Conroy and Mr Theron are wearing the ties from the finance team which we obtained from the Johannesburg Stock Exchange. That is what I am declaring on their behalf.

The relevance of the Bill seeking approval from this House is very important not only to give certainties to investors, but to consumers like hon members and me. The Bill seeks to regulate the business of rendering financial services to clients on a range of products such as financial, health-care and insurance products and also any advice given by brokers to consumers and investors.

People who want to provide such services according to the Bill must be licensed and their conduct shall be governed by the code of conduct and enforcement measures contained in the Financial Advisory and Intermediary Services legislation and in the regulations that are to be promulgated at the later stage by the Minister.

The Financial Advisory and Intermediary Services Bill will work in tandem with the Medical Schemes Amendment Bill - amendments to the latter legislation are before the Portfolio Committee on Health in the National Assembly. The Fais legislation and amendments to the medical-schemes legislation provide for a single gateway for health brokers in achieving the broader health objective in this context. An amendment to the medical-scheme legislation seeks to bring the health brokers into the Fais regime. What is important is that accreditation will still be done by the Council for Medical Schemes in so far as health products are concerned. The FSB will not take responsibility of giving accreditation through the Fais regime because the health authorities or regulators will take responsibility for that.

Having said the above, I would just like to raise three issues in this regard. The first issues was raised in the Business Day on 3 September this year and in Finance Week on 13 September. They have raised several issues and I will deal with those issues in that order, not because the media raised them, but the committee also picked it up when we were getting the briefing and I will delve into that.

What the legislation is seeking to achieve is to strike the balance between keeping the cost low and protect the investors or consumers as much as possible. The important thing is that proper practice should be adhered to by big, medium and small brokers. I do not think we are advocating that small brokers, because they are small should not adhere to proper standards.

Generally South Africa has been hailed by the international monetary institutions as having the best financial system. So through this legislation we want to make sure that even small brokers, if they want to participate in this industry, have to make sure that they adhere to this principle. I think that element is quite important. The notion that says when small brokers who happen to be black, come into this thing, they have to break the law and do not have to adhere to proper principle, should be dispelled in the best possible way.

The Business Day article, as I said earlier, said on 3 September that the Bill could hurt small financial advisors. The article reads as follows:

At the moment there are about 30 000 intermediaries, financial advisories and brokers working in South Africa’s financial services sector, selling products from life insurance to other policies.

The article also talks about the possible high cost to medium and small companies, saying:

We will have to spend a minimum of R200 000 more a year in order to meet the requirements as stipulated in the Financial Advisory and Intermediary Services Bill.

The point I was raising earlier on is that as much as this may be true and as much as there will be high costs, some of these costs are necessary when people’s systems are first put in place. But as time goes on some of these costs will go down and I think in our discussion with the Financial Services Board yesterday, they assured us that care has been taken to make sure that the small brokers are not driven out of the market as a result of these bad practices the country is adopting.

Another article in the Finance Week from the 13 September refers to it and makes a point that in the UK, when such legislation was introduced, many small brokers were driven out of the market. As I said, we do not think that this legislation is going to do away with small brokers. Instead small brokers should find it a challenge to make sure that they come to the party. But if people cannot come to the party as individuals, they should find a mechanism of working together, because when people work as small companies all over the show, sometimes it defeats the purpose of why they are there in the first place. I think people should try to find some creativity in making sure that they live up to the desired principle contained in the legislation.

Having raised the issues that concern the medium and small companies, it is important that we as a committee report to this House that we will continue to seek better means and mechanisms of engaging the small business sector in all the sectors that we are overseeing as the Select Committee on Finance. We have noted, as a committee, that in our sector because it is very technical and in many instances people who are like us, from the previously disadvantaged communities, do not have skills and capacity to be able to do this kind of thing.

Therefore, I think it is important for all of us, including Members of Parliament who are sitting in this Chamber, to try and assist as much as possible in educating people about legislation and about any other matter we can to assist the small business in particular, even going to the extent of finding mechanisms. How do we get them to Parliament or how do we go to their places where they are, so that they can be able to make input into these policy-making processes?

One of the mechanisms that is built into the legislation in an attempt to the small brokers is that there is an Advisory Committee which is very comprehensive in terms of representativity. I think small brokers in this instance will be accommodated if they are not fairly treated in the industry in general. That committee, which will be seeking to advise the Minister from time to time, is going to be established for, amongst others, such purposes. Again, there is also an exemption clause contained in the legislation which is also making sure that if these small brokers are unable to come to the party, as I said earlier on, there will be special exemption given for them to be able to come to the party, not as inferior people but taking into account the conditions in which they find themselves.

There is a policy-holder protection rule which the legislation seeks to talk about. What I need to emphasise is that big business has been and remains opposed to this policy-holder protection. They want this policy- holder rules to be phased out immediately when this legislation comes into effect. The committee supports National Treasury’s approach, which says that the policy-holder protection rules provision will be phased out only when the Fais regime has come into full effect, because if it is phased out immediately it is going to help or defeat the purpose of why the policy- holder protection rules were there in the first place and that may expose in particular the small brokers, therefore they will be more hurt. The benefit to consumers will arise from reduced misselling and overselling of financial products through the core element of improved disclosure. In the past, when a person came and sold someone a financial product or anything else, brokers did not tell us how much their commission was and that type of thing. But this policy-protection holder rule seeks to make sure that people must declare and disclose upfront what it is that one is buying and the kind of product one is buying from them.

I am told that my time is up. One last point that I want to indicate is that in Botswana there is a very stringent regulatory mechanism, which is stricter than in South Africa. I think it is important to compare apples with apples, because Botswana is a developing country like ours and therefore we can learn a lot from them. But their conditions are more stringent. I want to thank members of the committee and the FSB. [Applause.]

Dr E A CONROY: Mnr die Voorsitter, agb Adjunk-Minister van Finansies en kollegas, ‘n mens kan deesdae skaars die verbruikerskolomme in die dagblaaie oopslaan, of daar is die een of ander klagte of berig van individue of groepe wat ingeloop is deur ‘n, sê maar ``slim’’, ondernemer wat hom- of haarself ‘n finansiële raadgewer noem. Dit is veral oues van dae en pensioenarisse wat deur gewetenlose bedrieërs van hul karige spaargeld beroof word. Die berugte Masterbonddebakel lê nog vars in die geheue en dit is nie verbasend dat die bedryf, ten regte of ten onregte, onder ‘n wolk van verdenking van oneerlikheid, vals raad, swak verwagtings en bedenklike produkte opereer nie. (Translation of Afrikaans paragraph follows.)

[Dr E A CONROY: Mr Chairperson, hon Deputy Minister of Finance and colleagues, these days one can hardly turn to the consumer pages in the daily newspapers without encountering one or other complaint or article about individuals or groups that have been taken in by a, let us say ``clever’’, entrepreneur who refers to him or herself as a financial advisor. It is particularly the elderly and pensioners who are robbed of their meagre savings by unscrupulous swindlers. The notorious Masterbond debacle is still fresh in our memories and it is not surprising that the industry, rightly or wrongly, operates under a cloud of suspicion of dishonesty, false advice, poor expectations and dubious products.]

It is, however, not only the elderly who fall victim to the traps of these so-called financial experts or consultants. Believe it or not, even the younger generation, who consider themselves to be very streetwise, fall prey to unscrupulous financial advisors.

Had I stopped my address here, one would have believed that all financial advisors and investment consultants can be classified in the category of being less than honest. That is not the case, however, as the majority of the South African financial advisers are honest men and women who render a necessary and indispensable service to the financial industry.

However, if we accept that they are honest people of high integrity, the question can still be asked whether all of them are qualified to do what they are doing. Or, do they have any financial backing to correct any honest but unfortunate mistakes that they might make in the handling of a client’s financial affairs and which could ultimately lead to the financial ruin of that client?

Ons is almal bewus van die uiters belangrike rol wat die finansiële sektor in die huidige en toekomstige ekonomiese groei van ons land speel. Dit is daarom nie vreemd dat die skepping van een of ander vorm van beheer oor die bedryf dwingend noodsaaklik geword het nie.

Verbruikersbeskerming is dan ook die grondslag van hierdie Wetsontwerp op Finansiële Advies- en Tussengangerdienste. Dit reguleer ‘n bedryf wat dienste ten opsigte van ‘n wye reeks finansiële produkte aan die publiek lewer. Hierdie wetsontwerp sal toesien dat die persone wat dié dienste lewer, gelisensieer is en dat hul professionele optrede beheer word deur die toepassing van maatreëls wat toesien dat die gedragskodes eerbiedig word.

Die beoogde wet sal vereis en toesien dat ‘n finansiële diensverskaffer, naamlik ‘n instansie wat die besigheid van finansiële adviesbediening en/of die lewering van intermediêre dienste bedryf, aan die volgende kriteria voldoen voordat ‘n lisensie toegeken word, naamlik, dat die aansoeker se eerlikheid en integriteit bo verdenking is, dat hy of sy bekwaam is en oor die operasionele vermoë beskik en ook finansieel gesond is. Die lisensie mag onderhewig aan sekere voorwaardes en beperkings toegeken word, dit hoef nie hernieu te word nie, maar mag wel opgeskort of ingetrek word.

Die voorgenome wet sal deur ‘n registrateur in die persoon van die hoofuitvoerende beampte van die Raad op Finansiële Dienste, die RFD, geadministreer word. Daar word beraam dat die personeel van die raad met ongeveer 15 persone uitgebrei sal moet word. Tydens die voorligting oor die wetsontwerp aan die Gekose Komitee oor Finansies het die adjunk-uitvoerende hoof van die raad trouens die onderneming gegee dat hierdie groot taak wat op die RFD wag wél deur hulle hanteer sal word - voorwaar ‘n verfrissende briesie in hierdie tye waarin ‘n personeeltekort so maklik as verskoning gebruik word wanneer ‘n instansie jammerlik faal om die taak wat aan hom toevertrou is na behore uit te voer.

Daar is oor ‘n tydperk van twee jaar wyd oor die onderwerp van vandag se debat gekonsulteer en ‘n groot hoeveelheid geskrewe, elektroniese en mondelinge insette is deur die RFD oor feitlik elke faset van die wetsontwerp ontvang, terwyl daar van radio- en televisieprogramme asook openbare werksessies gebruik gemaak is om alle belanghebbendes by die proses te betrek.

Die wetsontwerp het geen finansiële implikasies vir die staat nie. Voorsorg is ook tydens die opstellingsproses getref om te verseker dat daar geen gronde vir bewerings van ongrondwetlikheid sal wees nie. Hierdie wetsontwerp voldoen aan ‘n langgevoelde behoefte en word deur die Nuwe NP gesteun. [Applous.] (Translation of Afrikaans paragraphs follows.)

[We are all aware of the very important role that the financial sector plays in the current and future economic growth of our country. It is therefore not strange that the creation of one or other form of control over the industry has become vitally essential.

Accordingly, consumer protection is the basis of this Financial Advisory and Intermediary Services Bill. This regulates an industry that renders services with regard to a wide range of financial products to the public. This Bill will see to it that the persons who provide these services are licensed and that their professional conduct is controlled by applying measures that ensure that the codes of conduct are adhered to.

The envisaged Act will demand and ensure that a financial services provider, namely an institution that manages the business of financial advisory services and/or the delivery of intermediary services, adheres to the following criteria before a licence is granted, namely that the applicant’s honesty and integrity are above suspicion, that he or she is competent and has the operational abilities and that he or she is also financially sound. The licence may be awarded subject to certain conditions and limitations; it does not have to be renewed, but may well be suspended or revoked.

The envisaged Act will be administered by a registrar in the person of the chief executive officer of the Financial Services Board, the FSB. It is estimated that the staff of the board will have to be extended by approximately 15 persons. During the presentation on the Bill to the Select Committee on Finance the deputy chief executive of the Board in fact gave the undertaking that this immense task that awaits the FSB would indeed be handled by them - truly a breath of fresh air in these times in which a staff shortage can so easily be used as an excuse when an institution fails dismally to properly execute the task entrusted to it.

Over a period of two years widespread consultation took place on the subject of today’s debate and a great many written, electronic and oral inputs were received by the FSB on practically every facet of the Bill, while radio and television programmes, as well as public workshops, were also used to involve all stakeholders in the process.

The Bill has no financial implications for the State. Precautions were also taken during the drafting process to ensure that there will be no grounds for allegations of unconstitutionality. This Bill meets a long-felt need and is supported by the New NP. [Applause.]]

Mr J L THERON: Mr Chairperson, the Financial Advisory and Intermediary Services Bill aims to regulate the rendering of certain financial advisory and intermediary services to clients. The Bill sets up a process of authorisation and/or accreditation for financial service providers across all sectors, for example the banking of certain deposits, long-and short- term insurance. Accreditation is granted by the registrar, executive officer of the Financial Services Board, the FSB. In accordance with an agreement between the Ministries of Finance and of Health, financial service providers for medical schemes in the health sector will be accredited by virtue of a consequential amendment to the Medical Schemes Act, Act No 131 of 1998. The Bill further sets up an advisory committee, comprising all financial service provider industry players, to advise and interact with the registrar.

In order to ensure agreement with the new regulatory regime for financial services and the consumer protection it seeks to establish, the Bill creates a new Financial Services Ombud which has overlapping jurisdiction with the courts and other relevant sectoral regulators such as, for example, the Banking Adjudicator.

Globally, we are witnessing an increase in the activities of regulatory structures and regulation of industries and bodies that formerly prided themselves on the principles of self-regulation. Cases such as Arthur Anderson and Merrill Lynch are recent examples that have led to a growing debate on corporate governance and regulation in the interest of consumer and shareholder protection.

Globally, the financial services industry is regulated with a great degree of sector-specificity. While this Bill takes the first step towards regulation in the interest of consumers, Parliament, and indeed the Advisory Committee, set up in accordance with the Bill, which comprises industry players, must not only keep a watchful eye on the regulations issued after the passage of this Bill but also over their implementation.

While a lot of regulatory discretion is inherent in the Bill, it would be difficult to argue that it is sufficient ground to oppose the Bill. Similarly, while it is true that in this Bill the executive officer of the FSB has wide-ranging powers over the financial services industry, the arguments regarding consumer protection are convincing. In addition, most industry players are broadly supportive of this Bill and wide consultation has taken place.

It is recommended that the DP and DA support the Bill. [Applause.]

Mr K D S DURR: Chairperson, may we congratulate the Minister and the FSP on this measure. The experience worldwide has been that financial advice and intermediary services have often been unreliable. Consistently good, sound, honest, objective and skilful financial advice is very hard to get, indeed.

Furthermore, it is true that a national savings ethos must be occupying the Minister’s mind and it is vital for any country in order to find, develop and grow a pool of capital to make growth and investment possible and to raise standards of living. South Africa is currently experiencing a very low savings rate, which holds out no good for our financial health as a nation.

Historically, the insurance industry was the main vehicle to mobilise the savings of ordinary people and it remains important. But it is only one avenue, and not always the best one. There are, of course, many factors that persuade people to delay consumption and thereby to save and accumulate wealth. Amongst the most important is confidence - faith in one’s currency and its value and faith in one’s country. That is why on the US currency is written: ``In God we trust’’. In that way, they elevate that faith. Inflation is a major disincentive to saving and that must be worrying us all.

One has to have confidence in one’s institutions and advisors and they need to be worthy of that faith. One also has to have confidence in the regulations and the law and the regulators governing those bodies. This, of course, is a classic role for the state: to so regulate the financial environment that the ordinary person can expect and indeed obtain the necessary objective advice and guidance and thus have confidence to invest and grow his funds on his own and in the national interest.

There have been too many failures here and worldwide for the state to stand back and allow a lax attitude to prevail. We are fortunate to have strong institutions and a lot of good practice to build on in order to establish the best practice which, indeed, this Bill seeks to achieve along with a family of other legislation.

We have been world leaders in this field. We have been world leaders in the insurance industry, unit - trust industry and demutualisation. A lot of our legislation is and has always been ahead of the world. Now, I think with this legislation we are in step with the best practice worldwide.

The Bill builds upon the best in our system and elsewhere and there is a product of consultation here and worldwide. The FSB seeks to retain and build our national position as a well-regulated regional financial centre co-operating with the world. We must be ambitious for our country. If Nepad and other efforts are to succeed, we will need to have a viable financial centre, and that we cannot do without mobilising savings. This Bill is user- friendly and relies very much on affordable self-regulation. This Bill is not without teeth. There are enforcement measures which we can also mobilise in other legislation. The Bill is pre-eminently consumer legislation and one hopes that consumer courts will gain the teeth to protect particularly the small investor that needs to become far more savings orientated. [Time expired.] [Applause.]

Mr T B TAABE: Chairperson, hon Deputy Minister of Finance, Comrade Mandisi Mpahlwa, chairperson and members of the committee, ladies and gentlemen, I want to deal with the key principles in relation to the Financial Advisory and Intermediary Services Bill and not deal - quite deliberately - with other issues that have been dealt with quite sufficiently by hon members here.

The Bill before the House this afternoon, as other hon members have said, regulates the business of rendering financial services to clients as regards a large range of financial products. This legislation, in terms of what I mentioned earlier on, is based on three key principles, one of them being that it was accepted that it would not be in the public interest if the authorisation and compliance requirements were too strict and burdensome for the authorised financial services providers and their representatives in the industry. Consequently provision in respect of this legislation is, firstly, made for the consultation with the advisory committee on financial services providers in the making of regulations on the requirement for authorisation. The point was also made by the hon chair of the committee in respect of the provision in the legislation on the granting of appropriate exemptions for industry players, which I am not going to say anything about, because it was mentioned.

The second principle, in terms of the Bill, was to ensure that this kind of legislation is designed to be free-standing and complete as far as possible. Reference, therefore, is made in the Bill to a proposed new Collective Investment Schemes Control Bill, which is before the select committee and was deliberated quite exhaustively yesterday as well and deals comprehensively with investment schemes where pooling of client’s funds basically occurs. It is one of the issues to which reference is made in this legislation.

The last one is that a deliberate attempt is made again to create regulatory flexibility by providing for circumscribed discretionary power. But one issue which I felt I needed to dwell on a bit relates to the matter in relation to section 65 of the Medical Schemes Act, which has been amicably resolved, as was pointed out by the hon Deputy Minister. The difficulties concerning the position of the health brokers have indeed been resolved adequately to the satisfaction of all parties.

In the gazetted version of the Bill, provision was therefore made for the exemption of health brokers who are accredited in terms of the section I referred to earlier on, which is section 65 of the Medical Schemes Act of

1. This proposed exemption was met with severe criticism from all commentators, particularly in the long- and short-term insurance industry and consumer bodies. Having reconsidered the matter and arguments against the exemption of health brokers, the FSB, prior to the submission of this Bill to the committees on finance, effected an amendment that had the result of including health brokers within the ambit of the Bill.

The Council for Medical Schemes rejected this reversal on the earlier position, seeing it as an intrusion into their regulatory territory. Representations on behalf of the Council for Medical Schemes were also submitted to both the Portfolio and the Select Committees on Finance in Parliament, supported by motivations from the Health Ministry.

After a delay of some months, the impasse was resolved by means on an agreement between the Financial Services Board and the Council for Medical Schemes. Legislative effect to that agreement was given through the introduction of a new clause 8, subsection 7, in the Financial Advisory and Intermediary Services Bill.

The essential element of the agreement concluded is that whilst health brokers will have to be accredited under the Medical Schemes Act, they will, like all other intermediaries, be subject to the common framework provided by the Financial Advisory and Intermediary Services Bill, thereby establishing an integrated approach to market regulation. The difficulties experienced by health brokers were subsequently resolved in an amicable manner.

The amended Financial Advisory and Intermediary Services Bill presented to our Select Committee on Finance is the final product of intensive deliberations during the consultative processes and during parliamentary debates and discussions.

Support for this Bill has been expressed by all major industry players, consumer organisations, government institutions and regulators. No contentious issues, as things stand now, remain unresolved.

It is submitted that a sound case has therefore been made for the adoption of this Bill as amended in the main, which is in the interest of consumer protection. It is therefore our well-considered view that as the ANC we endorse this progressive piece of legislation, because we believe that it is not only desirable but has become an absolute necessity. If I make the point again, that this legislation … [Time expired.]

The DEPUTY MINISTER OF FINANCE: Mr Chairperson and hon members, I would like to thank the members and all the parties for their support of this particular Bill.

I would like to say that the issue around, for example, the small brokers is a matter that we regard as an important one. There are flexibilities which have been built into the legislation so that, if there were to be unintended consequences, we would be able to deal with those unintended consequences within the context of the legislation. For example, the registrar does have leeway to exempt particular applicants from sections of the Bill that may cause financial or other hardships. So in a way, I think, that would provide that possibility should it become evident that there may be such an unintended consequence.

However, I think it is important to say that what we seek to do is to establish a very sound environment in the financial services provision industry in the interest of the consumer so that, whether one is small, medium or big, one must provide a certain basic level of service that is credible to the consumer. We must not lose sight of that fact, because of the smallness of the people. But it does not mean that we are not willing to engage should it become clear that there may be such an unintended consequence, that the Bill may drive out small brokers from the industry. I also think that there is an advisory committee that has been established which can render advice on any matter that impacts on the financial service provision industry.

On the issue of health brokers, I think it is important, in relation to the point the hon Taabe raised, to see the agreement which was reached as not just an agreement between the two regulators. Between the Department of Finance or the National Treasury and the Department of Health we had to agree on broad parameters, the one being that we need to establish a common framework to regulate all brokers. The reason for that is that some of the brokers, typically the small brokers, do not specialise in one product, because for their survival it is important to sell a whole range of products. So, they will sell an insurance product, a health product and so on.

So how is one going to say in respect of a particular product one individual will be regulated by Fais and in respect of a health product the same individual will be regulated by another piece of legislation? We had to establish that all brokers had to be regulated in terms of a common framework and then, having agreed on that, let us also find ways to ensure that the Department of Health is able to impact on the conduct of health brokers to the extent that that is important for the attainment of health policy objectives. So those are the two broad parameters that we agreed on. We then asked the regulators to go and work out at a technical level how best we can achieve that. I must say that the outcome has really been a very good one for everybody, because it meets the needs and the interests of everybody.

The point to endorse is that it is these kinds of things, such as the Fais legislation, that will indeed give people the confidence in our institutions, in our system, to encourage them to save, for example. Just last week was a savings week and it is quite appropriate that we are discussing this at this point in time.

Again, the point about inflation is an important one and, I think, it really helps to keep our focus on the issue of keeping inflation low. It reinforces the point about having an inflation target. I know that in the current environment, where we are having inflationary problems arising from the depreciation of the currency last year, people tend to suggest that it is wrong for us to have an inflation target, it is wrong for us to try and contain inflation at a low level. I think that view is incorrect because, when one targets inflation, one is protecting the incomes of particularly poor people, because people with high incomes have some degree of flexibility, but it is very difficult for people who have low incomes.

Again, this will really contribute to maintaining the excellence of our institutions. I thank everybody. [Applause.]

Debate concluded.

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

The Council adjourned at 16:00 ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    The Joint Tagging Mechanism (JTM) on 17 September 2002 in  terms
     of Joint Rule 161, classified the following Bills as  money  Bills:




     (i)           Gas Regulator Levies Bill [B  47  -  2002]  (National
              Assembly - sec 77).


     (ii)    Finance Bill [B 48 - 2002] (National Assembly - sec 77).


 (2)    The Joint Tagging Mechanism (JTM) on 18 September 2002 in  terms
     of Joint Rule 160(3), classified the following Bill  as  a  section
     75 Bill:


     (i)     Child Justice Bill [B 49 - 2002] (National Assembly  -  sec
          75).


 (3)    The Minister of  Intelligence  on  9  September  2002  submitted
     drafts  of  the  following  bills,  as  well  as  the   memorandums
     explaining the objects of the proposed legislation, to the  Speaker
     and the Chairperson in terms of Joint Rule 159:


     (i)     National Strategic Intelligence Amendment Bill, 2002;


     (ii)    Intelligence Services Control Amendment Bill, 2002;


     (iii)   Intelligence Services Bill, 2002;


     (iv)    Electronic Communications Security (Pty) Ltd Bill, 2002.


     In  accordance  with  Joint  Rule  159(2),  the  drafts  have  been
     referred to the Ad Hoc Committee  on  Intelligence  Legislation  of
     the National Assembly and the  Select  Committee  on  Security  and
     Constitutional Affairs of the National Council of Provinces by  the
     Speaker and the Chairperson, respectively.


 (4)     The  following  Bill  was  introduced  by   the   Minister   of
     Intelligence in the National Assembly  on  18  September  2002  and
     referred to the Joint Tagging Mechanism  (JTM)  for  classification
     in terms of Joint Rule 160:


     (i)     National Strategic Intelligence  Amendment  Bill  [B  51  -
          2002] (National Assembly - sec 75) [Bill and prior  notice  of
          its introduction published in Government Gazette No 23828 of 9
          September 2002.]


     The Bill has been referred to the Ad Hoc Committee on  Intelligence
     Legislation of the National Assembly.


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


 (5)    The following Bill was introduced by the Minister of Finance  in
     the National Assembly on 18 September  2002  and  referred  to  the
     Joint Tagging Mechanism (JTM) for classification in terms of  Joint
     Rule 160:


     (i)     Insurance Amendment Bill [B 52 - 2002]  (National  Assembly
          - sec 75) [Bill and prior notice of its introduction published
          in Government Gazette No 23736 of 13 August 2002.]


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


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

National Council of Provinces:

1. The Chairperson:

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


     Bill  passed  by  National  Assembly  on  18  September  2002   and
     transmitted for concurrence:


     (i)     Disaster Management Bill [B 21B - 2002] (National  Assembly
          -  sec  76)  (referred  to  the  Select  Committee  on   Local
          Government and Administration).


 (2)    Bill passed by National Council of  Provinces  on  18  September
     2002: To be submitted to President of the Republic for assent:


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

COMMITTEE REPORTS: National Council of Provinces:

1. Report of the Select Committee on Land and Environmental Affairs on Protocol on Development of Tourism in SADC, dated 18 September 2002:

   The Select Committee on Land and Environmental Affairs, having considered the request for approval by Parliament of the Protocol on the Development of Tourism in the Southern African Development Community referred to it, recommends that the Council, in terms of section 231(2) of the Constitution, approve the said Protocol.

 Report to be considered.

1. Report of the Select Committee on Land and Environmental Affairs on UN Agreement on Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, dated 18 September 2002: The Select Committee on Land and Environmental Affairs, having considered the request for approval by Parliament of the Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks referred to it, recommends that the Council, in terms of section 231(2) of the Constitution, approve the said Agreement.

 Report to be considered.