National Assembly - 13 September 2002
FRIDAY, 13 SEPTEMBER 2002 __
PROCEEDINGS OF THE NATIONAL ASSEMBLY
____
The House met at 09:02.
The Chairperson of Committees took the Chair and requested members to observe a moment of silence for prayer or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.
NOTICES OF MOTION
Ms L M T XINGWANA: Chairperson, I shall move on behalf of the ANC:
That the House notes:
(1) that the women of South Africa call on the government of the Federal Republic of Nigeria, the African Union and the international community to fight and spare the life of Amina Lawal and all other women who are being sentenced to death by stoning for alleged adultery;
(2) the women believe that this act violates the human rights they have been given through:
(a) the Constitutive Act of the African Union;
(b) the constitution of the Federal Republic of Nigeria;
(c) the UN Convention on the Elimination of all Forms of
Discrimination Against Women; and
(3) that therefore, women have the right to exercise their reproductive rights, to freedom of association and to freedom of movement; and
(4) that the women therefore believe that Amina Lawal’s life should be spared, and that all leaders internationally and in Africa must support this motion.
[Time expired.] [Applause.]
Mr S E OPPERMAN: Chairperson, I shall move on behalf of the DP:
That the House -
(1) notes that -
(a) a small group of ANC members are determined to change the name
of Tzaneen to Mark Shope;
(b) the area was known as Tsaneng (Tzaneen), meaning ``come
together'' or ``the place where people gather'', long before any
white settler came to the district; and
(c) the majority of the community across cultures is strongly
opposed to this divisive and misguided proposal; and
(2) therefore calls on the ANC leadership to bring back sanity and encourage their comrades to concentrate on real issues that will benefit those in desperate need in this poverty-stricken province.
[Applause.]
Mr B M DOUGLAS: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP:
That the House -
(1) notes that an investigation team, appointed by the Gauteng MEC, has uncovered numerous irregularities and incidents of corruption in the provision of housing, including a developer who has been paid R41 million to build 5 000 houses, but constructed only eight;
(2) hopes that the investigation identifies and weeds out all the corrupt people involved so that the department can honestly start providing housing to the people who really need it; and
(3) urges the relevant authorities to take the necessary steps, once the investigation is complete, against the people contributing to the corruption and who are preventing the honest provision of housing.
Mr L M KGWELE: Chairperson, I shall move on behalf of the ANC:
That the House -
(1) notes that the World Summit on Sustainable Development noted that agriculture plays a crucial role in addressing the needs of a growing global population and has a direct link to poverty eradication in developing countries;
(2) further notes that the summit called for the improvement of land and water resource management, the increasing of agricultural production in a sustainable way and the increasing of technical and financial assistance to farmers in developing countries;
(3) believes that the implementation of these strategies will contribute positively to ensuring that there is food security and increased agricultural production in developing countries;
(4) welcomes the summit’s decision; and
(5) further calls on countries of the North and on the United States in particular, to desist from providing subsidies to their farmers because this poses a barrier to agricultural products from developing economies entering their markets.
[Applause.]
Dr W A ODENDAAL: Mr Chairman, I shall move on behalf of the New NP:
That the House -
(1) notes that land reform, as being conducted in Zimbabwe, is destroying individual property rights, the cornerstone of all successful economies, while thousands of new farmers are being settled without any support by the government; and
(2) supports the land reform programmes being rolled out in South Africa, especially by the Western Cape New NP-ANC provincial government, that strives -
(a) to settle 7 000 emerging farmers, supported by an encompassing
financial, managerial and agricultural extension service; and
(b) to secure land ownership and land-use rights for all commercial,
small-scale and subsistence farmers.
[Applause.]
Mr W G MAKANDA: Chairperson, I shall move on behalf of the UDM:
That the House -
(1) notes with dismay that the SABC head office was yesterday raided by the Scorpions, who are engaged in preliminary investigations into allegations of massive fraud and corruption at the public broadcaster;
(2) expresses its concern at the state of affairs of the SABC, given that these developments follow hot on the heels of the tabling of the controversial Broadcasting Amendment Bill, as well as shocking comments by a prominent SABC board member that editorial integrity is an outdated and clichéd concept;
(3) reaffirms its commitment to a free and open democratic society and the duty of the public broadcaster in this regard to accurately and impartially inform and entertain the citizens of South Africa; and
(4) calls upon the Board of the SABC to assist the Scorpions so that these allegations of corruption are vigorously investigated, and to swiftly punish …
[Time expired.]
Ms E NGALEKA: Chairperson, I shall move on behalf of the ANC:
That the House -
(1) notes that local artists and designers displayed their work at the Ubuntu Village during the World Summit on Sustainable Development;
(2) believes that these artists acted as cultural ambassadors and represented the true cultural heritage of the people of South Africa and, in so doing, generated interest in South Africa, thus attracting those would-be tourists to come back to the country;
(3) commends all those who displayed their arts and crafts work at the WSSD for their contribution to the local economic development programme; and
(4) encourages all small, medium and micro enterprises to follow this initiative for sustainable socioeconomic development.
[Applause.]
Ms C DUDLEY: I shall move on behalf of the ACDP:
That the House - (1) notes with sadness the tragedy that took place in Acacia Park on Wednesday afternoon, 11 September, when four-year-old Aphiwe Stofile drowned after falling into the park swimming pool;
(2) sends heartfelt condolences to Aphiwe’s twin brother and to his mother, Bongiwe Stofile, and prays the Lord Jesus Christ will comfort them during this time of great sorrow;
(3) further notes that this is the third drowning at Acacia Park within a three-year period; and
(4) calls on Public Works to secure the enclosure immediately and adequately, engage the services of life-savers when the pool is open or ensure that the pool stays closed, and to ensure strict adherence to bans on alcohol in the area and children under 12 being accompanied by adults, the swimming pool at present poses a threat to the safety of park residents, especially children. [Applause.]
Mr P J NEFOLOVHODWE: Chairperson, I hereby give notice on behalf of Azapo that I shall move at the next sitting of the House:
That the House -
(1) notes that the UN General Assembly is meeting at a time when the world is confronted with uncertainty as a result of the United States policy of intolerance and a tendency to want to dictate how other countries should run their affairs;
(2) further notes that America and Britain, who are champions of this policy, have always possessed weapons of mass destruction which they have used in Afghanistan and other parts of the world, and that the United Nations appears to be unable to force these countries to honour UN protocols and agreements; and
(3) calls on the UN General Assembly and the Security Council to call on the Bush administration to abide by UN resolutions and to conduct their international activities in accordance with UN agreements.
[Time expired.] [Applause.]
Ms S K MNUMZANA: Chairperson, I shall move on behalf of the ANC:
That the House -
(1) notes that the World Summit on Sustainable Development resolved that the countries of the world should use chemicals and hazardous waste in a manner that minimises harm to human health and the environment;
(2) further notes that the summit also agreed to enhance co-operation between nation states to stabilise greenhouse gas concentrations in the atmosphere;
(3) believes that this will contribute positively to preserving our global environment; and
(4) welcomes this resolution of the Johannesburg Summit.
[Applause.]
Mr B G BELL: Chair, I hereby give notice that I shall move:
That the House -
(1) notes the devastation caused by the veld fires in Mpumalanga in July, which killed six people and injured 568, destroyed 68 000 hectares of land, destroyed homes, killed thousands of stock animals and cost farmers R30 million;
(2) further notes the abject failure of the Government to take any action in response to this devastation; and
(3) calls on the Minister for Agriculture and Land Affairs to take immediate steps to declare a national disaster in the affected area and to provide disaster relief to those who have lost their homes, their livelihoods and their farming operations.
Mrs L R MBUYAZI: Chairperson, I shall move on behalf of the IFP:
That the House -
(1) notes that South Africa has given the highest priority to developing tourism as an industry in order to stimulate job creation;
(2) recognises that South Africa is uniquely placed in this regard on account of its climate, beauty, infrastructure, democracy and price to be competitive and attractive;
(3) recognises also that the departments are doing its utmost to make South Africa a travel destination of choice; and (4) calls on the entire travel industry to make Tourism Month the peak of all our endeavours in promoting and advancing tourism in our country.
Ms M M MAUNYE: Chairperson, I shall move on behalf of the ANC:
That the House -
(1) notes that the World Summit on Sustainable Development has thrown its weight behind the New Partnership for Africa’s Development;
(2) further notes that the WSSD committed the international community to providing, amongst other things, technical and financial support to prevent deforestation and to promote equitable access to health-care services on the African continent;
(3) believes that this represents a historic breakthrough in the struggle to fight poverty in Africa; and (4) welcomes the enthusiastic and firm support displayed by the summit in our endeavour to work for the development of our continent.
[Applause.]
Mnr J SCHIPPERS: Mnr die Voorsitter, hiermee stel ek voor namens die Nuwe NP:
Dat die Huis -
(1) kennis neem van die splinternuwe busdiens, ‘n inisiatief van die Wes- Kaapse provinsiale regering, wat ingestel gaan word om gestremdes te help om makliker by werkplekke, hospitale, klinieke en ander dienspunte te kom;
(2) verder kennis neem dat -
(a) die Bel-'n-Rit-diens se bussies dwarsdeur die Kaapse munisipale
gebiede sal diens doen; en
(b) die diens, onder andere, aan gestremde mense groter
beweeglikheid sal gee om toegang tot ekonomiese geleenthede te
verkry; en
(3) voorts kennis neem dat die Nuwe NP graag alle fisiek en siggestremdes wil aanmoedig om te registreer, sodat hulle die diens kan benut, en voel dat hierdie inisiatief ook na ander provinsies uitgebrei moet word. (Translation of Afrikaans notice of motion follows.)
[Mr J SCHIPPERS: Chairperson, I hereby move on behalf of the New NP:
That the House -
(1) takes note of the brand-new bus service, an initiative of the Western Cape provincial government, which will be established to help handicapped persons to get to work, hospitals, clinics and other service points more easily; (2) further notes that -
(a) the Call-a-Ride service's buses will serve throughout the Cape
municipal areas; and
(b) this service will, moreover, allow handicapped persons greater
mobility in order to gain access to economic opportunities; and
(3) also notes that the New NP would like to encourage all physically and visually handicapped persons to register in order to make use of this service, and feels that this initiative should also be extended to other provinces.]
Mr D G MKONO: Chairperson, I will move on behalf of the UDM:
That the House -
(1) notes that a vessel that was abandoned at sea earlier this week has run aground at St Lucia;
(2) further notes that St Lucia is a world heritage site and is regarded as one of the most unique and fragile ecosystems on the planet with a wide variety of plant and sea life, which holds great conservation and tourism value for South Africa;
(3) expresses concern that the vessel contains more than a thousand tons of oil and an unknown quantity of toxic and flammable chemicals, which pose a massive threat to the ecology of this vital site; and
(4) calls upon the Government to co-ordinate an urgent intervention to ensure that pollution of this pristine environment is avoided.
GAS REGULATOR LEVIES BILL
(Introduction) The MINISTER OF FINANCE: Chairperson and hon members, how long do you want this speech to be? I move. [Laughter.] [Applause.]
Bill referred to the Portfolio Committee on Finance for consideration and report.
FINANCE BILL
(Introduction)
The MINISTER OF FINANCE: Chairperson and hon members, in the interests of TGIF, I move. [Laughter.] [Applause.]
The CHAIRPERSON OF COMMITTEES: Hon Minister, owing to the guidelines before us, after the introductory speech the Chair is supposed to refer the Bill to the committee, but in this case there was no introductory speech. [Laughter.] However, Minister, in the interests of TGIF, we will refer the Bill to the portfolio committee. [Laughter.]
Bill referred to the Portfolio Committee on Finance for consideration and report.
COLLECTIVE INVESTMENT SCHEMES CONTROL BILL
(Second Reading debate)
The DEPUTY MINISTER OF FINANCE: Chairperson and hon members, the Collective Investment Schemes Control Bill, as it is commonly referred to, has been drafted over the past three years and has been through a very wide and thorough consultative process.
This is evident from the fact that when the hearings of the committee were held, no submissions were received from industry. The Bill replaces and consolidates the Unit Trusts Control Act of 1981 and the Participation Bonds Act of 1981.
The collective investment industry in South Africa had humble beginnings in the mid-1960s, but has grown exponentially since the mid-1990s. The total assets under management have grown from around R25 billion in 1994 to just over R176 billion in 2002.
This Bill is intended to safeguard the investments of some 2,5 million account holders. The profile of investors in this industry reflects, unfortunately, South Africa’s historical inequities. However, one would like to point out that about 40% of investors are, in fact, middle to lower income earners of all races.
This industry offers investment products, but costs as little as R50 per month, and it is my hope that over time the investor profile will reflect the true composition of our society. It is our priority to ensure that the costs of investing in a collective investment scheme are, firstly, properly disclosed to investors and, secondly, competitive in the sense that we do not pose a barrier to the participation of low-income earners.
Although fees and commissions in this industry were deregulated in 1998, when compared with the cost of investing in other products on the market, collective investment schemes are highly competitive. The industry is arguably the most transparent when it comes to disclosures of fees and commissions to investors.
It should be remembered that South Africans have a long history of participation in collective investment schemes through, for example, the proliferation of stokvels. These are not defined as collective investment schemes in this Bill, as they are private arrangements. But it should be noted that stokvels have served our communities well and have created a deep sense of collective savings.
The Bill has been designed to ensure that investors are able to participate fairly in this method of investment, thereby having access to the opportunity to make a return. It should be noted that investing in a unit trust portfolio, a participation bond, or a collective investment scheme in property are all regulated within the ambit of this Bill.
I would like to highlight the key investor measures contained in the Bill as these are key to ensuring that the industry itself is financially sound, and that investors’ funds are adequately protected from unscrupulous or negligent fund managers.
The first key investor protection measure contained in the Bill relates to the separation of the manager of a scheme from the trustee or custodian of a scheme. At no point in time can the investment manager of a scheme take control of the investors’ funds in such a scheme. All transactions made by the manager must be authorised by the trustee. The relationship between the custodian and the manager and the responsibilities that they share are clearly set out in the Bill.
The duties of a custodian have been enhanced, and the issue of who may offer such services has been more clearly spelt out in this legislation. This is to ensure that there are no ambiguities with regard to what is expected of a trustee.
The second key set of investor protection measures relates to different types of disclosures required by the legislation. This is arguably the most nonprudential investor protection measure. The disclosure of information relating to the risks of an investment, the potential rewards, fees, commissions, administration costs and all marketing information are regulated through this Bill.
This provides a comprehensive approach to the disclosure of all important and material information to an investor. This is intended to ensure that the investor is able to make an informed decision. It should be remembered that the Financial Advisers and Intermediary Services Bill will complement the disclosure provisions in this Bill, and will go a long way in ensuring that all investors are able to make informed decisions.
Finally, I would like to mention some key prudential measures contained in the Bill that are also investor protection measures in that they ensure the financial soundness of schemes. These relate to the liquidity of a scheme, the investment spread of assets and the capital adequacy of the management company.
In terms of the provisions for liquidity in a scheme, when one or more investors decide to sell their participatory interests, those investors remaining in a scheme are at risk, given the obligation of the manager to pay an investor within a short period of time, generally 72 hours.
To minimise this risk for the remaining investors, provisions have been made for a manager to borrow in the short term against the underlying assets in a scheme to provide immediate liquidity. In addition, the manager has the ability to ring-fence a sale order and pay an investor over a period of 20 days. This provision does not apply to investors with less than R50 000 in a scheme. Borrowing will be strictly controlled through regulations and monitored by the registrar.
Provisions relating to the capital adequacy of the management company have changed from the previous Act. A management company is now required to hold capital of its own and not in the scheme itself. This is very important because now 100% of investors’ capital is invested productively and the onus is on the management company to ensure that they have sufficient resources to operate a scheme.
The most common prudential measures are the limitations on the types of investments permissible in a portfolio, for example 5% in a single share, or 5% of the total value of market capitalisation in a single share. Also, investment spread provisions vary between different types of portfolios.
In closing, it is important to state that this Bill is a significant improvement on existing legislation, and we are very pleased with the outcome of this process, which was fairly lengthy and comprehensive, and which has led to this Bill being presented to Parliament. We would request that the House adopt this Bill. [Applause.]
The CHAIRPERSON OF COMMITTEES: Order! Hon members, before I call on the next speaker, can we have some order in the House. Would all members please be seated.
Ms B A HOGAN: Chairman, the work of the Portfolio Committee on Finance was greatly enhanced when this Bill came to us in Parliament owing to the extensive consultation process which preceded the Bill coming to us, this consultation process having been undertaken by the executive and by the Financial Services Board in particular.
The initiative arose several years ago, particularly from the industry itself, as a result of feeling the keen edge of competition from foreign participants on the market. Initiatives were then taken to look at refining and amending this Bill so that we could become internationally competitive.
By the time this Bill arrived before us in the committee, so much work, thinking, rethinking, redrafting and redeliberating had taken place within the conferences and workshops convened by the Financial Services Board that we virtually had no submissions from anyone in the public, apart from one or two tiny amendments that were proposed and which we accepted.
This is an example, I think, of sterling consultation on the part of the Ministry and the Financial Services Board. It is also an example of how a Bill should come before Parliament: well researched, well worked out, well connected to people who would be affected by this Bill.
However, the impression should not be given that the collective investment services industry is an industry which drastically and dramatically requires greater supervision. In fact, this industry, known to us as the unit-trust industry, has been one of the most safe savings provisions and investment provisions for the ordinary person in the street that we have seen. It is this industry’s unique features that make it a very useful investment tool.
For instance, the ordinary person in the street need not invest directly in shares, but can invest in a unit trust, which means that the money so invested is taken by an investment manager who has the necessary skills and understanding of the market and invested on behalf of that person in the street, together with the other funds invested by other role-players. In other words, there is a pool of funds provided to the fund manager by the various investors. That pool of funds is then invested in shares on the whole, although there are some other trusts, which I will not go into at the moment.
The interesting feature about unit trusts is that whilst the investment manager or the management company does the investment and makes investment decisions, those decisions are bound by a trust deed, which spells out what kind of investments and what the parameters are for investment. That trust deed is drawn up between the management company and the board of trustees or a custodian.
The custodian is completely separate from the management company and can be a banking institution or a long-term life insurer a whole range of institutions can qualify as a trustee and their job is to ensure that the money being used by the investment manager is used according to the agreement in the trust deed.
However, the Bill tightens up considerably the role of the trustee and makes sure that the trustee maintains careful oversight over the way the money is spent and that money is not abused in that fund.
So we have a unique situation in that whilst money is invested by a management company, there is very tight oversight over that management company by the trustee and the custodian. One of the main provisions of this Bill is to ensure that that custodian exercises his or her responsibilities with due care.
The other provisions, which are very important and which the Deputy Minister has also alluded to, are the prudential provisions particularly around liquidity of the fund. I am not going to go into the details of that because the Deputy Minister himself has spelt them out. But they are very important, because they ensure that the fund maintains its liquidity and that one cannot, as it were - which sometimes happens with banks and smaller banks in particular - have a run on the fund, which would mean that the investors suffer the consequences of such a run on the fund.
There are other matters which this Bill deals with, such as the powers of the registrar - the fact that one can have a self-regulating authority in the industry itself, which is to be welcomed. I will not go into these details because my collegues will cover them.
Suffice it to say that the ANC supports this Bill and congratulates industry role-players and the regulator on their sterling work in putting this Bill before us in Parliament and looks forward to heightened and more lucrative investment on the part of the ordinary person in the street. [Applause.]
Ms R TALJAARD: Chairperson, hon members, the Collective Investment Schemes Control Bill comes against the backdrop of a number of changes within the financial services sector. This House recently adopted the Financial Advisory and Intermediary Services Bill and there is clearly a close link, although a clear division of labour, between the FAIS Bill and the Collective Investment Schemes Control Bill.
For its part, the FAIS Bill will result in greater protection for unit trusts or collective investment scheme investors who may increasingly want to rely on intermediaries for financial services and advice. Both the FAIS Bill and the CISC Bill, the CISC Bill being the Bill we are debating today, bring South Africa’s financial services sector more in line with international best practice.
Furthermore, we adopt this Bill in the context of debates about the adoption of a single regulator for the financial services sector, and many of the new regulatory obligations and duties created by both the FAIS Bill and the CISC Bill might, in future, resort under the auspices of a new regulatory agency. The debate in this regard is clearly one that pits a sector-specific regulatory focus against complex arguments of an increasing trend among industry players to provide a multitude of financial services, as well as mergers across sectors within what is broadly referred to as the financial services industry.
The proverbial winds of change are increasingly blowing through the financial services sector. In this context of change and concomitant uncertainty, the DA calls on the Minister of Finance to ensure that he keeps a strong dialogue process with all financial services sector stakeholders, particularly in planning and compiling any envisaged empowerment charter for this crucial sector of our economy.
Any mining charter-style antics in the financial services sector will cost our economy dearly. Fortunately, National Treasury and the Minister’s approach at the recent Nedlac summit appear to be far more rational and responsible than the steps taken by his colleague in Minerals and Energy. However, it is regrettable that comments such as those attributed to the Minister of Finance at the Nedlac summit that the financial services sector was too exclusive, too discriminatory and a hindrance to economic growth were made. Such statements do not instil confidence and bode ill for investors in this sector. He must refrain from referring to any sector of our society or economy as a hindrance to our growth or progress. [Interjections.]
South Africa is a country with a poor savings track record. The Collective Investment Schemes Control Bill is yet another instrument with which we aim to address this problem. However, the problem of low levels of saving cannot be addressed purely by legislative measures and sound regulation, necessary conditions as these may be.
Sufficient conditions will always remain a sound and healthy economy. The current reality in South Africa - confirmed yet again yesterday by another interest rate hike, the fourth this year - is one of an ever-increasing cost of living and an ever-decreasing surplus income available for saving. These are broader problems that neither the CISC Bill, a single financial regulator or an empowerment charter for the sector can fix.
In fostering a culture of saving, it is important to eradicate the presence of dubious players. In this regard, the DA welcomes the creation of a call centre and hotline for investors by the National Treasury and the FSB.
The CISC Bill supplants the Unit Trusts Control Act and primarily seeks to regulate and control the establishment and administration of collective investment schemes. In the context of the new regulatory framework, the Bill draws a distinction between five types of collective investment schemes.
Apart from the clear and uncontestable imperatives of investor protection, one of the most important reasons for the existence of the new Bill is to enhance industry competitiveness and attract investment. As things stand at present, South African institutions are not able to offer the range of collective investment schemes available in other countries, simply because there is no existing legislation that governs their use. A case in point is the open-ended investment company - an alternative to unit trusts - which has been highly successful in the UK and other jurisdictions and which we provide for today in this Bill.
Our ability to attract investors, both foreign and local, is, in large measure, a function of the diversity of the available instruments and investment options. Familiarity, or at least comparability, is obviously paramount, particularly to investors from outside South Africa. Amongst various benefits, the CISC Bill will allow for the introduction of other investment products, such as open-ended investment companies - OEICs - and hedge funds.
The Bill, therefore, seeks to open up the industry to global competition with a broader definition of collective investment schemes. Hedge funds and other leveraged funds will have increased scope to operate in the South African market, subject to certain stringent conditions. These conditions must satisfy the Financial Services Board that such funds can be responsibly marketed, conveying to investors both the risks involved and the strategies used in order to enable the investors to make the necessary risk-reward-ratio decisions and be cognisant of all the risks and their appetite for such risks.
After the passage of this Bill, it is clear that the market will eagerly await signals from the FSB on what types of hedge funds will be allowed to operate in the South African market. Some of the key features of the Collective Investment Schemes Control Bill include that it carries more stringent responsibilities for trustees and custodians, as well as new provisions on capital adequacy. Clearly, such provisions strongly favour both the interests of investors and the sector itself.
In addition, the Bill contains provisions for enhanced financial disclosure, which can be welcomed in the context of global debates on corporate governance reform and improved protection clauses for investors.
Regulation and supervision of the industry will also be improved, while the option and continued scope for creating a self-regulatory environment is retained in the Bill. This local debate will clearly be informed by global developments on the debate on self-regulation versus statutory regulation.
Because the CISC Bill clearly seeks the modernisation of the sector, improved scope for attracting foreign direct investment and could significantly contribute to fostering a culture of saving, the DA takes pleasure in supporting this Bill. [Applause.]
Mr H J BEKKER: Chairperson, the IFP will support this Bill. This Bill will provide a modern legislative framework for the equity unit trust, the property unit trust and the participation mortgage bond scheme industries in line with international best practice. The policy board for financial services and regulation, in its review of the regulatory framework for financial service industries, proposed that all forms of collective investment schemes should be regulated by only one Act. This Act must also provide for the establishment of new structures, which is not possible in the context of current legislation.
If we look at this combination, we are looking at South Africa’s unit trusts in which there are more than 2 million investors. As far as participation bonds are concerned, there are only about 80 000 investors. The amounts also differ radically from about R130 billion to as little as R4 billion. Now this reminds me of a pie that is made up of a donkey and a rabbit. [Laughter.] I do not know which part is the donkey.
When one has a combination of 50:50 in the mix, then at the end of the day one can say, ``Yes, it is one donkey and one rabbit that is going into this pie’’. This is what is happening here with the small quantity of participation bonds in relation to the South African unit trusts. However, it is important that this be covered on the widest particular aspect.
This Bill, therefore, provides for the control, regulation and supervision of all investment-based collective investment schemes. It also provides for the appointment of a representative advisory committee to advise the Minister, and deals with the issuing of a licence, the annual renewal of such licence and the approval of the rules of an industry association for all those participating in this particular aspect.
In addition, the Bill deals with risk-based capital requirements for the managers of the collective investment schemes in order to protect the investors. The avoidance of conflict is also very important.
Now, if one looks at the global situation and at the collective position of South Africa, the relaxation of exchange control and integration into the international financial markets have significantly increased the investment options available. It is, therefore, important that we not only solicit local investors but also the foreign investment schemes that are now available to South African investors.
The combination of trust structure and exchange control and taxation has, furthermore, also driven South African companies to establish offshore investment companies and apply capital and skills to do business internationally. It is, therefore, at this stage, if I may deviate slightly, sad that under the circumstances in which we feel that the South African economy and the growth rate are just coming on stream and starting to move, there was another hike in the repo rate by the Governor of the SA Reserve Bank.
We feel it is important to look at other possibilities, and not at just the repo rate. I think the focus in the future should not only be on inflation targeting but much more on South Africa targeting the devaluation and the increase of exchange rates, and particularly the vulnerability of the South African rand. I think that we could achieve much more in South Africa if we started focusing on fixing the exchange rate and particularly at certain levels, rather than focusing so much on the inflation rate.
Dr P J RABIE: Chairperson, hon Minister, hon members, this Bill will provide a modern legal framework for the equity unit trust, property unit trust and participation mortgage bond scheme industries. It is important to note that the first piece of legislation for the regulation of the unit trust industry was promulgated in 1947, and it is very important to update legislation regarding this particular sector of the economy.
This piece of legislation will enable the local unit trust industry to remain competitive and to keep abreast of international developments within the industry. A number of roleplayers participated in finalising this Bill. Allow me to refer to the Association of Unit Trusts of SA - their input was noteworthy - and a number of institutions rendered valuable service in finalising this particular Bill.
This Bill provides for the control and integration of international financial markets. It also makes a significant contribution in that it opens avenues to local investors in foreign jurisdictions and also enables a number of foreign financial institutions to solicit investments from local investments. This Bill provides adequate prudential requirements for inclusion in the regulatory net of other types of collective investment schemes.
The Collective Investment Schemes Control Bill must also be seen in the global context, especially since September 11. All the main share indices have fallen steeply, and investment banking deals, public offerings and mergers - lucrative business for financial institutions - have declined, while job losses of skilled employees is an alarmingly persistent international phenomenon that is reason for great concern.
It is in the interests of all roleplayers to implement this legislation to allow the local unit trust industry to expand their competitive position. The tide and reversal of losses of local domestic investment, employment opportunities and revenue is another reason for grave concern.
Supervision and investor protection must also be accentuated. South Africa cannot afford what happened in India on 31 August, when the Indian government had to bail out the biggest financial institution or unit trust institution in India, namely the Unit Trust of India. That particular bail- out will cost the Indian taxpayer something like $3 billion. So it is very important that we have proactive legislation such as that contained in this particular Bill.
Die effektetrustbedryf is van sleutelbelang vir aftreefondse en die skep van welvaart. Welvaart en ekonomiese groei kan slegs geskied as ‘n normatiewe en waarderaamwerk bestaan waar hierdie sektor van die ekonomie transaksies kan beklink. Volgens die Nuwe NP voldoen die wetsontwerp aan die voorafgaande vereistes en ons steun hierdie wetsontwerp. (Translation of Afrikaans paragraph follows.)
[The unit trust industry is of key importance to retirement funds and the creation of wealth. Prosperity and economic growth can only occur if normative and value frameworks exist where this sector of the economy can clinch some of the economic transactions. According to the New NP the Bill meets the preceding requirements and we support this Bill.]
Mr N M NENE: Chairperson, hon members, the Collective Investment Schemes Control Bill is one of the measures through which the ANC Government continues to create an environment conducive to the equitable distribution of wealth in this country, as envisaged in the Freedom Charter, the Reconstruction and Development Programme and our current macroeconomic policy.
Allow me first to explain what a collective investment scheme is in my language. Uhlelo lolu lokonga imali oluvumela abantu abanezinhloso ezifanayo zokonga ukuba bahlanganise izimali zabo enqolobaneni eyodwa ukuze ikhiqize inzalo ngaphansi kwehlo longoti kwezokonga. Singasho nje kafishane ukuthi yinto ethi ayibe sasitokifela noma umfelandawonye. (Translation of Zulu paragraph follows.)
[This is a scheme of investing money that allows people who have the same objective of investing to put their money in the same account, so that it produces interest under the supervision of investment experts. We could say that, in short, it is almost like a ``stokvel’’ or collective investment.]
The investors in a portfolio do not purchase the underlying assets directly, and ownership of the assets is divided into units of entitlement or a participatory interest. The number of units acquired by each investor depends on the unit purchase price at the time the investment was made and the amount of funds invested. The return on investment is usually in the form of dividends and capital appreciation derived from the pool of assets underlying the fund. Investments can therefore be made either as lump sums, monthly instalments or annual instalments, or both.
The history of the collective investment scheme has already been explained. Briefly, it started in London in the 1860s for the purposes of raising funds for the British colonial government. In the 1920s it was launched in the United States and became popular in the late 1950s. In 1965 it was launched in South Africa and grew tremendously in the 1990s.
We are informed that total assets under the control of all registered management companies are in excess of R106 billion. Of these, 21% is in the hands of institutions and 79% is in the retail industry. Data from the All Media Product Survey 2001 shows that only 1,75% of this is in the hands of blacks, and ownership according to household income is just as skewed. For reasons that have already been mentioned by previous speakers, some changes have had to be effected in order to allow for an equitable distribution of wealth.
One of the major changes is found in clause 2 of this Bill, which sets the ground rules for the manager to act honestly and fairly with skill, care and diligence in the interests of investors and the industry. Assets of investors must also be segregated.
Clause 3 deals with the disclosure of information about the investment objectives of the scheme, the calculation of the net asset value and dealing prices, charges, risk factors, and distribution of income accruals must also be disclosed to the investor. Information that the manager considers necessary to enable the investor to make an informed decision must also be given to the investor timeously and in a comprehensible manner.
Clause 4 deals with the duties of the manager. The manager must avoid conflict between the interests of the manager and the interests of the investor. The manager must also disclose the interests of the directors and management to the investors. He or she must also maintain adequate financial resources to meet its commitments and to manage the risks to which its collective investment scheme is exposed.
The manager is also required to organise the collective investment in a responsible manner; keep proper records; employ adequately trained staff and ensure that they are properly supervised; have well-defined compliance procedures; maintain an open and co-operative relationship with the office of the registrar and inform this office promptly of anything that might reasonably be expected to be disclosed; and, lastly, the manager must promote investor education, either directly or through initiatives taken by the association.
It is envisaged that this kind of education for investors, if properly done, will bring on board the previously disadvantaged and improve the savings levels in our economy as this is one of the safest investment vehicles, especially in the current economic climate.
Let me take this opportunity to invite the members of this House to study this piece of legislation and to carry the message forward that their Government has delivered once again.
The ANC supports this Bill, and I also want to take this opportunity to thank the Financial Services Board, the Treasury and all the other participants for coming up with this Bill. [Applause.]
Dr G W KOORNHOF: Chairperson and hon members, the Bill before us represents the most comprehensive piece of legislation to date with regard to the regulation and supervision of the collective investment schemes industry in this country.
The first unit trust and participation bond legislation came into being 55 years ago and was consolidated in the current Act in 1981. Since then we have seen a number of amendments to collective investment schemes. In 1997 it was realised that a major update was needed to bring the legal environment into line with international best practice. The revised Bill before the House started out with workshops that were held in 1999, followed by further consultations and amendments in 2000. The result is the very comprehensive and well-researched Bill before us.
During June 2002, it was estimated that South African unit trusts had assets under management to the value of nearly R134 billion. It is, furthermore, estimated that R88 billion of South African funds were invested in foreign countries in June 2002. It is, indeed, a massive industry.
In my opinion, the major aim of this Bill is to open the collective investment industry as a savings vehicle for the ordinary person in the street. Hopefully, it will be user-friendly and provide the necessary information to the public, including the minimum lump sums required, the monthly investment fees, etc.
The purpose of the Bill is to bring collective investment schemes into the regulatory net and, thereby, not allow another Masterbond tragedy to happen. One either regulates it or one bans it. The Deputy Minister has referred to this.
Taking into consideration the aim of this Bill and its comprehensive nature, it is notable that stokvels fall outside collective investment schemes legislation, and the Deputy Minister may want to indicate to us whether it is his intention to eventually include stokvels in the legislation.
The UDM has no hesitation in supporting the Collective Investment Schemes Control Bill and congratulates the FSB, the Treasury and all other roleplayers on a neat piece of legislation. [Applause.]
Mr D A HANEKOM: Chairperson, I must admit I was not completely ready with my speech. I was talking to Sue over there and …
The MINISTER OF FINANCE: Use mine.
Mr D A HANEKOM: No, I would never use yours, Trevor. Sue said, ``Why don’t you start with something exciting like: `Forward to collective investment schemes, forward!’’’ [Interjections.] [Laughter.] Yes, yes. I just knew that would work.
Chairperson, that is what we are dealing with today, and the reason that you do not have such good audience participation is because no one knows exactly what collective investment schemes are. But, as they sit here, a number of them have money invested in what were formerly known as unit trusts.
I do not know about the Minister, because he has never really revealed to me where he invests his money. Once upon a time he told me that he actually does not have any money to invest. That is his real problem. But other members here do, and they do have some of their savings in unit trusts.
We know what the term unit trusts means, but actually it is not an apt term, because what we are dealing with here are collective investment schemes. Some of our communists here would actually like the term because it talks about collective action. It is not just about one investing one’s money as an individual, it is investing it together - doing things together
- for the best possible returns. That is what collective investment schemes are about, actually.
Hon members would be surprised to know that we have R200 billion in our country tied up in collective investment schemes. Two million people have their money invested in collective investment schemes. So this is a very significant thing that we are dealing with here. It is growing at the rate of 29% per annum, and it is growing because it has proved to be successful
- a very good way of investing one’s money.
The Bill we are dealing with is all about regulation. So the role of the regulator becomes very important, not in order to overregulate - to make it difficult for people or make it difficult for the industry - but to ensure that investors’ interests are protected. It is all about consumer protection.
The things that we do in this House are very important. It is like a chess game. We put the little pieces in place and the result is success, economic success. All the little pieces are very important. When one considers that R200 billion is tied up in collective investments, the appropriate and effective type of regulations become very important. It is very important that investors can feel safe with their investments and that this industry, which offers such benefits, continues to grow.
Now what are these benefits? Well, one of the benefits is that one is not burdened with the administration that one might have when one goes and invests money somewhere else individually, because one has a portfolio manager who assists. So one has the benefit of experienced and qualified portfolio managers that do the investment on one’s behalf, but one is, clearly, one of many.
It is not just one’s money being invested, it is many people’s money being invested, and that has an advantage. It means that one has a certain buying power with one’s money that one would not have if it were just one’s own R500, and because one’s R500 becomes R10 million or R100 million, there is buying power.
This also means, in terms of the way the system works, that one can redeem this money at any point. So it is not tied up and difficult to get hold of; it can be redeemed. The interest rates have been quite high and returns have been high, but it is highly redeemable. Now those are very important things to investors.
I think I have actually said enough. I am sure all hon members support the Collective Investment Schemes Control Bill. [Applause.]
Mr C AUCAMP: Chairperson, personally I have not got much interest in this Bill. A Bill regulating overdrafts would be of much more value to me. [Laughter.]
Die publiek is geregtig op sekerheid en beskerming wanneer hul geld aan beleggersmaatskappye toevertrou word. Soos die mediese beroep, die regsberoep en die ingenieursberoep, moet ook die beleggingsberoep volgens ordelike reëls geskied. Dit geld by uitstek die bedryf van eenheidstrusts, aangesien laasgenoemde by uitstek ‘n terrein is wat beleggers betree omdat hulle self nie oor die nodige kundigheid beskik om self individuele beleggingskeuses te maak nie.
As ‘n mens ook kyk na die onrusbarende verskynsel van bedenklike beleggingskemas waar duisende goedgelowige lede van die publiek swaarverdiende geld verloor het, kan ordelike regulering van die totale beleggingsveld alleen maar verwelkom word en sal ons ook bly wees as dit na daardie veld uitgebrei kan word.
Die AEB is van oortuiging dat die maatreëls wat met hierdie wetgewing ingestel word die bedryf sal baat en die publiek ten goede sal kom. Die wetgewing sal lei tot die volgende, onder meer: groter sekuriteit en veiligheid van beleggings deur die verpligte verspreiding van risiko; groter vaartbelyning deurdat die bedryf ‘n ordelike selfreguleringsinstrument daarstel; professionalisering van die bemarkingbedryf, deurdat fly-by-nights uitgeskakel word en die professionaliteit waarop die publiek geregtig is, bereik kan word; groter kompeteerbaarheid deurdat internasionale tendense en ontwikkeling verdiskonteer word; en groter … Ekskuus, Minister? (Translation of Afrikaans paragraphs follows.)
[The public is entitled to certainty and protection when their money is entrusted to investor companies. Like the medical profession, the legal profession and the engineering profession, the investors profession also has to take place according to orderly rules. This applies in particular to the unit trusts’ industry, as the latter is pre-eminently a terrain entered by investors because they themselves do not have the necessary knowledge to make individual investment decisions.
If one also looks at the disconcerting phenomenon of precarious investor schemes, in which thousands of credulous members of the public have lost hard-earned money, the orderly regulation of the entire investment field can only be welcomed and we will also appreciate if it could be extended to that field.
The AEB is of the conviction that the measures that are being introduced by this legislation will benefit the industry and be in the best interests of the public. The legislation will lead to the following, inter alia: greater investment security and safety through the compulsory distributing of risk; greater streamlining by the industry creating an orderly self-regulating instrument; professionalising of the marketing industry, by eliminating fly- by-nights and the professionality to which the public is entitled, can be achieved; greater competitiveness through discounting international trends and development; and greater … I beg your pardon, Minister?]
The MINISTER OF FINANCE: Mededingendheid. [Competitiveness.]
Mr C AUCAMP: Mededingendheid. Dankie, goeie Afrikaans vir die Minister. [Competitiveness. Thank you, good Afrikaans on the part of the Minister.]
Groter deursigtigheid - is die woord reg? - waarop die publiek geregtig is. Die AEB vertrou dat hierdie wetgewing besparing sal aanmoedig. Ons voel net jammer dat hierdie wet ter tafel kom juis op ‘n stadium waar daar weer ‘n verhoging in die rentekoerse kom. Die drastiese verhoging die afgelope paar jaar veroorsaak dat al hoe minder lede van die publiek hierdie goeie wetgewing gaan nodig kry, aangesien nie veel geld vir besparing oorbly nie.
Die AEB verwelkom ook die beginsel van selfregulering in die bedryf en ons steun graag hierdie wetgewing. (Translation of Afrikaans paragraphs follows.)
[Greater transparency - is that the correct word - to which the public is entitled. The AEB trusts that this legislation will encourage savings. We just have a measure of regret that this law is being tabled exactly at a stage when another increase in the interest rate is looming. The dramatic increase over the last couple of years is the cause of even fewer members of the public that are going to need this legislation, because not a lot of money is left over for savings.
The AEB also welcomes the principle of self-regulating in the industry and we gladly support this legislation.]
The DEPUTY MINISTER OF FINANCE: Chairperson, I would like to thank all the members for their participation in this debate and support for the Bill.
Quite clearly this is a Bill around which there has been a lot of convergence, and I think it is important to make the point that the week in which we are debating this Bill is actually South African Savings Week. I believe that the debates that we have had on this Bill should go some way towards promoting a culture of savings in South Africa. I just want to say to the hon Derek Hanekom that his ill-prepared speeches have actually done a lot for Savings Week.
The one issue I want to pick up on is the issue around some of the remarks that the Minister of Finance may have made at Nedlac on South African institutions and the fact that they are discriminatory or exclusionary. I think it is important for us to address this issue because it represents an ongoing challenge in the South African context, and making those kinds of statements is not equal to running down our financial institutions. I think our record speaks for itself.
The point about South Africa is that economic growth in South Africa is, necessarily, about ensuring that more and more people can participate in mainstream economic activities. At the centre of that stands the issue of access to finance and the role of financial institutions. Whilst we continue to look for ways and means in which we can assist, essentially, black people to have better access to financial services, we can never forget to say to our financial institutions that it is an ongoing challenge for them as well to make sure that they do more to promote access to financial services.
The other point I want to pick up on is that we should try not to have short memories when we are facing particular problems in our economic environment. We know that there has been a lot of concern about the increase in interest rates, which were increased yesterday once more by one percentage point.
We must also not forget that we have important objectives in terms of controlling inflation in South Africa, because it is in the interests of our people to control inflation. It is particularly in the interests of the poor people to control inflation, because it protects the value of their meagre incomes. So, I think, we must try to be more measured and not forget that there have been attempts in the past to target the exchange rate. We must look at what that experience is. So let us not just look at targeting inflation.
Finally, I would just like to say that we have some students from the University of Venda in the gallery. We would like to welcome them and acknowledge their presence. [Applause.] We hope that sitting in on debates such as these will help to give them greater exposure to the issues confronting the country. [Applause.]
Debate concluded.
Bill read a second time.
SOUTH AFRICAN REVENUE SERVICE AMENDMENT BILL
(Second Reading debate)
The MINISTER OF FINANCE: Chairperson, hon members, Sars was established as an organ of state on 1 October 1997, and there is a very important provision in the Act which describes Sars as being within the public administration but outside the Public Service. So Sars as a creature of statute has had the administrative autonomy and the flexibility to be able to employ and design systems to ensure that it can maximally live out its mandate.
We have had five years within which to observe what this new kind of institution is, and the amendments we seek in this Bill are, essentially, drawing on the experience of five years of intensive learning.
Firstly, there is an amendment that deals with the inclusion of the customs function. So it is not just about the collection of revenues, but also control over the movement of goods which is important. Secondly, the interrelationship between the customs function and the trade function is the reason why the Deputy Minister of Finance and the Deputy Minister of Trade and Industry are in intense consultations today. It is about that important function.
Let me just digress for a moment and say that the spokesman for the milling industry is completely out of order with his attacks. We can demonstrate that the applications for tariff adjustments came very late. There have been no hold-ups in Sars, but Sars’ improving on trade facilitation is an important function and that is taken account of, certainly, in the amendments before us.
The amendments also seek to align Sars as an entity - which is in part A of schedule 3 of the Public Finance Management Act - with the Public Finance Management Act. There is an amendment which seeks that Cabinet be involved in the appointment of the commissioner. And then there are two sets of issues that have been the subject of intense debate in the committee. The first is the disestablishment of the Sars Board - and this is drawn from five years of intense learning, as I have said - and in its stead the establishment of specialist committees, some in permanent sitting and some on an ad hoc basis. That matter was debated quite extensively.
The other issue relates to the method of funding, and the amendment sought here is that whilst recognising that Sars will remain a contender in a competitive bidding process to secure revenues from the Fiscus, the proposal - and this is a proposal - creates a possibility for Sars to be funded on a percentage of revenues earned basis. It does not call for immediate implementation. This is something that would require the full involvement of both the Ministry and Cabinet, and, clearly, it is something that would require the concurrence of Parliament as well. But the provision is made.
I want to be very clear about the fact that this is not about strange incentives created for bounty hunters. We believe that Sars fulfils a very important function in delivering democracy to people by ensuring that we can collect revenues from those who ought to be contributing to the Fiscus.
The last amendment is the alignment of Sars and its pension fund with the norms of the Government Employees’ Pension Fund.
I have great pleasure in placing the Sars Amendment Bill before this House. [Applause.]
Ms B A HOGAN: Chair, I do not intend to repeat what the Minister said. There are only a couple of amendments to this Bill, which he went into in great depth and detail. He also addressed the issues that were a matter of some debate within our committee. I do not believe that this House should be subject to constant repetitions on the same matters. My colleague Mrs Joemat has the unenviable task of spelling out the ANC’s position on this Bill, and she is sitting there ready to do so.
So it is my pleasure to say that the ANC supports this Bill and looks forward to the SA Revenue Service improving the already improved quality of work they do for this country. [Applause.]
Ms R TALJAARD: Madam Speaker, … [Interjections.] Yes, I could not rely on you to interpret the meaning of that, I am afraid.
Madam Speaker, hon members, when the SA Revenue Service Act was adopted in 1997, it marked the culmination of a long and arduous process to ensure that a moribund organisation could be allowed maximum operational freedom and administrative autonomy to turn itself around. The aim was to create an efficient and effective administration of revenue collection systems. This required substantive organisational re-engineering of the Revenue Service, including the establishment of an advisory board to advise both the commissioner and the Minister of Finance.
The positive results of this process are clear to see. Sars has consistently exceeded and collected more than its target revenue over the past few years. In this context any steps aimed at improving and/or removing ambiguities or inconsistencies in the legal institutional framework, within which we expect an efficient and accountable Sars to function, must be supported.
With the adoption of the Public Finance Management Act in 1999, the need arose to align the accountability arrangements in the Sars Act with those contained in the PFMA.
Under the pre-PFMA dispensation, Sars performed its functions and exercised its powers under the policy directives and control of the Minister of Finance. With the advent of the new PFMA, the rationale for these policy directives has fallen away as the relationship between the executive authority and the accounting officer has been spelt out in much clearer terms in the new legislation.
Although legitimate questions arise in relation to the desirability of the new provision for the President to appoint the head of Sars, which is a schedule 3 national public entity according to the PFMA, the removal of the policy directive provisions is supported.
Since its inception, the Sars advisory board appears to have been a hybrid institution exercising a board function over an entity that is described in the Sars Act as an organ of state within the public administration but as an institution outside the Public Service. With twenty-twenty hindsight and in practice the more conventionally conceived board function seems to have been ill suited to Sars. The Bill before us today abolishes the Sars advisory board and creates statutory specialist advisory committees to advise both the Minister of Finance and the Commissioner of Sars.
The doctrine of new public management dictates the need for clear lines of accountability and responsibility. The PFMA was an important step on the new public management path.
While there is certainly a case to be made for the existence of specialist advisory committees, there are, equally, legitimate questions about the wisdom of providing for such committees as creatures of statute instead of leaving them to be creatures of the commissioner’s discretion, in the context of the accountability clarity which the doctrine of new public management and the PFMA seek to establish.
While it is not a certainty that any interference and/or blurring of the lines will necessarily happen, it will entirely depend on the nature of any future incumbent Minister of Finance and Commissioner of Sars. As the decision has been taken to place the committees in the new Bill, the DA wishes to highlight these potential difficulties alluded to above.
However, it is important to note that the proposed advisory committees will have more circumscribed powers than those of the existing advisory board that is disestablished in terms of this Bill.
The Bill before us broadens the objectives and functions of Sars, apart from revenue collection, to adequately cover the exercise of customs and excise functions. This greater accountability and legal certainty must be welcomed.
The amendment to section 25 of the principal Act contained in this Bill creates an enabling provision to allow the Minister of Finance and the Commissioner of Sars to agree to another method of funding between them and for that then to be approved by Cabinet. This broad enabling provision opens the door to a number of potential policy measures, including the one highlighted by the Minister of retaining a certain fixed percentage of revenue collected and using it for operations. Clearly, the needs are considerable in the changeover process under Siyakha I and II, but surely these can still be catered for under the estimates process and not through controversial-potential incentives through this broad enabling provision, which we create and we believe is superfluous as it can be catered for under the estimates process.
It is of concern that on a Bill of this nature we did not receive any public comment. Good lawmaking requires civil society to be engaged in the legislative process. We do believe that it was regrettable that we received no such comment.
The sound functioning of Sars, however, is and remains the life-blood of public policy delivery, and the DA takes pleasure in supporting this Bill. [Applause.]
Mr H J BEKKER: Madam Speaker, Sars is the jewel in the Minister’s crown. They have done extremely well. It is due to them that it has been possible for a lot of tax savings to be passed on to consumers and people in general. However, this Bill deals specifically with some additional aspects that were encountered by Sars and which needed to be rectified.
Sedert die afkondiging van die Suid-Afrikaanse Inkomstedienswet in 1997 het ‘n hele paar faktore aanleiding gegee dat sekere van die bepalings van die wet hersien moet word. ‘n Belangrike faktor is die afkondiging van die Wet op Openbare Finansiële Bestuur in 1999, wat die finansiële bestuur in die nasionale Regering sowel as die provinsiale regerings reël. Dit is ‘n baie belangrike aspek wat in hierdie aangeleentheid ingesluit moet word.
Ander praktiese probleme met betrekking tot die huidige bepalings van die SA Inkomstedienswet is ook geïdentifiseer en sekere van dié bepalings word dan ook in hierdie wetgewing hersien. Hoewel die SA Inkomstediens aan die Minister van Finansies verslag doen en inkomstewetgewing administreer wat die verantwoordelikheid van die Minister is, is daar vanuit ‘n doeane- oogpunt ‘n verbintenis met die Departement van Handel en Nywerheid. Verder is daar die tariefwysigings, en spesifiek ten opsigte van dié wat deur die Departement van Handel en Nywerheid versoek en geïmplementeer word, en dan is daar ook die aansporingskemas wat geadministreer word en deur die Departement van Handel en Nywerheid ontwikkel word om handel aan te help en ekonomiese groei te stimuleer.
In hierdie verband vervul die SA Inkomstediens ook die funksie om die Minister van Handel en Nywerheid te adviseer aangaande aangeleenthede rakende die beheer oor invoer, uitvoer, beweging, opslag en verbruik van sekere goedere. Hierdie wetsontwerp stel derhalwe ‘n wysiging aan die SA Inkomstedienswet voor om hierdie funksie te weerspieël. (Translation of Afrikaans paragraphs follows.)
[Since the promulgation of the South African Revenue Service Act in 1997, quite a number of factors led to the need for certain of the provisions of the Act to be reviewed. An important factor is the promulgation of the Public Finance Management Act in 1999 that regulates the financial management in the national Government as well as the provincial governments. This is a very important aspect that should be included in this matter.
Other practical problems with regard to the current provisions of the South African Revenue Act were also identified and certain of these provisions are also being reviewed with this legislation. Even though Sars reports to the Minister of Finance and administers revenue legislation, which is the responsibility of the Minister, there is a connection with the Department of Trade and Industry from a customs point of view. Further, there are the tariff amendments, specifically with regard to those that were requested and are implemented by the Department of Trade and Industry, and then there are also the motivating schemes that must be administered and are developed by the Department of Trade and Industry in order to facilitate trade and stimulate economic growth.
In this regard Sars fulfils also the function of advising the Minister of Trade and Industry with regard to matters relating to the control of import, export, movement, oversight and consumption of certain goods. This Bill therefore introduces an amendment to the South African Revenue Act in order to reflect this function.]
The importance of this particular aspect is clearly being indicated by the problems that we have recently experienced with Romatex when they tried to settle in the Eastern Cape. It was owing to the fact that these pieces of legislation were not in place that we probably lost the Romatex investment.
But the important thing is that with this legislation in place, one can probably renegotiate with Romatex. I understand that there is a possibility that Romatex and several other organisations would perhaps reconsider their position, and particularly that these incentive schemes could be pushed through. However, it is of the utmost importance that these be controlled and properly legislated.
The IFP will definitely support this Bill. Dr P J RABIE: Madam Speaker, hon Minister, hon members, Sars was established as an organ of state on 1 October 1997. What is noteworthy is that Sars is a juristic entity within the public administration but outside the Public Service.
A number of significant amendments are included in this Bill. Allow me to mention two of them. First and foremost is the disestablishment of the Sars board and the establishment of a number of specialist committees; and the second is the membership of the Government Employees’ Pension Fund.
The current wording of the Act concentrates on the collection of revenue. Following the amalgamation of customs and revenue, Sars has added the important proactive function of control regarding import and export movement of manufactured goods, storage, etc.
When the Sars Act was implemented, the Public Finance Management Act had not yet been introduced. The PFMA ensures effective financial accountability, which resulted in a number of clauses in the Sars Act becoming obsolete, such as clauses 1(b) and 1(c) in particular.
The present Sars Act provides for the establishment of a Sars board, which is only an advisory and not a consultative body. Clause 18 proposes the disestablishment of the board, and clause 8 proposes that the Minister establish one or more specialist committees to advise the commissioner and the Minister regarding asset management, human resources and information technology.
Regarding the membership of the Government Employees’ Pension Fund, at present the Sars Act requires all employees to become members of the Government Employees’ Pension Fund. The Government Employees’ Pension Fund excludes certain persons, for example certain contract workers. What this Bill proposes, in fact, is that the Sars Act be aligned with the Government Employees’ Pension Fund.
The Commissioner of Revenue mentioned to the Portfolio Committee on Finance that the Revenue Service is recruiting highly skilled employees from the private sector, which will add to the capacity of this particular department. This amendment will enable Sars to compete at an effective level with the private sector.
The effective collection of revenue is of crucial importance. This technical Bill will benefit all role-players. The New NP supports this Bill.
Dr G W KOORNHOF: Madam Speaker and hon members, the new SA Revenue Service celebrates its fifth birthday in 2002. Let me use, therefore, this opportunity to congratulate the Commissioner of the SA Revenue Service, Mr Pravin Gordhan, and his staff on a sterling performance during this period of time. He has taken Sars to new heights and we, as South Africans, are proud of this institution - and, I may add - despite the fact that Sars has become the senior partner in most households and businesses.
In my opinion the most important amendment in the Bill before us relates to the expansion of functions. The Bill incorporates customs functions as an additional objective of Sars. These functions relate to the control over the import, export, manufacture, movement, storage or use of certain goods, which are performed by the customs administration division within Sars.
I am informed that, currently, controls are inadequate at a number of harbours and airports. Sars is, for example, relying on the documentation of clearing agents relating to all imports and exports at the Cape Town harbour, owing to the fact that Sars does not have the available personnel.
We also know that the fuel levy generates substantial revenue at customs and excise in Cape Town harbour, which means that Sars should perform audits at the oil companies. The question is: Do they have the capacity to do exactly that?
I therefore appeal to the Minister and the commissioner to create the capacity within Sars to perform these additional customs functions. Only then will this amendment be effective.
The UDM supports the South African Revenue Service Amendment Bill.
Mrs R R JOEMAT: Madam Speaker, hon members, in 1994 the new ANC Government inherited a SA Revenue Service that was institutionally weak and ineffective in raising the levels of revenue required to rebuild our country. In order to revitalise Sars it was necessary for Sars to attract the necessary cadre of professional staff and, in doing so, transform the organisation from an archaic white elephant to a revenue collector of note.
The Sars Act of 1997 thus placed Sars outside the limitations of the Public Service, but still within the public administration, that is, administrative independence with political accountability.
As an ANC member of Parliament I am indeed proud to be associated with the transformation of Sars. It has been transformed into a national asset. It is our revenue-raising breadbasket through which this ANC Government has delivered, and will continue to deliver, services for our people.
However, as politicians responsible for the political oversight of Sars, we cannot rest on our laurels. We need to sustain, enhance and improve its operational efficiency so that future generations can also benefit from the revenue-raising potential.
The Sars amendment Bill before this House today should be understood within this context and not based on narrowly defined party-political interests. Sars is intensifying its capacity to prosecute tax defaulters. Qualified legal officers are being appointed at regional and local offices to bolster Sars’ legal muscle.
Sars has achieved considerable success in its tax-base-broadening initiative aimed at registering persons, businesses and employers and at reducing the rate of noncompliance with tax legislation. The passing of this Bill will give Sars greater administrative autonomy and allow Sars to have better control over its resources.
I wish to reiterate - and in line with the vision of Sars - that Sars become an innovative revenue and customs agency that enhances economic growth and social development, and which supports our nations’s integration into a global economy in a way that benefits all South Africans.
During the past five years the model under which Sars has operated has been very successful, but it now requires amendment. Legislation is not static; it needs to be amended from time to time. With hindsight the amendments proposed deal with these realignments and will improve the administration of Sars.
There are approximately and broadly speaking seven amendments. Regarding the objectives of Sars, the current wording emphasises the collection of revenue, but following the amalgamation of customs and revenue, we need to align the legislation to incorporate the functions of customs dealing with customs matters as well.
Regarding the functions of Sars, the incorporation of customs into Sars will require greater synergy between Sars and the Department of Trade and Industry. These amendments will ensure a working legislative relationship (?) and serve to advise the Minister of Trade and Industry - as he enters - and the industry on policy relating to matters affecting the industry; and they will ensure the linkage between customs, administration and trade policy.
Thirdly, consequential amendments are proposed to bring Sars in line with the PFMA. The Act at present provides that the Minister appoint the commissioner. The proposal in this amendment is to bring Sars in line with the appointment of heads of national departments. Therefore, the commissioner will be appointed by Cabinet through the President.
The existing board needs to be disestablished and replaced with a specialist committee. The Minister may appoint one or more specialist committees. The main purpose of this specialist committee is to advise the Minister and the commissioner on the management of Sars resources, including assets, management, human resources and information and technology.
In terms of the Constitution, a specialist committee established by clause 11 must perform its functions impartially and without fear, favour or prejudice.
Regarding methods of funding, section 25 of the Act provides that its main source of income is derived from money appropriated by Parliament. The amount is calculated in accordance with the estimates of income and expenditure prepared by Sars, which are prescribed in the Sars Act, but which are also regulated in terms of the PFMA.
The Bill before us provides an amendment in order to provide that an alternative method of determining Sars funds may be agreed to between the Minister and the commissioner, that it will be subject to the approval of Cabinet and that the funds will be appropriated by Parliament.
As members have heard, these amendments will contribute to the efficient and effective functioning of Sars. The ANC supports this Bill. I would like to end by saying: ``Viva Sars, Viva!’’ [Applause.]
The MINISTER OF FINANCE: Madam Speaker, hon members, there is no need for me to filibuster any more as Alec Erwin has arrived. So all I need to do is say thank you to all parties for supporting the legislation.
I would like to make just two brief comments. The first relates to something that the hon Bekker said earlier. If one looks at countries that have found themselves in a deep crisis - one can look at Turkey; Argentina; Thailand; Brazil, until the beginning of last year; Indonesia; and I invite members to watch the situation in Ecuador - the one thing they all had in common was that their currencies were pegged. So let us just be careful about the kind of advice we give, because I would rather deal with the situation we are dealing with now than be faced with the need to go cap in hand to Washington to borrow huge sums of money. This is just an invitation that we deal with that.
Secondly, I would like to say to the hon Taljaard that we did invite public comment, and the only comment we got was from certain sectors of corporate South Africa who said, ``Do not disestablish the board; disestablish Sars.’’ We have done with that advice what she would have asked of us to do.
Lastly, it is the hon Connie September’s daughter’s birthday. Sabrina, happy birthday! [Applause.]
Debate concluded.
Bill read a second time.
CORPORATE LAWS AMENDMENT BILL
(Second Reading debate) The MINISTER OF TRADE AND INDUSTRY: Madam Speaker, may I thank you for slightly slowing down procedures. May I also thank the Minister of Finance for offering to stand in for me, and the Deputy Minister for panicking on my behalf. I am sorry I was slightly late; I was delayed. Further, I thank the Whips for their leniency towards me. My back is still unscarred.
The SPEAKER: I will protect it, hon Minister
The MINISTER OF TRADE AND INDUSTRY: Also, I wish Connie’s daughter a happy birthday.
These are relatively small amendments, but in some ways they herald quite an exciting time. As members will no doubt know, we have amalgamated the Companies and Close Corporations Registration Offices and the intellectual properties offices into Cipro, an acronym for Companies and Intellectual Property Registration Office.
From 1 April 2002, the office, in consultation with the National Treasury, was changed into a trading entity. This allows us to be more effective in our operations. We have already begun the process of electronic lodgments and a range of other important IT-driven processes, which will improve the efficiency of Cipro.
The amendments, accordingly, are designed to facilitate this process and deal with one or two other small issues. The main amendment would allow us to implement the trading entity process, which allows us to charge fees, retain those fees for the operation of the Companies Offices and retain a contingency amount at the end of the period, but any additional amounts that may have accumulated in the trading entity then go to the National Revenue Fund. These changes, therefore, will facilitate that process.
Secondly, other changes made relate to our ability to adjust fees and charge fees. These will now be done through regulation rather than having to amend the Act at each point. The third change of significance, and I think it is an important change, is to strengthen or reintroduce the requirement that companies have to submit an annual return. This had previously been dropped in the late 1980s, but from our point of view it is an important step forward again in creating a more effective data base with more information on what companies are doing, which sector they are in, etc.
We are also making a provision, which I think is an important provision, to allow companies to provide, on a voluntary basis, certain additional information about their operations. As we see corporate responsibility programmes coming in, as we see the whole issues of black economic empowerment coming in, such reporting could provide a very useful source of information for investors, for others, for our courts and for many other parts of our society as to what is happening in the corporate world.
I will not detain the House for much longer. These amendments, I think, are relatively small, but herald a new era for the Companies and Intellectual Property Registration Office, making it even more efficient than it has become in the last two years. [Applause.]
Mrs B N SONO: Madam Speaker, the Corporate Laws Amendment Bill is an essential Bill. It seeks to amalgamate the Companies and Close Corporations Registration Offices with the Patents and Trade Marks Registration Offices into a single office styled ``Cipro’’.
The Bill further seeks to change the manner of payment for the service rendered by this entity. This will enable Cipro to perform its role and function and to introduce e-commerce in the lodgment of documents and disclosure of corporate information. Obviously, these measures will enhance both the efficiency and modernisation of registration procedures in the corporate sector.
Investors, both domestic and foreign, will be better served and serviced. The present state of both these offices leaves much to be desired. I experienced this in July during constituency week. I had to help someone who travelled all the way from the Eastern Cape to register a patent. Time is of the essence when it comes to matters of that magnitude.
This Bill seeks, further, to address an aspect of concern, that is, the unsatisfactory compliance of the Companies Act and the Close Corporations Act regarding disclosure of certain information. The introduction of an annual return will greatly benefit the integrity of the South African registry’s data base on registered companies and close corporations. This will further facilitate corporate accountability and good corporate governance. If Cipro is to be a national public entity under the PFMA, then it will have tight government obligations and accountability arrangements in terms of the PFMA.
In conclusion, a crucial question I would like to ask is in regard to the progress made in the rewriting of the Companies Act. What elements, if any, of the King 2 report on corporate governance will become part of the new Companies Act in order to tighten corporate governance? The former chief executive of Engen, Rob Angel, has joined Cipro as management consultant, which is a key appointment, and there is consensus in the legal fraternity that this will make a huge difference to the service.
I would also like to commend Adv Simelane, who promised swift action in rendering this area of DTI efficient. He asked for three months, and the path travelled already is commendable. Efficiency and speed are aspects that lend an economy the agility to respond to global market pressures. In that way, the DA does support this Bill. [Applause.]
Ms C C SEPTEMBER: Madam Speaker, I am being pressurised into not using all 12 minutes of my speaking time. I am being told that it is Friday today, that it is Friday the 13th, that members are scared to stay in the House and that my minutes are up - all of these things.
Let me say that when we change any law, we do so to enhance sustainable development strategies and, obviously, proactive economic policies. The amendment to this Bill brings out one of the targeted areas in the establishment and enhancement of small and medium enterprises as vehicles for the promotion of access for previously disadvantaged individuals to employment opportunities.
Any business environment with increases in cost would be detrimental to the development of any type of enterprise. The incorporation of the Companies and Close Corporations Registration Offices with the Patents and Trade Marks Registration Offices into one single body named Cipro - the Companies and Intellectual Property Registration Office - can be regarded as a positive step in the right direction.
The hon Hanekom’s Bill fits nicely into this office, because without this office his Bill would not be able to operate. So it is important that he listen to each and every sentence I say. This incorporation took place with the approval of the National Treasury and the SA Revenue Service, as well as with the standing advisory committee on company law. In addition, this incorporation adheres to specific financial and other requirements as specified by the Public Finance Management Act. The intention of the incorporation was to get small and medium enterprises - the little ones - on board. For example, the computerisation of Cipro aims to decrease the costs of SMEs, and there will be no extra cost for the registration of prospectuses. The maximum fee in terms of the Public Finance Management Act that will be charged is R500.
In the case of huge companies like Old Mutual, attorneys can charge up to R2,5 million for an 800-page application. This Bill will help that now. This change in fees is an indication that Cipro is nonprofit-oriented and aims to get small and medium enterprises on board.
A further development in this regard is the introduction of the new electronic system that will ensure duplication of business registrations. One does not need to get revenue stamps any more and stand in long queues - one can do an electronic transfer. What is important in this Bill is the amendment in terms of the removal of the R100 penalty or imprisonment in terms of the deregistration clauses for those entities that refuse to abide by the law. We welcome the fact that the department has accepted our amendment of this. This does not imply that all businesses that are not active will be deregistered. The intention of this clause is to serve as a check as to whether COs and CCs are active or would be active in the near future. This principle applies to dormant COs and CCs with no assets.
In conclusion, I would like to say to the hon Danny Olifant that the amendmends to this Bill bear no financial implications for the state, and that Cipro will be financially independent within the next two years.
I now also have an opportunity to wish my daughter Sabrina, who happens to be listening, happy birthday. [Applause.]
The SPEAKER: Order! Hon member, you are most welcome to come back and finish using your full speaking time. The best protection today on Friday the 13th is to be in Parliament.[Laughter].
Ms C C SEPTEMBER: Thank you, hon Speaker. To continue with my speech … [Laughter.]
Mr H J BEKKER: Madam Speaker, the hon Connie September dealt so extensively with the Bill before us that there is not much left for me to say on it. She was even so convincing on certain of the items on which I could have taken her on that she also convinced me. I think the next time she goes to Belfast or Ulster she should take some of these items with her and try to see if she cannot convince those two groupings fighting there with each other to continue with that.
Cipro is the combination of the Companies and Close Corporations Registration Offices with the Patents and Trade Marks Registration Offices. Approval has been granted for Cipro under the Public Finance Management Act on condition that Cipro cover its operational costs within the next two years from funds generated for services rendered by it.
In the past one had to complete a form, and on the form one had to put a revenue stamp. Of course, this was not practical in terms of the recovery of expenses by means of a claim then against National Treasury. This was a long drawn-out process. With the availability of e-commerce it is absolutely essential that one move into a new type of business-like organisation.
One aspect I could perhaps also comment on is that there will now be annual returns and comments from both close corporations and companies and other entities. A question that might be asked is whether we do not create extra red tape in terms of this, and whether one should not perhaps consider another way out in that if there is any change in the composition of a company - by shareholding or whatever - that the office should be advised of such change within six months. This is so that one does not need to go through all these forms when there has been absolutely no change and when one looks into this just for the sake of formality.
However, bearing in mind the time factor and the old imperial saying, when we were still dealing with imperial measurements, that ``He who thinks by the inch and talks by the yard should be kicked by the foot’’, I will therefore conclude by saying that the IFP will support this particular Bill.
Dr R T RHODA: Madam Speaker, I too will be brief. The Minister has already encapsulated everything in a nutshell. Basically the Bill deals with the fact that the Companies and Close Corporations Registration Offices and the Patents and Trade Marks Registration Offices are going to be amalgamated into one trading entity, namely the Cipro office.
The main amendment, of course, allows the Cipro office to be a trading entity. Old methods of payments will be done away with. One will no longer deal with revenue stamps. The normal method of generally accepted common forms of payment will be introduced.
There is also the worldwide problem with registration offices’ data banks. I am sure they all have millions of companies. We do not know which of them are dead, alive, dormant and so on, and what they are doing. So the only way to overcome this problem is also then to ask them to lodge annual returns and to indicate any changes in their names, addresses and so on. This has become a worldwide trend for better visibility, integrity, compliance and disclosure.
Once this system is up and running, the legal systems such as banks, creditors and investors will always be able to access things on the Internet. Needless to say, this will help to overcome a lot of fraud in the country. With that, I shall end.
The New NP supports the Bill wholeheartedly.
Mr C T FROLICK: Madam Speaker and hon members, the Corporate Laws Amendment Bill addresses the operations of the Companies and Intellectual Property Registration Office. The hon Minister and other members of the committee have effectively dealt with the objectives of the Bill.
The Department of Trade and Industry embarked on an ambitious restructuring process to bring its operations into line with sound business principles and to reduce unnecessary delays and bureaucratic procedures. This amendment is consistent with this approach and process and will enable Cipro to manage its processes and financial transactions timeously and effectively. The department needs to comply to meet the condition placed on it by the National Treasury to cover its operational costs within the next two years from funds generated for services rendered by it.
The frequent visits by the portfolio committee to the department leave me with little doubt that the necessary systems are in place to achieve this and, if the need arises, suitable adjustments can be made.
The introduction of an annual return does not only bring Cipro’s operations into line with world trends but will enhance investor confidence. The UDM supports the Bill.
The MINISTER OF TRADE AND INDUSTRY: Madam Speaker, I thank colleagues of all parties who have supported the Bill. I think this confirms our view that it does usher in an exciting new era.
I believe that anyone dealing with Cipro will have seen that there has been a real improvement in efficiency. Once again, I would urge colleagues to remember the magic number 0861 84 33 84.
The hon member Sono will find that we have moved a lot of our Cipro people into the call centre. We have increased the number of people dealing with Cipro issues and, as she would probably know from her visits to the department, well over 60% of the calls are, in fact, Cipro-related calls. So, I think, we are seeing some real improvements in performance.
I would like to take this opportunity to thank Adv Malunga - I think reference was made to Adv Simelane, but it is actually Adv Malunga - and Rob Angel, the chair of the new board, for the work they have done. I am particularly pleased about an aspect not often seen that has happened at Cipro in that Adv Malunga has done wonders with raising the morale of many of the women who were working in that office and had been working there for many years. He has motivated them and converted them from clerical workers, dealing with paper, into computer-literate workers. I think anyone visiting Cipro will see that this has been one of the great achievements in transforming a department, and we are very proud of that.
I agree that maybe we were a bit harsh in suggesting jail sentences for those companies that did not put in their returns, although the temptation remains for me to keep that aspect, but members have wisely said that it be taken out. I think that the data base that we can get from the companies offices is absolutely critical and can help us in many ways. We must not be slack about this. We are going to be quite tough on the requirement that companies comply with their returns. As members know, it will not be the case that we will make a great deal of extra work for them. We will send them the forms and they must make alterations. So, by moving this to an electronic process, I think we are making real progress.
As my own personal gift to the House on this Friday I have decided to reduce my speaking time by two minutes. [Applause.]
Debate concluded.
Bill read a second time.
SUSPENSION OF RULE 253(1) FOR PURPOSES OF CONDUCTING SECOND READING DEBATE ON THE INTERCEPTION AND MONITORING BILL
(Draft Resolution)
The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move without notice:
That Rule 253(1) be suspended for the purposes of conducting the Second Reading debate on the Regulation of Interception of Communications and Provision of Communication-related Information Bill [B 50B - 2001] (National Assembly - sec 75), introduced as Interception and Monitoring Bill [B 50 - 2001] (National Assembly - sec 75).
Agreed to.
The House adjourned at 10:56. ____
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
ANNOUNCEMENTS:
National Assembly and National Council of Provinces:
-
The Speaker and the Chairperson: (1) The following Bill was introduced by the Minister for Justice and Constitutional Development in the National Assembly on 13 September 2002 and referred to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160:
(i) Child Justice Bill [B 49 - 2002] (National Assembly - sec 75) [Explanatory summary of Bill and prior notice of its introduction published in Government Gazette No 23728 of 8 August 2002.]
The Bill has been referred to the Portfolio Committee on Justice and Constitutional Development 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 Assembly:
- The Speaker:
(1) Money Bills introduced by the Minister of Finance in the
National Assembly on 13 September 2002 and referred to the
Portfolio Committee on Finance:
(i) Gas Regulator Levies Bill [B 47 - 2002] (National Assembly
- sec 77).
(ii) Finance Bill [B 48 - 2002] (National Assembly - sec 77).
TABLINGS:
National Assembly and National Council of Provinces:
Papers:
-
The Minister of Arts, Culture, Science and Technology: Annual Report and Financial Statements of the National Library of South Africa for 1999-2001, including the Report of the Auditor-General on the Financial Statements as ended 31 March 2001.
-
The Minister of Health:
Annual Report and Financial Statements of the Medical Research Council
for 2001-2002, including the Report of the Auditor-General on the
Financial Statements for 2001-2002 [RP 91-2002].
- The Minister of Sport and Recreation:
Annual Report and Financial Statements of the South African Institute
for Drug-Free Sport for 2001-2002, including the Report of the Auditor-
General on the Financial Statements for 2001-2002 [RP 127-2002].
COMMITTEE REPORTS:
National Assembly:
-
Report of the Portfolio Committee on Justice and Constitutional Development on the Interception and Monitoring Bill [B 50 - 2001] (National Assembly - sec 75), dated 13 September 2002:
The Portfolio Committee on Justice and Constitutional Development, having considered the subject of the Interception and Monitoring Bill [B 50 - 2001] (National Assembly - sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, presents the Regulation of Interception of Communications and Provision of Communication-related Information Bill [B 50B - 2001] (National Assembly - sec 75), and endorses the classification of the Bill as a section 75 Bill.
The Committee wishes to report further, as follows:
-
Clause 9 of the Bill provides that any communication may be intercepted in any prison if such interception takes place in the exercise of any power conferred by or under, and in accordance with, any regulations made under the Correctional Services Act, 1998 (Act No. 111 of 1998). Provision is further made that any such regulations must, before the publication thereof in the Gazette, be submitted to Parliament. The purpose of requiring such regulations to be submitted to Parliament is to enable the Committee to consider the constitutionality of those regulations which regulate the interception of communications in prisons.
The Committee has noted that the Minister of Correctional Services must, in terms of section 134(5) of the Correctional Services Act, 1998, refer proposed regulations which are to be made under that Act to the relevant Parliamentary Committees in both Houses dealing with the Department of Correctional Services. However, as the Portfolio Committee on Justice and Constitutional Development is not one of those Parliamentary Committees, such proposed regulations will not in the ordinary course of Parliament’s business be referred to, or brought to the attention of, the Committee. The possibility therefore exists that the Committee will not always be in a position to consider the constitutionality of such proposed regulations.
The Committee therefore recommends that the Minister of Correctional Services be requested to ensure that when regulations are referred to the Parliamentary Committees which deal with his Department, those regulations relating to the interception of communications in prisons are also specifically referred to the Portfolio Committee on Justice and Constitutional Development for consideration.
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Having noted the provisions of the National Key Points Act, 1980 (Act No. 102 of 1980), the Committee wishes to bring those provisions to the attention of the Minister of Defence and the Minister of Intelligence. The Committee recommends that those Ministers consider declaring the proposed interception centres, to be established by clause 32(1) of the Bill, National Key Points in terms of section 2(1) of the National Key Points Act, 1980.
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Report to be considered.