National Assembly - 21 August 2008



The House met at 14:01.

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


                        HOLY MONTH OF RAMADAN

                         (Draft Resolution)

The CHIEF WHIP OF THE OPPOSITION: I move without notice:

That the House –

(1) notes that the beginning of September marks the commencement of Muslims worldwide observing the holy month of Ramadan in fasting and prayer;

(2) further notes that Ramadan forms one of the five pillars of Islam on which the entire life of a Muslim is based;

(3) recognises that this month is a period of introspection, discipline and abstinence from worldly pleasures; and

(4) wishes all Muslims well over this auspicious period.

Agreed to.


                         (Draft Resolution)

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

That the House –

(1) notes that the South African cricket team, the Proteas, has won the recent test series against England in the United Kingdom;

(2) further notes that this is the first test series victory on English soil since readmission to the international game of cricket;

(3) believes that the deepening of transformation will take our cricket team to new heights; and

(4) congratulates the Proteas on winning the test series and wishes them well in the coming one-day series.

Agreed to.

                           HISTORY OF UDF

                        (Member’s Statement)

Ms C C SEPTEMBER (ANC): On 20 August 1983 thousands of activists and community leaders from across the country gathered at Rocklands Civic Centre in Mitchells Plain to launch the UDF. They represented the civic organisations, the youth, students, women, unions, religions, professionals and a range of other organisations, all united by a common opposition to apartheid. The front’s character enabled it to unite the broadest range of forces as it deepened the pillar of internal mass mobilisation. This tactic of broadening the front of struggle, while at the same time deepening the struggle, has been used consistently throughout the history of our country.

The formation of the UDF was a realisation of the command issued by the former President of the ANC in 1983 when he said the following:

For us to achieve victory it is essential that the masses of our people engage in struggle as a conscious and united force that requires that these masses must have their own democratic organisation to mobilise and guide them and through which they can themselves make their own viewpoint heard.

In the short time of the existence of the UDF, it gave form and coherence to the struggle ranging from the most local of issues to broad national political demands for the unbanning of the ANC, release of political prisoners and an end to apartheid. The achievements of the UDF demonstrate the importance of a united action. Thank you.

                      ARMS DEAL IRREGULARITIES

                        (Member’s Statement)

Mr E W TRENT (DA): Madam Speaker, government has repeatedly stated that there were no irregularities with respect to the arms deal, yet we continue on a weekly basis to be confronted with allegations of extensive corruption; most recently the revelation that the President received R30 million on behalf of the ANC from a German arms company. This allegation, predictably and unconvincingly, was denied, and, tellingly, no defamation action has been taken by the President.

This only serves to reinforce the perception that the President and the government are worried that any independent scrutiny of this rotten deal will reveal extensive wrongdoing. It is for this reason that the President most likely refuses to appoint an independent inquiry and why government continues to obstruct and prevent access to relevant documents by international investigating agencies. If there really are no irregularities, then government should have no reason to prevent these documents from being scrutinised and being opened up to inquiry.

Today I would like to challenge the hon Speaker of this House and the ANC Chairperson, Baleka Mbete, to stop stonewalling my efforts to gain access to numbers of documents that the Defence department deposited at Parliament and are currently being kept under lock and key by the serjeant-at-arms. I have every reason to believe that these documents may point to large-scale irregularities and corruption associated with the arms deal.

Ms F I CHOHAN: Madam Speaker, on a point of order: Is it parliamentary for the hon member to accuse the Speaker of this House of “stonewalling”?

Mr E W TRENT: Madam Speaker, I have written to your Office on numerous occasions …

The SPEAKER: Hon member, I don’t think your correspondence with my Office is the issue here. The issue that has been raised is your comments about the Speaker. I think it gives me, the Speaker, a very difficult task; to comment on something that is directed at me. Rather we don’t deal with it this way at the moment. Indeed, it is an issue to be looked at, to establish what is acceptable in the House with respect to a person who is in the Chair.

Mr E W TRENT: Speaker, so far, my numerous written requests to the Speakership requesting access to these documents have fallen on deaf ears. What does government or Parliament for that matter have to hide? If I request to examine these documents …

Ms F I CHOHAN: Madam Speaker, you have made what I consider a very reasonable request. On a point of order: Is it in order for the hon member just to continue in the same vein?

The SPEAKER: Hon member, have you finished?

Mr E W TRENT: No. I’ve got a little bit more.

The SPEAKER: Actually, your one minute is over.

Mr E W TRENT: Hon Speaker, what I really would appreciate from you as the hon Speaker is to have this matter dealt with. I have been waiting for two months now. COMMENTS ON STATE OF CRIMINAL JUSTICE SYSTEM

                        (Member’s Statement)

Mr J H VAN DER MERWE (IFP): Madam Speaker, let me start by expressing my sincere appreciation to the Deputy Minister for Justice and Constitutional Development, Johnny de Lange, for the remarkable honesty he demonstrated by admitting to the massive failures in our criminal justice system. His confession begs the question: What exactly led to his Damascus experience?

You see, just a few months ago, during the Justice budget debate, members of the DA and I quoted figures from the departmental annual report that demonstrated the collapse of the criminal justice system. Then the Deputy Minister said we were talking nonsense, so now it turns out that our statements were not rubbish, but the truth.

Be that as it may, the Deputy Minister has set an excellent example to his ministerial colleagues to be transparent and honest with the electorate by admitting the ANC’s massive failures. Whatever has led to Johnny’s Damascus experience? It is the moral duty of the Deputy Minister to share this with his colleagues so that the whole truth about the ANC’s disastrous rule of 14 years can be exposed.

Johnny de Lange had the guts to criticise his own party, but as a person who has publicly admitted the truth, we honour him today and we will assist him, and we encourage his ministerial colleagues to follow Johnny’s honourable example. [Interjections.] That includes you!


                        (Member’s Statement)

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY (ANC): Madam Speaker, on 16 August 2008 the ANC parliamentary constituency office in Atteridgeville held an education imbizo to assess progress and to develop a programme of action to address outstanding problems facing education in the Atteridgeville area.

The imbizo involved Education department officials, teachers, learners, community organisations and alliance structures. The imbizo also discussed the launch of the ANC campaign on health and education.

The imbizo recognised that teachers, learners, parents, education department officials and community organisations need to make a commitment to a code of quality education and to join forces to conscientise citizens about the importance of education; to mobilise communities to provide support to schools, teachers and learners; to provide this quality of education for all children, adults and youth, especially the poor.

It was agreed that all these sectors would work speedily towards the launch of a broad-based community education forum in Atteridgeville to improve education as part of the ongoing effort to achieve a better life for all. Thank you.

                      THREATENING FOOD SHORTAGE

                        (Member’s Statement)

Mr PJ BICI (UDM): Madam Speaker, with a food shortage imminent in this country, what are the plans the government has to counter the crisis? It is now time for the ruling party to put the Polokwane results behind it. The Zuma and Mbeki cliques must stop forthwith if this country is to be saved from starvation and annihilation. [Interjections.]

The MINISTER OF DEFENCE: On a point of order, Madam Speaker: Is the hon member discussing matters of the ANC here or the business of the country?

The SPEAKER: Hon member, could you please continue, hopefully with matters of the country?

Dr C P MULDER: May I address you on that point, Madam Speaker? We were told yesterday by one of the colleagues from across the floor that we were implementing resolutions of Polokwane and we did that yesterday. [Interjections.]

The SPEAKER: Proceed, hon member.

Mr J BICI (UDM): Thank you, Madam Speaker, I’m sure we are talking here about implementing the resolutions of Polokwane, and the Minister is making a mistake.

The UDM, as usual, has suggestions. [Interjections.] In virtually all the former homelands ploughing lands are lying fallow. The government, by agreement with the owners, must work those lands and produce. There are many options which the government can follow, for example, in partnership with the landowners, to rent land from owners for a period, employ landowners to work on the land. If you do not heed the UDM’s advice … [Interjections.]

The Deputy Minister for Agriculture and Land Affairs is here and he’s listening. I’m sure he will respond. Thank you.


                        (Member’s Statement)

Dr P W A MULDER (VF PLUS): Mevrou die Speaker, die VF Plus wil graag vir Botswana en Zambië gelukwens met hulle korrekte standpunt ten opsigte van mnr Mugabe en Zimbabwe. Die geskiedenis gaan Botswana en Zambië se standpunte teenoor mnr Mugabe en Zimbabwe as reg en demokraties suiwer, en Suid-Afrika se standpunt teenoor Zimbabwe verkeerd bewys.

Suid-Afrika en president Mbeki moet aanvaar dat gewone diplomatieke metodes en politieke oorreding in die spesifieke geval van mnr Mugabe nié gaan werk om hom te oortuig om van sy mag afstand te doen nie. Dit bly vir die VF Plus onverklaarbaar waarom president Mbeki in sy hantering van mnr Mugabe van sy standpunt oor demokrasie in Afrika, wat hy by die stigting van die Afrika-Unie in Julie 2002 uitgespreek het, afstand gedoen het.

Mnr Mbeki het by daardie geleentheid gesê:

Through our actions, let us proclaim to the world that this is a continent of democracy, a continent of democratic institutions and culture. Indeed, a continent of good governance, where the people participate and the rule of law is upheld.

President Mbeki se optrede teenoor Zimbabwe en Mugabe trek ’n streep deur elkeen van hierdie standpunte van hom en vernietig só Suid-Afrika en Afrika se beeld in die buiteland. Ek dank u. (Translation of Afrikaans member’s statement follows.) [Dr P W A MULDER (FF PLUS): Madam Speaker, the FF Plus would like to congratulate Botswana and Zambia on their correct position with regard to Mr Mugabe and Zimbabwe. History will prove the Botswana and Zambian positions on Mr Mugabe and Zimbabwe as correct and democratically just, and South Africa’s position on Zimbabwe wrong.

South Africa and President Mbeki must accept that ordinary diplomatic methods and political persuasion, specifically in the case of Mr Mugabe, will not succeed in convincing him to relinquish power. It remains inexplicable to the FF Plus as to why President Mbeki, in his handling of Mr Mugabe, reneged on his position with regard to democracy in Africa, which he pronounced at the establishment of the African Union in July 2002.

On that occasion Mr Mbeki remarked:

Through our actions, let us proclaim to the world that this is a continent of democracy, a continent of democratic institutions and culture. Indeed, a continent of good governance, where the people participate and the rule of law is upheld.

President Mbeki’s conduct towards Zimbabwe and Mugabe draws a line through each of his positions and in doing so destroys South Africa’s and Africa’s image overseas. I thank you.]

                        (Member’s Statement)

Ms M V MERUTI (ANC): Madam Speaker, in 2005, the US launched the Next Generation Nuclear programme, which focused on development of high- temperature gas reactor technology through public-private partnerships for use in industrial processes, as opposed to electricity. The current annual funding of the Next Generation Nuclear programme is around US$75 million or R500 million.

The roll-out of this programme led to a competitive bid for early studies in 2006. The Pebble Bed Modular Reactor, PBMR, was an early participant and its technology was the most successful, relative to general atomics design used by other designers. The Pebble Bed Modular Reactor is formally involved in pre-licensing processes with the US Nuclear Regulatory Commission. It is the only gas reactor programme with this status.

The industrial application of pebble bed technology holds much promise for South Africa as a world leader in this area and for humanity in its quest to find alternative sources of energy. Ke a leboga. [Thank you.]


                        (Member’s Statement)

Mr S SIMMONS (NA): Madam Speaker, as we are celebrating the formation of the UDF, about 25 years ago, it must be said that its ideals are far from being a reality. The ANC is paying lip service to the nonracial agenda of the UDF, while it is making use of the same race classification as the apartheid government.

The racist policy of the ANC government behind the facade of transformation has created new levels of racial division and tension amongst all South Africans. South Africa is once again in desperate need of a dynamic force from all sectors of civil society to realise the UDF’s dream of a truly nonracial and equal South Africa.

The powers that be have to be challenged by a dynamic movement that would be capable of restoring the moral legitimacy and integrity of the government of the day and to ensure a better life for all and not just the few. Therefore, the NA calls on Professor Allan Boesak to display similar political leadership and bravery, and to initiate a dynamic movement of a truly nonracial and equal South Africa. I thank you.


                        (Member’s Statement)

Adv H C SCHMIDT (DA): Madam Speaker, in order to tackle the energy problems that South Africa is currently facing, we need to determine biomass generation capacity as one of our main priorities. We should also use free energy in the form of solar and wind energy in the best ways possible. The following multilayered approach suggest that: Firstly, a short-term national solution is to use energy feedstock or biomass for co-firing in coal-based electricity plants. One suitable feedstock for this could be giant bamboo, which has a high heating value, and has been developed in South Africa. For the intermediate and longer term, we should decentralise energy production and look at setting up agri-villages.

Secondly, our cities should use the techniques that are available in Europe to turn waste carbon dioxide neutral, into electric energy. These systems would help us to dispose of waste and to address the electricity crisis. These plants could be set up in every city within the next two to five years, and could contribute to locally-produced electricity.

Thirdly, brand new developments in the field of wind energy production from Europe could be implemented in South Africa to help the local industry with current electricity problems, solve energy problems in our townships, and much more. With all the aforementioned developments identified and acted upon, the current energy crisis could be solved within four to five years in a green way. The knowledge to execute this is available, among local entrepreneurs, the University of Stellenbosch and through local initiatives in combination with European companies. I thank you. [Applause.]

                         ANC HEALTH CAMPAIGN

                        (Member’s Statement)

Ms M L MATSEMELA (ANC): Madam Speaker, the ANC believes that the achievement of better health for all is an important part of improving the quality of life of all South Africans. In this regard, the Freedom Charter said, “free medical care and hospitalisation shall be provided for all, with special care for mothers and young children”.

To further advance these objectives, the ANC would be campaigning to mobilise communities and sectors of society in promoting responsible sexual behaviour and encouraging regular voluntary HIV-testing and counselling; intensifying efforts to create an environment that promotes positive individual behaviour in communities, especially amongst young people; mobilising ANC branches to play a visible role in providing care and support in individuals and families in distress and in working to eliminate stigma attached to HIV and Aids; and in promoting awareness in communities about services available for prevention of mother-to-child HIV transmission, antiretroviral treatment and all means to improve nutrition. Therefore, the ANC is calling on all South Africans to join its campaign as part of the ongoing effort to achieve better health, thus a better life for all. I thank you. [Applause.]

                  Criticism OF GERT SIBANDE musical

                        (Member’s Statement)

Mr M W SIBUYANA (IFP): Madam Speaker, the IFP is outraged by the decision of the Mpumalanga Local Government to spend R22 million on the production of a musical play honouring one of the ANC struggle heroes, Gert Sibande, while thousands of residents in the province don’t have access to water. The local government of Mpumalanga has failed the citizens of Bushbuckridge by not supplying water to the estimated 100 000 people who live there. They are now wasting R22 million on a musical play and another R2,7 million on a statue of Gert Sibande. This is not acceptable.

The South African Constitution affords us all the basic rights to housing, food, water and health care, social security, education and a healthy environment. The state is required to respect, protect, promote and fulfil all the rights recognised in the Bill of Rights, including economic and social rights.

I have therefore today launched a complaint with the Human Rights Commission for human rights abuses against the Mayor of Bushbuckridge and the Mpumalanga provincial government. I believe they are guilty because they are denying the community of Bushbuckridge their basic right to water as guaranteed by the Constitution. Thank you.

              Skills contribution by Eskom and Transnet

                        (Member’s Statement)

Ms F I CHOHAN (ANC): Chairperson, the House notes that the independent research conducted by the national business initiative on the contribution of Business South Africa to skills development reveals the following: That Transnet and Eskom spent well over the average spent by companies in the private sector on training and investing in human capital in South Africa. Eskom and Transnet contribute disproportionally to the pool of available technical skills in the country. Eskom and Transnet spent R83 million in the 2006-07 financial year compared to the R103 million spent by 12 mining houses combined.

It commends the significant contributions of these and other state-owned enterprises and the overall development of our people and economy and calls on the private sector to enhance their commitment to improve skills and our economy. I thank you. [Applause.] Digression of charity funds

                        (Member’s Statement)

Ms J A SEMPLE (DA): Madam Speaker, the ANC-government’s disgraceful treatment of the charities which look after the needs of some of South Africa’s most disadvantaged citizens makes a mockery of its promise to put an end to poverty.

When the Lotto came into operation charities were forbidden by law from running any competitions that competed with the Lotto. The promise was made that the National Lottery Board would compensate them for this loss. However, the DA was dismayed to discover that the process of distributing funds to these charities has become an absolute shambles, with devastating consequences for the charities concerned.

After receiving several complaints from charities about payment problems, we recently put out a general request to all charities to inform us about any problems they were experiencing. We were flooded with complaints. Many charities said that they had to lay off staff or are on the verge of closure because they could not get the money they had been promised or had not even signed contracts in that regard.

We were even more disturbed by the reaction of the responsible authorities to this crisis. National Lottery Board chairperson, Sershan Naidoo, has done nothing but deny that there were any problems in the face of irrefutable evidence that serious problems do exist.

Trade and Industry Minister, Mandisi Mphahlwa, has ignored every single request from the DA to hold a commission of inquiry into the problem.

The DA, once again, calls upon the Minister to act in the interest of the South Africans who are poor, disadvantaged and disabled and to stop this discrimination at the Lotto. I thank you.

                  Telecommunication infrastructureS

                        (Member’s Statement)

Mr Y WANG (ANC): Madam Speaker, friends and former friends, the state-owned enterprise Infraco has provided and expanded its cable connectivity services with their nationwide network as a strategic infrastructural asset to South Africa.

This aims to drive down our telecommunications costs in the country. The fast connection, using fibre-optic cables linking our domestic long- distance network points, has been added to strengthen our network coverage while the full-service network was already in operation at the end of 2007.

This infrastructure, with its lower-cost implications, will benefit our economy in a manner that will have numerous positive spin-offs. The ANC and its government are committed to bringing better services to our people and will continuously monitor Infraco’s mandate in order to bring down our telecommunication costs. Thank you.

                  Review of sandf budget allocation

                        (Member’s Statement)

Dr G W KOORNHOF (ANC): Speaker, the SANDF is a national asset of South Africa. We created this National Defence Force 14 years ago when we integrated statutory and nonstatutory forces into a single, united and professional defence force. We instituted the President of the country as its Commander in Chief.

As a country and as a nation, we expect the SANDF to defend the sovereignty of the country and to enhance stability by participating in peace support operations on the African continent and to support the people of South Africa.

Currently, in practice, the Department of Defence is used as an important implementation arm of the government’s foreign policy. It is a fact that what is expected from the SANDF in terms of fundamental responsibilities allocated by our government and what is being provided in monetary terms to the SANDF, namely 1,2% of GDP, is becoming impossible to execute. Something has to give, whether it is the wellbeing and safety of the soldiers, obsolete or dysfunctional equipment, deteriorating facilities or losing much-needed skills.

It is imperative, Madam Speaker, that urgent consideration should be given to review the SANDF budget allocation. The current allocation of 1,2% of GDP, which compares to the lowest international benchmark of competitive countries, should migrate to 1,4% of GDP as soon as possible and be phased in to reach 1,7% of GDP over the next three years.

In addition, the strategic defence packages should be retained as the baseline in the budget. Only then will we create a proud SANDF capable of executing what government and our country are expecting of them. Thank you.

                       ARMS DEAL IRREGULARITIE
                           HISTORY OF UDM

                        (Minister’s Response)

The MINISTER OF DEFENCE: Madam Speaker, I have a number of matters that I wish to respond to, and I will try to be very brief. First of all, with regard to the statement of hon Koornhof, I would hope that members of the House take serious account of that statement. It is in the interest of our country to reflect on what he has suggested regarding the question of defence of our country.

The second issue that I would like to deal with relates to the member’s statement by hon Trent on the issue of the arms deal. I think it is probably relevant that the National Assembly and even Parliament take a position on this question.

The issue was raised some time ago. Government placed the matter in the hands of the democracy-supporting institutions to investigate the question of the alleged corruption in the arms deal. That exercise produced a report which was ultimately filed with your office, Madam Speaker. That report found that in the primary contracts government had not committed anything that was outside of the law. There was an indication that there were areas in the secondary contracts that needed further investigation.

The statement made by hon Trent seems to suggest that that report was fallacious. This government and this Parliament have not been presented with any evidence other than what has been available to the government on the basis of which the House can disprove the feeling that the allegations of corruption are disinformation or that the findings were correct.

An allegation was made by a newspaper! Any newspaper writes anything about anybody. A day later the company that is alleged to have given the President of South Africa R30 million issued a statement in its home country denying that it ever paid that amount of money to any South African. This company is on record as having issued such a statement.

Where is the evidence that can actually be tested in our courts? To continue to make these allegations against the President of our country and failing to place before our courts evidence to back up these allegations undermine the standing of this country internationally and it makes mockery of this very Sitting.

The documents which hon Trent refers to were made available. We made those documents public. We opened up the Department of Defence for investigators to will come and take a look at the documents. They couldn’t take them away, but they could examine any document.

We must not make a joke of the governance of this country and of this Parliament in this way.

The SPEAKER: Order! Hon Minister, actually your time has expired.

The MINISTER OF DEFENCE: No, I have one more important point to deal with. Madam Speaker, some of my colleagues are not here.

The SPEAKER: Please deal with the one more point in two minutes.

The MINISTER OF DEFENCE: Thank you. Hon Simmons, we must be honest to history, because if we misrepresent history we will mislead young people and we will make a nonsense of our country.

The United Democratic Front achieved everything it was set up to achieve. We set up the United Democratic Front to oppose what the National Party then called “the new deal”. It was to oppose the tricameral Parliament and the black local authorities. It was to call for the release of prisoners, the return of exiles and the unbanning of the banned and to negotiate a settlement. All of that, the United Democratic Front achieved. The UDF was set up to achieve that and no more. You must go and look at the declaration of that organisation.

Mr E W TRENT: Madam Speaker, may I ask the hon Minister of Defence a question?

The SPEAKER: You want to ask him a question? No, hon member, we are not dealing with questions here.

The MINISTER OF DEFENCE: I am available to answer his question even outside.

Mr E W TRENT: We can go right now, hon Minister.


                        (Minister’s Response)

The MINISTER FOR PUBLIC ENTERPRISES: Madam Speaker, firstly, let me thank the hon Meruti for drawing attention to this very important programme of the pebble bed modular reactor. Those of us in Cape Town are fortunate that there is an excellent exhibit, which I urge all members to visit, at the MTN Science Centre at Century City, which deals not only with pebble bed technology, but with all nuclear energy. It also deals with the issues that hon Schmidt raised, namely the different forms of potential energy. It covers wind, its strength, its weaknesses, what it can do, its likely costs. It deals with biomass and it also deals with solar energy.

All of these forms of energy generation have potential, but it would be misleading to indicate that biomass, solar and wind would solve our problems in 45 years. If you go and see the study, you will see why that is evidently not possible. We have to develop larger base-load stations from other forms. They could be gas-fired, coal-fired or nuclear-fired. That is one of the realities we have to face.

Let me also, very briefly, say to the hon …

The MINISTER OF DEFENCE: [Interjections.] Madam Speaker, on a point of order: Is it parliamentary for a member of the opposition, when he has lost an argument, to move from his side of the House and come to engage me on my side of the House?

The SPEAKER: Well, hon Minister, we have a vibrant democracy, as you can see.

The MINISTER FOR PUBLIC ENTERPRISES: Hon Speaker, I hope you will listen just now because I also want to comment on this new ANC member.

Let me also just support what the hon Chohan said. However, I think there are some extremely important initiatives taking place in Jipsa, the Joint Initiative on Priority Skills Acquisition, - at Transnet, Eskom, AngloGold, Sasol and a number of other major companies that are combined in a partnership to deal with the whole skills development process.

In the Modupi area, the new station, we are in partnership with Murray & Roberts and others, as well as the local FET, further education and training institution, to make sure that the skills-trained are available. I think these are very exciting opportunities for young South Africans of all races.

Briefly too, regarding the Infraco, that hon Wang raised. That is correct; it is making a very important contribution to the accessibility and speed of broadband and, as we have announced in this House, we are in continued negotiations to improve our undersea cable access to Europe.

Finally, the hon Trent stands up and, as he always does, says that government is obstructing these investigations. He doesn’t read a single thing government says; he doesn’t read any report on anything. It is just not true what he said.

As we outlined in the presentation then, we have not obstructed any investigations from any overseas country. The German prosecutors, as have the British prosecutors, announced that there is no basis for further investigation of all the claims that he is making. So, one day the old man will get used to doing something other than talking absolute nonsense in this House. Thank you.

                         ANC HEALTH CAMPAIGN

                        (Minister’s Response) The DEPUTY MINISTER OF EDUCATION: Madam Speaker, I would like to thank the hon Andries Nel for holding an imbizo, as well as the hon Matsemela for raising the issue of health. In terms of the Polokwane resolutions, health and education have been identified as priorities for this government.

The president of the ANC, Comrade Jacob Zuma, in the January 8 Statement, had the following to say referring to education:

This is a task that necessarily requires a longer view. Education must be elevated from being a departmental issue or even a government issue to a societal issue, one that occupies the attention and energy of all our people.

On 15 August 2008, at the Walter Sisulu Square in Kliptown, the secretary–general of the ANC launched the education and health mobilisation campaign. The campaign was all about ensuring that all sectors, the community, learners, educators and parents, get involved in this critical task of education. It embarked on or launched a process in terms whereof there were non-negotiables: One, that the teachers must ensure that they are at school on time; that they attend to tasks on time; that they ensure that quality education is provided; that learners stick to their responsibilities and ensure that where quality education is provided, they attend school; and that communities support the schools.

Communities, obviously, have the responsibility of ensuring that they create a caring environment within the communities for school-going learners.

This year would be the ultimate solution to eradicating poverty and overcoming underdevelopment.

With regard to hon Matsemela’s statement, the human capital of this country depends largely on the health and wellbeing of our citizens. Productive citizens have to be healthy and, therefore, for that reason, we certainly support the initiatives of Comrade Andries Nel. The department has indeed responded to the request to meet with the communities on the issue raised by the hon member. Thank you very much.


                        (Minister’s Response)

The DEPUTY MINISTER OF TRADE AND INDUSTRY (Dr R H Davies): Madam Speaker, I want to respond to the statement of the hon Semple. I am sure that the hon member is well aware that the decisions around the distribution of lottery funds are not taken by the department, but by independent distribution agencies and, in any number of cases that I have come across, there can be a lot of reasons why charities have not received funds. It could be that they are not considered worthy, and there are better competitors or they may not have submitted the required information.

Having said that, it is clearly not the policy of the Department of Trade and Industry that decisions should be delayed because of bureaucratic inertia. I think in the absence of any further information from the hon member it is not possible to say which category the particular cases she refers to are in. If she perhaps cares to give us the list of those and some information, we can follow up and try to see what the reasons for these problems are, and then get back to her.


                         (Draft Resolution)

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move on behalf of the Chief Whip of the Majority Party, the motion as printed on the Order Paper:

That the House, noting its resolution of 19 June 2008 extending the deadline for reporting of the Ad Hoc Committee on Intelligence Legislation to 29 August 2008, further extends the date by which the Ad Hoc Committee must report on all three Bills to 9 October 2008. Agreed to.

                      SUSPENSION OF RULE 253(1)

                         (Draft Resolution)

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: I move the motion as printed in the Order Paper on behalf of the Chief Whip of the Majority Party:

That Rule 253(1), which provides inter alia that the debate on the Second Reading of a Bill may not commence before at least three working days have elapsed since the committee’s report was tabled, be suspended for the purposes of conducting the Second Reading debates today on the National Land Transport Bill [B 51B – 2008] (National Assembly – sec 76), the Mineral and Petroleum Resources Royalty Bill [B 59 – 2008] (National Assembly – sec 77) and the Mineral and Petroleum Resources Royalty (Administration) Bill [B 60 – 2008] (National Assembly – sec 75).

Agreed to.


                       (Second Reading debate)

Mr M R BALOYI: Madam Speaker, the Bill that was presented before the committee basically was a technical amendment that dealt with the issues of the definition of a family, and we have agreed that the family should be defined not by ourselves, but by the sending state and they will therefore be able to communicate as to who are the members of the diplomat’s family that they have sent to us, and who are the members that must be accredited.

The second aspect that the Bill dealt with was the issue that related to the list that the Minister was required in the previous Act to publish in the Government Gazette, containing the names and the details of diplomats. That required that every year they should be published in the Government Gazette but the reality of the situation was that, by the time the Government Gazette was published, already in fact it was outdated because there would have been changes in the diplomats’ situation. We have agreed that the requirement for the publication of the list remains. However, that list will now be maintained on the website of the Department of Foreign Affairs, which must be updated on a continuous basis so that it can be as up to date as possible.

The second aspect that we have dealt with in this Bill and agreed to as the committee is the fact that there is no requirement that the director- general can only issue a certificate to clarify the status of a diplomat when the matter reaches court. He could actually be asked to do that and provide that certificate long before the matter reaches court. However, it is the court that could make the final determination as to whether the certificate is sufficient to prove that the diplomat enjoys certain immunities. Those are the basic three aspects that we were dealing with in the Bill, and we want to suggest that the House should adopt and pass the Bill. Thank you.

There was no debate.

Bill read a second time.

                        NATIONAL ENERGY BILL

                       (Second Reading debate)

The MINISTER OF MINERALS AND ENERGY: Thank you very much, Madam Speaker. Hon members, one of the greatest challenges of time is the issue of energy and energy security. These are so vital that most countries, including those in the developed North have elevated them to the level where they are regarded as a threat to national security, a threat to our planet and a threat to our economy. We are part of the global community and therefore we cannot avoid these biggest challenges of our generation. Without the energy sources, the very many and unprecedented quarters of postapartheid economic growth would have been but a mirage. We are facing a moment in history in which, as Barak Obama puts it: “The consequences of our inaction are so dangerous.” We must act now and act boldly and imaginatively to safeguard our country’s energy security.

One commentator recently said news reports flashing on computer screens these days seem increasingly to be related to the subject of energy. But what do they signify? They signify the extent to which energy has occupied a central focus in the development of global economies. Milan Kundera spoke about the struggle of memory against forgetting. Kundera may have been referring to a different era and a different context. We however do not have the luxury of forgetting the events of December of 2005 when our country experienced fuel shortages. A study we conducted in 2006 estimated that, should we experience total fuel supply disruptions, our economy would lose R1 billion a day. That was according to the 2005 prices. It will be a dereliction of our constitutional duty and an abomination not to take measures to prevent that possibility.

Accordingly, the memory of the wanton disruption which was caused by the recent electricity emergency is still fresh in our minds. This emergency disrupted all sectors of our economy and caused inconvenience never experienced before in the history of our country.

We are therefore presenting this Bill in order to ensure that we have the means to do proper planning not only for the supply of energy but also for the demand of that energy. In presenting this Bill, we would like to pay tribute to energy pioneers like Comrade Prakashnee Govender of the Congress of South African Trade Unions and comrade of our Fred Gono respectively of the National Union of Mineworkers and the entire leadership of these two organisations as well as National Economic Development and Labour Council for their guidance and activism during the preparation of this Bill.

The Bill makes provision for the tools that will enable us better to explain and predict demand. We need adequately to prepare for the periods when unexpected emergencies happen. In fact, we need to give practical expression to the dictum: In victory planned for defeat. This Bill ensures that we secure the supply of both energy carriers and feedstock. It contains sufficient instruments to prevent the possibility of what happened in January this year when all of a sudden we ran out of coal for local electricity generation whilst we were in the business, as usual, of exporting coal.

Madam Speaker, coming out of the unfortunate events of the supply of energy in 2005-06, Cabinet approved two energy security master plans in the latter part of 2007. One of the plans focused on electricity and the other on liquid fuels and energy security. These plans were developed in order to put in place a holistic strategy or plan for the energy sector in order not only for the short-term disruptions that were being faced by the country at the time but also to ensure the security of supply in the medium to long term. The effective implementation of energy security plans necessitated the need for a legal framework which would adequately empower us to ensure the unqualified implementation of all energy security aspects as envisaged in these master plans.

Madam Speaker, with this Bill we aim to ensure that diverse energy resources are available in sustainable quantities and at affordable prices to the South African economy in support of economic growth and poverty alleviation, taking into account environmental management requirements and interaction amongst economic sectors. It is for this reason that we are making provision for data and information related to energy demand to supply and generation mandatory by those who already posses it. We will also use this data to provide for energy modelling and planning. This will allow, amongst others, us to be able to conduct analysis which will assist us in promoting a sustainable and viable increase in the generation and consumption of renewable energies. We recognise that in order to deliver on our mandate, we need skilled and dedicated personnel. We also acknowledge that there is a dearth of skills in the key areas which require them. Further, to compound the problem, we are also competing with the private sector for these skills. It is for this reason that we are proposing the establishment of an institution which will be responsible for the promotion and implementation of energy efficient innovations and technologies, focusing not only on efficient consumption but also on efficient generation of energy.

This institute will also be responsible for energy research and development. The Bill enjoins us to make a concerted effort to ensure continued uninterruptible supply of energy. We will do this firstly by putting in place measures for the holding of strategic or contingency energy feedstocks and energy carriers at a national level and secondly by putting in place measures to ensure adequate investment in energy infrastructure as well as the maintenance thereof.

Madam Speaker, energy is somewhat of a dangerous commodity. This Bill establishes measures to minimise the negative impact that energy carriers may cause to health and the environment, as well as to address the safety aspect thereof while recognising the role played by other government departments in these areas. Members of this House understand the pain that is inflicted on our communities who, because of circumstances beyond their control, continue to use unsafe and unhealthy fuels. Whilst we are working towards finding a lasting solution to this problem, we have to work as a team to address the problems caused by the use of paraffin, coal and other traditional energy carriers. We are responding through this Bill to the outcry of all key industry stakeholders on the availability and in some instances the paucity of data and information used by state-owned entities like the Electricity Supply Commissioner in deciding whether special rates should be effected with respect to certain customers.

There have also been requests for the publishing of energy data that would be used to conduct analysis when reviewing energy demand and supply for previous years as well as to cater for future projections of such energy demand and supply. We have tried to balance the interests of those who need to provide data and information with those who need to access the data. Hon members, I put the Bill and I request that the Bill be adopted. I thank you.

Adv H C SCHMIDT: Madam Speaker, in the light of the general lack of energy supply predicted for the future, in particular the so-called Eskom crisis experienced since 09 January 2008 this year, the inept handling of the situation by government and Eskom of the electricity crisis, as well as the fuel crisis we experienced in 2006, it is clear that a very compelling reason exists for the existence of legislation to regulate the way in which energy affairs are being conducted. Concerns relating to the exercise of powers - or rather a lack thereof - in determining the minimum level of energy stocks have emerged, following the two crises and I venture to say that another crisis is still awaiting us. I say this because, as pointed out in the Budget speech earlier this year, concerns and discussions, of which the hon Minister is aware, have already raised the possibility of a fuel crisis regarding the 2010 Soccer World Cup. In fact, due to the current lack of capacity relating to oil refining and an apparent lack of international oil companies making further investments in the oil industry in terms of oil refining capacity in South Africa, we have resorted to importing fuel in its refined form in addition to our current oil refining capacity. We know the discussions and planning regarding the future construction of possible oil refining capacity by PetroSA and Sasol in the market. But we are concerned about the timeframe for the implementation of such projects in light of our current refining shortage.

The disappointing failure and embarrassment relating to Eskom is well known, so too are the reasons therefor. As such, government’s attempts, as sole shareholder of Eskom, need to increase in terms of making Eskom the reputable institution it was before. The latest downgrading of Eskom’s credit rating is in itself worrying as it has a negative impact on the cost of borrowing by Eskom and therefore on the price the consumer is expected to pay for electricity.

Our views and ways of solving the electricity crisis are well known and contained in a number of discussion documents which have been presented to the hon President. The most important issue would be the restructuring of the electricity industry to allow more room for independent power providers, and coal generation by large companies to provide electricity to the national grid. This issue requires more immediate and serious attention. The National Energy Bill, though the product of many years of consultation, is unfortunately still subject to improvement. One important last-minute change by the committee was the deletion of one of the most important functions of the South African National Development Institute, or rather Sanedi. It is not clear why, when the reasons, motivations and justification for the development of renewable energy are known to everyone, which would include the Kyoto Protocol, climate warming and a generally accepted notion for the development of technology in the direction of renewable energy, that this particular function was removed as one of the three main functions of Sanedi. This is particularly so when energy efficiency and energy development in general, excluding oversight are nuclear energy, has been included as its main functions.

The shortsighted response to the deletion of this function, with particular reference thereto on the basis that the department will be in a better position to deal with it, is not credible due to the historic lack of interest it has received from the department. An important issue is the responsibility ascribed to the Minister that an integrated energy plan be gazetted on an annual basis. Hopefully this will ensure continued and realistic evaluation of the real position regarding the status of the availability of different sources of energy as a whole and so ensure timeous response to prevent potential crises even before they arise. It is therefore submitted that although the Bill can be supported in terms of its objective and the formation of Sanedi, it unfortunately does not address a fundamental opportunity to ensure that renewable energy receives the necessary attention. I thank you.

Mr E N N NGCOBO: Madam Speaker, hon members, hon Ministers, Deputy Ministers present, the House at large and our guests of Parliament, first of all, before I begin my speech, I would like to make a short comment on the amendment that was seen on today’s Order Paper. It was just a matter that we felt, as a committee, that it was ambiguous for an Act to prescribe how the department should appoint its CEO. So, we felt that the following clause, which was general, was sufficient to address that. So, that is why we decided, all of us, to agree that we must put away the succession from the SA National Research Institute, Saneri, to the SA National Research Development Institute, Sanedi. Otherwise, thank you very much for accepting our amendment.

Please allow me to start my speech by first declaring that the ANC supports the National Energy Bill. Today, as I stand before this honourable House, it is 14 years after the advent of our democracy in 1994, but it is also 10 years after the launch of our country’s White Paper on Energy Policy in

  1. No doubt that this important White Paper on Energy Policy of our country, which acted as a central document in mapping out our energy needs in the last 10 years, requires a review and a renewal since some assumptions underpinning it are no longer valid at present and beyond. Hence the development of the current National Energy Bill, the Bill to take the country to the distant future in so far as the security of energy supply and its needs are concerned.

In a nutshell, this Bill seeks to address all energy security issues in such a manner as to become the energy security framework to all aspects related to energy utilisation and optimisation. It further seeks to achieve this objective by smoothly interfacing with all other related pieces of legislation that our Parliament has so far instituted on behalf of our nation. It must be emphasised at this juncture that the current Bill does not seek to replace any of the existing institutions, but to strengthen them.

The approach adopted in the development of this Bill has been, amongst other things, to establish an environment conducive to energy research on a wider scale; strengthening of energy efficiency options in our everyday life activities; as well as to collect as much data as the Department of Minerals and Energy as we possibly can, in order to correctly model different energy scenarios in various regions of our country, and at various times of our economic development from the present into the future. This environment has been achieved by developing an energy entity which is going to be known as the South African National Energy Development Institute, Sanedi.

Under Sanedi we, as the ANC, foresee a rigorous engagement with and modelling of all our energy systems and planning of an efficient and integrated energy system that will guide our country, the region and the continent into becoming an important role-player in a global context both economically and technologically. Why are we advocating this and why have we chosen this path and option?

Expenditure on energy account for approximately 7% to 8% of the GDP worldwide. In addition, annual global investments in energy supply technologies run into billions of dollars, whilst trillions of dollars are spent on products that consume energy. Furthermore, the global energy system is expected to expand substantially during the next decades, with the bulk of these increases coming from the developing world, that our country forms part of.

In future, it is the desire of our ANC-led government to follow an aggressive and radical policy on renewable energy technology. I was recently in China, where I learnt that China is vigorously pursuing a green technology revolution in renewable energy to the point where it is beginning to compete with Germany, which has always been known to be a leader in renewable energy technology. The recent report from the climate group says that despite China’s coal-dependent economy, it has become a world leader now in the manufacture of solar photovoltaic technology. Its biggest solar companies have a combined value of over $15 billion and around 820 megawatts of solar photovoltaic were produced in China in the year 2007. China already leads the world in terms of installed renewable capacity at 152 gigawatts. Next year China will become the world leader in exports of wind turbines, and it has become highly competitive in solar water heaters, energy efficient home appliances and rechargeable batteries.

Surprised by this economic usage of energy and in particular electricity in Beijing during my recent visit, I was further impressed when I was made to understand that China’s energy programme is so radical that each month they are engaged in a built programme equivalent to that proposed currently by Eskom over a period of five years. If properly managed and developed, Sanedi, as proposed in this National Energy Bill, can make significant strides as a potential competitor with China’s green revolution. We therefore feel that if Sanedi incorporates also the renewable energy and adopts what we call “distributed energy resources” in order to improve its efficiency energy activities, we will be able to model energy today and beyond. Thank you. [Applause.]

Mr E J LUCAS: Madam Speaker, in case anybody has forgotten, the recent energy crisis, which crippled much of South Africa, was a timely reminder of the crucial role that energy plays in the functioning of our lives. We must do everything in our power to prevent a repeat of the energy crisis, and ensure a stable and reliable energy supply if we are to achieve our growth and development objectives.

It is for this reason that legislation of this nature is so vital. I believe that, when enacted, the Bill will close many gaps that still exist with regard to policy issues and go a long way towards solving some of our energy problems. And this will hopefully restore some confidence that people have lost as a result of the energy crisis, and assure the investors that we are correcting our mistakes and addressing the shortcomings.

An area of grave concern for me is the unaffordable price that people are paying in rural areas. They seem to be paying for electricity but receive inefficient service in comparison to their urban counterparts. While I do understand that many of these areas are off the grid and the costs are therefore much higher, when we consider the low incomes that many people in these areas earn, the steep prices that they pay for energy pushes them even deeper into depths of poverty, and makes it so much more difficult for them to escape. Rural development really is an important issue to government and this is one of many issues that need to be rectified. We, in the IFP, hope that this Bill has a positive impact in this regard.

There are many other areas of concern that I have regarding energy, including the need to explore the use of technology that will lessen the impact coal has on the environment, and with climate change and global warming being so significant, that is very important. I am glad to see that the SA National Energy Development Institute, which will be established, will have a renewable energy division. Unfortunately, this section has been left out of the Bill and I think, in future, instead of rushing through our deliberations, we should make sure that everything is included.

The exploration of renewable energy is important if we are to expand our energy mix and lessen our reliance on coal, as well as find unique renewable energy solutions that are tailored to South Africa and consider our special needs and problems. Finally, innovation and foresight are needed in the energy field if we are to reach our potential as a nation, and I hope that this Bill encourages such actions. The IFP supports the Bill.

Mr L W GREYLING: Madam Speaker, the ID believes that this Bill is long overdue. Energy planning in South Africa has been woefully inadequate, as demonstrated by the recent energy crisis. In addition, free reign has been given to Eskom unilaterally to make decisions regarding our energy future without any consideration being given to the most appropriate energy mix for South Africa.

It is now time that the Department of Minerals and Energy assumes its responsibility for energy planning and engages in proper participatory processes in designing our country’s future energy path.

The ID has also noted that renewable energy has been firmly placed within the ambit of the department and we hope that it finally gives renewable energy the attention and budget it deserves. India has an entire Ministry devoted to renewable energy and South Africa can’t afford to be left behind in this ever expanding industry. Renewable energy is the only energy source that can solve our energy crisis in the short term. If I had more time, I would explain to Minister Erwin, who obviously doesn’t get it. Thank you.

Mr H B CUPIDO: Madam Speaker, the aim of the National Energy Bill is to ensure that the number of diverse and sustainable energy resources are available at affordable prices to the South African economy in support of economic growth, which is urgently needed to alleviate poverty and to reach the target set for 2014. The Bill also addresses energy security in South Africa.

The recent spate of power outages and the huge increase in tariffs do not do our economy any good. The need for an uninterrupted supply of energy to sustain the economy is nonnegotiable and therefore a proactive programme to prevent the abuse and theft of electricity is urgently needed.

The Bill makes provision for the Minister of Minerals and Energy to keep to an annual Integrated Energy Plan, through which issues relating to the supply and transformation, transport, storage and demand for energy will be accounted for. This Integrated Energy Plan is to be gazetted annually.

A concern that the ACDP shares with the Centre for Applied Legal Studies and Earthlife Africa is at the cost of electricity; especially for the poor and the needy it is becoming unaffordable. They also cited:

The Bill does empower the Minister to implement programmes that may realise some progress of affordable access, continued electrification and the safety of electricity substitutes such as coal and paraffin. However, the Bill should recognise that these programmes are not mere political policy, but reflects entrenched constitutional rights to adequate housing and environmental protection.

Since the Bill seeks to entrench renewable energy, the ACDP believes that clear, measurable targets for the percentage of South African energy obtained by renewable sources should be set. The ACDP will support the Bill.

Ms S RAJBALLY: Chairperson, at a period when the nation has been facing an energy crisis, this Bill offers some stability to the sector. The department has undergone great strains, with this dilemma and the public has not been supportive. I would think that the clarity and the effects of this Bill should certainly enhance the management and co-ordination of Minerals and Energy and rebuild community confidence in the efficiency and effectiveness of the department. The MF, from the provision of crucial data, is pleased that this Bill serves to shift voluntary data to a mandatory collection of energy data. We are especially pleased that this Bill addresses the negative implications energy carriers may have on one’s health and environment. The MF supports the National Energy Bill. Thank you.

Mrs M D SEADIMO: Modulasetulo, Maloko a Palamente, Molekgotla-Khuduthamaga wa Dimenerale le Maatla … [Chairperson, Members of Parliament, Minister of Minerals and Energy] … it is imperative to acknowledge that the consistent growth of development of the South African economy remains fragile in the absence of an integrated energy security legislative tool. We must also acknowledge that as a progressive South Africa, our development agenda would be hamstrung if the state did not provide a blueprint for energy security.

It is within this context that the significance of the National Energy Bill should be seen as part of the global community and that it is being affected by external economic shocks. We should develop our own institutional mechanism to negate the worst scenario possible. The National Energy Bill provides pre-emptive tools as it addresses the following: Energy research, diversity of energy supply, energy infrastructure planning, climate change mitigation and adaptation strategies, the development of local energy production and setting of standards and specifications.

In my engagement with the content of the Bill, I would confine myself to Chapter 2, which deals with energy supply, optimisation and utilisation. In terms of the provision of data and access to data sources, the Bill empowers the Minister to establish mechanisms for the provision of any data and information that is required for purposes of energy modelling and planning. It also allows the Minister to establish mechanisms to collect, collate and analyse energy data and information, and use energy statistics and information.

In terms of transparency and accountability, the Minister must annually publish an analysis that reviews energy demand and supply of the previous year. The same analysis would include the forecasting of energy demand and supply for no less that 20 years and it must provide possible future energy scenarios.

Furthermore, the Bill provides that the Minister must publish models used for data and information analysis. It also provides for the Minister to consult with the Ministers of Trade and Industry, Labour, and Environmental Affairs and Tourism to adopt measures to deal with the negative safety, health and environmental impacts of energy carriers.

In concretising the Reconstruction and Development Programme’s proclamation on energy sources, the Bill provides for the Minister to adopt measures that provide for universal access to appropriate forms of energy or energy carriers for all South Africans at affordable prices. As the ANC-led government, we are resolute in achieving social justice and improving the quality of life of the masses of our people, hence we maintain that the poor households should receive free basic electricity. This piece of legislation provides for this policy position.

In the advancement of the developmental agenda, it is important to have a strong state with the capacity to execute its strategic developmental tasks. Strengthening the state by retaining particular strategic tasks would go a long way in laying the foundations for a truly developmental state that would lead and manage strategic areas for sustained economic development.

Ke a leboga. Re le ANC, ra re ga re tshikinyege. Re fetisa Molaotlhomo o gore batho ba rona ba bone botshelo jo bo botoka. [Thank you. We, the ANC are not to be shaken; we are passing this Bill so that our people can have a better life.]

The MINISTER OF MINERALS AND ENERGY: Chairperson, I really want to convey my appreciation for the support that I have received, overwhelmingly, from all members and all parties. I also just want to say that I agree with the Chairperson that we need to review the White Paper on Energy. Indeed it’s overdue. It has to keep up with the developments of our economy, so I support that.

I want to make an earnest appeal to the portfolio committee to initiate a debate on renewable energy sources. I think we are talking past each other because there is a lot that is already happening in the department. Three of the problems that were stalling the process concerning renewable energy have been addressed. In terms of the issue of funding, the Minister of Finance has given us R2 billion which we will divide between renewable energy and energy efficiency. That matter has been addressed.

There was no strategy to drive the programme but now we have a strategy in place as we speak. There has also been research on the potential of renewable energy sources in the country and which sources have more potential. That report is in place; it is ready. So, I’m saying there is a basis and there is information that the department needs to share with this House. We will only be able to do that when we have enough time and when there is a focus on renewable energy. I’m really asking that we should have that debate.

We have already established an office, the Renewable Energy Financing Subsidy Office. It has been operating for the past two years and we are working with the Treasury on that one. Already here in the Western Cape we are rolling out solar energy. We have already started doing that. We started – I can’t remember the name of the place now – but we are going to Khayelitsha next.

In terms of the wind farms, the Darling Wind Farm is operating and is giving us 50 megawatts of electricity. So, all of these things are happening but I cannot communicate everything within such a short space of time. I think that I owe this information to this House and I would really plead that we have such a debate. I nevertheless appreciate the support and we will be looking at all other matters that the members have asked us to look at. Thank you very much, Chairperson.

Debate concluded.

Mr E N N NGCOBO: Chairperson, I put the following amendment to the Bill, as printed on the Order Paper (p 432) namely:

                              CLAUSE 13

       1. On page 9, from line 48, to omit paragraph (a).

Amendment agreed to.

Bill, as amended, read a second time.

                          DEVELOPMENT BILL

                       (Second Reading debate) The MINISTER OF SCIENCE AND TECHNOLOGY: Chairperson, hon members, the Intellectual Property Rights from Publicly Financed Research and Development Bill is an important development in our country’s ongoing efforts to address the challenges presented by what we call “the innovation chasm”. This chasm refers to the apparent gap between the local knowledge base and the extent to which this knowledge is effectively translated into commercialisable products and services within our own borders.

Over the past 15 years, our universities and science councils filed fewer than 5% of all patent applications made by South Africans. Further analysis shows that a number of patents emanating from South African institutions have since been sold to foreign companies and have typically been commercialised offshore, with very little benefit accruing to the people of our country. Our own assessment of this has revealed that such intellectual property losses are mostly due to a lack of clarity on how intellectual property, specifically that which is developed with public funds, should be managed and commercialised. Given this background, the 2007 Organisation for Economic Co-operation and Development Review of South Africa’s National System of Innovation has reiterated the need for South Africa to regulate the manner in which intellectual property emanating from public funds may be disposed of.

From the outset, it is important that we recognise intellectual property as an instrument for economic growth and improvement of the quality of life of all our citizens. It is therefore essential that we not only encourage the development of South African intellectual property by providing public funding, but that we also manage such intellectual property to the full benefit of all the people of the Republic.

Hon members, as you will recall, in the 2002 National Research and Development Strategy, we proposed that South Africa’s approach to intellectual property management should: Draw on enabling frameworks of global best practice, not place South African institutions at a disadvantage relative to international practice; create a context for benefit sharing by investors and innovators; require an obligation to protect intellectual property emanating from publicly financed research and development; establish the right of the state to acquire the right to use such intellectual property in the public interest; establish an acceptable framework for the disposal of intellectual property rights, including the conditions under which the rights can be acquired internationally; and provide for the establishment of an intellectual property fund that will fund patenting costs where this is in the national interest.

I am therefore honoured to present to you today the Intellectual Property Rights Bill which has all of these attributes and will not only provide an enabling environment for intellectual property creation, protection and management, but will also support the commercialisation of intellectual property by providing greater clarity on the ownership of intellectual property generated through publicly financed research.

In fact, it is the specific objective of the legislation that intellectual property that emanates from publicly financed research and development should be commercialised for the benefit of our people, and should be available to South Africans and protected from appropriation. Where this condition is not met, the legislation provides for a mechanism for the state to address this.

Through the proposed intellectual property rights legislation, we hope to provide a framework for the establishment of capacity to ensure that South African institutions are better able to identify, protect and commercialise intellectual property arising from research conducted at those institutions. These interventions will be supported and guided by the National Intellectual Property Management Office, which is to be established in order to implement the objectives of this legislation.

Hon members, we have travelled a long and fruitful road towards this end. During 2006, the policy framework on intellectual property rights from publicly financed research was developed through a rigorous consultative process with all role-players. The aim was to meet the obvious need for a proper policy framework, which is an enabling legislative environment for the effective management of intellectual property that emanates from publicly financed research. The first draft of the Bill, which was approved for public consultation by Cabinet in May 2007, was informed by this policy framework.

Following the publication of the first draft of the Bill in June 2007, extensive work has gone into reviewing the numerous public comments received, revising the Bill and testing its various provisions against international best practice and the attributes set out in the national research and development strategy.

An international review panel, comprising of experts from South Africa, India, Canada and the USA, provided further inputs that resulted in the refinement of the Bill in line with global experiences and best practices.

Then, in June 2008, Cabinet approved the amended Bill. On 29 and 30 July 2008, the Portfolio Committee on Science and Technology, in conjunction with the Select Committee on Education and Recreation, held its first round of public hearings on the Intellectual Property Rights Bill. I understand the rich and rigorous engagements with role-players from industry, universities and science councils, during these hearings, further demonstrated the urgent need for legislation of this nature in South Africa. The hearings also revealed that, over the years, South Africa has missed out on golden opportunities to create new industries that could have created sustainable jobs from the commercialisation of intellectual property emanating from publicly financed research and development, because some of our researchers and scientists acted selfishly and allowed valuable intellectual property to leave the country.

Hon members, global competitiveness today is ultimately determined by the extent to which knowledge generation is harnessed as part of a concerted national effort for further development and economic growth.

Our ability to create and subsequently derive enduring benefit from our national knowledge base is dependent on the extent to which we can effectively translate our publicly funded research and development into innovative products and services that can be commercialised for the benefit of all South Africans. This will require of us to support our knowledge generating institutions to enable them to develop sufficient capacity for the effective identification, protection and commercialisation of the knowledge generated by the researchers through public funding.

It is this context that the Intellectual Property Rights Bill was drafted. The Bill is intended to support higher education and other research institutions by clarifying the roles and responsibilities of various players in respect of the management of publicly financed intellectual property.

Furthermore, it is the specific intent of the Bill to ensure that the state has a right to use intellectual property emanating from publicly financed research and development in the public interest, including health care. To entrench the rights of the state in this regard, appropriate walk-in rights have been included in the Bill for noncommercialisation of intellectual property and, where appropriate, grant third-party rights to commercialise the intellectual property in the public interest. Hon members, Chairperson, I commend this Bill to the House.

Mrs L MALONEY: Chairperson, hon members, today we are here to discuss a Bill that was conceived by the Department of Science and Technology some 15 years ago.

This Bill is called, in the short title of the Bill, the Intellectual Property Rights from Publicly Financed Research and Development Bill of

  1. This Bill seeks to provide for the effective utilisation of intellectual property.

A child who was conceived 15 years ago would be on the verge of completing his/her Grade 9 today. This Bill is a new-born baby that is delivered today. The department underwent strenuous labour pains to make sure that this new-born baby is nurtured and ready to be implemented by the department. In comparing this Bill to a 15-year-old child, I was not complaining. I just wanted to elaborate on the efforts made by the department to compile such an accurate piece of legislation.

This was a complicated, but a straightforward Bill. The public hearings held by the portfolio committee assisted a great deal to understand the content of the Bill in its absolute simplicity.

I, therefore, want to thank those companies and institutions who participated in the public hearings. Without your contributions, relevant information would have been excluded from this Bill. Your quest for this Bill to become an Act of Parliament helped us to realise that you are not content just to be spectators, but rather wanted to be participants in assisting our government to grow the economy.

Since this Bill has undergone various stages, like consultation, benchmarking and learning about best practice from other countries, I have no doubt in my mind that the object of this Bill will be achieved without any hindrance.

The then government did not have adequate protection in place to protect intellectual property rights that were publicly financed. That was a loophole that led to the commercialisation and offshore selling of South African research information without any meaningful benefit to the South African population. This Bill will make sure that this will never happen again. The big question we have to ask is: How will ordinary people of South Africa benefit from this piece of legislation?

We were assured during the public hearings that this Bill will create jobs for the poor and also lead to true commercialisation, tax will be generated and that will mean that those taxes will be deposited into the tax and fiscal coffers. And also, it will mean that social development programmes will be achieved through this piece of legislation.

This Act also creates a space for broad-based black economic empowerment. This means that it is not an exception to other pieces of legislation where there is a call for each department to make sure that this policy of black economic empowerment is entrenched in order for those previously disadvantaged people to participate in the country’s economy.

Another question asked by us as a portfolio committee is: How will the government achieve the objects of the Bill? By making sure that it incentivises intellectual property creators as people, which would make them more innovative in their research work. And, more importantly, the effective monitoring of the implementation of this Bill will make sure that the government achieves the objectives of the Bill.

What will the government receive in return? The government will make sure that it provides for preferential exclusives. Exclusive licences would be given to those intellectual creators who seek to use intellectual property in ways that provide optimal benefit to the economy and quality of life for the people of the Republic.

Terms of reference on how to go about this knowledge enrichment are clearly stipulated in the Bill. My learned colleagues will elaborate on this.

Although our institutions of higher learning have been doing research for quite some time, this Bill also encourages them to produce more innovative research skills, and in return their institutions will get more respect and also increase their integrity.

Knowledge is power. We, therefore, should be at the forefront of advocating knowledge to our researchers so that it would benefit the country and realise the betterment of our people. Amandla kuloo ndawo. [We support this view.]

Before my time ends, I want to support this Bill on behalf of all women in the Department of Science and Technology, in particular, Dr Mehlomakhulu, the deputy-director of the department, who is a woman by birth and a leader in her own right. [Time expired.] [Applause.]

Mr J P I BLANCHÉ: Chairperson, for a moment I thought you were a new invention.

The Bill was initiated to address the need for the creation of a proper framework and enabling legislation for the more effective management of intellectual property arising from publicly financed research. This Bill opens doors for many South African researchers. I think it is most welcome.

The Department of Science and Technology advised us that there are significant leakages of intellectual property into overseas jurisdictions, and that government is unable to exercise any walk-in rights in the absence of this legislation. Therefore, I think we have now closed that door.

This, and cases of South African commercialised products which appeared under foreign patent registration on the international markets, necessitated the legislation and the DA will support the Bill. After all, Rooibos is as much South Africa’s own as Sasol, and we must ensure that locally developed products are protected in this way, especially if they are researched by our own universities and institutions.

The Bill also brings South Africa’s research and development institutions to the international arena where our researchers, the institutions and society stand to benefit from its labour. It will protect the rights of the inventors and the research institutions, and reward the public who fund these institutions through their taxes. After registering their patents, the institutions and the inventors stand to benefit financially for at least 40 years.

Against this backdrop, the thrust of the proposed legislation is to provide for more effective utilisation of intellectual property derived from these institutions. The Bill aims to establish the National Intellectual Property Management Office and the South African Intellectual Property Fund. In addition, the Bill provides for the establishment of offices of technology transfer at these institutions. All these are most welcome, Chair.

The Bill further makes provision for intellectual property development in this way to be utilised and commercialised for the benefit of society, as the Minister has explained, and ensures that human ingenuity and creativity are acknowledged and rewarded. Certainly, we need that on the African continent.

Furthermore, it will ensure that people in the Republic of South Africa, particularly small enterprises, have preferential access to opportunities arising from the production of knowledge from publicly financed research and development.

Finally, sir, the Bill will ensure that the researchers may publish their findings for the public good and also that the state may use the results of the research in the Republic of South Africa. In a globally competitive world it is vital that South Africa establishes the requisite institutions and legislation to ensure that the economic and social benefits that arise from our research are captured within the country.

Many nations have established legislation from the regulatory frameworks to ensure better practice and returns from intellectual property. Developing countries and emerging economies have taken action since the late 1990s. More recently, Brazil, South Korea and Japan, for instance, have modified their policies and approach. One only needs to look at countries like Taiwan and Singapore to see how such developments have improved their economies and their welfare.

These developments are intended to provide a basis for higher levels of patenting to result from publicly financed research for commercialisation or regulated use. The Intellectual Property Rights from the Publicly Financed Research and Development Bill are well-placed to meet this obligation and to build on South Africa’s illustrious innovative record. I thank you.

Dr R RABINOWITZ: Chairperson, I, without question and with pride, represent women in science in supporting this Bill on behalf of the IFP.

A winning country requires vibrant research and development. This Bill is another rung in the ladder that Science and Technology is building to lift South Africa onto a launch pad from which we can be projected into a successful orbit.

Intellectual property is undoubtedly one of most valuable mechanisms for advancing civilisation. However, there is always a conflict. On the one hand there is a person who creates a novel concept, benefiting therefrom; on the other there is the need for breakthrough ideas that will benefit society, being freely available to all. The human genome is an example of this. Knowledge held by our traditional leaders is another classic example. It is exploited by foreign drug companies who buy knowledge from individuals and commercialise it. Our traditional healers keep their knowledge secret because they don’t see financial benefit through sharing it. As a result, valuable ideas are not commercialised.

To create a structure that is fair and embraces community knowledge, government funding, private funding, university initiatives, and individual creators requires a tricky balancing act. This Bill seeks to walk that tightrope. It is a new development and, understandably, some are anxious about the changes.

Universities are concerned that it will add a financial burden to them and to the Department of Science and Technology; also that frivolous patents will be filed and attempts to commercialise these will fail, with huge wastage of money. Small businesses are concerned that they must navigate an ever expanding bureaucracy. Researchers are concerned that international donors sometimes insist that there should be no personal commercial benefit from their funding. The private sector does not want to be left on its own to fund research, lodge intellectual property, and commercialise research.

Many of the mechanisms incorporated are based on systems in countries where research and development are well-funded and its agencies efficient. But, this initiative is important. If it is well-funded, universities are supported, and the patent office, the National Intellectual Property Management Office, Nipmo, does not get buried in piles of papers, it will help us to fly. Perhaps, in future, it may need fine-tuning, but we support the Bill. Thank you.

Mr S N SWART: Chairperson, the question can correctly be asked: What does a lawyer know about science and technology? But, we as the ACDP will support this Bill as it seeks to achieve the more efficient utilisation of intellectual property, emanating from public-funded research and development institutions, as the title says.

It does this through the National Intellectual Property Management Office and the Intellectual Property Fund and allows for offices of technology transfer at state-funded institutions which are all very impressive and very necessary as it balances commercialisation with innovation, research and development and also determines the scope of rights of intellectual property creators to determine the nature, extent and principles according to which benefits can be shared between the intellectual property creators, the research institutions to which they are affiliated and the organs providing the funders.

During our research, if you excuse the pun, on this Bill, we found the report on the state of patenting by Mr Sibanda, who is a senior patent lawyer of the Innovation Fund, particularly informative. His report evaluated South Africa’s performance in terms of intellectual property and highlighted the low rate of patenting in the public sphere. We, as the ACDP, trust that the lessons learnt in the private sector will, where it is applicable, be applied in the public sector to increase the rate of patenting as recommended in his report which, I understand, was well- received by the portfolio committee.

We, as the ACDP, are also pleased that the leakage of our patents overseas and that loss have been addressed in the Bill. Therefore, we, as the ACDP, are pleased to support this Bill. Thank you very much.

Nk B T NGCOBO: Sihlalo namalungu ahloniphekileyo, nabamele uMnyango Wezesayensi Nezobuchwepheshe, loMthetho ufike ngesikhathi esikahle lapho sigubha usuku lwamakhosikazi kuyo yonke le nyanga ka-Agasti, futhi uMnyango wenze ukuthi mhla zi-8 Agasti uhlomulise abesifazane ababambe iqhaza elikhulu kwezesayensi nezobuchwepheshe kanti kanjalo nePhalamende belibambe iPhalamende Labesifazane. Siyawuncoma-ke lo Mthetho ofike ngesikhathi esinjalo.

Okwesibili okudala ukuthi siwuncome lo Mthetho ukuthi kungekudala besikhuluma nge-TIA ekhuluma ngokukhuphula izinga lomnotho lapha eNingizimu Afrika. Njengoba-ke sesiqhamuka nalo Mthetho, kusho ukuthi izinga lomnotho lizokhuphuka hhayi kubantu abaphakeme kuphela kodwa nalabo abajwayekile bazotomula lapha kulo Mthetho. Kubalulekile-ke ukuthi uma lo Mthetho usuyoqeda unyaka kube sekwakhiwe amaziko afanele ukuthi abhekelele ukuthi abantu abenza ucwaningo ngemali evela embusweni balwenza ngendlela ezoba nembuyiselo embusweni.

Siyazi ukuthi umthetho udinga imali, ucwaningo ludinga imali ngokunjalo ingqondo nobucopho budinga imali, ngakho uMnyango ubeke imali engangezigidi ezi-R90 ukubhekelela izinto eziningi, ikakhulukazi ukwakha la maziko okade kukhulunywa ngawo … (Translation of isiZulu paragraphs follows.)

[Ms B T NGCOBO: Chairperson, hon members and the officials of the Department of Science and Technology, I want to mention that this Bill came at the right time as we are celebrating Women’s Month, which is August. Interestingly this department had a function on 8 August 2008 to award women who played a vital role in science and technology and Parliament also has just hosted the Women’s Parliament. We appreciate the timing of this Bill.

Our second reason for supporting this Bill is that not so long ago we were talking about the Technology Innovation Agency, TIA, which is aimed at accelerating economic growth in South Africa. The passing of this Bill will further accelerate economic growth. This growth will not only be for a selected few or the rich, but ordinary people will also benefit from this Bill. It would therefore be important that within a year of the coming into effect of the Act, there are proper structures in place to monitor the people who are doing research through state funding and also to check whether they are conducting it in a way that will benefit the state.

We know that for the Bill to work, it needs money. The research too, needs money as well as the intellect and brain. And owing to all this, the department has put aside the sum of R90 million to fund major projects, such as the building of …]

… the office of the transfer of technology and the National Intellectual Property Management Office, Nipmo.

Kuzovulwa amahhovisi ezobuchwepheshe esingawabiza ngokuthi ohluzingqondo. Kuwona lawo mahhovisi kuzobe kubhekisiswa ucwaningo olwenziwa ngabantu. Kuzobe kukhona ongoti abazobe bebheke yonke imikhakha ngoba bazobe befundiseke ngakho konke okuqondene nalo Mthethosivivinywa, ngakho-ke bazohluza ingqondo ngokuthi babhekelele ukuthi lolu cwaningo olwenziwe abantu besizwa amaziko abasebenza kuwo ngabe luzowuhlomulisa yini umbuso. Lokhu kuyophendula imibuzo efana nethi ngabe ukwenziwa kocwaningo kuzobasiza yini abantu? Ngabe ikhona yini indlela yokuthi ilungelo lobunnikazi bocwaningo livikeleke? Okokugcina, bazokwazi yini ukuthi ulwazi asebelutholile lukwazi ukuheha amazwe angaphandle ukuze kukhule umnotho uhlume ngoba phela sikhuluma ngokuhluma komnotho?

Kukhona-ke futhi leli hhovisi elibizwa nge-Nipmo elizobe lingaphansi koMnyango Wezesayensi Nezobuchwepheshe, lapho uNgqongqoshe ezokwenza ngokubona ngokwakhe ukuthi ajube noma yimuphi omunye uMnyango noma iziko noma olunye uhlaka oluzokwazi ukusebenza ngendlela okufanele lo Mthethosivivinywa ozofuna ukuthi lusebenze ngayo.

I-Nipmo-ke izobheka ngeso lokhozi ukubhekelela zonke lezi zinto uMthetho ofuna ukuthi zibhekeleleke. Okunye nje kwazo ukuthi konke lokhu okuvela ehhovisi lokwedlulisa ubuchwepheshe sekufika lapha kuleli hhovisi ngoba leli hhovisi sekungumphelandaba. Yonke into yenzeka kuleli hhovisi.

Kuleli hhovisi kuyavikeleka futhi kuyadayiseka. Konke kwenzeka lapha kuleli hhovisi futhi uyakwazi ukuthi ubhekelele labo bantu abangabacwaningi behambisana nalabo akade bebasiza ekucwaningeni ebebekwenza. Leli hhovisi liyokwenza ukuthi babhekelwe ukuthi-ke lowo nalowo uthola ilungelo lobunikazi bocwaningo. Kuyoqinisekiswa futhi ukuthi ucwaningo lwakhe luyowuheha umhlaba futhi sizozuza nathi siyiNingizimu Afrika ngaleso simo. Nokho, lapho kuba khona abantu abangaphatheki kahle okufuneka ukuthi mhlawumbe kube khona ubulungiswa kuzosebenza … (Translation of isiZulu paragraphs follows.)

[Offices of technology transfer will be opened and they will be mind- openers. The research done by the people will be monitored by these offices. There will be experts who will be responsible for all the sections because they will be taught everything concerning this Bill. They will therefore monitor whether the research done by the people benefits the state. Questions such as whether the research conducted would benefit the state or not will be dealt with. It will also investigate whether such research will help the people. It will also look at the ways of protecting the rights of intellectual property. Lastly, these offices will determine if they are going to be able to use the information they have collected to attract foreign countries so as to grow the economy, because this is all about the economic growth.

There is also the National Intellectual Property Management Office, Nipmo office which will be established within the Department of Science and Technology. The Minister may assign its operation to any department, institution or any other structure which is involved in state-funded research and development that will correspond with this Bill’s requirements. The Nipmo will watch attentively to see to it that everything that this Bill provides is realised. One of these is that everything that comes from the office of technology transfer is protected and commercialised when it gets to Nipmo because this office is the last stop. Everything is done in this office.

Everything is done in this office and you will be able to deal with those people who are recipients, together with the intellectual property creators, in the research. They must be catered for in a way that each one of them obtains statutory protection of intellectual property; and also that their research will attract the attention of the world and that South Africa will benefit from that situation. Besides, justice will be done where the treatment of the recipients had adverse effects in terms of … ]

… the Promotion of Administration of Justice Act of 2000 … ukuze-ke abantu bavikeleke lapho bengavikelekanga khona. Yini le eyenza ukuthi sithi lo Mthethosivivinywa ufike ngesikhathi esikahle? Ufike ngesikhathi esikahle ngoba laba bantu abenza ucwaningo banikezwa ubunikazi, kwathi ulwazi ebebekade belucwaninga lwaheha umhlaba lwadayiseka ngakho-ke kufanele ukuthi bahlomule-ke ngokwenkece.

Sivumelene-ke siyikomidi noMnyango kanye nalabo futhi ababekhona ezithangamini zomphakathi. Sangcweka kakhulu nokho ngokuthi bakhokheleka kanjani nokuthi kungani kufanele bakhokhelwe lesi samba abakhokhelwa sona. Kodwa-ke sagcina sivumelene-ke ukuthi okungenani kufuneka bathole amaphesenti angama-20 emalini ezongena ekuqaleni ngaphandle uma uNgqongqoshe engase afise ukuthi imali ikhuphuke. Kusemandleni akhe-ke lokho ukuthi ikhuphuke okungenani-ke kumaphesenti angama-20.

Imali izolokhu ingena iminyaka impela nje iminyakana ethe ukuba miningana kuze kufike leso sikhathi isivumelwano esithi ayifike kuso. Imali elandelayo okungenani amaphesenti angama-30 iyotholwa yilabo abangabaqambi bocwaningo oludayisekile noluhehe amazwe.

Sekuyothi-ke ekugcineni i-Nipmo njengoba le mali ilokhu ingena isiyobona-ke ukuthi kufanele kukhule umnotho, kuqhubeke kwenziwe ucwaniningo, kube khona ongoti nezigagayi ezizokhulisa umnotho wethu. Ukuze lokho kwenzeke-ke, kufuneka enye yemali engenayo ifakwe kulolu cwaningo kuthi enye ikhuphule amazinga ala mahhovisi esesiwabalile, bese kuthi enye ivikele amalungelo obunikazi bom buso ukuze-ke umthetho ukwazi ukusisiza.

Ngesikhathi sisekomidini, abanye ozwakwethu besilisa bathe bona … (Translation of isiZulu paragraphs follows.)

[… so that people can be protected where they were not protected. Why do we say this Bill came at the right time? It came at the right time because these people who conduct research are granted ownership of intellectual property whilst the information they have been researching attract the world and is commercialised, therefore, they are entitled to be awarded with some revenues. We as a committee, the department and all those who were present in the public briefings agreed on many things. We also discussed in detail the ways these people are going to be paid and the reasons for paying them the stipulated amount. Thankfully, we finally agreed that they are entitled to at least about 20% of the revenues accruing to the institution for the first sum unless the Minister wishes to increase the amount. The Minister will therefore be empowered to increase the amount to exceed 20%.

The creators of intellectual property will be granted a specific portion for as long as revenues are derived from such intellectual property until the contract expires. In the following revenues at least 30% will be received by those who are the creators of intellectual property which attracted foreign countries and obtained commercialisation.

In the end Nipmo, as this money keeps on being generated, will see to it that the as economy grows, the research is continued, and there must be experts and activists who will accelerate our economy. However, for that to be achieved, it is required that some of the revenues generated be put into this research, and that some of it should be used to improve the standards of these offices we have already mentioned and some of it to protect the rights of state ownership so that the Bill can be able to assist us. During our committee session, some of our male colleagues said …]

We are in agreement that women must debate it and women should co-operate. Thina-ke besifazane sithe … [And we, as women said] … no, we are not co- operating, we are being assertive. You are not in agreement and you are not co-operating. We are assertive and we are going to debate in our own right, not because you are agreeing that we must debate.

I-ANC iyawesekela lo Mthethosivivinywa. Ngiyabonga. [Ihlombe.] [The ANC supports this Bill. Thank you. [Applause.]]

Adv P S SWART: Chairperson, on a point of order: In terms of Rule 25, and we are approaching that again now, it was mentioned by some of the other Whips, in particular the Deputy Chief Whip of the DA yesterday, we cannot take decisions on Bills if there is not a quorum in this House. And the quorum is a majority. Clearly, at the moment we are not even a third. We can’t even take decisions in terms of questions. I’m rising, because this debate is still ongoing and I would suggest that maybe you should start ringing the bells, so that we can see if we can get a quorum to take decisions on Bills for the rest of the afternoon. Otherwise we are outside the Rules. Thank you.

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, really, at the moment we are deliberating. We are not taking a decision and the issue doesn’t arise. Honestly, I would also like to hear from the official Opposition’s Whips. The HOUSE CHAIRPERSON (Mr M B Skosana): Hon, members, I would like to make a ruling here.

Mr J H VAN DER MERWE: Chairperson, just to advise you, in the British Parliament a quorum is three. [Laughter.]

The HOUSE CHAIRPERSON (Mr M B Skosana): Hon members, currently we are not considering any question. We are debating, so we will continue with the debate. At the point when a question is put, we will check whether there is a quorum. Obviously if there is no quorum, then we will ring the bells for a few minutes and then see if we have a quorum. If we still don’t have a quorum after that, obviously we will postpone, but for now it is still a debate, so we will proceed in that direction.

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Chair, I wish to address you on a further matter. You see, this is becoming a constant refrain from the DA benches. The fact of the matter is that while this House is in sitting there are also committee meetings. Members are engaged in a number of other activities. They are constantly seeking to draw attention to the absence of members from the Chamber and they are doing it when their own benches are virtually empty. I think that is disgraceful and I don’t think it is necessary.

The HOUSE CHAIRPERSON (Mr M B Skosana): Hon Andries Nel, thank you very much. I am no longer allowing any discussion on the matter. I have ruled on the issue. We will now continue with the debate.

Ms S RAJBALLY: Chairperson, thank you for ending that discussion.

Chairperson, not many of our people are aware of intellectual property or what it means, but at the World Economic Forum held recently it was established that Africa, as one of the poorest continents, may boost its economy by billions of dollars through export if the agricultural industry incorporates intellectual property as part of its business plans.

South Africa is a country that is rich in so many unique talents and, certainly, we should tap into them to assist in the fight against poverty. [Interjections.] I’m talking; you keep quiet. This will be catered for in terms of the intellectual property legislation, but what we need to look at is how effective have we been in identifying intellectual property in rural South Africa.

If it is true that intellectual property can be this great poverty alleviator, should we not then explore every avenue, especially in our rural areas, in this regard? It is evident that both the public and private sectors have been key role- players. And it is important that we ensure that women and the physically challenged may also be represented in this sector.

The establishment of the National Intellectual Property Management Office, Nipmo, is beneficial to the management and the recording of intellectual property. We, however, have to give the assurance that it remains liable and answerable to a greater authority so that we may secure its effective and efficient function.

It is a very special month in which we celebrate all our women. It is important that we take the initiative to take forward our fight and ensure that women are given equal opportunities, to be granted the assistance to establish themselves in all sectors and forums.

The value and contributions of all women need to be realised. When we look at our academics and researchers, women have made an astounding contribution and I believe we may make such a contribution in this faculty too. The MF supports the Intellectual Property Rights from Publicly Financed Research and Development Bill.

Mr G G OLIPHANT: Chairperson, if hon Koos van der Merwe had patented his name many years ago he could have been enjoying lot of royalties today.

This debate takes place during the very important month of August, the month of women. Let me also join in the salutations of those heroic struggles of our mothers and sisters for gender equality in society and for the total emancipation of women around the globe.

On Friday, 8 August 2008, we attended a very impressive award ceremony organised by the Department of Science and Technology and its partners in recognition of the achievements of Women in Science. We congratulate all women scientists and those who won some awards and prizes during that time. Thanks go to hon Minister Mosibudi Mangena for his leadership in this process all the time.

Like with many other important pieces of legislation enacted through this Parliament, we conducted public hearings at the end of July 2008 relating to Intellectual Property Rights from Publicly Financed Research and Development Bill. This time we conducted joint public hearings with our colleagues in the NCOP and wish to thank them for their co-operation and leadership in this matter.

Our appreciation also goes to all organisations, institutions, individuals and especially the Department of Science and Technology for their support and dedication. They severally and collectively helped us to improve the Bill to be what it is today. I want to thank Dr Mjwara, Dr Mehlomakhulu, and Mr Sibanda for their leadership in this regard.

In the Bill itself, intellectual property is defined as:

… any creation of the mind that is capable of being protected by law from use by any other person, whether in terms of South African law or foreign law, and includes any rights in such creation, but excludes copyrighted works such as thesis, dissertation, article, handbook, or any other work, in the ordinary course of business, is associated with conventional academic work.

This is the most important piece of legislation in the evolution of our knowledge economy in our country, like you will recall, Comrade Nel. At first sight this Bill may seem to be of a very technical nature, however, patents arising from these processes are used successfully by the developed world for the advancement of their knowledge economies.

Over the years, patents have been powerful economic weapons in the arsenal of developed countries against each other, and particularly in their scramble to take control of developing countries’ economies. Members will remember our fight as a country against the pharmaceutical companies in our quest to manufacture generic drugs for our people. The Germans have long appropriated pebble bed modular reactor technology. Using that technology as a country does require some intellectual property transactions with the Germans. Earlier on, there was a statement that suggested that South Africa is involved in discussions with the Intellectual Property Commission in the United States to try to get some licences in this regard.

Now, in our hand-over report we have also decided that, particularly on this matter of PBMR with regard to the next Parliament, we will recommend that the Portfolio Committee on Science and Technology, the Portfolio Committee on Minerals and Energy, and the Portfolio Committee on Public Enterprises must engage in serious oversight work related to this matter.

You can’t, hon members, use the label of “Champagne” on any sparkling wines in South Africa because this is patented as a geographical indicator by the French. We also have to defend our geographic indicators, like Mr Blanché said, such as “Rooibos” tea. Hoodia, for instance, is patented – and I won’t have to explain what it is because members know the properties of Hoodia – but we still have to check whether the San and the Namqua people benefit from the commercialisation of this indigenous knowledge. The same applies to the African potato.

During the public hearings, participants like Professor Julian Kinderlerer, Professor of Intellectual Property at the University of Cape Town, warned us against undermining the delicate balance between the imperatives of research work and that of commercial interest. He cited the example of Jonas Salk who invented the polio vaccine and refused to patent it, preferring that polio be eradicated largely. Prof Kinderlever went on to say that the primary point of research is to give information to the world. For example, Watson and Crick discover the structure of deoxyribonucleic acid, DNA, which was the most important discovery, from which all modern biotechnology and generics, including new designer drugs, have followed. The evolution of this research work and the ensuring debate culminated in a very important agreement between the United Kingdom and the United States of America in 2000. This clock is going very fast!

I just want to say that the Bayh-Dole Act passed in 1980 was the basis for this Act, and so on. But be warned about something here! Some years ago Comrade Khumalo and I visited Hong Kong, invited by the International Telecommunication Union to look into an exhibition on the information and communication technology sector in particular. I must confess that I came back with mixed feelings not only about impressive technology advancement in the information and communication technology sector, but also disappointed about the revelation that as a country we still have a long way to go. We must guard against our economy becoming a glorified spaza shop for some international supermarkets whilst we can also secure important benefits from global innovation. I wanted to say a lot about our marketing in South Africa and what the red book we were referred to says – Mr Sibanda would know what I’m talking about - but the level of patenting here in South Africa is really very low. This may be the reason why at least 50% of patent applications filed in South Africa emanate from abroad.

For South Africa to compete effectively in the knowledge economy, we need to strengthen our education system to respond to the challenges of high- level research and innovation. The ANC supports this Bill and would like to give thanks to all who helped us to make it what it is, including our secretaries. Thank you.

The HOUSE CHAIRPERSON (Mr M B Skosana): Thank you. Don’t blame the clock.

The MINISTER OF SCIENCE AND TECHNOLOGY: Chairperson, I wish to thank all the hon members for their support of this very important Bill. As we all know, our country is richly endowed with minerals. For the most part, we dig lots of holes all over the country and take out the minerals and send them elsewhere. We are also blessed with biodiversity. By and large other people come and harvest it, produce advanced goods out of it and we buy them at higher prices.

We also have lots of clever people in our country and we hope that with the passing of this Bill, we will be able to combine this richness in intellectual power and in expertise with the riches that we have as a country and will therefore be able to develop better. We will bring together our muscles and our brains. That can only be wonderful. So, thank you, hon members. I also wish to thank Deputy Minister Derek Hanekom. This has been a very long road as far as this Bill is concerned and we travelled it together. The portfolio committee and the select committee really worked very hard at this and in the process of engagement we learned a lot and we were able to improve the Bill as we went along.

More than any other people, I would like to thank officials from the Department of Science and Technology. They really worked very hard and hon Derek and I really slept well at night because we knew that we had “baie goeie, skitterende mense wat werk” [outstanding, excellent people who worked] in the department.

We are not the only people who are proud of them; I think the people in the portfolio committee are also proud of them. They call them every now and then, not just to look at them because they are beautiful, but also to listen to what they have to say. Thank you very much, hon members. [Applause.]

Debate concluded.

Bill read a second time.


                       (Second Reading debate)

The ACTING MINISTER OF TRANSPORT (The MINISTER OF SCIENCE AND TECHNOLOGY): Chairperson and hon members, I stand here on behalf of the Minister of Transport, who is abroad on government business. After the publication of the White Paper on the National Transport Policy in 1996 the National Land Transport Transition, Act 22 of 2000, was promulgated, together with other related legislation. It then came into effect in December 2000 and constituted ground-breaking legislation in various areas involving land transport. The Act was transitional because certain issues required finalisation at the time, including funding, conversion of permits for public transport services to operate into licences, and registration of minibus taxi associations and operators.

Since 1996 the National Land Transport Policy has evolved and the Act needs revision. Areas of the National Land Transport Translation Act, NLTTA, that require revision include the following: The new public strategy and action plan approved by Cabinet in 2007 must be applied along with other policy documents that have appeared since 2000. Concerning a new dispensation for tourist transport, I want to say that concerns of provinces, industry associations and so on need to be accommodated.

The NLTTA is now due for transformation into a final Act. Policy documents and reports, which have appeared since the 1996 White Paper, were collected and analysed, and interviews have been held with a wide range of stakeholders, experts and interested parties at the cutting edge of transport service delivery.

Research indicated that the fundamental approach is formulated in the White Paper and the NLTTA has not been substantially changed. For example, regulations of road-based transport services must be plan-based. Functions executed by various institutions in all three spheres of government should be combined where possible and rationalised. Municipal planning authorities should also be responsible for execution, rationalisation of services, and management of funds. Consolidation of responsibilities, by assignment if necessary, should be pursued to achieve the aforementioned goals.

The national and provincial spheres should retain policy setting, co- ordinating, monitoring, supervising and funding functions. The legislation should promote uniformity and avoid a plethora of diverse provincial and local laws. Accordingly, a national land transport strategy document, as input for the drafting of the Bill, was prepared and discussed with stakeholders and the Bill is based on that strategy document. The purpose of the Bill is to provide for the final transformation restructuring of the national land transport system. The main focus of the Bill is public passenger transport, which is defined as including all land transport modes, namely road as well as rail.

The Bill does not deal with rail institutional and infrastructural issues as these will be dealt with later on in specific rail legislation. It provides for the incorporation of rail service level planning and liaison between planning authorities and the South African Rail Commuter Corporation.

The Bill does not generally deal with freight issues except in regard to planning freight routes, and routes for transporting dangerous goods. When the Bill was published for comment in the Government Gazette and a participative workshop was held, a number of institutional issues were raised mainly by the National Treasury and by Gauteng and Western Cape provinces.

The concept in the NLTTA of having transport authorities as distinct legal entities has not been adopted by most metropolitan municipalities and aspirant metros, and has proved to be problematic in the light of local government legislation that appeared after the NLTTA. The Department of Provincial and Local Government identified the need for the terms “public transport” and “municipal public transport” that appear in Schedule 4 of the Constitution to be defined in more detail. Intensive discussions with the DPLG followed and the following changes were made to the Bill at the committee stage: the concept of transport authorities has been deleted from the Bill; municipal transport functions will be executed by the appropriate categories of municipalities to which other national and provincial functions can be assigned in terms of the Constitution. The Bill now contains more detailed provisions on the role of the different spheres of government. Two issues to note in this regard are the following: The bar subsidy function which is situated at national level at present in relation to existing bar contracts, and is executed by the provinces on a basis of delegation, may be assigned to appropriate municipalities by the Minister. This is subject to section 156 (4) of the Constitution and sections 9 and 10 of the Local Government: Municipal Systems Act, 2000. In the meantime they will remain with the provinces.

The functions relating to operating licenses which are currently executed by the provincial operating licence boards will be assigned to appropriate metropolitan municipalities and aspirant metros by the Minister. This is to achieve the objective of the strategy document to consolidate functions and promote accountability. Hon Chair, thank you very much, and I commend the Bill to the House. [Applause.]

The HOUSE CHAIRPERSON (Mr K O Bapela): Thank you very much, but before I call the next speaker, somebody just wanted to know why we did not vote. For us to pass the Bill in the House we need 50+1 present in the House. So, at the time that the interjection was made we did not have the numbers; we were 140 in the House. We needed to have 201 members sitting in the House before any question can be put. That is what happened. Because the required number was 201, there was no need to vote since the presence was there to give legitimacy to the Bill, that indeed the NA did pass the Bill within the 50+1 as required by the law. That is why the bells were rung and people had to be brought in.

Mr J P CRONIN: Chairperson, I thank the Acting Minister of Transport.

It is common cause that public transport generally in South Africa is in a very parlous state. The National Household Travel Survey of a few years back told us, I think, what we all know, and that is that there are very high levels of legitimate dissatisfaction with the public transport that is available particularly to working class and poor people.

The question is: Why? Well, the first part of an answer is obviously the legacy that we have inherited. There was a neglect of infrastructure and the abandonment of state responsibilities in terms of providing public transport over many decades. There is the reality of apartheid cities which is still with us today; the spatial realities of South Africa, in which the poor and working class are scattered and marginalised and very far away from places of work. Yes, I agree with you; the legacy is a real issue, but we can’t just complain about it. We must answer and take responsibility for finding answers.

So, the next question is: Are we spending enough money? And, Minister of Finance, we actually are spending a lot of money on public transport. We spend R3 billion every year on operating subsidies for Metrorail and another R3 billion on bus subsidies every year for operating subsidies. Whether the money is going in the right directions and is effectively spent, I think, is a moot question. We are committed to spending R7 billion over several years on the taxi recapitalisation process. We are spending R25, or is it R27, or is it more than R30 billion, on Gautrain. So, I don’t particularly think personally that the money issue is the core issue.

The problems that we are confronted with in the institutional realm and have to do with systemic factors. Now, way back in the first democratic government, the Moving South Africa policy document correctly said that in order to have effective public transport, you need to integrate public transport. Different modes need to talk to each other, and different modes need to do what is appropriate. It is ridiculous to have a minibus running from Khayelitsha to Cape Town or from Orange Farm to the centre of Johannesburg. It is fuel inefficient, it is business inefficient but you need minibuses to be doing what minibuses do well, and so you need to integrate your systems. Yes, you need to have space for the private sector to do business in terms of public transport, but they can’t be competing against each other on the routes, sometimes literally with AK 47s, and at other times undermining each other through three different modes running on the same route, making all of them unsustainable, hence the need for major operational subsidies.

You need to plan public transport and you need to align your public transport planning with all of your other planning, for instance, with where you are locating your housing development and where your shopping mall is going up, where the administrative institutions are located. You need also to allocate operating licences in terms of what you are planning. It is no good simply handing out operating licences willy-nilly to operators, with no bearing whatsoever on the kind of planning that you are trying to do within your towns and cities. And, therefore, in order to do those things, you need to locate planning, regulation, licensing and financing as much as possible within one sphere, within one place.

Now the National Land Transport Transition Act of 2000 envisaged transport authorities in order to try to locate these functions as much as possible within one place. It also talked a lot, and correctly so, about integrated transport plans and required, as we do, municipalities and cities to draft integrated transport plans. It also said that we needed to convert this reality that we have out there, of minibuses having life-long permits to operate, and bus companies assuming that a particular route is theirs forever and ever. We need to have tendered contracts. In other words, contracts where there are service levels required; where, if you are subsidising a service, there needs to be a quid pro quo, there needs to be a good service, and it needs to be well monitored and well regulated by public authorities.

Well, the National Land Transport Transition Act was well intentioned, but it has not really worked, quite honestly. It envisaged, as I say, transport authorities. Only one transport authority has been launched in Ethekwini, and the experience there is very uneven and it behaves as if it has an unfunded mandate. In other places, we have seen provinces and cities trying to combine to form some kind of hybrid transport authority, and that has not worked either.

The problem is that the core functions remain scattered. So, subsidies for buses from the national Budget go to provinces and the provinces administer them, but the way in which they administer those bus subsidies often has scant regard for what the cities, for instance, are planning in terms of their integrated transport plans. In one case - I wish to mention this - in one province they are providing subsidies to a private company and are actively undermining the operations of the municipally owned metro bus company.

When we go into cities, as we have as a committee, to have a look at their 2010 plans, we find wonderful planning and wonderful PowerPoint presentations on all of the routes that they are planning and so on, but they very often don’t have enough resources and the subsidies that provinces are applying don’t talk to the planning. So, we get all kinds of clashes.

As we speak now, in terms of the critical connection for instance - to use one of many examples - between Cape Town International Airport and Cape Town, critical for 2010 and the success of 2010, we have three competing projects underway. There is a national project led by Metrorail, planning to connect its Metrorail system to the airport. We have persuaded them here in Parliament that even their own budgeting reflects that it’s not going to be ready for 2010. We haven’t persuaded them yet that their feasibility study suggests that it’s going to fly in terms of sustainability either.

Three weeks ago, the province here in the Western Cape announced tenders for a bus shuttle service between the city and the international airport. Meanwhile, the city is planning a wonderful - and it’s what we are supporting at a national level - integrated rapid public transport system in, which one important leg is the leg between a bus rapid transit connection between the airport and the city and further network. So, we have incoherence and this is what is really causing serious problems.

Now, the Constitution, as the Acting Minister said, has not helped on this front. In the schedules of the Constitution, public transport is designated as a national and provincial concurrent competence, but in another schedule, it goes on to say that municipal public transport is a municipal competence. Now, where does municipal transport begin and end, and where does other public transport begin and end? It is not easy. And that is what we have tried to do here in this Bill. We have tried to sort this out because, in sorting this out, we think we will sort out all the other complications and practical systemic problems that we have.

We have, in this Bill, extended very extensive functions in terms of public transport to the municipal sphere. We think that this is by and large where public transport is going to succeed or fail. So, we have extended them, but we also recognise that many municipalities don’t have capacities, skills and resources and therefore we don’t want to make all of these functions inherent constitutional functions of cities. We would like to, but we realised that if we did that, we might actually collapse what we are trying to achieve.

So, what we have said is that operating licencing and subsidies are a national competence or function but must be assigned to the appropriate level where and when possible, and the appropriate level in particular. The intention of this Act, and of the national department, is to very quickly now devolve subsidies and operating licencing functions to our major cities and towns in order to meet the challenges of 2010. We have to move very quickly on this.

I would like, in closing, to thank the team from the Department of Transport, led by Jits Patel. This has been a very complicated process. I would like to thank our colleagues from Treasury and the Department of Provincial and Local Government who played a really constructive role in helping us to get this right. The SA Cities Network also played, I think, a very important role, as did many others. Thanks go to all of them.

I think that we are on the threshold, finally, of beginning a new era in public transport in South Africa. It won’t dawn all at once, but certainly in our major cities there are marvellous plans now for rolling out effective public transport - the integrated rapid public transport systems. This legislation, I am convinced, will help to liberate these important efforts. Thank you, Chairperson. The ANC obviously supports this Bill. [Applause.]

Adv P S SWART: Chairperson, I am delivering this speech on behalf of my colleague, the hon Stewart Farrow, who is recuperating after undergoing major surgery. [Interjections.] Yes, that’s why I got the quorum. The Bill before us is a hybrid of the National Land Transport Transition Act, which laid the foundation for restructuring and formalising of the public transport entities that are now operating throughout the country, and in particular the taxi industry.

A lot of water has passed under the bridge since this Act was promulgated in the year 2000 and many problems had to be dealt with. However, after a slow start, the Department of Transport had to learn by experience about the complexities of delivering an efficient, safe and affordable transport system that catered for all of the South African commuting public. The Bill now presented has, hopefully, learnt from these experiences, and provides further processes of the transformation and restructuring of the national land transport system.

During the proactive and vigorous process of public hearings on the Bill, the Bill, in its final form, was considerably changed from the one gazetted for public comment earlier this year. The reason for this is threefold. Firstly, the department unsuccessfully attempted unprocedurally to change the principal responsibility of public transport from that of constitutionally assigned local government to that of provincial government. This was clearly undertaken with the mandate of a few provinces, with the view to undermine one of the only metros where they did not have political control.

Secondly, the National Treasury was not happy with the funding arrangements proposed for land transport at national, provincial and municipal levels and, as a result, two of the sections have now been omitted. Thirdly, the whole aspect of the need for designated planning authorities was reconsidered and also omitted from the Bill. Thus, common sense prevailed and the Bill now seems set to lay the foundation for the implementation of public transport systems in the majority of those of our metros and host cities for the 2010 Fifa World Cup that have completed their transport systems. Clause 11 of the revised Bill spells out the roles and the responsibilities of the three spheres of government in order to clear the way for the who- and-how part of the delivery mechanism of this service. Linking onto this, Clause 12 spells out the intergovernmental relations, which provinces may have to enter into where joint exercises of the respective powers and functions need to be performed. This clause also applies to adjacent municipalities who may agree on joint transport initiatives in the interest of efficiency and expediency.

One of the most crucial issues, which the Bill addressed in the form of the new clause, was that of the inefficient and bureaucratic operating licence functions and how they could be properly administrated. These operating permits have long been the big problem of getting buses and taxis on the road, sometimes taking 18 months or more from application to issue. Clause 17 of the Bill now places this responsibility in the hands of every municipality, to which the operating licence function has been assigned by the Minister and that is where it should be.

Finally, let me thank the portfolio chairperson for the professional manner in which he handled the Bill in such a short time. It forms a good foundation to build on and for that reason the DA will be supporting this Bill. Thank you.

Mr E J LUCAS: Chairperson, this is an important initiative, which will create a clear framework to implement this legislation. It will make transport convenient for the large part of our population. The municipalities will play an important role. Our concern is the smaller and rural municipalities, which may not have the capacity and financial resources to implement this legislation.

All spheres of government will be involved, namely national, provincial and local government. We believe that provincial governments will be able to assist municipalities that experience difficulties. This Bill will also help to reduce competition between different spheres of government as each sphere has its own responsibility.

Cross-municipality boundaries and their travel arrangements need greater co- operation with the affected municipalities, and provincial governments will be able to play a proper facilitating role in this matter. The national public transport regulator will be established. The Bill ensures that the regulator will be impartial. It is important that the regulator appoints an experienced technical committee.

We need to continue to engage the mini-bus taxi industry and look at their inputs. Much has been done. However, much has still to be done. They have to be made aware of the National Land Transport Bill and what it intends to achieve. There are concerns about subsidies and temporary permits, amongst others. I would also like to say a very big thank you to the chairperson, because he has handled this very well. The IFP supports the Bill. Thank you.

Mr S N SWART: Chairperson, this Bill seeks to restructure the national land transport system in an integrated manner. The main focus of the Bill is on public passenger transport, which includes all forms of land transport, road as well as rail. It also addresses issues that arose from the taxi recapitalisation scheme, as well as concerns arising from the tourism industry around operating licences.

Now, the ACDP welcomes the significant amendments added by the portfolio committee following the Department of Provincial and Local Government’s discussions to clarify the constitutional inconsistencies regarding the function of providing public transport by the three spheres of government. As pointed out by the portfolio chairperson, it is incoherent to have three competing spheres of government seeking to provide public transport in the run-up to the World Cup, as indicated in the example that he used of transport between Cape Town’s airport and Cape Town.

So, we trust that the Bill will facilitate the provision of safe and reliable public transport, particularly in view of the high levels of dissatisfaction with existing public transport. We have noticed, and we welcome, the fact that there are inconsistencies, which are clarified by those definitions that are not clearly set out. The ACDP will support this Bill. Thank you very much.

Ms S RAJBALLY: Chairperson, the MF is extremely pleased with the introduction of this Bill and the issues of land transport that it addresses. Many challenges exist in making road safety an initiative for all commuters, but, unfortunately, we still have irresponsible drivers that claim lives on a daily basis.

Further, it is an unfortunate truth that government officials remain to be tempted into bribery and corruption. A few years ago the issue of illegal, fake licences was highlighted, but today the problem continues and many remain on our roads with bought licences. We think that the renewal of licences is a sure way of smoking out all the perpetrators.

Another concern is the number of not-so-roadworthy vehicles on the roads and the question is: How do they remain on the roads? In Gauteng and KwaZulu-Natal we have had increased roadblocks and we believe that there needs to be a national project to make our roads safer. The MF supports the National Land Transport Bill. I thank you, Chair.

Dr M SEFULARO: Chairperson, I stand here to support the chairperson of the committee and the department for asking the House to approve this Bill. I want to mention that one of the most important steps we had to take in processing this Bill was to beat back efforts by the nine provinces to change the Bill as originally passed by the Cabinet.

Between the Bill leaving Cabinet and reaching the committee, or shortly thereafter, they got together and studied the Bill. They felt that the Bill was seeking to take from provinces, up to national level and down to municipalities. They reinserted all that had previously given them powers and discretion over municipalities and a hold on subsidies, etc. I think that was the most important thing.

For me, this points to the need to return to this matter insofar as the constitutional provisions and the systems Act are concerned, aspects of which have actually limited our ability to really free up the municipalities so that they can deal with the realities of the people over which they preside, the people they serve and the people they account to. I want to say that for me that is the most important thing.

What this Bill does is to take us forward significantly, but it represents incomplete work and the work is incomplete because we were limited by the Constitution and the systems Act.

The Polokwane resolutions of the ANC, taken at the 52nd conference, recognise that more than half of the poor live in rural communities. The majority of the poor in these rural communities are women. Yet in these rural communities - which are mainly your former Bantustans – there is no infrastructure, particularly road infrastructure, and this limits the ability of people to sustain any livelihood. This limits the ability of rural municipalities to play a catalytic role or to be an agent for change and the delivery of a better life in the rural communities.

Therefore, our argument is that, as far as possible, we should work towards a future where the standards will be set nationally, without the possibility of nine different substandards being developed by provinces. With such standards having been set, there would be implementation at local level.

The rural transport strategy of the department envisages rural transport infrastructure. They say that this infrastructure should not only include access roads, but also district roads, public transport interchanges, tracks and other nonmotorised transport infrastructure.

The Bill provides for the maintenance of municipal roads within municipalities. All of these things would require that the necessary funds and resources are transferred to municipalities. However, the most important resource in being able to support the decisions that are taken is the decision-making space and the money.

So, we may be limited by what we have in front of us insofar as attaining the vision that we expressed in Polokwane and attaining the rural transport strategy are concerned. However, we believe that this is work in progress; we shall get there.

We should also be locating this discussion about transport within the overall review of the functions and roles of provinces and municipalities. We believe that there is a need for this discussion to be talking to the process that provisional local government is currently busy with.

As I have said, we may have to return so as to deal with the constitutional limitations and the limitations of the systems Act. The matter of assignment and concurrency has by now, after 14 years, proven to be a very problematic area in that very often you may be left with discretion at provincial level. But, having been in a province for about 10 years, we notice that there tends to be reluctance, particularly on the part of provinces, to assign to municipalities those functions and powers that are prescribed for assignment.

So, we would want to limit - as far as possible in the future – this issue of assignment when a municipality is ready. There’s always a tendency to question the readiness of municipalities. The fact that there’s a provision in the current Bill that any municipality may request the Minister or MEC to assign the functions contemplated in 1(a) or 1(b), subject to section 156(4) of the Constitution, etc, shows you that a municipality can declare its readiness for any amount of time in any amount of words, but if the MEC is not ready to assign, they may hold back.

The chairperson has referred to the problem that we see in the Western Cape provincial administration, the Cape Metro, etc. There are many other such examples, but our central message here is that we should free up transport for local planning, local accountability, local participation by communities and so on. This we should do through legislative, constitutional and institutional reforms, and thus we would also be creating a platform for serious rural development and serious maintenance of livelihoods in the rural areas.

Perhaps we would then be able to reduce rural poverty and the migration to cities, which creates other pressures on the cities as well as the apparent need for more transport infrastructure. In fact, this could have been avoided or prevented by providing serious transport infrastructure and transport services, with the authority given to the municipalities and the people of the rural areas. That is what we have attempted to provide for, but we believe that a lot still has to be done to achieve more complete space and more complete empowerment for municipalities and the rural communities. Perhaps if we do so, we shall achieve the vision of Polokwane.

On behalf of the committee, I support the chairperson and the Bill. Thank you.

The ACTING MINISTER OF TRANSPORT (The MINISTER OF SCIENCE AND TECHNOLOGY): Chairperson, I thank all the members for their unanimous support of this Bill. I also wish to thank the officials from the Department of Transport who tried very hard to educate me about the intricacies of public transport for purposes of presenting this Bill, and the other three Bills yesterday. I must say they didn’t succeed. They didn’t get very far. In terms of that, I am still as ignorant as when they first tried. Probably they can’t teach. But nevertheless, they tried very hard. Thank you very much, hon Chair.

Debate concluded.

Bill read a second time.

The HOUSE CHAIRPERSON (Mr M B Skosana): Hon members, as agreed at the programme committee meeting of 14 August, Orders No 5 and 7 will be taken together.


                       (First Reading debate)

                       (Second Reading debate)

The MINISTER OF FINANCE: Chairperson, hon members, we sat in this House on 24 June to table the Mineral and Petroleum Resources Royalty Bills to give effect to the policy framework arising from the Mineral and Petroleum Resources Development Act.

The first draft of the Mineral and Petroleum Resources Royalty Bill was published by the National Treasury for comment as far back as 20 March

  1. The Bills being debated today are the fourth drafts, and I can safely say that these Bills have been the subject of extensive consultation and debate with all relevant stakeholders. I am sure, Chairperson, that if you asked any of the members of the Portfolio Committee on Finance to recite any part of this Bill in their sleep, they will do it gladly.

Firstly, in respect of tax base, the Mineral and Petroleum Resources Development Act laid out some very important principles that are intended to ensure that all South Africans benefit from the vast mineral resources that this country is endowed with. Based on extensive research and practical considerations, it was decided that the tax base will be the value of the minerals mined, that is, gross sales less transport costs between the seller and the buyer of the final product. Resource rents or mineral royalties should be payable irrespective of whether mining companies make a profit or not. Then, in respect of tax rate, the earlier versions of the Bill provided for various specific royalty rates for different mineral resources. The need to provide some form of relief in the case of marginal mines, both during start-up operations and when a mine is close to the end of its life span, proved to be a challenge.

To ensure equitable royalty rates and in response to requests for relief for marginal mines, a formula-based royalty rate structure has been proposed. In terms of this formula, there is one for refined minerals and one for unrefined minerals. The applicable royalty rates will vary according to the profitability of the mining company, subject to a minimum rate of 0,5% and maximum rates of 5% and 7% for refined and unrefined minerals respectively. For the purpose of these Bills, oil and gas production will be subject to the refined formula. The lower rates for oil and gas are an acknowledgement that there have, as yet, not been major findings of these resources in South Africa – more’s the pity.

The profitability parameter in the formulae is Earnings before Interest and Taxation, EBIT, and it also allows for 100% capital expensing. The 100% capital expensing is an acknowledgement of the high capital costs associated with deep underground mining, currently in the case of gold and in future some other minerals, and deep level sea oil and gas exploration and production.

The formulae-based royalty rate structure does not only provide automatic relief for marginal mines, but also allows for the state to share in the upside in times of high commodity prices, such as the times we are living in now. Royalty rates will tend to increase as commodity prices increase and vice versa.

In terms of community royalties, the Mineral and Petroleum Resources Development Act protects the rights of certain communities to continue to receive community royalties. These community royalties will not be allowed as an offset against royalty payments to the state. Contrary to the views of many mining companies and analysts, such payments to communities are not viewed as double royalties. Mining companies and communities are also encouraged, where deemed appropriate, to convert the interests of communities into equity.

The full earmarking or ring-fencing of mineral royalty revenues is not supported. However, government is amenable to consider an on-budget spending programme targeted at mining and labour-supplying communities directed at human or local economic development, where these are properly justified on a partnership basis.

In this regard, a clear framework to prioritise projects, develop effective partnerships and governance guidelines will be critical. It should be noted that mineral royalties’ revenues will tend to be cyclical, especially given the commodity price cycle. Such revenues may decline over the long term as a result of the gradual depletion of our mineral resources.

The benefits of our vast mineral resources, some of which are about to be depleted, have historically accrued to only a few. The Mineral and Petroleum Resources Development Act lays the foundation to ensure that the mining industry transforms benefits to larger sections of our citizens. The Mineral and Petroleum Resources Royalty Bills of 2008 will make a contribution towards greater transparency, sustainability and the distribution of benefits to all South Africans.

I want to take this opportunity to thank everybody involved in this process, but certainly the Portfolio Committees on Finance and Minerals and Energy for their contribution as in the final version of these Bills. I trust that the Bills will be supported by this House. I thank you, Chair. [Applause.]

Mr N M NENE: Ngiyabonga nami, Sihlalo namalungu ahloniphekile ePhalamende. [Thank you, Chairperson and the Members of Parliament.]

The Bills before the House today are once again a clear and conscious commitment to the implementation of the clause in the Freedom Charter which proclaims that:

The people shall share in the country’s wealth. The mineral wealth beneath the soil, the banks and monopoly industry shall be transferred to the ownership of the people as a whole.

In pursuit of this noble injunction by the People’s Charter, and subsequent resolutions from the conferences of the ANC over the past five decades, a number of pieces of legislation have been passed by this House, among them the Mineral and Petroleum Resources Development Act, MPRDA, and the Diamond Export Levy Act.

The ANC resolved, at our 52nd conference in December last year, that:

A developmental state must ensure that our national resource endowments, including land, water, minerals and marine resources, are exploited to effectively maximise the growth, development and employment potential embedded in such national assets, and not purely for profit maximisation.

We further resolved that:

The use of natural resources, of which the state is the custodian on behalf of the people, including our minerals, water and marine resources, in a manner that promotes the sustainability and development of local communities and also realises the economic and social needs of the whole nation. In this regard, we must continue to strengthen the implementation of the Mineral and Petroleum Resources Development Act, which seeks to realise some of these goals. Our programme must also deepen the linkages of the mineral sector to the national economy through beneficiation of these resources and creating supplier and service industries around the minerals sector.

These Bills, which we are debating today, seek to give effect to the levying of royalties in order to ensure that South Africa receives just compensation for its nonrenewable resources that are extracted from underneath its soil.

In terms of this legislation, all extractors of mineral resources are liable for this royalty, whether they hold a mineral resource right under the Mineral and Petroleum Resources Development Act or illegally extract mineral resources without a right.

Provision is also made that all extractors, companies or individuals must register with the South African Revenue Services for purposes of payment of the royalty. This royalty is to be paid twice per year, with the final top- up payment being payable within six months into the following year, calculated in terms of a formula that my colleague, hon Mnguni, will outline later in the debate and that the Minister has also spoken of.

In addition to the imposition of royalties, the objectives of the Bills are outlined in the Bill as follows: It defines the refined minerals and the unrefined minerals; it also levies a rate on minerals that are refined, providing rates of royalty using a formula which I said will be explained. It clarifies the relationship between royalty payments and communities that hold rights to royalties due to mining on land owned by a community. It provides relief for marginal mines and also establishes anti-avoidance rules that prevent extractors of minerals from manipulating activities to avoid royalty payments. It also establishes administration procedures with regards to the frequency of levy payments and penalties for non-payment or underpayment of royalty.

The processing of this legislation was the most comprehensive and rigorous one, with submissions well above 30, ranging from industry to labour and civil society, even at the level of communities themselves. Of particular note here were Bapo Ba Mogale community who came by bus from the Brits/Odi magisterial districts of the North West province.

They came here with one message and they said: “Do not take away our community royalties as defined in the Mineral and Petroleum Resources Development Act 28 of 2002.” We assured them that we will not allow that to happen and we kept our promise. This legislation does not take away community royalties as these are provided for in the Mineral and Petroleum Resources Development Act.

The industry also made very passionate pleas for the formula to be revised and, as my colleague Mr Mnguni will explain later and as the Minister has already explained. The originally proposed formula was revised and an amicable settlement was arrived at.

In this regard, I must indicate that the National Treasury and South African Revenue Service officials, as well as the officials from the Department of Minerals and Energy, were very accommodative as usual and were able to open the consultation process even beyond the normal bureaucratic time constraints.

On behalf of the committee I extend our appreciation to them. When the National Treasury reported to the committee on 17 June this year, we were already on the fourth draft, as has been alluded to since the first was released in 2003. Even after this draft further engagement and deliberations continued, resulting in a number of refinements to the Bill all in the interest of participatory democracy. Of course, there will never be a process that ultimately works to the total satisfaction of all parties, but I must say sufficient consensus was reached.

Udaba-ke lwaleyo miphakathi ethole amanquphana kulezo zinkampani ezimba umcebo ngaphansi kwemihlaba yawo abizwa ngama-community royalties nalo lwabhekwa kabanzi ngesikhathi sidingida lo Mthethosivivinywa. Kwavunyelwana ngokuthi lolu daba, njengoba ngike ngasho ngaphambilini ngolukaJoji, lubhekelwe ngaphansi koMthetho obizwa nge- Mineral and Petroleum Resources Development Act ka-2002, futhi-ke lo Mthethosivivinywa awuluphazamisi neze lolu hlelo.

Kuphela nje into esingayigcizelela yikho ukugqugquzela abantu bakithi ukuthi benze izivumelwano zangempela nalezi zinkampani ezimba umcebo ezindaweni zabo. Kumele benze izivumelwano ezizokwenza ukuthi babe nobunikazi kuzo kunokuthi belokhu bekhohliswa ngokunceliswa umbele ofile.

Uma ulalela isikhalo semiphakathi engaphansi kwalolu hlelo lwama-community royalties kuyacaca ukuthi imiphakathi ayizuzi njengoba kufanele. Iningi layo likhohliswa nje ngobala bebe ongxiwankulu bezitika ngenonileyo emhlabeni woyisemkhulu. Bathi uma sebesenge bakleza izaqheqhe bese besishiya nemfambele. (Translation of isiZulu paragraphs follows.)

[The issue of community royalties, which are royalties received by communities from companies mining in their land, was also looked at when we were debating this Bill. We agreed that this matter, as I said earlier on in English, should be provided for in the Mineral and Petroleum Resources Development Act of 2002, and that this Bill does not tamper with this programme.

The only thing that we need to emphasise is for our people to enter into credible agreements with these companies that are mining minerals on their land. They should strive to be shareholders instead of being given a fraction of what they should be getting.

When you listen to the plight of these communities under the community royalties programme, it is clear that these communities are not benefiting as they should. Most of them are given leftovers, whilst the capitalists take the real chunks from the people’s grandfathers’ land. These fat cats take huge chunks and leave us with absolutely nothing.]

In the spirit of black economic empowerment, we encourage our communities to negotiate for the conversion of these community royalties into meaningful and sustainable equity shareholding rather than their relying, on the meagre royalties that some mining companies give them. We also wish to encourage all stakeholders to be prepared to make the necessary concessions and that the issue of environmental impact is also taken into account.

The issue of the state lease payments also featured quite prominently in the public hearings, particularly from the mining industry’s side. It was agreed that since most lease payments to the state were a form of mineral royalties in the absence of a more formal and comprehensive mineral and petroleum royalty regime, these would cease once this one kicks into effect. There will however be exceptional cases where particular arrangements that were unique to those cases will not be affected. Of particular note again here is the historical contractual arrangements between De Beers and the state in the Finsch mine, in which the state is entitled to a 70% undivided share ownership and the lease consideration is not necessarily royalties but payments in lieu of dividends, and therefore must be dealt with as such.

The other one would be the Ingonyama Trust in KwaZulu-Natal, and I would want to believe that these leases would have to be further engaged on, as there was no clear submission from the trust in this regard.

Chairperson, allow me to thank everybody who took part in the processing of this legislation, particularly staff from both the National Treasury and the Department of Minerals and Energy, in both the Portfolio Committees on Finance and Minerals and Energy, and all those who made submissions to the committees, and our committee staff for their administrative support while under tremendous pressure.

UKhongolose uyayeseka yomibili le Mithethosivivinywa. Ngiyabonga. [Ihlombe.] [The ANC supports these two Bills. Thank you. [Applause.]]

Mr S J F MARAIS: Chairperson, the Portfolio Committee on Finance again displayed a thorough and transparent process of deliberations and public hearings to ensure the legitimacy and credibility of the Bills submitted to this House. This is an example of good democracy and a shared responsibility to secure the best possible legislation.

These Bills have the objective to impose, arrange and administer the payment of royalties on the transfer of mineral resources in South Africa. The administration Bill aims to assure a fair and equitable distribution of payments to the people owning the land and the state as the custodian of all minerals to be extracted from the soil or beneath it.

These Bills received widespread responses from both industry and affected communities, with real concerns that varied from pure uncertainty to possible infringements on the rights on mining houses and the inherited land of communities. Some mining houses argued that, where they are already paying royalties to land-owning communities, a further royalty to the state would imply double taxation, which will obviously impact on their profitability and considerations by local and foreign mining and exploration investors. Local communities, on the other hand, wanted to assure that their vested rights to royalties are not negatively influenced by any amendment.

Vir die bepaling van die werklike gunsloon wat betaal moet word, moet daar kennis geneem word van twee tipes gunslone wat ter sprake is, afhangende of dit rou erts of onverwerkte erts of verwerkte erts is. Die formules vir die berekening van die gunslone was van die mees gedebatteerde onderwerpe tydens die openbare verhore - noodwendig omdat dit die finansiële voordeel van die belangepartye die meeste geraak het.

’n Beginsel wat gevestig en ondersteun moet word is dat geaffekteerde gemeenskappe die reg verkry om die gunsloon in die vorm van aandele in die mynonderneming te verkry. Dit verseker voorspelbare sekerheid en eienaarskap in die mynmaatskappye. (Translation of Afrikaans paragraphs follows.)

[In setting the actual royalty that has to be paid, cognisance has to be taken of two types of royalties that are at issue, depending on whether it is raw, unprocessed or processed ore. The formulae for the calculation of royalties were some of the most debated subjects during the public hearings – ultimately because it impacted on the financial benefit of the interested parties the most.

A principle that must be established and supported is that affected communities are given the right to secure the royalty by way of shares in the mining enterprises. This ensures predictable certainty and ownership in the mining companies.]

In setting a royalty rate, it is vital that a balance is achieved to prevent possible investors from being deterred and existing players from looking elsewhere for more attractive business opportunities. The tax base of the royalty was agreed to be earnings before interest and tax, instead of the previous base of earnings before interest, tax, depreciation and amortisation, which did not take account of the capital investment particularly by deep-level gold mines.

To effectively deal with this complication, especially for integrated companies, of when the royalties should be applied, it was agreed that taxation should be applied as close as possible to the source in the mine. The formula takes into consideration the viability of the mine and its ability to pay the royalties. Refined formula rates would typically range from 1,7% to 2,5% depending on the profitability of the mine, with a maximum rate of 5% in cases of high profitability mines. Unrefined formula rates would range from 2,2% to 3,3% with a maximum of 7% in the case of high profitability mines.

Die DA is tevrede dat die benadering in die praktyk reeds in ander gevalle in die wêreld suksesvol gebruik word en dat die gemeenskappe nie benadeel sal word nie. Met die huidige hoë kommoditeitspryse sal mynhuise dit ook kan bekostig.

Dit sal nodig wees dat die uitkomste gemonitor moet word om te verseker dat onbedoelde negatiewe gevolge tydig mee gehandel kan word. Die DA steun die aanvaarding van hierdie wetsontwerp. Baie dankie. [Applous.] (Translation of Afrikaans paragraphs follows.)

[The DA is satisfied that the approach has already been successfully applied in other parts of the world and that the communities would not be negatively affected. Given the current high commodity prices, it would also be affordable to mining houses.

It is imperative that the outcomes are monitored to ensure that unintended negative results are timeously addressed. The DA supports the adoption of this Bill. Thank you very much. [Applause.]]

Mr N SINGH: Chairperson, in the debate earlier on, the Minister of Science and Technology, said on the Intellectual Property Bill that overseas investors come into our country and dig up our resources. Now, hon Minister, if they dig, they pay for what they had dug up, and that money will remain with the people of South Africa.

This is essentially what this Bill does. As the hon Minister had indicated, there was a very extensive consultation process. This Bill has been on the table for the past five years, and I know hon Lucas has been telling me about this. We want to acknowledge the efforts of National Treasury in accommodating the concerns and uncertainties within the mining sector, without diluting the state’s rights to recoup a user fee for nonrenewable mineral resources that belong to all South Africans.

Treasury had to walk a fine line between the state’s interests as the custodian of our mineral wealth and the long-term survival and viability of the mining sector, which continues to play a vital role in our economy. It is the IFP’s position that a sensible balance has been struck and we applaud all stakeholders for their positive contributions.

It goes without saying that the IFP was concerned that the Bill would do away with royalties that are currently accruing to traditional communities and which are used to uplift those communities, as is the case with the Ingonyama Trust in KwaZulu-Natal, whose income from these sources is almost R10 million.

We are assured, however, by item (ii) of Schedule 2, which protects these existing royalties and ensures that the traditional communities will continue to benefit from them now and in the future. We have accepted Treasury’s assurances in this regard and the hon Minister also alluded to this when he opened the debate.

The hon chairperson of our committee spoke about the environmental impact. We also would like to bring in the issue of safety, particularly, not only with underground mining, but also with sand-mining companies, because we have read about a lot of incidents where young people have drowned because safety measures are not into place. We would also like to encourage the department to work with communities to ensure, where equity is sought in these mining companies, that the department must assist communities so that they can get equity. We want our people to be partners, shareholders and directors in these operations and not merely tax collectors or royalty collectors.

A wonderful example is what happened in the Royal Bafokeng community and I think this needs to be emulated all over. As the IFP, we wish to support both the Bills, the Mineral and Petroleum Resources Royalty Bill and the administration Bill. Thank you.

Ms S RAJBALLY: Chairperson, if anything, South Africa has always been a country rich in minerals. From many hundreds of years ago, people flocked to South Africa to gain from our mineral wealth and many colonialists have built their wealth from our soil.

It is, however, evident that in democratic South Africa mining of minerals remain a common trade of interest, and more remains to be the substance of survival for many working in these mines. It is also true that the salaries they earn do not match the wealth the mine owners inherit from digging, and it’s a fatal imbalance in our economy.

Either way, all of these minerals are the wealth of the South African people and we, as the MF, have no objection to there being a royalty charge on this. The MF supports the Mineral and Petroleum Resource Royalty (Administration) Bill and the Minerals and Petroleum Resources Royalty Bill. I thank you.

Mr B A MNGUNI: Chairperson, hon Ministers and colleagues, one of the clauses of the Freedom Charter states that, “the wealth of the country and its mineral resources shall be shared amongst those who live in it.’’ The Bill before us complements the Mineral and Petroleum Resources Development Act, Act No 28 of 2002, which in turn vests the mineral rights in the state as custodian of mineral resources on behalf of South African citizens. Its main objective is to compensate the state for the country’s permanent loss of nonrenewable resources without compromising communities who have contractual royalties with mining companies operating on their land.

This was a concern among mining houses as they claimed that it was double taxation. On the other hand, communities such as Bapo Ba Mogale are dependent on these contractual royalties for the upliftment and development of their communities. During public hearings and our deliberations the committee emphasised that it was not going to go against the objectives of the MPRDA by bowing to industry demands to do away with contractual royalties.

It is, however, up to communities themselves to negotiate with mining companies if they need an equity stake in the company. A busload of Bapo Ba Mogale’s people came to the hearings to voice their interests in and support for the retention of community royalties. The community is fully aware of the implications and responsibilities they will be faced with should they decide to have an equity stake in the mining company.

Indirectly, the Bill also tries to address the issue of unemployment and poverty by enforcing beneficiation of minerals. This is done through the taxation of minerals at an exit point when they are exported. This Bill complements and gives teeth to the MPRDA’s objectives of beneficiation; the State Diamond Trader and the levy imposed when some diamonds are exported are typical examples.

The determination of the royalty to be paid by the industry was another bone of contention for the mining houses. Clause 2 of the Bill states that:

A person that wins or recovers a mineral resource from within the Republic must …

… in respect of each year of assessment –

… pay a royalty for the benefit of the National Revenue Fund in respect of the transfer … … of that mineral resource by that person.

The argument from the industry was that there are refined and unrefined minerals of which the difference in purity or impurity is brought about by the by-products associated with the mineral. They argued that it is not the intention of the Bill to levy royalties on refined minerals. As a result, a formula was proposed by National Treasury, which took into account some of the concerns raised.

The formula expresses the royalty levy as a percentage of the amount of the mineral extracted. Because of the difference between the refined and unrefined minerals, two royalty formulae expressed as a percentage of the value of the minerals are used when calculating the royalty levy. The maximum factor for the refined minerals is 5% and 7% for unrefined minerals. Previously, a flat rate of 3% was used irrespective of the quality of the minerals. The formulae ensure that it is automatically adjusted for cyclicality and volatility of the market. When there is a boom in the market, it provides the fiscus with higher revenue and in bad times, it provides relief for marginal mines. Initially the formula included amortization and depreciation in the total value of the mineral, that is, EBITDA, which is earnings before interest, taxes, depreciation and amortization. This valuation was a bit harsh for the industry, as marginal mines and small-venture mining operations would suffer. Therefore, the committee agreed that depreciation and amortisation be excluded, which was a great relief for the mining houses.

There is a further relief for small business in this clause of the Bill. A mining company is exempted from paying royalty levies if the gross sales are less than R10 million during the year of assessment or if the royalty to be paid is less than R100 000. However, the small mining company must be a resident as defined by the Income Tax Act and must have registered for that year.

Generally the anti-avoidance rule will kick into place should the industry try any shenanigans in order to avoid paying a royalty levy. Thank you. [Applause.]

The MINISTER OF FINANCE: Chairperson, what can one add to a debate that has been as full and complete as this, that has been as participatory for members of the committee as this process has been, but to say thank you for the support. [Applause.]

Debate concluded.

Mineral and Petroleum Resources Royalty Bill read first time.

Mineral and Petroleum Resources Royalty (Administration) Bill read a second time.


                       (Second Reading debate)

There was no debate.

Bill read a second time.


                       (Second Reading debate)

The MINISTER OF TRADE AND INDUSTRY: Chairperson, hon members and members of the portfolio committee, I am greatly honoured to table the second reading of the Competition Amendment Bill in the National Assembly today.

The Competition Amendment Bill is aimed at strengthening the provisions of the Competition Act to enable the competition authorities to deal more effectively with anticompetitive practices such as hardcore cartels. It is not the intention of these amendments to overhaul the current competition regulatory framework, but rather to build on the existing foundation and to fill in the gaps that have been identified through the practical experience of implementing the law and the policy.

It is our observation that whereas great strides have been achieved by the competition authorities in uncovering cartels in various sectors, including milling, bread, milk, pharmaceuticals and scrap metal, it is doubtful whether the sanctions provided by the Act serve as an adequate deterrent to such conduct. Furthermore, we see behaviour in concentrated markets that cannot easily be impeachable under the Act, but whose outcomes are detrimental to consumers.

Other challenges relate to the interface between competition authorities and sector regulators in exercising overlapping jurisdiction in terms of competition considerations in regulated industries. There is also a need to strengthen the hand of the Competition Commission robustly to undertake market inquiries such as the one recently concluded on banking.

Chairperson, in addressing the above, I will now turn to the main provisions of the Bill. The purpose of the complex monopoly provisions is to deal with multifirm behaviour or co-ordinated conduct that would evade the current horizontal and vertical restrictive practices, as well as abuse of dominance provisions of the Competition Act. Firms would usually resort to such behaviour without an agreement, thus making it difficult to prosecute in terms of the existing provisions of the Act. An example could be import parity pricing, which leads to high input costs, to downstream consumers of raw materials, but where there is no agreement among players to price at that level. Similarly, the Act currently proscribes certain behaviour by a dominant firm and defines what such a firm would be. It is common cause that where one firm may not be dominant individually, it may be in a position of joint dominance with one or more other firms and could be abusing such joint or collective dominance. Such behaviour, therefore, would currently fall within the cracks.

To address this challenge, the Bill introduces an insertion of a new clause, 10(a), which defines a complex monopoly and prohibits participation in such a monopoly if it has the effect of substantially preventing, or lessening, competition. It also empowers the Competition Commission to conduct an investigation without having to first formulate a complaint, and to refer the matter to the Competition Tribunal if the evidence warrants an allegation of prohibited practice. It is important to note that complex monopoly refers to the conduct of firms and not the structure of a market, although it is common cause that certain structures may facilitate anticompetitive behaviour.

It is our view that adding an element of personal liability to price-fixing offences increases the cost of being caught and this will deter officers of firms from engaging in cartel activity.

As a result, clause 12 of the Bill introduces a new offence section to the Competition Act, making it an offence for a director or officer of a company to cause, or knowingly acquiesce to the firm engaging in cartel behaviour.

In addition, proposals currently included within the scope of the Companies Bill would, if enacted, empower the Competition Commission or other industry-specific regulators to seek a court order disbarring a person from serving as a director of a firm if that person was responsible for the firm contravening the Competition Act or relevant industry-specific legislation. It is the Department of Trade and Industry’s position that this power is best introduced globally within a reformed Companies Act rather than in a piecemeal fashion in other Bills.

With respect to concurrent jurisdiction, the policy intention is to clarify and provide certainty in terms of the management of concurrent jurisdiction in order to avoid forum shopping, policy inconsistencies, and protracted legal challenges in regulated sections.

The Bill does this by inserting a provision for clear distinction and assignment of roles between competition authorities and sector regulators in dealing with competition matters in regulated industries. The Bill vests in the competition authorities the competency to oversee and review competition considerations while sector regulators are charged with regulatory considerations.

The Bill further provides that a proper framework for co-operation and constructive relationships between the competition authorities and sector regulators need to be developed and enshrined in the memoranda of agreement. These measures will, if managed properly, go a long way to maintaining a proper balance between sector regulation on the one hand, and competition regulation on the other for the promotion of economic growth and competitiveness.

Consequential amendments to section 67(9) of the Electronic Communications Act are proposed to remove inconsistencies created and reinstate the policy stance on concurrent jurisdiction in the electronic communications sector.

A market inquiry is exploratory probing intended to inquire into competition deficiencies, the operation of markets, and why consumer needs are not being met. It is also intended to inquire into any matter concerning the purposes of the Act, including the achievement of social goals or public interest issues. It serves as a tool to enable the commission to play a more proactive role in investigating markets.

The policy rationale is to amplify the existing provision of the market inquiry to enable the Competition Commission to undertake an inquiry in a more structured, effective and transparent manner. In this regard, the Bill provides for the process and procedure for the initiation of market inquiries, including the mandate to initiate market inquiries, and the timeframe for the completion of market inquiries, as well as the dissemination of the results of a market inquiry.

The Corporate Leniency Policy is a tool used by the competition authorities to detect cartel activity by encouraging those involved in cartel activity to come forward and disclose information to the Competition Commission in return for leniency from prosecution. The policy rationale is to give legal backing to the leniency policy in order to avoid any possible restrictive interpretation that the Competition Commission does not have powers, or the discretion, to grant leniency. As a result of the personal liability provisions, the Bill also provides for the granting of leniency to individuals.

Let me stop there, Chair. Whatever I have not covered, I will come back to at the end.

The HOUSE CHAIRPERSON (Mr M B Skosana): Before I call on the next speaker – we can see the picture is frozen there – I think I must say that they are attending to this problem. I don’t know whether the professor knows about “juju”. It could be that when you come.

Prof B TUROK: Chairperson, I can assure you that I’ve never broken a camera before. So, please don’t blame me, I wasn’t even here.

Chair, I’m rather grateful that the Minister ran out of time because, in fact, he was making my speech. Thank you for leaving something for me.

Let me confess, Chair, that I face a little bit of a philosophical dilemma with respect to this small but very powerful piece of legislation. The philosophical dilemma I face is that, as I grew up intellectually, one was faced with the question of competition or co-operation, individualism vis-à- vis the collective; which do I favour? On the whole, I certainly favoured the notions of co-operation and of collective. But, here, we have a Bill which talks about competition, which we support, and I have to explain why. The answer is that in the specific case of South Africa competition does promote efficiency; it forces firms to adopt new technology to go up the value chain to, generally, join the modern world with all its new technology and so on. So, obviously the economic case is the good one.

But there is also a social case which arises from the high concentration that we find in the South African economy. The South African economy is, actually, highly monopolised as it arose under apartheid. Something needs to be done about the high concentration of power in the economy and competition seems to be one of the ways forward. However, competition mustn’t be done in a way which harms the employees. We are currently in the committee engaged in a long discussion about - in the Companies Bill - how employees can be safeguarded, even as you go about regulating the corporate sector.

Let me start my speech by talking about Mr Ismail Mukaddam, a gentleman who came to our portfolio committee hearings. He was an independent bread distributor last year whose major supplier was Premier Foods. Premier Foods imposed a new trade regime on people like him, which not only reduced the distributor discount but also insisted that the distributor pay the full invoice price upfront. Mr Mukaddam was so badly affected that he laid a complaint with the Competition Commission, whereupon Premier Foods suspended his total supply. The poor man went out of business and he came to the committee as a small businessman to report this. We were also told that Premier Foods had previously admitted to being guilty of a prohibited practice and, indeed, they were fined R99 million, upon which they reacted not by assisting Mr Mukaddam but by raising the prices by 40 cents and, thereby, apparently recovering the fine that was imposed on them.

There are two things facing us: Firstly, the question of victims of this kind of monopoly practice. Surely something has to be done about it. We did discuss - after Mr Mukaddam’s intervention - that appropriate action must be taken to compensate victims of such discrimination. Small businesspeople are affected by monopoly pricing and we hope that something will come out of it. We did discuss it. Surely something must be done to support victims of this kind of behaviour.

It is obvious, Chair, that there is a great deal of price collusion and cartelisation in the South African economy. South Africa was boasted about as being a First World country, and in many respects we are. But one of the characteristics of the First World economy is that there is a strong corporate sector with a great deal of concentration. The only snag is that these concentrations lead to high prices, which bring high profits but affect the consumer. And so, we are in a funny situation, in which we are saying: Let us have competition and the private sector; let’s have competition between the members of the corporate sector, partly to erode their power, to destabilise the cartels and to try and control the high prices which are now manifested very strongly in the South African economy.

While we were discussing these matters in the Bill, interesting debate ensued with the Law Society, Business Unity South Africa, and others. We asked them about what constitutes misconduct to undesirable practice. We were told that collusion is a bad thing. It is unacceptable and this is where the Competition Commission must come in. Rational commercial behaviour was acceptable. Now, rational commercial behaviour might, actually, cover a whole range of activities and pricing activities which could affect the consumer. I think we need, at some stage, in the committee – or maybe even in the House – to discuss the philosophical aspects of the free market, where you have corporate sectors which go their own way and raise prices in a particular way. I’m not suggesting that we move to a command economy - let me say it right away, there is no suggestion of that

  • but as long as we have the market and big corporate entities which are able to cartelise or to control prices, something needs to be done in South Africa to ensure that we have an economy which benefits not only big business but consumers as well.

We’ve also been informed about the excellent work done by the Competition Commission and the Competition Tribunal. They have done a great deal in many ways, in informal discussions, in asking people to report misconduct. But, surely, something more needs to be done, as the Minister has indicated. We need to have criminal liability. Now, the interesting thing is that internationally - because of corporate misconduct in the US, for example, Enron and world corporate companies like that, the world is now far more sensitive about corporate misconduct, cartelisation and the consequences of that for ordinary people.

There is an international trend which we are now following with this legislation that criminal liability by directors is an important issue. One question which, however, in my mind - and I’ve had discussions with very senior council on this matter – is that can we draw a distinction between director responsibility, namely the board, and management. What I’m told by people in the business, in fact, in the modern corporate world, is that management is the strongest and most effective in controlling the way in which a company operates; and the directors of antagonist companies pay lip service to the way the company is run, but it is management that is real.

In this piece of legislation there is a clause 73(a), which deals with the question of directors’ responsibility and also mentions management. But I wonder whether we aren’t being a bit soft on management who after all, have clout in the company. I am alerting you that the directors take the rap in our legislation and not management. I also mention this because in the days of black economic empowerment promotions - and with many new directors being on boards for various political and reasons of affirmative action – you also have directors who are not clued-up about the way in which a company is works. Some of them are members of too many boards and, therefore, are part-time directors and management is able to get away with murder. It seems to me that in this Bill, and in the next one, the Companies Bill, we ought to look at management, its role vis-à-vis the board, and whether we are not focusing too much, in an unbalanced way, on board responsibility and not on management.

We know that in many big companies, for example Enron and others, management diddles the books; management uses shares to enrich themselves; there are preference shares and all sorts of options that enable them to become very rich – some of them have gone to jail, and that’s fine – but we need to look at the responsibilities of management vis-à-vis the board and get the relationship right.

Finally, I come to the processes which the Bill has undergone. There was a bit of conflict between agencies, but we’ve now got a situation where if there is a problem in the market concerning any particular set of goods there will be a market enquiry which will be conducted by the commission. If some solution or clarity does not emerge, it will be referred to the tribunal, which will try to work out a consensus or some process and will impose a fine, if there is a need. A very important clause we’ve put in is that the fine should not be paid by the firm; it must be paid by the director. So, the notion of individual accountability, responsibility and criminality is built into the Bill. I think all this is a major step forward in the way we regulate company behaviour and, therefore, the ANC will support the Bill wholeheartedly. Thank you.

Dr D T GEORGE: Chairperson, I’m presenting on behalf of Dr Pierre Rabie, who is unable to attend today.

This Bill seeks to amend the Competition Act of 1998 to provide greater certainty regarding the concurrent jurisdiction between the Competition Commission and other regulatory authorities.

It introduces provisions to address other practices that tend to prevent or distort competition in the market for any particular goods or services.

The DA supports this Bill as it does tighten up gaps in the current legislation. This piece of consumer legislation is highly technical, which should contribute to acceptable international practice by all sectors of the economy.

The media stated that the final version of the Bill is a vast improvement on earlier drafts. The final version of the Bill is a compromise and acknowledges the potential for constitutional clashes when shifting enforcement of competition policy from the civil to the criminal domain.

The introduction of the concept of personal liability for those individuals actually involved in collusion is introduced. However, possible criminal action against company directors is the most controversial aspect of the Bill.

The implementing authorities, namely the Competition Commission and the Competition Tribunal, made submissions that this could undermine their success in curbing cartels. Their main argument was that directors would be reluctant to co-operate as they have under the current corporate leniency policy.

Another ethical question remains unanswered: Did the large fines imposed on companies found to be involved in anti-competitive behaviour have the desired effect? It was mentioned during the public hearings that the benefits of collusion were perceived by some to outweigh the possible legal cost because proving culpability is often difficult.

The Bill also introduces the concept of complex monopolies. In essence, this arises where 75% of the market accrues to no more than five firms. The application of this particular concept or definition in the South African context is questionable and, therefore, open to challenge. For historical reasons some sectors of the South African economy display characteristics of market concentration as opposed to those of complex monopolies.

To conclude, this Bill in essence attempts to prevent any artificial barriers to trade and to strengthen present competition law. Thank you. [Applause.]

Prof E S CHANG: Chairperson, hon Minister and colleagues, in recent years there have been a number of cases of collusions and competitive behaviour by various industry sectors and producers.

Collusion and the price-fixing are always at the expense of the consumers, who are compelled to pay higher prices that they would have to pay in a problem-free market economy. At the present time, the Competition Commission imposes penalties on the offending firms, but the individual culprits themselves are not penalised. Such culprits will always try to find a way to enhance their undeserved profit by circumventing the legislation in place by finding loopholes. These loopholes need to be closed. We must, however, protect consumers.

The amending Bill before the House today will do exactly that by eliminating some of the loopholes that still exist.

The IFP is particularly glad that the Bill provides for the introduction of a scheme of personal responsibility with criminal liabilities for the directors of firms that engage in cartel practices prohibited in terms of the Competition Act.

This will serve as a deterrent to the individual who is contemplating his own competitive practice. The key test, as always, will be implemented. There is still an urgent need to develop the anti-trust and pro-competition legislation to break the grip of our private and public cartels and monopolies on our economy.

This amendment is a start. Today’s deteriorating economic environment, with spiralling food and oil prices, and with high interest rates are contributing to the economic exposure of many South Africans. Uncompetitive behaviour only increases their vulnerability and results in higher costs being passed down to the poorest of the poor. It is for this reason that the IFP supports the Bill. I thank you.

Ms S RAJBALLY: Chairperson, with regard to competition, the MF has no objection to bringing the management of companies under this one Bill. It is important that in all forums and forms of governance clarity exists and does not leave room for loopholes and contradictions.

While it is perfectly fine having agreements made between the Competition Commission and the industry under question, it is also important to maintain legislation to oversee the effective and efficient running of things. Over and beyond that, a system of transparency requires us to constantly be answerable for our actions.

Further, this Bill is important in enhancing competition in economy. But how can we effectively instrument competition in any economy that is so uneven, imbalanced and haunted by poverty?

Furthermore, how do we ensure that this is an opportunity that may be utilised in fixing our imbalances, such as gender inequalities, and so forth? The MF supports the Competition Bill. I thank you, Chairperson.

Mr S J NJIKELANA: Hon Chairperson and the House at large, if one would ask an ordinary person in the street about the effect of this legislation, definitely one would draw a blank. However, if the following question would be posed to the same person, that is: What do you think of a law that ensures fair competition which results in fair prices? Without any doubt, the positive answer would be accompanied by a smile as well.

One of the fundamental tenets of capitalism is undue and unfettered domination of the working class for unbridled accumulation of capital. Such malpractice driven by avarice, of course, further breeds unsavoury and anticompetitive activities that are harmful to both the economy and subsequently the ordinary person. Since unfair competitive practice goes beyond artificial price manipulations which at times results in market failures, the amendments proposed in the Bill will also address excessive entry barriers so as to ensure broadening of access to business opportunities, especially for small, medium and micro enterprises. The proposed amendments will also address lack of transparency in order to reinforce public confidence. What is also admirable, is the intention of the amendments to enable the Competition Commission, in particular, to be proactive in its initiatives when necessary.

Some of the submissions during public hearings exposed that certain sectors were seriously ensuring that the amendments are crafted in a manner that would serve their group interests, and unfortunately not public interests. Good examples are the demands for complete removal of the clause on complex monopolies and the subjugation of market inquiry to excessive consultation processes, to such an extent that an inquiry would have little or no value.

The recent successes by the competition authorities, combined with the passion they, together with the DTI, demonstrated in addressing anticompetitive behaviour, have been so obvious, and admirable as well. Therefore, the expected additional support for the authorities in ensuring requisite resourcing, especially by DTI and National Treasury, ought to be a logical consequence.

However, I hereby make a strong appeal. I am in fact adding to the numerous calls for enhanced team effort amongst various government institutions such as DTI, the competition authorities themselves, Justice and Police. It is only through a well co-ordinated effort amongst the institutions that overall law enforcement against anticompetitive behaviour can be effective.

Whilst there is strong evidence of enhancement of consumer protection in this refinement initiative, hon George and hon Rabie, it’s a refinement of this initiative and it will always be refined as we uncover loopholes. A call must be made to every responsible citizen to make the legislation effective by co-operating with the state in its implementation. The advances by competitive authorities in pre-empting and undoing measures that were posing a threat to fair competition also revealed an inherent inability to disentangle complex monopolies.

Whilst, as is claimed by certain quarters, this concept has been ditched by countries such as the United Kingdom and United States of America, and as such begs to question the wisdom of solely relying on foreign experiences whilst local realities indicate otherwise. Have we not, as South Africa, trailed the blaze by formulating comprehensive medicine price control, which the World Health Organisation acknowledges as groundbreaking? What about our consumer credit price legislation for which the US, with subtle lamenting, expressed admiration? As the story goes, the lament was that had there been such an outstanding law in the US the subprime credit crisis could have been avoided.

Competition policy according to the ANC is located within a range of policy areas meant to pursue a broader programme of economic transformation. That is why the ANC has argued that in transforming the structures of ownership and production, there is a need to put in place antimonopoly and anticoncentration policies aimed at creating competitive markets. In this regard the ANC has also stated that the concentration of economic power in the hands of a few conglomerates has been detrimental to economic development in South Africa.

The Congress of South African Trade Unions, Cosatu, has also warned of creeping concentrations where it claims that large companies are steadfastly acquiring small companies that at times have unique products and services to buttress their market dominance. This is just another piece of evidence about the level of sophistication in which unsavoury behaviour is preparing to indulge.

Amongst the most notable supporters of this Bill was the Black Sash, that even went further and insisted that companies found guilty of anticompetitive behaviour should be barred from doing business with government. If there is any strong expression of such public opinion regarding anticompetitive behaviour, I’m very keen on it.

In conclusion, allow me to state the obvious. The state should spare no effort to create an environment conducive to dynamic business activity and consequently enhance the socioeconomic wellbeing of citizens. Such efforts include the role of the government in providing leadership to creation of a fair, competitive business environment. Therefore, the ANC unequivocally supports this Competition Amendment Bill. Thank you.

The MINISTER OF TRADE AND INDUSTRY: Chairperson, I think that there is a lot of support for this initiative. Just to reiterate, we are really not overhauling the legislation, we are strengthening it. We are doing that on the basis of the experiences that we have had. One of those experiences is the experience of continued conduct that has been found to be anticompetitive. Therefore the need to strengthen the hand of the state and the hand of the competition authorities is part of what we are trying to do with this legislation. I think that that is the context in which even the introduction of personal liability must be seen.

The nervousness that exists about whether this personal liability might undermine the corporate leniency programme is maybe fear of something that may not materialise at all. We do believe that at one level the deterring effect of the existence of possible criminal sanctions is something that is important to have in legislation, so that those that have not yet embarked on this kind of activity don’t do so. But with regard to those who have done so, we also do believe that it’s something that would encourage them to be forthcoming and to be more truthful to the competition authorities, and doing so in a manner that may or would guarantee their own freedom, if I may put it like that.

But I think it’s also important from another angle. The private sector often does need a stick. One could cite experience in a number of areas where you often have to turn to something of a stick or the potential of a stick in order to get the private sector to behave in a particular way. So, I think that we should do this because these are things that have been thought through. These are things that we are doing on the basis of experiences that we have had. We have studied what happens in other jurisdictions. We have looked at trends globally. So we have tried to come up with as balanced an approach as possible.

I don’t know how the hon Turok missed it. But with regard to the reference he made to directors, our understanding is that this is aimed at officers of a company and directors who cause a company to be involved in cartel activities. So I think your concern is taken care of. I agree with the hon member who said that the co-ordination between state institutions is going to be vital in order to ensure the effect of this legislation. Thank you very much, Chair.

Debate concluded.

Bill read a second time.


(Consideration of Report of Portfolio Committee thereon and President’s reservations on constitutionality of Bill as submitted)

Mr G G OLIPHANT: Thank you, Chairperson, and we recognise the presence of all Ministers, including in particular the Deputy Minister of Science and Technology, Comrade Derek Hanekom. This Bill was approved by the NA at the end of 2007 and sent to the President for assent and signing into law.

Earlier this year the Speaker of the NA received a letter from the President, dated 25 April 2008, informing her that he had reservations about the constitutionality of the Bill. The contents thereof will be dealt with later. The full text of the President’s letter and his reservations were printed in full in the ATC of 8 May 2008 and duly referred to the Portfolio Committee on Science and Technology for reconsideration on 9 May

  1. After extensive consultation and deliberations by the portfolio committee, the following amendment was effected to deal with both the reservations of the President of the Republic and the concerns of the committee. In particular here, clause 5(3) of that Bill was amended. I will not read it in full because it was given to members. Just to explain, the issue was about consultation, especially with respect to the Minister, to consult the National Assembly during or after consultation. That was the main bone of contention.

The major question is really that Parliament and the executive need to resolve and engage is the content and the meaning of the principle of separation of powers as contemplated in the Constitution of the Republic of South Africa. The committee is convinced that the amendment adequately addresses the matter at hand. In fact, two legal opinions were previously sought, from the parliamentary law advisers and the Office of the Chief Law Advisers respectively, which confirmed the centrality of the NA in the appointment of this board.

The Minister, on the other hand, also received an opinion that suggested that he was to appoint the board after consultation with the NA. Based on that opinion, the President was advised not to sign the Bill into law. Both the legislature and the executive accepted the concept of consultation in this matter. What became contentious was when such consultation must take place and the result of such consultation. In the advice from the Office of the Chief State Law Adviser, that is in the matter also between Van Rooyen and Others vs The State and Others in 2007, Southwood J held that:

The meaning of phrases “in consultation with” and “after consultation with” are now well established. “In consultation with” requires the concurrence of the other functionary or person and if a body of persons, that concurrence must be expressed in accordance with its own decision- making procedures. “After consultation with” requires that the decision be taken in good faith, after consulting and giving serious counteraction to the views of the other functionary or person. In the former the person making the decision cannot do so without the concurrence of the functionary or person. In the latter case he or she can.

The experience of the committee was that this was at best unacceptable and it was very frustrating. The committee, and in particular the chairperson and the Whip, had several discussions with the Ministry and the department on this matter in order to find an amicable solution and resolve this matter. We are satisfied that the product and result of proper consultation has borne fruit and we table this amendment and report for approval by this House.

The HSRC remains a strategic asset of the democratic state and has produced very good and well-researched reports that this Parliament and the new dispensation need to take serious note of.

In terms of the Act, they provide advice to the Minister on any matter ranging from unemployment, housing, poverty, health, education, etc. The challenge, though, is how their recommendations are implemented or taken into account, firstly by the affected departments and by the Department of Science and Technology in particular.

Just to go back to the amendment itself. The first part of 5(3) says that:

The Minister appoints the members of the Board after –

  a) publishing a notice in the Government Gazette and two national
     newspapers circulating in the Republic calling upon members of the
     public to nominate persons contemplated in subsection 2(a) and

That one was given and granted and there was no contention.

The (b)-part stipulates that the Minister appoints –

… a panel of experts to compile a shortlist of not more than 20 persons from the nominees referred to in paragraph (a) …

… and there was no contention about that. Here the number of people required is six to nine board members.

The new one agreed upon was the following:

 c) The chairperson of the panel has submitted a short-list of
    candidates together with their curriculum vitae to the Minister who
    must submit it to the National Assembly for approval ...

… lastly, that –

 d) the National Assembly has submitted to the Minister an approved
    short-list from which to select.

The Minister does have leeway as well to deal with these matters. This is how this matter was concluded and agreed to by the committee and also discussed with the Ministry. This is how we resolved this matter and we request Parliament to approve this. Thank you very much. [Applause.]


That the Bill, as amended, be passed.

Motion agreed to.

Bill, as amended, accordingly passed.


          (Consideration of Report of Mediation Committee)

There was no debate.


That the Report be noted.

Motion agreed to.

Report accordingly noted.


                       (Consideration of Bill)

There was no debate.


That the Bill be passed.

Motion agreed to.

Bill accordingly passed.

                           AMENDMENT BILL

                  (Consideration of Report thereon)

There was no debate.


That the Report be adopted.

Motion agreed to.

Report accordingly adopted.

                           AMENDMENT BILL

                       (Second Reading debate)

There was no debate.

Second Reading rejected and Bill accordingly lapsed.


Ms L L MABE: Amendments to the report are as follows: On page 1545, in paragraph 3, line 3, after “and” to insert “process on”.

On page 1545, in paragraph 3, line 7, after “government” to add “and on performance agreements”.

On page 1546, in paragraph 4 (c), after “projects” to add “and maintenance”.

At the beginning of this year when the President of the Republic of South Africa presented his state of the nation address, he emphasised “Business Unusual” by government. We all looked forward to “Business Unusual” in all government departments and that it would be reflected also in the first- quarter spending by different government departments. Unfortunately, spending in most departments is the same as in the previous year and the year before last. As the committee, we wonder if this is “Business Unusual” or business as usual, because spending must show a difference, but there is none.

The President also emphasised the filling of critical posts within six months. We have recommendations regarding the filling of vacant critical positions, and we would like departments to report to Parliament by September so that when we look at the Medium-Term Budget Policy Statement, MTBPS, and mid-term spending we would check whether those posts have been filled as per Presidential instruction. We expect the Public Service commission to respond or report by September by ensuring that all senior positions are filled and that all senior managers have signed their performance agreements. We want that information so that we can transfer it to various portfolio committees for follow-up.

We have in our oversight function realised that low spending by different departments impact negatively on the lives of women. Remember that this is Women’s Month, so if departments do not spend, it means that women who are out in the rural areas, disadvantaged areas, are suffering as a result of departments not spending as expected. This has been taken seriously by the committee. We are still going to follow up to ensure that departments spend and do not go for virement in September or October when the Minister of Finance will be presenting a report before Parliament. In our previous reports we said that we are going to focus on our oversight function and not on government in general. We called the departments of Public Works and Communications. Our interaction with the Department of Public Works was very good and we are happy that Public Works has come up with a plan that will inform us about what they plan doing to ensure that projects with other departments are not delayed. All departments have been complaining about how frustrating Public Works has been. We are going to follow up on that, to ensure that departments are not unnecessarily frustrated by Public Works.

With the Department of Communications serious challenges were experienced and we intend to interact with the Minister at some stage because all is not well with regard to Sentech and Infraco. We support the department for not allocating funds to these two before they submitted their business plans.

We had a challenge in our public hearings with Communications where allegations were made about the Auditor-General for coming up with wrong reports. We wondered how that was possible because this department took part in the planning from the onset, and they agreed with the Auditor- General on when to conduct the audit and who was to provide the Auditor- General with information. We are disappointed that by the time the Auditor- General went for audit, the department had not provided the necessary information. According to the department’s report, information was locked away somewhere and the person who had the keys was not available. We can’t allow that kind of arrangement. If the person is not there, somebody else must have the keys in order to give documents to the Auditor-General to do the audit.

We expect that departments will co-operate with the Office of the Auditor- General to avoid unnecessary squabbles between the Auditor-General’s office and the departments. This is an Office that must be respected. Remember it is part of the Chapter 9 institutions and it must be given the necessary respect and co-operation.

We are very grateful to various portfolio committees. We have observed that since we started reporting to Parliament on a quarterly basis, and debating our reports, portfolio committees are following up with their departments on what they are doing with regard to the issues that we raise and those that are raised by the Standing Committee on Public Accounts, Scopa. We are happy about the co-operation of and support by different portfolio committees.

We are also thankful for our relationship with National Treasury. In 2005, when I joined the Budget Committee, there was a sea between us and the National Treasury that could not be breached. But now the relationship is very good. Whenever we ask for information from them, they respond as per the request. They do not give us what, they want but they give us what we want, for us to do better oversight. That is why they have changed the section 32 report, which deals with monthly spending. The information contained in it is what we requested in order to do our oversight function better.

I also want to thank Parliament. When we started, I used to report on that without their support with research, and without a permanent secretary in the committee, we would not have been able to do our work. We are thankful that at least we have two researchers and a permanent secretary and whenever we need additional assistance, Parliament is in position to give us the support.

We also want to call on members and departments to look at our recommendations. We expect that by September the Department of Public Service and Administration, DPSA, and the National Treasury must come back to Parliament, based on the recommendations that we gave them. The ANC supports the reports. Thank you. [Time expired.]

Mr M SWART: Thank you, Chairperson. I have four minutes, I will try to cut it down to three so that we can all go home early. Every government in the world has the responsibility to deliver services to its citizens. Such services include the creation of a safe environment for citizens, the creation of a safety net for citizens who are unemployed and poor, the creation of an educational environment, in which individuals are enabled to improve their skills and the creation of an enabling environment for economic growth and job creation. The provision for funding - this is important to make service delivery possible - and ensuring then that the necessary policies, planning, management and control for the efficient usage of funds so provided are in place. Unfortunately it is in the planning, management and control of funding where government departments are failing dismally. We read in the press the reports about the Ikhaya Hospitality Centre, an example of the problems that we have in planning and management, and we are pleased to hear that the Minister of Sport is going to investigate the issue. But the tendency of poor management and control permeates through all three levels of government. The Auditor-General reports that only 2 out of 247 municipalities countrywide have received unqualified audit reports and this at a level of government where service delivery is absolutely crucial.

National government departments owe just five of the metro municipalities in South Africa R602 million in arrears for service charges, and that excludes Pretoria, where the largest number of government departments is housed. How are local authorities expected to fulfil the mandate of service delivery if their counterparts in government display a laissez-faire attitude towards payment of accounts?

There is a general tendency by government departments to underspend on their budgets. After the first quarter of the financial year,the spending patterns in particularly the Departments of Provincial and Local Government, Foreign Affairs, Communications and Public Service and Administration give cause for concern. The same applies to Samdi, the management training arm of the public service, which is also notorious for underspending on their budgets.

The first quarter of this financial year, the Department of Labour spent only 2.67% of its capital budget. Whenever the matter of nonperformance against budget is raised with departments, the stark answer virtually all the time is a lack of skills and the high vacancy rates. This despite high unemployment levels in the country and the fact that thousands of matriculants and graduates are roaming our streets without jobs. The excuses are lame.

Drastic action by government to get rid of poor performance and to appoint managers with the requisite skills to do the job properly is now urgently required. It is only in this way that government will show its commitment to service delivery, thereby ensuring that the daily boycott actions and protest marches throughout the country against poor service delivery are avoided. The DA will support the amendments proposed by the Chairperson of the JBC and will also support the recommendations of the committee. I thank you.

Mr N SINGH: Thank you very much, Chairperson. The hon Minister of Trade and Industry said just now at this podium that some in the private sector require the stick. The same can be said, hon Minister, for many of our government departments, because they also require the stick. If one looks at this report and reads this report in detail, there are some very worrying trends that have been highlighted both by the chairperson of the committee and the previous speaker, and we certainly as the IFP share the committee’s disappointment that spending patterns have not changed materially since last year.

Spending as a whole still lacks budget allocation, which is an accurate indicator that departments have not taken the President’s instructions very seriously. For example, Chairperson, the vacancy rates in the Department of Sport and Recreation is 45%. There are unspent grants. I mean this is something that we should not accept. In areas like HIV/Aids, where we look at the life skills education, we only spent 9.8%, whereas on the mass sport and recreation participation programme only 10.1% was spent. It is no wonder that we have only produced one silver medal, if money cannot be spent when money has been allocated by this government and this Parliament to those departments. The poor spending on capital projects is also very worrying.

When one notes that the Department of Provincial and Local Government was one of the departments that spent the least of the overall budgets, then clearly services to the public at the lowest level of government are not being delivered in the proper manner. Poor spending reflects poor planning and a lack of expertise. It is therefore imperative that the National Treasury takes the necessary and urgent steps to assist poorly performing departments.

The IFP fully supports the committee’s recommendations and the amendments that have been proposed by the hon Chairperson, and we also support the recommendation that National Treasury should fast-track the implementation of the performance information framework so that Parliament could gain an even more accurate picture of expenditure by departments. It is pleasing to note that portfolio committees are taking their oversight roles seriously, but they have to be more vigilant in the expenditure by their respective departments. The IFP will support this report. I thank you.

Ms S RAJBALLY: Thank you, Chairperson. During the budget we have devised programmes of expenditure that we hope will bring delivery in the various portfolios, which will bring us closer to poverty alleviation and develop South Africa.

In view of the Joint Budget Committee’s report, the MF is confident that we are well on our way to making this delivery a reality, especially when noting that in comparison to last year’s first quarter there is an increased aggregate expenditure this year.

The MF is confident that departments have acknowledged their challenges in the last year’s spending trends and are working hard to alter this. At the end of the day we have allocated funds that need to be filtered to the necessary role-players if we are to have effective and efficient delivery and results. The JBC plays a vital role in keeping us informed of the loopholes and the progress we have made to date. The MF supports the report and applauds all departments.

Chairperson, if I can just take half a second to say, this is Women’s Month and today I have participated in six debates at this podium. The day when I am not here, and none of you should miss me, then this podium will miss me. I thank you. [Applause.]

Mr G D SCHNEEMANN: Chairperson, comrades and hon members, the report that we are debating today of the Joint Budget Committee covers the period for April to June of this year.

It’s also the final first-quarter report of the Joint Budget Committee in this the third democratic Parliament. Total expenditure by departments in this first quarter stands at R139,2 billion or 23% of the appropriation. Whilst we have seen an increase in aggregate expenditure over the period 2005-06 to 2008-09, spending patterns relative to the Budget have remained in the 21% to 23% band. At the same time, there has also been underexpenditure in some of the subprogrammes.

The Joint Budget Committee has not been able to ascertain whether steps have been taken to accelerate not only spending but also actual delivery. If time permitted, the Joint Budget Committee should have required of departments to submit detailed reports of steps undertaken to implement the President’s instruction of “ “Business Unusual”.

In a presentation to the Joint Budget Committee on 1 August, the National Treasury indicated that four departments, namely Foreign Affairs, the Department of Public Service and Administration, and Agriculture and Land Affairs missed their year-to-date spending benchmark in the first quarter by more than 8%. A further two departments, Communications and Public Enterprises, missed their benchmark by 21%.

In the remaining months of this financial year and third democratic Parliament, it is imperative that all departments focus on accelerating spending in an effective and efficient manner, ensuring that government meets its delivery targets. This is obviously going to require greater emphasis on planning as well as improved interdepartmental planning, budgeting and spending.

The JBC is not convinced that departments have clearly identified departmental critical skills and prioritised them accordingly, and is therefore of the view that in fact all departments should make every effort to fill vacant posts by the end of the second financial quarter, especially those at senior management level, as well as those at a lower level.

The committee is also concerned about the delay in the transfer of funds to state-owned enterprises. This is attributed to, amongst others, delays in the submission of business plans, cash flow projections, service level agreements and compliance documents. These delays impact on the ability to spend allocated funds efficiently and effectively. It is important that departments that transfer funds to state-owned enterprises ensure that prior to the commencement of the financial year all the necessary documentation and in particular service level agreements are finalised and submitted.

Emphasis also needs to be placed on the performance and financial sustainability of state-owned enterprises. This includes taking measures to improve their overall operations and identifying and reducing potential risks. The JBC is of the view that measures should be taken to improve risk management in order to reduce situations that could lead to unacceptably high adjustments having to be made.

In some departments we have seen certain instances where, in certain programmes, low or nonexpenditure takes place as a result of allocated funds being placed in suspense accounts. The JBC is concerned about this, because delays in service delivery that occurred due to a lack of expenditure cannot be accepted. Therefore, we intend to exercise greater oversight over this area in the coming months with the Office of the Accountant-General. A number of departments have also indicated slow or low expenditure that took place as a result of delays in the receipt of invoices, and this is also of great concern. Maybe I can just give one or two examples. The Department of Labour, for instance, showed poor spending on goods and services due to delays in the submission of invoices by the Department of Public Works. The Department of Housing experienced delays in the receipt of invoices from the Government Communication and Information System.

Over the past four years, the work of the JBC has contributed to enhancements in budgetary oversight as well as departmental accountability. In the early years of the Joint Budget Committee, departments and in fact portfolio committees as well as select committees were not entirely sure of what the work of the JBC was. However, the JBC has improved its work, has been able to focus effectively on its mandate and has firmly placed itself on the radar screen of departments. During this term of office during this, the third democratic Parliament, we have seen a number of departments implementing the recommendations of the Joint Budget Committee, and one of those, for example, is the Department of Housing. They’ve put together a special programme, a special division, to monitor and oversee the use of funds. That, for us, is important.

It’s also through the initiative of the ANC that we have such a committee as a Joint Budget Committee. It demonstrates the seriousness of the ANC on both oversight and accountability. It is worth noting that under the previous regime there was no such committee, there was no accountability and there was no transparency.

The Joint Budget Committee has made a number of recommendations to National Treasury over the past years. Many of these have been taken on board by National Treasury, and these have assisted the Joint Budget Committee in strengthening its oversight and monitoring role. One of the issues that has been of concern to many of us has been the poor attendance by many of the opposition parties in the work of the Joint Budget Committee, especially during the hearings on the Medium-Term Budget Policy Statement as well as the Budget. I think this clearly indicates to us; in fact it’s a clear contradiction to their claims of being the watchdogs of Parliament. This role has been and will continue to be undertaken by the ANC.

In conclusion, the only consistent opposition party has been the DA and, in this regard, I would like to acknowledge the positive and constructive contributions of the hon Swart. We appreciate that. [Applause.] On a more personal note, I would also just like to say that it’s been a great privilege to have been part of the Joint Budget Committee from its inception way back in 2002. The ANC supports this report. Thank you very much. [Applause.]

Debate concluded.

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, I move that the report, including the amendments proposed by the hon L L Mabe, be adopted.

The HOUSE CHAIRPERSON (Mr G Q M Doidge): The motion is that the report, with amendments, be adopted. Are there any objections?

Mr J H VAN DER MERWE: Chairperson, the IFP will not say that there is not a quorum. [Laughter.]

Motion agreed to.

Report, as amended, accordingly adopted.

The House adjourned at 18:40. ____



National Assembly and National Council of Provinces

The Speaker and the Chairperson

  1. Bills passed by Houses – to be submitted to President for assent (1) Bill passed by National Assembly and National Council of Provinces on 21 August 2008:

    a) Housing Development Agency Bill [B 1F – 2008] (National
       Assembly – sec 76(1)).
(2)    Bill passed by National Assembly on 21 August 2008:

      a) Human Sciences Research Council Bill [B 16D – 2007] (National
         Assembly – sec 75).

National Assembly

The Speaker

  1. Message from National Council of Provinces to National Assembly in respect of Bills passed by Council and transmitted to Assembly
(1)    Bill passed by National Council of Provinces and transmitted for
     concurrence on 21 August 2008:

     (a)      Consumer Protection Bill [B 19B - 2008] (National Council
         of Provinces – sec 76(2)).

         The Bill has been referred to the Portfolio Committee on Trade
         and Industry of the National Assembly.
  1. Message from National Council of Provinces to National Assembly in respect of Bills passed by Council and returned to Assembly

    1) Bills, subject to proposed amendments, passed by National Council of Provinces on 21 August 2008 and transmitted for consideration of Council’s proposed amendments:

    a) Jurisdiction of Regional Courts Amendment Bill [B 48B – 2007]
       (National Assembly – sec 75) (for proposed amendment, see
       Announcements, Tablings and Committee Reports, 25 June 2008, p
       The Bill has been referred to the Portfolio Committee on
       Justice and Constitutional Development of the National Assembly
       for a report on the amendment proposed by the Council.
    b) Renaming of High Courts Bill [B 5B – 2008] (National Assembly –
       sec 75) (for proposed amendment, see Announcements, Tablings
       and Committee Reports, 29 July 2008, p 1474).
       The Bill has been referred to the Portfolio Committee on
       Justice and Constitutional Development of the National Assembly
       for a report on the amendment proposed by the Council.
    c) Refugees Amendment Bill [B 11B – 2008] (National Assembly – sec
       75) (for proposed amendments, see Announcements, Tablings and
       Committee Reports, 24 June 2008, p 1386).
       The Bill has been referred to the Portfolio Committee on Home
       Affairs of the National Assembly for a report on the amendments
       proposed by the Council.


National Assembly and National Council of Provinces

  1. The Minister for Public Enterprises

    (a) Report and Financial Statements of Pebble Bed Modular Reactor (Pty) Limited for 2007-2008, including the Report of the Independent Auditors on the Financial Statements for 2007-2008.