In the absence of a clear policy statement, speculation is rife about the likelihood of government introducing ‘prescribed assets’ as one measure to rescue struggling state-owned companies and boost economic growth. Vague comments on the subject from President Cyril Ramaphosa and ANC national executive committee member Enoch Godongwana have been quoted endlessly in the mainstream media. However, apart from an undertaking in the ruling party’s 2019 election manifesto to ‘investigate the introduction’ of prescribed assets on the funds of financial institutions – with the aim of ‘unlock(ing) resources for investments in social and economic development’ – only one Cabinet member has made an official comment on the matter.
In June – addressing pension fund trustees at a function in Johannesburg – Trade & Industry Minister Ebrahim Patel urged them to play their role in stimulating economic growth by investing in ‘real assets’. This was noting that government ‘is looking not just to foreign direct investment’ to stimulate the economy but also – ‘and very strongly’ – to domestic investment. The Minister believes fund trustees ‘have a responsibility … to help lift the long-term rate of growth of the South African economy as a key means of realising the pension promise’.
‘A sluggish economy impacts directly on the performance of your overall portfolio,’ Patel is quoted as having said in a Department of Trade & Industry media statement at the time. Against that backdrop, he invited the Council for Retirement Funds to ‘engage with government to learn more about ‘the new administration’s vision’ for promoting sustainable development, along with the interventions being considered. In the Minister’s view, the situation in which SA now finds itself calls for for ‘a longer-term perspective on returns’.
An article along these lines appeared in Legalbrief Today on 12 June, under Policy Watch
It could take as long as two years to implement the 2019 National Credit Amendment Act, according to Department of Trade & Industry officials. Briefing members of the National Assembly’s Trade & Industry Committee on Tuesday, they emphasised the importance of avoiding any ‘unintended consequences’ identified during a socio-economic impact assessment concluded in May. One could be that credit providers ‘implicitly’ draw a distinction between higher- and lower-risk low-income earners applying for credit – creating a ‘dual credit system’ and pushing the very people the Act seeks to assist away from legitimate credit providers into unregulated, informal markets.
Signed into law last month, once operational the Act will make long-term debt intervention accessible to consumers with a monthly income of R7 500 or less and unsecured debt not exceeding R50 000. However, regulations will need to be developed, released in draft form for public comment and finetuned before the Act can be implemented. In addition, the National Credit Regulator and National Consumer Tribunal will need additional resources to deal with what will inevitably be an increased demand for their services. That said, Trade & Industry Minister Ebrahim Patel made it very clear that the expectations of low-income consumers will need to be carefully managed. The Act will not ‘write-off’ their debt.
LAND EXPROPRIATION WITHOUT COMPENSATION:
The process of developing a Bill to amend section 25 of the Constitution – specifying the circumstances in which land may be expropriated without compensation – could take longer than expected. During Wednesday’s meeting of the ad hoc committee established by Parliament to draft the Bill, it was agreed that, while every effort should be made to meet the 31 March 2020 deadline for tabling it in the National Assembly, constituency work and demands on the time of members chairing other committees may well cause delays.
In keeping with the constitutionally enshrined principle of public partifcipation in the process of drafting new legislation – not to mention the Rules of Parliament – a draft Bill will be released for comment and public hearings held in the National Assembly, NCOP and provincial legislatures.
Before beginning the drafting process, the committee intends holding a workshop at which it will be briefed by experts and key stakeholders on the thinking behind recommendations in a broader report produced by former President Kgalema Motlanthe’s high-level panel, as well as a more recent report compiled by the presidential advisory panel on land reform and agriculture. However, while these recommendations will inform the process of developing the Bill, they are not binding.
Committee members (courtesy of the Parliamentary Monitoring Group): Click on each name for additional information.
This site provides reliable, accurate information on public policy and law-making issues of concern to ordinary South Africans. The mainstream media tends to sensationalise new developments out of context. Journalists rarely if ever take time to read the documents available to them or to develop a sound understanding of new policy and legislative proposals. As a result, misinformation abounds.
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The author’s observations will not include personal opinions but will focus on facts supported with documentary evidence cirulated by Parliament itself. That said, they should not be construed as representing the views of Juta Law, which publishes Legalbrief Today and CompliNEWS – to which the author continues to contribute as an independent contractor.
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This article appeared in the 30 August edition of Legalbrief Today, under Policy Watch
An opinion document on the constitutionality of the National Health Insurance (NHI) Bill presented orally to members of the National Assembly’s Health Committee before a briefing from Health Minister Zweli Mkhize was withheld from journalists – despite reportedly having been made available for copying and public circulation well before the meeting. Prepared by the Office of the State Law Adviser and read verbatim to the committee by acting head Ayesha Johaar in the presence of media representatives and health sector stakeholders, the document was only distributed to committee members after lunch, by which time Johaar had left. Her presence at the meeting was apparently requested at surprisingly short notice. When the morning session ended and committee chair Sibongiseni Dhlomo was approached for permission to make copies available to members of the public, he declined – claiming not to have seen or read the document.
Dhlomo adopted this stance is not clear. Underpinned by provisions in sections
27 and 146(2) of the Constitution, as well as sections 3 and 25 of the 2003
National Health Act, Johaar’s opinion is that the Bill is ‘constitutionally
sound’. Section 27(1)(a) of the Constitution makes access to health care
services a universal right. Section 146(2) spells out the conditions in which
national legislation uniformly applicable ‘to the country as a whole’ prevails
over provincial legislation. Section 3 of the Act deals with the
responsibilities of the Minister, the national department, provincial
departments and local authorities in providing healthcare services. Section 25
sets out the general functions of provincial departments in that context.
A committee media statement issued two days before the briefing – refuting allegations that the Bill had been ‘suspended’ because of concerns about its constitutionality – also noted that, having met ‘one of the state law advisers’ to discuss the matter, Dhlomo was ‘comfortable’ with the advice he received. Johaar is the adviser to whom he was referring. However, widely publicised reservations by some stakeholders about government’s capacity to fund NHI, manage it financially and deliver quality services – not to mention speculation about the future role of medical schemes – may explain Dhlomo’s obvious distrust of media representatives. This is especially given the extent to which some journalists tend to sensationalise issues without scrutinising the documents on which they report. The indignant tone of DA Evelyn Wilson’s input during the meeting probably did little to smooth already ruffled feathers. She has much to learn from party colleagues Siviwe Gwarube and Haseena Ismail, whose equally candid approach was noticeably more deferential.
that backdrop, the Minister, his deputy Joe Phaahla, Health Department DG
Precious Matsoso, deputy DG Anban Pillay, presidential adviser Olive Shisana,
NHI office head Nicholas Crisp and other departmental officials fielded an
avalanche of questions about the Bill and NHI in general from the DA, FF Plus
MP Philippus van Staden and the EFF’s Naledi Chirwa – but did little to assuage
their fears. Neither the model to be used in implementing NHI nor the mix of
options available to fund it are cast in stone. However, conceding that
government ‘will need to invest strongly’ in improving the standard of public
healthcare services and facilities, Mkhize said that, where there is evidence
of ‘neglect’ it ‘must be corrected’. ‘We are at such a low level of quality
that we will have to fight hard to improve it,’ he told the committee,
referring to NHI as a ‘vision’ and an opportunity to ‘up the game’. According
to Pillay, the need for ‘robust’ monitoring and evaluation was simply confirmed
by the pilot phase.
the Deputy Minister’s view, while NHI promises to be a ‘disruptive
intervention’ – especially for the 15% of citizens able to afford private
healthcare – ‘fear of the unknown’ cannot be allowed to prevent government from
moving forward with plans to honour not only its constitutional obligations but
also binding international commitments. While Phaahla did not elaborate on the
role of medical schemes under the NHI system and little was said on the issue,
Pillay confirmed that it will be spelled out in regulations. References by
Shisana to presidential health compact partnerships and by Crisp to the
introduction of NHI as ‘a journey, not an event’ were vague – tending to point
to a long road ahead, albeit with ample opportunities for public consultation.
Funding proposals will be the focus of a separate draft money Bill.
This article is based on one that appeared in the 20 August edition of Legalbrief Today, under Policy Watch
The controversial, recently gazetted 2019 National Credit Amendment Act – paving the way for the introduction of long-term debt intervention measures for qualifying consumers but not yet in force – has sparked outrage in some quarters, mainly because of provisions perceived to constitute the deprivation of property (Business Day). However, according to an opinion sought from Advocate Wim Trengrove by former members of the National Assembly’s Trade & Industry Committee, while the Act does indeed allow for this, the provisions in question do not amount to the arbitrary deprivation of property and are therefore ‘permissible and lawful under section 25(1) of the Constitution’. The version of the Bill on which Trengrove’s opinion was sought was later revised to address other issues he raised at the time.
Once operational, the new piece of legislation will provide not only for the ‘suspension or part-suspension of a credit agreement’ and ‘an alteration or extension of that suspension’, but also for ‘the extinguishing of the whole or a portion of the total of the amounts contemplated … under a qualifying agreement’. This is according to the committee report that accompanied the Bill to the House for a second reading. The term ‘debt intervention applicant’ will refer to anyone whom – at the time of applying – either receives no income at all (or whose monthly income during the preceding six months was less than R7500) and whose total unsecured debt does not exceed R50 000. When deemed appropriate, the Minister concerned will have the power to review and adjust these caps.
In addition, once in effect the new statute will require debt
counsellors to report to the National Credit Regulator ‘any suspected reckless
credit agreements’ identified when an over-indebted consumer applies for debt
review; empower Magistrates’ Courts to lower the rate of interest, fees or
other charges under credit agreements as a debt rearrangement measure; and enable
the introduction of regulations for ‘targeted credit life insurance for all
unsecured credit’, capped ‘lower than … existing insurance’. New enforcement
measures will make it a criminal offence to intentionally misrepresent
information when applying for debt intervention; engage in prohibited conduct in
respect of credit agreements; and not to register as a credit provider, credit
bureau, debt counsellor, payment distribution agency or alternative dispute
Both the National Credit Regulator and National
Consumer Tribunal ‘will require additional capacity’ to process the number of
debt intervention applications likely to be made once these measures are in
force. With that in mind, now that the Act has been gazetted, the necessary plans
and related funding requirements can be finalised.
This article is is based on two that appeared in the 12 and 15 August editions of Legalbrief Today, under Policy Watch
Once in force, the National Health Insurance Bill tabled last week in Parliament is expected to facilitate universal access to ‘needed health care that is of sufficient quality to be effective’ – and ‘financial protection’ from its costs. This is according to a memorandum on the Bill’s objects. However, in expanding on this, clauses 4, 5 and 7 of the Bill (respectively dealing with population coverage, user registration and health care services coverage) point to distinct limitations. Together, sub-clauses 4(4), 5(1) and 7(2)(e) make it very clear that only public and private health care facilities accredited over time by the fund will be available to registered fund users. Registration will not be compulsory. In addition, sub-clause 7(2)(e) requires the fund to ‘enter into contracts with accredited health care service providers and health establishments at primary health care and hospital level based on the health needs of users and in accordance with referral pathways’. This tends to suggest that private health care practitioners and facilities will be able to choose whether to contract in or out of the NHI system – at least at this stage of the process.
Regarding the role of medical schemes, clause 33 implies that – in the context of sub-clauses 4(4), 5(1) and 7(2)(e) – ‘once NHI has been fully implemented’ registered fund users who are also members of medical schemes will only be eligible for ‘complementary cover’ for ‘services not reimbursable by the fund’. Furthermore, sub-clause 39(1) clearly states that health care service providers and health establishments accredited by the fund will be required to deliver ‘services at the appropriate level of care to users who are in need and entitled to health care service benefits that have been purchased by the fund on their behalf’. This is noting that, according to sub-clause 57(1)(b), NHI ‘must be gradually phased in using a progressive and programmatic approach based on financial resource availability’.
According to the memorandum on the Bill’s objects, ‘in a favourable economic environment’, ‘new taxation options’ for the fund will be considered. In this regard, the Bill’s clause 49(2) refers to the ‘reallocation of funding for medical scheme tax credits’, ‘employer and employee’ payroll tax and a ‘surcharge on personal income tax’. An assumption on the part of some commentators that all listed options will automatically be factored into the mix could well be misplaced. Writing for Moneyweb, Bowmans tax partner Aneria Bouwer appears to agree. Like the 2015 NHI White Paper, the Bill tends to suggest that specific elements of the combined revenue source are still up for discussion. Meanwhile, the fund will depend on ‘some’ conditional grants being shifted from the Department of Health – as well as ‘some or all’ monies for ‘personal health care services’ traditionally factored into the provincial equitable share formula (clause 49). In this regard, reference is made to moving the national tertiary services grant and the HIV/AIDS and TB grant from the Department of Health into the fund. In appropriating money from the fiscus, Parliament will be guided by the principle of ‘social solidarity’ – which is defined as ‘financial risk pooling to enable cross-subsidisation between … young and … old, rich and … poor, … healthy and sick’.
National Assembly Health Committee chair Sibongiseni Dhlomo has confirmed that work on the Bill will begin with a briefing on its constitutionality from the Office of the State Law Adviser. This is expected to allay concerns expressed by DA leader Mmusi Maimane. The parliamentary process will include public hearings to be conducted separately by the National Assembly, the NCOP and the provincial legislatures.
This article was published on the Legalbrief website on 8 August, when the Bill was tabled in Parliament. It was not included in that morning ’s edition of Legalbrief Today, which was posted before the Bill became available. A more detailed breakdown of the Bill ’s key provisions will follow next week.
The National Health Insurance (NHI) Bill tabled in Parliament today seeks to provide South Africans with ‘access to needed health care that is of sufficient quality to be effective’, as well as ‘financial protection’ from its costs. According to a memorandum on the Bill’s objects, this is the aim of universal health coverage – as spelled out in the 2015 NHI White Paper. To that end, the Bill provides for the establishment of an NHI fund, setting out its powers, functions and governance structures.
Bill proposes that – using ‘some’ conditional grants shifted from the
Department of Health to the fund as well as ‘some or all’ monies for ‘personal
health care services’ traditionally factored into the provincial equitable
share formula – the fund will purchase health care services for all registered
users. Reference is made specifically to moving the national tertiary services
grant and the HIV/AIDS and TB grant from the Department of Health into the
addition, the fund’s executive authority ‘will bid for funds through the main
budget as part of the budget process’. This is noting that, ‘in a favourable
economic environment’, ‘new taxation options for the fund’ will be considered
and could include either ‘a surcharge on income tax’ or ‘a small payroll tax’.
Against that backdrop, it is envisaged that, over time, the fund will ‘expand
coverage using certified and accredited public and private sector health
this regard, the memorandum refers to implementing ‘reforms’ in six phases, the
first of which is apparently already a work in progress. Its focus is to
improve ‘the quality of the health system by … certifying … health facilities
to ensure (that) they meet the requirements of the Office of Health Standards
Compliance’. The final phase will focus on expanding coverage to accommodate
‘maximum projected utilisation rates’ – and ‘gradually increasing the range of
services to which there is a benefit entitlement’.
the memorandum notes ‘legitimate’ concerns about ‘the affordability and
sustainability of NHI’, it offers the assurance that ‘the nature of the
proposed system’ and ‘the checks and balances that will be put in place’ will
‘limit unnecessary expenditure increases for supply-side as well as demand-side
management’. The success or failure of NHI will be determined largely by the
extent to which ‘high quality primary health care services’ ensure that ‘the
majority of health problems’ are ‘diagnosed and treated at this level’.
This article appeared in the 2 August edition of Legalbrief Today, under Policy Watch
Neither Finance Minister Tito Mboweni nor his deputy, David Masondo, was present when the National Council of Provinces (NCOP) considered and passed the 2019 Appropriation Bill on Wednesday (Fin24) – tending to suggest that the final leg of its passage through Parliament was merely a formality. While NCOP member and former National Assembly Finance Standing Committee chair Yunus Carrim ‘stopped short’ of saying as much (SABC News), by drawing attention to the Minister’s absence from the House when it voted on the ‘important’ Bill, he might just as well have done so. Without Mboweni or his deputy, there could be no debate before the vote took place (Business Day).
Approved by the National Assembly on 23 July, the Bill’s ‘B’ version reflects the R17.7bn allocation to Eskom in April, which Finance Minister Tito Mboweni requested be factored into the version tabled on 20 February but not processed by the time Parliament rose for May’s elections. Having been revived on 3 July, it was subjected to public hearings just under two weeks later at a joint meeting of the NCOP and National Assembly Finance Committees. According to Parliamentary Monitoring Group records, Carrim used the opportunity to remind members that, despite capacity constraints, they have a ‘huge responsibility’ to ensure that the funds appropriated are ‘used productively’. Yet after the hearings, each committee met only once – to adopt the Bill.
A perception in some circles that it was ‘rushed through Parliament’ is therefore hardly surprising. In the view of DA leader in the NCOP, Cathy Labuschagne, not only has neither House ever made ‘significant amendments’ to an Appropriation Bill; the ‘right to debate’ its contents is being gradually eroded (Business Day). This despite provisions in the 2009 Money Bills Amendment Procedure and Related Matters Act apparently requiring what her colleague, Dennis Ryder, described as ‘thorough interrogation’ during deliberations in both committees (Fin24). Given the ‘austere measures’ imposed by the 2019 Appropriations Bill, Ryder believes the three-week process fell far short of these requirements.
This article appeared in the 29 July edition of Legalbrief Today, under Policy Watch
While the presidential advisory panel on land reform and agriculture report released recently lists situations in which land could be targeted for expropriation without compensation, it is envisaged that the revised Expropriation Bill will provide the required level of detail on each. Against that backdrop – and building on sub-clause 12(3) of the draft Bill released last year for comment – the report refers to ‘land already occupied and used by labour tenants and former labour tenants’; informal settlements; ‘inner city buildings with absentee landlords’; abandoned land; ‘hopelessly indebted land’; land held purely for speculative purposes; unutilised land held by state entities; land obtained through criminal activity; and farm equity schemes.
an ‘emerging interest’ among private land owners in ‘goodwill’ donations, the
report recommends that this, too, be considered a form of expropriation without
compensation. With that in mind, a voluntary land donations policy is being
drafted with input from National Treasury, the Department of Trade &
Industry and the Department of Agriculture, Land Reform & Rural
Development. Tax exemptions and the policy’s ‘correlation’ with empowerment
legislation are apparently the only matters still requiring attention.
that backdrop, regarding possible amendments to section 25 of the Constitution
the report proposes a new sub-section (2)(c), requiring Parliament to ‘enact
legislation determining instances that warrant expropriation without
compensation for purposes of land reform envisaged in section 25(8)’. This
appears to be a reference to the revised Expropriation Bill. The report also
alludes to a provision in the Constitution itself ‘strengthening’ measures
already in place for protecting farm dwellers from ‘inhumane and widescale
evictions’. Given that a moratorium on land evictions would undermine section
25(1) provisions protecting land owners from the arbitrary deprivation of
property, this appears to have been ruled out. Interestingly, the report also
alludes to ‘myriad … shortcomings’ in a draft Regulation of Agricultural Land
Holdings Bill released in March 2017 for comment. These include its focus on
agricultural land, ‘the concept of land ceilings’ and related proposals for the
redistribution of any excess land. ‘Further studies’ are recommended in this
Several other pieces of urgently required new legislation are mentioned in the report: a National Land Reform Framework Bill or Land Redistribution Bill (among other things prioritising ‘competing needs for land’); a Land Records Bill (to formalise and record off-register property); a Restitution of Land Rights (General) Amendment Bill and Restitution of Land Rights (Judicial) Amendment Bill (to address what appear to be the Act’s numerous shortcomings); a Protection of Informal Land Rights Bill (also dealing with rights under customary law); and a Land Court Bill (to strengthen the adjudication process in the context of disputes over land restitution, distribution and expropriation). As Legalbrief Today has already reported, Justice & Correctional Services Minister Ronald Lamola’s recent political overview of the work of his two departments prioritised the Land Court Bill, which is expected to be tabled in Parliament ‘soon’.
that, according to introductory remarks from advisory panel chair Vuyokazi
Mahlati, ‘the people have voiced their impatience’ and that prevailing inequalities
‘are threatening peace and stability’, the length of time likely to be taken
drafting, processing and implementing all this legislation is worrying. Other
recommendations in the report point to the need for urgent attention to a raft
of equally demanding imperatives, including agrarian and social reform. This is
noting that if ‘social issues’ directly impacting on the quality of life of
most South Africans are not addressed, the land reform programme will fail.
However, beyond somewhat superficially referring to a ‘land reform fund’ and
its possible ‘sources of capital’, the report is largely silent on the
practicalities of how the entire ambitious programme will be financed. It is
nevertheless made very clear that – as ‘one mechanism’ for enabling land reform
– expropriation without compensation will not, on its own, release land on the
This article appeared in CompliNEWS on 19 July 2019
The 2018 Competition Amendment Act – several key sections of which came into force recently – ‘is evidence of government’s continued commitment to drive economic transformation and inclusion’, according to Trade & Industry Minister Ebrahim Patel. In a media statement on the sections concerned, the Minister singled out ‘a number of new definitions’ along with changes to section 8 of the principal statute, dealing with the abuse of dominance; section 10, dealing with exemptions; section 12A, dealing with the ‘public interest consideration during mergers’; sections under Chapter 4A, dealing with market inquiries; and section 59 dealing with penalties for offences. According to the statement, sections of the amendment Act not yet operationalised ‘will be phased in’ – beginning with those providing small businesses with remedies against price discrimination by dominant firms and the abuse of power by dominant buyers. These provisions are expected to be in effect ‘by November’, in anticipation of which the necessary regulations will probably be released in draft form soon for public comment.
In an article published in Mondaq, Fasken’s Johan Coetzee, Neil MacKenzie and Stuart Strachan unpack ‘some of the more notable amendments’ now in force:
interest ground sees consideration being given to ‘the promotion of a greater
spread of ownership … to increase the levels of ownership by historically
disadvantaged persons and workers in firms in the market’.
‘The test for excessive pricing has been
reformulated …, although it is largely reflective of existing case law. It has
been explicitly stipulated that where it can be shown by the (Competition) Commission
that the price charged by the dominant firm is prima facie excessive, the onus shifts to the dominant firm to
prove that the price is reasonable.’
Regarding predatory pricing, ‘the scope of
possible cost benchmarks has been amended to include average avoidable cost and
average variable cost, in order to allow for a more accurate assessment of
Margin squeeze … has been included in the list
of specific exclusionary acts.
All contraventions are now ‘subject to a penalty
of 10% of a firm’s annual turnover’, while ‘an administrative penalty of 25% of
a firm’s annual turnover’ may now be imposed for a second offence.
Market inquiry proceedings will focus on market
structure, observed market outcomes and conduct adversely impacting on competition.
‘Critically’, according to the article, the Competition Commission ‘will be
able to take any remedial actions … it considers to be reasonable and practicable’
– other than divestiture, which can only be imposed by the Competition Tribunal.
The commission’s findings and actions will be binding, unless challenged in the
Exemption provisions in the principal statute
now include an additional ground: ‘to promote the ability of effective entry
into, participation in or expansion within a market by small and medium
businesses or firms controlled by historically disadvantaged persons’; ‘for the
economic development, growth, transformation or stability of any industry
designated by the Minister’; and ‘for competitiveness and efficiency gains that
promote employment or industrial expansion’.