THE 2019 NATIONAL CREDIT AMENDMENT ACT, UNPACKED

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 resolution agent. 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.

NHI BILL CONFIRMS LIMITS TO ‘UNIVERSAL’ QUALITY CARE

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.

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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.

NEW BILL CONFIRMS NHI VULNERABILITY

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.

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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.

The 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 fund.

In 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 facilities’.

In 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’.

While 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’.

NATIONAL HEALTH INSURANCE: THE BUILDING BLOCKS

This article appeared in the 17 July edition of Legalbrief Today, under Policy Watch

While the yet-to-be-tabled National Health Insurance (NHI) Bill is being processed in Parliament, ‘the structure of the national Department of Health will be reorganised’ and a dedicated NHI implementation unit established. The official version of Health Minister Zweli Mkhize’s recent budget vote speech describes the unit as an ‘embryo’ NHI fund and staff capacity-building platform. Unfortunately, the speech was only published on the department’s website several days after being delivered, which may explain why the mainstream media overlooked so much valuable information provided by the Minister on government plans for preparing public health facilities to implement the long-awaited system. As has been widely reported, Mkhize provided no information on the primary source of revenue for NHI. However, he did refer to a ‘social compact’ on building a health system fit for its implementation. It was one of the outcomes of last October’s presidential health summit.

Mkhize also confirmed that, as the ‘backbone’ of a national electronic health patient record system, a registration system has been developed on which the details of ‘all South Africans’ are expected to have been captured by the end of the 2019/20 financial year. According to the Minister, nearly 43m users have already been registered. With the aim of improving management and governance, within the ‘next six months’ the organograms of all state-run health facilities are expected to have been reviewed and the system of delegating responsibility ‘adjusted to ensure appropriate levels of authority for effective decision making’. In addition, EU funding and bilateral agreements with Japan, the UK and France will be used to ‘build the capacity of managers to implement NHI’. In this regard, Mkhize mentioned ‘twinning arrangements’ also involving ‘academic institutions’.

Conceding that ‘it will be impossible to convince the public about the virtues of NHI unless the health infrastructure is rebuilt as a matter of urgent priority’, the Minister said a ‘team of experts in finance and health … infrastructure’ has been established ‘to seek creative financing mechanisms’ and ‘alternative’ delivery models. According to Mkhize, the team’s ‘clear directive’ is to ‘accelerate the refurbishment of all old hospitals and clinics and deliver new ones within five-to-seven years’. While a ‘significant amount’ has been budgeted for this, in the Minister’s view it is ‘grossly inadequate’. Nevertheless, the ‘entire’ infrastructure build programme has been costed – informed by an audit of all public health facilities. ‘Preliminary indications are that … (it) is feasible,’ the Minister said.

Writing for the Daily Maverick (and drawing from the department’s 2019/20 annual performance plan) the Bhekisisa Centre for Health Journalism’s Laura Gonzalez reported that, initially, it is envisaged that, from 2021, the fund itself will be used to purchase a ‘basic package of services’ from both private and public healthcare providers. Over time, a ‘comprehensive package of services’ will be made available from regional and tertiary hospitals ‘in selected districts’. According to Gonzalez, these services could form the building blocks of ‘a basic medical aid option’ along the lines of one apparently being considered by the Competition Commission ‘as part of its four-year investigation into the private healthcare sector’.

COPYRIGHT AMENDMENT BILL: EXPERT ADVICE ‘MISSTATED’ AND IGNORED

This article appeared in the 22 March edition of Legalbrief Today, under Policy Watch

Parliament has largely ignored the advice of copyright law experts approached last September by the National Assembly’s Trade and Industry Committee for their views on ‘terminology’ used in the controversial Copyright Amendment Bill. Yet a Department of Trade and Industry presentation on which the NCOP’s Trade and International Relations Committee relied heavily before deciding this week to adopt the Bill’s ‘B’ version left members with the impression that the panel had ‘verified’ clauses many stakeholders believe should have been removed. Drawing attention to the ‘misstatements’ concerned, a letter to Trade and Industry Minister Rob Davies and NCOP committee chair Eddie Makue from panel member André Myburgh asked the Minister to ensure not only that they be ‘corrected on public record’ but that the committee consider ‘the actual responses of … panel members’ in its deliberations.

Myburgh’s letter provided Davies and Makue with copies of documents sent to the National Assembly committee by panel member Michelle Woods (World Intellectual Property Organisation), along with links to electronic copies of input from members Joel Baloyi (University of SA), Wiseman Ngubo (Composers, Authors and Publishers Association) and Myburgh himself. It also drew attention to ‘recommendations from members of the panel as to how certain desired policy outcomes could be made to work’ – along with instances where individual ‘positions’ at the time were, in fact, ‘consistent’ with those of stakeholders whose interests the Bill seeks to protect. This was noting a 6 March NCOP committee media statement among other things commenting on the contrasting views of ‘performers and artists’ (who are apparently ‘happy’ with the Bill) and the general ‘dissatisfaction’ it has allegedly elicited among ‘experts’.

At the time of writing, neither the Minister nor Makue had replied to Myburgh’s letter. However, during Wednesday’s NCOP committee meeting Department of Trade and Industry Deputy DG Evelyn Masotja did concede that ‘most’ members of the panel had been ‘worried’ by references in her presentation to their having ‘cleared’ the Bill. Explaining the panel’s role in the process, she said that, while the advice of individual members had been considered by the National Assembly committee, not all recommended amendments had been accepted. ‘They did not clear the Bill,’ she assured NCOP committee members. According to a document spelling out what was required of the panel at the time, its members were asked for their views on: the ‘appropriateness’ of terminology used ‘in the context of local copyright law parlance’; whether the Bill’s ‘wording’ reflected policy imperatives outlined in the memorandum on its objects; whether clauses seeking to address SA’s obligations in terms of various international treaties ‘correctly’ reflected their content; and ‘whether any of the clauses raise(d) constitutional concerns’.

On Wednesday, having ‘applied their minds’ to the most recent proposals received from stakeholders for amendments to the Bill (at least in Makue’s view), NCOP committee members chose not to consider them further in the light of Masotja’s presentation. Makue also referred to email correspondence from ‘international’ parties sent after the deadline for written submissions had expired, lobbying for the Bill to be withdrawn – and ignored by his own admission. Sadly, if input from committee members during two meetings at which the Bill was superficially discussed are any indication, they are no more familiar with the complex issues underpinning the advice of the panel of experts than their colleagues in the National Assembly committee were when they adopted the Bill last year. This notwithstanding, its endorsement at next week’s NCOP plenary is probably a foregone conclusion – despite widespread media coverage of unintended consequences likely to include job losses across all affected industries (Fin24) and a decline in ‘scholarly innovation and cultural development’ (The Conversation).

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Trade and Industry Minister Rob Davies

THINGS FALL APART

It’s rather worrying when a Constitutional Court judgment creates ‘some confusion’ in government about the department responsible for giving effect to the order concerned. But that was apparently what happened when, in 2017, the court found the 2011 Local Government: Municipal Systems Amendment Act invalid. Which is why it took nearly two years for the required amendment Bill to be tabled in Parliament – at least according to a media statement from Cooperative Governance and Traditional Affairs Minister Zweli Mkhize.

The Act was declared invalid because the Bill concerned was incorrectly classified as section 75 legislation (ordinary Bills) instead of section 76 (Bills affecting the provinces) and therefore processed without the involvement of the provincial legislatures. So, how on earth did the Minister and/or his department expect Parliament to follow the necessary procedures in the six weeks available when the amendment Bill was tabled on 7 February? In anticipation of the 8 May elections, the National Assembly is scheduled to rise on 20 March and the NCOP a week later.

The statement tends to suggest the Bill’s tabling at the eleventh hour was a formality and that it was always the department’s intention to apply to the court for another twelve months to process it. But here’s the rub: local government has been in crisis for decades, hence the need for a turn-around strategy. The accountability of municipal managers (or, possibly, their lack of it) is widely perceived to be at the root of the problems besetting most local authorities: an issue the invalid Act was expected to address by empowering the Minister to make the necessary regulations.

To sum up: 1) the crisis in local government prompted national government to begin implementing a turn-around strategy in 2009; 2) the 2011 amendment Act was supposed to give the Minister the teeth to hold municipal managers accountable; 3) in 2017 the Act was declared invalid by the Constitutional Court; 4) a replacement Act should have been in force by March this year (2019); and 5) it isn’t. If you look at the judgment, it’s perfectly obvious who should be taken to task. Yet municipalities are being told they ‘should not panic as this is not one of those situations where the Act was already in place and its suspension would … lead to a lacuna or vacuum’.

Really? Things are literally falling apart under some local authorities. If the municipalities themselves aren’t panicking, the unfortunate folk living in them probably are.