Agricultural Debt Management Bill: deliberations

Meeting report

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This Report is a Contact Natural Resource Information Service
Taking Parliament to People, and People to Parliament
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The aim of this report is to summarise the main events at the meeting and identify the key role players. This report is not a verbatim transcript of proceedings.

AGRICULTURE AND LAND AFFAIRS Portfolio Committee
18 September 2001
DELIBERATIONS ON THE AGRICULTURAL DEBT MANAGEMENT BILL.

Chairperson: Adv. P. Holomisa

Documents handed out:
Commentary on Draft Agricultural Debt Management Bill: Agri South Africa (Department of Agriculture)

Chairperson: Adv. P. Holomisa

Documents handed out:
Commentary on Draft Agricultural Debt Management Bill: Agri South Africa (Department of Agriculture)

SUMMARY
The Committee continued discussing the Agricultural Debt Management Draft Bill from the previous meeting 11 September 2001. The Committee proceeded with a general discussion of clauses three to eleven, with debate and questions directed at Mr Mbongwa, Mr Marais and Mr Venter of the Department of Agriculture.

The Committee went through a formal process of adopting the Bill from clause one to eleven. All clauses were adopted, with some amendments, with the exception of clause five. The Chairperson, noting the absence of agreement on clause five and time pressure, adjourned the meeting with instructions to committee members and the Department of Agriculture officials to apply their minds further to clause five of the draft amendment Bill.

MINUTES
The Chairperson opened the meeting by welcoming and introducing a visiting delegation from the North West Province Legislature Standing Committee on Agriculture. He said that the visitors had come to attend the meeting in order to acquaint themselves with the workings of the Portfolio Committee. The visitors had also planned to listen to a briefing by the Minister of Agriculture on the effects of the Zimbabwean situation on the South African economy. On the request of Mr. Ditshetelo (PAC) the Chairperson gave a summary of the Minister's presentation for the benefit of the visiting delegation.

The Chairperson invited the Department representatives to take the Portfolio Committee through the clauses of the draft Bill.

Section 3: Agricultural Debt Account.
Mr J. Venter, Department of Agriculture, presented on section three of the draft Bill explaining that the section concerned the establishment and management of the Agricultural Debt Account. He explained that the Director General of the Department would be the accounting officer on the account. He said the account would have funds drawn from the Agricultural Credit Account, repayments of debts or rent. He said that the Agricultural Debt Account would cease to exist at a time when all outstanding debt had been collected or when Parliament had appropriated all monies to the credit of the account.

Section 4: Crediting and Debiting of Account.
Mr Venter explained section four as dealing with the crediting and debiting of the account. He said the account would be credited with interest earned from investments, repayments of debt and any other sources. He said the account would be debited with purchase prices for property, expenses incurred in rendering services, reimbursements of erroneously credited amounts and any amounts appropriated by parliament. He stated that monies credited to the account would be invested with institutions such as the Corporation for Public Deposits and other registered financial institutions.

Section 5: Utilisation of Monies.
Mr Venter explained the section as dealing with the utilisation of funds in the account. He said the Minister of Agriculture, in consultation and with the approval of the Minister of Finance, could authorise the Director General (D.G) to transfer surplus funds in the account to the National Revenue Fund. Parliament would appropriate funds on the vote of the Department and that such appropriated funds would be used for specific business plans submitted by the D.G to the Minister for approval.

Section 6 and 7: Auditing and Reporting, and Validity of Agreements.
Mr Venter introduced the two sections as dealing with the auditing and reporting on the account and on validity of agreements. He said the financial year-end for reporting would be 31 March and that the Auditor General would audit the account. He said all agreements in force would remain legally binding, including those affected by repealed legislation on all state mortgage bonds and conditions against title deeds of immovable properties.

Section 8: Debt.
Mr Venter's stated that the DG would be responsible for the monitoring and management of debt in the account. He said the DG would also enter into negotiations with parties seeking to alter conditions applying to their debt. He mentioned that all properties bought to protect the interests of the State would be registered under the name of the Republic of South Africa.

Section 9, 10, 11: Tendering of Documents; Repeal of Laws; and Short Title and Commencement.
In conclusion, Mr Venter reported on the three sections which respectively dealt with the tendering of documents (mortgage bonds, agreements, consent, authorization, and endorsements), the repeal of the Agriculture Credit Act, the title or name of the Act and the condition and timing of its commencement.

The Chairperson thanked the presenter and invited members to discuss the Bill.

General Discussion of the Amendment Bill.
The Chairperson asked whether there was consent from the Treasury on the way in which the account was intended to work.

Mr T. Marais, Department of Agriculture, responded that there was consent from the Treasury.

Mr A. Botha (DP) asked whether it was possible for the money in the account to be earmarked specifically for land reform.

Mr M. Mbongwa, Department of Agriculture, responded that it was technically possible to earmark the money for land reform. He said that in discussions with the Department of Land Affairs it transpired that ths Department wanted to deal with the perception that it under-spends by first spending its own budget on land reform.

Mr R. Schoeman (ANC) said that the danger with not earmarking the expenditure for the money was that the money could be used generally without specific visible successes. He suggested that the account should be used as a revolving door, with money lent specifically to emerging farmers.

The Chairperson at this point presented a motion by the ANC suggesting that Clause five, sub-clause B should be changed to incorporate the statement that …"the account should be utilised specifically for agricultural development projects within a single financial year".
The Chairperson said that he was reading the motion at that stage in the meeting to make members aware of it and that discussions would be permitted when the formal debate on the adoption of the Bill occurred.

Mr S. Abram (UDM) asked what was the experience of the Department in acquiring movable property such as cattle.

Mr J. Venter responded that there had been success and failure stories. He said the success in recovering movable property depended on the speed in which the Department acted against defaulters. The Department's credit controllers were positioned around the country to respond quickly when needed.

Mr A. Botha (DP) asked if there were transfer costs involved with registering of assets in the name of the Republic of South Africa (RSA) that would then have to be re-registered when they were resold.

Mr Marais responded that no duties or taxes applied to the transactions.

Mr Botha asked the Department to comment on whether the issues regarding interest rates raised by Agri South Africa had been addressed.

Mr Marais said that only the Department of Finance could deal with the issue of interest rates.

The Chairperson noted that Clause 8(2) of the Bill stated that any movable property bought by the Director General would be registered in the name of the RSA. He questioned the reason for using the words "bought" instead of "acquired" as he felt that the term "bought" was limiting when assets could also be acquired by other means.

Mr Marais responded that the Department had no objection to making the change from "bought" to "acquired".

Mr K. Ditshetelo (PAC) enquired on the purpose of buying property to protect the interests of the State.

Mr Marais responded that there were times when it was necessary to buy properties under auction to prevent them from being lost to the State. Such properties could be managed or sold by the State to recover losses that the State would have incurred if the property was lost.

Mr D. Hanekom (ANC) enquired on the reason for using the word 'may' on Clause 5, dealing with the utilisation of the funds. He suggested that the Bill existed on the expectation that there would be requests for funding. The implication in using 'may' was that the money could be used for other purposes.

Mr Mbongwa responded that "may" referred to agricultural development projects, but that the Department would be willing to change "may" to "shall" or "must".

Ms O. Kasienyane (ANC) requested clarity on the use of the wording "with or without amendments" on Clause 5(2)(a) referring to ministerial approval of business plans on utilising the monies in the account.

Mr Mbongwa agreed that the Department would delete the wording "with or without amendments".

Mr S. Abram (UDM) suggested that the ANC amendment needed to be more specific on the use of the funds as it had left some ambiguities. He proposed that the amendment referred directly to formerly disadvantaged farmers.

Mr K. Ditshetelo (PAC) suggested that there was a possibility of being discriminating by being too specific.

Mr L. Zita asked what the lending rate would be for the loans in the account. He wanted to know if they would be different to that of other financial institutions and whether the availability of the loans had been communicated to emerging farmers throughout the country.

Mr Mbongwa responded that the answer depended on the arrangements entered into with financial institutions that would partner the Department in the programme. He also said that communication on the existence of the loan scheme had not yet happened because the programme was not yet in place. Once the Bill had been passed by parliament, the department would begin with a publicity strategy to let farmers know of its existence.

Mrs M. Ntuli (ANC) wanted to know if Mr Mbongwa meant that the credit function would be the responsibility of other financial institutions.

Mr Mbongwa responded that there was a policy that prohibited government departments from performing credit management functions.

Mr R Schoeman (ANC) said that as far as he was concerned if the Department provided money to an institution then it could determine the conditions under which the money would be used. The terms could not depend solely on the institutions.

The Chairperson said that the desire of the Committee was to see the money in the account used in the development of emerging farmers. According to the Bill, the money would be placed in the revenue fund and then appropriated by Parliament. He said if the money were not used it would be lost to the Treasury, but if it were transferred to the Land Bank it would be secured to perform its original purpose.

Mr Marais responded that the Department would go to the Treasury with business plans requesting funding that goes over the lifespan of the projects but with amounts payable annually.

Dr E. Baloi (ACDP) raised a concern that the Bill spoke more about the surplus of funds and not about the actual funds in the account.

Mr Marais responded that all funds in the account would be spent for the purposes of establishing the fund.

Mr A. Botha (DP) argued that the Bill needed to be more specific on the matter.

The Chairperson, noting the absence of agreement on Clause 5 and time pressure, adjourned the meeting with instructions to Committee Members and the Department of Agriculture officials to apply their minds further to clause five of the draft amendment Bill.



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