Ease of Doing Business Bill [B6-2021]: deliberations

Meeting report

Ease of Doing Business Bill: deliberations
The Chairperson invited Ms Lesoma to present the ANC party stance on the matter.

Ms R Lesoma (ANC) noted that the Committee had determined that Members would take the Bill to their political parties to caucus a party position. Members had received Mr Krüger’s Bill – she refrained from calling it a DA Bill or a Private Member's Bill – using government infrastructure, as the Bill sought to do. The ANC study group had been delegated by the ANC structures to apply its mind to the Bill. She stated that the study group had given the Bill the necessary attention to make a determination. The Committee had held three meetings on the Bill, had listened to a briefing on the Bill by the sponsor, to stakeholders who had given oral submissions and input from the Presidency as the Bill sought to advance the Presidency.

ANC position
Ms Lesoma noted that the Bill was tagged a section 75 Bill when gazetted in March 2021. It was important to understand the objectives of the Bill that the ANC study group had considered important to its position. The Bill sought to:
- Create a capacity in government to measure, control and reduce socio-economic impact of a regulatory nature;
- Ensure the due consideration of multiple options by organs of state to achieve the objectives of government policy;
- Measure the impact of regulatory measures, and especially red tape contained in regulatory measures on business;
- Create a friendly environment for business in the Republic; to get political buy-in so that all small, medium and micro enterprises overcome the binding constraints for business people to operate in a business-friendly environment;
- Create a regulatory impact assessment (RIA) unit in the Office of the Presidency responsible for the reduction of red tape and the cost of red tape for businesses.

The Bill would apply to all three spheres of government, even though the Bill was gazetted as a section 75 Bill. She would not go into why the study group felt that the tagging was wrong. However, for the study group, the fundamental question, which she was still battling with and hoped would be clarified at this meeting was: which was the appropriate Portfolio Committee to consider the Bill? 99% of the Bill dealt with small businesses, but the Speaker’s Office had sent the Bill to the Committee on Public Service, and she could tell Members why that was so. The Committee on Small Business Development had rejected the Bill in the Fifth Parliament. In the intervening time, the Bill had been tweaked and very specifically had added: to ensure the due consideration of multiple options by organs of state to achieve the objectives of government policy. That was a reference to B-BBEE and there were other issues of sequencing and so on that had been added during the legal writing of the Bill.

The fact was that the Committee on Small Business Development was the correct committee but that had been ignored and it was stated that the Committee on Public Service and Administration, Performance Monitoring and Evaluation was the correct committee for the Bill as it was this Committee that monitored the Presidency's Department of Planning, Monitoring and Evaluation (DPME) whose mission was to support effective planning, monitoring and evaluation of government programmes aimed at improving service delivery and outcomes and impact on society. Achievement towards the 2030 NDP goals were also monitored.

Ms Lesoma stated that the Presidency had been charged with facilitating ease of doing business. The DPME Unit in the Presidency dealt with the Socio-Economic Impact Assessment System (SEIAS). It had been invited to a meeting to clarify the extent of its mandate to avoid duplication with what the Ease of Doing Business Bill sought to achieve. SEIAS aimed to minimise unintended consequences from policy initiatives, regulations and legislation, including unnecessary costs from implementation and compliance as well as from unanticipated outcomes, and to anticipate implementation risks and encourage measures to mitigate them. SEIAS measured legislation and regulations in terms of their impact on social cohesion and security (such as safety, food, finances and energy), economic inclusion, economic growth, and environmental sustainability.

She had summarised what the SEIAS Unit was paid to do and it was clear that there was some duplication with the Bill. The Unit monitored laws that favoured big business and negatively impacted on the poor. There was some exclusion of the poor in the Ease of Business Bill as the Bill favoured the rich.

The political parties had been invited to make suggestions or amendments and to say if it accepted or rejected the Bill but the ANC noted that the Bill sought to create a unit in the Presidency which would duplicate the Socio-Economic Assessment System Unit. The Bill encroached on the mandate of other departments, such as that of Small Business Development. Operation Vulindlela was already addressing structural economic reforms. The Bill did not recognise the separation of powers between Parliament and the Executive. It lumped them together. The Bill did not consider a holistic approach to red tape, such as considering red tape in provinces and municipalities. The Bill was tagged section 75, but one would have thought that the Bill would have talked to that. The Bill took away the responsibility for an impact assessment from the SEIAS Unit of the DPME.

It called for a new unit but did not say what should happen to the existing unit. It did not speak to the impact of business on the social and other sectors. It did not evaluate nor have a strategy on how the reduction in red tape would create additional jobs or economic growth. To be fair to the sponsor, that might have been an exercise to be engaged upon if the Bill had been accepted.

She applauded Mr H Krüger (DA) for bringing the Private Bill to the National Assembly. She complimented the stakeholders and organisations that had worked so hard to support the Bill and to ensure that it saw the light of day. She recognised the passion of Mr Krüger for the upliftment of small businesses in the country.

The ANC study group was quite disappointed that the sponsor of the Bill and stakeholders chose to deliberately ignore fundamental questions:
1. The Office of the President presently did impact assessments and sought to reduce red tape.
2. The Bill encroached on the mandate of the SEIAS, National Treasury and the Departments of Small Business Development and Trade, Industry and Competition.
3. The Bill established a new regulatory impact unit which went against the spirit of reducing the public service wage bill. The Bill had financial implications which would add more pressure to the constrained financial resources of government and the state. The priority of the country was to fight poverty, but also to fight the Covid-19 virus through vaccinations to save lives. Was the Committee going to take on another vehicle to draw on limited resources and duplicate a unit in existence?
4. The rationality of directing the Bill towards this Portfolio Committee was questioned since the entire Bill addressed small, medium and micro enterprises. There was a relevant Portfolio Committee for Small Business Development. It could alternatively have gone to the Committee on Trade and Industry if it addressed all business. She did recognise that the allocation to a Committee was not the sponsor’s responsibility. If she had been there to advise the Speaker’s Office, she would have directed it to the relevant Committee. However, because it had been directed to this Committee by the Speaker, Members should respect that and so her study group had applied its mind and that was what she was presenting.
5. The Bill should be avoided by Parliament because it creates a perceived [inaudible 00:35:15].

Ms Lesoma spoke to the logic and spirit of the Bill. She had taken the trouble to go to the Constitution. In Chapter 3 of the Constitution, under Cooperative Governance, there was an important part. She read from section 40(1): In the Republic, government is constituted as national, provincial and local spheres of government which are distinctive, interdependent and interrelated.

The Bill was tagged as section 75 and the sponsor had never made reference to the NCOP and if it should go to the NCOP. He did not speak to that process nor to any Bills or legislation which addressed that issue in municipalities or at a provincial level. She knew that local government had gone the extra mile in addressing small businesses. Section 41(i) to (iv) of the Constitution was also important to the matter.

Ms Lesoma referred to section 44(1) of the Constitution, which spoke to national legislation in the National Assembly and conferred various powers on the National Council of Provinces. The sponsor had not referred to other spheres of government and the study group had found that very strange, but perhaps the sponsor could explain why.

Ms Lesoma added that the ANC moved that the Committee should declare it the end of the road for the Private Member’s Bill as it rejected the Bill. However, the ANC encouraged Members to sponsor honest and transparent Bills to relevant Portfolio Committees and not to find other ways of presenting Bills as that Bill had done. The sponsor had never made reference to the fact that the Bill was produced in the Small Business Development Committee in the Fifth Parliament.                                                                                                                                                                                                                                                                                                                        

She was talking to honesty and transparency, but quickly added that Mr Kruger might not have been serving on the Small Business Development Committee at the time and might not be aware of it. He had not stated that the Bill had been served on the Committee on Small Business and been rejected in the Fifth Parliament and that spoke to dishonesty. Her group had done its part and had considered the Bill.    
    
The ANC recommended that the Committee reject the Bill.

EFF position
Ms R Komane (EFF) had gone through the Bill and had seen that it attempted to get a buy-in from other political parties. The EFF believed that the Bill should not have been sent to this Committee but should have been sent to the Committee on Small Business. The Bill caused duplication of units in the Presidency. The EFF noted that the Bill would encourage marginalisation, particularly of the Black poor that were meant to be assisted by business. It reduced or marginalised the oversight of government. The Bill aimed at doing away with regulations such as employment equity and it privatised business. The EFF was striving to fight unemployment and supporting the Bill would send a message to the community that the EFF did not consider poor people, particularly the Blacks, but supported privatisation.

She said that the EFF had noted all the public submissions and the EFF had determined to reserve its right on the Bill. The EFF would not support or reject the Bill.

Discussion
Ms M Ntuli (ANC) stated that the Bill was more relevant to the Small Business Development Portfolio Committee and it was a duplication of the work in progress by the SEIAS and DTI. It was safe to say that the DPME was on top of the pressure put on small business or developing business, particularly about government departments making timely payments, which used to be delayed. Businesses had been suppressed and killed when payments were not made in time by government.

She appreciated and commended Mr Krüger for his willingness to assist government but observed that he did not see the work in progress as progressive enough. She also noted that the Bill had been tabled and rejected in the Fifth Parliament.

Her ANC colleague has not simply rejected the Bill but there had been a response that indicated appreciation for the Bill but noted that government was on top of matters. She seconded Ms Lesoma’s proposal that a full stop be put to the Bill and that it be declared “not moving forward” . She hoped that it would not cause any animosity because the work recommended in the Bill was already in progress. Mr Krüger and the supporters of the Bill could monitor the work being done by government.

Mr S Malatsi (DA) responded to the allegation that the Bill had been submitted to the wrong Committee. Such an allegation should not de-legitimise the contents of the Bill. In all fairness, the Committee should be engaging with the substance of the Bill. The allegations of duplication did not seem to be the case because in reality there was massive red tape hampering the operations of small business, and even big business, to do business. The Committee should be focussing on finding a legislative means of reducing red tape and creating an environment in which small businesses could thrive by removing all the obstacles in the way.

He did not think that the Committee should outsource its obligation to look at the legislation due to what had happened in a different Committee in a different Parliament. What was before the Committee should be dealt with on its own merits. Even the substance of the Bill was different from what had been presented to the Fifth Parliament. The Committee should not rush to cut short the Bill's lifespan but should interrogate it further and the Committee should satisfy itself on the merits of whether the Bill could support small business.

The essence of the Bill was what was important and the Committee had to find ways of ensuring that the essence of the Bill came to life. It was not about ideological differences but about the impact of the Bill on small businesses. It worried him that the current Unit was alleged to be working on this but the Members continued to hear massive testimony of continued red tape pulling down small businesses. If the Unit was effective as the ANC seemed to think, why was there so much red tape? The reality was that the Committee needed to be at the forefront of finding solutions that would help small businesses.

Mr Malatsi asserted that the Committee should not put an end to the Bill because it challenged their ideological foundations. He did appreciate that Members had attempted to share their party views on the Bill. The Committee also needed to look at the external organisations that had come to present submissions in support of the Bill. Not one of them could find anything against the Bill. It would be too hasty to rush to a decision to end the progress of the Bill. He would ask Mr McGluwa, to add to what he had said.

Ms C Motsepe (EFF) said that adding to the rejection of the Bill was the fact that social and economic assessments were normally key components of the broader environmental impact assessment often performed at the project approval stage. Economic impact assessments played a key role in determining the overall worthiness of a project and also analysed the reported output on employment, income and value-add at a national level. This Bill did not consider social development for the community, for the region and for the nation and that meant that the EFF could not side with the Bill but had to reject it.

Mr J McGluwa (DA) spoke about process and how the Committee had dealt with the Bill. He said that it could have been the Research Unit, but someone had to take responsibility for failing to determine that the Bill had been allocated to the appropriate Committee. Now Members were crying foul because the Bill was in front of the wrong Committee. Those Members had even involved the Presidency. He placed it on record that the Presidency itself was in ICU. The Presidency did not have a Portfolio Committee that had oversight over its affairs.

When the Bill had come before the Committee, he recalled, Members had asked the ANC to go back to its caucus and then to come back to the Committee with a recommendation but it seemed that there was some sort of politicking with the Bill before them. Not one of the Members against the Bill had referred to a single submission made by organisations to the Committee. The Small Business Institute had said that the Bill was achieving the aspirations of the Presidency. Another organisation had said that, for ten years, the objective of increasing the ease of doing business had not progressed and now it was addressed in this Bill. Business organisations representing more than 12 000 members had said that it was a good idea, including organisations funded by the African Union to assist the Department of Small Business Development in SA. Those organisations had believed that the Bill would assist government as well as SMMEs.

Mr McGluwa was disappointed that the Committee had been dragging its feet and playing politics. The Bill could not have come at a better time during the Covid-19 crisis because businesses were closing on a daily basis as the country went into various levels of lockdown and yet parties were politicking about the Bill being in the wrong Committee and that was why it had to be rejected. Instead of being in a hurry to help those closing down their business and people losing their jobs, the Members were seeking the right procedure to be followed. He added that it was a Member’s Bill, not Mr Krüger’s Bill, without even the title of Honourable Krüger. He requested the right to present a Minority Report for inclusion in the Committee Report on the undesirability of the Bill. He asked that the Researcher in the Committee provide the right advice on how the matter should be taken forward.

The Bill had been very clear about how it would assist in easing business. Mr McGluwa recalled that the very same Committee had requested the Unit in the Presidency to explain what it had done to deal with small business and red tape, and Members had not been satisfied with what the Unit had done.

He agreed that Ms Lesoma had very politely rejected the Bill but he called on ANC members who had said that it was a good thing, to come forward and support the minority view. The Bill should be taken forward in the right direction.

IFP position
Inkosi R Cebekhulu (IFP) informed the Committee that the IFP had not met and deliberated on the Bill. It was clear to him that the Bill had been tabled by a Member who was tired of government failing. Government had committed assistance to 40 000 small businesses every year but it had not happened. In the National Development Plan, Government had promised that red tape would be cut. In each and every State of the Nation Address, a promise was made that 40 000 small businesses would be assisted so that they could create jobs for the many unemployed in the country. Those were all empty promises.

He hoped that the IFP would have the opportunity to deliberate on the Bill if it came up again.

Discussion
Ms Lesoma thanked the Chairperson for his patience with her. It was disappointing. Was the Committee going to take on the responsibilities of other Committees? She would have a serious problem with that. That would be disappointing. The Committee had to avoid encroaching on the mandate of another Portfolio Committee in Parliament. Each Committee had its own jurisdiction.

She noted that 99% of Mr Krüger’s Bill dealt with small business. Why should it be the responsibility of this Committee to re-direct the Bill to the Small Business Portfolio Committee. Members knew what the right procedure was if they wanted to re-direct the Bill to the proper Committee. Even though it had been sent to this Committee by the Speaker’s Office, it was not the right of this Committee to encroach on another Committee’s mandate. This Committee could assist by monitoring departments that did not pay suppliers within 30 days and calling them to account. It was this Committee’s responsibility to accommodate that cry from businesses.

Ms Lesoma noted that the Research Unit had done some work which she assumed that all Members had gone through. They had compared SA to Australia but the two countries were materially different. The Committee had, at the time, requested the Research Unit to present its research but there was no need for that any longer. Members who wanted to could write to the Small Business researchers to do the research that they had requested, but this Committee did not have oversight over small businesses.

She said that it would be wrong to keep quiet on the matter of engaging with the Presidency. The President came to Parliament and engaged in “Questions and Answers” and Members could submit questions to the President. There was no logic in suggesting that the President accounted to a Committee: he accounted to Parliament. If the frequency of the President accounting to Parliament was inadequate, one would have to wait until next year to ask for an amendment to the Rules as the Programme Committee had already addressed that matter earlier in the year.

She added that Members should not misquote her as she had always referred to Honourable Krüger when referring to the Bill that he had sponsored but because Members were impatient, they forgot what she had said. There was nothing wrong, however, with saying “Mr” if one had forgotten. It was nothing to do with politicking. It was about areas of responsibility; about duplication and wastefulness financially and materially; the Bill sought to undermine other departments. She reminded Members that the Committee had already been kicking and screaming about the public sector wage bill, and Members could not, when it suited them, speak on both sides of their mouths.

Ms Lesoma rested her case, knowing that Ms Ntuli had supported her motion that the Committee reject the Bill. They were not rushing but it did not make logical sense to carry on with the Bill. Members were at liberty to come up with their own Bill but her advice was that the Committee should focus on the things that it should be doing and had not been doing consistently. The Committee needed to call in departments that were not applying the Public Finance Management Act and other regulations consistently.

Dr M Gondwe (DA) did not hold the view that the establishment of the RIA unit in the Presidency would duplicate the work of other units, such as the SEIAS unit, nor would it encroach on the work of the Department of Small Business Development. If the departments were doing something productive, the Bill would not have been introduced. There was no evidence to suggest that, since its establishment, SEIAS had had an impact on a reduction in red tape.

She noted that the submission from the Free Market Foundation had asserted that the SA economy was currently over-regulated and government promises and assurances that it would reduce red tape had not amounted to much. The economy was taking a strain under the pandemic. The Foundation had also pointed out that the rule of law was not being followed in the promulgation of legislation and the RIA would go a long way to resolving this and preventing the subsequent consequences. The Foundation pointed that not all legislation had assessments accompanying them. A case in point was the Section 25 Bill which had had no impact assessment until the DA had recently called for an impact assessment. Even where impact assessments were carried out, they were incomplete, unbalanced and in favour of policy, with no impartiality. The assessments were not honest about the consequences.

Dr Gondwe reminded Members that the Small Business Institute had given support for the Bill, indicating that it preferred RIA to SEAIS because RIA, as a tool, emphasised stakeholder engagement early on in the legislation- and regulation-making process. RIA also measured legislation against priorities, such as employment, growth, transformation and competitiveness, which all supported and enabled the business environment. Sakeliga had said that it welcomed any initiative that would reduce red tape and alleviate some of the unnecessary encumbrances placed on SA businesses.

The point was that support for the Bill had been received from credible organisations and no other submissions had been received. The interest should be on the substance of the Bill and not necessarily around its process. It would go a long way to alleviate the burdens experienced by medium and small businesses as a result of policies that were not helping but adding to red tape. She did not think that the Bill was undesirable and the Committee should look at its substance.

Ms M Kibi (ANC) stated that she was well covered by Ms Lesoma. The Committee had given the Bill adequate time and had done it justice. They had even allowed Mr Krüger to present and for those organisations that supported him to have their say. The Committee was now wasting time for Mr Krüger and he should take the Bill where it was supposed to be. It could be supported in another Committee but the Public Service and Administration, Performance Monitoring and Evaluation Committee had given it enough time. It was really a duplication of what was being done in other departments. It was the end of the road for this Portfolio Committee. Mr Kruger should take it to the Small Business Portfolio Committee. Whatever was in the Bill was being done by other departments in the Presidency, so it was a duplication. But the buck stopped there and the Committee should stop it and let the Bill move forward to another Committee.

Ms Komane said that she had called Hon Krüger Mr Krüger and she was not apologising because there was nothing wrong in doing that. She could not be forced by those who supported the Bill to dig deeper into the Bill. Members had supported the Bill but they had to remember the mandate of the Committee. The EFF was going to exercise its democratic right to abstain. The Bill would do better at the Committee on Small Business Development. One of the Members had mentioned that some businesses were not being paid within 30 days by government. It was within the mandate of this Committee to take that up with those departments. There was consequence management and it needed to be executed. Why introduce the Bill by saying businesses were not being paid on time? Members could not be drawn into deliberating on the Bill as it was not meant for this Committee. It had been accidentally brought to the Committee and it should not be drawn into the mandate of Small Business.

Ms Ntuli agreed that the Committee that had made time to deliberate on a Bill that had been rejected by the Fifth Parliament. The rejection of the Bill was not due to that issue. It was simple. The problem was that the Bill wanted to duplicate other units and departments. The Committee had been very kind in listening to the Bill and the supporters of the Bill. Mr Krüger had been given time to present. The Committee had opened its arms to all who had wanted to present on the Bill; even the Presidency had been invited to present.

She repeated that the Committee had opened its arms to hear the Bill. It could change colour in moving from the Fifth Parliament to the Sixth Parliament but that did not matter, it was a duplication of government departments. She wanted everyone to take "politicising" out of the Bill as no one had been politicising it. Members had participated wholeheartedly. DPME was on top of some of the things that were seen as red tape issues. The Department had done a good thing in insisting that businesses be paid within seven days. That was one of the things that had been killing business, especially black businesses that were doing business with government for the first time and were expecting to get paid on time. If businesses were not paid in time, they would be killed once and for all.

Ms Ntuli declared that the matter of ensuring that businesses were paid on time was work-in-progress. It was an honest fact that the Bill was not politicised. Mr Kruger and his supporters could submit the Bill to another Portfolio Committee if he felt it could do better there, but it was not the business of the Committee to send the Bill on to another Committee.

Mr Malatsi stated that the Committee was at a deadlock as those in favour of and those against the Bill were strong in their positions. He thought that the resolution to the deadlock would be to revert to that which Mr McGluwa had raised, i.e. a Minority Report as no one was being persuaded by the substance of the Bill. In terms of parliamentary rules, the way forward was a minority report. He recommended that Mr McGluwa present a Minority Report.

The Chairperson said that it was his turn to speak. His understanding was that the ANC Members had said that the Bill did not belong to this Committee as it could not do the work of other Committees and he advised Mr Krüger to take the Bill to the Portfolio Committee on Small Business Development. In that way, the Committee would not be rejecting the Bill but directing it to the relevant Committee. It was then not a rejection of the Bill. He instructed Mr Krüger to take the Bill to the correct parliamentary committee to address the Bill and that was the Small Business Development Portfolio Committee.

He thanked Members for their engagement.

Mr McGluwa requested permission to speak.

The Chairperson replied that Mr McGluwa could not speak after the Chairperson had indicated the way forward.

Mr McGluwa registered the DA’s disagreement with the way in which the Bill had been dealt with and the decision that had been taken.

The Chairperson stated that Mr McGluwa’s comments would not change anything. He told Mr Krüger to take the Bill to the Committee on Small Business Development as this Committee was not going to do the work of another Committee. He promptly declared the meeting adjourned.

The minutes of 2 and 23 June 2021 were adopted at the start of the meeting.