Date: 02/09/2003
Source: Department of Trade and Industry
Title: Erwin: Liquor Bill, NA
MINISTER OF TRADE AND INDUSTRY ALEC ERWIN'S SPEAKING NOTES ON THE LIQUOR BILL TO BE TABLED IN THE NATIONAL ASSEMBLY, 2 September 2003
Madam Speaker
Honourable Members
The Liquor Bill that is being tabled today has been long in the making and is in a sense a building block in the concept of co-operative governance set out in the Constitution. There is no question that we needed a new regulatory dispensation in this industry. The issue was the arrangement of powers and responsibilities between the three spheres of government. The wait has been long and the consultations with the provinces, various components of the industry and social groups have been intense and sometimes circuitous. However, the final product is a better piece of legislation for all.
As you will recall, a Liquor Bill was previously introduced into and passed by Parliament in 1998. That Bill introduced the concept of registration of manufacturers, micro-manufacturers, distributors and retailers - in common parlance a three-tier system. This meant that the Bill also impacted on powers of provinces and local government. This raised issues of concurrent and exclusive powers and the matter of cooperative governance. To obtain clarity the Bill was referred by the President to the Constitutional Court before its promulgation. The Constitutional Court found the Bill to be unconstitutional in some respects, in particular with regard to the respective jurisdictions of national and provincial government, and ruled that the retail and micro manufacture of liquor were exclusive provincial jurisdictions.
After the Constitutional Court judgement was handed down, a process of redrafting the Liquor Bill was initiated, which culminated in the introduction of a new Liquor Bill into Parliament in May 2003. As I have indicated this was an exhaustive process that involved many stakeholders of one or other form. The Bill does propose a new and more comprehensive regulatory structure for the industry and it was not surprising that at public hearings on the Liquor Bill, a number of concerns about the Bill were again raised, relating to the proposed implementation of a flexible three-tier system, the constitutionality of certain aspects of the Bill, as well as technical issues.
The introduction of a flexible three-tier system understandably has proponents and detractors. Within the industry this was an area of much attention and we once again canvassed many of the issues dealt with in 1998. For government the intention was to regulate and largely separate the three tiers within the industry of manufacture, distribution and retail. However, we have always been cognisant of the need for flexibility in this regard so as to meet differing economic realities and needs. We have been pragmatic and not dogmatic on the matter provided we know what is happening and that we do effect a degree of economic separation of the three tiers. The issues are many and complex and we welcomed the fact that the Portfolio Committee on Trade and Industry granted the dti time to consider the technical matters that were raised and to consult with the liquor industry.
This time has been well spent and the Liquor Bill that I am now introducing reflects broad agreement with the industry, addresses the constitutional and technical matters that were raised and meets with governments original intentions in a workable manner.
The Liquor Policy
I will not repeat what I said in 1998 about the very special and somewhat pernicious history of the liquor industry in South Africa. However, we must not forget the reality that the history of liquor regulation in South Africa was an integral part of segregation. Legislation prevented black persons from legally entering the economic dimensions of the industry and thus visited major social consequences on them. Liquor was used in the notorious 'dop' system as a means of payment, again with profound social consequences.
The result was a dualism of massive economic concentration and size on the one hand and an equally massive illegal industry that was socially very vulnerable. This was a sad and bad situation that we are bound to redress as far as is economically feasible in the present time.
The work on this redress of both economic and social distortions commenced two years after the new democracy with extensive consultations with all stakeholders and participants in the industry. This resulted in the publication of the Liquor Policy in 1997 and introduced a new approach to the regulation of the liquor industry. The stated objectives of the policy were to restructure the liquor industry and address the socio-economic costs of alcohol abuse.
This Bill seeks to give effect to these objectives, as well as to the principles of co-operative governance and the requirements of the Constitution in terms of the respective responsibilities of national and provincial government in the regulation of the liquor industry.
The Scheme of The Liquor Bill, 2003
Addressing the socio-economic costs of alcohol abuse
The Liquor Bill, 2003, seeks to address the socio-economic costs of alcohol abuse through a number of means. In particular, in Chapter 2, it imposes restrictions on
* The supply of liquor to minors;
* The advertising of liquor, particularly advertising targeting minors;
* The use of liquor as an inducement for employment, thus outlawing the "dop" system;
* The manufacture and supply of methylated spirits and the prohibition of concoctions.
In addition, Chapter 3 of the Bill requires manufacturers and distributors to submit a plan to combat the abuse of alcohol as part of their registration requirements.
Restructuring of the Liquor Industry
The Bill proposes the introduction of a flexible three-tier system, which requires the separate registration and regulation of the manufacture and distribution of liquor through national government and the registration and regulation of the micro-manufacture and retail of liquor through provincial government.
The Bill requires the Minister of Trade and Industry to evaluate the registration in terms of three main criteria:
* The commitment to black economic empowerment by the applicant;
* The commitment to combat the abuse of alcohol;
* The impact of the registration on new entry into the industry, diversity of ownership and competition in the industry, balanced against the impact of employment, efficiency and exports.
Based on the evaluation of the criteria, the Minister may impose conditions on the registration. The Bill further allows the Minister to review the conditions of registration if the registrant:
* Becomes registered as a retailer or micro-manufacturer in terms of provincial legislation or has in other respects materially altered its operations;
* Contravenes certain laws; or
* Fails to meet the conditions of its registration.
Chapters 4 and 5 of the Bill provide for inspection powers and offences and penalties.
Giving expression to co-operative governance
Chapter 6 of the Bill seeks to give expression to co-operative governance by creating the National Liquor Policy Council. The Council is an inter-governmental forum headed by the Minister and constituted by the Member of the Executive Council responsible for liquor licensing in each province. The Council's functions are
* To develop national norms and standards for the liquor industry;
* To develop national policy in respect of the liquor industry;
* To promote intergovernmental relations in respect of the liquor industry.
Transitional Measures
As the Bill repeals the Liquor Act, 1989, certain transitional measures have been provided for. In particular, the transitional measures set out norms and standards for provincial Liquor legislation and provides for a mechanism by which the Liquor Act, 1989 is repealed in each province when it has prepared the necessary provincial legislation. It also provides for the conversion of existing liquor licenses that relate to the manufacture and distribution of liquor, subject to a review by the Minister, and preserves the retail rights of existing license holders until such time that the necessary provincial laws are in place.
Conclusion
The Liquor Bill, 2003, thus gives expression to the objectives of the 1997 Liquor Policy, by providing mechanisms to intervene in the structure of the industry, where necessary, to create conditions facilitating new entry and Black Economic Empowerment, and to combat the socio-economic consequences of alcohol abuse through certain public interest prohibitions and the development of a sustainable and responsible liquor industry.
Yet again let me express my thanks to the Portfolio Committee who have helped us to steer this difficult piece of legislation to this point. Thanks to my Provincial colleagues and their officials for all their hard work. My thanks to the dti team for their hard work with more to come as we set up the institutional capacity to implement the new Act.
I should also pay a special thanks to many in the industry and in various social groups that went out of the way to ensure that we addressed economic need and reality whilst ensuring social responsibility.
I commend this Bill to the House.
Published: 3 September 2003
Source: Department of Trade and Industry (http://www.dti.gov.za)
Source: Department of Trade and Industry
Title: Erwin: Liquor Bill, NA
MINISTER OF TRADE AND INDUSTRY ALEC ERWIN'S SPEAKING NOTES ON THE LIQUOR BILL TO BE TABLED IN THE NATIONAL ASSEMBLY, 2 September 2003
Madam Speaker
Honourable Members
The Liquor Bill that is being tabled today has been long in the making and is in a sense a building block in the concept of co-operative governance set out in the Constitution. There is no question that we needed a new regulatory dispensation in this industry. The issue was the arrangement of powers and responsibilities between the three spheres of government. The wait has been long and the consultations with the provinces, various components of the industry and social groups have been intense and sometimes circuitous. However, the final product is a better piece of legislation for all.
As you will recall, a Liquor Bill was previously introduced into and passed by Parliament in 1998. That Bill introduced the concept of registration of manufacturers, micro-manufacturers, distributors and retailers - in common parlance a three-tier system. This meant that the Bill also impacted on powers of provinces and local government. This raised issues of concurrent and exclusive powers and the matter of cooperative governance. To obtain clarity the Bill was referred by the President to the Constitutional Court before its promulgation. The Constitutional Court found the Bill to be unconstitutional in some respects, in particular with regard to the respective jurisdictions of national and provincial government, and ruled that the retail and micro manufacture of liquor were exclusive provincial jurisdictions.
After the Constitutional Court judgement was handed down, a process of redrafting the Liquor Bill was initiated, which culminated in the introduction of a new Liquor Bill into Parliament in May 2003. As I have indicated this was an exhaustive process that involved many stakeholders of one or other form. The Bill does propose a new and more comprehensive regulatory structure for the industry and it was not surprising that at public hearings on the Liquor Bill, a number of concerns about the Bill were again raised, relating to the proposed implementation of a flexible three-tier system, the constitutionality of certain aspects of the Bill, as well as technical issues.
The introduction of a flexible three-tier system understandably has proponents and detractors. Within the industry this was an area of much attention and we once again canvassed many of the issues dealt with in 1998. For government the intention was to regulate and largely separate the three tiers within the industry of manufacture, distribution and retail. However, we have always been cognisant of the need for flexibility in this regard so as to meet differing economic realities and needs. We have been pragmatic and not dogmatic on the matter provided we know what is happening and that we do effect a degree of economic separation of the three tiers. The issues are many and complex and we welcomed the fact that the Portfolio Committee on Trade and Industry granted the dti time to consider the technical matters that were raised and to consult with the liquor industry.
This time has been well spent and the Liquor Bill that I am now introducing reflects broad agreement with the industry, addresses the constitutional and technical matters that were raised and meets with governments original intentions in a workable manner.
The Liquor Policy
I will not repeat what I said in 1998 about the very special and somewhat pernicious history of the liquor industry in South Africa. However, we must not forget the reality that the history of liquor regulation in South Africa was an integral part of segregation. Legislation prevented black persons from legally entering the economic dimensions of the industry and thus visited major social consequences on them. Liquor was used in the notorious 'dop' system as a means of payment, again with profound social consequences.
The result was a dualism of massive economic concentration and size on the one hand and an equally massive illegal industry that was socially very vulnerable. This was a sad and bad situation that we are bound to redress as far as is economically feasible in the present time.
The work on this redress of both economic and social distortions commenced two years after the new democracy with extensive consultations with all stakeholders and participants in the industry. This resulted in the publication of the Liquor Policy in 1997 and introduced a new approach to the regulation of the liquor industry. The stated objectives of the policy were to restructure the liquor industry and address the socio-economic costs of alcohol abuse.
This Bill seeks to give effect to these objectives, as well as to the principles of co-operative governance and the requirements of the Constitution in terms of the respective responsibilities of national and provincial government in the regulation of the liquor industry.
The Scheme of The Liquor Bill, 2003
Addressing the socio-economic costs of alcohol abuse
The Liquor Bill, 2003, seeks to address the socio-economic costs of alcohol abuse through a number of means. In particular, in Chapter 2, it imposes restrictions on
* The supply of liquor to minors;
* The advertising of liquor, particularly advertising targeting minors;
* The use of liquor as an inducement for employment, thus outlawing the "dop" system;
* The manufacture and supply of methylated spirits and the prohibition of concoctions.
In addition, Chapter 3 of the Bill requires manufacturers and distributors to submit a plan to combat the abuse of alcohol as part of their registration requirements.
Restructuring of the Liquor Industry
The Bill proposes the introduction of a flexible three-tier system, which requires the separate registration and regulation of the manufacture and distribution of liquor through national government and the registration and regulation of the micro-manufacture and retail of liquor through provincial government.
The Bill requires the Minister of Trade and Industry to evaluate the registration in terms of three main criteria:
* The commitment to black economic empowerment by the applicant;
* The commitment to combat the abuse of alcohol;
* The impact of the registration on new entry into the industry, diversity of ownership and competition in the industry, balanced against the impact of employment, efficiency and exports.
Based on the evaluation of the criteria, the Minister may impose conditions on the registration. The Bill further allows the Minister to review the conditions of registration if the registrant:
* Becomes registered as a retailer or micro-manufacturer in terms of provincial legislation or has in other respects materially altered its operations;
* Contravenes certain laws; or
* Fails to meet the conditions of its registration.
Chapters 4 and 5 of the Bill provide for inspection powers and offences and penalties.
Giving expression to co-operative governance
Chapter 6 of the Bill seeks to give expression to co-operative governance by creating the National Liquor Policy Council. The Council is an inter-governmental forum headed by the Minister and constituted by the Member of the Executive Council responsible for liquor licensing in each province. The Council's functions are
* To develop national norms and standards for the liquor industry;
* To develop national policy in respect of the liquor industry;
* To promote intergovernmental relations in respect of the liquor industry.
Transitional Measures
As the Bill repeals the Liquor Act, 1989, certain transitional measures have been provided for. In particular, the transitional measures set out norms and standards for provincial Liquor legislation and provides for a mechanism by which the Liquor Act, 1989 is repealed in each province when it has prepared the necessary provincial legislation. It also provides for the conversion of existing liquor licenses that relate to the manufacture and distribution of liquor, subject to a review by the Minister, and preserves the retail rights of existing license holders until such time that the necessary provincial laws are in place.
Conclusion
The Liquor Bill, 2003, thus gives expression to the objectives of the 1997 Liquor Policy, by providing mechanisms to intervene in the structure of the industry, where necessary, to create conditions facilitating new entry and Black Economic Empowerment, and to combat the socio-economic consequences of alcohol abuse through certain public interest prohibitions and the development of a sustainable and responsible liquor industry.
Yet again let me express my thanks to the Portfolio Committee who have helped us to steer this difficult piece of legislation to this point. Thanks to my Provincial colleagues and their officials for all their hard work. My thanks to the dti team for their hard work with more to come as we set up the institutional capacity to implement the new Act.
I should also pay a special thanks to many in the industry and in various social groups that went out of the way to ensure that we addressed economic need and reality whilst ensuring social responsibility.
I commend this Bill to the House.
Published: 3 September 2003
Source: Department of Trade and Industry (http://www.dti.gov.za)
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