Election of Chairperson; Media Development & Diversity Agency Bill: briefing by GCIS

Meeting report

LABOUR AND PUBLIC ENTERPRISES SELECT COMMITTEE
21 May 2002
ELECTION OF CHAIRPERSON; MEDIA DEVELOPMENT AND DIVERSITY AGENCY BILL: BRIEFING BY GCIS

Chairperson: Ms C Nkuna (ANC)

Documents handed out
Summary: Position Paper on the MDDA [Appendix 1]
MDDA Position Paper Process [available on GCIS website www.gcis.gov.za/documents/mdda/position.htm ]
GCIS Briefing

SUMMARY
Ms C Nkuna (ANC) was elected as Chairperson of the Committee.

The briefing by GCIS provided background information the Bill, its objectives and aims. The functions of the Media Development and Diversity Agency (the MDDA) and its funding process.

Issues raised during the discussion on the briefing questioned the manner in which funding could affect the independence of the projects, the definitions of "community media" and "equitable representation", the disclosure of any conflict of interests and the time at which this conflict has to be disclosed, the funding procedure under Clause 19 and whether the provision of funding by the MDDA constitutes a duplication with the similar initiative of the Department of Trade and Industry.

MINUTES
Election of Chairperson
Ms C Nkuna (ANC) was elected as Chairperson. She thanked Members for the confidence they have shown in her by appointing her as Chairperson.

The Chair introduced the Government Communication and Information Service (GCIS) delegation, consisting of Mr Tony Trew, the GCIS Deputy CEO: Strategy and Content, Ms Kristin Klose, GCIS Director: Policy and Research, as well as Mr Theo Hercules and Ms Nomalizo Bulisile both from the State Law Advisor's Office. Mr Trew was requested to commence the presentation.

GCIS Briefing on the MDDA
Mr Trew informed Members that the Media Development and Diversity Agency Bill is the culmination of a long process that reaches back to our founding constitution and before. It aims to redress the imbalances of the past with regard to access to the media within a reasonable time, and it is acknowledged that this endeavour can only succeed if founded on a partnership between government and the relevant stakeholders.

This resulted in the recommendation by Comtask that such an agency be established to promote media development and diversity, a task that was assigned to GCIS by Cabinet. There has been extensive consultation since 1999, as well as much research and comparative study, and public hearings were also hosted by the Communications Portfolio Committee which led to the draft bill adopted by Cabinet.

The Bill provides for the establishment of an independent agency rooted in a partnership between the South African government, the media industry and the community media sector, and gives practical expression to the common interest of all those involved in the media sector.

Clause 3 of the Bill contains the goals and objectives of the Bill: the promotion of development and diversity in the media. Yet a fundamental philosophy of the Media Development and Diversity Agency (the MDDA) is that it will not become involved in content, but rather aims to overcome the inequalities and barriers to media development and diversity.

The MDDA has no regulatory powers, as these are mere guidelines that the MDDA has to follow in executing its functions. Where these regulations are to be made the Bill provides for a consultative process with the Minister of Communications (the Minister) in prescribing such regulations or guidelines.

The MDDA is required to conduct all its functions and operations in transparency and good governance, and this includes the manner in which it allocated funds for support to community media, small commercial media, research and administration.

The Bill does not allow the MDDA to encroach the authority of current regulatory bodies such as the Independent Communications Authority of South Africa (ICASA), but rather requires the MDDA to work with such agencies.

Government and the media industry have together mobilized R25om for the MDDA to be rolled out over five years, but GCIS is approaching donor agencies for funding. The Universal Service Agency has also contributed here, with its new mandate on the provision of multi-media services.

The board of the MDDA consists of a total of nine members, with six being chosen via a Parliamentary process and the remaining three would be appointed by the President directly. It has been argued that the Bill leaves open the question of whether a government official may occupy a position on the board, as a principal funder and originator of this initiative. The Bill expressly requires the MDDA to be independent, facilitated by the conduct of the board members and not the composition of the board.

The Chair thanked GCSI for its presentation, and opened the floor to questions from Members.

Discussion
The Chair referred to the Comtask group established to introduce the Bill, and inquired as to how it was formed and its composition.

Mr Trew replied that Comtask was instituted by the then Deputy President Thabo Mbeki, and the body included persons from and outside government, who conducted wide-ranging interviews and research. These members were thus from government and from the industry itself.

Secondly, the MDDA has to be an independent agency and funding has to come from its donors, the private sector and government. Yet how does the Bill ensure that this funding regime does not influence the thinking of the MDDA or even the board itself.

Mr Trew responded that the independence of the MDDA is both defined and required by the manner in which it operates, and if any person should have a legitimate concern that any member of the board might be engaged in a conflict of interests s/he would have a legal remedy under the Bill. Furthermore, the board is ultimately accountable to Parliament itself, and has to submit an annual report.

The possibility that such conflict may arise still remains, but whether it actually materialises depends on the democracy of the legal system and how the board members were elected.

Ms C Botha (DP) stated that the current definition of the term "community media" in Clause 1 of the Bill implies that only non-profit businesses would be applicable here.

Mr Trew replied that the intention here was to steer clear of the use of "non-profit" in the definition because certain agencies were of the opinion that enterprises could go on receiving the necessary support for an indefinite period of time. The decision was that made that any profit made may not be used to benefit the individual, but must instead be reinvested in the enterprise itself. This measure is important for the sustainability of the enterprise and there is a presumption that the projects are sustainable, unless they are not. The board bears the responsibility to spell this out clearly.

Secondly, Ms Botha requested clarity on the factors employed to guage the representivity under the definition of "equitable representation" in the Clause 1. Is it based on demographics, language etc.

Mr Trew answered that the definition in terms of the ordinary understanding of the legislation in this context is intended.

Mr Hercules stated that it means equitable representation within the South African media environment as well as in terms of the definition in the Constitution itself.

Thirdly, Ms Botha stated that Clause 3 provides that the objects of the MDDA is to promote media development and diversity, yet she was under the impression that advertising accounted for most of the media's profit. How would the MDDA keep going if it cannot employ advertising in this manner and for this purpose, because it would then always depend on others for its funding.

Mr Trew replied that the objects of the MDDA are to develop those that have historically been deprived of access to the media industry and any scope for further development. The community media sector is looking to pool the buying of advertising. This is a critical question.

Fourthly, clarity is requested on the limit on the period for which the funds may be guaranteed to a particular project under Clause 20.

Mr Trew responded that the timeframe is two to three years.

Mr L Lever (DP) requested clarity on when disclosure of a conflict of interests has to be made under Clause 11(2)(a), as it seems the present provision says "far too little". The Bill has to state clearly that the board member him-/herself bears the onus primarily to disclose interests.

Mr Trew replied that Clause 11(2)(a) has to be read with Subclauses 1 and 3 in that same clause, as the obligation goes beyond whether there is a reason to believe that a conflict has occurred or not. Subclause 2 also refers back to Subclause 1 and Subclause 2(a) provides that the member must disclose the interest, thus creating very strong penalties.

Mr Lever responded that he accepts this point, but Subclauses 2 and 3 do not "make it plain" when the member has to disclose the conflict, because if this is not made clear the reasonable belief requirement in Subclause 2(a) and the member would not be able to construct a proper defence.

Mr Trew replied that a member contemplating not disclosing a conflict would violate Clause 11(2)(a), and Subclause 4 imposes a fine and possible imprisonment.

Mr Hercules added that Subclause 4(a) and (b) does provide both a penalty and an offence, and it is a matter of interpretation how the failure to disclose is read into the provision. Subclause 2 is thus an enabling provision.

Mr Lever replied that Subclause 4(a) and (b) simply refer back to Subclause 2, and it there is still the need to expressly state the time at which the disclosure has to be made.

Ms Bulisile stated that she understands the point made by Mr Lever, but Clause 11(1) contains a duty to disclose a conflict of interests and Clause 11(2) deal with the situation where the conflict of interests arises during the meeting itself. Clause 11(4) then imposes a fine and possible imprisonment for contravention of Clauses 11(1) and (2). Addition clarity and a more detailed discussion will be engaged on Friday.

The Chair stated that Clause 11(4) imposes a fine of R250 000 or imprisonment of up to five years for contravening Subclauses 1 and 2, and this serves as an important deterrent for any stakeholder.

Secondly, Mr Lever stated that the Bill does not require the beneficiary of a grant or loan to disclose a conflict of interests, yet this is a key issue for sustainability as both the infrastructure and the necessary skills needed for this infrastructure have to implemented to ensure sustainability.

Mr Trew responded that this is forms part of the information requested from the applicant on the original application form which includes, as outlined in Clause 19, information on the business plan and proposed budget of the applicant.

Mr T Setona (ANC) stated that Clause 5(d) includes an "office-bearer", yet this term itself is not defined in the Bill. Clarity is thus requested on this.

Mr Trew replied that a broad meaning of this term is intended.

Mr Hercules stated that the intention here is to cover the situation where the member does not disclose the interest and there has been a conflict. This person will then be dealt with in that meeting.

Secondly, Mr Setona requested clarity on the role played by Parliament in Clause 4(1).

The Chair contended that "Parliament" includes both the National Council of Provinces (the NCOP) and the National Assembly (the NA).

Mr Hercules stated that Clauses 4(1)(b) and 16(2) provides "in Parliament", and there is therefore a distinction between the NA and NCOP.

Ms Bulisile added that the Constitution defines Parliament to include the NCOP. Furthermore, the process will go back to the Department of Communications as it has already gone through the Portfolio Committee on Communications, because there is no intention to deal with this matter quickly.

Dr P Nel (NNP) stated that he was unable to find any reference to the financial implications of the implementation of the MDDA, except for the Clause 15(1)(a) revenue and the direct subsidies under Clause 17(a)(i). Clarity is thus requested on the commitment and role of the South African government in this regard, and the factors used to determine how funds are granted to media projects.

Mr Trew replied that it has no implications on the existing framework. The MDDA has set targets of R50m per year.

Mr Lever stated that the terms "misconduct" as contained in Clause 6(1)(e) has not been defined in the Bill. Yet this term has to be defined because it relates to the fiduciary duties of the members to their board which betokens a relationship of trust, and it therefore has to be included.

Ms Botha added to Mr Lever's point that this should include serious misconduct as well.

Secondly, Ms Botha stated that in terms of the identification of projects to be considered by the MDDA for financial or other support Clause 17(c) stipulates that feasibility studies have to be conducted for all new projects and Clause 19(2) deals with the guidelines to be followed in selecting projects for funding. Surely this constitutes a duplication of funding activities because the Department of Trade and Industry is already engaged in evaluating the funding of businesses in need of support.

Mr Trew replied that the MDDA will not only identify and grant funding or assistance to businesses, but also to projects in need of assistance so that the needs of all may be met. These would thus not necessarily receive funds from cash grants, but may need non-monetary assistance. There is thus no cause for any fear of duplication with the activities of the Department of Trade and Industry.

Ms Botha inquired whether any community media initiative could be precluded from receiving cash funding or loans.

Mr Trew responded that the MDDA cannot meet all the needs of all those in need of assistance, financially or otherwise, and Clause 18(3) deals specifically with small commercial media projects. Clause 14 provides that the MDDA may negotiate with various institutions for the desired support, and this is not because the MDDA does not have muscle. Instead, it aims to ensure capacity building for development and diversity of the South African media environment, and so that the MDDA may be better able to provide loans.

Mr Lever contended that Clause 17(a)(ii) would now be crucial as the MDDA could be faced with a project in need of assistance but which has not gone through a participation process. The Bill has to make it clear that the MDDA has to evaluate the terms and values of any project that applies for assistance.

Mr Trew replied that Clause 19 clearly stipulates the conditions which the board has to comply with in granting any support. In fact, in the United Kingdom emergency funding takes second place to other types of funding, and funding applies to those seeking long term funding which must be clearly spelt out for public comment.

Mr Lever stated that the long procedure for funding provided in Clause 19 seems to negate the very reason for providing emergency funding. Furthermore, the reason for dealing with these two types of funding separately is not clear, and it should be stated expressly that the Clause 19 requirements must apply to all projects.

The Chair suggested that Members raise additional comments and questions, and that these will be answered by the GCIS delegation during the next session on Friday 24^th May 2002.

Ms Botha requested GCIS to explain whether any measures have been put in place to hold the MDDA accountable to the taxpayer for the funds spent or granted to projects in need of assistance. Furthermore, has any procedure been introduced to check whether the decisions taken by the MDDA are not wasteful?

Dr Nel expressed his concern that some media projects might lose their independence because they are financially dependent on the government.

There were no further questions or comments and the meeting was adjourned.

Appendix 1
INFORMATION SERVICES: RESEARCH
21 May 2002
SUMMARY:
POSITION PAPER ON THE MDDA

1. Introduction

Media diversity is viewed as a result of media development and has two dimensions:
Affordable access by all to the widest range of opinion and information sources, and
Equitable representation within the media regarding, amongst others, ownership, staffing, audience, language and format of media.

The Media Development and Diversity Agency (MDDA) Position Paper outlines in its introduction the background to the establishment of the Agency and the reasoning behind that. This document is a summary detailing the above-mentioned aspects.

One of the recommendations that emerged from the Comtask Report of 1996 is that Government should facilitate the establishment of a media development agency. Their task is to operate in a statutorily recognized subsidy system for independent media and community in South Africa. In 1998 the National Action Plan for the Promotion and the Protection of Human Rights was adopted by Cabinet. The plan further endorsed the decision initially motivated by the alternative and community media sector in the 1990's. This Plan focused on the need to recognize and promote media diversity, freedom of expression and the need of government to be a key player in ensuring that instruments like the MDDA are created for this purpose.

"The Media Development and Diversity Agency (MDDA) Position Paper was finalized taking into account public comments received in February 2001, the Public Hearings conducted by the parliamentary Portfolio Committee on Communications in March 2001, and consultations with stakeholders throughout 2001.

The Position Paper contains the underlying philosophy and rationale of the MDDA, and thus represents government policy that has guided the drafting of the MDDA Bill."

The Position Paper has been developed by an inter-departmental committee who acted as the government reference group and consisted of departments, as well as the Policy Co-ordination and Advisory Service in the Presidency. Extensive research was undertaken into the media environment and a consultation process was embarked on with submissions from stakeholders and interested parties.

Government recognized that a foundation had been laid to address problems of media diversity in South Africa, but opined that a lot more needs to be done. It further argues that experience has shown that market forces, licence opportunities and changes in ownership alone cannot achieve media transformation.
A g e n c y
Government holds the view that the MDDA will be the instrumental in contributing to further media development and diversity especially with regard to marginalized communities. It outlined the following obstacles to development and diversity:
The concentration of media in metropolitan areas;
The low density of media infrastructure;
The restrictions of access to distribution for community and small commercial media enterprises;
Lack of resources to support the growth of community and small commercial media enterprises;
The legacy in media organizations of inadequate education, training and advancement of black South Africans;
Challenges of illiteracy and literacy;
The media's failure to adequately use and promote indigenous languages;
The need to encourage framework and environmental conditions conducive to the promotion of development-orientated news and information;
Challenges posed by the rapid development of new media, including the need for new skills and greater telecommunications access.
1.2 Background
2. The Role of the MDDA

The MDDA' s role in facilitating an enabling environment is to contribute to media development by providing support, in the first instance, to community media, and secondly to small commercial media through, amongst other things:
Providing direct financial support to community media projects;
Providing or facilitating indirect support, including access to low-interest loans, discounts and subsidies;
Building capacity, including training in journalistic, management, strategic, business and financial skills;
Supporting networking amongst community media practitioners at local, national, regional and international levels;
Commissioning media research to assess needs, and funding research projects that address issues relating to media development and diversity.

The Position Paper stipulates that the MDDA will through funding, facilitation and research activities make a contribution to changes in the media environment. This will be conducive to broader changes but will not have the resources or mandate to directly impact on all aspects of diversity.

The MDDA will regard the following as priority groups amongst the disadvantaged and marginalized:
Working class and poor people;
People living in rural areas;
People living in cities and towns having limited media resources;
Women;
Youth and children;
Marginalized language groups;
Illiterate people;
Senior citizens;
People with disabilities.

3. Provincial Interest

The MDDA Position Paper states the following in this regard:

In order to facilitate access to marginalized areas, the MDDA will look into the feasibility of establishing a presence in various parts of the country. This could be in the form of mentors based at existing institutions who would build the capacity of marginalized communities to develop project proposals.

The MDDA will use up to date research in making decisions around funding priorities, according to detailed criteria set out in regulations.

The MDDA will support amongst other things:
Community media enterprises;
Small commercial media enterprises (primarily by facilitating access to low-interest loan finance);
News agencies located in marginalized areas of the country;
Specific diversity oriented projects such as special reading broadcasts, indigenous language promotion and easy reading editions;
Non-governmental organizations that produce easy access media in various formats, such as Braille and broadcasts for the deaf.
Training and capacity building programmes aimed at community and small commercial media, including bursaries in media-related studies;
Media research to promote an informed public discourse around media development.