Social Assistance Bill: briefing

Meeting report

SOCIAL DEVELOPMENT PORTFOLIO COMMITTEE
29 August 2003
SOCIAL ASSISTANCE BILL: BRIEFING BY DEPARTMENT

Chairperson: Mr E Saloojee (ANC)

Relevant documents
Draft Social Assistance Bill - as at 27 August 2003
Implications of Establishing an Agency
Agency Policy Position
Institutional Functional Model

SUMMARY
The Committee proposed that the wording of Clause 16 be tightened to ensure people outside the country do not receive social grants to which they are not entitled. The specific circumstances of each case had to considered when deciding to discontinue a grant payment because there could be valid excuses. Clarity was sought on how "undue hardship" in Clause 17 would be determined, where the appeal tribunal would be located, and how the Bill would ensure that people were informed of their right to appeal.

Members decided that Clause 20 had to ensure that service providers did not deduct any amount from the grant payment before the beneficiary received the full amount. The Committee considered the independence of the Inspectorate, its functions and its relationship with the Agency and the Department in Clause 25. The Democratic Alliance was concerned that the Inspectorate would be a policing unit for the social security industry and questioned the need for granting the Clauses 31 and 32 powers to inspectors.

MINUTES
Social Assistance Bill
Chapter 3: Administration of Social Assistance
Clause 16: Application for social assistance
Ms G Borman (DA) stated she imagined that recipients could not receive their grants while travelling overseas but collect on their return. How did they access grants overseas?

Mr Selwyn Jehoma, Department Chief Director: Grant Administration, responded that the Department was aware of this concern. The regulations provided for the Minister of the Director-General to waive this provision to allow persons to remain overseas for a longer period and receive payments into their accounts. The aim was to continue paying the amount into person's account even if they left for overseas, and the provision did allow exceptions.

Adv M Masutha (ANC) proposed that "continuous" should instead read "continual", because "continuous" implied an uninterrupted period. The question was whether the payment still had to be made even during a "continual" period. This has to be checked because this Committee has been informed that it was in the area of these specific grant payments that much abuse was taking place. It could not simply be assumed that regulations would cure this.

Mr Fezile Makiwane, Department DDG: Social Security, replied that the Department considered the social assistance "not an exportable benefit" but intended for the legal residents of South Africa. The phrase "continuous period exceeding six months" provided certainty that the Department would make the payment, and it also granted the Department a window period within which to assess whether the particular beneficiary would be returning to South Africa. When the beneficiary returned, the administration then assessed the conditions and circumstances of the case, and considered the interests of the beneficiary and the State.

Mr M Da Camara (DA) suggested Subclause 1 should instead read "may" because otherwise the administration would have no room to consider the specific circumstances of a beneficiary's case.

Adv Masutha replied it would be more complex if the administration was granted discretion. The question regarded the exact grounds for exercising discretion and the effects on the beneficiary. This was important because the exercise of discretion would be subject to judicial review. The original concept was that the grant would be made available for South African citizens living in South Africa, and once they left South Africa, they were not entitled to a grant payment. This had to be made very clear. Whether this was constitutionally sound was for the courts to decide.

The other issue regarded South Africans overseas with no intention of ever returning. How exactly would this intention be determined? A second problem would be the consequences if the beneficiary remained overseas for longer than six months and had to receive medical treatment for example. The criteria considered by the administration in evaluating the case might have to be tightened up in the regulations. Furthermore, if payment was effected electronically, there was no way of telling whether the beneficiary was in South Africa.

Mr Makiwane responded that these issues had to be re-examined. This Bill was aimed at people currently living in South Africa, and if they left, the State should terminate their grant payments. The six month period would then allow the Department to examine the specific case. Subclause 2 provided that, upon return, the person must then justify why he was out of the country for longer than six months. The administrator could then resume the payment of the grant if the beneficiary could justify this.

The Chair asked how exactly the Department would know that the beneficiary had been overseas.

Mr Makiwane replied that it was problematic that the system of social protection was not linked to systems which would assist here. This matter was currently being debated as part of the broader system of social security with possible linkages with the Immigration Services, the Department of Home Affairs, South African Revenue Services (SARS) etc. This was currently being considered and it was hoped that the Agency, if established, would put this robust system into place.

Adv Masutha stated that the current formulation was ambiguous. It was implied that once the person becomes aware that s/he would be out of the country for longer than six months, s/he would have to disclose this intention to the administrator. Furthermore, Subclause 1 also implied that the payment of the grant could not be discontinued until the six months had lapsed. The wording of this clause had to be reworked.

Adv Werner Krull, Department: Legal Advisor, stated that Clause 5(b) was relevant because it stated that the person would have to be resident in South Africa at the time of making the application. Any amendment to Clause 16 could also affect Clause 5(b).

The Chair asked what possible impact the Department foresaw if this amendment were to be effected.

Adv Krull replied that it could result in a possible conflict. Clause 5(b) dealt with the time at which the application was made, whereas Clause 16 focused on the period during which the grant was paid.

Adv Masutha reminded Members that this Committee had decided during the previous meeting to include the aims of Clause 16 as a requirement in Clause 5, as a new Subclause (e). This would then require the applicant to be resident in South Africa at the time of applying for a continuation of grant payment. The Chair agreed.

Clause 17: Recovery of sums overpaid
Ms J Chalmers (ANC) asked who would decide what constituted "undue hardship" in Sub clause 2 and how this would be determined.

Mr Jehoma replied that the Department's social relief of disasters regulation 29 is currently looking at setting objective criteria that would constitute "undue hardship". The framework for this still had to be finalised.

Adv Masutha suggested that Ms Chalmer's concern still stood. Subclause 2 amounted to an exclusion which could then become a legal defense. It also has to be ensured that the regulations setting criteria for determining "undue hardship" did not water down what was currently contained in the principal Act.

Adv Krull responded that Subclause 2 stated that the Ministers of Social Development and Finance could write off either the whole or a portion of the outstanding debt, and thus provided for a balancing mechanism. It also essentially granted those Ministers discretionary power. It would be difficult to specify the exact circumstances that would constitute an "undue hardship". If the beneficiary had spent the grant money, the Ministers could then write off the amount, because it would be "uneconomical" to pursue its recovery.

Although this matter concerned the Department generally, the Bill sought create flexibility for the Ministers to use their discretion in case-specific circumstances. Adv Krull was not sure whether any attempt to prescribe the specific circumstances that would constitute "undue hardship" would benefit the interests of the people in the long run, and cautioned against binding the Ministers in this manner.

Mr Da Camara stated that Subclause 1 only seemed to apply to instances in which officials had paid out to persons in error. It did not seem to deal with cases in which people had lodged fraudulent applications and received payments.

Mr Jehoma replied that Clause 21 dealt with false representations and Clause 17 dealt with grant payments made in error.

Mr Daniel Plaatjies from the Treasury, stated that there had to be alignment between this Bill, Treasury's regulations and the provisions of the PFMA that dealt with debt collection. Specific provisions had to be spelt out for each case.

Clause 18: Appeal
Ms Chalmers stated that in the past this appeal tribunal had been located in the provinces, and asked where the envisaged tribunal would be located. Would appeals be dealt with by the Agency, the Inspectorate or the Department itself?

Mr Jehoma responded that this tribunal would not sit within the Agency. The institutional model development by the Department set up the appeal unit in the national department and it would have its own facilities.

Ms Chalmers asked whether an evaluation of the costs of establishing the tribunal had been finalised.

Mr Jehoma replied that the costs have not been finalised, because the input from the provinces is still awaited. A framework has been created but the rolling out of this process needs work.

Ms Chalmers sought clarity on the criteria to be used to pull the grouping together.

Mr Jehoma responded that officers of the Agency would be used to make this decision. Their decisions would be made independently, in accordance with the principles of administrative justice.

Mr Da Camara stated that he had trouble with the practicality of this approach. How would people in rural areas be able to submit a "written" appeal to the Minister?

Mr Jehoma responded that they could forward their appeal either to the Minister, the specific MEC or the Department's rural offices. Post would probably not be the most appropriate form for the appeal but was envisaged that the Agency's infrastructure would provide the necessary facilities.

Mr Makiwane added that the person might physically have to go to the Minister's office in order to lodge the appeal. The Bill should thus provide for any form of communication to the Minister and the Ministry should then have to put the appeal in writing. The use of "written" would be considered further.

Mr Da Camara asked where exactly the person would have to go in order to lodge this appeal with the Minister. An obligation should be placed on the official that declined an application to inform that person of their right to appeal against the decision, as well as to where that person could go to lodge the appeal.

Adv Krull responded that Section 3(2)(d) of the Promotion of Access to Information Act placed a duty on the official to inform the applicant of her/his right to appeal. It also required that official to provide the applicant with the reasons for the refusal. It was thus not necessary to spell this out in this Bill because these legal principles would apply in any case.

Adv Masutha stated that the Code that clearly outlined the duties of officials had to be consulted on this matter, and this could be retained in the regulations. The Department should also ensure harmony between this Bill and the corresponding provisions of the Administrative Justice Act. Subclause 2 seemed to conflate two distinct issues. Firstly, it provided that the Minister might entertain appeals and, secondly, that s/he could appoint a tribunal to do so. If this was the intention, then these two facets had to be contained in two separate provisions. This clause was also contradictory because it stipulated that the Minister "may" appoint a tribunal, whereas Sub clause 3 stated that the Minister "must" appoint this tribunal. The question arose whether this tribunal would exist on a permanent basis, or whether it would be established on an ad hoc basis when set up by the Minister.

Mr Jehoma replied that in the near future the Department foresaw the establishment of a mechanism for appeals, but in the long-term in might be better to have a tribunal.

Adv Masutha proposed that, if this was the case, the previous formulation of Subclause 3 should be retained. Subclause 2(b) should be amended to read "the Minister may refer the matter to a tribunal", as this would then cater for situations in which the Minister could establish the tribunal.

Mr Jehoma responded that the current formulation was proposed by the State Law Advisors. It was the opinion of the Department that the provision stated that the Minister "must over time" setup the tribunal.

Adv Masutha agreed with this formulation, as long as the provision clearly separated the establishment of the tribunal from referral to it by the Minister.

Clause 19: Misuse of social assistance
The Chair noted that no questions were raised with this clause.

Clause 20: Restrictions on the transfer of rights and payments of social assistance
Ms Chalmers stated that Subclause 3 was problematic because she did not see how service providers could be allowed to deduct this.

Mr Makiwane replied that the current law allowed service providers to make these deductions. In fact, in many cases the beneficiary did not receive any money from the grant because they used it to pay the provider. The subclause prohibited the service provider from deducting any money from the grant payment before the intended beneficiary received the full grant payout. A law case has been argued in Kwazulu-Natal against the Department because this type of provision was not in force. This subclause now entitled the beneficiary to receive the full payment first and then choose what to do with that money.

Ms Chalmers agreed, but stated that the problem was that this was not what the provision stipulated.

Mr Jehoma proposed that a full stop be placed after the word "grant", and the remainder of the provision should then be deleted.

Mr Plaatjies agreed. He proposed that another clause be inserted which specifically stated that no service provider could make any deduction from any grant payment at all.

Mr Makiwane suggested that this kind of provision would be unnecessary because government could not prescribe this in legislation.

The Chair stated that this issue has to be considered further because the service provider effected delivery of the grant payment.

Mr Jehoma replied that the Department would have to go back to the drawing board and consult some of the stakeholders involved.

Mr Plaatjies contended that the inclusion of a separate clause regarding service providers would give the Department leverage when negotiating contracts with providers to deliver grant payments. This would then be a good way to limit the role played by providers.

Ms Chalmers asked what the situation would be in terms of Subclause 1 if the child's caregiver died. This provision stated that the grant would have to be applied for de novo which could take many months. Surely in this case the entitlement to receive the grant payment could simply be transferred to the new caregiver.

Mr Jehoma agreed that an onerous duty was placed on the person to then reapply for the grant. Perhaps this clause could be amended to allow for the transfer of the entitlement, and a reworked version of the Subclause could be included in the next draft of the Bill.

Clause 21: False representations
The Chair noted that no questions were raised with this clause.

Clause 22: Information to be furnished to administrator
Adv Masutha asked why the Department has included a specific reference to "financial institution" in Subclause 2 as this seemed to be a duplication of another provision. Secondly, which portion of this clause dealt with the situation in which person simply did not disclose information about changed personal circumstances that could influence the decision of the administrator. This would cover the concern raised earlier under Clause 16 in which the person purposefully did not disclose that s/he would be going overseas.

The Chair stated that these points were taken.

Ms Chalmers asked how the public would access the information on their current grant status.

Adv Krull responded that the Promotion of Access to Information Act would be applicable here, and the beneficiary could then use its mechanisms to gain this information.

Adv Masutha contended that Subclause 2 limited the reference to the private sector to financial institutions only. This seemed to be too restrictive.

Mr Makiwane replied that that provision was broad enough to cover all financial institutions in the private sector such as Old Mutual, Sanlam etc., as well as others managing retirement funds.

Adv Masutha proposed that Subclause 2 also included a specific reference to "employers" because they would have financial information on the beneficiary.

Mr Jehoma agreed.

Clause 23: Power of administrator to investigate
Ms Borman sought clarity on the meaning of the term "thing" in Subclause 1(a).

Adv Krull responded that it includes any form of communication or correspondence, as well as any object used. This term has been thoroughly interpreted by the courts.

Chapter 4: National Department
Clause 24: Functions
Ms Chalmers asked whether the national department had the necessary capacity to perform all these functions as most of the social security operations were conducted by provinces. What would be left to the provinces?

Adv Masutha suggested that this was part of a much larger debate. This Committee would not be able to do justice to this issue if it simply consulted the SARS or UIF model, because those were tailored for different circumstances. An elaborate discussion was thus needed to allow the Department to devise its own model.

Chapter 5: Inspectorate for Social Assistance
Clause 25: Inspectorate for Social Assistance
Adv Krull stated that this clause created the impression that the Inspectorate was separate from the Department and the Agency, and this was important. It was like the Independent Complaints Directorate (ICD) within the Department of Safety and Security as contained in Schedule 3 of the Public Service Act. Yet Subclause 4 emphasised that the Minister exercised final responsibility over the Inspectorate.

Adv Masutha suggested that, although both Subclause 1 and Clause 26 seem to establish the independence of the Inspectorate, this clause really dealt with the administrative independence of the Inspectorate. The problem was that there was no clearcut legal definition of the term "independence".

Adv Krull replied that Schedule 3 of the Public Service Act detailed those entities that formed part of the public service but that are not part of government departments. The Inspectorate was one such entity. It also had to be remembered that the Inspectorate did not have a separate legal personality.

Adv Masutha stated that it was not certain what body the Inspectorate was an "organisational component" of in Subclause 2. Perhaps this needed to be clarified in terms of the PFMA and Public Service Act.

Adv Krull responded that Subclause 2 followed the wording of the Public Service Act and clearly referred to an organ of State. Section 7(4) of the Public Service Act implied that the head of the Inspectorate would be the equivalent to the head of a Government Department, which is the Director-General. The PFMA then applied to the Inspectorate and its regulations.

Mr Plaatjies stated that all institutions were accountable to the Minister and not the Department. Funding for the Inspectorate would be allocated to the Department, which would then transfer those funds to the Inspectorate and the Agency. The Inspectorate and the Agency would have to account for those funds to the Minister.

Ms Borman was concerned that the Inspectorate seemed to be a policing unit for social development. The proper policing channels were not being used, such as the Scorpions. This did not fit in with functions of the Inspectorate.

Mr Makiwane replied that the Scorpions only dealt with certain aspects. This had to be checked for compliance with the Agency's regulations. The Inspectorate dealt with fraud, corruption and other offences, and it was part of the best practice model to include these functions in the social security area. The law enforcement agencies did not deal with aspects specific to social security.

Mr Plaatjies stated that Treasury supported this. Social security was a R44b industry that would grow to R51b in the coming financial years, thus constituting the second largest national budget after the Department of Defense. The sheer magnitude of the funds justified all the provisions proposed in Bill aimed at curbing abuses. The Agency could not be allowed to perform the administration and payment system by itself, and the Inspectorate should check up on the Agency. The Inspectorate was not another police force, it merely served to ensure the integrity of the social security system.

The Chair asked why special units were not established within SAPS itself to deal with such problems in the social security industry.

Mr Makiwane responded that the Inspectorate not only dealt with criminal issues but also with service issues and problems within social security, which it would then independently inform the Minister.

Adv Masutha proposed that any further discussion be postponed until Members have been given a complete picture of the relationship between the Agency, the Inspectorate and the Department.

Clause 26: Independence of Inspectorate
Adv Krull stated that this clause confirmed the independence of the Inspectorate.

Clause 28: Functions of Inspectorate
Adv Krull stated that this clause gave strong powers to the Inspectorate but checks and balances had also been put in place to ensure these powers were not abused.

Clause 30: General power to enter, search and seize
Adv Krull stated that this clause sought to balance the rights of all parties involved. This clause did grant strong powers to the Inspectorate, but equally strong limits were placed on these powers by provisions such as Subclauses 2(a) and (b) to ensure that constitutional values were enshrined. Similar provisions were included in a number of statutes that established such inspectorates, such as the enabling legislation of the Civil Aviation Authority.

Mr Da Camara stated that all these powers granted to the Inspectorate did not seem necessary, as corruption within the social security industry needed an audit. Should it discover material evidence of an offence when it has completed this audit, the Inspectorate should then hand the matter over to law enforcement agencies such as the SAPS or the Scorpions.

Mr Makiwane replied that the Inspectorate would deal with matters specific to social security, and essentially check that the administration was functioning correctly. The Inspectorate would not perform physical checks on homes of beneficiaries to ensure that information on the grant record was correct. In order for a proper audit to be conducted, inspections will have to be conducted but this need not be accompanied by seizure. Inspectors did not currently have this power and this clause provides for it now.

Adv Masutha thought that the purpose of the Inspectorate had less to do with verifying the functioning of the Agency and more with the inspection of whoever was responsible to deliver that function. The Inspectorate would thus really be policing the Agency for the purposes of quality control and not beneficiaries. There seems to be a conflation of these two separate issues, and this Committee needed a comprehensive discussion on the institutional model.

Adv Krull responded that there could also be collusion between the beneficiary and the official and an agreement, for instance where the beneficiary gives the official a kickback in return for a grant.

Clause 31: Powers of Inspectorate to enter, search and seize with warrant
Adv Krull informed Members that these powers had safeguards built into them and these provisions had legal precedents.

Clause 32: Powers of Inspectorate to enter, search and seize without warrant
Adv Krull stated that the clause dealt with exceptional circumstances and was thus more tightly focused.

Briefing by Department
Agency Policy Position
Mr Makiwane presented this document (attached) to the Committee which essentially provided for the establishment of a separate specialist institution that could focus specifically on the management and payment of social grants for the country.

Implications of establishing Agency
Mr Makiwane presented this document (attached) which outlines the roles and functions of the Agency, the National Department, the provinces and the Inspectorate.

Institutional functional model of the Agency
Mr Jehoma presented this document (attached) which outlined the functions of the Agency, the Department and provinces and the Inspectorate. It illustrated the relationship shared between these three bodies.

Discussion
Adv Masutha stated that Treasury also needed to address the Committee on these matters. It had to be made clear in the Bill that failure to deliver rests with the Agency and that the Agency was only responsible for the payment of social grants. If this was not clarified, it would result in legal uncertainty.

It would perhaps not be best to stipulate that the provinces would cease to pay the social grants because, unless the Agency had the necessary capacity to perform this function from day one, it would still be performed by the provinces until the Agency could do so on its own. The Bill could then contain a transitional provision that simply transferred this function to the Agency when it had the necessary capacity. This would also have important labour relations implications, because it had to be determined whether staff will be transferred to the Agency. Lastly, the independence of entities had to be clearly spelled out. Is the tribunal in Clause 18 an independent entity or is it part of the Department?

Mr Plaatjies stated that there was a classical disjuncture between the institutional model presented by the Department and the provisions of this Bill. The issue of agent and principal and delegation versus assignment of functions has to be resolved. Treasury was of the view that government wa responsible for the payment, administration and service delivery of social grants. Government, in the form of the Department of Social Development, now planned to establish the Agency via legislation. It would then delegate these functions to the Agency. The problem was that the Bill seemed to use delegation and assignment interchangeably. Treasury would be able to conduct the presentation suggested by Adv Masutha.

Adv Masutha stated that a dedicated chapter had to be inserted to deal with information systems. It had to spell out where this database would be located, who would have access and who was authorised to make entries. This has to be considered so that the Bill was not too minimalist in content.

Chapter 5: Inspectorate for Social Assistance
Clause 25 and 26
Adv Masutha proposed that the ideal head of the Inspectorate would be an Chief Inspector, and not a CEO. A CEO implied a management position which oversees the inspectors, but does not necessarily perform the functions of the inspector. Chief Inspector would thus be more accurate because the head would be an active inspector. Ms Chalmers agreed.

Clause 27: Funding of employees of Inspectorate
Adv Masutha stated that the problem was that this provision spelled out two categories of staff. The first is inspectors who must be appointed and accredited to perform inspections. The second is other staff, such as cleaners etc. A separate and specific clause is thus needed to deal with inspectors alone.

Clause 28: Functions of Inspectorate
Adv Masutha stated that it was not certain whether "internal audit" in Subclause 1(a) referrec to an internal audit of the Inspectorate itself.

Adv Krull responded that this was a term generally used in Generally Accepted Accounting Practice (GAAP). It did not refer to internal audits of the Inspectorate itself, but rather to a specific type of audit conducted by the Inspectorate into the inner workings of another body.

Clause 29: Power of Inspectorate to request information and to subpoena
Mr Da Camara asked whether Subclause 2 is not a duplication of the provision dealing with the functions of the Agency. Adv Krull answered in the negative that this was a separate function.

Clause 30: General power to enter, search and seize
Mr Da Camara questioned whether there was a need to grant this power to inspectors. If they were checking out a case of possible theft, surely there was another law that applied to that offence.

Adv Krull responded that this clause granted the Inspectorate powers over offences specific to the social security industry, and essentially allowed evidence to be collected to prove the suspected offence. It would include cases such as the operation of a machine that produced fraudulent ID documents. Inspectors did not have the powers of police officers and could not act in terms of the Criminal Procedure Act or SAPS Act.

Mr Da Camara asked who decided whether the documents inspectors removed during the search were relevant to the case?

Adv Krull replied that this was outlined in Clause 31, which dealt with when a court authorised the seizure of a document via a warrant. Clause 32 was also applicable here, and dealt with cases in which the court had not given such authority. There were many ways to correct instances in which an inspector overstepped his/her powers in performing the search or seizure, and this itself was a deterrent.

The Chair stated that the language requirement in Sub clause 3(a) was too onerous. It should instead read: should "reasonably notify" the person in his own language in any event. Mr Da Camara agreed.

Adv Krull responded that this involved a value judgment. He emphasised that this Bill did not authorise inspectors to "kick down doors", as appeared to be the current misconception amongst Members. It merely authorised them to use "necessary force" which had been extensively interpreted by the courts. The Chair made a note of this.

Clause 31: Powers of Inspectorate to enter, search and seize with warrant
The Chair noted that no questions were raised with this clause.

Clause 32: Powers of Inspectorate to enter, search and seize without warrant
Adv Masutha stated that it had to be stipulated clearly in Subclause 1 that the person did not have to allow the Inspector onto the premises if s/he does not have a valid warrant. This was important because people were not aware of this.

Adv Krull agreed. This did however have a limiting effect because if the person refused entry, the inspector could argue that this satisfied grounds for entry in Subclause 1(b).