This submission does not represent a comprehensive assessment of the implications of the Bill and we therefore reserve comments on any issue that is not explicitly dealt with.

Despite an earlier undertaking to complete the policy process, the Department decided to skip the White Paper in order to expedite the enactment of an Electronic Commerce Act. We recognise the need to address the obvious gaps in our legal system in relation to electronic communications in general. However, we believe that this should not have been at the expense of the development of the necessary policy framework for this Bill and other relevant legislation affecting electronic communications. This is especially important taking into consideration that this is a new field, which requires far more debate than there has been thus far.

This would have provided the opportunity to identify and develop national objectives and priorities as well as investigate broader regional possibilities. According to our assessment of the situation there is no clarity in respect of government’s vision of electronic communications policy.

A White Paper process would have provided an additional opportunity to ensure a broader, more representative consultation process involving all relevant stakeholders. This we believe was lacking in the Green Paper process as pointed out in our earlier submission to the Department. Participation in this process has been weighted heavily towards consultation with business and academics and away from trade unions, NGOs and other civil society constituencies. This is in turn has translated into the Bill’s strong emphasis on commercial interests as opposed to addressing broader developmental objectives.

Further as indicated by the Department the Green Paper is not a policy document. As a consultative document it raises many questions, which have been left unanswered. This brings into question the objectives of initiating the process of calling for public comment, which should have been the basis for the development of a White Paper.

The failure to provide a policy framework makes it difficult to assess the implications of this Bill in its relationship to the implementation of other legislation affected by electronic communications. For example, the operation of electronic transactions may open tax loopholes. Although in certain instances affected legislation may fall outside the line function of the Department of Communications, it must at the minimum put into place mechanisms to safeguard the proper enforcement of affected legislation where appropriate.

Taking the above concerns into consideration we believe that the process behind this Bill has been flawed. As a result there remain significant policy gaps, which need to be rectified. It is on this basis that we commit ourselves to continue our engagement with the Committee and the Department in order to ensure that our concerns are addressed.

As stated in our earlier submissions, a holistic approach is required, which will include the debate and finalisation of the following policy issues:

• Job preservation and job creation, especially in the light of the employment displacement effects of e-commerce;
• Taxation of e-commerce, which is aimed at avoiding the shrinkage of the tax base and to ensure greater progressivity of taxation;
• Protection of online and workplace rights for workers; and
• Intellectual property issues.

Although it is inclusive in the issues listed above, the department and the Committee need to consider as a separate point the formulation of e-policy to achieve broader developmental objectives. This requires an intersectoral approach that takes into consideration diverse needs on the ground. For example, e-policy has direct relevance to promoting access to adult basic education and training and skills development. This would require collaboration with the Departments of Education and Labour. Since discussion of these issues was largely absent from the Green Paper, the Bill does not incorporate any of these concerns.

Despite the aim of the Bill to provide for both commercial and non-commercial electronic communications, the bulk of its provisions weigh heavily towards achieving commercial objectives. This is to be expected since the Bill developed out of a Green Paper, which was narrowly focused on E-commerce as opposed to broader electronic communications policy. Therefore, the attempt to incorporate a non-commercial perspective is not substantively reflected in the detail of the Bill’s provisions. We deal with this in more detail in our comments on the definitions and objectives provided in the Bill.

National e-policy should be determined within policy parameters that are aimed at promoting national interests, which are developmental in orientation. We believe that the Bill contradicts this principle by uncritically adopting international and foreign principles from governments and organisations reflecting the narrow interests of the developed world, for example the U.S. Government, the Organisation for Economic Co-operation and Development(OECD) and the World Trade Organisation(WTO). More consideration needs to given to the suitability of these principles to South Africa as a developing country. In our submission on the Green Paper we pointed out that more progressive principles have been developed on e-commerce by the International Confederation of Free Trade Unions(ICFTU), Union Network International(UNI) and the Trade Advisory Council(TUAC) to the OECD.

1. Taxation

As mentioned previously one of the problems of skipping the White Paper process has been to leave unresolved a number of policy and implementation gaps. Within the context of taxation this raises two broad concerns:

• The failure to provide mechanisms that ensure protection from the erosion of the tax base or opening of tax loopholes; and
• The need to examine e-commerce as a means for broadening the tax base and ensuring greater progressivity.

The Department’s response to concerns around tax avoidance has been that the existing tax legislation is applicable to e-commerce. While this is true, mechanisms should have been provided either in this Bill or other legislation to ensure enforcement of existing tax rules in order to protect the integrity of the tax system.

Further we believe that the consideration must be given to utilising e-commerce as an avenue to broaden the tax base and promote greater progressivity. Although it raised the question of imposing additional taxes, the Green Paper omitted to identify proposals in this respect. Our proposals in this regard include the consideration of the introduction of:

• A "bit tax" on electronic transactions, which would be set at a rate that would not impede the expansion of the use of information technology; and
• A "Tobin" excise tax on cross-border electronic currency transactions, which would be aimed at deterring currency speculation.

We are willing to revert to the Committee to elaborate our proposals in this respect, if this is required.

We believe that the policy and implementation concerns around taxation should have been thoroughly investigated prior to the drafting of this Bill. Ideally this should have been resolved in the White Paper process. This would have in turn clarified the appropriate legislative processes through which these should be addressed.

We call on the Committee to consider measures to address our concerns. In relation to the question of implementation of existing tax rules, there is still the opportunity to insert provisions directed at preventing tax avoidance. In relation to the introduction of additional taxes, we believe that the Committee should initiate a process to examine the feasibility of these other proposals. This should include the consideration of drafting additional legislation where applicable.

1. Interpretation and objects of the Bill

On the surface the scope of the Bill appears to be fairly broad, covering electronic transactions and electronic communications more generally. This is supported by the definition of "transactions", which broadly includes transactions of both a commercial and non-commercial nature as well as the provision of information and e-government services. Having said this the analysis of the Bill as a whole indicates that its objectives are more narrowly directed at commercial interests. Further no clarity is provided in respect of the meaning of non-commercial.

With the greater proportion of the Bill’s provisions leaning towards promoting business interests, the inclusion of "non-commercial" transactions appears to be superficial. It is likely that the only form of non-commercial transactions that the Bill envisages is e-government services, which is limited to two clauses. "E-government services" is defined narrowly as "any public service provided by electronic means by any public body". We are concerned that this reflects a lack of commitment by the government to its developmental role within the context of e-policy.

It is also unclear what role or status is envisaged for non-profit providers of electronic services within this context since no mention is made of this category of service providers. This is important taking into consideration the large number of services, especially information services, provided by NGOs and other non-profit organisations. Emphasis should be placed on facilitating and supporting the work of these organisations.

Taking into the consideration the above concerns we believe that definitions of "commercial" and "non-commercial" transactions should be provided in the Bill. Emphasis should be placed on linking this to developmental functions in the case of "non-commercial" transactions, which should take into account the role of non-profit service providers. This is important especially when taking into consideration the need to exempt certain non-commercial transactions from tax provisions where appropriate.

Section 2, which identifies the objects of the Bill, is important since it guides the application and interpretation of its provisions as a whole. Taking this into consideration we believe that a number of the provisions need to be strengthened.

Section 2(1)(b) identifies the promotion of "universal access" as an object. While we welcome the inclusion of this provision, we believe this should be linked to the affordability. The costs of accessing electronic services in effect prevent its accessibility to the majority of people. While it is possible to read ‘affordability" into the meaning of "universal", we believe that it is important that this is made explicit.

Section 2(1)(l) requires that the provision of electronic transaction services should take into account the needs of the disabled and special needs of particular communities. In general we support this provision. However, we believe that this needs to be strengthened. Firstly, the disabled should be broadened to include other vulnerable groupings. References to particular communities should be made more explicit with the emphasis being on historically disadvantaged/marginalised communities. Lastly this provision appears to be narrowly targeted at ensuring that electronic services provided are just more "friendly" to these groupings. This needs to be reworded to look at how electronic services may be used to support and promote broader interests of these groups.

There is no explicit commitment to promoting job retention and creation under the objects. Section (2)(1)(o) does provide for the promotion of the "development of human resources(HRD)" in the electronic transactions environment". However, this is insufficient to cover the protection of existing jobs. It should be borne in mind that the creation of new jobs is likely to benefit a narrow minority of highly skilled professionals. In order to be meaningful HRD should be linked to skills development that takes into account national programmes and priorities. This will ensure that e-commerce is not used to undermine the achievement of national skills initiatives. In order to address these concerns, we believe that the section 2(1)(o) should be amended requiring that objects of job retention and job creation should be promoted within the context of electronic communications and transactions.

Further, the Bill should be audited and amended accordingly to ensure that its provisions as a whole reflect the need to promote job retention and job creation.

No reference is made to the need to promote and ensure employment equity and social equity. We believe that both section 2(1)(d) and (o) should be broadened to include this. Social equity must take into account intersecting social barriers of race, class, gender and geographic disparities.

In addition to the amendments proposed above we believe that following objects should be inserted into the Bill:

1. The promotion and protection of rights of workers, consumers and citizens;
2. The promotion and protection of the right to information, administrative justice and privacy within the context of electronic communications and transactions;
3. The promotion of the developmental role of government within the context of electronic communications and
4. The provision for the role of Government as regulator of all electronic communications and transactions.

1. National e-Strategy

Under Chapter II provision is made for the development of a national e-strategy. According to section 5 the Minister must develop a five-year national e-strategy within 24 months of enactment of the Electronic Communications and Transactions Act. Upon acceptance of the national e-strategy the Cabinet must declare its implementation a national priority. We support the development of a progressive national e-strategy, which takes into account the concerns that we listed earlier. Further, we believe that this should be explicitly premised on promoting the developmental role of government. In this respect linkages should be made to sections 28 and 29, which provide for e-government services. This is explained further below.

4.1. Consultation

Section 5(4)(a) provides that the Minister must determine the subject matters to be addressed in the national e-strategy. This must be done in consultation with members of the Cabinet. Section 5(4)(b) does require the Minister to invite public comments. However, this is not enough. We believe that provision should be made for a formal process requiring the participation of stakeholders, which should explicitly include representatives of organised labour and other relevant civil society constituencies. This may be facilitated through the provision for a representative stakeholder forum that will be involved in ongoing holistic e-policy formulation.

4.2. Subject Matters of National e-Strategy

Section 5(4)(c) broadly sets out the areas that the e-strategy should cover. This includes regional, national, continental and international strategies. Emphasis is also placed on human resources development, promotion of universal access, and providing for the role of the private sector. We believe that this should be expanded to link the e-strategy with job creation and retention and the achievement of developmental objectives. The promotion of universal access should be broadened to include "affordability". Provision should be made requiring that subject matter explicitly include regional social and economic development as an objective of national e-strategy.

Finally, a separate clause should be included in this chapter, providing for the role of e-government. This should extend beyond the narrow provisions on e-government under sections 28 and 29, which does not explicitly cover the developmental functions of e-government. This we believe is a serious flaw of the Bill. The formulation of e-strategy in relation to e-government should be holistic, taking into consideration the needs of different sectors. As such this process will require not only the participation of relevant stakeholders, but the various government departments as well.

4.3. Universal Access

Section 6 provides for national e-strategies directed at promoting universal access. As stated previously we believe that this should be qualified by reference to affordability. The emphasis of this section appears to be exclusively focused on providing internet connectivity for disadvantaged communities, which while important will be frustrated if costs are unaffordable..

We do not believe that internet connectivity should be treated as an end object. Rather it should be linked to the achievement of other objectives, especially promoting broader developmental interests. This includes the upskilling of workers.

We also believe that "workers" should be explicitly included in the definition of "community". Further provision should be made for incentives promoting the access of employers’ infrastructure and facilities.

4.4. Previously Disadvantaged Persons and Communities

Section 7 requires that the Minister must provide mechanisms to maximise the benefits of electronic transactions to previously disadvantaged persons and communities. While we support the broad emphasis of this clause on historically disadvantaged persons and communities, we note with concern that this is limited to promoting commercial opportunities for such persons and communities. A national e-strategy should be more responsive to their broader interests, which extends beyond narrow commercial interests. As mentioned previously the potential for electronic communications to address educational, training and skills development must be fully exploited.

In relation to promoting commercial opportunities for previously disadvantaged persons and communities, special provision should be made for co-operatives as well.

4.5. Development of Human Resources

E-commerce has considerable potential for destroying jobs. Admittedly it does also create jobs. However, this is generally targeted at a small highly skilled group. The large majority who lose their jobs as a result are unlikely to find their way into newly created positions unless adequate provision is made for upskilling. Section 8 provides that the Minister must provide for ways of promoting human resource development. Taking into consideration our concerns outlined above, we support the provision for human resources under a national e-strategy. However, we are concerned that the Bill’s provisions are inadequate.

Subsection 8(1) requires that existing structures and programmes must be taken into account. This does not go far enough to ensure that national skills programmes, structures and priorities are actually incorporated into the e-strategy. This should be made explicit so that this does not result in a two-tier approach to skills development.

Section 8(2) provides for consultation with the Ministers of Labour and Education. This should be broadened to include consultation of organised labour, other stakeholders and the national skills authority as well.

Section 8(3) provides for skills development. This should be broadened to include "upskilling" with the emphasis being on job retention.

 

2. Electronic Transactions Policy

Section 10 provides the Minister with the power to determine electronic transactions policy in consultation with the Cabinet. No provision is made for public comment or consultation with stakeholders. This is a serious flaw since electronic transactions policy is likely to have significant impact on the country’s economy. Therefore, we propose that a provision be inserted into the Bill requiring both:

• A process inviting general public comment; and
• The consultation of relevant stakeholders, with explicit provision made for representation of organised labour.

Subsection 10(2)(b) states that when developing the electronic transactions policy the following must be taken into account:

• Objects of the Act;
• Nature; scope and impact of electronic transactions;
• International best practice, laws and guidelines; and
• existing laws.

We believe that this provision should be broadened to include criteria that must be factored into electronic transactions policy. This includes the promotion of job creation, job retention, social and employment equity.

1. E-Government Services

Chapter IV of the Bill provides for e-government services, which is limited to two sections, namely 28 and 29. This is merely to provide for the online delivery of government transactions. We believe that this should be expanded to take into account the promotion of government’s commitment to improved delivery of basic services especially for historically disadvantaged communities.

As a separate issue a provision should be inserted setting out the vision and objectives of e-Government. This should be defined broadly taking into account government’s developmental role and should be linked to the national e-strategy.

In addition the successful implementation of e-government services and formulation of relevant policy must take place within the context of consultation with relevant unions. Taking into consideration the potential for job displacements in the public sector, special emphasis should be placed on the consultation with public service unions.

There is a need for a proactive strategy by government to use electronic communications, telecentres and appropriate other facilities to give people access to critical information in line with its obligations under the Promotion of Access to Information Act. Provisions should be inserted into the Bill in order to ensure compliance with its provisions.

 

2. Cryptography Providers

Chapter V sets out the provisions applicable to cryptography providers. Section 32 sets out the restriction on disclosure of information. We believe that this section should be premised on the constitutional right to privacy, which should be explicitly recognised.

 

3. Protection of Personal Information

Chapter VIII provides for the protection of personal information. According to section 51(1) this chapter is applicable to electronic transactions only and therefore excludes protection of personal information within the context of electronic communications. While it is intended that this be covered under the Monitoring and Interception Bill, protection of electronic communications should be dealt within the context of this Bill as well to ensure clarity.

Section 52 sets out the principles applicable to data controllers in the collection of personal information. However, section 51(2) provides that it is voluntary for data controllers to subscribe to the principles under section 52. We believe that this should be made compulsory in order to protect the rights to privacy.

 

4. Limitation of Liability of Service Providers

Chapter IX provides for the limitation of liability of service providers. Section 74 defines service provider quite broadly, which includes "any person providing information system services".

Section 75 provides for the recognition of representative bodies, subject to these having adopted a code of conduct. The representative body would also be responsible for monitoring and enforcing the code. This means that the bodies will be responsible for setting the standards as well as monitoring their compliance. This provides a self-regulatory framework for service providers, which is hardly likely to be effective. We believe that more provision should be made for more stringent regulation of service providers, with the emphasis being on government’s role as regulator.

 

5. uauthorised ACcess or interception of data

Section 90 provides that it is an offence for any person to intentionally access or intercept any data without authorisation. In view of the protection of the rights to privacy, we support this provision. However, we believe that while protection for citizens and workers is implicit in this, this should be explicitly provided for.

 

6. regulations

Section 97 provides for the making of regulations. We believe that provision should be made for consultation with stakeholders, with explicit provision for representation of organised labour. Further, we believe that the Committee should audit the Bill in order to ascertain if any substantive policy issues have been left out of the Bill to be dealt with in subordinate regulations. If it is of the view that substantive policy will be dealt with in regulations, the Committee should insert an amendment requiring that the final regulations be made subject to parliamentary consideration.