Report of the Portfolio Committee on Public Enterprises on the South African Airways Bill [B35-2006] (National Assembly – sec 75), dated 28 February 2007:

The Portfolio Committee on Public Enterprises, having considered the subject of the South African Airways Bill [B35-2006] (National Assembly- sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Bill with Amendments [B35A-2006].

The Committee further reports as follows:

The Committee is acutely aware of the financial and other strategic challenges confronting SAA and the need for this Bill.

Consistent with the government’s new emerging shareholder management model and the Committee’s views on this, the Committee decided to effect amendments to the Bill that would provide for:

A Preamble to convey the sense of SAA as a national carrier and strategic asset.
The strategic role that SAA plays.
The need for the Minister to account to Parliament for any major changes in SAA’s role and decisions about converting SAA into a public company.

The Committee believes that the temperate amendments it proposed would not discourage potential investors or unduly bind the Minister.

The Minister for Public Enterprises, Mr Alec Erwin, stressed that he agrees with the amendments proposed but explained that it would be more appropriate to provide for them in the forthcoming Shareholder Management Bill. A key reason for this is that the provisions that the Committee wants in regards to SAA apply to state-owned entities generally. In a letter to the Committee, the Minister said “….with respect to the recommendation to involve Parliament in the decision to convert SAA into a public company, the Department is in the process of drafting legislation to regulate State-Owned Enterprises (SOE) such as SAA. This SOE legislation will facilitate a role for Parliament in the formation and change in status of any SOE. I believe this will accommodate the important point made by the Committee that if an enterprise is strategic enough that we bring the matter to Parliament, then surely Parliament should have some role if that status is changed. Our intention is to bring this piece of legislation to the Committee in the second half of this year.” Of course, the “recommendation” the Minister refers to is a proposed “amendment” – but the Committee recognises the value of what the Minister proposes and accepts it. However, consistent with paragraph 2 and what is set out in this paragraph, we have effected the Preamble referred to above.

The Minister said that the Shareholder Management Bill will provide for each SOE to have a Charter that sets out its strategic role. Any major change to this Charter would be brought to Parliament.

The Minister said that he would explain his intention to provide for the measures in the pending Shareholder Management Bill during the debate in the National Assembly on the SAA Bill.

The Committee agrees that the amendments it proposes to the SAA Bill are better addressed in the pending Shareholder Management Bill and will attend to this in the processing of that Bill.

Of course, the Committee recognises the volatility of the airline industry and SAA’s vulnerabilities, and the government may need to act swiftly, but the Committee believes that any major changes to SAA relating to the issues dealt with in this Bill should, ideally, take place after the Shareholder Management Bill is passed. If this is not possible, the Minister should inform Parliament of major decisions taken in terms of the SAA Bill.

Report to be considered.