OFFICE OF THE CHIEF STATE LAW ADVISER

24 August 2004

The Chairperson

Portfolio Committee on Finance

Parliament.

Dear Dr. Davies

PUBLIC INVESTMENT CORPORATION BILL (PIC BILL) - OPINION

We have been asked to give an opinion as to whether there is a legal obligation on Parliament not to pass the above mentioned Bill until it has been considered by the National Economic, Development and Labour Council (NEDLAC). In effect, our views will be confined to whether section 5 of the National Economic, Development and Labour Council Act, 1994(Act No. 35 of 1994) (the NEDLAC ACT), places an obligation on NEDLAC to consider the Bill before its introduction in Parliament. We say this because we can find no other provision that obliges NEDLAC to consider legislation prior to its introduction in Parliament.

We have had sight of opinions given by Messrs. Cheadle Thompson and Haysom, Sonnenberg Hoffman and Galombik and Hofmeyr Herbstein and Gihwala, all of which we found most helpful.

In considering section 5(1) of the NEDLAC Act we noted that the only provision expressly requiring the consideration of legislation prior to its introduction in Parliament is paragraph (c). That paragraph provides that NEDLAC shall-

".....(c) consider all proposed labour legislation relating to labour market policy before it is introduced in Parliament;".

We feel, however, that paragraph (c) does not apply to the PIC Bill since it clearly does not relate to "labour legislation relating to labour market policy".

The only other provision of the NEDLAC Act requiring consideration of anything by NEDLAC prior to its introduction in Parliament is section 5(1) (d). That paragraph provides that NEDLAC shall -

"...(d) consider all significant changes to social and economic policy before it is introduced in Parliament;".

"Socio and economic policy" is defined in section 1 of the NEDLAC Act. Matters included in that definition are-

"financial, fiscal and monetary policy, socio economic programmes, trade and industrial policy, reconstruction and development programmes and all aspects of labour market policy, including training and human resource development.". In our view the subject matter of the PIC Bill, namely the establishment of a company to handle certain investments on behalf of the Government does not fall under any of those policies.

In their opinion, Cheadle Thompson and Haysom seek to equate the concept of "socio and economic policy" with the phrase "socio-economic interest" referred to in section 77 of the Labour Relations Act, 1995, and thus to argue for a wide interpretation of the phrase "socio and economic policy" in the NEDLAC Act. With respect, there is a vast difference in what constitutes an interest of a particular group and what constitutes the policy of a government tasked with the protection of a\\ the citizens of the country. If their wide interpretation were to be upheld it is difficult to conceive of any Bill which would not have to be considered by NEDLAC before its introduction in Parliament since most, if not all, Bills touch on the socio economic interests of one or other group.

If we are wrong and if the subject matter of the PIC Bill can indeed be brought within the ambit of the definition of "socio and economic policy", the question still remains whether the Bill represents a "significant change to socio and economic policy". In order to decide that question one would have to hear evidence as to what the present policy is and as to how the Bill seeks to change that policy. We have not been briefed with sufficient evidence in this regard.

Another aspect that we feel is necessary to mention is that since NEDLAC is an advisory forum created by an ordinary Act of Parliament it can be argued that Parliament is not bound by that Act and need not follow the procedure of allowing NEDLAC to consider the Bill before passing it. Since the NEDLAC Act contains no sanction for the failure of NEDLAC to consider policy in terms of section 5 it is difficult to conceive of a Court declaring the PIC Act invalid should Parliament choose to pass it without its having been considered by NEDLAC.

That having been said we must point out that we know of nothing to prevent the Portfolio Committee deciding to refer the Bill to NEDLAC and to suspend further consideration of the Bill until such time as NEDLAC has considered it.

X MDLUDLU N. BULISILE T. HERCULES O.KELLNER

STATE LAW ADVISERS

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ENVER DANIELS

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