National Liquor Policy: briefing by Department of Trade and Industry

Meeting report

National Liquor Policy: briefing by Department of Trade and Industry
Mr MacDonald Netshitenzhe, Acting Deputy Director-General: Consumer and Corporate Regulation Division, dti, gave a background to the Policy and said that the Policy had been published for public comment in May 2015. It was concluded and adopted by the Cabinet on 14 September 2016 and published on 30 September 2016. The Department was currently involved in consulting with the public across the country and the next steps would be to bring the Bill to Parliament which would pass it on to the Committee for consideration.

Ms Clementine Makaepea, dti Director: Liquor Law Policy, spoke to the liquor regulatory framework. She gave a background to the Liquor Act of 2003 saying the objectives were to reduce the socio economic costs of alcohol abuse and to restructure the industry to promote transformation. She pointed out that macro manufacturing and distribution were national responsibilities while micro manufacturing and retail were provincial responsibilities.

She said the Act was subject to concurrent jurisdiction and required cooperative government to be effective and the National Liquor Policy Council (NLPC) was created to give effect to this. The National Liquor Authority (NLA) and the Provincial Liquor Boards (PLB) implemented its respective legislation.

The presentation looked at the challenges arising from the socio economic impact of liquor abuse and the policy positions taken around them. It noted that alcohol abuse was increasing, leading to increased crime, violence and traffic accidents. The government was looking to reduce the advertising and marketing of liquor.

The Policy noted that increased alcohol availability contributed to increased alcoholism and took the position that liquor premises had to be located at least 500m from schools, recreational areas, public transport nodes or places of worship. If it was situated in high density areas, certain norms and standards would apply. Trading hours would be regulated and age verification had to take place if there was doubt that the person was not 21 years or older. Manufacturers and suppliers would be held liable if their products were supplied to unlicensed traders. Traders should not sell liquor to intoxicated people.

A further challenge identified was that alcohol consumption by teens might result in impaired neurological development. The policy called for the minimum legal age for drinking to be changed from 18 to 21 and that there should be education and awareness campaigns. Liquor licence holders should also be educated.

On the challenge of transforming the liquor industry, the amended BBBEE Codes of Good Practice had been published. The National Liquor Regulator (NLR) was empowered to impose registration conditions and implement monitoring. Non compliance could result in the suspension or revocation of the registration certificate.

Another challenge was the differences in national and provincial legislation as well as the complexity of the enforcement processes. The policy sought to get norms and standards adopted and integrated by national, provincial and local authorities. Inspectorates had to act in a coordinated manner and there was a need for a coordinated training program for inspectors.

Currently the National Liquor Authority was under resourced and the policy position was that it would be restructured as the National Liquor Regulator which should be fully capacitated.

Disputes were usually resolved through the courts, a process which was lengthy and costly. The policy position was that an internal review mechanism be introduced to deal with aggrieved parties after which they could approach the courts, if they were still not satisfied.

The inability of the NLPC to secure quorums for its meetings had delayed the finalisation of council matters. The policy position was that binding decisions would be taken at a third meeting if there were no quorums at the first two meetings. The National Liquor Policy would inform the amendment of the current Liquor Act.

Discussion
The Chairperson asked how the three spheres of government would work together in terms of zoning and licensing which were done at municipal and provincial levels respectively.

Mr Netshitenzhe replied that when the National Liquor Authority granted a licence at national level, the Department would demand there should be a zoning certificate. The National Liquor Policy Council also needed to include SALGA so that municipalities could argue their case. He said the norms and standards needed to be implemented uniformly because, for example, different provinces had different closing times for traders, which was frustrating. He said that a decision could be imposed at the third meeting of the Council, if there had not been a quorum in the previous two meetings.

Mr A Williams (ANC) said the manner of the presentation was as if the policy was a fait accompli. He said Parliament was not a rubber stamp. He asked if the Department had looked at increasing the cost of alcohol substantially as a means to deter consumption instead of increasing the age limit? Age limits were not legitimate as this was taking away people’s rights and would result in the criminalising of the youth.

The Chairperson said that the presentation had mentioned that the policy would be gazetted for 30 days and "would go out to the public”. Could this be clarified?

Mr Netshitenzhe said the policy had been gazetted for 30 days but this would be extended to 45 days, because it was being piggy backed with the Gambling Bill and the Department were going to communities on both items, liquor policy and gambling.

Mr N Koornhof (ANC) asked if the Department would present to the Committee a summary of the representations made to it. He wanted a definition of what liquor premises were. He asked what would happen if someone sold their licence. He asked why wine could not be sold in grocery shops when cigarettes could be. Had the Department consulted with senior counsel on the constitutionality of the policy? If yes, he wanted to see the legal opinion.

Mr D Macpherson (DA) said the Bill was, word for word, what the policy was and the Department had not taken anything from the inputs that had been given on the policy. He said there was no evidence that age would have an influence and there had been nothing presented to show what had informed the policy. He said the age limit would make drinking illegal and would drive underage drinking underground. He said that when one made law that was not respected, one de-legitimised the law.

Mr B Mkongi (ANC) asked what the spirit of the policy was in relation to the socio economic challenges of the country. The country had a serious drinking problem which led to ills suffered by the black people of the country. He said the issue of age was a serious question. The role of MPs was oversight over the executive and not vice versa. Absenteeism in the NLPC indicated that everyone was not in harmony on the spirit of the Bill. There was a problem if people were avoiding the adoption of norms and standards, therefore the role of the National Liquor Policy Council had to be tightened.

Ms S Van Schalkwyk (ANC) was concerned over the 500m radius. She asked if the Department would reconsider the inputs given on the policy, as compared to the actual practice, where the radius was currently less than 500m and was having a big impact on communities.
 
The Chairperson said the question was whether the policy could be achieved without infringing rights. Currently the age restriction of 18 could not be enforced. What would the cost be to enforce the age of 21?

On Mr Williams’ question, Mr Netshitenzhe replied that pricing was one of the factors. Other factors were availability and restricted advertisements. He said the decision on policy lay with Parliament and not with the Department. The Department did not intentionally try to mislead people. The Department had received opinions and had gone to the State Law Advisors, particularly on the issue of liability.

About densely populated areas, he said 500m was a standard. For those businesses already within this range, common law should be applied. When the licence was given, it would come with certain conditions and if the conditions were not met, the licence could be suspended or not be renewed. There was a lot of alcohol abuse in South Africa.

On Mr Macpherson's question, he said there had been a lot of sports people attending the conference who said they were being used as role models to attract youth to drinking. Students were agreeing and saying alcohol abuse was a problem. Psychologists agreed that the brain was still developing between the ages 21 to 25.

He said the issue of age was one factor that should be considered. In the USA, one had to produce an ID when buying liquor. These factors were well considered and were advised by the WHO and by communities. The traders in communities themselves said that education and awareness was needed. Town planners should also be in the Policy Council with regard to town planning. The Department was also working with COGTA to advise them.

On the spirit of the Bill and whether limiting the drinking age to 21 was constitutional or not, he said that
from the Department’s side, it was constitutional and the Department was allowed to limit certain rights for the good of the country. He said the President could send the Bill to the Constitutional Court for certification.

Ms Makaepea said 'premises' was defined as any place, land or building. On the comments made about the National Liquor Policy Council, she said she had taken note of these.

On the question of whether premises could be sold and what happened afterwards, Mr Netshitenzhe said premises could be sold and continue to the use the licence as it could be transferred.

He replied that local authorities would have the discretion to act in cases where outlets were within the 500m radius and he said the Bill was not a draconian law.

Mr Macpherson said he did not believe that the Department knew how to deal with the problem. One could not further legislate issues such as alcohol abuse. The Department wanted to make it tougher to purchase alcohol but did not provide the detail on how it would do that or how the enforcement of underage drinking would be done. He asked who would be responsible for enforcement. There were constitutional issues because it appeared as if the Department wanted to take over provincial responsibilities such as licensing conditions and trading hours and the like. The 500m radius was a disaster, as for example, no outlet would be able to be opened in the Cape Town city centre or the Waterfront. On the matter of liability , he said the Department wanted to hold South African Breweries (SAB) to account for the sales of illegal liquor at a shebeen. Shebeens however, sourced supplies not from SAB but from a wholesaler. There needed to be a strong legal opinion on why SAB could be held to account. He said the BBBEE component was not in accordance with the BBBEE Act, licences could not be revoked but only penalties could be imposed.

The Chairperson wanted clarity on the reference to a Liquor Bill.

Mr Netshitenzhe said the Liquor Policy was pronounced on 14 September together with the Liquor Draft Bill, hence the public consultation phase on the Draft Bill after which the Department had to go back to Cabinet for approval.

Mr Williams said pricing was not part of the policy document. He felt that pricing alcohol higher would cover everything. On legal premises, he asked if a bottle store would have to be closed down because a church was built within 500m of it. He noted that the bar in Parliament would have to close down. Going down the road of taking rights away due to age, was wrong.

Mr Mkongi said the Intergovernmental Relations Framework (IGR) Act prescribed the relationship between the three spheres of government. He said the laws needed tightening to ensure that there were no conflicting laws. The issue of pricing went with that of advertising. Smoking had decreased because of a decrease in advertising. On liability, he said IDs needed to be produced.

Ms Van Schalkwyk asked if any research had been done in the context of African countries for benchmarking.

The Chairperson said she wanted the references on the research which showed that the brain was still developing between the ages of 21 to 25. On pricing, cognisance had to be taken of what the majority of people earned and one had to be careful in imposing discriminatory legislation. She said there would be even greater population densification in the future. Other ways needed to be looked at, without putting a specific figure to the number of metres a liquor store had to be from certain facilities. One could place certain conditions for example. She said she had heard nothing being said about responsible drinking. The Act dealing with cooperative governance needed to be explored as well as cooperative governance amongst departments. She did not want a person's constitutional rights to be infringed.

On Mr Macpherson's question, Mr Netshitenzhe said the burden of proof was shifted so the State did not need to prove a case, rather an individual had to prove he was not liable. The Department was also talking of behavioural change through education and awareness campaigns, not just legislation. Enforcement agencies should have their intelligence sources through their local police agencies.

The Department was of the view that the manufacturing and distribution of liquor was a national competency while retail and micro production were a provincial competency. Having the Policy Council meant that, by agreement, there should be a movement towards having uniform norms and standards which should be factored into provincial legislation.

Initially the Department had wanted to establish a fund to support rehabilitation centres and help victims of accidents caused by liquor.

On high population density areas, he said the Department took note of the inputs and would consider them. It would be addressed through attaching conditions to the licences.

On pricing, he said he would take it as advice on changing the behaviour of the people. The Department was not yet at the stage of calling for ID verification but it did seem as if it was the direction that was being taken. If this was the advice that was being offered, it would be considered.

On drinking being driven underground, he said the Department was seeking a balanced approach. It would provide the references about brain growth in people aged 21 to 25. He acknowledged that the Constitution was the guiding principal law. The Department took senior counsel opinions. It had received three differing opinions and had taken a decision. The Department would provide the written legal opinions. When the dti returned it would do so with a summary of submissions. The matter would go to Cabinet in February.

Ms Makaepea said the pricing was crafted in consultation with Treasury.

Mr Netshitenzhe said the Department would look at the conditions attached to licences. On transformation and BBBEE, he said the policy had been subjected to the BBBEE Unit and had received advice on the route the Department should take so that it was broad enough to give the Department the mandate to apply BBBEE, even during licensing.

The Chairperson wanted the enforcement spelt out in detail because the age limit of 18 had not been enforced. What would the enforcement of an age limit of 21 cost?

Mr Macpherson said bad policy informed bad bills. Submissions on the policy had not been taken into account. What had been done with those submissions? A number of issues that were highlighted in the Bill were highlighted in the policy. On the concern that too high a price would lead to the creation of a black market, he said that this surely would be the same for the age limit issue. He said nothing was in the Bill about enforcement and producing identification. What assurance was there that submissions on the Bill would be taken seriously if submissions on the policy were not taken seriously? He wanted access to all research and documents that informed the policy and which lead to the development of the Bill as well as all legal opinions received.

Mr Mkongi said the strengthening of the inspectorate needed to be tightened. He wanted a definition of ‘place of transport’ because an airport or rail station could also qualify. On the role of the Competition Commission on manufacturing and distribution, this needed to deal with dominance in the industry.

Mr Netshitenzhe replied that the issue of pricing and the black market had been well thought out, as was that of age. Health was taken into account when it dealt with age and, viewed cumulatively, it could lead to deterrence from drinking.

On enforcement, he said the USA demanded age verification and their age limit was 21 years. South Africa was not yet at that point of demanding age verification. The police were being trained by the Department. KZN had 67 inspectorates. If they wanted extra inspectorates, the Department would train police to cover the shortfall and in the spirit of the policy there might be empowering sections in the Bill on education and awareness. The policy set the tone and so some matters may not need to be legislated.

Municipalities, as an arm of government, should be part of the Policy Council. Town planning had to be considered also, so that everybody could be moving in one direction when by-laws or zoning was done.

On benchmarking, he said the Department had benchmarked with the USA, Japan and Switzerland. Botswana was benchmarked with relation to the fund. Kenya and Muslim countries were not considered because the ban on alcohol sales was based on religious grounds.

On transport hubs like air, rail and port, the Department’s initial view was that it would not allow alcohol sales, but eating and drinking should still be the norm and the Department had looked at how it could be translated such that enforcement was also taken into account in the Bill.

The Department would produce the research it had undertaken and would share the legal opinion on liability. The Department would provide information on how training of inspectorates would happen. It was not the Department’s intention to usurp the powers of the provinces, rather there would be discussion to reach agreement through the NLPC.

On benchmarking in the African context, Ms Makaepea said the Department had looked at Botswana, especially in connection with the fund that it had wanted to create.

Mr Macpherson said the Committee wanted benchmarking in the context of Africa.

Mr Netshitenzhe said the Department would do research, but only on a particular point.

Mr Netshitenzhe reminded the Committee that it had recommended that education and training be included in all legislation. This was done for the lotteries, the National Credit Act, the Companies Act and now in the Liquor Bill. Education and awareness in this case, was occurring even before it was being legislated. It might be confusing that there was consultation and education and awareness occurring all at the same time.
 
Committee business
The Chairperson said the Committee had received two replies from the Minister. The first was on the Committee Report on the colloquium on local public procurement and its linkages to the industrialisation drive. The letter said the contents of the Committee Report was noted and the Department, in consultation, would address the recommendations.

The second letter was regarding the Committee’s BRRR report. The letter noted recommendation 8.1 and this would be discussed in the Department’s strategic planning for the following year. Recommendation 8.2 for extra funding for the National Consumer Commissioner, would be done in consultation with Treasury.
 
The debt relief subcommittee would be meeting on Friday.

The meeting was adjourned.