DOCUMENTS

B-BBEE and EE: The Zille, Mazibuko correspondence

DA leader raises concerns over amendment bills, DA parliamentary leader replies, May 2013

Email from DA leader Helen Zille on the B-BBEE and EE Amendment Bills, May 6 2013:

From: Helen Zille

Sent: 06 May 2013 09:46 PM

To: Wilmot James; Geordin Hill-Lewis; Geordin Hill-Lewis; Jonathan Moakes; James Selfe; Gavin Davis; Tim Harris; Lindiwe Mazibuko; Frouwien Bosman; Russel Brueton; sejmotau@mweb.co.za; Johan JVdB. Van Der Berg

Subject: DA's approach to BBBEE and EE Amendment Bills

Importance: High

Dear colleagues

I have spent much time considering the two "empowerment" Bills, the BBB-EE Amendment Bill and The Employment Equity Amendment Bill.

My philosophical point of departure is as follows.

1) We support the need to redress the legacy of apartheid.

2) The best way is through sustained economic job-creating growth, education and skills training aligned to the needs of the economy.

3) We have spent at least R500-billion on narrow-based BEE" in the past 19 years. This has not created new jobs or broadened the base of the economy to any significant extent.

4) The empowerment results have been dismal: We have only managed to "over-empower" a small politically connected elite.

5) We need to redress both the legacy of apartheid as well as crony-based BEE, which merely continue the legacy of apartheid, by exduding the majority of disadvantaged South Africans.

6) We need to start by asking what the REAL barriers are to black advancement in the economy.

7) Anything that prevents job creating economic growth is a barrier to black advancement in the economy.

8) Anything that prevents first time job seekers getting jobs is a barrier to black advancement in the economy.

9) Anything that undermines education and training, and that mis-aligns this with the needs of the economy, undermines black advancement.

10) Once the requirements of growth, jobs, education, training and alignment with the economy are met, it will create opportunity on a grand scale. This will primarily advantage black South Africans and do more for BEE than any initiatives undertaken by the ANC thus far.

11) Within this context we need to inoentivise business to ensure opportunities, training and promotion for disadvantaged South Africans.

We must assess the two Amendment Bills within this framework.

As I read them they will mostly COMPOUND the problems of narrow-based BBBEE rather than broaden the scope of empowerment

For the BBBEE Amendment Bill our biggest argument should be based on the criteria for "new entrants" which enables the re-empowerment of the already empowered and enriched. We must seek, as hard as we can, to lower the threshold for entry, so that wealthy indMduals do not benefit again from "empowerment" which has, in the past, usually been through political connections. The Amendment Bill currently says it wants to INCREASE the threshold for applicability for BBBEE advantages from R20-million to R50-million. We want to lower it from R20-million ownership of equity instruments to R10 million as the upper limit for qualification.

THE BOTTOM LINE OF OUR ARGUMENT THAT WE MUST MAKE UNAMBIGUOUSLY CLEAR IS THAT WE WANT GENUINELY BROAD BASED EMPOWERMENT RATHER THAN THE RE-EMPOWERMENT OF AN ALREADY ENRICHED ELITE.

This must be the focus of our campaign against this Amendment. We want it genuinely broad based, and we want to remove crony empowerment from the system. We can oppose the Bill on this basis, while making it clear that we support genuinely broad based black economic empowerment.

As far as the EEA ¡s concerned. It is a stick approach, rather than the carrot approach.

It entirely ignores the "supply side" crisis, and pretends that if "demand" is beaten into shape, outcomes will change -- and improve.

An effective approach again requires us to look at the obstacles preventing genuine empowerment of people disadvantaged by apartheid. In my view they are almost all supply side. We have to come up with a coherent programme to address these issues, and put in carrots so that the private sector will assist - ranging from the Youth Wage Subsidy to incentives for work-related training, and investment in new enterprises.

Any other approach deters investment and kills jobs. When you kill jobs there is less demand side. So fewer people are employed and fewer black people can benefit from access to the economy and career advancement

This goes back to my point of departure that a growing economy offers far more scope for EE than a shrinking one. Anything that shrinks the economy or deters investment is BAD for Black Advancement.

We must get away from the assumption that business will invest anyway, no matter what obstacles the State puts in their way. They won't. And there is nothing that will kill opportunities for disadvantaged South Africans more that economic stagnation and decline.

We thus support BEE and AA and EE IF IT FULFILL THE INTENDED PURPOSE WHICH IS TO REDRESS THE LEGACY OF APARTHEID. The ANC's past and current strategies do not.

This is what we have to expose. We support BEE that WORKS.

The DA must present two alternatives for the future of BEE:

1) We must show that if we continue on the ANC's trajectory we must model the economic decline resulting from shrinking investment and fewer opportunities and the impact that will have on jobs.

2) We must model the DA's alternative of massive supply side improvement (education for jobs, economic growth and incentives) and what this will mean for Black advancement in comparison to the ANC's model.

THE REAL QUESTION MUST BE: WILL THE MAJORITY OF BLACK PEOPLE BENEFIT MORE FROM THE ANC'S MODEL OR THE DAS.

I think the answer will, irrefutably, be the DA's. We need to be able to demonstrate this convincingly. Then the "threat" posed by these two Amendments Bills will evaporate and we can turn them into an opportunity.

I hope this is clear.

We must clearly delineate roles going forward. But we must be on the same page on this crucial issue. I think we need a task team to meet and discuss all of the elements  that we require to flesh out and communicate this approach, inside and outside Parliament. May I ask Wilmot please to convene another meeting with all the people in the top address list (not the copied list) to attend.

Please let us take this discussion forward as a matter of some urgency.

Helen

***

Email from Gavin Davis, DA Head of Communications, May 8 2013

08 May 2013, at 16:02, Gavin Davis wrote:

Dear all

It is imperative that we get the communication right around the two amendment bills currently before Parliament.

I am of the view that we need to hold a press conference setting out our position on these two bills, highlighting the two issues identified by Helen below - namely:

1. The BEE Amendment bill is not broad-based enough. We will push to lower the threshold for new entrants to prevent repeat empowerment so that the most deserving people benefit.

2. The EE Amendment bill should not be punitive to companies who cannot implement it, since there are not enough skills on the supply-side to enable every company to comply. This "stick" approach will drive out investment which will lower the demand for labour and, in the end, will mean fewer opportunities for people who are previously disadvantaged. We should be in favour of a "carrot" system that offers companies incentives to diversify their staff.

In this way, we can show that both these bills will curb black advancement. Most importantly, it is an opportunity to show that we are proponents of real redress which can only be achieved by creating an enabling environment for growth and jobs.

I am in favour of holding a press conference setting out these arguments up front rather than having to explain them after the ANC's inevitable accusations that we are "anti transformation".

Look forward to your thoughts.

Gavin

***

Reply from Lindiwe Mazibuko, DA Parliamentary Leader, May 8 2013:

From: Lindi Mazibuko

Sent: 08 May 2013 05:57 PM

To: Gavin Davis

Cc: Helen Zille; Wilmot James; Geordin Hill-Lewis; Geordin Hill-Lewis; Jonathan Moakes; James Selfe; Tim Harris; Lindiwe Mazibuko; Frouwien Bosman; Russel Brueton; Sej Motau; JohanJVdB. Van Der Berg

Subject: Re: DA's approach to BBBEE and EE Amendment Bills

Dear All,

Any position that we put out on a piece of draft legislation has to be based on a thorough reading of the law in question, which is driven and managed by the relevant portfolio spokespersons - ¡n this case, Wilmot James and Sej Motau. Both Wilmot and Sej have been actively engaged ¡n the process of deliberation on these bills ¡n conjunction with their deputies and research support teams.

In Wilmot's case, we have in addition to the inputs he is making on the BBBEE Amendment Bill and its related codes, a draft policy on economic inclusion, which goes to the heart of the philosophical and practical questions around our response to BBBEE.

As I understand it, this has yet to be processed through Federal Council, although Fed ex has already approved it. Like Athol Trollip's draft policy on Land Reform, the Economic Inclusion policy will be subject to ratification by the party, and any comments about it can very easily be made in advance of the Federal Council meeting where a decision will be made. As with the draft legislation, comments should be based on the high-quality, detailed content proposed in the draft policy, rather than on speculation.

I am very confused about why we are discussing short-circuiting processes around our positioning on Bills which have been in place for many years, and processes around how draft policies are ratified which were themselves recently ratified by Federal Council. On issues as important as these, we must be directed by substance, not speculation. What is the substantiation for the claim that "both these bills will curb black advancement", for example?

As an aside, the position articulated in point number 1. is already extensively detailed and contained in Wilmot's response to the BBBEE Amendment Bill and the accompanying Codes of Good Practise.

Regards,

Lindiwe Mazibuko MP

Democratic Alliance Parliamentary Leader

Source: City Press, Scribd account.

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