Controversial draft debt-relief Bill clause in spotlight in
Parly

Controversial draft debt-relief Bill clause in spotlight in Parly

The clause proposes broad powers for the trade and industry minister to introduce debt-relief measures in the case of a significant shock to the economy that causes widespread job losses.

Parliament of South Africa in Cape Town. Picture: Christa Eybers/EWN.

CAPE TOWN – Parliament’s Trade and Industry Committee may drop a controversial clause in its draft debt-relief Bill after a damning legal opinion by senior advocate Wim Trengove.

The clause proposes broad powers for the trade and industry minister to introduce debt-relief measures in the case of a significant shock to the economy that causes widespread job losses.

This includes strikes and political unrest, as well as national or provincial disasters.

But Trengove also says that a key aim of the National Credit Amendment Bill – to allow for the debts of some poor people to be scrapped – is not a violation of the Constitution.

He was asked to give an opinion only on these two aspects of the Bill and not its constitutionality as a whole.

The committee on Tuesday resumed its work on finalising the National Credit Amendment Bill.

Trengove says extinguishing debts and claims against those earning less than R7,500 a month will simply give the poor the same relief that wealthier debtors in distress have always had.

He says credit providers’ property rights under Section 25 (1) of the Constitution won’t be violated by this provision, which will only apply if there’s no reasonable prospect of a debtor ever repaying what they owe.

But Trengove was scathing about the clause in the National Credit Amendment Bill that would give the trade and industry minister the power to introduce debt-relief measures in the event of an economic shock or natural disasters, where there are widespread job losses.

In a written opinion for Parliament’s Trade and Industry Committee, Trengove labels the definition related to events affecting the economy as “barely coherent”, asking:

“How do economic circumstances constitute an unexpected or unpredictable event – does it include a rise or fall in the price of gold, the depreciation of the rand, a negative or depressing State of the Nation Address or Budget speech or a downgrade of SA’s credit rating by the international ratings agencies?”

He also questions why every national or provincial natural disaster should trigger debt-relief measures by the minister.

Trengove says while providing distressed communities social assistance is a “worthy goal” the duty and cost of this should be borne by the government and not private credit providers – and that while Parliament can delegate legislative powers to “fill in detail” of existing law it shouldn’t be an open-ended licence.

In its current form, says Trengove, the bill gives the minister “a free hand” to introduce any kind of debt intervention measure for any duration or even indefinitely.

This would “operate at the expense of credit providers and deprive them of their constitutionally protected property rights”.

Trengove further cautions that the National Credit Amendment Bill, in its current form, is not user-friendly and could be “vulnerable to constitutional attack for its contradictions and vaguenesses”.

He says the draft legislation needs careful review as it is currently very complex, difficult to understand and “bears all the hallmarks of patchwork drafting ‘made up as we go’”.

African National Congress MP Adrian Williams told the committee he’d be prepared to withdraw the clause if it was a stumbling block.

The committee continues to work on the Bill now in its sixth draft this week.

(Edited by Thapelo Lekabe)

Source: EWN

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