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THE TOBACCO INSTITUTE OF SATHE TOBACCO INSTITUTE OF SA________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Presentation to Presentation to The Portfolio Committee on HealthThe Portfolio Committee on Health

Parliamentary Hearings Parliamentary Hearings The Tobacco Products Control Amendment Bill, B7The Tobacco Products Control Amendment Bill, B7--20082008

6 and 7 May 20086 and 7 May 2008

Francois van der MerweFrancois van der MerweTISA Chairman/CEOTISA Chairman/CEO

TISATISA

• Represents more than 95% of total legal industry in SA.

• Represents Tobacco Farmers, Leaf Dealers and the vast majority of legal tobacco product manufacturers.

• All views of TISA always balanced to represent the wider interests and positions of the entire industry.

• TISA acknowledges that there are risks associated with the use of tobacco products.

• To use tobacco products is a choice to be made by over 18’s, industry is against youth smoking, successful YSP campaigns now discredited.

• TISA supports regulation of the industry and on the use of tobacco products on condition that due process be followed fitting to a democracy (consultation and engagement should be the cornerstone).

Content of Presentation Content of Presentation

• S.A. Tobacco Industry – Key Statistics• Cooperation with government departments• Consultative Process• Why new legislation when existing

legislation is not enforced?• Bill 7 of 2008 - Concerns• Conclusion

SA Tobacco Industry SA Tobacco Industry Key StatisticsKey Statistics

SA Primary IndustrySA Primary Industry• One of the most labour

intensive crops in the agricultural sector

• 160 farmers/12000 workers

• + 50 000 dependents making a living in deep rural areas

• 80-90% of tobacco used in SA for manufacturing

• Production in SA declined by 70% over past 8 years, 20000job losses, many reasons, over-regulation one of them.

WESTERN CAPEWESTERN CAPE

NORTHERN CAPE

EASTERN CAPE

FREE STATE

KZN

MPUMALANGA

LIMPOPO

NORTH WEST GAUTENG

NAMIBIA

BOTSWANA

ZIMBABWE

LESOTHO

South African Tobacco

Total Production 2007/08:10 000 t Flue-cured:

8 000 tAir-cured:

2 000 t

Tobacco in Sub-Saharan Africa• Tobacco produced in Sub-Saharan Africa for many

decades: 350 yrs in South Africa, 110 yrs in Malawi, +60 yrs in Uganda and +40 yrs in Kenya.

• Tobacco production has created infrastructure, schools, hospitals, roads, multiplier effects of dense business networks, entire communities etc, mostly in deep rural areas.

• Vast majority of tobacco farmers are small holder farmers cultivating tobacco on land between ¼ and 1 hectare alongside other, mostly food crops.

Tobacco in Sub-Saharan Africa• Most small holders involved in contract farming with support

from contracting companies, well managed process to benefit of farmers, buyers and governments.

• Contracting companies and grower organisations promote e.g. Good Agric Practices (GAP), Reforestation projects, End Child Labour projects.

• Commercial tobacco farmers in Sub-Saharan Africa are highly skilled businessmen, stimulating vast economic activity in ruralareas, providing employment, stability, leadership, expertise.

• WHO crop diversification agenda, flawed from day 1, same mistake, exclude the very industry they want to regulate. Once again driven by anti tobacco activists, health officials, personal agendas.

Auction floors - Lilongwe

Tobacco truck in Malawi

Transport of Tobacco Bales Auction floors -Zimbabwe

Tobacco cultivation in Uganda

SA Manufacturing IndustrySA Manufacturing Industry• Mostly multi-national companies

- investing in the SA economy/manufacturing or importing

- generating income which is spent in the economy

- creating jobs

- earning foreign exchange through exports

- ploughing back into communities through CSI

- paying taxes and being audited regularly by Government and found to be of highest ethical standing for good business practices

- co-operating with Government in various spheres of society and yes,making profits and being much more than the product it manufactures. (farmers/leaf merchants/manufacturers)

SA Manufacturing IndustrySA Manufacturing IndustryKey StatisticsKey Statistics

• >R 8 billion to Government (VAT & Excise duties) in 2007, (2% of total Government income)

• 52% tax incidence on tobacco products

• + 35 billion sticks manufactured in SA per year

• Pipe tobacco products equates to + 4.5 billion sticks more

• 3 000 employees in manufacturing industry

• Turn-over manufacturing industry >R 17 billion

• + 5 million adult smokers (22% to 25% of adults)

• Consumption of legal products + 25 billion sticks/year

• Consumption of legal products declining, (30% in 10 yrs),more consumers buying illegal products, total consumption probably very stable or even increasing.

Cooperation with Cooperation with Government DepartmentsGovernment Departments

TISA working with Government• TISA committed to working with Government

• SARS Tobacco Industry Stakeholder Forum -representatives of SARS, National Treasury and Industry role-players

• Purpose of partnership is to achieve govt objectives of curbing illicit trade to the benefit of all stakeholders

• Forum activities expanding to SACU & SADC region

• National Department of Agriculture – CEO Forum. Purpose to assist govt in achieving its objectives to benefit of all

• TISA has been calling for similar formal working relationship with Department of Health for many years. Why, to assist govt in achieving its objectives

• We’ve seen new vision at Polokwane in Dec 2007 – engage with the people of this country to achieve objectives to the benefit of all

Consultative ProcessConsultative Process

DOH – History of Non-consultationChronology2002 Feb 19 DoH briefs PCH on work plan –

Changes to tobacco control legislation in pipe-line

2002 March 20 TISA letter to DDG of Health

2002 May 15 TISA letter to DDG of Health

2003 Sept 05 TISA letter to DDG of Health

DOH – History of Non-consultation2003 Sept 19 DDG PA response:

“Due to DDG already full schedule & parliamentary obligations, it wasn’t feasible to respond to your faxed letter”

2003 Oct 17 to Nov 17 Draft Bill publishedOne month given for comment

2003 Oct 17 TISA letter to MoH – request for extension & for meeting with MoHTISA similar letter to DDG

2003 Oct 29 DoH Tobacco Team meets with TISA – one way, no discussion, patronising, talk down to people

2003 Nov 3 TISA follow-up letter to MoH

DOH – History of Non-consultation

2003 Nov 05 MoH letter to TISA –No extension granted

2003 Nov 10 Fax from DoH – TISA letter to DDG dd17/10 referred to DoH Legal Services

2004 APRIL NATIONAL ELECTIONS

2004 Aug 04 TISA letter to Dir: Health Promotion

2004 Oct 7 DoH gives feedback to TISA on 2003 submission – one way, no discussion, patronising, talking down to industry


2005 June 15 MoH response to question in Parl – Bill to proceed to Cab in July

2005 Dec 15 TISA letter to DG – Sunday Times report Bill to Cabinet

2006 March 17 TISA follow-up letter to DG

2006 Apr 03 TISA follow-up letter to DG

2006 Apr 07 DoH email noting TISA letters to DG referred to Legal Services


2006 Apr 11 TISA CEO requests response from DG personally

2006 June to Sept Splitting of Bill: S75 & S76

2007 Jan Public Hearings – PCH instructs DoH to consult Industry

2007 Feb 09 TISA letter to DDG

2007 March 22 DDG schedules meeting, but it is postponed


2007 Nov 16 DoH meeting scheduled, but thencancelled without any reasons given

2007 Nov 20 TISA letter to DDG

2008 March 07 TISA letter to DDG

2008 March 28 TISA letter to DG

2008 Apr 04 Response from Admin Officer –Matter referred back to Deputy Director in office of DDG

Blurred lines – DoH/NCAS

• Does the NCAS have free access to the DoH?

• Tobacco Industry cannot engage the DoH but it appears an “open door policy” is followed with the NCAS.

• 11 March informal briefing – weak presentation, only aimed at discrediting industry, mislead committee, little substance

• No wonder, who prepared the DOH presentation?

TOBACCO PRODUCTS CONTROL AMENDMENT BILL 2008

Presentation to the Portfolio Committee on Health

11 March 2008

If this is true, it reflects

badly on the DoH

Blurred lines DOH/NCAS• DOH/NCAS/Lambert. Who’s who? It’s always WE,

always talk as if they’re government, embarrassing.• Saloojee – Fin/Taxation expert for WHO Africa Region

on FCTC Protocol on Illicit Trade in Tobacco Products –has Saloojee ever consulted Treasury/ SARS/Industry? Shouldn’t Salojee sit on the SARS/Industry Forum to gain understanding away from emotional agenda.

• Surely this position should be filled by Govt (SARS), but in stead is hi jacked by an anti tobacco lobbyist with no knowledge of the very industry they want to regulate. All of this condoned by the DOH

• Engagement with industry: DDG Matsau vs Lambert?

Section 75 Bill Process• On the back of no consultation by the DOH on

the S75 Bill, we give credit to the PCH for a proper public hearing process with adequate time to engage on this Bill in January 2007.

• Result is a Bill supported from all sides of the spectrum, although there are concerns about regulations, given history of how the DOH operates.

• Unfortunately PCH clear and repeated instruction to DOH to consult with Industry on future legislation was totally ignored.

Current Process• 2008 Feb 26 – PCH Chairman lists only bills to be dealt

with by Committee for 2008; S76 Tobacco Bill not included

• 2008 Feb 27 – MoH requests Parliament to fast-track S76 Tobacco Bill, formally tabled on 7 March 2008

• 2008 March 11 - PCH informally briefed by DoH.

• Stakeholders given few days for written submissions; public hearings scheduled straight after Easter Weekend

• TISA objected to this process in strongest terms

Current Process• Thankfully sanity prevailed – PCH gave

extension on written and oral submissions• HOWEVER, even with extension, serious

concerns:– PCH first day back from recess (6/5/08)– NO time to study submissions– NO time to deliberate before hearings– After 5 years of dragging feet, now suddenly this bill is

a matter of life and death, we fail to understand the logic.

Why suddenly the urgency to pass this Bill?

• To fulfill FCTC obligations re packaging and labeling? –NO

• To be able to implement Section 75 Bill? – NO• Is it because we have a vacuum regarding tobacco

control legislation and we need to get something in place – NO

• Have we met the requirements demanded by our Constitution re engagement and consultation? – NO

• Was it on the programme for the PCH like good planning would require? – NO

• Has the committee members received, studied and deliberated on the professional and comprehensive submissions made by industry and others? – NO.

Why suddenly the urgency to pass this Bill?

• Is the intention to rush the Bill in a busy year for parliament to ensure it doesn’t receive due attention? – YES

• Is it the intention to look good at COP 3 and show the world how far we’ve progressed? –YES, regardless of poor compliance behind us, as long as we pump out legislation like a “worsmaker”

• Would any political party think this bill should be a priority before election to win votes – Most definitely NO.

Why bring in new Why bring in new tobacco control legislation when tobacco control legislation when

existing legislation is not existing legislation is not enforced?enforced?

Non-enforcement of existing legislation

Measurement of tar and nicotine levels

“The tests shall be carried out by the South African Bureau of Standards or at a laboratory nominated by the Director-General (of Health), but in all respects at the expense of the manufacturer or importer”[Annexure 3 - GN 2063 - 2 Dec 1994]

• SABS facility not functional – for 2 years already

• TISA has called meetings with SABS and invited DoH to restore compliance

• SABS and Industry ready with solutions, DoH still found wanting with their own legislation

• Currently, DoH not enforcing its law, as it seems they’re only interested in making new laws, regardless of consequences.

Non-enforcement of existing legislation

Act 23 of 2007 (previously S75 Bill)

• S75 Bill was approved by NA and NCOP in 2007

• The State President signed the S 75 Bill into law on 23 February 2008 but it still needs to come into operation.

• It can be implemented on its own, but instead it is lying on a shelf serving no purpose whilst the MoH is requesting Parliament to fast-track a further piece of tobacco control legislation (the S76 Bill)

• Sec 75 Bill deals mostly with public smoking issues, which can be implemented with success and support from industry and other stakeholders

Proposed new legislation –enforceable?

Sale of single sticks• According to DoH, B7-2008 seeks to ban the

sale of single cigarettes by enabling the MoH to regulate pack sizes

• Our view is that single stick sales is already banned in current act.

• The tobacco industry is in favour of a ban on single sticks, BUT:– Is this practically possible in our country?– Have realities of the informal sector been considered?– If this is legislated again, what are we achieving?

SINGLE STICK SALES

BillBill 7 of 2008 7 of 2008 -- ConcernsConcerns

Danger of Enabling Legislation

• This Bill in essence is enabling legislation.

• If there was history of engagement from DoH, TISA would have no problem with enabling legislation. Industry and DoH can clarify most issues by the time any Bill reaches Parliament, no surprises.

• Despite PCH instruction to consult and TISA’s own efforts to set up meetings, consultation has not happened.

• Provisions which permit power to regulate non-sensical.

Danger of Enabling Legislation• Issues of lesser importance, eg vending machines, are

spelt out in detail, which is welcomed and advisable.

• Issues of far greater importance and consequence, are delegated to the Minister’s discretion.

• 2003 bill contained provision requiring products to be hidden from view. This has now been excluded, replaced by “requires retailers to display tobacco products in the prescribed manner”

• Certainly detailed requirements should be in the bill for a matter of such importance, after proper consultation with all stakeholders.

Vagueness in the BillPoint of Sale (PoS)• No clarity on what the MoH intends to prescribe ito:

– Signage – Health messages– Display

• Tobacco products could literally be forced “under the counter”

• If this is so, consequences like competition issues and growth in illicit trade will be the result.

• Enabling legislation here not good enough. Once again, in consultation with stakeholders detailed legislation could be brought to the PCH which could meet objectives of the DoH.

FORMAL SECTOR FORMAL SECTOR –– POINT OF SALEPOINT OF SALE

INFORMAL SECTOR – POINT OF SALE

Vagueness in the BillPackaging and Labelling• The MoH inter alia to prescribe:

– pack sizes, – info and health messages to be included in and on packages; – info that may not appear on packaging; – markings on packaging to identify illegally manufactured products or

products on which tax has not been paid.

• Because no consultation with industry, there is no certainty around what the MoH intends doing and whether what the MoH wants to do is even practically possible:– envisaged timelines– Currently existing machinery cannot insert leaflets into soft packs– Practicality around health warnings on imported products like cigars– Certainly SARS jurisdiction when it comes to fiscal matters

• Repeat, a proper consultative process will find practical solutions to meet objectives

Charitable Donations –Only Anonymously

• TISA fails to understand the reasoning by allowing charitable donations on the one hand but on the other only if it is done anonymously.

• How should charities declare monies received i.t.o FICA requirements if tobacco industry donations cannot be acknowledged?

• Is this a way for the DoH to be “saved from the embarrassment” of acknowledging that tobacco money is actually assisting a number of worthy charitable causes in our communities?

• It is ridiculous to link tobacco money for worthy causes to promoting the product, in fact, it demonstrates a lack of understanding ofrealities out there, out of touch with the needs of the people of SA!

• Many examples of this where even the DoH in provinces are involved. Malawi example of school where it’s desperately needed, turned down because it’s tobacco money. Then we talk of education as a priority in our country and region.

Constitutional Concerns

Parliamentary Process[Constitution - Chapter 4 (59) (1) (a)]

• SA Constitution created through public participation. Some of MPs currently in Parliament was part of that public participation process.

• In the spirit of the Constitution, Government and Parliament has an obligation to facilitate public participation in law-making

Constitutional ConcernsFreedom of Expression• Freedom to impart and receive information on tobacco products

• Tobacco products are legal products for which a demand exists bythose who choose to use it

• Consumers have the right to request and receive information on tobacco products

• Tobacco Industry has the right to impart information to its consumers and to the supply chain

• Looking at the Bill in its current form, it appears that this communication is intended to be banned.

• This is totally unacceptable and non-sensical.

• By closing one of only two ways to communicate with consumers, will create more problems. Will we see when we get there or should we do it right from the start.

Constitutional ConcernsLegislation by Regulation• Enabling legislation will give MoH ultimate power

to legislate by regulation• Parliament and PCH potentially will have no

further input into tobacco control legislation

• PCH has important oversight role – should not abdicate this role

• Unfortunately, DoH track record proves they do not engage, we need the PCH to act in the interest of those who elected them.

ConclusionConclusion• TISA strongly submits given all the uncertainties

and concerns, some of which are constitutional in nature, that Bill 7 of 2008Bill 7 of 2008 be referred backreferred back to the Department of Health for a proper proper consultative processconsultative process to take place before this Bill is brought back to Parliament.

• We respectfully request the urgent intervention of the PCH in this regard. Message to the DOH should be, get your house in order and just enforce your current legislation before you ask us to increase your powers.

THANK YOU THANK YOU

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