COSATU Submission on the Construction Industry Development Board Bill, Presented to the NCOP Select Committee on Public Services, 12 September 2000

COSATU Submission on the

Construction Industry Development Board Bill

Presented to the NCOP Select Committee on Public Services, 12 September 2000

Table of Contents

1. Introduction
2.Chapter One

2.1 Definitions

3. Chapter Two

3.1 Objects of the Board

3.2 Powers, functions and duties of the Board
3.3 Composition of the Board
3.4 Evaluation and review

4. Chapter Three

4.1 Registration of contractors

5. Conclusion

1.    Introduction

1.1 COSATU has participated in various processes aimed at regulating the construction industry. This has included participation in the Inter-Ministerial Task Team tasked with developing the White Paper (1), which serves as a basic framework for this legislation. We also tabled a submission to the Department of Public Works, on the Draft Construction Industry Development Bill and are pleased to note that some of our proposals have been incorporated. We therefore welcome the opportunity to participate in the public hearing on the Construction Industry Development Board Bill herein referred to as the Bill.

1.2 The construction industry employs a large number of people who are mostly drawn from the disadvantaged communities. These are vulnerable workers who must enjoy the rights accorded to all workers by labour market legislation. It is the role of all stakeholders in the construction industry to ensure that the industry grows and is able to create quality jobs which can be sustainable in the long-term and which can also help in improving people’s lives. This is what informs COSATU’s participation in these processes.

1.3 We wish to ensure that significant issues that are raised in the White Paper are clearly articulated in legislation and further strengthened. The White Paper pointed out the volatile nature of this industry, particularly its tendency to shed jobs on a large scale. Therefore it is important to have legislation which can adequately drive the development of the construction industry.

1.4 COSATU welcomes the Bill and in general believes that it will play a positive role in regulating and stabilising the construction industry. The amendments we are proposing are aimed at strengthening and tightening the Bill. They deal with the following areas: definitions, objects of the Board, duties of the Board, composition of the Board, evaluation and review, registration of contractors.

1.5 We note that there is confusion around the date of the public hearings and wish to state that COSATU would present its submission upon invitation to appear before the Committee.

2.    Chapter One

2.1 Definitions

2.1.1 The Bill proposes a new definition of "best practice" (2). This deviates from the previous definition; the new definition of "best practice" as adopted in the Bill is now worse than it was in the Draft Bill as it has a more developmental approach. (see definition below at para. 2.1.2 with proposed amendments). By doing this, the Department has also totally ignored the proposal by COSATU to include "improved labour relations" as part of the definition. This inclusion would have ensured that the definition is in line with the objectives and vision of the White Paper. The White Paper serves as a policy framework for this legislation and must therefore be clearly articulated and strengthened.

2.1.2 COSATU proposes that the following definition of "best practice" as proposed in the Draft Bill be reinstated and further amended by inserting "improved labour relations" as part of the definition. The new definition (derived from the draft Bill) will therefore read as follows:

1. In this Act unless the context otherwise indicates-

(a) "best practice";, means a desirable and appropriate standard, process, procedure, method or system, which during the delivery process and the life cycle of fixed assets, advances improvement in

national socio-economic development, including labour absorption, equity and human resource development in the construction industry;

technical outcomes, including quality, productivity and efficiency

safety, health and environmental outcomes

labour relations

3.    Chapter Two

3.1 Objects of the Board
3.1.1 COSATU welcomes the inclusion of ";labour absorption and improved labour relations in the construction industry"; as proposed in clause 4 (c) (v) (bb) and (cc). We however wish to reiterate our proposal, which has been ignored in the Bill, that one of the objectives of the Board should be to develop standards and guidelines to improve labour relations. This will assist in dealing with problems caused by casualisation and exploitation within the industry and could serve as a code of good practice for employers.

3.1.2 The new objective will be formulated as follows:

4(1) The objects of the Board are to:

(a) develop standards and guidelines to improve labour relations in the construction industry, in line with existing labour legislation

(renumber clause 4 accordingly)

3.2 Powers, functions and duties of the Board

3.2.1 COSATU welcomes the inclusion of "improved labour relations" in clause 5 (1) (a) (iii). However we wish to propose that one of the functions of the Board as outlined in clause 5 should be to create sustainable employment to promote stability within this sector. This is in line with the White Paper’s aim and vision as articulated in paragraph 2.4 of the White Paper.

3.2.2 The creation of sustainable employment will remove practices such as labour-only subcontracting, which is used by employers to avoid obligations arising from labour legislation. This encouraged the exploitation of workers. Further, without sustainable employment and training, the stability of the industry, productivity, creativity and growth as long-term benefits cannot be achieved.

3.2.3 The new clause should therefore read as follows:

5. (1) To provide strategic leadership, the Board –

a)

(b) must strive for the creation of sustainable employment within the construction industry

(renumber clauses accordingly)

3.2.4 COSATU further welcomes the insertion of sub clauses (5) (a), (b) and (c) which are aimed at ensuring that the Board evaluates and influences aspects of the national budget which affect the construction industry.

3.3 Composition of the Board

3.3.1 Clause 6 deals with the composition of the Board. COSATU strongly believes that in order for the Board to reach its objectives as set out in clause 4, all role players should be included in the Board. This will ensure that people with a reasonable balance of expertise and knowledge of this industry participate in the Board as envisaged by clause 6 (3). Therefore to avoid a situation where members of the Board are mostly drawn from one particular sector, the Bill should specifically oblige the Minister to ensure that business and labour are represented in the Board.

3.3.2 Clause 6(3) should thus be restructured and amended as follows:

(3) In the appointment of the members of the Board, the Minister must take cognisance of the need to achieve a reasonable balance of expertise and knowledge of the construction industry, whilst broadly reflecting the

(a)race;

(b)gender;

(c)stakeholder representation; and

(d)geographic composition of the Republic

3.3.3 To complement the recommendation in clause 6(3)(c), we further reiterate our previous recommendation that the Minister relieve a person from their position on the Board where they are no longer able to make input from the perspective of a sector they represent. This should be clearly set out in clause 7 (5) of the Bill.

3.3.4 Therefore, clause 7(5) will be amended as follows:

7

(5) The Minister must in writing immediately relieve any member of his or her duties if that member [has] –

(a)

(b)

(c)

(d

(e) no longer carries the mandate of a particular sector .

3.3.5 COSATU supports the establishment of the stakeholders forum in clause 13.

3.4 Evaluation and Review

3.4.1 Clause 14 provides that "the board must facilitate a review of its activities in relation to its goals and objects at least once every 5 years". COSATU in its submission on the Draft Bill recommended that this period be amended to 3 years so as to coincide with the Board’s period of office. Our proposal was however rejected.

3.4.2 The proposal for 3 years will ensure that Board members adequately report before they evacuate their positions. If the proposal in the Bill is adopted, outgoing members of the Board will evacuate their positions without giving a report of their activities. This will prevent a proper hand-over from taking place and it will make it difficult for new members to report on the activities that they were not part of. The review and evaluation process could also influence the appointment of the new Board. We therefore propose that the Board’s evaluation period coincide with the Board members’ term of office.

4.    Chapter 3

4.1 Registration of Contractors

4.1.1 The principles that guide the registration of contractors as set out in clause 18 (5) of the Draft Bill have been deleted from the Bill. Clause 16 (5) of the Bill now provides that "the Minister must prescribe the requirements for registration, taking into account the different stages of development of contractors in the construction industry, the development of the emerging sector and the objectives of this Act."

4.1.2 It is not clear why these principles, advanced in the draft Bill, have been removed from the Bill as they set out a clear criteria for registration. This would ensure that credible contractors are registered and that new and small enterprises are given recognition. The principles would also ensure that businesses which do not adhere to labour legislation and good business practices are rejected.

4.1.3 We recommend that the principles as set out in clause 18 (5) (3) of the draft Bill be reinserted to replace clause 16 (5) of the Bill. We further recommend that "failure to adhere to minimum labour standards and regulations" be inserted as sub-clause (5) (f) (iii). The new clause 16 (5) will now read as follows:

(5) -

(f) the register must have a mechanism to allow for the exclusion or rejection of contractors on prescribed grounds; but particularly on:

(i)

(ii)

(iii) failure to adhere to labour legislation

5.    Conclusion

5.1 The White Paper, which was released after broad consultation with stakeholders, has identified various constrains within the construction industry, which need attention. The White Paper also identified key elements that will assist in transforming the construction industry into a more stable industry for sustainable job creation and economic growth. It is imperative that when drafting legislation the aim and vision of the White Paper are taken forward. Therefore emphasis should be placed on clear and precise legislation which closes unnecessary gaps. We believe that the Committee will seriously consider our proposals when deliberating on the Bill

Footnotes

1 White Paper: Creating an Enabling Environment for Reconstruction, Growth and Development in the Construction Industry

2 1 (a) "best practice" means a desirable and appropriate standard, process, procedure, method or system in relation to the delivery process and the life cycle of fixed assets

3 (5) The register of contractors must be based on, but not limited to, the following principles:

(a) contractors must be registered within certain categories of work, according to their past performance and financial capacity;

(b) registration must result in the contractor being viewed as suitably registered for work of a general nature within those categories for which the contractor is registered;

(c) the register must cater for the large and small enterprises, main or subcontractors;

(d) new entrant enterprises, in particular emerging enterprises, which have not established a sufficient track record commensurate with their capacity may be recommended with special concessionary rules;

(e) membership of a contractor federation, trade federation of professional body is not mandatory for registering;

(f) the register must have a mechanism to allow for the exclusion or rejection of contractors on prescribed grounds; but particularly on:

(i) conviction of a criminal offence or grave misconduct relating to the pursuance of the contractor's profession or business;

(ii) unacceptable performance on construction contracts;