DIRECTOR-GENERAL OF THE DEPARTMENT OF TRADE AND INDUSTRY
(For the attention of Ms. Nkoe Ramphele)
About the proposed
NATIONAL LIQUOR POLICY
[Made known under Notice 446 of 2015]
The Minister of Trade and Industry, under a General Notice published in the Government Gazette of 20 May 2015, a discussion document about a proposed National Liquor Policy, for public comment.
(Interested persons were invited to submit comments within 30 calendar days from the date of publication, presumably the date of publication of the Notice in the Gazette on 20 May.Thus comments were to have been lodged by 19 June 2015.
(On 12 June 2015 the Department announced that after consultation with industry representatives it extends the period for submitting comments by 30 days and that to submit comments interested parties now have until “13 August.”)
The draft Policy proposes that a government-managed fund to finance the combating of alcohol abuse be established and that the liquor industry will “continue to” contribute to the fund. This implies that the industry is already contributing to the fund, which is incorrect.
Imposing on the industry a mandatory contribution amounts to imposing a tax, levy or duty. It cannot be included in the Liquor Act. It must be in a separate money Bill introduced by the Minister of Finance.
The Policy proposes that the percentage which industry must contribute should be determined by the Minister of Trade and Industry. In our view the percentage to contribute must be specified in the money Bill. A money Bill may not deal with any matter except imposition of the tax, levy or duty. These requirements, that the Minister of Finance must introduce the money Bill and it must deal only with the tax, mean by necessary implication that the Bill cannot delegate determination of the tax to another Minister.
If there is to be a dedicated fund, it is more appropriate that it be under the Minister of Social Development and her Department. They administer the Prevention of and Treatment for Substance Abuse Act, which applies to alcohol and provides for a comprehensive response to combat abuse. The Act established a Central Drug Authority of 20 government departments to oversee implementation of a National Drug Master Plan. The Minister of Social Development co-ordinates implementation aimed at combating abuse. The focus of the National Drug Master Plan 2013-2017 is alcohol abuse. Resolution 11 recommends a mandatory contribution “by the liquor industry and pharmaceutical and related industries producing dependence-forming substances” to a fund dedicated to “abuse of alcohol and other substances”.
To set aside the moneys in a dedicated fund requires justification. The Constitution says all money received by the government must be paid into the National Revenue Fund, unless “reasonably” excluded by Act of Parliament. It is not clear if it is reasonable to exclude these receipts from the National Revenue Fund and earmark them for a separate fund with one health-policy goal. The fiscal desirability of earmarked funds is discussed by our affiliate organisation the Free Market Foundation in its submission.
It is unnecessary to propose that liability for manufacturers and suppliers be introduced to ensure they take responsibility not to supply unlicensed traders. This is already prohibited.
The Policy proposes that liability should be placed on the manufacturer or supplier if its products are found in unlicensed outlets, and it would suffice for liability that the goods are merely “found” in an unlicensed outlet. If the proposal is only that the supplier is guilty if it sold knowing that its customer will store the liquor in unregistered premises, this already applies under common law and a supplier providing the customer with the means to commit the offence will be criminally liable as an accomplice. To go further and make a supplier liable for liquor found in unregistered premises even when it did not know that the liquor would be stored in unregistered premises would make the supplier liable without being at fault and would breach the presumption of innocence.
The Policy proposes that a manufacturer, distributor and trader should bear liability for harm or damages from a motor accident or crime related to substance abuse that involves an intoxicated person who had been served by a liquor trader. This is similarly unjust. It will be unworkable, and we identify the difficulties of proving it. It would also overlap with the liability of the Road Accident Fund and of the envisaged Road Accident Benefit Scheme that is expected to provide compensation not based on fault. The proposal will compel manufacturers, distributors and retailers to hold insurance against the risk of claims, the costs of which would be passed on to consumers, leading to higher liquor prices, thereby increasing the likelihood of consumers turning to illicit brews and concoctions.
The proposal is to raise the minimum age at which alcohol can be purchased to 21 years. We point out that the age of majority is 18.
The Policy proposes that liquor premises be at least 500m from schools, places of worship, recreation facilities, rehabilitation or treatment centres, residential areas and public institutions, and that no liquor licences be issued to petrol service stations or premises near public transport, or premises not classified for entertainment or zoned for liquor trading. Existing licences contravening this proposal should be terminated within two years. The proposal would presumably apply to both off- and on-consumption (restaurants, hotels, casinos, pubs, taverns). It would drive most retail licensees out of business, particularly where no or insufficient premises are zoned for entertainment or liquor trading or are far from customers. Relocating pubs and taverns far from public transport, so forcing patrons to drive there and back, will increase the incidence of drunk driving. Courts recognise that alcohol abuse is a social evil and that liquor sales should be controlled. But these proposals are unjustifiably disproportionate.
Departmental appointees to the proposed review tribunal should be sufficiently independent to enable the tribunal to exhibit the proper absence of institutional bias.
National standards for retail licensees are not essential. Provincial measures over liquor retailing do not affect national security or economic unity.
That it might be essential to combat abuse does not mean that national standards are essential. It is not necessary to have a uniform approach in order to combat alcohol abuse effectively. Different provinces should be left to pursue strategies they think will best combat abuse. Policies that are demonstrably more effective can then be adopted in other provinces.
The Liquor Act does not provide for a “National Liquor Authority”. The Act confers powers on the Minister. Persons seeking registration should apply to the Minister. The Minister grants or refuses applications, proposes registration conditions and issues registration certificates. He may delegate these powers to “an officer [or officers] designated by the Director-General”, not to a body of unspecified officials which the Regulations call the “collectivity” to which he has delegated powers. The regulations say the National Liquor Authority considers applications for registration, and certificates and forms are issued by the “National Liquor Authority for the Minister”. These regulations are ultra vires, beyond the powers of the Minister to make, and liable to be set aside by a court. If the Minister delegated powers to a “National Liquor Authority” and not to specified designated officers, that delegation is ultra vires and liable to be set aside.
The Policy proposes that the National Liquor Authority, for more effectiveness and capacity to regulate manufacturers and distributors and enforce compliance, should be repositioned as a departmental “trading entity” governed in accordance with Public Finance Management Act regulations issued by the Treasury. We point out that it is inappropriate to structure a regulatory body as a trading entity. A trading entity trades; a regulatory body regulates. The PFMA distinguishes departmental trading entities and governmental business enterprises from other public entities. Trading entities provide goods or services and government business enterprises carry on a business doing so (examples are the Airports Company, Telkom, Transnet, Rand Water, State Diamond Trader, Eskom, South African Airways). In contrast a “non-business public entity” is a board or commission or entity accountable to Parliament and funded by the National Revenue Fund or taxes (such as the Financial Services Board, National Energy Regulator, Competition Commission). PFMA regulations for non-business public entities differ from those for government business enterprises and trading entities. Structuring a National Liquor Authority as a non-business public entity would be more appropriate.
Establishment of government-managed fund to combat alcohol abuse
The draft Policy proposes that a government-managed fund responsible for combating alcohol abuse be established. The Policy says that the industry will “continue to” contribute “a percentage” to a fund, to fund activities to combat alcohol abuse.
It is not clear what is meant by the statement that the industry will “continue to” contribute to such a fund. This implies that the liquor industry is already contributing to the fund. This is incorrect. The current situation is as follows:
Pursuant to an Anti-Substance Abuse Summit of government departments and others held in Durban in March 2011 under the auspices of the Department of Social Development, a “Programme of Action 2011-2016” was developed based on 34 resolutions and recommendations for supply-, demand- and harm-reduction strategies adopted at the Summit. The 34 resolutions and recommendations included Resolution 11:
“11. Imposing a mandatory contribution by the liquor industry to a fund that will be dedicated to work to prevent and treat alcohol abuse.”
The Programme of Action says that the funds were to be “set aside and managed by an independent entity”. This concept was to be “Include[d] in the new liquor policy” and “in the reviewed Liquor Act”. After that it would be necessary to “Establish the structure to manage the fund.” The lead departments for these tasks were to be the National Treasury and the Department of Trade and Industry.
It therefore appears that the draft Policy’s statement that the industry will “continue to” contribute to a fund does not mean that it already contributes. Perhaps what is intended is that the industry will “regularly” contribute to a fund.
While there may currently be no statutory provision obliging the liquor industry to contribute to such a fund, industry sectors have voluntarily been funding projects and bodies combating alcohol abuse.
Levying of contribution is taxation requiring separate money Bill
If the intention is that the Liquor Act should merely be amended in the ordinary way to give the Minister of Trade and Industry the power to determine the percentage that industry must contribute, this would probably be unconstitutional.
In our view, “imposing a mandatory contribution by the liquor industry to a fund that will be dedicated to work to prevent and treat alcohol abuse” amounts to the imposing of a tax, levy or duty, and could probably not validly be included in a reviewed Liquor Act.
The dominant purpose of the proposed mandatory contributions would be to raise revenue for the proposed fund.  These proposed mandatory contributions would not be regulatory charges aimed at curbing, restricting or discouraging the activities of the liquor industry:
The draft Policy says it is necessary to “promote an economically healthy liquor industry” that fully contributes to the country’s revenue and participates in initiatives proposed in alleviating the socio-economic burden caused.
In May 2014 the National Treasury stated that:
“[T]he national government allocated more than R10 billion and provincial governments allocated a total of almost R7 billion towards efforts to deal with alcohol abuse in 2009/10. After the revenue gained through excise duties on alcohol sales of about R10 billion, estimated VAT on alcoholic beverages of about R6 billion and provincial liquor licences of almost R72 million are accounted for, net expenditure of about R890 million remained to be funded through general tax revenue. This shortfall of approximately 5 per cent is borne by the broader taxpaying public.
“[T]he extent to which government currently addresses alcohol related harm through its expenditure and taxation measures may be used as a proxy of the externality costs of alcohol abuse. It would appear that the contribution of alcohol consumers in terms of excise duties and VAT on alcoholic beverages is below the cost of expenditure programmes by national and provincial governments aimed at addressing the impact of alcohol abuse.”
There would need to be a separate “money Bill” dealing only with the imposing of this industry contribution to a fund to combat alcohol abuse. A Bill is a money Bill if inter alia it imposes national “taxes, levies, duties or surcharges.”
The Constitution says that only the Cabinet member responsible for national financial matters (the Minister of Finance) may introduce a money Bill in the National Assembly.
Money Bill should probably not authorise Minister to specify contribution rate
The draft Policy says that the percentage to be contributed (by industry) should be determined “by the Minister of Trade and Industry,” after consultation.
It will most likely be unconstitutional for a money Bill to merely delegate to a Minister the determination of the amount or rate of contribution. In our view the percentage to be contributed must be specified in the money Bill itself.
A money Bill may not deal with any other matter, except the imposition of taxes, levies, duties or surcharges (or the abolition or reduction of taxes, levies, duties or surcharges, or the granting of exemption from them).
The requirements that only the Minister of Finance can introduce a money Bill, and that money Bills must deal only with the tax, probably together mean by necessary implication that such a Bill cannot legitimately delegate the determining of the tax to another Minister. That would defeat the purpose of these constitutional requirements that taxes are to be under control of the finance Minister in special taxing statutes.
(It is true that the British Parliament may pass legislation delegating its powers of requiring the subject to pay money to the Crown to the Executive, but the clearest words are required before the Courts hold that such an unusual delegation has taken place. No pecuniary burden can be imposed on British subjects, by whatever name it may be called, whether tax, due, rate or toll, except on clear and distinct legal authority, established by those who seek to impose the burden.
(In Canada similarly, a delegation of the imposition of a tax is constitutional if express and unambiguous language is used in making the delegation. If the legislature expressly and clearly authorizes the imposition of a tax by a delegated body or individual, then the delegated authority is not being used to impose a completely new tax, but only to impose a tax that has been approved by the legislature. The delegation of the setting of the rate would be valid if it takes place within a detailed statutory framework that sets out the structure of the tax, the tax base, and the principles for its imposition.
(However, in Britain and Canada there are no constitutional provisions like South Africa’s that only the Minister of Finance can introduce a money Bill and that money Bills must deal only with the tax. The Canadian constitution says merely that Bills for imposing any tax or impost must originate in the House of Commons of Canada or legislature of the province as the case may be.)
Department of Social Development is appropriate department to administer fund
Assuming such a fund is to be established, it is not clear that the Department of Trade and Industry is the most appropriate government department to administer it:
There is an apparent conflict of interests in having such a fund resort under the same department that administers the Liquor Act. The Liquor Act deals primarily with supplying liquor, not liquor abuse as such. The Act (and the provincial Liquor Acts) provide for the licensing of supply rather than treatment of consumers.
It is true that the Liquor Act says only that one if its stated objects is “to reduce the socio-economic and other costs of alcohol abuse by … setting essential national norms and standards in the liquor industry.
But this contemplates merely the setting of norms and standards for the industry to reduce abuse ex ante, before it occurs.
It does not extend to administering a fund to treat abuse ex post facto, after it occurs. That would encroach on functions of other government Departments.
The Department of Social Development may well be the more appropriate Department to manage such a fund. The Department of Social Development already administers the Prevention of and Treatment for Substance Abuse Act. That Act defines “substances” as substances prone to being abused, including “alcohol” as well as tobacco and over-the-counter and prescription drugs; “drugs” in the context of that Act has a similar meaning.
The Act provides for a “comprehensive” national response for the combating of substance abuse, including mechanisms aimed at demand and harm reduction.
The Minister of Social Development may, from funds appropriated by Parliament for that purpose, provide financial assistance to service providers providing services in relation to substance abuse. She has prescribed regulations governing the provision of financial assistance for prevention of and treatment for substance abuse.
The Act says the Minister of Social Development, together with other national Ministers of state (not including the Minister of Trade and Industry), develop and implement “comprehensive inter-sectoral strategies” aimed at reducing the demand and harm caused by substance abuse.
The Act provides for prevention and early-intervention services, community-based services, in- and out-patient services, and aftercare and reintegration services, and deals with admission, transfer and referral to treatment centres. Special provision is made regarding treatment of children.
The Act established a Central Drug Authority. The Authority consists of senior members of 20 government Departments, including Trade and Industry, and up to 13 persons who have knowledge or experience in management of demand and supply of substances or can make a substantial contribution to combating substance abuse.
This Authority’s primary duties are to oversee and monitor implementation of a “National Drug Master Plan”, facilitate and encourage co-ordination of strategic projects, and facilitate rationalisation of existing resources and monitor their effective use.
The Cabinet must adopt a National Drug Master Plan setting out the national drug strategy and measures to control and manage drug supply and demand. The Minister of Social Development must co-ordinate implementation of the Plan aimed at the combating of substance abuse.
That the Minister, and the Ministers of the other Departments on the Central Drug Authority (including Trade and Industry) must take “reasonable” measures within “the scope of their line functions” and “available resources” to combat substance abuse, through development and co-ordination of three categories of interventions: demand reduction (services aimed at discouraging substance abuse); harm reduction (treatment of users receiving services and their families, and mitigating substance abuse’s social, psychological and health impact); and supply reduction (efforts aimed at stopping production and distribution of illicit substances through law enforcement strategies under applicable laws).
All these Ministers must adopt a multifaceted “and integrated” approach to enhance “coordination” and cooperation in the management of substance abuse, and ensure “effective implementation” of the National Drug Master Plan.
In June 2013, the Cabinet approved the National Drug Master Plan 2013-2017. The focus of this National Drug Master Plan is, primarily, alcohol abuse. The Plan has 239 references to “alcohol” and uses the word “liquor” 20 times.
The National Drug Master Plan 2013-2017 reproduces the 34 resolutions and recommendations that had been adopted in March 2011 at the Anti-Substance Abuse Summit and been listed in its resultant Anti-Substance Abuse Programme of Action 2011-2016.
However, the National Drug Master Plan does not reproduce these 34 resolutions and recommendations in the same form as they were in the Anti-Substance Abuse Programme of Action. Some of the resolutions and recommendations have been broadened or otherwise changed in the National Drug Master Plan:
Resolution 11 now reads as follows:
“Resolution 11: Imposing a mandatory contribution “by the liquor industry (and pharmaceutical and related industries producing dependence-forming substances)” to a fund that will be dedicated to work to prevent and treat abuse “of alcohol and other substances of abuse”, e.g. through changing policy, legislation, protocols and practice in a harmonised manner nationally; running developmental programmes relating to changes; assessing effects of changes.”
This proposes a contribution not only from the liquor industry but also from the “pharmaceutical and related industries producing dependence-forming substances.”
This proposal, developed in a comprehensive substance-abuse framework, supersedes the earlier proposal to impose the levy only from “the liquor industry”.
If there must be a dedicated fund, it is probably more appropriate that it be housed under the Minister of Social Development and her Department. Liquor is not the only substance prone to abuse: medicines (whether over-the-counter or prescription) and other substances (licit and illicit) are abused.
The 2011 Programme of Action proposed a mandatory contribution by the industry to “a fund” that will be “dedicated” to preventing and treating alcohol abuse.” The funds were to be “set aside,” and “managed by an independent entity”.
Separate dedicated fund to combat substance abuse requires justification
This proposal to set aside the moneys in a separate dedicated fund would require justification in the light of the Finance provisions of the Constitution:
All money received by the national government, says the Constitution, must be paid into the National Revenue Fund, except money “reasonably excluded” by an Act of Parliament.
It is not clear that it would be reasonable to exclude these particular receipts of the national government from the National Revenue Fund and dedicate them to one health-policy goal.
An attempt to justify the establishing of a dedicated revenue-and-expenditure fund for alcohol abuse entails arguing that (1) producers and suppliers of alcohol cause the public to abuse alcohol by bringing liquor into existence and making it available; (2) therefore producers and suppliers should be taxed to meet the shortfall in the cost of combating abuse.
Allocation and distribution of scarce health resources is ultimately a political decision. The fiscal desirability of separate earmarked funds is discussed in our affiliate organisation the Free Market Foundation’s submission.
Prohibiting manufacturers and suppliers from supplying liquor to unlicensed traders
The draft Policy proposes that liability for manufacturers and suppliers be introduced to ensure that they take responsibility “not to supply their products to unlicensed traders”.
This is unnecessary. It is already prohibited in the national and provincial liquor statutes:
The national Liquor Act says that manufacturers may distribute to distributors. “Distribute” means to sell to a registered person.
Manufacturers may distribute to retail sellers, if and to the extent permitted by their registration conditions.
A “retail seller” means a person registered or licensed in terms of applicable provincial legislation to sell liquor for consumption.
Distributors may distribute liquor subject to their registration conditions.
The Liquor Act says a person must not distribute liquor, except to the extent permitted in terms of the Act.
Failure to comply is an offence.
Any person who fails to comply is liable to a fine of up to R1 million or imprisonment for up to five years.
In addition to a penalty, the court must order forfeiture to the State of the liquor that was distributed by that person contrary to the prohibition and seized by the State.
Provincial Liquor Acts are to the same effect:
For example, the Gauteng statute stipulates that the holder of an on-consumption licence must ensure that liquor he sells is consumed on the licensed premises only.
It is an offence to sell liquor otherwise than under a licence in terms of that Act.
A person guilty of the offence is on conviction liable to a fine of up to R100 000,00 or to imprisonment for up to ten years, or to both.
Strict liability of supplier if his products are found in unlicensed outlets
The draft Policy proposes that liability should be placed on the manufacturer or supplier if its products are “found” in illegal or unlicensed outlets.
This means that, for the manufacturer or supplier to be liable, it would suffice that his goods are merely “found” in an unlicensed outlet.
(The Policy is not strictly correct in referring to “illegal or unlicensed outlets”. The Liquor Act requires registrants, including licensed retailers, to carry out their activities and store liquor in “registered premises”.)
Perhaps the Policy is only proposing that a manufacturer or supplier commits an offence if it is proved that the manufacturer or supplier sold liquor to a customer, and that the manufacturer or supplier knew that the customer (even if licensed) intended to commit an offence by reselling the liquor from unregistered premises.
If so, this is unnecessary, because that is already the law:
(It is already the case, under general principles of criminal law that, if a registered manufacturer or supplier (distributor or licensed retailer), were to sell liquor knowing that the customer intends to resell the liquor unlawfully from unregistered premises, the manufacturer or supplier is criminally liable as an accomplice of the customer, by providing to the customer the means to commit the offence.
(The manufacturer or supplier, to be criminally liable in this way as an accomplice, must know of the customer’s intended commission of the offence, and provide him or her with the means to commit it.)
(The manufacturer or supplier must be aware, at the time he supplied the liquor, of the customer’s intention to resell it unlawfully from unregistered premises.
(This applies whether the customer is licensed or not.)
On the face of it, the Policy proposes to go further, and would make a manufacturer or supplier liable for liquor found in unregistered premises, even if the manufacturer or supplier did not know that a particular customer would store the liquor in unregistered premises (for unlawful resale).
This would impose strict liability on a manufacturer or supplier for the criminal offence of its customer. (Presumably criminal liability is intended.)
It would make a manufacturer or supplier liable without fault on its part.
But to make a manufacturer or supplier liable in this way, without fault on its part, would probably be unconstitutional:
The Constitution says that every accused person has the right to a fair trial, including the right to be presumed innocent.
To make a manufacturer or supplier criminally liable if its products are found in unregistered premises would make it liable, even if it had committed no offence. It would make it possible for a conviction to occur despite the existence of a reasonable doubt about whether the manufacturer or supplier had committed any wrongful act or had had any intention to do so.
When that possibility exists, there is a breach of the presumption of innocence.
It is wholly unjustifiable to render a manufacturer or supplier guilty because a bottle of its products is found in unregistered premises.
A manufacturer or supplier may sell thousands or millions of units a year without knowing the identity of each purchaser, let alone where the purchaser will store the liquor. (In 2014 in South Africa, South African Breweries alone sold about 8 billion 340mL-units of beer. )
Serving liquor to intoxicated persons
The draft Proposal says that “traders should not serve liquor products to already intoxicated persons”.
Provincial liquor statutes already prohibit this:
For example, the Gauteng Liquor Act says that a licensee must refuse to sell or supply liquor to an intoxicated person.
Vicarious liability by manufacturers and wholesalers for drunk drivers
The draft Policy proposes that, should traders serve liquor to an intoxicated person, and the intoxicated person is involved in a motor accident or crime related to substance abuse, “the manufacturer, distributor and trader” should “bear liability” for any harm or damages.
Presumably the intention is that they bear only civil liability, in light of the mention of liability for harm or damages, rather than criminal liability.
It is not clear how this would work in practice:
Would the manufacturer, etc., bear liability for all the harm or damages caused by the intoxicated person in the accident or crime, or only the harm attributable to his intoxication?
To what extent would the commission of the crime be attributable to the intoxication? Would the liability be apportioned between the intoxicated person and the liquor manufacturer, etc., or would only the manufacturer, etc., be liable, and not the intoxicated person as well?
How would liability be shared among the manufacturer, distributor and retailer?
Would the injured person allege that the intoxicated person had drunk Heineken beer (brewed by Sedibeng Breweries in Gauteng) or Carling Black Label?
What if the intoxicated person had had only one Heineken followed by some Carling Black Label? Would only the manufacturer, distributor and retailer of Carling be liable?
What if the intoxicated person, even though he had a few Carlings, would not have become intoxicated but for that one Heineken? Would both producers be liable? If so, in what proportions would they each be liable?
What if the intoxicated person had died in the accident or crime, or can’t remember what bars he’d been to or what he’d had to drink?
How would the injured person know which retailer was at fault? What if the intoxicated person had been on a pub-crawl and had visited several retailers?
Should the intoxicated wrongdoer’s allegation of which liquor products he’d consumed be accepted without dispute? It would be impossible for any manufacturer, distributor or retailer to dispute the allegations.
Would the injured person call on the bartender to testify what the intoxicated person had had to drink?
Would the bartender of a busy pub recall serving the intoxicated person? What if some of the drinks had been bought by a friend for the intoxicated person?
Would a barman be willing to testify that he had sold and supplied liquor to an intoxicated person?
Would the liability of the manufacturer, distributor and retailer supplement the liability of the Road Accident Fund?
(The Road Accident Fund and its agents are obliged to compensate persons (so-called third parties) for loss or damage which third parties suffer as a result of bodily injury, or as a result of another person’s death or bodily injury, caused by or arising from the driving of a motor vehicle, if the injury or death is due to the negligence or wrongful act of the driver or owner of the vehicle or his employee in the performance of the employee’s duties.)
Would the liability of the manufacturer, etc., supplement the liability of the envisaged Road Accident Benefit Scheme which is expected to provide compensation not based on fault?
To make the manufacturer, etc., bear liability for any harm or damages arising whenever an intoxicated person is involved in a motor accident or crime will probably necessitate all liquor manufacturers, distributors and retailers obtaining strict-liability insurance cover against the risk of claims from victims.
The proposal would in effect mean that all liquor manufacturers, distributors and retailers will become no-fault compensation funds for victims of accidents and crimes whenever any liquor had been consumed by any person involved.
This will increase the costs of the manufacture, distribution and retail of liquor products. These costs would likely be passed on to consumers. This would lead to higher liquor prices.
Higher liquor prices would increase the risk of consumers’ turning to illicit brews, distillations and concoctions.
Inappropriate to delay drinking age for three years after age of majority
The draft Policy proposes that the minimum age at which alcohol can be purchased and consumed be raised from 18 to 21 years.
We point out that 18 is the age of majority.
Termination of licences of liquor premises in residential areas or near public transport
The draft Policy proposes that, “to standardise licensing requirements”, liquor premises be located at least 500m from “schools, places of worship, recreation facilities, rehabilitation or treatment centres, residential areas and public institutions”.
Further, no liquor licences shall be issued to premises attached to petrol service stations, premises near public transport, and areas not “classified for entertainment or zoned by municipalities for purposes of trading in liquor”.
If such a licence is already issued, it “should be terminated within a period of two years”.
It is probably fair to say that the overwhelming majority of licensed liquor retailers, both off- consumption and on-consumption, are located in residential areas, or very close to places of worship, recreation facilities (like sports clubs), public institutions (such as post offices), and public transport routes (of buses, trains, and minibus taxis).
The draft Policy proposes that all these licences should be terminated within two years.
This would no doubt apply to all off-consumption retailers (bottle stores).
Presumably it would also apply to all on-consumption retailers (restaurants, hotels large and small, theatres, clubs, night clubs, casinos and other gaming premises, sports grounds, pubs, pool clubs and dance halls).
It would extend to taverns (and sorghum-beer on-consumption premises).
Presumably no new catering or occasional permits would be allowed for premises within 500m of a residential area, place of worship, recreation facility, public institution or public transport.
These proposals would have the result of driving many if not most retail licensees out of business.
If municipalities have not classified or zoned any areas for entertainment or trading in liquor, or have not zoned sufficient of them, or have zoned them so far from customers that liquor retailing there would be unsustainable, it will have the effect of driving out of business most liquor retailers, particularly bottle stores.
Many restaurants, hotels, theatres, clubs, night clubs, casinos and sports grounds may choose to stay where they are, but no longer as on-consumption liquor licensees. Many will probably lose much custom and many will close. Pubs, taverns and sorghum-beer on-consumption businesses will close.
It is not rational to relocate pubs and taverns so far from public transport that patrons resort to their own vehicles to drive to and from their preferred bar, thus increasing the risk of driving under the influence of alcohol.
It is respectfully submitted that these proposed measures are unjustifiably disproportionate and irrational and would be unconstitutional:
The courts recognise that alcohol abuse is a social evil and that liquor sales should in consequence be controlled:
“[S]ome form of licensing and control in respect of the sale of liquor is desirable and necessary … It is hardly necessary to refer to the evil social consequences of the abuse of alcohol. One may mention the need to prevent the sale of liquor to persons below a certain age, the need to circumscribe situations where the over-indulgence in alcohol may, as is often its wont, give rise to anti-social and illegal conduct … At least a measure of responsibility on the part of would-be purveyors of alcohol and at least some control over their operations and at least some standard in respect of premises will be required or imposed. Such measures would be justified … notwithstanding that they may, for example, in some measure be discriminatory or curtail free economic activity.”
“The excessive consumption of liquor is universally regarded as a social evil. It is linked to crime, disturbance of the public order, impairment of road safety, damage to health, and has other deleterious social and economic consequences … The appellants did not dispute that … some control over the sale of intoxicating liquor is needed … The means employed by the Liquor Act to achieve this purpose is to prescribe a system of licensing under which liquor sales are controlled.”
It is submitted, however, that the draft Policy’s proposed measures are excessive:
The Bill of Rights protects the fundamental right to freedom of trade, occupation and profession, subject to justifiable limitations:
“22. Every citizen has the right to choose their trade, occupation or profession freely. The practice of a trade, occupation or profession may be regulated by law.”
The Constitutional Court says that more than the right to earn a living is at stake. Freedom to choose a vocation is intrinsic to a society based on dignity. Legal impediments are not to be countenanced, unless clearly justified in terms of the broad public interest. Limitations on the right to freely choose a vocation are not to be lightly tolerated. But we live in a modern and industrial world of human interdependence and mutual responsibility. Provided it is in the public interest and not arbitrary, regulation of vocational activity for the protection of the community affected by it is expected.
The proposed measures, in being excessive, will not achieve the desired purpose:
They could well make it so inconvenient, to the point of impossibility, for the public to purchase liquor products from licensed retailers that many will turn instead to illicit brews, distillations and concoctions.
It is not rational to relocate pubs and taverns so far from public transport that patrons resort to their own vehicles to drive to and from their preferred bar, thus increasing the risk of driving under the influence of alcohol.
Nor is it rational to require that liquor premises not be within 500m of places of worship or public institutions. Churchgoers and people visiting a post office are not more susceptible to being tempted by the proximity of liquor stores than other people.
Any internal appeal or review should by independent panel
The draft Proposal says an internal review mechanism should be introduced for aggrieved applicants to provide speedy redress and reduce litigation costs. If still aggrieved after the process, they may approach the courts for relief, but as a last resort.
It is proposed that the head of the national liquor authority must see to it that three senior “independent persons within the [Department of Trade and Industry]” serve on the structure.
We stress that these departmental appointees to the proposed review or appeal tribunal should be objectively independent, to enable the tribunal to exhibit the absence of institutional bias (created by its composition or structure) that is implicitly required by the Constitution.
The Constitution says everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum.
That it may be essential to combat abuse does not mean that national standards to do so are essential
These Policy proposals emanate from the national Department of Trade and Industry, but many of them concern liquor retailing, which is an exclusive provincial competence.
Parliament may intervene with regard to matters within exclusive provincial competence, only when it is necessary to maintain national security, economic unity or essential national standards, to establish minimum standards required for rendering services, or to prevent unreasonable action taken by a province which is prejudicial to the interests of another province or the whole country.
Liquor retailing and the measures taken by provinces for the control of liquor retailing within the province do not affect national security nor, it is submitted, economic unity.
Nor do provincial Liquor Acts or their administration amount to unreasonable action prejudicial to the interests of the whole country or any province.
Nor is national intervention in retail liquor sales necessary to establish minimum standards required for the rendering of services.
The fact that alcohol may be abused in every province does not make it necessary to impose uniform standards nationally.
In conclusion, it is submitted, national intervention by Parliament is not necessary.
Harmonization of provincial Liquor Acts is not essential or desirable
The draft Policy proposes that harmonisation of the provincial liquor laws with the Act should be encouraged and monitored for timely implementation. This will improve enforcement. It will also strengthen national and provincial strategies to eradicate liquor abuse and reduce the harmful effects of liquor.
The Policy says that the current fragmented manner of liquor regulation is hampering the effectiveness of interventions that are put in place to counter the harmful effects of liquor, and that there is a dire need to harmonise provincial liquor legislation.
It says that not much intervention has been made with regard to reducing the harms caused by liquor, and so it is imperative for purposes of effective and efficient liquor regulation that South Africa operates from a harmonised legal framework and that the old way of regulating liquor is eradicated.
It is submitted that uniform national standards for liquor retailing are not essential. It is not necessary to have uniformity of approach in order to combat alcohol abuse effectively.
Different provinces should and can be left to pursue strategies which they think will best combat alcohol abuse. Not all will necessarily be the same. Policies which prove demonstrably more effective than others can then be adopted in other provinces.
The “National Liquor Authority”
The draft Policy refers to a “National Liquor Authority” (“NLA”).
The Policy says that currently the NLA is a chief directorate within the Department of Trade and Industry “to which the Minister of Trade and Industry delegated powers” in terms of the Liquor Act.
We point out that the Liquor Act does not mention or provide for a “National Liquor Authority”.
The Act confers powers on the Minister, not on a National Liquor Authority:
The Act says the Minister must regulate the manufacture and distribution of liquor.
A qualified person seeking to be registered as a manufacturer or distributor applies to the Minister.
It is the Minister who registers applicants or refuses applications for registration, and proposes conditions of registration,  and issues certificates of registration. 
The Act authorises the Minister to delegate all or part of any power of the Minister in terms of the Act (other than power to make regulations) to “the Director-General” or “an officer” of the national department responsible for liquor matters, “designated by the Director-General”.
The Minister may delegate to a Member of the Executive Council (of a province) all or part of the Minister’s powers, discretion and responsibility under the Act with respect to the registration of persons within the province as distributors of liquor.
However, the Regulations made by the Minister under the Act define a “National Liquor Authority,” as “the collectivity of officials” within the department to whom the Minister “has delegated powers of the Minister” in terms of the Act.
The regulations say that the National Liquor Authority, “after receiving” an application to be registered, must proceed to consider the application.
The regulations say that the National Liquor Authority, “after considering” the application, may deliver conditions of registration to the applicant.
The regulations say that whenever the Minister “or National Liquor Authority” is required to issue a certificate, notice or notice in terms of the Act, the certificate must be in the prescribed manner and form. The certificates, notices, receipts and other forms prescribed in the Regulations are stated as being issued by “the National Liquor Authority for the Minister of Trade and Industry”.
It is submitted that all these regulations purporting to give powers under the Act to an entity or group of functionaries are ultra vires, beyond the powers of the Minister, and liable to be set aside by a court.
If the Minister has delegated powers to a group or body described only as the “National Liquor Authority”, rather than to a speciﬁc officer or officers designated by the Director-General, then that delegation is also ultra vires, and liable to be set aside.
It has been held that, where a statute authorised delegation to an official but powers were delegated instead to a committee not contemplated in the statute to carry out those powers, the person delegating the power will not have complied with the legislation and the committee’s decision under review in the case concerned was invalid. The matter was referred to the correct functionary to consider and decide.
Any decision to grant or refuse registration or impose conditions, which has been taken by any official who has not been specifically designated by the Director-General for delegation of powers of the Minister and to whom such power has not been specifically delegated by the Minister by name or official title, is probably liable to be set aside as invalid.
In the meantime, however, any such decision taken by an undesignated official is probably not automatically rendered void, and is merely voidable. The decisions will remain operative unless set aside by a court.
Until an invalid administrative act is set aside by a court, it exists in fact, and its legal consequences cannot be overlooked.
It is recommended that, if there has been any delegation to a group of undesignated officials, an Act of Parliament to cure the defect is desirable, in order to avoid any litigation for the setting aside of these voidable administrative decisions.
Inappropriate to restructure regulatory body as trading entity
The draft Policy proposes that the National Liquor Authority, for more effectiveness “in regulating” macro manufacturers and distributors, be repositioned to become a “trading entity” of the Department with more capacity to deal with issues of “compliance”, education and awareness, “enforcement, registration,” reviews and the administration of the envisaged government-managed trust fund.
The Policy says that governance of the National Liquor Authority as a “trading entity” will be in line with the “PFMA regulations” issued by the Treasury. The PFMA is a reference to the Public Finance Management Act.
It is submitted that it would be inappropriate to restructure a regulatory body as a trading entity. A trading entity trades; a regulatory body regulates.
The Public Finance Management Act distinguishes between a “trading entity” or “business enterprise” on the one hand, and public entities other than business enterprises, on the other hand:
The Act defines a “trading entity” to mean an entity operating within the administration of a department for the “provision or sale of goods or services.”
Similarly, it defines a national government “business enterprise” as an entity which is a juristic person under the ownership control of the national executive, has been assigned financial and operational authority to “carry on a business activity”, as its principal business “provides goods or services in accordance with ordinary business principles,” and is financed fully or substantially from sources other than a tax, levy, statutory money or the National Revenue Fund.
Examples of national government business enterprises listed in schedules to the Act include the Airports Company, the Armaments Corporation, Denel, Eskom, South African Airways, Telkom and Transnet. Lesser examples are Aventura, Rand Water, and the State Diamond Trader.
In contrast, the Act defines “national public entity” (besides business enterprises) to mean a “board, commission, company, corporation, fund or other entity” (other than a business enterprise) which is established in terms of national legislation, and mainly funded either from the National Revenue Fund or by a tax, levy or other money imposed in terms of national legislation, and accountable to Parliament.
Examples of such non-business public entities listed in a schedule to the Act are the Commission for Conciliation, Mediation and Arbitration; the Companies and Intellectual Property Commission; the Competition Commission; the Financial Services Board; the National Energy Regulator of South Africa; the Road Accident Fund; and the Unemployment Insurance Fund.
We submit that structuring a National Liquor Authority as a non-business public entity would be more appropriate.
The Public Finance Management Act lays down different annual-budget requirements for government business enterprises and for non-business public entities.
The Act also applies different PFMA regulations to non-business public entities and to national government business enterprises, and to trading entities within departments.
 “Invitation to the public to comment on the National Liquor Policy” (General Notice 446 of 2015, Government Gazette, 20 May 2015 (Gazette No. 38808)).
 Department of Trade and Industry, 12 June 2015. “Consultation period on Liquor Policy extended by 30 days,” http://www.thedti.gov.za/editmedia.jsp?id=3352 (accessed 18 June 2015).
 Draft Policy, paras 1.6.2 and 126.96.36.199.6.
 Department of Social Development, 2011, “Anti-Substance Abuse Programme of Action 2011-2016,” pp. 2, 4, 10. This Programme of Action is referred to in the following footnotes as the “Anti-Substance Abuse Programme of Action 2011-2016”.
 Anti-Substance Abuse Programme of Action 2011-2016, Resolution 11, p. 11.
 Anti-Substance Abuse Programme of Action 2011-2016, p. 20.
 See, for example: Industry Association for Responsible Alcohol Use (ARA), “The South African Liquor Industry: our contribution,” 2012.
 Liquor Act, 2003 (Act No. 59 of 2003).
 See the test enunciated by the Supreme Court of Canada to distinguish a regulatory charge from a tax, in 620 Connaught Ltd. vs. Canada (Attorney General), 2008 SCC 7 paras 24 to 27. See also the similar criteria applied by the South African Constitutional Court in South African Reserve Bank and Another vs. Shuttleworth and Another  ZACC 17 at paras , , , ,  and  of the majority judgment and para  of the minority judgment.
 Draft Policy, para 4.4.2.
 National Treasury, “A Review of the Taxation of Alcoholic Beverages in South Africa: a Discussion Document,” May 2014, p. 38.
 National Treasury, A Review of the Taxation of Alcoholic Beverages in South Africa: a Discussion Document, May 2014 (see fn.11) p. 38.
 Constitution of the Republic of South Africa, 1996, s 77(1)(b).
 Constitution s 73(2)(a).
 Draft Policy, paras 1.6.2 and 188.8.131.52.6.
 Constitution s 77(2)(b) and (c).
 Attorney-General v. Wilts United Dairies, Ltd. (1921), 37 L.T.R. 884 (C.A.), at p. 885, aff'd (1922), 91 L.J.K.B. 897 (H.L.)
 Gosling v. Veley, 12 Q.B., at p. 407.
 Ontario English Catholic Teachers’ Assn. v. Ontario (Attorney General),  1 S.C.R. 470, 2001 SCC 15, para 74.
 Canadian Constitution Act, 1867 (UK), 30 & 31 Vict. c. 3 (former title British North America Act) s 57.
 Constitution Act, 1867 (see fn.20) s 90.
 Liquor Act, 2003 s 2(a)(i).
 Prevention of and Treatment for Substance Abuse Act, 2008 (Act No. 70 of 2008). This Act is referred to in the following footnotes as the “Substance Abuse Act”.
 Substance Abuse Act s 1 sv “substance”.
 Substance Abuse Act, Long title.
 Substance Abuse Act s 7(1)(a).
 Govt. Notice 283 of 2 April 2013, Regulations for prevention of and treatment for substance abuse.
 Substance Abuse Act s 5(1).
 Substance Abuse Act, Chapters 4-8.
 Substance Abuse Act s 28. See also ss 26, 34, 40, 42 and 44.
 Substance Abuse Act s 53(1).
 Substance Abuse Act s 53(2)(a)-(u).
 Substance Abuse Act s 56(a)-(c).
 Substance Abuse Act s 3(3) and (4).
 Referred to in the Substance Abuse Act as “service users”: s 3(1)(b) read with s 1 sv “service user”.
 Substance Abuse Act s 3(1)(a)-(c).
 Substance Abuse Act s 3(2).
 Website of Central Drug Authority: “Central Drug Authority ready to implement National Drug Master Plan,” http://www.cda.gov.za/ (accessed 12 June 2015).
 National Drug Master Plan 2013-2017. Website of Department of Social Development, http://www.dsd.gov.za/index2.php?option=com_docman&task=doc_view&gid=414&Itemid=3 (accessed 12 June 2015).
 National Drug Master Plan 2013-2017, Table 6: Groups of outcomes and resulting outputs, p. 95, resolution 11.
 See text accompanying fnn. 4 and 5.
 Constitution, Chapter 13 (“Finance”), s 213 et seq.
 Constitution s 213(1).
 Soobramoney v Minister of Health, Kwa-Zulu Natal, 1998 (1) SA 430 (D).
 Draft Policy, para 1.6.3.
 Liquor Act s 4(3)(b)(i).
 Liquor Act s 1(1) sv “distribute”.
 Liquor Act s 4(3)(b)(ii).
 Liquor Act s 1(1) sv “retail seller”.
 Liquor Act s 34(1)(a).
 Liquor Act s 35(1)(a).
 Liquor Act s 35(2)(a).
 Gauteng Liquor Act, 2003, s 51(1).
 Gauteng Liquor Act s 127(a).
 Gauteng Liquor Act s 133.
 Liquor Act s 1(1) svv “registrant”, “registered person” para (a), “retail seller”.
 Liquor Act s 7(1) and (2).
 Faris, J.A., “Criminal Law” in W A Joubert (founding ed.), The Law of South Africa vol. 6 2nd ed repl volume, para. 132 Actus reus.
 Faris, J.A., “Criminal Law” in W A Joubert (see fn.62), para. 132 Mens rea.
 S v Thomo 1969 (1) SA 385 (A) 398F–G. Cf also R v Mlooi 1925 AD 131 134-135.
 S v Van Wyk  1 All SA 165 (C).
 Constitution s 35(3)(h).
 S v Coetzee 1997 (4) BCLR 437 (CC) para 
 R v Whyte (1989) 51 DLR (4th) 481 (Supreme Court of Canada) 493.
 SABMiller plc sold 27,245, 000 hectolitres of lager in South Africa in 2014 (SABMiller plc Annual Report 2014 p 31). One hectolitre is 100L (100,000mL), which is 294 units of 340mL (the typical measure of a tin of beer). Hence 27,245, 000 hectolitres of lager is equivalent to 8,010,030,000 units of beer measuring 340mL each.
 Draft Policy, para 1.6.3 and para 184.108.40.206.3.
 Gauteng Liquor Act s 47(1).
 Draft Policy, para 1.6.3 and para 220.127.116.11.3.
 Road Accident Fund Act, 1996 (Act No. 56 of 1996)
 A draft Road Accident Benefit Scheme Bill, 2014, was published under General Notice 337 of 2014 (Gazette 37612 of 9 May 2014) for public comment.
 ParlyReportSA, 9 June 2014, “New Road Accident Benefit Scheme based on ‘no fault’”, http://parlyreportsa.co.za/transport/new-road-accident-benefits-scheme-based-fault/ (accessed 15 June 2015).
 Draft Policy para 1.6.5. (see also para 18.104.22.168 to para 22.214.171.124, para 126.96.36.199.5, para 188.8.131.52.8.)
 Children’s Act, 2005 (Act No. 38 of 2005) s 17.
 Draft Policy, paras 1.6.6 and 184.108.40.206.2.
 Cherry v Minister of Safety and Security and Others 1995 (3) SA 323 (SECLD) at 337G–I; 1995 (5) BCLR 570 (SE) at 584D–F.
 S v Lawrence; S v Negal; S v Solberg, 1997 (10) BCLR 1348 (CC) paras  – .
 Affordable Medicines Trust and Others v Minister of Health of RSA and Another 2005 (6) BCLR 529 (CC) paras  – .
 Draft Policy, para 1.6.8, paras 220.127.116.11 and 18.104.22.168, paras 4.6.1 – 4.6.3.
 Draft Policy, para 4.6.2.
 Financial Services Board and another v Pepkor Pension Fund and another  4 All SA 129 (C) 131.
 Constitution, 1996, s 34.
 Constitution, 1996, s 104(1)(b)(ii), Schedule 5, “Liquor licences”; Ex parte President of the Republic of South Africa in re Constitutionality of the Liquor Bill 2000 (1) BCLR 1 (CC).
 Constitution, 1996, s 44(2)(a) – (e).
 Draft Policy, para 1.6.10.
 Draft Policy, para 22.214.171.124.
 Draft Policy, para.4.3.3.
 Draft Policy, para.4.5.1.
 Liquor Act s 12(1) and (2).
 Liquor Act s 13(5) and (7)(b)(ii).
 Liquor Act s 14(1)(a).
 Govt. Notice R.980 of 17 August 2004: Regulations for the Registration of Liquor Manufacturers and Distributors, and Related Matters Arising under the Liquor Act, 2003: reg. 2(3)(e).
 In terms of s 11(1) of the Act (see text at fn.93).
 Regulation 14(1)(b).
 See, for example, Form NLA 8 (Conditions of Registration) and Form NLA 9 (Registration Certificate).
 Opperman v Uitvoerende Komitee van die Verteenwoordigende Owerheid van die Blankes en Andere 1991 (1) SA 372;  3 All SA 35 (SWA).
 Coalcor (Cape) (Pty) Ltd and Others v Boiler Efficiency Services CC and Others 1990 (4) SA 349 (C) at 357I-358C.
 Oudekraal Estates (Pty) Ltd v City of Cape Town  3 All SA 1; (2004 (6) SA 222) (SCA).
 Draft Policy, para.1.6.15.
 Draft Policy, para.4.5.4.
 Draft Policy, p. 8, List of Acronyms, sv. “PFMA”.
 Public Finance Management Act, 1999 (Act No. 1 of 1999) s 1 sv. “trading entity”.
 Public Finance Management Act s 1 sv “national government business enterprise”.
 Public Finance Management Act, schedule 2 (Major public entities).
 Public Finance Management Act, schedule 3 (Other public entities), Part B (National Government Business Enterprises).
 Public Finance Management Act s 1 sv “national public entity” para (b)(i) – (iii).
 Public Finance Management Act, schedule 3 (Other public entities), Part A (National Public Entities).
 Public Finance Management Act s 52 (Annual budget and corporate plan by Schedule 2 public entities and government business enterprises).
 Public Finance Management Act s 53 (Annual budget by non-business Schedule 3 public entities).
 Compare regs 1.2.1(d) and 1.2.1(e) of the Treasury Regulations (Govt Notice R225 of 15 March 2005).
 Regulation 19 of the Treasury Regulations.