MPs turn up the heat on DTIC’s troubled film incentive

Members of Parliament’s Portfolio Committee on Trade, Industry and Competition have turned up the heat on the Department of Trade, Industry and Competition (DTIC) over their troubled film incentive, which has apparently seen the local industry lose millions in income due to cancelled productions.

The committee has demanded answers on delayed payments, stalled applications, capacity constraints and the apparent disconnect between government and the industry.

The heated exchange came during a committee meeting where MPs heard progress reports from both the department and the film industry on efforts to revive the incentive.

Also Read: SA’s film industry’s R822m crisis deepens, as incentive row leads to lost productions

At the centre of the discussion was whether government and the industry are finally working from the same plan and whether commitments made to Parliament will translate into action.

Adjudication delays stall payments

One of the biggest questions concerned the resumption of adjudication. An MP pointed out that on  May 6, the minister had told Parliament that 31 approved applications remained unpaid and that the department was in a position to finalise the arrears and begin adjudicating new applications.

However, the latest presentation appeared to suggest that adjudication would only resume once the approximately R55-million liability had been cleared. The MP questioned what had changed.

“If I’m hearing this correctly, then that means that there’s a misalignment in what has been communicated by the minister and in what we’re hearing today,” the MP said.

He questioned why the entire liability had to be eliminated before new applications could be considered and why applications under existing guidelines appeared to be linked to agreement on future guidelines.

He also called for a clear distinction between valid completed claims awaiting payment, applications awaiting adjudication and incomplete applications where information remains outstanding.

The department had reported that 30 productions had been completed and 12 remained in progress, representing billions of rands in production activity and jobs.

The MP said these categories required different interventions and should not be treated as one backlog.

Department’s capacity constraints questioned

The department’s repeated reference to capacity constraints also came under scrutiny. The MP said Parliament needed to see a concrete staffing plan showing what additional capacity would be added to the film incentive unit, when it would be in place and how it would reduce processing times.

He cautioned that an independent facilitator could help repair the relationship between government and industry and assist with the guidelines process, but would not actually process claims. The department, therefore, needed to explain what it was doing to increase its internal processing capacity.

Committee member Carol Phiri questioned whether the recommendations presented by the industry coalition were the same proposals previously discussed with the Deputy Minister and the department.

Phiri wanted confirmation that the proposals had agreed timelines and were legally and practically implementable within the department’s existing legislation, guidelines and principles.

‘Missing link’

She said there appeared to be a ‘missing link’ between what the industry had presented and the department’s response.

Phiri also asked the department to identify exactly where Parliament could assist. If the obstacles were legislative, she said Parliament could help unlock them through the appropriate processes.

If they were internal administrative problems, she said the committee needed to exercise oversight and hold the department and its executives to agreed deadlines. Her intervention put the emphasis firmly on implementation rather than further discussion.

ACDP MP Wayne Thring welcomed the department’s progress in reducing contingent liability and its attempts to address capacity constraints.

But he said these initiatives had to ultimately resolve the impasse between government and industry, revive the sector and allow it to reach its full potential.

Thring backed calls for the resumption of adjudication, the processing of outstanding applications, the establishment of a dedicated film fund and a reduction in red tape.

Red tape and uncertainty hurting the film industry

He also supported greater certainty around the tax rebate, arguing that uncertainty had already cost the industry and the wider economy millions of rands.

Thring said it was unacceptable that, more than three decades into democracy, Black filmmakers remained among those hardest hit by administrative failures.

He urged both sides to provide outstanding information, memorandums and correspondence so that unresolved matters could be dealt with speedily.

On concerns raised about Cecilia Molokwane, Thring said the allegations should be investigated but stressed that she must be given an opportunity to respond.

Warning over ‘dilatory or Stalingrad tactics’

He also warned against what the industry had described as dilatory or Stalingrad tactics.

Thring said the demand-and-supply imbalance at the heart of the incentive had to be resolved, warning that failure to do so could threaten the survival of the industry.

Committee member Tobias Chance argued that the crisis went beyond individual administrative failures.

He said the fundamental issue was South Africa’s failure to compete with international film incentive programmes that have become standard tools for sustaining and promoting film industries in other countries.

Chance suggested there was an attitudinal mindset disjunction between the department and the industry that could be contributing to the impasse.

He called for Parliament to see the department’s cost-benefit analysis so MPs could properly assess the proposed reforms. Chance also questioned the terminology around the incentive.

Distinction between grant and investment

While the industry views it as an economic investment that generates production expenditure, employment and tax revenue, he noted that the DTIC regards it as a grant because the money comes from the fiscus and is not expected to be repaid by producers.

He said MPs needed to understand the distinction when assessing the programme’s return on investment.

Chance acknowledged the severe fiscal constraints facing the department, including the Deputy Minister’s argument that the DTIC budget would be closer to R18-billion rather than R10-billion if adjusted for inflation.

But he said this exposed a broader problem: South Africa does not have sufficient economic growth to generate the resources needed to fund programmes designed to stimulate further growth.

Chance also questioned how the incentive’s contingent liability had reached approximately R2-billion five years ago. He cautioned that the subsequent decline in payments should not automatically be described as wrongdoing or maladministration.

However, he said it could represent a failure to meet performance targets. That raised questions about who was responsible for the deterioration in the programme’s performance.

Chance said accountability did not necessarily mean pointing the finger at one person, but could extend to officials and structures responsible for the incentive. He also questioned whether the proposed strategic facilitator had actually been discussed with the industry. He said the facilitator needed clear timeframes and measurable outcomes rather than becoming another layer of administration.

The department pushed back against suggestions that there was no agreement between government and industry. Justice Ngwenya told the committee that the framework presented by industry representative Dylan was the product of an agreed engagement process.

He said the two sides had acknowledged their differences but had agreed on a framework within which they could work towards resolving the outstanding challenges.

“Indeed, we have reached an agreement,” Ngwenya told MPs. He said the framework contained specific dates and figures and had been signed by both the department and the industry coalition.

Ngwenya said the framework was flexible and could be adjusted where necessary, particularly where government had different operational or statutory timelines.

He also confirmed that the resumption of adjudication meetings was included in the agreed framework. The department’s target, he said, was for adjudication meetings to begin by the end of August or beginning of September.

“So, the plan presented by the industry aligns with us,” Ngwenya said. The clarification appeared to address MPs’ concerns about a “missing link” between the two presentations.

Industry concerns remain

But the coalition said it remained concerned about attempts to portray the industry as fragmented. Unathi Mahlangu, representing the industry coalition, said the organisation that had allegedly sent a letter questioning the coalition was itself a member of a federation that forms part of the coalition.

She said industry representatives were therefore dumbfounded that the letter had been referenced in Parliament despite them not knowing its contents. Mahlangu warned government against becoming involved in how the industry organises or represents itself.

“The fragmentation of our sector is a longstanding government narrative”, arguing that the coalition had demonstrated broad representation.

She said the industry had come before Parliament as an organised coalition and rejected suggestions that it was divided. Mahlangu also raised concerns about whistleblower protection.

Reporting wrongdoing without fear of reprisals 

Mahlangu said filmmakers needed a process that would allow them to report alleged wrongdoing without fear of being ‘blackballed’.

The lack of trust, he said, had accumulated over years. He recalled that during efforts to distribute relief funding in 2020, some people were reluctant to provide their details because of the level of mistrust.

Mahlangu said the industry had raised the issue with the DTIC but wanted a dedicated process that would protect filmmakers who came forward with information about possible wrongdoing.

The coalition also referred to court judgments and arbitration matters that it said raised questions about the conduct of department officials. Mahlangu said the industry had given the department sufficient time to address its concerns and had followed its internal processes.

“We are not being unreasonable. We have given it time. We have asked, we have gone out, and we have voted on the matter,” she said.

Mahlangu also questioned the department’s reliance on the Public Finance Management Act (PFMA) as a justification for its current approach to the incentive.

She pointed to the department’s own presentation showing that the contingent liability had previously reached approximately R2-billion.

“If the DTIC comes and it talks about having to adhere to the PFMA, but we’re from a backlog of R2-billion, a contingent liability of R2-billion, so when was that breached?” she asked.

Mahlangu said Parliament needed to establish how the liability was allowed to reach that level and who was responsible.

“Who has let it get here?” she asked.

The coalition also backed the proposal for a consistent reporting mechanism, saying government and industry should be measured against the same commitments and outcomes.

‘Focus on institutional and systemic issues, not individual officials’

The committee chair cautioned MPs and stakeholders against allowing the dispute to become a campaign against individual officials without evidence.

The chair said the committee was dealing primarily with institutional and systemic issues, unless concrete facts showed that a particular official had committed maladministration, fraud, corruption or other wrongdoing.

“We will not afford, as this important body, to focus on individuals unless facts are brought that have to do with them,” the chair said.

The chair stressed that nobody would be protected if evidence of wrongdoing emerged.

But without evidence, the committee should focus on systemic inefficiencies affecting the incentive.

Members were also asked to return with a clear assessment of the issues raised, including how many of the nine points had been agreed to, how many remained outstanding and what timelines applied to each.

Despite differences in emphasis, MPs appeared united on one point: the impasse cannot continue indefinitely.

They want faster adjudication, legitimate claims processed and paid, greater capacity, reduced red tape, transparency around the funding model and clear implementation timelines.

The department has now confirmed that there is a jointly signed framework with the industry and that adjudication is targeted to resume by the end of August or beginning of September.

That gives Parliament a concrete set of commitments to monitor. For the committee, the next test will not be another presentation.

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Mbalenhle Zuma