MISSING VOICES: Industry dominated at Nedlac’s sugary drinks tax discussions, new report finds

In 2018, the Health Promotion Levy was introduced to halt excessive drinking of sugar-sweetened beverages (such as sodas) at about 10-11%. The World Health Organization recommends an increase in pricing to 20%, to reduce consumption by 20%. 

Drinking sugar-sweetened beverages frequently raises the risk of type 2 diabetes, heart disease, metabolic syndrome, and fatty liver disease. 

A new study, published in BMC Global and Public Health, examined the role played by the National Economic Development and Labour Council (Nedlac) in the development of the levy, and following its implementation. It analysed 94 documents obtained through a Promotion of Access to Information Act 2 of 2000 (Paia) request.

Nedlac submits its recommendations to the minister of employment and labour. It is a statutory body designed to promote dialogue between the government, business, labour, and community constituencies. 

The study showed that community representatives were not present at all for deliberations on the levy.

“This is not about giving one constituency more influence than another, it is about ensuring that the range of interests that Nedlac is designed to represent are actually present,” said Darshen Naidoo, lead author of the paper, to Daily Maverick. Naidoo is a Researcher in the Law and Policy team at PRICELESS SA – SAMRC/Wits Centre for Health Economics and Decision Science, and an Associate Lecturer at the Wits School of Public Health at the University of the Witwatersrand, Johannesburg.

“Ultimately, the concern is that if the people and organisations representing those public health and community interests are not at the table, the discussion can become disproportionately focused on the economic interests of organised stakeholders. That is particularly problematic when Nedlac’s own mandate includes broader participation in economic decision-making and the advancement of social equity.”

No community representation 

Nedlac was established under the National Economic, Development and Labour Council Act 35 of 1994. As per section 2.2 of the act, the council has four different chambers: the Public Finance and Monetary Policy Chamber, the Trade and Industry Chamber, the Labour Market Chamber, and the Development Chamber. 

“Not every chamber is made up of all four constituencies. Each chamber’s make-up and focus is set out in the Nedlac constitution and depends on the kind of issues it deals with,” Nedlac said to Daily Maverick.

Naidoo told Daily Maverick: “All four constituencies... should have the opportunity to engage with a matter tabled before Nedlac, regardless of which chamber the matter initially falls into.”

The current chamber structure could create silos, Naidoo added, especially where an issue like the Health Promotion Levy cut across economic, labour, social and public health concerns.

“It therefore makes little sense for the discussion to be confined in a way that prevents the other constituencies from meaningfully engaging with it.”

“We understand why the absence of community representatives stands out. However, the act does not require all four constituencies to take part in every chamber or every task team. The Health Promotion Levy discussions took place in the Public Finance and Monetary Policy Chamber, which deals with fiscal and monetary matters and is set up according to the Nedlac constitution,” Nedlac said to Daily Maverick.

“Community constituency is represented in Nedlac mainly through the Development Chamber, which has its own mandate. So the fact that community representatives were not part of this particular process does not, on its own, mean that Nedlac acted outside the act,” Nedlac said to Daily Maverick.

Who should be in the room?

According to Section 3.1 of the Nedlac Constitution, the council shall consist of members drawn from the four main constituencies.

“Section 3.1 sets out who the members of the council are, by referring to the four constituencies. It does not say that all four must be present at every meeting of every chamber, committee or task team. The quorum rules in the constitution apply to each structure based on who that structure is made up of. Therefore absence of community representatives from certain meetings does not show a breach of the act or the constitution,” Nedlac said to Daily Maverick.

Section 12.4 of this constitution describes the functioning of meetings. The quorum necessary for meetings of the executive council, committees (excluding the management committee) or chambers shall be one-third of the number of members of the executive council, committee or chamber, provided that among those present at least one-third of the number of members representing each of the constituents are present.

When a task team is established to consider a proposal, a constituency may not appoint more than six representatives, as per section 7.3.2 of the protocol. After reviewing documents, researchers found several instances where constituencies were represented by more than six representatives. 

“... the attendance registers include everyone who was in the room, which can include  technical experts, presenters and advisers, not only appointed representatives. The additional members are allowed to support a certain constituency. The registers may also include appointed constituency alternatives. So, a higher number of names on an attendance list does not necessarily mean the limit was exceeded,” Nedlac told Daily Maverick.

Paia request reveals reality of meetings

The Sugary Sweetened Beverage Task Team was set up in the first half of 2017. Its purpose was to develop a report for submission to the Public Finance and Monetary Policy Chamber. Later on, it engaged in the progress of the implementation of the government constituency’s job mitigation and creation plan. 

Government representatives consistently had the highest participation, reaching eight at one meeting, while business followed as second, reaching nine attendees at a single meeting.

Nedlac maintained two representatives at every meeting, while labour averaged one attendee per meeting. 

Job losses were a recurring theme in discussions, the study revealed. However, the low level of labour representation raised questions about how serious the concerns were, the paper outlined.

“Importantly, I would not interpret our findings as saying that concerns about employment should not have been considered. They absolutely should have been. The point is that claims about job losses should be subjected to the same level of scrutiny and independent evidence as claims about the health benefits of the policy,” Naidoo said to Daily Maverick.

A independent study found no significant association between the introduction of the Health Promotion Levy and job losses or jobs created in the sugar-related industries.

Researchers did not receive any documents from 2022. They did another Paia request for outstanding documents, and for 2022, “according to Nedlac, these were all the documents they had”.

“As we understand it, the researchers did not receive Health Promotion Levy-related documents from 2022 through their Paia request, and Nedlac indicated it had no further documents for that period. That is not quite the same as saying there was no contact at all between stakeholders during that year. We would therefore not want to confirm that statement as it stands,” Nedlac said to Daily Maverick.

Reports revealed

One report – drafted by the National Treasury – contained wording that advocated for the existence of the Health Promotion Levy. Four of the reports were explicitly against the levy existing. Five of the reports acknowledged that the levy had came into existence. One report acknowledged the levy’s existence, while also seemingly being against it.

“Business is one of Nedlac's constituencies and, like the others, is entitled to put forward its views. The paper is right that business raised concerns about the Health Promotion Levy, including possible effects on the economy and jobs. It's important, though, to separate what one constituency says from what Nedlac as an institution concludes,” Nedlac told Daily Maverick.

“Nedlac’s role is to provide a space where each constituency can share its position, look at the evidence and work towards agreement, so the records will naturally include positions that others disagree with. For example, the line ‘Business does not agree that a SSB [Sugary Sweetened Beverage] tax should be implemented’ records the view of business, it is not a Nedlac position. In the same way, the fact that the documents reviewed did not include a presentation in favour of the Health Promotion Levy does not, by itself, show that Nedlac took the side of business or the sugar industry.”

Recommendations 

The paper said there was a lack of clarity around how Nedlac’s four constituencies interacted with one another. It also said that how investigations were conducted and conclusions reached was opaque.

Researchers say Nedlac should introduce publicly accessible documentation detailing the steps involved in its investigations, including criteria for evidence evaluation, stakeholder consultation processes, and decision-making mechanisms. 

“Our study found substantial gaps in the documentation available to us, and there was limited public access to the deliberations surrounding the Health Promotion Levy. Greater transparency would make it easier to understand whose views were considered, what evidence was presented, and how conclusions were reached,” Naidoo said to Daily Maverick.

“We have noted the recommendations on clearer procedures, greater transparency, public access to documents and the involvement of community and civil society groups. These are the views of the researchers, and Nedlac has not formally adopted them,” Nedlac said to Daily Maverick.

“Nedlac already works within the framework set by the act, the constitution and its protocols. Any changes to how Nedlac works would need to be discussed and agreed through Nedlac’s own governance structures, where all constituencies have a say. For that reason, we can’t commit to specific recommendations at this stage, but we do take them seriously as input,” Nedlac told Daily Maverick. DM