FRIDAY, 21 JANUARY 2000 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY
                                ____

The House met at 10:03.

The Deputy Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.

                          NOTICES OF MOTION

The DEPUTY SPEAKER: Order! Hon members, welcome back to Parliament. Have a happy new year, and may Africa have a good century.

Ms N V CINDI: Madam Speaker, I give notice that on the next sitting day of the House I shall move:

That the House - (1) notes the tragic loss of life at the Orkney mine in North West;

(2) commends all those who battled so valiantly to save the lives of the surviving miners;

(3) extends its condolences to all the family and loved ones of those who lost their lives so tragically; and

(4) calls upon the mining industry to heed the calls of the National Union of Mineworkers to conduct research into the hazards of pillar mining.

[Applause.]

Mr D H M GIBSON: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move:

That the House -

(1) congratulates the voters of South Africa who continue turning out in by-elections at local government level to express their democratic choice and, in doing so, have time after time shown confidence in the DP; and (2) expresses the hope that this will continue throughout the forthcoming year.

[Applause.]

Mr A M MPONTSHANE: Madam Speaker, I give notice that on the next sitting day of the House I shall move on behalf of the IFP:

That the House -

(1) congratulates the Minister of Education, Prof Kader Asmal, for his efforts to put right what is wrong in education; and

(2) condemns the killing of teachers in the Eastern Cape which took place recently.

[Applause.]

Mnr J DURAND: Mevrou die Speaker, ek gee hiermee kennis dat ek met die volgende sitting van die Huis namens die Nuwe NP sal voorstel:

Dat die Huis -

(1) die nasionale sokker- en krieketspanne gelukwens met hul prestasies tot op hede; en

(2) die spelers alle sukses toewens met hul wedstryde vandag en môre.

[Applous.] (Translation of Afrikaans notice of motion follows.)

[Mr J DURAND: Madam Speaker, I hereby give notice that at the next sitting of the House I shall move on behalf of the New NP:

That the House -

(1) congratulates the national soccer and cricket teams on their achievements so far; and

(2) wishes the players every success in their matches today and tomorrow. [Applause.]]

Chief N Z MTIRARA: Madam Speaker, I give notice that at the next sitting of the House I shall move on behalf of the UDM:

That the House -

(1) acknowledges and gives serious consideration to the request of traditional leaders that Government clarify and define their role, functions and powers;

(2) supports a call by traditional leaders for the establishment of a portfolio for traditional affairs and culture, to be placed under the Office of the Deputy President;

(3) furthermore supports a call by traditional leaders for the introduction of an enabling Act that will grant them jurisdiction to decide over certain criminal and civil matters; and

 4) resolves to ensure that such legislation does not violate the
    provisions of the Constitution.

Prof S M MAYATULA: Madam Speaker, I give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes that the Minister of Education, Prof Kader Asmal, on 13 January published his department’s plan - Tirisano or Working Together - to get education and training in South Africa on the road;

(2) further notes that this will focus on HIV/Aids, staff professionalism, literacy, further education and the organisational effectiveness of the national and provincial education departments;

(3) recognises that education in this country poses some of our most serious challenges in making South Africa competitive and productive in the world economy;

(4) commends the Minister and MECs for their decisive action in dealing with problem schools since the start of the school year; and

(5) calls on all teachers, learners and parents to support and promote this ground-breaking programme.

[Applause.]

Mr G B D McINTOSH: Madam Speaker, I give notice that on the next sitting day of the House I shall move on behalf of the DP:

That the House -

(1) notes with regret the controversies in which Commissioner Selebi has been involved; and

(2) trusts that they will now cease so that the commissioner will be able to pay full attention to the fight against crime.

[Interjections.]

Mr H J BEKKER: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move:

That the House -

(1) expresses its shock at and condolences on the loss of property in the devastating fires in the Cape Peninsula and other areas;

(2) expresses its appreciation for the courageous and detailed work done by the firefighters; and

(3) hopes that they will be rewarded in the future.

Dr A S NKOMO: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes that Government is to substantially increase its spending on medical research by doubling the budgets of the Medical Research Council and its Aids vaccine development programme;

(2) recognises that the substantial increase to the core funding of the MRC is the first to occur in 30 years;

(3) acknowledges, in the words of Dr Makgoba, head of the MRC, that ``this represents a clear signal that the present Government recognises the critical link the MRC plays in national socioeconomic development, international competitiveness and national prosperity’’; and

(4) commends the Government for its investment in the future well-being of our nation.

[Applause.]

Dr P J RABIE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move:

That the House -

(1) notes with regret that a number of European Union countries retracted from their original position regarding the European Union free-trade agreement; and

(2) appeals to all the respective role-players to honour the spirit of the original agreement and to implement the content thereof as soon as possible. Mr S J LEEUW: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes that the inflation rate has fallen to a 30-year low and that interest rates continue to fall;

(2) notes the confidence shown by the buoyant South African stock market and the predictions for increased economic growth and a further lowering of the inflation rate from a wide range of economic analysts, including the AHI and Morgan Stanley Dean Whitter; and

(3) commends the Government and the Minister of Finance for guiding the economy through difficult world economic conditions so that we are poised to enter the new century with confidence and optimism.

Dr J T DELPORT: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DP: That the House reaffirms its commitment to uphold and adhere to the Constitution and calls upon all parties, in particular the governing party, to do likewise.

Mr S B NTULI: Madam Speaker, I give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes the recent cowardly shooting of black bus commuters in Constantia Park, Pretoria, in which three passengers died and four more sustained injuries;

(2) unreservedly condemns this heinous crime in the strongest possible terms;

(3) urges the Department of Safety and Security, and the SA Police Service in particular, to speed up its investigation and bring the perpetrators to book;

(4) conveys sincere condolences to all bereaved families;

(5) calls upon all communities to assist the police by blowing the whistle on criminals; and

(6) calls upon community leaders publicly to condemn cowardly acts like this that only serve to retard reconciliation and co-operation in South Africa.

Mr M J ELLIS: Madam Speaker, I give notice that on the next sitting day of the House I shall move on behalf of the DP:

That the House -

(1) expresses its regret at the fact that the matriculation results for 1999 were poor; and

(2) urges all concerned to ensure that in the year 2000 there is a perceptible improvement because our country cannot afford to waste its human and material resources on failure.

Ms C DUDLEY: Madam Speaker, I give notice that on the next sitting day of the House I shall move on behalf of the ACDP:

That the House - (1) is of the opinion that the exclusive vehicle hire services contract between Imperial Auto Services and the Departments of Water Affairs and Forestry, Labour, Health and Transport will have a detrimental effect on services due to huge budgetary implications; and

(2) undertakes to investigate this situation to ensure that previously disadvantaged communities will not be further disadvantaged by these contracts as a result of increased costs of services or diminished services.

Ms M C LOBE: Madam Speaker, I give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House -

(1) notes the recent undignified internal squabbling amongst the leadership of the DP in Gauteng;

(2) further notes the inability of the party to manage its party caucus in 1999, as evidenced by its divided voting on Bills and its confusion in committees; (3) believes that as the official opposition the DP is demeaning democracy through its poor management of its internal affairs, which has led to an internal investigation into allegedly fraudulent membership lists of DP branches; and

(4) urges the DP to recognise that it can never hope to have a coherent party while it attempts to gain voters by abandoning the humanist principles on which it was based, appealing increasingly to right- wing voters fearful of transition to a democratic society.

[Interjections.] [Applause.]

Ms J A SEMPLE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DP: That the House -

(1) notes with dismay the imminent closure of the National Symphony Orchestra;

(2) further notes the NSO’s contribution to cultural enrichment and development in musical education in South Africa; and

(3) calls on national Government to provide financial assistance to the NSO.

[Applause.]

Dr B L GELDENHUYS: Mevrou die Speaker, ek gee hiermee kennis dat ek op die volgende sittingsdag namens die Nuwe NP sal voorstel:

Dat die Huis -

(1) daarvan kennis neem dat daar nog geen inhegtenisnemings was met betrekking tot die bomaanvalle in die Wes-Kaap nie; en

 2) 'n dringende beroep doen op die Minister van Veiligheid en
    Sekuriteit om alles in sy vermoë te doen om toe te sien dat diegene
    aangekeer word wat daarvoor verantwoordelik was. (Translation of Afrikaans notice of motion follows.)

[Dr B L GELDENHUYS: Madam Speaker, I hereby give notice that I shall move on the next sitting day on behalf of the New NP:

That the House -

(1) notes that no arrests have yet been made in respect of the bomb attacks in the Western Cape; and

(2) urgently calls on the Minister of Safety and Security to do everything in his power to ensure that those responsible for the attacks are apprehended.]

Ms M VERWOERD: Madam Speaker, I give notice that on the next sitting day of the House I shall move on behalf of the ANC:

That the House - (1) notes the resignation from politics of the UDM’s former driving- force, Roelf Meyer, and the subsequent defection of a stream of other members from the UDM;

(2) recognises that the almost weekly resignations of high-ranking members from the UDM since the last months of 1999, in conjunction with Mr Meyer’s lack of confidence in that party, clearly indicate its complete demise;

(3) acknowledges that this is due to sharp divisions within the UDM, its dismal performance in Parliament and its lack of coherent policy; and

(4) calls on all South Africans committed to building a nonracial, democratic South Africa to join hands with the ANC.

[Applause.]

                          NATURAL DISASTERS

                         (Draft Resolution)

The CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move without notice:

That the House –

(1) notes with sadness the natural disasters, ranging from killer floods to out of control fires, that have struck the Western Cape, KwaZulu- Natal, the Eastern Cape and Northern Province in recent weeks;

(2) expresses its sympathy and support to all the victims of these disasters;

(3) commends the South African National Defence Force, the Police, emergency services and members of the public for their united action in fighting these life-threatening and life-wrecking catastrophes; and

(4) calls on all South Africans to remain united in this time of crisis for many.

Agreed to.

                          HOURS OF SITTING

                         (Draft Resolution)

Mr G Q M DOIDGE: Madam Speaker, on behalf of the Chief Whip of the Majority Party, I move section 1 of the draft resolution printed in his name on the Order Paper, as follows: That, notwithstanding Rule 23, the hours of sitting of the House on Tuesday, 25 January 2000, shall be as follows: 11:30 to adjournment.

However, I request that subsections 2(a) and 2(b) fall away.

Agreed to.

  RATIFICATION OF SPEAKER'S DECISION TO ESTABLISH AD HOC COMMITTEE

                         (Draft Resolution)

Mr G Q M DOIDGE: Madam Speaker, on behalf of the Chief Whip of the Majority Party, I move the draft resolution printed in his name on the Order Paper, as follows:

That, in accordance with Rule 214(2), the Assembly ratifies the decision by the Speaker to establish an Ad hoc Committee on Report No 13 of the Public Protector.

Agreed to.

                        MOTION OF CONDOLENCE

                        (The late Mr A B Nzo)

The CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move the draft resolution printed in my name on the Order Paper, as follows:

That the House -

(1) notes the death on 13 January 2000 of former Minister of Foreign Affairs, Mr Alfred Nzo;

(2) recognises that Mr Nzo devoted his life to the service of the people of South Africa;

(3) believes that the contribution that Mr Nzo made to the transformation of South Africa to a democratic rights based society was immeasurable;

(4) mourns the passing of one of South Africa’s finest children, whose loss will be sorely felt; and

(5) extends its heartfelt condolences to his family and loved ones.

Madam Speaker, hon Deputy President, hon members, the people of South Africa learnt with shock of the untimely departure of Comrade Alfred Nzo.

Comrade Nzo passed away exactly six months after the second democratic elections in our country. He also passed away at a time when the ANC and the people of South Africa were bracing themselves for the daunting challenges of the new century, the African century.

He was born into a working class family in 1925. His father was a mine clerk at Modderbee mine, which would be later converted into Modderbee prison, where Comrade Nzo would later be incarcerated.

Comrade Nzo received a missionary education in the Eastern Cape. After completing his matriculation certificate, he enrolled at the University of Fort Hare and left the institution a year later. It was at Fort Hare that Comrade Nzo became active in politics. He returned to the then Transvaal, where he lived and worked in Alexandra township as a health inspector. Comrade Nzo’s daily exposure to the bad living conditions led him to be politically active in the community of Alexandra. He was active in organising the Defiance Campaign in the 1950s. As a volunteer of the movement, he was involved in a campaign to interview the people about the kind of society they would like to live in. It was this campaign that culminated in the famous Congress of the People.

His talents and commitment to the ANC were quickly spotted, and in 1956 he became the chairperson of the Alexandra branch of the ANC. In 1958 he was voted into the regional and national executive committees of the ANC. It was due to his political work that the people of Alexandra walked to work every day for five months, protesting against high bus fares.

Comrade Nzo lost his job as a result of this political activity. He became a full-time worker of the ANC. He also continued with his political work in Alexandra although being fired in those days meant that one could lose the permit to live in urban areas. Comrade Nzo was arrested several times and was eventually sentenced to imprisonment for five months for not having a residence permit. When the apartheid security forces embarked on a clamp-down on the liberation movement in the early 1960s, Comrade Nzo was placed under house arrest. In June 1963, he was detained for a period of 238 days. In 1964 he was ordered by the ANC to join the contingent of ANC leaders in exile and to assist in rebuilding the ANC. He took up posts in various countries, including Egypt, India, Zambia and Tanzania, where he represented the ANC. At the Morogoro conference, Comrade Nzo was elected secretary-general of the ANC, a position he held for 20 years. He became the longest-serving secretary-general of the ANC.

Following the unbanning of the ANC, he was part of the ANC delegation that participated in talks with the apartheid regime. After the first democratic elections in 1994, Comrade Nzo became the first Minister of Foreign affairs, a portfolio he used to ensure that our country occupied its rightful place in international politics.

Comrade Nzo lived and died in struggle. His love for his country and his people led him to adopt an unwavering commitment to the struggle for the liberation of our people from apartheid colonialism. He was a tried and tested leader of our movement and an ANC cadre committed to the attainment of a free, nonracial, nonsexist and democratic South Africa. During the dark days of apartheid repression, he was able to lead the movement, together with Comrade Oliver Reginald Tambo and other ANC stalwarts, to being a powerful force that was at the head of the struggle for liberation.

Despite harassment and prosecution by the evil forces of apartheid and the hardship he endured as a result of the system of apartheid, Comrade Nzo taught the young generation the importance of peace and reconciliation, the need to forgive and continue the struggle for the reconstruction of our country and the building of a new nation. He was a humble person, always willing to listen to the opinions of others and patient to educate the younger generation. He always listened attentively to attacks by opposition parties and the media, but was never derailed or diverted from doing his work diligently. His ability to master diplomatic work as the leader of the ANC in exile and Minister of Foreign Affairs earned him the respect of the international community.

His family, friends, comrades and the people of South Africa will miss Comrade Nzo. The ANC joins the people of South Africa as they mourn the untimely departure of this great hero of our land.

We vow that Comrade Nzo’s name will never be forgotten by us and our people. We will pick up his spear and continue the battle to achieve the noble ideas for which he lived and died. We pledge that with our people united behind the ANC’s programme of democratic transformation of our country, no force, no matter how powerful, will derail us from this historic mission. [Applause.]

Mr D H M GIBSON: Madam Speaker, the DP is very glad to associate itself and all its supporters with this motion.

The late former Foreign Minister Alfred Nzo was someone the cartoonists loved because of those droopy eyes of his, and they could play around with his surname by putting in a lot of Zs and imply that he was very dozy. And because the cartoonists loved him, I think very many people in South Africa became fond of him as well. He was somebody who was a person, somebody in that new Cabinet that one could recognise.

We had a joke which we all appreciated very much and this resulted from a lunch which was given by the late Alfred Nzo for Mwalimu Nyerere. During the course of this lunch, which was attended by my hon leader, Mr Nzo was talking about toasts. He said: ``It is time for toasts.’’ As he stood up to propose a toast to Mwalimu the waitress came in through the door carrying a rack of toast for him, and, because he was so imperturbable, it just did not put him off. Obviously, he was the quintessential diplomat.

We knew him as a man of integrity. Certainly, from 1994 onwards, in our dealings with him, there was never a case in which we, or the public, for that matter, felt that he was untruthful. He had an enormous commitment to the liberation struggle. Because of the role which he played before 1994, he had unique access to leaders in Africa and the Third World, and because of that he was able to open doors for our country.

Despite the imperturbability and the reputation, I, personally, always found him to be extremely efficient and accessible. I remember making representations to him on a number of occasions, and in every case he was well briefed, he knew what was going on and he was ready to help. I was told one Friday night: Please phone the Minister's office early on Saturday morning. This is the number, and we will find him for you.'' I rang and I said:Good morning, I am looking for the Minister.’’ A quiet voice said: ``You have found him.’’ That is how my dealings were with him, and everybody in my party had appreciation for him.

We think that Abe Lincoln’s words ``with charity towards all, and malice towards none’’ sum up the late Alfred Nzo. We feel for his party comrades, his friends, his family and all those who loved him, and we also mourn our late Minister. [Applause.]

The MINISTER OF CORRECTIONAL SERVICES: Madam Speaker, Neil Hart, in his book The Foreign Secretary, writes:

Of all the great offices of the state, the premiership alone excepted, the foreign secretaryship has been the most demanding and the most desirable. The great Lord Salisbury believed that of all the offices in the British Empire, only these two were beyond the powers of men of good and average ability.

Now the question is: Did we, as South Africans, the media and the public, accord Mr Nzo the same respect and status? In hindsight, maybe we should have. But then we will leave that for posterity to judge.

On behalf of the IFP and its president, Dr Mangosuthu Buthelezi, who is also the Minister of Home Affairs and who has known Mr Alfred Nzo for many years, long before he became the Minister of Foreign Affairs of the democratic South Africa in 1994, I wish to convey to this honourable House our sincere condolences to, firstly, the family and close friends of the late Alfred Nzo on their loss of a father figure and a loved one.

Secondly, our condolences go to the ANC and its president, Mr Thabo Mbeki, for the loss of a comrade-in-arms. Lastly, our condolences go to the South African Government and the people of South Africa on the passing away of a trailblazer of what was often debated in this House as an unorthodox foreign policy for South Africa - a policy which inevitably attracted international adversaries and admirers alike as Mr Nzo steadfastly put South Africa as a reconciling cradle for the East and the West, and as he also put the African continent as a priority for economic development, conflict resolution and peace.

In The Elegy on Edgar Brookes, Alan Paton asks some of the fundamental questions which, I believe, are also pertinent to our late honourable Nzo. I quote:

Tell me what road are you going now? Tell me what words are you speaking now? Tell me what men will go with you? Tell me what kind of cross do you want?

Then he concludes:

Do not trouble to report to me. I know your answers already. But when you report to the Lord, offer this pen with your sword.

[Applause.]

Dr B L GELDENHUYS: Madam Speaker, during Julius Caesar’s burial, Mark Anthony said: ``I come to bury Caesar, not to praise him.’’ On behalf of the New NP, I would like to say: I have not come to bury Alfred Nzo, I have come to honour him.

Alfred Nzo was a politician and a gentleman. He always treated political opponents with respect and never allowed differences in policy to end in opponents being enemies.

As a Minister of Foreign Affairs, he established South Africa as a power of note, not only in the region, but also on the whole continent. He also played an important role in making Africa a nuclear-free zone. Under his guidance the need for the promotion of democracy and human rights took root on the continent, without which, of course, the whole idea of an African renaissance would remain a pipe dream. We salute him as a worthy opponent.

We associate ourselves fully with the content of the motion before the House, and we convey our condolences to his wife, his family and to his party. [Applause.]

Mne M N RAMODIKE: Madam Speaker, Deputy President, re re mahloko go mokgatlo wa ANC; mahloko go Moporesidente wa ANC le go Motlatšamoporesidente, mahloko go MaAfrika-Borwa ka moka, ao elego wona mathomomayo a African renaissance. Mokgopo wo mogolo o wele, dithaga tša lla bošogošogo! (Translation of Sepedi paragraph follows.)

[Mr M N RAMODIKE: Madam Speaker, Deputy President, we wish to extend our heartfelt condolences to the ANC, the President of the ANC, the Deputy President, and all South Africans, who are indeed the point of departure for the African renaissance. ``A very big tree that used to be a reliable source of food, nesting and shelter for birds has fallen down and the birds are now plunged into a state of restlessness and confusion!’’]

On behalf of the president of the UDM, the structures and members of the UDM, one and all, I wish to convey our heartfelt condolences to the bereaved family of the late Comrade Alfred Nzo, an ANC stalwart, a cadre who spent most of his life in the liberation struggle, fighting for the emancipation of millions of the oppressed people in the former apartheid South Africa, the first Minister of Foreign Affairs in the new democratic Government who presented South Africans with a clear vision and mission of building bridges of peace, harmony and political stability in the SADC countries, Africa and, indeed, in the international community, a true patriot and democrat.

He was not like his predecessors in the apartheid regime who today seem to be hunting with the hounds and running with the hares, and who were, no doubt, prophets and protagonists of doom and oppression. However, today they are claiming, from somewhere in the corridors or backyards of Pretoria, to have contributed much to the freedom of this country.

I met Comrade Alfred Nzo back in 1990. That was after the unbanning of the ANC and other liberation movements and the release of political prisoners. He was then the secretary-general of the ANC. He was among the leaders who established the ANC-led Patriotic Front in Durban, which paved the way for the Kempton Park multiparty negotiations.

Re tlo mo gopola le diketapele, baetapele, dipulamadibogo le boratšhatšhatšha ba temokrasi go leno la Afrika Borwa. Balapa la gagwe, meloko le metswalle, mokgatlo wa ANC le mekgatlo ka moka, Mmušo le rena ka moka, a re homotšegeng, re tshedišegeng. [Legofsi.] (Translation of Sepedi paragraph follows.)

[He will be remembered alongside authentic leaders who pioneered and championed the cause of democracy in South Africa. May his family, relatives, the ANC and all their structures, the Government and all of us be comforted and consoled. [Applause.]]

Mr L M GREEN: Madam Speaker, hon Deputy President, Ministers and members, the ACDP extends its sincere condolences to the family, friends and loved ones of former Minister Alfred Nzo. It is indeed a sad day for us as MPs to start this parliamentary session with the news of the passing away of former Minister Nzo.

We also extend our condolences to the ANC, which has lost a dear friend, a committed and respected community leader and a man who, as a Minister, made a valuable contribution to the building of our nation.

May the peace of God be with the family and friends of the late Alfred Nzo during this time of sorrow and loss. Politics often divides us, but when a respected man and a devoted community leader such as Alfred Nzo passes away, we all unite in mourning.

The ACDP fully supports this motion. [Applause.]

Genl C L VILJOEN: Mevrou die Speaker, ek praat namens die VF, en ek is ook gevra om namens mnr Aucamp, leier van die AEB, te praat aangesien hy by ‘n portefeuljekomitee betrokke is. Daar is vir almal ‘n tyd om gebore te word en ‘n tyd om te sterwe. By geboorte is daar vreugde; by afsterwe is ons almal treurig en voel ons hartseer.

Daarom wil ek graag namens hierdie twee partye ons innige simpatie betuig met die familie van die afgestorwe mnr Nzo. Ons wil hulle sterkte toewens, en ons hoop dat hulle sy dood vinnig sal kan verwerk en die pad vorentoe weer sal kan aanpak.

Wanneer ‘n openbare figuur soos mnr Nzo egter te sterwe kom, iemand wat ‘n groot rol gespeel het, wat hoë aansien onder sy mense gehad het, wat sy mense gedien het so goed hy kon, wat sy ideaal getrou bevorder het en wat tot op ‘n hoë ouderdom aktief in diens was …(Translation of Afrikaans paragraphs follows.)

[Gen C L VILJOEN: Madam Speaker, I am speaking on behalf of the FF, and I have also been asked to speak on behalf of Mr Aucamp, the leader of the AEB, as he is involved in a portfolio committee. For everyone there is a time to be born and a time to die. At a birth there is joy; at a death we are all sad and full of sorrow.

For that reason, on behalf of these two parties, I would like to convey our sincere condolences to the family of the late Mr Nzo. We want to wish them strength, and we trust that that they will be able to come to terms with his passing quickly and that they will once again be able to tackle the road ahead.

However, when a public figure like Mr Nzo passes away, someone who has played a great role, who was held in high esteem among his people, who served his people as well as he could, who faithfully promoted his ideals and who remained in service to an advanced age …]

… then many more than just the family mourn and all decent South Africans forget about party-political differences. We extend condolences, not only to the family, but also to the people he served. This I say on behalf of these two parties.

The memories that all treasure of this man, acknowledging his service, his loyalty, his perseverance and his dedication to his cause and to his people, will remain examples to his followers for generations to come.

We fully associate ourselves with the motion of condolence. [Applause.]

Mr I S MFUNDISI: Madam Speaker, hon members, very often people speak of a great giant, and Mr Nzo was one. He was unassuming, yet focused on what was at hand. While people talked and wrote about him, he went about what a Minister of Foreign Affairs has to do to forge links with other countries.

As the first Minister of Foreign Affairs in the democratic South Africa, Mr Nzo did his country proud. He succeeded in integrating officials of the former independent states into his department without breaking hearts. One recalls when this son of Africa led a delegation to the United Nations to present his credentials to see to the readmission of this country to the family of nations. What a solemn occasion this was!

Thanks to his dedication to the cause, our country had established diplomatic relations with 164 countries by March 1999. Over the five years of his term as Minister of Foreign Affairs, South Africa was visited by 73 heads of state or government, while our then President visited 83 countries. All these are the results of this unassuming giant. He was a mover, a negotiator par excellence. He will surely be missed.

On behalf of the UCDP I express condolences to the Nzos, the next of kin and the ANC.

Bantu bakuthi xolani, akuhlanga lungehliyo. [Kwaqhwatywa.] [Be consoled people. This is not something that never happens. [Applause.]]

Dr M S MOGOBA: Madam Speaker, I rise to convey sincere, heartfelt sympathies to the family of Mr Nzo and to the ANC. An old friend of mine once said when he was about to leave: ``I do not know what is going to happen to this place. When I leave, this building might come down, because my roots are everywhere under all the buildings here.’’

One has that sense when we have to say goodbye to an old veteran like the late Alfred Nzo. One has the feeling that this building might come down, because his roots are below it. His roots are below Shell House. His roots are below South Africa.

We have come here to salute a real person, motho, motho, gentlemen. We have come here to bid goodbye to a negotiator, somebody who has negotiated successfully for this country. We have come here to bid goodbye to somebody who has fought for this country. Many people who walk the streets and enjoy freedom can easily forget that people like Nzo gave nearly all their lives to fight for the freedom of this country. We mourn his passing and we just want to express our sympathies to Mrs Nzo and the family, to the ANC and to the nation. We hope that God will raise another Nzo to take his place. [Applause.]

Miss S RAJBALLY: Madam Speaker, it is sad when a country loses its great sons. With them goes great experience.

Comrade Nzo was a great leader. His devotion and his service to the society of South Africa will always be remembered. He left behind great memories, he led the way we have to walk now.

The MF expresses its deepest condolences to our comrade Alfred Nzo’s family and also to the ANC. [Applause.]

Mna M A MANGENA: Mohumagadi Spikira, legatong la Azapo le baFA, bao ba re kgopetšego go ba bolelela, re re mahloko go ba gaNzo; mahloko go ANC; mahloko setšhabeng sa gabo rena ka moka ge re lahlegetšwe ke mogale yo.

Comrade Alfred Nzo o gafile bophelo bja gagwe ka moka gore a tle a šomele setšhaba; a lokolle lefase le la rena kgatelelong. Bophelo bja gagwe ka moka e bile motlhala go rena ka moka wa go laetša gore gabotse boikgafo le go šomela setšhaba sa geno ke eng. Re holofela gore motlhala wo a re tlogeletšego wona re tlo o latela ka moka ga rena le gore re tlo phela bophelo bjo botelele gomme ra hlokagala re šomela setšhaba sa gabo rena.

Ge go hlokagetše motho-fela re a lla; efela ge go hlokagetše mogale, re a bina gomme ra keteka, e le ge re leboga bophelo bja gagwe bjo bobotse le bogale bjo a bo bontšhitšego. Comrade Nzo bja gagwe bophelo o bo phedile, gomme le ya gagwe tema o e kgathile, a be a e wetša. Re re anke a robale ka kgotso gomme le balapa la gabo ba kgotsofale, ba homotšege. [Legofsi.] (Translation of Sepedi speech follows.)

[Mr M A MANGENA: Madam Speaker, on behalf of Azapo and our colleagues in the FA, who have asked us to speak on their behalf on this matter, we wish to extend our deepest sympathies and heartfelt condolences to the bereaved family of Alfred Nzo, to the ANC and to all the people of South Africa, on the passing away of this comrade-in-arms.

Comrade Nzo dedicated his entire life to the liberation struggle, fighting for the emancipation of the oppressed people of our country. His life was an example of what is meant by a meaningful sacrifice to one’s country. We trust that the footprints he has left will be an encouragement to all of us, and that we too shall strive for the good cause of our people and country until we pass away.

It has become normal procedure that whenever an ordinary person has passed away, we are plunged into great sorrow as we mourn his or her loss. However, if a cadre such as Comrade Nzo has fallen, we need to dance, ululate and celebrate in honour of his tireless contribution to our common cause, as well as for the brevity he has shown in his living years. Comrade Nzo has lived his life, and has played and completed his part very well. May he rest in peace, and may his family be consoled.] Debate concluded.

Motion agreed to. PREFERENTIAL PROCUREMENT POLICY FRAMEWORK BILL

                       (Second Reading debate)

The MINISTER OF FINANCE: Madam Speaker, hon members, today we table in this House the Preferential Procurement Policy Framework Bill. This Bill is part of the commitment that we made to the people of this country when we drafted the Constitution four years ago.

Section 217 of the Constitution requires a system for procurement which is fair, equitable, transparent, competitive and cost effective. These principles must form the core of Government’s approach to procurement. Yet the Constitution also requires of us to effect, in legislation, a framework which allows organs of state to establish a system of preferences. This Bill addresses this requirement in the Constitution by trying to strike a balance between the concept of value for money on the one hand and a set of values on the other which includes, clearly, the need to address the vast inequalities that obtain from our past.

Firstly, the Bill defines organs of state to which the framework will apply. Secondly, it establishes the parameters for the preferences. For contracts with a value above a prescribed amount a maximum of 10 points may be allocated for specific goals. In this instance a maximum of 90 points must be allocated for price. For contracts with a value equal to or below this prescribed amount up to 20 points may be allocated for specific goals, while a maximum of 80 points is allocated to price.

Thirdly, the Bill defines both the beneficiaries and the objectives of such preferences. These include those historically disadvantaged by race, gender or disability, and implementing the programmes of the Reconstruction and Development Programme. To ensure greater transparency and accountability in the tender process, these goals and points allocated to each must be specified in the invitation to submit tenders.

Fourthly, the integrity of the preference framework is of paramount importance. To ensure that these preferences are not open to abuse, the Bill provides for any contract awarded on account of false information furnished by the tenderer in order to secure preference points, to be cancelled at the sole discretion of the organ of state without prejudice to any other remedies that that organ of state may have. In other words, we will not tolerate practices such as fronting.

Fifthly, the Bill allows the Minister of Finance to exempt an organ of state from any or all of its provisions in the interests of national security, where the likely tenderers are international suppliers or where it is deemed to be in the public interest. This Bill will be supported by a set of regulations which will be published for comment in the national Gazette and provincial gazettes. These regulations will include, among others, the formulae to be applied and other requirements set out in tender policies including tax clearance certificates.

It is important that those who benefit from tenders awarded by Government comply with the letter and spirit of the legislation passed in this Parliament. This Bill is only a step forward in the process of procurement reform. The process to ensure that the extensive procurement of goods and services is compliant with all the provisions of section 217 of the Constitution is ongoing.

This Bill has been considered by various committees at national and provincial level over the past two months. It has been substantially redrafted and benefited from the insights of members of Parliament, the NCOP, provincial legislatures and the public as a whole. I would like to express my sincere appreciation to the members of the ad hoc committee and in particular the joint chairs, Ms Barbara Hogan and Ms Qedani Mahlangu, for their hard work.

I have pleasure in proposing the adoption of the Preferential Procurement Policy Framework Bill. [Applause.]

Ms B A HOGAN: Madam Speaker, this Bill, as the Minister has just said, went through an enormous, vast and exhaustive process. It went to the provinces, to committees in the provinces, to hearings in the provinces and to hearings at national level. We had consultations at national level and in the provinces. If ever there was a Bill that had extensive national input, this Bill is certainly it.

It has been a very useful exercise. I think it has taught us the necessity of consulting as widely as possible, and it has also brought, very valuably, the experience the provinces have had with regard to tendering procedures in the period since 1994 and, in particular, in relation to preferential procurement. This, too, has informed the amendments which we are bringing to this House.

Some of the amendments are incidental and some of them are substantial. I would like to speak to a couple of amendments which I think fundamentally shape this Bill. The first is the definition of the organ of state. Preferential procurement in terms of this Bill will be applicable to Government proper: Government departments, provincial departments, municipalities and constitutional institutions.

In addition to that, the Minister has the power to designate other institutions - almost quasi-state institutions such as parastatals and museums. There are over 700 such quasi-state institutions. He will have the power over time to designate which of those should fall within the parameters of the Bill. This is necessary because of the particular statutory legislation which founded these institutions.

However, if one looks at the parastatals, we are talking about the necessity for more flexibility for the parastatals. In terms of their procurement policy they are, after all, institutions which are there to operate with a commercial motive. So there is flexibility within this Bill. It is not a draconian Bill, which immediately draws everybody into the framework. There will be a careful sifting through on that process.

Equally, the Minister has exemption powers. It was pointed out during the hearings that, for instance, in Defence procurement, very often there are only international suppliers and they obviously cannot be subject to these preferential procurement policies. Therefore the Minister, in those cases, will have the powers to exempt them. So there is flexibility within this Bill, although the intention of the Government is surely to secure preferential procurement, particularly for those who have been disadvantaged in previous economic regimes.

We have another important addition, which arose out of the very vocal submissions that were made to us. As hon members will recall, the initial Bill said that 10 additional points could be granted to a tenderer on the grounds of affirmative action, if one wants to put it in short terms. Many representations were made to us in this regard. The considerations were particularly price considerations, concerning the fact that the person who would win the tender would be the person who would give the lowest price. In considering that, we therefore have proposed an amendment which says that above a certain amount those 10 additional points will prevail. Below a certain amount 20 additional points can be allocated. This is to allow for the entry of small and medium enterprises into the tendering process.

However, on the other hand, as we have pointed out, we have to measure delivery and the cost of delivery against the economic empowerment of people who submit tenders. Therefore, I believe that we have attempted to address the complaints that were coming to us in a fairly measured way, by adding on the 20 points below a certain amount.

Those are some of the major, I think, amendments which have been made which in some way are giving some guidance to our procurement policy. But the Bill states, and the Constitution states, that this Bill is a framework. It is not actually a policy. And the Bill states that organs of state must determine a preferential procurement policy.

What do we mean by a policy for preferential procurement? My submission is that a policy for preferential procurement cannot be drawn up without a full understanding of what we mean by black economic empowerment, what we mean by empowerment of women and disability. Without that common understanding, the tender boards can have very little direction on how they are supposed to apply the framework which is enunciated in this Bill. Let me give members an example. Many people argued that one should qualify in terms of preferential procurement if there is a 100% black ownership or significant black ownership.

We are aware in terms of the debate about black economic empowerment that, in a sense, we have gone beyond the debate that black economic empowerment only means equity ownership. We have learnt through experience both at national and provincial level that only taking equity ownership into account means that this often leads to fronting, where as someone called it in the committee, ``renting a black’’ becomes the issue. To have the right face or the right women on the committee was the only necessity. We are talking about far more fundamental conceptualisations of black economic empowerment. We are talking about managerial empowerment. We are talking about a whole range of issues here that has to inform our tendering policy. Furthermore, a question was raised from some quarters. We had the demand that there should only be 100% black ownership. Now, if one talks about what our long-term vision of the economy is, are we then saying that we want white companies and black companies? Obviously, this is not what we are saying. We are saying that companies must reflect the demographics of this country. We are not simply talking about, in a very simplistic way, dividing companies between black ownership and white ownership. It is a far more fundamental issue.

This leads me to another fear that was consistently raised by various parties in the committee, and that is a question of what happens to white entrepreneurs. Does this eliminate white entrepreneurs? Are they put at a disadvantage? The point that I want to make is that this Bill is, firstly, aimed at being inclusive. It is about bringing people who were never allowed into the tendering process, into the tendering process. So, to say that it is exclusive is wrong. It is actually redressing a previous exclusivity, by making it inclusive. [Interjections.]

However, the question then arises: Does this inclusivity over time mean that whites get excluded? Of course not. We are not talking about 100% black ownership. We are talking about creative engagements. We are talking about bringing forth the full entrepreneurial skills and abilities of all our people in different partnerships and different arrangements that reflect the demographics of this country, but certainly unleash the entrepreneurial and job creating potential of our economy.

Certainly, this Bill is designed to grow the economy and to assist small entrepreneurs and medium-sized entrepreneurs to benefit from state procurement policies. It is not designed to simply, and in a very arbitrary way, say: Blacks will have access and whites will not have access. That is certainly not the intention of this Bill. Certainly, in the regulations and in the policies which the organs of state develop in terms of procurement policy, I would assume that these would be the issues that we have to deal with.

Finally, I wish to say that procurement policy is not the only mechanism to assist small and medium enterprises to develop in this country. We are very aware that there are a number of state practices that militate against small and medium enterprises. When they complete a tender many small and medium enterprises are only paid nine months after the completion of a contract. That throws them straight into bankruptcy. The state has to be far more responsive to these enterprises. Again, there are a number of changes which have to be brought about which can assist small and medium enterprises to fulfil their mandates better.

Finally, with regard to the question of delivery, it is absolutely essential that delivery continues. The state is going to be firm on the issue that preferential procurement does not mean inferior procurement. In many instances we have already seen that black tenderers have delivered far better than previous incumbents, and the intention is both to maintain standards and to deliver to the poorest of the poor through a preferential procurement policy that is enlightened, and to assist those who were previously discriminated against. [Applause.]

Mr K M ANDREW: Madam Speaker, among the most important challenges facing South Africa are poverty and inequality in our society. Simply removing statutory racial discrimination is not enough. We cannot expect people who have suffered impediments for decades to be able to compete and prosper without taking some deliberate steps to enable them to do so.

Hence the Constitution provides for some carefully defined deviations from its equality provisions. One of these deviations is contained in section 217, which is the one dealing with procurement. Subsection (1) of that section provides the basis for procurement and requires that contracts for goods and services must be in accordance with a system which is fair, equitable, transparent, competitive and cost effective.

The next two subsections make provision for exemptions to this basic rule and require Parliament to prescribe an enabling framework within which preferential procurement can be implemented. They provide for general, undefined categories, such as local content, which entitle people to preference, and specifically mention persons disadvantaged by unfair discrimination.

The DP believes it is desirable to assist certain categories of people, but that circumstances will differ widely. These variations will include the nature and financial position of an organ of state, the type of goods and services being procured, and the profit margins normally made on the goods and services being procured.

South Africa needs a growing economy, which will have to include a thriving small and medium business sector if it is to be sustainable. This will and can only happen if those disadvantaged by unfair discrimination are able to play a major role.

When one looks at addressing the challenges of poverty and inequality, action taken in some circumstances addresses both the problems of inequality and poverty. However, on other occasions one has to make a choice as to whether addressing poverty or addressing inequality should take priority as they may be in conflict. Procurement policies can fall into this category.

The Minister, in his meeting with the portfolio committee, pointed out the need for a balance between empowerment and efficiency, and added that the issue of value is central. Having said that, one readily acknowledges and welcomes the fact that many new businesses are as or more efficient than their more established competitors and are able to compete on equal terms. It is for these reasons that the DP was delighted that its view prevailed and substantial changes were made to the Bill at the last minute, which has enormously increased its flexibility and ability to deal with different circumstances. [Interjections.]

We did not support the ANC view that the same policy should be applied to all organs of state in respect of all tenders, irrespective of the goods and services required. For example, the DP would consider that when one was buying exercise books for schoolchildren and did not have enough money, one would give priority to maximising the number of books one obtained, rather than attempt to empower some disadvantaged suppliers by paying a premium price and so getting fewer books for those children.

Also, a bankrupt local authority would need to give priority to obtaining goods and services at the lowest possible price. A policy of one-size-fits- all would not be appropriate. One has to achieve a balance between the needs of the poor to obtain goods and services, such as housing, education and health, and the desirable aim of encouraging small and medium businesses, particularly those run by people disadvantaged by unfair discrimination, be that on the basis of race, gender or disability.

The DP does have reservations in respect of this Bill. First of all, we have some concerns about the constitutionality of some aspects of the Bill. These concern some of the ministerial discretions provided for and the qualification for disadvantaged persons. The legal advisers in the committee indicated that they were satisfied that that was not a problem, and we trust that their opinion is correct.

We have a concern that the clause providing for the Minister to grant exemptions contains, as one of the reasons, the expression ``if it is in the public interest’’. This is rather vague, but we accept that it is difficult to define all the circumstances in which an exemption may be desirable, and the committee was advised that the Minister could be required by a court of law to justify his exemption as being in the public interest if it were challenged.

A third reservation we had was that we believed that new legislation, which was untried and aimed at achieving certain goals, should be reviewed from time to time. One needs to ask whether it is working and whether a balance is being achieved, or whether it has been abused, for example, by fronting and enabling people to circumvent the intentions of the Bill. The DP accepts that the parliamentary portfolio committees can, and should, review many pieces of legislation from time to time and require the relevant Minister or department to report on whether the legislation is working satisfactorily or not. However, one must caution that, in practice, committees allocate very little time for this responsibility, and the danger always exists that that monitoring may seldom take place.

In addition, there is the question of whether we are going to reach the correct targets. The Minister has used the analogy of helping a baby learn to walk and pointed out that at some stage the baby needs to be able to discard the walking ring and stand on its own two feet. In terms of this legislation, the questions arise of who should qualify and how often they should be entitled to the preferences provided for in the Bill.

The DP believes that the preferences should be aimed at small and medium businesses which are not already firmly established and prospering. The targets should not be established, highly profitable and successful businesses, irrespective of who the owners of those businesses might be. For this reason, the DP did not support the addition of the word ``historically’’ to qualify unfair disadvantage in clause 2(1)(d).

If people, to their credit, have succeeded in overcoming their historic disadvantage, they should not be the beneficiaries of these preferences, as one is then addressing neither inequality nor poverty. On the contrary, one is continuing to disadvantage other disadvantaged persons, because they will not be able to compete effectively with those firms which are already successful. In addition, we must never forget that paying 11% or 25% more, means fewer houses or fewer schoolbooks for the poor.

Secondly, the DP believes that there need to be restraints on particular persons or businesses receiving preferences over and over again. However, objective criteria, which are contained in clause 2(1)(f), can be used to prevent this from happening.

Finally, in respect of the correct targets, the DP believes that there should be a ceiling on the value of tenders, because if one is capable of contracting and tendering for tenders running into tens or hundreds of millions of rands, one can hardly claim to be a struggling small or medium business.

We believe that this Bill is socially and economically desirable and is required by the Constitution. We did not agree with the conformity previously required, but although we do have some reservations, we believe, on balance, it has a good chance of achieving the desired objectives that I have outlined.

The DP will therefore be supporting the Bill, and I hope that the Minister will take care to ensure that the regulations he promulgates are realistic and workable. [Applause.]

Dr G G WOODS: Madam Speaker, the IFP will be supporting this Bill. We will be supporting this Bill, even though we, as with everyone else, do not know if it is going to produce more positive than negative results. In an essential way it is much like the situation which existed when the new labour legislation was passed in this House in 1998. Our support was something of an act of faith. Faith that once implemented, the effects of the new legislation would be monitored and that amendments would be made should it, on one hand, not achieve its desired effects and, on the other hand, cause undesired effects which become too costly. I think that recent developments on that front - on the labour front - suggest that our faith is being rewarded.

The desired effects I referred to regarding the Preferential Procurement Policy Framework Bill are, of course, those that section 217 of the Constitution intends when instructing the occurrence of the Bill. This, as alluded to by previous speakers, is a desire to effect some correction in the composition of the private-sector business space in the country, and it seeks to achieve this by offering enhanced opportunities for categories within the business sector which are today disadvantaged through the denial of opportunities in the past. If the Bill has the methods and formulae right then these desired effect are altogether possible. In addition, there could be some positive economic spin-offs through a broadening of the productive base and the stimulation of competition and job creation possibilities that comes from an enlarging, small business sector.

However, there are the possible undesired effects that this Bill could give rise to which, in the main, would arise from the interventions and manipulations that it imposes within the macroeconomy. International thinking warns us against such approaches, especially those that meddle in price mechanisms. But as we agree, we in this country, because of our special circumstances, have to take that risk.

However, what unwanted, undesirable effects could there be from this exercise, which contrives to shift business from the big and more established sector to the small and less established sector? What distortions, what disincentives and what costs would the Bill cause if has wrongly estimated critical business propensities and business behavioural tendencies? I will not go into such possibilities, but I will repeat our contention that no one can be sure what this Bill, once enacted, will or not achieve.

What might have helped our committee’s deliberations to be a little more considered and constructive would have been the availability of a lot more relevant information. The availability of information such as the sectoral and rand value breakdown of the state’s tender business, the established operating margins of industries typical to those sectors and some research indicators of small, black business activity within those sectors, would have been useful. This would have gone some way towards improving our understanding of the desirable and undesirable possibilities I have been referring to.

Regretfully, the department did not volunteer such information to support the rationale they formulated into the Bill. It seems that under the time pressures we were subjected to, no one in the committee had had the time to undertake that type of research. In a similar vein - and in retrospect - perhaps the active participation of the Department of Trade and Industry in the committee’s discussions would have been useful. They must have some relevant insights and information which might have helped us in our contemplation of the evasive future consequences of the Bill.

The absence of little besides committee members’ notional appreciations and theoretical understandings caused us to spend many hours in the realms of speculation, in particular when it came to methods and formulae upon which the preference is to be given. This, together with a reluctance of some to accept the inherent unpredictability of this type of corrective legislation, saw us spending so much of our time entertaining imaginary devils and ghosts in the Bill’s detail.

However, notwithstanding this, I would like to commend the hon Hogan and the hon Mahlangu for the purposeful way in which they drove the process forward. The process, at the end of the day - as has been said - did achieve some very useful amendments.

Using our general understandings, our instincts and our broad fear of pertinent proportions, the IFP’s sense is that the criteria for preference which the Bill provides should arrive close to the critical balance of effects which is necessary to take business away from the traditional tenderers and to give it to the targeted emerging small business sector, with minimum harm to the former and maximum gain to the latter.

But as hinted upfront, our commitment to the Constitution and what it asks us to do must go beyond the simple production of this new law by the required date of 4 February 2000. More than that, it asks us to try to achieve a particular development in the country which is important to the national interest. Given all the uncertainty about the Bill’s future effectiveness, we owe it to the Constitution to ensure that, within a realistic timeframe, the desired developments are indeed being achieved; and if not, then we owe it to the Constitution to note such failure and to amend the legislation until it does what is required of it. And here we would agree with the hon Ken Andrew.

This will require a periodic assessment of the new Act’s impact by the department. Such assessments will need to go beyond the monitoring of just the simple statistical trends which emerge from such monitoring. There will need to be an investigated dimension which exposes the devious and manipulative practices which will inevitably be attempted. The possibilities for new variations of fronting and price collusion will need to be curbed if we are to get a true picture of the Bill’s effectiveness and to make correct amendments, if necessary.

With our understanding that the Minister will adopt such an approach, we support the Bill. [Applause.]

Mr N M NENE: Madam Speaker, Deputy President of the Republic of South Africa and hon members, the Bill before us today is one of the most crucial ones in realising our goal of a better life for all. The exclusion of a section of our people from the mainstream of the economy did not happen by accident, but by discriminatory legislation which now has to be undone by putting in place mechanisms and policies that will address these imbalances.

In its preamble, the Bill provides that it will give effect to section 217(3) of the Constitution of the Republic of South Africa. This it does by, inter alia, providing a prescribed formula of allocating points when the tender process is being administered. This formula proposes that 90 points are for the price component of the tenders which are above a prescribed amount, and 10 points for the other elements, that is the local content, RDP principles, historical disadvantage, disability and so on. For contracts below the prescribed amount, 80 points are allocated for the price and 20 points for the other elements.

This goes a long way to address the concerns of a number of organisations that made submissions during our public hearings. As may be expected, the perpetrators of this ghastly situation, which the ANC-led Government seeks to address, are not too happy about it. Their argument is none other than the cost factor. In the 90/10 formula the premium, which is the cost to the state, is 11,1%, and in the 80/20 the cost is 25%; and that we feel is fair, especially in the light of the fact that Government has a responsibility to affirm the people who were deliberately and unfairly discriminated against by the apartheid system.

The proposed Bill fully recognises the cost-effectiveness factor as enshrined in the Constitution. Therefore the element of price remains the dominant factor. We believe that this Bill will enable the SMMEs to get into the mainstream of our economy. For the small contractors the 90/10 formula was really a tall order, and the 80/20 is, to some extent, quite enabling for them.

Since the Bill is only a framework, we would have recommended that the formula be in the regulations rather than in the Bill itself. The ANC fully supports this Bill and urges all nonracial parties to support the Bill in order to realise our dream of speedy delivery of a better life for all our people. We also would like to urge the architects of this unfair system to become part of the process that seeks to redress what has benefited them so much in the past. [Applause.]

Adv D P A SCHUTTE: Madam Speaker, it is a great privilege for me to take part in this debate because it is, in fact, the first debate of the new millennium in this House. I would like to briefly refer to the economic imperatives of the new millennium, because I believe they impact on this Bill.

This new millennium has started with a new world of globalisation and disappearing borders; a new world with renewed emphasis on free trade and market-related competition which has brought great prosperity to hundreds of millions of people not only in the developed world, but also in certain developing countries. We are also in a new world in which the electronic media, mass communications and effective, global transportation will, in the long term, not tolerate impediments to free trade and competition.

It has been estimated, indeed, that with the limited free trade, competition and industrialisation in the last 250 years, more prosperity has been created than in the preceding 10 000 years. Sadly, this prosperity has to a large extent bypassed Africa and it must be clear that the African renaissance which we all yearn for cannot be built on the handouts or the aid of others. Of that it has already had its fair share, without results. It cannot be built on the goodwill or the excellence of others. If there is to be an African renaissance, it will have to come about as a result of Africa’s own merit and excellence, and this cannot be achieved without exposure to free trade and competition.

I am grateful and would like to commend the Government for acknowledging the importance of globalisation, free trade and market-related competition as being essential for our economic wellbeing in the new millennium. The Government has done so by signing the Commonwealth Accord in Durban recently and through its commitment to globalisation, free trade and market- related competition. I must immediately add that I also support the reference in this commitment to greater equity for all countries in the world markets. The fact is that we have had the recent experience of demands for trade liberalisation which turned out to be nothing more than part of a very aggressive economic imperialism which has, in fact, devastated many Third World countries.

But the fact of the matter is that one cannot compete internationally if one’s economy does not promote excellence internally by promoting market- related competition. It is in this regard that I believe we should all applaud the fact that our Constitution actively promotes free trade and market-related competition and, as a result, excellence in the economic sphere. The same applies with regard to the procurement policy and system to be followed by the organs of state. Transparency, competitiveness and cost-effectiveness are specifically laid down as the governing principles as far as this is concerned in section 217(1) of the Constitution.

Of course, in this Bill we are dealing with the exception to the governing principles, namely preferential procurement, which is dealt with in section 217(2), and in particular the framework of the policy, which is dealt with in subsection (3). Having been part of the drafting of the Constitution and having supported these particular sections, I am pleased to say that the New NP will also support the legislation before us.

We support the Bill for the following three reasons: First of all, it is an exceptional instrument which can be used to heal the injustices of the past, and if it can play a role in this regard, it must be supported. Secondly, it must be an instrument which can be used to promote more equal and cost-effective competition eventually. The aim must be for this to create more and better competition in the economic sphere in future, and not less. Thirdly, in line with the Constitution, this regime should remain the exception to the governing principle, which remains market-related competition. Organs of state should have the option to implement a preferential procurement policy or not - it should not be peremptory.

We are satisfied that when clause 2(1) is read with the Constitution - and it should be interpreted with the Constitution - it will be clear that that is the only reasonable interpretation. It must be clear that in the interests of our own internal economic wellbeing and of international economic competitiveness, this legislation should not be a permanent feature of our economic landscape. We believe that there is unanimous support across party lines for this legislation to be reviewed every few years and that there should be a commitment in this regard by the Minister.

This legislation should also not be used to benefit the very big conglomerates or corporations who have already made it and who, in the words of the Minister, have progressed beyond the walking ring and are able to walk on their own, economically speaking. They could have done so with the aid and assistance of this particular legislation, but they no longer need it. They are able to stand on their own feet and be totally competitive in the marketplace without outside assistance. We also believe that there is appreciation for this, and that it should be dealt with in the regulations.

Two other matters that, in our opinion, should be dealt with in the regulations are, firstly, that this legislation should not be used to discriminate against South African concerns in order to favour foreign enterprises which had nothing to do with the past injustices or discrimination in this country. Secondly, it should also be made clear in the regulations that, in order to qualify as a tenderer, the enterprise should be in good standing with the Receiver of Revenue.

We support the power given to the Minister in this legislation to grant exemption from all or certain provisions to certain organs of state. This discretion, we believe, should be utilised to ensure that our huge public corporations, such as SAA, remain competitive globally and internally. It must be appreciated, in the final analysis, that the preferences envisaged in this Bill will, in the long term, only weaken the uncompetitive and ineffective, and further strengthen the competitive and effective enterprises.

In the end it must be regarded as the exception to the sound principles of cost-effectiveness and market-related competition enshrined in the Constitution. [Applause.]

Dr G W KOORNHOF: Madam Speaker, Mr Deputy President, hon members, the Bill before us is characterised by two features, namely the unsatisfactory process that was followed in order to put the Bill before us, and the desirability of the Bill and its intention.

Firstly, the process that this Bill followed can be summed up as crisis management. There can be no excuse for the delaying of constitutionally required legislation since 1997. Even as we discuss the Bill today, we have not yet seen a White Paper on procurement policy. In virtually all submissions to the finance committee by stakeholders during public hearings, criticism was levelled at the Government on the way it has handled this legislation.

The acceleration of Bills through Parliament and provincial legislatures may give rise to mistakes in legislation. In the past three days the Bill before us has changed from a prescriptive policy to a framework, based on two legal opinions that were obtained. This Bill may still be open to challenge in the Constitutional Court. This is totally unacceptable.

Owing to the accelerated way in which this Bill was pushed through, the finance committee could not determine what the financial implications for the state would be in rand value. We do not know, for example, what the rand value of additional premiums for the state will amount to for the coming financial year. It is now up to the Minister of Finance and provincial legislatures to budget for additional premiums for preferential procurement, only a month before the Budget is introduced in this House. The ANC Government has to take full responsibility for the unsatisfactory way in which this Bill was handled.

Secondly, I want to make a few comments on the content of the Bill. The aim of the Bill is to create empowerment legislation, and the UDM gives its full support to this aim. The danger exists, however, that this legislation will empower a few elitist persons, creating a few millionaires and leaving the majority of small entrepreneurs behind. This will leave the masses poor and unemployed. This will not promote entrepreneurial skills development, neither will it remove a major obstacle in the way of small businesses in order to compete for Government contracts. We must ensure that small, medium and micro enterprises are empowered to create jobs. At the same time we must make sure that people disadvantaged by unfair discrimination are assisted on a broad scale.

We welcome the following provisions: Participants must be in good standing with tax authorities. Secondly, there are penalties for tenderers supplying false information. Thirdly, there is flexibility for organs of state to implement their own preferential procurement policies within the parameters set by national legislation. Fourthly, there is the preference point system that will benefit small businesses, and lastly, the fact that regulations must be published for comment before promulgation.

It is a pity that there is no time limit or phase-out period in this Bill, because in a rapidly transforming society like ours, equality will be achieved somewhere in the future. I trust that Parliament and its finance committee will receive reports by the department on the implementation of this Bill and progress made with its implementation and aims.

In conclusion, the UDM believes that we must narrow the gap between the haves and the have-nots by empowering all through enterprise development. This must be achieved through empowerment, rather than entitlement. Unless opportunities are created for South Africans on a massive scale, real empowerment will never occur. The gap between the haves and the have-nots will widen, crime will flourish, social services will collapse, and people will lose hope.

The access to capital must be promoted and encouraged. The majority of our citizens do not have access to banking facilities, services, affordable loans and working capital. Steps must be initiated to make such facilities available on a broader scale so that many more potential tenderers may be brought to the fore. We fully support the empowerment legislation that seeks to benefit persons or groups disadvantaged in the past by unfair discrimination and that also seeks to benefit small businesses.

In this process, the state must get value for money. In this regard, the consumer, client and general public must be protected. This can be done by not compromising on quality, standards and delivery. The UDM supports this Bill. [Applause.]

Ms F B MARSHOFF: Chairperson, hon Minister, hon members, this Bill seeks to establish a preferential procurement system which will be binding on all organs of state, in all spheres of government and in any other identified institution. The Constitution prescribes that such a policy should be fair, equitable, transparent, competitive and cost effective. It also gives these organs and institutions leeway to decide whether or not to implement such a preferential procurement system. However, the Constitution requires that national legislation must prescribe a framework within which this policy is to be implemented. This is exactly what we are aiming to achieve in this Bill.

During the public hearings which were held at national and provincial levels, specific recommendations were made with regard to certain aspects of this Bill. Some of my colleagues have already addressed some of these issues, and others will address some of the more specific ones. Amongst the recommendations made was the need to include an exemption clause that will enable the Minister to exempt any organ of state from any or all of the provisions in this Bill.

The reasons for this clause are quite obvious. As we are all aware, there are hundreds of state organs functioning at various levels of society, each with its own specific dynamics, both at financial and managerial level. They therefore cannot all be subjected to the same criteria as envisaged in this Bill. This clause allows the Minister to grant exemptions on the following grounds: if it is in the interest of national security, if the tenderers are international suppliers, and if it is in the public’s interest.

This amendment was supported by all provinces and most of the opposition parties. During the deliberations of the joint committee, it became quite obvious that we were going to have some opposition from some of the opposition parties, especially to some of the contentious clauses in the Bill. True to form, they did not disappoint us.

Mr K M ANDREW: [Inaudible.]

Ms F B MARSHOFF: Some of them - I will respond to Mr Ken Andrew soon - especially the DP, wanted us to include a sunset clause in this Bill stating that the Bill should be subjected to a five-year review. The ANC’s argument against this inclusion was that we did not need such an inclusion, and that we did not want timeframes attached to this Bill, as all legislation is subjected to periodic review in any case.

The implementation and outcome of this procurement policy is to be closely evaluated and, when the need arises, which could be earlier than the five years recommended by the DP, some of the major aspects of the Bill might be amended. I am sure they would agree with us.

The ANC’s opposition to the recommendations made by the opposition parties was that there was no need for us to impose timeframes on this legislation. The opposition could not really explain to us why they wanted to have timeframes attached to it. We still do not know whether it is because they do not want to see economic power being transferred to persons previously denied access to the mainstream economy or whether they want to see us remaining small forever, dependent on subcontracting from the major companies which have always benefited from government procurement. At that stage, there was no need for timeframes to be attached to these procurement policies.

We have always known that the DP is a wolf in sheep’s clothing. It claims to support transformation, especially economic transformation, but when proposals are put on the table to encourage black economic empowerment, they always try to block it.

I should like to say to the hon Ken Andrew that I was quite encouraged to hear that the DP was going to support this Bill. [Interjections.] The hon member might be wrong.

Mr K M ANDREW: Would you like to join us? Ms F B MARSHOFF: No, I would not like to join the DP. [Laughter.] I would just like to say that the ANC supports the passing of this legislation through Parliament. [Applause.]

Mr L M GREEN: Mr Chairperson, hon Minister of Finance, Ministers and members, at the heart of public procurement reform is finding ways to address poverty and job creation. Governments are often called upon to lead this process. Economic activity is what is expected as an outcome of certain policy initiatives. The private sector may use some of its funds to stimulate economic activity. Governments, on the other hand, may stimulate such activity through certain works projects or the provision of certain seed capital for communities to do so.

The use of public-sector procurement as an instrument of government policy to achieve certain socioeconomic objectives can have significant outcomes with regard to its social policy goals such as promotion of equal opportunity. The use of procurement as an instrument of policy, however, has not been immune to controversy.

A point of contention raised in the committee and by many political parties was the retention of the words ``historically disadvantaged’’ in the Bill. The general argument against this provision is that it could affect the principles of equality and fairness. This concern, however, must be balanced with the reality that millions of people have been disadvantaged by discriminatory legislation in the past.

Questions have been raised regarding the legitimacy and the effectiveness of procurement as an instrument. All too often the beneficial effects of policies which are promoted through procurement have been doubtful or sometimes minimal. Even where benefits can be achieved, these must be weighed against the cost of doing so through procurement, either in terms of price, premium or a compromise on other matters such as time and quality.

There has been limited research on and a lack of data regarding most programmes to demonstrate the effectiveness of the use of procurement as an instrument of policy. The intention of this Bill is good but we must periodically monitor the outcome. What has been needed is a most effective procurement system which promotes Government’s socioeconomic objectives in a definable, quantifiable, measurable, verifiable and auditable manner within an equitable, competitive, cost-effective and transparent environment, without overtaxing the administrative capacity of Government, creating unfair competition, abusing or lowering labour standards and compromising value for money.

To meet these requirements an innovative system of procurement has been developed in South Africa. This system is known as targeted procurement, which permits social objectives to be quantified, measured, verified and audited. In other words, this system links social objective to procurement against the principles of fairness, transparency, equity, competitiveness and cost-effectiveness.

The question to be asked is whether this Bill adequately subscribes to this system and whether implementation of the legislation will in fact meet its objectives. In terms of its general application the ACDP believes that this Bill answers to the principles and values underlying the target procurement system. To what extent it can promote an equitable and fair system and develop effective growth in economic activity is not clear.

One of the major issues that needs to be addressed is that of capacity constraints, that is, a lack of competent infrastructures, especially amongst upcoming entrepreneurs, to deal with complicated tender requirements. Criticism has been voiced by a number of small business role- players, namely that the tender advice centres set up by Ntsika are not sufficiently qualified to help small businesspeople grow.

The Bill aims to assist the historically disadvantaged, but unless strong capacity initiatives and training facilities, and ongoing management systems, are incorporated to assist the sector, the development of a competent and efficient small to medium business system will suffer great economic and management pressures.

With these words, the ACDP supports this Bill, but we must also warn against dangers like entitlement, nepotism, efficiency and the threat of capacity constraints. [Time expired.]

Genl C L VILJOEN: Mnr die Voorsitter, hierdie wetsontwerp herinner my aan die WVK-wet. Daardie wet was gebaseer op ‘n mooi bewoorde kodisil in die tussentydse Grondwet van 1993. Dit was ‘n mooi duidelike grondwetlike bepaling wat terloops voorsiening gemaak het vir nasionale wetgewing om die uitvoering daarvan te omskryf.

Die WVK-wet het toe die gees van die kodisil geïgnoreer, die opdrag van die kodisil gemis en so ook die doel van die wetgewing. Vandag sit ons met gebrekkige versoening, ‘n halwe waarheid en probleme om die proses af te sluit.

Die bepalings van die artikel wat ons vandag oorweeg, naamlik artikel 217(1) van die Grondwet van 1996 is net so mooi duidelik gestel. Die verkryging van staatsorgane moet ‘n stelsel hê wat regverdig, billik, deursigtig, mededingend en kostedoeltreffend is. Dit is soos dit hoort; baie mooi woorde.

Subartikel (2) van artikel 217 is egter ‘n skuiwergat wat voorkeurtendertoekennings aan en bevoordeling van sekere persone toelaat. Dit is met enige tendersituasie altyd riskant. Die doel van die tenders is kompetisie om uitnemendheid van diens teen die laagste moontlike tarief te verseker. As tenderaars ‘n stelsel raaksien wat hom tot manipulasie leen, is daar altyd ‘n gevaar van korrupsie aan beide kante. My party glo dat die gees van artikel 217(1) nie suiwer weerspieël word in die wetgewing voor die Huis nie. Om in klousule 2 van hierdie wetsontwerp byvoorbeeld spesifiek aan te dui dat histories benadeeldes die voordeel van voorkeurtoekenning van tenders moet kry, is myns insiens onnodig, maar dit is veral onbillik. Al word die woord ``mag’’ gebruik, wat die deur vir ander op ‘n skrefie ooplaat, gee hierdie woord ‘n politieke angel aan die wetsontwerp wat my ondersteuners verder sal vervreem.

Kom ons neem die wit jong man wat in April 1994 16 jaar oud was, nog nooit gestem het en ook nie die vorige bewind gesteun het nie. Vanweë sy velkleur word hy nou deur hierdie wetsontwerp deel van ‘n nuwe kategorie benadeeldes. Binne jare mag hy ‘n tenderaar wil word, maar as gevolg van hierdie wetsontwerp mag hy nie op ‘n gelyke voet met sy swart technikon- of universiteitsvriend meeding nie. Dit is moderne rassisme, onbillik en nie in die gees van artikel 217(1) van die Grondwet nie. (Translation of Afrikaans paragraphs follows.)

[Gen C L VILJOEN: Mr Chairperson, this Bill reminds me of the TRC Act. That Act was based on a well-phrased codicil in the interim Constitution of

1. It was a very clear constitutional provision which, incidentally, provided for national legislation to define the enactment thereof.

The TRC Act then ignored the spirit of this codicil, missed the terms of reference of the codicil as well as the object of the legislation. Today we have poor reconciliation, half truths and problems in concluding the process.

The provisions of the section we are dealing with today, that is, section 217(1) of the Constitution of 1996, are just as clearly phrased. Procurement by organs of state should involve a system which is fair, equitable, transparent, competitive and cost-effective. That is how it should be; very fine-sounding words.

However, section 217(2) constitutes a loophole allowing benefits and preferential tender allocations in respect of certain persons. There is always a risk involved in any tender situation. The object of tenders is competition in order to ensure excellent service at the lowest possible tariff. If tenderers detect a system that lends itself to manipulation, there is always the danger of corruption on both sides.

My party believes that the spirit of section 217(1) is not clearly reflected in the legislation before the House. For example, to provide specifically in clause 2 of this Bill that previously disadvantaged persons should receive preference in the allocation of tenders is, in my view, unnecessary, and specifically unfair. Although the word ``may’’ provides an outside chance for others, it also gives a political sting to the Bill, which will alienate my supporters even further.

Let us take, for example, the young white man who was 16 years old in April 1994, never voted before and did not support the previous regime either. Because of the colour of his skin, he now becomes part of a new category of disadvantaged persons as a result of this Bill. In a few years’ time he may want to submit a tender, but because of this Bill he is not allowed to compete on an equal basis with his black technikon or university friend. That is modern racism, it is unfair and it is not in line with the spirit of section 217(1) of the Constitution.]

This argument emphasises the need for a sunset clause, which was refused in the portfolio committee. The legislation is therefore a blank cheque to the majority for legal discrimination and renewed job reservation for an indefinite period. I am not against the constitutional provision for a system to help those who have suffered from unfair discrimination. One can sincerely hope that this legislation will enhance the creation and development of a black entrepreneurial corps in our country. What I do warn about is the repetition of the same mistake of racial discrimination, causing new categories of disadvantaged young people, and I do object to the open-ended character of the remedial legislation.

On more than one occasion in the House, my party has pleaded for the identification, empowerment and development of the country’s human potential in the field of entrepreneurs. This legislation will no doubt assist black entrepreneurs and we are very happy about this. But it is a heavy blow to the other entrepreneurs from other groups and my own supporters. The overriding requirements of job creation for the masses are dependent on entrepreneurs. My forecast is that this legislation will influence many able professional South African youths to hunt for opportunities abroad.

In conclusion, may I warn that this kind of legislation is gradually adding to the totalitarian power of the majority party, and it will be a negative incentive to the tradition of excellence that we so badly need for greater efficiency in performance. We oppose the Bill on behalf of the newly created disadvantaged group of young people.

Mr G E BALOI: Mr Chairperson, the Preferential Procurement Policy Framework Bill aims to be the national legislation that will provide for a framework in terms of which preferential policy as contemplated in section 217(2) of the Constitution of South Africa is to be implemented by organs of state in all three spheres of government. The Constitution does not forbid the organs of state from implementing the preferential system. However, section 217(2) does not put an obligation on an organ of state to have a preferential system. This poses a tricky problem in trying to come up with a policy of this nature.

According to the WTO Ministerial Conference held in Singapore in December 1996, trade Ministers agreed to establish a working group to conduct a study on transparency in government procurement practices, taking into account national policies and based on a study of the development element for inclusion in an appropriate agreement. One has to look at the factors in the WTO agreement on government procurement that would pose problems in the implementation of this Bill.

Looking at the conditions of the agreement, implementation of this legislation, if South Africa was to sign the agreement, could become very difficult. This is because, according to the preferential procurement policy, any invitation to submit a tender contemplated in subsection (1) must clearly define the persons or categories of persons disadvantaged by unfair discrimination to be protected and advanced.

Clearly, subsections 2(a) and 2(b) of section 217 of the Constitution indicate that preference will be given to local-based business concerns and service providers. This is inconsistent with the World Trade Organisation’s agreement on government procurement. However, Article 5 of the agreement spells out the special treatment that developing countries, such as our beloved South Africa, will be afforded.

The state law advisers are of the opinion that the Bill must be dealt with in accordance with the procedure established by section 76(1) of the Constitution of the Republic of South Africa. The UCDP supports the Bill accordingly.

Dr S E PHEKO: Mr Chairman, the PAC welcomes the Preferential Procurement Policy Framework Bill. It is in accord with section 217(1) of the Constitution which, inter alia, reads:

When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost- effective.

As South Africa is passing through a developmental stage, state intervention in the economy is essential in order to redress the inequalities of the past which were caused by deliberate injustices. The Preferential Procurement Policy Framework Bill is therefore a welcome instrument in the process of creating a just society and an economy that serves all. It will take a long time and deliberate policy to achieve a position of parity. It is important that we remain vigilant in the application of the provisions of this new Act.

Ignoring the interests and aspirations of those that were discriminated against in the past, and therefore economically oppressed, would mean ignoring the whole purpose of the struggle that ushered in the present political order. However, there is another reason why these aspirations should not be ignored. If the victims of apartheid disempowerment are not brought into the mainstream economy, their resentment will build up to such an extent that we would find ourselves sitting on a time bomb. It is therefore in the interests of everyone that we view the empowerment of the categories of people identified by the Constitution for preferential treatment as being in the interests of the rest of the country.

Although the enactment of this instrument has been prescribed by the Constitution, we cannot take for granted that its provisions will be applied justly without political interference. We have observed that benefits were unjustly awarded in the past. This happened in relation to both the tendering for and the allocation of state jobs. One does not have to look too far to realise that such possibilities have already been created by the Bill. This Bill states that the contract must be awarded to the tenderer who scores the highest points. This is fair if the principles of transparency are going to be applied. The Bill, however, goes on to say: `` … unless objective criteria … justify the award to another tenderer’’. This is where abuse becomes a possibility. For example, reasons may be contrived to favour a tenderer preferred by the ruling party.

We urge the present Minister, and any future Minister, to take care that ministerial regulations prevent such possible abuse. The PAC urges that the ``sound reasons’’, envisaged in the Bill, be clearly spelt out in the awarding documents. In that way we can avoid any possible abuse that would replace the racial discrimination of the past with political discrimination.

The permanent political stability of this country depends very much on the social and economic emancipation of those who were dispossessed through colonialism, apartheid and racism, and who continue to get a raw deal economically, in this country, even at this moment in time.

The CHAIRPERSON OF COMMITTEES: Order! Hon members, the next speaker, that is the hon Mr M Lekgoro, will be making his maiden speech. [Applause.]

Mr M M S LEKGORO: Chairperson and members, after everything has been said and done, the bigger picture remains - the socioeconomic realities of our country are characterised by the legacy of colonial apartheid. The bulk of the wealth of the country is owned by established white conglomerates and white medium-sized corporations. This economic order is the outcome of apartheid policies designed to benefit white males.

The dawn of democracy and the ascendance of the ANC to power constitute, amongst other things, a declaration of confidence in the policies of the ANC to address the economic needs of the poor and the historically marginalised. We cannot claim to have achieved this until we have evened out the spread of our national wealth among all national groups and affirmed black people, women and the disabled in the economic sphere.

The wrongs of our economic order will not rectify themselves nor will they be rectified by the market forces as others would like to believe. We need to take proactive steps to turn around the fundamentals of the economy in order to benefit the weak and the marginalised. We ought to feel offended and undermined when black people in general, and Africans in particular, continue to experience deprivation and impoverishment on the one hand, whilst the white phenotypes continue to be richer and richer on the other hand. We ought to feel insulted when black small and medium enterprises fail to make it to the mainstream of the economy due to structural and traditional impediments.

The introduction of the preferential procurement policy framework is a step in the right direction. This policy framework unlocks possibilities and potentials for small and medium enterprises of historically disadvantaged people to be awarded Government tenders.

During the hearings different black organisations complained that they were refused tenders because certain established white enterprises were traditionally recognised and seen as efficient. This happened even in situations where the emerging small enterprises could prove that they could provide the product at a lower cost. It also emerged from these hearings that certain officials, especially white officials, distrusted emerging black enterprises and were hooked on the mentality that white was better. This Bill gets to the bottom of that problem. It compels those responsible for awarding tenders to favourably consider persons and categories of persons who have been historically disadvantaged by unfair discrimination.

We deliberately chose to use the term ``historically disadvantaged’’ in the Bill to ensure that there would be no ambiguity about the intentions of the Bill. The purpose of this Bill is to address the imbalances of the past and the legacies that these have left. The Bill in front of us also raises sharply the issue of the empowerment of black and white women and the disabled in the economic sphere. This is because we believe that any affirmation or empowerment programme that falls short of economic empowerment is meaningless.

The empowerment of the historically disadvantaged, particularly blacks, is not a matter on which we need to reach consensus. It is an obvious and glaring need that calls on all of the South African nation to join forces. Political parties should be at the centre of this effort. It is actually disappointing and shameful to hear a leader of a national political party represented here saying that they object to or abstain from an effort to enhance the economic state of the historically disadvantaged.

It is time for the opposition parties, especially those that object to the Bill, to awaken to the fact that the total freedom of the people they purport to represent is intrinsically linked to the economic freedom of the black people and Africans in particular. The economic freedom of black people is fundamental to the sustainability of our democracy and the freedom of generations to come.

It is naive to believe that an emphasis on the expression ``historically disadvantaged’’ means the exclusion of others. The fact of the matter is that the historically disadvantaged have been excluded for many decades past. The aim of this Bill is to include them and bring them into the mainstream of the economy.

This Bill also gives muscle to the Reconstruction and Development Programme. It creates an environment for the implementation of the objectives and principles of the RDP in the economic sector. These objectives will be enhanced by the Bill in that it demands that the awarding of Government tenders should not be based on price only. The Bill requires that organisations competing for tenders should also demonstrate their will and capacity to carry out the principles of the RDP. In this way, these organisations will be compelled to create jobs for the unemployed and valuable and sustainable human resource development programmes for those that they employ.

With these few words, we support the Bill. [Applause.]

Dr L LUYT: Chairperson, hon members, the FA supported this Bill at the finance committee deliberations. However, it was not unqualified support. We, together with other parties, voiced our concern about the inclusion of the wording historically disadvantaged''. Wording has the habit of outliving its usefulness and objectives. The fact that in section 2(1)(d) the wordmay’’ is carefully couched not to offend the Constitution does not take away the general implication of this Bill.

This is an empowerment Bill and must be treated as such. One has to be mindful, though, of its general effects. Will this proposed legislation create people who will forever have to be sustained through some kind of subsidy? Do economics and self- respect not also dictate that this type of legislation should surely be of limited duration? The FA therefore finds it strange and rather unsettling that the ANC would not give consideration to a sunset clause or the revisiting of this Bill after a certain period has expired. It was a very small concession we sought, and it would have sent out the right signals and messages to would-be foreign investors.

To subsidise takes money, and money is obtained from one source only - taxes. Hon Minister, taxes! Here we are going to have a wonderful analogy with Voltaire’s maxim: To take away as much money as possible from one class of citizens to give to the other. Nobody can and will deny that people were disadvantaged because of colour. These unfair practices were carried over to other parts of society as well, but the main sufferers were the people of colour, and this must be rectified.

We have already seen what unemployment can do to an economy. In fact, the ravaging results are still there for everybody to see. To attack unemployment and create an environment where school-leavers can also be accomodated, South Africa has to grow. To achieve growth we certainly cannot afford the luxury of subsidies for ever and a day - and this is what the Bill entails, that is, a form of subsidy.

I do not know of any firms where the black component is not by far the greater part of the workforce. Unless this proposed legislation is applied skilfully - and I think it will be, I have that faith in the Minister - a lot of people will be disadvantaged even further. A sunset clause or review situation would have served to make people realise that they have to come up to standard in a certain time and create a society of equals, and not exchange one unequal society for another. A bad law is the worst form of tyranny.

South Africa wants to be a world player in the international business community. This is a community which does not protect the weak and the ineffective. This is a community that does not take prisoners. Our competitiveness will be tested again and again, and the only way to withstand this ruthless onslaught will be through productivity. Productivity can only be achieved by competitive means. We simply have to facilitate productivity somewhere on the wider economic horizon. As I have said already, I want to warn again about the sustainability of this legislation which the country will, in the long run, not be able to afford. Would it not be wonderful if the ruling party aligned itself with the period for this proposed Bill to run and then to phase it out? Everybody would then take note that South Africa indeed intended to remain number one in Africa. As a nation, we can do this in an equal and unbiased society.

The FA supports this Bill. [Applause.]

Miss S RAJBALLY: Mr Chairperson, Deputy President, hon Ministers and members, the birth of a new political dispensation has placed specific expectations on the new South African Government. Among these are the development of our health care services, housing, education and job- creation facilities. These areas of priorities, which I have just mentioned, are competing for scarce resources which, unfortunately, puts a strain on our economic development.

The Preferential Procurement Policy Framework Bill commits Government tenders to promote small, medium and micro businesses. It is compulsory that the Government creates economic opportunities for the historically disadvantaged to empower themselves. Small and medium businesses are facilitated to bid for multimillion rand contracts. The survival of small businesses is absolutely necessary to continuously generate job creation and economic growth.

A compulsory preferential procurement policy ensures that organised market intelligence increases bargaining power through large purchases, simpler management and control over the quality of products and uniformity in the awarding of contracts to tenderers. The new political dispensation will not work unless it strategises a successful economic model or system.

Economically, South Africa has comparative advantages such as good infrastructure, abundant mineral resources, important trade routes, a beautiful climate, gold for bilateral trade swaps, sophisticated financial services, the ability to handle large projects, proximity to its markets and medical skills.

It is the medium to small business and informal sectors that will produce the bulk of employment. For the employment opportunities to manifest themselves, a symbiotic relationship between the big enterprise and the small enterprise must be established. The big business must subcontract smaller activities to the smaller businesses.

The best way to kick-start the preferential procurement policy is to embark on a massive housing programme using the small contractors. After all, people will not use the underlying moral fibre as the only criterion to judge the political system, but also how much extra money it delivers into their pockets.

The MF supports the Preferential Procurement Policy Framework Bill. [Applause.]

Mr C AUCAMP: Mr Chairperson, hon members, may I use this opportunity, during the first sitting of this House in the new year, to wish all hon members a prosperous, healthy and productive year 2000.

With regard to the present debate, I must inform hon members that lately I have spent the bulk of my time trying to save South Africa from the equity Bill and, as a result, my remarks on the Preferential Procurement Policy Framework Bill must be regarded as prima facie, on first sight, and are subject to correction, should more facts come to my attention.

In evaluating this Bill the point of departure must be the requirements of the Constitution. The obligation placed on the state, in its business of contracting for goods and services, is stipulated in section 217(1) of the Constitution. The key words are fair, equitable, transparent, competitive and cost effective.

Although section 217(2) allows for the implementation of a procurement policy, such a policy must still meet the requirements of section 217(1). This is clearly indicated by the must'' in subsection (1) and the omission ofmust’’ in subsection (2). Having applied this test to the present Bill, I am afraid that the proposed procurement policy will not pass.

By die eerste oogopslag klink dit nie te erg nie. ‘n Gewigstoekenning van 90/10 aan die nie-ekonomiese deel van ‘n staatstender klink heel matig. In die meeste gevalle skakel dit instansies wat laag op die punteskaal van regstellende optrede lê prakties egter heeltemal uit. In die reël is die winsmarge op verskaffing aan groot instansies soos die staat baie klein, en sal die 10%-penalisering baie tenderaars heeltemal uit die bus haal. Daar is eenvoudig net nie genoeg beweegruimte in die netto winssyfer in besigheid om die 10%, of ‘n groot deel daarvan, goed te maak nie.

Die gewigstoekenning van 80/20 in die geval van kleiner besighede sal ‘n sekere sektor van die besigheidsmark nog meer nadelig raak. Hier dink ek veral aan besighede wat heeltemal afhanklik is van die besigheid van ‘n plaaslike owerheid. In menige gevalle is koste aangegaan, infrastruktuur opgerig, addisionele personeel in diens geneem en ander offers gebring, juis om die tender van ‘n plaaslike owerheid te kan bedien. Die verlies aan besigheid wat die implementering van hierdie wetsontwerp gaan meebring, kan inderdaad hierdie besighede so nadelig tref dat besigheid gestaak sal moet word. Ek kan dink aan definitiewe voorbeelde in die dorp waarvan ek afkomstig is.

Verder is daar vir my ‘n teenstrydigheid geleë in die feit dat die arbeidswetgewing tereg erken dat kleiner besighede eenvoudig nie oor die middele beskik om regstellende optrede voluit toe te pas nie, en hulle dus van die verpligtings onder daardie wet vrygestel word, net sodat hulle deur hierdie wetgewing op ‘n ander wyse met die langsambok bygekom kan word.

In die lig hiervan kan ek nie sien hoe hierdie wetsontwerp die toets van regverdigheid kan slaag nie, terwyl die beginsel van mededingendheid ook in die slag bly. Hierdie wetsontwerp kan enorme implikasies hê op die staat en daardeur ook op die belastingbetaler. Dit spel die memorandum by die wetsontwerp ook uit as ‘n bykomende premie van tot 25%.

Die wese van hierdie wetsontwerp is dat die belastingbetaler ‘n aansienlike las moet dra om sekere tenderaars te subsidieer. Ek is oortuig daarvan dat indien dieselfde geld gebruik sou word om regoor die linie selfs net by agtergeblewenes ontwikkeling te laat plaasvind, veel beter resultate behaal sou word. Verder merk ek op dat daar geen voorsiening in die wetsontwerp gemaak word vir die geleidelike uitfasering van hierdie voorkeurbeleid nie. Daar is geen sogenaamde ``sunset’‘-klousule nie.

Die AEB se beleid is dat kunsmatige ingrype in die vrye ekonomie nadelig is vir al Suid-Afrika se mense. Laat ons konsentreer op die basiese beginsels van kostedoeltreffendheid, mededinging en meriete. Ons kan veel eerder deur positiewe programme van ontwikkeling die agtergeblewe besighede in staat stel om mededingend te raak as om hulle met die kruk van bevoordeling teenoor staatstenders afhanklik van uitsonderingsmaatreëls te hou. Ons moet groei stimuleer, misdaad bekamp, Suid-Afrika ‘n aantreklike beleggingsveld vir oorsese beleggers maak, en sodanige besighede sal op vaste grondslag veel sterker ontwikkel as deur partikuliere sporadiese bevoordeling.

Ek ontken nie dat daar in die verlede onregmatige benadeling was nie, maar die beginsel van ``two wrongs don’t make a right’’ staan vas. Ons kan nie ontwikkeling steun wat gebou word op die benadeling van en diskriminasie teen ‘n groot deel van die entrepreneurs in Suid-Afrika nie. Die AEB kan hierdie wetsontwerp ongelukkig, ten spyte van die goeie bedoelings, nie in hierdie stadium steun nie. (Translation of Afrikaans paragraphs follows.)

[At first glance it does not sound too bad. A points allocation of 90/10 to the non-economic part of a state tender sounds quite moderate. However, in practice this means that in most cases this totally eliminates those organisations which are low down on the points scale of affirmative action. Generally, the profit margins on supplying to large organisations such as the state are very small and the 10% penalty will eliminate many tenderers entirely. There is simply not enough room to manoeuvre in the net profit figure of business to make good the 10% or a significant part of it.

The points allocation of 80/20 in the case of smaller businesses will have a more disadvantageous effect on a certain sector of the business market. Here I am thinking especially of businesses which are totally dependent on the business of a local authority. In innumerable cases costs were incurred, infrastructures put into place, additional staff employed and other sacrifices made, precisely to be able to serve the tender of a local authority. The loss of business, which the implementation of this Bill will bring about, can indeed have such a detrimental effect on these businesses that they have to close down. I can think of definitive examples in my home town.

Furthermore, in my opinion, there is an inconsistency in the fact that the labour legislation rightly acknowledges that smaller businesses simply do not have the resources at their disposal to apply affirmative action fully, and exempts them from the obligations under that Act, just so that they can be punished by this legislation in a different way.

In view of this I cannot see how this Bill can pass the test of fairness, while the principle of competitiveness will also fall by the wayside. This Bill can have enormous implications for the state and hence also for the taxpayer. The memorandum on the Bill also spells this out as an additional premium of up to 25%.

The essence of this Bill is that the taxpayer will have to carry a substantial burden in order to subsidise certain tenderers. I am convinced that if the same amount of money were to be used across the board to develop only the disadvantaged, much better results would be achieved. I further observe that no provision is being made in the Bill for the gradual phasing out of this preferential policy. There is no so-called sunset clause.

The policy of the AEB is that artificial intervention in the free economy will be to the detriment of all South Africa’s people. Let us concentrate on the basic principles of cost-effectiveness, competition and merit. We could much rather, by way of positive programmes of development, enable the disadvantaged businesses to become competitive rather than keeping them dependent on exemption measures with the crutch of an advantage in respect of state tenders. We should stimulate growth, combat crime, make South Africa an attractive investment field for overseas investors, and such businesses will develop far more strongly on sound foundations than through special sporadic preferential treatment.

I am not denying that there was wrongful prejudice in the past, but the principle of two wrongs don’t make a right, remains true. We cannot support development built on the prejudicing of and discrimination against a large number of the entrepreneurs in South Africa. Unfortunately the AEB cannot support this Bill at this stage, despite the good intentions.]

Mr M RAMGOBIN: Mr Chairperson, members of Parliament, ladies and gentlemen, this Bill, which is the fulfilment of a constitutional requirement, is, in my view, rooted in the first declaration in the preamble to our Constitution, which declares: ``We, the people of South Africa, recognise the injustices of our past.’’ This is the key opening remark in our Constitution.

For us, the ruling party, this piece of legislation, among others, is an additional instrument to ensure that millions of blacks are no longer going to be prevented from becoming entrepreneurs, although it starts by reinforcing SMMEs. A major aspect of the injustices was the fact that the majority of South African blacks were prevented by law from gaining access to finance, skills and resources. This prevented personal fulfilment and employment opportunities which denied them self-reliance and, rather shamefully, even self-respect.

Even though in the processes leading up to legislation it was in some ways reassuring that most parties supported the general thrust and principles inherent in the Bill, it is important for us as parliamentarians, and the people of South Africa generally, to take note of the DP’s disquiet with regard to certain fundamental aspects of it and, during this debate, of certain aspects as propounded by the different parties.

The dishonest refrain of the DP which seeks to invoke the equality clause and presenting its case as if this Bill will be in conflict with such clause is, indeed, resistance to transformation. I am more than confident that if the DP had its way, it would not allow the spirit of our Constitution to be implemented. How else must we interpret the dishonest refrain of ``equality amongst all South Africans’’? [Interjections.] How else must we react when those South Africans who are relatively rich, well trained, well resourced, well housed, less diseased and adequately bankrolled are, by definition of apartheid, white? [Interjections.] These South Africans will have to share.

Mr I O DAVIDSON: You are a racist, man!

Mr M RAMGOBIN: I repeat - I refer this to Mr White Man - these South Africans will have to share. [Interjections.] They will have to be prepared to help underwrite the progress and upliftment of the poorest of the poor, and of blacks generally, if they are serious about peace - and I repeat - if they are serious about peace, the absence of crime and corruption, nation-building and reconciliation. Let them pursue their path at their own peril! [Interjections.]

Of course, this Bill is designed to give further meat to affirmative action, and we in the ANC do not and will not make any bones about it. This kind of affirmative action on the basis of social justice creates the scope for harmonious relationships. On behalf of South Africa as a whole, this is our guiding principle, and Parliament, as a guiding institution under the leadership of the ANC, will not pander to the self-serving interests of the DP and its supporters, nor to the opposition of the FF. [Interjections.]

The DP also wanted a review period, a cut-off time and a stipulation in the Bill that after a stipulated period …

Mr T S YENGENI: Mr Chairperson, on a point of order: I noted a member of the DP in the opposite benches who shouted: ``You are a racist!’’ I want you to rule on whether it is parliamentary for an hon member to refer to another hon member as a racist.

The CHAIRPERSON OF COMMITTEES: Order! Hon members, it is unparliamentary to call other members racists. Please, let us resist calling each other racists. [Interjections.]

I did not see the member, but I would like to know who it was. I appeal to him to withdraw that remark. [Interjections.]

Mr I O DAVIDSON: Mr Chairman, I did actually say he was a racist, because he specifically turned to us and called us whites. I thought race did not enter into this! [Interjections.]

The CHAIRPERSON OF COMMITTEES: Hon member, all I am asking is that if you said it, could you please withdraw it as it is unparliamentary.

Mr I O DAVIDSON: Mr Chairman, I withdraw it. [Interjections.]

Mr M RAMGOBIN: Mr Chairperson, the DP also wanted a review period, a cut- off time and a stipulation in the Bill that after a stipulated period this preferential period, with regard to historically disadvantaged people, will lapse or be reviewed. We in the ANC rejected this because we remain unimpressed by such selfish, racial arguments. Such positions completely ignore the existence of two competing socioeconomic systems within one geographic state. [Interjections.] These systems were put into place by the design … [Interjections.]

The CHAIRPERSON OF COMMITTEES: Order!

Mr K M ANDREW: Chairperson, on a point of order: If it is unparliamentary, as it is, to call somebody a racist, surely to allege that a political party and in particular individuals in a political party are using racial arguments, is exactly the same thing, just put in a different form. [Interjections.] I am asking for your ruling on the matter. I am not asking for the honourable crew on the far side to scream. If the hon member talks about racial arguments, then surely the people using racial arguments are by implication racist.

The CHAIRPERSON OF COMMITTEES: Order! The way I heard it, the hon member is using that from the argument of the debate. He is not actually pointing to that as a racist issue but debating the issue which has been raised on the subject. Carry on, hon member.

Mr M RAMGOBIN: Mr Chairperson, I would like to help Parliament here and I do not make any apology that my input in this case has racial connotations. It does and I appeal to the members to listen to my argument. [Interjections.]

The CHAIRPERSON OF COMMITTEES: Order! Hon member, let us give Mr Ramgobin a chance, please.

Mr M RAMGOBIN: Such positions completely ignore the existence of two … [Interjections.] Please, I appeal to Ken to listen if he does not mind.

The CHAIRPERSON OF COMMITTEES: Order! You are protected Mr Ramgobin. [Interjections.] Order! Hon members, let us conduct ourselves as hon members. Carry on, hon member.

Mr M RAMGOBIN: Mr Chairperson, I would like to put on record here the exhaustion of my time.

The CHAIRPERSON OF COMMITTEES: Order! You are protected. Carry on.

Mr M RAMGOBIN: Thank you. It is my belief that such positions completely ignore the existence of two competing socioeconomic systems within one geographic state. These systems were put into place by the design of fellow South Africans who remain well trained, well resourced, well housed, less diseased and adequately bankrolled.

If the implementation of a procurement policy within a prescribed framework, uniform in its application and nationally determined for all the organs of state as described in the Bill, is interpreted to be imposition for the inclusion of historically disadvantaged people, then so be it. The ANC in turn will ensure that there will be an unspecified period of time in which to determine both the pattern and the pace to promote and advance the achievement of equality with all the rights and obligations inherent in it.

At this stage, I would like to address the issue to the Minister that perhaps there is a historical precedent for the nonspecification of a time limit. In the reconstruction of East Germany, as early as 1990, the West Germans, over and above spending US $500 billion, prescribed for an indefinite period - to the best of my knowledge and I stand to be corrected

• a 7,5% solidarity tax to reconstruct East Germany.

To contest the definition of historically disadvantaged people by unfair discrimination as being primarily and essentially indigenous African people is indeed for me a contestation and a denial of the first declaration made by the people of South Africa in the preamble to our Constitution. I would like to urge those leaders who are in this Parliament and who happen to be not black and in opposition, to revisit this intellectual political aberration in their way of thinking.

In conclusion, I would like the Ministry to take into account the possibilities of subcontracting. But before the concluding remarks on subcontracting, I want to make one plea - one plea as a fellow South African to other South Africans but in this case directed essentially to the DP and to those of our South Africans who oppose this Bill. [Interjections.] I said the DP and those who oppose the Bill.

The CHAIRPERSON OF COMMITTEES: Order!

An HON MEMBER: You have just undercut your own argument.

The CHAIRPERSON OF COMMITTEES: Order! Hon member, I appealed for order, please.

Mr M RAMGOBIN: It would be morally and legally good if the DP could do some research in the future and present to Parliament all those entities and individuals who will possibly be in breach of this piece of legislation by means of fronting and other untrue declarations. This would be a good fight from the DP’s side, and I commit the ANC to engage in that fight with the DP if it can identify and bring to Parliament and to the notice of the police or the department, all those people, entities or individuals, who will be in breach of this piece of legislation. [Applause.]

Mr M A MANGENA: Mr Chairperson, we may have a democratic Constitution and may enact many laws to promote and enforce equality and democracy in our country, but if we are not able to effectively tackle the gross economic inequalities among the races, we are not likely to get very far.

The most dangerous threat to democracy and a good social order in this country is the widespread abject poverty among the majority of blacks and the obvious affluence among the minority white sections of our society. Such a setup is unsustainable, as events in Malaysia and elsewhere indicate.

The Preferential Procurement Policy Framework Bill, now before this House, provides the state with a potentially powerful tool to democratise the economic activity and wealth ownership in our country. It obliges all state organs, from municipalities right up to national Government institutions and Parliament itself, to award tenders in a way that favours those sections of our population that have been oppressed, discriminated against, shackled hand-and-foot and deliberately impoverished over several centuries

• not several years, but several centuries.

This will ensure, in a deliberate and measurable way, that a sizeable portion of the more than R50 billion in tenders that emanates from the state every year goes towards those who have been denied the opportunity to participate in the economy of this land.

An important characteristic of this Preferential Procurement Policy Framework Bill is that it has no element of hand-outs. It seeks to help those who take initiatives to engage in tangible economic activities, particularly in those areas of our country that need development. Thus, in addition to the job creation potential, that activity could uplift economically depressed sectors or areas in our country.

Obviously this Bill enjoys our wholehearted support. We would, however, urge that monitoring mechanisms be strengthened through the relevant regulations to ensure that the implementation of this Bill remains in our focus all the time. We should know, quite publicly, year in and year out, what percentage of tenders goes where and whether or not the objectives of the Bill are being achieved. This will also enable us to assess whether the 90/10 or 80/20 formulae are realistic or not. If the formulas do not work we should not hesitate to amend the legislation so that our society could be propelled in the direction of greater equality and therefore deeper democracy.

The monitoring mechanisms will also enable this Parliament, in its oversight functions, to assess whether the different state organs apply the legislation with the necessary diligence, rigour and fairness.

Although the Preferential Procurement Policy Framework Bill is only two pages long, it is a lot weightier than the other three lengthier constitutional Bills still coming. Access by the majority of the people to the resources of their country is a crucial element of their citizenship, democracy and justice.

Mr G A J GROBLER: Mr Chairperson, before I get to my speech, just for Mr Ramgobin’s attention, if he had listened to the hon Ken Andrew’s speech he would realise that he has already said that we support the Bill.

Before I get to some positive or negative aspects of the Bill before us, I would like to share some observations with this House. As a fairly recent arrival to Parliament, I was generally surprised to see that the Bill before us took nearly three years to be tabled before Parliament, and according to all the relevant facts that I could lay my hands on, this Bill should have been before Parliament in 1997. Only at the end of last year, at very short notice, discussions started and at our last committee meeting on 8 January 2000, fundamental changes were made, after the DP had insisted in previous discussions on legal opinion being sought in regard to the constitutionality of certain clauses.

At the end of a parliamentary session in 1999, it was decided that the joint committee members had to come to Cape Town on 15 December 1999, from all over South Africa at great cost to the taxpayer, only to discover that some provinces had not managed to finalise any public hearings as was expected of them. Fortunately most provinces did manage to do their homework.

The Constitution requires this legislation to be on the Statute Book before 4 February 2000. The DP respects the Constitution of the country and we acknowledge the fact that the Bill must be finalised before the stipulated time. And we also acknowledge the positive aspects of the Bill, and I mention the following. Section 2(1)(e) stipulates that any specific goal for which points may be awarded, must be clearly specified in the invitation to submit a tender, and a further clause that we are at ease with is clause 2(2), which stipulates that any goals contemplated in subsection 1(e) must be measurable, quantifiable and monitored for compliance.

As we all know, the worldwide, acceptable principles of good governance of an organ of state must be measured on the basic principles which can be easily defined in a word ``tape’’, that is transparency, accountability, participation and equality. These are vital ingredients in a democratic society, for which the DP has stood over the years as a party. Fortunately, the DP did not have to change by way of adding new names to our party or making changes in our policy to try to survive in the South African political arena. [Interjections.]

The DP hope that the Minister and the role-players in the various state organs will, in the regulations for tenders, make ample provision for all goals as envisaged in the Bill before us. Although all measurable goals are not specifically specified in the Bill, this could not be detrimental to the obtainable aims of the Bill.

Another positive element is the fact that the regulations must be published for public comments in the Gazette and also in every provincial gazette before promulgation. Hopefully enough time will be made available for public comment, and we in the DP think that this is vital as far as the participation of the people of South Africa is concerned. Certain groups before the committee made very harsh and sometimes not so friendly comments regarding the time allocated for comments, and hopefully these groups will have ample time for comments in the future.

There are quite a number of shortcomings in this Bill, as already mentioned by my colleague Mr Ken Andrew. One other negative element in the Bill before us is that the cut-off values of tenders qualifying for a maximum of 10 or 20 additional points are not stipulated in the Bill. But these values will be included in the regulations stipulating the various goals set out in the tender documents.

As mentioned earlier, the DP is aware of the stipulations in Section 217 of the Constitution on procurement, and, although the DP is not 100% in accordance with certain aspects of the Preferential Procurement Policy Framework Bill proposed, Mr Ramgobin should note that we will support it. [Applause.]

Mr A J FEINSTEIN: Chairperson, hon Minister and Deputy Minister, I will attempt at the end of this long debate to be as brief as the Bill itself is on paper. However, the Bill’s brevity in no way reflects on its importance which, as we have heard during this debate, is substantial.

I want to touch very briefly on only two issues. The first is that a certain amount of confusion crept into both the discussions in the committee and in this debate with respect to the matter of flexibility. A number of parties, including the DP, have criticised the Bill for treating all organs of state in a similar vein. Clearly, the Bill does not do this. The complex definition of organ of state reflects this. Additionally, the Bill gives certain constrained discretion to the Minister for exactly the purpose of ensuring a degree of flexibility. Therefore stating that the Bill remains too inflexible while rejecting greater flexibility applied through the office of the Minister seems to me illogical.

The second area I wish to touch on is the criticisms that have been levelled at the use of the word historically'' in the context of disadvantaged and the issue of the sunset clause. The ANC component of the committee inserted the wordhistorically’’ to make it clear that this Bill refers to those who were disadvantaged by the system of apartheid in all its manifestations.

Additionally, we do not accept the view that this Bill is a form of racial discrimination to the disadvantage of young white males, because the reality of life in South Africa today is that to be born white is still overwhelmingly to have access to material comfort and security, and good educational, cultural and employment opportunities that the vast majority of black South Africans still do not have. [Interjections.]

What young white South Africans do have to deal with is greater competition in the workplace than was the case in the days of job reservation and job exclusion. However, this competition quite clearly is no material disadvantage, as witnessed by the reality that unemployment amongst white males under the age of 40 is around 4%, whilst for African males it is over 40%. [Interjections.] For similar reasons, we in the ANC rejected the proposal of a sunset clause, because it is impossible for anyone in this House or outside it to determine at what point in time the effects of unfair discrimination will have been ameliorated.

An important example for us to consider in this regard is that of the state of California in the USA. After almost 30 years of affirmative action legislation, the state of California took the decision, after a referendum, to declare unlawful the use of affirmative action legislation. Less than three years after this decision was taken, most of the state bodies within California are complaining that affirmative action legislation was removed too early from the statute book. The effects of removing it have been negative.

For us to suggest that we are in a position to decide now, as we draft this Bill, when the effects of the system of apartheid will be behind us is simply illogical. In addition, quite clearly, as with any other piece of legislation, this House will regularly review all legislation and its effects.

However, allow me to conclude by saying that it is extremely positive that with the exception of a few parties and a few issues that have been mentioned, after standing a great distance from each other, most parties have managed to find significant common ground on this Bill. For this, I believe we must pass a special vote of thanks to the two joint chairpersons of the committee, the Ministry and the department for their innovative solutions to the problems raised by the committee.

We in the ANC believe that this legislation will play an important role in affirming historically disadvantaged communities while not detracting from the efficient delivery of goods and services to Government, and we therefore call on all parties committed to empowerment to support its passage through this House. [Applause.]

The MINISTER OF FINANCE: Hon Chairperson, firstly, I would like to thank all the parties who are supporting this Bill.

There is an old maxim that says: Where you stand depends on where you sit.'' That maxim was again proved to be correct by the way in which the debate was conducted, because, certainly, those who argue that the wording historically disadvantaged’’ does not deal with circumstances are the same people who argue that we should have an escape hatch to get rid of the Bill later. They are also the same people who argue that this will raise the costs of state procurement. These are, in all instances, the same people who sit in this House with distinct historical advantage as a result of apartheid’s past in this country.

This has shaped their perspective on the Bill. It is undeniable and was argued across parties, and it stands there. But, notwithstanding those issues, I thank all of those who have supported the Bill. This Bill, clearly, notwithstanding its brevity, will place South Africa on the path to a different future. [Applause.]

Debate concluded.

Bill read a second time (Freedom Front dissenting).

The House adjourned at 12:45. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

                      FRIDAY, 19 NOVEMBER 1999

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    The Joint Tagging Mechanism (JTM), in terms of Joint Rule
     160(3), classified the following Bill as a section 75 Bill:


     (i)     Financial Services Board Amendment Bill [B 62 - 99]
          (National Assembly - sec 75) - (Portfolio Committee on Finance
          - National Assembly).


 (2)    The Joint Tagging Mechanism (JTM), in terms of Joint Rule
     160(4), classified the following Bill as a section 76 Bill:


     (i)     Fire Brigade Services Amendment Bill [B 63 - 99] (National
          Assembly - sec 76(1)) - (Portfolio Committee on Provincial and
          Local Government - National Assembly).

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Minister of Education:

 Report of the Council on Higher Education for 1998-99.

1. The Minister of Defence: (1) Agreement between the Government of the Republic of South Africa and the Government of the Republic of France concerning Defence Co- operation, tabled in terms of section 231(3) of the Constitution, 1996.

 (2)    Agreement between the Department of Defence of the Republic of
     South Africa and the Federal Ministry of Defence of the Federal
     Republic of Germany on the Mutual Protection of Classified Defence
     related information, tabled in terms of section 231(3) of the
     Constitution, 1996.

 (3)    Agreement between the Government of the Republic of South Africa
     and the Kingdom of Lesotho concerning the Status of Armed Forces
     in the Kingdom of Lesotho providing military assistance, tabled in
     terms of section 231(3) of the Constitution, 1996.

 (4)    Agreement between the Government of the Republic of South Africa
     and the Government of the Republic of Singapore concerning the
     Status of the Singapore Forces deployed in the Republic of South
     Africa, tabled in terms of section 231(3) of the Constitution,
     1996.


 (5)    Agreement between the Government of the Republic of South Africa
     and the Government of the United Republic of Tanzania concerning
     Defence Co-operation, tabled in terms of section 231(3) of the
     Constitution, 1996.

 (6)    Memorandum of Agreement between the United Nations Office for
     Project Services and the Republic of South Africa, tabled in terms
     of section 231(3) of the Constitution, 1996.

 (7)    Agreement between the Government of the Republic of South Africa
     and the Government of the United States of America concerning
     Security Measures for the Protection of Classified Military
     Information, tabled in terms of section 231(3) of the
     Constitution, 1996.

 (8)    Agreement between the Government of the Republic of South Africa
     and the Department of Defence of the United States of America
     concerning Co-operation on Military Environmental Matters, tabled
     in terms of section 231(3) of the Constitution, 1996.


 (9)    Administrative and Technical Status Diplomatic Note Exchange
     between the Government of the Republic of South Africa and the
     Government of the United States of America, tabled in terms of
     section 231(3) of the Constitution, 1996.

(10)    Agreement between the Government of the Republic of South
      Africa and the Government of the Kingdom of Lesotho concerning the
      Status of Armed Forces in the Republic of South Africa
      participating in Exercise Blue Crane, tabled in terms of section
      231(3) of the Constitution, 1996.

1. The Minister for Justice and Constitutional Development:

 (1)    Document, in terms of section 9(1) of the Promotion of National
     Unity and Reconciliation Act, 1995, regarding the remuneration,
     allowances and other employment benefits of the staff of the Truth
     and Reconciliation Commission.

 (2)    List relating to Government Notice for 5 November 1999. 4.    The Minister of Water Affairs and Forestry:


 Report of the Department of Water Affairs and Forestry for 1998-99.

                     THURSDAY, 25 NOVEMBER 1999

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    Assent by the President of the Republic in respect of the
     following Bills:


      (i)     Intelligence Services Control Amendment Bill [B 46B - 99]
             - Act No 42 of 1999 (assented to and signed by President on
             18 November 1999);

     (ii)    Abolition of Certain Title Conditions Bill [B 40B - 99] -
             Act No 43 of 1999 (assented to and signed by President on
             18 November 1999);

     (iii)   Education Laws Amendment Bill [B 44B - 99] - Act No 48 of
             1999 (assented to and signed by President on 18 November
             1999);

     (iv)    Adjustments Appropriation Bill [B 55 - 99] - Act No 51 of
             1999 (assented to and signed by President on 18 November
             1999);

     (v)     Second Adjustments Appropriation Bill [B 58 - 99] - Act No
             52 of 1999 (assented to and signed by President on 18
             November 1999);

     (vi)    Revenue Laws Amendment Bill [B 59 - 99] - Act No 53 of
             1999 (assented to and signed by President on 18 November
             1999);

     (vii)   Higher Education Amendment Bill [B 45B - 99] - Act No 55
             of 1999 (assented to and signed by President on 18 November
             1999); and

    (viii)   National Student Financial Aid Scheme Bill [B 48B - 99] -
             Act No 56 of 1999 (assented to and signed by President on
             18 November 1999).


 (2)    The following Bill was introduced in the National Assembly on 25
     November 1999 and referred to the Joint Tagging Mechanism (JTM)
     for classification in terms of Joint Rule 160:


     (i)     Limitation of Legal Proceedings against Government
          Institutions Bill [B 65 - 99] (National Assembly - sec 75) -
          (Portfolio Committee on Justice and Constitutional Development
          - National Assembly) [Bill and prior notice of its
          introduction published in Gazette No 20676 of 25 November
          1999.]


 (3)    The Minister for Justice and Constitutional Development on 24
     November 1999 submitted the draft Cross-Border Insolvency Bill,
     1999, and the memorandum explaining the objects of the proposed
     legislation to the Speaker and the Chairperson in terms of Joint
     Rule 159. The draft has been referred to the Portfolio Committee
     on Justice and Constitutional Development and the Select Committee
     on Security and Constitutional Affairs by the Speaker and the
     Chairperson, respectively, in accordance with Joint Rule 159(2).

National Assembly:

1. The Speaker:

 (1)    The President of the Republic submitted the following letter,
     dated 18 November 1999, to the Speaker of the National Assembly,
     informing Parliament, in terms of section 201(3) of the
     Constitution, 1996, of the employment of the South African
     National Defence Force in terms of section 201(2)(c) of the
     Constitution, 1996.


     REPORT IN TERMS OF SECTION 201(3) 0F THE CONSTITUTION OF THE
     REPUBLIC OF SOUTH AFRICA, 1996 (ACT 108 OF 1996) ON THE EMPLOYMENT
     OF THE SOUTH AFRICAN NATIONAL DEFENCE FORCE IN TERMS OF SECTION
     201(2)(c) OF THE CONSTITUTION, 1996, IN THE FULFILLMENT OF AN
     INTERNATIONAL OBLIGATION IN THE REPUBLIC OF MOZAMBIQUE


     1. This serves to inform the National Assembly that on 12 November
          1999, I authorised the employment of the South African
          National Defence Force personnel and aircraft in the Republic
          of Mozambique in fulfillment of an international obligation.
          This employment was authorised in accordance with the
          provisions of section 82(4)(b)(ii) of the Constitution of the
          Republic of South Africa, 1996 (Act 108 of 1996), as well as
          section 201(2)(c) of the said Constitution of 1996, as read
          with section 227(1)(b) of the Constitution of 1993.

     2. This employment is in compliance with the Republic of South
          Africa's regional support to render logistical support to the
          Mozambican Government during their elections.

     3. The employment will consist of 121 members rendering support in
          terms of logistics, communications and medical. Seven Oryx
          helicopters, of which one will be in reserve in case of
          unserviceability, will be deployed. Other support aircraft
          will be required for the pre-deployment reconnaissance,
          deployment of equipment, placing of fuel, transport of
          election officials and deployment and withdrawal of personnel.
          These include Cessna 208, Casa 212, C-130, Boeing 707, Falcon
          50 and PC-12.

     4. The costs of the operation amount to:


          a)  Flying Hour Rates and R       15 903 828-00
              Fuel costs for Oryx, C-208,
              C-212, C-130, B-707, PC-12,
              Falcon 50

          b)  Total Logistical Support    R          949 920-90
              for a Temporary Air Base

          c)  Communications Support      R           34 999-98

          d)  Personnel Allowances  R          227 570-88
              (121 personnel)

          e)  Medical Support  R           77 036-16
          f)  Total 21 193350-00
     5. I will also communicate this report to the National Council of
          Provinces and wish to request that you bring it to the notice
          of the Members of the National Assembly.

     With kind regards

     T M MBEKI
     PRESIDENT


 (2)    The President of the Republic submitted the following letter,
     dated 18 November 1999, to the Speaker of the National Assembly,
     informing Parliament, in terms of section 201(3) of the
     Constitution, 1996, of the employment of the South African
     National Defence Force in terms of section 201(2)(c) of the
     Constitution, 1996.


     REPORT IN TERMS OF SECTION 201(3) 0F THE CONSTITUTION OF THE
     REPUBLIC OF SOUTH AFRICA, 1996 (ACT 108 OF 1996), ON THE
     EMPLOYMENT OF THE SOUTH AFRICAN NATIONAL DEFENCE FORCE IN TERMS OF
     SECTION 201(2)(c) OF THE CONSTITUTION, 1996, IN THE FULFILLMENT OF
     AN INTERNATIONAL OBLIGATION IN THE UNITED REPUBLIC OF TANZANIA


     1. This serves to inform the National Assembly that on 18 November
          1999, I authorised the employment of the South African
          National Defence Force personnel and aircraft in the United
          Republic of Tanzania in fulfillment of an international
          obligation. This employment was authorised in accordance with
          the provisions of section 82(4)(b)(ii) of the Constitution of
          the Republic of South Africa, 1993 (Act 200 of 1993), [which
          continues to be in force in terms of Item 24(1) of Schedule 6
          to the Constitution of the Republic of South Africa, 1996 (Act
          No 108 of 1996)], as well as section 201(2)(c) of the said
          Constitution of 1996, as read with section 227(1)(b) of the
          Constitution of 1993.

     2. This employment is in compliance with the Republic of South
          Africa's regional obligation for support. The presentation of
          this refresher diver training to members of the Tanzanian
          Peoples Defence Force over the period 10 November 1999 to 1
          December 1999 falls within the ambit of South Africa's
          regional commitments.

     3. The deployment will consist of the SANDF Diving Team, including
          a Diving Instruction, Diving Supervisor, and five Dive
          Technicians. One C-130B transport aircraft with eight
          crewmembers will be required to transport the SANDF Diving
          Team and equipment to and from Dar-Es-Salaam.

     4. The costs of the operation amount to:


          a.  Fuel costs R13,0670-00

          b.  Landing fees and overflight R15,600-00costs

          c.  Naval Group S&T R93,744-00

          d.  Total      R240 014-00


     5. I will also communicate this report to the National Council of
          Provinces and wish to request that you bring it to the notice
          of the Members of the National Assembly.

     With kind regards

     T M MBEKI
     PRESIDENT

                      FRIDAY, 17 DECEMBER 1999

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    Assent by the President of the Republic in respect of the
     following Bills:


    i  Sentech Amendment Bill [B 52 - 99] - Act No 44 of 1999 (assented
             to and signed by President on 9 December 1999);


    ii National Water Amendment Bill [B 53B - 99] - Act No 45 of 1999
             (assented to and signed by President on 2 December 1999);

    iii      World Heritage Convention Bill [B 42D - 99] - Act No 49 of
             1999 (assented to and signed by President on 3 December
             1999);

      iv      Rental Housing Bill [B 29D - 99] - Act No 50 of 1999
             (assented to and signed by President on 9 December 1999);

      v Mutual Banks Amendment Bill [B 47 - 99] - Act No 54 of 1999
             (assented to and signed by President on 9 December 1999);

      vi      South African Sports Commission Second Amendment Bill [B
             61 - 99] - Act No 57 of 1999 (assented to and signed by
             President on 2 December 1999);

      vii    Disestablishment of the Local Government Affairs Council
             Bill [B 54 - 99] - Act No 59 of 1999 (assented to and
             signed by President on 2 December 1999); and


      viii    Housing Second Amendment Bill [B 49 - 99] - Act No 60 of
             1999 (assented to and signed by President on 9 December
             1999).


 (2)    The following Bill was introduced in the National Assembly on 29
     November 1999 and referred to the Joint Tagging Mechanism (JTM)
     for classification in terms of Joint Rule 160:


     (i)     Preferential Procurement Policy Framework Bill [B 66 - 99]
          (National Assembly - sec 76(1)) - (Joint Committee on
          Preferential Procurement Policy Framework Bill) [Bill and
          prior notice of its introduction published in Gazette No 20657
          of 22 November 1999.]


 (3)    The Joint Tagging Mechanism (JTM), in terms of Joint Rule
     160(3), classified the following Bill as a section 75 Bill:


     (i)     Land Affairs General Amendment Bill [B 64 - 99] (National
          Assembly - sec 75) - (Portfolio Committee on Agriculture and
          Land Affairs - National Assembly).
 (4)    The following papers have been tabled and are now referred to
     the relevant portfolio committees as mentioned below:


     (a)     The following papers are referred to the Portfolio
          Committee on Home Affairs and the Select Committee on Social
          Services for consideration and report. The papers are also
          referred to the Joint Monitoring Committee on Improvement of
          Quality of Life and Status of Women:


          (i) Convention on the Nationality of Married Women, tabled in
              terms of section 231(2) of the Constitution, 1996.


          (ii)     Explanatory Memorandum to the Convention.


     (b)     The following papers are referred to the Portfolio
          Committee on Labour and the Select Committee on Labour and
          Public Enterprises:


         (i)  Report of the Compensation Fund for 1997-98.
         Unemployment Insurance Fund for 1998.


          (iii)    Report of the National Training Board for 1998.


     (c)     The following paper is referred to the Portfolio Committee
          on Justice and Constitutional Development and the Select
          Committee on Security and Constitutional Affairs for
          consideration and report:


          (i) Document, in terms of section 9(1) of the Promotion of the
              National Unity and Reconciliation Act, 1995, regarding
              the remuneration, allowances and other employment
              benefits of the staff of the Truth and Reconciliation
              Commission.

National Assembly:

1. The Speaker:

 (1)    The following papers have been tabled and are now referred to
     the relevant portfolio committees as mentioned below:


     The following papers are referred to the Standing Committee on
     Public Accounts:

     Reports of the Auditor-General on the -


     (i)     Group Annual Financial Statements of Mosshold (Pty) Ltd
             and its subsidiaries for 1998-99 [RP 174-99];


     (ii)    Financial Statements of the Meat Board for 1997 [RP 166-
             99];


     (iii)   Financial Statements of the Citrus Board for 1998-99 [RP
             122-99];


     (iv)    Financial Statements of the National English Literary
             Museum for 1998-99 [RP 119-99];


     (v)     Financial Statements of the National Hiking Way Fund for
             1996-97 and 1998-99 [RP 118-99].


 (2)    The following member will vacate his seat with effect from 31
     January 2000:


     Schutte, D P A.


 (3)    The following changes have been made to the membership of
     Committees, viz:


     Environmental Affairs and Tourism:

     Appointed: Grové, S P; Nqodi, S B (Alt). 
     Finance:

     Discharged: Mangena, M A.

     Labour:

     Appointed: Dyani, M M Z (Alt); Malebane, H F.

     Open Democracy Bill:

     Appointed: Arendse, J D (Alt).

     Promotion of Equality and Prevention of Unfair Discrimination
     Bill:
     Appointed: Taljaard, R (Alt).

     Provincial and Local Government:

     Appointed: Kannemeyer, B W (Alt).

     Public Accounts:

     Discharged: Mangena, M A.

     Public Enterprises:

     Appointed: Tsheole, N M (Alt); Smith, V G.

     Public Works:

     Appointed: Magubane, N E (Alt).

COMMITTEE REPORTS:

National Assembly:

1. Eighth Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 30 November 1999, as follows:

 The Standing Committee on Public Accounts, having considered the Report
 of the Auditor-General on the Financial Statements of Vote 33 - Sport
 and Recreation for 1996-97 [RP 171-97] and 1997-98 [RP 204-98],
 referred to it, reports as follows:

 Unauthorised expenditure, R168 036 (1996-97 - R154 584; 1997-98 - R13
 452)


 1.     Women in sport - R136 330


     An amount of R136 330 was paid during the 1996-97 financial year
     in connection with the "Women in Sport" launch held in March 1997.
     As the applicable State Tender Board regulations were not complied
     with, the payment of R136 330 was regarded as unauthorised.


 2.     Travelling expenses - R11 080


     Travelling expenses amounting to R11 080 was paid to an official
     for travelling between his residence and headquarters, which was
     contrary to the Public Service Staff Code.


 3.     Overseas return ticket - R6 820


     As an official travelled in business class, the amount of R6 820,
     being the price difference between an economy and business class
     overseas return air ticket, was paid contrary to the Public
     Service Staff Code.


 4.     Purchase of gift - R354


     A gift amounting to R354 was purchased for an official in
     recognition of long service without any Treasury approval. The
     department purchased the gift under a previous Treasury approval
     granted for the purchase of gifts to foreign sports dignitaries.
     On 12 April 1996, the Treasury did not see its way clear to
     approve the granting of the gift to the said official.


 5.     Overtime remuneration - R11 854
     A total of 800 hours was authorised as overtime to enable
     officials from the Department of Sport and Recreation to complete
     the backlog of work in the Finance Division of the department. It
     was observed that records of overtime were captured on the Persal
     system by the Personnel Division of the department, who omitted to
     update the Persal system with the manual payments that were made.
     This resulted in an excess of 233,95 hours that were not
     authorised.


 6.     Daily remuneration - R1 598


     The Minister of Sport and Recreation appointed a task team on 1
     April 1997, consisting of five officials, to investigate various
     aspects of rugby in South Africa. An amount of R5 700 was paid to
     a member of the task team as remuneration for the period. In terms
     of Treasury directives, this payment exceeded the authorised
     amount by R1 598.


 The Committee wishes to express its dissatisfaction at the disregard
 for State Tender Board directives and is alarmed by the frequency with
 which unauthorised expenditure occurs in the department.

 Notwithstanding the above and due to specific exonerating
 circumstances, the Committee recommends that the amounts of R154 584
 and R13 452 be authorised by Parliament, as no misappropriations have
 been revealed.


 The Committee recommends accordingly.

 Report to be considered.

1. Ninth Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 30 November 1999, as follows:

 The Standing Committee on Public Accounts, having considered the Report
 of the Auditor-General on the Financial Statements of Vote 36 -
 Transport for the year ended 31 March 1998 [RP 207-98], referred to it,
 reports as follows:


 A.     Non-compliance with Treasury Instructions


     The Committee noted that the government is continuously
     outsourcing certain functions in various departments.

     Accounting officers tend to underestimate the significance of the
     Treasury Instructions applicable to these transfers. In addition,
     due to poor planning and self-imposed pressure to effect the
     transfer, the assessment of the implication on accountability is
     often inadequate or non-existent. Consequently, accounting
     officers deliberately or unknowingly disregard these Treasury
     Instructions.

     This behaviour cannot be tolerated, as the non-adherence could
     potentially cost the State dearly. Despite the need for urgent
     decisions to be taken, proper control measures need to be
     implemented. It is essential that accounting officers familiarise
     themselves with the Treasury requirements and ensure that their
     subordinates are equally conversant therein.

     In the case of the Department of Transport, in excess of R3,3
     billion, or 92% of the department's total expenditure, consists of
     transfer payments to various agencies and provinces. Most of these
     agencies have been established in recent years to take over
     certain of the functions previously performed by the department.

     Transfer payments are regulated by Treasury Instruction K5, which,
     inter alia, provides that prior to rendering financial assistance
     accounting officers should satisfy themselves that beneficiaries
     submit documentation timeously. These documents should enable the
     accounting officer to assess whether the payments are made in
     compliance with the objectives for which the beneficiary was
     established.

     The Committee is dismayed that in many instances the department
     did not comply, and in some cases only partially complied, with
     these instructions. In addition, the department's application to
     the Treasury for approval of the non-compliance was disallowed.

     In his reply to the Committee, the Accounting Officer stated that
     provincial and government departments are not structured in a
     manner which make adherence to the specific Treasury Instruction
     possible. The Department of State Expenditure is of the opinion
     that there is a tendency with departments to ask permission for
     departure from specific Treasury Instructions without adequately
     applying their minds to the problems.

     The Committee wishes to stress that compliance with financial
     management requirements such as these should be incorporated into
     any restructuring plans of the department.

     The Committee took note of the steps the Accounting Officer has
     instituted to ensure that transfer payments to agencies fully
     comply with Treasury Instructions.  The Committee also noted that
     legislation is being drafted to change the mechanism of financing
     payments to provinces.

     The Committee recommends as follows:


     1. That any future transfer of activities or anticipated creation
          of statutory institutions be planned properly. This must
          include providing appropriate accounting and other control
          measures in the transition process.


     2. That the Accounting Officer provide the Committee with a
          schedule disclosing -


          (1) all agencies, institutions or other public bodies
              receiving financial assistance from the department which
              are subject to Treasury Instruction K5;


          (2) the date by which transfer payments to these beneficiaries
              will be fully compliant with Treasury Instruction K5.


     3. That the Accounting Officer provide the Committee with an
          evaluation of the draft legislation that will clearly indicate
          that transfer payments to provinces will in future still be
          subjected to proper accountability measures, and that this
          information be provided to the Committee by not later than 31
          January 2000.


     4. That the Treasury ensure that new Treasury Instructions cover
          all aspects of outsourcing and devolving of functions,
          including monitoring and assessment requirements.


 B.     Unauthorised expenditure - R3 108 266


     Various payments during the financial year, amounting to R3 108
     266, have been classified as unauthorised due to non-adherence to
     Treasury directives and reported as such.

     The Committee wishes to express its serious concern at the fact
     that the Accounting Officer in many instances did not even apply
     for ex post facto approval for these payments. In addition, the
     Committee was not provided with sufficient information in the
     Accounting Officer's reply to written and verbal questions to make
     a proper assessment on whether or not to authorise the payments.
     The Accounting Officer undertook to provide the Committee with
     further evidence in writing in this regard.

     The Committee further wishes to express its dissatisfaction at the
     department's blatant disregard for State Tender Board directives.
     It is unacceptable that rules and regulations are contravened,
     even in cases where the projects achieve a desirable objective.

     The Committee took note of the undertaking by the Accounting
     Officer to limit the occurrence of transactions where ex post
     facto approval is required and to prevent the incidence of
     unauthorised expenditure.

     The Committee recommends that the Accounting Officer provide the
     additional information by 31 January 2000.  The Committee will
     then, after evaluation thereof, make an appropriate
     recommendation.


 C.     Unresolved difference - R11,5 million


     Former employees of the department were transferred during the
     financial year to the National Road Agency (NRA), the Cross-Border
     Transport Agency (CTA), the Civil Aviation Authority (CAA) and the
     South African Maritime Safety Authority (SAMSA). In this process
     the employees also withdrew from the Government Employees' Pension
     Fund (GEPF), on the basis of an agreement between the unions, the
     staff members and the department that the latter will finance any
     shortfall in the fund. The NRA's founding Act makes provision for
     the financing of this deficit by the department. This funding is,
     however, not permitted in terms of the current laws and rules
     regulating the GEPF. There are no similar clauses in the founding
     Acts of the CTA, the CAA and the SAMSA.

     Due to these contradictory requirements, it is clear that the
     intention originally envisaged by the department, namely funding
     the deficit, is no longer possible. Consultations between the
     department, the Department of Finance (representing the GEPF) and
     the staff members are on-going in order to resolve this impasse.

     The Committee wishes to express its concern about the preparatory
     work done to establish the NRA and that the benefits of employees
     may be at risk. It is indeed alarming that the establishment was
     effected and legislation passed without an agreement having been
     reached between all the affected parties and departments. This is
     essentially what has led to the current impasse, and the Committee
     wants to advocate strongly against this happening in future, since
     it can result in negative staff morale.

     The R11,5 million in the suspense account is the direct result of
     the lack of agreement between the department and the GEPF.

     The Committee appeals for further co-operation between
     departments, and recommends that all roleplayers resolve this
     matter urgently and report back to the Committee on the progress
     thereon by 31 January 2000.


 D.     Payment of levies by Regional Services Councils (RSCs)
     The Customs and Excise Act made provision for the introduction of
     a one cent fuel levy to be paid over by the RSCs to the
     department. Since the introduction of this levy, the department
     has experienced difficulty in managing the system, as some
     councils did not honour these commitments. This provision of the
     Customs and Excise Act was repealed in 1997.

     R21,8 million in respect of the financial years 30 June 1994 to
     1996 and an estimated R31 million in respect of the 1997 financial
     year remain outstanding to the department.

     The Accounting Officer has referred the matter to the State
     Attorney for advice on how to proceed with the recovery of these
     debts, which are in some instances more than five years old.

     The Committee recommends that the Accounting Officer urgently
     follow up on progress in this regard with the State Attorney, and
     urges the State Attorney to expedite the provision of advice to
     the Accounting Officer.
     The Committee further recommends that the Accounting Officer and
     the State Attorney report back to the Committee on progress made
     by 31 January 2000.


 The Committee recommends accordingly.

 Report to be considered.

1. Tenth Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 30 November 1999, as follows:

 The Standing Committee on Public Accounts, having considered the Report
 of the Auditor-General on the Financial Statements of Vote 1 -
 President for the year ended 31 March 1998 [RP174-98], referred to it,
 reports as follows:

 Unauthorised expenditure (R66 226,64) (Page 2, par 2.2)


 1.     Unauthorised expenditure of R66 226,64 was incurred during the
     year under review. This expenditure resulted from the non-
     compliance with normal procurement procedures by the former RDP
     Office and is therefore unauthorised in terms of section 33(1)(d)
     of the Exchequer Act, 1975 (Act No. 66 of 1975).


 2.     The above unauthorised expenditure has been listed by the
     Auditor-General, since the expenditure was not material or has not
     resulted in a loss to the State, or the question of mala fides did
     not arise, or the expenditure was only unauthorised due to
     technical contraventions of the regulations. Since the Auditor-
     General has indicated that the expenditure could be authorised
     legally without detracting from effective financial control, the
     Committee recommends that the amount be authorised by Parliament.

 The Committee recommends accordingly.

 Report to be considered.

1. Eleventh Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 30 November 1999, as follows: The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of Vote 2 - Deputy President for the year ended 31 March 1998 [RP 57-99], referred to it, reports as follows:

 Unauthorised expenditure (R491 210,99) (Page 2, par 2.2.2)


 1.     Unauthorised expenditure of R139 118,86 was incurred during the
     year under review as a result of non-compliance with normal
     procurement procedures. An amount of R270 480,03 resulted from
     expenditure incurred without the necessary Treasury approval and
     expenditure to the amount of R81 612,10 occurred as a result of
     non-compliance with normal procurement procedures at the National
     Youth Commission. The total unauthorised expenditure of R491
     210,99 is therefore unauthorised in terms of section 33(1)(d) of
     the Exchequer Act, 1975 (Act No. 66 of 1975).


 2.     The above unauthorised expenditure has been listed by the
     Auditor-General, since the expenditure was not material or has not
     resulted in a loss to the State, or the question of mala fides did
     not arise, or the expenditure was only unauthorised due to
     technical contraventions of the regulations. Since the Auditor-
     General has indicated that the expenditure could be authorised
     legally without detracting from effective financial control, the
     Committee recommends that the amount be authorised by Parliament.


 The Committee recommends accordingly.

 Report to be considered.

1. Twelfth Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 30 November 1999, as follows:

 The Standing Committee on Public Accounts, having considered the Report
 of the Auditor-General on the Financial Statements of Vote 17 - Housing
 for the year ended 31 March 1998 [RP188-98], referred to it, reports as
 follows:

 Unauthorised expenditure (R8 778) (Page 5, par 2.2.3)


 1.     Unauthorised expenditure of R8 778 was incurred during the year
     under review. The expenditure resulted from non-compliance with
     normal procurement procedures and is therefore unauthorised in
     terms of section 33(1)(d) of the Exchequer Act, 1975 (Act No. 66
     of 1975).


 2.     The above unauthorised expenditure has been listed by the
     Auditor-General, since the expenditure was not material or has not
     resulted in a loss to the State, or the question of mala fides did
     not arise, or the expenditure was only unauthorised due to
     technical contraventions of the regulations. Since the Auditor-
     General has indicated that the expenditure could be authorised
     legally without detracting from effective financial control, the
     Committee recommends that the amount be authorised by Parliament.


 The Committee recommends accordingly.

 Report to be considered. 6.    Thirteenth Report (First Session, Second Parliament) of the Standing
 Committee on Public Accounts, dated 30 November 1999, as follows:


 The Standing Committee on Public Accounts, having considered the Report
 of the Auditor-General on the Financial Statements of Vote 23 -
 Minerals and Energy for the year ended 31 March 1998 [RP 194-98],
 referred to it, reports as follows:

 Unauthorised expenditure (R137 990,63) (Page 6, par 2.2.4)


 1.     The department reported that expenditure to the amount of R137
     990,63 in respect of the appointment of a legal consultant had not
     been authorised.


 2.     The above unauthorised expenditure has been listed by the
     Auditor-General, since the expenditure was not material or has not
     resulted in a loss to the State, or the question of mala fides did
     not arise, or the expenditure was only unauthorised due to
     technical contraventions of the regulations. Since the Auditor-
     General has indicated that the expenditure could be authorised
     legally without detracting from effective financial control, the
     Committee recommends that the amount be authorised by Parliament.


 The Committee recommends accordingly.

 Report to be considered.

1. Fourteenth Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 30 November 1999, as follows:

 The Standing Committee on Public Accounts, having considered the Report
 of the Auditor-General on the Financial Statements of Vote 28 - South
 African Communication Service for the year ended 31 March 1998 [RP 199-
 98], referred to it, reports as follows:

 Unauthorised expenditure (R92 638) (Page 2, par 2.2.2)


 1.     Unauthorised expenditure of R92 638 was incurred during the year
     under review. The expenditure resulted from non-compliance with
     normal procurement procedures and gave rise to five cases of
     unauthorised expenditure in terms of section 33(1)(d) of the
     Exchequer Act, 1975 (Act No. 66 of 1975).


 2.     The above unauthorised expenditure has been listed by the
     Auditor-General, since the expenditure was not material or has not
     resulted in a loss to the State, or the question of mala fides did
     not arise, or the expenditure was only unauthorised due to
     technical contraventions of the regulations. Since the Auditor-
     General has indicated that the expenditure could be authorised
     legally without detracting from effective financial control, the
     Committee recommends that the amount be authorised by Parliament.


 The Committee recommends accordingly.

 Report to be considered.

1. Fifteenth Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 30 November 1999, as follows: The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Financial Statements of Vote 5 - Agriculture for the year ended 31 March 1998 [RP 177-98], referred to it, reports as follows:

 A.     Production loan scheme for small and beginner farmers


     1. Recovery of outstanding loans


          In a previous resolution, contained in the Twenty-seventh
          Report of the Public Accounts Committee for 1998, that
          committee recommended that the department evaluate the
          recoverability of all loans made in terms of this scheme,
          which was terminated in August 1998.

          The Committee is pleased with the significant progress that
          has been made in recovering the loans since the previous
          report.

          The Committee, however, notes with concern that material
          amounts in respect of four mediators are still outstanding,
          and that the department has referred these matters to the
          State Attorney.

          The Committee further notes with serious concern that some
          mediators have been unable to pay the department, although
          repayments have actually been received from the farmers. The
          mediators have used these repayments to finance other
          expenses.

          The Committee finds this totally unacceptable, and recommends
          that the department take legal action in this regard.


     2. State Attorney


          In order to monitor the progress made with recoveries in
          respect of the matters referred to the State Attorney, the
          Committee requested the State Attorney to provide further
          evidence during the hearing.

          The Committee is extremely concerned about the length of time
          taken by the State Attorney to finalise matters referred to
          him. Difficulties in contacting the State Attorney prior to
          the hearing exacerbate this concern.


     3. Large companies as mediators


          The Committee notes with concern the possibility that large
          national and international companies may have received
          assistance in terms of this scheme.

          The Accounting Officer was, however, unable to confirm or deny
          this during the hearing, and undertook to reply to the
          Committee in writing on the concerns expressed.

          No response has been received at the time of finalising this
          Report, and the Committee will make an appropriate
          recommendation once a reply is received.

          The Committee recommends that the Accounting Officer urgently
          attend to this outstanding matter.


 B.     Internal control and financial management


     The Accounting Officer is at present the chairperson of the Audit
     Committee.

     During the hearing it became evident that there is confusion in
     the department regarding the functions of the Audit Committee and
     the Internal Audit Component.

     The Committee is of the view that the chairperson should be an
     external person who can support the Accounting Officer in her
     efforts to establish good governance in the department. The
     Committee recommends that the Accounting Officer, as a matter of
     urgency, appoint a capable external person as chairperson of the
     Audit Committee, as will be required when the new Public Finance
     Management Act comes into operation.


 C.     Agriculture Credit Account (ACA)
     Onderstepoort Biological Products (OBP)
     The Committee is dissatisfied with the poor quality of information
     disclosed in the accounts. Due to the failure to apply proper
     accounting principles, the integrity and credibility of amounts
     disclosed are in doubt and even misleading.

     Some examples of poor disclosure are:


     1. With respect to the ACA, debtors were disclosed at more than R1
          billion, yet no provision was made for bad debts, even though
          there were serious doubts regarding recoverability.


     2. With regard to OBP, cost of sales was disclosed as a negative
          amount, thus leading to an overstatement of the asset value.


     The Committee takes cognisance of the inherent weaknesses in
     disclosure on the cash-based system and also that departments may
     not have the expertise in preparing financial statements on the
     accrual basis.

     The Committee is, however, seriously concerned about the departure
     from generally accepted accounting practice, and questions the
     professionalism of the department in actually presenting these
     statements to the Auditor-General and to Parliament.

     This concern is especially grave given the move towards
     corporatisation of OBP. Further to the proposed corporatisation,
     the Committee questions the value of introducing a new financial
     management system at this late stage.

     The Accounting Officer undertook to prepare appropriate financial
     statements for the two accounts mentioned and to submit them to
     the Auditor-General and the Committee by not later than 15
     December 1999.


 D.     Outstanding information


     During the hearing on 12 October 1999, the Director-General
     undertook to provide the Committee with additional information
     regarding the following matters, which were perused:
     1. Debtors management strategy.


     2. Loan securities.


     3. Large companies as mediators.


     As this information is only due on 15 December 1999, certain
     aspects pursued during the hearing could not be dealt with in this
     Report.


 The Committee recommends accordingly.

 Report to be considered.

1. Sixteenth Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 30 November 1999, as follows:

 The Standing Committee on Public Accounts, having considered the Report
 of the Auditor-General on the Financial Statements of Vote 11 -
 Education for 1996-97 [RP 151-97] and 1997-98 [RP 182-98], referred to
 it, reports as follows:

 Unauthorised expenditure, R34 591 376

 For many years the former Department of Education and Training provided
 the South African Broadcasting Corporation (SABC) with funds through
 transfer payments in order to broadcast educational programmes. No
 contracts were entered into and the SABC used its own discretion in
 respect of programmes broadcast.

 The current Department of Education continued to make use of the SABC
 for the broadcasting of educational programmes. In order to obtain
 proper financial control over the funds expended and also to be
 involved in the quality of the programmes produced and the monitoring
 thereof, the department formalised these services by entering into a
 written agreement with the SABC, as approved by the State Attorney.

 The department did not adhere to tender procedures, as it considered
 the SABC to be a government institution. During discussions with the
 Department of State Expenditure and the State Tender Board, the
 department concurred on the process that should have been followed.
 An amount of R8 626 108 was paid to the SABC during the 1996-97
 financial year and was reported as unauthorised by the Auditor-General.
 During the 1997-98 financial year, the department incurred further
 expenses amounting to R25 965 268, bringing the total expenditure paid
 in respect of this contract to R34 591 376.

 However, on 14 August 1998 the State Tender Board informed the
 Department of Education that it could not agree with the procedures
 followed and refused ex post facto approval of the expenditure.

 Despite the above, the department was still liable for the payment of
 all outstanding invoices and payment for work done by the SABC.
 Notwithstanding the fact that a firm agreement to regulate the matter
 and to safeguard the interests of the State was entered into, payment
 to the SABC could have continued as a transfer payment against the
 budget vote of the department.

 The Committee wishes to express its dissatisfaction at the disregard
 for State Tender Board directives. Notwithstanding this, the Committee
 recommends that the amount of R34 591 376 be authorised by Parliament,
 as no misappropriations have been revealed.


 The Committee recommends accordingly.

 Report to be considered.

1. Seventeenth Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 30 November 1999, as follows:

 The Standing Committee on Public Accounts, having considered the Report
 of the Auditor-General on the Financial Statements of Vote 13 - Finance
 for the year ended 31 March 1998 [RP 184-98], referred to it, reports
 as follows:

 Unauthorised expenditure, R104 189 770


 1.     Interest payments: Closed Pension Fund - R104 104 617


     Since the 1994-95 financial year, interest payments (as listed
     below) were made on the outstanding balance of the remaining
     liability to the Closed Pension Fund. As section 9 of the Closed
     Pension Fund Act, 1993 (Act No. 197 of 1993), did not make
     provision for the payment of interest, the following payments were
     regarded as unauthorised:

     Financial year      Amount

     1994-95     R808 228
     1995-96 R39 933 088
     1996-97 R34 118 701
     1997-98 R29 244 600
     ------------------------
     TOTAL   R104 104 617
     ------------------------

     The Closed Pension Fund Act was amended by the Closed Pension Fund
     Amendment Act, 1999 (Act No. 41 of 1999), that was promulgated on
     1 October 1999. These amendments extend the State's remaining
     financial obligations to the Closed Pension Fund to include the
     payment of interest and to provide for an alternative method of
     payment. The implementation of these amendments is retrospective
     to 5 January 1994.

     The Committee notes that the payments were considered to be
     unauthorised due to the insufficient provisions of the Closed
     Pension Fund Act. As the said Act has subsequently been amended to
     include the payment of interest, the Committee recommends that the
     amount of R104 104 617 be validated by Parliament.


 2.     Exceeding of budget: Programme 3 - R85 153


     The budget of programme 3 (Exchequer financing) was exceeded by R2
     million, of which R85 153 is regarded as unauthorised as no
     virement was obtained from the Accounting Officer to authorise
     this excess, as required by Treasury directives.


     The Committee notes that the payment was considered to be
     unauthorised due to the procedural contravention of Treasury
     directives. As the contravention was of a technical nature, the
     services were rendered, the State suffered no loss and the Auditor-
     General has indicated that the expenditure can be authorised
     legally without detracting from effective financial control, the
     Committee recommends that the amount be authorised by Parliament.


 The Committee recommends accordingly.

 Report to be considered.

1. Eighteenth Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 1 December 1999, as follows:

 The Standing Committee on Public Accounts, having considered the Report
 of the Auditor-General on the Financial Statements of Vote 31 - SA
 Police Service for the year ended 31 March 1998 [RP 202-98], referred
 to it, reports as follows:


 A.     Introduction


     The Committee expresses its strong concern at the reaction of the
     Accounting Officer of the South African Police Services (the SAPS)
     to the public hearing held on 20 October 1999. The Accounting
     Officer's criticism of the Auditor-General's report is
     unprecedented, as is his criticism of the way in which the
     Committee exercised its oversight role on behalf of Parliament.
     The intimation that the Auditor-General incorrectly represented
     the state of affairs at the SAPS, and that the Committee had been
     unfair to the Accounting Officer and the department at both the
     hearings and in the press, is unfounded and without any factual
     basis. The Accounting Officer seems to have implied that the
     Committee displayed dishonesty and incompetence, and further that
     its members abused their parliamentary privilege.

     For the past number of years the state of financial management in
     the SAPS has not been of an acceptable standard, and the
     contemptuous attitude now shown towards the Committee because of
     its greater determination to have the SAPS address its
     shortcomings, is highly improper and altogether unbecoming of one
     holding such high public office. The Committee has been in
     communication with the Ministry in this regard.
     The Committee also noted that the SAPS only replied on 14 October
     1999 to the questions referred to them on 15 July 1999. The
     Committee wishes to recommend that the department in future reply
     to the questions referred to it within four weeks of the date of
     receipt of the questions or as indicated in the letter
     accompanying the question or inquiry.


 B.     Financial management


     1. Audit Committee and internal audit


          The Committee wishes Parliament to note that in spite of his
          verbal undertaking during the Committee's previous hearing on
          9 September 1998, and his written undertaking to the Committee
          on 29 January 1999 and again on 12 October 1999, the National
          Commissioner of the SAPS informed the Committee during the
          hearing on 20 October 1999 that an independent chairperson had
          not yet been appointed to the Audit Committee. The Committee
          is further concerned that the Commissioner did not comply with
          Financial Regulation 1(1)(m) by ensuring that the Audit
          Committee functioned properly during the period under review.
          In fact, the National Commissioner regarded it as "unnecessary
          for the Audit Committee to meet more frequently" despite the
          fact that he noted, at the time of approving the role and
          responsibilities of the Audit Committee, that that Committee
          should meet at least twice a year.

          The Committee noted that the National Commissioner during the
          hearing on 20 October 1999 committed himself to the
          appointment of an independent chairperson within the next two
          to three weeks.

          The Committee therefore recommends that -


          (1) particulars of the new chairperson, upon his or her
              appointment, be forwarded to the Committee;

          (2) the Audit Committee meet under his or her chairpersonship
              before the end of 1999; and

          (3) the minutes of the aforementioned meeting, as well as the
              date of the next Audit Committee meeting, be submitted to
              the Committee 21 days after the meeting.


     2. Decentralisation of financial management problems


          The Committee noted that in spite of the intended
          decentralisation process in the SAPS being modelled on the
          Park Road Police Station pilot project, the Commissioner could
          not provide convincing evidence, more than halfway through the
          two-year project, that it is succeeding and what important
          lessons had been learned in the process so far.

          The Committee recommends that the Accounting Officer acquaint
          himself with the significance of the pilot project and its
          results, and determine whether decentralisation to the extent
          envisaged was a realistic solution to the financial management
          position of the SAPS, and that he report to the Committee as
          soon as possible, but not later than 31 March 2000.


     3. Withholding of payments


          The Committee noted the confirmation by the Chief Executive
          Officer of the SAPS that at the end of the 1998-99 financial
          year the department's payments to creditors were not
          outstanding for more than 32 days on average.

          The Committee recommends that the SAPS furnish supporting
          documents to the Auditor-General to substantiate the fact that
          the creditors are not outstanding for more than 32 days, and
          that the Auditor-General's evaluation be submitted to the
          Committee promptly.


     4. Debtor control


          The Committee noted the evidence from the Financial Manager on
          the new debtors system to be incorporated into the new Polfin
          system, which was being tested and which was to improve the
          turnaround time between the date of debt incurred and the
          commencement of recovery, as well as a new "loss control"
          policy that would minimise losses.


          The Committee recommends that it be informed of the date on
          which the new debtors system will be in full operation, as
          well as the results of the tests carried out.


     5. Guarantee scheme for housing loans


          The Committee wishes to commend the Accounting Officer for the
          progress reportedly made with regard to the substantial amount
          by which guarantees called up had decreased from the year
          under review to the next financial year.

          The Committee nevertheless recommends that the National
          Commissioner promptly submit the following information to the
          Committee:


          (1) Number and amounts of claims not recovered from the person
              concerned as at 31 March 1998, together with an age
              analysis as well as the number of cases not being
              recovered.


          (2) Claims paid during 1998-99.


          (3) Amounts recovered during 1998-99 in respect of claims
              outstanding as at 31 March 1998. For claims received
              during 1998-99, separate figures should be provided.


          (4) The resultant decrease/increase of any balances in
              suspense accounts that are utilised to control these
              recoveries.


          (5) A breakdown of the write-off of R86 000 mentioned by the
              National Commissioner during the hearing in respect of
              the financial years involved.


     6. Stock administration


          The Committee is concerned about the many deficiencies
          reported with regard to the administration of stock. The
          Committee also noted the numerous references by the Head of
          Logistics to limited resources and expertise.

          The Committee therefore recommends that the National
          Commissioner take whatever steps are necessary to ensure that
          the new provisioning administration system for A-class items
          will be completed by September 2001, and that the Committee be
          informed of any material deviations from the implementation
          schedule on a quarterly basis.


     7. Fuel card system


          The Committee took note of the implementation problems of the
          new fuel card system and the fact that the SAPS may serve as a
          pilot project for a total vehicle fleet management system in
          conjunction with the Department of Transport.


          The Committee recommends that progress reports on the
          implementation of the fuel card system, and vehicle fleet
          management systems in general, be submitted to it and the
          Auditor-General on a quarterly basis.


     8. Members on suspension


          The Committee expresses serious concern about the financial
          implications of the number of members on suspension with full
          benefits. The long periods of suspension in certain cases are
          totally unacceptable to the Committee.

          The Committee recommends that it be furnished with a
          progress/status report as at the end of December 1999,
          compared to the end of March 1999, as well as what corrective
          actions have been taken where improvements have not been
          forthcoming.


     9. Auctions and disposal of assets


          The Committee noted in par 3.31 on page 40 that during the
          year under review, audits conducted by the Auditor-General and
          inspections carried out by the Inspectorate of the SAPS
          brought to light serious deficiencies regarding disposals.

          The Committee therefore recommends that the disposal policy of
          the SAPS be revised urgently to maximise income for the
          department. When vehicles and other assets are scrapped to be
          sold, it should happen without any unnecessary delay. Any
          auctioneer appointed should be reputable and be a member of
          the SA Institute of Auctioneers. The possibility of regularly
          rotating staff dealing with disposals should also be
          investigated.


     10.     Leave administration


          The Committee noted the progress made in addressing certain
          PERSAL system problems experienced by the SAPS. However, it is
          also noted that the deadline of March 1999 set for the
          completion of the reconciliation of the manual and the
          computerised leave records was not achieved. It was further
          noted that the ongoing administration of leave is not being
          performed adequately.
          The Committee therefore recommends that the project team
          established in July 1999 to address the issue of leave
          administration, attend to the following as a matter of great
          urgency:


          (1) Provide the Committee with a date when the new "user-
              friendly" manual on leave administration will be
              available.


          (2) Set realistic deadlines for completion of the
              reconciliation of leave records and undertake monitoring
              of the achievement thereof.


          (3) Ensure that the required training of staff is provided.


          Progress on the improvement of the administration of leave
          should be reported to the Committee quarterly as from 31 March
          2000.


 C.     Unauthorised expenditure, R3 405 893 [Page 17, par 3.3]
     The Committee took note of two instances of unauthorised
     expenditure, totalling R3 405 893, consisting of a payment made to
     a consultancy firm without tender procedures being adhered to and
     a payment made to a consultant in respect of a contract extended
     without the necessary prior approval.

     The Committee recommends that the Accounting Officer provide it
     with substantive proof that the service provided did not
     constitute fruitless expenditure.


 D.     Computer audit [Page 50, par 3.45]


     1. The Committee noted that in the past there were weaknesses in
          the system of internal control of services rendered and
          equipment received in the information technology environment,
          that losses were suffered owing to excess charges and
          overpurchasing, that computer equipment was stored in a
          warehouse since 1995 and in the process became obsolete, and
          that there was failure by the department to always update and
          maintain asset registers.


     2. A computer audit of the project management of a network
          contract was also carried out. The key findings of this audit
          indicate a lack of supporting documents, inadequate project
          management and control due to inexperienced project managers
          as well as formal project management standards and procedures
          not being in place. Due to the lack of supporting documents,
          the process followed in reaching the decision to award the
          tender could not be evaluated.


     3. The Committee recommends that the new Accounting Officer take
          the necessary steps to ensure that public funds expended in
          the information technology environment is spent only after
          proper planning and that all related projects are managed
          professionally and in terms of acceptable standards.


 E.     General


     The Committee recommends that the Accounting Officer of the SAPS,
     at monthly meetings with his top management, monitor and evaluate
     progress made regarding the matters referred to above as well as
     the other matters contained in the report of the Auditor-General
     for 1997-98, and that he report thereon to the Auditor-General on
     a quarterly basis in order for the latter to monitor the progress
     on behalf of the Committee.


 The Committee recommends accordingly.

 Report to be considered.

1. Nineteenth Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 1 December 1999, as follows:

 The Standing Committee on Public Accounts, having considered the Report
 of the Auditor-General on the Financial Statements of Vote 35 - Trade
 and Industry for the year ended 31 March 1998 [RP 206-98], referred to
 it, reports as follows:

 Unauthorised expenditure (R3 477 855,94) (Page 6, par 2.2.4) (Listed:
 R2 278 833,78; Reported: R1 199 022,16)


 1.     Over-expenditure of R2 278 833,78 regarded as unauthorised in
     terms of the Exchequer Act, 1975, and listed by the Auditor-
     General, was considered by the Committee. The Committee noted that
     the listed unauthorised expenditure occurred owing to the non-
     compliance with prescripts. As the contravention was of a
     technical nature, the services were rendered, the State suffered
     no loss and the Auditor-General has indicated that the expenditure
     can be authorised legally without detracting from effective
     financial control, the Committee recommends that the amount be
     authorised by Parliament.


 2.     The remaining amount of R1 199 022,16, reported as unauthorised
     by the Auditor-General, refers to expenditure incurred from voted
     funds to host the Second National Conference on Small Business, in
     excess of the R2 million donation received. Further information
     had been requested from the department, and although the Committee
     has accepted the reply, it is concerned at the non-compliance with
     applicable Treasury Instructions. However, in view of the
     corrective measures reportedly implemented by the department, the
     Committee recommends that this amount be authorised by Parliament.


 The Committee recommends accordingly.

 Report to be considered.

1. Twentieth Report (First Session, Second Parliament) of the Standing Committee on Public Accounts, dated 1 December 1999, as follows:

 The Standing Committee on Public Accounts, having considered the Report
 of the Auditor-General on the Financial Statements of Vote 37 - Water
 Affairs and Forestry and Related Accounts for the year ended 31 March
 1998 and the Performance Audit on Commercial Forestry [RP 208-98],
 referred to it, reports as follows:


 A.     Procurement administration system and related expenditure
     Various internal control weaknesses, which may result in the State
     suffering losses, were discovered during the audit.

     The Committee is pleased with the initiative by the Accounting
     Officer to establish an inspectorate, in addition to the existing
     internal system of control, to do checks on the more than 80
     administration offices scattered throughout the country.

     The Committee took note that 27 people, some of whom have
     subsequently been discharged, have been suspended after
     investigations involving R3,6 million.

     The Committee, however, wishes to express its concern at the long
     delay in finalising some of these matters, and recommends that the
     Accounting Officer urgently address the completion thereof and
     report back to it on progress in this regard by 31 January 2000.


 B.     Trading accounts (Government Water Schemes Trading Account;
     Industrial Plantations Trading Account)


     With regard to both trading accounts the auditors expressed an
     adverse opinion. This means that the financial statements do not
     fairly present the results of operations in accordance with
     prescribed accounting practice.

     The department merely made a poor attempt at an Income Statement
     to the Auditor-General and to Parliament. A Balance Sheet, Cash
     Flow Statement and Notes to the Statements were not submitted as
     required.

     The Committee noted with serious concern that the Department of
     State Expenditure granted permission for the submission of these
     inadequate statements.

     The Committee further noted that these statements did not include
     debtors and creditors, and that the scope of the audit was
     restricted as some of the documents to verify transactions were
     not available. As a result, the information disclosed is of little
     value from a financial management perspective. In fact, it could
     be regarded as misleading, as it poses more questions than it
     provides information. It is also apparent that no serious attempt
     was made to obtain proper debtors information from the regions.

     The Committee took cognisance of the Accounting Officer's view
     that the poor statements are a reflection of the weaknesses in
     administration and that it is inappropriate for individual
     departments to develop autonomous financial management systems.

     The Committee wishes to express its dissatisfaction at the
     inadequate financial statements. It would appear that the
     Accounting Officer allowed irregularities and systems weaknesses
     to dictate to him. The Accounting Officer's responsibility towards
     good financial management remains, notwithstanding these
     limitations.

     The Committee recommends -


     1. that the Accounting Officer provide it with explanatory notes,
          to explain the huge variations in these statements, by
          31 January 2000; and


     2. that State Expenditure do an evaluation of the compliance to
          disclosure requirements on all trading accounts in the various
          departments, the reasons for non-compliance, what steps have
          been done to avoid recurrence and what role State Expenditure
          itself is playing in assisting departments, and that it report
          back to the Committee on the progress thereon by 31 March
          2000.


 C.     Commercial forestry


     1. Staffing
          The Committee notes with serious concern that the plantation
          loss of R264 million in the 1998 financial year can be
          ascribed to excessive staff levels and wage rates. The
          Committee took cognisance of the reply from the Accounting
          Officer that supernumeraries would to a large extent be
          reduced by the privatisation of commercial forestry by the end
          of the 1999-2000 financial year. In addition, supernumeraries
          will also be afforded the opportunity to apply for Voluntary
          Severance Packages (VSPs).

          The Committee recommends that the Accounting Officer provide
          it with the status of the reduction in supernumeraries by 31
          March 2000, and on a quarterly basis thereafter.


     2. Contractual obligation


          The Committee notes with serious concern that the department
          and the State is subject to huge claims as a result of
          contracts entered into prior to 1994, which are impossible to
          comply with. Even if the department should successfully
          privatise its commercial forestry operations, these potential
          liabilities will remain with the department.

          The Committee recommends that the Accounting Officer -


          (1) inform the Committee about progress on the court case in
              which the department is defending its failure to comply
              with the terms of the contract;


          (2) determine whether any employee at senior management level
              who was involved in originally entering into the contract
              is currently employed in the public sector or drawing a
              pension from the government; and


          (3) report back to the Committee on progress with these
              matters by 31 January 2000.


 D.     Unauthorised expenditure


     1. Unauthorised expenditure previously reported - R617 788


          In the previous financial year the department made payments
          amounting to R617 788 in four instances without adhering to
          State Tender Board directives. The State Tender Board refused
          to grant ex post facto approval, and the payments were
          accordingly reported as unauthorised.

          The Committee wishes to express its serious concern at the
          inability of the department to trace the documentation and
          determine the actual amount of this unauthorised payment. This
          is another example of poor financial administration in the
          department.

          The Committee recommends that the Accounting Officer, in
          consultation with State Expenditure, urgently address this
          long outstanding matter and report back to it by 31 January
          2000 with proposals on how to resolve the matter.


     2. Water Law Review - R1 838 557


          During the year under review the department made 35 separate
          consultant appointments to make progress with the SA Water Law
          Review, which included preparation of the National Water
          Policy for South Africa, the National Water Act and the Water
          Services Act.
          Twenty-one of these appointments, fee payments of which
          amounted to R1 838 557, were reported as unauthorised, as the
          department did not comply with State Tender Board directives.

          The Committee wishes to express its dissatisfaction at the
          department's blatant disregard for State Tender Board
          directives and at the fact that the Accounting Officer did not
          even apply for ex post facto approval of these payments. The
          Committee finds it unacceptable that Accounting Officers often
          cite time constraints as a reason for contravening
          regulations, and, because projects achieve a desirable
          objective, expect the Committee to condone these decisions.

          The Committee recommends that the Accounting Officer provide
          the Committee with additional information regarding -


          (1) the hourly rates and amounts paid to the 21 consultants;
              and


          (2) the amount spent on marketing and promotion.


          The Committee further recommends that the Accounting Officer
          provide the additional information by 31 January 2000, at
          which stage the Committee, after evaluation thereof, will make
          an appropriate recommendation.


     3. Utilisation of savings


          During the year under review the department utilised savings
          under certain programmes to finance expenditure under other
          programmes. This utilisation of savings is regarded as
          unauthorised, as the department did not obtain prior Treasury
          approval.

          Due to the incomplete capturing of budget information on the
          financial management system, it is not possible to determine
          the amount of savings utilised, and hence the amount of
          unauthorised expenditure.

          The Committee wishes to express its dissatisfaction about the
          under-utilisation of the limited capabilities of the financial
          management system. The Committee recommends that the
          Accounting Officer, in consultation with State Expenditure,
          determine the unauthorised amount and report back to it on
          progress made in this regard by 31 January 2000.


 E.     Outstanding information


     During the hearing on 27 October 1999, the Accounting Officer
     undertook to provide the Committee with additional information
     regarding various matters.

     No such information has been received at the time of finalising
     this Report, and hence certain aspects could not be dealt with in
     the Committee's recommendations.


 The Committee recommends accordingly.

 Report to be considered.

                       MONDAY, 10 JANUARY 2000

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    The Joint Tagging Mechanism (JTM), in terms of Joint Rule
     160(3), classified the following Bill as a section 75 Bill:


     (i)     Limitation of Legal Proceedings against Government
          Institutions Bill [B 65 - 99] (National Assembly - sec 75) -
          (Portfolio Committee on Justice and Constitutional Development
          - National Assembly).


 (2)    The Joint Tagging Mechanism (JTM), in terms of Joint Rule
     160(4), classified the following Bill as a section 76 Bill:


     (i)     Preferential Procurement Policy Framework Bill [B 66 - 99]
          (National Assembly - sec 76(1)) - (Joint Committee on
          Preferential Procurement Policy Framework Bill).


 (3)    The Minister of Finance on 21 December 1999 and 28 December
     1999, respectively, submitted drafts of the Financial Institutions
     (Investment of Funds) Bill, 2000, and the SAA Unallocatable Debt
     Bill, 2000, as well as the memorandums explaining the objects of
     the proposed legislation, to the Speaker and the Chairperson in
     terms of Joint Rule 159. The drafts have been referred to the
     Portfolio Committee on Finance and the Select Committee on Finance
     by the Speaker and the Chairperson, respectively, in accordance
     with Joint Rule 159(2).

National Assembly:

1. The Speaker:

 (1)    The President of the Republic submitted the following letter,
     dated 13 December 1999, to the Speaker of the National Assembly,
     informing Parliament, in terms of section 201(3) of the
     Constitution, 1996, of the employment of the South African
     National Defence Force in terms of section 82(4)(b)(ii), read with
     section 227(1)(d), of the Constitution of the Republic of South
     Africa, 1993 (Act No. 200 of 1993).


     REPORT IN TERMS OF SECTION 201(2) 0F THE CONSTITUTION OF THE
     REPUBLIC OF SOUTH AFRICA, 1996 (ACT 108 OF 1996) ON THE EMPLOYMENT
     OF THE SOUTH AFRICAN NATIONAL DEFENCE FORCE FOR SERVICE IN THE
     PROVISION OR MAINTENANCE OF ESSENTIAL SERVICES RELATED TO THE Y2K
     PHENOMENON


     1. This serves to inform the National Assembly that I authorised
          the employment of the South African National Defence Force
          (SANDF) personnel and equipment in the Republic of South
          Africa for the provision and maintenance of essential services
          in the event of unforeseeable breakdown related to non-
          compliance with Y2K compatibility. This employment commenced
          from 10 December 1999 to 16 January 2000. This employment was
          authorised in accordance with the provisions of section
          82(4)(b)(ii), read with section 227(1)(d), of the Constitution
          of the Republic of South Africa, 1993 (Act No. 200 of 1993),
          [which sections continue to be in force in terms of item 24(1)
          of Schedule 6 to the Constitution of the Republic of South
          Africa, 1996 (Act No. 108 of 1996)], read further with section
          3(2)(a)(v) of the Defence Act, 1957 (Act No. 44 of 1957) for
          service in the provision or maintenance of essential services.


     2. The deployment consisted of 3 Battalions (1200 personnel) that
          were placed on standby and were authorised to be deployed to
          the extent necessary in the provision or maintenance of
          essential services such as the water supply,
          telecommunications, medical facilities and ensuring that
          essential state infrastructure was provided for and
          maintained. The operation was known as OPERATION CASTENET.


     3. The SANDF funded the operation from within its current budget
          allocation.
     4. I will also communicate this report to the National Council of
          Provinces and wish to request that you bring it to the notice
          of the Members of the National Assembly.

     Regards

     T M MBEKI


 Referred to the Joint Standing Committee on Defence.

                      THURSDAY, 20 JANUARY 2000

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    Assent by the President of the Republic in respect of the
     following Bills:


     i  Nuclear Energy Bill [B 10B - 99] (National Assembly - sec 75) -
           Act No 46 of 1999 (assented to and signed by President on 20
           December 1999);


     ii National Nuclear Regulator Bill [B 11B - 99] (National Assembly
           - sec 75) - Act No 47 of 1999 (assented to and signed by
           President on 20 December 1999); and


     iii     Local Government: Municipal Structures Amendment Bill [B
           60B - 99] (National Assembly - sec 75) - Act No 58 of 1999
           (assented to and signed by President on 12 January 2000).


     Note: The President has now assented to and signed all the Acts
     (60 in total) passed by Parliament in 1999.


 (2)    The following Bill was introduced in the National Assembly on 20
     January 2000 and referred to the Joint Tagging Mechanism (JTM) for
     classification in terms of Joint Rule 160:


     (i)     South African Airways Unallocatable Debt Bill [B 1 - 2000]
          (National Assembly - sec 75) - (Portfolio Committee on Finance
          - National Assembly) [Explanatory summary of Bill and prior
          notice of its introduction published in Government Gazette No
          20800 of 7 January 2000.]

National Assembly:

1. The Speaker:

 DECISION BY THE SPEAKER OF THE NATIONAL ASSEMBLY TO ESTABLISH AN AD HOC
 COMMITTEE ON REPORT NO 13 BY THE PUBLIC PROTECTOR


 1.     The Speaker of the National Assembly, after consulting the Chief
     Whip and the most senior whip of each of the other parties, has
     decided, in terms of National Assembly Rule No 214, to establish
     an Ad Hoc Committee on Report No 13 by the Public Protector, to
     consider the Report and report to the National Assembly thereon.


 2.     The committee is to be composed of 27 members as follows:


     a. African National Congress


          Cwele S C      Mokaba P R
          Dlamini B O    Nel A C
          Feinstein A J  Nonkonyana M
          Grové S P      Ramotsamai C M P
          Holomisa S P   Xingwana L M T
          Jana D P S
          Landers L T    Alternates
          Mahomed F      Benjamin J
          Masutha M T    Mgidi J S
          Modise T R     Oliphant G G


     b. Democratic Party


          Gibson D H M


     c. Inkatha Freedom Party


          Ndabandaba L B G


     d. New National Party


          Bakker D M
     e. United Democratic Movement


          Mabeta M E


     f. African Christian Democratic Party


          Green L M


     g. United Christian Democratic Party


          Mfundisi I S


     h. Pan Africanist Congress of Azania


          De Lille P


     i. Freedom Front


          Mulder C P


     j. Federal Alliance


          Luyt L


     k. Minority Front


          Rajbally S


     l. Afrikaner-Eenheidsbeweging


          Aucamp C


     m. Azanian People's Organisation


          Mangena M A


 3.     The Committee shall submit an interim report to the National
     Assembly by 28 February, 2000, which report will include a time
     frame for the completion of its business.


 4.     The Committee may exercise those powers in National Assembly
     Rule 138 that may assist it in carrying out its task.

 Dr F N Ginwala
 Speaker of the National Assembly
 Date: 19 January 2000 COMMITTEE REPORTS:

National Assembly and National Council of Provinces:

1. Report of the Joint Committee on Preferential Procurement Policy Framework Bill on the Preferential Procurement Policy Framework Bill [B 66 - 99] (National Assembly - sec 76), dated 18 January 2000, as follows:

   The Joint Committee on Preferential Procurement Policy Framework Bill, having considered the subject of the Preferential Procurement Policy Framework Bill [B 66 - 99] (National Assembly - sec 76), referred to it and classified by the JTM as a section 76 Bill, reports the Bill with amendments [B 66A - 99].

                    FRIDAY, 21 JANUARY 2000
   

TABLINGS:

National Assembly and National Council of Provinces:

Bills:

1. The Minister for Justice and Constitutional Development:

 (1)    uMthethosivivinywa wokuQhubekisa ukuLingana nokuVimbela
     uBandlululo Olungalungile [B 57 - 99].


     The Promotion of Equality and Prevention of Unfair Discrimination
     Bill [B 57 - 99] (National Assembly - sec 75) was introduced by
     the Minister for Justice and Constitutional Development on 27
     October 1999 and referred to the Ad Hoc Joint Committee on
     Promotion of Equality and Prevention of Unfair Discrimination
     Bill.

Papers:

1. The Speaker and the Chairperson:

 Reports of the Auditor-General on the -


 (1)    Financial Statements of the University of the North West for
     1997 [RP 164-99;

 (2)    Foundation for Education, Science and Technology for 1997-98 [RP
     168-99];

 (3)    Financial Statements of the Council for Mineral Technology for
     1998-99 [RP 188-99;

 (4)    Financial Statement of Vote 16 - Health for 1998-99 [RP 140-99];

 (5)    Accounts of the Rustenburg-Marico Regional Services Council for
     1993-94 [RP 145-95];

 (6)    Financial Statements of the President's Fund for 1997-98 [RP 165-
     99];

 (7)    Group Financial Statements of Syncat (Pty) Ltd for 1997-98 [RP
     184-99].

1. The Minister of Foreign Affairs:

 (1)    Agreement between the Government of the Republic of South Africa
     and the Government of the Federal Republic of Germany concerning
     the project "Reorientation and Development of Agricultural
     Advisory Services in the Northern Province", tabled in terms of
     section 231(3) of the Constitution, 1996.

 (2)    Agreement between the Government of the Republic of South Africa
     and the Government of the Federal Republic of Germany concerning
     the project "Promotion of Participative Development Planning in
     the Eastern Cape Province", tabled in terms of section 231(3) of
     the Constitution, 1996.

 (3)    Agreement between the Government of the Republic of South Africa
     and the Government of the Federal Republic of Germany concerning
     the project "Provincial Administration Capacity Building Programme
     Mpumalanga", tabled in terms of section 231(3) of the
     Constitution, 1996.

 (4)    Agreement between the Government of the Republic of South Africa
     and the Government of the Federal Republic of Germany concerning
     the project "Small Business Promotion/Ntsika Enterprise Promotion
     Agency (NEPA)", tabled in terms of section 231(3) of the
     Constitution, 1996.
 (5)    Agreement between the Government of the Republic of South Africa
     and the Government of the Federal Republic of Germany concerning
     the project "Teacher Training (President's Education Initiative)",
     tabled in terms of section 231(3) of the Constitution, 1996.

1. The Minister of Finance:

 (1)    Annual Report and the Financial Statements of the Public
     Investment Commissioners for 1998-99, including the Report of the
     Auditor-General on the Financial Statements of the Public
     Investment Commissioners for 1998-99 [RP 167-99].

 (2)    Fourteenth Report of the Public Investment Commissioners for
     1997-98, including the Report of the Auditor-General on the
     Financial Statements of the Public Investment Commissioners for
     1997-98.

National Assembly:

1. The Speaker:

 (1)    Special Report of the Public Protector on the Alleged
     Irregularities with regard to the affairs and Financial Statements
     of the SFF Association, on the relevant reports of the Auditor-
     General to Parliament, Report No 13.


     Referred to the Ad Hoc Committee on Report No 13 by the Public
     Protector.


                          EXECUTIVE SUMMARY

 INTRODUCTION
 1.1    The key driving force to this investigation was to protect the
       public interest. When it appeared that no loss occurred, I had
       to weigh whether the benefit of investigating further would be
       justified by the cost of the investigation. I have not proceeded
       to investigate matters which have been dealt with elsewhere or
       in other investigations. I have also not investigated matters
       which would not have been of practical benefit to the public.


 1.2    Based on my investigation, a number of key issues were
       identified. Below I have briefly summarised those key issues and
       my findings and recommendations with regard to them.


 1.3    This summary is intended to provide an overview only and should
       not be taken to represent the entirety of the issues, findings
       or recommendations, which are fully contained in the remainder
       of this report.

 CHANGE IN ACCOUNT POLICY (R170 MILLION ISSUE)

 1.4    During the 1992/3 financial year, the Strategic Fuel Fund
       Association (SFF) Management decided to change the accounting
       policy relating to strategic oil stock that had been sold from
       one storage facility and replaced in another during the previous
       three years. This change in accounting policy gave rise to a
       loss of R170 million in the 1992/3 financial year. This was the
       R170 million loss that the former Minister of Minerals and
       Energy Affairs, Dr Maduna, referred to in his responses to
       questions in Parliament. The Minister indicated that this was
       possibly a physical loss to the SFF.
 1.5    During the initial hearings in June 1998, Counsel for the
       Minister put on record that the R170 million was not a physical
       loss as the Minister had indicated in his responses in
       Parliament, but an accounting loss caused by the change in
       accounting policy.


 1.6    Considering and evaluating the accounting policy change was only
       necessary for as long as it appeared that the R170 million was a
       physical loss. Given that there was no physical loss associated
       with the change in accounting policy, I therefore have made no
       finding regarding the reasonableness of the change in accounting
       policy and its disclosure.


 PAYMENTS TO INTERSTATE

 1.7    The SFF contracted directly with the Egyptian General Petroleum
       Corporation (EGPC) to purchase Egyptian crude oil in 1992. Prior
       to this date, due to sanctions, the SFF had effectively
       purchased Egyptian crude oil through a company called
       Interstate, paying Interstate a margin for this service, as was
       normal practice at that time.


 1.8    The SFF continued to pay Interstate a reduced margin (US $0,06 a
       barrel) on all oil purchased through EGPC after 1992. Interstate
       paid the SFF US $0,05 a barrel if they, instead of the SFF,
       lifted the oil under the contract.


 1.9    Allegations were made that the payments to Interstate were for
       no value and were perhaps improper or fraudulent.


 1.10   The evidence showed that the payments were made for the
       effective relinquishing to SFF of Interstate's Egyptian oil
       contract volumes with EGPC, as EGPC did not have additional oil
       volumes to contract with the SFF, without Interstate giving up
       their volumes. Insterstate also provided ad hoc logistical
       services, but these were not the main causa for the payments to
       Interstate.


 1.11   Whilst there were many deficiencies in the documentation of the
       contract with Interstate which gave rise to the suspicion of
       impropriety, I find that there was a valid reason or causa for
       the payments to Interstate. It is however equally true that the
       benefits received for the payments to Interstate reduced or
       weakened over the years as the oil procurement environment
       improved.


 OTHER ISSUES

 1.12   Allegations were also made with regard to:


       a R1 450 million payment by SFF to the Government on April 1997;
       and


       the incorrect posting in the books of SFF of monies recovered
       from the Salem oil tanker incident.


 Whilst I needed to investigate these allegations and have covered these
 issues in the report, it is common cause that no losses arose from
 these issues. As such these issues did not form the primary focus of my
 investigation.

 THE AUDITOR-GENERAL'S REPORT TO PARLIAMENT

 The audit of SFF


1.13    The general allegation was that the audits of the SFF by the
       Auditor-General and his agent Price Waterhouse should have
       identified the problem with regard to the contract underlying
       the payments to Interstate (referred to as the Six Cents
       Agreement) and the other alleged irregularities.


1.14    Parliament specifically requested me to look at the alleged
       irregularities and therefore I considered the audit process only
       in so far as it related to the alleged irregularities as noted
       above.


1.15    Given that there was a valid causa for the Interstate payments
       and that the issue regarding the change in accounting policy did
       not cause an actual loss, I found no basis on which the audit of
       the SFF could be criticised for not identifying these issues.

 The Auditor-General's reports

1.16    The main criticism of the Auditor-General's reporting to
       Parliament was that the 1992/3 management financial statements
       which in previous years had not been published, were published
       for the first time in 1992/3 in an abridged format. The abridged
       financial statements summarised the management financial
       statements and did not separately disclose the R170 million
       relating to the change in accounting policy.


1.17    The argument was that the secrecy provisions, which had
       previously restricted the publishing of crude oil information,
       were sufficiently relaxed to allow full publication of the
       financial statements. The allegation went further to imply that
       the abbreviation had occurred to cover up the R170 million loss.


1.18    Based on the evidence it appears that the Auditor-General (who
       had the discretion after consultation to decide what information
       to publish) in fact published the SFF information much earlier
       than he was required to do. In addition I found that whilst
       there were minor technical difficulties with the abbreviated
       1992/3 financial statements they could not be said to be
       misleading or inappropriate.


 CORPORATE GOVERNANCE/REASONABLENESS OF THE ACTIONS OF THE VARIOUS
 PARTIES


1.19    Extensive evidence was heard on the reasonableness of the
       actions od the various parties to this investigation. This
       included:


       The professionalism of Nkoki Sizwe Ntsaluba (CA) SA (NSN) (the
       Management Auditors appointed by the Minister to audit SFF);

       The appropriateness of the Minister's actions;


       SFF Corporate Governance - the reasonableness of the actions of
       the SFF Board and Management and their interaction with NSN, the
       Minister and the Auditor-General.


1.20    Generally I found that there was distrust between the Minister
       and some of the parties, perhaps due in part to the past
       difficulties experienced in South Africa. It was this distrust
       more than anything that hampered the early resolution of these
       matters between the parties and is probably the main reason that
       this matter had eventually to be referred to my office. Whilst I
       can understand that there may be distrust emanating from the
       past, it is important that this is put behind us so that we can
       work together to create a truly new South Africa. Politicians
       and Government Departments should lead the way in this regard.

1.21    The distrust was further heightened by the SFF reporting
       structure. The General Manager and his team (who are not members
       of the Board) run SFF on a daily basis. They report to a non-
       executive Board. This gave rise to suspicions that the
       information flow to the Board could be manipulated by Management
       and in particular the General Manager. Whilst these suspicions
       were not substantiated, I have recommended that the SFF Board
       should consist of both executive and non-executive Directors as
       recommended by the King Report on Corporate Governance.

1.22    The other allegations against the various individuals have been
       dealt with, where appropriate, in the main body of this report
       and are too numerous and detailed to be summarised effectively
       here.

Note: Copies of the report are available from the office of the Clerk of the Papers.