THURSDAY 14 JUNE 2001 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY
                                ____

The House met at 14:01.

The Chairperson of Committees 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

Ms A N LUTHULI: Chairperson, 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 -

   (a)  the Deputy President officially opened the UWC-Robben Island
       Mayibuye Archives yesterday; and


   (b)  this centre houses the history of the struggle against
       apartheid;


 (2)    believes that this centre will play an important role in
     educating future generations about our painful past and encourage
     them to work for a united nonracial, nonsexist and democratic
     South Africa; and


 (3)    welcomes this most important project which is documenting the
     rich heritage of our revolutionary traditions.

[Applause.]

Mr R J HEINE: Chairman, I hereby give notice that on the next sitting day of the House I shall move:

That the House -

(1) notes that the SAA scandal will cost taxpayers hundreds of millions of rands and that it is the duty of the Minister of Public Enterprises to oversee the SAA;

(2) resolves to request the Government to take the necessary political and legal responsibility and, specifically to remove Minister Stella Sigcau from Cabinet for her failure to exercise her responsibilities properly at the relevant time;

(3) calls on the chairperson of Transnet, Louise Tager, to resign, as a matter of honour, for her dismal discharge of her duties and to remove the Board of Transnet for their serious lapses in corporate governance and their failure to perform their fiduciary duties; and

(4) enquires from Minister Radebe why he has taken so long to become aware of the extent of the disaster and seeks his assurance that similar expensive shocks do not await taxpayers in other public enterprises.

[Interjections.] Mr M F CASSIM: Mr Chairman, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP:

That the House -

(1) recognises that reconciliation among the racial and ethnic groups of South Africa was never expected to be easy, given our long history of repression on the one side and oppression on the other;

(2) notes that, whereas some of our country’s pre-eminent leaders have sought valiantly and heroically to get our fellow citizens to reach out to one another and to respect and honour one another’s humanity in a spirit of genuine Ubuntu, racial polarisation is neither diminishing nor narrowing; and

(3) calls on all leaders -

   (a)  at all levels to work steadfastly and resolutely towards
       bringing people together in order that there is a common
       understanding of one another's languages, beliefs, customs,
       hopes, fears and aspirations; and


   (b)  in the political arena to support a wide-scale revolution of
       goodwill ...

[Time expired.]

Mr R P ZONDO: Chairperson, 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 -

   (a)  that over 200 minibus taxis were impounded in and around Umtata
       for various traffic offences; and


   (b)  a statement by the MEC for Transport in the Eastern Cape, Dennis
       Meer, that the operation also dealt a heavy blow to perpetrators
       of taxi violence; and

(2) commends the Eastern Cape government for embarking on actions that will ensure that traffic laws are obeyed and the safety and security of commuters and the public using this mode of transport are guaranteed.

[Applause.]

Mrs S M CAMERER: Chairperson, I hereby give notice that on the next sitting day of the House I shall move:

That the House -

(1) notes that -

   (a)  today four members of the Democratic Alliance's parliamentary
       caucus are absent to attend the funerals of murder victims in
       their constituencies;


   (b)  farm killings have increased again with seven farmers murdered
       in the past two weeks;


   (c)  vigilante necklacing of crime suspects has restarted in
       townships; and
   (d)  two days after Timothy McVeigh was publicly executed in the USA
       this week a TV2 phone-in programme showed that a shocking 70% of
       their viewers were in favour of public executions;

(2) is of the opinion that this is evidence of the desperation of the South African public about our out-of-control serious violent crime; and

(3) calls on the Ministers of Safety and Security and for Justice and Constitutional Development to come down from their secure ivory towers, protected at taxpayers’ expense, and do something about the problem.

[Interjections.]

Mr J T MASEKA: Chairperson, I give notice that on the next sitting day of the House I shall move on behalf of the UDM:

That the House -

(1) notes the approval of the resignation of Judge Willem Heath, thanks him for his valuable contribution to society and wishes him well in his future endeavours;

(2) expresses its concern that he will not be receiving any benefits due to him under the Judges’ Remuneration and Conditions of Employment Act;

(3) further notes that this pathetic state of affairs smacks of the ANC Government’s unjust dealings and the ANC’s nasty habit of shooting the messenger when the news is bad; and

(4) calls upon the Minister for Justice and Constitutional Development to urgently and appropriately deal with this matter and not to let his emotions cloud his judgment.

Ms N E NGALEKA: Chairperson, 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 - (a) a report entitled Cape Town’s Economy: Current Trends and Future Prospects was released yesterday;

   (b)  the report raised amongst other issues that black people earn
       five times less than whites in the Mother City; and


   (c)  the Democratic Alliance councillor, Mr Kent Morkel, described
       this report as an eye-opener; and

(2) welcomes the report and calls on the Democratic Alliance to embrace the poor and not the rich, join the Government’s call for unity in action to tackle the twin task of overcoming poverty and racism.

[Applause.]

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

That the House - (1) notes that -

   (a)  despite assurances from the government of Sudan that they would
       cease air attacks against the Christian south, the National
       Islamic Front government has unleashed waves of artillery
       bombardments and ground assaults against Christian villages in
       the Nuba Mountains; and


   (b)  reports confirm that Sudanese government forces have subjected
       the beleaguered Christians in the Nuba Mountains to massive
       ongoing bombardment and military attack and that many villages
       have been burned, many people have been killed and communities,
       churches and schools are under attack and in the gravest danger;

(2) commends Frontline Fellowship which has sent five teams to help in Sudan this year alone despite their mission base and high school being bombed nine times in the last fourteen months; and

(3) calls on the Government to put pressure on the government of Sudan to stop waging war against its own citizens.

Mr I S MFUNDISI: Chairperson, I give notice that on the next sitting day of the House I shall move on behalf of the UCDP:

That the House -

(1) notes with great concern the decline and further deterioration in the state of the roads in this country;

(2) realises that failure to recognise the economic and social importance of maintaining roads properly has serious consequences that may result in the collapse of the economy and lawsuits resulting from road casualties may follow;

(3) prevails upon the Government to allocate the Department of Transport enough funds to be able to maintain the roads; and

(4) calls on the Minister of Transport to ensure that roads are safe to drive on.

Mrs D G NHLENGETHWA: Chairperson, 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 with shock and dismay that a Zeerust farmer has employed children between the ages of nine and twelve on his farm to obtain cheap labour, and that while the owner’s grandson rides his bicycle without a care, his peers are paid R25 per week to perform hard labour on the farm;

(2) thanks the Department of Labour for putting a stop to this inhuman reality of the Sopieshoogte farm by forcing the farm owner to sign a compliance order to prevent him from employing children again;

(3) calls on all citizens to end the exploitation of our children; and

(4) recognises that our children are the country’s most valuable asset and therefore should be treated with the necessary respect, love and honour.

[Applause.]

Mr R S NTULI: Chairperson, I hereby give notice that on the next sitting day of the House I shall move:

That the House -

(1) notes that surveys indicate the appalling disparity between rich and poor which is widening instead of narrowing in some parts of our country;

(2) notes further that it is the task of the Government to follow policies which lead to growth and job creation, as it is only jobs for our people which will close the poverty gap; and

(3) therefore condemns the Government for its failure to deliver jobs and opportunities for all South Africans.

[Applause.]

Mrs L R MBUYAZI: Chairperson, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP:

That the House -

(1) salutes the Minister of Environmental Affairs and Tourism and his Lesotho counterpart for signing a memorandum of understanding to conserve the Maluti-Drakensberg Mountains as a peace park;

(2) applauds the fact that this project has received a grant of about R120 million from the World Bank which will serve the purpose of enhancing sustainable development efforts;

(3) believes that this move will help to conserve our natural heritage for generations to come; and

(4) calls on the Minister to give special attention to promoting economic development, and to address poverty and joblessness in developing the peace park. Ms S B NQODI: Chairperson, 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 South Africa will accede to the 1997 Kyoto Protocol;

(2) further notes that South Africa will also ratify the Montreal and Beijing amendments to the Montreal Protocol;

(3) believes that this reflects the commitment of the ANC-led Government to a clean and safe environment; and

(4) commends the Government for embarking on this most important initiative.

[Applause.]

Mr J DURAND: Chairperson, I give notice that on the next sitting day of the House I shall move:

That the House -

(1) notes the worrying signs of civil disobedience all over our country, and that to date the ANC Government has failed dismally to deliver on their election promises of free basic services to all South Africans;

(2) further notes that only the DA-controlled Cape Town Unicity is putting all the people first; and

(3) urges President Mbeki and the ANC Government not to make promises if they are not serious about delivering on those promises, and to start putting all the people first, before civil disobedience escalates to chaotic proportions.

[Applause.]

Prof L M MBADI: Chair, I give notice that on the next sitting day of the House I shall move on behalf of the UDM:

That the House -

(1) notes the valid criticism of the Dutch Reformed Church against the Minister of Education regarding the self-determination of religious instruction at schools;

(2) further notes the constitutionally protected rights relating to religious freedom and the sensitive matters surrounding the interface between religion, education and the youth; and

(3) calls on the Minister of Education to urgently acknowledge and address the Church’s concerns, as well as those of all religions, by allowing them to participate in the discussions on the matter, thereby adhering to the principles of transparent, participative and fair governance.

Mr K MOONSAMY: Comrade Chair, 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 reports that the National Union of Metalworkers of South Africa (Numsa) will investigate South East Asian companies running sweatshops in South Africa;

(2) further notes that it is alleged that these sweatshops pay workers starvation wages and deny them the right to join trade unions;

(3) believes that the democratic Government has passed laws that guarantee workers collective bargaining rights;

(4) supports Numsa in its investigation; and

(5) calls on the union to pass on relevant information, which might constitute a breach of the laws of the Republic of South Africa, to the Department of Labour, so that speedy appropriate action can be taken.

[Applause.]

          GOOD WISHES TO SPRINGBOKS IN GAME AGAINST FRANCE

                         (Draft Resolution)

Mr T D LEE: Chairperson, I hereby move without notice:

That the House -

(1) wishes the Springbok rugby team success in their international match against France on Saturday; and

(2) trusts that the two-match series against France will be the start of a triumphant 2001 season.

Agreed to.

                           POINT OF ORDER

Mr G Q M DOIDGE: Chairperson, I rise on a point of order. During the motion read by the hon member Heine, he referred to the hon the Minister as ``Minister Sigau.’’ Now I know that this is a difficult surname to pronounce, but an attempt has to be made by all of us in this House to pronounce the names and surnames of all hon members correctly. The point of order is that the surname is Sigcau, not Sigau. [Interjections.] The CHAIRPERSON OF COMMITTEES: Order! Hon members, I know some names and surnames are very difficult for some of us to pronounce. All I can do from the Chair is to appeal to all hon members to try by all means to pronounce people’s names correctly. I am aware that it is not easy, but I believe that we can all try.

                         APPROPRIATION BILL

Debate on Vote No 7 - National Treasury (including SA Revenue Service), and Vote No 12 - Statistics South Africa:

The MINISTER OF FINANCE: Mr Chairperson, hon members, it is with immense pride and excitement that I once again bring good tidings and reflect on the achievements of our economy, and chart the way forward for the three departments entrusted with the management of the economy.

The theme of this year’s budget is the sharing of the fruits of the tough decisions, hard work, consolidation and reprioritisation of fiscal spending. The three entities that constitute the Ministry of Finance have played a critical role in ensuring that the policy choices that have been made bear fruit. Today we have an opportunity to reflect upon the contributions of the National Treasury, the SA Revenue Service and Statistics South Africa to our economic performance. We can be collectively proud of the fact that all three organisations have successfully aspired to, and shown concrete progress towards, benchmarking their work against the most rigorous international standards and norms. They have become the important repositories and training grounds of a growing group of black and white intellectual talent and leadership. [Interjections.]

Mr T D LEE: [Inaudible.]

The MINISTER: Mr Chairperson, I am sorry that Mr Lee is making so much noise that I cannot hear myself.

Together, these three organisations have undertaken some of the most exciting, ambitious and far-reaching institutional changes in the public administration, probably even surpassing such initiatives in the private sector. [Interjections.]

Mr T D LEE: [Inaudible.]

The CHAIRPERSON OF COMMITTEES: Order!

The MINISTER: Mr Chairperson, if he were making any sense, he would be heard.

The CHAIRPERSON OF COMMITTEES: Order! Could we please give the Minister a chance to address the House, hon members.

The MINISTER: These formidable changes have been clearly planned, carefully managed and systematically delivered. Their efforts are in the service of the development of a resilient economy, and a proud nation which can hold its own in the most challenging of international fora.

There is ample evidence of a steady improvement in the performance of the South African economy over the past three years. Real growth in GDP increased to 3,1% last year, after just 0,7% in 1998 and about 2% in 1999. Despite the sharp rise in oil prices and the depreciation of the rand, price inflation has remained moderate, and in the first four months this year we made encouraging progress towards our target range of 3% to 6% for next year. Exports grew by over 7% in real terms last year and have continued to perform strongly this year, despite the adverse international environment. The balance of payments and the nation’s foreign reserves are in a healthier state than they have been for many years, and the public sector borrowing requirement has fallen from over 5% of GDP to just over 2% in the past four years.

Yesterday, the R150 government bond traded at 10,98%, down from about 13% a year ago. The steady decline in long-term interest rates since 1998 is perhaps the most notable signal of the fact that our financial infrastructure is powerfully positioned for a robust expansion over the years ahead. It reflects confidence that inflation is under control. It means that funds are available for investment. It reduces the cost of capital to businesses seeking to build new plant or purchase equipment. It lowers the cost of borrowing for Government, raising the affordable level of real spending on public goods and services. It represents a significant decline in the price we must pay to attract foreign portfolio investment into our bond market.

The interests of consumers are closely bound up with another financial reform, namely the introduction of the inflation-targeting regime last year. We believe that we are on course to achieve the 3% to 6% target for 2002, agreed with the SA Reserve Bank. Because we have little control over exogenous shocks, such as increases in the price of crude oil, the agreement with the Reserve Bank provides an escape clause, as I indicated a few weeks ago, and I shall today release the letter which we gave to the Governor of the Reserve Bank in February last year. The escape clause was deliberately agreed on to take account of serious supply shocks and to avoid unnecessary monetary tightening, particularly when inflation is seen as an aberration, and to ensure that inflation is not the only thing measured, but economic growth can be taken account of, notwithstanding the shock.

Given the importance attached to the inflation-targeting regime, the Treasury and the Reserve Bank have formed a joint task team to develop our understanding of the inflation process, the implication of both macro and sectoral policies and propose further steps in the inflation-targeting framework. The new target will be announced along with the Medium-Term Budget Policy Statement in October this year.

The healthy state of the nation’s finances is a critical foundation for growth, but it does not guarantee economic success. And so, our efforts must now turn to the details of industrial policy, the provision of infrastructure, investment in skills, the structure of our labour markets, and the evolution of transport, communication and other services on which dynamic growth and employment creation depend. These are themes that extend well beyond our mandate in the Finance Ministry. But we have a modest role to play, which is the subject of this budget debate.

Our influence is not limited to our own national boundaries. As a country, we have actively participated in shaping the international economic agenda through our participation in various multilateral fora. In chairing the annual meeting of the Boards of the International Monetary Fund and the World Bank in Prague last year, we gave prominence to the pressing need for democratisation of the international financial institutions, the urgency of developed country reforms to complement those of developing countries in attacking poverty, and the importance of measures to ensure a more equitable distribution of the benefits of globalisation. We have called for fair access to markets as an important aspect of the development agenda.

We have also been contributors to the economic and social well-being of our continent and our region. In the past year President Mbeki has elaborated a vision for economic recovery in Africa that rests on the foundations of democratic governance, emphasises sound and sustainable economic policies and puts the needs of the very poor first. Mindful of the message our President has taken to the British Government this week, and to Westminster today, it is appropriate that this House should note our own substantial commitments to the development of our region and our continent. These include contributions to the Highly Indebted Poor Country Initiative and to the Poverty Reduction and Growth Facility of the International Monetary Fund. We have cancelled South Africa’s bilateral debt to Mozambique, and we will soon do so in respect of Malawi.

The National Treasury Vote includes annual provision for payments to the African Development Fund of the African Development Bank, which provides financial assistance to the poorest countries in Africa on highly favourable terms. Our shareholding in the African Development Bank has increased to just over 4%, and we expect the bank to play an active role in supporting the goals of the Millennium African Recovery Programme.

Our largest contributions to neighbouring countries are not made through the voted appropriations, but through a revenue-sharing partnership. The Southern African Customs Union provides for transfers of some R8 billion a year to Botswana, Lesotho, Swaziland and Namibia out of a common revenue pool. We are hopeful that a revised agreement will soon be given effect, enhancing its development impact by reserving a component of the pool to be distributed in relation to per capita income.

In our quest for setting world-class standards, we have proactively participated in the various international programmes and processes. In 1996 we subscribed to the IMF’s Special Data Dissemination Standards, and we are one of the very few countries to have fully complied within the set timeframe. We have also agreed that a report on observance of standards and codes should be undertaken in respect of our economic and financial data.

We have now participated in three financial-sector assessment programmes, all of which confirm a general soundness of the financial system, and see no risks to macroeconomic stability. They present a broadly positive endorsement of the South African financial system. South Africa’s markets are described as highly developed and balanced, Government financial and monetary policies as sound, the national payment system as modern and sophisticated, and the legal and regulatory framework as impressive in the comprehensiveness of its coverage.

The fundamental financial reform of our economy is well under way. The significant restructuring of our public finances will continue to bear fruit for many generations to come. Because our public finances are in such a healthy state, we are better positioned to continue to spend more on education, health, social services and infrastructure, all of which contribute significantly to the eradication of poverty and the creation of a better life for all. What we need now is something that no economic model can give us, namely a healthy dose of national pride in what we have achieved.

We must state quite unequivocally that our economy has never been in better shape. Let us now build on these achievements. We must also be frank about the challenges and opportunities that lie ahead and confirm our resolve to tackle them with the same vigour and determination that we have demonstrated until now.

I need to briefly outline the achievements, challenges and plans for the three organisations in the space of the next 10 minutes or so. It is the first time that we are reporting on the National Treasury and it has been a period of consolidation, reorganisation and delivery on a range of new initiatives. We have had financial management improvements, better budgetary planning and fiscal policy. We have taken these together and started intensively in the roll-out of the Public Finance Management Act.

The new Treasury is in place and it is, clearly, an environment within which learning, debating, reporting, analysis and interpreting takes place. It is a very special place for young people to work and be part of a greater set of intellectual activities. The amount to be voted for this year is R9,176 billion. Of that, R491 million is for the actual work of the department. Colleagues will all be familiar with the documents prepared by the Treasury: the Budget Review and the Intergovernmental Fiscal Review and this year, the new Estimates of National Expenditure. These indicate the broad range of work and analysis undertaken within the Treasury.

The intergovernmental relations unit has a very important part to play, taking responsibility for Budget reforms and ensuring that these reforms are carried through into the provincial and local spheres also. This year, the Division of Revenue Act takes a significant step forward in fiscal transparency, setting out the provincial conditional grants in detail and the various transfers to local government with allocations listed per individual municipality. Over the next three years, the focus will be on improving the financial and fiscal position of local government.

The Public-private partnership unit is now fully operational. Priorities over the next year will include strengthening our financial regulation office and bringing greater coherence to the related work of the regulation of financial services and the banking sector. A financial intelligence centre is to be established to address money laundering and financial fraud concerns. The asset and liability management division has not only met our targets for our annual borrowing requirement and managed our considerable foreign and domestic debt portfolio, but it has also introduced a more modern approach to financial risk management.

In the period ahead we will also be focusing on an ambitious programme to reform state procurement policies and procedures, the co-ordination of implementation of the Public Finance Management Act, the Office of the Accountant-General and the management of Government’s central financial management systems.

In respect of Sars, I think that hon members will be very familiar with the substantial changes that have taken place over the last while, in respect of both income tax and customs which are parts of the revenue service. In the year ahead, much of the pioneering work done in laying the groundwork for the emergence of a completely new service will begin to be implemented.

The approach of the Sars in uncompromisingly ensuring that tax and customs fraud and evasion are brought to book will continue to improve the business climate in this country. It will also ensure that the individual taxpayer carries less of the tax burden and continues to benefit from the tax cuts that we have been able to undertake over the past few years.

Today the leaders of legitimate businesses in the retail electronic industry can praise the efforts of Sars and publicly acknowledge that the tough and creative investigative work of Sars has created a level playing field in the electronic retail trade for the first time ever. Tomorrow we want the clothing and textile industries to say that, as a result of close collaboration between Sars, the trade unions and the organised business leaders, this sector has been cleaned of endemic fraud.

I can assure this House that over the next year we will uncover illicit and unlawful activities in several sectors of the economy. We will work with business and labour representatives in creating a new culture of compliance. As colleagues know, in the financial year that ended on 31 March, Sars collected a record amount of R219 billion. This helped to bring down the Budget deficit from the projected 2,4% to 1,9% of GDP.

Last year we introduced, in this House, the most comprehensive set of tax policy reforms in recent memory. These reforms culminated in major legislative changes, principally to the Taxation Laws Amendment Act, which was promulgated on 19 July last year, and the Revenue Laws Amendment Act of 2000 promulgated on 6 December last year. Not only did Sars staff participate in the development of the policy proposals and legislation, but they also ensured that the trained people and technology changes were ready on the designated dates in respect of the big changes that we introduced.

What is remarkable about the achievements is that they happened at the time when intensive work was being undertaken to radically transform the Sars in terms of its business processes, structures, skills profile, the orientation of its staff and the technology supporting the business. In January last year I gave my blessing and support to the Sars management to initiate the change process.

Notable gains have already been made through the creation of war rooms that have resulted in the elimination of the backlog of 2,3 million income tax returns in tax assessments. This resulted in an additional refund of R1,7 billion to South African taxpayers.

Big changes are under way in respect of the processing of customs as well. In respect of customs the focus is, clearly, on combating commercial fraud. Customs will facilitate the flow of higher volumes of trade, including the implementation of trade agreements, through improved clearance of exports and imports.

The Sars management has adopted a bold and uncompromising approach to all forms of internal corruption. Tough action has been taken in the past year against both those who bribe the Sars staff and the staff themselves. There have been 57 dismissals in the past year. Five staff members have already been criminally convicted.

The changes in the Sars have, as their most important element, the repositioning of all the people and attracting highly skilled and motivated professionals to what is now, clearly, a dynamic and exciting organisation. A number of challenges still remain.

Turning then to Statistics SA, as I said before, we need the right data to work with and this is the role of Statistics SA. If we cannot measure it we cannot manage it. The best way to characterise the transformation in this organisation is from a point of decline that we inherited in 1994 to the present, which is clearly sustainability.

The apartheid era saw a fragmentation of the statistical system resulting in poor quality statistics designed to support the interests of the white elite, rather than providing an accurate picture of the social, economic and demographic situation of all our people. A major revitalisation of official statistics took place between 1995 and the present culminating in, amongst other things, the appointment of a Statistician-General towards the end of last year.

The achievements are significant, but there is a need to support and review the outputs of the organisation to ensure methodological rigour, veracity and relevance. The newly-appointed Statistics Council will take on the role of oversight and advice for this challenge.

Very importantly, up ahead is the work that needs to be done to deliver Census 2001. We were privileged to address Parliament on this matter two weeks ago. The roll-out is continuing. This very day, just a few hours ago, the Premier of the Western Cape, Premier Morkel, launched the seventh provincial launch of Census 2001. So, work is clearly under way.

The new organisational structure will promote a more responsible professional organisation focused on the needs of users in three broad areas of work: product output, statistical support, and organisation and management.

In conclusion, the three organisations which are the subject of debate today have demonstrated in practical terms our determination to transform the institutions of the South African state. They have, planned and implemented a wide-ranging set of changes and initiatives which ensure South Africa a proud and prime place on the world stage, and continue to do so.

They will continue to grapple with the challenges of creating learning organisations; organisations which set and strive for the highest standards; organisations that build a new cadre of professional men and women who provide an energetic and creative service to South Africa.

Allow me to express my sincere appreciation to President Mbeki, Deputy President Jacob Zuma and all my Cabinet colleagues for challenging us to do more, better; Deputy Minister Mandisi Mpahlwa for sharing the burden; Barbara Hogan and Qedani Mahlangu, chairs of the portfolio committee and the select committee respectively, for their guidance, support and patience; and also to all members of the portfolio committee here, because politically, notwithstanding party differences, their support has been forthcoming. I would really like to express my appreciation to all of those active members and then to the three Directors-General, Maria Ramos, Pali Lehohla and Pravin Gordhan, and their teams for the incredible amount of hard work and professionalism that they endowed us with, and last but not least, this House for its continued support and guidance. [Applause.]

Ms B A HOGAN: Chairperson, I would like to propose a motion to the House that the Minister be granted a five-day leave break to recover from this pathetic state of coughing and flu that we witness before this House, and I am sure the Deputy President will grant such leave. Am I right? [Interjections.]

It is with great pleasure that I recommend the budget of the National Treasury for the financial year 2001-02 for approval to this House. Under the well-acknowledged and competent leadership of the Minister of Finance and his deputy, together with the capable and skilful management of the director-general and her senior staff, this department consistently produces work of high standard and professionalism. It has successfully and energetically implemented crucial and much-needed economic, financial and institutional reforms in this country, with the consistency and vision that is highly commendable. This has resulted in a stable and sound macro- economic environment, high levels of domestic and international confidence in the management of this economy and its financial systems, and continual improvements in the financial management systems of Government.

As a portfolio committee, it is always a pleasure to interact with this department for it always responds in a highly professional and competent manner, and seldom do we have to deal with issues of grave concern arising from this department. Unlike many other departments, the National Treasury does not deliver basic services to our people on a daily basis, yet, its task is as important and wide-ranging. It has to provide the financial resources for Government to do its work. It does this by raising revenue via taxes, borrowing money, and paying back debt. It draws up the Budget in consultation with other Ministries for delivery purposes and promotes accountability through establishing systems for financial management controls and reporting. It also plays a fundamental role in advancing economic growth, employment and income distribution by formulating and implementing microeconomic policies. Finally, it has to ensure that the financial institutions of the country operate on a sound footing. It has highly responsible tasks that are placed on its shoulders and it has certainly risen to the occasion. In all of these activities, it operates both in the national and international spheres.

This department has had significant achievements, when we bear in mind what it inherited when it came to Government. It inherited archaic budgetary systems, a collapsing system of revenue collection, serious distortion in macroeconomic indicators and virtual international isolation with little international influence. Over the period of time that it has been in control, this Ministry has fundamentally transformed and modernised the Budget process, introduced things that we are now very familiar with, for instance measures for the Medium-Term Expenditure Framework, significantly improved Budget transparency, making much more high-quality information available via various publications and the setting up of the systems of intergovernmental fiscal relations, including the Budget Council and the Budget Forum. Management of debt has been vastly improved by more active management of the debt portfolio and there has recently been, the introduction of co-ordination of public enterprise borrowing.

As regards taxation reforms, Government has introduced the most comprehensive reforms ever initiated in this country on taxation reforms and has undertaken the most complete and comprehensive overhaul of the SA Revenue Services, which, during the apartheid years, was allowed to deteriorate so badly. There is still a long way ahead, but an encouraging sign is that Sars has consistently overshot its revenue collection targets over these last years, and under the capable and determined management of the commissioner, Mr Pravin Gordhan, Sars is systematically moving towards its goals and being transformed into an efficient and capable institution.

On the level of financial management reforms, this Ministry has introduced the Public Financial Management Act, which has completely overhauled the manner in which Government manages its financial management systems internally, and it is working progressively to implement these reforms. On the level of international participation, this Government has moved from being an insignificant player to a very influential voice in the international community, as evidenced last year by our Minister chairing the meetings of the International Monetary Fund and the World Bank.

In terms of microeconomic reforms, reforms initiated by this Government have contributed towards stabilisation of microeconomic environment in this country. These are significant achievements. We often speak of Government battling to deliver. What we have from this Ministry is a Ministry which has successfully and energetically delivered with very profound and positive consequences for the society at large.

There are a couple of issues which I would like to raise in terms of the programme ahead. Wisely, the National Development Agency and the Umsobomvu Fund have been transferred to agencies which are better positioned to monitor and oversee the work of these funds. We would look forward to reports from these institutions in Parliament in the coming year.

Reform of the procurement system remains a vital step forward in that we need to reform a system which has not adequately met our needs as a country and as a Government. We already see movements in that regard and we look forward to those reforms appearing before us in this coming year.

The office of the Public Investment Commissioner controls and invests one of the most significant amounts of funding available in the investment markets. We as a committee will be taking a closer look at the activities of the Public Investment Commissioner as we believe that they have a vital role to play in this economy and for this Government.

We are interested in the comments made by the Minister on inflation targeting, and we welcome the announcement that the letter given to the Governor of the Reserve Bank will be made public. We look forward to the debate on inflation targeting as a two-year deadline draws to a close, and we are moving to the next phase of inflation targeting. We also look forward to an assessment of our macroeconomic framework. We have achieved a considerable amount in terms of this framework, and maybe now is time to assess which way we need to go in the future.

The amalgamation of the two departments of this Ministry, State Expenditure and Finance, has taxed this department enormously and it will still be, at least, another one and a half to two years before this amalgamation has been completed. It has been tackled energetically and we certainly hope that in the year to come this process will be completed. We bear in mind how taxing, actually, it has been for this department.

We welcome, too, this establishment of the financial intelligence centre which will be the final link in the laws which combat money-laundering and corruption in our society. Our committee will be looking closely at the implementation of this financial intelligence centre as it is a critical part of the array of mechanisms to combat money laundering at our disposal. Finally, we still question the inclusion of the intelligence budget in this particular Vote. The Intelligence department has a Ministry now and we feel that their budget should be separated from this. It should not be a simple transfer from this Ministry.

In conclusion, I would like to congratulate the Minister, the Deputy Minister, the director-general of this department, Ms Maria Ramos, her Deputies, Mr Pravin Gordhan and Mr Pali Lehlola, as well as the whole team, including the MECs of finance in the provinces, who have all contributed so ably, so determinedly and so energetically to the wellbeing of our financial systems. [Applause.]

The CHAIRPERSON OF COMMITTEES: Order! Hon members, could you please lower your voices. I can hear what you are saying right where I am. Could you please lower your voices and give other members a chance to debate.

Mr K M ANDREW: Mr Chairperson, it is always a pleasure to follow the hon Ms Hogan at the podium. I would also like to join in wishing the Minister a speedy recovery. In economics it is said that when the US sneezes, the rest of the world gets a cold. I have never taken that literally before. Perhaps I thought it was a joke, but maybe it is not.

I would like to start by congratulating Mr Pali Lehohla on his appointment as Statistician-General since the last budget and wish him well in his new position. I would also like to congratulate the Director-General of the National Treasury and the commission of the SA Revenue Services, as well as their departments on the good work they have done over the past year. I thank them most sincerely for the way in which they have assisted the portfolio committee and its members. Perhaps I should also congratulate the hon Turok on his promotion to speaking after me in the place of the hon Mr Andrew Feinstein. Unfortunately, this does represent a further loss of skills in our society.

There are three specific issues which I want to raise this afternoon. Section 77 of our Constitution requires that an Act of Parliament provide for a procedure to amend money Bills before Parliament, and it must be enacted within a reasonable period after the date on which the new Constitution took effect.

In October 1997 the hon the Minister submitted an inadequate draft Bill, which was rejected by the committee. Since then nothing further has been forthcoming. Now, five years on, we are in breach of our own Constitution. This is not an incidental matter. It is of cardinal importance.

The role of Parliament in determining taxation and expenditure is a critically important function. The current all-or-nothing, take-it-or-leave- it approach to the Budget is totally unacceptable. It may suit the Minister to retain absolute control, but it is inappropriate for a democratic Parliament to have no ability whatsoever to amend the Budget. It is disgraceful that, five years after the adoption of our new Constitution, the necessary legislation is not on the Statute Book. It deserves urgent attention. We cannot expect others to heed the Constitution if we in Parliament fail to do so.

The second issue is of importance, because it tests the credibility of the Minister and could affect large numbers of people. In the debate on capital gains tax last month I said that inflation could have a devastating effect on home owners if the R1 million exclusion on capital gains on private residences was not increased regularly. The portfolio committee was given a specific and unequivocal assurance that there would be a clear undertaking in an explanatory memorandum which would commit the National Treasury to increasing the R1 million exclusion on a regular basis to take into account inflationary effects.

The Minister responded by saying:

I also want to say that at no point was a commitment made to include increases to the value of property sold in the memorandum.

Further on he said:

We made no commitment and, therefore, there is nothing included in the memorandum of the Bill.

What are the facts? On 9 March Sars tabled a document in the portfolio committee containing the responses of Sars and the National Treasury to comments made on the first draft of the Bill. One of the comments was: Provision should be made for increase of limit in line with inflation.'' And the response of the department was:The limit will be increased periodically to ensure that it remains consistent with equity norms, revenue needs and the general price levels.’’

On the same day the National Treasury tabled a summary outline of major policy changes. On page three of that outline the following is said:

Commitment to review the R1 million cap along with other numerical caps.

While a R1 million cap is reasonable in the current environment, some concern was expressed that the R1 million cap would devalue over time. The revised CGT draft does not address this concern, but the the explanatory memorandum contains a commitment by the National Treasury and Sars to adjust the cap upwards to cover anticipated inflation, revenue availability permitting.

This was confirmed by an official of the Treasury, who said:

What we will do, in terms of an explanatory memorandum, is to give a undertaking that that threshold will be reviewed periodically, but it will be conditioned on affordability issues.

On 19 March a further document was tabled by Sars summarising the comments on the second draft of the Bill. In this document one of the comments from an accounting firm was:

If this cap is to be retained, notwithstanding the comments of Treasury, there should be a provision - as was the intention stated by Sars in replies to questions at the portfolio committee on finance - that this amount be increased by the RPI on an annual basis to take account of inflation.

The response to that was dealt with previously by the National Treasury. There is no doubt that an undertaking was given that the explanatory memorandum would contain a commitment to adjust the cap upwards on a regular basis to take into account inflationary effects, revenue availability permitting. I call on the Minister to have the decency to apologise to the House and to confirm that the undertakings given will be honoured.

Last but not least, I want to refer to the problem of the unacceptably slow pace at which money collected by the Fiscus, which is intended to assist people in need, actually is distributed. In respect of matters falling under the control of this Minister there is, firstly, the Umsobomvu Fund, which has accumulated about one billion rand over the past few years but has not yet distributed any of it - not one cent. There is also the issue of the amendment to the Income Tax Act, promulgated in the middle of last year, which provides for certain additional tax incentives for people and companies to donate money to NGOs. This has not come into effect as yet and there are organisations that are suffering, because donors are holding back in the hope of qualifying for a more favourable tax dispensation.

These amendments and this fund are both supposed to assist in alleviating poverty. It is unacceptable that when the Government wants to grab extra money from taxpayers, it gives it the highest priority, but when it is the poor and disadvantaged who are awaiting desperately needed assistance, Government drags it feet and adopts a lackadaisical attitude. Paying lip service to caring about the plight of the poor is no substitute for action which would make a real difference to improving their lives. [Applause.]

Prof B TUROK: Mr Chairperson, if I had known that the hon Andrew was going to start this debate with personal jibes, I would have indicated that it is one of the perks of Parliament to follow the hon Ken Andrew, because it gives one an opportunity to clear up a great deal of misunderstandings and distortions.

I work quite well with the hon Andrew, and I am very glad that his name is not Nigel Bruce. [Interjections.] I would also say that if I had known the kind of detail that he was going to bring up in this debate, I would have moved a motion that the House adjourn for a tea break. [Laughter.] [Interjections.]

Let me say that one of the distortions that the hon Andrew has brought here is about the ANC’s approach to amending the powers of Parliament and the budget process. Can I draw the attention of the House to the fact that the ANC has done a considerable amount of research on reforming the budget process. There has been a great deal of discussion, and this includes the amending powers of Parliament.

We have completed a conceptual framework of the issue. The chairperson of the Finance committee commissioned research and distributed - a year ago, I would like to say to the hon Andrew - this material to the whole of the Finance committee, including the opposition, and has received no comment as yet. We want this process to be open and consultative. We want it to be all- party, we want the whole House to agree, and we want civil society to be part of it. The details of all these proposals will be made available in due course, and the hon Andrew will have ample opportunity to join in the debate.

In the very short time I have available, I would like to devote my comments to the Treasury as an institution. What is clear - and it has emerged from the speeches so far and also from my work in this House - is that the Minister of Finance and his team has created a powerful institution for good governance in South Africa. The consolidation of Finance and State Expenditure, in particular, has created a unified department, which works closely with the SA Revenue Service and which uses Statistics SA - although it was part of the department previously - in what has become a very powerful institution.

My view is that Parliament does not fully appreciate this department as it is now, nor does Parliament appreciate the complexity and scope of the work of the Treasury. It seems to me that we ought to do something about this, because this is a new Treasury and it performs an immense role in our Government and in this Parliament. I want to elaborate on that, but, I first want to draw attention to some weak spots.

Finance and the Treasury excel at the big picture; they are not so good at the smaller things. I want to give some examples. The National Development Agency took a long time to be formed, and I think that it is correct that it has moved to the Department of Social Development. Umsobomvu previously fell under Treasury; it has moved to labour and, I think, correctly so. There have been some problems in the special pensions area. This has greatly improved now, and the Finance committee was able to interact with the department and things are much better.

The not-for-profit issues have also been a bit delayed, but now we see they are on the way to resolution. There have also been some problems, hiccups here and there, with development funding. These are the smaller issues, which have high visibility and great exposure in the public domain, and to which the press pay a lot of attention and create unnecessary irritation in the country and in the work of Finance and the Treasury.

So, I repeat that Finance and the Treasury excel at the big picture, but there are some small issues, which I think we should get out of the way so that Finance and Treasury can make the immense contribution they are making now, without the irritation of those small things. Above all, I think Parliament does not appreciate the full scope of the work of Finance and Treasury.

When we have the Budget debate, the whole House is full, the press is here, it is a great occasion, because it is understood that the Minister of Finance is speaking for the Cabinet and for the whole Government. The Minister of Finance correctly lays down broad policy for the whole country, which affects national, provincial and local government. But, thereafter, it seems that Finance tends to move into the background, individual Ministers take over their departments, and Parliament begins to focus on those areas.

Yet, Finance retains, throughout, very important oversights and financial controls, and this is why the consolidation has been a good thing. There will be more of this, more oversights and more controls, as we shift the focus from macroeconomic issues to microeconomic issues, as were set out by the President and the Budget itself. This is going to have major implications for departments and for all three spheres of government, and we should allow Treasury and the Minister to operate with the excellence that they are able to do on those big issues.

Furthermore, with the Public Finance Management Act there is going to be even more oversight, and there is going to be the need for even more policy direction from the Treasury and from the Minister. We should allow him and give him full scope and the full attention of the House, and the whole House should understand fully what kind of department this is. It is a special department, it has huge responsibilities, and that is the way we like to see it.

My time is nearly up , but I should say that very recently we had an example of the way Treasury and one department - the Department of Trade and Industry - operated in the incentives for industry. We saw an excellent example of how the macro economic responsibilities of Finance meshed with the microresponsiblities of one department, namely Trade and Industry. [Applause.]

Mr H J BEKKER: Mr Chair, I will not indulge in the infighting between the hon Turok and the hon Andrew. I will concentrate instead on the Minister. The Budget allocations to the Treasury are fully justified. During May the IFP supported the Budget in general, and complimented the Minister and the department on a well-constructed Budget. We will now also support Vote No 7: the National Treasury, which includes the SA Revenue Service, and Budget Vote No 12: Statistics SA. With regard to the Intelligence part of Vote No 7, which we will also support, that particular aspect of the Vote will be dealt with by my colleague, the hon Prof Ndabandaba.

The Department of Finance has shown competence and professionalism, and has gained the reputation of achieving its goals and objectives. The Minister, the Deputy Minister and the director-general deserve credit for the good sense and determination which they have displayed in adhering to firm fiscal policy, and, at the same time, very strong fiscal discipline. They exercise this discipline so well that many times they are unpopular with fellow state departments. It is a common fact that they who keep the purse strings tight, cannot be expected to be popular.

The significant advances that have been made by the lowering or narrowing of the forward cover book is a highlight of the department. By improving the overall financial position with the dedication that they did, we have gone a long way. It can be expected that the finalisation of the De Beers transaction will further improve and benefit their forward cover book.

On the monetary side, discipline policies are being pursued, and the doubts about achieving the inflation targets seem to be unfounded. In order that the economy may grow, we need to attract much more foreign direct investment, whilst, at the same time, convincing our domestic investors to do likewise. We cannot expect foreigners to invest in South Africa when our own people disinvest. The recent announcement of the Minister about the Government incentive scheme for industrial development projects is a major step in breaking this logjam.

Preferential industrial projects can now deduct as much as 200% of the investment costs for income tax purposes. It is estimated that the Government could sacrifice as much as R3 billion of tax revenue over the next four years in order to facilitate this incentive.

In addition to the normal depreciation rate of 20%, which has been taken over five years, that particular industry would now be allowed a further 100% deduction of establishment cost, subject to a maximum of R600 million. Not all investors would, however, benefit from this tax-free scheme, since the majority of recently established industries would operate on a loss for at least three years after inception. That is the basic average that we know as applicable.

We trust that the Minister and his colleagues from Trade and Industry will be able to announce further incentives that can also benefit these categories and smaller enterprises outside the industrial sector, such as tourism - in addition to the normal depreciation rate - something we said could be done for these organisations. We all hate to pay income tax. However, despite our personal misgivings, without a doubt, Sars is the largest jewel in Trevor Manuel’s crown.

Without the dramatic turnaround in the performance of Sars, particularly in its revenue collection efforts, we would still be hovering on the brink of the frightening debt trap. Instead, the large revenue overruns of the last four years has not only enabled the Minister to reduce the country’s Budget deficit and reduce the national debt that the new Government inherited, but has, importantly, also done much more for the country.

Sars has to be thanked for the reduction in tax rates and the increased spending on social services. As a party whose constituency is largely poor, the IFP acknowledges the contribution the Sars successes have made to the lives of ordinary South Africans. Much has been changed to both the tax base and the overall tax system. The balance, being equity and economic stimulation, is always at the centre of developments.

The IFP believes that, given the numerous areas of tax reform over the past five years, it is time to consolidate and to carefully assess the tax regime, in order to ensure that the balance that I have referred to is appropriate. While expressing gratitude for the redistributive aspects of the recent tax changes - which the IFP has long understood - we also understand the impact of tax rates and various tax types on the real economy.

The Minister is, therefore, urged to now contemplate and ask whether the business sector, in particular the manufacturing sector and its smaller and medium business strata, is being given the tax stimulation that is necessary. Taking into consideration the recently announced industrial incentives and possible implementation of further incentives, I believe it is now time that small business and tourism also received the Minister’s urgent attention.

The IFP also wants to congratulate the Minister on the improved role of Statistics South Africa. People quickly forget that a few years back Statistics South Africa was constantly under criticism and confidence in the numbers that they produced was, indeed, very shaky. However, over the past three years new internationally used methodologies have been introduced and the quality of data captured enhanced to produce information that is rapidly gaining public respect. People no longer scoff at the monthly consumer price index results and the quarterly GDP results produced by Statistics South Africa. This, in turn, adds to stability in the economy as business, in particular, feels that it can trust the statistics and base important decisions on it.

At a more general level, the quality of the statistics produced by Statistics South Africa is vital to almost every area of policy formulation. Quality statistics lead to quality policy in most instances. People easily forget this, and mistakenly regard national statistics as interesting general knowledge, something such as the ``did you know’’ inside the Chappies bubble gum wrappers.

The IFP, however, understands the vital work of Statistics South Africa and expresses its appreciation for the good and reliable information it has come to produce. In this regard, the IFP wishes Statistics South Africa a successful national census - to be exercised later this year - and asks everyone to co-operate with the census as the findings will inform Government how better to serve the people.

South Africa has so much to offer, particularly our financial, trade and industry policies that go a long way towards opening up opportunities for entrepreneurs. A tendency has developed where many South Africans complain simply for the sake of complaining. If we could stem the tide of crime and corruption, particularly violent crime, this country would be the best in the world.

Few people realise that the recent weakening of the rand was only in respect of the United States dollar. They tend to overemphasise this. In fact, should we measure ourselves against the basket of other world currencies, we would find that the rand has indeed improved. As an example, not so long ago, the rand was quoted against the euro at R7,30 whilst it is presently below R7. In fact, it is now at R6,90. Why do we not look at the other side of the coin regarding the positive aspects of South Africa’s exports at a favourable exchange rate, which could make us more competitive against the United States? If I were the Minister of Finance of the United States, or Alan Greenspan, I would, indeed, have been more worried about the escalating dollar and its devastating effect on their exports.

The visit of President Mbeki to the United Kingdom and his overwhelming reception will open further doors to us. The delegation, including the 80 business personalities, is doing steady work for South Africa. The President’s statement - that of South Africa being an open economy and a true constitutional state - is music to the ears.

Let us work together. Let us work positively in building our country, instead of shooting it down in the flames of negativity. [Applause.]

Mr N M NENE: Chairperson, hon members, the Vote before us today is no doubt the most important of them all, as its aim is to promote economic development, good governance, social progress and raising living standards through accountability, economy, efficiency, equity and sustainability of public finances. This Vote has turned programmes in total, and one of these is fiscal transfers. It is from this programme that the SA Revenue Service derives its allocation, and I am going to confine myself to this particular programme. The South African Revenue Service is charged with the task of collecting approximately 90% of the entire Budget of this country. In order to perform this task, this department has to be well-resourced and well-managed, and I can only sing Sars’ praises for the latter. The achievement of Sars, as we have all heard from all parties, are uncountable. The most outstanding achievement of Sars is the revenue collection, where it has consistently exceeded its collection targets, of which we are all aware and have heard from all the speakers.

The SA Revenue Service has achieved this through a number of efforts, ranging from the improvement of tax morale to the closing of tax loopholes and the tightening of the tax compliance measures. The processing of tax returns has improved tremendously in terms of turnaround time and efficiency. Records show that a backlog of 2,3 million income tax returns in October 2000, was brought down to zero by April 2001.

The zero tolerance of corruption in this institution is evidenced by the criminal investigations that have resulted in a number of convictions amounting to a total of 121 years of imprisonment. Internally, Sars has been equally firm on corruption. Up to five convictions have since been obtained and culprits dismissed - of course, within the confines of the labour legislation. Efforts to improve taxpayer services is given attention by putting key performance indicators in place, and these are being filtered down to all levels of operation.

Under restructuring, the Siyaka restructuring project is currently being piloted in KwaZulu-Natal and should be in operation by October 2001. It will be rolled out to other provinces towards March 2003. This entails the establishment of processing, compliance and service centres.

With regard to customs, 350 additional staff are to be employed in order to expand the capacity and reduce the delays. A mobile office is to be established and procedures are to be aligned with the Kyoto Convention and the risk profiling capacity is being strengthened at the customs components. In line with technological developments, an automated system called the Warehouse Inventory Management System is being put in place and is in the process of being expanded to all state warehouses.

The implementation of the residence-based tax and capital gains tax by Sars has commenced. Sars has come to the portfolio committee and provided us with their implementation plan, which provides comfort that Sars are on track with the latest changes in the tax system, particularly the implementation of the two that I have mentioned. Sars has also advised the committee that there are ongoing negotiations between them and the National Treasury to ensure that their sterling work will not be hindered by lack of funds. The current budget shows an average growth of 17,7% per year for this subprogramme, reflecting the priority of building additional capacity in tax administration.

Let me conclude by commending Sars, under the leadership of Commissioner Gordhan, for being endowed with the dedicated team that has always been available to the committee and the National Treasury that this healthy relationship has produced the results this country needs so much. When those who caused the mess fight back, we shall march forward to a better life for all. The ANC supports this Bill. [Applause.]

Dr P J RABIE: Chairperson, hon Minister, hon Deputy Minister, hon members, the South African economy is becoming an integral part of the new global economic order.

During the past fiscal year the rand has weakened against the dollar, but has retained relative strength against the euro. I will refer to the SA Revenue Service, taxation that relates to the retirement industry and SA Statistics.

The SA Revenue Service has made commendable progress regarding the narrowing of the tax gap. I interviewed a number of tax consultants and they suggested the following. The recently introduced Nitt system is apparently having teething problems regarding the assessment of tax and the interest that taxpayers owe. Apparently, the scheduled statement on how much the client owes is problematic and does not carry the full outstanding balance. The respondents also expressed reservations regarding the vast amounts of printed paper they receive. The Statement of Account IT93 can be more user-friendly and they requested that tax form IT34 be redesigned.

The tax committee of the Commercial Financial Accountants of South Africa has suggested some changes to the format of the tax forms and I trust that the Director of Revenue Services, Mr Gordhan, and the tax committee will be able to discuss these problems.

Another problem cited is that in the revenue offices in Cape Town and Bellville it is extremely difficult to establish direct telephone contact with relevant officials. However, I was asked to mention that the legal interpretation department of the Bellville branch has gone out of its way to help with requests and enquiries.

I think all of us will agree that it is of importance that one’s tax assessment documentation is user-friendly. A further request was that the hon the Minister and his officials look at the lump sum exempted from tax at the date of retirement. The amount of R120 000 which is tax free has remained constant for a number of years. The retirement industry is a very complex one and articulates the needs of a very vulnerable segment of our society. The asset base of this segment is at present affected by inflation, CGT, estate duties and taxation on retirement funds. An urgent request is made to the hon the Minister to review our present tax system that relates to the retirement industry in general. Section 11 of the Income Tax Act, which deals with the entertainment deduction of R2 500, has remained constant for a number of years. A constituent mentioned that this amount was less than his annual golf subscription. An appeal is made to the hon the Minister to review this amount as well.

A sound statistical, empirical database is of crucial importance to accurately monitor economic growth. If affects the forecast of policy- makers and influences prospective investors. Reliable statistics are also essential for responsible proactive policy implementation.

Of serious concern, however, is that some of the recent statistics released by the National Treasury are suspect. Ecosa reports in the Financial Mail of 6 April that the percentage growth in revenue and expenditure between the 1999-2000 and 2000-01 fiscal years was incorrectly reported. The mistake was in the figures for 1999-2000. It is shown as 19,7% and 18,6% respectively. In fact the increases were 8,7% and 9,3%.

There are a number of current limitations to our empirical data that relate to the balance of payments reporting. Our present financial and economic database is inadequate. To cite a number of examples, the last census of the mining companies was conducted in 1996; the census for the manufacturing industry in 1995; for hotels in 1994; and for wholesale and retail trade in 1993.

The errors in South Afica’s empirical data have important implications for the economy as a whole. What are the real earnings from exports of goods and services, if all transactions are not properly recorded? What foreign investors look for before deciding to invest in a country is accessible, reliable up to date representative data. The question we should ask ourselves is: Is enough money budgeted for the October 2001 Census? It is in the national interest that all role-players participate in this census.

Two other figures often cited by officials, politicians and academics relate to unemployment and emigration. It is easy to hide behind definitions regarding jobs, work and employment. What is a reason for concern is the expanded figure of Statistics SA that at present between 5 million and 6 million, or 35,5%, of the total workforce can be categorised as unemployed. We can go even further. It is accepted that unemployed matriculants could be as many as 1,5 million. My contention is that it can be even higher.

One of the reasons for the escalating figure of unemployment is the seriously underestimated official statistics that relate to the serious loss of skilled migrants, because skilled migrants provide work and can be labelled as entrepreneurs. The present manner in which Statistics SA sources migration figures from the Department of Home Affairs is questioned by a number of research units. To elaborate upon this statement, Statistics SA estimates that nearly 20 000 skilled South Africans left the country in the period 1994 to 1997.

A Cape Town-based development research unit instituted a research project called SA Network of Skills Abroad, Sansa. What they in essence did was to investigate the number of skilled South Africans that had taken residence in the five big destinations - the UK, the US, New Zealand, Australia and Canada - accounting for 77% of our total emigration. What they in fact found was that 43 000 economically active people emigrated during the period 1994 to 1997 and a total of 66% of them were highly skilled migrants.

One of the major shortcomings of our present labour market, in particular, is the skills shortage. Is it possible to devise a proactive labour policy regarding given needs, if one’s information database is inadequate? A challenge to all South Africans and to policy-makers in particular is to cultivate a positive attitude regarding South Africa in the minds of our large migrant populations abroad. Negative reports about South Africa by exiles tend to discourage foreign tourism and investment in South Africa.

The national Circle of Sunshine campaign aims to bring South Africans working abroad so far as to share their expertise with people working in their fields in South Africa. [Time expired.][Applause.]

Mr M S BOOI: Chairperson, Minister, director-general, I have been asked to speak on Sars, which is quite crucial to us since the commissioner has given us our returns. It is the result of the work that he has been able to do since 1994.

When we came into Government in 1994, we established a number of commissions to make recommendations to the new Government. One of those recommendations was to deal with the issues of the autonomy of tax collection. That is when the SA Revenue Service came into being.

Since the Margo commission recommendations, we need to look at how far we have gone. Have the institutions been built to the rectify capacity and have the right personnel been found? The state of matters or problems that were attributed to the performance of the commission were condemned by the Auditor-General in his report in 1992. He raised the issue of inefficiency and shortages of personnel with appropriate experience and qualifications.

The issue of the lack of autonomy of the revenue offices related to the power to make appointments, to determine the grade of persons appointed and associated salary scales and to effect promotions and the filling of vacancies. It is very important for us to understand the role of the SA Revenue Service. They have to design a proper infrastructure that can handle the intricate and sensitive task of evoking proper responses from taxpayers. These responsible officials must have at their disposal expertise and an extraordinarily broad range of experts in commerce and industry to take cognisance of our diversity.

Billions of rands are handled by these revenue offices and failure to effect revenue collection effectively threatens the sustainability of Government’s social and economic spending. It is very crucial for the ANC to take cognisance of the fact that this is not just growth on its own. It is not a responsibility that came about on its own. It came out of the efforts and the good policies of the ANC. The ANC has to play its role and keep its eyes on the performance of the South African Revenue Service.

What are the issues that Sars is faced with and what is it supposed to be doing? There is continued dualism in the national economy. The population is growing. There is a culture of low tax morality, high levels of unemployment and increased demands for improved delivery.

What are the other things that that SA Revenue Service has shown us that it is able to do under Pravin Gordhan? Pravin Gordhan has been able to introduce a new management system. This system has been able to produce the money that is needed by the community and South African society. The other issue that Pravin Gordhan has been able to tackle is the culture of not paying and not caring. He has also been able to address the process, ie how we can continue the process and ensure that everyone gets what they want.

Before I leave the podium, there is a crucial issue that I need to tackle, and I will do so in Afrikaans. I will do so in simple terms because it is very important to me to reflect upon this. Even the hon Ken Andrew has talked about the poor.

Terwyl ons Minister op nasionale vlak belasting vir ons bejaardes besnoei, doen die DA of die Nuwe NP in die Wes-Kaap onder die leiding van Peter Marais die teenoorgestelde. Hulle is nog besig om te diskrimineer teen die armes, bejaardes en gestremdes.

As gevolg van die DA se begroting in Kaapstad, en hulle belastingtariewe, betaal arm gebiede soos Belhar, Guguletu, Langa en Kewtown nog steeds duurder belastingtariewe in rand as Bishopscourt, Clifton, Bantrybaai en Plattekloof. Dit is duidelik dat die DP en die Nuwe NP geen gevoel het vir die armes nie, en voortgaan om net die belange van die rykes en die meeste wit inwoners te bevorder.

In die tyd van ANC-beheer van die Tygerbergse en Kaapstadse munisipaliteite is daar afslagtariewe vir gestremdes en bejaardes ingestel. Peter Marais en die DA bewys weer eens deur hulle begroting dat hulle glad nie omgee vir ons bejaardes en gestremdes nie, want hulle het nie hierdie afslag vir bejaardes uitgebrei na die hele stad nie. Die gevolg is dat ons mense net eenvoudig sal móét verseker dat dit voortgesit word! (Translation of Afrikaans paragraphs follows.)

[Whilst our Minister is reducing tax for our elderly at national level, the DA or the New NP in the Western Cape, under the leadership of Peter Marais, are doing the opposite. They are still discriminating against the poor, the elderly and the disabled.

Due to the budget of the DA in Cape Town, and their tax tariffs, poor areas such as Belhar, Guguletu, Langa and Kewtown are still paying higher tax tariffs in rands than Bishopscourt, Clifton, Bantry Bay and Plattekloof. It is clear that the DP and the New NP have no compassion for the poor, and are continuing to further only the interests of the wealthy and of most white inhabitants.

During the time that the ANC controlled the Tygerberg and Cape Town municipalities discount tariffs were introduced for the disabled and the elderly. Peter Marais and the DA are once again proving with their budget that they do not care about our elderly and disabled, because they have not extended this discount to the elderly in the whole city. Consequently our people will simply have to ensure that this is continued!]

Ken Andrew says that the Minister is doing nothing for the poor. What I want to point out is that exactly the opposite is taking place in the Western Cape. A lot of rates are being raised in the Western Cape. This specifically happens in poor areas. This is being done by the DP and the New NP and they continue do so under the mayorship of Peter Marais. They do not attend to the plight of the poor at all. It is therefore quite shocking when they stand on platforms and make sure that they are seen as standing with the poor.

During last year’s elections campaign, they continued expressing the view that they were for the poor. But now that they are in power, none among us is able to bear testimony. The people in Manenberg are not able to bear testimony because crime is being attended to only in the urban areas of Cape Town. The way rates are being raised helps people in areas such as Clifton.

It is therefore quite shocking that Ken Andrew comes here and claims that he speaks on behalf of the poor. It is again quite shocking that Ken Andrew claims that they are doing as much as they can for the poor. The examples that they have set up in the DA-run Western Cape continue to show that in terms of performance, the DA is unable to do what the poor expect from it. [Interjections.]

I want to inform Ken Andrew that the Government has provided the infrastructure, but the DA is allowing Peter Marais to destroy what has been put in place by the Government in the past. The DA should ensure that Peter Marais does not do what the DA is unable to do. The DA must convince Peter Marais to improve the lives of all people, not only his own or those of only a few people. He is failing on the issue of the naming of streets. He is wasting the taxpayers’ money. This is one issue we should talk about. [Time expired.] [Applause.]

The DEPUTY MINISTER OF FINANCE: Chairperson, hon members, on 25 May last year, when we debated the Votes of the departments that fall under the Ministry of Finance, we used the opportunity to draw to the attention of the National Assembly some important policy matters that faced us and undertook to report back to this House on progress as we dealt with them.

This debate provides us with such an opportunity, and to us it is of great importance and a pleasure to honour that commitment. The first of these policy matters was that of procurement reform. We indicated that we were grappling with fundamental questions about the model for a procurement system, in the light of the more mature provincial government structures and systems and the existence of the Public Finance Management Act, PFMA, which devolves more managerial flexibility to heads of departments. We posed the question as to whether we should still retain a highly centralised and rules-driven system as our model for procurement.

The purpose of the PFMA is to introduce a system of sound financial management which focuses on outputs and responsibilities. It compels an accounting officer to establish and maintain an appropriate procurement and provision the system which is fair, equitable, transparent, competitive and cost-effective.

It became obvious that there was no complementarity between the PFMA and the procurement. In fact, implementation of the PFMA created an ideal situation to expedite public-sector procurement reform and to align the procurement system with the spirit and purpose of the PFMA.

Ultimately, it became clear that the retention of a highly centralised system of procurement would undermine a fundamental tenet of the PFMA that sought to enable managers to manage, but hold them accountable for outputs. Procurements constitutes a substantial portion of the expenditure of Government departments.

Therefore, we have developed a procurement system that will decentralise and devolve the function directly to departments. Cabinet has since approved that the National Treasury and three other departments be used as pilot organisations for the implementation of the new proposed procurement system that will be in line with the PFMA. As departments implement the new procurement methods, they will be exempted from the jurisdiction of the State Tender Board.

Ultimately, the present system of the national and provincial tender board and their supporting offices will be phased out and the various tender board Acts will be repealed. As implementation progresses, accounting officers will become fully responsible for their respective departments’ procurement and will need to put in place procurement procedures which will be drawn from, and be consistent with Government’s general procurement guidelines. The National Treasury is to provide advice and assistance to all departments regarding implementation issues, including training of the relevant officials.

Government is moving its Public Service towards a more business-focused environment in which, within a given set of resources, heads of department have the flexibility to manage their organisations in order to achieve set outputs against which performance will be measured. Procurement is one input towards the achievement of outputs and outcomes.

In most organisations, money spent on procurement is the next highest outlay after human resources. That means that procurement itself has to be subjected to a much closer examination to determine, firstly, the degree to which its inputs contribute directly to the desired outputs and outcomes - in other words, effectiveness - and, secondly, whether it can be done in a better way to achieve internal cost savings or efficiency.

Proper and successful government procurement rests upon core principles of behaviour, and those principles have now been incorporated into Government’s General Procurement Guidelines which were issued by the Minister of Finance. These will serve as the central framework within which all departments must operate, and will ensure that there is value for money; open and effective competition; ethics and fair dealings; accountability and reporting; and equity.

On the question of equity, Parliament has approved the Preferential Procurement Policy Framework Act. Draft regulations supporting this Act have been prepared and will be promulgated once they have been approved by the Minister of Finance.

The second policy matter that we raised last year was that of how best to position the Government’s Employees Pension Fund and the Public Investment Commission, which currently exist as two separate entities that are governed by separate legislation. Since then, Cabinet has given approval for a review of the organisational structure and institutional capacity of the PIC and the GEPF, which includes an investigation of the desirability of integrating the two entities into one agency. An important part of this work entails an evaluation and incorporation of the findings of a fact- finding study tour to Europe and the USA which was undertaken in August and September 1999, with a view to investigate best practice as regards public sector benefits administration and investment.

The salient points of that investigation are that the three largest retirement funds in the world are managed by nonprofit government agencies, the main features of which are autonomy from government, with management of the agencies answerable to a board of trustees who have the ultimate responsibility, and that government exercises indirect control of the agencies by appointing half of the trustees. The senior management are employed on a contract basis, and the other staff remain and are remunerated as civil servants, with a view to attracting highly skilled and experienced personnel at management level. The organisational structure provides for investment and benefit administration as the core functions of the agencies. Generally, the agencies are regarded as being in the business of providing retirement and health care benefits to government employees in an efficient and cost- effective manner, and whose performance is constantly compared with that of equivalent organisations in the private sector. Among other advantages, the creation of an agency is seen as creating the flexibility to structure agency staff through appropriate remuneration, contracts and performance- related pay.

In the context of examining all these issues, there are a number of questions that arise. Chiefly, it is how the GEPF and the PIC - which constitute the largest pension fund and asset manager in the country - can, in investing the funds under their control, contribute to important national economic objectives such as human resource development, SMME development, infrastructure development, black economic empowerment, and so on.

What the practice and experience elsewhere demonstrates is that a comprehensive investment policy must be the framework within which such objectives can be met. This applies equally with respect to the Isibaya Fund - which was established following an amendment to the Public Investment Commission Act - to allow investment of a portion of funds under its management for infrastructure and social responsibility programmes; the investment of funds towards these objectives must be part of such a comprehensive investment policy framework. I am happy to indicate that substantial work has been undertaken with regard to both matters.

In this connection, a further matter that arises is that the development of a comprehensive investment policy will, of necessity, require a review of the portfolio management agreements entered into in 1995 with five major private sector asset managers. Already, there are clear weaknesses that have been identified in the agreements in their current form in the areas of the terms of appointment, remuneration, investment guidelines and investment performance management. In the meantime - and while all this work is in progress - we have found it prudent to promote closer co- operation and integration between the GEPF and the PIC, such as in areas of human resources and information technology. Parliament will be kept abreast of developments, as decisions are taken and implementation gets under way.

The third area which we referred to last year was that of financial regulation. The critical challenge facing the South African financial sector is that of providing appropriate and sufficient access to banking and finance for all the people of South Africa. Current South African banking legislation is in line with international standards, but makes access to finance among low-income groups difficult.

The Ministry is contemplating an approach to making affordable financial services accessible to all sections of the population based not only on the development of a new legislative framework, but also on broadening the scope of the existing regulatory framework to accommodate informal and formal providers of financial services to the under-banked population. Over the year, this approach will be fleshed out and discussed with relevant stakeholders. With regard to consumer protection, there is also work that is going on to examine a voluntary banking code of practice, with a view to improving it and improving compliance with it by institutions. There is a range of pieces of legislation that will be tabled during the course of this year that are aimed at enhancing the financial and regulatory framework in the country, namely, inter alia, the Pension Funds Amendment Bill of 2001, which clarifies the position of pension funds, furnishing guarantees in addition to granting loans for home loan purposes, broadening the concept of home ownership and providing for the deduction from the benefits of members amounts due in respect of guarantees and loans in cases of default on loan repayment and transfers to other funds. We will also be tabling the Financial Advisory and Intermediary Services Bill, which creates a new regulatory framework for the rendering of financial advisory and intermediary services to institutional and private clients.

Within the area of financial regulation, a further matter we highlighted as work in progress last year was money laundering. We have since tabled in Parliament the Financial Intelligence Centre Bill, which is currently before the joint Portfolio Committees on Finance and Justice.

The Bill that we have tabled and the process that is taking place under the auspices of the committees will challenge all of us in a number of ways, such as ensuring a proper and best possible location for the Financial Intelligence Centre; achieving a close and co-operative relationship among all the relevant stakeholders; and implementation which will ensure a quick process to get the centre up and running. We welcome the vigorous and intense debate that has been generated by this process and will work closely with the committees to ensure the best possible outcome.

Again, within the area of financial regulation we indicated last year as work in progress legislation to regulate the disbursement of surplus funds that accumulated within the pension funds. We have since tabled the Pension Funds Second Amendment Bill which deals with this matter. I must, however, indicate that our best efforts to achieve consensus between labour and business, both in Nedlac and outside, were unsuccessful.

Therefore, in the end, we proceeded to legislate, but taking into account the views expressed by both sides which we sought to incorporate, as far as possible, as we worked to finalise the Bill. Quite obviously, Parliament must expect that when the Bill is finally served before it, the participation and the representations will reflect the fact that the two key stakeholders still stand far apart on this matter.

The final point concerns on the accounting profession, which also falls under our responsibility. I just want to say that a process, which started some ten years ago, has almost reached a point of finality in that a final draft has been tabled before us. However, there are still areas in respect of which there has not been 100% agreement, and areas in which we still have some concerns. As far as those are concerned, we will try to make the best possible policy choices taking into account experience and practice elsewhere. We also hope to table the draft accountancy profession Bill later this year. The final point that I would like to make … [Time expired.] [Applause.]

Mr T R MOFOKENG: Madam Speaker, hon Ministers, hon members, the Budget Vote for Statistics SA was presented by the Minister of Finance here today to Parliament against the background and precised data of Statistic SA. I would like to speak more on Statistic SA. This debate has been brought to Parliament against the background and data of Statistics SA, which made it possible for steady and easy economic growth to be achieved and renewed focus in public policy on microeconomic and structural reforms.

We call for co-operation between Statistic SA, the citizens of the country, the private sector, the three spheres of Government and the Government institutions. This is essential for a successful statistical system. Without the continued co-operation and goodwill, the timely release of the relevant and reliable official statistics will not be possible.

Consciously, it must be borne in mind that without proper and reliable national statistics it would be impossible for the Government, the private sector and the other role-players to plan properly and to develop appropriate policies. It is for these reasons that we must provide adequate resources for Statistics SA. This is more important now, in the light of the fact that Statistics SA will be involved in the major sales operations before the end of this year.

Let me deal with interesting facts about Statistics SA on economical issues. With regard to microeconomic indicators, the seasonally adjusted estimates of real gross domestic products at the market prices for the first quarter of 2001 increased by an annual rate of 2% compared to the fourth quarter of the year 2000. The official inflation rate, for example, the annual rate of change in the Consumer Price Index, was 6,5%. The Production Price Index reflected an annual rate of 8,1% at April this current year.

With regard to labour market, there were 16,2 million people who were economically active in the year 2000. Of these people, 11,9 million were employed, including those working in the formal and informal sectors, for example, domestic workers and small-scale or subsistence agriculture, while 4,3 million were unemployed. The official unemployment rate in the year 2000 was 26,7%.

Amongst the employed there was a downward movement away from working in elementary occupations, from 32% of the employed in 1995 to 27% in 1999, towards more skilled work. For example, there was a movement of machine operators and artisans from 25% of the employed in 1995 to 29% in 1999.

Between November 1999 and November 2000, the average monthly salaries and wages, including bonuses and overtime payments, remained constant at 1995 prices and, real salaries and wages paid to employees in the measured component of formal nonagricultural business sector, excluding specific industries and subgroups, increased by 1,5%.

With regard to education, 94% of children aged between 7 and 15, the compulsory school-going age, are actually attending school. Of the 23,3 million people in the country aged 24 years on more, 2,9 million have not received any education. Twenty-seven per cent of women aged 28 years or more who are living in rural areas cannot read or write in at least one language, as against 10% of women in this age category living in urban areas.

I want to talk about housing, infrastructure and services. There has been a steady increase in the proportion of people living in formal households, from 64% of households in 1995 to 70% in 1999. At the same time, a proportion of households who were living in traditional dwellings decreased from 15% to 11% between 1995 and 1999. But the proportion of households who were living in informal houses increased from 8% to 12% between 1995 and 1999.

The proportion of households with access to electricity for lighting has increased from 64% in 1995 to 70% in 1999. The percentage of households with access to clean water has also increased from 79% to 89%.

I have full confidence that Statistics SA has a team that can work at the maximum speed required by the Minister of Finance. I, therefore, support the Budget Vote. [Applause.]

Mr M N RAMODIKE: Madam Speaker and hon members, the UDM would like to congratulate the hon the Minister of Finance and his team, including the hon the Deputy Minister of Finance, the Director-General of the National Treasury, the Commissioner of the SA Revenue Services, Statistics SA and all officials of the National Treasury on their highly effective and professionally run department and linked units. It is, therefore, a pleasure to participate and to support the Budget Votes before us.

As can be expected in any well-run department, not all is rosy in the National Treasury. Let me make but a few observations. Firstly, we are concerned about the manner in which the Financial and Fiscal Commission is being treated. Chapter 3 of our Constitution deals with co-operative government and spells out the principles of intergovernmental relations. Chapter 13 of the Constitution empowers the Financial and Fiscal Commission (FFC) to make recommendations on this and other matters.

Based on extensive research and the international best practice, the FFC made far-reaching recommendations with regard to the allocation of national revenues for the period 2001 to 2004. These recommendations were, however, rejected by the National Treasury. Sadly, the National Treasury did not use these recommendations to refine the current formula. We are of the opinion that recommendations of the FFC should, in future, be more rigorously debated, and that it should be encouraged to submit recommendations, for instance, on how conditional grants should be allocated.

The hon the Deputy Minister of Finance has already stated the importance of a mature process of procurement with particular reference to the provinces. Various questions have been asked in this regard, for instance, what capacity provinces have to implement procurement reform. Have there been consultations with provinces on the implementation of the Act? How do we measure that preferential procurement is successfully implemented? What database do we have? Has a procurement unit been established, and have regulations been promulgated and implemented?

Thirdly, the problems with regard to the processing of special pension benefits have mounted. During a recent visit by the Portfolio Committee on Finance to the Special Pensions Administration in Pretoria, they became aware of the serious problems faced by this administration, amongst others, a lack of research capacity. We hope that the new board that had been appointed in January 2001 will be able to produce a business plan by the year end that will produce results and get this unit out of the trough in which it currently finds itself. This aspect is not a happy experience for the National Treasury.

Fourthly, we are concerned that the envisaged income, derived from the restructuring of state assets amounting to R18 billion for the current year, may produce serious budget constraints if the process is slowed down for whatever reason. It is important that the Minister sticks with the announced policy in this regard.

In conclusion, I want to commend the SA Revenue Services and Statistics SA for work well done. For the first time, the SA Revenue Services has produced a strategic plan which will assist them in achieving their collection targets during the next few years. I want to thank the department and the hon the Minister for this work well done. [Applause.]

Ms F B MARSHOFF: Madam Speaker, hon Minister and members, I am privileged to participate in this budget debate on Statistics SA, especially as we will be conducting a census during October of this year and as Statistics SA is required by law to conduct a census every five years in accordance with the Statistics Act.

In 1996 we had the first democratic census, which established the baseline against which to measure change. The 2001 Census will give us an even clearer indication of how circumstances of life and living conditions have changed in South Africa. It will assist us to make informed choices when planning and developing policies for the future. Whilst Census 1996 was the first democratic census which provided us with baseline data against which to measure change, Census 2001 is intended to serve as the first legitimate benchmark against which to measure Government against service delivery.

The information will provide statistics that are crucial for planning, not only by Government, but also by business communities, international investors and so on. It will track Government progress in delivering services and infrastructure in even the smallest rural villages, and most importantly, it will be used for allocating budgets to provinces and local governments to achieve our goal of a better life for all.

Let me emphasise a few of the salient points that were highlighted by Census 1996. We discovered that the total population of South Africa was 40,6 million and not 43 million as was previously assumed. It was confirmed that KwaZulu-Natal has the largest population, with the Northern Cape being the least populated. Women constituted 51,9% of the population and 34,3% of the population was under 15 years old, indicating that we are, indeed, a very youthful nation. It was found that 23,8% of Africans older than 15 years of age were illiterate compared to only 1,1% of whites. Only 4,8% of the population were older than 65 years of age. And, approximately 1 million South African households lived in shacks. It could even be more now.

The question that we have to ask ourselves is: How will these figures compare to Census 2001? Have we made a meaningful impact on people’s lives through more targeted and effective service delivery programmes? Have we been able to decrease illiteracy levels and, more importantly, have we been able to increase access to formal housing to the poorest of the poor?

I want to take this opportunity to encourage our communities to participate in the census so that Government can be in a better position to improve the quality of life of our people. The people’s answers to the questionnaire will tell us exactly what is needed and where it is needed. Without their co-operation, this census will not be a success.

Members of Parliament are also requested to play a leading role in encouraging their constituencies to participate in the census. It is not only our responsibility to participate, but it is also our right to be counted and to make a difference in our country. We also want to assure our people that the information gathered during this census will not be divulged to anyone and will be kept strictly confidential. The completed questionnaires will be destroyed once data has been captured. Staff of Statistics SA are also compelled to take an oath of secrecy to ensure that any information given to them will be kept confidential.

Once again we are appealing to our communities to stand up to be counted and to become instrumental in making a difference to their lives. The information gained through this census will be used to plan effectively for the future to provide houses, schools and in other social and infrastructural needs.

Statistics SA will employ 80 000 enumerators who will be recruited from local communities. Supervisors will be people with the necessary skills and competence to oversee the process. It is also envisaged that these supervisors will be the same people who had worked for the IEC during the local government elections. So, through this process, we will ensure economic empowerment to local communities and that skills are transferred to the unemployed.

We believe that everyone has the right to be counted, and it is for this reason that we have changed the methodology for the 1996 and 2001 Census away from the demographic model and we now use the actual head-count model to ensure that the outcome of this census will, indeed, count everybody in.

Statistics South Africa has also embarked on partnerships to ensure that the outcome of this census will be as inclusive as possible. One of the innovative projects is the census-at-schools initiative, which involves learners between grades 3 and 12 who will gather information about themselves. This information will then be included in the national and international database and teachers will be able to use this information in a variety of learning areas.

The project also aims to enhance learners’ data-handling ability to raise awareness about population and housing surveys, and will demonstrate the purposes and processes involved in the census. This project will run during September and October in schools across the country.

After the completion of the questionnaire summaries will be sent to Statistics SA who will analyse and interpret the results and distribute them to schools, where they will serve as a database to inform curriculum development and serve as a resource for effective teaching and learning. We want to thank the international agencies who assisted us, ie USAid, UNFP and Statistics Sweden.

In conclusion, we would also like to congratulate the staff of Statistics SA under the competent leadership of the newly appointed Statistician- General, on the sterling work already done to ensure the successful outcome of this census. We as the ANC support this Vote. [Applause.]

Ms R TALJAARD: Madam Speaker, it is beyond dispute that the granting of administrative authority to Sars was a bold and brave decision with clear benefits.

Sars has certainly succeeded in maximising Government revenue. From a base of R147 billion in 1996-97, the revenue has risen considerably to allow the Minister of Finance to announce income tax relief. For the period 1995-96 to 1999-2000 Sars has collected R16 billion above the target set by the Department of Finance, as well as an additional R8,8 billion for efficiencies already built into the target, which then adds up to a total of R25,199 billion in additional revenue. Nominal revenue growth has averaged 13% per year. Targeted revenue for 2000-01 is R212 billion and the commissioner has assured us that he will meet this target again.

We must realise, however, that despite these welcome efficiency gains at Sars, the revenue bonanza unleashed by Sars’ efficiency gains cannot continue indefinitely. Similarly, Sars’ successes must also never obscure the appropriate policy decisions that have not yet been taken by the National Treasury, such as the need to ensure that relief is given to the top income tax bracket of the corporate sector, and that the tax base is broadened to make it more inclusive.

As we laud the sterling successes of Sars, we need to concede that these successes need to be consolidated. But the sustainability of Sars’ successes could be compromised by the raft of policy changes and certain inappropriate policy decisions that they have been required to implement.

Due to the Minister’s and the National Treasury’s policy decision, Sars is in an ongoing and continuous change management revolution resembling a gruelling and never-ending hurdle race. Sars has to grapple with managerial and institutional challenges of implementing the policy shift from a source to a residents base of taxation, tax on foreign dividends, capital gains tax, the tax incentives for strategic investments, the employment incentive, changes to customs and excise provisions due to a raft of free- trade arrangements.

These are mammoth arrays of simultaneous steps that the Sars team have to take and they are about another introduction of the next Revenue Laws Amendment Bill in June. We have to question our priorities, however. All efforts were made to prioritise the passing of the capital gains tax revenue amendments while the draft legislative amendments to implement the employment incentive have not come to Parliament. Given South Africa’s unemployment figures, we have to ask where our priorities are.

Furthermore, given the shortcomings highlighted by the Auditor-General in his recent report on Sars, there are causes for concern. When the commissioner himself highlights to us, as he did before the Standing Committee on Public Accounts, that Sars is still grappling with the legacy of being bureaucratic and with deficiencies in terms of skills and information systems, alarm bells must ring. This legacy must be eradicated by Sars’ Siyakha re-engineering programme, but it must be done in the context where goal posts keep shifting.

The difficulty Sars is experiencing, particularly in terms of systems and information management, showed up recently in the incorrect trade figures. This incident is a symptom of the scale of internal revolutionary change, in terms of skills in IT, required at Sars if it is to consolidate its successes. Sars’s difficulties are further compounded by having to make the legally required shift to generally accepted accounting practice, and this is required in terms of the Sars Act. We need an urgent resolution to these matters by the Treasury, the Auditor-General and Sars.

A snapshot of Sars is, therefore, disconcerting despite the revenue successes. It is a revenue service in the grip of constant change; a revenue service that is still lumbering with the skill and IT legacy that hampers efficiency; a revenue service that has to stumble from negative Auditor-General’s report to negative Auditor-General’s report; and a revenue service that has to ensure that they place the interests of the taxpayer first while having to adjust their systems constantly as the goal posts keep shifting.

Appropriately, the term Siyakha'', meaningwe are building’’ was chosen by Sars. Perhaps the strongest message we need to convey to the Minister of Finance today is: Give Sars a chance to build. Stop moving the goal posts through inappropriate tax-policy decisions such as the introduction of capital gains tax.

Equally importantly, in the context of the most recent staggering revelations of the loss to the taxpayer at SAA and the commitments we have incurred in terms of the arms deal, we simply have to ask the following from the Minister of Finance as well. Even if Sars jumps all the hurdles the Minister have set for them and consolidates their performance, will they ever be able to garner enough revenue to plug all the holes that are rapidly appearing? [Applause.]

Mr K A MOLOTO: Madam Speaker and hon members, today one can proclaim unashamedly and with pride that the finance of this country is in the hands of men and women who serve with distinction and utmost dedication. [Applause.] It is a cause for much jubilation and optimism for every South African.

Let us reckon with the fact that the treasury of every country is a reflection of its economic potential and an indication of the country’s ultimate destiny. I challenge anyone to show me a treasury of any country, and I will prophesy its future with great certainty.

The achievement of our National Treasury are monumental and fills the heart of every South African with immense pride. It deserves the praise of every member of this House. In recent times the national treasuries of some developing countries - even those of the so-called new industrialised countries - had to seek financial rescue packages from the International Monetary Fund to survive difficulties they encountered.

Our National Treasury endured all the storms and developed a debt- management strategy which is envied by all. Our enhanced international creditworthiness bears testimony to the fact that our National Treasury is the great steward of the finances of this country. The asset and liability division of the department has performed well in developing a sound debt- management strategy and it plays a pivotal role in giving assistance to the Department of Public Enterprises in the restructuring of state assets and improving the financial management of these assets.

I am really proud of the work of Statistics SA. During the apartheid era no credible statistics existed. Let me elucidate this point by informing the House of my own practical experience. In 1994 I was employed by a firm of consulting engineers which worked closely with Mvula Trust with regard to the design and provision of water and sanitation in the rural areas. I was assigned the task of collecting population statistics and design a rough sketch of the layout of the village.

This population statistic is vital to the calculation of the number of litres required per person per day, the capacity of the reservoir, the diameter of the pipes and the number of the stand pipes to be provided to the whole village. Without these figures one will not be able to cost the project.

I went to most local authority offices expecting to find the population data and I left disappointed. This is just a testimony of the lack of integrity of the previous statistics. The gruelling work of assigning the local water steering committee and the task of calculating the number of people had to be undertaken for the success of this project. Now I feel proud of Statistics SA. The information is readily available at the touch of a button.

The National Treasury, through the Sars, has ensured that South Africa has an efficient tax regime, which puts our taxes in line with that of most countries. Sars’ collection capacity has improved greatly and is a reflection of the integrity of the system. Our people are more willing than before to comply with tax obligations after realising the benefits of compliance. The current integrity of Sars is incomparable to any efforts in the history of South Africa, with particular reference to the colonial and apartheid eras.

Let me now speak as a young person of this country and express my joy at these achievements. Let me relive the past events to explain my joy. In the early 1980s, during the existence of Bantustans, it was common to see young men and women, especially the tall ones - I will explain this concept of the tall ones - getting out of buses to avoid being arrested for failure to pay a Bantustan tax. What mesmerised me most was the fact that one’s height was a qualifying criteria to the Bantustan police for being eligible for this tax. I found it the most unscientific method, because it was assumed that if one was tall enough, then one should be carrying a dompas and one was eligible to pay this Bantustan tax. [Interjections.]

It was common to see school-going youth alighting from the bus because they forgot to request a letter from the principal, stating that they were not income earners and could not pay this Lebowa tax. I do not think that even the Roman Empire’s tax collectors, even though they were despised by the populace, were vicious to that extent or applied such an unscientific method as height as a criterion.

After 1994, painstaking work was undertaken to build a revenue collection service with credibility and which would stand out today as one of the best. I am really proud of the SA Revenue Service, despite the comments made by the previous speaker. It is a really world-class institution. [Applause.]

The MINISTER OF FINANCE: Madam Speaker, I do not know whether I have to pay the Ramodike tax today, but, hopefully, he will spare me. Let me start by expressing general appreciation for the debate that has taken place, and for the obvious amount of work that so many members put into their contributions here today.

Let me deal with some of the issues that have arisen. Obviously the hon Andrew would be quite incapable of being positive about them. He raises three issues, and let us deal with them. Firstly, in respect of the procedure to amend money Bills, this is ongoing work. I want to give him the assurance that what he has lost at the hustings, he will not gain in the House. The power to make a budget remains that of Government. It is not only their power, it is also their responsibility. So, in respect of curtailing it, we will have the legislation, but one needs a series of processes in Parliament. The chair of chairs would be able to confirm that there are processes under way to create an environment that can receive this legislation.

In respect of the cap on housing - the R1 million cap on capital gains tax

• I want to stand here again today and give him the assurance that he is wrong in his interpretation. I checked with the officials who were in those hearings again today. They say that part of general good tax policy is to up the rates. Those agreements were struck, but there never was an equivocal commitment to include this in the memorandum to the Bill. I want to give him the assurance that he is entirely wrong on that issue, and we will not concede now. [Interjections.]

In respect of nonprofit companies, we will continue to work with them as we have been doing. There was a big conference convened by the nonprofit companies just recently. We will ensure that we have a system that works, a system that is administratively functional and not one that merely pokes holes in the system of taxation.

In respect of the hon Rabie, let me assure him that if people want membership of golf clubs, then they must pay for it out of their own pockets. One cannot ask the taxpayers to pay for the games of the wealthy. I want to give him that assurance. We do not take account of that because that has been practised in the past and it is wrong in the extreme. [Interjections.]

In respect of the hon Taljaard, the tax policies that she has difficulty with are those that strive towards equity. Whenever we move towards equity, she has a problem. But she cannot change it because the electorate will speak. They want equity and that is why they will put the ANC in Parliament and in government again and again. [Applause.] They will do so until such time as we have attained the goal of equity in this country, notwithstanding the history of this country. [Interjections.]

In respect of the National Development Agency - and this is something that has been raised - we have received more than 4 000 applications in the NDA. The system is running - 1 323 applications have been processed to the value of R310,42 million. Clearly, payments are in terms of performance agreements struck between the board of the NDA and the project receiving it, and the process is ongoing. Clearly, at the rate of more than 30 applications a week, one will never be able to cover the entire ground. But let us give this House the assurance that the NDA, now located in the Ministry of Social Development, is ongoing and functioning well. The machine is well geared.

Let me just express one general reservation, and it is not about Parliament. It is about the fact that we have recorded so much in so short a period of time, but sadly so little of this has been researched by academia and recorded. The upshot of it is that members of this House and the general public are not familiar with the kinds of changes that have been made, be they in general economic management or be they in organisational development, and in respect of the three departments whose budgets we are dealing with here this afternoon.

The changes are legion. They need to be recorded so that we can understand them, but, perhaps more importantly, they need to be recorded for posterity and also so that those in other countries, who are in the process of change, can understand the speed with which we have been able to implement change in this country.

We have not had time to go into all the issues today. We were allowed about two and three quarter minutes per department. It is sad, because, given the amount of work that we have undertaken and will undertake, this kind of time does not allow for adequate oversight by Parliament.

When the hon Andrew speaks it is very clear. I heard somebody carping that he was going to be the Minister of Finance. I want to say: ``Not in my lifetime!’’ [Laughter.] But let me just say that what his comments here have shown is that he has never run anything but his mouth, and look at the mess that he has made of that. [Laughter.] Let me conclude by saying …

The DEPUTY SPEAKER: Order! Hon Minister, are you prepared to take a question?

The MINISTER: Madam Speaker, of course I will take a question.

Mr K M ANDREW: Madam Speaker, there may or may not be some concerns in the market. We understood that the Minister only had a cold, not a terminal illness. I hope he can clarify that. [Laughter.]

The MINISTER: Madam Speaker, I will clarify it by saying that the bulk of South Africans are poor, they support the ANC, and for as long Ken is a member of Parliament, there is no chance that the DP will be in government. That is a fact. [Interjections.] [Applause.]

Let me conclude by saying that I have been advised this afternoon that there is some very good news for all South Africans in the economy, again arising from some hard work undertaken by Government. There is some very good news in the pipeline, but we will allow the Governor of the central bank to make the announcements. [Applause.]

Debate concluded.

                         APPROPRIATION BILL

Debate on Vote No 7 - National Treasury (Intelligence):

The MINISTER FOR INTELLIGENCE: Madam Speaker, members of Parliament, I need to share some good news myself, but perhaps not on the scale that Minister Manuel has. I want to say to members here that the former and honourable Minister for Intelligence, Minister Nhlanhla, is recovering very well. The ANC has made sure that he is given all the necessary medical attention that he requires. [Interjections.] I hope that he will be back with us before the end of the year. This is just to prove that, in fact, whatever happens, the ANC does look after its members. [Applause.]

Since my appointment as Minister for Intelligence on 26 January 2001, I have been grappling with what, to me, is an all-consuming issue of what direction the services should take to enable them to deal adequately with the challenges that they face. As we enter the 21st century, we find ourselves on the verge of a revolution - a revolution of ideas about us, about the way that we would like the world to relate to us and the way that we want the world to perceive us. At the same time, it is a revolution in the application of new technologies which have radically transformed the tools of our trade and heightened the complexities of our activities.

To us in the intelligence services this revolution coincides with a natural hiatus in which, at all levels, we have new management that has brought new ideas into the services. It is against this backdrop that we intend launching the services to what we envisage could be new heights. The past six years were utilised by my predecessor, the former Minister Nhlanhla, to carve out a new dispensation for the intelligence services; a dispensation that has a mandate worked out by the Constitution, a dispensation that united the myriad of services into one, a dispensation that respected human rights and, further, a dispensation that was very distinct from the old services.

Within the brief period that I have been Minister for Intelligence, I have had the opportunity of accessing the work that was done by former Minister Nhlanhla in the Ministry, and I am satisfied that he met the objectives that he set for himself and, despite the very adverse publicity that he had received in an exceedingly difficult portfolio, I believe he really acquitted himself very well. [Applause.]

We now, however, have to move forward from this premise, which was necessary for the establishment of this order, to one that strives for new ideals. We necessarily have to chart uncharted waters to make our new ideals possible. To this end, we have broadened our understanding of intelligence and its scope in the new era. We have also identified key strategic goals of intelligence away from the traditional spy of yesteryear. Within this environment we have determined that, first and foremost, our role is that of preserving the integrity of the state.

Our responsibility is to advise Government when choices have to be made. This would require prior knowledge of the prevailing setting and to underpin the work of law enforcement agencies by providing them with the kind of information that should give them a head start in the fight against all those who seek to undermine the constitutional order of this country. As a result, our work now encompasses all that which provides national security.

To meet these goals, our services would have to raise themselves to a level where they could give advice to the kind of leadership we have. They must provide the President - who, as we all know, sits up half the night looking at the Internet - with the kind of information that he will find useful and in which he will have confidence.

This means, therefore, that if the President spends six hours on the Internet, I would expect my services to spend 12 hours on the Internet, so that we can keep that much better in pace with him. If we do not at present have that intellectual capacity and if any of the members here feel that they have that intellectual capacity, we would like to have permission from the Speaker to recruit those members here!

I expect our services to have the kind of commitment, dedication and culture that define them as a cut above the normal employee of Government. I want around me that calibre of person in the services, which should allow hon members here to identify them immediately from their personal behaviour. I want the very best of our patriots for the services.

Furthermore, in the context of a globalising world, where the acquisition of appropriate technology guarantees superiority, intelligence services all over the world are required to be highly sophisticated and innovative. Gone are the days when intelligence officers hid behind dark glasses in heavy coats and followed their targets up the street, down the dark alley into the pub and out through the back stairway. Intelligence now is about the sophistication of the technology we employ to execute our work. If, in the past, our major investment was in repairing the soles of the shoes of our surveillance officers, our major investment now will be in technology.

Unfortunately, over time we have allowed ourselves to fall behind in the development of the human capacity and scientific advances necessary to protect our information environment against being manipulated, and in the development of a capacity necessary for us to manipulate our own environment. This, in my view, has posed a serious national security threat to us. The breakneck speed at which technology changes has also compounded our problem. I am, therefore, convinced that the only way we can render ourselves, indispensable within the modern context, is to acquire the above information technology.

We have identified that we need a massive injection of resources … [Interjections.] Please do not leave yet, Minister. We need a massive injection of resources, in order to take ourselves forward on this matter.

It is in this light that we will be embarking on a brave initiative to drastically restructure the Intelligence Academy. I have resolved to close the Intelligence Academy, to allow it to completely refocus and restructure itself, so that it could serve the needs of our present time. With this new shape, we will be entering into smart partnerships with a number of academic and technology institutions.

This is the point from which we will relaunch ourselves. That is why we have to ensure that it is appropriately structured to take us forward. I have this dream that, in time, the quality of research that will come from the new academy will be at a level where we can serve as a reference library for members of Parliament here.

The field of intelligence is continuously evolving and expanding. Within the services we therefore expect a continuous process of vigorous reassessment, which at times will reinvigorate the services. Our recent assessment in this regard has identified economic intelligence, sociopolitical intelligence and environmental intelligence as new and important areas in which we still need to invest our resources.

We have previously not had this capacity and we have had to develop it. With this type of intelligence we are able to provide the state, the parastatals and the private sector with sound economic advice, to make sure that we can make this country as competitive as the best.

We are also continuously improving our trade, so that our services become central to the eradication of crime, and so that we are central, also, to attempts to end corruption within the Government sector. Our greater efficiency will ensure that we, as South Africans, will be protected from all the scourges that undermine our democracy and the integrity of the state, including scourges that weaken the Government’s ability to deliver a better life for all.

I am sharing this with the House, so that hon members understand the kind of services we require and the massive training and retraining that is demanded of us. I am also sharing this to show that the services need to be infused with strategically determined resources to turn this ship in its new direction. More importantly, I am sharing this so that hon members here can rally behind the imperative of ensuring national security by supporting the objective of attaining this highly skilled cadreship that we need to secure our country.

Allow me, further, to inform the House of the initiatives that we have undertaken so far to build the kind of services that we are speaking of here. Shortly after my appointment, we embarked on a process of radically restructuring the Ministry.

Firstly, a Presidential Intelligence Support Unit, which will ensure that the President receives accurate, timely and relevant intelligence reports, is being set up. Secondly, we intend to introduce a new public relations approach to the Ministry, and to this end we intend to establish a client liaison office where members of the Cabinet, departments, as well as Parliament, can get the support they need from time to time.

Thirdly, in the past the services had a very bad image, which I am convinced was not necessarily of their own making. This image is rather a product of history, because intelligence has historically been abused in the previous dispensation. Regardless of the reasons and the circumstances, this image has had a negative impact on the services and their efforts. Moreover, the image of incompetence and fumbling has led to a number of misconceptions about the services and their contribution towards peace and stability in our country and elsewhere in the world. These misconceptions need to be replaced by an understanding of the work the services do.

As a first step in dealing with this problem, I am committing myself, as far as possible, to having an open relationship with the media so that I can mediate on behalf of the services. In this regard I also hope to pick up on a broader debate started by the President. I would like to engage the media in discussions around the concept of national security. I am hoping that through this engagement we would establish a common understanding of what can be disclosed publicly and what, through common interest, we agree cannot be disclosed. Let me hasten to add that I am not, however, pleading for special treatment in the media. When we have done wrong, we expect the media to treat us in the same way as they would treat anyone else.

I will, in addition, be launching a public lecture series where we can think about and engage on intelligence matters with all the relevant stakeholders, such as universities, NGOs, human rights organisations and security practitioners, both in the public and parastatal spheres. Let me emphasise that my approach in these interactions would throughout be to create a positive attitude towards the work of the services. In this regard I am motivated by the dedication of the staff of the services, who, when I called upon them to join me in reorientating the services shortly after my appointment, gave me an overwhelmingly positive response.

I appeal to hon members here to assist me in this regard. Let us not fail these many positive people, whose dedication and commitment to this country is second to none. They work without the recognition they deserve, for I can assure members that nothing is as difficult as working under extremely dangerous conditions where, because of the nature of the work, daily experiences cannot be shared, even with close family.

The problem is further exacerbated by the fact that, by its very nature, human beings have a weakness that each one of us wants to be recognised for the work that we do and acknowledged for the work that we do. This also applies to members of the services. I would like to make sure that, from time to time, we recognise the service they render to us behind closed doors. The services are a national asset and therefore we talk them down at our own peril. Let me very briefly go through some of the highlights of our successes in the intelligence services. I know that hon members have been very concerned about the backlog in disciplinary cases within the services. I would like to take this opportunity to assure members that this matter is now under control. On assuming office, I found a number of initiatives under way to improve discipline and organisational conduct within the NIA in particular. These initiatives were aimed at increasing productivity, boosting morale and organisational dedication. Of the cases we have spoken about, we can happily inform members that I have processed all those outstanding cases that were before me when I arrived in the Office. We have also set up a specialised unit to deal with discipline - a move that has significantly reduced the number of outstanding cases.

Secondly, we have an intelligence signal capacity whose potential ensures that we can compete with the best powers in Europe. It is by far the best we have in Africa. It is therefore in our interest to harness this advantage. Thus, we request members to support us in our request to invest in this particular field. It is also on that basis that we hope to establish our new National Communication Centre.

To meet the awesome challenges that we face, we have purposefully turned our attention to providing Government with the kind of security information it needs. Chief amongst the requests we receive is assistance in uncovering corruption. Our commitment in assisting Government in fighting corruption is motivated by the fact that the preservation of the integrity of the state is our core function. We are therefore aware that if we do not use our resources and skills to fight this scourge, we would by omission and facilitating the erosion of the capacity of the state. It is in this context that the services have helped Sars. I listened very intently, hoping that the Minister of Finance would give recognition for this, and he has not! I am sure he will now give recognition to the fact that we assisted them in recovering millions in taxpayers’ money.

The extreme rightwing, which is intent on carrying out subversive activities, was identified, including the responsible individuals. Definitive advice to Government on the extent of disinformation and the generation of artificial information was given to highlight the methods used by information peddlers and mongers who want to undermine the integrity of the state. The services have further identified money laundering, the smuggling and supplying of drugs, as well as the operations of various syndicates as of paramount importance in the assistance we are rendering to the SAPS.

Our responsibility is not limited to the boundaries of South Africa. Internationally South Africa now occupies a position of moral authority, because of its history and its gains. Increasingly the country is being requested to play a leading role in international mediation. This places an additional responsibility on us, because we have to provide quality intelligence and infrastructure for these efforts. Our external service therefore has had to prioritise the provision of these services.

In this regard, the SA Secret Services, together with Defence Intelligence, are actively involved in the Burundi peace process, which our former President Mandela is leading. Members will recall that initially the process had reached a stalemate and that there was no peace agreement in sight. On the appointment of the former President as the new facilitator, the services gave intelligence support which assisted in bringing the rebels and the primary leaders of the different warring groups together around the negotiating table. I could go on counting the successes of our services, but I am sure what we have outlined here is sufficient.

In conclusion, allow me briefly to say a few words about the intelligence oversight committees that we are working in. As members know, the Inspector- General - who, I believe, is here with us today - was appointed on 15 May

1. Unfortunately, shortly afterwards the then Minister of Intelligence Services fell ill and an interim Minister was acting in his capacity. The process of establishing the Office of the Inspector-General was slowed down considerably. I am, however, happy to announce that the office is now operational and the Inspector-General was sworn in this morning. The Inspector-General has been through a trying time with all these disruptions around him. However, all that is behind us now and he will add value to the work of this Government. [Applause.]

Allow me also to acknowledge the support of the Joint Standing Committee on Intelligence. I am privileged to work with the committee and have found a very high degree of understanding of intelligence among its members. I have found that they have the ability to go beyond party-political affiliation when dealing with matters involving national security. With this committee and their approach, we feel confident that our national security interests are in good hands. They have, in the past, presided over sensitive national issues without fear or favour. I have found the committee, and especially the chairperson, an important pillar of support, and they have made my work so much easier.

I am also privileged to work with the kind of team that I work with. I have with me here my co-ordinator, my directors-general my DDGs and some of the top management of my staff. During the time that I have worked with them, they have done me very proud. Their dedication, commitment, professionalism and, above all, integrity, make me feel that, with this team around me, we will definitely achieve our goals. I am convinced that, together, we will take the services to the new heights that we have spoken of.

In conclusion, I would like hon members, if it is possible for them, to go beyond thinking of us as spooks. I would like them at least to think of us in a positive light, as Casper the friendly ghost. [Laughter.][Applause.]

I am very grateful to my staff for the 24-hour dedication that they give, ensuring that we are at least two steps behind our brave, new, pioneering President, and the negotiator, the hon the Deputy President. We want to assure them that we will be the wind beneath their wings.

I heard the DP heckling here. Just when I was thinking that nothing could ever go right for them, I was proved wrong. Unfortunately for me, something did go right for the hon Tony Leon. What happened is that he was saved from himself. He married the type of woman who, in the short space of time that they have been married, has been able to teach him lofty concepts such as national security. I now find his utterances about national security so heart-warming, I could not have hoped for better news. This renews my faith in women. Long live women! I wish we had many such women to scatter around, because then we would have a more sober lot in the DP. [Applause.]

It is unfortunate that we have so few of the ill-fated UDM. I want them to convey to the hon Holomisa that, since he has always threatened those who know him with the heavy files that he always carries - which have made him stoop towards the right, as he carries these imaginary, heavy files - if he has any files with him, he should please hand them over to me. I will make his load lighter, and he might walk straighter. [Laughter.]

I want the hon Mr Green to please convey to the Rev Meshoe that he should stick with us, the friendly ghosts. We will lead him down the path of righteousness, away from the pyramid schemes. [Laughter.]

Finally, our capacity is such that I wanted to offer the ANC caucus our services to plug the leaks from their caucus. But what would life be without the daily newspapers that depend on those leaks? Alas! [Applause.]

Ms N N MAPISA-NQAKULA: Madam Speaker, your Excellency hon Deputy President Zuma and hon members, this is the maiden budget speech of the Minister for Intelligence. I would like to take this opportunity to congratulate her on her appointment.

The challenges that the hon the Minister faces are daunting. We know that she will succeed and we are confident that under her leadership, Intelligence will soar to great heights. We know that the hon the Minister has a committed and dedicated team. I want to take this opportunity to salute the Inspector-General for Intelligence, the Co-ordinator for Intelligence, the directors-general of both the NIA and the Sass, and the head of the ministerial services and his team.

Many challenges lie ahead and we need the Minister’s continued commitment and hard work. This is a legitimate expectation the hon the Minister has to live up to, to use the President’s phrase, as we steadily and surely edge closer to our intelligence vision. With each dawning day, through sweat and goal-oriented work, we edge towards the realisation of a vision that the legislature envisioned when it established the intelligence services, with the Joint Standing Committee on Intelligence as their oversight institution. With the establishment of the office of the Inspector-General, the dispensation now has all its components.

This House, when establishing the Joint Standing Committee on Intelligence, tasked us with, among others, the responsibility to review the budget of the intelligence services and make recommendations to Parliament. This task has been fulfilled as it will soon be evident when we table our report, which has been submitted to the hon the President.

Ever since Parliament established the committee, we have interacted with many international oversight committees for intelligence. Out of these interactions, it has been proven that the work that we do and our experience compare favourably with international standards. This has happened on the basis of hard work, commitment and loyalty to our cause by all members of the committee, past and present. I would like to commend and honour all of them for their dedication.

While we continue to benefit from the experience of those who have been members since 1995, members who were sworn in in 1999, are equal to the work at hand and have been quite tenacious in issues we handle in our committee. These hon members’ contributions are highly appreciated.

We have been able to do our work in the committee, because at all times we were alive to the fact that the nature of our mandate is of such a sensitive make-up that the best way to do it was by consensus. Those who tried political grandstanding in the committee soon discovered that they were completely out of place.

Let me indicate that we, including the Inspector-General, have a responsibility to protect the integrity and image of the services, and to uphold the constitutional rights of our people. The agenda of the committee is not guided by narrow political point-scoring and bickering. It performs its functions with integrity, without fear, favour, bias or prejudice. We do this to maintain and nurture the confidence and trust of both the services and the public.

As each passing day dawns, our intelligence services edge closer to being better. They are doing so within the constraints and difficulties produced by a turbulent process of globalisation, growing domestic and international challenges, the legacy of our immediate history and the forever shrinking resources. These new challenges are designed to make our world confront hunger, joblessness, homelessness and organised crimes such as people- smuggling, drug peddling, abuse and arms trafficking. These challenges are awesome and unpredictable.

To face these challenges, we have to strengthen and consolidate our services. This is a mammoth task, given the scanty resources that we have, both human and material. The technological expertise and experience available to us at this moment is not in sufficient supply. Meanwhile, intelligence continues to entail people, innovation, technology and money. In less than 10 years of democratic rule, this Government has placed on the national agenda a programme that is meant to fully transform the country into a democratic dispensation of peace, security and comfort. Consolidating our democracy means the fulfilment of this national agenda. It means accelerating our work with regard to peace and security.

Intelligence is the cornerstone of that work and acts on behalf of all South Africans. It is to preserve the dignity of our collective being as a people. It provides the state with sound, relevant and accurate advice on national security issues. It is to add value to decisions and policy-making on a range of matters of scientific importance to our country. Our services have been doing more with less, to use their phrase. They secure international conferences and seminars that are hosted by South Africa, and meeting the required international standards of performance during these activities.

We are happy to report that the NIA and the Sass have had notable success in the discharge of their functions, especially as it relates to crime combating, urban terrorism and political violence. These issues will be dealt with in greater detail later by my colleagues.

I would like to briefly touch on the matter of the alleged plot against the President, which recently dominated media reports and political discourse in the country. The JSCI has been concerned about the allegations. We have reviewed the role of the intelligence services in this matter, and we are happy to note that they have observed their legislative mandate. We also commend them on the professional manner in which they dealt with this issue. In the meantime, we await the outcome of the SAPS investigation.

It is against this backdrop that we should examine closely the resources that the services have at their disposal. Let us objectively interrogate these against the country’s expectations and needs. Surely, it is reasonable to expect the resources to be commensurate with those needs. When we finally judge the performance of the services, it must be measured in accordance with the size of the allocations made to them.

The Government’s democratisation programme is anchored on the establishment of a strong, efficient and developmental state which will use the resources at its command to meet the basic needs of all people. A precondition for this is peace and security - peace and security found in a stable environment.

As part of our work, we have interacted with the services regarding their individual budgets and expenditure. The committee is convinced that the resources are far from addressing the needs of South Africa and its people. In fact, the allocation to the services has been shrinking overall from year to year. Meanwhile, this budget includes funding for the Office of the Inspector-General for Intelligence - an integral part of the intelligence services. We are happy to note that this office has now been established. The Office of the Inspector-General of Intelligence is a mechanism that is built within the intelligence dispensation to ensure adherence to the law by the services.

Furthermore, it also covers the budget of the National Intelligence Co- ordinating Committee, which is responsible for the co-ordination of intelligence production, a cornerstone of a quality product. It ensures efficiency and effectiveness, and helps to produce well thought-out and tested intelligence products. The spending centre of the Ministry is also located here. I am sure by now that it is clear to all and sundry what intelligence resource in this country is. This intelligence has to drive the security of this country within these resources.

The JSCI calls for adequate funding of intelligence services, to enable them to drive security in this country. As we do that, we equally take the responsibility of ensuring that these resources are used in a cost- effective way. This ensures that the meagre resources at our disposal are used purposefully and creatively. In this respect, we interact with the Auditor-General, and seek guidance where necessary. We are happy to note that the intelligence services are also co-operating on these matters.

We are just sorry that our committee - and I assume the Ministry as well - has not received the latest report of the Auditor-General on the secret services’ account, and therefore, as we discuss some of these issues and raise some of them, we are not aware of some of the remarks which may have been made by the Auditor-General in his report.

In conclusion, I salute the steps taken by the Presidential Intelligence Budget Advisory Committee to review the budget for intelligence services. The budget for this year shows that things are changing for the better, but it is still a far cry from what these services need. The Deputy President will agree that the road ahead is still long and very difficult, and I just thought that my speech today should be confined to addressing him on this matter. [Applause.]

Prof L B G NDABANDABA: Mr Chairperson, hon Minister, hon members, officials of the intelligence services present here today and honoured guests, the IFP congratulates the new Minister, Dr L N Sisulu, on her appointment as Minister for Intelligence. We wish her well in the challenges ahead. The new Minister has been quick to adapt to her stupendous responsibilities, and she has already made her mark. By the same token, the IFP congratulates our chairperson on giving the Joint Standing Committee on Intelligence good direction.

In supporting the budget of the National Treasury - that is, Auxiliary and Associated Services - I want to emphasise that the IFP subscribes to a minimalist view of the role of covert intelligence, focusing on foreign intelligence collection in the pursuit of an informed foreign policy. In the IFP’s view, the accuracy and quality of such intelligence can and should be enhanced by the exchange of intelligence with allies and friendly nations, both regionally and internationally. The Deputy President should note that that means a lot of money, and that we are appealing for more money for the services.

The IFP further supports a clear break from the past in the sphere of intelligence - that is, transformation, transformation, transformation. Any decrease in the budget will affect the services deleteriously. We cry for more funds for the services.

The department appears to have many programmes. Is there no way that some of these programmes can be integrated, so as to ensure efficient utilisation of resources? Therefore, the services clearly require a financially healthy budget to be run smoothly and efficiently. To appreciate the importance of a good budget, we need to understand the place and role of intelligence in our young democracy. The legal framework for intelligence services in our country is to be found in our Constitution and the relevant legislation.

I want to refer briefly to the National Intelligence Agency’s, responsibilities. The NIA has done a very very good job during the past 12 months, and it has the following responsibilities: to gather, correlate, evaluate and analyse domestic intelligence; to fulfil the national counterintelligence responsibilities and to gather departmental intelligence at the request of any department of state. By the same token, the SA Secret Service has also done a very good job, and it is charged, inter alia, with gathering, correlating, evaluating and analysing foreign intelligence which must be transmitted speedily. I want to underline ``transmitted speedily’’.

To be able to transmit intelligence information without delay, the services need funds. Intelligence services therefore require a sizeable budget that befits their tremendous responsibilities in our young democracy.

Let us look at some of the achievements and successes of intelligence. The NIA and Sass have done a very good job. The JSCI has interacted with all the role-players and stakeholders in the services in order to identify problems as well as analyse the budget and ascertain that funds are handled in a responsible manner. Meetings and follow-up meetings have been held with the NIA, Sass, the Provincial Intelligence Co-ordinating Committee, Picocs, the law commission, Crime Intelligence, Defence Intelligence and His Lordship Justice Gordon. The oversight function has been done well. We congratulate our chairperson on her good leadership. The Ministry and the JSCI need more funds to run further workshops and attend important international conferences. Another important achievement has been the passing of the general laws amendment Act which, inter alia, aligned our services with the Constitution.

In its interaction with the services, the JSCI has become convinced about the necessity to prioritise and reprioritise the financial needs of the services so as to fast-track transformation where it is not visible. Another achievement has been the appointment, for the first time in the history of South Africa, of the Inspector-General for Intelligence. He has been duly sworn in, as the hon the Minister has told us, and we are happy to say that he is present among us today.

In conclusion, the IFP believes that South Africa’s foreign intelligence requirements are determined by levels of internal stability and its relations with the outside world. I concur with Adebayo Oyebade who, in his book Africa After the Cold War, said:

In Africa, the march towards a new world order is fraught with old and emerging problems.

He goes on to say:

In some cases, the search for a democratic political system has turned into civil violence, which threatens the very foundation of national sovereignty.

Therefore, it is abundantly clear from the foregoing that the budget for intelligence services needs to be beefed up.

Finally, by virtue of its position in Government and in Parliament, the IFP can play a crucial role in the intelligence services. It is exciting to hear that the Minister is considering involving the universities and research academies. I can only say amen to that.

I hope that what I have said today has assured the hon the Minister, on a lighter note, of my intellectual capacity to join her team. [Applause.]

Mr L T LANDERS: Chairperson, I also want to congratulate our new Minister for Intelligence on her appointment, and on the dynamic manner in which she has fulfilled her duties in the short four months since she was sworn in. I am particularly privileged to have served with the hon the Minister on the Subcouncil of Intelligence, or what was then called the Transitional Executive Council, TEC.

It is particularly significant and heartening that many of the plans, ideas, proposals and resolutions that served before that subcouncil have now become a reality, and this is in no small measure through her efforts. We welcome, in particular, her call for a debate on, and greater awareness of, the concept of national security. My contribution to this debate seeks to address some of the notable achievements of the National Intelligence Agency.

The NIA’s primary function, in terms of its legal mandate, is to collect intelligence, in order to counter any threats or potential threats to the state or to South Africa’s constitutional order. Examples of such threats are terrorism, espionage, sabotage, the proliferation of weapons of mass destruction, subversion and organised crime.

In terms of its counterintelligence mandate, the NIA is also responsible for security vetting of state employees and render security advisory services to all state departments and certain parastatals or state-owned enterprises. However, like all the other intelligence services, the NIA has continuously had to do more with an ever-shrinking budget. The NIA improved on its performance on domestic intelligence priorities and helped achieve major breakthroughs on some key national security concerns prior to and during the year 2000-2001.

These include the prevention of the loss of millions of rands to the state in the form of unpaid revenue, the apprehension of perpetrators of violence such as urban terrorism, the uncovering of organised crime networks, the identification of corrupt Government officials, the exposure of information pedlars, as already been referred to, and the relative stabilisation of political violence in KwaZulu-Natal.

I will attempt to deal with some of these in a little more detail. During the year 2000, the NIA established a special operation to look at urban terror in the Western Cape. This was done as a consolidation of work done on urban terrorism. To further ensure the success of this operation, the National Intelligence Agency has worked, and is working, closely with enforcement and prosecutorial agencies. Consequently, Government now has a better understanding of the root causes of the violence in the Western Cape, and can therefore address those root causes.

The bombings in the Western Cape have stopped, and while we cannot give a categorical assurance that they will not recommence, the NIA’s successes have helped give the taxpayer and public a crucial insight into the debilitating role of urban terrorism in our society.

Intelligence obtained by the NIA played a prominent role in criminal investigations at ports of entry, at which several arrests have been made and more are imminent. The NIA has also focused on progress regarding the illegal issue of identity and related South African documents. This has confirmed the involvement of Department of Home Affairs officials at all levels in a variety of corrupt and criminal activities.

The NIA has also helped to achieve success through providing intelligence related to corrupt activities, especially by members of the the SAPS pertaining to their direct criminal involvement, corruption and mismanagement in the Department of Correctional Services and corruption in the state tender system.

The NIA has also participated in investigations in the field of organised crime. The agency’s focus on drug trafficking is primarily directed against organised structures, that is, drug syndicates that are behind the drug trade. This also includes those elements within state structures who are assisting these syndicates.

Some notable successes have been achieved in terms of which intelligence provided by the agency to the SAPS was instrumental in the arrest of drug traffickers, both locally and abroad. We note in this regard that crucial surveillance was provided by the NIA on the movement of a large shipment of mandrax tablets that was confiscated on arrival in Johannesburg, in the year 2000.

Violence in the transport industry is a national security concern and will remain a priority until such time that industry is free from violence. During the period between 1999 and 2000, the NIA played a leading role in intensifying an investigation which focused on the activities of individual perpetrators of taxi violence. Intelligence gathering on this approach was successful.

However, it must be noted that it still remains a problem to turn such intelligence into court-directed evidence. The introduction of the Directorate of Special Operations has, however, improved the situation. Consequently, a number of arrests have been made in flashpoint provinces like Gauteng, the Eastern Cape, and the Western Cape during the same period, and some of the perpetrators were convicted. The NIA also played a prominent role in terms of monitoring and assisting to maintain general stability in the province of KwaZulu-Natal.

However, the JSCI is concerned about the limited capacity and the slow pace of vetting as conducted by NIA. From January to November 2000, the NIA had finalised 253 vetting requests from external clients and 228 internal vetting cases. However, we note that from December 2000 to March 2001, a new vetting approach was implemented within the NIA that resulted in the clearance an additional of 691 external clients being finalised.

Specific clients received priority attention in this regard, namely, the Office of the President, the Department of Foreign Affairs, the State Information Technology Agency, and the Directorate of Special Operations. These improvements will be monitored by the JSCI.

Whilst the NIA has made a supreme effort to deliver on these and other matters with the limited financial resources at its disposal, the harsh reality is that it is seriously underresourced in key areas of delivery. In the main, decisions about resourcing of intelligence have thus far been taken at a mechanical and bureaucratic level. This point needs to be stressed. What informs the Treasury or State Expenditure as to what financial resources are required by our intelligence services is not necessarily what informs those services as to what, in financial terms, they should be allocated. Therefore, we welcome the new statement about the budgeting process for intelligence services. As a matter of urgency, it is time that the decisions about the strategic resourcing of intelligence must be taken at the strategic political level.

We share the sentiments expressed by the hon Chairperson of the JSCI about the members of our intelligence services. They are true patriots and serve this country well. But we also want to pay tribute to the inspiring and outstanding leadership of the Chairperson of the JSCI, the hon Mapisa- Nqakula, and we wish her well in her future endeavours. [Applause.]

Mrs M E OLCKERS: Chairperson, a great number of Budget Votes were debated this year without this Parliament having had the Auditor-General’s reports available to us. Today is another such case. This situation severely impairs the role of Parliament which must also be the public forum where departments and Ministers are called to task, or praise for good governance can be given.

It is unacceptable that the Auditor-General’s Office did not table the reports for 2000-01 timeously for us to scrutinise. It is not of much use to us if it lands on our desks after the budget debates. I hope that this unacceptable situation will not repeat itself, especially as the Minister for Intelligence had already requested the release of this report from the Auditor-General in April.

Another very important matter of concern to us is the fact that certain officials and also some members of the executive seem to think and act as if they are above the law and the scrutiny of portfolio committees which, after all, are extensions of Parliament.

The JSCI is an oversight committee empowered by an Act and, therefore, has even more powers than ordinary committees. This is especially relevant where the security of the state is at stake which is our mandate. Because of the very nature of their work, intelligence services are not always exposed to detailed public examination and scrutiny, hence, the establishment of oversight mechanisms like the JSCI. Therefore, also, Ministers and officials should acknowledge the importance and powers of this committee.

I want to raise a matter that need not even have been necessary to mention in this House, but events necessitate me to do so. The JSCI requested the National Commissioner of Police to appear before the committee so as to enlighten us on the security matters directly linking him personally to some very problematic issues. The National Commissioner of Police had three weeks’ notice of the date of that meeting, which he accepted. However, on the day of the meeting with the JSCI, the commissioner sent his deputy on his behalf. His excuse was that another important matter came up. I find this arrogance and unavailability totally unacceptable. The commissioner was personally accused in media reports and, therefore, he was personally requested to address us.

Nobody, no member of the executive or any official, is above the scrutiny of this Parliament. The perception out there is that certain important officials are a law unto themselves. If need be the opposition will request the chairperson to subpoena any official or Minister to appear before us. Our meetings are closed to the public and the media and therefore, the excuse of confidentiality is irrelevant.

When various intelligence services do not co-ordinate and work together, there is a need for concern. When the NIA alerts other intelligence services to a problem area or person, the country expects a co-ordinated approach. It seems that the National Commissioner of Police has forgotten that his role is to serve the public and not the party only, and to answer to the representatives of the people and not those of the party only.

Coups throughout the world are, more often than not, staged from the ranks of the intelligence or the army. Therefore, ignoring the reports by an agency like the NIA is a problem to this committee. We need an explanation by the person allegedly involved.

There is, therefore, a greater possibility of coups or assassinations coming from those ranks than from three successful businessmen. To ignore the oversight committee appointed by the President smacks of arrogance and borders on audacity.

Dit is nodig om die Kantoor van die Inspekteur-generaal ook aan te spreek, want dit is nou ‘n volle jaar nadat die pos gevul is en steeds is daar nog nie ‘n kantoor ingerig of personeel aangestel nie. Die situasie is totaal onaanvaarbaar vir die opposisie. Daar word vergaderings gehou en besluite geneem, maar niks is nog van die grond af gekry nie. Ek dink dit is tyd dat dit reggestel word.

Daar is sake waaroor ook nog steeds nie duidelikheid verkry is nie, byvoorbeeld die Trytsman-ondersoek na die visbedryf en sy betrokkenheid by Luthuli-huis, saamgesien met die sogenaamde intelligensie-afdeling in Luthuli-huis; die Kubu-saak oor onreëlmatighede in die Nasionale Intelligensie-agentskap; die duidelike opdrag van die Besigheidsintelligensie-eenheid wat in die Ontvanger van Inkomste se kantoor gestig is; die sameswering of komplot om die President te vermoor, en die wapenskandaal, om maar ‘n paar te noem.(Translation of Afrikaans paragraphs follows.)

[It is necessary to address the Office of the Inspector-General as well, because it has now been a whole year since the post was filled and there is still no furnished office and no staff members have been appointed either. The situation is totally unacceptable to the opposition. Meetings are held and decisions are taken, but nothing has been established yet. I think it is time this was rectified.

There are matters about which we still have no clarity, for example the Trytsman investigation into the fishing industry and his involvement with Luthuli House, together with the so-called intelligence division in Luthuli House; the Kubu investigation into fraud in Foreign Affairs; the clear directive of the Business Intelligence Unit that was established in the Receiver of Revenue’s office; the conspiracy or plot to murder the President, and the arms scandal, to mention but a few.]

Finally, my appreciation to the Minister for her energy and the wisdom with which she performs her tasks; also to the chairperson and the members of the JSCI, for the openmindedness they display in our meetings. We work well together and there is a great deal of trust amongst us.

We have not reached Camelot yet, but we are on our way. I want to say to the people and powers that are trying to cover corruption and spread disinformation that, between the JSCI, the opposition and the media, we will expose them. We need honest answers. With the combined efforts of the opposition and the media, I want to tell the arrogant and corrupt officials that Big Brother is watching them. [Laughter.]

Mr E I EBRAHIM: Chairperson, hon members, all societies seek secret means by which to defend them from both external and internal threats. The SA Secret Service, Sass, draws its mandate from the National Strategic Act and from the national intelligent priorities, which is issued by the Cabinet committee on intelligence and security annually.

A distinction is drawn between external and internal security. Internal security is concerned with, inter alia, subversion and terrorism that either challenge the authority of the state or threaten human security, while external security is concerned with threats posed by external forces. Each is often dealt with by separate agencies, for example the NIA deals with internal security, while the Sass deals with external security.

A clear distinction, however, is often blurred in practice. If there is a conflictual domestic political situation, it might become vulnerable to exploitation by foreign parties. A persecuted minority or a persecuted religious or cultural group is likely to gain support from outside the country’s borders, from groups sharing similar objectives.

Therefore there is a link between external and internal threats to any society, and the existence of the intelligence services is vital in this link. In the current international environment, the main threat comes not from conventional war, but rather the indirect involvement of forces which could include state, multinational companies, political or religious organisations, criminal syndicates and even NGOs.

Intelligence on the intentions and activities of such bodies becomes of utmost importance to the intelligence community. South Africa is faced with a broad range of challenges due to the transformation into a democracy. Our vision of the African Renaissance now reflected in the Millennium Africa Recovery Programme, Map, requires us to be proactive on the continent in addressing the question of poverty, good governance, human rights, democracy and sustainable, all-round development.

Our country and our President have led the programme for the renewal of the continent. Peace, security and the prevention and resolution of conflict, become an important factor in the renewal of the African continent. South Africa’s immediate environment within the Southern African region and in the rest of the continent revealed increasing tensions last year. We have witnessed growing intra and interstate violence, including the ongoing use of mercenaries and private security companies by beleaguered statutory and nonstatutory forces.

There has been conflict and instability in both SADC states and in central and east African regions. Major foreign powers remain active in Africa in order to advance their own economic and strategic interests. The continuing existence of conflict in Africa will have a negative impact on the attitude of foreign investors and undermine confidence in the African Renaissance, while also contributing to Africa’s declining share of global foreign direct investment. President Mbeki has called for African ownership of the renewal of the continent and African-led solutions to the many problems of Africa.

The SA Secret Service, which is not mandated to support unconstitutional and tyrannical regimes, plays a key role in fostering positive development by, inter alia, alerting our President to potential threats to peace and stability on the continent. An effective early warning system enables us, together with our multilateral partners, to timeously intervene to prevent conflict-filled situations.

Sass has an important role to play in the success of the peace process on the continent. In the Burundi peace process our Intelligence has made an invaluable contribution through our Deputy President’s attempt to seek a solution there. Sass also supports our peace missions in the DRC and in Ethiopia and Eritrea.

There is a serious and considered effort on the part of the international community to prevent the exploitation and sale of conflict or what is referred to as ``blood diamonds,’’ which fuel the fires of tragic war on our continent. As a diamond-producing nation, our Intelligence provides support in order to locate and prevent the movement of blood diamonds. It is also the core business of Sass to deal with the proliferation of both conventional and small arms weapons and of antipersonnel mines on our continent. Sass also deals with maritime threats which target our marine resources.

South Africa has been the venue recently of numerous international conferences and these have to be secured by our security forces, including our intelligence community. The post-Cold War era has placed increasing emphasis on international crime and criminal syndicates, on drug trafficking, on money-laundering and on war crimes. Sass is actively involved in intelligence gathering on international crime, and also tackles the question of harmful trade practices, such as underfactoring, dumping of goods, and counterfeit and illegal imports.

Sass has collaborated closely with the SA Revenue Service in successfully combating crime, and has recouped millions of rands in revenue. Through the activities of Sass, numerous illegal containers have been seized at our ports of entry. Sass was central to the negotiations which resulted in the release of Callie and Monique Strydom when they were kidnapped by Philippino terrorists. From the beginning to the end, Sass was very active in securing the safety and release of our nationals.

Sass also focuses on South-South relations and on strategic partnerships worldwide, as well as on designated multilateral organisations. Our successful role in Nam, SADC and the OAU, and our presidency next year of the African Union, require us to take up various issues of the developing world, such as debt cancellation, poverty alleviation, and trade and development issues. Our involvement in all these issues must be backed by intelligence information.

Members of Sass are hard-working, dedicated men and women who work for long hours and, at times, under hazardous conditions. They work without receiving any glory from the media or the public. It is their hard work that secures our country from instability and which contributes to the success of our foreign policy.

This state of affairs could be negatively affected if the capacity and resource issues facing the intelligence community are not addressed. Of main concern is the inability of Sass to establish offices abroad, in line with South Africa’s foreign policy objectives, and our inability to deploy adequate intelligence services, while foreign powers are doubling their personnel in many countries. Of the 93 diplomatic offices that we have around the world, Sass has only a fraction of that number. Yet Sass has achieved many successes with proven financial management. [Time expired.] [Applause.]

Ms A VAN WYK: Chairperson, hon Minister and hon members, before I start speaking, I want to assure the Minister that there is no reason for alarm, there has been no change in the UDM’s member of this committee. Mr Abram has, unfortunately, fallen ill and he apologises for not being able to participate in this debate.

The total budget for the secret services for the current financial year amounts to R893 million, increasing to R1,1 billion in the year of the MTEF. This budget is carried by the National Treasury for the programming of its budget. For obvious reasons very little is known about this budgeted amount with regard to the output and service delivery indicators, which makes a proper evaluation virtually impossible. Therefore, very little is left to say, but, like a true politician, I will go ahead and say it in any case.

The fact that the national Intelligence has a full Minister responsible for the department, begs the question why this budget of the secret services should not be removed from the National Treasury to its own department. The Joint Standing Committee on Intelligence can retain its role of parliamentary oversight and accountability, while Scopa should continue its function of financial management oversight over national Intelligence.

The Portfolio Committee on Finance and members of Parliament have no basis or tool upon which to judge the secret services. At the same time we are aware of the important task that the secret services fulfil in our democratic society.

The UDM supports this Vote. [Applause.]

Mr L M GREEN: Chairperson, hon Ministers and members, since South Africa re- entered the global political arena, it has become a significant international role-player. Although South Africa is still a young democracy, the global issues it is faced with are more complex than its capacity can sometimes endure.

It is in this regard that our country’s national security agencies must be competent and equipped to demand respect for its intelligence capacities and abilities. The increase in the expenditure on intelligence is, of course, to be welcomed by the ACDP, especially if it is to support the improvement in intelligence gathering and defence capacity.

It is essential that national intelligence agencies should be independent and serve the national interests of the state, and not party interests. Unfortunately this appears to have been compromised in what appears to have been an attempt by the Minister of Safety and Security to use state security mechanisms to defend the President’s party-leadership position. I stand to be corrected on this issue, but this is the impression that most newspapers have created.

South Africa is an international player and has other greater problems to contend with. South Africa is open to international threat and violence from many corners of the world. International terrorism is a key factor that South Africa has to guard against.

The recent extradition to the USA from South Africa of a terrorist responsible for the bombing of the US embassy in Kenya in 1998 is a result of good intelligence work done by the NIA and Sass. International arms syndicates and crime warlords are using South African territory to operate its clandestine business. There have been several arrests and successful prosecutions. This is indicative of good intelligence work done by the NIA and we commend them for that.

The arms deal is another example of South Africa’s vulnerability to dubious international transactions and the NIA and Sass should tell the committee … [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Order! Carry on, hon member.

Mr L M GREEN: The NIA and Sass should tell the intelligence committee whether any probity checks were done on the foreign companies involved in the arms deal. There are many allegations of fraud and corruption and our intelligence service should be able to confirm or deny this.

South Africa is a democracy that allows much more latitude for all forms of activities than other well-established democracies. It has therefore opened its borders for abuse and misuse by other undemocratic and violent forces.

We congratulate the new Minister on her appointment, and we believe that she will raise the level of the intelligence services. We also believe that she will restore stability, pride and national confidence in all our intelligence services. We also commend the chairperson of the JSCI for her dedication and all her hard work.

The ACDP supports this Vote.

Dr S C CWELE: Chairperson, hon members, hon Mike Ellis, last Saturday I listened with sadness to a lady struggling to answer a qualifying question to a one million rand competition on a KwaZulu-Natal radio station. When she was asked: Who is the Deputy President of this country?'', she answered:Thabo Mbeki.’’ She was then asked: Who is the Minister of Correctional Services?'' After a few seconds of struggling, she answered: Steve Tshwete.’’

With such a level of ignorance, I am sure she could not even guess the name of the Minister for Intelligence. May I take this opportunity to inform her that this department is under the capable leadership of an outstanding ANC MP, Dr Lindiwe Sisulu. We hope that this debate will contribute to informing the public that our intelligence services are the servants of democracy and the peace-loving people of our nation, striving to protect our people, identifying the threats to the national security and promoting freedom from fear and want.

My input will focus on the National Intelligence Co-ordinating Committee, Nicoc, and the Inspector-General for Intelligence, the IG. Over a year ago, this House, the public and our intelligence community welcomed the appointment of Dr Faizel Randera, the first Inspector-General of our intelligence services. This complemented the oversight of services by the Joint Standing Committee on Intelligence and the Minister, ensuring that the services carry out their mandate within the confines of the law and the Constitution, and at all times hold the flag of our national security very high.

The Inspector-General must, in terms of our law, monitor compliance of services with their policies, review activities of the services with the aim of proposing remedies to any irregularities, pursue tasks given by the Minister and give reports to the Minister, the President and the committee at regular intervals. Our legislation locates the Inspector-General to be part and parcel of our intelligence community. He is not, and shall not be, another Public Protector, nor is he, or shall he be, another chapter nine institution of our Constitution. While there have been some teething problems, the Minister fulfilled the mandate of setting up the office of the IG. This is understandable, because this is a new institution. The JSCI, the IG and the Minister spend a lot of time developing guidelines for the functioning of the Office of the Inspector-General.

The ANC says that now is the time to implement these regulations with immediate effect. The swearing in of the IG this morning is one of the mechanisms of ensuring that his office enjoys the high confidence of all our services. Without this confidence it is doomed to fail, like it was the case previously in Canada. The international experience, including even America, confirms our committee’s position that the IG must draw the staff mainly from within the services. The Office of the Inspector-General must be located within the services in the most secure environment and in our case, the NIA headquarters.

Lastly, the budget of the IG, like that of the Minister, must be through the NIA as the accounting office. Our laws provide the public with several avenues to communicate with our Inspector-General. They can write directly to the Inspector-General through our Minister and through the Joint Standing Committee on Intelligence.

The National Intelligence Co-ordinating Committee, Nicoc, continues to harness all our intelligence services, ensuring efficient utilisation of our limited resources, minimising unhealthy competition among agencies and providing the President and the state with a useful, quality intelligence product. The broader definition of intelligence which includes environmental, economic and socioeconomic intelligence demands more resources if our developmental goals are to be met.

The National Intelligence Co-ordinating Committee has played a central role, as many members have said, in co-ordinating the strategies for clamping down on crime syndicates and warlords in our communities. We are indebted to them for the peace in KwaZulu-Natal. We salute them for placing us on top of taxi warlords, gangster kingpins and senseless bombers of our Mother City.

While intelligence is an exclusive national competency, we deliberately created provincial intelligence co-ordinating committees, Picocs, as the operational substructures of Nicoc. Last year our committee undertook a short assessment of Picocs and came out with the recommendation of strengthening their management. Now that we have strong provincial offices of the NIA, we need a comprehensive review of these provincial structures, clarifying their functions, accountability and their clients.

If we accept that intelligence must lead and guide policy and development, we must realise that our new integrated approach of governance demand modern and efficient methods of delivering intelligence. We welcome the establishment of a Nicoc early warning centre in the office of the President, to keep it abreast of fast-breaking events. This is not a new parallel intelligence structure, but a Nicoc substructure, to improve the service delivery to the Presidency. It is also in this vein that we welcome the client liaison centre to assist the department, including this Parliament.

In conclusion, let me emphasise that our country needs a strong and functioning Office of the Inspector-General which commands respect from all our services and the public. We need an efficient and well-resourced National Intelligence Co-ordinating Committee which is capable of delivering intelligence products to deal with the challenges of the current phase of our national democratic revolution. The ANC and the Joint Standing Committee on Intelligence support this Budget Vote. [Applause.]

The DEPUTY CHAIRPERSON OF COMMITTEE: Order! Hon members, I wish to recognise the Zimbabwean delegation, which is in the gallery. [Applause.]

The MINISTER FOR INTELLIGENCE: Mr Chairperson, very briefly, I would like to thank all the hon members who participated in the debate.

First of all, I would like to thank the chairperson. Most members here will know that she occupies my post there. That is the job that I had hoped I would carve out for myself for life, but I had to leave and hand it over to someone else. It is a job that I enjoyed doing.

I was in the committee as chairperson, together with the hon Mr Green and the hon Mr Landers, and we had a very good time. We had immense power there, which I miss terribly now. I do not have the same power that the chairperson has. I envy her and her job. I thank her very much for her support.

I would also like to recognise hon members Landers and Ebrahim for the recognition and acknowledgement they have made towards the work that the services are providing for the country. It is much-needed recognition, as I indicated earlier. The services do not get the kind of recognition that most members of the opposition party try to get on a regular basis in the media. [Interjections.]

I would also want to thank big sister Martha Olckers for her contribution in this debate. However, I think that I need to make just one correction. Hon member Martha Olckers says that the opposition in JSCI are watching criminals. The hon member is very wrong. It is, in fact, the services that are watching criminals. We would never put such a responsible job in the hands of the opposition. [Laughter.] They would sleep on the job. [Interjections.] [Applause.] We are looking for a suitable wife for the hon member, so he should just hang in there.

Mr F BEUKMAN: I would marry the hon Minister. [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order!

The MINISTER: That is not acceptable.

I actually found it very surprising that I agree with the hon member Van Wyk. She is gone now, but she raised the very important issue of our delinking our Vote from that of the Treasury. We would welcome that. I am sure it would also work in her favour, if she is standing in for an hon member who is not here, to have some prime time next year when we are on our own. But we are looking into that and we are going to make sure that we attend to it.

Finally, I would also like to thank Prof Ndabandaba. Yes, I am impressed with his intellectual capacity and I will be seeing Minister Buthelezi to see if, in fact, I can recruit Prof Ndabandaba into the services. [Laughter.]

I have also taken note of the hon Green’s suggestion about the probity investigation and we will look into that matter and see if, in fact, it would be possible for us to report back on it. Again, I thank all hon members very much for their time. [Applause.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! I hope the hon the Minister also notices the hon Mike Ellis for a job in the services. [Laughter.]

Debate concluded.

The House adjourned at 17:50. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

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


              Housing Amendment Bill [B 7D - 2001] - Act No 4 of 2001
              (assented to and signed by Acting President on 13 June
              2001); and


              Taxation Laws Amendment Bill [B 17 - 2001] - Act No 5 of
              2001 (assented to and signed by Acting President on 13
              June 2001).


 (2)    The following Bills were introduced by the Minister of Trade and
     Industry in the National Assembly on 14 June 2001 and referred to
     the Joint Tagging Mechanism (JTM) for classification in terms of
     Joint Rule 160:


     (i)     Merchandise Marks Amendment Bill [B 33 - 2001] (National
          Assembly - sec 75) [Explanatory summary of Bill and prior
          notice of its introduction published in Government Gazette No
          22249 of 24 April 2001.]
    (ii)     Trade Practices Amendment Bill [B 34 - 2001] (National
          Assembly - sec 75) [Explanatory summary of Bill and prior
          notice of its introduction published in Government Gazette No
          22249 of 24 April 2001.]


     The Bills have also been referred to the Portfolio Committee on
     Trade and Industry of the National Assembly.

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Speaker and the Chairperson:

 Report of the Auditor-General on the Financial Statements of Vote 21 -
 Labour [RP 130-2000].