TUESDAY, 22 MAY 2001 __

          PROCEEDINGS OF THE NATIONAL COUNCIL OF PROVINCES
                                ____

The Council met at 14:05.

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

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.

                CONGRATULATIONS TO SHARKS RUGBY TEAM

                         (Draft Resolution)

Mr N M RAJU: Chairperson, I move without notice:

That the Council -

(1) notes that two SA rugby teams, the Cats and the Sharks, met in one of the semi-finals of the Super 12 tournament last Saturday, 12 May 2001, at the ABSA stadium in Thekweni in KwaZulu-Natal, with the indomitable Sharks crossing the try line no less than five times, thereby pulverising the clawless Cats, and that’s no idle boast, for the team from the coast became the popular toast of all rugby lovers; and

(2) wishes the valiant Sharks every success in the Super 12 finals to be played in Canberra on Saturday, 26 May 2001, and recognises that a victory against the much vaunted ACT Brumbies of Australia will indeed be a great day for South African Rugby and South African sport.

Motion agreed to in accordance with section 65 of the Constitution.

      ACKNOWLEDGEMENT BY DA THAT RACISM EXISTS IN WESTERN CAPE

                         (Draft Resolution)

Mrs E N LUBIDLA: Chairperson, I wish to move without notice:

That the Council -

(1) notes with concern the recent report in the Cape Metro newspaper attributed to Mr Marais that he has finally admitted that racism exists in the Western Cape;

(2) also notes that this is contrary to the view which the DA has always expressed in this House that racism does not exist in the country;

(3) further notes that the accusation of racism reflects the growing division between members of the DP-New NP alliance and the people it is supposed to represent;

(4) acknowledges that this is the first time that the DA senior has openly acknowledged that racism exists in the Western Cape;

(5) expresses its disappointment that the DA only acknowledge racism when it suits them;

(6) further questions the honesty of Mr Marais when he says he wants to rename Wale Street in honour of Nelson Mandela, given the fact that it was he who, on a previous occasion, rejected the renaming of another Cape Town street after Nelson Mandela; and

(7) expresses its disgust at the selective way in which the DA is conveniently using racism in this case where it does not exist while denying the existence of racism where there is clear evidence of its existence: such as the public outcry by mostly white residents of Newlands over the use of the Newlands Stadium for soccer matches and the complaints by mostly black skilled persons that they feel excluded in the Western Cape and have to go to other provinces to find meaningful employment.

The CHAIRPERSON OF THE NCOP: Is there any objection to the motion? [Interjections.] There is an objection. The motion will therefore become notice of a motion.

Hon members, I have been very tolerant of these long motions that you tend to wish to submit, all of you. I have asked the Whips to put forward recommendations as to procedures we may adopt to make the system more workable. Really, I think we urgently need a response from the Whips so that we finalise this matter.

I have a fairly long list. The next hon member on it is Ms Jacobus.

ESTABLISHMENT OF INSTITUTE OF INFECTIOUS DISEASES AND MOLECULAR MEDICINE AT UCT

                         (Draft Resolution)

Ms L JACOBUS: Chairperson, I wish to move without notice:

That the Council -

(1) notes that a new, world-class medical research facility is in the process of being established at the University of Cape Town;

(2) acknowledges that the spreading of infectious diseases has decreased the life expectancy of many people in Africa and is crippling our continent’s efforts at development and economic growth;

(3) is of the opinion that the establishment of the Institute of Infectious Diseases and Molecular Medicine will enhance co-operation between scientists across Africa and will serve as a main centre for scientific research into vaccines and drugs for the diseases that have plagued our continent; and

(4) believes that this is yet another example of Africans joining together in a common purpose to respond to the challenges facing our continent.

Motion agreed to in accordance with section 65 of the Constitution.

           ACCESSIBILITY OF WELFARE GRANTS IN EASTERN CAPE

                         (Draft Resolution)

Mr K D S DURR: Chairperson, I move without notice:

That the Council -

(1) notes with concern that surveys done in the Eastern Cape show that one in five households, that is 20% of households, is experiencing hunger;

(2) further notes that the elderly and children in the Eastern Cape are the hardest hit by the harsh realities and that many are hospitalised with severe malnutrition;

(3) acknowledges that many people are having difficulty accessing child grants and pensions because of distances which must be travelled and the logistics involved;

(4) further acknowledges that welfare grant payouts have now been outsourced to overcome problems of fraud, corruption and poor systems; and

(5) therefore calls on the Government to ensure that the new system in place is made accessible in terms of localities chosen and in terms of distances needed to be travelled, especially by the elderly and mothers with small children.

The CHAIRPERSON OF THE NCOP: Is there any objection to that motion? [Interjections.] There is an objection from the hon member from the Eastern Cape, and therefore I have to indicate that the motion will become notice of a motion. [Interjections.]

Ms Dlulane and the hon Durr, please do not engage in a territorial dispute. [Laughter.] Allow the House to continue. We are here to debate African Unity as well.

               TOURISM AS A FACTOR IN ECONOMIC GROWTH

                         (Draft Resolution)

Me E C GOUWS: Voorsitter, ek stel sonder kennisgewing voor:

Dat die Raad -

(1) daarvan kennis neem dat -

   (a)  die inkomste uit toerisme in Afrika suid van die Sahara oor tien
       jaar kan verdubbel en dus die grootste dryfveer vir ekonomiese
       groei in die gebied kan word; en
   (b)  die Wêreld Reis- en Toerismeraad glo dat die volle potensiaal
       van Afrika se reis- en toerismebedryf nie ontgin word nie;

(2) meen dat, in die lig van bogenoemde, meer as 7,6 miljoen nuwe werkgeleenthede op die vasteland geskep kan word; en

(3) die Minister van Omgewingsake en Toerisme versoek om sy dringende aandag aan die saak te skenk aangesien Suid-Afrika deel is van hierdie wonderlike potensiaal vir ekonomiese groei. (Translation of Afrikaans draft resolution follows.)

[Ms E C GOUWS: Chairperson, I move without notice:

That the Council -

(1) notes that -

   (a)  income from tourism in sub-Saharan Africa may double in ten
       years' time and may therefore become the strongest driving force
       for economic growth in the region; and
   (b)  the World Travel and Tourism Board believes that the full
       potential of the travel and tourism industry in Africa is not
       being exploited;

(2) is of the opinion that, in the light of the above, more than 7,6 million new job opportunities may be created on the continent; and

(3) requests the Minister of Environmental Affairs and Tourism to give his urgent attention to the matter, as South Africa is part of this wonderful potential for economic growth.

Motion agreed to in accordance with section 65 of the Constitution.

CONGRATULATIONS TO KING ZWELITHINI KABHEKUZULU ON APPOINTMENT AS CHANCELLOR OF M L SULTAN TECHNIKON

                         (Draft Resolution)

Umntwana B Z ZULU: Sihlalo, ngenza isiphakamiso ebengingasibikanga:

Ukuthi umkhondlu -

(1) indlu yeZigele ihalalisela iSilo saMabandla, iNgonyama uZwelithini kaBhekuzulu ngokugcotshwa kwayo ukuba ibe inhloko/Chancellor ye M L Sultan Technikon;

(2) ukukhuthaza kweSilo abafundi be M L Sultan ukuba ekuqedeni kwabo ukufunda kule Technikom babe ngabasunguli bemisebenzi kunokuba babe ziqashwa zabathile phezu kwamakhono abo abawafundele kanzima;

(3) ukuphawula koNgangezwe ngokuncoma imizamo yokuba iM L Sultan ihlanganiswe ne Technikon Natal;

(4) ukuhlanganiswa kwalezizikhungo zokuqeqesha zemfundo yamakhono, kuyosho igxathu elikhulu lokusizakala kwabafundi ngokwezimali kuSifundazwe sakwaZulu-Natal; no

(5) sithi halala Hlangalwezwe! Umenjolo Silwesikhulu, Bayede. (Translation of Zulu draft resolution follows.)

[Prince B Z ZULU: Chairperson, I would like to move a motion without notice.

That the Council -

(1) congratulates his Majesty King Zwelithini kaBhekuzulu on his appointment as Chancellor at M L Sultan Technikon;

(2) commends the King’s words of encouragement to students to start businesses and become employers rather than employees after they have developed skills at the technikon;

(3) commends his comments in applauding the effort to unite the M L Sultan and Technikon Natal;

(4) notes that the unification of technikons will be a great contribution and KwaZulu-Natal students will receive sponsorship; and

(5) we say: Congratulations, Your Majesty, long live the King, Bayede.]

Motion agreed to in accordance with section 65 of the Constitution.

                       DEATH OF INKOSI KHAWULA

                         (Draft Resolution)

Mrs J N VILAKAZI: Chairperson and colleagues, I move without notice:

That the Council -

(1) notes with regret the death of Inkosi Khawula, a member of the IFP and member of the previous KwaZulu-Natal Provincial Parliament;

(2) notes that -

   (a)  Inkosi Khawula was one of the pillars of strength in his party;
       and


   (b)  both the IFP and the people of KwaZulu-Natal will truly miss his
       dedication; and

(3) conveys its condolences to his family and relatives.

The CHAIRPERSON OF THE NCOP: Is there any objection to that motion?

The CHIEF WHIP OF THE COUNCIL: Chairperson, I object on the basis that the deceased person is not a member of the House.

The CHAIRPERSON OF THE NCOP: There is an objection, because the convention that we practise is that the House notes the death of former members of the House or members currently serving.

We would convey, as Presiding Officers, on behalf of the KwaZulu-Natal delegation, the sympathy that has been indicated, but the House itself cannot note this, because then we would have a plethora of such motions presented to the House. Thank you very much, Mrs Vilakazi.

                          AFRICA UNITY DAY

                      (Subject for Discussion)

The DEPUTY MINISTER OF FOREIGN AFFAIRS: Chairperson, distinguished members of the NCOP, today on the eve of the 38th anniversary of the founding of the OAU, we must reflect on what one of the postcolonial founding fathers of Africa said. I refer to what Kwame Nkrumah said nearly 50 years ago:

Thus may we take pride in the name of Africa, not out of romanticism, but as an inspiration for the future. It is right and proper that we should know about our past. For just as the future moves from the present, so the present has emerged from the past. Nor need we be ashamed of the past. There was much in it of glory. What our ancestors achieved in the context of their contemporary society gives us confidence that we can create, out of the past, a glorious future, not in terms of war and military pomp, but in terms of social progress and peace, for we repudiate war and violence.

Our battles shall be against the old ideas that keep men trammelled in their own greed, against the crass stupidities that breed hatred, fear and inhumanity. The heroes of our future will be those who can lead our people out of the stifling fog of disintegration through serfdom into the valley of light where purpose, endeavour and determination will create a brotherhood.

The establishment of the OAU on 25 June 1963 was the expression of Africa’s strong will and political commitment to follow its collective efforts in facing the many challenges the continent was undergoing and to do so collectively and individually.

The celebration of Africa Day each year should therefore be a time for all Africans to reflect not only on where their individual country is going, but, more importantly, on where the continent is going.

The fact is that, despite our early leaders’ vision and commitment, we are faced with the stark reality that even though we have enormous riches and potential, the greatest number of least developed countries are found in Africa - 33 out of the 48 least developed countries in the world. According to UN statistics on the five subregions in Africa only two, which account for 25% of the continent’s population, enjoy a positive growth performance.

Growth decelerated in the remaining three subregions, negatively impacting on 75% of Africa’s population. Africa has lost half of its share of the world market since 1970 and this is equal to $70 billion a year.

Many of our countries are saddled with severe debt problems. Outstanding external debts in many African countries exceed the entire GNP of these countries, and debt service requirements exceed 25% of their total export earnings.

Sadly, the developed countries, rather than follow the UN decision to increase development aid, have decreased their assistance to almost a fifth, in real terms, since 1992.

Africa has also failed to attract substantive foreign direct investment, although many of our countries have taken measures to create a climate conducive to foreign direct investment. These measures include trade liberalisation, strengthening of the rule of law, improvement of legal and other instruments, greater investment in infrastructure development, privatisation, greater accountability and transparency, a greater degree of financial and budgetary discipline, and the creation and consolidation of multiparty democracies.

The dire consequence is that sub-Saharan Africa is the world’s poorest region with about half the population living on less than one dollar a day. Indeed, average income is lower than it was in 1970, savings are close to zero, diseases such as malaria, tuberculosis and HIV/Aids are rampant and electrical power consumption per person is the lowest in the world. Sub- Saharan Africa has 14 telephone lines per 100 persons and less than half of 1% of all Africans have used the Internet.

The reasons for this shocking reality are complex and many. They include slavery, colonialism, neocolonialism and the Cold War. Having been faced with this reality, we are confident today that as we enter the new millennium, the beginnings are taking shape for what we refer to as the African century. We are confident, because today a new African leadership is emerging, which has proclaimed that enough is enough and has committed itself in deed and in action to work for this African renewal I have referred to.

The vice president of the Africa region of the World Bank wrote, as recently as 1997, and I quote:

Africa is on the move. From Mali to Uganda to South Africa, hope and real success are transforming the continent. A new spirit of social and economic progress has energised much of the region. Gradually the rest of the world is beginning to take notice of Africa.

However, although Africa is on the move and hopes are high for her emergence from decades of stagnation and crisis, the challenges facing us remain vast. The African rebirth cannot occur just through a statement of intent. It has to be accompanied by commitment, perseverance and hard work. We all have to personally own the rebirth of our continent and work individually and collectively to achieve it.

Given the new international order, which is characterised by the end of the Cold War and by globalisation, I am happy to note that African leaders are responding to the challenges confronting our continent. In this respect a significant development has been the OAU summit decision of 1999 which was to transform the Organisation for African Unity into the African Union and this will come into effect on 26 May 2001.

In general, the objectives of the African Union are different from and more comprehensive than those of the Organisation for African Unity. It is geared towards addressing the current needs of the continent in the new millennium. To state but a few of the objectives - they are to achieve greater unity and solidarity between the African countries and the peoples of Africa; to defend the sovereignty, territorial integrity and independence of its member states; to accelerate the political and socioeconomic integration of the continent; to promote and defend the African common position on issues of interest to the continent and its people; to encourage international co-operation taking due account of the Charter of the United Nations and the Universal Declaration of Human Rights; to promote peace, security and stability on our continent; to promote democratic principles and institutions, popular participation and good governance; to promote and protect human rights in accordance with the African Charter on Human and Peoples’ Rights and other relevant human rights instruments; and to establish the necessary conditions which will enable the continent to play its rightful role in the global economy and in international negotiations.

The African Union’s objectives, further, are to promote sustainable development at economic, social and cultural levels and the integration of African economies, to promote co-operation in all fields of human activity to raise the living standards of African peoples; to co-ordinate and harmonise the policies between the existing and future regional economic communities for the gradual attainment of the objectives of the union, and, finally, to advance the development of the continent by promoting research in all fields; in particular in science and technology.

Through this shift in focus, mainly from our liberation from colonialism, underdevelopment, poverty, disease and human rights abuses, we now have an instrument more suitably geared to addressing these challenges. With the coming into effect of the African Union on 26 May 2001, we will have put in place continental building blocks for the socioeconomic regeneration of the continent and an end to Afropessimism.

Another important African initiative, around which the rebirth of Africa in the new millennium will focus, is the Millennium Africa Recovery Programme, or Map, which the OAU mandated Presidents Bouteflika of Algeria, Obasanjo of Nigeria and Mbeki of South Africa to prepare.

Map is a declaration of a firm commitment by African leaders to take ownership and responsibility for the sustainable economic development of the continent. The starting point is a critical examination of Africa’s post-independence experience and acceptance that things have to be done differently to achieve meaningful socioeconomic progress, without which it would not be easy to achieve our historic task of improving the lives of our peoples.

Map contains a vision, perspectives and outlines of a plan for the redevelopment of Africa. It is based on a partnership approach that will include all those who wish to become full partners in the development of the continent. It also clarifies the objectives of and approaches to development projects.

Map has developed the outlines of a concrete programme of action that is multifaceted, and the priority areas it would cover include creating peace, security, stability and democratic governance, without which it would be impossible to engage in meaningful economic activities; investing in Africa’s people through a comprehensive human resource strategy; harnessing and developing Africa’s strategic and competitive advantages in the resource-based sectors to lead the development of an industrial strategy; increasing investments in the information and communication technology sector, without which we would not be able to breach the digital gap; ensuring the development of infrastructure including the prioritisation of transport and energy, and, finally, developing financing mechanisms to ensure that the Map plan can become operational.

The objectives that we want to achieve through Map’s implementation include the acceleration of efforts to eradicate poverty on the continent and to significantly increase new investments by mobilising both domestic and especially foreign savings.

The plan envisages both Africa-wide and regional initiatives. Conflict prevention and the eradication of infectious diseases are examples of programmes that will be continental in scope. Economic initiatives, such as the development of agriculture, agro-industry and economic infrastructure, and the promotion of competition and economic integration will be managed at regional and subregional levels.

However, as we all realise, Map can only succeed with the commitment of Africa and the realisation of the rest of the international community that, without Africa’s succeeding, they themselves are not succeeding.

For a range of complex reasons that I referred to, African countries, with a few notable exceptions, have weak states. An essential step in the implementation of the Map would be to strengthen the capacity of these states. The focus of the programme is not on increased aid, but on increased investments in viable infrastructure and business opportunities. Targeted aid and technical support, to address capacity constraints and urgent human development priorities, would also be required.

We are realistic about the challenges faced by our continent. We realise that, while we are celebrating Africa Day, our continent is still bedevilled by the persistence of the scourge of conflicts and underdevelopment. Many people’s lives are being lost on a daily basis, due to the failure to resolve our differences peacefully.

Valuable heritages are being destroyed by the consistent wars. Millions of our brothers and sisters are living in humiliating conditions, as refugees or displaced people. We wrestle on a daily basis with the conflicts in the DRC, Angola, Sierra Leone, Burundi and the Comoros.

The human tragedy taking place in Angola and the DRC is on a scale second to none. I think all of us who watched the Carte Blanche or CNN programmes on the horror of Quito, a province in Angola, must be moved by the extent of the human suffering that is taking place in that wonderful country.

It is a challenge that we have to face. As we celebrate Africa Day, we also cannot ignore the threat of HIV/Aids. Minister Zuma last week told the National Assembly, and I quote:

In a few months, the United Nations will focus on the most serious health challenge of our time, HIV/Aids. Two weeks ago, the leaders of our continent were also grappling with HIV/Aids, TB, malaria and other communicable diseases.

The struggle for health care, as a right, must continue. For all these challenges and struggles, we need to mobilise the most important and dependable partner, the masses of our people in South Africa, on the continent and in the world.

It has been shown that with their support, the struggle for justice, peace and development can be won. The small but significant victory against the pharmaceutical companies is a good example. The struggle for affordable drugs is a just struggle to save lives and humanity.

Africa does not function in a vacuum. It is part of the global economy and needs to take its rightful place therein. As President Mbeki stated:

Account must be taken of institutions like the African Development Bank, the World Bank and the UN Commission for Africa.

Account will also have to be taken of major development initiatives, such as the World Bank’s strategic partnership for Africa, the IMF’s poverty reduction plan and the issue of debt relief, as highlighted in the HIPC initiative.

I am happy to note that the world is, at last, beginning to listen to the voice of the South and, especially, of Africa. The historic UN Millennium Declaration, which represents the political will and intent of the vast majority of the world’s leaders, reflects the growing understanding of the interdependence of the developed and developing countries.

Some of the priorities identified by the Millennium Declaration are the urgent need to address poverty and underdevelopment, especially in Africa; addressing the special needs of Africa, particularly in the context of the promotion of the broad objectives of the African Renaissance; the challenge of making globalisation a positive force for all; and, lastly, the need for democratisation of multilateral institutions, that is, the United Nations and the Security Council and the Bretton Woods institutions, the IMF and the World Bank.

It is up to all of us as citizens of the global village, through concrete action, to ensure that we hold the UN Millennium Declaration Programme of action to its content and ensure that it is implemented.

Allow me to also refer to two extremely important events that will take place in South Africa, over the next 15 months, which will impact on our vision of an African renewal. Firstly, the World Conference Against Racism and, secondly, the 2002 World Summit on Sustainable Development. The 2002 world summit is significant in that it will be held in Africa for the first time.

The recognition afforded this continent should be seen as a reflection of where we are headed at the moment. This World Summit on Sustainable Development will serve as an ideal opportunity to further advance the African Economic Development Strategy globally.

It is also most appropriate that South Africa will host the World Conference Against Racism, Racial Discrimination, Xenophobia, and Related Intolerance, as our record in the fight against racism speaks for itself.

It is also a tribute to our continent and recognition of the role played by the OAU in the struggle. As a country and as representatives of the people, we have to use both events to maximise the programmes, as developed in the Map initiative.

The intrinsic challenge facing us on this Africa Day is how to ensure that Kwame Nkrumha’s unfulfilled confidence that ``we can create, out of the past, a glorious future, not in terms of wars and military pomp, but in terms of social progress and peace’’, does become a reality. It is clear that Nkrumha, 50 years ago, had a vision that motivated many of us to the challenges that we were confronting, and it is clear that today, as the objective conditions move in our favour, we can make his vision become a reality.

We face the future, as I said, with confidence, because, as John Reader in his book Biography of the Continent, writes:

South Africa preserves the flickering hope of transforming dreams into reality. The shift in political power in South Africa affirmed the value of integrity and ideals in an era where economic pragmatism is the dominant theme of world affairs. South Africa offers hope for all humanity - yes, hope for a continent that seems to generate nothing but despair.

All South Africans, irrespective of party affiliation, must, through their activities, ensure that Reader’s ``flickering hope of transforming dreams into reality’’ becomes a reality. I believe that, as South Africans, we have an historic role to play on the African continent. The development and renewal of Africa will mean further development, consolidation and democracy in South Africa.

So, on this eve of the 38th anniversary of the OAU, our call will be, as Africans: Let us transform Africa into becoming the continent that our potential demands it becomes. [Applause.]

Mnr P A MATTHEE: Voorsitter, daar is ‘n Latynse uitdrukking wat sê ex Africa semper aliquid novi , uit Afrika kom daar altyd iets nuuts.

Daar kom tans ook iets nuuts uit Afrika in die vorm van die ``Constitutive Act’’ van die Afrika-unie waardeur die bestaande Organisasie vir Eenheid in Afrika deur die Afrika-unie vervang sal word. Die agtergrond vir die akte is reeds in dié Huis en die Nasionale Vergadering geskets toe dit vroeër vanjaar deur die Parlement goedgekeur is.

Die Departement van Buitelandse Sake het toe aangedui dat die akte slegs ‘n raamwerk is wat die beoogde Afrika-unie sal ondersteun. Dit sal uitgebrei moet word vir doeltreffende inwerkingstelling.

Alhoewel die uitvoerende gesag die prosesse moet moniteer wat lei tot die aanvaarding van die akte en die inwerkingstelling daarvan om seker te maak dat dit geïnterpreteer en toegepas word ooreenkomstig ons Grondwet, regsbedeling en ons verpligtinge kragtens die internasionale reg en internasionale konvensies en verdrae, het die komitee aanbeveel dat die Parlement deurlopend op die hoogte gehou moet word van vordering en ook, waar moontlik, geraadpleeg moet word oor sodanige prosesse in ‘n inklusiewe poging om die hand van ons onderhandelaars hierin te sterk.

In die lig hiervan verneem ek graag van die adjunkminister of hy reeds enige vordering aan ons kan rapporteer. (Translation of Afrikaans paragraphs follows.) [Mr P A MATTHEE: Chairperson, there is a latin expression: ``ex Africa semper aliquid novi, there is always something new from Africa.

At-present there is also something new from Africa in the form of the Constitutive Act of the African Union in terms of which the existing Organisation for African Unity will be replaced by the African Union.

The background to the Act has already been outlined in this House and in the National Assembly when it was approved by Parliament earlier this year.

At that stage the department of Foreign Affairs indicated that the Act was only a framework which would support the envisaged African Union. It will have to be extended for efficient implementation.

Although the executive has to monitor the processes leading to the acceptance and implementation of the Act to ensure that it is interpreted and implemented according to our Constitution, our judicial administration and our obligations according to international law and international conventions and treaties, the committee recommended that Parliament should be kept abreast of progress on an ongoing basis and should also, where necessary, be consulted about such processes in a comprehensive effort to strengthen the hand of our negotiators in this.

In view of this I would like to hear from the Deputy Minister whether he can report any progress to us at this stage.]

Africa does not merely need a new organisation. It desperately needs a new vision and a new strategy, which will concentrate on the development of its peoples. Africa, as a continent, has, unfortunately, fallen back into the clutches of war and even genocide, famine, pestilence, rebellion, civil war and the destruction of developmental frameworks.

Millions of our people in Africa are suffering untold misery and millions are refugees.

Africa and its millions of people desperately need hope for a better life. Last year the United Nations Secretary-General, Kofi Anan, a fellow African, told the summit of the OAU that Africa was the only region where the number of conflicts was increasing, and pointed out that 33 of the world’s 48 least developed countries were African. He said:

If Africa is being by-passed, it is because not enough of us are investing in policies which will promote development and preserve peace.

It is therefore clear that we should now concentrate on investing in policies which will promote development and preserve peace, so that not only something new can come out of Africa, but also something better, something good, which will uplift the millions of people of Africa and give them new hope.

When our President unveiled the Millennium Africa Recovery Plan at Davos recently, he told delegates that the programme was a declaration of commitment by African leaders to take responsibility for the economic development of the continent and that priority area included creating peace, stability and democratic governance; developing an industrial strategy; and increasing investment in the information technology and communication sectors.

We note that President Mbeki also said that it was intended to brief all African heads of states over the next few months, that the aim was to be as inclusive as possible and that, thereafter, substantive consultation with leaders of the developed countries and multilateral institutions would take place.

In the light of the inclusiveness of this process, as suggested by the President, and the fact that democratic governance was, as it should have been, specifically mentioned by the President, I wish to earnestly urge the President and the Department of Foreign Affairs to also include the political opposition parties of all African states, including those in our country, in the process of consultation.

I would appreciate it if the Deputy Minister could respond to this today already and, if he is not in a position to do so, I ask whether he would be prepared to take up this request with the President and to report to this House on the President’s response to this request. [Applause.]

Mr J L MAHLANGU: Chairperson, when Chief Albert Luthuli, the then President of the ANC, addressed the University of Oslo on 11 December 1961, an address he delivered prior to his acceptance speech of the Nobel Peace Price, he had this to say on his subject matter: ``United Africa : the goal’’ and I quote:

Though I speak of Africa as a single entity, it is divided in many ways, by race, language, history and custom, by political, economic and ethnic frontiers. But, in truth, despite these multiple divisions, Africa has a single common purpose and a single goal: the achievement of its own independence. All Africa, both lands which have been won by their political victories, but have still to overcome the legacy of economic backwardness; and lands like my own whose political battles have still to be waged to their conclusion; all Africa has this single aim: our goal is a united Africa in which the standards of life and liberty are constantly expanding; in which the ancient legacy of illiteracy and disease is swept aside, in which the dignity of man is rescued from beneath the heels of colonialism which has trampled it.

This goal, pursued by millions of our people, with revolutionary zeal, by means of books, representations, demonstrations, and, in some places, by armed force, provoked by the adamancy of white rule, carries the only real promise of peace in Africa. Whatever means have been used, the efforts have gone to end alien rule and race oppression.

Our continent is going through a transition in the political and economic fields, in the political field through a process of democratisation and in the economic field through economic reform. This is basically a continent on the march. Africa Day is a sign of hope, the hope that the evils which have, throughout the continent, forced millions of people to flee their countries by destabilising peace, which we are committed to upholding, are coming to an end.

This day provides a golden opportunity to review the role South Africa has played and the support South Africa received from the continent at large during the years of apartheid.

Our President’s vision of an African Renaissance, which has been brought to fruition by means of the Millennium Africa Recovery Plan, serves as the basis for South Africa’s relations with North Africa in a spirit of African unity. This follows the initiatives by our Department of Foreign Affairs, in partnership with appropriate departments involved in the joint bilateral commissions, with Tunisia, Egypt and Morocco, as well as the binational commissions with Algeria when they met to discuss the progress made thus far and the way forward.

Our former President, Dr Nelson Mandela, has been preaching the pillars upon which the spirit of tolerance and ethos of government throughout the continent should be based. Amongst other things, he stated that issues of human rights and respect for them are central to international relations and understanding, that they extend beyond the political, embracing the economic and social environmental, that just and lasting solutions to the problems of humankind can only come through the promotion of democracy in the whole continent of Africa, and that the concerns and interests of the continent of Africa should be reflected in the foreign policy choices.

In his address the Deputy Minister indicated that there is no future without the past. I am sure we all know the kind of race superiority and white supremacy which we sometimes come across as we move around in the country. We know what lies around us, as we have lived in the cancerous apartheid for too long. Indeed, it has robbed our people of their land, and insulted our people and their cultures.

It is not necessary for me to speak at length about South Africa. Its social systems, its politics, its economics and its laws have forced themselves on the attention of the world. It is a museum piece in our time, a hangover from the dark past of mankind, a relic of an age in which everyone else is dead or dying. Here, the cult of race superiority and white supremacy is worshipped like a god.

Few white people escape corruption. Many of their children learn to believe that white men are unquestionably superior, efficient, clever, industrious and capable, and that black men, equally, are unquestionably inferior, slothful, stupid, evil and clumsy. On the basis of the mythology that ``the lowest amongst them is higher than the highest amongst us’’, it is claimed that white men built everything that is worthwhile in the country - its cities, its industries, its mines and its agriculture. [Interjections.] Here is one of them. They alone are thus fit and entitled, as of right, to own and control these things, whilst black men are only … The CHAIRPERSON OF THE NCOP: Order! Mr Mahlangu, would you take your seat for a moment.

Mr P A MATTHEE: Chairperson, I am sorry, but I have to declare a point of order.

The CHAIRPERSON OF THE NCOP: What is the point of order?

Mr P A MATTHEE: Chairperson, my colleague said, ``Here is one of them’’, referring to the member …

The CHAIRPERSON OF THE NCOP: One of what? [Interjections.]

Mr P A MATTHEE: Chairperson, that applies exactly to what he is complaining about.

The CHAIRPERSON OF THE NCOP: What is the point of order?

Mr P A MATTHEE: Chairperson, the point of order is whether it is parliamentary to refer to an hon member in this House as basically racist, by implying that that member believes the things that he has just mentioned. That is clearly how I understood it.

The CHAIRPERSON OF THE NCOP: Hon member, did you imply that the member is racist?

Mr J L MAHLANGU: Chairperson, I have a high respect for Mr Matthee and I would appeal to him to listen when a person speaks, so that he can indeed respond appropriately. [Interjections.] I said nothing of that nature, Chairperson. [Interjections.]

The CHAIRPERSON OF THE NCOP: Order! Could we allow members to complete their speeches and all listen carefully to them. Proceed, Mr Mahlangu.

Mr J L MAHLANGU: Chairperson, when Dr Verwoerd was Minister of Bantu Affairs, he had this to say when explaining the government’s policy on African education: There is no place for him,'' meaning the African,in the European community above the level of certain forms of labour.’’ Now we still have that mentality within our communities. We can never run away from it.

Martin Luther King Jr, a civil rights leader and Nobel Prize winner, had this to say:

When millions of people have been cheated for centuries, restitution is a costly process. Inferior education, poor housing, unemployment, inadequate health care - each is a bitter component of the oppression that has been our heritage. Each will require billions of dollars to correct. Justice so long deferred has accumulated interest and its cost for this society will be substantial in financial as well as human terms.

As a country we have challenges. Let me invite Africa and all of us to cast our eyes beyond the past and, to some extent, the present with its woes and tribulation. [Time expired.] [Applause.]

Mr L G LEVER: Chairperson, African unity, to me, means and needs to be more than an expression of fellowship and goodwill to the inhabitants of the same continent. Whilst it can include the expression of goodwill and fellowship, African unity needs to be given tangible expression in economic progress and social development. It does not mean the loss of our sovereignty, as is evident from the treaty dealing with the Pan African Parliament.

African unity has been the subject of a number of conferences. A number of political forces throughout the continent have adopted the concept of African unity as their political philosophy. African unity has been the subject of at least two treaties over a number of decades. Unfortunately, despite all the efforts and the number of years that this goal has been pursued, little has been achieved. There are a number of reasons for our lack of success. The Abuja Treaty adopted a sensible, incremental approach to integration and unity. However, it appears that the political will to implement the Abuja Treaty was lacking.

There are also a number of regional conflicts and internal conflicts on the continent, including those in Angola, the Democratic Republic of Congo, the Sudan and Zimbabwe. While people in those regions engage in conflict based on political, ethnic and religious differences, the ideal of African unity based on economic and social development will remain simply an ideal. Unity needs peace and security; by definition conflict means disunity.

The misfortune of our fellow Africans does not mean that we must stop working towards unity. Given the growing trend towards globalisation, the need to integrate our regional economies has become pressing. There are a number of compelling arguments for integrating our regional economies.

Historically, our economies have been based on the export of raw materials and commodities. We then import manufactured goods which are invariably bought with expensive currencies of the developed world. We need to add value to raw materials we produce within our regional economies. We need to increase our trade with each other within our region. We need to put in place the infrastructure that will allow us to grow and develop.

It makes sense to rationalise our infrastructure in order to maximise our resources. To some extent, we have already done this with the provision of water and electricity in our region. This will promote economic and social development, which in turn will promote peace and stability within our region. We need to co-ordinate our efforts to market our region as a tourist and investment-friendly region. We need to maximise our resources by co-ordinating our economies and development projects.

An example of a project that could be of benefit to our region can be found in my home province. The development of the Mafikeng Airport as a cargo hub has the potential to promote development in South Africa, Namibia and Botswana. Perhaps its influence may be felt even further afield.

We have also established transnational game reserves. We need to go one step further and promote these game parks in a manner that will benefit all of the countries in our region. Once peace and stability have been established within our region, this will be an example to the other regions of Africa, who will then follow our lead. SADC has played an important role and has gained a number of achievements but there is still more to be done. [Applause.]

Mr M J BHENGU: Chairperson, one of the great African leaders, indeed an African paragon and redeemer, the late Dr Kwame Nkrumah, must of course be moving in his grave to see Africa Unity Day being celebrated as it is today.

Dr Nkrumah had a dream of a united states of Africa. That dream was not deferred and as a result did not explode, because the establishment of the Organisation for African Unity was realised. Of course, that was his vision. The name might have changed but the vision is still the same.

The desire to unite Africa has been on the agenda for many African countries for a very long time. In this country we have resuscitated the call for African unity by embarking on an African Renaissance programme to restore Africa to full human status as the mother of humankind. To many of us Africa is not only a continent but a concept that fashions and influences us. Poor as it may be, we are very proud of it.

There is now talk of globalisation, and I think that how Africa responds to globalisation will be determined to a large extent by the degree of social cohesion that African countries can muster, both individually and collectively. This is what will determine whether globalisation is enriching or not.

Globalisation has generally proceeded by either completely ignoring or trivialising local concerns, histories, problems and social programmes to address them. Indeed, globalisation processes and the ideological paraphernalia that goes with them have given the impression that these local concerns were provincial and idiosyncratic.

I therefore see globalisation as a big threat to African unity. That is why one of our African leaders once said that he was very much afraid that globalisation was actually another form of colonialism. That is debatable, but the fact of the matter is that globalisation is becoming a threat, especially to our continent, which is still trying to find its feet on the ground. If Africa is to assert itself on the world map, it has to encourage and promote regional co-operation and collaboration.

The fate of Africa lies in a collective rethinking of the continent’s unfulfilled humanistic tasks that would recast it into a cornerstone of social justice, solidarity and equality and enable the continent to reconnect with the rest of the world in a mutually beneficial way.

I think that SADC will eventually get to that point, but some of us will not be there. [Applause.]

Mr M V MOOSA: Chairperson, this debate today is indeed very significant. It takes place in the year 2001, at the beginning of a new millennium, and what many believe will be a new era. The reason I say this is because although there is a legacy of poverty, hunger and deprivation that we have experienced as Africans throughout this continent, there is no doubt about the fact that something very significant is brewing inside the hearts and minds of all Africans wherever they may be on this continent.

My mother used to say, when we were little boys and girls, that whenever one door closes five doors open. Let us never ever forget that.

The fact that we may be the least developed region in the world and the fact that we may not have infrastructure, telecommunication lines, energy and all sorts of things, need not necessarily be seen as something that says that we will never be able to get them.

The opportunities, however, abound. For example, the whole of Europe, the whole of the US and others have telecommunication cables laid down that are not capable of carrying certain types of information that are required in the information age. If Africa were to lay down telecommunication systems, satellite systems and so forth where they do not exist, we would not necessarily be required to break down old structures because, in fact, they would not exist. We can put down some of the most sophisticated optic and satellite cables on this continent, without having to upgrade obsolete infrastructure, because it would not be there.

For example, the European Union, the Americas and so forth have depleted their entire environmental and natural resources in the way in which they sustained development over the past millennium. The one thing we have learned from that kind of development is that it depletes not only the soil and the countries of those people, but it depletes the soul of humanity and its very existence, for instance, the hole in the ozone layer.

The very unsustainable way in which forests, water, land and other things have been utilised on those continents, in order to achieve development, has not necessarily been the cleverest of ways of doing things. We have not seen experiences on those continents that say that they have put down processes on those continents that are to last for generations to come.

As Africans we have the opportunity to do things differently. We have the opportunity to lay down processes now, over the next millennium and over the next 1 000 years, that make sure that humanity as a civilisation is a civilisation that can go on ad infinitums, because there are experiences that we have learned from those who have made mistakes, and that is an opportunity. It is not a bad thing that Africa is not as developed as the rest of the world. When we do develop, we should be able to develop properly.

There is a whole range of other things. One can go through the way in which youth development, education, gender issues, and respect for culture, language and diversity have taken place. Those kinds of things have taken place in some of the developed world and one finds that people are all digits; they are numbers that are part of a huge system. There is no individuality, colour or soul in some of those societies. Those are things that we have learned from the last millennium, and those are things that we do not necessarily have to do again if we want to sustain the human civilisation.

In that sense, I believe that the Millennium Africa Recovery Plan, that has been laid down by our President, Thabo Mbeki, and other leadership figures in Africa, provides an opportunity for us as Africans to almost rescue humanity and human civilisation from the path that it has chosen of the past 1 000 years. This path seems to be a path of self-destruction, a path that destroys everything: the environment, the water, the sea, the land.

The huge sustainable development conference that is going to take place next year in Johannesburg, South Africa, is going to attract 60 000 to 80 000 delegates from all over the world. That figure is unbelievable: 60 000 to 80 000 delegates and participants from all over the world are going to converge on the African continent in Johannesburg to discuss sustainable development. They are going to begin looking at the lessons of the past 1 000 years and the mistakes of the past 1 000 years, and to find out what it is that we, as Africans, can contribute to humanity now, now that the mistakes have been made, now that so much has gone wrong, now that we have holes in the ozone layer and global warming. That is what they are coming to discuss.

How do we utilise water, land and human resources to ensure that we perpetuate, in a healthy and sustainable way, humanity, humankind and the human soul? Those are opportunities that we sit on, right here in Africa.

There is a whole range of other things. When my colleague, Comrade Mahlangu, was saying that the perception among Africans is that white men are superior and able to do everything in a cleverer and a better way, this is what he was talking about. This is the legacy of the past 1 000 years we have, a legacy that says, deplete the resources of the planet; oppress those around you; put down your neighbours'', a legacy of colonialism and imperialism.Do those things because those are the parts and the programmes of success’’. That is what my comrade, Jabu Mahlangu, is saying. And the lesson that we need to learn, which also needs to be laid down for the next 1 000 years, is that that is not progress, it is primitive.

Those lessons that we have learned over the past 1 000 years are lessons that say that that is not the way in which we will be able to survive as a planet; and have our generations, our children, our children’s children and so forth survive in a sustainable and healthy world, in a well-utilised world. That is what he is talking about. There is nothing racist about it.

At some point we have to accept that all these clever forces that have brought us, not just as a continent but as a planet, to where we are today, were not all very clever, were they? I think that is what comrade Jabu Mahlangu is trying to say to us. In that sense I also want to say that when the hon member Bhengu speaks about globalisation being a threat, it is not a threat. It is not a threat at all, but an opportunity, because as Africa and Africans we have, probably, some of the greatest resources available, compared to those on any of the other continents anywhere else in the world.

We have everything one can think of. We have gold, coal, diamonds, people, land, water and sustainable resources. The nice thing about this is that we have not destroyed everything on this planet or on this continent. It is all there for us to utilise, and to utilise well.

The question is whether we as Africans can organise ourselves to do so. That is what has been the purpose of the African Union. What has been the purpose of the Pan-African Parliament?

I disagree with member Lever when he says that we are giving up our sovereignty by participating in the Pan-African Parliament, and those kinds of things. The African Parliament and the African union are about creating a forum for discourse, engagement and the development of programmes so that together, as a united force, we as Africans can begin utilising the resources of this continent to benefit and beneficiate the people of this continent. And where does that start? It starts with ourselves as Africans, taking control of our own lives and resources to beneficially serve our own people.

We must develop strategies to kick out those who are exploiting the gold, coal and oil in Angola. We must kick out those in the DRC who are fighting wars and fuelling wars in order to make money, and in order to ensure that they feather huge bank accounts and huge conglomerates in Europe, and so forth, that are no longer sustainable without those resources.

We must start making sure that we take control of the resources of this continent in a way that beneficiates every single African person, so that the fruits that hang pregnant off the trees of Africa are eaten by the children of Africa, with laughter in their voices and no hunger in their tummies. That is what Africa Day is all about, especially in the year 2001. That is the message that must go out, not just from us here as South Africans, but from all Africans to the rest of the world. [Applause.]

The DEPUTY MINISTER OF FOREIGN AFFAIRS: Chairperson, it is always a pleasure to speak in this National Council of Provinces. The atmosphere is very friendly, the quality of debate is good and, as always, there are not only criticisms, but also constructive suggestions. Therefore, as I say, it is always good to be here.

As the discussion has reflected, we tend to ignore sometimes the very crucial and vital role that South Africa is expected to and is beginning to play in the international community.

In fact, the globalisation that we have talked about can have positive and negative effects. South Africa, through its various governmental activities, not only Foreign Affairs, and the private sector and NGOs, is beginning to play a role which is helping to get an understanding that globalisation, if it is to survive, must create a world in which the rich do not continue to get richer and the poor to get poorer.

I think the millennium summit that I referred to is a clear indication that governments are accepting that their own prosperity depends on the prosperity of poorer countries. Today in the globalised world there are no borders confining drug trafficking, infectious diseases, organised crime syndicates and pollution of the environment. There are no borders, and therefore we have to tackle this as a whole. South Africa, I am proud to say, not only through Government but also through nongovernmental structures, is making quite an important contribution.

We must not leave this Chamber having any illusions about the tremendous challenges we face in trying to transform Africa from what it is to what it must become. We must all be aware that we have inherited a legacy through what I call the past, new colonialism, bad governance, elitism and so on. These are systems that need to be transformed, and if we want to turn this into an African century, we must work at this as a process, not an event. We must confidently begin to interact with the African continent and outside it, to have an African agenda that accepts our weaknesses but also accepts our positive features.

I think if we have that vision, then, over a period of time, the vision of Africa becoming a continent of prosperity and stability will become real. In this respect, it is the task of all South Africans to deal with a growing sense of what is now called Afropessimism that emerges from time to time in the developed countries. Our own successes in South Africa and in the region will help us to deal with that.

I think the importance of institutional changes is that they are not important on their own, but they reflect an understanding by the leadership that 38 years on, in the new world order where the Cold War has collapsed and globalisation is a reality, we cannot continue with the same institutions we had. The African Union is the first step in this direction.

My own plea to both Houses of Parliament is that they must not take it for granted because we have announced the formation of the African Union. There is still a lot of work to be done to make this an effective, realistic instrument to help us succeed in our objectives.

As parliamentarians hon members have an excellent opportunity, through the African parliament, to achieve many of the visions and ideals that we put forward in our Constitution and policy matters in South Africa and elsewhere.

I hope that the African Union documents will be studied much more closely so that we do give real, meaningful input about what its strengths and problems are going to be, so that we do not get bogged down in dealing with illusions on this matter.

The Map programme represents the first time that we in Africa have got together to assess our problems and put forward collectively, as an African agenda, a developmental programme that does not only benefit the elite, but is people-centred.

My own view is that for the Millennium Africa Recovery Programme to succeed, one needs partnerships between nongovernmental bodies and civil society on one hand and Government structures on the other.

This will demand that all sectors of society in all countries become involved: that is, the government, opposition and civil society. The African plan is a more strategic document which needs to be unpacked.

The Senegalese have introduced a programme called the Omega programme which is a little more concrete about infrastructure and development. Some forces are trying to counterpose the Senegalese programme against the Map programme.

It is our view, and that of most of Africa, that there is no contradiction. The Senegalese programme, which has got concrete programmes of infrastructure development and education, can be incorporated into the Map programme.

The Economic Commission for Africa has produced a brilliant document with concrete programmes and not just visionary statements. I also believe that that document can be incorporated in our broader perspectives identified by Map.

I think we can be happy that Map is now an instrument on the basis of which we in Africa can interact with the World Bank and the IMF and, indeed, with the developed countries on their aid programmes, because for too long programmes have been used to benefit the elite rather than the people of various countries.

We believe an African programme determined by Africa as a basis of consultations with the more developed countries and the World Bank and IMF will ensure that any aid that comes into our countries benefits us, and not the givers of it.

The issues of conflicts and instability that have been mentioned are quite problematic, as I have tried to indicate. But they are very complex, and a lot of them emerge from the historical legacy that we inherited.

I want to call on the Council to study these conflicts a little more carefully, because then we will be able to work together to ensure that we can determine programmes and policies that will allow us to bring peace and stability. It is clear that without peace and stability we cannot achieve sustainable people-centred development.

Therefore, when we start spending a lot of time in conflicts in the DRC, Angola and even further afield, it is important not to use this to just say that South Africans are involved elsewhere, they are not interested in what is going on in their own country. We do not live in a vacuum. We are not an island on our own. What happens on other continents, and especially on the African continent, impacts on us.

Let me end by returning to where I started. South Africa is beginning to play quite a major role. As hon members know, in a few months the President will be going to the G8 countries to put forward perspectives for the African renewal. He is one of the few African leaders who have actually been in discussion at the EU summit. He is one of the few African leaders who make up the group called Progressive Governments for the 21st century.

He is quite actively involved, not because he feels like going abroad, but on the basis of a strategic programme initiated by Foreign Affairs to go and ensure that we can market Africa, because we are Africans, and if we do not turn around Afropessimism, it impacts on our own stability and investments in South Africa.

Finally let me say that in a few days, Colin Powell, the secretary of state of the United States will be visiting South Africa. We are happy that so soon after taking office, the secretary of state of the remaining superpower is visiting us for broad-ranging discussions, including the African reconstruction and development plan. As soon as he leaves we will be visited by Jospin, the French prime minister, with a delegation of over 40 businesspeople and many ministers. In a few months he will be followed by the president of Russia.

That will mean that in the last 10 to 12 months we have had every major leader in the world visiting South Africa. This is not a jamboree. It indicates the importance that they see in South Africa’s role, not only on the African continent, but internationally.

I want to say to this House and the National Assembly that South Africa is now a success story which people look to as something that they want to emulate. I think that if we work as South Africans, the concept of South Africa as a winning nation will become a reality. If we become a winning nation, Africa becomes a winning nation. [Applause.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): We take this opportunity to thank the hon the Deputy Minister for making himself available for this debate.

Debate concluded.

                 SOUTH AFRICAN WEATHER SERVICE BILL

            (Consideration of Bill and of Report thereon)

The MINISTER OF ENVIRONMENTAL AFFAIRS AND TOURISM: Chairperson, hon delegates, the South African Weather Service Bill aims to create a world- class weather service which will be accessible to the majority of South Africa’s people.

This Bill will take the South African Weather Service into a new era of better service delivery. While it will now be endowed with the capacity for specialised services to different clients, of priority will be the extension of services to everybody.

The first provision of the Constitution constitutes the Republic of South Africa as ``one, sovereign, democratic state.’’ Pursuant to this philosophy, all spheres of government are obliged to observe and adhere to the principles of co-operative government, as set out in Chapter 3 of the Constitution. These principles include the need to secure the wellbeing of the people of the Republic, and the need to provide effective, transparent, accountable and coherent government for the Republic as a whole.

It was this constitutional imperative of co-operative governance which dictated the manner in which the Department of Environmental Affairs and Tourism interacted with the select committee. As a result of the committee’s considered interrogation of the Bill, I am with certainty able to present to hon members a Bill whose objectives are truly commendable in their attempt to transform not only the management structure of the Weather Service, but also the manner in which it prioritises which groups of our communities will be serviced. In addition to this, hon members’ input has allowed us to ensure that the structures of governance are accountable to Parliament. Over the past few months we have engaged in extensive consultations with sectors broadly representative of South African society to ensure that the Bill reflects our goal of improving the efficiency of service delivery to all communities. To this end, the Bill has several goals which include catering for the needs of communities previously ignored and neglected.

What aligns this Bill with the overall Government strategy of addressing poverty is its quest to extend access to the services, provided by the SA Weather Service, to vulnerable communities, particularly in rural areas. Similarly, the racial and urban bias in the distribution of weather offices in the country will be addressed through the establishment of regional offices. These regional offices, guided by various local and provincial government programmes, will be best placed to respond to the concrete needs of communities.

Over the past few years there has been, in real terms, a progressive decline in the budget allocation awarded to the Weather Bureau. This has happened at a time when demand for services has increased. The infrastructure of the Weather Bureau has, therefore, been slowly declining and key monitoring tools have been drastically cut back. This compromises the bureau’s ability to provide a quality service to everybody.

Agentisation of the Weather Service provides us with the unique opportunity to generate revenue to sustain its operations beyond what the public purse can fund. There is scope for implementing a sophisticated cost-recovery operation in certain areas of activity, for example in the aviation industry, and for market-related business activities in others. A number of commercial services have already started, such as the 24-hour weather service call line. This process also provides us with an opportunity to prioritise the transformation of the racial and gender human resource composition.

We cannot achieve our vision of service delivery with an organisation that does not represent the wider South African population. To this end, we have already initiated the process of recruiting the senior management of the new Weather Service, and we will ensure that by the time the service is actually agentised at least 50% of the management is black and one third women.

Transformation is also about implementing Batho Pele principles and the manner in which the service serves the population. Communities that are most vulnerable to weather hazards will now begin to see the real value of a transformed weather service. With such an efficient weather service working in close co-operation with provincial disaster-management structures, we will be better prepared as a country to deal with natural disasters and to ensure prompt, preventive and urgent action.

Through this interaction with the spheres of government closest to the people, communities will take note of the value of weather services, and their importance in enhancing the quality of their lives.

In order to achieve this, the Weather Service will invest in education and awareness campaigns for rural development initiatives. To ensure the realisation of these objectives, the Bill obliges the Weather Service to ``take reasonable steps to develop the skills and capacity of the Weather Service,’’ to enable it to respond to these needs. The Bill provides for two distinct services, namely the public-good services, which will be funded by Government; and commercial services for which the user-pay principle will apply. The public-good services include weather and climate forecasting; a weather-disaster warning system for the public good; services to subsistence farmers and fisheries; the provision of information and advice to Government; meeting regional and international treaty agreement obligations; maintaining a national meteorological library; technical and scientific training in meteorology; and, finally, undertaking research to improve services.

The public-good services will always require some level of funding by Government. It is for this reason that we do not support a privatised national weather bureau. It would be a mistake to place such a vital and strategic function solely in private hands. The SA Weather Service must provide an equal service to all South Africans and, to enable this, the support and guidance of Government is essential.

Commercial services, on the other hand, include the provision of specialised weather forecasting and climate information services; the provision of services to the maritime industry that are not included in international obligations; the provision of meteorological services; weather and climate-related publications; meteorological consultations, including advice to the legal and insurance industries; contracted weather and climate-related research; research to improve commercial services; the dissemination of weather and climate information; the manufacturing and selling of meteorological equipment to state departments and users from the private sector; the provision of specialised service to the media; and, finally, commercial services provided on an ad hoc basis to state departments.

This Bill complements the renewed focus by Government on economic growth. In particular, effective weather services are essential to a variety of weather-sensitive industries, such as the agriculture, aviation, construction and maritime industries. Clearly, weather-related losses in these industries will have a negative economic impact on these industries, which may result in job losses. Improvements in services to these sectors and a reduction in weather-related losses will improve the economic development of these sectors.

I believe that this Bill sets a new standard for the restructuring of Government agencies. By integrating the processes of transformation, commercialisation and agentisation, and by clearly distinguishing the public good from commercial services, we are ensuring that all South Africans will get the best out of this service.

In passing this Bill, Parliament will well and truly have laid the basis for South Africa’s weather services to be among the best in the world, and for them to play their part in the reconstruction and development of our country.

May I take this opportunity to express my gratitude to the select committee for the important changes which they have indicated in the Bill, and for having deliberated carefully on the contents of the Bill. In particular, I want to thank the chairperson of the committee, the Rev Moatshe, for having gone out of his way to keep me briefed and for consulting me at every stage. [Applause.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Order! Mr Moosa, what is wrong?

Mr M V MOOSA: Chairperson, I wanted to know whether the hon the Minister would take a question.

The MINISTER: He can ask me at home. [Laughter.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Hon members, you will deal with family affairs at home. [Laughter.]

Rev P MOATSHE: Hon Chairperson, hon Minister, Comrade Valli Moosa, members of the department, hon members and members of the public observing our proceedings, throughout evolution humans have always tried to understand the weather because it affected their livelihoods. Before civilisation as we know it, various means of understanding weather were employed, including observing livestock behaviour.

Go tswa kwa ga lowe bana ba mmala wa sebilo ba kgona go bala le go buisa tikologo e ba tsaletsweng mo go yona. Ba ne ba kgona go bonela pele fa ba leba matshwaotshupo a tlhago, mme ba re loapi lo hupile, loapi le a dusa, loapi le sisitse jaaka kgomo ya moroba e e geletseng ma[s]wi a kgatsele. Ba kgona go bona gore pula e tla ka sefako gongwe e tla ka medupe. (Translation of Tswana paragraph follows.)

[Since ancient times, black people could read and understand the environment in which they were born. They could foresee what would happen by merely watching the natural indicators. They would say, the sky is full just like a cow being burdened by the first milk. They could even tell whether there would be a rainstorm or just drizzle.]

Such practices have since been taken over by available technology, which forecasts weather with greater certainty and accuracy. History tells us, for instance, that the lifestyles of British explorers, especially those who were merchants, were fashioned according to the trade winds. By forecasting these accurately, people could sail around the world to do business. Places that had favourable weather were colonised and their resources expropriated to build the economies of the colonisers.

South Africa was not spared this and, until recently - seven years ago, to be precise - boasted a special kind of colonialisation, namely apartheid. With the exception of changes in methods and the sophistication of systems employed, human needs to predict and exploit weather conditions remain the same, if not stronger today. The South African weather services have over many years supplied weather forecast needs to the population of our country. They have since built up one of the most comprehensive data banks of weather patterns for South Africa and the region.

The possibilities provided by having such an institution and information resource base are endless, moreover, if one looks at the needs to redress the past injustices perpetrated by successive apartheid governments against the majority of South Africans, especially the Africans. Because Africans were never recognised as part of white South Africa, because, according to the apartheid government, confining them to homelands was the only and best way to deal with separate racial interests, access to accurate weather prediction has been limited to white South Africa. People in the homelands have had to do with no reliable information on weather, something that has meant that planting of crops and rearing of livestock relied purely on luck. Weather and climate are influenced by various activities which at most go beyond the activities of the affected area.

This and many other issues regarding meteorological information increasingly rely on sophisticated technology which looks at even micro elements that can change the quality of air and general balance of atmospheric conditions. As a result of the neglect of predominantly black areas with regard to weather forecasting and timely issuing of warnings of disasters, some of these areas fell victim to preventable disasters, resulting in conditions in which the threat to life and property could have been minimised. The KwaZulu-Natal floods, the tornadoes that struck and devastated areas in the former Transkei and Guguletu attest to these coverage shortcomings.

The South African Weather Service Bill which we are debating today presents us with an opportunity to redress these past imbalances - not only that, but also to exploit some of the potential commercial benefits that can be obtained from rendering these services to other sectors that are not part of the public good.

The early 1980s saw a weather anomaly developing in the Pacific. The southern oscillation, which gave us what we now know as the El Niño effect, devastated a lot of areas. Rural areas of South Africa were among the most devastated with the 1983-84 droughts. Livestock was lost. Drought struck with potency, reducing yields to levels that could have pushed us to import staple foods on a large scale.

Land use and management that are not in harmony with local weather conditions have seen degradation at unparalleled levels. As a result conditions in the former homelands require tremendous support with regard to meteorological information.

There is no doubt that what was seen or perceived to be an anomaly in the 1980s has become normal today. As such, as we try to revive agricultural practices in the rural areas, we need to take into account the fact that conditions are no longer the same. The agricultural sector on which our country depends for generating foreign income from exports, as well as for the national food supply, has an undeniable reliance on this service. If the Weather Service works closely with this industry in particular, it will mean that agriculture is spared losses resulting from short-term weather changes.

The aviation industry also needs and relies on a consistent supply of weather forecasting for flight safety and the direction of air traffic. Maritime operations equally need constant, accurate weather forecasts. During wars a country also needs a dedicated team and weather services. With this in mind, it should be clear to members that the agentisation would not translate into the Weather Service not being one of the strategic institutions that our Government would retain. In restructuring state departments, which, we will all agree, is inevitable, given our past, current and future challenges, this institution will also have to undergo restructuring.

As with most divisions within Government departments, the issue of racial imbalances will have to be addressed. Hopefully this will be attended to and addressed within a very short space of time. Spreading the service to rural areas, as I mentioned earlier, is something that has to be seen to with great urgency. Most important also is to make sure that, where possible, revenue is generated. In this case the area that would generate revenue is that of the services rendered to the commercial sector and the putting to use of technology generated in weather modification and other associated activities.

Services rendered to commercial industry, be it aviation or maritime, were highly subsided by the state in the past. Embarking on agentisation will ensure that Government saves money and that industries shoulder costs pertaining to their operations. The outcry by the aviation industry in particular around what this Bill proposes was not based on a true reflection of the Bill itself, but rather on what appears to be a loss of the soft benefits they have been enjoying. Information on international pricing and general practices reveals that the same airlines pay more in some instances for similar services.

The kind of argument raised in the newspapers amounts to nothing more than an attempt at confusing the public and upsetting the industry partners. However, if there is a genuine issue that the aviation industry or any other industry wants to raise pertaining to this Bill, our open-door policy remains in place and they should feel free … [Time expired.]

Mrs A M VERSFELD: Chairperson, the aim of this Bill is to change the Weather Bureau from its current form, as part of the department, into an agent. Although this is not full privatisation, it does allow the new agent to charge market-related fees for its service. The commercialisation aspect also means that it can diversify its product, thereby generating more revenue to cross-subsidise the so-called public-good aspect.

The weather radars at Cape Town, Durban, PE and East London are used to monitor rainfall and storm activities to about 200 km over the ocean and therefore have an adverse effect on the meteorological service rendered to the marine industry when not operational. To me this is quite a concern.

As die Minister miskien kan onthou dat aan die begin van hierdie jaar die radartoerusting by die weerburo in Kaapstad nie gewerk het nie. Dit was omdat die weerburo onderbefonds was en hierdie buro nie eers kon onderdele aankoop vir die instandhouding om net die basiese diens te kan lewer nie. Ek is seker dat dit opgelos sal word met die daarstelling van ‘n weerdiens.

Die DP ondersteun hierdie wetgewing en wel om die volgende redes: Die gehalte van die weerdiens kan verbeter deur middel van die tegnologie in veral industrieë soos die landbou, toerisme, lugvaart en mariene lewe - bykans alle fasette van ons lewens. Ons glo ons kan so ‘n gesofistikeerde koste-effektiewe en ‘n uitgebreide diens lewer aan al die mense, veral diegene op die platteland. Navorsing het getoon, soos die Minister tereg gesê het, dat arm mense ‘n 500 keer groter kans staan om nadelig beïnvloed te word deur natuurrampe, as mense wat nader aan groot stede woon en wat goed ingelig is.

Derdens glo ek ook dat die gehalte weerdienste noodsaaklik is vir die ekonomiese groei en ook vir armoedeverligting en daarom steun ons dit. Die feit dat ons dienste kan voorsien aan ons buurstate is vir die DP belangrik. Ek dink net ons moet ‘n bietjie meer geld vra vir die buurstate. Dit is nodig om hul van dienste te voorsien, want ek glo as rampe hulle tref, dit ons ook nadelig kan beïnvloed. Hulle moet egter ‘n bietjie meer betaal.

Daar is egter vir my bekommernisse in hierdie wetgewing. Eerstens, dat soortgelyke agentskappe soos byvoorbeeld Satoer en die Nasionale Parkeraad volgens my oordeel nie ``pockets of excellence’’ is nie. Kyk ons byvoorbeeld na Satoer, soos iemand vroeër in ‘n mosie gesê het, weet ons die wêreldreis- en toerismeraad glo nie die volle potensiaal van Afrika se reis- en toerismebedryf word ontgin nie. Die Minister het in ‘n vorige debat van my verskil en my daarop gewys dat ek nie weet waarvan ek praat nie. Ek glo tog daar kan verbetering by Satoer wees.

Aan die begin van die jaar is daar gesê die regering staan nou borg vir die Nasionale Parkeraad by die IDC vir R69 miljoen en dit terwyl die Nasionale Parkeraad nie eens ‘n finansiële direkteur het nie en toerismegetalle afneem en personeel afgedank word. Die tweede bekommernis wat het ek, is ek glo daar is te veel magte aan die Minister gegee. Onder sy leiding is ek gerus, maar wat sal gebeur as ons nou ‘n Steve Tshwete vir omgewingsake het? Dit sal chaos wees as daar soveel magte aan ‘n Minister oorgedra word. (Translation of Afrikaans paragraphs follows.)

[If the Minister can remember, at the beginning of this year the radar equipment at the weather bureau in Cape Town was not functioning. This was because the weather bureau was underfunded and could not even purchase parts for the maintenance simply to be able to render the basic service. I am certain that this will be resolved by way of the establishment of a weather service.

The DP supports this legislation and for the following reasons: The quality of the weather service can be improved by way of technology, particularly in industries like agriculture, tourism, aviation and marine life - virtually all facets of our lives. We believe that in this way we can render a sophisticated, cost-effective and extended service to all the people, particularly those in the rural areas. Research has shown, as the Minister correctly said, that poor people have a 500 times greater chance of being negatively affected by natural disasters than people who live close to large cities and who are well informed.

Thirdly, I believe that quality weather services are essential for economic growth and also for poverty alleviation, and we therefore support it. The fact that we can provide services to our neighbouring states is important to the DP. I just think that we should ask for a bit more money from the neighbouring states. It is necessary to provide them with services, because I believe that if disasters hit them we can also be negatively affected. However, they must pay a bit more. However, I have concerns about this legislation. Firstly, that similar agencies, for example Satour and the National Parks Board, in my opinion, are not pockets of excellence. If one looks at Satour, for example, as someone said earlier in a motion, we know that the world travel and tourism board does not believe that the full potential of Africa’s travel and tourism industry is being developed. In a previous debate the Minister differed with me and pointed out that I did not know what I was talking about. However, I do believe that there can be improvement with regard to Satour.

At the beginning of the year it was said that the Government was standing surety for the National Parks Board at the IDC for R69 million, and that while the National Parks Board does not even have a financial director and tourism numbers are declining and staff are being dismissed.

The second concern I have is that I believe that the Minister has been given too much power. I am comfortable under his leadership, but what would happen if we were to have a Steve Tshwete for environmental affairs? There would be chaos if so much power were transferred to a Minister.] Originally, the Bill was opposed by trade unions, but the department tried to accommodate them and several amendments were made, including watering down the criteria for the appointment of the board. This now means that the Minister need not appoint to the board anyone with expertise from the industry.

Hierdie is ‘n raad waarvan mense se lewens in baie gevalle gaan afhang, waarvan ons ekonomiese groei gaan afhang. Na al hierdie punte wat ek genoem het, wat my voorsitter en die Minister genoem het, dink ek regtigwaar nie dis ‘n ``glorified’’ en ‘n vreeslike sosiale raad hierdie nie. Ek glo dat hierdie raad moet bestaan, maar hoofsaaklik uit kundiges. (Translation of Afrikaans paragraph follows.)

[This is a board on which people’s lives are going to depend in many cases, and on which our economic growth is going to depend. After all these points that I have mentioned, which my chairperson and the Minister have mentioned, I truly do not believe that this is a glorified and very social board. I believe that this board must exist, but comprise mainly experts.]

Despite this, the DP supports the Bill. Dr E A CONROY: Chairperson, hon Minister Moosa and colleagues, the word ``weather’’ describes the general atmospheric condition at a given time and place as regards temperature, rain, sunshine, cloudiness, storm and other meteorological phenomena.

It is undoubtedly the natural phenomenon which has the most profound effect on our everyday lives. Most of us, invariably, begin a conversation by making some comments on the condition of the weather. This is not only a habit, but stems from our natural instinct to plan our day in terms of the weather, whether to dress warmly or to take an umbrella, etc. This type of planning is relatively simple as it can be based on merely glancing out the window or poking one’s nose out the door.

Planning on a social, commercial or economic basis, however, involves more than merely glancing at the sky. Farmers, commercial pilots, seafarers and construction companies, among others, must plan on a shorter and longer term into the future. Will the farmer be able to start ploughing next week or must he start harvesting urgently because heavy rains are expected that might damage his crops on the field? Can he take the chance to start shearing his sheep? If a sudden cold spell sets immediately after he has shorn his sheep, his animals might die of exposure.

This is where the Weather Service comes in and renders an invaluable and priceless service to the nation: A sometimes thankless task, because they are not able to give a spot-on prediction, but nevertheless an indispensable component of our planning processes.

The task of providing a meteorological service which promotes the safety of life, property and economic development of all South Africans by means of the preparation of weather and climate advice, information and weather forecasts and warnings was, up to now, that of the Chief Directorate: Weather Bureau, as a division of the Department of Environmental Affairs and Tourism. It was popularly known as the Weather Bureau.

The object of the Bill on the table is to commercialise the Weather Bureau. The new Weather Service will become a juristic person and will thus be able to enter into contracts on its own behalf. It does not imply privatisation, however, as the Weather Service provides certain social goods which do not lend themselves to privatisation.

Public-good services, such as the provision of daily rainfall and maximum and minimum temperatures to the general public, the conducting of research focused on reducing the impact of weather-related natural disasters and the provision of forecasting and warning services for the general benefit of safety and life of property, etc, will still be provided free of charge.

Services under Schedule 2 of the Bill, such as, inter alia, the provision of aviation meteorological services, meteorological consultation, including advice to the legal and insurance industries, and the provision of services to the maritime industry will, however, have to be paid for and this will provide much needed funds to service previously disadvantaged areas.

State departments will also remain the clients of the Weather Service and will continue to be provided with public-good services in return for Government funding. The funds of the Weather Service, which must be utilised to defray expenses in connection with the performance of its functions, will consist of money appropriated by Parliament, income derived from commercial services and other sources, such as fees, royalties and donations and interest on investments.

The utilisation of its assets will be strictly monitored in terms of the Public Finance Management Act. The Bill has financial implications for the state in so far as there will be establishing costs during the first three years.

The NNP supports this Bill. [Applause.]

Mrs J N VILAKAZI: Chairperson, hon Ministers and hon members, the Bill before the House, the South African Weather Service Bill, brings to our attention the importance of the weather in the lives of human beings. Quite often we fail to realise the importance and influence of the weather in our lives, yet it can turn out to be very deadly at times. Too often television beams into our homes terrifying pictures of the weather wreaking havoc. We observe cities, human and animal life being destroyed by volcanoes, storms, etc.

In our country we also witness loss of life as a result of road accidents attributed to bad weather. It is therefore clear that our country and the whole world rely on the availability of meticulous weather forecasts. Our economy cannot do without this service. The safety of our people and property also revolves around it.

Tourists and other visitors need to have the weather information well in advance to plan for their tours. The same thing applies to many others such as drivers and pilots.

Umthetho osezithebeni uzobhekela izidingo ezingejwayelekile. Siyazi ukuthi isimo sezulu sibaluleke kakhulu ezimpilweni zakho konke okuphefumulayo. Lo mthetho ubalula izexwayiso ngesimo sezulu. Kudingeka izingcweti ekwenzeni lo msebenzi ngobunyoninco obukhulu nangempumelelo, phela ngisho izangoma zezulu. KwaZulu-Natali, isimo sezulu senza umuntu nomuntu aqaphele futhi azivikele esimeni sezulu esiguquguqukayo.

Ukwaziswa ngesimo sezulu kudinga umthetho oshaywa uHulumeni ukuze izimo zelanga, ukushisa, imvula enomoya ezobhubhisa izitshalo kanye nokunye kulindelwe. Uzamcolo ozomukisa izindlu, kubhodloke amadamu, konke lokhu kufanele kulindelwe futhi kuhlonyelwe ukubhekana nakho. Isichotho, ungqoqwane, amakhaza ashubisa umnkantsha futhi abulale abantu nemfuyo kufanele ahlinzekelwe nokunye nokunye.

Phela isigungu lesi okukhulunywa ngaso esibizwa ngokuthi yi-Board of Weather Service yiso esengamele. Sibheka yonke imininingwane eqondene nesimo sezulu esiguquguqukayo. Ekukhethweni kwalesi sigungu, uNgqongqoshe womnyango uyaqikelela ukuthi kubhekelwe kahle yini konke lokhu okulandelayo: abezamanzi, ezolimo, ezokusakaza izindaba, abagada izibhicongo, ezomthetho, ezocwaningo, ezomkhathi kanye nokunye. Umsebenzi kaNgqongqoshe walo mnyango ukuba engamele konke lokhu osekubaliwe. Isigungu lesi esikhuluma ngaso, singumaluleki kaNgqongqoshe.

Lo mthetho ubaluleke ngendlela ongesheshe uyinake wena muntu nje. Siyaye sinake kuphela uma sekwenzeke izinto. Ake ngithi nje uma izulu likhithikile, sijaha ukubona ukuthi lizosa nini ukuze sikwazi ukusebenza. Ake ngithi kukhona uzamcolo, siyaye sijahe ukwazi ukuthi lisa nini. Uma libalele kakhulu, likhipha umkhovu etsheni, sibheka ukuthi zithini izangoma zezulu kanye nokuthi lesi sigayigayi selanga zithi sizophela nini. Sibheka noma sizovakasha ukuthi ingabe kumele sithwale amajazi, izambulela, otapolo bemvula kanye nokunye. Konke lokhu engikubalayo nengingeke ngakubala manje kulawulwa izangoma zezulu.

IPHINI LIKASIHLALO WOMKHANDLU KAZWELONKE WEZIFUNDAZWE (Mnu M L Mushwana): Isikhathi siphelile mama.

Nkk J N VILAKAZI: Thina be-IFP siwushayela ihlombe lo mthetho osezithebeni. Ngiyabonga. [Ihlombe.] (Translation of Zulu paragraphs follows.)

[The Bill on the Table will cater for unusual needs. We know that weather is important to everything that has life. This Bill highlights some warnings regarding weather conditions. Experts are needed to make this law in a proficient manner. By experts I mean climatologists. In KwaZulu-Natal knowledge about foreseeable weather conditions makes people take extra pre- cautions.

The Government should pass laws that will enable people to know about weather conditions so that they can expect any situation such as sunny weather, heat, storms that can destroy crops, and many other things. People should know if we are going to have a deluge that will destroy houses and dams. Preventive measures should also be taken. Storms, frost and cold weather that can destroy reared animals should be prepared for in advance.

The Board of the Weather Service is the one that is in charge. We expect all the information pertaining to the changes in the weather. In nominating members of this board, the Minister of the department concerned has to ensure that it consists of people in the following careers: water resource management, agriculture, the media, disaster management, legal profession, research community, any other weather sensitive industry, etc. The task of the Minister is to preside over the board to ensure that the above- mentioned points are complied with. This board should serve as an advisory team to the Minister.

This Bill is important in a way that an ordinary person cannot realise. We usually act and do not prevent. For instance, if there is snow, what we want to know is when it will clear up so that we can go back to work. If there is a deluge, we want to know when it will end. When the weather is too hot, we want to know what climatologists have to say and when the weather will cool down. If we are going to take a journey, we want to know whether we should carry umbrellas, big coats and raincoats. The climatologists control all these things that I have mentioned, as well as those that I have not mentioned.

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Your time has expired.

Mrs J N VILAKAZI: We in the IFP applaud the Bill under discussion. Thank you. [Applause.]]

Mr R M NYAKANE: Chairperson, hon Minister, I am made to understand that South Africa is one of the few countries in the world that has an environmental clause in its constitution. Section 24 under the Bill of Rights guarantees the right of everyone to an environment which is not harmful to their health or wellbeing.

In terms of subsection 4 of schedule 1 of the South African Weather Service Bill, all citizens of this country stand to benefit from the meteorological services that will be provided. The importance of early warnings cannot be overemphasised, after all, forewarned is forearmed. A great deal of damage through the national disasters which often leave the rural and urban population in a state of misery and destruction can be minimised, could the meteorological services be able to effectively predict fatal disasters, and warn those that live in the danger areas timeously.

I do not believe that there could be anybody from the Northern Province who would be opposed to the passage of this Bill, given that a great deal of damage, related to weather conditions, has already been experienced a few years ago. It is the intention of this Bill, among other things, to extend the delivery of weather services by South Africa beyond its borders.

The spirit of good neighbourliness was demonstrated in practical terms by South Africa when it offered relief services to the Mozambicans when they were trapped by floods in the Inyambana and other areas. This gesture symbolised our country’s spirit of good neighbourliness, Ubuntu, towards its neighbours.

Clause 26 of the Bill indicates that the Weather Service is the sole persona to retain the intellectual property rights on any data, meteorological and advisory services.

We have no qualms with this particular proposition. However, I would like to share with the hon the Minister this particular observation. There are internationally renowned figures like the Rain Queen Modjadji, who performs rituals in consultation with the ancestors to cause the rainfall. This practice has been in place from time immemorial. Queen Modjadji’s rituals seem to possess powers that can induce meteorological processes which can eventually culminate in rainfall.

I know it is not the intention of this Bill to address these observations. However, the bottom line is that there are other interested parties who are involved in the process of meteorology. My question is: Are we to ignore those practices? Should the answer be yes, it is well and good. Should the answer be no, how should these practices be carried on board in terms of the provisions of this particular Bill?

However, the UDM wholeheartedly supports this particular Bill. [Applause.]

Mr K D S DURR: Chairman, following my hon colleague, Nyakane, we are not really just discussing an ordinary situation. The Minister will know this. I am a fan of the Minister. I spent a lifetime in conservation, and I know how good he is at what he does. I very much respect the things that he has done so far.

However, when we talk about weather and climate, it is not an ordinary situation. Climate is becoming a real problem with global warming. We will need to alert ourselves to climate changes, and to plan accordingly. We cannot just rail and complain against it, and say it is happening. We might have to do some very long-term planning, and this Weather Service is going to have a key role to play in interpreting and assessing, and helping us plan the way forward, because it is going to affect whole, huge segments of our economy.

The Minister will know, as I do, that there are farmers, people that I know well, and some are related to me, that already plant their crops taking information received from the satellite into consideration. They are told exactly what the water content is, what the water vapour in the air is, when they must harvest, even regarding certain blocks on their farms. They are told by the computer, automatically. These are all challenges to the Weather Service. It will have to integrate itself into not just an agent that is looking for money, and therefore is going to privatise and have a user charge. It is fine and good that they do that if it will help them fulfil their potential, but they have a huge challenge, which I know the Minister will recognise, and that is to really become part of what is a vital global debate.

What the Minister is doing, according to the little research I have been able to do, constitutes best practice at the moment in the world as far as weather services are concerned in leading countries, and to that extent we support what he is doing.

I stand to caution the Minister by saying that transformation sounds great, but transformation has not always been great. Sometimes it has been great, sometimes it has not been so great in our experience in South Africa. We ask the Minister to keep a close eye on the transformation, and to see that it is a good example of transformation that takes place, that the tariffs remain competitive, even lower, if necessary, than those of comparable countries around the world so that we maintain our competitive advantage, also in terms of things like tourism, attracting people to fly to our country and those that use our services.

This Weather Service is going to find itself in a competitive situation. It has had a monopoly to date, but with the Internet a lot of people now get their weather information from other sources, and they will have to compete in the marketplace. That is both a challenge, on the one hand, and an opportunity on the other, because they will be able to sell information to markets that they did not sell to before - if they are good at what they do. I am satisfied that they can remain the best and really respond to these challenges, and opportunities, which they have in a globalising world. [Time expired.] [Applause.]

Chief M L MOKOENA: Chairperson, the ANC will fully support any legislation which is aimed at improving the lives of our people.

The South African Weather Service Bill is one of those pieces of legislation that we fully support. This Bill is one of those things called a success story. That is why I believe success comes only to those who want and not to those who wait.

What is the South African Weather Service Bill all about? It is a piece of legislation that is going to achieve a lot of things. It establishes the SA Weather Service. The Bill will, for the first time in the history of this country, make it possible for people, especially those in the disadvantaged communities, to be warned timeously of any weather change. As one knows, change is something to get excited about. Even a baby with a dirty nappy gets excited about change. [Laughter.]

Taking over where Rev Moatshe left off, let us, for a change, look at the following examples. Many years ago when one saw certain types of birds, one immediately knew it was about to rain. When one saw certain types of clouds, one knew exactly what type of rain was coming. When one felt a particular kind of heat, one knew that sooner or later it was going to rain. When the wind blew in a particular direction, one knew what kind of rain would come.

The South African Weather Service Bill will make it easier for people like Mosebjadi, Mahlaku or N’wa Mkhelemba and Ma-Mkhize not to rely only on the said examples. The ANC sees this as an opportunity to put things right. As hon members are aware, a person gets only one opportunity to make the first impression. Our people are going to benefit from this service.

The entire Weather Service is going to be transformed even though, as we have heard, some people see transformation as a strategy or a systematic way of removing people from their jobs and replacing them with others, while others see transformation as a co-ordinated method of restructuring and realigning positions in a particular field or sector. This Bill deals with the latter.

Oh yes, it is true that in the past there was a time in this country when some positions in government were reserved for certain people. Some positions would even be created to be filled by a chosen few. Qualifications, experience and knowledge were disregarded and substituted by colour. As the ANC we say that that kind of behaviour or attitude belongs in a zoo.

There is no provision in the South African Weather Service Bill for the promotion or perpetuation of that kind of behaviour. When appointments are made in the Weather Service, normal procedures will be followed. There will be no job reservation for pals. This can only be done by a government that cares, because people do not care how much you know, they only want to know how much you care. Good people will know that God is more interested in their character than their comfort.

This Bill makes it easy for people to get the necessary information about weather-related matters. It also makes it easy for people to access the Weather Service. For the first time in this country’s history this service will be brought nearer to the people. People will not just hear about this service from some high building in Pretoria, they are going to own this service. Hence, the greatest thing in this world is not so much where we are, but what direction we are moving in.

To make sure the SA Weather Service is functioning properly and reliably, the Board of the Weather Service will be established. This board will not be cumbersome. As hon members are aware, it will consist of not more than 10 and not less than eight people.

I want to tell the hon Mrs Versfeld that members of the board will be appointed by the Minister through the normal processes. [Interjections.] Unlike the past practice, the Minister will not just pick and choose or select his or her lackeys when appointing these board members. He or she will consider the needs of the following - I would like to say to Mrs Versfeld - for example weather resource management, agriculture, subsistence farmers, disadvantaged communities, the media, disaster management and those of any other relevant stakeholder.

Another pleasing factor, for the attention of the hon Mrs Versfeld, is that before the Minister appoints these board members, people will participate in nominating people of their choice - something I would like to say to Mrs Versfeld - an unknown concept under the previous regime. I want to say well done to the hon the Minister. How true it is that true leadership cannot be divorced from the basic qualities that produce good sound character.

The Board of the Weather Service will ensure that people get service of a better quality. It will also set policy and standards. The board will monitor the work of the Weather Service. The board will set policy for recruitment, training, and transformation of the Weather Service.

Besides the Board of the Weather Service, there will also be another body called the regulating committee. This committee will play a watchdog role. The regulating committee can immediately investigate a matter, if in its opinion there are reasonable grounds to believe that the Weather Service has, in one way or the other, failed to perform its duties as is expected.

We have been reliably informed that people currently working at the Weather Bureau, which will now be called the SA Weather Service, were uncertain about their jobs. Fortunately, the ANC-led Government, like great minds, does not discuss people; we discuss issues. We play the ball, not the man. In this piece of legislation, people who are currently employed in the Weather Bureau … [Interjections.] … you listen … will automatically be transferred to the new Weather Service when this Bill becomes an Act. One would never get this kind of gesture from any other organisation in this country, other than from the ANC. Again, I say well done to hon the Minister. But people or those who stay in glass houses must be warned that they should dress properly.

The ANC supports this Bill. [Applause.]

The MINISTER OF ENVIRONMENTAL AFFAIRS AND TOURISM: Chairperson, may I at the outset express my appreciation to Kgosi Mokoena for his support and his kind words. May I also say that he is the appropriate person that the hon Nyakane can consult on the role and place of traditional weather forecasters in the new Weather Service that is going to be established. I am not qualified enough to comment on that, but the Kgosi would be able to advise him on how to go about approaching that.

I must, however, differ with the Kgosi on one issue that he raised. He said that apartheid thinking and practices belong in a zoo. As an animal lover, I think that is an insult to the animals, and I would really ask him to reconsider whether he really means that or not.

The hon Versfeld, I think, took the opportunity to talk about other institutions, like the SA National Parks. May I, firstly, point out to her that the legislation that governs the SA National Parks is not legislation which was sponsored by me or by the ANC. It is her party that established that and set out the legislation. I have not, as yet, had the time nor the need to look at that legislation, in order to revise it. I did not see any urgency about doing it, anyway.

However, may I point out to her that, once again, she is quite wrong. The SA National Parks is a pocket of excellence. The question I would ask her is: When she questions the SA National Parks, by what measure does she do so?

One can point to inadequacies in any institution, including the NCOP, if one wants to, but the question is: What does one measure it against? Is the hon member measuring it against similar institutions elsewhere on the continent and elsewhere in the world? If she does so, then she will understand the very high respect with which the SA National Parks is held.

Is she comparing it with other similar conservation institutions within the country? Then, too, she would be able to see that the SA National Parks, although it may have some weaknesses, stands head and shoulders above any other similar institution.

We must bear in mind that the SA National Parks manage a huge percentage of the surface area of South Africa, in a very scientific and responsible manner, and at very little cost to the taxpayer. Very few people know that the budget of SA National Parks is probably in the region of about R350 million. I do not have the exact figures. This Parliament subsidises the SA National Parks only to the tune of about R50 million. We may want to increase that now and then, a little bit, but it would be, more or less, in the region of that ballpark figure.

There is no other parks conservation body in this country, at the provincial level or anywhere else, that can measure up to that kind of standard, and the proof of the pudding is in the eating. I beg your indulgence, Chairperson, so that I can just speak on this matter a little bit, because it has been raised. Give me an opportunity to say that in the period 1994 to 2000, the SA National Parks expanded more than it had expanded in any other comparable period in the history of SA National Parks. I think that is a fact that one must take into account. We must take into account that, in the recent period, a whole new national park, the Cape Peninsula National Park, was established as a result of a co- operative process between the local authorities, the province and the national Government, and that is a great achievement for the conservation of the Fynbos biome and the Fynbos floral kingdom in this region.

It is also in the past few years that the Kgalagadi Transfrontier Park was established, which is the first of its kind in the world, for that matter. There are other transfrontier conservation areas, but this is a true transfrontier park. That is really one of the first which works very well, without any additional expense for the taxpayer.

The creation of a new transfrontier park, the GKG, which involves South Africa and will bring in the Kruger, Mozambique and Zimbabwe, is already far advanced. That is a very massive project that we have undertaken, led by SA National Parks. So I must say that, indeed, I think SA National Parks is really something that all of us can be proud of.

In a few months’ time, the SA National Parks will be beginning the process of the relocation of 1 000 elephants, from the Kruger onto the Mozambican side. This is a massive exercise which will take a few years to complete, and it is a very costly exercise. However, because of good friends of conservation in this country, and in this case I must mention Dr Anton Rupert, we have been able to raise money elsewhere, not from the taxpayer, in order to undertake what will be one of the biggest Noah’s Ark projects that the world has seen.

There are some very wonderful things happening that I think we can truly be proud of. When the hon member says that the Minister has too much power in the appointment of the board, etc, I am sure that she would not expect me to concur with her on that. That is the nature, I suppose, of the debate between Parliament and the executive, which is always healthy.

Mr Nyakane mentioned the environmental rights that are contained in our Constitution. I think that it is valuable for us, from time to time, to remind ourselves that we are a country in which the right to a clean and decent environment is regarded as a fundamental human right, and there are very few other jurisdictions in the world where it is entrenched to that extent.

That does place special responsibilities on Parliament, and it places special responsibilities on Government, on the executive and on the Government departments. I do hope that when I come here for the policy debate, I will be able to give some indication on the extent to which we are fulfilling that requirement of the Constitution.

The hon Durr, I think, very usefully points out that we must constantly be aware of the question of climate change and global warming. This is a matter of very deep concern to Government, especially in the light of the fact that the international negotiations on this matter have broken down, and the United States even walked out of the climate change negotiations. There is also the lack of consensus now between the US, on the one hand, and other industrialised nations, like the EU countries and Japan.

It is a very serious matter. In fact, I can say that Cabinet has requested that I do a special in-depth briefing to Cabinet on the matter of global warming and climate change, which we will be doing next week. Because of the concern of Government as a whole about this particular matter, we have also done a study on what the effect on South Africa would be of climate change, and what the few degrees rise in temperature, over a period of time, would mean for the health of our agricultural resources, our water resources, biodiversity, plant and animal life, the coast, etc.

I do hope that once I have an opportunity to present that to Cabinet, we will be able to make it public, so that people can become more aware, as far as this is concerned. It is quite a serious matter. We have emissions of carbon dioxide and methane into the atmosphere at an unprecedented level. Never before, in the history of this planet, has there been so much carbon dioxide surrounding the earth in the atmosphere, and it is a matter that is not just a blue science question that only scientists should worry about. I think all of us should be worried about it.

It is a matter of concern that, while in Europe the proverbial person in the street is reasonably concerned about this matter, in South Africa we have not, as yet, taken it to grass-roots level. I hope we will be able to do that. May I just say, in conclusion, that the transformation of the Weather Bureau is one of the biggest steps that has taken place since its inception, in the entire history of weather forecasting and weather-related activities.

One of the most important things it does, apart from the commercialisation of some of its activities, is that it puts another brick in the modernisation of the state, which is a massive exercise that we are going through, and which will still take us quite a few years to fulfil. However, this is an important step and I think there is a great deal of innovation in the manner in which we have done this, which will, hopefully, inform some of the other work that we will do in transformation.

I must then take this opportunity, also, to thank all of the people who worked very hard - the select committee, certainly, but also members of the Department of Environmental Affairs and Tourism, the Weather Bureau, in particular, and the Ministry - for the diligent work that has been done to build the kind of consensus that we have seen in the House today.

May I say that the passage of this Bill through Parliament has certainly enjoyed fair weather. [Applause.]

Debate concluded.

Bill, subject to proposed amendments, agreed to in accordance with section 75 of the Constitution.

                    TAXATION LAWS AMENDMENT BILL

            (Consideration of Bill and of Report thereon)

The DEPUTY MINISTER OF FINANCE: Madam Chair, the Bill that we are going to be debating today provides for the introduction of capital gains tax in South Africa, and it is therefore the last instalment in a series of comprehensive tax proposals that were announced in the past year. Since this was announced last year, capital gains tax has been the subject of extensive debate by both proponents and opponents of the broadening of the definition of income to include capital gains.

In the process a lot of emphasis was placed by opponents of capital gains tax on such issues as the negative impact it will have on the economy - more specifically on investment in South Africa, entrepreneurship, job creation and savings - the complexity of the tax, the small amount of revenue that it will produce and the lack of indexation. These are some of the issues that have been focused on.

In dealing with some of these issues, we would like to give a bit of perspective. Firstly capital gains tax was announced as part of a wider tax reform initiative aimed at enhancing the integrity of the tax system, broadening the tax base and thereby creating the scope to further reduce tax rates. In this regard we believe that it will bring greater neutrality to the treatment of income of a revenue as opposed to that a capital nature, thereby reducing the opportunity to recharacterise taxable income as nontaxable income of a capital nature.

This is a key weakness of our environment in South Africa, because there are those who are able to convert what would be ordinary taxable income into a capital gain and therefore get away without paying tax. This means that we have an unfair tax system, because those members of society who are not able to do that pay their full tax. It will also free up administrative resources used in combating arrangements of this nature which could be employed more productively in other areas of tax administration.

Thirdly, it will complement and underpin the effectiveness of administering other taxes and therefore serve as a backstop to the tax system as a whole. In other words, it closes a loophole that has been there through which certain individuals have been able to get out of their obligations to pay tax.

It also brings our tax system in line with international norms both in developed and developing countries.

In terms of the impact on the economy, savings and investments in South Africa, the IMF expressed a view that the effect on private savings is likely to be slight. I might add that the best evidence is that total private savings are in any event, more responsive to changes in the taxpayers’ total after-tax income than they are to changes in after-tax returns on specific investments. Reducing the tax rate for companies and individuals, as we have done, is therefore far more likely to encourage savings.

Foreign investment is likely to be unaffected by the introduction of capital gains tax since both long-term and short-term investors in South African companies are generally exempt from capital gains tax on the disposal of their shares. Even where a foreign investor does pay capital gains tax on the disposal of his South African asset, a tax credit against the capital gains tax paid in the home jurisdiction will be available for the capital gains tax paid in South Africa.

On the complexity of the legislation, the proposed legislation is relatively simple when compared to that of other jurisdictions. Indeed, much of the complexity in other jurisdictions’ legislation comes from special concessions granted to one interest group or another. I do not wish to imply that the proposed provisions are without any complexity at all, but rather want to say that we are mindful of the complexity of the capital gains systems of other countries and therefore endeavoured to keep the rules as simple as possible in South Africa.

On the question of the revenue yields from capital gains tax, these are projected to reach R1 billion to R2 billion rands per annum once the system is fully phased in. It is a significant amount, but what will be even more significant are the amounts that will be flushed from hiding and will be properly declared in the ordinary income tax system, in the VAT system and for other taxes, once the capital gains tax has been implemented. It is these amounts, which are so difficult to measure, that are conveniently ignored by opponents of capital gains tax.

On indexation, balanced against the calls for simplicity have been calls for inflation indexing of the capital gains tax system. Apart from the fact that it is conceptually unsound to index only a part of the income tax system, the main problem with indexing the capital gains tax system is the complex record-keeping that will be required of taxpayers to calculate the adjustments. Other jurisdictions have experimented with indexing and have abandoned it. We should learn from their experience. In a sense, complaining that this is complex legislation to administer and at the same time calling for indexation, which is even more difficult and is more onerous on both taxpayers and the revenue authorities is, in a sense, a bit of a contradiction in terms, and we have tried at all times to make sure that our own system that we introduce is simple to administer. On the question of the process, hon members will remember that on Budget day last year, a guide setting out the key principles to this tax was released and public comment was invited. Over 300 submissions were received and considered. After extensive preparation, a first draft Bill was released on 12 December 2000. Once again, responses were received, this time from more than 150 interested parties. The Portfolio Committee and Select Committee on Finance held joint hearings on the matter during the period 23 January 2001 to 9 March 2001, which generated a great deal of debate and interest. During this process the committee had the benefit of hearing the views of international academics who are experts in this field of taxation.

A second draft Bill was then released on 2 March 2001, which took into consideration of many of the issues and concerns raised during the hearings.

The opportunities for interested parties to make an input in the process were therefore extremely wide and transparent. I therefore wish to express my appreciation towards the public for their participation and assistance, whether in a personal capacity or via organised groupings, which has been invaluable in the preparation and finalisation of this Bill.

On the issue of implementation, notwithstanding the above process, many organisations expressed the view that if 1 April 2001 had remained the date of implementation for capital gains tax, it would have been impossible for them to change their systems in time to comply with the provisions. In this regard Government displayed understanding by deferring the effective date to 1 October 2001. This was a further indication that the public hearings were not just a token exercise, but that we, indeed, did take into consideration a lot of the issues that were raised by various parties.

In conclusion, I would like to say that there has been a lot of work that has been put into the preparation of this Bill. We therefore wish to thank members of the portfolio committee and the select committee for the role that they have played in finalising this Bill. No doubt capital gains tax remains a complex issue, and, as in the case of other jurisdictions, the provisions will require refinement over time. I would like to stop here. [Applause.]

Mnr J L THERON: Mnr die Voorsitter, agb Adjunkminister en kollegas, my aanvanklike vraag oor die belasting is: Wat is die werklike doel met kapitaalwinsbelasting? Is dit om by die rykes weg te neem en vir die armes te gee, of wat is die werklike rede? Oor die redes wat aangevoer word deur die adjunkminister en wat in die gesamentlike komitees aangevoer word, het ons ernstige bedenkinge. Daarom wil ek ten aanvang dit duidelik stel dat die DP en die DA kapitaalwinsbelasting, of KWB, teenstaan.

Ek het nog altyd respek gehad vir die Minister van Finansies, mnr Trevor Manuel, asook vir die adjunkminister en die Minister van Handel en Nywerheid. Ek het nog altyd gedink dat finansies en ekonomiese sake goed bestuur word in Suid-Afrika, maar nou met die inwerkingstelling van KWB wonder mens wat is die doelwitte en die prioriteite vir die Suid-Afrikaanse ekonomie.

Ek wil kortliks kyk na die probleme wat in Suid-Afrika ervaar word. Twee van die grootste probleme waarmee ons tans in Suid-Afrika worstel, is misdaad en die lae ekonomiese groeikoers. Ons glo dat indien die lae ekonomiese groeikoers aangespreek kan word, dit tot ‘n groot mate ook die misdaadprobleem sal verlig. Indien die ekonomiese groeikoers verhoog kan word, sal meer werk geskep word sodat ons van ‘n breër basis af kan groei.

Vervolgens wil ek kortliks kyk na die vordering van ekonomiese groei. Twee van die sleutelelemente in die ekonomiese groei is belegging en besparing. Ons in Suid-Afrika wil graag meer buitelandse beleggings hê wat die ekonomiese infrastruktuur sal uitbou, meer werk sal skep, armoede sal verlig en dus die ekonomiese groeikoers ‘n hupstoot sal gee.

Suid-Afrika sukkel ook reeds jare met die spaargeneigdheid wat baie laag is. Indien ons meer spaar, word meer kapitaal gebou en word die ekonomiese stimulus verskaf wat ekonomiese groei skerper sal laat klink. Nou weet ons ook dat as mens minder van iets wil he, dan belas mens dit. Dit is die rede hoekom alkohol en tabak meer belas word. Wil ons nou met KWB belegging en besparing meer belas en minder daarvan kry? Waar kom KWB nou in wat belegging en besparing betref?

Kapitaalwinsbelasting gaan presies die teenoorgestelde effek hê as wat ons sou verkies. KWB gaan buitelandse beleggings ontmoedig en relatief min belasting inbring tot voordeel van die staat. Ons het tans ‘n mededingende voordeel teenoor die buiteland deurdat ons nog nie KWB het nie.

In die lang sessies wat KWB in die gesamentlike komitees gedebatteer is, was feitlik al die verteenwoordigers van Handel en Nywerheid teen KWB gekant. Hoekom? Een van die persone wat voor die komitees verskyn het, het ‘n baie eenvoudige voorbeeld genoem. Gestel ‘n Amerikaner belê geld in Suid- Afrika en vyf jaar later verkoop hy weer die besigheid. In dollarterme kan dit wees dat hy ‘n verlies maak na vyf jaar, maar in randterme kan hy ‘n wins toon omdat ons inflasiekoers soveel hoër is as die Amerikaanse koers. Dan moet ons hierdie belegger nog KBW ook laat betaal op ‘n dollarverlies wat hy gemaak het. Dit klink absurd, maar dit kan beslis gebeur. Die vraag is dus: Sal hierdie Amerikaner weer in Suid-Afrika belê? Beslis nie. Hierdeur probeer ek slegs demonstreer dat KWB beslis nie ‘n goeie belasting vir buitelandse belegging is nie.

Dit volg logies dat KWB beslis nie besparing gaan aanhelp nie. Waarom sal ‘n Suid-Afrikaner meer wil spaar en sy kapitaal opbou net om later hierop belas te word? Met Suid-Afrika se hoë belastingkoers is dit noodwendig dat belasting so ver moontlik vermy moet word. Dit volg dus logies dat mens nie meer gaan spaar as mens weet jy gaan meer daarop belas word nie.

‘n Verdere punt onder ekonomiese groei wat geopper moet word, is of KWB- entrepreneurskap die klein- tot mediumsakesektor gaan bevorder. Almal weet hoe noodsaaklik entrepreneurskap en die klein-tot mediumsakesektor vir Suid- Afrika is. Indien hierdie sakesektor nog verder belas word met die KBW op kapitaal wat moeilik bekombaar is, is dit voor-die-hand-liggend dat dit nie bevorderlik vir hierdie sakesektor is nie.

My vraag is dus weer: Wat is die werklike doel met KWB? Ek wil graag kyk na die internasionale ervaring. Met debatte in die gesamentlike komitees was dit baie duidelik dat die internasionale ervaring nie baie positief vir KWB is nie. Daar is oor en oor gesê dat dit ‘n baie ingewikkelde belasting is om te administreer en ‘n relatief lae belastinginkomste vir die staat genereer. In baie lande word die koers van KWB jaar na jaar verlaag. In Brittanje het hulle ondervind dat na vyf jaar was die koste van administrasie nog steeds hoër as die inkomste wat gegenereer word. Ek wil afsluit. Uit die voorafgaande behoort dit duidelik te blyk dat KWB nie die korrekte ekonomiese rigting is om te beweeg nie. Wat is die korrekte rigting? Die ekonomie moet verder gestimuleer word vir hoë groei sodat meer werk geskep kan word om armoede en misdaad te beveg.

Buitelandse beleggings en groter besparing moet aangemoedig word met belastingtoegewings om die ekonomie verder te stimuleer. Privatisering moet dringend versnel word om meer buitelandse kapitaal of beleggings te lok. Dit sal hoër groei in die Suid-Afrikaanse ekonomie grootliks fasiliteer. Die vraag bly dus steeds: Wat is die werklike doel met kapitaalwinsbelasting? (Translation of Afrikaans speech follows.)

[Mr J L THERON: Mr Chairman, hon Deputy Minister and colleagues, my initial question concerning the tax is: What is the actual purpose of levying capital gains tax? Is it to take away from the rich to give to the poor, or what is the real reason? About the reasons given by the Deputy Minister and the joint committees we have serious reservations. I would therefore at the outset like to say clearly that the DP and the DA are opposed to capital gains tax, or CGT. I have always respected the Minister of Finance, Mr Trevor Manuel, as well as the Deputy Minister and the Minister of Trade and Industry. I have always thought that financial and economic affairs were being well managed in South Africa, but now that capital gains tax has been introduced one wonders what the objectives and priorities of the South African economy are.

I want to take a brief look at the problems that are experienced in South Africa. Two of the major problems with which we are at present wrestling in South Africa are crime and the low economic growth rate. We believe that if the low economic growth rate could be resolved, this would relieve the problem with crime to a great degree. If the economic growth rate could be increased more work would be generated so that we could grow from a broader base.

I accordingly want to look briefly at the progress of economic growth. Two key elements of economic growth are investment and savings. We in South Africa would like to obtain greater foreign investments that would extend the economic infrastructure, create more jobs, relieve poverty and therefore give the economic growth rate a push.

South Africa has also been struggling for years with a very low savings trend. If we save more, more capital is generated and the economic stimulus is provided that would render economic growth more effective. Now we also know that when one wants to have less of something, one taxes it. This is the reason why higher taxes have been imposed on alcohol and tobacco. With CGT do we want to tax investment and savings more and so have less of it? Where does CGT come in with regard to investment and savings?

Capital gains tax is going to have precisely the opposite effect than the effect we would have preferred it to have. CGT is going to discourage foreign investments and and bring in relatively little tax that would benefit the state. At present we have a competitive advantage over foreign countries in that we do not have CGT yet.

During the long sessions that CGT was debated in the joint committees, virtually all the representatives of Trade and Industry were opposed to CGT. Why? One of the people who appeared before the committees mentioned a very simple example. Suppose an American invested a large amount of money in South Africa and five years later he sold the business. In terms of dollars it could be that he incurred a loss after five years, but in terms of rands he could show a profit, because our inflation rate is so much higher than the American rate. Then we make this investor pay CGT on top of the loss in dollars that he had incurred. This sounds absurd, but it could definitely happen. The question is therefore: Will this American invest in South Africa again? Certainly not. By saying this I am only trying to demonstrate that CGT is most certainly not a good tax when it comes to foreign investment.

It follows logically that CGT will definitely not promote savings. Why would a South African want to save more and build up his capital only to be taxed on it later? With South Africa’s high tax rate, taxes must of necessity be avoided as far as possible. It therefore follows logically that one would not save more when one knows that one is going to be taxed on it.

A further point that must be mentioned when it comes to economic growth is whether CGT entrepreneurship will promote the small to medium business sector. Everyone knows how important entrepreneurship and the small to medium business sector are to South Africa. If this business sector is going to be taxed further by means of CGT on capital, which is difficult to obtain, it is evident that it is not beneficial to this business sector.

My question, therefore, is once again: What is the real objective of CGT? I would like to look at the international experience. During debates in the joint committees it became abundantly clear that the international experience in respect of CGT was not very positive. It has been said over and over again that it is a very complicated tax to administrate and that it generates a relatively low tax revenue for the state. In many countries the CGT rate is reduced year after year. In Britain they found that after five years the administration costs were still higher than the revenue generated.

I want to conclude. From the aforementioned it should be clear that CGT is not the correct direction to take. What is the correct direction? The economy must be further stimulated to grow so that more jobs can be created in order to combat poverty and crime.

Foreign investments and greater savings must be encouraged by means of tax concessions further to stimulate the economy. Privatisation should be urgently speeded up so as to invite more foreign capital or investments. This will greatly facilitate higher growth in the South African economy. The question therefore remains: What is the real objective of capital gains tax?]

Mr T B TAABE: Chairperson, hon Deputy Minister and members of this august House, before I respond to the kind of political baloney that this House has just been subjected to, let me start my speech by referring to a statement by one of the foremost thinkers on issues of taxation in the world, R H Tony, when he accurately expressed our views on capital gains tax. He said, and I quote:

The exemption from taxation of gains arising from capital appreciation seems to one about as rational as a close season for sharks.

The introduction of capital gains tax is often justified on fiscal equity grounds and on other criteria. The point has consistently been made, and right so, that it is this tax, as proposed by the ANC that would seek to widen the income tax base, secure the existing base by limiting tax avoidance activities, and improve equity and reduce investment distortions, which other parties do not really want to agree with for reasons best known to them.

Capital gains tax is also to be found in a number of developing countries, including Argentina, Brazil, Chile, Zimbabwe, Ghana, Malaysia and Thailand.

This tax, we argue very strongly, has to be judged by the impact it has on the following. Firstly, it has an impact on economic efficiency. Secondly, regarding the impact it has on savings - an issue which is being deliberately distorted by hon members of the so-called DP, New NP unholy alliance in this Chamber. This tax should, in fact, be judged by the impact it has on savings. This is an issue they do not want to talk about in this chamber.

Thirdly, this tax should also be judged by the impact is has on investment and economic growth. We have made this point consistently from the very first day we had public hearings, basically, on capital gains tax. Lastly, capital gains tax should be judged by the impact it has on risk taking, a point we have always made ourselves.

If capital gains tax goes untaxed, individuals are encouraged by the tax system to invest their savings in assets that provide returns in the form of capital gains, for example property, rather than income-producing assets such as equipment and machinery. The crucial point is that scarce investment funds are clearly misallocated when tax factors are given undue weight over risk-return considerations in the allocation of investment capital.

Capital gains tax, we insist, will narrow the gap in the tax treatment of different assets, reducing these distortions in individual portfolio decisions. And, in the case of savings, the absence of capital gains tax in the past did not seem to influence the level of savings much. It is a reality in South Africa. This absence has never really influenced the level of savings much. After all, South Africa’s savings rate is much lower than many countries that do have capital gains tax. I do not know if hon Theron would want to dispute this fact as well. [Interjections.] Obviously, those with the most unintelligible of minds, honestly, would want to dispute this reality.

It is likely, therefore, that other factors, such as the level of lifetime income, have a greater bearing on the level of household savings than do taxes. I hope the hon member Theron is listening. [Laughter.] In this light, one must also consider the positive effect of capital gains tax receipts on Government revenues. The point has also been made that with capital gains tax in force, South Africa is likely to have revenue yields of anything between R1 and R2 billion annually. That is a fact.

While the direct receipts tend to be small, the total contribution of capital gains tax is greater than the direct revenue flow. By reducing the incentives to convert ordinary taxable income into tax-free capital gains, capital gains tax enhances the ordinary income tax base, increasing receipts from this source as well. These receipts could be applied to reducing Government dissaving.

Alternatively, the resources can be used to reduce statutory income tax rates, which would contribute to the efficiency of the overall tax regime. Therefore, the implementation of this Bill before us could have a positive effect on the level of savings.

A major critique of capital gains tax is that it is too expensive to administer, an insignificant point which has been made by those parties basically opposed to this Bill from time immemorial. However, there is no question that not taxing capital gains, or taxing it at preferential rates, contributes any more to the complexity of the tax system than any other single characteristic of an income tax system.

Firstly, when the differences between capital gains and other types of investment income become very large, the pressure that the tax-avoiding taxpayers place on that border generates an almost endless variety and number of tax shelters.

Complicated rules are needed to prevent such tax sheltering activity to prevent taxpayers from converting taxable dividends into nontaxable capital gains, and, generally, to prevent high- income taxpayers, who earn income from capital and who can obtain the advice of sophisticated tax planners. This is a game that, obviously, the hon member and others basically understand. [Time expired.] [Applause.]

The CHAIRPERSON OF THE NCOP: Order! I would also remind you, hon member, that you are addressing the Chair and not other hon members in this House.

Dr E A CONROY: Agb Voorsitter, agb adjunkminister van Finansies en kollegas, die gesamentlike gekose- en portefeuljekomitee op finansies het die afgelope paar maande deeglik oor die instelling van belasting op kapitaalwins besin.

In dié tydperk is daar trouens na aanleiding van geregverdigde kritiek uit verskeie oorde op ‘n verskeidenheid aspekte vele toegewings gemaak ten opsigte van die konsepwetgewing soos dit oorspronklik daaruit gesien het tot dit wat vandag ter tafel is.

Indien ooreenstemming bereik kon word oor wat in dié stadium in Suid-Afrika se ekonomiese ontwikkeling gewens en geskik is, kon aanvaarbare belastingwetgewing op kapitaalwins hieruit voortspruit.

Die probleem met KWB word netjies deur mnr Frikkie Strauss, belastingkonsultant van die Swartland, saamgevat en ek haal aan: Die gevaar van die KWB lê nie in sy onderdele nie, maar in sy hele wese. Die belasting is strydig met die fundamentele beginsels en waardes van die vryeondernemerstelsel.

Voorlopige beramings dui op ‘n geraamde inkomste van sowat R2 miljard uit KWB. Dit is bykans gelykstaande aan die R1,6 miljard wat die staat, volgens die Minister vir die Staatsdiens, klaarblyklik in die afgelope finansiële jaar op konsultante vermors het.

As die korrupsie, bedrog en wanbesteding wat die ouditeur-generaal feitlik daagliks uitwys, hokgeslaan sou word, as die SA Inkomstediens se ondersoek na ‘n groep sakemanne wat na bewering sowat R189 miljoen aan belasting skuld tot sy finale konsekwensies deurgevoer sou word of as die provinsie, wat deur die agb Taabe in dié Huis verteenwoordig word, verhinder sou word om die begroting met ongemagtigde uitgawes, tot dusver soveel as R150 miljoen, te oorskry met die bou van ‘n wetgewergebou, sou die staatskas maklik kon deurkom sonder om ‘n verdere las op die belastingbetaler se skouers te laai.

‘n Groot deel van waagkapitaal, tot soveel as 48% in die VSA, kom van kapitaalwins. Die organisasie vir ekonomiese samewerking en ontwikkeling beveel aan dat kapitaalwins wat na waagkapitaalprojekte gekanaliseer word, nie aan KWB onderworpe moet wees nie. My vraag is of die Regering enige planne gereed het om beleggings vir waagkapitaalprojekte in Suid-Afrika aan te moedig. (Translation of Afrikaans paragraphs follows.)

[Dr E A CONROY: Hon Chairperson, hon Deputy Minister of Finance and colleagues, the joint select and portfolio committee on finance has, over the past few months, carefully considered the implementation of capital gains tax.

During this period, in fact, in response to legitimate criticism from various quarters in relation to a variety of aspects, many concessions have been made with regard to the draft legislation as it stood originally, as opposed to that which is being tabled here today.

If agreement could be achieved with regard to what is desirable and appropriate at this stage of South Africa’s economic development, acceptable tax legislation on capital gains could result from this. The problem with CGT is succinctly stated by Mr Frikkie Strauss, tax consultant from the Swartland, and I quote:

Die gevaar van die KWB lê nie in sy onderdele nie, maar in sy hele wese. Die belasting is strydig met die fundamentele beginsels en waardes van die vryeondernemingstelsel.

Preliminary estimates indicate an estimated income of approximately R2 billion from CGT. This is almost equivalent to the R1,6 billion which the state, according to the Minister for the Public Service, apparently wasted on consultants in the past financial year.

If the corruption, fraud and maladministration that the Auditor-General highlights practically every day could be curtailed, if the SA Revenue Service’s investigation of a group of businessmen who allegedly owe R189 million in taxes were to be followed through to its final consequences, or if the province that is represented by the hon Taabe in this House were to be prevented from incurring unauthorised expenditure, thus far as much as R150 million, and going over budget with the construction of a legislature building, the Treasury could easily have pulled through without placing a further burden on the shoulders of taxpayers.

A major portion of venture capital, as much as 48% in the USA, is generated from capital gains. The organisation for economic co-operation and development recommends that capital gains channelled to venture capital projects should not be subject to CGT. My question is whether the Government has any plans prepared to encourage investments for venture capital projects in South Africa.]

As I mentioned right at the beginning of my speech, many submissions have been made by South African business interests, virtually all of them opposing the introduction of CGT on various grounds.

The following objections run like a golden thread through the majority of these submissions and appeals, namely that it is not an appropriate tax to be introduced in South Africa at this stage; that the average citizen will not understand and not be able to comply because of the complexity of CGT in its present form; that the costs of implementation and administration will be extremely high; that we will have long-term negative economic consequences, because it will undermine savings, investment, capital formation, job creation and economic growth; that it has a notorious reputation for its low yield and high opportunity costs, arising from distortions it creates in the economy; and that contrary to claims that CGT is in line with best international practice, there is a trend away from this type of tax.

In this connection, I quote Dr Alan Greenspan, Chairman of the US Federal Reserve, who is of the opinion that CGT is a poor tax for revenue-raising purposes and that, ``indeed, its major impact is to impede entrepreneurial activity and capital formation’’.

Last but not least, South Africa is considering the imposition of a controversial tax precisely at the time when it is either being phased out or being reduced to meaningless levels around the world.

Die Regering is blykbaar duidelik voornemens om, ten spyte van alle teenargumente waarvan bogenoemde voorbeelde is, voort te gaan met die instelling van KWB. Dit dui daarop dat dit polities geïnspireer en gemotiveer is. Die Nuwe NP sien nie sy weg oop om dié wysigingswetsontwerp te steun nie. [Applous.] (Translation of Afrikaans paragraphs follows.)

[The Government apparently clearly intends, in spite of all the counterarguments, of which the above-mentioned are examples, to proceed with the implementation of CGT. This indicates that it is politically inspired and motivated.

The New NP does not see its way clear to supporting this amending Bill.] [Applause.]

Mr G A LUCAS: Chairperson, hon Deputy Minister of Finance, hon special and permanent delegates of this August House, I would not join the chorus to respond to what the opposition says. They want to divert us from the real course, and I do not think it is appropriate to waste our time engaging them. They were defeated at the level of the committee by the masses of our people, and therefore it is a real waste of time to continue to engage people who do not want to listen.

Before us today is one of the major initiatives embarked upon by our democratic Government in continuously seeking meaningful ways to improve our tax system to make it globally competitive, but also above all, to make our system achieve its tax policy objectives. For a developing country like ours to take such bold and courageous steps clearly demonstrates the resolve of our people to break the chain of poverty, unemployment and underdevelopment that characterises the future of our society.

This resolve truly finds correct expression in such progressive pieces of legislation as the one in front of us. This Bill will greatly enhance the tax revenue base of our country, and indeed contribute positively to our overall gross domestic product.

These steps taken by our Government require maximum support from all of us, especially the captains of industry who command huge influence in our society, in particular on the economic frontiers.

On the contrary, however, the response from them has been not very positive. Some argue that the capacity of the revenue services will not cope with the new tax introduction. What a stupid argument, because the very same people have applauded the revenue services for improved tax collection capacity.

Beyond that they have managed to construct different arguments to oppose the introduction of the capital gains tax. For instance, the Chamber of Mines of South Africa argued, during the public hearings, and I quote:

Capital gains tax has a negative impact on economic efficiency.

They further argued, and I quote:

It locks in investors into low-return assets at the expense of investments into higher-return and more productive assets.

They further argue that its compliance costs for business are estimated to be much higher than the actual tax rates, and, furthermore, that capital gains tax will undermine savings, investments, capital formation and economic growth and ultimately undermine employment levels and living standards.

It is quite surprising that today capital gains tax is the one which causes all the negativity in our economy: no longer crime, corruption, Government’s unwillingness to privatise state-owned enterprises and so forth.

What is further surprising is that the mining industry continues to shed jobs massively and above all also prefers to invest its resources outside South Africa, not here at home. But it has also joined the chorus of discomfort at the introduction of capital gains tax. I wish to challenge the Chamber of Mines and established business not to be overcritical of Government’s commitment to economic growth and job creation initiatives.

They must invest in their country before going abroad and remember that it is we and our natural resources that made them successful. To continue disinvesting in our country is a clear demonstration of their unwillingness to contribute to the building of a new society that enjoys all the necessary ingredients of a better life.

Contrary to the negative views expressed by big capital, progressive organs of civil society and workers’ trade unions hailed the proposed introduction of capital gains tax as a progressive move on the part of our Government.

They did so because they believe, as all of us do, that the capital gains tax will increase the tax base of our country, and also, above all, because those who have been avoiding paying tax, because of such loopholes in our tax system, will never again have the opportunity to do so.

Clearly their views nullify the notion that ours is a complicated tax system which encourages disinvestment, dissaving and the shedding of jobs in the market.

They argue, for instance, that the continuous process of reforming the tax system in order to make sure that all those who are liable for taxation contribute accordingly plays, in a sense, a meaningful role in restoring the tax morality in our society.

The Economic Policy Research Institute stated, and I quote:

The absence of capital gains tax creates significant distortions in our South African tax structure, leading to an erosion of our tax base and wasted resources that could otherwise promote economic growth and job creation.

This assertion by the Economic Policy Research Institute means that there is still a lot that needs to be done to improve our tax structure so that it is both globally competitive and contributes to our gross domestic product in such a manner that our economic growth path continues unhindered.

A rand earned through the sale of a capital asset bestows the same economic power as a does a rand gained through employment. The dictates of equity suggest that they should be taxed similarly.

Therefore, the emphasis of capital gains tax on promoting horizontal and vertical equity amongst taxpayers clearly addresses the various distortions within our tax system, as the bulk of our tax comes from profits on wages and business production and not profits from capital gains. Capital gains tax seeks to ensure that there is equity, which is a fundamental prerequisite for our tax reform initiatives.

But as much as we are alleviating the burden of tax on individuals, alternatively we should continue to find creative ways of broadening our tax base and closing any loopholes which encourage avoidance and evasion of our tax, thus undermining the tax morality of our society.

Our country and its people have reached the point of no return. Ours is a march towards a prosperous brighter future, and the collective will and determination of our people have thus far made sure that ours is a victorious march to the future.

The recent case against the pharmaceutical companies and the ongoing case led by the victims of asbestos in London continue to prove that the poor, through their collective activism, can take on the captains of industry and emerge victorious.

They always emerge victorious because theirs is not a struggle to accumulate wealth at the expense of the majority, but rather one to address the fundamental issues which confront our society: those of poverty, unemployment and underdevelopment. Theirs is a struggle about the creation of a caring society, where one’s neighbour’s socioeconomic difficulties are also one’s problem.

I am therefore convinced that capital gains tax will succeed, whether big business supports it or not, whether members in this House who form the nucleus of the privileged few, under the guise of opposition parties led obviously by the DA, the ``Deurmekaar Alliansie’’ [Confused Alliance], support it or not. The collective will of our people shall prevail. Tax reform shall prevail. Economic growth and job creation shall be achieved.

However tortuous the road might be ahead, because of unpatriotic business, unpatriotic South Africans that see profit maximisation as the only motive, the ANC supports the Bill. [Applause.]

Mr K D S DURR: Madam Chair, may I say at once to the Minister that we thank him for his courtesy and patience, and that of his officials, during the weeks in which we listened to all of the hearings.

I have to say, having listened to it all, that it is my party’s view that South Africa is giving away a comparative advantage. There is no question that moving from our present tax system to a residence-based tax system is going to put enormous pressure on Sars. It is a difficult transition to make, and we think that to complicate that transition by adding capital gains tax at the same time, however desirable it may or may not be, would be the wrong thing to do. It is a big enough leap for the service to move to a residence-based tax system without loading it with this additional, complex impost.

The public hearings and the subsequent adjustments resulting from many of the suggestions made have improved the Bill. We are grateful for that. We are grateful, for example, for the unit trust concession. Its impact on saving and investment was essential, with the constantly changing portfolios.

I have to say to the Minister that I would appreciate clarity on the position of wrap funds as opposed to that of the fund of funds. Do we really want tax legislation that discriminates between different investment mediums?

Another factor which, I think, it would be helpful if the Minister would make a statement on, either now or later or consider at least, is that many people are saying that the Government has just put its foot in the capital gains door, and that they have set capital gains tax at a low rate. I have to say to the Minister that I am opposed to this legislation, but if I was going to introduce capital gains tax, I think he has done it very well. I do.

However, what even those people who supported it are saying is that once he has his foot in the door, he is going to bump the rates up. That is why many people are against it. It would be helpful if the Minister would make a statement, or give an undertaking, that for the rest of the life of this Parliament he will not increase rates. I think that would be helpful, both to him and to the public, and for certainty in business.

Our policy is clear. We have given the matter considerable thought. We believe in the old dictum that if you want more of something, subsidise it; if you want less of something, tax it. When we say that, we are speaking for the poor, not for the rich, because it is the poor who will benefit from capital inflows and from public confidence, and not the rich. [Interjections.]

People who are supremely rich do not realise their capital, because … [Time expired.] [Applause.]

Ms Q D MAHLANGU: Chairperson and Deputy Minister, … [Interjections.] … I do not understand Afrikaans, so I will not attempt to do that.

Before I say what I am supposed to, I must just try to address one or two elements. Regarding what Mr Durr has said, we were also misled in the public hearings by the very same constituency that he represents, that this tax is going to affect the Mmatshabalalas who own the spaza shops and all those things. Again, those hypocritical measures are coming up again in this House. I do not think people like us, who grew up under such conditions, take kindly to those types of things because we do not know what they mean.

Also, I do not think it is true what members have reflected, in particular those members from the opposition, that this tax is being phased out in a number of countries. Actually, the contrary is the case. In fact, in the countries they were talking about the rate of capital gains tax is being reduced, and not the tax itself phased out. What is also true is what was reflected in the public hearings by a number of eminent persons who participated from Australia, Canada - you name them

• including the IMF. There is disorder there, Madam Chair. This tax is not going to yield huge revenues. That is a fact, and we all understand it. But, if I may use the words of the Minister of Finance ``this tax is a wicketkeeper.’’ Those who understand cricket know exactly what it means not to have a wicketkeeper on the team. I think it is an important tool to have under the circumstances.

Going on to what I was supposed to say, one of the things that the select committee and the portfolio committee tried to do jointly, when we were at the hearings, was to conduct research of our own. When we contacted people from England, it was indicated to us, for instance, that when the chancellor made his speech in England, at some point in time, he said that the tax was going to be effective within hours of his announcement. And, again, Prof Creavor from Australia indicated that when capital gains tax was introduced in Australia, the Minister said that the tax was going to be effective ``20 minutes from now’’.

I think in South Africa it is contrary to that. We must applaud the national Treasury for this and for having considered and taking into account all the issues that were raised by the public at large. Obviously, those people do not come from the constituency I represent. All those who came to the public hearings were from all the constituencies, but this Government took into account all the issues that were raised and they were listened to.

The institution of capital gains tax seeks to address some of the existing avoidance opportunities, such as redefining ordinary taxable revenue into capital revenue, thereby escaping the tax net.

Income tax systems that do not include capital gains in the definition of income are widely perceived as being inadequate. The issue is that capital gains tax is not separate and different from normal income. The issue before both committees in this Parliament is whether capital income, which everyone admits is income, should be included in the income tax base.

The usual opponents of capital gains seem to suggest that there is nothing wrong with an income tax, but oppose a capital gains tax. In essence, what they are saying is that they support the type of income they think should be taxed and the type of income that should not be taxed. But, clearly, the opinions of the opponents of capital gains tax are only about the type of income they receive themselves and that of the interest groups they represent.

In essence, the legislation before us today does not, in a real sense, introduce a new income tax, but simply proposes that income for the purposes of income tax be defined more comprehensively.

In terms of a fair tax policy, two individuals with the same ability to pay should pay the same amount of tax. In other words, an individual who realises R50 000 capital gains has the same ability to pay as an individual who receives R50 000 in interest in income, or who earns the same amount as an employee. They should all pay the same amount of tax.

The central tenet of a good tax policy is that equally circumstanced people should be treated the same by Government. [Laughter.] [Interjections.] Moreover, almost every major industrialised country in the world taxes capital gains. The United Kingdom and Portugal introduced tax on capital gains in 1965. In an increasingly globalised economy, tax reform in one country must take into account the tax system in that country’s trading reform.

A fair tax policy should also promote equity between taxpayers in different income categories. There is no doubt that any tax preference on capital gains will benefit, primarily, indeed almost exclusively, high-income individuals.

In Canada in 1996, for example, less than 0,3% of taxpayers reported over 40% of all taxable capital gains. High-income taxpayers reported on average 500 times more capital gains than middle-income earners. Income and wealth are distributed, relatively, more equally in Canada than many other industrialised countries. In countries where income and wealth are distributed less equally, capital gains will be even more concentrated among the very rich.

I am listening to you, so I beg your indulgence. [Interjections.]

Mr K D S DURR: [Inaudible.] You cannot compare them. [Inaudible.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Hon member, please talk through the Chair.

Ms Q D MAHLANGU: Of course, we may find a few people with modest incomes who realise only one capital gain over their lifetime. Most high-income individuals who realise capital gains, realise them year after year, and are also in receipt of a substantial salary or dividend income during their lifetime.

We often hear that instituting capital gains tax will compromise economic efficiency. This is a myth. In fact, the converse is the case.

To ensure the efficient allocation of resources in an economy, and to spur economic growth, market forces should be left to direct financial capital to where it will earn its highest rate of return. If capital gains are not taxed, capital will flow to those assets and sectors in the economy where tax-free capital gains can be realised, and away from investments with higher before-tax rates of return. Such distortions in the allocation of financial capital reduce the efficiency of the economy and thus lower average standards of living and reduce the potential for economic growth.

The opponents of CGT argue that taxing capital gains could even lead to a more serious effect or problem, namely the lock-in effect. With a CGT investors will be discouraged from seeking investment they think will earn them the highest rate of return because they will have to pay tax on their capital gain if they sell their existing holdings and consequently have less capital to reinvest.

The allegation raises two issues. First, we need to raise the question: To what extent does the lock-in effect actually influence behaviour and, secondly, to what extent does lock-in in fact have an adverse effect on economic efficiency? It is important to note that even in theory it has no or little effect on many investors. It obviously has no application to tax- exempt institutions such as pension funds. It does not apply in the situation where shareholders are forced to liquidate their investment because of a merger or acquisition. Investors who have large diversified portfolios are unlikely to be affected by it since they will normally have some capital losses from which they can offset gains. It does not apply in situations where a business is selling assets and acquiring similar assets, since most tax systems provide a roll-over for this transaction.

Clause 66 of the Bill before this House deals precisely with the reinvestment in replacement assets. With regard to the effects of lock-in on economic efficiency, there is no helpful empirical study on this issue. Those who make an argument contemplate a situation where an investor is locked into an investment that yields a lower rate of return and they think they can earn a higher rate of return with another investment. Even in this case, economic inefficiency will result only if the person who is locked into an investment has special knowledge of a more lucrative, alternative investment.

Otherwise, the person to whom he or she proposes to sell his or her present investment will invest in a more attractive investment. That is to say, it is difficult to see how capital formation can suffer much, because some investors have capital locked into particular investments. While one investor’s funds might be tied up, the person who otherwise might have purchased those investments now has funds available to use elsewhere. There are, of course, investors on both sides of every investment transaction. Consequently the lock-in effect is unlikely to have any effect on the aggregate investment in firms.

The Bill also, in clause 40, assumes that a deceased person has disposed of his or her assets to his or her deceased estate for proceeds equal to the market value of those assets at the date of that person’s death, and therefore this clause removes all potential difficulties arising from lock- ins. This clause is an improvement of many CGT regimes instituted elsewhere in the world. Moreover, the Bill before us is not a punitive measure. The key features and the exemption in the Bill are very praiseworthy and lend themselves to our political support.

One example which deserves our support is an inclusion which is 25% for a natural person like me and you, or a special trust. The IMF tells us that this is very generous, since Canada, for example, has an inclusion rate of about 75%. Another notable feature is the inclusion of capital loss in determining capital net gains. The exclusion is R10 000 for natural persons annually and R50 000 when a person dies. In addition, the proceeds from the disposal of primary residence are also excluded from CGT if they do not exceed R1 million. With these remarks, I would like to indicate the ANC’s support for this Bill unconditionally.

The DEPUTY MINISTER OF FINANCE: Chairperson, I would like to thank all the members who have participated in this particular debate. Quite clearly, there is a lot of divergence around the issue of capital gains tax. I would like to address some of the issues that have been raised around capital gains tax.

One of those issues is a question as to what the real intent is of introducing capital gains tax in South Africa. That was the question raised by the hon Mr Theron. I would like to respond to that issue by saying that the introduction of capital gains tax is anchored on two key principles, that is the issue of horizontal equity and the issue of vertical equity. I would like to briefly explain what I mean by both.

Currently in South Africa income is taxed in full, while capital gains are not taxed at all. Those people that pay their taxes in full are mostly those people who are salaried, and those who earn the sort of ordinary business income. Those South Africans who are able to convert what would ordinarily be taxable income into a capital gain, because we do not have a capital gains tax at the moment, have an unfair advantage over those South Africans who pay their tax in full because they are basically salaried South Africans, or have ordinary business incomes. This is the horizontal equity that we are talking about. It is to say that people with different forms of income must be taxed equally under our own tax system.

On the issue of vertical equity, it is known that throughout most of the world the tax system is progressive, in the sense that the higher the income one gets, the more tax one pays. Part of what is being addressed here is exactly the issue of ensuring this, especially in South Africa, where one has such wide disparities among the people. One could even argue that our own system, our own progressivity, should even be more extreme.

The issue of vertical equity is also an important one in this particular regard. The real intent of this legislation is to address the question of equity in South Africa. This is part of the whole project that we are involved in in South Africa at the moment. It is to address the question of equity.

When we tabled the Budget this year, there were four key priorities that we put forward. They are economic growth, job creation, promoting equity and social development, and dealing with the question of crime and social stability. These are the priorities that we put forward. There should be no argument that this is where we should be focusing our energies. We are already committing resources and we are doing a whole range of things to deal with questions, for example, of crime and economic growth.

One of the arguments that has been advanced is that this is going to have a negative effect on foreign investment. There are two aspects to this. Attracting foreign direct investment is not a result of a knee-jerk response: Today one does that and tomorrow one does that. It is a result of a combination of measures that one takes in order to address all of those issues that are blockages in the economy, which would enable one, if one addresses them, to attract foreign direct investment. We have an integrated economic framework in South Africa that seeks to see us, as Government, intervening to promote the competitiveness of our own economy by reducing energy costs, transport costs and communications costs.

It is also a framework that will see us addressing some important crosscutting issues such as human resource development and developing the information and communications technology sector in South Africa. We have identified growth sectors in this economy. These are all of the things that we are doing in order to ensure economic growth and attract foreign direct investment.

One of the questions that I would like to ask is: What is the evidence on capital gains tax? There is a view that we are doing something that is contrary to an international trend. Well, the evidence is that out of 43 countries in Africa that have been reviewed, only 14 decided against the capital gains tax. In Asia and the Asian Pacific region 21 jurisdictions out of 46 decided against the capital gains tax. In America only two out of 19 jurisdictions decided against the capital gains tax.

I think that this is a tax that is generally applicable. I also think that the foreign investors that we are talking about are used to this tax and they know it. I do not think that it is the single thing that would deter them. What is important to those people who would want to invest in our economy is the environment that exists in South Africa.

Talking about tax, tax systems have to be based on certain core principles. One must have a fair tax system. One must have a simple tax system that is stable, predictable and efficient. These are the things that people look for. If one broadens this matter beyond the tax issue, the existence of a proper legal framework in a country will protect people’s investments if they do invest in an economy.

So it is a very simplistic view to say that simply by introducing the capital gains tax one would scare away investors.

On the question of foreign direct investment, one of the things I should mention is that there will be no material effect on foreign direct investments because all investments by nonresidents in South Africa, through shares, will not attract the capital gains tax. This is in terms of both FDI and even the portfolio type of investment. As the South African Government, as the Treasury and as the Revenue Service we are particularly sensitive to the issue of whether there would be the kind of effect that would discourage foreign direct investment. So our own system that we are introducing is such that we will not have that situation affecting foreigners.

Concerning the question of savings, it is important to note that savings in South Africa have been on a decline for quite a long time. Even before the introduction of the capital gains tax one had savings declining in South Africa, so it is very simplistic for one to say that one is going to discourage savings by introducing the capital gains tax. What we need to do is to look at the things that we can do to promote and encourage savings.

We have been reducing tax rates, particularly among the lower-income to middle-income earners. We have been doing that consistently over time. Part of the reason for this is to try and give people some space by way of disposable income so that even though they will spend that money, at least they will save a portion of it.

We have also introduced measures to promote savings by raising the amount of interest income that is not taxed. These are things that we are doing actively in order to make sure that we promote savings. Of course, part of the problem with economic measures is that one cannot always fully predict what people will do when they have money in their pockets. But from a policy point of view, we try to put in place those measures that we think give people the space to save some of their money.

The issue has been raised that we should be focusing on crime and on corruption. I agree: We should focus on crime and on corruption, but we must extend that to also deal with tax fraud and tax evasion. [Interjections.] Who are those people who are able to engage in schemes such as tax evasion schemes and in tax fraud? It is not the ordinary people and not the low-income people. It is actually the people on the higher end of the income stream. One must be consistent when dealing with crime and include corruption, tax fraud and tax evasion. [Applause.]

I agree that there has been a lot of opposition by business to the introduction of the capital gains tax. Perhaps it is understandable that business should object. But we have listened and we have effected lots of changes to this legislation as a result of the interaction that has taken place.

Of course, as the Government we sometimes have vehement opposition from labour. I think what is important is for us to take those measures that we see as addressing the wider interest of South Africa as a country. If one is talking about the economy, such things, I should believe, will benefit the economy. Of course, here I have mentioned the question of equity. It is an important issue to us and is an important objective in the context of South African reality.

Yes, Mr Greenspan may have said the things he was said to have said on the capital gains tax as a means of raising revenue. But I want to reiterate that equity is an important aspect of this tax system. From our own work that we have performed, we are going to realise higher revenue.

However, I think that the issue of the size of revenue that is raised is used to really camouflage the fact that by not having the capital gains tax we have a lot of income that is hidden in a number of ways and which we are unable to tax, yet it is supposed to fall into the tax net. Our tax system has got to tax income comprehensively. Therefore, there must be no hiding place for any form of income that is supposed to be taxed, particularly because one has a section of society that pays the tax due to it and the other section which, because it does not have capital gains, does not pay the tax.

On the question of the complexity and cost of administering this tax, I explained earlier on that we have tried to introduce a simple system. Taking into account the questions of complexity and cost, we believe that the system that we are introducing is going to be a manageable one.

On whether the Revenue Service is being put under undue strain, we must point, again, that one of the biggest success stories of the democratic South Africa is the transformation and change that has taken place at the Revenue Service. So successful has been that change that we are now taking the Revenue Service to an even higher level of transformation.

There is a project called Siyakha Project, which means ``We are building’’. It is aimed at fundamentally transforming the way the Revenue Service does its work. It is going to look at the operations, that is what the people do in the workplace to try and promote efficiency, eliminate duplication and ensure that each person can perform a whole range of tasks.

This is the higher level of transformation to which we are taking the Revenue Service. We are not worried that the Revenue Service will not be able to cope with administering the capital gains tax and the residence system of taxation.

There is the other issue that one would like to address. There is a view that the capital gains tax will have a negative effect on risk capital, but we believe that the opposite is actually the case. The capital gains tax can and does, in fact, encourage risk-taking in the sense that when one realises a capital loss from a business failure, that can be set off against future or other capital gains. So we think that the opposite is the case.

Will people invest offshore? Well, most of those very offshore tax systems, especially in First World countries, include the capital gains tax. If one is not taxed here one will be taxed there, where one believes one will invest because one is running away from the capital gains tax here in South Africa.

Because we will now also be taxing on a residence basis, South African residents will also be taxed on their foreign capital gains, subject of course to certain exclusions.

What do wrap funds, an issue that Mr Kent Durr raised, do? They basically administer investments in unit trusts, and when a wrap fund switches, a unit holder’s investment in a unit trust triggers a capital gains tax event. We could, however, provide a much more comprehensive explanation on how that works after this debate.

One of the things that I did not say on the question of whether the Revenue Service will be able to handle this tax, is that we have tabled an extensive implementation plan, which is available if members are interested. The Revenue Service is going to be embarking upon this plan, particularly aimed at ensuring that it is able to deal with this. Additional resources have been made available to develop the systems and to implement and operationalise the capital gains tax. This is how we would like to respond to some of these issues. To the question of whether we can commit ourselves to never raising the rate, I would like to respond differently. I would like to ask that we be judged on our record, and be judged on the commitments that we have made. We have made the observation that South Africans have a very heavy burden of tax. We have made that observation, and we have made the commitment to address that burden. This is why hon members have seen us gradually reducing the rates of tax, and this is the commitment that we have made. I think we should be judged like that.

The particular jurisdiction that is referred to regarding the issue of introducing capital gains tax at a low rate, and then raising it quite sharply once it is in place, is the UK jurisdiction. I think it is the tax system that stands out for that. But I would like us to be looked at in terms of our own commitment, in terms of our own track record.

Perhaps, finally, one should say that the introduction of a capital gains tax is not the sort of thing that will impact on people at the low end of the income stream. There are a number of things that will ensure that one does not have that kind of an impact. One of them is the issue of gain that is realised on the disposal of a house, for example. It is kept at R1 million. One will only trigger capital gains tax if one realises a gain of R1 million and above. How many ordinary South Africans can sell a house and realise a gain of more than a R1 million?

There are a host of other exclusions, like R10 000 per annum. If one realises a gain of less than that per annum, one does not trigger capital gains tax. One can sell a whole range of things which have been excluded from capital gains tax. So this is not the sort of thing that can be seen as affecting ordinary South Africans and people on the low end of the income stream.

If it is accepted that equity is an important issue in the South African context, we should be able to accept that it applies across the board. There are a whole number of areas where we have to deal with the question of equity. If we had the time we could look at a whole range of areas where we have to deal with the question of equity in South Africa, because I believe that there is not a single sector in South Africa that can escape the need to address the question of equity. Without taking too much time, I would like to stop there. I thank for hon members very much for their participation.

Debate concluded.

Bill agreed to in accordance with section 75 of the Constitution.

The Council adjourned at 17:36.

                             __________

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

                         MONDAY, 21 MAY 2001

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    The Minister for Agriculture and Land Affairs on 21 May 2001
     submitted drafts of the Agricultural Research Amendment Bill,
     2001, and the Marketing of Agricultural Products Amendment Bill,
     2001, as well as the memoranda explaining the objects of the
     proposed legislation, to the Speaker and the Chairperson in terms
     of Joint Rule 159. The drafts have been referred to the Portfolio
     Committee on Agriculture and Land Affairs and the Select Committee
     on Land and Environmental Affairs by the Speaker and the
     Chairperson, respectively, in accordance with Joint Rule 159(2).


 (2)    The following Bills were introduced by the Minister for
     Agriculture and Land Affairs in the National Assembly on 21 May
     2001 and referred to the Joint Tagging Mechanism (JTM) for
     classification in terms of Joint Rule 160:


     (i)     Agricultural Research Amendment Bill [B 25 - 2001]
          (National Assembly - sec 75) [Explanatory summary of Bill and
          prior notice of its introduction published in Government
          Gazette No 22275 of 3 May 2001.]


     (ii)    Marketing of Agricultural Products Amendment Bill [B 26 -
          2001] (National Assembly - sec 75) [Explanatory summary of
          Bill and prior notice of its introduction published in
          Government Gazette No 22275 of 3 May 2001.]


     The Bills have also been referred to the Portfolio Committee on
     Agriculture and Land Affairs of the National Assembly.


 (3)    The following Bill was introduced by the Minister of Trade and
     Industry in the National Assembly on 21 May 2001 and referred to
     the Joint Tagging Mechanism (JTM) for classification in terms of
     Joint Rule 160:


     (i)     Counterfeit Goods Amendment Bill [B 27 - 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 Bill has also been referred to the Portfolio Committee on
     Trade and Industry of the National Assembly.

1. The Speaker and the Chairperson:

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


 (1)    The following paper is referred to the Standing Committee on
     Public Accounts for consideration and report. It is also referred
     to the Portfolio Committee on Environmental Affairs and Tourism
     and to the Select Committee on Economic Affairs for information:


     Report of the Auditor-General on the Financial Statements of Vote
     11 - Environmental Affairs and Tourism for 1999-2000 and a
     Performance Audit of the Management of Marine Resources [RP 120-
     2000].


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


     Report of the South African Law Commission for 2000 [RP 19-2001].


 (3)    The following paper is referred to the Portfolio Committee on
     Provincial and Local Government and to the Select Committee on
     Local Government and Administration. The Report of the Auditor-
     General contained in the following report is referred to the
     Standing Committee on Public Accounts for consideration and
     report:


     Report and Financial Statements of the Municipal Demarcation Board
     for 1999-2000, including the Report of the Auditor-General on the
     Financial Statements for 1999-2000.

National Council of Provinces:

1. The Chairperson:

 The following report tabled on 15 May 2001 is now referred to the
 Select Committee on Land and Environmental Affairs:


 Report of the Commission on Restitution of Land Rights for 2000-2001
 [RP 59-2001].

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Speaker and the Chairperson:

 (a)    Report of the Auditor-General on Border Post Control [RP 43-
     2001].


 (b)    Report of the Auditor-General on Selected Internal Control
     Measures over Taxation Process administered by the South African
     Revenue Service [RP 44-2001].

1. The Minister for Justice and Constitutional Development:

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

1. The Minister of Minerals and Energy:

 (a)    Agreement between the Government of the Republic of South Africa
     and the Government of the Republic of Mozambique concerning
     Natural Gas Trade between South Africa and Mozambique, tabled in
     terms of section 231(3) of the Constitution, 1996.


 (b)    Explanatory Memorandum to the Agreement.

                        TUESDAY, 22 MAY 2001

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    The Minister of Finance on 22 May 2001 submitted a draft of the
     Provincial Tax Regulation Bill, 2001, as well as the memorandum
     explaining the objects of the proposed legislation, to the Speaker
     and the Chairperson in terms of Joint Rule 159. The draft has been
     referred to the Portfolio Committee on Finance and the Select
     Committee on Finance by the Speaker and the Chairperson,
     respectively, in accordance with Joint Rule 159(2).


 (2)    Assent by the President of the Republic in respect of the
     following Bill:


              Advisory Board on Social Development Bill [B 43B - 2000]
              - Act No 3 of 2001 (assented to and signed by President
              on 16 May 2001).

National Council of Provinces:

1. The Chairperson:

 Bill passed by National Council of Provinces on 22 May 2001: To be
 submitted to President of the Republic for assent:
   Taxation Laws Amendment Bill [B 17 - 2001] (National Assembly - sec
     77).

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 the
 Unemployment Insurance Fund for 1999 [RP 42-2001].

1. The Minister for Agriculture and Land Affairs:

 Consolidated Statements, and Generally Accepted Accounting Practice, of
 the Assets and Liabilities and the Profit and Loss Account of the Land
 Bank and its Subsidiaries - the South African Mortgage and Insurance
 Company Limited for 2000, tabled in terms of section 65(2) of the Land
 Bank Act, 1944 (Act No 13 of 1944).

1. The Minister of Minerals and Energy:

 Report and Financial Statements of the Council for Geoscience for 1999-
 2000, including the Report of the Auditor-General on the Financial
 Statements for 1999-2000.