TUESDAY, 12 NOVEMBER 2002 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY
                                ____

The House met at 13:01.

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

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.

            DEBATE ON MEDIUM-TERM BUDGET POLICY STATEMENT

Mr N M NENE: Madam Speaker, the podium timer is flashing the wrong time. It is indicating seven minutes and I have been allocated 10 minutes.

Madam Speaker and hon members, the Medium-Term Budget Policy Statement is, in the Minister’s own words - … an invitation to Parliament, and to the nation, to share in our deliberations about the challenges before us, on:

• how we promote more rapid, sustainable economic growth and development,
• how we progressively realise the social and economic rights promised in our Constitution,
• how we prioritise spending to achieve a balanced and effective delivery of services to our people, and
• how we raise the finances required, without unduly restraining economic activity or unfairly burdening the poor.

The statement before us, which is the Medium-Term Budget Policy Statement, sets the fiscal planning framework for the upcoming Budget and the two years following that. It includes up-to-date macroeconomic projections, a revised fiscal framework setting out affordable levels of taxation, public spending and borrowing, the analysis of existing spending plans and a summary of likely implications for service delivery. It also sets out the main policy choices that Government confronts as it finalises its Budget.

The Budget process has been undergoing tremendous transformation over the past few years that has culminated in the birth of the Joint Budget Committee. The pursuit of the ANC’s vision of a prosperous, equitable, stable and democratic society has made it possible for the process to move in this direction.

The terms of reference mandate the Joint Budget Committee, firstly, to consider the proposed allocation in the Medium-Term Expenditure Framework and the Appropriation Bill, and whether these allocations are in keeping with the policy directions of Government. They also mandate us as the committee to make proposals regarding the processes Parliament should follow with regard to its role in the developing of budgets in accordance with the constitutional requirements.

Also, they mandate us to monitor monthly published actual revenue and expenditure per department on a regular basis and to ascertain whether they are in line with Budget projections. They also mandate us to consider when tabled, as we are doing today, the Medium-Term Budget Policy Statement with the exception of the sections dealing with the macroeconomic situation and revenue.

The Medium-Term Budget Policy Statement has six sections. Sections 2,3 and 4, which deal with the macroeconomic outlook and the fiscal issues and taxation, are dealt with by the finance committee, as hon members will realise. We will confine ourselves to Chapters 5 and 6, which deal with the expenditure framework and also the allocation to provinces and local government.

We are also mandated to conduct hearings on the Medium-Term Expenditure Framework and Budget Policy Review document, again with the exception of those sections which deal with the macroeconomic situation and revenue. We are also mandated to exercise those powers under Joint Rule 32 that may assist us in carrying out our functions, and to report on the Medium-Term Budget Policy Statement regarding the matters referred to above.

The statement outlines the priorities of Government and the appropriate measurable objectives of each department. In line with this mandate, the committee conducted hearings with Government departments and civil society, which made very important submissions to the committee despite very tight timeframes. The committee will, however, have to find a way of encouraging civil society to participate in this process because their participation was very minimal.

The following clusters appeared before the committee. The first was the social services cluster, with a particular focus on poverty reduction, development and human capacity-building. The second was the economic cluster, which focused on black economic empowerment and land reform and agricultural development. Then there was the protection services cluster, which focused on strengthening the fight against crime in order to create an environment which is conducive to investment and economic growth. We also heard the administration services cluster, which was represented by the Department of Home Affairs, which is currently engaged in administrative upgrading. We also received written submissions from the Financial and Fiscal Commission. Civil society was represented by Fedusa and the People’s Budget.

The Medium-Term Expenditure Framework seeks to consolidate policy achievements and to enhance further equality and effectiveness of service delivery to the poor. This is supported by a significant increase in baseline allocation. The preliminary framework proposes R84,9 billion in additional allocations over the baseline amounts, with a marked increase in the allocation to provinces. In relative terms, local government receives the largest increase at 18,4% over the baseline, compared with 9% to provincial governments and 7,3% to national departments. Another important achievement is the increase in spending on the economic infrastructure, human capital and other priorities over the MTEF, which grows by an annual average of 4,7% in real terms.

Significant increases in spending will not, on their own, guarantee better outcomes. Therefore Government will have to continue to strengthen administrative capacity and improve co-ordination between national and provincial departments and municipalities to ensure that a higher proportion of spending reaches the intended beneficiaries and that the quality of that spending is improved. Additional resources have also been made available over the MTEF period to all three spheres of government to compensate for inflation, which has been higher than was anticipated at the time of the 2002 Budget. My colleagues will deal more with the details of these increases as they also form part of the adjustments estimate.

Madam Speaker, allow me to take this opportunity to thank all those who participated in this process - the Ministry of Finance, the National Treasury, parliamentary staff, researchers, the Financial and Fiscal Commission, civil society, Government departments, various portfolio committees in different clusters and members of the Joint Budget Committee

• for their valuable contribution and I trust that the level of commitment shown thus far will propel us as we tackle the next phase of our work. [Applause.]

Ms R TALJAARD: Madam Speaker and hon members, the DA believes that poverty reduction is built on two mutually supporting and mutually reinforcing areas: that of poverty eradication on a sustainable basis rooted in strong economic growth and that of poverty alleviation as an interim measure en route to higher growth. Only a much higher economic growth path can therefore ensure in the long run that the better life for all promised by so many electioneering slogans does not become a dream deferred. My colleague Mr Clelland-Stokes will focus on poverty alleviation. Suffice it for me to say that to show unambiguously that Government is taking poverty alleviation seriously it must give a clear indication of what steps it will initiate to further the proposals of the Taylor commission.

Let us start with the bouquets. Apart from the continued fiscal success and impressive deficit performance, other highly commendable areas include the continued steady decline in debt servicing costs and the first, yet seemingly steady, steps Government is taking to contribute to savings instead of continuing on a destructive path of government dissaving. A bouquet is also due for the strong performance of the current account and the first, albeit modest, surplus since 1994.

Given the global economic environment in the aftermath of 11 September, it would be ungracious not to comment positively on the upward revision of GDP growth projections to 2,6 in 2002 and 3,5 for 2003. However, the DA noted with concern submissions from J P Morgan that the revised rates may be overly optimistic due to the continued impact of inflationary pressures and related monetary tightening, as well as continued uncertainty over the state of the global economy.

The DA firmly believes that only accelerated growth in excess of 6% will enable South Africa to make a meaningful impact on unemployment and poverty. While some of the factors inhibiting higher growth, such as emerging market contagion effects and a sluggish global economy, are outside our scope of policy influence, there are continued structural changes that can be made in domestic economic policy. These changes are only hamstrung by questions of political will and ill-advised strong-arm tactics such as Cosatu’s antiprivatisation strike in October.

It is now conventional wisdom that the inflation target for 2002-03 will be missed. While the Minister of Finance, thankfully, did not change the CPIX measure or change the basket substantially, the agreement between the Minister and the Reserve Bank saw the 3-5% target fall away until further notice. However, as Mazwai Securities noted in their comments before the committee, due to the manner in which the inflation target has been adjusted, markets still require greater clarity on how inflation targets are set and altered and for predictable procedures within the broader inflation-targeting framework. This framework requires further modification and attention, and we have a number of proposals in this regard which we will circulate to the Minister.

These are but a few changes to the framework that could strengthen its predictability, thereby enhancing its credibility. It is important to note, however, that within an open economy such as ours, the inflation forecasts, as well as many other assumptions in the Medium-Term Budget Policy Statement, are highly dependent on the performance of the rand, and any renewed currency instability could jeopardise all these projections.

The Adjustments Appropriation Bill contains a roll-over plan for the Telkom IPO and it leads to the question yet again: Is Telkom’s call on hold? We have seen a number of delays in this area, and concerns around the proceeds of privatisation continue yet again, with a very modest projection over the MTEF cycle of R13 billion.

The thrust of the policy statement to prioritise social expenditure must be welcomed. There can be no doubt that South Africa’s greatest needs are in the social areas of health, education and social development. These needs are vast, and consistently delivering growth rates that do not make a meaningful impact on poverty and unemployment simply means that these needs will grow and people will continue to be dependent on the state in the absence of opportunities for employment and self-sustaining activities.

It is therefore time for bold thinking and even bolder action to break out of the rut and ensure that poverty eradication through strong and robust growth becomes the goal of an open society of opportunity and that we do not get stuck in poverty alleviation. [Applause.]

Dr G G WOODS: Madam Speaker, the Medium-Term Budget Policy Statement is produced to give broad direction and context to the medium-term expenditure framework, which follows a few months later. Against Government’s analysis and projections of the key macroeconomic developments, the Medium-Term Budget Policy Statement provides the fiscal and tax policy and the revenue and expenditure frameworks for the next few years. I think it is important for us in Parliament to remind ourselves of our role in relation to this policy statement.

In the finance committee we had, I think, a very thorough scrutiny of the macroeconomic and fiscal aspects of the policy statement. In the Joint Budget Committee, which was hastily formed shortly before this, I think we had a bit more of a difficult time, especially with regard to quizzing the national departments’ DGs, but I am sure that under the capable guidance of Chairperson Nene we will go from strength to strength and next year do even better than we did in our initial year.

Turning to the substance of the policy statement and in particular its views on the macroeconomy, we have both a warm and a comfortable reaction to Treasury’s positions, which are, of course, the positions of Government as well. These are warm in so far as the views indicate a generally improving situation and comfortable in so far as we largely agree with these views. I think the major positions here could include the debt position, the budget deficit, current GDP trends, the trade account surplus, industrial productivity improvements, cash flows including FDI and currency stabilisation in the current year. There are a number that I could still mention. However, economies and economic behaviour being what they are, we can never fully discount the possibilities of unkind twists of fate, especially in the realms of GDP growth and inflation.

Regarding the statement’s GDP projection, I think the two imponderables we need to bear in mind here are, firstly falling exports and the effects thereof which could happen through a strengthening rand and, secondly, the possibilities of global growth conditions and their effects on our economy.

Turning to the inflation projections, what we would be concerned about here is if Treasury’s projections, which we agree with, were not to be realised, and I think we would also see a strong downward-turn movement over the next 13 months attributed in some part, possibly, to a more promising agricultural season, an improving oil price, a strengthened exchange rate with the imported component of inflation that that relates to and the resultant reversal in interest rate direction which this will lead to, which in itself is a factor in inflation.

I think the big underlying issue regarding the economy is its stability relative to most other economies in the world. If we take out last year’s externally caused rand-dollar experience and its role in current inflation levels, there are perhaps only two or three other economies in the world which can currently compare to our performance. Should we sustain this, both conventional wisdom and international experience would suggest, I think, that investor interest in South Africa must be growing.

Regarding the policy statement’s fiscal projections, there are one or two issues here that we might ask about, the first being the revenue estimate. As has been the case for each of the past four years, Treasury has been much too cautious here. If GDP growth is even reasonable for the final two quarters of the current year, next year’s tax take will exceed the projection, and that is before the Commissioner of Sars hunts down his usual quota of evaders.

The other issue we need to register a question on is the budgeted deficit over the next three-year term. I think, given the uncomfortable socioeconomic conditions which the unemployed and many of the lower income earners are currently experiencing, we wonder whether it would not have been better to have allowed this to move out to about 2,5% of GDP, thus giving us a further R5 billion per annum for poverty relief.

Moving to the chapter on the Medium-Term Expenditure Framework and the proportions and patterns of its horizontal and vertical expenditure distribution across Government, we have no serious arguments. We can support the balancing of the competing priorities this represents.

Overall the latest policy statement confirms that the Budget is making progress and is becoming increasingly thoughtful and policy-sensitive. With the introduction of annual strategic planning exercises in all Government departments we can expect even further progress towards capturing Government’s policy objectives in future years’ budgets.

Dr P J RABIE: Madam Speaker, hon Minister, hon members, the present Medium- Term Budget Statement is a proposed social, economic and fiscal framework for the next three years.

What is significant is that Government’s contribution to growth has turned positive. The present private capital spending trend is also encouraging and indications are that the present steady economic growth is due to continue in the forthcoming financial year.

Our present unemployment rate of 29,4% is a cause for serious concern. The Medium-Term Budget Policy Statement states that an estimated 4,7 million work-seekers find themselves without jobs. This must also be seen in the context of the depreciation of the rand and a high rise in consumer and producer prices.

If we look at the macroeconomic perspective we see that a shift in priorities from inflation to growth can be discerned. The inflation target band announced is realistic and the fiscal policy can be broadly categorised as expansionary.

Vir die huidige fiskale jaar tot dié van 2005-06 sal die jaarlikse geprojekteerde groeikoers in die besteding aan onderwys meer as 9% wees, terwyl gesondheid en welsyn op 10,8% en 8,2% te staan kom. [For the present fiscal year until that of 2005-06 the annual projected growth rate in expenditure on education will be more than 9%, whereas expenditure on health and welfare amounts to 10,8% and 8,2%.]

Other government sectors that will benefit are local government, justice and correctional services. The increased government spending will occur without any steep increase in personal tax. The hon the Minister stated that one of the long-term objects of the Medium-Term Budget Policy Statement is to reduce personal tax and to keep the Budget deficit under 2,5% of GDP, which is commendable.

The Minister, in his Medium-Term Budget Policy Statement, stated that economic growth rates of 3,5%, 3,7% and 3,9% are attainable for the years 2003, 2004 and 2005. A number of economists in the private sector have speculated that the Minister’s projected economic growth figures can be defined as optimistic. J P Morgan, in fact, reduced the economic forecast for economic growth for next year from 3,1% to 2,5% due to volatile international economic conditions and the sharp increase in interest rates.

Ekonomiese groei sal al die sektore van die ekonomie bevoordeel. Die optimistiese groeiverwagtinge kan deels toegeskryf word aan die groei in ‘n styging in reële vaste investering. Indien die voorspelde ekonomiese groeikoers egter nie realiseer nie kan ‘n verdere afname in verbruikersbesteding na vore kom. (Translation of Afrikaans paragraph follows.)

[Economic growth will be to the advantage of all sectors of the economy. The optimistic growth expectations can be ascribed partly to an increase in real fixed investment. However, if the projected economic growth rate is not achieved, a further decrease in consumer spending may follow.]

The revenue growth for this year is 17,5%. This can be attributed to strong growth in corporate tax revenue, strong retail sales, which have helped VAT collection, and the continuing improvement in the efficiency of tax collection, a positive achievement which in the long run will be to the benefit of all.

Inflation targeting is of the utmost importance for an emerging economy like South Africa’s. We are subject to the destabilising shocks from international capital flows and exchange rate moves. It is therefore important that all the role-players have more frequent meetings to reduce the risk of getting behind the inflation curve. The fact that inflation targets were missed in 2002-03 is not a fatal blow to our inflation targeting. Only repeated target misses would justify a serious review of our inflation strategy.

A number of macroeconomic policy factors will have to be addressed in the forthcoming budget. The first is the serious lack of domestic savings. Secondly, investment must be an ongoing focus. Thirdly, a further relaxation of exchange controls is important and will encourage foreign investor confidence. Fourthly, taxation of retirement funds at the present rate is unacceptable and increases the welfare burden on the state. Fifthly, further measures to encourage savings are required. One of the best ways to reduce poverty is to create employment and growth opportunities.

Monetary policy is the sphere of the Reserve Bank. However, it must be noted that Government sets the inflation targets. The increase in Government spending this year was largely due to a 9% wage hike. The CPIX inflation forecast in the Medium-Term Budget Policy Statement has increased from 6,7% to 10% for this particular fiscal year. It is my opinion that the market is still left with uncertainty on how the Reserve Bank will respond to future inflationary crises and what procedures will be in place for this.

The increase in the money supply is a cause for concern, but the significance of economic growth and the increasing levels of unemployment owing to escalating interest rates must also be taken into account. Interest rates are high at present because of emerging economy dynamics. The volatility and unpredictability of our exchange rate is a major problem in this regard. The current balance between the rand and the currencies of our major trading partners favours us, however. On the whole the Medium- Term Expenditure Framework must be seen against the slowdown in world economic growth and increasing concern with corporate accountability, which is creating a degree of hesitancy within investment circles.

To conclude, this statement is in essence a shift in priorities from inflation containment via interest rates to growth. The New NP supports this statement. [Applause.]

Dr G W KOORNHOF: Madam Speaker and hon members, there are three issues in the Medium-Term Budget Policy Statement that need further comment, namely infrastructure development, savings and inflation. I will deal briefly with each of these three areas of concern.

Firstly, one of the cornerstones of the UDM’s economic policy is increased spending on infrastructure development in South Africa. This means that more funds should be earmarked to be spent on infrastructure development, including the maintenance and upgrading of existing infrastructure. Infrastructure maintenance refers to the maintenance of our road network, water purification systems, sanitation and power networks.

We commend the Minister and the Government for increasing infrastructure spending in the Medium-Term Expenditure Framework, because this is in line with official UDM policy. The challenge however, is to do more. In the words of the Minister himself: ‘‘More needs to be done.’’ The UDM says the Government must do more. If this means state intervention, let us call it that.

The time has arrived for Government to invest heavily in infrastructure development projects in all three spheres of government. The Department of Public Works has a crucial and important role to play to invest massive amounts of money in infrastructure projects that will create jobs - for instance, dams, roads, airports, harbours, clinics, schools, houses and the tourism industry. From the word go, it must be certain that this spending will be efficient and that the capacity is developed to ensure delivery.

How do we finance such a large-scale infrastructure development project? At present we are in a position to grow the budget deficit from its current low level. We have the opportunity to spend money on new infrastructure projects and to upgrade the existing infrastructures, which will create more jobs. In the October issue of Leadership it was reported that for every one billion rand invested in South Africa’s infrastructure development, 16 000 new jobs are created, the GDP is boosted by R440 million and R175 million is generated in additional taxes. We have no option but to go this route.

Secondly, we need a policy to stimulate savings. We urge the Minister to start a savings drive by dramatically increasing the tax exemption levels of savings in the Budget Speech in February 2003. Why should the exemption of interest earnings not be increased to, say, R50 000 per person? This will provide a proper incentive for individuals to save.

Thirdly, and in conclusion, regarding inflation, a certain amount of uncertainty has been created by the fact that the inflation targets for 2005 have not been announced, despite the fact that an estimate has been pitched at less than 5%. We urge the Minister to announce the 2005 targets as soon as possible, but not later than in the 2003-04 Budget.

With these few observations, the UDM will support the Medium-Term Budget Policy Statement.

Ms B A HOGAN: Madam Speaker, the Medium-Term Budget Policy Statement gives us an idea of where Government will be moving when it tables its Budget in February, and so it is a very important document, because it tells us where, over the next three years, we are likely to be spending our money and what we will be achieving out of the spending of that money.

There could not possibly be a better economic environment than we have at the moment - and I am talking domestically, and not internationally - for the tabling of this Medium-Term Budget Policy Statement. So many of our economic indicators are looking good: the balance of payments, GDP, revised upwards growth, private consumption expenditure on a steady path and increasing investment in production capacity. The economy is looking steady, it is looking healthy, it is looking as though it is ready for take- off.

However, the international environment in which we are operating mitigates against certainty, and what happens in the Middle East is certainly going to have a profound impact on what happens in our economy here. But what we must say and what we need to be proud of is that our economy, during one of the roughest times for the international economy, has been resilient. It is growing steadily and it has hardly suffered from the impact of the turmoil elsewhere.

Of course, a lot of this has to be attributed to the policies that have been brought about by the ANC in Government. I think our Ministry of Finance and our Cabinet need special congratulations for the steady course on which they have guided our economy over the last eight years or so. Had it not been for the firmness of direction, I doubt we would be in the position that we are in now.

The one looming problem on the horizon has been inflation, which has reared its ugly head. We see now, even in Business Day today, that the expected growth in inflation is projected to turn around next year, which is a good omen. But what the inflation-targeting regime has taught us is that inflation-targeting in a developing economy is not a simple matter.

I want to thank the opposition parties in the debate today for having an understanding of and insight into the difficulties accompanying inflation- targeting in an economy which is as open to outside shocks as ours is today. However, inflation-targeting is not an easy thing for any economy. If one looks at the UK economy, the Bank of England has consistently undershot its inflation target. In other words it comes in under what has been projected. It might sound like a good thing to many of us to have a low inflation target, but when one is reaching a regime of virtually nil inflation and very low interest rates, one is moving very close to a recessionary regime. Yet the Bank of England has consistently undershot its inflation targets.

So it is not unknown, but in fact very well known internationally, that inflation-targeting is not a precise instrument that can be used easily. It is a very difficult ship to manoeuvre. In that regard, we welcome the Minister’s allowing the inflation target to fall away from 3-5% to 3-6%. I think it gives the Governor of the Reserve Bank a lot more flexibility to manage what has indeed been a difficult period. As my colleague Reinette Taljaard has said, I think there are proposals that one can make around fine-tuning our inflation-targeting regime and we certainly will be raising these issues in our committee with both the Minister and the Reserve Bank.

I want to move on to the actual fiscal policy environment in which we are tabling this Medium-Term Budget Policy Statement. It is very gratifying to see that the rate at which the amount of money that we are paying in interest on the debt that we owe is declining very steadily. One merely has to think of how, when we came into government, virtually 20% of our budget was spent on just paying our interest costs, and how that has been declining. In fact this year, in terms of the adjustments estimate, our interest payments go down - I cannot remember the exact number - by about R260 million, and that is indeed a welcome turnaround. Already we see the benefits, as we have seen in the last couple of years, of being able to release more expenditure for other social and economic priorities.

What we have noticed, though - and this was general, from everyone who made presentations to us, from J P Morgan right through the economic spectrum - is that many were arguing that our budget deficit is slightly conservative at this stage and we could actually be a little bit more ambitious in terms of that deficit target. I am aware that there are looming debt issues which we have to deal with, for instance the R28 billion on our losses on our cover on forward exchange. I am aware that these are things that one cannot simply wish away. Nevertheless I do think that we need to look at the question of just how fiscally conservative we have been and whether we cannot just relax even a tiny bit more at the moment.

In regard to that, obviously we would say that where we would be directing any increased spending, as we do now, is towards growing the economy and alleviating poverty. And in that sense I agree with my colleague Dr Koornhof that investing in infrastructure does both. It allows the economy to grow and it also alleviates poverty.

But I have often wondered to myself - and I know that the ANC at the moment is in the throes of a discussion around this: Have we yet considered the possibilities of a well-co-ordinated, well-implemented public works programme? I am not talking about the itty-bitty implementations that we have seen over this period of time. I am not talking about the futile poverty alleviation projects that sometimes just fall away because of the lack of sustainability. I am talking about the imaginative programmes such as the Working for Water programme that we are seeing. That has been an enormously successful programme. It has a feel-good factor for environmental reasons, it employs people who would otherwise be unemployable in a sustainable way and it has created downstream benefits, for instance the production of charcoal.

Now we really do need to be looking at public works programmes, not just in terms of building dams, roads, etc, in the way the United States did in the 1930s. We need to be looking at those gaps where the state is not providing, and how we can come in as a state, maybe in partnership with others, to promote a more sustainable and more growthful public works programme than we had in the past. I am saying that because I believe that poverty alleviation can be assisted only with the implementation of far- ranging and far-reaching public works programmes that have to be well- organised and well-orchestrated.

The other claims an additional expenditure might include improving social insurance, for instance, income grants and UIF benefits. I do not dismiss the possibilities of those, but they all ignore the benefits of investment in the economy that a public works programme - and a major public works programme - could allow for this economy.

I do not believe that a public works programme should fall under any one department. I think it needs to fall under a range of departments. I think it needs to be implemented slowly and not in a big-bang approach, because that seldom works. But we owe it to the poverty-stricken people of our country, and we owe it to the inadequate economic infrastructure that we have at the moment, to look very seriously and, I say, imaginatively to a public works programme that can complement our present infrastructure programme, which is gaining in momentum. Perhaps we need to pick up on that momentum and move forward.

With that I conclude my comments on the macroeconomic implications of this Medium-Term Budget Policy Statement and I have pleasure in recommending, on behalf of the ANC, the adoption of the statement. [Applause.]

Mr L M GREEN: Madam Speaker, the ACDP supports the 2003 Medium-Term Expenditure Framework spending priorities, especially those relating to poverty reduction and development, improving municipal infrastructure and basic services, accelerating land reform and restitution and improving the capacity in the safety and security sector, particularly the administration of justice in our courts. Allocating more funds to social and basic service delivery does not necessarily mean there will be a dramatic improvement in delivery.

We must make sure that Government gets the best value for money. Let me give an example to the Minister of Finance. Recently, an official from the Department of Education reported that the department spends R15 000 to replace a toilet in a Western Cape school and R25 000 in a school situated in Limpopo province. Of course we do realise that these are inflated costs and that the real cost is R1 200.

The economy of the country, according to the Minister of Finance, is set to grow by 2,6% this year and steadily increase to 3,9% in 2005. This, of course, is good news and does show that South Africa is a country able to withstand major odds stacked against it. It goes without saying that the rate of economic growth is stimulated by a partnership of political stability. The more a country matures politically, the greater the increase in its economic benefits. The ACDP is concerned that Government is not effectively bringing to account those civil servants at provincial and local government level who failed to deliver adequately on basic services.

The SA Revenue Service has done well to collect R8,1 billion more than budgeted for this year. We are also able to keep our budget deficit within 1,6% of GDP. These figures show that we can effectively manage our economy with the foresight required to built a better future for our nation. However, there must be a line of efficiency that goes through all levels and spheres of government.

Mr I S MFUNDISI: Madam Speaker and hon members, revisiting and evaluating the strengths and weaknesses of the past in relation to the Budget enables the National Treasury to project into the future and thus tighten up all loose ends. The 2003 Medium-Term Expenditure Framework is set to reduce poverty and accelerate development. This is easy to say, but how it should actually be done begs for answers. The extension of social assistance, health and education calls for more resolve from Government when one sees how the old, vulnerable and frail people jostle and fall over one another at paypoints. Surely this noble idea of reducing poverty has to be pursued at no cost to the lives of our people at paypoints.

There is a clear determination to improve the criminal justice system in this programme. Efforts continue to be made to get rid of backlogs at courts and a financial injection is given to safety and security. This will ensure that the SA Police Service measures up to the high crime rate and the terrorism which keeps rearing its head these days. The modern approach to correctional services will also be enhanced with the envisaged increases to these budgets. The Medium-Term Expenditure Framework proposes to take the fight to social ills. Increases in social grants to the vulnerable groups are most welcome. Old age pensions, child support grants and disability grants will increase in an effort to keep inflation at bay. Also most welcome is the R400 million set aside to provide relief for those whose livelihoods are threatened by rising food prices. However, the question remains as to how such people will be identified.

All in all, the National Treasury has done good work, as usual. They are capable of that and have done it very well. Therefore it is up to the departments, the provinces and the municipalities to use these allocations for the good of the nation. The UCDP supports the Medium-Term Budget Policy Statement.

Ms N S MTSWENI: Madam Speaker, the World Summit on Sustainable Development held in Johannesburg earlier this year resulted in a global commitment to a number of clear targets and practical steps to tackle poverty and environmental degradation. National Environment Month challenges all South Africans to translate this global commitment into local action.

History is important to us: It offers lessons from the past, it smooths the progress of transformation and it is key in addressing a way forward. Nine years after the inception of the Reconstruction and Development Programme, access to basic services has increased significantly and Government is now seeking to provide a minimum package of free basic services for all.

We welcome the Medium-Term Budget Policy Statement as it provides an opportunity to the nation to discuss how the Department of Finance proceeds with the progressive realisation of the social and economic rights promised in our Constitution. The ANC welcomes the Medium-Term Budget Policy Statement and the net increase in spending for the current year. In addressing the policy priorities and the Budget, I quote from ANC Today:

Many South Africans continue to live without adequate water and sanitation. The majority of women in South Africa are unemployed. Almost half of the women who are employed earn less than R500 a month and as many as 60% of female-headed households are classified poor.

The growth of about 23% of children under the age of 6 is stunted, indicating a lengthy period of undernutrition. The most seriously affected children are those in rural areas. The infant mortality rate is 8-10 times higher for Africans than for whites.

The Medium-Term Expenditure Framework seeks to consolidate policy achievements and enhance further the quality and effectiveness of service delivery to the poor. This gives hope to our poor communities. The 2002-03 Budget will build upon the policy priorities laid down in the 2001-02 Budget. Cabinet agreed on the need to consolidate and deepen existing budget priorities. Hence the 2002 Medium-Term Expenditure Framework will continue to emphasise infrastructure investment and the extension of the coverage and quality of social service delivery.

Cabinet has approved a further increase in social grants to vulnerable groups with effect from 1 October. The old age pension grant, the disability grant and the child support grant were increased in October. The R3,8 billion adjustment also includes an amount of R4 million set aside to provide relief to those whose livelihoods are threatened by rising food prices. For example, this means a poor family in the deep rural area of Mpumalanga will be able to afford a bag of maize meal and to send their children to school. There will be a change in their lives and those of their children.

The stabilisation of enrolment in recent years and the achievement of near- universal primary enrolment allow the emphasis to shift decisively to quality-enhancing initiatives. An early child development program has been piloted and will be progressively extended in the years ahead. We welcome this move and think that it is a well-considered development, as many disadvantaged children will benefit through it.

Adult basic education and training projects will also be enhanced in part through the new skills development funding arrangement. Another important priority that is relevant to education is the higher education restructuring, including support for institutional mergers and investment in infrastructure. A five-year timeframe for completing the process is envisaged. The broader national skills development strategy also seeks to improve the supply of high-quality skills to industry and enhance productivity across the economy.

In the health sector additional spending will provide for improved compensation to health personnel and expanding employment, investment in building hospitals and equipment and the rising cost of medicine supplies. This means that a hospital in KwaMhlanga in the Ekangala region of Mpumalanga will provide better services to the community. The hospital nicknamed ``akubuywa’’ [place from which there is no return] will not be called that in a few days from today. There will also be stepped-up spending on HIV/Aids.

The Consolidated Municipal Infrastructure Programme is one of the main vehicles for providing basic infrastructure. It is complemented by the community water and sanitation programme, which focuses on providing services in the rural areas using labour-based approaches. Another important element of the Government’s poverty alleviation strategy is a more equitable distribution of landownership in addressing this strategy.

I wanted to include a quotation, but because I do not have enough time I will not do that. In conclusion, we appreciate what the department of economic affairs in Mpumalanga has contributed in alleviating poverty and creating better working conditions for a group of women at Spitzkop in the Kangala region.

As the ANC we recommend that Parliament adopt the Medium-Term Budget Policy Statement. We are succeeding in bringing about a better life for all our people in South Africa. [Applause.]

Dr S E M PHEKO: Madam Speaker, the Minister’s Medium-Term Budget Policy Statement has some very important points and ideas with which we agree. He talks of a caring economy, but unfortunately this is still a mere ideal. The poor, the jobless, the homeless, the landless and those who cannot afford school fees for the education of their children are not experiencing this caring economy. We hear that the fiscal position is healthy and the economy is growing steadily, but no statistics have been provided. While the PAC does not dispute this fact, we must state that many African businesspeople who thrived before 1994 have gone bankrupt. In the rural areas this business has now fallen into non-African hands.

The PAC agrees with the Minister that our women must play a key role in society and that at present they carry a disproportionate share of the burden of poverty. In our country the population of women is estimated at 54%. They are a vast majority. A political struggle which does not liberate women does not liberate a nation. The PAC wants to see the women majority reflected in education, professions, business and many other important spheres of life.

The PAC subscribes to Nepad. We regard it as the brainchild of Pan Africanism. This child has been there, as reflected in many OAU documents, since as early as 24 May 1963, when a commission worked out a continentwide plan for a unified or common economic industrial programme for Africa. Of course, the PAC view is that Nepad will succeed only when it depends on African people themselves with the assistance of all people of goodwill in the world toward Africa. But the G-8 countries are not a reliable partner, as can be seen from the rumblings of President George Bush of America.

It is ridiculous that we in this country are paying for a foreign debt that was incurred for our genocide while many victims of apartheid whom the TRC said must be compensated to the extent of R800 million are yet to receive a cent of that money. Nevertheless we support the policy statement.

Miss S RAJBALLY: Madam Speaker, the alleviation of poverty being our primary focus, it is pleasing to note that the Medium-Term Budget has been established in line with doing so. The increase in real spending on matters such as the Public Service, reinforcing Government’s investment in people, service delivery and growth are well set to achieve this. It is important to note that this is extremely challenging, noting a number of factors that have placed a lot of demands on the fiscus, such as the depreciation in the rand, rising fuel and food prices and expanding international commitments.

The key spending areas are well selected to address the issues of society and the administration. The substantial increase made to social services is welcomed, noting the need and shortages. These are vital to alleviate poverty and bring society into line with good and healthy living. The increase in social grants is one way of doing so, but here good criteria for the selection of persons qualifying for such assistance have to be established.

Improvements in medical personnel are certainly also a great help in improving conditions in poorer provinces and the attention paid to the HIV/Aids problem is promising too. Provisions to the education sector are suited to a changing society. The provisions made to protection services have been well selected and reassuring. The increase in SA Police Service personnel, court efficiency and the strengthening of anticorruption measures are earnestly needed in view of the current situation.

Economic services and infrastructure development are applauded, with an increase in basic services to communities, free basic electricity, sanitation and land reform. Adjustments made to administration are also advantageous and would hopefully meet the ends they aim to achieve.

The MF supports the Medium-Term Budget Policy Statement. [Applause.]

Mnr C AUCAMP: Mevrou die Speaker, dit is ‘n bekende spreuk dat hoe minder opspraak ‘n begroting verwek hoe beter is hy. Dit was die geval met die Minister se Mediumtermyn-bestedingsraamwerk. Daar was geen groot verrassings nie. Dit behoort stabiliteit in die hand te werk omdat nie afgewyk word van vorige jare se fiskale dissipline nie en dit spreek van goeie beplanning, bestuur en kontrole.

Die AEB verwelkom die verdere beoogde belastingverligting, die vermindering van druk op rentekoerse, die hoër groeiverwagtings en groeibevorderde uitbreidings aan staatsbesteding. Die R2 miljard bykomend volgende jaar vir die Justisie sektor asook vir die ekstra 5 000 lede per jaar van die polisiemag word verwelkom, maar is egter nog veels te min. Die misdaadsiekte in Suid-Afrika benodig ‘n noodoperasie en nie ‘n aspirienpilletjie nie.

Die AEB verwelkom die versagting van inflasieteikens deur die 3-6% teiken wat vir 2002-03 gestel is te verskuif na 2003-04 en af te sien van die 3-5% teiken tot 2004. Hierdie aanpassing in die inflasieteiken kan die onmiddellike druk op rentekoerse verlig en maak ‘n verdere verhoging in rentekoerse vir die jaar onwaarskynlik. Die onlangse verstewiging van die rand en die verlaging van die prys van ru-olie kan daartoe bydra dat die teikens dalk gehaal word.

Die AEB vra ‘n hersiening van die enkelvoudige beleid van rentekoersverhogings om inflasie hok te slaan. Veral langtermynlenings soos huisverbande moet van verdere rentekoersverhogings uitgesluit word. Aangesien alle instansies wat langtermynfinansiering verskaf ook in die korttermynmark bedrywig is, kan kruissubsidiëring maklik plaasvind.

Die groeiverwagting van 3,5% vir 2003 tot 3,9% vir 2005 is steeds nie genoeg nie. Die aansienlike bedrae wat aan maatskaplike sorg bestee word, dokter steeds maar net die simptome. Die oplossing is om hoër ekonomiese groei en werkskepping te bewerkstellig en inflasie te beveg deur ‘n breë strategie om beleggersvertroue te skep en die waarde van die rand te beskerm. Die AEB ondersteun die Minister se Mediumtermyn-bestedingsraamwerk. (Translation of Afrikaans speech follows.)

[Mr C AUCAMP: Madam Speaker, it is a well-known saying that the less attention a budget draws, the better it is. This is the case with the Minister’s Medium-Term Expenditure Framework. There were no big surprises. It should promote stability in the country because there was no deviation from previous years’ fiscal discipline and this attests to good planning, management and control.

The AEB welcomes the further envisaged tax relief, the reduction of pressure on interest rates, the higher growth expectations and growth- promoted extensions of Government spending. The additional R2 billion next year for the Justice sector, and also for the extra 5 000 members of the Police Force per year is welcome, but is still far too little. The crime disease in South Africa requires an emergency operation and not an aspirin.

The AEB welcomes the relaxing of inflation targets by shifting the 3-6% target set for 2002-03 to 2003-04 and abandoning the 3-5% target until

1. This adjustment in the inflation target can relieve the immediate pressure on interest rates and makes a further increase in interest rates for the year unlikely. The recent stabilisation of the rand and the reduction in the price of crude oil could contribute to the targets possibly being achieved.

The AEB requests a review of the simple policy of interest rate increases to combat inflation. Especially long-term loans, such as mortgage bonds, must be excluded from further interest rate increases. Since all institutions which provide long-term financing are also active in the short- term market, cross-subsidisation can easily take place.

The growth expectation of 3,5% for 2003 to 3,9% for 2005 is still not enough. The significant amounts which are spent on social care are still only treating the symptoms. The solution is to achieve higher economic growth and job creation and to fight inflation through a broad strategy to create investor confidence and protect the value of the rand.

The AEB supports the Minister’s Medium-Term Expenditure Framework.]

Mr N J CLELLAND-STOKES: Madam Speaker, millions of South Africans are unemployed and destitute. One fifth live on less than R10 a day and, depending on which poverty line is used, there are 20 million South Africans living in poverty. Despite the Government’s having promised jobs, jobs, jobs, its policies have actually caused substantial job losses. The result is that in many parts of South Africa people are starving, in some cases to death.

While the obvious longer-term solution lies in policies that will kick- start economic growth, and therefore job creation, as South Africans we cannot sit back and allow our fellow citizens to starve. We understand that a basic income grant cannot eradicate poverty, but it can help to alleviate poverty. A basic income grant will be able to close the poverty gap by 74% and effectively reach the 10-12 million South Africans in the poorest households currently not receiving even indirectly any form of social assistance.

The DA believes in a caring state that takes action to generate opportunity, especially for the disadvantaged. A basic income grant financed and administered in a responsible manner, and implemented in conjunction with economic policies designed to achieve faster growth, is exactly the kind of policy a DA government would implement. Our research has proved that the grant can be sustainably financed and can be administered without the state having to set up new, expensive bureaucracies.

But now, how does the Minister of Finance respond to the plight of the poor? He calls the basic income grant, and I quote, unashamed and unaffordable populism'',not a viable proposal’’ and ``macropopulism’’. Frankly, while the Minister is good for free grapes and speeches in iambic pentameter, his response and the ANC’s response to the implementation of a basic income grant is downright disgusting. What is truly illustrative of the ANC’s attitude is that we can afford a R600 million luxury jet for the President but we cannot give the poorest of the poor R110 a month. That says it all.

The Minister has lost touch with the people; he has forgotten where he came from; he has let the people down. [Applause.]

Mr D A HANEKOM: Madam Speaker, hon Minister, hon members, let us not respond to the last speaker. He just spoilt it for us. I would not respond to that because it is not worth it. It has been a very good debate. [Applause.]

It is very difficult to speak on this budget that we have in front of us, the Medium-Term Budget Policy Statement, because so much has already been said. So let me talk a little bit about our dreams. We all have dreams and aspirations. We dream of many things. [Interjections.] Yes, even those who are shouting have dreams. We dream of a better world, and we should. We dream of a world without war. We dream of a world in which there is peace, a world without poverty, a world without underdevelopment. We dream of a cleaner environment, safe streets where we can go for walks. We dream of parks where our children can play without our being worried about their safety. We dream about these things. Martin Luther King was not the only person in the world with dreams. The reason that his much-acclaimed speech so resonated amongst many people was that he gave expression to the dreams that ordinary people have.

In a more immediate sense we have other dreams and aspirations: the dream of a rural woman to have, one day, a fridge or running water in her house, to be able, one day, to provide a decent meal for the family. It is a modest dream, but it is a dream that she has and it is a very important dream.

The Budget is about the fulfilment of those dreams. Even these very modest dreams make up our vision for our country. The Budget we are discussing is all about the needs of that woman, and the needs of many of our people that we are expected to fulfil. The Budget and the accompanying measures and programmes represent the most powerful tool we have at our disposal to address these dreams and aspirations, to make them become a reality and to ensure that the basic needs of our people are met in a sustainable way.

The Budget is essentially about improving the lives of millions of our people. The school uniforms that we have to buy next year for our children are something that we immediately think about. In the backs of the minds of many members who are sitting here are worries about everyday economic realities that have to be faced: the servicing of the car that may have to be done next year or next month, the holiday that is possible being planned for the end of the year. When we go to the ATM we might see a sign that worries us: it reads ``insufficient funds’’, and that is a horrible thing to see.

Well clearly, in order to fulfil the aspirations of our people we need money, just as, in order to service a car, one needs money. For most of us we are talking about a few hundred rand or maybe a couple of thousand rand at the most. The good Minister here has rather a big family to provide for. In fact, there are over 40 million people that are his responsibility. The Budget is not about the allocation of funds to Ministries and the departments. It is about satisfying the legitimate needs of millions of our people. And to do this properly a lot of money is needed.

Economics should not be just for economists. It affects our everyday lives. The Minister is dealing next year with a Budget of over R300 billion. This is a very big sum of money. Most of us do not even know how many noughts go behind this R300. I am sure Trevor himself is intimidated and cannot really comprehend what this means, and that is why he has such a good team of people around him. It is a lot of money and it has to be spent well, and that is what this Budget is about.

I think it is important for us just to have some sense of where we are going, some sense of our economy. What we heard as a budget committee was not a thumbsuck; there were presentations from, in very many cases, quite conservative economists. The prediction of economic growth is a sound prediction supported by all of the people that made presentations to us. We have forecasts of 3,5% growth in 2003 - this is good news - 3,7% in 2004 and 3,9% in 2005.

Inflation has been a problem, but from every single person who made a presentation there was optimism that inflation would come down. There is absolute optimism. The forecasts that we have in the Medium-Term Budget Policy Statement indicate that in the final quarter of next year we will bring inflation down to below 6%. In 2004, we are confident that it will fall within the 3-6% range. Real expenditure, real spending on those things that we need so desperately is increasing, and 6,7% is the increase in the amount of money that will be available for social spending. That makes a real difference in respect of the kinds of things that we are able to do. Revenue in 2001-02 grew by 15%. That is really impressive.

Now, in our everyday constituency work we will be confronted by a number of important questions. People will ask us what we are doing about HIV and Aids. We must familiarise ourselves as members of Parliament with this Budget that we have in front of us. We must be able to say that we have now provided for a massive increase in the spending on HIV and Aids, a R3,3 billion boost over the next three years.

People will say to hon members: What about crime? How are we going to improve our country? Has enough money been allocated to crime? We must be able to give people information. We heard submissions from the police force indicating that over the next three years 16 000 people will be recruited and trained to boost the performance of the police. The courts are being improved. Prisons are being built, maintained and improved. This whole integrated justice sector is using the money that has been made available to them to ensure that we are able to live in a safer environment. Those are real things that are improving.

But while we are doing this - and this is perhaps the really good news, because it represents increased spending - we are continuing to build a solid foundation for future growth. Money is being spent on infrastructure and on education and training to ensure that we have sustained future economic growth. This is the result of good economic management.

It is very difficult to believe, but while we are doing all of this, the deficit is going down at the same time, and it is not being done with higher taxes. Yes, we are improving on our tax collection performance, but the main thing is that what we have in front of us is good, sound economic management, improved tax collection, economic growth and responsible fiscal management. That results not only in increased spending immediately in this three-year period that we are looking at, but also in sustained economic growth and sustained increased spending.

Possibly the only thing that we can report to the hon the Minister, because there was a lot of consensus amongst those who did presentations, is that there was consensus amongst most who made presentations to us that there is room for further fiscal expansion. This is something that we have to think about very carefully. Performance has been very good, but there is clearly a dire and pressing need to deliver on the needs of our people, and the economists that made presentations to us all feel that there is room for fiscal expansion.

I would like to say that this committee was very fortunate to be led by somebody like Nhlanhla Nene, who has proved to be a very, very good chairperson of this committee. I think he has done an excellent job. We are immensely proud of Minister Manuel, his Deputy Minister and his team. The whole country has confidence in our economy.

We believe that, the way we are going now, these dreams that we have can and will become a reality. Our challenge now is to translate these dreams into ideas and practical programmes so that even we, when we go back to our constituencies, can think of things that we can do to make the lives of ordinary people better. [Applause.]

The MINISTER OF FINANCE: Madam Speaker, hon members, let me start by expressing my sincere appreciation to the hon Nene and the members of the budget committee. They were given an unenviable task, convened right on the eve of the tabling of the Medium-Term Budget Policy Statement and set a task. I would like to believe that they have acquitted themselves exceedingly well, given the circumstances.

However, what is important going forward is that the budget committee is involved in a process that assists us in shaping the Budget. So I would like to appeal for permanence for this committee and ask that they live out their terms of reference, including providing inputs into portfolio committees on a regular basis gleaned from the expenditure trends as reported in terms of the PFMA.

I would also like to express my appreciation to all members of the committee who spoke in this debate. Before dealing with the issues raised directly, let me share some good news with the House this afternoon. Standard & Poor’s rating agency has upgraded South Africa. They have changed the outlook from stable to positive. [Applause.] They did so this morning using two sets of criteria: firstly, the persistently sound macroeconomic management and policies, and secondly, a readily manageable and declining debt burden which has helped the country weather periods of high currency volatility.

Hon members may or may not be aware that all three rating agencies have given us upgrades as a country during the past 12 months … [Applause.] … Moody’s in November last year, Fitch in August and today Standard & Poor’s. That, certainly, is good news, and I think it speaks volumes for the Medium-Term Budget Policy Statement and the issues that we have already heard about in the debate this afternoon.

In respect of some of the issues dealt with, and recognising that input was sought from a number of private-sector economists, let us remind ourselves that economics is a dismal science. It is very hard to reach agreement on these issues. I think that members, especially those in the Portfolio Committee on Finance, would know that we, as the Treasury, do not change our minds very often. We make two calls: one at the time of the Medium-Term Budget Policy Statement and the other when we table the Budget, and we live by that. Private-sector economists, especially those in big banks, have the luxury of changing their minds three times a day, so let us examine what they offer within that context.

The hon Woods spoke about falling exports, and when one looks at the detail, I think it is important to recognise the changing basket of exports. Clearly, we are already starting to see some of the resource-based exports come down and against that the enormous breakthroughs that we are continuing to make in higher-tech industries. So there are trade-offs and the value is certainly at the higher end, and this is something that we clearly have to watch going forward.

A number of members have spoken about inflation and the inflation target. Let me restate this afternoon that price stability is in our collective interest. I think workers and investors alike need to take inflation out of the equation, be it in wage bargaining or investment decisions. That kind of stability provides a certainty which will be important for growth.

It is a fact that north and south of the equator inflationary outlooks differ, with the G-7 countries facing a deflationary environment while in the south inflation still continues to be in the order of magnitude that we are now living through. Of course, there is a lot of light at the end of the tunnel. There is broad consensus now that especially food price inflation will come down over the next 12 months, and that certainly augurs well for the lives of poor people in our country.

In respect of the estimates, especially on the revenue, clearly we need to remain cautious about that, and not without reason. Looking at the details of the changes that we have announced in the R8,1 billion increase, the first issue is that VAT is higher than expected, and that is largely inflation-driven with no fall-off in consumer spending. Secondly, corporate taxes have increased by R500 million, largely because of improved efficiencies. Thirdly, secondary tax on companies is up by R700 million. And then, because of higher than expected wage settlements, there is the whopping R2,6 billion from personal income taxes. Those trends are likely to be there in an environment which is as uncertain as that which we are living through, given global uncertainties and the impact of inflation on our domestic economy.

Dr Koornhof and others spoke about infrastructure, and I think we broadly agree that it needs a boost. Part of what members did not comment on - because I can well accept that in two minutes there is not much that one can say - is that the increases to other spheres of government, especially to local government, do account for an additional R1 billion of infrastructure spending.

Optimally, I think a public works programme might prove to work better if managed through local authorities. That, together with local economic development, is likely to assist the process. Some of these small projects are very difficult to manage from the national level. In fact, sometimes consultants’ fees are more than the cost of the project. So local authorities need to be brought into play. Salga is holding a national general council meeting, and this is one of the issues that they are talking through during these days.

There is an issue on the expenditure side that I perhaps had hoped that members would have touched on, and that relates to facilities. In many of our larger facilities, especially tertiary hospitals, what we are seeing is a failure to manage. We are reading daily in the newspapers about machines breaking down, linen disappearing, no light bulbs and all of those kinds of issues. Generally, it is not as a result of an insufficiency of finance. It is as a result of a failure to manage these institutions.

Together with the Department of Health and the provinces, we are now introducing an IT facilities management system that will allow better reporting and better maintenance of equipment so that we do not have these kinds of breakdowns. But between now and the tabling of the Budget on 26 February 2003, I think these issues are likely to be drawn into sharp relief again.

Perhaps the key issue - and I draw this from what a number of contributors to the debate said - is what kind of state we want. Clearly, the caring needs to be demonstrated in the content of development, and so a developmental state is one that must be identified from the fiscal stance it takes: how much we borrow and how much we spend; how much capital expenditure there is to facilitate growth for tomorrow against how much consumption expenditure there is. There is no quick fix, there is no silver bullet; there has to be continuous engagement in this process. We have heard from the private sector and from contributors here that perhaps our Budget is not sufficiently expansionary. I challenge anybody to look at the 6,7% real growth for the first year. The Budget which we table on 26 February next year is premised on 6,7% real growth. I cannot see the public sector absorbing substantially more than that. So when people take these labels so graciously and freely provided by private-sector economists, let us also look at those kinds of issues.

Let me conclude by saying that I heard an interesting point this afternoon. I heard about a DA government. Well, a camel has more chance of going through the eye of a needle than the DA has of governing South Africa. [Laughter.] [Applause.]

Debate concluded.

CONSIDERATION OF REPORT OF JOINT BUDGET COMMITTEE ON MEDIUM-TERM BUDGET POLICY STATEMENT

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move:

That the Report be adopted.

Motion agreed to.

Report accordingly adopted.

CONSIDERATION OF REPORT OF PORTFOLIO COMMITTEE ON FINANCE ON MEDIUM-TERM BUDGET POLICY STATEMENT

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move:

That the Report be adopted.

Motion agreed to.

Report accordingly adopted.

                   ADJUSTMENTS APPROPRIATION BILL

                       (First Reading debate) Ms B A HOGAN: Deputy Speaker, I have before me  the  Adjusted  Estimates  of National Expenditure. It is a comprehensive book and a welcome  change  from the way that the National Treasury presented the  adjustments  estimates  in the past.

Before us here we have every department spelling out how it intends changing its budget. It is clear and transparent, and it is a great pity that here in Parliament we have not had sufficient time to pay attention to the detail that is carried in the document. It is for this reason that I want to congratulate Parliament on setting up a Joint Budget Committee. I wish to convey my good wishes to the chairs of that committee, Mr Nene and Mr Ralane, and to its members, because they are indeed going to be faced with the formidable task of transforming this institution, Parliament, into an institution that performs effective, wise and good oversight over the executive, using the Budget as a basis for that oversight.

It is an ambitious project, a project that Mr Hanekom might say is one of the dreams that those of us who take oversight seriously in this Parliament have dreamt for many, many years. I wish to thank the Treasury for producing documents of this calibre and transparency and accessibility over the years, even though we as Parliament have never had the opportunity to engage properly with these documents.

The process I would imagine next year is that when, for instance, the Medium-Term Budget Policy Statement is tabled, the Budget committee simultaneously deals with these adjustments estimates, so that every department appearing before the Budget committee would at one time speak to its medium-term forward estimates and the adjustments estimates. Maybe my dream is a bit bigger. Maybe my dream says that we would also have Scopa members there, sitting jointly with that Budget committee, and we would be looking at the report that Scopa makes on each Government department, using that too as a basis for examining the work that the department is doing and the output that it is achieving. It is only in this way - when the legislature, Parliament, comes into partnership with the executive - that we can start getting real value for money, that we can start ensuring that the money that the Government appropriates for its work reaches, as my colleague Mr Nene said, those for whom it is intended.

I wish the Budget committee a great deal of success. It will be a trying time for those who have even begun to scratch the surface of what it would mean to alter the Budget process here in Parliament, to make it a more effective process, to make this Parliament a debating forum - not just a place where we pass Bills regularly and talk formally, but one where we debate the issues underlying that. For instance, the DA has tabled its views on the basic income grant. These things need to be debated. We need to be talking about the best possible way of going forward in providing for this country and its people. So let me say to Mr Nene and Mr Ralane that it is with great joy that I see that their committee has been appointed and I look forward to engaging with it in seeing if we can improve this Budget process.

Briefly, what are the adjustments estimates about? We pass a Budget in February, and what we do in October is fine-tune that Budget. We say, ``This is not as we anticipated, this is what has got to be fine-tuned, this is what happened that we did not expect and these are the adjustments.’’ It does not allow us to change the basic Budget.

The adjustments estimates only cater for very specific instances of change, and let me go through them very quickly. Firstly, what may be allowed are significant unforeseeable economic and financial events, and we see this in the Budget with the adjustments for inflation. We have an amount of over R3,4 billion which is going to adjust for inflation.

It allows for unforeseeable - not unforeseen, but unforeseeable - and unavoidable expenditure. For instance, not one of us could have anticipated what the expenditures would be for the World Summit on Sustainable Development, and that is an instance of unforeseeable expenditure. It allows for any funds required for emergency situations. We are looking at food relief at the moment, and emergencies are obviously unforeseeable.

Then there is money that is to be appropriated and that has already been announced by the Minister. One must note that often in a Budget Speech the Minister makes mention of certain expenditures which have not yet been allocated because they are dependent on certain agreements. These expenditures relate this year to infrastructural grants, and now we know what the full impact of those infrastructural grants is going to be.

Then we have a very important item which we ourselves put in the Public Finance Management Act, and that is virement. Departments are not allowed to shift between their spending categories or between departments without the approval of Parliament, and that is where we have to come in and say we agree that the shifting of expenditures can occur.

Then, of course, there is the utilisation of savings, how that can be reallocated, and the roll-over of unspent funds. Let me say that roll-overs have become far less of a contentious issue than they were in the past, and I want to congratulate the executive on improving that situation.

With that I commend these adjustments estimates to Parliament for its approval, and I thank you, Madam Speaker, for the opportunity to address the House. I commend the House for setting up the Joint Budget Committee and I wish it well in its endeavours. [Applause.]

Ms R TALJAARD: Madam Speaker and hon members, the Adjustments Appropriation Bill before us increases the estimated expenditure level by R3,8 billion, a relatively modest increase given the inflationary pressures present in the South African economy during this period.

Despite the clear inflation question, the adjustments do aim to address poverty and rightly emphasise considerable social need in a fiscally responsible manner. The Bill provides for an additional R2 billion social- delivery-targeted equitable share allocation for the provinces aimed at catering for the extensive take-up rate of social grants. The increased take-up rate for social grants is a clear indication of the need for an affordable social security net to be set up as a matter of urgency. The comments made by my colleague in an earlier debate would have a bearing here.

From comments by the Department of Social Development before the Joint Budget Committee, it became clear that in relation to the R400 million provided for food relief through the adjusted estimate process, there is no clarity on, firstly, which Government department would be the lead department to ensure delivery in the crucial area and/or, secondly, what mode this delivery would take, be it food vouchers, direct food distribution or whichever other mode might be available to Government. For the modest relief to be effective, and efficiently targeted and distributed, these questions must be addressed and resolved speedily.

As is clear from the report to the House on this Bill by the Portfolio Committee on Finance, a number of areas of concern emerged during the consideration of the Bill. Firstly, in relation to the Vote of the Department of Transport, the lifetime contracts in both rail and bus commuter services raised concern due to the escalation clauses in the contracts.

In relation to the Department of Public Works, concern was expressed that the National Treasury had not funded the department for it to be in a position to discharge all its legal obligations for rental and lease agreements. The National Treasury indicated that this was a form of bringing pressure to bear on the department, but surely this must not be in a context where the department is forced into abdicating its legal obligations.

Another department that raised concern was clearly Home Affairs and the roll-out of the Hanis project, which was based on an estimated exchange rate of R6 against US$1. This raised concern, as the committee pointed out in its report, due to the cost increases for the contract.

In the arena of HIV and Aids prevention - these are concerns, not criticism, and Trevor can handle that - Government ought to have known that its constant and stubborn abdication of its responsibility for socioeconomic rights delivery in this area would inevitably result in court action and that the principles underpinning such litigation would win not only a moral victory but also its day in court. The R5 million allocated to the Department of Health to cover legal costs in the TAC case therefore cannot be seen as unforeseeable expenditure. In addition, the paltry R50 million adjusted allocation to the HIV and Aids grant to provide for Cabinet’s decision following the Constitutional Court action is woefully inadequate.

The PFMA allows for appropriations that are unforeseeable or unavoidable. The DA believes that a number of the allocations before the House today that purport to be unforeseeable or unavoidable are merely unforeseen. A rigorous engagement is required between the National Treasury and the relevant departments to ensure that it is not merely bad planning that results in these categories of expenditure and that they are truly unforeseeable and unavoidable.

This is clearly an area of fertile ground for the new Budget committee to interrogate - whether or not expenditure going through an adjusted appropriation process is indeed unforeseeable and unavoidable, or whether it is a judgment call that would see such expenditure as merely being unforeseen.

I would further like to associate myself quite strongly with the comments that were made by the hon Barbara Hogan in relation to the future of the Joint Budget Committee and the formidable challenge that confronts it in growing a role for Parliament in the budgetary process. I wish the two chairpersons all strength in that process because it is indeed a process that requires both urgent attention and our commitment.

The DA supports the Adjustments Appropriation Bill. [Applause.]

Dr G G WOODS: Chairperson, we have studied the various categories of adjustments proposed in the Bill and, to concur with the hon Barbara Hogan, we too found Treasury’s publication of the Adjusted Estimates of National Expenditure to be very helpful in this regard. In fact, in almost each instance we found sufficient information for us to decide on whether we felt the individual adjustments to be acceptable or not.

In the category of roll-overs we also found an improving situation and in theory we see the situation improving further as the strategic planning and the PFMA regime bed down fully in all Government departments, with more considered spending of money and better use within the required periods of time. I think that roll-overs, as we once saw them, will therefore never repeat themselves.

There is also no contention surrounding the virement activities, as these appear to conform with the PFMA parameters. A lot of these virement changes and shifts were very interesting, but in that it was a case of Government taking the licence granted to them by the Public Finance Management Act. With everything conforming to that, we have no problems there either.

I think we can say the same from the information we see in the publication concerning the supplementary infrastructure allocations, announced in the Budget earlier this year, coming into being by way of adjustment. There is the inflation adjustment, which has already been referred to, and the provision for food relief, which is very necessary.

This really leaves us with that expenditure category of R3,4 billion which is known as ``unforeseeable and unavoidable incidents of expenditure’’. Only in this area do we possibly have a few questions. We did try to raise some of these questions with Treasury officials in the Portfolio Committee on Finance. I think they did their best when we quizzed them, but the chairperson of that committee made the obvious point that somehow we perhaps need to get the actual departments before the committee to ask them in detail, as it is not really fair to ask Treasury officials in a second- hand fashion to explain the deeper reasons for some of these adjustments.

On this occasion, rather than to cherry-pick instances of these unforeseeable and unavoidable expenditures, the main issues are going to come up in the session that follows in about half an hour’s time, when we have this really unique occasion in this House - which I know we are going to utilise well - where we as MPs have the executive here in front of us to account to us. I am sure these issues are going to come up.

The IFP will therefore support the Bill and we look forward to the question and answer session just now.

Dr P J RABIE: Mnr die Voorsitter, agb Minister en agb lede van die Raad, hierdie wetsontwerp bewillig aangesuiwerde bedrae geld vir die behoeftes van die staat ten opsigte van die boekjaar wat op 21 Maart 2003 eindig. [Mr Chairperson, hon Minister and hon members of the House, this Bill appropriates additional amounts of money for the requirements of the state with regard to the financial year ending on 21 March 2003.]

I will briefly refer to provincial and local government. In the Joint Budget Committee we had extensive hearings over the past two weeks and I would like to start with social grants. These will continue to be adjusted to compensate for inflation. What is of importance, however, is that Government continues the emphasis on capacity-building, municipal infrastructure and access to free basic water and electricity.

When I studied the Adjustments Appropriation Bill I thought about the Financial and Fiscal Commission’s proposals regarding local government, namely that the creditworthiness of some municipalities with little access to debt must be extended by means of infrastructure grants. I think this is a very important form of assistance from the national Government. What is of concern to me, however, is that the clear demarcation between the functions of local and district municipalities regarding electricity distribution and other services must be made timeously. This is very important. It is one of the functions of the Joint Budget Committee to demarcate this particular division.

My considered opinion is that local government should, in the long run, deliver services to residents. The proposal of the FFC that a legal base should be established to enable contingency reserves to accommodate disaster management is also very important. This should also be included by means of the enactment of legislation as soon as possible. The fact is that empirical evidence reflects that 89% of municipal revenue is collected from own resources. However, the catch in this is that most of this money is collected by metropolitan local authorities. What is of concern is that a number of rural and district councils depend upon grants and funds from national Government. I think that national Government should be able to help these particular authorities to become financially independent. It will be quite a challenge, especially for the national Government and the legislatures, to assist these particular institutions to attain financial independence.

Home Affairs was also given a fair amount of attention during the Joint Budget Committee hearings. The fact was mentioned that the delivery of civic affair functions to municipalities to enable citizens to obtain identification documents, registration of birth certificates and so forth is being investigated. They are thinking of delegating this to these local authorities. I think that will also help people in rural areas to gain access to this assistance, which is extremely important.

In the Adjustments Appropriation Bill, R44,967 million is budgeted in Home Affairs regarding migration. During the Budget hearings the Centre for Illegal Aliens was mentioned and the question was posed by the Budget committee as to whether this centre was functioning and managing to assist migrants coming into South Africa. Illegal immigrants are now migrating in increasing numbers to South Africa. I am concerned that, during the Joint Budget Committee hearings, we were told that 1 100 posts in Home Affairs remain vacant. I think we will have to address this particular issue, because it is impossible to render an effective service if that is the number of vacancies. It is a particular challenge to all role-players that we fill these vacancies in a timeous manner.

The New NP supports this Bill and we will go into further detail shortly, when we have some questions to ask.

Mr B A MNGUNI: Chairperson, hon members, the hon Barbara Hogan mentioned the roll-overs. I just want to concentrate on roll-overs for a little while. What are roll-overs? These are funds that could not be spent during the year in which they were appropriated and are taken over to the following year. Now in these estimates the roll-overs total R1,2 billion. Compared to last year and looking at the current figures of the total Budget of this year, it is only 0,4% of the total Budget. If there were more roll-overs, politically people would say that the Government does not deliver and does not spend and that there is no efficiency or there is incapacity in departments.

If we study the roll-overs in this estimate, we discover the opposite to be true. We find that most of the roll-overs in these estimates are due to technical or logistical problems. In Defence, for example, four out of five roll-overs are due to the late delivery or nondelivery of invoices. That is not the fault of Government but is due to service providers.

Looking at land restitution, I hope we are all aware of the problem this department is facing of negotiating with buyers and sellers on that basis. The department cannot ride roughshod over people who are supposed to sell their land to previously disadvantaged people, and the funds allocated for such projects cannot just be forfeited because the funds were not spent during the timeframe of that year.

However, we are not justifying such roll-overs. We should thank the National Treasury for introducing the Vulindlela project, which monitors the expenditure patterns of departments, including roll-overs themselves. The department needs to be commended for doing such a sterling job. However, it needs to tighten the screws a bit so that unjustifiable roll- overs are prevented.

The R3,4 billion on the adjustments is due to inflation adjustments. We should be proud that the South African economy is as resilient to outside shocks as expected. Most developing countries are not as resilient to such outside shocks. South Africa has proved that, though small and having an emerging economy, it has performed quite well as far as the global economy is concerned. Despite inflationary pressures due to outside shocks, South Africa performed much better with the result that R3,4 billion has to be allocated to accommodate inflation.

We heard in the previous debate on the Medium-Term Budget Policy Statement that food prices are mainly responsible for increasing inflation. Besides food prices, there are other goods and services essential for Government to deliver that are actually also responsible for inflation.

With regard to the international arena, South Africa is participating globally in all forums and spheres. When one looks into the estimates, one sees that there is R172 000 that has been adjusted due to donor funds or some prizes that we won from all these forums. That proves our competency as we participate more in these world forums.

I just want to refer to what Ms Taljaard said, namely that the R3,3 billion inflation might be due to Government’s failure to curb inflation. On the contrary, she should be aware that in any economy where there are outside shocks there are bound to be secondary effects. One cannot say that the department or the Ministry is failing just because there is that R3,3 billion allocated to inflation. It is a fact that any economy is bound to have secondary effects. [Applause.]

Dr G W KOORNHOF: Mr Chairperson, hon members, two important issues should be raised with regard to the Adjustments Appropriation Bill: firstly, the report of the Portfolio Committee on Finance on this Bill and, secondly, the R400 million per annum allocated for emergency food relief.

I hope that members of this House have read the short but very important report of the portfolio committee on this Bill, published in the ATCs on 7 November 2002. In this report the portfolio committee highlights its concern with three of the Votes contained in the Bill, and I fully align myself with the concerns raised.

The first is Vote No 4 - Home Affairs, regarding which the portfolio committee expressed its concern that the exchange rate on which a contract was budgeted did not cover the cost of equipment and services for the Home Affairs National Identification System project, or Hanis. This represents a major blunder and should have been anticipated. The amount is R157 million.

The second is Vote No 6 - Public Works. Concern is expressed that the contractual obligations are not budgeted for in the Medium-Term Expenditure Framework. It is suggested that the escalation costs of the rental or lease agreements should be revisited. The value here is R172 million.

The third is Vote No 32 - Transport. Concern is expressed that the escalators in contracts of both bus and rail services are unaffordable. Both these modes of transport have lifelong contracts. The amount involved here is R200 million.

In all three Votes referred to above the expenditure was classified as unforeseeable and unavoidable. This should be a real concern for the National Treasury.

In conclusion, the Minister and the National Treasury should be commended for the initiative to ask for an unallocated R400 million per year for emergency food relief. We want to recommend to the Minister that serious attention or consideration be given to the introduction of a food stamp system in South Africa by which target groups in the poorest section of our society can be effectively assisted. Such a system can easily be linked to an incentive scheme to also help in the upliftment of poor communities in our country.

We also want to align ourselves with the remarks by the chair of the portfolio committee, Ms Barbara Hogan, and we wish the Joint Budget Committee every success in their deliberations in the next couple of months.

The UDM supports the Adjustments Appropriation Bill. [Applause.]

Mr L M GREEN: Chairperson, one area that affects adjustment measures is the volatility of our economy, which makes it difficult to adequately predict and sustain a stable rand-dollar value. South Africa’s economy needs to stabilise in order to sustain a more reasonable adjustment policy. It is not a feasible practice when departments calculate their budgetary requirements without having clear guidelines as to inflationary measures. In certain instances huge adjustments had to be made to keep up with unexpected costs.

It is also unacceptable to realise at a very late stage that the Department of Home Affairs used an exchange rate of R6 to US$1 for the Hanis contract. If this is an oversight then it surely cost the taxpayer a lot of money to rectify the matter. In fact, we must state the position in economic terms as a loss to the state and negative tax burden borne by the taxpayer.

The ACDP thinks that the sooner we start measuring cost in terms of losses and gains, instead of roll-overs and adjustments, the greater the ability to determine the productivity and performance of certain state departments will be. In the Health budget the state had to adjust an amount of about R15 million to provide antiretroviral drugs to rape survivors. It then had to pay legal costs of R5 million for its case against the Treatment Action Campaign. These costs should also be referred to as losses in a real sense.

If Government had not supported an outdated health policy, much of the costs incurred now for antiretrovirals might have been better spent with consequent cheaper outcomes, instead of going the route of court action while incurring legal costs simply to be told to roll out funds for medication. The loss carried by the taxpayer should be calculated in terms of the rise in inflation, deaths, and health and welfare costs which the state had to pay because of late interventionary measures.

In conclusion, the ACDP supports this Adjustments Appropriation Bill. [Applause.]

Mme L MABE: Modulasetilo, sa ntlha ke rata gore ke re, re le Maafrika Borwa re seka ra lebala gore re mo Afrika, ga re kwa Amerika e bile ga re kwa Yuropa. Ka nako nngwe batho ba bua ba re puso ya Afrika Borwa e tshameka ka madi. Ba bua ba re re tlogele go ya kwa DRC, e bile re tlogele go ya kwa Burundi. Re tshwanetse re seka ra ya le batho bao gonne ba a re timetsa. Batho ba ba a re timetsa. Ba re lebatsa gore re Maafrika, e bile re Maafrika Borwa. (Translation of Setswana paragraph follows.)

[Ms L MABE: Chairperson, firstly I would like to say, as South Africans we should not forget that we are Africans, we are not in America and we are not in Europe. At times people say that the Government of South Africa wastes funds. They say that we should not go to the DRC, and we should not go to Burundi. We should not listen to these people because they are misleading us. These people are misleading us. They make us forget that we are Africans, and that we are South Africans.]

The Minister of Finance tabled the Adjusted Estimates of National Expenditure in the National Assembly for Parliament to approve and adopt the revised spending plans of the executive. The adjusted estimates include the allocations for unforeseeable and unavoidable expenditure.

Unforeseeable and unavoidable expenditure is expenditure that could not be anticipated at the time when the submissions were made to Treasury and therefore could not be accommodated in the Budget by the Minister of Finance at that particular time. Those expenditures cannot be financed from savings or, at the same time, from the reprioritisation of programmes.

During the course of the year departments face situations that need additional funding and could not be predicted, as I indicated, in the Budget in February 2002. It is a fact that any responsible government would adjust its budget estimates when faced with challenges that could not be foreseen at the time when it passed its budget. Some of these adjustments are unforeseeable economic and financial events that face us as a country, and we need to respond to those situations.

As Africans we have an obligation to develop an interest and participate actively in issues of Africa. Some people regard Africa as a dark continent, but it is time that we showed them that Africa is not a dark continent, because those who reside in Africa like it, just as those who reside in Europe like Europe. South Africa hosted the inaugural summit of the African Union, which was attended by an unexpectedly large number of heads of state because nobody expected that many African countries would be members of the AU at the particular time of its launching.

South Africa assumed the responsibilities for the implementation and monitoring of the Democratic Republic of Congo conflict resolution agreement. Armed conflict in any African country affects us negatively, whether we like it or not. One cannot precisely predict how long armed conflict negotiations will last and the necessary spending related to such negotiations. A good example is our Kempton Park negotiations, which posed serious challenges to us as a country and which lasted longer than expected.

An additional amount of R118 million has been allocated for the Department of Home Affairs to meet the contractual obligations of the Hanis project. This adjustment results from unanticipated exchange rate movements when the value of the rand depreciated and the price escalation of equipment and services.

An amount of R2 billion is allocated to provinces for unavoidable spending resulting from rapid growth in the numbers of beneficiaries of social grants and to provide for learner support material before the new school year.

The 17 April 2002 announcement by Cabinet on the implementation of the HIV/Aids policies and programmes is another unavoidable expenditure because nobody expected that announcement at that particular time. Spending was inevitable in order to provide funding for the treatment policy and the mother-to-child transmission programme. Also unavoidable was the funding required in KwaZulu-Natal to defray expenditure incurred to combat the cholera epidemic. Therefore …

… ke rata gore ke re go botlhokwa gore re tlhaloganye gore fa re bua ka madi ka sena sebaka mo ngwageng, go bontsha gore go botlhokwa ka puso e re nang le yona ga jaana gore e dire gore mongwe le mongwe a tlhaloganye e bile a itse seo puso e se dirang ka madi, le gore ga re a tshwanela gore re fetole fela Palamente e sa naya Tona le Ditona tse dingwe tetla gore seo se diragale. Ke ka moo re reng rona re le ba mokgatlho wa ANC re itumelela gore puso e re nang le yona e na a ikarabela, e bile e na le maikarabelo mo setshabeng sa Maafrika. [Legofi.] (Translation of Setswana paragraph follows.)

[… I would like to say that it is important that we understand that when we talk about money at this time of the year, it shows that it is important for this Government at the moment to make everybody understand and know what the Government is doing with the money, and that we should not change Parliament without giving the Minister and other Ministers the permission that, that should happen. That is why we as the ANC are happy that the Government that we have is accountable, and it has a responsibility to the nation of Africa. [Applause.]]

The CHAIRPERSON OF COMMITTEES: Hon members, before calling upon the next speaker, may I request some order in the House, please? Thank you very much.

Dr S E M PHEKO: Chairperson, it is logical that the national Budget can never predict all the financial problems and needs that may arise. That is probably the reason why most parliaments have the practice and tradition of financial adjustments at least once before the end of the financial year.

The PAC, however, in the limited time at its disposal, would like to comment on a few matters. First, it is commendable that these adjustments include education, arts and culture, science and technology, health, safety and security, agriculture, labour, and trade and industry.

Money spent on education will be useless, however, if the children of the poor cannot advance their education merely because their parents are poor. Educated children are a national asset. The PAC is advocating free education for all children from poor homes. Our hospitals and clinics, especially in the rural areas and townships, leave much to be desired in terms of the standard of medical treatment. Many nurses have left for Saudi Arabia, Britain and other countries, and this is continuing. The Budget must be used to improve conditions for both the patients and the medical personnel.

The PAC has long expressed its disagreement with the sale of state assets to the rich. This privatisation of state assets has created massive unemployment while it enriches the rich, especially foreigners who have stronger currencies than the present limping rand. Money spent on privatisation is therefore creating joblessness and poverty.

What about presidential expenditure? This country has an adequate, efficient air service. Given the urgent needs of this country, is it necessary to expend millions of rands on a presidential aircraft amidst increasing poverty, joblessness, homelessness and disease among the poor and in the midst of so much crime?

The CHAIRPERSON OF COMMITTEES: Order! Hon member, your time has expired.

Dr S E M PHEKO: I thank you very much, Chairperson, for banning me exactly as I was before 1960. [Laughter.]

Miss S RAJBALLY: Chairperson, no matter how much we plan there will always be a hiccup along the way. This is especially so with economic and financial events that affect our fiscal targets. Unforeseeable and unavoidable expenditure is another factor and emergency situations also contribute to altered plans.

The shifting of funds and many other factors have to be taken into account. However, the idea is that by having a plan we have a direction, and with a direction we know where we are going. No matter how many factors try to hinder our performance, we take them as minor setbacks that need just a little adjustment. With poverty at the top of our list of problems to tackle, found in every sphere of society, adjustments are necessary. The adjustments made to the main Budget are not that much and are found to be adequate. It is understood that the adjustments made to most Votes were as a result of roll-overs and unforeseeable or unavoidable expenditure. The adjustments made to the various Votes are deemed adequate.

The MF applauds the various departments for their hard work that has produced promising results. It is felt that the adjustments made to the Budget would hopefully assist in further accommodating good results and enable departments to perform at their peak at all levels. The MF supports the Adjustments Appropriation Bill.

Mr C AUCAMP: Chairperson, for one who is not an economist, terms like medium-term budget policy'' andAdjustments Appropriation Bill’’ can be confusing. Let us in future use the term the hon Barbara Hogan introduced today - that is, the ``fine-tune budget’’.

Die AEB steun die Minister se ``fine-tune budget’’. Ons glo dat die meeste gevalle van aanpassing geregverdig is, en dat daar nie buitensporighede gereflekteer word nie. Ek sou wat wou gee as ek in my persoonlike begroting teen die halfjaar so min aanpassings hoef te maak.

Die een uitsondering: ons weet dat die R300 miljoen addisioneel vir die Wêreldberaad vir Volhoubare Ontwikkeling seker noodsaaklik was. Waar Suid- Afrika tans ‘n gewilde sentrum is vir die aanbieding van internasionale byeenkomste, sal ons groter erns moet maak met die verpligting wat ander lande het ten opsigte van finansiering van hierdie tipe byeenkomste. Suid- Afrika kan nie hierdie las alleen dra nie.

Ons voel besonder positief oor die feit dat slegs R3,8 miljard aangepas is op die Begroting. Dit is maar ongeveer 1,5%. Ook die vermindering in onbesteebare bedrae, of ``roll-overs’’, is ‘n positiewe faktor. Die positiefste aspek van die aanpassingsbegroting is dat die verwagte begrotingstekort vir 2002-03 van 2,1% van BBP tot 1,6% afgeskaal is, en dat dit verdere belastingtoegewings moontlik maak. Ons steun die R400 miljoen vir voedselleniging, en verwelkom ook die ouderdoms- en ongeskiktheidspensioene wat vanaf 1 Oktober met R20 per maand en R10 per maand onderskeidelik verhoog. Almal moet egter saamstem dat dit ‘n druppel in die emmer is. Die enigste manier om armoede te beveg is uiteindelik deur groter ekonomiese groei en gepaardgaande groter werkskepping. Daarvoor moet beleggingsvertroue verstewig word, en die waarde van die rand gestabiliseer word.

Die AEB steun met vrymoedigheid die Miniser se ``fine-tune’’ begroting. (Translation of Afrikaans paragraphs follows.)

[The AEB supports the Minister’s fine-tune budget. We believe that in most cases the adjustment was justified and that no extravagance is reflected. What I would not give to have to make so few adjustments in my personal budget by mid-year.

The one exception: we know that the additional R300 million for the World Summit on Sustainable Development was surely necessary. Because South Africa is presently a very popular centre for the hosting of international gatherings, we will have to become more serious regarding the responsibilities of other countries with regard to the financing of these types of gatherings. South Africa cannot carry this burden alone.

We feel particularly positive about the fact that only R3,8 billion was adjusted in this Budget. This is only approximately 1.5%. The decrease in unspent amounts, or roll-overs, is also a positive factor. The most positive aspect of the adjustments appropriation is that the expected budget deficit for 2002-03 of 2,1% of GDP has been scaled down to 1,6%, and that this makes further tax concessions possible.

We support the R400 million for food relief, and also welcome the old age and disability grants which increased from 1 October with R20 per month and R10 per month respectively. Everybody should, however, agree that this is merely a drop in the ocean. The only way to fight poverty is eventually through greater economic growth and concomitant greater job creation. For that we need to strengthen investor confidence and the value of the rand must be stabilised.

The AEB supports the Minister’s fine-tune budget with confidence.]

Mr C M LOWE: Chairperson, it is particularly appropriate that we debate the Adjustments Appropriation Bill in the very same week that the DA is launching its basic income grant campaign and is spelling out exactly how it would finance it, for where the Minister and his team at the National Treasury succeed in promoting economic development, good governance, social progress and rising living standards, we shall not hesitate to applaud and support these achievements.

The adjustments proposals are a case in point, and the DA recognises that, given the inflationary pressures present in the economy, the increase is relatively modest, but therein lies the rub. The inflation question and particularly its dramatic effect on food prices and the lives of the poor is one that needs to be directly and honestly addressed.

As today’s front-page article in Business Day again so aptly demonstrates, it has been largely the spectacular collapse of our currency that has brought about the spiralling food prices, created double-digit inflation and seen consumers staggering under four interest rate hikes this year alone. The reason for that lies squarely at the door of Government, precipitated by a President who has failed to demonstrate leadership or instil confidence in a country crying out for the foreign investment that will help to bring the better life so often promised, yet so seldom seen.

Hence we have a crisis of confidence over our attitude to Zimbabwe and the human rights abuses and starvation that threaten six million of her citizens, a crisis of confidence over the real cause of Aids and the provision of lifesaving drugs for those struck down by the virus, and now a crisis of confidence and confusion over Nepad and what mechanisms, if any, exist for political peer review among member states.

And while our people reel under the blows of double-digit inflation and rocketing food prices, and look aghast at the failure of our once proud rainbow nation to take a stand against the terror of the Mugabe regime, our President, instead of inspiring leadership and confidence to strengthen the rand, blames it all on a secret cabal, the self-appointed champions of human rights. Markets respond accordingly and South Africans everywhere pay the price.

One does not have to be a dreamer or a camel to realise that when the President changes his tune, the difficult job and juggling act of the Minister of Finance will become infinitely easier and the poorest people the ANC claims to represent will have their burden lifted too. [Applause.]

Mr F C FANKOMO: Chairperson, hon members of Parliament, let me follow in the footsteps of those hon members who have deliberated before me. At the beginning of this financial year, the Minister of Finance presented the Budget for the 2002-03 financial year for spending on Government objectives. The aim of the Budget is about finding a balance between several broad Government objectives. Some of these objectives are to provide for social and development expenditure, to overcome poverty, to provide safety and security, to enhance investment in infrastructure, to maintain Government capital stocks, to reduce the overall burden of tax so as to lower the cost of investment, job creation and to release household spending powers.

I will focus my speech on supplementary infrastructure allocations and self- financing expenditure. Supplementary infrastructure allocations in the adjustments estimates for 2002-03 are funds allocated for supplementing the actual Budget in order to be able to reach specific targets or priorities. These are placed under the following departments.

An amount of R20 million has been provided for supplementing the offices, daily maintenance, repairs and upgrading of office controls in the Department of Home Affairs. An amount of R16 million has been provided for supplementing the regional indicators management system in Statistics South Africa. An amount of R50 million has been provided to ensure that the Department of Arts, Culture, Science and Technology supplements projects from various bids, while R60 million has been provided for supplementing the renovation and refurbishment in the Departments of Justice and Constitutional Development.

The total supplementary amount that has been provided in the Department of Environmental Affairs and Tourism for the construction of a new weather base on Marion Island is R70 million, while the Department of Transport, in order to upgrade 17 South African national border posts and rail extensions at Khayelitsha and Umtata, has been provided with an amount of R188 million.

Supplementary infrastructure allocations, based on conditional grants in the amount of R120 million, have been provided to the Department of Health for hospital rehabilitation, and an amount of R150 million has been provided for sanitation in clinics and communities by the Department of Water Affairs and Forestry. Hence a total amount of R700 million has been provided as a supplementary allocation in the adjustments estimates.

Although it is a general rule that in terms of the Constitution and the Public Finance Management Act all revenue is to be collected and deposited in the National Revenue Fund, it is understood that the funds derived from the sales of ammunition purchased from the Special Defence Account should be allocated to the Department of Defence. An amount of R160,775 million has been allocated to this department.

The Department of Education, under Programme 3: General Education, has received various local donations amounting to R1,4 million for the national teachers’ award project during this current year. First National Bank of South Africa has sponsored the Government Communication and Information System in the amount of R100 million for the Government communicator award for excellent services. This award recognises improved delivery, innovation and excellence in the Government communication profession. However, the Department of Public Service and Administration received an amount of R9 000 for self-financing in the adjustments estimates.

I welcome and support this Adjustments Appropriation Bill. [Applause.]

The MINISTER OF FINANCE: Chairperson, hon members, it is clear that, save for a few questions, there is broad support in the House, but I think the hon Aucamp - I am not sure which party he represents now - put his finger on it. Right now we are finalising a Budget that is meant to be appropriated and last until 31 March 2004. We are dealing with uncertainties in that kind of environment and, notwithstanding those challenges, I think that, in relative terms, if one looks at world practice we do exceptionally well in this regard.

Let me just put on the other hat: I chair the Treasury Committee, which is not a Cabinet subcommittee, but deals with the requests in terms of the unforeseeable and unavoidable criteria and sometimes it is very difficult. So let me just walk through some of the issues that hon members have raised.

The first of those is in respect of transport, and here on the one hand there are the bus contracts. The contracts are difficult because they tend to be lifetime contracts and they have variables built in that automatically kick in, including fuel prices and the price of spares. That is a difficulty for the Department of Transport, but they are working through this as part of a policy change and I am sure that early in the new year Parliament will be proffered a White Paper dealing with road transportation going forward.

In respect of commuter rail: firstly, the Rail Commuter Corporation is running at a deficit and, secondly, as a result of the decline in its asset base there are difficulties that we face that tend to be in here. And then, thirdly, there is a difficulty because of this tangled web of the Rail Commuter Corporation, Metrorail and all of those entities coming together in a rather strange way. That needs to be untangled going forward.

In respect of public works, there are three elements, one of which is the rates bill. This has been a period of uncertainty and we have to take account of that. Secondly, there are backlogs in respect of health and safety in many Government buildings and that has had to be addressed. Thirdly, as reflected for instance in the adjustments to the Treasury Vote, sometimes we deal with pretty tough owners of the buildings that we occupy and this creates a lot of uncertainty for the Department of Public Works in their negotiations.

With regard to the issues of Home Affairs - and I am sure Minister Buthelezi will deal with this in question time - apropos Hanis, it is important to recognise the scale of this project. For a long while the expenditure was slow, the tolerances were higher, and so the planning was done for a very different exchange rate environment. But now, as the project is taking off - and we should all be thankful that the digitisation of the Home Affairs database is now starting to happen - the costs are kicking in and the tolerances are substantially lower.

In respect of the way in which the Treasury Committee looked at this, we familiarised ourselves with all of the detail. Whilst, yes, in absolute terms it may be difficult to argue unforeseeability in all instances, I think that we would plead that the House supports this, given the circumstances and the environment that we operate in.

I would just like to say that the hon Lowe should not talk about the collapse of the currency, because he does not know what a collapsed currency is. It must really grate on members like that when we have upgrades by rating agencies for good performance, because they will never quite appreciate it. But thank you very much to the House for the support. [Applause.]

Debate concluded.

Bill read a first time.

                   ADJUSTMENTS APPROPRIATION BILL

                (Consideration of Votes and Schedule)

The CHAIRPERSON OF COMMITTEES: Hon members, consideration of the Votes and Schedule should be limited to adjustments and reasons for those adjustments. I will put each Vote in turn, whereupon members will have the opportunity to raise issues about the adjustments with the relevant Ministers.

Vote No 3 - Foreign Affairs:

Ms C DUDLEY: Chairperson, the ACDP would like to ask the Minister if the need for government to protect opposition officials, political tolerance and the promotion of democracy were raised during the recent bilateral discussions with the Zimbabwe government. If not, why not? If so, what was their response?

The MINISTER OF FINANCE: Chairperson, I know that Minister Nkosazana Dlamini-Zuma will join us in a few minutes, so with your permission - and I have not consulted the Whips - could the question stand over until she is with us? It will just be a few minutes, and I trust that the hon Dudley will accept that.

The CHAIRPERSON OF COMMITTEES: We will hold this Vote over and continue with the next Vote.

Vote No 5 - Provincial and Local Government:

Mnr C AUCAMP: Voorsitter, ek sien die Minister is ook nie hier nie, maar ek kan dalk die Minister van Finansies vra. Dit gaan oor die begroting vir die artikel 185 kommissie vir die bevordering van die regte van taal-, kultuur- en godsdienstige gemeenskappe. Dié kommissie sou hierdie jaar al begin het. Ons sien dit is nog nie daar nie. Is daar enige planne? Volgens beplanning, wanneer gaan dié kommissie begin? (Translation of Afrikaans paragraph follows.)

[Mr C AUCAMP: Chairperson, I see the Minister is not here either, but perhaps I can ask the Minister of Finance. This relates to the budget for the section 185 Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities. This commission should have begun its work this year. We notice that it has still not been established. Are there any plans? According to planning, when will this commission commence?]

The CHAIRPERSON OF COMMITTEES: Hon Minister of Finance, are you able to answer that?

The MINISTER OF FINANCE: [Inaudible.]

The CHAIRPERSON OF COMMITTEES: We will have to ask for that one to stand over.

Vote No 8 - National Treasury:

Mr R J HEINE: Chairperson, I would like to ask the Minister of Finance whether he is aware of the fact that on Sunday Mr Nick Wolpe, the organiser of the network lounge at the ANC’s national conference in December, was quoted as saying that several parastatals and Government departments had expressed a keenness to take part in the network lounge at a cost of R70 000 per exhibition. I would like to know which Government departments and parastatals these are that are prepared to take part and whether the Minister agrees with the principle, because this is taxpayers’ money that we are talking about.

The MINISTER OF FINANCE: Chairperson, I do not know what the Rules allow for. I suppose the next question might be: What is the weather like in Tokyo today? Sadly, that question has absolutely nothing to do with the National Treasury Vote and I ask that it not be accommodated.

Dr G W KOORNHOF: Mr Chairperson, an amount of R15,6 million will be utilised to cover the costs of the Myburgh Commission of Inquiry into the Rapid Depreciation of the Exchange Rate of the Rand. My question is: What is the final cost of the Myburgh commission?

The MINISTER OF FINANCE: Chairperson, to the best of my knowledge the final cost is R15,6 million. The Myburgh commission has wrapped up its work and published its report.

Ms R TALJAARD: Chairperson, I thank the Minister for his reply to the hon Koornhof, but could he indicate whether he believes that the work of the Myburgh commission has resulted in policy recommendations which the Treasury will pursue any further and whether he considers the expenditure on the Myburgh commission to have been wasteful or to have given value for money?

The MINISTER OF FINANCE: Chairperson, the terms of reference for the commission specifically excluded policy recommendations. They were required to investigate and they have investigated. In the context of the terms of reference we in the Treasury find the work exceedingly helpful. We also believe that the work of the Myburgh commission assisted in educating all South Africans about the complexity of foreign exchange markets, and I think we have all learnt something as a result of the work of the commission. As we indicated on 29 October, some of the issues that were raised by the Myburgh commission will be taken up when we table the Budget on 26 February 2003.

Vote No 9 - Public Enterprises:

Dr W A ODENDAAL: Mr Chairperson, may I enquire from the Minister whether any additional moneys have been made available for the purpose of black economic empowerment? If so, can he say at what aspects of it the money is aimed?

Secondly, does the Minister not feel that it is high time now that we changed this concept of black economic empowerment to the empowerment of the previously disadvantaged? I ask this because it is my experience that coloured and Indian people feel that it is not directed at them, but only at a fortunate few within the black community.

The MINISTER FOR PUBLIC ENTERPRISES: It is aimed at all people who were historically disadvantaged by the system of apartheid. That includes coloureds and Indians and Africans, and some white women who were oppressed by the apartheid system. That is our broad conception of that.

The CHAIRPERSON OF COMMITTEES: We will now go back to Vote No 3 - Foreign Affairs. I ask the hon member from the ACDP to put her question again.

Vote No 3 - Foreign Affairs:

Ms C DUDLEY: Chairperson, in relation to Nepad, was the need for government to protect opposition officials, political tolerance and the promotion of democracy raised during the recent bilateral discussions with the Zimbabwe government? If not, why not? If so, what was their response?

The MINISTER OF FOREIGN AFFAIRS: Chairperson, maybe the hon member can enlighten me as to why opposition members need to be protected - from whom, from what and for what. Then I might be able to answer her.

The CHAIRPERSON OF COMMITTEES: Hon members, I want us to pay attention to the adjustments and be focused with our questions on the business before the House. Are there any further questions to Foreign Affairs?

Dr P W A MULDER: Chairperson, there is an adjustment of R19 billion for inflation in the estimates - on salaries, if I understand it correctly. My question relates to the serious problems experienced by personnel abroad when new regulations were implemented regarding their benefits, and so on. Is that part of this adjustment? Has that problem been solved or not? As I said, some of them complained to me that they suddenly experienced problems when the Minister of Finance implemented certain forms of taxation on benefits.

The MINISTER OF FOREIGN AFFAIRS: Chairperson, the problem has been partially solved, although it has not been solved for all time. We are looking for a permanent solution, as I said when I was introducing my Vote. For now there has been a partial solution, so the diplomats are not suffering because of that 40% taxation rate. But we are still discussing the matter with Treasury in order to find a permanent solution so that we do not face this crisis every year.

The CHAIRPERSON OF COMMITTEES: Let us now return to Vote No 5 - Provincial and Local Government.

Vote No 5 - Provincial and Local Government:

Mr C AUCAMP: Chairperson, before I start, may I ask for the speech timer to be zeroed? My putting of this question earlier does not count. Presumably the section 185 commission on cultural and linguistic rights and so on was budgeted for in this financial year, but the commission is not there yet. When will we see the commission and what impact does it have on the Budget?

The MINISTER FOR PROVINCIAL AND LOCAL GOVERNMENT: Chairperson, the commission was budgeted for in the normal way, as the member correctly says. The President has already issued an invitation to members of the public to make nominations, after which he will consider appointing people to serve on the commission. So the matter is in the public domain.

Mnr P J GROENEWALD: Mnr die Voorsitter, van die Aansuiweringsbegroting van R194 miljoen, gaan R108 miljoen vir salarisse. Nou wil ek by die agb Minister weet: is dit deel van die hoër salarisse van, byvoorbeeld, munisipale bestuurders wat tussen R500 000 en R700 000 per jaar verdien? In die lig van wat die agb Minister van Finansies gesê het oor die hoë salarisse op die vlak van plaaslike regering, wat gaan die agb Minister daaromtrent doen? (Translation of Afrikaans paragraph follows.)

[Mr P J GROENEWALD: Mr Chairperson, of the R194 million in the Adjustments Appropriation some R108 million is going towards salaries. Now I want to know from the hon the Minister whether this forms part of the higher salaries of, for instance, municipal managers who are earning between R500 000 and R700 000 per year? In the light of what the hon the Minister of Finance has had to say about the high salaries at local government level, what is the hon the Minister going to do about this?]

The MINISTER FOR PROVINCIAL AND LOCAL GOVERNMENT: Chairperson, the amount that the hon member referred to is an inflation adjustment. It is an adjustment that occurs especially when higher than expected salary increases have come into effect. This has absolutely nothing to do with local government. Local government is not part of the equation with respect to budgeting for personnel expenditure.

Mr C H F GREYLING: Chairperson, I just want to ask the hon the Minister about Programme 2. I am concerned that R29,8 million of CMIP funds has been rolled over because various projects were not completed by municipalities in the previous year. Given the fact that we have an estimated R70 billion backlog for infrastructure for municipalities, and that it is a Government priority to alleviate the plight of the poor and to boost the economy, I want to ask the Minister whether his department has plans in place to ensure that in the current year, when the Minister has allocated nearly double the amount of CMIP funds, he is ready for all that money to be spent.

I am also concerned in this regard about that fact that, in this financial year, district municipalities received and oversaw that money, and not the provinces, which creates further problems. I therefore want to ask the Minister, bearing in mind that his policy is that municipalities cannot roll over these funds, whether he is ready to oversee expenditure this year and ensure that all the money is spent on infrastructure. The MINISTER FOR PROVINCIAL AND LOCAL GOVERNMENT: Chairperson, we are satisfied that the spending patterns with respect to both CMIP and the local economic development funds have not been that bad. The roll-overs have to do with projects that are under implementation. Commitments have already been made, but indeed the money has not been spent, although the projects are under way. So the money which was not used is still going to be used, and therefore there is nothing to worry about.

Vote No 13 - Statistics South Africa:

Dr G W KOORNHOF: Chairperson, Census 2001 will now be finalised before the expected date of October 2003. My question is: What will the Minister do and how much will it cost to terminate the lease agreements for office and other rental accommodation that were negotiated to continue until October 2003?

The MINISTER OF FINANCE: Chairperson, the processing centre, which is in Pretoria North-West, more or less, has now been fitted out. There have been negotiations with the owner of the building. We will continue to use that as a processing centre. It may be used by other Government departments as well, because the big investments by Statistics South Africa have actually been in information technology. The big change has been facilitated by the use of enormous scanners which are capable of scanning a few hundred thousand images per day each. It would be possible for other departments to use this. The mechanics of that will have to be worked out going forward, but the processing centre as such is likely to remain operational.

The other processing centre, which was in Port Elizabeth, was shut down earlier this year, and so we are down to the one in Pretoria North-West.

Ms R TALJAARD: Chairperson, the Minister will recall that earlier this year the President succeeded in getting entangled in a dispute about the causes of death in South Africa. We note the following statement in relation to the allocation for the roll-overs for the Statistics South Africa Vote:

The Presidency required mortality statistics that were not available and called on Statistics South Africa to obtain the necessary information.

Can the Minister give us an indication as to which guidelines decide which statistics will be gathered and which statistics will not be gathered, and why this allocation and this particular request have been accommodated in this way? It is purely aimed at ensuring that the theory of the President is proved and the statistics agency is roped in accordingly.

The MINISTER OF FINANCE: Assumptions, assumptions, assumptions! Chairperson, in the course of our work in Statistics South Africa there are requests from different departments. One of the more recent requests was from the Department of Agriculture for a detailed study on the agricultural sector. That is work in progress, and we are very much still in the process of collecting the questionnaires from farmers.

Also there was a huge study undertaken two years ago on rape, and that was initially requested by the Departments of Health and of Safety and Security together. In that context, and as part of the development of what we call a national statistical system, other departments would be part of gathering information, but it would remain the responsibility of Statistics South Africa, as per the Statistics Act.

In the context of the mortality statistics, they involved, firstly, the Department of Home Affairs, because they required a retro-scan of death certificates, and, secondly, the Department of Health to look at the causes of death, both primary and secondary, as listed on death certificates. That work is now in the final stages and Statistics South Africa advises that they will be in a position to release these statistics within the next few weeks.

Vote No 14 - Arts, Culture, Science and Technology:

Mr S L DITHEBE: Chairperson, there are eight science centres in Africa, and six of these are in South Africa. One is in Botswana and another in Mali. My question is: Does the Deputy Minister’s department have plans to ensure that entrance fees at these science centres are not beyond the levels of affordability for ordinary people, seeing that a further R6,7 million has been allocated for the construction of science centres? We would also like to congratulate the department.

The DEPUTY MINISTER OF ARTS, CULTURE, SCIENCE AND TECHNOLOGY: Chairperson, the whole point of having a directorate for public understanding of science is, in fact, the principle of providing society with an understanding of science. We have a special vehicle that we created, which is the Foundation for Education, Science and Technology - generally known by its acronym, Fest - through which we develop programmes for bringing science education to society at large.

Indeed, one of the directives from the directorate of Puset is that they should ensure access to a knowledge of science, and that would presuppose that entrance fees should not hinder access. To answer very directly, Puset has programmes for bringing science to people in rural, urban and periurban areas. In fact, Fest annually runs programmes to bring young people, through school programmes, to science centres.

Mrs M A A NJOBE: Chairperson, we note that the funds for Vote No 14 have been transferred, since 1 August, to Vote No 34, for the Department of Arts and Culture, and Vote No 35, for the Department of Science and Technology. This is to enable the two departments, now that the original department has been divided into two, to carry out their restructuring programme. I wanted to find out from the hon the Deputy Minister what formula was used to determine how much each of these departments should receive.

The DEPUTY MINISTER OF ARTS, CULTURE, SCIENCE AND TECHNOLOGY: Chairperson, even when there was a single department, the budget was specifically directed to programmes, except for corporate services. The divisions are according to the separate programmes and thus designated separately for arts and culture and for science and technology.

Ms N M TSHEOLE: Chairperson, under Programme 4: National Language Services we understand that money has been rolled over that will be used for the employment of staff and also for purchasing furniture. One had hoped that something would be said about the language policy. Would the Deputy Minister appease us by telling us when we are going to see something being said on the language policy?

The DEPUTY MINISTER OF ARTS, CULTURE, SCIENCE AND TECHNOLOGY: Chairperson, of course the large part of the budget for language is for implementing policy because we are at that stage. What my colleague should note is that the infrastructure for language is being set up. Just let me say that I can assure her that we are doing it the right way. Vote No 15 - Education:

Mr R S NTULI: Chairperson, the DP supports the adjustments estimate regarding education. We understand that the roll-overs concern areas where our educational system is most vulnerable, namely poverty relief and infrastructural projects. We hope that the roll-overs will also be used to strengthen auxiliary and associated services by engaging more subject specialists to offer the much-needed back-up support to teachers in curricular development and interpretation, as well as psychological services to teachers and learners under stress and pain.

Adequate training will also be needed for the new curriculum for Grade 10 to 12 teachers to be able to operate in the new paradigm of OBE, while teaching the traditional syllabi must also receive priority as there is no proper articulation between the GET band and senior secondary schoolwork. Simultaneously, sound preparation for the implementation of FET in the year 2004 must take place. The introduction of compulsory mathematics and mathematical literacy in the FET band requires massive retraining of teachers.

Can the Minister indicate whether he has done some further research in terms of reliable data and cost implications to implement these highly demanded items?

The MINISTER OF EDUCATION: Chairperson, I actually had difficulty in hearing the question. I really have a serious problem. [Interjections.] It is not because of my age - I just had a test done - but I am really having difficulty.

Out of consideration for the hon Ntuli, the answer is yes. He should not believe everything he reads in the weekend newspapers. I have said publicly and I announced to the House that the further education and training certificate, which will replace the senior certificate, will only be implemented after a long period of consultation which ends in January. I know the weather in Dublin, by the way. I do not know whether it is raining now, but I will still answer his question. In addition, I have said that in co-operation with the Council of Education Ministers, no steps will be taken for the implementation of the further education and training certificate until we are sure that adequate, satisfactory and intensive training takes place. That has been announced.

Secondly, it is a high-cost area, because we are making a leap from the apartheid senior certificate, which everybody accepts, by the way. There must be teachers’ materials and learning materials for the students. Until we are satisfied that adequate funding will be available for that, there will be no movement to implementation.

The nominal date which the department proposed is 2004. My own view is - and I will be writing to the department as a citizen - that this date of 2004 is unrealistic. It has to be put forward. Therefore, in the meantime, we will have to negotiate with the unions also, because there is no doubt that there are obsolete subjects. We have more than 130 subjects in matric this year. It is impossible for any country to deal with that. The obsolete subjects will go by the board, and we will have to provide for retraining for the teachers. That is a complex matter, too.

I would also like to say that the subject is not closed. There are 35 subjects that we have identified. There will be public intervention as to additional subjects. Out of the foreign languages, we have identified four or five which will be part of the foreign language programme. There will be additional foreign languages, depending on the need and the capacity of some of these embassies to pay for those foreign languages. So everything is open.

I hope, therefore, the member will take into account that the statement which he made, which I read in the Sowetan, is based on a fallacious idea that came with a weekly journal.

Mr C AUCAMP: Chairperson, the hon the Minister, in his latest statement on tertiary institutions, said that no university would have the right to be exclusively Afrikaans. That means compulsory dual or parallel medium. Does the Minister intend to ask for more funding, because this will definitely cost more?

The MINISTER OF EDUCATION: I am pleased to answer this. I am looking for the heading in the eight or nine programmes that are before the House.

Let us be quite clear. There is no compulsory parallel or dual medium. There cannot be. The primary thing is the context of multilingualism. That is why there is an extraordinary reaction from my own side, the opposition parties and from academics that multilingualism is the route to follow. I am pleased that the hon leader of the Freedom Front has insisted in this House that we should seriously move towards multilingualism. The fundamental approach of the Government - there was great enthusiasm from the Government - is that we must now take active measures to ensure that the indigenous African languages which, up to now, have had no consideration in higher education, will now be assisted.

Yesterday, I announced in a press conference - the member may have seen this - that I am setting up a working group of people directly involved to move with some expedition towards, first of all, reviving the study of languages in higher education. I must confess that all 11 languages are discounted for purposes of study as a language. I regret that, because we need our writers, our poets and our teachers, but culturally we need people to study languages in higher education. Therefore, the position about all languages is the further development of languages.

What we have said - and I think the hon Aucamp should really look at this - is that there cannot be any exclusive emphasis on one language in an institution. No institution in South Africa teaches exclusively through one language, even English. What we are saying is that there are certain institutions whose primary emphasis might be on a particular language, let us say Afrikaans. The primary emphasis means that the institutions themselves must work out a plan as to how to support and develop a national heritage, such as Afrikaans is, and learning and teaching in it.

I cannot prescribe by law: Thou shalt be dual medium; thou shalt be parallel medium. I am only allowed, under the Higher Education Act, to set the framework. It is up to the institutions to take into account the constitutional, ethical and moral aspects associated with languages so that we can give, as our Constitution says, ``parity of esteem’’ to all languages.

This Government will not be a party to either demonising a particular language or reducing its role in South Africa. We did not fight for freedom so that we could remove fundamental aspects of identity for all our people. On the other hand, we have to look at equity, because all institutions in South Africa, in the end, are South African institutions.

I would like to offer an opportunity for all political parties, between now and January, to discuss the actual application of the Government’s proposals. I have already received one invitation. They should discuss the actual applications rather than taking positions which are out of step with the Government’s proposals.

I hope I have clarified the matter.

Mr T ABRAHAMS: Mr Chairman, we welcome the provision for early childhood development. We are very pleased to see that this, in future, will be provided for in the mainstream Budget. We want to ask: Is there anything more that can be done to ensure that the funds provided are actually used at provincial level, especially when it comes to the rural areas. Is there anything further that can be done?

The MINISTER OF EDUCATION: I must confess, I did not hear the first sentence. Again, it is the noise. I am sorry.

Mr T ABRAHAMS: I referred to the provision for early childhood development. We welcome the fact that, in future, these provisions will be part of the mainstream Budget. We are asking about the rolling out of it at provincial level.

The MINISTER OF EDUCATION: The development of early childhood education is a fulfilment of the undertaking in the Constitution that there should, effectively, be 10 years of compulsory education. I think it is very important that we should fulfil that, and it will put us among the leading countries in the world.

That is why we have started very, very carefully. The provinces cannot get unfunded mandates. I must confess the Treasury has been very co-operative about this, because it is also an antipoverty drive. When we involve ourselves in this, we will use some of the NGOs and community-based institutions, particularly in the rural areas. Let us make that quite clear. In the urban areas, we will use existing resources in the schools. Why it has to be done on a carefully planned basis is that the schools may not have enough space for these people. Secondly, the teachers also have to be trained. We cannot inflict untrained teachers on our people as happens in many cases. Our idea is therefore that, by 2005, all children who qualify will be in early childhood education programmes. Those who qualify

• those who are five and are turning six - will be in schools for early childhood education.

That must be in the rural areas as well as everywhere else. The problem arises, as in the Free State, where more than 60% of the schools are farm schools. That is a real problem. That is an inheritance for which there is no easy answer. It will be like many other countries. We may have to amalgamate some farm schools, but then one has to provide transport facilities. These are the kinds of issues which we have to debate, discuss and decide on.

Finally, I think it is important to recognise that we are the first country to acknowledge that the human resource development programme of this Government, which is now in our policy, begins with early childhood education, and ends with higher education. We know that unless one deals with education at its foundation phase, one cannot deal with poverty adequately. Education and an antipoverty drive are crucially important in this area.

The CHAIRPERSON OF COMMITTEES: Hon members, can we have order in the House, please?

Prof S M MAYATULA: Chairperson, I wonder if the Minister could comment on the delay in the filling of 200 posts for the Ikhwelo project, which led to a saving of R26,8 million, and the delay in the filling of posts in the ECD, which led to savings of R106 000. How far have we progressed in filling those posts now?

The MINISTER OF EDUCATION: I must explain to the House that both Thuba Makote and the Ikhwelo projects are very different from all other projects in Education. All other projects are conditional grants from the provinces. This is a unique arrangement by Treasury, on our submission, to deal with poverty, infrastructure development, and part of the Jobs Summit. I take personal responsibility for the delay in the full implementation.

Let us be quite clear. I think we may have a serious indictment on the capacity of Government departments to have project managers. That is the reason for this. The Treasury have been very understanding about this, because they have reviewed the commitments for 2003, but it is not good enough. It is an antipoverty drive. In Thuba Makote, we spent R1 million, out of R48 million. Then there is a roll-over.

The answer I am getting from the department is that we need community involvement. It is very important, because, first of all, Thuba Makote is for three community institutions in each province. They will be dealing with agriculture, domestic science and crafts, which are very important for job creation and training. Community involvement, identification of sites, obtaining sites, developing building plans that are suitable, tendering and construction are the things that have to occur. All I announce now at present, therefore, is that construction has begun with the first centre per province. As I said, it is not good enough. It is seriously not good enough.

For the Ikhwelo projects, which are for adult basic education and training, for the provision of these centres, again, R25 million was voted in 2001-02 on the South African National Literacy project. Of this R6 million was spent. This again is a problem. Of course, the Treasury has recognised that this is a work in progress. I do not believe in the Latin tag festina lenta, hasten slowly. We need to act with considerable expedition.

I can assure Prof Mayatula that nothing is lost in this, because we will finish the projects, but the way we do the projects, the way in which we implement them and the way we apply to the Treasury for assistance need the strictest supervision if we are to meet the objectives that we set out to achieve.

Vote No 16 - Health:

Mrs S V KALYAN: Chairperson, a sum of R5 million has been allocated … [Interjections.]

Mr M J ELLIS: Mr Chairperson, on a point of order: Yet again, when the hon Kalyan stands up to say something in this Parliament, there are people on that side of the House who cannot help making animal noises. [Interjections.] I want to warn them this afternoon that if there is a repeat of that, the DP will vote against every single Vote to teach them a lesson. [Interjections.]

The CHAIRPERSON OF COMMITTEES: Order! We have appealed to hon members on numerous occasions to refrain from making catcalls when the hon Kalyan speaks. [Interjections.] Please can we have order, hon members! [Interjections.]

Mrs S V KALYAN: Chairperson, a sum of R5 million has been allocated to the Department of Health to cover legal costs in the court case between the Minister and the Treatment Action Campaign. It is scandalous, to say the least, that the Minister uses taxpayers’ money to fight her personal agendas and to publicly display her inefficiency.

Despite being ordered by the court to roll out universal access to nevirapine, the Minister has yet to comply. Will she explain the reasons for her failure to do so, and also say how she plans to ensure good, principled management of this vital portfolio instead of depending on lengthy, costly and unnecessary litigation to decide the health of the nation? [Interjections.] [Applause.]

The MINISTER OF HEALTH: Mr Chairperson, I do not know who is applauding the hon MP, because I think that the hon MP does not have the correct facts. I am not here to assist the hon the Minister to understand the ruling of the Constitutional Court. [Interjections.] I am sorry, I meant to say``the hon MP’’. [Interjections.] I invite the hon member of Parliament to go and read the Constitutional Court ruling. [Interjections.] If she heckles me, am I going to be able to respond to her? [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon member, if you want a reply, I think you should allow the hon the Minister to make the reply.

The MINISTER OF HEALTH: If she wants a reply, she must listen.

The DEPUTY CHAIRPERSON OF COMMITTEES: The Chair will protect you, hon Minister.

The MINISTER OF HEALTH: Please protect me. [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order!

The MINISTER OF HEALTH: I am sure she cannot listen with her mouth. She should use her ears to listen, not her mouth. [Interjections.]

I was saying that she should go and read the Constitutional Court ruling … [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! A point of order has been taken. The Chair would like to insist that there be decorum in this House. Any member who is found to be making catcalls will face serious repercussions. [Laughter.] I would like to warn hon members against that. Please take note, and I think I would like you again to recognise that this is the Parliament of South Africa, and I would like you to preserve the decorum of the House.

The MINISTER OF HEALTH: Chairperson, as I was saying, the hon member of Parliament must use her ears, and not her mouth, to listen to me.

Mrs S V KALYAN: [Inaudible.]

The MINISTER OF HEALTH: There she goes again! [Laughter.] [Interjections.] She herself is making catcalls! [Laughter.] [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order!

Mrs S V KALYAN: Chairperson, on a point of order: I was not making a catcall. I was asking the Minister to use her grey matter and answer the question.

The DEPUTY CHAIRPERSON OF COMMITTEES: Hon member, I have asked you also, if you want a reply, to afford the Minister the opportunity to make the reply, but you have yourself not been heeding the advice of the Chair to allow the Minister to do so. [Interjections.]

The MINISTER OF HEALTH: If the hon member of Parliament … [Interjections.]

Dr B G MBULAWA-HANS: Chairperson, on a point of order: Is it parliamentary for a member to say to a Minister that she must use her grey matter? That implies that the Minister is stupid. I think you need to rule on that.

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon member, in Parliament, we allow for the cut and thrust of debate. We allow for robust debate and robust discussion. [Interjections.] While you are permitted to make interjections, I think you also have to heed the advice of the Chair to allow for a situation where a question-and-answer session will afford the Minister the opportunity to make a studious response. But if you continue to interject, it is well within the right of the Chair to ask for order. I therefore suggest that you allow the Minister to make her response, and you will have an opportunity, if you wish, after that, to make further interventions.

The MINISTER OF HEALTH: Chairperson, I do not think there is anything scandalous and inefficient in implementing the Constitutional Court’s decisions in this country. Besides, we had already started implementing the mother-to-child transmission programmes. If the MP does not understand the cycle of this appropriately, then I do not know what to say, because it was in April, and the decision only came out in … I mean, we are talking about the cycle from April to 31 March next year. I do not know what she is talking about. It is studious, and I think it is correct for us to implement the Constitutional Court’s decision, which we had already started to implement, in any case, even before the court case, without any money having been given to us, because we are actually very interested in the health of the women of this country.

We were also trying to implement this programme so as to understand what the operational costs were. Of course, we were caught unawares by the decision of the Constitutional Court, and we had to continue. So, if that is scandalous and inefficient, then the MP must come and tell me what it is that I was expected to do. [Applause.]

Ms C DUDLEY: Chairperson, the ACDP have a number of questions. Firstly, under the Strategic Health Programme, for how long will taxpayers’ money fund the slaughter of unborn babies, which is not only tolerated in South Africa, but promoted? Secondly, by when will the disgraceful state of hospitals and clinics be adequately addressed? Why are doctors and nurses leaving this country in droves? When will the intimidation of health workers over the issue of abortion be stopped? Why are we wasting millions of rands on condoms and organisations such as LoveLife, which have done nothing to stem the HIV/Aids pandemic, but have rather exacerbated it? [Interjections.] The Treatment Action Campaign say that Government does not have an acceptable plan to curb the pandemic. Up to now, they have been right. What does the hon the Minister say? Lastly, the MCC reports that 20% of all ethical medicines in circulation in South Africa are fakes, smuggled …

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon member, we are dealing with the adjustments.

Ms C DUDLEY: Correct.

The DEPUTY CHAIRPERSON OF COMMITTEES: We are not dealing with the main Budget and therefore you will have to restrict yourself to the aspect that deals with the adjustment. I cannot permit you to deal with the broad ambit of the subject. So I am requesting you seriously to confine yourself to the element of adjustment.

Ms C DUDLEY: Chairperson, they do apply to the adjustments. On the issue of fake medicines, we just wanted to know what South Africa is doing about it and what other countries are doing about it.

The MINISTER OF HEALTH: Chairperson, you have saved me an unpleasant question. I think if the hon member wants answers on the policy of the department, that is a different matter. She knows that I have an open-door policy. She can come to my office and ask those questions.

Vote No 17 - Housing:

Miss S RAJBALLY: Mr Chairperson, as all of us are aware that housing is a great problem in our country, I will come straight to the question and ask the Minister whether there will be any further adjustment made in the allocation of finance to continue building houses for the homeless.

The MINISTER OF FINANCE: Chairperson, the answer to the question is yes, but I think that there is a series of pressures developing as well, because, having received the houses, very poor people have difficulty in maintaining them. So there needs to be institutional support.

I am advised that the Minister of Housing is involved both with MECs for housing and with local government. Because even beyond the provision of free basic services there are all manner of other kinds of support to develop communities that need to be put in place. Beyond just building housing, we need to form communities as well, and so very close collaboration is taking place especially between the Minister of Housing and the Minister for Provincial and Local Government.

Vote No 19 - Sport and Recreation South Africa:

Mr T D LEE: Chairperson, the Minister of Sport and Recreation is in a relevance crisis. He thinks that to be relevant, he should be loudmouthed and overbearing, and make crude remarks when speaking to sports bodies. [Interjections.] He is tinkering with the colour of the paint on the roof … [Interjections.]

Mr H P CHAUKE: Mr Chairperson, on a point of order: I think the member is out of order. He is not addressing the budget estimate. He is addressing something different. [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Hon member, come round to your point quickly.

Mr T D LEE: He is tinkering with the colour of the paint on the roof of the house while he is doing very little to make sure that the foundation of the house … [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Please, hon member come to the question of the estimate. Yes, I recognise you, hon Andrew.

Mr K M ANDREW: Mr Chairperson, there are two points of order: Firstly, this is a debate on the adjustments appropriation schedules. This is not simply a question-and-answer session, and therefore as long as an hon member is addressing a matter relevant to the adjustments appropriation he does not, in fact, have to ask a question at all. Secondly, I would like, with respect, to ask you to give the people asking the questions the same protection as you are giving Ministers answering the questions.

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! I think every member of this House is entitled to be protected by the Chair. That has to be done impartially and honestly.

By the same token we also need to recognise that while we do have a debate, the debate and the subject of the debate have to be relevant and significant. The Minister of Sport and Recreation is not himself the subject of the debate, but rather the aspect of the estimates is. Provided that the individual member deals with the matter to hand he will be fully protected by the Chair. [Applause.]

Mr T D LEE: Chairperson, an example is that the Minister was able easily and quickly to find R700 000 for his race-based and race-driven and, may I say, unnecessary investigation into cricket, while very little money is available for sports development. The youth of this country need sports facilities and equipment. They need bats and balls as well as playing fields. If the Minister really wants to make himself relevant, he must see to their sporting needs.

UMPHATHISWA WEZEMIDLALO NOLONWABO: Mhlalingaphambili, xa ndilunywa yinja, andiguqi phantsi, ndiyilume inja. Ukuba ndiyayenza loo nto abantu abadlulayo abasayi kwazi ukuba yiyiphi na inja phakathi kwam nenja le. [Uwele-wele.] (Translation of Xhosa paragraph follows.)

[The MINISTER OF SPORT AND RECREATION: Chairperson, when a dog bites me, I do not go down on my knees and bite it back. If I do that people passing by will not know which one of us is actually the dog. [Interjections.]]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon Minister, I think the House is entitled to a fair response, and as much as you may take offence at the personal element, may I call on you to respond to the aspect which is pertinent to the portfolio.

The MINISTER OF SPORT AND RECREATION: Chairperson, he was talking about changing the paint on the roof. [Interjections.] I do not paint roofs. He talks about an investigation that has been undertaken. He does not say anything about it. He says … [Interjections.]

Mr G B D McINTOSH: Mr Chairperson, on a point of order: In general, the thrust of the hon the Minister’s response in Xhosa was: ``I do not deal with dogs.’’ [Interjections.] Now, we have already had … [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon members, on that issue I will await the translation to see if that was indeed the case. I will not take it as a point of order immediately because there is a contestation around it.

Mr G B D McINTOSH: Thank you, Mr Chairperson. I would appreciate it if Hansard could record the words used correctly. [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon members, may I call upon you please to concentrate on the matter in hand. The matter in hand is the adjustments estimate. I would like you to deal with that and to deal with the issues, and try and curb the emotions that are surrounding these issues.

The MINISTER OF SPORT AND RECREATION: Chairperson, with regard to the youth of this country, first of all, there was no question but I am going to respond in this way. The youth of this country, quite correctly, want to play sport. I have no reason to doubt that. The member then goes on to say that I want to change the colour of the paint on the roof. I do not paint roofs. I do not have a brush, neither do I have paint. I still have to talk to Buffalo Timbers to give me some paint. [Interjections.]

He then goes on to say that I have wasted an amount of money that he is talking about. In these appropriation estimates that I have here in front of me, there is absolutely nothing about that. What is there is World Cup Legacy projects, which actually assist the youth of this country to form a huge base of players so that they can go to the top to become South African cricket players.

There was no question from the member. The idiom which I used is a Xhosa idiom, and if the member does not understand it, he must please come to me and I will explain it, because I speak Xhosa. That is what it is all about.

Why are they overheating, on that side, like old Buicks? What they need to do is to stop the engine and put in water, and then the overheating will cease. [Interjections.] [Applause.]

Mr S B NTULI: Mr Chairperson, I wish to commend the National Treasury and Government for approving an allocation of R12 million to Sport and Recreation South Africa’s World Cup Legacy project. Would the Minister explain how formerly disadvantaged communities that feel marginalised would benefit from this 2003 World Cup Legacy project, and can he also outline the areas that have been earmarked for such developments?

The MINISTER OF SPORT AND RECREATION: Mhlalingaphambili, enkosi kutat’ uBheki Ntuli ndiyabulela. Chairperson, I would like to say thank you to Mr Bheki Ntuli.]

Firstly, this country, with the assistance of this Government, will next year host the most successful and spectacular Cricket World Cup with a team that will be embraced and supported by all South Africans and which will, in turn, win the Cricket World Cup right here at home. [Interjections.]

As for the R12,5 million that we got, Doc Craven used to say something, but I will not repeat what he used to say because if I do they will complain again. So I would rather not say it. [Interjections.] I am very polite. I will not say it. Doc Craven used to talk about tall trees - I worked with him - and how wonderful to have these tall trees, but the only thing … Let me leave it at that. [Interjections.]

Now, the World Cup Legacy project will build facilities where there were none before. The members who are talking do not even know that in the communities around them there are no facilities. We will leave those facilities there as a legacy of the Cricket World Cup in our country. That is why we call them legacy projects.

The likes of Mr Ray Mali, who is the president of Border, and Mr Max Jordaan, are moving around the country, checking on these facilities and making sure that we are ready. Here are a few of the areas where these projects will be built. We are building a facility in Kwelera in East London. There is Amacal’egusha Oval at Masingatha village in King William’s Town. A new facilty is going to be built in Piri village. There is Extension 5, Joza township, and Gelvandale. Charmaine Williams told me about a member who went to a meeting there and does not even live in Gelvandale. There is Dobsonville in Soweto. Khayelitsha Cricket Club will get an oval. There is Montrose Cricket Club near Athlone and Bonteheuwel Cricket Club. In Umtata we have an oval that we have named the Khaya Majola Cricket Club. So that is where all these facilities will be built.

I do not paint. I do not use paint and I do not have a brush.

Mr C AUCAMP: Mr Chairperson, my question to the Minister, with reference to the Adjustments Appropriation Bill, is: Did he enjoy Jacques Kallis’s innings of 75 not out on Saturday? [Laughter.]

The MINISTER OF SPORT AND RECREATION: Mr Chairperson, there is no doubt about it. Whenever I see that wonderful all-rounder driving through the covers, then I am able to say: ``South Africa has good cricketers.’’ [Applause.]

Vote No 21 - Defence:

Mr A BLAAS: Chairperson, I have four questions. The first three relate to the R82 million in unforeseen expenditure, and the first two to Burundi specifically.

The MINISTER OF FINANCE: With great respect, Chairperson, can we not ask the person operating the public address system to raise the volume? We are having difficulty hearing the questioner.

The DEPUTY CHAIRPERSON OF COMMITTEES: Let us try. I am going to ask the House please to allow those who are putting questions to do so unimpeded. By your putting questions to yourselves or your neighbours, you are disturbing the whole process in the House. Order! I still hear noises in the background.

Mr A BLAAS: Chairperson, I have four questions. The first three relate to the R82 million in unforeseen expenditure, and the first two are about Burundi.

Firstly, to what extent have foreign donors fulfilled their commitments to the Burundi initiative? Secondly, is it reasonable to expect South Africa to maintain its involvement in Burundi virtually alone, against the background of very little progress having been made although, on the other hand, this is for the benefit of the whole subregion?

The third question relates to the World Summit on Sustainable Development. Were any reasons submitted to the Minister by the Department of Environmental Affairs and Tourism for the fact that they did not budget for security purposes? Surely that was their responsibility?

The last question refers to the R180 million for higher salary increases. What are the main constraints preventing the finalisation of the rationalisation process in Defence, and when is it anticipated that this will be completed?

The MINISTER OF DEFENCE: Chairperson, first of all let me say that the countries that indicated their willingness to make a contribution towards funding the mission in Burundi have, to a very large extent, complied. Perhaps I should rather say that they have, in fact, complied, except for one country that has only partially responded, so far.

Belgium promised, at the beginning of that mission, a sum of R54,8 million and we were able to receive that funding by 28 March this year. The European Union pledged an amount of R76,4 million, which we were privileged to receive on 19 March this year. The Netherlands pledged R52 million, of which R17,6 million has now been delivered, and we expect the balance to be delivered any time now. The UK pledged an amount of R24,8 million, and that money was delivered in full by 21 August this year. Norway pledged R12 million, which we received in August. There was a commitment from the US that was not quantified, and nothing has been forthcoming so far. Italy pledged R3,1 million, which we received in August of this year.

To all intents and purposes, therefore, all of those international organisations and countries that made pledges and commitments to support the initiative have done so, and we are confident that those whose contributions are outstanding will still do so.

The question has been raised, of course - I have dealt with it before, but it seems I will have to deal with it once again - of whether South Africa alone should carry the burden of peace initiatives in our region and continent. I think we have made the point, first and foremost, that we are not going into these missions alone. Even though, when we start a mission, resources for carrying that mission out may not be available immediately, members of the international community do come along with us and, as this report shows, do their best to respond and fulfil whatever commitments they have made.

Going beyond that, I have said to the House, and I must repeat, that South Africans themselves must not forget that in the drive for the democratisation of this country, we benefited from the support of the international community to an extent that cannot be quoted in money alone. We need to take into account countries in our region whose citizens even lost their lives, lost their property and so on, some of them much smaller economies than ours, and which have never demanded that we pay them back. It is only appropriate, as former President Mandela has reminded all of us from time to time, that we do not forget the friends who were with us in the darkest hour. It is only appropriate that we reciprocate.

But in the current situation of this region and the continent, we have also said that unless the countries of our continent, Africans themselves, take the lead in dealing with the problems of stabilising the region and the continent and make sure that disasters and whatever else may come to pass are dealt with first and foremost by themselves, we are going to find ourselves in difficulties, because many countries that are outside our continent will not commit their young men and women and their resources on our behalf. We cannot sit back and expect others to lead us. We must lead. Let them support us.

It is in that spirit that our country is taking upon itself the burden of striving so determinedly for peace and stabilisation. In investing in stability in the region, we are investing in the stability of our own country. If we have a region that is unstable, we are in difficulties.

With regard to the question regarding the World Summit on Sustainable Development, I am looking around to see if the Minister of Environmental Affairs and Tourism is around. I do not see him. [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: He is right behind you.

The MINISTER OF DEFENCE: First of all, I should say, the Minister is not here. [Interjections.] My understanding is that, first of all, there was a certain budget that was set aside for the security of the World Summit on Sustainable Development. When those resources had been deployed, it was found that the actual needs were in excess of that. The Cabinet considered the question as a whole and it was decided that various departments should bring some of their own budgets into play so that we were able to support that major international conference for the sake of our country, after which we were able to approach the Treasury to seek relief. I may say that our requests were dealt with reasonably. The responsibility for the World Summit on Sustainable Development, in any event, was ultimately our collective responsibility, and I think we handled it very well.

The last question, about the problems relating to the issue of rationalisation, is a very complex question, far more complex than many of us realise. Let me say, for a start, that there are a number of angles to this question. First of all we have to reduce the number of men and women in the SA National Defence Force. But, whilst we are doing that, it is important to keep in mind the right mix of skills, age and racial composition, otherwise we might, after bringing the numbers down to the level we want, find ourselves without, for instance, the right number of pilots of the requisite racial composition. Some members are of an advanced age, so we do not have the right age composition. It is a very complex issue.

We are dealing with this issue competently. We are advancing very well in this regard. But there are other elements outside the National Defence Force that impact on this issue and also have to be taken into account. The question, for instance, of the levels of education in our society is now making itself very strongly felt. Unlike in the past, when white South Africans were conscripted into the SA Defence Force, today they are not. It is extremely difficult today to get young white South Africans to join the National Defence Force, and the reason is that the income levels in the white community allow them to move to other areas. When one looks today at the composition of the SA National Defence Force, one sees that among the rank and file, where everybody starts, we are almost 99% black. The top and middle management are all white, but these are now also slowly reducing in numbers, because they are leaving.

The net effect is going to be that, some years from now, we will have a higher percentage of black officers than has, in fact, been determined in the calculations that were set out in this Chamber. I am in the field. Here in the Chamber, it is easy to do the mathematical equations and all of that, but once one is confronted with the reality of dealing with those issues, the situation is different.

I am saying, therefore, that in this balancing exercise that was begun when we started here, the left side sometimes goes up and the right side down, and so on. There will be no time to stop it, but at some point, the day South Africans are just South Africans and not white and black and coloured and Indian, we will just have a National Defence Force, and that is what I am working towards. [Applause.]

Mnr P J GROENEWALD: Voorsitter, ek wil vir die agb Minister vra - maar ek sien hy gesels daar - gesien in terme van die krisis in die lugmag, dat daar nie eens voldoende fondse is om vegvlieëniers op te lei of om genoegsame onderdele te voorsien nie: hoekom het die agb Minister nie met die Aansuiweringsbegroting voorsiening gemaak daarvoor nie?

Tweedens, in die Aansuiweringsbegroting word voorsiening gemaak vir ‘n ex gratia-toekenning van R350 000 as gevolg van ‘n arbeidsgeskil. Die agb Minister is daarvan bewus dat daar ongeveer 12 lede van die Weermag is wat ‘n pensioenprobleem het soortgelyk aan Projek Dyson ‘n paar jaar gelede. Is dit ingesluit by die begroting? Indien nie, hoekom nie, en wat gaan die agb Minister daaromtrent doen?

Die MINISTER VAN VERDEDIGING: Voorsitter, ek wil eerstens net sê dat dit waar is dat ons in die verlede probleme gehad het, maar die posisie is dat die lugmag op hierdie oomblik besig is met ‘n program wat geleidelik beweeg in die rigting van ‘n oplossing. Ons is besig om die jonger mense nou op te lei in die lugmag, die vloot en so aan. Daardie program gaan oor ‘n paar jaar hierdie probleme oplos. Dit is ongelukkig so dat ‘n mens nie sommer binne ‘n jaar opgeleide mense kan kry nie. Dit maak nie saak wat ons wens nie, maar dit vat tyd, en ‘n mens moet met tyd werk. Ek is baie optimisties en ek vertrou dat in hierdie stadium ons op pad is om hierdie probleme op te los.

In verband met die hele kwessie van die pensioen-probleem, het ons die saak al lankal na die Kabinet geneem, en ek moet sê die Nasionale Tesourie is op die oomblik besig met die wetgewing. Ons is net nie in ‘n posisie om te beweeg sonder daardie wetgewing nie. Agb lede self, in komitees ens, sal moet help om daardie wetgewing gou deurgevoer te kry. Die betrokke Minister is hier en hy het my verseker dat hulle amper klaar is met die wetgewing. [Tussenwerpsels.] Ja, dit is wat hy vir my gesê het. [Gelag.] In elk geval, wat betref al daardie mense wat vir hul pensioene wag, die Kabinet het al daaroor ‘n besluit geneem. Die begroting, so ver ek bewus is, is beskikbaar, en dit is net ‘n kwessie van die wetgewing wat nog moet kom. [Applous.] (Translation of Afrikaans paragraphs follows.)

[Mr P J GROENEWALD: Chairperson, I want to ask the hon the Minister - but I see he is busy chatting over there - in view of the crisis in the air force, in that there are not even sufficient funds to train fighter pilots or to provide enough spare parts: Why did the Minister not make provision for this within the Adjustments Appropriation?

Secondly, in the Adjustments Appropriation provision is made for an ex gratia allocation of R350 000 as a result of a labour dispute. The hon the Minister is aware that there are about 12 members of the Defence Force who have a pension problem similar to Project Dyson a couple of years ago. Is this included in the budget? If not, why not, and what is the hon the Minister going to do about it?

The MINISTER OF DEFENCE: Chairperson, firstly I would like to say that it is true that we have had problems in the past, but the position is that the air force is currently engaged in a programme that is gradually moving towards a solution. We are currently training the younger people in the air force, the navy, and so forth. That programme will resolve these problems in a few years’ time. Unfortunately, one cannot simply have trained people within a year. It does not matter what we would like, it takes time, and one has to work with time. I am very optimistic and I trust that at this stage we are on our way to solving these problems.

With regard to the whole issue of the pension problem, we took the matter to the Cabinet long ago, and I have to say the National Treasury is at present dealing with the legislation. We are simply not in a position to move without that legislation. Hon members themselves, in committees and so forth, will have to assist in getting this legislation implemented. The Minister concerned is here and he has assured me that they have almost finalised the legislation. [Interjections.] Yes, that is what he told me. [Laughter.] In any event, regarding all those people who are waiting for their pensions, the Cabinet has already taken a decision about that. The budget, to my knowledge, is available, and it is only a matter of the legislation that is still pending in the pipeline. [Applause.]]

Mr D M DLALI: Chairperson, is it correct that the Department of Defence has been able to deal extensively with its present mandate, inter alia the deployment of our soldiers outside the Republic for peacekeeping under UN resolutions in the Congo and Burundi and the participation of our soldiers in the security of the World Summit on Sustainable Development, and has also been able to ensure soldier preparedness? We congratulate the Department of Defence on the work it has done so far.

The MINISTER OF DEFENCE: Chairperson, it is quite correct to say that there is no audit obligation that the National Defence Force has not dealt with or is not able to deal with at this time.

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! If I could just prevail on the Whips please to assist. I think the Government benches are the biggest offenders. [Interjections.] Would you come to order, please, so that the Minister can make a proper reply. [Interjections.] Seriously, I request the Whips please to assist in this matter. The hon the Minister may proceed.

The MINISTER OF DEFENCE: The point I was making is that from the point of view of our standing obligations, the National Defence Force has been able to deal with, and is capable of continuing to deal with, all of them, over and above those have been the obligations that have been ordered as a result of the extensive work that my colleague the Minister of Foreign Affairs has been doing under the leadership of the President and so on. With regard to those as well, the National Defence Force has been able to respond competently and efficiently and effectively, and we are very cautious, in taking on obligations, not to stretch the National Defence Force to breaking point. So we are satisfied that there is nothing foreseeable that can arise that the National Defence Force cannot deal with.

Vote No 23 - Justice and Constitutional Development:

Mrs S M CAMERER: Chairperson, as the Minister for Justice and Constitutional Development is aware, fraud and theft have been and are being committed in his department on a massive scale, and the Auditor- General wishes to pursue his forensic audit and investigation.

On 11 September, in reply to my question, the Minister told Parliament that his department had asked the National Treasury for R20 million a year for three years for this purpose. On 23 October the Minister of Finance, in reply to my question, denied that such a request had been made. There is no sign of an allocation for this purpose in the adjusted estimates, in particular under unforeseeable and unavoidable expenditure, although clearly it was unforeseeable that the Auditor-General would uncover fraud and theft on this scale and surely it is unavoidable that this investigation should proceed. Both Ministers are in the House today, so the question is: Which Minister is correct, and why does this allocation not appear?

The MINISTER FOR JUSTICE AND CONSTITUTIONAL DEVELOPMENT: Chairperson, both Ministers are correct. The issue is going to be catered for next year. We have agreed, as colleagues, that it does require attention and we will indeed provide for it next year.

Mr M A MZIZI: Chairperson, looking at the programmes that need adjustment, I realise that the judges’ salaries do have adjustments and we welcome that. There are also adjustments in Programme 2 - Administration of Courts, and we welcome that too. But what makes me pull up short and tickles my nose is two items regarding courts. Have the salaries of magistrates been taken into account in the adjustments? The other issue, when we deal with courts, is the security of courts. Has this also been taken into account? This issue of court security worries the magistrates and other presiding officers, as they are afraid to preside in our courts. We would like to know whether, in making the adjustments, these matters have been taken into account.

The MINISTER FOR JUSTICE AND CONSTITUTIONAL DEVELOPMENT: Chairperson, with regard to the first question, I am sure the hon member has looked carefully at page 125 of this book that the Treasury kindly provided us with. There is indeed an amount of R62,3 million which was allocated to the department to cover the cost of the higher-than-expected salary increases. The hon member will find that the increases in the salaries of magistrates are catered for under that item.

The issue of the security of courts, incidentally, was discussed this morning by the Cabinet committee dealing with justice, peace and security, etc. It is an issue that is receiving the constant attention of our cluster as well as Government. We are already making a whole host of interventions. I would be the last one to deny that they may not prove to be adequate, but certainly the issue of the security of courts, as well as of all personnel working in courts, is receiving our attention.

Mr S N SWART: Chairperson, the explanatory note to Programme 5 - Auxiliary and Associated Services on page 125 indicates that the amount of R12 million reflects a reduction in the amount appropriated to the National Crime Prevention Strategy. In a country with high crime levels, can we afford this reduction of funds spent on the National Crime Prevention Strategy? What was the motivation for this reduction?

The MINISTER FOR JUSTICE AND CONSTITUTIONAL DEVELOPMENT: Chairperson, if the hon member were to read a little further, beyond the comma there, he would see a reference to these funds being shifted to administration. It is not as though the reduction is to be implemented because we have no use for the money. We look at the figures and at better ways of managing whatever we are doing, and then we shift the money.

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon members, I have been requested to go back to the Correctional Services Vote because a member did not hear me announcing it. With the leave of the House, may I do so? [Interjections.]

HON MEMBERS: No!

The MINISTER FOR JUSTICE AND CONSTITUTIONAL DEVELOPMENT: Chairperson, are we through with Vote 23?

The DEPUTY CHAIRPERSON OF COMMITTEES: Yes, we are through with Justice and Constitutional Development. [Interjections.]

Vote No 20 - Correctional Services:

Mr J N MASHIMBYE: Chairperson, the members do agree. [Interjections.] I say so.

Will the Minister of Correctional Services, in the coming year, prioritise the process of reviewing and reinforcing the White Paper on Correctional Services? It is my view that doing so would enable the Department of Correctional Services to carry on with its business confidently, knowing that there is a policy in place.

The MINISTER OF CORRECTIONAL SERVICES: Mr Chairperson, the hon member, who is the chairperson of the Portfolio Committee on Correctional Services, guessed correctly that I wanted to say something about this, so I will answer him.

First let me say that we will, in fact, give priority to the White Paper process next year, for several reasons. Firstly, I think it should be noted that Correctional Services is evolving. The concept of corrections presupposes just that. Together with Justice, the SAPS and Intelligence, Correctional Services is central to the criminal justice system. Therefore, by implication and practice, it is part of the National Crime Prevention Strategy. What we are seeking to do with the White Paper is to locate that process properly.

Secondly, I think the public have so far refused to view Correctional Services or the prisons as just concrete archipelagos of mere incarceration. They have asked us to move on to establish and focus on rehabilitation and restorative justice. They have asked us to fight the scourge of HIV and Aids in prisons. The public have requested us to deal progressively with the question of women and children and infants in prisons, with the issue of the disabled in prisons and also with the issue of education and training and of prison labour - simply to reconcile prison labour with the external labour market forces and also the trade unions, as one member is beginning to bark behind me. [Interjections.]

Thirdly - and this is my last point - Correctional Services is also viewed as an integral part of governance. To contribute towards good governance we have to put in place anticorruption measures which also include the process which is going ahead presided over by Justice Jali in order to assist in good governance. The process of the White Paper next year will assist us in relocating Correctional Services properly in the whole process of governance.

Vote No 24 - Safety and Security:

Adv P S SWART: Chairperson, through you to the Minister, visiting most of the presidential police stations identified by President Mbeki in his state of the nation address 20 months ago, we found no discernible improvements nor any real difference from the average police station, being understaffed and underresourced. The Minister should invite the President to visit these police stations, where he can explain to the hard-working, dedicated members what happened to his undertakings.

I want to ask the Minister if the fact that crime increased in eight of the 14 presidential station areas in the past financial year, combined with the fact that there are, in most instances, now fewer detectives at these stations than before the President’s promise, was unforeseeable. If so, does he intend to use some of the additional almost R85 million allocated for detective services to rectify this unacceptable situation?

The MINISTER OF SAFETY AND SECURITY: Chairperson, firstly I want to explain what happens in terms of the resources that we have. I think people should appreciate that there is a lot of strategic thinking now within the SA Police Service. What happened immediately the President identified these particular station areas was that the police sat down and did an assessment of the sociology of the affected areas that included the types of crime, the regularity of occurrence of those crimes and many other things relevant thereto. In the end, the resources, both human and material, that were deployed had to be equal to the needs of the given areas. This is what we did.

In June this year, during my speech on my Vote, I did indicate to this House what had happened up to that point. I want to reiterate this so that we can understand what has happened. It does not help to go into any area and not understand this background, because surveys that people do will not respond to the issues that we are dealing with.

I just want to pick up on a few examples of what has happened. Let us take the Thabong station, for instance. In Thabong, at the point when the President announced this project, there were 145 police officials, because we had determined that that was the number that was necessary to deal with the situation there. But afterwards I told this House in June that this had risen to 198 police officials. They had at that point 30 vehicles, but I said we had added eight vehicles. It is, as I say, about human as well as material resources.

We could go through a number of these stations. I know that an issue has arisen with respect to Mitchells Plain. It is true that we had wanted a contingent of 477 police officials for Mitchells Plain. To date we only have 300, but let me indicate to hon members what is going to be happening. There are 153 new functional entry-level recruits and 49 additional detectives who have already been identified and are being trained for deployment in Mitchells Plain.

It is not correct to say that we are not responding to these issues. I could go through all the presidential stations, which I did in June. The record is there. Hon members will see the additions we made to human and material resources. We have supplied all of these stations with computers, which are necessary, for instance, in terms of the control and monitoring of case dockets. In other words it is incorrect to say that nothing has happened. I want to admit that there are areas where there are still some problems. I have already referred here to the issue at Mitchells Plain. But there are more police areas where an advance has been made.

Ms ANNALIZÉ VAN WYK: Chairperson, does the amount appropriated include a request by you for an additional amount for training in the light of the increased training requirements that the new SAPS recruits bring with them? What is the amount and is the Minister satisfied that it is sufficient?

The MINISTER OF SAFETY AND SECURITY: Chairperson, there can never be adequate funds for the work that we do, but we are satisfied that the amount we have been given is going to give us the mobility we require to deal with crime in this country.

There is a significant allocation for purposes of training. We should remember that there is continuous training that is designed to equip our people to deal with the changes that are happening also with regard to the commission of crime in this country. There is another level of training for specific kinds of police officials. These are people whom we are going to be deploying in fields such as sector policing. Some of these are also going to be deployed in areas where we do not have such a deployment.

There is something new that we are going to be doing, but we are going to come before this House to report on this matter. Already we are beginning to put in place the initial stages of this. We require a new division in the police which is going to be responsible for the security and protection, in the main, of national key points. This function is being handled in co-operation with a number of other departments, but we are going to establish this particular division.

Some of these funds therefore relate to these areas where we are going to be training people for specific functions which, at the moment, of course, are different from the regular training with respect to the upgrading of our human resources so that we can attend to issues of crime. Vote No 25 - Agriculture:

Dr A I VAN NIEKERK: Chairperson, I would like to ask the Deputy Minister if any requests have been made to Treasury for additional funds for the Agricultural Research Council in the light of the fact that 243 of the staff have resigned and three directors have left the council because twice in the past three years they did not receive any salary increases.

I am also asking this in the light of the fact that Government’s one hand does not always know what the other hand is doing. On one hand the President puts agricultural science in Africa high on the Nepad development agenda, but in the meantime the personnel and the expertise are leaving the department. On the other hand the Deputy President says that he will help Zimbabwe in terms of agriculture and farm labourers who are in difficulties, but in the meantime the personnel are resigning by the dozen. Something has to be done, and I ask this purely because it is an important asset. What is happening there? The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Chairperson, we completely agree - and the President has given the lead on this matter - regarding the importance of agricultural research, but I think for the real answer to the question of the hon Van Niekerk we must go and look at the Main Budget, where the growth in the Agricultural Research Council’s budget is indicated quite clearly.

Let me give these details to the hon member. He knows that from R302 million in 1998 there was a decline in the budget for two years, but according to the Medium-Term Expenditure Framework it is R275 million for 2002-03, which is already more than the year before, climbing in the following year to R284 million and in 2004-05 to R303 million. In other words, the matter is being rectified and that instruction regarding the importance of agricultural research is being followed.

The hon member must just remember that the ARC budget is part of the budget of the Department of Arts, Culture, Science and Technology. Once that department gets the money in its budget, a fixed amount is transferred to Agriculture. I can assure the hon member that the Ministry for Agriculture and Land Affairs, as well as the Department of Agriculture, is continuously agitating for growth in the budget of the Agricultural Research Council.

Mnr S ABRAM: Voorsitter, dit is droog in die mielieproduserende streke van ons land. Met die El Niño-verskynsel lyk dit vir my dat droogte ons in die gesig staar, en daar gaan moeilike tye voorlê. (Translation of Afrikaans paragraph follows.)

[Mr S ABRAM: Chairperson, it is dry in the maize-producing regions of our country. With the El Niño phenomenon it seems to me that we are facing a drought, and that there are difficult times ahead.]

According to the adjustments estimate an additional R10,7 million is going towards expected salary increases and R4,14 million is going towards surveillance of foot-and-mouth disease. We are now free of foot-and-mouth, and I see that the hon the Deputy Minister of Foreign Affairs is smiling. He has been helping us get contracts overseas, which we appreciate. We need to spend that kind of money.

But there is something I need to find out. With the spectre of a drought looming, Programmes 2, 5 and 6 are extremely important programmes. The sort of funding that we have available in the adjustments estimate is only going to cover peripheral issues. When the real issues hit us, do we have sufficient funding to assist these three programmes to survive?

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Yes, Chairperson, I completely agree with the hon member that those are the important ones, but we are not doing nothing about them. Let us just take one example of what he is referring to, the question of foot-and-mouth controls. We are making additional funds available to prevent the disease from breaking out in South Africa again. I must say that the most serious concern at the moment is on the border between South Africa and Zimbabwe. There is information now of an outbreak of foot-and-mouth 8 km from the border. We are currently taking the strictest measures to prevent it coming over that border. I will speak directly to the member about what we are doing; it is quite something.

But the outbreak is 8 km from the border. If it crossed the border, it would cost a lot more than the additional R3,5 million that we are going to put in now. We have to look at that border fence, because it is very difficult to keep it in place. Our officials are working overtime, through the night, to make certain that no cattle get over that border. In fact, recently we paid out R1 million extra in overtime.

I am just as concerned about the effect the El Niño phenomenon will have on maize production in particular, and also on other small grains. Our production of maize, as the basic staple food of South Africa, must be such as to enable us to feed our people and export some as well. I think it is going well at the moment, because the farmers have been able to pay a lot of their debts during the present good season. We hope that that will continue into the next season. The food support that is going to come through the Department of Social Development is almost R400 million, as was referred to earlier today.

I thank the hon member for the question, and I will talk to him later about the foot-and-mouth issue.

Vote No 27 - Environmental Affairs and Tourism:

Mrs L R MBUYAZI: Chairperson, we understand that, owing to unforeseen and unavoidable circumstances, the budget of the Johannesburg World Summit Company, Jowsco, incurred expenses in excess of R157,6 million. My question is: Are there any other countries that were supposed also to foot the bill, but did not fulfil their obligations? I also want to know what will happen to the equipment that was bought by Jowsco, for example their computers, since the department had to incur these expenses.

Furthermore, I want to know about the poverty relief projects which previously fell under tourism and are now being transferred to biodiversity and heritage, amounting to R20 million. My problem is this: Will there be any capacity-building for those who will now handle these poverty relief funds, since people need them most? The issue of poverty alleviation was debated in this House and now this problem has been transferred to biodiversity and heritage. What will happen now?

The MINISTER OF ENVIRONMENTAL AFFAIRS AND TOURISM: Chairperson, on the first question, we had what is regarded internationally, and even in our own country, as a rather unusual situation, with a number of countries donating money towards the financing of the World Summit on Sustainable Development. I should say to the hon member that there was no obligation on any other country to assist with the funding of the World Summit. The obligation rests solely on the South African Government and on South Africa as such.

Nonetheless we did make an appeal to a number of countries to assist in contributing, and I am pleased to report to this House that we have received from various countries a total amount of R109 million towards the funding of the World Summit on Sustainable Development quite directly. In addition to that, a number of countries spent quite large sums of money putting up exhibitions at the Ubuntu Village and the Water Dome and engaging in various other side events that took place in and around Johannesburg during the World Summit.

The overspending is not due to a lack of response by donor countries, I must say. The overspending is simply a case of it not being possible, on a number of items, to do an exact, detailed calculation at the time when we budgeted for the World Summit on Sustainable Development, taking into account that an exercise of this size was really outside the experience of anybody in South Africa. One of the areas that we had to ensure we catered for adequately was information technology. We had to make use of vast information technology resources in order to ensure that the thousands of journalists who were here from all around the world would be able to transmit both electronic material and their stories quickly all around the world. We also had to ensure that the entire registration system for the tens of thousands of people who participated in the summit events took place in a proper manner.

As far as equipment is concerned, much of the equipment that was procured for the summit will go into the existing use of line function departments, security departments, etc. As far as the hon member’s specific question about computer equipment is concerned, most of the computer hardware was donated by Hewlett-Packard. Computers worth between R30 million and R40 million were donated by Hewlett-Packard. That is one of the biggest private- sector donations that we received. The agreement that we have with Hewlett- Packard is that the equipment will now go directly into communities, schools, etc.

The hon member will know that at the World Summit on Sustainable Development, the CEO of Hewlett-Packard came down from the US and, together with President Mbeki, launched a new community global e-community project. A community in the Limpopo province will be targeted as one of the three communities around the world for which there will be very detailed information technology training taking place, so that will go into use there.

We have not as yet closed off all of the books of the Johannesburg World Summit Company, and so some of the other equipment at this stage has not yet been allocated. This will be done, hopefully, by the end of this year.

As far as the shifting of the poverty relief funds is concerned, the hon member will know that the Department of Environmental Affairs and Tourism administers quite a large chunk of Government’s poverty relief funds. These are generally used in two areas: in the area of tourism and in the area of biodiversity and the environment in general.

All of the poverty relief funds, apart from creating direct jobs, are generally aimed at ensuring, at the same time, that a certain amount of capacity-building is done in terms of training, so each project has a training component attached to it. Each of those projects also generally leaves some or other sort of value. For example, the tourism projects would be aimed at improving the tourism product that we have in this country, so they would include building walking trails, putting up signage and improving existing facilities at tourism spots. It is not just poverty relief for the sake of it, but poverty relief, in fact, which increases the overall asset base of the country.

As far as biodiversity and heritage and environment generally are concerned, here again this would involve rehabilitation work, the protection of the environment, biodiversity, a lot of work that goes into the parks as such and again a training component. An amount of R20 million has been shifted - bear in mind that this is over all nine provinces - mainly on the basis of the nature of the applications that we get.

The hon member must remember that the poverty relief projects are not all designed by national Government. We make a call on local governments, provinces and also local communities and nongovernmental organisations to submit proposals for poverty relief projects in a prescribed format. These proposals are scrutinised and shortlisted, and then sent to the provinces for the provinces to approve. Legally we do not need to consult the provinces, but we have an agreement with the provinces that they will approve projects for the provinces. Once they are approved, then we give the go-ahead at national Government level. It so happens that this adjustment is necessary in order to cater for the nature of the projects that have come in.

Vote No 29 - Land Affairs:

Mr S ABRAM: Chairperson, just a quick question. I note that R50 million is being sought for restitution and land reform under Programmes 4 and 5. Is the hon the Deputy Minister satisfied that we will be able to carry out these projects during the course of this financial year? Does he feel that it is sufficient or does he feel that it falls short?

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Chairperson, if the hon member is asking me whether I feel the amount is sufficient, let me tell him what we asked for. He should first remember that under the roll- overs there are three projects that are in midair at the moment. We asked for a roll-over of R41 million just for those three projects. So that is R40 million that is actually part of the present allocation.

But under ``unforeseeable and unavoidable expenditure’’ we requested R160 million and got R50 million, but that is the kind of control that is understandable from a macroeconomic perspective. As the hon member knows, we have all kinds of very good plans. It is going very well with restitution at the moment. We are over the halfway mark. We won the case against the Transvaal Agricultural Union, so the reaction of that party is out. [Interjections.]

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

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: We are expecting, regarding urban claims, a lot from the standard settlement offers, but this will cost more money. We will just see how far we can go. The Treasury was actually quite generous with this R50 million, which will be split between land reform and restitution as well.

Mnr C AUCAMP: Voorsitter, my vraag gaan oor staatsgrond en die hervorming en oordrag daarvan. Slegs 140 000 hektaar van ‘n beplande 1,4 miljoen is gerapporteer as oorgedra, ek dink dit was in Maartmaand vanjaar - slegs 0,5% persent van die 25 miljoen hektaar staatsgrond en slegs 19 400 ha oor drie en ‘n half jaar. Ons weet dit kos geld om hierdie grond oor te dra vir ontwikkeling. Beoog die agb Adjunkminister om hierdie oordrag van staatsgrond te bespoedig en dat hy enigsins in die res van hierdie termyn wat oorbly hierdie bespoediging sal kan uitvoer? (Translation of Afrikaans paragraph follows.)

[Mr C AUCAMP: Chairperson, my question deals with state land and its reform and transfer. Only 140 000 ha of a planned 1,4 million hectares has been reported as having been transferred, I think it was in March of this year - only 0,5% of the 25 million hectares of state land and only 19 400 ha in three and a half years. We know it costs money to transfer this land for development. Does the hon the Deputy Minister envisage speeding up this transfer of state land and that he will in any way, in the remaining part of this period, be able to implement this acceleration process?]

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Chairperson, I do not think the hon member’s question about the transfer of state land really takes into account land that is being leased out. The leasing question is creating a problem for the timing of this matter. We are rolling over R5,6 million, if I remember correctly, for the transfer of state land. But that is the area in which we are going to deliver quite well in the next year.

The hon member must also remember that this is under delegation - in other words, the work is actually being done in the provinces, which are nearer to where the state land is situated, so a co-operative model determines the mechanics that we use in this regard. We are planning to roll it out far better, because that is the first instance of delivery in land reform.

Mr L M GREEN: Chairperson, my question relates to restitution and the additional amount of just over R68 million in the Adjustments Appropriation. My question refers particularly to claims from the people who lived in District Six. During one’s constituency visits one often comes across people complaining that they are not being paid out, that the state is dragging its feet with regard to paying out and so on - not so much from those people who rented property, but particularly from those people who owned their own homes in District Six.

There is a process, and we are glad about that. They are starting to build and to finalise this programme. What I would like to ask the Deputy Minister is: To what extent is any of this funding involved with District Six, or is he quite happy and quite sure that the people who put in claims will have their claims met? The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Chairperson, that is exactly what I said in my previous answer: that, if we really say what our commitments are, we are talking about R160 million which we need now, so it has to be spread out.

What I must say is that the hon member must take into account that District Six is a really historical claim, so the payments will come on account of the validation of those claims. In most of the urban areas, the standard settlement is promising a lot, although that would not be the case in a situation like that of District Six.

The standard settlement offer will only apply to urban areas where people are already settled. Claimants have indicated in urban areas that they do not wish to experience the pain of moving again from where they were removed to and settled over many years. That is part of the problem, so the standard procedure can really speed up the urban claims. But as for the specific details of District Six, if the hon member wants to talk to me about that or address a query to the department, I will handle it with pleasure.

Vote No 32 - Transport:

Mr J P CRONIN: Chairperson, I listened very carefully to the Minister of Finance … [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Order! Hon members, I will have to call you by name. I have tried to restrain myself from doing so, but if you are not going to come to order, hon Borman, I will have to do that. I understand that hon members have had a long day, but we need to try to advance the process. The hon member may proceed.

Mr J P CRONIN: Chairperson, I think that the Minister of Finance will be taking the question. The public transport in Tokyo is very good, which is why the weather in Tokyo is an irrelevant, or largely irrelevant, issue.

I listened carefully to his responses in the debate earlier in regard to the two predictable unforeseeables in this Transport budget, namely the bus subsidy issue and the commuter rail issue, and I am sure the other parties will also be raising this. The Minister’s responses basically said, in the case of the bus subsidies, that the problem there is that there are still some lifetime contracts. We have passed legislation to get rid of lifetime contracts for all the obvious reasons, but obviously there is slowness in implementing it. That is something that we need to look at. My concern is that we must not make the assumption that the subsidisation of commuter buses will necessarily go down in terms of gross amounts if we move away from lifetime contracts. It should become a lot more rational, but the sum might not go down, and so the question is: Is that also an assumption that is being made in Treasury?

And then, related to commuter rail, I also agree with the response the Minister gave that part of the problem is that we have a bit of an organisational spaghetti, that the funding goes to the SA Rail Commuter Corporation and then, in a complicated and probably duplicating way, gets passed on to Metrorail. This is something that we have to sort out so that we do not keep coming back to this problem year after year.

However, our belief, as the ANC, is that it is not just this institutional arrangement that is contributing to problems. There is serious underfunding, basically, of commuter rail, and we need to have not just an adjustment annually, but a paradigm shift in terms of commuter rail. I would like to know whether the Minister agrees that this is a possibility that needs to be looked at.

The MINISTER OF FINANCE: Chairperson, the short answer is, yes. Part of the reason is that the entire system needs to be overhauled, and resolving that requires that the institutional arrangement between Metrorail and the SA Rail Commuter Corporation should be resolved.

Members will be aware, I am sure, of the extensions of the lines in respect of both Khayelitsha and the new loop facility in Umtata. Rolling out that also requires that attention be given both there and in respect of existing commuter rail facilities dealing with issues such as signalling and other facilities that provide high levels of safety for commuter rail. That expenditure is going to be big.

In addition, there is money on the budget for capital stock, especially in respect of rolling stock, and so changes will come. But supporting that in terms of the present arrangement will also require that additional money be made available to ensure that we have functional commuter rail facilities in all cities.

Mr S B FARROW: Chairperson, I think the hon Cronin has stolen my thunder to a degree, but would it not then be important that the Minister actually start moving these bus subsidies into the hands of the commuters, so they actually get the subsidy and not the buses at the end of the day?

Let me just talk about the whole budget and the lack of funding in it. Needless to say, the R488,6 million or so additional funding that was given is insufficient, when one considers the funding needs for taxis and buses, the rail subsidies and the capital needs for both rail and road, which I will emphasise. It has been estimated that there are backlogs to the tune of about R65 billion.

Would the Minister consider - and this as a ``tip for Trevor’’ - channelling funds for this purpose into a dedicated road fund from the fuel levy, which is ostensibly for that purpose, and apportioning them back to the provinces as conditional grants? Would he agree that, in the light of some of the 200 000 km of rural roads identified nationwide, and the need for new roads, funding can no longer be continuously supported through the extension of toll roads, which is seen by many road users as double taxation?

The MINISTER OF FINANCE: Chairperson, in respect of a road fund, part of the difficulty with dedicated funding is the fragmentation of the fiscus. If departments that could fund themselves through dedicated charges did that on a continuous basis, there would be no resources left to fund education, health and so on, and the poorest would always come off worst in those kinds of situations. There is an assumed, built-in allowance in fuel prices to take account of this, but it is dealt with in such a manner that the resource is entirely fundable.

In respect of the extent of backlogs, I think there will always be differences. The Southern African Bitumen Association - some call it the ``bitching men’s association’’ - would have their own views about these issues. In other respects I think that our road network is reasonable, but the breakdown, I think, comes more in respect of local government and especially in rural areas. Those links are probably the most underserviced links, and so looking at a fund that deals with national and provincial government to the exclusion of local government is probably quite disastrous for the poorest of our people, who reside in rural areas.

Clearly there is a set of issues that we have to deal with. Part of resolving especially the challenges in respect of both primary and secondary roads is to effect substantial improvements in freight rail, because that is where the difficulties are coming in. We have to replace our roads too frequently because of the loads on axles travelling on our roads, and that becomes a big challenge. So improved management and improved flexibility in freight rail are an important part of resolving the challenge in financing roads going forward.

But let me repeat what I said earlier, namely that the Department of Transport, in collaboration with a number of other departments, is working on a policy framework for road transport going forward, and I think that they will be in a position, early in the new year, to place that policy framework before Parliament for consideration. Then we will have clarity, and that clarity must deal with a combination of road freight, commuter buses and, of course, taxis, and the intermodal utilisation of transport to ensure that we can maximise efficiencies, because we should say that there probably is a high degree of inefficiency within the present subsidy arrangements as well. Vote No 33 - Water Affairs and Forestry:

Mr S SIMMONS: Chairperson, hon Minister, are there any additional funds for community water services envisaged? It appears from the Adjustments Appropriation Bill that no provision has been made for these services. Is it possible to transfer funds within the department’s budget through virement approval to address the serious concerns of the following municipalities?

Many villages in the Nkangala district municipality in Mpumalanga had been without water for three to four weeks at the time of the portfolio committee’s visit to the area in April 2002. When the committee sat to consider the matter very seriously and approve the reports, it was reported that the same villages were still without water, up to six months later. The Hamulima municipality in the Limpopo province reported that it had insufficient underground water and that boreholes did not fulfil the water demand. The El Niño drought will aggravate the situation. The hon the Minister will agree that the situation in the said two municipalities is serious, hence the question.

The MINISTER OF WATER AFFAIRS AND FORESTRY: Yes, Chairperson, I wholeheartedly agree. There is no adjustment, however. We do have R1,2 billion for the community water programme.

In respect of the two areas the hon member referred to, the Nkangala area is in the former KwaNdebele, a vast area of 5 000 square kilometres and 750 000 people. The problem there is that the water board in Nkangala has a single system. As the hon member probably knows from his visit, there is a single pipeline serving hundreds of villages. The problem with this is that those who benefit earlier from that pipeline are extracting large amounts of water. In Kwaggafontein people are consuming as much as 100 litres per day each. Further down the line, then, there is not sufficient water.

In the height of summer, in hot weather, people higher up that pipeline use excessive amounts of water and those lower down that pipeline are suffering, as the hon member has seen. I have been discussing this with the Nkangala municipality and with the water board, and we even had the Human Rights Commission coming on board.

The only way in which we can improve matters in the short term is through greater discipline and co-operation from the villages so that those who benefit earlier do not do so at the expense of those who receive water later. We are dealing with that from an integrated management point of view, tackling such problems as the illegal connections which abound in the area.

The longer term solution is a question of two years, and that involves improving the system. We are dealing with that. The Human Rights Commission has, in fact, said that it is satisfied with the way we are handling the issue. That is according to a letter I received about two months ago.

The Limpopo area that the hon member referred to - the municipality is in the Tshitapa area - is an area with very big problems. Fortunately, there is the groundwater supply. It is insufficient. We are in the process of building the Nondoni Dam. It will be completed within two to three years. A pipeline from Nondoni will come to the rescue of many, many thousands - hundreds of thousands - of people in that part of Limpopo.

If the El Niño effect is as acute as the hon member indicated earlier, we will have to take emergency measures. But I beg to differ with the hon member. My reading of El Niño is that it is coming, but the predictions are that it is not expected to be severe. If it is, we will deal with it as an emergency, as my hon predecessor did at the time of the previous El Niño occurrence.

Regarding the constitutional rights issue, I have reported on the Human Rights Commission. They accept that Government is doing everything it can in the reasonable sense and in terms of the limited amount of funding which the hon the Minister of Finance has to dole out to all these departments. We are doing our best and with the R1,2 billion this year and in coming years, we are really getting there. By 2008 every single South African will be receiving clean, safe water. [Applause.]

Vote No 35 - Science and Technology:

Dr A I VAN NIEKERK: Chairperson, I would like to ask the Minister a question. If I heard the Deputy Minister for Agriculture and Land Affairs correctly when I asked him a question on agricultural research, he said that he would leave no stone unturned to increase the budget of the Agricultural Research Council. My question to this Minister, who deals with the Agricultural Research Council and its budget, is therefore: Did the Department of Agriculture request additional funds? If they did, how much? Or did the Agricultural Research Council request any funds to get them out of their tremendous predicament?

The DEPUTY MINISTER OF ARTS, CULTURE, SCIENCE AND TECHNOLOGY: Chairperson, I will answer the question in broad terms. Firstly, it has to be said that science councils will always bid for more. Obviously there has to be a consideration of the whole collection of institutions when it comes to funding. Let me just say that we have received a budget for research and development and the ARC is an interested party in that budget. We are aware of the needs of the science councils and we are satisfied that the budget for now is adequate. There will always be a need for more. The Minister of Finance will give us the details.

The MINISTER OF FINANCE: Chairperson, part of the difficulty in the ARC is that the liabilities are largely in respect of pensions and the leave pay of people who have been around for a long time. We dealt with that in respect of some of the other science councils earlier. The problem has not gone away in the ARC and so, from the perspective of Treasury, there is still too large a transfer into those nonproductive costs, if I may put it like that, and that is the issue to be resolved. We are working with the Ministry for Agriculture and Land Affairs to develop a model that will ensure that the money going to the ARC actually assists agricultural research and not the pension and medical aid liabilities of people who have left long ago. [Interjections.]

Discussion on Votes and Schedule concluded.

Vote No 1 - The Presidency - put and agreed to.

Votes Nos 2 to 14 put.

Mr D H M GIBSON: Chairperson, on Vote No 2 - Parliament I would like to rise on a point of order. I would like to request the Chairperson to attempt to determine which hon members of this House persistently ignore rulings by the Speaker. There are certain members who, during the discussion of Vote No 2, again displayed blatantly sexist and racist behaviour towards one of the members of my party. We object to this, and I think all right-thinking hon members of this House will also object.

What makes it so serious from our point of view is that, on a number of occasions, the Speaker has requested people to abide by her rulings and has appealed to them not to be sexist and racist. But certain hon members of this House keep on showing their prejudices and treat one of my hon members in a blatantly sexist and racist way. I want to ask the Chair to determine who those hon members are and to deal with them accordingly so that the rest of the world knows that those people at least do not live up to the high principles which all of us should live up to.

The CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, if I may address you on the same question, we wish to submit that the issue that has been raised by the hon Chief Whip of the DP does not relate to the subject matter of this particular Vote and the manner in which it has been scheduled. If the matter has to be pursued, it must be pursued outside the issue at hand as it is disposed of before this particular House. We ask you for a ruling in accordance with that.

The CHAIRPERSON OF COMMITTEES: Hon Gibson, the concern raised is noted and will be taken up with the presiding officers, and we will find a solution to the problem. We will identify an appropriate structure in which this matter can be raised and discussed.

Mr D H M GIBSON: Chairperson, you started by putting Votes No 2-14. On Vote No 2 we would now like to divide in order to show what we think of the racist and sexist remarks of people from the other side. [Interjections.]

Vote No 2 - Parliament - put.

Division demanded.

The House divided:

AYES - 294 (ANC-236, IFP-17, New NP-24, UDM-10, ACDP-3, UCDP-2, MF-1, AEB- 1).

NOES - 33 (DP-31, FA-2).

Vote accordingly agreed to.

Vote No 3 - Foreign Affairs - put and agreed to. Vote No 4 - Home Affairs - put and agreed to.

Vote No 5 - Provincial and Local Government - put and agreed to.

Vote No 6 - Public Works - put and agreed to.

Vote No 7 - Government Communication and Information System - put and agreed to.

Arts, Culture, Science and Technology and Education) agreed to.

Vote No 8 - National Treasury - put and agreed to.

Vote No 9 - Public Enterprises - put and agreed to.

Vote No 10 - Public Service and Administration - put and agreed to.

Vote No 11 - Public Service Commission - put and agreed to.

Vote No 12- South African Management Development Institute - put and agreed to.

Vote No 13 - Statistics South Africa - put and agreed to.

Vote No 14 - Arts, Culture, Science and Technology - put and agreed to.

Vote No 15 - Education - put and agreed to.

Vote No 16 - Health - put.

Division demanded.

The House divided:

AYES - 296 (ANC-241, IFP-18, New NP-24, UDM-10, UCDP-2, MF-1).

NOES - 38 (DP-31, ACDP-4, FA-2, AEB-1).

Vote accordingly agreed to.

Vote No 17 - Housing - put and agreed to.

Vote No 18 - Social Development - put and agreed to.

Vote No 19 - Sport and Recreation South Africa - put.

Division demanded.

The House divided:

AYES - 300 (ANC-242, IFP-18, New NP-24, UDM-10, ACDP-3, UCDP-2, MF-1).

NOES - 34 (DP-31, FA-2, AEB-1).

Vote accordingly agreed to.

Vote No 20 - Correctional Services - put and agreed to.

Vote No 21 - Defence - put and agreed to.

Vote No 22 - Independent Complaints Directorate - put and agreed to.

Vote No 23 - Justice and Constitutional Development - put and agreed to.

Vote No 24 - Safety and Security - put.

Division demanded.

The House divided:

AYES - 301 (ANC-243, IFP-18, New NP-24, UDM-10, ACDP-3, UCDP-2, MF-1).

NOES - 34 (DP-31, FA-2, AEB-1).

Vote accordingly agreed to.

Vote No 25 - Agriculture - put and agreed to.

Vote No 26 - Communications - put and agreed to.

Vote No 27 - Environmental Affairs and Tourism - put and agreed to.

Vote No 28 - Labour - put and agreed to.

Vote No 29 - Land Affairs - put and agreed to.

Vote No 30 - Minerals and Energy - put and agreed to.

Vote No 31 - Trade and Industry - put and agreed to.

Vote No 32 - Transport - put.

Division demanded.

The House divided:

AYES - 303 (ANC-243, IFP-18, New NP-25, UDM-10, ACDP-3, UCDP-2, MF-1, AEB- 1).

NOES - 33 (DP-31, FA-2).

Vote accordingly agreed to.

Vote No 33 - Water Affairs and Forestry - put and agreed to.

Vote No 34 - Arts and Culture - put and agreed to.

Vote No 35 - Science and Technology - put and agreed to.

Schedule put and agreed to.

                   ADJUSTMENTS APPROPRIATION BILL

                       (Second Reading debate)

There was no debate.

Bill read a second time.

                     REVENUE LAWS AMENDMENT BILL

                       (First Reading debate)

Mrs R R JOEMAT: Chairperson, I see that there is a movement of people leaving the House while we are debating the Revenue Laws Amendment Bill. I want to remind them that the SA Revenue Service is the goose that lays the golden egg. If there are no resources coming from the Revenue Service one might get less in one’s budget.

The ANC supports the Bill before the House. [Interjections.]

The CHAIRPERSON OF COMMITTEES: Order, hon members! Order!

Mrs R R JOEMAT: Our ANC-led Government is the most significant player in the economy and, as a custodian of democratic values in society and of the economy, the Government has a key role to play in transforming the economy, reducing poverty, improving levels of productivity … [Interjections.]

The CHAIRPERSON OF COMMITTEES: Order! Hon member, can you please take your seat? Hon members, can you please be seated? Order! Hon members, can you please be seated?

Mrs R R JOEMAT: Thank you, Chairperson. To achieve these goals, we tabled the Bill to meet these challenges and to improve and consolidate our policies. Revenue collected must be returned to the people to ensure the socioeconomic transformation to address the imbalances in society.

There are lessons to be learnt from the process that preceded these proposals before us. Sars listened to the public, received questions from interested parties and numerous telephone calls, held meetings, and received letters from concerned taxpayers. Most of these changes are due to this process. But, as the saying goes, one cannot satisfy all of the people all of the time.

During the hearings our committee interacted with organisations from various business sectors and one common source of dissatisfaction was the time constraints placed upon them for comments, but they also understood the pressures Sars was under during the preparation of this Bill. During these hearings the National Treasury and Sars responded to the various points of concern raised by commentators on the Bill.

The proposals in this Bill are designed in favour of and will benefit taxpayers, be they companies or individuals. The proposed Bill deals with technical corrections but does not reverse prior tax policies. It covers five major items of legislation. The proposals in the Bill are the culmination of two years of fundamental tax reform and include changes to the rules governing company reorganisations and foreign currency transactions. The Bill also aims to adjust business travel allowances, removes taxation on diplomats’ foreign allowances and fringe benefits, and seeks to clamp down on the avoidance of transfer duties.

New rules on company mergers, acquisitions and takeovers will allow for a wider array of corporate combinations and measures to facilitate the tax- free movement of foreign assets into South Africa. However, foreign companies with South African branches can no longer transfer losses into a newly formed South African company. The amendment lifts the restrictions on banks and insurance companies, allowing them to reorganise without incurring tax liabilities.

The Bill also seeks to clarify inconsistencies concerning foreign currency deals. The foreign currency rules represent one of the most complex features in the Income Tax Act, because foreign currency gains and losses involve all forms of foreign-related transactions. The Bill eliminates all currency gains or losses for individuals for capital gains tax purposes from routine travel and private expenses and rationalises currency rules by including foreign-related income in one basic system. For companies all foreign-related income will be translated into rands at an average exchange rate for the taxable year.

Regarding transfer duties, the Bill aims to make individuals who have bought homes through a private company, trust or close corporation liable for the transfer duty. All these proposals put before us by the National Treasury and Sars will contribute to providing and improving a transparent and client-orientated service to ensure the optimum and equitable collection of revenue.

This Bill is the result of and enforces what the Minister outlined in his Budget Speech this year when he said:

There will be comprehensive tax policy reform to further advance the restructuring of the SA Revenue Service and collection processes.

With this Bill Government will be able to continue to provide tax relief for individuals and seek to improve further the effectiveness and efficiency of South African tax structures with a view to encouraging investment and reducing the cost of doing business in South Africa. To assist Sars it is important to encourage individuals and businesses in our constituencies to adhere to tax morality and compliance.

Finally, I am sure all members wish to thank the Minister and the Deputy Minister and the SA Revenue Service under the leadership of the director- general, Maria Ramos, and the commissioner, Mr Pravin Gordhan, for their commitment, hard work and dedication. The ANC supports the Bill. [Applause.]

Ms R TALJAARD: Chairperson, hon Minister and hon members, there are two important aspects in the Bill that need to be noted. Firstly, it purports to contain mere technical amendments or corrections to major tax policy changes introduced last year. However, this is not the case, as Saica point out in their submission. Whilst industry players were under the impresssion that this year would be one of consolidation, thereby contributing to tax certainty, the Bill before us introduces considerable change.

The Bill brings changes in the areas of the residence basis of taxation; corporate reorganisation rules to cater for mergers, acquisitions and restructuring; the taxation of capital profit liquidations; currency rules for capital gains tax; source rules for capital gains tax that were strangely omitted from the previous legislation; a number of other CGT- related provisions, including the alteration of the definition of controlled foreign entity'' tocontrolled foreign company’’ to restrict its scope; and a number of customs and excise amendments.

The changes before us add fuel to the fire of those who warned against the administrative complexity of capital gains tax in particular - a complexity that implies substantive change and resultant tax uncertainty. While these amendments do not alter policy, they are considerable changes and not mere technical corrections as the National Treasury maintains. Secondly, what ought to be clear is that those who opposed policy decisions on the introduction of capital gains tax and/or the change from a source to a residence basis of taxation will find it difficult to support legislation that tampers with the margins of complexity of what are considered to be bad tax policy choices for South Africa. In the National Treasury’s submission to the committee, they state that the proposed Bill is a normal consequence of major tax reform. The administrative complexity of the major tax reform South Africa is undertaking speaks clearly from the voluminous Bill we are considering today and its numerous retrospective provisions - always bad law, irrespective of whether it acts to the benefit of taxpayers, as it perpetuates tax uncertainty.

In addition, areas of uncertainty remain despite the changes in lieu of corporate reorganisations, as consequential amendments to the Uncertificated Securities Tax Act and Value-Added Tax Act will be required due to the alterations to the corporate reorganisation rules. These are new policy decisions that will have to wait until Budget time, clearly introducing further uncertainty. Saica raised the question of the iniquitous treatment of taxpayers due to retroactivity, and the DA supports Saica’s call for a constitutional provision prohibiting retroactive fiscal legislation.

Instead of merely having a debate on the Revenue Laws Amendment Bill before us, what is clearly required is a debate on tax policy. Debates on tax policy and the advisability of certain tax policy changes for an emerging market economy have all but vanished, being replaced by a technical correction process. Instead of having robust debates on tax policy choices in Parliament, Parliament is being relegated to a mere spectator with tax consultants, tax lawyers and accountants bickering over technical details, while the policy decisions themselves go nearly unchallenged. South Africa needs a robust debate, particularly on corporate tax reform, not mere technical tampering with the margins of new policy.

In considering whether to support or oppose the Bill, competing considerations arose. There is no doubt that the Bill seeks to bring at least greater clarity, particularly in crucial areas such as corporate reorganisations, residence-based taxation and CGT. There is no doubt that many provisions would act to the potential benefit of the taxpayer. However, this has to be seen against the broader background that the Bill before us furthers tax policy decisions that were not seen by the DA to be in the interests of the needs of an emerging market economy such as South Africa’s; policy decisions that bring great administrative complexity and resultant uncertainty, as this Bill attests; policy decisions that, in some areas, were not sufficiently thought through or articulated, but now result in undesirable retroactive provisions, with the biggest issue in this Bill being the question of effective dates.

For all these reasons, the DA cannot support this Bill. [Applause.]

Dr G G WOODS: Chairperson, this is one of the busier Revenue Laws Amendment Bills that we in the Portfolio Committee on Finance have had to deal with in recent years, with some 130 amending clauses being proposed across various tax Acts. However, after working through the very often technical detail of this Bill, it becomes apparent that there are not too many substantial issues. In fact, once one has lifted out those amendments which are there to deal with clumsy wording, unclear definitions and interpretive ambiguities, and those which are of a consequential nature, the whole exercise becomes considerably less daunting.

There are the usual number of amendments which are of an anti-avoidance type, which we have come to expect given the highly expert industry out there which exists chiefly to find loopholes and escape routes in our tax laws. Naturally, Treasury through Sars is always having to play catch-up through such legislative amendments as are contained in this Bill, and they do this as and when unacceptable avenues of avoidance and evasion are discovered. However, if we note that much of Sars’s growing tax collections and tax revenue is attributable to the plugging of these loopholes, it suggests to us that Sars is now actually catching up and closing the gap on the industry experts. I think for this Sars deserves all the accolades it receives.

There is, however, a side to this success story which I will briefly refer to. It concerns a fair number of public complaints regarding what they see as the commissioner having become overly aggressive in his approach to suspect actions by taxpayers. While there is some truth in this contention, I think we must reluctantly agree that this toughness has been necessary for the greater good - such was the state of tax morality and the resultant tax gap in the country. And what is pleasing is that now that the commissioner has captured the taxpayers’ attention and their grudging respect, he is beginning to address some important shortcomings which affect the public.

One is to give taxpayers better audience and constructive engagement in the case of disputes. Indeed, this Bill provides an example of this where it allows for easier appeal and objection to certain discretionary decisions made by the commissioner. We also see that Sars is beginning to be more serious in the customer service side of its operations, with dedicated service centres such as the one set up in the Western Cape quite recently, and other organisational changes that are being introduced to deal more effectively with the taxpaying public. This is to be welcomed. Returning to the Bill, there is some fine-tuning of the recently introduced residence-based tax laws. Let us acknowledge that Sars has defied the prophets of doom who predicted administrative chaos when these changes were introduced. In fact, the relatively few subsequent amendments in this Bill are an indication of how well the change-over was planned and managed.

Likewise, to some extent for capital gains tax, while we do have some ambivalence about this tax as a matter of economic common sense and notwithstanding the current difficulties some are experiencing in the unit trusts industry and property markets, we have to say that Sars has handled the introduction of capital gains tax quite well.

Perhaps the most significant amendments of the Bill are those concerning corporate restructuring rules. I think these caught some of us by surprise, not having fully appreciated the tax advantages that were being exploited through certain of these amalgamation transactions. During its hearing on the Bill the Portfolio Committee on Finance entertained strong representation from business concerning these changes, but we are happy that Sars has accommodated the more serious of their concerns. I believe that these amendments to the original amendments have resulted in appropriate tax arrangements.

The final amendment I will refer to concerns the Transfer Duty Act. This is welcome in so far as it closes a clear tax avoidance avenue. We will, however, have to monitor its effect on the property market and the way it might discourage property-owning trusts which otherwise would serve the interests of beneficiaries such as minors.

Dr P J RABIE: Chairperson, hon Minister, hon members, the Revenue Laws Amendment Bill effects amendments to a number of tax Acts. A number of changes in the present tax legislation are proposed. Entities holding residential property can currently avoid transfer duty through the use of companies and trusts. The Bill refines the definition of property, which is extended to cover an interest in a residential property or company, and an interest in a company where that company would be a residential property company if all subsidiary company assets were held by it. A contingent right to residential property is also explained in legal terms.

The recovery of transfer duties is also covered in the sense that the proposed amendments extend the liability to the public officer and seller, who will be jointly liable for the transfer duty should the buyer fail to pay. Any newly named beneficiary of a trust will also be liable for transfer duty.

On the whole I think this piece of legislation is user-friendly and I think we should give credit to Sars for finding these sorts of concepts which even make sense to lay people like myself. The residence basis of taxation and controlled foreign companies are further defined regarding technical corrections to refine wording, remove inconsistencies and provide clarity, with particular reference to the taxation of the income of residents from foreign sources. A number of currency rules are stipulated and the double taxation and taxation of foreign dividends and credits paid in respect of foreign source income are also defined. A very important amendment regarding the last-in- first-out rule in section 9E clarifies dividends that are deemed to come out if profits from the most recent year on a last-in-first-out basis are available for distribution. What is significant, however, is that individual taxpayers can choose to use profits from a different year if they select by way of a decision by management or shareholders.

Schedule 8 of this Bill introduces source rules for capital gains. These rules determine that the source of capital gain or loss on the sale of an immovable property will be determined to be where the immovable property is situated. The definition of immovable property in relation to an individual includes shares in a company when 80% or more of the net asset value of the company is attributable to immovable property and where the person holds 20% or more of the shares of that particular company. Regarding movable property, where the property is attributable to a permanent establishment, the source of the capital gain or loss on the sale of that property will be determined where the permanent establishment is situated.

South Africa is becoming an integral part of the global international economy. In the case of foreign equity instruments and assets, which are deemed to be sourced in the Republic, the full currency gain or loss determined on disposal will be taxable. In the Portfolio Committee on Finance it was clearly stated that expenditure of this nature will be translated into rands at the average exchange rate for the year during which the expenditure was incurred.

The amendment to section 9D of the Income Tax Act of 1962 includes a number of technical changes to provisions on controlled foreign entities that favour taxpayers. The New NP supports the Revenue Laws Amendment Bill.

Dr G W KOORNHOF: Mr Chairperson and hon members, much debate has already taken place regarding the process surrounding the Revenue Laws Amendment Bill. Two issues can be highlighted, namely the voluminous extent of the Bill and the period allowed for public comment. We commend the Minister of Finance’s statement that tax policy in South Africa needs a period of consolidation. Fewer amendments in next year’s Bill will achieve this envisaged consolidation and will bring more certainty into the system. We also welcome the commitment of Sars in this regard during our hearings.

Regarding the time allowed for public comment, we think that a clear 10-day period should be afforded to the public and practitioners to comment on the Bill once it has been released, as suggested by the SA Institute of Chartered Accountants. We believe that the Minister of Finance will have no problem with reference to the issues raised above, namely to bring tax certainty or consolidation and a fair period to comment on the Bill.

The Bill before the House contains three substantive issues, the first being transfer duty provisions. In future all residential properties, whether owned by a company or a trust, will pay transfer duty on transactions. We believe this is a fair and just proposal.

Secondly, the Bill provides for group structuring rules in all corporate reorganisation. The Bill is extended to include banks, insurance companies and similar financial institutions to reorganise in a tax-free manner.

Thirdly, the Bill contains foreign currency rules. The Bill translates all foreign income and loss into rands under a unified averaging regime. Taxpayers will be subjected to tax on their currency gains and losses.

These substantive issues are of great importance and we are in support of such amendments. The UDM agrees with the provisions in the Revenue Laws Amendment Bill and therefore supports the Bill.

Mr M M S LEKGORO: Chairperson and colleagues, the Revenue Laws Amendment Bill before the House deals with a broad range of issues and amends a variety of laws with revenue implications. It brings about changes to these laws with the aim of ensuring efficiency, aligning the different laws and bringing our revenue laws up to speed with current legal and legislative developments.

All the amendments in this Bill are of a technical and consequential nature. None are of a policy nature. So the point should be made and clarified that none of these amendments are bringing about any new policy. The amendments are intended to give effect to existing policies and these are the policies that have been adopted by this House in the recent past.

My colleagues have already dealt with a variety of issues in this Bill. I will focus on the skills development levy area and the value-added tax area. In the skills development levy area, it has become apparent to the collectors that some employers do not pay their skills development levies on time. This raises all sorts of complications for Government and those who are supposed to benefit from these levies. It is also important to note that nonpayment of these levies by employers deprives the public and the state of the desired benefit, whilst employers continue to enjoy undue benefits from this money illegally held by them.

It is therefore only reasonable and correct for the state to take appropriate steps to rectify this situation and force the employers to comply without introducing any measures that would result in a loss of time and energy. So the introduction of interest on moneys not paid at the time that they are required to be paid is quite reasonable. Simply put, those employers who do not pay their levies on time are holding in their possession moneys that the state and the public were supposed to be given. This situation is analogous to a situation in which the employers have borrowed money from the state and therefore have to pay interest on that money that they hold.

In the area of value-added tax, most of the amendments in this area are of a contextual nature as well and seek to give greater clarity to the intentions of the legislation. In some instances the amendments bring the provisions of the Act into line with the provisions of the Income Tax Act. The amendments to the VAT Act also bring the Act into line with current technological developments by enabling taxpayers to use electronic systems to file their taxes. This is enhanced by the possibility of the utilisation of the electronic signature for tax purposes.

This is a positive development, but could be abused by some unscrupulous characters. To prevent any such possibility the Bill introduces offences to enable the law to deal with such abuses. Today it is common knowledge that technology-driven systems in any environment bring about efficiency. They stop the unnecessary loss of time and paper proliferation to the benefit of both the service provider and the client. It is for this reason that we will support the Bill.

The Bill also clarifies the issue of which courts hold jurisdiction. The amendment to the VAT Act also deals with the issue of the jurisdiction of courts. It provides clarity on which court has the jurisdiction when an offence is committed under this particular Act. This is necessary to remove the lack of certainty with regard to this particular question. The amendment provides that the courts with jurisdiction in the area in which the person who committed the offence resides, or carries out his business, should be qualified to put the offender on trial. This is done with a view to complementing the existing legislation and not to limiting the jurisdiction provided for in other legislation.

The good news for taxpayers is also the fact that the VAT Act is being amended with a view to re-introducing VAT exemptions for defined categories of transactions. This will in actual fact bring relief to a number of taxpayers and also relieve the administration of handling a number of small taxes which would not provide any major benefit in the tax system. For these reasons the ANC supports the Bill. [Applause.]

Mr L M GREEN: Mr Chairperson, the Revenue Laws Amendment Bill provides a complex set of administrative competency requirements which Sars will have to manage. The cost in effort and time to manage capital gains tax and residence-based income tax may prove to be an administrative nightmare. South Africa is becoming a heavily tax-based country. The need to balance taxation versus skills needs to be spelt out in this regard.

Several organisations such as Sacob complained that they had less than 10 working days to comment on the Bill, and we would like to appeal to the department to allow for more time in future. However, we understand the need to have this Bill passed before we go into recess.

Most South Africans will pay their taxes and many, especially expatriates in foreign countries, will make contributions to assist with the growth of South Africa. However, when the taxation policy of Government becomes too restrictive on personal income gains, a defensive attitude prevails. Foreign-based income has its benefits when expatriates return to this country. However, if we persist with negative tax-based structures, the wealth structures of the country could be affected.

Concessions on foreign-earned money are what is the best alternative. We need to encourage a greater source of wealth-based individual capacity in our nation. People must be encouraged to return to invest their resources and their financial power in our country. South Africa is in need of skills, and those who work overseas will come back to reinvest in the growth of this country.

Skills are what South Africa needs most. Government taxation cannot supply the growth in skills as much and as quickly as those who are given the right set of concessions and incentive benefits to plough back into South Africa the gains they have acquired overseas.

The Revenue Laws Amendment Bill does not fully ensure sufficient tax flexibility and the ACDP cautions about the negative impact of such a strict tax home. However, with these words of caution the ACDP supports the amending Bill. [Time expired]

Miss S RAJBALLY: Chairperson, the Revenue Laws Amendment Bill appears to bring a number of Acts into line with the current structure of democracy and rule of law. It is very important that each sphere inculcates the values of the national Constitution at all levels, and that all factors that contribute, influence, enhance and affect such matters are taken into account seriously.

This Bill amends many laws and it is important to ensure that these amendments are made not only for the improvement of the revenue facilities but also to the betterment of the lives of all South Africans. At the end of the day, it has to be remembered in everything we do that we are the government of the people by the people and, at all times, we are answerable to our people. This is why the values of transparency and accountability are so firmly entrenched in our bureaucracy.

We all know the importance of national revenue in the running of our country. In fact, without revenue, would there be much running at all? Many other factors contribute to such revenue and it is important to maintain good control over these so that such contribution can be maintained at a similar, if not better, rate.

Although the Revenue Laws Amendment Bill brings factors into line with the revenue laws for the better management of these issues, it should, however, not bar society from activities they previously indulged in with no real harm. National revenue is a means to alleviate poverty. In doing so, the idea is not to squeeze society. However, the MF is confident in our Government’s proposal. The MF supports the Revenue Laws Amendment Bill. [Applause.]

Mr C M LOWE: Chairperson, severe time constraints on the presentations to the Portfolio Committee on Finance during hearings on the Revenue Laws Amendment Bill meant that committee members were often unable to fully and constructively engage the National Treasury and other bodies appearing before them about the full implications and ramifications of the proposed legislation.

This curtailment of interaction time is of concern to the DA. We believe that in future more opportunity needs to be afforded to committee members to allow them, and the committee as a whole, to fully engage presentations and presenters and to grapple with the detail of proposed legislation if the finance committee is to become something more than just a lecture theatre where, with respect, National Treasury simply presents its views.

As my colleague has already said, robust debate is required, with the finance committee engaging in more than just the technical detail around the perimeter of the real debate. I repeat, what is required are clear policy debates, a real and in-depth debate around tax policy choices. At the moment the committee really tinkers with the technical detail with very little input on tax policy itself. This is extremely frustrating to members and proposals to address this anomaly are welcomed.

The call for a specialist taxation subcommittee to deal specifically with tax law is therefore a good one, and we wholeheartedly support it, with the presumption, of course, that the Portfolio Committee on Finance and its subcommittees, as and when they are established, will have access to their own independently appointed taxation and finance advisers. Committee members are not, by and large, finance and tax experts, nor should they be, but they do require the assistance and guidance of experts as they engage National Treasury, with its own set of advisers, and the other role-players in the serious debate that must accompany the drafting of finance legislation.

Another concern is that currently money Bills cannot be amended, which frustrates the political process even further. Even if a party opposes just one aspect of a Bill, it is nonetheless obliged to oppose it in its entirety.

We have already referred to the the iniquitous treatment of taxpayers brought about by retroactively implementing fiscal legislation. Saica made the point, which we repeat again today, that retroactivity of laws is a bad thing. It is seen as a tool of a totalitarian regime and, in the case of tax legislation, it creates uncertainty and impedes confidence.

For the reasons already spelt out, the DP has no choice but to reject the Bill in its entirety. [Applause.]

Mr K A MOLOTO: Chairperson, the hon Taljaard has indicated very critical matters that warrant attention. It is important to correct certain statements. This House has deliberated extensively on the direction this Government should take in developing a tax policy. This House has agreed that South Africa should move from source-based taxation to residence-based taxation. Globalisation has necessitated such changes. This House has also agreed that in South Africa the rich should pay proportionately more than the poor.

Therefore South Africans have come to realise the benefits of an efficient and fair tax system. The improvement of our people’s lives depends on it. It is therefore critical that every effort should be made to ensure that our tax base is not eroded by various tax avoidance schemes. The financing of old age pensions, child support grants, disability grants and other measures adopted by this Government to fight poverty depends on a sound tax base.

It is important that we should plug loopholes in our tax laws to protect the revenue base of South Africa. Each and every South African is supposed to pay transfer duty when acquiring immovable property. However, it needs to be noted that under the current tax law there exists a possibility of avoiding payment of transfer duty through the use of a company or trust. A person holding immovable property through a company can sell that immovable property simply by selling the shares in that company to an interested party. Change of ownership will then be effected through the acquisition of the shares. The property will remain registered in the name of the same company and no transfer duty is payable.

Similarly a person holding immovable property through a trust can dispose of such property simply by substituting beneficiaries. The substitution of beneficiaries effectively means that there is a change of ownership. However, no transfer duty is payable because the property is still registered in the name of the same trust. The revenue raised from transfer duty might look insignificant. However, the point I am raising here is that it is a matter of principle and of tax morality.

The Revenue Laws Amendment Bill proposes amendments that will ensure that such tax avoidance measures are stopped. The public officer of the company and the seller of the immovable property in question will be jointly and severally liable for the transfer duty. In the case of a trust the trust and the trustees will be jointly and severally liable for the transfer duty. These persons have a right to recover the amounts paid from the buyer in the case of the company and from the new beneficiary in the case of the trust.

Our country is making tremendous progress in dealing with our painful history of land dispossession. In order to avoid penalising those who are gaining from the land restitution process, the Bill proposes excluding this category of people from capital gains tax. Under the current tax law, in an award in terms of the Restitution of Land Rights Act of 1994, these people may be subjected to capital gains tax. A person who has submitted a claim for land restitution and disposes of that claim in return for compensation may be subjected to capital gains tax. The National Treasury needs to be commended for ensuring that the victims of land dispossession are not penalised for receiving compensation.

The Bill provides for the establishment of joint land border posts and for the joint administration of such border posts with the customs authorities of the adjoining states. This provision has been necessitated by the SADC protocol. This aims to strengthen trade relations within the region and ensures that all countries benefit from free trade. The ANC supports this Bill. [Applause.]

The MINISTER OF FINANCE: Chairperson, hon members, I would like at least as much time to reply as hon members had to comment on the Bill. People on this side have called for so many divisions that, because I know that they are getting hungry, I am going to speak for a long time here. [Interjections.] I must show Dougie! [Interjections.]

Let me comment on a few issues. The first issue that members have spoken about is the time allowed for comment on the Bill. The Bill was available in early draft form on 14 October and then discussed nine days later on 23 October. That is one day short of the required 10 days, but that required 10 days is convention and there are certain issues that I think members of this House should consider. Part of the battle is to get out of the clutches of those who, in my view, have tended to capture tax policy law. The law drafters is in the SA Revenue Service and the National Treasury know that I want to take tax law out of this closed club that has had that privileged access in the past. Many of those who continue to appear before the Portfolio Committee on Finance on tax matters represent that kind of privilege.

Part of what we need to do is rather to bring the Bill into the portfolio committee process and have it discussed here, even in its early form, than to take it quietly. Because they have an opportunity for 10 days, the same individuals return before the Portfolio Committee on Finance, restate their views and try to hold everybody captive, which I think is wrong. I think this plays to the privileged few and part of what we need to be doing is to give Parliament its appropriate place in respect of dealing with legislation.

I would like to believe that we can get support for that because some of the individuals concerned who have been part of this very tight club play different roles. They are all practitioners. There is one individual, for instance, who now has a very specialised practice in tax arbitrage. Now he has problems, for instance, with the speed of conflict resolution because it means lower fees for him. Part of what we need to do is to strengthen the democratic oversight of Parliament and not have it detoured through the same individuals who have held us captive, and I trust that even those opposing this Bill today will support the intent of an approach that is radically different from where we have been in the past.

Much has been said about the volume of the Bill and I would like to echo what the hon Woods said, that notwithstanding the number of clauses and the number of pages, if stripped down, one is dealing with three sets of issues. One is dealing with corportary organisation, foreign currency rules and individual items.

Sure, there are issues of policy, but I, again, would hazard a debate on whether there are policy shifts in the amending Bill. These are, in the main, corrections and some of those corrections, granted, are retroactive. But it is important to understand this in the context of tax law. Tax law is unique because it is made by practice and by the courts. Notwithstanding the piece of legislation that is before this House today, a few years down the track, when people look back on the issues that we have dealt with here, the bulk of decisions will vest in legal precedent because of the way in which the tax courts operate. All that the amendments do in the main is to look back on the intent of the legislation, to understand that there were loopholes and to plug those loopholes.

The other issue about retrospectivity is that in every instance it favours the taxpayers. And so some suggestion that this is autocratic law and is a denial of the rights of taxpayers in this country has to be fundamentally flawed. I challenge anybody to interrupt me and show me where the retroactivity does not favour the taxpayers. So we must be economical in our choice of words and the position we take on these kinds of issues. If we argue merely for the sake of it, then I think we waste the time of this important and august democratic institution.

A point was also raised about emerging markets. One of the issues that we need to deal with, which the OECD tax policy research centre is full of, is that emerging markets or developed economies face exactly the same challenges in respect of tax law, partly because one is dealing with the same tax practitioners. There are highly transnational companies they advise in this kind of way; and they will seek the loopholes in the emerging market, which they cannot then have in a developed economy. So we need to be alive to these kinds of issues. If we mirror what is happening in more developed economies it is because that is a broad trend of tax law globally.

Let me also just say that whilst some of these tax practitioners would take one view in the committee to try and be radical, the other process is under way, and part of it is the professionalisation and registration of tax practitioners. Announcements will be made within the course of the next fortnight. Work is far down the track.

But we want to know that those who give advice to the individual taxpayer who pays for that advice, with the best intent, give the best advice and that people who provide that advice must have must some professional liability. They cannot load taxpayers who find themselves in a poor circumstance because of bad advice given by them.

So this is part of the professionalisation and part of the work we are doing. Some of the individuals who take one position in the committee, perhaps because of TV cameras and so on, take different positions when we are dealing with the professionalisation of an industry that needs to be structured in the interests of all taxpayers.

This is probably the last time I will be standing at the lectern here before Christmas and so on, so let me take this opportunity to wish everybody well over the festive season. [Applause.]

Debate concluded.

Bill read a first time (Democratic Party dissenting).

                     REVENUE LAWS AMENDMENT BILL

                       (Second Reading debate)

There was no debate.

Bill read a second time.

                     TIME ALLOCATED TO QUESTIONS

                         (Draft Resolution)

The CHIEF WHIP OF THE MAJORITY PART: Chairperson, I move without notice:

That, notwithstanding Rule 113(2), the time allocated for Questions on Wednesday, 13 November 2002, not be limited to two hours.

Agreed to.

The House adjourned at 19:06. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 (1)    The Joint Tagging Mechanism (JTM) on 11 November 2002  in  terms
     of Joint Rule 160(3), classified the following Bill  as  a  section
     75 Bill:


     (i)     Local Government:  Municipal  Structures  Second  Amendment
          Bill [B 68 - 2002].


 (2)    The following Bill was introduced by the  Minister  for  Justice
     and Constitutional Development  in  the  National  Assembly  on  12
     November 2002 and referred to the  Joint  Tagging  Mechanism  (JTM)
     for classification in terms of Joint Rule 160:


     (i)      Constitution  of  the  Republic  of  South  Africa  Fourth
          Amendment Bill [B 69 - 2002]  (National  Assembly  -  sec  74)
          [Bill and  prior  notice  of  its  introduction  published  in
          Government Gazette No 23941 of 11 October 2002.]


     The Bill has been referred to the Portfolio  Committee  on  Justice
     and Constitutional Development of the National Assembly.


     In terms of Joint Rule 154 written views on the  classification  of
     the Bill may be submitted to the  JTM  within  three  parliamentary
     working days.

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Minister for Justice and Constitutional Development:

 (a)    Proclamation No R 73 published in Government  Gazette  No  23951
     dated 18 October 2002: Referral  of  Matters  to  existing  Special
     Investigating Units and Special Tribunals, made  in  terms  of  the
     Special Investigating Units and Special Tribunals  Act,  1996  (Act
     No 74 of 1996).


 (b)    Proclamation No R 74 published in Government  Gazette  No  23951
     dated 18 October 2002: Referral  of  Matters  to  existing  Special
     Investigating Units and Special Tribunals, made  in  terms  of  the
     Special Investigating Units and Special Tribunals  Act,  1996  (Act
     No 74 of 1996).


 (c)    Proclamation No R 75 published in Government  Gazette  No  23973
     dated 25 October 2002: Referral  of  Matters  to  existing  Special
     Investigating Units and Special Tribunals, made  in  terms  of  the
     Special Investigating Units and Special Tribunals  Act,  1996  (Act
     No 74 of 1996).


 (d)    Proclamation No R 76 published in Government  Gazette  No  23973
     dated 25 October 2002: Referral  of  Matters  to  existing  Special
     Investigating Units and Special Tribunals, made  in  terms  of  the
     Special Investigating Units and Special Tribunals  Act,  1996  (Act
     No 74 of 1996).


 (e)    Proclamation No R 77 published in Government  Gazette  No  23973
     dated 25 October 2002: Referral  of  Matters  to  existing  Special
     Investigating Units and Special Tribunals, made  in  terms  of  the
     Special Investigating Units and Special Tribunals  Act,  1996  (Act
     No 74 of 1996).

National Assembly:

Papers:

1. The Minister of Safety and Security:

 (1)    Letter from the Minister of Safety and Security to the  Speaker,
     tabled  in  terms  of  section  65(2)(a)  of  the  Public   Finance
     Management Act, 1999 (Act No 1 of 1999), explaining  the  delay  in
     the tabling of the Secret Services Account  of  the  South  African
     Police Service and the Auditor-General report:


          Dear Madam


          In terms of section 65(2)(a) of the Public Finance  Management
          Act, 1999, I am compelled to table the Financial Statements of
          the Auditor-General of all departments and entities  resorting
          under me.


          In this regard, I would like to inform you that the  Financial
          Statements and the Report of the Auditor-General in respect of
          the Secret Services Account of the SAPS for the year ended  31
          March 2002, is still the subject of  discussions  between  the
          Department and the Office of the Auditor-General.


          As soon as finalisation in this regard has been  reached,  the
          Financial Statements will be presented to you for tabling.


          Please accept my apologies for the delay.


          With kind regards


          C Nqakula (MP)
          MINISTER


 (2)    Report by the SA Parliamentary Delegation on the  1st  Forum  of
     African  Parliamentarians   for   New   African   Partnership   for
     Development (NEPAD), held at Cotonou, Benin: 8-9 October 2002:


     To insert the report

COMMITTEE REPORTS:

National Assembly:

1. Report of the Portfolio Committee on Transport on the Administrative Adjudication of Road Traffic Offences Amendment Bill [B 42D - 2002] (National Assembly - sec 76), dated 12 November 2002:

   The Portfolio Committee on Transport, having considered the Administrative Adjudication of Road Traffic Offences Amendment Bill [B 42D - 2002] (National Assembly - sec 76), amended by the National Council of Provinces and referred to the Committee, reports that it has agreed to the Bill. Report to be considered.

2. Report of the Portfolio Committee on Justice and Constitutional Development on the Regulation of Interception of Communications and Provision of Communication-related Information Bill [B 50B - 2001] (National Assembly - sec 75), dated 12 November 2002:

   The Portfolio Committee on Justice and Constitutional Development, having considered the Regulation of Interception of Communications and Provision of Communication-related Information Bill [B 50B - 2001] (National Assembly - sec 75) and proposed amendments of the National Council of Provinces (Announcements, Tablings and Committee Reports, 1 November, p 1693), referred to the Committee, reports the Bill with amendments [B 50C - 2001].

   The Committee wishes to report further, as follows:

   1. After the Bill was passed by the National Assembly on 17 September 2002, it has been brought to the Committee’s attention that the Bill does not provide for compulsory “blacklisting” of lost and stolen cellular phones. When a cellular phone (handset) is “blacklisted” by a cellular telecommunication service provider, the handset is inactive on all networks (provided they support blacklisting) and the handset cannot be used again unless it is delisted by the cellular telecommunication service provider concerned or by other unlawful means.

      From the preliminary views expressed by the respective cellular telecommunication service providers on the issue of compulsory “blacklisting”, it appears to the Committee that there is no unanimity amongst them on the matter in question. Whilst some of them support compulsory “blacklisting”, others are more in favour of compulsory “greylisting”. When a cellular phone (handset) is “greylisted” by a cellular telecommunication service provider, the handset remains active and can be used on all networks, but the user will receive periodic messages to contact his or her telecommunications service provider, since the phone was reported as lost or stolen.

      Due to a lack of time, the Committee was not in a position to -

      (a) obtain the formal views of the cellular telecommunication service providers and law enforcement agencies on the matter in question; and

      (b) conduct any investigation into the matter in question and to consider the advantages and disadvantages of “blacklisting” and “greylisting”, respectively.

      In the light of the above, the Committee recommends that the Minister for Justice and Constitutional Development be requested to -

      (i) direct that his Department investigate the above-mentioned matters with a view to submitting amending legislation, if necessary, to Parliament at the earliest opportunity; and

      (ii) submit a progress report on the investigation to the National Assembly by not later than February 2003.

 Report to be considered.

1. Report of the Portfolio Committee on Justice and Constitutional Development on the Insolvency Second Amendment Bill [B 53B - 2002] (National Assembly - sec 75), dated 12 November 2002:

   The Portfolio Committee on Justice and Constitutional Development, having considered the Insolvency Second Amendment Bill [B 53B - 2002] (National Assembly - sec 75) and proposed amendments of the National Council of Provinces (Announcements, Tablings and Committee Reports, 1 November, p 1692), referred to the Committee, reports the Bill with amendments [B 53C - 2002].

2. Report of the Portfolio Committee on Communications on the Broadcasting Amendment Bill [B 34B - 2002] (National Assembly - sec 75), dated 12 November 2002:

   The Portfolio Committee on Communications, having considered the Broadcasting Amendment Bill [B 34B - 2002] (National Assembly - sec 75) and proposed amendments of the National Council of Provinces (Announcements, Tablings and Committee Reports, 5 November, p 1716), referred to the Committee, reports the Bill with amendments [B 34C - 2002].

3. Report of the Portfolio Committee on Education on the Higher Education Amendment Bill [B 30B - 2002] (National Assembly - sec 75), dated 12 November 2002:

   The Portfolio Committee on Education, having considered the Higher Education Amendment Bill [B 30B - 2002] (National Assembly - sec 75) and a proposed amendment of the National Council of Provinces (Announcements, Tablings and Committee Reports, 5 November, p 1713), referred to the Committee, reports the Bill with an amendment [B 30C - 2002].

4. Report of the Ad Hoc Committee on Intelligence Legislation on the Intelligence Services Control Amendment Bill [B 50B - 2002] (National Assembly - sec 75), dated 12 November 2002:

   The Ad Hoc Committee on Intelligence Legislation, having considered the Intelligence Services Control Amendment Bill [B 50B

   • 2002] (National Assembly - sec 75) and proposed amendments of the National Council of Provinces (Announcements, Tablings and Committee Reports, 7 November, p 1736), referred to the Committee, reports the Bill with amendments [B 50C - 2002].

   The Committee further noted the following technical language amendment to Clause 3:

       On page 4, in line 24, to omit "the Service for  which  he  or
       she is responsible" and to substitute:
   
   
           [the] each Service [for which he or she  is  responsible],
           the Academy or Comsec
   

5. Report of the Ad Hoc Committee on Intelligence Legislation on the National Strategic Intelligence Amendment Bill [B 51B - 2002] (National Assembly - sec 75), dated 12 November 2002:

   The Ad Hoc Committee on Intelligence Legislation, having considered the National Strategic Intelligence Amendment Bill [B 51B - 2002] (National Assembly - sec 75) and proposed amendments of the National Council of Provinces (Announcements, Tablings and Committee Reports, 7 November, p 1737), referred to the Committee, reports the Bill with amendments [B 51C - 2002].

6. Report of the Ad Hoc Committee on Intelligence Legislation on the Intelligence Services Bill [B 58B - 2002] (National Assembly - sec 75), dated 12 November 2002:

   The Ad Hoc Committee on Intelligence Legislation, having considered the Intelligence Services Bill [B 58B - 2002] (National Assembly - sec 75) and proposed amendments of the National Council of Provinces (Announcements, Tablings and Committee Reports, 7 November, p 1737), referred to the Committee, reports the Bill with amendments [B 58C - 2002].

7. Report of the Ad Hoc Committee on Intelligence Legislation on the Electronic Communications Security (Pty) Ltd Bill [B 59B - 2002] (National Assembly - sec 75), dated 12 November 2002:

   The Ad Hoc Committee on Intelligence Legislation, having considered the Electronic Communications Security (Pty) Ltd Bill [B 59B - 2002] (National Assembly - sec 75) and proposed amendments of the National Council of Provinces (Announcements, Tablings and Committee Reports, 7 November, p 1738), referred to the Committee, reports the Bill with amendments [B 59C - 2002].

8. Report of the Portfolio Committee on Safety and Security on the International Convention on the Suppression of Terrorist Bombings, dated 12 November 2002:

   The Portfolio Committee on Safety and Security, having considered the request for approval by Parliament of the International Convention on the Suppression of Terrorist Bombings, referred to it, recommends that the House, in terms of section 231(2) of the Constitution, approve the said Convention.

 Request to be considered.

1. Report of the Portfolio Committee on Safety and Security on the International Convention for the Suppression of the Financing of Terrorism, dated 12 November 2002:

   The Portfolio Committee on Safety and Security, having considered the request for approval by Parliament of the International Convention for the Suppression of the Financing of Terrorism, referred to it, recommends that the House, in terms of section 231(2) of the Constitution, approve the said Convention.

 Request to be considered.

1. Report of the Portfolio Committee on Safety and Security on the Protocol on the Control of Firearms, Ammunition and other Related Materials in the Southern African Development Community (SADC) Region, dated 12 November 2002:

   The Portfolio Committee on Safety and Security, having considered the request for approval by Parliament of the Protocol on the Control of Firearms, Ammunition and other Related Materials in the Southern African Development Community (SADC) Region, referred to it, recommends that the House, in terms of section 231(2) of the Constitution, approve the said Protocol. Request to be considered.

2. Report of the Portfolio Committee on Environmental Affairs and Tourism on the UN Agreement on Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, dated 12 November 2002:

   The Portfolio Committee  on  Environmental  Affairs  and  Tourism,    having considered the request for approval  by  Parliament  of  the    Agreement for the Implementation of the Provisions  of  the  United    Nations Convention on the Law  of  the  Sea  of  10  December  1982    relating to the Conservation  and  Management  of  Straddling  Fish    Stocks  and  Highly  Migratory  Fish  Stocks,   referred   to   it,    recommends that the House,  in  terms  of  section  231(2)  of  the    Constitution, approve the said Agreement.
   

Request to be considered.