WEDNESDAY, 16 MARCH 2005 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY

                                ____

The House met at 15:01.

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.

                          NOTICES OF MOTION

Mr M WATERS: Chair, I hereby give notice that I shall move on the next sitting day:

That this House debates the shortage of social workers in the Public Service and the NGO sector and the resulting impact of this on service delivery. I thank you.

Mrs C DUDLEY: Chair, on behalf of the ACDP, I give notice that I shall move on the next sitting day:

That the House debates government’s new finance policy on service awards to service providers and its envisaged implementation in view of the fact that government aims to deliver critical services through these organs. Thank you.

THE ROLE OF PARLIAMENTS IN ESTABLISHING INNOVATIVE INTERNATIONAL FINANCING AND TRADING MECHANISMS TO ADDRESS THE PROBLEM OF DEBT AND ACHIEVE THE MILLENIUM DEVELOPMENT GOALS

                              (Debate)

Mr L ZITA: Chairperson, today we are discussing a very important issue: the ensemble of factors that have hitherto arrested Third World development. In particular we are trying to respond to the question put to us by the IPU: whether we as parliamentarians can play a role in establishing innovative international and financing trading mechanisms to address the problem of debt and achieve the millennium development goals. Despite many challenges the underdeveloped world, including Africa, has begun to make itself felt on the issues of the developmental agenda of globalisation.

As testimony to this we have this week witnessed the formal launch of the UK-led Commission for Africa. As the ANC we welcome this development. We continue to hope that our call for all of us to be our brother’s keeper is beginning to resonate across whole sectors of the world as an appreciation of our common humanity. It is important for us to appreciate that initiatives such as the Commission for Africa are not an act of generosity by the global powers. They are a result of an all-round campaign by the peoples of the world, both in the North and in the South, to fight for and create a different world, to ensure those that assemble annually at the world social forum that another world is possible. As part of this fight there is unity, not only of social movements, but also of the states of the South in the trade negotiations of the World Trade Organisation.

South Africa has been at the centre of these initiatives such as the establishment of the India-Brazil-South Africa front on the world stage, as well as playing a critical role in strengthening the cohesion of Africa in the multilateral trade negotiations system. For the South trade is crucial. There is a correlation between levels of trade and levels of affluence on the one hand, and the absence of trade and the accentuation of deprivation on the other.

Trade is used as a tool in the war for economic and political domination in the global political and economic system. As with most issues in the modern capitalist world, behind the veneer and civility of the trade system is a capricious pursuit by the North to gorge the last remnants of blood from the people of the South through a system that seeks to freeze the present power relations in the global economic system.

Africa is part of the global economy. The issue is the manner of our integration. For instance, sub-Saharan Africa only contributes 1,6% of world exports and absorbs a meagre 1,9% of world imports. Even though the continent has been moving towards nontraditional exports, this move remains precarious. With the exception of Egypt, Mauritius and South Africa the rest of the continent has sought to integrate itself at the expense of labour and without any productivity improvements.

Another debilitating factor is the change in the terms of trade. Since the commodity boom of the early 1970s the trend of the terms of trade for the continent has been declining in sub-Saharan Africa by 21% from the 1970s peak. A study by the World Bank on the cumulative impact of this decline concludes that, as a result of these adverse terms of trade, sub-Saharan Africa has lost 119% of the regional gross domestic product as well as 51% and 68% of net resource flows and net resource transfers to the region, respectively.

Commenting on this report, UNCTAD notes that if these numbers are combined with leakages from capital inflows into outflows and the accumulation of reserves, it turns out that in the past decades sub-Saharan Africa has not received any net transfer of real resources from the rest of the world.

Another reason behind the decline in the terms of trade has to do with the price reduction of primary products relative to manufactures. The gap between the prices of these different kinds of products is between one to two thirds of what it was three decades earlier. Price fluctuations and volatility in Africa has been double that of East Asia and four times that of the North, creating uncertainty and, as a result, adverse conditions for wealth creation – a vicious cycle.

This vicious cycle extends even to the export of manufactured goods; a function of the fact that the exports of the South are labour intensive whilst overall global competitiveness is skills and technology intensive. The weakening of the trade capacity of the underdeveloped world relates also to the challenge of market access, whilst the rhetoric of neo-liberal globalists is about the sanctity of open markets and free trade. This is not matched by practice.

Whilst in some instances there is willingness to encourage trade in primary commodities, once these are value added there is a whole arsenal of interventions that northern governments resort to. These range from peak tariffs and quotas, antidumping and countervailing duties that are imposed on imports, sanitary and phytosanitary import restrictions, export subsidies for agricultural and industrial products, as well as various production and investment subsidies both for agricultural and industrial products.

If this regime of exclusion could be ended the North would save 2,2% of its GDP, a total amount of about $470 billion. Underdeveloped countries would immediately gain an extra 10% of their GDP. For South Africa this could easily translate into an extra R100 billion annually and R15 billion to our fiscus. For sub-Saharan Africa the end of subsidies would be equal to a 241% increased injection to the regional GDP. The World Trade Organisation as it operates today has not done much to undo this unfair global architecture. The struggle must continue.

The skewed nature of the global trading system has a genesis dating back to the classical era of imperialism, colonialism and latter- day neocolonialism. It has been underpinned by a weak and comprador bourgeoisie, which acts in the main as rent seekers or appendages of multinational corporations. This is more the case in Africa due to the lack of maturity of social structures. Together with a weak working class and the unorganised popular classes, this lack of maturity and of a national project has caused African leaders and their bourgeoisie not to make use of the commodity boom of the 70s.

As a response to this crisis a number of proposals have been made. The more fundamental is the end to agricultural and industrial trade barriers. Key to the reconstruction of a more equitable trade regime is the need to transform the financial architecture that oils the global trading system. Since the Second World War, the World Bank and the IMF have been at the centre of the world economy. Whilst geared to facilitate the reconstruction of the world economy after the war, they have developed to become hegemonic instruments of the North, particularly the United States, and, as a result, are discredited in the eyes of the underdeveloped world.

According to Paul Streeten, one of the pioneers of development economics, a number of proposals have been made whose aim is a progressive recomposition of the global financial architecture. These include the creation of a global central bank, a global investment trust that would recycle current account surpluses to capital-starved countries, a global income tax, a global environmental protection agency, etc. Whilst such developments would be critical and welcomed, we need to undertake the painstaking effort to transform and re-orientate the agenda, also of the existing institutions such as the World Bank and the IMF.

Whilst the global agenda remains critical, there should also be a continental and national agenda for effective and transformative financial mediation. The Nepad initiative should provide a framework to the bolstering of the African Development Bank, whose responsibility should encompass both infrastructural and ordinary accumulation. Such a developmental state at the continental level should also spur the evolution of a developmental state in all the member states of the African Union.

It will take the reconstruction of the present trade regime, its financial architecture and the elaboration of a developmental state to create the foundation for progressive development in the underdeveloped world. I thank you. [Applause.]

Dr E NKEM-ABONTA: Madam Chairperson, I shall speak as an African. [Interjections.] I shall also speak as a liberal. [Interjections.] More importantly, I shall speak as an Africanist.

The debt situation in the Third World is dire. The external debt of the Third World grew fifty-fold between 1968 and the year 2003, when it reached the dizzy height of US$436 billion. Now, for each dollar that the South receives, it pays back three to rich countries.

Given absolute debt levels in amounts already paid as debt service, the poor countries of the South had by 2003 actually paid their debt twice. In all this, Africa’s situation has been truly traumatic. The question therefore is: Can the Third World pay back the debt? My answer is: No. Why do I say this? Because underdeveloped countries currently devote the bulk of their export income to servicing their external debt. The share of the South in world export trade has been declining, mainly due to a trend decline in export prices and the protectionist policies of developed countries. There is another reason, and that is that most African countries that qualified for the heavily-indebted poor countries initiative have a debt export ratio of 300%, whereas 200% is considered the limit for a manageable debt.

We may then ask the question: Can the Third World meet the Millennium Development Goals, the MDGs? The answer again is: No, not if the current trend continues.

For example, since 2000, when the MDGs were adopted, Africa’s dire socio- economic conditions have worsened, a fact which strongly suggests that, under the current circumstances, the MDGs are simply unachievable. To quote a 2005 IPU report:

Unless the situation improves, it is estimated that sub-Saharan Africa will not achieve universal primary education until 2129. It will not be able to reduce poverty by half until 2147, and to reduce infant mortality rates by one third until 2165.

If current trends prevail, the international mortality rate among children under five years of age will drop by approximately one quarter by 2015, which is a far cry from the reduction goal of two-thirds.

The question, which is important today, is: What can countries of the North do to help? They can simply cancel their debt. Regarding this, there are antecedents in history. The following few examples will suffice to prove my point. In the 1950s, Germany had 80% of its debt cancelled, and was allowed to apply only about 4% of its export income toward the remaining portion. In the late 1980s, creditor countries cancelled about 50% of Poland’s debt to assist it to make a transition from socialism to a free market economy. The USA, in 1991, cancelled US$7 billion of Egypt’s debt in reward for supporting it during the first Gulf War. More recently, America has championed with success the cancellation of Iraq’s debt, arguing that it was largely illegitimate, a situation that clearly applies to most of Africa’s debt.

Despite the free market and liberal democratic reforms that most of Africa has undertaken, and despite the fact that most of Africa’s debt qualifies as illegal and illegitimate, clearly so, Mr Bush apparently thinks that he should only pursue his objective of spreading freedom where the supply of oil is threatened.

What most of the Third World has is a mere litany of palliatives and phoney solutions. The countries of the North can finance the total cancellation of the Third World’s debt by doing three things: First, stop protectionist policies that currently cost underdeveloped countries at least US$100 billion a year, which is twice what these countries receive as Official Development Assistance, ODA. Indeed, rich countries spend more than US$330 billion on domestic subsidies. The Third World only requires about 5% of that amount to meet the MDGs.

Second, they should cut down their military spending to release funds for meeting the MDGs. A reduction of just 12% of total world military spending will free up more than US$100 billion, much more than is required to meet the MDGs.

Third, they should honour their commitment to devote a meagre 0,7% of their GDP to ODA, which will generate about US$175 billion a year, far in excess of what is required to meet the MDGs.

We are debating this to determine what the role of the South African Parliament is in all of this. Acting through the Inter-Parliamentary Union, the IPU, the Parliament of the Republic of South Africa should, first, get parliaments of rich countries to do the three things I have already outlined above. Second, they should regularly discuss and debate Africa’s trade and external debt issues, and insist that people participate in decisions regarding these. Moreover, it should insist on taking part in trade negotiations, even if only in a consultative capacity, as it represents the supreme will of the people.

Third, it should insist, through the executive, that heavily-indebted middle-income countries be included in any proposed solutions or mechanisms, as they also suffer serious economic and social imbalances, and owe much higher levels of debt. They should also work for the elimination of all obstacles to market access or to free and fair trade, and against the piracy of indigenous people’s knowledge. They should also move for the establishment of an international tax on financial transactions not aimed at trading goods and services.

Fourth, they should generate funds for meeting MDGs and to curb the financial instability to which emerging market economies are very vulnerable, including our own country. Finally, they should propose the establishment of an UN-administered worldwide lottery to raise funds to meet MDGs. [Time expired.][Applause.]

Mr H J BEKKER: Madam Chair, strangely enough, today I find myself in agreement with the two previous speakers, so I don’t know whether something has gone wrong.

The issue before this House today will be on the agenda of the Inter- Parliamentary Union’s 112th session in Manila. The South African delegation wishes to share some thoughts with our colleagues to enable us to be mandated on these important issues.

In 2003, underdeveloped countries, which are home to 85% of the world’s population, accounted for only 44% of the global GDP, and only 25% of international trade. It should also be noted that the underdeveloped countries’ share in global export has declined drastically. There are many obstacles and challenges that these countries face with regard to international trade.

Although there are masses of people living in abject poverty, many underdeveloped countries still have to divert their meagre funds in order to pay the interest on their external debt. They are therefore not making any headway with regard to real economic development. This vicious cycle will continue unless we find ways to address the high debt faced by the underdeveloped countries, as well as increasing international finance to these countries.

By 2003, the external debt of underdeveloped countries was      US$2,6 trillion, and the debt service stood at US$436 billion. This high level of external debt serves as a deterrent to potential foreign investors as they view these countries as being a high risk.

The Millennium Development Goals commit the international community to an expanded vision of development that promotes human development as the key to sustaining social and economic progress in all countries.

Reaching the MDGs within the agreed timeframes remains a monumental task, which might not be achieved unless drastic steps are taken to address, among other things, the development finance shortfalls as well as the high external debt that most underdeveloped countries face.

Parliaments have to be united in their efforts to meet the challenges of the MDGs. Many Inter-Parliamentary Union resolutions underscore the role of parliaments in putting pressure on governments, and ensuring that their commitments and targets are met. Parliaments should use their oversight roles to monitor the MDGs’ progress reports as well as to ensure that they are debated in Parliament.

Parliaments around the globe can make a difference and contribute by playing an active and ongoing role in their respective governments’ efforts, and by ensuring that their countries meet their various commitments in achieving the MDGs. In this manner, our Parliament can also make a substantial contribution.

Mr M STEPHENS: Chairperson and hon members, the extent of the debt problem is well known. However, how to convince and encourage the developed world to take the necessary action is the question. Parliaments have a crucial role in championing the eight Millennium Development Goals.

The UDM believes that our role as Parliament should go well beyond the adoption of the corresponding legislation and appropriate budgetary allocations when required to do so. We should become proactive in developing innovative solutions - solutions that the developed world will buy. We must proceed from the acknowledgement that globalisation is a fact. Simultaneously, it represents a source of opportunities as well as challenges, and it has an impact on people’s everyday lives.

The importance of international trade and investment and their direct influence on the development and wellbeing of the nations of the world cannot be overemphasised. Nevertheless, we cannot but be concerned at the fact that the current international trade and investment system is quite obviously distorted in favour of the developed countries.

If we are to make poverty history and put an end to avoidable human misery and suffering, the current global financial and economic model must be revised. Such a revision must be undertaken only after an exhaustive study and intensive debate. However, time is of the essence.

The three main sources of funding to empower developing countries, namely economic growth, debt relief and public assistance, will be unable to generate the extra US$50 billion to US$100 billion required annually to achieve the MDGs.

The imperative is for Parliament to set up properly resourced think tanks to generate innovative solutions. We, the developing countries, must take charge of the agenda or face being sidelined by the developed world.

A radical solution to the debt problem is required. To succeed, debt cancellation should be linked to the earmarking of resources thus freed up for investments related to achieving the MDGs, especially in health, education and gender equality. It is up to us to make it happen. I thank you.

Ms H C MGABADELI: Chairperson, I dedicate this speech to the visionaries who, decades ago, called for an end to racism, tribalism, sexism and all other such –isms. It is with pride and appreciation of the fallen heroes and heroines of our struggle for the democratic liberation of our country, the continent and, indeed, the whole globe that one is standing here today debating the Millennium Development Goals, as seen not only by the South African masses, but all the United Nations member states.

Who would have thought that after years of resistance to change all South Africans - both black and white, governing together for people’s power and equality before the law, in a country where peace and friendship is what we all look for and work for - would this day come together and say: Let us align our parliamentary minds with those of the other parliaments towards addressing the problem of debt and achieving the Millennium Development Goals for a better life for all?

Who would have thought that all South Africans, black and white, through their Parliament, would be sitting like this, trying to find better ways and means of sharing in their country’s wealth with the rest of the globe without incurring debts? Aluta Continua!

Without any waste of time, one would zoom into, first, recognising some of the instruments that our government has put in place to ensure that the country’s goals are met. I would really request everybody to realise that we do have instruments here. These instruments are going to be of great help in seeing the Republic of South Africa, as a member state of the UN, participate meaningfully in ensuring that these Millennium Development Goals are achieved.

In doing so, we will spell out, step by step, instruments as we tackle them goal by goal. Secondly, we would like to remind our hon members of what the goals are that we are talking about. We will check the distance travelled towards achieving them, and we will also look at how do we continuously utilise the networks and the linkages that exist. These linkages with the international community were cultivated during the hard times of the apartheid era. They were some of the pillars that saw us achieve this democracy around whose warm fires we are now able even to debate the issues of millennium development goals as a country, as a government and as a parliament whose motherland is one of the member states of the United Nations.

What are these goals? Let me remind you of the goals that we are talking about. They are, to eradicate poverty and hunger; to achieve universal primary education; to promote gender equality and empower women; to reduce child mortality; to improve mental health; to combat HIV/Aids, malaria, TB and other diseases; to ensure environmental sustainability; and, lastly, to develop global partnerships for development.

Let us look into our own government and our own Parliament. What are these instruments? There is a list of them, but I will just cite a few. In eradicating poverty, the Department of Transport sees extreme poverty as often linked to people and communities being completely stranded, with public resources and services being inaccessible. The intervention strategy, as an instrument of eradicating these, involves a yearly expenditure of R4 billion on transport subsidies.

The recapitalisation programme of R7 billion over five years is designed to extend safe and affordable transport to poor communities. The Department of Labour, on the other hand, through its National Skills Development Strategy, deals with skilling human resources for the total eradication of poverty, which is a long-term strategy beyond 2015. With regard to goals three, four, five and six - as you heard me tabulating - I will just quote that through the National Policy Framework for Women’s Empowerment and Gender Equality, we are able to do this.

We will be able to achieve this through international resources, such as the gender-related development index, which pays attention to and mobilises all other departments towards the attainment of this goal.

When it comes to ensuring environmental sustainability, let us again look at the Department of Transport. It places emphasis on public transport to increase the use of certain modes in order to circumvent the one-car, one- person practice, which aggravates the emission of carbon dioxide.

When it comes to the last goal, which is to develop global partnerships for development, we will take it when we are looking at the linkages. I would like us to look at the distance that we have travelled towards achieving this, as we are expected to have achieved these goals by 2015.

It is imperative for all hon members to visit President Thabo Mbeki’s state of the nation address of February 2005 and identify indications of the distance we have travelled. Among other indications, we would like to highlight the following, within the context of this debate; the “decisive advances”, as he called them. The first one is eradicating poverty and underdevelopment within the context of a thriving and growing first economy, and the successful transformation of the second economy.

Secondly, he quotes the Rand Merchant Bank on domestic output. We achieved the 10-million mark in December last year in terms of South Africans who gained access to potable water since 1994. He also quotes City Press on education.

Thirdly, the CEO of Anglo American South Africa, Lazarus Zim, indicated that large resources will be utilised to empower a great number of black enterprises and to develop a global partnership for development.

Fourthly, he quotes the Expanded Public Works Programme, worth R1, 5 billion, which created over 76 000 job opportunities and provided thousands of those enrolled with the skills that will stand them in good stead as they will have learned from such programmes.

There is long list of measurable indications that the development goals of the Parliament of the Republic of South Africa, as well as the United Nations Millennium Development Goals, are achievable. That is, if and when members of Parliament get driven by acts of patriotism, humaneness and commitment to the defence of the motherland.

Hon members, just go back to the state of the nation address and understand it as having a one-unit relationship with the UN Millennium Development Goals, then you will realise that nothing is impossible.

Budget Votes will be presented to us a few weeks from now by the different departments. We call upon all loving South African parliamentarians to make it their role to crosscheck as to what the financial resources are utilised for, within the context of our goals and the UN development goals.

When it comes to developing global partnerships, which is one of the aspects I will address, we are saying that attending different progressive conferences whose purposes are in line with what we are striving to achieve – for example, the 112th IPU Assembly-will further strengthen the exchange of ideas towards cancellation of such debts. We cannot just howl from nowhere; we must create a base where we are going to debate these issues.

The other important aspect would be to carefully identify needs for entering into bilateral agreements with countries whose intentions are towards minimising the gap that exists between those two economies.

We should become a parliament that adds value to conventions such as the AU Convention on Prevention and Combating Corruption and we should become serious contributors to putting in place monitoring systems to monitor the success of such conventions and many other structures.

In conclusion, I want to say, make every step you take, every word you utter, every moment you spend as a public representative a value-adding gesture towards our goal of transforming our society to meet the basic imperative goals that were foreseen as far back as November 1989 in Sechaba, which was an official organ of the ANC, and I quote:

The times demand decisive and clear-sighted leadership at every level - in the factories and other workplaces, at the local, regional and national level. Only thus can we reap the fruits of the new possibilities created through struggle. To be effective, such leadership must be firmly rooted in organisations of the people, accountable to the people, and committed to the cause of the people.

Then will we achieve the Millennium Development Goals. Thank you, Chairperson. [Applause.]

Mr K D S DURR: Chairperson, what is not surprising is the emphasis placed by the World Bank, the IMF and the world donor community on the role of parliaments in poverty reduction strategies and reaching the Millennium Development Goals.

Multiparty democratic parliaments that rule by consent and that are not the pawns of kleptocratic, centralised, presidential-style executive governments in Africa are essential building blocks of development progress. These parliaments need to be nurtured.

I think it is essential not to fall into the trap, however, of looking for simon-pure before turning on the aid flows, but certain basic standards and structures do need to be in place. Trends at least must be flowing in the right direction. Transparency, proper accounting and demonstrable public benefit need to be in place. We must remember that donor governments also need to be able to sell these ideas and costs to their parliamentarians in their democratic parliaments.

Finally, I want to say that multilaterism is essential to the developing world, but we in the ACDP believe that we must be careful that we do not spend all our resources, time and energy on multilateralism and focus only on the general good, and fail to deal with South Africa’s own particular challenges and opportunities. Bilaterlism is vital, but it is also vital for us to pursue our own interests and development goals. And what is good for South Africa is good for our region. Remember that the multilateral lead times are very long but we have urgent priorities in our own country. I thank you.

Mr M T LIKOTSI: Deputy Chairperson, the Inter-Parliamentary Union was established in 1889 as an organisation of parliaments of sovereign states. Our Parliament must play a vital role in the core business of the IPU and contribute to the development of Third World countries and our own development.

In the course of our liberation struggle, we sacrificed many lives to improve the living conditions of our people, and we may not fail them. The position is clear: The struggle continues until the last inch of our land is equitably redistributed to us.

We are our own liberators. We must wage a socialist revolution from all fronts to deal with the remaining forms of oppression. Land dispossession is central to our cause, while economic injustice is an integral part of it.

Parliament and our people must take a firm and non-negotiable position that slavery, colonialism, land dispossession and, today, neo-colonialism had put us in this quagmire of external debt, and it must be cancelled. These debts have brought about the economic and social deterioration of our country, all other debtor countries in Sub-Saharan Africa and the world.

The main culprits, the International Monetary Fund and the World Bank, must be transformed to meet the material needs and conditions of the Third World countries. Their policies lack flexibility and the conditions of their adjustment programmes leave much to be desired.

Our goal of economic growth must be strengthened by enforcing strict principles of corporate governance. Initiatives to mobilise large funds should be taken seriously to meet the objectives of the Millennium Development Goals. I thank you.

Mr R B BHOOLA: Madam Chairperson, the G7, comprising the United States, Japan, Britain, Germany, France, Italy and Canada, or the G8 which includes Russia, has been pressurised to be committed to debt relief to impoverished countries by 2015, in line with the Millennium Development Goals.

Agreement has been reached to look at case studies of heavily indebted poor countries, and a willingness to allow debt relief of 100% to multilateral debts has been indicated, though the US has voiced opposition.

Britain has shown a serious commitment to this debt relief in Africa. The recent visit by Britain’s finance minister, Gordon Brown, in pursuing a new modern Marshall Plan, has resulted in the writing off of Mozambique’s debt of R900 million, and an undertaking to pay 10% of that debt to international lenders and its multilateral lenders. A meeting was convened in South Africa between Brown and our hon Minister of Finance, amongst other key role-players, to discuss how to alleviate poverty, illiteracy, health problems and trade impediments.

The MF takes this opportunity to applaud Britain, which has undertaken to share the debt of 70 countries. I refer to the words of Gordon Brown. Voicing their commitment, he said:

Justice promised will forever be justice denied unless we remove from this generation the burden of debt by past generations.

Poverty relief is the means to clearly promote development. Nelson Mandela has correctly said that, like slavery and apartheid, poverty is not natural. It is man-made and can be overcome and eradicated by the actions of human beings. Sub-Saharan Africa alone owes R430 billion to multilateral lenders.

However, the MF feels that other than this debt relief by rich countries, we developing countries in our own capacity need to realise that we have the tools to promote our development. We need to firmly eradicate the laws of the apartheid regime that shackled non-whites to low-credit facilities. As Parliament, we should adamantly reject the past and legislate laws and policies that not only place all South Africans on an equal footing but also motivate trade, the establishment of global relations and the settlement of debt.

BEE stands to assist businesses that are already established, but its primary focus needs to be shifted to small businesses. This is our way of joining Mandela’s campaign to make poverty history. In so doing, we echo the words of Minister of Foreign Affairs Nkosazana Dlamini-Zuma that what is crucial for our success is to identify new resources for development, consolidate competing development funds and ensure substantial debt relief.

The MF calls upon the House to commit itself to bring into action laws and policies that influence international financing and trade mechanisms that address debt and the millennium development goals. I thank you.

Mr I VADI: Chairperson and hon members, you might have been surprised by the anti-Bush rhetoric that came from the hon Nkem-Abonta of the DA. I will tell you what is the source of that. He has taken virtually all the proposals made by the Cuban representative for the discussion paper that has been prepared for the Inter-Parliamentary Union conference.

So, the sudden somersault to the left indicates that there is no principled position that the DA is taking. [Applause.] I also wonder if that speech was cleared by the hon Tony Leon. I think he will get shivers down his spine. [Interjections.]

This debate is timely and appropriate because in a few days from now, the South African delegation is going to be participating in the 112th session of the Inter-Parliamentary Union in Manila. So, this debate serves as a prelude to the global discussions, and what we could do is to assist our delegation to crystallise its views and ideas on the matter.

This debate also gives us an opportunity to reflect deeply on some of the pressing problems facing the world today, particularly those confronting the poor nations of the world.

One of the most important issues confronting the Third World countries is the debt burden, and all speakers have indicated that and spoken about it. The point has been made that in 2003 the debt of poor countries stood at US$2,6 trillion. To service this debt alone, these countries had to pay US$436 billion.

Debt servicing costs have increased dramatically over the years, with the countries of the South having paid those in the North five times more in debt service than in actual aid received.

Today the foreign debt is economically and socially unbearable for these countries. They are trapped in a never-ending effort to pay the loans and the interest on the loans. This forces them to cut back on socially necessary spending on education, health, welfare and infrastructure development, which all help to improve the quality of life of the poor. The consequence of this is that the poor of the world have become poorer, and the rich richer.

The key questions that confront us, therefore, are: What are the parliaments of the world doing about this particular problem? What are we going to be doing about it as the South African Parliament and as ordinary parliamentarians active in the field?

Over the years, many plans had been developed to deal with this burden of humanity, but in recent times we have seen renewed global interest in the fight against poverty and relieving poor countries of the debt burden.

A key objective of these efforts was to develop an international trading and financial system that is rule-based, predictable and nondiscriminatory. Efforts have to be made to deal comprehensively with the debt problem of these countries in order to increase the developmental aid.

It is already becoming clear that at the current levels of official development assistance to poor countries, the Millennium Development Goals will not be achieved by 2015. We are way off the target mainly due to shortfalls in development aid, the burden of debt servicing and the lack of economic growth in poor countries.

So, after nearly two decades of various economic approaches to the plight of humanity, over 1,2 billion people still live on less than one dollar a day. Almost 900 million people continue to live in poverty, 18 million more than 20 years ago, and 10 million children will die of preventable diseases, which means 21 deaths per minute. The gap between the rich and the poor has widened even further.

So, what must be done? There are a few practical measures that are just unavoidable. We must generate a sense of urgency, collective thinking and collective action on issues of global poverty.

Firstly, the South African delegation to Manila must ensure that rich countries agree to a 100% debt write-off for the poorest countries in the world. This should extend beyond the odious debt of undemocratic regimes and must include the current debts of poor countries. Is this possible? Absolutely!

If South Africa could write off Namibia’s debts, so could other countries that are much wealthier than us. A point has been made already that both Poland’s debt and a percentage of Egypt’s debt were also written off recently.

If in the course of one day in November last year the Paris Club could agree to cancel a large chunk of Iraq’s debt, without any conditions, with no democratically elected government in place and no track record of the interim government, it can be done for all other states who are poor.

So, politicians linked to the rich nations of the world can act when they want to and if it’s in their immediate interest. But we must challenge the inconsistencies in the provision of debt relief for poor countries. We must challenge the global hypocrisy on this score. What is good for Iraq must also be good for Mozambique, for example.

Secondly, the South African delegation to Manila must insist that rich countries honour their international commitments to the poor, which they have made on international platforms. This means that they must double the development aid so that almost US$50 billion per annum can reach the poor of the world over the next 10 years. Again, can this be done? Absolutely!

Most Scandinavian countries today have already reached this target, but it is the G8 nations who have not moved fast enough in this direction. Why not? The answer is simple: The political will is just not there. Therefore, we must mount political pressure on them to honour the deal for the poor.

Thirdly, our delegation to Manila must support calls for rich countries to break down their trade barriers, to reduce tariffs on products and to open their markets, particularly in agriculture, to developing countries.

They must call for a fair, inclusive and equitable multilateral trade system, based on transparent norms and principles. Protectionism must become a thing of the past for all states in the world, not just for the rich.

Finally, our Parliament must support initiatives such as the Commission of Africa, spearheaded by the British Prime Minister Tony Blair, Minister Trevor Manuel and several other African leaders. The commission has set out bold steps and tangible plans for Africa’s recovery, for reduction in poverty and for promoting social development. It calls for improved governance and capacity-building, peace and security, investment in Africa’s people and more trade and further trade with and on the continent. The rich of the world must do these things, and it must be done now!

Third World countries must also commit themselves to democratic and clean governance, adherence to a human rights culture, the effective use of public resources aimed at improving the lot of their citizens and integrating and diversifying their economies.

The momentum for reform must come from within the developing world itself. Only then can we honourably call upon our development partners to meet their commitments.

Practically, what can this Parliament do? Firstly, it must embody and express the popular hopes and aspirations of our people, particularly the poor. It must serve as a platform for the voiceless in society. It must advance the needs of the poor in society.

Secondly, our Parliament must never surrender or weaken its oversight and monitoring functions. It should keep a watchful eye over government’s spending to ensure that it is in keeping with the principles of good governance, sustainable development and poverty alleviation.

Thirdly, our Parliament must lobby the Pan-African Parliament so that a common voice can be constructed on debt cancellation and relief, reducing poverty and promoting economic growth and development.

Finally, our Parliament can give serious consideration to supporting the call for a new source of funding, such as an international tax on military trade, which could generate funds for aid and development purposes.

What I am suggesting is an approach that is more proactive, action-oriented and forward-looking. It’s about developing continental and global solidarity with the poor of the world and using political power more creatively to advance the interests of the poor. It’s about Parliament increasing partnerships with other parliaments, governments and civil society.

In this way we can give concrete expression to the clause in the Freedom Charter which says:

There shall be peace and friendship in the world. [Applause.]

Debate concluded.

The House adjourned at 17:58. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

ANNOUNCEMENTS

National Assembly:

1. Referrals to Committees of papers tabled

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

1) The following paper is referred to the Portfolio Committee on Trade and Industry and to the Standing Committee on Public Accounts for consideration:

  Report of the Auditor-General on  the  Performance  Audit  of  Overall
  Management Measures at Ntsika  Enterprise  Promotion  Agency  [RP  11-
  2005].

2) The following paper is referred to the Portfolio Committee on Health for consideration:

  Strategic Plan of the Department of Health for 2005-2008.

3) The following paper is referred to the Portfolio Committee on Sport and Recreation. The Report of the Auditor-General on the Financial Statements is referred to the Standing Committee on Public Accounts for consideration:

  Report and Financial Statements of Boxing South Africa for 2003-2004,
  including the Report of the Auditor-General on the Financial
  Statements for 2003-2004.

4) The following paper is referred to the Portfolio Committee on Science and Technology:

  Report and Financial Statements of the National Advisory Council for
  Innovation for 2003-2004.

5) The following paper is referred to the Portfolio Committee on Home Affairs:

  Report of the Independent Electoral Commission on the National and
  Provincial Elections for April 2004.

TABLINGS

National Assembly and National Council of Provinces:

1. The Minister of Science and Technology

   Strategic Plan of the Department of Science and Technology for 2005-6 to 2008-2010.

2. The Minister of Social Development

   Strategic Plan of the Department of Social Development for 2005-6 to 2009- 2010 [RP 28-2005].

National Assembly:

1. The Speaker

   Letter from the Minister of Finance dated 08 March 2005 to the Speaker of the National Assembly, in terms of section 8(5)(a) of the Public Finance Management Act, 1999 (Act No 1 of 1999), explaining the delay in the tabling of Consolidated Financial Statements.

   LATE TABLING OF CONSOLIDATED FINANCIAL STATEMENTS

   I am writing to advise that the tabling of the Consolidated Financial Statements in terms of section 8(3) of the Public Finance Management Act (PFMA) will be delayed, and to request an extension for the tabling thereof in Parliament.

   Section 8(3) of the PFMA stipulates that “The Minister must submit the Consolidated Financial Statements and the Audit Report on those statements within one month of receiving the report from the Auditor- General, to Parliament for tabling in both Houses”. The timing for the tabling referred to in this case is the end of October 2004. Section 8(5)(a) requires me to provide written explanation setting out the reasons for failure to submit the statements timeously.

   Please be advised that the causes for the delay are due to the following:

   The year ending 31 March 2004 is the first year in which such consolidated financial statements are required. Departments and entities are thus exposed to the complexities attached to this requirement for the first time, and formats for the redraft of the consolidated financial statements posed a challenge to all stakeholders; The consolidations done on the previous years’ information raised serious issues with regard to the integrity of the information, thus a more thorough approach was needed this year; Most public entities did not comply with the deadline for submitting the statements; The National Treasury and the technical team of the Auditor-General’s Office needed to resolve the disagreement on the nature of the audit opinion, which was resolved on, 28th February 2005; and The Auditor-General has not been available due to other commitments and has accordingly been unable to review the consolidated financial statements. We have however, received a commitment that the AG will accommodate us by mid March 2005.

   The National Treasury intends to table the Consolidated Financial Statements in terms of section 8(3) of the PFMA before the end of March

   1. I have instructed the National Treasury to put in place mechanisms to ensure non-recurrence of these problems.

   The National Treasury and the Auditor-General have discussed the matter and both parties agree that the delayed publication will allow for the issues to be addressed comprehensively, thus laying a good foundation for the future.

   Kind regards

   Trevor A Manuel, MP Minister of Finance

COMMITTEE REPORTS

National Assembly:

1. First Report of Standing Committee on Public Accounts: Unsigned Audit Reports, dated 8 February 2005:

The Standing Committee on Public Accounts having considered the Legal Opinion of the Parliamentary Legal Advisers on the legality of unsigned audit reports submitted to Parliament for tabling, and the validity of audit reports signed by means of an electronic signature or a company rubber stamp, reports as follows:

The Committee has been experiencing a practice by some of the Parastatals/Departments where Annual Reports containing unsigned audit reports from external auditors are tabled in Parliament. This practice is of great concern to the Committee as it might have legal implications on the status of these reports.

These led to the Committee requesting a legal opinion from the Parliamentary Legal Advisers on the validity of such reports and the validity of an audit report signed by means of an electronic signature or a company ’s rubber stamp.

From the legal Opinion received, it is clear that such reports might be in contravention of the Common law, South African Audits Standards (SAAS) and the Electronic Communications and Transactions Act, 2002.

The Committee therefore recommends that:

An audit report tabled in Parliament must be signed by an authorized auditor either in his/her personal name or in the name of the Company; If an electronic signature is used the report must be certified to be correct by an officer in the service of the Company; Where a Company uses a rubber stamp, an official of the company must also sign the report; That Departments and Parastatals should comply with these requirements; and Reports that do not conform to these standards will be rejected and sent back.

Report to be considered.

1. Second Report of Standing Committee on Public Accounts: Correctional Services, dated 9 February 2005:

The Standing Committee on Public Accounts having considered the report of the Correctional Services, reports as follows:

1. Medical Expenditure (para 4.2.3, page 52)

The Auditor-General was unable to verify the validity, accuracy and completeness of medical expenditure amounting to R630 million paid to Medcor.

The Committee recommends that the Accounting Officer:

Immediately takes all appropriate steps to finalise the outstanding agreement with Medcor, as well as all other outstanding matters currently limiting the extent to which the Auditor-General can audit the Medcor expenses; Ensures that full and complete records of payments made to Medcor for the 2004/05 financial year audit are provided to the Auditor-General; Compiles and maintains an accurate membership database; Limit the employer contributions to the maximum amount permissible per member per month in line with the rest of the public service; Ensures compliance with schedule 7 of the Income Tax Act (Act No. 58 of 1962) relating to taxation of medical aid fringe benefits; Considers the possible liability to the state should Medcor not have the necessary funding levels that are required in terms of section 35 of the Medical Schemes Act, Act No. 131 of 1998.

1. Internal Control (par 4.2.5, page 53)

Internal control shortcomings were reported for the third year in a row, including a lack of management reviews, and non-compliance with laws and regulations.

The Committee is aware of a number of corrective actions that the Accounting Officer can consider, including –

Revisiting and updating all policies and procedures; Ensuring proper monitoring structures and accountability at all levels; Implementing and monitoring proper management controls, especially in terms of overtime; Ensuring that individual performance contracts of staff include measurable key performance areas that are revised on an annual basis; and Investigating alternative systems to address the control shortcomings with respect to leave administration especially relating to process flows for approval.

However, these are regular management actions required of accounting officers and should not be pointed out by a committee of Parliament.

The Committee therefore recommends that the Accounting Officer ensures that:

He takes all appropriate steps to fully comply with the requirements of section 38 of the Public Finance Management Act, or run the risk of being guilty of financial misconduct in terms of section 81 of the Act.

If the Accounting Officer is unable to comply with any of the responsibilities determined for accounting officers in the aforementioned section, he must promptly report the inability, together with reasons, to the Minister and the National Treasury. 1

The Accounting Officer should inform the Committee and the Auditor General of the progress made with regard to addressing the problems of internal controls capacity.

1. Information technology (par. 4.2.5, page 53)

A number of weaknesses were reported by the Auditor-General regarding co- ordination on management levels between the Department and the State Information Technology Agency (SITA) with respect to the various software and hardware needs of the Department.

The Committee recommends that the Accounting Officer urgently ensures –

proper consultation and co-ordination with SITA; an appropriate service level agreement with SITA; proper consideration of the cost benefit analysis relating to the change over to Microsoft solutions, including aspects such as the purchasing costs of software/hardware and data conversions required; compliance with the SITA Act; and The finalisation of the IT strategic plan, which has to incorporate the finalisation of a disaster recovery plan.

1. Consultants (par 5.14, page 127)

The Committee is concerned about the return on investment received for the Department ’s training expenditure of R4,471 million during the year in question. The Committee is also concerned that the Department had apparently overlooked the opportunity to make use of the services of the SA Management Development Institute (SAMDI) – the designated public sector management training institution – seeing that the training related to leadership development of junior and middle managers.

The Committee recommends that in future the Department ensures that they give full consideration to the services available from public sector institutions such as SAMDI and National Treasury.

1. Unauthorised Expenditure (Reference 02/03 AFS - Note 1.2, page 125 and Note 12 page 130)

There was no unauthorised expenditure disclosed for the 2003/2004 financial year. With respect to the unauthorised expenditure of R41,642 million incurred during the previous year, the Committee took note that the funds were spent on essential services for prisoners.

In the light thereof that the Accounting Officer managed to contain excess expenditure during the last year, the Committee recommends that Parliament authorise the amount of R41,642 million in respect of the previous year. However, the Committee noted that in numerous instances of virement in the various programmes and sub-programmes which seem to indicate lack of proper planning and budgeting controls.

The Committee recommends that the Accounting Officer:

Improves the budgetary controls within the Department; and Takes disciplinary action against all officials causing overspending.

1. Possible fraudulent qualifications

The Committee is not satisfied with the slow progress being made with the investigation into possible fraudulent qualifications. The extent of overpayment and unjustified remuneration is still unknown.

The Committee is of the opinion that this investigation, reported in 2000/01 already, has to be completed. If this is not possible, reasons must be provided to Parliament, as well as a commitment to a finalisation date.

1. Leave utilisation and overtime (par 5.9, page 121) and overtime (page 104, tables 2.3 and 2.4)

In the case of three comparable departments, the following information was disclosed to Parliament in their respective annual reports for the 2003/04 financial year

The Committee wishes to emphasize the responsibility of the Accounting Officer for the management of leave and overtime in terms of the PFMA and the Public Service Act. The Committee will in future focus on the proper management of leave and overtime, specifically whether -

proper compliance with policies and procedures in respect of leave and overtime and the necessary controls to enforce compliance are in place to ensure that leave and overtime are not misused; the responsibility for monitoring and authorizing overtime is clearly assigned; human resource information exist, capable of meeting the needs of management with regard to various issues such as leave use and cost; and all reasonable means of eliminating the need for overtime have been assessed.

1. Monitoring of Progress

In view of the monitoring role of the Audit Committee, as determined by the PFMA and the Treasury Regulations pertaining to the internal control environment, the Committee wishes to recommend that the Audit Committee on a quarterly basis monitor and evaluate the progress made with respect to all of the above areas of concern identified. The Audit Committee must report thereon in the next annual report of the Department.

1. Vacancies and personnel turnover (par 4.1.3, page 46, and par 4.1.9, page 48)

The Annual Report indicated that out of an approved and funded staff establishment of 35,675, only 32,832 departmental posts were filled at the end of the financial year under review. An additional number of posts have subsequently been approved, bringing the approved establishment to 48,674.

The Committee recommends that the Portfolio Committee on Correctional Services consider:

monitoring the progress with the filling of all vacancies, especially critical top management positions; ensuring that, overall, the issues raised by the Committee in this Report, are addressed in the Department’ s next strategic plan, and are monitored for implementation.

Report to be considered.

1. Third Report of Standing Committee on Public Accounts: APAC Conference, dated 8 February 2005:

Report of the Standing Committee on Public Accounts (SCOPA) on the 6th Annual Conference of the Association of Public Accounts Committees (APAC) held in Nelspruit, Mpumalanga Province from 3 to 6 October 2004.

The SCOPA having attended the Conference, report as follows:

  1. Terms of Reference

The SCOPA was invited to attend the 6th Annual ACPAC Conference and the Annual General Meeting held in Nelspruit, Mpumalanga Province from 3 to 6 October 2004. The Committee was represented by the multiparty delegation consisting of the following members:

Mr. F Beukman (NNP: Chairperson); Mr. V Smith (ANC); Ms. L Mabe (ANC); Mr. D Gumede (ANC); Mr. R Mofokeng (ANC); Mr. G Madikiza (UDM); Dr. M Van Dyk (DA); Mr. E Trent (DA); Mr. B Kannemeyer (ANC); Mr. E Pule (UCDP); Mr. P Gerber (ANC); Mr. E Molefe (Support Staff); Mr. L Pakati (Support Staff); Mr. P Netshendama (Support Staff); and Mr. D Ramurunzi (Support Staff)

 2. Background

The APAC was established in July 1997 with the intention of empowering members of the Standing Committees of Public Accounts and their support Staff. This would be achieved by offering orientation to newly appointed members of the Public Accounts Committees, training and commissioning research on matters of interest to the Association. However, the ultimate mission of APAC is to assist members in understanding oversight processes and principles within the South African Constitutional framework and parliamentary practices, as well as the financial management and performance management systems.

The Conference

The APAC holds an annual Conference and General Meeting where progress in oversight by its members is monitored and experiences are shared. The 2004 Conference, with the theme ‘Celebrating 10 yrs of Transparent Public Accountability and Moving towards Effective Oversight and Accountability in the Next Decade’ which was held in Nelspruit, Mpumalanga from 3 to 6 October, was attended by representatives from Australia, Provincial Public Accounts Committees, SCOPA National and the following SADCOPAC members (Botswana, Lesotho, Seychelles, Tanzania, Malawi, Mozambique, Zimbabwe, Swaziland and Kenya).

Welcome and Opening of the Conference

The Executive Mayor of Mbombela Municipality, Ms. R Mhaule, welcomed the delegates and thanked APAC for its decision to host its 2004 Annual Conference in Nelspruit. The Conference was officially opened by the Chairperson of the Association, Mr. V Smith, MP, who encouraged delegates to critically examine and unpack the concept of accountability, oversight and performance and come up with solutions on how APAC could make a difference in improving the life of ordinary citizens of this country.

Panel Discussions and Commissions.

The Conference was divided into three Commissions, viz. Strengthening oversight ability and effectiveness of the legislature; An African Perspective on oversight by Legislatures; and Implementation challenges of the Municipal Finance Management Act, with each Commission allocated three guest speakers.

There were two further guest speakers who presented papers on general themes of interest to the Conference, viz. ‘Relationship between SCOPA and the Accounting Standard Board’, which was presented by the CEO of the Board, Ms. E. Swart; and ‘Celebrating 10 yrs of Transparent Public Accountability and Moving Towards Effective Oversight and Accountability in the Next Decade’, which was presented by the Auditor-General, Mr. S Fakie.

Commission/ Theme 1: Strengthening oversight ability and effectiveness of the legislature.

Ms. S Lucas, APAC EXCO member, chaired the discussions and the panelists were, Prof. T Sono (APAC EXCO member), Ms. M.N Matladi (Chairperson of the SCOPA, North West Legislature) and Prof. Stan Sangwena (Chairperson of the Public Service Commission).

Presentations

In their presentations the panelists noted critical areas that are an essential part of improving the oversight ability of legislatures and they identified the following as the main priorities for action:

Appropriate skills of members; Committees should be suitably resourced; Awareness programs on ethics and good governance; That legislatures and Parliaments should ensure that section 92 and 133 of the Constitution of 1996, which relates to Cabinet and Executive Council’s accountability to both Parliament and Legislatures, are effectively and continuously complied with; That Parliament and Legislatures should clarify the roles of those who have to account to them; Performance measurement must be employed as a tool to enhance accountability; The effectiveness of statutory bodies must be maximized; Promotion of intergovernmental co-ordination, viz. to monitor performance of a particular sector across the provinces, e.g Education; The roles of SCOPA should be reviewed, especially in regard to budget process; Lack of follow-ups on previous Committee Resolutions; and Conflict between party loyalty and the obligation to hold government accountable;

Commission’s Recommendations

Commission 1 resolved that, subject to the availability of resources, the following resolutions should be implemented by SCOPA as soon as possible:

Appropriate skilling, capacity building & empowerment of MPLs/MPs and support staff; Provision of resources to committees and support staff (equipment, etc); Follow up & effective tracking system on resolutions of SCOPA & involvement of Treasury and the Office of the Auditor-General in order to assist on the implementation of resolutions and checking the implementation of the previous year’s resolutions during the next audits (Chapter 9 institutions, e.g. Public Service Commission) and reporting by the Audit Committee to SCOPA in terms of the implementation of resolutions; Strengthen the working relationship between the Public Accounts Committees and other portfolio committees; Refining the House rules of the different Legislatures to give maximum support to committees; Sharing of information by SCOPA (bringing SCOPA committees’ reports from Legislatures to APAC); Assistance to provincial Public Accounts Committees by APAC, e.g. capacity building workshops; and Establishing Memoranda of Understanding with external institutions where it assists SCOPA to operate effectively.

Commission/ Theme 2: An African Perspective on oversight by Legislatures.

Mr. M Seloane, APAC EXCO Member, chaired the discussions on this theme with panelists Dr. H Mateme (APAC EXCO Member), Mr. Z Mkabile (Chairperson, Public Accounts Committee, Eastern Cape) and Mr. P Loney (Member of Lara, Deputy Speaker, Australia).

Presenters

The Panel in their presentation noted the following:

There is no distinctive difference on African perspective on oversight. Principles of oversight are the same, and conditions of dealing with oversight are different; For any oversight function of a legislature to be efficient and effective, certain standards and norms must exist. These basic norms include conducive legal framework, appropriate institutions and structures for implementation and other instruments to enhance implementation; There is a need for oversight as it deepens democracy, promotes good governance, reinforces transparency, monitors alignment between policy, planning, budgets and implementation, ensures the effective, efficient, economical and equitable delivery of services and holds the executive accountable; That although liberalisation from colonialism in Africa started in the 1960s, literature indicate that the concept of oversight in African governments started showing only in the 1990s; That African Governments are not the only ones grappling with the issue of oversight; That structures such as APAC, SADCOPAC and other related organisations on the Continent should find their way into PAP and, in unison with other government structures, make good governance a reality on the African Continent; Concerned with the quality of responses put forward by the accounting authorities on matters raised by the legislature, and in some cases responses had not been forthcoming at all; The presence of the Executive Authority at the oversight meetings might give rise to an improvement in the quality of the responses put forward; The investigative power of the Public Accounts Committees should be backed up with a legislated power to summons witnesses and demand the production of documents; and If Public Accounts Committees are to achieve the objective of being the primary mechanism for scrutiny of government, members working on Parliamentary Committees need to be able to distinguish between their roles as members of parties, and their role as a Committee member.

Commission’s Recommendations

Commission 2 resolved that:

There is a need for research on the structures and processes of financial oversight by Parliaments and Legislatures in Africa.

Commission/ Theme 3: Implementation challenges of the Municipal Finance Management Act

Ms. R Mabena, APAC EXCO Member, chaired the discussions on this theme with panelists Mr. K Kumar (Chairperson, IMFO), Ms. N Hlangwana, (Mayor, Mafikeng) and Ms. J Downs (APAC EXCO Member).

Presenters

The Panel in their presentation noted the following:

That the MFMA is going to assist in improving the accountability of local government; That in order for it to be successfully implemented we need to be aware of possible constraints and problems in order to plan for them and to make provision for capacity building and extra budget allocations, where necessary; That there would be major challenges in the implementation of the MFMA. These relate to:

Severe capacity constraints at several levels; There are no uniform information systems set up to facilitate the reporting required either for the PFMA or the MFMA; Weak Internal Audit and Audit Committees. It might be difficult to find properly qualified people in rural municipalities where salaries may not attract people with the requisite skill levels. The same applies to Audit Committees, there may not be people living in rural areas who are able to serve on an Audit Committee; Oversight Committees. Those municipalities that set up public accounts or oversight committees will more than likely be starting with very low levels of experience and skills; Provincial Governments have often been reluctant to intervene in local government and may be slow to make the necessary interventions. Frequent reporting requirements and unrealistic deadlines; Implementation performance expectations are based on the performance of the more developed municipalities; and The Act is very generic and does not address the unique needs or crises facing various municipalities, such as: 139 interventions, lack of capacity, etc.

3.3.3.2 Commission’s Recommendations.

Commission 3 resolved that:

There should be a forum where the Premier and/or MEC for Local Government meet with mayors on the one hand and a collective forum of the above and the Heads of Departments of Local Government departments and municipalities;

There should be a uniform interface for Information Technology Systems. The National Treasury would be requested to issue guidelines on the software, ensure a uniform interface capacity building and SCOPA’s should assess the impact of capacity building programs;

SCOPA’s public hearings should include municipalities in order to hear their assessment of the programs; National Treasury and all relevant role-players must set in their regulations minimum qualifications as standards for officials. SCOPA’s should monitor the MFMA’s implementation and ensure that enough attention is given in all three spheres to cost drivers; APAC should strongly support Public Accounts Committees in Local Government; APAC should raise funds to hold workshops for representatives from national and provincial Public Accounts Committee’s and representatives from Local Government Public Accounts Committees; APAC is uniquely positioned to assist Local Government Public Accounts Committees with training and the new EXCO should consider interaction with Local Government and National Treasury regarding the guidelines to be issued by National Treasury; and APAC EXCO to investigate and report to relevant authority on the accountability arrangements.

The Launch of the booklet on the MFMA.

Mr. F Beukman, member of the APAC EXCO formally introduced a booklet on the Municipal Finance Management Act (MFMA) to APAC members. The booklet deals with the role of the national and provincial public accounts committees at the local government level.

1. The Annual General Meeting.

Election of the Office Bearers

The following members were elected to serve on the Executive Committee of the Association:

With Portfolio

Chairperson: Mr. V Smith (SCOPA: National); Deputy Chairperson: Ms. R. T Mabena (Mpumalanga); General Secretary: Ms. N Abrahams (Eastern Cape); Deputy Secretary General: Ms S Lucas (Northern Cape); Treasurer: Mr. M Seloane (Gauteng);

Without Portfolio

Mr. M Holford (Limpopo); Mr. D Ngidi (Kwazulu-Natal); Mr. T Marais (Northern Cape); Mr. J Geldenblom (Western Cape); Ms. S Kekana (Limpopo); Prof. T Sono (Gauteng); Ms. S Mereeotlhe (Mpumalanga); Mr. Z Mkabile (Eastern Cape); and Ms. J Downs (Kwazulu-Natal).

1. Conclusion

The members of the delegation would like to extend their appreciation to the organizers of the events and the Mpumalanga Public Accounts Committee for their hospitality.

Report to be considered.

1. Fourth Report of Standing Committee on Public Accounts: Competition Commission, dated 15 February 2005:

INTRODUCTION

The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Financial Statements of the Competition Commission for the year ended 31 March 2004, tabled in Parliament on 22 September 2004 and referred to it, reports as follows:

AUDIT OPINION

The Committee noted the unqualified audit opinion expressed by the Auditor- General, and trusts that future audit opinion shall be equally unqualified.

GENERAL MATTERS:

The committee further noted with concern that the Commission: retained accumulated surplus funds, but that approval from National Treasury has not yet been obtained; and had more than doubled its depreciation charge from R919 612 to R2,147 754 owing to the office relocation of the Commission, which may also lead to a penalty for the cancellation of lease the agreement of which penalty will amount to approximately R7,2 million during the next financial year.

RECOMMENDATION The Committee recommends that within two weeks of receipt of this resolution, the Commissioner should submit to SCOPA:

the reply by National Treasury to their request for retention of the accumulated surplus funds, and if permission has been denied the Commissioner must furnish proof that the surplus funds have been returned.

CONCLUSION

The Committee is of the view that except for the aspect highlighted above, no further interaction with the Competition Commission would be necessary for the financial year under review.

The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.

Report to be considered.

1. Fifth Report of Standing Committee on Public Accounts: South African Reserve Bank, dated 16 February 2005:

INTRODUCTION

The Standing Committee on Public Accounts, having considered the Annual report and the Report of the Independent Auditors on the Financial Statements of the South African Reserve Bank for the year ended 31 March 2004, tabled in Parliament on 28 September 2004 and referred to it, reports as follows:

AUDIT OPINION

The Committee noted the unqualified audit opinion expressed by the Independent Auditors, and trusts that future audit opinions shall be equally unqualified.

CONCLUSION

The Committee is of the view that no further interaction with the accounting authority of the South African Reserve Bank is necessary for the financial year under review.

The Committee therefore awaits the next Annual Report and the Report of the Independent Auditors.

Report to be considered.

1. REPORT OF THE PORTFOLIO COMMITTEE ON ENVIRONMENTAL AFFAIRS AND TOURISM ON BUDGET VOTE 27, DATED 15 MARCH 2005

The Portfolio Committee on Environmental Affairs and Tourism having considered Budget Vote 27 of the Department of Environmental Affairs and Tourism, wishes to report as follows:

Having been briefed and having deliberated on Budget Vote 27 of the Department of Environmental Affairs and Tourism for 2005/6 financial period in terms of Rule 201 (c) of the National Assembly, which states that: A Portfolio Committee may monitor, investigate, enquire into the and make recommendations concerning any such executive organ of the state, constitutional institution or other body or institution, including the legislative programme, budget, rationalization, restructuring, functioning, organization, structure, staff and policies of such organ of state, institution or other body or institution. 1, the Portfolio Committee on Environmental Affairs and Tourism reports as follows:

1. INTRODUCTION AND OVERVIEW

Members of the Portfolio Committee on Environmental Affairs and Tourism and the Select Committee on Land and Environmental Affairs were briefed at a joint meeting on Budget Vote 27 of the Department of Environmental Affairs and Tourism. The Departmental briefing focused on policy and strategic objectives and the 2005/06 Budget allocation to its interrelated six programmes. These include Programme 1: dealing with Administration, Programme 2: dealing with Environmental Quality and Protection, Programme 3: dealing with Marine and Coastal Management, Programme 4: dealing with Tourism, Programme 5: dealing with Biodiversity and Conservation and, Programme 6: dealing with Social Responsibility and Projects.

1. JOINT BRIEFING ON BUDGET VOTE 27 FOR 2005/06 FINANCIAL PERIOD

On 16 February 2005, the Department of Environmental Affairs and Tourism briefed members of the Portfolio Committee on Environmental Affairs and Tourism and the Select Committee on Land and Environmental Affairs on Budget Vote 27 for the 2005/06 financial period. The Departmental briefing generally focused on the 2005/06 budget allocation to programmes such Administration, Environmental Quality and Protection, Marine and Coastal Management, Tourism, Biodiversity and Conservation and, Social Responsibility and Projects

2.1 BRIEFING ON PROGRAMME 1: ADMINISTRATION The Chief Operation Officer, Ms PM Yako, briefed members of the Portfolio and Select committee on 2005/06 budget related to administration programme. Her presentation focused on budget allocation to subprogramme such as Minister and the Deputy Minister works, offices of the director-general and chief operation officer, international coordination, corporate affairs, planning and coordination, communication, internal audit and office of the chief financial officer. 2 BRIEFING ON PROGRAMME 2: ENVIRONMENTAL QUALITY AND PROTECTION The Deputy Director-General of the environmental quality and protection programme, Ms J Yawitch, briefed members of both the Portfolio and Select committees on the 2005/06 budget related to environmental quality and protection. Her presentation focused on budget allocation to sub-programmes such as management, regulatory services, pollution and waste management, contributions and financial assistance. 3

2.3. BRIEFING ON PROGRAMME 3: MARINE AND COASTAL MANAGEMENT Members of the Portfolio and Select committees were briefed on the 2005/06 budget allocated to the marine and coastal management programme. The presentation focused on the 2005/06 budget allocated to sub-programmes such as government assistance, levies, harbour fees, permits and licenses, interest on investment, sale of confiscation, fines & penalties and marine activities card, administration, resource management, research, monitoring, control and surveillance, marine patrol and research vessels 4.

2.4. BRIEFING ON PROGRAMME 4: TOURISM The DDG of the tourism programme, Dr P Matluo, briefed members of the Portfolio and Select Committees on the 2005/06 budget related to tourism programmes. His presentation focused on budget allocation relating to subprogrammes such as management, tourism support, tourism development and contribution.5

2.5. BRIEFING ON PROGRAMME 5: BIODIVERSITY AND CONSERVATION The DDG of the biodiversity and conservation programme, Mr. F G Mketeni, briefed members of both the Portfolio and Select Committees on the 2005/06 budget related to the biodiversity and conservation programme. His presentation focused on budget allocation to sub-programmes such as management and support, biodiversity and heritage, biodiversity and conservation, resource use, protected areas, park infrastructure and transfers to statutory bodies.6

2.6. BRIEFING ON PROGRAMME 6: SOCIAL RESPONSIBILITY AND PROJECTS Members of the Portfolio and Select Committee were finally briefed on the 2005/06 budget related to the social responsibility and projects programme. The presentation focused on the 2005/06 budget allocation to sub-programmes such and antartic and island research, government motor transport, land, building and structures and financial assistance to poverty relieve projects. 7 DELIBERATION ON BUDGET VOTE 27 FOR 2005/06 FINANCIAL PERIOD On the 11 March 2005, the Portfolio Committee on Environmental Affairs and Tourism deliberated and resolved on Budget Vote 27 for the 2005/06 financial year, presented by the Department in the joint meeting with the Select Committee on Land and Environmental Affairs on 16 February 2005. The Chairperson, Ms E Thabethe, indicated that the purpose of the meeting was to deliberate, seek clarity and resolve on Budget Vote 27 for the 2005/06 financial period related to programmes and subprogrammes of the Department of Environmental Affairs and Tourism.

The deliberation, clarity seeking questions and responses, as well as resolutions during the Committee meeting, focused on the 2005/06 budget allocation to departmental programmes such as administration, environmental quality and protection, marine and coastal management, tourism, biodiversity & conservation and, social responsibility & projects. Having deliberated and having sought clarity related to budget allocation to departmental programmes, the Portfolio Committee on Environmental Affairs and Tourism noted that:

3.1. The aim of the Administration programme is to provide strategic direction and oversee the overall management of the entire department. The 2005/06 budget allocated will enable this programme to provide the number of new posts required for core areas as indicated in an institutional review.

3.2. The Environmental Quality and Protection programme aims at protecting the constitutional right of all South African to an environment that is not harmful to health and well-being through legislative and other measures. The 2005/06 budget allocated will enable this programme to put in place practicable measures to ensure the implementation of National Environmental Air Quality and Environmental Impact Assessment as well as the evaluation procedures to assess the Buyisa –e- Bag Section 21 Company.

3.3. The Marine and Coastal Management Programme provides guidance to the development and conservation of the marine and coastal management and ensures sustainable utilization of marine and coastal resources. The 2005/06 allocated budget, if used effectively, will enable this programmme to deal with challenges related to the allocation of fishing rights, transformation, employment equity, retention of scientists and skills development.

3.4. The Tourism programme aims at creating the conditions for sustainable growth and development. The 2005/06 allocated budget will enable this programme in its 2005/06 activities to deal with challenges of black economic empowerment score card and the development of a training package for tourism entrepreneurs as well as the development of NEPAD strategies to encourage tourism in the rest of Africa.

3.5. The Biodiversity and Conservation programme is aimed at promoting and conserving South Africa’s biological diversity, cultural heritage and sustainable utilization of resources for the benefit of South Africans. The 2005/06 allocated budget will enable this programme to develop a national biodiversity strategy and plan and the implementation of an invasive species strategy, approved in December 2004. 3.6. The Social Responsibility and Projects programme provides projects that are targeted at infrastructure development, job creation, poverty alleviation and community training and development within the framework of the extended Public Works Programme. The 2005/06 allocated budgets will enable this programme in its 2005/06 activities to increase the number of people participating in the projects and put in place monitoring and evaluation systems to assess the impact and sustainability of the projects.

1. CONCLUSION AND RECOMMENDATIONS The Portfolio Committee on Environmental Affairs and Tourism, having been briefed on 16 February 2005 and having deliberated on 11 March 2005 on Budget Vote 27 of the Department of Environmental Affairs and Tourism, related to budget allocation to programmes such as administration, environmental quality and protection, marine and coastal management, tourism, biodiversity & conservation and, social responsibility & projects, concludes and recommends as follows:

4.1. Administration Programme Noting that the aim of this programme is to provide strategic direction and oversee the overall management of the department, and noting that the expenditure has increased from R127, 4 million in 2001/02 to R337, 2 million in 2002/03, then fell to R128, 2 million in 2004/05, is recommended that the Department should appear before the Portfolio Committee on Environmental Affairs and Tourism and the Select Committee on Land and Environmental Affairs during the second term of the parliamentary session and committee week to brief them on its overall short, medium and long-term strategic plan and details of work in the implementation of sustainable development priorities and as indicated in the 2004 Johannesburg + 2 conference.

4.2. Environmental Quality and Protection Programme Noting that the draft Environmental Impact Assessment (EIA) regulations were published for public comment in December 2004 and that March 2005 was targeted as the date of finalization of the regulations, it is recommended that the Department of Environmental and Tourism should appear before the Portfolio and the Select Committees to brief them on the progress made in respect of the finalization of EIA regulations, development of waste information system and waste management planning guidelines and implementation and asbestos regulations.

4.3 Marine and Coastal Management programme Noting that Marine and Coastal Management programme of the Department has published on the 1st March 2005 19 policies to guide the 2005 allocation of commercial fishing rights for public comments and will be publishing a report by April 2005 on options for future management of fishing harbours and, by mid December 2005 long-term fishing rights will be allocated, it is further recommended that during the 2005 Second Term of the Parliamentary session and committee week, the Department of Environmental Affairs and Tourism should appear before the Portfolio and Select Committees to brief them on each of the published 19 fishing policies and report on options for the future management of fishing harbours.

Tourism programme Noting that the black economic empowerment score card will be launched in May 2005 during the Tourism Indaba to be held in Durban, the Department of Environmental Affairs and Tourism should appear before the Portfolio Committee on Environmental Affairs and Tourism and the Select Committee on Land and Environmental Affairs to brief members on the black economic empowerment score card, institutional strategies, processes and mechanisms to be put into place ensure successful implementation.

4.5. Biodiversity and Conservation programme

Noting that the biodiversity and conservation national action programme has been completed to address land degradation and poverty eradication, the Department of Environmental Affairs and Tourism must appear before the Portfolio Committee and Select Committee to brief them on progress made in respect of National Action Programmme (NPA).

4.6. Social Responsibility and Projects programme

Noting that the social responsibility and projects sub-programme provides for projects which are targeted at infrastructure development, job creation and community training, it is recommended that the Department of Environmental Affairs and Tourism should appear before the Portfolio Committee on Environmental Affairs and Tourism and the Select Committee on Land and Environmental Affairs to brief them on the progress made in respect of the Extended Public Works Programme, monitoring and evaluation systems to be used to assess projects location, beneficiaries of the Extended Public Works programme.

The Portfolio Committee on Environmental Affairs and Tourism wishes to express its gratitude to the Minister for leading the Departmental officials during the joint briefing sessions, dated 16 February 2005. Thanks is also extended to the former Director-General, Dr C Olver, and Acting Director- General, Ms P B Yako, and Departmental teams for presenting the 2005/06 Budget Vote 27, and for providing professionalism in answering questions raised by members at meetings.

1. Report of the Portfolio Committee on Public Enterprises on the Study Tour of Alexkor, a state-owned diamond mining company in Alexander Bay, Northern Cape, dated 16 March 2005:

The Portfolio Committee on Public Enterprises, having undertaken a study tour of Alexkor on 1 and 2 November 2004, reports as follows:

A. Study Tour part of programme

1. Alexkor is a state-owned diamond mining company in Alexander Bay, Northern Cape, that accounts to parliament through the Public Enterprises Portfolio Committee.

2. As part of the August 2004 programme of the Committee, “ Towards Developing a Longer-Term Programme: Setting the Foundations”, the Committee decided to undertake visits to all the state-owned enterprises (SOEs) that fall within our portfolio. The aims of these visits, basically, are:

   • To get a better sense of the SOEs and the nature and scope of our portfolio. • To get a better understanding of the extent to which the SOEs are fulfilling the government’s mandate, particularly the new stress on the developmental role of SOEs. • To develop a strategic framework to guide the Committee’s programme over the next few years. • To develop a more effective oversight role for the Committee.

3. Depending on the overall programme of Parliament, the Committee hopes to complete this initial study tour programme of the SOEs by June this year.

4. The study tour of Alexkor took place on 1 and 2 November 2004. Those who took part are Mr Y Carrim (chairperson), Mr I Davidson, Mr C Gololo, Mr P Hendrickse, Mr S Kholwane, Ms N Kondlo, Mr J Louw, Mr S Manie, Mr K Minnie, Ms N Mnandi, Ms D Ngcengwane and Mr R Nogumla.

5. The study tour followed shortly after Alexkor presented its Annual Report to the Portfolio Committee. This brief report is partly related to the issues raised in the consideration of Alexkor’s Annual Report. In addition to the general aims of the SOE study tours set out in section 2 above, the visit to Alexkor is also aimed at getting a better understanding of:

   • The contribution of Alexkor to the economy and society of the Namaqualand region. • Progress in respect of transferring government functions from Alexkor to local and provincial government. • Progress in respect of settling the land claims dispute.

6. The Committee had meetings with the Mr Rain Zihlangu, the CEO, and the management of Alexkor, the Kuboes and Sandsdrift communities, and representatives of the National Union of Mineworkers, United Association of Workers of South Africa, women’s empowerment groups and land claims committees. The Committee also visited the land and sea mining sites of Alexkor and the diamond sifting plant, and dairy, ostrich, oyster and citrus farms, and the silos and fodder mixer. The Committee also visited the Johan Hein Primary School.

B. Alexkor: Towards Greater Focus on Core Activities

1. Alexkor is a state-owned diamond mining company in Alexander Bay in the Northern Cape. The core business of Alexkor is “the economic exploitation of diamonds and associated support elements. Its businesses include diversified agricultural operations and commercial services to the local and surrounding communities”. These operations are split into two divisions, Alexander Bay Mining and Alexander Bay Trading.

2. From an operating loss of R31,7 million in the 2001 financial year, Alexkor subsequently made operating profits each year, with an operating profit of R26,2 million in the 2004 financial year, under the management of its new CEO, Mr Rain Zihlangu.

3. Alexkor does land and marine mining. Alexkor recently restructured marine mining to allow for private contractors. There are currently 35 boats and 38 shore units. The boats employ between 4 and 6 people each. The company focused on black economic empowerment and the employment of retrenchees when issuing contracts. The contractors are involved at different stages and play different roles in the mining, processing and evaluation of the diamonds. Alexkor Diamdel and the evaluator for the contractors do the evaluation of diamonds. To ensure the safety of the marine operation each boat is required to have a diver with an advanced certificate. There are currently approximately 370 divers operating. Since 1928, De Beers Corporation has acted as the marketing channel for the diamonds mined.

4. Alexkor has 18 entities engaged in non-core activities. These non- core activities include running guest houses, holiday resorts, dairy, ostrich, oyster, fruit and parsley farms, and a fuel station. Alexkor is also involved in maize and wheat production. Over the past few years, many of these entities have been transformed from loss-making enterprises to profitability and employ a substantial number of people. Some 28 000 ostriches have been slaughtered. The ostrich farm has export accreditation. The ostrich farm also produces a huge number of eggs and has been able to reduce the mortality rate of the ostriches from 80% to 25%. The oyster farm produces a large quantity of market-sized oysters. Some 653 000 were sold over a ten month period. The oysters are sold all over South Africa under different labels.

5. Alexkor essentially owns and manages Alexander Bay, in which slightly over 3000 people live. It provides services that are normally provided by local and provincial government. This includes electricity, water, sanitation, health, education, transport, sport and recreation. Alexkor also takes responsibility for a museum and an airport. Alexkor is negotiating with the Richtersveld municipality and provincial government to hand over these responsibilities to them.

6. The Alexkor management explained that the government’s restructuring plans for Alexkor include selling 51% to a strategic equity partner, giving the community 10% and retaining 39%. In view of the negotiations on the land claims, this has been put on hold.

7. The Alexkor management explained that there are significant disparities in salaries between what Alexkor offers and the norms in the industry. These disparities, it was said, have largely been shaped by the history of apartheid employment and practices in the sector. The company undertook a national market scan which also revealed disparities. This information was presented to the Board. It was found that the majority of pay scales and bands would need to be corrected. It was estimated that this would have major financial implications for the company. The Committee recommended that the Company introduced corrective action within a time plan so that the apartheid wage gap is corrected.

8. The management said that the company recognises the importance of building a second-tier leadership and has introduced a Protégée Internship programme. Twenty people are employed from the local community and assigned to different managers. Six of the interns are women. Alexkor also provides bursaries to students from the local community. These students are earmarked for senior positions. Four of the 10 bursaries have been provided to women.

9. The Committee congratulates Alexkor, and in particular its dynamic new CEO, Mr Rain Zihlangu, for the remarkable turnaround effected over the past two years. Of course, difficulties persist and much more needs to be done, but it is clear to the Committee that the progress achieved under the new leadership is commendable. The Committee visited most of Alexkor’s core and non-core entities, and, overall, the problems notwithstanding, is impressed with what is being done. The restructuring of the marine mining sector seems quite successful to the Committee. Its beneficiaries certainly welcome this. While supporting Alexkor’s approach of moving towards shedding its non-core activities and focusing specifically on diamond mining, the Committee feels that there has to be a very carefully phased strategy to achieve this. Alexkor is intricately woven into the fabric of the Richtersveld communities and if its withdrawal from its non-core activities is not handled sensitively, the community will experience hardships. In respect of the municipal functions Alexkor currently fulfils, these should be transferred in a phased and balanced way that takes account of the current capacity of the Richtersveld municipality. While recognising the constraints of the provincial government, the Committee feels that it might be easier for Alexkor to forego the provincial government functions it fulfils; certainly it seems that the provincial government has less of a case not to, in a phased manner, take some of these responsibilities over from Alexkor. Whatever the situation, the transfer of these responsibilities has to be effected without negatively affecting the communities. They have very little anyway.

C. Meeting the Communities

1. In view of the crucial role that Alexkor plays in the economy and society of Richtersveld, the Committee met with some of the communities living there. About 180 people attended a public meeting in Kuboes. There was a much smaller meeting in Sandrift. The key issues raised at these meetings are covered below.

2. Several people complained about the lack of adequate services and facilities. These included issues regarding schooling, health, roads, transport and sports facilities. They held Alexkor responsible for this.

3. A significant number of people said that the government did not show adequate respect for and did not offer enough support for the Nama and Khoisan languages. Several people focused not just on language, but on the culture and customs of the Nama and other people which they feel are being allowed to disappear. People feel they are being marginalised.

4. It was claimed that Alexkor did not employ local people, but instead hired people from outside the local community. It was also claimed that the wealth created by Alexkor is not being re-invested in the community, but transferred outside the area.

5. The Committee also visited the Johan Hein Primary School. The major issues raised were around the lack of classrooms and teachers and the need for a policy on the use of Nama in schools in the region.

6. In various ways, it emerged that relations between “Coloured” and African people in some of the areas were somewhat tense, and needed to be addressed. In particular, it was claimed that an African nurse was forced to leave the Sandrift clinic because she was not acceptable to the local community on racial grounds.

7. While appreciating the frustrations of significant sections of the community with their living conditions, the Committee feels that too much of the responsibility for this is being placed on Alexkor. The Committee explained during the meetings that many of the issues being raised by the community should be addressed to the municipal and provincial government. The Committee feels that more needs to be done by all three spheres of government to improve conditions for the people of the Richtersveld. Also, more need to be done to address the language and cultural concerns of the communities as part of the overall nation-building project, and not in ways that reinforce the communities’ alienation. There is clearly a need to develop better relations between the “Coloured” and African communities. The Committee is to forward the concerns raised during these meetings to the local councillor, relevant MPL and MP, municipality and provincial government. The “National Question” issues will also be raised with the Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities and the Pan South African Language Board.

D. Land Claims

1. The Richtersveld community have submitted claims to the land on which Alexkor is situated. In October 2003 the Constitutional Court found in favour of the community. The government is negotiating with the community to finalise a restitution package. The Alexkor management explained that the land claims had created a “degree of uncertainty for workers and community members over employment and the provision of services”. The search for a strategic equity partner for Alexkor has been suspended pending the outcome of negotiations on the land claims.

2. Both at the public meetings and in meetings with some of the representatives of the land claims organisations, concern was expressed at the time it is taking to resolve the land claims issues. In public meetings, there were appeals to the Committee to intervene.

3. The Committee had previously met with representatives of the land claims organisations, and has also discussed the matter with the Minister of Public Enterprises, Mr Alec Erwin, and officials of DPE. It seems to the Committee that there are too many structures, with differing demands, seeking to pursue the land claims, and that there is a need for a greater degree of unity among the people pursuing the claims. The Committee is aware that sensitive negotiations are underway between the government and representatives of the communities, and hopes that an amicable settlement will be found soon.

E. Women’s Empowerment in Mining

1. To encourage women to take part in mining, in August 2003 Alexkor offered mining contracts in Witvoorkop to women’s groups. The organisations involved in the Witvoorkop mining operations are Arriesdift Smallscale Miners, Jomaree, Kgotsong, Tarras Trading, Mountain Desert Developing Company, Alexkor, and Alexkor Development Foundation.

2. In a meeting with the Committee, the women’s groups raised their difficulties with the project. Among the issues raised were the following:

   • The lack of participation of women in the project. • The lack of involvement of women in decision-making. • The lack of openness and transparency in finances. • The behaviour of the sub-contractors. • The failure of women to benefit financially from the project. • The lack of technical capacity of women. • Labour disputes.

3. The Committee feels that the empowerment of women in mining is crucial in view of the broader gender equity goals of the government and parliament, and the overwhelming dominance of men in the mining sector. The Committee therefore welcomes Alexkor’s decision to empower women in mining. However, the Committee explained at the meeting that it would not be able to immediately address the concerns of the women’s groups, but would send a sub-committee to follow-up on the matter. The Committee stressed that its role would not be to resolve the differences, but to facilitate co-operation among the stakeholders so that they can settle their differences. A sub- committee comprising Ms Ncumisa Kondlo and Ms Nana Mnandi subsequently visited Alexkor on 17 and 18 January and engaged with all the stakeholders involved in the women’s empowerment project. The Portfolio Committee adopted a report on this visit on 2 March. Among the proposals are:

   • Alexkor seconds a staff member to work with the women’s groups to address their specific concerns and improve their technical capacity. • Alexkor takes responsibility to ensure that all stakeholders understand the contract. • Audited financial statements from the sub-contractors who worked on the mine be made available as soon as possible. • A clear business plan be developed through proper consultation with all the stakeholders. Consideration should be given to ensuring that the women’s groups gain financially from the project by a set amount targeted for each financial year. • A sub-contractor be identified who will continue with the mining, as the contract is still valid for three years. The powers of the sub-contractor be limited and clearly defined. • The Department of Public Enterprises (DPE) assists in order to settle the problems and monitor progress. • Where appropriate, the provincial government should play a role. • The public representatives in the area should also play a role.

4. The Committee has since raised the matter with the Director-General of DPE and the DPE official responsible for Alexkor, and they have agreed to follow up on the issues. The matter has also been raised with the Minister. The Committee requested DPE to keep the Committee abreast of developments and formally report to parliament in six months’ time on progress. The NCOP Select Committee on Labour and Public Enterprises is to visit Alexkor soon and has also been apprised of the issues, and is to follow up on them.

F. Relatively Good Labour relations

1. The Committee met with representatives of the National Union of Mineworkers (NUM) and the United Association of South Africa (UASA).

2. Both unions said that relations with Alexkor had improved significantly since Mr Rain Zihlangu took over as CEO. They said that there is now a high degree of consultation between the unions and management.

3. The unions feel that there should be more co-operation between Alexkor, the unions, the community and the provincial government to improve service delivery and development in the area.

4. The unions feel that priority should be given to appointing qualified local people to jobs at Alexkor in order to stop the current skills flight.

5. The unions feel that Alexkor should offer more contracts to local people as part of their empowerment programme.

6. The unions are concerned about the salary disparities within the company. This includes workers getting different salaries for doing the same jobs.

7. Of course, it is to be expected that unions and management will differ. As these relations go, Alexkor management and the unions seem to have a very co-operative, productive relationship at the moment. The unions seem to recognise the value of the broader role Alexkor plays in the community, and want to work with management to see the community as a whole, not just union members, benefit. The specific role of Alexkor in the local economy and society seems to give union- management relations its specific character. Relations seem good at present, but how permanent this is going to be, is not easy to say.

G. Conclusion

1. Visiting Alexkor was very valuable for the Committee. In many ways, it was a unique experience. The Committee now has a much better sense of the nature and scope of Alexkor’s activities and the challenges that they and the communities they are engaged with are facing. The visit will certainly assist the Committee to be more effective in our oversight role.

2. Ours was, of course, a limited two-day study tour. While we gained useful insights, we also want to guard against being too definitive in our observations and recommendations.

3. It seems to us, though, that the current CEO of Alexkor, Mr Rain Zihlangu, has performed extremely well. From what the Committee can tell, it is to be seriously regretted that he is leaving the company on 31 March this year. The Committee is certainly concerned that Alexkor has not been grooming a second-tier leadership, especially one that is sufficiently representative in demographic terms. Given Alexkor’s challenges, it is vital that an energetic and effective CEO succeeds Mr Zihlangu.

4. The Committee will certainly act on all the commitments it has made in this report. As explained in section D3, a subcommittee of the Committee has already followed up with a further visit to Alexkor in January, and as explained in section D4, the Committee has already acted on some of its recommendations.

5. It has to be stressed, however, that while the Committee will raise the relevant issues in this report with the Richtersveld municipality, the Northern Cape provincial government, the relevant public representatives and other authorities, it does not have the authority to ensure that these structures and individuals act on these issues. Of course, the Committee has an oversight responsibility over the Ministry and Department of Public Enterprises, and in regard to the issues in this report raised with DPE, the Committee will actively monitor developments. But the Committee also feels that all the stakeholders we met during our study tour need to do more to address the challenges facing them. Of course, the Committee will play its part, but so must the people of Alexander Bay.

H. Appreciation

1. The Committee expresses its sincere appreciation to Mr Zihlangu and his team at Alexkor for the considerable hospitality they accorded us and the efficient organisation of the programme of the study tour. Our appreciation is also accorded to all the people we met for the manner in which we have been received.

2. We also thank Mr Ekshaan Jawoodeen from the Parliamentary Research Unit for the initial report from which this report was drawn.

3. Report of the Portfolio Committee on Public Enterprises on the “Strengthening Legislatures in Response to Globalisation and International Security Issues” Conference, dated 16 March 2005:

The Chairperson of the Portfolio Committee on Public Enterprises, having attended the “Strengthening Legislatures in Response to Globalisation and International Security Issues” Conference in the Philippines, on 2 and 3 December 2004, reports as follows:

A. Aims of the Conference

1. The Chairperson of the Public Enterprises Portfolio Committee, Yunus Carrim, was invited to offer a paper and chair a session of the “Strengthening Legislatures in Response to Globalisation and International Security Issues” Conference held in Manila, Philippines on 2 and 3 December 2004. The Conference was organised by the Centre for Legislative Development, International.

2. In view of the effort and cost involved in getting to the conference and the fact that it was for just two days, the chairperson negotiated with parliament to also spend two extra days on a study tour of the electricity and transport public utilities in the Philippines and meet with MPs from the Philippines to get a sense of how they fulfill their oversight role in respect of public utilities.

3. Essentially, the Conference aimed to increase awareness of the impact of globalisation and international security issues, post 9/11, on the practice of legislative oversight and on the nature of parliamentary democracies. The Conference aimed to encourage greater co-operation among MPs and other stakeholders across the world to strengthen legislatures to respond to the challenges of globalisation and international security issues.

4. The Conference included sessions on:

   Balancing Security and Democracy Legislative Awareness of the WTO (World Trade Organisation) Legislative Sensitivity to Gender and Globalisation Usefulness of Legislative Support Services Capacity of Legislative Committees Effectiveness of Legislative Oversight Adequacy of Budgetary Allocation A New Agenda for Legislative Strengthening

5. There were 110 participants from 21 countries. The majority were MPs. Those who participated included parliamentary staff, academics and representatives of capacity-building organisations, NGOs and donor agencies.

B. Key Issues

1. The historical, political, cultural and other contexts of the parliaments from which the MPs present at the conference came differed. The MPs came from different parliamentary committees. The speakers represented a cross-section of the ideological spectrum. Despite the diversity of the participants, a fair degree of consensus emerged on what the key challenges were and what the broad responses to these should be.

2. Participants generally felt that there was an increasingly close relationship between globalisation and international security issues. There was general agreement that governments were increasingly taking major decisions on globalisation and international security issues without legislatures exercising effective oversight of these decisions. The threat of terrorism can be effectively tackled without eroding human rights and fundamental principles of democracy – and legislatures have a crucial role to ensure this. Legislatures, it was stressed, need to be strengthened to play a more effective oversight role with regard to globalisation and international security issues.

3. Legislators, it was felt, needed to be sensitive to the manner in which globalisation and security issues have started to challenge traditional concepts and interpretations of what constitutes national sovereignty, democracy and human rights.

4. Legislators have a major responsibility to pursue the state’s obligation to protect its citizens from all kinds of threats to their physical security and well-being while, at the same time, ensuring that civil liberties are respected and upheld in all circumstances.

5. Legislators need to recognise that global and local responses to international security issues have to be sensitive to the historical, cultural and socio-political contexts of countries as sovereign and democratic entities.

6. There is a need, it was acknowledged, to better understand the historical, structural, cultural and ideological roots of international terrorism, and to seek both short-term and long-term solutions that do not polarise people on ethnic-religious-racial lines. While the “positive” sides of globalisation tend to undermine the threat of terrorism, the “negative” sides tend to exacerbate the threat. Reducing the security threat is difficult without greater economic and social development of the developing world and the reduction of global inequalities. However, at the same time development and the reduction of global inequalities are difficult without reducing the security threat. Obviously, reducing global inequalities will not automatically reduce the threat of terrorism – there are major cultural-religious-ethnic-ideological issues at stake, but it will be a major contributing factor.

7. There was general consensus that globalisation and the post-9/11 global response to terrorism were serving to attenuate the role of parliaments, and yet strong parliaments were needed for countries to reap the benefits of globalisation and counter the threat of terrorism. While recognising some of the sensitivities, the Conference felt that it was crucial that the public actively participate in decision-making on basic globalisation and security issues.

C. Challenges in Effective Oversight in South Africa

1. The Chairperson of the Public Enterprises Portfolio Committee presented a paper on “Challenges in Effective Parliamentary Oversight in a Developmental Democracy: The Public Enterprises Portfolio Committee”.

2. Among the key issues dealt with in the paper are the following:

   • The impact of globalisation on the democratic transition in South Africa. • The activist potential of parliamentary committees in South Africa. • Challenges in effective parliamentary oversight of state-owned enterprises. • Ways of strengthening legislatures in response to globalisation and international security issues.

3. Key aspects of the paper dealt with issues raised in the Public Enterprises Portfolio Committee’s “Report on the Annual Reports of the Department of Public Enterprises and the State-Owned Enterprises ”, published in the ATCs of 22 February 2005.

D. Ways of Strengthening Legislatures

1. Among the issues to be considered in strengthening legislatures in response to globalisation and international security issues are the following:

   • MPs and parliamentary staff need to be more aware of globalisation and international security issues, especially as they impact on their respective countries. The gender aspects of these issues also need to be fully understood. • MPs and parliamentary staff need to drastically improve their technical and political understanding of these issues. • Parliamentary committees in the economic and security clusters need to co-operate more within and across clusters and across both Houses, including by sharing information and organising joint briefings and public hearings. • Adequate budgetary and other resources have to be allocated by parliaments to committees so that they can effectively fulfill their oversight roles. • Parliamentary committees need to scrutinise the impact of these issues on the budgets approved by parliaments. • National parliaments need to co-operate more with state/provincial and local governments on these issues. • Parliaments need to contribute to empowering the public on these issues and encouraging them to actively participate in communicating their views to the parliaments. • Parliaments need to strengthen their links with civil society organisations and individual experts. • Parliaments need an enhanced role in oversight of trade and security agreements negotiated by governments. Parliaments need to consider a more active say in decisions about macro-economic policy decisions, which are usually made by governments in consultation with international multilateral institutions. One possible approach is to require legislative approval of representatives to multi- lateral institutions. • But the pursuit of a more effective oversight role for parliaments does not mean that parliaments need to be crudely confrontational. Some aspects of globalisation and security issues are better dealt with at the level of the executive, others at the level of parliament. There needs to be some broad consensus on this, and on the nature of both oversight and co-operation between legislature and executive. In the context of globalisation, there is also a need for the legislature and executive to creatively co-operate in the national interest. • Regional, continental and international inter-parliamentary forums should be more effectively used to tackle these issues. These organisations should also seek to be represented in multilateral institutions, where appropriate, and link more effectively with transnational civil society movements.

E. Public Utilities in the Philippines

1. The Committee Chairperson met with representatives of the electricity and railways public utilities of the Philippines, the Philippines- South Africa Business Council and two MPs from committees dealing with public utilities. There is no South African embassy in the Philippines; there was very limited time to organise a study tour programme; and those who tried to assist were, unfortunately, not able to do enough; so the programme turned out to be limited in value.

2. In general, public utilities in the Philippines have been undergoing major transformation over the past fifteen years; they are increasingly in private hands through privatisation or in other ways. The stakeholders consulted had differing views on the effects of privatisation in the Philippines, but the issues raised included in the following:

   • A privatisation programme must fall within an overall national development plan for the country, and should not simply be embarked upon to reduce the budget deficit. • Contracts have to be carefully crafted to ensure that private sector buyers fulfill the obligations defined by the state. • Foreign investors should be brought in in a way that does not sacrifice the sovereignty of a country, and there should be clearly- defined obligations to empower local companies. • Most national regulators are too weak to exercise their roles effectively. Privatisation programmes should not be effected until regulators are capacitated. • The effects of privatisation are difficult to tell. There seem to be mixed outcomes; in some cases ordinary people have benefited, in others not.

3. The stakeholders met were very impressed when informed of the South African model of free basic water and electricity services and the extent of delivery.

F. Conclusion

1. It was very useful to attend the Conference, and much was gained. However, the separate study tour programme was disappointing and not particularly productive, but in the circumstances there was little that could be done about this.

2. Clearly, there is a lot of overlap between the debates we are having in our parliament about strengthening our oversight role and the debates in other parliaments. Interestingly, though, our committee system is much more powerful than that of most other parliaments represented at the Conference, and even has constitutional protection, and we might want to exchange more with these parliaments on our perspectives on and models and experiences of parliamentary committees. The discussions within our own portfolio committee on parliamentary oversight of state-owned enterprises seem to be unique to our own country – and this is perhaps related to the extent to which the state in our country controls major entities providing basic services, our current state-led investment path and the model of the developmental state we are seeking to implement. But it is likely, given the impact of globalisation, that other developing countries will, over time, also follow aspects of our overall path, and the debates we are currently having in our Committee will probably be of relevance to them. Essentially, the Conference suggested, once again, how important it was for our country to have closer links with other African and developing countries. We have both lessons to offer and lessons to learn.

1 See section 40(5) of the PFMA.

1See, Rules of the National Assembly, 4th Edition, January 2004, 53

2 For a detailed breakdown of financial allocation to subprogramme refer to Budget Vote 27 in 2005 Estimates of National Expenditure

3 For a detailed breakdown of financial allocation to subprogramme refer to Budget Vote 27 in 2005 Estimates of National Expenditure

4 For a detailed breakdown of financial allocation to subprogramme refer to Budget Vote 27 in 2005 Estimates of National Expenditure

5 For a detailed breakdown of financial allocation to subprogramme refer to Budget Vote 27 in 2005 Estimates of National Expenditure

6 For a detailed breakdown of financial allocation to subprogramme refer to Budget Vote 27 in 2005 Estimates of National Expenditure

7 For a detailed breakdown of financial allocation to subprogramme refer to Budget Vote 27 in 2005 Estimates of National Expenditure