WEDNESDAY, 22 MARCH 2006 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY
                                ____

The House met at 14:02.

The House Chairperson, Ms C-S Botha, took the Chair and requested members to observe a moment of silence for prayers or meditation.

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col 000.

 ADDITIONAL ADJUSTMENTS APPROPRIATION BILL (2005-06 FINANCIAL YEAR)

                       (First Reading debate)

Mr G D SCHNEEMANN: Chairperson, Ministers, comrades and hon members, as the ANC we support the appropriation of an additional amount of R2,7 billion which will enable the Road Accident Fund to meet its liabilities for the period 2005-06.

In addition, this appropriation clearly indicates the caring nature of our government. The Road Accident Fund provides compensation to victims of motor-vehicle accidents for injuries, loss of income and loss of financial support. Without this appropriation many victims would be adversely affected and would not receive the much-needed compensation provided for by the Road Accident Fund.

We are mindful that this is not a permanent solution to the challenges facing the Road Accident Fund and we urge the Minister of Transport, together with the national Department of Transport and the Road Accident Fund, to ensure that the necessary measures needed for the Road Accident Fund to operate in a sound manner are introduced.

Amongst other things, attention will need to be given to minimising the cost of administration, promoting good governance and developing a sustainable economic model, which will put the Road Accident Fund in a financially sound position.

According to the estimates of National Expenditure in Vote 33 – Transport, the recommendations of the Road Accident Fund Commission have been assessed regarding both their impact and implications. It further states that, subject to a Cabinet decision, work on a no-fault benefit scheme will start with the publication of a White Paper during 2006.

This appropriation will generate a surplus of R1,7 billion that will assist in partially offsetting future deficits over the 2006 MTEF.

During 2005-06 a total of 185 773 new claims were received by the Road Accident Fund. Owing to slow progress in finalising claims, the backlog of claims grew to 443 399. This indicates the need for measures to be introduced to ensure the future financial sustainability of the Road Accident Fund.

Whilst changes can be made to the structure of the Road Accident Fund, a critical challenge is the high number of fatalities and accidents which occur on our roads each year with an estimated cost to the economy of some R40 billion per annum. During December 2005 there was a 16,9% increase in fatalities in comparison to December 2004.

Every year more and more new drivers take to our roads. An estimated 60 000 new vehicles were purchased last year.

The national Department of Transport and the Arrive Alive campaign have performed well in raising awareness of the need for road safety. Despite these efforts the number of fatalities and road accidents remain at an unacceptably high level. On the one hand we need more visible and tougher traffic law enforcement, whilst on the other hand the users of our roads have to take responsibility for their own driving practices and the roadworthiness of their motor vehicles. The owners of vehicle fleets must start to take responsibility for how the drivers they employ drive.

It is correct that government must take responsibility for the enforcement of traffic laws on our roads, but it is equally correct that the users of our country’s roads must ensure that they abide by the traffic laws, which govern our roads. We are pleased that the Road Traffic Management Corporation has started to function. We urge the Road Traffic Management Corporation to approach its task with a sense of urgency, as it has an important role to play in ensuring order on our roads.

In conclusion, we in the ANC support this appropriation and also urge all the users of our roads to obey the rules of our roads. Together we can create safer roads and reduce the number of fatalities and motor vehicle accidents. I thank you. [Applause.]

Dr S M VAN DYK: Mevrou die Voorsitter, hierdie wetsontwerp kan beskou word as deel van die huidige boekjaar se aansuiweringsbegroting, waarvan die meeste aansuiwerings van ander departemente reeds einde verlede jaar in die Parlement aangehoor en bespreek is. Hierdie aansuiwerings ten opsigte van, onderskeidelik, Denel en die Padongelukkefonds word beskou as addisionele fondse en beredeneer as onvoorsienbaar en onvermydelik. (Translation of Afrikaans paragraph follows.)

[Madam Chairperson, this Bill could be regarded as part of the adjustments appropriation for the current financial year, of which most adjustments of other departments have already been addressed and discussed in Parliament at the end of last year. These adjustments, with regard to Denel and the Road Accident Fund, respectively, are regarded as additional funds and considered to be unforeseen and inevitable.]

The DA in principle supports the appropriation of R2,7 billion for the Department of Transport for further transfer to the Road Accident Fund in order for it to proceed with scheduled payments to successful claimants and to settle the outstanding payment to the SA Revenue Service. We base this decision purely on the knowledge of the 400 000 claims outstanding - some going back nearly three years – and the long and painful suffering these claimants have endured because of not receiving payment for injuries.

But just throwing R2,7 billion at the Road Accident Fund to bail it out of its state of insolvency is not the answer. The DA opposed the recent amendments to the Road Accident Fund Act, as did over 100 000 signatories to the Stop the Bill petition, because the Bill failed to address the real issues facing the fund, namely poor management and high costs of fees spent on lawyers, medical experts and actuaries.

In the long run the only thing that will make the Road Accident Fund sustainable is a dramatic reduction in the number of road accidents. Over 12 000 people died on our roads last year, and many more were injured and maimed. This costs the economy of the country as much as R40 billion per annum.

Die huidige toestand van Suid-Afrika se padnetwerk dra grootliks hiertoe by en die regering moet in ’n groot mate die mede-aanspreeklikheid daarvoor aanvaar. Ek het die Minister van Vervoer verlede jaar gevra hoeveel kilometer paaie op die waglys is vir onderhoud en rehabilitering. Uit sy antwoord blyk dit dat 105 627km paaie dringend aandag nodig het. [Tussenwerpsels.] Soos die agb Seremane dit stel, deesdae kyk ‘n mens op sommige paaie nie meer uit vir die slaggate nie; jy soek eerder die pad wat oorgebly het tussen die slaggate! [Tussenwerpsels.] (Translation of Afrikaans paragraph follows.)

[The present state of South Africa’s road network is largely contributing to this state of affairs and the government must, to a great extent, be held co-responsible. Last year I requested the Minister of Transport to provide details of how many kilometres of road were placed on the waiting list for maintenance and rehabilitation. From his answer it appears that 105 627km of roads need urgent attention. [Interjections.] As the hon Seremane puts it, these days you no longer look out for potholes on certain roads, but rather for the piece of road that has been left between the potholes! [Interjections.]]

The question needs to be asked whether any conditions have been linked to this appropriation in terms of ensuring that the fund won’t end up looking for further appropriations in the future, or, for that matter, a further increase in the fuel levy.

The DA has on a number of occasions in this House asked for the Minister to commission an appropriate external task team to investigate the Road Accident Fund with a view to coming up with recommendations to restructure the fund in an appropriate way and to make it more sustainable, efficient and free of corruption.

The amendments to the Road Accident Fund have a number of controversial clauses. Amendments now take away the common-law right of the innocent motorist, whilst the offending or negligent driver carries no such burden and in many cases can walk away scot-free, despite the fact that he or she may be in a position to pay for any damages caused in excess of the Road Accident Fund’s accountability.

I wonder whether the Minister took these issues into consideration when so generously bailing out the Road Accident Fund. Surely, some of this money could be well placed in campaigns to educate and provide the necessary enforcement to stop the continued loss of life of and injuries to our citizens, which is indirectly costing the economy billions. I trust the Minister will have time to ponder these areas where we seem to be robbing Peter to pay Paul.

Secondly, the DA supports the R2 billion bail-out of Denel to restructure itself, given present circumstances. We are appalled by the financial losses this company suffers year after year and we must emphasise that this drain on the fiscus cannot be allowed to continue indefinitely. Denel must shape up or be shipped out!

Nevertheless, Denel is a strategically important enterprise that should be salvaged if at all possible. It has long-term commitments to maintain and has to upgrade existing weapons systems in the Defence Force. It is the core of our valuable aerospace capability. Its internationally recognised scientific and technical expertise is a national asset that we cannot afford to lose or compromise. It has more than 10 000 employees. They cannot just be abandoned to the hardships of unemployment or the lure of emigration.

Uit voorleggings aan die Parlement blyk dit dat daar geen wanpraktyke by die organisasie voorgekom het nie. Agterlosige bestuur en die verkleining van Denel se hoofuitsetmark, die SANW, is verantwoordelik vir die organisasie se verliesgeskiedenis. Tog lyk Denel se nuwe visie en missie as internasionale vennoot vir die ontwikkeling van onderdele van wapentuig, eerder as om die volledige artikels te vervaardig, meer belowend. Die ontwikkeling van wapentuig het verreikende openbare en nasionale strategiese beleidsimplikasies.

Gevolglik is dit moeilik om Denel te privatiseer. Denel moet óf herstruktureer word óf, indien dit nie slaag nie, as organisasie gesloop en gelikwideer word. Die DA vertrou dat hierdie addisionele R2 miljard- inspuiting so ’n katastrofe sal voorkom en Denel eerder op die pad na herstel sal plaas. Die DA steun hierdie wetsontwerp. Dankie, Voorsitter. [Applous.] (Translation of Afrikaans paragraphs follows.)

[From submissions to Parliament, it appears that no irregularities occurred at this organisation. Careless management and the shrinking of Denel’s main market, the SANDF, are responsible for the organisation’s loss history. Though, it seems that the new vision and mission of Denel, as international partner to develop spares for armaments rather than manufacturing the complete items, is more promising. The development of armaments has far- reaching public and national strategic policy implications.

Consequently, it is not easy to privatise Denel. Denel has either to be restructured, or, if this does not succeed, dissolved or liquidated as an organisation. The DA trusts that this additional R2 billion injection will prevent such a catastrophe and will rather place Denel on the path of recovery. The DA supports this Bill. Thank you. [Applause.]]

Mr T E VEZI: Thank you, Chair. According to Denel’s annual report of 2005, the net loss for the year is significantly worse than the loss of the previous financial year, which came to R377,5 million. According to the report, the major contributors to this year’s financial performance were, mainly, the failure to achieve the sales target, an increase in provision for contract losses and the adverse impact of the exchange rate.

According to Ernst and Young, included in the cost of sales is an amount of R697,8 million, representing the expected contract loss on the Rooivalk attack-helicopter project. Unfortunately, they did not obtain all the information and explanations they considered necessary to satisfy themselves that this provision is fairly stated. They conclude by stating:

These conditions, along with other matters, as set out in the director’s report, indicate the existence of a material uncertainty, which may cast significant doubt on the group’s ability to continue as a growing concern.

Cash is the lifeblood of any living organism. And unless drastic steps are taken … [Time expired.]

Mr J BICI: Chair, hon members, the UDM supports the Bill. However, the Bill before us constitutes large additional appropriations for two government entities that suffer from perennial financial woes. As far as Denel is concerned, its struggle to become and stay profitable has been ongoing for years. This, despite billions in taxpayers’ money being invested in it, as well as the billions more spent on the arms deal, which should have produced positive spin-offs. We are being asked to sponsor another restructuring. Let’s hope that this time the investment bears fruit.

The other entity that stands to benefit from additional taxpayers’ money is the Road Accident Fund. It has also been the subject of restructuring over the years. Despite annual promises of improvement following annual bail- outs, the RAF remains a budgetary black hole that sucks up the taxpayer’s money, without ever seeming to get out of the red. Nevertheless, we support the Bill. Thank you.

Mr H B CUPIDO: Chairperson, the ACDP notes the progress made by Denel with regard to securing equity partnerships and the selling of noncore assets. This is a welcome step towards the goal of reshaping our parastatals, so that they are in line with international standards. We have repeatedly been told that the shortage of professional skills is the greatest challenge facing our state-owned enterprises.

The ACDP exercises its faith that Denel’s R2 billion injection will cover world-class human resource practices. State-owned enterprises are generally expected to become largely self-financing, and not to place an extra burden on the budget. It is therefore our hope that every effort will be made to address those issues that may have been identified as obstacles to the growth of Denel. Regarding the Road Accident Fund, the ACDP appreciates the precarious financial situation of the fund. The solution, however, lies in better management of the fuel levy funds and the eradication of corrupt practices, not the reduction of victims’ rights to claim. Additionally, we urgently need to reduce the number of serious collisions on our roads, which, in turn, will reduce the number of claims to the fund. Thank you, Ma’am.

Dr G G WOODS: Madam Chair, like other parties, the National Democratic Convention, Nadeco, sees the similarity between the circumstances of the two institutions that seek additional funding. The similarity concerns their viability, and therefore whether the additional appropriations are justifiable.

Concerning Denel, with no real competitive advantage in a tough international market, it has found it difficult to succeed. The arms-deal- related work gave it something like a reprieve, but this is insufficient and unlikely to last. We note that British Aerospace recently decided against buying a substantial share of Denel pertaining to questions of commercial viability, and we therefore ask: “Is Denel’s latest turnaround plan sound enough to justify an additional R2 billion?”

Then there is the Road Accident Fund, which has long been problematic. There have been too many failed rescue plans to remember over this period. Seemingly, a lack of management and an inability to do what it takes to make the fund viable remain. Solutions concerning the scope, nature and integrity of the claims allowed against the fund have yet to be introduced. So, here too, are we just pouring money into a bottomless pit?

Nadeco, however, supports the appropriations on the understanding that the Ministers for Public Enterprise and of Transport will now be taking a far more rigorous approach towards dealing with the problems of these two institutions.

Mong M T LIKOTSI: Motsamaisi wa mosebetsi, PAC e amohela tshisinyo ena ya Tlatseletso ya Letlole lena la R2,7 billion bakeng sa Road Accident Fund, bakeng sa batho ba fumanang dikotsi mona ditseleng. PAC e boela ere ke maswabi a maholo hore ebe ho ntse ho ena le diketekete tsa batho hona jwale, ba so kang ba fumana ditlhapiso ha ba ile ba fumana dikotsi tsa ditseleng.

Re re ke boikarabelo ba mmuso hore baahi ba fumane tshireletso ya bohlokwa ditseleng, ele hore ba tle ba se ke ba iphumana ba le dikotsing. Mmuso o tlamehile ho bona hore o ntlafatsa mebila e le hore ho tle ho se ke ha eba le dikotsi tse etsahalang ha bobebe. PAC e amohela tlatseletso ena ya ditjhelete tsena, e le hore tshebetso e tle e kgone ho tswella pele hantle. Ke a leboha. (Translation of Sesotho speech follows.)

[MR M T LIKOTSI: Madam Speaker, the PAC supports the Adjustments Appropriation Bill for allocating an additional R1,2 billion to the Road Accident Fund to compensate people involved in road accidents. The PAC notices with despair that there are still thousands of people who have not yet received compensation from the fund.

We feel that it is the responsibility of the government to protect its citizens on the roads and to minimise accidents. The government should upgrade roads constantly to avoid an increase in road accidents. The PAC supports the Bill. Thank you.]

Mr R H BHOOLA: Madam Chairperson, the MF acknowledges and accepts that a total of R4,25 billion was appropriated in this Bill. We do feel that there is no need for a roll-over if sectors utilise their funds adequately. We are not, however, suggesting that expenditure should be created to avoid a roll-over, but in view of the fact that we are constantly complaining about a shortage of funds, that a roll-over does exist, it does not make sense.

We believe that because of the seriousness of unemployment, the Department of Labour should devise means to utilise funds adequately in the alleviation of unemployment. We have no reservations regarding additional funds appropriated to Public Enterprises and Transport. Considering the reasoning behind this addition, we support it.

We are, however, pleased that the funds are being made available to manage the Road Accident Fund and for the adequate payment of successful claimants. The MF supports the Adjustments Appropriation Bill.

Mr C L GOLOLO: Chairperson, I want to applaud the President and the Finance Minister on realising the importance of giving support to this very strategic entity, Denel, which is universally renowned for the state-of-the- art and sophisticated products it has to offer the defence fraternity.

Denel cannot ship out. Indeed, there are those who feel that Denel should be privatised and should not be given state funding. But the majority in our portfolio committee appreciate that the new leadership at Denel has a major responsibility to restructure it and make it a competitive, viable and world-class entity.

It is a fact that we as a nation do not face any external military threats because of the fact that we have made more friends than enemies since the demise of the apartheid regime. The picture that was painted last year by the new leadership of Denel, of the need to fundamentally transform it, seems reasonable to us.

We would like to call upon all relevant stakeholders to work together and do their utmost to reconstitute Denel and ensure that it serves the national interests and that it is commercially viable on a sustainable basis.

We believe the CEO when he says that part of the problem has been lack of clarity among the government and other stakeholders of the exact role Denel should play to the extent that there is convergence among the major stakeholders on the exact role of Denel and greater co-operation among them. We appreciate that.

If there is disagreement on this matter, particularly within government, surely there should be more political and financial support for Denel too, especially as we are told that defence companies globally rely on Denel.

The recent R2-billion injection by National Treasury to Denel is a positive move in that it will not only sustain jobs, but will also ensure that new skills in science and technology are acquired. This eventually enhances development, which will enable us to meet our economic growth rate goal of 6% by 2010.

In our interaction last year the CEO, Mr Liebenberg, said that fixing Denel included making Denel a profitable and dynamic organisation commercially; delivering consistent growth; attracting, developing, retaining and appropriately rewarding world-class skills; achieving world-class productivity; focusing on areas in which Denel can compete credibly; partnering with state agencies to meet the country’s defence needs; and competing in the open market, which means behaving like the best in the open market.

Denel cannot achieve world-class results with a subsidy mind-set. Anything other than world-class will not cut it in this highly competitive environment. Denel needs to decide on what it is and focus on a game plan.

Global defence procurement is a US $360 billion market. Many of the global defence contractors such as Denel find it almost impossible to serve the United States, for example, and the Nato countries, which have a closed bidder and tender process. The USA and Europe are also trying to expand their markets to areas previously served exclusively by Denel, such as the Middle East, the Far East and South America. Independent contractors such as Denel are forced to become reliant on domestic markets.

To succeed, Denel should pursue a strategy based on prime contracting here at home, and the export of systems and components through selective equity partnerships and alliances. A process is under way to evaluate alliance opportunities and drive internal improvements across all business units.

In conclusion, this time round we as a committee are going to closely watch Denel’s performance after its R2 billion allocation. Denel is the only state-owned enterprise getting money directly from the national fiscus. Hence, our committee will have a much more direct oversight role over Denel.

We need to be clear about what the money is going to be used for and we are going to monitor that it is being used for the correct purpose. We will be meeting with Denel very soon to make it clear that we are going to monitor them regularly. Hon members, ladies and gentlemen, the ANC supports this Bill. I thank you. [Applause.]

The MINISTER OF FINANCE: Thank you very much, Chairperson. Let me express appreciation for the support from all parties in the House, and deal with the issues at hand.

The first issue I’d like to deal with is that which the hon Gololo raised about the friendship that we enjoy internationally. Minister Erwin has assured me that this is not because of diplomatic endeavours, but rather because of the awesome array of weaponry that Denel has produced that has created this condition in which there are no external threats. So, it is in that context that we have to see the Additional Adjustments Appropriation Bill as well.

Of course there are different issues at play here. In agreeing, as this House does this afternoon, to an appropriation of an additional R2 billion to Denel, it is done against the backdrop of very intensive discussions, detailed presentations by the CEO and the Minister to the portfolio committee on state-owned enterprises; discussion then about the choices we exercise in order to retain the capacity in weaponry manufacture; and also against the backdrop of where Denel has been, understanding why this additional appropriation is now important.

The issues in the Road Accident Fund are considerably different. It’s worth commenting on them again, because a number of hon members did so here this afternoon. We don’t have a choice about the Road Accident Fund. The R2,7 billion that we’re asking Parliament to appropriate to the Road Accident Fund arises against the backdrop of, firstly, understanding that the Road Accident Fund is an integral part of our social security network. It’s part of the raft of social security that we have.

If we take that perspective, then a series of other issues follows. Yes, firstly, I think we must agree with those members who raised the fact that we have to do considerably more to ensure that drivers are held responsible for their conduct on the roads. It’s too easy a cop-out to say that it’s potholes in the roads. There is an incredible amount of driver irresponsibility in South Africa, and that is something we have to take joint responsibility for wherever we find ourselves.

The second issue is, of course, that this has been the most remarkable honeypot for all kinds of interests - lawyers, doctors, hospitals, people who claim way in excess of what they had previously – and what we need is a system that minimises the fault and minimises the payout.

Now, if you accept that this is part of our social security system, we then don’t take responsibility for paying wealthy people more by way of pensions. Why should we suddenly have to pay wealthy people more when they have their private insurance as well? It’s all part of retraining and re- educating, and I hope that this House will stand united as we transform the conduct of those who drive on our roads, those who are responsible for accidents, and ensure that we can maintain the RAF as an instrument within the raft of social security institutions we have in South Africa, recognise that there must be equity in how we go about this, and ensure that we can keep the fund solvent. I thank you for your support. [Applause.]

Debate concluded.

Bill read a first time.

 ADDITIONAL ADJUSTMENTS APPROPRIATION BILL (2005-06 FINANCIAL YEAR)


                       (Second Reading debate)

There was no debate.

Bill read a second time. The HOUSE CHAIRPERSON (Ms C-S Botha): I’m going to ask the Secretary … Oh, Mr Nene. The Secretary will read the Third Order of the Day.

                         APPROPRIATION BILL


 (Consideration of Report of Portfolio Committee on Finance thereon)

Mr N M NENE: Chairperson, I think there is confusion. Regarding the consideration of the report, the committee moves that the report be adopted. Thank you.

The HOUSE CHAIRPERSON (Ms C-S Botha): Thank you. May I then ask a Whip from the majority party to move a motion to adopt or note the report?

Mr S K LOUW: Madam Chairperson, I move the adoption of the report.

Motion agreed to.

Report accordingly adopted.

                         APPROPRIATION BILL


                       (First Reading debate)

Mr N M NENE: Chairperson and hon members, yesterday this country celebrated and commemorated Human Rights Day 46 years from the day that unarmed citizens were massacred for protesting against an unjust system that oppressed the majority of the indigenous inhabitants of this country.

We celebrated because South Africa today is a different country. It is free, and the rights of all human beings are guaranteed and protected in the Statute Book and in practice. We commemorated the day because we were also paying tribute to those who laid down their lives in pursuance of this cause of building a South Africa that belongs to all who live in it, without discrimination.

It is for this reason that one of our institutions supporting democracy, the Human Rights Commission, took stock of how far we have come as a country to realise these human rights, as entrenched in our Constitution. The findings of this commission are encouraging indeed. This progressive realisation of basic human rights has been made possible by the ANC government’s commitment to its historical principle that has characterised this movement over decades without flinching.

The distribution of resources has been informed by the People’s Charter, which categorically guaranteed equality before the law in the economy and at a social level.

It was only 12 years ago when the ANC came into power and faced daunting economic challenges of severe poverty, inequality and economic stagnation. It was beyond imagination how the ANC government was going to address these challenges, as it has done in the first decade of our democracy.

To use the wise words of Alan Hirsch in his book Season of Hope, he said that:

… the ANC government followed a consistent economic philosophy that had the following elements: … at the centre is a social democratic approach to social reform - it is the state’s job to underwrite the improvement in the quality of life of the poor and to reduce inequalities, but with a firmly entrenched fear of the risks of personal dependency on the state and of the emergence of entitlement attitudes. The state exists within a market economy that depends on private investment, and therefore a successful state creates an environment that supports high levels of private investment.

It is in the context of this emerging market economy faced with new challenges of a shortage of suitable skills, persistent poverty and unemployment, and limited uptake of investment opportunities that this year’s Budget was tabled.

The economic outlook for the coming Medium-Term Expenditure Framework period remains positive and is set to continue improving. We have been experiencing higher than expected economic growth and expect an average of 5% over the medium term. The expansionary fiscal stance adopted since 2001 continues, with an increase in government expenditure in pursuit of the accelerated shared growth initiative goals.

This initiative is consistent with the ANC government’s unwavering commitment to the ideals of the Freedom Charter; the Reconstruction and Development Programme; and the Growth, Employment and Redistribution policy, as these refocus government’s efforts to the new challenges.

The Freedom Charter captured the aspirations of all South Africans, whilst the Reconstruction and Development Programme was a programme that served as the ANC’s manifesto for the 1994 elections. And then the Growth, Employment and Redistribution policy was our macroeconomic policy that made it possible for this government to increase expenditure in areas that would have redistributive outcomes.

Real increases in social spending, with significant increases in infrastructure development and a renewed commitment to skills development - given that these are some of the pillars of the Accelerated and Shared Growth Initiative for South Africa, Asgisa - seek to address the constraints on economic growth.

Asgisa, in line with government’s main policy aims of reconstruction and development, supports the fiscal stance that offsets the impact of the commodity price cycle and the robust consumption. It further identifies that the recent growth, although welcomed, is not balanced as it is based on strong commodity prices, capital inflows and domestic consumer demand, which have increased imports and have strengthened the currency beyond desirable levels, as observed by the Minister of Finance in his speech.

The Minister further warned that the current boom in commodity prices is not sustainable in the absence of support on the production side. The economists that appeared before the committee share the Minister’s view and added that, historically, economic growth has been followed by a period of recession in which commodity prices were major catalysts for growth, citing 1981 and 1994 as examples of this phenomenon.

An important feature of the government’s economic management is the Medium- Term Expenditure Framework, with projections spanning over a three-year period. The committee noted that government’s projections have been relatively conservative, hence the higher than expected growth rate in 2005- 06.

According to the Medium-Term Budget Policy Statement, inflation is expected to remain within the target range of 3% to 6% over the MTEF, further underlining the fact that the economy is on a structurally stronger growth path.

This positive economic outlook is underpinned by a number of factors, among which are: a sound and sustainable macroeconomic platform; favourable global economic conditions, particularly the growth in Japan and China, and a growing market in Africa; the improvement in policy co-ordination between National Treasury and the Reserve Bank in keeping inflation within the target range, moderate interest rates and reduced costs of capital; and a rise in commodity prices.

Inselele ekulu-ke ebhekene nalo hulumeni eyokuxosha ikati eziko nokudala amathuba emisebenzi ukuze abantu bahlomule kulolu hlelo lokuthuthukisa umnotho olusheshayo futhi olunkomo isengwa yiviyo.

Ingqinamba-ke kulokhu ngeyokungabikho kwamakhono afanele nobuchwepheshe besimanjemanje. Kungakho nje isabelo sezimali sokuthuthukisa amakhono sikhule ngokubonakalayo kulo nyaka. Ukukhula kwalesi sabelo sezimali sokwakhiwa kwezingqalasizinda nakho kuzoba nezithelo ezinhle ngoba kushaya izinyoni ezintathu ngetshe elilodwa, kunikeza amathuba emisebenzi, kususa ikati eziko futhi kunikeze labo abaqashiwe amakhono emisebenzi yezandla abangaziphilisa ngawo izimpilo zabo zonke. Izibalo zakamuva-ke zikhombisa ukuthi noma amathuba emisebenzi ekhulile kodwa izinga lokuqashwa alehlanga ngokwanele ngenxa yokwanda kwabantu abazama ukungena kwezomsebenzi.

Inhlangano ebhekene nokuqoqwa kwezibalo, iStatistics SA, iphezu komkhankaso wokulungiswa kwendlela eziqoqwa ngayo izibalo ukuze lezi zibalo zifeze umsebenzi wazo ngendlela efanele. (Translation of isiZulu paragraphs follows.)

[The biggest challenge facing the government is poverty alleviation and job creation so that people will benefit from the Accelerated and Shared Growth Initiative for South Africa.

The obstacle to this is a skills shortage and technology. It is for this reason that the budget for skills development has been increased this year. The budget increment for infrastructure development is also going to bear fruit because it means that we are killing three birds with one stone. It creates jobs, alleviates poverty and gives the unemployed craft skills to make ends meet.

The latest statistics show that employment opportunities have increased but the rate of unemployment has not decreased because of the increase in the number of people looking for jobs. The statistics company, Statistics SA, is in the process of changing the way in which information is collected so that statistics will serve their intended purpose in a proper way.] With the ANC having once again emerged as the only reliable champion of the poor and the vulnerable in the recent local government elections, the challenge to live up to the expectations of the masses of this country is even greater. Indeed, the people shall continue to share in the country’s wealth and all shall enjoy equal human rights.

The committee is going to ensure that all matters raised during the hearings and all undertakings by the department are implemented without fail. Progress on the recommendations, as tabled in the report, is also going to be monitored on an ongoing basis. My other colleagues are going to be speaking on the aspects of oversight, social spending and tax policy in more detail.

Allow me to commend the National Treasury, under the political leadership of the Minister, Mr Manuel, the director-general and staff, the commissioner, the SA Revenue Service staff, the statistician-general and Statistics SA staff for all their hard work. I also commend committee members for their dedication and hard work, as well as the committee support staff for putting up with the pressures of the committee.

Business, labour, academia and civil society have also contributed tremendously in the hearings, and their inputs are going to inform our future engagements going forward. The ANC supports this Appropriation Bill. Thank you, Chairperson. [Applause.] Mr I O DAVIDSON: Madam Speaker, the DA wishes to congratulate the Minister on the presentation of his tenth budget to this House. Under his tenure we have seen the introduction of prudent macroeconomic policies, which appear to have a sound base for economic growth. This we applaud.

Yet, despite the sound base, we have seen our economy struggle to reach GDP levels comparable to other emerging markets, and more importantly, to grow at a level that not only absorbs the annual entrants into the labour market but also makes a dent in our stubbornly high rate of unemployment.

It is in this context that we welcome the Deputy President’s growth initiative, Asgisa, aimed at projecting our GDP growth to 6% and above. We are supportive because growth in economy brings growth in jobs and alleviates poverty. The Deputy President reflected correctly that our recent growth has been unbalanced based on strong international commodity prices, strong capital flows and strong consumer demand.

We agree with the Minister of Finance that commodity prices will one day retreat and investment flows can, as they have done in the past, swing away from emerging markets.

Sustainable growth cannot take place on the back of consumption demand alone. What is needed is growth on the investment and the production side if South Africa is to be placed on a more sustainable growth path.

We need to turn the current low-inflation, high-consumer growth momentum into a high-fixed-investment, high-employment-growth environment.

In respect of investment, government is to be commended on the R372 billion infrastructure roll-out over three years. But even – and this is the point

• if government does succeed in spending all of this allocation it will only raise fixed capital investment by between 1% and 2%. At present, fixed capital investment is at round about 16,5% of GDP, up on the recent low of 15% in 2000, but still well behind the 23,6% of emerging market countries and even further from the 25% target we have set ourselves if we are going to hit the 6% growth level.

So, my simple point is this: Where is the rest of the fixed investment going to come from? The answer is obvious: the private sector. Government itself has acknowledged that the private sector is the main engine room for sustained economic growth. Their participation is key. Yet, where are the incentives in the budget to induce the private sector to be part of government’s growth initiative? Where are the measures to boost the supply side of the economy and enhance South Africa’s attraction to foreign and local investors? Despite a good deal of rhetoric, a few key figures evident in the Treasury’s Budget Review tell a revealing story: Firstly, net foreign direct investment inflows for the first nine months of 2005 reached about R35,7 million, a great improvement on the stagnant levels of 2003 and 2004, but if you strip out the Barclays-Absa deal, which constitutes the bulk of that amount, we are back to the stagnant levels of before. The truth of the matter is that we are just not attracting our rightful share of foreign direct investment.

Secondly, the growth of fixed capital formation in 2005 grew by 8%. However, if you focus on the private sector component of that figure, it fell to 6,7% for 2005, off the high of 9,7% realised in 2004.

Thirdly, an analysis of government’s R372 billion infrastructure roll-out invites the question: what is the private sector’s part in this roll-out? Almost 22% is allocated to municipalities, 38% to national and provincial government, 33% to parastatals and a mere 5% to public-private participation.

So, here is where we have to register a disappointment that the budget, we believed, failed to show that ours is a government that is business friendly, and not just business tolerant. We wanted to see bolder steps in the budget: a budget embracing the role of the private sector, challenging it; a budget that incentivises the private sector to create jobs and makes it an integral part of the Deputy President’s growth initiative, not just a peripheral player.

And in this, fiscal or tax policies do play a key role. Let me welcome the reduction in tax on retirement from 18% to nine per cent. This move has long been called for by the DA and will positively affect retirement funding and increase the worryingly low savings rate. Secondly, let me also welcome the range of fiscal measures aimed at stimulating small business.

Thirdly, there can be no complaint that the budget’s main impact will be on enhancing the spending power of lower-income groups both directly and through incentives for skills development. But this raises a basic dilemma – we also need to encourage savings and investments, and this is predominantly done by the corporate sector and top-income individuals. And this is where the budget fails. The tax burden and therefore the cost of doing business in SA is high in comparison to our competitor nations in other emerging markets.

I know that the Minister is sceptical, if not cynical, about the role of taxes in encouraging investment. In this he is sometimes joined by Professor Katz, but with respect to the Katz commission, when it sat it faced a completely different investment world, in and outside South Africa.

I would, quite frankly, far rather listen to Business Unity South Africa, Busa, which believes that the time has come for a critical review of corporate tax structure, including the secondary tax on companies. This follows their own research, as well as that of others such as Merrill Lynch and KPMG, which place SA on the high side in respect of international corporate tax rates and very high when one adds in the secondary tax on companies.

The Minister published in response in the portfolio committee a note that at an effective rate of 36,9%, we compared favourably with a whole list of companies. Well, I could not help but notice in respect to the whole list that he produced that these were mostly developed countries that we were comparing ourselves with. What we need to do is compare ourselves with developing countries, more particularly those in the so-called emerging market club against which we are competing for that highly mobile investment capital.

Let me deal with a few points raised by the Minister in the meeting. Yes, looking at the effective corporate tax rate in isolation is meaningless. What has to be added in is state and other taxes that our competitors may in addition need to apply, but then so too do we have to add in our municipal taxes, skills levies and who knows what the costs of BEE and other costs are in that context.

I also hear the Minister’s argument that if he lowers the corporate tax rate unaccompanied by a reduction in the maximum marginal tax rate of individuals, it would result in unhealthy tax arbitrage. Here I think the Minister is being disingenuous. Firstly, the costs of corporatisation are not taken into account.

Secondly, but more importantly, the Minister knows that if he had not raised the threshold to R400 000 in respect of the top marginal rate, but lowered the marginal rate itself, it would have had the same effect as far as revenue is concerned but eliminated the arbitrage potential.

Finally, in respect of STC, Busa indicates that this form of double taxation does not go down well internationally. The objective of STC was to encourage companies to retain earnings and invest as opposed to taking those earnings out. I think we have to critically examine that. The trade- off the Minister makes of saying that shareholders will prefer the tax paid in companies’ hands as opposed to taking the dividend in theirs, wrongly places the purpose of this tax. Secondary tax on companies was never intended to be a tax on dividends, nor was it intended to be a trade-off. The tax on dividends was abolished in 1990; STC was brought in with a different objective in 1993.

We recognise that a scrapping of the RSC levy does positively impact on certain companies. Firstly, the RSC levy is deductible against tax and therefore it is not a R7 billion tax write-off, but closer to a R5 billion tax write-off. Secondly, the RSC levy, as I made the point, is turnover- and employment-based and therefore only high turnover and high employment companies will really benefit. Now, Minister, let us understand one another as far as this is concerned: Our plea is not for a race to the bottom but for a competitive rate.

We believe that committing SA to a 25% corporate tax rate, by say 2010, would have brought the tax rate down to the nominal international norm, sent out a strong signal of confidence in the economy and provided business with an incentive to commit to expansionary projects; and most importantly, create jobs and alleviate poverty.

And here we would have liked to see the Minister use the tax system more creatively and encourage the private sector to create jobs by introducing wage subsidies for persons employed on a full-time basis. We give incentives for investments of a capital nature, why not of a human employment nature?

Now let me concede: Fiscal policy is both complex and integrated. We might be wrong, Busa might be wrong. But I think the time is right, as part of the growth initiative, for a critical review of our tax structure. And so I ask the Minister - if he is listening – is it not time for him to constitute a task team of all stakeholders to address this issue?

In a similar vein, we are disappointed by the slow progress of privatisation, which, besides other positive spin-offs, would significantly reduce government’s public sector borrowing requirements.

Eskom’s recent indication that its plans to build a power station in Lephalale may be put on hold, because a Canadian consortium plans to build one across the border in Botswana, has a logic all of its own. We are happy to buy electricity from the private sector across the border but reluctant to buy electricity from the private sector within our own borders. That does not make sense.

On skills, while we welcome the extension of learnership advances to 2011, as well as the raising of limits, the budget does little, in our view, to address our capacity and skills crisis. The Setas have failed SA miserably and yet their cost to the SA taxpayer is R5 billion and rising. The money, we believe, could have been far more usefully spent on further incentivising the private sector to do the job.

Finally, another area of debate that needs to be opened up is that around the level of the budget deficit. Government is now projecting a deficit of 1,5% before borrowing for 2006-07 and which, in all likelihood if overruns continue, will come in again well below projections, below 1% with even a possible surplus. Such prudence may gain praise for a developed country, but for a developing one such as ours, levels closer to 3% would have been sustainable and provided a flexibility regarding increased employment incentives and other categories of spending.

As indicated Minister, we will be supporting the budget. But let me close by quoting the Financial Mail of 17 February:

On the whole this is a steady-as-you-go budget: Prudent, sound, but unimaginative and not innovative. But that is no small feat; and back in 1994 few could have predicted the revolution we have seen for the better in the handling of our public finances by government. The Minister has now delivered 10 budgets and is entitled to take much of the credit for this.

The MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Thank you, hon House Chairperson and hon members. As the hon member spoke here I was wondering whether it is my time that is wrong or maybe the House Chairperson’s time, but the House Chairperson correctly said to me he was within his time.

I would like to congratulate the Minister of Finance, Trevor Manuel, for presenting a budget representing the spirit of hope embodied in the state of the nation address, which was made in this House by our President, the hon President Mbeki.

In tabling the 2006 Budget, the Minister of Finance correctly used the quotation from Ben Okri’s book, A Way of Being Free. Central to this quotation he used, in my view, is a reminder that there are no easy victories. What we have been able to achieve as a country, 12 years into our democracy, owes much to the tough decisions we had taken earlier with regard to the management of our economy while at the same time addressing the legacy of social inequities in our society.

We can indeed repeat the words of President Mbeki in this year’s state of address that today is better than yesterday. Indeed, our yesterdays are a myriad of challenges that we had to contend with, both as government, this Parliament, as well as our people. Central to these challenges has been the building of a nonracial, nonsexist democratic South Africa, an ideal espoused by our people in 1955 in Kliptown when they drafted the Freedom Charter. It also has been about building a caring society.

The 2006 Budget is, once again, a reminder that we are indeed on the path of building a caring society. Our social wage, as reflected in many aspects of this budget, in particular the social security system, which is the largest expenditure item in this budget, is an indication that the poor are at the centre of our development. It is against this background that I support the growth and income support to vulnerable households while at the same time ensuring that our communities are not overly dependent on state support, but seek employment opportunities, as well as access other government programmes, such as the food production support grants available through our provincial departments of agriculture within the context of the Integrated Food Security and Nutrition Programme.

The mobilisation of the poor and vulnerable through the self-help programmes and co-operatives seeks to ensure that our social security system, as an intervention, creates an enabling environment while it assists people to engage in programmes that can improve their capacity to provide incomes for themselves.

The continuous support to learners from a poor background, particularly with regard to bursary allocation as is reflected in the National School Financial Aid Scheme, is another intervention that seeks to support those who are vulnerable in our society, as well as ensuring that it can contribute to the building of skills - a capacity which all agree we need in this country.

The allocation of the conditional grants to provinces as a way of improving mass participation in sport and recreation again affirms our commitment to building a caring society and a healthy society too. The Minister of Health’s initiative, which is a campaign known as Vuka South Africa, would also ensure that we as citizens play our part in improving our own health while at the same time we partner with government in improving our capacity to deal with the challenges that are there in terms of our health situation. The budget also reflects our commitment to support delivery at local government. This is an area all of us would agree is where we are able to access the impact of our policies and programmes. The support given towards continuing with Project Consolidate, which, as we know, was an intervention to ensure that we can support those municipalities that are ailing, is again a way in which we can, in a meaningful way, show a need for integrated government. All of us who have been engaged in the campaigns at local government have realised that this area of our work is an important indicator of an integrated and co-ordinated government.

I hope that the amounts that are reflected in the budget, as tabled by the Minister in February, towards the support to political parties will ensure that, as the members of this Parliament, in doing our work in the constituencies we will be able to lend support to the local government at municipal level. It is also necessary that we are able to induct and work with the newly elected representatives so that they themselves can fully appreciate the work that they have to do in order to improve the capacity of our people in making their lives better.

In order for our government to work as a collective, we would like to lend our support to the work that the Presidency is doing through the Presidential Co-ordinating Committee, as well as the resources, financially, that have been provided by the Minister of Finance in this budget. We have seen improvements particularly from last year July to this year January where alignment in having the lekgotla between national government and provincial government enabled us to bring synergy to our work.

It is also necessary for me to point to the work that is being done by the Premiers through their Premier’s Co-ordinating Forum, which also brings together the district mayors to ensure that both in the planning and the execution of our development programmes we can deliver quality service to our people. Indeed, Ben Okri, as the Minister of Finance reminded us, indicates that there would always be challenges that lie ahead of us as long as we live. Hence, as we climb the mountains, we are mindful of the frontiers ahead.

I am mindful of the challenges of spending in the area of conditional grants. Some of these are clearly evident when one examines the spending in the Comprehensive Agricultural Support Programme by various provincial departments of agriculture. In itself, the essence of the grant cannot be dismissed as being unimportant. However, our responsibility is to deal with the challenges on spending that are there.

It is therefore comforting that the national departments affected by conditional grants - not just the Department of Agriculture, but other departments at national level - have devised mechanisms to work in support of the provinces so that they can improve the quality of spending. This would also mean, as the Minister of Finance articulated in the presentation of the budget, that we might have to review the criteria that we have set to ensure that indeed they themselves don’t become an impediment for spending by the provinces.

What we have seen in the weeks after the tabling of the budget by Parliament was engaging with the various departments, looking at where we need to improve, alerting us to what the challenges are that we need to continue to deal with. Therefore what we have seen today, Minister of Finance, is actually an indication of the work that has been done over these weeks by members of this Parliament to ensure that as the executive, as well as the administration, as we discharge our duty we are mindful of those frontiers that lie ahead of us that we need to conquer.

I’m sure as Parliament we will play our oversight role so that, as the departments as well as the executive continue with their work we are able not only to monitor and evaluate the impact of the programme but also to lend a helping hand. I thank you, House Chairperson. [Applause.]

Mnr H J BEKKER: Agb mevrou die Voorsitter, die agb Minister van Finansies verdien ‘n pluimpie vir weer eens ‘n goeie begroting. Die kroonjuweel in die agb minister Manuel se kroon is die Suid-Afrikaanse Inkomstediens wat ‘n oorskot van meer as R40 miljard daargestel het, hoofsaaklik as gevolg van die oorverhaling van inkomstebelasting en die surplus op belasting op toegevoegde waarde. Wat ‘n voorreg om te beplan en te begroot met so ‘n geweldige voorsprong, terwyl die begrote tekort van die vorige jaar feitlik uitgewis is deur onderbesteding. Die Minister se grootste probleem is oënskynlik wat om met al die surplusgeld in sy koffers te doen.

Die IVP is ‘n sterk ondersteuner van effektiwiteit en finansiële dissipline, en veral dat klem gelê word op ekonomiese groei. Groter of versnelde ekonomiese groei lei tot groter maatskappywinste en kapitale uitbreidings, wat op hul beurt meer inkomstebelasting vir die staat beteken én, veral kumulatief, meer belasting op toegevoegde waarde. Wanneer die staat dan sy surplus en lenings terugploeg in massiewe kapitaalprojekte, soos met die miljarde aan Transnet en Eskom, is die tafel gedek vir verdere ekonomiese groei waarbinne die sogenaamde “multiplier effect” [vermenigvuldigereffek] definitief gaan inskop. Die vermenigvuldigereffek beteken dat die oorspronklike kapitaalbesteding tot tienvoudig gehersirkuleer kan word en ‘n ware inspuiting vir die ekonomie en werkverskaffing kan beteken.

Die IVP het gepleit vir die afskaffing van belasting op pensioenfondse en die Minister het ons halfpad ontmoet. Ons vertrou dat dit vir die Minister moontlik sal wees om volgende jaar met die oorblywende 9% belasting op pensioenfondse weg te doen.

Ons is verder ten gunste van die geleidelike infasering van ‘n basiese inkomstetoelaag in ooreenstemming met die Taylor-verslag en daarom het ons vrouegroepe ondersteun wat gepleit het om die verhoging in die ouderdomsperk tot 18-jariges vir die kindertoelaag. Dink net daaraan, dan word daardie meisies wat op skool bly en presteer ook beloon pleks van diegene wat babas kry voor hul agtiende verjaarsdag.

Soortgelyk kan die middeletoets aangepas en mettertyd afgeskaf word met betrekking tot ouderdomspensioene van ons senior burgers. Op hierdie wyse kan die basiese inkomstetoelaag geleidelik ingestel word, sonder om die stelsel oornag ryp te druk. Volgende jaar is nog ‘n jaar en, wie weet, miskien kan die Minister soos in die verlede met die amnestiewetgewing met Inkatha saamwerk, of ons raad aanvaar. (Translation of Afrikaans paragraphs follows.)

[Mr H J BEKKER: Hon Madam Chairperson, the hon Minister of Finance once again deserves to be complimented for an excellent budget. The crown jewel in the hon Minister Manuel’s crown is the South African Revenue Service that accomplished a surplus of more than R40 billion largely as a result of the over recovery of income tax and the surplus of taxation on value-added tax. What a privilege to be able to plan and budget with such a great advantage, while the budgeted shortcoming of last year has practically been wiped out as a result of underspending. The Minister’s biggest problem is apparently what to do with the surplus money in his coffers. The IFP is a strong supporter of efficiency and financial discipline, and in particular that emphasis be placed on economic growth. Greater or accelerated economic growth leads to greater company profits and capital expansion, which again lead to more income tax for the state, and especially accumatively, more value-added tax. When the state then reinvests its surplus and loans into massive capital projects, such as the billions to Transnet and Telkom, the table is set for further economic growth in which the so-called “multiplier effect” will definitely kick in. The multiplier effect means that the original capital expenditure can be recirculated tenfold and can be a real injection for the economy and employment opportunities.

The IFP pleaded for the abolition of taxation on pension funds and the Minister met us halfway. We trust that it will be possible for the Minister to do away with the remaining 9% on pension funds in the next year.

We are furthermore in favour of the gradual phasing-in of a basic income allowance in accordance with the Taylor report and therefore we supported women groups who pleaded for an increase in the age limit to include 18- year-olds for the children’s grant. Just think about it, then those girls who stay at school and perform are also rewarded instead of those who have babies before their eighteenth birthday.

Similarly the resources test can be modified and later abolished with regard to old age pensions for our senior citizens. In this manner the basic income grant can be introduced slowly, without having to force the system to ripen overnight. Next year is another year and, who knows, the Minister could perhaps, as he did in the past with the amnesty legislation, collaborate with Inkatha or accept our advice.]

For several years the IFP has highlighted the importance of Richards Bay and that it could become the gateway to Africa whilst opening up the slumbering provinces of Mpumalanga and Limpopo via the underutilised rail track from Richards Bay to the Mpumalanga coalfields. Government has now bought into the idea and we thank them.

For industrial development and cheaper electricity there are no better regions than Mpumalanga and northern KwaZulu-Natal, which are both also in close proximity to Cahora Bassa. Cross-boundary negotiations have been opened by the government and I can even foresee gas and oil pipelines connecting the South African development region. Imagine what it can mean for Southern Africa if we were to be linked by pipeline to the oilfields in Cabinda, Angola.

We applaud government’s efforts to accelerate economic growth and recent statements on developing the manufacturing base of South Africa. Together with the modernisation and technological innovation of industries you simply have to realise the importance of the principle of competitive advantage. Let’s face it, in certain categories it will be impossible for South Africa to compete internationally and particularly against the Asian and East blocs.

Handicaps with regard to region, provincial bias and price-fixing must be addressed. The IFP supports the Department of Trade and Industry in its criticism of Mittal Steel with regard to their price-fixing aimed at South African steel manufacturers by selling steel at the London international export price. South African manufacturers should at least have the benefit of the international price, less the freight cost of that exported steel.

Telkom is another example of abuse of a privileged monopolistic situation, whilst Eskom is boasting cheap electricity tariffs, but at a single outgoing price regardless of where the industrial hubs are situated. It simply does not make sense that industries relocate to Cape Town and the Eastern Cape, driven by false economies of scale in terms of which electricity tariffs are kept artificially the same as in Mpumalanga and the Tugela Basin of KwaZulu-Natal. Why not lower the tariffs or increase them according to the real cost factor of power generated by Eskom? Industries will then locate to the most economical and advantageous region.

We are also in favour of the gas-fired turbine power station envisaged for and linked to Mossel Bay and the pebble bed modular reactor in order to level the playing fields and to generate the most sought-after scarcity of electricity in the Western Cape. Spectators at the last evening rugby match at Newlands must have seen the poster of the Koeberg Supporters Club: “Enjoy rugby by candlelight.”

Feit is egter, mnr die Minister, dat die Kaap van “Stormers” nog steeds nie voldoende krag het nie. Al slaan jy jou oë op na Tafelberg sien jy nog steeds nie waar jou krag vandaan kom nie, en dis waarom die nuutste statussimbool in die Kaap nou is om jou eie generator te kan besit.

Ten slotte, ‘n vraag aan die agb Minister en sy kollega van Openbare Ondernemings: Het julle nou al die moer gekry wat Koeberg gesaboteer het? Sterkte en krag vir julle almal. (Translation of Afrikaans paragraphs follows.)

[The fact, however, Minister, is that the Cape of “Stormers” still does not have sufficient electricity. Even if you cast your eyes up to Table Mountain, you will still not see where your electricity will be coming from, and that is why the latest status symbol in Cape Town is to own your own generator.

In conclusion, a question to the hon Minister and his colleague from Public Enterprises: Have you found the bolt which sabotaged Koeberg? Power and strength to everyone.]

Power to the people! [Time expired.]

Ms J L FUBBS: Hon Speaker, hon members of this House, comrades and colleagues, “In the midst of winter I found in me an invincible summer.” Inspiring words that echo through the decades and which, for me, so aptly recall one of our greatest heroes, Bhambatha, and the revolt he led. Indeed the Bhambatha Rebellion signifies the beginning of umzabalazo, the end of the wars of resistance and the beginning of the struggle for freedom, and the culture for human rights, which we celebrated yesterday throughout the country, began.

Indeed, the beginning of the 20th century was a time of rapid and radical change, when Africans were dispossessed of their land, their cattle and their agrarian industry and enterprise. It was a time when an unholy alliance, which was struck between the government of the day and the mining magnates, who, through the poll taxes, forced black Africans - referred to as natives - over the age of 18, to work on the mines.

Diamonds were discovered. How many of us don’t wear them today and forget how it all happened! Mine bosses wanted large numbers of black people to work for them in the mines. Laws and taxes were designed to force people to leave their land. The most severe law was the 1913 Land Act, which prevented Africans from buying, renting or using land, except in the reserves.

This Act was the beginning of many such pieces of legislation that broke up families and unsuccessfully tried to crush the spirit of the majority of our people. Unwittingly, it created a proletariat and in many ways expedited the liberation struggle. It was during these tumultuous times that the ANC was born in 1912 - the oldest liberation movement. Since then, it has continued the struggle for liberation.

As a liberation movement, the ANC has fought against Bantu education, and for the right to vote for a government of our choice. And we have just all been through local government elections. It is only through an ANC government that we have democratic elections in this country. Say thank you to the ANC. This history is about our struggle for freedom and justice.

There is a strong message of hope, ushered in by the President earlier on this year, spelt out in Asgisa and, once again, mapped out in the budget, by the Minister of Finance. The policies of our current taxation reflect this commitment to address the daunting challenges we face in our country.

Just as Pixley ka Isaka Seme, in 1911, called on Africans to forget the differences of the past and unite together in one national organisation, today we are called upon to work together within the framework of Asgisa. Who in this House does not want to be in harness to eradicate poverty? Indeed, it is through Asgisa that we can address these daunting challenges of poverty.

In 1920 the ANC supported the militant strike of the mineworkers when, for the first time, workers became the motivating force of the national democratic struggle. Interesting enough, just in passing, I want to mention that the SACP then took an active role. It was, of course, among the first nonracial political organisations in the country.

Over the past 10 years we have implemented major tax reforms to broaden the tax base and to introduce equity and fairness. We have reduced marginal taxes and improved the administration of tax collection. The support for accelerated and shared growth in South Africa is supported by taxation measures over the medium term.

Regarding personal taxes, bracket creep has been directly and substantially addressed by 30% and 33% respectively for personal income tax. The middle- income earners have not been forgotten, with the top marginal tax rate now starting at R400 000 a year. When one looks at this figure of R400 000 a year, one is reminded very much that the ANC government now has done everything it can to foster and further the implementation of tax relief. In fact, we are looking at something along the lines of R13,5 billion, which really indicates that we put people first.

By raising the tax threshold on personal income tax to R400 000, the government has in one swift move exempted many low-income earners from income tax. It has also addressed the plight of our people who wish to own their own homes by drastically reducing the transfer duty. This has cut the costs of property transactions.

I want to refer to someone mentioned by one of my esteemed colleagues – a man I have the greatest respect for. I also want to refer to someone who enjoys just the edge of that respect – Prof Katz. All of us listened with great interest to Prof Katz’s inputs. I know we all did. We didn’t agree with everything that he put forward. In fact, some of us were debating the research and development as at 150, not just over the top, as it were. But let’s leave that as it were, and we will come to some debate on it. Let’s look at the companies. My heart bleeds for these companies. In 1994 the tax rate was 40%, and then it came down to 35%. We did this as a sign of good faith to try and reassure them. That was not sufficient and, of course, we brought it down to 29%. Having brought it right down to 29% and so on, I look at this and I am not an authority on tax but Prof Katz said … [Interjections.] … No, no, you are quite right, but I now listen to the authorities. May I suggest something like what Ben Okri said, “Turn on the light”. Read his poem. It was drafted for the millennium, but, of course, it is very relevant today. Katz said, and I quote:

I support the decision not to reduce basic corporate tax. A further reduction of corporate rates unaccompanied by a reduction in the maximum marginal rate of individual tax would result in a very unhealthy tax arbitrage.

As a matter of fact, hon Davidson, you were concurring there. It is not an appropriate time to reduce maximum marginal rates of individual tax. That is not a Fubbs statement; it comes from an esteemed, respected tax authority called Katz.

Now I want to tackle the secondary tax on companies, STC. Here is another thing, I don’t claim to have the edge on maths but I know how to count though. That’s very useful when you come to STC. If you look at the STC, the ANC government said, “Look, of course, we are going to reduce this. We can’t reduce it by that much, but at the very least we can take it down from 25% to 12,5%.” That was not enough and I didn’t even hear a thank you at the time.

But on top of that, because there were no thank yous, there was a further sweetener. They said: “Now, look guys, take out your calculators and we will tell you what you can do. You have all these dividends coming from other companies. You are all in this together. Before you declare your dividends, have a little discussion on your golf course, and work out as to whether this is the right time to declare your dividends, or whether you should withhold it for a moment and offset it against losses. You can take that decision. It leaves that in your own hands.”

Then it was said, “Deduct what you want to pay as a dividend to what you are receiving.” Of course, they do this long before you see it in writing. And then, “Maybe you want to offset the losses next year, only if what you are paying exceeds this will you then have to dip into that little resource of yours at the bank.” Now, I have never heard of such a hand-out.

The Americans are looking at us and saying, “Hey, you give it to them on a plate!” They are looking at us with envy. But, never mind because we have taken a decision to develop and shape our own tax policy. As I said this morning, complex as tax legislation may appear to be, it doesn’t take truckloads of policy before you can take a decision like you would have to do in the United States or the United Kingdom.

Furthermore, to show how lenient we are, we don’t make taxation proposals law with immediate effect, but maybe one or two years later. In Britain, just the opposite applies. I think it was in 1913 when they said, “You guys hang on to everything. As soon as the chancellor of the exchequer pronounces, my friends, the guillotine has fallen.” We are not like that, because we are equitable and fair.

If I am trying to make this sound as if tax is just a numbers game, it is not. It’s all about equity and expanding our minds and contributing to human capital. Look at Tsotsi, the Oscar-winning film, which was in fact made possible to a degree, you could argue, because of the tax rebates. So there we have an ANC government that says, “It’s not just a matter of number crunching. Let’s promote the film and production industry, and develop our labour-intensive areas in the industry.” Really, all I want to say to members who disagree with me is: “Switch on the light, because once you do, you are going to see a lot better and understand a lot better.” The ANC government supports this budget. I thank you. [Time expired.][Applause.]

Mr J BICI: Chairperson, hon members, the UDM supports the budget again, Mr Manuel. The national Budget, as reflected in this Appropriation Bill, is a balancing act. Overall it is a good reflection on the strength of our economy.

Much of this year’s budget’s success is built on the better-than-expected economic growth and revenue collection. A number of problematic areas remain, however, when it comes to expenditure. The failure to spend allocated funds bedevils the best of intentions to deliver.

At provincial and local level, shortages of skills and capacity as well as mismanagement nullify increasing budgets and shares of revenue.

On the social front the Appropriation Bill allocates significant funding towards education, health and social grants. Education remains one of the most fundamental long-term social and economic investments that we can make in our country. Therefore the no-fee school system is to be welcomed. But is the growth in higher-education allocations keeping pace with the real needs and demands being placed upon higher-education institutions?

The real growth of social grants cannot be said to adequately address the real cost of living of the recipients. The Minister argues that social grants should not become disincentives for employment. But, be that as it may, people depending solely on these grants are specifically or essentially becoming poorer each day.

Another social matter the UDM would have liked the Minister to address emphatically in his Budget Speech is the HIV/Aids pandemic, which constitutes one of the single biggest threats to the future success of the country when you compare the amount of people requiring antiretroviral treatment with the target the government has set.

There are two macro factors that will affect our society profoundly, economically and socially. These are energy and water. The increasing incidence of power failures and persistent droughts are exposing a severe lack of infrastructure, investment and maintenance.

We are looking towards a water and energy-scarce future, even if these problems are addressed. What this requires is long-term investment in research and development of alternative sources of water and energy. We again say, Mr Manuel, that we support your budget. [Applause.]

Mr B A D MARTINS: Hon Chairperson and hon members, we meet at a time when there is broad agreement across the political spectrum that the South African economy continues to improve its performance in many important areas. A cursory look at the facts also reveals that the past 11 years of democracy have indeed been very good to big business.

For the ANC the key challenge remains to ensure that the growing economy benefits all, with special reference to workers, the economically marginalised, the unemployed and the poor. It is in this context that the ANC sees Asgisa as an important stimulant to drive the economy to a higher rate of growth that will optimise broad-based impact.

The ANC further supports the Asgisa programme of targeted interventions, and its aim to halve unemployment and poverty by the year 2014. In order to meet the 2014 objectives, it will be important for the interdepartmental economic cluster programme to focus on the joint implementation of strategic high-impact Asgisa projects so that government firstly, moves faster to address the challenges of poverty, underdevelopment and marginalisation confronting those caught in the margins of the economy to ensure that the poor share in our country’s growing prosperity. Secondly, we need to make the necessary interventions with regard to the economy to accelerate progress towards the achievement of higher levels of economic growth and development of at least 6% per year. Thirdly, we need to sustain and improve the effectiveness of social development programmes targeted at providing support to those most exposed to the threat of abject poverty.

It is, however, important to bear in mind that Asgisa is not intended to cover all elements of a comprehensive developmental plan. It rather consists of a limited set of interventions that are intended to serve as building blocks to accelerated and shared growth and development. It is in this context that the Asgisa objectives confirm the need to expand the small, medium and micro enterprise sector, and the need to pay particular attention to broad-based black economic empowerment, and the development of women and the youth.

It will thus be necessary to ensure the effectiveness of measures and programmes such as the Apex microcredit fund; the Micro-Agricultural Financial Institutions of South Africa for agricultural development; Seda, the Small Enterprise Development Agency; Khula; the Umsobomvu Youth Fund, the IDC Small Business Initiative; and others.

On the other hand, manufacturing remains the engine of our economy. As a major sector, it has substantial linkages to primary and tertiary sectors. Industrial policy must, however, be increasingly broader than manufacturing to include particular activities in services and agriculture.

It is appropriate that the DTI will be finalising the National Industrial Policy Framework that will include a regional development strategy and focus on strengthening competition regulation. The policy will focus on unlocking South African industrial development in a sustainable manner through identifying strategic industrial interventions.

In this context, it is also important that state-owned enterprises, such as Transnet, Eskom and Telkom, amongst others, also facilitate public expenditure-led growth.

Finally, it will be crucial that the economic cluster, in co-ordinating an effective implementation strategy, ensures that it mobilises all relevant social partners to contribute to the process of economic growth in a manner that all South Africans can take pride in. The ANC supports the Appropriation Bill. I thank you. [Applause.]

The DEPUTY MINISTER OF CORRECTIONAL SERVICES: Chairperson, hon Ministers, Deputy Ministers, fellow members, comrades and colleagues, the ANC has been the party for and of the poor - and still is. Most of us, as we are seated here, have grown up in townships. We have learned our politics on the streets, and today we sit here, having been elected largely by the poor. They have voted for us so that we can deliver to them water, electricity, jobs, services and, most critically, safer communities.

The ANC welcomes the 2006 Budget as a firm indication and commitment that is focused on the needs and aspirations of the poor. It is truly a people’s budget, as it seeks to balance economic growth and social development. Our people look to us to tip the scales in their favour with substantial investment in their communities, which will alleviate poverty and significantly contribute to their development.

If we look at Budget 2006, what we see is that the Minister of Finance and his team have produced a very even-handed and well-balanced budget. Their major task was always to provide for the needs of the poor, as well as to create the conditions for capital to grow, and thereby grow the economy and create jobs that our people so badly crave.

In the safety and security cluster our role in bringing social stability and economic sustainability to our communities is taken very seriously. Measures announced in the budget will better provide resources for the criminal justice system as a whole, and will therefore assist in making our communities safer.

The President, in his state of the nation address, stated quite clearly that government would continue to focus its efforts on the critical challenges faced by our criminal justice system. For this cluster, we look forward to measures that will further reduce illegal firearms through stringent new licensing procedures; reduce drug trafficking and substance abuse; and implement social crime prevention measures.

Due to the high incidence of crime in our communities, government departments and particularly Justice are struggling to cope with the caseloads in the courts, and will be given extra financial capacity to deal with this matter. For Correctional Services, in particular, this has a direct impact on the awaiting-trial detainees languishing in our facilities.

Overcrowding is the single biggest challenge and, critically, it is a challenge that can only be addressed by the Justice, Crime Prevention and Security Cluster, JCPS, as a whole. Three areas were specifically highlighted for Correctional Services by the President in his state of the nation address: firstly, the building of new correctional centres; secondly, the reduction of the numbers of children in correctional facilities or centres; and thirdly, the implementation of the recommendations of the Jali Commission.

Priority number one, regarding the construction of new centres, we do recognise that they will alleviate overcrowding and contribute to economic growth through infrastructure development and job creation. As members might know, the major constraint in projects of this nature is that neither the department nor the Minister is in control of the multiplicity of processes involved between the declaration of intent and the completion of construction. Members should therefore rest assured that this issue is receiving the full attention of senior management in the Department of Correctional Services, as well as the Minister, Treasury and Public Works.

Secondly, as the ANC, we have always proclaimed that the correctional facility or centre is not the place for any child. In this regard, I have a scheduled meeting with my counterpart in social development, Deputy Minister Benjamin, where we will take forward previous discussions between her and my predecessor on this matter.

The Department is also fully committed to removing children from our correctional centres, and we will continue working with our partners in the JCPS and social clusters to ensure that there is delivery on this matter. The Department of Social Development, at the moment, does not have the necessary financial and human resources to manage children or juveniles convicted of crimes or awaiting trial.

We are also aware that the continued detention of children at these centres, which were meant for sentenced adults, constitutes a violation of some of the provisions of the Children Bill, as well as the children’s charter. At our last national general council of the ANC, which was in June 2005, we resolved to continue lobbying government to pay attention to the establishment of places of safety for children in conflict with the law.

I am also glad to note that this matter is one of the priorities within the social cluster, as well as the JCPS cluster.

With regard to the Jali Commission’s report and its recommendations, the report is now before the Minister. We will refer it to Parliament once we have digested its contents and have articulated a way forward regarding the recommendations contained therein.

With regard to Asgisa, spearheaded and led by our Deputy President, it is expected that all government departments will, in addition to the reporting systems relating to the legislative and policy mandates, produce short-, medium- and long-term plans, and reports on how they will contribute specifically to this project.

The envisaged contribution of the Department of Correctional Services to Asgisa creates an opportunity for the department to develop a coherent strategy for alignment of its core business of rehabilitation and correction with wider national objectives, such as poverty alleviation, job creation, growth and economic development.

The intersectoral nature of Asgisa implies that the Department of Correctional Services will have to build and strengthen its relationship with NGOs, business, labour, communities, professional bodies, statutory bodies, and all strategic partners. Regional commissioners, area commissioners and heads of centres should therefore direct their energies at strengthening relations with the spheres of government in which they operate with a view to realising these objectives within Asgisa.

The Department of Correctional Services, I am also glad to note, has prioritised its engagement with local government during the course of this financial year. Senior management has been tasked with developing a list of standard issues that should constitute a programme of engagement between the department and the municipalities.

Lastly, we, as the ANC, are of the view that to achieve our objectives of the second decade of freedom, we need stronger partnerships among all South Africans, a people’s contract for a better South Africa. The ANC commits itself to working within communities and within government to play its role in forging a people’s contract for a better South Africa.

Inspired by its commitment to democratic consultation, mass participation, and volunteerism, the ANC has, over the decades of its existence, focused, amongst other things, on safe and crime-free communities. We therefore want to call on all sectors of society to make their contribution to creating a crime-free South Africa. Our people have voted for peace, safety and prosperity. Let’s make the age of hope a living reality for all. And, once more, the ANC supports the Appropriation Bill. Thank you. [Applause.]

Mr S N SWART: Chairperson, hon Minister, congratulations on delivering your 10th Budget Vote; you correctly painted a rosy picture of the economy with the economic growth forecast revised to 4,2% of GDP from the forecast of 3,8%. The revenue authorities are also to be commended for collecting R41 billion more than last year’s projected target.

The balance, hon Minister, that must be struck, is to use the fiscal space created by the revenue overruns and savings on debt service costs to give something back to the economy, and in so doing, to address poverty and unemployment.

The ACDP trusts that personal tax relief granted will result in higher levels of domestic savings. The national savings ratio has steadily declined to 13,5% for 2005, bringing the savings ratio to a level previously seen in 1949. We also trust that the welcome reduction in the tax on retirement funds, halved from 18% to 9%, will result in greater domestic savings.

The ACDP is also on record as supporting a reduction in corporate tax rates. However, the removal of the RSC levy will result in substantial savings for business, bringing effective tax relief of about R7 billion a year. According to the Business Law Review of March 2006, the fact that the RSC levy is not replaced can, for all practical purposes, be equated to a 2% cut in the corporate tax rate.

The ACDP encourages small businesses that are not tax compliant to make use of the tax amnesty granted by SARS. Clearly, the larger the net, the lower the rate of tax will be for all of us. With the core priority of the budget to strengthen education, public health services and social welfare services, we welcome the additional R30,9 billion to the provincial equitable share over the next three years.

We also welcome the increases in the social welfare grants, which, though modest, will go some way to alleviate the plight of the poorest of the poor.

Serious cause of concern is that we are running our largest current account deficit in history, currently at R73 billion or 4,7% of GDP. Can we continually rely on a sufficient surplus on the financial account to cover the deficits on the current account? A further constraint to economic growth is clearly the capacity of Eskom to deliver power. Certain issues have been raised in the Financial Mail, which I would like to quote from the 3 March 2006 edition. Whilst Eskom itself has certain plans in place, the Financial Mail quote says that “whilst we can blame Eskom for the blackouts, the biggest folly is that of economic planners, government itself”. Clearly this is an aspect that needs to be looked at.

Whilst there is a huge demand for social security as indicated by substantial increases in the budget, government must shift from welfare towards development - and this, hon Minister, you have stated already - in order to address poverty and unemployment in the long term. At the end of the day we will be judged on the degree to which the economic boom translates into more jobs to address the poverty experienced in our country. This is the ultimate challenge.

Thank you, hon Minister, and congratulations to the Treasury and Ministry for the exceptional job done with this Budget.

Mr M JOHNSON: Chairperson, hon members, Ministers and Deputy Ministers, the Treasury team, comrades and friends, as always, it brings joy for one to address this august House on matters of national importance, matters that mean life and death to the vast, destitute majority out there.

Indeed, it becomes an honour and privilege for anyone of us to stand here and speak, not only to a few of us here, but to the poor and rich, to the young and old, to the black and white, to the literate and the illiterate, to the South Africans, the Africans in Africa and in diaspora.

Appropriation of monies from the National Revenue Fund for requirements of state in the 2006-07 financial year becomes a vital component of our democracy as we continually seek to entrench it. This we do consistent with the constitutional requirements of section 213(2) that stipulates that -

Money may be withdrawn from the National Revenue Fund only – a) in terms of an appropriation by an Act of Parliament; …

Furthermore, the Public Finance Management Act of 1999 provides that Parliament must appropriate money for each financial year for requirements of state.

For the progressives led by the ANC, we contribute in this debate in fulfilment of the Freedom Charter’s slogan that stipulates that, “The people shall govern.” More importantly, this governance must and can only and mostly be felt at local government level where the coalface of delivery is to be seen and felt.

Our debate takes place against the backdrop of 21 March, officially declared as Human Rights Day on our calendar. Lest we forget, an official figure of 69 of those peaceful marchers shot dead was recorded at Sharpeville.

Human rights are people’s rights, people’s rights to basic services. They are people’s rights to govern their lives through ward committees and other spheres of government. These are human rights to live a better life. These are people’s rights that stipulate that for you to talk of human rights, you must have shelter, a job and food.

Those living perpetrators who engaged in such callous acts need to go back to those communities and publicly apologise for their actions that caused so much misery to the dear ones of the deceased and the living, maimed both physically and spiritually.

Yes, the truth and reconciliation term came and is indeed gone forever, but reconciliation is a process that involves forgiveness. President Mbeki said: “Today is indeed better than yesterday, and tomorrow will certainly be better than today.”

Part of this act that we are engaged in seeks to make local government work better for you and your communities. Having identified the constraints and the gaps, we build on reconstruction and development, and the human resource development strategy by focusing on capacity-building through the Accelerated and Shared Growth Initiative for South Africa, Asgisa, as it is popularly known. Together with the RDP, Asgisa is continually to build on a sound economic basis that is aimed at bringing about a better life for all.

This initiative is also intended to enhance Project Consolidate, an intervention that seeks to bring a working system to the ailing municipalities in order to have effective and efficient local government. Minister Manuel’s proposals on zero-rating municipal property rates will go a long way to simplify the accounting tax records of municipalities. We have inherited a complex structure of municipal systems that must be made people-friendly and must talk to the daily experiences of our people.

Once again, skilling at this level of governance ensures the extent of capacity-building in our local government. Capacity-building must be supported by a strong learnership programme, thanks to the extension of this programme to 2011. This then calls on the private sector to join government in supporting these programmes that will ensure young people enter into training and gain experience and jobs.

Local government, through the Joint Initiative for Priority Skills Acquisition initiative, Jipsa, must call on the skilled and the newly skilled audit in order to enhance the skills base that seeks to bring about a better life for all. The ANC supports this budget, a budget that talks to the building of capacity within our municipalities, the coalface of delivery. I thank you. [Applause.]

Dr P W A MULDER: Agb Voorsitter, ek het oor die jare heen al na baie begrotings in dié Raad geluister. Dis min dat ‘n Minister so kan geld uitdeel aan departemente en aan maatskaplike toelaes sonder om ingrypend aan die ander kant belastings hoef te verhoog. Tog het die agb Minister met dié begroting dit reggekry.

Ek het dit dus in mediareaksie dan ook as ‘n goeienuus-begroting beskryf. Die Minister was in ‘n posisie om verskeie toegewings te maak, wat ek glo in die langer termyn bewys sal lewer en sal wys dat dit goed was vir die ekonomie. Verskeie jare reeds argumenteer die VF Plus aangaande die belasting op aftreefondse en ons verwelkom dit dat die Minister wel die belasting op aftreefondse verlaag het. Die 9% gaan die staat R2,4 miljard kos.

Die vraag is of met so ‘n klein verlies aan die staat se kant, die Minister nie maar die belasting kon afgeskaf het nie. Dieselfde geld vir boedelbelasting. As gevolg van die styging in huispryse loop ‘n middelklasfamilie nou die risiko dat die waardasie van hul huis so gestyg het dat hulle die huis sal moet verkoop vir boedelbelasting sou die broodwinner skielik sterf. Dit was tog sekerlik nooit die bedoeling met boedelbelasting gewees nie. Hierdie saak sal jaarliks dopgehou moet word om te voorkom dat ons weer in so ‘n situasie beland. Die Minister weet dat die landbousektor tans groot ekonomiese probleme ondervind. Hul gevoel is dat dié regering nie werklik begrip of simpatie met hul situasie het nie, en dat die begroting – met soveel geld beskikbaar – dit vir hulle makliker kon gemaak het. Kom ek gee vir u een voorbeeld: ons raak gewoond aan die jaarlikse verhoging van die sogenaamde sondebelasting, dis dinge soos tabak en alkoholiese drank; die persentasies is meestal meer as inflasie. Volgens ons berekeninge kry die regering tans meer inkomste uit ‘n bottel wyn as wat die boer as produsent kry.

Die deurlopende hoë verhoging van dié belasting kan hierdie bedryf in byvoorbeeld die Noord-Kaap, waarvan ek kennis het, permanente skade aanrig. Elke jaar word na die agb leier, mnr Buthelezi gekyk – dié kant toe – en dan word daar aangekondig dat tradisionele bier uitgelaat word en geen verhoging sal kry nie. Ek dink die Minister skuld die wynbedryf een jaar ook so ‘n kyk om hulle dan ook ‘n jaar vry te skeld.

Omdat dienslewering dikwels op provinsiale en plaaslike vlak vashaak, hoor ek regeringsgeluide om die probleme op te los deur van hierdie magte nasionaal te sentraliseer. Dis ‘n normale reaksie om te sê, “Kom ons beheer dit, dit word nie dáár goed gedoen nie.” Ongelukkig het ek nie in my toespraak tyd om volledig daaroor te argumenteer nie, maar die VF Plus glo regtig dis ‘n fout om as gevolg van huidige probleme die hele beginsel van die afwenteling van mag na sentrale mag te vernietig. Tussentydse oplossings is moontlik om probleme, waar daar gesentreer is, aan te spreek. (Translation of Afrikaans paragraphs follows.)

[Dr P W A MULDER: Hon Chairperson, I have listened to many budgets in this Council over the years. It is seldom that a Minister can distribute money to departments and in the form of social grants in this manner without having to increase taxation drastically on the other hand. Nonetheless, the hon Minister has managed to do so with this budget.

In my response to the media, I accordingly described it as a good-news budget. The Minister was in a position to make various concessions, which I believe will prove and will show that they were good for the economy in the longer term. The FF Plus has been arguing for many years already about the taxation on retirement funds and we welcome the fact that the Minister has indeed decreased the taxation on retirement funds. The 9% is going to cost the state R2,4 billion.

The question is whether, with such a small loss on the side of the state, the Minister could not just have abolished the tax. The same applies to estate duty. As a result of the increase in house prices a middle-class family now runs the risk that the valuation of their house might have increased to such an extent that they would have to sell the house for the purposes of estate duty if the breadwinner were to die suddenly. That is surely not what was intended by estate duty. This matter will have to be monitored annually to prevent us from finding ourselves in such a situation again.

The Minister knows that the agricultural sector is experiencing serious economic problems at present. They feel that this government does not really have an understanding of or sympathy with their situation, and that the budget – with so much money available – could have made it easier for them. Let me give you one example: we are getting used to the annual increase of the so-called “sin tax”, namely things such as tobacco and alcoholic beverages; the percentages are, more often than not, higher than inflation. According to our calculations the government is at present getting more revenue from a bottle of wine than the farmer as producer receives.

The continuous high increase in this taxation can cause permanent damage to this industry in, for example, the Northern Cape, of which I have knowledge. Every year a glance is directed the hon leader, Mr Buthelezi - in this direction – and then an announcement is made that traditional beer is to be exempted and will not be subject to an increase. I think that the Minister owes it to the wine industry to look at it in the same way one year and then also to exempt it for a year.

Because service delivery is often problematic at provincial and local level, I can hear sounds from the government’s side to the effect that the problems can be solved by centralising these powers nationally. It is a normal reaction to say, “Let us control this, it is not being done well there”. Unfortunately, I do not have time in my speech to elaborate on this in full, but the FF Plus truly believes that it is a mistake to destroy the whole principle of the devolution of power and resort to central power and as a result of present problems. Interim solutions are possible to address problems where centralisation has taken place.]

The irony is that government must still have the voting power behind it, but the question is: How much doing power does it have? A well-known political analyst put it in this way:

The lack of capabilities is not restricted to one or two sectors of the Public Service, but impacts on most of the government departments. The Department of Finance and SARS are among the very few where an efficient job is still being done.

And that is a compliment for the Minister.

So, the question is, as government functions decline the private sector is taking over these functions and we have the privatisation of government functions, is that good or bad? Let me give you one example. By the end of 2005, there were 300 000 private security guards in comparison to 148 police officers. Do we want to see this trend continuing? Is that the best way or not? I would like to think that we can debate that as well as the centralisation of more power. I thank you.

Ms L L MABE: Chairperson, colleagues and South Africans, I send you revolutionary greetings and want to say that we must all take part in reconstructing and developing our country for greater economic development and growth.

The growing awareness and interest of South Africans in the affairs that impact on their lives pose a serious challenge to legislatures and government to be more efficient in service delivery.

Simultaneously, the legislatures need to strengthen their oversight role of government and the executive to ensure that the programmes and strategic plans are implemented with the desired diligence and passion towards the achievement of a better life for all.

There is an increasing demand for the oversight function of the legislatures, in particular Parliament, to insist on government departments achieving and producing the outcomes as indicated in their strategic plans. Thus the pace of service delivery must be increased during this decade of our democracy to reduce poverty by half in 2014. There is no reason not to achieve this aim, because we have good policies and we only need commitment for better implementation, as we have financial resources at our disposal.

The reduction of poverty levels by half in 2014 is achievable, as I have indicated, because we have the required financial resources. I hope that the Minister of Finance will double his efforts to produce more in the coming years.

I want to add a word of caution: having the required financial resources is not a guarantee at all for the achievement of the expected outcomes or results. The allocation of financial resources or money by the National Treasury in the past few years is not matched by the results the departments produce at the end of the financial year. The departments always have reasons or excuses about why they have not achieved their objectives, whereas they ask for budgets as per their strategic plans, which need commitment and passion, as I indicated, to be implemented.

Therefore this is an indirect call by departments for Parliament to strengthen its oversight role to ensure that the budget is implemented as per those strategic plans, without any unnecessary deviations.

Many South Africans are always keen to know what government has in its trolley on Budget day, because they want to know more about the financial resources that government allocates towards the achievement of a better life for all.

However, it is unfair and at the same time oppressive for our people when the departments do not make the realisation of a better life for all a reality, but instead make it look like a donkey cart that moves slowly and does not match the financial resources that are at the disposal of the department. Thus, this is an indirect removal of the hope of our people, rather than strengthening that hope.

To cite an example, the announcement in the previous budget about the building of four new correctional centres gave many people confidence that this would assist greatly in addressing overcrowding in prisons, whereas strategic plans and budget estimates done prior to the allocation made it possible to realise these objectives.

I quote from the estimates of the national expenditure to 2006:

Four new correctional centres with the original target date for completion set for the 2006-07 financial year were included in the Budget. After the Department of Public Works’ tendering process, the cost per project had virtually doubled compared to initial projections. Then the department appointed independent quantity surveyors to investigate, resulting in the delivery date being revised to 2008-09.

The heart of the matter is: Were the initial projections realisable? Whzy did it take so long to implement those plans that were presented, because money was made available as requested? How much will be spent before the actual construction comes into operation? Will it be business as usual for people who have failed and delayed the implementation of the initial plans? What must Parliament do in this instance as part of its oversight function?

Mmega dikgang wa City Press e leng Mpumelelo Mkhabela o fetsa a e nametsa thaba kgomo e tlhotsang ena a re … [A City Press reporter, Mpumelelo Mkhabela has eventually put the frying pan into the fire by saying that …]

… information that the departments had rechannelled was never presented to Parliament in its documents.

Fela o bowa a tswella a re … [However, Mpumelelo continued by saying …]

… National Treasury has told Parliament that –

… with an allocation of R1 billion in its three-year budget cycle, the Department of Correctional Services should have been able to start and complete four prisons, even though the costs were increased.

This scenario emphasises the importance of Parliament’s oversight role in the budget. It poses a big challenge to Parliament to ensure that the Joint Budget Committee is given the necessary resources that it requires in order to complement the work of the portfolio committees and the Standing Committee on Public Accounts, and for Parliament itself to carry out its oversight function, as stated in the Constitution.

The 51st national conference of the ANC noted that there is –

… need for all legislatures to exercise oversight responsibility comprehensively by holding government departments and organs of state accountable for both non-financial service delivery and financial performance.

The conference resolved that it supported the need for all legislatures to improve their capacity to exercise their constitutional oversight role and assess the performance of all organs of state, and be provided with the necessary and sufficient resources to carry out this role effectively. Therefore Parliament needs to speed up the process of legislating how its oversight function over the budget should operate.

Taking note of the points I have raised earlier on in my speech, the underlying questions are: Is the time not ripe for Parliament to have powers to amend the budget? If not, how will it ascertain that departments are effective and efficient in the implementation of the plans in relation to their budgets, as presented to Parliament? How will Parliament ensure that financial resources that are allocated to various departments and organs of state improve the lives of the poor? If the status quo is maintained, how will Parliament ensure that the increasing budget allocations bring about drastic changes in the lives of the majority of our people, and promote sharing and greater participation by previously disadvantaged people in the growth of our communities?

How can our budget ensure that these people participate more, rather than having only those who have been advantaged continuing to participate, or those who are at the top continuing to participate rather than increasing the participation of more people in accessing economic benefits?

I want to indicate clearly to members of this House, and I want to challenge members of this House, to engage in the discussion or in the debate on what the effective oversight of Parliament over the budget means in relation to poverty eradication. What does it imply about us in the portfolio committees having to ensure that the financial resources that are made possible by National Treasury are utilised efficiently so that departments can achieve what they intended to achieve in that particular year? How do we make these departments accountable, rather than, from time to time, having departments spending towards the end of the financial year? Why should that be the case? Why can’t they redesign their plans to ensure that whatever they have planned for will be achieved in that particular year? I repeat: I challenge those of us in portfolio committees to ensure that, for those budgets where departments come and plead with us to convince us that they will be able to deliver on their targets, we pin them down to delivering on those targets as per their strategic plans.

Unfortunately, it is the burden of the Standing Committee on Public Accounts, at the end of the financial year, when everything has been done and people have presented their excuses - or perhaps don’t even present their excuses - to the portfolio committees for why they did not implement the budget as planned, to interrogate why money was not utilised effectively. That is the challenge I leave with you. Thank you, Chairperson. [Applause.]

Dr G G WOODS: Chairperson, over the last 10 years, revenue collections have increased on average by a remarkable 10% a year, and this is the single biggest contribution to the country’s improving fiscal fortunes, and more than anything else, is the means through which the Minister has been able to strategically promote both demand and supply sides of the economy.

Lowering taxes, increasing social spending, reducing the national debt and stimulating economic growth has been the type of opportunities he has capitalised on in order to improve the country’s economic and socioeconomic situations.

It stands to reason, however, that sooner or later, there will few or no new taxes to introduce, and there will be less and less efficiency gains to be made at the SA Revenue Service. Annual revenue increases will then struggle to keep up with inflation and other demands on the expenditure side.

As such, the Minister will not have the range of budget options he has had in recent years. That is, of course, unless government is able to achieve far greater savings on the expenditure side. I want to argue that such savings are to be had if financial management across all departments begins to achieve the particular objectives of the Public Finance Management Act.

There is a strong and growing body of international evidence, covering both private and public sectors, which proves that substantial gains in economies and efficiencies are to be had if modern performance budgeting and spending management methods are properly employed.

My contention is that the PFMA is not being adequately used. It was implemented in a rather mechanical way, and is now being applied in a rather mechanical way. Old bureaucratic attitudes of “Let’s live by the book” and “Let’s only do what we have to do to keep out of trouble” remain. The Minister’s intentions at the time of the PFMA’s introduction such as “We must now move away from a rules-bound regime and must let managers manage” and “It’s now all about performance and managerial initiative” have not been properly realised.

The performance idiom of the PFMA is not evident enough, and a value-for- money culture is not being fully instilled. Sure, there are now strategic plans and more extensive reporting, but this has quickly become just another part of the administrative routine rather than a part of the dynamic that drives higher performance.

The predetermined performance objectives are generally too vague, and are mostly not measurable in the required way and, at the end of the day, outputs and outcomes remain modest, and the potential expenditure savings remain out of reach.

It is clear that there is something lacking in how departments are being orientated and educated regarding modern, performance-related, financial management. Perhaps Treasury itself does not have the particular experience and knowledge to impart the necessary attitudes, and perhaps the SA Management Development Institute doesn’t either.

The situation requires that we go far beyond just teaching a new set of rules and procedures to how managers must think, take initiative, seek and achieve new goals, and feed success with success. [Applause.]

Mrs N B GXOWA: House Chairperson, hon Minister, hon Deputy Ministers, hon members, South Africa’s pre-1994 economic growth path was characterised by extremes of development and underdevelopment, resulting in the legacy of South Africa as a country of two nations.

The developed component of this economy has enjoyed historic over- investment, which achieved short-term cost-competitiveness. This, however, has been at the expense of the underdeveloped part of the economy, which represents the experiences of the vast majority of South Africans where economic potentials have not been able to harness results due to backlogs and underinvestment in social and productive capital.

Our Constitution and government are committed to building a truly nonsexist society and progressively addressing the legacy of the past. However, despite the changes ushered in by the democratic dispensation, there are gaps such as the lack of a budget document that gives a gender breakdown of spending by departments.

Identifying this gap, female MPs and women representatives of NGOs started the Women’s Budget Initiative, which was and remains an important tool to assess the impact that the main budget has had on women since the democratic government came to power. Although called the women’s budget, it is not a separate budget, but rather a policy tool that does gender breakdowns for the purposes of analysis and further improving our policies on a continuous basis. The Expanded Public Works Programme received an additional R3,2 billion in 2005 to boost provinces and municipalities, which, on the surface, will benefit women because of the Code of Good Practice, for the programme requires 60% female employment. Since 1999, the Department of Public Works has invested more than R1,7 billion and created 2 993 rural infrastructure projects and 123 738 jobs in the impoverished rural areas of KwaZulu-Natal, Eastern Cape, Free State, Mpumalanga, North West and Limpopo.

Since 1994 many women are now able to own houses irrespective of their marital status, age and race. The Department of Housing has adopted a policy, which says that in all the contracts that are given to emerging contractors, 10% of them should be given back to women. This sector is also empowering women through the People’s Housing Schemes, which are largely composed of women. Many women benefited from the presidential-led projects aimed at poverty alleviation such as the Working for Water Programme. These projects employ members of communities to remove invasive species near and around dams and rivers so that water can flow with ease. Such programmes provide women with an income and, at the same time, communities benefit directly through their efforts. They are also trained and given skills for future purposes.

The deracialisation and redistribution nature of our social security system introduced since 1994 has benefited many black people and women in particular, especially such social grants as pensions and child support grants. However, our comprehensive social security system is still evolving and we need to improve on the delivery system of the already existing grants so that they indeed reach the core target groups - which are women and children.

The universal access to basic education through the schooling system, adult basic education and other skills training programmes continue to make an impact on the high levels of illiteracy amongst women. However, educating the girl-child continues to pose serious challenges because of the high dropout rate for girls, especially at secondary level.

The structures are demand-driven and include community gardens, multipurpose community centres, rural access roads, bridges, taxi ranks, market stalls, sports fields, additional classrooms, poultry houses, theme parks and many more. These projects benefited mostly women, because women were employed and for the first time some were able to put food on the table.

In last year’s budget some consideration was given to tackling gender inequities. However, many interventions tend to be gender-blind. For example, interventions that benefit everyone, including women, will benefit women less than men and girls less than boys as a result of the imbalances mentioned above. Thus a gender-blind policy or intervention becomes gender- insensitive. What is needed is a move away from the gender-blind interventions to proactive gender- sensitive interventions. In order for this to happen, there has to be ongoing critical engagement with the impact of budget expenditures on vulnerable groups, both inside government and within the civil society.

This year’s budget should address the imbalances observed with regard to who is most vulnerable in society. For example, those most vulnerable to HIV/Aids infections are female; those most vulnerable to poverty are female; and those most vulnerable to lower-paid employment and to unemployment are women. Within the South African context, racial, class and geographical factors compound these vulnerabilities.

Thus, when developing plans and programmes to address the imbalances within society, a gender perspective provides a critical lens through which these layers of inequalities can be considered, for example, the rolling out of ARVs to all those who are in need of them. Unless gender-sensitive plans and programmes have money allocated to them, it is not possible to implement them, thus the budget also needs to be gender-sensitive.

In keeping with our maxim that the people must govern, we must embark on a legislative process to make sure that women are the beneficiaries in our economy. It is best to fast-track and maximise our interventions for women entrepreneurs in our communities.

In his state of the nation address, the President of the Republic of South Africa said that we will also need to pay the necessary attention to the important issue of the inclusion of women, and that of Asgisa has, once more, confirmed the need for us to expand our small, medium and micro enterprises sector, paying particular attention in this regard to broad- based black economic empowerment and the development of women. Entrepreneurship is core to building a vibrant and sustainable SMME sector. The SMME sector is critical to achieving the key national development objectives of economic growth, employment creation and equity.

Without the development of women there cannot be development in the country. Women need to play an increasingly important role in the leadership of businesses in our country, and in particular in state-owned enterprises. None of you here today need me to remind you of the multitude of challenges that face women in business in South Africa. Thank you, House Chairperson. [Time expired.][Applause.]

Mr S J NJIKELANA: Chairperson, Ministers and Deputy Ministers, hon members, members of the public, … maqabane, bantu bakuthi niphelele kunye nani basebenzi … [… comrades, fellow countrymen and members of the labour movement …] We need to examine the ability of the current budget to advance workers’ rights, which are an integral part of human rights. I say this because we celebrated Human Rights Day just yesterday.

Chairperson, the current budget is characterised as a pro-poor budget by all, because of its contribution to the social wage. The total social wage for poor households has certainly been substantially increased, particularly when we take into account that individual households have access to more than one social grant.

One may go further and include the provision of schooling, the school fees, free nutrition programmes, etc. The extension of learnership allowances that were introduced in 2002 for another five years as well as the impact thereof on the job training and skills development is worth mentioning and commending. The budget also commits itself to a favourable allowance for workers living with disabilities.

However, a question arises: What about the private sector’s role? Will the private sector respond positively by taking advantage of these initiatives articulated in the current budget?

There will be benefits for labour, owing to improvements in the long-term retirement savings, as well as a further increase in finance for skills development. It is worth mentioning that labour will be amongst the beneficiaries of the joint initiative on priority skills acquisition, as outlined in Asgisa.

Government’s emphasis on labour-intensive infrastructure spending enhances the sharing aspects of Asgisa, because it has a potential to increase the elasticity of employment creation.

Mphathisihlalo, siyafuna ukusoloko sisiva minyaka le ukuba uHlahlo lwabiwo- mali luyixhasa ngamandla imizamo yokudalwa kwemisebenzi. [Chairperson, we would like to hear every year that the budget considers job creation as one of its priorities.]

The ANC has long committed itself to decent work and living standards in the context of improved equity ownership and management skills, as well as access to opportunities. Hence the budget also ensures that through the promulgation of the Co-operatives Bill co-operatives, as a new entity in the economy, will also have financial support.

In spite of the noble achievements, as stated above, there are a few challenges lying ahead. Amongst these is the ability of the Expanded Public Works Programme to convert short-term jobs into permanent, sustainable, quality jobs. I say this simply because there is an irrefutable assertion that workers are central to the economy of any country. And definitely the ANC commits itself to the full potential of our economy to be productive, as we all know.

The sustainability and the extension of the sharing aspect of Asgisa is also another challenge. Whilst recognising that Asgisa has the intention of sharing the wealth that will be created, we also, as the ANC persuades us to, have to assume collective responsibility for ensuring that such ideals are fully realised.

Kumnandi, bantu bakuthi, xa sisithi urhulumente makenze le, naleya. Kodwa ke masibambane ngezandla, sisebenzisane norhulumente wethu, siqinisekise ukuba ezi nkqubo siza nazo siyavumelana ngazo kwaye ziyaphumelela. [It’s easy for us to say that the government should do this and that. We need to hold hands and work together with the government to ensure that all our programmes come to fruition.]

The extent of access by the unemployed to government grants must still be on all of our agendas, particularly those of MPs when they engage in their constituency work.

There has to be enhanced understanding by labour of government programmes so that they can take advantage of such programmes. Of course, another challenge is whether the small business sector will pass on any of the current tax benefits to workers.

Mhlalingaphambili, ndithe makhe mandicaphule nje zibe mbalwa kwezi zinto zithunukayo. Nokuba ezinye izinto zintle, kodwa ke noko makhe sizijonge ezi ziza kukhe zisithi ntsho ngamehlo. [Chairperson, I thought I should mention just a few of the issues that have the main points of contention. Although some of the programmes have good intentions, we should consider those that may cause us problems in the future.]

Organised labour must also take advantage of the substantial budget expansion. I also strongly maintain that they should provide leadership and consistently ensure that all the workers benefit from such expansion. If our country is to ensure human rights for all, our budget has to be integral to that noble endeavour.

Just as we recognise the centrality of workers in our economy, so should we admire the government’s recognition of labour, as articulated in the current budget. Let us, however, take outstanding achievements to even higher levels. Iyabulel’ ilali. [Thank you.]

Mng M T LIKOTSI: Modula-setula le lekgotla, mokgatlo wa PAC o amohela dikabo tsena tsa letlole la setjhaba tsa selemo sena sa 2006. Kabo ena ya matlole e tla ka nako e thata ho batho ba habo rona ba ma-Afrika, ba futsanehileng, ba hlokang mesebetsi, ba phelang maemong a mabe a bodulo. Batho ba ha bo rona ba kenwe ke diketso tsa botlokotsebe mme basadi ba hlekefetswa ka mekgwa e mengata, dikgwebo tsa rona makeishebneng di wele mme di nkuwa ke melata.

Dikaabo tsebo tsena di fihla ka nako eo ka yona boramapolasi ba rona ba ma- Afrika ba tlaletsweng ke naha. Ba bang ba fumaneng mapolasi, empa ba hloka disebediswa. Empa re tshepa hore dikabo tsena tsa matlole di tla leka ho hlokomela ho loka ha a mang a mathata a boletsweng. Mmusmo o tlamehile ho bona hore ditjhelete tsa setjhaba di sebediswa hantle le ka toka.

PAC e re naha ena ya habo rona ena le bokgoni, empa batsamaisi ba yona ke matlaila. Mmuso o tlamehile ho fehla mesebetsi sepheo e le thibela hore naha ya habo rona e se be ya moruo o putlameng (welfare state), moo batho ba phelang e ele mekopa-kopa ya ditjhelete tse mona tsa matheka, tse kgothaletsang bana ba rona hore ba tlatse matlo a rona ka bana ba hlokang bo-ntata bona.

Mmuso o tlamehile ho thibela thekiso ya thepa ya setjhaba ka sena se bitswang privatisation. Thekiso ya thepa ya setjhaba ka mokgwa ofe kapa ofe, e fedisa mesebetsi, e atisa bofutsana, e kenya tlala le malwetse. Ditjhelete tsa setjahaba di lokela ho sebediswa ka tlhokomelo le toka.

Batsamaisi ba tlamehile ho hlokomela hore diphallelo eleng di donation, tse tswang matjhabeng ho phallela ditshebeletso tsa setjhaba, haholo batho ba futsanehileng, di sebediswa ho ya ka ditumellano le dinaha tse re phallelang kgahalanong le ditjhelete tsena tse kgutlelang ho beng ba tsona, hobane re sena bokgoni le boikarabello ho di sebedisa. Ditjhelete tsa setjhaba ha di sebediswe ho phahamisa naha ya ha bo rona. Ke a leboha. (Translation of Sesotho speech follows.)

[Mr M T LIKOTSI: Chairperson, the PAC supports the 2006 national budget. This budget comes at a very difficult time for Africans, many of whom are poor, unemployed and live in appalling conditions. Many people have become criminals and they abuse women in many ways. Businesses in the townships have closed.

This budget comes at a time when many African farmers do not know what to do with the farms they were allocated, because they do not have farming resources. We hope that the money will help solve some the above-mentioned problems and that the government will ensure that there is proper financial management.

The PAC asserts that this country has the resources, but the problem lies with administration. The government must create jobs to prevent the country from turning into a welfare state, where people beg for grants such as the child support grant, which encourages our daughters to fill our houses with children whose fathers are unknown to us. The government must also stop selling state property through privatisation. The selling of state property in any way results in unemployment and the accompanying poverty and diseases.

Directors of NGOs must ensure that donations from foreign countries to help communities are used according to agreements with donor countries, and that they are channelled towards poor communities. No funds should be returned to donor countries because of any organisation’s incapacity to use them. Public funds must be used to uplift the people of this country. Thank you.]

Ms M V MERUTI: Hon Chairperson, hon members, ladies and gentlemen, as South Africans and as part of a progressive humankind, we have a moral and political responsibility to change the society in which we operate, in the interest of a better future for the human species, in particular the poor and vulnerable sections of our society.

Whilst these ordinary masses of our people make history and change society, they find themselves trapped in demeaning poverty and underdevelopment. However, because our democratic movement, the ANC, and the ANC-led government have always prioritised developmental issues concerning these poor and vulnerable masses, and because the ANC-led government remains a beacon of hope for the masses, during the processes of distribution and appropriation of material resources of our country the ANC is always mindful of this hope and faith that the ordinary masses of our people have in our democratic movement and the ANC-led government.

These distribution and appropriation processes are always informed by the Freedom Charter which, amongst other things, provides that South Africa belongs to all those who live in it, black and white, and provides that the people shall share in the country’s wealth. Needless to mention, these processes are also informed and guided by our notion of equality, which takes into account the legacy of apartheid inequalities and also reflects race and gender contradictions.

The justice system in South Africa was inaccessible to the majority of the poor and vulnerable sections of our country. The ANC firmly believes that access to justice is essential to any legitimate justice system because it strengthens public respect for the law and gives people confidence in the legal system. It is this belief and the vision of the ANC to improve access to justice for all which has underpinned the appropriation and related processes.

In essence, the Appropriation Bill is a product of the processes which took into account various progressive, political and policy considerations that include bringing justice services closer to all people, particularly rural and township communities; alleviating the onerous burden of long-distance travel to access justice services, which involves redemarcation and rationalisation of our magistrates’ courts and High Courts; the intensification of programmes which seek to help the most vulnerable in our society, namely women and children; and strengthening criminal justice system initiatives and efforts.

Let me emphasise that we need to welcome all the progressive aspects of the Appropriation Bill, in particular the funding, which will assist the justice sector in developing infrastructure and capacity so as to further improve access to justice for all. The ANC supports the Bill. I thank you.

Ms S RAJBALLY: Chairperson, budget time is our favourite time of the year, as we can redevise our means to attain our goals for South Africa.

The MF is confident that the R12,1 billion tax cuts certainly have many smiling this year. The MF takes this opportunity to thank the hon Minister of Finance, Mr Trevor Manuel, for an outstanding budget - thank you, sir.

Bringing our attention back to the Appropriation Bill for 2006, the MF is pleased with the 9,58% allocated for appropriation to provincial and local government. We view local and provincial government as key institutions to providing delivery to our people. We applaud the allocation and request the effective dispersal of funds to ensure efficient delivery.

We are extremely pleased with the prioritisation of allocations made to Education and Health. Both sectors are crucial to the upliftment and wellbeing of our people. The increased effort towards adult education and the prioritisation of educating our people should greatly benefit skills development and growth for our economy.

As for Health, with the threat and reality of HIV/Aids, the allocation will benefit those infected, as well as boost the prevention of HIV/Aids. We, however, would have appreciated a bigger allocation to Labour, considering unemployment and our fervent effort to eradicate poverty. It is, however, correct that the bulk of the appropriation of 23,85% goes to Social Development. It is within this sector that our people are in most need; and it is through Social Development that the standard of living will be increased thus metamorphosising the poverty situation.

Another crisis in South Africa is our crime rate, which has been adequately combated by the 12,52% allocation of the appropriation. In respect of disputes globally and our necessity not only to protect ourselves but also to protect the innocent globally, the 9,16% allocated to Defence is supported.

We would have appreciated a larger allocation to Sports and Recreation. The importance of the sector needs to be realised through nation-building and global relations. We do, however, acknowledge the difference in allocation and would like briefly to say that if the foreign debts were written off we would have so much more funds to dispense on delivery and to cater for the needs of our nation. The MF supports the Appropriation Bill.

Mr S SIMMONS: Chair, once again the hon Minister of Finance has successfully executed his extremely important and difficult task. The various allocations are evidence of the Minister’s attempt at a fair distribution of state funds. I wish to compliment the hon Minister, together with the South African Revenue Service, for the meticulous nature in which they went about their business which has resulted in the excess of R30 billion.

Dit is dus duidelik dat die regering se vernaamste probleem nie noodwendig die beskikbaarheid van geld is nie. Die vraag ontstaan dus nou oor die regering se onvermoë om die meeste van sy teikens te behaal. Die antwoord hierop blyk te wees dat die goeie werk van die agb Minister en die SAID ongedaan gemaak word.

Hierdie Huis het die afgelope tyd keer op keer voorbeelde gehoor van hoe die regering veral op plaaslike vlak versuim om hul mees basiese funksies te verrig, ten spyte van voldoende geld. Waar lê die probleem? Daar is redelike eenstemmigheid hieroor, naamlik dat kapasiteit die primêre rede is vir die onaanvaarbare bestedingstendense by sekere staatsdepartemente. Nie eens broodnodige buitelandse finansiële hulp word doeltreffend bestee nie, met die gevolg dat sulke skenkings, bestem vir maatskaplike en ekonomiese ontwikkeling, teruggegee moet word, byvoorbeeld die R131 miljoen wat aan Europese organisasies en die R130 miljoen wat aan die EU teruggegee moes word. (Translation of Afrikaans paragraphs follows.)

[It is therefore clear that the government’s main problem is not necessarily the availability of money. Hence the question now arises about the government’s inability to reach most of its targets. Seemingly, the answer to this lies in the fact that the good work of the hon Minister and Sars is being undermined.

Recently this House has time and again heard examples of how the government, especially at local level, fails to provide the most basic services, in spite of sufficient money. Wherein lies the problem? There is reasonable consensus on this, namely that capacity is the main reason for the unacceptable expenditure trends of certain state departments. Not even badly needed foreign financial aid is spent efficiently, with the result that such donations, for example the R131 million and the R130 million that was meant for socioeconomic development, had to be returned to European organisations and the EU respectively.]

It would appear those are more or less the same departments that expose their inability to maintain healthy financial practices. The Department of Provincial and Local Government’s inability to ensure that municipalities comply with primary compliance requirements is no longer acceptable. The hon Minister for Provincial and Local Government is in the habit of being reactive to matters resulting in little or no corrective measures and results, for instance his reaction towards the 48% of municipalities not meeting the submission dates for financial statements as required by the Municipal Finance Management Act.

HIV/Aids sufferers who form an extremely high percentage of the South African population are having a devastating impact on all levels of society, both private and public sectors. Despite the generous financial allocations for the fight against HIV/Aids, we still have to go a long way in setting up an adequate infrastructure to successfully fight HIV/Aids.

Agb Speaker, die afgelope kragonderbrekings in die Wes-Kaap is ’n manifestasie van nie net ’n gebrek aan kapasiteit en die gepaardgaande vaardighede nie, maar ook die afwesigheid van doeltreffende beplanning op verskeie vlakke. Die ekonomiese skade wat in die Wes-Kaap aangerig is, word op R1,5 miljard bereken. Meer kommerwekkend is die feit dat beide die regering en Eskom nie in staat is om ’n aanvaarbare aanduiding te gee van wat die omvang van die toekomstige onderbrekings sal wees nie. Hierdie toedrag van sake bedreig die teiken van 6% ekonomiese groei. (Translation of Afrikaans paragraph follows.)

[Hon Speaker, the recent power failures in the Western Cape are a manifestation not only of a lack of capacity and the concomitant skills, but also the absence of efficient planning at various levels. The economic damage caused in the Western Cape is estimated at R1,5 billion. Of more concern is the fact that both the government and Eskom are incapable of giving an acceptable indication of the scope of future power failures. This state of affairs threatens the target of 6% economic growth.]

The job well done by the hon Minister of Finance … [Time expired.]

Ms N R MOKOTO: Hon Chairperson, Minister of Finance, hon members and members of the public, I greet you all. Minister of Finance, I would like to congratulate you for the most impressive record set in Budget 2006. The ANC, throughout its term, has been the democratic leader of government, which has preoccupied itself with the responsibility of transforming the South African economy from an economy that has been deeply characterised by inequality, dispossession, racial exclusion and skewed distribution of resources into one of the model developing economies of the world.

Our endeavour as the ANC government was to build a strong developmental economy which would comprehensively and effectively seek to redress the twin evils of apartheid, that is poverty and joblessness, which continue to exacerbate the structural gap between the developed few and the underdeveloped masses of our people.

Key to this economic policy approach has been to ensure that all people have equal share in the wealth of their country. At the same time, we have to ensure that we develop and sustain the economy.

We have to acknowledge that our economy is booming to the dismay of many of our detractors. However, we are prepared to move on to extend the net to other sectors of our economy and to improve and sustain this positive outlook on the economy.

For the past decade we have seen an increased growth in the economy by 4,9%. We have seen additional opportunities being made available for the previously marginalised groups, including blacks, women, youth and the poor. There has been lower government debt and inflation. Our labour market reforms have immensely improved our labour relations and there has been more certainty, high stability and high levels of confidence within our markets. We are proud to say that we have now decreased the debt burden of our country.

Today as we journey into the second decade of democracy, we are proud to highlight impressive breakthroughs made by the government in its effort to respond to the policy dilemmas and fundamentals.

The Constitution of South Africa places on government the mandated responsibility to provide basic services to all its people. For the larger part of society, these socioeconomic rights have never been as justifiable as they are today.

We have to recall that section 26 of the Bill of the Rights deals with the obligations of the state to ensure progressive realisation of the right to housing and section 27 highlights the right to health care, food, water and social security; whereas the right to education is enshrined in section 29.

The significance of this constitutional provision is clearly enunciated in the RDP document adopted by the democratic government. This has successfully highlighted key priorities for government and the impact on the fiscal system.

For the past ten years government spending has been focused on the redistribution of resources from the privileged few to the previously disadvantaged. Specific challenges have been identified with this approach. However, as long as it satisfied the constitutional obligation, it had to happen.

Firstly, large chunks of the government’s budget had to be cut and redirected to address the basic needs of our community. Although this approach was extremely beneficial to the many who were locked in the poverty trap and the cycle of unemployment, it had its negative consequences arising from our slow growing economy, which was steadily readjusting to the volatile global markets.

But the major challenge lies in the analysis and questions raised by many of the economies across South Africa. The question of whether our booming economy is able to effectively respond to the redistributive demands and obligations that are entrenched in our Constitution and the economic policies still stands. It is, however, important to note that the milestones we have achieved in the first years of democracy have set an outstanding record of performance for this country, both economically and socially, especially in terms of delivering the hard services.

Notwithstanding the impact made by these services we must acknowledge that in some instances it has resulted in unforeseen circumstances, like the increasing high rate of dependency and the extension of racial inequalities.

Our social spending has been characterised by the redistributive thrust of our economy - and in many cases this has had a negative impact - which is quite often output-oriented, rather than input driven. Half the time, budget allocations and intergovernmental grants are linked to service delivery outputs.

It is time that government translates budgeted allocations to actual service delivery because it will not be sufficient for government to argue that it has met its obligations in terms of socioeconomic rights through the allocation of sufficient funds for health, education and other forms of service delivery. Let me refer to quite a few examples in education, health and housing. We have seen a dramatic drop in the quality of services provided to the people. This has been the case despite the fact that government has increased its allocation of funds to address these sectors.

It is thus clear that redistributing budget allocations does not immediately result in redistribution of service delivery outputs, as anticipated initially. Furthermore, it suggests that the binding constraint was not purely financial, but rather management capacity, especially on capital projects.

This can be coupled with the inability to spend effectively and this has been a phenomenon in most of the provinces where high budgetary allocations did not automatically result in high delivery rates.

In the light of the above it becomes a necessity to consider a budget reform at all levels especially the introduction of budget reforms in all spheres of government to specifically oversee the introduction of performance budgeting, which has a potential to improve public sector efficiency and effectiveness. The ANC supports the Bill. I thank you. [Applause.]

Dr P J RABIE: Mr Chairman, hon Minister, hon members, the DA welcomes the broad set of tax breaks announced in the budget. In particular, we welcome the reduction of the tax on retirement funds from 18% to 9%. This move has long been called for by the DA, and will positively affect retirement funding and increase the present low savings rate.

In my speech I will refer to the retirement industry and the second economy. Despite the impact of Aids, increasing longevity pushes up the need for postretirement income. It is generally accepted that pensioners should be self-supporting as much as possible and not be dependent upon the state or, in the end, the taxpayer.

The South African retirement industry is fairly sophisticated and the South Africans that belong to a registered pension fund can consider themselves fortunate. However, millions of South Africans do not belong to pension funds. They traditionally rely on extended family support and subsistence in the so-called second economy.

The plight of the pensioners, especially in the so-called retirement communities, with life membership is also something of grave concern, and I believe that the hon Minister and the Department of Finance are investigating this plight.

The hon Minister, in his Budget Speech, made mention of the fact that social grants contribute to more than half of the income of the poorest 20% of households. In a recent study of the bureau for market research at Stellenbosch university it was estimated that roughly two million people are employed in the informal sector. Lower-skilled and less-educated South Africans have no alternative to escape from unemployment and poverty and are often forced to participate in the second economy.

It is estimated that on its own the second economy employs about 1,72 million people and contributes only 2,1% of GDP. This comprises about 750 individual outlets with an average turnover of R68 000 per month, each employing between two or three individuals on average. Average remuneration per employee is around R1 000 per month, half the minimum required to sustain the average household in an urban community.

Armoede, werkloosheid en lae vaardigheidsvlakke is veranderlikes wat werklike, reële, ekonomiese groei inhibeer. Die Suid-Afrikaanse bevolking, soos talle ander, is besig om snel te verouder. Die openbare en private sektors sal toenemend moet saamwerk om volhoubare ekonomiese groei van tussen 5% en 6% te laat realiseer.

Dit sal gewis nie maklik wees nie, aangesien die feit dat groot gedeeltes van die Suid-Afrikaanse bevolking wat hul in die sogenaamde tweede of informele ekonomie bevind, in die verlede uiters beperkte toegang tot die formele ekonomie gehad het. Dit is dus gebiedend noodsaaklik dat die formele sektor deur middel van mentorskappe die hand na die agtergeblewe informele sakesektor uitsteek.

Lande wat die afgelope drie dekades ekonomies vooruitgegaan het, was aantreklike beleggingsbestemmings vir beleggers. Internasionaal aanvaarde ekonomiese norme is geëerbiedig, soos byvoorbeeld vrywillige koper en verkoper. Korrupsie in geen vorm is geduld nie, met ‘n onafhanklike regbank waar daar geen staatsinmenging van enige aard rakende die administrasie of regspleging plaasgevind het nie. Die DA versoek dat daar indringend na wyses gekyk word om die pensioenbedryf in die algemeen uit te bou, met dien verstande dat meer Suid- Afrikaners daaraan kan behoort, en dat die informele sektor van die ekonomie deur middel van aanvaarde internasionale riglyne en sakepraktyke uitgebou word, sodat ook hier aanvaarbare wins- en groeimarge sal realiseer wat tot volhoubare ekonomiese groei en welvaart die breë bevolking sal lei. (Translation of Afrikaans paragraphs follows.)

[Poverty, unemployment, and lower skills levels are variables that hamper actual, real economic growth. Like many others, the South African population is aging rapidly. The public and private sectors will have to increase their collaboration in order to achieve sustainable economic growth of between 5% and 6% percent.

This will certainly not be easy, given the fact that the greater part of the South African population which participates in the so-called second or informal economy has had extremely limited access to the formal economy in the past. Therefore it is vital that the formal sector should reach out to the disadvantaged informal business sector by means of mentorship programmes.

Countries that have prospered economically in the past three decades have been attractive investment destinations for investors. Internationally acceptable economic standards such as willing-buyer, willing-seller were maintained. Corruption was not tolerated in any form, with an independent judiciary where there was no interference from the state whatsoever regarding the administration of justice.

The DA requests an in-depth consideration of ways to expand the retirement industry in general, providing that more South Africans will be able to join, and that the informal sector of the economy will be expanded by means of accepted international guidelines and business practices in order to achieve acceptable profit and growth margins here as well that will lead to the sustainable economic growth and prosperity of the population as a whole.]

We face a number of formidable obstacles. At present our tax base is relatively small; approximately 4,3 million out of a population of 44 million people pay income tax. Unemployment is more than 30%. Our domestic consumer market is small. Our geographic location is not close to the EU, North America or the East. This contributes to additional transport costs for our exports.

Furthermore, some of our neighbouring countries, particularly Zimbabwe, experience an unacceptable inflation rate that runs into the 100 percentiles. The DA, therefore, calls upon government and the private sector to leave no stone unturned in generating a favourable economic climate, an essential prerequisite for future sustained economic growth. The DA supports this budget. I thank you, Mr Chairman. [Applause.]

Ms N C KONDLO: Hon Chair, hon members, the thrust of this debate is about appropriating money for the state to be able to meet its requirements. These allocations should be linked to the mandate we received from the people of South Africa, guided by the Freedom Charter, the January 8 Statement, the national and local government manifestos and, lastly, the state of the nation address. This mandate is underpinned by the drive to eradicate poverty, create jobs and ensure that growth is shared amongst all the people.

The Department of Public Enterprises has a central role to play in terms of fulfilling this mandate, through its oversight and shareholder/manager role with regard to state-owned enterprises. The restructuring of state-owned enterprises seeks to promote economic growth, socioeconomic development and ultimately a better life for all. The ANC believes that this remains the role of SOEs in terms of their being central to the development of the state.

Thus it is important that the state remains the main shareholder in these enterprises in order to drive the national agenda of democratic revolution. It is our belief that these strategic areas should not be left to the market forces as they are unable to, on their own - and have no track record of doing this – redress historical imbalances.

The ANC believes that our state-owned enterprises can be more effective and efficient. Therefore we are supportive of the programme to restructure these entities to meet their developmental roles. However, we are equally adamant that such interventions should not be to the detriment of our strategic objectives, namely creating jobs, eradicating poverty and creating a better life for all.

The Department of Public Enterprises has been on track in ensuring that the state drives development through the public enterprises. The appropriation for the Department of Public Enterprises, with the exception of the R2 billion that has just been allocated to Denel, as Comrade Chris Gololo outlined, has remained more or less constant, which points to the DPE’s sound financial management.

To a certain degree, the same cannot be said of all the state-owned enterprises. As we have stated before as the Portfolio Committee on Public Enterprises, we would have preferred that the various turnaround strategies be implemented earlier by these SOEs. The case in point is Alexkor, which the ANC believes can play an important role in contributing to the economic development of the Alexandra Bay community in particular, and the Namaqualand region in general.

We are extremely concerned about the financial position of Alexkor and welcome the Department of Public Enterprises’ continued support for this vital state-owned enterprise.

Kwaye sinethemba lokuba lo mcimbi waseAlexkor, onxulumene nomhlaba nabantu balaa ndawo, uya kuthi wakuqukunjelwa urhulumente, esebenzisa iSebe lezeziMali, akwazi ukunika inkxaso eyiyo khon’ ukuze iAlexkor ikwazi ukwenza umsebenzi wayo. (Translation of isiXhosa paragraph follows.)

[We hope that after the matter regarding Alexkor, which has something to do with land owned by people in that area, has been concluded, the government and the Department of Finance will be able to render their support in order that Alexkor could move forward with the task that is expected of it.]

Whilst we continue to be complimentary of Eskom, we feel that the developmental needs of the country will require it to increase its generation capacity. In this context, we welcome their short-term strategy in relation to recent outages. We also support their long-term strategy to meet the ever-increasing demand caused by higher-than-expected growth rates.

We welcome the decision to move SA Airways from Transnet, which allows Transnet to focus on its core mandate of being a freight carrier.

We further welcome the fact that the relevant unions and Transnet management are working together to address the challenges arising from the restructuring process. In seeking to resolve these issues, both parties should be guided by the mandate that was given to the ANC when it was voted into power, that is that they should remain aware of the imperatives to create jobs, fight poverty and promote shared growth.

Ukuxhasa olu hlahlo lwabiwo-mali, singuKhongolozi sithi, Mphathiswa wezeziMali, kulo nyaka-mali utshintsho kubomi babantu malungqamane neemali ezabelwe amasebe ngamasebe. Akufuneki ukuba kuthi noxa amasebe eyisebenzisile imali, ibe inguqu yona inqongophele ebomini babantu.

Kananjalo, ayamkeleki eyokuba amasebe angakwazi ukuyisebenzisa ngokupheleleyo imali abelwe yona. Silindele ukuba kulo mjikelo amalungu ePalamente awenze ngokuthe ngqo umsebenzi wawo wokuqinisekisa ukuba urhulumente wenza kangangoko anakho ukuqinisekisa ukuba iimfuno namalungelo abantu … (Translation of isiXhosa paragraphs follows.)

[We, as the ANC, would like to support this budget and further say that it must ensure that it meets and fulfils its developmental roles as allocated to the different departments. There should be evidence among people and communities that monies allocated to and used by departments have fulfilled their intended function, which is to change the lives of people.

Furthermore, it is not acceptable for departments not to use funds allocated to them. This time we expect Members of Parliament to fulfil their mandate of oversight to ensure that people’s needs and basic rights …]

… are met through service delivery to the various sectors of our society.

Xa ndiza kuhlala phantsi, sifuna ukuba kulo nyaka-mali kuthi nokuba bayahamba okanye bayavuka ooMam’ uMaRhadebe nooTat’uDlamini, baluve utshintsho oluze nolu hlahlo lwabiwo-mali. Kwaye sihlaba ikhwelo kubasebenzi bakarhulumente, nanjengabantu ekugqibeleni abangqamene ngqo nendlela yokuzisa ezi nkonzo ebantwini, ukuba babhinqe omfutshane kuba kaloku urhulumente ophetheyo akasokuze abheke phambili ngaphandle kokusebenza kwabo. Sithi ke kulo umjikelo umbhalo useludongeni. Ngalo mazwi i-ANC iyawuxhasa lo Mthetho usayilwayo. [Kwaqhwatywa.] (Translation of isiXhosa paragraph follows.)

[In conclusion, I would like to say that before and after the Rhadebes and Dlaminis have come and gone, they should experience change brought about by this budget. We call on public servants as the people who directly deal with service delivery, to commit themselves fully because there shall be no progress in this government without their support. This time around the writing is on the wall. With those words I would like to say that the ANC supports this Bill. [Applause.]]

Debate interrupted.

The House adjourned at 17:04. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS


                       THURSDAY, 9 MARCH 2006

TABLINGS

National Assembly and National Council of Provinces

1. The Minister of Finance

 a) International Convention on Mutual Administrative Assistance in
    Customs Matters adopted in Brussels on 27 June 2003: Your Customs
    Johannesburg Convention dated 13 July 2004, tabled in terms of
    section 231(2) of the Constitution, 1996.


 b) Explanatory Memorandum on International Convention on Mutual
    Administrative Assistance in Customs Matters.

1. The Minister for Agriculture and Land Affairs

 a) Strategic Plan of the Department of Land Affairs for 2006 to 2009.
 b) Strategic Plan of the National Agricultural Marketing Council for
    2006 to 2011.


 c) Strategic Plan of the Ncera Farms (Pty) Ltd for 2006/07.

1. The Minister in The Presidency

 a) Strategic Plan of the International Marketing Council (IMC) for
    2006 to 2009.

COMMITTEE REPORTS

National Assembly

1. Date of Meeting

   The report of the Portfolio Committee on Finance on the Additional Adjustments Appropriation Bill (2005/06 Financial Year) [B 4 – 2006], published in the Announcements, Tablings and Committee Reports of Wednesday, 8 March 2006, on page 282 had an error in that it indicated the date on which the Committee met as 6 March 2006. The correct date is 7 March 2006.

2. Report of the Portfolio Committee on Minerals and Energy on the Electricity Regulation Bill [B 29B - 2005] (National Assembly - sec 75), dated 8 March 2006: The Portfolio Committee on Minerals and Energy, having considered the Electricity Regulation Bill [B 29B - 2005] (National Assembly - sec 75) and proposed amendments of the National Council of Provinces (Announcements, Tablings and Committee Reports, 15 February 2006, p 237), referred to the Committee, reports the Bill with amendments [B 29C - 2005].

Report to be considered.

1. Report of the Portfolio Committee on Communications on the Annual Reports and Financial Statements for 2004/2005 of the Department of Communications and its entities, dated 8 March 2006:

The Portfolio Committee on Communications, having considered and
examined the Annual Reports of the Department of Communications and the
National Electronic Media Institute of South Africa (Nemisa), the South
African Broadcasting Corporation (SABC), the Universal Service Agency
(USA), the South African Post Office (Sapo), Sentech and the
Independent Communications Authority of South Africa (Icasa), reports
that it has concluded its deliberations thereon.

1. Report of the Portfolio Committee on Communications on the Annual Reports and Financial Statements for 2004/2005 of the Government Communication and Information System and its entities, dated 8 March 2006:

   The Portfolio Committee on Communications, having considered the Annual Reports and Financial Statements of the Government Communication and Information System, and the Media Development and Diversity Agency (MDDA) and the International Marketing Council (IMC), reports that it has concluded its deliberations thereon.

                     FRIDAY, 10 MARCH 2006
   

ANNOUNCEMENTS

National Assembly

The Speaker

1. Membership of Assembly

 a) The following member vacated her seat in the National Assembly with
    effect from 9 March 2006:

    Zille, H.

 b) The vacancy which occurred owing to the death of Mr S F Haasbroek,
    had been filled with effect from 22 February 2006 by the nomination
    of Mr I F Julies.

TABLINGS

National Assembly and National Council of Provinces

1. The Minister of Finance

(a)     Government Notice No 44 published in Government Gazette No
    28411 dated 18 January 2006: Exemptions from Supply Chain
    Management Regulations in terms of the Local Government: Municipal
    Finance Management Act, 2003 (Act No 56 of 2003).


(b)     Government Notice No R.1105 published in Government Gazette No
    28226 dated 14 November 2005: Amendment of prescribed fees in terms
    of the Pension Funds Act, 1956 (Act No 24 of 1956).

2. The Minister of Water Affairs and Forestry

a) Strategic Plan of the Department of Water Affairs and Forestry for 2006 to 2007.

                        MONDAY, 13 MARCH 2006

ANNOUNCEMENTS

National Assembly and National Council of Provinces

1. The Speaker and the Chairperson

   The Speaker and the Chairperson, on 13 March 2006, called a Joint Sitting of the National Assembly and the National Council of Provinces, as follows:

            CALLING OF JOINT SITTING OF PARLIAMENT
   

The Speaker of the National Assembly, Ms B Mbete, and the Chairperson
of the National Council of Provinces, Mr M J Mahlangu, in terms of
Joint Rule 7 (2), have called a joint sitting of the Houses of
Parliament for Tuesday, 14 March 2006 at 14:00 in order for Mr Kofi
Annan, Secretary-General to the United Nations, to address the Joint
Sitting.






_______________________                        ________________________
B MBETE, MP                                    M J MAHLANGU, MP
SPEAKER OF THE                                 CHAIRPERSON OF THE
NATIONAL ASSEMBLY  NATIONAL COUNCIL OF PROVINCES


Date: ____________________                           Date:
___________________

TABLINGS

National Assembly and National Council of Provinces

1. The Minister of Social Development

a) Strategic Plan of the South African Social Security Agency for 2006/07 to 2008/09.

1. The Minister of Public Enterprises

(a)     Amendment to Eskom’s pricing structure, tabled in terms of
    section 42(4) of the Local Government: Municipal Finance Management
    Act, 2003 (Act No 56 of 2003), and supporting documents required in
    terms of section 42(3) of the same Act.

COMMITTEE REPORTS

National Assembly

CREDA INSERT - Insert ATC130306

                       TUESDAY, 14 MARCH 2006

ANNOUNCEMENTS

National Assembly and National Council of Provinces

1. Referral to Committees of papers tabled

   1. The following paper is referred to the Portfolio Committee on Public Enterprises for consideration:

   a) Amendment to Eskom’s pricing structure, tabled in terms of
      section 42(4) of the Local Government: Municipal Finance
      Management Act, 2003 (Act No 56 of 2003) and supporting
      documents required in terms of section 42(3) of the same Act.
   

TABLINGS

National Assembly and National Council of Provinces

1. The Minister of Social Development

a) Strategic Plan of the Department of Social Development for 2006/07 to 2009/10.

COMMITTEE REPORTS

National Assembly

1. Report of the Portfolio Committee on Social Development on the Older Persons Bill [B 68B-2003] (National Council of Provinces - sec 76), dated 10 March 2006: The Portfolio Committee on Social Development, having considered the subject of the Older Persons Bill [B 68B-2003] (National Council of Provinces – sec 76) referred to it and classified by the Joint Tagging Mechanism as a section 76 Bill, reports the Bill with amendments [B 68C- 2003].

2. Report of the Portfolio Committee on Agriculture and Land Affairs on the Genetically Modified Organisms Amendment Bill [B 34 - 2005] (National Assembly - sec 75), dated 13 March 2006:

   The Portfolio Committee on Agriculture and Land Affairs, having considered the subject of the Genetically Modified Organisms Amendment Bill [B 34 - 2005] (National Assembly - sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Bill with amendments [B 34A - 2005].

                      WEDNESDAY, 15 MARCH 2006
   

ANNOUNCEMENTS

National Assembly and National Council of Provinces

The Speaker and the Chairperson

1. Assent by President in respect of Bills

 1) Diamonds Amendment Bill [B 27B – 2005] – Act No 29 of 2005
    (assented to and signed by President on 10 February 2006);
 2) Diamonds Second Amendment Bill [B 39B – 2005] – Act No 30 of 2005
    (assented to and signed by President on 10 February 2006);
 3) Forestry Laws Amendment Bill [B 24B – 2005] – Act No 35 of 2005
    (assented to and signed by President on 4 March 2006).

National Assembly

The Speaker

1. Referral to Committees of papers tabled

   1. The following papers are referred to the Portfolio Committee on Finance for consideration and report:

   (a)      International Convention on Mutual Administrative
       Assistance in Customs Matters adopted in Brussels on 27 June
       2003: Your Customs Johannesburg Convention dated 13 July 2004,
       tabled in terms of section 231(2) of the Constitution, 1996.
   
   
   (b)      Explanatory Memorandum on International Convention on
       Mutual Administrative Assistance in Customs Matters.
   

   1. The following papers are referred to the Portfolio Committee on Agriculture and Land Affairs for consideration:

     a) Strategic Plan of the Department of Land Affairs for 2006 to
        2009.
     b) Strategic Plan of the National Agricultural Marketing Council
        for 2006 to 2011.
   
   
     c) Strategic Plan of the Ncera Farms (Pty) Ltd for 2006/07.
   

   1. The following paper is referred to the Portfolio Committee on Communications for consideration:

     a) Strategic Plan of the International Marketing Council (IMC) for
        2006 to 2009.
   

   1. The following paper is referred to the Portfolio Committee on Finance and the Portfolio Committee on Provincial and Local Government:

     a) Government Notice No 44 published in Government Gazette No
        28411 dated 18 January 2006: Exemptions from Supply Chain
        Management Regulations in terms of the Local Government:
        Municipal Finance Management Act, 2003 (Act No 56 of 2003).
   

   1. The following paper is referred to the Portfolio Committee on Finance and the Portfolio Committee on Public Service and Administration:

     a) Government Notice No R.1105 published in Government Gazette No
        28226 dated 14 November 2005: Amendment of prescribed fees in
        terms of the Pension Funds Act, 1956 (Act No 24 of 1956).
   

   1. The following paper is referred to the Portfolio Committee on Water Affairs and Forestry for consideration:

     a) Strategic Plan of the Department of Water Affairs and Forestry
        for 2006 to 2007.
   

   1. The following paper is referred to the Portfolio Committee on Social Development for consideration:

     a) Strategic Plan of the South African Social Security Agency for
        2006/07 to 2008/09.
   

2. Membership of Committees

 1. Ms P Tshwete has been elected as Chairperson of the Ad Hoc
    Committee on Nomination of Persons to Fill Vacancies on the
    Commission on Gender Equality with effect from 15 February 2006.

TABLINGS

National Assembly and National Council of Provinces

1. The Minister of Trade and Industry

 a) Strategic Plan of the Department of Trade and Industry for 2006 to
    2009.

National Assembly

1. The Speaker

 a) Report of the Public Service Commission on the Review of Sector
    Policing and the South African Police Services’ Role in Community
    Crime Prevention Initiatives for 2005 [RP 220-2005].


 b) Report of the Public Service Commission on Evaluation of Service
    Standards in the Public Service for 2005 [RP 69-2005].


                       THURSDAY, 16 MARCH 2006

ANNOUNCEMENTS

National Assembly

The Speaker

 1. Referral to Committees of papers tabled

1.      The following paper is referred to the Portfolio  Committee  on
    Finance and the Portfolio Committee on Housing:


      a) Report of the Auditor-General on the findings identified
         during a performance audit of the approval and allocation of
         housing subsidies at provincial housing departments, January
         2006 [RP 13-2006].
2.      The following paper is referred to the Portfolio Committee on
    Public Accounts for consideration and the Portfolio Committee on
    Provincial and Local Government:

      a) Quarterly Report of the Auditor-General on the submission of
         financial statements by municipalities and the status of audit
         reports as at 31 December 2005 for the financial year ended 30
         June 2005 [RP 16-2006].

3.      The following paper is referred to the Portfolio Committee on
    Arts and Culture for consideration and report. The Report of the
    Auditor-General is referred to the Standing Committee on Public
    Accounts for consideration:

      a) Report and Financial Statements of the South African State
         Theatre for 2004-2005, including the Report of the Auditor-
         General on the Financial Statements for 2004-2005.

4.      The following paper is referred to the Portfolio Committee on
    Labour for consideration:

      a) Strategic Plan of the Department of Labour for 2006 to 2009.

5.      The following paper is referred to the Portfolio Committee on
    Health for consideration:

      a) Strategic Plan of the Department of Health for 2006/07 to
         2008/09 [RP 29-2006].

6.      The following papers are referred to the Portfolio Committee on
    Communications for consideration:

      a) Strategic Plan of Government Communication and Information
         System (GCIS) for 2006 to 2009.


      b) Strategic Plan of Media Development and Diversity Agency (MDDA)
         for 2006 to 2009.


7.      The following paper is referred to the Portfolio Committee on
    Public Service and Administration for consideration:

      a) Strategic Plan of the South African Management Development
         Institute for 2005/06 to 2010/11.

8.      The following papers are referred to the Portfolio Committee on
    Agriculture and Land Affairs for consideration:

      a) Strategic Plan of the Department of Agriculture for 2006.


      b) Strategic Plan of the Land and Agricultural Development Bank
         for 2006/7.


      c) Strategic Plan of the Commission on Restitution of Land Rights
         for 2006/7 – 2008.


      d) Strategic Plan of the Agricultural Research Council for 2006/7
         – 2010/11.


      e) Strategic Plan of the Ingonyama Trust Board for 2006/2007.
      f) Strategic Plan of the Onderstepoort Biological Products Ltd for
         2006 to 2009.


      g) Strategic Plan of the Perishable Products Export Control Board.

TABLINGS

National Assembly and National Council of Provinces

1. The Minister of Trade and Industry

   a) Annual Report of The Office of Consumer Protection for 2004-
      2005.
   
   
   b) Report of the Strategic Industrial Projects (SIP) for April
      2002 to March 2005.
   
   
                     FRIDAY, 17 MARCH 2006
   

TABLINGS

National Assembly and National Council of Provinces

1. The Speaker and the Chairperson

   (a) Report of the Auditor-General on the Declarations of Interests by Ministers, Deputy Ministers and Government Employees [RP 19- 2006].

2. The Minister of Public Works

   (a) Memorandum by the Minister of Public Works setting out Particulars of the Building Programme for 2006-2007 [RP 25-2006].

COMMITTEE REPORTS

National Assembly

1. Report of the Portfolio Committee on Health on the Foodstuffs, Cosmetics and Disinfectants Amendment Bill [B 35-2005] (National Assembly - sec 76), dated 15 March 2006:

   The Portfolio Committee on Health, having considered the subject of the Foodstuffs, Cosmetics and Disinfectants Amendment Bill [B 35-2005] (National Assembly - sec 76), referred to it and classified by the Joint Tagging Mechanism as a section 76 Bill, reports the Bill with amendments [B 35A-2005].

2. Report of the Portfolio Committee on Finance on the Appropriation Bill 2006/7, dated 16 March 2006:

   The Portfolio Committee on Finance, having considered and examined the Appropriation Bill [B2 – 2006] (National Assembly – sec. 77) and its related documents, referred to it, and classified by the JTM as a section 77 Bill, reports as follows:

   1. Introduction The Minister of Finance tabled the Budget for 2006/7, including the MTEF for the 2007/8 and 2008/9, on 15 February 2006.

   On 16 February, the Committee, in a joint sitting with the Select Committee on Finance and the Joint Budget Committee was briefed on the Budget for 2006/7 and the MTEF forecast by the Minister of Finance, together with the Director-General of the National Treasury and the Commissioner of the South African Revenue Services (SARS).

   Between 7 and 10 March the Committee received further submissions from National Treasury and SARS, invited economists and tax specialists, as well as organised labour and business. These submissions dealt with the full range of issues raised in Budget 2006/7, as well as certain other related issues.

   The report is structured around the following main themes, which emerged from the abovementioned briefings and hearings, and the Committee’s own discussions.

• Macroeconomic framework • Fiscal policy • Revenue and tax proposals • Other issues

These hearings took place within the  context  of  an  emerging  market
economy faced with the challenges of the shortage of  suitable  skilled
labour, unemployment and poverty, and the limited uptake of  investment
opportunities.


 2.     Economic Policy and outlook


The economic outlook  for  the  (MTEF)  period  remains  positive,  and
continues to improve. The higher than expected growth  rate  for  2005,
the expected average of 5% over the medium term, and  the  efficacy  of
SARS, bodes well for the economy.


The expansionary stance adopted since 2001 continues, with an  increase
in real expenditure in pursuit of achieving the Accelerated and  Shared
Growth  Initiative  South  Africa  (ASGI-SA)  goals.  Social   Services
received real increases in spending of R871 bn over the MTEF  and  R262
bn in 2006/7. While social services account for  57%,  in  the  current
fiscal year, education receives the single largest expenditure in  this
category.  There  are  also  significant  increases  in  infrastructure
development  of  R372  bn  over  the   current   MTEF.   Infrastructure
development  represents  an  annual  growth  rate  of  14,2%  with   an
allocation of R113 bn for 20006/7. The  renewed  commitment  to  skills
development seeks to address the constraints to growth in  the  economy
recognising that these are some of the pillars of ASGI-SA.


During the hearings Prof S van der Berg  highlighted  the  increase  in
social spending, noting that fiscal resource shifts did not necessarily
translate into real  resource  shifts.  He  added  that  the  sustained
improvement in poverty reduction, through  increased  social  spending,
requires economic growth and investment in human capital. The  expanded
grant system had an impact on poverty reduction, but  not  enough  jobs
were created. Van der Berg points out  that  despite  the  increase  in
resource allocation, the lack of efficient social spending continues to
challenge the country. This constraint is also identified in ASGI-SA.


Underscoring the Government’s main policy aims  of  reconstruction  and
development is the fiscal stance adopted which offsets  the  impact  of
the commodity price cycle and the robust consumption. This  is  further
highlighted through ASGI-SA which identifies that  the  recent  growth,
although welcome, is unbalanced as it  is  based  on  strong  commodity
prices,  capital  inflows  and  domestic  consumer  demands,  increased
imports and strengthened the currency beyond desirable levels.


The  risk  associated  with  this  unbalanced  growth  has  also   been
highlighted by the Minister of Finance who pointed out that the current
boom in commodity prices is not sustainable in the absence  of  support
on the production side, and that outlook for capital flow going forward
is important to maintain the higher growth rates.


The policy choices, faced by government, had to take these risk factors
into account with an anti-cyclical fiscal stance that supports  growth,
while moderating the impact of consumption  expenditure  and  commodity
prices on growth.


Both economists who appeared before the Committee, Prof B Smit  and  Mr
Jac Laubscher, identified these risks  as  constraints  to  growth.  Mr
Laubscher argued, that historically, economic growth has been  followed
by a period of recession where commodity  prices  and  capital  inflows
were the major catalyst for growth. The recessions  in  1981  and  1994
were due to a fall in commodity prices, and capital outflows.


 2.1    Higher growth path


In the MTBPS, government  presented  an  optimistic  view  of  economic
growth for the years  2006/7,  2007/8,  and  2008/9.  The  higher  than
expected growth rate for 2005/6 of 5%, the growth trajectory of 5%  and
CPIX expected to remain within the target range of 3% to  6%  over  the
MTEF, further underlines that the economy is on a structurally stronger
growth path.


A number of factors underpin government’s positive economic outlook:

• Sound and sustainable macroeconomic platform; • Favourable global economic conditions, particularly the recovery in Japan, (significant for South African exports) strong growth in China (an average of 8,9% to GDP over the last three years and a significant importer of commodities), and robust growth in Africa; • Improved policy coordination between National Treasury and the Reserve Bank in keeping inflation within the target range, moderate interest rates and reduced cost of capital; and • Rise in commodity prices.

2.1.1.  Consumer-led growth


One of the principle drivers of economic growth has been the high level
of domestic consumption expenditure. During  the  MTBPS  hearings  last
year it was identified as a significant weakness of the current  growth
trend. Government realised that the reliance of  household  consumption
is not sustainable.


The extended upswing of the economy did not have a  significant  impact
on the manufacturing sector. Growth remains modest. Prof B Smit  is  of
the view that the strong currency is the reason for the decline in  the
manufacturing sector. Mr Jac Laubscher believes that while the strength
of the currency has had an impact on this sector, however the effect of
globalisation  has  had  a   significant   negative   impact   on   the
manufacturing sector. The upward trajectory  is  expected  to  continue
within the construction industry.

1. Commodity Prices

   South Africa being a commodity exporter has benefited from the increase in commodity prices. The strong global demand for commodities, as a result of strong global economic growth, is led by developing economies such as China and India.

   Mr J Laubscher supports the view of the Minister of Finance that the high commodity prices are not sustainable. He highlighted the fact that China and India could, in the future, become commodity suppliers. He believes that the commodity boom is cyclical. The risk factors to economic growth are the collapse of the housing market in the United States of America (USA), the current account deficit of 6% to GDP (USA), the stand-off regarding the Iran nuclear situation and the avian flu pandemic that will cause a global economic slowdown. Any softening of the commodity market prices will affect South Africa, but not to the extent it will have had in the past, said Mr Laubscher.

   Taking the history of economic growth into account, the Committee concurred that commodity prices have in the past negatively impacted on economic stability. However it also recognises that the country has shifted from its singular reliance on one or two commodities to a more diversified economy supported by sound macroeconomic fundamentals.

   1. Accelerated growth and labour participation Raising the level of economic participation is key to ensuring that government sustains and improves on the growth forecast over the MTEF. Lack of suitable skills has been identified as one of the constraints of the ASGI-SA. The 2006/7 Budget continues to remove constraints on growth through broadening access to economic activity that will encourage the accelerated increase in the creation of new jobs.

   R372 bn allocated to infrastructure over the MTEF period, which supports a wide range of public sector programmes is seen as part of the new initiative. The allocation of R4 bn broadens government’s reach through the expanded public works and employment programmes. The targeted land reform initiatives, the agricultural support programmes and housing and community investment should further enhance participation.

2. Current account deficit

   The current account deficit has risen to an estimated 4,2% of GDP, the highest since 1980s. This has been fuelled by the strength of the rand, growth in imports fuelled by rising incomes and long-term accelerated growth expectation. Although the deficit widened it has been adequately offset by a strong financial account surplus. Both economists raised concerns around the growth of the deficit, as they believe it may have an impact on the ASGI-SA.

3. Household savings

   The Committee is concerned at the low household savings and its impact on the economy. Mr Jac Laubscher concluded that the household savings rate is the lowest since 1952 and national savings the lowest since

   1. He believes that this brings into question government’s ability to achieve the projected growth rates.

4. Skills

   The Minister of Finance, during the hearings, highlighted the importance of investment in infrastructure and human resource development, as key in expanding the growth opportunities for the economy. The capacity constraints limit government’s ability to spend effectively to ensure delivery.

   Government commitment to address this constraint is reflected in the significant allocation to social spending that increases by R10 bn to R92 bn in 2006/7 rising to R110 bn in the last year of the MTEF. This priority is also reflected through additional spending in the 23 SETAs.

   Evidence presented to the Committee by Prof van der Berg, not inclusive of data from 2004, suggests that the social outcomes for education have not been achieved. Fiscal resource shifts have taken place. However, efficient application of these resources in the process of social delivery should be the focus, he said.

   1. Fiscal Policy

   All commentators endorsed the expansionary fiscal stance adopted by government. Since 2001 debt service costs have declined significantly, and released resources to expand the social net. The fiscal stance outlines support for growth while moderating the impact on consumption expenditure. This could be referred to as the conservative part of the budget and is in line with government’s anti-cyclical fiscal stance. This seeks to address the concept of a “boom and bust” by taking account of the risk factors inherent in an expansionary budget.

   Government must be commended that although they have increased real expenditure, they were mindful of the risk that the current economic conditions present.

   3.1 Real increases in expenditure

   Government received an endorsement from the Committee for the expansionary fiscal stance adopted. Positive reactions were received to the real increases to allocations to education and skills development, social welfare, R&D, HIV and AIDS, and infrastructure investment.

   3.2 Deficit reduction

   The smaller deficit is due to larger than expected revenue collections of government. During the hearings on the MTBPS the Committee suggested that the surplus funds should be utilised to service debt. This is consistent with sound fiscal management that seeks to reduce the deficit during an upswing of the business cycle, allowing itself the necessary space when the economy slows down.

   Economists agree that the government is mindful of the risk, through maintaining expenditure at the level as outlined in the MTBPS, and increasing their foreign reserves from US$7,6 bn to US$22 bn at the end of January 2006.

   Some economists have seen the deficit reduction as a measure of government’s success story. Maintaining a low deficit during the boom time allows for space to increase the deficit if economic conditions worsen. Maintaining the low deficit is the best indication of government’s intention not to contribute to the boom on the expenditure side, despite the tax relief.

   1. Increase in tax revenue to 26,4% of GDP

   Commentators were concerned about the higher than expected increase in revenue of 26,4% as government is committed to keeping it 25% to GDP. This will not necessarily contribute to sustained growth. The Committee recognises that the SARS depends upon other projections especially those published by Statistics South Africa on GDP and the actual performance of the economy and improved tax collections. The projected decline of tax revenue as percentage of GDP over the MTEF is noted.

   1. Tax Policy

   Tax reforms over the last decade have bolstered government’s revenue- raising capacity. These reforms include broadening the tax base, reduction of the marginal tax rate at the lower end, adjustment of brackets to address bracket creep, improving tax administration and building a culture of tax compliance. These successes are the product of sound tax design that took cognisance of societal realities. Increases in resources ensured that allocations infrastructure development and social services have increased while promoting economic growth.

   4.1 Tax proposals

   The 2006/7 tax proposals will continue to provide the necessary stimuli in ensuring an upward trajectory in economic growth. The tax proposals outlined in the budget continue to build on these achievements and support the goals of the accelerated and shared economic growth initiatives by promoting long-term retirement savings, small business development, investment in research and technology, skills development, and home ownership.

   Commentators, who however raised a number of issues during these hearings, received these tax proposals positively.

   4.1.1 Corporate Income Tax (CIT) & Secondary Tax on Companies (STC)

   Most commentators supported government’s decision not to reduce the CIT rate. Since 1994 to 2005 the CIT rate dropped from 40% to 29% and compares favourably internationally.

   The business community, represented by BUSA and CHAMSA, expressed the view that an expectation is created that since the 1% reduction in the CIT rate last year, government will have adopted a gradual approach of reducing the rate. They argue that to encourage investment the CIT rate should be internationally competitive. The decisions that informed the investor is not only the CIT rate per se, but whether there is an efficient tax administration system that is predictable and reliable. The current tax system in South Africa is not an impediment to investment and resource allocation should be based purely on commercial and not tax decisions.

   Prof M Katz supported by National Treasury, believes that the reduction in the CIT rate without a reduction in the maximum marginal rate of individuals will result in tax arbitrage. The combined rate of CIT and STC of 36,9% ensures that the difference remains 3% and eliminates tax arbitrage. The total tax burden on the business community has been reduced with the abolition of the Regional Services Council (RSC) levies.

   The Business community calls for a critical re-evaluation of the appropriateness of the STC in the context of international competitiveness of the CIT.

   The Committee shared Prof Katz’s view that there is a danger of tax arbitrage if there is a reduction in the CIT rate without reduction in the maximum rate of individual PIT.

   4.1.2 Regional Services Council levies

   The abolition of the RSC levies is welcomed. The reduction in compliance costs, and lowering the tax burden on key economic activities provides the necessary incentives to ensure long-term economic growth. Business received a significant direct tax relief to the amount R7 bn for 2006/7 and totalling R24 bn over the MTEF period.

   As outlined in the 2005 MTBPS, Treasury is exploring alternative instruments that will replace the RSC levies. Commentators noted that no announcement regarding an alternative has been made, and this provided the business sector with appropriate tax relief. SAICA called for the permanent abolition of the RSC levies, but the business community were in principle not opposed to finding alternative funding arrangements.

   4.1.3 Tax relief – Small Business

   The Committee recognised the importance of broadening economic participation and creating opportunities for small businesses. Given that this sector contributed to accelerated growth in employment, the Committee welcomes the improvement in the economic environment of small businesses. The adjustment in the monetary tax thresholds will promote job creation and contribute to economic growth. The Committee supports the decision that “co-operatives that operate like small businesses will enjoy the same level of benefits”.

   The business community raised the concern that no relief is announced to provide tax relief to the small service sector businesses. SAICA and the business community hope that during the review to amend the definitions relating to “small business corporation” and “deemed employee” it will secure a tax regime that will foster the growth of small business in the service sector.

   4.1.4 Tax Amnesty – Small Business

   The announcement of amnesty to small business is welcome, as this will afford businesses, currently outside the tax net, with the opportunity to regularise their tax affairs. The Committee is in agreement that this is a bold initiative that will effectively achieve a broadening tax base.

   The Committee welcomes this bold initiative that effectively enables small business to take advantage of procurement opportunities in the public and private sector.

   1. Tax on Retirement Fund Industry

   In 2004 the Committee provided a public forum to discuss costs associated with retirement fund instruments. This hearing was in response to a paper presented by Mr R Rusconi at the Actuarial Society of South Africa Conference. In 2005 the Committee again provided the necessary forum for the industry and government to engage the draft paper on the Retirement Fund Industry, as it has identified the cost factor as a major concern.

   BUSA welcomed the announcement to reduce tax on retirement funds as this tax impacts negatively on the lower end of employees. In its opinion the regressive nature of the tax has a negative impact on private savings and therefore the reduction will improve savings. Various other commentators called for the scrapping of tax on retirement funds.

   Government also announced that progress has been made with respect to regulatory reforms within the retirement industry. A discussion paper will be released shortly that will propose certain changes to the regulatory environment and tax reforms.

   1. R & D incentives

   Broadening of the tax base, minimising expenses, incentives and good taxation should always be the objective of tax policy. Government believes that investment in R & D and innovation is an investment in knowledge and human capital. Providing the necessary incentive to R & D will lead to economic growth through new technologies, and development of new products. The business community welcomed these measures.

   Prof M Katz was supportive of R & D initiatives broadly, however he raised a concern about the proposed deduction of 150% on R & D expenditure. He argues that historically, whenever an incentive has been given that gives more than 100% deduction expenditure incurred leads to wasteful expenditure, and abuse. Prof Katz is of the view that R & D support should not be given through the tax system but through the accelerated depreciation allowance for capital expenditure.

   1. Impact of HIV and AIDS on Growth

   Prof B Smit informed the Committee that clear benefits are emerging from government implementation of the government HIV and AIDS treatment plan. He argues that SA loses 0,5% growth per year, and although this is not likely to have an impact on growth going forward, it gains 0,1% of growth since the provision of the antiretroviral (ARV) drugs to sufferers. The cost of between 15% - 20% is recouped.

5. Concluding comments

   The resources allocated to infrastructure underpin capital expenditure, which is one of the drivers of this expansionary policy. Over the past ten years government macroeconomic policies have developed an environment to encourage investment. The Committee believes that now more than ever the investor community should begin to directly contribute to radical reduction of poverty and unemployment.

   The significant reduction in the deficit and utilising the surplus funds in the financial current to increase the foreign reserves rather than simply immediately utilising these funds in unsustainable expenditure was in the Committee’s opinion a wise decision.

   Tax amnesty for small businesses including cooperatives operating as small businesses supports their growth in the reduction of unemployment.

   1. Recommendations

   2. Effective oversight on the Appropriation Bill is directly linked to the exercise of oversight on the MTBPS. In future, to exercise oversight effectively, more time should be allocated within the parliamentary programme for both processes.

   3. To ensure efficient expenditure of allocated resources in social services, in particular education and the SETAs to achieve suitable skills output, requires:

           i.      Efficient   and   effective    output    targeting,
              implementation and management of allocated resources;
           ii.   Regular tracking as  well  as  timely  and  strategic
              intervention; and
         iii. Integrated implementation of cross-cutting measures;
      

   4. The Committee is of the view that the extra 50% proposed incentives for R & D requires further discussion.

   5. Oral submissions

   The following people made oral submissions before the Committee, some in their personal capacity. These submissions are available on request from the Committee Section of Parliament.

   1. Mr T Manuel, Minister of Finance
   2. Mr J Moleketi, Deputy Minister of Finance
   3. Mr L Kganyago, Director-General: National Treasury
   4. Mr P Gordhan, Commissioner of SARS
   5. Mr L Worth, Chief Operating Officer: National Treasury
   6. Mr K Naidoo, Acting Deputy Director-General: Budget Office
   7. Prof S van der Berg, Stellenbosch University
   8. Mr J Laubscher, Chief Economist: Sanlam
   9. Prof B Smit, BER
   10. Ms J Arendse, South African Institute for Chartered Accountants (SAICA)
   11. Mr N Nalliah, SAICA
   12. Prof M Katz, Edward Nathan & Associates
   13. Mr L Verwey, IDASA
   14. Prof R Parsons, Business Unity South Africa (BUSA)
   15. Adv A Meiring, BUSA
   16. Mr D Kruger, CHAMSA
   17. Ms P Drotskie, CHAMSA
   18. Mr K Warren, CHAMSA
   19. Ms G Humphries, Federation of Unions of South Africa (FEDUSA)

Report to be considered.

                        MONDAY, 20 MARCH 2006

ANNOUNCEMENTS

National Assembly and National Council of Provinces

The Speaker and the Chairperson

1. Draft Bill submitted in terms of Joint Rule 159

1) Convention on International Interests in Mobile Equipment Bill,
   submitted by the Minister of Transport on 7 March 2006. Referred to
   the Portfolio Committee on Transport and the Select Committee on
   Public Services.

COMMITTEE REPORTS

National Assembly

1. Report of the Portfolio Committee on Finance on the International Convention on Mutual Administrative Assistance in Customs Matters, dated 14 March 2006:

   The Portfolio Committee on Finance, having considered the request for approval by Parliament of the International Convention on Mutual Administrative Assistance in Customs Matters, referred to it, recommends that the House, in terms of section 231(2) of the Constitution, approve the said Convention.

Request to be considered.

                      WEDNESDAY, 22 MARCH 2006

ANNOUNCEMENTS

National Assembly and National Council of Provinces The Speaker and the Chairperson

1. Membership of Committees

 (1)    The following changes have been made to the membership of Joint
    Committees:


    Budget
    Appointed: Robinson, Ms D.

National Assembly

The Speaker

1. Membership of Assembly

The following member vacated his seat in the National Assembly with
effect from 16 March 2006:

Dodovu, T S.

TABLINGS

National Assembly and National Council of Provinces

1. The Minister of Defence (a) Strategic Business Plan for the Department of Defence [RP 33- 2006].

2. Minister of Communications

   (a) Strategic Plan for the Department of Communications for 2006- 2009.

National Assembly

1. The Speaker

   (a) Report of the Public Service Commission on Assessing the Role of Labour Relations Officers in the Public Service, 2005 [RP 71- 2005].

COMMITTEE REPORTS

National Assembly

1. Report of the Portfolio Committee on Public Works on the oversight visits to all nine provinces, dated 7 March 2006:

The Portfolio Committee on Public Works (National Assembly) having conducted an oversight visit to the National Department of Public Works (NDPW) and the provincial departments of Public Works, municipalities and local communities between February and September 2005, reports as follows:

The structure of this report is as follows:

Glossary Foreword Introduction Findings Overview Oversight visit to Provinces Recommendations Conclusion

GLOSSARY BEE Black Economic Empowerment CBPWP Community-Based Public Works Programme CDW Community Development Workers CIDB Construction Industry Development Board CETA Construction Education and Training Authority CTM City of Tshwane Management CHW Community Health Workers DM District Municipality DORA Division of Revenue Act DPTRW Department of Public Transport, Roads and Works EPWP Expanded Public Works Programme EXCO Executive Council ECD Early Childhood Development HCBC Home Community-Based Care IDP Integrated Development Plans IDT Independent Development Trust ILO International Labour Organisation IMDC Integrated Development Management Committee ISRDP Integrated Sustainable Rural Development Programme KZN Kwazulu-Natal LED Local Economic Development MEC Member of Executive Council MFMA Municipal Financial Management Act MIG Municipal Infrastructure Grant MoU Memorandum of Understanding MPC Multi-Purpose Centres NDPW National Department of Public Works PEC Provincial Executive Committee PFMA Public Finance Management Act PMIS Property Management Information System PPWD Provincial Public Works Department PSC Provincial Steering Committee PTC Provincial Technical Committee SALGA South African Local Government Association SAWIC South African Women in Construction

FOREWORD

The Portfolio Committee undertook its oversight visit to the NDPW and all nine provinces during the 2005/2006 financial year and wishes to extend gratitude to the following: • The National Department of Public Works, for its cooperation and their responsiveness to constructive criticism from the Portfolio Committee and Standing Committee on Public Accounts.

• The Committee further appreciates the immediate and positive response
  by the Department to the proposals and recommendations  made  by  the
  Committee.


• The Committee notes the appointments of the Deputy  Directors-General
  for the EPWP and Asset Management respectively.


• The Committee observes the Leadership Way  Initiative  introduced  by
  the Department in an attempt to redress  administrative  shortcomings
  of the Department during the year under review.


• The Committee further notes the  improved  financial  and  accounting
  systems that were subsequently complimented by an  unqualified  audit
  report for the 2004/05 financial year.


• The Committee thanks all provincial MECs, Members of  the  provincial
  legislatures and officials of the departments for their  support  and
  cooperation during the hearings.


• The Committee also recognises the cordial reception from the Premiers
  of Northern Cape and Limpopo provinces respectively as well as mayors
  of Johannesburg, Durban metropolitan councils and district mayors  of
  OR Tambo, Chris Hani and Alfred Nzo district  municipalities  in  the
  Eastern Cape and Ulundi District Municipality in Kwazulu-Natal.


• The Committee  further  recognises  the  frankness  and  constructive
  contribution made by representatives of SALGA,  mayors,  councillors,
  beneficiaries and communities during the deliberations.


• A tribute to South African Women  in  Construction  (SAWIC)  for  the
  seminal role demonstrated in exhorting,  mobilising,  empowering  and
  effectuated South African women to be part  of  the  challenging  and
  lucrative construction industry through the EPWP.


• The Committee acknowledges with appreciation the support given by the
  IDT to the Department and communities in the  implementation  of  the
  EPWP at Hlabisa hospital and Zibambele road construction  in  Ndwedwe
  in KZN, and at Dutyini, Mount Ayliff in Eastern Cape and Zivuseni  in
  Gauteng.


•  The  Committee  appreciates  the  contributions  rendered   by   the
  Chairperson of the NCOP Select Committee on  Public  Services  during
  the information sharing in the advancement of the  work  of  the  two
  Committees.

Not withstanding the above, o The Committee during its oversight visit observed with concern that in most provinces the intergovernmental and interdepartmental relations are still a challenge and recommends that Parliament and its committees must intensify the oversight role and promote the understanding, need and the importance of these relations as contained in chapter 3 of the Constitution. o It is evident that in some provinces the non-availability of public representatives directly and indirectly affects service delivery.

o The visibility of all public representatives at  national,  provincial
  and local spheres of government is paramount in making  the  necessary
  interventions and assists  to  disseminate  information,  monitor  and
  evaluate government programmes.


o The coordination  of  the  departmental  programmes  (i  e  EPWP)  and
  noncooperation of cluster Departments remains a concern, the Committee
  recommends that designated officials by the NDPW to regional and local
  spheres of government must be capacitated and resourced  in  order  to
  effectively improve the coordination and  the  implementation  of  the
  Programme.


o The Committee further recommends  that  the  regional  and  provincial
  coordinators of the EPWP constitute a forum to coordinate and  monitor
  the  implementation  of  the  programme  thereby   strengthening   the
  intergovernmental and interdepartmental relations.


o On assets and asset management the Committee recommends  the  Property
  Management Information System (PMIS) being a  data  capturing  and  an
  early warning system developed  by  the  Mpumalanga,  North  West  and
  Western Cape provinces must be considered as a case study by the NDPW.

INTRODUCTION

The report is structured to present a general trend and a consolidated perspective of all provinces rather than province-by-province. In some instances a specific mention of a province is highlighted to emphasise attention and action to be taken.

The Committee, as required by the Constitution of the Republic of South Africa (1996), must ensure that the Department of Public Works carries out its mandate and responsibilities viz: -

o Policy implementation at all spheres of government. o Monitor progress on service delivery and meeting of targets by the department as enunciated in the state of the nation address by the State President, the budget speech by Minister of Finance and, the Minister of Public Works’ strategic plan and budget vote speech. o Strengthening of the intergovernmental and interdepartmental relations. o Management and maintenance of state assets. o Monitor the Integrated Sustainable Rural Development Programes

                              OVERVIEW

The main focus of the oversight was on the performance of the department in key areas of its responsibilities as set out hereunder: • The provision and management of land and accommodation to national departments and public institutions, • To give strategic leadership to the construction and property industries, • To co-ordinate and monitor the implementation of the EPWP and, • Adherence and conformity to the requirements of the Public Finance Management Act of 1999 (PFMA), Division of Revenue Act (DORA) and Municipality Finance Management Act (MFMA).

The period under review is from 31st January 2005 and 2nd September 2005.

The oversight report on the National Department of Public Works undertaken between 31st January 2005 and 2nd September 2005 is contained in the Committee report of the Department’s Annual report (please refer to Committee’s report on the Annual report of the Department).

                              FINDINGS

1. OVERSIGHT TO PROVINCES

  The Committee visited the following Provinces:

Eastern Cape 31 January – 3 February 2005 Committee Delegation visited the province: Party Mr F Bhengu, Chairperson ANC Mr L Maduma Acting Leader of the delegation ANC Mr M Magubane ANC Mr K Moonsamy ANC Ms MM Ntuli ANC Ms NM Mdaka UDM Mr S Opperman DA Ms NP Nonkelela Support staff Ms P Kakaza Support staff

 Areas and organisations visited:
 a)     Met with Honourable MEC for Public Works: Mr S Kwelita
 b)     Met with the Department officials
 c)     Met with Amatola District Municipality and Mayor Mr S Somyo
 d)     Met with Chris Hani District Municipality and Mayor Mr M Sigabi
 e)     Visited Alfred Nzo District Municipality and Executive Mayor  Mr    GG Mpumza:
 f)     Met with Chairperson of SALGA in the Province Mr S Somyo
 g)     Met with OR Tambo District Municipality and Executive Mayor Ms Z    Capa-Langa

Free State 7-10 February 2005 Committee Delegation visited the province: Party Ms CMP Ramotsamai Leader of the delegation ANC Mr HP Maluleka ANC Mr NJ Gogotya ANC Mrs TLP Nwamitwa-Shilubana ANC Mr JPI Blanche DA Mr MT Likotsi PAC Mr J Leburu Support staff Mr S Makeleni Support staff

  Areas and organisations visited: a) Met the Honourable MEC Mr S Mohai. (The MEC was part of the entourage.) b) Met with officials from the department    c) Met with Thabo Mofutsanyana District Municipality and Executive  Mayor
  Mofumahadi Mathokoana Mopedi d) Met with the Maluti a Phofung Local Municipality e) KM Mankwane Construction Road in Qwaqwa f) Hydroponics (Agricultural) project in Qwaqwa g) Tswarang Waste Management Project in Qwaqwa

Gauteng 31 January – 3 February 2005 Committee Delegation visited the province: Party Ms CMP Ramotsamai Leader of the delegation ANC Mr HP Maluleka ANC Mr NJ Gogotya ANC Mr S Siboza ANC Mrs TLP Nwamitwa-Shilubana ANC Mr JPI Blanche DA Mr MT Likotsi PAC Mr J Leburu Support staff Mr S Makeleni Support staff

  Areas and organisations visited: a) Met with honourable MEC for Public Transport,  Roads  and  Works:  Mr  I    Jacobs b) Met officials of the provincial Department of Public Works c) Met with Mayor of Johannesburg Metropolitan Council: Mr A Masondo d) Matengteng road and storm water canal project in Stinkwater, Tshwane e) Zintombeni taxi project in Bronkhorspruit f) Poortjie Hospice in Region 11 of Johannesburg g) Almac MPCC (learnership and skill development project) in Ekurhuleni h) Bophelong Skill Resource Centre in Lekoa District i) Working for Fire project in Cullinan j) Working for Water (alien-vegetation-clearing projects) in Silverton

KwaZulu-Natal 7-10 February 2005 Committee Delegation visited the province: Party Mr F Bhengu, Chairperson ANC Mr L Maduma ANC Mr M Magubane ANC Mr K Moonsamy ANC Ms MM Ntuli ANC Mr S Opperman DA Ms NM Mdaka UDM Ms NP Nonkelela Support staff Ms P Kakaza Support staff

  Areas and organisations visited: a) Met with honourable MEC for Transport in KZN Mr H Cele b) Met with honourable MEC for Public Works in KZN Mr Gwala c) Met with officials from the department d) Met with mayor of Durban metropolitan Mr O Mlaba    e)  Visited  King  George  Hospital  project  Presidential  lead  project
  launched on 14 February 2004 for the rehabilitation and  extension  of
  the Hospital,. f) Met with Deputy Mayor of Mkhanyakude District Municipality: Mr S Sibanda g) Visited Zibambele and Vuk’Uzenzel Road maintenance programme in Ndwedwe h) Visited Jozini – SANDF Base i) Met with Ulundi Mayor, Ms Z Magwaza j) Visited Hlabisa Hospital (rehabilitation and extension)    k) Visited state-owned properties in Ulundi previously  occupied  by  the
  Departments of Justice and Correctional Services l) Met with Amajuba Local Municipality Mayor Mlangeni in New Castle m) Beneficiaries of EPWP

Limpopo 1-3 August 2005 Committee delegation visited the province: Party Mr F Bhengu Chairperson ANC Mr NJ Gogotya ANC Mrs TLP Nwamitwa-Shilubana ANC Mr TG Anthony ANC Mr S Siboza ANC Mr JPI Blanche DA Mr J Leburu Support staff Mr S Makeleni Support staff

Areas and organisations visited:

a) Met with the honourable Premier of Limpopo: Mr S Moloto b) Met with MEC for public Works: Mr T Mufamadi c) Met with Provincial Portfolio Committee d) Met with Greater Sekhukhune District Municipality e) Visited Mohlaletsi home-based care centre f) Visited the Gundo Lasho projects g) Visited the Tzaneen Municipality h) Visited the agricultural project managed by women in Tzaneen i) Visited CHOICE (Organisation that caters for people infected and affected by HIV/AIDS) caregivers project in Tzaneen j) Imbizo in Polokwane (Beneficiaries of EPWP)

Mpumalanga 6-8 June 2005 Committee delegation visited the province: Party Ms CMP Ramotsamai Leader of the delegation ANC Mr L Maduma ANC Mr NE Magubane ANC Ms PS Sekgobela ANC Ms MM Ntuli ANC Mr S Opperman DA Ms NM Mdaka UDM Mr M Nguqu Support staff

Areas and organisations visited: a) Met with honourable MEC of Public Works in Mpumalanga, Ms C Mashego b) Met with officials of the PPWD c) Met with Provincial Portfolio Committee d) Visited Thembelihle home community-based care projects in the Nkomazi area e) Visited Mbuzini and Thambokhulu land-care projects in Mbombela district municipality f) Visited Gutshwakop-Lubisi Road construction learnership and Skills transfer project in g) Mbombela district municipality h) Visited Vukani Sisebente Community project in Mbombela district municipality i) Beneficiaries of EPWP

Northern Cape 6-8 June 2005 Committee Delegation visited the province: Party Mr F Bhengu Chairperson ANC Mr S Siboza ANC Mr TG Anthony ANC Mr JPI Blanche DA Mr MT Likotsi PAC Mr J Leburu Support staff Ms NP Nonkelela Support staff

  Areas and organisations visited:    a) The Committee attended a  provincial  lekgotla  hosted  by  Honourable
  Premier: Ms D Peters. b) Met with Honourable MEC for Public Works: Mr. F Wyngaard c) Met with the officials from the PPWD d) Road-paving project – Upington e) Road-curbing project – Keimoes f) Road construction project - Kakamas g) Gravel road construction at the Kgalagadi transfrontier h) Beneficiaries of EPWP

North West 9-10 June 2005 Committee Delegation visited the province: Party Mr F Bhengu Chairperson ANC Mr S Siboza ANC Mr TG Anthony ANC Mr L Maduma ANC Mr NE Magubane ANC Ms PS Sekgobela ANC Ms MM Ntuli ANC Ms NM Mdaka UDM Mr S Opperman DA Mr JPI Blanche DA Mr MT Likotsi PAC Mr J Leburu Support staff Ms NN Nonkelela Support staff Areas and organisations visited:

a) Met with Honourable MEC for Public Works: Mr H Yawa b) Met Members of Provincial Legislature c) Met with officials from the Department d) Met with Councillors e) Visited Modimola road Maintenance project 1st and 2nd phases f) Visited Mmabatho Paving Project g) Imbizo (Beneficiaries of EPWP)

Western Cape 1-2 August 2005 Committee Delegation visited the province: Party Ms CMP Ramotsamai Leader of the delegation ANC Mr HP Maluleka Acting Leader of the delegation ANC Mr L Maduma ANC Mr NE Magubane ANC Ms PS Sekgobela ANC Ms MM Ntuli ANC Mr S Opperman DA Ms NM Mdaka UDM Ms NP Nonkelela Support staff Ms N Chaso Support staff

  Areas and organisations visited a) Met with Members of Provincial Legislature b) Met the DDG EPWP: Mr B Gxilishe c) Met HOD:  Mr A Yasir d) Visited Khayelitsha train station e) Visited Merrydale primary school f) Visited Nonkqubela road construction g) Visited Moreson road construction h) Visited Droehoewel road construction i) Imbizo at Robertson City Council (Beneficiaries of EPWP)

Findings

DEPARTMENTAL PROGRAMMES

Asset Management and Maintenance (Movable and Immovable)

a) Mpumalanaga, North West and Western Cape provinces have developed PMIS in attempt to address the shortcomings within their asset management system. b) Provincial Departments do not have a consistent and accurate auditing system for both movable and immovable state properties. c) There is a critical backlog on the maintenance of state properties in the provincial departments. d) In most provinces the government properties are vacant, not properly maintained, have illegal occupants and are vandalised (i e in KwaZulu- Natal Jozini army base and government properties in Ulundi). e) The finalisation of land restitution in Limpopo and other provinces hinders the compilation and finalisation of the asset registers. f) Cognisant of the fact that land restitution is still an ongoing process the finalisation of the asset register is dependent on the completion of the process.

Recommendations on Asset Management and Maintenance

o  The  Mpumalanga,  North  West  and  Western  Cape  provinces   asset
  management system initiatives should be taken  as  a  case  study  to
  develop a holistic, accurate and reliable asset management system  by
  the national and provincial departments.


o Audit of all state properties utilised, underutilised and unutilised,
  including all military bases, must be completed and an interim report
  be tabled in Parliament before  the  end  of  the  first  quarter  of
  2006/2007 financial year. The  Committee  is  conscious  of  and  not
  undermining the fact that the Departments of Public  Works  and  Land
  Affairs are conducting a vetting process.


o The Committee recommends that a uniform and centralised PMIS must  be
  developed to address this anomaly.


o An investigation and appropriate legal action  should  be  instituted
  against  all  tenants  who  are  unable  to  produce   title   deeds,
  certificates of occupation or lease agreements on demand.


o Services in vacant government  properties  that  are  unoccupied  and
  those occupied by illegal occupants must be terminated.


o Lease and service agreements must be honoured by  client  departments
  and public institutions and defaulters be penalised.
o A mechanism must be developed to cause individuals who are  occupying
  properties belonging to the  state,  knowingly  and  unknowingly,  to
  declare their occupation  in  order  to  qualify  for  indemnity  and
  failure to disclose be punishable by law.


o There must be uniformity on the  disposal  of  state  assets  in  all
  spheres of government.


o The NDPW must, in consultation with  all  other  departments  in  all
  spheres of government, develop a uniform disposal policy of all state
  assets.


o Any disposal of government property, be it at a national,  provincial
  or local level of government, must  be  by  agreement  of  all  role-
  players.


o The PDPW must have  a  disposal  strategy  for  old  and  depreciated
  movable properties (i e plants and machinery). When auctioning  takes
  place preference must be given to learner and emerging contractors.


o The Committee recommends that the maintenance and renovation of state
  properties must fall directly under the EPWP to ensure that  emerging
  contractors and contractors in  the  Incubator  Programme  are  given
  preference.

Expanded Public Works Programme (EPWP) Launch of the EPWP in Provinces:

•  Eastern  Cape  province  launched  the  EPWP  on  3  September  2004,
  (Infrastructure Sector).
•  Free  State  province  launched  the  EPWP  on  28  September   2004,
  (Environment Sector).  • Gauteng province launched the EPWP on 31  August  2004,  (Infrastructure    Sector).  • KwaZulu-Natal EPWP launched the EPWP on  28  August  2004,  (Environment    Sector).  • Limpopo province launched the EPWP  on  1  April  2005,  (Infrastructure    Sector).
•  Mpumalanga  province  launched  the   EPWP   on   30   August   2004,
  (Economic/Agriculture Sector).  •  Northern  Cape  province  launched  the  EPWP  on   27   August   2004,    (Infrastructure).  •  North  West  province  launched  the  EPWP  on   16   September   2004,    (Infrastructure).  •  Western  Cape  province  launched   the   EPWP   on   1   April   2005,    (Infrastructure/ Building
        maintenance).

2.2.2 The coordination of the EPWP

The EPWP is driven by four Clusters viz: • Infrastructure • Social • Environmental & cultural • Economic The coordination and performance of the clusters varies from one province to another.

2.3 Infrastructure

  The infrastructure cluster is leading in all provinces  in  terms  of    performance.

A Eastern Cape

o In Alfred Nzo District Municipality, the Rural Housing Project, which
  manufactures bricks, has employed women and youth with the  exception
  of people with disability.
o In OR Tambo  District  Municipality,  infrastructure  Projects  (i  e
  Vukuzakhe Project, a rural housing  and  agricultural  project  which
  benefited 30 000 households) were not integrated into EPWP.
o In Chris Hani District Municipality,  Women  in  Construction  stated
  that they were harassed and discriminated against in the industry and
  at the construction sites.
o General complaints were levelled against the conduct and behaviour of
  government officials, which does not conform to Batho Pele.
o Late payments  were  cited  by  emerging  contractors  as  a  general
  phenomenon.

B Free State

Women and youth with the exclusion of people with disabilities were involved in the construction of Mankwe road in Qwaqwa.

C Gauteng

o  Tshwane-Stinkwater  road  construction  in  Hammanskraal  was  badly
  constructed due to non-adherence to specifications by consultants.
o The Almac local municipality in collaboration with the Infrastructure
  Cluster adopted and supported the multi-purpose  centre  situated  in
  Almac (i e training of carpenters, welding, baking).
o In Bara taxi and bus terminal,  the  Committee  was  briefed  on  the
  rehabilitation, upgrading and renovation of the terminals.
o The Zithombeni Taxi Project in Bronkhorsrpuit needs to be constructed
  with a water drainage system.  D     KwaZulu-Natal province


o The Zibambele and Vuk’uzenzel road project are labour-intensive  road
  construction and maintainance projects that created job opportunities
  for communities in Ndwedwe.
o The Zibambele road project deliberately targeted and employed female-
  headed households.
o Other labour-intensive projects  that  benefited  learners,  emerging
  contractors and communities was the upgrading of King George Hospital
  and Hlabisa  Hospital,  (Hlabisa  Hospital  is  a  Presidential  lead
  project).

E Limpopo province

o The Committee is concerned that the Gundolasho road  was  constructed
  without curbing and this could lead to erosion.
o The Committee is concerned that most provinces have not budgeted  for
  road maintenance.
o Across provinces a concern has been raised  by  emerging  contractors
  regarding fronting and irregularities  in  the  tendering  processes,
  which also implicated government officials and that no decisive  pre-
  emptive measures were in place.

F Mpumalanga province

o The  Gutshwakop-Luphisi  learnership  programme  imparted  skills  to
  learners on regravelling, compacting, filling and drainage of  a  300
  kilometre road in Mbombela local municipality.
o Vukasisebente community project in Mbombela local municipality caters
  for  packaging  facility  of  beverages  and  bakery,  which  imparts
  financial and management skills to beneficiaries.  G     Northern Cape province


 o Upington road making and road paving
 o Keimoes road curbing
 o Kgalagadi Transfrontier rehabilitation and road construction project,


 o All three projects had a reasonable involvement of  women  and  youth
   but the  Committee  is  concerned  about  the  lack  of  people  with
   disabilities.
 o The Councillors in Kakamas were not actively involved or  unaware  of
   the road construction projects that were taking  place  within  their
   own constituencies.
 o The  Committee  observed  that  in  most  labour-intensive  projects,
   workers are not adhering to occupational health and safety standards.

H North West

o Mmabatho CBD road paving projects (owned and driven by youth) must be
  promoted in other provinces.
o The Modimola integrated flagship project driven by the Departments of
  Agriculture, Water Affairs and Public Works, has  not  been  properly
  managed.

I Western Cape

o The Saamstaan is a broad programme that includes  road  constructions
  (Nonkqubela,  Moreson  and   Droehoewel   roads),   renovations   and
  maintenance of schools (Merrydale School) in Robertson.
o The Klipfontein Corridor project  encompasses  the  EPWP  guidelines,
  which benefited 22 learner contractors in the Incubator Programme.
o The Committee did not complete its visit  and  it  will  revisit  the
  province during the course of the 2006/2007 financial year.

2.3.1 Recommendations on Infrastructure:

• Late payments to emerging contractors must be avoided by paying  them
  according to the schedule of the projects.


•  The  NDPW  should  look  at  the  regulations  of  the  Preferential
  Procurement Policy Framework Act and consider which amendments  could
  be effected to strengthen this Act.


• The Committee recommends  that  the  co-ordination  and  co-operation
  between NDPW and other departments in all spheres of government  must
  adhere to contractual agreements entered into  and  payment  must  be
  made within the prescribed period.


• The Committee notes that the department is investigating fronting and
  therefore an interim report should be tabled  in  Parliament  on  all
  acts of fronting that have been investigated and corrective  measures
  taken, on or before the first  quarter  of  the  2006/2007  financial
  year.


• The department  must  assign  dedicated  inspectors  to  monitor  and
  investigate fraudulent claims  committed  and  shoddy  work  done  by
  contractors  and  appropriate   legal   action   be   taken   against
  perpetrators inclusive of blacklisting.


• Whilst the Committee appreciates the progress made by the  office  of
  the MEC and the Department of Public Works in  the  Eastern  Cape  in
  addressing the discrimination against women, it is incumbent  to  all
  departments in all spheres of government to act against the violation
  of women’s rights in the workplace.


• Occupational health standards were not maintained and adhered  to  at
  EPWP projects  i  e  Kgalagadi  Transfrontier  road  and  Chris  Hani
  District Municipality. The Committee recommends that the PPWD  should
  continuously educate workers in construction about the importance  of
  adhering to the occupational health safety standards.


• The NDPW must ensure that the Department of Labour assigns inspectors
  to enforce safety standards regulations.


• The Department of Labour should ensure that  protective  clothing  is
  supplied to potentially hazardous projects.


• The Committee recommends that provinces must budget  for  maintenance
  of completed projects (ie Gundolashu Road Project).


• The mismanagement of Modimola Integrated  Flagship  project  must  be
  investigated and a report must be tabled to Parliament before the end
  of the first quarter of the 2006/2007 financial year.


• Consultants have committed to rectifying the  irregularities  on  the
  construction of the Stinkwater road in Tshwane  and  to  comply  with
  Council decision. The Committee recommends that a report be tabled in
  Parliament on this before  the  end  of  the  first  quarter  of  the
  2006/2007 financial year.


• The Committee is concerned about the age group of youth participating
  in the EPWP projects who are supposed to  be  attending  school.  The
  NDPW  in  collaboration  with  the  Department  of   Education   must
  investigate the socioeconomic circumstances contributing to this  and
  make necessary interventions i  e  in  Kgalagadi  Transfrontier  Road
  Project and other projects in Upington.

1. Social Cluster

o Choice is an established organisation in Tzaneen supported by the NDPW focusing on learnership and skills transfer to communities and home- based caregivers of people affected and infected by HIV/AIDS.

o It was reported that the university of Southern Africa would train the CDW and HCBC volunteers.

o Training of Home Community-Based care-givers (HCBC), Early Childhood Development Educators (EDC) and Community Health Workers (CHW) is an ongoing process.

o The Committee appreciates the collaboration between the infrastructure and social clusters in the establishment of the HIV/AIDS hospice in Poortjie.

o The Youth of Christ in collaboration with the Social Cluster established HIV/AIDS Hospice at Poortjie. o The Infrastructure and Social clusters collaboration in support of the municipality of Thabong in the HIV/AIDS awareness project is commendable.

o The establishment of Thembelihle Home Community-Based Care Project (vegetable garden) in Mbombela has provided employment and skills to 300 caregivers and volunteers for/to people with HIV/AIDS.

  2.4.1 Recommendations on Social Cluster

• The  Departments  of  NDPW,  Agriculture  and  Forestry  must  assist
  communities in Limpopo and  other  provinces  in  fast  tracking  and
  developing community gardens as part of the EPWP.
• The Committee recommends that the PPWD should  in  consultation  with
  Departments  of  Social  Development  and  Health  establish  and  or
  strengthen social clusters for the realisation of the  objectives  of
  the EPWP.


  2.5 Environment and Cultural Cluster

The Committee commends the support the NDPW has given to the Working for Fire in Culinan and Working for Water and clearing of alien vegetation in Silverton.

  2.5.1.Recommendation on Environmental and Cultural Cluster

Disaster management must be devolved to municipalities to form part of job creation for the local community within the EPWP Guidelines.

  2.6 Economy


o In Limpopo the agriculture project in Tzaneen  spearheaded  by  women
  has benefited the local community with employment and skills.
o (In Free State the Hydroponics project in Qwaqwa  has  benefited  all
  involved with life skills and employment.) [Ms Shilubana proposed  it
  be change to reflect the reality on the ground]
o In Free State the Hydroponics project in Qwaqwa should have benefited
  all involved with life skills and employment and therefore  the  NDPW
  should monitor its progress. (Ms Shilubana’s formulation)
o Provinces in general are still at the planning stage of  implementing
  the EPWP in the economic sector.

Incubator Programme

• The Incubator programme is inconsistent from province to province and
  the coordination and monitoring of the programme by the department is
  crucial in achieving the intended results.
• Collateral required  by  financial  institutions  from  the  emerging
  contractors is a concern from most provinces and the NDPW  must  make
  necessary interventions.
• The NDPW, private sector and institutions  of  higher  learning  must
  establish a joint venture whereby  Built  Environment  graduates  are
  placed on internships.
• The NDPW in cooperation with PPWD in the  Eastern  Cape  must  ensure
  that the CIDB implements the Incubator Programme and further consider
  the reviewal of the programme.
• The Committee commends the  progress  made  on  the  learnership  and
  skills transfer under the Incubator programme. The Provincial  Public
  Works Departments must from time to time consolidate, synchronise and
  update the data of all beneficiaries of the EPWP.
• The short-term employment and the  lack  of  sustainability  of  jobs
  created  through  the  EPWP  was  viewed  as  a  constraint   and   a
  shortcoming. The Committee recommends the reviewal  of  the  EPWP  to
  accommodate long-term job opportunities.
• The Committee recognises the short period that  emerging  contractors
  spent in the Incubator Programme. The NDPW should develop  supporting
  mechanisms that would  ensure  sustainability  of  those  contractors
  through NEPAD initiatives as they exit the programme.

SALGA and Municipalities

o The  NDPW,  PPWD  and  SALGA  must  assist,  train  and  support  the
  councillors in order to effectively fast-track government  programmes
  and meet set targets.
o Most municipalities were not sufficiently trained and briefed on  the
  principles  and  guidelines  of  the  EPWP   and   those   that   are
  knowledgeable are inconsistent in the implementation thereof.
o The NDPW in consultation with DPLG should assist municipalities  with
  the integration of MIG in the IDPs within the EPWP.
o The weaknesses observed in the local municipalities are unabated; the
  Committee recommends that the important complementary role played  by
  the CDW must be clearly defined to avert unnecessary tensions at that
  tier of government.
o The underutilisation and depreciation of the multi-purpose  community
  Centres (MPC) at most municipalities is  common.  The  municipalities
  should budget for the maintenance of the MPCs.

Imbizo

  Matters and concerns raised at the Imbizos

   • Lack of budget to maintain of EPWP infrastructure projects.
   • That the involvement of the youth and people with disability in the


     construction industry is minimal.
   • Unprofessional,  poor  dissemination  of  information  and  service
     rendered by the department officials is unacceptable.
   • The EPWP guidelines and information  booklets  are  viewed  as  not
     assisting and not user-friendly.
   • Complicated and laborious tender documents were not user-friendly.
   • Fronting and alleged involvement of officials  and  councillors  in
     irregular tendering processes.
   • EPWP Guidelines are  restrictive  regarding  overtime  and  medical
     health benefits that should accrue to workers.
   • The EPWP does not provide sustainable employment.
   • There is lack of clarity and envisaged  support  for  emerging  and
     learner contractors when emerging from the programme.

1. NEPAD PROGRAMMES

   The Committee recommends that the national Department of Public Works should develop a clear policy that defines its role in NEPAD.

   4 Conclusion

o Some public representatives have a challenge in understanding the concept and application of the EPWP. The current information booklet on the EPWP is inhibitive and lacks details.

o The role of the four sectors within which the EPWP operates must be clearly defined. Presently the work being done by the clusters is not well co-ordinated and an immediate intervention is needed.

o The bridging of the two economies through the EPWP must be clearly elaborated in the information booklets and pamphlets.

o The variance between the Labour Relations Act and EPWP Guidelines must be clearly defined. The Committee is of the view that the guidelines should be reconsidered to be in tandem with the labour laws.

o Coordination at all spheres of government is still a challenge with regard to the intergovernmental and interdepartmental relations.

o Section 13-14 of DORA elucidates how provinces and municipalities could apply the Act and mechanisms in the maintenance of the infrastructure, which is a perpetual challenge.

o Some provinces do not have a conclusive and reliable immovable and movable asset register. This must receive immediate attention and control measures be instituted.

o Immediate attention as recommended by the Committee in addressing the fronting and irregularities in the tendering process must be considered.

o The Committee notes that all provinces are striving to implement the EPWP by putting more emphasis on learnership and skills transfers through CETA.

o The Committee further notes the commitment, enthusiasm and benefits received by beneficiaries of this programme.

o The Committee commends the training received and quality of work done by beneficiaries in various provinces despite logistical and teething problems experienced.

o The Committee observed that some communities are continuing to benefit from the EPWP objectives by establishing own businesses i e job creation and poverty alleviation.

o The NDPW must give effect to the involvement of women, youth and people with disabilities in the EPWP as emphasised by the Committee.

o The municipalities must take control, full ownership and responsibility of maintaining the multi-purpose centres.

o The Committee urges and encourages departments and municipalities at local levels to optimise the utilisation of the multi-purpose centres.

o The Tugela dam as a resource could benefit the communities with water provision as immediate necessity and the creation of jobs for the construction of the water infrastructure.

o In the Northern Cape Province coordination of the programme is in the office of the Premier, which is commendable.

o Due to the vastness of the Northern Cape province, provincial officials travel long distances from one region to another. To save on travelling expenses, the Committee recommends that the existing regional offices be resourced and subregional offices be established where they do not exist.

o As part of the EPWP the role played by Departments of Public Works, Land and Agriculture, Forestry and Water Affairs and Provincial and Local Government in establishing agricultural projects to benefit the communities is encouraged.

o Those departments that are not within the EPWP clusters must identify and commit programmes that will complement the EPWP.

o In the Free State province the Provincial Steering Committee (PSC) has been established to coordinate the implementation of EPWP and see to it that the EXCO takes the total responsibility of the implementation of the programme.

o It is with appreciation that the empowerment of women is taking place i e one woman with no formal education in Mpumalanga supported by her child went through the learnership programme of the EPWP and graduated. She has established her own construction company that provides job opportunities for her community.

o The Committee commends the Mpumalanga province for data capturing of all contractors and subcontractors as a best practice in monitoring and exposing corrupt tendencies where some beneficiaries who were tenders were repeatedly awarded tenders at the exclusion of new applicants.

Report to be considered.

1. Report of the Portfolio Committee on Correctional Services on its Visit to the Private Prisons, dated 1 February 2006:

   The Portfolio Committee on Correctional Services having undertaken an oversight visit to the Kutama Sinthumule Private Prison in Makhado on 04 August 2005 and to the Mangaung Private Prison in Bloemfontein on 18 August 2005, reports as follows:

   Introduction

    The  Portfolio  Committee  on  Correctional  Services  decided   to
    undertake an oversight visit to the Private Prisons  on  04  August
    2005 and on 18 August 2005.
   

B. Delegation

    The following members of the Portfolio  Committee  on  Correctional
    Services formed part of the delegation.

     • Mr DV Bloem (ANC) (Chairperson)
     • Ms LS Chikunga (ANC)
     • Mr NB Fihla (ANC)
           • Mr S Mahote (ANC)
     • Ms MW Makgate (ANC)
     • Mr MS Moatshe (ANC)
     • Mr MJ Phala (ANC)
     • Mr LJ Tolo (ANC)
     • Mr ET Xolo (ANC)
           • Ms SA Seaton (IFP)

C. Objectives

    The objectives of the visit were:


     • To  gain  first  hand  knowledge  of  how  the  private  prisons
       operated. The  Committee  wanted  to  understand  what  security
       measures  the  prisons  have  in  place  and  to  ascertain  the
       programmes offered at these institutions and  the  effectiveness
       of rehabilitation.
     • To interact with the inmates incarcerated at the private prisons
       to find out what problems  they  experience,  successes  of  the
       institutions and to find solutions to the problems.
     •  To  establish  whether  the  institution  complies   with   the
       requirements of the Act.

D. Findings

    The following are  the  findings  of  the  Portfolio  Committee  on
    Correctional Services:

1 Kutama Sinthumule Private Prison

         1.1  Background



         The Kutama Sinthumule prison was named  after  two  traditional
         leaders of the area of Makhado. The prison is being managed  by
         the  South  African  Custodial  Management  (SACM)  under   the
         directorship of Mr S Korabie. The  Department  of  Correctional
         Services has awarded a 25-year contract to SACM.



         The Kutama Sinthumule prison is the second largest private
         prison in the world and has 3 024 bed spaces. A total number of
         550 staff members, previously unemployed and from the local
         area, are employed at the prison.






         The focus of the facility is to set a benchmark for
         Correctional Services on this continent. The facility has
         received many awards for its effectiveness.





         The facility is divided into 3  prisons.  Two  of  the  prisons
         accommodate 1  152  inmates  and  the  other  accommodates  720
         inmates. The prisons are also  colour-coded  and  inmates  wear
         blue, green and yellow uniforms. Each prison  is  divided  into
         distinct subunits e  g  the  Blue  prison  is  divided  into  3
         subunits. Each subunit is divided into 4 blocks and the head of
         the block is called the unit manager. The facility  holds  many
         inmates with long sentences (one inmate serves a sentence of  1
         100 years + 27 life sentences).

         1.2  Security

         The facility is a keyless  facility  where  the  movements  and
         activities of staff and inmates are  monitored  and  controlled
         from a central control room.  The  entrance  and  exit  control
         systems are highly effective and the  efficiency  of  staff  on
         duty ensures that no one leaves or enters the facility,  unless
         authorized to do so.


         All inmates are  assessed  and  vetted  when  admitted  to  the
         facility. Sentences are also verified  every  24  hours.  Daily
         searches are conducted at the facility. Access is controlled by
         fingerprint verification. The facility also has  an  electronic
         surveillance system. Inmate counts are conducted 4 times  daily
         at 06h00, 12h00, 18h00 and at 20h00. The facility is  patrolled
         on a twenty-four hour basis and staff  make  use  of  equipment
         called the “zapper snapper”, which helps staff  to  stay  awake
         (the equipment makes a noise in the ear).


         All staff are briefed on the current security situation in  the
         facility before they start with their duties on a  daily  basis
         and they are debriefed after lock-down. A security manager will
         debrief the staff in the  event  of  normal  operations  and  a
         psychologist or social worker  after  a  serious  incident  has
         occurred.


         1.3  Escapes


         The facility has had no escapes thus far. The management stated
         that they consider the human rights and dignity of all inmates.
         The facility attempts to keep inmates constructively busy.


         1.4  System of Penalties


         The facility is monitored by  the  Department  of  Correctional
         Services through a fixed penalty system. A penalty of R300  000
         is given if any  escapes  or  unnatural  deaths  occur  at  the
         facility. The management can pay up to R20 000  for  breach  of
         service  levels,   building   infrastructure   or   maintenance
         problems. The facility can also be penalized for  its  security
         environment, cell environment and food services.


         This system keeps management on its toes  and  has  up  to  now
         received no penalties.

         1.5  Health Care

         The facility has 2  permanent  doctors,  1  dentist,  1  dental
         assistant, 24 senior  professional  nurses,  a  pharmacist  and
         medical assistant personnel. The  facility  also  has  a  fully
         equipped dental room. The hospital has dealt with a  number  of
         medical emergencies.


         1.6  Food Services


         Food services are provided by Royal Foods Correctional Services
         who have demonstrated their capacity and efficiency to  provide
         more than 9 500 meals per day to inmates and staff.


         A total of 92 inmates work in the  kitchen  on  four  different
         shifts. The inmates  working  in  the  kitchen  receive  formal
         training on food and related services. Once qualified, they are
         rotated to provide an opportunity for others to be trained.


         Meal times:
         07h15 - Breakfast;    12h15 - Lunch;  16h30 - Supper


         1.7  Staff


         The staff component consists of ninety percent (90%) previously
         disadvantaged  individuals  who  were  recruited  locally   and
         through this process contribute to socio-economic upliftment of
         the staff and the town in general.


         All  staff  have  to  undergo  an  annual  40-hour   compulsory
         refresher training programme to provide them  with  the  skills
         and competencies to face the challenges ahead.


         1.8  Black Economic Empowerment (BEE)


         The facility complies with all the principles of BEE and it was
         mentioned that the SACM is an equal  opportunity  employer  and
         employs a number of disabled  individuals.  The  upliftment  of
         women in society is also a key aspect and a  number  of  female
         officers were placed in supervisory positions to take  care  of
         maximum security inmates.


         1.9  Programmes and Training


         The rehabilitation and development of inmates form  a  critical
         part  of  the  operational  management  of  the  facility.  The
         programmes  provided  by  the  facility  are  embedded   in   a
         structured day programme, which starts from 06h00 until  18h00.
         All programmes that inmates attend  are  specifically  designed
         for their  own  development.  Ten  inmates  attend  a  specific
         programme at a time. The facility has  a  total  number  of  35
         teachers and 32 social workers.


         The following programmes are offered at the facility:


         (a)  Educational programmes.
          a) Spiritual Care – many  religious  leaders  offer  spiritual
             programmes at the facility.
       b) Textile training – the uniforms of inmates  are  manufactured
          at the facility.

6 Motor mechanics – this programme is facilitated by an inmate. Tools used during the programme are locked away in a cabinet specifically made for it. Routine checks on tools are also being done.

7 Sport – when inmates return from the sports fields, they must sit on a body chair which scans their bodies for any strange objects they might have picked up.

         Other programmes offered  at  the  facility  include  woodwork,
         horticulture and art. The facility also has  a  fully  equipped
         laundry which  is  run  by  the  inmates.  The  fully  equipped
         gymnasium and computer room assist in keeping inmates busy.

         The facility is a cashless prison  and  things  bought  at  the
         kiosk are deducted from monies in the inmates’  trust  account.
         Inmates are allowed to make phone calls only on  Saturdays  and
         Sundays. An inmate can register up to 10 numbers that  he  will
         telephone. Each phone call is recorded.  Inmates  can  purchase
         airtime vouchers to make their calls and this is  also  debited
         from their trust accounts.


         1.10 Inmates


       a) Though each housing unit has a  grievance  box,  the  inmates
          complained that  their  grievances  are  never  attended  to.
          Inmates are also scared  to  register  their  complaint  with
          their Unit  managers,  as  they  fear  victimization  at  the
          facility.
       a) Many of the inmates complained that they are  very  far  from
          their hometowns e.g. Cape Town or Durban and therefore  never
          get family visits or  even  correspondence  from  home.  They
          apply for transfers, but this never materializes.
       b) Though the Committee was informed that the facility  has  two
          full time doctors, many inmates complained that they only see
          the  doctor  a  month  after  registering  their  complaints.
          Medication is not easily obtainable and inmates often do  not
          receive the required medication.
          a) The inmates stated that they do not  have  enough  clothing
             such as socks.

    2. Mangaung Private Prison
         2.1  Background


         The Mangaung Private Prison situated in Bloemfontein is managed
         by a company called GSL Correction Services. The facility has
         bed space of 3 000 and at the time of the visit accommodated 2
         928 inmates.





         GSL Correction  Services  manages  the  facility  through  unit
         management, sentence management, direct  supervision,  personal
         officer scheme and relaxed regime. GSL is in  partnership  with
         Liberty Adult Education as a benchmark for ABET portfolios.


         The prison consists of six (6) housing units, which provide 488
         available prisoner places. Each  unit  consists  of  eight  (8)
         streets and provides sixty-four (64) available prisoner  places
         per street.


         The Department of Correctional Services has awarded  a  25-year
         contract to GSL.

         2.2  Employees and Employee Development

         The facility has 2 permanent doctors who are on duty 24 hours a
         day;  18  professional  nurses,  10  social   workers   and   2
         psychologists employed by GSL, and 2 psychologists from  Afrox,
         render services to inmates.


         Training  and  development  must  be  planned,  monitored   and
         measured, otherwise it stands little chance of adding value  to
         the company and the skills and knowledge of the employees.  GSL
         Correction  Services   recognizes   that   the   training   and
         development of employees is an important element  in  providing
         quality service to customers. Training, development and skills-
         broadening  are  often  used  interchangeably,  but  they   are
         different and meet different needs.


         GSL is committed to training at all levels with the emphasis on
         life-long learning and satisfying contractual obligations.  The
         outcomes for education and skills development for the  facility
         can be summarized as follows:
     a)      Improvement of the quality of life of employees and  their
         prospect for mobility.
   a) Improvement in the productivity and  delivery  of  quality-assured
      prison service.
      b) The encouragement of employees to participate  in  the  active
         learning environment of GSL.
   c) The provision of the opportunity to gain  work  experience  to  be
      multi –skilled.
   d) Bursaries were awarded to 40 employees to further their studies.


         Training and development programmes.


         The following training and development programmes  are  offered
         to employees:


         Refresher training, life skills training,  diversity  training,
         personal financial planning, time management, hostage training,
         computer literacy, stress management as well as  a  health  and
         safety empowerment programme.


         2.3  Inmate Care and Empowerment


             All inmates are assessed to determine  which  courses  they
             qualify for.
              a) Education
                 An average of 503 inmates attend daily education
                 programmes such as ABET Level 4, Grade 12 and FET.


              b) Vocational Training
                  An average of 308 inmates attend vocational courses
                  daily. At the vocational training centre inmates are
                  provided with skills training, which can be utilized
                  upon release. The service providers from the community
                  assess these training courses. Vocational Training
                  courses include:


                 Basic tool skills, office machine operator, home care,
                 vegetable  propagation,  leather  work,  wood  skills,
                 cleaning  services,   gardening   maintenance,   basic
                 business skills, candle making and garment making.


                 The vegetables produced in  the  horticulture  gardens
                 are donated to the community (1 074  bags  –  29  tons
                 since opening). Training  on  sustainable  gardens  is
                 also presented to community groups.


                 Clothing that was made in the tailoring  workshop  was
                 donated to the homeless children in Bloemfontein.


              c) Social Work programmes
                 520 inmates are involved in case work per month and 100
                 groups per month attend inmate development programmes.


                 Programmes that are provided  can  be  categorized  as
                 follows:
                 •  Offending  behaviour:  sexual  offenders   treatment
                   programme,  substanceabuse  treatment,   intermediate
                   treatment programme and homicide.
                 •   Development   programmes:   Life   skills,   stress
                   management,   anger   management,   social    skills,
                   induction counselling, HIV/AIDS treatment.
                 • Prevention programmes: HIV/AIDS prevention, substance
                   abuse  prevention,  release  preparation   and   good
                   citizenship.


              d) Community Projects and Programmes
                  The community is also very involved in programmes
                 offered to inmates    e g crime prevention project,
                 prevention of violence against women and children and
                 the NICRO arts project.


              e) Religious Care
                 An average of 336 inmates takes part in religious care
                 programmes per day.
                 Religious activities include:  religious  orientation,
                 Church and Faith services,  prayer  meetings,  choirs,
                 counselling individuals and counselling groups.


              f) Library Programmes
                 111 inmates are involved  in  library  activities  per
                 day. The library has active membership of 2 824  (99%)
                 inmates. A library advisory committee consisting of 12
                 inmates and 6 employees  assists  the  librarian.  The
                 library trained and certified 12 inmates to facilitate
                 library trolleys in the units. The library activities,
                 apart from library visits, include:
                  Book discussions, video discussions, debates and
                 information sessions.


              g) Work activities
                 2 056 inmates are involved in work activities at the
                 prison. Work activities include industries, kitchen,
                 cleaners, grounds, laundry and maintenance.


              h) Other activities
                 412 inmates  take  part  in  activities  daily.  These
                 include:   soccer,   touch   rugby,   indoor   soccer,
                 badminton, table tennis, gymnasium, aerobic exercises,
                 soft ball, basket ball, board games, art/painting  and
                 drawing, drama and debating.

         2.4  Inmates

             Due to time constraints the Committee could not engage with
             the inmates incarcerated  at  the  facility.  However,  the
             Committee was informed of one inmate who committed  suicide
             whilst in segregation.
             The Committee was also informed by the  management  of  the
             facility that all avenues were explored to  assist  inmates
             with  psychological  behavioural  problems.  One   specific
             inmate had behavioural problems and was then  placed  in  a
             single cell. The  inmate  tried  various  ways  of  hurting
             himself and was then placed in the “Silent Room”. This room
             is  only  used  when  it  is  absolutely   necessary.   The
             management also said that an inmate does not  stay  in  the
             “Silent Room” for more than four hours and  regular  checks
             are done.  The inmates named this room the “ Dark Room”  as
             the lighting of this room is controlled from the outside by
             the officers. There is only a mattress  in  the  room,  but
             despite this, the inmate hanged himself  with  his  clothes
             from an iron handle above the door.


             The Independent Prison Visitor informed the Committee  that
             this  information  was  forwarded  to  the  Office  of  the
             Inspecting Judge and the Office of the Chairperson  of  the
             Portfolio Committee, but both  of  these  offices  did  not
             receive this information.


    3. Transfers


         The Department of Correctional Services  decides  who  will  be
         incarcerated at private prisons. Whilst the  facility  provides
         many  services  and  activities,  inmates  still  want  to   be
         transferred. Inmates stated that they needed to  be  closer  to
         home where they will at least have frequent visits  from  their
         families. The  Committee  was  informed  that  because  of  the
         commitment, passion and tight  security  at  these  facilities,
         smuggling, such as the smuggling of substances, does not occur.
         This is extremely problematic for  inmates,  especially  during
         the first six months.



E.     Comments and Recommendations





    (1) The Portfolio Committee strongly  recommends  that  the  Private
        Prisons should accommodate only juveniles, as this  environment
        is more conducive for the development, education, training  and
        rehabilitation of juveniles.


    (2)      Rehabilitation is the key in preventing recidivism. Whilst
        the private prisons have  many  programmes  and  activities  to
        occupy  inmates,  family  visits  are  an  essential  part   of
        rehabilitation. The Committee recommends that the Management of
        these facilities develop a system where inmates  can  regularly
        communicate either in person, telephonically or  by  mail  with
        family members.


    (3)      The Portfolio Committee requests that the coordinators  of
        the Department of Correctional Services at the private  prisons
        provide the Committee with quarterly reports on the functioning
        of the private prisons and any irregularitries that may occur.


    (4)       The  Portfolio  Committee  recommends  that  the   Prison
         Directors  at  Kutama  Sinthumule  and  Mangaung  speedily  and
         expeditiously handle all grievances at these facilities.


    (5)      The DCS should furnish  the  Portfolio  Committee  with  a
         report on the unnatural death of  an  inmate  at  the  Mangaung
         Private prison and that the “Silent Room” not be  used    until
         the investigation is finalized.  The  Committee  expects  these
         institutions to explore all avenues available before placing an
         inmate in segregation.


    (6)      The Portfolio Committee  commented  that  the  Independent
         Prison Visitors have a duty to report any irregularities to the
         Judicial Inspectorate of Prisons. If this is  not  adhered  to,
         the Judicial Inspectorate should take  serious  action  against
         such employees.



F.     Conclusion


    In conclusion, the Portfolio Committee on Correctional Services
    commends the management and staff at the private prisons. The
    Department of Correctional Services can learn a lot from these
    facilities, especially in terms of security. Juveniles in prisons
    always remain the priority of the Committee and the Committee will
    ensure that juveniles benefit from these facilities rather than
    adults with extremely long sentences. The Committee will monitor
    these facilities to ensure compliance with the Correctional
    Services Act and the White Paper on Corrections.