MONDAY, 5 JUNE 2006 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY

                                ____

The House met at 14:01.

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

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.

                         APPROPRIATION BILL

Debate on Vote No 9 – Public Enterprises:

The MINISTER FOR PUBLIC ENTERPRISES: Madam Speaker, hon members, guests, ladies and gentlemen, I have brought along with me this afternoon my “girl- child”, Xolelwa Ntozini, who’s sitting up there in the gallery. She is a Grade 11 student from Langa High School. [Applause.] Today we have such a wide range of activities, which I hope will broaden her understanding of the work of the department and our aligned state-owned enterprises. Welcome, to our Budget Vote day, Xolelwa.

I’ve also got some other guests, some young people; I’ve got a big gallery there to support me today: Thabiso Msiza and Ntombi Sibanyo, who are joined by their principal Mokamola Selesho from Gauteng Comprehensive High School. They are up there in the gallery. There they are. [Applause.]

I also have Hanneke van der Walt and Gerhard Hermann Janse van Vuuren, joined by their principal Dr Carel Scheepers van der Merwe from Menlo Park High School. They are somewhere in the gallery. [Applause.] Nkululeko Sibiya from Pretoria West Pre-Primary School is joined by her mother, Ntombi Sibiya, and Lethabo Lengweng from Sunnyside Primary School is joined by her guardian Lizette Goosen. [Applause.]

We’ve invited these young students, accompanied by their teachers, and two children of members of my own department, as part of our contribution to public education and development. By exposing the learners to the processes of Parliament and the mandate of the Department of Public Enterprises, DPE, and its strategic intent, we hope to contribute to the creation of a more informed and active citizenry.

I personally find it hard to believe that this is my third opportunity to present the budget of the Department of Public Enterprises to the National Assembly. [Interjections.] I am sure it’s a great pleasure. To the young people who couldn’t hear what he was saying, the hon member was just saying that it’s a great pleasure to be addressed by me again. [Applause.] [Laughter.]

This is, indeed, a salutary thought, since in accelerating and sharing growth time is of the essence. However, I do believe that we are making progress. This is due to the excellent work of the boards, the chairpersons sitting up there in the gallery, management and employees of the state- owned enterprises.

It is also due to the efforts of my young, capable and delightfully impatient department, under the leadership of director-general Portia Molefe. It is due, I believe, to the constructive oversight of the portfolio committee and its chair, the ever-questioning and supportive hon Yunus Carrim.

I strike this positive note at the outset because I believe that the positive does indeed far outweigh the negative and gives confidence in dealing with the immense challenges that lie ahead. The past year has not been plain sailing by any stretch of the imagination. I hardly need to tell this House, located in the fairest, but at times darkest Cape, what some of our challenges have been. Let me assure this House this afternoon that I intend no more bolts from the blue.

Appended to the written copies of this speech is a summary of progress on all the issues that I raised in the last budget speech, and we are moving forward since in virtually all cases the projects have expanded, and whilst some may not be meeting the time lines envisaged, their implementation will be more beneficial than was originally conceived.

There are some exceptions - very few, I must say - and these are set out. I will not spend too much time on detailing these programmes, as I think it is more useful to concentrate on certain key issues that will impact on future progress.

I would like to focus on the following: Communication of our plans; capacity in the department and in the state-owned enterprises; progress in the governance system and key developments in each of the SOEs; and finally, the impact of the infrastructure programme on our industry. In the process I will also welcome into the fold our newest charge – a nuclear one at that – the Pebble Bed Modular Reactor.

The electricity problems we have and may experience in the Cape have driven home some lessons. A key one is that of communication and reliable information. There are a number of aspects to this matter. The first is a consistent message on growth and the investment required to meet and facilitate that growth.

What the last two or three years have shown is that this economy is indeed capable of a higher growth rate and that this is a very robust and competitive economy. It is now time for both the public and the private sectors to internalise this reality and adjust their decision-making accordingly.

In the public sector, from the local through to the national level, full attention has to be paid to every aspect of infrastructure and to efficient and continuous maintenance of that infrastructure. In the private sector the supplier industries, where investment lead times are longer, business leaders must have the confidence and foresight to invest now. Hesitancy and timidity are an obstacle to the growth that we can achieve.

This is not an incitement to reckless planning, but a call to courage. The leaders of both the public and the private sectors must now take personal responsibility for the training of our talented and capable people. They are, indeed, the bedrock assets of the economy.

For our part, we in the DPE and the SOEs will attempt to improve our communication with the stakeholders so that more information is available for decision-making. As I will discuss later in this address, interaction with potential suppliers in the investment programme is important both to facilitate such a large programme and to open up opportunities for the largest and smallest of enterprises.

With the change in emphasis regarding the work of the DPE and the increased level of activity in the SOEs, we have had to build new capacities within the department. During the second half of 2004 and throughout 2005 the department redesigned its operational areas and embarked on an active staff recruitment programme. More than 30 technically skilled senior management, middle management and professional staff were recruited within the department, and we now exceed employment equity targets for race and gender at all levels.

Four line function branches were established to improve internal operating efficiencies. An analysis and risk management unit was formed to monitor and manage key risks and vulnerabilities, both at enterprise level and across the enterprises as they impact on the wider economy. The corporate strategy and structure unit, which oversees the contribution of SOEs to government’s strategic and economic objectives, was augmented.

The legal, governance and secretariat unit, responsible for ensuring SOE policy and regulatory compliance, and the corporate finance and transactions unit, responsible for transactions execution and management, were merged to tighten enterprise accountability for transactions. A specialist position, to deal with special projects such as the resolution of Aventura and the transformation of Alexkor, was established.

With the focusing of the SOEs on their core areas and the increased workload, it became evident that there were a number of areas where a joint endeavour by the SOEs and the DPE could give rise to important initiatives that were not within the current core work of the SOEs, or fell outside their future work.

This realisation resulted in the formation of the joint project facility, and currently the unit is focusing on six projects: Firstly, identifying and finding a coherent strategic approach to investment by the SOEs in Africa and outside South Africa. Secondly, examining the current use of pipelines within the SOEs and possible future uses to establish synergies with port, rail and energy development.

Thirdly, identifying the skills needs of the SOEs and defining possible areas of co-operation in skills development both for the SOEs and the wider economy. This project links up well with the Joint Initiative on Priority Skills Acquisition.

Fourthly, examining the optimal strategic deployment of the ICT infrastructure of the large SOEs and its role in the second network operator and enhanced broadband capacity in our economy. Incorporated in this project is the development of business process outsourcing capacity in populated but poor areas. More information on this last project is contained in the appendix to the speech.

Fifthly, the process to optimise the disposal of noncore properties in order to maximise value, provide broad-based Black Economic Empowerment opportunities and support developmental initiatives. Finally, to achieve a positive impact on the domestic economy through enhanced local production, the revival of dormant capital goods industries and the creation of opportunities for empowerment in the areas of SMMEs, broad-based Black Economic Empowerment and women-owned enterprises.

The work programme of the DPE is now considerable and the progress that we have made in addressing that workload is, I believe, positive. With regard to the SOEs, they too have had to pay attention to building new capacity. The investment programme is large. It requires new skills and indeed new management structures and processes to implement it.

I believe that the SOEs are making excellent progress in this regard. The work of the boards and management has indeed been Herculean. The management teams, especially the newer ones, are settling in and I am confident that we will increasingly see the benefits of this process.

I’m also confident that we are building a professional and dedicated managerial cadre for the economy as a whole. I will continue to provide as much support as possible for this healthy development and, along with the boards, find the optimal balance between nurturing new talented management and demanding the highest performance from them.

With regard to the employees as a whole, we will continue to find every way we can to improve their skill and efficiency and to make the SOEs employers of preference. This requires a robust but healthy working relationship between management and the unions. I know that all boards and managements are striving for this, and I’m confident that we will achieve this relationship to a measure greater than the present basically good situation. Differences will occur and maybe even future strikes, but I believe that there is now a great deal of common ground regarding what the state-owned enterprises can and should achieve.

The strategic and significant roles of SOEs in the economy necessitated the institutionalisation and stabilisation of governance systems to balance enterprise, sector and economic developmental imperatives whilst maintaining sound corporate governance practices, and commercial and financial viability.

Key to the developmental role of the SOEs is their ability to deliver goods in an efficient, reliable and cost-effective manner. Like any other structure that operates in the economy, we expect SOEs to raise finances, to cover costs, to maximise efficiency and to maintain healthy, independent balance sheets. By providing well-priced, effective services, the SOEs can enhance national competitiveness and contribute to economic growth and job creation.

Capturing the depth and profound macroeconomic impact of SOEs in the form of shareholder compacts is indeed a challenge. We have come a long way in fostering a common understanding between the department and SOEs around key deliverables and the expected rate of return on equity. The process of formulating shareholder compacts has been lengthy, but it is the quality of the end product that is important.

The shareholder compacts will provide clarity to the SOE boards regarding our expectations in respect of compliance with systems of corporate governance and the developmental objectives of the state. We have exceptionally competent and professional boards with good management teams that, given clear shareholder management compacts, will be able to drive implementation.

Our role is thus primarily to provide support and oversight. We will continue to strengthen the shareholder–board relationship through regular chairperson and chief executive officer fora; formulating a SOE-wide dividend policy; establishing remuneration guidelines; conducting board induction programmes and an annual board evaluation; and revising the transaction management guidelines. To tighten our shareholder management function the department also established processes to ensure the systemic review of businesses, corporate and investment plans and financial forecasts. To strengthen our risk management capacity, the HOLT valuation system was introduced to develop financial indicators, and the cash flow return on investment framework formed part of an initiative to benchmark SOE performance.

A risk management questionnaire was developed to measure SOE compliance with the Public Finance Management Act, and performance risk analysis reviews are conducted quarterly. All of this will occur within the context of a robust shareholder management framework. We are working with the National Treasury and the Department of the Public Service and Administration to amend the Public Finance Management Act to better align the current performance measures with government’s strategic economic intent.

Greater clarity on the nature and role of SOEs has laid the foundation for the formulation of legislation on shareholder management, which we hope to table before this House next year. We will also be engaged in government- wide consultations to establish co-operative governance protocols to improve co-ordination across the three spheres of government.

For us the primary focus for the year will thus be to closely monitor the streamlining of SOEs and the implementation of investment plans to ensure that they take the economy to the leading edge of efficiency in the operations of infrastructure. I will now speak briefly about the key developments in each of the SOEs that report to the Department of Public Enterprises.

Transnet will continue its process of transforming from a diversified conglomerate into a focused freight transport company. With regard to the reassignment of noncore functions and services, Metrorail was transferred to the Department of Transport on 1 May this year, and Shosholoza Meyl is in the process of being transferred. On Monday, 29 May, the Transnet Group successfully launched a process to sell a majority stake in Cape Town’s Victoria and Alfred Waterfront, which we hope to conclude by September 2006.

It is anticipated that the transfer of SA Airways will be completed within the current calendar year. Our primary undertaking following the transfer of SAA will be to stabilise its short-term financial position and develop a pragmatic airlift strategy. Developments in the airline industry are taking place at a rapid pace. SAA will not be an exception to this, and we can expect a number of important and positive announcements in the year to come.

The rate of growth of container traffic has necessitated a rapid expansion of ports. The expansion and redesign of Pier 1 and the widening of the entrance to Durban harbour and the construction of the container terminal at Ngqura are on track. The delays being experienced at the Cape Town Container Terminal in respect of environmental impact assessments are a matter of concern, which we hope to resolve shortly. A long-term plan for ports that speaks to the strategic industrial requirements of different regions of our country and ensures greater specialisation between and amongst ports is being developed to optimise the impact of our infrastructural investment programme.

In the case of Eskom, the underestimation of economic growth and the consequential underinvestment in infrastructure in the first decade of governance has required us to adjust and accelerate the implementation of Eskom’s building plan. I am very happy with the progress to date.

The massive capital expansion requirements will, quite clearly, require funding from sources beyond government. In order to address new capacity requirements, as indicated in 2004, Eskom will build 70% of future new capacity whilst independent power producers or IPPs will provide the remaining 30%. Furthermore, Eskom’s ability to go into the capital markets and raise private capital at very competitive rates is of huge macroeconomic importance.

The first residential mortgage-backed securitisation in the public sector, to the value of R1,6 billion, was settled on Wednesday, 31 May, this year. The securitisation of Eskom Finance Company (Pty) Ltd’s home loan book is a momentous event, having been 3,5 times oversubscribed and clearing at what is called Jibar plus 36 basis points. That is a very competitive interest rate. The success of the event highlights the opportunities that the proceeds of restructuring can present to the infrastructural investment programme.

Eskom will invest R97 billion over the next five years: R65 billion will be invested in the generation sector - this amount includes the new building and the return to service of the mothballed plants, and will add about 7 579 MW to the current 37 500 MW available in the system; R10,9 billion will be invested in strengthening the transmission sector; and R15 billion will be invested in the distribution sector.

Included in these plans is the provision for a coal-fired power station codenamed ‘Project Alpha’, which is expected to add 2 100 MW to the total power available by 2012. The first phase of that project is included in the first figure I gave you of 7 579 MW. A pump storage project codenamed ‘Project Hotel’ will also be ready in 2012 and will provide a further 1 300 MW to the system.

As regards additions to current capacity, Eskom will commission 1 050 MW of open-cycle gas turbine plants at Atlantis and Mossel Bay by 2007, while the IPPs will commission another 1 050 MW of open-cycle gas turbine plants in KwaZulu-Natal and Port Elizabeth by 2009.

As indicated by the Minister of Minerals and Energy on 25 May, Cabinet has agreed that we need to establish a national distributor that encompasses the municipalities outside of the metropolitan areas and financial modelling is being run by EDI Holdings to look at its viability. Cabinet also acknowledged that Eskom will need to play a critical role in this regard and we are currently consulting with Minerals and Energy, Provincial and Local Government and the National Treasury on how we will implement the Cabinet decision.

Eskom has continued to exceed its electrification targets. For the year ending in March 2006, Eskom electrified 135 868 additional homes, surpassing its 85 000 target, and has now electrified 3,346 million homes since the inception of this programme. This is quite a staggering achievement. [Applause.]

The energy sector brings me to the newest acquisition of the department, the Pebble Bed Modular Reactor, which was transferred from the Department of Trade and Industry to the Department of Public Enterprises in March this year. The increasing demand for energy and the need to combat global warming have resulted in nuclear energy re-emerging as an attractive alternative. Currently 30 nuclear plants are being built in 12 countries and over 50 are in the pipeline.

Given the urgent demand for large-scale, clean, affordable energy and South Africa’s lack of primary fuel sources in its coastal regions, providing coastal towns and cities with electricity requires either the construction of very long and expensive transmission systems, or the setting up of the logistics capability to supply coastal power stations with either natural gas or coal. Both of these solutions are expensive.

The Pebble Bed Modular Reactor provides a plausible and cost-competitive alternative solution. PBMRs can be situated close to the point of use so that there is no need to upgrade either transmission or rail infrastructure. The PBMR modules use uranium in small quantities with the resulting advantages in waste management. In addition, South Africa has an abundance of uranium, negating security of supply concerns. Having innovated significantly from its original German-based technology, the PBMR design can be regarded as the most efficient high temperature reactor in the world at present.

The department will assist in the establishment of this entity by introducing a governance system that is compliant with the Public Finance Management Act, supporting the construction of a demonstration power plant and pilot fuel plant, and facilitating the timely processing of the environmental impact assessment.

Last year we reported that Denel was facing a funding crisis and that it was not viable under its current model. The recent R2 billion cash injection and a strategic refocus based on establishing Denel as a systems integrator rather than a systems developer is bearing positive fruits despite the challenges.

Denel has identified four key measures to improve its profitability and long-term viability. Firstly, Denel will consolidate its business units in order to reduce duplication and to focus on supplying niche capabilities. This process includes the assessment of the viability of each business unit and a decision to either fix or exit the particular business. The assessment of the businesses has largely been completed. Denel will consolidate and reduce the number of its product lines. In addition, Denel is in the process of disposing of its noncore business units and assets.

The second central measure of the strategy is the identification of global alliance partners and the conclusion of business partnerships at business unit level. Selective equity partnerships and alliances with global prime contractors will be established. These partnerships will result in Denel achieving greater market access, global supply chain integration and world- class capabilities and productivity. Our first partnership deal in the aerospace sector with SAAB is currently under way. We are also actively seeking new partnerships in the developing or emerging world. My recent visit to Turkey was to advance this objective.

Domestic demand is the nucleus for success in the defence market. As its third measure Denel is seeking to secure at least 70% of local defence spending. Interdepartmental task teams involving the Department of Defence and the Department of Trade and Industry have been established to ensure further alignment of the defence acquisition policy with the objective of further developing the local industry. This may require changes to the current Armscor Act and the alignment of Department of Defence requirements with the strategic capabilities of Denel, as indicated by the Minister of Defence during the debate on his Budget Vote.

Lastly, Denel will raise its capabilities and productivity to world standards. It will identify, initiate, co-ordinate and manage interventions to ensure capability and productivity gains. Where required, their business alliance partners will inject new technology, processes and skills into Denel, resulting in a leading technological edge and improved efficiencies.

The department will closely monitor the implementation of Denel’s business strategy and its performance with respect to joint venture partnerships. We are also working closely with the National Treasury to monitor the balance sheet requirements of Denel, especially after the R2 billion injection. Furthermore, we will work with the Department of Trade and Industry and the Department of Science and Technology to develop a defence sector strategy and ensure policy alignment. In order to streamline the activities of national organisations to support the Department of Defence, Denel, Armscor and industry with research and testing services, the Department of Public Enterprises will also play a key role in establishing the Defence Evaluation and Research Institute, or Deri, which will fall under the Department of Defence.

With regard to Alexkor, I am very pleased to see three leading members of the community there …

Goeiedag, mense. [Applous.] [Good day, people. [Applause.]]

Let me tell you that they are “baie taai” [very tough] negotiators, but great leaders.

As regards Alexkor, the significance of community participation in decision- making on matters pertaining to their economic wellbeing cannot be underestimated. We have therefore dedicated significant time and resources to engage the Richtersveld community on developing a comprehensive and beneficial resolution to their concerns.

An agreement has been reached between the community and myself and a memorandum of agreement was signed on 10 February, but the legal teams are still negotiating a few outstanding concerns. It is expected that a settlement will be concluded with the Richtersveld community shortly. This will allow for the recapitalisation of Alexkor to be expedited and Alexkor will then be in a position to implement its short-term turnaround plan and drive its exploration and expansion programme.

We will announce the agreement with the community in more detail later, but I believe it is a historic opportunity for this community, which I hope will be of great benefit to them. In the meantime, however, the department is proceeding with the transfer of community services such as the hospital, the school, the airport and other noncore services currently managed by Alexkor, to the relevant authorities. A consultant has been appointed to support the establishment of a municipality and the Northern Cape provincial government is in the process of taking over the functions, which should reside with them.

As regards Safcol, Safcol’s Komatiland Forests is the last remaining forestry package that was to be disposed of under the forestry- restructuring programme. The Bonheur consortium has withdrawn from the competition tribunal process and the Komatiland Forests transaction, providing the department with an opportunity to review the transaction. A study of high-level international best practice in forestry revealed opportunities within the wider forest, timber, pulp and paper industries for greater contributions to the Asgisa objectives of skills development, the cost of intermediate inputs for industry, expansion and development of SMMEs, and maintaining the competitiveness of the South African industry. A new strategy is currently being developed, which will be finalised within the current financial year.

Expanding and modernising the country’s logistical infrastructure will improve the quality and efficiency of services, thereby contributing to overall economic growth. This will ensure that the spending on infrastructure does indeed result in the desired outcomes.  Furthermore, an investment dashboard is being introduced to track the outputs of capex- related projects, thereby increasing transparency, accountability and effective implementation.

The capex programmes will also provide opportunities for the development of domestic industries and for job creation. The total government infrastructural spending over the next five to seven years is estimated at R360 billion, of which a third will be driven by Eskom and Transnet.

The capex programmes spending by Transnet and Eskom, which translates to 1,5% of 2004’s GDP per annum over the next five years, will have a significant positive impact on the economy. It will result in an increased demand for outputs, focused industrial development of important sectors such as capital goods and transport equipment, and the crowding in of private sector investment.

Let me say that many industries, I believe, will unfold out of this programme, including that of the Pebble Bed Modular Reactor, and many opportunities will arise. I would urge members to have a look at the small booklet we are releasing today from Eskom and the Department of Public Enterprises. It sets out how the Eskom contracts will be managed and how one can try to become a supplier to Eskom. So the small booklet that was available in the presentation is really worth looking at, and I would encourage members to ensure that they spread this information to those businesses and companies that would be interested in participating in this major programme.

Madam Speaker, we table before you a Budget Vote request of R683,4 million. In the current financial year the department will oversee the continued shedding of noncore activities of SOEs and the accelerated implementation of building plans through the stringent application of shareholder management and governance frameworks. I would like to impress on the House the enormity of the responsibility that rests on the department and its reporting SOEs.

Madam Speaker, we embrace the challenge because we know that we have a competent team within the department and within each SOE and its board, teams that are committed to the expeditious realisation of government’s developmental objectives.

Allow me once again to thank the chief executive officers and board chairpersons and members, Director-General Portia Molefe and all the energetic young people in my department, and the portfolio committee chairperson, Yunus Carrim, and members of the portfolio committee for their contributions to the remarkable progress made by the department. Congratulations also to Maria Ramos, who I believe is up there, on the extension of her contract as Transnet’s chief executive officer.

Finally, to my special guests who I announced at the outset, the young people sitting there, I hope that they have seen enough to be able to learn something and that the information may have opened exciting opportunities for you to consider in your career to come.

Madam Speaker, this is a sign of our efficiency: I have no time left. [Applause.]

Mr Y I CARRIM: Madam Speaker, comrades and friends, it seems to me that we need to look at the rules of Parliament because I have a flu emerging and I have been allocated a limited amount of time. If you have flu it slows you down. I sincerely think that we need to look at situations like mine, although I have no doubt that the hon Butana Komphela and others will always have flu when they are about to speak before this House. So, we should add a rider that says you must produce a doctor’s certificate, which I can produce - and hopefully the next time around when I do get a flu, which I hope I do not ever get, you will be sympathetic and extend my time by a few minutes.

But having said that, let me say that our committee feels that three key interrelated issues that emerged in our consideration of the department luckily apply to the DA too. If you have flu, it does not matter which party you are from.

What we say in our report is that there are three things really: Firstly, government is becoming increasingly clear about the nature and the role of the SOEs in a developmental economy; secondly, while different SOEs have different challenges, and are in different states of readiness, there is a general movement away from clarifying visions, strategies and plans to implementation; and thirdly, the portfolio of the department seems to constantly increase with expanded programmes and new projects, but there has not been a commensurate increase in personnel and resources.

In short, the department has, with modest resources, come quite some way in 12 short months and we convey this in our report on the budget published in the ATCs of 31 May. Essentially I will provide an overview of the report and other members will focus on specific aspects of that report and develop them further.

Our overall view of the Department of Public Enterprises - DPE - as set out in our report is that, given the scope and complexities of the department’s portfolio, we feel that the DPE has made significant strides since the last budget briefings. It is much clearer on its role and current programmes and it has budgeted appropriately for the achievement of its targeted outputs in this financial year.

The new strategic plan for 2006 to 2009 is commendable and there is a much better fit now between the plan and the budget than there was in previous years. We will be able to assess this better after we have considered the DPE’s annual report for the last financial year, which we will consider later this year. But, at this stage, we feel that the DPE has made effective and productive use of last year’s budget.

Of course, major challenges persist. But, the Portfolio Committee feels, at this stage anyway, that the department certainly has the potential to meet most of these challenges. The department’s senior managers are new, young and enthusiastic and hold a lot of promise. The skills level of the DPE has improved since the last budget sittings, although challenges remain. It was a more confident department that we engaged with this year.

Minister Erwin and the new director-general, Portia Molefe, must be commended for putting together such a potentially good team. The challenge, of course, is to create a productive harmony of this new team and most effectively deploy their skills and passions - and here too, the signs are promising. Of course, given the nature of the interaction between departments and parliamentary committees, for a variety of other reasons, there are aspects of a department’s role and functioning, usually negative, that we are unable to see. But, with this qualification, we are very clear that the DPE is doing well and is poised to do better. Of course, time will tell.

So, as you can see, we are very positive but also cautious. A lot has been done during the past twelve months, and we hope it is sustainable. There is a lot of promise - we hope it will be fulfilled. On both counts, at this stage at least, the signs are that our expectations will be realised.

We feel that there is a fairly high level of synergy between the Minister and the DG’s approach to their portfolio. And this is also reflected in the approach of the senior managers. This, too, suggests the clarity being forged in attending to this portfolio.

The committee feels that the new strategic plan is much clearer on the role of the department and its programmes, measurable objectives and structures. The plan also provides greater clarity on the nature and role of the state- owned enterprises - SOEs - and what is required of each of them.

The committee was interested to hear that the DG feels that the department’s mandate, vision and mission should be further refined and made clearer and even more concrete, although there have been improvements since last year. The DG wants these functions to be more concise and in simpler language. This is surprising, frankly, coming from a senior manager in a government department.

MPs have often complained about the bureaucratic-speak and unnecessarily technocratic language used by department officials, which often tends to hide – or to use a more precise but big word, obfuscate - issues. And, we have really had to struggle to get anywhere with the departments officials on this. So, the DG’s attitude is a breath of fresh air.

Of course, there is no denying that the complex technical work of some departments sometimes requires technical language, which is not easy to simplify. But, in general, there is certainly room to be more precise and concise and to use simpler language. This, too, we think, should be a measure of a department’s progress.

As the SOEs stabilize and their new roles become clearer, the DPE is increasingly focusing on the long-term economic and developmental needs and goals of the country - and this, too, is to be welcomed.

To the committee it also seems that there is an increasing coordination between the DPE and the policy, regulatory and other relevant departments. Of course, this coordination can be challenging, but the committee notes the progress and hopes to see more. To ensure that there is effective coordination within the DPE and across departments and that the message given to SOEs by different parties is consistent, the DPE is working on a governance workflow model. The committee welcomes this.

Now that greater clarity is emerging about the nature and role of SOEs in our developmental state and economy, the stage is set for legislation on the new shareholder model. The committee looks forward to the tabling of this legislation. And, we have heard from the Minister a moment ago that to ensure a more focused and integrated role in transactions, the DPE has merged two previous programmes and a new programme has emerged - all of which, it seems to us anyway, will make for a more effective implementation of the department’s mandate.

There was much else in the department’s programme that titillated us: Firstly, a new procurement guide that encourages local content in procurement through the SOEs capital expenditure programme; secondly the department’s focus on the role of the SOEs capex programme in revitalising dormant industries; and, thirdly, the role of the SOEs in establishing call centres.

The committee was also impressed to hear that 63% of DPE staff are women. Of these, 47% are at senior management level. [Applause.] However, there are no people with disabilities employed at the DPE. The department hopes to employ 15 people with disabilities over a two-year period. That not a single person with disabilities is employed at the DPE is surely not acceptable and the committee will monitor progress in this regard.

The Minister explained that the department had a relatively small budget, but was changing somewhat from being an administrative department to having a budget that reflects transfer payments for capitalisation of SOEs. The R2 billion allocated to Denel in the last financial year is an example. Of the department’s budget of R683,4 million for this financial year, R580 million comprises transfer payments – the largest, of course, being to the Pebble Bed Modular Reator - PBMR. In effect, the DPE’s budget is R102,3 million, which includes R10 million for the Joint Project Facility, previously funded by the SOEs.

In the past financial year, the department underspent by 0,2%. This rises to 4,77% if the transfer to Denel is excluded. The reason for this is that the R3,1 million due to Diabo Share Trust was not transferred because its audited financial statements were not available. The committee feels that the underspending is understandable. Other committee members will deal with this, so we shall quickly deal with them as an overview.

Obviously the challenges in electricity delivery, especially in the Western Cape, have to be met more effectively. Of course, we accept that the higher than anticipated economic growth and the massive rollout of electricity to the poor, explain the current challenges. But, the underinvestment in infrastructure in these past ten years is also responsible for the current challenges. The committee welcomes the Minister’s statement that the power outages have highlighted the underinvestment in infrastructure. We feel that there should be great acknowledgement of the consequences of this.

We feel, too, that the executive must take its fair share of responsibility for this underinvestment and draw the necessary lessons. But, Parliament too, Madam Speaker, cannot escape its responsibility for this and our and other parliamentary committees need to also draw lessons and become more effective in fulfilling our oversight responsibilities.

However, in respect of the new generation of electricity programme, Eskom seems very much on track and we welcome this. The PBMR is new to us – Comrade Wang will speak about that down the road.

Transnet, we note, is making constant progress and the committee commends this. The committee also congratulates the Transnet management and the trade unions on the amicable settlement of the strike. Of course, the committee does not understand the full complexities of the dispute but hopes that both sides have drawn lessons from this experience and that other SOEs will do so too.

The committee feels that as Denel has been allocated R2 billion from the national fiscus and is likely to be allocated more to meet its R5,1 billion recapitalisation target, we should be more rigorous in monitoring its progress in the implementation of its turnaround strategy and financial recovery. Since the budget briefings, the committee has received a briefing from Denel and was impressed with Denel’s greater clarity of vision, strategy, programmes and structures and the progress it has made in the six months since we last saw it - the considerable challenge notwithstanding.

But, our committee has its own challenges. We need to be more rigorous in our oversight role. The report we have presented focuses on plans, strategies and programmes but not enough on concrete details of the budget. We need to develop our skills further in this regard and we also have to do a whole lot of things that I am afraid I do not have the time to comment on – but it is more about us rather that the executive.

By way of conclusion, though, I would like to thank Minister Erwin, the Director-General, Portia Molefe, and all the senior managers in the Ministry and department for their cooperation. I know that this has been a particularly positive picture of the Ministry and the department and I sound like “imbongi” [praise singer] Carrim – but I want to say that this is the picture we see.

This is not, let me assure you, because Portia Molefe is my home-girl as it were, or because the Minister, the DG and I were at some stage attached to the then University of Natal – nor, indeed, because we all happen to be Zulus. But, it is because of the picture we see. [Laughter.] It may, of course, fade or become more beautiful – let us see.[Laughter.] But oversight certainly, Madam Speaker, does not just mean criticising for the sake of criticising.

Finally, let me say thank you to Reneva Fourie and Dudu Mhlongo from the Ministry’s parliamentary liaison office and to Ms Gaynor Kast who is somewhere here. I should not be saying this, Gaynor, in the public domain, but thank you very much, in particular, for sending me all the statements that the Minister issues before they go to the press. That is why I am so positive. But, on a more serious note, thank you, Gaynor Kast, for sending us the press releases on time. It goes out to the Chairperson of the Committee at the same time it goes to the press. So, let me once again say thank you.

I want to say one final thing. I think the House is going to acknowledge this in a moment, but I would like to take this opportunity very quickly to say that the hon Yusuf Bhamjee, a member of this House who has been at the provincial legislature in KwaZulu-Natal from 1990, suffered a severe loss on Friday. Many of you read about it in the press. We extend our sincerest condolences to him. His wife, who was a very progressive gynaecologist, was killed in the medical centre in the middle of Pietermaritzburg at about noon on Friday - which is quite a severe indictment of what is happening in our country. And, I think we as a committee and, I am sure, the Speaker empathise with this. We want to extend our sincerest condolences to him and wish his family the very best in these difficult circumstances. I thank you all. [Applause.]

Mr J J M STEPHENS: Madam Speaker, may I say on behalf of the DA that we associate ourselves in every way with the condolences expressed by the hon Carrim. The Minister will be happy to hear that the DA supports this Budget Vote, and we are not calling for his resignation! [Laughter.]

I wish to use the opportunity of this, my first budget speech as DA spokesperson on Public Enterprises, to review the status of the debate on SOEs, specifically to identify those matters upon which there is agreement and those upon which we take issue with the government. I’m indebted to my DA predecessor the hon Rabie for his 2005 budget speech in which he initiated this process and on which I shall attempt to build further.

I begin with those matters upon which I believe the government and we are in agreement. Let the decks be cleared of such nonissues. Firstly, SOEs must be self-funding business enterprises that deliver economic returns on capital employed. There is no room for loss-making SOEs that persist as a drag on the fiscus. Loss-making SOEs must be turned around post-haste. Secondly, unlike private firms, SOEs cannot merely be profit-maximising agents. They must achieve certain strategic socioeconomic goals and therefore they must maximise economic rates of return.

Thirdly, SOEs must be efficient. The product or service that they are supposed to deliver must be delivered time-efficiently, cost-efficiently and capital-efficiently. Consequently, SOEs must be fully corporatised. International studies have concluded that SOEs gain far greater efficiency from corporatisation than from the privatisation of their ownership.

These points could form three pillars of an emerging national consensus on state-owned enterprises. There are other areas of agreement as well, but they require further interrogation.

The subject of state-owned enterprises forever raises the question of the relative roles of public and private enterprise. It is a debate with deep roots in South Africa. The earliest and most tempestuous such debate occurred during the mid-1920s around the establishment of Iscor.

Die destydse Eerste Minister genl Hertzog het die totstandkoming van die destydse Yskor as ’n staatskorporasie in die Parlement ter tafel gelê. Hy is gesteun deur sy alliansievennoot in regering, die Arbeidersparty. Namens die ou Sappe het genl Smuts, destyds die leier van die opposisie, die skep van ’n besigheid in staatsbesit heftig teengestaan en dit uitgekryt as blatante sosialisme.

Genl Hertzog het betoog dat Britse geldmagte nie beheer oor hierdie strategies belangrike nywerheid van Suid-Afrika moes kry nie. Buite staatsbesit, het hy gesê, sou net Britse kapitaliste dit as ’n private nywerheid kon stig en bedryf, tot nadeel van maatskaplike opheffing in Suid- Afrika en die ontluikende plaaslike nywerheidsektor.

As ’n staatsonderneming was die ingryping juis daarop gemik om werk en opleiding te verskaf aan veral armblankes, merendeels arm Afrikaanssprekende blankes, om sodoende hulle nypende armoede te verlig. Hertzog het duidelik ’n ekonomiese ontwikkelingsdoelwit nagestreef.

As ’n staatsonderneming het Yskor dan, tesame met ander staatsinstellings en –ondernemings, ’n sleutelrol gespeel in die bou van ’n sterk plaaslike nywerheidsektor en die uiteindelike oplossing van die armblankevraagstuk. (Translation of Afrikaans paragraphs follows.)

[The then Prime Minister Gen Hertzog tabled the establishment of the then Iscor as a state corporation in Parliament. He was supported by his alliance partner in government, the Labour Party. On behalf of the old Saps Gen Smuts, at that time the leader of the opposition, vehemently opposed the creation of a state-owned enterprise and denounced it as blatant socialism.

Gen Hertzog argued that British moneyed interests should not gain control over this strategically important industry of South Africa. He said that if it was not state-owned only British capitalists would be able to found and operate it as a private industry, to the detriment of social upliftment in South Africa and the budding local industrial sector.

As a state enterprise the intervention was, in fact, aimed at providing work and training for poor whites in particular, for the most part poor Afrikaans-speaking whites, in order to alleviate their grinding poverty. Hertzog was clearly pursuing an economic development objective.

As a state enterprise Iscor, together with other government institutions and enterprises, then played a key role in the building of a strong local industrial sector and the eventual solution of the poor-white problem.]

The more things change, the more they remain the same!

Yskor was ’n belangrike element in die ekonomiese bemagtiging van blanke Afrikaners. Genl Smuts is nooit vergeef vir sy opponering van Iscor nie. Afrikaners het dit beskou as bewys van sy afkerige, minagtende houding jeens hulle en hulle belange, en sy voorkeur vir Britse kapitaliste. (Translation of Afrikaans paragraph follows.)

[Iscor was an important element in the economic empowerment of white South Africans. Gen Smuts was never forgiven for his opposition to Iscor. Afrikaners viewed it as proof of his disinclined, contemptuous attitude towards them and their interests and his preference for British capitalists.]

Now in the shape and form of Mittal Steel, this privatised monopoly represents an economic disaster. The previous positive downstream externalities are all lost. Mittal is a negative for the local manufacturing industry and is fuelling the very high cost of construction, while the economy haemorrhages monopoly-sized profits offshore.

This situation can only be tolerated if rigorously regulated and price- capped. Urgent government action is required. The country is bleeding. Cap Mittal’s prices at export parity and be done. They can live with that very handsomely. Hertzog was right, you see, and Smuts was wrong! I suggest there are valuable lessons for all of us in this piece of history.

Privatisation has many facets, of which ownership is but one. There is room for private participation in SOEs on a multitude of bases. The more such opportunities are created, the wider the benefits of public enterprises can be spread. With the unlamented demise of the Washington consensus – never a consensus much beyond Washington anyway! – a new global consensus is developing, often referred to as the New Santiago Consensus.

The new consensus retains its stress on market-based development and limiting government’s role in direct production, but it takes cognisance of market failures that at times cannot be addressed without a significant and ongoing role for government. Very importantly, it emphasises that government has the responsibility to reduce poverty and inequality and to ensure that there is shared growth in the economy.

Fundamentally, government has no business being in business, yet there are valid reasons for SOEs, as is demonstrated by the Iscor saga. If the enterprise is a natural monopoly or if it delivers any social welfare, nationally strategic or public policy benefits that cannot be delivered in any more efficient way, or if it requires investment of a magnitude beyond the ability of private enterprise there is a case for state ownership.

Unfortunately SOEs have suffered from a lack of capital investment during the past decade. Now an urgent need for a massive capital injection exists, with enterprise restructuring and spinning-off of noncore assets resulting. This lack of foresight has cost the country dearly in jobs and a loss of social welfare. The need to place SOEs on a sound financial footing is fundamental, but it must be understood that, as all shareholders do, South Africans expect our investments to grow, to prosper and to deliver what they are intended to deliver. As we expect of private enterprise, so public enterprise must create and maintain economically viable jobs. We need growth in productive employment opportunities, not restructuring excuses.

Employees must have job security, whatever their race or gender; they must not fear tomorrow. Everyone must know that there is no glass ceiling to prevent their advancement in the organisation. Only then will SOEs become the vibrantly viable, efficient and proudly South African enterprises they are supposed to be.

We await the department’s strategic three-year plan with bated breath. The anticipated shareholder compacts will direct the nature of the future debate. Greater clarity on the relative roles of the department and the SOEs, clearly measurable objectives for each SOE and their expected contribution to Asgisa are urgently required. Let us therefore do what wisdom demands, but let us do it with speed and courage. Do not let procrastination born of timidity delay us any longer. The people are waiting. I thank you. [Applause.]

Mr S E KHOLWANE: Madam Speaker, Ministers and Deputy Ministers present, hon members, officials from the DPE and the captains of the SOEs, the leaders of the community of Alexkor, guests and comrades, when the Cuban President, Fidel Castro, was addressing this House in September 1998, he said:

There are still today two South Africas, which I ought not to call the “white” one and the “black” one; that terminology should forever be dropped if a multiracial and united country is meant to be created.

I would rather put it this way: two South Africas, the rich and the poor, one where an average family receives 12 times the income of that of the other … one where 100% of the people know how to read and write, another where illiteracy is more than 50%; one with almost full employment, another where 45% are unemployed … one that has accumulated and has almost all the technical and managerial knowledge, the other doomed to inexperience and ignorance; one that enjoys wellbeing and freedom; the other having been able to conquer freedom but without wellbeing.

The above still holds true even today. The challenge of making a substantive dent in the level of unemployment and poverty remains. Furthermore, the government has to forge an effective developmental state that can both accelerate and share economic growth.

Asgisa, as elaborated by the President in the state of the nation address and by the Deputy President in various subsequent forums, is a direct response to the structural constraints that have limited our progress in achieving our developmental programme.

As reflected in the 50th national conference, our mission as the ANC continues to be the fundamental transformation of the South African economy in order to empower black people, in particular, and those who were previously disadvantaged, to eliminate poverty and the extreme inequalities generated by the apartheid system, to generate productive employment opportunities for all our people at a living wage and ensure balanced South African economic development.

Furthermore, I must indicate that the recent management innovation special report for the Boao Forum for Asia Annual Conference 2006, reflects that as China embarks on its eleventh five-year guidelines, state-owned enterprises are being called on to take the lead in increasing China’s capacity to innovate.

China’s large and medium-sized SOEs have made significant gains in economic strength over the past 30 years, and have been a major driving force of that country’s economic growth. Some SOEs have made it to the top rank - even the top five - and some are leading in their disciplines. This proves to us that the position of the executive that we use our SOEs to develop our economy and also to transform, was a well-informed position to take.

We all know that Eskom and Transnet will be embarking on a massive R130 billion project over the next few years. That means that both SOEs will require the necessary skills and capacity to deliver and that in turn will mean that the department must also have the capacity to monitor that.

This does not exclude us as the portfolio committee either, Chairperson Yunus Carrim. We must also have the capacity to do our oversight, because if we don’t we are not going to be able to ensure that this programme becomes a success.

Furthermore, as has been indicated by the chairperson, we would like to indicate that the department has moved further in terms of ensuring that the issue of gender balance, which we are so passionate about as the ANC, is addressed. If one looks at the department, it is well represented. Indeed, what pleases me is that the youth representation is also huge in that department, thanks to the DG and the Minister. [Applause.]

The need to reassert the importance of rural development cannot be overemphasised. In 1992, in our ready-to-govern policy we stated that apartheid had distorted the social and economic environment of the rural areas and accordingly the new democratic state must implement a policy to redress these distortions and create opportunities for rural people through balanced and sustainable development. We welcome the project about the call centre and the property projects, which have been driven by the SOEs. We hope that the programme which they are developing to ensure that all the communities do participate in the capex projects will be presented to the portfolio committee very soon so that we can engage with it.

Ngalesikhatsi sichumana netakhamiti singemaLunga eSishayamtsetfo, basebenti labasebenta etindzaweni tetingodvo njengase Barberton, eSabie naletinye tindzawo, Ndvuna, bakhombise ngalokusebaleni kwekutsi batjelwe bacashi babo kutsi kwentiwa yini lokutsi kubete tingodvo kuleto timboni ngobe umgomo wahulumende we ANC nguwo lobangela kutsi kushode leto tingodvo.

Kodvwa-ke lesifuna kukusho tsine, kulabo basebenti labatsintsekako kanye nemindeni yabo, kutsi loko akusilo nani liciniso. Liciniso kutsi lemililo leyahlasela emahlatsi etfu, ngemnyaka wanga 2003 ngiyo leyaba yimbhangela leyenta kutsi kube nekushoda kwetingodvo. Ngeke lohulumende we ANC lobatsandza kangaka bantfu baseNingizimu Afrika afake imigomo letakwenta kwekutsi bangakhoni kuvikela imisebenti yabo. Sitsi leso simo siyetsemba sitawulungiseka masinyane. (Translation of Siswati paragraphs follows.)

[When we met with the public as members of the National Assembly, the workers in the timber industry, Minister, explained to us very clearly that they were told by their employers why there was a shortage of raw material. This, they said, was a direct result of the ANC-led government’s policies on the forestry industry.

Notwithstanding that, what we want to say to you today and inadvertently to those workers and their families is that there is no truth in that. The truth is that the fires that struck our forests in 2003 are the direct cause of the shortage of timber. The ANC that loves the people of South Africa so much will never allow policies that will hamper progress in the industry. And we hope that this situation will be resolved speedily.]

In conclusion, we want to congratulate the captains of the SOEs, Eskom, Transnet, Denel and the rest. We know that the work they are doing is not easy to do. It is easy for us to come here and lambaste them, without acknowledging the work they do.

Furthermore, we cannot exclude the work done by the department, particularly the DG and the top management. We think that they are doing very well. Keep it up. We cannot underestimate the problem that we inherited and we acknowledge that we will not overcome this in a short period. We still have a long way to go, particularly in the transformation of the economy of our country. [Interjections.]

Don’t worry; I will not say that we don’t support the budget. We as the ANC will support this budget, because it’s one of the most progressive budgets, which also addresses the issue of the shareholder management system that will enable the state-owned enterprises to deliver as is expected. I thank you. [Applause.]

Prof E S CHANG: Madam Speaker, hon Minister, the chairperson of the committees and hon members, and all the hon guests sitting on the gallery, this is the first time that I stand here with my very cold hands - I don’t know why they are so cold. But I can guarantee you; I am going to give a very warm speech. [Laughter.]

The IFP believes that one of South Africa’s biggest challenges is to attain sustainable economic growth and development. Clearly, we have not yet achieved the growth rate required for sustainable development. Coupled with this, a number of issues have to be dealt with head on.

The first issue is Denel. State-owned enterprises in South Africa are characterised by massive financial investment as well as investment in labour, technology and infrastructure. Denel, which is South Africa’s defence-related industry, operates within the context of increasing global consolidation. It is a repository of cutting edge technology and intellectual capital.

We need to deal with the question that has been put as to whether Denel is a viable state-owned enterprise. Denel’s CEO, in a recent presentation to the portfolio committee, said that Denel suffered a 23% decline in revenue and was expecting an operation loss of between R1 billion and R1,8 billion. He also said that the government’s commitment was needed if it was to ward off insolvency.

The chairperson of our committee stated recently that overseas defence companies flourished when they had political support. It is with the above point in mind that we urge government to give clarity on the type of support they will provide Denel in order to make it viable.

The second issue is Eskom. It is said that Eskom is one of the most efficient and lowest cost producers of energy in the world. Although this might be true, and we do acknowledge that Eskom has provided electricity to millions of South Africans, the power shortages that parts of the Western Cape experienced have caused great inconvenience and financial losses for many. We therefore hope Eskom has learnt from this unfortunate incident, which has tarnished its image, and is able to prevent similar incidents from occurring, as well as meet the growing demand for electricity.

Another issue that is also critical is that of violence on trains. There is no doubt that the security guard strike has had a huge impact on Metrorail and its mode of operations. We have seen too many images of people being thrown off trains and the violence that accompanies it. This cannot be allowed to continue and government and this Ministry have to take responsibility.

This brings me to yet another area of concern, that of the Airports Company of South Africa. We cannot ignore the continuous stream of complaints about baggage theft at our airports. I think this situation is clearly out of hand and with the Soccer World Cup in 2010 this does not augur well for our national carrier. We need to know exactly what measures are in place to eradicate this serious problem.

Transnet has to become a focused and efficient organisation. Here I would like to commend the work of Maria Ramos. However, this year we saw the Transnet strike. Here again it is imperative that there should be open and clear lines of communication. It is understandable that workers together with unions want to protect their rights and interests, and rightly so. There is no doubt that the strike has cost us millions of rands. But our focus should be on growth and employment and these should be our essential objectives now.

Inefficiency and underinvestment by Transnet is very costly for the whole economy. Better lines of communication are essential with those in the bargaining chamber. Lest we forget, part of our mandate is to act as the responsible shareholders of the entities that we have an interest in. Government and the Department of Public Enterprises are supposed to be totally committed to the advocacy, promotion, implementation and development of a culture of sound corporate governance within state-owned enterprises. Yet there are times when the state-owned enterprises’ independence, their clearly defined mandate, accounting and reporting in line with the Public Finance Management Act, corporate governance issues that relate to the remuneration of board members, and the disclosure of remuneration to the executives, and so on, have to be questioned. The IFP also believes that our state-owned enterprises subscribe to the values that are expected of responsible corporate citizens in South Africa.

In order to guide the state-owned enterprises in achieving the above, the department must actively promote and institute sound corporate governance, ethics and probity. I cannot begin to emphasise how important this is. Reports have to be submitted timeously, and the state-owned enterprises must comply with the Public Finance Management Act. Rigorous performance monitoring of the state-owned enterprises is where our mandate as the portfolio committee comes into play, in terms of our constitutional oversight and monitoring.

Another challenge to the Ministry is black economic empowerment. It is imperative that the public sector plays the leading role in the process of broad-based black economic empowerment. Thus far in the restructuring of state assets, significant contributions have been made toward BEE, but here again we need to know about the beneficiaries. Is it some elitist group, and those who are well connected? Is it those who are already empowered? Coming to the budget of the Department of Public Enterprises, I would just like to touch on the issue of new skills for the personnel complement. In view of the high level of skills needed to engage with the complex financial, corporate and strategic issues ahead, it will be critical to bring in specialists both to assist with the required expertise and to build capacity in the public service. Clearly, we need to build capacity in the fields of energy, logistics and the defence industry. The IFP supports the Budget Vote. Thank you. [Applause.]

Ms N D NGCENGWANE: Madam Speaker, hon Minister and Deputy Ministers, hon members, distinguished guests, ladies and gentlemen, it is, again, that time of the year when public representatives and government departments account to the public on how the budget they were allocated by National Treasury was spent. This is to check progress on and achievement of the priorities that we set ourselves, and whether the resources allocated were used optimally.

In 2005 we celebrated the 50th anniversary of the Freedom Charter, a guiding document and almost a bible of the ANC, which says: “The people shall share in the country’s wealth.” It is in this context that the ANC- led government ensures growth and development of our economy, thus providing a means to achieve the broad goals indicated in the Freedom Charter.

Colonialism and the apartheid system robbed people of their land and of their country’s wealth. Now the time is ripe to fast-track the inclusion of the previously marginalised in the mainstream economy, thus restoring their dignity.

We keep referring to the past because a lot of damage was done under the apartheid system. It is important to know your past in order to prepare for your future.

The economy of this country was built on systematically enforced racial divisions in every sphere of our social life. Be that as it may, the ANC- led government has shown commitment in addressing the microeconomic issues of this country by trying to bridge the gap between the rich and the poor, whilst at the same time trying to address unequal income and wealth distribution, as well as macroeconomic issues.

South Africa, our country, has seen a growth in joblessness for quite some time, and it is up to us, as public representatives, to come together and take advantage of the limited resources we have and start boosting the second economy.

There are crosscutting activities in different departments, eg the Expanded Public Works Programme, which is going to assist with infrastructure development. These could be utilised optimally in labour-intensive activities to reduce unemployment and thus fight poverty, of course with targeted initiatives for women and the youth. This could also assist with the implementation of infrastructure investment programmes.

The reduction of the cost of doing business and the strengthening of the key sectors of the economy are some of the efforts to boost the second economy, using Asgisa as a tool for infrastructure development in our country.

The main objective of the corporate strategy and structure programme is to ensure delivery by the state-owned enterprises on the government’s economic growth objectives.

Regarding the transport unit, Transnet and SA Airways should manage the government’s investment in the transport industry. Coming to energy, the implementation of government’s energy policies is aimed at improving delivery on economic growth objectives, including rural electrification, through Asgisa.

The main objective of the economic research unit is to make sure that state- owned enterprises’ capital expenditure is in line with government’s overarching economic objectives, with greater emphasis on fiscal risk exposure.

Industrial efficiency and effectiveness should be developed through projects that would improve the capability of SOEs to benefit the whole economy of South Africa. All this should be done, guided by the Companies Act and the Public Finance Management Act of 1999, with additional requirements of transparency.

The Department of Public Enterprises embarked on certain projects to design a governance framework to enhance its ability to implement the shareholders’ management framework, namely: firstly, drafting legislation to define accountability and transparency; secondly, strengthening government-wide consultancy to improve management through co-operative governance protocols; thirdly, strengthening the relationship between shareholders and the board; and, lastly, improving information related to transactions.

One of the major steps the Department of Public Enterprises –DPE has taken is the separation of SAA from Transnet. We hope that the high oil prices and the strong rand will not impact negatively on this national carrier.

Furthermore, the recapitalisation of Denel should boost the morale in this SOE. However, portfolio committee members would like to see transformation and skills transfer at Denel. We all know that change does not happen without inconvenience, even from worse to better. So let’s join hands as we are building this country for future generations.

Xa umbutho wesizwe, i-ANC, wawulwela inkululeko, wawungalweli kuphela ukukhululwa emakhamandeleni kwabantsundu, koko wawulwela wonke umntu weli lizwe loMzantsi Afrika, nkqu ne-DA. Namhlanje bayakwazi ukuthetha ngenkqubo yohlengahlengiso, i-transparency. Kanti ukuba bebefuna ukulubona lusenzeka olu hlengahlengiso, bebethulele ntoni yonke le minyaka?

Iingcebiso ezazivela kwi-DA zazisithi: “Thengisa, thengisa onke amashishini karhulumente ukuze kukhule uqoqosho lweli lizwe.” Yaba nkulu kakhulu le ngxoxo, yade yaya kufikelela nasezindlebeni ze-Cosatu, nayo yathi iyayinyova. Emva kothetha-thethwano, yaye yacaca ukuba ayikho loo nto, koko kwakuza kuthengiswa impahla engengondoqo ukuze kubekho iinguquko ezaziza kwenza ukuba la mashishini enze inzuzo nengeniso kuqoqosho lweli lizwe loMzantsi Afrika.

Umbuzo omkhulu ke ngowokuba: Ngubani owayeza kuzuza ngokuthengiswa kwala mashishini? (Translation of isiXhosa paragraphs follows.)

[When the ANC was fighting for democracy, it was not only fighting for the liberation of black people, but for everybody, including the DA. Today the DA can speak of restructuring and transparency. If they were so keen on this, why were they quiet all these years in seeing restructuring being implemented?

Their advice was that all government financial institutions should be sold to enhance economic growth. This became a big debate and even Cosatu expressed its opposition to the idea and embarked on mass demonstrations. After intense negotiations it was made clear that the intention was not to privatise but to restructure the enterprises, so that they can make a profit and become self-sustainable.

The question is: Who stood to benefit from privatisation?]

Who benefits from privatisation in developing countries? And what happens to the poor people of that developing country? How do they benefit from privatisation? Honesty is the first chapter in the book of wisdom, so let us be honest if we want to build this country.

This ANC-led government continues the struggle both to ensure higher rates of economic growth and to meet the objective of a better life for all the people of this beautiful country.

Xa ndigqibezela, ndifuna ukuthi huntshu kweli qobokazana, uPortia Molefe, eliphethe eli Sebe laMashishini akwaRhulumente, nakwiqela lalo labantu abatsha. Maqobokazana angalala endleleni yazini kunyembelekile! Ndithi malibongwe igama lamakhosikazi. (Translation of isiXhosa paragraph follows.)

[In conclusion, I want to congratulate Portia Molefe, who heads the Department of Public Enterprises, and her team. Young women never sleep on the side of the road; if they do, then you should know that there is a problem. Let the name of women be praised.]

You do us proud. We all know how difficult it is to manage a team. It’s like holding a dove in your hands. You squeeze too hard, and you kill it; and you try not to squeeze too hard, and it flies away. The ANC supports the budget. I thank you. [Applause.]

Mr H B CUPIDO: Hon Speaker, hon members, the ACDP takes this opportunity to lend its support to the corporatisation of state-owned enterprises. Corporatisation will ensure the streamlining of capacity, increase productivity and maximise the contribution of state-owned enterprises to the development of the economy.

It is particularly with regard to Denel that corporatisation will have a visible impact. The recapitalisation of this enterprise should make significant inroads into the establishment of human resource practices that are comparable to international standards.

Government’s failure to purchase from Denel has been attributed to a lack of capacity with regard to an effective marketing department at Denel. Human resource objectives that are aligned with international corporatisation standards will ensure that such obstacles to the growth of SOEs are removed.

The disposal of the noncore assets of state-owned enterprises will make an additional contribution to the high degree of positive change that this country is currently experiencing with regard to its SOEs.

We wish to emphasise that both corporatisation and the frameworks for the disposal of noncore assets will be enhanced by the establishment of improved communication mechanisms between the department’s SOEs and the strengthening of the department’s oversight capability.

We further take this opportunity to urge the department to speed up the reintroduction of the apprenticeship system, as the ACDP strongly encourages measures aimed at increasing the number of people with technical skills. The ACDP supports this budget. [Applause.]

Mr Y WANG: Madam Speaker, before I start my speech I just want to say that my friends asked me yesterday what posters I was going to put up today. I regret that I forgot them at home, so there are no posters today.

Today I would like to focus on Programme 4: Corporate Strategy and Structure. The objective of that programme is to optimise the contribution of state-owned enterprises to economic growth through the delivery of our core SOE mandates, projects ensuring our industrial efficiency and the leveraging of SOEs to catalyse broader development.

What does this mean to the average person on the street? In short, this is about ensuring delivery on government’s economic growth objectives by leveraging our state resources that are unmatched by the private sector. This also contributes towards the goal of Asgisa by reducing the cost of business and strengthening the key sectors of our economy. For example, without the magnitude and efficiency of Eskom, we would not have such a cheap source of electricity. This is a significant advantage in lowering the cost of business, especially for industrial sectors and most commercial sectors.

The programme’s budget increased from last year’s R8,5 million to R600 million this year. This is because of the R580 million that has to be transferred to the Pebble Bed Modular Reactor project and the increase for salaries and goods and services. Excluding the PBMR, the budget for this programme is expected to rise at an average annual rate of 38,6% and reach R24,8 million in 2008-09. The allocation to the joint project facility is expected to increase by R10 million per year for the next three years.

With the objectives of this programme in mind, it is understandable that there is a noticeable increase in the 2006-07 budget for consultancy expenditure, owing to the multitude and complexity of the industries involved. However, while expert services are often necessary, the department should be cautious of overreliance on external consultancy.

In addition, in terms of leveraging off the resources of SOEs, the impact of subprogramme JPF is clearly huge. Consequently guidelines on how experts are selected seem to be very critical. I would like the budget allocated to this function to be more transparent and therefore more effectively monitored.

Having said this, we really welcome the new JPF taking off. It is actually quite an ambitious programme, but with successful management by the department’s young and capable team I have no doubt that the budget allocated will allow the department to achieve its performance targets effectively and efficiently.

In order not to obscure comparison with the budget, the R580 million transfer to the Pebble Bed Modular Reactor is obviously considered as an item on its own. The PBMR is a major and challenging project that government has decided on. The committee, however, feels that there is a need for more work to be done. The committee has started the process and begun to interact with other relevant committees in order to develop our understanding of and various views on this project.

We hope to have public hearings together with other committees, possibly next year. Of course, there are many advantages to the PBMR project and we would certainly explore this project’s potential, especially in the context of cleaner fuel. We also understand that there is concerted opposition from civil society, and as Parliament I think it is our responsibility to respond and address their concerns.

In terms of the strategy and structure of our transport sector, the fluctuations in the exchange rate and oil prices have always made the SAA a difficult business to manage. Therefore, the separation of SAA from Transnet is prudent as it allows the department to monitor the SOE more closely than before, which, in turn, also allows Parliament to have more direct oversight to ensure our national carrier fulfils its mandate in a volatile market.

Another SOE that is subject to international uncertainty and that is of strategic importance to us is Denel. With its restructured mandate, assistance from the Department of Public Enterprises and the forming of new strategic partnerships, we look forward to seeing Denel carry out its new corporate strategy in support of government’s overall economic objectives, which include, obviously, job creation and retention, skills development and exploring export opportunities. Of course Denel will need to work more closely with our Defence Force.

Regarding another SOE, that is the SA Forestry Company Limited, the need for state ownership of Safcol has become more evident now, as we can see that demand is higher than supply, there is the growing superpower in the East and the requirement for raw materials. This will also encourage small players in the industry and diversify the market share as we leverage the state resources to lower the cost of raw materials. That will, in turn, improve our small and medium enterprises here in South Africa.

Lastly, one of the important aspects of the operation of state-owned enterprises is actually their capital expenditure and investment plan. The idea of using various capex programmes to revitalise dormant industries and encourage local content with job creation is a great idea. We look forward to the implemented outcome.

One concern is perhaps the slow process of the environmental impact assessments, for various reasons. As a result, these capex programmes quite often are delayed or prevented from going ahead. We sympathise with the frustration over the administrative hurdles, but, again, I think we should also stress the importance of the validity of these environmental concerns.

Noting the above observations and concerns, I would like to say that the ANC supports the Vote. Thank you. [Applause.]

Mr Z KOTWAL: Madam Speaker, hon Ministers, Deputy Minister, and guests, I quote: “It may well be that South Africa’s social system is a monument to racism and race oppression, but its people are living testimony to the unconquerable spirit of mankind.” These words of the late Chief Albert Luthuli, I believe, express a true wisdom that it is this very unconquerable spirit of mankind that has seen our young democracy flourish.

On a daily and yearly basis, every effort is being made by our government to enhance the lives of our people. One such effort, as recognised by the Department of Public Enterprises in 2005, was the need for a financial facility that would enable the development of projects that enhance the value of an industry or can leverage assets and/or capabilities of state- owned enterprises to the benefit of those SOEs and the economy as a whole.

The Minister of Public Enterprises and state-owned enterprises established a joint project facility, which I will be referring to as the JPF, in order to pursue crosscutting projects with participation by our SOEs. The objective of the facility is to ensure the rapid development of projects to the point when an investment case has been accepted in principle by relevant operational companies and with appropriate financial investors.

In 2005, the JPF was funded through the SOEs, but it is now funded through the fiscus. The JPF manages projects, identifying them under six different criteria. The JPF manages SOEs’ continental investment projects, recognising their importance. Given our obligations in terms of the New Partnership for Africa’s Development, as a country we remain committed to the upliftment of South Africa and Africa as a whole, and the strategic use of state resources to drive continental development to the benefit of all and to further facilitate future investments.

The energy sector has embarked on a project seeking sufficient liquid fuels at the best possible price that will make for efficient input costs in our economy. The pipelines master plan project will objectively scrutinise the impact of various pipelines in their views for South Africa and ultimately recommend the best possible solution for suitable strategies in the sector.

The JPF is also involved in projects aimed at halving the actual cost of telecommunications by at least 50%. This will be done mainly through the provision of low-cost telecommunications infrastructure and the implementation of a broadband solution for the country over the next couple of years.

At this point, it should be borne in mind that when we refer to a 50% reduction in the cost of telecommunications, we are referring to the end cost to the consumer, ultimately with the aim that the average South African consumer will not only have access to telephone services but that such services will cost at least half as much as current consumer prices.

Apart from the fact that SOEs have the potential to improve the quality and quantity of skills, in particular in areas of education and training, the JPF will concentrate on the strategy and plan to prioritise, develop and deliver a range of critically important technical, technological and high- level engineering skills that will enhance and extend the capabilities of SOEs.

This strategy will be linked to the capital expansion programme. In that, they are currently concentrating on opportunities for further collaboration with each other and other educational institutions.

The JPF also has responsibilities in terms of the disposal of SOEs’ noncore properties. They have, together with the Department of Public Works, developed broad-based black economic empowerment, BEE, criteria for such disposal.

The criteria are in line with the Department of Trade and Industry’s codes and property sector charter. However, as a committee, we have become more and more concerned with ensuring that BEE is really broad-based and that there are certain guarantees ensuring that small, medium and micro enterprises also benefit in terms of BEE legislation.

There are also properties that have been identified as properties of increasing strategic importance, seeing that they are situated adjacent to the ports of central business districts, with the potential to provide greater returns for SOEs and to promote mixed use for urban renewal and integrated development.

These opportunities will be used to provide facilities that make the country more internationally competitive, that is, to report expansions that will allow for the handling of greater volumes of freight in our ports.

Further opportunities also exist to expand enterprises such as the Johannesburg International Airport in time for 2010. Such an expansion will also come as a relief to commuters who use Johannesburg International Airport on a regular basis.

The most important role that the JPF will be playing is managing the procurement associated with the capital expansion programme. At present, it is estimated that over 40% of the capital expenditure requirements associated with Eskom and Transnet will be imported. Obviously, this is a situation we cannot support if we are really serious about our commitment to fighting poverty and job creation. Ideally, it is not a situation we would like to encourage if we are to maximise using our SOEs to benefit all our people from positive economic growth.

Therefore, there is a need to optimise the local content of procurement so as to ensure that the local economy reaps the benefits and rewards from the large amounts that the SOEs intend to spend. Further, we also need to ensure that, wherever possible, importing of goods and services is avoided at all costs, and local industry is developed and supported, enabling small and medium enterprises to benefit from the capital expenditure programme.

Bearing in mind the magnitude of these projects that the JPF has established and hopes to expand further, one has to question whether the JPF will be able to facilitate them on a budget of R10 million only. I am happy that the Minister of Finance is in the House and I hope he takes note. Indeed, as enshrined in our Freedom Charter, South Africa belongs to all who live in it, and, therefore, all should reap the economic benefits of the land.

In closing, I would like to thank Minister Alec Erwin, the chairperson hon Yunus Carrim, members of the portfolio committee and the Department of Public Enterprises. As a relatively new member of the portfolio committee, I look forward to working closely with all. Thank you. [Applause.]

Mr P A C HENDRICKSE: Mr Chairperson, this is the first opportunity that I have of addressing the National Assembly since the death of my dad, Rev Allan Hendrickse. On behalf of our family I would like to express our sincere appreciation to the presiding officers and to all the political parties for the condolences expressed, as well as for the words of appreciation spoken about his contribution to our country. It was a wonderful privilege having my dad as father, as minister, leader and mentor. Allow me also to publicly thank my mother for what she has meant to our family and especially to my dad over all these years.

Last year, as part of an overall programme adopted by the Portfolio Committee on Public Enterprises to familiarise ourselves with state-owned enterprises, we visited the Kendal Power Station, Eskom’s head office and national control centre in Richards Bay harbour, Durban harbour, where we met the National Port Authority as well as the South African Port Operator.

We travelled overnight on the Shosholoza Meyl, visited the rail workshops, as well as the South African Airways’ technical services. We also visited Coega and Port Elizabeth harbours as well as the Koeberg nuclear power station.

We also visited the various training facilities where on a simulator - and I repeat, on a simulator - I managed to sink a tanker in Cape Town harbour, crashed a Boeing on take-off from Johannesburg International Airport, as well as derailed a 4km long diesel train. All this took place in the course of one week.

There are two things which made an enormous impression on me. One was the technical expertise that we command and even more than that was the young people that work in these facilities. In the year that we are celebrating the 30th anniversary of the youth uprising of 1976, and may I say that I too am from the class of 1976, I want to acknowledge the important role young people are playing in the SOEs.

It was inspiring to see the expertise of these people and the confidence with which they went about doing very crucial and critical work that I had never even heard of when I was at school. There was the calmness of people at the Eskom control centre, the young women steering tankers and cargo ships into Durban harbour, the port captain at Port Elizabeth harbour and the manager of the overnight train from Durban to Johannesburg. I wish that all South Africans could see and experience what we did in that one week.

Even more inspiring was the fact that these people represented the whole spectrum of South African society - black, brown and white Africans. I use these terms black, brown and white Africans deliberately. Following on the President’s ”I am an African” speech on the adoption of our Constitution 10 years ago, I welcome his inclusive definition of African. I also state the need for us to consciously deracialise the term “African” because for all of us being South Africans is not a problem but when you take away the “South”, it becomes problematic and takes on a racial connotation. I further state that because of our racist past and conditioning as well as the need to address the injustices of the past, we might still need to refer to race groups and as such using the terms black, brown and white Africans would help us accept that we are, first and foremost, all Africans.

The reason I raise this in this debate is because state-owned enterprises should lead the market and society in reflecting the ethos that we are all Africans. Some time ago there was a big story in the media about Eskom and its employment practices. The story alleged that Eskom used degrees of oppression as part of its employment criteria. While it is true that we need to address the skewed racial and gender demographics of the SOEs inherited from the past, we must do so in a positive way that will contribute to nation-building, rather than in a mechanical way or in ways that sometimes appear to be punitive.

People were not given a choice of oppression and as a matter of fact the National Party government was good at using divide and rule tactics. I therefore welcome the President’s reply to a question regarding the incident referred to above. I quote the President’s reply:

Most certainly the government would not agree to this. Our Constitution and legislation that derives from it addresses in part the issue of sections of our population that were previously disadvantaged. The coloured community belongs among those sections of our population that were previously disadvantaged. And therefore it would never be possible for the government to say that the coloured people should be excluded with regard to those processes. We therefore would indeed argue for the equal treatment to which you refer.

He goes on to say that what might be necessary is to pay close attention to what is actually being done. In the portfolio committee, I was told by a senior manager at Eskom that, to the best of their knowledge, they don’t use such a differentiation or use words to that effect.

Chairperson, I raise this because if it is not dealt with unequivocally, it becomes like the black man Ngoro insult, a festering sore in the minds and hearts of brown Africans. It adds to the hurt, indignity, humiliation and dispossession suffered under apartheid.

This sore will be exploited by the unscrupulous for short-term political gain, irrespective of its long-term consequences rather than out of genuine concern for their socioeconomic wellbeing. This then contributes to the ongoing bedevilling of relations between different communities. I want to call upon the Minister to assure us that none of the SOEs are acting in a manner contrary to the government’s policy as stated by the President.

Once again I want to reiterate how wonderful it was to see all those young people performing their work with a confidence that cannot but impress. This is truly a microcosm of the country that we can become. May I further add that as we approach the 17th year of the repeal of the hated Race Classification Act, we must be mindful that soon we will have people entering the job market who were never classified as being of a particular race. My children are “born frees” and never suffered the indignity of being classified and they never must.

With regard to recent articles, Eskom has undertaken the task of encouraging people to use energy efficient light bulbs and for this purpose they have been exchanging people’s household light bulbs for energy friendly ones. I would like to congratulate them on the way they have gone about this. Some people came to my house the other day to exchange light bulbs and it was very convenient and effective. It is also a tribute to Eskom that even in this short-term adversity, they were able to create jobs for so many people who are going from house to house.

However, I am concerned by questions raised in the Mail & Guardian this weekend about the price of gas. As we know, Eskom has encouraged people to replace their two-plate electric stoves with gas stoves, concentrating particularly on people in the lower income groups. It appears from the article that the gas suppliers have enormous markups on the price of gas, and that we are at their mercy. The example given is that of charging about R130 for a 9 kg cannister of gas, whereas the factory sells that cannister for R47. Is it true that Eskom has no agreement with the gas suppliers on the prices that they will charge? Is it true that it is at least twice as expensive to cook with gas than to cook with electricity? As an SOE, surely they have a responsibility not to put our people in a position where they can be ruthlessly exploited? We know that if it is left to the market, the market will ruthlessly exploit the most vulnerable.

Could the Minister please enlighten us about these allegations? Will he interact with his Ministerial colleagues to address this exploitation? Is there any possibility of regulating the markups on gas? Will Eskom continue to exchange people’s two-plate electric stoves for gas stoves once we have passed the critical stage in which we now are?

Minister, I want to acknowledge your forthrightness in acknowledging the government’s contribution to the delay in increasing Eskom’s capacity, but we as Parliament must also accept responsibility. Irrespective of whether we were thinking of selling Eskom wholly or partly or whether we are keeping it, the long-term planning and capacity enhancement of Eskom should not have been interrupted. Rather than blame one another, we leave that to the opposition. We should learn valuable lessons from this experience.

The electricity shortages in the Western Cape are not the result of normal occurrences and in the big scheme of things are temporary. We should instead acknowledge the role that Eskom has played in our economy and also their achievements. They are the cheapest supplier of electricity and have been able to respond to the government requirement for the electrification of the whole country and particularly rural areas. Of course there is much that must be done and even faster.

All this while being a state-owned enterprise, proves two important lessons that I learnt in Brazil and Chile regarding the privatisation debate. It is not the ownership of an enterprise but the management that is important. Secondly, before you even think of privatising, you need a strong regulatory authority in place with very clear and unambiguous rules.

Chairperson, in conclusion allow me to thank the Minister, the director- general and her staff for always being accessible and responsive to our committee. Someone who needs a special mention is Comrade Desmoreen Carolous, the ANC researcher, who comes all the way from Namaqualand since Parliament has not been able to provide us with a researcher for 18 months. She has been acting in this capacity and I am sure that the opposition will join me in thanking her for all her hard work.

Finally, we owe a warm word of appreciation to our very articulate and hardworking chairperson, Yunus Carrim, for the energy and enthusiasm that he puts into making a success of our committee. He has managed to ensure that we are all on board as far as this demanding and challenging committee is concerned. The ANC has great pleasure in supporting this budget. Thank you.

Mnr K J MINNIE: Agb Voorsitter, agb Minister, kollegas, gaste, ek praat vandag nie namens nie, nie vir nie, maar ter ondersteuning van ’n baie belangrike groep mense. Die laaste jaar het ek talle briewe en stukke korrespondensie van ontevrede lede van Transnet se tweede vastevoordeelfonds ontvang. En ek glo die Minister het ook.

Hierdie pensioenfonds se 100 000 lede en hul afhanklikes, ’n beduidende groep van ons meer kwesbare bevolking, ondervind tans dat hulle skynbaar geen seggenskap meer het oor die volhoubaarheid van hul hoof-inkomstebron en die handhawing van hul lewenstandaarde nie. Terwyl ander openbare entiteite se lede van hul pensioenfondse in die laaste jare verhogings van tot 8% geniet het, het lede van die Transnet se tweede vastevoordeelfonds oor die laaste vyf jaar geen verhogings in hul maandelike pensioene ontvang nie – buiten nou die statutêre 2%, waartoe hulle geregtig is.

Tussen 2002-04 het die befondsingsvlak van die tweede vastevoordeelfonds gedaal van 103% tot 72,1% as gevolg van ’n aandeleruiltransaksie wat deur die fonds se Transnetaangestelde trustees goedgekeur is; oënskynlik met die doel om die toe wankelende entiteit se finansiële posisie beter te laat voorkom. Die besluit om die R1,4 miljard van Transnet se MCell-aandele vir amper R4,9 miljard van die tweede vastevoordelefonds se TO11-effekte uitgereik deur Transnet aan die fonds in die vroeë negentigerjare, te verruil, is goedgekeur deur die fonds se trustees, sonder enige voorafgaande beraadslaging met die pensioenfondslede.

Klaarblyklike botsende belange aan die kant van die tweede vastevoordeelfonds se trusteeraad het die DA diep bekommerd oor die toekomstige welsyn van hierdie pensioentrekkers. Een van die hooftrustees wat die besluit goedgekeur het, is self ’n afgetredene van Transnet en was by Transnet as finansiële bestuurder werksaam. Ten tye van die besluit oor die aandeleruiling het hy die maatskappy op verskeie rade dan ook verteenwoordig.

Die tweede vastevoordeelfonds besit tans 43,6% aandele in die Waterkant in Kaapstad. Noudat hierdie eersteklasbate moontlik verkoop gaan word, eis ons die versekering van die Minister dat die lede van die tweede vastevoordeelfonds se belange onafhanklik van die balansstaat van die groot konglomeraat beskerm gaan word.

Laat my toe om u te herinner aan die volgende feite: dat hierdie pensioentrekkers hulself jare afgesloof het vir karige salarisse deurdat hulle geglo het dat die belofte van goeie aftreepakkette gestand gedoen sou word en as die trustees van hierdie fonds is beide die regering en Transnet geheel en al verantwoordelik vir die voortgesette welsyn van die fonds se lede. (Translation of Afrikaans paragraphs follows.) [Mr K J MINNIE: Hon Chairperson, hon Minister, colleagues, guests, today I am not talking on behalf of or for, but in support of a very important group of people. Over the past year I have received lots of letters and pieces of correspondence from disgruntled members of Transnet’s second defined benefit fund. And I believe the Minister has as well.

These 100 000 members of the pension fund and their dependants, a considerable group of the more vulnerable part of our population, are currently experiencing that they would seem not to have a say any longer regarding the sustainability of their main source of income and the maintenance of their standard of living. While members of other public entities enjoyed increases of up to 8% in their pension funds, in the past few years, members of Transnet’s second defined benefit fund have received no increases in their monthly pensions over the past five years – apart from the statutory 2% to which they are entitled.

Between 2002-04 the funding level of the second defined benefit fund dropped from 103% to 72,1% as a result of a shares exchange transaction that was approved by the Transnet-appointed trustees of the fund; apparently with the aim of allowing the at that stage shaky entity’s financial position to appear better. The decision to exchange Transnet MCell shares to the value of R1,4 billion for second defined benefit fund TO11-shares to the value of almost R4,9 billion, which were issued to the fund by Transnet in the early nineties, was approved by the trustees of the fund without any prior consultation with the members of the pension fund.

An apparent conflict of interest on the part of the board of trustees of the second defined benefit fund is causing the DA to be extremely concerned about the future welfare of these pensioners. One of the main trustees that approved this decision is a retired employee of Transnet, and worked for Transnet as a financial manager. At the time when the decision regarding the share conversion was taken he was representing the company on various boards.

The second defined benefit fund currently owns more than 43,6% of the shares in the Cape Town Waterfront. Now that this first class asset is possibly going to be sold, we demand an assurance from the Minister that the interests of the members of the second defined benefit fund will be protected separately from the big conglomerate’s balance sheet.

Allow me to remind you of the following facts: these pensioners slaved away for years for meagre salaries because they believed that the promise that they would receive good retirement packages would be honoured and as the trustees of this fund both the government and Transnet are totally responsible for the continued welfare of the members of this fund.]

Many of these pensioners and their representatives, like the SA Association of Retired Persons, and I from the DA, have written to the Transnet CFO Chris Wells, the CEO Maria Ramos and the Minister. At most, our efforts had been met with a promise to look into the matter. Often, not even an acknowledgement of receipt has been forthcoming.

I appeal to you today, sir, to heed the calls of 100 000 pensioners and their dependants, struggling to make ends meet, to ensure that the members of the Transnet second defined benefit fund are retrospectively compensated for not having received inflation-aligned increases over the last 5 years. The members of the Transnet second defined benefit should be given the right to nominate their own trustees to ensure that no movement of assets of the fund takes place without the prior knowledge and consent of the fund members. The government and Transnet should publicly commit themselves that Transnet’s second defined benefit fund members will receive annual increases, at least aligned with the increases received by other public entity pension funds.

Ek dink dit is net billik en regverdig. Die DA gaan die verbeterde welsyn van hierdie Transnet-pensioentrekkers meedoënloos oor die komende maande bevorder en propageer. Ek dank u. [Applous.] (Translation of Afrikaans paragraph follows.)

[I think that is only fair and just. Over the coming months the DA will relentlessly promote and propagate the improved welfare of these Transnet pensioners. I thank you. [Applause.]]

Ms N C KONDLO: Chairperson, members of the executive present this afternoon, hon members and comrades, the decision by the ANC to have state- owned enterprises remain in state hands was and remains the correct decision in the context of advancing the national democratic revolution and the view that the ANC has, that SOEs need to and must play a critical role in building the developmental state that the ANC has committed itself to.

Kanjaqo, Mhlalingaphambili, izigidi ezingama-40 ekufuneka zenziwe ngu- Transnet nezingama-80 ekufuneka zenziwe ngu-Eskom zigxininisa kananjalo ziqinisekisa ukuba uphuhliso anoxanduva lwalo la mashishini aphantsi kukarhulumente luyenzeka, kwaye lubalulekile. (Translation of isiXhosa paragraph follows.)

[Furthermore, Chairperson, the R40 million and R80 million that Transnet and Eskom have to accrue respectively, will ensure that the state-owned enterprises have a responsibility which is important.]

If state-owned enterprises have such a strategic role to play in the economy, the Department of Public Enterprises has an even greater challenge, that of monitoring the delivery of SOEs on their mandate without micro-managing them. This is how the department usually likes to depict their role in terms of monitoring state-owned enterprises.

The question, therefore, remains as to whether the Department of Public Enterprises is poised to handle this responsibility, and also whether the budget allocated to the department is going to be able to match these responsibilities.

The chairperson of the portfolio committee answered this question, even though I am of the view that there can be no yes or no. However, owing to the recognition of the ever-increasing pressures on the department to provide oversight and strategic direction to SOEs, we see an annual increase of 15,3% in the department’s budget over the MTEF cycle.

One of the key programmes of the department that is central to the performance of SOEs is analysis and risk management. Last year it was reported that there were instances of significant differences between the level of technical know-how and expertise in the DPE and the management of SOEs. This had an inhibiting effect on the department’s ability to exercise oversight over the state-owned enterprises, and it thus makes sense that the department increases its spending in areas that will facilitate oversight.

This programme’s budget increased from R7,9 million in 2005-06 to R16,72 million in 2006-07. This is partly to fill vacancies in the financial risk analysis section.

Isinika ithemba ke loo nto, kuba ithetha ukuba isebe liyaqiniswa kwaye liyomelezwa ukuze lenze umsebenzi walo wokujonga la mashishini karhulumente ngeliso elibanzi. Liyinene kananjalo elokuba ntlandlolo kweli sebe kwakukho ukusilela ngokuphathelene nomsebenzi wokuqinisekisa ukuba la mashishini karhulumente anendlela ephucukileyo yokuba nezicwangciso ezizizo, isakhono sokuphengulula nendlela yokubona iingxaki ezinokuthi zenze ukuba la mashishini angaziphumezi iinjongo zawo.

Sinemizekelo yeemeko apho la mashishini karhulumente akhe asengxakini ngenxa yokuba, okokuqala, isebe lingenazazo ezi zakhono zokubona iingxaki, khon’ ukuze akwazi ukuzilungiselela ziseza, zingade zifike.

Phofu namashishini la karhulumente ebeqhuba ebheka phambili ngaphandle kwezi zakhono. Ndibhekisela kulwazi esinalo sonke ngobekuthe kwenzeka kwiminyaka egqithileyo kwi-SAA, ku-Denel, ku-Eskom, mhlawumbi no-Alexcor. (Translation of isiXhosa paragraphs follows.)

[This gives us hope that as the department we are given support in order to perform the task of monitoring these state-owned enterprises. It is true that this department has previously lacked monitoring progress in respect of state-owned enterprises with regard to strategic planning, evaluation and obstacles that hold back the processes.

The state-owned enterprises once had a problem with regard to, firstly, the department functioning without the analysis and management risk system to prevent problems that were anticipated from occurring.

The state-owned enterprises functioned without the analysis and risk management system. I am referring to the knowledge we have about what happened in previous years when state-owned enterprises such as SAA, Denel, Eskom and perhaps Alexkor operated without this system.]

In fact, even as we speak, there are state-owned enterprises that still do not have their analysis and risk management systems. I am referring here to Denel, Safcol, Alexkor and the Pebble Bed Modular Reactor, PBMR. Be that as it may, we welcome state-owned enterprises that do have their systems in place and we congratulate them on this. I am referring here to Eskom, Transnet and SAA.

By its own admission, the department alluded to the fact that, with an effective risk management system - the example of Eskom is tabled here – it would have been possible to anticipate some risks and take measures to avoid them. Whilst we welcome the development of a framework by the department - even though it was scheduled for implementation in April, it will only be finalised in August - we can only hope that the department will meet this target this time around.

This framework will be an important tool in helping to anticipate financial and other risks that the SOEs may face. With proper risk management, it should be possible to take measures to avoid certain risks. Of course, proper risk management needs to be backed up by, amongst other things, good governance principles, which Comrade Ngcengwane referred to earlier.

We therefore look forward to hearing more about the department’s practical plans for implementing the risk management framework later this year. The department said they need to strengthen the analysis part of this programme as proper analysis would help them to correctly anticipate certain risks and be able to take measures to avoid or minimise them.

Indibanisela yesebe kunye namashishini la aphantsi korhulumente, ebizwa ngokuba yi-risk management forum, yeyokuqinisekisa ukuba kukho ukubetha ngesingqi esinye phakathi kwesebe nala mashishini karhulumente, ngethemba lokuba iinzame zesebe, ngokukhokelwa nguMphathiswa Alec Erwin, kunye noMlawuli-Jikelele uPortia Molefe, ziya kukwazi ukuwubhekisa phambili lo msebenzi. (Translation of isiXhosa paragraph follows.) [The co-operative governance between the department and state-owned enterprises has brought about the establishment of the risk management forum to ensure that there is collaboration between the two, with the hope that the department under the leadership of Minister Alec Erwin and Director-General Portia Molefe will achieve its objectives.]

The responsibility of government and state-owned enterprises to fight poverty and create jobs is ever needed at this time.

Mandithathe eli thuba nditsho ukuba ndiwamamele amalungu amaqela aphikisayo xa ebethetha apha, ngakumbi ohloniphekileyo uMnu Stephens. Ndiye ndazibuza ukuba ngaba use lilungu le-DA, okanye kukho nto engahambi kakuhle? Mhlawumbi ubonisa ukubhideka kwengqondo kubo ngokwemigaqo-nkqubo yezoqoqosho abayilandelayo.

Noxa kunjalo, i-ANC inoxanduva lokusebenza kwimibutho efana nale. Asingothuki xa simbona uMnu Stephens ewelela kwa-ANC ngoSeptemba, yaye sakumamkela singulo mbutho. (Translation of isiXhosa paragraphs follows.)

[Let me take this opportunity to say I have listened to the debate from the members of the opposition, particularly hon Stephens. I asked myself whether he is still a member of the DA or whether there is some misunderstanding. Maybe he is showing signs of their confusion concerning their constitution on economic affairs. Nevertheless, the ANC has a mandate to work with parties like this. We will not be surprised to see hon Stephens joining the ANC in September and we will welcome him.]

The ANC supports the Budget Vote. Thank you, Chair. [Applause.]

The MINISTER FOR PUBLIC ENTERPRISES: Thank you, Chairperson. Let me begin by responding to certain specific issues that hon members raised.

I agree with the hon Stephens on the issue he raised – the debate on state- owned enterprises. This is a very long debate; it has been going on for a long time. I think we share your views on the role it could play and, as you have seen from ANC policy, from the ready-to-govern document through to the RDP document, we’ve always argued that the precise balance between the public sector and the private sector should be decided on economic issues, on the balance of economic evidence and what is useful.

This will mean that the precise role that a state-owned enterprise plays at any point in time in an economy and in different economies will change. These are not single, unchanging entities. These are economic instruments to achieve objectives. What we should do – and this is why I particularly welcome the hon Stephens’ intervention because I think it is the correct approach – is to sit down and analyse. This is not a dogma; this is not a philosophy; this is not a law. This has to be decided in terms of the correct economic principles at the time.

We would agree with the issue of employees being protected and with the objective of creating employment. One issue that I have tried to clarify in my discussions with the portfolio committee and others – and, I believe, it is well understood - is that the task of state-owned enterprises with regard to achieving critical objectives, within the infrastructure it is responsible for, is not just to create jobs no matter what.

So, quite clearly, what we are looking for are enterprises that are efficient in achieving their objectives; that treat their employees in a manner that I outlined in my speech - that they become employers of preference. But we are not employment agencies; the mandates have to be very clear; and we are not there just to follow the whim of what Parliament, or the executive, or any other grouping, may wish at any point in time.

There will be rules that govern how we conduct ourselves as state-owned enterprises. They have to be efficient, they have to enter the capital markets and raise funds, but they are not just profit maximisers. Their task is to achieve key economic objectives and therefore key economic rates of return. But, I think, this debate is clarifying, and I hope that we will not spend too much time on unnecessary arguments about it. Questions have been raised with regard to whether Denel is viable. Well, I think we’ve explained in some detail how we intend making Denel viable. We’ve explained in some detail that the initial corporatisation of Denel done before 1994, quite frankly, was probably not well conceived and was probably not well capitalised. So, we have to put this right now. It will be a process that we will have to go through and undertake.

Just as a matter of information: I regret luggage that’s been lost, hon member Chang, but Acsa, fortunately, doesn’t fall under me. [Laughter.] So, I will take it up with my colleague. If it was SAA that lost the luggage, we will talk to them. But, really, the issue of who deals with both Metrorail and Acsa is now very clear. It is the Ministry of Transport, and I think that is correct.

Regarding the issue of the strike that has been raised by the hon Carrim and other speakers, I believe that both sides have learnt from this. We have, in the agreement that ended the strike, set up channels of communication, which were there before but were probably not entirely effective. I congratulate the Transnet management on the way they have dealt with this matter of setting up communication strategies, and I believe that we are establishing a better relationship with the union leadership.

As we change these enterprises - and not only in Transnet - we must expect that any good union leader will raise the issue: “What’s going to happen to my members?” So, we accept and we expect that good unions will always want to be very sure of what is going to happen to their members during these changes. I would be much more worried if the unions were not asking these questions. The fact that they are means we will have to build a good relationship with them.

Many of the hon members have commented and provided more detail on the programmes and projects, and it is not necessary for me to add more. Let me just say to the hon Hendrickse that I’m very pleased you mentioned the young people in enterprises. Some of them are here with the exhibit today. I think it is very exciting to see young people in very important positions in interesting and important careers.

Let me repeat, with regard to the issue of Eskom, the statement made by the President. It’s now clear to me that we probably need to publish much more fully the exact facts on this, because the exact facts are not what are being claimed at all. The President was absolutely correct in what he was saying. The tribunal and others are clear on what they are saying, and I think that Eskom’s conduct was in no way untoward in this matter. The arbitrator found in their favour. They were not moving outside of government policy.

It’s a pity that the matter has been elevated to some kind of cause célèbre to prove a point. But that point cannot be proved out of the facts of that incident, and I just want that to be very clear. The assurance you wanted is very clear. The President gave it; we give it; the Eskom management has given it to you; and we will continue in that manner.

With regard to the price of gas, this is clearly something that is problematic. We need a degree of shift to use gas for heating purposes. It would be useful in the present circumstances. That has led to price increases. Now, Eskom is not involved in those issues. I think for the policy Ministry, Minerals and Energy, this is quite a difficult problem that they consider we will liaise with.

Whether it is achievable, feasible, possible to regulate gas prices … Remember what we are talking about here: this is bottled gas There is no source that we have access to. We don’t import it in bulk in any way that the state can control. So, it is quite a vexed issue; quite a problematic issue that, I think, has to be looked at fairly carefully. It’s a pity that this rise is taking place at this point in time, because we do need a switch.

To the hon Minnie I’d like to say, with regard to the second defined benefit fund, the Transnet fund: quite frankly, the pension funds that we inherited in Transnet are riddled with problems. I think that the initial process – and you are probably familiar with it – was exceptionally complex and wrong.

We now have to unwind this process. We have to do it carefully. We cannot do it in a manner that is completely unaffordable. We cannot bankrupt Transnet. It’s not going to help anyone if we do that just to solve the pension fund problem. So, we are involved in a complex negotiation – with Transnet, with Treasury and everyone – to see how we can unwind what is not a satisfactory situation.

Mistakes have been made by the trustees and others in the past. It’s a complex situation. We cannot just give blanket assurances on anything. It will have to be - as it is - studied very, very carefully. I am sympathetic, and I think we are all sympathetic, to the plight of pensioners with low incomes. This is something we need to look at. But if any lesson can be learned from this, it is: Don’t do things hastily.

When Transnet was corporatised in the early 1990s, structures were put in place and pension funds were put in place that were not viable. It was really quite problematic. We then had to try to rescue it. You’ll remember that very sizeable amounts of Treasury bonds and others were put in. In fact, for the first 10 years one of the reasons why Transnet didn’t invest was precisely because far too much money was going into the pension funds. So, we do have to correct this. We will do it in a considered manner and carefully. We cannot rush it. We will try to unwind these unsatisfactory situations and help wherever we can.

I’d like to say very briefly with regard to the budget of the Department of Public Enterprises, that it has come up. We are very comfortable with the budget and the process of how we formulated the budget. We’ve had to work very closely with Treasury, because the department’s budget is now proving to be less important than some of the payments we have to make for capital injections, which are very important long-term strategic decisions.

We are very comfortable with this process and the engagement with Treasury. It is Treasury’s task to make certain that funds are well spent, and it is our task to represent these new projects and try to get injections of capital into them. So, we are comfortable with the process.

With regard to risk management, I must say we must be very clear on this. Risk management is the responsibility of the boards and management. If we take responsibility for that, we will have a complete problem of governance. So, all we are trying to do is to ensure that the boards have these in place, that they meet certain basic standards. We are getting there very quickly indeed. I think this is going well.

Some projects, like the PBMR, are very new and we are putting in place the governance requirements, as we indicated in the speech. Some of these are fairly complex. In the case of Alexkor, we must understand that a lot will be changed when we make the settlement with the community and revitalise Alexkor. For the management of Alexkor and the board of Alexkor, this has been a very difficult time, because hanging over them they have had the uncertainty and they have been trying to run a company within uncertainty. It has been difficult, but I think we are improving very much in putting the risk management in place.

As I say, in my speech you will see that we are very careful about this. The DPE cannot take responsibility for risk management. That is the board and management’s decision. What we will look at is to see whether any risks are emerging across the enterprises. It’s not the Transnet board’s job to see what is happening in Eskom, or the Eskom board’s job to see what is happening in Transnet. It’s our job to see what is happening across those and to see if there is a risk that is emerging above the enterprises that could be problematic for the economy or our objectives.

Let me conclude very quickly and once again urge you to have a look at the booklets, and just tell you, members, that the speech that I gave was web- cast live. This is an experiment we are using with our website to broadcast the speech live. We did link up with the foreign missions abroad, which I think is a way of trying to link in with our foreign missions. [Applause.]

Let me conclude too by just offering my very personal condolences to Comrade Bhamjee. It was a great shock to me to hear what happened on Friday night. I would also like to extend my condolences in respect of a good friend and comrade, Eric Molobi, who passed away.

Thank you very much and thanks for the support for the budget. It’s been very good working with this committee and with Parliament, and I look forward to an even better year next year. Thank you very much. [Applause.]

Debate concluded.

                         APPROPRIATION BILL

Debate on Vote No 8 – National Treasury (South African Revenue Services), and Vote No 13 – Statistics South Africa:

The MINISTER OF FINANCE: Thank you very much, Chairperson. I would like to start by extending our condolences from the Ministry to Comrade Yusuf Bhamjee and his daughters. Their loss is our loss, and we received the news with great shock on Friday night. Also to Martha Molobi and her daughters. Eric was a great comrade and mentor to many of us.

Chairperson, the past few weeks have seen heightened volatility in international financial markets and renewed concern about the size and sustainability of global growth and trade imbalances. In hosting the World Economic Forum here last week, we have been reminded of shared international interests and mutual concerns: the global environmental challenges, management of trade and financial stability, the economics of debt and aid, the gap between rich and poor, the management of conflict and the politics of multilateral co-operation. Particularly welcome, I believe, is the opportunity to work with other governments and global business leaders in addressing barriers to accelerated investment and creating a climate for improved growth, employment creation and poverty reduction across the African continent.

In South Africa, we are similarly challenged by the complexity of bringing together our first and second economies; formal and informal activities; urban and rural neighbourhoods; innercities, suburbs and townships; wealthy and poor. Different aspects of these challenges are the responsibilities of the various organisations under the oversight of the Ministry of Finance. This is partly about building stronger institutions; it is about the social and economic linkages between increasingly integrated and interdependent communities; it is about measuring performance and progress against agreed objectives and targets.

These are the challenges we face together, whether the task is bringing small businesses and taxi operators into the revenue system, or measuring changes in income and living standards of households, or planning social and development spending programmes, or reviewing the structure and evolution of our financial institutions.

The South African economy is experiencing its longest economic expansion to date. The economy has now been growing for over six years. Years of concerted macroeconomic reform are yielding the desired benefits. A combination of high business and consumer confidence, low inflation and historically low nominal interest rates, has underpinned the current growth.

Our growth, however, has been unbalanced. Expenditure has grown faster than domestic production, thus leading to a current account deficit; the demand for skills has not been matched by supply; disadvantaged communities have remained marginalised from the mainstream of economic activity.

As I pointed out in my Budget Speech in February this year, the global environment remains uncertain. Over the medium term we can influence the international conventions and market regulations, and the multilateral institutions in ways that benefit South Africa. We can help to build regional and farther-flung economic ties and relationships that create deeper and wider markets that are more resilient to contagion. More importantly, we can develop appropriate policies, regulatory structures and institutions, and help to build human capital for our domestic economy.

Getting our policies right means that more rapid growth in investment, productivity and employment creation can lead to higher income and greater resources to withstand economic shocks. Our policy challenge is partly about adapting to global imbalances that seem likely to persist for a considerable period of time.

It is apparent that by virtue of its relative size and role in the international financial system, the US economy is able to maintain a large gap between its investments and savings, financed by capital inflows from the rest of the world. As Joe Stiglitz put it recently: “It’s a strange world where the poor countries are in fact financing the richest nation on the globe.”

A range of factors lies behind this structural feature of the world economy. One is that for many economies, including much of Europe and Asia, growth is fuelled by exports to the US, which results in current account surpluses and flows of capital back into dollars, in turn financing consumption in the United States of America.

A gradual adjustment path out of this situation would require an increase in demand in the rest of the world and a decrease in US demand, associated with a significant depreciation of the dollar and a long-term correction of the large negative US debt position and its current account deficit, which is about $800 billion at the moment. The alternative to gradual, policy- induced adjustment is the build-up of the present unsustainable imbalances, which carries the risk of an eventual “sudden-stop” correction and slower growth across all economies.

The flow of capital into the US economy over the years has also contributed to low interest rates throughout the global financial system. Risk premia on emerging market assets and interest rates in emerging capital markets are low by historical standards. This means that there is little room for easing monetary policy in the event of a crisis, and that the build-up of credit to relatively unprofitable activities and to finance consumption may prove unsustainable. But thus far global growth has remained strong, and the pattern of growth – particularly the continued buoyancy of commodity prices – has been broadly favourable for the South African economy.

We need to be concerned, however, about two aspects of the current trajectory of South African growth. One is the exceptionally fast pace of credit expansion in the economy – including both household credit to finance consumption and rising debt levels of nonfinancial businesses. The second is that despite higher export prices, our overall mining production has been sluggish, and investment in new output capacity remains disappointing.

Chair, let me draw attention briefly to several international aspects of our work in the Ministry of Finance, before turning to the policy implications of the current global environment.

The challenges of growth and development continue to be a central focus of our participation in multilateral initiatives. Forums in which we play an active part include SADC, Nepad and the Growth Commission initiated by the World Bank. Strengthening Africa’s representation in the International Monetary Fund, reinforcing the capacity of the African Development Bank, and further work on debt reduction and improving the co-ordination of aid and development finance internationally are key priorities.

Statistician-General Pali Lehohla and Statistics South Africa are working with other countries through the Economic Commission for Africa to improve the calibration and measurement of social and economic trends across all of Africa.

Commissioner Gordhan is still chair of the World Customs Forum, and our SA Revenue Service is increasingly involved in initiatives to strengthen tax collection capacity in other countries and to improve co-ordination between revenue authorities worldwide.

Through the Collaborative African Budget Reform Initiative, amongst other forums, we play a supportive role in improving budget systems and public finance management in almost 20 countries on our continent.

The South African presidency of the Financial Action Task Force, which is the international standards-setting body against money laundering and terrorist financing, comes to an end next month. The task was of course assigned to Prof Kader Asmal by Cabinet. Under his exacting stewardship, a process has been initiated to raise the profile of a perspective from the “South” – issues related to illicit financial flows that matter to poor and developing countries.

Next year, South Africa will host the annual conference of the International Corporate Governance Network. We will also be chair next year of the G20 Finance Ministers and Central Bank Governors, providing a special opportunity to address pressing issues of mutual interest to developed and developing nations alike.

The current fiscal environment in South Africa is one of exceptional buoyancy. Real growth in government expenditure after debt costs has averaged some 9% a year over the past three years, and will rise by a further 8% in the current fiscal year, averaging some 6% over the MTEF period. However, we have seen a rise in underspending in some areas of public service delivery and infrastructure investment, signalling the need to address capacity constraints alongside continued budget increases.

A greater focus on ensuring that expenditure takes place according to plan is part of our current response to favourable fiscal circumstances, and reprioritisation must continue to direct resources to their most effective uses. The Treasury’s fiscal policy and budget planning work is aimed at sustaining and enhancing long-term growth and development, and broadening participation in social and economic opportunities.

But this work relies critically on better measurement and better information. This is the central mandate and responsibility of Statistics South Africa. As set out in the Vote 13 summary in the Estimates of National Expenditure, there are four key objectives: firstly, to provide relevant statistical information to meet user needs; secondly, to enhance the quality of products and services; thirdly, to develop and promote statistical co-ordination and partnerships; and, fourthly, to build human capacity.

Statistics South Africa has set itself several strategic targets for the MTEF period ahead. Firstly, starting with the recognition that statistics are neither perfect nor complete, the objective is to restore trust, and maintain such trust, in official statistics through improving the measurement of key indicators of economic performance, trends in prices, employment and job creation, life circumstances and service delivery, and demographic and population dynamics.

Secondly, efforts will continue to be focused on building and strengthening our statistical infrastructure, which forms the architecture on which all surveys are designed and conducted. Thirdly, it is important to create a professional organisation capable of meeting the increasingly complex challenges of statistics collection and analysis.

We have also agreed on three key projects to be delivered during the current year. The first is a major community survey, to be conducted in place of the population census that was scheduled to take place in 2006. [Interjections.] Sorry, Comrade Kora, I can’t hear myself. It will provide information at lower geographical levels than existing household-based surveys, and will also contribute to building capacity ahead of the planned 2011 full population census.

The community survey will be conducted in February next year and will collect information from approximately 280 000 households over a period of six weeks. The results will be presented in November next year. Approximately 20 000 fieldworkers will be employed, and the survey will provide information across several key social and demographic indicators aimed at measuring our progress towards the achievement of the Millennium Development Goals.

The data processing phase for piloting this survey is complete and the data quality assurance and editing work was completed at the end of last month. Internal tabulation and analysis is under way and the two processes are planned to be completed by the end of this month. The community survey will cost R370 million in the current fiscal year and R102 million in the new year.

The second major project this year is re-engineering the labour force survey. This will provide a more robust measurement of the dynamics of the South African labour market. The survey will be conducted quarterly instead of every four months, with results released after four weeks, and the content will be focused on critical labour market trends, in line with international practice. Research, design and development work will proceed over the year ahead, and the new quarterly survey will be launched in January 2008.

Thirdly, Stats SA is conducting an income and expenditure survey, with a particular focus on the spending patterns of South African households. Officially launched in September 2005, this is a 12-month survey of 24 000 randomly selected households from 3 000 primary sampling units across the country. Its main purpose is to update the content of the basket of goods and services for the consumer price index.

Better statistics are a critical resource for government planning and management of service delivery, are a key service to the wider public and community users, and most importantly, are central to Parliament’s understanding and oversight of our economic and social progress as a nation.

Let me turn to the key initiatives of the SA Revenue Service for the period ahead. The first is the small business amnesty. Since the announcement of the amnesty in the Budget Speech in February this year, we have concentrated on getting the enabling legal framework in place and, most importantly, engaging with and listening to small business, including the taxi industry, and consulting them on the envisaged legislation.

The consultative process is wide ranging. Members of the House can join in one such consultation down the road at the City Hall tomorrow morning. Over the past few weeks there have been meetings with representatives and leaders of national, provincial and local organisations of small business and the taxi industry. Very constructive meetings have taken place with the SA National Taxi Association and further meetings will take place with the association.

I am pleased with the valuable guidance and feedback we have received. These will be taken into account when we finalise the Bill which the Portfolio Committee on Finance is considering at present. The SA Revenue Service will ensure that the great need for education, information and assistance that is being requested by small business will be addressed. Much work has already been done in this regard, and will in due course lead to the establishment of localised structures and processes to ensure sustainability and permanence as we move towards real partnerships with small business.

Equally important is the role and influence on our tax system of tax and customs practitioners. The integrity, professionalism and quality of the intermediaries are essential to our drive to create a sustainable culture of compliance in South Africa.

The public seeks their help for tax advice and preparation of returns and many take their guidance from the tax and customs practitioners on what is legally acceptable or not. These tax and customs professionals have a direct impact on taxpayer and trader compliance.

We view them as vital partners in strengthening South Africa’s fiscal citizenship. We also believe that we can assist by continuously improving the service we offer and by making every effort to reduce red tape and compliance costs.

I am, therefore, pleased to announce that Sars will be launching a programme to provide better accessibility and responsiveness to tax and customs practitioners. In the next few months Sars will engage with representative organisations to better understand their needs and tailor our service to best respond to these needs. We invite representative organisations to join Sars in raising the integrity and standards of professionals in South Africa.

Last year I alluded to the fact that the time was ripe for an overhaul of customs policy to ensure custom’s alignment with government’s developmental aims and important international developments. Developments in the World Customs Organisation, the World Trade Organisation and South Africa’s bilateral trade negotiations require a review of customs policy and capacity. In addition, there are also new dangers facing South Africa in the form of illegal trafficking of prohibited goods, international crime, smuggling of cigarettes, drugs, counterfeit goods and other commodities, and of course money laundering.

South Africa’s customs capability must be both modernised and significantly increased if we are to optimally facilitate trade, exploit trade opportunities unleashed by globalisation and ensure better security of the trade supply chain and protection of the economy.

Today I have pleasure in announcing that we will shortly release a Green Paper on Customs Modernisation intended to initiate an inclusive and robust nationwide debate on the future role of customs and a collective commitment to the successful implementation of customs modernisation. I also see this as a historic opportunity to forge a strong and sustainable partnership between all stakeholders and government.

The challenge ahead of us is to ask the question: How best can customs serve our nation’s importers and exporters, and thereby contribute to economic growth? Our new customs policy has to help South Africa’s exporters and importers engage in international trade and help grow our economy with both greater ease and better security.

Turning to the National Treasury, I spoke this time last year of the challenge we face in strengthening the quality and effectiveness of Public Service management and delivery, and the importance of Parliament’s oversight role in this regard. The Treasury’s work on budget reform, monitoring and evaluation and improving financial management is focused precisely on this challenge.

There is still much to be done, but over the past year we have seen considerable progress. Consolidated expenditure reports show that capital spending and infrastructure maintenance have improved markedly, and we are now seeing the fruits of better information flows, both on financial trends and nonfinancial data on service delivery.

Quarterly financial reports and service delivery information published by the Treasury have contributed, for example, to the quality and relevance of public hearings on education, health, social development and other critical provincial functions. The National Council of Provinces should be commended for this initiative, and I am confident that this enhancement of public accountability will play a significant role in encouraging improvements in service delivery in the years ahead. The Public Service Commission, in its recently published 2006 State of the Public Service Report, correctly notes that we have in place “sound legislation, regulations, systems and procedures”, but “what needs to be done now is to undergird the Public Service with the appropriate capacity that is critical to ensuring the alignment of its service delivery and sharpening its effectiveness”.

This is a theme that challenges all of us – in Parliament, in the executive and in every part of the national, provincial and local tapestry of government agencies and programmes. I would like to highlight just a few of the specific initiatives of the National Treasury focused on this objective over the period ahead.

In respect of infrastructure delivery improvement, the Treasury Vote includes R15 billion over the next three years in support of provincial infrastructure investment. The House may recall that at the time this grant was introduced, provincial capital expenditure had fallen to just 3% of total provincial expenditure. It has increased to about 10% of provincial budgets now, steadily contributing to better maintenance of schools, clinics, hospitals and provincial roads, in addition to continued investment in housing and municipal infrastructure.

The Treasury plays an active role in capacity-building through the Infrastructure Delivery Improvement Programme, which is a targeted technical support initiative focused on critical engineering and contract management skills and systems. In co-operation with the Construction Industry Development Board, a standard toolkit has been developed to assist in project management, diagnostic support is provided to identify bottlenecks and system failures, and infrastructure planning and monitoring systems are implemented.

Over the past year support has been provided to the nine provincial education departments, contributing to an 18,5% increase in capital spending in 2005-06. The programme is currently being extended to the public works and health departments.

Other aspects of infrastructure development will also enjoy sharpened attention over the year ahead. The Public-Private Partnership Unit has stepped up its training programme, with particular attention to developing parallel capacity in provincial treasuries. Systems and procedures for evaluation and appraisal of large infrastructure projects are the focus of a new working committee, also including provincial treasury representatives. This initiative focuses on the quality of information required for major infrastructure project planning and decision-making, within the context of our accelerated economic growth objectives, the need especially to prepare for hosting the 2010 World Cup and the importance of improving the design and maintenance of transport, communications, energy and water supply networks.

Now that the Municipal Finance Management Act is in place, local government financial reforms and capacity-building are under the spotlight. As with the implementation of the Public Finance Management Act in national and provincial departments, the emphasis in the initial years is on building appropriate institutions and capacity, training, guidance and of course technical support.

The Treasury has already published over 20 circulars which give guidance to municipalities on budgeting, accounting systems, procurement and other aspects of financial management – so that municipal councils have suitable instruments at their disposal to hold their executive and management teams to account for the resources and services for which they are responsible.

In relation to capacity and training, work is in progress on a framework of formal qualifications for municipal financial management from entry-level to postgraduate standards. Currently, over 500 graduates are working in over 120 municipalities under the internship programme funded by the Financial Management Grant under the Treasury Vote. Allocations of these grants will go to all 283 municipalities over the MTEF period ahead, contributing to meeting specific capacity-building needs in each local authority while also supporting a coherent national programme of financial systems development, implementation, training, monitoring and evaluation.

I indicated in February that a new allocation in support of local public- private partnerships would be phased in this year, financed in part through the proceeds of the exchange control amnesty levy collected over the past three years. An initial call for proposals for the Neighbourhood Development Programme Grant resulted in 162 applications from 41 municipalities, and the first allocations will be made during the course of the next six weeks. The aim of this programme is to bring private sector investment in commercial, recreational and community services into historically underserved township residential areas – creating business and employment opportunities alongside improved services to local residents.

I need to emphasise that this is not an alternative source of funding for the bulk infrastructure and basic service delivery responsibilities of municipalities – these are already supported through the local government equitable share and the municipal infrastructure grant. The Neighbourhood Development Programme is for interventions that will be innovative and qualitatively different. It is about developing precincts that combine administrative and social service delivery with retail and commercial services; it will include support for several new multipurpose community centres; and it will include co-financing arrangements for infrastructure investment and improvements that contribute to local economic development and job creation.

We have received new ideas and detailed plans for such diverse communities as Tembisa, KwaThema and Kwatsaduza in Ekurhuleni, the Swalala and Kanyamazana precincts in Mbombela Munipality in Nelspruit, Mthonjaneni in KwaZulu-Natal – even a proposal for a “tridistrict alliance” between the Northern and Eastern Cape and Free State provinces for a Gariep Tunnel Festival. Some of these proposals will need further refinement, but the prompt response of so many municipalities is a clear sign that the time has come for a major programme of shared public and private sector investment in improving the quality of life in low-income neighbourhoods.

Alongside these direct initiatives, there is also the indirect contribution to local and regional development associated with sound trusteeship of public funds. The Public Investment Corporation continues to be a formidable force in the South African investment landscape, with close to R600 billion worth of assets under management now. Clearly it is the largest fund management initiative in this country, and compared favourably with the largest in the world. Its portfolio includes bonds, equities, properties and the Isibaya Fund, which is a private equity fund, focused on black economic empowerment.

Two new initiatives deserve special comment. The first is the Pan-African Infrastructure Development Fund. We have to recognize that Africa’s growth and development requires a renewed focus on development of the continent’s infrastructure. The Pan-African Infrastructure Development Fund will focus on attracting pension funds from across the African continent, to invest in a 25-year infrastructure equity fund.

The infrastructure backlog on the continent is huge and it is clearly right that Africans should engage the challenge. Targeting the top 10 African pension funds suggests that the fund should be able to achieve a first closure of the fund with at least $1 billion of commitments by the end of the current fiscal year.

An office has been established and a team put together to raise these commitments of at least $1 billion. International pension funds will be targeted for a second closure of the fund that should bring total committed funds to about $3 billion.

The initial focus of the fund will be transport infrastructure, energy, water and sanitation and telecommunication infrastructure investments. It will focus on projects that can contribute to regional integration of the continent and that will have regional impact.

Secondly, the PIC has created “Project Rural”. This is the largest direct property investment fund focusing on township and rural shopping centres in South Africa. It has been achieved through the merging of the Community Property Fund, a well-established property fund, whose investors are union and parastatal pension and provident funds, and the retail properties owned by the Government Employees Pension Fund.

The fund has a combined asset value of just over R1 billion and is at the forefront of township and rural developments, with projects in the pipeline which will double the size of the fund over the next three years. This initiative clearly complements and supports government’s broader urban renewal and rural development programmes.

I should also update the House on progress in respect of the Financial Intelligence Centre, FIC. Its systems and procedures are beginning to yield positive results: the reports from accountable institutions are flowing in steadily; institutions are enhancing their “know your customer” obligations and other compliance requirements; and law enforcement shows steady improvement in financial investigations and an increase in money laundering prosecutions.

During the past financial year the FIC received a total of 19 793 suspicious transaction reports, bringing the total to date to 44 021. This is an indication that the reporting systems are working, largely due to the seriousness with which the banks and other financial institutions have taken on their responsibilities.

However, there are several sectors, which need to demonstrate further compliance. For example, the FIC will be closely scrutinising the casino and gambling sector and estate agents in the coming period.

The FIC will also be building even closer working relationships with supervisory bodies, such as the Banking Supervision Department of the Reserve Bank, the Financial Services Board, the National Gambling Board, and similar organisations to ensure that an even and co-ordinated approach is taken to monitoring compliance.

Consideration is also being given to ways in which less costly and more efficient ways of implementing “know your customer” processes can be implemented. The legal framework to strengthen oversight mechanisms must be examined and improvements made where necessary to facilitate measured responses aimed at remedying instances of noncompliance.

In conclusion, Chair, the activities of the Finance Ministry and the departments and agencies under our oversight are wide-ranging and challenging. Deputy Minister Jabu Moleketi will elaborate on several important financial sector reforms, and the finalisation of the work of the Amnesty Unit. Let me, in conclusion, highlight several shared themes of all of this work.

Firstly, institution-building is at the centre of our activities. This is not just about the organisations that report to the Ministry of Finance and their development, but is also about the larger challenge of institution- building, sound financial management and governance, right across the public sector and the economy more widely.

Secondly, the social and economic imperative that is the driving force behind our activities is the construction of an integrated, equitable, shared economy, broadening participation, and opening up opportunities for all. This shapes what we measure, how we engage with taxpayers, what we plan to spend, how we aim to reform and transform the financial sector and its role in economic development.

Thirdly, the quality and integrity of our work, the professional standards to which we aspire, remain paramount.

Fourthly, our activities are organised around clear objectives, and disciplined by targets and deadlines. The budget date, agreed with this House, is itself a most powerful discipline over all of us.

Finally, our work is increasingly broad in its scope – national and regional concerns, and international engagements shape our ideas and duties – but our progress towards accelerated growth, reconstruction, development and eliminating poverty is the foundation on which all of our activities rest.

Thank you for listening to me this afternoon, and I would like to express appreciation to hon Nene, the Portfolio Committee on Finance and of course the good men and women who work in the department and report to the Ministry. Thank you very much. [Applause.]

Mr N M NENE: Chairperson, hon members, firstly, on behalf of the committee, let me also express our condolences to Comrade Yusuf Bhamjee and family on the sad loss of his wife. To him we say: Akwehlanga lungehlanga. [Let us accept what has happened.]

This Budget Vote comes at a time when South Africa is celebrating a number of important political milestones. Among these milestones are the centenary of the Bhambatha rebellion, the 13th anniversary of the Soweto June 16 student uprising and the 12th anniversary of the attainment of our democracy. The budget of a developmental state like ours is therefore a direct response to the socio-political ills that these rebellions were waged against and an endorsement of the democracy that was born in 1994.

The state of the nation address delivered by the President on 3 February 2006 reflected on the key challenges of this new season of hope, with a particular focus on growing the economy and bridging the divide between the first and the second economies. The Budget, subsequently delivered on 15 February 2006, provided a financial plan and resources to address these challenges.

Economic development is central to the realisation of the objectives of the accelerated and shared growth initiative, which is defined as a limited set of interventions that are intended to serve as a catalyst to accelerated and shared growth and development. Incidentally, National Treasury, as a department, is also at the centre of the facilitation and co-ordination of this process. Therefore its capacity to deliver on this mandate is exceedingly critical.

The ANC has always been of the view that a developmental state can only deliver later - measured against the aspirations of the people, as expressed in the Freedom Charter and through our Reconstruction and Development Programme. Therefore allow me to measure the performance of the department and its readiness against these two yardsticks.

The Reconstruction and Development Programme was an integrated, coherent socioeconomic policy framework, which sought to mobilise our people and our country’s resources toward the final eradication of apartheid and the building of a nonracial, nonsexist and democratic future. It is within this framework that the ANC-led government has developed a legislative programme and policies that have brought about this season of hope.

This innovative and bold philosophy was based on a few powerful ideas and sought to be precise. These were integrated and sustainable programmes, and this programme was essentially centred on a people-driven process. This programme and this people-driven process would be closely bound up with peace and security for all that would enable us to embark upon nation- building and that would require us to link reconstruction and development. Finally, these five principles depended on a thoroughgoing democratisation of South Africa.

In order to realise these noble objectives, five key programmes were identified: Firstly, meeting the basic needs; secondly, developing our human resources; thirdly, building the economy; fourthly, democratising the state and society; and, lastly, implementing the RDP itself.

The National Treasury is therefore appropriately mandated by the Constitution of the Republic of South Africa and by the Public Finance Management Act to be responsible for the national government’s fiscal policy framework and co-ordination of macroeconomic policy. This department also exercises control over implementation of the annual national budget, including any adjustments to the budget.

Regarding meeting the basic needs, in terms of this programme the department has discharged its responsibility extremely well. The expansionary fiscal policy in the past year has translated into a social wage which was last calculated at close to R1 000 a month to the poorest 40% of households. That is in the Budget Speech of 2005, which was made by the Minister. We see this trend continuing again in this year’s budget through a significant increase in the allocation to the Infrastructure Delivery Improvement Programme, IDIP. We trust that this programme will be closely monitored so that we reap the desired outcomes from it.

The support given to municipalities and provinces through the infrastructure grant is also applauded. Monitoring and reporting mechanisms envisaged in the department’s strategic plan over the MTEF is welcome and we will, as a committee, monitor this quarterly through those reports to avoid a situation where funds are not spent and our people continue to suffer whilst resources are available.

Regarding developing human resources, the committee was briefed by the department on progress made with regard to the support given to departments concerning capacity-building and the continuing professional development of all existing staff. But we would like to see this department taking the lead in terms of taking up interns in order to contribute in the broader skills development campaign.

The Minister did mention those that have been deployed in the municipalities, as we speak. The committee also takes note of your personnel, Mr Minister, and awaits a report on progress made particularly on the recruitment of the 140 new employees budgeted for during this financial year.

Concerning building the economy, on this core mandate of the department I must admit that it takes somebody from another planet to ignore the tremendous progress that the department has made. The latest GDP figures released a few weeks ago, ie 4,2% growth accompanied by a well within target inflation rate of 3,7% put the country in good stead for the targets set over the MTEF.

However, as has already been noted, the trade deficit, which is currently financed by the capital account, may prove to be unsustainable in the long run. External shocks, mainly the oil price and the volatile exchange rate are also causes for concern as the second-round effects might have inflationary consequences that might have a negative impact through the monetary transmission mechanism.

Concerning democratising the state, under the department’s Programme 2, which is Economic Planning and Budget Management, we note the progress made in public finance management and the co-ordination of intergovernmental relations. It is also worth noting that the Public-Private Partnership Unit, over the next five years, will increasingly provide support to municipalities in delivering certain services through partnerships with the private sector. Further, the introduction of the Neighbourhood Development Partnership Grant, which the Minister spoke about here, is also another laudable initiative that could only come from an ANC people-centred government.

The implementation of the Reconstruction and Development Programme is an ongoing process and we urge the department to continuously evaluate its performance against it as it is, in my view, the only programme that will distinguish our government as a truly developmental state that our people envisaged …

The HOUSE CHAIRPERSON (Mr G Q M Doidge): Order! Hon member, just give me a minute please. Hon members, you are conversing very loudly and very close to the podium. Please continue, hon member.

The CHIEF WHIP OF THE OPPOSITION: [Inaudible.]

Mr N M NENE: Thank you, Chairperson, for bringing some discipline. They are very undisciplined. If there is no liquor, Mr Gibson is bored. He said it’s boring because we are talking sense. The implementation of the Reconstruction and Development Programme is boring for him. It’s an ongoing process and we urge the department to continuously evaluate its performance against it, as I have indicated that it’s the only programme that will distinguish us as a truly developmental state that our people envisaged when the charter was written.

Allow me to take this opportunity to thank the members for their dedication that was shown during the deliberations, the Minister and the Deputy Minister, the director-general and the National Treasury staff for their co- operation during the hearings. I also want to take this opportunity to thank the Commissioner of the S A Revenue Service and the Statistician- General and their staff for their hard work under very challenging and trying conditions.

I thank you, Chairperson. Before I bore Mr Gibson further: The bar is open, Mr Gibson. [Applause.]

Dr S M VAN DYK: Agb Voorsitter, ons wil ook net van die DA se kant af ons innige meegevoel betoon met die agb Bhamjee en sy gesin.

Die Minister van Finansies het ’n moeilike portefeulje. Hy bestuur die Suid- Afrikaanse Statistiekdiens, die Suid-Afrikaanse Inkomstediens en die Tesourie en op die resultate van hulle produktiwiteit moet hy sy fiskale beleid baseer om die regering se ekonomiese mikpunte te bereik.

Alhoewel die Minister ’n gesonde fiskale beleid nastreef, word hy tans deur sy eie geledere ondermyn in die groeidoelwitte wat gestel word. Hierdie voortslepende konflik van belange, gepaardgaande met ’n gebrek aan kapasiteit tussen u departement, Minister, en sommige ander departemente is nie goed vir die land se ekonomiese groei nie. ’n Werker sal gemotiveerd en produktief wees as hy opgelei is, vervoer het na ’n werkplek, oor gesondheidsdienste beskik, oor mediese dienste beskik en munisipale dienste ordelik aan hom voorsien word.

Die Tesourie wys jaarliks fondse toe aan die onderskeie staatsdepartemente, maar die probleem is egter dat alle departemente nie saamwerk nie en ek wil graag na ’n paar se statistiek verwys. Die Tesourie sal ook voorsiening moet maak in sy eie begroting om meer personeel daar te stel vir die oorweging van ander departemente se begrotingsmotiverings omdat van hierdie departemente besig is om die belastingbetaler se geld te mors.

Agb Minister Manuel, u sal nie die volle samewerking van die privaatsektor kry vir die ekonomiese ontwikkeling, solank as wat die Minister van Arbeid hulle toegooi met arbeidswette en oorregulering nie.

Navorsing toon dat 51% van die vervaardigingsektore, regulasies en burokrasie beskou as die grootste enkele beperkings op ekonomiese groei. Gevolglik beweeg verskeie ondernemings weg van die arbeidintensiewe- na die kapitaalintensiewe produksie, waar arbeid eenvoudig met masjiene vervang word. En die Minister van Arbeid moet kennis neem hiervan.

Die sterk rand, lae inflasie en lae rentekoerse maak dit moontlik dat arbeid baie maklik met ingevoerde kapitaaltoerusting vandag vervang kan word. Navorsing toon dat, indien die staat net sy regulering van die privaatsektor verslap deur minder periodieke rapportering van die sakesektor te aanvaar, sonder om regulasies as sodanig af te skaf, kan die privaatsektor al klaar R40 miljard per jaar spaar. Daarmee kan 2 miljoen tydelike werksgeleenthede per jaar in die arbeidsintensiewe konstruksiesektor geskep word.

Wat opleiding betref, beskik net 44% van die werkerkorps oor matriek en naskoolse opleiding. As gevolg van hierdie gebrekkige produktiwiteit gaan 22% van alle werkstyd verlore, maar jaarliks gee die Tesourie geld vir onderwys, maar weet u amptenare dat 10% van alle onderwysers op enige gegewe dag nie by die skole aanwesig is nie en dat tussen 17 000 tot 22 000 onderwysers jaarliks hierdie beroep verlaat?

Volgens navorsing is gebrekkige vaardighede in die vervaardigingsektor vir 48% sake eienaars in Suid-Afrika ’n groot bedreiging. Daar is tans sowat 300 000 vakante poste in die ekonomie, omdat die aantal vakleerlinge vanaf 33 000 in 1975 tot 3 000 in die jaar 2000 afgeneem het. Die gemiddelde ouderdom van ’n Suid-Afrikaanse ambagsman is dus nou vandag 54 jaar en oor ses jaar, wanneer hierdie ambagsmanne op die ouderdom van 60 jaar aftree, sal dit die ekonomie van Suid-Afrika in ’n totale krisis dompel. Die tekort aan vaardighede gaan dan verseker Asgisa se grootste kopseer word.

Wat plaaslike regering aanbetref, word 56% van die BBP in die ses metrorade geproduseer. Die res val binne die grense van die kleiner stadsrade. Daar is dus ’n baie groter verantwoordelikheid by munisipaliteite om voldoende infrastruktuur aan die privaatsektor te lewer sodat hulle hulle produksie kan uitbrei. Maar, wat plaaslike regering aanbetref, kan 48% munisipaliteite nie meer effektiewe dienste lewer nie. Waar laat dit ons? Net 52% munisipaliteite is gerat om die funksie te verrig. (Translation of Afrikaans paragraphs follows.)

[Dr S M VAN DYK: Hon Chairperson, on behalf of the DA we would also just like to express our sincere condolences to the hon Bhamjee and his family.

The Minister of Finance has a difficult portfolio. He is in charge of the South African Statistics Service, the South African Revenue Service and the Treasury and he has to base his fiscal policy on the results of their productivity in order to reach the government’s economic goals.

Although the Minister is striving for a sound fiscal policy, he is at present being undermined by his own people in the growth goals that are set. This ongoing conflict of interests, together with a lack of capacity between the Minister’s department and some of the other departments is not good for the country’s economic growth. A worker will be motivated and productive if he is trained, has transport to a work place, has health services and medical services and he is provided with municipal services in an orderly way.

The Treasury annually allocates funds to the various government departments, but the problem is, however, that all departments do not co- operate and I would like to refer to the statistics of a few. The Treasury will also have to make provision in its own budget for the appointment of more staff for the consideration of other departments’ budgetary motivations because some of these departments are wasting the taxpayer’s money.

Hon Minister Manuel, you will not get the full co-operation of the private sector for economic development as long as the Minister of Labour is inundating them with labour laws and overregulation.

Research indicates that 51% of the manufacturing sectors regard regulations and bureaucracy as the single biggest limitation to economic growth. Consequently various enterprises are moving away from labour-intensive to capital-intensive production, where labour is simply replaced by machines. And the Minister of Labour must take note of this.

The strong rand, low inflation and low interest rates make it possible for labour to be replaced very easily nowadays with imported capital equipment. Research indicates that, if the government were merely to ease its regulation of the private sector by accepting less periodic reporting from the business sector, without abolishing regulations as such, the private sector would already be able to save R40 billion per annum. With that, 2 million temporary job opportunities per annum could be created in the labour-intensive construction sector.

As far as training is concerned, only 44% of the workers corps have matric and post-school training. As a result of this poor productivity some 22% of all working time is lost. The Treasury gives money for education annually, yet do your officials know that 10% of all teachers are absent from schools on any given day and that between 17 000 and 22 000 teachers leave this occupation annually?

According to research poor skills in the manufacturing sector constitute a big threat to 48% of business owners in South Africa. There are at present approximately 300 000 vacant posts in the economy, because the number of apprentices has decreased from 33 000 in 1975 to 3 000 in the year 2000. The average age of a South African artisan is therefore 54 years now and in six years’ time, when these artisans retire at the age of 60 years, it will plunge the economy in South Africa into a total crisis. The lack of skills will then certainly become Asgisa’s biggest headache.

As far as local government is concerned, 56% of the GDP is produced in the six metro councils. The rest fall within the borders of the smaller town councils. Municipalities therefore have a much greater responsibility to deliver adequate infrastructure to the private sector so that they can extend their production. But, as far as local government is concerned, 48% of municipalities can no longer deliver effective services. Where does that leave us? Only 52% of municipalities are geared to perform the function.]

Maybe it would be a good idea if all the ANC mayors across the country visited Cape Town once a month in order for Helen Zille to address them on effective municipal governance. [Interjections.]

Wat gesondheid aanbetref, mnr die Minister, weet u amptenare by die Tesourie dat daar ’n gaping is tussen gesondheidsbeleid aan die een kant en die implementering daarvan aan die ander kant? Ek weet nie eers of die Minister daarvan bewus is nie.

Die swak gesondheidsdienslewering, gepaardgaande met die HIV-verwante siektes wat reeds 55% van die mynbou- en vervaardigingsektore se produktiwiteit beïnvloed, bring mee dat volwassenes se lewensverwagting nou gedaal het tot 51 jaar. Alhoewel die gemiddeld bereken word uit kindersterftes tot ouderdomsterftes, is dit steeds uiters kommerwekkend.

Dit gaan vorentoe ernstige gevolge inhou vir toekomstige aftreefondse by versekeringsmaatskappye wat eers vanaf ouderdom 55 jaar voordele uitbetaal. Hierdie bronne van besparing wat uiters nodig is vir verdere investering gaan eenvoudig minder aantreklik word en daar gaan groter druk op die staatskas geplaas word om na mense se welvaard in die toekoms om te sien. Wat ons veiligheid aanbetref, hoekom word 18 000 mense per jaar in Suid- Afrika vermoor? Hoekom gee die agb minister Trevor Manuel vanjaar R32 miljard belastinggeld vir die polisie en dan moet ons 18 000 mense begrawe? Êrens is daar mos fout!

Verminder ook die staatsadministrasie se rompslomp, die sogenaamde “red tape”. Hoekom sloer mynuitbreiding so lank? Dit neem tans etlike jare – tot 10 jaar - vandat ertsafsettings ontdek word, voordat die myn sy deure kan open. Dit strem mos ekonomiese ontwikkeling. Ons moet daarmee wegdoen.

Dan is die ANC, as ’n party, ook nog besig om minister Manuel in die uitvoering van sy fiskale beleid te ondermyn deurdat die regering sekere besluite neem waaroor daar nie ’n deurdagte debat gevoer word ten opsigte van die gevolge daarvan nie, en wat dan later ’n baie groot las op die Tesourie plaas.

So het die regering van geskoolde onderwysers ontslae geraak en hulle betaal om te loop, maar dan moet die staat hulle weer begin terugkoop, en dit plaas ’n las op die Tesourie. Die regering het ook ’n minimum loon vir landbou ingestel, en minister Manuel, u is deel van daardie regering, want u neem saam deel aan daardie besluite. Maar hierdie loon is ingestel, ongeag of die bedryf dit kan beskostig of nie en dit het gelei tot afdankings. U weet dit.

Ongeveer 138 000 werksgeleenthede het reeds verlede jaar in die landbou verlore geraak, maar dan praat ons elke dag oor werkskepping, en dit plaas druk op die Tesourie vir addisionele investering om werkloosheid op alle terreine aan te spreek. Laat dit liewers oor aan die markmeganisme om deur die vraag en aanbod lone te bepaal, want dit is juis die landbou wat ’n groot persentasie van die massa ongeskoolde arbeid kan absorbeer.

’n Verdere voorbeeld waar die regering beleidsbesluite neem, sonder om die implikasie daarvan te besef, is die hele proses van regstellende optrede wat op ’n ongrondwetlike wyse plaasvind. Alhoewel regstellende optrede noodsaaklik is, moet dit nie gebeur sonder die inagneming van produktiwiteit nie, want dit het hierdie land al finansieël baie duur te staan gekom. Baie kundiges het kardinale sektore, en onder andere u eie departemente, Minister, verlaat, en ons praat telkens daarvan in die portefeuljekomitees wanneer die statistiekdiens en die Suid-Afrikaans Inkomstediens met ons kom gesprek voer. Hulle het ook die land verlaat, maat nou moet die Tesourie meer geld beskikbaar stel om weer geskoolde werkers in te voer. Dit maak mos nie sin nie. Dis ’n sinnelose kringloop. [Tussenwerpsels.]

So het Suid-Afrika ongeveer 15 000 nuwe ingenieurs jaarliks nodig, maar ons kry net 3 000 by. In die munisipaliteite alleen is daar ’n tekort aan 4 000 ingenieurs. Nou, wat verwag u? Dit is hoekom 48% nie meer dienste kan lewer nie, bo en behalwe die finansiële krisis waarin hulle verkeer.

’n Verdere faktor waar die regering besluite neem sonder om die finansiële gevolge te besef, is die hele kwessie van grondhervorming – en u moet mooi luister, want ek sien u luister vandag. Alhoewel grondhervorming ’n belangrike vereiste is, en dit is belangrik, kan die manier waarop dit uitgevoer word meebring dat die Tesourie baie belastinggeld in ’n bodemlose put gaan gooi.

Eerstens hou restitusie in terme van grondeise vir hervestiging van mense wat voorheen van hulle grond verskuif is, min grondverdeling in omdat 80% van die eise in stedelike gebiede voorkom, waar die eisers geld verkies in plaas van grond, en die Minister van Finansies moet betaal.

Tweedens, wat die 30% landbougrondhervestiging teen 2014 aanbetref, is die vraag baie eenvoudig: Wanneer en hoe gaan ’n 30% mikpunt bereik word? Het u al mooi daaroor gedink, agb Minister? Dit is byne onmeetbaar, want grond kan weer van swart eienaars vervreem word. Byvoorbeeld, 20% grond kan oorgedra wees op ’n gegewe tyd, maar as die helfde van daardie swart boere as gevolg van droogte of finansiële krisis nie hulle finansiële verpligtinge kan nakom nie, en die grond word teruggeneem deur die finansierders, dan sak die persentasie van 20% were terug na 10%. En so kan dit jaar na jaar fluktueer. Die staat beskik ook nie oor die grondtransaksie inligting van privaatbanke nie. U weet nie hoeveel privaatbanke van hierdie swart boere finansier om grond aan te koop nie.

Wat die Minister van Finansies en die regering moet oorweeg is dat die bestuur van die geld vir boerdery ontwikkeling eerder aan die Departement van Landbou oorgegee moet word om die ou landboukredietstelsel weer in te stel, waar bekostigbare lenings dan teen ’n lae rentekoers, en selfs rentevry, aan voornemende swart boere beskikbaar gestel kan word. Dan sal ’n haalbare mikpunt, alhoewel steeds moeilik meetbaar, vinniger bereik word.

Dan wil ek ook graag verwys na die hele kwessie van sosiale toelaes, wat ’n geweldige las op die staatskas plaas. Die Tesourie kies ’n kortpad na armoedeverligting deur vir 12 miljoen mense welsynsinkomste te gee.

Die ANC kan nie vir altyd hierdie politieke oorlewingstryd so uitrek deur werkloses te paai nie – daai tyd is verby. Die regering het ook nie gedink aan die gevolge van sy kindertoelae wat deelmaak van hierdie welsynsinkomste nie, want die betrokke Minister het gesê in antwoord op ’n vraag dat ongeveer 12 000 kinders van buurlande, wie se ouers oor die grens kom, ook nou deur die Suid-Afrikaanse belastingbetaler, waarvan u almal deel is, gefinansier word, omdat hulle lande nie sulke toelaes gee nie. (Translation of Afrikaans paragraphs follows.)

[As far as health is concerned, Mr Minister, do your officials in the Treasury know that there is a gap between the health policy on the one hand and its implementation on the other? I do not even know whether the Minister is aware of it this.

The poor health service delivery, together with the HIV-related diseases which are already influencing 55% of the productivity of the mining and manufacturing sectors, has resulted in adult life expectancy now having decreased to 51 years. Although the average is calculated from the deaths of children through to the deaths of the aged, it is still very alarming.

This will have serious consequences for future retirement funds with insurance companies which only pay out benefits from the age of 55 years. These sources of savings, which are very necessary for further investment, are simply going to become less attractive and greater pressure is going to be placed on the Treasury to attend to people’s welfare in the future.

As far as our safety is concerned, why are 18 000 people murdered in South Africa every year? Why is the hon Minister Trevor Manuel giving R32 billion in taxpayers’ money to the police this year, and then we have to bury 18 000 people? Something is wrong somewhere!

Also lessen the state administration’s red tape. Why does the extension of mining activities take so long? At present it takes a number of years – up to 10 years – from the time mineral deposits are discovered until the mine can open its doors. This hampers our economic development. We should get rid of this.

Then the ANC, as a party, is also undermining Minister Manuel in the execution of his fiscal policy in that the government makes certain decisions on which no proper debate is conducted in respect of their consequences, which later on places a very heavy burden on the Treasury.

In this way the government got rid of skilled teachers and paid them to leave, but now the state has had to start buying them back again, which places a burden on the Treasury. The government also introduced a minimum wage for agriculture, and Minister Manuel, you are part of that government, because you take part in those decisions as well. But this wage was introduced regardless of whether or not the industry could afford it, and this has resulted in layoffs. You know that.

Approximately 138 000 job opportunities were lost in agriculture last year, but then we talk about job creation every day, and that places pressure on the Treasury for additional investment to address unemployment in all spheres. Rather leave it to the market mechanism to determine wages on the basis of supply and demand, because agriculture can absorb a large percentage of the mass of unskilled labour.

A further example of where the government makes policy decisions without realising their implications is the whole process of affirmative action which is taking place in an unconstitutional manner. Although affirmative action is essential, it should not take place without taking productivity into consideration, because this has already cost the country a lot financially. Many experts have left vital sectors, including your own departments, Minister, and we talk about this over and over in the portfolio committees when the statistics service and the South African Revenue Service hold discussions with us. They have also left the country, but now the Treasury has to make more money available to import skilled workers. That makes no sense at all. It is a meaningless cycle. [Interjections.]

For example, South Africa needs approximately 15 000 new engineers every year, but we only get 3 000. In the municipalities alone there is a shortage of 4 000 engineers. Now, what do you expect? That is why 48% of municipalities can no longer deliver services, over and above the financial crisis they are experiencing.

Another sector where the government makes decisions without realising the financial consequences is the whole question of land reform – and you must listen carefully, because I see that you are listening today. Although land reform is an important requirement - and it is important - the way in which it is implemented can cause the Treasury to throw a lot of taxpayers’ money into a bottomless pit.

Firstly, restitution in terms of land claims for the resettlement of people who were previously removed from their land entails little land distribution because 80% of the claims occur in urban areas, where the claimants prefer money instead of land, and the Minister of Finance has to pay.

Secondly, as far as the 30% agricultural land resettlement by 2014 is concerned, the question is very simple: When and how is the 30% target going to be reached? Have you thought carefully about that, Minister? It is almost immeasurable, because land can once again be appropriated from black owners. For example, 20% of land can be transferred at a given time, but if half of those black farmers cannot fulfil their financial obligations owing to drought or financial crisis, and the land is repossessed by the financiers, then the percentage will fall again from 20% to 10%. And so it can fluctuate from year to year. Nor does the state have the land transaction information of private banks. You do not know how many private banks finance black farmers to enable them to purchase land.

What the Minister of Finance and the government must consider is that the management of the money for farming development should rather be handed over to the Department of Agriculture to reintroduce the old agricultural credit system, where affordable loans can then be made available at a low interest rate, and even interest free, to prospective black farmers. Then it will be possible to reach a reasonable, although still not easily measurable, goal a lot sooner.

Then I would also like to refer to the whole question of social grants, which place a tremendous burden on the Treasury. The Treasury is choosing a short cut to poverty alleviation by giving 12 million people welfare income.

The ANC cannot extend this political survival struggle forever by placating the unemployed – that time is past. Nor did the government think of the consequences of its child grant which forms part of this welfare income, because the relevant Minister said in reply to a question that approximately 12 000 children from neighbouring states, whose parents cross the border, are now also being financed by South African taxpayers, of whom you are all part, because their countries do not offer such grants.]

Prof A K ASMAL: Given that Mr Van Dyk will never be a Minister of Finance, and given the fact that his hectoring tone is totally amusing us, will Mr Van Dyk tell us if he finds anything positive in last year’s Budget and the arrangement of the financial sector of our economy? Dr S M VAN DYK: Agb Voorsitter, as dit so goed gegaan het sou ons nie op die oomblik op ’n 4,9% groei gewees het nie, maar op ’n 6% groei, terwyl ons eintlik 10% nodig het, agb lid, om uiteindelik ons werkloosheid aan te spreek. So dit gaan nie so goed in die ekonomie op hierdie stadium nie.

Kom ons kyk na die Departement Statistiek. Die Suid-Afrikaanse Statistiekdiens het sy werkvermoë die afgelope paar jaar verbeter deur meer opgeleide personeel te werf, en dit is goed so. Die Finansiële Portefeuljekomitee het ook nou in sy verslag oor Statistiek Suid-Afrika hierdie week aanbeveel dat ’n strategiese plan verwag word om geskooldheid verder in die departement te ontwikkel. Ek dink egter dat dit ’n bietjie vergesog is vir die departement om nou ’n persverklaring uit te reik en te sê:

Stats South Africa is going to Parliament with the confidence that it is on the right course to produce accurate, relevant and reliable statistics that it knows South Africans and Parliament can trust.

Die agb Minister het ook vandag net goed gepraat van Statistiek SA se dienslewering. Ek weet nie of u gerieflikheidshalwe al die probleme verswyg wat ons in die portefeuljekomitee rondom die statistiekdiens bepreek het nie, want u het net na al die voordele en die mooi dinge verwys.

Eerstens, agb Minister, is daar ’n groot leemte in die statistiek ten opsigte van werkskepping. Die twee definisies van werkloos, en baie van ons lede in die Parlement kan dalk geïdentifiseer word as bedekte werkloosheid omdat hulle net hier sit en aanmerkings maak en nie werklik ’n konstruktiewe bydrae lewer nie, en ek hoef nie te kyk nie, u sal weet waar dit vandaan kom. [Tussenwerpsels.] [Gelag.] Maar, as ons verwys na die twee definisies van werkloosheid, naamlik om werkloos te wees en werk te soek of om werkloos te wees en nie werk te soek nie omdat hy moedeloos is, daardie twee definisies maak mense net eenvoudig deurmekaar. Jy het òf ’n werk of jy het nie ’n werk nie. En ek kan u verseker, die meeste werkloses is al so moedeloos om werk te soek, dis hoekom daardie persentasie bly styg.

Tweedens, as die R41 miljard meer belastingsinkomste toe te skryf is aan ’n groter groei in die ekonomie, hoekom het die werkloosheidsyfer dan nie drasties gedaal nie? Met die R41 miljard belastingoorinvordering is geld onnodig uit die ekonomie onttrek waarmee werk geskep kon word. Alhoewel die R41 miljard wat te veel ingevorder is deels wel toegeskryf kan word aan ’n toename aan kommoditeitspryse van onder andere goud, platina en die verbruiksbesteding, hang daar ook ’n vraag oor die berekening van die Bruto Binnelandse Produk. Meer volledige inligting is nodig vir duidelikheid oor hoekom die groeisyfer dan net altyd opwaarts aangepas word.

Daar is ook ’n groot leemte in die statistiek ten opsigte van inligting oor die informele sektor. Die departement sal eenvoudig hierdie sektor moet binnedring, omdat die informele sektor ongeveer 2 miljoen mense in diens het en ’n belangrike rolspeler is vir werkskepping. Studies toon dat 45% van die informele sektor dit oorweeg om tot die formele sektor toe te tree, wat ook vir die land voordele kan inhou as toekomstige belastingpligtiges.

Dan wil ek ook graag verwys na die Tesourie wat deur die agb Minister bestuur word. Die Tesourie se verantwoordelikheid stop nie by die proses van toewysing van fondse na die departemente toe nie, maar ook om die effektiewe bestuur daarvan te monitor en ek en die Minister het al in die verlede hieroor swaarde gekruis. Die Grondwet en die Openbare Finansiële Bestuurswet - en ek gaan nie nou na die klousules verwys nie - bepaal dat die Tesourie moet omsien na die gesonde bestuur van die belastingbetaler se geld en om ’n toesighoudende rol te speel oor die finansiële bestuur van departemente.

Die Tesourie moet ook effektiewe bestuur van departemente ten opsigte van hulle inkomste en uitgawes bevorder, maar u departement faal om hierdie funksie na behore uit te voer. Want, hoekom moet Binnelandsesake nou, na die finansiële jaar ’n paar dae gelede, die Tesourie vra om in te gryp, nadat die Ouditeur-generaal laasgenoemde departement se finansiële jaarverslag afgekeur het omdat ongeveer R800 miljoen by die departement net verdwyn het? Hoekom het die Departement van Sport en Rekreasie sy lopende begroting met 162% oorskry?

Minister, u het ook nie in u toespraak vroeër vandag enigsins verwys na hierdie verantwoordelikheid in die verband nie. Dié Tesourie kan eenvoudig net nie meer voortgaan om geld uit te deel met oogklappe aan nie. U en u departement het ’n verantwoordelikheid teenoor die belastingbetaler. Die Parlementêre Finansiële Portefeuljekomitee het ook ’n paar dae terug in sy verslag aanbeveel dat die Tesourie nou ’n verslag moet voorberei oor die stand van interne ouditeuring en risikobestuur in die staatsdiens.

Om terug te kom na die ekonomiese groei omstandighede, navorsing toon dat in ontwikkelende lande 55% volwassenes werk het. In Suid-Afrika is die syfer 39% en om te beweeg na die 55% impliseer dat ons teen 10% per jaar moet groei, in plaas van 6%, terwyl ons tans teen 4,9% groei. Investering is net 17% van die Bruto Binnelandse Produk en dit behoort - en die Minister weet dit - tot 25% uit te brei.

Staatsinvestering kan net 3% van die werkloses absorbeer, vanweë ons geweldige kapasiteitsprobleem. Tans word staatsinvestering aan bande gelê deur swak bestuurs- en beleidsbesluite, ook deur lae geskooldheid van sekere amptenare en die onvermoë om hulle kapitaalbegrotings suksesvol te besteë. (Translation of Afrikaans paragraphs follows.)

[Dr S M VAN DYK: Hon Chairperson, if we were doing that well we would not have had a growth rate of 4,9% at present, but a 6% growth rate, whereas we really need 10%, hon member, to address our unemployment at long last. So the economy is not really doing well at this stage.

Let us look at the Department of Statistics. The Statistics South Africa improved its operating capacity over the past few years by recruiting more trained staff, and that is a good thing. The Portfolio Committee on Finance has now also recommended in its report on Statistics South Africa this week that a strategic plan is expected to improve skills further in the department. However, I think it is a bit far-fetched for the department now to issue a press statement saying:

Stats South Africa is going to Parliament with the confidence that it is on the right course to produce accurate, relevant and reliable statistics that it knows South Africans and Parliament can trust.

The hon Minister also had only praise for the service delivery of the Statistics SA. I do not know whether you conveniently refrained from mentioning the problems that we have discussed in the portfolio committee regarding statistics services, because you referred only to all the advantages and the positive aspects.

Firstly, hon Minister, there is a great deficiency in the statistics in respect of job creation. There are two definitions of unemployment - and many of our members of Parliament can perhaps be identified as being covertly unemployed because they just sit here and make remarks and do not actually make a constructive contribution, and I do not have to look, you will know where they come from. [Interjections.] [Laughter.] But, if we refer to the two definitions of unemployment, namely being unemployed and looking for work or being unemployed and not looking for work because you are despondent, those two definitions simply confuse people. One either has a job or one does not. And I can assure you, most unemployed people are despondent about looking for work; that is why that percentage keeps on increasing.

Secondly, if the R41 billion additional tax revenue can be ascribed to an increased growth in the economy, why has the unemployment figure not dropped drastically? With the R41 billion tax over-recovery, money with which jobs could have been created was unnecessarily withdrawn from the economy. Although the R41 billion which was over-recovered can indeed be partly ascribed to an increase in commodity prices of, inter alia, gold, platinum and consumer spending, there is also a question mark hanging over the calculation of the Gross Domestic Product. More comprehensive information is necessary for clarity as to why the growth figure is always only adjusted upwards.

There is also a great deficiency in the statistics in respect of information on the informal sector. The department will simply have to penetrate this sector, because the informal sector employs approximately 2 million people and is an important role-player for job creation. Studies indicate that 45% of participants in the informal sector are considering entering the formal sector, and they may also hold benefits for the country as future taxpayers.

Then I would also like to refer to the Treasury that is managed by the hon Minister. The Treasury’s responsibility does not end with the process of the allocation of funds to the departments, but it also monitors the effective management of these funds and the Minister and I have already crossed swords about this in the past. The Constitution and the Public Finance Management Act - and I am not going to refer to the clauses now - provide that the Treasury must attend to the sound management of the taxpayers’ money and play an oversight role over the financial management of departments.

The Treasury must also promote effective management of departments in respect of their revenue and expenditure, but your department is failing to perform this function properly. Why must Home Affairs now, after the financial year ended a few days ago, ask the Treasury to intervene after the Auditor-General rejected the financial annual report of the aforementioned department because approximately R800 million simply disappeared in the department? Why did the Department of Sport and Recreation exceed its current budget by 162%? Minister, in your speech earlier today you also made no reference at all to the Treasury’s responsibility in this regard. The Treasury simply cannot continue to pay out money with blinkers on. You and your department have a responsibility to taxpayers. The Parliamentary Portfolio Committee on Finance also recommended in its report a few days ago that the Treasury must now prepare a report on the state of internal auditing and risk management in the Public Service.

To return to the economic growth conditions, research indicates that in developing countries 55% of adults are employed. In South Africa the figure is 39% and to move to 55% implies that we must grow at 10% per year, instead of 6%, whereas at present we are growing at 4,9%. Investment is only 17% of the Gross Domestic Product and it should - and the Minister knows this - grow to 25%.

State investment can only absorb 3% of the unemployed, on account of our enormous capacity problem. At present state investment is being hampered by poor managerial and policy decisions, as well as by the poor skills of certain officials and the inability to spend their capital budgets successfully.]

The HOUSE CHAIRPERSON (Mr K O Bapela): Let’s see. Is it a question or a point of order? A question? Do you want to take a question, hon member? He has to respond first. Hon Bloem, let’s first hear if he wants to take your question. Do you want to take the question? You will take it?

Mnr D V BLOEM: Ek wil net vra … Dis ’n kort vraag. Rook jy, of rook jy nie?

Dr S M VAN DYK: Wel, ek dink ek praat sin. Ek lyk nie gerook nie. So, ek dink ek praat die waarheid, maar as iemand dit nie verstaan nie kan hy dalk gerook wees in die Parlement. (Translation of Afrikaans paragraphs follows.)

[Mr D V BLOEM: I just want to ask … It is a short question. Do you smoke, or don’t you?

Dr S M VAN DYK: Well, I think I am talking sense. I am not stoned. So, I think I am telling the truth, but if someone does not understand it, he may be stoned in Parliament.]

The HOUSE CHAIRPERSON (Mr K O Bapela): Hon member, you cannot be following up on the question. You raised your question. There is a response, just listen to the response.

Dr S M VAN DYK: Agb Voorsitter, so het die nasionale departemente – om terug te kom na hoekom die kapasiteitsprobleem daar is en departemente nie hulle kapitaalbegrotings spandeer nie – R2,5 miljard van hulle lopende begrotings wat geëindig het in Maart vanjaar, nie spandeer nie. Weet u amptenare dit, Minister?

Kuns en Kultuur het byvoorbeeld net 1,8% van sy kapitaalbegroting spandeer, terwyl die Suid-Afrikaanse Nasionale Weermag nie een sent van sy kapitaalbegroting spandeer het nie. Nou wat sê dit vir u? Dan is daar mos ’n geweldige kapasiteitsprobleem. En dan mors u die belastingbetaler se geld, want hoekom moet ons geld uit die ekonomie onttrek vir investering as dit nie gebruik word nie?

Minister Manuel, die staat het genoeg geld vir openbare investering, en ons weet dit almal, maar dan moet die staat eers sy bestuurders identifiseer, hy moet die projekte identifiseer en dan moet hy die geld beskikbaar stel vir die investering daarvan. Dit het ook tyd geword dat die Parlement … [Tyd verstreke.] Die DA ondersteun die begroting. (Translation of Afrikaans paragraphs follows.)

[Dr S M VAN DYK: Hon Chairperson, the national departments - to come back to why the capacity problem exists and departments do not spend their capital budgets – failed to spend R2,5 billion of their current budgets, which ended in March of this year. Do your officials know this, Minister?

Arts and Culture, for example, spent only 1,8% of its capital budget, while the South African Defence Force did not spend one cent of its capital budget. Now what does that tell you? There is obviously an enormous capacity problem. And then you are wasting the taxpayers’ money, because why must we withdraw money from the economy for investment if it is not used?

Minister Manuel, the state has enough money for public investment, and we all know it, but then the state must first identify its managers, it must identify the projects and then it must make the money available for investment. It is also time that Parliament … [Time expired.] The DA supports the budget.]

Mr T E VEZI: Thank you, Chair, let me also, on behalf of my party and myself, convey our condolences to colleague Yusuf Bhamjee on his sad loss. If you’ll bear with me, I think this is the first time that I have stood on this podium with nine minutes at my disposal. I always used to have only three minutes.

The National Treasury aims to promote economic development, good governance, social progress and a rise in living standards through accountable, economic, efficient, equitable and sustainable management of South Africa’s public finances. The Treasury is responsible for preparing a sound and sustainable national budget, an equitable division of resources between the three spheres of government.

Real total GDP grew from R770 billion in 1994 to R1,5 trillion in 2005. In 2005 the economy grew by 5%. The National Treasury is expected to advance economic growth, broad-based empowerment, progressive realisation of human rights and the elimination of poverty. The total allocation of R218 billion includes transfers to provinces; R17 billion or 8% more than in 2005 for increases to Sars and provincial and local government.

What remains of concern to the IFP is whether the existence of vacancies within the Treasury has any impact on its ability to deliver on its mandate. The IFP hopes that the accrual system is now almost complete. The Treasury should now insist on performance, otherwise officials will always use a lack of capacity as an excuse for failing to perform. The IFP encourages the Treasury to ensure that the PFMA is applied rigorously; that the public sector managers manage more efficiently and are held more accountable.

The launch of Asgisa requires the National Treasury to play a pivotal role in providing the necessary economic analysis that should underscore this process. The IFP wishes to congratulate the National Treasury on its stable economic management.

The aim of Sars is to collect tax revenue and provide customs services. The IFP commends the commissioner, his senior management team and all of his staff for the outstanding revenue collection performance in 2005-06. Sars collected R354,9 billion last year – that is R21 billion more than targeted for. It brings the budget deficit down to 1,6% of GDP. Sars’ allocation is R4,8 billion more than last year for capacity-building and project management. The free movement of goods means that South Africa is exposed to greater levels of transnational criminal activity. These activities sometimes threaten national economic security. Sars should optimise compliance and risk management. It should also enhance trade facilitation and border control.

The aim of Stats SA is to produce accurate and reliable data in the following areas: economic growth, the measurement of the gross domestic product, improving the measurement of price changes, employment and job creation, re-engineering of the labour force survey. Stats SA’s allocation is 4,5% more than in 2005 for savings on income and expenditure, community and labour force.

The challenge to produce high quality data to meet the information needs of the state, is massive. Stats SA faces high organisational risks. Stats SA, as a scientific institution, operates in a society that, for many years, was deliberately and systematically denied proper development in the mathematical sciences. The provision of official statistics is an indispensable element in the information system of democratic society, serving the government, the economy and the public with data about the economic, demographic, social and environmental situation.

In congratulating the Commissioner of Revenue and realising the problems that he sometimes faces, let me quote from a famous case in America:

Over and over again, the courts have said: there is nothing sinister in so arranging one’s affairs so as to keep taxes as low as possible. Everybody does so: rich or poor and all do right. Nobody owes any public duty to pay more than the law demands. Taxes are enforced extractions, not voluntary or contributions. To demand more in the name of morals is mere cant.

Thank you, sir.

The HOUSE CHAIRPERSON (Mr K O Bapela): You didn’t even use the entire nine minutes. I thought you would use all of it.

Mr K A MOLOTO: Hon members, the monumental achievements of Sars are a living testimony to the dedication of men and women in Sars. These achievements have inspired me to deliver a very short speech indeed. It is a real South African success story and envied by many tax administrations in developing countries. The mandate of the SA Revenue Service is to meet the state revenue requirements to fund the government’s development agenda.

With this budget allocation, Sars is expected to intensify the campaign to broaden the tax base by including the unregulated economy or informal business in the tax system. Sars is expected to administer the tax amnesty offered to small businesses that was announced by the Minister of Finance. Most of these small businesses have been marginalised from the economic mainstream and are now prepared to regularise their tax affairs. They require amnesty to deal with their fears about their past noncompliance and the possibility of heavy penalties for previous nondisclosures.

The other challenge that Sars has to continuously deal with is tax evasion. Tax evasion poses a risk to the South African revenue base and Sars requires the support of this House to contain this risk. The ANC is really pleased to note that the number of convictions secured in courts for tax- related offences has increased. In the 2005-06 financial year 148 convictions were secured in courts for tax-related offences.

The other area of great concern is tax evasion by very rich individuals who do not fully disclose their incomes. This House should be pleased to note that Sars is going to launch operations to deal with noncompliance by high- net-worth individuals. They will be prosecuted without fear or favour. Sars has done sterling work in this area.

Aggressive tax structuring, which is being advocated by the hon Vezi, should be a matter that should not be tolerated by this House. It erodes the tax base and should be seen as a crime against the poor in this country, and it is an obstacle towards the realisation of our development agenda.

We do consider that the compliance cost of taxpayers has to be lowered. There has to be reduction of the red tape and simplification of forms and procedures. I am impressed to learn that Sars is launching e-filing to enable taxpayers to submit their tax returns over the Internet. This will go along way towards lowering compliance and administration burdens.

Allow me to address this House on a matter that is equally important but rarely receives the publicity it deserves. This is a matter that relates to the trade facilitation and border control role of Sars. International trade requires that Sars has to be efficient in the ways it handles this matter. This becomes even more important, given our SADC responsibilities and the trade protocols that we have entered into.

Traders and transporters in the Southern African Customs Union and SADC are faced with major challenges in transporting goods through borders of various countries. Different customs clearance documentation in various countries, which fall within Sacu, poses a set of challenges. It reduces processing time and causes unnecessary delays at the borders. This leads to reduced service levels, raises costs and ultimately the competitiveness of products. It is quite encouraging to realise that Sars has been instrumental in the development of a single multipurpose document that can be used in all countries within the Southern African Customs Union.

The other critical area that Sars is engaged with is the development of one- stop borders. Currently, the customs process requires a trader to make at least four stops. A South African trader exporting goods to Botswana will make the first stop, for example, at Ramatlabama border post on the South African side to have documentation and the load verified. The second stop will take place when the trader enters Botswana where he undergoes the same process of documentation and load verification. The third stop will take place when the trader leaves Botswana. The fourth stop will take place when the trader re-enters South Africa.

Clearly, this is a time-consuming and inefficient process. The establishment of joint customs facilities and border inspection services will reduce the costs to both governments and traders. Sars is currently negotiating one-stop borders with Botswana, Namibia, Swaziland, Lesotho and Mozambique.

It is important that South Africa should intensify the fight against smuggling of goods and the movement of contraband. The deployment of scanners at South African ports this year will assist in detecting the movement of contraband and smuggled goods without hampering the movement of legitimate goods.

The study on the feasibility of establishing customs laboratories has to be finalised as a matter of urgency. These laboratories will assist in the detection of drugs and dangerous substances as well as identifying other goods subject to import and export prohibitions. It is important that Sars should develop and increase the capacity of its dog units. These units are crucial in reinforcing the fight against narcotics and dangerous substances.

This government has committed itself to making a contribution to the success of Nepad and the strengthening of microeconomic policy convergence in SADC. In the past, Sars has been involved in the strengthening of tax administration capacity and systems in Lesotho and Swaziland. This type of assistance to fellow African countries should be encouraged.

Finally, Sars has continuously performed beyond our expectations. It is part of many of our success stories. The ANC supports this Budget Vote.

Mr J BICI: Chair, Minister and hon members, at the outset, let me congratulate the Minister and the department on performing their duties with excellence and consistency year in and year out. We may not necessarily always agree with the policies that direct your activities but your work performance is unquestionably good.

Indeed, a special word of praise should be directed towards the SA Revenue Service. As a citizen, it is a revelation to enter the average Sars office where friendly and competent staff are the norm, not the exception. We can only plead with the government to use Public Service delivery at Sars as a blueprint and replicate it in other departments like Home affairs, Health, etc.

Regarding the broad policy direction of the National Treasury, we are satisfied with the more expansionary fiscal stance that replaces the earlier austerity. Whilst fiscal budgetary management has been good at National Treasury level, the same cannot be said for some other departments. Problematic budgetary overspending and underspending occur in provincial and local governments. It is relevant to mention this here, since the National Treasury has been spearheading the increasing devolution of national budget and service delivery responsibilities to lower tiers of government.

Statistics SA remains the ugly duckling in the National Treasury family. We appreciate, however, that the embarrassments of a few years ago have not been repeated in that much work is going into further improving the agency. Nonetheless we must, once again, emphasise the pivotal role that timely and accurate economic and social indicators and statistics may play in shaping both government policy and the markets. The UDM supports the budget.

The DEPUTY MINISTER OF FINANCE: Hon Chairperson, hon members, allow me to preface my speech this afternoon by dealing with some of the issues that have been raised by hon Van Dyk. Quite obviously, in the mind of hon Van Dyk, the role of the National Treasury is that of a police person. Or rather to put it more clearly, it is that of an enforcer or terminator rolled into one.

I must submit that even Schwarzenegger in his heyday couldn’t really achieve the type of feat that hon Van Dyk thinks the National Treasury ought to. [Applause.] He expects the National Treasury to take over the role, amongst others, of the oversight duties of Parliament by ensuring that all departments account for their deficiencies to the National Treasury. I suppose as we all sit here we know that is the responsibility, amongst others, not just of the management of the different departments but of the oversight committees of Parliament.

He also expects us in the National Treasury to undertake some of the tasks of the Auditor-General. We can’t do that. And I want to remind the hon member that our mandate is captured in the Estimates of National Expenditure and all our programmes are quite clearly articulated. It is also obvious that there is evidence to indicate that in the past years – and we are committing ourselves even in this current financial year that we will live up to that mandate and to a large extent we will pledge to do exactly that – to advance the mandate as captured in the Estimates of National Expenditure. It is also important to understand that his confusion around the narrow and broad definitions of unemployment has nothing to do with the institution of Statistics SA. It has everything to do with his lack of understanding of some of these matters. And I am sure the Statistician-General is also a good teacher. In your free time, hon member, find time to engage with the Statistician-General so that you can be broadly educated around some of these very, very complex but necessary issues for Members of Parliament to basically understand. And I think it’s important for all of us to do that. As we come here as members of the legislature we must not just be informed by our own understanding of issues, but we must seek to broaden it by engaging with the institutions that advance some of these very, very important tasks.

I don’t understand, and I never perceive, Statistics SA as an ugly duckling of the National Treasury. Statistics SA is undertaking a very, very important task - the task, to a large extent, over the past few years, though most of us did not understand it, of basically updating our data – because, by and large, they have inherited a legacy that statistics in South Africa really did not exist for the majority of the constituencies and the people of South Africa. And to update that is a mammoth task in itself.

Whilst we do that, and because this is a human endeavour, quite clearly there will be a few occasions when errors are committed, but you cannot judge this mammoth effort by the numbers and the sparse population in terms of the errors that have been made. But what has been achieved at this point is that South Africa can stand up within the international fora and boast about the existence of this institution that in itself has undertaken to update our statistics. [Applause.]

Over and above that, they have advanced this technical expertise to our neighbours. On the African continent, and even internationally, our Statistics SA has taken its place internationally in terms of ensuring that in the African continent, notwithstanding the capacity challenges that we confront, we are also able to advance the ability of the world to base policy on credible data. It’s a journey that we have embarked on and we are confident that the management of Statistics SA will rise to this challenge.

Quite obviously, strong economic growth and investment and the efficient allocation of investment funds depend on the quality and depth of our financial markets. Over the past year, we have seen an extraordinary performance in our capital markets, partly driven by robust global goals but also indicative of rising confidence in South Africa’s growth outlook. For business in general, and certainly for the financial sector, conditions have never been so good. But the sustainability of growth depends also on the quality and equity of economic performance. This is perhaps especially true of the financial sector.

At the heart of our broadening economic development strategy are the key concepts of good governance, sustainability and equity. We have strived to do what is transparent, what will result in long-term success and what is fair and right. For business, this has resulted in a far more favourable environment than many envisaged.

Whilst many in industry may originally have been sceptical about issues of empowerment, transformation and redistribution, increasingly we are seeing the wisdom of such policies in that not only were they the right thing to do, but they also contributed to stronger, shared and sustainable economic performance.

It is perhaps no surprise that questions of fairness have dominated the financial sector reform agenda during this past year of extraordinary growth and improved performance. The spotlight has fallen increasingly and sharply on the standard of good governance and equity and the character of enlightened trusteeship at the helm of our financial ship.

Shortly after taking office, which is basically just about ten years ago, Minister Manuel stated that government needed to have a big say in the structure and regulation of the financial services industry and that the industry could not place itself above the law by defining its own regulation. Ten years later, we can see that those words were indeed prophetic.

The situation inherited in 1996 was one of a financial sector that had developed within the context of an inward-looking policy environment, skewed investment opportunities and ownership by a few. Years of political and economic isolation meant that our regulatory structures had become progressively out of line with international standards. A highly concentrated financial sector meant that there was limited competition to bring down the costs to consumers and to spur innovation. It was a political dispensation that did not care about the majority of its people and it found its reflection in a financial sector that had scant regard for the interests of ordinary consumers.

Over the past ten years, the pace of transformation in the financial sector has indeed been remarkable. Legislation in most segments of the financial sector has been overhauled. Where traditionally regulation was focused on issues of prudential risk management, we have seen a range of new laws aimed at balancing this with improved consumer protection. But legislation can only go so far. Bringing about true change is also about the enforcement of such legislation and the spirit and the integrity with which financial sector participants take the message of this legislation to heart. I am happy to say that though many challenges still exist in this regard, the past year has witnessed some heartening progress in giving effect to the principle of good governance, transparency, and fairness and consumer protection.

In December 2005, the Minister of Finance and representatives of the life insurance industry signed a statement of intent in which the industry committed itself to finding an effective solution to concerns highlighted by the Pension Fund Adjudicator relating to the lack of transparency in the fee structures of contractual savings products, in particular the cost of early termination. While there were extensive debates about the obligations of insurers in terms of the relevant legislation and regulations, the life insurance industry recognised that the reasonable expectation of consumers with respect to net returns from retirement annuity funds, members’ policies and other savings policies have not been met, particularly in the context of early premium cancellations. As a result of this, the life insurance industry agreed to a restitution package of close to R3 billion to reimburse effected and affected policyholders.

The spirit that informed this agreement was that while certain practices may not have been formally illegal, they were plainly unfair and indefensible. The task of putting flesh on the bones of this agreement is currently under way, guided by a discussion paper on contractual savings in the life insurance industry released by the National Treasury by the end of March 2006.

This includes proposals on regulatory changes to provide more adequate consumer protection measures to lower the cost through improved transparency and competition, measures to better align the incentives structure of intermediaries with the interests of the client, including the reform of the structures of commissions and, lastly, financial safety nets to provide a more equitable sharing of risks between the client intermediary and insurance companies. It is anticipated that these reforms will result in a significant improvement in consumer confidence in the value offered by the savings products of the insurance industry and provide a strong foundation for improving the culture of savings to go forward.

A second example of the financial sector being held to the highest standards of transparency and accountability relates to recent investigations into a practice that was termed as “bulking” by retirement fund administrators. It has emerged that administrators were making undisclosed profits from bulking the funds under their administration and then negotiating a higher rate of interest to be paid on the funds by taking some of these benefits for themselves, without approval from the pension fund under administration.

This is tantamount to taking away benefits from pension fund members without their knowledge or approval. An agreement has been reached between the Financial Services Board and Alexander Forbes, whereby Alexander Forbes will repay the retirement funds the total benefits received from bulking, as well as making a contribution of R12 million to the Financial Services Consumer Education Foundation – and this money will be used for training of retirement fund trustees.

This sends a clear message to all retirement fund administrators and other financial services providers, acting as agents of retirement funds, that we will tolerate no less than the highest standards of accountability. Financial sector service providers are placed in a position of trust towards retirement funds and as such are under a legal duty to act in the best interests of their client at all times.

Receiving secret profits or undisclosed compensation from other parties is not an acceptable practice. Retirement fund administrators operate in terms of a licence, as we all know, from the Registrar of Pension Funds and, as such, must observe all the conditions and obligations that come with such a right to operate. It is imperative that all other administrators provide a full and frank disclosure of all practices that amounted to undisclosed profits as required by the Registrar of Pension Funds and that similar steps are put in place to fully compensate retirement fund members and pensioners.

In terms of the Pension Funds Second Amendment Act of 2001, all pension funds were required to submit fund surplus apportionment schemes to the Financial Services Board within two and a half years of their surplus apportionment date. This ought to be done by 7 June 2006 at the very latest. It is estimated that about 2 000 pension funds will have surplus apportionments but to date only about 10% of these have, to a large extent, submitted the surplus apportionment schemes.

In plain language, this means that there are hundreds of thousands of individuals who are not receiving their due surplus benefits. If this situation persists, we will see an increased number of people, especially pensioners, lose out on these benefits because they will not survive long enough for the process to be completed. This, as we all know, is entirely unsatisfactory.

Retirement fund members have a right to demand that the trustees of their funds take urgent action in case of non-compliance. Ultimately, it is the retirement fund members and pensioners who are penalised by this inactivity. If no action is forthcoming, the trustees will have compromised their fiduciary duties and the fund will be required to appoint a tribunal to take over the duties of trustees, in respect of complying with the surplus legislation.

Ultimately, this is indeed an expensive and complex step that we do not want to take unless necessary. Rather, we call upon all trustees and administrators to deal with this issue with the seriousness that it deserves and submit surplus schemes in terms of the agreed timetable with the Chief Actuary of the Financial Services Board by no later than 31 December 2006.

It is not our intention that changes in the financial sector should begin and end with what is prescribed in legislation. The financial sector charter is instructive in this regard. Firstly, it is a model of constructive industry corporation on a national scale, not in the form of collusion but rather in the sense of sharing of intellectual capital to find solutions to present day challenges. Secondly, it breaks new ground in terms of an industry coming forward voluntarily to commit itself to doing things that go above and beyond what is required in terms of legislation.

Certainly, legislation and regulations are important cornerstones in setting the framework within which firms must operate, within which we must protect overall financial stability. However, the charter has demonstrated the power of a shared vision, one that commits transformation, not only for moral reasons but also because it will build the foundations on which we will benefit in the future.

Last year, I was able to report that Mzansi has led to the creation of 1 million new bank account holders, within its first seven months. This figure has now grown to over 3,3 million new accounts. [Applause.] Mzansi will continue to evolve as new product features are added. It has already taken significant strides in the challenge of improving access to banking services for all.

We are also seeing the development of similar initiatives in the insurance and collective investment industries. Transformation and access to finance are objectives of the proposed tier banking legislation in the form of the Dedicated Banks Bill and Co-operative Banks Bill. The Co-operative Banks Bill seeks to provide community-based banks with legal standing and strengthen regulations, so as to afford its depositors the same safety and stability as that enjoyed by formal commercial banks.

The first draft of the Co-operative Banks Bill has now been revised to reflect the numerous comments received and will be tabled at Nedlac within the next few days for further consultation, prior to submitting to Cabinet later this year.

The Dedicated Banks Bill seeks to create a new institution that will provide core banking services without having to conform to the traditional model of full-scale banks. Institutions which it is envisaged will apply for these types of banking licences would include telecommunication companies, large retail companies and micro lenders. It is my view that the promulgation of these two Bills will introduce significant opportunities for new entrants into the banking system, with the aim of increasing competition and access to finance.

Turning to other organisations reporting to the Minister of Finance, I am pleased to announce that the amnesty unit housed in the National Treasury and tasked with adjudicating the applications by South Africans who wish to voluntarily declare their foreign assets and regularise their tax affairs, has completed its core work. After undertaking a final audit of files received, I can report that the amnesty unit has adjudicated all of the 42 679 applications it received since the announcement of the amnesty nearly three years ago. Of this number, 42 178 applications were approved, 937 applications were withdrawn, deleted or voided and 20 applications were declined. The amnesty process has raised R2,9 billion in levies and will soon transfer this amount to the National Revenue Fund. [Applause.]

It is worth noting that when the amnesty process was announced in 2003, it had four objectives: to broaden the tax base; to enable South Africans to regularise their affairs without prosecution; to provide SA Revenue Services and the Reserve Bank with details of foreign assets; and, finally, to facilitate the repatriation of foreign assets to South Africa. I am pleased to announce that the amnesty process has successfully achieved all these objectives and a total of R68,6 billion of foreign assets have been disclosed. Approximately 70% of these disclosed assets were illegal, whilst 30% were legal or legalised through the Reserve Bank.

It is estimated that the income tax base has increased by R1,4 billion, which is likely to increase the collection of personal income tax by an estimated R400 million. The sum of R2,9 billion of revenue raised through the levies is a further indication of the success of the amnesty process and will be used for social development, as indicated by the Minister, and community infrastructure.

I wish to specifically thank the chairperson, Adv Madlana, who has led the amnesty unit impeccably and with great enthusiasm. I would also like to thank the Reserve Bank and Sars for their assistance in finalising the amnesty process.

Finally, my appreciation also goes to Parliament and the public for the confidence they have shown in this amnesty process, which, as stated above, has indeed been a remarkable success. The Minister of Finance earlier made reference to progress in implementing the Financial Intelligence Sector Act. I just want to relate a personal experience in this regard. I think it is also important that we begin to look at some of the regulatory burdens that are basically imposed on clients.

I have also had personal experience of being FICA’d’’. I don’t think it was ever the intention of the legislation, when the Federal Insurance Contributions Act was passed, to allow a situation to develop where the customer of a financial institution, for example a bank, would be FICA’d’’ and would have to identify themselves more than once.

However, what we have at the moment is a situation where every time a person who is already a client and who has already been FICA’d’’ wants a new product, another home loan or motor vehicle financing, he or she has to go through the motions of beingFICA’d’’ again and again. This is time- consuming and expensive. This is not hearsay, it has happened to me.

I believe it is the responsibility of a bank or any other similar institution to ensure that their internal systems enable them to have a single view of their customers. If they only have separate views with each and only link a client to a particular product, then how can they honestly state that they have good customer relationships in place? How can they honestly say that they have developed good risk management processes? Moreover, it then becomes an excuse to pass the cost of complying on to the client. This is not acceptable.

Our banks and other financial institutions have world-leading IT systems. It seems to me that here is something that shouldn’t be difficult to achieve. It also seems to me that in doing so, they will not need to pass the costs to their clients, because the institutions will soon recoup these costs through the better relationships that they develop with their clients and many others will choose to come and bank with them.

In conclusion, I would like to take this opportunity to thank the Minister of Finance for his leadership and the management of the National Treasury and all the institutions that are residing within the area of his responsibility, for maintaining high standards of efficiency and competency. Thank you very much.

Mr M JOHNSON: Chairperson, I want to start off my speech with a quotation from a certain Ralph Waldo Emerson. He said:

Shallow men believe in luck. It is those days. Strong men believe in cause and effect.

That is what happens when you suddenly have 18 minutes. You end up waffling, not knowing what to do with it. [Interjections.] It’s new.

On the occasion of the 30th anniversary of the 16 June Soweto revolt, it is fitting that we dedicate this speech to those who took up stones, petrol bombs, fought against an armed enemy, were maimed and died in the process, were detained, imprisoned, and got exiled, all in the name of liberating you and me.

This cluster of 1976 efforts opened our eyes and minds about a need, not only of fighting against the usage of Afrikaans as a medium of instruction, but also against the entire system of Bantu education that denied an African child being taught maths and science. Heita Class of 1976, heita!

Chairperson, Minister of Finance, Deputy Minister of Finance, the team from Statistics South Africa, led by Messrs Howard Gabriels and Pali Lehohla, Ministers and Deputy Ministers present, colleagues, comrades and fellow South Africans here and elsewhere, we gather at a sad moment when one of us, comrade Yusuf Bhamjee, has just lost his loved one, through the senseless murder of his wife at her surgery.

Also, South Africa mourns the passing on of one of us, a seasoned cadre of our movement, Comrade Eric Molobi. We salute these cadres for the sterling work they have contributed towards liberating our country from the fascists who only knew of the existence of one race in this world, that is, the white race. Even if we don’t say it in so many words, your work did not go unnoticed.

Today is better than yesterday, and tomorrow shall be better than today. This is firmly illustrated by the growth of our gross domestic product to 4,2% in the first three months of the year on a seasonally adjusted and annualised basis.

It is the 30th consecutive quarter of economic growth, the longest continuous upswing in South Africa’s history. In this regard, therefore, we have every reason to celebrate these achievements under an ANC-led government and administration. I demand that applause from you. [Applause.]

Class of 1976, indeed your struggles have not been in vain. You continue to swell the ranks of leadership in society. However, a challenge still remains – that of ensuring the wider spread of this generation in other areas, like we are dealing with today.

I am speaking here as a non-statistician during this debate on Vote No 13 - Statistics South Africa, to pass a message that talks to the importance of data collection with regard to planning and a need for all of us here and out there to allow these statisticians to enter our homes and businesses, and be given correct information as they collect this data.

We collect this reliable data in order to do proper planning towards building a better life for all in our country. The credibility and reliability becomes very important for statistics in South Africa, because these inform policy formulation, development, effective implementation of targeted delivery and allocative efficiencies.

For the reasons above, growth in our economy is better measured with the introduction of the new systems, and the rate at which prices of commodities are measured in our inflation targets leaves us with much scope for future achievement.

Underlying the objectives of collection of reliable data is the honesty and willingness on the part of South Africans, and those who have since migrated to our country. The Statistics South Africa Act of 1996 has as its purpose the advancing of the planning, production, analysis, documentation, storage, dissemination and use of official and other statistics. Among the other purposes of this Act is to seek co-operation between producers of official statistics and the users thereof, and other statistics in government, other sectors of society and the public at large, and the respondents supplying the information that results in official and other statistics liaising also with international and regional organisations.

The vision is very clear: To be a preferred supplier of quality statistics. The mission is equally clear: Provide a relevant and accurate body of statistics to inform users on the dynamics in the economy and society through the application of internationally acclaimed practices.

There are three fundamental principles of official statistics – confidentiality, professional independence and co-ordination and co- operation amongst institutions, both in the country and abroad. What we get here as and when the statisticians present all of these statistics is the confidentiality that goes with it.

In achieving these sound principles, we are pleased with the work done by Stats SA by providing us with the work programme that maps out five programmes that Stats SA is following in implementing the above. On the administration side, over the past year, we have seen a significant improvement in the office, especially with the appointment of the new Deputy Director-General on economic statistics. That makes our lives easier as we go along in doing especially the community surveys that precede the work of Statistics South Africa for Census 2011.

On economic statistics, the statistics are produced to meet user requirements. For example, in the industry and trade statistics, they refer to the turnover and volumes in various economic sectors. Statistics on employment and prices provide us with information on employment in the formal non-agricultural sectors with the price indices like the CPIX and PPI. There are also financial statistics on public sector spending and the performance of private sector organisations.

Critical to our emerging economy is the unrecordability of our second economy. This refers to the resistance that we find among our informal businesses. The challenge here is to measure these success stories, and the challenges that accompany these in order to identify the gaps for proper intervention.

As the Minister has said, the community survey is upon us. Of critical importance for this is an effort that will take us towards the 2011 Census that will be done nationwide. The Question we must ask ourselves is whether we are ready to accept these statisticians with correct information at our fingertips as they come to us, seeking such data.

The last programme seeks to optimise the use of technology in the production and use of official statistics. Of here importance here is the development of the provincial capacity of provinces towards ensuring that we have this data collected.

On the education front, part of this exercise entails the understanding of the reasoning behind the collection of such data. The importance of honesty amongst the people, big business, and the small and medium-sized businesses towards the provision of correct information to data collectors cannot be overemphasised. At the heart of this initiative is the need to increase the accessibility of Stats SA’s statistics to all users.

On the labour force survey, accurate reporting on employment and unemployment levels leaves a lot to be desired. In keeping with international best practices, we welcome the re-engineering of the quarterly labour force survey, and look forward to its first publishing in

1. This initiative provides our country with better-informed statistics on employment and unemployment.

Statistics South Africa operates within an ambit where you have other departments of government that are doing a similar exercise. Amongst these are Home Affairs, the Department of Trade and Industry and the SA Revenue Service. They collect valuable information and reliable data about registration of the newly born. They also collect information on the population, business registers and taxpayers in our country.

Of importance is the data located within the SA Police Service, especially about those who die, and the causes of this, amongst others. This is one area that the country has to work hard on. The time to stigmatise the HI- virus and these causes of such is “verby” [passed].

With few facts for policy formulation and planning, it becomes difficult to target accordingly. Once again, we are called upon to stop stigmatising HIV and Aids-related deaths. This call helps us arrest the virus with more required help, and subject these carriers to more years of economic activity.

Regarding the shortage of skills, South Africa continues to suffer from imbalances of the past apartheid colonial order. Our skills are skewed to a point of nonalignment to the requirements of our economy and its growth accordingly. A close liaison with the institutions of learning by the Stats SA office is critical as we move forward with our work of finding these important skills required for such planning.

I challenge Stats SA to engage with those skilled but without official qualifications in recognising the prior knowledge, especially among the class of 1976 and the 1980s. These are the sons and daughters who were able to engage with the enemy head-on, understanding precisely where and how to get certain information in pursuit of the struggle for liberation.

One of our major weaknesses is the extent to which we have not been able to integrate our human resource development strategy, including recognition of prior learning experiences accumulated in the course of practical work, towards change in society.

In this regard, therefore, we welcome the efforts led by the Deputy President in the form of the Joint Initiative for Priority Skills Acquisition. However, the point remains that of integrating our human resource development strategy towards filling critical areas of delivery for a better life for all.

We therefore do not amass skills for the sake of it. Our revolution requires revolutionary policy implementers that implement revolutionary policies intended to transform our society from the past colonial apartheid order to one which is nonracial, nonsexist and democratic.

As part of this programme, support for maths teachers should be programmes that reach out to where the need is felt most, that is, in the rural communities. I challenge Stats SA to reach out to these communities by supporting these maths teachers in rural communities to achieve the desired goals of excellent results.

As you have pointed out in your work programme, we look forward with keen interest to a programme that engages young learners with maths at pre- primary and primary levels of education. The main objective here is to root out poverty.

The last point is that as we engage in this national address project, we must open our houses and businesses and supply the correct information. Yes, under apartheid, we had to delete the numbers on our homes and houses with a view to ducking the enemy forces and its might. Now, in the course of the reconstruction and development of our nation, we need all of us to get into the partnership in the renumbering of our homes.

With the intergovernmental structure led by Stats SA, business, and NGOs, it is time that we make ourselves available as we go through the process of community surveys, ahead of the 2011 national Census. It is projects like these that the unemployed youth of yesterday make use of.

As South Africa is part of a global movement that seeks to achieve set targets spelt out in the Millennium Development Goals, we are confronted with a challenge of co-ordinating and guiding, especially our municipalities and quasi government agents, as they continue with our fragmented visions that do not talk to the MDG’s targets of halving unemployment … [Time expired.] The ANC supports this Budget Vote. [Applause.]

Mr S N SWART: Chairperson, hon Minister, the ACDP would also like to extend its sincere condolences to Yusuf Bhamjee and his family on his tragic loss.

Minister, the thorny issue of whether Parliament should be given power to amend the national Budget was raised today in the media. The ACDP is fully aware of the conundrum you, hon Minister, would face if Parliament had the power to amend the Budget, and then held you accountable for the result. Clearly, however, section 77 of the Constitution envisages a procedure to amend money Bills, but after 10 years, such a Bill has not seen the light of day.

Parliament’s oversight committee already does have a degree of power over how money is spent. The question is whether we as parliamentarians are even at present engaged in the executive sufficiently during the process of drawing up the Medium-Term Expenditure Framework. Perhaps, until we are doing that, and using the monthly financial information effectively, the debate about amending the Budget is premature.

Additionally, besides the important role played by the Standing Committee on Public Accounts, we, in exercising our oversight functions in our portfolio committees, should be monitoring every department and internal audit process throughout the year, and not only now during the budget process.

We need to ensure that we are fully conversant with departmental expenditure, and are not surprised by an adverse Attorney-General’s report, such as the Attorney-General’s shock disclaimer recently issued to Home Affairs. [Interjections.] Sorry, it’s the Auditor-General.

In this case, there were glaring inadequacies relating to financial controls and internal auditing that should have been picked up earlier in the financial year. That, however, does not exclude the National Treasury’s role in this regard.

The ACDP thus welcomes the National Treasury’s financial management reforms whereby the department will continue to build and upgrade internal audit capacity in government. We welcome the Treasury’s intervention in Home Affairs, which may be slightly overdue.

In conclusion, the ACDP would like to commend the National Treasury, the SA Revenue Service and Statistics South Africa for the exceptional work performed, notwithstanding major challenges with filling vacancies and attracting appropriate skills. The ACDP will support this Budget Vote. Thank you. [Applause.]

Mr B A MNGUNI: Thank you, Chair. Hon Minister, Deputy Minister, colleagues and the House at large, in anticipation of the level of concentration at this time of the day due to mental gymnastics this House has been subjected to, I have decided to limit my speech to the bare necessities.

Looking at the strategic plan of the National Treasury and comparing it to the department’s progress during the briefing session, one has realised that most of the department’s goals were achieved. This is against the backdrop that the National Treasury has one of the smallest budgets as compared to most of the departments. This, however, is not a justification for more resources to be allocated.

Also, we should be mindful that most deliverables in this department are not physically visible, such as houses or roads, but they tend to be more abstract and intangible although the outcomes have a greater impact in society, such as economic growth. However, a detailed report of achievements is still to be tabled in the annual report of the department.

Programme 1 has to do with the administration of the Ministry’s office, the Director-General’s office and corporate services. We believe that allocations to this programme are sufficient, seeing that the core activity in these three subprogrammes is co-ordination. A high vacancy rate that was a concern in the previous strategic plan has been addressed. The total vacancies were decreased from 299 to 152 between March 2005 and March 2006.

The department is planning to recruit another 140 during the current financial year. On this issue of unemployment and underemployment the 51st conference of the ANC resolved that government at all levels implements a comprehensive and integrated employment strategy combining short-term measures aimed at providing a degree of immediate relief with longer term interventions aimed at sustainable job creation and alternative income earning opportunities. In line with this resolution the department has more than 50, or 56 to be exact, interns, some of whom have been appointed to permanent posts. Their qualification ranges from a National Diploma to Masters in Economics.

In the ANC policy document “Ready to Govern” we envisaged that, “the central goal of economic policy is to create a strong, dynamic and balanced economy that will be directed towards, amongst others, initiating growth and development to improve the quality of life for all South Africans, but especially for the poor”. The Economic Planning and Budget Management programme is one of the cores of the Department’s activities. In the quest to fulfil the ANC’s aspirations as outlined above, this programme is key in the coordination of Asgisa. Therefore, the allocation of resources in this programme is not only important but it needs proper and careful management. Not that the officials of the Department are not doing it - it is just that it needs to be looked at carefully.

As was noted during the briefing session, accelerated economic growth will require the department to play an important role in providing the necessary economic analysis that would underscore the process. In turn, for the National Treasury to be able to do this, it will need to embark on institutional reorganisation in order to provide the necessary support. Consequently, expenditure on research and other projects will increase in the 2007-08 financial year and taper towards the other two years.

The committee was concerned about R970 million that would be spend on Integrated Financial Management Systems over the MTEF period. The National Treasury explained that it was addressing the shortcomings within the financial systems of government, as they were based on outdated technology and architecture. Revision of the financial landscape necessitated a comprehensive analysis of existing financial systems that required the replacing of outdated systems and called for the introduction of new integrated financial management out-solutions to address the new challenges in the public sector.

In supporting this Vote I would like to refer back to the ANC’s 51st National Conference resolution on the restructuring of state-owned assets and enterprises which resolved “to re-affirm the ANC’s policy on restructuring particularly the role of State-Owned Enterprises in economic transformation, democratisation and deracialisation of our economy, which ensures that the transfer of assets to the private sector strengthens our department’s developmental agenda”. The National Treasury is the key driver of our economic policy. State-owned enterprises are outside the scope of its day-to-day operations. However, the department has the responsibility, through the Assets and Liability Management programme, of co-ordinating resources in all departments to fulfil government goals.

The question that the committee is unable to answer is whether the measures and indicators as tabulated in the strategic plan will go far enough in addressing the outputs as envisaged by the departments. But, most important, is whether government will achieve the strengthening of the developmental agenda as envisaged by the 51st conference of the ANC. Therefore, the question calls for close monitoring and robust oversight work by the committee over the strategic plan and expenditure programmes of the department.

This equally applies to financial development institutions, whose broader mandate is to facilitate socioeconomic development in our communities. It is a matter of grave concern that the Apex fund has failed to execute this task. It was reported during the budget hearing that the funds allocated for Apex could not be spent because the business plan was not submitted. The question arises then: Do we have a politically conscious civil service in these development institutions that shares the vision and mission as envisaged by the executive authority in the country? What recourse do we have if these institutions are not fulfilling their mandate? Are we as committees playing our role in ensuring that plans put in place by departments are adhered to and objectives achieved? It is, therefore, up to us as committees that through Parliament we receive monthly and quarterly expenditure reports for perusal and analysis against the strategic plans.

Finally, we have to complete this exercise when annual reports are tabled in September or October. In reintegrating South Africa into the global economy the department intends to spend R13 million in the MTEF period to host the G20 secretariat in 2007. Though Joseph Stiglitz notes that globalisation has its own discontents, we cannot linger on the periphery of the global economy and wait to be assisted by outside countries. We need to take the stage and show that globalisation is to the benefit of all South Africans irrespective of colour or creed. Thanks, Chair.

Ms J L FUBBS: Chairperson, hon members of this House, colleagues, comrades, my fellow countrymen, I wish to congratulate the Statistician-General, Pali Lehohla, on the corrective measures taken to put Statistics South Africa back on course. However, I also wish to advise the Statistician-General to ensure that he continues to underpin these management measures to take Stats SA to fresh heights.

Indeed, statistics is more than just a set of numbers, ratios and aggregates. It is a symphony of synthesised requirements and realities, expressed in numbers. Statistics expose misconceptions and gather data informed by reality. Statistics deal with facts and not fiction, but, more importantly, statistics configure the information gathered and analysed in ways that lead to delivery solutions, by allowing us to shake ourselves free from the prison of blinkered reality. It would be a good idea if this happened to a few members in this House!

There is a continuing sense of wonder and delight about statistics, when users find a robust instrument that calibrates the information that informs their policies and information that ensures efficient, effective and equitable delivery. [Interjections.] If that isn’t English, I suggest you get a dictionary.

Credible data orchestrates this symphony when the needs of the targeted group of people are identified with laser-like precision by statistical data, both quantitatively and qualitatively.

Statistics, as I have been trying to put across, is not a dry discipline, devoid of passion and social meaning. Certainly, the previous regime tried to do that, but today we know that statistics are a rich tapestry of a community’s profile and definitive data in detail. Statistics give that analytical architecture of trends on prioritised challenges such as poverty, employment, economic growth, educational development and attainment, but also health and housing.

Over the past 12 years, we have developed and implemented several strategies aimed at removing the disparities in the quality of life of fellow South Africans, disparities, incidentally, which were inherited from decades and centuries of racial and colonial discriminatory practices and policies. Statistics South Africa was a key instrument of these historical distortions.

When one considers this, it is imperative that Stats SA takes great strides, as it can no longer simply implement change, but must embrace the call to arms to achieve the following six challenges. These challenges, I can tell you, I defined myself after analysing this, but then I read that the Statistician-General himself had recognised them anyway! Nevertheless, I am going to tell you what I thought. [Interjections.]

These challenges are: the restoration of trust; the development of a passion to study mathematics while pursuing a social conscience; promoting professionalism … [Interjections.] Turn yours down if it’s too loud … an acknowledgement that capacity must be steadily pursued rather than parachuted in; ensuring that what we need to know gets measured; and, most importantly, a participatory approach that involves all stakeholders.

Statistics has a new challenge, and that is to ensure that its work enables all departments and entities to achieve the qualitative and quantitative targets set by the Accelerated and Shared Growth Initiative for South Africa.

We are dealing with racially divided towns and cities, with fragmented educational fronts and a fractured infrastructure, and all of this makes service delivery difficult to do and achieve economically. Yet do it we must, and we will, with the help of credible and robust statistics.

Clearly, it is evident that statistics is an essential tool in the delivery of quality services. Service delivery must be available but it must also be accessible, and, most importantly, affordable.

Relevant and reliable statistics that reveal the profile of your family, your neighbourhood, your community, your region, your province, and our country are increasingly utilised effectively by our elected representatives and leaders, by the Public Service, and, let me tell you, by the private sector. I want to believe that they are relying on official statistics and not those turned out by Van Dyk and Fubbs.

Anyway, they have been complaining for a long time about statistics in previous years, but they are unusually silent at the moment. They are silent, because what is there to criticise? In fact, a novelist once said to me: “I wish that critic would stop criticising my work. Tell him to sit down and write a book.” Now I am saying this to Mr van Dyk. [Interjections.] I am saying to Mr van Dyk: “Please, Mr van Dyk, you and I are colleagues. I enjoy your jokes. I enjoy your cigar jokes, yes, but what I want to tell you is this: Stop trying to do the work of official statisticians, because you can’t.” [Interjections.] You can’t! [Interjections.] Yes, you propose! I suggest you propose a little less.

The ANC-led government is continuing its quest to accelerate growth and economic and social development, but it faces multiple and complex challenges. Do you know, the policy-maker’s and implementer’s nightmare in both developed and developing countries is this word “uncertainty”, because it breeds in any environment where there are problems with numbers and resources.

However, the only difference between policy-makers in developed and developing countries is the fact that in developed countries they have a macro quantity of resources and an armoury of finance. We don’t have that luxury. What we do have is a commitment and a conviction that the credible statistics we have been producing recently will remain and be retained and improved.

The increasing relevance, robustness and reliability of official statistics have been boosted by regular household surveys that are acting as a litmus test for change. The community survey will provide a much-needed update of information that can be used immediately but also serve as a platform from which to launch the massive census due in 2011. The labour statistics that are now being compiled and published more frequently also generate greater certainty, not just for the Public Service in an ANC-led government, but for commercial, industrial and other institutional planners.

But do you know what is interesting? We talk of the volatility of markets. They blow this way, they blow that way, they go up and they go down. But the mobility of people is equally volatile, especially in countries that are experiencing rapid urbanisation, as South Africa is doing. In South Africa, people have been drawn by the magnet of local economies that are generating more jobs, and the consequence is annual radical changes to local demographics.

As fast as new houses are being built, as fast as educational and health institutions are expanded and government offices opened, instead of the originally targeted needs being met, they shift along, not a silk route, as in previous years - you see, that is why I am wearing my Little China outfit – but along an employment route. That is one of the biggest challenges facing us in respect of poverty. [Interjections.] The frequency of robust statistics is an imperative to local, provincial and national departments, because they align allocated resources with realistic requirements and accurately identified target groups of people.

So, comrades, colleagues, my fellow countrymen, what is the summum bonum? [Interjections.] That is the supreme good. What is the supreme good of official statistics? The supreme good, the summum bonum, is the relevance, the robustness, the reliability, the transparency and the accountability of statistics. [Applause.]

Yes, it is the integrity of statistics that imbues technical data with social purpose and economic objectives, and embraces social and economic justice in South Africa. More recently, the ANC-led government has expressed this in a strategy called accelerated growth.

The community survey will focus on data at local level, upon which high- level planning depends. Why? It is because national departments don’t service national departments, generally speaking. They service people on the ground.

Statistics South Africa put this very well in its work plan. I must congratulate them on a very innovative piece of publishing material, something that has enabled us to do our oversight more effectively, but will also enable them to do their job more effectively. I want to quote from that book:

``When a person talks about number 240 in Botsaleni, be it Telkom, Eskom or any government department, it refers to my house,” says a community resident. Another put it this way: “The numbers made our community beautiful, but we also hope for more improvement.”

In Sebokeng, you are no longer a number. In Qwaqwa, you are no longer a statistic. You will be one of the many receiving services you need. So just as we have participatory democracy, so too we need participatory development in order to deepen democracy. Good governance depends not only on competence and conscientiousness, but also on accountability, and my appeal to the National Treasury, which has done such a fine job as everyone says, is this: Let’s now try to line up the strategic plan with the allocated resources and let’s be less creative there.

I do want to say this: It is always a pleasure to speak on this Vote, because I have nothing but superlatives to add, particularly when I see a change in the way things have been done. Certainly, as far as statistics are concerned, today is better than yesterday, and tomorrow will be even better. The ANC supports this Vote. Thank you. [Applause.]

The HOUSE CHAIRPERSON (Mr K O Bapela): Hon member, you indeed spoke English throughout!

The MINISTER OF FINANCE: Thank you very much, Chairperson. After the animated speech by the hon Fubbs, everything will be nothing. [Laughter.]

Let me just state again the purpose of the exercise. It is a process of accounting to Parliament, and that’s what we have tried to do. I think that because we’ve considered this discussion to be what we’d like it to be, there is no party and perhaps that is why the House is as empty as it is. Perhaps everybody’s wandered off to the Department of Public Enterprises’ great party today. I suppose the only tragedy is that there was only one woman who participated in this debate. That is probably unprecedented in the history of this Parliament and we should note it.

In respect of the comments by the hon Van Dyk: thank you for your support. If that is how you support, I would hate to see when you don’t support. [Laughter.] I am not quite sure what we have done, and I shall certainly call the hon Leon this evening. You know, we had Ken Andrew. He was okay; he left. Then we had Raenette Taljaard - she was very good and she left. Then we had Pierre Rabie, and I don’t know why he doesn’t talk to us anymore. And then Ian Davidson abandoned us, and now we have Van Dyk. What have we done? [Laughter.]

Part of the problem is that he is ideological, and we understand that. I mean, he worked for the Goebbels department called the CEAS – the Central Economic Advisory Service – there to tell lies about apartheid. That was the economic advice that they gave successive apartheid heads of state. That’s where he comes from, so you need to understand the context. He has not been able to unshackle himself from what he has really been through in the bulk of his adult life. [Interjections.] That is his problem. So when he stands here before you, as he did this afternoon with what he calls statistics, they still come from the Goebbels mind. [Laughter.]

You see, when he says that there is no employment creation, he’s telling an untruth. And it’s not a good thing. It’s not parliamentary to say that a member isn’t telling the truth. But if you look at the statistics between September 2004 and September 2005 and you see that 600 000 new jobs were created and that for the first time in many years you have exceeded the number of entrants to the labour market, then unemployment must fall. And if the member doesn’t accept that, he doesn’t know the first thing about statistics.

The second issue I want to raise is that he fails to understand the origins of economic history. In the 1970s you had the big infrastructure programmes that continued marginally into the 1980s. Then they built the war economy, and all of the project managers who were around in the 1970s were then called in to the war effort. That is part of the legacy we have to deal with. It’s the reality of South Africa, and that is why there is a dearth of the necessary skills. This is not a money problem. It’s a wider skills problem: white, black, green - you can’t find them in South Africa.

When this happens in an era of globalisation, when the United States is reporting a shortage of engineers and project managers, you understand the scale of the difficulty we are dealing with. It’s shaped by the history of this country; shaped by the resistance to democracy. And that is part of, I think, the legacy we have to unpack.

In respect of the PFMA, again, I must respectfully submit that the hon Van Dyk is wrong. Section 6(1) of the PFMA – I have it right here in my hand - asks of the National Treasury to define uniform norms and standards, and then asks of us to report to Parliament. It empowers Parliament like no other piece of legislation has before. But as the hon Swart said, it is sadly not something that Parliament has used. We would like to see Parliament use this. I have said this from this podium a number of times. The Act empowers you. We provide you with the information. Please use it, because that is the oversight role of Parliament that will strengthen democracy in this country. Please use it.

In respect of the hon Vezi, again, I say: Ask us to do what we must do and leave the management of departments to the managers in departments. You are so preoccupied with vacancies. The vacancy rate has dropped from 30% to 15%. The hon Bici speaks about the ugly duckling. Well, come to the pond sometime. We have never seen you in the committee. You don’t know if it’s a coot, a duck, a goose or a swan, because you are never there. [Laughter.] So don’t criticise that which you have not taken the time to see.

The hon Moloto spoke about e-filing. Well, in terms of the update as at 4 o’clock this afternoon – three working days since 1 June – there have been 4 462 new registrations for e-filing, 500 returns have already been submitted in three days, and 578 practitioners have registered to facilitate e-filing. I think that is certainly very encouraging as regards the compliance climate. [Applause.]

The hon Swart, I think, raised the issues well pertaining to section 77. Could you imagine, hon Swart, that you give powers to make a budget to the hon Van Dyk? Could you think about this in a quieter time and think what the outcome may be? [Laughter.] So, we have to find each other on this issue. Let’s get the oversight role of Parliament right. Let’s strengthen that. [Applause.] Let’s use the information and then, I think, we will have a better platform to deal with the other issues. I think that the hon Fubbs said everything that needs to be said about Statistics SA, so I would be doing a grave injustice if I tried to add to or summarise that.

Let me just conclude by saying thank you to all the parties in the House, all the members who have spoken, all the members who diligently attend the Portfolio Committee on Finance meetings, who have gone through the documents, who keep us on our toes.

More importantly, let me also express appreciation to the team of whom I am greatly honoured to be a part: the Deputy Minister, the director-general, the commissioner, the statistician-general, the Director of the Financial Intelligence Centre, the CEO of the Public Investment Commissioners, the CEO of the Financial Services Board and their entire teams. I think that they do democracy proud in this country, and I think that we owe them a great debt of gratitude. [Applause.] Thank you very much for your support here. [Applause.]

Debate concluded.

The House adjourned at 18:48. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

TABLINGS

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COMMITTEE REPORTS

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