WEDNESDAY, 12 SEPTEMBER 2007 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY
                                ____

The House met at 15:07.

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.

                     CHANGES IN PARTY MEMBERSHIP

                           (Announcement)

The SPEAKER: Order! Before we proceed with today’s business, I wish to announce the following changes in party membership that occurred today in terms of Schedule 6A to the Constitution.

Ms M N Mdaka had, on 12 September 2007, left the United Independent Front and joined the ANC. Ms Z A Ndlazi had, on 12 September 2007, left the United Independent Front and joined the ANC. Mr C M Morkel had, on 12 September 2007, left the Progressive Independent Movement and joined the ANC. Mr V C Gore had, on 12 September 2007, left the Independent Democrats and joined the ANC. [Applause].

Order! Hon members, the first item on the Order Paper is questions addressed to hon Ministers in the economic cluster. Hon members may press the “to talk” button as usual on their desks if they wish to ask a supplementary question. The first question has been asked by the hon G T Madikiza to the hon Minister of Public Works.

QUESTIONS FOR ORAL REPLY

                              ECONOMICS
                              Cluster 3

MINISTERS:

 Rent owed by Members of the Executive for their ministerial houses

1. Mr G T Madikiza (UDM) asked the Minister of Public Works:

   (a) How many members of the Executive owe rent for their ministerial houses, (b) how much do they collectively owe and (c) what does her department intend doing to rectify this?NO2084E

The MINISTER OF PUBLIC WORKS: Thank you, Madam Speaker and hon members. As background to question 1, I should remind this House that as a custodian of state assets one of our responsibilities as the Department of Public Works is to offer accommodation to government departments, state entities, Members of the Executive and Members of Parliament.

The residential accommodation therefore falls under the function known as “prestige accommodation” in our budget. Hon members will recall that in 1994, when the new democratic government was set up, the Melamet commission, which looked at conditions of service for Members of Parliament and the Executive, made a proposal as part of the salary structure, that members need to pay for residential accommodation if they take occupation of such as offered by the state.

This decision was then operationalised by the Department of Public Works through the ministerial handbook, as well as communication through the parliamentary board with Members of Parliament. Cabinet further decided that should an MP utilise both residences in Cape Town and in Pretoria he or she will pay rental on one of them. At the time, hon members would recall, the valuation of an amount to be paid by the MPs was bench-marked to be market related, and included a formula that was developed then.

In 2002, Cabinet took a decision after recommendations by the mandate committee that members of the Executive will pay 1% of their annual salary divided by 12 on a monthly basis. On the other hand, Members of Parliament and session officials are also accommodated in state accommodation in the parliamentary villages according to the Parliamentary Acts. The determination of their rental payment is done after consultation between the Minister of Finance and the Minister of Public Works, following consultation with the parliamentary board.

If I were to come to the answer directly, Madam Speaker, there is no Member of the Executive that is still owing money and therefore question b and c fall away. Thank you.

Mr G T MADIKIZA: Thank you, hon Minister, for such a comprehensive response. Are you telling this hon House that the case of the axed Deputy Minister of Health was an isolated incident, where we read that she owed up to R26 700, which is about 72 months’ rent in arrears? Thank you.

The MINISTER OF PUBLIC WORKS: Well, I will be very kind to the hon member because the matter does not necessarily arise, but it might be related. It is not an isolated question. Every Member of the Executive, or even a Member of Parliament who is owing is reminded in accordance with the agreements that have been made with Members of the Executive through their departments about the amount that the member has to pay or the amount that is owed. Arrangements are therefore made on how a member would actually pay back that amount to Public Works. As we speak now, with regard to the Members of the Executive, there are no arrears that have accrued. They have paid the money. Those who were in arrears have made good their payment in accordance with the statements. Thank you very much.

Mr J P I BLANCHÉ: Hon Minister, does that mean that the former Deputy Minister Madlala-Routledge was in arrears and did not pay or did you have a special dispensation for her not to pay? Why did the department leave it until such a late date to collect that money from her? It seems to create the impression that some people are untouchable until they leave the Cabinet. Can you please just tell us what happened there and why it happened?

The MINISTER OF PUBLIC WORKS: Thank you, Madam Speaker. The question was: How many Members of the Executive owe the state? I think I have answered that. The former Deputy Minister of Health is aware of what she owes to the state. Her office has actually consulted us in terms of the ministerial handbook on whether she is vacating the house belonging to the state. As we all know, one month after Members of the Executive have been released of their duties, they have to vacate the residences. Again, if she or he was using a state car, we will pay attention to that, as well as the vacating of offices. There are timelines that have to be honoured.

Obviously, where a Member of the Executive has been released from duty, we will have to do our reconciliation to see whether or not that member owes money or not. If she or he owes, we will communicate with the member in question. There is no isolated incident. As I have said, Members of Parliament who owe us to date are reminded and they will be reminded as we always do with the statements that are sent to them.

Mr B A RADEBE: Thank you, Madam Speaker. Comrade Minister, the ANC-led government passed a Constitution which guaranteed equality to all its citizens, irrespective of whether a person is a Minister, a Member of Parliament or a member of the public. As long as the person owes the department any money, that money will be collected by using just administrative procedures, which means that a person can be made to acknowledge the debt and make an arrangement to pay that debt. Is this principle still going to be applied to any person or entity or department owing any money to the department in future?

The MINISTER OF PUBLIC WORKS: Certainly, such is done. Actually, in the case of the former Deputy Minister of Health we have had discussions and we will indeed enter into negotiations with regard to the money that is owed, which is accrued as a result of the rental, and which arrangements she is going to make to be able to pay us back. We do not doubt that because we understand that the former Deputy Minister understands clearly her obligations, as do all other Members of Parliament. Where there is a debt we will inform hon members of such.

However, I must say, that clearly, in terms of administration there are also things that we ourselves must deal with in terms of our monthly invoices which have not been done, because statements have been sent either quarterly or even every six months. I think those are the issues that we have to correct as a department to ensure that all members who get accommodation from the state are reminded on a monthly basis about what they owe and how they must pay back as well.

Mr S N SWART: Thank you, Madam Speaker. The ACDP shares your concerns, hon Minister, when it comes to debts owed to the state in this particular case, and in general. Could I just enquire from you: One of the concerns relates to the time period over which the debt was incurred. As you are aware, that prescription takes three years from the date when the debt becomes due. What steps have been taken to ensure that the debts are not incurred where persons do not pay and it goes back beyond three years, which then becomes legally unenforceable?

The MINISTER OF PUBLIC WORKS: Clearly, in this case that has not arisen, hon member. As I said, we will enter into a debt recovery agreement with the hon former Deputy Minister or any other member. I want to indicate to this House that there are many of you here who have debts with me as a landlady. I will make sure that I send reminders to you and if you owe me for more than two months I will also explain as such and I trust that you will pay me. If you do not pay, we also know what happens if someone does not honour the debt obligations. Scopa is there in Parliament. You will also put me on the spot if I am not following up on the members who are not paying as we all know that these are our obligations

           WELCOMING OF NAMIBIAN PARLIAMENTARY DELEGATION

The DEPUTY SPEAKER: Order! Before we proceed to the next question, I would like to recognise our guest delegates from the Parliament of Namibia who are in the gallery and they are led by the hon Dr Muzei Amoelo.

           Process and methods to proceed with land reform

1. Mr P J Groenewald (FF Plus) asked the Minister for Agriculture and Land Affairs:

   In the light of her statement that land reform will not be suspended until 30% of agricultural land is in the possession of black people, (a) what process will her department follow and (b) what methods will her department use in order to proceed with land reform? NO2128E

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Madam Speaker, it is an interesting question, because he is so confused! Hon Groenewald, with respect, through the Speaker to you, you are talking (a) about what process, and (b) what method. In actual fact a process is just a particular method to attain a certain objective and a method is a procedure of attaining an objective or a result. So you are actually asking the same question twice. If I may say, it creates the impression of being quite erudite, but I think it’s destitute of knowledge.

The answer is obviously that many documents give explanations of the processes that are being followed. You can consult the White Paper on Land Policy, the Constitution itself – section 25(6) - and you can consult the Provision of Land and Assistance Act, Act 126 of 1993 as amended in 1998. And, as a Member of Parliament, having sworn to obey the law, you, of course, support the Provision of Land and Assistance Act, where you will find all the procedures and all the powers that government has in regard to land reform. All of these will be used. They were put in place in 1994 and dynamically adapted from time to time to address policy and legal gaps and, of course, attended to on a continuous basis. If you see anything addressed, like it was at the Land Summit, of course, the necessary steps will be taken to address those.

Many techniques are available to the government. Methodologically, there are differences between a demand-led approach and a supply-led approach. More and more, we are following a supply-led approach. Thank you, Madam Speaker.

Mr P J GROENEWALD: Agb Mev die Speaker … [Hon Madam Speaker …] I can’t blame the hon Deputy Minister if he sounds a bit confused. I just hope that his policies are not as confused as he sounds.

Maar Mev die Speaker, ek kan nie die agb Adjunkminister kwalik neem nie. Die vraag is verkeerd op die vraelys. Die oorspronklike vraag wat die Vryheidsfront Plus gevra het, verwys na wat gaan gebeur nadat die 30%- grondverdeling plaasgevind het. Dit lyk my ons het bietjie ‘n probleem met vertaling by die administrasie. Maar miskien kan die agb Adjunkminister vir ons sê wat die proses is - ek wil nie in `n debat betrokke raak met die agb Adjunkminister oor die proses nie - nadat die 30% bereik is.

Wat gaan u dan doen? Want die agb Minister het gesê dat grondhervorming nie dan gaan ophou nie. Ek dink die landbousektor in Suid-Afrika is geregtig om te weet wat gebeur ná die 30% afgehandel is en of dit nog die moeite werd is om in Suid-Afrika te boer al dan nie. Miskien kan die agb Adjunkminister vir ons daarop antwoord. (Translation of Afrikaans paragraphs follows.)

[But Madam Speaker, I cannot blame the hon Deputy Minister. The question is wrong on the Question Paper. The original question submitted by the FF Plus asked what was going to happen after the 30% land distribution has occurred. It appears as if we have a bit of a problem with regard to translation at administrative level.

But perhaps the hon Deputy Minister can tell us what the process is – I do not want to get involved in a debate with the hon Deputy Minister regarding the process – after the 30% mark has been reached.

What are you going to do then? The hon Minister said that land reform is not going to stop then. I think the agricultural sector in South Africa is entitled to know what is going to happen once the 30% has been distributed and whether it would still be worthwhile to farm in South Africa or not. Perhaps the Deputy Minister could give us an answer.]

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Thank you, Speaker. Well, you are going a bit too far into the future, I would say.

U gaan bietjie ver in die toekoms in. Kyk, u moet asseblief verstaan dat die 30% n teiken is vir n bepaalde tydperk. Dit kan nie die einde van die proses wees nie. Jy kan nie sê dat, met ‘n bevolking van x teenoor y – op die oomblik – jy op 30% gaan stop nie. Dit is net `n teiken wat ons gaan behaal en ek dink grondhervorming is ‘n kontinue proses wat baie, baie lank nog sal aanhou tot die regte getalle bereik is.

Sedert die vorige Minister in 1999 in die pos gekom het, word daar ekonomies gedink, en u weet dit goed. Die samewerking wat ons met landbou- unies het, is in die algemeen daarop gerig om ekonomies-vatbare eenhede te kry.

Eintlik moet ek vir u sê dat daar `n ander vraag van u is wat bietjie verder aan is – dis vraag 246 – wat eintlik basies dieselfde vraag is as wat u nou vra. Die antwoord daarop is ook “Nee”, maar ek dink nie ons gaan vandag daarby uitkom nie.

Die hele punt is dit: Jy kan nie in Suid-Afrika sê soveel hektaar gaan jy per persoon uitdeel nie, want die land verskil soveel. Jy kan wel van gemiddeldes praat en dit is hoofsaaklik vir begrotingsdoeleindes. Nee, ek dink nie hierdie proses sal ooit by 30% kan ophou nie. (Translation of Afrikaans paragraphs follows.)

[You are going a bit too far into the future. You have to understand that the 30% is a target for a specific period of time. It cannot be the end of the process. One cannot say, with a population of x to y – at the moment – that one is going to stop at 30%. It is merely target that we want to reach and I think land reform is a continuous process that is going to continue for a long, long time until we reach the correct figures.

Since the former Minister came into the position in 1999, we have started to think in terms of economics manner and you know that very well. The co- operation that we have with the agricultural unions in general is aimed at getting economically viable units. I really have to point out that there is another question posed by you further down on the Question Paper – it is question 246 – that asks basically the same question that you are asking now. The answer to that is also “No”, but I do not think we will get to that today.

The point is: In South Africa one is not able to say that you are going distribute so many hectares per person, since the country differs so much. One is able to talk about averages and that is primarily for budgeting purposes. No, I don’t think that this process can ever stop at 30%.]

And I’m sure that is the policy of this government, that we will have a continuous land reform process. Also, agriculture itself must be attended to. Our production in this country, as you well know, must increase considerably. Thank you, Madam.

Mnr C H F GREYLING: Mev die Speaker, agb Adjunkminister, een van die doelwitte van die Departement van Grondsake is die herverdeling, teen 2014, van 30% landbougrond wat tans in besit is van blanke boere. Of dit nou 30% of meer is, is die belangrike aspek dan hier nie juis die 30% of meer nie, en nie sodanig die datum nie. Watter verdere stappe sal geneem word om landbouhervorming en die herverdeling van grond in Suid-Afrika te bespoedig? Dankie. (Translation of Afrikaans paragraph follows.)

[Mr C H F GREYLING: Madam Speaker, hon Deputy Minister, one of the aims of the Department of Land Affairs is the redistribution, by 2014, of some 30% of agricultural land that is currently owned by white farmers. Whether it is 30% or more is the more important issue here not the 30% or more, and not necessarily the date? What further steps will be taken to speed up agricultural reform and the redistribution of land in South Africa? Thank you.]

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Madam Speaker, that question was also put in Afrikaans, if I remember correctly.

Nee, inderdaad, enige landsbestuur plaas datums op enige proses. Jy moet datums plaas, want andersins het jy nie beheer oor die prosesse nie. Maar dit is nie te sê dat jy daardie datum presies op die dag en uur gaan bereik nie. Die belangrike punt op die oomblik is dat ons minstens binne hierdie periode daardie 30% kan behaal. Dit is nog eintlik n baie klein minderheid teenoor wat die behoefte regtig is in hierdie land. Maar dis ook n baie ingewikkelde en moeilike proses. Omdat enige landbouaktiwiteit op langtermyn kapitaalbelegging berus, bou mens dit op oor tyd en jy probeer ten minste om daardie 30% te behaal. Dit is nog glad nie die einde van die pad nie en dit kan nie die einde van die pad wees nie. Baie dankie.

Mnr A C NEL: Speaker, hierdie vraag is na aanleiding van `n vraag wat ek aan die Minister gevra het en toe het sy aangedui dat die demografie van die land weerspieël moet word in grondbesit ten opsigte van ras en geslag. Ook het sy gesê: “The needs of the most needy must be addressed.” Nou my vraag is: Ons het nou redelike goeie voedselsekuriteit. Hoe gaan hierdie intensies van die Minister voedselsekuriteit in die toekoms raak, veral in die lig van die hoë persentasie grondhervormingsprojekte wat nie slaag nie? Baie dankie. (Translation of Afrikaans paragraphs follows.)

[No, indeed, any government places dates on any process. You have to impose dates, otherwise you have no control over the processes. But that does not mean that you will reach that date at the exact day and hour. The important point at present is that we should attain this 30% at least within this period. It is actually a very small portion when compared to the actual need in this country. But it is also a very complicated and difficult process. Because any agricultural activity relies on long-term capital investment, one builds over time and one tries, at least, to reach that 30%. It is not the end of the road at all and it cannot be the end of the road. Thank you.

Mr A C NEL: Speaker, this question is as a result of a question I posed to the Minister and she indicated that the demographics of the country should be reflected in land ownership with regard to race and gender. She also said: “The needs of the most needy must be addressed.” My question is therefore: We currently have reasonably good food security. How will these intentions of the Minister affect food security in future, particularly in the light of the high percentage of land reform projects that do not succeed? Thank you.]

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Speaker, food security will have to stay in place. Except for some production problems that we have at the moment - for example, too little wheat production on account of climatic conditions - we are working towards all these projects being sufficiently supported. Quite a lot of support programmes are in existence.

My point will still be this: I think that Act 126 of 1993, as amended in 1998, should be implemented with greater intensity, because it is a support programme and a land acquisition programme. We can do it. We can get good production on emerging farms, as we have shown in many cases. It is really the case. You can look at some excellent projects that have been done together with Grain SA and together with Sugar SA in Mpumalanga in the Sunday River Valley. These are excellent, successful projects and it can be done. We can even attain large numbers and really bite off this 30% and then continue after that.

I am sure that when you start asking whether this is a quota system, that is not what this is about. In the end, the reasonable approach is to reflect your population composition. There’s no doubt about it: That is the policy of this governing party and that is what we are going to get and I’m sure no one and nothing with regard to our food production will be affected. We will manage it. Thank you, Chairperson.

        Utilisation of liquefied petroleum gas by households

1. Mrs B Tinto (ANC) asked the Minister of Minerals and Energy:

   Whether liquefied petroleum gas (LPG) as an alternative source of energy is making inroads into the household market; if not, why not; if so, what is the extent of its utilisation by households compared to other forms of energy? NO2094E

The MINISTER OF MINERALS AND ENERGY: Madam Speaker, I thank the member for the question. The response to the question is: At this stage we cannot say that liquefied petroleum gas, LPG, is making inroads into the household markets, mainly because the total annual growth, which is at 15,4% as we speak from 9 percent in 2003, emanates mostly from the industrial sector and not households.

The department has undertaken pilot projects on the use of liquefied petroleum gas by households, and we are piloting the project in Tembisile in Mpumalanga and in Atteridgeville in Gauteng, to gain valuable information to properly promote LPG, should it be required.

What is important for us is to appreciate that central to the use of an energy carrier is its reliable, availability, accessibility and affordability. When it comes to LPG, given that South Africa does not have natural gas, we still have a challenge as far as availability and affordability of LPG goes. However, we still have to assess all of these and the pilot project is meant to begin that process. Thank you very much.

Mrs B TINTO: Thank you, Madam Speaker …

Enkosi Mam’ uSonjica ohloniphekileyo ngempendulo yakho ecacileyo, umbuzo wam olandelayo uthi okokuqala, ingaba la malinge -pilot projects ayakuphunyezwa nini na, okwesibini ingaba ixabiso le-liquid petroleum gas okanye iLPG nalo nilijongile na nilisebe, ngoba abantu abaninzi abahluphekileyo abafikeleli kakuhle kula maxabiso nanjengokuba ubusele uthethile ngokufikeleleka kwamaxabiso- affordability. Leyo yenye ingxaki ye- LPG le yala maxabiso.

MPHATHISWA WEZIMBIWA NAMANDLA: Enkosi lungu elibekekileyo, lo mcimbi wokuphanda ngokusetyenziswa kwale LPG sijonge ukuwuxovula kwi-Summit esiza kuba nayo apha kuSeptemba okokuqala, kodwa siza kuyiqulunqa yonke le nto kunyaka ozayo phambi kokuba kuphele lo nyaka-mali sikuwo. Ngoko ke siza kube sibuyela apha ePalamente size kunika ingxelo yokuba ezo zifundo sizifundileyo zisimisa ndawoni na. Eneneni abantu abahlelelekileyo kunzima kubo ukusebenzisa i-LPG ngenxa yexabiso layo.

Njengoko benditshilo ukuba asinayo irhasi apha eMzantsi Afrika kufuneka ke ukuba siyithathe kwamanye amazwe. Siyithenga kwamanye amazwe, sixabane noMnu Trevor Manuel ngoba kaloku lo nto yenza ukuba ixabiso ezincwadini ngakuthi –balance of payments linyuke size sibe nemali eninzi esiyisebenzisayo ngokuthenga kumazwe aphesheya izinto ezinje ngerhasi.

Lo nto ekugqibeleni iphelela ekubeni mna ndingumthengi kufuneka ukuba ndiyihlawule loo nto. Abantu ke abahlelelekileyo abasebenzisa le rhasi enyanisweni bathi bakujonga iparafini nerhasi bakhethe kwaparafini nangona inobungozi ngoba yeyona nto bakwaziyo ukuyithenga ngemalana abanayo. Ngoko ke eli xabiso le-LPG eneneni liza kuba ngomnye wemibandela esixoxa kakhulu ngayo ukwenzela ukuba sincedisane nabantu abahlelelekileyo ukwenzela ukuba bakwazi ukuyifumana le rhasi. (Translation of isiXhosa paragraphs follows.)

[Mrs B TINTO: Thank you, hon Sonjica, for your clear answer. My next question is, firstly, when will the pilot projects be completed? Secondly, has the cost of liquefied petroleum gas, LPG, been considered by the department, because many poor people cannot really afford these costs, as you have already spoken about affordability, which is another problem with LPG?

The MINISTER OF MINERALS AND ENERGY: Thank you, hon member. Investigating the use of LPG will be discussed in a summit that we will hold for the first time in September, but we will extensively discuss this matter next year, before the end of this financial year. We will come back to Parliament to give a report on what we have learnt and where that puts us. In reality, poor people find it difficult to use LPG because of its cost.

As I said, we do not have gas in South Africa and we have, therefore, to get it from other countries. We buy it from other countries and we always clash with Mr Trevor Manuel because that increases the balance of payments because we have to use a lot of money to buy things such as gas from overseas countries.

This in the end leaves me as a buyer having to compensate for that. In truth, when poor people who use gas compare it with paraffin, they choose paraffin even though it is dangerous because it is what they can afford with the little money they have. The cost of LPG will be one of the items we will seriously discuss in order that we can assist poor people to afford to buy gas.]

Adv H C SCHMIDT: Madam Speaker, I understand the argument concerning the balance of payments, Madam Minister, and it is all good and well to implement and spearhead a campaign to make LPG appliances available to the public, but it quite honestly defeats the objects of the exercise when we as a country run out of LPG, as happened earlier this year. What, hon Minister, are you doing to ensure that the supply of LPG will not run out and is available at all times, particularly in light of the fact that it should be available to the poor? Thank you.

The MINISTER OF MINERALS AND ENERGY: Firstly, the study that we are conducting will ensure that we know the demand in the market, but we are also looking at our own capacity to supply the product. It is a challenge that we don’t have gas, and it is still a challenge.

We are going to import it. We need to know to what extent people will use it when we have imported it. Otherwise, it would be a futile exercise for us to import and not get the market. I think it’s important for us to do this feasibility study, and get our facts correct before we can move forward in terms of distributing the LPG. It’s important as one of the energy sources in South Africa, for us to be able to meet our security of supply of energy.

Resources for local economic development and progress made in this regard

1. Mr S M Rasmeni (ANC) asked the Minister of Trade and Industry:

   (1) Whether his department has allocated enough resources to its agencies, like Seda, Khula and NEF, for them to execute their mandate for local economic development; if not, why not; if so, what are the relevant details; (2) (a)what successful projects have been launched in the poorest provinces, (b) what progress has been made with regard to local economic development across the country and (c) what are the major constraints in this regard?

     NO2103E
   

The MINISTER OF TRADE AND INDUSTRY: Madam Speaker, it was the Minister of Finance who was disturbing me and I apologise for that. This is a fairly broad question for which there isn’t a straight answer because the issues differ from agency to agency, and very often the issues that relate to resourcing matters are subject to ongoing review and are often issues that are difficult to assess according to the different circumstances of each institution.

But, in relation to the Small Enterprise Development Agency, Seda, it is important to mention that this is an organisation that has been involved in a twin process of amalgamation where we are bringing together various institutions to create one agency and at the same time it was involved in the process of rolling out new infrastructure to support small enterprise development at national, provincial and local levels.

I think that, following largely the conclusion of that process, we have a better sense of the new scale of resources that are required and where the gaps are. For the record, for this year the Small Enterprise Development Agency has had a scale of resources of R253 million. With a better sense of where the gaps are, we have begun a conversation with the National Treasury around further needs for the organisation.

Secondly, in relation to Khula, more recently the work that it has been involved with has related to the expansion of its footprint, as well as the expansion of the scale of funding for small business support. This is something that has been done quite successfully by Khula and it is an ongoing task. To sustain and further scale up the resources there are issues of recapitalisation that arise in relation to Khula as the scale of resources can only be supported by the degree of capitalisation of the organisation. And again, in this regard, conversation has begun with the National Treasury to begin to explore those issues around possibly further capitalisation for the organisation.

Thirdly, the National Empowerment Fund has steadily grown in size, budget and operations over the past three years. This growth is envisaged to be sustained over the Medium-Term Expenditure Framework period. In the implementation and delivery upon its mandate the NEF has up until now each year nearly doubled its staff complement and the Department of Trade and Industry has supported these additional budget requests to allow the NEF to sustain this growth in resources and implement its operational mandate.

The NEF received transfers of R561 million from the department for 2006-07. The allocations for the MTEF period are R710 million, R470 million and R481 million, mostly for further capitalisation, and no additional funding requests are being made at this stage.

On the question about successful projects, there are few that we could cite, and these include projects funded through the NEF rural and community development programmes. One such project is a raspberry farm in the Amajuba District in KwaZulu–Natal funded in conjunction with the Industrial Development Corporation. The NEF funding portion for this project is R19,4 million.

A further transaction in support of local economic development is a community-owned dairy farm in the Middlesdrift area of the Eastern Cape, and R9 million has recently been approved for the project.

In an attempt to address the issue of local economic development, the DTI has launched the South African Micro Finance Apex Fund and the Local Enterprise Fund. To date, 707 business loans to marginalised groups have been made through the Apex Fund.

The Local Enterprise Fund was funded by the United Nations Office for Projects for three years in four of the nine provinces, namely Limpopo, the Eastern Cape, the Northern Cape and Mpumalanga. The aim was to provide financial and nonfinancial services to the four selected district municipalities in these provinces utilising the capacities of the provincial development corporations as channels for support and funding. The pilot … [Time expired.]

Mr S M RASMENI: Madam Speaker, I thank the hon Minister for the response. Minister, since you mentioned that these institutions are different, the question that arises is about co-ordination. What form of co-ordination exists between the department and local government with regard to these institutions so that it gives impetus to growth and development at local government?

The second question that I want to pose is: To what extent has the protocol meant to access the funds been made user-friendly to ordinary people at the local level?

Lastly, given the high rate of illiteracy and unemployment amongst our people, what administrative support does the department gives to strengthen drafts of business plans that are focused on the second economy? Thank you.

The MINISTER OF TRADE AND INDUSTRY: I think the issue of co-ordination is an important one and it happens at various levels. At one level within the broad DTI family we do have a co-ordination forum, which is the Council of Trade and Industry Institutions, where as the department we meet formally with all of the agencies that fall under the department. Within that forum we do have a subforum of the Development Finance Institution and second economy and small business support agencies, who would then deal with issues that are germane to the kind of work that they are doing.

But there is a second level where co-ordination happens, and in that regard we have started to strengthen our co-operation with the provinces through Minmec and, more specifically, we have developed a three-year work programme among the DTI economic affairs fraternity where there are very specific programmes that we have prioritised. Some relate to industrial development and some relate to small business development - that is the other level at which this co-ordination is happening.

The more challenging issue for us, of course, is the issue of co-ordination with local government because of its diverse nature, but we are working in that area as well because one of the challenges that faces us today as the Department of Trade and Industry is how we register a presence on issues of local economic development. That is work that is in its early stages of development but it is work that is being attended to.

I think the issue of user-friendliness, of products and services, is something that is attended to on an ongoing basis. With Khula, for example, they do not just facilitate finance, they also provide pre-loan and post- loan support to small enterprises. Also, one of the products provided by the Small Enterprise Development Agency is precisely aimed at assisting small businesses to develop their business plans. That is the work that is ongoing. Thanks.

Mr L B LABUSCHAGNE: Minister, up to half of all working South Africans are employed by small businesses and they are responsible for up to 80% of formal jobs created in recent years. Yet, in spite of government’s good intentions, policies and programmes, small businesses struggle under the dead weight of government bureaucracy and red tape. For example, Khula pleads for an expanded mandate regarding loan facilities and Seda is supposed to provide major support. Now, Seda offices are by and large dysfunctional and not fully rolled out yet.

Last week we learnt of another debacle in your department when a forensic investigation on Seda reported that a lot of money went on irregular expenditure.

Mr Minister, there are too many institutions and duplications. The question is: Why do you not institute an effective, simplified one- stop operation for small business support coupled with swift, strict action against miscreants? Thank you.

The MINISTER OF TRADE AND INDUSTRY: Madam Speaker, perhaps it is important to say that our objective is to make sure that the contribution of small business to growth and employment creation rises beyond the level where it is at the moment. All our efforts are geared to ensure that we can create the right institutional infrastructure and provide the right services, but also create the right climate for small businesses to succeed because it is one thing to intervene on the supply side by providing various forms of nonfinancial and financial support, but it is quite another to create an environment within which there is enough demand for the goods and services that are provided by small businesses.

That is why we’ve had to also identify things that we need to do on the demand side to make sure that there is that environment for consumption of the goods and services that are produced or supplied by small businesses. This is the context within which we’ve got to examine the various things that are being done.

The identification of the need for government to set aside certain products to be bought from small businesses is one such measure, but also the work that we have done through the codes of good practice on black economic empowerment creates further room for greater demand for the services of small businesses.

Secondly, let me say that at the moment small business is growing in South Africa at a faster rate than the Gross Domestic Product, and I think that is a good sign, and it will always be an ongoing challenge getting the institutional mix right and getting the services right for small business. It is not a task that you tackle and finish. It is an ongoing responsibility. We worked very closely with the Indian government and institutions. They have been doing this for decades and it is an ongoing challenge all of the time to improve and perfect the institutions and the services that you provide to small businesses. So, we just have to keep doing it all of the time for a very long period of time.

Democratic South Africa is only 13 years old. So, I think that we should not despair; we should just keep up the work that we are doing and keep on carrying out the refinements that are necessary in order to support small businesses.

With regard to the issue around the forensic audit that has been done at the Small Enterprise Development Agency, well, for us it is not a new issue; we instituted that forensic audit. It may have come to light for yourself, hon member, just recently, but the issues emanating from that forensic audit are being handled between the department and the board of the Small Enterprise Development Agency.

I am satisfied that we moved in terms of identifying what went wrong and moved also to strengthen the systems of the organisation because, as I said earlier on, this is an organisation created out of various agencies that we amalgamated. We had to look at the issues around strengthening the systems of those organisations. Thanks.

Prof E S CHANG: You say that the resources are different from agency to agency. I agree with you 100%. But, do you know how many resources of those agencies there are? Instead of asking you let me tell you something that I believe, which is that no matter which agency we are talking about, they must have human resources, knowledge, skills, financial and marketing resources and, most importantly the quick response of raw material resources.

Minister, can you tell me how you are going to address the killer of our economy at the moment, which is the absence of a quick response to the raw material resource? Thank you.

The MINISTER OF TRADE AND INDUSTRY: Is this still a question that is related to small business and the agencies? Okay. [Laughter.] I think that the issues around raw materials, generally speaking, are issues that affect the entire economy.

If we look, for instance, today at the levels of demand that we are experiencing for such things as steel and cement, it is an issue that is generally facing the economy and I think that to an extent those small businesses would face a crunch in terms of accessing those kinds of raw inputs. I am not sure, hon member, that I am quite clear about your question, but I would imagine that those would also impact on your smaller enterprises.

If we look, for instance, at the issue of steel in the country at the moment, we’ve been quite vocal and consistent in raising the issues of access to steel in terms of pricing. Our interest in raising this issue is because we would like to promote downstream fabrication and manufacturing, and access to steel becomes quite a critical issue and so it is also with a view to those smaller scale manufacturers that we have particular concerns around such issues as the pricing of steel.

But, I am really making an attempt to answer a question which I am not so sure I fully understand. [Laughter.]

           Launch of Motor Industry Development Programme

1. Dr P J Rabie (DA) asked the Minister of Trade and Industry:

   On what date will the new Motor Industry Development Programme (MIDP) be launched which will take the South African motor industry past 2012? NO2113E

The MINISTER OF TRADE AND INDUSTRY: Madam Speaker, the Motor Industry Development Programme Review Report that we received from the consultant had, as one of its recommendations, the introduction of a new programme and an improved programme. The development of a new programme is a long and detailed process, especially if one considers that it took about three years to design the current Motor Industry Development Programme.

Part of the work is to ensure that whatever programme is designed is both simple to administer whilst robust in controls to limit the risk of abuse. The programme also needs to be aligned to government’s goals and vision. The new scheme also has to be flexible to the extent that it allows for periodic reviews and amendments.

Finally, the new scheme needs to be designed so as not to be unduly costly to the country as there are competing needs for the available limited resources. In the next few months, work aimed at designing this new Motor Industry Development Programme will be led by Prof Anthony Black, who has been appointed by the Department of Trade and Industry to fast-track this process. He will be working with an interdepartmental team of the Department of Trade and Industry and National Treasury, including agencies such as the International Trade Administration Commission, as well as the SA Revenue Service. An update on the finalisation of the MIDP will be made available within the next six months. The new programme will be launched in due course. Thanks, hon Speaker.

Dr P J RABIE: Thank you, Madam Speaker and thank you, hon Minister, for your answer. The MIDP has been very much of a success, but according to reports in a number of financial magazines and so forth, the motor industry in South Africa is extremely perturbed about the delay in the finalisation of this motor programme. Is it possible to furnish the House with other reasons why there has been such a delay because our manufacturers compete with emerging countries like Russia, India, China and so forth and thousands of jobs are at stake? Their request is that this programme be speeded up so that they can negotiate contracts with their overseas counterparts. Thank you, Madam Speaker.

The MINISTER OF TRADE AND INDUSTRY: Madam Speaker, the critical issue here is that when we received the report as the Department of Trade and Industry, or upon receipt of the report by the consultant, it became quite evident to us that there is still further work that needs to be done in order to fully respond to the issues around coming up with a scheme that is in line with our international obligations; coming up with a scheme that will respond to the new objectives that we have set for the motor industry. It is this work that we have set out to undertake and achieve over the next period.

There is really no other reason, except the fact that we’ve had to undertake further work that will ensure that we can respond to the critical issues. We need a scheme that is World Trade Organisation compliant because it is not quite comfortable as a country to always be facing a risk of being challenged at the World Trade Organisation, as happened with the leather aspect of the Motor Industry Development Programme. So, we’ve had to pay very close attention to that issue of a scheme that will be confident, that we can implement without fear of being taken to the WTO.

I think the report enabled us to immediately achieve the necessary alignment of all the different instruments that are part of the MIDP to achieve harmonisation between now and the end of the life of the MIDP as it currently stands, whilst the work around a new scheme needs a little bit more time.

Let me say that last week we had a very good meeting with all of the CEOs of the original equipment manufacturers. It was a very good meeting that enabled us to identify the critical issues, to talk about the timelines and to look at the things that would enable them as the local operators to give confidence to their capitals around the work that is being undertaken in South Africa. We will be issuing a joint statement arising out of that meeting. I think the atmosphere and the environment between the department and the CEOs of the automotive companies are healthy.

Prof E S CHANG: Thank you, Minister. The IFP suggests that the MIDP be extended to 2020 with the condition that the car industry must be encouraged to gradually increase the use of South-African-made cars and components to over 85% by the year 2020. It is the only way to ensure that the motor industry is sustainable and competitive.

In 2005, the Minister of Finance, in response to arising questions, stated that Import Rebate Credit Certificates, IRCCs, were issued to the motor industry in 2003 to the value of more than R23 billion and more than R22 billion in 2004. Based on this, we estimate that IRCCs amounting to at least R100 million were issued to the motor industry for the period 2000- 06.

My question to you, Minister is: Have you ever started to see during these periods how many components in the factories were established from 2007 to 2012? I want to pose the same question to you. How many companies and factories will be built between 2012 and 2020? How many companies is the manufacturer going to establish?

Minister, do you agree with that?

Some motor manufacturers import the cars from their mother companies, which are in other countries. And it is easy for them to sweep the profits back to the countries they come from. It doesn’t benefit our country. The prices in our country benefit other countries. Ours are the highest in the car market at the moment. Thank you.

The MINISTER OF TRADE AND INDUSTRY: Indeed, a large quantum of resources has gone into supporting the motor industry through the Motor Industry Development Programme. That is why to us it continues to be an important issue to pay attention to, and it is important to recognise that the support we make available to the motor industry is support in the context of a lot of competing interests. We therefore have to continue to be concerned around ensuring that we get the maximum benefit for the country from the resources that we plough into any particular industry, for that matter. We will continue to be seized with the question of ensuring that we don’t make more resources available to any particular industry than is necessary or sustainable.

Secondly, I think around the issues of components manufacturing, there has been some growth in components manufacturing. Some of the automotive companies actually export components to other facilities from South Africa, but in terms of the industrial policy action plan that we have prioritised amongst four sectors, including the automotive sector, one of the key objectives that we are setting for the period up to 2020 for the automotive industry is to deepen local content and to increase components manufacturing in South Africa.

It becomes important as we move to expand components manufacturing to also expand the volume of production, because in order to sustain the components manufacturing you need increased volumes of production. That’s how you actually ensure that you can grow your local components manufacturing. This is one of the key objectives in terms of the industrial policy action plan. [Time expired.]

Ms D M RAMODIBE: Thank you, Madam Deputy Speaker and thank you, hon Minister. The ANC welcomes the initiative. Would the hon Minister share with the House the level of employment that will be generated by this MIDP?

The MINISTER OF TRADE AND INDUSTRY: Thank you, hon member. In terms of current employment levels, in automotive assembly we have 35 000 people employed and in components manufacturing we have 70 000 people employed. In the service industry of the automotive sector we have 100 000 people employed.

While I cannot give you figures of the sorts of employment levels that we would expect to attain, let’s say over the period for which we intend to double the volume of production, I think from the current employment trends it should be expected that we would be able to generate a lot more employment across the entirety of the value chain in automotive assembly and in components manufacturing, especially where we are growing the manufacture of components locally, as well as in the service industry because the size of the sector will actually be expanding.

   Progress made to stop the eviction and violation of farmworkers

1. Mr D M Dlali (ANC) asked the Minister for Agriculture and Land Affairs:

   What progress has been made to stop (a) the eviction of farmworkers by white farmers in particular since a nongovernmental organisation’s report on the matter on which the media reported and (b)(i) the human rights violations and (ii) beating of farmworkers by white farmers in northern KwaZulu-Natal (details furnished)? NO2106E

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: The hon Dlali is asking an important question. I will surprise him today. Normally there are two pieces of legislation which inform us of what we should do with regard to this problem of evictions. This problem is a medieval practice that continues. Normally we have the Extension of Security of Tenure Act, ESTA, and the Land Reform (Labour Tenants) Act, with which we are trying to handle this matter.

Actually, there are three pieces of legislation. I think that we should start using the third one for the purpose of working against these evictions as in accordance with the 1993 law, and that is the Provision of Land and Assistance Act as we amended it extensively in 1998 - as I’ve mentioned earlier today. We cannot generalise regarding the protection of farm dwellers’ rights. As you are rightly saying, there are serious things happening.

In problematic instances we have started using this Act, which for example, says that the Minister may, from money appropriate by Parliament for this purpose, acquire land for residential purposes and, further, for securing land and tenure rights may designate certain land and expropriate it.

Now, if you start doing it in a few instances, I’m sure this practice will stop in midair. We use the ESTA and the LTA. We are contracting firms of attorneys; we’ve developed a land rights management facility in the Department of Land Affairs; we are rolling out the national awareness campaign of rights; we are facilitating social mobilisation on these evictions and somewhere we always say, without explicating it really, that we will aggressively acquire land, including through expropriation, to secure long-term tenure security.

The cases that you’ve refer to are being followed up in court. It is unfortunate that these matters are continuing, as we see a stream of reportage on this matter. In the cases that you’ve reported the law will take its course. It is also true that this land support Act is our law and the government is expected to implement it. Thank you, Madam.

Mr D M DLALI: Thank you, Comrade Deputy Minister. Deputy Speaker, I’ve got this article here which clearly states the case of a child that has not been finalised until today. At that stage she was 14 years old. To date she has lost her dignity as a human being particularly because of the white commercial farmers. Today we are saying that we are free but the farmworkers are not free. Then I want to know from you, what are the short-term, medium-term and long- term mechanisms to address this particular crisis? It is clear that the white farmers are not prepared to handle the farmworkers as human beings. These things are still happening even today, particularly in northern KwaZulu-Natal where people are being terrorised almost every day. Thank you.

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: I agree completely with you. I must say quite honestly that we don’t have a separate short- term, medium-term and long-term plan. All that I can say is that we have to act seriously now; we shouldn’t just play it softly anymore. There are cases similar to the one you’ve mentioned being reported. We must now start acting in a determined fashion as we have the powers and the co-operation of at least two of the agricultural unions on this matter.

Those people who are not members of those agricultural unions are just out on their own and dealing with this in their own way. They are just trying to throw people off their land. We must then send the message and the only way they will understand is when the land is affected and only then it will stop. The legislation is in place so it should be the strategy. Then of course we can come and implement our facility. Our land rights management facility is implemented in any event and it has all these management tools available. But you must have a place where the buck stops. I think that our Minister has repeatedly said that this must end. Yet, it doesn’t end. If something which must end doesn’t end, then we must act as a responsible government and do something about it. Thank you.

Mnr A H NEL: Speaker, ek wil eerstens sê ek maak ten sterkste beswaar teen wat mnr Dlali gesê het. Hy het gesê dat alle wit boere verantwoordelik is daarvoor. Dit is wat hy gesê het.

Dit is absoluut nonsens. Ek dink die Minister behoort ook hierop te reageer. Daar is enkelinge. Die regte ding om te doen, is om hulle te vang en hulle voor die hof te bring en te straf. Om hier te kom staan en te sê: Alle wit boere is skelm en hulle vat mense aan en hulle slaan mense, is absoluut onwaar. [Tussenwerpsels.]

Speaker, hierdie vraag is gebaseer op die Nkuzi-verslag van twee jaar gelede. Hierdie verslag dien so elke ses maande, dan voor die Raad van Provinsies en dan voor die komitee van die landbou. Dit is ’n verslag wat strek oor 21 jaar. Hier word gesê, onder meer dat 67% van die mense wat van die plase af is, vandag in die stede sit. Hulle sê dat dit vir hulle beter is daar. Wat die verslag nie sê nie, is dat in hierdie selfde tydperk is ongeveer 10 … (Translation of Afrikaans paragraphs follows.)

[Mr A H NEL: Speaker, firstly I want to say that I object in the strongest terms to what Mr Dlali has said. He said that all white farmers are to blame. That is what he said.

It is absolute nonsense. I think that the Minister should also respond to this generalisation. There are individuals. The right thing to do is to arrest them, bring them before the courts and punish them. To come and stand here and say: All white farmers are villains and they take people on and beat people, is absolutely untrue. [Interjections.]

Speaker, this question is based on the Nkuzi report of two years ago. This report comes up more or less every six months, sometimes before the Council of Provinces and sometimes before the committee on agriculture. It is a report that stretches over a period of 21 years. Here it is mentioned, inter alia, that 67% of the people who are from farms now live in cities. They contend that life in the city is better for them. What the report does not mention, is that in the same period approximately 10 …]

The DEPUTY SPEAKER: Order, hon member. The time allocated …

Mr A H NEL: … is ongeveer 20 000 boere … [ … approximately 20 000 farmers were …]

The DEPUTY SPEAKER: … for the follow-up question … Will you please take your seat! Will you please take your seat, sir? Thank you. I think if you need to comment on that, hon Deputy Minister, you may.

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Ma’am, perhaps the member didn’t understand when I was speaking English. Let me tell him. Not that my English is that good, but …

… nee, my broer, luister nou mooi vandag vir my. Ons het nooit gesê ons veralgemeen nie. Daar is baie verantwoordelike boere. [Tussenwerpsels.] Nee, nee, nee, luister mooi wat … Jy moes ook geluister het wat die Minister sê. Daardie mense wat nie wil hoor nie, gaan ons nie net in die hof kry nie, maar ons gaan hulle grond ook onteien. Al is dit net vir daardie mense wat van plase afgesit word. [Applous.] (Translation of Afrikaans paragraph follows.)

[… no, my brother, listen carefully to me today. We never said that we are generalising. There are many responsible farmers. [Interjections.] No, no, no, listen carefully to what … you should also have listened to what the Minister said. Those people who do not want to take heed, we are not only taking them to court, but we are also going to expropriate their land. Even though it may only be for those people who are being evicted from farms. [Applause.]]

The DEPUTY SPEAKER: Hon members, let us then move on to the next question. What is the problem now? I can’t listen to all three of you at the same time, okay.

Mrs S V KALYAN: Madam Deputy Speaker, is there a chance for another follow- up on this question, please? The DEPUTY SPEAKER: Unfortunately there is. Will you please take that? Unfortunately for the people, I am saying that there is no more time allocated. There is time allocated.

Mr A H NEL: Did you say: “unfortunately, there is a question left”?

The DEPUTY SPEAKER: You did not understand me. Listen.

Mr A H NEL: What is this all about?

The DEPUTY SPEAKER: I think you have a problem. The people were saying that there was no other slot. I am saying to those people who are saying that there was no other slot, unfortunately, we do have another slot. What is your problem?

Mr A H NEL: I accept that.

Minister, laat ek aangaan oor die Nkuzi-verslag. Wat die verslag nie sê nie … [Minister, let me continue with the Nkuzi report. What the report does not mention … ]

The DEPUTY SPEAKER: Agb lid, laat ek eers … [Hon Member, allow me to first …]

Briefly I’d like to say don’t give a speech; ask the question because that is how you lost your opportunity on the previous time. You wanted to react to something and I can’t add any more time to the time allocated, so just go straight to the question and the Minister will respond. Thank you.

Mnr A H NEL: Wat die verslag nie sê nie, mnr die Minister, is dat in daardie selfde tydperk min of meer 20 000 boere ook van die grond af is. Wat ek wil weet is, word dit in ag geneem wanneer oor uitsettings gepraat word in die land? Dit is as gevolg van mense wat hulle grond verlaat dat die arbeiders ook die grond moet verlaat. Dit word nooit in ag geneem nie. (Translation of Afrikaans paragraph follows.)

[Mr A H NEL: What the report does not mention, Minister, is that during that same period about 20 000 farmers had also left the agricultural land. What I would like to know, is whether this taken into consideration when evictions are discussed in the country? It is as a consequence of people leaving their agricultural land that labourers also have to leave the agricultural land. This point is never considered.]

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: In short, the report is the only real statistical report we have. It was done under the auspices of the UN and it is an important report. Of course there are economic reasons for which farmers leave their land and go to do something else. But, it is quite a different question around tenure rights and the problem of evictions. It is not the same question you are asking and we can talk about it in more detail outside. Thank you.

Implications of state’s custodianship of mineral resources in terms of legislation

1. Mr S K Louw (ANC) asked the Minister of Minerals and Energy:

   What does the state’s custodianship of mineral resources, provided for by the Mineral and Petroleum Resources Development Act, Act 28 of 2002, (a) mean in terms of the advocacy of transformation and (b) seek to achieve in the long term?NO2097E

The MINISTER OF MINERALS AND ENERGY: Deputy Speaker, hon members, the answer to the question is as follows: The principle of state custodianship of the nation’s mineral resources confers on the Minister of Minerals and Energy the authority and power to drive, direct and enforce transformation in the minerals and mining sector.

The transformation referred to in the Mineral and Petroleum Resources Development Act, MPRDA, is driven and directed within the context of government constitutional obligations enunciated in the section 9 equality clause of our Constitution and the transformation policy and agenda of this government.

The mining charter and the social labour plans - that would include the environmental management plan, as well as the BEE plan - are the instruments in terms of which transformation is enforced in the minerals and mining sector.

As a country which respects the rule of law, failure to implement transformation vigorously would amount to the violation and the undermining of the very foundation and fabric of this democracy, as well as the Constitution of South Africa.

In this regard my department will continue to drive, to direct and enforce transformation in the minerals and mining sector without fear or favour. This government’s objective is to ensure that the South African minerals and mining sector reflects the demographic representation of this country.

I must say that the charter has gone a long way in ensuring that there is significant participation of previously excluded people in this sector. We have seen a lot of black people as partners in the industry. This is also happening at a professional level but we will ensure that the number of black-owned and controlled mining and minerals companies is increased over time and that the number of blacks at management levels in this sector is also increased.

We are confident that we will achieve the transformation objectives of this government through this Act. Thank you, Madam Deputy Speaker.

Mr S K LOUW: Madam Deputy Speaker, hon Minister, the Mineral and Petroleum Resources Development Act is anchored on three legs, namely the social labour plan, black economic empowerment and an environmental management plan. Now, what are the other challenges affecting the transformation agenda as advocated in the MPRDA?

The MINISTER OF MINERALS AND ENERGY: Madam Deputy Speaker, before I give the challenges that we are experiencing in the course of implementing this Act, I think we need to acknowledge that we can hail the charter as one of the most important instruments that have facilitated the participation of black people in the mining sector. But in terms of challenges, there are a number of them confronting us.

Fronting is a problem whereby there is a “rent-a-black” situation. Companies will employ black people as BEE employees or partners and in the process they come back to own the whole project. So, that is the problem and this amounts to dilution. Because our people do not have capital or funds available to enable them to participate as equal partners in these projects, they have to allow for dilution. This means, therefore, that the parent company would come up with capital, and in the process the smaller company would have to give away its rights to the parent company and, so to speak, the very rights go back to the parent company. That does undermine the transformation process.

The other challenge is the minimal participation of women in the industry. We still have a long way to go in terms of ensuring that more women participate in the industry.

The challenge also, as raised by the industry, is that some of the aspects of the Act are onerous for them and then it becomes difficult for them to comply with the requirements because they feel that some of these aspects are onerous. These are matters that we are beginning to address. For example, when it comes to the processing of the environmental management plan they do encounter problems when it comes to that, because of what the National Environmental Management Act requires of them.

So, we are beginning to address some of the areas without compromising on what the objectives of the National Environmental Management Act are. But we are looking at all of those. Those are the challenges that we have, Madam Speaker. [Time expired.]

Adv H C SCHMIDT: Madam Speaker, the MPRDA has set a basis for transformation and in particular BEE, but has definitely had a negative impact on investment, particularly international investment. The MPRDA Amending Bill, which has not yet been passed by Parliament but by the portfolio committee, in our view, definitely does not achieve the objectives of the Bill as identified by the hon Minister at the Mining Indaba earlier this year.

Now, there is a newspaper article in Business Day which basically says that South Africa is still not reaping the full rewards of booming prices for gold and other key commodities. Is the Minister of the view that the MPRDA Amending Bill addresses the important long-term objectives of the Act with regard to investment in the mining sector? We are of the view that there are major problems in that regard, Madam Minister. Thank you.

The MINISTER OF MINERALS AND ENERGY: Madam Deputy Speaker, I would like to dispute the point made by the hon member. We need to appreciate that the mining industry is characterised by booms and busts like any other industry. It’s cyclical in nature. You will experience booms at some stage and there will be busts at some stage. So, that’s the character of the industry. But to say that it’s undermining investment, I don’t agree with that.

This kind of Act is not unique to South Africa. Canada has a similar Act which opens things up for the participation of its indigenous people and at no stage has this disinvestment issue been a problem in that country. This particular Act has been designed along the lines of the Acts that open things up for the participation of black people in Canada. So, this is not new to South Africa. We undertook road shows, both nationally and internationally. We met with asset managers and got a sense of what the investors were concerned about in as far as the Act is concerned. We never had a sense that they were reluctant to come and invest in South Africa because of the MPRDA. So, all this kind of hullabaloo in the media is pure politicking. There is no evidence that shows us that the MPRDA has undermined investment in the industry.

The DEPUTY SPEAKER: Order! We now come to Question 325, asked by the hon D H M Gibson … [Interjections.]

Adv H C SCHMIDT: Madam Deputy Speaker, is there an opportunity for another supplementary question?

The DEPUTY SPEAKER: There is. But you don’t leave me to move from a question and when I go to another question make that request.

Adv H C SCHMIDT: Sorry, Madam Deputy Speaker, I did ask my colleague to press the button and it did flash.

The DEPUTY SPEAKER: Why didn’t you press the button yourself?

Adv H C SCHMIDT: I am sitting at the speaker phone, Madam Deputy Speaker and as you can see it’s about half a mile from my seat. [Laughter.]

The DEPUTY SPEAKER: That’s not an excuse but I wouldn’t really deny you an opportunity for a follow-up question. Would you put it then?

Adv H C SCHMIDT: Thank you, Madam Deputy Speaker. Madam Minister, we do not take up cudgels at this point in time for this exercise about the transformation in the BEE requirements. What we are saying is that if you compare Canada with South Africa - and we don’t dispute the fact that there might be relevant and similar legislation - look at the facts and the figures. Canada’s profit has increased – I’m talking off the top of my head, Madam Minister – by between 40% and 70%. Our increase has been 16%. There is clearly a big disjuncture between the South African position and the Canadian position where in terms of Australian law they … [Interjections.]

The DEPUTY SPEAKER: And the follow-up question is …

Adv H C SCHMIDT: Why is there a disjuncture? Why is there that big difference? Could you explain it, Madam Speaker?

The MINISTER OF MINERALS AND ENERGY: Chairperson, surely the hon member is talking off the top of his head and he has given us no facts. The top of the head will always be top of the head until you give me the correct facts. So, really I can’t respond to top-of-the-head facts. What you could do is put a new question, and then I can respond when you have the correct facts.

But, I think you must appreciate that change is not easy and embracing it has been a problem within the industry. Some of the companies in the industry have been very reluctant to embrace the charter under the pretext that they had a different interpretation of the various aspects of the law, for their own convenience.

So, I say that it has not been easy for them and for everybody to embrace the law – that is a fact – because transformation is not easy for anybody.

I also think that, although Canada has been successful in terms of achieving the intended purpose, we will be getting there. It is still new and it is only two years old. We only started to implement the Act in 2004. So, teething problems will be there and we are not denying that. But, to say that it is the MPRDA and transformation that is undermining investment in the country is not true.

Interventions and discussions around restoring the Zimbabwean economy

1. Mr D H M Gibson (DA) asked the Minister of Finance:

   (1) Whether he or his department is involved in planning a rescue operation in respect of the Zimbabwean economy; if not, what is the position in this regard; if so, (a)(i) for what plans and (ii) in what circumstances will South Africa commit funds and resources and (b) how much will South Africa spend in the (i) short and (ii) medium term;

   (2) whether any discussions have taken place with the Southern African Development Community, the European Union, the United States of America, the United Kingdom and the People’s Republic of China, as well as financial institutions such as the World Bank and the International Monetary Fund, aimed at involving some or all of them in efforts to revive and restore the Zimbabwean economy; if not, why not; if so, what are the relevant details?NO2107E

The MINISTER OF FINANCE: Madam Deputy Speaker, the hon Gibson is obviously not short on melodrama. His question is about whether we are involved in planning a rescue operation, kind of “De la Rey, De la Rey, sal jy sommer Zimbabwe ook lei?” [De la Rey, De la Rey, will you come and lead Zimbabwe too?] That’s the kind of question the hon Gibson is asking. Nothing quite as dramatic. There is work in progress.

The SADC Heads of State Summit met on 16-17 August 2007 and took account of the work already done by the executive secretariat and also work on the mediation which was requested by the political organ of SADC, and which is led by President Mbeki and seeks to mediate between the different political organisations, both parliamentary and nonparliamentary. The Ministers of Finance were then asked to take responsibility for some work in the arena of the economy. The leadership for this process would be by both the executive secretariat and the new Chair of the SADC Ministers of Finance, Minister Magande of Zambia. A task team has been set up, and the Ministers will meet in early November to take stock of the situation, by which time we should have an evaluation of the needs and demands of the situation but more importantly also, that over which Zimbabwe will want to take decisions in the short term.

The Deputy Speaker and hon members should be aware that just last week there was a very significant announcement in Parliament by the finance Minister of the devaluation of the Zim dollar that brings it much, much closer to black market rates now. But in terms of decisions about the currency in Zimbabwe that is quite unprecedented.

To get to the heart of your question, sir: Under what circumstances would government lend or give money? I think that the circumstances are well founded in section 213(2) of the Constitution. The Constitution is very clear about the fact that money may be withdrawn from the National Revenue Fund only in terms of an appropriation by this House. So, there is no ``under-the-table deal’’; it has to be by an appropriation and, if needs be, by special appropriation, as we will undertake this afternoon. That would be the route. If there are other circumstances such as a guarantee issued by government that would have to be provided for in terms of section 218 of the Constitution.

Since these are constitutional dictates, there is no room to manoeuvre around them – government will have to comply with the letter and spirit of the Constitution before it can provide support to any country in any circumstances. [Interjections.]

The DEPUTY SPEAKER: Order, hon Minister. I’ve a problem because you haven’t touched the second part of the question. I would therefore allow you a few seconds to do that.

The MINISTER OF FINANCE: In respect of the second part of the question – SADC – I have covered it, Madam Deputy Speaker. I don’t know whether the government and the people of Zimbabwe have been involved with the other agencies – the World Bank, China or the US. I have no knowledge of that, but as a sovereign state we are involved in the SADC relations.

Mr D H M GIBSON: Madam Deputy Speaker, I would like to thank the Minister for that undramatic and factual response to this dramatic question. There are of course many people in South Africa who care deeply about the plight of our fellow Africans in Zimbabwe and this is not confined to De la Rey’s fans. I think there are people on both sides of this House who feel the same.

Now, the Minister has made it quite clear what the constitutional position is. I would like to ask him whether that same constitutional position applies to the Reserve Bank and to the parastatals. I would like to specifically ask: Does the SA Reserve Bank give assistance or has it given assistance, direct or indirect, to the Zimbabwean government aimed at helping that government to meet its obligations?

The MINISTER OF FINANCE: I think the question on the Question Paper is about direct governmental assistance. In respect of the Reserve Bank, Madam Deputy Speaker, there is an arrangement. I think it was in 1965, at the time of UDI or the Unilateral Declaration of Independence, when an arrangement was struck between the then Rhodesian government and the SA Reserve Bank which provided for a credit facility in the Reserve Bank which was backed by Land Bank bills. The same facility has been rolled over and in about 1987 it was reopened. We were advised by the Reserve Bank that the guarantee facility isn’t even fully drawn down upon as we speak.

So, it’s a facility that central banks around the world have for those kinds of arrangements. Central banks around the world have to have places where they invest reserves and then negotiate these deals between central banks. There doesn’t have to be the same kind of public accountability for how they invest and where they invest them. The world knows, for instance, that the People’s Bank of China has invested $1,3 trillion in the US. It’s just the way in which the world works.

In respect of other state-owned enterprises, they are again our credit facilities, and this would apply in the current milieu primarily to an agency like Eskom that traditionally has sold electricity. From time to time there would be debates about a settlement. There has never been a refusal to settlement. There will be queries about the amounts in particular bills.

I know that, in reply to another question from the hon Gibson, the amount of R2,2 million that is being debated was given a lot of attention by some journalists. But on the larger scale of things, in bilateral relations R2,2 million is a rounding error. I think that Eskom would say what the Reserve Bank would say there has never been reluctance. The commitment of the government and people of Zimbabwe to meet their obligation is actually incredibly strong. We were all taken by surprise in late October 2005 when Governor Gono of the Reserve Bank of Zimbabwe decided to pay the IMF an amount of $178 million. They take these things quite seriously because they know that there might have to be a call tomorrow again.

Mr B A MNGUNI: Madam Deputy Speaker, could the Minister inform the House what role macroeconomic convergence is going to play in the region and in improving the economic situation of countries that are experiencing difficulties, such as Zimbabwe? The MINISTER OF FINANCE: Madam Deputy Speaker, in the Regional Indicative Strategic Development Plan – RISDP as SADC has named this document – there are certain timelines set to meet certain objectives. For instance, in 2008 we would like to have across all of SADC a free-trade area. That means that our tariff books must be aligned and we must then be able to facilitate trade between all the countries in the region.

The second trend of issues relates to the need to have macroeconomic convergence. We can see from evidence from around the world that countries that have moved within the same balance of payments pack of key macroeconomic indicators tend to be able to grow together. In the RISDP there are convergence criteria for fiscal deficits for balance of payment deficits or surpluses for inflation and so on. If you look at the common monetary area, CMA, or the Southern African Customs Union, which is the CMA plus Botswana, you will see that there is very, very high level of convergence.

Now, part of what we need to do is to bring in countries that are converging. Some may have to be brought in and then have their currency pack. There would be proposals along this side even with countries that are far out of line at the moment. But these aggravate some tough decisions because once you’ve taken that decision the group of countries that have taken it will need measures to ensure enforcement, like you see in the EU after the Maastricht criteria were set down. When the criteria were there, if a Minister of finance violated the deficit rule they had to go and account to their colleagues. And you need similar rules and you need some supernatural powers to be able to deal with some of these tough, tough issues.

Adv Z L MADASA: Thank you, Madam Deputy Speaker. Hon Minister, as a follow- up question to the second part of the question: The former Prime Minister of Britain, before he left office, responding to a question in the House of Commons about whether the promise to fund land acquisition in Zimbabwe had been met, mentioned the fact that his government was still committed but that they would rather put that money with an independent institution or have it monitored by the UN or the World Bank and that they would avoid involving Zanu-PF in the management of those funds. Do you know if anything has transpired regarding that kind of promise, because as we know it is central to this dispute?

The MINISTER OF FINANCE: Madam Deputy Speaker, let’s just go back: The Lancaster House Agreement had the direct involvement of the Thatcher administration representing the Conservative government. In the early period, because there were certain agreements built into the Lancaster House Agreement, including fixed representation for whites and a deferment of the agrarian reform issues in Zimbabwe, there was donor aid. I am told that in the late 1980s after the five-year period had elapsed there were some transfers. I don’t know how significant it has been. That’s what Whitehall would say - I think that Harare would have a different view on the matter and these issues must still be resolved.

Inevitably, I think that some agency is going to have to assist Zimbabwe, because all agriculture is driven by credit and you can’t have agricultural credit without collateral. If you want collateral then you need a deeds registry and if you need a deeds registry then you’ve got to resolve some of the issues that have happened in the context of land reform. These are matters that will be on the table to be resolved. The key issues depend on that interrelationship between an economic plan that Zimbabweans will develop and allow to be tested by peers and the speed of the political solution that Zimbabweans find for themselves.

Mr D H M GIBSON: Madam Deputy Speaker, I’m indebted to the hon Minister for the detailed answer which he gave to me, particularly concerning the facility available to Zimbabwe and the nature of it. Could he please tell me what is the extent of that facility that is available?

The MINISTER OF FINANCE: Madam Speaker, I don’t recall the figure off-hand, but it is not more than R90 million. [Interjections.] Is it R80 million? Pardon me, I just want to confirm. [Interjections.]

The DEPUTY SPEAKER: Order! The director-general should not participate in the debate. [Laughter.] We may agree to send a response of the hon Minister to the Ministry of Finance.

The MINISTER OF FINANCE: But it’s far less than R100 million. I have a sense that that balance of payments pack is between R80 million and R90 million.

Compliance strategy for state-owned enterprises regarding the employment of the disabled

1. Mrs H I Bogopane-Zulu (ANC) asked the Minister for Public Enterprises:

   What (a) is his department’s strategy to ensure that state-owned enterprises (SOEs) comply with the provisions of the Employment Equity Act, Act 55 of 1998, in relation to the employment of the disabled, (b) monitoring measures are in place in this regard and (c) sanctions have been developed to strengthen compliance by the SOEs? NO2090E

The MINISTER OF FINANCE (for the Minister of Public Enterprises): The question relates to the compliance with the norms of the Employment Equity Act by state-owned enterprises. I am advised that each of the state-owned enterprises has a shareholder compact with the Department of Public Enterprises. One of the performance criteria set out in there would be compliance with the requirements of the Employment Equity Act.

I am also advised that an independent check of this is available through the Department of Labour because the state-owned enterprises have to report in terms of the employment equity plans on an annual basis. So, there is a high level of compliance. The Department of Public Enterprises also secures from the state-owned enterprises a report to it quarterly on their performance in terms of the Employment Equity Act.

Mr C L GOLOLO: Madam Deputy Speaker, I also want to thank the Minister for his response to that question. Could the hon Minister further tell the House what punitive measures will be imposed on those SOEs that do not comply with this Act? What is the percentage of the physically challenged persons currently employed by the department?

The MINISTER OF FINANCE (for the Minister of Public Enterprises): Deputy Speaker, I don’t know what the answer to the second part of the question is. I think it is important that we understand that the norms of the Employment Equity Act are not optional. They must be complied with and the compliance involves moving the power from the shareholder compacts to the Department of Labour and that is where the enforcement happens.

I am pretty sure that all of the state-owned enterprises also have boards that oversee this and there would be reports on the instances contained in the annual reports of each of the state-owned enterprises. So, the targets will vary - some of them are more dependent on high-level, scarce skills. But all of the facts are readily available from the independent annual reports.

Dr S M VAN DYK: Agb Adjunkspeaker, as ’n mens in aanmerking neem, Minister Manuel, hoe swak sekere openbare ondernemings presteer, veral Denel, Alexcor en die Suid-Afrikaanse Lugdiens, dan weet ek nie of die situasie van hierdie openbare ondernemings noodwendig sal verander – of daar nou voldoen word aan die Wet op Gelyke Indiensneming of nie.

My opmerking aan u, Minister, is dat die SAL, byvoorbeeld, as ’n openbare onderneming, nou 2 232 personeellede wil afdank en ander personeel se voordele wil verminder. Daar is reeds kritiek in die openbaar uitgespreek dat SAL-bestuur met sy uitvoerende hoof, mnr Ngqula, wat R5 miljoen per jaar verdien, ’n uiters swak onderhandelingsproses volg met personeel en dat vakbonde dreig met ’n staking soos in 2005, wat die SAL nou tot ’n val kan bring.

My vraag aan u, Minister, is: Word wette wat op personeel van toepassing is net gehandhaaf wanneer dit die departement pas, terwyl dit in ander gevalle, soos nou met die afdankings om ’n openbare onderneming van finansiële ondergang te red, geïgnoreer word? Daar sal ook gestremdes, sekerlik, onder hierdie 2 232 afdankings wees. Dankie. (Translation of Afrikaans paragraphs follows.)

[Dr S M VAN DYK: Hon Deputy Speaker, if one takes into account, Minister Manuel, how poorly certain public enterprises are performing, especially Denel, Alexcor and South African Airways, then I don’t know if the situation of these public enterprises will necessarily change – whether there is compliance with the Employment Equity Act or not.

My observation to you, Minister, is that SAA, for instance, as a public enterprise, now wants to retrench 2 232 staff members, while reducing the benefits of others. Criticism has already been expressed in public that SAA management, with its chief executive, Mr Ngqula, who earns R5 million per year, is following a very poor negotiation procedure with staff, and that trade unions are threatening to go on strike, as they did in 2005, which could now be SAA’s downfall.

My question to you, Minister, is this: Are laws relating to staff only complied with when it suits the department, whereas in other cases, such as now, with retrenchments in order to save a public enterprise from financial ruin, these laws are ignored? There must surely be people with disabilities among these 2 232 retrenchments. Thank you.]

The MINISTER OF FINANCE (for the Minister of Public Enterprises): Deputy Speaker, I am not sure if that is a follow-up question, but I will leave it to your judgment. Let me restate, for the hon Van Dyk, the fact that the norms of the Employment Equity Act, which is a piece of legislation from this House, are not optional. They must be complied with. It is very important that we don’t suggest in this House that state-owned enterprises be spared or that we must have different norms. If we can’t meet the criteria set out in the Employment Equity Act then I think it is important that such enterprises should report to Parliament for their omissions. That is how the system should work.

In respect of the restructuring by norms - and there are comparatives available across the world - South African Airways is personnel-heavy and you can measure these personnel per aircraft. You can look at management - and you can look at it in any part of the structure - these are issues that have to be dealt with.

Nowhere in the world do people raise their hands and say that they would like to be dismissed or that they are working because they are just trying to fill the time. People are not easily separated from their places of employment. These are always difficult negotiations. There are going to be two sides of the story.

I am not directly involved as a line function but I have seen that the general manager for human resources at SAA has written pieces that have been placed in a number of newspapers. They have taken adverts and placed them in newspapers. When I fly, staff members talk to me about these issues. They have concerns, but I have the sense that there is much better communication than pessimists would have us believe.

          Strategies to keep maize affordable and available

1. Ms J L Fubbs (ANC) asked the Minister for Agriculture and Land Affairs:

   What strategies have been developed to ensure that maize as a staple food continues to remain affordable and available in sufficient quantities? NO2091E

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Thank you, Madam Deputy Speaker, for the question as well. Every evening my daughter checks the prices for me. Yesterday, sunflower oil was R3 400 and something per ton. Wheat is the one that is getting out of hand at, I would say, R3 100 per ton. Interestingly, a few months ago, the maize price rose over R1 900 per ton. Yesterday evening, it was reported as R1 550. At Pick ‘n Pay you pay R24,50 for 5kg of maize meal.

What I would ask in answering this question is that you must distinguish between sufficient food being available and the price of the food. Until now, I think the market has been responsible in ensuring that there is sufficient food available in the country for all our people, but there has been a sharp food price increase. We have the quantities of food available even by importing, like wheat, for example. The Free State didn’t have any harvest for about two years and it is producing more than both regions of the Western Cape. Wheat is actually the problem at the moment.

The free market was basically responsible, as the Food Price Monitoring Committee has indicated, for a 0,7% decrease in real food prices for the period from June 2003 to July 2006.

What is different from 2002 when maize prices went over R2 000 a ton, is that our social security has dramatically changed, both in the monetary value thereof as well as in the number of beneficiaries. That is why the Minister of Finance has previously indicated that the government was not planning to interfere in food pricing.

If you think, for example, of bread prices, hypothetically, if you take away something from the price of brown bread so that brown bread is more readily available than white bread at a lower price, your retail markets will just put up the price of brown bread until it’s almost just under the price of white bread, and they will take what could have been VAT. That is simply what happens if you interfere with the food prices. But our social security plans and programmes must be checked regularly to see whether we have to increase that, or whether we should have food price increases. For example, as we did once before for a limited period, we could use food parcels for target communities.

The conclusion is that the market is responsible for the availability of maize and it has performed rather well over the last 10 years. [Time expired.]

Ms J L FUBBS: Thank you, Deputy Speaker and thank you to the hon Deputy Minister as well. I must say that you and I share two things: My grandson went shopping for me and unfortunately he can’t reach properly, or as high as your daughter. He was looking at the lower shelves, but that’s by the by.

I do, of course, study and enjoy the agricultural magazines and so on, but that again is something else.

When you go out … [Interjections.] … and the question is coming and thank you, you are not the speaker yet! [Laughter.] What I want to ask is this - the question is a very simple one, and the concern remains that maize is one of our staple foods and there is definitely a trend among the commercial farmers to recognise that shifting their maize into biofuels will generate them greater revenue. My concern for the people of our country, who are mostly poor and in the low-income group in the rural areas … [Interjections.]

The DEPUTY SPEAKER: We don’t have time for your concern, but we have time for your earlier question, which the Deputy Minister did not answer and your follow-up question was also not related to your initial question. So, Deputy Minister will you please give us the department’s strategies to make sure that maize remains protected.

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Thank you, Madam Deputy Speaker. That was correctly said. The strategy is basically to keep the market responsible for the sufficiency of food, but not to interfere with the pricing of maize. That is the strategy at the moment and then your backup strategy is social security plans when people can’t afford the basic foods.

But, maize is more than just maize meal. It is like gold used to be in the old days for the economy as a whole. It is the basis of food pricing in South Africa. Marvellous things are thus produced from maize in general, but it gives the trend for the whole food pricing market. So you have to watch it all the time, but interference will not - I strongly believe - give the results that you will have. You must give the assistance for food security in another way, otherwise, you are going to get scarcity of production.

At the moment a lot of emerging farmers in maize farming and cattle farming depend on maize farming, especially yellow maize. We have seen that if the price goes too low for them, like we experienced with meat, emerging farmers would suddenly start to sell cattle on a far larger scale than previously, because the price of meat was going up. We must get that balance and keep in our minds that emerging farmers must eventually, if we reach figures of over 30%, be able to make a living, otherwise no one would want to go into farming, and certainly not maize farming. But maize farming is the basis in the sense that our whole meat industry is, for example, dependent on that. At the moment I am worried about the rain in the Free State because that’s where the majority of wheat is being produced. Thank you.

Mnr A H NEL: Dankie, Voorsitter. Adjunkminister, ek stem basies saam met wat u sê oor inmenging in die hele ketting, maar daar ís sekere strategieë wat gevolg kan word. As ’n mens kyk na wat die WHO-ooreenkomste is wat ons het en wat oor die wêreld geld, kan ons ’n bietjie hoër tariewe hef. Die graanboere het verlede jaar vir daardie hoër tariewe gevra, maar ongelukkig het die landboudepartement hulle nie gesteun nie, en dit is my vraag: Moet ons nie daardie roete volg nie, want dan sal die boere meer produseer omdat hulle sekerder is van ’n sekere prys? Moet die landboudepartement nie voortgaan en praat met hulle kollegas in Handel en Nywerheid sodat daardie tariewe ’n bietjie nader kan kom aan waarvoor die graanboere vra nie? Baie dankie. (Translation of Afrikaans paragraph follows.)

[Mr A H NEL: Thank you, Chairperson. Deputy Minister, I basically agree with what you are saying about interference in the whole chain, but there are certain strategies that can be followed. If one looks at what the WTO agreements are that we have and that are valid all over the world, we can impose somewhat higher tariffs. The wheat farmers requested those higher tariffs last year, but unfortunately the Department of Agriculture did not support them, and this is my question: Is that not the route that we should take, because then the farmers will produce more, since they are more assured of a certain price? Should the Department of Agriculture not go ahead and talk to their colleagues in Trade and Industry, so that these tariffs can be brought closer to what the wheat farmers are asking for? Thank you.]

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: No, the DTI recently investigated the pricing with regard to maize and there was also an investigation into wheat, which only had a low tariff, but in maize the tariff model was investigated. It was, in the end, found that it is functioning well at the moment and ensures that when domestic prices are high there is no tariff on maize imports. It is only when domestic prices are going the other way that your tariff kicks in. I think that is working well; in wheat we want more engagement from the side of agriculture in the tariff process, and we are sure we are getting there. Thank you.

               Financial misconduct at national level

1. Mr A H Nel (DA) asked the Minister for Agriculture and Land Affairs:

   With reference to the Report of the Public Service Commission on Financial Misconduct for 2005-06 which reveals that the Department of Land Affairs were responsible for R20 million of the R30,6 million financial misconduct at national level, (a) how did this financial misconduct occur, (b) who was responsible for this misconduct and (c) why has none of this amount been recovered to date? NO2111E

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Chairperson, this question is about the Public Service Commission and financial misconduct. There was a parliamentary question in this regard. Now, the allegations were made of inflated prices of land purchase for restitution purposes in Mpumalanga when there was awareness on the part of the restitution commission and the Ministry of these allegations.

There were two investigations ordered by the Department of Agriculture and Land Affairs; one by forensic auditors and one by a private evaluator. The forensic auditors actually did not indicate particular potential losses. That is not where the amount of R20 million comes from.

The private evaluator expressed an opinion in respect of prices paid, to the extent that they were inflated by about R20 million more than the market value of the relevant properties. Payment was stopped for those projects which were still in progress and the actual loss therefore was not R20 million - that just comes from that evaluator’s report.

Misconduct charges were brought against the official and there was severe pressure to charge the responsible commissioner. He went to the Labour Court to force the department to charge him and to reinstate him, and eventually an order was made to charge him before a certain date. He was then formally charged. By that time, the auditor’s report was out, but the private evaluator only issued the preliminary report of another evaluator.

An amount of R20 million was not mentioned in the charge sheet. He was charged with 13 charges and alternatives to each. He was found guilty on three main charges or alternatives and given a chance by the then Minister, on the recommendation of the chairperson, to resign or be dismissed. He subsequently resigned.

The department sought the advice of the state attorney and senior counsel on the matter of possible recovery of the money. The advice indicated that the department not be successful with any such claim unless the police investigation uncovered evidence of fraud or corruption relating to the R20 million. To date the police investigation has failed to uncover any such evidence. If new evidence comes to light, the department will obviously seek new advice and reconsider its position. I thank you.

Mnr A H NEL: Voorsitter, dit is ’n baie ingewikkelde verduideliking, maar baie dankie. Ek is nou so ’n bietjie meer op hoogte. Met ander woorde, die departement het die ding opgegee vir die Staatsdienskommissie, terwyl hulle nog net van die eerste gedeelte bewus was. Daarom het hulle nou die R20 miljoen aangedui en dit terwyl daar niks is nie. Gaan die departement probeer om die geld terug te kry? Dankie.

[Mr A H NEL: Chairperson, that is a very complicated explanation, but thank you anyway. I am a bit more informed now. In other words, the department gave it to the Public Service Commission, whilst they were only aware of the first part thereof. They have thus indicated R20 million and that while there is nothing of the sort. Will the department try to get the money returned to them? Thank you.]

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Yes, as I’ve said, that depends on the police investigation. Dit hang af van die polisie-ondersoeke. As daar bewyse van bedrog of korrupsie gekry word, sal daar voortgegaan word met die klagtes, maar ons moet op advies van die Staatsprokureur en senior advokaat optree in hierdie verband. ‘n Mens moet maar luister na die regsadvies wat jy kry. Hul advies was dat ons nie suksesvol gaan wees nie, tensy die polisie vir ons getuienis kan bring oor korrupsie en bedrog. Die R20 miljoen was net ’n bedrag wat ’n privaat waardeerder genoem het. Dit is nie ’n … al die transaksies in daardie verband is toe al gestop. So, jy kan nie sê dit is R20 miljoen wat verlore is nie. Dit is juis die probleem. Dankie. (Translation of Afrikaans paragraph follows.)

[It depends on the police investigations. If proof of fraud or corruption are uncovered, the charges will be proceeded with, but we must act on the advice of the state attorney and senior advocate in this regard. One should listen to the legal advice that one gets. Their advice was that we will not be successful unless the police bring us proof of corruption and fraud. The R20 million was just an amount that was mentioned by a private evaluator. It is not a … all the transactions in this regard had been stopped by then. So you cannot say that it is R20 million that is lost. This is precisely the problem. Thank you.]

Ms C NKUNA: Inkomu eka wena Mutshaviseki Mutshami wa xitulu. [Thank you, hon Chairperson.]

The HOUSE CHAIRPERSON (Mr G Q M Doidge): Order! Hon member, let’s get the hearing device working. Are you connected, hon member? You may proceed, hon member.

Ms C NKUNA: Hon Deputy Minister, having listened attentively to your response, I would like to commend the Ministry and the department for the steps taken in this regard in ensuring that clean and good governance is upheld. Hon Deputy Minister, what mechanisms have in place or do you intend to put in place to ensure that such incidences do not reoccur?

The DEPUTY MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Thank you Madam, through you, Chairperson, for the compliments to the department. The Ministry is very strict about this matter and different forensic audits are being conducted. In the end, you have the forensic audits; you have controls through your Chief Commissioner of Land Claims and the restitution commission and you have training and supervisory schemes in the offices of the Restitution Commission, as well as Land Affairs and everywhere else, of course.

The problem is to keep the pressure up that under no circumstances will anything be tolerated which smells of corruption. Now, with regard to these evaluations, we have decisions of the Land Claims Court as well as the Constitutional Court which say that it’s an extremely relative matter and that you will have one evaluator saying it is six million while another evaluator will come and say it is 10 million. That is why the market value is such an uncertain factor to base land reform and restitution on.

In fact, if you closely read the Constitution, especially section 25 (4), you will see that market value actually is not the guide for land reform and restitution and we will certainly keep it under close control and as this has been proven we will certainly follow up any possible allegations of fraud or corruption. Thank you.

The HOUSE CHAIRPERSON (Mr G Q M Doidge): That concludes the time allocated for questions. Before I proceed to the next Order, I want to recognise the Minister of Finance who is going to provide further clarity on question number 325.

The MINISTER OF FINANCE: Thank you very much, Chairperson, for your indulgence. In responding to one of the supplementary questions asked by the hon Gibson in respect of Question 325, I said I thought that the facility the Zimbabwean government has with the Reserve Bank is around R90 million. I would just like to confirm for the record that the figure is R75 million, that it has been there since 1 March 1990 at that level and that it is drawn down to the value of R73,2 million as at 31 July 2007. Thank you.

See also QUESTIONS AND REPLIES.

               SPECIAL ADJUSTMENTS APPROPRIATION BILL

                       (First Reading debate)

The HOUSE CHAIRPERSON (Mr G Q M Doidge): Before I recognise the Minister, hon members, I just want to point out that copies of the Portfolio Committee on Finance’s report on the Bill have been put on all members’ desks.

The MINISTER OF FINANCE: Chairperson, hon members, today we take the unusual step of tabling a Special Adjustments Appropriation Bill.

Although we have occasionally had to table second adjustments budgets in previous years, this is the first time that an appropriation has been required before the usual adjustments budget which is scheduled to be tabled in this House on 30 October.

We tabled a Special Adjustments Appropriation Bill owing to the fact that in this case we unfortunately do not have the option of waiting for the normal adjustments budget. Both the government in general and I as Minister of Finance have been hesitant to introduce more than one adjustments budget a year.

Where we have done this, it was either due to an emergency or a clearly and unambiguously unavoidable situation. While the items that we request additional resources for today cannot be considered a natural or economic emergency, we table this Special Adjustments Appropriation Bill after exploring all options to meet the cash flow requirements in this instance. Not providing this financial support may in some cases cost government more than the amounts requested.

The first of these cases relates to stadiums. We want to ensure the speedy completion of our 2010 Fifa World Cup stadium projects. In the Budget in February this year we announced an amount of R8,4 billion over four years for the 10 stadium upgrade and construction projects.

Today we are pleased to announce that in certain cases construction is proceeding faster than anticipated. For this reason we are requesting that R1,9 billion be brought forward from next year’s allocation to the present year.

In addition to faster progress on the projects the additional funds will be used to prefund the procurement of roofing structures, which in some cases involves importing expensive fabricated steel products. Early payment reduces the risks of cost escalation and currency risk. Particularly the Soccer City Stadium project in Johannesburg and the Moses Mabhida Stadium in eTthekwini entail complex roofing structures.

Since we announced the R8,4 billion ceiling on the stadium projects, we’ve had a number of requests for additional resources. We’ve been firm in our resolve not to provide additional resources for these projects and we commend those city municipalities for ensuring that we do not exceed the financial limits on all of these projects.

A review of all 10 stadium projects shows that we’re on track to meet the deadline set by Fifa. This is again testimony to South Africa’s ability to organise and manage large international projects to the highest standards. We wish each of the host cities and local organising committees well in their endeavours to host a memorable tournament.

Hon members, in 2004 government signalled a strategic shift in its approach towards state-owned enterprises and our development finance institutions. We signalled a stronger role for these enterprises and institutions in driving our developmental agenda.

When we took this decision we were mindful of the fact that in some cases our enterprises were not well managed in the past and not well capitalised, and that governance and oversight were sometimes lacking.

In implementing this strategy we’ve had to work tirelessly in increasing this strategic focus on improving management. Our approach attempted to steer away from the sterile ideological debates about whether the public sector or the private sector was better able to deliver the services to businesses and households. Instead, we’ve adopted a pragmatic approach that recognised that there were areas where government had to exit from providing the service, but there were also areas where we felt that the public sector could play a positive role in driving investment.

In the Budget in February we announced a number of developments in state- owned enterprises and development finance institutions in which we’re working to assess business plans and increase the strategic focus. In particular, we informed Parliament that we were reviewing the business plans and activities of the Pebble-Bed Modular Reactor project, Sentech, the Land Bank and Broadband Infraco.

In respect of Sentech we are pleased to announce today that an agreement has been reached on the business plan of Sentech. Government has approved Sentech’s role in developing a national wireless network that can be used by a number of enterprises, including private companies, to enhance wireless Internet connectivity both to businesses and households. For this purpose government is providing R500 million as an initial capital investment in the infrastructure of Sentech.

The Land Bank is a key development finance institution, providing access to credit in the agricultural sector. Clearly it’s a very topical issue; hence so much time was consumed this afternoon in debating matters relating to land and agriculture. The bank has played a pivotal role for almost a century in the development of commercial agriculture in South Africa. If we are to expand our agricultural industry and, in particular, if we are going to succeed in bringing black farmers into the agricultural supply chain, the Land Bank is going to have to continue to be a key player in this sector.

There have been difficulties, but we must also report progress. Given the progress that we have made, and noting the low level of capital on the balance sheet, it’s prudent for government to recommend an injection of R700 million in cash and the provision of R1,5 billion by way of a government guarantee to ensure the sustainable operations of the bank.

I will give this House the assurance that I will continue to work with my colleague, the Minister for Agriculture and Land Affairs, but also with the board of the bank to ensure that we can have the desired outcomes.

In respect of the Pebble-Bed Modular Reactor, members of this House will be aware that considerable progress has been made in recent years in the design of an entirely new-generation nuclear power plant, know as a PBMR. The construction of the demonstration plant has now begun, for which government has made a financial commitment of R6 billion over three years.

This is a commitment that was made in the Budget Speech in February this year. At the time of the Budget, the amount required this year and the details of the business plans had not been finalised. At this stage external funding for the project is not available and an amount of R1,8 billion is therefore required for the period April to December this year.

This amount will allow for the project to fund the ongoing recurrent expenses as well as provide for contractual obligations related to the design components of the demonstration plant.

In respect of Alexcor, I think we all are aware of the government’s efforts to exit from diamond mining, but there was a need to resolve the protracted land claim with the Richtersveld community. A deed of settlement was signed on 22 April this year. The settlement constitutes the conclusion of a lengthy court case in which billions of rands were claimed.

There’s now a joint venture with the Richtersveld Mining Company, which will become the owner of converted land mining rights that currently belong to Alexcor. Funding of R44,7 million is required for the operational costs and working capital of the mine.

The final item in this special appropriation relates to an indemnity claim in favour of Denel’s aerostructure subsidiary. The claim is currently being verified by auditors appointed by the DPE and an amount of R222 million is required as provision against this contingent liability.

In conclusion, in each of these cases it’s not possible to wait until the normal adjustments at the end of October. It’s not the intention of government to request approval for the appropriation of resources more often than is absolutely necessary. If we could have avoided the need for a special adjustments budget today, we certainly would have done so.

Turning our state-owned enterprises and development finance institutions around so that they can become effective tools in the hands of a developmental state requires huge efforts on all fronts.

I confess that in some cases we’ve been disappointed with our efforts to focus the activities in a manner that ensures financial stability. We have much more work to do to improve the quality of management and the strategic direction of these enterprises. However, as a shareholder, it is also our obligation to ensure that these entities do not engage in risky financial arrangements that would inevitably cost consumers more in the long term.

It is our obligation to provide funding, after due diligence has been completed, where these funds are required to increase investment or to lower the cost of doing business in South Africa. In total an additional appropriation of R5,195 billion is required for the Departments of Agriculture and Land Affairs, Communications, Sport and Recreation and Public Enterprises.

The anticipated revised total expenditure, and how it is to be financed, will be dealt with as usual in the Medium-Term Budget Policy Statement to be tabled here on 30 October this year. I thank you very much. [Applause.]

Mr K A MOLOTO: Chairperson, hon members, allow me to focus on the Special Adjustments Appropriation Bill of three entities reporting to the Department of Public Enterprises and briefly speak on the Land Bank. The hon Mbili will be dealing with the special appropriations for the Department of Sport and Recreation and the Department of Communications.

State-owned enterprises play a critical role in the realisation of our developmental objectives. They make a critical intervention in key sectors of our economy. Therefore, it is important that state-owned enterprises should operate efficiently and rely less on a constant cash injection from the fiscus.

It is understandable for government to inject cash in state-owned enterprises during their initial start-up phase. After the initial capitalisation, it is assumed that they have to rely on the strength of their balance sheet to borrow from capital markets. Obviously, we do not want to burden the state-owned enterprises with so much debt to the extent that they would have to increase their tariffs sharply to compensate for much-needed capital expenditure and investment.

The sale of noncore businesses and assets is critical to the strengthening of their balance sheet. It is also understandable for government to recapitalise state-owned enterprises under special circumstances, especially when undertaking a major turnaround strategy.

I must also caution that for such a strategy to succeed, Parliament has to exercise proper oversight on the activities of the state-owned enterprises and their turnaround strategies. Failure to do so will lead to state-owned enterprises constantly depending on the fiscus for capital injections.

The core business for Alexcor is the mining and marketing of diamonds sourced from the land and sea. The 2007 annual report of Alexkor indicates that by the end of October 2006 the company was facing increasing operating losses, resulting in a depletion of the cash reserve to the extent that government had to provide the amount of R32,9 million to enable Alexkor to continue operations. The annual report indicates that Alexcor’s solvency position remains critical given the limited operating cash reserves. The report indicates that Alexkor will continue to operate at a loss until the recapitalisation programme of the joint venture with the Richtersveld community is agreed upon and implemented. The R44,7 million allocated to Alexcor in this special adjustment is meant to cover the operational expenses until the end of March 2007. It is estimated that by March 2007 an agreement would have been reached with the Richtersveld community on the recapitalisation of the joint venture agreement. We hope that the turnaround strategy considered by Alexcor on the transfer of noncore activities from the mining operations to the relevant structures will be successful.

Regarding the Pebble-Bed Modular Reactor, government expects nuclear power to make a significant contribution as a primary source of electricity. Government has made a commitment to finance 51% of the capital requirements of the Pebble-Bed Modular Reactor.

The development and commercialisation of the PBMR will unfold in four phases: Phase 1 would involve the design and construction of the demonstration power plant at Koeberg and the pilot fuel plant at Phelindaba. Phase 2 would involve the commercial phase, which entails the supply of power to Eskom. Phase 3 would involve the export of electric nuclear power plants to the rest of the world, and phase 4 would involve the development and supply of Pebble-Bed Modular Reactors for process heat applications.

The R1,8 billion allocated to the PBMR is an interim arrangement to finance the operational expenses and meet contractual obligations until the end of December 2007.

The 2007-08 corporate plan of the Land Bank indicates that in the past years the Land Bank’s net capital and reserves have been reduced substantially due to large bad debt write-offs and provisions for bad debts in line with new accounting standards.

This led to a reduction of the Land Bank’s capital adequacy ratio to below 10%. In fact, the current bank capital adequacy stands at 7%. This has major implications as it impacts negatively on the bank’s ability for growth and funding development. This makes private sector investors nervous as they assume a greater risk for each of the bank’s loans.

National Treasury gave the bank a R1,5 billion letter of support to reduce the concerns of the financial markets. The R700 million allocated to the Land Bank in this special adjustment is meant to address the capital adequacy ratio and liquidity shortfall.

The R222 million for Denel is required to pay for a claim against the government guarantee granted to Denel. Denel is making major progress in the implementation of the turnaround strategy it has adopted. There are significant contracts that have been secured in the domestic markets. We hope that it will break even in the coming few years.

Lastly, let me thank the chairperson of the portfolio committee, Mr Nhlanhla Nene, and also the members of the portfolio committee for insisting that heads of these state-owned enterprises and entities should give a full explanation of why they need the money. Indeed, it was a very robust engagement. Thank you. [Applause.]

Mr D H M GIBSON: Chairperson, we know from the Bible that the Lord loves a cheerful giver.  I regret to tell the Minister that today I am a little reluctant as a giver.

Members of the Portfolio Committee on Finance at the hearings on the Bill showed their teeth. The message was conveyed loudly and clearly to the National Treasury and the other departments concerned that a special adjustments appropriation is very special indeed and should not be resorted to lightly.

There was a feeling in the committee that some of the items in this Bill should have been foreseen and might therefore have been included in the main Budget, while the ordinary adjustments appropriation, to follow next month, could have been used for some of the other amounts. I am relieved to have the hon Minister’s assurances today in this regard and I am sure that has impressed all the departments concerned.

I must say that my colleague, the hon Ms Smuts, says that the amount for Sentech could and should have been foreseen and is because the Minister and the Deputy Minister are not properly in control of their department. They don’t know what is happening there. [Laughter.]

Let us deal with a few of the items. One of them is the Pebble Bed Modular Reactor. This is experimental and requires continued financing.  It was a political decision to continue with this project and we have now spent R4,2 billion since 1999. There is a worldwide swing towards nuclear energy.  If the Pebble-Bed Modular Reactor is a success it could have huge implications for South Africa.  My party supports it because we are green and we therefore support clean energy.  We will keep a beady eye on the PBMR to help ensure that taxpayers receive value for money.

Let us talk about Alexcor. This must be the only diamond mine in the world that makes a loss. I have a concern about whether there is a reasonable prospect of returning it to profitability.  We are now entering into an arrangement in which the people of the area are going to have a share in this. I hope they are going to have a share in something that is worthwhile and not in something that makes a loss. The taxpayers have invested hundreds of millions of rand in this and we haven’t received any recent dividend.

As far as Denel is concerned, we have some doubts about the amount there but I intend pursuing this at a later stage when I have got more time.

Let us have a look at the Land Bank. They are receiving a big dollop of money. It is a fact that many farmers in South Africa are dependent on the Land Bank continuing and it would be a disaster for agriculture if the Land Bank were to go insolvent. But, surely, it is more than time that there was a proper turnaround strategy agreed upon, put into operation and more than that that the turnaround actually happened. A financial institution such as this should not operate at a loss.

I would like to deal briefly with the 2010 Soccer World Cup. We are prepared to support these payments to local authorities for the erection of football stadiums. It did concern me greatly to hear from National Treasury that inadequate planning has been done for the use and management of the stadiums after the World Cup. I want to suggest to the hon Minister that we need some rigorous cross-questioning of local authorities that fail to have viable plans in place when the taxpayer is providing hundreds of millions of rand to help them to construct stadiums. We must avoid having white elephants after our successful 2010 experience.

The hon Minister may be relieved to know that despite the few misgivings I have expressed the DA will vote for the Special Adjustments Appropriation Bill. I thank you. [Applause.]

Mr N SINGH: Chairperson and hon members, I thought it was the preserve of the IFP was to speak about elephants. I was also going to talk about white elephants and hon Gibson has already said something about them. Maybe that is where I should start, hon Minister.

The IFP support this Special Adjustments Appropriation Bill, but we note it is an unusual step and it is only the second time in the history of this Parliament that there has been a special adjustment - we are informed that the last time was when there had been a disaster of some sort in the country.

However, I don’t think it was possible for us in the committee to suggest any amendments or to amend this Bill, even if we were satisfied that some of the departments should not have gone this route of a special adjustment, because if I look at the Constitution, section 77(3) says that an Act of Parliament must provide for procedures to amend money Bills before Parliament. I am sure the hon Minister of Finance may introduce such a Bill in due course in this House.

As far as the funding for 2010 stadiums is concerned, we are pleased that they are ahead of schedule, but I want to re-emphasise the point made by hon Gibson that the hon Minister, as he has assured us, would work with the Department of Agriculture and Land Affairs in terms of the R700 million. Here as well we need the hon Minister to give us an assurance that business plans submitted by host cities include sustained economic viability of the stadiums post 2010. We also would like the hon Minister to note that we were informed by Land Bank officials that the R700 million would be used for development programmes and would be ring-fenced as such. I think it is important that that money be used for that.

With regard to the PBMR, we would just like to know whether the foreign exchange rate was factored into fluctuations because a lot of the services that are being acquired are denominated in foreign currencies.

We support the Bill and we trust that the relevant portfolio committees will continue to interrogate these amounts that have been granted to each of the departments. Also, with regard to the PBMR, hon Minister, we have been informed that since 1999 R4,2 billion has been spent and in total R21 billion has been spent. So, that is why it is important for the exchange rate fluctuations to be taken into account. [Time expired.] We support the Bill.

Mr J BICI: Chairperson, the UDM has no problem with the appropriation of additional funding for the requirements of Sport and Recreation South Africa. The funds are intended for use by host cities of the 2010 World Cup under the 2010 Fifa World Cup Stadiums Development Grant provided for in the Division of Revenue Act.

We do, however, have a problem with the appropriation of additional funding for the requirements of the Department of Agriculture and Land Affairs for buying land and the Department of Public Enterprises for Denel. These two state-owned enterprises, that is, the Land Bank and Denel, show weaknesses in their administrations, but to oppose the appropriation of funding to them would be to shut them down. Shutting them down would not be in the interests of South Africa as a result of the roles, aims and objectives of these institutions. It is imperative that the funding of R5,2 billion be granted.

Emanating from the aforesaid, the UDM supports the Bill. Thank you.

Mr S N SWART: Chairperson, as far as the additional R700 million to the Land Bank is concerned, committee members expressed grave concern at the performance of the Land Bank, in particular the rapid turnover of senior staff and alleged disappearance of assets, and have queried the sustainability of the bank’s continued operation. We trust, however, that the new business model will enable the Land Bank to be able to fulfil its mandate.

As far as the PBMR is concerned, we undeniably need additional electrical power sources and therefore we should support the research and development of this project. Parliament needs, however, to closely monitor the massive cost implications of this project where an additional R1,8 billion is now allocated.

The ACDP also shares the concerns around budgets for stadium construction, namely that they may be exceeded or that there may be cash flow problems. Clearly, in view of the narrow timeframes agreed on for the completion of these stadiums, they should not and cannot be constrained by cash flow shortages; therefore, we support the additional amount of R1,9 billion which will allay such concerns.

The ACDP will accordingly support the Special Adjustments Appropriation Bill.

Mr I S MFUNDISI: Chairperson and hon members, there is always need for flexibility to accommodate contingencies and unforeseeable and unavoidable expenditure. The Bill seeks to do just that. We in the UCDP would like to emphasise, though, that in so far as the allocation for agriculture is concerned, special oversight should be exercised over the Land Bank and the money used subject to such conditions as the Minister of Finance may determine.

This we say in the light of the fact that experience has shown that the Land Bank is wont to extend loans even for matters not really core agricultural business. We are also aware that millions have been loaned to people whose creditworthiness is suspect. Some of them have become regular visitors to courts in this country.

We fully support the extension of funding to host cities of the 2010 Fifa World Cup. The commitment by government to stage the best ever World Cup revolves around the availability of resources which this Bill is asking for.

Regarding the Department of Communications and state-owned enterprises, the UCDP supports all efforts to modernise equipment and make the country ready for international competitiveness.

The UCDP supports the Special Adjustments Appropriation Bill. Thank you.

Ms S RAJBALLY: The MF accepts and acknowledges the need for adjustment made in the budget allocated to Sport and Recreation South Africa, Public Enterprises, Communications and Agriculture. However, an explanation for this needed adjustment would be advisable in terms of adjudicating reasons for the requirement and maintaining our system of checks and balances.

We appreciate that by this time of the year departments’ allocations are already being utilised well and to fulfil their year’s endeavours. I use this platform to enquire in terms of co-operative banks as to whether tax relief is being considered and what the reasons may be for either exercising this relief or instituting a payable tax.

We also call for faster pension reform to a more liveable rate and hope the hon Minister of Finance will bring our pensioners greatest relief in 2008.

The MF supports the Special Adjustments Appropriation Bill. I thank you, Chairperson.

Mr M E MBILI: Chair, the purpose of this Bill is to provide for both the additional and interim funding requirements with regard to the departments in question. The Minister of Finance, in terms of section 30 of the PFMA, may table this adjustment budget in the National Assembly as and when it is necessary. This adjustment, therefore, has been awarded special status because the allocation cannot be delayed until October 2007.

The affected state-owned enterprises are confronted with unprecedented financial pressures and, as a consequence, an early adjustment is required. The amount of R1,9 billion requested with regard to the 2010 Fifa World Cup stadium development conditional grant is provided for in the Division of Revenue Act of 2007. This is not a new allocation; rather, as mentioned, it seeks to fast-track the funding requirement flow for the upfront procurement of input materials for stadiums such as roofs, structural steel and site development, in order to minimise the cost owing to inflation and exchange rate volatility.

Tight deadlines have been set for the completion of stadiums. Therefore, it was necessary to bring forward R1,9 billion from the 2008-09 budget to ensure that construction was not constrained by cash flow shortages. Members, all this means, therefore, is that construction for the 2010 stadiums by host cities is well ahead of schedule.

In addition, stadiums such as Ellis Park, the Royal Bafokeng Stadium and Loftus Versveld, should be renovated and ready for the Confederation Cup in September 2009. The early allocation, therefore, for the construction of soccer stadiums in terms of this Special Adjustments Appropriation Bill will ensure that affordable facilities are constructed in accordance with Fifa standards.

South Africa is convinced more than ever before that it will host a world- class Fifa World Cup in 2010 here in South Africa for all the people of this continent. There is no turning back, for we believe that the stakes are too high and our people cannot be disappointed, at least not by the ANC government as a trusted servant of the people.

Now, let me turn to the R700 million allocation agreed to by Cabinet to recapitalise the Land Bank, subject to conditions in respect of its executive mandate and provision of a turnaround strategy. Members are aware that agriculture is the backbone of this country in terms of making sure that it addresses poverty alleviation, hunger and, most importantly, food security for our nation.

It is also important to address the thorny issue of access to land for the majority of our people. In this regard, we have been assured by the management of the Land Bank that all of the R700 million requested will go towards development, amongst other things, to address this issue. It is also important to immediately address the issue of the deteriorating position of the bank, which has resulted from the writing off of large sums of money owing to nonperforming loans.

It is worth noting, however, that of the R15 billion written off over the past six to seven years, 95% of that was for white commercial farmers. We do understand that the farming business is very complicated and has many challenges. Some of these are beyond the control of the bank and the farming communities themselves – issues like droughts and floods. We therefore felt that this was a reasonable request in the short to medium term to address the challenges mentioned above.

On the issue of Sentech, the committee was unanimous about the allocation of R500 million to position Sentech as the wireless broadband wholesale provider and infrastructure developer. We are of the view that this is a highly competitive environment and requires highly skilled personnel. Therefore this allocation, we believe, will go a long way towards helping Sentech to retain and attract new skills.

On many occasions government entities or state-owned enterprises have been accused of having a shortage of skills, which hampers service delivery. We believe that this allocation seeks to address this question. Sentech is expected to address the issue of network coverage which will cover the rest of the country and, in particular, the underdeveloped areas of our country. For instance, you can tune in to SAfm from anywhere in the country and it will be predominantly white in nature.

The question therefore is: When will Sentech extend the coverage network enjoyed by SAfm to other radio stations such as Ukhozi and Umhlobowenene, to mention but a few? This is a critical issue which Sentech, through the Department of Communications, must address honestly because it talks to the issue of transformation.

We cannot, in this day and age, still speak about the underdeveloped areas in which people cannot access the services of this department. Therefore I take this opportunity to ask the Portfolio Committee on Communications, particularly comrades serving in that committee, to make sure that this issue is addressed as one of utmost importance, because in this day and age we cannot stand tall and say why this has not happened 13 years after our democracy.

The ANC therefore appeals to the National Assembly, because even though there were questions on some of the issues, as I have mentioned, most of the issues we were unanimous about, that this Bill must be passed. The ANC supports this Bill, and I thank you. [Applause.]

The MINISTER OF FINANCE: Thank you very much, Chairperson. Had I known it would have been this easy and that the Special Adjustments Appropriation Bill would be supported so gallantly by the House, it would have been five times the size that it is. But, thank you very much for the support. [Laughter.]

The one thing I do acknowledge is that the process here was incredibly rushed, but I hope that, in the spirit in which the hon Gibson spoke, when the adjustments are tabled at the end of October, committees will give all of these issues attention so that the understanding of each and every line item funded in here will be properly interrogated by Parliament as part of the oversight function.

Regarding the issue of Sentech that the hon Gibson said he was raising on behalf of the hon Smuts, the difficulty hasn’t been on our side. I think that the least that taxpayers must expect of us is a rigourous analysis in due diligence. If there isn’t a business plan that will pass muster, our approach is that we shouldn’t fund it. So, it is not that there is a breakdown. There has to be a business plan. The hon Mbili may be disappointed because this money is about broadband rather than all of the signal distribution that South Africa needs. There are going to be a series of other things that Sentech needs to undertake, including the digitisation ahead of 2010. It is a very costly exercise, but we must ensure that we aren’t just going to go out on a wing and a prayer; we need properly supported business plans that we can interrogate. And, I’m sure Parliament needs that as well.

In respect of Alexcor, the issue to deal with in Alexander Bay is, of course, the pigeons, but here we have a durable solution. The pigeons arise because the pigeons are taken into the mine and the diamonds leave by the route of pigeon post traditionally.

In respect of the Land Bank, we are dealing with two sets of issues. The one is that the Land Bank, over decades, has not foreclosed anywhere and the liabilities have actually just built up in the institution. Now they come to a crunch and there is a huge difficulty with the liquidity of the organisation. I gave the undertaking earlier - there is a forensic report that has just been completed – that we will act, as we must act, to ensure that this is a well-run financial institution. In all the development finance institutions we are looking for a different model that will ensure that it supports the developmental objectives more broadly.

On 2010: The Minister, Rev Dr Stofile, knows that we have spoken about this. From the side of the Treasury, we’ve been bold enough to put on the table for municipalities a ratio of 10% of maintenance a year. So the R4 billion in current terms would require R400 million of maintenance a year, failing which these stadiums look like a lot of those in the former Bantustans and so on. We have that responsibility and that is what we must ensure is delivered.

On the PBMR – the Pebble-Bed Modular Reactor – the hon Singh spoke about R21 billion – no, it’s the other number. I know that the Director-General of Public Enterprises raised a number like this. But the commitment that government has made is a R6 billion commitment, and we have to squeeze maximally to ensure that we can get a return, get the new technology and ensure that it’s clean and safe at the same time. Thank you very much, and thanks to all parties for the support. Thank you. [Applause.]

Debate concluded.

Bill read a first time.

               SPECIAL ADJUSTMENTS APPROPRIATION BILL

                (Consideration of Votes and Schedule)

The HOUSE CHAIRPERSON (Mr G Q M Doidge): Order! Hon members, the proceedings will initially take the form of a question-and-answer session. I shall put each of the four Votes in the Schedule in turn, whereupon members will have the opportunity to ask questions to the relevant Ministers. Members must please press the to-talk button if they wish to ask a question. Hon members should please wait until I recognise them before putting their question.

Vote No 18 - Sport and Recreation South Africa – put and agreed to.

Vote No 24 – Agriculture – put and agreed to.

Vote No 25 – Communications – put and agreed to.

Vote No 30 – Public Enterprises - put:

Mr L W GREYLING: I asked the question last year and I will ask it again this year: Where is the business model for the Pebble-Bed Modular Reactor, PBMR, that shows that this project will be economically viable and will justify the spending of the taxpayers’ billions of rands, simply to get a demonstration model up and running?

I also asked: Where are the other investors that we have been hearing about for over a decade? Is the lack of investors now forcing us to use an extra R1,8 billion of taxpayers’ money to fund an experiment that has already cost our country over R3 billion?

Will the Minister also explain to the House when, in the best possible case scenario, can we expect to see the first commercially available PBMR module? Finally, has the design for the PBMR actually been finalised, upon which we can base a due diligence study? [Interjections.]

The HOUSE CHAIRPERSON (Mr G Q M Doidge): Order! Can we lower the noise levels, please. Hon Minister of Finance, are you responding to that question?

The MINISTER OF FINANCE: The truth of the matter, Chairperson, is that there is no off-the-shelf model. There is nowhere in the world where this technology that is safe and third-generation nuclear is available. If you want it, part of what you have to work with are the designs of nuclear engineers, but a lot of it is untested.

Part of what we have seen already includes the fact that, whilst a nuclear plant may be small, the heat plant which may drive a hydrogen economy into the future may be substantially larger. But, nobody will know this unless a prototype is built. If you want to build a prototype, somebody has to pay for it. Now, even the private sector or capital is a coward. Capital will sit back until there is substantially more development. We are advised that progress in this area in South Africa is quite unprecedented in the world. We don’t want to take any risk but I think we understand that we can’t rely on fossil fuels in perpetuity. Some changes to the scale of the low-cost electricity that we have become accustomed to in this country – something at that scale - will need to be done. You know, a few wind farms and so on are not going to generate it. Somebody has to bell the cat and that’s what this process is about.

Research and development is expensive. You don’t see the results in the short term but I think we need an association with Parliament on this issue, so that there is a higher level of trust, knowing that this project will be watched, that due diligence will be in place and that we will ensure that it isn’t money down the tubes – which it could become. However, I think we have to provide the guarantees that Parliament is looking for on this issue. [Applause.]

The HOUSE CHAIRPERSON (Mr G Q M Doidge): Order! I want to remind hon members to be very specific with their questions regarding the adjustments before us. [Interjections.] Order!

Dr S M VAN DYK: Voorsitter, die appropriasie van bykomende fondse ten bedrae van R2,9 miljard verwys na drie openbare korporasies: Eerstens is daar die Alexkor-myn wat R44,7 miljoen ontvang om sy operasionele koste te dek tot die skikking met die Richtersveld-gemeenskap afgehandel is. Tweedens is daar Denel wat te groot gehap het met kontrakte wat nie aan die gekontrakteerde spesifikasies kon voldoen nie, terwyl die staat nou die eis moet betaal. Die DA wil van die Minister weet waarvoor ’n eis teen Denel ingestel is en wie dit ingedien het en welke kontrakte kon nie nagekom kon word nie en waarom nie?

Die derde openbare korporasie, naamlik die korrelbed kernreaktor, het R1,8 miljard ontvang, omdat hulle nie behoorlike besigheidsplanne in die vorige begrotingsjaar aan die Tesourie voorgelê het nie. Minister, u moet aan die Parlement verduidelik hoekom die KBKR se korporatiewe strukture nog steeds nie in plek is nie; hoekom dit so lank gevat het om die korporasie te lisensieer, wat die projek Suid-Afrika uiteindelik gaan kos en hoekom hulle nou al vyf jaar lank sukkel om buitelandse beleggings vir die projek te kry. Ek dink die DA en die belastingbetaler het rede tot kommer. (Translation of Afrikaans paragraphs follows.)

[Dr S M VAN DYK: Chairperson, the appropriation of additional funds to the tune of R 2,9 billion refers to three public corporations: Firstly, there is the Alexcor mine, which receives R 44,7 million to cover its operational costs until its settlement with the Richtersveld community has been concluded.

Secondly, there is Denel, which bit off more than it could chew in terms of contracts, and was then unable to comply with contracted specifications, so that the state now has to foot the bill. The DA wants to know from the Minister: What damages are being claimed from Denel, who lodged this claim, which contracts could not be complied with, and why?

The third public corporation, namely the Pebble-Bed Modular Reactor, has received R 1,8 billion, because the corporation failed to submit proper business plans to the Treasury in the last budget year. Minister, you have to explain to Parliament why the PBMR corporate structure is still not in place; why it has taken so long to licence the corporation; what the eventual total cost of the project will be for South Africa, and why the corporation has been struggling for five years to obtain foreign investment for the project. I think the DA and the taxpayer have reason to be concerned.]

The MINISTER OF FINANCE: Chairperson, I believe that the questions from the hon Van Dyk are asked for effect, because they are answered in the document as it stands. In respect of Alexcor, there were two routes you could take. The one route was that the land traditionally belonged to the Richtersveld community. The Nama were given that land by Queen Victoria at the end of the Anglo-Boer War. If the claim had succeeded at the scale that their lawyers had argued for, we would have been talking billions. There is a different agreement that was struck and concluded this year. If you want the participation of the community, then it is going to cost you. You can either continue to treat the community as dirt, as part of the Kgalagadi, part of Namaqualand; just that – take the land, ignore their rights or empower them. This money is about empowering the community to a new beginning. That is the issue at hand. It is dealing with historic injustices and that is important in understanding the issues of Alexcor.

In the context of Denel, I think that it is a difficult issue because there are some corporate priority issues that are still being negotiated. I think that the sensitivity of this would have been expressed in the Portfolio Committee on Finance. We can’t go into all of the details. These issues were canvassed today to the limits possible and I think we must respect that some of the detail would be covered by the confidentiality agreements.

In respect of the PBMR, I think that my colleague, the Minister of Public Enterprises, would be in the best position to explain this. As the Acting Minister and as the Minister of Finance, there are issues that have to be resolved quite speedily. Yes, I agree that a corporate structure is one of those issues that needs to be resolved.

In respect of the business plan, let me repeat: If we had responded, in the Medium-Term Expenditure Committee’s hearings, to the request for money, without all of the answers that we have now provided, I believe we would have been in dereliction of duty. We have held out for as long as we can, to ensure that the answers are afforded us. They have come. The business plan is on the table. We are now talking of an amount of money that will carry not even to the end of the fiscal year. This is the nature of the beast that is research and development.

Things are not as cut and dried as with a company that has been running for a very long period of time. That is why, if I weren’t reasonably satisfied with the answers that we got on the business plan, I wouldn’t have had the confidence to put the request for resources for the PBMR before this House. I do it in good conscience and in good faith, knowing that we have interrogated the business plan to the best of our technical abilities in the Treasury. [Applause.]

Mr Y WANG: Chairperson, hon Minister, the PBMR company has recently tabled its first annual report. So, for those members looking for a business strategy or business model, they must just look at the reports or come to our committee meetings.

My question is one of a more practical nature. Before the proper commercialisation of the PBMR technology or the particular project, will the Ministry of Finance work closely with the Department of Public Enterprises in terms of monitoring its cash flow projections against its targeted timelines to ensure that there is no more special provision needed, as we are going to need a greater appropriation each year until things are commercialised?

The MINISTER OF FINANCE: Chairperson, as the hon Wang knows, the first audit is not just available, it is also an unqualified audit. That says something about the environment that this body is working in and I think that it provides us with the basis for addressing these matters going forward.

A lot of the investment in the last while and the largest draw on cash flow has been for personnel, and these are highly skilled, highly sought-after people. You don’t get nuclear scientists sitting by the side of the road, waiting for the odd bakkie to pick them up so that they can come and clean a garden somewhere. These are highly skilled people and they are unfortunately very expensive. This has been the largest draw on cash flow.

The project is now at the point where the contract for the supply of some of the technology - some of this is in foreign exchange - has been taken into account. That day is now upon us and that is why we have to proceed, failing which all of the money spent to date will come to nought and then the Auditor-General will be unhappy with us and say that Parliament had approved expenditure which proved to be fruitless. Now you are either going to sink or swim. This is why we need to ensure that the systems are in place to ensure that the project will actually float and provide us with a durable and safe energy source. Thank you.

Vote No 30 – Public Enterprises – agreed to. The HOUSE CHAIRPERSON (Mr G Q M Doidge): That concludes our question-and- answer session on the Votes. We shall now proceed to decide on the Votes and Schedule.

Schedule agreed to.

               SPECIAL ADJUSTMENTS APPROPRIATION BILL

                       (Second Reading debate)

There was no debate.

Bill read a second time.

The House adjourned at 18:09. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

ANNOUNCEMENTS

National Assembly and National Council of Provinces

The Speaker and the Chairperson

1. Classification of Bills by Joint Tagging Mechanism

(1)     The Joint Tagging Mechanism, in terms of Joint Rule 160(6),
     classified the following Bill as a section 76 Bill:


     (a)     National Environmental Management Amendment Bill [B 36 –
          2007] (National Assembly– sec 76)

(2)     The Joint Tagging Mechanism, in terms of Joint Rule 160(6),
     classified the following Bill as a money Bill:


     (a)     Special Adjustments Appropriation Bill (2007/08 Financial
          Year) [B 37 – 2007] (National Assembly– sec 77)

National Assembly

The Speaker

1. Membership of Assembly (floor-crossing)

Membership status of the following member has in terms of Schedule 6A
of the Constitution (floor-crossing) changed as follows:


  ▪ Ms N M Mdaka left the United Independent Front on 12 September
    2007 and joined the African National Congress.


  ▪ Ms Z A Ndlazi left the United Independent Front on 12 September
    2007 and joined the African National Congress.


  ▪ Mr C M Morkel left the Progressive Independent Movement on 12
    September 2007 and joined the African National Congress.

  ▪ Mr V C Gore left the Independent Democrats on 12 September 2007
    and joined the African National Congress.

1. Membership of Committees

Mr F Bhengu has been elected as Chairperson of the Portfolio Committee
on Defence with effect from 12 September 2007. TABLINGS

National Assembly and National Council of Provinces

1. The Minister of Social Development

 (a)    Report and Financial Statements of the National Development
     Agency (NDA) for 2006-2007, including the Report of the Auditor-
     General on the Financial Statements for 2006-2007 [RP 159-2007].

1. The Minister of Health

 (a)    Report and Financial Statements of the National Health
     Laboratory Service (NHLS) for 2006-2007, including the Report of
     the Independent Auditors on the Financial Statements for 2006-
     2007.

COMMITTEE REPORTS

National Assembly

1. Report of the Portfolio Committee on Justice and Constitutional Development on the Criminal Law (Sentencing) Amendment Bill [B15-2007] (National Assembly – sec 75), dated 6 September 2007:

   The Portfolio Committee on Justice and Constitutional Development, having considered the subject matter of the Criminal Law (Sentencing) Amendment Bill [B15-2007] (National Assembly – sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, endorses the classification of the Bill and reports the Bill with amendments [B15A-2007].

2. Report of the Portfolio Committee on Minerals and Energy on the Accession to the Framework Agreement for the International Collaboration on Research and Development of Generation IV Nuclear Energy Systems, dated 12 September 2007:

   The Select Committee on Minerals and Energy, having considered the request for approval by Parliament of the Accession to the Framework Agreement for the International Collaboration on Research and Development of Generation IV Nuclear Energy Systems, recommends that the House, in terms of section 231 (2) of the Constitution, approve the said Agreement.

Request to be considered.

1. Report of the Portfolio Committee on Finance on the Special Adjustments Appropriation Bill (2007/08 Financial Year) [B 37– 2007] (National Assembly – sec 77), dated 12 September 2007:

   The Portfolio Committee on Finance, having considered and examined the Special Adjustments Appropriation Bill (2007/08 Financial Year) [B 37– 2007] (National Assembly – sec 77), referred to it, and classified by the Joint Tagging Mechanism as a money Bill, reports that it has agreed to the Bill.