National Council of Provinces - 22 May 2007
TUESDAY, 22 MAY 2007 __
PROCEEDINGS OF THE NATIONAL COUNCIL OF PROVINCES
____
The Council met at 14:02.
The Chairperson took the Chair and requested members to observe a moment of silence for prayers or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col 000.
NOTICES OF MOTION
Mr M A MZIZI: Chairperson, I hereby give notice that at the next sitting of the Council I shall move on behalf of the IFP:
That the Council –
1) notes with distress the long arm of injustice, putting a man in
jail for nine years before he is put on trial and then at a later
stage he is acquitted;
2) further notes that more prisoners are awaiting trial for a long
period before they are put on trial;
3) acknowledges that this is unacceptable and should be given
immediate attention; and
4) urges that the wheel of justice should be armed so that justice is
dispensed equally.
SUPER 14 CUP FINAL
(Draft Resolution)
Mr O M THETJENG: Chairperson, I move without notice:
Dat die Raad –
1) kennis neem dat –
a) die finale wedstryd van die Super 14-eindstryd deur twee Suid-
Afrikaanse spanne gespeel was op Saterdag 19 Mei 2007 in
KwaZulu-Natal;
b) die Bloubulle en die Haaie ’n redelike goeie wedstryd gehad
het; en
c) die beste span gewen het; en
2) wens al die spellers en die bestuurders van beide spanne en die toeskouers geluk met hulle prestasie en dat hulle ons land se sport so goed verteenwoordig. (Translation of Afrikaans draft resolution follows.)
[That the Council –
(1) notes that -
a) the Super 14 Cup Final was contested by two South African
teams on Saturday, 19 May 2007 in KwaZulu-Natal;
(b) the Blue Bulls and the Sharks both played fairly well; and
(c) the best team won; and
2) congratulates all the players and the managers of both teams and
the spectators on their achievement and for having represented
country’s sport so well.
Motion agreed to in accordance with section 65 of the Constitution. The CHIEF WHIP OF THE COUNCIL: Chairperson, on a lighter note, I didn’t know that when a member is campaigning for a certain position in his party … [Laughter.] The CHAIRPERSON OF THE NCOP: Hon Chief Whip, move your motion!
Mr O J TLHAGALE INVOLVED IN AN ACCIDENT
(Draft Resolution)
The CHIEF WHIP OF THE COUNCIL: Chairperson, I move without notice:
That the Council –
(1) notes that -
(a) the hon Mr O J Tlhagale, a member of the UCDP, was
involved in an accident on 9 April 2007 and remained in a
coma until 4 May 2007; and
(b) he has since recovered and was discharged from the Garden
City Clinic on 16 May 2007;
(2) takes this opportunity to wish the hon Tlhagale a speedy recovery; and
(3) trusts that he will be in a position to witness the white wedding of his party leader, the hon Lucas Mangope.
Motion agreed to in accordance with section 65 of the Constitution. APPROPRIATION BILL
(Policy debate)
Vote No 30 – Public Enterprises:
The MINISTER FOR PUBLIC ENTERPRISES: Voorsitter, ek moet aan die begin sê dis baie moeilik vir my as ’n Haaie-man om te aanvaar dat die beste span gewen het, maar ek aanvaar die uitslag. [Gelag.] [Chairperson, I have to say at the outset that it is very hard for me as a Sharks man to accept that the best team won, but I accept the result. [Laughter.]]
Chairperson, hon members of the National Council of Provinces, ladies and gentlemen, it is indeed an honour to stand before you once more and table Vote 30 of the Department of Public Enterprises. This past year was one marked by much activity in state-owned enterprises, for which my department is mandated to provide oversight and strategic direction.
The state-owned enterprises or SOEs carry out their activities in virtually all provinces, and often play a key role in those provinces. Accordingly, it is important for the provincial leadership to be familiar with their activities. We are making copies of a new Department of Public Enterprises’ publication, which will be available to you today. This deals with a number of the strategically important developments that will be undertaken by the SOEs.
While it is not possible to provide all the details of SOE-activity in each province, I hope that my address will provide some useful information. A second publication concerning introducing the supply and development programme, I believe, will also prove useful to the business community.
I will speak on each of the SOEs in detail later, but I would like to say, at the outset, that we are very pleased that we were finally able to conclude a settlement agreement with the Richtersveld community. This is a landmark agreement, and allows for restoring ownership rights and the payment of compensation to the community. We look forward to its speedy conclusion and implementation, and I believe that a successful implementation of this settlement will have a positive developmental impact on the Northern Cape and the broader Namaqualand area in particular.
Although it is encouraging to note that the economy is now growing at above 4%, we recognise that we still have some way to go in fulfilling our objective of facilitating economic growth of 6% and above, as well as ensuring that more South Africans are employed and integrated into the first economy.
The year ahead will indeed be a challenging one, as we continue in our mandate to ensure that the SOEs are effective and contribute meaningfully to accelerated and shared growth. The state-owned enterprises have a strategic role to play in the economy and they are critical to the success of any developmental state. We have decided to use state ownership in key economic areas to ensure that we achieve strategic objectives in those sectors. I shall say a little more about this when we look at the proposed shareholder management legislation.
Key to the formation of any developmental state is clearly political will and capacity, institutional strength and responsiveness, and the necessary resources to give leadership to the national economy and provide for the most vulnerable members of our society. After all, all our efforts would have been in vain if we failed to create an economy that is growing but fails to take care of the poorer and more destitute members of our society.
In order to mobilise resources in the national and international capital markets, our state-owned enterprises must be financially sound and stable. This requires that they have strong balance sheets, and that they are able to partner with private capital. The SOEs need to maintain a balance between maximising economic outcomes and ensuring their financial success.
The scale of the infrastructure programme and the need for the SOEs to be orientated towards growth pose an additional set of challenges for the SOEs to implement major investment programmes whilst maintaining their financial strength and operational efficiency. The SOE activities also need to be undertaken within a predictable, effective and transparent governance system.
Let me now briefly discuss the achievements and challenges of each of the SOEs. I will do so in alphabetical order, starting with Alexkor. The land settlement agreement which we signed recently will make the Richtersveld community owners of a viable company involved in land mining and, in addition, with prospects of sea mining rights and an opportunity to expand their activities at a later date.
This agreement allows us to convert a vulnerable community into a prosperous one. The implementation of the land claims settlement will allow the community to use Alexkor as a commercial vehicle for their own development. It will also provide the basis for the rationalisation of the Namaqualand diamond fields.
We have come a long way with the process, with almost 10 years of consultations. The community leaders also proved to be tough negotiators and quite capable of representing their interests. We hope that we will be able to implement the settlement agreement, which we believe will be of great benefit to that community.
Moving on to Broadband InfraCo, the high cost of broadcast availability is constraining economic growth, depriving South Africa of the opportunity to interact speedily and more effectively with the rest of the world. The establishment of InfraCo as a stand-alone SOE is an important development in our economy and we look forward to the opportunities that it will help to unlock. Under the leadership of its CEO, Dave Smith, Broadband InfraCo will ensure that South Africa develops broadband infrastructure.
As a result of the establishment of InfraCo, and the expected lower bandwidth costs, we believe more businesses will exist which could not have done so before. The InfraCo Bill has been gazetted and we will have public hearings on that Bill soon. InfraCo will indeed provide a series of new platforms for bandwidth expansion and affordability. This will be done with partners such as the South African Square Kilometre Array and the South African Research Network, two major science projects in our country.
Moving on to Denel: the recent announcement by Denel on the Hoefyster project, which is worth approximately R8 billion, is Denel’s biggest contract to date, and this suggests that the potential for the company to turn itself around into a once again profitable entity is a real possibility. Denel, which has thus far earned some R400 million in revenue as a result of the disposal of some of its non-core assets, will finalise the disposal of the remaining non-core properties in the 2007-08 financial year. The formation of equity partnerships with global original equipment manufacturers or OEMs, such as the partnership between Denel Aerostructures and SAAB, the Swedish company, which was finalised during the year, is a key pillar of Denel strategy.
Fragmentation in the South African defence-related industry is undesirable, and we would much rather see consolidation taking place, which we believe will make the industry more sustainable. In this regard, the relevant government departments will focus on interventions to help develop the industry. This will ensure that Denel is better able to serve South African, regional and international defence requirements.
The Defence Evaluation and Research Institute, Deri, will also be established for the co-ordination of tests and evaluation facilities. A catalyst for the transference of advanced manufacturing technologies and know-how to the broader manufacturing sector will be the establishment of manufacturing clusters by Denel. These are expected to be world-class suppliers of subsystems and componentry, and will also, critically, allow for the development of skills. We have no doubt that the management and board of Denel will achieve the turnaround of the entity and we are looking forward to the year ahead.
Regarding energy, Eskom and the pebble bed reactor, Eskom’s R150 billion investment programme for the next five years will certainly improve the security of supply, which is key to supporting a growing economy. We need to secure long-term, environmentally sustainable electricity for the country, and Eskom as well as the PBMR will be key in this regard.
The most viable alternative to the use of coal as a primary source of energy is nuclear energy. With the planned larger nuclear usage by Eskom and the progress on the Pebble bed Modular Reactor project, we look forward to forming a new nuclear energy division within Eskom, that will have very positive implications for the future of the nuclear engineering industry in South Africa.
The construction of the pilot fuel plant at Pelindaba, for the pebble bed reactor, and progress with approvals for the construction of the first power plant in the Western Cape, are expected in the current year. These are all with reference to the pebble bed technology.
Locally, the private sector interest in the pebble bed reactor has grown. Recently, Sasol indicated that it is in talks with the pebble bed reactor representatives regarding a number of the process heat applications. This indicates, in our view, that the pebble bed is indeed a commercially viable option. We will be working closely with the Department of Minerals and Energy to fast-track the introduction of independent power producers in the electricity system, which we believe will be a valuable addition to energy- generation capacity in South Africa.
With regard to SAA and the new entrant to our portfolio, SA Express, the high-quality, affordable and cost-effective air transport will allow South Africa to link with its regional and international trade partners. Therefore, this has a big role to play in economic growth.
It is with this in mind that we have chosen to retain ownership of SAA, and, following legislative processes, SAA is now a stand-alone entity reporting to the Department of Public Enterprises. We have started a wide- ranging restructuring and recapitalisation process, aimed at turning the company into a profitable airline.
The Department of Public Enterprises and the board are fully committed to the programme, which is now in progress. SA Express will also be converted into a stand-alone entity, that is we are taking it out of Transnet as well, following legal processes similar to those we followed with SAA.
Now, SA Express’s expertise is in operating regional services in smaller gauge aircraft up to 100 passengers, while SAA, as an African airline with global reach, operates on more heavily used routes with larger aircraft. The business and operations of SA Express thus differ fundamentally from SAA’s core business.
Due to the type of equipment it operates, SA Express is also an ideal vehicle to help develop African air routes on a more economical basis. SA Express has had a remarkable turnaround into sustainable profitability after its mission was clearly defined and we look forward to a positive year for the company.
With regard to forestry and Safcol, Cabinet approved the disposal of the last remaining package of Safcol, which is the Komatiland Forests. This was a carefully considered decision, based on the significance of Safcol in the forestry industry. Essentially, what we found was that Safcol was a relatively small part of the total forestry industry, but that it is an important asset, accounting for some 30% of the saw-log production.
So, in the disposal, we will have to carefully design the process, because of the nature of the Safcol asset. However, we believe that the disposal, in the coming year, could have a significant impact, particularly in the province of Mpumalanga, where most of its assets are situated. We will, of course, as the process unfolds, make further announcements during the year, as is appropriate.
On Transnet, I will not spend that much time because I think it has achieved a very successful turnaround and is now very much focused on its key objective, which is to be a world-class freight logistics company. Its turnaround has seen the company more focused and the next five-year capital budget of R78 billion will certainly ensure that the company’s investments in ports rail, and pipeline improve the transport infrastructure, making the transportation of goods more efficient, and the fast-tracking of economic growth a real possibility. I should add that I think the disposal of non-core assets has gone very well, and we hope to complete virtually all of those processes in the coming year.
Interestingly enough, and differently from previous years, there is now far more legislative activity within the Department of Public Enterprises portfolio. In addition to the SA Airways and SA Express, and Broadband InfraCo Bills, it is our intention in the latter part of this year to table a new piece of legislation dealing with the shareholder management model or structure that DPE proposes. This piece of legislation will allow us to better define our role as shareholder to the SOEs and to crystallise the role of the state in these activities, as well as our expectations of these entities.
We refer to this as defining the strategic intent of the enterprise, and Parliament will have a role to play in this process. This is by no means a simple task, and poses interesting intellectual, technical and legislative challenges, but I am quite sure that both the department and Parliament will be well up to this exciting new challenge.
Let me begin drawing to a conclusion by extending my sincere thanks to the Director-General, Portia Molefe, and her team of young and committed staff. The past few years have been taxing and we expect the next few years to be even tougher, as the SOEs and the department carry out what I would call mission-critical activities, which will see us attain our primary objectives of economic growth and job creation.
I also wish to extend really sincere thanks to the boards, chief executives and staff of the state-owned enterprises. Without the commitment of these people, we would be unable to attain our goals. And, I think we now have excellent boards and managerial teams in place.
Then, let me offer my very sincere thanks to the hon Priscilla Themba and her committee members who are here. We will thank them a little bit more fully later. The support with which you provide us, despite your heavy workload, where you cover a number of different portfolios, is really valued by us as the Department of Public Enterprises. I look forward to your active future participation in the very successful autumn schools that we are now running each year, that I think are both informative for parliamentarians and for the department itself. Our senior management learn a great deal from the interaction with MPs.
I am confident that our aims will be realised and that the Department of Public Enterprises and the state-owned enterprises will continue to attend to the matters mentioned above with the necessary vigour and attention that they require. I hope that this House will also accept the budget that has been allocated to the Department of Public Enterprises.
As a mark of our increased efficiency in the state sector, I would point out to you that I have taken less time than you allocated me, and we will use this time profitably, I am sure, for questions and debate on your side. I thank you. [Applause.]
Ms M P THEMBA: Chairperson, hon Minister and hon members, I state from the onset that the select committee supports the budget allocation for the Department of Public Enterprises. I do this to highlight the magnitude of the responsibility assigned to this department. When stocks rot because a town has experienced yet another power outage; when the Internet is so slow that an e-mail sent today communicating a major global contract only reaches the recipient the following day; when perishables have to be dumped because of delays at the ports; and, when businessmen or women fail to get to their meetings on time because SAA flights were late, then our economy suffers.
Efficient and reliable energy, communication and logistics services are imperative to every well-functioning economy. Before we can speak about job creation and poverty eradication, before we can speak about being among the most competitive in the world, we have to address the fundamentals. The fundamental in this instance is that our infrastructural logistical services are not functioning as optimally as they should. At the very least, let us maintain what we have and provide a service of good quality.
Here, I am not only speaking to the department and the Minister or to the people who are managing these state-owned enterprises, I am also speaking to all of us, the workers and the rank and file, and I am saying that we want to use labour-intensive methods. We want to retain jobs. That can only happen if we improve our levels of productivity and improve the quality of services.
Every time there are outages, communications fail, there are port blockages and delayed flights, business suffers and jobs are lost, as I have mentioned earlier. What is worse, then, is that when businesses experience these logistical inefficiencies, they become reluctant to invest in our country. They lose confidence in our ability to provide the stable, reliable infrastructural backbone to make their businesses viable.
Hence, it is incumbent upon us all to ensure that our services are of impeccable standards. Of course, we are quite conscious that maintenance of existing infrastructure is not adequate.
South Africa is experiencing positive growth and we are participating in a global economy. State-owned enterprises have to ensure therefore that they expand in order to meet the surge of domestic and global economic activity. SOEs have to have modern, world-class equipment and reduced productivity inefficiencies. We, therefore, welcome Eskom’s commitment to increase their five-year capital expansion in allocation to R150 billion, and we welcome Transnet’s allocation of R78 billion.
We believe that the department’s determination to advance the production of the Pebble Bed Modular Reactor is bold and visionary, and we will support your request, Minister, that the initial capital outlay should come from the fiscus. Likewise, we agree with you, Minister, that the expansion of InfraCo to improve broadband availability and, in the long run, reduce telephony costs should be funded by the state.
We take cognisance of the fact that government cannot sustain the funding of these entities on a constant basis, and we welcome the department’s role in supporting the entities to stabilise their balance sheets and function at corporate levels. Without a doubt, our SOEs are among the biggest corporations in the country and it is astounding to see how well they are being managed.
While there is always room for improvement, Minister, I would like this House to note the positive corporate governance practices of these institutions, the high levels of integrity that they display and the fact that they have completely dispelled the myth that government entities are corrupt. We are incredibly proud of them and incredibly proud of how you have been directing them.
South Africa is a developmental state. While we want our SOEs to maintain healthy balance sheets and focus primarily on being facilitators of economic growth, the fact that they are state-owned implies that they cannot be exempted from contributing to broader socioeconomic objectives.
We accept that SOEs have to be streamlined to focus on their core functions. Let this exercise be done with minimal job losses. When we say that Safcol contributes to only 2% of the forestry industry and therefore is not of strategic significance, let us not lose sight of the fact that we are speaking about human beings here and that every human being is of significance in a developmental state.
Disposals should be done sensitively, should be participatory and should preferably be beneficial to the communities where the entities are located. The sensitivity displayed regarding the management of the Richtersveld community settlement should be carried through in all engagements of the department.
Likewise, SOEs’ big plans offer enormous opportunities for job creation in local communities. Where tracks are being upgraded, where pipes are being laid and where plants are being built, let us make it as labour-intensive as possible and let us employ local people. Even in the semi-skilled and high-skilled areas, let us target one or two brilliant graduates to work alongside the experienced engineers so that skills are transferred. Your competitive supplier development programme offers a significant opportunity for supporting black-owned and women-owned enterprises as well as co-operatives. Possibly, you could build in twinning criteria whereby an international company that accepts a large contract is encouraged to twin with a local co-operative to sharpen their capacity in that field.
There is also the issue of service to the second economy. Let us not relegate the responsibility to the policy department. It is the very same SOE that is reporting to you that has to service the townships and rural areas. Please ensure that this issue forms part of the corporate plans, even if it is not necessarily going to come from their budget.
As for the constant call by the DA to privatise, I strongly disagree. It is precisely because of the fundamental role that SOEs play in driving the economy that they have to remain under state control. The cost of infrastructural investment is high; the short-term returns are low or even no-existent. Private companies will only invest where they will derive direct benefit. Furthermore, there is no guarantee that profits generated by them will be redirected towards capital expansion.
The state, in the interest of the public, has to ensure that energy, communication and transport logistical services are rendered efficiently and economically. The state also has to ensure accessibility. Where partnerships with the private sector are required, we accept that this has to occur, but let it be done in a manner that will not compromise the strategic intent of the state.
As for SA Airways, we believe that, though it is not as essential as Eskom and Transnet, at this point in time it has a vital role to play in air passenger and freight transport, domestically and on the continent. We continue to call for SAA to remain in state hands.
If these enterprises are to remain in state hands, the state has to have the capacity to manage them. The Department of Public Enterprises, in particular, has to have sufficient authority to direct these entities. We, therefore, welcome the endeavours of the Department of Public Enterprises to strengthen governance and regulatory systems.
While your presence, Minister, as a very senior and highly capable Minister, ensures significant coherence in the activities of the SOEs, we have systematic interventions in place to secure these practices. Our committee is therefore looking forward to the shareholder management legislation that we shall be tabling this year. We will particularly be using it as an opportunity to reflect upon the role of Parliament in supporting the oversight work of the department.
We are tremendously pleased with your performance in this short period of time. Under your supervision, the SOEs have become focused and more vigorous in respect of implementation. We also wish to commend your excellent team in the department for their absolute dedication and zeal.
I reiterate what I said in my introduction, that the Department of Public Enterprises is one of the most important departments in the country and should be resourced accordingly. The Select Committee on Labour and Public Enterprises supports the Budget Vote. I thank you. [Applause.]
Ms N D NTWANAMBI: Chairperson, Minister, comrades and colleagues, during our visit to the port of Cape Town last week we met with three companies that raised the same issue – the availability of land at Cape Town harbour. Minister, all these companies said that the Department of Public Enterprises, through the National Ports Authority, is not keen to make land available for ship repairs. Having been taken to the areas on the dry dock where this is done, NCOP representatives, together with the standing committee on economic affairs in the legislature, felt we should raise the matter here so it can get the necessary attention.
Secondly, we met with representatives of the Cape Town boat-building initiative that has registered students with False Bay College. Together with the Department of Trade and Industry, they participated in the Dubai International Show. I must say that this is quite a good show, but, again, there is no space available. Having looked at other options, we thought maybe some space could be made available at the port of Saldanha, something that will bring more business to the West Coast region. As a member from the Western Cape, can I ask the Minister whether ship repairing in our province is not a priority, as is the container terminal?
Another issue of concern during this negotiating time is what we read in the media, namely that SAA is going to retrench 1 000 workers. In the past, when we met with the department, they assured us that there would be no retrenchments. Is this going to be done to assist SAA, which does not seem to be doing well, or is it some kind of recovery of the loss or is it being done to achieve better specialisation within core functions of the department?
I must congratulate the department on the restructuring that will bring focused programmes on energy, broadband infrastructure and mining enterprises. Also, Minister, even though it is still in its initial stages, we congratulate you and the department on the amicable resolution of the Richtersveld land claim. As a time-tested member of the ANC, your handling of the matter was very good. We have also learnt that the Joint Project Facility has been taken out of the former corporate strategy to become a separate programme.
The Department of Trade and Industry and the Department of Public Enterprises undertook an assessment of state-owned chemical companies, with a view to understanding how well their activities are aligned to government’s objectives, as captured in the chemical strategy developed by the Department of Trade and Industry. The funding obligations of the Department of Public Enterprises, with regard to this assessment, totalled R464 000, and it was completed at the end of last year. Will you be putting more money in, or can we assume that there will be no more expenditure on this?
The department’s restructuring seems to be a very good move, hoping also that there will be settlement on mode of operation programmes and that there will be more focus on these programmes.
Denel has brought in a good investment of R933 million. What is Alexkor bringing to the Department of Public Enterprises? How will the department make sure that, in this financial year, SAA will bring in more investments?
In conclusion, Minister, the ANC says: Keep it up, so that even other countries, particularly in the region, can learn from your department how to handle state-owned enterprises, and so that those that are not productive are sold to recover any loss. The ANC unreservedly supports this Budget Vote and urges other political parties to do so as well. Thank you. [Applause.]
Ms J F TERBLANCHE: Hon Chairperson, hon Minister and colleagues, the Department of Public Enterprises’ mandate is to provide shareholder management of all eight state-owned enterprises, namely Eskom, Denel, Transnet, SA Forestry Company Ltd, SA Airways, Alexkor Ltd, Broadband Infrastructure Company, and the Pebble Bed Modular Reactor.
While the ideal situation should be that the department should ensure the efficiency as well as economic effectiveness of these state-owned enterprises, the reality is, with the specific mention of SA Airways, that the taxpayer has had to foot the bill over and over again.
When we recently debated the SAA Bill, I made it clear what the DA’s position was on the privatisation of SAA, and even after listening to you carefully in your response when you explained why it should remain state- owned and controlled, I still maintain that it will be in the best interest of the taxpayer as well as the country to privatise the company.
Surely, the funds used to bail SAA out, time and time again, could be put to better use? I know that you are committed to using state-owned enterprises to drive national development, but the price to pay is too high in SAA’s case. I would like to quote the DA’s finance spokesperson, Ian Davidson:
State funding should be a last resort and restricted to long-term public goods like basic infrastructure.
I recently attended a community policing meeting dealing with rural issues in Potchefstroom. One of the issues raised related to Eskom. The illegal tapping of electricity is causing a lot of frustration amongst residents, especially those from the farming community who have to fork out huge amounts of money to buy generators in order to ensure that they can carry on with their farming activities.
It was also reported that the contractors that are supposed to disconnect the illegal and dangerous connections have a very difficult task because of threats made to them. In this case, it is the municipality’s responsibility to ensure that no illegal tapping of electricity takes place. But, up to now, the issue is unresolved, and illegal tapping in Potchefstroom stands at 19%, almost four times higher than the national average of 5%.
During the budget briefing, two weeks ago, I discussed the issue with the department, and hoped that a solution could be found, because there is no way in which illegal tapping of electricity can’t have an extremely negative impact on Eskom’s ability to adequately provide electricity to all consumers, especially with the cold weather that we have currently. I thank you.
Dr F J VAN HEERDEN: Baie dankie, Voorsitter. In 2001 was daar ’n reserwekrag van 25% vir Eskom se kragvoorsiening. Tans is die reserwes tussen 8% en 10%, terwyl dit ideaalgesproke 15% moet wees. Dit is ongeveer die helfte van wat dit behoort te wees.
Op die oomblik blyk dit dat kragvoorsiening in die volgende vyf jaar steeds onseker sal bly. Mens dink maar net aan wat gaan gebeur met die wêreldbeker indien daar kragonderbrekings kom. Daar sal stellig noodopwekkers wees, maar dit is nie waaroor dit gaan nie. Dit gaan oor die beeld wat uitgestraal sal word as Suid-Afrika op ander terreine met kragonderbrekings gaan sit.
Professor Eberhard van die Universiteit van Kaapstad het onlangs voor die portefeuljekomitee die argument, naamlik dat die hoër as verwagte kragaanvraag te wyte is aan die uitermate hoë ekonomiese groei, verwerp. Maar selfs al is die geleerde professor verkeerd en die argument heelwaarskynlik korrek, blyk dit dat dit nog steeds ’n verantwoordelikheid is wat die regering, en by name die Ministerie van Openbare Ondernemings, het om tydig voorsiening en alternatiewe planne te maak. Nie net om die planne te maak nie, maar ook om die planne te implementeer en uit te voer.
Die Nasionale Energie Reguleerder, Nersa, het in ’n onlangse oudit van die belangrikste verspreiders bevind dat sowat R850 miljoen per jaar benodig sal word om die huidige, steeds ondoeltreffende kapasiteit te voorsien - die Minister het inderdaad verwys dat, ek glo ek het dit reg, R150 biljoen oor die volgende vyf jaar benodig sal word. Dan word hierdie argument van Nersa in elk geval inderdaad deur wat die Minister nou gesê het ondervang.
’n Probleem is klaarblyklik die onvermoë van die regering om die verspreidingsnetwerk effektief te herstruktureer deur 184 munisipaliteite te konsolideer in ses of sewe operasionele streekselektrisiteitsverspreiders, afgekort Reds, en dit het nou niks met die Reds Rugbyspan te doen nie, want hulle het maar sleg gevaar in die Super 14. Die onbetroubaarheid van elektrisiteitsvoorsiening in Suid-Afrika het ernstige gevolge op inwoners en besighede. Onlangs is berig oor die kragonderbreking in Bedfordview wat drie dae lank geduur het.
Die aanduiding van die Minister, naamlik dat daar na alternatiewe energiebronne, veral kernenergie, gekyk sal word, word verwelkom. Die punt is net dat dit uitgevoer moet word. Die Minister het inderdaad gesê wat benodig word in al hierdie staatsondernemings is die politieke wil en kapasiteit. Wys vir ons, Minister, dat u dit het. Ons glo dit is daar. Voer dit uit. Bring vir ons die resultate.
Wat die publiek betref, op die oomblik met die televisieverskynings van die “alert” ten opsigte van die kragbeskikbaarheid wil dit tog voorkom asof dit ’n sukses is. Daar is ’n gewilligheid ook by die publiek om saam te werk ten opsigte van die kragsituasie en ons vertrou dat die ministerie die goeie planne wat hulle het, soos ek nou na die Minister geluister het, sal uitvoer. Baie dankie. (Translation of Afrikaans speech follows.)
[Dr F J VAN HEERDEN: Thank you, Chairperson. In 2001 there were reserves of 25% for Eskom’s power supply. Today the reserves are between 8% and 10%, whereas ideally, it should be at 15%. That is approximately half of what it should be.
At the moment it appears that the electricity supply will still remain uncertain for the next five years. One tends to think of what would happen to the World Cup should power outages occur. Emergency power generators will certainly be in place, but that is not the point. The point is the image that would be portrayed of South Africa should power outages affect other spheres.
Prof Eberhard of the University of Cape Town recently stated at a portfolio committee meeting, that he rejected the argument that the higher than expected power demand, is due to extremely high economic growth. But even if the learned professor is wrong, and the argument most probably correct, it still appears to be a responsibility of government, namely the Ministry of Public Enterprises, to make provision and alternative arrangements timeously. Not only to make arrangements, but also to implement and execute them.
A recent audit by the National Energy Regulator, Nersa, of the most important distributors, found that approximately R850 million per year is needed just to maintain the present, but still ineffective production capacity – the Minister has indeed mentioned a figure, I believe I am correct, of R150 billion that will be needed over the next five years. Then this, in any case, actually endorses the argument of Nersa, on account of what the Minister has now stated.
A problem is apparently the inability of the government to restructure the distribution network effectively by consolidating the 184 municipalities into six or seven functional regional electricity distributors, in short, Reds, and this has nothing to do with the Reds Rugby team as they have performed rather poorly in the Super 14. The unreliability of the electricity supply in South Africa has grave consequences for residents and business. Recently it was reported that Bedfordview had a power outage that lasted for three days.
The indication by the Minister, namely that alternative energy sources, specifically nuclear energy, would be looked into, is welcomed. The point is just that it has to be carried out. The Minister has indeed stated that what is needed in all these public enterprises is the political will and capacity. Show us, Minister, that you have got it. We believe you are capable. Put it into effect. Bring us the results.
The present “alert” screenings on television, indicating availability of electricity as a result of consumption by the public, appears to be a success. There is willingness, also on the part of the public, to co- operate on this issue with regard to the electricity situation and we trust that the good plans the Ministry has, which the Minister has alluded to, will be put into action. Thank you.]
Mr M A MZIZI: Sihlalo, Ngqongqoshe nozakwethu … [Chairperson, Minister and colleagues …]
… one of the aims of the Department of Public Enterprises is to support and promote economic efficiency and competitiveness for a better life for all South Africans. This is very important, considering the lofty economic growth targets contained in the Accelerated and Shared Growth Initiative for South Africa.
The department will therefore have an important role to play with regard to economic growth. If the department is to fulfil its mandate and make a meaningful contribution to economic growth, it is imperative that the state- owned enterprises are efficient and effective performers. This, however, has not always been the case.
The performance of some of the state-owned enterprises has left a lot to be desired. Eskom and SA Airways, in particular, have not performed up to the standard that would promote economic efficiency and competitiveness. Their performance has, in fact, been bad, to say the least.
The many blackouts and power shortages that now seem to be common occurrences in our country are definitely not conducive to economic efficiency and competitiveness. They have in fact had the opposite effect and contributed to economic losses and inefficiency, regarding the affected individuals and businesses.
With the winter months now upon us, and the demand for energy increasing, Eskom will have to ensure that there is a consistent supply of energy to households and businesses.
The airline industry is very competitive and if SAA is to be a major player in this industry, then drastic changes are needed. It cannot continue to rely on the government for funding. The sooner SAA is competitive and starts making a profit, the better for the South African economy as a whole.
We, in the IFP, have always been strong advocates of the free-market system, which promotes the efficient allocation of resources. But, we do, however, understand that this department has an important role to play in the economic development and prosperity of South Africa. It is, therefore, in the best interests of all South Africans that our state-owned enterprises function efficiently and effectively, as this will contribute to the department’s aim and help us attain a higher level of economic growth. We support the budget. Thank you.
Mr D G MKONO: Madam Chair, Minister, hon members of this august House, officials, this afternoon this Council deliberates upon the budget of the Department of Public Enterprises. The Budget Vote before us should be a beacon of hope for many South Africans, particularly those who live in poverty. It should, therefore, not be seen as a routine matter of business to be discharged as quickly as possible.
Budget Votes are an opportunity for hon members to scrutinise the work of the department and ensure that it will deliver on the mandate that the people of this country have given us – a mandate to create work, a mandate to eradicate poverty, a mandate to reduce inequalities and to expand economic opportunities for all.
Within the National Council of Provinces, this scrutiny takes on additional dimensions. As representatives of South Africa’s nine provinces, members of this Council are particularly concerned about how the work of the department will improve the economy of their provinces and regions.
Through this budget, the department plans to achieve objectives that, I believe, we all share, which include, inter alia, unlocking the economic potential of all our towns, cities, villages and communities, our different regions and provinces, so that the geographic spread of economic growth and development is more equitable.
The department aims to provide an effective state-owned enterprises’ shareholder management system, and to support and promote efficiency and competitiveness for a better life for all South Africans. There has been renewed emphasis on the role SOEs must play in a developmental state, in that they will remain government-owned to play a vital role in economic growth.
In line with this, the Department of Public Enterprises defines its medium- term mandate as having the following three elements: disposing of non-core assets that no longer serve a strategic purpose, ie infrastructure – I am saying this under protest, Mr Minister; the ongoing management of SOEs against the achievement of their strategic purpose; and establishing new SOEs to achieve a strategic purpose, particularly in the event of market failure; and, most importantly, to strengthen SOEs’ balance sheets and also to leverage the SOEs’ capex programme in order to catalyse economic activity.
Apart from implementing an effective shareholder management system, the department will also look at four subprogrammes. These are the ICT Sector – Broadband, which is responsible for setting up the new SOE Broadband InfraCo, overseeing the necessary agreements between the relevant parties, assessing the business plan, monitoring the commissioning of the full services network, and providing the overarching shareholder management; the Mining Sector, which provides oversight on the turnaround of Alexkor, with a particular focus on the settlement negotiations and the separation of Alexander Bay Trading from Alexander Bay Mining; the Energy Sector, which provides oversight of Eskom and is responsible for the generation, transmission and distribution industries, with a particular focus on analysing the regular framework and tariff-related issues; and the Initial Public Offering, which includes transfers to the Diabo Trust and the Khulisa Trust where Telkom shares were housed.
In conclusion, as part of service delivery objectives, this year’s departmental expenditure should ensure the implementation of the infrastructure investment programme, characterised by the restructuring process currently taking place amongst some state-owned enterprises. I hope the House will adopt this Budget Vote. I thank you. [Applause.]
Ms B L MATLHOAHELA: Hon Chairperson, hon Minister, members of the department and hon members of the House, the efforts made in this Budget Vote are noted. Recruitment of people who are differently able should become a priority, as this is presently a challenge in the Department of Public Enterprises. Issues relating to women, children and the youth should be the focal point towards addressing it.
The state-owned enterprises, SOEs, are required to carry out infrastructure investments so as to raise capital in the markets in which they operate. Hence, it is expected that recapitalisation will decrease. The Northern Cape province is rich. During the provincial week, the Premier of the Northern Cape brought to the attention of the delegates the richness of manganese that we have. What can the input of public enterprises be in this regard?
In a previous speech, I referred to the treatment of employees of the SAA in a positive way. The ID is no longer so positive about this issue, in view of the fact that the hon Minister pointed out in the media that 1 000 employees would have to leave. The country has a high unemployment rate. It is not expected of the state to increase these figures.
The attention of the hon Minister also needs to be drawn to the situation where Eskom demands 80% occupation before electricity is provided in the Northern Cape province. I thank you, hon Chair.
Mr N D HENDRICKSE: Hon Chair … [Interjections.] Can you protect me please, hon Chair? Hon Chair, hon Minister, hon members and officials, this Ministry is a vast one, with many facets and varying enterprises. As I have a limited time slot, I wish to laud the Minister and the CEO, Ms Molefe, and their dedicated staff in their attempt at rectifying and turning around ailing SOEs. I wanted to start with that, in case I got cut off before I could say it.
We are extremely happy to see that Denel no longer depends on Rooivalk sales to get into the black. Though SAA is still a problem child, we believe, with extra attention and good service, it could right itself. Perhaps, the SAA CEO’s bonus must be results-driven.
The winter has come with a vengeance, and I hope Eskom will not have any loose bolts flying around. The decision to build the pebble bed reactor is a brave one and we support it. We wish the department well. However, we trust that the funding will come from the fiscus, and that the rates will not increase. Similarly with Telkom, we feel that the rates are way out of line, if we compare them with rates worldwide.
Alexkor and the Richtersveld, is a worrying point. Therefore it needs close monitoring so as to ensure that the people there are fairly treated. We depend on you, Mr Minister, to do just that. We know you will do that. It is a poor community that has suffered for many years.
We eagerly await the revitalisation of goods and passenger trains through the Karoo so as to bring a breath of life back into the dying towns and dorpies [small towns], and this will encourage tourism. We know that you are busy with such things and we are looking forward to that.
Unfortunately, there is definitely no way that we can stand by idly whilst CEOs of various enterprises rake off millions of rands as remuneration and bonuses. To say the least, that is embarrassing for us. Just how do we justify this kind of madness to the people on the ground? Sir, the argument that these are market-related payouts holds no water, because, at the drop of a hat, you could probably get managers who would do this at half the pay.
So, Mr Minister, we want to tell you that we fully support you and that we have every confidence in you and your staff. You have a big job to do, and the economy and the people of South Africa depend on you to do just that. We fully support this Budget Vote. I thank you. [Applause.]
Mr J M SIBIYA: Comrade Chairperson, hon Minister, officials of the department, comrades, colleagues, ladies and gentlemen, I have never been to an economics classroom, neither have I ever been to an economics lecture hall, but what I know for sure has been learnt from the wisdom of the Shangaan-speaking people in this country and Mozambique. Like any other national group, they have a very interesting proverbial expression from which, I think, we can all learn a lot. In English it says: Do not sell the little you have, otherwise you become a beggar of the highest order. And they put it in this way in their language:
U nga dyeli hi timpfuvu u nga rimanga enhlalukweni. [Do not let your food be destroyed by the hippopotami, if you did not plant at their drift.]
Privatisation as a concept, especially wholesale privatisation, is anathema. It increases unemployment, poverty and landlessness. It undermines human dignity and human rights – aspects which the ANC will never allow to be violated. It also creates the mentality of individualism – I, and then the rest. Above all, in philosophical terms, it creates the mentality of living on unearned income. What I have said has never been of service to our people, neither are these part and parcel of their vocabulary, let alone that of the ANC-led government in this country.
The ANC considers human dignity and human rights as inviolable, unless there are compelling and inexcusable reasons. The above emanates from its philosophical belief that a human being is of the highest value in the whole universe. The Freedom Charter, the people’s document which was adopted in 1995 - I was there but only three years old, so, I couldn’t understand what was going on [Laughter.] - says in clause 7, and I quote, “There shall be work and security.”
The Minister, to whose department the Budget Vote we are debating today belongs, is well versed in the above-stated positions. If one studies the strategic plan for his department for the 2007-08 financial year, one will be quick to deduce what I am saying, unless one does not know the ANC philosophy nor understands the contents of the Freedom Charter. If that is the case, then hard luck to that person, and there is very little we can do.
The Budget Vote that we are debating today is a monetary expression of the programmes and activities to be carried out by the government in the current financial year. Put in broad terms, the government, through this Vote, aims to do the following: to ensure that corporate strategies of Eskom, Alexkor and others are aligned with government’s strategic objectives as defined in the policies, regulations and economic strategies; to ensure the provision of effective legal services, corporate government systems, risk management frameworks and secretarial services to the department itself and state-owned enterprises as a whole; to ensure effective SOE strategy analysis against strategic intent as well as SOE financial and operational performance monitoring; to ensure that the strategy, investment plans, commercial philosophy and operational performance are aligned with the strategic intent of the government; and to enable the development of projects that leverage the assets, activities and/or capabilities of the SOEs and the economy as a whole.
The ANC believes that the overall strategy of the budget we are discussing now is to contribute greatly to the facilitation of the fulfilment of the programmes we have as a government. First and foremost, it is about service delivery to our people.
The mining sector, for instance, intends to provide the oversight of the turnaround of Alexkor with a particular focus on the settlement of negotiations with the people concerned, thereby bringing about the atmosphere of co-operation between Alexkor and the people concerned, and, in that sense, creating room for the government to concentrate on its core business.
The building of the SOEs is one of the most promising endeavours by our government and we believe that it is one of the cornerstones of the policies of the ANC-led government, especially taking into account the commitment to creating jobs and fighting poverty.
It is only when enterprises are built that jobs can be created, leading to the consequence of people being hired, work being available. As such, they contribute to the dignity of the people. The prevalence of work and security contribute greatly to the welfare of the people, but also to their human rights and dignity. In a political sense, the move will contribute towards reducing poverty. As a country, we aim to halve poverty by 2014.
The subprogramme of infrastructure building and the sector investment strategies will greatly contribute towards the realisation of Asgisa, as a government policy. As the ANC, we believe that the budget as a whole will strengthen the SOEs, departmental governance and the administration system. We believe that this will, in turn, improve management of SOEs and bring about cost-effective, commercially viable logistics, infrastructure and services.
To us – the ANC - the above is a way to service delivery efficiency, lower production costs and improved competitiveness. It is for these reasons, in part, that the ANC unreservedly and fully committed, supports the Vote and urges this House to do the same, as Comrade Ntwanambi said. Thank you very much. [Applause.]
The MINISTER FOR PUBLIC ENTERPRISES: Chairperson, I must say, very sincerely, that it is always a great pleasure for me to attend these debates. There is a certain quality about the NCOP which makes it deal with things in a very practical and realistic way. I thoroughly enjoy it, and I say that sincerely. [Applause.]
I am going to jeopardise my credibility because I am so impressed by this debate that I would like to answer the issues in full. I hope that, if I stray just a little bit over 10 minutes, Madam Chair, you will exercise that gentle quality of mercy that falls like the rain from heaven in Cape Town. [Laughter.]
Let me deal with a number of the very interesting issues that have been raised by hon Themba. Thank you for your comments about the department. I also believe that both the SOEs and the department have worked very hard. Specifically, with regard to some of the issues that you have raised, let me say that, concerning Safcol and any disposals of Komatiland Forests, our policy on this matter is very clear. Our objective would be to sell these as going concerns. In terms of the labour laws, that would be a section 189 process. We seek thereby, with the unions involved, with the new owners and with ourselves, to integrate into any disposal agreement some security for workers, both in terms of their employment and in terms of their benefits. I think this is an approach we take in any disposal; it is an important approach.
Let me also say that a number of speakers have raised the issue of skills. We are putting a tremendous effort, as state-owned enterprises, into skills development. We are doing it from the schools through to the engineers and professionals. Let me illustrate one programme that we are very pleased about. It comes as a result of our skills project in the department.
We discovered that Denel had a very good programme, where they adopted schools, particularly from poorer areas. They took young people whose parents could probably not afford to put them through further education. They took them to our college in Kempton Park, at the airport, and then allowed them to be tutored by the local college of further education and training and to write matric again. These were youngsters who had passed mathematics and science with standard grade. At the end of the year they wrote again, at higher grade. I must say that the success has been fantastic, moving from bare minimum passes to upper second-class type of passes.
We will expand that programme, with all of the big SOEs. We are, of course, doing a great deal to improve our training of artisans and we are working very hard to train engineers. This skills process is very important and we are putting a great deal of energy into it.
I did not mention the property project in my formal address. Really, it is an important process of making available pockets of property in the different provinces. We have published our guidelines on disposals, black economic empowerment etc and this process will continue.
With regard to shareholder management, which a number of people have raised, and was raised by the hon Themba, to begin with - I do think this is a very interesting exercise. There is also a point that has been made by many speakers from different parties. The DA made this point and the IFP made this point, that there is always going to be some dispute about the role that the state should play. Should it be involved in companies or not?
Now, the truth of the matter is that I am sure there is not a party sitting in this House or the other House that does not accept that, as it happens with all economies in the world, there will be state-owned enterprises. The question is: In which sector and for what purpose?
Just because we are a state-owned enterprise, does not mean you don’t work with the market. It does not mean you don’t have partnerships with the private sector; you have very big ones. But this Act will allow us to make a clearer statement on what it is that we are doing with an enterprise. And I think that is good for everybody. It is good because it will clarify for the boards and management what it is that we want them to achieve. It will clarify to the world as a whole, be it in South Africa or anywhere else, what it is we are going to do with an enterprise. So, I think it is an exciting new development.
Let me deal very quickly with hon Ntwanambi’s point about the port of Cape Town. This is actually something that is worrying us quite a lot. Now, in our property project, together with Transnet, we had actually planned to release quite significant land in the port, particularly for shipbuilding and boatbuilding, which is a very successful industry in Cape Town. I know a lot about that because we started it during my time with Trade and Industry. It has been very, very successful.
Our difficulty is this: We had originally intended to expand the container terminal, because the number of containers coming into Cape Town is continually rising. Now we are having massive difficulties with the EIA, because of objections that we may have an adverse impact on the beaches, going around that coastline. And, frankly, it is taking so long that we have a problem regarding the ports.
So, we have been forced to reserve land behind the port where we may have to put container terminals. If that happens, we have to move a whole lot of other stuff further back, meaning there will be very little land for other activities. Now this is a difficulty. How do we grapple with it? It is something we have to grapple with.
Saldanha, obviously, has space but most of the artisans and people are here, because if you look at the quality of our boatbuilding, you will find that it is of excellent quality. Some of the best yachts, crafts and catamarans in the world are built here – it is really fantastic. You can look how well Shosholoza did, it was manufactured here. So, it is quite difficult to consider how we would move it away.
Let me deal with this statement, which is an interesting exercise, in the press. You mentioned the bolt, and this statement is the same phenomenon as the bolt story. Now, I have never said 1 000 people will be retrenched. In the portfolio committee hearing, I never said that. So, when I approached the journalist who wrote that, she admitted it and said: “No, you never said it. I am sorry, my editor put it in.” They didn’t apologise or anything – they put it in. Roger Makings then also quoted “1 000 people”. People here quoted “1 000 people”. We didn’t say that. Yes, the chief executive did once say in a hearing that we may have to consider this.
What I said is what the position is, that in this process we would have to negotiate certain changes, and we cannot guarantee that there may not be retrenchments. But, regarding the number or if it has to happen, involves a negotiating process, and that is a normal situation. Sometimes the media just creates facts: one quotes another one which quotes another one, but the first one was wrong. So, I am afraid, that is the position.
Very briefly, let me say one or two words on Alexkor. It is an important settlement, and it is a very complex one. So, I do need to clarify that. It is complex, and this is what amazes me about that community, that they can keep track of such complex negotiations. We will set up a partnership to begin with, and we are starting work in a few days’ time on that issue. We would hand over the agricultural and maricultural stuff to the community. They have to set up companies to receive that. They have to form partnerships with people that will help them manage. So, it is a very complex project. But I think if we carry it through, as I indicated, we really can make a difference to that community.
Let me say one or two words on SAA. The long and the short of it is, as some speakers accurately identified, yes, SAA is different to Eskom or Transnet. We are heading for a very intense period of tourism, visits etc. Regarding the 2010 World Cup, we have to be absolutely certain. It is a very big challenge for us. If you go and look at what happened in Germany, they put on a massive number of new frequencies etc. And we are just not prepared to take the risk in this period, that is if you privatise you have absolutely no control over what will happen to that airline. We are not going to take that risk. It is too important for us. Yes, we have to carry out the changes.
Most of us are very critical of our airline, I know. It’s a national sport in most countries, but if you actually look at SAA as an airline, it compares very well. Most of you haven’t flown in the United States; I don’t think so. I mean, fly in the United States and tell me what sort of service you get there? I can tell you it is nowhere close to SAA’s. And that is true of most of Europe too, if you fly there. So this is a good airline. We are going to turn it around, we are going to make it more profitable.
I want to say a few quick things about electricity. Some questions were asked about quantities of funding needed, etc. If we manage the process carefully, and if we are very serious about saving electricity, then we should minimise the impact of this tight reserve margin. But it requires a joint effort. It requires the kind of effort we saw in Cape Town last year, where we saved amazing amounts of electricity by joint activity. Now, we all have to do that. We met with the mining industry yesterday, we meet with business in a few weeks’ time, and everyone has to save. If we can do that, we have a real prospect of getting through this process.
The figure of R150 billion doesn’t include some of the additional funding that would have to be carried out in the actual distribution sector, in the municipalities and the metropoles. And this, we all agree, is a cause for concern, which is why we should delay the formation of the regional electricity distributors, because we have to begin investing also in that infrastructure.
Eskom is rapidly upgrading its distribution and transmission, but we do sometimes have problems. Bedfordview was a very classic example: a fairly old technology cable was punctured. So the insulation of this 135 megawatt cable, this old technology where you insulate it with oil, was punctured by construction workers somewhere. Now, it took us time to find out where the puncturing was. We had to find out where someone had gone in and punctured this thing. And it took us more time than we all liked to be able to repair that. But it shows that we have to upgrade technology continuously. We have to modernise that technology.
But let me say that if you compare the outages in South Africa, they compare very well with the outages in Europe. In fact, we are still far better than most economies in Europe on this. So, yes, it is a problem for us in South Africa, because we have never had this before. Of course, we want to change it but let’s not exaggerate that we are suddenly worse off than everybody else - we are not. Our economy is still very strong when it comes to energy, etc.
Let me make one or two last quick comments. Regarding manganese, one of the projects is certainly to create a second channel of export from the Northern Cape to Coega in the Eastern Cape. It will take us a few years, but I think it is going to be a very interesting project which we need to build up.
On the employment of the disabled, we are working very hard on it in the Department of Public Enterprises and I think we are beginning to make progress. It is very crucial.
Very quickly, concerning the Rooivalk, just to dispel some of the editorials - and thank you for your leniency, Madam Chair - what we have said is very clear: We will have to consider it. The reason we are considering it is that we are actually continuing a further investigation with the company to see whether a modified version of the Rooivalk would be reasonable. Once that process is finished, it will allow us to make a final decision, one way or the other. We will make that decision. If we find it is not feasible, the programme will have to stop. If we find there is a possibility of making this a feasible programme, we would continue, but it would clearly be in a modified form. It is not going to be in the present form.
On the remuneration of CEOs, most of the companies involved are the biggest companies in South Africa. They are very complex and they are very big. If you think you are going to find top executives in South Africa to run these companies, they have to be really skilled. If you are going to pay them peanuts, it’s not going to happen. So, basically, the guideline we have is that, regarding all our big companies, we take approximately the median of what we see in the market as our benchmark, and we pay around that. That includes bonuses, basic packages and everything. But remember, these are very big and very important companies. If you want good management, you are going to have to pay for good management.
I thought that Shangaan Economics 101 was really excellent. [Laughter.] I think that made a good point. But this debate is not a debate about ideologies. This is a debate about economics. What is economically the most effective proposition? So, why the ANC has been a successful movement is that we are not driven by ideology. We are driven by analysis of the facts.
If you look at the Ready to Govern document of 1992, if you look at the RDP document, you will see stated very strongly that we will deal with the state on the balance of economic evidence, that is whether it should be owning or not. And that is why, for example, with regard to the Freedom Charter, we took a very clear and deliberate decision that in the modern world, in the modern context, it would not make sense to nationalise mines. It would have been a mistake.
But, what we knew was that the system of mineral rights was wrong. We were one of a tiny number of countries in the world where the mineral rights could be owned privately. That is wrong. You cannot take a natural asset, a natural endowment, and make it privately owned. So, that is why we, if you like, nationalised the mineral rights.
But I make that point because we will always make our decisions on the balance of economic evidence, on analysis, on what’s correct and what’s not, and we are not going to be swayed by ideology that says that the market is God or ideologies that say the state is God. What is realistic and what is practical is what we will do.
Thank you very much, Madam Chair, for your leniency. Thank you to the House for listening for so long, and thank you for the debate. [Applause.]
The DEPUTY CHAIRPERSON OF THE NCOP (Ms P M Hollander): We thank the hon Minister for his valuable and informative contribution to the debate. Thank you for your participation, hon Minister.
Debate concluded.
The Council adjourned at 15:21. ____
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
FRIDAY, 30 MARCH 2007
ANNOUNCEMENTS:
National Assembly and National Council of Provinces
The Speaker and the Chairperson
- Assent by President in respect of Bills
(1) Measurement Units and Measurement Standards Bill [B 21B – 2006]
– Act No 18 of 2006 (assented to and signed by President on 25
March 2007)
(2) National Land Transport Transition Amendment Bill [B 38D –
2005] – Act No 26 of 2006 (assented to and signed by President on
25 March 2007)
-
Draft Bill submitted in terms of Joint Rule 159
(a) Prohibition or Restriction of Certain Conventional Weapons Bill, 2007, submitted by the Minister of Defence. Referred to the Portfolio Committee on Defence and the Select Committee on Security and Constitutional Affairs.
-
Translation of Bill submitted
(1) The Minister of Public Works
a) Wetsontwerp op die Bestuur van Onroerende Regeringsbates [W 1
– 2006] (National Assembly – sec 75).
This is the official translation into Afrikaans of the Government
Immovable Asset Management Bill [B 1 – 2006] (National Assembly –
sec 75). COMMITTEE REPORTS:
National Assembly and National Council of Provinces
-
JOINT BUDGET COMMITTEE REPORT ON THE HEARINGS OF THE JUSTICE AND PROTECTION CLUSTER 2006
-
INTRODUCTION 55 1.1 Joint Budget Committee Mandate 55 1.2 Process 56
-
Department of Correctional Services 57 2.1 Financial management aspects 57 2.2 Human resource and capacity aspects 60 2.3 Concluding requests and comments on Correctional Services 60
-
Department of Safety and Security 61 3.1 Financial management 62 3.2 Human resources and capacity 63 3.3 Rural location of police stations 63
-
Justice and Constitutional Development 64 4.1 Financial management aspects 64 4.2 Resource constraints including human, equipment and capacity 66 4.3 General Comments 67
-
The Department of Defence Vote 21 68 5.1 Financial management aspects 68 5.2 Human resources and capacity aspects 73 5.3 General Comments - Further Information required from Departments 75 5.3 General Comments 11
-
CONCLUSION 11
-
RECOMMENDATIONS 12
1 INTRODUCTION
The Joint Budget Committee identified the Justice and Protection Services’ Cluster for its first oversight exercise on a sector. During the deliberations on the Section 32 monthly financial management on a quarterly basis reports, the Committee identified expenditure patterns which called for more focused engagement with certain departments, to seek among other issues, a further clarification of the relationship between expenditure and strategic outputs and outcomes.
1.1 Joint Budget Committee Mandate
The Committee’s mandate regarding the Medium Term Budget Policy Statement (MTBPS) requires it to consider the distribution of available financial resources for expenditure against government policy priorities. This mandate is distinct from that of the Portfolio and Select Committees on Finance, which deliberate on the macro-economic, fiscal and intergovernmental dimensions of the MTBPS respectively.
The Committee has interpreted its mandate to mean that it should consider:
▪ The likely impact of expenditure allocations in the MTBPS on the effectiveness and efficiency with which departments can respond to government’s stated policy priorities; and ▪ Whether departments are making the tough choices required by ensuring planned expenditure is informed by priorities, and choosing effective strategies and pursuing greater efficiency in implementation.
The Joint Budget Committee (Committee) on a regular basis monitors monthly revenue and expenditure as published by the department to determine whether expenditure is in line with budget projections in respect of outputs and outcomes. The intention of the Committee is to explore whether the department’s expenditure encompasses the following principles and best practices:
• Effective expenditure on identified policy priorities including the
principle of value for money;
• Strong linkages between expenditure and stated objectives in
strategic plans;
• Ascertaining whether strategic plans are measurable, achievable and
sustainable; and
• Identification of critical success factors.
1.2 Process
The Committee conducted the hearings between 14 and 15 November 2006. It planned to hear submissions from the National Departments within the Justice and Protection Services excluding the Independent Complaints Directorate. The Committee also identified the Department of Home Affairs as requiring further scrutiny. After deliberating on the submissions and studying the relevant documents the Committee has made certain recommendations. The Committee expressed its concern that the Department of Home Affairs did not present themselves for the submission as requested. The hearings are a valuable part of the exercise of the Committee’s oversight on the Budget process which include the Appropriations Bill, the Division of Revenue, the MTBPS, the Adjustments Bill and the monthly Section 32 reports which the Committee reports on, quarterly.
- DEPARTMENT OF CORRECTIONAL SERVICES
The Department of Correctional Services highlighted their strategic objectives during their presentation to the Committee. These strategic objectives are: Master Information Systems Plan, Seven Day Establishment, Integrated Human Resource Strategy, Other Corporate Projects, Human Resource Development, Security Equipment, Management of Remand Detainees, Overall of Social Reintegration, New Generation Correctional Centres and Development and Care.
2.1 Financial management aspects
During the current financial year the Department has focused on several improvements to increase the compliance with internal controls. These improvements were necessary as previous years’ audit reports highlighted queries regarding internal control issues. However the Committee learned that compliance has been improved in internal controls. These include on- site verifications conducted by the departmental inspectorate and Internal Audit Units, as well as the training of managers in logistics and financial management.
According to the adjusted estimates per programme (2006/07), inter- programme shifting of funds occurred. The bulk of the funds shifted were to Compensation of Employees from the Programme Security to align the budget allocation with new approved posts. Inter-programme shifting of funds also occurred from Programme Facilities to Programme Care. The specific shifting of funds came from Goods and Services to finance nutrition under the Programme Care.
From the current state of expenditure per programme, it is clear that after six months of the current financial year, most programmes have been spending more or less the same as the total spending for the vote (41.87%). Only one programme, the Programme: Facilities has spent at 31.96% of its budget by 30 September 2006. In terms of the ENE Baseline Allocations per Programme, this programme has also been allocated 2.21% less from the previous year.
Capacity constraints arising from the non-employment of staff were given by the department as an explanation for the delay in the construction of the Kimberly Prison Facility.
Allocated budgeted funds were insufficient to begin the construction of the New Generation Correctional Centre in Kimberley which the department indicated had led to serious financial challenges. The new design based on the White Paper on Correctional Guidelines required the appointment of private quantity surveyors re-cost expenses relating to the facility. These increased costs and the significant escalation in the price of materials led to the initial estimates projected. The construction and related costs will be incurred over two years and the estimated expenditure for the 2006/07 financial year will be R 180 million.
With reference to the outsourcing of catering for correctional facilities, the Department stated that it made more “practical sense while upgrading” and would also “reduce costs”. This would be an interim measure during the installing of the new planning system, training of offenders, and renovations. Consequently, a pilot process of mobile kitchens was introduced.
In the Committee’s opinion the achievement of strategic objectives poses a serious challenge to the department which acknowledged that the objectives were too broad, which hindered the measurement of the objectives. The department assured the Committee that they were working on improving the strategic process.
During the current financial year the department has taken proactive steps to monitor expenditure. The monitoring of expenditure became important since the department has in previous financial years surrendered funds to National Treasury. The department has committed to set better time frames and also to ensure improved expenditure management.
A shift occurred in funds from the sub-programme under Programme 4 Care which the department indicated was a consequence of an escalation in medical treatment – thus necessitating an adjustment.
The department confirmed they had experienced problems on extending the Correctional Facilities at Leeukop and Pollsmoor. It had withdrawn these plans to build on prime site which had been objected to by the private sector. The department indicated that they were continuing their interaction with the Portfolio Committee on Safety and Security in respect of the announcement of eight prisons in the State of the Nation address during 2000, 2002 and 2006. The Committee was not entirely satisfied with the department’s response that the escalation in terms of costs in the building industry would determine whether four or five facilities announced by the State President 2005, 2006 would be finally constructed.
The Committee intends engaging the department during the fourth quarterly report regarding these costing analysis. The department assured the Committee that it was not their practice to accelerate expenditure in the final quarter.
2.2 Human resource and capacity aspects
Provision has been made in the budget for salary increases of level 6 and 7 personnel. To address the screening constraints experienced, as projected to 2009, the department has established a section to screen staff for selected positions dealing with sensitive documents.
The Committee learned that the integrity of the new IT security system during its implementation had been compromised at Durban Westville Correctional Facility and in some instances staff had caused the system to fail. The department indicated that IT facilities are centralised from head office. It further indicated that not all centres have IT specialists. At present the department has a system whereby the 241 correctional facilities countrywide are connected through a system of five dedicated centres. All centres are connected but not all systems are installed.
The department is in the process of implementing the Balance Score Card (BSC). The department is striving to have the BSC in place through their strategic plans, and would strive towards excellence with implementation.
The department stated that the implementation of the recommendations of the Jali Commission would have financial implications for which funding would have to be sought. However, they confirmed that internal capacity had been established.
4 Concluding requests and comments on Correctional Services
The issue around budgetary allocations for new Generation Correctional Facilities and other unanswered questions should be responded to within seven days, in writing.
During the next engagement with the Committee the department should ensure their preparations include the linkages between stated outputs in their strategic plan and expenditure utilised as well as projected expenditure to ensure a more constructive oversight process.
- DEPARTMENT OF SAFETY AND SECURITY
The department’s should note that the key public spending priorities defined in the Medium Term Budget and Policy Statement of 2006, among other objectives is an emphasis on visible policing and improvement of court case flows.
Spending as outlined in the New Economic Reporting Format Expenditure table shows that current payments at 45.6% appears to be on track. Nevertheless, the Committee believes the low expenditure of 21.6% on buildings and other fixed structures gives cause for concern. However, it welcomed the department’s 73.1% transfer and subsidies to provinces and municipalities which should support effective and efficient expenditure in these two spheres of government.
The department stated that it was operating under the principle of value for money for projects it was involved in. It had linked the strategic plans with strategic objectives, which are measurable, achievable and sustainable, but that time would really tell if they would be sustainable.
3.1 Financial management
The Committee was impressed with close linkage of the information submitted and responding engagement with the oversight requirement mandate of the Committee. The department pointed out the growth of the budget from R17 billion six years ago to the current budget of R28 billion. During the last financial year the department had a net surplus of only R1 000 which they surrendered to National Treasury which underpins the robust financial management.
One of the innovations to manage the maintenance budget while sustaining the policy priority of effective police response timing, was to change the procurement approach for maintenance by giving selected garages permission to work on a threshold basis rather than following the previous tender procedure route. In line with the department’s maintenance model, associated with its assets, the vehicle crime response units were upgraded with a new fleet of cars for the purpose of increasing response time. However, the vehicle maintenance budget spent about R1 billion on fuel, which was largely related to global market increases. With respect to improving the response time to crime, the Committee believes the department could increase its engagement with the private sector to support its efforts in this direction. Perhaps the relevant Portfolio Committee could also pursue this matter when exercising oversight of the department.
The department assured the Committee that it would be able to spend the funds allocated for the 2010 World Cup, which included the acquisition of Water Canons and Command Vehicles. The department illustrated this with their expenditure patterns for their commitments in the Rugby and Cricket World Cup. Furthermore, the experience they would gain from their contract to co-ordinate the security arrangements at the 2007 Cricket World Cup in the West Indies would be of great value. The department re-emphasized that expenditure was informed by priorities.
3.2 Human resources and capacity
According to the department, the information technology system is regarded as efficient to indicate staff turnover. It took the South African Police Services four (4) years to develop and locate issues internally. The department has a remuneration system for police officials to improve their quality of life, with incentive systems similar to the merit system in education.
In response to the Committee’s questions on salary challenges and performance, the department indicated that the salaries of the police officials who fall between the ranks of constable and senior superintendent has been raised by more than 34% over the last three years. Further, all employees have the right to promotion but most importantly the promotion policy of the department is based on performance. Staff must now convince the department of performance, which is in sharp contrast with the former practice of automatically promotion of officers.
3.3 Rural location of police stations
Much progress was evident in the linkages between allocative efficiency and expenditure nevertheless the department needed to also link allocations to government rural policy and locate police stations closer to rural people. However, the department indicated that often the most suitable location was on land that belongs to the chiefs. The Committee believes that negotiations with chiefs, regarding location of police stations in rural areas should be pursued.
- JUSTICE AND CONSTITUTIONAL DEVELOPMENT
The Department of Justice and Constitutional Development has a history of under spending and has received qualified audits for the last four years. The key challenges highlighted in the MTBPS are the improvement of court case flows, capacity, skills development, administration of justice, the Justice College Programme, the Construction of the new head quarters in Mpumulanga and Limpopo, and the management of Monies in Trust.
4.1 Financial management aspects
At the end of September 2006, the department had spent 38% in terms of current payments. Goods and services, which form part of this category, have the slowest expenditure with 33% expenditure, while compensation of employees spent 42%. Overall, the expenditure department stood at 41% of the budget at the end of six months of the current financial year.
The department has a history of huge under spending and this pattern is not seen as good – last year’s under spending was R1 million, and under spending is projected at R500 000 for the current financial year. The repeat under spending is not good for the department since court services are regarded as the department’s main focus. The Department could not respond to the Committee’s inquiry on its involvement in multipurpose centres (MPC).
Both virements and rollovers occurred during the first six months of the year. The shifting of unspent funds was used to provide for expenditure for a digital network system to the amount of R41.8 million. The digital network system was introduced to replace the old analogue system in courts. R35 million was rolled over to finance X-Ray machines and metal detectors at courts, while R114.8 million was used to fund digital court recording equipment.
Approximately R101 million was shifted from Compensation of Employees and Machinery and Equipment to Goods and Services. The shifting of funds from Compensation of Employees to Goods and Services was as a result of the non- filling of posts. Between programmes, funds were also transferred from Machinery and Equipment to Buildings and Software. Virements for software were as a result of the March payment for software licences.
In response to the Committee’s observation on the high March expenditure patterns the department indicated that the institution’s for which they provide services close down during November and December, which led to the expenditure peak in the final financial quarter.
The department informed the Committee that National Treasury had agreed to its need to obtain an emergency certificate to procure the necessary security equipment related to the re-prioritisation of services. However National Treasury had warned the department that this departure from regular tender procedures should not be seen as the norm.
The department also reported that they made payments to psychiatric services, which was later claimed back from other departments, however this may reflect negatively when analysing their financial position.
4.2 Resource constraints including human, equipment and capacity
Insufficient and under-utilised courtrooms contributes to the huge case backlog which department said necessitates an increased budget for capital works. The department confirmed that the Magistrates Commission was looking into 500 to 600 courts. Location of courts in largely urban areas had also contributed to long waiting lists. Lenasia and Protea courts were not easily accessible to the community. The Committee believes that in the short term the department could also explore alternative measures to better utilise existing court facilities with low case loads. The provision of transport and the use of alternative facilities that could be cost effectively converted.
While the Committee acknowledged the difficult working conditions staff are experiencing with no air conditioning, and no proper functioning facilities in some courts, it also believes that if the budget of the department is stringently analysed against its core priorities it may be able to resolve the problems cited in capital works.
With respect to the current HR capacity challenges the department stated that its problems are governance and systemic in nature. It added that it is investigating a short-listing process and are also considering outsourcing the HR function to respond to the exercise of short-listing of candidates.
However, it had employed temporary staff as an interim measure. Retention was also a huge problem especially below the salary 8 level which accounts for the high under-expenditure. In dealing with the management of caseloads and the Court Roll, the department has re-employed retired and recruited new staff in an attempt to bring trial dates nearer in managing of case backlogs. This process is expected to cost approximately R60 million to implement. The department indicated that currently the National Prosecuting Authority (NPA) has been advertising posts.
Notwithstanding the measures already taken the Committee expressed the opinion that the department had not analysed its core business, which the Director-General acknowledged. The type of employee required for the department’s core business, which is advisory services, should be at a higher skills level and administrative in nature. The minimum qualification in the department nowadays is a tertiary qualification with two years experience. To address the currently employed staff, who do not have the degree qualification; the department confirmed that they would be trained through SETA’S accredited training programmes.
Most stenographers became redundant with the implementation of a digital system, however those who could be employed in alternative clerical positions would be retained and re-skilled through SETA programmes.
4.3 General Comments
The Committee recognised that the department was working on matters where they were experiencing major challenges but advised the department to work with the relevant portfolio Committee. The Committee reminded the department that it should prepare to make a submission on either the fourth quarterly expenditure in May or the first quarterly expenditure in the 23006/07 financial year. The Committee also pointed out to the department the need to re-examine their classification of under expenditure as savings in certain line items.
- THE DEPARTMENT OF DEFENCE VOTE 21
The Department of Defence made submissions to the Committee, but did not have either the executive authority or accounting officer present, which is one of the requirements when accounting to the Committee nevertheless the Committee agreed to continue the process of submission and engagement, but only after warning the department it would not do so again. This is a requirement to comply with the PFMA and also to respect and comply with the constitutional oversight mandate of Parliament.
The Committee also noted that the department had a practice of not attending the MTEF hearings. The Committee also cautioned the department to focus on the strategic plans, objectives achieved and the corresponding budget projections and expenditures associated to programme spending.
5.1 Financial management aspects
The Department of Defence has nine programmes. These include: Administration, Landward Defence, Air Defence, Maritime Defence, Military Health Support, Defence Intelligence, General Support, Force Employment and Special Defence Account.
The Committee noted with concern the low spending performance for the two project descriptions in the Programme Special Defence Account, falling below the average spending of 33% for the entire programme. The recorded pattern of 21% has been spent on projects in excess of R15 million as part of the first six months of the year. Likewise, only 16% spend on Special Projects.
A comparison between the total estimated expenditure (2006/07) and the available funds (include adjustments) reveal that an over expenditure is expected in all programmes. The Government Finance System (GFS) classification in terms of the New Economic Reporting Format reveals that an over expenditure of almost R21 million is expected for Compensation of Employees. A protracted procurement process has delayed expenditure in Goods and Services for approximately R18 million.
The Committee noted that an expected over expenditure is anticipated for which no funds are available despite the provision made for transfers to foreign governments and international organisations, The department explained that this over expenditure will be offset by a saving in the transfers to public corporations and private enterprises for the same amount. Under expenditure as shown through the cash flow report is due mainly to the delayed payment of goods and service the integration of logistics systems, and the industry’s capacity to deliver maintenance and repair services for B-Vehicles.
In the previous financial year the department’s capital expenditure programme of R72 million was spent on prioritised capital projects. This year department increased its expenditure to R74 million due to the nature of the built environment in terms of cost escalations. At present, the department has two projects administered by Public Works, which will result in a slight rollover.
Facilities have been devolved from Public Works to the Department of Defence however with regard to Municipal Services for which the department receives R80 million the department hopes to receive an equitable return but Public Works is not yet in a position to confirm the allocation of funds. As the department is the custodian, it is liable for payment. The department is in the process of working with Public Works to ensure that its priorities are taken into consideration.
The Department of Defence has numerous strategic plans. One of the key issues in the department is dealing with the complex costing nature of defence-related budgets. This is as a result of the challenge the department faces due to its heavy reliance on technological developments in the defence industry. This reliance on the defence industry developments requires that the budget baseline figures should be amended so as to make provision for new developments and to help facilitate the costly operation of new defence systems.
The department stated that sale of goods and services refer to equipment of S.A. armoury, Caspirs, normal vehicles, aircraft, spares from the navy, and the SAS Outeniqua.
The disposal of assets by the department is a fairly standard process when it relates to furniture and office equipment through auctions. However, in relation to other military equipment, Armscor processes the disposal of aircraft and military vehicles. When acquiring items from foreign countries the department is contractually bound to do it through the National Conventional Arms Control Committee (NCACC), which approves the sale and/or disposal of assets. Due to the scale of activities the department had to start a Directorate for the NCACC and assigned a manager responsible for this.
Transfers from the department comply with legislation and is VAT compliant. Armscor transfers funds to a government department; the government department transfers out and the Department of Defence then charge VAT.
The department confirmed that its internal audit systems are in place, reporting to the audit Committee on a quarterly basis.. Reporting to the budget Committee happens monthly. The department’s logistics agency is responsible for monitoring the internal systems. With inspectors to ensure that the necessary structures and logistic training are in place. Internal audits of systems are conducted. The department has contracted a training company at a cost of R70 000 to train internal staff on the new system. It also confirmed that an objective Committee is in place consisting of internal and external personnel for the internal audit process.
The department has received qualified audits for the past five years and cannot do much about it. In response to the Committee’s inquiry as when it could expect an unqualified audit report the department stated it was not expecting one in 2007. In explanation the department pointed out that the new expenditure and systems implementation challenges associated with arms procurement, specifically naval vessels, posed problems with other costs, such as the need for more navigation time, increased training time, and increased fuel consumption.
National Treasury had informed the department that the Integrated Financial Management System (IFMS) will be provided to the department and that therefore the department should not be spending funds on a new accounting system. The new system will only be implemented and ready for use by 2015. The department concluded by stating that these equipment resource constraints impeded progress towards achieving an unqualified audit. The Committee did not accept that there was nothing the department could do to overcome this challenge and advised the department that it would be engaging them and also National Treasury further.
The department stated that it performs an agency function when it comes to the UN payments. The Department of Defence receives these payments but the funds are paid over to the National Revenue Fund. The Committee intends seeking further clarification on how this system works within the PFMA.
The department stated that the budget allocation for the Sudan Peace Support Operation was R95 million. All Peace Support Operations’ budget allocations totalled R836 million. The Sudan Peace Support Force budget projections were inaccurate due to the practical problems encountered in the field. The department projects a shortfall at the end of the financial year, given experiences of unaccounted for allocations previously when conducting field operations. The shortfall encountered by the department was finally sourced from its internal budget.
The department projects some losses due to differences in the accounting doctrines of the UN and South Africa, but the department is attempting to control losses. Future Peace Support Operations will hopefully be linked to a computerised system.
The department explained that for a typical 10-year deployment they under estimated by 40%. A factor contributing to under estimating their budget was the nature of Peace Support Operations, which needed to be, met immediately the political directive was issued.
The Committee recognised the challenges posed by peace keeping operations and advised the department to develop a risk model that could be used for such spending priorities, to be scrutinised by the department. It intends engaging the department on this issue during the Fourth Quarterly Report deliberations.
The department has a proactive programme focussed on preventative maintenance, and new facilities development. The department has identified mission critical areas relating to the upgrading of military hospitals and large projects such as the upgrading of Waterkloof Airbase. The final phase of completing the Thaba Tshwana Hospital is scoped within an 18-month period. An amount of R50 million has been allocated for the upgrading of Military Hospitals 1, 2, and 3. The Committee stated that it would follow these commitments in the next Quarterly Report.
The department said it faced capacity issues on the technology provision side, which were mainly due to contractors diverting their attention to high-profile projects such as Gautrain.
The department is liaising with the Department of Foreign Affairs for the timely, rather than annual, submission of invoices for payment of the Foreign Affairs Military Officers’ VIP protection programme. This will improve cash flow.
5.2 Human resources and capacity aspects
The department has embarked on a programme to acquire scarce technical skills. The department has programmes in place to build scarce technical expertise skills, which has implications on the budget. A proactive measure is making bursaries available in the areas of scarce technical skill.
The human resource challenges that the department experiences are no different from those faced by other departments when it comes to staff mobility. The department acknowledges that it is unable to compete with the larger salaries of the private sector. Despite the public official contractually bound for contract period, firms do not find it difficult to buy the official out of the contract with the department.
There are various incentive schemes in place to retain scarce skills for placement in rural areas, especially for Navy officials. The Department realises that incentive schemes are not enough. The environment officials work in, plays a huge role in retention strategies. The department pays the tertiary studies of staff, expressing interest in enhancing skills of its existing employees. The department is currently conducting research with international institutions to find out how these institutions succeed in retaining staff. The inflexibility in the budget was regarded as a problem that impacts on the department’s ability to retain staff. The department is developing the internship programmes to enhance the acquisition of new skills.
The department is in the process of capacity development by aligning capabilities from defensive to supportive. One aspect is the alignment of the accounting systems, which were manually operated before. In general, the defence capabilities were not ready for supportive operations abroad through its internally computerised system. Other practical problems, such as little or no electricity supply in the Burundi mission, further highlighted the department’s capability challenges.
The department has not addressed investments in information and communication technology (ICT) fully or running the PERSAL system. In the area of logistics management, the department is running separate systems of the different segments, such as the Army and Navy. These systems are based on cash accounting, while other government entities have progressively moved towards accrual accounting systems. The department intends to pilot a new system for logistics, and lessons learned here would serve the implementation of systems in other areas. There are projects underway to integrate electronic maintenance and cooperation of all systems.
The department stated that the situation with the protracted procurement process is a difficult one as the department shares it logistically with other departments. The approval needed at various levels poses a constraint to the department. The department is busy recording suppliers on its supplier database to facilitate the procurement system, which is still being developed. The department’s asset register is a major challenge and deals with the reconciling of the 10 or more systems used by the various segments of the department. The department is in the process of ensuring a more accurate register. Part of the reason for the inaccurate asset register was the size of the department when the transformation process started.
5.3 General Comments
The Committee noted that further follow-up on this will have to be conducted with regards to the payments for UN and other peace support operations as accounted for in the MTEF.
The Committee noted that although the department has correctly identified its spending priorities, the department struggles to effectively strategise in terms of allocations to these priorities.
The Committee also noted that the department seems to fail to plan properly for the implementation of some of its programmes and that there are no apparent plans or procedures in place to remediate this lack of planning.
In its closing remarks, the Committee noted that clarity must be provided on issues the department is not clear on. The Committee assured the department that they will keep an eye on the budget and that the line is closed if they were to ask for more funds.
The Committee referred to the graphical representation by the department to explain the 2006/07 cash flow in detail. The Committee noted that it is always best to show information against a baseline measurement.
- CONCLUSION
The mandate of the Committee is to scrutinise the budgetary implications of service delivery . It would be in the interest of departments to gain a better understanding of this mandate to enable them to be better prepared for future engagements with the Joint Budget Committee.
Financial Management problems proved to be an over-riding challenge in all the departments that presented in this cluster. In performing its oversight role, the Committee will continue to track the expenditure patterns of departments in this cluster. This will be done thorough the relevant monthly expenditure reports and the Section 32 reports on a quarterly basis. The principle of accountability and transparency which is the foundation of good fiscal governance, should inform expenditure management, asset management and revenue management to ultimately achieve more robust financial management and leading to improved service delivery.
Financial management problems proved to be an over-riding challenge in all the departments that presented in this cluster. In its oversight the Committee will continue to track the expenditure patterns of departments in this cluster closely through the relevant Section 32 monthly expenditure reports on a quarterly basis. The principle of accountability and transparency which is the foundation of fiscal good governance in departments should inform the management of allocations and expenditure to achieve more robust financial management leading to improved service delivery.
The Joint Budget Committee studied the relevant Sector Committee reports on this cluster to achieve better oversight over the cluster and it believes its own report would be of value to the same Sector Committees.
The Committee appreciates the presence of the Head of Departments that attended the hearings on the Security Cluster and urged all departments to send their highest level of delegations in future; preferably the executive authority and/or the accounting officer as prescribed by the PFMA. Departments can anticipate further constructive engagements with the Committee. Furthermore, departments should strive towards conforming to the reporting requirements of the PFMA and the Committee. The Committee thanked all departments for its sincerity in reporting to the JBC during these hearings.
- RECOMMENDATIONS
-
Robust implementation of Financial Management and compliance with the PFMA to achieve more effective outputs leading to efficient delivery and services should receive greater focus particularly in the areas of: ▪ Internal controls ▪ Cash flows ▪ Tracking of expenditure commitments ▪ Supply chain management checks and balances ▪ Asset registers ▪ Allocation and monitoring of all resources including human capital, buildings and equipment ensuring quality assurance ▪ Development of financial management systems, procedures and processes
-
The Human Resource capacity challenges relating to departments in the Security Cluster requires the urgent development of measures to retain skilled staff, and to capacitate if necessary re-skill existing staff to overcome current constraints to service delivery.
-
Inter-departmental and inter-governmental co-ordination and co- operation should be strengthened.
- Measurable objectives should be developed within the strategic plan to support more effective and efficient expenditures. A more robust monitoring system should be developed that tracks achievement of outputs against expenditure Departments that have not already done so should develop a risk management model that can assist it in managing its cost drivers in dealing with other expenditure challenges
Report to be considered.
National Council of Provinces
-
Report of the Select Committee on Public Services on the Convention on International Interests in Mobile Equipment Bill [B1 – 2007] (National Assembly - sec 75), dated 28 March 2007:
The Select Committee on Public Services, having considered the subject of the Convention on International Interests in Mobile Equipment Bill [B1 - 2007] (National Assembly – sec 75), referred to it, reports that it has agreed to the Bill.
CREDA INSERT REPORT - Insert T070330E – insert 2 – PAGES 619-641
THURSDAY, 12 APRIL 2007
ANNOUNCEMENTS:
National Assembly and National Council of Provinces
The Speaker and the Chairperson
- Introduction of Bill
(1) The Minister of Defence
Prohibition or Restriction of Certain Conventional Weapons Bill [B
7 - 2007] (National Assembly – proposed sec 75) [Explanatory
summary of Bill and prior notice of its introduction published in
Government Gazette No 29636 of 23 February 2007.]
Introduction and referral to the Portfolio Committee on Defence of
the National Assembly, as well as referral to the Joint Tagging
Mechanism (JTM) for classification in terms of Joint Rule 160.
In terms of Joint Rule 154 written views on the classification of
the Bill may be submitted to the JTM within three parliamentary
working days.
- Translation of Bill submitted
(1) The Minister of Transport
(a) Wetsontwerp op die Konvensie oor Internasionale Belange in
Mobiele Toerusting [W 1 – 2007] (National Assembly – sec 75).
This is the official translation into Afrikaans of the Convention
on International Interests in Mobile Equipment Bill [B 1 – 2007]
(National Assembly – sec 75).
National Council of Provinces
The Chairperson
- Referral to Committees of papers tabled
(1) The following paper is referred to the Select Committee on
Education and Recreation for consideration and report:
(a) Report and Financial Statements of Boxing South Africa for
2005-2006, including the Report of the Auditor-General on the
Financial Statements for 2005-2006.
(2) The following papers are referred to the Select Committee on
Security and Constitutional Affairs for consideration:
(a) Progress report on the inquiry into allegations of
misconduct regarding Mr K Suliman from Durban, in terms of
section 13(3)(f) of the Magistrates Act, 1993 (Act No 90 of
1993).
(b) Progress report on the inquiry into allegations of
misconduct regarding Mr M K Chauke from Pretoria, in terms of
section 13(3)(f) of the Magistrates Act, 1993 (Act No 90 of
1993).
(c) Progress report on the inquiry into allegations of
misconduct regarding Mr M S Makamu from Benoni, in terms of
section 13(3)(f) of the Magistrates Act, 1993 (Act No 90 of
1993).
(d) Progress report on the inquiry into allegations of
misconduct regarding Mr M F Mathe from Johannesburg, in terms
of section 13(3)(f) of the Magistrates Act, 1993 (Act No 90 of
1993).
(e) Report on withholding of remuneration of Magistrate K
Suliman, in terms of section 13(4A)(b) of the Magistrates Act,
1993 (Act No 90 of 1993).
(f) Strategic Business Plan for the Department of Defence for
the financial years 2007-2008 and 2009-2010 [RP 25-2007].
(3) The following paper is referred to the Select Committee on
Education and Recreation for consideration:
(a) Medium Term Strategic Plan for 2006-2010 and the Revised
Operational Plan of the Department of Education for 2006-07.
(4) The following paper is referred to the Select Committee on
Public Services for consideration and report:
(a) Report and Financial Statements of the Film and
Publication Board for 2005-2006, including the Report of the
Auditor-General on the Financial Statements for 2005-2006.
(5) The following paper is referred to the Select Committee on Land
and Environmental Affairs for consideration:
(a) Strategic Plan of the Ingonyama Trust Board for 2007-2008.
(b) Strategic Plan of the Department of Agriculture for 2007
to 2008.
(6) The following papers are referred to the Select Committee on
Land and Environmental Affairs and the Select Committee on Local
Government and Administration for consideration:
(a) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Rand Water, tabled in terms of section 42(4) of the Local
Government: Municipal Finance Management Act, 2003 (Act No 56
of 2003).
(b) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Namakwa Water, tabled in terms of section 42(4) of the Local
Government: Municipal Finance Management Act, 2003 (Act No 56
of 2003).
(c) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Botshelo Water, tabled in terms of section 42(4) of the
Local Government: Municipal Finance Management Act, 2003 (Act
No 56 of 2003).
(d) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Lepelle Northern Water, tabled in terms of section 42(4) of
the Local Government: Municipal Finance Management Act, 2003
(Act No 56 of 2003).
(e) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Bloem Water, tabled in terms of section 42(4) of the Local
Government: Municipal Finance Management Act, 2003 (Act No 56
of 2003).
(f) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Umgeni Water, tabled in terms of section 42(4) of the Local
Government: Municipal Finance Management Act, 2003 (Act No 56
of 2003).
(g) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Magalies Water, tabled in terms of section 42(4) of the
Local Government: Municipal Finance Management Act, 2003 (Act
No 56 of 2003).
(h) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Sedibeng Water, tabled in terms of section 42(4) of the
Local Government: Municipal Finance Management Act, 2003 (Act
No 56 of 2003).
(i) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Pelladrift Water, tabled in terms of section 42(4) of the
Local Government: Municipal Finance Management Act, 2003 (Act
No 56 of 2003).
(j) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Mhlatuze Water, tabled in terms of section 42(4) of the
Local Government: Municipal Finance Management Act, 2003 (Act
No 56 of 2003).
(k) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Bushbuckridge Water, tabled in terms of section 42(4) of the
Local Government: Municipal Finance Management Act, 2003 (Act
No 56 of 2003).
(l) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Amatola Water, tabled in terms of section 42(4) of the Local
Government: Municipal Finance Management Act, 2003 (Act No 56
of 2003).
(m) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Albany Coast Water, tabled in terms of section 42(4) of the
Local Government: Municipal Finance Management Act, 2003 (Act
No 56 of 2003).
(n) Increase in water tariffs for 1 July 2007 to 30 June 2008
by Overberg Water, tabled in terms of section 42(4) of the
Local Government: Municipal Finance Management Act, 2003 (Act
No 56 of 2003).
(7) The following papers are referred to the Select Committee on
Land and Environmental Affairs for consideration and report:
(a) Report and Financial Statements of Sedibeng Water for the
year ended June 2006, including the Report of the Independent
Auditors on the Financial Statements for the year ended June
2006.
(b) Report and Financial Statements of Bushbuckridge Water for
the year ended June 2006, including the Report of the
Independent Auditors on the Financial Statements for the year
ended June 2006.
(8) The following paper is referred to the Select Committee on
Labour and Public Enterprises for consideration:
(a) Amendment to Eskom’s pricing structure, tabled in terms of
section 42(4) of the Local Government: Municipal Finance
Management Act, 2003 (Act No 56 of 2003), and supporting
documents required in terms of section 42(3) of the same Act.
(b) Strategic Plan of the Media Development and Diversity
Agency (MDDA) for 2007 to 2010.
(c) Strategic Plan of the International Marketing Council
(IMC) for 2007 to 2009.
(d) Strategic Plan of the Department of Communications for
2007 to 2010.
(9) The following papers are referred to the Select Committee on
Finance for consideration and report:
(a) Report of the Registrar of Short-term Insurance for 2005.
(b) Report of the Registrar of Long-term Insurance for 2005.
(10) The following paper is referred to the Select Committee on
Economic and Foreign Affairs:
(a) Performance audit report of the Auditor-General on
consultants at the Department of Trade and Industry – January
2007 [RP 9-2007].
(11) The following papers are referred to the Select Committee on
Public Services for consideration:
(a) Strategic Plan of the Department of Transport for 2007 to
2010.
(b) Memorandum by the Minister of Public Works setting out
particulars of the Building Programme for 2007-2008 [RP 25-
2007].
(12) The following papers are referred to the Select Committee on
Finance:
(a) Government Notice No R186 published in Government Gazette
No 29681 dated 1 March 2007: Amendment of Regulations in terms
of the Long-term Insurance Act, 1998 (Act No 52 of 1998).
(b) Government Notice No R 194 published in Government Gazette
No 29670 dated 9 March 2007: Amendment of Schedule No 1 (No
1/1/1331), made in terms of section 48 of the Customs and
Excise Act, 1964 (Act No 91 of 1964).
(c) Government Notice No R 195 published in Government Gazette
No 29670 dated 9 March 2007: Amendment of Schedule No 1 (No
1/1/1332), made in terms of section 48 of the Customs and
Excise Act, 1964 (Act No 91 of 1964).
(d) Government Notice No R 196 published in Government Gazette
No 29670 dated 9 March 2007: Amendment of Schedule No 2 (No
2/283), made in terms of section 56 of the Customs and Excise
Act, 1964 (Act No 91 of 1964).
(e) Government Notice No 212 published in Government Gazette
No 29658 dated 23 March 2007: Draft Municipal Regulations on
Minimum Competency Levels made in terms of section 168(1) of
the Municipal Finance Management Act, 2003 (Act No 56 of 2003).
(f) Government Notice No 189 published in Government Gazette
No 29683 dated 1 March 2007: Determination of interest rates
for purposes of paragraph (a) of the definition of “Official
Rate of Interest” in paragraph 1 of the Seventh Schedule to the
Income Tax Act, 1962 (Act No 58 of 1962).
(g) Government Notice No 187 published in Government Gazette
No 29669 dated 9 March 2007: Listing and delisting of Public
Entities, made in terms of section 47 and 48 of the Public
Finance Act, 1999 (Act No 1 of 1999).
(13) The following paper is referred to the Select Committee on
Security and Constitutional Affairs:
(a) Report of the Independent Complaints Directorate (ICD) for
January 2006 to June 2006, in terms of section 18(5)(c) of the
Domestic Violence Act, 1998 (Act No 116 of 1998).
(14) The following papers are referred to the Select Committee on
Security and Constitutional Affairs for consideration and report:
(a) Proclamation No R.24 published in Government Gazette No
28885 dated 29 May 2006: Notification by President in respect
of entities identified by the United Nations Security Council
in terms of section 25 of the Protection of Constitutional
Democracy against Terrorist and Related Activities Act, 2004
(Act No 33 of 2004).
(b) Proclamation No R.38 published in Government Gazette No
29222 dated 19 September 2006: Notification by President in
respect of entities identified by the United Nations Security
Council in terms of section 25 of the Protection of
Constitutional Democracy against Terrorist and Related
Activities Act, 2004 (Act No 33 of 2004).
(c) Proclamation No R.44 published in Government Gazette No
29284 dated 11 October 2006: Notification by President in
respect of entities identified by the United Nations Security
Council in terms of section 25 of the Protection of
Constitutional Democracy against Terrorist and Related
Activities Act, 2004 (Act No 33 of 2004).
(d) Proclamation No R.51 published in Government Gazette No
29500 dated 22 December 2006: Notification by President in
respect of entities identified by the United Nations Security
Council in terms of section 25 of the Protection of
Constitutional Democracy against Terrorist and Related
Activities Act, 2004 (Act No 33 of 2004).
(e) Proclamation No R.2 published in Government Gazette No
29598 dated 7 February 2007: Notification by President in
respect of entities identified by the United Nations Security
Council in terms of section 25 of the Protection of
Constitutional Democracy against Terrorist and Related
Activities Act, 2004 (Act No 33 of 2004).
TABLINGS:
National Assembly and National Council of Provinces
- The Minister of Finance
(a) Strategic Objective Grant Agreement No 674-0329 between the United States of America and the Republic of South Africa for Increased Use of HIV/AIDS and Other Primary Health Care Services, tabled in terms of section 231(3) of the Constitution, 1996.
(b) Explanatory Memorandum to the Strategic Objective Grant Agreement No 674-0329 between the United States of America and the Republic of South Africa for Increased Use of HIV/AIDS and Other Primary Health Care Services.
(c) Addendum to the South Africa-European Community Country Strategy Paper and Multi-Annual Indicative Programme for the Period 2003- 2005, tabled in terms of section 231(3) of the Constitution, 1996.
(d) Explanatory Memorandum to the Addendum to the South Africa- European Community Country Strategy Paper and Multi-Annual Indicative Programme for the Period 2003-2005.
(e) Government Notice No 305 published in Government Gazette No 29781 dated 5 April 2007: Exemption from certain Specific Provisions of the Act to facilitate electricity industry restructuring, in terms of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).
- The Minister of Transport
(a) Report and Financial Statements of the Road Traffic Management Corporation for 2003-2004, 2004-2005 and 2005-2006, including the Reports of the Auditor-General on the Financial Statements for 2003- 2004, 2004-2005 and 2005-2006.
- The Minister of Environmental Affairs and Tourism
(a) General Notice No 224 published in Government Gazette No 29674 dated 2 March 2007: Invitation to members of the public to submit written comments on the national norms and standards for the management of elephants in South Africa, tabled in terms of section 100 of the National Environmental Management: Biodiversity Act, 2004 (Act No 10 of 2004).
WEDNESDAY, 18 APRIL 2007
ANNOUNCEMENTS:
National Assembly and National Council of Provinces
The Speaker and the Chairperson
- Introduction of Bills
(1) The Select Committee on Security and Constitutional Affairs
a) Mandating Procedures of Provinces Bill [B 8 – 2007] (National
Council of Provinces – proposed sec 76) [Explanatory summary
of Bill and prior notice of its introduction published in
Government Gazette No 29264 of 6 October 2006.]
Introduction and referral to the Select Committee on Security
and Constitutional Affairs of the National Council of
Provinces, as well as referral to the Joint Tagging Mechanism
(JTM) for classification in terms of Joint Rule 160.
In terms of Joint Rule 154 written views on the
classification of the Bill may be submitted to the JTM within
three parliamentary working days.
TABLINGS:
National Assembly and National Council of Provinces
- The Minister of Finance
(a) Government Notice No 210 published in Government Gazette No
29698 dated 12 March 2007: The dimension of, design for, and
compilation of the year 2007 Natura pure gold coin series, in terms
of the South African Reserve Bank Act, 1989 (Act No 90 of 1989).
(b) Government Notice No 211 published in Government Gazette No
29698 dated 12 March 2007: The dimension of, design for, and
compilation of the year 2007 Protea coin series, in terms of the
South African Reserve Bank Act, 1989 (Act No 90 of 1989).
(c) Government Notice No 212 published in Government Gazette No
29698 dated 12 March 2007: The dimension of, design for and
compilation of the year 2007 R1 and R2 pure gold coin series, in
terms of the South African Reserve Bank Act, 1989 (Act No 90 of
1989).
(d) Government Notice No 213 published in Government Gazette No
29698 dated 12 March 2007: The dimension of, design for, and
compilation of the year 2007 Crown size and 2½c Sterling silver
coin series, in terms of the South African Reserve Bank Act, 1989
(Act No 90 of 1989).
(e) Government Notice No 214 published in Government Gazette No
29698 dated 12 March 2007: The dimension of, design for, and
compilation of the year 2007 Sterling silver coin series, in terms
of the South African Reserve Bank Act, 1989 (Act No 90 of 1989).
(f) Government Notice No 215 published in Government Gazette No
29698 dated 12 March 2007: The dimension of, design for, and
compilation of the year 2007 “FIFA 2010 Coin Series”, in terms of
the South African Reserve Bank Act, 1989 (Act No 90 of 1989).
(g) Government Notice No R.251 published in Government Gazette No
29707 dated 23 March 2007: Amendment of Schedule No. 2 (No. 2/284),
in terms of the Customs and Excise Act, 1964 (Act No 91 of 1964).
(h) Government Notice No 271 published in Government Gazette No
29742 dated 28 March 2007: Fixing Amount of Tax in Dispute for
purposes of Appeal to Tax Board, in terms of the Income Tax Act,
1962 (Act No 58 of 1962) and Value-Added Tax Act, 1991 (Act No 89
of 1991).
(i) Government Notice No R.270 published in Government Gazette No
29741 dated 28 March 2007: Transitional arrangements for
municipalities following the deletion of paragraph (c) of the
definition of “enterprise” in section 1 of the Act, the zero rating
of municipal rates and other consequential amendments, in terms of
the Value-Added Tax Act, 1991 (Act No 89 of 1991).
National Council of Provinces
- The Chairperson
(a) The President of the Republic submitted the following letter dated 23 March 2007 to the Chairperson of the National Council of Provinces informing Members of the Council of the employment of the South African National Defence Force in Nepal:
EMPLOYMENT OF THE SOUTH AFRICAN NATIONAL DEFENCE FORCE IN NEPAL,
FOR SERVICE IN FULFILMENT OF THE INTERNATIONAL OBLIGATIONS OF
THE REPUBLIC OF SOUTH AFRICA TOWARDS THE UNITED NATIONS, AS PART
OF THE UNITED NATIONS POLITICAL MISSION IN NEPAL
This serves to inform the National Council of Provinces that I
have authorised the employment of the South African National
Defence Force (SANDF) personnel to Nepal, in fulfilment of the
international obligations of the Republic of South Africa
towards the United Nations as part of the United Nations
political mission in Nepal.
This employment was authorised in accordance with the provisions
of section 201(2)(c) of the Constitution of the Republic of
South Africa, 1996, read with section 93 of the Defence Act,
2002 (Act No 42 of 2002).
For a total of five (5) SANDF members are employed as military
observers and staff officers of United Nations Political Mission
in Nepal for a period of 12 Months. The deployment will commence
as soon as the Presidential Minute is approved. The total
estimated cost to be borne by Defence will be R 1, 598 Million.
I will communicate this report to members of the National
Assembly and wish to request that you bring the contents hereof
to the attention of the National Council of Provinces.
Regards
signed
T M MBEKI
WEDNESDAY, 25 APRIL 2007
ANNOUNCEMENTS:
National Assembly and National Council of Provinces
The Speaker and the Chairperson
- Assent by President in respect of Bills
(1) Corporate Laws Amendment Bill [B 6D – 2006] – Act No 24 of 2006 (assented to and signed by President on 11 April 2007)
(2) Genetically Modified Organisms Amendment Bill [B 34B – 2005] – Act No 23 of 2006 (assented to and signed by President on 11 April 2007)
(3) South African Institute for Drug-Free Sport Amendment Bill [B 7B – 2006] – Act No 25 of 2006 (assented to and signed by President on 11 April 2007)
- Draft Bills submitted in terms of Joint Rule 159
(1) Criminal Law (Sentencing) Amendment Bill, 2007, submitted by the Minister for Justice and Constitutional Development. Referred to the Portfolio Committee on Justice and Constitutional Development and the Select Committee on Security and Constitutional Affairs.
(2) Mineral and Petroleum Resources Development Amendment Bill, 2007, submitted by the Minister of Minerals and Energy. Referred to the Portfolio Committee on Minerals and Energy and the Select Committee on Labour and Public Enterprises.
TABLINGS: National Assembly and National Council of Provinces
- The Speaker and the Chairperson
(a) Quarterly report of the Auditor-General on the submission of financial statements by municipalities and the status of audit reports as at 31 December 2006 for the financial year ended 30 June 2006 [RP 30-2007].
- The President of the Republic
(a) Report of the Independent Commission for the Remuneration of Public Office Bearers for the year ended 31 December 2006.
- The Minister for Justice and Constitutional Development
(a) Report and Financial Statements of the Judicial Service Commission for the year ended 30 June 2006.
National Council of Provinces
- The Chairperson
(a) The Acting President of the Republic submitted the following letter dated 28 March 2007 to the Chairperson of the National Council of Provinces informing Members of the Council of the employment of the South African National Defence Force in the West Indies: EMPLOYMENT OF THE SOUTH AFRICAN NATIONAL DEFENCE FORCE IN WEST INDIES, FOR SERVICE IN FULFILMENT OF THE INTERNATIONAL OBLIGATIONS OF THE REPUBLIC OF SOUTH AFRICA TOWARDS THE WEST INDIES, TO ASSIST THE WEST INDIES IN SAFEGUARDING THE 2007 WORLD CUP CRICKET ON THE ISLANDS OF ST LUCIA, GRENADA AND BARBADOS
This serves to inform the National Assembly that I have
authorised the employment of the South African National Defence
Force (SANDF) personnel to West Indies, in fulfilment of the
international obligations of the Republic of South Africa
towards the West Indies in safeguarding the 2007 World Cup
tournament on the islands of St Lucia, Grenada and Barbados.
This employment was authorised in accordance with the provisions
of section 201(2)(c) of the Constitution of the Republic of
South Africa, 1996, read with section 93 of the Defence Act,
2002 (Act No 42 of 2002).
A total of thirteen (13) SANDF members will be employed, as from
08 April to 30 April 2007, to assist the West Indies in
safeguarding the World Cup tournament on the islands of St
Lucia, Grenada and Barbados. The cost of the deployment will be
borne by the Department of Safety and Security.
I will communicate this report to members of the National
Assembly and wish to request that you bring the contents hereof
to the attention of the National Council of Provinces.
Regards
signed
P MLAMBO-NGCUKA
ACTING PRESIDENT
(b) The Acting President of the Republic submitted the following letter dated 28 March 2007 to the Chairperson of the National Council of Provinces informing Members of the Council of the employment of the South African National Defence Force in the Republic of Mozambique:
EMPLOYMENT OF THE SOUTH AFRICAN NATIONAL DEFENCE FORCE FOR
SERVICE, IN FULFILMENT OF THE INTERNATIONAL OBLIGATIONS OF THE
REPUBLIC OF SOUTH AFRICA TOWARDS THE GOVERNMENT OF THE REPUBLIC
OF MOZAMBIQUE FOR HUMANITARIAN ASSISTANCE
This serves to inform the National Assembly that I have
authorised the employment of the South African National Defence
Force (SANDF) personnel to the Republic of Mozambique, in
fulfilment of the international obligations of the Republic of
South Africa towards the Republic of Mozambique, for
humanitarian assistance in the preservation of life, health and
property resulting from the explosion of the ammunition storage
facility in the northern part of Maputo.
This employment was authorised in accordance with the provisions
of section 201(2)(c) of the Constitution of the Republic of
South Africa, 1996, read with section 93 of the Defence Act,
2002 (Act No 42 of 2002).
A total of seventy (70) SANDF members are employed as from 26
March until the end of May 2007 to provide humanitarian
assistance in the preservation of life, health and property
resulting from the explosion of the ammunition storage facility
in the northern part of Maputo. The total estimated cost to be
borne by the Government of the Republic of South Africa is RM 5,
887.
I will communicate this report to members of the National
Assembly and wish to request that you bring the contents hereof
to the attention of the National Council of Provinces.
Regards
signed
P MLAMBO-NGCUKA
ACTING PRESIDENT
THURSDAY, 3 MAY 2007
ANNOUNCEMENTS:
National Assembly and National Council of Provinces The Speaker and the Chairperson
- Introduction of Bills
(1) The Minister of Finance
(a) Municipal Fiscal Powers and Functions Bill [B 9 – 2007]
(National Assembly– proposed sec 75) [Explanatory summary of
Bill and prior notice of its introduction published in
Government Gazette No 29775 of 13 April 2007.]
Introduction and referral to the Portfolio Committee on
Finance of the National Assembly, as well as referral to the
Joint Tagging Mechanism (JTM) for classification in terms of
Joint Rule 160.
In terms of Joint Rule 154 written views on the classification
of the Bill may be submitted to the JTM within three
parliamentary working days.
(2) The Minister of Minerals and Energy
(a) Mineral and Petroleum Resources Development Amendment Bill
[B 10 – 2007] (National Assembly– proposed sec 75)
[Explanatory summary of Bill and prior notice of its
introduction published in Government Gazette No 29822 of 19
April 2007.]
Introduction and referral to the Portfolio Committee on
Minerals and Energy of the National Assembly, as well as
referral to the Joint Tagging Mechanism (JTM) for
classification in terms of Joint Rule 160.
In terms of Joint Rule 154 written views on the classification
of the Bill may be submitted to the JTM within three
parliamentary working days.
TABLINGS:
National Assembly and National Council of Provinces
- The Minister of Finance
(a) Government Notice No 317 published in Government Gazette No
29797 dated 14 April 2007: Allocations per municipality for each
schedule 3, 4, 6 and 7 allocation to local governments, and the
framework for each schedule 4, 5 and 7 allocation, made under the
Division of Revenue Act, 2007 (Act No 1 of 2007).
(b) Government Notice No 316 published in Government Gazette No
29788 dated 13 April 2007: Regulations issued under section 91A
prescribing the circumstances under which the Commissioner may
write off or compromise any amount of tax, duty, levy, charge,
interest, penalty or other amount, in terms of the Income Tax Act,
1962 (Act No 58 of 1962).
-
The Minister of Labour (a) Strategic Plan of the Department of Labour for 2007 to 2010 [RP 43-2007].
-
The Minister of Safety and Security
(a) Strategic Plan for the South African Police Service for 2007-
2008 [RP 34-2007].
FRIDAY, 4 MAY 2007
TABLINGS:
National Assembly and National Council of Provinces
- The Minister of Labour
(a) Preliminary Annual Report of the Department of Labour for 2006-
2007 [RP 44-2007].
(b) Strategic Plan of the Umsobomvu Youth Fund for 2007 to 2008.
- The Minister of Environmental Affairs and Forestry
(a) General Notice No 329 published in Government Gazette No 29711
dated 16 March 2007: Draft regulations on bio-prospecting, access
and benefit-sharing: published for public comment, tabled in terms
of the National Environmental Management: Biodiversity Act, 2004
(Act No 10 of 2004).
- The Minister of Water Affairs and Forestry
(a) Strategic Plan for the Department of Water Affairs and Forestry
for 2007/08 to 2009/10.
MONDAY, 7 MAY 2007
ANNOUNCEMENTS:
National Assembly and National Council of Provinces
The Speaker and the Chairperson
- Introduction of Bills
(1) The Minister of Finance
(a) Pension Funds Amendment Bill [B 11 – 2007] (National
Assembly– proposed sec 75) [Explanatory summary of Bill and
prior notice of its introduction published in Government
Gazette No 29632 of 16 February 2007.]
Introduction and referral to the Portfolio Committee on
Finance of the National Assembly, as well as referral to the
Joint Tagging Mechanism (JTM) for classification in terms of
Joint Rule 160.
In terms of Joint Rule 154 written views on the classification
of the Bill may be submitted to the JTM within three
parliamentary working days.
(2) The Minister of Finance
(a) Banks Amendment Bill [B 12 – 2007] (National Assembly–
proposed sec 75) [Explanatory summary of Bill and prior notice
of its introduction published in Government Gazette No 29632
of 16 February 2007.]
Introduction and referral to the Portfolio Committee on
Finance of the National Assembly, as well as referral to the
Joint Tagging Mechanism (JTM) for classification in terms of
Joint Rule 160.
In terms of Joint Rule 154 written views on the classification
of the Bill may be submitted to the JTM within three
parliamentary working days.
WEDNESDAY, 9 MAY 2007
ANNOUNCEMENTS:
National Assembly and National Council of Provinces
The Speaker and the Chairperson
- Classification of Bill by Joint Tagging Mechanism
(1) The Joint Tagging Mechanism, on 30 April 2007 in terms of Joint
Rule 160(6), classified the following Bill as a section 75 Bill:
(a) Prohibition or Restriction of Certain Conventional Weapons
Bill [B 7 – 2007] (National Assembly – sec 75).
- Draft Bills submitted in terms of Joint Rule 159
(a) South African Express Enabling Bill, 2007, submitted by the
Minister for Public Enterprises. Referred to the Portfolio
Committee on Public Enterprises and the Select Committee on Labour
and Public Enterprises.
(b) Broadband Infraco Bill, 2007, submitted by the Minister for
Public Enterprises. Referred to the Portfolio Committee on Public
Enterprises and the Select Committee on Labour and Public
Enterprises.
TABLINGS:
National Assembly and National Council of Provinces
-
The Speaker and the Chairperson
(a) Report of the Joint Standing Committee on Intelligence (JSCI) for 2004-2005, in terms of section 6(1) of the Intelligence Oversight Act, 2002 (Act No 66 of 2002).
CREDA PLEASE SCAN DOCUMENT – PAGES 689-711
-
The Minister of Finance
(a) Government Notice No R.354 published in Government Gazette No 29813 dated 20 April 2007: Correction Notice: Amendment of Schedule No. 1 (No. 1/1/1334), made in terms of the Customs and Excise Act, 1964 (Act No 91 of 1964).
b) Government Notice No R.361 published in Government Gazette No 29824 dated 20 April 2007: Regulations prescribing the circumstances under which the Commissioner may waive any amount of additional tax, penalty or interest payable by specific persons, in terms of the Small Business Tax Amnesty and Amendment of Taxation Laws Act, 2006 (Act No 9 of 2006). -
The Minister of Correctional Services
(a) Strategic Plan for the Department of Correctional Services for 2007/08 to 2011/12.
-
The Minister of Science and Technology
(a) Strategic Plan for the Department of Science and Technology for 2007 to 2008.
-
The Minister for Justice and Constitutional Development
(a) Report on the withholding of remuneration of Mr I X Masimini, an additional magistrate at Queenstown, in terms of section 13(4A)(b) of the Magistrates Act, 1993 (Act No 90 of 1993). COMMITTEE REPORTS:
National Council of Provinces
-
Report of the Select Committee on Public Services on the Government Immovable Asset Management Bill [B 1B - 2006] (National Assembly – sec 75), dated 09 May 2007:
The Select Committee on Public Services, having considered the subject of the Government Immovable Asset Management Bill [B 1B - 2006] (National Assembly-sec 75), referred to it, reports that it has agreed to the Bill.
-
Report of the Select Committee on Finance on the Protocol on Finance and Investment of the Southern African Development Community, dated 8 May 2007: The Select Committee on Finance, having considered the Protocol on Finance and Investment of the Southern African Development Community, referred to it, recommends that the Council, in terms of section 231(2) of the Constitution, approve the said Protocol.
Report to be considered.
FRIDAY, 11 MAY 2007
TABLINGS:
National Assembly and National Council of Provinces
-
The Speaker and the Chairperson
(a) Report of the Auditor-General on a performance audit of the immigration process at the Department of Home Affairs – February 2007 [RP 29-2007].
-
The Minister of Sport and Recreation
(a) Strategic Plan for the Department of Sport and Recreation for 2007 to 2011.
-
The Minister for Justice and Constitutional Development
(a) Proclamation No R.5 published in Government Gazette No 29756 dated 30 March 2007: Amendment of Proclamation in terms of the Special Investigating Units and Special Tribunals Act, 1996 (Act No 74 of 1996).
-
The Minister of Environmental Affairs and Tourism
(a) Government Notice No 355 published in Government Gazette No 29814 dated 20 April 2007: Withdrawal of declaration of land under the authority of a resolution of the National Assembly: Vaalbos National Park, in terms of the National Environmental Management: Protected Areas Act, 2003 (Act No 57 of 2003).
(b) Government Notice No 392 published in Government Gazette No 29862 dated 4 May: National Environmental Management Second Amendment Bill, 2007: For further regulation of environmental impact assessments, environmental authorisations and incidental matters for comment.
(c) Government Notice No 393 published in Government Gazette No 29862 dated 4 May 2007: National Environmental Management Impact Assessment Regulations, 2006: For written comments.
(d) Government Notice No 394 published in Government Gazette No 29862 dated 4 May: Amendment to the list of activities and competent authorities identified in terms of section 24(2) and 24D, made in terms of the National Environmental Management Act, 1998 (Act No 107 of 1998).
e) Government Notice No 395 published in Government Gazette No 29862 dated 4 May: Amendment to the list of activities and competent authorities identified in terms of section 24(2) and 24D, made in terms of the National Environmental Management Act, 1998 (Act No 107 of 1998).
MONDAY, 14 MAY 2007
ANNOUNCEMENTS:
National Assembly and National Council of Provinces
The Speaker and the Chairperson
- Draft Bills submitted in terms of Joint Rule 159
(a) Human Sciences Research Council Bill, 2007, submitted by the
Minister of Science and Technology. Referred to the Portfolio
Committee on Science and Technology and the Select Committee on
Education and Recreation.
(b) Science and Technology Laws Amendment Bill, 2007, submitted by
the Minister of Science and Technology. Referred to the Portfolio
Committee on Science and Technology and the Select Committee on
Education and Recreation.
TABLINGS:
National Assembly and National Council of Provinces
- The Minister of Finance
(a) Strategic Plan for the South African Revenue Service for 2007/08
to 2009/10.
- The Minister of Trade and Industry
(a) Report of the Strategic Industrial Projects for April 2002 to
March 2006.
National Council of Provinces
- The Chairperson
(a) The following statement has been submitted to the National
Council of Provinces by the MEC for Housing and Local Government
in the Northern Cape under section 106(3) of the Local Government:
Municipal Systems Act, 2000 (Act No 32 of 2000):
Section 106 investigation: Renosterberg Local Municipality
Referred to the Select Committee on Local Government and
Administration.
(b) Notice received from the Premier of the Western Cape Province
regarding the intervention in the Oudtshoorn Municipality in terms
of section 139(1)(b) of the Constitution of the Republic of South
Africa, 1996 (Act No 108 of 1996).
Referred to the Select Committee on Local Government and
Administration for consideration and report.
Copies of the statement and the notice are available from the
office of the Clerk of Papers.
TUESDAY, 15 MAY 2007
ANNOUNCEMENTS:
National Assembly and National Council of Provinces
The Speaker and the Chairperson
- Draft Bills submitted in terms of Joint Rule 159
(a) Taxation Laws Second Amendment Bill, 2007, submitted by the
Minister of Finance. Referred to the Portfolio Committee on
Finance and the Select Committee on Finance.
TABLINGS:
National Assembly and National Council of Provinces
-
The Minister of Safety and Security
(a) Strategic Plan for the Independent Complaints Directorate (ICD) for 2007 to 2010.
-
The Minister of Education
a) Strategic Plan for the Department of Education 2007 to 2011.
WEDNESDAY, 16 MAY 2007
ANNOUNCEMENTS
National Council of Provinces
The Chairperson
-
Message from National Assembly to National Council of Provinces in respect of Bill passed and transmitted (1) Bill passed by National Assembly on 16 May 2007 and transmitted for concurrence:
(a) National Sport and Recreation Amendment Bill [B 17B – 2006] (National Assembly – sec 75)
The Bill has been referred to the Select Committee on Education and Recreation of the National Council of Provinces.
COMMITTEE REPORTS
National Assembly and National Council of Provinces
-
Report oF the JOINT BUDGET COMMITTEE On BUDGET ANALYSIS WORKSHOP
-
Introduction
Parliamentary oversight over the executive has reached a point where the Legislature and its committees need to build capacity to keep up with reforms in the public sector. Such reforms have included new requirements for planning, budgeting, financial management and reporting. As a result the Legislature has had to refine and develop its oversight processes to ensure that information from the executive can be comprehensively interrogated to ensure better service delivery. More specifically it has impacted on the manner in which parliamentary committees perform their functions.
The Joint Budget Committee (henceforth the JBC) has, over the past years, held several workshops to develop aspects of its functioning. In accordance with this approach, the JBC held a workshop on budget analysis, practices and techniques on Monday the 19th and Tuesday the 20th of February 2007. Although the workshop focused on these subjects, discussions also touched on other issues relevant to the Committee. The workshop was facilitated by The Applied Fiscal Research Centre (AFReC) and took place at Lagoon Beach Hotel, Milnerton. Proceedings included:
• A discussion on the JBCs’ Terms of Reference;
• A presentation by AFReC on budget analysis techniques;
• A presentation by National Treasury on In-Year Monitoring
instruments and;
• A presentation by the Auditor General on auditing techniques and
the Financial Management Capability Model.
This Report serves both as a recap of the event and a summary of challenges and action points for the JBC on how to be more effective in its oversight role.
- Joint Budget Committee’s Terms of Reference
Parliament has, for the past several years, been occupied with the process of reviewing and strengthening its oversight function. Part of this involves developing oversight practices over budgetary matters. As a result, Parliament decided to, amongst other things, establish a committee, the Joint Budget Committee, with the following Terms of Reference (TOR):
1) Consider proposed allocations in the Medium-Term Expenditure
Framework and the Appropriation Bill and whether these
allocations are broadly in keeping with the policy directions of
the Government;
2) Make proposals regarding the processes Parliament should follow
with regard to its role in the developing of budgets in
accordance with constitutional requirements;
(3) On a regular basis monitor monthly published actual revenue and
expenditure per department, and to ascertain whether they are in
line with budget projections;
3) consider, when tabled, the Medium-Term Budget Policy Statement,
with the exception of those sections dealing with the macro-
economic situation and revenue;
4) conduct hearings on the Medium-Term Expenditure Framework and
Budget Policy Review Document, with the exception of those
sections dealing with the macro-economic situation and revenue;
During the Workshop, the need to operationalise the JBC’s TOR was noted as fundamental. In the process of operationalising its TOR, the Committee identified various ongoing concerns, which needed to be addressed. These include consolidating its mandate, especially its role and relationship vis-à-vis other Parliamentary structures and other state institutions, addressing issues of capacity and programming and reviewing its own progress.
2.1. The Joint Budget Committee’s TOR and Relationship with other Committees
In terms of its general mandate, the JBC identified the need to ensure that budget oversight was practiced in conjunction with other parliamentary committees, for example those engaged in overseeing state finances.
To prevent overlap and improve operations, the JBC recognized that the roles and responsibilities of each required clarification. The Committee discussed, for example, to what extent it could assess issues of institutional performance, such as value for money - which falls within the Standing Committee on Public Accounts (SCOPA’s) remit. The issue of the JBCs engagement with the provincial and local spheres and other organs of state, such as the institutions supporting constitutional democracy – the Chapter Nine Institutions – were also raised.
Once clarified, each committee could then design analytical tools to engage the executive in its respective focus area effectively. Generally, the JBC felt it would be appropriate for the Committee to be making recommendations to Parliament. Related to this, the JBC also felt that 2007 was a suitable juncture to revisit and update its 2005-2009 Strategic Plan.
In relation to the role of JBC in influencing Money Bills, the Committee stated that clarity was required in terms of the JBC’s role in the Appropriation Bill, currently formally referred to the Portfolio Committee on Finance and the Division of Revenue Bill, which the Select Committee on Finance engages with.
The JBC further recognized that it should be informed of progress and make inputs into the work of the Task Team established by the Joint Rules Committee with the aim of developing legislation in accordance with Section 77 of the Constitution to allow Parliament to amend Money Bills.
In addition, the JBC recognized that, in conducting oversight, the imperative of facilitating public participation from both organized interest groups and from disadvantaged stakeholders, such as those active in the second economy, was an ongoing challenge. The Committee felt that, to supplement informational inputs of this kind, it could also engage in more direct oversight through, for instance, visiting sites of service delivery.
Lastly, the JBC highlighted that due to Members busy schedules and the programming arrangements for the National Assembly and National Council of Provinces, the ability of the Committee to fulfill its mandate in a timely manner was considered to be serious challenge.
2.2 Oversight over Parliament’s Budget
A further specific oversight issue identified was the question of the JBCs role in monitoring and assessing Parliament’s budget and expenditure. The Committee felt that, until the legislation regulating Parliament’s financial management has been adopted – the development of which the JBC should track – the Committee should hold Parliament accountable for budgetary matters.
- Capacity and Training Needs
In terms of workload and capacity, the JBC highlighted a lack of human resources and other support as an ongoing concern. To better manage its workload, the Committee discussed the option of restructuring the Committee and utilising a sub-committee system, similar to that used by SCOPA. In this regard, it was emphasised that the mandates of these sub- committees should be very clear. The Committee also examined the possibility of developing relations, perhaps through memorandums of understanding, with service providers and non-executive organs of state such as the Auditor-General and the Financial and Fiscal Commission.
Training for Members on budget analysis was also raised as a focus area. Specifically the JBC, with the assistance of AFReC, identified the following training requirements or topics:
• Topic 1: Information and training on in-year monitoring
activities and instruments, specifically how to effectively
utilise departments’ Strategic Plans and monthly and quarterly
expenditure reports.
• Topic 2: Training on public finance terminology and instruments:
the JBC highlighted the need for more clarity on public finance
terms such as inputs, outputs, activities, outcomes, allocative
efficiency, operational efficiency, etc. These should be clearly
demonstrated in terms of departmental examples.
• Topic 3: Budget formats – best practices that departments should
use when budgeting.
• Topic 4: The role and nature of adjustment budgets and whether
such adjustments were used for under or over expenditure.
• Topic 5: Training on performance budgeting, which would aid in
determining the impact of changes in output and quality of
services when resource envelopes are adjusted. The example of
the rehabilitation of specific prisons in the country was used to
illustrate the need to clearly understand the relationship
between costs (resources, inputs) and outputs.
• Topic 6: Fiscal dumping - how to interpret early warning signals
and act on instances of fiscal dumping. In this regard the JBC
noted examples of extraordinary fiscal dumping exercises and
highlighted the need for the appropriate timing of national
budget payments to other spheres of government.
• Topic 7: Transfers and subsidies. Although linked to the
concern about fiscal dumping, the JBC highlighted the need for
clarity and proper understanding of the prerequisites of grants,
transfers and subsidies to entities as well as information on
expenditure and quality of outputs delivered.
• Topic 8: Public participation in budgetary processes: the JBC and
other committees may need to explore how to link up with civil
society initiatives on the budget. The Institute for a Democratic
South Africa (IDASA), for example, has a programme dedicated to
budgetary analysis and the Committee could enquire about
possibilities for support.
• Topic 9: Vacancies in the public sector– the need to
contextualise the practical problems and current remedies.
As an initial step, the JBC stated that guidelines on the annual programme of the Committee as well as a manual on best practice to inform topical and technical questions to departments would be of practical assistance and be useful for developing institutional memory.
- Presentation by the National Treasury and JBC Discussions
The National Treasury (NT) presented on various subjects including the implementation of financial management legislation, expenditure reports and monitoring, infrastructure projects and under expenditure.
4.1 The Implementation of Financial Management Legislation
Concerning the implementation of financial management legislation such as the PFMA, Treasury stated that the lack of project planning and management capacity was a serious problem evident throughout government. Although enthusiasm was present, information and skills were often lacking at under-performing departments and entities. Examples of this were the recurring requests by some departments for monthly disbursements of one twelfth of the total annual funding envelope – this often does not coincide with the practical expenditure needs.
The JBC noted the lack of financial management skills within government. The Committee further stressed the need for departments to comply with legislative requirements and, in this context, made the example of departments not paying suppliers within the 30 day time period. Small suppliers in particular needed to be protected from extended delays in payments. Treasury stated that the necessary funds for payment of suppliers were normally adequate although, due to internal inefficiencies and poor cash management in departments, these payments were often not made within the prescribed time periods.
4.2 Monitoring Expenditure and Infrastructure
Treasury highlighted the importance of monitoring budgeted versus actual revenue and expenditure figures as well as audited outcomes of previous budgets. Treasury agreed that PFMA Section 32 reports - whose purpose was to report on the implementation of the Appropriation Act, and after October of each year, the Adjustments Appropriation Act – were important but limited oversight instruments: they could not, for example, assist the JBC and other oversight bodies in picking up on fiscal dumping in the last quarter of each financial year. Apart from Section 32 Reports, NT also produces an internal report, which monitors departments and entities’ expenditure patterns and service delivery. These reports are not published.
Treasury also presented on the financing, expenditure and monitoring of infrastructure projects. Some of the problems in infrastructure roll-out were highlighted, such as the lengthy delays in environmental impact assessments and delays associated with litigation. Treasury also explained its national infrastructure project register, which tracks the progress of governmental infrastructure projects from the identification phase through to the design, construction and completion phases. Similar registers were also being established for provincial government infrastructure programmes. Notably, the register was not currently reflected in Section 32 reports. Treasury stated that it was reliant on accurate and timeous input from departments and provinces for the updating of this register. Treasury added that it would be difficult to utilise the register for oversight purposes as it was complex system.
Treasury also indicated that there were separate teams to monitor individual infrastructure projects although their ability in this regard varied: large construction projects, such as dam construction, were easy to monitor whilst smaller projects, such as the Department of Trade and Industry (DTI)’s small enterprises development agency outlets in towns, were more difficult. The NT stated that the monitoring of these projects should also be a bottom-up participative process in that communities should assist with the verification of completion and quality standards. The NT could only effectively focus on the financial reporting aspect of departments’ service delivery programmes and outputs. Some monitoring functions are delegated to Provincial Treasuries.
Treasury added that the monitoring of infrastructure projects at local level was particularly problematic. The example of the multi-purpose community centres (MPCCs) was used – with NT indicating that local authorities often did not want to maintain and operate these centres. The tracking of Housing was also noted as a challenge – Treasury explained that the nature of the Department of Housing’s database as well as its internal tracking systems made it difficult to count finalized units. The example of the slow pace of the N2 Gateway project was given. This project generated unique delivery problems and delays, compounded by community preferences for the location of houses and the relative cost of temporary relocation.
The JBC noted the lack of proper asset registers and the need for departments, provinces and municipalities to properly value and account for their assets was emphasized. In addition, the Committee referred to the importance of parliamentary oversight over the Gautrain rapid rail project and the issue of monitoring the transfers of funds from national to provincial government for this purpose. Treasury indicated it was currently piloting a project monitoring tool to ease financial accounting of transfers and subsidies.
Concerning the question of monitoring and enforcing conditional grants, Treasury explained that, in cases where government departments failed to meet conditions for grants, it had yet to use the legislated mechanisms to enforce compliance. Instead, the practice had been for NT to facilitate quarterly meetings with the relevant departments and entities. The NT added that it would welcome the assistance of the JBC in formulating and overseeing the implementation of criteria for grants.
4.3 Under-Expenditure
Treasury reported that under-expenditure was still a concern, especially in some essential services such as Health – the Hospital Revitalization Programme was used as an example. Funds were, however, still allocated to these services due to their importance. In other cases funds were redirected to other departments. Generally reasons for under-expenditure varied but, as was the case of Health, dysfunctional supply chain management and a lack of management skills were often cited as causes. A further example related to the construction of certain correctional centres, where the lack of proper feasibility studies severely hampered roll out. Even though the NT proposed that Public Private Partnership’s (PPP) arrangements should be followed with the building of these centres, the relevant Department resisted. The issue of the correctional centres was of great concern to the JBC as the centres were supposed to be near completion.
Finally, Treasury asserted not all instances of under-expenditure were due to poor financial management: in the case of the Department of Land Affairs, for instance, money destined for land restitution projects was taken away due to external difficulties in the restitution process. Generally, however, most cases of under- expenditure could often be traced to inadequate strategic planning.
4.4 Vacancies
On the subject of vacancies in the public sector, Treasury revealed that employee appointment procedures in government were complex and lengthy and should perhaps be streamlined. In addition, NT indicated that vacancies in departments were sometimes inflated to that they could vire from these budget line items at the end of financial year to cover other expenditure.
The JBC stated its concern about the skills mismatch in the public service as well as the payment of bonuses despite the failures and lack of performance contracts. The Committee further raised the issue of unrealistic bonuses when Key Performance Indicators have not been met. Key Performance Indicators (KPI’s) should be thoroughly researched and require focused scrutiny.
- Presentation by the Auditor General and JBC Discussions
The Auditor General, Mr Terence Nombembe, in his first interaction with the JBC, presented on the Financial Capability Model. Prior to discussing the model, the AG explained the three types of audits undertaken by his office:
a) audits on the reliability of financial information presented in annual reports, which look for adequate evidence for the financial info presented in annual report. The AG noted the increasing intensity of doubt about evidence in some entities’ annual reports. b) audits of service delivery information – officially known as “audits of predetermined objectives”. Underlying information should support objectives set out in strategic plan. The AG reported that the NT and the Dept. of Public Services and meet to define what information should be included in annual reports. c) performance audits, which take a closer look at the delivery competence of entities. Performance audits cover issues of efficiency, effectiveness, and economy (the three “Es”) of public expenditure management. For example, such audits examine the input/output ratios of entities service delivery programmes.
The Auditor General conceded that it is a common mistake to confuse the last two types of audits. It is the intention of the AG to reverse the level of concentration in the first type of audit towards a focus on the last two types of audits. A balance between the three types of audits would bring the operations of the AG closer to similar benchmark institutions in the world. The AG informed the Committee that for purposes of performance audits his office would work together with stakeholders such as the JBC.
The Financial Management Capability Model
The Auditor General of Canada has developed a Financial Management Capability Model that can be used by regularity auditors to determine the financial management capabilities of government departments. This model formed the basis for the model currently under development by the South African Office of the AG. The object of this model was to provide a framework to enable the reader of Annual Reports to assess the adequacy of financial management, to monitor progress and to make comparisons.
The AG explained the various levels of analysis contained in the model:
• Level 1: Start-up level. No proper control framework exists -
basic planning and control taking place on an ad hoc basis.
Financial accounting and internal control systems not properly
developed. No internal audit systems or audit committee
established.
• Level 2: Development level. This level involves the development of
proper internal control frameworks and financial accounting
processes. Internal audit systems and audit committees are
established. Both Level 1 and 2 are considered unacceptable for
departments and the AG typically requires progress reports from
relevant departments on how they plan to improve.
• Level 3: Control level. The focus at level 3 is on the proper
implementation and functioning and the performance of financial
accounting and internal control systems, including compliance with
financial management legislation. The AG noted that not all
departments and entities in South Africa had reached this level and
added that performance audits would gradually increase in volume
once financial management requirements (Level 3) are met.
• Level 4: Information level. The focus on Level 4 was on measuring
how resources are used with reliable and sufficient financial
information. This level of capability typically resulted in
unqualified audit reports.
• Level 5: Managed level. The focus is on balancing efficient and
economical use of resources with quality and/or effectiveness of
results achieved.
• Level 6: Optimising level. The focus is on continuous improvement
and learning.
The AG indicated that the model provided a benchmark for improvement and assists by asking the most relevant questions, and in simplifying conclusions over the capacities of entities. The AG stated that explanations and assessments based on the Financial Management Capability Model would be included in the next General Report of the AG.
- Recommendations
In line with its Terms of Reference, the Joint Budget Committee recommends the following:
6.1 For the JBC to fulfill its oversight and monitoring responsibilities, the Committees TOR must be further clarified and developed. It follows that an operational system for the Committee should be designed and implemented. An operational system should address, amongst other issues, the overlapping functional areas between the JBC and other committees, for example SCOPA and the Portfolio and Select Committees on Finance, as well as the Committee’s reporting functions. Such a plan would empower the JBC to alert the relevant sector committees to interrogate departments on expenditure management issues as they arise. One additional option may be for the JBC to include a matrix of key questions as an annexure to every quarterly report.
6.2 In addition, the Committee should undertake a formal training needs assessment. As an initial step, guidelines on the annual programme of the Committee as well as a manual detailing topical and technical questions to departments could be developed.
6.3 Related to the above, the capacity needs of the Committee should to be addressed. This would necessitate, amongst other things, addressing the issue of institutional memory and ensuring continuity in the Committee’s human resources and technical support.
6.4 The JBC should confer with other committees on strategic plans and budget votes in order to track input/output ratios and later assess the outcomes achieved. The Committee also indicated that PFMA Section 32 reports provide little information that could be used by committees to detect early warning signs on spending and service delivery. The JBC will further engage with National Treasury on this matter.
6.5 That the JBC should consult with the AG in future, specifically on the Financial Management Capability Model and whether departments have reflected on this model.
Report to be considered.
THURSDAY, 17 MAY 2007
TABLINGS:
National Assembly and National Council of Provinces
- The Minister for Provincial and Local Government
(a) Report and Financial Statements of the South African Local
Government Association (SALGA) for 2005-2006, including the Report
of the Auditor-General on the Financial Statements for 2005-2006
[RP 24-2007].
FRIDAY, 18 MAY 2007
ANNOUNCEMENTS
National Assembly and National Council of Provinces
The Speaker and the Chairperson
- Classification of Bills by Joint Tagging Mechanism
(1) The Joint Tagging Mechanism, on 18 May 2007 in terms of Joint
Rule 160(6), classified the following Bills as section 76 Bills:
(a) Housing Consumers Protection Measures Amendment Bill [B 6 –
2007] (National Assembly – sec 76(1)).
(b) Mandating Procedures of Provinces Bill [B 8 – 2007]
(National Council of Provinces – sec 76(2)).
(2) The Joint Tagging Mechanism, on 18 May 2007 in terms of Joint
Rule 160(6), classified the following Bills as section 75 Bills:
a) Municipal Fiscal Powers and Functions Bill [B 9 – 2007]
(National Assembly – sec 75).
b) Mineral and Petroleum Resources Development Amendment Bill [B
10 – 2007] (National Assembly – sec 75).
(c) Pension Funds Amendment Bill [B 11 – 2007] (National
Assembly – sec 75).
(d) Banks Amendment Bill [B 12 – 2007] (National Assembly – sec
75).
- Draft Bill submitted in terms of Joint Rule 159
(a) Transport Agencies General Laws Amendment Bill, 2007, submitted
by the Minister of Transport. Referred to the Portfolio Committee
on Transport and the Select Committee on Public Services.
TABLINGS
National Assembly and National Council of Provinces
-
The Speaker and the Chairperson
a) Submission of the Financial and Fiscal Commission on the Division of Revenue Bill for 2008-2009, tabled on 16 May 2007 in terms of section 9(1) of the Intergovernmental Fiscal Relations Act, 1997 (Act No 97 of 1997).
MONDAY, 21 MAY 2007
TABLINGS
National Assembly and National Council of Provinces
- The Speaker and the Chairperson
(a) Report of the Auditor-General to the Trustees on the financial
statements of the 23rd Africa Cup of Nations in Mali Trust for the
period 21 December 2001 to 31 December 2003 [RP 41-2007].
-
The Minister of Minerals and Energy
a) Strategic Plan for the Department of Minerals and Energy for 2006/07 to 2011/12.
TUESDAY, 22 MAY 2007
ANNOUNCEMENTS
National Council of Provinces The Chairperson
- Message from National Assembly to National Council of Provinces in respect of Bill passed and transmitted
(1) Bill passed by National Assembly on 22 May 2007 and transmitted
for concurrence:
(a) Criminal Law (Sexual Offences and Related Matters)
Amendment Bill [B 50B – 2003] (National Assembly – sec 75)
The Bill has been referred to the Select Committee on Security and
Constitutional Affairs of the National Council of Provinces.
TABLINGS
National Assembly and National Council of Provinces
- The Minister of Home Affairs
(a) Strategic Plan for the Department of Home Affairs for 2007-2008
to 2009-2010.
(b) Annual Performance Plan for the Department of Home Affairs for
2007-2008.
- The Minister for the Public Service and Administration
(a) Strategic Plan for the Department of Public Service and
Administration for 2007-2010.
- The Minister of Trade and Industry
(a) Strategic Plan for the Department of Trade and Industry for
2007-2010.