TUESDAY, 2 MARCH 2010 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY
                                ____

The House met at 14:00.

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

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col 000.

                          NOTICES OF MOTION

Ms A T LOVEMORE: Mr Speaker, I hereby give notice that on the next sitting day of the House, on behalf of the DA, I shall move:

That the House debates the state of waste-water treatment in South Africa and the urgent interventions required of government to effectively address the situation in order to protect environmental and human health.

Thank you, Speaker.

Mr A M MPONTSHANE: Hon Speaker, I hereby give notice that on the next sitting day of the House I shall move:

That this House debates the roles and responsibilities of teacher unions in the formal education sector.

I thank you.

              CONDOLENCES ON DEATH OF ALDERMAN E STOTT

                         (Draft Resolution)

The CHIEF WHIP OF THE OPPOSITION: Mr Speaker, I move without notice:

That the House –

 1) notes with regret that Alderman Eulalie Stott, a founder member of
    the Liberal Party and of the Black Sash, passed away on Sunday, 28
    February 2010;


 2) further notes that Eulalie Stott was a leading campaigner for the
    abolition of the iniquitous pass laws and a fearless and outspoken
    opponent of the tyranny of the apartheid regime;


 3) acknowledges that Eulalie Stott served as a Cape Town City
    Councillor for 33 years and was a long-serving member of the
    council housing committee, in which capacity she won numerous
    awards for her efforts to speed up housing provision for the
    homeless;


 4) recognises that Eulalie Stott was a proud daughter of our great
    nation who dedicated her life to the service of others and the
    eradication of injustice and tyranny within South Africa;


 5) further recognises that she will be remembered by those who knew
    her as a charming, dedicated, generous and moral woman, who will be
    deeply missed by the community which she selflessly served for so
    many years; and


 6) extends and expresses its sincere condolences to her daughters
    Louise and Rene, her grandchildren and all who loved her.

Agreed to.

              CONDOLENCES ON DEATH OF PROF S DE GRUCHY

                         (Draft Resolution)

Mrs J D KILIAN: Mr Speaker, I move without notice:

That the House –

  1) notes with a deep sense of loss the passing away of Prof Steve de
     Gruchy, a deeply religious man who promoted an appreciation with
     the church of the important theological connections between the
     economy and ecology;

  2) further notes that Prof Steve de Gruchy was a man who stood
     uncompromisingly for justice and promoted righteousness no matter
     what the circumstances were;

  3) acknowledges that over his productive lifetime he rigorously
     pursued the family tradition of ecumenism through his unselfish
     services in the World Council of Churches, World Alliance of
     Reformed Churches, Council for World Mission and the SA Council of
     Churches and that he made a signal contribution to all of these
     church bodies; and

  4) conveys its heartfelt condolences to his wife, Marian, and his
     children, Thea, David and Kate, as well as to his parents and
     siblings.

Agreed to.

APPOINTMENT OF DR P JORDAN AS SOUTH AFRICAN AMBASSADOR TO UNITED NATIONS

                         (Draft Resolution)

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Mr Speaker, I move without notice: That the House –

  1) welcomes with pride the appointment of former Minister of Arts and
     Culture, Dr Pallo Jordan, as the South African ambassador to the
     United Nations;


  2) recalls that his appointment comes at a time when the African Union
     Summit endorsed South Africa's candidature for a non-permanent seat
     on the United Nations Security Council;

  3) further recalls that the endorsement of his appointment is guided
     by the commitment to strengthen the multilateral system and support
     for a broader multilateral approach to questions of international
     peace and security;

  4) believes that the appointment of Dr Pallo Jordan to the position of
     ambassador is a correct decision, and trusts that he will discharge
     his responsibilities with humility, dedication and utmost
     commitment; and

  5) wishes Dr Pallo Jordan a successful term in the United Nations.

Agreed to.

                       VIOLENCE AGAINST WOMEN
                         (Draft Resolution)

Mrs C N Z ZIKALALA: Mr Speaker, on behalf of the IFP I move without notice:

That the House –

 1) notes that 8 March 2010  marks  International  Women’s  Day,  which
    celebrates the economic, political and social development of  women
    worldwide;


 2) further notes that violence against women is rife around the  world
    and is not only restricted to underprivileged households;

 3) recognises that violence against women is also linked to the spread
    of HIV/Aids and that in some countries as  many  as  one  in  three
    women will be beaten, coerced into sex or otherwise abused in their
    lifetime;
 4) acknowledges that South Africans have become  active  in  combating
    violence against women, but that more needs to be done to eradicate
    this unsocial behaviour; and


 5) calls upon all South Africans  to  stand  together  and  speak  out
    against  women  abuse  that  takes  place   in   their   respective
    communities, to help the police identify the perpetrators of  women
    abuse and to offer support to victims of abuse.

Agreed to.

          FIRST IMAGES PRODUCED BY SA SATELLITE, SUMBANDILA

                         (Draft Resolution)

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Mr Speaker, I move without notice:

That the House –

 1) welcomes with great pride the success of the South African space
    satellite, Sumbandila, which produced its first images of the
    earth’s surface on Monday, 22 February 2010;


 2) recalls that the R26 million satellite was launched in Kazakhstan
    in September last year and was expected to orbit about 500 km to
    600 km above the earth, carrying high-resolution cameras to produce
    images of the earth’s surface;


 3) further recalls that the data collected will be used in the
    management of natural disasters such as floods, fires and oil
    spills in Southern Africa and is also expected to monitor sea and
    land temperatures, clouds and rainfall, winds, sea levels, ice
    cover, vegetation cover and gases; and


 4) feels that the success story of Sumbandila reinforces South
    Africa’s role in national, regional and international space
    initiatives and enhances its efforts to develop space science and
    technology in the country.

Agreed to.

The SPEAKER: Hon members, I now wish to invite the hon Kohler-Barnard to address the House.

                  APOLOGY FOR UNACCEPTABLE LANGUAGE

                       (Personal Explanation)

Ms D KOHLER-BARNARD: Thank you, Mr Speaker. I wish to unconditionally apologise to the House for the use of totally unacceptable language in the National Assembly on Tuesday, 16 February 2010. I withdraw the words I said unconditionally. Thank you. [Applause.]

The SPEAKER: Noted. Hon member, thank you very much for that unconditional apology to the House.

CONSIDERATION OF FISCAL FRAMEWORK AND REVENUE PROPOSALS AND OF REPORT OF STANDING COMMITTEE ON FINANCE

The SPEAKER: Hon members, I think it is important to highlight that this is the first time that Parliament is required to adopt the fiscal framework and revenue proposals. This is, of course, in line with the Money Bills Amendment Procedure and Related Matters Act.

Mr T A MUFAMADI: Hon Speaker, the first thing that I noticed is that there is no water for me here, and my speech is going to be very long.

Mr Speaker, it is my honour and great pleasure to participate in this historic budget debate of the fourth democratic Parliament. It is indeed a special occasion for us as hon members, because the fiscal framework under consideration and the budget proposals contained in the Division of Revenue Bill and the Appropriation Bill to be deliberated upon are the first to be processed under the new Money Bills Amendment Procedure and Related Matters Act.

This Act is a consequence of years of deliberation by the public on how budgetary processes should reflect the concerns of broader society. The ANC as an organisation of the people, through its structures, finally resolved in Polokwane that Parliament should pass legislation to effect this aspiration of our people. This piece of legislation seeks to deepen public participation and therefore there is indeed an expectation from the public that their voices will be heard through this process more than ever before. After the Budget was presented, the Speaker referred the fiscal framework to the Standing Committee on Finance. Between 18 February 2010 and 1 March 2010 we interacted with different stakeholders representing the views of various constituencies on the fiscal framework, and all parties in Parliament, with the exception of the IFP, supported the framework.

Let me also take this opportunity to thank, express appreciation to and congratulate President Jacob Zuma on giving the nation and the world at large an opportunity to celebrate the 20th anniversary of the release of our torchbearer and true liberator, Tata Nelson Rolihlahla Mandela … [Applause.] … who epitomises the dignity and pride of the heroic and relentless struggles of our people in the fight for political and economic liberation, because, in reality, political freedom will remain meaningless and incomplete without economic power.

This celebration is but a recognition and reaffirmation of the correctness of our history, and that Mandela is not just an icon of our people but the heritage and a living symbol of human dignity. Given the current economic challenges, what we need is a growth path underpinned by a coherent industrial strategy, with clear sector programmes aimed at the creation and retention of quality jobs and employment opportunities via a process of retooling the skills of economically active people.

The proposed fiscal framework and revenue proposals are a base and foundation on which the Appropriation and the Division of Revenue Bills will be considered by this honourable House at a later stage. The new Money Bills Amendment Procedure and Related Matters Act, Act 9 of 2009, provides the ideal opportunity for the broader public and Parliament to engage with long-term trends in fiscal and economic policies.

When we compare this budget to the Medium-Term Budget Policy Statement presented in October 2009, the first observation we make is that it is premised against the backdrop of a slightly positive economic outlook, which remains fragile in terms of the projected recovery of the global financial markets, and it addresses two main policy challenges. The first is the transformation of the South African economy to realise sustainable growth accompanied by employment creation. The second is the need to have a responsive public sector to meet the expectations of our population and the broad objectives of a developmental state.

These proposals are borne out of our experience of the last decade, which justifies a new way of doing things, because we can safely say, without fear of contradicting ourselves, that we now know what has worked and what needs to be adjusted.

What was of critical importance in this Budget Speech was an admission by the Minister of Finance that the current economic growth path has not adequately responded to the challenges of the growing statistics on joblessness, income inequalities and wealth redistribution.

In the same spirit, the Minister used this public platform to invite all stakeholders to a national dialogue, particularly between government, business and labour, to chart a common developmental economic growth path with practical solutions to the challenges that confront ordinary people on a daily basis.

The fiscal framework recognises that the majority of the potentially economically active population who are unemployed are young people. This must be viewed in a very serious light. In fact, we must treat this as an emergency. Young people need to be exposed to an environment that will assist them in realising their goals. The proposed subsidy by the Minister will play a big role in responding to the negative impact that no education, no skills and no entrepreneurial skills have on young people.

The onus is on us to act in a responsible manner, cognisant of the fact that there are capable men and women who, in the past decade, lost hope of any job prospects. As leaders, irrespective of our political affiliations, we have a responsibility to engender entrepreneurship and skills development in young people who, in turn, will be capacitated to restore hope to uBaba Madikane in the Eastern Cape who last saw the inside of a factory 10 years ago before he was retrenched. This will create the type of economy which, simultaneously, changes the hopeless situation of Joyce Tshikukununu in Thothololo, a graduate who has not had a job for the past eight years.

The proposed measures to promote youth employment through employer subsidies should be carefully considered. Just like any other new initiative, there will always be serious challenges in the implementation of the proposed employer subsidy. Our response to these challenges will determine the success or failure of this noble idea.

All the parties should view this as the beginning of a potentially fruitful process; let us come forward with more enriching ideas. Together we can do more. The need to encourage the private sector to give young people experience and meaningful employment should be commended and supported vigorously. [Applause.]

For this initiative to succeed, maximum co-ordination between the economic cluster of Ministries and their departments is paramount. And, most importantly, the matter should be thoroughly canvassed with the labour representatives.

Taking experience as our best teacher, we must guard against employers turning this into a scab labour scheme, in which real jobs are conveniently replaced by this state intervention or by temporary jobs. We need to be careful of employers who may seek to turn the good intentions of government into a get-rich-quick scheme to boost their profit margins.

The question to ask is: What then is the trajectory of a new growth path? This brings me to my next point and observation with regard to the national response to the economic crisis. It is my considered view that, to a very large extent, what held our economy together during these trying times was largely the government’s countercyclical fiscal policy, particularly on public and economic infrastructure spending. It is also evident from the budget presentation that our economy is on a recovery path, and this can be attributed to the partnerships among the private sector, labour and government.

Notwithstanding the successes of this state intervention, there are indications that not all sectors of the economy have responded positively to government’s offer, particularly when we assess the training lay-off programmes in the clothing and textile industries, and in the transport and metal-fabrication industries.

We must commend government spending particularly on public and economic infrastructure and in the automotive industries, and we particularly commend BMW and Renault for taking full advantage of the lay-off programme incentives. This has thus far succeeded in mitigating the retrenchments.

Given that not every opportunity provided to the private sector has been maximally utilised, the impact of the economic recession has been more severe, hence we have lost almost one million jobs in the economy in a period of less than a year. We urge the private sector to participate fully in the lay-off programmes. In fact, there is a need to examine whether the economic recession wasn’t used to a certain extent as an excuse to lay off workers in some instances. This matter requires the attention of Nedlac and other relevant stakeholders.

Although a deficit is bad, it can also be good, depending on the reason for borrowing and when properly managed. From the budget presentation it is clear that in order to meet our expenditure priorities, we will have to increase our debt levels over the next three years.

What is comforting, though, is that this borrowing is not meant to sponsor the current account, and there is a clear indication of fiscal stability around 2014. Our role as Parliament is to ensure that there is value for money. For us to achieve this, we will have to ensure that our Public Service is properly geared up to deliver on the mandates of a developmental state. We must further strengthen the efforts by the executive in the fight against corruption by mobilising all our communities to reject any corrupt tendencies wherever they occur.

In conclusion, we acknowledge that the fiscal framework, as stated before us, is presented under different economic conditions, which indicate positive signs of a slow recovery - and yet it has also taken into consideration the five priorities reflected in the ANC manifesto and is indicative of steps to strengthen the three arms of government. It is therefore a good basis and foundation for the Division of Revenue Bill and the Appropriation Bill.

I therefore urge the honourable House to support the fiscal framework, as presented by the Minister, and would like to say officially that the ANC supports the framework. I thank you. [Applause.]

Dr D T GEORGE: Speaker, the Money Bills Amendment Procedure and Related Matters Act has initiated a process that will enable an active parliament to ensure that the people’s voice is heard in the budget process and that the people’s money is applied in the most appropriate way. Whether it actually makes any difference to the people is in our hands.

The heartbeat of the Act lies in the fiscal framework. This reflects how much revenue government expects to collect, how much it plans to spend and how big the gap between the two numbers is expected to be. If revenue exceeds expenditure, we have a surplus; if expenditure exceeds revenue, we have a deficit. A deficit needs to be funded, usually with borrowed money, and must eventually be repaid. Parliament can amend the fiscal framework, but it needs to do this within specific parameters, as set out in the Act.

Parliament must ensure that there is an appropriate balance between revenue, expenditure and borrowing; that debt levels and debt interest costs are reasonable; that the cost of recurring spending is not deferred to future generations; and that there is adequate provision on infrastructure development, overall capital spending and maintenance.

In October last year the Minister of Finance presented the Medium-Term Budget Policy Statement, MTBPS, detailing the estimated fiscal framework for 2009-10 and the next three years until 2012-13. The estimated revenue for 2010-11 was R743 billion and expenditure R905 billion, leaving a deficit of R162 billion – not unusual, given prevailing economic conditions. In our response in Parliament on 11 November 2009 the DA stated that “assumptions underlying the fiscal framework may well prove to be optimistic”. In February the Minister tabled an amended fiscal framework for 2011, which reflected revenue at R738 billion – a R5 billion reduction on the October forecast, although the gross domestic product, GDP, growth estimate was revised upward from 1,5% to 2,3%.

At face value this would mean that we have rising economic activity with falling revenue, thus a phenomenon of tax-less growth – not possible, given the tax to GDP multiplier. In its response to the DA’s enquiry on this, National Treasury responded that:

Corporate tax revenue since October 2009 points towards a deeper decline than expected at the time of the MTBPS and the short-term outlook for both value-added tax and corporate income tax points to a stabilisation at more modest levels.

In simple English this really means that Treasury’s forecast in October was optimistic and that tax collection is expected to be lower than anticipated.

A forecast is a prediction based on assumption. If the assumption is wrong, so is the prediction. The DA has concerns arising from the fiscal framework, because it is possible for forecasts to go wrong, as demonstrated in this instance. The fiscal framework before us today looks three years ahead to 2012-13 – a difficult task, even for the experts. By then our gross national loan debt, excluding that owed by municipalities, will be R1,4 trillion or 43,1% of projected GDP. In that year we will pay R104 billion to service our debt. Last year we paid R57 billion.

Comparing our debt level to that of the USA and the UK is not meaningful because our economy is very different to these developed economies. Those economies can withstand much higher debt levels for much longer than ours can. Highly indebted countries in the Euro zone can take comfort in the knowledge that others in the zone are unlikely to permit them to default on their debt because of the currency fallout that will ensue.

We do not have a bank of last resort other than our own hardworking taxpayers. The suggestion by the Financial and Fiscal Commission that government may want to adopt a fiscal stability pact to clearly establish the level of debt and what it can and cannot be used to finance has been included in our recommendations, given that government departments cannot maintain even the most basic principles of financial discipline.

The DA is not opposed to government borrowing money for appropriate reasons such as infrastructure development and stimulating our economy as it emerges from recession. We are, however, opposed to borrowing that yields questionable returns. The nonfinancial public enterprises will borrow R287 billion over the next three years. We have no certainty on whether this money will be appropriately spent as these institutions lurch from one financial crisis to another, secure in the knowledge that the people of South Africa will rescue them and their overpaid executives over and over again while the people wait for basic services to be delivered.

Eskom has vividly demonstrated the reality that government cannot deliver on its own and that the concept of a developmental state with parastatals as key drivers for economic growth cannot work. Without an incentive to become efficient, these entities never will and can only survive until their lifeline to the people’s money is eventually unplugged. Not a murmur emerges from government when its parastatals, overflowing with underperforming and overpaid cadres, fund executive bonuses with bailouts and don’t change their behaviour.

The DA’s approach to public finance shows that it is possible to restrain public debt by attracting private investment into the parastatals. A modest private sector investment of R20 billion would reduce the need for debt escalation and help stem the bailout haemorrhage that drains the public purse. Increasing debt to prop up the failed parastatals is neither appropriate nor compatible with our mandate to ensure that the people receive maximum value for their money. The DA’s alternative budget has demonstrated how a new financial model for the parastatals can change the debt trajectory. Our debt does not have to increase as forecast if we exercise the right choices.

The Minister has made it clear that government can raise taxes in future to fund spending commitments, given the possibility of delayed economic recovery. The DA’s model is grounded in a different principle, based on the knowledge that sufficient investment capital exists in South Africa and that business will invest if the environment is attractive enough. The Minister has mentioned that government, business and labour should work together – so the sentiment is there, we just need some action. Government should not rest assured that it can just increase taxes to fund its often wasteful and extravagant spending. That is merely adding insult to the already injured taxpayer who waits in pain as their hard-earned tax contribution is thrown down yet another drain filled with empty promises. The social contract will only stretch so far and it is already strained.

A different message is needed and the DA would suggest that it should be that government will not increase your already heavy tax burden; we will become more efficient, less wasteful and build partnerships with business that does have money available for investment. The DA is not opposed to government spending, but we are opposed to government spending that fails to benefit the people.

Since October, the 2010-11 expenditure forecast has increased from R905 billion to R906 billion. This is not a large increase, but it does beg the question of why the Minister’s promise to cut wasteful expenditure and restrain the spiralling public sector wage Bill is not reflected on the fiscal framework. The Minister is saying that steps will be taken to root out corruption and tighten up on wasteful spending, yet the number increases. Does the Minister not have any faith in his ability to actually cut the expenditure to the point that we see it in the numbers on the fiscal framework, because that is where, after all, it really matters? The Minister was so afraid of my question that he never came here today, neither did the Deputy Minister.

The DA’s alternative budget has demonstrated how real expenditure cuts of R4 billion can impact on the fiscal framework, while ensuring that the people’s money is more efficiently spent. Given that the revenue projection has been revised downwards, an increase in expenditure, however small, is not the right direction.

The DA supports the counter cyclical fiscal stance and therefore does not think it possible to balance the budget deficit to zero within the next three years. Our alternative budget delivered a 5,2% deficit off a growth of 1,5%. There does not seem to be consensus on growth expectations for 2011, with the Reserve Bank forecasting 2%; National Treasury 2,3%; the Reuters consensus 2,6%; the Economist Intelligence Unit 2,8%; and Nedlac, according to Fedusa, 3%. We hope that the higher forecasts will be achieved, but government must manage our money with its eye on the lower forecast, because if GDP growth dips or does not accelerate in line with National Treasury forecasts, our public financial model must be robust enough to withstand the shock.

National Treasury, in its explanation on how it calculated expected revenue, predicted that the tax to GDP multiplier at 0,95 in 2010-11 will gather pace in 2011-12 to 1,3. Therefore, if GDP growth exceeds Treasury expectations, government revenue should increase at an accelerating pace over the next three years. This will provide additional fiscal space for a reduction in the currently high levels of taxation to which South African individuals and corporates are subjected.

In October the DA stated that we would not support an increase in taxation unless it was offset by a tax reduction elsewhere. The 2010-11 budget proposes to reduce taxes on individuals and companies by R6,75 billion and increase indirect taxes by R6,3 billion – a net reduction of R450 million. We therefore support the general impact of this on the fiscal framework, although we believe that the Minister could have more fully compensated individuals for fiscal drag that erodes their disposable income. The increase in the general fuel levy is excessive and will contribute to inflation. The National Treasury’s view during deliberations that the increase would not be inflationary has been contradicted by economists and the Reserve Bank.

The DA welcomes the proposed wage subsidy and made provision for a revenue reduction in our alternative budget to accommodate this. We look forward to its implementation next year. We also made provision for VAT zero-rating to be extended to books to improve access to this basic ingredient of quality education. In its report, the Standing Committee on Finance notes that the parliamentary budget office, as soon as it is established, will investigate the VAT treatment of books and other basic essentials with a view to zero- rating.

During parliamentary hearings, all submissions specific to the revenue proposals suggested that the introduction of a tax ombudsman should be investigated. This office would ensure that a balance exists between the need of the SA Revenue Service, Sars, to increase tax compliance and the right of individual taxpayers to fair treatment. Sars cannot be a player and a referee in a tax-collection game. Sars also needs to consider how cash business can more fully be captured into the revenue net and work more closely with the business community to achieve this objective. Rather than putting a vice grip on relatively compliant taxpayers, Sars should focus on those who blatantly ignore our tax laws by remaining outside of the net. Lifestyle audits are needed, with a focus on those who are inappropriately politically connected and feast at the expense of the poorest members of our community.

South Africa’s development continues and it is time for us to reflect on the tax regime applicable to South Africa. Over the past few years, tax practitioners have consistently submitted that our tax laws are overly complex and complicated and do not do justice to our emerging economy. As we emerge from the depths of the recent recession, and with Sars of the view that tax compliance has deteriorated during the recession period, now would be an appropriate time to convene a tax commission to consider our tax laws and the central question of tax incidence and its suitability to the South African context.

We have entered a new era in South Africa where the budget is no longer the exclusive domain of the executive; it belongs to all of us. Although we have chosen not to amend the fiscal framework or revenue proposals, the committee has made recommendations and commitments that, when implemented, will have important consequences to ensure that debt levels do not spiral out of control; that we have a clear understanding of how the Reserve Bank will maintain price stability, given the variables it needs to consider in its decision-making process; and that the VAT treatment of essential items such as books is reconsidered.

Although the parliamentary budget office is not yet in place, the committee was able to consider properly the fiscal framework and revenue proposals. It is simply not true that the committee was not capable of understanding the implications and complexities around the forecasts. We know exactly what the numbers are saying and the context of the message. That is why the proposals were not amended - not this time, anyway.

The DA will support the fiscal framework and the revenue proposals and will monitor very closely the direction of the numbers and the policies that influence them. Thank you. [Applause.]

Mr N J J KOORNHOF: Mr Speaker, sound macroeconomic policies of the past 12 years have helped South Africa cushion the impact of the current recession.

It will all be about goals for 2010, not only for Bafana Bafana, but also for the economy and especially the public sector. A critical factor in cementing this recovery will be the behaviour of the public sector and our ability to do something about the glaring inequalities of our society. We are going to experience larger deficits and higher levels of debt.

South Africa will need to cover the dent in its finances and to ensure that we have adequate fiscal space to deal with future negative shocks. A clear exit strategy out of debt and a disciplined spending programme shall be vital for survival.

The year 2010 was the time to keep the economy anchored and to embrace the consistency of the past. The hon Minister has succeeded in doing this and, therefore, Cope shall support this framework.

If we compare South Africa’s position to emerging markets, only our interest rate bracket is “above average”. At all other levels, we are in the “worst” or “unattractive” brackets of the score sheet - something we cannot ignore.

The International Monetary Fund, IMF, has warned emerging markets not to test the 50% of gross domestic product, GDP, debt levels. South Africa will start to stabilise its debt levels only in 2015, peaking at close to 48% of GDP, if there are no further shocks in the system.

There will be no room for mistakes in this arena. We almost made a mistake in 2008, when we argued whether or not this recession would hit us, and if so, how hard. To illustrate this, the former Minister of Finance was wrong in his projections for growth in 2009-10. He projected growth of 1,4% and we ended up at -1,5%. Gross tax revenue was down R70 billion and the deficit almost double what was projected.

There will be no room for mistakes again. All indications are that we shall experience a continued deficit for the next six years, making them very different from the previous six years.

The real tax trend shows that there is very little prospect for recovery in company taxes and VAT revenues in the immediate future. Since 1994, we saw the rising of debt levels, hitting close to 50% of GDP in 1998. During that time, there was a debate about the direction of policy in the alliance.

However, under the guidance of the former Minister of Finance and President Mbeki, we returned to sound macroeconomic policies. We realised that the market would shape the economy, and the correct decisions were taken. Debt levels dropped to 22% of GDP.

Again in 2010 we have a debate about the economic direction. Wisely, it was the Minister of Finance, his deputy, Minister Manuel and Minister Chabane, who won the contest - and may I add that it was with the blessing of the President and, hopefully, the Cabinet. Owing to the recession, however, debt will rise again in the next five years to levels similar to those of 1998.

In the next three years, we might see the clash of the titans in the credit- borrowing arena. When the domestic spending levels pick up, domestic people will go to the market for credit. State-Owned Enterprises, SOEs, will start borrowing, and the state will follow. We have seen this in the background of the global credit crisis where countries struggled to pay their state debts. We might see high interest rates in 2015 increasing high debt levels, and maybe slight downturns in the economic cycle. We all know that debt creates friction, as it does in a household, for example.

In 2014, or even before, because of tight spending, we might again see friction among the alliance partners around economic policies. This does not augur well for the future and for consistency. You cannot change economic policies every five years. We must strive for discipline and stability.

To get out of this debt trap, the easiest way is to raise taxes, but then it becomes a horror story. What we would like to see is value for our rand and tax, and an earlier exit strategy out of debt. If we grow more than projected, we must start paying back sooner.

Cope would like to see a zero-tolerance approach to ineffective spending by Ministries and departments. We all know spending patterns are down in the next three years. That is why we cannot tolerate any wasting of money. Why can’t Ministries set the example now and cut 15% of their budgets? How is the Treasury or the hon Minister Chabane’s performance agreement going to ensure that inefficient programmes in departments are cut? We need to know how. How are we going to ensure value for our rand if we struggle to maintain a professional Public Service at some levels? If performance agreements are linked to outcomes, for instance the number of houses built, and not linked to how much was saved by shredding bad programmes, then all the speeches remain a wish list and we are heading for troubled years.

Hon Deputy Minister, I have commended the Minister of Finance on his Budget Speech by quoting the famous American boxer Gentleman Jim. I said to him, “If you want to become a champion, you fight one more round; if it is tight, you fight one more round”. He has fought two good rounds and he has kept the economy anchored. What we need now is another round - a knockout round to get rid of undisciplined departments and bad spending behaviour. Deputy Minister, you’ve got a weight advantage. I thank you. [Applause.]

Mr M G ORIANI-AMBROSINI: Mr Speaker, Minister Pravin Gordhan is an extraordinary man. I came to know him during the negotiation process. He has a strong personality that could have been intimidating and threatening, were it not for his intensely benign and reassuring attitude and the confidence that emanates from his leadership.

This may account for the fact that he has charmed so many into applauding his fiscal framework. Even the DA, notwithstanding them telling us how terrible it all is, seem to be supporting him.

In the next three years Minister Gordhan will borrow not only as much debt as was accumulated during the last days of colonialism, the apartheid period and the new democratic South Africa, including the money used for the greatly increased social spending of the past 16 years, but one and half times more than that. The present national debt is R513 billion, which will be raised to R1,3 trillion by 2013, and this is not the end of it.

According to his projection, the debt will stabilise only in 2015. If it grows at the same rate, the debt will be R1,7 trillion by that time. He clarified in the committee that, in 2015, we will have stabilised the Budget, by which he means the Budget will run on a deficit of only 4% of the GDP. By projecting the growth of the size of the Budget and the growth of the GDP, this means that by 2015 the deficit will grow by a few more hundred billion rands per year.

Let’s place this in context: In 2015, every child will be born with a debt at birth of about R340 000 at present rand value, steadily growing each year thereafter. The principle of “no taxation without representation” will not apply in respect of such newborns, who will have to pay off money they had no part in borrowing.

With his charm, Minister Gordhan told us not to worry because he had it all figured out. He told us that the economy will grow this year by 2,3%, next year by 3,2% and the following year by 3,6%. Thereafter, it will all be hunky-dory. He is relying on the same advice of those who, over the past 15 years, got projected growth wrong time and again, starting from the 6% projected growth on Gear, the Growth, Employment and Redistribution strategy, which turned out to be a mere 3%, to finish with the grand prediction … [Interjections.]

The SPEAKER: Hon members, your voices are drowning out the speaker. Please allow the speaker to be heard. If you have to speak, please do it quietly or, preferably, don’t speak at all until we have finished the session.

Mr M G ORIANI-AMBROSINI: … that the recession would bypass South Africa.

The Reserve Bank appeared before our committee and frankly told us that the Minister’s growth projections are inflated and they themselves worked on something more realistic: around 2% growth in the foreseeable future.

This is not the end of it. Having decided to borrow us into major problems on the basis of such an optimistic outlook, Minister Gordhan candidly told us nobody knew if the recession was really over, and it may very well be much longer and deeper before it’s over. Therefore, we are borrowing ourselves against the untested best-case scenario that the Minister himself warned us not to give much credence to. To me, this sounds like a daredevil’s fiscal policy.

It gets worse. In order to reduce the borrowing, which would otherwise go to R3,6 trillion by 2015, Minister Gordhan took out of the Budget R846 billion’s worth of public expenditure for infrastructure and placed this cost directly on the consumers’ shoulders at the time of their most dire and greatest indebtedness.

There is no answer to the fundamental question of how this enormous debt will be paid off. The only thing we know is that perhaps we will stabilise at a constant rate over balanced growth. [Interjections.]

The SPEAKER: Hon member, your time has expired.

Mr M G ORIANI-AMBROSINI: We have difficulty in supporting a leap of faith in the dark simply on account of how good and charming Minister Gordhan is. Thank you.

Mr L W GREYLING: Speaker, the ID recognises the enormous challenges that the South African economy currently faces and the difficult task of presenting a fiscal framework that funds our ever-increasing priorities while still ensuring that our debt levels do not become unsustainable. Ultimately, the only way for us to achieve this difficult balancing act is to move our economy on to a higher growth path; one that will ensure that the majority of our population is able to take up gainful employment.

The ID, therefore, welcomes the tentative steps that are being taken to restructure our economy and create new sectors that can spur on future economic growth. Unfortunately, however, most of the budgetary resources to do this have been directed towards the automotive and textile sectors, each of them receiving R1,6 billion in this year’s budget.

Despite the commitment to build up green industries there has not been adequate budgetary allocation to do that. We have also heard in repeated budget speeches for the last three years that different environmental taxes have been explored, but now is the time to start implementing them. The emissions tax is a good start but there are many others in which environmentally destructive practices can be effectively taxed. This will bring in much-needed revenue for the state and help to put us on a more sustainable development path.

The ID is also concerned with the projections put forward by the Treasury concerning the anticipated economic recovery. The global economy is in a precarious state and we are concerned about whether this recent upturn is sustainable. Questions can certainly be asked about whether this recent upturn is simply a product of the enormous stimulus packages of developed countries and whether this recovery will continue once these stimuli are removed. If the global economy slumps into another recession and South Africa becomes a victim, our budget deficit will balloon. This is something we have to watch very closely.

In this regard, the ID supports the Minister’s concerted efforts to rein in government expenditure and ensure that failing public enterprises are not funded into perpetuity. We also support his commitment to root out corruption, particularly as it pertains to the tendering process. We wish him the best of luck in this endeavour, though, because he is no doubt going to make enemies along the way. The ID implores him to investigate all conflicts of interest in the tendering process without fear or favour, including those of government Ministers and even the ruling party itself through its Chancellor House front company.

Let’s work together to ensure that the tendering process is free from any conflicts of interest and that service delivery is no longer sacrificed on the altar of naked greed. It is possible to turn this economy around and root out corruption but only if we remain committed to the task. I thank you.

Mr N M KGANYAGO: Mr Speaker and hon members, we remain aware that budgeting, and the overall fiscal framework that drives it, is a balancing act. Competing, sometimes even contradictory policy and institutional demands must be met within the constraints of a finite budget. These constraints weigh even heavier upon the process when the economy is in recession and revenue is in decline.

Thus, now - more than ever before – we need to be very clear about our priorities. At this moment, various communities throughout the country are in turmoil due to the service delivery protests. The burning tyres and rubber bullets provide a stark reminder that the fiscal framework and everything that the government does should reflect the needs of the people, otherwise we will be heading for a violent crisis of legitimacy for this government.

The UDM welcomes the acknowledgement by the hon Minister of Finance that we require a national, long-term consensus on the economy. This is the reason that the UDM has been calling for a national indaba on the economy. It is regrettable that the Minister, in his delivery of the national budget, talked about “starting today” on job creation. The ANC government should have started on job creation 15 years ago.

We are concerned about the projected public debt rising to 40% of the gross domestic product, GDP, by the year 2013, especially since lower-than- expected revenues might become a trend. We broadly agree with the priorities of education, health, crime fighting, rural development, job creation, and municipal and housing investment.

We believe that it is necessary to heed the concerns raised by the Financial and Fiscal Commission regarding the apparent lack of intergovernmental structures for the co-ordination of the priority areas of employment creation and rural development. The continued pursuit of the national health insurance is troubling since current independent calculations indicate that it would be vastly unaffordable. Where will our economy source additional hundreds of billions?

We believe that the government should not claim victory on projected large infrastructure spending when much of it will not be funded through the budget but by the public through tariffs, such as electricity tariffs. Tariffs constitute a secondary tax that increases the burden on household budgets, escalates inflation and is poured into parastatals, such as Eskom, with poor track records and severe leadership vacuums. I thank you.

Mr D D VAN ROOYEN: Mr Speaker, hon members, stable and mature democracies are indeed characterised by the resilience of their institutions, and their economic foundations are characterised by stability of income distribution.

The philosophy underlying leading democracies, the political aspects of their economics and the economic aspects of their politics ensures the stability of income distribution. We, in our beloved country South Africa, face the challenge of a stable democracy, but one that presides over worsening income distribution.

Combined with expansionary fiscal measures, cutting the interest rate always comes to the fore in any policy debate. It is true that this would go a long way towards assisting the economy. However, because of delays in the stabilisation measures having an impact on the economy - particularly in the case of the monetary policy, which usually takes 12 to 18 months to have a full impact - social protection measures are also critical in minimising the negative social impact on particularly the workers and the poor. Hence the current fiscal framework provides for more spending in this regard.

The macroeconomic policy context in which the 2010 Budget is tabled is characterised by a shift in emphasis away from inflation control to growth and employment creation. The pressures on inflation are significantly reduced, although with the recent electricity tariff increases we shall have to monitor the real effect of this increase. The demand for goods and services was in decline for most of 2009, but research has shown that a positive turnaround was achieved in the last quarter of 2009.

Major international economies are still in recession, and the main leading indicators of economic activity are pointing in a downward direction. Monetary policy is in an interest-rate-cutting phase of the cycle. Some central banks, especially the Federal Reserve and the Bank of Japan, are already reaching zero-bound interest rates. Options to use monetary policy as a policy stimulus are increasingly running out globally. This leaves fiscal policy as a potent tool to arrest the current decline.

However, issues of financial fiscal policy have come to the fore. Raising taxes appears not to be an option in the current phase of economic contraction, but the continued worsening of income distribution in South Africa during the past years of robust economic growth should not rule out this option.

Another financing option is to issue more debt. The capacity of South Africa’s financial market to absorb the required amount of debt to finance fiscal expansion may not be sufficient, as has been realised recently. In this case, of course, we have no option but to look into foreign sources of finance. However, I must also indicate that the strained global liquidity conditions weaken the viability of sustained external finance.

The fiscal framework that we are debating today positions itself in terms of the Medium-Term Budget Policy Statement of October 2009. The budget deficit as a percentage of GDP has been increased significantly so as to have resources to cover the programmes the ANC-led government has to execute. All these programmes obviously mean an increase in the budget deficit. While some conservative economists have been critical of the ANC- led government’s approach, what they have failed to appreciate is the need to continue to invest and spend in times of economic recession, even if the deficit as a percentage of GDP rises.

In this way, we are pushing the economy towards recovery. As has been outlined in the Budget Speech, the management of this deficit will be catered for in the outer years of the Medium-Term Expenditure Framework, especially as the situation provides little scope for any real increase in taxes. As the ANC-led government, we have raised the minimum wage level of tax over a number of years. This has given the lower-income earners much- deserved tax relief, which, in turn, has helped in increasing demand in the economy.

Despite the sustained – but, of course, moderate – growth we have realised, the gains from economic growth have benefited only a small section of our society. In particular, this is evidenced in the inability of our economy to create employment at rates that would meet the target of halving unemployment by 2014.

Moreover, economic concentration in the economy has not only resulted in price collusion in several industries but constituted a fundamental obstacle to the entry of new players into industries. In addition, the recent economic meltdown has further exacerbated the challenges that face poor households, while its pace has worked to limit the chances of adjusting to these challenges for the poor.

The impact in 2009 was obvious. The weakening demand for products has already seen job cuts, for example in the motor industry. Retrenchments were higher in more significantly smaller companies and across various vulnerable sectors. A number of companies responded by not hiring more workers, and pressure on economic growth has resulted in a slowdown in tax revenue, thus affecting the ability of our government to fund a more expansionary programme.

However, the creativity that underpins the 2010 Budget is remarkable. With reduced income and the shifts in policy, the ANC-led government, through the National Treasury, has been able to sustain expenditure and increase it whilst ensuring that the Medium-Term Expenditure Framework commitments are not abandoned.

The state has intervened to support existing jobs and create new jobs. Potentially, there is room for further economic stimulus packages that could provide a cushion for firms to adjust to new conditions. International conditions have not led the ANC-led government into retreating and withdrawing, as has been the case in so many other countries. Rather, they have potentially provided the space for moving towards a significantly more labour-intensive growth trajectory. This trajectory is possible, provided that social partners, as cited earlier, begin emphasising the importance of employment creation for our economy. We believe that a significant opportunity is available for increased social dialogue aimed, of course, at moving the South African economy forward on a new growth path.

To ensure the creation of decent jobs, our manifesto committed us to making available more resources, which will be used for the implementation of industrial policy and special programmes that will strengthen manufacturing, mining and other vulnerable sectors. The undertaking, through the vulnerable sectors programme, is a promise to increase savings and expand jobs in the clothing and textile sectors, to strengthen the automobile and components sectors, as well as to expand the food industry while making massive investments in public infrastructure.

As the ANC we are unambiguous about the argument that good-quality employment remains the first best option for our country. We will continue the major public job opportunities programme through the Expanded Public Works Programme as a key intervention. Our focus on employment is based on our understanding that whilst grants are important to stabilise society and support educational and job-search outcomes, a sustainable transition out of poverty, particularly for the young, will lie in widening opportunities for employment, including self-employment and study.

I think it is important that all of us in this House, as leaders, call on all intended beneficiaries to also reciprocate, because this is not a one- man show. We need their support, and we need them to reciprocate with regard to these interventions with the required vigour and commitment, because it takes all of us to make these interventions work for our country and, of course, for future generations.

Ours is a developmental state charged with driving social and economic development, a more efficient and co-ordinated public sector and an effective industrial policy.

In order to further entrench our developmental mandate, our government has committed substantial resources to developing sustainable economic activities that can also generate employment on a large scale. The commitment to upgrade the economic infrastructure represents only an initial step. It will be supplemented by establishing a clearer strategy for economic transformation, and of course for there to be better alignment of investment in infrastructure with the development strategy.

While we acknowledge land reform as a necessary condition for sustainable rural development in South Africa, it is equally important to stress that it is by no means a sufficient condition. Rural development entails more than the redistribution of land and ensuring that people make productive use of land. In other words, rural development is not only about agricultural development. Hence our approach recognises the following as some of the other elements of rural development that need to be taken into account when budgets are determined. These elements are: the promotion of agriculture-related enterprises in rural areas for those who are not interested in agricultural production; the development of rural infrastructure, particularly the provision of water and improved roads; ensuring that the curriculum in schools is revised and made to respond to the needs of rural areas; and the provision of health services.

From the above, I think we all concur that it becomes clear that for there to be sustainable rural development, a number of government departments will have to work together - a point set out clearly by the chairperson of our committee. This is something that poses serious challenges, not only for budgetary purposes but for co-ordination too.

With regard to issues of revenue and deficit spending, expenditure, as correctly captured, is matched by the sum of revenue and deficit spending, normally known as borrowing, with most of the expenditure funded through tax revenue in our situation. Raising the level of revenue is thus important in order to fund higher levels of much-needed spending.

According to the 2009 Medium-Term Budget Policy Statement, which gives the terms for this fiscal framework, we are moving towards a much more expansionary fiscal policy. In particular, with the economic downturn, expansionary spending to stimulate the economy is needed. This has led to a significantly higher deficit-to-GDP ratio. Given the current economic conditions and the developmental challenges facing the country, it makes sense to run a budget deficit in the medium term, as long as it is sustainable. Opposition to a deficit is usually based on the false neoliberal assertion that a government that finances spending through borrowing is “living beyond its means” and is deferring the cost of borrowing to future generations. This means that government can borrow from future generations. With accelerated growth, future generations will be rewarded with higher standards of living than would have been possible without deficit spending.

Expenditure needs to be efficient and productive. Productive and reasonably efficient deficit spending is crucial for building the economy and human capital for the future. It would be problematic to fund wasteful or fruitless expenditure through deficits. The ANC-led government has recognised the need for significant increases in the deficit-to-GDP ratio and the coupling thereof with strict monitoring and evaluation capacity. I must reiterate: “… with strict monitoring and evaluation capacity”.

It is our take that this fiscal framework and these revenue proposals must be accepted as a tool that provides the much-needed scope for all role- players to shape our country’s development in a way that will benefit future generations. We are all welcome. Kea leboga. [Thank you.] [Applause.]

Mr S N SWART: Madam Deputy Speaker, the ACDP shares the concerns expressed in the parliamentary report about deficit levels and the increasing public debt levels, forecast to rise to R1,3 trillion by 2013. Debt service costs are set to escalate dramatically, reaching R104 billion by 2013. We appreciate, however, that the increased borrowing requirement is a response to exceptional circumstances and that government has done relatively well, given the global recession.

May I, however, remind members that God in His Word promises that if we obey His commands, we as a nation will be blessed and that we will be a lender to nations, not a borrower. There is no mention about global recovery or global economic crises. Why are we not experiencing this blessing?

I submit, Madam Deputy Speaker, that it is not insignificant that the number of job losses last year was in the region of 900 000, and that this is almost the same number as the number of babies that have been aborted since abortion on demand was allowed. Can this be a coincidence? I don’t think so.

The Budget Review states in no uncertain terms that high deficits lead to rising debt service costs that compete with productive expenditure. We are given the assurance by the government that steps will be taken to ensure that the growing debt burden does not crowd out spending on development priorities and that government will also stabilise growth in interest costs through a careful, controlled reduction in the deficit, taking into account the health of the economy. There is, however, no guarantee of this, given that the global recovery is risky and fragile.

Our trading partners in Britain and the Euro zone are facing a bleak time in the next few months. The Governor of the Bank of England has stated that this nascent recovery is fragile. According to him, the tensions that underlie the building up of large world imbalances have not been resolved.

Should there be - God forbid - a double-dip recession or even stalled economic growth, South Africa would be in an extremely precarious position – given investor sentiment with regard to emerging market economies.

For this reason the ACDP and other members, as well as the report, indicate our concerns about escalating public debt. This is also the reason that the report has recommended that National Treasury develop a clear strategy on how it plans to manage these new levels, both in a scenario of a growing economy and in a scenario of an economy not growing as forecast, given the possibility of a second wave of global recession.

At the very least, we should have a fiscal stability pact, as proposed by the Financial and Fiscal Commission. The ACDP will, however, remain positive and trust that growth forecasts will be far higher than estimated, leading to increased revenues, and that we will speedily reduce public debt and debt service costs, leading to a better future for all. I thank you.

Me P E ADAMS: Agb Adjunkspeaker, agb lede, die fiskale raamwerk gaan nie net om syfers nie, maar wel ook om mense met begeertes, behoeftes en verwagtinge. Dit is ’n monetêre uitdrukking van die ANC se politieke voorkeure en hoe daardie voorkeure op ’n fiskaal volhoubare wyse nagekom kan word. Dit is beide ’n politieke en finansiële instrument wat aangewend word om te verseker dat die beleidsprogramme deur die toekenning van finansiële bronne aan die onderskeie regeringsvlakke uitgevoer kan word.

Die Polokwane-resolusies is die grondslag van die ANC se mediumtermyn- prioriteite en is sy mandaat om die wense van die mense ten uitvoer te bring. Die fiskale raamwerk vloei voort uit die ANC se resolusies, asook uit die mediumtermyn-begrotingbeleidsverklaring en die mediumtermyn- bestedingsraamwerk. Die prioriteite is die vertrekpunt by die bepaling van die 2010 Begrotingstoekennings.

Die politieke voorkeure ten opsigte van insameling en besteding van inkomste word bepaal deur die aanwending daarvan in die rekonstruksie en ontwikkeling van die samelewing. Die sukses van enige fiskale raamwerk moet dus gemeet word aan die mate waarvolgens Suid-Afrika uit onderontwikkeling beweeg na die punt waar sosio-ekonomiese ontwikkeling en die stryd teen armoede begin vrugte afwerp.

Deurdagte besluite moet geneem word en die fiskale raamwerk moet aangewend word om ekonomiese deelname en patrone van eienaarskap in die samelewing te lei. In dié proses moet die staat ’n sentrale en strategiese rol speel by die direkte investering in onderontwikkelde gebiede en die staat moet rigting gee aan beleggings uit die privaatsektor.

Een van die onmiddellike uitdagings wat Suid-Afrika in die gesig staar, is die inwerkingstelling van belangrike infrastruktuurprogramme wat ons organisatoriese, tegniese en strategiese vermoëns sal toets. Ons vermoëns om te verseker dat sulke programme en projekte as katalisator sal dien vir die breër ontwikkeling van die ekonomie en ons ekonomiese transformasiedoelwitte, sal ’n kritiese aanduider wees van die vordering wat ons maak in die bou van ’n ontwikkelingsstaat wat as ’n instrument van ekonomiese bevryding sal dien.

Sleutelelemente van die beleggingsprogramme sluit onder meer in: die opgradering van ’n infrastruktuur vir massa waterlewering; die opgradering van die kapasiteit van elektrisiteitsvoorsiening; groot projekte vir die opgradering van ons vervoer infrastruktuur; en die verbreding van die omvang van behuisingsprogramme.

Sodanige programme, asook deurlopende infrastruktuuronderhoud, is nie eenmalige gebeurtenisse nie. Na die suksesvolle voltooiing van die 2010 Sokker-Wêreldbeker se infrastruktuurprojekte wag daar weer nuwe programme wat tussen nou en die einde van die tweede dekade van vryheid ontwikkel moet word.

Die hoofdoel is om te verseker dat infrastruktuurprojekte geïntegreer is en dat ’n onderlinge ondersteunende verhouding tussen projekte en ander beleidsdoelwitte, soos die ontwikkeling van vaardighede, nywerheidsstrategie en makro—ekonomiese bestuur, bestaan.

Die hooftake wat in die fiskale raamwerk in oënskou geneem moet word, word gereflekteer in die vyf prioriteitsgebiede vir die volgende vyf jaar, soos vervat in die ANC se 2009 verkiesingsmanifes, naamlik: die skepping van goeie werk en volhoubare lewensbestaan; opvoeding; gesondheid; landelike ontwikkeling; voedselsekerheid en grondhervorming; en die stryd teen misdaad en korrupsie.

Hierdie prioriteite sal met alle middele tot ons beskikking, soos staatsbronne, die visie van die Vryheidsmanifes en die energie en verbintenis van ons mense, aangepak word. Op hierdie wyse sal die behoeftes van die jeug, vroue, die landelikes, armes, bejaardes en mense met gestremdhede, aangespreek word.

Dit is duidelik dat ons die aandag sal moet toespits op die direkte en indirekte bydrae wat infrastruktuurontwikkeling kan maak ter bereiking van ons doelwitte om goeie werk en ’n volhoubare lewensbestaan te skep. Werkgeleenthede wat geskep word, vereis weer op hul beurt die ontwikkeling van ons vermoë om die nodige ambagslui, ingenieurs- en projekbestuurders op te lei. (Translation of Afrikaans paragraphs follows.)

[Ms P E ADAMS: Hon Deputy Speaker, hon members, the fiscal framework is not only about figures, but also about people with aspirations, needs and expectations. It is a monetary expression of the ANC’s political preferences and how those preferences can be fulfilled in a fiscally sustainable manner. It is both a political and financial instrument that can be applied so as to ensure the execution of the policy programmes by way of the allocation of financial resources to the respective levels of government.

The Polokwane resolutions form the basis of the ANC’s medium-term priorities and are its mandate to execute the will of the people. The fiscal framework arises from the ANC’s resolutions as well as from the Medium-Term Budget Policy Statement and the Medium-Term Expenditure Framework. These priorities form the point of departure when determining the 2010 Budget allocations.

Political preferences regarding the collection and expenditure of revenue are determined by the utilisation thereof in the reconstruction and development of society. The success of any fiscal framework should therefore be measured according to the rate at which South Africa is moving from underdevelopment to the point where socioeconomic development and the fight against poverty start to bear fruit.

Well-considered decisions must be taken and the fiscal framework must be utilised to guide economic participation and patterns of ownership in society. In this process the state must play a central and strategic role in direct investment in underdeveloped areas and the state must give direction to the investments from the private sector.

One of the immediate challenges facing South Africa is the putting into operation of important infrastructure programmes that will test our organisational, technical and strategic abilities. Our ability to ensure that such programmes and projects will serve as a catalyst for the broader development of the economy and our economic transformation targets will be a critical indicator of the progress we are making in establishing a developmental state that will serve as an instrument of economic liberation.

Key elements of the investment programmes include, among others: the upgrading of infrastructure for mass water supply; the upgrading of the capacity to supply electricity; large projects for the upgrading of our transport infrastructure; and the expansion of the scope of housing programmes.

Such programmes, as well as continuous infrastructure maintenance, are not one-off events. After the successful completion of the infrastructure projects of the 2010 Soccer World Cup new projects now await, which have to be developed between now and the end of the second decade of freedom.

The main aim is to ensure that infrastructure projects are integrated and that a mutually supportive relationship exists between projects and other policy objectives, such as skills development, industrial strategy and macroeconomic management.

The main tasks to be considered in the fiscal framework are reflected in the five priority areas for the next five years, as contained in the ANC’s 2009 election manifesto, namely: the creation of proper jobs and a sustainable livelihood; education; health; rural development; food security and land reform; and the fight against crime and corruption.

These priorities will be tackled with every means at our disposal such as state resources, the vision of the Freedom Charter and the energy and commitment of our people. In this way the needs of the youth, women, the rural people, the poor, the aged and people with disabilities will be addressed. It is clear that we will have to focus on the direct and indirect contributions that infrastructure development can make in the attainment of our objectives to create proper jobs and a sustainable livelihood. The job opportunities that we create will, in turn, require the development of our ability to train the requisite artisans, engineers and project managers.]

Referring to the priority of education, it is noted that this sector remains the largest item of spending in the 2010 Budget, giving meaning to the commitment that it is the ANC’s number-one priority.

The ANC’s election manifesto stated that education is a means of promoting good citizenship as well as preparing our people for the needs of a modern economy and a democratic society, and it called for an increase in output in areas of skills shortages. A framework for the development of skills in the workplace was identified as a key requirement for economic growth in South Africa and for the economic empowerment of our previously disadvantaged majority.

There was also a renewed call for the revival of further education and training colleges to promote skills development in the economy. Making education one of the five priorities reaffirms the commitment of the ANC to the improvement of the quality of education and access thereto. The 2009 curriculum review addresses the content and impact of an education mainly on young people, their progression to higher education and their preparation for entry into the labour market. Decent work, which embraces both the need for more and better-quality jobs, is a foundation of the fight against poverty and inequality. This is central to the ANC-led government’s agenda and is a primary focus of its economic policies. It intends to make maximum use of all the means at the disposal of government to achieve this.

The 2010 Budget acknowledges that people want action on jobs, growth and poverty and that a new common purpose must be built so that all the talent, skills and resources to tackle our socioeconomic challenges can be used to improve their own lives and communities. It also acknowledges that South Africa needs a new growth plan, so that the key challenges are job creation, poverty reduction and faster economic growth. The capacity of the economy needs to be expanded to grow sustainably and to ensure that growth must be more labour-absorbing.

The Budget’s approach to employment creation includes measures to encourage industries and services that have significant job potential, stepped-up implementation of the Expanded Public Works Programme, investment in further education and skills development, encouragement of small business development and entrepreneurship, and a new focus on promoting youth employment.

Over the 2009-14 period, the second phase of the Expanded Public Works Programme aims to create 4,5 million short-term job opportunities.

In October 2009, additional spending on the HIV and Aids programme was announced, while further allocations mean that the number of people who are on antiretroviral treatment will rise from 920 000 to 2,1 million in 2012-

1. Our total national and provincial health spending is projected to be R105 billion next year.

A new grant to support on-site water and sanitation infrastructure as part of the rural housing programme over three years is provided. Provision has been made for the phased extension of the child support grant up to a child’s 18th birthday while the state old-age pension and the disability grant also increase.

As far as the fight against crime and corruption is concerned, additional funds have been allocated to bolster the efforts to strengthen supply chain management, while the relevant government departments have intensified efforts to bring perpetrators of tender fraud to book. Data matching will become a regular feature of a systematic approach to minimise abuse.

The Budget reflects the choices to be prioritised in spending. In its drive towards the progressive realisation of socioeconomic rights through the provision of social security for the poor, universal access to basic services, and ongoing programmes to defeat poverty, the Budget remains informed by the ANC policy and resolutions.

Strong growth in expenditure has resulted in a significant increase in government’s share of the economy. In the past two years, government’s share of GDP increased from 28,5 to 34,1 percent. Slowing economic growth over the past 18 months, in an environment of a global economic crisis affecting every region of the world, has resulted in a marked decline in budget revenue. This left a deficit of 7,3%, which must be financed through borrowing. It also had a dampening effect on economic growth in our own country, with negative implications for investment, employment, incomes and government revenue.

Since more needs to be achieved with smaller financial resources, diligence in the management of public finance and savings within all spheres of government has become more important than ever before. Wastage will not be tolerated, and neither will corruption and mismanagement.

To succeed in combating corruption, it is not enough that people should fear the law and punishment. They must also be ethical and possess the ethos that makes corruption fail to thrive. Only through broad and sustained efforts to create a shared future, based upon our common humanity in all its diversity, can we succeed in defeating and eradicating the value system that justifies naked selfishness represented by acts of corruption.

We welcome the robust and open debate occurring in the public domain regarding corruption. We unapologetically encourage exposure of tender manipulation as shown in the announcement by the Minister of Finance that Treasury is to set up a unit to monitor and investigate corruption in public procurement processes.

Building on the economic achievement of the last 15 years, the ANC will continue to accelerate a sustainable, equitable and inclusive economic growth path to address its stated priorities. The 2010 fiscal framework reflects the choices to be prioritised in spending. I thank you. [Applause.]

Gqr Z LUYENGE: Sekela-Somlomo, egameni lombutho wesizwe endingumbhobho wawo emva kwemini nje mandikhahlele kuwe nakuzo zonke izinxibamxhaka ezikhoyo kule Ndlu ibaluleke kangaka. Ndiza kugawula ndiwarhuqa kwaye ukwenza oko mandithathe esi sixhobo sabantu abafundileyo ndenjenje. (Translation of isiXhosa paragraph follows.)

[Dr Z LUYENGE: Deputy Speaker, let me greet you and all the dignitaries who are in this very important House this afternoon on behalf of the ANC for which I am the spokesperson. I will be brief and in so doing let me use English to articulate my position.]

The debate on the transformation of the economy is within the budget fiscal policy. The ANC recognises the necessity to transform the economy in order to ensure that the Budget is not unevenly distributed. Budgets must serve the needs and interests of the people as an instrument for change for a better life for all.

The key task in building and transforming the economy is to ensure a strong and responsive economic system that serves all South Africans. However, this recognises that since 1994 the new government inherited an economy that was designed to meet the needs of a minority. It was an economy in deep structural crisis, and consequently required fundamental reconstruction. This economic problem emanates from the discriminatory policies of the apartheid era. Above all, the international economic balance of forces contributed immensely to unequal patterns of distribution adversely affecting the local economy. Similarly, at present, the South African economy is affected by the international economic crisis as part of the global economy.

During the years of transition in the 1990s, it was noticeable that the South African economy was characterised by the excessive concentration of economic power in the hands of a tiny minority of the population. In the mid 1990s, four corporations controlled 81% of share capital. Twenty families held shares worth R10,7 billion. Eighty-seven percent of the land was owned by whites. Comrade Prof Turok, a fundi amongst us here, argues that 80% of the country’s wealth was owned by 5% of the population.

On the one hand, the international climate demanded free-market liberalisation and tended to constrain radical transformation of the economy. As a consequence, the ANC has had to reach a compromise on transition and economic reform from what had been envisaged over the years. This was done with a view to future struggles rather than as an end in itself. The impetus during the 1990s was the Freedom Charter’s clarion call that the “people shall share in the country’s wealth”.

As a result of the vision based on the Freedom Charter since 1994, the ANC government has made substantial achievements in transforming the economy in the interests of the poor. In the same vein, the ANC recognises the huge challenges of unemployment, poverty, and inequality.

This Budget must address the socioeconomic challenges. It could do so probably through an economic policy that promotes an expansionist budget. That requires economic growth which translates into the creation of decent jobs. In this regard, fiscal policy must support economic growth, creation of decent jobs and development. This could happen through ensuring that government expenditure continues to grow in a sustainable manner.

It is noticeable that government expenditure growth has continued, reaching 34,1% of GDP during the 2009-10 financial year, particularly in some key priorities. The current Budget has shifted from a surplus of 1% of GDP in 2007-08 to a deficit of 7,3% in two years. This is despite a global economic crisis. However, the public debt is expected to rise from 23% of GDP at present to about 40% in 2013 and will probably stabilise in 2015.

The ANC is committed to a mixed economy where the state, private sector capital, co-operatives and other forms of social ownership complement one another in order to fight poverty. This should be done in an integrated manner to eradicate poverty and ensure economic growth. This economy should be part of the evolving world economy which benefits from equal trade - or the fight for equality - with the rest of the world.

Transforming the economy should mean integration into the Southern African region and the continent as a whole. This is in line with the advancement of the goals of development and African renewal indeed the advocate for a sustainable economy for a better life for all.

The transformation of the economy should increase social equality and the growing economy in a dialectical manner that changes the lives of the poor people. This includes the creation of decent jobs. It also calls for increasing productivity, labour-absorbing industrial growth, competitive markets, small business, and the co-operative sector.

Part of the goal behind the transformation of the economy is to fulfil economic rights through fair labour practices, social security for the poor, access to basic needs, and the eradication of poverty.

The hon members of the ANC need to mobilise people and build a popular hegemony in order to drive the transformation of the economy in their interest. Transforming the economy requires a state-led process. It calls for the building of a developmental state with the capacity to intervene in economic direction for the purposes of service delivery. This state must play a central and strategic role by directly investing in underdeveloped areas and directing private sector investment. This calls for industrial policy at the centre of developmental strategies.

The ANC is committed to ensuring the diversification of the economy, but this is not a narrow economist notion simply to promote the accumulation of wealth by the few. In this regard, the character of a diverse economy should be informed by class, race, gender and the youth factor. This is to avoid the exclusion of certain sections of society in the economy of South Africa. It is further to transform the skewed patterns of ownership and production, which reflect the legacy of apartheid, inequalities, dualism and marginalisation. The diversification of the economy has to ensure popular economic participation for all people. This seeks to accommodate the historically excluded groups. Part of this is to strengthen and ensure access to the key sectors of the economy, involving minerals, mining, agriculture, forestry and timber, Eskom and so on. There is a need for a state-driven industrial policy to ensure effective and productive use of the Budget. This involves the use of the Public Sector and the harnessing of private sector resources that are essential.

There is a need to break away from the simplistic calls for the state merely to create an investor-friendly climate. This has failed before and it is not going to work now. A clear and coherent industrial policy needs to inform budget, fiscal and other policy-making processes, including the state’s planning capacity. Comrade Minister Rob Davies revealed a promising and detailed Industrial Policy Action Plan, Ipap, which represents a step forward along the new developmental growth path. This approach could accelerate state-led development and economic transformation.

Uqoqosho nophuhliso lwamaphandle kunye namaphondo ngokubanzi luyinxalenye yoxanduva lwenkqubo yokuvuselela uqhagamshelwano phakathi kwemo yocwangciso nophuhliso lwabantu bakuthi. Uphuhliso lwamaphandle lufuna uhlaziyo olukhawulezileyo, oko kukuthi ukusekwa kweSebe lezoPhuhliso lwaMaphandle noBuyekezo lwezeMihlaba yindlela elungileyo eya phambili. Uphuhliso noqoqosho lwamaphandle lwalusoloko lungahoyekanga kwiminyaka yoorhulumente bengcinezelo. Yiyo le nto uxanduva lungamandla kubantu bakuthi ezilalini nasezifama.

Inkqubo yezoqoqosho yasemaphandleni iza kuphuhla ixhamle kwinyathelo elisungulwe ngurhulumente. Ucwangciso nokwakha ukhanyo kujongwe ukuba iinkonzo ziyaya na ebantwini kulinyathelo elikhulu elo. Kunyembelekile ke, masibhinqele phezulu siphakamise izinga lokwenza izinto phaya emaphandleni ukwenzela kubekho imiphumela yophuhliso.

Kuyafuneka siqinisekise ekwakheni imisebenzi enesidima phaya ezifama nakwiilali zakuthi. Oku kuquka uphuhliso loomama, abasebenzi nabantu abatsha.

Zombini iimeko zophuhliso lwemihlaba kwakunye nezoqoqosho maziqiniswe zisekelwe kwiimfuno zabantu phaya ekuhlaleni. Loo nto yenza uphuhliso lomhlaba lube yinxalelenye yemo yezoqoqosho. Kuyafuneka ukuba ibe ngabahlali abayinxalenye yokuthatha izigqibo ngemo yophuhliso lwabantu nentlalontle.

UMongameli weli lizwe nongumongameli wombutho wesizwe kwintetho yakhe yovulo lwale Ndlu inkulu kangakanana uyikhankanyile ngokumandla imfuneko yokuthatha inxaxheba kwabantu bonke kuphuhliso lwemihlaba namaphandle. Olu luxanduva olufanelekileyo ukwenzela ukuba uphuhliso noqoqqosho lwasemaphandleni lube sezandleni zabantu, lungabi kwizandla zegcuntswana. Kwinkomfa yombutho wesizwe i-ANC, eMorogoro ngo-1969, esinye sezindululo sasilumkisa ngolu hlobo:

Xa sisedabini kufuneka sazi ukuba sizabalazela abantu bonke. Singaba libali abanye sisuke sityebise iziqu zethu, sishiya ngasemva isininzi.

Lo yaba ngumgca onolwamvila nefuthe lokusikhuthaza singurhulumente we-ANC emaphondweni najikelele. Eneneni sibe nemiphumela enje ngoku; siphuhlise indlela, sakha izikolo neekliniki. Urhulumente uthathe unyawo evuselela imithetho yokuhlala ukuze abantu bakwazi ukuzikhusela balwe ubundlobongela bencedisana namapolisa, baze kwakhona badulise imikhwa yokurhwaphilizwa kweenkonzo zikarhulumente yimigewu.

Ngokubhekiselele kwimfundo sithi abazali nabantu bokuhlala ngokubanzi mabadlale indima eqaqambileyo kwikamva labantwana babo. Kuwo onke amaphondo lisatyelwe eli khwelo. Ndithetha nje amawaka ngamawaka abafundi afumana imfundo engahlawulelwayo ukuncedana nabazali abangathathi ntweni.

Senze ngakumbi ukubethelela amalungelo abo baphila nogawulayo. Ukongeza apho, siqinisekisile ukuba bayaxhaswa ngumphakathi uwonke. Konke oku kuza kufumana isandla esiqinileyo sikarhulumente ngokuthi ajonge aze adibanise imali yokudiliza intlupheko kubantu bakuthi. (Translation of isiXhosa paragraphs follows.) [Rural and economic development in the provinces in general are part and parcel of the programme to revive communication between development and planning and our people. Rural development needs a speedy transformation and that is the reason it was fitting to establish the progressive Department of Rural Development and Land Reform.

Rural and economic development had always been marginalised by the previous apartheid regime. That is why it is an immense responsibility for our people in the rural areas and on the farms.

The rural economic development programme will grow and benefit from the government’s initiative. It is a great step to have planning and oversight to monitor service delivery to the people.

It is becoming extremely difficult, so let us pull up our socks in the rural areas so that there is excellent development. This includes the development of women, the proletariat and the youth.

Both economic and land development must be intensified and be centred on the people’s needs within their communities. That makes land development part of the economy. It must be the communities who take part in the decisions about the development and welfare of the people.

The President of the Republic, who is also the President of the ANC, in his state of the nation address emphasised the need for all the people to take part in the development of the land and the rural areas. This noble responsibility of rural economic development must not be in the hands of the few, but must be owned by the people.

In the ANC’s Morogoro Conference in 1969, one of the resolutions warned us that:

In the struggle we must know that we are fighting for everyone. We must not forget others and enrich ourselves, leaving the masses behind.

This resolution was a mark that encouraged and influenced us as the ANC government in the provinces and nationally. Honestly, we have now achieved excellence; we have built roads, schools and clinics.

The government has gone the extra mile and came up with the idea of establishing community police forums which assist with security and fighting lawlessness together with the police. They also report corrupt tendencies within government departments.

In respect of education, we asked parents and communities at large to play an active role in the future of their children. All the provinces responded to this call. Thousands of learners are receiving free education to assist the struggling parents. We have even endorsed the rights of those living with HIV and Aids. To add to this, we have assured them of our support as the whole community. All this will be done through substantial funding from the government by organising funding in order to break barriers of poverty affecting our people.]

The fight against corruption should be located within the national democratic revolution. The objective of the national democratic revolution is to promote economic and political transformation. This articulation has become the ANC’s moral vision to restore ubuntu - the values of humanity. The ANC’s understanding of moral values is rooted within the struggle. This implies that corruption should not be viewed as a moral matter. It means meeting the needs of the people and treating them with respect. It also refers to the building of a society based on democratic values, social justice, and the rule of law. It is noticeable that privatisation, procurement, outsourcing, entrepreneurs, and tenders result in corruption, and affect the economy. However, the election manifesto of the ANC and the state of the nation address by the President call for measures to ensure the transparency of the tendering system so as to ensure the accountability of the public servants.

Corruption has a more devastating economic effect than the inflicted pain of common crime, and it affects poor people indirectly. It is mostly the crime of the rich and powerful. The ANC-led government notes that corruption erodes the economic base for effective service delivery and mostly affects poor people. It has the potential to reverse the gains of the people and of the country as well.

The purpose of broad-based black economic empowerment, BBBEE, is to deracialise the ownership and control of the economy. It has to encourage productive opportunities by black people who have been excluded from the economy over decades. BBBEE should not be narrowly responding to the minority of blacks, but rather broadly target women, youth, poor people, workers and rural communities to promote new enterprises to build skills and the production needed by the economy.

It has to broaden ownership and participation by the majority of the people and to ensure a competitive market in rural areas and the townships, not just in the big cities. This requires the continued acceleration of economic transformation, with fiscal policy talking to industrial strategy.

BBBEE has had successes and has weaknesses. It has taken strides to redress past economic imbalances; broaden the economic base of the country in the last 16 years; stimulate economic growth; create jobs while eradicating poverty; and ensure the increasing participation of black people in the productive capacity of the economy.

The shortcomings of BBBEE relate to the fact that sometimes its implementation tends to be narrow, which might lead to unintended consequences. It sometimes tends to be concentrated amongst a few males. It tends not to be visible in rural communities, resulting in fewer women entrepreneurs. Nevertheless, a lot has been said today, but the record of the transformation of the economy is evident on the ground. There is no turning back to a fragmented and skewed economy, and our fiscal policy should assist this new economic path to a better life for all.

Nditsho ndisithi umbutho wesizwe uyayibethelela into yokuba le Ndlu imele iwuphehlelele kwaye iwuthathe lo mgaqo-nkqubo usikhokelela phambili nomhle kangaka. Ndiyabulela. [Kwaqhwatywa.] (Translation of isiXhosa paragraph follows.)

[The ANC mandates this House to endorse and welcome this policy which is progressive and well articulated. [Applause.]]

The DEPUTY MINISTER OF FINANCE: Madam Deputy Speaker and hon members, it is indeed a fulfilling and very rewarding moment for me to see the democratisation of our budget process, which has evolved over the past decade. I wish to thank all those who have made it possible for us to be at this phase of our constitutional democratic order. A number of Members of Parliament played a huge role in actually seeing this legislation reach the stage where we are now. In keeping with the provisions and tenets of this legislation, it’s also encouraging to note that Parliament has risen to the occasion and given full meaning to its oversight role. Speaker after speaker has come to the podium and spoken about this fiscal framework. It is encouraging to see how many of the speakers spoke in support of the fiscal framework in general. I, therefore, would not want to bore this House by going through each of the speakers’ comments and trying to respond, as most of the members have supported it. I do, however, want to focus on four general issues with regard to the points that have been raised by some members.

If some of us believe that revenue needs to be higher than what we have estimated, this needs to be the result of three potential factors: Firstly, higher economic growth; secondly, faster recovery in corporate income tax; and thirdly, higher tax rates. Dr George, the Treasury’s economic focus is based on the latest economic data, mainly the SA Reserve Bank’s December quarterly bulletin. They have been interrogated, discussed and ultimately approved by the Ministers’ Committee on the Budget and have also been presented to Cabinet for adoption.

As the Minister indicated, the budget we tabled on the 17th was a collective statement of government. I want to assure you that the Minister did not run away from the DA’s shadow minister of finance. The acting Minister of Finance is Minister Pandor, because we act as a collective, and Minister Pandor is here to represent the Ministry and I’m delegated here by the very capable Minister. [Applause.] With those words I also want to indicate that we take this process quite seriously, since the Minister is abroad with the President on a state visit.

The focus is in line with consensus expectations and most commentators have noted that they effectively take account of the fragile nature of global recovery and associated risks. The recovery in corporate income tax is based, firstly, on the corporate income tax data up until January 2010 and, secondly, on our experience of the lags in corporate income tax over the past 15 years, as well as the analysis of the expected recovery in corporate profitability.

The corporate income tax data suggests a deeper decline in corporate income tax than we originally estimated in the Medium-Term Budget Policy Statement, MTBPS. While corporate profitability will recover somewhat, the pace of recovery is expected to remain muted as economic activity continues to remain subdued over the next two to three years. Even where corporates successfully return to profitable positions, assessed losses built up during the economic slump will mean that it may still be a few years until we start seeing income tax revenue from many corporates.

These factors are considered by the Revenue Analysis Working Committee, comprising Sars, the SA Reserve Bank and the National Treasury, and the revenue focus is debated and approved by the Ministers’ Committee on the Budget. This is meant to just indicate what processes we follow in order to arrive at these figures. The October MTBPS contained a much more aggressive increase in tax revenue as a percentage of Gross Domestic Product, GDP, and this was partly based on the likelihood of a tax rate increase or introduction of new tax instruments to raise revenue to close the gap between expenditure and revenue.

Since October, higher nominal GDP has allowed us to close the financing gap at a similar rate to what was proposed in our MTBPS, but without such an aggressive increase in tax revenue as a percentage of GDP. This is an extremely positive development and should be welcomed as it allows the fiscus to continue to operate in a strongly countercyclical fashion, supporting development and contributing to demand in the economy whilst not compromising long-term sustainability. Higher tax rates too soon would have the likelihood of threatening the sustainability of the economic recovery and by implication would strongly undermine the long-term sustainability of the fiscus.

The next point is on the fiscus sustainability pact that members and the committee have raised as a recommendation. We welcome the idea of a fiscus sustainability pact and look forward to engaging with Parliament as to the likely purpose and form of such a pact. Any fiscal rule or pact must be countercyclical in nature and this is notoriously difficult to achieve, as illustrated by some of the bigger economies like the UK which, despite a cyclically adjusted sustainability rule, finds itself facing severe fiscal constraints and the likely burden of higher tax interest costs, lower expenditure and higher taxes in the future.

The Chilean experience also, however, points to what can be achieved if a fiscal policy can be disciplined and countercyclical. Successful fiscal management has enabled Chile to respond to the economic crisis with higher expenditure, which has placed them on an excellent path to economic recovery and has played an extremely important role in limiting volatility in the Chilean currency.

It is also important to note that the flip side of significant deficits, when the economy is underperforming, is substantially lower deficits and perhaps even surpluses when the economy is overperforming.

The third point is on the impact of the Eskom tariff increase – some people have even referred to it as double taxation. Let me say that in the 2010 Budget our economic outlook assumed a 35% increase in the electricity price. The impact of the awarded increase being closer to 25% is that real GDP growth will be marginally higher and inflation will be lower in the next three years. As a result, the impact of higher GDP growth would be offset by the lower inflation and nominal GDP is not expected to change very much as a result of the decision of the regulator. Therefore, the impact on tax revenue and the budget framework is expected to be broadly neutral.

The last point I want to refer to is the issue of how the fiscus will respond if the growth remains low and the deficit high, as some of the members raised this as a possible risk. The 2010 Budget clearly and boldly states that the objective of a sustainable fiscal framework remains the primary goal of fiscal planning. This is to be achieved through a stabilisation of growth in expenditure combined with rising budget revenue, thereby returning the fiscus to primary surplus, which allows us to sustainably finance expenditure in the long run.

The committee report correctly identifies the economic risks to this recovery. Should the economy fail to grow at the rates expected, it is likely that the fiscal position and the trajectories of revenue and expenditure will have to be re-evaluated. In this scenario we will be able to choose from a combination of three options: firstly, we can further reduce spending; secondly, we can meet our revenue targets through additional taxation; and thirdly, we will be able to consider borrowing additional resources.

While all three of these options entail both current and future costs, our first instinct would be to extract further savings and efficiency gains to government spending, as most members have alluded to, while attempting to continue to support the economy through continued borrowing. We would also seek to defer tax increases until the economy recovers, but we’ll obviously have to balance this against the rising interest burden on the fiscus on future generations.

The level and extent to which we wish to provide this support will be a result of the outlook for the economy and the extent to which we expect the economy to recover. Clearly, the longer we continue to borrow, the greater the interest burden. With interest already the fastest-growing expenditure item on the budget, any decision to continue borrowing would not be taken lightly. It must also be recognised that while the economic outlook poses a risk in the fiscal trajectory, any additional expenditure requirements on the fiscus would also serve to undermine the sustainability and raise debt costs.

For anyone interested in how we are dealing with the debt sustainability and economic scenarios, let me refer you to the box in chapter four of our Budget Review, which shows the results of Treasury’s modelling of various economic and fiscal paths over the five years.

With these few remarks I want to take this opportunity to thank the committees for having dealt with the fiscal framework in the manner that they have, did for the time that they have put into it, this being the first of these fiscal frameworks that we’ve tabled before you. We hope that we will be able to engage with the budget process going forward in a much more meaningful way as we have done, starting today. Thank you. [Applause.]

Debate concluded.

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Madam Deputy Speaker, I move:

That the House adopts the Fiscal Framework and Revenue Proposals, and the Report of the Standing Committee on Finance on the Fiscal Framework and Revenue Proposals.

The DEPUTY SPEAKER: The motion is that the Fiscal Framework and Revenue Proposals as well as the Report of the Standing Committee on Finance be adopted. Are there any objections? No objections. Motion agreed to.

Fiscal Framework and Revenue Proposals and the Report of the Standing Committee on Finance accordingly adopted.

The House adjourned at 15:50. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

                      FRIDAY, 19 FEBRUARY 2010 TABLINGS

National Assembly and National Council of Provinces

1. The Speaker and the Chairperson

(a) Report of the South African delegation to the 121st Inter- Parliamentary Union (IPU) Assembly in Geneva from 18-21 October 2009.

  Referred to the Parliamentary Group on International Relations for
    consideration.

            REPORT OF THE SOUTH AFRICAN DELEGATION TO THE    121st INTER-PARLIAMENTARY UNION (IPU) ASSEMBLY IN GENEVA, 18-21 OCTOBER
                                2009

1. Introduction

Established in 1889, the Inter Parliamentary Union (IPU) is an international organisation of Parliaments of sovereign states. The IPU is one of the leading organisations in the promotion and strengthening of the institutions of parliamentary democracy. The organs of the IPU are the Assembly, the Governing Council, the Executive Committee and the Secretariat.

The IPU supports the efforts of the United Nations, whose objectives it shares, and works in close co-operation with. It also co-operates with regional inter-parliamentary organizations as well as with international inter-governmental and civil society organzations that are motivated by the same ideals.

The IPU’s membership currently comprises of 152 member parliaments and 8 international parliamentary assemblies who are associate members.

1. Agenda

The agenda for the 121st IPU Assembly was as follows:

i. Election of the President and Vice-Presidents of the 121st Assembly ii. Consideration of possible requests for the inclusion of an emergency item in the Assembly agenda iii. Panel discussions on the subject items chosen for debate during the 122nd Assembly (Bangkok, Thailand, 27 March – 1 April 2010):

     • Cooperation  and  shared  responsibility  in  the  global  fight
       against organized crime, in particular drug trafficking, illegal
       arms sales, human trafficking and cross-border terrorism  (First
       Standing Committee on Peace and International Security).
     • The role of parliaments in developing South-South and Triangular
       Cooperation with a  view  to  accelerating  achievement  of  the
       Millennium  Development  Goals  (Second  Standing  Committee  on
       Sustainable Development, Finance and Trade).
     • Youth participation in the democratic  process  (Third  Standing
       Committee on Democracy and Human Rights).

iv. Report of the IPU Committee on United Nations Affairs

1. Delegation

The delegation to the 121st IPU Assembly consisted of: Mr M V Sisulu, MP (Speaker and Leader of Delegation), Mrs N D Ntwanambi, MP, Mr Z L Madasa, MP, Mr J Selfe, MP and Mr M A Nhanha, MP. Mr G D Schneeman, MP and Ms S C N Sithole, MP were advisers to the delegation. The delegation was assisted by Mrs L Mokate, Head: International Relations, Ms T Lyons from the National Assembly Table and Ms Z Jardine of the International Relations Section of Parliament. Ms N Sonjica of the International Relations Section supported the Speaker during the conference.

1. Coordinating Committee of Women Parliamentarians

The Coordinating Committee of Women Parliamentarians met on Sunday, 18 October in closed session. Mrs Ntwanambi attended the meeting.

1. Meeting of Southern Africa Group

The meeting was held on Sunday, 18 October. At the beginning of the meeting delegates from only four countries, namely, South Africa, Namibia, Zambia and Lesotho were present. The meeting was chaired by Speaker Sisulu. He indicated that as a result of a quorum not being present the meeting would be informal and aimed at assisting to take matters of importance forward to the Africa Geopolitical Group meeting later that day.

The meeting proceeded to a briefing by Mrs Margaret Mensah-Williams a member of parliament from Namibia and a member of the Executive Committee of the IPU. Mrs Mensah-Williams briefed the group on matters that had been raised within the Executive Committee and would now serve before the Governing Council.

Suspension of membership of the IPU

The Executive Committee would recommend to the Governing Council that Niger (which had ceased to function as a parliament) and Somalia (which was three years in arrears in the payment of its contributions) be suspended in terms of Article 4 of the Statutes of the IPU. In addition, Liberia which was also in arrears with its contributions, but for less than three years, would only be allowed to send to two delegates to the Assembly and would have no voting rights.

Request from Palestine

In respect of the request from Palestine that the Palestinian National Council should be recognised by the IPU and not the Palestinian Legislative Assembly as agreed to by the IPU in Geneva in October 2008, the Executive Committee agreed that it would recommend that the IPU recognise only “Palestine” in accordance with its rules and that the matter of which body would be an internal matter for the Palestinians to resolve.

Observer status

The Executive Committee noted its concern that certain organisations which had requested observer status of the IPU did not attend meetings of the Union. The Executive Committee was proposing that should an observer member not attend for two consecutive years they should forfeit their observer status. It was further agreed that the Secretary-General would write to observer bodies and remind them of the expectations of the Union in respect of observers.

Financial results of the IPU

It was noted that the IPU would have a surplus of SFr. 400 000. The Governing Council would be requested to approve the use of an amount of SFr. 150 000 for the following projects:

• A human rights mission to Madagascar.
• A seminar in Colombia on human rights.
• The publishing of the survey results on women’s access to Parliament.
• A seminar on CEDAW to be held in Rwanda.
• Funds to be utilised by  the  Special  Adviser  on  Violence  Against
  Children to look at the functions of this office within the IPU.

The group agreed to propose Mr Selfe as the rapporteur for the Africa Geopolitical Group on the financial results of the IPU.

Cooperation with the United Nations (UN) system

It was indicated that countries should give consideration to the manner in which they would like cooperation with the UN to take place. In principle, the meeting agreed that the IPU should carve itself a meaningful role within the United Nations system, but that it should nevertheless retain its independence.

2012 IPU Assembly

The meeting was informed that Uganda had offered to host the 2012 IPU Assembly and that negotiations around this were at an advanced stage. In addition, Uganda hosting the IPU in 2012 would coincide with its 60th year of independence. Canada which had previously requested to host the 2011 Assembly (which would now be hosted by Panama), but had been unsuccessful as it could not guarantee that all countries would be granted visas to enter Canada, had subsequently written to request that it host the 2012 Assembly. Although it was indicated by Canada that the issue of visas would be resolved, no written guarantee had yet been given. It was the position of the meeting that the candidature of Uganda, which was at an advanced stage, should be supported by the Africa Geopolitical Group.

Supplementary Item on the Agenda of the Assembly

A supplementary item on the H1N1 virus was proposed for inclusion on the Agenda of the Assembly. It was, however, agreed that the rules did not provide for the inclusion of a supplementary item and that a statement should rather be heard on the matter, similar to what had been done during the 118th IPU Assembly in Cape Town on the situation in Zimbabwe.

Emergency Item

On the proposal of South Africa it was agreed that the region would support the proposal of an emergency item by Uganda, namely “Parliamentary cooperation with the United Nations to promote investment in research and scientific advancements to boost agricultural productivity and combat drought-induced famine, floods and other natural disasters”. It was also proposed that Uganda be requested to give consideration to combining its proposal with the proposal of Australia which also dealt with the food security.

Composition of delegations

It was brought to the attention of the meeting that the Executive Committee had noted that certain countries continued to send delegations representative of only one gender. Of the 12 single gender delegations to the Assembly 11 comprised only men.

Term of office of the Secretary-General

The meeting agreed to support the proposal by the Executive Committee for a four year renewal of the contract of the Secretary General, Mr Anders Johnston, in line with the decision taken during the 120th Assembly in Ethiopia. This could lead to a vote within the Governing Council on the position of the Secretary General. Furthermore, both the Southern Africa Group and Africa Geopolitical Group should look at proposing a candidate from Africa to take over the position of Secretary-General in future. A discussion around how this transition would take place should be held at the Africa Geopolitical Group meeting.

Draft Rules of Procedure of the Africa Geopolitical Group

The meeting also briefly considered the rules of procedure of the Africa Geopolitical Group. Neither Namibia nor Zambia, as members of the task team that was appointed to look at the draft rules of procedure for the Africa Geopolitical Group, were in a position to give a report on the work of the task team.

It was agreed that the Southern Africa Group should be proactive in resolving the matter of the Pan African Parliament (PAP) becoming an associate member of the IPU. The PAP had still not applied for associate membership status. In light of this it would be difficult for the PAP to take over the organisation and financing of the meetings of the Africa Geopolitical Group from the African Parliamentary Union.

Support for the President of the IPU

Ms Mensah-Williams requested that the group support the work of the President of the IPU, Dr Theo-Ben Gurirab, by volunteering members from the region to be rapporteurs for standing committees and ensuring that the African agenda was furthered within the IPU.

1. Meeting of the Africa Geopolitical Group

The meeting was also held on Sunday, 18 October 2009.

Emergency Item

After deliberations on the proposals for emergency items, the group agreed that it would support the proposal of Uganda on “Parliamentary cooperation with the United Nations to promote investment in research and scientific advancements to boost agricultural productivity and combat drought induced famine, floods and other natural disasters.” It was further agreed that Uganda would meet with the 12+ Group to combine the proposal of Uganda with that of Australia on global food security.

In regard to the proposed emergency items on the situation in the occupied Palestinian territories and particularly Gaza, it was agreed that the President Gurirarb should be requested to consider a presidential statement on the matter, particularly in light of his recent visits to the region.

Report from representatives to the Executive Committee

The representative from Benin briefed the group on matters that had been raised within the Executive Committee and that would now serve before the Governing Council. The meeting was informed that it should prepare for a vote on the position of the Secretary-General to the IPU and the possible appointment of an Assistant Secretary-General.

The representative from Kenya made a plea for Somalia to be assisted to pay its arrears from the IPU’s surplus funds. Ms Mensah-Williams indicated that Somalia would need to be dealt with in terms of the statutes of the IPU, but that Somalia should apply, with the assistance of the group, for assistance from the IPU to settle its arrears.

Evaluation of cooperation with the United Nations system

After brief deliberation it was agreed that each sub regional group would select one representative to serve on a task team to look at closer interaction between the United Nations and the IPU. It was also noted that these inputs would be of importance to the World Conference of Speakers in 2010 as this matter would be deliberated during this conference.

Consideration of Draft Rules of Procedure of the Africa Geopolitical Group

South Africa raised its objection to the adoption of the draft rules of procedure as it was unclear from the draft rules presented how the position of the Secretary-General of the African Parliamentary Union (APU) would be appointed. Furthermore, matters relating to financing of the group were not clear and the two thirds majority required to effect amendments to the rules was considered very high. It was also noted that not all countries were members of the APU and therefore the suitability of this organisation to convene the Africa Geopolitical Group was brought into question. The representative from Kenya also raised a concern that no provision was made for interpretation to and from Swahili.

After deliberation the rules were adopted by acclamation (see Annexure A).

Financial results of the IPU

South Africa proposed that Mr James Selfe should represent the views of the Africa Geopolitical Group on the financial results of the IPU. The proposal was forwarded to the secretariat of the group.

1. Meeting of the Governing Council

The Governing Council met on Monday, 19 October and Wednesday, 21 October. South Africa was represented in the Governing Council by Mr Sisulu, Mrs Ntwanambi and Mr Selfe.

The meeting noted that the United Arab Emirates had requested that a supplementary item entitled “The role of parliamentarians and regional parliamentary organisations in combating the H1N1 virus and containing its economic and social risks” should be included on the agenda. It was agreed that this request would be dealt with by way of a statement on the matter.

The Governing Council adopted the recommendation of the Executive Committee to suspend the affiliation of Niger to the IPU as the Parliament of Niger had ceased to function following its unconstitutional dissolution on 26 May 2009.

It was also noted that discussions were ongoing with the parliaments of Somalia and Papua New Guinea in respect of the payment of arrears to the IPU. These parliaments would be given until April 2010 to put their financial affairs in order with the IPU.

The meeting received a report from the President of the IPU on his activities since the 184th session of the Council, held in Ethiopia, and also on the activities of the Executive Committee. The salient points of the presentation were:

• The efforts to raise awareness on climate change ahead of the  Climate
  Change Conference that would take  place  in  Copenhagen  in  December
  2009.
• The action in defence of peace and democracy especially with regard to
  the political situation in Honduras where the  military  expelled  the
  President, the continued house arrest of Aung San Suu Kyi  in  Myanmar
  and the continued appeal by the IPU for  a  negotiated  settlement  in
  Cyprus.
• The completion of the mission to the Middle East by way of a visit  to
  Israel.
• The undertaking of a goodwill mission to Zimbabwe which  was  followed
  by a visit by the Secretary  General.   During  the  latter  visit  an
  initial agreement was reached that the  IPU  would  provide  capacity-
  building support to the parliament.
• The convening of a preparatory committee to lay the foundation for the
  World Conference of Speakers to be held in 2010.
• The close monitoring of negotiations towards the reaffiliation of  the
  United States Congress to the IPU.
• The strengthening of the IPU’s cooperation with regional parliamentary
  assemblies and bodies.

The meeting also looked at an interim report by the Secretary General on the activities of the IPU since the 184th session of the Council, held in Ethiopia. It was noted that during this period a number of activities to follow up on the results of the 120th IPU meeting had been held, the regular programmes of the IPU had been implemented and preparations for the 121st Assembly had taken place. In its work to promote democracy the IPU undertook activities that would assist parliaments, promote human rights, advance the role of women in politics, address development issues and protect the rights of children. In addition the IPU also worked closely with the United Nations to ensure that the voice of parliamentarians was heard and that parliamentary oversight of the work of the United Nations took place.

The Secretary General also presented an interim report on activities of IPU members in terms of action their parliaments had taken on the recommendations contained in the resolutions of recent Assemblies, namely:

• The role  of  parliaments  in  striking  a  balance  between  national
  security, human security and individual freedoms and in  averting  the
  threat to democracy.
• Parliamentary oversight of state policies on foreign aid.
• Promoting  diversity  and  equal  rights  for  all  through  universal
  democratic and electoral standards.

Only 36 members (23%) had responded to this request. The South African delegation noted that its response was amongst the 36.

The Secretary General presented a report on how parliaments had marked the International Day of Democracy on 15 September.

The meeting proceeded to a presentation on the financial situation of the IPU. The Governing Council, by acclamation, approved the request from the Executive Committee for the use of an amount of SFr. 150 000 from surplus funds for the following unforeseen activities which were considered important, but had not been budgeted for at the beginning of the financial year:

• A human rights mission to Madagascar.
• A seminar in Colombia on human rights.
• The publishing of the survey results on women’s access to Parliament.
• A seminar on CEDAW to be held in Rwanda.
• Funds to be utilised by the Special Adviser to the Secretary  General
  on Violence Against Children to convene an expert group meeting which
  will look at the work of this office.
• The payment of the subsistence and travel costs of a senior  Canadian
  judge to assist the work of the gender equality programme.

The Secretary General made a presentation on the financial situation of the IPU as on 30 June 2009. He also presented the 2010 consolidated budget and planned activities and requirements for the period 2010 – 2012 to the meeting. The full debate on this matter took place on Tuesday, 20 October with each geopolitical group presenting its comments and views.

Mr Selfe made a presentation on behalf of the Africa geopolitical group. In his presentation he noted, with thanks, the scale of activities undertaken by the President and the Secretariat of the IPU on behalf of its member parliaments in respect of issues that vitally affected the international community. In particular, he noted that the Africa geopolitical group welcomed the President’s initiatives to intercede in trouble-spots and to heighten awareness of the role the IPU fulfilled. It was noted that the wider the scale of these activities and the more complicated the issues confronting the IPU, the more money it required to provide it with the ability to make a meaningful contribution. It was thus commendable that the IPU had fulfilled most of its obligations within its budget and shown a slight surplus.

It was nevertheless of concern that in comparing the actual expenditure for 2008 with what was budgeted for the year, more was budgeted than was actually spent. The view as expressed that budgeting should be as accurate as possible, so that it was clear what resources were being matched against specified priorities. It was further noted that the report of the Internal Auditors had contained some worrying aspects relating to the absence of tendering procedures for services, high travel costs and the airline benefit programmes, challenges in budget preparation and project implementation, as well as management challenges during the absence of the Secretary General. These aspects were only partially addressed in the forthcoming budget and would require that further progress be made to address them.

Mr Selfe pointed out that that the Secretary General had remarked earlier that the budget was the most important document relating to the policy of the IPU and that the consolidated budget gave not only the figures of expected revenue and expenditure, but also spelt out the issues and challenges for each of the IPU’s major activities for the forthcoming year. It was therefore disappointing to note that in the consolidated budget for 2010, the issues and challenges for 2010 were, in most cases, identical to the issues and challenges for 2009. The view was expressed that there should surely be new issues and new challenges that were different from last year’s.

In conclusion it was noted that there were also issues and challenges facing the members of the Africa group. The Africa geopolitical group consisted of some relatively rich countries and some very poor countries. Some countries were confronted with civil wars, climate change, food insecurity and mass migration. In some states in Africa there was even difficulty in financing the operations of their parliaments. Therefore while it was recognized that changes had been made to the assessments formula, the Africa geopolitical group appealed to the IPU to find ways to assist African parliaments to pay their contributions and remain full members of the IPU.

The meeting noted the reports on recent IPU specialised conferences and meetings as well as the reports on the activities of committees and other bodies. The meeting also considered a proposal for further cooperation with the United Nations Alliance of Civilizations which aimed to improve cooperation and understanding between nations and peoples across cultures and religions as well as to counter the forces that could fuel polarization and extremism. It was agreed that the IPU would consider the conclusion of an agreement of cooperation with the Alliance of Civilizations.

The Governing Council received a report of the first meeting of the Preparatory Committee established by the President of the IPU to assist with organizing the 3rd World Conference of Speakers of Parliament. The South African delegation noted that Mr Sisulu formed part of this preparatory committee. The 3rd World Conference of Speakers was scheduled to take place in Geneva from 19 to 21 July 2010. The main theme of the conference was “Parliaments in a world in crisis: securing global democratic accountability for the common good.” The theme would permit the Speakers’ conference to address a large number of issues relating to peace, democracy, development and cooperation. This included gender equality and action to stem violence against women, as proposed during the 2009 meeting of Women Speakers. The conference would also give Speakers an opportunity to focus on the role of parliaments in furthering the objectives of the conference at national level and in relation to multilateral processes and institutions. The conference would formulate recommendations relating to the relationship between parliament, the IPU and the United Nations. Speakers of all national parliaments of sovereign states (including both Speakers in bicameral parliaments) would be invited to participate in the conference. The next meeting of the Preparatory Committee would take place in New York on 16 and 17 November.

The Governing Council proceeded to a vote on the appointment of the Secretary General. At the conclusion of the vote Mr Anders Johnston was appointed to a further term as Secretary-General of the IPU.

1. Meetings of the Assembly

The 121st Assembly was opened on Monday, 19 October by the President of the IPU, Mr Theo-Ben Gurirarb.

The meeting proceeded to the consideration of requests for the inclusion of an emergency item in the agenda of the Assembly. Five requests were initially received. Uganda (on behalf of the Africa group) and Australia combined their proposals to form the following proposed item: “Parliamentary action to ensure global food security”. Oman (on behalf of the Arab Group) and the Islamic Republic of Iran also combined their proposals to form the following proposed item: “The critical situation in the occupied Palestinian territories and particularly Gaza”. Cuba withdrew its proposal which dealt with the case of Honduras.

The Assembly proceeded to vote on the two proposals before it. At the conclusion of voting the combined proposal of Uganda and Australia received the requisite majority of positive votes and was accordingly included in the agenda of the Assembly. The meeting proceeded to a debate on the emergency item that afternoon.

The Assembly also looked at the launch of the joint International Committee of Red Cross (ICRC) and IPU Handbook for Parliamentarians on Missing Persons. The Vice-President of the ICRC, Ms Christine Beerli, addressed the Assembly.

The Assembly resumed its work on Wednesday, 21 October. During this session it adopted a resolution on the emergency item entitled “Parliamentary Action to ensure Global Food Security” (the text of the resolution is attached as Annexure B to this report).

1. Meeting of the Committee on United Nations Affairs

The Committee on United Nations Affairs met on Monday, 19 October. Mr Sisulu, Mr Madasa and Mrs Sithole, attended the meetings.

The committee discussed the results of the IPU survey on how parliaments organise their with respect to the United Nations. The aim of the survey was to determine the manner in which parliaments related to the United Nations system, special meetings and negotiating processes within the United Nations and also in its country offices. To date, 65 responses to the survey, including that of South Africa, had been received. The preliminary results had highlighted a number of good practices. Parliaments were urged to forward their responses to the IPU as the survey would form part of the preparatory work for the Third World Conference of Speakers of Parliament.

The meeting then proceeded to a debate on cooperation between the United Nations and regional parliamentary associations and organisations. It was recalled that the 2005 Declaration of Speakers of Parliaments had requested that the IPU cooperate more closely with regional parliamentary associations and organizations in order to enhance coherence and efficiency in global and interregional parliamentary cooperation.

The committee received a progress briefing on the reform of the United Nations. The committee was briefed by Mr M Traore, former Speaker of the National Assembly of Burkina Faso, and Deputy Chair of the Inter- Parliamentary Committee of the West African Economic and Monetary Union as well as Mr N Seth, Director, Office for ECOSOC Support and Coordination, United Nations Department for Economic and Social Affairs. A report from the Advisory Group visit to Viet Nam to assess the One UN reform process in that country was also received. The report of the Advisory Group called on all parliaments to play a more dynamic role in the design, implementation and oversight of national development plans, as well as the upstream planning of the national budget. The need for a coherent approach to aid delivery at the national level was underscored as a tool to ensure greater effectiveness, transparency and accountability of United Nations operations.

The committee also received an update on negotiations on climate change aimed at ensuring a strong international commitment during the United Nations Climate Change Conference (COP15), scheduled to take place in Copenhagen in December 2009, from Mr R Kinley, Deputy Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC). It was noted that members of parliament should endeavour to join their national delegations to the COP15 conference in December. The IPU, together with the Danish Folketing in Copenhagen, would convene a parliamentary meeting on 16 December to provide members of parliament with an opportunity to obtain first hand information on the main issues and orientations of COP15.

The committee met again on Tuesday, 21 October. During this meeting a keynote address was received from Mr Jacque Diouf, Director General of the United Nations Food and Agriculture Organisation (FAO). The committee heard about the current food crisis and preparations for the World Summit on Food Security scheduled to take place in Rome in November. In his input Mr Madasa indicated that there was a need to remove supply constraints which impact on food security.

The committee proceeded to a briefing and discussion on the implementation of the IPU resolution on “parliamentary oversight of state policies on foreign aid” adopted at the 118th IPU Assembly in Cape Town. The committee also looked at the IPU’s involvement with the Development Cooperation Forum established by the United Nations Economic and Social Council. The guest speakers were Mr F de Donnea, MP (Belgium), Mr N Seth, Director, Office for ECOSOC Support and Coordination, United Nations Department for Economic and Social Affairs and Mr W Krafchik, Director, International Budget Partnership Center on Budget and Policy Priorities (United States of America).

During the presentation by Mr Krafchik it was noted that the Open Budget Index, which looked at the role of parliaments in ensuring budget transparency and accountability, ranked South Africa amongst the top five countries in the world in respect of having sufficient information available for their citizens on the budget and who had sufficient budgetary oversight. The other countries in the top five were France, New Zealand, the United Kingdom and the United States. It was noted that the more dependent a country was on overseas development aid the less budgetary transparency was available. It was encouraging to note that several developing countries were however moving towards greater budgetary transparency and accountability. It was noted that parliaments should ensure that national budgetary accounts were made public, follow up on annual audit reports, develop strategic partnerships between their parliament, civil society and audit institutions, develop codes of practice for greater budget transparency and contribute to a change in donor practices in order that international aid was properly reflected during the budgetary exercise.

1. Panel discussion: Cooperation and shared responsibility in the global fight against organized crime, in particular drug trafficking, illegal arms sales, human trafficking and cross-border terrorism (First Standing Committee on Peace and International Security)

A panel discussion was held on the subject to be considered by the First Standing Committee on Peace and International Security during the 122nd IPU Assembly in 2010. Mr Schneeman and Mr Selfe attended the meeting. A draft report entitled “Cooperation and shared responsibility in the global fight against organized crime, in particular drug trafficking, illegal arms sales, human trafficking and cross border terrorism” was submitted by the co-rapporteurs Ms. Maria Teresa Ortuño (Mexico) and Mr. Apiwan Wiriyachai (Thailand) (the text of the draft report is attached as Annexure C to this report).

The panel discussion was introduced by Mr P Lapaque, the chief of law enforcement of the Organised Crime and Money Laundering Unit of the United Nations Office on Drugs and Crime. He gave an indication of the extent and scope of transnational crime including drug trafficking, arms sales and human trafficking as well as the illicit trade in oil, counterfeit medicines, toxic waste and human organs.

The profits from the trade are huge, with counterfeit medicines trade accounts being in the region of $60 – 70 billion. Cumulatively the profits from transnational crime are equivalent to the GDP of the 20th wealthiest nation. Mr Lapaque urged delegates to push their governments to ratify and sign treaties and conventions relating to transnational crime, but also to pass and implement legislation that would criminalize and penalize such crime. He urged member states to develop a strategic vision about how to counteract crime and anticipate new forms of transnational crime.

Anthony Steen, Chair of the All-Party Parliamentary Group on Trafficking of Woman and Children for the Parliament of the United Kingdom argued that while there was enormous interest in human trafficking few people had actually met a trafficked person. There were too many international conferences on the subject, but insufficient concerted action to interdict it. He said that it was estimated that 2 million people are trafficked at any time, but only 22 000 victims have been identified. He too criticized the ineffectiveness of merely passing laws. Laws needed to be effectively implemented and his group used parliamentary questions to prompt the Home Secretary and other cabinet members into more effective action. He concluded with a thought provoking statement that there are now more people in bondage than were enslaved in the 300 years of the transatlantic slave trade.

During his input Mr Schneeman highlighted that the South African government had identified the fight against crime and corruption as one of its priority areas of focus for its five years of office. South Africa had become an important area in terms of drug trafficking both for end users and as a transit hub to other countries. As South Africa moved closer to the 2010 FIFA World Cup these activities were likely to increase. South Africa had recognized these challenges and as such was a signatory to all relevant protocols, including the ratification and implementation thereof. Steps had also been taken to ensure greater coordination and cooperation between police forces at regional and international level. In this regard he cited instances of joint operations between South Africa and the United Kingdom and also Mozambique. Cooperation at the level of Interpol was also on the increase as South Africa moved towards 2010. He also indicated that the government would increase border security by deploying the Defence Force to take over from the South African Police Services. Legislation to deal with the problems of human trafficking, drug trafficking, money laundering and also the illegal possession of arms and ammunition had been passed by parliament. He concluded by requesting the sharing of information of best practice between parliaments and the IPU, increased regional and international cooperation in the fight against crime and that parliaments should play a greater oversight role in the implementation of legislation and policies which dealt with the fight against organized crime.

During the debate it became clear that a renewed form of terrorism was piracy and that concerted international action was needed to counteract this menace.

1. Panel Discussion: The role of parliaments in developing South-South and Triangular Cooperation with a view to accelerating achievement of the Millennium Development Goals (Second Standing Committee on Sustainable Development, Finance and Trade)

A panel discussion was held on the subject to be considered by the Second Standing Committee on Sustainable Development, Finance and Trade during the 122nd IPU Assembly in 2010. Mr Sisulu, Mr Madasa, Mrs Ntwanambi and Mrs Sithole attended the meeting. A draft report entitled “The role of parliaments in developing South-South and Triangular Cooperation with a view to accelerating achievement of the Millennium Development Goals was submitted by the co-Rapporteurs Mr. François-Xavier de Donnea (Belgium) and Mr. Given Lubinda (Zambia) (the text of the draft report is attached as Annexure D to this report).

The panelists were Mr P Pardeshi, Senior Coordinator for Regional Operations, United Nations International Strategy for Disaster Reduction, Mr V Yu, Coordinator of the Global Governance for Development Programme and Mr Y Zhou, Director of the Special Unit for South-South Cooperation, United Nations Development Programme.

In his input Mr Sisulu noted that Parliament’s role in terms of conducting oversight and ensuring accountability as well as being a platform for facilitating public participation in matters of national and international importance should not be underestimated.  In the arena of global governance the line between the domestic and the international was often blurred.  In future, matters relating to international trade, the global economy, peace, security and climate change would continue to be areas of focus not only for government, but also for parliaments as they engaged fully with their mandates.

South Africa viewed its relationship with countries of the South as central to its international relations policy and national development strategy. In this regard it was centrally involved in activities of the organisations such as the India, Brazil, South Africa Dialogue Forum, the Non Aligned Movement, the Group of 77 and China.

Leaders in these fora had reiterated their support for the achievement of the Millennium Development Goals and this was evident from instances such as the establishment of the IBSA Facility Fund for the Alleviation of Poverty and Hunger. The Non Aligned Movement had also called for full implementation of the Millennium Development Goals and a comprehensive evaluation of progress towards achieving these goals. The G77 sponsored projects related to South-South Cooperation through funding from the Perez Guerrero Trust Fund and promoted South-South trade through the Global System of Trade Preferences. To date the G77 and China had adopted numerous Ministerial Declarations which reiterated their commitment to the achievement of the Millennium Development Goals.

The earlier contribution made by Canada in which they highlighted their assistance to South Africa for the work it had undertaken in Burundi, Rwanda and South Sudan was noted. This was seen as a concrete example of triangular cooperation.

It was stated that parliamentarians should familiarise themselves with their country’s progress reports on the Millennium Development Goals and Poverty Reduction Strategy Papers which were a key mechanism for the achievement of the Millennium Development Goals.

In conclusion it was stated that parliaments had a role to play in overseeing the implementation of internationally adopted declarations by the Executive. Parliaments (through the IPU) had adopted a declaration in 2006 which clearly set out the role of parliaments in overseeing the achievement of the Millennium Development Goals. Parliaments should remain true to their commitment to ensure that the voice and interests of the people were represented all aspects of governance. In this regard parliamentary international relations may be viewed as a continuation of political processes and discussions which take cognisance of global developments and a changing world order. Parliament as the representatives of the people should therefore focus wider than on national policy alone. It is the duty of Parliaments to ensure that government follows through on its international role and implements its international commitments and obligations. Parliaments should actively participate in various regional, continental and international forums and ensure that there was ongoing engagement on important international relations issues.

1. Panel discussion: Youth participation in the democratic process (Third Standing Committee on Democracy and Human Rights)

A panel discussion was held on the subject to be considered by the Third Standing Committee on Democracy and Human Rights during the 122nd IPU Assembly in 2010. Mr Nhanha and Mr Schneeman attended the meeting. A draft report entitled “Youth participation in the democratic process” was submitted by the co-Rapporteur Ms Marija Lugarić (Croatia) (the text of the draft report is attached as Annexure E to this report).

The panelists were Mr A Guerrero, Partnerships Manager, Civil Society Partnerships, UNICEF, Ms N Shepherd, Head of the UN Programme on Youth, Division for Social Policy and Development, Department of Economic and Social Affairs (UN-DESA) and Mr R Amalvy, Director, External Relations and Marketing, World Scout Bureau.

In his input Mr Nhanha noted that young people throughout all countries were the future. In most, if not all the struggles for democracy and justice, young people had put their lives on the line. He noted that South Africa would never forget the young heroes and heroines of 1976 who had taken to the streets to protest Bantu education. He said that most people would agree that this had been a turning point in the history of the struggle.

Youth in almost all countries were in the majority yet it was a disturbing trend that youth apathy and low turn out for elections was now a worrying trend. He stated that it was important to ask ourselves how best we could draw young people into institutions of democracy and develop and retain them within the system. In the South African parliament, across political parties, 6,5% of members were youth. Mr Nhanha submitted that youth parliaments should be compulsory for member states and that in forthcoming IPU meetings one member of each delegation should be a member from the youth in much the same way that the IPU expects women representation in all delegations to its meetings. He concluded by indicating that if we invest in our youth we would instill in them a sense of patriotism, we would be encouraging them to take charge of their own destiny and allow young people to build their countries, provide solutions, give leadership and be better citizens.

1. Conclusion and Recommendations

The 122nd IPU Assembly and related meetings will take place from 27 March to 1 April 2010 in Bangkok, Thailand.

The delegation recommends that the National Assembly and the National Council of Provinces give consideration to referring the subject items chosen for debate during the 122nd Assembly in 2010 to the following committees: • The Portfolio Committee on Police, the Select Committee on Security and Constitutional Development and the Joint Standing Committee on Defence to consider and report on the subject item “Cooperation and shared responsibility in the global fight against organized crime, in particular drug trafficking, illegal arms sales, human trafficking and cross-border terrorism”. • The Portfolio Committee on Trade and Industry and the Select Committee on Trade and International Relations to consider and report on the subject item “The role of parliaments in developing South-South and Triangular Cooperation with a view to accelerating achievement of the Millennium Development Goals”. • The Portfollio Committee on Women, Youth, Children and People with Disabilities and the Select Committee on Women, Children and People with Disabilities to consider and report on the subject item “Youth participation in the democratic process”.

The committees should be requested to engage with the subject items from the perspective of South Africa with a view to influencing the resolutions which will be adopted on these subject items during the 122nd IPU Assembly.

The delegation further recommends that the National Assembly and National Council of Provinces consider referring the resolution on the emergency item, adopted by the 121st Assembly, entitled “Parliamentary Action to ensure Global Food Security” to the Portfolio Committee on Agriculture, Forestry and Fisheries, the Portfolio Committee on Environmental Affairs and the Select Committee on Land and Environmental Affairs with a view to informing the next IPU Assembly of action taken by our Parliament to give effect to the recommendations contained in the resolution.

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                      MONDAY, 22 FEBRUARY 2010

ANNOUNCEMENTS

National Assembly

The Speaker

1. Withdrawal of Committee Report

Please note: The Report of the Portfolio Committee on Social
Development on the oversight visit to the Mpumalanga Department of
Social Development, Nkomazi District Municipality, Mbombela Local
Municipality, Mbombela and Nkomazi Municipalities’ Projects, South
African Social Security Agency (SASSA) Office, paypoints and service
areas, and National Development Agency (NDA) Projects, dated 3 February
2010, published in the Announcements, Tablings and Committee Reports of
15 February 2010, is withdrawn.

TABLINGS

National Assembly

1. The Speaker

(a)     Report of the Independent Electoral Commission (IEC) on the
    National and Provincial Elections for April 2009 [RP 167-2009].


                     THURSDAY, 25 FEBRUARY 2010

ANNOUNCEMENTS

National Assembly and National Council of Provinces

The Speaker and the Chairperson

1 Classification of Bills by Joint Tagging Mechanism (JTM)

(1)    The JTM in terms of Joint Rule 160(6) classified the following
     Bill as a section 75 Bill:

      a) South African Post Office Bill [B 2 – 2010] (National Assembly
         – sec 75).

COMMITTEE REPORTS

National Assembly CREDA INSERT 1 – PAGES 221-227

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                      FRIDAY, 26 FEBRUARY 2010

ANNOUNCEMENTS

National Assembly and National Council of Provinces

The Speaker and the Chairperson

1 Classification of Bills by Joint Tagging Mechanism (JTM)

(1)    The JTM in terms of Joint Rule 160(6) classified the following
     Bill as a money Bill:

      b) Appropriation Bill [B 3 - 2010] (National Assembly – sec 77).

(2)    The JTM in terms of Joint Rule 160(6) classified the following
     Bill as a section 76 Bill:

      a) Division of Revenue Bill [B 4 - 2010] (National Assembly – sec
         76).

National Assembly

The Speaker

1. Questions not replied to (a) A letter dated 18 February 2010 has been received from the Leader of Government Business, informing members of the House that in response to a letter from the Speaker on the matter of questions that had not been replied to in 2009, he had written to all Ministers who had not replied to questions in the National Assembly and National Council of Provinces, requesting an explanation for each question that had not been replied to and information on how the Ministers intend ensuring that all questions are answered within the timeframes set by Parliament in the current parliamentary session.

2. Replacement of memorandum on private member’s legislative proposal

   (a) At the request of Mr P J C Pretorius, MP, the memorandum dated 23 September 2009 to his private member’s legislative proposal, currently before the Committee on Private Members’ Legislative Proposals and Special Petitions for consideration and report, was replaced by a memorandum submitted to the Speaker on 12 October 2009 and transmitted to the committee on 14 October 2009.

COMMITTEE REPORTS

National Assembly

1. SECOND REPORT OF THE COMMITTEE ON PUBLIC ACCOUNTS ON THE REPORT OF THE AUDITOR-GENERAL ON A PERFORMANCE AUDIT OF THE HANDLING OF CONFISCATED ABALONE AT THE DEPARTMNENT OF ENVIRONMENTAL AFFAIRS AND TOURISM, dated 16 February 2010 Background

On March 2008, the Auditor-General (A-G) engaged with the Accounting Officer of the Department of Environmental Affairs and Tourism (DEAT) to perform a performance audit of the handling of confiscated abalone. The audit was requested by the Standing Committee on Public Accounts (SCOPA). Various factors such as a lack of formal policy and or guidelines regulating the receiving, storage and disposal of confiscated abalone were identified.

The Auditor-General report demonstrated that measures were not in place to ensure the timely awarding of tenders for the processing of confiscated abalone; that uniform tariffs were not applied for the processing, marketing, selling and exporting of abalone; and that the non-rotation of the processing of abalone between the service providers resulted in the use of an additional monitoring team.

Report of the Committee

The Standing Committee on Public Accounts (SCOPA) heard and considered evidence from the Directors General and Heads of Departments of the following Departments & Entities: • Department of Environmental Affairs and Tourism • Department of Police • Department of Justice • National Prosecuting Authority of South Africa • The South African Revenue Services (SARS)

Subsequent to the hearing, the Committee undertook a site visit to Paarden Island abalone storage on the 6 October 2009 to investigate the handling of confiscated abalone. The Auditor- General raised specific concerns on the following and reported as follows:

1. Formal policy and guidelines regarding the handling of confiscated abalone

A formal policy and or guidelines relating to receiving, storage, processing and disposal of confiscated abalone did not exist. A draft policy was compiled during June 2007, but as at June 2008 it had not been approved or communicated to all role players involved in the handling of confiscated abalone: furthermore, the draft policy was not comprehensive and specific in addressing various aspects relating to handling of confiscated abalone.

With regard to the above, the Committee recommends as follows:

a) A specific and comprehensive policy for the handling, storage, processing and disposal of confiscated abalone should be speedily approved and implemented. b) The Department of Environmental Affairs and Tourism should develop norms and standards relating to the handling of confiscated abalone.

1. Status of court cases relating to confiscated abalone

The Auditor -General raised specific concerns and reported as follows:

 a) The Department of Environmental Affairs and Tourism did not monitor
    progress of court cases relating to abalone that had been
    confiscated. The Department of Environmental Affairs and Tourism
    therefore did not know which court cases had been finalised and
    whether the samples kept for court purposes could be released for
    processing.
 b) The Department of Environmental Affairs and Tourism  records of
    samples of confiscated abalone kept for court purposes (as at 31
    July 2007) were incomplete and details of police investigations
    were not maintained for some of the samples of confiscated abalone
    which failure could complicate the monitoring and follow up of
    court cases.

With regard to the above, the Committee recommends as follows:

a) The Department of Environmental Affairs and Tourism must put measures in place to ensure that the reported cases of confiscated abalone are timeously followed up and reported. b) The Department of Environmental Affairs and Tourism must improve the record keeping of samples retained for court purposes; this will enable follow up on the progress of court cases c) For purposes of ensuring an improved conviction rate of cases relating to confiscated abalone, the Department of Environmental Affairs and Tourism must put measures in place that will ensure a structured co- ordination between Department of Environmental Affairs and Tourism and other government departments.

1. Awarding of tenders

The Auditor-General raised specific concerns and reported as follows:

• There was a delay in the awarding of the tenders for the processing of
  confiscated abalone (MLRF 050) and monitoring of the processing
  function (MLRF 049) as well as the signing of memorandum of agreement
  (MoAs) with the successful service providers after the previous
  processing contract ended on 30 November 2005, therefore confiscated
  abalone could not be processed and was stockpiled. With regard to the above, the Committee recommends as follows:

• The Department of Environmental Affairs and Tourism must ensure that
  tender contracts are timeously renewed or awarded to prevent
  unnecessary delays in the processing of confiscated abalone and the
  resultant loss of potential income to the Department.

1. Tariff structures for the processing, marketing, selling and exporting of abalone

The Auditor-General raised a specific concern and reported as follows:

• The Marine and Coastal Management (MCM) awarded tenders for the
  processing, marketing, selling and exporting of abalone to three
  service providers at different tariffs. During the period October 2006
  to August 2007, the total actual costs (as invoiced by the three
  service providers) for processing, marketing, selling and exporting of
  173 794 kg of wet abalone amounted to R 7.1 million. If all the costs
  and invoices were based on the cost structure as per the MoA with the
  service provider who had the lowest tariff structure, the total would
  have been R 5.3 million.

With regard to the above, the Committee recommends as follows:

• The Department of Environmental Affairs and Tourism must develop a
  proper costing system that will address issues related to the
  standardisation of prices of service providers in accordance with the
  adopted costing methodology.

1. Payment to the Project Monitoring Team (PMT) The Auditor- General raised specific concerns and reported as follows:

 a) Invoices received from the PMT for services rendered during the 11-
    month period from October 2006 to August 2007 amounted to R 6.5
    million (Inclusive of VAT and disbursements), which is R 23 426
    more than the budget allocated for the 24-month period and R 1.2
    million more than the approved ceiling price.
 b) The MoA states that, the processing of abalone should have taken
    place on a rotational basis between the three service providers. No
    records existed that rotation occurred during the tenure of the
    existing service contracts up to August 2007. It is also estimated
    that the additional costs owing to the non-rotation of the
    processing of abalone between service providers during the
    corresponding period amounted to R 1.4 million.
 c) In respect of seven of the eleven invoices (63 per cent) analysed
    for the period October 2006 to August 2007, the PMT made use of
    additional staff or staff were used for more hours than indicated
    in the tender document. The total cost paid by the Department of
    Environmental Affairs and Tourism  for additional PMT staff
    amounted to R 1.8 million for the period October 2006 to August
    2007

With regard to the above, the Committee recommends as follows:

a) The MCM must take effective and appropriate steps to prevent irregular expenditure.

b) The MCM must in line with its procurement policy appoint one service provider, in order to ensure maximum economic benefits from its processing, marketing, selling and exporting of confiscated abalone.

    6. Further Recommendation

The Committee further recommends that the Accounting Officer should submit a progress report on all the above recommendations to the National Assembly within 60 days after the adoption of this report by the House.

1. Third Report of the Committee on Public Accounts on the Report of the Auditor General on the Special Audit of the N2 Gateway Project at the National Department of Housing, dated 16 February 2010

Background

The Auditor–General (AG) was requested by the National Department of Housing (NDoH) to conduct a special audit of the N2 Gateway Project (N2GP). The audit focused on the N2GP from its inception, as well as the achievements of goals regarding sustainable human settlements and the collaboration of the three spheres of government to achieve successfully the common objective. The report highlighted challenges encountered during the audit and management comments received from the accounting officer on the 3rd of March 2008 and 5th of June 2008.

Report of the Committee

The Standing Committee on Public Accounts (SCOPA) heard and considered evidence from the Director General, Head of Department and Accounting Officers of the following Departments & Entities: • National Department of Human Settlements • Western Cape Department of Local Government and Housing • City of Cape Town

The Auditor-General made the following findings:

1. Enabling Legislation and Policies

a) The specific roles and functions allocated to the different spheres of government in terms of the Housing Act (Act No. 107 of 1997) and the Social Housing Policy were not adhered to. b) The roles and responsibilities set out in the Memorandum of Understanding ( MoU) were not clearly defined and were inconsistent within the terms of the MoU resulting in uncertainties as to who needed to take responsibility for, and ownership of which specific functions. c) The Steering Committee established in terms of the memorandum of understanding (MoU) stopped functioning properly after 10 May 2006

The Committee recommends that:

i) The completion of the project must conform to the prescripts of national legislation on housing and that the National Department of Human Settlements should monitor compliance by all stakeholders. ii) The current Memorandum of Understanding (MoU) should be reviewed to clarify the roles and responsibilities of all stakeholders

The Committee noting that the N2 Gateway Steering Committee is now meeting, recommendations that the Department of Human Settlements must monitor the proper functioning of the Steering Committee.

1. Planning

The Auditor-General made the following findings:

a) The business plan for the construction of the N2 Gateway Project had not been finalised and approved before the actual construction of the N2 Gateway Project and no final approved business plan was submitted to the audit team. b) The selection of beneficiaries was not finalised prior to the commencement of construction, resulting in the non-compliance with the prescribed requirement of listing the beneficiaries in the final business plan and loading these details on the National Housing Subsidy database prior to the project implementation. c) The National Housing Code, The Breaking New Ground Plan and the draft business plans were not consistent with regard to qualifying criteria for proposed beneficiaries, especially in respect of the monthly household income requirement. It was also noted that the criteria communicated to the different communities were not consistent. d) The identification and securing of sufficient land was not finalised prior to the construction of the N2 Gateway Project and that the geotechnical surveys indicating the true seriousness of the soil problems were not compiled prior to the commencement of the project

The Committee recommends that the Accounting Officer ensures:

i) The final business plan be aligned to applicable policies such as the National Housing Code and the Breaking New Ground Plan. ii) The selection of beneficiaries should be in line with applicable policies and that National Department of Human Settlement should monitor compliance to applicable policies iii) Proper planning relating to the investigation of the availability and suitability of land must be undertaken within realistic timeframes iv) The professional advice from dully appointed housing official with regard to the risks associated with the project proposed timeframes must not be compromised. v) Funding should be secured prior to the project implementation and the three spheres of government should ensure that the funding required in terms of business plan is realistic.

The Committee notes that since the hearing with the Department of Human Settlements, the business plan of the project has been finalised and adopted by the Department.

       3. Appointment of previous Project Manager

The Auditor-General made the following findings:

That the previous project managers were appointed in spite of the following:

a) The company failed to prepare its costing in compliance with the terms and conditions of the request for proposal (RFP), thereby rendering its bid non-responsive b) The supply chain management committee awarded the contract to the company based on the Goods, Services and Property Advisory Board’s recommendation, notwithstanding the fact that the company was ranked number 6 in the evaluation Committee’s assessment. c) The National Department of Human Settlements was not represented in the evaluation committee even though the RFP stipulated it would comprise officials from all spheres of government. d) No formal contract was entered into with the company. e) The company lacked in-house and specialist expertise to perform various project management functions, with the result that the company obtained a third-party specialist and the company raised a 10% mark-up, on these services. f) The project management fees paid to the company exceeded the industry norm by 4% and were not performance based, as the company was paid 254% of the original tender amount (R12 080 653) although the N2 Gateway Project had not yet been completed.

The Committee recommends that:

i) The Accounting Officers ensure that there is proper monitoring and compliance with applicable legislation and policies to avoid mismanagement and abuse of processes. ii) The Accounting Officers of National and Provincial Department of Human Settlements and the City of Cape Town should take disciplinary or legal action against implicated individuals and initiate processes to recover lost funds where appropriate

       4. Quality of Units at Joe Slovo Phase 1

Various physical shortcomings were identified by the Social Housing Foundation as well as the A-G which included, amongst others:

a) The certificate of completion for the building contract issued by the principal agent was erroneously issued. b) Compliance with registration and inspection procedures ranging from the National Building Regulations to the National Home Builders Registration Council (NHBRC), construction regulations, inspection by local authorities and professionals and occupation certificate could not be verified. c) Site inspections revealed numerous cracks in the walls and floors, peeling paint, doors that were not fitted properly, loose fittings and uncovered drain pipes and blocked drains.

The Committee recommends that:

i) The Accounting Officers ensure that all physical defects be rectified in line with building regulations. ii) Disciplinary actions or sanctions be instituted against officials or entities that did not comply with building regulations and inspection procedures

    5. Conclusion

Subsequent to the hearing, the Committee undertook a site visit to the N2 Gateway and established that whilst the Department contends that the repairs were done to the units, there are serious deficiencies in the units and this matter requires urgent attention.

Report to be considered

1. Report of the Portfolio Committee on Water and Environmental Affairs on the 2008/09 Annual Report of the Department of Environmental Affairs and Tourism, dated 2 February 2010

The Portfolio Committee on Water and Environmental Affairs, having considered the 2008/09 Annual Report on 11 November 2010 of the Department of Environmental Affairs and Tourism, reports as follows:

Summary

In terms of the financial component of the annual report of the Department of Environmental Affairs and Tourism, there had been no unauthorised or irregular expenditure. They had also received an unqualified audit report from the Office of the Auditor-General. The rating, (as the top department of their audit list), by the Department of Public Service and Administration was considered a major accomplishment of the functioning of the department. The department’s internal audit committee was fully functional.

Members raised a number of issues and questions, which focused primarily on the following achievements and challenges:

• The department was firstly commended on being selected top of the audit list by the Department of Public Service and Administration. • The functioning capacity of Environmental Impact Assessments. • The carbon footprint of government departments. • Abalone protection. • The establishment of environmental courts. • Municipalities’ readiness to integrate waste management plans. • Greening 2010. • Green grading of hotels. • Reduction of un-permitted waste sites. • The proclamation of Vredefort Dome as a world heritage site. • Hazardous medical waste. • Learnerships, bursaries and vacancies.

1. Overview of the performance of the six programmes

The following programmes underpin the work of the department:

Programme 1: Administration Programme 2: Environmental Quality and Protection (EQP) Programme 3: Marine and Coastal Management (MCM) Programme 4: Tourism Programme 5: Biodiversity and Conservation (B & C) Programme 6: Sector Services and International Relations (SSIR)

Input was provided on the transfers to each of the department’s agencies: iSimangaliso Wetland Park; South African Weather Services (SAWS); Marine Living Resources Fund (MLRF); South African National Biodiversity Institute (SANBI); South African Tourism; and South African National Parks (SanParks). Table 1 below reflects the transfers to each of the agencies:

Note: The spending trends and performance of the agencies are reflected in their respective reports.

In addition to the information on transfers, the presentation also noted the achievements and challenges of the overall functioning (financial and non-financial performance) of the department. This included:

• No unauthorised or irregular expenditure.
• Compliance with all disclosures.
• An unqualified audit report from the Office of the Auditor-General.
• An acknowledgement for being on the top  of  the  audit  list  of  the
  Department of Public Service and Administration.
• A fully-functional internal audit committee.
• An under-spending of R7,  6  million.   This  was  allocated  for  air
  quality testing equipment but had not yet been put in place.

In detailing the budget and expenditure review for 2008/09 of each of the programmes, Table 2 below reflects the allocations for each of the programmes:

1. Achievements and challenges – non-financial performance

In highlighting the achievements, challenges and corrective measures for each of the programmes, emphasis was placed on the following aspects:

Programme 1: Administration

Achievements • A 95% implementation of Performance Management Development System was achieved. • A 100% of planned and funded training facilitated as part of workplace skills plan. • 100% employee related cases processed within prescribed timeframes. • In terms of staff demographics representivity, that of : gender, race and people with disabilities, the following was highlighted: o 54% women; 90% blacks and 1.4% people with disabilities. For 2009/10, the department will approach the associations of people with disabilities to market opportunities. • 2 quarterly reports published and the draft annual tourism report developed.

Challenges

• The target of reducing the vacancy rate was not achieved due to delays
  in filling posts.  The department decided  to  coordinate  filling  of
  same groups posts as a single process to address delays in filling  of
  posts.

Programme 2: Environmental Quality and Protection

Achievements

•  85%  of  Environmental  Impact   Management   (EIM)   of   provincial
  applications completed.
• Three hundred and fifty two (352) provincial officials trained in  EIM
  review and decision-making related matters.
• 100% of reported emergency incidents received timely response.
• The number  of  investigations  into  reported  and  prioritised  non-
  compliance transgressions exceeded the target of 35.  Fifty  one  (51)
  administrative  investigations  were  conducted.    Approximately   59
  criminal investigations – top ten prioritised  for  investigation  and
  enforcement.
•  Thirty  (30)  envisaged  authorisations  monitored  compared  to  the
  envisaged target of  15  environmental  authorisations  monitored  for
  compliance.
• Nine hundred and seventy five (975) EMIs trained compared to  the  950
  envisaged targets.
• Practical training  for  waste  management  capacity  development  was
  completed for 9 provinces.
• The Draft Hazardous Waste Classification system is in place,  and  the
  departmental   adjudicating   committee   approved   appointment    of
  international service provider.
• Asbestos phase out plans have been developed.
• The final  draft  of  the  incineration  policy  completed  and  under
  consideration for promulgation for public comment.
• The national policy on  co-processing  of  alternative  raw  fuels  in
  cement kilns was gazetted and will be finalised in 2009.
• The Waste Management Act was promulgated in March 2009.
• The envisaged target of 18 ambient  air  quality  monitoring  stations
  providing information to South Africa’s air quality information system
  was met.
• There was a reduction of 27 metros and  district  municipalities  with
  air quality that did not meet  ambient  air  quality  standards.   The
  target set was achieved.
• Climate Change  Policy:  The  Long-Term  Mitigation  Scenarios  (LTMS)
  process was formally concluded with decisions and directions from  the
  2008 July Cabinet Lekgotla and scenarios were published.

Challenges • The Environmental Management Frameworks (EMFs) completed but not gazetted. Targets to be adjusted for the 2009/10 financial year. • The envisaged target of conviction rate against environmental transgressors for all cases that have been to court was calculated at between 75 to 80%. The cases have not gone through courts, hence there were no convictions. 20 cases are with the National Prosecution Authority (NPA). • The envisaged target percentage reduction of unpermitted waste disposal sites was set at 30%. There was a 2.5% reduction. The department depends on municipalities submitting applications. All municipalities owning 116 sites have been visited to compile applications.

Programme 3: Marine and Coastal Management (MCM)

Achievements

• Marine aquaculture scientific base and  management  regime  in  place:
  The target was set to initiate 5 marine aquaculture pilot projects.  A
  feasibility study was conducted for potential sites.  In terms of this
  sector, the policy and implementation plan finalised; feed experiments
  completed for kob; scientific publication  completed  on  reproductive
  cycle of scallops; a student has begun working on sea urchin  research
  and final report for joint  aquaculture  research  frontier  programme
  with the Department of Science and Technology completed.
• South African strategic research presence  in  Antarctica  and  Marion
  Island:  The user needs for the new  vessel  was  compiled,  the  ship
  building contract advertised  and  four  companies  shortlisted.   The
  envisaged target for the demolition of the old base site will be reset
  to allow the Department of Public Works  and  South  African  National
  Antarctic Expeditions planned and carried out.
• The 80% target managed capacity in place for declared Marine Protected
  Areas (MPAs) was reached.
• The Integrated Coastal Management Bill was  signed  into  law  by  the
  President, now Act No 24 of 2008.

Programme 4: Tourism

Achievements

• Skills availability in the tourism sector:  The National Tourism Human
  Resource Development (HRD) Strategy has been finalised and launched at
  National Tourism Conference in October 2008.
• A total of 128 tourist guides have been trained on SA  Host.   Limpopo
  Province did not have a budget for accommodation and its training will
  take place during the 2009/10 financial year.
• 135 training opportunities created.
• 4 163  Small  Micro  and  Medium  Enterprises  (SMMEs)  trained.   The
  envisaged target of 1 000 was exceeded.
• 135.6% of the approved 2008/09 sector skills plan targets implemented.
   The target was set at 50%.
• 8 053 accommodation establishments graded in comparison to the  target
  of 6 365.
• 40% of Tourism 2010 plan implemented.
• The Final National Framework for 2010 Greening is in place.

Challenges

• Levels of  tourism:  Black  Economic  Empowerment  (BEE)  Charter  and
  Scorecard Implementation:  50% if targets are met.  The tourism sector
  was unable to report since the sector  code  had  not  been  gazetted.
  This has since been gazetted in May 2009.
• The target of organs of state procuring from empowered  establishments
  was set at 30%.  The tourism sector was unable  to  report  since  the
  sector code had not been gazetted

Programme 5: Biodiversity and Conservation

Achievements

• Systems to standardise trade and utilisation of threatened,  protected
  or commercial species established:  Regulations are developed for  the
  Draft Convention on International Trade in Endangered Species of Fauna
  and Flora (CITES).  The final draft document  for  Hunting  Norms  and
  Standards  developed.  A  database/register  was  developed  and   the
  register of bio-prospecting applications received.
• Measures to manage threats to biodiversity developed:  A draft  status
  quo  report  on   National   Biodiversity   Framework   implementation
  completed.  The Draft Cycad Biodiversity Management Plan developed and
  the  final  draft  of  the  Alien  Invasive  Species  Regulations  was
  recommended for publication.
• Conservation estate expansion to ensure ecosystem  representivity  and
  viability:  The national expansion plan approved and funds transferred
  to South African National Parks (SANParks).  Three suitable  grassland
  areas were identified.
• Three (3) additional World Heritage Sites (WHS) proclaimed.  The  Cape
  Flora Region Protected  Areas  and  Mapungubwe  World  Heritage  Sites
  proclaimed.  The Draft Gazette Notice for Vredefort initiated.
• The final Vhembe Biosphere Reserve nomination  proposal  submitted  to
  United Nations Education and Scientific Commission (UNESCO).
•  Protected  Areas  Performance  Management:    National   process   on
  performance management system was presented with  recommendations  and
  approved.  Request extended to Robben Island management  authority  to
  submit Integrated Management Plan (IMP) through Department of Arts and
  Culture.  Workshops were held with stakeholders  to  review  Vredefort
  Dome to draft IMPs.  A meeting was held with iSimangaliso Wetland Park
  Authority to review and provide comments  on  the  draft  iSimangaliso
  Wetland Park IMP.
• Research to support conservation and sustainable use  of  biodiversity
  facilitated:  The Biosafety Research programme is  not  yet  complete.
  However, the biosafety research strategy has been  prepared.   Ongoing
  consultations took place with the National Research  Foundation  (NRF)
  to assist with the development of the Biosafety Research  Strategy  to
  form part of the Biodiversity Research Strategy being developed by the
  Department of Science and Technology.  A  draft  guide  to  funding  a
  Centre of Excellence for Biosafety has been developed.
• The draft work plan for elephant management submitted by South African
  National   Biodiversity   Institute   (SANBI)   was   submitted    for
  consideration.
•  Levels  of   professional   regulation   and/or   co-regulation   for
  practitioners in the environmental  sector:   A  strategy  toward  co-
  regulation of recreational off- road driving and a business  plan  for
  implementation  has  been  completed.   The  draft  qualification  for
  Environmental Authorisation Professional Standards (EAPS) gazetted for
  public comment.  The task team had  a  final  meeting  to  incorporate
  comments received for  final  submission  for  registration  by  South
  African Qualifications Authority  (SAQA)  in  terms  of  the  National
  Qualifications Framework.
•  Environmental  sector  skills  development  for  non-DEAT  officials:
  Adverts to recruit 50  learners  and  call  for  proposals  placed  in
  national papers.  All 7  host  employers  completed  the  shortlisting
  process to identify potential learners.
• 4 364 learners have visited parks as part  of  programmes  to  enhance
  biodiversity appreciation.
• Programmes to advance  vulnerable  communities  developed:  The  draft
  national co-management framework for protected  areas  was  finalised.
  This was presented to the DEAT/Department of Land Affairs  task  team,
  provinces and People  and  Parks  Steering  Committee.   The  proposed
  calculation for lease option was completed.
• The draft post- land settlement support framework has been  developed:
   The cabinet memorandum on  the  settlement  of  land  claims  against
  national protected areas has been completed.  The  cabinet  memorandum
  has been approved for settlement of claims of Kruger National Park.
• The Community Based Natural Resources Management (CBNRM),  Access  and
  Benefit Sharing (ABS)  implementation  plan  finalised.   There  is  a
  provision for provinces to report on progress  against  implementation
  of the plan.
• Sector transformation  framework  developed  for  the  Black  Economic
  Enterprise Charter for the hunting sector:   The  transformation  task
  team was established under the Wildlife Forum and it met  and  drafted
  the Terms of Reference.

Challenges

•  Systems  to  standards  to  standardise  trade  and  utilisation   of
  threatened, protected  or  commercial  species  established:   20%  of
  management plans submitted, pending review and approval by the issuing
  authority.  There was a delayed response  by  most  organs  of  state.
  Reminders, have however, been sent to the relevant organs of state.
• The bioregion plan is  not  yet  completed.  However,  guidelines  for
  determination of bioregional boundaries have been published.

Programme 6: Sector Services and International Relations (SSIR)

Achievements

•   67%   of   international   multilateral   sustainable   development,
  environmental, biodiversity, marine and tourism agreements  negotiated
  and reported on.  65% of international governance, South-South, South-
  North,  bilateral  and  African  foreign  relations  and   cooperation
  agreements related to sustainable development, environment and tourism
  negotiated and reported on.
•  The  TFCA  investment  catalogue  has  been  developed,  printed  and
  distributed.
• The construction for Twee Rivieren Tourist Access facility completed.
• Policy framework for 4x4 vehicles driving in TFCAs:  The  action  plan
  has been drafted and circulated to stakeholders for comments.
• Implementation of poverty alleviation and job creation programmes  and
  infrastructure projects:  172 914 accredited training days created; 89
  196 non-accredited  training  days  created;  12  learners  linked  to
  projects.  The target was set at 30 but due to budgetary  constraints,
  the number of learners was reduced to 12.  433 permanent jobs created.
   14 214 temporary jobs created.  57% of overall  budget  allocated  to
  projects in presidential nodes and Project Consolidate municipalities.
   3 472 SMMEs used in project implementation to date.
• All public entities complied  100%  with  governance  and  performance
  requirements.
• 90% of graded establishments as per Tourism Grading Council  of  South
  Africa (TGCSA) have been geo-coded and mapped.
• Databases for 7 nodal areas were targeted, but only 5 were  available.
  The migration to the new Geographical Information System (GIS)  server
  and software environment  took  much  longer  and  led  to  delays  in
  capturing of information.
• Indicator report and update of State  of  Environment  Report  (SOER):
  South  African  Indicator  data  submitted  to  the  Southern  African
  Research and Documentation Centre’s Musokotwane  Environment  Resource
  Centre (SARDC-Imercsa) for inclusion  in  their  database.   The  SOER
  website has been redesigned to conform to DEAT branding and additional
  information was loaded.
• Financial value of resources  raised  from  donors  to  support  South
  Africa and Africa’s  environmental  programmes:   Approximately  US$25
  million obtained and US$10 million in the  pipeline.   German  funding
  secured for 5 project proposals for  2008  (Euro  –  18  million)  and
  agreement on funding for 2009.  US$3 million from  Denmark  for  Basel
  Centre.
•   Improving   intergovernmental    cooperation    and    coordination:
  Participated  in  100%  Integrated  Development  Plan  (IDP)  reviews.
  Cabinet Lekgotla report and report on  nodal  intervention  on  Social
  Responsibility Programmes and Projects (SRPP) initiative developed and
  submitted to Department of Provincial and Local government (DPLG).  Bi-
  annual reports submitted to DPLG on implementation of environment  and
  tourism 5-year local government strategy.
• Review of National Environmental Management Act (NEMA) as  it  relates
  to environmental planning:  The approval of the proposal and gazetting
  of  new  CEC  successor  were  dependent  on  promulgation   of   NEMA
  amendments.
• Review of NEMA as it relates to institutional arrangements: Amendments
  submitted to the President for assent and signature.
• 100% compliance with tabling requirements for 2008/09 financial year.
• 100% of parliamentary requests received responses on time.

Challenges

• Number of Trans Frontier Conservation Area (TFCA)  Wildlife  Corridors
  and migratory routes established:   The  target  was  to  establish  2
  wildlife corridors and migratory routes.  These  were  not  completed,
  but the final draft joint management plan is awaiting signatures  from
  relevant participating authorities.
• Three hundred and ninety five (395) of the targeted 500 youth enrolled
  in DEAT National Youth Service (NYS).  The target was not achieved due
  to delays in the approval of one of the three  NYS  business  plans  –
  implementation is continuing in the  2009/2010  financial  year  where
  outstanding enrolments will be achieved.

1. Issues/questions considered by the committee

Whilst the department was congratulated on achieving the top rating on the audit list from DPSA, for spending 100% of their budget, as well as their excellent financial management, a number of issues were raised in relation to the synergy between the financial and non-financial performance. These included:

• The challenges encountered by the Vredefort proceedings.
• The position of environmental impact assessment  (EIA)  practitioners.
  Linked to this, questions were raised about the possible formation  of
  a   coordinating   body   (to   undertake   EIAs)   that   could    be
  institutionalised to perform a regulatory function; and the timeframes
  for achieving this, was needed.  Another related question  focused  on
  whether the gazetted  standards  and  quality  of  practitioners  were
  equally applied to both people in provincial and national departments.
   Concern was raised about  the  Free  State  and  Gauteng,  which  had
  massive vacancies.
• It was also important for the department to  add,  as  part  of  their
  performance management, a carbon  footprint  performance  measurement.
  It was good to note that there was a decrease on paper and energy use,
  but  this  must  also  include  reporting  on  reducing  their  carbon
  footprint.
• Is there a process in the department or marine coastal management that
  looks specifically at a solution to the abalone fishery problem?   Was
  the science up to date on the fishery? The decision of whether to open
  it up fully, partially or not at all was based on science and  it  was
  therefore important that an informed decision was made.
• Clarity was sought on what constituted priority crimes and  what  were
  the  priority  crimes  mentioned  in  the  report.   When  would   the
  environment courts be in place?  On page 24 of the report, mention was
  made of a baseline of 75% conviction rate and currently it appeared as
  if the department was sitting with a 0% conviction rate.
• Another critical issue raised was whether municipalities  reported  on
  waste management plans and if they did this, whether it  was  assessed
  and  whether  the  department  kept  tabs   on   the   municipalities’
  implementation on waste  management.   Medical  waste  posed  a  major
  problem in many municipalities.  How was  this  critical  issue  being
  addressed by the department?
• Some municipalities implemented greening programmes for 2010 and asked
  if there was an overall management of the greening of the  2010  World
  Cup.
• Programmes like street cleaning were spoken about, but this was not  a
  sustainable  means  of  waste  management.   The  committee  wanted  a
  response to this.
• Whilst the  department’s  energy  and  paper  reductions  were  to  be
  commended, there were questions raised around the reason for water and
  general  waste   reduction,   besides   paper   not   been   included.
  Environmental foot printing and not  only  carbon  foot  printing  was
  critical and needed  an  intergovernmental  interaction  on  this.   A
  number of governmental departments were meant  to  have  environmental
  plans in place.  Clarity was needed on whether these were in place and
  if the departments monitored this initiative.  A further question  was
  asked on whether the department was involved in hotels receiving green
  grading as a star rating based on environmental factors.
• The plastic bag levy was set at 4c and if 2 billion were  sold,  there
  should be R80 million in their budget, but according  to  the  report,
  there was only R20 million.  A question was raised about the matter of
  R60 million.  In relation to this, a question  was  raised  about  the
  financial environmental levy which was not utilised by the department.
• Members asked if the department could provide  a  workshop  on  global
  warming and climate change. It was important for legislators to  fully
  understand this subject matter to  impart  the  information  to  their
  constituents.
• What was being done about reducing unpermitted waste disposal sites as
  there were people squatting on the dumping sites?
• A question was raised about the way in which  the  department  defined
  capacity constraints in relation to existent vacancies.   The  vacancy
  rate issue was a common one amongst  many  departments  and  director-
  generals should meet to discuss this.
• If environmental learnerships were placed in national newspapers,  how
  did the department transfer information to deep rural  areas  with  no
  access to the print media?  How did the department monitor the use  of
  monies transferred to its agencies?
• The department reflected a high figure on training  of  Small,  Medium
  and Micro-Enterprises (SMMEs), but clarity  was  required  on  whether
  this was dispersed or only concentrated in  one  province  or  region.
  Linked to this was a question on the extent  to  which  SMME  training
  reached rural areas.
•  What  compliance  and  regulatory  measures  were  in  place  against
  industries emitting greenhouses gas?
• With reference to the employment of people with disabilities,  clarity
  was sought on the marketing  mechanisms  used  by  the  department  to
  employ people in this category. 3.    Responses

• The self-regulation initiative of the EIA  practitioners’  institution
  was in progress.  The department has a business  plan  that  committed
  funding for all the planning and work connected  to  interacting  with
  the sector, and  the  qualification  board.   Although  R500  000  was
  allocated to this project, the release of funding by National Treasury
  within the current financial context, slowed the pace of the  project.
  Although the department had approved a three-year plan with  industry,
  commitment thus far, was only for a year.  There  was  uncertainty  on
  whether they would conclude their work in the following year, as  this
  was subject to availability of resources.
• The department acknowledged the challenge in terms of EIA  functioning
  in terms of delays.  In  some  instances,  there  were  problems  with
  consultations, and in some instances, inexperienced service  providers
  were  given  the  responsibility  for  complex  EIA  processes.    The
  department had, however, launched  an  independent  review  to  assess
  improving efficiency  and  effectiveness  of  EIAs.   With  regard  to
  qualifications of practitioners,  these  had  to  be  established  and
  retained, so that there was a proper benchmarking  system,  and  these
  had to be included in the self-regulation package.
• In relation to the vacancies of EIA practitioners, very few people had
  the proper qualifications,  and  this  had  a  ripple  effect  on  EIA
  processing.  The department  was  working  on  a  monitoring  database
  system, which would migrate to  a  national  environmental  assessment
  investigation system, once fully  operational.   The  provinces  would
  transmit data and this would be provided to MECs.  The database  would
  contain the number of  vacancies,  and  the  impact  of  this  on  the
  processing of  EIA  applications.   The  problem  was  attributed  to:
  insufficient support to provinces;  the  appointment  of  consultants;
  lack of and limited funding.
• The performance management of the  carbon  footprint  was  an  initial
  initiative by the department, and the aim was to expand to  an  entire
  environmental footprint.  This was done on a small scale so  that  the
  department would monitor and measure this to put in place  a  baseline
  and to analyse the status quo.  A number of options for the success of
  this initiative was considered:
     o Current employees would have to be seconded to  undertake  this,
       as they could not afford to employ people.
     o If undertaken properly, this could be used as a litmus test  for
       other departments.
     o The use of clusters of departments was another option.
     o Introducing an element that requested the private  sector  (more
       especially,  listed  companies)  to  report  and  monitor  their
       footprints,  such  as  it  happens  with  financial   statements
       (environmental statements).  Five years could be  voluntary  and
       thereafter mandatory.
• Abalone poaching:  MCM was unable to sufficiently address this  issue.
  The department would be putting together an enforcement strategy.  The
  department had listed what they considered priority crimes,  and  this
  included land contamination, hazardous waste contamination and abalone
  poaching.  The Department of Justice has a dedicated  Priority  Crimes
  Unit, and collaboration was essential between the two departments.
• Environmental courts: The Ministers of Water and Environmental Affairs
  and Justice had met to discuss the administrative processes needed  to
  set up environmental courts.  Some of the issues discussed comprised –
  whether to establish a regional court or provincial courts or a normal
  court  with  extended  courts  dealing  primarily  with  environmental
  crimes.  The  baseline  figures  on  convictions  were  based  on  the
  previous financial year.  These were used to improve the system.
• Integrated waste management plan:  Municipalities were to  have  these
  in place, as the legislation was passed  in  July.   However,  it  was
  difficult to force municipalities  to  comply.   Environmental  issues
  were competing with budgets for the provision  of  basic  services  in
  some  municipalities.    With   provincial   funds   as   well,   many
  municipalities did not prioritise environmental issues as permanent or
  sustainable interventions.
• Greening 2010:  Broad framework guidelines were issued  for  all  host
  cities, such as greening of areas and waste minimisation.  Many of the
  host cities had to fund interventions, and the department did not have
  control of the strategies implemented.  However, for those host cities
  that they were co-hosting with donor funds,  they  would  be  able  to
  monitor the implementation.  At the end of the World Cup, host  cities
  are required to report on strategies implemented, success rate, and to
  reflect if the national strategy or framework was successful or not.
• Environmental plans for all departments:  In terms of NEMA, all organs
  of government were compelled to develop  environmental  implementation
  plans to  be  approved  by  DEAT,  whose  functions  impacted  on  the
  environment.  All departments that managed environmental issues had to
  draft environmental management plans. The department  had  produced  a
  four-year plan, which was published  for  comment,  and  is  not  been
  monitored.  Some departments had not complied, and warning letters had
  been forwarded by the minister.
• Green grading:  Agreement was  reached  on  the  system  and  industry
  initiatives for green grading and standards for grading in hotels  had
  already run as an independent system.  What was  not  realised  though
  was a national system that could be used as  a  national  benchmarking
  framework.  The department was partnering with the  National  Heritage
  Council to develop a system.
• Unpermitted waste sites:  The department had intervened and  appointed
  service providers to assist municipalities.  One hundred  and  sixteen
  sites (116) had been identified.  Eighty eight (88)  applications  had
  been received.  Eighteen (18) sites  were  considered  unsuitable  for
  landfill sites.  The department was working with municipalities.  They
  would provide a report-back on this issue.
• Costing for waste permitting functions and proper  infrastructure  for
  landfills:  This would  cost  the  state  an  amount  of  R5  billion.
  National Treasury was aware of this.  The department had  participated
  in the process of  municipality  infrastructure  grant  review,  which
  showed only 4% was allocated  for  waste  management,  which  included
  street lighting.
• Vredefort:  The department had tried to proclaim the site as  a  world
  heritage site, but objections were raised by landowners.  By  February
  2010, the department hoped to resolve the issue with the landowners.
•  Communication  on  environmental  issues:   Capacity  and   financial
  constraints limited the department’s  impact  of  awareness  in  rural
  areas.
• Employment of people with disabilities:  The department was engaging a
  number of organisations to assist them.
• Hazardous medical waste:  A policy on incineration was finalised,  but
  in many hospitals, the problem  with  medical  waste  was  exacerbated
  because of incorrect temperatures on incinerators.

1. Recommendations

The committee, in deliberating on the input by the department and members of the committee, recommends the following:

• The department to undertake awareness  programmes  on  climate  change
  throughout the country as many citizens were unaware of  environmental
  issues. The environmental education should incorporate  diverse  media
  forms and be inclusive of languages spoken in different communities.
•  The  department’s  energy  and  waste  reduction   initiatives   were
  commended, but  this  should  be  expanded  to  include  water  as  an
  important resource.
• The department should begin the employment  process  in  the  previous
  financial year, so that there are no long  time-frames  before  people
  start working.
• In light of the delays in the completion of  EIAs  causing  delays  in
  some construction development  projects,  especially  in  the  Eastern
  Cape, (due to lack of capacity in the Department), a special  briefing
  by the Department should be scheduled in 2010.

Report to be considered.

1. REPORT OF THE PORTFOLIO COMMITTEE ON WATER AND ENVIRONMENTAL AFFAIRS ON THE FINANCIAL STATEMENTS AND ANNUAL REPORT TRANS CALEDON TUNNEL AUTHORITY (TCTA) AND WATER RESEARCH COMMISSION (WRC) FOR 2008/9, DATED 2 FEBRUARY 2010

The Portfolio Committee on Water and Environmental Affairs, having considered the 2008/9 annual report, on 20 October 2009 of Trans Caledon Tunnel Authority (TCTA) and Water Research Commission (WRC) reports as follows:

1. Introduction

The Portfolio Committee on Water and Environmental Affairs received briefings from Trans Caledon Tunnel Authority and Water Research Commission on 20 October 2009. According to the Public Finance Management Act (No.1 of 1999), the Trans Caledon Tunnel Authority (TCTA) is a Schedule 2 public entity, which reports to Parliament through the Minister of Water Affairs. The TCTA is governed by Chapter 6 of the Public Finance Management Act (No. 1 of 1999), and derives its mandate in terms of the National Water Act (No. 36 of 1998). Trans-Caledon Tunnel Authority (TCTA) is a state-owned entity mandated by the Minister of Water Affairs to implement and fund raw bulk water infrastructure.

TCTA implements projects, from the development of economically sustainable funding models; to the design and implementation of environmental management and socio-economic strategies; through to the design of cost- effective and environmentally-sound infrastructure. In the past year, the Trans-Caledon Tunnel Authority has performed remarkably well - reaching significant milestones with two of its flagship projects, the Berg Water Project (BWP) and the Vaal River Eastern Subsystem Augmentation Project (VRESAP).

TCTA has also been mandated to undertake four new projects; funding and implementation of phase two of the Mooi-Mngeni Transfer Scheme (MMTS-2), the Komati Water Scheme Augmentation Project (KWSAP), phase two of the Olifants River Water Resource Development Project (ORWRDP-2) and the Mokolo Crocodile Water Augmentation Project (MCWAP).

The functions of the TCTA are to:

• Provide integrated treasury management and financial advisory
  services, which is provided to the Department of Water Affairs and
  Forestry, and water boards.
• Construct of infrastructure: The two projects that the TCTA is
  responsible for are the implementation and funding of is the Berg
  Water Project (BWP) and the Vaal River Eastern Subsystem Augmentation
  Project (VRESAP). In terms of the National Water Act (No 36 of 1998),
  TCTA fulfills a function of being a body that oversees the
  international treaty between Lesotho and South Africa by managing the
  Lesotho Highlands Project.
• Assist with debt management.

1. Presentation of the overview of the Trans Caledon Tunnel Authority (TCTA) Annual Report and Financial Statements for 2008/09 by Dr S Khoza

The TCTA was established in 1986 by the Department of Water Affairs and Forestry with the purpose of constructing and financing infrastructure of the South African part of the Lesotho Highlands Water Project. In 2000, there were amendments in the notice of establishment, which resulted in TCTA undertaking additional projects other than the Lesotho Highlands Water Project. These included: funding of projects, debt management and construction of infrastructure. The responsibilities of the Department of Water Affairs remained that of revenue management, asset management (relating to operations and maintenance and asset register) and water resource management.

The TCTA is a special purpose vehicle for the financing and construction of national water resources infrastructure. It’s classified as a Schedule 2 entity in terms of the PFMA. As a non-profit making organisation, the nature of the actual costs charged, has resulted in lowering tariffs for raw water. The TCTA operates in a very sound ring-fenced financial environment as required by the National Water Act (No. 36 of 1998) and in full compliance with the Public Finance Management Act (No.1 of 1999) (PFMA).

The Minister of Water and Environmental Affairs mandated TCTA to undertake additional directives. This entailed restructuring of the Umgeni Water balance sheet as well as the funding and implementation of the following projects – Berg Water Project, Vaal River Eastern Subsystem Augmentations, Mooi-Mgeni Transfer Scheme Phase 2, Olifants River Water Project and Komati Water Scheme project to the amount of R30.2 billion. It was awaiting a directive from the Department of Water Affairs to construct Mokolo Crocodile Water Project. The authority’s funding requirements for the next three years was R19.8 billion.

2.1. Overview of organisational performance

With regards to organisational performance, the authority presented its highlights on the performance of its goals and targets for 2008/09 period, which included:

• Strengthening of organisational structure to ensure separation of
  roles between operations, finance and assurance.
• Transforming the organisation to align with government development
  agenda.
• Implementing projects in line with the Minister’s directives.
• Maintaining strong financial systems which would lead to the authority
  receiving a clean unqualified audit.

Achievements

The authority reported the following achievements:

• With regards to job creation, 4 379-person years of jobs were created
  through the Berg project of which 2 460-person years were from local
  communities. On the Vaal River Eastern Augmentation project 1 694 jobs
  were created, of which 1 319 sourced from local people.
• As of 31 March 2009, the authority’s overall BBBEE transformation
  balance scorecard was sitting at 68. 24.
• In March 2009 the Berg Water Project was inaugurated by the then
  President K Montlante.
• The Vaal River Eastern Augmentation project was given to SASOL and
  Eskom.
• Tenders for construction of the Mooi-Mgeni transfer scheme, Olifants
  River Water Project, Komati Water Scheme and Mokolo Crocodile Water
  Project were being finalised.
• Lastly, increases on water sales from R2.1 billion in 2008 to R 2.5
  billion in 2009.

2.2. Overview of Financial Performance

The authority’s financial performance was sound. For the 2008/9 financial year, it received an unqualified audit. Some of the financial highlights presented included:

• The financial statements indicated that the authority was solvent over
  the long-term with no risk of being unable to service or repay its
  debt.
• Full cost recovery was obtained through water sold to consumers.
• Constant tariffs were maintained in line with consumer price index.
• The authority was in a position to repay its debt within the
  reasonable period of 20 years.
• The authority complied fully with PFMA requirements and in accordance
  with international financial reporting standards.
• It also reported a net project .deficit of R77 million that relates to
  a shortfall in covering interest costs.

The balance sheet as at 31 March 2009 was as follows:

2.3 Overview of Operations

The TCTA highlighted that it was currently a highly skilled organisation with registered engineers and accountants and would most likely utilise these skills in support of government’s agenda. However, it faced challenges in that it can only work outside of its mandate of the Lesotho Highlands project on other projects on a directive from the Minister of Water and Environmental Affairs. It continued with professional development of its employees to keep up with latest management practices.

The status of various projects was presented. It mentioned that the Lesotho Highlands Commission was responsible for the oversight of the project whilst TCTA remained responsible for the South African portion of the project and has a right to receive water from the project. To date, Cabinet has approved the completion of Phase 2 of the project subject to the amendment of the treaty between South Africa and Lesotho planned for 2019. In order to generate revenue, water was sold to domestic and industrial consumers in the Vaal River Catchment. In relation to the Berg Water Project, water supply to the City of Cape Town in the Western Cape has increased by 18%. The project has received numerous engineering and environmental awards, for example, it was awarded as the first dam to be constructed and operated according to guidelines issued by United National World Commission on Dams at the cost of R1.6 billion.

VRESAP supplied mainly Sasol and Eskom in Mpumalanga and the tariff system was implemented. The completion of the project was envisaged for 2010 at an estimated cost of R 2.7 billion. In relation to Mooi-Mgeni Transfer Scheme Phase 2, it was reported that the project was still in its design and tender stage. Although the project was only scheduled for completion in 2012, it was necessary to have the next augmentation complete by 2014 at an estimated capital cost of R1.7 billion.

In reporting on the progress on the Olifants River Water Resource Development Project, it was stated that the project was supplying major economic centres and rural areas in Limpopo. However, there was a need to address operational issues on the Olifants –Sand Transfer Scheme to ensure that Polokwane received its allocated water. The first phase of the project is scheduled for completion by 2012 at an estimated capital cost of R8 billion.

On the Komati Water Scheme, the TCTA mentioned that the scheme was intended to supply Duvha and Kusile power station. Due to acid mine drainage, the previous line to Duvha from Witbank could no longer be used. In reporting on the Mokolo Crocodile Water augmentation project, feasibility studies were conducted and a service provider appointed. Phase 1 and Phase 2 were scheduled for 2012 and 2015 respectively. In conclusion, the chairperson assured the committee that the authority was led by a competent board with capacity to raise funds for water projects. It would continue to maintain top credit rating and ensure that sufficient bulk raw water for the country to drive socio economic development and growth.

1. Discussions and responses

The committee thanked the TCTA for the presentation and noted that the annual briefing was a key mechanism to monitor the performance on service delivery as well as financial statements.

The committee, after receiving the presentation, raised the following concerns:

• The committee noted that there was no mention of climate change in the
  TCTA presentation, especially its impact on the future construction of
  dams and water supply
• Clarity was sought on the progress on the tabling of South African
  National Water Resource Infrastructure Agency
• There was a view by Members of Parliament in Lesotho that the Lesotho
  Highlands Project was an apartheid project. There was further concern
  that the Lesotho people were displaced as a result. The committee
  wanted to know if there was any compensation paid to local people that
  were displaced during the construction.
• The question of savings (surplus) came up and a question was asked on
  whether they had established a suspense account.
• There was concern over the empowerment of small and local companies.
  The trend over the years has been that the TCTA utilised the services
  of big companies only for the construction of dams.
• There was a concern over the sustainability of jobs, and training of
  engineers.
• How did the authority disseminate information?

In response to the above, the following information was provided:

• Although the TCTA has not conducted any research about the future
  impact of climate change, it was utilising the department’s planning
  documents on climate change.
• The TCTA commented that the South African National Infrastructure
  Agency Bill was withdrawn from the parliamentary process due to non-
  consultation with Nedlac. However, it envisaged its re- introduction
  in the forthcoming year.
• Concerning savings, the TCTA funding model entailed ring fencing of
  all its projects and therefore there was no suspense account.
• In addressing the displacement of communities because of the Lesotho
  Highlands Project displacement, a compensation package and
  resettlement policy was in place. The World Bank was responsible for
  oversight and an Ombudsman dealt with complaints. To date, Lesotho has
  received R3 million from the royalties and South Africa paid for the
  full transfer of water.
• Transformation and empowerment of small contractors: TCTA had a
  strategy to maximise BEEE and training on enterprise development; and
  has encouraged black small companies especially those owned by women
  to form joint ventures. For the VRESPA project, it reported that 10
  companies were involved in the construction of the dam.
• To sustain the employment created, the authority ran a skills and
  capacity programme and internships.
• The TCTA used local newspapers to disseminate information to the
  people.

REPORT ON THE WATER RESEARCH COMMISSION (WRC) ANNUAL REPORT AND FINANCIAL STATEMENTS FOR 2008/9

1. Introduction

The mandate of the Water Research Commission is derived from the WRC Act of 1971, (last amended in 1996) and performs the following functions:

• Promoting coordination, cooperation and communication in the area of
  water research and development.
• Establishing water research needs and priorities.
• Stimulating and funding water research according to priority.
• Promoting effective transfer of information and technology.
• Enhancing knowledge and capacity building within the water sector.

The vision of the Water Research Commission is:

• To be a globally recognised leader in providing innovative solutions
  for sustainable water management to meet the changing needs of society
  and of the environment.

The mission of the Water Research Commission:

• The WRC is a dynamic hub for water-centred knowledge, innovation and
  intellectual capital.
• To provide leadership for research and development through the support
  of knowledge creation, transfer and application.
• To engage stakeholders and partners in solving water-related problems,
  which are critical to South Africa’s sustainable development and
  economic growth, and are committed to promoting a better quality of
  life for all. The 2008/9 achievements noted by the Water Research Commission incorporate the following:

• Managed its strategic and operational affairs within sound corporate
  governance framework.
• It facilitated local government understanding of the link between
  energy and climate change through research as required by the country
  such as research topics on sanitation and assistance to emerging
  farmers.
• A new board was appointed by the Minister of Water Affairs and
  Forestry.
• The commission has adhered to board charter and code of ethics.
• It complied with the Water Research Act, PFMA and Treasury
  regulations.
• The Audit Committee operated within clearly defined charter and
  oversees both external and internal audit.

1. Overview on organisational performance

The WRC achieved most of its set financial performance targets for 2008/9 financial year including;

• Receiving an unqualified audit report with no major audit findings.
• Maintaining a strong balance sheet with no unfunded liabilities.
• Increasing revenue to a total of R 11.5 million as a result of
  increases of water research levies.
• Employing of African employees increasing to 56 %; and 60 % were
  female.
• Increasing operating expenses by 25% due to increase in research
  funding and human resources related costs.

Challenges

In respect to challenges, a deficit of R3.3 million was reported.,This was due to increased payments on over-due research projects and non-cash year end accounting adjustments as well as the net loss of R1 million due to servicing of Water Research Commission loans.

1. Overview on key strategic areas

The following achievements under the key strategic areas of knowledge generation, capacity development, knowledge dissemination and impact, were presented:

3.1. Knowledge Generation

During 2008/9, the WRC supported the relevant institutions and its partners in the water sector, including the:

• Providing of knowledge for decision making processes.
• Addressing of the issue of climate change.
• Funding of research on development of mitigation strategies to ensure
  future sustainability of the country’s water resources and services.
• Providing of sanitation and hygiene education
• Contributing towards poverty reduction initiatives and wealth
  creation.
• Supporting the food and fibre production activities.
• Allocating of research funds and supporting 294 research projects, of
  which 78% (230 projects) were active and 22 % (64 projects) were
  completed.
• Supporting of 39 solicited projects which translated to about 17% of
  active projects.
• Utilising R115.7 million towards knowledge creation, sharing and
  dissemination.
• Six hundred and thirty three (633) historically disadvantaged students
  were supported.
• In building the research capacity in Africa, for example, the
  following was achieved: NEPAD, Water Research Fund of Southern Africa
  and Inter Academy Programme for Water.

3.2. Capacity Building

The Water Research Commission supported a number of capacity building initiatives such as the:

• Young Scientists Awards.
• Joint venture in developing a framework for Education and Training in
  Water with UNESCO.
• SA Youth Water Prize.
• Development of manuals and training material.

1. Distribution of research project funds among key strategic areas (KSAs) – planned vs. utilised (cash paid out) funds (2008/09 date in brackets)

4.1. Number of projects and project distribution

4.2. Income indicators

• Leveraged income includes all other income with the exception of
  interest received.

4.2.1. Consolidated Annual Financial Statements

• The WRC received an unqualified audit report with no emphasis of
  matter.
• It was in full compliance with the PFMA and International Financial
  Reporting Standards.
• The variance between actual and budgeted income and expenditure is
  within the set performance target of 10%.

4.2.2. Statement of financial position (Balance Sheet)

• The financial position in terms of the balance sheet was stronger in
  the 2008/9 financial period in comparison to 2006/07.
• There was growth in investments amounting to R5.8 million due to
  buoyant equity market and higher interest rates.
• Trade receivables were lower due to levy payment received before year-
  end.
• There were increases in cash and cash equivalents as well as cash held
  at year-end are in respect of commitments to research projects that
  were awarded.
• Increases in trade payables totalled R10.5 million due to accruals for
  research contractors.

4.2.3. Statement of financial performance (Income statement)

• Net surplus of R15.0 million was recorded.
• There was an increase in revenue of R11.2 million, resulting from
  increases in the water research charges, which is the WRC’s main
  source of income (constitutes 89.8% of its total income).
• The WRC leveraged additional income of R13.3 million and its operating
  expenses increased by 5.0%.

4.2.4. Consolidated annual financial statement for ERF 706 (Pty) Ltd

• The WRC owns a building, which is designated as ERF 706.
• Although it obtained an unqualified audit report, it reflected a net
  loss of R7 million due to servicing the loans received from the WRC
  (for building improvements). Its main source of income is derived from
  rent.

1. Non-financial aspects of the work of the WRC

Capacity building

▪ During 2008/09, the WRC supported 664 students, 65% of them are from
  historically disadvantaged communities.
▪ The WRC supported:

     o Excellence in water awards.
     o Young scientists’ awards.
     o Joint venture in developing a framework for education and
       training in water with UNESCO.
     o The women in water, sanitation and forestry awards initiative.
     o The South African youth water prize.
     o Education material focusing on water for school learners (Grades
       R-10).
     o The water information network (WIN-SA). Supporting Africa

▪ The WRC continued to strengthen its role in Africa.  Examples are:
  New Partnership for Africa’s Development (Centres of Excellence for
  water research); water research fund of Southern Africa; streams of
  knowledge – Africa and the inter academy programme for water.
▪ The WRC continues to establish strategic relationships with the
  continent.

Knowledge dissemination

▪ Effective knowledge dissemination using innovative mechanisms and
  tools are an ongoing challenge.
▪ During the year under review, the WRC has:

     o Published 108 research reports.
     o Conducted action research.
     o Published a book titled Our Water our Culture:  a Glimpse into
       South Africa’s Water History.
     o Organised an open day focusing on its support to DWAF (for
       DWAF).
     o Published Water SA and the Water Wheel (special edition of Water
       SA, May 2007, was focused on Nutritional Value and Water Use of
       Indigenous Crops for Improved Livelihoods).
     o Held about 19 technical workshops (for example, climate change,
       citizen voice, and sludge guidelines – 9 provinces).
     o Organised a number of conferences (for example, Integrated Water
       Resource Management 2008, wastewater management conference) and
       participated and exhibited in many local and international
       conferences.

Innovation and knowledge application

▪ The WRC supports the development of new applied knowledge and water-
  related innovations.
▪ The WRC strives to transfer innovative methodologies and practices
  to end-users using different knowledge transfer mechanisms.
▪ The WRC has supported the commercialisation of products (where
  required).
▪ During 2007/08, the WRC undertook a number of impact studies
  addressing the impact of water research funded by the WRC.

1. Discussions and responses

In its oversight of the annual report of the WRC, the committee raised the following issues:

• Through its media management initiatives, there was a lack of
  management in waste water to custodians of water sources.
• Clarity was sought on the level of consultants employed by the WRC.
• There was a question on whether the WRC had any relationships with
  educational institutions in the country.
• The committee wanted to know if the Department of Water Affairs and
  Forestry provided adequate parental support to the WRC.
• Sanitation was problematic in rural municipalities, as they did not
  have funds to build new sewerage plants, and what mechanisms did the
  commission use to assist municipalities?
• What kind of support did the commission offer to previously
  disadvantaged students?
• With regards to water quality and soil degradation, the committee
  wanted to know how often the department uses the WRC research.
• To what extent was WRC involved in acid mine drainage?
• The WRC was asked to comment on water scarcity.

In response to the above, the following was detailed:

• According to the commission, instruments to relay information to the
  end user entailed various information dissemination methods, such as
  print, electronic, radio, etc.
• Partnerships with various institutions of higher learning existed, for
  example, the WRC concluded a memorandum of understanding with various
  tertiary institutions as well as SALGA.
• The WRC acknowledged the use of its research by the sector, not only
  the department.
• The WRC reported that consultants were only providing technical
  advice.
• Departmental assistance to the WRC was based on the mutual
  relationship and consultation to ascertain the needs.
• The issue of sanitation was now under the Department of Human
  Settlements, but the WRC has conducted research on dry sanitation,
  composition of sludge, and urine separation. This is based on the
  practice in Sweden eco-villages.
• There was also a study conducted on the decentralisation of sanitation
  services in the Eastern Cape, which aimed at using different
  approaches such as dual pit latrines.
• About water quality degradation, a substantial amount of research was
  undertaken. DWAF regions were consulted, and steering committees
  formed.
• The WRC noted that there are solutions to acid mine drainage. This
  involves closing down the mines that are not in operation. Research
  showed that a combination of mine acid and sewage was neutralised, it
  could result in good use.
• The commission remarked that there was no water crisis for the near
  future but the problem was water management.  Therefore, water usage
  and rainfall patterns must be correctly monitored and managed.

Recommendations

The Committee recommends that:

• TCTA should submit their BEEE strategy the next time they present
  before the committee.
• An oversight visit could be organised to visit the TCTA projects, as
  well as the WRC offices.
• The WRC should appear before the committee at a later stage to provide
  a briefing on its views on issues of water scarcity.

Report to be considered.

                        MONDAY, 1 MARCH 2010

COMMITTEE REPORTS

National Assembly

CREDA INSERT - insert1-amended – PAGES 272-293

                        TUESDAY, 2 MARCH 2010

ANNOUNCEMENTS

National Assembly and National Council of Provinces

The Speaker and the Chairperson

1. Introduction of Bills

 (1)    The Minister of Social Development


      a) Social Assistance Amendment Bill [B 5 – 2010] (National
         Assembly – proposed sec 76) [Explanatory summary of Bill and
         prior notice of its introduction published in Government
         Gazette No 32986 of 1 March 2010.]


         Introduction and referral to the Portfolio Committee on Social
         Development 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.

National Assembly

The Speaker

1. Referral to Committees of papers tabled

   1) The following papers are referred to the Standing Committee on Appropriations for consideration and report in terms of the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No 9 of 2009):

       a) Appropriation Bill [B3 -2010]
       b) Division of Revenue Bill [B4-2010]
   

   2) The following papers are referred to the Standing Committee on Appropriations in terms of the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No 9 of 2009):

       a) Estimates of National Expenditure [RP3/2010]
       b) Budget Review 2010 [RP4/2010]
       c) Speech of the Minister of Finance on the National Annual
          Budget [RP5/2010]
   

   3) The following papers are referred to the relevant portfolio committees for consideration in terms of their respective mandates and the Money Bills Amendment Procedure and Related Matters Act (No 9 of 2009):

       a) Vote No 3 – Cooperative Governance and Traditional Affairs –
          to the Portfolio Committee on Cooperative Governance and
          Traditional Affairs for consideration and report.
   
       b) Vote No 4 – Home Affairs – to the Portfolio Committee on Home
          Affairs for consideration and report.
   
       c) Vote No 5 – International Relations and Cooperation – to the
          Portfolio Committee on International Relations and Cooperation
          for consideration and report.
   
       d) Vote No 6 – Public Works – to the Portfolio Committee on
          Public Works for consideration and report.
   
       e) Vote No 7 – Women, Children and People with Disabilities – to
          the Portfolio Committee on Women, Children and People with
          Disabilities for consideration and report.
   
       f) Vote No 8 – Government Communication and Information System –
          to the Portfolio Committee on Communications for consideration
          and report.
   
       g) Vote No 9 – National Treasury – to the Standing Committee on
          Finance for consideration and report.
   
       h) Vote No 10 – Public Enterprises – to the Portfolio Committee
          on Public Enterprises for consideration and report.
   
       i) Vote No 11 – Public Service and Administration – to the
          Portfolio Committee on Public Service and Administration for
          consideration and report.
   
       j) Vote No 12 – Statistics South Africa [Minister in The
          Presidency: National Planning Commission] – to the Standing
          Committee on Finance for consideration and report.
   
       k) Vote No 13 – Arts and Culture – to the Portfolio Committee on
          Arts and Culture for consideration and report.
       l) Vote No 14 – Basic Education – to the Portfolio Committee on
          Basic Education for consideration and report.
   
       m) Vote No 15 – Health – to the Portfolio Committee on Health for
          consideration and report.
   
       n) Vote No 16 – Higher Education and Training – to the Portfolio
          Committee on Higher Education and Training for consideration
          and report.
   
       o) Vote No 17 – Labour – to the Portfolio Committee on Labour for
          consideration and report.
   
       p) Vote No 18 – Social Development – to the Portfolio Committee
          on Social Development for consideration and report.
   
       q) Vote No 19 – Sport and Recreation South Africa – to the
          Portfolio Committee on Sport and Recreation for consideration
          and report.
   
       r) Vote No 20 – Correctional Services – to the Portfolio
          Committee on Correctional Services for consideration and
          report.
   
       s) Vote No 21 – Defence and Military Veterans – to the Portfolio
          Committee on Defence and Military Veterans for consideration
          and report.
   
       t) Vote No 22 – Independent Complaints Directorate – to the
          Portfolio Committee on Police for consideration and report.
   
       u) Vote No 23 – Justice and Constitutional Development – to the
          Portfolio Committee on Justice and Constitutional Development
          for consideration and report.
   
       v) Vote No 24 – Police – to the Portfolio Committee on Police for
          consideration and report.
   
       w) Vote No 25 – Agriculture, Forestry and Fisheries – to the
          Portfolio Committee on Agriculture, Forestry and Fisheries for
          consideration and report.
   
       x) Vote No 26 – Communications – to the Portfolio Committee on
          Communications for consideration and report.
   
       y) Vote No 27 – Economic Development – to the Portfolio Committee
          on Economic Development for consideration and report.
   
       z) Vote No 28 – Energy – to the Portfolio Committee on Energy for
          consideration and report.
   
      aa) Vote No 29 – Environmental Affairs – to the Portfolio
          Committee on Environmental Affairs for consideration and
          report.
   
      ab) Vote No 30 – Human Settlements – to the Portfolio Committee on
          Human Settlements for consideration and report.
   
      ac) Vote No 31 – Mineral Resources – to the Portfolio Committee on
          Mining for consideration and report.
   
      ad) Vote No 32 – Rural Development and Land Reform – to the
          Portfolio Committee on Rural Development and Land Reform for
          consideration and report.
   
      ae) Vote No 33 – Science and Technology – to the Portfolio
          Committee on Science and Technology for consideration and
          report.
   
      af) Vote No 34 – Tourism – to the Portfolio Committee on Tourism
          for consideration and report.
   
      ag) Vote No 35 – Trade and Industry – to the Portfolio Committee
          on Trade and Industry for consideration and report.
   
      ah) Vote No 36 – Transport – to the Portfolio Committee on
          Transport for consideration and report.
   
      ai) Vote No 37 – Water Affairs – to the Portfolio Committee on
          Water Affairs for consideration and report.
   

TABLINGS

National Assembly and National Council of Provinces

1. The Minister of Finance

       a) Estimates of National Expenditure 2010 [RP3/2010]
   

COMMITTEE REPORTS

National Assembly

1. REPORT OF THE PORTFOLIO COMMITTEE ON COMMUNICATIONS ON AN OVERSIGHT VISIT TO TELKOM SA, DATED 24 FEBRUARY 2010:

2. INTRODUCTION

The Portfolio Committee on Communications, as part of its oversight mandate took a decision to visit Telkom SA in Melkbosstrand on Wednesday, 21 October 2009. The purpose of the visit was to provide Members an opportunity to understand the nature of the work of this entity and to exercise oversight. The delegation consisted of the following Members: Mr I Vadi (Chairperson), Mr SE Kholwane, Ms MN Magazi, Ms WS Newhoudt-Druchen, Ms SR Tsebe (all from the ANC); Mr NJ Van Der Berg (DA) and Mr KM Zondi (IFP). The secretariat consisted of the following parliamentary staff members: Mr Thembinkosi Ngoma (Committee Secretary) and Mr Luvo Nxelewa (Committee Assistant).

1. MEETING WITH SENIOR MANAGEMENT The Committee met with Telkom senior management, including the Group Chief Executive Officer, Mr Reuben September at the Cape Town International Convention Centre (CTICC). Mr September briefed the Committee on Telkom’s Strategy going forward. The briefing document was not distributed as it contained confidential information.

2. TOURING TELKOMSA - MELKBOSSTRAND

After the discussions at CTICC, the Committee went on a tour of the Telkom SA Plant in Melkbosstrand. Upon arrival, Mr Johan Meyer presented as follows on Submarine Cables and International bandwidth:

Telkom undersea capacity has been significantly upgraded, especially with 2010 FIFA World Cup in mind. There are at least nine undersea telecommunication cables including South Atlantic 3 and South Africa Far East (SAT3 & SAFE) that will connect various parts of Sub-Saharan Africa to the rest of the world by the end of 2011. By the end of 2009, the SAT3 and SAFE upgrades to at least three times their current capacity will be concluded.

South Atlantic 3 and South Africa Far East commenced service in 2002 with a mere 20Giga bites per second of equipped capacity but, by the end of October 2009, both cables will be equipped with capacity that exceeds 300Gb/s.

Telkom and SAT3/WACS/SAFE (S3WS) partner their abilities by using S3WS for

1. The SAT3 provides the shortest route to Europe and SAFE is the shortest link to Asia. The S3WS offers fully diverse solutions out of South Africa. It will have sufficient spare capability to transport all World Cup 2010 requirements out of South Africa. Telkom provided numerous solutions to FIFA and the international broadcasting community during the 2009 Confederations Cup. It is also a proud National Supporter of FIFA World Cup 2010.

2. CONCLUSION

Members were taken on a tour of SAT3 and SAFE. The Committee found the tour informative and productive as it broadened the Members’ knowledge and understanding of the work of Telkom.