National Assembly - 02 November 2010
TUESDAY, 02 NOVEMBER 2010 __
PROCEEDINGS OF THE NATIONAL ASSEMBLY
____
The House met at 14:03.
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 9519.
APPOINTMENT OF MR S P MASHATILE
(Announcement)
The SPEAKER: Hon members, I wish to announce that the vacancy which occurred owing to the resignation of Mr M Gungubele has been filled, with effect from today, 02 November 2010, by the nomination of Mr S P Mashatile. The member has made and subscribed the oath in my office. [Applause.] You are welcomed, hon member.
NOTICES OF MOTION
Mr M S F DE FREITAS: Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DA the following motion:
That the House debates the high number of minibus taxi-related accidents on our roads and the necessary steps that should be taken to curb this problem.
Thank you.
Ms N P KHUNOU: Speaker, I hereby give notice that on the next sitting day of the House I shall move:
That the House debates how to improve the means test for beneficiaries of government grants.
Thank you.
Mr L RAMATLAKANE: Speaker, on behalf of Cope I give notice that I shall move on the next sitting day of the House:
That the House debates South Africa being a signatory to the United Nations Convention against Torture of 1998, to determine when South Africa will comply to criminalise torture in our South African law.
Thank you.
Mr M MNQASELA: Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DA:
That the House debates the effects that the theft of identity documents and passports has on the economy, security and the National Population Register of the country.
Thank you.
Mr S J NJIKELANA: Speaker, I hereby give notice that on the next sitting day of the House I shall move:
That the House debates Parliament’s roles in and contributions to the Pan- African Parliament.
I thank you.
Mr P D MBHELE: Speaker, on behalf of Cope I give notice that on the next sitting day of the House I shall move:
That the House debates the responsibility of air carriers to ensure that their employees are adequately trained to ensure the safety of passengers in emergency situations. I thank you.
Mr J B SIBANYONI: Speaker, I hereby give notice that on the next sitting day of the House I shall move:
That the House debates the introduction of community service for law graduates to ensure that basic legal services are afforded to poorest of the poor and ensure that new graduates gather the requisite experience.
I thank you.
Mr G R MORGAN: Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DA:
That the House debates the R113 billion infrastructure backlog for the provision of water infrastructure in South Africa, and solutions to ensure that all South Africans have access to potable water sooner rather than later.
I thank you.
Mrs J D KILIAN: Speaker, on behalf of Cope I hereby give notice that I will move on the next sitting day of the House:
That the House debates the demeaning of women to satisfy the appetites of the rich ANC and ANC Youth League members feasting on sushi served on their naked bodies.
Thank you.
Mr D A KGANARE: Speaker, I give notice on behalf of Cope that I shall move on the next sitting day of the House:
That the House debates the benefits or disadvantages of using private security to guard state institutions, especially police stations and state hospitals.
Thank you.
Ms A MDA: Speaker, I hereby give notice on behalf of Cope that on the next sitting day of the House I shall move:
That the House debates the cadre development in the National Youth Development Agency, which does not represent and serve the interests of South African youth.
I thank you.
ANNOUNCEMENT OF SPRINGBOK RUGBY SQUAD
(Draft Resolution)
The CHIEF WHIP OF THE MAJORITY PARTY: Hon Speaker, I move without notice:
That the House —
1) notes the announcement last Saturday of the Springbok rugby squad
to tour Europe;
2) congratulates the six new caps in the squad who will be
representing our country for the first time;
3) believes that the team will prove once again why they are the
number one team in the world; and
4) wishes Peter de Villiers, the team and the management good luck
with maintaining our country’s dominance of world rugby.
Agreed to.
Mr M J ELLIS: Certainly, it is not an objection, but I have great pleasure in proposing another motion without notice.
The SPEAKER: Hon member, please take your seat. [Laughter.]
Mr M J ELLIS: Speaker, it is just that the Chief Whip of the ANC made me so excited when he talked about rugby, and that as a very proud person from KwaZulu-Natal I have great pleasure in proposing this motion without notice to the House.
CONGRATULATIONS TO SHARKS ON WINNING CURRIE CUP COMPETITION
(Draft Resolution)
Mr M J ELLIS: Hon Speaker, I move without notice:
That the House —
1) notes that the Sharks won the Currie Cup competition by beating a
spirited Western Province side 30-10 in Durban on Saturday, 29
October 2010;
2) further notes that the Currie Cup, which has been contested since
1889, is South Africa’s premier domestic rugby competition and is
widely considered as the ultimate prize to be won by a provincial
union;
3) congratulates the Sharks players and management on their victory;
and
4) further congratulates Western Province for reaching the final and
being worthy opponents.
Agreed to.
EFFORTS TO COMBAT RHINO POACHING IN SOUTH AFRICA
(Draft Resolution)
Mr N J J KOORNHOF: Mr Speaker, I move without notice:
That the House —
1) notes the increasing number of rhinos being poached, on a daily
basis, for their horns;
2) acknowledges the relentless efforts of the South African Police
Service and related role-players in protecting wildlife for future
generations;
3) recognises the success of the South African Police Service in
exposing and prosecuting some of the syndicates operating within
the country’s borders; and
4) wishes them all the best in combating the destruction of the
wildlife of South Africa.
Agreed to.
FREEDOM OF LONDON AWARD BESTOWED ON BAFANA BAFANA CAPTAIN, AARON “MBAZO” MOKOENA
(Draft Resolution)
Mr M A NHANHA: Hon Speaker, I move without notice:
That the House —
(1) notes that Bafana Bafana captain, Aaron ``Mbazo’’ Mokoena, will have the Freedom of London Award bestowed on him by the Lord Mayor Boris Johnson on 10 November 2010 for his services to football and his charitable foundation;
(2) acknowledges the inspiration that Aaron Mokoena has been to many aspiring young football players both in South Africa and abroad;
(3) further acknowledges his active participation in charity through the Aaron Mokoena Foundation, which uses football to engage children in education and health programmes;
(4) recognises Aaron Mokoena’s career achievements as the youngest- ever South African to play for the national team, who has also achieved the accolade of being the most capped captain for the team and achieved his 100th cap during the Fifa World Cup on home soil and also is the captain of Portsmouth FC;
5) further recognises that he was the youngest player ever to represent
South Africa in an international event, having played in 1999 for
the 2000 Olympic qualifiers; and
6) congratulates Mr Mokoena for his great achievement and his admirable
commitment to football and society.
Agreed to.
CONGRATULATIONS TO BANYANA BANYANA
(Draft Resolution)
The CHIEF WHIP OF THE MAJORITY PARTY: Speaker, I move without notice:
That the House —
1) notes that the Confederation of African Football (CAF) African
Women’s Championship kicked off on Sunday, 31 October 2010;
2) congratulates Banyana Banyana on winning their first game in this
competition against Tanzania;
3) wishes Banyana Banyana well for the rest of this tournament; and
4) urges South Africa to rally behind Banyana Banyana and give them the
support they need to win this tournament.
Agreed to.
PRAISE FOR CABINET RESHUFFLE BY PRESIDENT ZUMA
(Member’s Statement)
Mr S L TSENOLI (ANC): Speaker, the ANC welcomes the Cabinet reshuffle by President Jacob Zuma. The intervention follows continuous monitoring and evaluation of the performance of all ANC cadres deployed in Cabinet.
It was guided by the need to speed up effective service delivery in education and health, crime fighting, rural development and land reform and job creation, as mandated by our 2009 election manifesto.
The ANC further wishes to congratulate the newly appointed Ministers and their deputies and pays tribute to outgoing Ministers and deputies who have served the ANC-led government, confident that they will continue to make meaningful contributions in areas where they will find themselves or be redeployed to. I thank you. [Applause.]
CHARGE LAID AGAINST TONY YENGENI
(Member’s Statement)
Mr T D HARRIS (DA): Speaker, yesterday I laid a charge against the head of the ANC’s political school and former Chief Whip of this House, Tony Yengeni, who has allegedly breached the Companies Act.
Section 218 of the Act states that any person who has been convicted of corruption, shall be disqualified from acting as a director of a company, but Companies and Intellectual Properties Registration Office, Cipro, records indicate that, despite his corruption conviction, Mr Yengeni is a director of six companies.
One of these companies has mining rights for 200 sites in the North West province. Mr Yengeni is already a convicted fraudster and now it appears he has fallen foul of the law again. We await the results of the SAPS inquiry into Mr Yengeni’s affairs with interest.
Yesterday the Daily Dispatch wrote, and I quote:
Asked about his lavish lifestyle and ownership of three luxury cars, among them a 2009 Maserati Gran Turismo, costing about R1,75 million, the Gucci-socialist said: “How many cars I drive is a private matter.”
The MINISTER OF DEFENCE AND MILITARY VETERANS: Speaker, on a point of order: I am under the impression that according to the Rules of Parliament, members’ statements should have a bearing on Parliament, to be answered by members of the executive. [Interjections.]
No, it isn’t. Could you please … [Interjections.] You are talking rubbish. Could you please advise me on this because if that is the case, I do not understand what bearing that question has on us.
Mr M J ELLIS: Speaker, on a point of order: There is nothing in the Rules whatsoever that suggests anything like the hon Sisulu is saying. You can make a statement on any issue that you wish to. That is your right as a Member of Parliament.
The SPEAKER: Continue, hon member.
The MINISTER OF TOURISM: On a point of order: What is in the Rules of the House is that no attack can be launched on the integrity of any other member of this House without a substantive motion. That is in the Rules of this House.
Mr M J ELLIS: Speaker, on a point of order: I suspect the hon Van Schalkwyk should listen to what is being said because I don’t think any member of this House was being attacked by the hon Harris. [Interjections.]
The SPEAKER: Order, hon members! Conclude, hon member.
Mr T D HARRIS (DA): Speaker, Mr Yengeni was not able to become a member of this House because of the jail term he served. He allegedly breached an Act of this House. A cloud of corruption and criminality hangs over his excessive wealth, but he continues to flash it around with no regard for the persistent poverty that is the lived reality of most South Africans.
If the ANC continues to tolerate and support leaders like Mr Yengeni, then voters will make their disapproval known at the ballot box. [Applause.]
BLOATED CABINET TO PRECIPITATE ENORMOUS CRISIS
(Member’s Statement)
Mr M G P LEKOTA (Cope): Speaker, last week the Minister of Finance encouraged the executive to focus on employment on the frontline where services are delivered to the communities.
With the changes that have now been made, we have one of the biggest governments in the world, relative to the size of the population and the economy. The executive now consists of 68 members, including the President. The accelerated use of state resources in accommodating this bloated Cabinet is going to precipitate an enormous crisis.
The new executive, with four new deputy posts created, will push the cost of running Cabinet, already at R1 billion, even higher. South Africa has just emerged from being sapped by a public sector strike about state employee salaries. The government said then that the envelope was empty.
Now suddenly, this government that pleaded poverty then, can splurge as it is doing now. The government is spending an ever-increasing portion of the national income on itself. This is neither desirable nor sustainable.
To set things in perspective, the Cabinet of the United States includes the President, Vice-President and 15 Cabinet Ministers. Nigeria, with more than triple South Africa’s population, has 38 Cabinet Ministers. I thank you. [Time expired.] [Applause.]
ANC PAYS TRIBUTE TO ANC YOUTH LEAGUE
(Member’s Statement)
Ms N R MABEDLA (ANC): Speaker, the ANC pays tribute to the ANC Youth League on its 66 years of existence in the struggle for a democratic, nonracial, nonsexist and prosperous South Africa.
The ANC applauds the role played by young people under the leadership of the youth league which has always been at the forefront of the struggle for a better life, particularly for the poor majority. Again, the ANC encourages the youth to be … [Interjections.]
Mr M J ELLIS: Mr Speaker!
The SPEAKER: Hon member, is that a point of order? What point are you rising on?
Mr M J ELLIS: Mr Speaker, I think it might be a point of order. [Laughter.]
The SPEAKER: What point are you rising on?
Mr M J ELLIS: I just wanted to say that although the hon member is not talking about anything to do with Parliament, we are quite happy to let it go. [Laughter.]
The SPEAKER: Hon member, take your seat. [Laughter.] Hon member, you may continue.
Ms N R MABEDLA (ANC): Again, the ANC is encouraging the youth to be at the forefront of the current struggles, in order to change the quality of life of our people, including through the attainment of economic liberation for the poor.
Government programmes should be geared around education, skills development and job creation for our youth. The ANC congratulates the ANC Youth League on the milestone of celebrating 66 years in 2010 and believes that the league has the critical responsibility of taking forward the wonderful work of the founding fathers and mothers. I thank you. [Applause.]
EMPTY PROMISES MADE TO TEACHERS BY THE RULING PARTY
(Member’s Statement)
Mr A M MPONTSHANE (IFP): Speaker, during the state of the nation address earlier this year, President Zuma promised to assist teachers nationwide to do their jobs more efficiently by equipping them with computers or laptops.
Whilst the IFP appreciates that promises to the electorate are part of any political party’s campaign, our role as the opposition is to ensure that promises made by the ruling party are indeed acted on and implemented.
The IFP would, therefore, like to bring to the attention of the House that nothing came of that promise. As the year draws to an end, many teachers have been told that the department will assist them with buying computers, but only through a subsidy. This leaves teachers with the extra burden of having to pay for the equipment themselves. That is a financial burden they would not be able to carry with their meagre salaries.
The IFP believes that this is yet another classic example of the ruling party’s empty promises. Our teachers are already struggling to cope with an almost dysfunctional education system on a daily basis. I thank you. [Time expired.]
CABINET RESHUFFLE
(Member’s Statement)
Mr P J GROENEWALD (FF Plus): Speaker, my statement does have something to do with Parliament!
Die VF Plus verwelkom die kabinetskommeling. Die boodskap wat die skommeling aan kabinetslede stuur, is dat hulle moet presteer anders word hulle vervang.
Die algemene indruk is dat die rede vir die skommeling nie net die prestasie van Ministers was nie, maar dat taktiese ANC-oorwegings die hoofrol gespeel het. Die aanstelling van twee voormalige jeugleiers, Fikile Mbalula en Malusi Gigaba, as Ministers, is strategies om die ANC jeug te akkommodeer voor die munisipale verkiesings volgende jaar, waar die jeug ’n belangrike stem sal verteenwoordig.
Goeie presteerders soos Barbara Hogan en Geoff Doidge se afdanking kan nie weens swak prestasie wees nie, maar was waarskynlik eerder om plek te maak vir ander. Siphiwe Nyanda kon nie die mas opkom nie, en sy afdanking was daarom nodig en word verwelkom.
Die skommeling het wel nie een van die politieke faksies binne die ANC gebaat nie, aangesien mnr Trevor Manuel en die ekonomiese groepering nie geskommel is nie.
Of die kabinetskommeling tot beter dienslewering sal lei, sal nog eers bewys moet word. Die VF Plus wil egter maan dat die oorsigrol van die Parlement nie deur hierdie kabinetskommeling benadeel moet word nie. Die ANC moet deeglik oorweging skenk aan geskikte kandidate wat die poste van portefeuljekomiteevoorsitters kan vul, eerder as om oorhaastig aanstellings te maak wat op die lange duur die werk van die Parlement sal benadeel. Dankie. (Translation of Afrikaans paragraphs follows.)
[The FF Plus welcomes the reshuffling of Cabinet. The message the reshuffling sends to Cabinet members is that they must perform or else they will be replaced.
The general impression is that the reason for the reshuffling was not only because of Ministers’ performance, but that tactical ANC considerations played the main role. The appointment of two former youth leaders, Fikile Mbalula and Malusi Gigaba, as Ministers, is strategic in order to accommodate the ANC youth before the municipal elections next year, where the youth will represent an important vote.
The dismissal of Ministers who have performed well, like Barbara Hogan and Geoff Doidge, cannot be due to poor performance, but was probably rather to make way for others. Siphiwe Nyanda could not cope, and his dismissal was therefore necessary and is welcomed.
The reshuffling did, however, not favour any of the political factions within the ANC, since Mr Trevor Manuel and the economic grouping was not reshuffled.
Whether the reshuffling of Cabinet will lead to better service delivery, still needs to be proven. The FF Plus would, however, like to caution that Parliament’s oversight role should not be impaired by this reshuffling of Cabinet. The ANC should seriously consider suitable candidates who can fill the positions of portfolio committee chairpersons, rather than make hasty appointments that could, in the long run, impair the work of Parliament. Thank you.]
DESTRUCTION OF STATE PROPERTY BY OFFENDERS
(Member’s Statement)
Ms M N PHALISO (ANC): Speaker, at the beginning of this calendar year, the Department of Correctional Services unveiled a state-of-the-art prison in Kimberley.
The Kimberley Correctional Centre boasts some of the most up-to-date facilities so that the successful rehabilitation of inmates is made possible. This is in line with the primary objective of the White Paper on Corrections.
Having said this, we are very concerned by the report of yet another incident of destruction of state property by six offenders who are accused of setting mattresses on fire in one of the cells this past Saturday.
It is unacceptable that this brand-new facility has witnessed two incidents of destruction of property by ill-disciplined prisoners, possibly with the collusion of prison officials.
We urge the Minister and the department to get to the bottom of the causes of this latest incident, with harsh corrective steps to be meted out to all individuals found guilty of negligent and/or criminal behaviour.
This should include the dismissal of the departmental officials involved and the transfer of the guilty inmates to maximum security facilities. I thank you.
BRUTAL WITCHCRAFT MURDERS
(Member’s Statement)
Mr L M MPHAHLELE (PAC): Speaker, the PAC is gravely concerned about the barbaric killing of innocent people who are accused of witchcraft. Most of the victims are rural, poverty-stricken old women. In August this year, 85-year-old Babusiba and her four grandchildren, the youngest aged five years, were brutally hacked to death in the Transkei.
Our society is guilty of betraying the victims of witch-hunts. In a killing fuelled by racism, society rightly condemns both the act of killing and the ideology of racism. However, when the so-called witches are butchered, society slams the killing only.
We never go far enough and denounce the antiquated ideology of witchcraft, thus implicitly arming the criminals — at least with the ammunition of superstition.
The rainy season is upon us. A lot of rural old women are going to be killed for using lightning to settle scores with their enemies.
Here are the striking facts about lightning: Within millionths of a second the temperature of lightning may reach almost five times that of the sun’s surface. It is sheer madness to accuse an old granny of generating such intense heat.
Witch-hunts are a form of self-hate. An indigenous African seen among a troop of baboons is labelled a witch. A white person in a similar situation is hailed as a researcher. Africans always think badly of themselves. Poverty eradication and mass education can go a long way towards sparing the lives of our elderly people and their grandchildren. [Time expired.]
POOR SERVICE DELIVERY BY MADIBENG MUNICIPALITY, NORTH WEST PROVINCE
(Member’s Statement)
Mr M W RABOTAPI (DA): Speaker, service delivery in the Madibeng Municipality in the North West province has reached an all-time low.
Last week, DA public representatives visited the water purification plant after numerous complaints about water quality. There was green foam and blue algae on the water. The DA insisted that the water be tested and it was found that the water from this plant was not fit for human consumption.
The previous Minister of Water and Environmental Affairs, who was fired by the President on Sunday, also visited last week. She had the audacity to say that her department would provide the residents with a Christmas present by helping to fix the plant within three months. The provision of clean water is a right, not a privilege. It is not a Christmas present! This situation should never have happened in the first place, but it did because of corrupt and incompetent ANC municipal officials.
HON MEMBERS: Hear, hear! Mr M W RABOTAPI (DA): Madibeng is a perfect example of a municipality where endemic corruption affects service delivery to the poor. There is no money for maintaining water purification plants because of fraud. The Special Investigating Unit has found that 341 Madibeng officials have interests in eight municipal contracts valued at R21,7 million. [Interjections.]
The previous municipal manager has been arrested. Essential after-hours services have ground to a halt as the overtime budget has been overspent by R3 million. Corruption makes poor people poorer and in this ANC-run municipality, this is exactly what is happening. [Time expired.] [Applause.]
HON MEMBERS: Hear, hear!
DA MEMBER ALLEGEDLY GUILTY OF FRAUD AND CRIME
(Member’s Statement)
Mr J P GELDERBLOM (ANC): Speaker, the DA is slow to deal with its errant representatives. One of their members is currently facing rape charges in court and is still a public representative. [Applause.]
The latest is that the very same member was allegedly part of an illegal house sale as a Cape councillor under then Mayor Helen Zille. It is averred he got involved in a house grab and displaced an elderly beneficiary.
The RDP house was then sold to a third party. The member concerned went as far as certifying this with his councillor’s stamp. The new owner of the house declared under oath that the member, when he was still a councillor, sold the home to her for R40 000 and has received … [Interjections.]
Mr M J ELLIS: Mr Speaker, on a point of order: The issue has already been raised this afternoon by the hon Van Schalkwyk about whether you can cast aspersions about a sitting member of the House. Now the hon member from the ANC speaking at the present time is doing just that, sir, and I urge that you rule this particular statement out of order.
You cannot cast aspersions on a sitting member of this House without a substantive motion.
The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Speaker, on a point of order: I tried to listen to the member carefully, and I did not hear him refer to the name of a member who sits in this House. So, I really do not know what Mr Mike Ellis’s point of order is.
Mr M J ELLIS: Mr Speaker, on a point of order: With all due respect to my colleague from the ANC Whippery, that is nonsense, sir. It is quite clear that the hon member making the statement has referred to a member of this House, and that, sir, is against the Rules of this House.
The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Can he perhaps name that member for us? [Interjections.]
The SPEAKER: Order! Hon members, I will look at Hansard and come back with a ruling on this matter. [Interjections.] Hon member, I said I would come back with a ruling on the matter.
The MINISTER OF SCIENCE AND TECHNOLOGY: Speaker, on a point of order: I seek your assistance in my rising to address you.
Speaker, if I could direct you to Rule 63 of this House in terms of conduct of debate, it indicates that no member shall use offensive or unbecoming language. We appear before South Africa and the world as we address matters in this House.
Is it becoming for us to throw “rubbish”, “nonsense” at each other? And I speak to all members of the House. [Interjections.]
The SPEAKER: Order, hon members!
The MINISTER OF SCIENCE AND TECHNOLOGY: I speak of all members of the House in all parties represented in the House, as to whether such references by any of us reflect “becoming language”.
The SPEAKER: Thank you, hon member. This, sadly, is not becoming. It is unbecoming language. I would like to make an appeal here. Please let us respect the Rules of the House. That includes the language.
The MINISTER OF DEFENCE AND MILITARY VETERANS: Speaker, on a point of order: I rise on this matter, and I would like to withdraw my remarks in response to those that came from the member and which he continues to make. I would like to withdraw mine. [Applause.]
The SPEAKER: Thank you, hon member.
Hon member, do you wish to withdraw that unbecoming language of “rubbish”?
Mr M J ELLIS: Mr Speaker, I think that as I have stood here over the years, I have heard many unbecoming things from the ANC. Taking into account the word that I might have said, namely “rubbish”, I actually do not believe that I have any reason to withdraw anything at all, sir. So no, I won’t.
The SPEAKER: Thank you. I will again look at Hansard and I will come back to that point with a ruling. CABINET RESHUFFLE WELCOMED
(Member’s Statement)
Mr B W DHLAMINI (IFP): Speaker, the IFP welcomes the President’s recent Cabinet reshuffle as a sign of President Zuma’s commitment to efficiency and accountability within government. Nonperforming departments must be corrected in order to improve service delivery to the people of our country.
All too often Ministers assume that they are beyond reproach and bigger than the structures that have placed them in power. This leads to a mind- set of unaccountability and inefficiency, which we have already experienced here in Parliament during this year. An example of this is the notable absence of a few Ministers from various scheduled parliamentary portfolio committees.
We trust that the reshuffling will bring in an accountable executive that is committed to both service and the delivery thereof. In this event the IFP will wish all new Ministers and Deputy Ministers everything of the best with their portfolios as they serve the citizens of South Africa. I thank you. [Applause.]
CORRUPTION AND ABUSE OF POWER IN GOVERNMENT AND ITS INSTITUTIONS
(Member’s Statement) Mr M E GEORGE (Cope): Speaker, this Parliament owes South Africa an explanation. How did two former SABC managers, Snuki Zikalala and Mvuso Mbebe rack up R11 million in excessive petrol card expenses?
Is this government implementing the Public Finance Management Act, PFMA? Since 1999 not one person has been convicted under this Act. Isn’t this shocking? In these circumstances the serial abuse of credit and petrol cards goes on without any consequence for the offenders.
People in government are the law. They don’t fear the law. In Gauteng’s Kungwini municipality a staggering R147 million has simply been made to disappear. There is so much that this government would really like to hide. The media exposed nepotism in the Police Service. It also exposed Gen Cele leasing a building without following the law. All these examples create such bad publicity. It would be so convenient to hide such information!
There is clearly one law for the politically connected in South Africa; the other is for the rest of us. Another case in point is Tony Yengeni’s many transgressions, with a reluctance on the part of state agencies to do anything about them.
There are now so many untouchables in South Africa, it is no wonder that South Africa is a haven for the mafia! [Interjections.]
The SPEAKER: Order, order!
Mr M E GEORGE (Cope): Some of the world’s most wanted lawbreakers live freely in South Africa. South Africa is, indeed, a predatory state and the political hyenas roam the corridors of Parliament. [Time expired.] [Applause.]
OPEN BUDGET INDEX RANKS SOUTH AFRICA FIRST
(Member’s Statement)
Mr M S MOTIMELE (ANC): Speaker, South Africa has been awarded first place in the 2010 Open Budget Index, OBI, which is compiled by the Washington- based International Budget Partnership.
This internationally recognised index analysed 94 countries worldwide this year. South Africa came out on top, beating Britain out of the top place into third, and placing New Zealand second. South Africa scored 92 out of a possible 100 points.
The OBI is an independent, comparative measure of budget transparency and accountability around the world. It was started in 2006 by the partnership and is produced every two years. The latest index found only 7 of the 94 countries assessed had released extensive budget information. Up to 40 countries had released no meaningful budget information at all. This makes it difficult for the public and oversight institutions in these countries to hold government accountable or to have meaningful input into decisions on how to use public resources.
South Africa, New Zealand, the United Kingdom, France, Norway, Sweden and the United States scored in the top tier of transparency. This is yet another confirmation that the country has, for the past 16 years of constitutional democratic rule, been in capable hands under the ANC-led government. I thank you. [Applause.]
BLUE FLAG BEACHES
(Member’s Statement)
Mr G R KRUMBOCK (DA): Speaker, the launching of the Blue Flag beaches for 2010 and 2011 by the Minister of Tourism on 28 October is a clear indication of the successes and failures in different local government administrations.
A total of 27 beaches countrywide received Blue Flag status, which is only awarded to beaches that have achieved the highest quality in water, facilities, safety and environmental management.
Fifteen of the 27 beaches awarded Blue Flag status are situated in the Western Cape, of which six are in Cape Town. This success will enhance the Western Cape’s international reputation as a world-class tourist destination, which was already growing due to positive tourist experiences during the 2010 Fifa World Cup.
By contrast, the city of Durban is needlessly missing out on potential tourist growth because the city manager, Dr Michael Sutcliffe, continues to deny the benefits of participation. Blue Flag beaches draw tourists, and if Dr Sutcliffe believes the standards at Durban’s beaches are higher than required by the Blue Flag scheme, why is Durban not allowed to participate?
It beggars belief that, despite a DA council motion — a decree supported by all parties to rejoin the Blue Flag scheme — little has been done to make this a reality.
The DA urges the Minister of Tourism to persuade all coastal municipalities to address the slowly deteriorating sewerage management systems along our coastline, and encourage all municipalities to push for Blue Flag status. This will ensure that the goodwill generated by the World Cup does not slip through our fingers like so many grains of sand on the flagless Durban beach. Thank you. [Applause.]
EARLY CHILDHOOD DEVELOPMENT
(Member’s Statement)
Mr Z S MAKHUBELE (ANC): Speaker, the ANC firmly believes that every child has a right to a good start in life, and that early childhood development is critical in the development cycle of human beings. It also believes in giving children a headstart in numeracy and literacy.
The ANC welcomes the North West government’s initiative of putting aside R15 million for makeovers of early childhood development centres in rural areas. This initiative is in line with and strengthens the ANC government’s resolve and commitment to strengthen support for crèches and preschools in rural areas and urban centres. Thank you. [Applause.]
EMPTY PROMISES MADE TO TEACHERS BY THE RULING PARTY
EARLY CHILDHOOD DEVELOPMENT
(Minister’s Response)
The DEPUTY MINISTER OF BASIC EDUCATION: Hon Speaker, I would like to respond to two of the statements, one in relation to early childhood development, and the other in relation to the laptops for teachers.
Had the hon member from the IFP paid particular attention to the detail of the allocation made by the state, he would have known that all the unions had decided that the SA Council for Educators had been appointed by them to negotiate with the service providers for the provision of computers. This is a decision that was taken independently by the unions.
The Department of Education had prescribed in regulation the nature of the expectations with regard to the ICT, its capacity and software. This was made public, and now what is required is, basically, for the unions and the SA Council for Educators to conclude the business.
There has been no delay whatsoever in terms of the funding of this particular and important item. In fact, if the unions had been a little more serious about what they ought to have done, then there would have been delivery. The delivery is delayed only by them.
With regard to early childhood development, the hon member is, indeed, correct: Early childhood development is central to success in education.
Social scientists have indicated that the period of gestation is already an indication of the cognitive and other developments of a child. The first two years of a child’s life are an indication of 70% of the cognitive ability that the child will acquire over a lifetime. Therefore this government has emphasised the importance of early childhood development.
With regard to Grade R classes, we have moved from 400 000 to beyond 650 000 in a period of two years, so these centres are integrated into our schools. With regard to preschool, or pre-Grade R, the Department of Education is working extremely closely with the Departments of Social Development and Health to ensure that we expand and increase the number of early childhood development centres.
We can also celebrate the fact that we now have a curriculum and uniform training schedules for practitioners, and that resources are provided to every child in a Grade R class in the country. Thank you very much.
BLOATED CABINET TO PRECIPITATE ENORMOUS CRISIS
CORRUPTION AND ABUSE OF POWER IN GOVERNMENT AND ITS INSTITUTIONS
(Minister’s Response)
The MINISTER IN THE PRESIDENCY — PERFORMANCE MONITORING, EVALUATION, AND ADMINISTRATION: Speaker, I will respond to two points which have been raised. I will start with the one which was raised by the hon Lekota.
I think it is more important for hon Lekota to become concerned about the number of supporters he has rather than what the number of executive members is. [Interjections.] [Applause.] Nonetheless, hon Lekota should know that the issue he is raising is not a Cabinet one. It is an issue for the President as the head of state.
He cannot ask that question of any member, or make a statement expecting responses from members of Cabinet who are not responsible for that. I think that is a very simple thing which he should know.
With regard to the hon George, I am not sure whether he is authorised to speak on behalf of Cope, but nonetheless, we will try to respond to what he is saying as a member of the House. [Laughter.] However, it is not clear whether he is speaking on behalf of Cope.
On the SABC issue, I think he should have provided the answer rather than posed the question, because he was a member of the executive at the time those things happened. So we expect an answer from you, sir! [Interjections.]
With regard to the issue of criminals in the country, I would urge you to go straight to the police station as we leave here. Inform them as to who the criminals are, so the police can look for them. We cannot look for something we do not know about. Because you know them, it is better for you to go and inform the police. Thank you very much. [Applause.]
RECENT DEVELOPMENTS IN COMPETITION MATTERS
(Statement)
The MINISTER OF ECONOMIC DEVELOPMENT: Hon Speaker and hon members, in the New Growth Path adopted by Cabinet a week ago, government drew attention to the high levels of economic concentration and price collusion that characterise parts of the South African economy.
We committed to ensure greater competition as a means to draw new entrants to the market and to grow employment in order to achieve the target of five million new jobs within the next 10 years.
Over the past number of months, and in support of the new framework that was emerging, the competition authorities have intensified their focus on anticompetitive action in the local market. An important aspect of this is the investigation into the food sector. Currently, the Competition Commission is investigating several cases along the food value chain ranging from inputs such as fertiliser and tin plate used for tinned foods; to products such as vegetable oils and fats, wheat and maize, poultry and fish; and to storage and retail, including silos and supermarkets. In particular, the commission has investigated five areas of relevance to today’s statement.
The first case involves an investigation of the milling industry; that includes wheat flour and maize meal. During the probe into bread price- fixing and the market allocation cartel in 2006, the commission received information that the firms involved in the bread cartel were also involved in price-fixing and market allocation for flour.
Two of the millers confessed their involvement and provided further evidence of a cartel and were granted conditional immunity.
Investigations into the flour market revealed that the firms involved agreed to fix prices of milled wheat products; to create uniform price lists for wholesale, retail and general trade customers; to allocate customers among themselves; and to agree on the timing of the price increases and their implementation.
Similarly, the agreements were used to secure co-ordination at both national and regional levels. The agreements were reached through meetings and telephone discussions. The cases of price-fixing were referred to the Competition Tribunal for adjudication by the commission in 2009.
In the second instance, the commission investigated and referred a case in maize milling. The maize milling case was separated from the flour one because the two cartels did not involve exactly the same members. Although the main milling companies were involved in both cartels, the maize milling cartel implicates a larger number of firms. The investigation revealed that from 1999 to at least 2007, competitors were involved in conduct that contravened the Competition Act by fixing prices of white maize products; by creating uniform lists for wholesale, retail and general trade customers; and by agreeing to the timing of the price increases.
The third case centres around information exchanged in the wheat flour and bread market. The commission initiated an investigation against current and former members of the National Chamber of Milling and South African Chamber of Baking. The complaint was initiated after the commission observed that, although the prohibited practices that I cited earlier had apparently ceased, the market had not become more competitive.
The commission’s investigation revealed that firms in the industry submitted commercially sensitive information to the two chambers. In turn, the firms received detailed, disaggregated information from the chambers. This information exchange appears to have enabled members to sustain collusive outcomes without the necessity of meeting. The detailed information exchanges enabled the firms to align their behaviour in the market and thus reduce competition.
A similar case was initiated in the maize industry when it was found that competition outcomes were not observable despite the breaking up of the cartel. This case also centres around the exchange of information between the National Chamber of Milling and its current and former members. These practices have now stopped after the intervention by the commission.
The fourth case involved exclusionary conduct against independent bakeries. The commission received a complaint in December 2008 from an independent bakery in Mossel Bay alleging that Pioneer Foods, through its Sasko division, had threatened it with a price war if it did not adhere to the fixed price. One of the means employed to exclude independent bakeries was the introduction of Sasko’s so-called “fighting brands” to undermine independent competitors who had entered such areas.
The commission found that Pioneer Foods is dominant in the relevant markets and its aggressive behaviour prevented competitors from entering into or expanding in the markets. The object of the price war was to force these independent bakeries to charge prices similar to Pioneer Foods, at above competitive levels or, failing which, to force them out of the market. This is in contravention of section 8 of the Competition Act.
Finally, the competition authorities investigated four cases in the poultry market. In April 2009, the commission initiated an investigation into anticompetitive conduct in the market for poultry breeding stock and broiler production, poultry products and poultry feed.
This followed initial research that pointed to the existence of anticompetitive behaviour by firms and industry associations. In addition, the commission is investigating allegations of collusion in the egg industry after Pioneer Foods confessed its involvement in a cartel.
The main allegations against particular firms are as follows: They agreed not to compete in an open market, but instead divided markets by allocating territories and/or customers to each other. As a result of the collusion, these companies charged significantly higher prices than the independent or small manufacturers even though their cost bases are similar. These prices were, in some instances, 25% higher than those of the smaller poultry feed producers. This collusion also reinforced and was sustained through extensive information sharing via industry associations.
Hon members, I have provided details of these different investigations to contextualise a significant competition settlement that was reached earlier today.
The Competition Act provides for parties to enter into settlement agreements with the competition authorities. Following a few months of negotiations, Pioneer Foods, one of South Africa’s largest food-processing companies, and the Competition Commission signed a consent and settlement agreement in regard to contraventions of various sections of the Competition Act. Pioneer Foods may not produce under brands such as Sasko Bakeries and Sasko Flour, Duens Bakeries, Weetbix, Ceres Fruit Juices, and others. Not all these products are implicated in the investigations.
The settlement reached today addresses Pioneer Foods’ cases in the wheat, maize, poultry and eggs market and constitutes a resolution of all the current investigations against the company. The agreement will be lodged with the Competition Tribunal by 15:00 today, for its consideration and confirmation in terms of section 49(d) read with sections 58(1)(b) and 59(1)(a) of the Competition Act.
It is expected that the Competition Tribunal will decide the matter within the next two weeks and the terms are, of course, subject to the final decision of the Competition Tribunal.
In view of its significance, I wish to provide the House with details of the terms of the settlement and its intended impact.
Pioneer Foods undertakes to immediately desist from collusion and price- fixing, not to participate in any activities of any cartel in the sector and to comply fully with the Competition Act in future.
Pioneer Foods undertakes to co-operate fully with the authorities in the prosecution of any other parties who are the subject of the current investigation by the commission; and to provide evidence and testify against members of any cartel it has been involved in. The company will pay an administrative penalty of R250 million into the National Revenue Fund. The aim of the administrative penalty is to serve as a deterrent and disincentive against anticompetitive conduct.
Pioneer Foods will pay a further sum of R250 million towards a special agroprocessing competitiveness fund that will be established and managed by the Industrial Development Corporation. The aim of the fund is to promote competition in the food value chain by supporting the entry and expansion of enterprises, including small and medium enterprises. Pioneer Foods will not be able to access any of the money in the fund for its own operations. The rules applicable to the fund will be published by December this year.
Pioneer Foods will reduce the net selling prices of selected bread and flour products by a total of R160 million, to benefit consumers who have suffered as a result of anticompetitive behaviour. This will bring much- needed relief to consumers who have paid above competitive prices for bread and wheaten products. It is anticipated that this will stimulate price competition in the bread and wheaten market; and the modalities of the price reduction will be announced by the company and the Competition Commission, and Pioneer Foods’ compliance with these undertakings will be audited.
Pioneer Foods has undertaken to increase its planned capital expenditure by an additional R150 million over a two-year period. This is over and above the company’s planned capital expenditure of R1,2 billion. This commitment is intended to focus efforts to improve the company’s competitiveness through innovation, upgrading of equipment and expansion of operations, instead of reliance on price-fixing and collusion with competitors.
Finally, Pioneer Foods agreed to drop its cross-appeal against the R195 million penalties levied against it by the Competition Tribunal, earlier this year.
Hon members, the effect of this settlement, if confirmed by the Competition Tribunal, is that the company would pay, inclusive of the fine levied earlier this year, penalties totaling R445 million and it would transfer R250 million to a competitiveness fund for the agroprocessing industry, and it would commit to reducing the net selling prices of selected products by a total of R160 million.
These three components amount to R855 million in commitments that are for the benefit of the fiscus, competitors and consumers. Added to this is the commitment to increase capital expenditure by a further R150 million above the company’s previous decisions, bringing the total commitments as a result of this settlement to slightly over R1 billion.
This constitutes the largest settlement in the history of the Competition Commission involving any one company. Taken together with the bread penalty, it amounts to the largest penalty ever imposed on a single company, which is R445 million.
It contains provision for a novel mechanism to promote competition and new enterprise development in the agroprocessing sector by committing funds from the perpetrator of anticompetitive conduct, to finance new competition in the sector. It also provides, for the first time, relief to consumers through a commitment to reduce prices on specified products up to a total of R160 million. These products are bread and flour, key staple products that ordinary South Africans rely on.
I take this opportunity, subject to confirmation by the Competition Tribunal of the settlement, to call on bakeries, supermarkets and the retail trade to pass the price reduction on to consumers. Government wants to see that bakeries and retailers do not divert price reductions into higher margins.
I have asked the Competition Commission to monitor the actions of bakeries and retailers to ensure that the benefit reaches the intended beneficiaries. It must also provide me with a written report that I intend to table in Parliament.
In the New Growth Path, government identified the agricultural value chain, which includes agroprocessing, as a key driver of new job creation. However, to achieve the jobs we expect, we need to get a number of policies right in the sector, including reducing input costs and putting an end to the cartels and price-fixing that keep new entrants, particularly small businesses, out of the market.
This settlement shows the resolve of the competition authorities to act swiftly and effectively to promote a competitive food-processing sector. Vertically integrated firms in the milling and poultry markets leverage their control of critical inputs like wheat or poultry feed to exclude other firms or to sustain cartel arrangements.
For this reason, both structural and behavioural measures are important to bring new players into the value chain. The new, proactive stance of the competition authorities, coupled with a strong investigative capacity, makes it harder for companies to escape with anticompetitive conduct.
The action I have highlighted today follows on a number of other recent steps taken by the authorities, including actions to address monopoly conduct in the fertiliser market, which resulted in a fine of R250 million levied against Sasol; the selling off of five of Sasol’s six fertiliser blending plants to new competitors; and action against Foskor that resulted in price reductions in their fertiliser products.
In addition to these actions, the commission will continue its investigations against other companies implicated in the cases that involved Pioneer Foods. We call on other perpetrators to follow the example of Pioneer Foods and come forward and settle with the competition authorities.
The free ride that some companies had at the expense of consumers and jobs in South Africa for many decades is over. Our resolve is firm to act against contraventions of the Competition Act.
In the New Growth Path, government recognises the fact that anticompetitive conduct is pervasive and entrenched in certain sectors of the economy. Where this is the case, consumers, including downstream enterprises, face high prices and limited product choices; and competitors are denied entry to or forced out of the market. Firms focus less on innovative strategies to compete than on co-ordinating their activities or abusing their dominance.
Anticompetitive conduct seeks profits from narrow and backward-looking strategies based on inherited positions of market power. Such conduct ultimately implies lower levels of output, investment and employment.
For this reason, the commission’s investigations in the food sector go beyond the scope of the cases that involve Pioneer Foods and the cartels in which it was involved. The commission will accelerate existing investigations into market conduct in supermarkets and in regard to poultry, fish, vegetable oil, tin plate and storage.
Outside of the food sector the commission is now focusing on other key priorities of government, including investigations into collusion and unlawful behaviour in construction and infrastructure, inter-mediate industrial products and finance and banking.
In conclusion, may I on behalf of government congratulate the competition authorities for the excellent work they are doing. [Applause.]
A properly resourced, professional and effective competition authority is critical to the achievement of the economic and employment goals of the New Growth Path. We are committed to providing the competition authorities with the support they require to undertake this important mandate.
The CHIEF WHIP OF THE OPPOSITION: Madam Deputy Speaker, on a point of order: I have no problem at all with the Minister’s statement — in fact, vigorous competition is the very essence of the market system. I do, however, want to draw the Deputy Speaker’s attention to Rule 106(3), which says:
Whenever possible, a copy of an executive statement must be delivered to the leader of each party, or that leader’s representative, at or before the time the statement is made in the Assembly.
That is there for a purpose: to encourage a coherent response to a very important statement made by the Minister. I would draw your attention, the Speaker’s attention and, indeed, the Chief Whip’s attention to this Rule of the House so that we can, in fact, abide by the Rules in the future. Thank you.
Adv T M MASUTHA: Deputy Speaker, may I address you on the same point of order? The hon member has clearly read the Rule; it says, “whenever possible”. It is clear that some of the elements of the statement are so recent — a matter of hours — that I do not see how the hon Minister could reasonably have complied fully with that Rule. Thank you.
The CHIEF WHIP OF THE OPPOSITION: Madam Deputy Speaker, on a point of order: I just have to respond to the hon member. We were given notice — in fact, in the Announcements, Tablings and Committee Reports — that indeed there was going to be a statement on competition issues. We could have been briefed at that stage about such a statement so the member’s statement is, in fact, not a statement at all. [Interjections.]
The DEPUTY SPEAKER: May we move on and may I plead with members that we definitely have Rule 63 on unbecoming language. I know that the Speaker is looking at that, but I would really plead with you to refrain from using language that is unparliamentary, please. I’ve just heard “rubbish”, somewhere; unless we are saying “rubbish” and “nonsense” is not unbecoming language.
The CHIEF WHIP OF THE OPPOSITION: Deputy Speaker, I really do appreciate your ruling in that regard, but I would ask you to vent an opinion on the point that I indeed raised … [Interjections.] [Inaudible.] … is a matter of importance …
The DEPUTY SPEAKER: No, no! Hon Ellis, I don’t know if it was you who just said “rubbish” as I was talking. I was talking generally about when somebody is talking, let’s resist from using words that are unbecoming. I’m not saying that the point of order was wrong.
Mr M J ELLIS: Madam Deputy Speaker, I agree with you and I apologise for having used the word again this afternoon, but sometimes certain members provoke a response. [Interjections.] The important point is: You’ve not made any ruling whatsoever with regard to what the hon Chief Whip of the Opposition has said. Are we going to hear anything more about this?
The DEPUTY SPEAKER: No, I’ve noted the question. I’m not going to make a ruling. It really does not require a ruling. I’ve noted it and I’m sure members here have also noted that. Please, I’m not going to make a ruling on that.
Mr S J F MARAIS: Chairperson, we know that we need a more globally competitive economy to improve our market position as a catalyst for growing our domestic economic activities, including promoting local entrepreneurship, especially small, medium and micro enterprises, SMMEs, and improving our attractiveness as a preferred foreign investment destination, especially for foreign direct investments, FDIs.
For our economy to grow and develop exponentially and to ensure that we will have more South Africans earning salaries and wages, and thus paying taxes, we need to strive towards creating more real and sustainable jobs in a competitive environment.
However, to create five million jobs, as the Minister has indicated, by 2020, we need a 7% growth in GDP per year, which is unlikely if we look at the Medium-Term Budget Policy Statement, just delivered last week. More specific actions are needed from the Minister in that regard.
Government, however, has a very important role to play in developing such an environment; not only to create the required jobs, but to also encourage more businesses to enter the global market. This in turn will lead to competition between suppliers of services and products, which will improve consumer choices and result in more value for money.
Competition in every sector of our economy, especially those identified to drive our economic recovery, should be encouraged and supported. Unfair competitive activities and practices, however, like price collusion and black economic empowerment, BEE, fronting, must be opposed fiercely. The Competition Commission is best positioned to ensure that such a competitive environment is maintained.
The settlement agreement by Pioneer Foods, as announced by the Minister, must surely be complimented. I think that is a great step by Pioneer Foods, and I am sure that they will again return to their previous position and enormously add to the economic growth potential of South Africa.
The competition authorities must consider various actions in support of competition. Allow mergers and acquisitions which lead to better choices and value for money for consumers. In this regard, the possible merger between Walmart and Massmart should be encouraged. This is an example of a foreign direct investment transaction with economic development benefits that our economy needs.
The authorities must also ensure that provisions of the Broad-Based Black Economic Empowerment, Act are not misused with fronting as a practice that benefits a few elite tenderpreneurs with mostly excellent political and governmental connections. Any possibility of such transgressions should be investigated and punitive action taken.
In this regard, the widely publicised transaction between ArcelorMittal and Imperial Crown Trading, ICT, must be investigated. The perception from reports and submissions is that this transaction is certainly not intended to be beneficial to a broad base, but rather to enrich a few of the elite with excellent political connections.
It also constitutes fronting as per the BBBEE Act, which in itself is a punitive transgression. The impression is also that ICT has no knowledge of or track record in iron ore mining activities and has no operational mining assets. This certainly adds no value.
A strong message should be sent out by fighting illegal fronting activities, especially as this is not only taking away benefits from historically disadvantaged individuals, but it also places the eventual funding burden on the consumers. It should be classified as anticompetitive behaviour if the result is higher prices and not necessarily more choices and better value for money for the consumers.
We need to develop appropriate strategies and competitive economic development plans that will enjoy the full support of government, labour, business and foreign investors. This will contribute not only to optimal employment opportunities, but also to consumer beneficiation opportunities. It will also improve strategic global competitiveness and sustainability, and it will certainly promote an open opportunity society for all. Thank you. [Applause.]
Mr L S NGONYAMA: Madam Deputy Speaker, Cope commends the Competition Commission. It has achieved outstanding results. The benefits of these results for South African consumers and poor people, in particular, have been considerable.
What is remarkable about this agency is that it works so efficiently with such limited resources at its disposal. Its key managers are performance oriented, and even though it has a budget of about R120 million, its output is huge.
The commission has scored major successes against monopolies, oligopolies and cartels. All of these distort market forces. Furthermore, they keep new entrants from emerging on the scene. Their influence on marginalised people has been as insidious as the apartheid-era politics. Therefore, we salute the settlement by the Competition Commission with Pioneer Foods.
However, the key question that we want to put is: How much of the settlement will cascade down to the Competition Commission? How much? We are asking this because at the present moment we have a problem of capacity with regard to the Competition Commission and the tribunal.
The second issue is with regard to the amount of money that the poor have been robbed of by the very same companies. How much of that money will find its way back to those communities?
Lastly, we would like to make a point about ArcelorMittal. Currently in South Africa manufacturing is shrinking. We have serious problems with regard to steel pricing. How much influence does the Industrial Development Corporation, IDC, in particular, have together with the relevant departments in ensuring that the price of steel is reduced?
Cope would like to salute the achievement of the Competition Commission. We say that it has to be assisted — and in many ways. Thank you. [Applause.]
Mr M G ORIANI-AMBROSINI: Madam Deputy Speaker, thank you to the Minister for giving us a piece of good news from the tip of the iceberg. I think, however, that attention should be given to dealing with the rest of the iceberg. South Africa is still a country characterised by cartels and monopolies, and is still flying on the autopilot left by the National Party. If we are serious about dealing with these problems we cannot rely on the Competition Commission alone. We must look at amending the law to introduce private actions, triple damages and a strong motivation for private companies to take on and break monopolies.
They are all over the place. The entire distribution of goods and services in this country is a cartel; so are the fertiliser and insurance sectors, the banks, the petrol and tyre industry, electricity and the other utilities and the ports and harbours. Even the IDC itself is becoming an industrial conglomerate with a very anticompetitive effect in its lending practices. We received submissions in one of our committees on this matter.
Again, with regard to the issue of tariff barriers and what type of competitive effect they have, we are facing a situation where the South African marketplace could soon become a putrid pond within which there is insufficient international competition to ensure proper pricing.
There are foundational problems, structural problems for market dynamics and competition dynamics, which cannot be addressed exclusively through the sluggish, lengthy processes of the Competition Commission. We need more effective government action, especially to eliminate the many areas in which anticompetitive practices are entrenched in existing legislation and regulations.
We must enable the private sector to sue whenever it is necessary and be rewarded for its capacity to sue and break monopolies. We need to open up the market to international competition so that we stop paying twice as much for goods sold internationally. Thank you very much.
Mr S N SWART: Madam Deputy Speaker, the National Economic, Development and Labour Council’s framework response to the international economic crisis highlighted this aspect of food cartels and emphasised that one should act against these cartels and any collusion that resulted in inflated food prices.
This matter was also emphasised during the Minister’s first budget speech earlier this year. Today we see the fruits that the strengthening of the competition authorities has borne.
We, as the ACDP, welcome today’s announcement on the R855 million settlement with Pioneer Foods: the largest such settlement in South Africa’s history. Besides the large administrative fine, which Treasury will no doubt welcome, we, as the ACDP, particularly support the innovation of the agroprocessing competitiveness fund to improve competitiveness in this food sector.
The reduction in the price of bread flour is to be welcomed. Bread is the key staple food for many millions of South Africans. However, we as parliamentarians, as the Minister indicated, must ensure that the benefits are passed on to the consumer.
Lastly, we commend the competition authorities on this landmark historic settlement. Thank you.
Mr L W GREYLING: Deputy Speaker, the picture the hon Minister has outlined today is indeed a very sorry one and reveals the depths to which big economic players in South Africa are prepared to sink in order to maximise their profits. We have to call this exactly what it is: large-scale theft from the poor!
The ID applauds the Competition Commission for exposing this kind of theft, and we welcome the settlement that has been negotiated. Our only regret though is that criminal charges do not seem to have been brought against anyone for this crime against the poor.
In the future, the ID would hope that these unscrupulous actors will face the full force of the law as opposed to simply punitive fines. The ID supports all measures that aim to create a more competitive economy in which new entrants can emerge and consumers can get a fair deal. Thank you.
Mr K B MANAMELA: Madam Deputy Speaker, the first thing that we want to do, as the ANC, is to express our excitement about the fact that all the political parties that spoke here today agree that there is no such thing as a free market and that, if left to its own devices, it proves to be extremely dangerous. With its traits and characteristics of greed intended mainly to benefit a few shareholders, it would use any opportunity to ensure that it enriches only a few.
We agree that this statement made today is about a situation that constitutes the gravest theft from the working and middle classes in terms of the inflated prices or fixed prices with regard to fish, bread and flour, as these are the basic foodstuffs that many households need.
We also believe that this exposes the notion and the mantra that corruption only exists in the public sector, and that there is indeed corruption in the private sector, which is almost a criminal activity, and that we have to deal with it in the same way. There is no other name that we should call it. We know that many will be saying it is white-collar crime and all of those things. It is crime to the majority of our people, and those who are responsible have to be brought to book.
We also want to emphasise, as the ANC, the need for more resources for the Competition Commission and the Competition Tribunal in order for the two institutions to be able to do their jobs more effectively. This is precisely because these cartels are prepared to match the Competition Commission and tribunal pound for pound when it comes to the courts. We believe that this justifies the need for more resources.
We also believe that this had a huge impact on food security as millions could not afford these basic foods. It has also destroyed small and medium enterprises, and spaza shops which have supported the livelihoods of millions of South Africans, and has obviously encroached on the commitment of the ANC-led government to create jobs in our economy.
We have to emphasise that the announcement, by the Cabinet, of five million jobs is possible, and it is not a thumb suck. It is the agendas of these cartels that distract government’s programme of job creation. We also want to emphasise the point that this had an effect on distorting the economy and the market, and that it is important that both the Competition Commission and the Competition Tribunal continue to deal with such behaviour.
As part of the way forward, we believe that there needs to be a firm commitment to exposing those who are left and are still resisting co- operating with the institution. There are companies such as Foodcorp that are still continuing with legal action. We also need to be firm in our resolve to ensure that companies feel the impact on their profits and also on their businesses.
We are quite happy that part of the commitment of this deal is to ensure that it will facilitate new entrants into the market through the capital investment that has been incorporated into this particular deal. There will be benefits for those who have been robbed, that is the poor, the working class and the middle class, through the R160 million that has been committed and will go towards price reductions. We believe that that will also have an impact on the other players in this particular section of the market.
What is also important is that this establishes a norm. When Tiger Brands, about three or four years ago, was fined more than R90 million there were no visible returns to the consumers. This particular deal guarantees and sets a trend for benefits for the consumers. We see this as a very important development.
Finally, we believe that some of these actions for stopping cartels and monopolistic behaviour are in line with the New Growth Path as announced, and are also in line with employment creation. It also shows that the regulatory framework that government has put in place and the policing mechanisms of private companies are actually working and are actually effective.
We also believe that this will strengthen the approach in terms of ensuring that through agroprocessing we create more jobs and food security. It shows we support small and medium enterprises and co-operatives, and also ensures that millions of our people are taken out of poverty and unemployment.
We note what the hon member from the DA was saying about the merger between Massmart and Walmart, and obviously the approach of the ANC-led government would be to ensure that any mergers and acquisitions comply with the Constitution of the Republic, including with regard to protection of workers’ rights.
In conclusion, this sends a sign to those industries such as the construction and infrastructure sector, the telecommunications sector — including the mobile cellphone operators — and the financial institutions that their days of fixing prices and maintaining a monopoly are coming to an end.
The tribunal and the commission are growing some teeth. We would like to take this opportunity to applaud those who played an important role and those who pioneered this particular deal. Thank you very much. [Applause.]
Debate concluded.
GEOSCIENCE AMENDMENT BILL
(Consideration of Report)
Mr M F GONA: Hon Deputy Speaker, let me state from the outset that the Portfolio Committee on Mining has adopted the report unanimously, and that the ANC supports this Bill tabled before this Parliament. Our support is based on the fact that the proposed amendments to the Bill, in our view, are long overdue and necessary. Therefore we would propose that the report be adopted. Thank you very much.
There was no debate.
Mr S E KHOLWANE: Deputy Speaker, on behalf of the Chief Whip of the Majority Party, I move:
That the report be adopted.
Motion agreed to.
Report accordingly adopted.
GEOSCIENCE AMENDMENT BILL
(Second Reading debate)
The MINISTER OF MINERAL RESOURCES: Deputy Speaker, chairperson of the portfolio committee, members of the portfolio committee, Ministers present, Members of Parliament, I would like to take this opportunity to welcome the new Deputy Minister of Mineral Resources. Comrade Godfrey Oliphant, you are welcome in the department. I’m looking forward to working with you. [Applause.]
It gives me pleasure to introduce the Geoscience Amendment Bill. The amendments are in response to the challenges that the country is facing, which include, amongst other things, the need to ensure that infrastructure development, especially on land underlain by dolomite, takes place in a sustainable manner. Such land is prone to sinkhole formation, which often destroys infrastructure. An example of such a situation is the Khutsong township in Merafong, where sinkholes have destroyed property and as a result government is faced with the situation of relocating people at huge costs.
It also makes South Africa the most globally attractive country for mineral exploration. I am certain that our mineral industry has and will have tremendous potential for a host of new and exciting mineral discoveries, which will continue to play a major role in eradicating poverty, creating jobs and improving the welfare and equality of people of South Africa.
This Bill directly addresses the renewed push to increase investment in mineral exploration by mandating the Council for Geoscience to proactively participate in attracting investment into the exploration sector through the production of key geoscience exploration information and data assessment and interpretation. Therefore it will increase the role of mining in development.
The main objectives of the Bill are to make provision for the following: the Council for Geoscience to be a national advisory authority with regard to geohazards that are related to infrastructure and development; empowering the Council for Geoscience to be the custodian of all geotechnical data with the purpose of compiling a complete geotechnical risk profile; putting mechanisms in place to address the problems associated with infrastructure and development on dolomitic land; empowering the Council for Geoscience in the management and administration of the national seismic network; enabling the Council for Geoscience to execute its functions and responsibilities in promoting investment in the mining industry through its research activities; enhancing administrative processes of the Council for Geoscience to ensure effective implementation of the proposed amendments; addressing references to legislation that is obsolete in the Geoscience Act; and aligning the Geoscience Act with the Mineral and Petroleum Resources Development Act.
Between December 2008 and September 2009 the Department of Mineral Resources conducted consultations with various stakeholders, including government. As stated earlier, the threat posed by dolomite-related sinkholes has affected major human settlements such as Khutsong, Katlehong and Tshwane, as well as major national infrastructure.
The dolomite rocks underlie major portions of at least four provinces, and a potent risk of sinkhole development exists in the country.
It is for this government to address these infrastructure development challenges that could be associated with building on potential geohazardous land. It is government’s understanding that, in order to address all the challenges associated with dolomite, it is necessary that the Council for Geoscience takes the lead in the research on and monitoring of the impact of development on land covered with dolomite.
The council will further advise all local government, provincial and national state authorities when assessing applications for infrastructure and development.
In conclusion, the necessity for these amendments cannot be overemphasised. It will only be to the benefit of the country to have a geological institution that serves and is responsive to the increasing needs of its people. I thank you. [Applause.]
Mr M F GONA: Deputy Speaker, hon Ministers and Deputy Ministers present here and hon members, let me state from the outset – in case I run out of time – that the ANC supports this Bill. We believe that the transformation of the South African economy should always be holistic and comprehensive, covering all sectors of the economy. In this regard, we need to ensure greater state involvement and control of strategic sectors of the economy such as mining.
Key to this is the development of a mining sector strategy which must take into account the country’s developmental needs. It should also help clarify the state’s role in the sector. This will, of course, require consequential amendments of the Mineral and Petroleum Resources Development Act in order to support the objectives of our mineral sector strategy.
The Geoscience Act, Act 100 of 1993, was mainly introduced to establish the Council for Geoscience, the purpose of which was to provide for the promotion of research and the extension of knowledge in the field of geoscience.
The purpose of the Geoscience Amendment Bill is, therefore, to extend the mandate of the Council for Geoscience – as the Minister has pointed out here - to enable it to become the custodian of geotechnological information and an advisory authority in respect of geohazards related to infrastructure development.
The Bill further seeks to put mechanisms in place to address problems which are associated with infrastructure development in dolomitic areas. This phenomenon resulted in the development of sinkholes that were initially noticed way back in the 1950s, but the seriousness of the situation was highlighted in the early 1960s when a sinkhole engulfed a three-storey crusher plant at West Driefontein Mine.
In 2007, a three-bedroomed house in Khutsong, near Carletonville, caved in as a result of a sinkhole. This incident led to the relocation of residents from Khutsong to a safer area. It was initially planned that more than 25 000 housing units were to be relocated in three phases, and that such a project would have cost an estimated R3,5 billion. That would have been the cost to the state to relocate these communities!
Other incidents of damage caused by sinkholes include the following: the evacuation and demolition of Bank village in the 1970s; major repairs to the military airport by the Department of Public Works at Waterkloof Air Force Base in 2008; damage to Vosloorus Police Station; the collapse of a house in Hans Strydom Road in Tshwane; severe damage to a Basden Road townhouse in Tshwane in 2008; ongoing repairs that are required by Ekurhuleni Municipality to Kathorus suburbs; and the diversion of the double-lane N14 highway leading into the south side of Tshwane in 2008.
Notwithstanding the above-mentioned details, we are further informed that at least 39 people are known to have died over the past 50 years as a result of sinkhole-related incidents. It has cost people their lives. Research reveals that approximately 20% of Gauteng province, as well as parts of Mpumalanga, Limpopo and the North West are also underlain by dolomite. So the challenge in these provinces is not only acid mine drainage, but also the sinkholes.
All these above-mentioned serious incidents occurred under the watch of the private sector engineering companies — I think the DA must pay particular attention to this paragraph — upon which the state relied for advice before approving development plans. Through this Bill, therefore, we are also redressing the legacy of apartheid spatial planning, which we are still dealing with as we speak today.
Therefore this Bill empowers the Council for Geoscience to be the custodian of all geotechnical data, with the purpose of compiling a complete geotechnical risk profile of the entire country. The Bill further enables the Council for Geoscience to become the custodian of technical information related to exploration and mining.
There are some concerns that were raised during the process of the public hearings. There have been some concerns with regard to the passage of the Bill and I would like to address the House on the misconceptions that have been raised with these concerns. The first are the functions, powers and the role of the council that have come into question.
The state has the responsibility to ensure that the developmental infrastructure, minerals, land and other activities are in a condition that is best suited to deliver. Evaluation and assessment over a number of years has led to a scientific analysis. In areas of deprivation, the lack of penetration to turn around the material conditions of the people has been affected by market-related considerations that superseded the need and responsibility to address structural poverty.
Existing polices have proven not to be sufficient and, therefore, necessitated intervention. We cannot continue with a situation where development takes place under risky circumstances and the state, ultimately, has to then deal with the fallout of risky business ventures.
The second concern is that of the powers of the Minister. This is normally rolled out when it comes to amending Bills. In order to implement policies dictated to them through legislation, the executive requires the powers. The responsibility of the legislature, therefore, is to ensure oversight over those powers that the executive has.
We should not try to weaken these powers to the extent that the implementation of the policy becomes unworkable and also, because of broad flexibility, the policy implementation becomes ineffective and does not address the concerns that gave rise to it in the first place.
In this regard, the only semblance of powers conferred on the Minister by this Bill is in section 23(7) where it is stated that -
The Minister may issue a directive to authorise council officials to enter any land within the borders of the Republic of South Africa in order to execute the council’s mandate, save where there is prohibition under any other law.
Even with this light amendment, the portfolio committee has included subsection 8 that provides for notification and consultation with the landowner and/or lawful occupier. Therefore this power, weak as it is, should be contained in the Bill.
Thirdly, there have been concerns that the council will have oversight over professional ethics. The principal intention of the Bill is to ensure ecological development and meeting socioeconomic needs, especially in poor communities. At the same time it cannot close its eyes to conduct in the exploration field that lacks professional ethics and therefore will intervene only when it’s necessary.
Responding to some sectoral demands that were made during the public hearings, the amending Bill must ensure that the Council for Geoscience is well equipped and in a position to contribute to safety both at a residential level, especially in poor, working-class communities, and at the industrial base.
The Council for Geoscience must, therefore, be in a position to work with related stakeholders to develop technologies that can detect and give early signals of dangers. This would save many lives, especially in our mining industry.
The amending Bill will ensure that the council has a role to play in ensuring safety in the mines by mandating the mining industry to develop systems that would assist to detect, for example, seismic activities in the mines - as has been alluded to by the Minister. For this to happen, there needs to be improved co-ordination between the Council for Geoscience, the Mine Health and Safety Council and Mintek. This would ensure safety in mines, strengthen government functions to explore minerals and ensure information technology development.
The mining industry has been and remains a critical sector in our economy. Its transformation, therefore, is vital for our national sociopolitical objectives. The development of the Mining Charter in 2002 was informed by transformation considerations that were consistent with the evolution of the political landscape in the country. Accordingly, we recognise that the development of the country’s mineral complex presents opportunities to expand related industries that supply material or services for mining to be effective.
To this extent, we have strengthened the notion of local content to support local industries consistent with the government’s drive for local industrialisation, creation of decent jobs and poverty alleviation. I thank you very much. [Time expired.]
Adv H C SCHMIDT: Hon Chair, the DA wishes to congratulate the hon Godfrey Oliphant on his appointment as the Deputy Minister of Mineral Resources. I have not yet seen him serving as a member of the committee, but I trust that he will be able to make a contribution. [Laughter.]
This Bill intends to amend the Geoscience Act of 1993. It provides, inter alia, for the Council for Geoscience to act as a custodian of all geotechnical data for the purpose of compiling a geotechnical risk profile for the country.
More importantly, it ensures that the council will be the custodian — and I stress the word “custodian” — of technical information relating to mining. It, however, assumes the task of being a custodian with respect to mining. This is a term that is used in the Mineral and Petroleum Resources Development Act of 2002, when it placed the ownership of mineral resources in the custodianship of the state. Whilst the Geoscience Act currently provides for numerous representatives on the Board from the private sector, such as a representative nominated by the Chamber of Mines, as well as representatives nominated by the Geological Society of South Africa and the Industrial Development Corporation, IDC, the current Bill intends to provide the Minister with the sole authority to determine who should represent the above institutions and organisations on their behalf.
Representatives from at least six different government departments would also be appointed by the Minister. The Council for Geoscience has provided specialised services to both the private sector and government departments for many years; at least since 1993 when it accommodated board members from both the private and public sectors.
Accordingly, it could be expected that representatives from the private sector nominated by the relevant institutions should be included. It also appears that some recent board members from the private sector have attended more meetings than certain members from the Public Service represented on the board, creating some obscurity as to the real reasons why private sector members are to be removed.
In the light of the recent developments relating to the intended state- owned mining company, which is to be formed by government presumably by June 2011, the above provides for a situation where no private sector participation on the board could lead to a situation where services are primarily directed to government functions – the state-owned mining company
- to the detriment of the private sector, as it will have no input or participation in the affairs of the council.
An amendment that raises concern relates to the fact that the Bill proposes to allow the council to conduct business in so far as any reconnaissance operation and prospecting activities are concerned. This is a matter which has primarily been the domain of the private sector.
The view of the DA in this regard is well known: Mining operations should be undertaken by the private sector, whilst the task of government should be aimed at providing the necessary stimuli and macroeconomic framework to lure both local and international investments on a long-term basis — the basic tenets on which the mining industry is based.
Apart from the fact that government does not have the necessary expertise to run mines efficiently and cost-effectively, the state also does not have the capital — neither does it have access thereto — to capitalise and recapitalise mines considering the strong demand for socioeconomic rights and disparities.
Both Alexkor and the latest government-controlled African Exploration Mining and Finance Corporation, AEMFC, of which the state is the only shareholder, are in dire financial straits, having shed thousands of jobs and suffered a dramatic drop in production, in the instance of Alexkor, and are in urgent need of capital and experienced management.
The Bill, if approved, will not only allow the Council for Geoscience, to be in a position to act as a mandatory custodian of all knowledge relating to geological and geotechnical data on a national scale, but will also allow it to compete with the private sector in so far as exploration and prospecting are concerned. This allows the government to act as both player and referee with regard to its intended functions.
The CGS has been underfunded for many years. The intended extension of the existing mandate will require more skilled personnel and an additional budget. While the CGS is struggling to fulfil its current mandate with the allocated resources, the capacity required to fulfil its new intended mandate appears too ambitious if not impossible, as raised by various geological-related entities.
The additional unfunded mandate will impact negatively on its current commendable task, which relates to geophysics, seismology, mine safety, and aspects relating to mine flooding, acid mine drainage, development of databases and strategies on derelict and abandoned mines.
The most important reason for opposing this Bill is the conflict of interest, which will arise if the CGS is to operate as a service provider in addition to regulating the affairs to be prescribed by the Geoscience Amendment Bill. The DA therefore opposes this Bill. I thank you. [Applause.]
Ms C M P KOTSI: Chairperson, the delay in the Geoscience Amendment Bill is of concern to us, as this is an important piece of legislation for South Africans across the spectrum. One would have thought that, as a result of the delays, problem areas raised by stakeholders would and should have been addressed.
In this case I would like to raise some concerns. The Geological Society of South Africa, GSSA, alluded to the fact that now the Minister has the sole responsibility to appoint an individual representative of academic and professional expertise. This responsibility has been taken away from the GSSA.
This is a concern in the light of the fact that the present incumbent nominated by the GSSA has attended all meetings held by the council and the management board, while the representative from the department was nowhere to be seen. Furthermore, no mention has been made as to how the department arrived at the indicated budget figures or what the increase in the budget will specifically be targeting. It must therefore be noted that the increase in the budget is an ongoing commitment especially in view of the current financial difficulties that the council is facing.
Lastly, the creation of the national databank of geotechnical information is a noble idea, and is good in theory. History has, however, taught us differently, and we are concerned about the breaches in confidentiality of information, which, together with the possible conflict with the Copyright Act, needed to be addressed first.
In the light of this and regardless of the concerns that we think needed to be addressed, Cope still supports the Bill. I thank you. [Applause.]
Mr R N CEBEKHULU: Chairperson, I am standing here, not as a member of the portfolio committee, but I am representing, on behalf of the party, the hon member who should be here.
This Bill, besides updating terminology in respect of the various government departments, addresses core issues surrounding safe infrastructural development within the sphere of geohazards and related perils.
Importantly, the Bill seeks to instruct the Council for Geoscience to act as a national advisory body within the above spheres, which should engender a co-ordinated and comprehensive oversight of their mandate. Additionally, the council would also be a custodian of all geotechnical information and reports, as all documents of this nature will have to be submitted by parties involved in work of this nature.
The Bill also seeks to mandate the council to undertake extensive research in the petroleum and mineral prospecting sectors that could in the future prove very advantageous to our country and her economy. South Africa is the richest country in the world in terms of the actual minerals still in the ground, and such wealth should be worth literally trillions in US dollars.
As such, it should be judiciously managed, and it is in this vein that the Council for Geoscience has a great responsibility to the people of South Africa in that it must work very closely with the Departments of Energy and Mineral Resources in order to ensure a wise and informed decision-making process with regard to all geotechnical and related matters.
In conclusion, the IFP supports the Geoscience Amendment Bill and we believe it to be a very important step in the right direction for geoscience exploration, management and oversight. We look forward to engaging with the Council for Geoscience on all aspects relating to the new mandate in terms of this legislation in the future. I thank you.
Mrs N J NGELE: Chairperson, hon Ministers and Deputy Ministers, hon members, and distinguished guests, the ANC is committed to public-sector- led development to address the needs of our people and to ensure that public resources serve the developmental needs of our people.
Hon members, the Geoscience Amendment Bill must be seen against the backdrop of a broad philosophy that places the needs, health and safety of our communities at the centre of development. The Freedom Charter identified that —
The mineral wealth beneath the soil … shall be transferred to the ownership of the people as a whole.
This requires an effective development strategy in which the state co- ordinates its efforts around key priorities. It is within this context that we need to understand the governance framework that this Bill seeks to advance.
This Bill entrenches good governance in a manner that enhances accountability and transparency through proposed structures with specific mandates.
The Bill empowers the council to be the custodian of all geotechnical data, with the purpose of compiling a complete geotechnical risk profile of the country. Concurrently, it promotes the search for and exploration of minerals within the field of geoscience.
Hon members, the Bill enables the Council for Geoscience to act as a national advisory authority in respect of geohazards related to infrastructure and geoenvironmental pollution brought about by mineral exploration.
The Bill enables the council to provide specialised geoscientific services. The amending Bill gives powers to the council to study the use of the land and seabed surfaces and to provide the analysis, which would be used as a geoscientific position. The council can advise government institutions and the public on the judicious and safe use of materials and land.
The council may review and evaluate all geotechnical reports with respect to geohazards that may affect infrastructure and the development thereof. Crucially, an appeals committee will also be set up to deal with disputes such as may arise over access to private land. The proposed legislation plans to give the council the right to enter private property in order to carry out its stipulated tasks.
The Bill proposes a balance in the representivity of the board, with members reflecting different disciplines but brought together in an interlocking manner so as to address the overall mandate. Stakeholders have been addressed in this process.
The numbers on the board have been increased, which reflects the increasing scope and task of the structure. With regard to representation of departments, representatives can be nominated by the director-general and appointed by the Minister.
The powers of the Minister give an indication of the nature and scope of the board and the strategic and sensitive nature of its work. The powers assigned to the Minister by the Bill are appropriate. Such powers are required if we are to meet the demands of the Bill itself. The nature of the powers assigned support the spirit and intention of the Bill that geohazard areas must receive close regulation and protection from the government.
Public safety, especially at the level of poor communities, cannot be compromised and left to the individual developers or the private sector alone. Our past experience is filled with examples of conflict in this area involving private companies and local communities and workers. The governance framework must eradicate such a fragmented practice.
Chairperson, in conclusion, the council will need to strengthen its role in exploration and ensure that co-ordination amongst different stakeholders is both maintained and enhanced. The development of a country, that is, the infrastructural development and protection of our public resources, are all critical areas that this amending Bill addresses. Public education on the intentions of this Bill is critical in order to ensure that communities may benefit.
Government needs to monitor and evaluate exploration processes, so as to ensure that both the state and the people benefit and that the specialised service offered by the council enhances delivery to the people. Attention must be given to strengthening the structures established by this Bill in order for the full intention and potential of the Bill to be realised.
Hon members, this Bill will bring about better co-ordinated governance, control and efficiency in line with the developmental agenda of our country. It will bring about greater accountability and transparency in accordance with international health and safety standards, particularly in respect to the most affected sections, such as poor communities, but equally to the mining sector. The ANC supports the Geoscience Amendment Bill. I thank you. [Applause.]
Mr E J MARAIS: Hon Chairperson, the Council for Geoscience is mandated to gather, compile, interpret and disseminate geoscience knowledge for South Africa, as provided by the Geoscience Act, Act No 100 of 1993. This Act established the mandate and national responsibilities of the organisation.
During the past year, the Council for Geoscience has continued to execute both its statutory and mandatory programmes. The management of the new national geoscience facilities on behalf of the state is included in the statutory programme. However, the reliance of the organisation on commercially generated income to fund its annual technical programme has proved to be a risky business model.
The global economic downturn coincided with a period in the organisation that saw the completion of large projects funded by the European Union in Africa. The strong South African rand also impacted negatively on the income of the organisation during the year, as significant currency losses were experienced in the international projects.
The Council for Geoscience has to establish and strengthen partnerships with both private and public sector institutions in order to achieve its growing mandate within the context of the broader South African national and international priorities.
The organisation is faced with significant key challenges that include an increased shortage of mid-career scientists, ageing infrastructure, a decline in commercial income, inadequate statutory funding and the refocusing and aligning to address South Africa’s developmental challenges.
The council will in the future be more involved in assisting the Department of Mineral Resources to seal extremely dangerous openings of abandoned and unsafe mines. Furthermore, they will be involved in addressing the acid mine drainage, specifically in Gauteng, and will advise the Department of Mineral Resources on the effective rehabilitation of mines.
The production of geoenvironmental maps is seen as a vital step towards the dissemination of information in an appropriate format to local governments in order to assist them with issues relating to land-use planning. The Council for Geoscience is doing excellent work in dolomite stability, especially where there is the continued formation of sinkholes in the Gauteng province.
The council aims to increase earthquake monitoring in the gold mining areas of South Africa with the hope of promoting research into minimising the risk of seismic rock bursts and rock falls and their impact on the lives of miners and on the flooding of abandoned mines.
New amendments to the Geoscience Act will bring new challenges in terms of the additional resources required for the implementation of these changes. This is exactly where the major problem lies. The intended extension of the mandate of the Council for Geoscience will require an additional R80 million per annum, excluding assets.
While the Council for Geoscience is struggling to fulfil its current mandate with allocated resources, the capacity required to fulfil its new intended mandate appears to be far too ambitious. The Treasury is faced with requests from other departments to address more essential needs in South Africa such as energy, housing and water supply. I thank you. [Applause.]
Mr M R SONTO: Chairperson, I gladly follow on after hon member Marais, a member of the committee on which I serve. Let me start by saying that the ANC supports the Geoscience Amendment Bill. This Bill seeks to amend the principal Act, the Geoscience Act of 1993, so as to strengthen the mandate of the Council for Geoscience.
This amendment will allow the council to play a greater role in research and development in the mining industry by, among other things, promoting the search for and exploitation of any minerals in South Africa; undertaking geoscientific research and related technological development; and acting as a national advisory authority in respect of geohazards related to infrastructure and development and geoenvironmental pollution arising from the mineral industry.
Public submissions were received by the committee from the relevant stakeholders, as the process requires. It was outlined that the Bill, in particular, seeks to put in place mechanisms that will deal with problems associated with building on dolomitic land. Such land is susceptible to sinkholes, as has been said before, and therefore the danger of loss of life exists. The ANC wants to ensure that the land released for development is stable.
The geotechnical industry is an integral part of urban planning, civil engineering and the mining sectors of our economy. A geotechnical investigation is a precursor to every infrastructure development project in South Africa, such as urban township development, roads, railways, sanitation, water, mine infrastructure and so on.
The geotechnical industry is therefore responsible for ensuring safe, responsible and sustainable infrastructure development. The economic growth of our country hinges on this. Where public safety is at stake, through the actions of unscrupulous and opportunistic developers, regulatory intervention is required.
Chairperson, geohazards are also increasingly important in the field of disaster management, both globally and in South Africa. The Council for Geoscience is in a strong position to provide services and consult in this area through its huge information base and considerable expertise that it possesses, contrary to what the previous speaker was saying here.
The development of a national geohazard system for South Africa addresses geohazards issues by using geological information held by the Council for Geoscience. This system plays a significant supporting role for critical stakeholders such as planning authorities, municipalities and many other public organisations.
With an estimated figure in excess of 11 000 property transactions per year, and growing as building stock increases, there’s a high demand for technical data regarding the ground conditions upon which these properties could be built or already exist.
The use of historical data and local knowledge of all geohazard occurrences and their effects can provide the basis for an understanding of what could happen in the future.
Chairperson, the home building manual of the National Home Builders Registration Council prescribes the technical requirements to be met by both engineers and home builders. It requires that a competent person shall investigate any proposed township areas which are underlain by dolomite, and prepare a clearly motivated report detailing any precautionary measures that are required to reduce the risk of sinkhole formation.
The report must therefore be submitted to the Council for Geoscience for their confirmation that the investigations were conducted on the stability of dolomitic land referred to in the report.
I am not surprised that the DA is not supporting this Bill because during the public hearings that we held, the DA was at pains to try to drive the committee to appoint the board. Where have you seen that? The DA is also worried that the Minister has got this responsibility of appointing the board. The DA’s problem is that it wants to control everything; it is used to that and indeed it wants to control it. [Applause.]
They have a concern about the mining company that is in the offing. It is coming, like it or not, because the wealth of this country belongs to the people of this country and not anywhere else. [Interjections.]
Your worry is that these engineering companies want the government to buy information from them about this country — that is not on. The government will establish mechanisms that are going to make it possible for the government to get information about the mineral resources of this country, Trollip. [Applause.]
The LEADER OF THE OPPOSITION: Chairperson, on a point of order: Was the hon member addressing me?
The HOUSE CHAIRPERSON (Mr M B Skosana): I didn’t hear him addressing you, hon Trollip.
The LEADER OF THE OPPOSITION: Well, he said “Trollip” and I am not “Trollip”, but I am “the hon Trollip”.
The HOUSE CHAIRPERSON (Mr M B Skosana): Yes, you are “hon Trollip”. If you said that, hon member, please note that the hon members are hon members. Let’s address them as such that.
Mr M R SONTO: Thank you, Chair. The DA is worried about the capacity of the council. What capacity? We have already explained that not a single engineering or geoscience company has the requisite capacity that will deal with everything that we need, especially the information that we are talking about.
The government is there to help even the council, if it lacks the capacity, so that it can get the capacity it requires, because we want the council to deliver on its mandate.
I am very grateful on behalf of the committee that all the parties that represent constituencies of poor people understood the necessity of the Bill, except for the DA. I thank you. [Applause.]
The MINISTER OF MINERAL RESOURCES: Chairperson, firstly, I would like to say I am very disappointed in Mr Schmidt. I thought he was intelligent enough to understand the objective of this Bill.
It is interesting that the DA has been up in arms about the Information Bill and the state concealing information. However, when it is the private sector, the DA says that it has a right to conceal information on exploration. I am really disappointed. You are not consistent. [Applause.] You can say “Wha, wha, wena”, but it is just like that.
The Council for Geoscience wants the state to be the custodian of any exploration that happens in the country so that anyone who wants to invest in South Africa can have access to that information. That is the purpose.
We want to promote investment and to grow this country’s economy; and the mining sector must also grow. In fact, as far as the private sector is concerned, the mining companies are keen to provide that information to the state as the custodian. That’s what we want the Council for Geoscience to do. I am very disappointed, Mr Schmidt.
We welcome the support from the ANC, but I also must say that we should not confuse what is in the Mineral and Petroleum Resources Development Act, when it comes to the mining rights, and the custodianship of the mining data. Those are two different things.
We want to grow the economy. Research is very critical in making sure that technology in the country grows and that we understand what the state has and where to find that information. We want to make South Africa globally competitive, so that’s the purpose and objective of the Council for Geoscience.
I must respond to hon Kotsi: We recognise the issue of professional bodies, but it must also be open. It cannot only be one institution for life because then you’ll have ancestors who serve on the Council for Geoscience for ever - 30 years! Why don’t we give other people a chance also to participate? That’s the issue. This person you are talking about has been idlozi [an ancestor]. [Applause.] We cannot have amadlozi [ancestors]. Space must be created for others.
We welcome the support of the IFP.
I agree with Mr Marais that when it comes to the issues of skills and infrastructure there are challenges, but we are addressing that with Treasury to making sure that the Council for Geoscience can be properly funded.
I hope that through the new system of budgeting you will also play a role in making sure that we get better resources from Treasury. I hope that you will contribute positively.
With this particular Bill, we welcome the support of the ANC. I also want to thank the chairperson for the appropriate and important public hearings he held and that he managed to steer this ship in the right direction. The Council for Geoscience is very important when it comes to making sure that we know what is where. If it were not for the Council for Geoscience, we wouldn’t know about those areas in the country that are dolomitic. Today we have this knowledge because of this institution, hence we now need to capacitate it much more.
In conclusion, Mr Schmidt, do not mix up state-owned mining companies with the Council for Geoscience; it is going to come and you will understand its role.
There are no blurred areas between the Council for Geoscience and the state- owned mining company. It will come and compete, as we’ve said, with the rest of the private sector. We don’t have the intention of taking short cuts.
It will go through due diligence like any other company and it will apply to the Department of Mineral Resources for opportunities like any other private company.
Let’s not mislead the public into thinking that the lines are blurred. There is nothing that is blurred; everything is clear. [Interjections.]
Hon Ellis, you’re the oldest member of this Parliament, you must teach us how to behave. Thank you. [Applause.]
Mr M J ELLIS: Mr Chairman, on a point of order, sir: The hon Minister who has just spoken is misleading the House. I am not the oldest member of this House.
The HOUSE CHAIRPERSON (Mr M B Skosana): I agree!
Debate concluded.
Bill read a second time (Democratic Alliance dissenting).
REPEAL OF THE BLACK ADMINISTRATION ACT AND AMENDMENT OF CERTAIN LAWS
AMENDMENT BILL
(Consideration of Report)
Nom J B SIBANYONI: Sihlalo, ngijame la njengomjaphethe, esikhundleni sakaSihlalo wethu wekadeni, uMhlonitjhwa uNgoako Ramathlodi, begodu simfisela itjhudu ngokukhethwa kwakhe abe liSekela Ngqongqotjhe lomNyango wezokuVuselelwa kweeMilo. Begodu bekuzabakhona uSosibebhe wekomiti yethu uMhlonitjhwa uMondli Ngungubele, naye simfisela itjhudu ngokukhethwa kwakhe … [Iinthikaziso.] (Translation of isiNdebele paragraph follows.)
[Mr J B SIBANYONI: Chairperson, I am standing here as acting chairperson on behalf of our longest-serving chairperson, hon Ngoako Ramatlhodi. We therefore wish him all the best on being appointed Deputy Minister of Correctional Services. And to our Chief Whip, hon Mondli Gungubele, who was supposed to be here, we also wish him all the best on being appointed … [Interjections.]]
The HOUSE CHAIRPERSON (Mr M B Skosana): Order, hon members, order please!
Mr J B SIBANYONI: … waba yiMeyara ephezulu eMkhandlwini Dorobha wekuRhuleni. [… Executive Mayor of Ekurhuleni Metropolitan Municipality.]
I’m here just to give a very brief report on the Repeal of the Black Administration Act and Amendment of Certain Laws Amendment Bill. In order for the members to understand this, we’ve got to remember that there was an Act called the Native Administrative Act, Act No 38 of 1927. It later became known as the Bantu Administration Act, Act No 38 of 1927. Finally, it was known as the Black Administration Act, Act No 38 of 1927.
When we repealed all the apartheid laws, it was not possible to repeal this Act in toto because there is section 12 and section 20 of this Act, as well as the third Schedule of this Act, which deals with the judicial functions of the traditional leaders. This portion deals with the traditional courts or the tribal courts, the iinkundla – makgotla [traditional courts].
Now, if the Act had been repealed in toto, there would have been a vacuum. In order for the vacuum not to exist, it was necessary to keep on extending these particular portions.
These portions have been extended lately by the Repeal of the Black Administration Act and Amendment of Certain Laws Act of 2005. That Act comes to an end on 30 December this year. It was obvious. We could foresee that there was no way in which we could be in a position to pass the Traditional Courts Bill before 30 December this year. As such, it became necessary that we should come before this august House and ask for the extension of this Act.
I must say that the judicial functions of traditional leaders constitute one of the most important African laws. It has to do with the restorative justice of ubuntu, a system of law where there is no winner or loser, but where disputes are reconciled. As we stand here, we say this Bill intends to ask for an extension until 20 December 2010.
We need some time as the Justice Portfolio Committee to engage with … amakhosi emvelo, amakhosi endabuko, abantu bakwaMthaniya, sibanikele isikhathi sokobana baveze amazizo wabo, abakwaXhosa, bakwaSikhukhune bakwa Makhado sithi … [… indigenous leaders, traditional leaders, the people of Mthaniya, who will be given an opportunity to express their views; to the people of kwaXhosa, Sikhukhune and Makhado we say …] … Ndaa! … [… Hello!…] … so that they have a chance to comment on this intended Traditional Courts Bill. This is a Bill that takes into consideration the Constitution, as well as the Bill of Rights. It is gender sensitive. As a result we need time to undergo that process to give all South African people, who are still living according to and observing our beautiful traditional jurisprudence or our traditional law, an opportunity to comment.
Yeke-ke, sitjhaba sekhethu, sibawa isikhathi. Sizoninikela ithuba lokobana niveze amazizo wenu noke ngokupheleleko. [We therefore request time from our people. We are going to give all of them an opportunity to express their views in full.]
In conclusion, I want to say the ANC supports this Bill, the Repeal of the Black Administration Act and Amendment of Certain Laws Amendment Bill. I must also mention that we are fortunate that all the parties that are participating in the Portfolio Committee on Justice and Constitutional Development agreed that they don’t have any problem with this Act being extended until 30 December 2012. Thank you. [Applause.]
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, I move:
That the report be adopted. Motion agreed to.
Report accordingly adopted.
REPEAL OF THE BLACK ADMINISTRATION ACT AND AMENDMENT OF CERTAIN LAWS
AMENDMENT BILL
(Second Reading debate)
There was no debate.
Bill read a second time.
CONSIDERATION OF REPORT OF STANDING COMMITTEE ON FINANCE - 2010 REVISED FISCAL FRAMEWORK
Mr T A MUFAMADI: Nndaa, khakhamela, dada muhali, marungadzinndevhelaho … [Praise.]
With regard to the responsibilities vested in me as of now, it is my pleasure to introduce the report of the Standing Committee on Finance on the Revised Fiscal Framework, as presented by the Minister of Finance on 27 October 2010 in the Medium-Term Budget Policy Statement.
Let me indicate that the main thrust of the Fiscal Policy Framework is premised on a countercyclical and expansionary policy approach informed by the need to stimulate job creation, growth and development to best address the objectives of a developmental state.
Amongst other things, it seeks to promote the creation of decent work and sustainable livelihoods by strengthening labour market institutions; further the expansion of education and opportunities; promote health; ensure rural development underpinned by food security and land reform; enhance safety and security and fight corruption; and advance settlement philosophy and programmes and, amongst other things, local government that addresses the needs of the people.
Through strategic state intervention, the achievement of the above- mentioned priorities will ensure that a developmental state provides equitable wealth redistribution in the economy. Fiscal policy is one of the key policy instruments available to policy-makers to redirect the economy in order to activate the stated objectives of government.
The monetary policy is a key policy instrument of the Reserve Bank which focuses on monetary intervention in the economy. This includes management of interest rates, price stability, exchange rates which must be utilised to actively promote the creation of decent employment, economic growth, broad-based industrialisation, reduced income inequality and other developmental imperatives.
On the balance of evidence, the Revised Fiscal Framework as presented to this honourable House is consistent with the government policy which is directed towards the maintenance of social expenditure and economic infrastructure investments. It also provides stimulus packages for economic activities as stated in the Medium-Term Budget Policy Statement of 2010.
The basis for the committee to analyse the Revised Fiscal Framework and any envisaged changes remains the adopted fiscal framework that laid the basis of the Division of Revenue Bill and other relevant money Bills tabled earlier this year. The Revised Fiscal Framework as announced in the Medium- Term Budget Policy Statement does not show any major shifts that are inconsistent with the government objectives, which are geared towards the expansion of public spending directed towards the maintenance of economic investment, particularly in infrastructure — social and economic.
In essence, the main thrust of the revised fiscal policy is to ensure a balance between expansion and spending in order to address problems of unemployment and the need to reduce the levels of borrowing and to mitigate against long-term implications of debt service costs. The committee has noted the positive aspects of South Africa’s countercyclical policy designed to steady the economy and to protect core social and economic programmes from undue volatility.
In pursuing this trajectory, in the past the government realised some surpluses, particularly when the economy was growing at a higher rate. Let me also indicate that the Revised Fiscal Framework as tabled before this House seeks to achieve higher gross domestic product, GDP, growth and reduced inflation; a recovery in tax revenue as a ratio to GDP; moderation in the real growth of non-interest expenditure; a reduction in the proportion of expenditure to GDP over the Medium-Term Expenditure Framework, MTEF; and a rise in government debt service costs from 7,5% of expenditure in 2010-11. Most important is the R977,2 billion made available for spending next year; and the additional R89 billion for public expenditure over the next MTEF period.
Before I recommend the committee’s report and proposal, let me also take this opportunity, on behalf of the committee, to congratulate the government and the National Treasury in particular, on being rated number 1 amongst 94 countries by the International Budget Partnership in its 2010 Open Budget Survey. [Applause.]
The survey is based on the degree of transparency that government is able to display in providing budget documentation and information to allow for both public participation and oversight by the public in the process of budget decision-making, so that the citizens can at all times hold government accountable for the public purse.
Equally, we must congratulate the collective efforts of our electorate for keeping government under constant scrutiny through parliamentary committees and public engagement. May I also congratulate committee members and thank them for their willingness to deliberate on the Revised Fiscal Framework as presented within a very short space of time, as dictated by the parliamentary programme. Despite those limitations and obligations imposed on us, the committee has succeeded in applying its mind to the content of the document.
Amongst other things, based on those deliberations, the committee recommendations are as follows: National Treasury should take appropriate steps to accelerate the rate of decline in expenditure; provide the committee with a detailed report on how government will rebuild a fiscal space that we seem to have lost during the recession; provide the committee with a detailed report on the impact of the fiscal framework on a value- added tax zero rating, particularly on school textbooks; and government should resolve the issue around Southern African Customs Union revenue- sharing formulas as a matter of urgency.
Since it has become evidently clear that to realise the full implementation of the Money Bills Amendment Procedure and Related Matters Act, Parliament’s programme would require a total overhaul. We therefore recommend that the House accept the Revised Fiscal Framework as tabled.
Let me also say and indicate up front, that the ANC supports the Revised Fiscal Framework.
Lastly, on behalf of the committee, I would also like to congratulate government under the stewardship of President Jacob Zuma, the Minister of Finance, and his deputy, together with the National Treasury staff for their incisive collective efforts on the presentation of the Medium-Term Budget Policy Statement. I thank you.
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, I move:
That the report be adopted.
Motion agreed to.
Report accordingly adopted.
The House adjourned at 16:40. ____ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
FRIDAY, 29 OCTOBER 2010
ANNOUNCEMENTS
National Assembly and National Council of Provinces
The Speaker and the Chairperson
-
Draft Bills submitted in terms of Joint Rule 159
1) Correctional Matters Amendment Bill, 2010, submitted by the Minister of Correctional Services. Referred to the Portfolio Committee on Correctional Services and the Select Committee on Security and Constitutional Development.
COMMITTEE REPORTS
National Assembly
- The Budgetary Review and Recommendation Report of the Portfolio Committee on Energy on the Performance of the Department of Energy for the 2009/10 Financial Year, dated 26 October 2010
The Portfolio Committee on Energy, having assessed the performance of the Department of Energy, reports as follows:
- Introduction
During May 2009, the President of the Republic of South Africa announced the restructuring of Cabinet and national departments to align the structure and electoral mandate of government with developmental challenges. As a result, the former Department of Minerals and Energy (DME) was divided into two Departments, that of Mineral Resources and that of Energy. A government-wide task team was established under the auspices of the Department of Public Service and Administration (DPSA) to oversee the transition. The establishment of the Department of Energy as a stand alone department was finalised at the end of the 2009/2010 financial year. This report therefore seeks to analyse the performance and expenditure of the Department of Energy during the 2009/2010 financial year (and the first two quarters of the 2010/11 financial year.
1.1 The Role and Mandate of the Committee
In terms of the Constitution of the Republic of South Africa, Parliamentary committees have a mandate to legislate, conduct oversight over the Executive’s actions and facilitate public participation.
The Portfolio Committee on Energy’s mandate is governed by Parliament’s mission and vision, the rules of Parliament and Constitutional obligation. The mission of the Portfolio Committee on Energy (the Committee) is to contribute to the realisation of a developmental state and ensure effective service-delivery through discharging its responsibility as a Portfolio Committee of Parliament. Its vision includes enhancing and developing the capacity of Committee Members in the exercise of effective oversight over the Executive Authority. The primary objective of the Committee is to oversee, scrutinise and influence the performance of the Executive and its agencies. This implies holding the Executive and related entities accountable through oversight on the objectives of its programmes, scrutinising its budget and expenditure (quarterly and annually), and recommending, through Parliament, actions the Executive should take in order to attain their strategic goals and contribute to service-delivery.
Furthermore, Section 5 of the Money Bills Amendment Procedures and Related Matters Act, No 9 of 2009 (the Act) provides that the National Assembly, through its committees, must annually assess the performance of each national department and annually submit Budgetary Review and Recommendation (BRR) Reports for tabling in the National Assembly. These BRR Reports should be considered by the Committee on Appropriations when it is considering and reporting on the Medium Term Budget Policy Statement (MTBPS) to the House.
1.2 The Department
The Department of Energy (the Department) is the primary Government institution that is responsible for formulating and implementing policies on energy. The Department reports to and advises the Minister who, in conjunction with the Cabinet, takes final responsibility for Government policies. The Department is headed by the Director-General, who is responsible for ensuring that South Africa has a secure and sustainable provision of energy for socio-economic development.
1.3 Methodology used in compiling the BRR Report
For the period under review, the Portfolio Committee on Energy, in exercising its oversight role, had interacted with the Department of Energy and analysed its 2009/10 to 2011/12 strategic plan, the 2009/10 annual report, the 2009/10 Estimates of the National Expenditure, budget vote for 2010/11 and the Constitution.
- Strategic Priorities and Programmes of the Department
2.1 Strategic Priorities of the Department
The Department’s strategic plan seeks to deliver results along eight strategic objectives that include promoting energy security through reliable, clean and affordable sources; universal access to energy sources; transformation of the energy sector and strengthening the operations and management of the Department. A brief description of these strategic objectives is as follows:
• Ensure energy security – creating and maintaining a balance between
energy supply and energy demand, develop strategic partnerships,
improve co-ordination in the sector and ensure reliable delivery and
logistics.
• Achieve universal access and transform the energy sector – diversify
energy mix, improve access and connectivity, provision of quality and
affordable energy, promote safe use of energy and transform the energy
sector.
• Regulate the energy sector – develop effective legislation, policies
and guidelines, encourage investment in the energy sector, ensure
compliance with legislation.
• Effective and efficient service delivery – understands stakeholder
needs and improves turn-around times.
• Optimal utilisation of energy resources – develop enabling policies,
encourage energy efficient technologies.
• Ensure sustainable development – promote clean energy alternatives,
encourage economic development, promote job creation.
• Enhance DoE culture systems and people – attract, develop and retain
appropriate skills, promote good organizational culture, make the
Department an employer of choice.
• Promote good corporate governance – optimal utilisation of resources,
manage budget effectively, implement fraud and risk management, and
ensure compliance with relevant prescripts.
- Programmes of the Department
The activities of the Department were organized in the following programmes:
2.1 Programme 1: Administration
The purpose of the Administration programme is to enable the Department to deliver on its mandate by providing strategic management and administrative support to the Department of Energy and its Ministry. Programme 1 provides strategic support and management services to the Ministry, Director- General’s Office, Audit Services Chief Directorate, Strategy, Risk and Monitoring Chief Directorate, Special Programmes and Projects Directorate; Corporate Services Branch (Human Resources, Communication and International Relations, Legal Services and Auxiliary Support Services); Chief Financial Officer’s Office-Branch (Finance, Information Technology and Supply Chain Management).
2.2 Programme 2: Hydrocarbons and Energy Planning
This programme comprises of two sub–programmes, namely Hydrocarbons and Energy Planning. Hydrocarbons sub-programme develops policy and regulations to manage petroleum, coal and natural gas. The Petroleum Controller is included in this sub-programme and is responsible for the implementation of the Petroleum Product Amendments Act (Act no. 58 of 2003). Energy planning sub-programme, in particular, focuses on promoting the sustainable use of energy resources through integrated energy planning.
2.3 Programme 3: Electricity, Nuclear and Clean Energy
Electricity and Nuclear management provides the platform for the overall management of the programme. The Electricity sub-programme develops implements and monitors electricity policy and programmes. The Integrated National Electrification Programme (INEP) Business Planning Unit manages the electrification planning, funding and implementation process, including addressing electrification backlogs with the aim of achieving universal access to electricity. The Nuclear sub-programme aims to improve the governance of the nuclear sector, specifically in relation to nuclear safety, non-proliferation as well as nuclear technology. The Clean Energy sub-programme facilitates the implementation of renewable energy and Energy Efficiency Technologies. This sub-programme also promotes and regulates the Clean Development Mechanism (CDM) activities.
2.4 Programme 4: Associated Services
The Associated Services programme is made up of five State-Owned Entities reporting to the Minister of Energy, namely the National Nuclear Regulator (NNR), the National Energy Regulator (NERSA), the Central Energy Fund (CEF), South African Nuclear Energy Corporation (NECSA) and the Electricity Distribution Industry Holdings (EDIH).
- Analysis of the Department’s Prevailing Strategic and Operational Plans
3.1 Programme 1: Administration
Due to the split from the former Department of Mineral Resources, the Department had to grapple with the issue of ensuring that it had manpower. The process of filling vacancies is key to the Department in its drive to implement its plans and achieve its strategic objectives. The composition of the interim structure had 325 personnel. At the moment, the Department is operating at a rate of 531 funded posts. This creates a shortfall of 349 unfunded posts, when one takes into account the desired total figure of 925 for the Department to be fully staffed. At present, the Department has 73 vacant posts. The recruitment and selection process to fill these 73 posts is at an advanced stage.
The following are key projects for the Department as contained in the strategic plan:
• Filing of vacancies,
• Payment turn around time,
• Procurement spent on HDSA,
• Internship programme,
• Bursaries,
• Training,
• Presidential Hotline, and
• Employment Equity.
3.2 Programme 2: Hydrocarbons and Energy Planning
The purpose of the Hydrocarbons and Energy Planning programme is to undertake energy planning in order to promote the sustainable use of energy resources by developing appropriate policies and regulations that, in turn, are expected to promote efficient use of petroleum products, coal, gas and renewable energy sources. The Hydrocarbons and Energy Planning programme comprises of two sub-programmes, namely the Energy Planning and Hydrocarbons sub-programmes.
In terms of service delivery achievements, this programme has, since the implementation of the Petroleum Products Amendment Act (PPAA) Act No. 58 of 2003, issued approximately 5 581 licences compared to the pre-determined target of 1 200. But, the PPAA awareness campaign to inform people about rules and regulations was not held due to financial constraints.
The Programme’s key projects for 2010/11 are as follows:
• Fuel strategic stock policy,
• LPG price regulations,
• Fuel specifications and standards,
• 25 year Fuel Liquid Infrastructure Plan,
• Petroleum pricing framework,
• Transnet Multi Product Pipeline,
• 20 Year Integrated Energy Plan,
• National Integrated Energy Modelling System, and
• SANERI/SANEDI
3.3 Programme 3: Electricity, Nuclear and Clean Energy
The purpose of the Electricity, Nuclear and Clean Energy programme is to govern the electricity, Nuclear and Clean Energy sectors with special emphasis on secure supply, universal access to electricity, development of the nuclear sector, diversification of energy sources and the promotion of the clean energy technologies.
This programme also transfers conditional grants to municipalities and Eskom for Integrated National Electrification Programme (INEP). The INEP connects electricity to rural households and schools. Other plans of this programme for the 2010/11 financial year include, among others, the following:
• IRP 2010,
• ISMO,
• Electricity Regulation Act, Second Amendment Bill
• Independent Power Producers,
• REDs,
• Standard offer policy,
• INEP,
• Solar Water Heaters, and
• Nuclear.
3.4 Programme 4: Associated Services
The purpose of the Associated Services programme is to provide services in support of the Department’s mandate through funded and non-funded statutory bodies and organisations.
The measurable objectives were to enhance the Department’s objectives through policies and directives, promoting its legislative mandate and leading to the creation of an environment conducive to sustainable development, investment and the improvement of the quality of life of all South Africans.
The greater percentage of the Departmental budget (approximately 80 per cent) was allocated to this programme for transfers to entities such as NECSA, EDI and NNR.
- Analysis of Expenditure Reports
4.1 The Overall Departmental Allocations and Expenditure
Departmental Budget per Programme
| Programme | 2010/11 | Roll-Over | Adjusted | Expenditure | Exp as % |
| Initial | s | Allocatio | YTD | of Budget | |
| R’000 | R’000 | n | R’000 | ||
| R’000 | |||||
| Hydrocarbons | 1,558,608 | 1,558,608 | 402,196 | 25.80 | |
| and Energy | |||||
| Planning | |||||
| Electricity, | 408,817 | 408,817 | 29,132 | 7.13 | |
| Nuclear and | |||||
| Clean Energy | |||||
| Associated | 3,463,760 | 3,463,760 | 1,618,750 | 46.78 | |
| Services |
Total |5,535,390 | |5,535,390 |2,110,335 |38.12 | | The Department’s overall expenditure is 38 percent of the R5, 3 billion allocated budget for the 2010/11 financial year as at 30 September 2010. The Department has already spent 48 percent of the allocated Compensation of Employees budget, 69 percent of Goods and Services, 64 percent of Capital Assets allocation and 37 percent of Transfers and Subsidies budget.
The Department’s budget is 97 percent Transfers and Subsidies and 3 percent operational expenses. As a result, although the expenditures on other spending areas is well above the norm of 50 percent as at mid year (30 September 2010), the lower expenditure on Transfers brings down the overall average below the norm (38 percent) especially because, as stated above, Transfers and Subsidies accounts for 97 per cent of the total budget. This is a significant weighting which greatly influence the total expenditure as at 30 September 2010.
The observed under-spending by the Department on Transfers and Subsidies is a matter of concern particularly taking into account that the core operations of the Department are funded though Transfers. Taking cognizance of the fact that the Department is on its first year of operation as a stand-alone entity, factors -such as capacity constraints, appropriateness of the supporting infrastructure and so forth -are of significant importance in assessing the performance of the Department, both qualitatively and quantitatively.
The Goods and Services expenditure of the Department is approximately 19 percent above the 50 percent norm or expectation. The costs, in that regard, seem to be escalating amid the austerity measures that the Department has put into place. The Department however is allocated additional R48 million through the adjustment budget process which will be spent on operational activities and therefore easing the prevailing trend.
4.2 Administration
The spending on this programme is 58 percent which is above the 50 percent expectation at the middle of the financial year. The spending on this programme is satisfactory. However, the Department should monitor closely the expenses and contain them within the allocated budget to avoid over spending. It is encouraging that the Department adopted some cost containment measures in the beginning of the financial year in response to the limited resources at their disposal.
4.3 Hydro-Carbons and Energy Planning
The operational budget performance of this programme is at 52 per cent. The transfer and subsidies expenditure is however 25 percent of the total allocation of R1.5 billion and the Committee is not satisfied with this low level of spending. This money hinges significantly on the ability of the Department to discharge its mandate of security of petroleum supply through the construction of the Transnet Multi-Purpose pipeline.
There are concerns around the running costs of the projects with the delays. But, the Department indicated that the blockages that were experienced on the project are resolved and the work is continuing smoothly and the second payment, which will increase total spending on this programme by 25 per cent to 50 per cent, will be made in the near future.
Furthermore, there was an indication that the project is behind schedule by 9 months. It was reported that Transnet is assessing the impact of the delay and will report to the Department in the middle of November 2010.
It is therefore recommended that the Department engages Transnet to ensure that the impact of the delay is managed properly and costs to the taxpayers are contained. The Committee requested that the Department should forward the progress report to the Committee before the end of November 2010.
4.4 Electricity, Nuclear and Clean Energy
The compensation of employee’s expenditure of this programme is 58 percent as at the end of September 2010. The Goods and Services expenditure is 78 percent, which is way above the 50 percent benchmark. The Transfer and Subsidies, on the other hand, is at zero per cent expenditure and this is a serious cause for concern.
This programme is the driving force behind renewable energy and has a lot of projects that can make a lot of difference to poor South Africans through access to renewable energy. It is therefore disappointing to observe that not much seems to be happening at the halfway mark of the year. The Committee is not satisfied with this.
The Department reported that procurement processes were complete and the roll out is gaining momentum, particularly in the Province of KwaZulu- Natal. 4.5 Associated Services – Transfers and Subsidies
The average expenditure of 48 percent for this programme approximates the norm of 50 percent. The transfer to the State-Owned Entities, in particular, is at a very comfortable level of more than 50 percent.
The Intergraded National Electrification Programme transfers to Eskom are at a reasonable level of 45 percent but transfers to municipalities are lagging behind with 26 percent. The Department reported a challenge of misalignment of National Departments and Municipalities’ reporting cycles as the cause of disparity in this regard.
The Department further elaborated on the trends over the years on this project on expenditure performance. The analysis indicated that the expenditure on this project picked up in July 2010, which is the beginning of the municipalities financial period.
There is a clear indication that the capacity to implement these projects at the Local Government level is still a challenge. The Department indicated that it used to intervene by deploying engineers to municipalities through an internship programme which was discontinued in the 2010/11 financial year due to lack of funding.
Over the past few years, the Department has spent around 98 percent of the budget on these projects and it is suggested that the Committee is fairly comfortable with the expenditure level on this programme.
Furthermore, the Department raised a number of critical projects to the value of R203 million that are unfunded. These projects are crucial for stability of this Department and its capacity development and therefore it is recommended that the amount be granted to the Department for execution of these projects. The additional funding is critical considering that Government has already committed the funding of these activities.
- Statement of Financial Performance
The total revenue of the Department amounted to R4.9 billion–comprising R4.7 annual appropriation and R217.1 million from Departmental revenue.
The total expenditure amounted to R4.5 billion–comprising of R673 million for current expenditure; R3.8 billion total transfers and subsidies; and R48.7 million total expenditure for capital assets. The under expenditure for the 2009/10 financial year amounted to R348.6 million.
- Analysis of Auditor General
For the 2009/10 financial year under review, the Department received a qualified audit report. The reasons cited for such a qualified audit report were that the Accounting Officer of the Department did not ensure that full and proper records of the receivables for Departmental revenue of the Department was kept as per prescribed norms and standards. The Department could not provide sufficient appropriate audit evidence to support the Departmental receivables for revenue balance amounting to R25.6 million. The Audit Report also pointed to some irregular expenditure which was incurred without adhering to the internal delegation of authority, e.g. services rendered prior to approval by the relevant authority. Those were picked up by the internal controls established by the Department and all cases were evaluated and condoned by the Accounting Officer during the year. Although under-spending was reported, the percentage was very low (2.9 percent of the total budget) and this was mainly due to delays in finalising contracts for non-grid service.
- Report from the Committee on Public Accounts
The Department received a qualified audit and it is yet to meet with the Committee on Public Accounts, wherein, recommendations by the Committee will be made.
-
Observations
• The overall expenditure of Programme 1: Administration is 58 percent which is above 50 percent expectation at half year.
• The local and national spheres reporting cycles are not aligned and this is causing Integrated National Electrification Programme (INEP) grants and Solar Water Heaters (SWHs) programme at municipality level seem to be spending less than they are supposed. National Department commenced transferring grants to municipalities during its second quarter (July – September) which is the first quarter for municipalities.
• The Department continuously transfers INEP grants to municipalities well aware and conscious of the fact that most of the municipalities do not have technical capacity to implement this programme.
• The Department of Energy is still sitting with key unfunded activities such as National Electricity Response Team, Federation of International Football Association (FIFA) tournament, Clean Energy Operations, International affiliations, accommodation, establishment of SANEDI and electrification internship programme amounting to R203 million.
• Transnet Multi Product Pipeline project expenditure is at 25 percent to date and this very is worrying considering the need to ensure security of petroleum supply for the Country. The delays were caused by the Environmental Impact Assessment processes and land disputes that occurred in areas where the pipeline is being constructed. The project is understood to be running behind schedule by nine months. There is also possibility that the delay may result in costs escalation of the project if it is not managed well.
• The Committee is concerned with REFSO and Working for Energy that have spent 2.3 percent and 0 percent, respectively. This is attributed to lack of Human Resources within the Clean Energy Division of the Department.
• Roll out of Solar Water Heaters (SWHs) by municipalities is marginally low. However, tendering and procurement processes are at advanced stage and roll out may commence at any time from now.
-
Recommendations
The Portfolio Committee on Energy recommends the following:
• That the Department of Energy should closely monitor its expenses and
carefully implement cost containment measures to avoid over spending
on the allocated budget for Programme 1.
• That Committee on Appropriations should look at ways to align
reporting cycles and engage with Department of Cooperative Governance
and Traditional Affairs to align and synchronise national, provincial
and local spheres of government planning, budgeting and implementation
of programmes. This systemic governance issue is impeding planning and
implementation of programmes and should be seriously looked at and
joint committee meeting between Portfolio Committee on Cooperative
Government and Traditional Affairs and Portfolio Committee on Energy
need to be convened to examine this matter.
• That the business model of implementing INEP and Solar Water Heaters
by municipalities should be revisited and redesigned in order to
transfers of funds to implement such programmes should be based on the
assessment of municipalities’ technical capacity. Furthermore, the
Department should report to the Portfolio Committee on Energy on a
business model to improve the current situation with clearly defined
timeframes.
• That unfunded Departmental activities to the amount of R203 million
should be funded by National Treasury because commitments have already
been made by Government i.e. World Cup Guarantees, Clean Energy
Operations, International affiliations, accommodation, establishment
of SANEDI and electrification internship programme and the Department
has also made commitments. However, the Department must take
cognisance and address under-spending that was experienced in the
2009/10 financial year.
• That Transnet should undertake the impact assessment of the delay on
the Multi Purpose Pipeline project and report this to the Department
within 30 days after the adoption of this report by the House. The
Department should, in turn, report on this issue to the Portfolio
Committee on Energy 15 days after the receipt of the said report from
Transnet.
• That National Treasury should consider allocating additional resources
to the Department of Energy for the Clean Energy Programme of the
Department in order to implement renewable energy projects.
Furthermore, the Department of Energy should report to the Portfolio
Committee on Energy on the recruitment processes for the Clean Energy
Programme. The latter report should be submitted to the Portfolio
Committee on Energy every quarter for three coming years.
• That the Department of Energy should report to the Committee on the
progress made on SWHs roll out on a monthly basis for a period of
three months after the adoption of this report by the House.
• That the Department of Energy should consider the establishment of a
designated Monitoring and Evaluation Unit that will oversee the State-
Owned Enterprises reporting to the department.
• That the Department of Energy should strengthen its oversight
mechanisms over its State-Owned Enterprises in order to determine if
they are fulfilling their strategic mandates and identify operational
inefficiencies.
• That the Department of Energy should focus more on hydrocarbons and
clean energy sources in the Country.
• That the campaign around changing consumer behaviour on usage of
energy (energy saving lifestyle), one of the objectives of the
Department of Energy, should be reflected on the Department’s revised
strategic plans since the Portfolio Committee on Energy supports the
Department’s intentions to educate the public on the need to save
energy.
Report to be considered.
MONDAY, 1 NOVEMBER 2010
TABLINGS
National Assembly and National Council of Provinces
- The Minister of Tourism
a) Agreement between the Government of the Republic of South Africa
and the Government of the Socialist Republic of Vietnam on co-
operation in the field of tourism, tabled in terms of section
231(3) of the Constitution of the Republic of South Africa, 1996.
b) Explanatory Memorandum to the Agreement between the Government of
the Republic of South Africa and the Socialist Republic of Vietnam
on co-operation in the field of tourism.
- The Minister of Arts and Culture
(a) Report and Financial Statements of Vote 12 – Department of Arts
and Culture for 2009-10, including the Report of the Auditor-
General on the Financial Statements and Performance Information for
2009-10.
COMMITTEE REPORTS
- MEMORANDUM OF THE COMMITTEE ON PRIVATE MEMBERS’ LEGISLATIVE PROPOSALS AND SPECIAL PETITIONS IN TERMS OF RULE 238(1)
The Committee on Private Members’ Legislative Proposals and Special Petitions hereby tables a memorandum in terms of Rule 238(1), seeking permission from the National Assembly to introduce a bill dealing with the processing of special and general petitions at national level.
MEMORANDUM ON THE OBJECTS OF THE PROPOSED NATIONAL PETITIONS BILL
- PURPOSE OF THE BILL
The rationale of the proposed bill can be summarised as follows:
a) To give effect to democratic accountability, including the
right to petition Parliament, as a constitutional dimension of
the principle of the rule of law.
b) To provide a comprehensive and unified mechanism for lodging,
processing and regulating petitions at national level, thereby
enhancing public participation in the democratic processes of
Parliament.
c) To address citizens’ concerns by creating a petitions process
that will lead to enhanced service delivery and improved
socioeconomic conditions.
- OBJECTS OF BILL
The bill seeks to address grievances that citizens present to Parliament in the form of a petition. The bill will not override existing provincial legislation on petitions and does not intend to introduce anything that is not in keeping with the provisions of the Constitution of the Republic of South Africa, 1996 and other laws in the Statute Book. It seeks furthermore to give practical effect to the democratic values of human dignity, equality and freedom, as set out in section 7(1) of the Constitution. In terms of section 7(2) of the Constitution, the state is obligated to respect, protect, promote and fulfil the rights in the Bill of Rights, including the right given in section 17 where it is stated that “everyone has the right… to present petitions”.
3. FINANCIAL IMPLICATIONS FOR STATE
There will be no financial implications for the state.
Memorandum to be considered.
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Report of the Standing Committee on Finance on the 2010 Revised Fiscal Framework, dated 29 October 2010
The Standing Committee on Finance, having considered the 2010 Revised Fiscal Framework, reports as follows:
-
Introduction
Section 12(3) of the Money Bills Amendment Procedure and Related Matters Act, Act No. 9 of 2009 (the Money Bills Act) requires that the Minister of Finance tables a revised fiscal framework with the national adjustments budget if the adjustments budget effects changes to the fiscal framework.
Section 12(5) of the Money Bills Act further requires that the revised fiscal framework be referred to a joint sitting of the Committees on Finance for consideration and reporting.
The 2010 revised fiscal framework was tabled in the National Assembly of Parliament by the Minister of Finance, on 27 October 2010 and the National Assembly referred it to the Standing Committee on Finance on the same day. The Standing Committee on Finance and the Select Committee on Finance conducted, on 29 October 2010, a joint meeting to consider the revised fiscal framework.
- Committee’s Observations The Standing Committee on Finance (the Committee) noted that the consolidated government deficit is projected to decrease from 6.3 per cent of the gross domestic product (GDP) in the 2010/11 financial year to 3.2 per cent of GDP in the 2013/14 financial year. The projected reduction in government deficit was driven, amongst other things, by the strong uptake in revenue and the stabilization in non-interest spending. National Treasury indicated that growth in expenditure will need to moderate as debt service costs increase over the Medium Term Expenditure Framework (MTEF). National Treasury undertook to continue to pursue a counter-cyclical fiscal policy that will aim to grow revenues while gradually reducing non-interest stimulus spending. It is however important to keep the fiscal trajectory on a sustainable path while meeting growth expectations.
The Committee noted that revenue, as a percentage of GDP, is increasing at a rate of 0.2 per cent per year over the next three years (that is 28.7, 28.9 and 29.1 per cent in the 2011/12, 2012/13 and 2013/14 financial years, respectively). In the same period, expenditure is declining at a rate of 0.4, 0.5 and 0.5, per cent respectively. As revenue increases and expenditure decreases, the budget will remain in deficit albeit declining, until the 2018/19 financial year.
Over the MTEF period, government departments are requested to reprioritise programmes in order to be efficient and effective. In view of the 2010 audit outcomes by the Auditor General on various government departments, this calls for more stringent control measures on expenditure and prudent financial management.
The Committee recognizes that the Southern Africa Customs Union’s (SACU) revenue sharing formula is currently under review and that the SACU’s Council will meet in December 2010 to resolve this matter. The Committee accepts that this revision should be done carefully and without jeopardizing the economic stability in the Botswana, Lesotho, Namibia and Swaziland (BLNS) countries. The Committee advises that the revenue sharing formula should be favourable towards the South African fiscal burden in order to support South Africa’s ability to boost revenue collection, and consequently increase revenue as a percentage of GDP in the fiscal framework until 2013/14.
The Committee noted that, over the long term, higher economic growth will support debt reduction, enabling government to rebuild the fiscal space.
The Committee noted that the 2010 Medium Term Budget Policy Statement (MTBPS) estimated that the debt amount will be approximately 40 per cent of GDP in the 2015/16 financial year. If the economy experiences another recession and the level of debt is as projected in the 2015/16 financial year, the Committee foresees major challenges. While the MTBPS indicated that the exact level of debt will largely depend on the pace of economic growth, the Committee is of the view that there is still an element of economic uncertainty. The Committee however fully endorses the fact that the economy is currently in a solid position.
- Conclusion
The Committee would like to commend National Treasury that South Africa scored first in the world in the survey of budget transparency of the International Budget Partnership. This achievement results from years of commitment to the reform of the budget system towards greater transparency and greater potential for accountability and participation.
- Recommendations
Having considered the revised fiscal framework, the Standing Committee on Finance recommends the following:
4.1 That National Treasury should take appropriate steps to accelerate the rate of decline in expenditure. 4.2 That National Treasury should provide the Committee with a detailed report on how government would rebuild the fiscal space.
4.2 That National Treasury should provide the Committee with a detailed report on the impact of a zero rating value added tax (VAT) on books on the fiscal framework.
4.3 That National Treasury should resolve issues pertaining to the SACU’s revenue sharing formula as a matter of urgency. 4.3 That the House accepts the Revised Fiscal Framework.
Report to be considered.
- The Budgetary Review and Recommendations Report of the Standing Committee on Finance on National Treasury, dated 29 October 2010
The Standing Committee on Finance, having assessed the performance of National Treasury for the 2009/10 financial year, reports as follows:
- Introduction
In terms of section 5(2) of the Money Bills Amendment Procedure and Related Matters Act, Act No 9 of 2009, committees must annually submit budgetary review and recommendation reports for tabling in the National Assembly for each department. A budgetary review and recommendation report must provide an assessment of the department’s service delivery performance given available resources, an assessment on the effectiveness and efficiency of the department’s use and forward allocation of available resources, and it may include recommendations on the forward use of resources.
- The Mandate and Role of the Committee
The Standing Committee on Finance was established in terms of section 4 (1) on the Money Bills Amendment Procedure and Related Matters Act, Act No 9 of
- The mandate of the Committee is conferred to it by the Constitution, legislation, the standing rules or a resolution of a House, including considering and reporting on- a) The national macro-economic and fiscal policy. b) Amendments to the fiscal framework, revised fiscal framework and revenue proposals and Bills. c) Actual revenue published by the National Treasury. d) Any other related matter set out in the Money Bills Amendment Procedure and Related Matters Act, Act No 9 of 2009.
Further to the above, the mandate also encompasses the committee’s function to legislate, conduct oversight on the Executive’s actions and its entities. The Money Bills Amendment Procedure and Related Matters Act, Act No 9 of 2009 makes provisions for a procedure for this committee to amend money bills.
- Methodology.
In complying with section 5(2) of the Money Bills Amendment Procedure and Related Matters Act, Act No 9 of 2009, the Standing Committee on Finance and the Select Committee on Finance held joint meetings on the 2009/10 Annual Reports of National Treasury, the South African Revenue Services (SARS), the Financial and Fiscal Commission (FFC), Statistics South Africa (Stats SA). The Office of the Auditor-General was also invited to give input during the budget review and recommendation report process. The report therefore reflects key issues that were identified by the two committees.
- Mandate and role of National Treasury
The National Treasury is responsible for managing South Africa’s national government finances, and draws its mandate from Chapter 2 of the Public Finance Management Act, Act No 1 of 1999, together with Chapter 13 of the Constitution, 1996. National Treasury continued to monitor the impact of the global financial crisis and was able to find appropriate responses (interest rates were cut five times, increased the pace of government expenditure etc).
The budget process was enhanced as a result of the Money Bills Amendment Procedure and Matters Related Act, (Act 9 of 2009) and National Treasury’s capacity was increased by creating a division handling international and regional economic policy.
The legislative mandate of the National Treasury includes developing and prescribing measures to ensure equitable resource allocation and proper expenditure control in each sphere of government, as well as to ensure that this function is executed in a transparent manner. The National Treasury does this by advocating and ensuring adherence to the following guidelines and procedures:
• Generally Recognised Accounting Practice. • Uniform Expenditure Classifications. • Uniform treasury norms and standards.
As the custodian of state funds, the National Treasury is therefore responsible for coordinating departments’ budgets in all spheres of government. The Treasury’s role in this regard is to ensure that appropriated funds are transferred to departments for implementation of government priorities, and that government expenditure is continuously monitored. In 2010/11, the National Treasury plans to take stock of conditions associated with a recovering economy. In responding to the developmental challenges currently facing South Africa, the National Treasury will, in line with its mandate, play a crucial role in the government’s plan to shift resources away from lower priorities to higher priorities.
3.1 Strategic Priorities of National Treasury
In line with the President’s call for more systematic approaches to challenges and doing things differently, and to adopt a multidimensional approach in partnership with business and labour in order to speed up service delivery, improve employment and reduce poverty, the National Treasury strategic plan indicates commitment to several issues, such as.
• Ensure that the macroeconomic perspective and analysis provided, is clear and dependable. • Continue robust and constructive engagement with departments and Parliament. • Sustain the fiscal stance followed over the years by applying appropriate fiscal policies. • Embracing the new outcomes-based approach in government and adhering to the President’s call for a more efficient performance oriented public service. This entails developing measurable outcomes for all programmes and projects, working hand in hand with the new Planning and Monitoring and Evaluation ministries in the Presidency, as well as adhering to the Government Wide Monitoring and Evaluation System. • Exploring policy objectives for a new growth path, including making the economy more labour absorptive, raising productivity, boosting exports, promoting investment, as well as improving education, health and training outcomes. • Ensure proper management of public finances. • Continue with the infrastructure development programme, which provided an essential stimulus during the recession. • Accelerate economic growth and higher employment, which require stabilising microeconomic reforms and implementing sound macroeconomic policy. The Treasury has also identified a need to respond to serious challenges such as employment (especially youth employment) • Efficient use of funds to eliminate waste through the government savings and reprioritisation drive that started in 2009. • To stabilise micro and macro economic policy by coordinating fiscal and monitory policy, working in conjunction with the South African Reserve Bank in this regard. • The drive to eradicate fraud and corruption in procurement and tender processes also has important implications on the National Treasury and its partners, particularly the Auditor General.
3.2 Analysis of Expenditure Reports
National Treasury is established in terms of Section 216 of the Constitution, 1996 and Section 5 of the Public Finance Management Act (No. 1 of 1999). Among its responsibilities, National Treasury is required to enforce compliance with good financial management principles and monitor the implementation of budgets. The department’s mandate is executed through programmes that largely play a facilitation and coordination role of the budget. To ensure effective delivery on its mandate, the department is allocated a budget as per programme and economic classifications that supports the identified priorities of the department.
The Constitution requires that budgets and budgetary processes must promote accountability. In line with this constitutional principle, the Public Finance Management Act (PFMA) requires each government department and public entity to prepare reports (performance and financial) to account on their activities. The scrutiny of such reports is very important to the oversight work of Parliament, as it provides Members of Parliament with a holistic overview of the actual performance against plans. This section analyses the expenditure performance of the National Treasury.
3.3 Budget Allocation National Treasury was allocated an adjusted appropriation of R62.8 billion in the 2009/10 financial year. These funds were allocated proportionally across the departmental programmes, with Provincial and Local Government Transfers and Fiscal Transfers programmes receiving a substantial share of the departmental budget. The Provincial and Local Government programme, which is responsible for managing conditional grants to other spheres of government was allocated R14.4 billion (22.93 per cent) of the budget while R42.2 billion (67.15 per cent) was allocated to the Fiscal Transfers Programme. The budget allocation for the Fiscal Transfers Programme included R30 billion for an Eskom loan which aims at expanding its capacity. This programme is responsible for transferring funds to other countries as well as multilateral and domestic institutions and public entities.
The departmental budget was dominated by transfers and subsidies, which amounted to allocated R61.6 billion (98.07 per cent) of the budget. Current Expenditure was allocated R1.2 billion (1.90 per cent), while Capital Payments category was allocated R16.3 million (0.02 per cent). This indicates that the National Treasury was allocated only 1.3 billion (2 per cent) for its operational budget.
3.4 Expenditure at the end of the 2009/10 Financial Year
The following table presents the spending trends by the National Treasury on its programme budget.
Source: National Treasury
As indicated in Table 1 above, the National Treasury spent R62.7 billion (99.72 per cent) of its adjusted budget at the end of the financial year. It had under-spent by R176.8 million (0.28 per cent) due to a combination of factors. These include the following: • Under-expenditure of R7.8 million (12.79 per cent) on the Asset and Liability Management Programme. This was attributed to slow spending on the Capital Structure and Financial Distribution Policy project, as well as delays in the development of the Treasury Management System. • Under-expenditure of R53.8 million (11.72 per cent) on the Financial Management and Systems Programme. This was due to the less than anticipated spending on the Integrated Financial Management Systems (IFMS). • Under-expenditure of R83.3 million on the Provincial and Local Government Transfers Programme. This was due to the non-disbursement of R83.3 million to municipalities for the Neighbourhood Development Partnership Grant (NDPG). This Grant aims to support the development of township development plans. It further aims to support nodal investment into the construction or upgrading of community facilities. • Under-expenditure of R22.4 (0.05) million on Fiscal Transfers was due to less than anticipated transfer payments to the Financial Intelligence Centre (FIC). • Cost cutting measures implemented by the National Treasury on operational expenditure. These include training and development, travel and subsistence, venues and facilities. • Vacancies in both Asset and Liability Management and Financial Management and Systems Programmes.
While the National Treasury reported an impressive overall expenditure of 99.72 per cent, it should be noted that transfers to receiving entities constitutes a substantial share of the expenditure. Transfers and Subsidies constituted 98.07 per cent of budget and 99.83 per cent of transfer funds was disbursed to receiving entities at the end of the financial year. The National Treasury’s responsibility regarding transfers is to coordinate and to disburse transfer funds to the receiving entities, as well as monitor the use of funds by entities, particularly provinces and municipalities. Transfer budgets are implemented (actual expenditure) by the receiving entities.
It should be noted that some programmes that were allocated an operational budget had significantly under-spent at the end of the financial year. These include the Asset and Liability and Financial Management and Systems programmes. Even though the departmental operational budget only constituted 2 per cent of the total budget, it still under-spent on its operational budget. In this regard, the National Treasury under-spent by R59.4 million (7.5 per cent) on goods and services, R4.6 million (28.7 per cent) on payment for capital assets and R6.5 million (1.6 per cent) on compensation of employees.
3.5 Analysis of the Annual Report and Financial Statements
The indispensability and comprehensive analysis of annual reports cannot be underestimated. Annual reports are the most salient tools to measure the performance of a department or entity, and play an enormous role in holding government departments accountable to the legislature and the citizenry. According to the Guidelines for Legislative Oversight, annual reports are key reporting instruments for departments to report against the performance targets and budgets outlined in their strategic plans, read together with the Estimates of the National Expenditure (ENE). They allow Parliament to evaluate the performance of a department after the end of a financial year. The critical information contained in the annual report, which is backward- looking, include inter alia, service delivery information, presentation of financial statements, audit report and accounting officer report.
This section provides a summary and analysis of the 2009/10 Annual Report for National Treasury and looks at the overview of the identified programmes as per National Treasury‘s 2009/10 Annual Report, wherein only the unattained targets shall be outlined. The section further explains the management report as per 2009/10 Annual Report, the Auditor-General’s report. Financial statements are salient in measuring both the performance and position of an undertaking and their short analysis is also presented.
Programme Analysis
It is in the interest of good ethical reporting to present accurate, fair and correct information regarding the department‘s annual performance against its planned objectives as set out in the different documents. The method or approach followed is to draw attention to targets that were not met during 2009/10 fiscal year. The focus is on output performance, targets, actual performance and reason why they are not met.
Programme 1: Administration
Within the Administration Programme, the Corporate Services sub-programme set 10% as the target of the Electronic Procurement System that should have been implemented, but the system only went live on the 24 May 2010 due to delays in the implementation of the Integrated Financial Management System (IFMS). The annual report is not clear regarding the actual work done and what the status quo is. Programme 2: Public Finance and Budget Management
With regards to the Public Finance and Budget Management Programme, the Technical and Management Support sub programme indicated that the feasibility studies for 6 hospitals Public-private-partnership (PPP) projects should be completed for the year under review. The Annual Report however, only reports on the actual work done on only 2 hospitals PPP. Moreover, the agreement that is reached to complete the remaining 4 projects does not state when that will be completed.
A further target for the department was that one hospital PPP project should reach financial close in the year under review, but the Annual Report indicates that there has been no progress in this regard due to delays in procurement.
While the Annual Report acknowledges that several activities under the Public Finance and Budget Management Programme are in their final stages, and are being discussed (e.g. Standard Operating Procedure Manuals, the draft Public Finance Management Bill, Structure of the Appraisal Framework for quality of capital planning), it does not indicate when the activities will be met and completed as required.
Programme 3: Asset and Liability Management
With regards to the Governance and Financial Analysis as sub programme, the department set a target of 33%( for 6 SOEs) for benchmarking to determine appropriate capital structure. This target was not achieved due to the time it took to obtain buy-in from the executive authority of the department and delays in obtaining data from State Owned Enterprise (SOEs). A concern in this regard relates to the fact that the Annual Report does not stipulate any alternative to meet the target. Programme 4: Financial Management and Systems
The Financial Systems sub programme reflected unachieved targets pertaining to setting up a call centre help-desk and the Integrated Financial Management System (IFMS) training unit at the State Information Technology Agency (SITA).
Programme 5: Financial Accounting and Reporting The Internal Audit Support sub programme achieved only 62 % (997 of 1600) of the target, but the 2009/10 Annual Report does not provide any explanation of why this target was not met. It had been noted as well that there might have been some typo errors, wherein the 2009/12 National Treasury Strategic Plan recorded 1 600 trainees as the target, but the 2009/10 Annual Report recorded 600 trainees as the target.
Programme 6: Economic Policy and International Financial Relations
The Tax Policy sub programme achieved 70% of the target with regard to the Draft policy paper on carbon pricing relating to mitigating the impact of carbon emissions and issues of climate change through environmental fiscal reform. The document is expected to be published in the new financial year.
Programme 7: Civil and Military Pensions, Contribution to Funds and Other Benefits
Within this programme, the Civil Pensions and Contributions to Medical Schemes sub programme, 98.4% and 94.2% of targets relating to Injury-on- Duty (IOD) and monthly contributions by members to medical schemes have been achieved respectively. The reasons for not meeting the set target was due to the incomplete information on application forms and the slow uptake of the under-35 applications and because employees on salary level 5 downwards are applying at a slow rate.
3.6 Report of the Accounting Officer
The report of the Accounting Officer cited the review of the Service Delivery Model as a major focus and a challenge for the year under review. The introduction of the Human Resources Business Partnering Model had a significant positive impact for the Department in terms of establishing a platform to transform human resources’ way of working in an effort to increase value added service to the business. The actions of human resource have shifted to a more of customer-focused, innovative and structured way of responding to dynamic priorities.
The issue of resourcing was also depicted in the Accounting Officer’s report. Although the vacancy rate is still a challenge, resourcing has led to an improvement of vacancy rates from 9.0% to 6.8%, and an average of 9 to 11 weeks as turnaround time for filling posts. The report of the Accounting Officer also reveals that this resource focus led to an improvement in filling pipeline requirements at entry level.
Initiatives undertaken under the Senior Management Leadership Development Programme during period under review include inter alia: • New Directors Development Programme. • Managing for results. • Chief Directors Development Programme. • Coaching for Results; and • Choice at work. As a way of implementing the Capacity Building Model for Financial Management and enhance public service capacity, the Accounting Officer report reveals that National Treasury will roll-out 2009/10 business plan for training and development, facilitated by the Institute of Public Finance and Auditing.
The report indicated that an Internal Audit Function (IAF) organisational structure was approved by the audit committee, and the positions have since been filled. This will culminate in the conclusion of the co-sourced service provider’s contract by the end of December 2010. The report further indicates that the IAF monitors its human capital to ensure that the existing staff obtains relevant qualifications. Management had noticed the importance and value of IAF within its system of governance and its success in formulating a three-year rolling plan, incorporating an approved annual plan. The Accounting Officer’s report indicated a direct reporting line of the Head of IAF to the Audit Committee.
The Accounting Officer’s report further reveals that the Enterprise Risk Management Strategy was reviewed under the leadership of the Chief Risk Officer (CRO) in order to integrate risk management into the day-to-day activities of National Treasury. The report also cited the initiative of good governance, and also indicated that the success of the Risk Management Unit through approved risk management processes culminated in an updated Risk Profile for the National Treasury, which is monitored by internal governance structures, including Exco, the Audit Committee and the Risk Management Committee.
The report further mentioned that the activities to mitigate corruption risks have been incorporated into the reviewed Fraud Prevention Plan to achieve the National Treasury‘s zero tolerance to corruption.
The report further highlights the completeness of the 2010 FIFA World Cup in July 2010, with considerable savings on the fiscus and the specialist unit that shall prepare a lessons learned report which will be completed before 31 March 2010. The Accounting Officer’s report further recommended that the 2010 FIFA World Cup Unit migrate to the new Mega Capital Project Analysis Unit, on the basis of the high calibre expertise and the vast resources allocated to the unit. The unit will render six key functions, commencing during 2010/11 financial year. These are:
• Develop sound relationship with National Treasury divisions, line
departments and SOE companies implementing capital projects.
• Collect monthly data from each of the forty nominated mega capital
projects until the project construction and commission phase has been
completed.
• Conduct a data analysis to determine the delays, cost overruns, risks
going forward and forward data for use in economic modelling.
• Preparations of reports on a regular basis to guide decision makers,
including National Treasury, Office of the Director-General and the
Minister of Finance.
• The Accounting Officer report states that National Treasury ensured
proper use and record keeping of the departmental assets and that
these are all accounted for in the assets register.
The Accounting Officer’s report mentioned that no significance matters were reported by the Auditor –General in its management letter to the department and internal control related matters that were highlighted were addressed and the required control measures were taken to prevent re-occurrence of those matters.
3.7 Analysis of Financial Statements
The Department received an unqualified audit opinion on its 2009/10 financial statements with some matters of emphasis. An audit opinion with matters of emphasis indicates that there are some weaknesses within the department’s financial control systems. The following matters were emphasised:
• The financial statements showed that corresponding figures for 31
March 2009 have been restated as a result of an error discovered
during the 2009/10 financial year in the financial statements of the
National Treasury.
• Note 26 to the financial statements disclosed that irregular
expenditure of R2.7 million relating to the prior year was incurred
due to the fact that proper tender processes had not been followed.
• The Auditor General was unable to audit the statements relating to
conditional grants paid to provinces and unconditional grants paid to
municipalities, as well as the amounts spent by provinces and
municipalities. The Auditor General could therefore not express any
opinion on these matters.
• Contrary to the requirements of Public Service Regulation 1/111/B2
(d), no human resource plan was in place for the 2009/10 Medium Term
Expenditure Frame Work period.
• An investigation was conducted in terms of Proclamation R50 of 2006
published in the Government Gazette on 07 December 2006. The
investigation was initiated based on the allegation of possible
maladministration of the Special Pensions Board and improper or
unlawful conduct by officials of the Board. The investigation
identified 374 (6.9%) disentitled beneficiaries in respect of fraud
and/or a schedule 1 conviction as well as 683 (12.6%) instances of
misinterpretation of the Special Pensions Act of South Africa, (Act
No. 69 of 1996) by the Board. The investigation resulted in 141 (2.6%)
criminal matters that have been handed to the South African Police
Services. A forensic investigation was conducted but the results had
not yet been made available for review at the time of finalising the
audit.
- Consideration of Reports of Committee on Public Accounts
The National Treasury has not appeared before the Committee on Public Accounts in the past three years, therefore there are no Committee on Public Accounts resolutions relating to it.
- South African Revenue Services (SARS)
5.1 Mandate and Role of SARS The South African Revenue Service was established by legislation to collect revenue and ensure compliance with tax law. Its vision is to be an innovative revenue and customs agency that enhances economic growth and social development, and supports South Africa’s integration into the global economy in a way that benefits all citizens. In accordance with the South African Revenue Service Act 34 of 1997, the service is an administratively autonomous organ of the state: it is outside the public service, but within the public administration. Although South Africa’s tax regime is set by the National Treasury, it is managed by SARS.
SARS aims to provide an enhanced, transparent and client-orientated service to ensure optimum and equitable collection of revenue.
5.2 Economic Context of 2009/10 The Commissioner of SARS reported that 2009/10 was one of the most challenging and demanding financial years in the history of SARS. A clear indication of the prevailing economic downturn experienced during 2009/10 is reflected in the revenue performance is reported in the 2009/10 Annual Report. The report reflects a year-on-year decline in overall revenue of R26.4 billion – the first time in the 13 year history of SARS in which revenue collection declined in a 12 month period. Revenue collection is a key driver of SARS’s performance and is central to the mandate of SARS as prescribed by legislation. The financial crisis that manifested in the 2008/09 financial year affected revenue collections in the 2009/10 financial year. The 2009/10 financial year saw South Africa go through the worst recession in 17 years, bringing financial hardship to millions of South Africans. The revenue target for SARS was decreased by R69 billion from R659.3 billion in 2008/09 financial year to R590.4 billion in the financial year under review.
Only collections from Personal Income Tax – which was buffered by above inflationary wage increases – the fuel levy and excise duty showed year-on- year gains but these were not enough to off-set significant declines in Corporate Income Tax (R30.2 billion or 18% lower), VAT (R6.4 billion or 4% lower) and Customs duties (R3.2 billion or 14% lower). In response to the challenging revenue collection target, coupled with the tough economic conditions, SARS identified a number of necessary special initiatives to enable achieving its target. These initiatives, along with the dedicated SARS workforce, were key factors in helping SARS exceed the revised target by R8.4 billion.
5.3 Increase in the Debt Book In relation to the debt book, the Commissioner highlighted that the debt book grew 23% year-on-year to R85.8 billion in 2009/10. For the same period the credit book declined by 7.3% down from R45.5bn in 2008/9 to R42.2bn in 2009/10. The Credit Book is a reflection of payments to SARS which have not yet been allocated.
The increase in debt was in part a reflection of the difficult economic circumstances in which taxpayers – both corporate and individual – found themselves in during 2009/10, which significantly affected their ability to pay on time and in some cases at all. Much publicity has been given to similar trends, which have been experienced and reported by financial institutions and tax authorities across the world.
Over the next two years, SARS plan to introduce a system in line with modern banking in which taxpayers are in control of their accounts, payments and transfers which should significantly reduce both the credit and debt books. SARS believes this process will also necessitate a review of the current debt write-off policy to remove unrecoverable debt.
5.4 Cost of Collection The decline in revenue collection also resulted in a slight increase in the cost of collection which rose from the steady 1% level over the past three financial years to 1.2% in 2009/10. This ratio remains highly efficient and is equitable with many comparative revenue administrations globally. It is anticipated that as revenue collections rebound over the coming years and the efficiency gains of the Modernisation Programme are further realised, this ratio will return to the 1% range.
5.5 Compliance Gains One of the more positive gains achieved during the year was a marked improvement in compliance – especially in terms of returns submitted on time. By the end of Tax Season 2009, SARS had received more than 3.1 million returns compared to 2.4 million a year earlier, reflecting a growth in the compliance ratio to 79% compared to 58% in 2008.
Equally encouraging is a growing trend by taxpayers to submit their returns earlier. It took just eight weeks in Tax Season 2009 to reach 1 million submissions. By the same point in 2008 only 427 000 returns had been submitted. This year, the trend towards early filing continues and it just took 7 weeks to reach the 1million mark. Three months into Tax Season over 2.2 million returns was received compared to 1.8 million by this stage last year – a 22% increase.
During 2009/10, SARS issued more than 270 000 penalty notices to taxpayers with multiple outstanding returns resulting in the submission of over 80 000 late returns. This has been followed up in the past few weeks with the issuing of approximately 60000 IT88 Agent Appointment notices to recover outstanding penalties from defaulting taxpayers’ salaries.
The Commissioner highlighted that SARS clamped down on fraudulent VAT claims through a focused effort to remove bogus VAT vendors and to tighten up on VAT registrations to ensure legitimate access to the VAT system. This saw some 16 000 VAT vendors suspended during the year.
The sophisticated risk engines, expanded use of third party data, and the reorganised compliance process also allowed SARS to expand its audit and verification coverage for tax returns which increased by over 50% from just over 70000 audits to almost 160 000 audits last year resulting in additional revenue of approximately R1.3 billion.
SARS plan to further expand the use of administrative penalties, third party data and risk detection for those who continue to skirt their obligations. Targeted interventions have been introduced, which had led to seizures of illicit and counterfeit goods including:
• 560 cloned cheques to the value of R7.8 million;
• 67 million cigarettes to the value of R33 million;
• Two warehouses of alcohol;
• 340 000 DVDs worth R53 million;
• 35 tons of textiles; and
• And 400 seizures of narcotics with a street value of R280 million
Over 880 investors, who are South African taxpayers, have been contacted in connection with Ponzi schemes. It should be remembered that Ponzi schemes are illegal and any earnings will be surrendered to the state.
5.6 Service Improvements In relation to services improvements, the Commissioner indicated that SARS continues to deliver against target and expectation on the modernisation programme embarked on in 2007. The key initiatives initially aimed at transforming the income tax process from a complex paper-based and labour- intensive process, to a simplified and automated process, has delivered great results. This endeavour has not only reduced cost for both SARS and taxpayers, but it has also gone a long way toward strengthening the compliance aspect.
Over the past three years, the number of registered e-Filing users increased from 500 000 at the end of 2006, to over 6 million users at the end of 2010 – a twelvefold increase. Usage of this channel has increased substantially, with the number of electronic returns submitted increasing from approximately 1.5 million per annum in 2006 to approximately 10.8 million at March 2010 – resulting in an increase of 720% across Income Tax, VAT, PAYE, SDL and UIF tax products.
Turnaround times for the assessment of returns were almost 95% of returns processed within 24 hours during Tax Season 2009 compared to 62% a year earlier. In the vast majority of cases this resulted in refunds being paid within 48 hours of submission directly into taxpayers’ bank accounts. During the year, SARS refunded R14.8 billion compared to R11.2 billion a year earlier, providing significant and speedy relief to cash-strapped consumers.
5.7 Customs and Border Management The Customs Modernisation Programme was launched in October 2009 and will address five aspects of the supply chain namely: • Trusted trader. • Customs inspections. • Customs systems replacement. • Declaration processing. • Leveraging SARS capabilities.
5.8 Collaboration with other Government Institutions The collaborative approach to work with other government departments has culminated in the on-going work of a steering committee comprising all significant role players in border management and protection which is pursuing the Border Management Agency initiative announced by the President last year.
Working relationships were established with the following state institutions: • Collaboration in the Justice, Crime Prevention and Security (JCPS), International Cooperation, Trade and Security (ICTS) and Governance and Admin clusters.
• Participation of SARS in the Multi Agency Working Group on improving
the state procurement capability and the reduction of fraud and waste.
• Shaping the founding of the Roundtable of Financial State Institutions
to enable improvement of the management of the whole financial system.
• Joint investigations of various cases including some highly publicised
pyramid schemes, illicit goods such as drugs and cigarettes, and work
in the anti-poaching and smuggling of abalone and rhino horn.
5.9 Human Resource Trends The Commissioner indicated that the headcount reduced marginally during 2009/10 compared to the previous financial year with a total of 14 738 permanent employees and 525 temporary employees. This was 44 less than the previous year.
SARS continued with their upward trend of employment equity with increases in the number of black employees and women, including in supervisory and management positions.
5.10 Governance Gains SARS received an unqualified audit opinion for both the Administered Revenue and Own Accounts with one emphasis of matter. The one emphasis of matter which the Auditor-General noted relates to the impairment of the loan to Clidet Pty LTD. Clidet is the name of the company wholly owned by SARS, which was established as part of the acquisition of the TATIS customs software as reported in last year’s Annual Report. The loan was required to be impaired as Clidet will be supported by SARS for their cash flow as the customs and border management system is further developed and implemented as part of Customs Modernisation.
5.11 Key Achievements The following were some of the key achievements: SARS pioneered and is chairing the African Tax Administration Forum (ATAF). The ATAF was launched in Uganda and attracted over 30 African countries as members. This forms the basis for closer co-operation and engagement between revenue authorities on the African continent. South Africa will host the ATAF secretariat and in addition, SARS continued to play a key leading role in a number of international multilateral tax and customs forums including the OECD Forum for Tax Administration and the World Customs Organisation (WCO).
SARS was awarded top honours in the inaugural Public Service Excellence Awards in October 2009, the Grand Prix Platinum Award for Best Reputation of all Government Departments and State-owned Entities. In addition, SARS received four Gold Awards for Overall Effectiveness, Service Orientation, Service Orientation in Rural Areas, as well as Best Reputation in the Financial Services category.
SARS received an accolade in the form of the Lean Institute Africa Diamond Award for Excellence. This award recognised achievements in efficiency and productivity internationally in line with the “lean” production philosophy developed by Toyota.
- Financial and Fiscal Commission (FFC)
The FFC is coordinated by the Minister of Finance and consists of a full time chairperson and deputy chairperson (nominated by national government), who is also the chief executive and accounting officer of the FFC. There are seven other commissioners (two national, three provincial and two organised local government [SALGA] nominees). All appointments are made by the President of the Republic of South Africa.
6.1 Mandate of the FFC The primary mandate of the FFC is to provide recommendations to the three spheres of government and other organs of state on: the division of revenue between and among the three spheres of government and, any other financial and fiscal matters.
In the discharge of its mandate, the FFC timeously tabled its 2009/2010 Annual Report, tabled its 2011/2012 Submission on the Division of Revenue, responded to the 2009 Medium Term Budget Policy Statement, responded to the 2010 Division of Revenue Bill, commented on the 2010 Fiscal Frameworks and Revenue Proposals, commented on the 2010 Appropriations Bill in April 2010, individual Commissioners and Staff published technical reports based on the work of the Commission in academic journals and thus contributed to the knowledge base on IGFR issues to the broader community.
The FFC is in the second year of implementing its 5 Year Research Strategy which extends focus from first generation issues relating to revenue sharing formulae to include second generation issues relating to the impact of the intergovernmental system on development outcomes.
The 2009/2010 Research and the 2011/2012 Submission on the Division of Revenue focus on the processes necessary to adjust to the recession and global economic crisis from which the South African economy is emerging. The need for cushioning the vulnerable and laying the foundations for future growth and development in this environment. The fiscal adjustments and reprioritisation that the state will need to make in order to take the economy back to where it was before the recession without compromising access to basic services by the vulnerable groups. The FFC successfully conducted an annual review of its internal controls as well as its financial and non-financial Risk Management Framework.
The FFC once more received an unqualified audit opinion from the Auditor General. The Commission continued to engage with Parliament, Provincial Legislatures and Executives, Organised Local Government, National Government and other organs of state in briefings, hearings and other forums on its recommendations when invited to do so.
Some of the recommendations that the FFC made in its 2010/2011 annual submission on the Division of Revenue and Government’s Response to them are the following:
6.2 Provincial Equitable Share (PES): Principles
Expenditure assignments between provinces and national government should be clarified beyond what is covered under Schedule 4 of the Constitution. There should be a clear separation of instruments in the transfer system. Government indicated that these recommendations will be considered as part of a Government-wide review of the PES.
6.3 Provincial Equitable Share (PES) Review: Reform Options In the short term reform of the PES formula stay within the confines of the current constitutional dispensation, and in the medium to long term the reforms should depart from the realisation that fixing the PES as a pool requires the fixing of other aspects of the current fiscal decentralisation system. The FFC highlighted that national government indicated that these recommendations will be considered as part of a government-wide review of the PES.
6.4 Public Infrastructure Investment and Social Assistance
In relation to public infrastructure investment and social assistance, the FFC reported that government should develop and implement a comprehensive national infrastructure maintenance strategy, appropriate funding mechanisms through intergovernmental coordination to facilitate, integrate and sequence infrastructure planning and delivery. Social assistance should be managed in such a way as to eventually reduce dependency on the social grants. Government should use infrastructure expansion to provide opportunity for workfare programmes as well as activities identified in the Expanded Public Works Programme (EPWP). Government agreed with all these recommendations.
6.5 Management and Financing of Road Infrastructure
The FFC reported that here should be an increased and stable flow of funds for maintenance, rehabilitation and addressing backlogs in the long-term, greater coordination of road management functions across the three spheres of government. Priority should be given to addressing the lack of technical skills in the road management sector of sub-national governments. Government indicated that these recommendations will be considered as part of a Government-wide review of the PES.
6.6 Local Government Capacity Building In relation to local government capacity building, the FFC indicated that local government should be central to setting the agenda for capacity- building programmes. Government must therefore establish an intergovernmental-wide framework for understanding what constitutes a lack of capacity within the context of local government. When capacity-building interventions are undertaken with respect to different functional areas, there should be a clear separation of responsibilities, as well as coherent interface, between service authority and the service providers. Government agreed with these recommendations The FFC also made detailed submissions on:
• 2009 Medium Term Budget Policy Statement;
• 2010/2011 Fiscal Framework and Revenue Proposals;
• 2010 Appropriation Bill;
• Financial Management of Gauteng Provincial Legislature Bill;
• Seventeenth Constitution Amendment Bill;
• Eighteenth Constitution Amendment Bill; and
• Money Bills Amendment Procedures and Related Matters Bill
A National Treasury request for comment on the possible continuation and/or lapsing of municipal taxes (other than property rates) that existed prior to the Municipal Fiscal Powers and Functions Act.
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Committee’s Observations The committee commended the work of National Treasury in terms of its strong macroeconomic policy framework, which helped to improve growth performance over the last two decades. Of concern to the committee however, are the low rates of job creation and productivity growth. However, beyond bringing the economy back to potential, many challenges remain. These, the committee noted focused on:
• The need to make better use of South Africa’s abundant resources, both physical and human. • To accelerate the increase in living standards. • Faster growth is required to achieve the government’s social and economic targets and to meet the aspirations of the people. • An extreme and persistent low employment problem, which interacts with other economic and social problems, in the education, health and increased crime, further exacerbate the situation.
The committee noted that faster growth is needed to meet social objectives. The AsgiSA growth targets were framed with a view of halving unemployment and poverty by 2014. The low rate of employment and the extreme level of inequality are considered by the government to be important problems facing the country.
To adequately address the challenges faced by South Africa, the institutional framework, governance and monitoring of government departments expenditure is critical to the mandate of National Treasury, which is:
• To advance economic growth and job creation through appropriate macro- economic, fiscal and financial policies. • To play a pivotal role in the management of government expenditure, setting financial management norms and standards for state departments, monitoring their performance and reporting any deviations to the Auditor-General.
Within this specific mandate, the committee raised a number of issues with regards to expenditure trends between the three spheres of government. A number of government departments are allocated substantial amounts of monies to address the challenges, but one needs to engage national treasury on the manner in which the following would be addressed:
The Committee noted that considerable progress has been made with regard to revenue collection, but notes that many sectors in the economy are still outside the tax net.
The Committee noted that many criminal matters that were referred to the police after the intervention of the National Treasury were not followed through owing to an apparent lack of co-operation with law enforcement agencies. The Committee would like to urge National Treasury to expedite this process so that these cases could be brought to an appropriate conclusion.
The Committee expressed concern about the levels of “naked corruption” in the field of procurement among government departments that were “rotten to the core”.
The Committee noted that rural municipalities faced a challenge in making use of local government financial management grants, which were intended to help build capacity. In analysing the figure of 894 graduate interns, it appears that most interns are deployed to metro areas and large municipalities. The Committee suggests that there should at least be three graduate interns in all 283 municipalities.
The Committee noted that the infrastructure grant to provinces was intended for the rehabilitation of existing health, education, road and agricultural infrastructure. The committee further noted that little work had apparently been done on agriculture, even though the grant had been increased to cater for the replacement of “mud schools” and repair of coal haulage routes. The Committee would like to urge provincial treasuries to take action in cases of corruption, and suggests that National Treasury should step in to assist.
The Committee noted the vacancy in the Financial and Fiscal Commission. A national nominee had accepted the appointment, but did not take up the position since June 2009. The committee is concerned about the impact this will have on the work of the FFC and would like to urge that the position should be filled as a matter of urgency.
The committee took note that one of the strategic objectives in the FFC’s Annual Report, that stated a review of public hospital performance and an evaluation of the national health insurance (NHI) proposals were planned, but that these had been put on hold.
The committee took note that recommendations submitted by the FFC were not binding on the Government, but that the Minister was bound by law to give reasons for their acceptance or non-acceptance.
- Conclusion and Recommendations
The Standing Committee on Finance, having considered the annual reports and related documentation from National Treasury, South African Revenue Services and Financial and Fiscal Commission, recommends that: 8.1 The Minister of Finance should consider tabling the Medium Term Budget Policy Statement early in October in order to allow parliamentary processes to follow accordingly.
8.2 National Treasury should provide the Committee with a detailed progress report on the Preferential Procurement Policy.
8.3 National Treasury should provide the Committee with a detailed progress report on measures implemented to ensure that national government departments adhere to the appropriate legislation and regulations regarding the management of public finances.
8.4 National Treasury should review the Annual Report format for national departments reporting to Parliament in line with the Money Bills Amendment Procedure and Related Matters Act, Act No. 9 of 2009.
8.5 National Treasury should consider the framework for consumer protection against financial exploitation to ensure that the Financial Services Board is appropriately resourced and has appropriate jurisdiction.
8.6 National Treasury should intensify its work on working together with law enforcement agencies in order to bring closure to criminal cases within its work jurisdiction.
8.7 National Treasury should assist in establishing a reputable businesses register crucial for tax payment by companies.
8.8 South African Revenue Services should accelerate the process of reaching those who are not in the tax net.
8.9 Accessibility to SARS offices poses challenges, therefore SARS should consider the feasibility of opening offices in areas to ensure accessibility.
8.10 Parliament should consider reviewing the Parliamentary Programme to allow for proper engagement on the Budgetary Review and Recommendations Report (BRRR) process and the Medium Term Budget Policy Statement (MTBPS) process. 8.11 Parliament should also consider reviewing its oversight model in order to bring it in line with the Money Bills Amendment Procedures and Related Matter Act, Act No. 9 of 2009.
Report to be considered.
TUESDAY, 2 NOVEMBER 2010
ANNOUNCEMENTS
National Assembly and National Council of Provinces
The Speaker and the Chairperson
- Bills passed by Houses – to be submitted to President for assent
(1) Bill passed by National Council of Provinces on 2 November 2010:
a) Transport Laws Repeal Bill [B 19B – 2010] (National Assembly –
sec 75).
- 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) Repeal of the Black Administration Act and Amendment of
Certain Laws Amendment Bill [B 37 – 2010] (National Assembly –
sec 75).
(2) The JTM in terms of Joint Rule 160(6) classified the following
Bill as a section 76 Bill:
a) Division of Revenue Amendment Bill [B 35 – 2010] (National
Assembly – sec 76(1)).
(3) The JTM in terms of Joint Rule 160(6) classified the following
Bill as a money Bill:
a) Adjustments Appropriation Bill [B 34 – 2010] (National
Assembly – sec 77).
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Assent by President in respect of Bills
1) Taxation Laws Amendment Bill [B 28 – 2010] – Act No 7 of 2010 (assented to and signed by President on 31 October 2010).
2) Voluntary Disclosure Programme and Taxation Laws Second Amendment Bill [B 29 – 2010] – Act No 8 of 2010 (assented to and signed by President on 31 October 2010).
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Draft Bills submitted in terms of Joint Rule 159 1) Companies Amendment Bill, 2010, submitted by the Minister of Trade and Industry.
Referred to the Portfolio Committee on Trade and Industry and the Select Committee on Trade and International Relations.
National Assembly
The Speaker
1. Referral to Committees of papers tabled
(1) The following paper is referred to the Standing Committee on Appropriations in terms of the Money Bills Amendment Procedure and Related Matters Act, 2009:
(a) Division of Revenue Amendment Bill [B 35 - 2010] (National
Assembly – sec 76(1)).
2. Membership of Committees
(1) The following members have been nominated by their parties to serve on the Ad Hoc Committee on Commission for Gender Equality Forensic Investigation: African National Congress
Dlulane, Ms B
Holomisa, Adv. SP
Malgas, Mrs HH
Sibanyoni, Mr JB
Smith, Mr VG
Snell, Mr GT
Democratic Alliance
Robinson, Mrs, D
Duncan, Mrs P
Congress of the People
Rwexana, Ms SP
Inkatha Freedom Party
Lebenya-Ntanzi, Ms P
Independent Democrats
Paulse, Mrs S (2) The following changes to Committee membership have been made by
the ANC:
Portfolio Committee on Basic Education
Discharged: Saal, Ms G
Appointed: Skosana, Mr JJ
3. Appointment of new Ministers and Deputy Ministers
a) A letter dated 1 November 2010 has been received from the President
of the Republic, informing members of the National Assembly of the
appointment of the following new Ministers and Deputy Ministers:
Arts and Culture
Minister: Mr S P Mashatile
Deputy Minister: Dr M J Phaahla
Communications
Minister: Mr R L Padayachie
Deputy Minister: Mr K O Bapela
Correctional Services
Deputy Minister: Adv N A Ramatlhodi
Economic Development
Deputy Minister: Mr E Godongwana
Energy
Deputy Minister: Ms B Thomson
Health
Deputy Minister: Dr G M Ramokgopa
Higher Education
Deputy Minister: Ms H B Mkhize
Home Affairs
Deputy Minister: Ms F I Chohan
International Relations and Cooperation
Deputy Minister: Mr M L Fransman
Labour
Minister: Ms M N Oliphant
Mineral Resources
Deputy Minister: Mr G G Oliphant
Police
Deputy Minister: Ms M M Sotyu
Public Enterprises
Minister: Mr K M N Gigaba
Deputy Minister: Mr B A D Martins
Public Service and Administration
Deputy Minister: Ms A Dlodlo
Public Works
Minister: Ms G L Mahlangu-Nkabinde
Presidency: Performance Monitoring, Evaluation and Administration
Deputy Minister: Ms D D Pule
Rural Development and Land Reform
Deputy Minister: Mr T W Nxesi
Social Development
Minister: Ms B O Dlamini
Deputy Minister: Mrs B M Ntuli
Sport and Recreation
Minister: Mr F A Mbalula
Trade and Industry
Deputy Minister: Ms E Thabethe
Water and Environmental Affairs
Minister: Mrs B E E Molewa
Women, Children and People with Disabilities
Minister: Ms L M Xingwana
COMMITTEE REPORTS
National Assembly
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Report of the Portfolio Committee on Communications on the Final Acts of the International Telecommunications Union (ITU) Plenipotentiary Conference, Antalya, 2006, tabled in terms of section 231(2) of the Constitution, 1996, dated 02 November 2010.
The Portfolio Committee on Communications, having considered the Final Acts of the International Telecommunications Union (ITU) Plenipotentiary Conference, Antalya, 2006, tabled in terms of section 231 (2) of the Constitution, 1996, recommends that the House approves the Final Acts of the International Telecommunications Union (ITU) Plenipotentiary Conference, Antalya, 2006.
Report to be considered.
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