Statistics South Africa: Minister's Budget Vote Speech & Response by DA

Minister of Statistics South Africa , Mr Trevor Andrew Manuel, gave his Budget Vote Speech on the 15 May 2013

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Chairperson
Honourable Members
Ladies and Gentlemen

Last year when we participated in the Statistics SA (Stats SA) budget vote debate, we thanked everyone in the country for having participated in Census 2011 the previous October and at that point, we were awaiting the results. The Census 2011 results have since been released on 30 October 2012 in both the standard formats as well as in the ground-breaking iPad tablet format that some members here may have seen. Whilst the purpose of the debate here today is to discuss Budget Vote 13 - Statistics South Africa, it is crucial to ensure that the discussions here have context. So, the appeal to Parliament in the course of this debate is to ask a series of questions about the resources available to Stats SA and about the quality of these and other outputs being published.

For the outputs of Stats SA to have relevance for development, Parliament needs to advance the discussion about the manner in which available statistics are being utilised for evidence-based policy-making. I want to emphasise that the responsibility of Stats SA is solely to ensure that the necessary statistics are available, verifiable and that they meet internationally set standards. Stats SA supported by the Stats Council and the Executive Authority must ensure that the manner in which the data is presented is above reproach.

One of the significant breakthroughs from the publication of Census 2011 last year is the form and style of data availability. Last week, members of the Standing Committee on Finance were provided with a demonstration of the availability of detailed statistics at ward level using the My Ward, My Councillor section of the Stats SA tablet application. We should point out that the availability of this huge wealth of data in this format is without precedent and places Stats SA in a position where it is without peer.

The same application is now being used for new releases and so the quarterly GDP release was made available in this format, the Mortality and Causes of Death information was made available in this format, last week the first Quarterly Labour Force Survey of 2013 was availed in this format and so was the Mid-Year Estimates release yesterday. We want to submit that in doing so Stats SA is discharging its obligation to ensure the timeous dissemination of statistics as prescribed in section 3 of the Statistics Act (Act 6 of 1999). However, despite the ease of use and the level of detail, availing all of this data in this contemporary format appears insufficient to spark curiosity or interest from legislators, policy-makers or the public. It is this that Parliament must take a view of because once the data is available it is no longer a Stats SA responsibility but is over all of us who care.

Before I get into the substance of this debate, it may be important for me to reiterate the explanation provided to the Standing Committee about the definition of employment used by the Quarterly Labour Force Survey. It would appear that, despite our explanations at the meeting last week, there is still some misunderstanding about the information and figures that Stats SA releases. Stats SA reinstated the expanded definition of unemployment when the decision was made to expand the labour force survey to a quarterly one in 2008. However, the headline figure that is released as the official figure is based on the International Labour Organisation (ILO) definition where someone is considered unemployed if they meet the following criteria:
1) 'Without work' i.e. were not in paid employment or self-employment as defined by international definition of employment
2) 'Seeking work' i.e. have taken active steps in a specified recent period to seek paid employment or self-employment
3) 'Currently available for work'

This adherence to the ILO definition is to ensure that the current labour market situation is measured objectively and that the measurement can be used to assess South Africa in relation to other countries. We need to bear in mind that this definition works well under circumstances where the working population engages in paid employment and where the channels for exchange of labour exist and are widely used.

However, the ILO recognises that the definition does not take into account instances where a large portion of the population is engaged in subsistence farming, the labour force is largely self-employed or the labour market is largely unorganised or of limited scope. Stats SA recognises that, there could be impediments to searching for employment for some sections of the population.

The cost of looking for a job is often so exorbitant, relatively speaking, resulting in increasing numbers of discouraged work-seekers. Thus, it reports on both the strict unemployment rate and the relaxed (expanded) unemployment rate. So, if any member chooses to look at the information available either on the website or by using the app, they will have access to a complete breakdown of unemployment in terms of race, gender, geographical location, age-group, industry, etc.

The notion of having more than one unemployment rate is not unique to South Africa; for example, the United States has six measures of unemployment with only two being official numbers. We need to recognise that the two unemployment rates in South Africa are not in conflict but rather that they provide indicators for different components of the economy.

Chairperson, while it may seem that I have digressed somewhat from the Budget Vote under discussion today, it is imperative that we understand the importance of maintaining public trust in the outputs of Stats SA. If this budget is to be approved by Parliament, we must address not only the issue of resources but also the quality of the outputs. I want to remind the House of the mandate of Stats SA as outlined in the Stats Act, specifically section 3 (1) that states:

(1) The purpose of official statistics is to assist organs of state, businesses, other organisations or the public in
(a) planning;
(b) decision-making or other actions;
(c) monitoring or assessment of policies, decision-making or other actions.

The definitions used by Stats SA therefore have wider implications for planning and assessing the state of our economy as a barometer within the country and internationally. While the QLFS measures unemployment using a quarterly household survey of 30 000 households, it is not the only measure. Stats SA releases Quarterly Employment Statistics (QES), that measure the level of employment in all non-agricultural sectors.

It does so by undertaking quarterly surveys of about 20 000 (20 208 to be exact in the latest figures released on 19 March 2013) vat-registered private and public enterprises. In an ideal situation, the results of these two datasets should tend to be similar and which is why definitions or in the case of the QLFS, self-definition becomes a factor. The strategic focus of Stats SA is to ensure that the work of these two areas is more closely integrated in future to provide for an improved understanding of employment.

In the current financial year, there will be a continued focus on improving the output of a range of equally important datasets that concentrate on the changing demographic profile and health of the population, poverty levels, and income and expenditure trends. These are managed through the Poverty and Inequality Statistics, Health and Vital Statistics and Demographic Analysis sub-programmes.

In addition to these regular series relating to social statistics, both government and the private sector rely on key economic data published by Stats SA. Chairperson, during my speech last year I referred to the implementation of significant changes in economic statistics, notably in the form of a reweighted and rebased consumer price index (CPI). In line with its program of continuous quality improvement, the CPI was updated to reflect more accurately changes of prices that affect the lives of households. This refinement assists in ensuring to ensure that the South African Reserve Bank has accurate information at its disposal when it makes interest rate decisions. In addition, the Producer Price Index (PPI) was completely overhauled to align it with international benchmarks.

The new suite of five PPI replaced the single index to allow analysts to provide a better understanding of the transmission of prices through the economy. The new 2012 base ensures that the PPI reflects the dynamics of the economy more accurately. In line with the announcement last year, Stats SA implemented those changes in February 2013. In addition, other improvements on further releases such as improved seasonal adjustment techniques were implemented during the year. They will continue to monitor the impact of these changes to evaluate its efficacy.

For South African statistics to remain valid in a changing global context, the next challenge for economic statistics will depend on their ability to ensure that their classification systems remain relevant and current. In this regard, Stats SA will continue to explore the implementation of two international standards during the course of the current financial year. The first is the 2008 system of national accounts (SNA). At present, South Africa's national accounts and therefore its economic statistics are estimated according to the 1993 SNA, the international framework. The new SNA was developed by IMF, OECD, World Bank and adopted by the United Nations Statistics Commission to ensure that economic statistics keep track of new economic phenomena that have become important in economies in the last 20 years. An example of this is the need to quantify the value of research and development and include it in estimates of value added in the economy.

The second set of international standards is called the International Standard Industrial Classification (ISIC) used by statisticians to divide the economy into different industries such as agriculture, mining and transport according to an agreed standard. The ISIC was updated to version four in order to identify and emphasise new aspects of economic activity that have become important, especially in the services sector.

Ideally, these two standards should be implemented simultaneously and Stats SA is faced with the challenge to ensure that they continue to measure the dynamics of the economy accurately while ensuring that our ability to compare with our international counterparts in OECD, BRICS and other trading partners does not become compromised.

The responsibility of ensuring that official statistics are published in terms of distinct standards extends beyond those statistics compiled by Stats SA. Section 14 of the Statistics Act provides Stats SA with the responsibility of co-ordinating statistics among organs of state. This includes advising departments about improving the quality of statistics, enhancing the comparability of statistics and minimising any possible overlapping or duplication with the collection or publication of statistics.

Chairperson, in the past I have raised concerns in this House about the effect of our poor educational outcomes. The reality is that a scarcity of maths and science skills in this context must be understood in terms of its impact not only on the human resource challenges faced by Stats SA directly but more significantly in terms of the impact on statistical collection and processing by other organs of state. Ideally, the skills set would exist across departments with the system for managing the quality and standards being with Stats SA. This unfortunate reality, however, does not absolve Stats SA of its statutory responsibilities and in this regard, a more hands-on approach is often required. An example of such intervention is a census of schools in Limpopo and the Eastern Cape Province being undertaken at the request of the Department of Basic Education and the National Treasury.

The objectives are to verify the total number of schools within the provinces, establish the number of school learners and educators per school, establish the education stream and subject offerings of educators and learners and to establish the qualifications of teachers in relation to the subjects that they are teaching. It is important that we understand that while Stats SA is responsible for statistical co-ordination, the capacity to compile data and use statistics to influence policy actually rests with, in this case, the provincial departments of Education. The challenge of a shortage of relevant skills and the importance of statistical training cannot be emphasised enough.

The approach to the lack of statistical skills cannot simply be a resigned fatalistic one, and in this regard, Stats SA has established strategic partnerships with various universities including the University of Stellenbosch, University of Cape Town and the University of KwaZulu-Natal.

 

Tim Harris, Shadow Minister of Finance
 

Too often our society is personified by shocking violence. These days bring with them the real possibility of brutality on the platinum mines, of the bloodthirsty rape and murder of women, and of the massacre of our soldiers in other country’s wars.

This violence is measured in headlines and column inches, in a breakdown of trust between one and another, and in a slow and steady rise in the risk investors’ associate with operating in our country.  
 But, as Bobby Kennedy said so eloquently:

"… there is another kind of violence, slower but just as deadly destructive as the shot or the bomb in the night"

In a speech the day after the assassination of Martin Luther King Junior in 1968 he spoke of:

"The violence of institutions; indifference and inaction and slow decay. This is the violence that afflicts the poor, that poisons relations between men because their skin has different colours. This is the slow destruction of a child by hunger, and schools without books and homes without heat in the winter. This is the breaking of a man's spirit by denying him the chance to stand as a father and as a man among other men. And this too afflicts us all."

This, house chairperson, is the violence whose effects are measured by Statistics South Africa. The slow grind of poverty worsened year after year by the increase of the price of electricity or fuel or public transport, or the creeping desperation of a young South African unable to find her first job because the only jobs available require work experience.

And this is why the work of Stats SA is so critically important. While savage crime has the power sometimes to jolt us into action soon after it occurs, we need to measure the violence of institutions, inaction and slow decay to make them real to South Africans.

So, Minister Manuel, the problems with the unemployment stats is that broad unemployment - which includes those that have given up looking for work, is not sliced and diced by "population group", "sex", "industry" and "age" in theLabour Force Survey presumably because it is not based on the  "official" definition. That is the reform we are calling for. This will help to make the unemployment statistics real to our people.

But that said, without the surveys, estimates and research of Stats SA it would be almost impossible to understand the real plight of our people, or to design policies that can start to turn the situation around.

House Chairperson, the Statistician-General is a colourful figure who figuratively - and sometimes literally in his famous yellow suit – brightens up meetings of the Standing Committee on Finance with his jokes and anecdotes.

He is also unafraid to weigh into policy issues of national importance. We note and welcome his recent support for the Youth Wage Subsidy (that remains unimplemented three years after it was announced) when he said: 

"But I think if one looks at the net end to society, I suspect an environment with a youth-wage-subsidy is a much better option for South Africa in the long-term than an environment without a subsidy."

We also welcome his reported comments on the education system where he pointed out that the 30% pass mark standard was not helping the youth and was among factors making some of them unattractive to prospective employers.

There are too few voices from the top of government prepared to stand up to the reform-blockers, the stone-wallers, and those who work against in their own narrow interest against the wider interests of our children and unemployed young people. We salute his courage and hope this government is listening.

But, house chairperson; the Statistician-General’s most important job is to manage the work of work of Stats SA. And there is no work done by Stats SA that is more important than the census. 

The data from last year’s R3,4 billion census will affect every single item in the national, provincial and municipal budgets. It will define the budget allocations for departments and provinces and influence the priorities of every sphere of government.

It is important that the census results and processes are beyond reproach. Here, unfortunately, there are serious questions about the job that has been done.  And it’s important to note that it is not the DA that has raised these questions. They come from Stats SA insiders, from demographers who have worked with the institutions for fifteen years and from senior staff with long records of contribution at the highest level.

UCT demographers Professor Rob Dorrington and Associate Professor Tom Moultrie, who were retained by Stats SA to review the census data, were promised two months to work on it, but only given ten days. They have identified a serious anomaly in the data where the birth rate – for no apparent reason – appears to have experienced a 20% spike in the previous decade.  

They have also identified apparent problems with the provincial population distribution last year and their concerns appear to have been validated by the publication this week of the mid-year population estimates that, to quote the gentlemen concerned:

“portray a version of the age structure of the South African population that is quite different from that of the census. The two versions cannot both be correct”.

These are serious allegations from credible insiders, and they could have real implications for spending on health and education and I ask the Minister to deal with them specifically in his reply.

But it was not only external consultants who raised serious questions about how census 2011 was conducted.  A deputy director-general at Stats SA, Jairo Arrow, and a senior statistician, Marlize Pistorius have now been side-lined by the institution because they apparently would not support the statistician-general’s estimates of a lower undercount than the official figures, and because they would not reopen the PES process at the request of the SG.

Stats SA and the Statistics Council have rubbished these allegations in general but they have not provided specific answers to the critical questions raised by these individuals who, given their long track records of service to the institution, would have no obvious axe to grind and no hidden agenda.   I again ask the minister to respond to these serious charges and to explain why Stats SA was in such a rush to publish the results “only 12 months after the census was conducted when many of South Africa’s peers in the developing world typically take 18 to 24 months after an initial Census to publish their findings” .

He should also deal with the general institutional decline at the institution reflected in the Auditor General’s 2012 report that shows a deep deterioration in StatsSA’s audit outcomes and were the basis of the qualified audit. 

The AG found that 58 officials were supplying other parts of government without approval from the department. He identified that one in three invoices were not settled within thirty days, making them illegal in terms of the PFMA and he counted a significant number of “no shows” for hotels and plane tickets. (And Minister, you will forgive us for finding it hard to believe that, if this government can pay out 15 million social grants per month, they lack the systems to pay census suppliers on time).

This is an alarming state of events and it is telling that the SG and his team did not provide much reassurance that they had a turnaround plan when they appeared before our committee last week, preferring to complain about the fact that their budget had declined in real terms. 

It is difficult to find a basis for this complaint when budgets will naturally increase leading up to a census year and decrease in the years after. 

Furthermore, in a finance committee meeting last year, when members questioned the significant increases over the medium term, the Minister threw the ball back into the SG’s court when he asked him to justify these to our committee.  No adequate reason was forthcoming then, perhaps explaining, why now we see more modest budget increases in 2014 and 2015.

But, house chairperson; one of the most alarming areas of non-performance at StatsSA concerns a project that requires close co-ordination with SARS and the Companies and Intellectual Property Commission (CPIC) at the DTI. This is the development of a single business register for South Africa – a key intervention to cut red tape and make it cheaper and easier to register a business in our country.

I say it is an alarming failure because it highlights how many of the areas of weakness in individual departments and entities are often multiplied into abject failures by a government defined by a silo mentality, where officials and political leaders often seem more interested in protecting their own turf than collaborating to introduce reforms.   Two years ago the Minister told us that “policy framework and draft legislation aimed at creating a single business register has been developed” and that it was on its way to getting Cabinet approval before the target date for completion in 2013.    This year we are advised that internal challenges at the CIPC have delayed the project and, up until today, we have had no idea what the prospects are for it being implemented.

Now that the Minister has tabled a revised timeframe it is critical that he uses his cross-cutting influence in government to intervene with the CIPC to ensure that they can end the "indifference and the inaction" delaying the delivery of this key project that would lower the cost of doing business in South Africa. 

Stats SA has so much to work with, including: a R1,7 billion budget, a team that is regularly able to conduct credible surveys across this vast country, and an approach to technology and innovation that has delivered the impressive and free Roambi app that allows South Africans to truly get to grip with the data that defines our country. 

But it is now up to the leadership of the institution to fix the internal problems that have resulted in the census making headlines for all of the wrong reasons, and that have led to a qualified audit report. 

For this, and for the task of co-ordinating projects between the government departments blocking the implementation of the single business register the Minister will be held politically responsible. I ask him to deal with these serious issues in full during this debate. 

If these things can be done, then Stats SA can expose the "violence of institutions, indifference, inaction and slow decay" with credible data unmarred by scandal. This will be the first step towards turning the tide against this violence that may not capture the headlines, but that is conducted daily against the people of this country.