Medium Term Budget Policy Statement: Input from Government's Social Cluster, Civil Society & Local Government

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Meeting report

JOINT BUDGET COMMITTEE
2 November 2005
MEDIUM TERM BUDGET POLICY STATEMENT: INPUT FROM GOVERNMENT'S SOCIAL CLUSTER, CIVIL SOCIETY & LOCAL GOVERNMENT

Chairperson:
Mr B J Mkhaliphi (ANC, Mpumalanga)

Documents handed out
Department of Home Affairs submission

Department of Social Development submission
Department of Health submission
Department of Education submission
People’s Budget Response to the Medium Term Budget Policy Statement
South African Local Government Association submission
Department of Trade and Industry submission
Institute for Security Studies
Department of Transport submission
MTBS – IDASA
Budget Information Service of IDASA
[please email docs@pmg.org.za for the documents]

SUMMARY
The Committee heard submissions by the Departments of Home Affairs, Social Development, Health, Education and Trade and Industry, the People’s Budget campaign and the South African Local Government Association on the 2005 Medium Term Budget Policy Statement. Members showed particular concern over the ability of Social Cluster Departments to recruit and retain key service delivery functionaries such as
teachers, nurses and social workers, as well as over intra-cluster co-ordination between the Departments.

MINUTES

Submission by the Department of Home Affairs
Mr Joel Chavalala (Deputy Director-General) and Mr P Khambule (Chief Financial Officer: Department of Home Affairs) represented the Department. It was acknowledged that the Department needed to implement immigration policies that would benefit South Africa’s economic growth through growing its skills base appropriately. It needed to ensure effective management and control at Ports of Entry and border control. In terms of its role within the context of the Social Cluster the service provided by the Department of Home Affairs assisted the Department of Health to identify residents in need of health care; assisted the Department of Education to identify and register eligible students; and, assisted the Department of Social Services in the assessing grant applications and making payments.

For the 2005/06 financial year the Department had no rollovers and requested no additional funds for unforeseen or unavoidable expenditure. Its final allocation amounted to R3.032 billion.  

Discussion
Ms B Dambuza (ANC) asked what the Department of Home Affairs meant by stating that its budget was sufficient, given that many of its offices in the rural areas seemed under resourced and dysfunctional.

Ms R Mashigo (ANC) also expressed her concerns over the functioning of the Department’s activities in rural areas, especially insofar it related to the poor accessing assistance grants. She asked how the Department of Home Affairs was linked to other Departments in this regard, and how it dealt with corrupt traditional leaders that abused the process of obtaining enabling documents.

Mr P Khambule replied that the Department had spent mostly on capital goods such as information technology infrastructure, which did affect service delivery. The ten mobile units that were doing service in the rural areas were only launched at the beginning of this year. The launch of another 57 mobile units was imminent. This would impact positively on service delivery in rural areas. 

Mr D Botha (ANC, Limpopo) noted that the Department of Home Affairs had underspent to the tune of R388 million in the 2004/05 financial year and that it had used only 41% of its total allocation for 2005/06. He asked for assurances that the Department would exhaust its budget for 2005/06.

Mr Khambule replied that it was not to the Department’s benefit to be saddled with more resources than it had the capacity to deal with. The Department had reached an agreement with the National Treasury on the phased increase of expenditure capacity over a number of years, to allow sufficient time for proper recruitment to be done. The Department did not foresee any reason that it would underspend or ask for budget rollovers at the end of 2005/06.

Ms T Tshivase (ANC) expressed her concern over the occurrence of similar Identity numbers being issued to different people in different geographical locations, and multiple birth certificates being issued to one person.

Mr J Chavalala (Department of Home Affairs Deputy Director-General) stated that the new fingerprint identification system would go a long way in countering these problems. It would be fully rolled out by September 2006. The problem with birth certificates would remain a problem, since children were not fingerprinted.

Ms L Chikunga (ANC) asked whether the Department had any evaluation system in place to monitor the implementation of its policies. She also noted that Swaziland citizens with South African enabling documents often crossed the border to draw assistance benefits here just to return to their own country, while students from both South Africa and Swaziland freely crossed the border to go to the school nearest to them, regardless of which country they were actually resident in.

Mr Khambule stated that the Border Control Co-ordination Committee (BCOCC), which the Department chaired, was aimed precisely at dealing with these types of problems. It was a new initiative. Many people did come into the country with legitimate documents. He noted the comments about Swaziland and stated that the Department of Home Affairs would endeavour to deal with these problems.
 
Submission by the Department of Social Development
Mr Vusi Madonsela (Department of Social Development Director-General) noted that the Department promoted community and economic participation through the Expanded Public Works Programme. To this end, the Department was expanding Home Community Based Care, access to Early Childhood Development (ECD) and rolling out its new financial awards policy. The consolidated figure for social development spending stood at R59 billion for 2005/06. This figure would grow to R72.6 billion in 2008/09. Social assistance would consume 92% of the total social development budget.

The Department of Social Development was concerned that too little commitment was made to fund the role that it as a national Department had to play to support provincial Departments in the expansion of policy priorities. The Department further emphasised that adjustments to its social assistance baselines may not be sufficient as growth in foster care continued to put pressure on transfer budgets

Discussion
Ms M Gumede (ANC) asked what type of people were entitled to assistance grants. He said that some people who received grants seemed fit and able, while others whose application had been turned down seemed like they were really in need. She also expressed concern over the period it took for successful grant applications to start paying out, and the general integrity of the grant application process.

Mr Madonsela (Department of Social Development Director-General) stated that there were different grant types. People who were of employable age, but unemployable due to their disability qualified for disability grants. A medical assessment was mandatory. The Social Security Agency was recently established with the view to have a single entity that had the quick processing and maintenance of grant applications and payments as its core function. A grant application should take no more than two and a half days. In reality, this process could take up to thirty days in the best performing provinces. Part of the problem was the high beneficiary-to-staff ratio, which was currently 50% higher than it was desired at 1800:1.

Ms Dambuza asked how the Department of Social Development viewed the utilisation of the South African Post Office (SAPO) in the dispersal of social security grants.

Mr Madonsela said that the SAPO would be the Department of Social Development’s service provider of choice. However, the SAPO had yet to demonstrate its cost efficiency in this regard. Cost versus efficiency was the prime concern in this regard.

Ms Mashego asked how the Department of Social Development linked with the Department of Home Affairs to reach and grant access to the target groups of assistance grants.

Mr Madonsela stated that there had been collaborative campaigns between the two Departments, and that their relationship was good. Children who presented themselves for assistance where never turned away unassisted, regardless of whether they had the necessary documents or not.

Mr Dithebe (ANC) asked how the Department of Social Development made sure that the grants that it dispersed actually made a real difference in the alleviation of poverty amongst the targeted groups.

Mr Selwyn Jehoma (Department of Social Development Social Security Acting Deputy Director-General) stated that there was no agreed upon poverty datum line in South Africa, but moves were afoot to establish one. Research had indicated that the grants did, indeed, play a significant role in the alleviation of poverty.

Ms I Direko (ANC) what the Department of Social Development’s vision was for the recruitment and retention of social workers. She also asked what support would be given to caregivers in the townships — who themselves were often without means — to keep them motivated.

Ms Vuyela Nhlapo (Department of Social Development Integrated Development Deputy Director-General) stated that the salaries of social workers were currently being focussed on, but that more of them would also be recruited. The assessment of the stipends awarded to caregivers was currently under way to bring them in line with the Department of Health. The stipends would be increased from R500-00 to R1000-00.

Mr B Mkongi (ANC) noted the Department’s concerns in relation to the budget, and asked what the Department hoped that Parliament could do for it in this regard.

Mr Cocedo Pakade (Department of Social Development Chief Financial Officer) stated that the Department would welcome Parliament’s, through its oversight role, sustained commitment to the Department’s budget concerns. The process of the budget was still unfolding, and therefore the Department was unable to discuss numbers at this time.

Submission by the Department of Health
Mr Thami Mseleku (Department of Health Director-General) referred members to page five of the Medium Term Budget Policy Statement where the Minister of Finance stated that the priority for the decade ahead was public healthcare and education. The concern was that exponential growth in social assistance could crowd out basic service provision, such as health services. To this end, changes included in the Revenue Laws Amendment Bill were specifically aimed at taxing lower income individuals at a less punitive rate on their medical benefits. The general idea was to get as many people insure as possible. Three issues were key with regards to public healthcare: infrastructure development; systems development; and, access to and quality of service provision.

Discussion
Ms L Chikunga (ANC) asked whether the training of health professionals were planned for properly, and whether the Department held its managers accountable. She also asked for clarity on the situation at the training college in Mpumalanga.

Mr Mseleku stated that the National Human Resources Deputy Director-General was dispatched together with the Nursing Council to deal with the situation of the training college in Mpumalanga. The college was accredited to teach just more than one hundred students, but it had been extended to over three hundred without due procedure being followed. Now the Department of Health found itself in the situation where it had to deal with the matter with all the students already enrolled. It was a general national problem, which gestured to political pressure being exerted from the communities on the decision-makers of these colleges.

Mr Mseleku stated that a national workshop with the Chief Executive Officers (CEOs) of all the public hospitals was started as part of the National Department’s drive to improve the quality of service delivery. The CEOs was asked to develop a national quality improvement strategy together with the national Department. Issues of discipline and capacity of management would now be addressed.

Ms Tshivase expressed her concern over the standard of service delivery and security levels at rural clinics. She also noted her reservations over service standards and staff capacity at public hospitals at night. She also asked why DNA tests were not available at some children’s hospitals to cater for instances of sexual abuse.

Mr Mseleku conceded that quality service delivery in the rural areas was a continuing challenge, and partially because of the human resources issues mentioned earlier on. Upgrading the clinics to medical centres was also an example that presented a human resources obstacle, since few doctors were willing to work in rural areas. One of the Department’s strategies was to expand the number of mid-level workers, e.g. pharmacists, nurses and medical assistants.

Ms Direko stated her opinion that the closing down of nursing colleges has had a devastating effect on the ability of nursing practitioners. She expressed her concern over the number of nurses that were leaving the country and asked whether it would not be viable to upgrade the training of nursing aids so that they might fill the gap.

Mr Mseleku stated that the desire came from the nursing profession itself to be seen as “part of the higher education environment” that was espoused by professional nursing training schools at universities. The key challenge in reopening nursing colleges was that most of those that served as nursing tutors are now working in Saudi Arabia or the United Kingdom. This was linked up with the Department of Health’s strategy for re-recruiting South African health professionals back from abroad.

Mr Dithebe asked for clarity on the methods that would be employed to pursue the target of a 10% reduction in malaria per annum. He also asked whether the targets in terms of anti-retroviral distribution were still on track.

Mr Mseleku indicated that both the target for the reduction of malaria in South Africa and the rollout of anti-retrovirals was on track.

Submission by the Department of Education
Mr Duncan Hindle (Department of Education Director-General) had seen increases to its baseline allocations for improving its human resources (HR) system, its monitoring and evaluation systems, plus an increase in the Higher Education Block Grant to enhance Further Education and Training recapitalisation. Increases were made to the Provincial Equitable Share for the implementation of the ECD integration plan; to reduce the backlog in school infrastructure; and, to fund teacher development and HR strategies. Further priorities were to strengthen special schools and to build an integrated national education management information system.
 
Discussion
Mr B Mkongi raised concern over the increase in the higher education block allocation in relation to the effect that it would have on the output of universities. He contextualised his concern against the background of the disproportionate number of “African” students that were not finishing their studies. He then asked what the Department’s strategy was to deal with the question of temporary teachers. Thirdly, Mr Mkongi wanted to know what the strategy was for getting Further Education and Training (FET) colleges to start producing the kind of skilled individuals that the country was short of and, in so doing, lifted the image of these institutions. Finally, Mr Mkongi wanted to know what the relationship was between the Department’s statement that there was no shortage of teachers, while there were schools with teacher shortages.

Mr Hindle conceded that there was a throughput problem with regards to higher education. The Department was now in conversation with universities to find how best to fund and implement enrolment planning to deal with this problem. The President had also set up a higher education working group that was looking at some of these issues.

Mr Hindle acknowledged that the situation with temporary teachers was unacceptable. Substitute teachers would, however, always be needed. Some of the provinces were now working towards a situation where temporary teachers were being absorbed into the system as permanent appointments. This situation was the legacy of the redeployment process.

He commented that the inferior status of FET colleges was an international phenomenon, but that the members' comments with regards to them were valid, and that the Department was looking at these issues.

He stated that in terms of overall supply and demand, there were enough teachers, but that teacher placement could be improved. The problem with teacher shortages at schools might also be ascribed to the demand side such as dysfunctional school governing bodies. Teacher shortages might definitely become an issue within the next two years though

Ms Tshivase asked for clarification of the roll out of ECD programmes in the rural areas.

The ECD programme was expanding. Already, there were some 600 000 children in the ECD system out of a total cohort of 1 million. There were different modes of ECD delivery. Private and community-based sights received subsidies. Where there were public schools established, grade “R” classes were encouraged. The Department was now also looking at providing for children between the ages of naught and four, for which there was currently no provision.

Ms Direko asked for clarification on whether there was in increase in the allocation for school nutrition programmes or not.

Mr Hindle stated that the school nutrition programme was increased to the tune of R200 million, but because of this, the allocation for next year was lower.

Ms Chikunga asked when the policy for “no fees schools” would be implemented. She also wanted to know whether school inspectors had to have budgets or not, as it puzzled her that they did not seem to have any.

Mr Hindle indicated that “no fees” schools would likely only be declared from 2007 onwards, and that this would not apply to every school in the country.

Submission by the People’s Budget Campaign (PBC)
The People’s Budget Campaign, represented by Mr Elroy Paulos (COSATU), Mr Keith Vermuelen (South African Council of Churches) and Mr Sarel Hunter (
South African National NGO Coalition), maintained that South Africa required a developmental partnership to ensure poverty eradication aims were met within one generation. The theme of shared economic growth was thus important. The PBC reiterated its call for a developmental state that had to mobilise stakeholders behind a transformative strategy and align all government programmes around its strategy.

The PBC pointed out that Pay As You Earn (PAYE) was the tax type generating the largest percentage of revenue (31%), followed by Value Added Tax (VAT) (28.5%). In comparison, the business sector contributed 22%. This clearly indicated the disproportionate burden shouldered by the poor. The PBC called for the raising of the tax to gross domestic product (GDP) ratio; the reformation of VAT to a progressive tax weighing less heavily on the poor; deficit financing to support economic growth and, reallocating resources from spending on the military and the Pebble Bed Modular Reactor.

Discussion
Mr Mkongi asked for an explanation on how the PBC saw the financing of an expanding budget deficit to relate to increased economic growth. He also asked for an elaboration on the problem with the expanded definition of the unemployed, since one could argue that government had absorbed some of these individuals through programmes like the Extended Public Works Programme (EPWP).

Mr Elroy Paulos stated that the deficit was projected at between –1% and –2% over the MTEF period. According to the minds at the PBC, the deficit target could be relaxed in order to spend even more. This proposal came against the background that many of the social cluster Departments were either experiencing attrition or had struggle to make ends meet in some way or other. The PBC felt that socio-economic progress could not merely be measured by economic indicators. Growth and deficit targeting could not come at indefinite social cost. The idea was not to be reckless.

He acknowledged that the Government was managing on expenditure trends, but the PBC contended that the expenditure was not enough to achieve Reconstruction and Development Programme goals, Freedom Charter ideals and apartheid backlogs.

He related that in dropping the expanded definition of unemployment, Statistics South Africa did research to establish the reasons behind the low levels of encouragement amongst job seekers. It was established that levels of unemployment were chronic amongst the youth, and that apartheid spatial infrastructure would require families to sacrifice their unity and funds in the pursuit of employment over significant distances. Language was another constraint.

Dr Rabie (DA) asked how a differential VAT system would be imposed and where the benchmark for a tax to GDP ratio of 29.7% came from.

The PBC felt that far more basic goods could be zero rated for VAT. The National Treasury countered that the administrative burden would not be sustainable. The PBC felt that the administrative burden would be offset by social gains. A study commissioned by the PBC found that from an economic and feasibility perspective, 29.7% was a good balance between tax and GDP.

Submission by the South African Local Government Association (SALGA)
Councillors S Molokoane and P Raedani represented SALGA. The South African Local Government Association anticipated greater detailing of the improved second phase of the National Skills Development Strategy. It was also dismayed that there was no announcement in the 2005 MTBPS about the Government’s will to extend the child support income grant and school nutrition programme to children between fourteen and eighteen years of age. The SALGA also felt that a specific allocation should have been made to address the shortage of social workers and parity of salaries for government and non-profit organisations.

SALGA further noted that the MTBPS made announced no allocations towards local government for environmental health services. It also sought clarity on the devolution of bus and taxi subsidies to municipalities where the capacity existed to manage these services. SALGA's concluding concerns centred on the continued implementation problems with employment creation policies.

Discussion
Ms Chikunga asked how SALGA saw local government overcoming the challenges raised by it in its submission. She referred particularly to the problem of skills shortages in local government.

SALGA felt that continued implementation problems — particularly with regards to the skills development strategy, the small enterprise development strategy and the EPWP — would undermine the significant impact on employment creation being achieved. Skills that were there in apartheid era municipalities (such as engineering) were imported from other countries. This was no longer done. This was currently being addressed by all spheres of government through the Project Consolidate Programme. The issue of skills development, in turn, was addressed through academic leadership schools in the various provinces for local government officials.

Ms Mashigo asked what SALGA was doing about the irregular appointments at municipalities, the training of councillors and the lack of service delivery.

The response was that c
ouncillors was counseled and trained by SALGA. The key performance criteria in the mandatory performance contracts of municipal managers were the main tool by which inept managers were measured and dealt with accordingly. Performance management systems were still being put in place, and were without complete criteria and measurable indicators at this stage.

Submission by the Department of Trade and Industry
Mr Willem van der Spuy (Acting Chief Director) and Mr Kuben Naidoo (CFO) represented the department. It was noted that the Department of Trade and Industry ordered its strategic objectives according to its international trade and economic development (ITED) priority focus areas. These included an increase in market access opportunities for and export of South African goods and services; contributing towards the economic growth and development of the African continent within the Nepad framework; and, increasing the level of direct investment overall and in priority sectors. The Department’s main ITED objectives included the expansion of market access for South Africa’s exports and the facilitation of investment through the conclusion of trade and investment agreements.

Amongst the Department’s key achievements for the 2004/05 financial year stood the conclusion of a Mercusor-South African Customs Union (SACU) Preferential Trade Agreement (PTA); the continued finalisation of the European Free Trade Area (EFTA) – Southern African Customs Union (SACU) Free Trade Area (FTA); and, its continued participation in the World Trade Organisation (WTO) Doha Round.

The Department expected to expend R100.7 million in 2005/06, with its most significant increase in expenditure attributed to International Trade Administration. It would spend R23.1 million on personnel in 2005/06, with its most significant capacity shortages in the area of legal support to trade negotiations. 

The meeting was adjourned.

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