Committee Report on Department of Public Enterprises Budget and Strategic Plan
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Public Enterprises
12 April 2010
Chairperson: Ms M Mentor (ANC)
Meeting Summary
The Committee met to consider their programme for the second-term. The discussion was dominated by the fact that some Members felt that the Committee should discuss the World Bank loan to Eskom. The Committee decided revisit programme at a later stage because they still needed to add and confirm a few items.
Members also discussed and adopted their report on the Department’s budget and strategic plan for the 2010/2011 financial year. The Department had been allocated approximately R350.5 million for the 2010/11 financial year. This confirmed National Treasury’s statement that much of the infrastructure funding would not come from the fiscus. This was a huge decrease from the R3.9 billion the Department was allocated in the previous financial year.
Members questioned the discrepancy in the figures in the strategic plan and the budget document as well as what motivated the radical, large, reduction of over 90% in the budget between last year and this year. What impact would it have on the operations and sustainability of parastatals? Would they be requesting more money later on?
The Committee was divided because there were no proper observations and no recommendations in the report, which would have allowed Members views to filter through. The Committee adopted the report with amendments.
Meeting report
Consideration of Committee’s Second-Term Programme
The Chairperson opened the meeting and presented a draft programme for the period until mid June for the Committee’s consideration. The programme included meetings with Eskom regarding Mozal, the aluminium smelter, and Eskom’s funding model. She said that the Minister of Public Enterprises could be asked to brief the Committee about the World Bank loan to Eskom.
Mr P Van Dalen (DA) suggested that the two members of Eskom who were on the board of Motraco to be present at the briefing when the supply of electricity to the aluminium smelter Mozal was discussed.
Mr M Oriani-Ambrosini (IFP) said that the World Bank loan had not yet been discussed by the Committee and was of immense importance. The issue had to be made a priority.
Mr L Greyling (ID) motivated that the meeting to discuss the World Bank loan be held next week.
The Chairperson said the Eskom loan was a loan to the government, which would be signed by the Minister of Finance. The conditions of this loan were still being discussed and it was not the Minister of Public Enterprises who was signing the loan therefore the chances of having a meeting next week were slim. It would be requested of the relevant department to brief the Committee at an appropriate time.
Mr Ambrosini wanted to know if the oversight function of the Committee occurred after the fact or could the Committee deal with a policy issue at any time. The issue had to be discussed so that the Committee could give some input to government prior to their deliberations on the conditions of the loan; these conditions would impact on South Africans for 50 years to come.
Mr M Sonto (ANC) said that the Committee could exercise its oversight function through a briefing by the department that signed the loan, and not by Eskom.
Mr S Van Dyk (DA) mentioned that the Committee must set aside time to discuss the investigation that he had undertaken with Mr G Koornhof (ANC) concerning pension funds and how they were administered.
The Committee decided revisit programme at a later stage because they still needed to add and confirm a few items.
Committee Report on Department of Public Enterprises Budget and Strategic Plan
The Committee Secretary presented a report outlining the strategic plan and budget of the Department. The Department had been allocated approximately R350.5 million for the 2010/11 financial year. This confirmed National Treasury’s statement that much of the infrastructure funding would not come from the fiscus. This was a huge decrease from the R3.9 billion the Department was allocated in the previous financial year. The budget allocation for the Department was mainly for administration and shareholder management of the various SOE’s. Consequently, there were no major transfers to State-owned enterprises and only two SOEs were to be funded from this budget namely, the Infrastructure Company (Infraco, R138 million) and Alexkor (R36 million). The operational budget of the Department remained within the baseline over the period, which was linked to the business plans of the units.
Committee Report on Department of Public Enterprises Budget and Strategic Plan
The Committee Secretary presented a report outlining the strategic plan and budget of the Department. The Department had been allocated approximately R350.5 million for the 2010/11 financial year. This confirmed National Treasury’s statement that much of the infrastructure funding would not come from the fiscus. This was a huge decrease from the R3.9 billion the Department was allocated in the previous financial year. The budget allocation for the Department was mainly for administration and shareholder management of the various SOE’s. Consequently, there were no major transfers to State-owned enterprises and only two SOEs were to be funded from this budget namely, the Infrastructure Company (Infraco, R138 million) and Alexkor (R36 million). The operational budget of the Department remained within the baseline over the period, which was linked to the business plans of the units.
Discussion
Mr Ambrosini said that the R2 billion guarantee to Denel was not mentioned in report. This was a significant issue, which had been raised in the Committee. Even though this was not an expenditure, it was an obligation by the State and he wanted the Committee to make a change in the budget, however small, to give expression to the work of the Committee.
Mr Van Dalen wanted the clause “responded to satisfactorily” on page 8 deleted .
Mr Van Dyk recalled that a document handed out at the opening of Parliament, mentioned job creation and skills development. The research document (budget vote document) did not reflect the huge amount of R60 billion given to Eskom and the transfer to SAA of R2.2 billion should be a bigger figure
The Chairperson replied that job creation was captured elsewhere in the document. The Department sought to create employment and enhance skills in the document. In addition, she stated that the draft report should include all monies for the period, not just a few.
Mr Koornhof questioned the discrepancy in the figures in the strategic plan and the Budget document. As a result, he suggested that the Committee Secretary should check this against the source documents.
Mr Mokoena (ANC) asked what motivated the radical, large, reduction of over 90% in the budget between last year and this year and questioned the impact it would have on the operations and sustainability of parastatals. Would they be requesting more money later on?
The Chairperson replied that government planning was based on the Medium Term Framework (MTF) cycle and allocations were generally bigger in the earlier years of the cycle. The President had announced that government would spend R876 billion on SOE‘s to develop infrastructure in the next three years. The Committee could however record their observations as part of the report.
Mr Ambrosini drew attention again to rule 2.5.1.g of Parliament which stated that a Committee Report should carry minority views. In his view, the Department had failed to justify why the state owned these companies. He requested that his party’s view also be recorded in the report.
Mr Koornhof said that anybody could take a position on the budget vote. Transfers to SOE’s were not part of the budget vote. The documents gave the reason for the drastic reduction in the Department’s budget.
Mr Ambrosini became agitated at the apparent ignorance of the Chairperson on the rules governing the committee meeting.
The Chairperson said the Committee had gathered to consider and deliberate on the strategic plan of the Department as presented to them and that they would debate the issues on 15 April 2010 when the Budget Vote was presented in Parliament. All the Committee had to do was consider the strategic plan of the Department in conjunction with the proposed budget.
Mr Van Dyk said that the DA Members were not in a position to approve or disapprove the document.
The Chairperson drew attention to the conclusion of the report in which it said that the Committee had considered the report and recommended that the House pass the budget.
Mr Koornhof said that if the Committee adopted the report, it would go to a budget vote. The Committee was divided because there were no proper observations and no recommendations in the report, which would have allowed Members views to filter through. These recommendations were not political party recommendations but rather Committee recommendations.
The Chairperson said the report would be redrafted to take cognisance of Mr Koornhof’s statement.
Mr Van Dyk said that the conclusion should read that the Committee took note of the budget and strategic plan and the Committee had considered it period.
The amended draft was agreed to.
Mr Ambrosini said that the R2 billion guarantee to Denel was not mentioned in report. This was a significant issue, which had been raised in the Committee. Even though this was not an expenditure, it was an obligation by the State and he wanted the Committee to make a change in the budget, however small, to give expression to the work of the Committee.
Mr Van Dalen wanted the clause “responded to satisfactorily” on page 8 deleted .
Mr Van Dyk recalled that a document handed out at the opening of Parliament, mentioned job creation and skills development. The research document (budget vote document) did not reflect the huge amount of R60 billion given to Eskom and the transfer to SAA of R2.2 billion should be a bigger figure
The Chairperson replied that job creation was captured elsewhere in the document. The Department sought to create employment and enhance skills in the document. In addition, she stated that the draft report should include all monies for the period, not just a few.
Mr Koornhof questioned the discrepancy in the figures in the strategic plan and the Budget document. As a result, he suggested that the Committee Secretary should check this against the source documents.
Mr Mokoena (ANC) asked what motivated the radical, large, reduction of over 90% in the budget between last year and this year and questioned the impact it would have on the operations and sustainability of parastatals. Would they be requesting more money later on?
The Chairperson replied that government planning was based on the Medium Term Framework (MTF) cycle and allocations were generally bigger in the earlier years of the cycle. The President had announced that government would spend R876 billion on SOE‘s to develop infrastructure in the next three years. The Committee could however record their observations as part of the report.
Mr Ambrosini drew attention again to rule 2.5.1.g of Parliament which stated that a Committee Report should carry minority views. In his view, the Department had failed to justify why the state owned these companies. He requested that his party’s view also be recorded in the report.
Mr Koornhof said that anybody could take a position on the budget vote. Transfers to SOE’s were not part of the budget vote. The documents gave the reason for the drastic reduction in the Department’s budget.
Mr Ambrosini became agitated at the apparent ignorance of the Chairperson on the rules governing the committee meeting.
The Chairperson said the Committee had gathered to consider and deliberate on the strategic plan of the Department as presented to them and that they would debate the issues on 15 April 2010 when the Budget Vote was presented in Parliament. All the Committee had to do was consider the strategic plan of the Department in conjunction with the proposed budget.
Mr Van Dyk said that the DA Members were not in a position to approve or disapprove the document.
The Chairperson drew attention to the conclusion of the report in which it said that the Committee had considered the report and recommended that the House pass the budget.
Mr Koornhof said that if the Committee adopted the report, it would go to a budget vote. The Committee was divided because there were no proper observations and no recommendations in the report, which would have allowed Members views to filter through. These recommendations were not political party recommendations but rather Committee recommendations.
The Chairperson said the report would be redrafted to take cognisance of Mr Koornhof’s statement.
Mr Van Dyk said that the conclusion should read that the Committee took note of the budget and strategic plan and the Committee had considered it period.
The amended draft was agreed to.
The meeting was adjourned.
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