Revised Fiscal Framework: Budgetary Review & Recommendation Reports: Stats SA & National Treasury

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Finance Standing Committee

28 October 2010
Chairperson: Mr T Mufamadi (ANC) & Mr C De Beer (ANC, Northern Cape)
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Meeting Summary

Members of the Standing and Select Committees, sitting jointly, gave their input on the Revised Fiscal Framework. They said that National Treasury must consider the impact of zero-rating Value Added Tax on books, and noted that the Committee must give consideration to the concerns by the Minister of Cooperative Governance and Traditional Affairs about the role of the Development Bank of Southern Africa. They pointed out that the impact of some of the measures proposed in the South African budget must be measured locally as well as in other countries, and the Committee also needed to be involved in monitoring some of the programmes. A Member commented that although there had been commitment from National Treasury on reducing government debt, there was need for more emphasis, and suggested that the proposed reduction of debt stock to 40% of Gross Domestic Product (GDP) by 2015 was still too high. The expenditure of enterprises was also growing steadily, as evidenced by the expected expenditure of R428 billion, but caution must be taken to ensure that the re-examination of remuneration and governance did not impact on service delivery. The need to look carefully at the role and functioning of the Southern African Customs Union was also emphasised. The Committee noted that it was important also to bear in mind the unpredictable nature of the world economy, and noted that Members, as they continued to interact, could make more suggestions to National Treasury, aimed at improving the social well being of the nation and addressing issues such as unemployment. The Committee accepted the Revised Fiscal Framework, with the inputs made.

The Committee then considered the Budgetary Review and Recommendation Report on the National Treasury. A proposal was made to add a recommendation that the tax base be expanded, as also that the Companies and Intellectual Property Registration Office (CIPRO) must establish a credible business register. A Member asked that National Treasury should also review the Annual Report format for national departments, so that they reported to Parliament in line with the Money Bills Amendment Procedure and Related Matters Act. It was also suggested that National Treasury needed to look further into consumer protection in the financial sector, to ensure that public funds were properly managed, and to improve its  relationship with law enforcement agencies to expedite cases of corruption. The Committee adopted this Report, as amended.

The Committee then considered the Budgetary Review and Recommendation Report on Statistics South Africa was considered. Some technical changes were made. Members noted that Parliament needed to play a role in the sensitisation programme for the Census 2011, and that Statistics South Africa also needed to ensure that the business register was up to date. The Committee adopted this Report.


Meeting report

Revised Fiscal Framework: Deliberations
Dr D George (DA) said that the National Treasury needed to consider what the impact would be on the fiscal framework if South Africa were to zero-rate Value Added Tax (VAT) on books.

Mr D Van Rooyen (ANC) said that it was high time that central expenditure was monitored and that there should not just be a focus on monitoring expenditure at provincial and departmental level.

Mr Van Rooyen said that the Committee needed to look into the concerns raised by the Minister of Cooperative Governance and Traditional Affairs on the role of Development Bank of Southern Africa (DBSA) in infrastructure development.

Mr Van Rooyen said that some of the measures that had been proposed in the budget had had a negative impact in other countries. It would be important to know what the impact would be in South Africa. The Committee also needed to be involved in monitoring some of the programmes.  

Mr N Koornhof (COPE) said that even though there had been commitment from National Treasury on reducing government debt there was need for more emphasis. The proposed reduction of debt stock to 40% of Gross Domestic Product (GDP) by 2015 was still too high.

Ms Z Dlamini-Dubazana (ANC) said that more clarity was needed on what actions were being taken on overspending. She thought that there was a need for more to be done.

Ms Dlamini-Dubazana said that there was need to speedily address bid-rigging as this was wasting a lot of resources.  

Mr B Mashile (ANC, Mpumalanga) said that the expenditure of enterprises was growing steadily, as evidenced by the expected expenditure figure of R428 billion. However, he cautioned that the proposal to re-examine remuneration and governance within these enterprises should not impact on service delivery.

Co Chairperson Mufamadi said that the Southern African Customs Union (SACU) impacted on revenue base of the nation, so there was a need to look at its role.

Mr Mufamadi further noted that it was important to bear in mind the unpredictable nature of the world economy, without casting doubt on the Revised Fiscal Framework. He added that the Committee was dealing with a process and not an event. The progress that National Treasury had made was partly due to the input from members.

Mr Mashile said that he had observed, from comments made by other Members, that the Committee was in agreement with the Revised Fiscal Framework. 

Co-Chairperson Mufamadi noted that the Committee’s submission to National Treasury was not the end of interactions with that department. As members continued to interact with the document, more suggestions could be communicated to National Treasury. It was important to propose measures that would improve the social well being of the nation and address issues such as unemployment.
                       
Co Chairperson de Beer asked that a report be drafted to capture the input of members.

Co-Chairperson Mufamadi said that the final draft should be ready on Monday morning to be placed on the ATC in the afternoon.

The Committee accepted the Revised Fiscal Framework, including the inputs made.

Committee’s Budgetary Review and Recommendation Report (BRRR) on the National Treasury
The Chairperson of the Standing Committee on Finance proposed that since the Members had received the copy of the Committee’s Budgetary Review and Recommendation Report (BRRR or the Report) in ample time to prepare comments, they should go through that Report page by page, to suggest amendments and corrections.

Mr Koornhof said that the six hospitals that were part of the feasibility studies for public private partnership needed to be named as they had were unknown.

Ms N Sibhidla (ANC) said that a recommendation should be added that the tax base should be expanded. Furthermore, another recommendation should be added that the Companies and Intellectual Property Registration Office (CIPRO) needed to establish a credible business register. The National Treasury should also review the Annual Report format for national departments reporting to Parliament, in line with the Money Bills Amendment Procedure and Related Matters Act. 

Dr George said that National Treasury needed to look at consumer protection in the financial sector.

Dr George said that there was also a need to ensure that public funds were properly managed so that there was no wastage of funds.  

Mr van Rooyen said that the Committee needed to emphasis the need to improve the relationship between National Treasury and law enforcement agencies, so as to expedite cases of corruption.   

The Committee adopted the Report, with amendments.

Committee’s Budgetary Review and Recommendation Report on Statistics South Africa
The Chairperson noted that Members had had ample time to study the Report before the meeting and asked that they comment on any amendments or corrections, page by page.

Members observed that the report had a few grammatical errors, and asked that these be corrected.

Dr George said that Parliament needed to play a role in the sensitisation programme around the Census 2011.

Mr Van Rooyen said that Statistics South Africa should ensure that the business register was up to date.

The Committee adopted the Report, with the corrections and amendments proposed.

The meeting was adjourned

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