Medium Term Budget Policy Statement: Human Sciences Research Council briefing

Standing Committee on Appropriations

07 November 2011
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Human Sciences Research Council (HSRC) had been requested to provide comments on the Medium Term Budget Policy Statement, and gave presentations on the health, education and rural development sectors. In relation to health, the state of readiness of the Department of Health to deliver the proposed National Health Insurance system, and the progress made in delivering on the ten point plan were discussed. The HSRC reported that consultations on the health insurance scheme still had to be completed, and steps had to be taken to prepare for implementation of the scheme. These included the provision of seed and reserve funding, office space and personnel and accreditation of facilities and service providers. In particular, an engine had to be created to reduce the threat of fraud. Progress was being made in all aspects of the ten point plan. Despite planned growth in funding for health, there would still be a shortfall of R4 billion over the medium term. This was still a legacy of short-changing on the budget for health between 1997 and 2005. It was suggested that the NHI should be run separately from the Department of Health. Members were concerned about funding for the National Health Insurance scheme. The shortfall of R4 billion might be used to cover this. Better co-ordination was needed between provincial and national Government. Members were also concerned about the maintenance of existing medical facilities. A DA member believed that the NHI should not be introduced, as there was no budget or capacity to manage even existing facilities, but ANC Members expressed a contrary view. They were concerned that so much was still to be put in place, noted that there was not uniform interpretation of policy, that training colleges were still an issue, asked what would inform the budgets around planning, how staff would be recruited and sourced, noted that fraud was a significant risk and that funding must be ring-fenced. Members asked if all health functions would be covered by the R121 billion, what the extra R4 billion would cover, and what model would be used. The Financial and Fiscal Commission commented that it had already made recommendations for review of the equitable share formula, and a broader approach was needed. It was noted that issues of assignment of powers were being discussed again, and not enough was being transferred to provinces to cover personnel costs.

HSRC had also looked at the effectiveness of spending on education, noting that most of the increases had raised the number of no-fee schools. South Africa was close to a position of universal access to education already, and was amongst the highest spenders in the world on education, but it would alleviate the debt burden on many households. Unemployment was still a major concern. There was a need to improve quality and quantity of teachers, as 22 000 teachers left the profession annually, and although 9 000 bursaries for student teachers were given, 60% teachers moved to the private schools. The National Skills Fund had failed to spend about R5.2 billion and the Sector Education and Training Authorities were not effective. Few learnerships in agriculture were being taken up. Although access to early childhood development increased, there was a need to improve quality, and there were concerns about levels of literacy at grade 3, and low graduation from higher education, as well as address the increased unemployment levels. Members asked about the technical schools, absenteeism of teacher, the need to increase quality of those entering the teaching profession, blockages in the processes, whether there was poor attitude that needed to be addressed, and disjuncture between national and provincial departments. They noted that performance was not matching investment.

The HSRC noted that, for the first time, the Mid Term Budget Policy Statement had addressed rural development, with increased allocations. Although there was a greater emphasis on food production, the number of small projects such as food gardens had been significantly reduced, and the target for these was reduced from 22 000 to 1 800, with only 900 having been achieved so far. The land claims programme was on track, but some 3 000 claims still needed to be settled, with another thousand claims being processed each year. Underspending in rural communities was a challenge, as was attraction of skills. The MTBPS said nothing about measures for rural development outside agriculture and nothing on rural tourism, and the HSRC proposed that the equitable share model should be applied to prioritise rural infrastructure development and environmental sustainability needed to be a building block. Urgent attention must be paid to ensuring that different programmes complemented each other.

In summary, the HSRC said that it was difficult to see how the job target of 5 million jobs by 2020 could be met, and the aim of 7% growth was becoming more difficult to achieve, whilst the government salary bill was much higher than other countries. Skills shortages and corruption were particularly problematic.  was pertinent. There was a difference between education and skills training. Decisive action was needed to combat corruption. The MTBPS tried to shift the balance of public spending from consumption to investment, and there was great potential in infrastructure projects, including upgrading of the townships, although only four out of ten major investment programmes had been realised. Green industries were critical, but lack of specialist skills could hamper this development.

Members discussed some of the issues around the overseas study visits, and noted that although India was a possibility, other countries were still being investigated.

Meeting report

Medium Term Budget Policy Statement
Chairperson’s opening remarks

The Chairperson said that Government priorities for the next five years included health and education, and it was necessary to consider the challenges that lay ahead. The Minister of Finance had raised two issues as the fastest growing concerns for the fiscus. These issues were personnel and debt. He had indicated that the national debt was still manageable. It would stabilise at 40% by 2015 and then begin to decrease.

Human Sciences Research Council briefings:
Health Matters

Dr Olive Shisana, Chief Executive Officer, Human Sciences Research Council, introduced her delegation. The Minister of Finance had indicated that debt was rising faster than in other countries. Fiscal discipline was needed. National Treasury (NT) had indicated that there would be prioritisation, but there was no sign of this in the Medium Term Budget Policy Statement (MTBPS). Government had set twelve outcomes, on which the Human Sciences Research Council (HSRC) would inform government.

The outcome of health would be addressed by the introduction of a National Health Insurance (NHI) scheme. Government was not yet ready to implement NHI, as consultation had not been finalised. This would have to be followed by a White Paper to Cabinet, which would have to be approved by Parliament. The Department of Health (DoH) was preparing a plan but a policy had to be in place first. There would have to be congruency between the plan and the ultimate legislation.

Dr Shisana said that certain actions needed to be completed urgently. Firstly, an NHI fund must be established with seed funding. The structure had to be set up, including establishing offices and finding staff. There were many, particularly in the private sector, who could help establish the NHI. Information systems would be needed to manage the NHI fund. Contracting mechanisms would need to be put in place.

Dr Shisana said that the next process would be one of accrediting facilities. The NHI would have to look at facilities and the capacity of staff to service a defined community. This process had to start in January 2012. In the pilot phases, which would be started in ten regions in 2012 and a further ten in 2013, the population had to be defined. She had not seen much funding allocated for this purpose in the budget. The districts had not been properly identified and described, which made the compilation of a realistic budget problematic.

Dr Shisana said that another important need was to establish a reserve fund. This would grow until such time as the NHI was ready to be implemented. This could be safeguarded by the Division of Revenue Act (DORA) with ring-fenced funds. The criteria had to be spelled out carefully. There also had to be a risk engine to prevent fraud.

Dr Shisana listed some further actions to implement NHI. Firstly, simulation models had to be developed to test issues of payment and tariffs. An information system had to be set up to ensure that models were realistic. Although still far from the required level, DoH was busy with this.

Dr Shisana said that funds had been allocated largely for infrastructure and the establishment of primary health care. These services were needed, irrespective of the establishment of the NHI.

Dr Shisana had looked at the budget figures. Health had received a good increase of allocations, to R113.2 billion. Over the next three financial years (FYs), however, there was only an average growth of 7%. The Green Paper estimated a need for R125 billion. The R4 billion shortfall continued into 2014 and 2015. NT would argue that it could not allocate figures until the pilot programmes were producing reliable information.  

Dr Shisana had looked at the ten point plan for improving healthcare. The provision of strategic leadership was ongoing. Even in the area of general health, the Minister was maintaining a high profile. However, a social contract was lacking. Health would only improve if the public took this matter to heart. Dr Shisana said that the second point was that NHI had to be a comprehensive plan. This was still in its early stages. The third point was the improved quality of health services. A set of standards had been published but had still to be assessed. This would lead to a proper plan. There had been an audit of facilities, which should be completed by May 2012.

Dr Shisana said that the fourth point was improved human resource (HR) management. A strategy had been launched and consultation was taking place. The fifth point was an overhaul of the health care system. This was being done. The DoH was looking at the state of health care facilities and at co-operation with the private sector. The sixth point was the revitalisation of physical infrastructure. This was being done, but work had to be at a provincial level. Some provinces were performing at a higher level than others. The Northern Cape was making the most progress, but the population there was the least dense. Other provinces such as Western Cape were lagging, but she was sure they would be able to catch up.

Dr Shisana said that the seventh point was the acceleration of an HIV and AIDS plan. Mortality rates were decreasing. The DoH had made an important move to counter tuberculosis (TB), and management of this disease was improving. The level of introduction of anti-retro-viral (ARV) treatment had been increased. The resources were in place, including foreign funding. People needed to be motivated more to seek treatment. Too many people were still dying prematurely. Dr Shisana said that the drug policy had been reviewed. Policy proposals had to be submitted to the DoH. The final point was research and development. A survey had been launched, funded by the DoH and external donors. A survey on HIV and demographics was funded, and should start by the start of 2012.

Dr Shisana returned to the question of health facility infrastructure. Appropriate criteria had to be determined, and the DoH had done this. The audit of public facilities was under way. After this was completed, the DoH would conduct a gap analysis compared to the private sector. A refurbishment plan would have to be developed. An assessment was needed on the ability of private facilities willing to participate in the NHI. Infrastructure spending had declined slightly to R9.6 billion. She believed that the DoH could utilise funding, which would increase continuously over the medium term.

Dr Shisana said that NHI funds should be budgeted for 2012/13. She hoped to see an increase in the budget in 2012. Pilot schemes were needed. Key elements had to be introduced. This was not being done at present, due to the focus on primary health care. There had to be a focus on the autonomy of institutions. Authority was needed, coupled with accountability. Facilities had to be accredited. A comprehensive package of services was needed. A referral process was needed at all four levels of care. Community health workers had to be integrated into public facilities. Such workers should also educate the public in their homes.

Dr Shisana added that there was also a need for a risk management strategy. It would be a huge undertaking. A system was needed to counter fraud. This was widespread all over the world. The help of the South African Revenue Service (SARS) would be essential. A risk management engine should gather data as soon as possible. SARS was being successful in its sector. Correlation with the data of the Department of Home Affairs (DHA) also was needed. Funds should be set aside for the development of a risk engine. There was an issue with the allocation of funds. The present policy was that funds went directly to provinces. This needed to change as the national DoH would need funding to implement policy on a uniform basis. Health was a concurrent function.

Mr M Swart (DA) was convinced that NHI should not be introduced. There was no budget or capacity to manage the existing facilities. The cost of NHI was unknown. Government should first get existing facilities running properly. The country already had high levels of debt. Staff remuneration was already more than the country could afford.

Mr L Ramatlakane (COPE) said that there was still a lot of guesswork over NHI issues. He was worried that there were so many plans to be put in place. The money might be available in the next budget. The Minister seemed to have different priorities. There were many issues around the budget. Health and the access to health services was an important issue. A common understanding was needed. The numbers would determine affordability, but these numbers were unknown.

The Chairperson said that there could be a voluntary or direct tax. Policy still had to be finalised. It was not up to this Committee to determine the policy on NHI, merely the financial aspects.

Mr Swart said it was clear that there was no budgetary provision for either planning or pilot projects. The facilities were also lacking. In his view, NHI would not work in the current climate.

Mr G Snell (ANC) said that the co-operation between national and provincial government was fundamental. A number of areas would be tested. There was an assumption in various areas of Government that there were uniform interpretations of policy. This was not the case, and it led to hindering of service delivery. He asked how NHI was being co-ordinated at a national level.

Dr Shisana agreed. As the Director-General of the DoH, she had overseen a process of the devolution of powers from national to provincial level and could not see why this could not be extended to hospital level.

Mr J Gelderblom (ANC) said that Government needed to look after the poor. In certain areas of the Southern Cape, TB had been a problem long before the advent of HIV/AIDS. He asked if the HSRC was happy with research into TB. There were many hospitals, but the standard of maintenance was often poor. Funding should perhaps rather ensure that existing facilities should be well maintained.

Dr Shisana was pleased to see that DoH was going to conduct a survey on the state of TB and multi-drug resistant TB. It was only now that real concern was being expressed. Current solutions were more tailored to regions where TB prevalence was low. The DoH was busy re- equipping and refurbishing six major hospitals throughout the country through private-public partnerships (PPPs). A good referral system was central to the NHI. Information being gathered through the audit was encouraging.

Ms R Mashigo (ANC) said that the focus on NHI was on moving the country in the right direction. The benefits could already be seen. The ten point plan was a comprehensive basis for the introduction of NHI. It would benefit all South Africans. Training colleges were an issue. They had been on the programme for some time, but she was not sure if they were making any impact on service delivery levels. She agreed that powers should be devolved from provincial departments to hospital managers.

Dr Shisana said that NHI was one of the ten points in the plan. Some 122 nursing colleges were being refurbished and re-equipped. About 72 should be completed by March 2012.

Ms L Yengeni (ANC) applauded the HSRC for its input. She suggested that the Minister of Finance should be invited to address the Committee in terms of budget and priorities. She believed that NHI should be introduced as soon as possible. Government had a responsibility to the poor. Members must remember that while they had adequate medical schemes, the poor had to pay what little they had to health care.

Dr Shisana agreed. This Committee should question where there was a discrepancy between budget and funding. She believed that Members had to play an oversight role to ensure that funds were spent correctly.

Mr M Mbili (ANC) said that Dr Shisana had indicated that the implementation of a national plan was still at an early stage. A White Paper had to be developed to inform policy and planning. While this was still in progress, the HSRC was suggesting that funds had to be budgeted for 2012/13. He asked what would inform the budget. He questioned on what basis staff would be recruited, and how they would be sourced, given the difficulties of identifying suitable people. In respect of the facility audit, he said it was common knowledge that provinces were unable to spend budgeted funds. Spending was below the expected levels for the year. Policy should be in place before the NHI was rolled out.

Dr Shisana said that the costing had been done. Costing was not a static issue. Constant revision was needed, so it would always be on the agenda. A document had been prepared by the Ministerial Advisory Committee.  This was helping to guide the process of putting HR in place, describing how the top management of NHI should look. There was much research already on the issues.

The Chairperson praised the quality of the presentation and the insights given. He agreed that fraud was a significant risk. This was making an impact on everything government was doing. He asked how the proposed reserve fund could be justified. Every cent should be allocated. In previous years there had been a low deficit, but this had grown over the years. He asked if there had not been a small fund set aside for pilot studies in the previous FY. He asked if there was a different proposal.

Dr Shisana felt that NHI should be run separately from DoH. A Chief Executive Officer should be appointed as soon as possible to oversee the implementation process. Much progress was being seen with the facility audit. The gaps were being plugged. Budgeting was needed. The DoH was working with NT in the provinces to ensure swift delivery of infrastructure. Seed funding would be needed to set up the pilot funds. The reserve fund was needed so that funds were in place, despite a possible future dip in the economy, to attract engineers. Efficiency should be the goal. Where it was lacking in some areas, funds should be cut and transferred into priority areas. She agreed that there were severe problems with the economic situation, and pointed out that between 1997 and 2005 the budget for health had been short-changed, which had created a problem. This was at the height of the HIV/AIDS epidemic, and the lack of funding had set the whole health sector far back. It was precisely during difficult economic times that Government should be putting more funding into health care, even if money had to be borrowed. No funding was available for the pilot programmes in the ten districts.

Mr Swart asked if all health functions would be covered by the R121 billion, and if the extra R4 billion would cover the NHI.

Dr Shisana said that an extra R4 billion would fund the pilot programmes in the ten selected regions. There would be initial sharp increases in costs as the system was implemented.

Mr Ramatlakane asked if the Reserve Bank model would be used. He asked if ring-fenced funding would be used. There would still be other problems.

Dr Shisana said that it would be the SARS model that would be used. Funds would be directly allocated for the NHI fund, with some funds for the DoH to be used on a national basis. This model had worked well for SARS.

Mr Bongani Khumalo, Acting Chairperson, Financial and Fiscal Commission (FFC), said that the FFC had an issue with the funding for health as a function. In 2009, the FFC had made recommendations for the review of the equitable share formula. Issues had been raised in 2007 in the field of education. At a national level there were certain priorities. The NHI was an important and large programme. In fourteen years, when the programme would be finally implemented, there would be significant issues. A grant to the provinces should be spent at the discretion of provincial government. The current formula took a global view. A broader approach was needed. The Department of Co-Operative Governance and Traditional Affairs (COGTA) had resuscitated its White Paper process in regard to the assignment of powers, and he thought that this would delay the NHI process. A decision was needed. The FFC had noted where the funding formula was hindering service delivery. The FFC would consult with the HSRC on this matter. Work had been done in this area. It was easier at local level as there were larger grants in the form of conditional grants than in the equitable share formula. Maintenance budgets were an issue. They were soft targets. Not enough was being transferred to the provinces to cover personnel costs.

The Chairperson said that there was an issue being raised over whether there should be separate funding for NHI, or whether this should be covered by the DoH budget. Government needed to see how it could make a contribution. The Committee would look at the funding model. He agreed with Dr Shisana that the whole question of funding had to be carefully considered.

HSRC briefing on Education Matters
Dr Vijay Reddy, Executive Director, HSRC, said that education levels were increasing but so too were unemployment levels. The MTBPS had increased the education budget from R167 to R190 billion. A large portion of this was to go towards increasing the number of no-fee schools to 60%. The HSRC had been asked to comment on whether the education system was delivering quality education, and what could be done to yield better outcomes.

Dr Reddy said that South Africa's budget had been compared to that of other countries. South Africa spent 5% of the gross domestic product (GDP) on education, and this was comparable to developed countries and higher than in most low income countries. South Africa had spent 20% of its national budget on education. This made the country one of the highest spenders in the world.

Dr Reddy said that 79% of the budget had gone to provincial delivery. The Department of Higher Education and Training (DHET) had received 14% and the Department of Basic Education (DBE) 7%. It was seldom that the provinces accounted. He stressed that the question of accountability should not be looked at merely in relation to the DBE. It was important to focus on the provinces. Spending on learners was comparable between the provinces. There were, however, differences in the learner:teacher ratio. From studying the Annual Reports, the HSRC found that 75% of the allocation to the provinces went to employee compensation and the remainder to programmes and operations. Five years previously, the salary budget had been 79%. The next issue was that there were large discrepancies between provinces, ranging from 81% in Limpopo to 66% in the Northern Cape. A comparison had been made between the level of salary budget and the Annual National Assessment. This showed that the Western Cape, which had one of the lowest salary to operations ratio, had the best score while Limpopo scored worst.

Dr Reddy said that in 2009 the Western Cape had no vacancies, but there was a 52% vacancy rate in the Northern Cape in 2008, of both teachers and administrative staff. There were high vacancies for departmental personnel. There were questions over whether teachers were delivering a qualified service, or were being utilised incorrectly.

Dr Reddy said that that the provision of high quality teachers was seen as a need. The Funza Lushaka bursary scheme had been introduced to increase the number of student teachers. In 2011, almost 9 000 bursaries had been awarded. About 22 000 teachers left the profession annually, whilst about 60% of recipients of bursaries were taking up jobs in public schools.

Dr Reddy said that it was useful to talk about how resources were being used. One major concern was the National Skills Fund, even though this fund did not derive its income from taxation. About R5.2 billion had not been spent in the 2009/10 FY. The resources were available, but were not being used. The Sector Educational Training Authority (SETA) system was not working. Some 50 000 learners registered for programmes annually, most of whom were graduating and 60% finding employment. It was surprising to see how few learnerships in the field of agriculture were being taken up.

Dr Reddy said that the importance of early childhood development (ECD) was being recognised. This formed a foundation for further education. Access had increased from 40% in 2002 to 78% in 2011. However, quality was still needed. In the schooling system, the country was close to having universal education. The South African community was committed to education. The advent of no-fee schools would not increase universal basic education in numbers, and did not seem to be leading to an increase in performance. However, the burden on households was being alleviated. Issues included high failure rates and poor scores in various assessments. There was a divide, where 30% of schools performed well. Even the better performing schools were not performing at levels of expected excellence. In ten to fifteen years children now in the system would be the leaders. It might be necessary to look for other solutions to achieve improvements in performance. On average, teachers had lost about 22 days a year due to absence. Some cultural changes might be needed.

Dr Reddy said that further education and training was important. There were about 330 000 students in this system, which was only a quarter of what was expected. Graduation rates were low. In higher education there were about 837 000 students. There were problems with access and low graduation rates. There was a lack of linkage between courses of study and the requirements of the labour market.

Dr Reddy said that there should be a focus on provincial capacity and accountability. Human capital needed to be improved by attracting staff, both at schools and to administrative functions. Over a ten year period the qualification rate of the population had been increased. Only 4% of the population had no schooling. However, employment levels had decreased to 26%. The number of those unemployed had increased to 32%.

Mr Swart was encouraged by the fact that 60% of trainees were finding work in their area of training. He asked how far the process of rebuilding the technical schools had gone. At one stage these schools had been taking on a more general nature.

Mr Gelderblom said that teachers were often absent on Mondays and Fridays. He asked if anything was being done about this. He felt that the quality of education might be compromised by poor standards of teaching. He asked if potential teachers should be identified at an early stage of their education. He asked how the situation could be addressed.

Dr Reddy said that in Asia the top 10% of scholars were trained as teachers. The same applied in Ireland. The image of the profession had to be changed in South Africa. The dynamics of the societies were different. A number of studies showed that the knowledge base of some teachers, particularly in mathematics and science, was poor. There were no overnight solutions. Investment had been made at the higher levels, but performance at Grade 3 level was a predictor of matric performance. The Grade 3 assessments had produced alarmingly poor results. This was a national emergency. This pattern had not changed much over the last ten years. It was a societal issue. It might be time to educate the public. Efforts would lead to positive output. Districts were closer to the proverbial coalface. Accountability  should be at this level.

Dr Reddy said there were good policies to manage teacher absence.

Ms Mashigo was concerned about the foundation phase. Something was lacking. Teachers from colleges should do practical training at schools, particularly in the foundation phase. She asked if there were still such programmes, in the absence of training colleges.

Mr Ramatlakane said that a huge investment was being made. There was a praiseworthy commitment. However, he was troubled about the blockages in appropriate output, in terms of students. The average learner to teacher ratio was 29:1, but he questioned the accuracy of this information. He asked if this impacted on the ratio of non-performing to performing schools, currently 70:30. He asked if there were any tools to trace the 40% of learners who were not finding employment. He asked if the poor outcomes were related to bad attitude, and could be remedied by a social solution rather than a monetary one. He commented that poor quality of teaching could be impacting on the future of the country.

Dr Reddy said part of the learnerships involved workplace training. A pact was needed between employers and training institutions. Technical schools were a diminishing portion of the total number of schools, especially since the advent of the Future Education and Training (FET) Colleges. Each of these was now an autonomous institution, with its own governance issues.

Mr Swart said that a high school in George had improved its performance rate significantly by exercising better control over the attendance and discipline of both teachers and learners.

Mr Snell said that the national departments had an overall role to play. However, there was disjuncture between provincial and national departments. He asked if such a system could be retarding the country's vision of education.

Dr Reddy said it was difficult for national departments to intervene, as had recently been the case in the Eastern Cape. If discussions were focussed on districts, better oversight might be achieved.

Mr Ramatlakane said that China produced 250 000 engineering graduates annually. No one in South Africa could complain about the financial investment. However, performance did not match investment. Only 60% of students reached matric.

The Chairperson said the issue of education was always a challenge. There was a political wall and money was not an issue. There was a question of whether the Government was getting value for money. It was clear that the country was investing in education. The assessment rates had to be considered.

Briefing on Rural Development
Unesh Pillay, Executive Director, HSRC, said that the HSRC applauded the shift away from temporary poverty alleviation measures to sustainable development. He was concerned about the proportion of rural spending. The move to improve the plight of the poor through better use of social grants was to be supported. It was the first time that an MTBPS had addressed rural infrastructure. The increased assistance to small scale farmers was also welcomed. Programmes between different Departments were becoming more coherent. Funding for development of a climate change policy was also welcomed.

Dr Pillay said that the main budget made provision of R8 billion for rural development, of which half had been spent to date. He presented figures on various performance areas. The Department had planned to introduce 22 200 household food gardens, but this figure had been revised down to 1 800. The recruitment of the national rural youth services corps (NARYSEC) was continuing, but the pace seemed too slow to achieve the objective.

Dr Pillay said that 242 projects had been recapitalised between April and September. Although this was short of the target, it was a significant effort. The land claims programme was on track, but some 3 000 claims still needed to be settled, with another thousand claims being processed each year. Remote sensing was being used to determine suitable arable land.

Dr Pillay said that underspending in rural communities was a challenge. These were still unable to attract specialised skills. Many of the success stories had been the result of collaboration with the private sector. The HSRC supported the idea of a common administration for social services. The MTBPS had been silent on measures for rural development outside of the agricultural sector, and it also said nothing about rural tourism, which had been identified as a priority. The equitable share model should be applied to prioritise rural infrastructure development. Environmental sustainability needed to be a building block. No reference was made to land redistribution.

Dr Pillay said that there had been an upward adjustment but it was not a significant increase in the budget allocation. The amount allocated for land restitution was unchanged but that for land reform had been reduced.

Dr Pillay said that the Zero Hunger Campaign had been launched to assist small scale farmers in reaching sustainable production levels. Only 900 food gardens of a planned total of 22 200 had been established by the end of September 2011. Food security remained a serious concern. Most funding was targeted through the provinces. There was a fair amount of policy uncertainty. Urgent attention was needed to ensure that policies complemented each other. Affordable, nutritious food must be available. Budgets aimed at improving food security should be ring-fenced. National monitoring of food security was needed.

Dr Pillay said that an audit had revealed that one million state supported packages were in the pipeline. There were initiatives that were part of the development of rural areas, such as revitalisation of small towns and borehole provision. The NARYSEC had recruited 8 000 youths for two year contracts. There was parity in the gender balance of the recruits.

Dr Margaret Chitiga-Mabugu, Executive Director, HSRC, said that two main themes had come out of the MTBPS. One was the slowdown in economic growth. This resulted in increased budget deficit and increased debt. Money raised from loans should be used for capital purchases.

Dr Chitiga-Mabugu said that the MTBPS was more about adjustments than introducing new policies. Unemployment remained a major crisis, having increased from 22 to 26% over the last three years. More than six million adults were unemployed, many of whom had given up looking for work. Almost half the youth were unemployed.

Dr Chitiga-Mabugu said that government had tried to create jobs. Government had done its best to shield the vulnerable, such as children. Most expenditure was going into consumption rather than investment. The number of jobs had decreased in recent years. It was difficult to see how the target of 5 million jobs by 2020 could be met. Government capital spending had declined. Creative ways were needed to capacitate provinces. The private sector was the leader in investment, but even this sector's value was declining.

Dr Chitiga-Mabugu said that government was aiming at 7% growth to meet the 5 million job target. It was becoming more difficult to achieve this goal. The R25 billion for manufacturing would help by creating 115 500 jobs, but was still far from the target. The wage subsidy was due to start in 2013. It was important to look at labour legislation. The salary bill was much higher than in similar countries. Decisive action was needed. The issue of skills shortage was pertinent. There was a difference between education and skills training. Decisive action was needed to combat corruption.

Dr Chitiga-Mabugu said that the MTBPS was looking to shift the balance of public spending from consumption to investment. Job creation had been stagnating for some time. Incentives for provinces were welcomed, but money had to be spent wisely. There was great potential in infrastructure projects such as the World Cup to create jobs. Upgrading of the townships had the potential to create jobs. Assistance to small-scale enterprises would also help.

Dr Chitiga-Mabugu said that workers and employers had been assisted during the crisis period in the economy. In regard to industrial development, there had been many programmes that were assisting companies in creating employment. Most programmes had potential. She reminded Members not to pin all their hopes on investment. It was a welcome intervention. The Department of Trade and Industry had created a number of opportunities. Only four of ten major investment programmes had been realised.  Programmes had to be implemented quickly.

Dr Chitiga-Mabugu said that the Enterprise Investment Programme had been launched by Government in 2008. The growth rate would have to be raised from 7% to 9% to realise the goal of creating jobs. Infrastructure development was important. Green industries were critical both in terms of the environment and for job creation. A lack of specialist skills could hamper this development.

Dr Chitiga-Mabugu said that new industrial developments were welcome, but Government had to assess if objectives were being achieved.


Mr Gelderblom asked for clarity on the number of food gardens. It was explained that the initial target of 22 200 had been downgraded to 1 800, of which only 900 had been established.

Dr P Rabie (DA) stressed the importance of the green economy, and reminded Members that technologies in this regard were more expensive. It was concerning that so many major developments had not come to fruition. He suggested that the companies involved should be asked to reconsider their positions.

Mr Gelderblom asked if there was any research into the agricultural patterns in China. There were many developments providing many jobs. The Vaalharts scheme had also provided many jobs. There were fertile areas in the Eastern Cape which could be used to develop such programmes. There were many unemployed youth who could not afford to go seek work in the urban areas. There were no opportunities in the rural areas.

Ms Mashigo wondered if there were any institutions which could assist with industrial development. These could benefit rural development. Equipment could be channelled to projects. She liked the concept of PPPs but felt that such partnerships were not always used in the most beneficial way.

The Chairperson said that government was creating many incentives for job creation, but this was not enough. He asked what examples could be provided. He noted that he had been informed that it was difficult to monitor food security projects. He noted the reports on the reduction in payment for land reforms. Rural development had another programme for land reform. Agriculture had its own programme.

The Chairperson suggested that, given the limited time available, the HSRC should respond in writing within two days. Members could make further comments the following day in writing. More presentations would be heard the following day.

Other business: Comparative research
Mr Ramatlakane raised concern over a document comparing systems used in the United States and Canada.

Mr Gelderblom said that he had spoken to Mr Ramatlakane and Mr Swart. Both had admitted that the document was a suitable motivation.

The Chairperson said that the Indian system was closest to South Africa's. The system in China was so different to that in South Africa that a request for a visit had been declined. Members were told by a Parliamentary researcher that a different system was followed in the USA. The budget served as a vote of no confidence. It was either approved or rejected.

Mr Ramatlakane said that those who had drafted the document had a better understanding of the systems used and they should advise the Committee on which countries should not be visited as they did not provide suitable study material. He noted that he had still not seen the document, and he suggested that Members needed to be advised of all the options. He thought it would make more sense to visit India or Russia, rather than Canada, but stressed that any visit should address the needs of the Committee.

Mr Swart said it would not be possible for this Committee to find a country whose systems matched South Africa's situation exactly. However, two officials from the American budget office had visited the Committee and had been very informative. Other than the initial processes, the system was similar. Members would learn much by visiting the Budget Office in the USA. South Korea followed a system based on that in the USA, but a visit to that country would not be approved.

The Chairperson said that a sub-committee had been appointed, but this had not worked well. After visits to China and Thailand were rejected, India had been proposed. The invitation to visit India had been postponed several times. This had been noted in the Committee's programme for the year. There had been no recent sub-committee meetings.

Mr Gelderblom requested to be relieved from duties on the sub-committee. There had been many meetings and he felt that he could no longer make a contribution.

Mr Swart also asked to be relieved.

Ms Mashigo was surprised about the turn of events regarding Canada.

Mr Ramatlakane said it was not necessary to form another sub-committee. If Members were in agreement, then a visit to India could be requested. Russia had not responded to an earlier request. There was already agreement to go to India, but a decision was still needed on combining this with a visit to a second country.

The Chairperson said there had been a motivation for a visit to India, and this country was willing to accommodate a visit, but the problem lay with other countries.

The meeting was adjourned.


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