Report on the Revised Fiscal Framework and Revenue Proposals: consideration and adoption

Meeting report

Report on the Revised Fiscal Framework and Revenue Proposals: consideration
Chairperson de Beer observed that a draft of the Committees' Report on the Revised Fiscal Framework and Revenue Proposals had been circulated to Members that morning. Members were given 10 minutes to review it.

Mr Harris queried the title: was it not a joint report?

Chairperson De Beer replied that it would be tabled in the National Assembly as a Report of the Standing Committee on Finance and in the National Council of Provinces (NCOP) as a Report of the Select Committee on Finance, although the report would mention that the two Committees had held joint meetings.

The Committee read through the report and made corrections.

Mr Koornhof pointed out that the report must reflect that 'The Committee observed the commitment that the National Development Plan provides a clear, progressive approach for a long-term development.'

Mr D Ross (DA) referred to administered prices, page 7, third bullet from the top. It was wrong to say that administered price increases from Eskom were positive for investment. They were negative for investment from a business perspective, though it might be positive for Eskom in terms of strengthening its balance sheet.  The rest of the paragraph did not make sense. As discussed in the previous day's meeting, it was a triple inflation increase and, from the viewpoint of business, a form of double taxation.  The sentence should be shortened to 'Administered price increases from Eskom were negative for investment.' Otherwise one would open a whole debate. 

Mr Koornhof said that it was a 'Catch 22' situation, as, without electricity', South Africa could not grow. In the past, South Africa had made the mistake of not investing sufficiently in electricity generating capacity.

Mr Ross said that the Manufacturing Circle had indicated clearly that Eskom's electricity costs were a cause for fiscal review. However, he was not sure what kind of intervention the Circle wanted. On the other hand, the Circle had clearly indicated that there were 440 000 job losses. Discussions with Eskom and NERSA had indicated that there was a need to move to inflation-linked electricity tariff increases. The administered price increases were at triple the rate of inflation. An additional bullet point should be added, to say that a positive balance sheet for Eskom was a necessity for energy security.

Chairperson De Beer asked if this bullet point was needed in the observations.

Mr Mashile said that it depended on from which side one was looking at the situation. Mr Ross reflected the view of business, whose costs would be increased by the tariff raises, but guaranteed and sustainable supply of energy was also positive for investment and business in the long run. Perhaps to avoid the possibility of an apparent contradiction, it might be better to be silent on this point.

The Committees agreed to remove that bullet point.

Dr Z Luyenge (ANC)'s understanding of the previous day's discussion was that, to avoid compromising service delivery, one should not encourage 'savings' [under spending]. To say that National Treasury should monitor such 'saving' was to condone it while acknowledging the need to monitor it. He wanted the report to convey the meaning that Government, through National Treasury, should develop plans and mechanisms to monitor departmental savings so as not to compromise the delivery of basic services to the poorest of the poor.     

Mr Mashile thought it might be advisable to omit the phrase 'to the poorest of the poor', unless one was quite sure that it was funds for this group in particular that were being under spent.  He preferred the words 'officer responsible for the job' rather than 'official person'. He corrected a wrong use of 'rolled over' and substituted 'rolled out'. He found the phrase 'personnel numbers over time' confusing.

Report on the Revised Fiscal Framework and Revenue Proposals: adoption
Chairperson De Beer asked for a proposal from the Finance Select Committee to adopt its report.

Mr Mazosiwe proposed. Mr Mashile seconded. The Finance Select Committee thus adopted the Report with amendments.

Chairperson De Beer asked for a proposal from the Finance Standing Committee to adopt its report.

Mr Harris proposed. Ms J Tshabalala (ANC) seconded. The Finance Standing Committee thus adopted its report with amendments.

Chairperson De Beer thanked all Members for their efforts. The reports would be tabled the next day by way of statements in both Houses 'precisely at the same time'. It had never happened this way before.

Chairperson De Beer adjourned the meeting.

[Apologies: Ms T Memela (KwaZulu-Natal, ANC) was in another meeting in her capacity as the Deputy Chairperson of the National Council of Provinces (NCOP)].