2013 Fiscal Framework and Revenue Proposals Finance Standing Committee Report: Consideration and Adoption

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Finance Standing Committee

07 March 2013
Chairperson: Mr T Mufamadi (ANC)
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Meeting Summary

The Finance Standing and Select Committees met jointly to consider and adopt the Finance Standing Committee's Report on the 2013 Fiscal Framework and Revenue Proposals following two days of public hearings.

The Committees commented that the National Treasury needed to consult more extensively prior to the introduction of the carbon tax due the serious implications it posed. The Committees recommended that the National Treasury should encourage government departments to limit their use of consultants.

The Committees also added another recommendation that National Treasury must report to the Finance Standing Committee on incentives on the Special Economic Zones and how they compared around the world.
The draft Report of the Finance Standing Committee was thus adopted with changes.

Meeting report

The Chairman led the Committee through the consideration of the draft report before its adoption on a page by page basis.

Mr S Swart (ACDP) said that there were grammatical errors in the report and also added that he had prepared recommendations that he hoped the Committee would consider.

Mr Swart, commenting on page two paragraph five of the draft report, said that the sentence ‘Revenue collection has deteriorated due to a moderate economic growth should be corrected to read ‘Revenue collection has deteriorated to a lower than forecast economic growth’.

Mr B Mashile (ANC – Mpumalanga), referring to paragraph six of page two, said that the sentence ‘The proposed 2013 budget framework makes provision for slightly over a trillion rand in the current financial year…’ would create confusion since the current financial year was yet to start.

 Mr C de Beer (ANC – Northern Cape) said that in the rest of the report the expenditure was stated in figures. He proposed that the same be done on page two for consistency.

Mr Mashile, commenting on page three paragraph three, said that the sentence ‘ According to Business Unity South Africa (BUSA), the global economy as a whole may be over its cyclical low point and the economies of the United States is likely to grow faster while China’s growth rate stabilise’ was time bound but there was actually no time specified.
Mr Swart on the same sentence said ‘economies’ should be corrected to ‘economy’ and ‘while China’s growth rate stabilise’ should be corrected to read ‘…while China’s growth rate is set to stabilise.’ He also added that ‘volatility’ should be added to the word ‘currency’ on paragraph three line four.

Mr T Harris (DA) said that there was a phrasing problem in the second last paragraph which read ‘The mining sector contracted, manufacturing growth as muted and weaknesses in the services sector…’ He said that it should be corrected to read ‘Contraction in the mining sector, …’ and in the last paragraph the sentence ‘…R10.1 billion estimated during October Medium Term Budget Policy Statement 2012’ should be corrected to read ‘‘…R10.1 billion estimated in the October Medium Term Budget Policy Statement 2012.’ ‘Mining remains a key sector towards the domestic economy…’ was corrected to read ‘Mining remains a key sector to the domestic economy…’

On page five Mr Mashile said that the columns and figures should be aligned on the right instead of the left.
Mr Harris said that ‘Broad unemployment rate (discouraged jobseekers)…’ in paragraph three should be corrected to read ‘Broad unemployment rate and discouraged jobseekers..’

Mr Swart said that the sentence ‘The Manufacturing Circle is also in support of the fiscal policy approach’ should be corrected to read ‘‘The Manufacturing Circle is also in support of this fiscal policy approach’ in paragraph six of page six.

On page eight, Mr Mashile said that the units of measurement had been confused with the heading of the column on consolidated fiscal framework (column of billion rand).

On page 10, Mr Mashile said that the word ‘Practitioners’ should be added to ‘The South African Institute of Tax’ in paragraph four.

On page 18, the Chairperson said that the figures required alignment and on page 20, ‘Select Committee’ had to be replaced with ‘Standing Committee’ and also on page 23 item 9 on recommendations.

On page 21 at 8.12, Mr Swart said that ‘The Commission’ had to be specified.
On page 22 at 8.13 Mr Mashile said that the National Union of Metalworkers of South Africa (NUMSA) did not support the National Development Plan (NDP) according to its presentation.
The Chairperson said that NUMSA had to be specific about what it was not in agreement with. It was proposed that the words ‘NUMSA which had reservations’ be added to the paragraph.

In terms of the recommendations on page 24 recommendation 9.1, Mr Harris said that the role of the legislature was not clear in the recommendation. It was not up to the Department to legislate but rather draft amendments had to be sent to the Committee for finalisation.

Mr Harris, commenting on recommendation 9.2 on National Treasury considering conducting research, said that a report summarising research around the reasons for the change to the succession of trusts should be presented to the Committee. In terms of resolution 9.3 on cross border services and pensions, he said that National Treasury had to present to the Committee a cost benefit analysis of allowing a deduction.

In terms of recommendation 9.4 on a carbon tax Mr Mashile said that this was a proposal and not a recommendation. He proposed having it deleted.
Ms J Tshabalala (ANC) said that there should be an allowance for more consultation by the National Treasury prior to the introduction of the tax.
Mr D Ross (DA) agreed with the proposal for consultation before introducing the tax because of the serious implications that it posed.

In terms of recommendation 9.5 on administered prices, Mr Swart proposed a period of six months as opposed to the three month period that was indicated for the development of a policy on administered prices and having the same tabled in Parliament.
Mr Ross said that there should be a move towards inflation related pricing.

Ms Tshabalala said that recommendation 9.6 on the National Health Insurance should be deleted since funding was the only concern.

Recommendation 9.8 on the development of a plan after the adoption of the youth employment incentive and Recommendation 9.9 on restructuring of programmes in the Ministries of Health, Women, Children and People with Disabilities, Labour, and Social Development to reflect and address gender inequality were deleted.

Recommendation 9.11 requiring the Minister of Finance to monitor government spending on a quarterly basis was deleted because the quarterly reports were already being done. 

In terms of Recommendation 9.12 on the use of consultants by government departments, Ms Tshabalala said that National Treasury should encourage departments to limit the use of consultants.

Recommendation 9.16 on awarding tenders for infrastructure projects and Recommendation 9.17 on National Treasury monitoring tax collection were deleted.

Mr Swart said that the recommendations that he took time to write down were on the NDP plan, Government deficit, combating wasteful expenditure, and capacity of government to spend R262 billion. The Chairperson said that the Finance Standing Committee would see how to incorporate them into the report.

Mr Harris’ recommendation requiring a report from the National Treasury to the Finance Standing Committee on incentives on the Special Economic Zones and how they compare around the world was included.
Mr Harris recommended that a report on the review of infrastructure spending over the past three years and targeted spending be prepared and sent to the Committee.
Mr Mashile, however, said that the review would be a creation of unnecessary work since already there were annual individual reports.
Mr S Mazosiwe (ANC – Eastern Cape) said that this was already happening and that there was no need to separate it.

The Finance Standing Committee Draft Report on the 2013 Fiscal Framework and Revenue Proposals was adopted with the above changes.

The meeting was adjourned.


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