Committee Report on Treasury, SARS and Statistics SA 2014 Budget

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Finance Standing Committee

08 July 2014
Chairperson: Mr Y Carrim (ANC)
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Meeting Summary

The Standing Committee on Finance deliberated on the first draft of the Budget Vote report on the Department of Finance, the South African Revenue Service and on the Budget Vote report on Statistics South Africa.
 
Treasury and SARS Budget Vote report
The Chairperson said that in future the format of the report should change, with the Department’s input summarised more succinctly and greater attention given to the Committee’s observations, findings and recommendations.

The report’s processing had had to be finalised in exceptional circumstances due to the holding of elections, and this had meant there had been no time to engage with stakeholders. It called for stakeholder engagement in the following year and for a greater synergy between the budget, the National Development Plan (NDP), the second radical phase of transformation, as called for by President Zuma, and the structural constraints of the economy.

The Committee felt that it was in the interest of the Executive that the Committee be strong.   There should be greater synergy between the NDP, the Department’s strategic plan and the budget allocation. More attention should be given to the structural constraints of the economy and greater clarity was needed on what structural transformation needed to take place and how it could be given effect.  The Committee was concerned about the recapitalisation of State Owned Enterprises (SOEs) and the stresses this placed on government. The Committee said the Department should monitor the financial performance of SANRAL actively, and that the Department should work more closely with the Department of Co-operative Governance to assist municipalities spend their funds.

Members wanted greater clarity on what the term ‘radical phase of transformation’ meant.  They said the Department should request the Davis Tax Review Committee to look at tax base erosion, profit shifting and transfer pricing.

Four additional points for consideration to be included in the report were raised: that the Department needed to consider the public finance accounting process; that the Department give a progress report on retirement reforms; that financial regulations, and regulators such as the Financial Services Board (FSB) and the Financial and Fiscal Commission (FFC) needed to be debated; and fourthly, that the financial impact of legislation was taken into account when considering new legislation.  Was it affordable to government and could the legislation be implemented? The first three were accepted for inclusion, as well as a request for the Department to report on the ‘twin peaks’ reform when they next met the Committee.

Statistics SA Budget Vote report.
The report noted the key findings of the de-skilling of the African population group between 1994 and 2014. It had provided evidence of transport infrastructure planning not being aligned to the spatial distribution of the population and noted the dissonance between statistics, policy, implementation and service delivery.

Members said it was important that Statistics SA be independent.

The Committee recommended that Statistics SA and the SA Local Government Association (SALGA) develop a comprehensive strategy to use statistics at municipal level and that Statistics SA, in conjunction with the Department of Performance Monitoring and Evaluation, implement a statistical data system to be incorporated into the monitoring and evaluation systems. It recommended that Statistics SA develop information sharing strategies, especially with Parliament.
 

Meeting report

Treasury and SARS Budget Vote report
The Chairperson said that in future the format of the report should change, with the Department’s input summarised more succinctly and greater attention given to the Committee’s observations, findings and recommendations.

The report’s processing for the current year had had to be finalised in exceptional circumstances due to the holding of elections, and this had meant there had been no time to engage with stakeholders. It called for stakeholder engagement in the following year and for a greater synergy between the budget, the National Development Plan (NDP), the second radical phase of transformation, as called for by President Zuma, and the structural constraints of the economy.

Regarding a paragraph that asserted that there would be engagement with stakeholders before the following year’s budget vote report, Dr D George (DA) said that the Committee had to be cautious about making statements about the following year which would possibly not be followed up.

Mr D Ross (DA) questioned whether the Department supported all the policy views stated in the draft, as some -- such as the NDP and the New Growth Path (NGP) -- were inconsistent.

The Committee felt that it was in the interest of the Executive that the Committee be strong. In this regard, Mr Ross said that he would like a programme to be drawn up of the entities that the Committee would be meeting over the course of the year.

Another observation was that there should be greater synergy between the NDP, the Department’s strategic plan and the budget allocation.

The Committee felt that more attention should be given to the structural constraints of the economy and that greater clarity was needed on what structural transformation needed to take place and how effect could be given to it.

Dr George wanted greater clarity on what the term ‘radical phase of transformation’ meant.

Mr F Shivambu (EFF) said the Department should look at deeper structural constraints and their impact on the economy. The economy was not impacted solely by issues which had occurred in 2014, like the strikes or electricity shortage, as mentioned in the State of the Nation Address (SONA).

The Committee was concerned about the recapitalisation of State Owned Enterprises and the stresses it placed on government.  The Minister should brief the Committee on these enterprises.

The Committee said the Department should monitor the financial performance of SANRAL actively, and should work more closely with the Department of Co-operative Governance to assist municipalities spend their funds.

The Chairperson recognised that there were tensions between these two departments.

Mr Ross said that the Department’s intervention was appropriate.

Mr Shivambu said the Department should request the Davis Tax Review Committee to look at tax base erosion, profit shifting and transfer pricing.

He added that the observation commending SA Revenue Services for its performance should also contain a clause noting the Economic Freedom Fighters’ disagreement with this view.

Dr M Khoza (ANC) said the mention of a party’s name should not be mentioned, as the oversight was done collectively.

The Chairperson said he had checked, and a party could be mentioned by name.

Dr George raised four additional points for consideration to be included in the report: that the Department needed to consider the public finance accounting process; that the Department give a progress report on retirement reforms; that financial regulations, and regulators such as the Financial Services Board (FSB), and the Financial and Fiscal Commission, needed to be debated; and fourthly, that the financial impact  of legislation should be taken into account when considering new legislation. Was it affordable to government and could the legislation be implemented?

The Chairperson said that in the past, problems had been encountered, with no costing done and with no capacity in government to implement legislation.  However, every bill currently had a memorandum attached to it regarding costing, although the memo was bland and sometimes outdated by the time the bill was implemented. He added that costing was not relevant in the processing of a bill being passed, but that the memorandum had to be more extensive.

Dr George said the last matter could be removed from the report.

Mr D van Rooyen (ANC) said that the matter of financial regulations, notably the ‘twin peaks’ legislation, should be mentioned in the report.

Dr George agreed with this.

The Committee agreed to the first three additions,  and included that the Department should report on the ‘twin peaks’ reform when it next met the Committee.

The Chairperson said that two entities had asked to brief the Committee.

Statistics SA Budget Vote report
The report noted the key findings of the de-skilling of the African population group between 1994 and 2014. It had provided evidence of transport infrastructure planning not being aligned to the spatial distribution of the population and noted the dissonance between statistics, policy, implementation and service delivery.

Dr George said it was important that Statistics SA be independent.

The Committee recommended that Statistics SA and the SA Local Government Association develop a comprehensive strategy to use statistics at municipal level and that Statistics SA, in conjunction with the Department of Performance Monitoring and Evaluation, implement a statistical data system to be incorporated into the monitoring and evaluation systems. It recommended that Statistics SA develop information sharing strategies, especially with Parliament.

Ms P Kekana (ANC) moved that the reports be adopted as amended.

The Chairperson said he wanted to rewrite the Statistics SA presentation, and would like responses from the Members.

Mr Shivambu said that the budget report should note that he was not in agreement.

The meeting was adjourned.
 

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