Revised Fiscal Framework : Consideration and Adoption of Committee Report

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Finance Standing Committee

30 October 2014
Chairperson: Mr C De Beer (Northern Cape, ANC) and Mr Y Carrim (ANC)
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Meeting Summary

The Standing Committee on Finance and the Select Committee on Finance met to consider and adopt the  of Committee Report on the Revised Fiscal Framework. Members debated the phraseology of some sections of the report and debated whether the report was an accurate reflection of what other input had been made, rather than a description of the Committee's own view. They made a few technical amendments, before adopting the Report.

Meeting report

Revised Fiscal Framework : Consideration and Adoption of Committee Report
The Chairpersons welcomed Members and summarised that the purpose of this meeting was to consider and adopt the Committee Report on the Revised Fiscal Framework (the report). The report, on pages 1 to 4 talked about what Members already knew and discussed. For this reason, he asked that Members should concentrate on the content from page  and particularly give attention to paragraph 4.1 which dealt with observations of the Committee.

Mr D Ross (DA) interjected, asking that Members be given a short time to study those pages, and the Chairperson agreed.

On resumption of the meeting, Mr Ross noted that point 4.3 which referred to "the moderate public sector wage bill". However, he made the point that it was in fact a very bloated public sector wage bill, which constituted 56% of the expenditure budget. He did not believe the Committee could agree to the current wording.

The Chairperson asked whether the Committee wanted to drop the word “moderate”. He pointed out that this statement was not coming from the Committee, but reflected what the Fiscal and Financial Commission (FFC) had said.

Mr Ross said that the Committee noted most of the FFC’s proposals, and National Treasury accepted them.

The Chairperson said that FFC welcomed most of the aspects of the 2014 Mid Term Budget Policy Statement (MTBPS), as National Treasury had presented it.

Mr Ross requested that his concern should be noted.

The Chairperson said that paragraph 4.8 should be linked with 4.8 and 5.10 of the report.

Mr Ross said that the National Treasury (NT) should note the FFC’s proposals, but he was reluctant to go so far as to say that they should be accepted. He was still not in agreement with paragraph 4.3, especially in regard to the proposal of increased taxes.

The Chairperson read out paragraph 4.3 as follows: “Noted that most of the FFC’s proposals on the NT were accepted, and that the FFC welcomes most aspects of the 2014 MTBPS, including economic forecasts; fiscal consolidation; a moderate public sector wage bill; government’s intention to intensify initiatives to combat waste; inefficiency and corruption; proposals to increase taxes and a deficit reduction programme”.

The Chairperson emphasised that this paragraph did not read that the Committee was agreeing with the NT,  in terms of it accepting the FFC’s proposals, and it was in fact the FFC that was welcoming most aspects of the 2014 MTBPS, not the Committee. This paragraph was an accurate reflection of what the FFC had said.

Another Member of the Committee made the point that these were merely observations, and section 5 dealt with recommendations. He believed that the Committee should be more focused when expressing a concern.

Mr Ross said, in relation to paragraph 4.4, that the part reading “the Committee accepts that there may be a need to sell non-strategic assets,” might be too vague. There should be a commitment or movement for the injection of private capital on State Owned Entities (SOEs) as a priority, which was a completely different view.

Another Member thought that the Committee needed to use that wording. At this stage, there had not yet been any real identification of the non-strategic assets, and he did not think that it would be wise to come with a definite statement at this stage.

Ms P Kekana (ANC) agreed with that point, and agreed also that the wording of paragraph 4.4. should be left as it was.

Co-Chairperson Mr C De Beer said that even the Minister was not clear about this. The detail would still come; it had not yet been given, and for this reason he thought that it would be incorrect to use the word "must".

The Chairperson suggested that perhaps the words: “the majority believes” could be used.

Mr D Van Rooyen (ANC) said that there would be a problem with that approach. He noted that to do this would amount to adhering to the principle that said the majority prevailed in all the reports, and there was disagreement here.

Another Member pointed out that Mr Ross was not actively disagreeing with the statement but had raised concerns about the wording used.

Mr Ross said that if the word “must” was a problem, he accepted the need to sell non-strategic assets.

Mr Ross suggested the inclusion of the phrase “high electricity” in paragraph 4.6 of the report.

The Chairperson said that most of the recommendations should be linked to observations.

Mr De Beer said that the report should use language which was understandable for the person on the street wanting to read the report.

The Committee adopted the report, with amendments.

The Chairperson thanked Members for their contribution and apologized that the report came out so late.

The meeting was adjourned.



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