2015 Medium Term Budget Policy Statement; Finance Bill [B31-15]; New Development Bank Special Appropriation Bill [B32-15]: public hearings

Standing Committee on Appropriations

11 November 2015
Chairperson: Mr S Mashatile (ANC)
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Meeting Summary

On the MTBPS, COSATU drew attention to certain core areas. Within the economic context, there was a 34% unemployment crisis and government needed to put in more effort to create jobs. COSATU noted that while some attempts appeared to have been made in respect of fighting corruption, it was concerned that the fight against corruption appeared to be ineffective and insufficient. It noted that the reports that ARMSCOR had recently proposed the need for a new presidential jet. The cost of the jet represented insensitivity to public frustrations concerning the economy. COSATU was of the opinion that there was a need for economic stimulation and to ensure an appreciable cut in non-priority expenditure. There had also been a wrong perception in respect of the public wage bill as it appeared to be concerned with demonising workers as unfairly asking for a wage increase. There was a need to address the gap in the wage bill. On revenue and tax measures, COSATU was strongly opposed to any increase in the Value Added Tax (VAT) because such increase would impose a burden on the working class beyond what they could afford. COSATU would prefer to see an increase in luxury taxes and a reduction in wasteful expenditure. On economic development, COSATU acknowledged government efforts in improving economy growth; however, it believed more could be done. Concern was raised about shale gas and hydraulic fracking; the need to give more support to emerging farmers; the need to support the Department of Rural Development's land restitution programme; and the need to ensure stability in the labour market. On health and social protection, it was hoped that the National Health Insurance (NHI) White Paper would be released as soon as possible. It also stressed the need for government to release the Social Security Discussion Paper. On basic and higher education, COSATU was hopeful that the recent crisis within tertiary education would be adequately resolved by ensuring more funding was dedicated to education. On transport, energy and communications, concern was raised that the new trains sought to be purchased were not going to fit the rails. The position was unacceptable and smacked of misuse of taxpayers’ money by government officials. There was therefore a need to rein in such officials.

A member referred to the allegation by COSATU about plans by ARMSCOR to purchase a new presidential jet for the President and asked if COSATU’s source of information could be considered to be reliable. 

The meeting was interrupted by striking workers of Parliament who were chanting slogans and tried to force their way into the room. They were initially prevented from making their way into the room.

The Rural Health Advocacy Projects (RHAP) was in the process of making a submission on the MTBPS when the striking workers succeeded in forcing their way into the room and disrupted the meeting. They chanted slogans and aggressively insisted that everyone should leave the room. Members and everyone else present for the meeting were compelled to vacate the room as it became impossible to continue with the proceedings.

Meeting report

Congress of South African Trade Unions (COSATU) submission on 2015 MTBPS
Mr Matthew Parks, Parliamentary Officer at COSATU, stated that there was a need for COSATU to express its frustration about how the usual processes for budget considerations in Parliament unfolded. The process appeared to be that submissions and opinions submitted to Parliament on the following year's Budget were hardly ever reflected in that Budget. There was a need to find a way to include these perspectives on key budgetary issues. One needed to ensure that these issues were prioritised in  the budget. For instance the recent protests by university students across the country had shown that the concerns raised by the students about more funding for tertiary education was an area that warranted priority in the budget.

COSATU acknowledged that government was facing a lot of pressure as a result of harsh conditions in the local and global economic climate and that it was trying its best to manage the situation presented by these challenges.

There were certain core areas that COSATU wanted to draw attention to. Within the economic context, there was the 34% unemployment crisis., there was a need for government to put more effort into creating jobs and the failure to dedicate any urgency to the matter might lead to the issue exploding sometime in the future. For instance no one expected the recent protests by university students to arise the way they did and everyone was caught unawares by the crisis. COSATU appreciated the efforts of government in expanding infrastructure as a way of kick-starting the economy. However, it was concerned that the fight against corruption appeared to be ineffective and insufficient. There were all sorts of media reports that reflected that there was nothing to be cheerful about in the fight against corruption. There was a need for urgency in all departments, municipalities and provinces to deal with the problem of corruption before it became too late. It would be dangerous to ignore the public frustrations with corruption which had appreciable effects on the polity. University students had recently demanded a 0% increase in tuition fees which was understandable. However, it was perplexing to find out that ARMSCOR had recently proposed the need for a new presidential jet. The cost of the jet had been mentioned in media reports to be in the region of R4 billion. Such a report if true, would appear to suggest that public concern was not being taken into consideration. While it was possible that there might be the need for a presidential jet, it was clear that such a need could not be considered a priority considering the present economic climate. This was one of the reasons why COSATU felt that the MTBPS was a ‘business as usual’ budget as against the thought that the budget could have more radical economic transformation.

COSATU was not unmindful of the decline in fiscal revenue and the financial pressure faced by the government; nevertheless, it was clear that there was a need for economic stimulation. One needed to ensure an appreciable cut in real expenditure. For example, on the global scene, a step taken by the European Union was to cut back expenditure and attempt to create more jobs. Further, countries such as the United States and China had taken steps in cutting state expenditure which had seen an improvement in the creation of more jobs in those countries. A wrong perception had been created in respect of the public wage bill which appeared to be concerned with demonising workers as unfairly asking for a wage increase. There was a need to address the gap in the wage bill. It was difficult to convince municipal workers earning R150 000 a year that  their salary demand was too high when the Treasury Director General was earning about R1.6 million a year. This position represented a sharp contradiction that warranted attention.

On revenue and tax measures, COSATU was strongly opposed to any increase in the Value Added Tax (VAT) as such increase would impose a burden on the working class beyond what they could afford. COSATU would prefer to see an increase in luxury taxes and a reduction in wasteful expenditure. There was a need to convince the private sector to continue to reinvest in the economy. Company tax had been reduced without having a reciprocal response by business towards the creation of jobs or reinvesting in the economy.

On economic development, COSATU acknowledged government efforts in improving economy growth; however, it believed more could be done. There was concern about shale gas and hydraulic fracking, most especially when one considered that there was water scarcity. More support to emerging farmers was needed, considering that land restitution processes had failed as a result of lack of support to farmers. The Department of Rural Development need to be supported in its land restitution programme as the current allocation meant it would take about 30 years to address land restitution. COSATU hoped that the Home Affairs regulations review would assist in resolving the tourism concerns. On the expanded public and community work programmes, COSATU was aware of the government’s efforts in trying to create more jobs. However, such efforts should be aimed at creating jobs for the long term. The concern about the programme was that some provincial departments and municipalities were abusing it as a form of cheap labour. COSATU acknowledged that some efforts had been made to address this. Nevertheless, the concern still remained. COSATU supported government’s efforts to train 50 000 plumbers to deal with water leaks as this would held to stimulate the economy. There was also appreciation for government’s effort to achieve a national minimum wage; it was believed that this might help to finally break the apartheid wage gap once and for all. A national minimum wage would also stimulate local economic growth. There was also a need to ensure stability in the labour market considering that workers did not benefit from protracted long strikes.

On health and social protection, commendation was given to the government in respect of the provision of ARVs for HIV/AIDS which would increase life expectancy. It was hoped that the National Health Insurance (NHI) white paper would be released as soon as possible and suggestions would be offered in respect of how to make it a success. Government was also commended for the social grants rollout to about 17 million recipients. However, while the social grants were a temporary intervention, the permanent solution was job creation. There was a need for government to release the Social Security Discussion Paper. COSATU had been imploring government to release the paper over the past 15 years. However, it was heartened to learn of the recent ANC National General Council resolution that had mandated government to release the paper. It would assist in ensuring that it was released as soon as possible.

As regards basic and higher education, COSATU was hopeful that the recent crisis in respect of tertiary education would be adequately resolved by ensuring that more funding was dedicated to education. The release of more funds would ensure the provision of more text books, safety and security, better sanitation, and more facilities to the schools. The recent resolve by the government to ensure a zero percent increase in the tuition fees of students of higher education in the country was welcome; however, the next step was to seek to achieve the provision of free tertiary education. 

On transport, energy and communications, COSATU appreciated government’s efforts in significantly expanding rail infrastructure. It was hoped that this would move the economy forward in taking freight off the roads and getting more commuters on the trains. However, it was shocking to hear that the new trains purchased would not fit the rails in the country. This position was unacceptable and smacked of misuse of taxpayers’ money by government officials. Government had to rein in such officials. COSATU appreciated government’s intervention in the power supply situation in the country; the load-shedding of power supply in the country had appreciably improved. However, COSATU was opposed to nuclear energy as it represented old technology. Furthermore, it was not only very expensive, but also posed huge environmental risks. COSATU was also opposed to e-tolls and it should be considered to be a political failure.

COSATU acknowledged government’s efforts in funding the police service, however, it appeared that the R1 million allocated to the SAPS children’s bursary fund for the children of fallen police officers was insufficient considering the sacrifice their parents made. There was a need to clear the backlog of cases in the judicial system and correctional services.

Discussion
Mr M Figg (DA) referred to the allegation by COSATU about the plan by ARMSCOR to purchase a new presidential jet for the President. An ARMSCOR official had recently stated that the alleged plan to purchase the aircraft was still at a very early stage and there was nothing confirmed yet. He asked if COSATU’s source of information could be considered to be reliable. 

Mr Parks replied that the plans to buy a new presidential jet had actually been in the works for some time; it was not a new development. While there was nothing wrong with purchasing a new aircraft for the President, however, the timing of such a plan was wrong. If difficulty was encountered in providing the sum of R2 billion rand to fund the zero percent increase in tuition fees in tertiary institutions, then it was very difficult to understand how money could be allocated for the purchase of a new aircraft. Suffice to say, there were other matters that warranted greater priority over the purchase of a new aircraft. Government needs to curb wasteful expenditure by prioritising and dealing with matters that demand to be in the forefront of those considered by government.

[At this stage, the meeting was interrupted by loud bangs on the doors of the Committee room by striking workers of Parliament who were chanting slogans and tried to force their way into the room. Two security men stood by the door to try and prevent the workers from coming in].

The Chairperson stated that the Committee would take COSATU’s submissions into account when making its report.

Rural Health Advocacy Project submission
Mr Daygan Eagar, Programme Manager at RHAP, stated that RHAP’s interest in the MTBPS emerged out of its work on health care financing and rural health. Therefore its submission was about the impact that budget policy decisions could have on access to human resources for health within the public system. The submission focused on the increasing moratoria or the freezing of posts being implemented at the provincial level.

[At this point, the striking workers of Parliament succeeded in forcing their way into the room and disrupted the meeting. They chanted slogans and aggressively insisted that everyone should leave the room. Members and everyone else present for the meeting were compelled to vacate the room as it became impossible to continue with the proceedings].

The meeting ended abruptly.

[Apologies: Mr N Kwankwa (UDM), Dr C Madlopha (ANC), and Ms M Manana (ANC)].

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