Committee Report on Study Tour to Germany and Sweden

Standing Committee on Appropriations

17 February 2017
Chairperson: Ms Y Phosa (ANC)
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Meeting Summary

The Committee met to adopt the report on the study tour to Sweden and Germany from 28 January to 5 February 2017. The Committee also considered prioritisation of the agencies and institutions to be invited in the process of reporting on the fiscal framework and the division of revenue, the use of information collected from invited departments, and how the Committee could create awareness about its work.
 

During consideration of the report on the study tour to Germany and Sweden, a Member pointed out that the title of the report signified that all the Members of the Committee went on the study tour and that would be misleading to the House. It was explained that it was the standard format, and should be viewed in the same way as oversight visit and that the report would lack local standing before the House if written as a delegate’s report as suggested by the Member. The Chairperson said she would consult on the format.

Another issue raised was that the report should include an explanation of the statement on page 12, that there was a ‘strict procurement regulation placed on all government contracts’. Members explained that this implied that violation of procurement rules in Sweden had been criminalised and compared this to South Africa that has currently imbibed the same values.

A Member raised the issue that Sweden and Germany had the Balance Sheet as part of the publications for budget reviews and this would be of benefit if South Africa imbibed the same, and should be included in the report. Another Member said the Balance Sheet was part of submissions in SA but it was not required.

The report on the study tour to Germany and Sweden was adopted with amendments.

The Committee deliberated on the prioritisation of institutions and agencies to be invited to brief the Committee. The Committee decided to invite four think tank institutions which were: Financial and Fiscal Commission, Public Service Commission, Human Science Research Commission, and Office of the Auditor General. Based on engagement with these institutions the Committee will be able to make an informed decision on the agencies to be invited for deliberations.

A Member requested the Committee to invite the Competition Commission on the 17 banks indicted for collusion to buy and sell currency, the Department of Social Development, South African Social Security Agency, and the Department of Water and Sanitation. The Chairperson said they were noted for later deliberation while the Committee focused on the immediate schedule.

Members also proposed that brief meetings should be moved from Fridays and added to any of the meetings in the week. The Chairperson agreed to this but requested that Members be ready to attend meetings on Fridays and to be prepared for meetings that run into the night when necessary.

The Chairperson also asked Members if the information collected from invitees was well utilised and seen to be utilised. Members submitted that the information collected had served as an input for the Committee’s report and the recommendations it contained. Which were the sources of changes made by National Treasury and the deliberations in the House. Committee Researchers said the report of the Sweden and Germany study tour could be extracted for articles and the delegates interviewed to promote what was learnt of the tour.

Minutes of 5 December 2016 were adopted

Meeting report

Opening remarks
The Chairperson said the meeting was held to adopt the report on its study tour to Sweden and Germany from 28 January to 5 February 2017, adopt the minutes of 5 December 2016, prioritise agencies and institutions that needed to be invited to report on the fiscal framework and the division of revenue, ascertain how to use information collected from invited departments and decide how the Committee could create awareness about its work.  She appreciated Members for ensuring that there was a successful tour, and also appreciated the support and the research team who helped with the preparation of motivating documents for the journey. Despite the differences between the two countries there were many similarities. These included having different provinces that were linked together in both countries, citizens that had different levels of income with some being poor and some being, rich just like in SA. Fiscal discipline was held in high regard in both countries.

 

Mr A McLoughlin (DA) observed that the report was a bit skewed because Members that went on the trip to Sweden and Germany were not in attendance while those who did not go on the trip were present.

The Chairperson then asked Members if the meeting should be held or if it should be postponed.

Dr C Madlopha (ANC) suggested the meeting should proceed because six of the nine delegates were present at the meeting.

The Chairperson agreed with Dr Madlopha that the Committee should proceed with the meeting.

Dr M Figg (DA) requested that Members should focus on the content and not the grammar so as to maximise the time.

The Chairperson said the Committee did not have a quality assurance team, which was needed to edit the grammar and style of the report. Therefore, Members should correct any serious grammatical mistake because it would reflect on the committee.

Committee Report on the Study Tour to Germany and Sweden
The Chairperson said that Members should look at the report page by page and comment on it.

Mr McLoughlin noted that the report title read ‘draft report of the Standing Committee on Appropriations on its study tour to Sweden and Germany’ despite the fact that not all the Members of the Committee went on the tour. He suggested it should be captured as ‘the report of the delegation to Sweden and Germany’ so that it could indicate that not all the members of the committee went on the tour.

The Chairperson responded that they would have loved all Members to go but a delegation was sent because of budgetary control, which made it impossible for all members of the Committee to go on the tour. The delegation represented the Committee and did not have any local standing with Parliament, only the Committee could report to Parliament.

Ms D Senokoanyane (ANC) asked if the format in which the title was written were a standard format and if it were compulsory, otherwise the title could be changed to reflect Mr McLoughlin’s observation.

Mr Tshepo Masoeu, Content Advisor (CA), said it should be seen the same way as an oversight visit.

The Chairperson promised to consult on the correct title for the report before the final report is submitted.

Ms S Shope-Sithole (ANC) understood Mr McLoughlin was concerned about the factual representation of the report, but it was common practice that not all Members attended study tours but titles were captured in this specific way.

Mr McLoughlin also suggested that a better way of capturing it could also be ‘a delegation of the Standing Committee on Appropriation reports on the study tour to Germany and Sweden, but the Committee reported as follows’.

The Chairperson maintained that the format was not appropriate, but Mr McLoughlin should be comforted by the fact that, the Chairperson will consult on the matter.

Dr Figg added that the Members who went on the trip had a de-briefing meeting every day of the tour which reflected in the correctness of the report, hence making its adoption process easier.

The Chairperson said it was also a way of bringing on board Members who did not go on the tour

Dr Figg asked for an explanation on the statement on page 12 in the fourth paragraph which stated that there is a strict procurement regulation placed on all government contracts.

Mr Masoeu explained that the intention of the statement was to highlight that there is a constituted authority in place which prosecutes anyone in violation of procurement regulations and that was described as a criminal offence in Sweden.

The Chairperson said the information should be included and the report should be re-circulated.

Dr Madlopha said it was important to note that South Africa had also imbibed the same culture as the Swedish Competition Authority by criminalising any violation of procurement regulation.

Dr Figg also observed that both Sweden and Germany prepare balance sheets which often reflect all important financial information, unlike South Africa where balance sheets were not prepared.

Mr Masoeu noted that Dr Figg’s observation was a good one; he clarified that in South Africa, both state entities and government accounts prepare balance sheets and they are published annually by the Reserve Bank, but there it was not submitted as a part of the financial report.   

Dr Madlopha said the observation was a good one because prior to the information by Mr Masoeu, she was not aware that the balance sheet was not used in South Africa.

Ms Shope-Sithole recommended that it would be good to request the balance sheet as part of submission for financial reports so that the Committee could make informed decisions based on the information it presents. She emphasised that this will make a difference.

The Chairperson commented that only experts like Ms Shope-Sithole would be able to understand the balance sheet while other Members may not be able to do so.

Ms Shope-Sithole said since the experts were available in the Committee the balance sheet should be included in financial reports.

The Chairperson said the difference was that the balance sheet was not submitted as a part of the financial report in South Africa, while Sweden and Germany require the balance sheet to be attached to financial reports. She requested that this information should be included in the report because it was one of the lessons learnt during the tour.

The report was adopted.

The Chairperson asked the Committee Secretary to confirm the next step after the report had been adopted by the committee.

The Committee Secretary said the report would be sent to the House but it was up to the House if they would want to debate the report.

The Chairperson asked if Members would like to debate the report or to focus on its main responsibilities that would be coming up after 22February.

Dr Figg submitted that the debate would not be necessary.

The Chairperson said the Committee would table the report for consideration by the House.

Prioritisation of agencies and institutions to be invited in the process of reporting on the fiscal framework and the division of revenue
The Chairperson said the workshop with Financial and Fiscal commission (FFC) was eye opening and preparatory for the activities of the coming week.  The researchers had given a long list of institutions that the Committee could work with. The Committee was expected to report on fiscal framework within 16days after which the budget had been tabled. Since the Committee had to submit the Division of revenue within 30days the Committee had to decide how many institutions should be given priority and invited.

Dr Figg proposed that the Committee should invite the Human Sciences Research Council (HSRC), Public Service Commission (PSC), FFC and Office of the Auditor General (AG).

The Chairperson listed the names of the institutions from which the Committee was expected to make four choices, some of which were the South African Human Right Commission, Public Service Commission, Financial and Fiscal Commission, Office of the Auditor general, Commission for Gender Equality, National Youth Development Agency (NYDA), which was included because of the need for job creation for the Youths because 75% of unemployed are youths. She called on the Researcher to comment on the process.

Mr P Dlomo (Researcher) said notwithstanding that FFC had compiled the list; the Committee had the prerogative of deciding and prioritising the institutions to invite. There were two phases in the budget process; the first phase should include the Committee receiving input from the think tank institutions which were Financial and Fiscal Commission (FFC), Public Service Commission (PSC), Human Science Research Commission (HSRC), and Office of the Auditor General (AG). This empowered the Committee on vital information to engage the government agencies. The think tank institutions gave analysis which would help to enhance the Committee’s report, findings and recommendations. The second phase should be the hearing of government agencies and a time to use the information provided by think tank institutions as an input for the deliberations with the government agencies. It should be an opportunity for the Committee to hear about how the government agencies intend to utilise their allocation from the appropriation and Division of revenue bills.

The Chairperson asked Members to identify government agencies that should be invited because decision on this function had been left to officials in the past without the engagement of the Committee. The Chairperson said she was advised that the selection of the government agencies should be left until after the Committee’s engagement with the think tank institutions, which would help the Committee make an informed decision on the issue.

Ms Shope-Sithole remarked that based on the recent news on the indicted Banks, the Committee should invite the Competition Commission of South Africa because the Committee should be following the money and must not close its eyes to such happenings.

The Chairperson responded that the issue of the Bank and the invitation of Competition Commission had been noted for a later time so that the agenda is not clogged with a different issue.

Mr M Zamisa, Researcher, suggested that, in addition to Ms Shope-Sithole’s observation, in addition to the Competitive Commission, the Committee should also be a part of deliberations of the Department of Social Development, South Africa Social Security Agency (SASSA), and the Department of Water and Sanitation which has been in the news.

Dr Figg said although he agreed with Mr Dlomo’s contribution that the selection of the agencies should be left until after the Committee’s engagement with the think tank institutions, he was concerned that the institutions seem to ask for money all the time rather than giving any valuable information.  The Committee should be assisted with information on the large amount of capital outflow because of its negative impact on the South African economy

Mr Masoeu responded that a lot of work has been done by Parliament Budget Office (PBO) and presented to Finance Committee and a lot of findings were made and they had also had an engagement with the DTI which should be made available to the Committee

The Chairperson said the Committee must be briefed on the report

Ms Shope-Sithole agreed with having the report but the Committee must not shy away from inviting the Reserve Bank because there were lot of issues in the air.

The Chairperson asked if Ms Shope-Sithole wanted the Reserve Bank to brief the Committee on capital outflow

Ms Shope-Sithole said the Reserve Bank should be called to brief the Committee

Mr Dlomo explained that Ms. Shope-Sithole was talking about the 17 banks that colluded to sell and buy the currency; an investigation is about to kick-start by the Competition Commission. He advised that the Committee should wait for the report of this investigation before inviting the Reserve Bank to inform the Committee of its remedy to correct the situation.

Ms Shope-Sithole asked that the Researchers should look for a man by name of Kelvin who was said to be in custody of an important report related to the issue that was presented by former President Mbeki in 2002.

The Chairperson said that the Committee had brainstormed on the institutions it would like to see and that Members triggered the issues that required its attention, which were the capital outflow and the issue of the 17 banks in violation of the law, all of which were noted for later deliberation by the Committee. She invited the Committee Secretary to brief the Committee on the parliamentary programme so that the Committee could decide when to invite the four think tank institutions identified during the brainstorming session.

The Committee Secretary stated the Parliament Programing Committee met yesterday and an updated schedule of the Parliamentary programme would be circulated later. The updated schedule might influence the programme of the Committee with regard as to; when the Standing and Select Finance Appropriate Committees (SSFACs) finalises the fiscal framework, which would trigger when the Committee finalises the report on Division of revenue. She highlighted the programmes that concerned the Committee from 21 February till 15 March and suggested that the Committee did not mention South African Local Government Association (SALGA) in the four prioritised institutions.

The Chairperson asked if SALGA should be left out or be included

Mr Masoeu said that division of revenue was the allocation of resources for national, provincial and local spheres and there were resources which the committee ensured that the grants were spent in the areas that were required and SALGA was an important stakeholder that ensured the grant delivered the services. He therefore recommended that SALGA should be invited.

Dr Figg said the role of the Committee to SALGA was to ensure that the money allocated to local government was paid accordingly, SALGA always ask for more money. He proposed that the four institutions already on the priority list as decided earlier should be invited and SALGA may not be invited by the Committee except if there were a place for them.

The Chairperson decided that the Committee would invite the four prioritised institutions as agreed by the Committee.

Dr Figg said he would like to confirm the scheduled meeting on 15 March in Khayelitsha is correct and though Friday was a workday he requested that the agenda on 31 March be added to another meeting which could be taken within one hour.

The Chairperson said Khayelitsha came across as a result of a proposal in the previous meeting where Members agreed that the Committee should go out to address the communities and she asked researchers to prepare the concept documents for the Khayelitsha outreach before the Committee addressed the community. On the proposal by Dr Figg to add the agenda to other days, the agenda could be added to another meeting but might imply that the Committee may go through the night in certain meetings and encouraged Members to be flexible and available.

Ms Senokoanyane proposed that the Committee should amend the programme by adding the activities of short meetings to other meetings instead of having meetings that would not last more than one hour.

The Chairperson responded that the proposal by Ms Senokoanyane would be considered but Committee Members must be prepared to meet on Friday because the weeks ahead promised to be engaging.

Ms Shope-Sithole was in agreement with the proposal of Ms Senokoanyane that Members could meet on Friday when the work demands such, otherwise the agenda of short meetings, especially on Fridays, could be added to other meeting days.

The Chairperson agreed with their proposal and said where possible meetings will be scheduled until Thursdays but when there was a need the meetings would be scheduled for Fridays. She further asked Members how the information given by institutions on their budget analysis had been utilised because the institutions might be discouraged if the information was not used. When the Committee used the information, it was important to indicate such in its outputs. She asked the Researchers for comments.

Mr Dlomo responded that information from the invited institutions had been inputs into the output which is the Committee’s report and the changes that had happened over time were results of the information provided by the institutions because Treasury responded to the Committee’s recommendations line by line through the budget review. The inputs from the Committee’s report that are generated from the information were the basis for the debates in the House.

Dr Figg said the institutions, for instance the FFC, had acknowledged that the Committee was using the information provided by them.

The Chairperson asked if it was allowed that the Committee to send their reports to the institutions to create the awareness that information acquired from their engagements was used.

Ms Shope-Sithole said that would be possible only after the reports were tabled to the House because then the reports become a public document.

Dr Figg said it might not be necessary because people read their reports with the support from PMG, which put a lot of information on what was said in the meetings on their Website.

Mr Zamisa said it was important that people were aware that the Committee went on a study tour and had learnt. He suggested that articles could be extracted from the report and delegates that went on the tour could also be interviewed.

The Chairperson was happy about the inputs, knowing that the inputs from Members would take the Committee to another level of operation; these processes would create an awareness of work done by the Committee because the Committee was working hard but the people were not aware of this.

Mr Dlomo asked how the Committee intended to inculcate the lessons learnt into ensuring that it tightened the Money Bill Act to make sure that the processes learnt to amend the budget and conduct tight oversight was inculcated during the review process, and also cautioned that the Committee should not send reports to institutions because this might generate problems in the future. The report can be accessed by interested parties.

The Chairperson agreed with Mr Dlomo and thanked the Members for the valuable contribution. Last year, the researchers were requested to prioritise the Department and State Owned Enterprises that needed to be interviewed, but not much was achieved. She asked the researchers and content advisor to go deeper in research and provide necessary information needed to engage the agencies and institutions because the interaction depended on the information available to the Committee. The committee would like to help the invited bodies to achieve their mandates.

Adoption of minutes
Mr McLoughlin asked if a particular alternate member had been removed from the Committee.
The Chairperson replied that the mentioned member was no longer in the Committee.

Dr Figg noted that a statement on Page two of the minutes referred to Annexure one which was not attached to the minute.

The Chairperson requested that the secretary should provide the annexure to Members. She said the committee can either adopt the meeting and get the annexure later, or wait to receive the annexure before adopting the minute.

Committee minutes for 5 December 2016 were adopted.

The Chairperson thanked Members and acknowledged that those present at the meeting were consistent in terms of meeting attendance and encouraged them to maintain the good work.

The meeting was adjourned. 

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