Appropriation Bill 2017: Comment by Human Sciences Research Council

Standing Committee on Appropriations

23 May 2017
Chairperson: Ms Y Phosa (ANC)
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Meeting Summary

Delegates from the Human Sciences Research Council presented on education, health, inclusive growth, land reform and State-Owned Enterprises. Points focused on include the following: Education outcomes are improving rapidly but we are still far behind other countries including BRICS countries. South Africa has a double burden of both HIV and Tuberculosis. The National Health Insurance pilot projects had mixed results; preparation for implementation of NHI begins in 2017. Land Reform has also had mixed success and there are certain obstacles. A successful policy is not only about replacing farmers but is more comprehensive. Inclusive growth requires a set of interventions that ultimately give individuals options out of poverty and allow them to become productive; there is a limit to the extent that redistribution can create positive social change. State Owned Enterprises are often inefficient; governance around them must be tightened and laws must be updated to allow better management of State Owned Enterprises.

Members asked for clarification on minor points around health and inclusive growth. Regarding education, Members were concerned at the presence of a skills-mismatch between the types of qualifications awarded in the education sector and the needs of the labour market. There was particular focus on the supply and hiring of engineers. Members did not discuss land reform. The Committee and the delegates from the Council agreed that the large State-Owned Enterprises had become inefficient and wasteful, and that better governance and legislation was necessary to control them and stop losses. There was consensus that the Council should investigate the spending of funds given to State Owned Enterprises by government. 

Meeting report

The Chairperson briefly introduced the role of the Human Sciences Research Council (HSRC). The HSRC delegates were present to comment on the Appropriations Bill before the Committee. Budgets must be transformative and improve the lives of citizens. She noted, however, that the budget is always limited, which requires compromise.

HSRC Presentation
Dr Angelique Wildschut, Senior Research Specialist, HSRC, explained that her department considers skills and education development nationally. The findings should help contribute to the Committee’s deliberations on the budget. The Trends in International Mathematics and Science Study (TIMSS) measure reliably tells researchers how the country has achieved in terms of science and maths at the basic schooling level. Out of 25 participating countries in a 2015 test, South Africa has shown the largest improvement. However, RSA are still the lowest performing country in the group. The country has improved in the three periods we were tested, being 2003, 2011 and 2015. The biggest improvements were seen in the lowest performing quintile.  By province, Gauteng scored the highest while the Eastern Cape was the lowest. Western Cape was the only province that did not improve. In terms of school-type, No-fee paying schools perform the poorest, independent schools were the best and fee-paying schools fell in the middle.

It has been found that learner performance in the mathematics part of the test often depends on the learner’s home situation. In particular, learners in households with flush toilets score 56 points higher in TIMSS mathematics scores on average compared to those without. Learners in households with running water score 54 higher in mathematics than those without. Learners in households with post-grade 12 education score 43 points higher in the test than those without.  Learners who do not experience bullying score 68 points higher than those who do not. Learners who frequently speak the language of the test at home score 60 points higher than those who do not. Learners in schools with a high emphasis on academic success score 34 points higher.

On post-school education training (PSET) and higher education., internationally, South Africa ranked second worst out of 42 countries in 2012 in terms of the percentage of 25-64 year olds with tertiary education. This list included the Organisation for Economic Occupation and Development (OECD) countries and the Brazil Russia, India, China and South Africa (BRICS) countries, omitting many developing countries. The National Sciences Research Council (NSRC) does research into the demand for different skills in the economy compared to what the education sector is producing. The data comes from the Labour Market Intelligence Partnership Project (LMIPP). In RSA, there are more enrolments in universities than there are in technical and vocational education and training (TVET) colleges, although TVET has expanded significantly and faster than universities. As of 2014 there were just under a million university enrolments and around 700 000 TVET enrolments. 60% of the TVET qualifications are at National Quality Forum (NQF) level 4 which is the equivalent of a matric pass.

Dr Wildschut discussed the supply of skills in RSA: 27% of university graduates were in the business, economics and management category in 2014; 30% were in science, engineering and technology category; 42.8% were in the humanities category.

Dr Wildschut discussed the completion rates in TVET colleges. For the NATED 6 programme, 50% of engineers passed, 57% of those enrolled in services, and 39% of those in the business category. For the National Curriculum Vocational (4) programme, 21% of engineers completed, 48% for services, and 39% for business.

Mr A Shaik-Emam (NFP) requested a point of clarity. He wanted to know if he was interpreting the table correctly. In particular, does business science constitution one of the majority types of degrees and certificates for South African graduates? He posited that this was an over-supply to the economy and therefore a concern.

Dr Wildschut discussed the education-jobs mismatch in RSA. Of the 1.2millon degrees held in RSA 75% are in the community and social services or financial services, where community and social services includes the public sector. The statistics are similar for post-grade 12 certificates and diplomas. This can be compared to the jobs that are held by graduates and certificate holders. 75% of degree holders ended up working as managers, senior officials or professionals. By contrast, of the certificates holders, on 39% worked as managers, senior officials or professionals. The certificate holders are more evenly spread over different occupations. Dr Wildschut found the low proportion of people working as technicians and associate professionals surprising.

Dr Wildschut discussed engineering specifically and noted that it is a versatile skill. 31% of the engineering qualifications work in the financial services sector for example.

Professor Priscilla Reddy, Line Director of population and health, HSRC, presented on health and its social aspects in RSA. Health is an investment and an aspect of social development. District health services are the level at which most services are delivered. The district services health spend has grown by R11 billion and will be at R83 billion by 2017/18. Whether or not this amount is sufficient to cover the nation’s health needs is an important question. Services at provincial hospitals are also important and have also grown in terms of budget. The overall spend at this level was increased by 11% from 2015-2018. Other health services and central hospital services grew by 11% each, costing R25 billion and R35 billion respectively. The total spend increased by 11% from the 2015/2016 level of R157 billion the 2017/2018 projection of R187 billion.

Funding priorities follow the National Development Plan (NDP) goals for health. These include: increasing life expectancy to 70 years by 2030, having a generation of under 25’s free of HIV and AIDS, reducing maternal and child mortality, significantly reducing the burden of non-communicable diseases (NCD’s), and implementing NHI.

Professor Reddy discussed the implementation of NHI. The goal is to achieve universal health care by 2030, which will require significant investments into NHI. These are not just health facilities but broader capacity areas. The preparatory work needs to be accelerated. RSA needs to engage actively in research and monitoring. The NHI fund is to start at R20 billion in tax credits and then increase to R26 billion in medical subsidies. Contracting in and out models need to be tested at the primary health care level. Hospital managers should be provided with greater decision-making powers as part of preparations for them to operate as “business units” under the NHI. Capacity development means investment in doctors and professionals. The pilot project needs to be expanded beyond 10 districts.

The areas where it was felt investment should be priority included: NCD’s, maternal and child health, health systems strengthening interventions (including human resources, service delivery platforms, health technology assessments and governance and stewardship), and health systems and implementation research. Legislation on tobacco has been strong historically but recently has diminished.

Prof Leickness Simbayi, Deputy CEO of Research, HSRC, discussed HIV/AIDS and Tuberculosis (TB) in RSA. Last year RSA adopted the United Nations (UN) “90 90 90” programme to tackle HIV. The programme has the following aims: by 2020, at least 90% of all People Living with HIV (PLHIV) in RSA know their status. Of those with HIV, at least 90% should receive treatment, and of those receiving treatment, at least 90% should be virally suppressed. This basically means that the treatment works. In September 2016, the Department of Health (DOH) introduced a “universal test and treat” policy which requires that as soon as someone is found to be HIV positive their treatment starts. The rationale is that the earlier treatment starts the better the outcomes for the patient. The new National Strategic Plan (NSP) covers 2017 until 2022. Unfortunately, there has been no increase in HIV and TB grants. Government is aiming to increase the number of people treated but the budget is not increasing. At the same time the condom budget is being reduced.  It is a worrying trend that the country continues to set higher goals but is not increasing the allocation.

RSA has the largest number of PLHIVs in the world, currently at 7.1 million. Overall prevalence is 18.8% between the ages of 15 and 49. Prevalence amongst adults aged 25 and older has increased from 15.5% in 2002 to 19.9% in 2012. While this is bad, this is partly due to a good thing, being that treatment is causing PLHIVs to live longer which would increase the proportion in this age category. Encouragingly, prevalence amongst the youth has decreased from 10.3% in 2005 to 7.1% in 2012. The HSRC is undertaking two surveys which estimate the number of people carrying HIV and/or TB. These are done at the national and provincial level; the NSRC will hopefully soon be able to do it at the district level. The first is the 2017 national population-based HIV survey of 60 000 people. The second is new and is a national TB survey among 55 000 people.

In terms of TB, in 2010 the rate of incidence was 981 per 100 000 people, which declined to 860 per 100 000 people by 2013. In 2010 there were around 400 000 new cases of TB which decline to 330 000 new cases in 2013. The severity of SA’s TB epidemic, which is one of the worst in the world, is driven by the prevalence of HIV. The rate of 860 new cases per 100 000 people is close to 1% of the population. In terms of the proportion of all death that is related to TB, the rate has decreased from 12.6% in 2008 to 8.4% in 2012. As such there has been progress in the treatment of TB. It remains the leading cause of death in RSA and is the leading preventable cause of death among PLHIV. For people without HIV, TB cause 59 deaths per 100 000 people in 2012. In the same year, 8.4% of those being treated for TB died.

Professor Simbayi discussed AIDS. RSA is one of the few African country that commits such a large portion of its fiscus to addressing HIV. The upcoming budget is estimated to be around R19 billion. This represents 50% of total health spending, compared to the 5% level it was at in 2006. Government provides 80% of the cost of the national HIV response. NGOs also provide funding and RSA is renowned for the quality of these organisations. The South African National Aids Council (SANAC) budget is expected to increase to R30 million next year. The broad aim is to have AIDS-free youth by 2030.

Professor Ivan Turok, Executive Director, HSRC discussed the economy, inclusive growth, spatial development and Small-to-Medium-Enterprises (SMMEs). He began with an overall assessment of the economic situation and government policy. The economic slowdown has been hurting taxes. Debt has been rising fast over the last 8 years. The budget deficit is now 3.4% of GDP. Debt servicing costs have risen by 10% per annum. Austerity is becoming increasingly important. There is little room for larger budgets. There has been a shift in the fiscal policy approach from counter-cyclical spending towards an agenda of austerity and tax increases. There is a new high-incomes tax bracket at 45% of income. There has also been an increase in the levy of share dividends, the fuel levy and the road accident levy. There has been a 2% slowdown in the rate of public spending growth. In terms of public sector staff, there was been a policy to freeze the headcount. The state is also trying to adopt a tougher approach to the management of SOEs.

On inclusive growth, it is crucial that RSA address economic and spatial inequality. The question is how we address it? RSA needs to move beyond slogans and rhetoric and become specific with a plan to define and create inclusive growth. Inclusion is not just an outcome of fairness and equity, which implies redistribution through grants and services, etc. There are limits to this approach to inclusive growth. The reason is that they do not address the root causes of inequality. Redistribution is not growing the size of the cake that we all share, although it is important in reducing inequality. We need to think more creatively about inclusive growth – it is a process and not just an outcome. A more dynamic approach to redistribution makes individuals self-sustaining and this is the true definition of inclusion. Economic participation entails employment, enterprise, skills, capacity, assets, housing, pensions, and savings. In these spheres, RSA is not doing well, especially with regard to savings and pensions. RSA needs to create social mobility and ladders out of poverty. It is not just a welfare approach but a process of transformation.

Professor Turok felt that policy makers do not speak enough about spatial inequality. Inheritance playing too much of a role in the economy is bad; the Apartheid legacy is profound. GDP per province has widened since 1994. The urbanised places such as the Western Cape, Gauteng and KwaZulu-Natal have done relatively well and the rest are relatively worse. There is a widening gap between the provinces that is very consistent over time. As such governmental policy has not been effective at redressing special inequality at the regional scale and tackling the spatial divide.

Gauteng province is the “golden goose” of RSA and 50% of RSA revenues. This fact and the dynamics around it are not understood properly. Gauteng’s revenues are critical to the financial sustainability of the government and this is often underestimated. Gauteng pays more taxes per capita meaning on average individuals in Gauteng pay more tax than elsewhere. The reason is that they are more productive and earn more.  Understanding why this is so is important and so far, researchers don’t have good answers to this question.

Fiscal allocations are for the first time available from National Treasury and were published in the budget review. The allocations show how taxes are allocated between provinces and municipalities. The disparities are again very striking. There is massive redistribution of funds from Gauteng to the rest of the country. The metropolis municipalities in Gauteng are generating wealth which is distributed to poorer municipalities on a scale that is striking. Rural municipalities receive more than twice as much revenue as the metropolis municipalities per person. An important question is whether this redistribution is sustainable or if it might undermine the golden goose. The metros generate 70% of the fiscus, and they get back in return 31% in government spending. Rural areas put in 5% and get 31% back. So again, there is a striking movement of resources. This is healthy and useful in addressing RSA’s past and the legacy of inequality and poverty but it may not be sustainable.

Professor Turok discussed inclusive growth policies. There are three key areas in which inclusion can be strategically fostered, being the labour market, the land and housing markets, and in enterprise.  In the labour market one must understand the causes of exclusion from jobs. Some are to do with demand. Some of it is form skills and education. Some is from discrimination. RSA needs solutions to these problems. Strategies for inclusion should respond to causes of exclusion. The labour market is critical. The second area is in the land and housing markets. People need to be able to locate closer to jobs. Building regulations discriminate against poorer households. The state should use public land and create regulations and transport connections that benefit the poor. The third element is enterprise. RSA needs to enable adults to create enterprises. This involves improving competition policy and relaxing punitive by-laws which should enable enterprise.

Professor Turok explained that a colleague that was meant to present on land reform was absent but he could summarize the section. RSA has seen mixed in the land reform programme with some farms performing reasonably and some doing quite poorly. Obstacles to progress include a lack of knowledge, access to finance and access to energy. The overall message is that the process of rural transformation needs to go beyond farming and be more comprehensive.

Professor Narnia Bohler, Director of Democracy and Governance, HSRC, concluded the HSRC presentation by discussing SOE’s and the role of Research and Development (R&D) in promoting competitiveness. The presidential Review Committee (2013) on SOEs considered the criticisms of the “Structural Adjustment” era, being that public-owned entities were inefficient, mired in administrative bureaucracy and not cost-effective for services delivered. The review committee emphasised the potential opportunities in taking advantage of government influence on service delivery by SOEs. There is wide acceptance that SOEs need to perform these services while maintaining operational efficiency and international competitiveness. Innovative and efficient SOEs can play a vital role in the economy. It is notable that the four largest SOEs (Eskom, Transnet, Denel and Telkom) account for 91% of all SOE assets, but only 86% of turnover and 77% of employment. These SOEs are crucial for future industrialisation plans. 

R&D conducted at SOEs is vital to maintain and improve their operational efficiency, as has been the case historically. Overall, business expenditure on R&D is increasing but this is marginally so in the case of SOEs. It seems evident that the priority afforded to R&D has decreased for SOEs. For example, there is apparent underspending of R&D budgets by large SOEs. Some SOEs are not reporting on R&D expenditure levels. Some SOEs that could be performing R&D are not doing so.

SOEs can serve as a platform for advancing skills development initiatives and sustaining human capital development. R&D by SOEs must be prioritised as a critical requirement for innovation, efficiency, growth and competitiveness. RSA has made strides and efforts to reform the SOE landscape, but to date the environment is still wrought with challenges, especially in governance, oversight, job creation and skills development. Despite attempts to harmonise the landscape, it is not clear how many SOEs exist in RSA. It is difficult to monitor and measure the success and impact of SOEs in fulfilling the developmental aspirations of the state. There are contradictions and confusions prevailing in the sector which need attention. For example, there is confusion between the terms state-owned enterprises (SOEs) state-owned companies (SOCs) and/or public entities. SOEs in RSA operate within a framework of multiple pieces of legislation, which are at times in conflict with the broader strategic developmental thrust of the state as reflected in the NDP. The critical issue raised in the 2012-2015 Presidential Review Committee/HSRC study was whether the legal instruments should have some form of universal application or whether RSA should retain sector-based reductionist arrangements or formulate legislation aimed at specific SOEs.

Professor Bohler discussed governance reforms for SOEs. More resources are needed to strengthen the governance, shareholder oversight and accountability instruments of SOEs. There is a need to focus on legal reform. It is common knowledge that there are more often than not acrimonious relationships among the shareholders, boards, and GCEOs.  This is illustrated respectively by the SABC ‘When governance and ethics fail’ report, the PRASA ‘Derailed’ report and the ESKOM state capture report of the Public Protector. If these governance issues are not attended to, the socio-economic impact of these SOEs will be at risk.

Professor Bohler suggested Monitoring and Evaluation (M&E) framework within which SOEs must be reformed. A regular review of SOEs is necessary. The M&E mechanism needs to be improved by tracking the implementation of the 31 recommendations of the Presidential Review Committee through the Cabinet process and therefore offer strategic interventions and an enabling environment for SOEs. The M&E mechanism should be up-scaled to assess the performance of SOEs regularly and action taken accordingly.

Mr Shaik-Emam was concerned about the HIV figures and the rate of new infections. The population increase is 1.6/1.7 percent per year. The figure in the slide translates to around 2000 new HIV infections per week. Without calculating precisely, if one considers the rate of infections per year this implies compared to the population growth rate, it seems that the entire country will be infected eventually. On education, TVET colleges were clearly out of line. RSA is producing the wrong skills. For example, consider how many people graduated in a particular field but are now performing other remedial jobs. This would be illustrative. The engineering statistics are the most confusing. Policy makers continuously hear that the education sector is not producing enough engineers – yet the HSRC figures indicate that qualified engineers end up doing alternative work.

Ms D Senokoanyane (ANC) stated that TVET colleges are a matter for serious concern. If the certificate is only the equivalent of a matric pass it is no wonder these graduates end up unemployable. The colleges are not serving the purpose for which they were established. Regarding engineers, she agreed that policy makers often hear that RSA needs to train them. Yet they go into other work. Regarding the health budget, it seems that government is under-funding health but as always it is a catch-22 situation. It was common knowledge that there are NGOs that spend their funds on salaries instead of providing service delivery. South Africans’ lifestyles are a big part of the causes of non-communicable disease.

Ms C Madlopha (ANC) was interested in the education research stressing the importance of a learner’s home situation on education outcomes, for example the presence of a flush-toilet in the household. What is the relevance of this information in terms of policy? Regarding the regional contributions of taxes, the slides say that the Norther Cape and Free State contribute more than say Limpopo but this is an unfair comparison as there are so few people living there.

Mr M Figg (DA) commented that a lot of the statistical information seemed to be outdated, being from 2012 or 2013 for example; this was four years ago. Why is the information so outdated? He commented that the university and TVET graduation rates were very low. What are the real causes for the low pass rate? What is the impact of protests and strikes? How do our lecturers measure up in terms of skills? We need to appoint quality lecturers. Too many appointments are made for the wrong reasons. He agreed that RSA needs to create an inclusive economy. We need to do research on this and prove that policy can create inclusivity to the benefit of the country. Regarding HIV and TB, the youth tend to become sexually active at a younger age these days. It has been found that children are sexually active even at the ages of 10 and 12 for example. Younger children should therefore be included in research in HIV and TB.
 Regarding the presentation on SOEs and R&D – there are currently 715 SOEs. Some should probably be done away with, if they are not profitable. Eskom for example is continuously costing the country. This principle should be applied to all SOEs.

The Chairperson noted that the appropriations Bill adds R6.6 billion to education spending. She agreed that graduation rates are low. Another challenge is in monitoring the quality of courses. Regarding health, there were 10 pilot sites testing interventions aimed at strengthening the response to HIV and AIDS. She felt that these had performed poorly. What, in the HSRC’s view, are the major obstacles to these programmes? 2017 is the year of introduction for the full NHI. How can we ensure that NHI is meaningful and successful? NGOs are requesting that a pregnancy grant is introduced that covers the first 1000 days of a child’s life. What is HSRC thinking on this proposal?

Response from HSRC and further discussion
Professor Simbayi agreed that the data was outdated. However, the data is never up to date. More recent data is only estimates and there is no faster data source available.

Ms Wildschut responded to Ms Madlopha by discussing the role of the household situations on education outcomes. In research, this is measured according to the presence of flush toilets, tap-water, and the education of parents in the household. This is relevant as context to a learner’s life is important - a bad test score is not always because of a bad student or a bad school. RSA is leading the pack with including these context-related variables in its research.

Ms Wildschut noted a “zigzag” progression for graduates of TVET colleges. People often participate in studying towards qualifications in a level they already have. This often occurs after they fail to find work in the workplace. After getting a qualification in a TVET college equivalent to one they already hold, they return to labour market afterwards and try again. As such there is an inefficiency in the system. There are legislative issues in the predominance of level 4 certificates at the TVET colleges. They law is that they can only offer level 5 programmes in conjunction with universities. This is probably blocking a significant number of colleges from offering level 5 programmes and as such blocking people from becoming better qualified.

Ms Wildschut felt that she could not answer the question about engineer demand as it is not an easy thing to clarify or quantify. But Members were correct that there is inconsistency. If RSA needs more engineers we should see that the ones we have are being hired. It is difficult to fix because policy makers can’t stop engineering graduates from changing sector.

Ms Wildschut explained that there is a lack of research and answers regarding the impact of spending on post-school education and training for individuals entering the labour market. Institutionalising tracer-study type research is a popular idea. Currently RSA does not have a system to measure the return on investment in different types of qualification.

Ms Wildschut commented on spending between TVET and university. The allocation given to TVET colleges is not aligned with the white paper trying to expand the TVET system. Currently, 80% of higher-education spending goes to universities and not to TVET colleges. Expanding the TVET budget is crucial in empowering a labour force within which many individuals do not does not have matric.

Professor Simbayi responded to Mr Shaik-Emam. One needs to distinguish between all cases and new cases of HIV. HIV incidence is a key measure, which measures new infections defined as those acquired within the past year. Discussing prevalence mixes the picture as higher prevalence could indicate that existing cases are being treated better. As such incidence is the more important figure. Incidence is dropping particularly among young people. The decrease in certain parts of the budget that aim to address HIV such as spending on condoms is problematic. There are some NGOs that are stepping in to increase funding in these areas however.

Professor Simbayi spoke to TB. Other countries with high prevalence of TB are the BRICS countries such as Russia, China and India, as well as a few neighbouring countries in Africa. A high prevalence of HIV generally goes together with TB prevalence. Western Cape is an exception as it has high rates of TB but this is not due to a high prevalence of HIV. In response to Mr Figg, evidence does not support the claim that children are on average becoming sexually active at a younger age. The average age of first sexual activity was 17 the latest survey, which is the same as it was back in 2012. Regarding budget, there are also funding units for HIV treating within several government departments.  As such, funding may in reality be higher than it appears.

Professor Reddy discussed the NHI. The HSRC was not involved with the evaluation of the pilot sites and as such she was unable to comment. It is true that lifestyle is crucial to certain non-communicable diabetes such as cardiovascular diseases. One can also look at industry and considering reforming food labelling and redirecting the types of foods that are available. Consumer choices are contained by a context that policy has an effect on. The issue of a pregnancy grant is a tricky one, Professor Turok spoke about the concerns with extending the welfare model. RSA badly needs other processes to reform the economy apart from various forms of grants. On the issue of age and sexual activity, data does show a high rate of teenage pregnancy.

At this point Chairperson Phosa had to leave and Mr NE Gcwabaza (ANC) took the Chair. He asked whether RSA was investing enough in preventative products to stop HIV.

Professor Simbayi stated that there has been such research, for example into pre-exposure prophylactics. SANAC provides these as an intervention. Gay men are at higher risk. A movement also exists to legalise sex work which would make it easier to regulate, however, this is a very controversial issue. ARVs can be used to lower the infection rate. There is also a programme to empower women not to avoid falling into dependant relationships with older men and to rather stay in school. A grant to stay in school is an option. There are other products that are still in clinical trial.

Ms Shope-Sithole (ANC) asked if the RSA government is currently in a period of austerity? This was the impression given by the presentation. 

Professor Turok responded to Ms Madlopha. Tax revenues by province in the presentation were presented per capita on the bottom of the slide. It is true that the total amount from the Northern Cape is lower and indeed this is because it is a small area with fewer people. But per capita it is very high, probably because of a higher employment rate and possibly better pay in that area. Regarding education, basic services provide better living conditions which help students study in a better environment. This is important for progression in RSA and policy needs to consider the “bang for buck” in public education spending. Altogether interventions need to be a package that helps people to develop. In discussion, one must be careful when using the word austerity. RSA is experiencing spending cuts or rather a decrease in the rate of growth in budgets. But it is nowhere near in scale to austerity in Greece for example.
Gauteng is a growth success story. Data that tracks people shows that people’s lives are improving in the province. We need to find ways of copying and enhancing this trend. This is why he is nervous to expand redistribution out of Gauteng – rather, RSA should reinforce Gauteng’s success. We need to improve townships and development in Gauteng, we need to reinforce growth rather than penalise it. This can be inclusive.

Ms Shope-Sithole stated that the SCOA identified that many department’s budgets get transferred to SOEs. Departments used to be more hands-on in monitoring the spend of these grants to SOEs as well as municipalities. Much of the evil in the country is probably occurring at this point of transfer.

Chairperson Gcwabaza stated that SOEs have been very unstable in terms of their delivery. Debt has also arisen due to their poor performance.

Professor Bohler agreed that RSA is “haemorrhaging” money in the SOE sector. There is supposed to be an SOE reform committee but it is unclear if this committee has been established. This was the recommendation of the review commission. Said committee was supposed to look at issues in SOEs and make recommends. Efficiency, strategy and financial viability was the focus of the review.  It is easy enough to determine whether or not an SOE and its activity is worthwhile.

Chairperson Gcwabaza said the SCOA was beginning to focus on SOEs. Where has the money gone? Government needs to do this research.

HSRC Chairperson Mr Soudien stated that the HSRC was happy to do that analysis. It would need a brief from the Committee. There was consensus in the Committee that this was a good idea and would be pursued.

Ms Senokoanyane stated that the SCOA was not convinced that these SOEs need more resources. They are poorly run. It is efficiency that is the problem; poor governance and poor financial management.

Professor Bohler said the role of SOEs the country was originally to drive inclusive development but that has not happened. Government needs to look at legislation and find a way to tighten it around SOEs.

Chairperson Gcwabaza agreed. Ministers have limited control of resources and the legislation is too loose. This is what makes it difficult to govern the leadership of SOEs.

Ms Shope-Sithole stated that Skills Education Training Authorities (SETAs) get a lot of money. Perhaps they are getting away with murder. The committee should call them in to give account of what they have achieved.

Professor Turok stated that there were many reasons as to why trained engineers end up working in non-engineering trades. Of course, one should not expect a 100% correlation to begin with. But there are indeed some glaring gaps such as this one. Some going abroad internationally is also an incredible waste. More skills and more M&E is necessary to create a policy-space that ultimately stimulates labour.

Chairperson Gcwabaza noted that due to the absentees, the Committee did not have quorum and as such could not adopt minutes.

The meeting adjourned.  

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