Committee Reports on 2018 MTBPS; Adjustments Appropriation Bill & Special Appropriation Bill

Standing Committee on Appropriations

27 November 2018
Chairperson: Ms Y Phosa (ANC)
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Meeting Summary

The Committee met to consider and adopt the draft reports on the 2018 Medium Term Budget Policy Statement; the Adjustments Appropriations Bill B35-2018; and the Special Appropriations Bill B36-2018.

Members considered the draft 2018 Medium Term Budget Policy Statement (MTBPS), and apart from corrections to grammar and style, discussed whether to include a recommendation on the exorbitant costs of holding commissions of inquiry, and agreed that the monitoring mechanism requiring those receiving child support grants who had children of school going age, to provide school reports should be enforced because the grant was being abused.

Members wanted to know what Human Resource for Health (HRH) distribution analysis meant, and why there was no mention of the National Student Financial Aid Scheme (NSFAS) in the recommendations. They asked what the Committee was saying about some senior managers not submitting financial declarations.

The Committee adopted the Committee’s report with amendments, and the DA reserved its rights.

With the draft report on the Adjustments Appropriations Bill, the Committee discussed the issue of scholar transport that fell under the Departments of Basic Education and Transport, and commented that it did not appear to be doing well. Members also felt the Committee was not emphasising that the Department of Water and Sanitation was not addressing its core business. They asked that the Committee recommend that the maintenance budget of the ‘War on Leaks’ be used for maintenance.

The Committee adopted the report with amendments, and the DA reserved its rights.

The draft report on the Special Appropriations Bill saw the Committee discussing whether South African Airways (SAA) should not also be reporting to the Committee quarterly on whether it was meeting the conditions attached to the appropriation. It should get a copy of the agreement between SAA and Treasury before it was entered into so that it knew the terms of the agreement.

Members said SAA had explained to the Committee the challenges they faced, one of which was the bad publicity it was receiving, which made consumers insecure over the airline’s future. They recommended that the government should give an assurance on SAA’s future, so customers could feel secure in making bookings.

The Committee adopted the report, with amendments.

Meeting report

Draft Report on 2018 Medium Term Budget Policy Statement
 
The Committee considered the 2018 Medium Term Budget Policy Statement (MTBPS).

Mr A McLoughlin (DA) referred to page15, and proposed that instead of saying that the budget allocations were “spent below the norm,” it should be “underspent their budget allocations”

A Treasury official said it was not underspending. Departments were spending less because there was a need to reduce spending and hence reduce the national budget deficit, therefore spending was below the norm of 98%.

Ms R Lesoma (ANC) said the Departments were expected to underspend.

Mr M Shackleton (DA) suggested on page 17, where commissions of inquiry were mentioned, that the Committee highlight the exorbitant costs of approximately R300m for holding commissions of inquiry.

The Committee Secretary, Mr Darrin Arends, said the view expressed in the report was a summary of the Public Service Commission’s (PSC’s) submission, and not that of the Committee.

On page 21, Mr McLoughlin wanted to know what the Human Resource for Health (HRH) distribution analysis meant.

The Committee Secretary, Ms Zandile Hulley, said it was a recommendation by the Budget Justice Coalition for the Department of Health (DOH) to compile a comprehensive human resource list for health distribution analysis, and it referred to the norms for health worker personnel based on World Health Organisation (WHO) standards.

Mr Shackleton suggested a rewording of the relevant sentence to read “… according to Human Resource for Health guidelines.”

Mr Shackleton said a line needed to be added relating to the cost of holding commissions of inquiry, indicating the need to monitor this expenditure.

It was suggested by Ms Hulley that it be included in, or after, point 5.15 on p32.

Mr N Gcwabaza (ANC) said the point the PSC had made was a valid one. It was not proper for the Committee to discuss the issue of spending on commissions. The public had called for commissions of inquiry and the commissions’ work was driven by its terms of reference, the number of people involved and the time period allocated to it. Therefore he did not agree with the call to include Mr Shackleton’s proposal, as it would limit government’s response to  the public’s demands.

The Chairperson said the Committee would recommend that the budget be allocated effectively and efficiently.

Ms M Manana (ANC) said that adding Mr Shackleton’s proposal might give the impression that money was not being spent efficiently.

Mr Shackleton then suggested that the Committee follow the South African Local Government Association’s (SALGA’s) view and monitor expenditure on commissions.

Ms S Shope-Sithole (ANC) supported Mr Gcwabaza’s comments, and said there had already been press coverage of judicial overreach and she would not want to see press coverage of Parliamentary overreach. In addition, there was no evidence to back up any claims of ineffective or inefficient allocations. She said the addition of Mr Shackleton’s recommendation should be avoided.

Ms D Senokoanyane (ANC) asked what the reason was for there to be a recommendation for effective and efficient spending. Was there something found to be wrong with the manner in which the budget was allocated? Such a recommendation would imply that the Committee was worried that the funds were not being spent effectively and efficiently.

Mr Shackleton said that taking into account the sentiment of the other Members, he would suggest that the wording of the recommendation read that the Committee would continue to monitor.

The Chairperson said the Committee’s role was to monitor.

Mr A Shaik-Emam (NFP) said the commissions of inquiry were warranted, but would be costly. The question was how the country had arrived at the situation of having manifold commissions of inquiry. How was it that problems could not be identified earlier, because it meant that monitoring was not really working. He did not even have confidence that the Public Audit Amendment Bill would turn things around. One needed to look beyond the commissions of inquiry and the solution was for the government to get its house in order.

On the recommendations, Ms Hulley said that 6.1.1 arose from the wage bill and its impact on frontline services.

Mr Shaik-Emam said that national departments were having major problems with provincial departments, and unless the recommendations were enforceable, they were meaningless. He said national departments should have a bigger say on who they employed, as the ministers were accountable when there were problems.

Ms Hulley said the concern of the Committee was that provincial departments’ spending on compensation of employees would impact on the provision of frontline services in the form of teachers, nurses etc.

Mr Shaik-Emam said the recommendation was an ideal. Whether it would work in reality and be enforced was another matter. He said greater cooperation was needed between national and provincial departments. The Committee should be bold and recommend that the policy be changed, and a greater mandate be given to national departments.

Ms R Lesoma (ANC) said the recommendations needed to be followed up in the House of Parliament.

Ms S Shope-Sithole (ANC) suggested that the Committee researcher and the parliamentary legal advisors should look at section 44 of the Constitution and see how far it could be used.

Mr Shaik-Emam said oversight over infrastructure had been beefed up because it had been a sore point. He asked what the difference was between inspectorate, and monitoring and evaluation. He felt it was the same thing.

Ms Hulley said the emphasis was on the inspectorate to ensure the quality of work.

A Treasury official said there was a need within the Department to develop the capability to manage infrastructure projects.

Prof Daniel Plaatjies, Chairperson: Financial and Fiscal Commission (FFC), said that ‘inspectorate’ was preferred because it had to do with the built environment, the value chain, the costing and pricing, and the pre- and post-delivery of infrastructure.

On recommendation 6.3, Mr McLoughlin said that there was no mention of the National Student Financial Aid Scheme (NSFAS) in the recommendations, and asked if it should not be included. An appropriate sentence was duly added, to include a mention of NSFAS.

On recommendation 6.4.2, Mr Shaik-Emam said that the mechanism to monitor that those receiving child support grants who had children of school going age, should provide school reports, should be enforced because the grant was being abused.

The Chairperson said that it was a matter for the Portfolio Committee to do.

Mr Shaik-Emam said the Appropriations Committee was responsible for following the money and ensuring that the budget was used correctly.

Mr Gcwabaza said Mr Shaik-Emam had made a valid point, but the matter could not be put into the report. It could be put in the minutes of the meeting and discussed with the Portfolio Committee on Transport.

On recommendation 6.5, Members brought attention to the fact that there was no Minister for Public Administration, and it needed to be corrected.

On recommendation 6.7, Ms Manana wanted to know what the Committee was saying about some executive members not submitting financial declarations of heads of departments (HODs).

Ms Hulley said that Ministers should comply by submitting the declarations that had been supplied to them by the Directors General (DGs). She said all HODs had submitted documents, but 56 senior managers in the Departments of Defence and Energy had not submitted documents.

Ms Manana asked if nothing was being said about the senior managers.

Mr Shaik-Emam said that all ministers had to ensure compliance.

On recommendation 6.8, Mr Shaik-Emam said he was concerned why the Department of Health (DOH) had been left out of the list.

The Committee, after consideration, adopted the report with amendments.

Mr McLoughlin noted that the DA reserved its rights.


Draft report on Adjustments Appropriations Bill B35-2018

Mr McLoughlin asked why parts of the text were underlined.

Mr Arends replied that the underlined text were the changes made to the report based on submissions from Members, as was requested.

On page 12, dealing with SA Express, Mr Shaik-Emam suggested that the term ‘revenue achieved’ be replaced.

Ms Lesoma suggested ‘revenue generated’.

On page 6, Ms Hulley said that reference to the Department of Sport and Recreation should be deleted, as the further information requested for it had been submitted late.

The Chairperson said that scholar transport under the Departments of Basic Education and Transport, did not appear to be doing well.

Mr Shaik-Emam said the Committee had discussed the matter previously. The Committee had recommended that school transport fall under the Department of Basic Education (DBE) and not the Department of Transport (DoT), as the latter was not doing a good job.

Ms Manana said the two Departments were busy trying to solve the problems in school transport. The Committee could only ask how far they had come in resolving the matter.

Mr Shaik-Emam said services were being provided by outside service providers, and it would be better that DBE oversee the service providers rather than the DoT.

Prof Plaatjies said the issue was an old one which had been going on for years. One needed to distinguish between the national Department of Transport (DoT) and the provincial Departments of Transport. He added that there was a Memorandum of Agreement (MoA) between the DoT and the DBE at the provincial level to provide services.

Mr Shaik-Emam said a time frame should be put in place. There had not been any follow up and the feedback he received was that there was little or no progress on the issue.

On recommendation 6.3, Mr McLoughlin said the Committee was not emphasising that the Department of Water and Sanitation was not addressing its core business. The recommendation should note that the Department uses its best endeavours to achieve its core mandate.

Mr Shaik-Emam asked if the ‘War on Leaks’ issue included a maintenance budget, and said that the Committee should recommend that the maintenance budget be used for maintenance.

Mr Gcwabaza said the recommendation should be that there must be a balance between new projects and maintenance.

Mr Arends said the matter of the utilisation of the maintenance budget was covered in the medium term budget policy statement (MTBPS).

On recommendation 6.5.1, NT said the word ‘timeously’ should be added after the word ‘finalised’. The Committee should also consider adding a recommendation that the conditions identified in paragraph 4.1 be strictly complied with.

The Committee, after consideration, adopted the report with amendments, and the Committee noted that the DA reserved its rights.


Draft report on the Special Appropriations Bill B36-2018

Ms Shope Sithole and Mr Shaik-Emam questioned whether South African Airways (SAA) should also not be reporting to the Committee quarterly on whether it was meeting the conditions attached to the appropriation, as SAA was doing in quarterly reports to Treasury.

The Chairperson said the Committee would get the Treasury quarterly report, and if there was a further need it would call SAA to a follow up meeting.   

Mr McLoughlin said the Committee should get a copy of the agreement between SAA and Treasury before it was entered into so that the Committee knew the terms of the agreement.

The Chairperson said this could be a recommendation.

Mr McLoughlin said that Mr Alf Lees’s list of recommendations should be included in the report as part of Mr Lees’s submission, and be placed alongside other submissions, such as that of Mr D W Nott.

The Chairperson said it could not be added as a submission because the DA was making a submission, but was also part of the Committee. She said it could be discussed to see if it could be included as part of the Committee’s recommendations.

Mr Shaik-Emam said SAA had explained to the Committee the challenges they faced, one of which was the bad publicity it was receiving which made consumers insecure over SAA’s future. He said SAA had to be given full support by the government or otherwise it would be continually in crisis. Notwithstanding the money given to them, SAA was being set up to fail. He recommended that government should give an assurance on SAA’s future, so customers could feel secure in making bookings. Government needed to look at what SAA needed in totality.

On the issue of advance sales, the Treasury official said the Finance Minister, the Minister of Public Enterprises and the President had made differing statements which had to be seen in the context that SAA, Mango, and SA Express were going to be reconfigured, and that there were conditions attached to the allocation of funds to SAA. These would be shared with the Committee.

Ms Senokonyane said the recommendations by Mr Lees had nothing to do with the Committee. Mr Lees had been present when the Committee had engaged with SAA, and he could not impose his recommendations on the Committee.

Mr Gcwabaza said the recommendations were irrelevant, and he proposed that Mr Lees’s recommendations be rejected.

Mr Shaik-Emam said Mr Lees’ report could be noted and if necessary rejected. He agreed that Mr Lees’s recommendations should not be in the report.

The Chairperson said that if she had to consider the DA’s document, then she would have to consider other political parties’ documents also. She said after consideration Members had agreed not to accept the proposal that it be included in the report.

Mr McLoughlin said that nowhere in the document was the DA’s name mentioned. It was not a party political document. He said he endorsed the document. SAA had caused the fiscus huge debts and the lender was entitled to impose conditions on a loan given. The comments by Committee Members on a letter that had been submitted in sincerity, was insulting. If the loan was converted into equity later on, then the whole exercise was worthless, and it should be stated upfront that SAA would be given R5 billion.

The Chairperson commented that the Minister had imposed conditions and that SAA had said they would account on a monthly basis to Treasury.

Mr Shaik-Emam said all the points mentioned in the letter were being addressed.  There were only two issues to consider -- either SAA was to be privatised or be kept as a state-owned company. He said Mr Lees’s document was undermining saving SAA, and the letter was dictating to the Committee what had to be done.

The Treasury official said there was no agreement between Treasury and SAA, as the money was an allocation, He proposed that a copy of the conditions set by the Minister be included in the recommendations.

Mr McLoughlin added that the Committee should be provided with a copy of the conditions.

Mr Shaik-Emam said he was concerned that forward sales of tickets by SAA would be affected by the lack of certainty around SAA, and that there should be a recommendation that government should give assurances that people would not lose money when buying SAA tickets.

Mr Gcwabaza said it was not correct for the Committee to give guarantees.

Prof Plaatjies said the money being given was not to rescue SAA, but was to offset debt so that there was no knock-on effect on sovereign debt.

Ms Hulley said that the fact that the Committee was agreeing to the allocation to SAA was already a vote of confidence, so an explicit recommendation was not needed.

The Committee, after consideration, adopted the report with amendments.

The meeting was adjourned.   

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