The Human Sciences Research Council (HRSC) gave a submission on the Medium Term Budget Policy Statement touching on government debt and the public sector wage bill; health issues in the form of HIV/AIDS, the youth, non-communicable diseases (NCDs), NHI; gender based violence; and education budget priorities. It also giving a report on the HSRC attitudinal survey on democracy, the economy and service delivery.
On government debt, it said there was an alarming difference between Treasury’s forecast and the actual trajectory of government debt and that the debt to GDP figure would reach 70% in three years with debt ballooning from R3 trillion to R4.5 trillion. The debt was escalating three times faster than peer countries and South Africa was at risk of falling into a debt trap where debt servicing costs would become bigger than service delivery spending. Key concerns were the public wage bill which made up 35% of government spending and its aggressive growth as the average government wage increased by 66% in last ten years; spending on SOEs; and the low economic growth the country was experiencing.
On health, the HSRC spoke to tobacco as one of the causes of NCDs, to youth and their risk behaviours, to HIV dynamics among children of schooling age. Government provided 80% of HIV funding but the remaining 20% from external donor funding was drying up so one needed to look at how HIV investment was done. The HSRC was part of the NHI implementation task team and a NHI primary healthcare cost benchmarking exercise was being conducted in Ekurhuleni. On gender based violence, it said what was needed was a whole of society approach and the HSRC was part of this broader based approach to GBV.
The HSRC said the country needed to prioritise how it spent its education budget. While South Africa was still near the bottom of benchmarked testing in maths and science subjects, what was not well known was that SA had shown the largest improvement for the period 2003-2015 and this was due to the emphasis on getting the basics of writing, reading and comprehension right. There was a need for a systematic analysis of the impact of technology on the future of work for young people, and to prepare for this new reality and the new sectors in which young people were likely to find a livelihood. Currently 40% more youth chose university over TVETs and it was time to re-imagine TVETs to make them more appealing and innovative.
The attitudinal survey on democracy, economy and service delivery reflected that trust levels in institutions of government were a concern. It also spoke to the methodology used, which was a satisfaction index of the economic situation, government-provided services; institutional trust; corruption; xenophobia; 4IR; and energy provision.
Members asked where government should invest to get the maximum benefit of the fourth industrial revolution. What were the lessons learnt from the NHI pilot projects? Could the HSRC comment on the affordability of the NHI?
Members asked what would happen if SA’s debt to GDP continued at the present rate; what the HSRC interpretation of the NHI was and what would prevent a successful roll out. What was the impact of the decrease in the pass rate of doctors and should government not provide for quality rather than quantity of education? A Member said government should focus on HIV prevention instead of providing ARVs. Members asked how the HSRC got its data. Members wanted comment on the pilot NHI project and its performance.
Members asked if enough emphasis was placed in the MTBPS on the educational development of children. What was the HSRC’s view on the introduction of practical artisanal skills at the lower levels of schools? Service delivery protests drew bigger crowds than a government public meeting to involve communities in planning and budgeting. Public participation was central to governance. Members asked if a study had been done on how government communicated and disseminated information.
Members asked in which sectors the decrease in the public service wage bill should be done. Was the allocation for HIV /Aids being distributed equitably? Members asked for the HSRC’s view on the current public issue of sex education at primary schools. Members asked why the HSRC was not talking publicly about the progress made in the standardised maths and science tests as a form of encouragement. Members asked how religious leaders could be advised to assist with the guidance of youth. Members asked if the impact of a cut to the public service wage bill had been modelled and what impact a cut would have on government debt. Members asked for comment on the health allocation of the MTBPS compared to other countries at the same level of development.
HSRC comments on 2019 Medium Term Budget Policy Statement
Prof Leslie Bank, HSRC Deputy Executive Director: Economic Performance and Development research programme, spoke to government debt. There was an alarming difference between Treasury’s forecast and the actual trajectory of government debt and that the debt to GDP figure could reach 70% in around three years with debt ballooning from R3 trillion to R4.5 trillion. Debt was escalating three times faster than peer countries and there was the risk of falling into a debt trap. Debt servicing costs would become bigger than spending on health and economic development.
The pressure points were the public wage bill which made up 35% of government spending and the growth in this was aggressive as average government wage had increased by 66% in last ten years. Secondly, it was the expensive SOEs; and thirdly it was the low economic growth the country was experiencing which meant less taxable income to the state. There had been increased urbanisation of the population but there was also an increase in investment in rural towns. There was therefore a need for an economic census to be done to see what was happening economically in the country.
Prof Priscilla Reddy, HSRC Deputy Executive Director: Population Health, Health Systems and Innovations (PHHSI) Research Programme, spoke to health. Tobacco was one of the causes of non-communicable diseases (NCDs) and she said it was important that the Tobacco Amendment Bill be passed as it would make a dent on NCDs. Research had shown that there had been a decrease in smoking in the youth sector and tobacco was one of the causes of NCDs. She spoke to youth and risk behaviours, saying that there was a need for evidence because data was poor. She spoke to HIV dynamics among school going children. There was an increase in the number of youths contracting HIV/AIDS and a decrease in the number of them on ARV treatment and this would mean deaths among youth would increase. Turning to HIV/AIDS and TB, she said government provided 80% of the funding but the remaining 20% from external donor funding was drying up, so there was a need to look at how HIV investment was done. One needed to improve ART service delivery because there was gap in ART treatment not being initiated at clinics or treatment was not continued due to a lack of follow up. She called for more investment in research and development on NCD interventions.
Prof Heidi Van Rooyen, HSRC Executive Director: Human and Social Development Programme, explained that HIV studies done in SA and Uganda had shown that 30% of people with HIV/AIDS were not using ARVs. There was a need to think of partnerships with communities to deliver ARVs in the community. It should be a partnership between government and community.
Prof Reddy then spoke about the NHI. The HSRC was part of the NHI implementation task team and that a primary healthcare cost benchmarking exercise of the NHI was being conducted in Ekurhuleni. When looking at the continuing healthcare budget, the actual expenditure was more than what was budgeted for, either due to inefficiencies or the budget was not enough.
Prof Van Rooyen spoke to gender based violence saying that because of the country’s history violence was normative and was ‘in our DNA’. What was needed was a whole-of-society approach and the HSRC was part of this broader based approach to gender based violence.
Prof Sharlene Swartz, HSRC Executive Director: Education and Skills Development research programme, said that the country needed to prioritise how it spent its education budget. Firstly, robotics and coding from grade R to grade 9 was highlighted in State of the National Address (SONA) and the MTBPS. Secondly, due to the provision of tablets to young people in schools. Computer access had dropped in schools because of issues of security, upkeep and a lack of data and the question then was whether coding and robotics was needed right now. While SA was still near the bottom of benchmarked testing of maths and science subjects, what was not well known was that SA had shown the largest improvement for the period 2003-2015 and this was because of the emphasis on getting the basics of writing, reading and comprehension right. She said that it was important to get the basics right before taking on robotics and coding. To further enhance literacy and numeracy, parent interaction with their children in activities like reading, singing and playing games needed to increase. Turning to the public service, she said that random across-the-board job freezes were unhelpful and that it would be better to audit or review department and entity spending according to national priorities. A 2018/19 study revealed that non performing incumbents were acting with impunity based on the political connections they had. Turning to the youth, she said there was a need for a systematic analysis of the impact of technology on the future of work for young people, and to prepare for this new reality there was a need to think about new sectors in which young people were likely to find a livelihood. Currently 40% more youth chose university over TVETs and it was time to re-imagine TVETs to make them more appealing and innovative.
Dr Derek Davids, HSRC Chief Research Specialist: Democracy and Governance and Service Delivery (DGSD) programme, spoke to an HSRC attitudinal survey on democracy, economy and service delivery which reflected that public trust in institutions of government was a concern. He spoke to the methodology used, which was a satisfaction index of the economic situation, government-provided services; institutional trust; corruption; xenophobia; 4IR; and energy provision.
Ms R Komane (EFF) asked where government should invest to get the maximum benefit of the fourth industrial revolution. What were the lessons learnt from the NHI pilot projects? Could the HSRC comment on the affordability of the NHI?
Mr A Shaik-Emam (NFP) asked what would happen if SA’s debt to GDP continued at the present rate. He asked what the HSRC’s interpretation of the NHI roll out was and what would prevent a successful roll out. What was the impact of the decrease in the pass rate of doctors and should government not provide for quality rather than quantity education? The statistics of the police and Stats SA showed that gender based violence mostly occurred at night and was alcohol related. Government was not dealing with prevention by dealing with shebeens. The focus should be on HIV prevention instead of providing ARVs.
Mr D Josephs (DA) asked how the HSRC got its data. He thought HIV/AIDS education was part of the school curriculum. Health services should be taken to where the people are. Gender based violence was deeply rooted in society and this could not be changed only through laws. He asked the HSRC to comment on the pilot NHI project.
Mr A Sarupen (DA) said that given Treasury’s forecast and the actual debt figures, what was causing the national debt to grow so quickly. What did the HSRC think of vertical business and horizontal policy?
Mr O Mathafa (ANC) said early childhood development was very important and could not be overemphasized. He asked if enough emphasis was placed in the MTBPS on the educational development of children. There was emphasis on literacy, numeracy and logic, but could this and robotics and coding not be done simultaneously? What was the HSRC’s view on the introduction of practical artisanal skills at the lower levels of schools? Service delivery protests drew bigger crowds than a government public meeting to involve communities in planning and budgeting. Public participation was central to governance. He asked if a study was done of how government communicated its work and disseminated information via the media.
Mr Z Mlenzana (ANC) asked in which sectors the decrease in the public service wage bill should be done. The MTBPS seemed to say that public servants were being elevated to be millionaires. He asked if the HSRC was of the same opinion, saying that the higher echelons should be forgotten and focus be put on workers. He asked if the HSRC foresaw the realisation of the presidential initiatives. He wanted the HSRC to talk about performance of the NHI in terms of the pilot project especially underspending. On interventions to make school children aware of HIV/AIDS, was there an increase or decrease in the last five years in terms of location. He asked if the MTBPS budget spoke to these trends. Was the allocation for HIV /AIDS being distributed equitably?
Ms E Peters (ANC) said the salary of over R1m for some public servants needed to be taken in context. The figures were cost to the state and not the take-home amount. She asked if their qualifications had been taken into account. Some of them had served for long periods without benefits. If a comparison was done with the private sector, then some of them were under-paid. One of the categories of people against the NHI was the doctors who were working in both the private and the public sector. On HIV/AIDS and the youth, she asked if some of the youth might have been born with the virus. She asked for HSRC’s view on the current public issue of sex education at primary schools. Teachers would now have to teach sexuality to children. The teacher might be from a conservative background and would be expected to teach children when he could not even teach his own child. She supported a multi-pronged 4IR approach. Siya Kolisi was an example of what could be achieved if someone was given the opportunity. She asked why HSRC was not talking publicly about the progress made in the standardised maths and science tests as a form of encouragement.
Ms M Dikgale (ANC) requested that the HSRC ensure that the NHI programme did not fail. The Minister and former Minister of Health had held meetings with traditional leaders in Limpopo province and they were ready for the NHI programme to be implemented there. Learners were going to be learning "bedroom practices" in grade four and this would cause stress to parents. On youth risky behaviour, she asked how religious leaders could be advised to assist.
The Chairperson asked if the impact of a cut to the public service wage bill had been modelled and what impact such a cut would have on government debt. Would it improve? What would be the one major decision the HSRC would take if it were the Minister of Finance? He asked for comment on the health allocation of the MTBPS compared to other countries at the same level of development. He asked if the problems in the area of health were budget related. If 100% of the budget was given to health, would the problems be solved? For example, some public sector medications were found in private sector doctor surgeries and in nearby countries.
Prof Crain Soudien, HSRC CEO, replied about government debt and how to deal with it saying this was the subject of massive global debate. Portugal and Spain were two countries with similar problems to what SA was facing and they had taken different approaches. Spain went the route of austerity measures while Portugal had decided not to cut government expenditure and Portugal had fared relatively better. More modelling should be done but SA did not have the econometrics capacity.
Prof Bank said the slides showed economic growth data in SA until 2008-2012 where it had flatlined for the private sector. The HSRC had not generated any data on debt. 60% debt was considered manageable but the speed at which the debt was increasing was compressed and it had a long-term trajectory. An increase in the wage bill had a consequence for other parts of the budget.
The work done in on 4IR needed to be expanded and the HSRC was positioned to expand work in this area. The question of industrialisation versus service sector specialization was a false dichotomy as development of both was needed and more.
The higher education system had a lot of expertise in the modelling of government debt. The question for the HSRC was whether to replicate what was done at universities or establish a niche working on public sector concerns.
Prof Swartz said pruning the wage bill was the wrong term to use – it was about maximising spend and the value received and there was a need for self-evaluation. The question to ask was whether there was space for redeployment and SOEs need to look at the role it could play here.
On NHI, Prof Reddy replied that there were many supporters and detractors of the NHI, with many heated arguments taking place. Cuba and Brazil had implemented NHI successfully. SA spent 8.5 to 9% of GDP on its health budget, which was a considerable amount. The problem was the inequality rooted in our history and of gross neglect, and that health spending should be seen as an investment.
The HSRC had done a proposal to evaluate the pilot NHI project but the bid had not been successful. She was unsure how the pilot sites were funded but one challenge was the roll out of the ideal clinics. The findings of the evaluation report were mixed. The HSRC had the skills and the capacity to assist government by creating demonstration projects.
The HSRC had run two small test projects screening for diabetes and hypertension. The lessons learnt from the HSRC project was that going forward there would have to be collaboration between the private and the public sectors and that infrastructure, equipment and skills needed to be looked at.
Mr Shaik-Emam re-iterated his question on whether the HSRC believed the country was ready to implement NHI or what else needed to be done to ensure its successful implementation.
Prof Reddy replied that it was a question of how things were defined. Implementing the NHI throughout the whole country from the start would not work but that developing it from district to district, and adjusting along the way would work. For example, 40% of trained doctors left the country and there was no incentive for young couples to move to the rural areas due to a lack of schools.
On the allocation of funds to HIV/AIDS, Prof Leickness Simbayi, HSRC Deputy CEO for Research, said that government provided 80% of funds spent on HIV/AIDS and 20% was from foreign donors which was the reverse of most African countries. On focussing on prevention, he said that treatment was also a form of prevention. The weak link was the struggle to get interventions on changing social norms. Binge drinking was happening a lot in SA and this was impacted by unemployment. Drinking could not be abolished but there was a need to drink responsibly.
Prof Reddy said there had been success with tobacco but there was also a need to look at the commercial determinants of drinking.
Prof Van Rooyen said there was a need to address the root causes and fix them so that the Siya Kolisi case was not the exception but the norm.
There was a need to do sex education at schools because of gender based violence risks, HIV, and sexuality and that this was work that all individuals needed to do.
On early childhood development and robotics, Prof Swartz said that the question was whether SA had a strategic road map for education for the next few years. Grade R was now compulsory but one could not push ahead because some people would be left behind as many children were not in grade R classes. Massive open online courses should be looked at, using the public broadcaster for the broader education sector. TVETs had to be re-imagined and not enough effort was being put into this area.
On the pass requirements, Prof Soudien said what was important was what was in the requirements before a discussion could be held.
Mr Shaik-Emam said he was alluding to the fact that 56% of doctors had failed their surgeon exam.
Prof Soudien said that the fact that people were failing was a good marker that standards were being maintained. He added that that particular matter had not been well handled.
Dr Davids spoke to the survey methodology of sampled households. He spoke about the public participation model in Nyanga, using ward and street committees. This process needed to be scaled up using social media and that these types of public participation models needed to be rolled out.
Prof Soudien said he would not answer what he would do if he were the Minister of Finance because the HSRC was in a different position and the implementation process across departments was very important, otherwise the decision of one department would be neutralised by another department. Macro-economic policy should be working in ways that were not being done currently.
Mr Mlenzana challenged the HSRC to debate more on the concerns the Committee had raised and then to submit a discussion document on this to the Committee.
The Chairperson advised the HSRC, given that it was a new Parliament with new members, that it should give background to the Committee on its budget, funding and what it did. He explained the Appropriations Committee’s role and work. He questioned the statement that the country lacked capacity in econometrics.
Committee business and programme
The minutes of the meetings of 22 and 23 October and 5 and 6 November were adopted.
The Chairperson noted the receipt of correspondence from Eskom and discussed the committee programme for 20, 26, 27, 28 November.
the Committee should consider focussing on ensuring that by the end of the Sixth Parliament the bucket toilet system, at least, would have been eradicated,
Mr X Qayiso (ANC) said the eradication of the bucket toilet system should be made a key performance indicator for Department of Water and Sanitation officials who would be held accountable.
The Chairperson said that a letter would be written to that department requesting their programme for eradicating the bucket toilet system with timelines when they next meet with the committee.
The meeting was adjourned.
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