The Standing Committee on Finance of the National Assembly and the Select Committee on Finance of the National Council of Provinces held a joint meeting to consider a Report to be tabled in Parliament on the 2019 Revised Fiscal Framework. After Members had agreed on changes to the Report, the Committees held brief separate meetings to adopt the Report.
Changes suggested by Members reflected concerns that National Treasury did not take the Financial and Fiscal Commission seriously enough. Members called for state-owned enterprises to be included in efforts to deal with government’s wage bill. Members proposed an engagement between Parliament, the SA Revenue Service and the Reserve Bank on taxation of the digital economy. Members called for the finalisation of government’s medium term strategic plan.
The Select Committee also adopted, without discussion, a Report on the state of financial management in local government.
The Standing Committee on Finance of the National Assembly and the Select Committee on Finance of the National Council of Provinces (NCOP) held a joint meeting to consider a Report, to be tabled to Parliament, on the revised and proposed fiscal framework.
The Report provided an overview of an earlier briefing the Minister of Finance gave to the Committees following his delivery of the Medium Term Budget Policy Statement (MTBPS) in Parliament. The Report gave an overview of the national budget, the revised fiscal framework and the proposed medium term fiscal framework. It summarised submissions made during a public consultation process. These included submissions by the Financial and Fiscal Commission (FFC), the Parliamentary Budget Office (PBO), non-governmental organisations, organised labour and private sector interest groups.
The Report also contained observations and recommendations by the Committees on the revised fiscal framework as well as the proposed medium term fiscal framework.
Committee Members suggested several minor changes during a section-by-section consideration of the observations and recommendations.
Referring to a section (5.7) dealing with State-Owned Enterprises (SOEs) and the extent of government guarantees to them, Co-Chairperson Maswanganyi suggested the total debt owed by all SOEs should also be reflected. He believed National Treasury would be able to supply the number.
Mr D Ryder (DA; Gauteng) suggested that a statement that the Committees “welcomed” measures to improve governance at SOEs should be changed to say that they “cautiously welcomed” these measures as they needed to concrete progress. Mr Ryder said Eskom was still without a Chief Executive Officer. He suggested an additional sentence saying the Committee looked forward to an appointment being made soon.
The proposals were accepted.
C0-Chairperson Maswanganyi suggested changing a section (5.9) calling for the public sector wage bill to be reviewed in consultation with public sector trade unions. He said it should be made clear that the wage bill at SOEs was also a concern.
After Co-Chairperson Carrim pointed out that different unions were involved, it was agreed to add a sentence saying that the approach should also apply to staff at SOEs.
Ms R Mohlala (EFF) referred to a section (5.14) in which the Committees noted a submission which raised concerns about possible South African funding for the Grand Inga Dam hydro-electric project in the Democratic Republic of Congo. She suggested that a rider be added that no funding should be allocated to the project until Eskom had shown itself to be financially sustainable.
The Co-Chairpersons said the Committees did not have sufficient information to make judgments about the project.
At Co-Chairperson Carrim’s suggestion, it was agreed to include a proviso that any allocations should be done in a transparent manner in full consultation with Parliament.
Members agreed to a suggestion by Co-Chairperson Carrim that a section (6.2) on medium term forecasts by National Treasury should be amended to reflect the Committees’ “serious concern” that a medium term strategic framework had not yet been finalised. This should be done as soon as possible in order to enable more rigorous evaluation of the MTBPS.
Members agreed with Co-Chairperson Carrim that a section (6.4) calling for more effective taxation of the digital economy was “too limp.” It was agreed that there should be a joint sitting of the Finance Committees in the first quarter of 2020 to discuss the matter with the SA Revenue Service, the Reserve Bank, National Treasury and independent experts.
The Committees accepted a suggestion by Dr D George (DA) that there should be a separate point on the need for the Treasury to take the Financial and Fiscal Commission (FFC) more seriously.
Co-Chairperson Carrim agreed. He said there had been Finance Ministers over the years who had questioned the role of the FFC. It had been created as an independent body to provide reassurance during the transition to democracy and there was a “political propensity” to see it as no longer necessary.
It was agreed the Report should state that the Committees believed National Treasury needed to recognise the constitutionally-defined role of the FFC and engage with it accordingly.
Mr Ryder said it should be pointed out the FFC itself raised these concerns with the Committee.
At the end of the joint discussion, the Committees adopted the Report in separate processes:
Standing Committee on Finance
Co-Chairperson Maswanganyi put the report to the Committee.
Ms P Abraham (ANC) moved that the Report be adopted.
Mr E Buthelezi (IFP) seconded the motion.
The Report was duly adopted with amendments.
Select Committee on Finance
Co-Chairperson Carrim put the Report to the Committee.
Ms D Mahlangu (ANC; Mpumalanga) moved that the Report be adopted.
Mr E Njandu (ANC; Western Cape) seconded the motion.
The Report was duly adopted with amendment.
The objection of the EFF was noted.
Report of the Select Committee on Finance on the State of Local Government Finances and Financial Management
The Select Committee then adopted, without discussion, a Report on the state of financial management in local government. The Report gave a summary of the audit outcomes at municipalities. It noted deterioration in the number which received favourable audits. In its comments and recommendations, the Committee said the current state of local government finances was “disconcerting.”
Meeting was adjourned.
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