The joint Appropriations Committees of the National Assembly and the National Council of Provinces (NCOP) received presentations from seven non-governmental organisations at a public hearing on the 2019 Adjustments Appropriation Bill and the Medium Term Budget Policy Statement (MTBPS).
The Organisation Undoing Tax Abuse (OUTA) said the National Treasury’s fiscal policy was weak. Parliament should push harder for the structural reforms needed to avoid sovereign credit rating downgrades. Radical interventions were needed at State Owned Enterprises (SOEs). Higher standards should be set for financial management in government. Underperforming managers should be dismissed. Local government was in free-fall. There should be a Codesa-type conference to discuss a different business model for it.
The United Nations Children’s Fund (Unicef) said low economic growth and an accumulating debt burden had resulted in the lowering of the Budget’s expenditure ceiling for the “social wage.” This had a negative impact on children’s programmes and services. Considered leadership and prudent decisions were needed to preserve key programmes.
The Rural Health Advocacy Project (RHAP) noted that that the MTBPS provided for nominal growth of seven per cent in health spending over the medium term. If managed well, the additional spending could be used to stimulate youth and women’s employment in rural areas.
The Congress of South African Trade Unions (COSATU) called for a clear plan by all departments, municipalities and SOEs to ensure that government met its job creation commitments. It called on the government to engage with the SA Reserve Bank on measures the Bank could undertake to support economic growth and job creation. It called for a comprehensive forensic audit at Eskom and for those who looted to be arrested. It rejected attacks on the right to a living wage. The public service wage bill was stable at 35 per cent of government expenditure. Bloated management should be cut.
Two organisations, WoMin African Alliance and International Rivers, raised concerns about a treaty between South Africa and the Democratic Republic of Congo, committing South Africa to obtaining electricity from the Grand Inga Dam project in that country. They said the government had committed to this project without an independent risk assessment.
The Budget Justice Coalition (BJC) said a history of budget cuts and poor planning had resulted in service delivery targets not being met. The committees should require departments to provide a clear turnaround strategy to improve the efficiency of spending.
Fields of Green for All, a cannabis advocacy group, said government departments should make room in their budgets for the regulation of the cannabis industry once it was legalised. Legalisation and careful, evidence-based regulation presented an opportunity to develop township and rural economies and strengthen the agricultural and industrial sectors.
Organisation Undoing Tax Abuse (OUTA)
Mr Godfrey Gulston, Chief Financial Officer: OUTA, said the National Treasury’s (NT’s) fiscal policy was weak. Parliament should push harder for the structural reforms needed to avoid sovereign credit rating downgrades. The cost of corruption and poor financial performance by organs of state undermined the developmental objectives of the state.
Radical interventions were needed at state owned enterprises (SOEs). These should include partial privatisation and the winding down of those that were beyond repair.
Higher standards should be set for financial management in government. Underperforming managers should be dismissed. Non-compliance with financial rules should be met with aggressive remedial action by Parliament. Inefficient appropriations should be withheld.
OUTA repeated its view that the Gauteng e-tolls project had failed as a revenue collection scheme. Mr Gulston accused the SA National Roads Agency Limited (SANRAL) of hiding losses it had made in its financial statements.
OUTA believed local government was in free-fall with no visible solution. There should be a Codesa-type conference to discuss a different business model.
United Nations Children’s Fund (Unicef)
Ms Muriel Mafico, Deputy Representative: Unicef, said low economic growth and an accumulating debt burden had resulted in the lowering of the Budget’s expenditure ceiling for the “social wage.” This had a negative impact on children’s programmes and services. Considered leadership and prudent decisions were needed to preserve key programmes.
Unicef believed that there should be active support for innovation in service delivery models for basic education and health. There was an urgent need to work across departments.
Unicef recommended that the Medium Term Expenditure Framework (MTEF) should increase expenditure on cash transfers to households by a rate that was marginally above the inflation rate. Cash transfers had a multiplying effect on economic output. Serious efforts should be made to reduce a backlog in foster care grants.
The National Treasury should publish a report on what the national government departments were doing to arrest growing spending arrears.
Unicef supported the extension of a pilot project for teaching reading skills. Implementation of an early childhood development policy should be expedited. Social welfare needed to be strengthened, especially in a depressed fiscal climate. Government should provide a concrete breakdown of the next steps for the implementation of the National Health Insurance (NHI) project. There was uncertainty about the NHI because of financing challenges.
Ms Mafico said the fiscal space for children’s programmes had shrunk and required a creative response to prevent a reversal of hard-won spending and programmatic gains.
Rural Health Advocacy Project (RHAP)
The RHAP submitted a report on research into health infrastructure. It examined issues of demographics and rural poverty, employment in the health sector, and inequalities in health infrastructure. It raised the need for gender-sensitive health budgeting and for mitigating the effect of austerity measures on health services.
Ms Kirsten Pearson, RHAP research fellow, noted that that the Medium Term Budget Policy Statement (MTBPS) provided for nominal growth of 7% in health spending over the medium term. If managed well, the additional spending could be used to stimulate youth and women’s employment in rural areas. It recommended that employing new community health workers should be prioritised, and that both national and provincial governments should develop a plan to integrate them into the primary healthcare system.
RHAP said the anti-retroviral treatment programme was progressing slower than anticipated, with 4.8 million clients against a target of 5.8 million. It recommended that the Appropriations Committees ask the Department of Health what it intended to do about under-spending on that programme.
Congress of South African Trade Unions (COSATU)
In a written submission, Cosatu said an unemployment rate of 40% was the biggest threat to social stability, yet there had been no response to this by the National Treasury in the MTBPS. It called for a clear plan, with time frames and resource allocation, by all departments, municipalities and SOEs to ensure that government met its job creation commitments. It called on the government to engage with the SA Reserve Bank on measures the Bank could undertake to support economic growth and job creation.
Mr Matthew Parks, COSATU’s Parliamentary Liaison Officer, told the Committee there was still uncertainty about Eskom and other SOEs on the verge of collapse. He called for a comprehensive forensic audit at Eskom, and for those who looted to be arrested. There was a need for coal supply prices to be cut. Eskom should be allowed to produce renewable energy. There should be affordable tariffs for individual consumers and industry. There should be a clampdown on government, municipal and Soweto defaulters on electricity payments. There should be no privatisation or retrenchments, and there should be a just transition for coal workers threatened by the closure of mines.
Cosatu rejected attacks on the right to a living wage. The public service wage bill was stable at 35% of government expenditure. Bloated management should be cut.
Mr Parks said the Department of Basic Education (DBE) had not met targets for the provision of school sanitation and infrastructure. There had been under-expenditure at the Department of Higher Education, the SA Police Service (SAPS) and the Department of Health. A target for the electrification of households had not been met.
WoMin African Alliance and International Rivers
In a joint presentation, the two organisations raised concerns about a treaty between South Africa and the Democratic Republic of Congo, committing South Africa to obtaining electricity from the Grand Inga Dam project in that country.
Ms Rudo Sanyanga, Programme Director: International Rivers Africa, said the project would entail significant public expenditure over many years. They were concerned that the government had committed to this project without any widespread independent South African appraisal and risk assessment. The Committees should recommend to Parliament that the Department of Mineral Resources and Energy should disclose what part of its budget was to be spent on the project.
Budget Justice Coalition (BJC)
The BJC presented the Committees with a detailed breakdown of under-spending by government departments, as well as cuts in funding proposed in the MTBPS.
Ms Andile Cele, Coordinator: BJC, said a history of budget cuts and poor planning had resulted in service delivery targets not being met. In a five-year period from 2014, almost 95% of the education infrastructure budget amounting to R58.4 billion had been spent, yet only 57% of targets had been met. Where was the rest of the money going? On water and sanitation, there was under-spending of R250 million, which was alarming in the light of decaying municipal infrastructure. The Department of Higher Education intended to return R897 million to the National Revenue Fund.
The BJC said the Committees should require departments to provide a clear turnaround strategy to improve the efficiency of spending.
Ms Cele asked how promises to increase spending to deal with gender-based violence and femicide could be kept, while allocations to provinces were being cut. Unpaid labour performed by women did not receive due recognition, although it added value to the economy, by meeting socio-economic needs such as caring for the sick. It was the woman or the girl child who trekked to fetch water for the home. Budgets should focus on people who were least represented. There was under-funding in critical public health areas.
The BJC submission said 25.2% of the population lived below the food poverty line. There was no access to social security for people between the ages of 18 and 59. Recent research had identified R7 236 per per person per month as a decent standard of living. The old age grant was only 24% of this value. The feasibility of a basic income grant (BIG) for all should be investigated. This would be paid to everybody, but clawed back from those who did not need it through the tax system. Welfare grants should be seen as a form of economic stimulus.
The BJC recommended increased funding for non-profit organisations that performed work on behalf of government so that they could provide work for unemployed social work graduates. It recommended that the Department of Women, Youth and People with Disabiliites should provide clear indicators and budgeting guidelines to address problems faced by transgender, gender diverse, gender non-conforming and intersex people in South Africa.
Fields of Green for All
Ms Myrtle Clarke, Managing Director: Fields of Green, said government departments should make room in their budgets for the regulation of the cannabis industry once it was legalised.
Her organisation noted with concern that there were large sums of money that had not been spent by government departments that could have been used to start the development of a legal cannabis industry in South Africa. There were an estimated 900 000 cannabis farmers in South Africa supporting more than three million people. The estimated number of users was 20 million. Legalisation and careful, evidence-based regulation presented an opportunity to develop township and rural economies, and strengthen the agricultural and industrial sectors.
Mr Z Mlenzana (ANC) asked presenters what their views were on the state of implementation of the NHI. He asked what Coatu’s view was on the partial privatisation of SOEs. He suggested that there should be a broad investigation into Eskom that went further than just a forensic one. He wondered whether the supply of coal to Eskom should be run by the government.
Mr D Ryder (DA, Gauteng) said OUTA had made some good points, though some of their comments were based on news headlines and should have gone deeper than that. He said the role of the appropriations committees was not to look at policy issues. These should be raised with the relevant portfolio committees. He complimented Unicef on their presentation. They should provide the Committee with further briefings on their research. He commented that COSATU’s approach had become “more progressive and conciliatory.”
Mr O Mathafa (ANC) asked what constituency was represented by Green Fields for All. How much would a legal cannabis trade inject into the economy? He asked OUTA what Parliament could do more to ensure consequence management in financial administration. It had passed a law giving the Auditor General more powers in this regard.
Ms D Peters (ANC) thanked the BJC and the RHAP for their focus on gender issues. She asked presenters for their views on non-payment for services. Huge debts were owed to Eskom and water boards. How should a culture on non-payment be addressed? She asked OUTA what their view was on the torching of trains, given that they advocated non-payment for transport infrastructure. To Green Fields for All, she said the Zondo judgment had provided for private use of cannabis at home, but promoting public use was not correct.
Ms R Komane (EFF) said it was likely that the Inga Dam treaty had been signed at a time when South Africa’s economy was strong. Given the current weakness, could the treaty be renegotiated? She asked how far engagements between COSATU and Eskom had progressed. She too wanted to know what OUTA’s view was on the torching of trains.
Mr X Qayiso (ANC) asked Unicef what they meant when they referred to uncertainty about the NHI. He asked COSATU what conditions should be set for bail-outs of SOEs.
Mr D Joseph (DA) said he did not agree with OUTA’s view that the National Treasury’s fiscal policy was weak. The problem was weak management. He said the Unicef presentation had not mentioned teenage pregnancies and violence at schools. He acknowledged that cannabis could have an impact on the economy, and he would watch developments with interest. However, the law had to be obeyed. Green Fields had a right to try to influence policy. It should approach the relevant committee. There was too much lawlessness in the country, and they should not add to it. He asked Cosatu to look more deeply into the issue of the public service wage bill. Workers had received reasonable benefits when the economy was strong. In bad times, the benefits of all workers, and not just senior managers, should be reviewed.
Co-chairperson Mahlangu asked Cosatu what they meant by calling for an expanded mandate for the SA Reserve Bank. She questioned whether Parliamentary portfolio committees engaged sufficiently with the budgets of the departments they were overseeing to ensure that spending achieved the desired outcomes, and that “fiscal dumping”did not occur at the end of the financial year. She said there needed to be open acknowledgment and discussion of intersex issues. .
Co-chairperson Buthelezi asked OUTA to elaborate on the SANRAL debt. He asked Cosatu what savings could be made by moving Parliament to Pretoria. He asked the RHAP about the missed ARV targets. He advised International Rivers to take their concerns about the Inga treaty to the relevant government departments.
Mr Gulston said partial privatisation was one way of injecting funds into SOEs. He rejected suggestions that OUTA reacted to news headlines. It produced highly sought after financial analysis to assist municipalities. On the issue of consequence management, it could not be business as usual. There had to be firm action at Municipalities and SOEs.
He said OUTA would never advocate the torching of trains. OUTA had not told people not to pay e-tolls for the Gauteng Freeway Improvement Project. The e-tolls were irrational. It had been shown to be a failed business model, and an alternative had to be found. SANRAL had been “less than truthful” in their disclosures in their financial statements. Debts had been hidden by using a different accounting standard.
Mr Russell Wildeman, Social Policy Specialist: Unicef, said the quality of basic education was the key issue in the short and medium term. In the longer term, the funding of education should be part of the national conversation. Early childhood education and school infrastructure was still not fully funded. Unicef supported the NHI. The uncertainty they referred to was reflected in the MTBPS itself.
There should be a much deeper investigation into under-spending. The cash accounting system used in government encouraged people to do things they were not supposed to do. Under-spending could mask other complicated behaviours.
Ms Mafico said Unicef fully agreed on the need to address school safety, and the impact of teenage pregnancies on young peoples’ future. About 16% of girls became mothers before they turned 18.
Mr Parks said there should be consequences for ministers whose departments under-spent. Parliament had a huge role in holding the executive to account. COSATU fully supported the NHI Bill. It supported a complete review of Eskom, and a review of the mandates of other SOEs. There could be consolidation of SOEs, provided this did not worsen the unemployment crisis. He believed Eskom’s coal suppliers should be forced to “take a haircut.” Those guilty of corruption should be jailed. The coal suppliers should charge market-related prices, If they did not, the government should set an example by expropriating one of the suppliers.
Firm action was needed to ensure people paid for services. Municipalities should have to pay their utility debts into a central account to ensure that money paid by users of services was not used for other purposes. COSATU would like to see a national water plan based on what was learnt from Cape Town’s water crisis.
On the public service wage bill, Mr Parks said the salaries of nurses and teachers were not excessive. What was excessive was the Minister of Finance earning R2.5 million and “crying about nurses,” or ministers being allowed to take their spouses overseas at a cost of hundreds of thousands of rands. Cosatu agreed that managers that did not do their jobs should be fired.
The Reserve Bank should have a clear mandate to promote economic growth and job creation. Inflation was well within the target range, so there was space to stimulate the economy.
Mr Parks said moving Parliament might save some costs, but it would create a vacuum in the Western Cape. The size of government delegations travelling to Cape Town should be cut, and there should be greater use of audio-visual conferencing.
Mr Russell Rensburg, Director: RHAP, said there were various phases in implementing the NHI. There had been inequitable allocation of health resources by provinces. One of the biggest changes in the NHI would be to fund districts directly from a central fund. The idea of a comprehensive NHI would be realised progressively and, given current circumstances, it was unlikely that the target of 2026 would be met. There were near-term opportunities to start changing the way in which public sector health services were delivered.
The HIV programme had had a number of successes. More than four million people were receiving life-saving ARV treatment. However, not achieving the target of R5.8 million raised questions about the effectiveness of the spending.
Ms Pearson said there was more to under-spending than just a lack of capacity in departments. There had been a massive jump in under-spending which she believed had more to do with plugging budget deficits. Funds would be allocated, but spending would be restricted. This had an impact on people’s human rights to services.
Ms Cele said there should be more stringent oversight of spending and procurement processes. Resources should be allocated according to departments’ capacity to spend. Billing problems at municipalities were contributing to peoples’ reluctance to pay their bills. There was a need to understand the demographics of communities that were unable to pay.
WoMin African Alliance
Ms Trusha Reddy, Researcher: WoMin African Alliance, said consideration should be given to the implications of the Inga treaty today, compared to what they were when it was signed many years ago. The Department of Energy had briefed Parliament’s Energy Portfolio Committee on the treaty. It had stated incorrectly that the treaty posed no financial risks. The Inga project had been included in the country’s Integrated Resources Plan, but it had not been interrogated with sufficient rigour.
Ms Sanyanga said there was a need to unpack the different factors involved in non-payment for services. The use of third party agents to collect payments increased costs. There had to be exemplary leadership and engagement by all sectors of society in educating people about the need to pay. A pay-as-you-go system, supported by subsidies, was one option.
Fields of Green for All
Ms Clarke said her organisation’s constituency was all South Africans. Twenty million people used cannabis in one way or another, even if it was only to put bread on the table by selling it. Cannabis had been shown to be effective in treating bronchial and other ailments. She was not able to say what the effect of a legal cannabis trade would be on the economy. The only people with the resources to do so were overseas. She said she became “riled up” about the stigma attached to a plant that could really help the economy.
In his concluding remarks, Co-chairperson Buthelezi urged Ms Clarke not be “riled up” by Members’ questions, but rather to seek to persuade them with arguments. The Constitution enjoined Parliamentary Committees to hear the public’s views on proposed legislation.
He thanked those who had participated in the hearing and assured them that their views would be reflected in the Committees’ reports to Parliament.
The meeting was adjourned.
- Budget Justice Coalition submission
- Mr P Moss submission
- UNICEF submission
- Fields of Green for ALL submission
- Rural Health Advocacy Project submission
- Rural Health Advocacy Project presentation
- COSATU submission
- COSATU presentation
- OUTA submission
- OUTA Presentation