Public Enterprises Budget: Committee Report

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Public Enterprises

02 June 2020
Chairperson: Mr K Magaxa (ANC)
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Meeting Summary

Audio: Public Enterprises Budget: Committee Report 
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Tabled Committee Reports

The Committee considered and adopted its Committee Report on Department of Public Enterprises (DPE) Budget Vote. The Democratic Alliance suggested amendments but these were not accepted by the Committee. However, they would be included in the meeting minutes but not as a minority report to the Committee Report. The Economic Freedom Fighters rejected the Committee Report as it found no fault in the failure of the State Owned Companies to create not shed jobs and the EFF did not believe the DPE was sufficiently driving industrialisation.

Meeting report

Mr Disang Mocumi, Committee Secretary,  was asked to take the Committee through the Committee Report on the Department Budget Vote.

Ms O Maotwe (EFF) raised a point of contention that it is not appropriate for a staff member who is not a Member of Parliament to take the Committee through the report.

The Chairperson responded that her assumption was incorrect The Committee received presentations from all types of entities and the Secretary was merely presenting what had been drafted by officials. He pleaded with her to give the Committee a chance to hear the report from the Secretary so that they may engage afterwards on it, as that was the procedure followed every year. Mr Mocumi is the Secretary of this Committee and his responsibility is to present the Committee Report that they must adopt or reject.

Ms Maotwe retorted that in Parliament it is never the accepted practice to allow a staff member to perform a reading of a report and that the Committee is an extension of Parliament.

The Chairperson clarified that the Secretary’s reading was a presentation. He asked for the rest of the Committee Members to weigh in on the matter.

Mr G Cachalia (DA) said that he had no problem with the Secretary taking the Committee through the report and the Committee thereafter engaging on it and asked the Chairperson to make a ruling on the matter.

Ms J Tshabalala (ANC) supported his view.

Mr S Gumede (ANC) wanted clarification from Ms Maotwe on what she would lose if the report was presented by the Secretary. However, the Chairperson dismissed Mr Gumede’s query.

Ms Maotwe responded that the Committee is not frivolous and must give proper respect to the institution of Parliament. That is why people are invited to report to the Committee. She appealed to the Committee to agree that if they were in Parliament, they would not have staff members presenting to them.

Ms J Mkhwanazi (ANC) supported the view of Mr Cachalia and Ms Tshabalala that the report needed to be presented and noted that the staff member is not appointed by the Department but by Parliament. She appealed to the Chairperson to remind the Committee that the Secretary is presenting a report for the Committee’s adoption. She seconded the proposal that the Secretary present the report.

The Chairperson asked the Secretary to resume his reading and acknowledged Ms Maotwe’s rejection.

Mr Disang Mocumi, Committee Secretary, clarified that under normal circumstances, the House Chairperson of the National Assembly would respond about the role of the Committee’s Secretary when the matter of his responsibility was raised in a meeting. It is important to note that the responsibility of the Committee Secretary is to be the custodian of the Committee’s information and to write all their reports and minutes. This is usually termed the in-house business of the Committee as it constitutes what the Committee deliberated on and what it needs to report to the House. There has not been any other way of executing this duty other than the Committee Secretary accounting to the Committee about what they have done and presenting this report to the House on what had been presented to the Committee. The Secretariat provides procedural advice to the Portfolio Committees of Parliament, they do not merely write minutes and reports and do not present as a Member of Parliament.

Ms Maotwe contended that the Chairperson had ruled on the matter, she had registered her rejection of the vested power in the Secretary. Therefore she did not accept that Mr Mocumi was qualifying the role of the Committee Secretary.

The Chairperson replied that she was being disruptive and he did not want to resort to muting her throughout the meeting for this. She must look to the rules and legislation that allow the Committee to meet and engage. The Secretary has rights in the Committee as well and Ms Maotwe must read these references.

Ms Maotwe replied that she respected his ruling.

The Chairperson appealed to her to stop raising matters when they have been responded to and that the Committee has a right to correct her. If she is disruptive he will have to use the powers vested in him as the Chairperson.

Ms C Phiri (ANC) asked that they allow the Secretary to continue to fulfill his mandate. There is nothing wrong with the Secretary articulating his duties and roles. She emphasised that all the Members must respect each other.

The Chairperson supported Ms Phiri’s views.

The Committee Secretary resumed his presentation of the report. He took the Committee through the department programmes and budget sections of the report. He asked if the Committee wanted him to take them through the Observations and Recommendations in detail or whether he should assume that the Members had had an opportunity to read over all of them already.

The Chairperson posed the question to the Committee.

Ms Tshabalala proposed that the Secretary take the Committee through them briefly and not in detail as they have the report with them that they can follow themselves.

Mr Cachalia commented that the Committee received the Observations and Recommendations prior to the meeting and they should have at least read them. None of the Members would be any wiser if the Secretary took them through it in a general manner. He proposed the Chairperson take it that the Members had read the report. The Members can instead comment on the Observations and Recommendations.

The Chairperson said the two Members appeared to be in agreement..

Ms Tshabalala proposed that the Secretary reads the Recommendations but not the Observations.

Mr Gumede seconded this.

The Committee Secretary took the Committee through the recommendations in detail and thereafter the Chairperson asked for engagement on it.

Mr Cachalia had a number of comments on the Recommendations and Observations. He dealt with the Democratic Alliance comments seriatim as they appeared in the Committee Report:

Recommendations:
7.1. The Presidential State Owned Enterprises Coordinating Council must make its mandate, composition, reach, scope, applicability, governance and accountability transparent and any decisions that may further imperil the bottom line position of the SOCs.

7.1.2. The Department of Transport needs to ensure that the entire state aviation strategy policy can enable the sustainability of the national carriers that are developed. This is a pipedream given the history of mismanagement and bailouts totalling multiple scores of billions of rands. In addition to the parlous state of the global aviation industry, this is compounded by dire global prospects and in the near future they must make way for sale, partnerships and  privatisation, if so required.
 
7.1.3. Facilitation of the successful implementation of the deed of settlement in delivery of socio-economic development programmes to the beneficiaries of the Richtersveld community is required.  The point must be made that the benefit that the community will derive is wholly dependent on an effective, solvent, profitable mining company, which will act as a motive for development. In view of Alexkor’s insolvency and significant governance issues and gross irregularities, the sale of the company should be recommended, in absence of which, the community will continue to be disadvantaged.

7.1.4. More than addressing financial governance issues facing the state owned companies within the departments by regular feedback to the Committee, full transparency of government and financial issues to the Committee is to be recommended. The annual financial statements are to be tabled within the prescribed period and in the event of failure to table these, a final period must be prescribed, after which sanctions should apply.

7.3. The communication strategies should go beyond communicating opportunities, most of which do not exist because of the parlous state of the SOCs. They should address transparency in terms of the taxpayers' right to be apprised of their use and misuse of tax monies.

7.6. Shareholder compacts should be provided to the Committee on an annual basis and quarterly reports on how the companies are doing. This is absolutely crucial. Additionally, the Committee must hold the Deputy Minister to his word on the provision of shareholder compacts. He gave this to the Committee at the last meeting and the Committee requires delivery on this.

7.7. and 7.8. The Committee should note the need to minimise the demands made on the fiscus and prioritise accordingly with the investment and procurement programmes, given the dire state of the SOCs and their role in driving South Africa Incorporated to the edge of a fiscal cliff. The recommendation that they should not over concentrate on the commercial mandate while neglecting the development mandate of transforming the economy and improving the quality of lives is irresponsible. These objectives can only be met by a capable state, not an insolvent one, and accordingly financial sustainability should be paramount.

7.9. Ensuring competent executive and board appointments at SOCs through conduct of security clearances and lifestyle audits is correct but the recommendation should require implementation by an agreed date.

Observations:
6.1.2. More than noting the weakening of the SOCs by corruption, it must be noted that this is likely to be ongoing as the Committee has no transparency on existing contracts, the terms, potential conflicts, prescriptions, recipients and costs. Full disclosure here is required.
  
6.1.3. With the creation of more black industrialists and the need to focus on localisation, it is recommended by the Democratic Alliance that the full disclosure of past efforts with full disclosure of recipients, evaluations of financial success and failures and the right to evaluate recipients in efficacy should be provided going forward. Similarly, localisation needs to be constantly monitored to ensure compliance with competitiveness, non-distortion of markets, sustainability, cost to consumers and transparency of contracts to obviate the restitution of past mistakes such as we had with the locomotives.
 
6.1.4. With job creation incentives, SOEs without exception have bloated workforces at all levels. The creation of jobs has been without regard at senior executive level for sectoral competence. There needs to be a recommendation in line with this for appropriate rationalisation.

6.1.5. With the SOCs not declaring dividends to the state and not contributing to the fiscus, the question is what measures have been put into place to rectify this?

6.1.10. The reworking of risk assessment tools used by government is needed.

6.1.12. With the removal of remuneration standards for executives and the boards of state owned companies, the Committee should recommend that these be put in place.

He concluded by asking for permission on behalf of the Democratic Alliance to formulate a minority report for attachment to the Committee Report. He said that the DA would be reserve its right to vote on the Committee Report for the plenary session.

The Chairperson asked that Mr Cachalia send his comments to the Committee Secretary.

Mr Cachalia committed to sending a written form of his comments as they had been voluminous and following them up with a minority report which would include the inputs he made to the Committee.

Mr Gumede questioned the procedure for Mr Cachalia’s recommendations. The purpose of this meeting was to adopt the report. Mr Cachalia’s recommendations are voluminous and supplement the report. Mr Cachalia is being allowed to forward those comments to the Secretary and reserves his right to vote so those Committee Report recommendations will be passed in any case. What will be the status of Mr Cachalia’s recommendations? They are not assumed to be accepted merely because they are forwarded to the Secretary as the Committee needs to consider them. He commended the comprehensiveness of the Committee Report and it being a tool for holding the Department accountable. Many of the comments Mr Cachalia raised have been condensed and incorporated into bills and policies, such as the dividends matter addressed by the draft Shareholder Bill. The Department emphasised that it want to pass a Bill and that will be part of monitoring the dividends due to the fiscus or Department. He was ready to vote Committee Report recommendations.

Ms Tshabalala clarified that the recommendations are meant to align with the observations. Mr Cachalia cited recommendations on observations from his perspective. She expressed a contrary view on the procedure and acknowledged that while it is important for Mr Cachalia to make submissions to the Committee, she is opposed the process of Mr Cachalia submitting his recommendations in a separate document. She opposed Mr Cachalia’s recommendation on annual financial statements which if not submitted, the Committee must apply sanctions. There are rules on how the executive submits annual reports to Parliament, those are submitted to the Speaker’s Office but the Leader of Government Business is the person who interacts in the event a departments fails to submit those reports. It is not within our scope to give sanctions on the failure to submit those reports. She opposed the idea of a minority report and she had never come across that type of report in Parliament. She concluded that the recommendations were rightfully covered and emerged from the observations the Committee made in the report. She moved for the adoption of the Committee Report without amendments.

Ms Mkhwanazi supported the recommendations as is on the basis of the explanation provided by Mr Gumede. She seconded Ms Tshabalala’s opposition to a separate submission from Mr Cachalia with his recommendations. If Mr Cachalia does not support the report, he can merely state this. She moved for the adoption of the report without amendments.

Mr Gumede moved for adoption of the report.

The Chairperson clarified that he was not expecting Mr Cachalia to submit a report from his party. The comments Mr Cachalia raised were not contrary to what the Committee was saying. The minority views are recorded but are not intended to interfere with the outcome of the Committee, such as in the current case where the majority of Members moved for the adoption of the report.

Mr Cachalia responded on the matter of his separate submission. The rationale for submitting his objections to the Chairperson was to incorporate them into the report at the Chairperson’s discretion; failing which, he wanted the Democratic Alliance’s contentions to be recorded despite the adoption of the report. In previous parliaments long before his time, not in recent parliaments, minority reports were accepted. It is a dereliction of democratic duty that recent parliaments have not accepted minority reports. The acceptance of his report is within the Chairperson’s discretion. He agreed that the report would be passed by the majority of Members but he wanted the Democratic Alliance’s objections on record.

Ms R Komane (EFF) objected to the Committee Report and asked the Chairperson record her objection.

Mr Gumede said that before they embarked on the decision of whether the Committee supported or rejected the report, Mr Cachalia made it clear to the Committee that he would not be supporting the adoption of the report. Mr Cachalia’s submission formed part of the minutes which do not and are not meant to affect the proceedings on the adoption of the report. It is uncertain if it is correct for Mr Cachalia to submit his comments on behalf of his party as they submit their report as a Committee not on behalf of separate parties.

The Chairperson appealed for the Committee not to harp on the issue as it is accepted that Mr Cachalia’s submission forms part of his recorded objection to the report.

Ms Maotwe said that she believed that they would discuss the Committee Report but Members had jumped ahead to the adoption of the report. She rejected the report and provided reasons for her rejection. The background of the report speaks about support of the wider economy, national business sectors and support of the economic recovery. During the Department presentation, it was clear that there were no true intentions of DPE contributing anything to the economy so it cannot be said that they support the wider performance of the economy. DPE said that its mandate is crucial in driving the state strategic objective of creating jobs but this is not the reality. In Transnet, people are being given voluntary severance packages (VSP), Eskom is laying off employees, SAA is closing down and SA Express employees have not been working and since March have not received salaries. This statement is not a true reflection of what is happening on the ground. When DPE presented to the Committee, it wanted to make a link between the NDP, the Department’s strategic objectives and the different SOEs. Industrialisation was strongly included in the NDP. When the Committee visited the Department, it did not mention driving industrialisation.

There is no alignment between what the Committee Report says and what the Department presented. The mandate says that the Department is not directly implementing or executing the programmes yet when they presented to the Committee DPE claimed to oversee implementation of the programme – so clearly there is a contradiction. On the policy priorities, it mentioned divisionalisation of Eskom but the Committee did not agree to that. The Committee is opposed to divisionalisation of Eskom as they wanted to prioritise those divisions. The SAA BRP were supposed to submit their rescue plan by the end of May but they have failed to submit it. There is no correlation between this report and the DPE strategic overview indicating a serious misalignment between the two documents. It is against the background of these comments that she claimed the recommendations are not going to assist DPE to fulfill its mandate. On that basis she rejected the report.

The Chairperson emphasised that the report had been adopted and according to procedure they were meant to move towards ending the meeting.

Mr Gumede said that perhaps the meeting should close at that point as Ms Maotwe's facts were incorrect. Her purpose was to deliberately confuse the situation and disallow the Chairperson from accepting the report. The EFF would never accept recommendations proposed by the ANC but he reminded the Committee that they are not present at the meeting as political parties. On industrialisation, he advised that Ms Maotwe consider the elements of industrialisation and the Department mandate to see if they are in agreement. They are closely connected. He proposed that they submit the recommendations to DPE for implementation so that they fulfill their mandate and as a Committee they can monitor DPE’s implementation of the recommendations. 

Ms Maotwe responded that she did not understand why Mr Gumede contested her objections as she merely responded to the report. The Chairperson should protect Members from being targeted due to their party membership and debating directly with each other on their responses. It was wrong for Mr Gumede to question her comments based on her party membership and requested that he withdraw his comments.

Mr Cachalia reiterated that he reserved his rights on the adoption of the report on the basis of the input he provided which he would forward to the Committee Secretary to be included in the minutes. He will furnish a report detailing the Democratic Alliance’s position.

Ms Phiri commented that the role the Members in the Committee meeting was to adopt the report. She supported the adoption of the Committee Report as the observations in it reflect what they observed as a Committee. The recommendations and observations of the report assist the Committee in their oversight of the Department. She seconded the adoption of the report. She contended that Mr Cachalia’s mention of the previous Parliament accepting minority reports was during the pre-democracy era.

The Chairperson clarified that Mr Cachalia was not referring to the Apartheid regime but rather to post 1994 prior parliaments which the Chairperson could also attest to.

Ms Tshabalala agreed with the procedure taken in the meeting and her concerns had been covered. She seconded the adoption of the report.

The meeting was adjourned.

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