The purpose of the meeting was for the Standing Committee on Appropriations and Select Committee on Appropriations to jointly hear public submissions on the Appropriation Bill [B4-2020]. There were four civil society organisations on the agenda to present, namely, the Budget Justice Coalition (BJC), Confederation of South African Trade Unions (COSATU), Organisation Undoing Tax Abuse (OUTA) and African Farmers Association of South Africa (AFASA)
The BJC believes a much greater investment in ensuring participation of community-based organisations can be facilitated. It asked if Parliament is able to make open access to zero-rated platforms, given the challenges related to it.
Critique from the Committee to the BJC included, the BJC talking about an economic relief package which it presented as a shopping list without giving possible sources for funding. On the emergency procurement, it talked about R130 billion from Budget for re-prioritisation, and it raised concerns about who it will benefit. It did not come up with suggestions.
COSATU made several points, including, senior management in government, and politicians, are causing financial problems. Essential workers such as nurses are earning small salaries, yet the Senior Executive Officer (SEO) of the Umgeni Water Board earns a R1 million every month. There are 800 managers earning above R2 million. To sell any compromise to workers, one must deal with bloated management structures at the top.
OUTA said the main point it wanted to make is, since roughly ten years ago or more, the debt burden on South Africa changed dramatically. State capture also played out in the last ten years and the country has not seen the Appropriations Bill reflect these changes in its composition really. Where money is spent has not changed significantly from year to year. OUTA does not necessarily say the Committee is rubber-stamping, but OUTA believes very strongly the Committee can have a stronger voice in how the Budget has to be adjusted.
AFASA said the easiest way to assist Black farmers to reach the markets is for the state to be an off-taker of the product from the farms. It is as simple as this. If the state wants, for example pork, AFASA has hundreds of members who are pig farmers. There is no need to compromise on quality. The quality will be the quality as stipulated in the regulations. Government departments can procure directly from the farmers. The modalities of how this will happen can be dealt with. In this way the state can enhance the capacity of farming in the country
Budget Justice Coalition (BJC) Presentation
Ms Zukiswa Kota presented on BJC’s behalf.
The Economic Relief Package
The focus is on measures to help citizens and the economy recover from Covid-19, where to appropriate funding, what legislative fixes are needed, and how South Africa can prepare better for future disasters. While at R500 billion, the economic relief package is significant, the BJC’s concerns are:
- How much new money was actually being provided?
- Where was it coming from?
- Whom would it benefit?
The BJC said social grants allocation is inadequate. At least 55% of South Africa’s population live below the Statistics South Africa (Stats SA) poverty line of R1 267 per person per month. Prior to Covid-19, 13 million people were regularly experiencing hunger and malnutrition. The BJC advocates for increased transparency in fiscal decision-making.
The BJC advocates for this pandemic to be an opportunity to effect permanent change to the way government makes fiscal decisions, by
- Democratising these decisions to allow civil society to have a direct say,
- To increase transparency to every level of government spending, right down to procurement at schools.
Key recommendations include:
- Ensure transparent policy and decision-making.
- The budget for the social grant component of the relief package must be increased
- Adequately fund gender-based violence response and prevention.
- Publish spending and procurement data on public platforms such as VulekaMali, real-time and in accessible formats.
- Engage the National Treasury to work on a special health budget which includes budget provision for key vacancies in the health sector to be filled.
For the complete presentation, kindly see presentation document attached.
Confederation of South African Trade Unions (COSATU) Presentation
Mr Matthew Parks, Deputy Parliamentary Co-ordinator at COSATU, presented on COSATU’s behalf.
The key economic challenges which existed pre-Covid-19 are:
- 40% and rising unemployment,
- Dangerous levels of inequality and poverty,
- Collapsing State Owned Enterprises (SOEs),
- Municipalities and even some departments,
- Rising levels of corruption and wasteful expenditure,
- Declining levels of revenues and an economic recession
Corruption with impunity in the state sabotaged all efforts to effectively deal with the real societal challenges. Cosatu wants:
- Government acknowledgment of corruption and comprehensive government anti-corruption plans.
- Cosatu wants to know how much is still being looted,
- How much has been recovered,
- About arrests,
- Convictions and asset seizures.
COSATU proposed that these be addressed:
- Comprehensive forensic audits of SOEs, provincial and local government.
- Life style audits of elected leaders.
- Expand Role of chief procurement office to centralise procurement.
- Treasury deployments to SOEs, provincial, and local government
Cosatu’s proposals on state expenditure are list the following types of expenditure as wasteful:
- Bloated executives and perks.
- Spousal benefits.
- First class travel & travel allowances.
- Billions allocated to catering.
- Departmental head offices (6 buildings – R13 billion)
Cosatu proposed ways in to cut the public service wage bill, how government can save on procurement, how departmental appropriations can be cut, where new jobs can be created, for example the need for an additional 500 labour and 200 health & safety inspectors.
For the complete presentation, kindly see presentation document attached.
Organisation Undoing Tax Abuse (OUTA) Presentation
Mr Matt Johnston, Parliamentary Engagement Manager at OUTA, presented on the organisation’s behalf.
The Organisation Undoing Tax Abuse is a non-profit, crowd-funded organisation. It aims to hold government to account and ensure the responsible use of tax revenues.
The state-centric monopoly in key industries like energy, water, and transport, has failed because of systemic contravention of the Public Finance Management Act and other legislation governing how tax revenue can be spent.
There is an urgent need to cultivate working-and middle-class growth through targeted public expenditure in a way which does not constrain investment in the private sector. Rather, it must promote it.
Near financial collapse of several SOEs was compounded by the economic impact of a nationwide lockdown enforced to limit the spread of the Covid-19 virus.
- OUTA promotes renewable energy sector growth.
- It promotes impactful public spending in other labour-intensive sectors with real potential for growth if supported and secured, such as in agriculture, and manufacturing and tourism sectors.
- To increase spending in crucial sectors like education and health with a contracting pool of tax revenue, major reductions to spending in lower priority sectors is non-negotiable.
The state can save money, get better value for money, or spend in ways to grow the economy in different spheres. An example is the state’s macro-economic policy on local government level, in the energy sphere as well as with its public entities.
For the complete presentation, kindly see presentation document attached.
African Farmers Association of South Africa (AFASA) Presentation
The impact of the budget on agricultural development in South Africa (SA): the agricultural sector is divided into two subsectors based on resources, and the gap in-between is widening. The state invests less and less in agricultural research, and development and practice. There is a high level of poverty and youth unemployment in the country. Agricultural development and funding is uncoordinated.
Agricultural challenges include:
- Cites low inclusivity caused by high entry barriers for new Black players
- Food availability but not accessibility due to price
- Drought and diseases
- Climatic changes and technological development
- Unemployment specifically for educated youth and women
- The widening dualistic agricultural economy in RSA
Strategic objectives for increasing the budget include:
- To create an inclusive united and sustainable agricultural sector in the country
- To improve agricultural competencies for RSA to participate and compete meaningfully in all the markets platforms (local and international)
- To mobilise resources for food security and economic growth
For the complete presentation, kindly see presentation document attached.
Ms D Mahlangu (ANC, Mpumalanga) said the presentation was enriching and enlightening, because it was not only complaints, but identified issues and suggested possible solutions to the issues. She referred to the BJC presentation Slide 3, where the questions were asked:
- Where did the money come from?
- How much money was there?
- Who will actually provide the money?
- Who will benefit?
- Was there overall value for money?
She said those were the correct questions to ask. The BJC also asked the Committee to confirm its views. The Committee could not do this, although Ms Mahlangu said she valued the content of the presentation.
Mr D Joseph (DA) asked the BJC to submit proposals about the social beneficiaries it thought had to benefit from state assistance, including figures and amounts. He asked what other categories of social service the BJC had in mind.
Ms M Dikgale (ANC) said when the BJC talked about an economic relief package, it presented a shopping list without giving possible sources for funding. On the emergency procurement, it talked about R130 billion from budget for re-prioritisation, and it raised concerns about who it will benefit. It did not come up with suggestions, telling the Committee who it had to benefit. She said the Committee needs to know who the BJC proposed beneficiaries are for the purposes of the debate.
Mr Y Carrim (ANC, KZN) agreed with most of the submissions made. He said the Committee asked civil society to propose more concretely the trade-offs it offered to the demands made. This is especially so in the Covid-19 period. This includes sources of funding, given the fact, a week earlier, it was made knows the South African Revenue Service (SARS) will get R300 billion less.
In the Appropriations Committee, civil society has to tell the Committee what trade-offs it proposes, otherwise it becomes a shopping list.
Ms Kota said the Coalition members made attempts in its written submissions to clearly speak around where it thought some of this money could come from. She noted as well, the BJC did not have the benefits of any of the National Treasury (NT) models, regarding both tax and revenue aspects. To some extent these are made blindly. The immediate tax, and the tax the BJC motivated for strongly, is a wealth tax.
The BJC believes a tax on the richest tiers within the country and private sector will be a meaningful solution. It is less punitive on the most vulnerable, less punitive on the informal sector, less punitive and less deepening regarding inequality.
Ms Kota said she drew on one particular study. There are economists within the BJC whose thoughts and research are within its submission. The Southern Centre for Inequality Studies at Wits University also showed in its research an estimate, if government taxed the country’s richest 354 000 individuals, it could raise R143 billion.
This equated to a significant proportion of the current R500 billion fiscal response package. The BJC urged the SA government and NT to do deep introspection into who is taxed and why wealth taxes are not imposed more liberally.
The second aspect is around savings. The BJC had to wait for the adjusted budget to see where the re-prioritisations will be made. Within the civil society sector, savings are made on travel and accommodation budgets, and the money paid for data. This allows community activists to join meetings like this.
The BJC expected similar savings in the public service can be re-prioritised to be part of the economic relief package. This should provide significant income.
Mr E Njandu (ANC, Western Cape) said the BJC focused on public participation and stakeholders coming to Parliament, especially during the Covid-19 period. He asked for clarity on this point.
Mr Joseph asked how the BJC can assist the Committee to increase public participation. It is an important point and the Committee worked hard to increase public participation.
Ms Mahlangu said on slide seven, the BJC talked about transparency regarding government fiscal decision making, as well as public participation. She asked if public participation is a problem caused by the Committee or NT or government. The Committee must know where intervention must happen. Committees take public participation very seriously because Members are in parliament because of the public. Members will not be doing members work if there was no public participation.
Ms Kota said she was encouraged by Ms Mahlangu’s reflection on public participation.
She said she can imagine the Coalition members listening are encouraged by the questions relating specifically to the public participation aspect. Secondly, it relates to substantiate the Coalition’s concerns.
BJC’s perspective was this:
The Presiding Officers at Parliament would have received various letters from some Members of the BJC saying:
- Even before this period, a much greater investment in ensuring participation of community-based organisations can be facilitated. She said it is easier for someone like herself who has access to facilities, to undertake a presentation like this, than for someone who has a solid foundation within its constituency as a representative of community-based organisations and movements.
- In the context of virtual meetings, she asked what the opportunities to enhance this are.
- She asked if Parliament is able to make open access to zero-rated platforms, given the challenges related to it.
- The other aspect was within normal times, non-virtual, non Covid-19 periods. Public participation through the Committees is an area the BJC noted in the past as problematic. This is not only in the context of the legislatures and Parliament, but also in the context of the executive eliciting input from Members of the public.
- To answer Ms Mahlangu, she said it was also on the Executive side, and other line function departments to solicit input from communities.
Mr Joseph said the BJC’s survey showed SA rated 24% for participation. She asked if the BJC did the research or if it was done by an external party.
Ms Dikgale said the BJC talked about an international organisation rating countries for budget transparency. She said SA was rated, but never achieved 100%. These organisations rated the country but did not identify the shortcomings in the country. She asked what could be done to correct those shortcomings to attain 100%.
Ms Kota replied that many Members of Parliament (MPs) asked what the problem was with public participation. The question was, why was the rating not 100% and who did the research.
The Open Budget Survey was undertaken by the open budget partnership of these 117 odd countries. In SA the public service accountability monitor was responsible for undertaking the survey.
The survey was also overseen by the NT, and its findings are commented on by the NT. The comments around this rating are not just a thumb-suck from civil society. It has been overseen by the NT as well.
She said the Chairperson and Dr Modise will be aware of the rigour and the process.
Mr Z Mlenzana (ANC) asked all presenters, what the Committee and Parliament can learn from the Covid-19 pandemic, especially regarding the allocation of funds. The pandemic exposed Parliament to the realities of SA.
Ms Kota replied that the BJC feels this is an opportunity to influence change. It is an opportunity to better understand what openness looks like. She said, for example, if school governing boards are able to see at the start what is supposed to be delivered to its school versus what actually is delivered to its school, and who it can report non-delivery to. If the BJC is to call to have access to procurement information, this for the BJC, will be an immediate win looking at transparency and meaningful engagements with communities after Covid-19. The change has to extend beyond this phase. It will be heartbreaking if the hunger, poverty, and deep wealth inequality continues.
Mr D Ryder (DA, Gauteng) asked the BJC what budget data platforms mean.
Ms Kota had more answers but stopped due to time-constraints. The BJC has ideas on how to mitigate some challenges the country faces, and is willing to share these with the Committee.
Mr Ryder said he was glad COSATU was ready to engage, because it was not the Committee’s impression the last time the Confederation presented to the Committee.
Mr Parks replied that unions have to compliment where it is due and criticise when needed as well.
Mr Ryder said the written submission had a much more combative tone than the presentation delivered, as if it came from different authors. Although he did not agree with COSATU on all points, he found the arguments and proposals coherent and constructive. COSATU always comes to the Committee with requests and demands, because that is how it approaches its relationship with government. He said he wants to know if COSATU has any commitment to motivate its members to improve productivity as a contribution from its side.
Mr Parks replied that if government can sort out Metro Rail and workers can get to work on time, companies will be more productive. If government is going to invest in workers’ health, a healthy worker is a more productive worker. COSATU is keen on to improve productivity, because if companies can survive, workers jobs can be saved.
One of the things to do is to monitor government tenders. The South African Clothing Workers Union (SACTU) Union monitors all clothing and textile tenders to make sure it goes to local companies. COSATU had quite a few engagements, as Members probably know, with NT over the past few months, making sure the personal protective equipment (PPEs), the cloth masks, are locally procured.
COSATU tries to look at win-win situations. COSATU is quite involved in the sectoral master plans to save the economy, because workers jobs depend on it.
COSATU always said the country needs to invest in education to improve worker skills, especially as the country moves into the fourth Industrial Revolution. However, COSATU does not think the Sector Education and Training Authorities (SETAs) are up to scratch. There is a huge amount of wasteful expenditure and poor training there.
Mr S Aucamp (DA) said, during the pandemic, funding worked according to BBBEE requirements. This led to many businesses not qualifying for funding because it was White-owned or not fully BBBEE-compliant. It resulted in these businesses closing its doors. Black, Coloured, and White people worked for these firms. He asked what the effect on the unemployment rate will be, due to the implementation of these BBBEE requirements, misused during the Covid-19 pandemic.
Mr Parks replied, saying COSATU supports BBBEE. Its focus is to save every single company in the country, Black or White owned. COSATU recognises what Mr Aucamp is saying. Most White owned businesses employ Black people. The R40 billion from the Unemployment Insurance Fund (UIF) went to any employer suffering financial losses, to make sure workers receive salaries. Mr Parks said he was worried, because, of the R200 billion given by government to companies, only 10% was released so far.
Ms Mahlangu said COSATU correctly highlights the challenges SA faces as a country, and the Committees agreed on those.
On Public Service, she was not sure if COSATU was present when she presented the Report on the Division of Revenue Amendment Bill (DoRA), but implementation on this matter depends on what COSATU is driving in the Public Service Co-ordinating Bargaining Council (PSCBC).
These Appropriations Committees have very limited influence within its body. COSATU can see it as right or wrong, but the decisions are taken in the body.
Mr Aucamp referred to NT saying the amount of R37 billion will be cut from the public service budget, because public servants will not get salary increases. The Committee asked if it negotiated with Unions, and if the Committee can get a clear positive answer from NT. It appeared it was not negotiated with the Unions.
He asked for the response from the Unions to the R37 billion cut NT was suggested. He also asked if the Unions agree, and if not, he asked what its position on it is.
Ms D Peters (ANC) said COSATU mentioned salary cuts. She asked which category of personnel it was talking about, and if it was talking about it across the board.
Mr Parks replied that unions are not going to compromise on existing wage agreements in all likelihood. There are negotiations taking place at the PSBC. It moved from mediation to arbitration. The parties are hopeful to find each other. There is some movement with government coming closer honouring agreements.
Unions are not likely to re-negotiate, because it worried, if it re-negotiates a signed, legally binding agreement with government, it sets a precedent for private sector companies to also abandon agreements.
Ms Mahlangu referred to corruption. Two days before there was a joint meeting. The meeting was very hard on consequence management. Until there is consequence management, the public will not have trust in members as public representatives, and also in government. It did not help anyone or the public to have these processes but at the end of the day there is no outcome, and no consequences. It is life as usual. The Committee and the public want to see consequence action implemented.
Mr Aucamp said the Committee was briefed by National Treasury two days earlier. Dr Modise of NT said SA is in trouble. When he considered what was presented by the public in these presentations, more than 55% of the people of SA are living below the poverty line, and 15 million people regularly experience hunger.
COSATU said SA had a 40% unemployment rate and it will probably rise due to the Covid-19 pandemic. He said he has to agree with Dr Modise, and understands the problems civil society organisations lay out.
Mr Parks replied that he agrees with NT. The country is in deep trouble. The country was in trouble before the lockdown. There are a couple of issues. The way government approaches it is very unhelpful. To go to the Public Service Bargaining Council the day before Tito Mboweni’s Budget Speech, to say government is pulling out, is negotiating in bad faith. Government should have gone to COSATU in October 2019 and said it was in trouble. The parties would have found each other. Instead it chose to withdraw the day before the Budget Speech without tabling alternative proposals. It put workers in a corner, because it blamed workers for the crises in government and the economy, while not dealing with corruption and wasteful expenditure, which consumes about 10% of the budget every year.
The Chairperson said COSATU talks about the cost of commissions which is about R400 million to date, and categorises it under the heading: Corruption. He asked COSATU if it can explain what it meant by this.
Mr Parks replied that COSATU supports the commissions, but the National Prosecuting Authority (NPA), and the police do not implement those recommendations, or arrest anyone. By example he said, at ESKOM there are 3000 forensic audits which are not implemented. There is no point in exposing corruption if one does not make those responsible for it bear the consequences.
Mr Aucamp said the Committee discussed it and concluded the funding supplied by government to the SOEs was definitely detrimental to the finances of government. Government also proposed the pension fund of government employees be used as security for funding those failing SOEs. He asked if COSATU discussed this with its members, of which a lot are government employees. He asked what the stance was on making use of private citizens money to stand as security for the incapability of this government.
Mr Parks was happy to share the COSATU proposal on ESKOM with the Committee. The ESKOM social compact at National Economic Development and Labour Council (NEDLAC) was just finalised with government and business. It is a 35-point plan dealing with bloated management, with corruption, with unaffordable contracts, with a just transition, and so on. Public and private financial support had to be mobilised for ESKOM. If ESKOM fails, there is no economy. Industry depends upon ESKOM. Many jobs were lost in the mining and manufacturing sectors because of an unreliable source of electricity.
It is not a blank cheque. The Public Investment Corporation (PIC) can invest, but it had to be through government bonds where there has to be return-on-investment. The conditions are, corruption, the wasteful expenditure, and the bloated management structures, must be dealt with.
Mr Carrim agreed with most of the submissions made. Given a week earlier it was announced the South African Revenue Service (SARS) will get R300 billion less, and especially in the Covid-19 period, he suggested the Committee propose to civil society more concretely the trade-offs offered to the demands made by civil society, and also the sources of funding.
In the Appropriations Committee, civil society had to tell the Committee what trade-offs it was proposing, otherwise it became a shopping list.
Mr Parks agreed there had to be trade-offs and COSATU was happy to fund the trade-offs with the next 3-year wage agreements. COSATU did not think government on its own can provide all the funding to grow the economy. The private sector has to contribute, especially the banks and the investment funds. It has to be done through impact investments. COSATU pushed on the social relief measures which came through. This was UIF funding, the R40 billion, and the increase of social grants. COSATU also pushed at NEDLAC on the various economic relief measures which came through so far.
COSATU made its proposals and thought it can help government on two fronts. For the next three year wage agreement it did its number crunching. It found a way to save R160 billion because inflation fell quite a bit from 5.5% to 2.8%. COSATU also made proposals on how to put a freeze on what management earned, from levels 12 to 16, in the public service. To also do cuts there. The same goes for the Wage Bill of the SOEs.
One can have a sliding scale protecting the lower bands from levels one to six, which led to guaranteed inflation, and the middle bands eight to 11 which had guaranteed inflation. There is space to find each other, but it must be done in a constructive way.
Mr Carrim asked if COSATU had a sense of how many people will lose jobs, and the location of COSATUs comments as part of overall economic strategy. He said he knows there is an Alliance Economic Strategy which COSATU is part of, and asked if COSATU had its own economic strategy within which it located its comments when it came to the supplementary budget. He suggested COSATU make a submission to the Minister, even though it is late.
Mr Parks replied that most of the proposals in the Alliance Economic Plan came from COSATU. The stimulus plan had to be linked to job creation. It cannot be a blank cheque to employers. Massive infrastructure investments have to be looked at, especially on key things such as ports, rail, and energy. The economy needs to be grown but COSATU needs dedicated support to heavily affected sectors of the economy, like hospitality, retail, tourism, and so on.
It can also not just be national government doing the work. Provincial and local government as well as SOEs have to do its part as well. There are no job creation targets from these organs of state. For COSATU, local procurement is critical, as well as the banks making credit more affordable and accessible. It is also about tapping into international green funding. At NEDLAC, COSATU has been pushing the digital economy as a way of releasing pressure on employers and growing the economy.
The energy crisis must also be sorted out. Those are the key things for the economy and of course COSATU has shared the proposals with Tito Mboweni and the colleagues at the NT.
Ms Peters said COSATU addressed the challenge of unemployment in general and youth unemployment in particular. She asked if COSATU supports the view, because of Covid-19, there must be early retirement for those above 55 or 60, especially if living with co-morbidities of other diseases.
Ms Peters asked what type of approach COSATU proposes, if it proposed a voluntary severance package (VSP) type option, or how to deal with this particular issue of early retirement.
Mr Parks replied, COSATU does not support early retirement. One cannot shuffle older workers for young workers. Jobs must be created. COSATU wants to see public works programs helping to create new jobs, not just being a source of cheap labour.
Mr O Mathafa (ANC) referred to the last point of the proposal, on the tax brackets. He said another colleague, Honourable Xheso, spoke on the lack of participation of the private sector in the market when it comes to economic stimulation. He asked if COSATU did an analysis to compare SAs tax brackets to other like countries, particularly those emerging in Africa and Latin America, to see how SA was pegged against them. Mr Du Toit said South Africans are overtaxed, but Mr Mathafa begs to disagree. He saw instances where SA was actually one of the lowest in tax brackets toward the corporate space. He wanted to find out what COSATUs view is regarding how SA compares to other countries.
Mr Du Toit referred to slide nine of the COSATU presentation, which mentioned COSATU wants changes in the income tax brackets, inflation adjustments, and inheritance. He said government cannot tax businesses or individuals more than it is already being taxed. It is over-taxed at this stage.
Businesses have to get tax relief to enable it to have more movement in the market, to do business more freely, and in effect employ more personnel.
Mr Parks replied around taxation, saying it was to:
- make taxes more progressive,
- to lessen the burden on working and middle class families,
- to make sure the rich pay a fair share,
- to make sure SARS is capacitated.
- It dealt with tax evasion and customs evasions.
Mr Ryder agreed with COSATU on the bloated management structures in the public service.
Mr Joseph wanted to comment on COSATUs first letter and was glad COSATU was willing to engage.
Some SOEs are in the intensive care unit (ICU). It needs to be stabilised before it can be saved. He agreed with Ms Peters, it is important for COSATU to tell the Committee where the cut-off level of senior management is. Stakeholders need to deal with the public service and COSATU resisted the process. It said senior management in government, and politicians, are causing the financial problems. If COSATU can identify the senior management, Parliament can deal with it, including Parliamentarians.
Mr Parks replied, the public now believes nurses who earn about R200 000 a year, and are providing an essential service, especially now, are to blame. Yet the Senior Executive Officer (SEO) of the Umgeni Water Board earns a R1 million every month. There are 800 managers earning above R2 million. To sell any compromise to workers, one must deal with bloated management structures at the top.
The Chairperson asked COSATU what it said about the Chief Procurement Officer (CPO). The presentation spoke about localisation and also spoke about expanding the role of the CPO. To him localisation and centralising meant two different things. He asked for an explanation to understand what COSATU was trying to achieve.
Mr Parks replied that COSATU wants the CPO to play a central role in government procurement. It can help save costs and reduce corruption, because many municipalities, provincial governments and SOEs violate all the PFMA rules. NT and the CPO need to set very clear framework guidelines to deal with corruption in state procurement.
Mr Mlenzana asked what the Committee and Parliament can learn from the Covid-19 pandemic, especially regarding the allocation of funds. The pandemic exposed Parliament to the realities of SA.
Mr Parks said one has to capacitate the State to deal with unemployment, to deal with poverty, but also the urgency of now. The ticking time-bombs have to be dealt with and not kicked down the road.
Mr X Qayiso (ANC) said the issue of disinvestment in the country was exacerbated by the greediness of monopoly industries in the country, not because of the emergence of Covid-19 or the preference of BBBEE. It is important to note there was this trend of disinvestment resulting in huge job losses in the country. The government handled the issue of preference of BBBEE quite fairly, because of the previously disadvantaged.
Mr Qayiso agreed with a number of points COSATU raised. There are proposals which could assist the Committee moving forward. COSATU raised the issue of stimulus packages for employers. He asked if COSATU meant government must not allow a situation where employers are given stimulus packages and then still continue with retrenchments.
Mr Carrim said COSATU is correct. When Parliament passed the VAT Bill, it said within a three year time span, the 15% had to be reviewed to see if it can be brought back to 14%. He did not know how possible it was, but Parliament could look into VAT relief, bearing in mind the severe financial constraints.
Mr Carrim did not understand the COSATU proposal on the NHI. In his understanding the government’s attempt to deal with the covid-19 pandemic served towards accelerating and strengthening the process of the National Health Insurance (NHI). He proposed the Committee set up a briefing by the Impact Investment Council (IIC).
Ms Peters fully supported COSATUs call for labour and health inspectors, in particular the appointment of transport health inspectors. There is a team of men and women in the employ of the State, although on a limited package, like the Community Work Programme (CWP) or the Extended Public Works Programme (EPWP), who can be retrained and re-skilled to be able to do this particular task.
Ms Peters said COSATU spoke about the Broad Indigent Grant (BIG) versus the R350 Social Relief of Distress Grant (SRD). She asked how COSATU proposes government fund this grant.
Mr Parks said he will provide written answers to the unanswered questions.
Mr Joseph asked OUTA to clearly distinguish and identify for the benefit of the committee the SOEs which had to generate a profit and be self-funding, and the ones which existed to render a service to the public.
Mr Johnston replied that he will prefer to answer this question in writing.
The Chairperson referred to OUTA saying the focus must be on SETAs. He asked what was wrong with the SETAs and what OUTA proposed.
Mr Johnston replied that there are contracts in the SETAs which are corrupt. There is significant wasteful expenditure. What the Committee can do in his opinion is to make the appropriation to the Department of Higher Education is conditional to it addressing these issues. These entities are under its oversight and if the Department is just given money to hand over to these SETAs, then it must make sure the money is not going to be wasted.
The Chairperson said OUTA proposed the fiscus takes money away from departments which under-spends. The question was, what about the impact of not spending on the intended recipients. He asked if the process of taking away budgets from under-spending departments did not double-punish the prospective recipients.
Mr Johnston said he did not think so. Resources are very limited. There is very limited space to increase tax revenue and when money is not spent to good effect it can be spent elsewhere in organs of State, which are actually spending it properly.
Mr Mathafa said OUTA talked about spending money around analysis and developing local space, to introduce governance reforms. He asked what reforms it was thinking about, because OUTA was citing it would assist in response to the Auditor General’s (AG) concerns. He raised this question because at national level, the AG was given an extended mandate.
Mr Mlenzana asked OUTA how the Appropriation Bills were the same every year. He wanted to know if it was about Rands and cents, or if it was about approach, or if Parliament rubberstamped decisions made elsewhere. He wanted details to understand what OUTA meant.
Mr Qayiso asked what OUTA meant when it said the Appropriations Bills remained the same year every year.
Mr Johnston replied that the main point OUTA wanted to make is, since roughly ten years ago or more, the debt burden on South Africa changed dramatically. State capture also played out in the last ten years and the Country has not seen the Appropriations Bill reflect these changes in its composition really. Where money is spent has not changed significantly from year to year. OUTA does not necessarily say the Committee is rubber-stamping, but OUTA believes very strongly the Committee can have a stronger voice in how the Budget has to be adjusted.
Also to say, when it comes to the final blow in a bail out to ESKOM, there are conditions attached to the special appropriation. OUTA wants to see these kinds of conditions attached to ordinary appropriations to make sure monies are spent properly. OUTA is just saying there has to be much more flexibility in how the Appropriations Bill really reflects change in real life from year to year.
Ms Mahlangu said OUTA is empowering the Committees on Appropriations. It is doing this by emphasising and outlining the mandates of the Committees on Appropriations. Coming from Co-operative Governance and Traditional Affairs (CoGTA), and coming from the NCOP, the inter-relations between South African Local Government Association (SALGA), between provincial governments, and departments are very important. That is the mandate and the focus of the Select Committee on Appropriations. She appreciated the Select Committee had this understanding with its stakeholders.
Mr Johnston replied that OUTA agrees with what the Financial and Fiscal Commission (FFC) recently said. Civil society has to be a part of intergovernmental fiscal relations, and a stakeholder society must be fostered. At every stage of the budget cycle there must be public engagement that is meaningful, so one can actually see how it influences what is ultimately decided.
Ms Mahlangu said it caught her attention that the AG had to audit all leisure SOEs. As far as she is concerned, all SOEs need to be audited by the AG of SA. For a long time South African Airways (SAA) was not audited by the AG and the Select Committee raised it in the Fifth Parliament, as the Finance Committee. It is wrong. She said other audit firms are questionable and the audit outcomes cannot be relied on.
Ms Peters asked what OUTA’s view on the Roads Bill is.
Mr Johnston said OUTA did not go into much detail because it did not do focused work on it. He wanted to exploit this platform to say OUTA has a strong view there must be an emphasis on road safety, as opposed to really just sustaining the government entity paying out for road accidents.
Money will be better spent if it is allocated to more police visibility and this kind of intervention, to make sure there are less road accidents, to ensure minimal liability.
Mr Mathafa asked about spending on local government reforms, and what kind of reforms OUTA would like to see.
Mr Johnston said there is a long debate about this. He said he will not try and talk about all of it now, but in essence OUTA is in discussion with the AGs office as well, and there is a view it can be much more efficient. In rural municipalities, where towns are small, one Chief Financial Officer (CFO) can for example serve several towns or municipalities. These are the kinds of structural changes OUTA will like to see. The district development model has been spoken of quite often, but it does not really reflect in the Appropriations Bill. As OUTA said, it continues to look quite similar to what it looks like in previous years.
Water Boards complained about the role it played in really getting payment for services, and started to bring in third parties to collect these payments. OUTA believes the budget and Appropriations Bill can reflect if local government’s role is reduced, or if it is increased. OUTA thinks, when a municipality procures energy from a producer directly, or if a Metro Municipality takes over the metro-rail, an Appropriations Bill has to reflect this.
Mr Mlenzana asked what the Committee and Parliament can learn from the Covid-19 pandemic, particularly regarding the allocation of funds. The pandemic exposed Parliament to the realities of SA.
Mr Johnston said the general questions asked about Covid-19 are important questions. Covid-19 exposed the weaknesses of the public sector and amplified problems which were there before. The energy crisis needs to be resolved. There are several issues which could not be ignored any longer. In general there is space for change and OUTA wants change to be inclusive.
He agrees with the BJC, budgets in formulation have to be more inclusive, more participatory, and there were platforms which are developed for this. OUTA wants to see those integrated with these public hearings.
OUTA said it will engage with the Committees to answer unanswered questions.
Mr Carrim said AFASA made a very good submission. The Committee can endorse it, but if it is doable is a different issue.
Ms Peters asked if AFASA has a national footprint, and asked about the relationship of AFASA with statutory bodies, as well as the Department of Agriculture.
Mr Neo Masitela, AFASA, replied that AFASA has a footprint in nine provinces and represents 360 000 members in the country. It has substantial numbers, big and small, communal, middle commercial, and large commercial farms. Regarding to helping the Agricultural Research Council (ARC), the ARC worked with AFASA, especially the grain commodities. There are six commodities in the organisation. This includes the sugar industry - both South African Sugar and South African Grain Farmers Association (SAGRA) are members of AFASA.
There is a process of approval in the organisation by joining its study groups. There are currently study groups for poultry, piggery and horticulture.
The state showed interest to help Black farmers, but the amount of money allocated is minimal. This is why it is unable to spread its wings regarding research and help to assist the cultivars.
Ms Peters said she heard AFASA speak about the need for increasing the research budget and concern about South Africa’s challenge relating to the seed bank. She asked what would be ideal and equitable funding for the Agricultural Research Council (ARC).
Mr Joseph said the other issue is research. More money needs to be invested on all levels, but without research, evidence-based policy proposals cannot be made.
Ms Peters asked if the ARC was supporting African farmers adequately.
Ms Mahlangu partially agreed with AFASA about the decreasing allocation of budget to agriculture compared to pre-1994 times being a matter of concern. This can be justified, because it benefits a certain portion of the population and not everybody, the imbalances of the past must be corrected.
Ms Peters asked how the passion for agriculture can be built through schooling in African children. It vanished from the school curriculum, and she believes for the long-term investment in food security and agriculture, children must have the passion. Children must be taught agriculture at an early stage.
Mr Masitela replied that AFASA’s view is it is important to reopen agricultural colleges in all the provinces. If this is not done, the opportunity is missed to make young people see the importance of agriculture. Members have to remember, in the past in SA, Black people were forced to study agriculture to be an employee. This is why many Black people are resistant to being in agriculture.
In the present conjuncture, it is important to revitalise and re-energise this situation. AFASA has started to work with a different organisation. It has worked with the grain industry to set up bursary funding for post-graduate Black students to encourage an appetite and participation. This is one of the things AFASA is doing, and it plans to engage with the Committee around these matters.
Mr du Toit agreed that food security is a huge priority in South Africa. He agreed drought and disease did not receive the necessary assistance it was supposed to receive. He referred to a document the Committee was supposed have received from the Department of Agriculture, relating to drought relief in South Africa. This document is supposed to have been tabled at the end of February 2020 to this Committee, but to date has not been received by the Committee.
Mr Du Toit said AFASA mentioned it wants transformation in agriculture, but it is clear AFASA is only canvassing for the assistance of Black farmers. However, many White farmers acted as mentors in many instances to assist new farmers entering the farming arena with great success. It is of the utmost importance for all farmers, not only subsistence farmers, but more so commercial farmers to receive assistance from government in the light of food security. It is of the utmost importance there be no discrimination on the basis of race when assistance is given to farmers. There is enough room in the markets to accommodate the current and upcoming farmers.
Mr Joseph said all farmers contributed toward food security. The Land Bank can do more towards land reform and land distribution.
Mr Qayiso said the AFASA presentation was an eye opener for the Committee on a number of issues raised. He said it will be proper to meet with this organisation after this hearing so the Committee can have an understanding of what it tried to address, amongst this, the role of the Land Bank, which came up in many recent discussions. He asked if AFASA is implying the developmental mandate of the Land Bank needs to be reviewed.
Mr Mathafa asked AFASA how best the Land Bank, with the assistance of NT, can assist new entrants into the agricultural space as well as smallholding farmers, in the era of the Covid-19 pandemic.
Mr Joseph agreed the emphasis on the Land Bank is important, but he asked what role the Land Bank can play for previously disadvantaged farmers, because AFASA asked the Land Bank be re-positioned.
The Chairperson said the Committee interacted with the Land Bank two weeks previously. It shared with the Committee the use of intermediaries. He asked if AFASA can share its experiences with intermediaries, and he asked what its role and impact was, especially as it relates to Black and emerging farmers.
The Chairperson pointed out, the presentation said the Land Bank operates like any other commercial bank. He asked exactly what this means. He also asked what COSATU proposed and how the Land Bank should perform.
Mr Masitela replied that the transformation of the land Bank will be dealt with at a later date.
The Chairperson asked what AFASA thought government must do to assist agriculture in general and Black farmers in particular to access the markets, nationally and internationally. When the Chairperson worked at NT, he said, once he met the Ambassador of China. The Ambassador said China can buy everything SA produced. It will improve SAs trade balance and obviously impact positively on SAs GDP growth. He asked what government was doing to able to access the markets.
Mr Masitela replied, the easiest way is for the State to be off-taker of the product from the farms. It is as simple as this. If the State wants for example pork, AFASA has hundreds of members who are pig farmers. There is no need to compromise on quality. The quality will be the quality as stipulated in the in the regulations. Government departments can procure directly from the farmers. The modalities of how this will happen can be dealt with. In this way the State can enhance the capacity of farming in the country.
Mr Masitela replied, one of the critical things Parliament can do is to amend the Marketing of Agricultural Products Act to help with the marketing. There are many other regulatory frameworks dealing with this.
AFASA will respond to the remaining questions in writing.
Mr Masitela replied that AFASA made a presentation for the Department of Agriculture and Land Affairs and Rural Development on what AFASA thought is the best way of dealing with Covid-19. He will send the presentation and the document to the Committee. AFASA presented to the industry around how the state had to intervene in Covid-19.
Mr Njandu asked AFASA about the low inclusivity of entry for Black farmers. He agreed with the presenter, there is a lot of money in Agripax. Agripax is linked across national, provincial and local levels. He asked for a detailed description of what the obstacles are for AFASA to be able to source from Agripax, which is a multi-farming sector.
Mr Mathafa agreed with the other members that food security is the responsibility of all farmers. He asked what advice AFASA can give the Committee regarding how to assist new entrants to the agricultural industry.
Mr Masitela replied that in 1996/7, government adopted what is called a deregulation process. The unintended consequence of this is it barred Black people from participation in the agricultural sector. For instance, prior to 1996/7, the Land Bank had a credit bond - it had a cushion for particularly White farmers to be protected when these farmers were unable to pay bank loans. It is a good thing from this period, which must be re-introduced to accommodate Black farmers. This is broadening the scope and enabling the inclusivity of Black farmers in this space.
AFASA speaks for entire farming communities, Black and White, but the issue is, White farmers have a huge historical advantage over Black farmers, while competing in the same market. It is an unequal race. White traditional farmers are generally helped by the regulations. In 1933 the State consciously developed a program and processes to help White farmers. There is nothing wrong with helping Black farmers. It is not exclusivity. White farmers who are prepared to help are welcome.
It is 26 years after the advent of democracy in SA. Despite what was done, currently, many Black farmers are not financially viable. He asked the Committee to assist AFASA in this space.
The Chairperson asked if AFASA made use of intermediaries.
Mr Masitela replied that Black farmers are not helped by intermediaries. The Land bank used intermediaries to finance White commercial farmers. AFASA’s proposal is for Parliament to amend the Land Bank Act to enable resources for the development of Black farmers.
Ms Mahlangu advised AFASA to demand regular engagements with the Portfolio Committee on Agriculture, Land Reform, and also the Select Committee of the National Council of Provinces (NCOP). AFASA needs one-on-one engagements with the Department of Agriculture, because its presentation was good but it needs to get to the relevant people in the Department of Agriculture.
The Chairperson thanked the presenters for the presentations and the wisdom contained in them. The Committee will engage with the civil society organisations on a continuous basis.
The meeting was adjourned.
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