Committee Report on 2020 Revised Fiscal Framework; National Treasury on Adjusted Budget & Revised APP, with Deputy Minister

Meeting report

Opening Remarks

Co-Chairperson Maswanganyi welcomed Members of the two Committees and other Chairpersons attending the meeting: Ms D Mahlangu (ANC MP), Chairperson of the NCOP Appropriations Committee and Mr S Buthelezi (ANC), Chairperson of the Standing Committee on Appropriations.

On calling for apologies, he was informed that Mr I Morolong (ANC) who was involved with matters relating to the death of North West MEC for Cooperative Governance, Human Settlements and Traditional Affairs, Gordon Kegakilwe, from Covid-19. The Chairperson offered his condolences to the MEC’s family and the government of North West Province.

Mr D Ryder (DA Gauteng) presented his apologies but explained that a plenary of the National Council of Provinces (NCOP) was starting at 10:00 and would be running concurrently with the Finance meeting. He had a particular interest in that meeting and so would leave the current meeting at some stage to attend the NCOP plenary session but would soon return to the meeting.

He added that he wished to place on record that he was not really happy that committee meetings were being arranged to run concurrently with plenary sessions of the House as it made it difficult for a Member to perform in terms of his or her mandate. He understood that it was not the Chairperson’s fault but blamed it on poor planning. He was aware that they were under pressure to pass the budget but there were other aspects of the parliamentary processes that should be taken into consideration.

Co-Chairperson Carrim explained, especially to new Members, that he agreed with Mr Ryder that it was not acceptable but, even outside of Covid-19 times, the work of the Finance Committees was pressurised because of the work that the Finance Committees did, and because the Finance Committees and the Intelligence Committee were the only prescribed committees in the legislative framework. There were deadlines for completion of the fiscal framework so that the rest of the Appropriation Bill could be started. For that reason, the Committees had a standing exemption from appearing in the House. The Standing Committee had often sat in Committee Room G26 of the East Wing so that Members could enter the Chamber to vote. He would raise the issue but pointed out that it occurred even outside of Covid times.

Co-Chairperson Maswanganyi  stated that it was difficult to get two Committees from two Houses together. It was a unique situation and the Committees had to sit together as long as it took for the report to be sent to each Chairperson and then sent to the Committee staff for finalisation.

Discussion on the Report of the Standing/Select Committee on Finance on the 2020 Special Revised Fiscal Framework

Co-Chairperson Maswanganyi requested that issues of language and similar such concerns be sent directly to the Committee Secretary and that the Committee address only the observation and recommendations. He moved that the Committees moved right away to Item 6: Committee’s observations and recommendations.

Co-Chairperson Carrim agreed as it was the normal approach. He added that at the public hearings, presenters had been requested to provide summaries and it was mainly those summaries that had been used in compiling the report. Members were free to get copies of the summaries. The statistics had been copied from the National Treasury Report; only errors need be corrected. It was only the last part that the Chairperson took responsibility for because that section demanded political decisions.

Co-Chairperson Maswanganyi trusted that everyone had read the report as he would only stop to discuss a point where a Member had a question or comment.

Co-Chairperson Carrim reminded the team that the process had been advised by the legal services unit. A single report would be prepared in which “Standing Committee” would be replaced by the words “Select Committee” for the NCOP Committee’s report. It was a joint report for content but, for parliamentary procedure, the National Assembly Committee would have to adopt the “Standing Committee Report” while the NCOP would adopt the “Select Committee Report”.

Co-Chairperson Carrim stated that the Chairperson of the NCOP Appropriations Committee was with him on the virtual platform. He added that she had no idea of the amount of work that awaited her in her Committee. The Chairperson had asked him why there was the mechanical separation between fiscal framework issues and appropriations issues. He had explained to the Chairperson that there were a thousand reasons for that and it was a long story but the load carried by the previous finance committee dealing with both fiscal framework and financial appropriations was too heavy to bear and it had been decided to separate the two. Stakeholders, however, did not make submissions to the Appropriations and Finance Committees separately as the submissions often overlapped. The Appropriations Committee was about allocating monies to take into account the Covid-19 crisis which was why he suggested that all the submissions and summaries should sent to all Members of the Appropriation Committee.

Points under Item 6 on which there was discussion:

6.3:  Ms P Abrahams (ANC) noted that the paragraph contained a long observation because it talked about the economy and then went on to talk about the effect of the pandemic and the rates of poverty, and then discussed the ages of people. She asked that it could be worked on so that it was not so long.

Co-Chairperson Maswanganyi agreed that there were quite a few points for noting which should be removed from the observations and recommendations and included in the background and introduction sections. Observations and recommendations had to be concise and to the point. He thanked the researchers and content advisors for drafting the report under difficult conditions.

Mr Z Njadu (ANC Western Cape) asked about zero budgeting and from what premises the Committee was moving in respect of zero-budgeting. He noted that the Special Budget was a bridge to the budget of October.

Co-Chairperson Maswanganyi stated that the zero budget had not yet been introduced to the Committee, although the Minister had raised it before.  He did not know if it had been presented to Cabinet and adopted as policy. National Treasury would have to present that to the Committee as it would have a huge impact. It was not just a concept but would have a huge impact on how things were done.

6.4 Dr D George (DA) noted that line 5 stated that “but there clearly needs to be a new, more effective relationship between the state and the market with the state playing a more active role in the economy...” He did not believe that state should play a larger role in the economy but less of a role and make it more efficient in time. He knew there was a crisis and something had to be done but it should not be to increase the role of the state. Also, the virus should not be used as an excuse for the state to increase its role given its performance to date. His party could not support that.

Co-Chairperson Maswanganyi stated that it was a debatable matter as to whether the state should play more of a role in the economy.

Mr Z Mkiva (ANC Eastern Cape) said that it was not just an issue of different views and a debatable matter. At any given time when a crisis faced the country, the state had to take not only an active role but a leading role, a primary role of leadership and guidance. It must lead the population and the market itself and give a marching line to guide the market to confront the challenges. That responsibility could not be outsourced by the state as the market was driven by profit. In a time of crisis the market would look for ways of maximising its profits.

Mr W Wessels (FF+) agreed with Dr George. It was dangerous to say that “the Committee believes…”. Members could agree that government should create an environment for economic growth and should create an environment for the country to be an effective developmental state but he disagreed that the state should play an active role in the economy. He added his voice to what Dr George had said. Government should create an environment for the country to develop an effective economy and to create job opportunities.

Ms D Mahlangu (ANC Mpumalanga) stated that wording should be changed to say that it should be the state’s responsibility to create an environment conducive to a developmental state. She supported the statement in the document. One could not give responsibility to the state when it suited one and take responsibility away when it did not suit one. What happened in government had a huge impact on what happened in the economy of a country. The market reacted to what the state was doing, so the statement was important.

6.5 Mr D Ryder (DA Gauteng) commented that 6.5 spoke to the R500 billion package and yet the presenters had stated that the amount was not really R500 billion. There seemed to be some smoke and mirrors at play. The Finance Committee needed to build into its oversight programme some sort of activity to ensure that the money was actually spent. In addition 6.5 referred to the additional allocations to the South African Police Services (SAPS) and the South African National Defence Force (SANDF). The additional amounts given to the SANDF did not cover the additional costs put on the Department by the deployment letters of the President. The deployment letters  gave a specific amount of what it was going to cost the SANDF. Those additional amounts had not been covered by the allocation.

He said that Parliament was setting up a budget that would not cover costs. It might well have more to do with Appropriations than the fiscal framework but it went against policy to set a department for failure. SANDF was already having qualified audits because it was overspending on human resources. Now the Department had been given additional human resources but it was not being covered for the expense. It pointed to a policy problem and a disconnect between what National Treasury could deliver and what was needed by the Executive.

Ms Mahlangu asked, on a lighter note, if Mr Ryder had started contributing to the R500 billion. It was his responsibility as a citizen of SA. She had contributed.

Co-Chairperson Maswanganyi  noted that she was referring to the solidarity fund.

6.10 Mr Ryder responded to Ms Mahlangu. He said that his party had contributed to the solidarity fund on behalf of every single Member of the party. On 6.10, he noted that the economy was expected to contract by 7.2%. He suggested that the words “at least 7.2%” be added to the sentence as National Treasury had indicated that they projected a 7.2% contraction of the economy but others had suggested that the economy would contract even further.

Co-Chairperson Maswanganyi  noted that it was just a projection. He added that the words “at least” meant a minimum, but the contraction could be less than 7.2%.

Mr Ryder responded that if it was less than 7.2%, he would buy the Chairperson a three-course meal at a fancy restaurant in Cape Town when he was back.

6.12 Mr Ryder apologised for dominating the discussion. He was concerned about government needing more time to avoid a further negative impact on the economy  He proposed that if a programme was not working, it had to be cut as fast as possible. A programme providing employment could be a short-term solution but it was not a long-term solution. The primary balance had to be achieved sooner rather than later. Government could not keep programmes that only offered employment. There might well be casualties in that regard.

Mr G Hill-Lewis (DA) stated that it was not a National Treasury prediction as stated in 6.12 but a commitment of the Cabinet that primary balance would be achieved by 2023 and he believed that it was a very welcome commitment and that the legislature should very rigidly hold Cabinet to primary balance by 2023. It was  absolutely essential that primary balance be achieved as soon as possible. 2023 was three full financial years away and so it was entirely possible. The Minister had stated that it would be the policy. The legislative should not give them the room to move out of it by giving more favourable timelines.

Co-Chairperson Maswanganyi agreed. He noted that the last sentence stated that: “the National Treasury should provide the Committee with regular reports of progress made in achieving this target.” The Committee would hold them to their commitment. National Treasury was the lead Department on presenting the situation to Cabinet so, from time to time, the Department would have to report to the Committee.

Mr Hill-Lewis requested that the word “prediction” be changed to “commitment” and that the date be changed from 2020/23 and entered correctly as 2023/24. He asked that the sentence relating to a more realistic timeframe be removed.

Co-Chairperson Maswanganyi stated that the word “prediction” had been cautiously used as it might not happen and a commitment could not be made because it might be achieved.

Mr Hill-Lewis said that he still requested that the sentence about the change to the timeframe be removed.

Co-Chairperson Carrim suggested that the word prediction be changed to “expectation” as a compromise. Mr Hill-Lewis was correct that the date referred to should be 2023/24. He believed that the Members did not know what the key programmes were, although he and the Co-Chairperson understood it to be programmes such as electricity, which the Opposition Members would disagree with, but it was not crucial to include the sentence about more realistic timeframes. However, he would go with whatever other people wanted. Some of the issues were about expenditure but it did relate to the financial framework.

Co-Chairperson Carrim added that Mr Wessels raised a good point and one kept coming back to the point but there would never be agreement. Inkosi Mkiva had made the ANC’s point about the state taking the lead. Those were policy issues. There was no such thing as a minority report in Parliament, as frequently explained by Senior Legal Advisor, Frank Jenkins. What Parliament did allow for was a minority opinion within a common Committee Report. Towards the end, the report could say that the DA reserved its right but objected to the role of the state as set down in paragraph x. He suggested that the DA provide a half page with its minority view. The Committee would never agree. He understood that, although the report stated, “the Committee”, it would not include the EFF which had rejected the budget, nor the DA and probably not the FF+ either. There was, therefore, no need to reach a compromise.

Co-Chairperson Maswanganyi  appreciated the clarity but said that Committee would come to that when it considered the issue of adopting the report.

Ms Abrahams stated that Co-Chairperson Carrim was right as the Committee Members were “oversighters” who  had a role to play in the separation of powers but the Committee should not see itself as trying to “catch out” government. The Committee’s role should be to conduct oversight and to advise National Treasury that it should look at realistic timeframes as the timeframe of 2023/24 was not realistic. However, the Committee should also look at the impact on the economy. It was the consideration of the Committee that it was a well-written report and that Members should not tamper with the report by putting unrealistic timeframes. When Parliament asked National Treasury about the timeframes, it would not be able to budge. The Committee could not contribute to the unrealistic timeframes.

Co-Chairperson Maswanganyi  asked the Secretary to correct the timeframe as Co-Chairperson Carrim had said it was 2023/24.

Mr Hill-Lewis had an objection to the way in which the report was being handled. Specific suggestions were made to amend the report. Two people spoke in favour of an amendment and one against and then the Chairperson just moved on. He asked whether the Committee should adopt the report as it stood and the DA should just send its minority report.

Co-Chairperson Maswanganyi  asked Mr Hill-Lewis if he wanted the Committee to vote on each point.

Mr Hill-Lewis responded that he thought that the Committee should properly consider proposals for amendment and then make a decision as to whether an amendment should or should not be made.

Co-Chairperson Maswanganyi  said that Co-Chairperson Carrim and Ms Abrahams had spoken against the proposal. There was the issue of the timeframe and the issue of National Treasury’s commitment. He had come with a number of suggestions and Co-Chairperson Carrim had come with a different proposal. There was no bulldozing. All Members could speak and make proposals. To what specific issue was Mr Hill-Lewis referring?

Mr Hill-Lewis stated that he had proposed that the sentence about National Treasury presenting a more realistic plan with a longer timeframe be deleted. He supported Mr Carrim’s proposal that the word “prediction” be changed to “expectation”.

Co-Chairperson Maswanganyi stated that he supported the phrase “National Treasury’s expectation” and that the last sentence be deleted.

Mr Hill-Lewis corrected him, stating that it was the middle sentence: “The Committee recommends that NT presents a more realistic plan with a longer time frame, as moving too quickly to cut expenditure relating to key programmes will further negatively impact upon the economy, and cause more hardship and loss of jobs” that should be cut out.

Co-Chairperson Maswanganyi  asked for the rationale for that proposal.

Mr Hill-Lewis stated that he had discussed the rationale earlier but he would repeat it. The Finance Minister and Cabinet had made a commitment that they would achieve financial balance by 2023/24, which was three financial years away so he did not think that the Committee should give an easy escape clause. Parliament should hold them to it.

Ms Abraham suggested that the report should say that National Treasury should present a more realistic plan with a more realistic timeframe. That would be giving them a platform to build their commitment on. The legislature was not there to say that they should lie and say that it would be done within an unrealistic timeframe. National Treasury knew that it could not be done in the timeframe so the Department should bring realistic timeframes. The Committee Members were not passive “oversighters” and it would be wrong to accept an unrealistic timeframe. The Department should be given an opportunity to correct it. The Committee should not try to catch government out.

Mr F Shivambu (EFF) observed that the ANC as a study group had adopted the report and the Chairperson wanted the other Members to rubberstamp it. Even if the report had said something progressive, National Treasury would just ignore it and would continue with its framework. The EFF had made a written submission that the EFF rejected the entire report with contempt. The EFF did not agree with National Treasury nor with the ANC study group. The party simply did not agree with the way in which the process was being handled. The process was a waste of time.

Mr Wessels agreed with Mr Hill-Lewis’s suggestion and disagreed with the Member who had just spoken. National Treasury had given the timeframe and the country could not afford to go beyond the suggested timeframe. It was not the place of the Committee to say that it was an unrealistic timeframe. It was a difficult timeframe but there should be fiscal discipline to save the economy and he supported the proposal that the sentence be removed.

Ms Abrahams said that she was grateful for Mr Shivambu’s openness and honesty but the DA seemed to be walking with ANC but she knew the party would drop the ANC in the end. In the process of making observations and recommending, the DA Member had just admitted that the timeframe was unrealistic so why should the Committee leave it when it had oversight over the Department. It would have a negative impact on the economy. It had nothing to do with the study group having discussed it but it had to do with how it affected the people as the poorest of the poor would be affected. She suggested that the Committee leave the sentence and see what National Treasury came up with.

Mr G Skosana (ANC) agreed with Ms Abrahams. The statement had arisen because of past experience, but it did not stop National Treasury from achieving the earlier timeframe. If they achieved it earlier, it would be a bonus but it helped to put a realistic timeframe otherwise they would fail and the Committee would blame them.

Co-Chairperson Maswanganyi asked the content advisors to find a position that reconciled the views of the Committee.

Mr Hill-Lewis declared that Mr Skosana made a good suggestion to which he was amenable. He suggested that the report should state that the Committee welcomed the commitment, although it was concerned about the timeframes but if National Treasury achieved the balance within that timeframe, that would be a bonus. He could live with that. The Committee should welcome the commitment and not give Cabinet and Treasury a free “get out of jail” card.

Co-Chairperson Maswanganyi  agreed to that formulation of the paragraph.

6.13 Dr George stated that the item was one on which the positions of the parties were far apart. He referred to the last sentence about a State Bank. The DA would not support another state-owned enterprise (SOE) as they were bottomless pits into which the public’s money was thrown. The Minister could give a report but he wanted to state his party’s position very clearly, i.e. that it could not support another SoE and certainly not a State bank.

Mr Hill-Lewis was covered by Dr George’s input.

Co-Chairperson Maswanganyi  stated that the matter had come from the Minister of Finance and it was a responsibility that he had delegated to the Deputy Minister. The Committee would have to ask the Minister and the Deputy Minister when they attended a Committee meeting. He noted the rejection by the DA of a State Bank.

The Deputy Minister of Finance, Dr David Masondo, indicated that he was in the meeting and had noted what had been said about the State Bank.

The Committee engaged in some banter about conferring a doctorate on Co-Chairperson Carrim.

Co-Chairperson Carrim said that all agreed that the reference to the State Bank should be a separate paragraph from 6.13.

Co-Chairperson Maswanganyi asked for confirmation that the reference remained part of the report.

Co-Chairperson Carrim agreed.  All the point asked for was a report. Everyone knew that it was ANC policy to set up a state bank, even the peasants in Outer Mongolia. The EFF supported the ANC on setting up a state bank. What was wrong with a briefing? A state bank was the position of the ANC and it would happen as it was a policy of the majority party that had won 58% of the vote.

Co-Chairperson Maswanganyi  asked if Co-Chairperson Carrim had a tactical alliance with the EFF.

Co-Chairperson Carrim denied that he held such a position but understood that the EFF position was to look into the African Bank, which should be considered by the Committee.

Co-Chairperson Maswanganyi  commented that Mr Shivambu had an alliance partner.

Mr Shivambu did not respond as he had left the meeting.

Deputy Minister Masondo stated that the summary guidance was useful and he concurred with it. The President as well as the Minister had made it clear that government would be establishing a state bank and the Minister would brief the Committee on the progress in respect of the matter.

6.14 Mr Ryder stated that there was an error in the third Line: it should be “uncharted” not “unchartered” territory. It was a linguistic amendment of a frequently misused word.

6.19 Mr S du Toit (FF+ North West) suggested that the word “welcome” be changed to “note” in the sentence: “The Committee welcomes the allocation of R3 billion for the Land Bank’s recapitalisation after it defaulted on its debt obligations.” There were losses in the Land Bank because the Bank had bad management that had borrowed money at a higher rate than it had lent the money. The Committee could not welcome the allocation because it was a result of poor administration, which could not be welcomed.

Mr Hill-Lewis agreed that the Committee should never welcome a bail-out because it was always a result of bad management, bad administration or corruption. The Committee should reflect its concern about the administration of the Land Bank.

1:07 Mr W Aucamp (DA Northern Cape) referred to the sentence: “The Land Bank is a strategic entity that should not be allowed to fail…”  He suggested that it be amended to say, “fail again” because it had already failed before. He noted that that was what happened when government ran a bank. The ANC wanted a state bank but Members had seen what had happened to both the African Bank and the Land Bank. That provided a good roadmap of where a state bank would lead to in the future – failure. That was just an aside but he thought that it was important to put in the fact that it had failed and that the bail-out was a result of a failure that had already occurred.

Ms Mahlangu differed with the speakers on 6.19 because everyone understood the role and the importance of the Land Bank because of the Covid-19 situation and because of the role that the agriculture sector was going to play. She appealed for credit to be given where credit was due. Where government failed, Members should be very hard on government but they should welcome it when government helped the citizens. She agreed with Mr Hill-Lewis that the Committee had been hard on National Treasury regarding the issue of bail-out, but the Land Bank was different because the intervention would help. The Committee had to make sure that the bail-out would benefit the relevant people.

Co-Chairperson Maswanganyi noted the debate.

Co-Chairperson Carrim said that firstly, he agreed with Ms Mahlangu and the ANC had said repeatedly that it did not support SOEs behaving badly and it had made that statement repeatedly, and that was something that the Opposition parties had to take into account. The Committees had to welcome the bail-out because the Land Bank was a strategic asset so one could not say “notes” but he suggested adding the point that Ms Mahlangu had proposed: “noting the Land Bank’s challenges over the past few years, the Committee committed itself to rigorous oversight and required the Land Bank to report to the Committee at least twice a year and that National Treasury should exercise stringent control over the Land Bank”. The Committees did not want to find themselves faced with another R3 billion bail-out in a few years’ time but oversight could not mean that the Committee folded its hands and criticised. The Committees had to be active in oversight. He suggested that the Committees met with the Land Bank reasonably soon, noting that the Committee had already attempted to meet with the Land Bank.

Mr Njadu aligned himself with Ms Mahlangu and Mr Carrim because the Land Bank was an important asset.

Mr Aucamp commented that the old saying about insanity was “doing the same thing over and over again but expecting a different result”. If there was  no oversight, the Land Bank would be back asking for R10 billion the next time. However, it was not just about the amount given, management changes needed to take place in the Land Bank. The Land Bank might be strategic but if no changes took place, then it would be strategic in throwing the country back into fiscal problems. There had to be performance agreements and targets that had to be met or the Committee would have to answer why one hell of a lot of money had been wasted.

Co-Chairperson Maswanganyi noted Mr Aucamp’s point and stated that he believed that all Members in the Committee required a report on the challenges and problems in the Land Bank and the sooner that meeting took place, the better.

Mr Aucamp added that the money should follow the report and the Bank’s accountability and not the other way around.

Co-Chairperson Maswanganyi  requested the Committee Secretary to arrange a meeting with the Land Bank as soon as possible as it was a serious matter.

Mr Skosana stated that “welcomed” did not mean that the Committee was condoning the wrong things that had happened at the Land Bank but was welcoming the assistance offered to the Land Bank, but he added that the processes raised by Mr Carrim were important. The word “welcome” should not change.

Co-Chairperson Maswanganyi noted that Committee had agreed that the plan for SOE reform had to be submitted so that the Committee had a comprehensive plan of how the SOEs were going to be reformed, but the Committee also required a specific reform plan for each SoE, and the Land Bank would be one of those SoEs. National Treasury would provide information but, nevertheless, an urgent meeting with the Land Bank had to be arranged.

6.20 Mr Hill-Lewis stated that the issue was very important to him: the R200 billion government guarantee loan scheme was probably the most important part of the R500 billion package to businesses. It was hugely crucial in helping businesses to survive the crisis. However, as said in the report, it was being rolled out very slowly. The Minister of Finance had stated in his speech that there would be some redesigns to that scheme to make it work quicker and better. However, his speech had been two weeks earlier and the Committee still had no information on what those redesigns were.

He suggested that a sentence be added stating that the Committee urgently awaited details and progress on the redesigned scheme to make it work more efficiently and faster, as the Minister had committed in his speech.

Co-Chairperson Maswanganyi  agreed as he believed that there would be no objection to such an inclusion. He explained that state involvement was important.

Mr Hill-Lewis responded that the money was being distributed by banks while the state guaranteed the money so that was the appropriate balance between the state and the private sector.

6.24 Ms Abrahams suggested that the paragraph was too open and timeframes were needed. “… interest rate spreads remain high and commercial banks could consider cutting them in view of the unprecedented crisis confronting the country.”  National Treasury should work on it so that it did not just remain a statement. The report should provide timeframes so that National Treasury could work on it and report back to the Committee.

Mr Ryder said that the paragraph, as it stood, was not justifiable but he was not going to comment on it. Margin squeeze for commercial banks was already at its worst, especially in the low interest sector, partially due to the returns on money, but further reducing the margin through reduction of the interest rate spread would hurt the viability of the banking sector. It was the viability of the banking sector that had got the economy through the last financial crisis and if the banking sector was over-regulated, it could get ugly. He did not entirely agree with the paragraph but he certainly did not want anything added.

Co-Chairperson Maswanganyi  asked Mr Ryder how the USA managed to have a lower interest rate.

Mr Ryder replied that it was a matter of volumes in the USA. The United States had six and a half times the population of South Africa.

Co-Chairperson Maswanganyi  would ask National Treasury to brief the Committee on interest rates because the issue of the Reserve Bank was raised in 6.23 and the Reserve Bank was concerned with interest rates. The Committee was meeting with the Reserve Bank and the issues should be raised with the representatives from the Bank.

The Committee Secretary confirmed that the meeting with the Reserve Bank and National Treasury would take place the following Tuesday.

6.25 Ms Abrahams stated that the paragraph was well-written.

Co-Chairperson Maswanganyi requested that the Secretary arrange with the Minister of Finance to brief the Committee on the implications and terms of any loan from the IMF and World Bank.

6.26 Mr Hill-Lewis did not support any change to the Public Investment Corporation (PIC) mandate as the PIC was an asset manager for the benefit of public sector pensioners and should only have one mandate and that was to invest and grow its money for the people that it served who were civil servants saving for retirement and those in retirement. If the PIC investments did not perform well and it could not pay pensions, the state and the public would have to pick up the slack because those pensions were guaranteed. He requested that the paragraph be removed.

Dr George supported the input of Mr Hill-Lewis.

Ms Abrahams asked for the motivation for removing the paragraph. The Committee should respect the integrity of the drafters of the report because some of the recommendations were a result of the Members’ own discussions. She did not understand why the paragraph should be removed. At the end, Mr Hill-Lewis had just dropped the bomb that the paragraph should be removed. His statement on the paragraph had not led her to that conclusion.

Co-Chairperson Maswanganyi explained that the concern was about protecting the pensions and the mandate of the PIC should not be added to.

Mr Hill-Lewis explained that the PIC had a simple mandate and it was simply growing money for the retirement of the millions of civil servants who were currently saving for their retirement and it should be protected. If the PIC failed, the public and the state would have to pay the pensions as the pensions were guaranteed. He did not think that would be right either. That was why he had motivated for the removal of 6.26.

Co-Chairperson Maswanganyi asked if Ms Abrahams understood the point made by Mr Hill-Lewis.

Mr Skosana did not agree with Mr Hill-Lewis. He thought that those same workers wanted to retire in nice homes with running water, with sewers, and infrastructure. All those things required money so government should be allowed to use the money for infrastructure development in order that those same workers could retire in nice homes, etc. There was nothing wrong with the paragraph. He said that government was responsible  and if anything went wrong with the funds, government would take responsibility. The paragraph should stay.

Co-Chairperson Maswanganyi said that, if Members recalled, the President had gone into details about how money could be unlocked from prescribed assets and that was long before Covid -19, so it was not the first time that prescribed assets were being looked at. Members had not been vehemently opposed to the idea at the time. The Committee would have to discuss the matter with National Treasury as some of those entities reported to National Treasury.

6.27 Dr George said that instead of asking pension funds to assist during the crisis, he would rather that investors be permitted to leverage the assets that they had in their pension funds. Currently housing loans could be guaranteed by one’s pension fund, so why not allow citizens to obtain a loan against the retirement fund assets to assist a person right now? The Committee should ask National Treasury to assist in determining how individuals could leverage their own money instead of taking away the money.

Dr George proposed that the Committee include a note that National Treasury should look at how pension assets could be leveraged, especially during the Covid-19 pandemic, instead of focusing on how government could get its hands on the public’s pension funds. Members of pension funds should be able to leverage loans beyond just the housing loans. It was a good financial tool as the money was not withdrawn but could work for the members of pension funds. He had raised the issue with National Treasury before to no avail. The report should direct National Treasury to look into it. That would help the public because there was real hardship out there. He was not asking that it be implemented but was asking that National Treasury look at it as it was possible and could be done.

Co-Chairperson Maswanganyi said that National Treasury was listening to the debate and so the Department could attend to it. He asked the Committee Secretary to note the point raised by Dr George in 6.27.

6.30 Co-Chairperson Maswanganyi noted that the Minister had not yet briefed the Committee on the Mpati Commission. The Minister had not been ready with the information when asked to present previously. He requested the Secretary to ensure that the Minister briefed the Committee on the Mpati Commission.

6.32 Mr Ryder stated that the paragraph was poorly written. “The Committee requires to be briefed on why this is being proposed, what the implications of “zero-based budgeting” are and how is it being proposed that it be done.” He requested that zero-based budgeting should be moved to the beginning of the sentence and that it be reconstructed from that point.

Co-Chairperson Maswanganyi  agreed. He asked the Secretary to make it clear in the report what the Committee wanted National Treasury to do in respect of zero-based budgeting.

Ms Abrahams agreed with the Member’s observation.

6.33 Ms Abrahams expressed her concern about the language in the paragraph: “…in view of the hunger stalking the country”. She was not English as so was not sure. If it was correct, then it was fine.

Co-Chairperson Carrim stated that the language was correct but could be reworded if Members so chose.

Co-Chairperson Maswanganyi agreed that the language was in order.

6.39 Co-Chairperson Maswanganyi informed the Committee that the paragraph expressed its appreciation for the excellent work performed by the outgoing AG, Mr Kimi Makwetu. He noted that the Auditor-General’s post had been advertised.

6.40 Dr George agreed  that there should be as much participation as possible in the Committee but said that the Committee should not be fixated about what a person looked like when that person appeared before the Committee. He agreed that the Committee wanted diverse opinions and that was something that the Committee could address but he did not believe that it mattered what the person’s race or gender was. The person was coming to put a position to Parliament and Parliament was representative of all people. He felt uncomfortable commenting on the physical appearance of people giving input - “more demographically representative representations required in Parliament”.

Co-Chairperson Maswanganyi stated that Parliament had a public participation model, published some time back, that the Committee could look at that. As public representatives, they encouraged as many members of the public and stakeholders of various organisations as possible to present to Parliament. The report should stick to that model. He pointed out that it was just a matter of noting in regard to the previous experience. The intention was to encourage participation in the budget.

Mr Hill-Lewis agreed with the point made but objected to the idea that only a certain demographic could represent poor people in Parliament. That was not a value that his party could support. He supported the Co-Chairperson’s amendment.

Co-Chairperson Maswanganyi indicated that the Committee had come to an end of the observations and recommendations.

In summing up, Co-Chairperson Carrim stated that there was a need to reflect accurately on the amendments as the two Chairpersons were responsible for making the changes. Some of the changes were not clear. He was not sure what was being proposed. The important issue was 6.3. It was a long paragraph. it had to go under observations because the President had not addressed the Committee. People were drawing distinction between the President’s position versus government’s statements. The Committee was asking to what extent the budget adequately reflected a more stable growth path. The ANC, and maybe one other party, agreed on that path but he thought that they should be careful about that one.

Co-Chairperson Carrim suggested that the Chairpersons should settle the changes outside of the meeting. There were no new policy statements as most were literally quotes that the team had sourced. He suggested that some things should not be inserted into the recommendations but added as observations by the DA in the minority opinion. Paragraph 6.3 could be broken up but not removed as it would impact on other recommendations. He added that the report had to be in the ATC by 15:00 or it could not be voted on the following day.

Co-Chairperson Maswanganyi stated that all inputs accepted during the meeting had been captured by the secretariat. Some inputs from the Opposition had been included.

Adoption of the Committee Report on 2020 Revised Fiscal Framework

Co-Chairperson Maswanganyi  noted that he had received an email from Mr Hill-Lewis stating that the DA objected to the report but added that the issues raised by the Opposition would be captured in a minority opinion. He had also received an email from the EFF rejecting the Report.

Resolution: Standing Committee

The adoption of the Committee Report on 2020 Revised Fiscal Framework was put to the Standing Committee on Finance:

Mr Wessels requested that the objection of the FF+ be noted.

Ms M Mabiletsa (ANC) proposed the adoption of the Committee Report. The proposal was seconded by Ms Abrahams.

The DA objected. The Eff objected. The FF+ objected.

The Committee Secretary confirmed that there were sufficient ANC members to carry the vote.

Co-Chairperson Maswanganyi announced that the Committee Report on 2020 Revised Fiscal Framework was adopted by the Standing Committee on Finance with a minority opinion.

Resolution: Select Committee

The adoption of the Committee Report on 2020 Revised Fiscal Framework was put to the Select Committee on Finance:

Mr Njadu proposed the adoption of the Committee Report. The proposal was seconded by Ms Mahlangu.

Objections were raised by the DA, the EFF and the FF+.

The Committee Secretary stated that the Committee had a quorum as there were eight Members present: four ANC Members and four Opposition Members. The ANC did not have a majority to carry the vote. He also explained that Mr Mkiva was not on the platform as he had connection problems.

Co-Chairperson Carrim asked if Mr Mkiva could send an email. He had been online at 10:06 but after speaking at 10:08 he had been offline and the technician had been attempting to get him back online as he was aware that he had to vote. He asked the legal advisor what one did in such a situation.

Adv Jenkin, Senior Parliamentary Legal Advisor, said that, in order for a person to vote, the person had to be engaged in the discussion. He had to be present and know what was happening.

Co-Chairperson Carrim stated that he would phone Mr Mkiva and record him voting on his phone. He suggested that the Standing Committee went ahead with the briefing by National Treasury while he sought a solution.

Mr Ryder said that he might be an impediment but the rules of Parliament for online meetings put out by the Chair of Chair clearly stated that one had to be logged on to the virtual platform in order to vote. Mr Mkiva had to go somewhere to log on. His vote could be accepted then. If not, it could become a problem later. Maybe he had to drive to a cell phone tower. If he were allowed to ignore the rules, it could be precedent-setting.

Co-Chairperson Carrim stated that he did not know what the Parliamentary Rules said but what Adv Jenkin had to say was what went. People could go ahead and challenge the procedure in court if they wished. Mr Mkiva had been in the meeting an hour earlier and he had been cut off. He requested that the Whip, Mr Njadu, attempt to reach Mr Mkiva. He would try and re-connect Mr Mkiva, otherwise the Committee would re-convene later in the afternoon and he could vote. The vote could be deferred because it was four in favour of the resolution and four against. The vote had been deferred before.

After a few minutes, Mr Njadu stated that Mr Mkiva was online and on speaker phone.

Mr Mkiva stated that he was voting in favour of the ANC’s position of adopting the report.

Voting on the adoption of the report by the Select Committee on Finance:

5 in favour

4 against.

Adv Jenkins noted that all rules in respect of the voting process had been followed.

Co-Chairperson Carrim  announced that the Committee Report on 2020 Revised Fiscal Framework was adopted by the Select Committee on Finance with a minority opinion.

Mr Aucamp stated that Mr Mkiva was not connected on the virtual platform.

Co-Chairperson Carrim asked Mr Njadu if Mr Mkiva was connected on the platform.

Mr Njadu stated that Mr Mkiva was on the platform.

Mr Mkiva explained how he had been on the platform but had been cut off and had been struggling to get back on.

Mr Aucamp disagreed. He explained that the names of all the participants on the MS Team virtual platform were indicated on the screen and Mr Mkiva was not there. He was on a cell phone and not on the platform.

Co-Chairperson Carrim asked if Mr Mkiva was registered on the MS Team platform.

Mr Mkiva said that he was connected.

Co-Chairperson Carrim said that people had to be understanding and not be unreasonable. The person was in a very remote rural location. SA was not Germany in a developing country. The vote had to be clarified because the Budget Vote had to be put to the House and passed the following day and he did not want anyone standing up and objecting.

Adv Jenkins stated that he had looked at the NCOP Rules on the matter which had been issued on 20 April 2020. He had put a copy on the meeting chat. Those rules stated that any form of technology could be used to conduct the meetings. He did not see a problem as Mr Mkiva had previously been on the platform and when the vote was taken, enough hands were raised for the matter to pass. It was unprecedented but he accepted that it was part of the meeting. Adv Jenkins offered to follow up with his colleagues.

Co-Chairperson Carrim stated that he was satisfied.

Mr Aucamp said that he did not have a problem and he recognised Mr Mkiva’s voice but he wanted clarity on the rules for future meetings.

Co-Chairperson Carrim explained to Mr Aucamp  that he had previously engaged in a meeting on FaceBook via his cell phone even though he was not on Facebook and had connected via someone else’s FaceBook page. He also knew of someone who had participated in an international parliamentary discussion via cell phone, although there was no vote on that occasion. It was therefore acceptable that Mr Kiva vote via cell phone.

Briefing by National Treasury on the Updated National Treasury Strategic Plan 2020-2025 and Annual Performance Plan 2020/21

Deputy Minister of Finance Dr David Masondo suggested that the DG should lead the presentation.

Mr Dondo Mogajane, Director General, apologised to the Joint Committee for what he had said in the previous meeting. What he had wanted to say had not come out very clearly and he assured Members that he believed in Parliament as a cornerstone of democracy. He apologised as he had not intended to dictate to Parliament and believed that open debate should be held. He suggested that when people engaged, they should be fact-based.

Co-Chairperson Maswanganyi told the DG not to motivate his apology. He should apologise unreservedly or unconditionally.

DG apologised unreservedly to the Committee.

Co-Chairperson Carrim declared the DG had done the right thing. He had responded that day, not as an individual, but as a Committee Member. DG and all the officials were free to be robust in discussions in a public hearing as the Committee was often robust with DGs and their departments. That was not the issue. The issue was the value of civil society and its input, no matter what one might think of the representations made by members of civil society. Without the public hearings, Parliament was dead. That was what everyone had fought for, including Members of the Committee. Parliament would not be used by either National Treasury or civil society.

However, he confessed that it was not the way he understood the DG and it was not a reflection of his attitude to Parliament. He had not intended to come out in such a way that there was a fight between he and the DG, or for it to become so viral. It was not personal and he was acting simply as required of the Chairperson of a Committee.

Laura Mseme, Chief Director: Strategic Planning, Monitoring and Evaluation, at National Treasury presented the adjustments to National Treasury’s appropriation and the amendments to National Treasury’s Strategic Plan (SP) 2020-2025 and Annual Performance Plan (APP) 2020/21. The presentation would show the inclusion of Covid-19 interventions and the amendments to indicators and targets where they had been impacted on by Covid-19 prioritisation and the shut-down.

Ms Mseme explained that certain projects had been re-scheduled, savings had been realised and there were consultancy services savings. The principle allocation had gone to the Land Bank. Programmes 1 and 2 had savings as a result of there being no expenses in respect of travel and accommodation during the lockdown. Municipal projects had been rescheduled partially as a result of Covid-19. There had been capital expenditure savings as no work had occurred during lockdown

National Treasury had reviewed the tabled Strategic Plan 2020/25 and had made changes in respect of the economic growth graph and the debt duty. The were no other amendments to SP 2020/25. Treasury had made adjustments to the situational analysis graph and the growth outlook. A list of Bills already tabled/passed or to be tabled in 2020/21 was provided to the Committee.

National Treasury had made four amendments to the indicators in the APP 2020/21. There had been a reduction in the spend on training and development due to lockdown. In some cases, targets had been rescheduled from the first and second quarters to quarter four.

Ms Abrahams briefly took over the position of Co-Chairperson from Co-Chairperson Maswanganyi.

Ms Mseme indicated that she had completed the presentation and National Treasury was open for questions and comments.

The Acting Co-Chairperson invited discussion from Members.

Discussion

Mr Skosana welcomed the Strategic Plan of National Treasury. The President had spoken about the State Bank but the plan was silent on that. How far was Treasury in relation to that? If Treasury were to pursue the idea of a State Bank in the near future, when would the Members see the plans?

Ms Mseme replied that, on the matter of the State Bank, National Treasury had indicated to the Committees during the original presentation of the SP and APP that there was a process for taking up the State Bank into the work of National Treasury. Initially, the matter of the State Bank had been located in the ministry where work was undertaken to define the work plan and the work process. Then it would be presented to Cabinet before being brought back into the workflow of Treasury. As previously agreed with the Committee, National Treasury would be reporting on the progress of the State Bank until it went into the APP, i.e.  the 2021/22 APP. The approval by Cabinet would be too late for the State Bank to be included in the APP presented for 2020/21. Treasury would provide an auxiliary report to the Committee when it made its quarterly report.

The DG added that the technical team had completed the work on the state bank and a preliminary report had been drafted. It presented the options for establishing a state bank, looking at similar institutions. The next step was to go to Cabinet. The Department would get back to Parliament as soon as the Cabinet meeting had occurred. The Department would report at the time of the Quarterly Reports.

The Deputy Minister had left the meeting and was unavailable for final comments.

Closing remarks

Co-Chairperson Maswanganyi thanked Co-Chairperson Carrim, all Members and the DG and Chief Director of National Treasury.

The meeting was adjourned.