Second Special Appropriation Bill: public hearings

Standing Committee on Appropriations

17 September 2021
Chairperson: Mr S Buthelezi (ANC); Ms D Mahlangu (ANC, Mpumalanga)
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Meeting Summary


In this virtual public hearings joint meeting, the Standing and Select Committees on Appropriations were presented with a submission on the Second Special Appropriation Bill [B17-2021] from the Congress of South African Trade Unions (COSATU) which supported the Bill.

COSATU proposed a number of relief measures which included the extension of the Special Relief of Distress Grant beyond March 2022, food parcel distribution and relief measures for companies. It supported the allocations to the South African Special Risk Insurance Association (SASRIA) and the South African Social Security Agency (SASSA) but said the corruption and delays at the Post Office and obsolete IT systems needed to be addressed. COSATU supported the deployment of the South African National Defence Force (SANDF) to KZN and Gauteng. Concern was raised about the state of Defence bases and infrastructure. The allocation to the South African Police Service (SAPS) was welcomed. However, the failure of SAPS to respond timeously to the unrest in the two provinces needed to be looked into. The allocation to the Department of Trade, Industry and Competition (DTIC) was welcomed, as relief was needed for many companies to save jobs.

Members of the Committees raised concern about the impact of the unrest on informal traders and how they were being supported. Emphasis was given to the erosion of capacity and infrastructure in the SANDF and SAPS. Members asked about COSATU drive for pension reform; about the temporary employment created by the Assistant Teachers Programme; the long queues and delays at Post Offices for the SRD grant; companies introducing short-time due to the unrest impact; if other provinces were impacted by the unrest due to short supply of materials; and for COSATU' latest position on the wage bill offer. The proposed extension of the SRD grant was welcomed and it was suggested that trade-offs would need to happen to facilitate this. Clarity was requested about the impact of the SRD grant extension on South Africa's fiscus and debt and introducing the basic income grant through the ‘back door’ via the SRD grant.

Meeting report

Mr S Buthelezi (ANC) stated that he would be co-chairing the meeting with the Select Committee Chairperson as the two committees had decided to hold the public hearings together.

The Money Bills Amendment Procedure and Related Matters Act enjoined the two Committees to have public engagements when dealing with these bills. COSATU would be the only submission. The fact that there were not many people who wanted to appear before the Committees was likely because the public agreed with the Bill; however, submissions of support would have been appreciated.

The Second Special Appropriation Bill proposed to allocate R32.85 billion: R26.7 billion would go to Department of Social Development (DSD); R1.3 billion to DTIC; National Treasury would receive R3.9 billion, mainly for SASRIA; Defence would receive R700 million and Police R250 million.

COSATU submission on Second Special Appropriation Bill
Mr Mathew Parks, COSATU Deputy Parliamentary Coordinator, presented to the Committee.

KZN and Gauteng Disaster Relief Proposals
COSATU tabled at NEDLAC in the wake of the violence a proposed relief package. It was agreed to by government and supported by social partners. It included the following:
- Extend the UIF TERS for workers in companies affected by the violence;
- Reinstate Covid-19 SRD R350 Grant across SA;
- Food parcels for destitute in KZN and Gauteng
- Private and SASRIA insurance relief;
- Fiscal relief for the uninsured;
- Bank relief for affected consumers;
- Revamped Loan Guarantee Scheme;
- Tax relief for affected businesses;
- Additional funds for Presidential Employment Programme which employed 310 000 teaching assistants at the national minimum wage and provided them with skills and experience.
- This programme should be expanded to give other unemployed persons similar opportunities;
- Limited access for distressed workers to their pension funds.

Engagements are taking place between COSATU and Treasury on both immediate and longer term relief options. A Bill should be tabled with the Medium Term Budget Policy Statement (MTBPS) to provide for relief in 2022 and an additional Bill in 2022 for longer term relief as needed. COSATU was pleased that these proposals were largely agreed to by government and business and they are being rolled out to varying degrees.

COSATU supports the R3.9 billion allocation to ensure SASRIA can meet all claims.
COSATU proposal: Government should ensure that this allocation is sufficient to cover all legitimate claims. If needed, an additional allocation should be provided in the MTBPS.

COSATU welcomes the R26.2 billion allocation. The reinstatement of the R350 grant is a critical poverty alleviation intervention. However, its recipients will not miraculously find work when it ends on 1 April 2022.
- COSATU hopes that the R500 million allocated for SASSA administration will be used to modernise its systems, prevent corruption and ensure all payments are electronic.
- Recipients should not be forced to spend days in queues at the Post Office.
- Make the SRD grant permanent, extend it beyond March 2022 and increase it to the food poverty line of R624.
- Parliament should ensure SASSA does modernise its systems and payments are all electronic.

Department of Defence (DOD)
- COSATU supports the SANDF deployment. It played a critical role in restoring law and order;
- COSATU is concerned how the SANDF has been weakened over the past decade. Bases and material have deteriorated to alarming levels. Corruption and wasteful expenditure is widespread. Military personnel are undertrained due to shortage of funds.
- DOD is the largest offender in the state in the late payment of suppliers
- If these internal crises are not dealt with it will make future SANDF deployments impossible.
- Parliament needs to engage with Treasury and DOD to address SANDF systematic collapse.

- COSATU welcomes the role the SAPS played in restoring law and order. However, an investigation is needed on SAPS failure to respond timeously and proactively to the violence.
- SAPS has been significantly weakened during the state capture era.
- Despite the 2020 State of the Nation Address commitment to increase SAPS head count by 7 000 it has in fact decreased by 7 000.
- Parliament needs to engage Treasury and SAPS to address systematic de-capacitation of SAPS.

Department of Trade, Industry and Competition (DTIC)
- COSATU welcomes this additional allocation. It will provide badly needed relief for many companies affected by the violence and help to save jobs.
- COSATU is concerned and has raised repeatedly in its Budget submissions to Parliament on the need to halt budget cuts to DTIC industrial financing allocations. These cuts are threatening the survival of many companies and putting badly needed jobs in manufacturing etc at risk.
- Parliament needs to reverse these DTIC cuts in the MTBPS and the 2022/23 Budget.

Mr Z Mlenzana (ANC) asked for COSATU’s understanding of the conditions attached to the financial support to businesses. He asked what was happening with the informal traders and that COSATU provide clarity on the support to informal traders.

Mr D Ryder (DA, Gauteng) said that he was pretty sure informal traders did not pay union fees – therefore he was not sure that COSATU had a position on them. He agreed with most of the submission although there were some points that he did not agree with. He wanted to emphasise the points made about the erosion of capacity within both the SANDF and SAPS over the previous decade. The Committee would really need COSATU’s support and assistance in dealing with this going forward as there would likely be some changes that needed to happen. The fact that COSATU had highlighted this was welcomed.

Ms D Peters (ANC) thanked COSATU for its consistency in dealing with issues – especially pensions. She was concerned that COSATU did not seem to be actively involved in lobbying workers or publicly supporting the drive for pension reform. In her view, this was something very progressive, especially if one looked at the challenges most workers had with debt, specifically property related debt. People paid for a house over 20 years, at the end of the 20 years, those households landed up re-applying for a bond – they lived in debt. By the time it came to their pensions, people still did not own their property. There was a joke in the communities, that the beneficiaries of workers were not in support of it – but it was not about the beneficiaries. It was about the impact of debt on the worker and relieving them of the stress. She supported the COSATU initiatives and its engagements with National Treasury and the processes at NEDLAC. She was concerned that it did not seem as if workers were aware that this was a progressive intervention, especially in dealing with personal stress from debt.

Ms Peters noted that COSATU supported the assistant teachers programme – that was a good intervention. There were assistants in the Northern Cape who were not paid. She suggested that the Committee would likely sit again with challenge of people not being paid, despite having done the work, who would then demand to be made permanent. This issue was debated even when she was still in school – about having permanent school social workers, school sports, school teacher assistants. In private schools they had permanent teacher assistants. It was important that there was career pathing. In Magareng Local Municipality, the school principal had said that the assistant teacher had been asset. The teacher assistant had repaired all the school’s computers - the school now had operating computers. This meant that the school had identified a skill in somebody who was not even at the school for that reason. This category of workers was needed. She was worried that this was a challenge that needed to be addressed by the Committee, because it meant that the Department of Education needed to be supported.

The COSATU submission was well-researched, well-informed and addressed key issues. Mr Ryder could speak about the informal traders – those traders benefitted from the workers and communities through accessing resources. The Post Office queues for the R350 SRD grant that COSATU had raised was a serious concern. The Committee needed to engage with DSD and SASSA about the Post Office. The Post Office was needed but it needed to be an institution that served the people with dignity. The people could not be queuing for such a long time.

Mr X Qayiso (ANC) invited Mr Ryder to agree 100% with what was said by COSATU. The issue of caregivers needed to be addressed – as well as that of the assistant teachers. There were new opportunities that had arisen since the COVID-19 pandemic, such as the necessity to have assistant teachers. He agreed that there was an expectation about this temporary unemployment relief measure in progressing the education system. It had also created an expectation that people must be seen to be fully employed. There needed to be long-term planning on this. New opportunities had been created by the pandemic. At the same time – how would the Committee respond to unemployment, poverty and inequality. There were disputes that could not be resolved about what should happen. He asked COSATU to engage more broadly on this to assist the Committees on what should happen.

Mr Qayiso asked what COSATU proposed about SAPS capacity. DTIC played a critical role in building industry. He agreed with COSATU that industries needed to be built to support the economy. The Committee had learnt a lot from the previous DTIC presentation about a number of manufacturing companies that were playing the role of building local manufacturing sectors. These manufacturing companies were trying to ensure there was greater collaboration with the private sector in bolstering industries and getting them to invest and take part. He suggested the budget needed to be looked at holistically.

Given the unrest in Gauteng and KZN, did COSATU think there were other areas affected indirectly in supply provisioning? In Welkom in the Free State there were companies that had begun to do short-time due to the violence in Gauteng and KZN. He had not heard that mentioned in COSATU’s submission.

Mr E Njandu (ANC, Western Cape) appreciated COSATU’s support of the Bill, with the view that there would be an ‘economic turnaround’ in the medium to long-term. It was a valid point that DTIC needed to look at ways of getting more support in the future. He asked if COSATU could take the Committees’ into confidence about its latest position on the wage bill.

Mr Y Carrim (ANC, KZN) agreed that stakeholders in support of the Bill should make submissions to state that they agreed with the budget wholly or mostly. He was glad that this process had come through NEDLAC. It was not often that NEDLAC processed appropriation bills nor that there was consensus about the Bill before it reached Parliament. Hopefully it was a sign of what was to come. He suspected that given the give and take, NEDLAC was obliged to process it. It seemed as if all Members supported the extension of the SRD grant, despite the huge difficulties in the economic and financial situation of the country. He suggested that it would be far worse if this grant was not offered, precisely because of the economic and financial crisis. As was said in an earlier Committee meeting on the Bill, it was a trade-off. In the Committee Report to the House, the Committees would emphasise the need for the extension of the SRD grant.

Mr Carrim said that even in the middle of metros and urban areas, the Post Offices had incredibly long queues. This needed to be raised with the Communications Portfolio Committee. It was not as if there was an end in sight. Let the state deliver grants and let the Post Office be revitalised. It was the poor out there that were the victims of the inefficiencies of government, Parliament, the state and the Post Office, in particular. It was a trade-off. There were Post Offices closing down; people who used to work in the Post Office were despairing. It was an ongoing situation. He had been contacted by Post Office workers who he had engaged with 10 to 15 years before about labour problems. The workers sometimes did not get paid and the services were cut down. The Post Office workers also had to deal with how upset the public got with them over the limited and slow delivery. The Post Office was crucial and it should function properly. He suggested that perhaps a joint meeting should be scheduled with the Communications Committee.

Chairperson Buthelezi stated that it was clear that the objective of the Bill was to assist with the after effects of the July 2021 unrest and the impact of the COVID-19 pandemic. COSATU touched on the credit guarantee scheme, it was something that the Committee had previously discussed. It was critical that the economy should start to grow so more jobs could be created and more people could be taken out of the social grant environment to become productive in the economy. The fact that only about 10% of the credit guarantee scheme was disbursed had an impact on the economy and ultimately on job creation. This matter had been discussed at NEDLAC – did COSATU understand what the challenges and intended solutions were? He asked if COSATU had interacted with the Department of Labour at NEDLAC – what were the challenges people were experiencing? There were companies who claimed on behalf of their workers but that money never reached the workers – he did not hear COSATU condemning that and calling for those companies to face the might of the law. It was fraud – what was the problem?

He noted Members' comments about the long queues at Post Offices. Why were there long queues? SASSA had previously stated that they had a lot of intermediaries to disburse grants. What was the cause of the long queues which were becoming the status quo – despite using intermediaries? When grant payments were moved away from private companies to the Post Office, the main argument was to try and build capacity in the Post Office.

There was also the failure of departments to pay service providers on time. The impact of that was well-known. COSATU had proposed that the SRD grant should go beyond March 2022 and that it be increased to about R600. Had COSATU considered the implications of that on the fiscus? Had the calculations been done and what was COSATU’s argument?

COSATU response
Mr Mathew Parks stated that irrespective of party t-shirts everyone was basically saying the same thing. On financial support for companies, there were a few conditions – the idea was not to make too many conditions or make the conditions too burdensome. The objective was to keep the companies open. Those companies were currently on their knees and needed to be assisted to save jobs and regrow. Some of the basic conditions put in place to prevent corruption and fraud included the requirement to have police case reference numbers. If one had insurance, one had to provide a copy of the insurance claim. That was not a necessity in cases of informal traders or Small, Medium and Micro-Enterprises (SMMEs) who would not have insurance. There was a commitment to reopen. Inspections were being undertaken by the DTIC, the Industrial Development Incorporation and Department of Labour to check that these companies were impacted by the violence. There were concerns about delays in payments - the inspectors should not delay payments to companies. COSATU was worried about this but appreciated the need to prevent corruption, which was an ‘ever-present threat.’ Informal traders were not members of unions but both informal traders and SMMEs were largely uninsured, hence the need for fiscal relief from a national level. There were some municipalities that had provided some relief. Informal traders would be able to apply to SASSA for food parcels – approximately 700 000 food parcels were distributed in KZN and approximately 200 000 food parcels in Gauteng. There was also an effort being made to facilitate better relationships between informal traders and municipalities, which was in some cases very ‘toxic.’ There was a need to regularise and make it a more healthy relationship.

On the Defence Force and SAPS, COSATU appreciated that government had always needed to balance what was spent to grow the economy and help the poor. What was seen in the last few months was how weakened the Defence Force and SAPS had become – this had happened over some time. The Defence Force was really a ‘horror story’ in many ways. The conditions and quality had plummeted in the military bases and hospitals, which the Department of Public Works was meant to maintain. Many of the fences of these bases across the country had been completely removed. This had an impact on the psychological wellbeing of the Defence Force members. How should a high morale be maintained, if the Defence Force was living in squalid conditions? There were bases where the toilets did not work and personnel could not isolate from COVID-19. Personnel were sleeping in tents in the middle of winter. There were reports of air force pilots not receiving half of the annual number of flying hours they should receive. Yet, the Defence Force had a critical role to play in South Africa and on the continent. The Defence Force was being systematically collapsed. It would take time to rebuild.

He appreciated the comments by Ms Peters about the COSATU pension fund proposals. Those proposals were raised in May 2020 publicly. COSATU had engaged quite a bit with other unions which had tabled it. It was a difficult balancing act as COSATU also needed to manage workers’ expectations. When the former Minister of Finance Mr Tito Mboweni had made announcements just before leaving Cabinet a month ago, workers were phoning COSATU about when they could go and cash out their pensions. That needed to be managed. Legislative processes – and this required an amendment of two Acts – would not happen overnight. If lucky, it would happen by 2022. COSATU would need to announce publicly what they could do to assist – workers were in a very desperate situation. COSATU needed to maintain pressure on government and Treasury as well as manage workers' expectations that it would not happen the next day.

A positive meeting was held between Minister of Finance, Mr Enoch Godongwana, and COSATU about a week before about the pensions. There was an agreement that there would be a Bill with the MTBS in November 2021 for relief. This would come into effect in 2022 when the Bill was passed. In future a third of one’s pension would go to a savings pot, which could be accessed when in need. The other two thirds would go into a preservation pot, which would be preserved for retirement, which one could only access during emergencies, such as in cases where one lost one’s job. COSATU thought that having a one third savings pot could help to incentivise savings and grow it. That balance needed to be found, because workers were highly indebted, even public servants and they also needed to be assisted. Even if one was lucky enough to have a job, like a teacher, one might have a spouse who lost their job, or relatives who lost wages. People were supporting an extensive network of unemployed relatives. The pressure was even greater on them. COSATU thought that public servants needed to be included, even though they received wages. Public servants were highly indebted and needed to be assisted. It was critical that some sort of compromise be made. At the moment one could access one’s pension by simply resigning from one’s job and everything could be cashed out. This was the worst of two situations as one would be unemployed, struggle to find another job and deplete one’s pension fund. Only about 60 percent of workers could afford to retire – the right balance needed to be found.

COSATU had received positive feedback from the teachers’ unions on teaching assistants. There were instances in the Eastern Cape, where some had not been paid, and this was being sorted out. The report COSATU received was a positive one, as people were receiving practical skills and experience and building confidence through the programme. Some of them were already being employed in the Department. As it was hosted by the Department of Basic Education, there was a proper structure and it was less prone to corruption, in comparison to the Department of Public Works programmes. The fact that it was paid at the minimum wage level helped to avoid cheap labour distractions. COSATU thought that there was space to expand this. R11 billion had helped to create over 318 000 teaching assistant posts. COSATU hoped this could be tripled at a cost of R33 billion. This could help to create about 900 000 jobs. This could be expanded across other departments such as the Department of Health, SAPS, Home Affairs – the critical front-line service delivery departments as well as Environmental Affairs and Water and Sanitation. It was a worthwhile investment compared to ‘the cost of violence.’

Mr Parks replied to the concerns raised about the Post Office, saying it was a ‘horror story.’ Personnel were not getting paid and Post Offices were closing left, right and centre. It was clear that the Post Office was dying and a new model was needed. He was sure that none of the Members had posted a letter in the last year, or even years. That model was dead. He suggested the new model for the Post Office could be to link it to the Postbank. It could become a bank that serviced pensioners, people in rural areas and the poor. There needed to be a very close partnership with the Postbank. It could also be a multi-purpose government centre where people could apply for social grants, identity documents, register with the South African Revenue Service (SARS) and Unemployment Insurance Fund (UIF). It could have a role in rural areas and townships, where banks did not exist – one would not find an Automated Teller Machine (ATM) in an informal area or in most villages in rural areas. SASSA needed to get its act together.

Mr Parks stated that Mr Qayiso had raised a fundamental question about how the economy should be grown, all of these measures were temporary measures to stabilise the ship. One thing that needed to happen was re-capacitating the state and dealing with the holes – the corruption and wasteful expenditure – that was bleeding the state on so many fronts. It was about getting the State-Owned Enterprises (SOEs) back on their feet. COSATU hoped that the Presidential SOE Council would provide some clear turnaround plans soon. COSATU was pleased to be part of this. It was about getting Eskom back on its feet; there were some ‘green shoots’ in Eskom recently in dealing with corruption and maintenance. Transnet Freight Rail needed to be fixed as well as the Transnet National Ports Authority. If those were not fixed, the country could not export mining, agricultural and manufacturing goods. Passenger Rail Agency of South Africa (PRASA) needed to be fixed to get workers to work on time. On the SARS front there was some good progress in starting to tackle some of the tax evasion. Much more needed to be done to capacitate the country to deal with customs evasion. Other issues were about the different components of the Economic Reconstruction and Recovery Plan – about local procurement from state to big companies, consumers and so on. There was some work taking place to get the construction industry to champion locally produced cement, so that it was not imported from Vietnam. Local production needed to be championed on all fronts, such as locally produced cars and t-shirts. Amending Regulation 28 of the Pension Funds Act to allow pension funds to invest in infrastructure opportunities would be beneficial.

The skills development regime was not producing the skills workers needed. The reduction of SAPS personnel needed to be stopped – there had been a 7 000 personnel decline and possibly 15 000 personnel in the near future. SAPS had a heavily bloated management structure. About 56 000 SAPS members were deployed to provincial head offices and 120 000 SAPS members deployed to desk jobs. That needed to be reversed so they were deployed to community policing and stations. There was a need to overhaul training – the levels of training were very poor. There was a need to deal with corruption and pay. Police officers earned the least in the public service, that was a huge problem. There was a problem with crime intelligence – there was no head of crime intelligence. The previous head, General Peter Jacobs, was doing a good job to begin to clean up but there was a constant internal struggle within crime intelligence partly linked to corruption that needed to be addressed. SAPS could only do so much. The challenge was also about reducing the 44% unemployment rate and poverty levels. The National Prosecuting Authority (NPA) needed to be re-capacitated. COSATU welcomed the efforts made to clean up corruption by implementing the ‘step-aside rule.’ It was symbolic, but it was an important effort made by government and the African National Congress (ANC) to begin to cleanse corruption.

The Department of Trade and Industry had a very small budget in the bigger scheme of things although its impact was quite significant. It was important to support DTIC through industrial financing. There were positive reports from the clothing factories about the good impact it was having there. There was some work taking place on the 15 industrial sector master plans, some were making good progress and there were agreements between business, labour and government on the poultry, sugar, textiles and agricultural master plans. There were some ‘green shoots’ there, for example local retailers had agreed to increase their local procurement of clothing from 40 to 60% in the next three years. That would create jobs. Some had not got off the drawing board – such as the health, construction and mining master plans which were key growth opportunities. There was some good work being done to protect local industries. More needed to be invested to ensure competitiveness as tariffs were not a long-term solution.

On other provinces being affected by the violence, Mr Parks said that this had been seen in the clothing industry particularly. Some Free State factories had been affected by delays in supplies from KZN, as some supplies had been destroyed. Engagements were taking place to assist through the KZN violence relief. There were existing UIF measures under the reduced-time package, where companies that were experiencing distress could apply for reduced time relief. UIF assisted with paying workers’ salaries and a financial turnaround strategy needed to be submitted by the company to UIF.

The Bill would have a positive impact on the unemployed – that was why COSATU supported it. A sensitive issue was raised on the wage bill. The 2020 wage bill was before the Constitutional Court and arguments were heard in August 2021. He was not sure when the court judgement would be given. He expected it in the near future. The 2021 Wage Offer was signed. The majority of unions, about 61% of union membership signed it, including COSATU and the Federation of Unions of South Africa (FEDUSA). Some unions did not agree to it, that happened. It had come into effect and had been rolled out. The only one that was delayed was the police service, that was being paid today. COSATU had said to the ANC in Parliament that collective bargaining needed to be raised – to find one another in a win-win way as government and workers. He noted that the municipal wage increment had been signed the day before. That was positive, it was a three-year wage increment that addressed all parties' concerns – both workers and government.

COSATU was pleased that consensus was quickly found on the Disaster Relief proposals at NEDLAC with government. This was tabled at NEDLAC. Before the meeting had ended agreement had already been reached with Treasury. Treasury was very responsive to it. It helped that everyone tried to be pragmatic to find common sense solutions, that government could afford and could have a positive impact. It was important when a crisis took place that everyone worked together, they could ‘fight each other on other days.’

COSATU thought the SRD grant was affordable. The cost of the extension was about R26 billion and for a year it could be R50 billion. COSATU thought it was a lot of money but it was affordable in a budget of approximately R1.6 trillion. If one compared that to the July 2021 violence and its potential R150 billion cost – this was a much smaller price tag. Not that one needed to link this or be ‘blackmailed.’ The money was not lost. Easily 15% of that would be put back into Value Added Tax (VAT). It was money that would be spent in the economy, it was not money that was saved or stored. It had helped many unemployed people buy food, feed their families and pay for transport to find work – there were positive spin-offs.

On the COVID-19 Loan Guarantee Scheme, COSATU was disappointed that government and the banks had not moved with speed to resolve this in 2020. COSATU had had high hopes for it. It thought the conditions attached by the banks were too stringent. COSATU appreciated that many companies were fearful of taking on more debt. There were creative ways that this could have been addressed. Equity options could have been considered. That in exchange for saving jobs or creating jobs, part of the loan could be put into a grant or equity. This would come back to the state indirectly through the payment of tax. Lower interest rates needed to be provided. The Banking Association had stated that it was working on a new model, which it hoped to unveil soon. This would hopefully assist in finding the right balance. If one considered the United States and Europe, they were much more aggressive than South Africa and more radical in giving money out to save jobs. It was a worthwhile investment to spend R10 billion to save thousands of companies and jobs as opposed to dealing with the consequences of a 44% unemployment rate, companies closing and more people needing to be assisted through social grants.

In 2020 the UIF was the biggest source of stimulus into the economy, it paid over R53 billion to about 5.5 million workers. At the peak it was paying about R700 million every single day. The UIF managed to move ‘heaven and mountain’ to save workers. This year, the UIF had not paid anything since March 2021. The UIF had become paralysed by fear due to the audit findings. A lot of UIF staff had been found wanting by the Auditor General (AG), some were put on suspension for eight months. There was now a ‘perverse’ situation where the UIF was paralysed and refusing to move an inch. Each week the UIF issued a new bureaucratic requirement for companies applying for relief for their workers. For example the UIF requested certificates from the Department of Trade, Industry and Competition. COSATU met with UIF each week, and each week there was an additional delay. COSATU was hoping to meet with the Labour Minister, Director General and UIF Commissioner to see what could be done to resolve this. At this rate, R5.3 billion had been put away for the UIF for Lockdown Level 4 and 3 this year and the violence, none of it had been spent. This was a huge disadvantage. When the UIF stopped around March 2021, there were far higher retrenchment levels. The UIF was able to save jobs. If it was not fixed, the situation would worsen.

COSATU had tried to deal with the corruption, where employers sat on the money and did not pay it to the workers. What was meant to happen was for it to go straight to the workers’ bank accounts and only in exceptional circumstances, where worker did not have a bank account, would the money go to the employer. The employer would be required to provide the UIF with proof of payment to the worker. About R3.5 billion had been recovered where employers had not paid their workers or where there was fraud or corruption. There had been a significant decrease in UIF applications. There were about 8000 applications due to the July violence. For Lockdown Level 4, about 11 000 applications were made – that was a huge decrease. It was likely because employers were exhausted by the chaos in the UIF. The UIF had become its worst brand ambassador. That was having a huge impact on people willingly applying to it. This was a real shame as many companies, restaurants, clothing factories, the tourism industry and hospitality industry were desperate for it.

There was some profiteering by private companies as those companies failed to deliver the capacity that was promised to SASSA. The focus should be on enhancing state capacity through the Postbank or even to utilising the African Bank as a state bank, where government would be a majority stakeholder.

The UIF had been found wanting as it had assured COSATU in 2020 that the UIF systems were linked to the banks, SARS and other government systems – what was found was that this was not true. The systems were archaic and required significant overhauling.

The impact of the failure by government departments and entities to pay service providers was huge. COSATU met with Treasury to try and resolve this. Treasury was making progress on a macro level in national and provincial departments. More work needed to be done at a municipal and SOE level. There was a case where one department had not paid for three years – in the meantime the owner of that company had died. Those workers were long retrenched and never received the wages owed to them. This lack of timely payment destroyed companies that legitimately provided services.

Further questions
Chairperson Buthelezi noted that the COSATU submission argued for the extension of the SRD grant beyond March 2022 and that it should be raised above R600. Had COSATU considered the impact this would have on the fiscus, especially the debt levels of the country?

He agreed that soldiers should be living in conditions that were conducive for those who were defending the country. The Department of Public Works needed to do that work. He did not understand why the barracks should be maintained by civilians. Should the maintenance budget not be moved away from the Department of Public Works to the DOD as a start? It was an inherited system that had simply been run with. Likewise, there had always been complaints about the state of the parliamentary villages. If one considered wasteful and fruitless expenditure, it emanated from there. He requested COSATU’s opinion on that.

Mr Mlenzana asked if COSATU was gradually drawing them in to the formalisation of the unemployment grant. He suggested an unemployment grant should not be brought in through the back door, that is, the SRD grant.

COSATU response
Mr Parks replied about the maintenance budget saying that the logic of using Public Works was that as the state property manager it should effect cost savings. What was seen was that there was a lot of corruption for many years at all levels, from rentals to maintenance contracts. Many departments had suffered due to this. The Department of Home Affairs had partly developed the Border Management Authority to remove the role of Public Works, because it could not trust Public Works to provide quality facilities for IT support to the border posts. The condition of Home Affairs buildings and infrastructure had deteriorated because Public Works and the State Information Technology Agency (SITA) had not maintained them. He received a complaint from a police officer in Limpopo where a police station burnt down over a year ago and the officers were still sitting in burnt out facility with Public Works nowhere to be found. Even at schools there was no decent sanitation. This was applicable to the parliamentary villages as well as the money spent on them was disparate to the quality one saw. The contracts were huge – he suspected there was a significant amount of padding in those contracts and there was no quality in exchange. Perhaps critical departments should take over the mandate. There used to be a programme in the Defence Force that up-skilled outgoing personnel for the private sector – that could be a useful tool.

Mr Parks said that the fiscal constraints facing the state needed to be acknowledged. One could not afford an inflation rate of 1000% as found in some countries. The deficit trajectory needed to be considered as it was worrying. This had been slightly adjusted due to the size of the economy, but the debt remained. COSATU did not want to see government going to the International Monetary Fund (IMF) or World Bank. That would mean an austerity budget and would impact social services. There was sufficient space for the extension of the R350 SRD grant. It had been quite affordable; an amount of R50 billion was affordable in a R1.6 trillion budget. Some significant reprioritisation would need to take place to the state budgets. COSATU thought this was a stepping stone toward a basic income grant – an affordable one. Obviously, one could not have a grant of R7 500 – there was no money for it. If the grant could be phased to R624 that would be affordable. There was some breathing space on two fronts, the one was the commodity boom – which brought in some additional revenue to government. There was some good work being done by the new SARS Commissioner to tackle the holes in SARS that might ease some pressure on the state. The corruption and wasteful expenditure needed to be addressed. One could not afford 44% of the country sitting on no income at all. It was a ticking time bomb. Extending the R350 SRD grant began to link it to the food poverty line. It was a fair compromise.

Closing remarks
Chairperson Buthelezi stated that the arguments put forward were well-researched; this was appreciated. The R350 SRD grant would go back into the economy – it was an investment into the economy. The President announced that it had been made possible by the windfall from the performance of the mining sector – it did not affect negatively on the fiscal framework. There were positive multiplier effects that came from the injection of this money into the economy. The Special Second Appropriation Bill would help put money into the economy to produce those benefits.

The Select Committee Secretary said that the Select Committee would wait for the Standing Committee to finalise its adoption of the Bill and thereafter it would adopt it and the Select Committee report on the Bill. He would continue communicating with Members on this.

The Standing Committee Secretary said that he would draft the Committee Report over the weekend and it would be circulated to Members before the 21 September meeting where the Bill would be considered and adopted.

Mr Ryder noted a written submission had been sent but it had nothing to do with this Bill. He suggested the submission might be better placed in Rural Development and Land Reform. He suggested a reply be sent to the person explaining that the submission was received but was not relevant to these discussions.

Mr Buthelezi asked that the secretaries take note of that. It was a misplaced submission and had nothing to do with the Bill being discussed. He asked that the member of the public be directed to the right place.

Chairperson Buthelezi thanked his Co-Chairperson and the Members of both Committees, support staff, members of the public and media. He wished them all the best for the registration weekend.

Ms D Mahlangu (ANC, Mpumalanga), Select Committee Chairperson, stated that she was happy with the COSATU input and responses.

The meeting was adjourned.

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