The Standing Committee on Finance and Select Committee on Finance considered the Committee Report on the 2021 Revised Fiscal Framework.
Members of the Democratic Alliance (DA) agreed that there was a problem with power generation. Power outages continually interrupted the economy and therefore interrupted economic growth. There was a long-term energy crisis in South Africa that was not going to go away soon. It noted that the Committee needed to express the fact that this matter was very urgent. The DA welcomed the fact that private sector generation was going to potentially increase but that was not enough. There should be an immediate and urgent intervention which would include splitting up Eskom into three entities for generation, transmission and distribution. There should be an increase in the permitted private sector production. The DA also raised the issue of Public Sector wage bill as it was discussed in the report. The salaries of the frontline public servants were too low. Those salaries should be increased. It was the management section of the public sector that appeared to be bloated and overpaid. It was there that significant cuts were required. A member of the DA noted that were three items that came up in discussion that were fully captured. The first one was the fairly low allocations to the contingency fund that were planned in the medium term. The low contributions to the contingency fund were highlighted in the discussions and was not seen in the report. The second item was a need to restructure and re-evaluate Government spending. He had pointed out that there were two places in the MTBPS that specifically reaffirmed the zero-based budgeting approach and the fact that it was going to be piloted on the Department of Public Enterprises. That had not been included in the report. Then there was the issue about the cautioning around the contingent liabilities specifically relating to the SOEs and the need to ensure that those were contained. Those three issues had not been adequately expressed.
The Committees noted with concern the strained relationship between the Parliamentary Budget Office (PBO) and National Treasury. It seemed as if the relationship had become somewhat strained. This was unacceptable. The Committees resolved that a meeting should be arranged between the two entities but that it should not be included in the report. It was an operational matter that should be managed by the Chairpersons of both Committees. It was also stated that the FFC should be invited and included in that meeting. It was a Constitutional structure that also played a role in making recommendations on budgetary issues. The FFC reported to Parliament and made invaluable contributions.
After deliberations, the Committees considered the reports independently and both adopted them.
The Chairpersonwelcomed the members of the two Committees to the meeting on the consideration of the report on the 2021 Revised Fiscal Framework.
The Committee Secretariat read the apologies into the record.
The Chairperson said that the Committees did not have to go through the entire report and that it could go straight to the observations and recommendations. He welcomed Mr Carrim, Chairperson of the Select Committee on Finance, to make opening comments.
Mr Y Carrim, (ANC, KwaZulu-Natal) informed Members that there was a 10am sitting of the NCOP dealing with finances issues, consequences of social unrest and many members of the Select Committee were required to put forward questions to the Minister. If it was possible the members of the Select Committee would join the NCOP sitting as soon as this meeting had concluded. The members of the Select Committee would be grateful if this meeting ended by 10am.
Consideration of the Committee Report on 2021 Revised Fiscal Framework
The Chairperson moved onto the consideration of the report. Members had already gone through the report before the meeting. He recommended that the Committees moved onto section eight of the report which was the Committee observations and recommendations on the Revised and Proposed Fiscal Framework. The Chairperson went through the report point by point. He asked if there were any clarity seeking questions?
Dr D George (DA) commented on 8.2. It may be covered later on in the report, but he wanted to note that the DA agreed that the people were suffering from unemployment and poverty. Increases in the grants should be considered. The only way for it to happen was if the economy grew. The only way to increase grants sustainably was if the economy grew. He wanted to add at the end of the paragraph, which was a quote from the Committee, that action to accelerate economic growth was required to achieve this objective.
Mr Carrim agreed with Dr George and suspected that most of the members did. There was a quotation in the report. The Committee could not change that quotation. That was the way it was said. He did not think that there should be an inextricable link between grants and economic growth. One of the reasons why Government had social grants was because there was no growth, investment and jobs. He did not think that it should be linked in that way. Elsewhere in the report that was a reference to the need for growth. Required meant that it was a precondition. If the economy was growing, if there was sufficient investment, if there were jobs then Government would not have to provide so many social grants. It was not something that the ANC was happy about that 46% of the population was receiving grants in some form or another. No other society had that and it was unsustainable. A milder word should be put there. Something to the effect that it would facilitate this if there was greater economic growth not saying that it was required. Elsewhere that issue had been covered as it was always covered in these reports. Everyone was unhappy with the growth, investment and jobs but it could not be made a precondition.
Dr George commented on 8.3. He knew this was not a matter the Committee would agree on. The labour regulatory environment discouraged employment. His comment was that the regulatory environment needed to change to encourage employment. He knew that this view was not shared by the Committee and that in the past the members disagreed. He just wanted to raise the point. It was the regulatory environment that was getting in the way of employment and therefore was creating poverty.
Ms D Mahlangu (ANC, Mpumalanga) discussed labour regulations. She was not sure if the issue Dr George raised was relevant for this Committee or if it was supposed to be dealt with by the Department of Labour and Employment. He made a comment before he spoke saying that the members might not agree with him. He was aware that this might not be relevant to the Committee.
Mr Carrim said that the Committee had had a discussion with the legal services unit. It was a right of any Department to have its say. The norm was that at the end of the report it would say, for example, ‘the DA draws attention to the following’ and the party would be given a few lines. There was no harm in him saying what he said. Mr Carrim did not know whether it belonged here or to the Labour Committee. The majority could decide. He did not have a strong view. The DA could send the Chairpersons a paragraph where it set out the view that it felt strongly about. That was what had been done before.
The Chairperson agreed with Mr Carrim’s suggestion but it would be up to the view of the majority. There needed to be a clear vision of the views under the recommendations that the Committees were adopting.
Dr George commented on 8.8 and 8.9. The Minister in his speech said that there would be ‘tough love’ with the State-owned enterprises (SOEs). The DA completely agreed with the sentiment of the Minister that SOEs required that because they had been very undisciplined for a long time and a lot of money was put on them. The DA supported the view of the Minister that ‘tough love’ was required for the SOEs. Additional bailouts and allocations should end. This was also related to 8.9 where there was reference to clarifying what the Minister had actually said. There it said that ‘tough love’ did not mean that there would be additional allocations or bailouts. The Committee did not hear from the Minister because he was absent in the first meeting that was scheduled after the budget and subsequent to that he did not appear before the Committee. The Committee had not had the opportunity to talk to the Minister and ask him what was actually meant. The Deputy Minister had been there but not the Minister. It was a conundrum. He would have liked the Minister to clarify what he meant. On 8.8 the DA supported the view of the Minister that there should be ‘tough love’ and that the bailouts and additional allocations should end because that was the prudent way to do the budget. On 8.9 he wanted to not that the Minister had not appeared before the Committee to clarify his statement. He was not sure whether paragraph 8.9 was a correct reflection of what the Minister was actually saying to the people of South Africa at the MTBPS speech.
The Chairperson said that it would have been ideal for the Minister to have appeared before the Committee to clarify his statement. 8.9 made a recommendation that the Committee should first confer with the Portfolio Committee on Public Enterprises on a joint briefing on SOE restructuring by DPE and National Treasury. He did not think it would be ideal for the Committee to take a decision that it make a recommendation to Parliament that bailouts should come to an end. Otherwise there would be no need for the meeting that was recommended on 8.9. The Committee should agree with the recommendation on 8.9 that there was a meeting with the relevant Department and Treasury to provide a full briefing. The Committee would then take it from there.
Ms Mahlangu agreed with the Chairperson’s motivation on 8.9. The Committee should implement this recommendation so that the decision that was taken was informed. The Minister never had an opportunity to clarify how the ‘tough love’ was going to be. 8.9 ensured that the decision the Committee took would be informed.
The Chairperson suggested that when the Committee met with the Portfolio Committee of Public Enterprises that the Minister of DPE and Minister of Finance be present. The Chairperson instructed the Committee Secretariat to make sure the two Ministers would be available by the time the Committee met to deal with issues of SOEs.
Dr George commented on 8.11. The DA agreed that there was a problem with power generation. Power outages continually interrupted the economy and therefore interrupted economic growth. In the paragraph there was a discussion about private sector generation. The DA supported that. The paragraph mentions it as a crisis. There needed to be urgent action. For a very long time there had been discussions about splitting Eskom into separate entities, specifically for generation, transmission and distribution. That process had been initiated and may take a very long time. The CEO of Eskom had actually stated that Eskom was a ‘dead horse’. If that was the case, then no amount of intervention was going to fix the problem. There was a long-term energy crisis in South Africa that was not going to go away soon. This Committee needed to express the fact that this matter was very urgent. The Committee had been saying that for a very long time. South Africa had been having power failures since 2008 which was a very long time. The issue was raised over and over again but nothing was done and that was a bit pointless. The DA welcomed the fact that private sector generation was going to potentially increase but that was not enough. There should be an immediate and urgent intervention which would include splitting up Eskom into three entities for generation, transmission and distribution. There should be an increase in the permitted private sector production.
Dr George commented on 8.23 which dealt with the Public Sector wage bill. For quite a long time there had been discussions on the size of the Public Sector wage bill. The previous Minister had also said that there was going to be an intervention. That intervention the Committee did not see because the wage bill continued unabated yet productivity remained tepid at best. The salaries of the frontline public servants for example the nurses, the teachers and doctors were too low. Those salaries should be increased. It was the management section of the public sector that appeared to be bloated and overpaid. It was there that significant cuts were required. He knew that view was also not shared in this Committee. However, the view of the DA was that close attention needed to be paid to the Public Sector wage bill; not with the view to cut the salaries of all personnel on the frontline of service delivery but having a look at inefficiency, looking at those people who were employed in the public sector at senior positions, who earned high salaries and were not adding value.
Ms P Abraham (ANC) commented on 8.17 that dealt with fiscal policy. She wanted to a sentence after the first sentence of paragraph 8.17. The Committee should add that ‘the Committee notes that public submissions have questioned whether this should be the primary focus of the fiscal strategy’. That view had cut across the submissions. The submissions had questioned whether fiscal policy should be primary focus of the fiscal strategy. She highlighted the last sentence of the same point, 8.17. It stated that the ‘Committee welcome these robust engagements and believes that NT should continuously consider the views of stakeholders and meet with them even outside the Parliamentary processes in order to find each other’. She did not think that sentence was assisting the Committee in any way. She thought that recommendation could do without that comment. The Committee had already stated that there had been engagements. The engagements were between stakeholders and the Portfolio Committee. The Portfolio Committee facilitated the engagement of the stakeholders with National Treasury. Further, the Committee could not dictate to National Treasury that they should find each other with the stakeholders. The stakeholders should be autonomous. The stakeholders should raise the issues that they wanted to raise with National Treasury. The tension between stakeholders and Government did not have to be a negative tension. There would always be issues that they wanted to raise. That last sentence should be deleted. She then commented on 8.23. She had refined the last sentence to read as follows ‘the Committee reiterates its views that it believed that Government needs to find one another given the impact that it has on the MTEF’. The emphasis there was on the impact on the MTEF.
Mr D Ryder (DA, Gauteng) partly agreed with Ms Abraham that the last sentence in 8.17 did not read correctly. He thought that Government and stakeholders needed to better understand each other. Deleting the sentence was not the best way to go. There needed to be meetings and further engagements. The last sentence should be amended to say ‘meet with them outside the Parliamentary processes in order to better understand each other’. That would cover what was discussed and take care of Ms Abraham’s concerns. There needed to be better understanding of each other’s concerns.
The Chairperson said that that paragraph would be altered to accommodate the comments of the members.
Mr Ryder commented on 8.25. He thought that the FSCA needed to be included in that discussion. When the Committee was discussing it said various entities. The FIC and the FSCA would both play a role here. The FSCA needed to be included in that presentation to the Committee.
Dr George said that during the course of the engagements there was an uncomfortable exchange between the PBO and National Treasury. It seemed as if the relationship had become somewhat strained. This was unfortunate and very unacceptable. It was then agreed that a discussion would be held between the PBO and National Treasury. That was a good thing because if they did have any simmering tensions then it should not bubble to the surface in a public place and certainly not at the Committee. Hopefully the problem would be resolved. He did not know if the Committee wanted to comment in the report the fact that the PBO and National Treasury would meet. A situation should not arise again where it was agreed that they meet but they never did. That was not constructive in terms of time usage. He proposed that the Committee say something about then meeting.
The Chairperson asked if that was not an operational matter. The Committees were reporting to National Assembly, the NCOP and the public. Issues of how the two entities relate was something that the two Committees could manage. The Committees had the capacity to do that. The independence of Parliament from the executive needed to be respected. The Committees could find a way of managing that relationship without going to Parliament as if the Committee did not have the capacity to do so. The Committees should first do it themselves and see how far it could find a way of them working together. The independence of Parliament needed to be respected because PBO was a support team of Parliament which was independent from the executive.
Mr Ryder said that the report was reasonably satisfactory. There were three items that came up in discussion that he did not think were fully captured. If the Committee had more time he would have made a formal submission or suggestions of some things. He discussed the three issues that were covered in the discussions that had not been included in the report. The first one was the fairly low allocations to the contingency fund that were planned in the medium term. That spoke to fiscal policy. It was not an appropriations issue. If Government was not putting away for a rainy day or for a car accident, then it was setting itself up for future unhappiness should South Africa experience any nasty events like had happened this year. The low contributions to the contingency fund were highlighted in the discussions, was previously mentioned and was not seen in the report. The second item came out quite strongly in both the OUTA and SAICA presentations. There was a need to restructure and re-evaluate Government spending. He had pointed out that there were two places in the MTBPS that specifically reaffirmed the zero-based budgeting approach and the fact that it was going to be piloted on the Department of Public Enterprises. That had not been included in the report. Then there was the issue SAICA mentioned about the cautioning around the contingent liabilities specifically relating to the SOEs and the need to ensure that those were contained. Those three issues had not been adequately expressed. He hoped that something on each would be included in the report.
Mr Carrim said that the NCOP had asked Treasury to meet with the PBO before. As he understood it the Committee had the power to request them to meet within a month or three months. He agreed with the Chairperson that there was no need for that. The Committee would manage it outside of putting it in the report. He suggested that a joint letter be written to Treasury and PBO and tell them that the Committees would like them to meet within the next four to six weeks. This issue needed to be put to an end. He did not want to go back to that debate. The PBO was correct to have their own independent views. This was long overdue. The Committees should consider writing a letter telling both of them that they should meet.
The Chairperson said he hoped National Treasury and PBO were listening to what the members had said. He noted that the Director of PBO and the DG of National Treasury should find a way of handling this matter amicably while respecting each other’s terrain as provided for by legislation and the Constitution.
Ms Abraham said that she had been partly covered by the issues that had been raised by members. Especially the issue around what happened between PBO and National Treasury. An outstanding workshop needed to happen just to clarify roles. Sometimes the PBO had not always been there. Sometimes there may be a conflict in terms of how the duties were performed. Not because the Committees wanted to educate them in terms of how the entities worked but there needed to be a platform created for all of these formations to find one another. The financial sector formations needed to find one another. Mentioning it in the report would be a lot of detail. It relieved her to hear that the PBO and National Treasury were a part of this meeting. They were able to hear what kind of discussion was taking place because of a concern members had around what took place in the meeting. It should not only be a question of them meeting. A portion of the Committee should also form part of that meeting so that it could satisfy itself that the meeting was able to achieve its purpose.
Mr E Njadu (ANC, Western Cape) said that he also wanted to make an input on that point. It might be a matter of roles, responsibilities and independency of the two institutions. He suggested that it be a matter that was managed by the two Chairpersons of the two Committees of the two Houses.
The Chairperson said that the FFC should also be brought on board. It was a Constitutional structure that also played a role in regard to making recommendations on the issue of budget. The FFC reported to Parliament and made invaluable contributions to the budget. The meeting invitation should be extended to the FFC on the various entities’ roles. This was a matter that had been raised by the late Professor Daniel Plaatjies. It looked like the recommendations that the FFC made were not taken into consideration despite the fact that they were a Constitutional Structure. The FFC should be brought on board.
Adoption of the Committee Report on 2021 Revised Fiscal Framework
The Chairperson of the Standing Committee on Finance, Mr Maswanganyi, addressed the Standing Committee. Having considered the 2021 revised fiscal framework and the 2021/22-2023/24 proposed fiscal framework, the Standing Committee on Finance adopts the 2021 revised fiscal framework and the 2021/22-2023/24 proposed fiscal framework as presented. He asked if there was anyone to move for the adoption of the report?
Dr George said that the DA reserved its position.
Ms Z Nkomo (ANC) moved for the adoption of the report.
Ms Abraham seconded the adoption of the report.
Mr W Wessels (FF+) said that the FF+ reserved its position.
The Standing Committee on Finance adopted the Committee Report on 2021 Revised Fiscal Framework.
The Chairperson of the Select Committee on Finance, Mr Carrim, addressed the Select Committee. Having considered the 2021 revised fiscal framework and the 2021/22-2023/24 proposed fiscal framework, the Select Committee on Finance adopts the 2021 revised fiscal framework and the 2021/22-2023/24 proposed fiscal framework as presented. He asked for a mover and seconder?
Ms Mahlangu moved for the adoption of the report.
Mr Njadu seconded the adoption of the report.
Mr Ryder said that the DA reserved its position.
Mr M Moletsane (EFF, Free State) said that the EFF reserved its position.
The Select Committee on Finance adopted the Committee Report on 2021 Revised Fiscal Framework.
Read: ATC211123: Report of the Select Committee on Finance on the 2021 Revised and Proposed Fiscal Framework, Dated 23 November 2021
The meeting was adjourned.
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