Appropriation Bill: Parliamentary Budgeting Office briefing; with Deputy Minister of Finance

Meeting report

The Chairperson expressed her gratitude and welcomed the Members present on the platform and the Deputy Minister of Finance, Dr David Masondo, to the meeting. She extended her greetings to all Committee Members, the Parliamentary Budget Office (PBO) staff, the public and other stakeholders who might be in attendance.

She reminded the Members that in the past week, there had been an engagement with National Treasury (NT) and the Financial and Fiscal Commission (FCC) regarding the Appropriation Bill [B5 – 2024]. The objective of the current meeting was to receive input and analysis from the PBO, which was established under Section 15 of the Money Bills and Related Matters Act, No 9 of 2009 (Money Bill Act), as amended in 2018. The PBO's role is to provide independent, objective and professional advice to Parliament on the budget and other money bills.

The Chairperson emphasised the importance of understanding that the PBO was not present as an executive body but as a key stakeholder. She reminded Members that, like the previous week's meeting with the FCC, the current meeting involved a stakeholder invited to empower the Committee with a better understanding of the intricacies of the Bill before them. She cautioned Members against attempting to interrogate or oversee the PBO as if it were an executive body. The purpose of the meeting was consultative, to gain assistance and information from the PBO.

Before giving the floor to the PBO, the Chairperson noted that the meeting would be lengthier than previous ones. She requested Mr Lubabalo Nodada, the Committee Secretary, to complete the introduction of Members and then allow the PBO team introduction. She stated that following these introductions, the Deputy Minister of Finance would be given an opportunity to make his opening remarks, after which the presenters would begin their presentations.

Apologies and introductions

The Committee Secretary confirmed the presence of the following Committee Members:

Mr D Ryder (DA, Gauteng),

Ms S Nxumalo (ANC, Mpumalanga),

Ms M Siwisa (EFF, Northern Cape),

Mr J Britz (DA, Eastern Cape),

Mr J Majola (MK, KwaZulu-Natal),

Mr K Ceza (EFF, Mpumalanga),

Mr P Swart (DA, Western Cape) and

Ms S Ndhlovu (ANC, Limpopo).

Mr B Radebe (ANC, Free State) had not yet joined the meeting and no apology had been received from his office. He concluded by thanking the Chairperson.

The Chairperson acknowledged the apology from Mr Radebe, who was absent due to ill health and would return to his duties on 5 August 2024. She wished him a speedy recovery and requested that the Members note this. The Chairperson then asked the Director of the PBO to introduce the team accompanying him in the meeting. She also requested that those being introduced should turn on their videos during the introductions, and that Members should do the same when making their submissions. This is to help everyone familiarise themselves with each other's faces. She concluded by expressing her thanks.

Parliamentary Budget Office

Dr Dumisani Jantjies, Director of the Parliamentary Budget Office (D: PBO), greeted the Chairperson and Honourable Members, expressing his gratitude for the opportunity to address the meeting. He introduced himself and requested the accompanying team to introduce themselves. The team would interact with the Committee in the next week. The team are:

Dr Seeraj Mohamed, Deputy Director: Economics, 

Dr Nelia Orlandi, Deputy Director: Public Policy,  

Ms Kagiso Mamabolo, Economic Analyst,

Dr Mukundi Maphangwa, Public Finance Analyst,

Mr Tshepo Moloi, Economic Analyst,

Ms Sibusisiwe Sibeko, Public Finance Analyst,

Dr Mmapula Sekatane, Policy Analyst,

Ms Lwazikazi Ntizi, Research Intern.

The Chairperson expressed her gratitude to Dr Jantjies. She shared a personal anecdote, explaining she was smiling so much, as she and Dr Jantjies grew up together and lived three streets apart. She welcomed Dr Jantjies and his team and then handed over to the Deputy Minister for his opening remarks before returning the floor to Dr Jantjies for the presentation.

Deputy Minister of Finance opening remarks

The Deputy Minister of Finance, Dr David Masondo, expressed his gratitude and mentioned technical difficulties with his equipment. He indicated that the purpose of the meeting was to provide clarity where needed, assuming colleagues had gone through all presentations. He acknowledged the good inputs prepared by the PBO for deliberation on the Bill. He noted that he would intervene as required but had to leave at 11:30 for another commitment, apologising for not being able to stay throughout the meeting.

The Chairperson thanked the Deputy Minister and requested him to afford Members the opportunity to raise any questions before he left the meeting. She requested Members to take notes during the presentations and hold their questions until all presentations were concluded, specifying to whom the questions would be posed for easier reference. She then handed over to Dr Jantjies to begin the presentation.

Dr Jantjies expressed his gratitude to the Chairperson and greeted the Members, the Deputy Minister of Finance and colleagues present on the platform. His presentation includes opening remarks, addressing some of the confusion and concluding with final comments. He emphasised the importance of supporting the Committee as they enact legislation. He thanked the Chairperson for summarising his initial slides and expressed gratitude for the opportunity to provide input.

Dr Jantjies then outlined the structure of the presentation, which aimed to capture the context of the budget, focusing on service delivery, economic development and the current state of services. After presenting this context, he planned to give an overview of the budget and highlight key issues for the Committee's consideration. He stressed the importance of empowering the Members with key issues impacted by the budget, showing how the budget addresses these issues or where improvements are needed.

He mentioned that the presentation was designed to support the Committee's work as mandated by Parliament, emphasising governance and the role of various chairpersons in overseeing the committees’ work. Dr Jantjies noted that more detailed discussions would occur in the following week's induction session.

Parliamentary Budget Office Briefing

Situation analysis

Ms Kagiso Mamabolo, Economic Analyst, PBO, commenced with a situational analysis, highlighting challenges faced by the country and the budget allocations to address these. She noted that the 2020s were marked by crises, including the COVID-19 pandemic, climate change shocks and a cost of living crisis, which exacerbated unemployment, inequality and poverty. She highlighted the reliance on government support by low-income households and the importance of social grants in improving livelihoods.

Ms Mamabolo presented data on the increase in household food basket costs, the allocation of social grants, and the insufficiency of the COVID-19 Social Release of Distress Grant (SRDG) funding. She discussed the rising unemployment rates, especially among the youth and the urgent need for effective interventions such as a basic income grant.

She then addressed the inequality in education, particularly in access to tertiary education and noted the allocation of 30% of the learning and culture budget to post-school education and training. She also highlighted the rise in violent crime and the lack of specific allocations in the 2024 budget for implementing the National Strategic Plan on Gender-Based Violence and Femicide.

Budget process

Dr Nelia Orlandi, Deputy Director: Public Policy, PBO, provided an overview of the budget process, noting the structure of government functions and the allocation of funds across different sectors. She highlighted government's priority to enhance spending quality and minimise inefficiency. She detailed the Bill structure and the allocation of funds to various departments, emphasising the need for efficient monitoring of fund transfers and conditional grants.

Dr Orlandi presented data on departments compensation of employees spending, goods and services, and transfers. She raised concerns about the departments capacity to monitor the use of transferred funds and suggested areas for parliamentary oversight. In addition, she provided insights into the performance of education-related grants and their alignment with the National Development Plan (NDP) outcomes.

Dr Orlandi shared specific figures, noting that education-related grants amounted to R23.7 billion for the 2023/24 financial year. She highlighted that the National School Nutrition Programme grant received R8.5 billion, while the Early Childhood Development (ECD) grant was allocated R1.3 billion. These grants were critical for achieving the NDP's objectives of improving education quality and access.

In conclusion, Dr Orlandi stressed the importance of understanding the size and impact of public entities that provide services on behalf of the national government, noting potential duplication of services and the need for efficient oversight. She pointed out that public entities' combined budgets amounted to R348 billion for the 2023/24 financial year, underscoring the significant role they play in service delivery.

Expenditure trends

Ms Maseko stated that she would now go through the expenditure trends. She mentioned that one of the PBO’s core values, aimed to be achieved through the upcoming budgets, was prioritising efficiency. She highlighted several initiatives introduced by the government, including the rationalisation of entities, which was anticipated to reduce the number of provincial and national entities from 281 to 264. She also mentioned that the government aimed to standardise salary levels, particularly at the executive management level.

She noted continuous underspending on Agricultural Conditional Grants, specifically for projects supporting beneficiaries of land reform, and highlighted issues with the Basic Education Grants. This can be contributed to poor coordination between different programmes within and between departments.

For the 2024 budget, she mentioned that R7.4 billion was set aside for the presidential employment initiatives, with R4 billion allocated for hiring more teacher assistants. She raised a concern about whether this allocation was a result of reprioritisation from other initiatives.

Moving to other efficiency and effectiveness considerations, she stated that R1.1 billion was reprioritised towards the Social Employment Fund, and the Cities Public Employment Programme would receive R650 million to create employment in local communities and townships. She urged Members to consider whether funds were being reallocated from informal settlement upgrading to the township programme, emphasising the need for both. She also mentioned that the National Youth Service would receive R250 million to support youth employment initiatives.

She continued by summarising various employment creation initiatives and questioned their effectiveness, urging Members to request research evidence to assess their impact on reducing unemployment in the country. She then discussed the social wage, noting that NT had started capturing data on community development, employment programmes, health, basic education, free higher education and training, social protection, and social security funds. She pointed out that fiscal consolidation was leading to real reductions in per capita expenditure on critical services such as health and education.

She highlighted declining real per capita expenditure on health over the medium term, stressing the need for continued investment in the healthcare sector, especially given that the majority of the population relies on public healthcare. She noted that without real increases in funding, the healthcare system would remain overstretched, highly unequal and severely underfunded.

Regarding education, she observed a different trend, with increases in spending, particularly in ECD, which saw significant growth of 24.5% in real terms. However, she reminded Members that this increase was from a small baseline.

She discussed the COVID-19 SRDG, now called the Social Relief of Distress Grant, noting that no increase was effected over the last few years and had been eroded by inflation. After the 2024 budget was tabled, the Minister of Finance, Mr Enoch Godongwana, announced an additional R20 added to the R350 grant. She explained that the allocation made by the NT only accounted for 10.5 million people, despite the Department of Social Development (DSD) projecting that 10.9 million people would need the grant, leading to adjusted eligibility criteria and the exclusion of millions.

She urged Members to question why allocations for the SRDG were declining over the medium term despite the number of beneficiaries increasing. She concluded her presentation by handing over to the director.

Dr Jantjies thanked his colleagues and the chair, noting that this was their first meeting with the Select Committee on Appropriations. He emphasised the importance of recognising that the budget is a crucial tool for transforming society and the economy. He highlighted the need to consider macroeconomic and societal impacts and public finance applications when discussing the budget. Dr Jantjies stressed that Parliament must be provided with budget information in advance and that all mechanisms in the country should ensure this information is available. He noted that committees should ensure that information on unemployment, poverty, and inequality is included in budget proposals before these are fully approved.

Dr Jantjies emphasised the importance of ensuring a proper alignment between policy priorities and budget allocations, noting that divergences between the two could hinder the realisation of policy goals. He mentioned the Money Bill Act, which empowers Parliament to report on budget reviews and recommendations. This Act is an essential tool for guiding budget allocations based on past performance, highlighting areas that require more funds. He stressed that it is crucial for Parliament to use this tool to provide grounds for amending the budget if need be.

Dr Jantjies also underscored the importance of quality information in budget documents, stating that departments' strategic and optimised planning must be measurable to enable effective oversight. He called for proper oversight of budget implementation, which requires detailed financial information. Dr Jantjies summarised the key messages from the morning's presentations, expressing concerns about government's ability to achieve the NDP targets over the next five years. He highlighted the severe crises faced by households and businesses, including cost of living and economic challenges. It is important that the budget must address these issues.

Dr Jantjies stressed the need for greater scrutiny of the budget to ensure it fulfils the developmental mandate of the state. He noted that current budget projections fell short of the economic growth required to create employment and reduce poverty and inequality. He raised concerns about the likelihood of remaining below the targets for unemployment, poverty and inequality over the next three years, based on the budget baseline.

Dr Jantjies pointed out that funds directed towards various functional groups required careful examination to ensure effective and efficient use. He highlighted the importance of aligning the proposed budget with the NDPs and other policies. Given the current societal and economic context, he stressed that fiscal consolidation could impact government performance and fiscal stability.

Dr Jantjies welcomed the strategic use of the budget to generate fiscal space, such as the allocation of R150 billion for reducing debt and financing targeted fiscal stimulus in areas that improve developmental indicators. He expressed concerns about the high interest rates set by the central bank, which could affect the availability of funds for strategic initiatives.

Dr Jantjies concluded by reiterating the main messages to the Chairperson and Members. He stressed the importance of recognising the role of the budget in addressing societal and economic challenges. He thanked everyone for the opportunity to engage and expressed his eagerness for further discussions on these critical issues.

(See attached for full presentation)

Discussion

The Chairperson extended her thanks to Dr Jantjies and the colleagues from the PBO before opening the floor for Members to ask questions, deliberate on the presentations, or make submissions. She then posed three key questions intended to enhance general understanding and ensure clarity on crucial issues. Firstly, she inquired about the key differences between the Section 77 Money Bill Act and other types of legislative bills. This question aimed to clarify the distinct nature and legislative implications of the Money Bill Act compared to other bills within the legislative framework. Secondly, she sought to understand how the PBO maintains independence, objectivity and professionalism in its advice and analysis when assisting Parliament on financial matters. This question was crucial for ensuring that the guidance provided by the PBO remains unbiased and effective in supporting parliamentary decision-making. Lastly, the Chairperson addressed the issue of grant adequacy by questioning what measures could be taken to address shortfalls in grants, considering that they are not inflation-linked and the cost of the household food basket exceeds the current minimum wage. Given the ongoing budget deficit and lack of additional revenue, she sought insights into potential trade-offs within the current expenditure framework that could help mitigate these shortfalls.

Ms M Siwisa (EFF, Northern Cape) expressed her appreciation for the presentation, noting that it provided a clearer understanding of the issues at hand. She then raised several significant concerns. Firstly, the alarmingly high unemployment rate, with 8.2 million people actively seeking work but struggling to find employment. She suggested that the budget should address this issue by focusing on supporting small-scale farmers, fisheries and small businesses, which could potentially create more job opportunities. Ms Siwisa also pointed out the lack of adequate monitoring and evaluation in various departments, which undermines the effective utilisation of allocated funds. This shortfall in monitoring and evaluation, combined with rising food basket costs and declining employment figures, necessitates more rigorous oversight and questioning.

Additionally, Ms Siwisa raised concerns about the persistent issue of informal settlements. Despite ongoing upgrade efforts, new informal settlements continue to emerge, highlighting the need for sustained attention and resources. She also emphasised the critical issue of youth unemployment, urging the government to find ways to improve employment prospects for young people. Furthermore, Ms Siwisa called for better inclusion and employment opportunities for people with disabilities. She noted the difficulty in obtaining accurate data on disabilities and stressed the need for more educational and employment opportunities tailored to individuals with various disabilities.

Ms Siwisa also expressed concern over the decreasing number of schools with nutrition facilities and the overall decline in school enrolment. She suggested that this issue might need to be addressed by the Minister of Basic Education to ensure that adequate support and resources are provided. Lastly, she critiqued the current budget for not effectively addressing poverty, unemployment and inequalities. She highlighted a broader issue of excessive spending on remuneration rather than on service delivery, arguing that funds should be allocated more effectively to ensure meaningful outcomes and improvements in public services.

Mr D Ryder (DA, Gauteng) addressed the Chairperson, expressing gratitude for the presentation provided by the PBO. He then shared his personal experience, noting that he was currently dealing with issues related to a land grab or expropriation without compensation, which made his participation in the discussion somewhat challenging. Despite this, he thanked the PBO for their valuable presentation.

Mr Ryder's inquiry was broad and somewhat general, focusing on the complexity of the documentation used for deliberations. He highlighted the substantial nature of the documents, including the Bill, the budget review and the Estimates of National Expenditure (ENE). Mr Ryder pointed out that while these documents are comprehensive, interpreting them accurately can be quite challenging. He used the example of discrepancies he observed with the budget for the Department of Cooperative Governance and Traditional Affairs (COGTA). The ENE indicated an increase in the budget for this department, while a presentation from the department itself claimed a reduction of R1.5 billion. This contradiction led Mr Ryder to question whether the current level of understanding and interpretation of these documents was sufficient.

He suggested that the PBO could play a crucial role in providing guidance on how to navigate and interpret these complex documents. Mr Ryder proposed organising a session where the PBO could offer insights and practical advice on effectively using the various budgetary documents. He acknowledged that while Members might not become experts in budgeting, a comprehensive overview would be beneficial. He emphasised that an early intervention in this regard would be more advantageous than waiting until the middle of the term, helping Members to better understand and utilise the information provided in the documents for their work over the next five years.

Ms S Ndhlovu (ANC, Limpopo) expressed appreciation for Dr Jantjies and his team for their detailed presentation, acknowledging the wealth of information it contained. However, Ms Ndhlovu emphasised the necessity for additional clarity on certain aspects of the presentation.

She highlighted the upcoming induction workshop as a crucial opportunity to address these gaps. According to her, the workshop will be pivotal in identifying and understanding the challenges and issues that need further attention in the context of the budget. She also referenced Ms Sibeko's presentation, which underscored the importance of evidence and the need for corrections or oversight in certain areas.

Ms Ndhlovu stressed the importance of gaining a deeper understanding of the budgetary issues to ensure effective oversight. She noted that the upcoming workshop should focus on equipping Members with the necessary knowledge and tools to address these issues comprehensively. This preparation is essential for engaging in informed discussions and oversight activities related to the budget. She concluded by acknowledging the significance of these discussions for provinces and the broader budgetary process.

Ms S Nxumalo (ANC, Mpumalanga) commenced her remarks by extending her greetings to the Chairperson and fellow Members, both present and connected remotely. She expressed her gratitude for the presentation delivered by Dr Jantjies and the team.

Ms Nxumalo highlighted a key concern regarding the agricultural sector. She noted that despite the presentation’s insights, there is a pressing need for a practical understanding and support in agriculture, especially in rural areas where people are heavily reliant on farming to sustain themselves. She emphasised the importance of ensuring that agricultural grants are properly utilised to support commercial farming initiatives, which are crucial for food security in these communities. She stressed that future oversight should address issues of underfunding or mismanagement in this area.

Another significant issue she raised was the need to prioritise upgrading informal settlements. Ms Nxumalo pointed out that many people live in informal settlements that lack basic infrastructure such as sewer systems and lighting. She argued that addressing these deficiencies should be a high priority, as these conditions often lead to dire living situations. She suggested that resources should be allocated to improve these conditions and enhance the quality of life for residents in these areas.

Lastly, Ms Nxumalo reflected on the current state of monitoring and evaluation, acknowledging that there is substantial room for improvement. She called for increased vigilance and effective oversight in this administration to ensure that government projects and departments are held accountable and that services promised to the public are delivered efficiently. She commended the PBO for their presentation, describing it as enlightening and motivating for more rigorous monitoring and accountability.

Mr P Swart (DA, Western Cape) began by expressing his gratitude for the presentation delivered by Dr Jantjies and his team, as well as the Deputy Minister. He noted that many of his questions had already been addressed and appreciated the clarity of the presentation.

Mr Swart raised several concerns based on his observations and experiences. He pointed out that the presentation highlighted the substantial debt and borrowing required to manage current expenses. This poses a challenge, given the economic difficulties facing the country. He questioned whether there is any hope for improvement amid these financial pressures and the high cost of debt repayment.

He also expressed concern about high employee costs at municipal level, where spending on personnel can reach up to 60% of the budget. This significant expenditure on staff can impact the quality and efficiency of public services.

Another issue Mr Swart raised was the upgrading of informal settlements. He mentioned that the Western Cape had previously submitted a report on this matter, but little progress had been made. He questioned whether there are any ongoing programmes addressing this issue and emphasised the need for effective action to improve living conditions in these areas.

In addition, Mr Swart was worried about the state of economic development and job creation. He highlighted the high unemployment rate among young people. He questioned how the Government of National Unity (GNU) could better allocate resources in the budget to support economic growth and job creation. He was particularly concerned about budget cuts to economic development departments, which he believes are crucial for infrastructure and economic recovery.

He also inquired about specific measures the executive should take to manage growing government debt and rising debt servicing costs, which he argued detract from essential services and infrastructure projects.

Finally, Mr Swart raised concerns about the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector including Organs of State (Zondo Commission) findings and the handling of funds mentioned in the report. He questioned whether the money identified in the report was being misappropriated and what actions were being taken to address this issue.

He concluded by reiterating the need for further training and skill development for Members of Parliament to enhance their oversight capabilities and he called for a session where departments could provide additional briefings.

The Chairperson began by thanking the Honourable Members for their contributions. She noted that the Deputy Minister had communicated that there would be no direct input from him, and that NT delegation would be providing input on his behalf. She also apologised for not acknowledging the presence of the NT team earlier in the meeting. The Chairperson extended a welcome to the team and informed them that they would have an opportunity to make a submission on behalf of NT once the PBO had responded to the Members’ questions and comments. She then indicated that no further follow-ups would be entertained until after the PBO’s response. With that, the Chairperson handed over to Dr Jantjies to address the submissions made by the Members.

Responses

Dr Jantjies expressed his appreciation for the Chairperson and Members’ questions, acknowledging their usefulness and noting that some issues would require ongoing discussion. He emphasised the importance of aligning the budget with long-term development strategies. The primary message he wanted to convey was the necessity for a clear convergence between the budget framework and the strategic development goals set by the government.

Dr Jantjies noted that the budget should support the President’s priorities for the term, integrating with the strategic plan for the next five to ten years. He highlighted that discrepancies between developmental indicators and the budget framework have led to a deterioration in some areas. To address this, he argued that the budget must align closely with strategic goals to effectively support development.

He acknowledged the significant debate around national debt, emphasising that while managing debt is crucial, it should not overshadow efforts to promote economic growth and job creation. Dr Jantjies stressed that investments in infrastructure and social grants are essential as they stimulate economic activity and support household income, enhancing government revenue and reducing the debt–to–gross domestic product (GDP) ratio.

Dr Jantjies also called for a shift in focus towards supporting more productive sectors, such as manufacturing and agriculture. He argued that reallocating resources to these areas would drive economic growth and job creation, addressing unemployment more effectively.

He proposed that a clear strategy is needed to manage debt while fostering economic development. While acknowledging the high cost of debt service, he suggested that promoting economic growth would help manage these costs over the long term.

Dr Jantjies also addressed the legislative process, noting that some bills and their impact on provinces could be improved. He suggested that the effectiveness of select committees could be enhanced in influencing these processes.

Finally, he affirmed the PBO's commitment to providing evidence-based analysis and supporting Parliament. He expressed a willingness to continue engaging with the Committee and addressing further questions. Dr Jantjies indicated that detailed responses would be provided in subsequent interactions.

Dr Orlandi said that she would respond to Mr Ryder and that it would be her pleasure to demonstrate the documents and how to use them, not just during the budget process to approve bills, but also throughout the financial year, especially concerning monitoring. She added that Members should remember there is a difference between reductions in the budget for the medium term and reductions for the current year. At the moment, she noted, the Bill only addressed the current financial year. She mentioned that the purpose of most of the slides she presented was to discuss the proportions and structure of the budget. She emphasised that it is not a one-size-fits-all approach; if a department transfers 80% of its budget, it is crucial to focus on where oversight should be concentrated. She suggested that a workshop on these documents and how to determine oversight focus would be very useful for the Committee. She also highlighted that departments often request additional funding when they come to committees. However, Members would see during the medium-term budget policy statement and the adjustments budget that some departments ask for more money, adjust their budgets, or even surrender unused funds to the revenue fund.

Additionally, she pointed out that departments might roll over unspent money from the previous financial year. She mentioned that there were challenges in monitoring informal settlements, noting that the funding for the Informal Settlements Upgrading Partnership Grant had been reduced and moved to the Public Employment Programme. She suggested that further inquiries would be needed to understand this shift and indicated that monitoring and reporting on conditional grants were challenging due to the lack of detailed quarterly performance information.

Dr Mohamed thanked Dr Jantjies and said he would address some of the more general questions regarding affordability levels of debt, social spending and unemployment. He noted that Dr Jantjies had already covered the approach and perspectives on debt. He explained that the PBO works on efficiency and improvement within government, aiming to find savings and enhance affordability. He stressed the importance of viewing expenditure as an investment rather than mere consumption. He elaborated that sometimes it is necessary to spend more to improve management, fight corruption, or enhance spending effectiveness. He also highlighted that government operations should be seen in the context of economic impact, not just as household budgeting. He argued that spending on infrastructure and development should be viewed as investments in society, contributing to long-term economic growth and reduced debt-to-GDP ratios. He urged that the overall development project and budget alignment should address economic growth and employment. He acknowledged that while spending should not be wasteful, improving resilience to crises and investing in long-term development should be prioritised. He concluded by expressing the need to consider these contexts and how they are reflected in the PBO's presentations.

Ms Maseko stated that she would like to briefly address the issues of deeds and disabilities. She mentioned that NT has been working on a project concerning gender-responsive budgeting. She emphasised that questions on the inclusion of people with disabilities are relevant to how this framework is being developed. She noted that as NT continues to develop its gender-responsive budgeting framework, input on how to include everyone in budget considerations and the impact on different groups are crucial. She highlighted the importance of considering how budgets affect various demographics, such as race, geography and age.

Regarding grants, Ms Maseko responded to a question on funding by referring to alternative approaches, including the concept of investment. She cited a recent paper published in June 2024, demonstrating how the SRDG positively impacts labour market participation. She referenced past studies showing that women receiving grants are more likely to seek or obtain employment. She argued that grants should be viewed more broadly, not merely as a household benefit but as a means to diversify household income and improve resilience. She emphasised that the SRDG is fundamentally a gender issue, noting that women, especially black and coloured women, undertake significant unpaid care work and have higher unemployment rates. Since many children in South Africa live with these women, grants should consider these intersections of gender, race, and social assistance rights.

Regarding informal settlements, Ms Maseko pointed out that their growth reflects broader macroeconomic issues. She explained that informal settlements indicate localised development problems and that addressing these issues requires a macroeconomic shift. She stressed the need to ensure people can live in developing communities with access to resources, jobs and basic needs. She concluded by summarising that revenue and expenditure should be viewed as investments rather than mere consumption.

Dr Jantjies expressed his gratitude and then addressed a few points he had noted. He emphasised the importance of carefully considering the issue of employee costs, which he believes needed to be evaluated in a broader context. He pointed out that while significant service delivery requirements have not been fully met, it is crucial to understand the impact of employee costs within the overall budget. Dr Jantjies noted that employee taxes are a significant factor in the budget and stressed the need to look at spending comprehensively, rather than narrowly.

He mentioned that some recent work had been done on spending, which he promised to share with the Chairperson in the coming weeks. Dr Jantjies also highlighted the need for greater convergence to achieve what is set out to do, particularly in reviewing the current fiscal strategy. He suggested that if the President sets out clear developmental objectives for the future, reviewing the existing fiscal strategy to achieve those objectives is essential.

From an oversight perspective, Dr Jantjies advocated for more detailed information in budget documents to empower Parliament to assess the budget's impact on economic development, employment, and poverty. He noted that additional information is often necessary and might not be included unless explicitly requested in the budget.

Dr Jantjies concluded by thanking the Members and expressing his passion for the work. He indicated there would be more input next week and appreciated the opportunity to contribute.

The Chairperson thanked Dr Jantjies and the team and then addressed the Honourable Members, inquiring if there were any follow-up questions or submissions they wished to make at that moment. Not seeing any hands raised, the Chairperson proceeded to query Dr Jantjies on the three presentations forwarded to the Committee. She noted the grants tracker record document, which had been addressed in the previous Parliament. She suggested discussing it in detail during the upcoming inductions might be more appropriate. She sought clarification on the purpose of forwarding the conditional grant presentation and asked if the Committee should review it briefly now or discuss it during the forthcoming induction session.

Dr Jantjies responded that the presentation on conditional grants was intended to address the discussions from the previous week. He acknowledged that some key issues were covered in the conclusions of the presentation and proposed discussing these in detail during the next induction session. He also mentioned that the presentation included further analysis of education and that more detailed information would be provided during the induction session to support the Committee's previous discussions.

The Chairperson thanked Dr Jantjies and requested that NT provide their remarks or submissions. She asked for the appropriate person from NT, to lead the presentation or provide the necessary remarks.

National Treasury remarks

Dr Rendani Randela, Chief Director: Public Finance Division (CD: PFD), NT, stated that NT was always available to support and assist the committees, although limited time during the transition from the sixth to the seventh administration had constrained their ability to do so.

He then addressed several issues concerning underspending, noting that the reasons varied widely depending on the nature of the departments' work. For instance, labour-intensive departments such as the police, correctional services, and security departments spend a significant portion of their budgets on compensation for employees. In contrast, departments with fewer personnel, such as NT do not face such high costs.

Dr Randela explained that underspending in these departments could be attributed to vacant funded positions and procurement delays. Additionally, issues such as construction mafias in the infrastructure sector and non-compliance with grant conditions by some departments contributed to underspending. He also mentioned that cuts imposed on certain grants were often a response to underperformance or underspending.

Addressing a query from Dr Orlandi, Dr Randela discussed the urban settlement development grant and noted its history of underspending. He highlighted that budget reductions had been redirected towards public employment initiatives, with an allocation of R7.4 billion. According to the Money Bills Amendment Procedure and Related Matters Act, No 13 of 2018, NT provides quarterly expenditure reports to the Standing Committee on Appropriations and presentations on spending outcomes. He stressed the importance of linking this work with monitoring and evaluation, a function of the Department of Planning, Monitoring and Evaluation (DPME).

Finally, Dr Randela addressed concerns about the Budget Review and the ENE, acknowledging the document's vast size and complexity. He suggested that, due to the document's length and the limited time available, it would be practical for Members to divide the task of reviewing it by clusters, with each member focusing on specific sections. He concluded by expressing his gratitude and handed back to the Chairperson.

Mr Ryder mentioned that he appreciated the feedback and sought clarification regarding his request. He stated that his intention was not to work through the entire document but rather to understand the structure of the votes, noting that while the individual votes can be repetitive and vary in complexity depending on the number of entities within each department, some are simpler than others. He emphasised the usefulness of the first 30 to 35 pages of the document, marked with Roman numerals, for comparison purposes and to better grasp the content.

Mr Ryder also inquired about where else he should look, referring to the need to understand issues not immediately evident in the COGTA ENE. He expressed his intention to take up Dr Randela’s offer and possibly seek additional guidance to unpack the document thoroughly. He concluded by expressing his appreciation for the positive inputs received.

Mr Randela addressed Mr Ryder, acknowledging a request related to a presentation by COGTA. He noted that he had not recalled the exact details but confirmed that assistance with that presentation could be provided. Regarding the structure of the ENE, Mr Randela explained that it consists of two parts: the small book, which provides detailed budget allocations and non-financial information for each vote and the big book, which offers a summarised version, particularly focusing on entities. He suggested that these could be discussed further.

The Chairperson then thanked everyone and requested that for the next induction of Members, any useful documents or information should be forwarded or printed for the Committee. She noted that the meeting had reached its end, with only the consideration of the minutes from the previous meeting remaining. Neither the PBO nor NT were required to be present. She expressed gratitude to both NT and the PBO for their participation, with special thanks to the PBO for their straightforward and informative presentation. The Chairperson emphasised that the meeting was the first of many engagements and expressed satisfaction with the alignment in understanding the mandate of the PBO and the Committee. She then allowed NT and PBO representatives to leave the meeting.

Adoption of Committee Minutes

Minutes dated 16 July 2024

The Chairperson asked if there were any corrections to the minutes that had been presented. In the absence of corrections, she requested Members to indicate whether they adopted the minutes. She asked if there was a mover for the adoption of the minutes.

Ms Nxumalo responded, expressing her gratitude and stating that she moved to accept the minutes as they were, noting her presence at the meeting on the date specified and confirming that everything went well.

Ms Ndhlovu also moved to accept the minutes.

The minutes were duly adopted.

Minutes dated 17 July 2024

The Chairperson asked colleagues to raise their hands if they had any corrections to the minutes. In the absence of corrections or input, she inquired if a Member of the Committee would like to adopt the minutes, seeking agreement that the minutes were an accurate reflection of the previous meeting’s deliberations. She reminded Members to provide corrections, remove inappropriate content, or add any missing information if needed. If no such inputs were made, she anticipated Members would adopt the minutes as a true reflection of the meeting.

Ms Nxumalo moved for the adoption of the minutes.

Ms Ndhlovu seconded the motion.

The minutes were duly adopted.

Announcements

Mr Nodada reminded the Committee about the programme for the following day, noting that public hearings on the Bill would be conducted. He mentioned that submissions had been received from the Congress of South African Trade Unions (COSATU), and Equal Education Law Centre, who all wished to address the Committee. He informed Members that he had forwarded the submissions earlier and would later send the link along with all relevant documents for the next meeting.

Closing remarks

The Chairperson thanked Mr Nodada and the Members for their presence and contributions during the meeting. She emphasised that their participation was crucial for acquiring information and assembling a quality report for the Seventh Parliament. She also extended thanks to the Committee Secretariat for ensuring readiness for the meetings. The Chairperson concluded by expressing appreciation for everyone's efforts and wished them an enjoyable rest of the day.

Meeting adjourned.