Adjustments Appropriation Bill & Special Appropriation Bill: public hearings

Meeting report

The Chairperson welcomed everyone to the meeting. Thereafter she asked if any apologies were received.

Mr Lubabalo Nodada (Committee Secretary) said the Committee received apologies from Mr Bhekizizwe Radebe MP and Ms Mathapelo Siwisa MP.

The Chairperson noted the apologies. She outlined that this was an important public hearing for the Committee as it would deal with the Adjustments Appropriations and Special Appropriations Bills. The meeting was convened for the Committee and stakeholders to deliberate on the critical matters that will impact the financial governance of the government’s resources. The two bills represent a significant opportunity for the government to respond effectively to the evolving needs of society. These appropriations will facilitate initial services, foster development, and provide relief to vulnerable groups. She reminded Members of the Committee that they represent ordinary citizens’ views.

Although the Committee received several submissions, only three organisations were present to make oral submissions during the hearing: Breadline Africa, the Congress of South African Trade Unions (COSATU), and the Youth Capital (YC). After deliberating with the stakeholders represented, the Committee will adopt its outstanding minutes.

After making those brief remarks she invited YC to take Members through its presentation.

Youth Capital presentation on the Adjustments Appropriation Bill

Ms Clotilde Angelucci (Communications and Network Lead at Youth Capital) and Mr Nape Senong (Mobiliser Strategist at Youth Capital) took the Committee through the presentation.

YC highlighted that the government was far behind the National Development Plan (NDP) target of reducing the unemployment rate from 25% in 2013 to 14% in 2020 and to 6% by 2030, as the current unemployment figure stands at 32.9%, with young people making up 45.5% of that figure. The government has also failed to meet the NDP’s target that public employment programmes should target the creation of 2 million opportunities annually by 2020 or earlier, if possible, with 1.2 million opportunities created from 2020 to 2023.

YC submitted that more funding should be provided towards public employment programmes, like the Community Work Programme (CWP) and Expanded Public Works Programme (EPWP), as they employ young people.

YC made the following recommendations:

“We need to learn what happened to the UIF funds and ensure that funds are released for 2025;

Public employment programmes employ young people and more funding is required;

National Treasury should consider youth unemployment reduction as a goal of fiscal policy;

Systematic review of public employment initiatives to assess the longer-term employment pathways created”

(See Presentation)

Breadline Africa presentation on the Adjustments Appropriation Bill

Mr Warren Povey (Head of strategic partnerships at Breadline Africa) took the Committee through the presentation.

Breadline Africa encourages the government to prioritise investing in early childhood development (ECD) so that all children can reach their full potential. Otherwise, the country risks losing its youth dividend. Having noted that children’s development is absent from the Medium-Term Budget Policy Statement (MTBPS) priorities, Breadline Africa requested that the Committee lobby the Minister of Finance to realign the Medium-Term Budget Policy Statement (MTBPS) to the President’s commitment of the Seventh Administration to prioritise universal ECD as a national development priority in the Medium-Term Development Plan.

Furthermore, Breadline Africa hoped that the NT would allocate funds for health, social development, and local government roles in ECD, which remain underfunded.

Breadline Africa requested the NCOP not to concur and approve the MTBPS and Appropriation Bills as they do not support the 7th Administration’s Electoral Mandate to prioritise transformation through children’s early development. They also urged the House to provide leadership and ensure ministerial accountability for remedying this omission in the 2025 Budget

(See Presentation)

COSATU presentation on the Adjustments Appropriation Bill

Mr Matthew Parks (COSATU Parliamentary Coordinator) took the Committee through the presentation.

COSATU was disappointed by the Medium-Term Budget Policy Statement (MTBPS) and the appropriations bills, as few new measures were introduced despite an expanded unemployment rate of 41.9% and 70% youth unemployment. COSATU opposed the department’s focus on cutting expenditure and the debt to gross domestic production (GDP) ratio. Considering the dire economic climate, COSATU believed it would be better for the department to announce a stimulus package.

COSATU said it was a myth to say the state is bloated as it had 1 million public servants in 1994 for 34 million citizens. Today, it has 1.2 million – with 70,000 unfilled vacancies – for 64 million people.

Some of COSATU’s proposals were that frontline vacancies must be prioritised for filling and that the headcount of public office bearers and their packages must be reduced.

(See Presentation)

Discussion

The Chairperson said all of the submissions would be considered. She agreed with YC that the country was still far away from achieving its employment targets. She also shared Breadline Africa’s concern about the absence of ECD in the MTBPS’ current priorities. In her view, the government had to prioritise both issues going forward.

Mr J Britz (DA, Eastern Cape) said much of COSATU’s submission was in line with the committee's views, especially the call to reduce fuel taxes and extend VAT exemptions for essential foods and other goods. In addition, he believed that the Committee resonated with Breadline Africa and YC’s submissions. He asked YC what proposals it could share to create new and sustainable jobs.

He called for the government to address the increase in the public service wage bill as it has grown out of proportion.

Mr K Ceza (EFF, Mpumalanga) expressed concern that the MTBPS did not make enough provision for ECD. After saying that, he posed several questions. First, he asked Breadline Africa if the MTBPS made provision to build recreational facilities for children. Second, he asked COSATU about its views on the importance of capacitating the state to create sustainable jobs for the unemployed. Third, he asked how the YC could consider the opportunities given by the CWP and EPWP programmes as jobs given the low wages each pays to participants. Fourth, he asked COSATU if it had any proposals on how municipalities can collect the monies owed to them by private businesses, government departments and entities.

The EFF, he said, was committed to fighting for the rights of workers.

Mr D Ryder (DA, Gauteng) felt it might have been better for the submissions to be made during the MTBPS process. Nonetheless, he was pleased by the information presented. He shared the view that there needs to be a better focus on funding children from a health and educational point of view from birth, as doing so would benefit the country.

The Public Finance Management Act severely constrains what can be done in the adjustment budgets. As such, he shared the hope that some of the proposals made will find expression during the February 2025 Budget, which will be the first budget of the Government of National Unity.

He was disappointed that the Organisation Undoing Tax Abuse (OUTA) could not present today as he would have wanted an answer on the Gauteng Provincial Government’s (GPG) contribution to settling the E-Toll debt. The questions asked by OUTA in its submission were around why the Gauteng contribution for maintenance is being used towards debt repayment and what conditions the NT has attached to the bailout. In his view, the department had to respond to this question. While the NT and GPG have reached a solution, he felt that the country should not have been in the situation in the first place as the E-Toll system should have been properly discussed, implemented, and evaluated because, at this moment, the GPG is taking money away for service delivery to pay back a debt incurred in 2010.

The Committee must consider this matter going forward and the importance of public participation in the lawmaking process.

He reminded the Committee of SARS’ plea for an increased allocation to better carry out its revenue collection duties. In a previous joint sitting, SARS expressed its concern about the reliability of the Medium-Term Expenditure Framework, which has prevented it from committing readily to multi-year projects because it is worried about the change in adjustments each year. In his opinion, it was important that the Committee monitor these developments and ensure the adjusted estimates of national expenditure are done prudently and that the multi-year projects undertaken by departments are taken into consideration when the adjustments are processed.

There was a need, he stressed, to review the need for there to be so many millionaire managers in the public service and far too few people delivering frontline services.

Mr J Majola (MK, KwaZulu-Natal) noted the statistics presented by YC on the level of unemployment in the country, which he felt put the government’s chances of achieving the National Development Plan targets into doubt. After saying that, he posed several questions. First, he asked if the YC regarded the CWP and EPWP as adequate initiatives to tackle the high unemployment in the country. Second, he asked Breadline Africa to share its proposals on how to better support children in their teenage years, as it only spoke about ECD in its submission. Third, he asked Breadline Africa whether it believed that the current curriculum was responsible for the poor reading levels of children at school. Fourth, he asked if COSATU had suggested that the government audit the entire public service to see how many ghost workers there are.

He stressed that many of the issues raised in COSATUs submission have been raised before and should be taken more seriously.

Ms S Nxumalo (ANC, Mpumalanga) said the Committee has noted the high unemployment amongst the youth as well as the increasing cost of living. Given these conditions, initiatives like the CWP and EPWP were important as both provided employment opportunities. However, she wondered why the department decided to decrease the amount allocated to the Presidential Youth Employment Initiative (PYEI) as it provides job and other skills opportunities to young people.

She was concerned by the news that the country was rated at the bottom in global rankings for numeracy and reading. She asked Breadline Africa to clarify its suggestion that local government should be provided additional funding for ECDs, given that this is a function of the Department of Basic Education.

In her opinion, the government needed to enhance its monitoring of state-owned entities (SOEs) expenditures, considering that the department has committed not to give out any more bailouts.

She applauded the NT for increasing the allocation to SARS and for reaching a resolution with the GPG on the e-toll matter. She also applauded Eskom for its improved operational performance, which has resulted in the suspension of load shedding.

Mr P Swart (DA, Western Cape) felt that it was time for Parliament and the NT to take the submissions of all stakeholders seriously, as they are critical in driving better planning and allocation of resources. The country's poor fiscal position meant that there were not enough resources to meet the service delivery demands. In his view, more questions had to be asked about why the country’s economy continues to struggle.

Without better investment in ECD, the country will not be able to sustain future economic growth. He said it was crucial for the government and the rest of the country to work collaboratively to correct the current challenges.

Responses

YC

Ms Angelucci indicated that one in two children who start grade one drop out before matric without any qualifications; three in ten young people between the ages of 15 and 35 live in households with no one who is in employment; and 9.8 million young people are not in any form of education, employment and training. The longer young people are out of opportunities, the harder it is to find work, as they are perceived as risky hires. Given this climate YC advocates for public employment programmes as they offer a way for young people to enter the labour market, but only if the opportunities are well-designed. Labour-intensive opportunities need to be connected to social needs in the communities and skills the labour market needs.

Mr Senong said YC believed there has to be a greater focus on providing additional resources to the Skills Fund, ensuring that the National Student Financial Aid Scheme and Technical Vocational Education and Training colleges work, ensuring that the money allocated to the State Information Technology Agency-funded programmes is used properly and is impactful on the lives of young people; and reducing the red tape so that young people can create more self-employment opportunities.

Ms Angelucci believed that NT would be better placed to provide high-quality economic growth rather than focus solely on financing debt.

Breadline Africa

Mr Povey highlighted that Breadline Africa is currently working on two projects. One is a government-focused project, and the other is a private partnership with another foundation. Breadline Africa believes that multi-purpose ECD centres should be built in communities so that children can have other activities to do after class and feel safe.

Regarding the literacy rate of children in the country, he said 80% of grade 4 children in South Africa cannot read for meaning. Breadline Africa has partners who supply teaching material or upskill teachers in quintile one to four schools. In the ECDs it operates in, Breadline Africa ensures the children have a play area, a safe sick bay for when they are not well, and a kitchen to ensure food can be prepared.

Regarding the suggestion that local government should be provided additional funding for ECDs, he asked if Breadline Africa could provide this response in writing. In the past, local government officials have prevented Breadline Africa from establishing ECD centres.

COSATU

Mr Parks was pleased to see that a consensus was reached on several issues between the stakeholders and Committee members. 

In his view, much of the success of the first two government administrations was due to the work done by SARS. Given this contribution, he advocated for the NT to provide SARS with all the resources that it required to fully recapitalise itself and improve the tax compliance rate.

While COSATU acknowledged that reducing the fuel tax regime would be difficult, it believed there was room for some sort of reduction, which would give businesses and consumers much-needed relief. As a starting point, the government will need to address the many issues faced by the Road Accident Fund, which loses large amounts of funds each year to fraud and corruption.

On the wage bill, he mentioned that the MTBPS has remained at 35% of the gross domestic product for the past fifteen years; in fact, it has decreased by 10% in the last two years due to the decline in headcount. COSATU believed that the focus should be on reducing the size of the executive and reinforcing frontline services.

COSATU also felt that there is an opportunity to conduct an audit of the entire public service, from the national to the local level, to assess the number of ghost employees present.

COSATU had hoped the Appropriation Bill would provide some sort of solution to the teaching crisis in the Western Cape.

Regarding the comments made on SOEs, he said both Eskom and SARS showed that it is possible to rebuild the state and SOEs and that it is a worthwhile investment to do so. Improving SOEs' organisational and functional capacity will have a multiplier effect and create more jobs for the country.

COSATU was displeased by the department’s decision to reduce the budget allocation of the PYEI from R36 billion to R3 billion, as this programme has provided several job and skills development opportunities to young people, unlike the CWP and EPWP programmes.

In COSATU’s view, there had to be a renewed discussion on how to grow the manufacturing sector and improve the municipal funding model, as many are not financially sustainable.

In a recent communication, the Post Office informed the Department of Communications that it will have to be liquidated if it does not receive the money it needs soon.

COSATU is currently discussing the Public Procurement Act regulations (passed earlier this year) with the NT.

Dr Rendani Randela (Budget and Policy Analyst at the National Treasury) said there was a general understanding within the Minister’s Committee on Budget on the need to turn things around and bring about economic growth in the country. To guide its efforts, the department incorporated four growth pillars in Chapter 2 of the MTBPS publication on the economic outlook.

The Chairperson expressed appreciation for the stakeholders' contributions to the two bills, which she said will help ensure the needs of communities are addressed. All three stakeholders were excused from the meeting.

Consideration and adoption of the minutes for the meeting held on 3 December 2024

Mr Nodada took the Committee through the minutes.

The Chairperson requested a mover to adopt the minutes.

Ms S Ndhlovu (ANC, Limpopo) moved for its adoption.

Mr Ryder seconded the mover.

The minutes were duly adopted.

After the minutes were adopted, the Chairperson indicated that the Committee would meet on Tuesday next week to adopt its reports on the two bills. Having said that, she closed the meeting.

The meeting was adjourned.