Economic Governance and Management: public hearings

Meeting report

ECONOMIC GOVERNANCE AND MANAGEMENT JOINT AD HOC COMMITTEE
16 November 2005
AFRICAN PEER REVIEW MECHANISM: PUBLIC SUBMISSIONS

Chairperson: Mr V Prince

Documents handed out:
Financial & Fiscal Commission (FFC) Submission
Alternative Information and Development Centre (AIDC)
National Treasury Submission
Prof P Le Roux's submission [email [email protected]]
COSATU Submission
Open Democracy Advice Centre (ODAC) Submission

SUMMARY
The Committee heard submissions from the Financial and Fiscal Commission, Alternative Information and Development Centre, Professor Le Roux, COSATU, National Treasury and the Open Democracy Advice Centre on the African Peer Review Mechanism process. The Committee plan to public hearings in all provinces to elicit the views of the public. Members’ concerns included the need for an increase in the budget deficit and alternatives to the export-orientated industrial policy.

MINUTES
Financial & Fiscal Commission (FFC) Submission
Mr JayaJosie, Deputy Chairperson, FFC said that the FCC was guided by key statutory and policy frameworks such as the Intergovernmental Fiscal Relations Act, the Public Finance Management Act, Provincial Borrowers Act, Municipal Finance Management Act, Municipal Systems Act, and Provincial Tax Regulation Process Act. The revenue was assigned to the three spheres of government. Expenditure responsibilities included all the government departments at provincial and local level.

The Chairperson said that he did not expect Members to ask questions because questions would be asked during the hearings.

Alternative Information and Development Centre (AIDC)
Ms Dot Keet, Senior Researcher, spoke on how her organisation saw economic governance and management in SA. She said that strategic policy making was too technocratic. The collective government policy development was strongly influenced by a western neo-liberal paradigm and monetarist theory. She was critical of the influence of the World Bank and the International Monetary fund. On parliamentary policy making and monitoring, she said that Committees were not probing the departments enough. Department officials reported only what they were dealing with and left very little space for Members to influence the direction of policy making. On tripartite policy deliberation, she said that the National Economic Development and Labour Council (NEDLAC) did not carry enough statutory weight in national legislation. NEDLAC labour participants needed to be capacitated to be on par with business counterparts. There was a serious need for genuine democratic participation. NGOs were not consulted when important decisions were made. She said that economic policy making in the region and the Continent were made largely out of public sight. Business operations of South African companies were not regulated.

Discussion
Mr L Greyling (ID) asked for alternatives to the policy of export-led growth.

Ms Keet replied the export-led growth policies had not delivered on employment. She said that the current model was not the only alternative for developing countries, even if developed countries could open their markets SA's problems would not be resolved. South Africa needed massive investment in infrastructure.

Mr N Abonte (ANC) asked what could be done to call the Government to order. He said that all Governments had limitations and constraints with regards to the type of policies they followed.

Ms Keet replied that trade negotiations were not balanced; South Africa should not let itself be dictated to by capitalist policies. The Government only listened to the views of big business and it excluded communities. The Government should also engage non-governmental organisations.

National Treasury Submission
Mr L Woods, Chief Operations Officer, said that the National Treasury was operating within the context of Chapter 13 of the Constitution, and the Intergovernmental Fiscal Relations Act. The role of the Treasury was to establish the Budget Council and Forum. It had to spell out the intergovernmental budget process and the role of the FFC. Other relevant pieces of legislation were the Public Finance Management Act and the Municipal Finance Management Act. He mentioned the parliamentary budget process, and the main steps that the Treasury went through during the budget process.

Some of the things he mentioned were the Budget documentation and parliamentary oversight. The International Monetary Fund Article IV review and the African Development Bank and OECD African Economic Outlook gave South Africa positive reviews. Macro-economic policies supported sustainable development. The policies of the Treasury were sound, transparent and predictable. Mr Wood went through the steps required by the PFMA. The Treasury was fighting corruption and money laundering through its Financial Intelligence Centre. The SA financial system was integrated with Southern African regional systems through various bodies such as the Southern African Development Community (SADC) Finance and Investment Protocol, the African Development Bank and the Committee of Central Bank Governors.

Discussion
Mr Sample asked whether there was anything that the Treasury could do better. Mr Wood said that the implementation side could do with a slight improvement.

Mr Abonta enquired about the role of civil society during the drafting of the budget. The Budget Process was influenced by many factors such as the ruling party manifesto and economic priorities

Mr Greyling asked what could be done to increase the participation of NGOs. He wanted to know whether the deficit could be increased.

Mr Wood replied that the deficit had to be managed carefully and gradually. The Budget was informed by the fiscal process, the Government Lekgotla and other stakeholders rather than the Treasury alone.

Prof Pieter Le Roux's submission
Professor Le Roux, Director School of Governance, University of Western Cape said that South Africa cannot imitate South Korea or first world countries because those countries’ development happened in a different context. South Africa should consider the failures of Japanese planning. He understood that South Africa had no choice but to join the World Trade Organisation but the reduction in tariffs was too rapid. The Government had not given enough support to tourism as the most promising sector. He added that tourism had the potential to develop this country further and it could grow the economy. He said that telephone and broadband was too expensive in South Africa and that could hinder business investments.

Discussion
Mr Gumede (IFP) said that a lot of economists had been calling for the re-instatement of the October Household survey. He asked who was going to finance the Basic Income Grant (BIG).

Prof le Roux said the BIG could be financed by indirect taxation

Mr Greyling asked for an acceptable deficit level.

Prof Le Roux replied that South Africa should stop copying foreign models. When money was spent properly, the deficit could be average.

COSATU Submission
Mr E Paulus, Senior Researcher spoke about the macroeconomic developments that have shown a shift from the controversial Growth Employment and Redistribution policy. The government had realised that the economy could grow when more money was spent on infrastructure. He spoke about fiscal and monetary policy. He said the questionnaire that had been distributed about the African Peer Review Mechanism (APRM) was flawed. He mentioned measuring and reviewing the goals of the APRM. He said that the Government should adopt a developmental approach to economic governance and management. That could be done by increasing spending sufficiently to improve services to the poor. COSATU felt a deficit of 1, 5% was unacceptable. He said that another factor was that the South African Revenue Services had consistently out-performed in terms of tax estimates. COSATU wanted spending on social security to be increased and the child support grant had to be increased up to 18 years. The Government had to show more seriousness with implementing the Basic Income Grant. He said that the reason that employment had dropped was because of the fact that the unemployed had stopped looking for work.

Discussion
Mr Greyling wanted to know whether civil society had any suggestions regarding public participation in Parliament. He asked Mr Paulus' views on industrial policy.

Mr Paulus replied that COSATU rejected the export orientation of Government policy because it resulted in job losses. COSATU would participate in the public hearings.

The Chairperson said that the Committee would embark on a road show to all provinces and invite the public to participate.

The State of Whistle Blowing and Access to Information in South Africa: Open Democracy Advice Centre (ODAC) Submission
Ms A Tilly, ODAC Director, said that her organisation was a specialist organisation working in areas of access to information and whistle-blowing. She spoke about Democracy and Good Political Governance. She said every citizen had the Right of Access to Information as guaranteed in the Constitution. The purpose of that right was to foster a culture of transparency and accountability in public and private bodies. She said that the Act itself was inadequate and inappropriate to South African circumstances. The lack of appropriate dispute resolution mechanisms in the Act was an example of this. There was a need for a forum that could be accessed after the requested information was refused.

The South African Human Rights Commission (SAHRC) assumed primary oversight for the Promotion of Access to Information Act (PAIA). The SAHRC had expressed concerns that public bodies were not submitting reports detailing their implementation of PAIA in their annual reports. ODAC recommended that more robust action was needed by the SAHRC. The challenges that faced the PAIA were illiterate requesters and mute refusals. ODAC recommended that that the Department of Justice should assist in the creation of an accessible, cost effective, efficient dispute resolution body to adjudicate disputed requests. ODAC had laid a complaint with the Public Protector about the refusals. She said that the required fee of R35 might be a hindrance to large sections of the population. ODAC recommended the establishment of an Information Ombud.

The meeting was adjourned.