Hansard: Minister's Responses / Member's Statements / Global Financial Crisis Affecting Both Developed and Developing Countries Alike
House: National Assembly
Date of Meeting: 18 Nov 2008
No summary available.
TUESDAY, 18 NOVEMBER 2008
PROCEEDINGS OF THE NATIONAL ASSEMBLY
The House met at 14h05.
The Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.
NEW MEMBERS AND OATH
The SPEAKER: The Speaker announced that the vacancy that had occurred due to Mr K P Motlanthe being elected President has been filled by the nomination of Mr L M Kgabi with effect from 14 November 2008 and that the vacancies caused by the resignations of Ms G J Fraser-Moleketi, Mr A G H Pahad, Mr M G P Lekota, Ms AT Didiza, Mr A Erwin and Ms S P Rwexana had been filled by the nomination, with effect from 14 November 2008, of Mr E Godongwana, Ms D N Sikosana, Ms T B Sunduza, Mr P O Moloto, Ms J C Moloi-Moropa and Mr X B Mabaso respectively.
In terms of section 48 of the Constitution, members of the National Assembly must swear or affirm faithfulness to the Republic and obedience to the Constitution before they begin to perform their functions in the NA.
I wish to announce that the vacancy which had occurred in the National Assembly owing to the resignation of Mr T D H Ramphele, had been filled with effect from 31 October 2008, by the nomination of Ms T M A Gasebonwe. I further wish to announce that that the vacancies which occurred in the National Assembly owing to the resignation of Ms P G Mlambo-Ngcuka, Mr E G Pahad, Mr R Kasrils and Mr F S Mufamadi, had been filled with effect from 31 October 2008, by the nomination of Ms T M A Gasebonwe, Ms A C Mashishi, Ms S B Moiloa-Nqodi, Mr F C Fankomo and Ms F J Wright respectively. The members made and subscribed the oath or affirmation in my office.
NOTICES OF MOTION
NOTICES OF MOTION
Mr N SINGH: Madam Speaker, I hereby give notice that, on the next sitting, I shall move on behalf of the IFP: That the House-
(1) notes that the IFP has been in consistent critic of the ministerial blue lights, which has been a source of chaos on the provinces' roads;
(2) in the latest incident a member of the security unit of the KZN MEC for Social Development, Mechack Radebe, has been arrested for shooting at a tire of a motorist who failed to move over to a slower lane of the N3, near Pietermaritzburg, on Saturday, causing an accident that left eight people injured;
(3) the IFP believes that MEC Radebe must be help accountable for this incident;
(4) further, believes that clear guidelines and rules now need to be put in place so that this unlawful behaviour is stopped before innocent lives are lost;
(5) the users of blue lights seem now to have become a law unto themselves; and
(6) therefore, calls for an urgent debate in Parliament on this matter.
Mr N SINGH
GLOBAL FINANCIAL CRISIS AFFECTING BOTH DEVELOPED AND DEVELOPING COUNTRIES ALIKE
The CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move without notice: That the House ...
[TAKE IN FROM MINUTES.]
Mr M J ELLIS: Madam Speaker, there are other motions without notice before we get to the Order Paper. I wonder if we could put those first.
The SPEAKER: Yes.
AMERICAN PRESIDENTIAL ELECTION
Mr M J ELLIS: Madam Speaker, I move without notice: That the House -
[TAKE IN FROM MINUTES]
WORLD AIDS DAY
Ms S V KALYAN: Madam Speaker, I move without notice: That the House notes –
[TAKE IN FROM MINUTES]
GLOBAL FINANCIAL CRISIS AFFECTING BOTH DEVELOPED AND DEVELOPING COUNTRIES ALIKE
The CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move without notice: That the House ...
[TAKE IN FROM MINUTES.]
MOTION OF CONDOLENCE
(The Late Prof Es'kia Mphahlele)
The CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker I move without notice: That the House ...
[TAKE IN FROM MINUTES.]
Agreed to, with all members standing.
The CHIEF WHIP OF THE MAJORITY PARTY
The CHIEF WHIP OF THE MAJORITY PARTY
MOTION OF CONDOLENCE
(The Late Mrs Vuyiswa Tiny Nokwe)
The CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move without notice: That the House ...
[TAKE IN FROM MINUTES.]
Agreed to, with all members standing.
The CHIEF WHIP OF THE MAJORITY PARTY
The CHIEF WHIP OF THE MAJORITY PARTY
MOTION OF CONDOLENCE
(The Late Mama Miriam Zenzile Makeba)
The CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move the draft resolution printed in my name on the Order Paper, as follows:
[TAKE IN FROM MINUTES.]
Agreed to, with all members standing.
The SPEAKER: Before I give parties an opportunity to address the motion as introduced by the Chief Whip, I want to acknowledge the presences of Miriam Makeba's family in the gallery and also one outstanding South African actor and cultural worker, Zakes Mokae, who lived with Miriam Makeba in States for many years. They are present in the Speaker's bay. Welcome to the House. [Applause.] Mr Mokae is accompanied by his friends also from the States and his wife Mandy. Welcome to the House.
The DEPUTY PRESIDENT
The DEPUTY PRESIDENT: Madam Speaker, may I also start by welcoming, yet again, and recognising the friends and family of Miriam Makeba.
Hon members of Parliament and fellow South Africans, I am honoured to join the millions around the world to commemorate the living memory of Mama Miriam Zenzile Makeba. This past weekend at her memorial service, we joined the multitude of fans of this world-acclaimed icon to pay our last respects and say: Thank you, Mama Miriam for sharing your life with us.
We acknowledge that she has returned to her everlasting home to watch over us as she did in this world in her capacity as our mother, sister and story teller in song. The whole world recognises her stellar achievements in the world of music in particular and culture in general.
She accomplished a great deal since her debut with legendary groups like The Manhattan Brothers and The Skylarks. As the National Heritage Council, NHC, said:
Our country and the musical world at large have not only lost an irreplaceable idol but we have lost, I quote: "a cultural institution all by herself".
She extended the horizons of African musicians and inspired a whole generation of Afro-pop and Afro-jazz musicians. We have lost a singer par excellence who used her beautiful voice of unique rhythmic power to spread a message that stated simply that the injustice anywhere must be challenged and the struggle for truth must continue. Even in her last days, she was participating in a concert in Italy for an Italian journalist whose life had been threatened after publishing a book critical of the mafia.
Today, we are gathered in this House to remember South Africa's Goodwill Ambassador to Africa, to pay homage to a woman who sacrificed much for us to be free. Her contributions to our liberation are legendary, as when she stood at the United Nations in 1963 to decry and denounce a system of unimaginable dehumanisation to its citizens. Those of us who were privileged to bask in her glory and glow in her shadow recall a woman and a sister whose humility came naturally.
Mama Miriam was not a pretender to her queenly throne. She was kind, she was giving and she was there for her contemporaries who struggled to cope with life in exile. Mama Miriam's actions spoke louder than our pronouncements of her abilities as a caring singer.
In being honoured as South Africa's first ever Goodwill Ambassador in March 2001, the former President said that he recognized and honoured Ms Makeba's contribution over the decades in playing a lead role internationally, in the struggle for the African people's freedom and the emancipation from slavery, colonialism and apartheid and instilling of pride in the African history, culture and civilisation.
Africa has lost a true daughter and patriot to whom it was unforgivable to be a singer and just entertainer without educating the world about the tragedy if women survivors in Democratic Republic of Congo, DRC.
In March this year, she went to the DRC in her capacity as the Food and Agriculture Organisation Ambassador. She also expressed the concern to us here in South Africa about sexual violence. Her words ring true for Africa that even though women, I quote:
Guarantee the survival of 80% of households are frequently victims to rape.
These are not the words of a woman who was only interested in world fame or becoming rich, she was acquainted with the sea of poverty, hunger, hopelessness besetting our families and neighbourhoods. Her life is a message by itself to all people who aspire to either public office or celebrity status. Her life says to all of us as public representatives such positions carry a responsibility to those without a voice. Her life says that to be a public figure is to be selflessly dedicated to the poor, the marginalised and the vulnerable. Mama Makeba managed to combine effortlessly her commitment to her craft and art along with her love for her people especially young children.
The accolades she has garnered in the five decades she was in the public sport light speaks to a person who could not sit idle by when she was told of the abused girl-children, who do not have a home and people to care for them.
These accolades speak to someone who founded and became a benefactor to the Makeba Rehabilitation Centre for Girls, which opened in 2003 in Midrand. This centre caters for girls ranging in age from 11 to 17 years and what is truly touching about this centre is that these girls come from dysfunctional families, and some are orphans.
She has done it all and received all known acknowledgements from Grammy Awards, a Swedish Polar Music Prize, the Dag Hammarskjöld Prize for Peace in 1986 and in 1999 she received the National Order for Meritorious Service from South Africa.
Her story of triumph in this world does not end here. Mama Miriam is a woman, a mother, a grandmother and a great-grandmother who also took up an initiative of developing continental networks among women from South Africa and West Africa. In this capacity she set up a Skills Development Exchange Programme, which is a continent wide collaboration.
It is my wish that the younger generation of musicians that are trustees of her legacy will take up the baton and work to transform lives of others for the better. This is what "Mama Africa" has striven to do since she went into exile in 1959, being a light of inspiration to her fellow musicians, lifting up and empowering women and children and simply being an unparallel role model to all of us.
It was thus befitting that she was voted 38th in the top 100 poll of Great South Africans in 2004.
I recall her words on the already-mentioned trip to the DRC this year:
I would like my visit to this country to be an opportunity to renew and strengthen our commitment and ensure that innocent victims suffering from hunger have access to the necessary resources to cultivate their hopes for a better life.
When I think of Mama Zenzile Makeba, I seem to recall another heroine, Ms Ella Fitzgerald when she sang Skylark. The lyrics to this classical tune are familiar on this occasion:
Skylark, have you anything to say to me? Is there a meadow in the mist? Have you seen a valley green with spring? Where my heart can go a journeying over the shadows and the rain to a blossom covered land? Oh Skylark, won't you lead me there?
I see I have some time and I wish to share with you some of the words we listened to at the funeral service on Saturday.
When the Minister of Arts and Culture addressed the funeral service, among other things, he referred to the endless love of music of "Mama Africa".
She kept telling us that she was retiring. And I think hon members will remember some years back when she sang to us at one of those beginning of the year concert. She did even on that occasion announce that she was retiring. But look where she died, coming down a stage, after singing. She could never get herself to stop singing. I always say she left beautifully, because she left us after doing something that was what she enjoyed most in life; what she did best in life.
I also want to refer to the words of Minister Nkozasana Dlamini-Zuma who referred to her generosity. Among stories she told was a story of how Mama Miriam came across her daughter at some airport, and the child had lost her luggage. Without hesitating, she popped out money and gave her to go and buy clothes for herself. That is why we say that she was not just a star on stage; she was a beautiful human being, a mother and a very gentle person.
In working with the Ministry of Foreign Affairs, she co-operated unhesitatingly with the Minister on the many needs that they had to address, sometimes without having planned ahead and she would immediately just offer herself and her energies to assist to address the problems that the department was faced with.
The speech that touched me most was that of her 13-year old great
grandson who told us that, of course, he ought to have been calling her "ukhokho" that is great-grandmother, but he called her "gogo". He also said that she was her own person.
She got to America and, of course, any normal human being would immediately start playing the game according to what the people around you are doing, but Miriam stayed African; in the way she carried herself, in the songs that she sang, the preoccupations that, in fact, informed the content of the music. At the end, Lindelani said that we should learn from her.
I think that that is a great message that we should also leave in this House today. The way she lived her life, the way she loved Africa, and, in fact, became more of an African than a South Africa, we should learn from her.
I believe that a better place is where Mama Makeba is at present.
At her memorial service this past Saturday, I was touched also by a wonderful rendition of hers, of a biblical song, and I felt that it was a fitting end to a most dignified life and a most dignified woman. The song I am referring to is titled When I Die Tomorrow, and I wish to briefly quote its touching lyrics,
When I die tomorrow, I will say to the Lord, Oh Lord you've been my friend. Thank you Lord. Oh Lord I'm your child, Oh Lord I am your child.
May her soul rest in peace!
Mrs D VAN DER WALT
The DEPUTY PRESIDENT
Mrs D VAN DER WALT: Madam Speaker, `` a larger-than-life lioness of the struggle and a songstress in whom Africa had found her voice'': This is how the publicist, Mark Le Chat, so aptly paid tribute to Miriam Makeba in his foreword to her 2004 album, Reflections. As he recounted his presence in the hot and fevered atmosphere where her arrival was awaited in a downtown club in Johannesburg in December of 1990, suddenly, he recounts, the room went quite in a reverential kind of way as Miriam Makeba stood in the doorway, clothed in a head-dress and robed fashioned from the gorgeous fabrics of Guinea, regal, yet but paradoxically humble. She was seemingly shy. Yet the owner of a powerful persona which took your breath away momentarily before the assembled crowd burst into ululating, applause and tears.
The mark that Miriam Makeba left on the global music scene and the great service that she has done to both African and South African music will leave on for decades to come.
She remains one of the most important female vocalists to have emerged out of South Africa. She has rightly been hailed the Empress of African Song and Mama Africa, not only for her prowess as a musician but also for helping to bring African music to a global audience in the important decade of the 1960s.
More than five decades after her debut with the Manhattan Brothers, she continued to play an important role in the growth of African music on the stages of the world. The fruits of her musical contribution will live on for decades to come and nothing will ever be able to relegate it, or the memory of her gorgeously pitched range and the husky drift of her voice to the forgotten annals of music.
But Miriam Makeba's contribution was not only in terms of music. Her life was marked consistently by struggle. Borne into poverty, she soon recognised that music was a type of magic which she could use to uplift herself. But she would always balance her vocal successes with her outspoken views about apartheid and racial injustice across the world, something for which she came to pay a heavy price.
In a regrettable step, the government of South Africa revoked her citizenship in 1960. This forced her to be a citizen of the world for the next 30 years, albeit the world for the next 30 years that was not entirely welcoming since the number of Western governments also became unsympathetic towards her for her association with the civil rights movement.
In a lesson to all of us, Miriam Makeba prevailed as a force of good and a force of musical beauty - her fate in death, being nearly as poetic as her fate in life.
On 9 November 2008, in the moments before her passing, she was taking part in a concert organised for a social cause to support writer, Roberto Saviano, in his stand against the Camorra, a mafia-like organisation local to the region of Campania.
Miriam Makeba has shown herself to be a great South African. She has distinguished herself as a daughter of Africa that was proud of her continent and that enlivened many of its grand steps to liberation. But most importantly, Miriam Makeba was an outstanding global citizen that spoke out about injustice everywhere in the most beautiful songs that will permeate homes, public spaces and memories for decades to come. Lala kahle, Mama Africa. [Rest in peace, Mama Africa.] [Applause.]
Mr M B SKOSANA
Mrs D VAN DER WALT
Mr M B SKOSANA: Thank you Madam Speaker, hon Ministers, Deputy Ministers and hon members, on behalf of the Inkatha Freedom Party and its President, Prince Mangosuthu Buthelezi, I join the hon members of this respectable House in expressing our sincere condolences to the family of the late Miriam Makeba, her friends and all people of South Africa.
Much has been said about her over the past days - on her life, her music and on her friends whom I understand some of them are also here with us, her achievements, accolades and her selfless sacrifice in the struggle for South Africa's liberation. When you talk about Mr Zakes Mda, then I remembered a play called, Come Home Child.
The demise of Miriam Makeba is a great loss for South Africa and the world. From all those who were touched by her dynamic presence and personality to those whose hearts and souls were charmed by her majestic melody and song.
Indeed, we are all poorer without her. However, we must derive much solace and comfort in the magnanimous spirit she left with us. And like Thucydides in her oration of a funeral, and say:
For heroes have the whole earth for their tomb; and in lands far from their own, where the column with its epitaph declares it, there is enshrined in every breast a record unwritten with no tablet to preserve it, except that of the heart.
The people of Italy blessed with the last performance and song from Miriam Makeba that fateful evening will testify to their fortune. Miriam Makeba was bequeathed to the world community at a very tender age. She became South Africa's ambassador of goodwill decades before it was officially conferred on her by the former President, Mr Thabo Mbeki.
Persecuted at home with racist draconian laws, Miriam Makeba amassed exceptional courage to tell the painful story of the people of South Africa to the United Nations, presidents, kings, and prime ministers around the world.
Long after the mourning period is over, tears of sorrow have been gracefully wiped off, long after memorial services and eulogies have been passed, after the gospel choirs, symphonies, musicians and bands of all shades have ended their renditions, Miriam Makeba's beautiful song will remain with us and with the people of the world.
For now let us be content that the songbird sings no more for us, but sings with the angels above. May God keep her soul. Amen. [Applause.]
Mr G T MADIKIZA
Mr M B SKOSANA
Mr G T MADIKIZA: Madam Speaker and hon members, the United Democratic Movement wishes to extend our deepest heartfelt condolences to the family, friends and colleagues of the late Miriam Makeba during this time of bereavement.
Mama Africa, as she was affectionately known attained many tremendous achievements during her lifespan. She will be remembered as a person who lived her life to the fullest. She will also be remembered for her talent, style and passionate believe in what she was doing, as well as carrying a message of hope for South Africans during trying times inside and outside the country.
Her legacy lives on through the accomplishments of her children and the younger generation who aspire to be musicians. The youth of today can learn from the discipline and respect that Miriam Makeba embraced throughout her life.
She was rated among the leading proponents of change in South Africa. We have lost a true role model whose work will always be remembered. Indeed, hers is a sad loss to the country and to the continent. May her soul rest in peace. I thank you. [Applause.]
Mrs P DE LILLE
Mr G T MADIKIZA
Mrs P DE LILLE: Madam Speaker, on behalf of the ID, I want to express our condolences to the family of our sister, Miriam Makeba. Mama Africa's contribution towards the struggle against apartheid can never be overstated. Miriam Makeba was the daughter of the soil who liberated our country with her beautiful voice. She appealed to young and old and her activism as a singer, who sang about real issues, is a hard act for singers of today to follow. We will forever be indebted to her for the countless times we were made to feel alive and free by her beautiful voice, even during oppression.
To her family and millions of fans around the world, I would like to say, this is not only a time for mourning; it is also an opportunity to celebrate the contribution of her life to our nation. May her soul rest in peace. Thank you. [Applause.] REV MESHOE
Mrs P DE LILLE
Rev K R J MESHOE: Madam Speaker, the ACDP is saddened by the loss of Mama Africa, Zenzile Miriam Makeba; a great lady, musician, activist and an ambassador for black people everywhere, who made famous the phrase, "black is beautiful." Her rich voice sang songs that decried oppression wherever she found it. Her "Click Song" and "Pata Pata" become international hits, bringing attention to the plight of black people suffering under apartheid. She declared she would sing until the day she died, which she did, in Italy, in the open air at an antiracism and anti-Mafia concert.
Mama Africa twice addressed the United Nations, speaking out against the evils of apartheid and her fearless humanitarianism earned her many international awards. She weathered many storms; including several car accidents, a plane crash and even cancer, and was as active in her latter days as if she was still a young girl.
It was heart-warming to hear that at the age of 74, Mama Makeba insisted on doing a studio interview when she could have stayed home and do it over the telephone. It revealed a woman of much humility despite her immense fame. The ACDP expresses heartfelt condolences to the family. We join you, together with people all over the world in mourning your great loss. Thank you. [Applause.]
Mr P H K DITSHETELO
Rev K R J MESHOE
Mr P H K DITSHETELO: Madam Speaker, hon members, the legendary South African singer, fondly known as Mama Africa, passed away. In 1963, her South African citizenship was revoked after testifying before the United Nations Congress on the issue of apartheid. She was not welcome in her own country, but 10 different countries made Makeba an honorary citizen and they all issued her with passports.
The South African government's radio and television refused to broadcast her songs until 1989. It was only in 1990, when many long-exiled South Africans returned that she was able to return home. We want to honour her today and thank her for her tremendous sacrifice and contribution made by leaving behind her family and still continue to make us proud as she used her fame to focus attention on the abomination of apartheid.
Re lebogela botshelo ba ga Mama Afrika. O dirile tiro ya gagwe e e neng e mo tshwanetse, e e neng a e rata. O tlhokafetse a e dira. A Modimo o nne le ena. Re leboga le go utlwa botlhoko le bagaabo. A kagiso e nne le bone. [Legofi.]
Ms S RAJBALLY
Mr P H K DITSHETELO
Ms S RAJBALLY: Madam Speaker, I cannot express the shock and dismay when hearing the news of the passing away of our beloved Mama Africa. The late Miriam Makeba was a light to our nation and her melodious voice rang out the sweetness of our people, on being African.
Miriam Makeba, though a great celebrity and loved globally, did not live unscathed by the apartheid regime. Her return to South Africa brought back to our people an angel of light, to whom she was a best friend, a mother and a sister.
The MF takes this opportunity to express our deepest condolences to the family, friends and the entire nation on the loss of this magnificent artist and an amazing lady, Miriam Makeba. Miriam, you will always be our angel and as you pata pata our hearts, you'll live in them forever. God bless you. May you rest in peace. Thank you. [Applause.]
Dr S E M PHEKO
Ms S RAJBALLY
Dr S E M PHEKO: Madam Speaker, Miriam Zenzile Makeba defied the circumstances of her birth. She was only 18 days old when her mother was imprisoned for six months for brewing African beer. This was illegal according to colonial laws. Her mother took her with to jail. Miriam also lost her father when she was six years old. Her childhood was for Miriam Makeba a bundle of despair, but she rose to be a celebrated musician internationally and earned the title "Mama Africa." She was not a politician, but a musician par excellence. She was sensitive to the national humiliation of her people. Many of her songs spoke to suffering and dispossession of her people. She sang...
Bahleli bonke etilongweni; bahleli bonke kwaNongqongqo.
Yini na ma-Afrika?
Nanku, nanku uSobukwe; nanku, nanku noMandela.
Abantwana beAfrika bakhalela izwe labo, elathathwa ngabamhlophe. Mabawuyeke umhlaba wethu!
She consulted with Johnson Makhathini of the ANC and the David Sibekos of the PAC at the United Nations. She treated all leaders of our country with respect. She knew that all freedom fighters of this country were sacrificing for some noble cause. She gave them equal respect and recognition, and her speech is testimony to this.
Anyway, death is a necessary end. "It will come when it will come," as Shakespeare put it, but in the context of eschatology death is a passport to a deathless land beyond the universe. Mama Africa for now:
Mabawuyeke umhlaba wethu.
We shall sing that song until the objective for which the liberation struggle was waged is achieved.
Tsamaya ka kgotso kgabane ya Afrika, re lla le lona he ba ha Makeba, bohle re tseba hore ngwana wa lona e ne e se moradi wa lona feela, e ne e le moradi wa Afrika, e ne e le moradi wa rona kaofela. Re ya le leboha ka ho mo kadima batho ba Afrika.Ke ya leboha. [Mahofi.]
Mr L M GREEN
Dr S E M PHEKO
Mr L M GREEN: Madam Speaker, the late Miriam Makeba was a world musical icon. She was a daughter of this soil who sang her way into the hearts of millions of people and her "Click Song" brought melodious joy to all of us. "Pata Pata", one of her most famous songs is a classic and as it means dance, we believe that such was the influence of her songs. It brought happiness to our souls.
She will be missed, but she died while doing what she does best, and that is singing to international audiences. Her death will be mourned by us all, for she has made her mark on the world stage; not only as a singer, but as a humanitarian activist as well. She made her contribution to making this world a better place. Her virtues were those of integrity, respect for others, charity and unselfish service.
South Africa has over the past few years lost many excellent artists through death, some naturally, others through violence. We become poorer in spirit if these icons are not recognised for what they contribute to the soul of our nation.
On behalf of the FD, I wish to express our sincere condolences to the family of Miriam Makeba. May the Lord be with the family and loved ones of the late Miriam Makeba during the time of bereavement and may they be consoled with the knowledge that though she is no longer with us, her songs and memories will remain in our hearts for generations to come. May the soul of Miriam Makeba rest in peace. Thank you. [Applause.]
The CHIEF WHIP OF THE MAJORITY PARTY
Mr L M GREEN
MOTION OF CONDOLENCE
(The late Mr B Nair)
The CHIEF WHIP OF THE MAJORITY PARTY: That the House-
(1) notes with profound sadness the passing away of Mr Billy Nair on 23 October 2008;
(2) recalls that Mr Nair committed his life to the cause of freedom, peace and democracy and that he joined the Natal Indian Youth Congress in 1949, became its Secretary in 1950 and later joined the Natal Indian Congress and that he was also a volunteer in the 1952 Defiance Campaign and served on the first executive committee of the South African Congress of Trade Unions;
(3) further recalls that Mr Nair was active in Umkhonto weSizwe from its establishment on 16 December 1961 and in 1963 was charged with sabotage and received a 20 year sentence which he served on Robben Island and that Mr Nair had also been a member of the national executive committee of the United Democratic Front, the Central Committee of the South African Communist Party, the National Executive Committee of the ANC and in 1994 became a Member of Parliament until 2004;
(4) acknowledges the momentous role played by Mr Nair towards the birth of a nonracial, nonsexist and democratic South Africa, as well as his immense contribution in the reconstruction and development of our country; and
(5) conveys its condolences to the Nair family, the African National Congress, and the South African Communist Party.
The SPEAKER: No objections to the motion. Agreed to. The condolences will be conveyed to the Nair family, the African National Congress, and the South African Communist Party.
CONCERN ABOUT THE GLOBAL FINANCIAL CRISIS
Mr T J BONHOMME (ANC): Madam Speaker, on the statement of the global financial crisis. The African National Congress has observed, with great concern, the current global financial crisis that has, and is still, seriously affecting both developed and developing economies across the board with no abatement.
The epicentre of this extremely grave financial market crisis is the USA. South Africa's financial sector has borne up relatively well and for several reasons including, as it is widely acknowledged, the remaining exchange control measures.
But the global economic crisis will certainly impact upon South Africa's economic growth prospects over the next years and pose challenges for job creation and other development goals. The global crisis will also impact upon the persisting systematic points of vulnerability: currency volatility, the current account, and the inflationary pressures.
Despite the advocacy of the neoliberal agenda, a substantial majority of developed countries, especially the United States and United Kingdom, have embarked on partial nationalisation of the banks, as well as some of the financial institutions that experienced the current financial crisis over and above bailing them out financially.
The African National Congress-led government continues to work for changes at the World Trade Organisation, the International Monetary Fund, and the World Bank and thus mandate government to prioritise efforts to fight poverty and to build the economies of developing countries; to work to make multilateral institutions more accountable to the people of the South; to work to strengthen the United Nations and specialised economic agencies and promote greater coherence between the different multilateral agencies. I thank you, Madam Speaker. The LEADER OF THE OPPOSiTION (DA)
Mr T J BONHOMME (ANC)
RELAUNCH OF THE DEMOCRATIC ALLIANCE
The LEADER OF THE OPPOSITION (DA): Chairperson, may I also express my condolences to the family of Miriam Makeba, whom I first heard in concert in Berlin in 1969.
The relaunch of the Democratic Alliance signals a new promise and a new approach: a promise that we can turn South Africa into a society in which everyone has a fair chance at achieving their dreams, irrespective of the circumstances of their birth, and a renewed determination to address the injustices and to transcend the racial divisions of our country's past for the benefit of all the people of South Africa.
It melds our core philosophy of an open opportunity driven society for all with our historic quest to promote and defend the Constitution and our democracy.
One nation, one future: the security of all our children, women, and men, a market economy appropriately regulated focused on creating jobs, and a welfare safety net for those who cannot provide for themselves. We now express each of these concerns as an integrated part of our new identity.
This step signals the DA's confidence as a party that speaks to the needs of the people with real policy alternatives. Most importantly, our new identity shows we are a party of government and not just opposition – a winning party that will prove its governing mettle after the next election. ANC, beware. [Interjections.]
WELCOMING OF DELEGATION FROM THE REPUBLIC OF KENYA
The HOUSE CHAIRPERSON (Mr A C NEL): Hon members, before I give the IFP an opportunity, could I recognise the presence in the gallery of a delegation from the parliament of the Republic of Kenya, led by the hon Fred Kapondi Chesebe. Welcome to Parliament. [Applause.]
Mr H J BEKKER
The HOUSE CHAIRPERSON (Mr A C NEL)
MISMANAGEMENT OF FUNDS BY KWAZULU-NATAL LEGISLATURE
Mr H J BEKKER (IFP): Chairperson, whilst the rest of South Africa, and the world for that matter, are trying to be financially prudent, the overspending of departments in the KwaZulu-Natal government has meant that the intervention of National Treasury is needed to keep government services going.
In his presentation to the provincial legislature finance committee, the KwaZulu-Natal head of treasury said that 11 out of the 16 departments were currently overspending. Overexpenditure for the 2009 year is now at R2,1 billion, with the health department alone overspending by R1,5 billion. This mismanagement and irresponsible actions of these departments mean that service delivery, which is already slow, is going to be hampered even further, resulting in inconvenience and suffering for the many people whom they are meant to be helping.
It is obvious that there is a lack of leadership and management, and that the current management cannot deliver and provide the necessary services to the people of KwaZulu-Natal. It is with this in mind that we call upon the Minister of Finance to intervene directly in terms of section 100 of the Constitution. I thank you.
Mr W M SKOSANA
Mr H J BEKKER
registration of voters
Mr W M SKHOSANA (ANC): Chairperson, the ANC welcomes the efforts demonstrated by all South African patriots in defending the democratic gains of all the people and advance towards a society in which the government is freely chosen by the people. The IEC set aside a weekend of 8 and 9 November 2008 as voter registration weekend.
A total number of 1 648 189 new registration was received whilst another 1 752 596 currently registered persons applied for registration in new voting districts following the change of addresses. A further 293 871 re-registered in their same voting districts, those were already registered before. A total number of records visited in the registration station came to a total of about 3 694 656.
The drive has far surpassed the expectation of the IEC and we are all delighted to see a successful weekend drive to register new voters, especially the youth who represent the majority of the weekend registration actively at about 77,9%. The IEC says: "We are proud to say that this was our most successful registration since 2000."
However, there have been some challenges that cropped up during the registration relating to the setting up of the some voting districts and opening time. We urge the IEC to attend to these challenges. The ANC urges all registered voters to participate in their millions in the elections of 2009 and renew the democratic mandate of the ANC. I thank you. [Applause.]
Ms N C NKABINDE (UDM):
Mr W M SKHOSANA (ANC):
Corruption at SAA Senior management LEVEL
Ms N C NKABINDE (UDM): Thank you, Chairperson. The UDM notes that the SAA finds itself, once again, embroiled in a scandal. This time, the Sunday Times claims that the CEO has been involved in breaking the company policy by reinstating voyager miles to a person supposedly employed to investigate corruption in the SAA.
It is nonsensical to commit corruption in pursuit of fighting corruption. If this was an isolated incident of dubious management at the SAA it would have been cause for concern. The SAA has not seen a year gone by in the past decade without management and financial woes. In the past few years this House has bailed out the SAA to the tune of billions of rands.
It is especially galling for the thousands of workers, who have lost their jobs during the SAA's restructuring and the many workers who still face retrenchment, to witness the excess and the unpunished transgressions of senior management. Whilst thousands of workers are uncertain about their future, the man at the top is paid a fortune despite wasting the resources of the company. The UDM calls on the board of the SAA to act immediately on these latest allegations. I thank you.
Mrs P DE LILLE:
Ms N C NKABINDE (UDM):
Teenage girl pregnancIES
Mrs P DE LILLE (ID): Chairperson, may I use this opportunity to congratulate you on your appointment as the chairperson. As we enter the 16 days of activism against women and children abuse, the issue of teenage pregnancies must be dealt with. But it cannot be dealt with through knee-jerk reactions and solutions that put the sole responsibility and blame on teenage girls.
The ANC's President's comments that pregnant teenage girls must be sent to boarding schools perpetuate the patriarchal and sexist values in our society. Why is it that girls and women have to bear the responsibility alone? What about the responsibility of the boys and men? Why are we not confronting the power relations within our society that are leading to girls being victimised while men refuse to take responsibility for their actions?
The ID believes that we need real solutions to the many social problems afflicting our society. Real leadership means standing up for what is right rather than mouthing of the rhetoric that simply entrenches the values that need to be challenged in our society. Thank you.
Ms N M MDAKA (ANC):
Mrs P DE LILLE:
education summit in Gugulethu
Ms N M MDAKA (ANC): Chairperson, the Gugulethu parliamentary constituency office in partnership with the metro central education district and other stakeholders held a successful two-day educational summit on Friday 24 and Saturday 25 October at the Ekhwezi Community Centre. The summit was an initiative of the Gugulethu parliamentary constituency office, after visiting and consulting with schools as part of a fact-finding exercise through readiness earlier this year.
The primary focus of the summit was to look at various challenges facing schools in Gugulethu, ranging from poor Matric results, school vandalism, crime, teenage pregnancy, lack of recreational facilities in schools, drug abuse, etc.
The summit was attended by various local stakeholders, including the MP deployed into the area, Ms Ramakaba-Lesiea and the MEC for education, Mr Yousuf Gabru, in order to engage these challenges and come up with solutions. Some of the resolutions taken were: The formation of the Gugulethu education forum, that education should not be treated as a government matter alone but in partnership with communities, and that the summit should be held annually in order to check the progress made on the summit resolutions.
The ANC is committed to the principle of building a caring society. I thank you.
Ms S RAJBALLY
Ms N M MDAKA
THE STRUGGLE OF THE INDIANS
Ms S RAJBALLY (MF): Chairperson, I would first like to congratulate you in achieving your seat. I'm not going to call you Deputy Speaker.
Chairperson, 148 years ago, the ships Bulverde and Tyrol left Calcutta and Madras for South Africa bringing onto our shores Indians who were indented to do manual labour. Today, I stand here requesting all to recognise the struggle of these people and the great contribution Indians have made to the development of South Africa.
Under a segregated system Indians too bore the brunt of the apartheid regime and together with the other victims of the system fought for the freedom of our people. We applaud all who share this heritage by realising the value of every person in South Africa. We encourage unity and so stimulate our ability to address our country's challenges. Thank you.
Mr E W TRENT
Ms S RAJBALLY
THE DEMOCRATIC ALLIANCE UNDER APARTHEID REGIME
Mr E W TRENT: I hope the Minister of Finance will listen, since he's in the House.
If the Democratic Alliance becomes the government of South Africa, we will ensure that Parliament plays its oversight function effectively and well. It is for this reason that we agree with you Chairperson when you said this morning, seven hours ago, at the Auditor-General's briefing that this Parliament must leave a firm foundation which the next Parliament will be able to build upon; when it comes to oversight.
Sadly, this legacy will not be achieved because of the way in which Standing Committee on Public Accounts, Scopa, was stopped from attending to its affairs because of narrow partypolitical considerations. Scopa's responsibility is critical. It is to oversee the prudence spending of public persons to ensure that the executive remains accountable to South Africa and to the tax-payers.
The fact that the ANC pays lip service to oversight and accountability is vividly demonstrated by the fact that Scopa will -out of a total of 248 departments' constitutional institutions and entities - only consider the reports of four departments and entities, this year; scarcely, one per cent. Even those resolutions of these four will probably never reach the National Assembly because they will only come next year.
We believe, in fact, that the public hearings for tomorrow and Friday are a total waste of resources. When the DA proposed that the Scopa should be given permission to sit during the constituency period, we were blocked by the ANC majority in the committee. To them, I suppose, sorting out the ANC's internal political problems, clearly, took precedence over our government departments' oversight.
On 23 October 2008, I wrote to the Speaker and to this day I haven't heard a ruling from her about why we can't sit during constituency periods.
The HOUSE CHAIRPERSON (Mr A C NEL): Hon member, I've audited your time. It has expired. Thank you.
Mr D C MABENA
Mr E W TRENT
THE PROVISION OF HOUSING
Mr D C MABENA (ANC): Chairperson, the democratic government led by the African National Congress, together with our people, work tirelessly to ensure that people where they choose to be decently housed and to bring up their families in comfort and security.
The Gauteng Provincial Government led by the ANC has in the last five years made progress in providing our people with housing, thus, restoring dignity to those who live in poor communities.
In the current financial year, alone, the Gauteng Provincial Government has provided the poor people with 64 000 houses - far exceeding the target they set for themselves of 58 000 for the current financial year, ending in March 2009. This has resulted in 318 000 people having proper shelter and enjoying security of tenure for the first time in their lives.
The ANC endorses the principle that all South Africans have a right to a secure place in which to live in peace and dignity. We believe that housing is human right. Thank you.
Dr R RABINOWITZ
Mr D C MABENA
DRUG ABUSE IN SCHOOLS
Dr R RABINOWITZ (IFP): Chairperson, the IFP notes with concern the increasing gangsterism in the Western Cape fuel by the drug intake, especially tik. Drugs are freely available in schools to children and teachers say the drug abuse is out of control in some schools.
We are equally concerned that the social fabric is so fractured in many schools such that there is no hierarchy of discipline between violent students and the police, parents, teachers, headmasters and mistresses. Leaders have lost control and play no role.
We have made excellent progress in providing antiretroviral for pregnant women and the newborn. But we appear to be bringing children into a world where they are condemned before birth. We have removed special courts to deal with children to be replaced by special provisions in all courts. Yet, even prosecutors are disturbed by the lack of support for children and young raped girls in their courts.
As politicians we may talk glibly of moral regeneration but, clearly, we secedes our society with the wrong values and we have undermining authority. It is our freedom that inadvertently done this. Our goal should be to create a harmonious society. But when we fail to do this as it appears that we have. We need more urgent and creative solutions from the Minister of Education and the Minister of Justice. So, we are looking up to you to act urgently in these regards. Thank you.
Mrs D M MOROBI
Dr R RABINOWITZ (IFP)
COMMUNITIES AND THE FIGHTING OF CRIME
Mrs D M MOROBI (ANC): Chairperson, the ANC has long recognised that the police service and government agencies cannot fight crime alone. In meeting this challenge, they require the involvement and active participation of all communities and all sections of society.
The Gauteng provincial government led by the ANC embarked on a campaign focussing specifically on what they term the "trio crimes." These are residential, business and vehicle robberies. Since the start of the campaign in July this year, 1 333 suspects have been arrested. The campaign focuses on identifying, tracing, arresting and effectively prosecuting as many perpetrators as possible while closing the space for criminals to operate in the province.
The national struggle for freedom led by the ANC was a critical overarching vehicle to bring about peace, security and stability to our society. In dealing with issues of crime, the movement proceeded from the premise that a rising quality of life also meant an improvement in the safety and security of citizens wherever they might be. Thank you.
Ms J A SEMPLE (DA)
Mrs D M MOROBI (ANC)
SHODDY WORKMANSHIP IN MOGOBA COMMUNITY
Ms J A SEMPLE (DA): Chairperson, the shoddy workmanship of the toilets being built in Mogoba settlement near Putfontein in Ekurhuleni is an absolute disgrace. The summer rains in Gauteng have barely begun. But by the registration weekend, about 38 toilets had actually fallen down. Most are so badly built, and the foundations are so shallow that there are cracks all around the base. The toilets lean dangerously at a 45º angle.
This past week has seen continuous rain. More of the toilets will have fallen down as we speak. It is highly unlikely that they will still be standing, never mind being usable, in a year's time.
Trenches are dug, left open and unmarked. There is no electricity. So, it is difficult to see the deep open pits. A member of the community has already fallen into one of these trenches. He broke his pelvis and subsequently died.
Before some arrogant ANC Minister accuses me of cheap politicking, I have the pictures to prove it. I have seen this complete disregard for human life and safety with my own eyes.
Apart from the shocking waste of taxpayers' money and the fact that the contractor should be fired, the democratic process and the community's participation are completely disregarded. Where is the ANC ward councillor, and what is the highly acclaimed Community Development Worker doing? DA members are ignored at ward committee meetings. They are beaten up and their shacks are burnt down when they try to raise these issues. The ANC had better wake up and improve service delivery, otherwise they will be in for a big surprise at next year's election. The community is not prepared to put up with bad service and useless public representatives. The voters will make their voices heard through the ballot box.
Ms S D MOTUBATSE-HOUNKPATIN (ANC)
Ms J A SEMPLE (DA)
ALEXANDRA CONSTITUENCY OFFICE ON HOUSING
Ms S D MOTUBATSE-HOUNKPATIN (ANC): Chairperson, I rise here on behalf of the Alexandra constituency office.
The Alexandra community held a workshop recently discussing, among other things, the Constitution of the Republic and economic rights. There was special focus on the right to housing. The community looked at the Freedom Charter once more, which talks about housing security and comfort. They appreciate the work done by our government in housing delivery, and they committed themselves to fighting corruption in the housing delivery system.
However, the community wishes to strengthen the part of security as enshrined in the Freedom Charter. They request that a system of documentation be put in place, especially with regard to RDP housing, so that there can be a list of all the people who are the dependants of the registered tenant. They believe this will strengthen the security against unscrupulous people who like to buy houses or take houses if the registered tenant dies or passes on. So, the request is that there should be a registration of tenants. This does not imply reinstating or bringing back the permit system as it was in the 50s and 60s or before our democracy. We should have a register that will allow all the people to have security as they live in their houses. I thank you. [Applause.]
Ms M M NTULI (ANC)
Ms S D MOTUBATSE-HOUNKPATIN (ANC)
Ms M M NTULI (ANC): Chairperson, the ANC believes that sport and recreation are integral parts of reconstructing and developing a healthier society. Accessibility and affordability of sport to all South Africans, including those in rural areas, the young and the elderly, must be realised immediately.
The ANC-led government is constantly broadening access to sports facilities, particularly to the poor. At this point, our government is building a sports and recreation facility in the area of Meshweshwe in KwaZulu-Natal. This sports facility is expected to be completed in December 2008. It will have the following facilities: ablution, change rooms, palisade fencing, grassed football pitch, concrete grandstands and combo courts. This year alone, our government has built 50 sports facilities throughout the province, particularly in rural areas. These developments have also facilitated the transfer of skills in areas like sports fields grass planting, drainage and irrigation erection, fencing and bricklaying.
The ANC believes that it is important to ensure that sports and recreation facilities are available to all South Africans, regardless of race, creed or gender. Thank you.
Ms N C NTULI
REVIEWING OF SECTION 100(1)(a)
IMPLEMENTATION OF THE OCCUPATION SPECIFIC DISPENSATION
The MINISTER OF FINANCE: Chairperson, the statement made by the hon Bonhomme is a subject of the Ministerial statement and discussion immediately hereafter, so I think we should just leave the response to that. The hon Bekker suggested that we should impose section 100. He did not say which part of section 100 in respect of
KwaZulu-Natal should be imposed. Wherever we view section 100(1)(a), we have observed the requirements of chapter 2 of the Constitution, which requires co-operative governance. It has always been done co-operatively.
We have a brand new Member of Parliament today who was once an MEC in some province where section 100(1)(a) was applied. He would be able to attest the fact that it was unco-operative. In the context of the Department of Health in KwaZulu-Natal, the key issue that driving the cost is the Occupational Specific Dispensation which is been applied in respective nursing staff. It is a matter which we are very conscious of. We have discussed it at some length with both the MECs of Finance and of Health. This matter is going to be resolved. It's not as though there is carelessness or anything. I think that in respect of the Occupation Specific Dispensation, OSD, it is entirely circumstantial.
The hon Trent did himself a great disservice because he started on the wrong footing. There is a greater chance of chickens growing teeth and than that of the DA becoming the government in this country any time soon [Laughter.] Because he did himself such a disservice it was a preamble, and everything else had to fall away. But we observed the issues. I think that the hon Godi who at the last count was not a member of the ANC, and is the Chairperson of the Scopa, is probably in the better position to speak, because we have no ability to do that on behalf of Scopa. I thank you.
The MINISTER OF SPORT AND RECREATION
The Minister of Finance
AVAILABILITY AND ACCESSIBILITY OF SPORTS FACILITIES TO ALL SOUTH AFRICANS
The MINISTER OF SPORT AND RECREATION: Chairperson, we would like to thank the hon Ntuli for the remarks that she made. We would like to point out that that was not happening in one province only. It was happening throughout the country in a much smaller way than we would have wanted it to happen. For that reason the discussions between the Minister for Provincial and Local Government and I are at an advanced stage.
We thought that with the return of the Municipal Infrastructure Grants to the department, we would be able to move much faster. This is so, because although this government is wielding power, it does so in a very hostile environment, because the legacies of the past stubbornly continued to haunt our society and our communities. Unless the balance of forces around the finances and the resources changes, our communities will be expected to wait a little longer and this would be undesirable.
The little bit that we did, by a way of providing kit for poor children - black and white and by providing travel-abroad opportunities for those who showed talent as selected by their federations makes a bigger difference in the lives of our children. Even though the playing facilities were not sophisticated, they offered our children something that made it possible for them to be exposed or to expose their talents to the talent scouts and develop their skills.
We are looking forward to a further partnership with the private sector which is showing great interest because we must continue to mitigate partnerships in this environment. They are showing great interest in assisting, especially where MECs like those in KwaZulu-Natal are overzealous. We encourage that overzealousness in insisting on social responsibilities from those who are receiving money from the government to build other facilities. We are not going to compete with housing or schools and clinics, but nevertheless, we should get something from our social partners. I thank.
The Minister for Public Service and Administration
The Minister of Sports and Recreation
THE ROLE OF PARLIAMENTARY CONSTITUENCY OFFICES IN RELATION TO SERVICE DELIVERY AND SOCIETAL DEVELOPMENT
The MINISTER FOR THE PUBLIC SERVICE AND ADMINISTRATION: Chairperson, we commend the role of the parliamentary constituency offices to engage the organs of people's government and broader civil society on issues of service delivery and societal development.
The Gugulethu and Alexander statements presented this afternoon, were examples of active roles that Members of Parliament – in fact - all public representative might play. As a Department of Public Service and Administration we created a unit that is going to interact with Parliament so that we follow up on the issues that communities raise as contained in members' constituency reports. We would like to encourage members to do their work, so that on those issues that need follow up, we would be there to assist that they are followed-up.
Hi endlelo leri ha tshemba leswaku hi ri Palamende ya Rixaka, ya Swifundzankulu na le ka timasipala hi nga swi kota ku humelerisa pfhumba ra hina ra Batho Pele loko hi kota ku hlangana na vayimeri va tiko na mintlawa ya vaaka-tiko hinkwayo, hi kanerisana no burisana na vona hi timhaka ta vukorhokerhi bya tiko. Swi na nkoka leswaku hi endla sweswo hikuva demokrasi ya hina yi vula tano. I nkomu.
The Minister for Public Enterprises
The Minister of Public Service and Administration
MEDIA REPORTS ABOUT THE SOUTH AFRICAN AIRWAYS
The MINISTER FOR PUBLIC ENTERPRISES: Chairperson, I am responding to the comments on SAA. I would like to say that the indeed the reports in the media about SAA are worrying. Therefore, I would like to assure the House that we are going to follow up and address any problems that we might have with the SAA.
The HOUSE CHAIPERSON (Mr A C Nel): No! Are our nation's hands in safe hands? [Laughter.]
The MINISTER FOR PUBLIC ENTERPRISES
COMMUNITY PARTICIPATION IN FIGHTING CRIME
The MINISTER OF SAFETY AND SECURITY: Chairperson, I want to commend the hon D M Morobi on her statement. Her statement is underpinned by the need of strengthening partnerships in our communities as a contribution to fight crime and create more stable and safer communities.
I must say that owing to what she said, I think we should take this opportunity to thank South Africans from different walks of life. To date, on this call of partnership, we have met a number of people amongst others and their traditional leaders with their own suggestions on how to strengthen our communities partnering with government to fight crime.
Business Against Crime - a pilot project was launched last week which aims to strengthen this partnership as we come together with the private security companies, as well. We have had a hand and some contributions from religious leaders who have come to the fore and said they also want to be counted and they give some suggestions in so for as that it concerned.
In the past few weeks, we have been calling all others, including those who are in the journalistic fraternity to assist in this fight against crime because if we do this and strengthen our community structures in their different forms, be they community policing fora, community safety fora, neighbourhood watches, business watches, street committees - all of them, we would be able to reap the fruits as the hon member has alluded to here of apprehending suspects. Thank you very much. [Applause.]
The MINISTER OF EDUCATION
The MINISTER OF SAFETY AND SECURITY
EDUCATION SUMMIT IN GUGULETHU
UNGQONGQOSHE WEZEMFUNDO: Mgcinisihlalo, ngifuna ukuqala ngokuthi ngibonge kakhulu iqabani umama uLesia- Ramakaba ngokuthatha umsebenzi we ANC ophuma kuziphakamiso zasePolokwane azenze ukuthi zibe umsebenzi wehhovisi lakhe laseGugulethu. Sivumelene ukuthi imfundo sizoyibeka phambili kakhulu ku ANC ukuthi sisebenzisane nabazali, nabantwana kanye nothisha ezikolweni ukuze abantwana bonke babone ukuthi imfundo yabo siyayilungisa futhi bathole imfundo enhle kakhulu. Ngiyambonga-ke umama uLesia- Ramakaba ngomsebenzi wakhe eGugulethu.
Ke a go leboga mme. Ke a itse gore o motho yo o tshwarang thipa ka fa bogaleng. O itse tiro e e tshwanetseng gore re e dire. Fa re ne re dumalana kwa Polokwane re ne re sa dumalane fela gore re kwale dilo tse dintle mo dipampiring, re dumalane ka gonne re batla go bona tshwetso ya rona ya go dira. Ke a go leboga e bile ke batla gore tiro ya gago e gole. Fa e le gore o tlhoka thuso ya rona, re tla go thusa. Re tla leka go dirisana le wena le go go thusa ka tiro e ntle e o e dirang.
Ka kgang e ya bana ba ba dirisang diritibatsi le bojalwa mo dikolong, re tshwanetse go oketsa tiro e re e dirang. Re dira tiro e ntsi go fedisa tiriso ya dilo tse di maswe tse mo dikolong tsa rona, mme potso e re batlang go e botsa IFP ke gore, rona re le baemedi mo Palamenteng re dira eng? Rona re le batsadi fa re bona bana ba rona ba tsena mo mathateng a, re dira eng? A re bua le bana ba rona kwa gae? Fa go ne go siame kwa gae, o ne o ka se fitlhele ngwana a dira dilo tse. Ga re a tshwanela go lebisa dilo tsotlhe kwa lefapheng la thuto. A re faneng matsogo, re dirisane. Motsadi, ngwana, morutabana le mongwe le mongwe yo o nnnang mo gae, rotlhe re dirisanye go lwantsha mathata otlhe a. Ke a leboga. [Legofi.]
The MINISTER OF FINANCE
The MINISTER OF EDUCATION
THE GLOBAL ECONOMIC CRISIS
The MINISTER OF FINANCE: Chairperson and hon members, the global economy is presently living through its deepest crisis since the Great Depression of 1929. Around the world, people's representatives like us are engaging with the impact of this crisis on their respective mandates. I want to express sincere appreciation for this opportunity to address the National Assembly on what we know about the crisis. Earlier today we had an opportunity to discuss these matters in great detail with the members of the Portfolio Committee on Finance. Important as those discussions were found to be, we recognise that the challenges before us cannot be confined to one or other portfolio committee. The nature of the challenges is such that they affect the very fundamentals of all of our work – the crisis indeed gnaws at the contract that we have with the people of South Africa; indeed it compels us all to ask about our ability to contribute to a deep and durable democracy that will lift millions of our people out of a life of grinding poverty.
First and foremost, this is a crisis of the developed world. Loose credit extension in the years since the dot-com bubble burst in 2001 and large fiscal deficits in the USA has increased the debt of households and governments alike. These debt levels have become unsustainable. The popping of these bubbles has had and will continue to have a large global impact.
Many countries not at the centre of the current turmoil will suffer terribly and tragically. As firms in developed countries strive to repair their balance sheets, they tend to sell everything and repatriate resources back to their home base. This has implications for us as it has for many emerging economies, despite the fact that the epicentre of this crisis does not lie within our shores. The depreciation of our currency, the rand, in line with many other emerging market currencies is testimony to these developments. Of particular concern is Africa. Strong rates of growth in recent years are at risk, as commodity prices fall and countries are forced to pay back capital. These fears pose the risk that there will be greater demands for protection from fearful populations and, less benignly, cynical adventurers. This is the state of the world, and it cannot be allowed to continue.
If we look at recent event, we recognise that the causes of all this can only be paraphrased here today. Over the years, banks purchased vast quantities of loans used for house purchases in the United States. As interest rates were increased in 2006 and 2007 in that country, many of those debtors began to default, putting at risk the value of all the housing loans. This uncertainty has resulted in the share prices of financial and nonfinancial companies falling, affecting lending operations between the banks.
Financial institutions involved in property, such as Northern Rock in the UK, failed, while other institutions experienced increasingly large losses on their investments in the housing markets. Losses of $200 billion were predicted in the early days of the crisis. Estimated losses now stand at an estimated $1.4 trillion, according to the IMF. Central banks in advanced economies responded by announcing co-ordinated action to address short-term funding markets, establishing temporary currency swap arrangements, and injecting liquidity into the markets. Sovereign wealth funds were tapped for funding for UBS, Morgan Stanley and Merrill Lynch and interest rates have been cut sharply.
These actions did little to stem the tide however. Investment banks in the US failed, such as Lehman Brothers, who bought for a song at $2 a share – that was Bear Stearns - or changed their regulatory stripes to access a deposit base – and this happened in the case of both Goldman Sachs and Morgan Stanley. Official support from the US Treasury and the Federal Reserve to the insurance company AIG now exceeds $150 billion. Governments have committed about $4 trillion of support to financial systems around the world. About $661 billion of write downs and losses have been acknowledged so far.
The signs of the spreading economic malaise are abundant. In the quarter to September 2007, Volvo Trucks sold about 42 000 truck units. In the same period this year, the quarter to September, they sold just 175. The cost of dry bulk shipping charter rates as it appears on the Baltic Index, plunged by 71,9% in October. Whatever ships you want, they're available, the costs have dropped. Suddenly the world is a very different place. General Motors' share price has fallen 88% this year, to $3 a share, which is the lowest price for a General Motors' share since 1946. GM, Chrysler and Ford, the giants of Detroit, have requested a bailout of some $25 billion as car sales in the US dropped 32% month compared to the same period last year.
The world's equity markets have declined precipitously. Since 1 October this year the US Dow Jones Industrial Average has fallen by about 36%. Brazil's Bovespa has dropped by 45%. Russia's RTS Index has declined by 71%. Our JSE All Share Index has fallen by roughly 30%.
One of the great sources of ballast in the world economy has been the rapid growth of China, which has contributed on average 20% of world's growth in the last 5 years. With a gigantic population and rapid economic growth, China has been both a great importer of raw materials and commodities from the rest of the world and a great exporter too. China's demand for commodities contributed to the commodity price boom the world experienced over the past 6 years.
But China has its own challenges. Each year China must create 10 million net new jobs to absorb new entrants into the labour market and people who move from the rural into the urban areas. The most recent indications suggest that growth in China has begun to moderate, resulting in lower imports and putting downward pressure on commodity prices. Chinese GDP growth slowed to 9% in the 3rd quarter of this year, from 11,9% last year and 11,6% in 2006. The IMF forecasts Chinese growth next year is down to 8,3%.
Commodity prices have responded quickly. The price of platinum has dropped 47% since 1 January this year. Gold prices have fallen by over 13% and oil prices by 31%. Coal prices remain 40% higher than they were in January, but have declined by 31% since 1 October this year. Falling prices for oil and other commodities and the major outflows of capital from emerging markets in the middle of October signalled that we have entered a new phase of the crisis. Economic conditions have deteriorated worldwide. Despite this, the global economy will continue to grow in 2009, with all of the growth deriving from developing economies.
World output will fall from 50% in 2007 to 3,7% in 2008 and to 2,2% next year. Advanced economies GDP growth at 1,4% this year will fall to minus 0,3% next year. African growth is expected at 5,2% for this year and 4,7% for 2009. Against this backdrop it is important that we take a view of all of these events on the South African economy.
Commodity price changes alone have an ambiguous effect on South Africa, but we should be under no illusions about the fact that our economy will suffer along with the rest of the world. The financial crisis is giving way to a real economy slowdown. Some countries will bear the full brunt of both the financial crisis, as lending and borrowing has come to a halt, and the economic crisis. Exports and imports will fall.
In South Africa we have experienced at least part of the financial shock. Our exchange rate has depreciated sharply and the prices of our equities and bonds have fallen far. Yet our sound and well-regulated banking system is not dependent on foreign lines of credit and our exposure to toxic assets has been nearly nonexistent. Some firms with extensive international operations have seen losses, but even these have been small, relatively speaking. Our public debt levels are low and our level of foreign currency debt is even lower. This helps to lower our vulnerability to financial shocks.
Global economic weakness in trade and investment however will have more far-reaching effects. Declining commodity prices and lower growth in major trading partners will lower demand for South African exports and reduce the income we derive from them.
Only one part of our challenge is to ensure an appropriate short-term response. In the long-term, we need to ensure that our firms and our people are more productive, more export oriented, and with higher saving and investment. We need to be able to achieve much higher economic growth rates with a sustainable current account.
It is becoming clear, however, that at least in the medium-term, our aspirations for more rapid economic growth and our capacity unfortunately do not match.
Our policies have been appropriate to our macroeconomic challenges in recent years. We have set a monetary framework that targets a low and stable rate of inflation over the long-term. As a small economy we can expect that inflation will sometimes fall outside the target, and we have experienced such an occurrence this year and last from sharply rising food and oil prices, but we are not alone in this – nearly all countries have missed their implicit or explicit inflation targets over this period. What matters is that we have a framework that is flexible enough to ensure that we achieve low inflation over time and with due regard for economic growth. The economic and social costs of a prolonged period of high inflation or deflation caused by wayward or ill-conceived monetary policies cannot and should not be tolerated by a democratic society. On the fiscal side, we have endeavoured since 2005 to raise saving in the economy and create fiscal space. We did this for two reasons: One was to offset the negative effects of rapidly growing domestic demand on inflation and the competitiveness of the economy; the other was to create financial saving to expand demand should economic growth fall sharply.
Now we can prudently maintain a healthy growth rate in government spending while keeping public borrowing modest and sustaining low long-term interest rates. As growth slows, however, it is likely to become more difficult to maintain a positive government saving rate. Continuing to focus spending on capital and public infrastructure helps to keep saving up, and so we have opted to continue to emphasise our public infrastructure commitments, the expansion of our energy production capability and to ensure readiness for the World Cup, among others.
A good track record in financing investment in human capital in health, education and skills development will also be maintained. These commitments will help to raise the economy's growth rate in the present as investment spending is maintained, and in the future contribute to rising potential growth of the economy. To close the gap between the 6% economic growth rates we aspire to and the realities of slower growth we are now experiencing requires a renewed effort to reform our economy.
Reform is needed to propel investment. The purchases of South African bonds and equities by foreigners accounted for almost half of South Africa's financing needs between 2002 and 2007. About $20 billion per year, that's roughly R200 billion at today's exchange rate, is needed to finance our current account deficit. So, as people make these calls for new exchange controls and for isolating South Africa, we need to remember that that gap in financing our investment is in the order of R200 billion a year. If we impose harsh measures on foreigners, we won't get that money and then we will have to slow down growth. Continuing to attract foreign investment implies the need to maintain confidence in our macroeconomic policies and to raise the growth rate of the economy.
There is no shortage of good and bad ideas. Our task is to find the good ones and move forward with the policy articulation and implementation. Raising the cost of economic activity and restricting our ability to trade is obviously not the right path for our country. We live in a world where our domestic industries, such as the domestic auto or metals industries, are intimately and irrevocably linked to the rest of the world. The indiscriminate dispensing of cash to firms that lobby for help will also not raise incomes and create jobs. We have made financing available for industrial policy. It is time that economically sensible plans are articulated for public review and support.
Our focus on government's contribution to reducing the costs of economic activity and expanding infrastructure needs to be matched by investment and productivity growth in the private sector. There is room for policy adjustment in a range of sectors to facilitate investment in new businesses and growth in employment, particularly in network industries. New power generation, greater responsiveness to environmental needs, expanding our access to advanced telecommunications, the redevelopment of water and transport infrastructure, among other things, imply fertile ground for public and private partnership and new economic activity.
Let us be clear, the global crisis enjoins us to take forward our efforts if we intend to permanently reduce unemployment, increase incomes, and lower poverty. Our macroeconomic policies are sufficiently flexible to address a prolonged economic downturn, as demonstrated in the shift to a fiscal deficit in the Medium Term Budget Policy Statement. We have a good understanding of what the international community is doing to combat economic weakness, and we understand the need to address our own local economic challenges.
Our domestic efforts to address the global economic crisis need to find external resonance in the reform of the international financial architecture, in the reform of the multilateral institutions, and in the renewal of global commitment to mutual accountability. A co-ordinated international approach to the financial sector is obviously also needed.
The international financial and economic crisis is in large part about the failures of national and cross-border regulatory regimes in assessing and managing the risks building up in financial institutions and systems. In Sao Paolo and in Washington, at the G20, we discussed how to address these problems in a durable and credible way in coming months. On a national basis, it was noted that policy frameworks need to maintain fiscal sustainability. There is little gain to be had from a new massive build-up of imbalances. We cannot allow a crisis caused by a rise in debt and cheap credit to be followed in 10 years' time with another crisis caused by the same thing.
To make headway, Ministers of Finance and Central Bank Governors have been asked to look at a range of issues in the financial markets, with deadlines set for next year. Particular attention needs to be placed on sound regulatory policies and the application of standards for accounting, auditing and transparency. Each country will therefore have to adopt its national plan, based on the common principles for reform. We will each have to assess to what extent both our fiscal and monetary policies support the internationally agreed principles. More importantly, we will need to ensure better co-ordination and co-operation, not only between our own financial regulators, but between our regulators and those of other countries, particularly in regulating financial institutions that operate in more than one country. I will be convening a meeting of all our financial regulators, as well as the SA Reserve Bank and National Treasury, to ensure that as South Africa we give effect to the common principles for reform, and to facilitate our full participation in global standard setting institutions and the Financial Stability Forum.
In conclusion, we have the good fortune of being able to stand on the shoulders of those who have preceded us, and so we understand much about what has gone wrong in the world economy and what is required to deal with it. The effects however will be with us for the foreseeable future, and so we need to think carefully about how we reach our own domestic economic goals in this new environment. Our macroeconomic framework is sound and, because of the choices we have made in the past, we have the resources and policy space to set an appropriate response to the evolving economic downturn. We need however to address the microeconomic and regulatory constraints to more rapid economic growth. This implies a renewed social dialogue, one part of which will be the development of a national approach to financial markets regulation and reform, but addressing our long-term growth and employment challenges requires a broadening of that dialogue. Much needs to be done to achieve our aspirations. Those aspirations are of a country that has shed a history of poverty. When looking at the issues in the global financial crisis at the moment, it is important to remind ourselves continuously of what we are doing here as members of Parliament and what is in the nature of our Contract with the People. Thank you very much.
Mr S J F MARAIS
The MINISTER OF FINANCE
Mr S J F MARAIS: Chairperson, by now everybody is aware of the effects of global economic turmoil on our economy. The statement by the Minister and this debate confirms the seriousness of its current and potential affects on South Africa.
It is expected that this crisis will pass, given the nature of economic cycles. The role of government must be an attempt to smooth this cycle. A fiscal discipline and a prudent policy approach are essential in weathering the storm at our front door.
Die huidige fiskale beleid, waarby die inflasieteikens ingesluit word, het bygedra tot ons vermoë om die wêreld se ekonomiese krisis relatief goed te kon hanteer, tot so `n mate dat ons nie in `n resessie verval het nie; ondanks die feit dat daar sekere aspekte daarvan in sommige bedrywe aanwesig is. Ekonomiese aksieplanne waartoe die regering en al die rolspelers verbind behoort te wees, is noodsaaklik. Die President het in `n antwoord op `n vraag van my gereageer dat die Nywerheidsontwikkelingsbeleid genoegsame stukrag sal gee om nie net vaste buitelandse beleggings te lok, maar ook om Suid-Afrika se uitvoerbedryf so te stimuleer dat ons minder afhanklik van portefeuljebeleggings sal wees om die tekort op die betalingsbalans te finansier. Ons weet dit het nie gerealiseer nie.
What is firstly required from us is to assure that we have an FDI policy that would attract FDIs for employment driven production and with a focus on exports implemented so as to stimulate the employment and capacity-building in South Africa with incentives to the performing employers. These will increase employment and wealth creation and savings; increase the foreign capital earnings and reserves; improve the currency volatility and stability and decrease the dependency on state grants.
Secondly, initiate public private partnerships and not the increased central control by government and thirdly, all need to support and promote a prudent fiscal policy that will best assist in establishing investors' confidence and sentiments and all must refrain from statements that will damage these objectives.
In Sake-Rapport van Sondag 16 November is gewaarsku teen ondeurdagte ekonomiese beleidsuitlatings deur politici wat beleggersvertroue, werksgeleenthede en werksekerheid ernstig in gevaar stel. Daar word gewys daarop dat die onsekerheid oor die ANC se toekomstige ekonomiese beleidsrigting van die redes is waarom ons soewereine kredietgradering afwaarts aangepas is en waarom buitelandse beleggers hulle geld onttrek as gevolg van risiko verskansingsoptredes. Hoewel dit gegrond mag wees op sentimente en persepsies, bewys dit dat die noodsaaklikheid dat die ekonomiese beleid nou gesteun moet word en behoort veral die ANC-woordvoerders en hulle alliansievennote dieselfde beleidsuitsprake te maak en nie `n indruk van die teendeel te skep nie. Voorsitter, ons moet die vermoë toon om die uitdaging vir ekonomiese krisis nou en in die toekoms met `n doelgerigte ekonomiese beleid die hoof te bied en behoort die Minister se beleidsinisitatiewe gesteun te word. Ek dank u.
Mr N SINGH
Mr S J F MARAIS
Mr N SINGH: Chairperson, congratulations on your appointment to the
high chair. I hope it is secured. The meltdown of global financial markets has left the world in crisis, with some of the most prosperous countries even facing recession, and we heard that from the hon Minister. We, in the developing and emerging economies, have also been harshly affected by this crisis even though we were not directly involved with the dealings which led to this untenable situation. But such is the nature of globalisation.
To say that South Africa is removed from these troubles, would be very naïve and uninformed. With our integration into the global economy, we are affected by international events and movements in the global markets. The volatility of the rand against the currencies of our major trading partners, as well as the increase, and then the sharp decline in the prices of the commodities which we are exporting, are just some examples of how connected the global environment is and the effect that it has on people in South Africa.
The gloomy economic state in which we now find ourselves has put a serious damper on our growth targets and will influence our economic and developmental plans, as well as have a detrimental effect on efforts to combat poverty and unemployment.
This, Chairperson and members, is worrying considering the slow progress that has been made in combating poverty and creating employment over the years. Innovative plans and strategies are needed if we are to try and limit the suffering that this will have on the poorest members of our society who will no doubt be the harshest affected by this crisis. We are, however, glad that the Minister of Finance has reassured the South African public that the banking system and financial institutions can weather the current financial crisis.
An interesting feature of the economic turmoil is the development of relationships and the interactions between governments and the private sector in trying to overcome this crisis. These relationships are very important, and here in South Africa government, the private sector and labour must interact honestly and closely with each other to ensure that we do overcome this crisis with the least amount of damage.
In conclusion, we hope that there will not be any fundamental changes to the ANC's economic policies in the long term as a result of pressure from its alliance partners. And I say long time because of the principles that they will be a majority party but the indications are that it will not be so. Reassurances are needed in this uncertain climate if we are to comfort current investors and to attract new foreign investors. Thank you. [Applause.] [Time expired.]
Mr J BICI
Mr S J F MARAIS
Mr J BICI: Chairperson and hon members, it is an unfortunate fact that we as a country have little impact in averting the global financial crisis, even though the actions of irresponsible bankers far from our shores will surely affect us too.
Global economic turmoil leads to capital flights. The effects which we have already seen amply demonstrated on the Johannesburg Stock Exchange, JSE, in the past two months.
In times of international risk-aversion, a developing country such as ours can ill-afford creating policy uncertainty, but unfortunately the ANC alliance partners seem less concerned with this, and more concerned with stamping their ideological mark on the ANC and the future government. Thank you. Mr L W GREYLING
Mr J BICI
Mr L W GREYLING: Chairperson, the ID believes that in order to minimize the ripple effect of the global financial crisis on our economy, we must implement a more relaxed monetary policy that will ease down our interest rates.
South Africa has largely been sheltered from the direct impacts of the crisis. However, we are already being affected by the accompanying slump in commodity prices, as well as the economic slowdown in our export markets.
We in the ID believe that it remains imperative that we also introduce a fiscal stimulus package that invests in our dire infrastructure and human capacity needs.
The thunder will pass, Minister, but we must ensure that we make the necessary investments now so that we can take full advantage of economic upswing when it finally does come. Thank you.
Mr S N SWART
Mr L W GREYLING
Mr S N SWART: Chairperson, the ACDP wishes to thank the Minister for his comprehensive briefing on the global economic crisis and his Treasury's role in addressing that from a South African perspective.
There can be no doubt that whilst we will weather the global economic storm, we will continue to experience spill-over effects such as currency volatility, high inflation, slowing economic growth and sell-offs on our equity markets.
However, prudent fiscal and monetary policy has shielded us to a large degree and our economy is resilient enough. Our regulatory framework is strong enough to weather the storms.
We, as the ACDP also welcome the G20 meeting that took place this weekend and we are looking forward to studying our national plan, which will form part of the G20's action plan aimed at restoring global economic growth and reforming financial systems.
The sad aspect of this crisis is that people living in poverty are and will continue to be hardest hit by the financial crisis. This situation in our view is grossly unfair and cannot be allowed to continue and it must be addressed on the international forums. Thank you.
Ms S RAJBALLY
Mr S N SWART
Ms S RAJBALLY: Chairperson, it is without a question that every economy has been severely hampered by the rand-dollar situation and that local inflation by no means creates any alleviation. It is a matter that the MF strongly feels about that global countries have to address and be united in their attempts to resolve.
As a new South Africa we have been in infant stages of addressing our nation's challenges of which poverty is our greatest, and the global economic crisis has certainly not served to assist this plight.
We are concerned as to whether things will turn around and stabilize our descent into greater disaster, leaving our people to an even greater disadvantage.
In the view of the recent G20 meeting the MF supports the submission made by our hon President. We further feel that the First World countries have a crucial role to play in ensuring that some relief is offered to the Third World countries.
The MF feels if we can urge the relief of Africa's foreign debts it shall certainly assist us in the era of crisis and assist the plight against poverty. Thank you.
Mr L M GREEN
Ms S RAJBALLY
Mr L M GREEN: Chairperson, the FD commends the Minister of Finance on his thorough briefing on the global economic crisis. In his thought provoking book, The End of History and the Last Man, Francis Fukuyama, illustrates that a capitalist system features as the most accepted economic system of the future.
However, we have seen that capitalism without an accountability regime framework in place has the potential to destabilise nations at great financial costs. The global economic crisis is a warning that when the wealth of the world resides in the hands of a few nations, a crisis occurs and the rest of the world faces the risk of national instability and insecurity.
There is clearly a need for a new economic dispensation. A new economic value system is needed to move away from business as usual.
In conclusion, the FD commends the Minister of Finance for the austere macroeconomic policy over the past 10 years. Had it been any different, we would have been drowned by this global crisis. I thank you.
Mr K A MOLOTO
Mr L M GREEN
Mr K A MOLOTO: Recently, I was listening to the testimony of the Chairman of the Federal Reserve System, Ben Bernanke, before one of the committees of the US Congress, requesting the Congress to approve the 700 billion rescue package.
One Congress man said the following to Chairman Bernake: "Wall Street had a party, got drunk and broke chairs. American citizens were not invited to the party and now they are expected to pay for the damages caused by Wall Street". The analogy was simple and reflected great frustration at the way events unfolded.
We are living in very difficult times. The financial press is replete with information on bank failures, bailouts, plunging stock markets and threats of global recession. These are very disturbing developments and raise serious concerns among all citizens of the world.
Therefore, it is crucial that we understand the origins of this crisis and its current manifestation so as to be able to appreciate its likely impact on the South African economy. The global economic crisis we are facing today has been caused mainly by a combination of deregulation and low interest rates in the US.
Joseph Stieglitz explains it better. He says the following: "After the collapse of the technology bubble, the economy needed a stimulus. But the Bush tax cuts didn't provide much stimulus to the economy. He further points out that instead, this put the burden of keeping the economy going on the Fed and it responded by flooding the economy with liquidity."
Of course, under normal circumstances, the economy would have grown, but as Stieglitz had pointed out, the economy was already over invested and so the extra money wasn't put to productive use. Instead, the consequent low interest rates and easy access to funds in Stieglitz' words, encouraged reckless lending. The infamous interest only, no down payment, no documentation supply mortgages fueled the current global crisis.
Financial innovation and deregulation has introduced complex financial structures and instruments. Securitisation and derivatives are at the heart of this financial innovation. Securitisation simply means the pooling together of loans and selling such repackaged loans to other investors. Home loans, credit card receivables and automobile loans were securitised. This process involves a lot of players.
Let me briefly explain this process and the role of different players with the view of illuminating the course traversed in the development of this crisis.
A classic securitisation process works in the following manner: A potential homeowner approaches a bank or mortgage broker to get a loan to buy a house. The bank would provide the loan to the applicant and sell the repackaged loan to a Special Purpose Vehicle. The loan is permanently removed from the bank's balance sheet and the potential risk is transferred to other investors. The Special Purpose Vehicle would then sell bonds to different types of investors. The bonds held by these investors are expected to be serviced by monthly bond repayments made by homeowners.
The asset-backed securities unravelled negatively when interest rates increased and homeowners were unable to be refinanced at more favourable interest rates as expected.
Three fundamental problems arose immediately from this type of originate to distribute transactions. Firstly, the bank or mortgage brokers earn a fee for originating loans and the more loans it generated, the bigger the origination fee earned. That can serve to be a perverse incentive to disregard all established practice of risk management and adequate screening of clients. This resulted in a lot of so-called sub-prime clients getting loans without undergoing a thorough credit check or verification.
Secondly, the credit rating agencies misled investors by rating these subprime backed bonds as triple A, thus implying that they are of good quality and low risk. The reality is that we all now know that that information was incorrect and misleading. Issues of conflict of interest arose in the majority of these cases. The rating agencies were paid by the issuers of these bonds.
Wall Street, on the other hand, assisted in selling these toxic assets or mortgages around the world. When the truth finally came out about the true nature of these bonds and their values, there was panic in the market. Banks refused to lend to each other in the interbank market as they attempted to avoid contamination. Short selling of bank shares, as a result of such negative market information, compounded the problem. Wall Street has created a serious credit crisis with far reaching implications for the financing of the real economy.
The announcement of rescue packages and provision of liquidity to these financial institutions have attempted to reduce the interbank rate. However, the problem of the interbank market still persists. Credit is not flowing to households and corporate sectors.
The impacts of the activities of Wall Street are now seriously working their way through the main streets. People are loosing houses in the US and consumer spending has dropped significantly. Businesses in the US are unable to finance productive activity and struggling to obtain short-term financing for payrolls. Workers are being retrenched.
This is a global environment in which South Africa is finding itself. South Africa can take comfort in the fact that its banking system is not exposed to these toxic assets and our banking system is rated among the best. The bank of international settlements considers the Bond Exchange of South Africa to be highly liquid more than even some of the developed countries. It is much easier and quicker to buy and sell bonds in South Africa. South African capital markets are well developed and matured.
We should also take comfort in the fact that our foreign debt is minimal and a lot of it has long-term maturity. The public finances are in good shape. We are on course to undertake major infrastructural developments. The industrial tax incentives contained in this year's budget would assist in building our industrial capacity and create sustainable jobs in the long term.
The storm would pass and we are definitely poised to achieve great things. Of course, there would be a bit some pain when we go through the storm. We would ride through this storm with the conviction but we are poised to achieve great things in the long term.
As a Christian, I have been taught never to focus on the storm lest I sink due to fear. Focusing on the storm breeds immense fear and obscures the bigger picture.
Focusing narrowly on the current price of platinum is
counterproductive. Mining is also a long-term business venture, which requires a long term view.
I am also encouraged by the words of Roger Baxter, the chief economist of the Chamber of Mines, who had the following to say, "Mining is a long-term game where one doesn't simply stop activities for a year and come back."
Auto sales in the US and Europe might be experiencing serious reductions, but the fact of the matter is that this storm would pass.
It is very important that the South African companies should take a long-term view. Our massive infrastructural development projects would boost our export capacity in the long term.
There is no time to focus on the boom and bust. When the storm settles, only long-term visionaries would gain a competitive edge.
In conclusion, allow me to congratulate the hon Nene for his appointment as the Deputy Minister of Finance. I know he would do well. I have always valued his guidance and leadership in the ANC Study Group and portfolio committee. Thank you. [Applause.]
MEDIUM-TERM BUDGET POLICY STATEMENT
Mr K A MOLOTO
MEDIUM-TERM BUDGET POLICY STATEMENT
(Consideration of Report of Joint Budget Committee)
The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, I move: That the Report be adopted.
Motion agreed to.
Report accordingly adopted.
MEDIUM-TERM BUDGET POLICY STATEMENT
(Consideration of Report of Portfolio Committee on Finance)
There was no debate.
The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, I move: That the Report be adopted.
Motion agreed to.
Report accordingly adopted.
Mr B A MNGUNI
The CHIEF WHIP OF THE MAJORITY PARTY
DEBATE ON MEDIUM-TERM BUDGET POLICY STATEMENT
Mr B A MNGUNI: Hon Chairperson, hon Ministers and colleagues, we debate this Medium-Term Policy Statement, not as a mini budget, as it is sometimes referred to, amidst the turmoil of financial crisis that has a great potential for the global economic meltdown and recession in one of the biggest economies in the world, the USA.
The Medium-Term Policy Statement provides the framework within which the 2009 budget is to be drafted, including indicative figures for two succeeding years. It gives an indication of government's assessment of the state of the economy; fiscal framework; budget priorities; and the division of revenue between national, provincial and local governments.
We have been informed by the Minister after the policy statement was tabled, that the South African economy will remain unscathed by the financial crisis that is wreaking havoc in developed countries, least expected to can have such a phenomenon due to their advanced and sophisticated financial systems and best world practices. It has been said that our economy's resilience to these financial woes is due to tough decisions that were taken a couple of years earlier on macro-economic policy, banking regulation, gradual exchange control liberalisation, introduction of inflation targeting and the counter-cyclical approach to fiscal policy.
Accordingly, these economic factors have not only shielded us from the financial contagion effects, but have also made us benefit from the economic global environment that is prevailing. However, despite these fundamentals being in place, National Treasury has made a point that global financial crisis will indeed affect the trajectory of our economy.
During public hearings on policy statement, the group of economist of Sanlam, Mr Job Laubscher, pointed out that the global financial crisis is indicative of a recession. According to Mr Laubscher, developed countries are said to be going through a recession which we would be characterised by two executive quarters of negative growth, while in developing countries they would be characterised by growth recession – there would still be positive growth at a much lower rate.
The International Monetary Fund forecasts global growth of 3% in 2009. According to its own definition, any economic growth that is less that 3% would be classified as a recession. The political implications for governance structures globally, are less revenue for policy implementation. Coming closer to home, National Treasury has stated that the global financial crisis would have implications for domestic economy. Therefore, the growth trajectory that has been attenuated would have far-reaching implications for the country's revenue as the corporate profits would have also dipped in the process.
The resultant domino effects of these events might culminate in a situation where a better life for all, is not realised at the expected time of delivery for the majority of the people as to what we have committed ourselves to. We are less likely to escape the damage that would be done in the real economy by this phenomenon. There is a looming mass retrenchment in the mining sector, due to a massive drop of prices for tradable resources.
One has to take solace to the fact that Federation Union of South Africa, Fedusa, also acknowledged the context within which the 2008 Medium-Term Policy Statement was tabled, stating that the challenges from the fiscal side for the next three years, was to counteract the adverse effect of the external factors, including banking and credit crises in developed countries. This brings light to the fact that at least unions and by inference, the general public, do understand and appreciate the global economic conditions the country is faced with.
As stated in the portfolio committee report, Fedusa pointed out that in the light of the global challenges ahead, special attention needs to be taken in South Africa, in lifting the rate of national savings as this is necessary in order to construct a more expropriated economy and to create a more labour-intensive growth trajectory. The National Treasury pointed out that the investment growth is going to remain the key driver of growth over the medium-term.
In support of other commentators at the hearings, Business Unity of South Africa, Busa, raised a concern that demand-driven growth, was not sustainable and that it was critical to focus on unlocking supply-side growth. Accordingly Busa pointed out that government infrastructure investment programmes should provide the necessary supply-side stimulation to the economy.
The monetary policy could not do much to prevent supply-side shocks, such as oil and food prices increases from having first round effects on inflation. The monetary policy committee had to be mindful of the impact of these shocks of inflation expectations and of the need to act against the emergence of generalised inflation pressures. Inflation breached the upper limits since April 2007.
According to the National Treasury, the exchange rate volatility may result in higher inflation in the short term, but falling oil prices and lower food costs would help to bring the inflation back to the 3 to 6% target range. As stated in the report, the expected movement of Consumer Price Index, CPI, towards the target range is partly as a result of the introduction from January 2009, of a new target measure of inflation in the form of headline Consumer Price Index for all urban areas.
The committee has been previously informed that the current account deficit poses no threat to the financial stability and the economy as there were enough capital inflows to finance it. Accordingly, surplus capital inflows fully financed current account deficit for the first half of 2008. It has been expected to be the average of 8,3% over the Medium-Term Policy Statement. As stated in the policy statement, the gradual increase of current account deficit is a reflection of South Africa's mismatch between savings and investment.
According to Laubscher, portfolio inflows, commonly known as hot money, move swiftly around the world, seeking to return by trading in stocks, bonds, and currencies. He further stated that the current global financial circumstances and the way of financing the current account deficit may be a workable solution.
Finally, the policy statement states that the sound macro-economic management will stand South Africa in good stead in the period ahead, cushioning the economy and households against shock and providing a platform for a long-term growth. The ANC's economic policy has always been looking forward, and was aimed at improving the lives of ordinary citizens. It was through the vision, the dedication of the ANC leadership and cadreship in political office, and the civil service that the country stands shoulder high amongst its peers at the global economic stage. I thank you.
Mr B A MNGUNI
VISITORS FROM CZECH REPUBLIC
The HOUSE CHAIRPERSON (Mr M B Skosana): Thank you, hon member. Before I call the next speaker, I was informed that in the gallery we have visitors who are members of the delegation of the Committee on Constitutional and Legal Affairs, of the Chamber of Deputies of the Parliament of the Czech Republic. We would like to recognise them. [Applause.]
Mr S J F MARAIS
Mr B A MNGUNI
Mr S J F MARAIS: Chairperson, as we know the Medium-Term Budget Policy Statement, MTBPS, which the Minister of Finance tabled on 21 October 2008, is not a mid-year budget as commonly known, but importantly provides the framework on which the 2009 budget is to be constructed. It is also the obligation of the National Treasury in terms of section 28 of the Public Finance Management Act to annually table a multiyear budget projection for revenue, expenditure and key economic projections. In this process, it gives indication of government's assessment of the state of the economy, the fiscal framework, the budget priorities and the division of revenue between national, provincial and local governments.
The analysis of the current economic crisis indicates that the global economic downturn will certainly have negative effects on the South African economic growth and development. As part of the global economic village, our economy will get a cold when major economy sneezes, and our medium-term economic outlook must reflect a policy to best weather these economic storms.
In this regard the DA is pleased that the Minister has stuck to his well-known and prudent fiscal policy regime and the 2008 budget announcements which contain pragmatic elements to provide for social welfare and educational needs, but also that it must reassure investors that not only will their investments be safe over the medium-term but that South Africa can offer a better return on the investments than other emerging markets.
In order to effectively reassure investors and to positively influence their sentiments, it will be required from government and the ANC alliance not to make negative economic statements and create unrealistic expectations. This will not only jeopardise the investor's confidence and sentiments, but also be the task of the Ministry of Finance in support of the prudent fiscal policy regime and to attract enough foreign investments to fund the growing deficit on the balance of payments.
Our economic policy outlook must incorporate the realities of the current global economic climate relative to our domestic developmental, social investment and other economic needs. Investor's perceptions and sentiments reflect their expectations of future risk and potential returns on the investments in relation to other alternative options.
Negative sentiments will influence amongst others the credit rating of South Africa as we've just experienced. This can have a major influence on the cost of foreign borrowings which again can fuel domestic inflation expectations. This can also threaten economic growth outlook and eventually employment and work security.
Van die belangrikste uitdagings wat ons die hoof móét kan bied om te verseker dat ons steeds ekonomiese groei in die toekoms kan ervaar, sluit in: groei in veral buitelandse vastekapitaalinvesterings; die stimulering van groei via die aanbodkant van die ekonomie; die bevordering van uitvoer- en werkskeppende groei in veral die vervaardigings- en produksiesektore - dit sal die druk op die groeiende betalingsbalans verlig, wat al reeds neig na 9% van BBP, en verder sal dit ook ons kwesbare afhanklikheid van portefeuljebeleggings verminder – die liberalisering van arbeidswetgewing, juis met die doel om groter indiensname en kapasiteitbou aan te moedig, wat sal lei tot 'n afname in armoede; die verdere liberalisering van ons belastingbedeling, veral ten opsigte van klein en mediumgrootte ondernemings, waar die grootste potensiaal vir indiensname gesetel is; 'n verdere verlaging in huishoudelike skuld, wat verwag word teen 1,6% in 2009, asook huishoudelike verbruik, wat teen 2009 voorsien word om teen 2,8% te groei, wat grootliks die gevolg is van die verhoging in rentekoerse, en brandstof-, voedsel- en elektrisiteitspryse.
Die aangepaste fiskale besteding sal die begrote surplus verander na 'n aangepaste tekort van minder as 2%, wat binne perke is, gegewe die huidige ekonomiese klimaat.
Die DA besef dat die ekonomiese realiteite, pragmatisme en omstandighede deeglik in aanmerking geneem moet word met die beoordeling van die ekonomiese beleidsaankondiging. Volgens ons mening het die Minister en die Nasionale Tesourie alle faktore deeglik in aanmerking geneem, en hoewel die DA sekere klemverskille sou aanmoedig, steun ons minister Manuel se aankondigings en sal ons met groot verwagting uitsien na die begrotingsaankondiging van 2009. Ek dank u. [Tyd verstreke.]
Mr N SINGH
Mr S J F MARAIS
Mr N SINGH: Chairperson, I would also like to take this opportunity to congratulate hon Nene on his appointment and commend him on the excellent manner in which he chaired our meetings.
The failure to create the jobs needed to meet the demands of our growing population as well as the failure to eradicate poverty and to make real inroads into rural development is very worrying and is a huge obstacle to our development and prosperity.
The current economic slowdown will exacerbate these problems and make it even more difficult for the poor to escape their lives of poverty. We in the IFP believe that a strong focus on microeconomic policies and the removal of impediments to job creation in the labour market is vital if we are to overcome these problems and attract the investment needed to take us into a higher growth level.
We also need to harness the entrepreneurial spirit of our people and make it easier for them to start up and operate their own businesses and this would also mean having access to finance. We therefore reiterate our proposal that an urgent forum comprising of government, business and representatives of the labour unions be convened to discuss these important issues.
The IFP was encouraged by and agrees with the comments made by the hon Minister of Finance regarding the need to look at our labour market policy if we are to achieve our employment targets. The commitment to increase spending on infrastructure is not only welcomed but also necessary to increase growth and development.
It is, however, important that this infrastructure spending be focused on the long-term growth and developmental needs of our country and not just on the 2010 World Cup. While this event is important and will provide a major boost to our economy and development, and must thus be well supported, we must look beyond 2010 when considering the infrastructural needs of our country.
In the statement there is also a contingency reserve of R36 billion for unforeseen and unavoidable events. While we agree with this, we believe that there should be more clarity on what constitutes an unforeseen and unavoidable event. If it is the disaster that has occurred recently in KwaZulu-Natal in the Molweni area, if it is what has happened in the Western Cape, and if there is need for timeous intervention and funding, then we will support this wholeheartedly. Just to indicate, there is a main road in KwaZulu-Natal, R102, near where I live that has been inoperable for two years as a result of flood damage.
Even if we do formulate the best and most innovative plans and provide the necessary funding, we will not improve the lives of many who are still suffering as a result of fiscal indiscipline that is so obvious in some provinces and municipalities, should it continue. Taxpayers have to get value for money and for every rand that the taxpayer puts in, we must get one rand's value. Needless to say, our tax-collection system is about the best in the world, with them collecting hundreds of billions.
In conclusion, I would like to reiterate the recommendations stated in the committee report that time for public engagement on the MTBPS was far too short. While this engagement was very constructive and informative, we hope that there is more time for engagement in the future. Thank you.
Mr J BICI
Mr N SINGH
Mr J BICI: Chairperson, hon members, the reality of the budget process is that it is not realistic or constitutionally possible to effect any major budgetary shifts midstream through the budget cycle. Another constraint that cannot be overlooked is that the current executive is an interim structure which will be careful not to impose policy or budgetary imperatives on the incoming executive that the ANC expects to elect in the 2009 polls.
There is also a further need for making no sudden policy shifts since the global markets are in turmoil and developing countries like South Africa are threatened with a flight of foreign capital. It is a pity that whilst the MTBPS pursues this objective, the SACP and Cosatu are saying the opposite. In this context the UDM expected a budget statement that holds the cause with no real changes.
The UDM would like to see a clearer budgetary commitment stimulating the economy with a view to job creation as well as bigger cash injections for the fight against crime and to improve the salaries and working conditions of teachers, nurses and other government workers. Thank you.
Mr L W GREYLING
Mr J BICI
Mr L W GREYLING: Chairperson, the ID welcomes some more expansionary stance that is been taken in this year's Medium-Term Budget Policy Statement. It is now clear that the global financial crisis will have a negative effect on our economic growth prospects and in particular, our commodity exports.
It is in times like these when the co-operate sector reverts to a survivalist mode that the government needs to step in with the fiscal stimulus package. We must use the stimulus package to address our most obvious constraints to sustainable economic growth, namely inadequate education and skills, physical infrastructure and a competitive and productive environment for industry and economic service development.
When it comes to infrastructure spend, the ID has noted the concern in your policy statement that our current infrastructure is heavily import intensive. What we really need to do is focus on how we can stimulate the local industrial base and create the employment for South Africans.
In particular, Eskom intends spending R700 billion on nuclear plants which will be built by a foreign company with very little linkages to our local industry.
The ID believes that we should rather be looking to invest up money in renewable energy; the vast majority of which can be built by local industries. This would in turn create thousands of jobs for our people. It is these types of initiatives that need to be employed during this difficult period to ensure that we improve our manufacturing base and create the maximum number of jobs for each rand that the government spends
It is one thing to put aside money for infrastructure spend, but spending it is a different thing altogether. In this regard the ID is extremely concerned that the very departments entrusted with the task of building infrastructure are the same departments that are guilty of continual underspending on their budgets.
The ID maintains that we now need a government that can spend its money as effectively as it collects it. Thank you.
Ms L L MABE
Mr L W GREYLING
Ms L L MABE: Chairperson, the last Medium-Term Budget Proposal Statement report presented is the last of the Third Parliament and it reflects on the road ahead for the next Parliament on issues that it should take up to accelerate the work done by this Parliament. So, we need to remember that this is the last for this Parliament to prepare the next Parliament to take up issues that affect our people.
The economic slowdown and the projected decline in revenue may require changes in the medium-term budget proposals and we must be prepared for, as Parliament, when those changes are proposed by the next leadership. This in turn will place greater importance on domestic policies, with the need to ensure that funds are directed at those sectors and programmes which have the greatest impact on the lives of South Africans, and this is quoted from our report on the MTBPS.
This MTBPS makes provision for enhancing medium-term priorities, although not to a large extent. Generally, the committee welcomes and supports the statement, but there are some issues that need to be taken on board by government. I will reflect on some of the priorities and my colleague, hon Schneeman, will do the same with the remaining priorities.
One of them is to improve the provision of health services. Health is central to the lives of our people. We welcome the funding for the National Health Insurance System and appeal to government to put sustainable plans in place and financial support for its proper implementation. As funds are allocated there should be a proper implementation plan so that as Parliament, as the portfolio committee and the Joint Budget Committee, can follow up on whether the plan is implemented or not. As we interacted with the Human Science Research Council, prior the presentation of the statement, they indicated that 60% of maternal deaths are due to treatable diseases...
... fa 60% ya dintsho tse di tlhagelelang tsa bomme fa ba belega di tlisiwa ke malwetsi a a alafegang. Se, se raya gore go na le phoso mo Lefapheng la Boitekanelo. Phoso e, rona re le Palamente, jaaka re tlhopilwe ke batlhopi re tshwanetse go e baakannya, gore bomme fa ba belega ba seka ba tlhola ba tlhofala mmogo le bana ba bona, mo go sa tlhokegeng teng.
Ke rata gore ke boe gape ke re ee, ke nnete go na le tswelelopele e e dirilweng mo go fokotseng dintsho tsa bomme le bana ka nako ya pelegi. Fela, jaaka fa ke bua, re tlhoka go itse gore lefapha le tlile go dira eng gore e re fa re bua ka madi a re a ba neelang re bo re itse sentle gore bana ba, jaaka re le bomme mo Palamenteng, re bone gore ba a phela ka gore ke bona ba re lebeletseng bokamoso mo go bona.
Although we support the allocation of more financial resources to health, we also want to see an improvement in the supply chain management. We are very concerned as a committee that you will, for example, find that a hospital in Kimberley procures from companies in Gauteng. Why such a distance for waste disposal? How can it procure from Gauteng? How can linen be washed and cleaned in Gauteng? That is not fair to our people and we therefore say procurement must also be done from local companies, so that local economic development can be realised. [Applause.]
We also say that as medication is procured, it must be on time, not at the 11th hour or at the end of the financial year, every time, we expect medicine to be available because there is money availed for it.
On crime prevention and security we always say, even last year during the MTBPS, the cluster should have an integrated approach so that Correctional Services, Justice and the police know what each other is doing, so that their approaches can be enhanced to ensure that crime is reduced, but we have discovered that this is not the case.
We welcome the fact that more financial support will increase the number of specialised police personnel, but they should be accompanied by a visible decrease in the level of crime. As we employ more police, crime must also decrease; as we employ more police, we need to have more detectives, who can prepare convincing statements that can stand the test of time in court because we want more people to be convicted and sentenced to jail.
At the same time, as I talk about jail, it's our concern as the Joint Budget Committee that in 2002, the former President, Comrade Thabo Mbeki, announced that six prisons would be constructed. Unfortunately, the statement says there'll be six more new prisons. We tried to interrogate it and communicated with the Department of Correctional Services to ensure that the six announced in 2002 are not the six that are supposed to benew. Unfortunately, there was no response. We also say that, as the department, as we welcome funding proposals for those six new prisons, the correctional services must give the portfolio committee and the Joint Budget Committee an implementation plan of how those prisons would be constructed and completed.
On rural development and agrarian reform, we say that agrarian reform is central to the policy of this government and there's no way we can move away from it because we want to alleviate poverty, we also want to ensure that there is food security. As a developmental state we must have food security.
We interacted with the Department of Land Affairs and Agriculture because last year we raised a concern that they did not work hand-in-hand. At least now, they convinced us that they've started to work together. The challenge is we expect Land Affairs to speed up processes to meet the 2014 target. Last year, they were not convincing. They did not show that they could achieve that plan. There were some technicalities that cropped up but we still stick to that 2014 target.
I also want to say that the reason we are concerned about agrarian reform is the fact that agriculture employs more people. As we support it, we must also ensure that more people are employed and not machinery, because there is a tendency to move towards using more machinery. There is a tendency of ensuring that, instead of taking up their responsibility of providing more food, people would rather opt for game farming. We questioned it during our interaction with the department.
With respect to industrial reform, initiatives that government has in place must be balanced between promotion of competitiveness and protection of the existing industries.For instance, the textile industry is dying and efforts that are there to assist the motor industry must also be used for these textile and clothing industries to ensure they survive because these are the main employers in that sector. Therefore, there must be a broader sustainable industrial strategy, which as a developmental state must be prioritised. Remember, we produce natural resources and they must be used to ensure that we develop more industries to create more employment. We welcome the new face of the Expanded Public Works Programme that is intended to transfer skills, but also create longer-term employment. We've been concerned that employment created was short-term.
I can't leave out state-owned enterprises. Our view is that they must work together with government on developmental objectives. They can't work parallel to what government is doing. There must be that integration to ensure that they support our developmental initiatives.
Before I complete, we emphasise, as a committee, that co-ordinated and integrated planning is paramount, whether it's in the justice and security cluster or in the economic or social sector. An integrated planning approach is very important. Departments must stop working in silos. This is one government; all departments have to work together.
Finally, I want to thank all the departments, including the Human Science Research Council and the Public Service Commission because they gave us information when we interacted with them, which we used when we called departments to appear before us.
Rra, ke a go leboga. Re le ANC le tshegetsa puo e. Rare,...
phambili, ngomzabalazo phambili!
Mr S N SWART
Ms L L MABE
Mr S N SWART: Chairperson, amidst radically altered political and economic conditions, the ACDP welcomes the hon Minister of Finance's assurance that, whilst, there is global financial turmoil the thunder will pass and we will weather the storm. The medium-term statement provided the much-needed assurance that government's prudent fiscal and monetary policy that has shielded South Africa from the global financial crisis affecting other emerging markets will not be altered.
The crisis will, however, result in a slowdown in our economic growth. This will result in decreased job opportunities, rising prices, reduced exports, and reduced taxes that would have been collected. This was factored into the policy statement with lower economic growth forecasts and revenue estimates.
Whilst there was huge pressure for more popular spending, thankfully, no radical shifts in monetary and fiscal policy were announced. This would have sent the wrong message to foreign investors, already jittery due to the financial crisis.
In this regard, the ACDP appeals to left-leaning Members of Parliament to tone down calls for major shifts in economic policy. This, particularly, in light of the fact that the financial crisis has already jeopardised South Africa's foreign capital inflows. We cannot afford to further destabilise the economy by political pasturing, particularly, in the run-up till next year's elections.
Our large current account deficit that is financed by speculative short-term capital inflows would also be affected and is also an area of concern that was addressed. Whilst this deficit remains our Achilles heel, the country's low debt ratio, large cash holdings, and significant foreign exchange reserves in the region of $32 billion will serve to cushion the economy during this global meltdown.
The ACDP supports the limited increases in public spending in the amount of R170, 8 billion over three years that was announced. We particularly welcome the focus of the policy statement to include the enhancement of the quality of education, improving health care, fighting crime, delivering housing, water, electricity, sanitation and addressing poverty.
We would like to touch on the issue relating to the credit ratings. It is regrettable that our rating has been reduced from "stable" to "negative". Surely, as South Africa are the victims in this whole situation and as the ACDP we share the views expressed by Treasury about the credit rating of Fitch and Spoor which are not supported by our recent history and overlook certain material facts about current macroeconomic and fiscal frameworks. We cannot allow ourselves to be negatively affected by this credit rating – as I've mentioned we are the victims – and, surely, these are the issues that have to be addressed when looking at the global financial institutions.
In general, the ACDP will, however, conclude by saying that we support the Medium-Term Statement and believe that the tough fiscal and monetary decisions will be taken to enable us to weather the storm. I thank you.
Ms S RAJBALLY
Mr S N SWART
Ms S RAJBALLY: Chairperson, the global crisis has the developed world and the developing world in limbo, while economists may see some light for a developing country such as South Africa even though at a slower rate of growth. The Minority Front cannot contain its concerns when we look at the volume of people affected by the scourge of poverty, unemployment and minimal service.
Even though a low growth figure is a bit positive but it is a reality of the exceedingly high cost of living and getting through, today of poverty-stricken families that we need to take to great consideration. The inflation rate of 11% has earned a salary of 11% wage increase.
People are battling to sustain even more from a small income. This is the sore reality of our current economic climate and, certainly, there should be fiscal issues to cushion it. The hon Minister of Finance has rightly described it as a financial storm.
The MF hopes that the additional allocation of R170, 8 billion over the next Medium-Term Expenditure Framework, MTEF, shall address many of our challenges and sustain effective growth even in these trying times. While tax revenues do not look as grim, we are certain that the hon Minister and his brilliant team shall, by next year's budget, have devised some relief.
The MF acknowledges that the National Treasury has had to change its growth forecasts, reducing the Gross Domestic Product expectations with all its uncertainty. We need to earnestly examine the situation so as to reduce external vulnerability. The MF, however, notes the efforts to increase investment and employment to stimulate higher economic growth.
We thank the hon Minister and his able team for putting the band aids where we need them. The MF hopes that our strategy shall sustain effective economic growth and rather assist in bringing poverty down. The MF supports the Medium-Term Budget Policy Statement. I thank you.
Mr G D SCHNEEMAN
Ms S RAJBALLY
Mr G D SCHNEEMAN: Chairperson, the spending projections contained in the Medium-Term Budget Policy Statement continue to build on the commitments which the ANC has made to create work and fight poverty and to make local government work well.
It also sets up the context and direction of policy which enables departments to plan and budget for the next three years. If departments are able to do this there should be no reason for under expenditure and not meeting targets.
These spending projections determined by this ANC-led government move us closer towards achieving the goals and objectives of the Freedom Charter. They also clearly demonstrate the continued commitment of the ANC to the Freedom Charter and ensure that the aspirations of those gathered in Kliptown on 26 June 1955 are realised.
We, in the ANC join those who were in Kliptown in 1955 when they said: "And we pledge ourselves to strive together, sparing neither strength nor courage, until the democratic changes here set out have been won."
In particular, allocations are made which strengthen the following clauses of the Freedom Charter: "The land shall be shared amongst those who work on it." This is demonstrated through the policy priority which government has placed on the redistribution of land and its implementation of which has been emphasised by the Joint Budget Committee: "The doors of learning and culture shall be opened". No fee schools are being expanded, new schools are being built and old infrastructure continues to be upgraded. "There shall be houses, security and comfort". Over 2,6 million houses have been built.
We have no doubt that our government continues to put the people of South Africa first and prioritises spending that will create a better life for all. The Joint Budget Committee held hearings on the Medium-Term Budget Policy Statement, MTBPS, and interacted with the Department of Housing, the Department of Transport and the Department of Education as well as the Human Resource Research Council.
Spending on housing over the MTEF period will see R44, 7 billion allocated through the Integrated Housing and Human Settlement Grant. The Joint Budget Committee, JBC, welcomes the increased allocation and is confident that this will help to accelerate housing delivery and a reduction in the housing backlog.
However, there will have to be greater co-ordination between all relevant departments so that as housing projects are planned, so to is the necessary infrastructure such as police stations, schools clinics and recreational facilities. This means that departments must talk to each other, plan and budget together. The days of working in a silo approach must come to an end.
A point of concern is whether sufficient funds are allocated towards the eradication of informal settlements by 2014. The Department of Housing indicated that with current allocations over the MTEF may not be able to meet this target. Together with the National Treasury, they will need to prioritise both financially and human resources and to ensure that this target is met.
With the continued rise in the cost of building materials, more emphasis should be placed on using alternative construction methods such as those which have been showcased that the Eric Morobi Housing Innovation Hub in Tshwane. Many of these methods provide a house which is cheaper to construct, bigger in size and of sound quality.
The increased allocations for school infrastructure which will improve existing facilities with priority to the provision of libraries, sport fields, laboratories, Grade R classrooms and infrastructure for learners with special needs, is welcomed.
Funding should not only be provided for the provision of facilities but must also provide the resources so that these facilities achieve the results which they are meant to. Well-resourced libraries will help to improve the reading skills and knowledge of our children. Sports equipment will help to produce sports stars of the future. Laboratories with the correct equipment will produce scientists.
One of the disturbing facts presented to the JBC during its interaction with the Department of Education, the Department of Health and the Human Sciences Research Council was the number of schools and clinics without access to sanitation and water despite considerable achievements having been made in the provision of these services.
Tomorrow is the World Sanitation Day, but children in 1 532 schools or six percent of our schools will have to wait to celebrate. Therefore, the JBC calls on all related departments to work together to ensure that by the end of the 2009-10 financial year that no school or clinic should be without sanitation.
The Medium-Term Budget Policy Statement provides funding for promoting energy efficiency and investment in renewable energy sources. Serious and urgent consideration should be given to the use of alternative forms of energy such as solar power in those schools and clinics which do not have access to conventional forms of electricity.
The National Student Financial Aids Scheme has been an effective policy measure with many students being able to further their studies. Continuous evaluation is required from the Department of Education to ensure that the intended target groups do indeed receive this much needed funding. The employment of more teachers will not only reduce learner or educator ratios, but will also improve the quality of learning, teaching and results. The establishment of a unit to evaluate school and teacher performance is welcomed, although, it is not clear on what funding be provided and more clarity will be required in this regard.
The JBC was informed that one of the contributors to absenteeism in certain high schools is transport problems. There is a need to clarify who is best placed and responsible to perform this function. The school nutrition programme provides much-needed sustenance and often the only form of sustenance to learners and is to be extended to all secondary schools in quintiles one, two and three; more work needs to be done to ensure that sufficient budget allocations are made.
Significant allocations are made for the provision of public transport infrastructure although much of these funds will go to 2010 Fifa World Cup host cities. It is important to ensure that our people experience the benefit of safe, affordable and reliable public transport. Throughout the hearings and in fact over the past four years, an area that has become increasingly evident to the JBC is that there is insufficient interdepartmental co-ordination, co-operation, planning and budgeting. Under expenditure is often related to poor planning and budgeting.
We, therefore, fully support the recent alliance economic statement on the need for a high level planning, evaluation and monitoring capacity in government and the proposed planning commission which would ensure the alignment of all work of government departments.
The Freedom Charter belongs to all South Africans who embraced it. I would call on all South Africans to register to vote in 2009 and join the ANC and realising the dreams and hopes of all the people who gathered in Kliptown in 1955. Together with the ANC we will create a better life for all South Africans. I thank you.
Mr L M GREEN
Mr G D SCHNEEMANN
Mr L M GREEN: Chairperson, the Federation of Democrats welcomes and supports the Medium-Term Budget Policy Statement. We have all been warned that global economic growth will be sluggish for several years. The market has become very volatile, and foreign investors will not be kind to emerging markets, as we have seen when investors recently took more than R8 billion out of the country.
The Minister of Finance has predicted that we have to downscale our growth rate to around 3% over the next few years. The current global financial crisis was brought about by the policies of the developed countries. The time has come for a review of current global market imbalances. If Germany, Japan, and other First World economies are facing a recession and shedding jobs every day, we must thank God that we can still talk of a 3% growth.
To access global funds, it has always been prescribed that emerging markets must tighten their belts by introducing austere fiscal measures to contain overspending. However, when financial crises strikes the richer nations, whom themselves ignored the fiscal discipline demanded by them for smaller, developing economies, developing nations, despite their sound fiscal policies, continue to lose out from accessing funds as the rich countries bail out only their own financial sectors and at the expense of development in emerging markets.
South Africans need to be sheltered from the fallout of the current global financial crisis. As the Minister has stated in his speech, the crisis will be with us for a number of years still since we have a situation where the rich have become richer and the poor have become poorer before the current crisis. The impact of the global financial will be even more critically experienced amongst the poorest of the poor. I thank you.
Dr D T GEORGE
Mr L M GREEN
Dr D T GEORGE: Chairperson, the Medium-Term Budget Policy Statement provides a snapshot of deteriorating economic conditions within which our economy needs to compete.
Two significant events occurred in 2007 which are impacting on our economic performance. In August 2007 credit markets froze when trust between banking counterparties broke down. This resulted in a liquidity crisis in the international financial markets and fallouts in real economies across the world.
A decline in global consumption and the withdrawal of investor capital from our emerging market will further enlarge our current account deficit and impact on the value of our currency. Hedge funds are offloading many of their assets, including gold, causing the price to fall along with other commodities. This is unusual, given that the gold price usually increases during economic turmoil to our benefit.
In December 2007 events at Polokwane highlighted concern over future economic policy. Uncertainty over policy continuity has increased perceived risk and calls for unworkable policy shifts have frightened market participants. Proposals to position government at the centre of our economy have eroded confidence in our sustainability and demonstrate our vulnerability to experimentation with failed economic systems.
Our economic prospects have deteriorated substantially in the past eight months. Macroeconomic projections indicate the extent to which South Africans will feel the brunt of the economic downturn. Fitch and Standard and Poors have downgraded their economic outlook for South Africa from stable to negative. This makes the cost of credit even more expensive.
The role of government is to help ensure that the downturn is shallow and short. Government needs to stimulate the economy without dominating or commanding it. It needs to intervene through effective fiscal policy and we broadly support its approach. Fortunately, our banking system does not require rescue, so attention can be applied to three immediate needs: preventing job losses, providing a safety net for the vulnerable and accelerating job creation. This can be achieved through improving the ease of doing business, simplifying the tax regime, providing incentives to business, especially small and medium enterprises to retain its work force, implementing a wage subsidy and income support, addressing uncompetitive labour laws, and accelerating public-private partnerships.
There appears to be a broad consensus that developed economies are heading for recession, and developing economies for slower growth. Our economy needs to be perceived as a stable and secure investment destination. Our fiscal stance, to date, has promoted that objective. Through appropriate interventions, the downturn can become less painful and our fundamentals can be improved to accelerate the upturn when it inevitably comes. Thank you.
Ms N R MOKOTO
Dr D T GEORGE
Ms N R MOKOTO: Good afternoon, Chairperson, members, and members in the gallery, the debate on the Medium-Term Budget Policy Statement has come at a very critical stage of the economic developments around the world.
In that case, very serious reviews and considerations have to be taken in order to place to our economy on a platform to better respond to the current challenges facing the world as a whole. Our government has been very proactive and, through the strong supportive measures centred on policies and relevant institutions, it has, to a certain extent, assisted in cushioning the economy from the global pressures of volatility.
Chairperson, during the past 14 years, government has gradually and effectively strengthened its fiscal position whilst, at the same time, it has ensured stability in the public finances. It has, therefore, been able to support sustainable economic growth through the increase in public spending on key priorities like boosting the investment in infrastructure and social and economic development.
Whilst we appreciate the proactive approach of government, especially of National Treasury in the choices they have made for us, we are also mindful of the fact that it also calls for prudent action on our part as citizens, state-owned enterprises, government departments, and the private sector. We must heed the call to improve our culture of saving and reduction of debt and reckless consumption, particularly as we go to the festive season, as this will further cushion us from the harsher effects of global volatility.
For the past five years, government's fiscal position has been adjusted to respond to cyclical factors and last year a budget balance was introduced which also allowed for a budget surplus. The advantage was that government better positioned itself to increase social spending on major priorities.
For the coming year, it has been projected that there has been a weakening in the structural budget balance, mainly due to high expenditure. The state-owned enterprises are also playing a strong arm, or bigger role, in driving this investment. At the same time, revenue trends also reflect moderation. The buoyancy of the recent years has dissipated, giving effect to reduced gross tax revenue as a percentage to the Gross Domestic Product, GDP. Much of this decline represents a natural reduction in cyclical components of revenue as economic growth and commodity prices retreat from relatively high price levels and, as the economy begins to pick up in 2010, revenue collection and prices will also stabilise.
For several years our government has been able to reinforce a progressive character of the tax system. The factors behind this strong revenue performance included legislative changes to broaden the tax base, to reduce loopholes, and to create a more efficient revenue service. Through both policy reforms and improved administration, government has increased the efficiency, fairness, and progressiveness of our tax system whilst reducing the impact of high marginal tax rates.
South Africa's main sources of tax have been income tax, VAT, and corporate income tax. Improved revenue administration and a growing economy have enabled our government to make significant tax reforms over the past decade. The current tax reforms that are under way include the replacement of the Secondary Tax on Companies with a dividend tax. It is proposed that the general fuel levy should be shared with metropolitan municipalities and further tax instruments are being suggested for the municipalities.
With regard to the personal income tax, the 2009 Budget will again provide relief for individuals to compensate for the effects of inflation. The nett results of these reforms include rate reduction, adjustments to brackets, base broadening in the form of capital gains tax, closing of various loopholes, and improved enforcement. It is apparent that a considerable erosion of the company tax base occurred when the rate was 40%, while a broadening of the tax base, higher growth, and improved compliance efforts have resulted in significant increases in this revenue category since 2001.
Hon members, the VAT zero rating that is widely talked about – that is whilst zero rating of basic foods and paraffin is intended to assist the poor, higher income households also benefit from this concession. It is our view most of the cases... the ANC supports the statement. Thank you. [Time expired.]
The MINISTER OF FINANCE
Ms N R MOKOTO
The MINISTER OF FINANCE: Siyabonga kakhulu; Sihlalo, ngaphambili!
I would like to thank the Joint Budget Committee for the work they have done on the Medium-Term Budget Policy Statement, because, as is evident from the report published in the ATC today, and also from the contributions of members here this afternoon, the committee set about its task to produce a diligent and detailed process. I think it is remarkable that Parliament's oversight is as strong as it is, and I hope the hon Trent is aware of this.
I think that the broad message that we built the Medium-Term Budget Policy Statement around, which was focused on the storm and the fact that it will pass, has been well received by members here.
The report reflects the complexity of the present economic circumstances. I think it is also important, as reflected in the earlier discussion, that since the tabling of the Medium-Term Budget Policy Statement on 21 October, global circumstances have actually deteriorated somewhat, although we have had a series of meetings that have allowed us to explore options for a turnaround, along with a number of other countries.
I would like to concur that there is broad agreement on the key budget priorities over the next three years. These are: education, health, fighting crime, investing in built environment infrastructure and improving rural livelihoods.
We appreciate that Parliament broadly supports the division of revenue among the three spheres because this decision is a critical decision, ensuring that government's priorities are funded, and that subnational governments have the resources to deliver on government's priorities.
One of the issues we clearly have to give attention to now is to improve on the alignment between the three spheres of government, especially in those areas where we have concurrent powers, and part of the work that we are exploring is the estimates of national expenditure that will in fact construct such an alignment and ensure that parliamentary oversight over a function, and not just a function in a sphere, might be considerably improved.
The Joint Budget Committee makes ten recommendations, as published in the ATC. I would like to concur with each of these recommendations, and I undertake to share this with my colleagues in the executive, especially in those areas where better alignment is called for between different functions: education, water, etc. I will communicate this with my colleagues and ensure that by the time we return in February with the Budget, these issues have been taken account of, and, very importantly, that we can reflect on these issues also in the measurable objectives in the estimates of national expenditure.
In respect of co-ordination and the measurable objectives, a series of several intergovernmental forums have been set up to improve on co-operation between the three spheres and also within a sphere, but Parliament also has a role to play in this regard. Raising it here, as the Joint Budget Committee does in its report published in the ATC, is important but there needs to be constant follow-up, and I hope even beyond the elections that this will be part of the way in which the oversight of Parliament is undertaken.
Secondly, departments compose their measurable objectives as part of their strategic plans and table them for scrutiny here in Parliament. I'd like to agree with the point that the very excitable hon Trent made earlier. It is not frequently that we recall what you said, Mr Trent, so let's celebrate that today! [Interjections.] Parliament has not actually looked at annual reports this year. Now, if you haven't looked at the annual report, how are committees then prepared to engage with strategic plans going forward? I just happen to be of the view that it is a major omission, because the fundamental purpose of parliamentary oversight over the work of the executive then does not receive the necessary attention.
So beyond the report as published in the ATC, and knowing that departments have published measurable objectives, Parliament needs to know that departments actually stick to what they made the commitments for. There is a kind of contract about what the money will buy, and that oversight function is a function best performed by Parliament.
Lastly, despite the gloomy international economic outlook, because of the tough decisions we took earlier on, we will be able to finance our spending plans over the next three years. We have the fiscal space to protect spending on infrastructure and social services, because it is these investments that will ensure that we grow faster when indeed the storm has abated.
The Budget that will be tabled in February will take account of the recommendations and views of the committee, and we will endeavour to continue engaging with these issues that the report raises way beyond the Budget on 11 February next year.
Thank you very much, Chair. [Applause.]
Mr G G OLIPHANT
The MINISTER OF FINANCE
INTELLECTUAL PROPERTY RIGHTS FROM PUBLICLY FINANCED RESEARCH AND DEVELOPMENT BILL
(Consideration of Bill as amended by NCOP)
Mr G G OLIPHANT: Chairperson, Ministers and Deputy Ministers present here, let me also congratulate the newly-appointed Ministers and Deputy Ministers who are here and those who are not here. I also greet the Chairpersons and deputies behind us, as well as the Chief Whip and Deputy Chief Whip of the Majority Party. Welcome to all the new members who joined Parliament today and on the other days. [Applause.]
Today we are dealing with some amendments that arose from a Bill that we debated here in Parliament. We are happy to report that the Portfolio Committee on Science and Technology met on 24 October 2008 and adopted unanimously amendments that the National Council of Provinces proposed for our consideration, relating to the Intellectual Property Rights from Publicly Financed Research and Development Bill. The Bill was approved by the National Assembly on 21 August 2008 and sent to the NCOP for concurrence.
The two amendments proposed are of a technical nature and essentially clarify that choice, in respect of intellectual property emanating from publicly financed research and development, shall be owned by the recipient. Where the recipient prefers not to retain ownership of the intellectual property or not to obtain statutory protection thereof, that choice must be made in accordance with the regulations and any guidelines published in NIPMO, the National Intellectual Property Management Office, by notice in the Gazette or other provisions applying in this regard.
Secondly, the Bill addresses the right of intellectual property creators in institutions to benefit-sharing. For instance, intellectual property creators at an institution and their heirs are granted a specific right to a portion of revenue that accrues to that institution.
What we are saying is that if you are a creator at an institution that receives some royalties relating to this intellectual property, you or your heirs must benefit from that. There is a legal criterion that facilitates this. So, I'm not going to get into the details, because we have debated this law before.
The committee was satisfied that the omission and/or corrections suggested by the NCOP do not change the substance of the Bill as was approved by the National Assembly.
To illustrate the critical importance of this piece of legislation in relation to economic growth and competitiveness, let me just repeat some examples that we gave at the CSIR, Council for Scientific and Industrial Research, conference held yesterday – and it continues today – as achievements. The CSIR that we are talking about is funded by the public and boasts many achievements of technological excellence and innovation. Amongst these is, for instance, the Heavy Vehicle Simulator, which is a mobile laboratory that allows engineers to assess the performance of new road designs using accelerated testing techniques.
This scientific tool for measuring scientific competence optimises the structural design of roads and minimises the life cycle cost of the road. The CSIR, for instance, informed us that the United States of America and China have adopted this world-class system to develop infrastructure in their own economies.
Deputy Minister Hanekom will be happy to know about the Lithium Battery Technology that is used in many power tools or devices. Soon, it is expected that this technology will also be deployed in battery‑powered motor vehicles. Although South Africa does not have a battery cell manufacturing industry, our country has recently announced its plans to develop a battery car. A prototype car was recently announced at the Paris Motor Show. The fact that CSIR has key patents in lithium battery field provides us the freedom to operate and establish a battery cell or battery-manufactured operation.
There are many examples; another excellent example of our research excellence is the Bioartificial Liver Support System that is intended to extend the lives of patients suffering from acute liver failure - and the list is long. Regarding the last example I gave, Ntate Mokoena, what science will do to assist you when you have this condition is to drain all the blood out of your body and pump into you a lot of oxygen so that you remain alive. It will also purify the blood and try and treat some conditions in your liver. That is what it is able to do. The marvels of modern science! Our country is at the cutting edge of this technology.
People die owing to the condition of liver failure. Transplant is expensive and it's also very difficult to get liver donors and so on. So, we are excited that the next Parliament has the prospect of overseeing some of these pieces of legislation - this one and the others that we adopted during the course of this year.
Let me wish all political parties a peaceful election campaign, all members a restful season and, obviously, an overwhelming victory for the ANC in the next election.
Mr J P I BLANCHÉ: Mr Chairman, may I ask the member a question?
The HOUSE CHAIRPERSON (Mr M B Skosana): Well, you still have time, hon Oliphant. Will you take a question?
Mr G G OLIPHANT: I shall, Chairperson. Go ahead, sir.
Mr J P I BLANCHÉ: Now that Mr Lekota and Mr Shilowa have left the ANC, is there any intellectual property left in the ANC?
The HOUSE CHAIRPERSON (Mr M B Skosana): You wanted a question.
Mr G G OLIPHANT: I was hoping for a much more intelligent question than that. [Interjections.] No, no, no! I shall not say that any ...
The HOUSE CHAIRPERSON (Mr M B Skosana): Please, hon member, you offered to answer the question!
Mr G G OLIPHANT: I shall not say anything about our former comrades. They are just lost, that's all. Basically, like the President of the ANC Jacob Zuma said ...
The HOUSE CHAIRPERSON (Mr M B Skosana): Hon member, your time has expired. I need to rescue you now. [Laughter.]
The hon Oliphant started off by welcoming me, even though I've been in the Chair for a whole year. I don't know whether the hon member is bidding me farewell; you don't know these things. Maybe he knows something that I don't.
The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, I move that the Bill, as amended, be passed.
Bill, as amended, accordingly passed.
Prof S M MAYATULA
The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY
CONSIDERATION OF REPORT OF PORTFOLIO COMNMITTEE ON EDUCATION – STRATEGIC WORKSHOP
CONSIDERATION OF REPORT OF PORTFOLIO COMMITTEE ON EDUCATION ON OVERSIGHT VISIT TO VAAL UNIVERSITY OF TECHNOLOGY
Prof S M MAYATULA: Chairperson, I will start off by congratulating two members who were part of the compilation of this report and who have left us. These are very important reports. What I need to do first is to indicate where to find this in the ATC, because I am not going to go through what is contained in it. The first one relates to the workshop we had at Gordon's Bay as a portfolio committee; the second one relates to our visit to the Vaal University of Technology.
I want to start off by congratulating two members of the portfolio committee who have left us. They were part of the process when we were dealing with these things. I am referring to hon Matsomela, who has since been promoted to the position of Chairperson of the Portfolio Committee on Public Service and Administration. [Applause.] I am also referring to Adv Gaum, who has since been promoted to the position of Deputy Minister in the Department of Education. [Applause.] As a committee we do pride ourselves on exporting leaders to different areas - Deputy Ministers, Ministers and chairpersons of committees. So we hope that they are going to fare well in their new lives.
In the workshop of the portfolio committee held at Gordon's Bay on 9 to 11 March, I want to again acknowledge, in particular, hon Ben Mthembu in his absence. Hon Ben Mthembu was a driving force behind this programme and he had a real passion for quality of education. Unfortunately he has also left the committee. In particular, what we did in that workshop was to invite people from outside. We invited Prof Christie to deal in particular on thinking outside the box regarding issues about general education. We also invited Prof De la Rey again to come from outside and deal with issues on higher education.
I would really appreciate it if people who are not part of the committee could go to the ATC dated on 27 August, 2008. It was good to hear Prof Christie again indicating the achievements of this government. Let me just read a few achievements Prof Christie, from the Cape Peninsula University of Technology mentioned in the first decade: More equitable distribution of state resources, for example no-fee schools; and the redesigning and restructuring of the system of education. She was happy with the increased access into our schools, the improvement in school provisioning, moving towards the achievement of education for all. She was also able to go through some of the challenges that are facing us. She referred to the quality of education, how our children are failing at international tests for reading, writing and arithmetic. If I cross over to Prof De la Rey, she was able to bring a SWOT analysis about our higher education, looking at what the strengths, weaknesses, opportunities and threats are - and again it was a breath of fresh air to see somebody from outside. In the same workshop we were able to get first-hand information from our comrade, hon Bapela, regarding the new model of oversight. As a committee we were really happy to ask: What does it tell us? I wish this could also be taken to other committees, because this is a very important model that is going to assist us. In that workshop we were even able to plan ahead up to and including 2011, so this is kind of a Bible and basis we are going to be using to see how we are going to take education forward. Let me put that aside.
When it comes to our visit to the Vaal University of Technology, we had to go there because of the turmoil, strive and strike and because we got letters from different stakeholders. If one reads this report you can see how we were able to get the different stakeholders, unions, the teachers and management to share how they feel about their university. During the presentation from all stakeholders, one could sense the mistrust. In 2006 the rector of that university was dismissed. He is still appealing. The new rector came and one could sense that these two stakeholders, the management and other different stakeholders, did not see eye to eye. They are not working together and the new management has not, as yet, been accepted. What we could read was that there was a sense of fear. Different structures are fearful of victimisation. They say if you stand and say anything as a structure, chances are you are going to be dismissed.
We tried to reason with the management that our democracy allows us to think whatever way we want to think and it is very important to accommodate everybody. So we did make some recommendations and, again, if one were to read this report, you can see that it is an objective report, taking all sides into account and indicating the state of affairs in that university. On behalf of the portfolio committee, I propose that these reports be adopted.
The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, I move that the reports be adopted.
Mr N T GODI
The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY
Consideration of twenty-seventh report of standing committee on public accounts – housing subsidies to municipal employees and administration of low-cost housing by certain provincial housing departments
Consideration of twenty-eighth report of standing committee on public accounts – independent complaints directorate (ICD)
Consideration of twenty-ninth report of standing committee on public accounts – Inkankala water board
Consideration of thirtieth report of standing committee on public accounts – magalies water board
Consideration of thirty-first report of standing committee on public accounts – Namakwa water board
Consideration of thirty-second report of standing committee on public accounts – bushbuckridge water board
Consideration of thirty-third report of standing committee on public accounts – construction education and training authority
Consideration of thirty-fourth report of standing committee on public accounts – department of health and welfare sector education and training authority (HWSETA)
Consideration of thirty-fifth report of standing committee on public accounts – local government sector education training authority
Mr N T GODI: Thank you very much, Chairperson. As you indicated the nine reports that we are tabling relate to the Auditor-General's report on housing subsidies to municipal employees and administration of low-cost housing projects by certain provincial departments. The report deals with the challenges that we identified as well as the recommendations that we have made to improve and ensure that this kind of maladministration blended with corrupt practices do not re-occur.
The second report is the annual report of the Independent Complaints Directorate, which is a qualified audit. The major issues of concern relate to weakness in internal controls, lack of monitoring which is a product of a high vacancy rate, including the fact that, that entity does not have a permanent head or director. And, I think this is the third year.
The other four reports relate to the water boards such as the Inkangala, Magalies, Namakwa and Bushbuckridge water boards who all have received qualified audits. If one looks at the challenges that face these entities which perform a very important and critical role in the rural areas one finds that they are similar. There is lack of the audit committees or internal audit, lack of segregation of duties, lack of fraud prevention plans, and general weakness in the internal control processes. We are calling on the Department of Water Affairs and Forestry to heavily intervene to ensure that these institutions are sufficiently capacitated to discharge their responsibilities to our people.
The last three reports are the reports of the Setas. We have the Construction and Education Training Authority which for quite some time have not been showing any signs of improvement as a disclaimer. There are serious control weaknesses and skills shortages.
We have questioned why the Minister has not yet intervened because it appeared that things were merely moving from bad to worse with no prospect. And if one looks at the current public small parcel explosive detection system, Speds, amongst the various stakeholders it does indicate to a Seta that is experiencing serious problems.
The same thing applies to the Health and Welfare Seta. It also had a disclaimer of audit opinion indicating a complete breakdown in the state of affairs. The last one is the Local Government Seta which has a qualified audit opinion. But, if one looks at the reports of these three Setas there are basically the same challenges. They are governance issues, lack of internal controls and proper monitoring systems.
I am convinced, as hon members and comrades would have seen in the reports that we as a committee have made firm proposals in terms of what needs to be done. It remains for our colleagues in the Portfolio Committee on Labour to assist us in terms of the inner monitoring of the challenges that are there as well as the executive. Some of these administrative challenges persist to a point where they certainly become political challenges where the executive needs to intervene to ensure that corrective measures are taken, especially as recommended by Parliament. I thank you. [Applause.]
Mr T R MOFOKENG:
Mr N T GODI:
Mr T R MOFOKENG: Thank you, Chairperson. I think the chairperson has covered enough when he spoke about qualifications, be they adverse, disclaimers or qualified audits. Those are the normal terms which are used in transactions of books – when you qualify books. On qualifications, when people get qualified they should not think that they are qualified to be promoted. They are qualified to be dismissed. [Laughter.]
Disclaimer means that there was no talk – the CEO could not even know whether he was coming or going. Therefore the opinion from the auditors has to be a disclaimer. It is in such thing that when he gives emphasis of matter it shows problems. Let me launch myself on the reports of provincial housing departments and the Independent Complaints Directorate.
Chairperson, when the representatives of our people met at Kliptown in 1955, to chart together a vision of our country as expressed in the Freedom Charter, they included a clause that says: "There shall be houses, security and comfort!" They went further to say: "All people shall have the right to live where they choose, be decently housed, and to bring up their families in comfort and security."
Section 26 of the Constitution states that: "Everyone has the right to have access to adequate housing." The state must ensure the progressive realisation of this right.
According to the Department of Housing, over 2,3 million houses have been constructed under the government housing subsidy scheme, from April 1994 to March 2007. Whilst this has gone some way towards fulfilling the aims of both the Freedom Charter and our country's Constitution, we have to admit that more still needs to be done.
It is our duty as Scopa to ensure effective monitoring of those tasked with realising the noble aspirations of our people. Additionally, we should always remember that the financial report that we analyse affect human beings.
Building defects were identified in 737 of the 970 houses inspected by the audit team. The defects included, amongst others, walls and foundations were severely cracked, gaps between the outside walls and the roofs, roofs of houses which were leaking, general basic services were either not installed or not connected to the bulk supply.
So, this confuses us and we don't know whether there are some inspectors. Really, if you give a quality control and go to inspect, you then ask yourself, how does a house which has not take even more than to years having being build starts cracking? These are the problems that we seem to be facing.
When the audit was conducted the following provinces were covered: Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga and the Western Cape. The criteria which need to be met for eligibility include marital status, residency, age, monthly household income, whether previous benefits had been received from government funds, or it was a first-time property owner. Those are some of the things that are needed.
With regard to Independent Complaints Directorate, for 2006-07 financial years, a qualified audit opinion was expressed by the Auditor-General on the financial statement of the ICD. Before elaborating on the details of the audit report it is important that we remind ourselves of the crucial responsibility that has been entrusted to the ICD.
Section 53(2) of the South African Police Act stipulates that the Independent Complaints Directorate may, upon receipt of a complaint, investigate any misconduct or offence allegedly committed by a member; investigate any death in police custody or as a result of police action; and may investigate any matter referred to the directorate by the Minister or a member of the executive council.
It is disappointing therefore that the ICD did not have a full staff complement, whilst it had to deal with an increase in complaints. The Auditor-General reported that out of 535 approved positions only 231 had been filled in the 2006-07 financial year. Due to critical management positions being vacant, policies and procedures were not properly monitored to detect and prevent noncompliance. This can only negatively affect the work of the ICD, and unduly prejudice those the directorate is meant to serve.
Standing Committee on Public Accounts therefore recommends that the accounting officer re-assesses the organisational structure, and requests more funding from National Treasury if needed to ensure that the entity delivers on its mandate.
Secondly, the Auditor-General reported the following shortcomings with regard to fixed assets: The valuation of the assets amounting to R29 319 000, including adjustments of R7 093 000 could not be verified due to inadequate documentation. Assets were not always bar-coded, and assets valued less than R5 000 are not supposed to be included in the register according to the regulations of the auditors and the Treasury.
The committee recommends that the accounting officer ensures that an appropriate document management system is implemented to control all source documentations and ensure that accurate reconciliation is done; assets are recorded and bar-coded; that there is compliance with the National Treasury prescript which requires that assets with a value of less than R5 000 should not be listed as capital asset in the financial statements.
Thirdly, the following control weaknesses were identified with regards to leave benefits: Leave forms were not properly filled, resulting in them not being properly captured on persal; leave forms were not always completed and approved before staff went on leave.
Hon members, I think this is a problem that we are having in most of the departments. You find that a CEO is suspended for almost two years with no case going on, and to certain departments there would be an acting CEO – for the whole two year. The first CEO is suspended with full pay. Now, this is an unbecoming behaviour. If somebody goes for two years and gets fully paid while suspended with no hearing, then one gets surprised as to what is really going on.
That is why I say let us try to be serious and assist each other. I appeal to the Ministers and their Deputy Ministers – Scopa has more than 35 Ministers. It is the only committee that has so many Ministers, but none of these 35 Ministers have attended Scopa's meeting.
They have never been in a study group of Scopa. So, I have come to the level now as a whip of debt of exposing the Ministers in this House. Because where we are supposed to discuss these at the study group they are not there. Now, where should we plan and discuss these things? You really cannot pump out money and then just leave. I am talking here about R29 319 000, which I am now proposing that this House accept as a loss and forget about the R29 million which got lost. This is what we have always said.
Today we are proposing and putting forward that hon members should accept the loss of R29 319 000 to go down the drain and accept this report. Therefore the report should be accepted with such a loss of an amount and it's not for the first time. Thank you.
Mr J J M STEPHENS
Mr T R MOFOKENG
Adv J J M STEPHENS: Chairperson, I must immediately thank the hon Mofokeng for what he said here today, because he has underlined an extremely important point about Minister's non-attendance at Scopa. The DA has asked for that to happen a number of times, yet it never did. We are extremely happy that such a view is now also being supported from the ANC benches. It would be a marvelous development if on each occasion that we call departments to the committee we would have both the departments and the Ministers present.
The Committee on Public Accounts called four water boards to appear before it to deal with the findings of the Auditor-General regarding their finances. It is deeply disturbing to note the complete inability of these boards to function at acceptable standards. The Magalies Water Board for example, is one of the biggest of its kind in the country. Yet it lacks properly developed policies and procedures to comply with generally accepted practices and applicable legislation. It must be stressed that no acceptable explanation could be put forward by the board's representatives at the meeting, for the lack of, for example, an operational audit section.
It must be said that it was still better than other boards, such as the Inkankala and Namakwa Water Boards, which both totally lacked an audit committee. The Bushbuckridge Water Board, which despite having such a committee, at least nominally, had no internal audit done at all during the previous year. In all cases the committee's report now before Parliament demanded a progress report within 60 days of the adoption of the report by this House.
These results are illustrating the importance of the oversight work that Parliament does through its Committee on Public Accounts. I am so glad that the hon Minister of Finance also raised the whole question of oversight. But there in lies a concern, because Scopa does not have the ability to deal fully and effectively with all the follow-up reports and investigations that would be required to complete the job. On a previous occasion in this House, I have requested that portfolio committees should follow-up on the work done by Scopa. I know that some of them did, but they were unfortunately a minority.
It would not be an overstatement to suggest that the oversight work done by Scopa was the most important work of Parliament as far as oversight was concerned. The Auditor-General's work would all be in vain, were it not for the fact that Parliament, through Scopa takes up his findings and holds the departments and entities to account. This work was absolutely essential for the effective functioning of the nation as a delivery vehicle for the people. It was not a luxury but a necessity. The work was essential and must carry on despite whatever else was happening.
This is why we are perturbed by the present state of affairs as was pointed out by my colleague hon Trent in his member's statement. Scopa's work must be continued, despite an impending election. The affairs and the best interests of the nation could not be deserted and abandoned, because members have to get themselves re-elected. We have been entrusted to look after the affairs of our people. The trust is sacrosanct - we dare not violate it.
The seriousness of the challenge faced by our democracy is illustrated by the fact that for the 2007-08 year, the Auditor-General gave only five departments clean audit reports. Nine departments received qualified reports and had had them for six consecutive years. About 11 others had emphasis of matter and other matters cluttering their reports - one department of state and one entity received total disclaimers of opinion.
It is true that elections are important. They are important for democracy to function. But nothing, not even elections, could be allowed to cause a discontinuation of good governance. Both are essential for a successful democracy. I would appeal to Madam Speaker and to all the Whips of all the parties in Parliament, to arrange matters in such a way that it never happens again, that Scopa's work gets interrupted and discontinued as in the present case.
The work that is not done now could not be done later. What is not done this year is not going to be done at all, because after the elections the new financial year will be upon us. I thank you. [Applause.] [Time Expired.]
mr H J BEKKER
Adv J J M STEPHENS
Mr H J BEKKER: Chairperson, the Report of the Standing Committee on Public Accounts before us for consideration today, highlights some of the weaknesses of the institutions that are meant to be working for the people of South Africa in the improvement of their lives. A common theme among the reports of the various water boards considered, was the inadequacy with regard to internal audit controls.
In most instances, there were no audit committees in place and no internal audits were performed in the year under review. However, realities should also be faced considering Namaqualand, for instance, where enormous distances of water pipelines are supposed to be maintained, but where there are very few customers or consumers, because of the sparsely populated area. The Department of Water Affairs should in this case, give more money to them.
The audit of the six provincial housing departments which focused on municipal employees who should not have received a subsidies or should have received a reduced subsidy, identified some very worrying shortcomings with regard to the administration of subsidy applications, as well as the administration of housing projects. Some of these include: Municipal employees submitting outdated and misrepresented information on their subsidy applications. Here we are talking of outright fraud and self-enrichment. Why are these employees not fired? There is no way in which you could be tolerant to that. This government is too much tolerant to fraud. Were the inadequate management measures for the safekeeping of completed application form or the fact that it has not been kept in a safe custody being done on purpose to conceal fraud or mismanagement? I am asked that question.
The reply we got from the Director-General was that there was a lack of capacity. Imagine the capacity that is needed by the person who is doing the filing. If the person is taught for one week, he or she would know how to file. The ownership of houses has not been transferred to the beneficiaries, although payments have been made to developers. Building defects of 737 of 970 houses inspected implies that 75% of the houses turned out by the Department of Housing are defective. We are not going to tolerate that. The correctness of payment made to developers could not always be verified as the departments could not provide supporting documents indicating payments for construction of houses.
Had there been colluding between the tenders and the municipal employees, considering that so many people have fought so hard and waited for so long for houses, and that some were even forced to live in makeshift houses in bad conditions, that is simply unacceptable. I thank you. [Time Expired.] [Applause.]
Ms S RAJBALLY
Mr H J BEKKER
Ms S RAJBALLY: Chairperson, in report 27 great concerns are expressed over the affairs of the Department of Housing which the MF wants to address in the light of the recommendations made by the Standing Committee on Public Accounts, Scopa, and monitored by them.
Report 28 has made it clear that the Independent Complaints Directorate, ICD, needs to address the shortfall in vacancies and leadership.
Further, the policy concerns expressed in report 30 on the Magalies Water Board need to be given a serious consideration, and similarly the management of the Namakwa Water Board in report 31 needs attention so that they may realize their mandate. Report 32 seems to have picked up a similar loophole in Bushbuckridge Water Board which the MF extends the same sentiments.
Recommendations made by Scopa on remaining reports equally require earnest attention.
The MF re-iterates the importance for us to govern the system of transparency to encourage accountability and Scopa as the leading drive force in ensuring that this is upheld in the public accounts. Thank you, Chairperson.
Mr D M GUMEDE
Ms S RAJBALLY
Mr D M GUMEDE: Chairperson and hon members, on the occasion of the 10th anniversary of the association of the Public Accounts Committee, the former Speaker of the National Assembly, Dr Frene Ginwala, when said:
The struggle against apartheid was not simply about the right to vote, important as it is. It was also about a new kind of society, about new values which we have embodied in our Constitution; values such as equality, nonsexism, accountability, responsiveness, openness, transparency and a just administration.
These values are the basis for our governance and the context within which we view our country's government and its entities.
Having said that, I shall start with the iNkangala Water Board – that is vote number 7 and numbers 9-15 on the Order Paper – in this entity, there was no audit committee, there was no internal audit and there was non-compliance with the Water Services Act - they had a qualified report as a result. The committee recommends that they have to correct this within 60 days and report back.
The next entity was the Magalies Water Board, which also has a qualified audit opinion for the 2006-07 financial year. They have no internal audit, they lack all controls and the fraud prevention plan was developed and not implemented. The annual report went to say that transactions had no supporting documentation and there was a lack of appropriate policies and procedures.
The committee recommended that the internal audit section should be fully operational. Monitoring controls should be put in place and reconciliations should be made.
The Standing Committee on Public Accounts requested that progress reports be sent to Parliament within 30 days. That is a progress report.
For the Namakwa Water Board, problems were of a similar nature and they did not have a Chief Executive Officer, CEO, as well. They were also required to report on their progress within 60 days.
The Bushbuckridge Water Board had the same problems but, on top of that, the municipalities that were served by the Bushbuckridge Water Board owed the municipality a lot of amount.
The Board had to recover R644 651 million that was regularly paid in the 2003-04 financial year, and they were having an inefficient recording keeping. The committee has recommended that this be corrected and the progress report be sent to Parliament within 60 days of the consideration of that report by Parliament.
We request that management should enforce the relevant laws and regulations. What has to be clear to all of us is that if there are no controls, then there are leakages like theft, fraud and waste, which in turn lead to less delivery; and in these instances it will eventually mean that the communities supplied by these water boards may eventually have no water. Let us remember that where there is pure water there is life and where water is contaminated it can't be deadly. And this depends on how we do our controls.
We have experienced and survived Eskom blackouts and they were bad. The same experience with water will surely be more devastating if not deadly.
Focusing on the Skills, Education and Training Authorities, Setas under the Department of Labour which are listed as orders number 13, 14 and 15 in our Order Paper, we start with the construction of education and training authority up to the local government sector, education and training authority which is number 15.
The problem in the Setas range from a lack of leadership, that is, they have a period of times without a CEO and some of them without Chief Financial Officers, CFOs; which then causes a lack of leadership.
Above this, these entities were found to be lacking in capacity and also lacking of skills which resulted in poor governance which has also resulted in an irregular awarding of tenders worth R14 million among others. These resulted in effective internal audit and their audit committees were less effective and further irregular in the issuing of tenders, and a disregard for applicable laws were experienced in these departments as a result of a lack of leadership, a lack of capacity, a lack of skills and noncompliance with regulations.
The committee request support from the relevant portfolio committees and Parliament.
In conclusion, let me quote John Rohn,
To be successful you don't have to do extraordinary things, just do ordinary things extraordinarily well.
The Public Finance Management Act, PFMA, and the laws of our motherland do not require extraordinary effort or extraordinary intelligence. They do not require extraordinary expertise that is not there. They simply ask of us to do what we can and do it as we ought to. This will make us realise the dreams of our forbearers at Kliptown when they adopted the Freedom Charter.
Looking at the performance of a number of departments and the number of public entities of which their majority where not qualified, not well-managed and not well-governed, that journey was a dream begun by the Freedom Charter. We, indeed, shall get it right. Thank you very much, hon Chairperson.
The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, I moved that the report be adopted.
The House adjourned at 18:24.
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