Hansard: NCOP: Consideration of Fiscal Framework and Revenue Proposals & of Report of Select Committee on Finance

House: National Council of Provinces

Date of Meeting: 13 Mar 2013

Summary

No summary available.

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Minutes

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 1

START OF DAY

WEDNESDAY, 13 MARCH 2013

PROCEEDINGS OF THE NATIONAL COUNCIL OF PROVINCES

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The Council met at 18:00.

The Chairperson took the Chair and requested members to observe a moment of silence for prayers or meditation.

Consideration of Report of Select Committee on Finance Fiscal Framework and Revenue Proposals

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 1

START OF DAY

Consideration of fiscal framework and revenue proposals and of report of select committee on finance thereon

The MINISTER OF FINANCE: Chairperson, hon members and members of the public that are here, firstly, my apologies for arriving here about an hour late. I thought that we owned the South African Airways, SAA, but we can't give them instructions on not to be late. The plane was an hour late in landing and I was coming from Cape Town after leaving a Cabinet meeting early. Thank you for the opportunity to address this House and participate in this very important debate on the Fiscal Framework and Revenue Proposals.

The 2013 Budget is about national development and fiscal sustainability. It is the first budget in which the government's plan to introduce the National Development Plan is beginning to take shape. The plan expresses central priorities of public policy, eliminating poverty and reducing inequality with a focus on lowering the cost of living and doing business, increasing exports, creating more jobs and making economic growth more inclusive.

Government departments will increasingly align their planning and expenditure to meet the objectives of the NDP and at the same time growing collaborative dialogue between government, the private sector, trade unions and civil society is needed to make the plan a reality. To remind you once again, the fiscal framework underpins the 2013 budget and tries to achieve a number of objectives. Firstly, it is to support economic recovery. Secondly, it is to secure fiscal sustainability.

What this means is how do we collect revenue, borrow money and spend money in a way in which we can make sure that future generations don't find themselves in trouble paying for the debt that we have incurred.

It stabilises the growth of public debt. I know that some hon members and others are concerned about this but we are still within reasonable limits on this question and I will come back to that. It finances government's ambitious infrastructure programme, some of it on budget and some of it through the balance sheets of state-owned co-operations or enterprises. It slows the growth of consumption spending. We thought at the MTTPS in October that growth and expenditure could be 2,9% but by the time we got to February this year we had to cut it down to a growth of 2,3% in what we call real terms.

I want to outline a few other areas in my introductory remarks. The first is as I pointed out, whilst we want to make sure that we reduce the deficit, which is what we call fiscal consolidation, manage our debt better and ensure that interest costs do not rise too far, we have to support the economic growth in a way in which we do not get stuck at 2,5% and are able to counter the kinds of troubles we see coming from Europe and from our own economy.

You will see that infrastructure spending grows in this budget. You will also see that job creation programmes such as the community works also see an increase in the budget and we support programmes such as the manufacturing competitiveness. You will also see that the Department of Trade and Industry's budget has increased in this regard.

In addition, we have allocations for the intended special economic zones so that businesses that invest there will be supported in terms of the buildings that they put up, the employment they create, and also get a tax break as you would have heard during the budget. However, most importantly if we are going to sustain our fiscal position and get into a healthier position over the next few years, one of the things that we have to emphasise a lot more - and I hope that this House will help us to do that – is that we have to keep reminding our public servants and perhaps ourselves too, that we need to do more with less.

Currently, the impression I get is that public servants by and large do not have an understanding that: we are living in very difficult times; that we do not have a lot of money to throw around; that we need to take extra special care to ensure that we improve the quality of our spending; that we get value for money for our spending, and that taxpayers, whose money we are spending get a clear impression from us that we are using their money wisely.

The third point is around securing fiscal sustainability. This means that whilst we are trying to ensure that we moderate real growth and spending, we at the same time will not impose posterity amongst our people. It also means that we are stabilising debt as a share of national income and at the most we will reach just below 41% in the next three years in terms of the debt gross domestic product, GDP, ratio. This is far better than anything that we see in most parts of the world particularly in those advanced countries. At the same time if our economy does not grow, if we do not get more tax revenue then we are not going to be in a very healthy position. This is a warning that I think all of us should take to heart and ensure that we pass that message down the line, so to speak.

As I pointed out, we need to improve the impact of public spending as well. In order to moderate our spending plans government departments were asked at a national level to trim their budgets. As you know, the contingency reserve has been substantially cut in the outer years, which means that the new administration that comes in after the 2014 elections has a limited fiscal space to do what they want to do in respect of new programmes.

We have asked departments to review their spending and some R52 billion has been shifted to support new priorities. I have also already indicated that we want to ensure that the growth and public debt is managed in a way in which we reassure South Africans and anybody else that requires reassurance that we are trying to keep this debt at a reasonable level. At the same time we need to be aware that rising debt means that more interest is going to be paid. If more interest is paid that means that we actually have less money for expenditure on both economic support and social support that we offer South Africans.

For the next year, the 2013-14 year, debt service costs for the first time in a long time rise above R100 billion. That means that of about R1 trillion that we will be spending, 10% of what we are spending will go towards the interest of our debt. That is a lot of money. It means that we are actually cutting down on the amount of money we have available for building schools, providing health care services and economic support in various areas.

Our task over the next few years is to rebuild what we call the fiscal space, meaning that our revenue must increase, our deficit must come down and our debt must come down. You can expect that in the future there will be more economic shocks. In 2007-08 we were able to absorb some of those shocks because of the good work done before that. We need to again get into the position we were in 2007-08, so that when and if and more likely when, rather than if, another shock comes our way we are able to absorb that shock.

The last point I want to make as I conclude my opening remarks is the point I made earlier on about the quality of spending. What is crucial is that we have to make more active efforts, and committees in the National Council of Provinces need to help us in this regard because provinces today spend 43% of our total expenditure. Forty three per cent is a lot of money. Over R400 billion of the trillion rands are spent in provinces. If there are big leakages as we know there are in provinces, then it means that all of this money is not reaching the people.

As you heard - and the Chairperson informed me - from the people themselves that money is allocated but it does not reach them, it reaches somebody else's pockets. The question is, whose pockets are they reaching and why is it getting into pockets of individuals rather than benefitting our communities in these sorts of areas? That is an important question.

Secondly, we will undertake a series of expenditure reviews to ask tough questions of ourselves about whether we are spending money the right way. Thirdly, we are going to review our tax policies to see whether those policies are appropriate for the kind of developmental challenges we have and the growth prospects that we have as well.

Lastly, we are going to have a long-term fiscal plan that we will present to you as well, which will ensure that we have a longer-term plan on how we make South Africa successful at some of the fiscal challenges that we have and the kind of fiscal objectives that I have outlined for you. I look forward to the debate and I will respond later to some of the issues that you raise. Thank you. [Applause.]

Mr S S MAZOSIWE... JN / TAKE ENDS AT 18:11:39

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 2

THE MINISTER OF FINANCE

Mr S S MAZOSIWE: Hon Chairperson, the ANC welcomes the fiscal framework tabled today, together with the Budget the Minister has presented for the 2013 financial year and the other two outer years. The fiscal framework takes into account the following: Despite the economic downturn as mentioned by the Minister in the United States and the eurozone, South African economy continues to grow albeit at a lower percentage than anticipated.

In the recent past, we have seen major crisis in the economies of the eurozone for example Greece, Spain and Italy etc. This had serious implications to South Africans, especially in trade, investments and in borrowing. We have also seen the backlash created by this crisis in those countries.

The strategy or the framework adopted by government to drive the economy has been accepted by the majority of South Africans including the opposition parties in and outside Parliament. Indeed South Africa is in good hands in the ANC-led government and in the Minister, Pravin Gordhan. This was demonstrated by comments made during the Budget Speech as many commentators agreed with the framework and many of them agreed with plans that government has for service delivery. These trends domestically have resulted with the review of the anticipated revenue collections downwards for the 2013-14 financial years. The Minister has already explained that the slight increase in the Budget deficit is owing to reasons mentioned above.

The economic growth figures have also been revised downwards. The reduction in spending is an interesting one. The R10 billion earmarked for the reduction of the overall Budget, I believe more could still be achieved, like you said, with what we have. For if we improve efficiency on our spending patterns, definitely, I believe we would have more money to spend than we think.

I should also remind members that the fiscal framework is about people and service delivery, not just about figures and not just a framework. How does it then affect service delivery? Government continues to prioritise the infrastructure development, job creation, health, education, social development, crime prevention and the elimination of poverty. This is what the government or the people of South Africa are saying and are going to do in terms of the cake that they have.

The framework takes the National Development Plan as its point of departure. We are aware that there is a bigger plan to align plans with policies and Budget. Again this document delivered by the Minister was also accepted by many, many South Africans. It therefore means that we have a framework within which to deliver services. What does this mean for ordinary people? I am not going to cover all areas, but it means that as the Minister has announced the personal income tax relief of seven billion rands, this benefit would be immediate as more money will go into their pockets when the new year kicks in.

The revised framework on the equitable share formula for local government targeting the poor households was also mentioned by the Minister. That is also a welcomed element in the Budget because ordinary South Africans will actually benefit, although mechanisms to implement that will be rolled out by the National Treasury. It is important for us as Members of Parliament to talk about these things, such as what ordinary people stand to benefit in this Budget. I am not talking about social development issues, but I am talking about issues raised in the fiscal framework.

Prior planning on infrastructure development to avoid rollovers due to unspent conditional grants is also a welcomed move, because in the past we have been talking about the Medium Term Expenditure Framework concept. I am saying this today hon Minister, that the concept has been enhanced because of this inclusion of planning. For the framework proposes a two year prior planning before services are delivered to give time for government departments to plan and actually secure procurement for those kinds of services in time so that the question of rollovers and unspent moneys generally in the Budget would be in the past.

The provision for metros to administer housing or human settlements in the six metros has been announced and is also welcomed. It is going to eliminate a lot of bureaucracy around housing provisioning in the country. The incentives for provinces who spent grant allocations quicker and efficiently, if I may add, is also a welcomed move so that they could be incentivised and get more allocations and so that they can spend more to deliver services. Programmes like the public works programmes and others, will actually be those that are targeted by municipalities as well as the conditional grants.

The task, as I conclude my speech, rests with us Parliament as the Minister has already indicated. We should dedicate more time in monitoring plans and service delivery. I may not be concerned much about who gets the tender in terms of the existing government framework, but I am more interested in the product that is being delivered. Yes, I will be concerned if the product delivered is below standard. I will raise my voice, louder and louder as a Member of Parliament.

This must also apply to members of provincial legislatures, to councillors and everybody as a whole must take this as a challenge as the Minister has said that the Auditor-General has raised issues about the performance of government as a whole, that is national, provincial and local government. The communities have raised issues about the concerns they have on service delivery. This is the biggest challenge we have as Members of Parliament. I just hope that through you hon Chair, the hon Tau will take this as the biggest challenge ever, even as a legacy project for the new Parliament to take up these issues of monitoring plans and service delivery as a key project in the new Parliament. With those few words I wish to thank you and we as the ANC supports the framework. Power! [Applause.]

Mrs Y N PHOSA / AZM MNGUNI/TAKE ENDS AT 18:22:20

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 3

Mr S S MAZOSIWE

Ms Y N PHOSA: Chairperson of the NCOP, Deputy Chairperson of the NCOP, the hon Minister of Finance Mr Pravin Gordhan, hon premier Mr D D Mabuza in absentia, Ministry, members of the NCOP, special delegates to the NCOP, members of Salga, ladies and gentlemen, it is a privilege and honour to participate in this important debate on the 2013 fiscal framework and revenue proposals.

The national Budget has given a concrete meaning to the assertion of the people's budget. The Minister of Finance, hon Pravin Gordhan, has presented a Budget that took into account the shared perspective on the future of our country as articulated in the National Development Plan, NDP, supported by the New Growth Path, NGP. This Budget certainly provides the necessary resources to kick-start the vision 2030 journey towards a society where improved service delivery will ensure a better and quality life as per the constitutional order of the Republic of South Africa.

Despite the uncertain global economic environment that is still shrouding us, the Minister confidently gave us hope when he pronounced the growth of the Southern African economy since the 2009 recession. The Minister managed to take the whole nation along in outlining the spending priorities anchored on the mandate of our future. That shows relevance and a response to the needs of the people as again prescribed by the Constitution of the Republic of South Africa where it says, you have got to be responsive to the needs of the people.

Hon Chair and hon members, be informed that on 01 March 2013, the hon premier, in his state of the province address pronounced that the province is hard at work to ensure that there is alignment of the provincial plans with the NDP. The hon premier also emphasised the needs for all of us as it flowed from the hon Minister to shift from consumption to investment.

He called for unity of purpose in delivering quality services that will add value in the lives of the people of the province so that there can also be value for money. He made a clarion call for the departments and public enterprise to make a double effort and fast track service delivery and work even harder and smarter to achieve the objectives of a better life for the people of the province and subsequently a better life for the people of the country.

As the Mpumalanga government, we welcome the measures that the national government is putting in place to improve and fast track the infrastructure delivery at provincial and local government spheres. The process of developing a provincial infrastructure masterplan is being fast tracked in the province to ensure that our future plans are solid and related. The related monitoring instruments propel quality delivery in the province, making sure that the money that has been allocated for the province and linked to the government's priorities, indeed works for that.

We remain committed to the principles that inform the national Budget. As a province, we commit to shifting expenditure from consumption to investment infrastructure. We commit to ensure that our Budget is directed to priorities of government aimed at bringing a better and quality life to the people of the province and subsequently to the people of the country.

Therefore, it would require that we direct more resources to elevating skills development and job creation for the youth as a new priority that came and flowed from the state of the nation address and we also commit to ensure that there is a delivery in as far as job creation for the youth of the province is concerned.

The provincial budget will be tabled within the same economic constraints that have been alluded to by the hon Minister. It will be informed by the urgency of delivering to all government priorities. The province supports all the measures that the National Treasury is putting to protect the most precious resource for development of the people's budget and committing to doing more with less.

Our fiscal framework has identified certain revenue proposals. We want to guarantee this august House that we unreservedly support these proposals because we think that they will make an impact on reducing overconsumption of alcohol and involvement in addictive substances like drugs and also talking about tobacco smoking. The tax relief on consumers and small businesses, as well as incentives for special economic zones, is welcomed as it is in sync with government's commitment for a better life for all.

As Mpumalanga government, we commit to establish a price standardisation committee as an effort to improve provincial supply chain management processes. The premier has already instructed us that there must be no official allowed to do business with the provincial government. Now, judging the premier by his good intentions but also the Department of Finance, indeed this is one of the fraud prevention strategies that ensures that Budget allocated benefits the taxpayer and the great majority of our people and nothing else.

As Mpumalanga government, again, we support the budget framework and we believe that indeed, it will work towards the so envisaged better life for all and quality life of the people of the province. Thank you. [Applause.]

Mr J M BEKKER / LN/Mia / TAKE ENDS AT 18:30:29

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 4

Ms Y N PHOSA

Mr J M G BEKKER: Hon Chairman, hon Minister Gordhan, hon MECs, hon mayors, hon councillors, hon colleagues and hon guests, thank you for the great honour of speaking in today's debate, in this beautiful province of Mpumalanga. I am from the Klein Karoo in the Western Cape and we are surrounded by big mountains, while here it is open and you can even see what is to happen tomorrow.

The 2013 Budget is the first in which government plans to implement the National Development Plan, NDP. The NDP is supported by all the parties in Parliament. It's great to see that government is trying to implement the NDP. We all hope that they will succeed.

Revenue collection was less than budget due to slower economic growth and unrest in the labour market within the mining and agriculture sectors. The mining unrest caused a loss of R15,3 billion while it was only projected at R10,1 billion in October 2012. Therefore, the tax revenue is expected to be R16,3 billion below the 2012 Budget estimate of R826,4 billion. This has led to a lower Budget revenue for 2013 and a deficit of 5,2% of the gross domestic product, GDP. Government's net debt is expected to stabilise at 40,3% of GDP. Compared to other countries, this is not alarming although the service of this debt becomes a big expense.

Afrikaans:

As ons dus in totaal na die situasie kyk, is ons posisie nie krities op die kort termyn nie. Die regering sal die 2013-14 jaar kan hanteer. Die probleem gaan begin wanneer ons na die 2014-15 jaar beweeg. Ons moet 'n hoër groei van die ekonomie as die beraamde 2,7% in 2013, 3,5% in 2014 en 3,5% in 2015 kry. Die regering se inkomste kan net styg as die ekonomie groei en die ekonomie groei net as die markte groei. Ons moet dus produkte produseer en vervaardig teen kompeterende pryse. Dit beteken dat ons arbeid meer produktief moet wees, ons grondstowwe moet teen kompeterende pryse geproduseer en verkoop word en daar moet nuwe markte in die wêreld geïdentifiseer en ontwikkel word. Ons moet kapitaal van elders trek om vir alle ontwikkeling te betaal deur die stimulering van buitelandse beleggings.

Ons arbeidswette beskerm werkers en die regering sal metodes moet vind dat indiensneming – dit is werk – nie deur vakbonde benadeel word nie. Vakbonde het net die belange van hul lede op die hart en nie die van werkloses nie. Ons sit met 'n werkloosheidsyfer van bykans 40% in die land. Die regering sal strenger beheer oor uitgawes moet verkry. Kapitale werke se tenders blyk die grootste probleem te wees. Beplanning van sulke werke is dikwels swak en dan word die proses misbruik in die uitvoering daarvan. Die Nywerheidsontwikkelingskorporasie, NOK, het veral baie werksgeleenthede in die landbousektor beplan. Die 50% styging van die minimum loon vir plaaswerkers gaan nie meer werksgeleenthede skep nie, maar eerder lei tot groter afdankings en groter meganisasie in die landbou.

Die aarbeidswette in ons land moet aangespreek word. Ons het te veel onrus wat 'n groot invloed op ons beeld in die buiteland en die vloei van kapitaal na ons ekonomie het. Daar word verwag dat die inflasiekoers tussen 3% en 6% sal bly. Dit is moontlik as die wisselkoers nie nog verder verswak nie. 'n Swak wisselkoers is 'n aanjaer van inflasie. Dit het ook 'n groot invloed op die prys van brandstof. Die olieprys is ook baie onstabiel.

Die gebruik van konsultante op alle regeringsvlakke en departemente blyk noodsaaklik te wees omdat daar nie kapasiteit in sekere departemente is nie, maar dit moet fyn bestuur word. Asemrowende bedrae word op konsultasie dienste gespandeer. Daar moet gepoog word om van die red tape [burokratiese rompslomp] – om 'n besigheid te begin en te registreer – ontslae te raak. Dit beteken nie 'n verslapping van dissipline in die algeheel nie want die toepassing van finansiële dissipline is die sleutel tot sukses.

Die diens vanaf munisipaliteite aan die mense op grondvlak is skokkend. Raadslede en amptenare misbruik die fondse, en soos ons die afgelope dae gehoor het, dienste word nie gelewer aan die mense op grondvlak nie. Raadslede en amptenare wil nie politieke aanspreeklikheid aanvaar nie. Ons moet hulle verantwoordelik hou!

Daar moet vir elkeen 'n werk wees wat hy of sy kan doen. Hy moet vir sy eie dienste kan betaal en so die kwaliteit van sy lewe verhoog. Die gaping tussen hoogs besoldigde en laags besoldigde moet verklein word deur beter geleenthede vir opleiding te verskaf. Werkloosheid moet aan bande gelê word, al moet die regering dan ook sekere subsidies aan bedrywe wat nie groei of kan oorleef nie, betaal.

English:

The DA supports the 2013 Fiscal Framework and Revenue Proposals. Thank you. [Applause.]

Mr M W MAKHUBELA

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 4

Mr J M G BEKKER

Mr M W MAKHUBELA: Hon Chairperson and hon members, this is a do-or-die Budget. I am saying this due to the following point. It is a final wake-up call for everyone to do their bit to make this country work.

The big questions remain as to whether domestic sentiment will return and whether labour will enhance the new vision of the NDP for a prosperous South Africa. These two big questions need to be answered. The time for playing games is over. The power struggle between the government and the Congress of South African Trade Unions, Cosatu, must stop. We cannot afford this luxury anymore. The Minister has done his part. The rest of us should follow and embrace the goals of the NDP so that we can see the light. That is everyone's duty.

Without a faster growth rate, we remain vulnerable to factors out of our control. The fact that Treasury had to adjust the growth rate downwards once again gives a clear picture of the bad scenario because the tax hike will be on the doorstep.

Economic growth does not always mean job growth. Let me give an example. In Singapore, a growth rate of 7% translated into only 3% of job growth. Hong Kong with a growth rate of 5% only registered a 1% job growth, while a growth rate of 1,8% in the USA led to no job growth. That is the issue. If we are really worried about jobs, we should worry about agriculture in this country. We should also worry more about smaller companies and assist them to become drivers of job creation. For how long can we afford not to have a dual labour dispensation, one for big companies and one for smaller ones, to create jobs?

We are all in this game. The role of ordinary South Africans, business, labour and good government is vital. We must change our attitudes to be more proudly South African. Europe and the rest of the developed world are worried. They shall not lead us out of the problem.

The call is that sub-Saharan Africa – the second fastest growing region of the world – must succeed. Less than 15% of all trade in Africa is between African countries. The red tape on trade in Africa must be cut and the mobility of citizens must be streamlined. The Minister has done his part and the rest of us should actually embrace this. It is our duty. However, time is not on our side. As I have said, if we fail, the tax hike is at the backdoor. I thank you. [Applause.]

Mr J J GUNDA / TH (Eng & Afr) / TAKE ENDS AT 18:40:50

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 5

Mr M W MAKHUBELA

Mr J J GUNDA: Hon Chair, hon Minister, hon Deputy Chair, and all protocol observed, this afternoon, let me start by congratulating the Minister of Health for demonstrating service delivery. He has done a good job by setting an example for people to see what service delivery is.

Let me just get to the point since I have only three minutes. The fiscal framework and revenue proposals describe the plan of government and how the money needs to be spent by various government departments. Let me quote the hon Minister, R Davies, during the Industrial Policy Action Plan, Ipap2, in 2010:

There is a need for structural changes in our economy to address the pressing problems of inequality, poverty and unemployment.

Let me go to the next important point. In 2011, in his state of the nation address, the hon President, Jacob Zuma said he is giving R9 billion for job creation opportunities. Almost R3,7 billion has already been spent, but only a few jobs have been created. The challenge is that the Department of Public Service and Administration, DPSA, is in control of that money. Another challenge is that there is only two years left for the R5,7 billion that is left from the initial R9 billion allocated for job creation to be used. The question is: how will they spend the remaining money if they spend about R4 million in creating only one job?

They should have spent the money on smaller businesses. As we have seen in China and India, smaller businesses on the ground created easy jobs. For instance, we can spend the money on five or six entrepreneurs to liberate themselves because in South Africa we need our people to be independent.

We can't have a social state where all people depend on the government. It's impossible. That is why I am saying that private sector must also come to the table and play its part. It is impossible that we, as government, can allow things like that to happen. South Africa needs a change and it is possible.

The dream of 1994, to better the lives of all people, can become a reality if we are really putting our fingers on the people who must achieve it. If we look around here, there are counsellors and provincial governments. As the Minister has just said, about 43% of the budget goes to the provinces. So, if the provinces are responsible for service delivery, they are responsible for seeing to it that the lives of our people get better - the same applies to local government.

In conclusion, hon Chair, it is very important that we watch the money that has been given to all the departments. That is very important. The private sector is not playing its part right now. Out of that R9 billion, government is giving them big businesses thereof. The money is not given to the people on the ground. I thank you. [Applause.]

Umntwana M M M ZULU

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 5

Mr J J GUNDA

IsiZulu:

Umntwana M M M ZULU: Sihlalo woMkhandlu kaZwelonke weziFundazwe nePhini lakho, Ngqongqoshe wezeziMali kuleli lizwe lethu, iNingizimu Afrika, abahlonishwa abangamaLungu esiShayamthetho namaLungu ePhalamende aseNdlini yoMkhandlu kaZwelonke weziFundazwe, nabethamele-ke, ithimba, siyi-IFP siyasamukela isabelomali sakho salo nyaka ngoba sihambisana neziNhlelo zeNtuthuko zaZwelonke [National Development Plan, NDP] ezenziwa uhlaka lokusebenza oluchaza ukuthi yimiphi imisebenzi okufanele yenziwe.

Nakuba kwezinye izinto kunokungabaza okuthile ngokuthi kungenzeka yini lokho ngoba ukwehla kwesamba somkhiqizo wasekhaya [Gross Domestic Product, GDP] okwenzekayo kusukela ngonyaka wezi-2009 kungenza ngibone ukuthi umhlaba wonke usesimweni esibi sezinkece obhekene naso, yingakho nophethiloli unyuka kangaka.

Okunye engikubona ukuthi kungase kulethe uhlevane kulokhu ukuthi izimali ezibolekwayo seziyofika kuma-44% uma ngiziqhathanisa neminye iminyaka. Lokhu kuzokwenza ukuthi izizukulwane ezilandelayo zibe nokuhlupheka okukhulu. Mhlonishwa Ngqongqoshe, angibonge ukuthi la kohulumeni bezifundazwe nakohulumeni basekhaya inkece ifakiwe. Kepha engikucelayo kukodwa, ukuthi sonke njengabantu baseNingizimu Afrika kufanele sizinikele ekutheni lezi zimali ezabiwa uhulumeni ziyafika kubantu, azipheleli emakhukhwini ethu.

Uhulumeni wethu-ke unezinhlelo ezicacile zokuthi kwenzeke kanjani lokhu. Ngiyacela-ke ukuthi siwuhulumeni wokubambisana kanye nophiko lwezokuphepha, uMnyango wezeziMali neminye iminyango sibophe izigebengu. Uma izigebengu kuyithina kuleNdlu, asihambe siyogcwala emajele. Uma kuyithina kuleNdlu esinamathenda, kufanele siboshwe sigcwale amajele ngoba ukubhekana namakhansela ewodwa ngeke kusisize.

Okunye kokugcina, kufanele sibheke ukuthi abantu esibafaka ezikhundleni ezifana nokuphatha omasipala, nezo-CFO kanye nezinye ngabantu abafanele yini ukwenza lowo msebenzi. Lokhu ngikusho ngoba isikhathi esiningi umuntu asichithe la kubonakala ngokusobala ukuthi omasipala bethu bayahluleka ukwenza umsebenzi, futhi ngeke ngikhombe ozakwethu amakhansela ngenxa yokuthi abathintani nezimali, uma bethuma babathuma ngemilomo. Ukuba bathuma ngezincwadi ngabe abaphathi bomasipala bayasitshengisa ukuthi nazi izincwadi abasithume ngazo ukuba kwenzeke izinto ezithile ngazo.

Sengiqeda, mayelana nosizo lokuxhasa intsha [youth subsidy], uMongameli kanye neqembu elibusayo bashilo ukuthi kufanele kwenzekeni. Ngiyacela-ka kumadlelandawonye ukuthi ahambe ayovalelana ezingxoxweni axoxe ukuze kuqinisekiswe ukuthi lolu sizo lwezimali lwentsha luyafika phela entsheni yakithi. Intsha yakithi ilimele kakhulu ngenxa yokungasebenzi. Intsha kade ikhala ngokuthi ayinaso isipiliyoni kepha inayo yonke enye into efunekayo. Ngakho-ke, yizo zonke izinto okufanele ukuthi thina njengezwe sizibheke ngoba alikho ikolishi noma indawo lapho kufanele ufundele kuyo umsebenzi ngaphandle kokuthi uqashwe.

Ngiyabonga

Mr C J DE BEER ///NPM/LIM CHECKED ZLU// .../TM / TAKE ENDS AT 18:47:56

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 6

Prince M M M Zulu

Mr C J DE BEER: Hon Chairperson, hon minister, hon MECs and hon members of the public that are still here with us, in the tabling of the 2013 Budget, the hon Minister provided a ray of hope for South Africa and cracked a whip on tax-evaders.

This Budget is a pro-poor budget. In the state of the nation address the hon President said: "We must put South Africa first." Yes, we must be patriotic and responsible to build and promote our country. This was an input made by previous hon members. We can be a winning nation, yes we can, but then we have to work.

The preamble of the Constitution commits us to improve the quality of life of all citizens and to free the potential of each person. This is about development.

This is in essence what the National Development Plan, NDP, is about, development. It's a perfect vehicle for a united action by all South Africans, the unions, private and public sectors.

I table this Committee's report and its recommendations on the 2013-14 Fiscal Framework and Revenue Proposals for consideration and adoption by the House as directed by Section 8(3) of the Money Bill Act 2009.

The report covers the economic policy focuses, the Fiscal Policy Framework, also following the tabling of the Budget on 27 February 2013 we engaged with the Minister in a briefing on 28 February 2013, and we had public hearings on 6 and 7 March 2013 receiving submissions from organised labour, organised business and public institutions. This is also captured in the report.

The NDP provides a broad strategic framework to put the economy and society on a new trajectory, it sets out 10 critical actions on which the government policy can proceed in partnership with the private sector, trade unions and civil society and it will shape resource allocations over the next two decades.

The best way to generate measures to implement the plan, as was also indicated by the previous speakers, is to grow the economy faster,

The work of the Presidential Infrastructure Coordinating Committee, PICC, is already contributing to improved planning and budgeting for the Strategic Infrastructure Projects, SIPS. The large part of the implementation of the NDP is proper planning, building public sector capacity and enhanced accountability chains. We want quality decisions, by quality officials to deliver quality work.

Looking at the global economic outlook, the International Monetary Fund, IMF, expects a gradual upturn in Global Economic Growth, GEG, that will increase marginally from 3,2% in 2012 to 3,5% in 2013 averaging 4,1% in 2014.

The continued crisis in Europe remains a major risk to the global economy and is affecting South Africa's economy with reference to exports, capital flows and current volatility.

The domestic economy has continued to grow but at a slower rate than was projected. In the 2012 Budget, GDP growth reached 2,5%.

Very important, is the labour unrest in the mining sector which resulted in the total value of mining production lost in 2012 that amounts to R15,3 billion. We have to get peace and stability in the labour sector and mining to enhance economic growth.

Turning to manufacturing, this is a driver for economic productivity and competitiveness making the sector critically important for growth and development. The estimate for exports in 2014 is R40 billion with a projected rise of 13%. The roll-out of the Automotive Investment Scheme, AIS, will support 63 000 jobs over a three year period.

In the Trade and Industry, DTI, R148 million had been approved for 123 companies under Clothing and Textile Competitiveness Programme, CTCP, which would support 49 888 jobs. One way for South Africa to create jobs is to increase exports into Africa and our Bricks partners. Budget spending for public sector infrastructures total R827 billion over the next three years.

Looking at employment, the NDP recommends several policies to improve labour market efficiency and speed up job creation. We welcome the youth employment tax-incentive, aimed at encouraging firms to employ young work seekers, to be tabled in Parliament. The good of any policy is in its implementation.

Decent work is about earned income and the living conditions of our working people. The objective is decent work over a long term. The Fiscal Policy Framework features entail counter cyclicality, debt sustainability and the intergenerational fairness.

The Fiscal Policy Framework features further entail a revenue shortfall of R16,3 billion; the deficit of 5,2% of GDP for 2012-13; the growth outlook for the next three years that has weakened and also linked to the global economic circumstances; additional measures to control spending, reducing real expenditure growth to an average of 2,3% over the next three years; reduction in the budget deficit of 3,1% by 2015-16; trimmed growth in national department expenditure; reduction of the contingency reserve by R23,5 billion; reprioritise R52'2 billion in support of key priorities; reduction of core spending by R10,4 billion over the medium term, and very important, expenditure reviews will increase efficiency and eliminate waste. But in order to eliminate waste it must be monitored and controlled. This emphasises the role of Parliament and its committees on their oversight roles.

The expenditure, revenue, budget deficit and the debt costs are captured in the report and I am not going to refer to that.

Referring to infrastructure, South Africa's critical infrastructure needs are in part the outcome of two decades of underinvestment and neglect. Improved planning and supportive capacity is needed to speed up the implementation of the projects.

Private business, referring to the hospitality sector, telecommunications, rail and logistics, retailing, food and beverages and infrastructure investment by a leading industrial company, took hands with government to strengthen economic growth.

The Committee also noted the reinforcement of several initiatives to support business development like the Special Economic Zone, Sez, programme, the Manufacturing Competitiveness Enhancement Programme, MCEP, jobs fund -

as was referred to - and the financing of SMMEs.

A terrain to put more focus on is to enhance our village economies. What is happening in our villages and what is happening in our townships? I want to use the name suburbs to get away from the word townships. For example, bakeries, tyre shops, panel beating, carpentry, welding, sewing and knitting, and agricultural programmes that are still to be rolled out. Although this is government's policy, but it also remains our responsibility to go and see if these programmes have been rolled out.

The Select Committee on Finance makes the following recommendations. The Minister of Finance and the Commissioner of the South African Revenue Service, Sars, should consult with the tax industry and submit to the House the draft amendments of the legislation pertaining to registration as a vendor for VAT purpose. This will facilitate and encourage business development in South Africa.

The Minister of Finance should submit a report to the House summarising the research on taxation trusts including the reasons for the proposed changes given that Sars and the National Treasury managed to reduce tax avoidance over time in accordance with current existing laws. Relevant stakeholders should also be consulted prior to Parliament enacting the amendments. This report should be submitted within three months of its adoption by the House.

Pertaining to cross border services and pensions, the Minister of Finance should submit to the House an analysis exploring a deduction to any retirement fund, local or offshore, and tax payouts from the funds instead of proposed amendments, and irrespective of where the fund payout is from.

The Minister of Energy should develop a policy on inflation-related administered prices that could assist the National Energy Regulator, NERSA, to contain the electricity prices. The policy should be to contain the electricity prices given the impact of electricity increases on inflation and on the broader economy.

The Minister of Finance should, within three months of the adoption of this report by the House, submit a report on the proposed incentives for Sez, including an implementation plan and a report on the total package benchmarked against the offering in similar zones in other emerging markets.

The National Treasury should submit to the House a funding for National Health Insurance, NHI, whilst ensuring that low- income taxpayers are not burdened, and submit its findings within six months for the adoption of this report by the House. Hon Minister this afternoon we had a practical experience of the implementation of the NHI in the Gert Sibande District Municipality area, the Minister of Health was here to introduce it.

The Minister of Finance should prioritise the implementation, monitoring and evaluation of programmes that target job creation to ease the burden on the unsustainable social welfare. National Treasury should also consider investigating measures that will increase the return on such social investments.

National Treasury should encourage departments to limit the use of consultants, given the costs incurred during the past three years, but should encourage development of internal capacity. The National Treasury, in collaboration with financial institutions, should roll out campaigns to educate and encourage South Africans on matters of household savings.

The Minister of Finance should prioritise the appointment of the Tax Ombudsman, TO, for Sars as Parliament has passed law during the 2012-13 financial year in this regard.

National Treasury should submit to Parliament a report detailing the time frame assigned to the commission that would review the tax policy framework and how it would support the objectives of inclusive growth, employment and fiscal sustainability.

The Committee noted significant progress regarding the appointment of the Chief Procurement Officer in the National Treasury, and the role played by National Treasury in combating corruption. However, the establishment of this directorate should be accelerated given the levels of corruption in the government departments. The capacity of law enforcement agencies, such as in Sars, the Directorate for Priority Crimes, DPC, the Special Investigative Unit, SIU, and the Asset Forfeiture Unit, AFU, need to be enhanced to enable the speedy recovery of the misappropriated funds. National Treasury should submit to Parliament a progress report within three months of the adoption of the report by the House.

I hereby move that the House adopts the report on the Fiscal Framework and Revenue Proposals for 2013-14.

The MINISTER OF FINANCE (Mr P Gordhan*)/sam TAKE ENDS AT 19:01:14

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 7

Mr C J DE BEER

The MINISTER OF FINANCE: Chairperson, let me thank all of the hon members for their contributions. Let me perhaps reiterate a few points.

The first one is that several members made reference to the global situation with regards to what is happening in Europe and so on. The key message of the Budget is that those situations that we find in the developed countries are going to be there possibly for the next five to ten years. We cannot wait for those things to be resolved. We need to ask ourselves: What is in our capacity to change our economy and create a better life for South Africans? It is possible to do that. We do have the ability and capabilities but we need to get the kind of unity and focus that many hon members have been talking about.

The second point is that hon Makhubela talked about the dream of 1994. That dream still exists but we should remind ourselves from time to time that achieving that dream would not happen overnight. The second message in the Budget is that we are involved in a long process of change, reconstruction and development. However, each administration, in a five-year period, needs to do its best to change the living and the economic conditions in South Africa. It is possible for us to do it, so that in 20 years time, our children and grandchildren can say that this generation made a difference in terms of developments.

The third point is that in less than two weeks, the President will be hosting the Brazil, Russia, India, China and South Africa Summit, Brics Summit, in Durban. It is going to be a very important occasion where the world's eyes are going to be upon us. It is where South Africans can show new sense of unity; new sense of purpose; and a new sense of pride.

Many of the hon members have talked about the kind of disruptive voices that we are hearing from different constituencies in South Africa and they are absolutely correct. In the next two weeks, we must start making the right sounds. We have heard today that over a thousand press people have already registered to come and observe this particular summit. We should put on 'our best behaviour' as South Africans - and not make all these negative noises that do not make any contribution whatsoever apart from creating a lot of disruption to actual change on the ground - to actually change the economic prospects in our society.

All the hon members have expressed support for the National Development Plan, NDP, and you will hear more from the Cabinet in this regard in the near future. However, plans are already afoot to start aligning national departments and provincial planning processes with the NDP. As the hon Mazosiwe has pointed out, the NDP does provide a basis for all of us to unite and perhaps find more areas of common ground than differences amongst us. He pointed out the benefits of government's approach, the kind of Budget that we have produced and the spending plans that many ministers will be talking about in the next few weeks.

Hon Phosa is right in terms of the alignment between provincial planning processes and the National Development Plan. She and the others have also made the important reference about shifting spending from consumption to investment. Why is investment important? Investment is important in our economy today because the private sector is not fully investing as it did prior to the recession.

The government and state-owned enterprises have been the main investors in our economy but still our investment is lower than what it should be. It is absolutely crucial that government does more on the one hand but as the hon members have pointed out, the private sector needs to come to the party and I have been saying in many meetings post the Budget that the private sector must take a different view of this country. If they must take a different view of what they see as risk, then they need to take a different view of what they see as opportunities as hon members have pointed out, within and around of South Africa.

Only Becker is correct on many of the points that he raises but one habit that I think we South Africans have to get rid of, which often plays out quite a lot, is blaming everything on the unions. Unions are an important part of any democratic system.

Unions are absolutely necessary in terms of our Bill of Rights where workers have the right to organise themselves and workers have the right to strike, but they do not have the right to engage in violence while they strike. That is where unions in South Africa must come to the party. They need to contribute to the right kind of climate in South Africa that creates confidence. They can do that by stopping the violence that is associated with strikes.

We have seen what the cost of Marikana is! We have seen what the cost of loosing production in our mines is! That cost is less corporate taxes paid: Some R16 billion less than we thought it would be collected in a few days time by the end of March. That is why we have had to adjust our 2013-14 Fiscal Framework from the one we presented to Parliament in October last year. So, these strikes have a cost.

It is time for South Africans to sit back and draw some kind of cost-benefit analysis to say: What are the benefits that we get out of this process? What is the cost? And to whom is this cost? How do we intend to pay for this cost at the end of the day? This is important food for thought for all of us and the many important suggestions that hon Becker has made that many of us agree with.

Hon Makhubela seems to think that this is a do-or-die moment but I do not think that things are that bad. We are growing! We are creating jobs! I do not think we need to be that pessimistic. The challenge for all of us in South Africa is that we could be doing much better than we are doing today. We are not fulfilling our potential. We are not creating the extra jobs or delivery of services that we could.

I can see a lot of empty chairs here but you have been listening to our people from last week in terms of the deficit between what we think we can do and should be doing; and what the people are actually experiencing. That is the deficit apart from the fiscal deficit that we need to close. He is absolutely correct. The economic growth does not necessarily create jobs. A point well made!

Hon Gunda, the jobs fund cannot be anything to everybody. There are many funds that we have in government. There are funds that go to small business entities. There are funds that go through the Industrial Development Corporation, IDC. There are funds that go through the Development Bank of South Africa, DBSA. The jobs fund was a competitiveness fund and a matching fund. So, when you say R3 billion has been spent; you ought to remember that the private sector has also put in R3 billion. We give you R1 to create jobs but you also put your R1 into the equation.

To date, over the last year, over R6 billion has been mobilised. The process has been slow because we had to establish the whole new machinery to make this process work. However, allocations that have been made will create somewhere between 70 000 and 80 000 jobs once the machinery starts moving and it will grow as we proceed. Hon Gunda is absolutely correct when he says that private sector must also play its part. More of us need to encourage the private sector to do so.

The hon Prince Zulu is concerned about borrowing and so on. I have addressed that and I hope he does not loose any sleep over this. The situation is well under control but where he is correct is that we need to spend better. We need to deliver on the capital projects that provinces and municipalities and those who are mischievous with tenders must end up in jail. Not enough people end up in jail; therefore more people are taking chances with the issue of corruption. If more people do end up in jail or pay taxes on their ill-gotten gains, they will be more careful with what they do in relation to the tender processes.

Hon De Beer is optimistic as ever, and I am glad that he is. I thank him for the outline that he has presented to us with regards to the committee's contributions and some of the Budget issues that have been raised. However, on the recommendations which we will interact with the committee through the Chairperson, we should be more careful when we listen to consultants saying we ought to change the VAT registration process because the VAT system is also largely a refund system.

So, if you do not register people carefully you ought to know that you could be paying refunds today and the business disappears tomorrow while illegitimate funds could in fact also be paid. So, for many years, part of the problem has been that whilst we collect some R160 billion or R170 billion, we also pay back another R60 billion or R70 billion into the economy. There are export related VAT frauds.

There are businesses that register themselves today, cook up documents for VAT refunds, and then they disappear. We could potentially be loosing hundreds of thousands of rands through the system. However, we will interact with the committee and explain why these processes had to be put in place because the refund is like a carrot that you are dangling to people, saying they must come to take their share because it is free of charge as well. Hon members should expect that.

Similarly, we have been watching trusts for a long time. There are good trusts; and there are bad trusts. Again, the consultants we spoke about need to confess a little bit on how trusts are cooked up in order to avoid taxation, usually by wealthy people as well. The intention is not to harm trusts that citizens create in order to look after disabled children, for example, because those trust are useful and important.

However, you and I need to be in one mind to tackle those trusts that are designed to avoid taxation. It is a worldwide phenomenon that trusts are used to avoid taxation. We would certainly come back to you on National Health Insurance, NHI, funding. I suppose you are correct by saying that our job creation programmes in government can be improved a bit quite a bit. We look forward to your committee playing a role. Education on saving is also an important area that the committee has highlighted.

Finally, let me thank you and the hon members for this debate. Let me also thank the hon Deputy President for processing the Fiscal Framework, and thank our provincial MECs and representatives, including the SA Local Government Association, Salga, representatives for being here today. The bottom line is that we have a tough job ahead of us. We are used to doing tough things in South Africa, and this is just another tough challenge that we have to take on. We need to make sure that negative people do not take us in the negative direction. We owe it to the 50 million people of South Africa that they get the full benefit of the R1 trillion that we will be spending next year, and that it does not end up in the wrong pocket as many of you have referred. Thank you!

The CHAIRPERSON OF THE NCOP: Thank you, hon Minister. Hon members, this concludes the debate.

I shall now put the question. The question is that the report be agreed to in accordance with Rule 71. I shall first allow provinces the opportunity to make their declarations if they so wish. Is there any province that wishes to do so?

HON MEMBERS: No!

VOTING

The CHAIRPERSON OF THE NCOP: None! We shall now proceed to the voting on the question. I shall do so alphabetically, per province but before I do that can I confirm whether all heads of delegation are present in the Council? Yes, you are present. We will therefore move to voting.

Of course, we do not have our electronic system here; therefore we will do this manually. Please do indicate to the Chair whether you vote in favour, against, or you abstain:

Eastern Cape?

Free State?

Gauteng?

KwaZulu-Natal?

Limpopo?

Mpumalanga?

Northern Cape?

North West?

Western Cape?

All nine provinces voted in favour. I therefore declare the report agreed to in terms of Section 65 of the Constitution.

Mr L P M NZIMANDE / TAKE ENDS AT 19:16:17

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 8

The MINISTER OF FINANCE

CONSIDERATION OF REPORT OF SELECT COMMITTEE ON SECURITY AND CONSTITUTIONAL DEVELOPMENT - DRAFT NOTICE AND SCHEDULE DETERMINING THE RATE AT WHICH SALARIES, ALLOWANCES AND BENEFITS ARE PAYABLE TO MAGISTRATES ANNUALLY FOR 2012-13, DATED 11 MARCH 2013.

Mr M H MOKGOBI: Hon Chairperson, hon members and special delegates, in terms of section 12(1)(a) of the Magistrates Act of 1993, as amended, Parliament must approve, amend or disapprove the determination of the President after the determination by the Independent Commission for the Remuneration of Public Office Bearers.

The Independent Commission for the Remuneration of Public Office Bearers is obliged to make annual recommendations relating to salaries, benefits, allowances and resources required by public office bearers in terms of section 8(4) and (5) of the Independent Commission for the Remuneration of Public Office Bearers Act of 1997.

Government Notice 583, published in the Government Gazette no. 35563, dated 26 July 2012, laid out the Independent Commission for the Remuneration of Public Office Bearers' decision to award all public office bearers a 5,5% increase with effect from 1 April 2012. Included in Schedule 6 of the notice are the remuneration scales for magistrates, senior magistrates, chief magistrates, regional magistrates, regional court presidents and special grade chief magistrates. Section 12(1)(a) of the Magistrates Act, Act 90 of 1993, spells out the procedures for determining the salaries of magistrates.

Firstly, magistrates are entitled to such salaries, allowances or benefits as determined by the President from time to time by notice in the Government Gazette after taking into consideration the recommendations of the Independent Commission for the Remuneration of Public Office Bearers established under section 2 of the Independent Commission for the Remuneration of Public Office Bearers Act, Act 92 of 1997.

Secondly, approved by Parliament in terms of subsection 3, section 12(3)(a) provides for such a notice as contemplated in section 12(1)(a). A notice issued under subsection 1(a) must be submitted to Parliament for approval before publication thereof.

In terms of section 12(3)(b), Parliament must, by resolution, approve the notice, whether in whole or in part, or disapprove the notice. In terms of the notice provided for by the President tabled with the Speaker of the National Assembly on 20 August 2012, the remuneration of magistrates, with effect from 1 April 2012, sets out the determination as follows. A basic salary component equal to 60% of the total package, which constitutes the pensionable salary; pension benefit contribution to the applicable pension fund; and a flexible portion for the remaining amount of the total package.

At its meeting held on 26 February 2013, the committee reaffirmed its position that it would not approve the Independent Commission for the Remuneration of Public Office Bearers and subsequently the President's determinations on the following basis. Firstly, the committee had representations from the magistrates' associations, the Judicial Officers Association of Southern Africa, Joasa, and the Association of Regional Magistrates of Southern Africa, Armsa, and have taken their requests into account; secondly, the committee took the Bertelsmann judgement, case no 2010/11 North Gauteng Division, into account; thirdly, the committee noted that the chairperson of the Independent Commission for the Remuneration of Public Office Bearers declined to meet with the committee; and, lastly, the committee wanted to hear from the Presidency in terms of the determination, and requested a briefing from both the parliamentary legal adviser and the President's Parliamentary Counsellor on the matter.

At a meeting held on 27 February 2013, the President's Parliamentary Counsellor briefed the committee in a closed session on the issue and the matters that have to be considered by the committee. He informed the committee that there was a pending court case before the Constitutional Court where both Armsa and Joasa were contesting the President's determination. It was also common cause that if Parliament does not reach a decision by the end of March 2013, magistrates will not be receiving any increase at all for the 2012-13 financial year.

At a meeting held on 11 March 2013, the committee considered the following. Firstly, the fact that magistrates would not receive an increase for the 2012-13 financial year; secondly, not all magistrates were members of Joasa and Armsa, and the committee received a submission from magistrate Saunders who pointed out that if no decision is reached, magistrates would not be receiving the 5,5% increase; thirdly, the Constitutional Court case with Armsa and Joasa will have no real effect on the 2012-13 determination, and refers to the 2010-11 financial year; fourthly, the legal opinion from the parliamentary legal services and the terms of the Bertelsmann judgement; and lastly, nothing precludes the committee from approving an increase in the interim while the court determines the outcomes of the case.

In view of the above reasons, the committee decided to rescind its decision taken on 21 September 2012 and approve the notice of determination of the remuneration of magistrates in terms of section 12 of the Magistrates Act with immediate effect. I thank you. [Applause.]

Debate concluded.

Question put: That the Report be adopted.

The CHAIRPERSON OF THE NCOP / Nb//Robyn – ed/ TAKE ENDS AT 19:24:34

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 9

Mr M H MOKGOBI

Question put: That the report be adopted

Declarations of vote:

Mr D JOSEPH: Hon Chair, the DA wants to make a declaration on the determination of salaries, allowances and benefits on magistrates for the year 2012-13... [Interjections.]

The CHAIRPERSON OF THE NCOP: Hon member, I said the province; I did not ask the parties to make declarations.

Mr D JOSEPH: My apologies, hon Chair. Whiles the 2012-13 increases were discussed by the committee... [Interjections.]

The CHIEF WHIP OF THE NCOP: Chairperson, I rise on a point of order: Is he declaring on behalf of the DA or the province?

The CHAIRPERSON OF THE NCOP: That's what I was just saying; I have asked the province to make declarations, not a party.

Mr D JOSEPH: I'm sorry for that, I said I'll do it on behalf of the province. [Interjections.] Whilst the 2012-13 increases were discussed by the committee at the meetings on 12 September, the Department of Justice and Constitutional Development acknowledged there that there was a court case pending and that the Judicial Service Commission and the President of the Republic were to sign this determination for the 2011-12 financial year.

The committee was concerned that the reasons of the court case among others reflected on the unfair treatment of staff and salary disparities. The parliamentary legal advisor and councillor of the Deputy President advised the committee that they did not approve the determination... [Interjections.]

Mr M OZINSKY: Hon Chairperson, as a member of this delegation, I have no knowledge of any mandate from the province on this matter. I don't think this matter has been discussed in the legislature and it definitely hasn't been discussed in the delegation.

The CHAIRPERSON OF THE NCOP: I note your objection to that.

Mr D JOSEPH: The parliamentary legal advisor and the council of the Deputy President advised the committee that if it did not approve this within one year, the magistrates will not receive their salaries at all. They also advised that the court judgement is separate from the 2012-13 determination. The committee does not want to get involved in procedures about salaries determination. Our role in Parliament is to ensure that fair procedures and due processes are followed consistently.

In closing I want to say that we want to urge the department to establish a task team to investigate all grievances of the officials and the staff to avoid further legal disputes. We support the allowances and benefits payable to magistrates for the 2012-13 annual year. Thank you.

Mr D V BLOEM: Chair, I rise on a point of order. It is not on behalf of the Free State, because I don't have a mandate from the Free State. [Laughter.] Are parties not allowed to make declarations?

The CHAIRPERSON OF THE NCOP: No, they are not allowed. It's only provinces.

Mr L P M NZIMANDE

UNREVISED HANSARD

NATIONAL COUNCIL OF PROVINCES

TAKING PARLIAMENT TO THE PEOPLE - MPUMALANGA

Wednesday, 13 March 2013 Take: 9

The CHAIRPERSON OF THE NCOP

Mr L P M NZIMANDE: Hon Chair, as the head of delegation from KwaZulu-Natal Province, we would like to declare our support to the decision of the committee and make the following emphasis that we believe in the rule of law as the province, and that the commission is given full rights in terms of the Act as well as the Magistrates Act as quoted in the statement that bestowed various powers to various entities, the President, the commission and the Parliament itself.

Section 55 (2) says that committees or Parliament must not engage into consultation with parties. Therefore we desist from making ourselves representatives of such structures as we have consulted with those two associations. Section 69 directs Parliament to play the role of oversight monitors.

In a meeting held on 20 September, we listened to the department itself when it gave us a briefing on how it progressively processed the closing of the gap in terms of the material conditions of the Justice officials or the magistrates in this matter. Thank you. [Applause.]

Debate concluded.

Question put.

That the Report be adopted.

Declarations of vote made on behalf of the Western Cape and KwaZulu-Natal.

Voting

IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal,

Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.

The CHIEF WHIP OF THE NCOP moved: That the Council resolves, in terms of section 12(3)(a) of the Magistrates Act, 1993 (Act No 90 of 1993)as amended by section 3 of the Judicial Officers (Amendment of Conditions of Service) Act, 2003 (Act No. 28 of 2003), to approve in whole the determination by the President of the Republic of South Africa of the rate of salaries and allowances payable to magistrates, as it appears in the Draft Notice and Schedule determining the rate at which salaries, allowances and benefits are payable to magistrates annually for 2012-13, dated 11 March 2013.

Question put.

That the motion be agreed in accordance with section 65 of the Constitution.

Voting

IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal,

Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.

Motion accordingly agreed in accordance with section 65 of the

Constitution.

The Council adjourned at 19:33

EKS/LIM CHECKED// TAKE ENDS AT 19:33:58

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