Hansard: EPC: Debate on Vote No 11 – Public Enterprises
House: National Assembly
Date of Meeting: 16 Jul 2014
Summary
No summary available.
Minutes
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 20
WEDNESDAY, 16 JULY 2014
PROCEEDINGS OF THE EXTENDED PUBLIC COMMITTEE – COMMITTEE ROOM E249
__________________
Members of the Extended Public Committee met in Committee Room E249 at 16:35.
House Chairperson Mr C T Frolick, as Chairperson, took the Chair and requested members to observe a moment of silence for prayers or meditation.
FIRST ORDER
START OF DAY
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 20
APPROPRIATION BILL
Debate on Vote No 11 – Public Enterprises:
The MINISTER OF PUBLIC ENTERPRISES: Chairperson - I think that is probably the last applause I will get for a while - hon Ministers, Deputy Minister, hon members, chairpersons and board members of the state-owned companies, the director-general of the department and members of my department, chief executives and senior managers of state-owned companies, distinguished guests, ladies and gentlemen, the way you get to appreciate the very real way in which this portfolio touches the lives of every citizen is when your phone rings just minutes after the President has named you as the member of his Cabinet responsible for the Public Enterprises portfolio. The first call is to let you know that the lights are off in a street in your old neighbourhood. The second is from an elderly aunt wanting to know if you know that the price of electricity is going to increase again.
While this was initially a source of amusement, on reflection it brought home a fundamental message very clearly. This portfolio is not just about the very impressive mega-initiatives to develop and grow the economy, which I will speak about later, but it is about making it possible for the two people who called me, as well as all the other citizens and businesses to do what they need to do every moment of every day, worry free.
A second light-bulb moment - excuse the pun - was when I first heard myself being referred to as the representative of the sole shareholder - my formal role in relation to most of the eight state-owned companies in the portfolio. I understood that while the state was the formal shareholder, it held these companies in the name of all citizens. So, early in my tenure I understood who I was serving and who my true bosses were.
The department exists to support the representative of the shareholder in playing her role, performing her duties, exercising her responsibilities and discharging her obligations. In doing so, I require it to operate at four levels. The first is to distil government policy and strategy into a shareholder's compact or performance agreement with each of the companies and to provide careful, incisive and detailed scrutiny of the way in which each company performs against the agreed targets. The second is to assist and support the companies to achieve the targets and help remove blockages in their operating environment.
The third is to undertake interventions to harness the combined capacities and capabilities of all the companies and other key players. The fourth is to unlock inclusive growth, drive industrialisation, create jobs, develop skills and deracialise the economy.
The last one is to join me in engaging other relevant players in the policy and regulatory terrain to obtain certainty and secure the most conducive circumstances for the companies within which to operate and succeed.
Naturally, I have expectations of the state-owned companies as well. Given that in introducing Vote 11 this is the first time that I am speaking as the representative of the sole shareholder, I would like to use the opportunity to reflect briefly on my expectations and how I hope to inhabit this role.
Firstly, state-owned companies must simply get the basics right. Those with a direct interface with citizens and businesses must deliver quality, affordable and accessible services consistently. In old-fashioned parlance, they must ensure that the trains run on time. In our case, of course, these would be freight trains. Secondly, state-owned companies must continue to serve as effective strategic instruments of industrial policy and economic inclusion. This must be as central to their thinking as performing their core business.
Thirdly, the visionary National Development Plan and its effective five-year implementation plan - the Medium-Term Strategic Framework of the fifth democratic administration - assign very pivotal roles to state-owned companies in achieving the radical socioeconomic transformation of which the President spoke in his recent state of the nation address. These are to contribute substantially to, firstly, accelerating and sustaining inclusive economic growth beyond 5%; secondly, ensuring much higher levels of employment creation and decent work; and then, lastly, rapidly reducing inequality, which includes the deracialisation of the economy. This will push back the triple challenge of poverty, inequality and unemployment, which is required by government. Therefore it is required of us to do things differently. Fourthly, the boards and management of state-owned companies must be paragons of strong, visionary and strategic leadership, cutting-edge business practices, innovation and exemplary governance.
There are two obvious questions that arise from such expectations: Will I act in relation to those boards who fiddle while precious public money burns and/or who fail to ensure that the company fulfils its core mandate? My answer is yes. Does this mean I will micromanage the companies or, to put it more bluntly, will I interfere? The answer is no.
I have outlined how the department and I will approach matters. What I will do, like any responsible shareholder representative, is scrutinise quarterly performance very carefully and provide immediate and appropriate feedback.
The department and I are also called on to play roles beyond the immediate oversight and support of the state-owned companies. Let me touch on the most pressing. The fifth democratic administration has placed resolving the electricity supply problem at the centre of its agenda. I want to assure the two people who called me about their problems related to the affordability and reliability of their electricity supply, as well as all other citizens and businesses, that this issue is being addressed very seriously and very urgently. There are critical talks between Ministries, departments and others to address this issue, not as an Eskom problem but as a national priority.
Let me now turn to Vote 11. Of course, I will be judged forever on the first few things that I have just raised – hon member Marais. The proposed budget for the 2014-15 fiscal year is R259,8 million, with the two outer MTEF years being R279,3 million and R285,6 million respectively. Following tradition, the Deputy Minister and I will cover the portfolio together.
Let me reflect briefly on infrastructure investment. Eskom's build programme and Transnet's capital expenditure programme form the core of government's infrastructure investment strategy. Eskom spent R58,2 billion on capital expenditure in 2013-14. The key achievements of its build programme are, firstly, the completion of the Return to Service project. All three targeted power stations - Camden, Grootvlei and Komati - are fully operational. This added generating capacity of 3,700 MW to the grid since 2005.
Secondly, the refurbishment projects have made progress. All the Kriel units and three of the six Matla units have been refurbished. Delays were experienced at Duvha. The first project under the renewable energy independent power producers programme was connected to the grid in September 2013 and the first independent power producer was commissioned in November 2013. A total of 467 MW is currently available to the system from these producers.
During the 2013-14 financial year, Transnet awarded a R50 billion contract for the acquisition of 1 064 locomotives. Not only will this acquisition of locomotives enable Transnet to increase its rail volume capacity but the procurement process has been structured in such a way as to allow for the maximisation of localisation benefits. Broadband Infraco will be transferred to the Department of Telecommunications and Postal Services as soon as the necessary processes allow.
Denel is doing well. Denel has returned to sustainable operating profit. The majority of its revenues are now derived from export orders. The business order book has grown from R21 billion to R30 billion in the past financial year. Revenues will double to over R8 billion by 2018-19. In the 2013-14 financial year, Denel secured a R10 billion contract from the SA Department of Defence to produce 238 Hoefyster infantry fighting vehicles. Importantly, 70% of the components of these vehicles will be developed and manufactured in South Africa, creating 2 000 jobs at Denel and in the SA defence-related industries. [Applause.]
Let me touch briefly on localisation and transformation. A total of 547 contracts, worth R5,6 billion, were awarded during the financial year as part of Eskom's capital expansion programme, of which the local content committed amounted to R3,1 billion.
In the 2013-14 financial year, Transnet achieved 92% local content procurement as a percentage of total spend, against an actual target of 70%. Transnet also exceeded the supplier development target. Transnet's B-BBEE spend amounted to 94% of total measurable procurement spend, against the target of 70%. In the 2013-14 financial year, in line with the National Skills Accord, the companies collectively committed to enrol 2 764 new artisan trainees.
Over the next 12 months, increased focus will be given to the delivery of the current build programme. The synchronisation to the system of Medupi's first unit will be concluded by December 2014 and subsequent units are scheduled to come on stream at nine-monthly intervals thereafter. All three units of the Ingula pumped-storage plant are scheduled to be available by the end of 2015. Eskom has committed to contract at least 3 725 MW of renewables in the year ahead.
Transnet has substantially increased its targeted infrastructure expenditure over the seven-year period beginning in the 2011-12 financial year, from R110 billion to just over R312 billion. This will address the current capacity constraints and inefficiencies of our national logistics system. Over the current MTEF period, Transnet will spend R107 billion on its capacity expansion programme. It is projected that the jobs supported by Transnet in the economy will increase from 368 000 in 2011-12 to 570 000 in 2018-19.
In the 2013-14 financial year, the department developed the Africa strategy, which is intended to co-ordinate the investment activities of our companies and reposition them to be able to capture the opportunities that exist on the African continent.
The current economic environment presents a major challenge to the financing of the build and capacity expansion programmes of government. It is clear that a sustainable funding framework that is independent of the fiscus is required. This framework must attract private-sector funding and guarantee a reasonable return on assets on the one hand, while on the other it must allow space for government to leverage the build programme for better developmental outcomes.
Let me briefly touch on the airlines. The environment in which SAA and SAX operate domestically and globally has become ever more challenging, with intensified competition, narrow margins and cost pressures due to fuel prices and currency volatility. In this context, their undercapitalised balance sheets severely constrain the airlines, leading to continued losses and affecting the going-concern status of the companies.
It has become clear to me that simply – and if you ask that question, I will tell you why not in my response - extending state guarantees to the airlines is an inadequate response to the challenge and that an extraordinary intervention is required to put them on a sustainable footing and to support their turnaround efforts. The department will continue to focus on increasing localisation in the build programme through the competitive supplier development programme. It is also working with the airlines to ensure that the fleet acquisition programmes deliver better industrial development outcomes. Government has invested substantially to enhance the capabilities to manufacture high-value components for the aerospace industry through Denel Saab Aerostructures and other initiatives that involve the private sector. Preserving and enhancing these capabilities is fundamental to the development of advanced manufacturing in South Africa and is in line with the Industrial Policy Action Plan.
For the period between 2014-15 and 2018-19, the state-owned companies in the public enterprises stable will collectively enrol more than 30 000 new learners in various scarce and critical occupations. The department will conclude the consultations on the remuneration standards for boards of directors and executive directors to ensure that their remuneration packages are linked to the achievement of targets contained in the shareholder compacts. It will also embark on the finalisation of the Shareholder Management Bill, which will embed the shareholder management practices that have been developed by the department over time.
In conclusion, may I make a special appeal to all the hon Members of the House on the subject of the burning issue in this portfolio. I am sure that all present agree that resolving the challenge of shifting this country to a situation in which we have ample reserves of affordable and reliable electricity is a very high priority. As we have witnessed, both domestic and international investors and rating agencies are looking for signals that we, as a country, are serious about resolving this problem soon and in everyone's interest. My appeal is that we do not treat this as a partisan issue. It is just too important to our future to get it wrong as a result of placing narrower interests first.
If the committee concurs, I will engage you on how to make such an approach mutually meaningful. Even though we have worked together for less than two months, I have been overwhelmed by the extraordinary support I have received from the chairperson, the Deputy Minister Bulelani Magwanishe, Director-General Matona, the staff of the department and the Ministry. For that I want to say thank you very much. [Applause.]
I have a relationship with the opposition and that is for them to oppose me. You are very important, because if I do not hear what you have to say I will not know how to address it. Thank you. [Applause.] [Time expired.]
Ms D B LETSATSI-DUBA
The MINISTER OF PUBLIC ENTERPRISES
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Ms D B LETSATSI-DUBA: Chairperson, I also have a special relationship with the opposition. [Laughter.] [Interjections.] Yes, this is not a uniform. The Minister and I are wearing the same colours but it is not a uniform.
Hon Chairperson, Minister, Deputy Minister, hon guests and members of the House, I say good evening. I rise on behalf of the ANC in support of the budget for the Department of Public Enterprises. I would also like to congratulate the hon Minister Lynn Brown and her Deputy Minister on their appointment. As the ANC, we have hope and we believe that they will lead the department in order to implement the programme of the ruling party.
This morning, in a meeting with the chief executive officer of South African Airways, SAA, it came to our attention that an SAA flight bound for Hong Kong had hit serious turbulence and 25 people got injured. Fortunately, all the people aboard the aircraft reached their destination safely. All of them are receiving treatment in Hong Kong and they are recovering. We would like to take this opportunity to wish them a speedy recovery. We would also like to thank the pilot and the crew for their heroic action to make sure that everybody on board was safe.
In his recent state of the nation address, President Jacob Zuma outlined the following:
The economy takes centre stage in this programme. It remains our strong belief that the most effective weapon in the campaign against poverty is the creation of decent work and that creating work requires faster economic growth.
The ANC's vision of state-owned enterprises, SOEs, seeks to advance the key objectives of economic transformation and to advance the ANC's programme that is the New Growth Path. Therefore, the overall objective and the mandates of the SOEs are to advance the socioeconomic and political agenda of a developmental state, which promotes social cohesion, the creation of jobs and skills development. In this regard, the vision of the National Development Plan plays a critical role.
One of the most important conditions that must be addressed for us to build a developmental state is the strengthening … Chair, let me use mine or I will soon have a black-out. [Laughter.] No, I think it is the battery. [Interjections.] One of the most important conditions that must be addressed for us to build a developmental state is the strengthening and enhancement of the capacity of the state to deliver to its people. We must make sure that we have a capable and effective state with the technical and political capacity to lead development and the transformation of the economy. One of the objectives of the ANC government in terms of these is to build an inclusive economy that creates jobs - what we call a radical shift.
The manifesto of the ruling party was very clear that we will promote local procurement by directing the state to progressively buy at least 75% of its goods and services from South African producers and support small enterprises, co-operatives and broad-based empowerment. State-owned enterprises have been playing a pivotal role in advancing economic inclusivity and transformation.
The department has a progressive tool, called the Competitive Supplier Development Programme, the CSDP. This programme has over the years seen Eskom and Transnet ensure that local industry is supported, value addition is promoted and broad-based empowerment is supported, with the emphasis on enterprises owned by young people, women and people with disabilities.
Let me briefly address some of the governance issues and the related oversight responsibilities of our committee. The Presidential Review Committee has made recommendations with regard to a need for an overarching legislation and a long-term strategy for the SOEs in order to align them with the objectives of a developmental state. We would like to ask the Minister to consider introducing the Shareholder Management Bill. This is an urgent issue, which will empower and enhance the department's unique responsibility of shareholder management on behalf of government.
The task of the ANC government is to entrench a uniform strategy for state-owned commercial entities in the country that is effectively a response to the developmental state agenda and creates an enabling environment which, among other things, seeks to create a universal policy framework and legislation and to develop the state's capacity to effectively monitor and evaluate state-owned commercial entities in all spheres of government. The absence of this Bill would lead to conflicts of governance and a lack of clarity, in particular with the boards or among the boards.
Given the complexity of the multiplicity of legislation and policy frameworks of different departments in different spheres of government and their entities, the absence of an overarching strategy would mean that the SOEs would face the challenge of operating in the context of a decentralised and multiple policy framework, legislation and oversight approaches.
The department has done extremely well under the capacity constraints in ensuring that state-owned companies deliver on the developmental objectives of government. It has ensured that the SOEs contribute immensely to job creation, skills development, the support of local industries and beneficiation.
We would like to see the department enhancing its monitoring mechanisms to ensure entities deliver on their performance targets within the agreed timeframe. We are pleased that the Minister has announced that they will sharpen this and will enter into agreements with these entities. The department should ensure that the SOEs also make a deliberate effort to visit rural communities. This will ensure that rural young people, women and people with disabilities benefit from the investment that will come with the industrialisation programme of government.
The department has a challenge in retaining highly specialised skills, which are sought after in the economy. The department has been unable to compete with the lucrative packages offered by the private sector. However, we are proud that it has been able to produce the skills required.
The department has performed very well in regard to their three programmes, namely administration, legal and governance, and portfolio management and strategic partnerships. Under the heading of administration, the department will continue to strengthen its financial management tool to return to a clean audit opinion. It continues to ensure the payment of invoices within 30 days. It has demonstrated progress in the strengthening of the human resource function in the department by ensuring that the vacancy rate is kept below 10%.
Regarding "legal and governance", we are happy that the department continues to provide legal services and facilitate the implementation of all transactions that are strategically important to the department and state-owned companies. We will continue to support the department in its role of advising the Minister regularly on the appointment of boards of directors, including the issue of remuneration, conducting annual reviews and ownership policies.
Regarding the portfolio management and strategic partnership programme, over the Medium-Term Expenditure Framework period we will continue to support the department in its intention to strengthen their oversight role of state-owned companies. We will continue to monitor the environment in which the department will contribute to the enhancement of the performance of state-owned companies. In this regard, we would also like to see if maybe we can enter into agreements with entities and also with the Minister to make sure that we have measures in place to enable us when we do monitoring, so that we will know over what measures we are doing such monitoring.
We will continue to monitor the environment in which the department will contribute to the enhancement of the performance of state-owned companies, as I have said. In this regard, we will continue to support plans to ensure the security of the energy supply by Eskom. We will continue to support the long-term growth strategy for the financial stability of Denel. The committee will support the department in ensuring that SAA is transformed into a commercially successful national carrier that will contribute to the development of trade and tourism domestically, in Africa and in the rest of the world. We will ensure that the department provides oversight of Transnet's implementation of the market demand strategy, which the Minister alluded to earlier on, in order to ensure the optimisation of the economic impact of infrastructure investment in the economy.
The Department of Public Enterprises has a record of receiving a clean audit report from the Auditor-General for eight consecutive years, ending with the 2011-12 financial year. It is a relatively small department with a small budget when compared to other departments but it is successful in overseeing some of the largest state-owned enterprises in the country. We acknowledge the sterling job that is being done by the director-general in the department and by all other officials in continuously strengthening their oversight of our SOEs. [Applause.] [Time expired.]
Ms N W A MICHEALS
Ms D B LETSATSI-DUBA
UNREVISED HANSARD
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Wednesday, 16 July 2014 Take: 22
Ms N W A MICHAEL: Chairperson, hon Minister, Deputy Minister and all hon members in the House, today we stand here to debate the budget for this important component of our country's economic cluster but, sadly, we find ourselves in almost exactly the same, if not worse, condition than we were the last time we came together.
We were promised that by now our country would be out of its energy crisis due to the fact that both the Kusile and Medupi Power Stations would, at the very least, be partially up and running. Alas, here we stand, with rolling blackouts a way of life for thousands of South Africans and the economy taking yet another beating as a result of Eskom's poor capacity. In a country so desperate for job creation, this situation is untenable.
Rolling blackouts have a major impact on our economy and will inevitably result in job losses. With our economy already growing so slow and facing many internal and external pressures, these blackouts should rightly be considered a national crisis. The Medupi project was initially planned to be operational by the end of 2012 but has since had its commission deadline shifted many times, with the latest extension scheduling completion for the end of 2014.
Last year, I made a request for access to the records of a public body, through the application of the Promotion of Access to Information Act, to gain access to the Medupi contracts and also those of all subcontractors. I unfortunately stand here today without these contracts. Both I and the population of the country remain completely in the dark - if you will pardon the pun - regarding penalty clauses, timeframes and the awarding of tenders.
In its response to my Promotion of Access to Information Act application, Eskom essentially refused to hand over contracts relating to one of the worst offenders behind the delays at Medupi: Hitachi Power Africa and its former shareholder – surprise, surprise - Chancellor House, the ANC's investment wing. [Interjections.]
This is unacceptable, even more so because one of the primary offenders at the Medupi project is Hitachi Power Africa. Indeed, we are still no closer to finding out the truth about the ANC's investment wing, Chancellor House, and their involvement in the awarding of this multibillion-rand contract at the Medupi project to Hitachi Power Africa.
What we do know is this: There is no smoke without fire. The smoke here is so thick that one can almost no longer see the road to Lephalale. I get the distinct feeling that officials at Eskom are hoping that my pursuit of these contracts will emulate the deadline schedule for the Medupi station and that eventually I will give up. Allow me to assure this House that I have absolutely no intention of letting go of this issue and will relentlessly continue to fight for access to those contracts. [Interjections.] [Applause.]
We have a good portfolio committee. We are South Africans, working for South Africans. I was most pleased when the Portfolio Committee on Public Enterprises included in recommendations that these contracts must be produced for the portfolio committee to scrutinise. How would it be possible for us as parliamentarians to be able to honestly say that we had executed our duty of oversight if we remain unable to see these contracts?
Since 2008, the DA has called for policy and legislative amendments to dismantle Eskom's monopoly as the sole purchaser of electricity in South Africa. This would allow independent power producers, IPPs, to feed into the national grid or to feed power directly to consumers. It would thus reduce Eskom's generation capacity need. The Independent System and Market Operator Bill has been blocked from being processed in Parliament by various Ministers and by the President himself. The Independent System and Market Operator Bill would remove the operation of the electricity grid from Eskom and locate it in new independent entities.
The national carrier, SA Airways, remains a huge worry. The airline continues to be shrouded in controversy and teeters on the edge of financial collapse, only to be saved over and over again by emptying South African coffers and relying on government bailouts.
At this point, allow me to state something very clearly and so that there can be absolutely no confusion: South Africa produces some of the finest pilots in the world. The pilots at SA Airways and at SA Express are among the top in the world – the top in the world! Any country and any airline would be proud to have them. The problem with the airline is not the staff and certainly not the pilots. It is its top-heavy, inexperienced management that lets the airline down.
The aviation industry is one of the most fickle and at its helm it requires people who understand aviation, understand international best practice and, most importantly, understand that it is an archaic and romantic notion at best to think that every time an SA Airways plane takes off, our national flag flies. This is not an issue of patriotism; it is an issue of giving the best to South Africa.
We want competition. We want to be able to choose between various airlines that offer us competitive prices and great service. [Interjections.] How can this be possible when government simply continues to fund a failing airline? Ticket prices increase, yet, at the same time, so do the annual losses of the airline. We are still awaiting full details of the new turnaround strategy. All we have received thus far is a very brief executive summary.
Again, I emphasise that we want to execute our oversight role. It is imperative that we know what the airline is up against. What we do know for sure is this: The airline runs too many nonprofitable routes due to political pressure, while the airline does not service its own citizens due to cost-cutting measures being taken in the wrong places.
It is appalling that South Africans cannot catch an SA Airways flight from Cape Town to Durban. [Interjections.] Let us be completely honest: I do not think that anyone from the Eastern Cape is going to be writing an "I love you" letter to the carrier for the meagre amount of flights available for them to choose from. We are an international tourist destination and we must start acting like one!
Having managed to rack up operating losses worth R1,2 billion this year alone, with approximately R16 billion in taxpayers' money wasted in the last 20 years, this is a futile attempt to prop up SA Airways. No money should be extended to this enterprise and, Minister, I implore you to look at privatising SA Airways. [Interjections.] [Applause.]
This company provides no value for money for the South African taxpayer and is proving to be nothing more than a drain on our budget. Minister, let us now stand together - as you rightly said, no party politics. Let us stand together as South Africans and say, enough is enough! South Africa deserves better and South Africa can indeed have better. I thank you. [Applause.]
Mr K Z MORAPELA /Mosa/ END OF TAKE
Ms N W A MICHAELS
UNREVISED HANSARD
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Wednesday, 16 July 2014 Take: 23
Mr K Z MORAPELA: Hon Chair, Minister and Deputy Minister, dumelang [good day]. The EFF notes the budget presented by the Department of Public Enterprises for the 2014-15 financial year. Unashamedly and unapologetically, we reject the budget presented because it is premised on the National Development Plan, which, in our view, does not wholeheartedly seek to address the plight of our people. [Interjections.]
The NDP's approach to the state-owned companies still does not talk explicitly about our people … [Interjections.] … and says less about the direct empowerment of and benefits to our people, particularly the communities where the operation of these companies are taking place. We are calling for the dissolution of this department … [Interjections.] … because it is unnecessary and a waste of money that could better be used to deliver quality services for our people. It is just a department that was created to reward loyalists, cadres and friends. [Interjections.]
All eight state-owned companies should be taken to their relevant departments in line with their mandate. As you have announced, hon Minister, you have already taken Broadband Infraco to the Department of Telecommunications and Postal Services. Just so, Eskom should be taken back to the Department of Energy; SAA, SAX and Transnet should be taken back to the Department of Transport; Denel should go to the Department of Defence and Military Veterans; Alexkor should go to the Department of Mineral Resources; and SA Forest Company Limited, Safcol, should go to the department responsible for forestry. [Interjections.]
We believe their relocation would yield better results to the desired outcomes of radical economic transformation, beneficiation and industrialisation of the economy. The radicalisation of the economy does not need pronouncements but practical steps, courageous leadership and firm government prepared to respond radically and without any excuses to the evils that have been brought by the oppressive apartheid systems.
Our people cannot eat ideas and economic policies that change titles every five years but have the same content. [Interjections.] Our people need decent jobs and living wages. They need empowerment and development to guarantee the future of their children. The state-owned companies should play the role of catalyst, with a distinct mandate for the development and social wellbeing of the people of this country.
It will never be right that those who continue to benefit from the state-owned companies are only the select few who are connected to the authorities. A deliberate radical programme to empower young and small emerging businesses should be prioritised and implemented at full steam. Corruption is a sin that steals from our people a better today and tomorrow. It must be confronted and uprooted.
The nature and attitude of our state-owned companies must be to not only chase profit but to drive an aggressive developmental agenda to grow the economy and stimulate jobs. Therefore, we are calling on the Minister and on the highest office in our country to introduce the following radical changes as a concrete step forward: a state housing construction company; a state road construction company; a state pharmaceutical company; and a state food-stocking company to regulate the prices of basic foodstuffs and guarantee food security for all. [Interjections.]
As the EFF, it is our firm belief that if we voted to adopt the budget presented by the hon Minister, without all of these issues and proposals, we would definitely have misrepresented the 1,1 million South Africans who, without any shame, voted for us to be in this Parliament. We must begin to act radically. Thank you very much.
Mr N SINGH
Mr K Z MORAPELA
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Wednesday, 16 July 2014 Take: 23
Mr N SINGH: Hon Chair, it is good to follow a fiery hon Morapela from the EFF. Hon Chair and hon Minister, firstly let me congratulate you on your appointment. The Minister and I have worked together before in different capacities and I want to assure you, hon Minister, that you will certainly get the support of the IFP in managing this challenging portfolio and the task that lies ahead.
Let me say, hon Chair and colleagues, that as we stand the Department of Public Enterprises exists. It has a particular mandate to fulfil and whether that mandate will be reduced as we move forward with the taking away of Broadband Infraco and other state-owned companies, we will see and we will engage with it as we move forward.
I think our responsibility as members of this House, and as Members of Parliament and the committee in particular, is to ensure that the executive head, who is the Minister, fulfils her responsibility of oversight over these state-owned companies. As the chairperson of our committee indicated, we are, I would say, in a transition phase. I am new to this committee, as many other members are. We have not had the opportunity to engage fully with the department on the roles and responsibilities it has. But you can bet my bottom dollar - and I do not have many dollars - that we will certainly be engaging very vigorously in the committee and with you, hon Minister, to ensure that the state-owned companies, as they stand, fulfil their mandate and the development goals that we as government have set out.
We need to ensure that there is proper financial management in these state-owned companies. The type of financial management found in some of these state-owned companies leaves a lot to be desired. The lack of governance in some of these state-owned companies leaves a lot to be desired. To that end, hon Minister, we would like to know whether the board, the executive and the management of these state-owned companies are in sync with each other in terms of the goals and the mandate of the particular state-owned company. I don't believe they are, and we see that with SAA and some of the other state-owned companies, where you have different views and conflict between the board and the management of these state-owned companies.
I do not have time to deal individually with the seven state-owned companies that you listed, but let us talk about SAA. Let us talk about what we should do, going forward. Should the state continue to own these companies? Should we not think of innovative ways of bringing in parties? Should we not also consider bringing in partners? As a shareholder, we have an opportunity to bring in partners while maintaining majority shareholding in these companies. We could have better governance because we know that governance in the private sector is, to a large extent, much better than governance in state-owned companies. We need to examine these things as we move forward.
A few years ago, we bailed out SAA to the tune of R2 billion because we wanted to have an airline during 2010. We were hosting the Fifa World Cup and we needed the world to know that South Africa had an airline company. Can we continue to pour taxpayers' money into these companies without really going to the crux of whether we need them or whether we need to invite other partners to make them sustainable, moving forward? We will support this budget, hon Minister, but in this portfolio committee we will continue to interrogate everything that happens. Thank you.
The DEPUTY MINISTER
Mr N SINGH
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 24
The DEPUTY MINISTER OF PUBLIC ENTERPRISES: Hon Chairperson, hon Ministers and Deputy Ministers; hon members; chairpersons; board members and CEOs of our state-owned companies; the director-general of the department; all Department of Public Enterprises colleagues present; distinguished guests; ladies and gentlemen, on behalf of the Ministry, we also wish those on board the flight that ran into turbulence a speedy recovery.
When we stood before you for our 2013-14 Budget Vote, we had trees with us. Some had been partly eaten away and some were broken because of our recent past. We had branches whose connection to the tree was weak, and we promised to nurture them. In nurturing them, we had engagements with seven provinces through our provincial engagements programme. In these sessions, engagements on opportunities were held with government, both provincial and local, as well as with the youth and business community. Institutional support mechanism structures to realise the alignment of programmes have been established in the provinces visited. These are the North West, KwaZulu-Natal, the Free State, the Eastern Cape and the Northern Cape. The other provinces will be visited as well.
The government is committed to institutionalising the development and empowerment of the youth, as expressed in the National Youth Policy. Our response to this commitment has been through our Youth Economic Participation programme. Through this, we are co-ordinating the efforts of our state-owned companies to maximise their role in the achievement of the national youth economic empowerment objectives. These include skills development, job creation, enterprise and supplier development, and corporate social investment. As a result, youth opportunity expositions were held in various provinces, where information relating to the above was shared.
The lack of awareness regarding opportunities in state-owned companies led us to prioritise people in rural areas, farming communities and townships. These state-owned companies are not only for the urban or upper middle class but for all South Africans. Thousands of young people attended expositions held at Ekurhuleni, Umhlathuze and on the farms of De Doorns.
During the last Budget Vote process, we committed to hosting a state-owned company supplier summit to address the question of how corporate social investment can fund youth development in general. On 28 March 2014, we hosted the summit at the University of Fort Hare in Alice.
Corporate social investment expenditure continues to grow in South Africa. According to the 2013 Trialogue audit, the top 100 companies and state-owned companies have a corporate social investment budget with a value of R7,8 billion. We commit to continue redirecting the focus of state-owned company corporate social investment spend towards addressing the triple challenge of inequality, unemployment and poverty.
We have identified three focus areas to streamline the direction of corporate social investment. These are education, enterprise development, and health and sport. Regarding education, our priority as the department is the promotion of mathematics and science. In this respect, we have embarked on a roll-out of the Telematics system to schools in the various provinces. We have been able to pursue this programme in partnership with the University of Stellenbosch.
Our state-owned companies adopted schools in the provinces, facilitated the installation and carried the costs for the installation of the system to the schools identified. Some of the schools connected include the following: St John's College in Mthatha, Eastern Cape, connected with the support of Eskom; Jikindaba Secondary School at Ingquza Hill in the Eastern Cape, connected with the support of Denel; and Seshego Secondary School in the province of Limpopo, connected with the support of Broadband Infraco. Transnet has also built a computer centre for this school. Vaal Reefs Technical High School in the North West, Zikode High School and Harding Secondary School in KwaZulu-Natal are due for connection before the end of this year.
Langa High School in the Western Cape, Moremoholo Further Education and Training College in the Northern Cape and 100 schools from the Free State represented in the Youth Camp had the benefit of receiving donations from the state-owned companies in the form of mathematics dictionaries. In our last Budget Vote debate, we promised to respond to a plea made during our visit to the Free State in December 2012 to host a Youth Camp for Grade 10 and 11 learners from the Free State province. In this regard, the Youth Camp hosted by our state-owned companies, who worked together with the Free State department of economic development, was a great success. Learners from townships and rural areas of the Free State were exposed to opportunities in our state-owned companies. We remain committed to making this a yearly event, targeting learners from the different provinces.
Before the end of this year, we intend formally launching the Transnet Maritime School of Excellence in Durban. Through this school, we intend building a pool of marine graduates.
With regard to enterprise development, Transnet has been on extensive roadshows to townships and rural areas. These are meant to educate young people on how to tender for opportunities in Transnet. As we move South Africa forward, Transnet has invested over R18 billion to go to youth-owned businesses, particularly those in the townships and rural areas. In addition, Transnet has entered into a range of partnerships with both private and public companies to provide funding to small and micro enterprises. These interventions are specifically targeting the black youth and women-owned companies. Transnet has further dedicated an amount of R4,7 billion to bursaries and grants.
Eskom, on the other hand, has set itself a target of spending over R24 billion a year on youth-owned businesses by 2017. Thus far, Eskom has reserved over R10,5 billion of spend for youth-owned businesses in a range of industries, including the national electrification project and coal mining.
The Transnet Phelophepa Healthcare Train continues to bring health services to disadvantaged communities that do not have access to proper health care. With the train celebrating 20 years of service, we have now launched Phelophepa II, a second train, to bolster the annual patient reach of the programme.
In 2013, Eskom also approved four paediatric mobile units that will service primary schools around the communities it serves. These mobile units will provide general health, dental and eye care, which is much needed in the rural areas. Transnet and Eskom are looking at possible collaboration in a health partnership.
The success of our battle against the lack of training and skilling can be achieved by giving life to collaborative efforts. The New Growth Path emphasises that the only way to achieve our national economic objectives is through building multistakeholder partnerships.
In partnership with the Department of Communications and Tata Africa, we secured computer centres for Jikindaba High School and for the local church of Holy Cross to train the community in computer skills. The department is engaging the Department of Co-operative Governance and Traditional Affairs, Cogta, in a collaboration meant to respond to the shortage of artisans and to respond to service delivery hotspots. A draft memorandum of understanding and a concept document have been prepared to pave the way for the Phelophepa Train of Hope. The collaboration is intended to bring artisans, technicians and engineers to municipalities that lack technical capacity and to reduce the level of service delivery protests.
The skills we are developing must be able to respond to our transition from a resource economy to a knowledge-driven economy. The competitiveness of that economy will be extremely dependent on the quality of the human capital that we produce. So far, we have been able to identify 23 district municipalities as priorities. In partnership with the Ingquza Hill Local Municipality, realising the need for clean water for learners and the community, Denel provided four boreholes to the area. These are strategically located near the schools, particularly to enable easy access to clean water for the learners.
The SA Forestry Company Ltd, Safcol, is operating under very difficult economic conditions. However, we are happy to announce that Safcol will declare a profit in the 2013-14 financial year. A budget of R6,6 million was allocated to socioeconomic development during the 2013-14 financial year. In collaboration with the Joint Community Forums of Mpumalanga and Limpopo, a needs analysis and project identification were finalised. Flowing from that budget, projects ranging from building community halls to building schools were successfully undertaken by Safcol.
Alexander Bay Development Corporation Ltd, Alexkor, represents another of the good stories in our 20 years of democracy. This state-owned company has been able to turn the tide amid all the challenges that existed in their space. Alexkor has accomplished its financial obligations in terms of the 2007 Deed of Settlement obligations. As a result, the Alexander Bay township now forms part of the Richtersveld Local Municipality, as per the registration of 22 November 2013. The value of the property that will be transferred to the Richtersveld community as part of the Department of Rural Development and Land Reform restitution programme is estimated at R200 million.
As part of the turnaround strategy, the deep-sea mining agreement with the International Mining and Dredging SA Pty Ltd, IMDSA, has been concluded. Operations in this respect will commence once the marine mining rights have been granted. We expect more people from the Richtersveld to benefit from this extension of focus.
We have also realised an improvement in carat production from 35 000 to almost 42 000 carats in one year. This is on the back of the handing over of the Muisvlak Modular Plant in April 2014. The plant was commissioned during the 2013-14 financial year and its operation has created 200 more jobs. When we stood before you in 2013, Alexkor had 109 employees. Today, the company has 350 employees. Confirming our unwavering support to empower women, the Witvoorkoppen Women's Mining Company has been established and has commenced with its land mining operations in the Richtersveld.
The Pebble Bed Modular Reactor Company, PBMR, is now fully incorporated into Eskom as its subsidiary, as an interim measure. This will be the situation until a Cabinet decision is made on the future of the company.
The first meeting of creditors since the liquidation of Aventura Resorts took place in December 2013. The department intends commencing with the process to repeal Aventura's founding legislation, as part of finalising the winding up of Aventura. We are anticipating that the Master of the High Court will approve the liquidation and distribution account around November 2014. After that, Aventura will be deregistered.
I would like to thank the Minister for her leadership and guidance; the previous Minister for the role he played in leading the department; colleagues at the Department of Public Enterprises for their support; boards, management and staff of our state-owned companies for their support; and the ANC study group for their guidance.
As the Ministry and the department, we commit to working closely with the Portfolio Committee on Public Enterprises in Parliament, and we thank all the guests for their attendance. I humbly ask the House to support this Budget Vote. I thank you. [Applause.]
The TEMPORARY HOUSE CHAIRPERSON (Mr J M Mthembu): Hon Deputy Minister, if I were to say you still had five minutes, what would you say? [Laughter.] No, I am joking!
Mr E J MARAIS
THE DEPUTY MINISTER OF PUBLIC ENTERPRISES
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 25
Mr E J MARAIS: Hon House Chairperson, Minister, Deputy Minister and members, budget work is one of the most important oversight functions of Parliament. The budget reflects the choices that government has to make and is the tool it uses to achieve its economic and developmental goals. However, budget work also has a larger purpose: to ensure openness, transparency and accountability for public resources. The DA sees the principle of accountability as very important in the budget process.
In his state of the nation address, the President did reflect on infrastructure investment as a key priority of the National Development Plan, the New Growth Path and the Industrial Policy Action Plan. South Africa's economy could be stimulated by implementing a long-term, government-led infrastructure investment programme. The Department of Public Enterprises plays the key role in contributing to the objectives of the National Development Plan, which are to grow the economy, reduce poverty and increase employment. The DA supports the National Development Plan.
The department has the potential to contribute to the objectives of the National Development Plan through Eskom's build programme and Transnet's capital expenditure programme in order to improve industrial capabilities, provide sustainable jobs and improve the productive capacity of the economy.
State-owned companies should provide more job opportunities that allow the youth to qualify themselves for the formal workplace. The DA strongly supports the youth wage subsidy to create more job opportunities.
As far as public enterprises are concerned, we must look into more public-private partnerships and privatisation in the future. Long-term growth and investment requires a shared vision, trust and co-operation between government, business and labour.
Afrikaans:
Eskom se opwekkingskoste het met 14,9% tot by R69 812 miljard gestyg, en sy personeel uitgawes met 7,73% tot by R22,38 miljard. Die koste van dieselopwekkingseenhede het meer as verdubbel, tot by R10,561 miljard. Hierdie uitgawes is genodig as gevolg van die swak prestasie van sy steenkoolopwekkingseenhede. Eskom se wins van R7 miljard sal nie langtermyn finansiële stabiliteit gee nie. Bedryfskostes sal onder beheer gebring móét word.
English:
The fact that one new power station costs about twice the entire depreciated capital stock of existing power stations illustrates the challenge. The current electricity crisis exposes institutional weaknesses related to state-owned companies responsible for network infrastructure.
Hon Minister, averting such problems requires clear institutional arrangements, transparent shareholder compacts, clean lines of accountability and sound financial models to ensure sustainability.
We must construct infrastructure to import liquefied natural gas and increase exploration to find domestic gas feedstock to diversify the energy mix and reduce carbon emissions. We have to produce more renewable electricity. At least 20 000 MW should come from renewable sources. Minister, we have to accelerate the procurement of independent power producers.
Regarding Broadband Infraco, compared with the best international standards, South Africa's Information, Communications and Telecommunications, ICT, infrastructure is very poor. Efficient information infrastructure that promotes economic growth and greater inclusion requires a stronger broadband and telecommunications network and lower prices. The economic and employment benefits outweigh the cost.
Afrikaans:
Die DA-beheerde Weskaap regering streef na gratis Internet toegang vir almal in die Weskaap. 'n Beskostigbare breëbandnetwerk sal binnekort in die Weskaap gevestig word. Die Wes-Kaap regering, Neotel and die regering se agentskap vir inligtingstegnologie, Sita, het in Junie 2014 'n ooreenkoms aangegaan om die netwerk wel in die provinsie te vestig. Die netwerk sal oor die volgende drie jaar in 2 000 regeringsgeboue gevestig word. Dit sluit skole, klinieke en biblioteke in.
Die Stad Kaapstad gaan binne die volgende vyf tot sewe jaar R1,3 miljard bestee om die hele Kaapse metropool te dek met 'n vinnige telekommunikasienetwerk. Die doelwit is om Stad Kaapstad die digitaal mees-gekonnekteerde stad in Afrika te maak. [Tussenwerpsels.] Die Stad Kaapstad geen belê in 'n netwerk van optiese veselkabels wat oop toegang het. Kommunikasieverbinding sal geskep word in gebiede wat, tot dusver, agter gebly het wat dienslewering betref.
Dit sal ook beskikbaar wees vir gelisensiëerde telekommunikasiediensverskaffers om die beskikbaarheid van breëband Internet te verhoog en om maatskaplike en ekonomiese voordele te put uit meer toeganklike en bekostigbare breëband Internet toegang.
English:
Hon Minister, we need competitively priced and widely available broadband. I urge you to push hard in establishing a wider national, provincial and municipal fibre-optic network to provide the backbone for broadband access, driven by private investment and complemented by public funds. Please assist by changing the regulatory framework to ensure that Internet broadband capacity improves, prices fall significantly and access improves.
Hon Minister, in short, I want to reflect on the salaries of executives ... [Interjections.]
Mr G S RADEBE: I rise on a point of order, Chair.
THE HOUSE CHAIRPERSON (Mr C T Frolick): Yes, hon member, go ahead.
Mr G S RADEBE: Chair, can I request the hon Marais to speak through the Chair, rather than addressing the Minister.
THE HOUSE CHAIRPERSON (Mr C T Frolick): Order! Sit down!
Mr E J MARAIS: I want to reflect in short on the salaries of executives and the remuneration of board members. It is nowhere more evident that excessive increases in salaries are being paid to executives than in an inefficient state-owned enterprise.
Eskom submissions in 2012 to the National Energy Regulator of SA called for a 16% electricity tariff hike each year for the five years ahead, up to 2017. This was done on the back of R36 million spent on staff parties and a 20-month schedule overrun - at an additional R60 billion - in the construction of boilers for Medupi and Kusile. Despite these inefficiencies, Eskom executives have seen generous pay increases. In the 2011-12 financial year, Eskom paid executive members 109% more than they were paid in the previous year. The Eskom chairperson then earned R113 500 for every board meeting he attended.
In the case of Transnet, nonexecutive directors were paid R8,1 million, up by 40% from 2011. In 2012, the chairman earned R125 000 per board meeting attended, while the chief executive officer took home R6 million a year.
The board members of state-owned companies are serving on too many boards. The Minister and department should regulate the number of boards that they could serve on at any one point.
Clearly, something went horribly wrong with our state-owned enterprises' remuneration framework. The SOCs are insulated from failure. They are not allowed to go insolvent because government ... [Interjections.] ... generally bails them out.
Furthermore, if they fail, the option of a takeover bid, which may be viable for private companies, is also out of the question. This means that the boards and management may slump into complacency. Thank you. [Applause.]
Dr Z LUYENGE
Mr E J MARAIS
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 26
Dr Z LUYENGE: Hon Chairperson, Minister and Deputy Minister of the Department of Public Enterprises, all Ministers present here, all august members and the chairperson of the portfolio committee, our Whip, and all members of this august House, I greet you this afternoon in the name of the ANC, the leader of South Africa.
Given South Africa's current challenges, the developmental state should maintain its strategic role in shaping the development of a number of key economic sectors, including through the continued ownership of state-owned enterprises. These sectors include the energy complex and the national transport and logistics system, where an ongoing role is envisaged for Eskom and Transnet. There must be consideration of the best means to enhance the strategic role of these and other public enterprises, utilities and agencies across all spheres of government.
Eskom is one of the top 20 utilities, by generation capacity, in the world. It generates approximately 95% of the electricity used in South Africa and approximately 45% of the electricity used on the continent of Africa. Furthermore, Eskom's total procurement spend for the 2012-13 financial year was about R120 billion, and total expenditure on broad-based black economic empowerment-compliant companies is R103,4 billion. This is 86,3%, against the target of 70%. There is an intention to ensure that by 2018, Eskom procures over 50% of its coal from emerging black coal miners, which would be a significant act of transformation. To date, significant work has been done to establish the fund, which will go into operation by the end of the 2013-14 financial year.
Eskom directly provides electricity to about 45% of all end users in South Africa. The other 55% is resold by redistributors, including municipalities. Additional power stations and major power lines are being built to meet the rising electricity demand in South Africa. By December 2011, the Eskom Kusile Project had already employed 6 718 people and by 2019, the number will have increased to 22 150.
Eskom has committed to training 2 017 employees, and already 798 have completed their training. Training of 341 people is still in progress. Eskom has planned for a new intake of 1 465 for training in various fields, such as artisans, engineers and technicians.
In 2012, Eskom topped the list for contributions to social initiatives, contributing R87,9 million to various projects. These included business incubators, an energy and environmental programme, enterprise development initiatives and projects in infrastructure development and education support.
During 2011-12, Eskom invested over R76 billion in infrastructure. Its rolling capital investment programme increased from R92 billion in 2005 to R549 billion in 2011. Through its medium-term power purchase programme, Eskom signed contracts with five independent power producers, totalling some 373 MW of capacity. It also signed up about 200 MW of municipal generation for the 2011 winter.
The African Development Bank approved a US$365 million loan to Eskom for the 100 MW concentrated solar power plant and the 100 MW wind power plant. Eskom submitted a US$250 million loan application to the World Bank for funding from the Clean Technology Fund.
In 2011, Eskom, once again, provided apprenticeships to 10 000 young people – up from 4 500 – and implemented a youth programme to support about 5 000 young people – up from 200 – to find their way into employment by 2015.
I want to clarify certain issues regarding Broadband Infraco here. People daydream if one leaves them unchallenged. The 53rd ANC national conference resolved that to maximise the value of the scarce or high-demand spectrum, government must set aside spectrum for the provision of wholesale services or an open-access network by the merged entity between Sentech and Infraco.
This infrastructure must prioritise government services and provide modern communication services to government departments, municipalities, schools, hospitals, clinics, police stations, multipurpose community centres and courts, to ensure that they are connected and can provide e-services to the people. Excess capacity should be geared to further connect rural areas to help achieve full access to high-speed Internet networks by 2030.
As a Schedule 2 company, Broadband Infraco was awarded an individual electronic communications network services licence in October 2009. This allowed it to sell high-capacity, long-distance transmission services to licensed, fixed and mobile network operators, Internet service providers and other value-added network service providers. Broadband Infraco is a state-owned company that operates in specific focus areas of the country's telecommunications sector. In addition, it provides strategic international connectivity to operators in the SADC region and on the west coast of Africa.
Broadband Infraco also operates in specific focus areas of the telecommunications sector in South Africa. The National Development Plan states that information and communications technology, ICT, must perform a developmental function, have an adequate range of infrastructure and must be available at the lowest cost and the highest quality to the wider community.
In 2011, the Department of Public Enterprises explored strategic synergies between Infraco and Sentech to optimise capacity. The network established 13 600 km of long-distance fibre, as well as five open-access points of presence in key metropolitan areas. A further seven open-access points to roll out broadband access in remote rural areas and to facilities such as hospitals, clinics and schools were also established.
Wholesale long-distance connectivity prices have come down by more than 75% over the past two years. This is partly as a consequence of the establishment of Broadband Infraco, thus further reducing the cost of connectivity.
In conclusion, in May 2012, the West Africa Cable System international connectivity became operational. This increased bandwidth capacity, providing for the improved integration of the 10 African countries that are customers of the West Africa Cable System and enabling the further reduction of the cost to communicate.
The state-owned enterprise, which has a budget of R3,1 billion over three years, is in the process of strengthening its cable to ensure its carrier-grade status, so that it is able to provide broadband services. It has completed the building of installation sites for the northern ring of state-owned Broadband Infraco's new national network. Broadband Infraco is in the process of refurbishing 13 125 km of fibre optic cable. I thank you. [Time expired.]
Mr N L S KWANKWA
Dr Z LUYENGE
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 27
Mr N L S KWANKWA: Hon Chair, I was greatly intrigued by what the EFF proposed earlier when they said that given the fact that the Department of Public Enterprises is staffed by ANC loyalists, we should dissolve it. I would like to take it a step further and say that considering the fact that most government departments - in fact, all of them - are made up of ANC loyalists, we should dissolve the entire government and put in place a military government to run the country. [Interjections.] Of course, yes. [Laughter.]
Hon Chair, hon Minister and Deputy Minister and hon members, for many years South Africa's economic growth potential was shackled by a lack of properly planned infrastructure investment. This resulted in immense disparities between the quality of the infrastructure in rural and urban communities. The poor in rural communities have to make do with inadequate and poor-quality infrastructure, which confines them to the margins of economic activity.
Through properly planned infrastructure development and rural development programmes, state-owned enterprises have an important role to play in boosting economic growth in order to ensure equal opportunity for all people to participate in our country's economy.
However, this will be difficult to achieve if drastic steps are not taken to improve the capacity of SOEs to spend their allocated budgets. For instance, over the past two years, SOEs have been spending approximately 70% of the funds committed to infrastructure development. Even taking a casual look at the underexpenditure of the aforementioned SOEs and at the number of times government has had to bail some of them out reveals that SOEs are far less productive than companies in the private sector.
How does one then justify the high salaries paid to the executives of the SOEs? The UDM believes that capacity levels at the SOEs need to be improved if they are to truly serve as an engine for economic growth and development. We are also of the view that steps should be taken to ensure that the right people are employed in the right positions at our SOEs and that there should be clear performance contracts.
In addition, in large infrastructure development programmes, the department needs to rope in the private sector to either invest or to play a part in them.
IsiXhosa:
Ndifuna ukuthi thina siyi-UDM ...
English:
... we have been talking a lot about the issue of a developmental state. And when you talk about a developmental state, one of the things that we talk about is that the SOEs have an important role to play in that. Obviously you cannot expect the government to sit back and twiddle its thumbs and do nothing about ...
IsiXhosa:
...ukuphuhliswa kwabantu. IsiNgesi esithetha ngemarike nangezinye izinto ezininzi, sisiNgesi esikholelwa kakhulu kwi...
English:
... trickle-down economics ...
IsiXhosa:
... apho kuthiwa, siza kutya thina size siniphosele imvuthuluka ezantsi kwaye ke loo nto ayinakuze isisebenzele thina bantu bantsundu, thina bantu bahluphekileyo...
English:
... who still have backlogs from the past that need to be redressed. Secondly, I do not think we are asking the right questions when we ask ...
IsiXhosa:
... ingaba amashishini karhulumente afanelwe ukuba agcinwe kusini na?
English:
That is the wrong question all together. The most important question is, how do we make them effective so that ...
IsiXhosa:
... akwazi ukufikelela nakwezi ndawo zazihlelelekile ngaphambili? Singakhumshi isiNgesi esimnandi esiphuma kwiincwadi zesikolo [textbooks.] kodwa sibe singabasebenzeli abantu. Enkosi kakhulu. [Kwaqhwatywa.] [Kwaphela ixesha.]
Adv A D ALBERTS
Mr N L S KWANKWA
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 27
Adv A D ALBERTS: Hon Chair, ... [Interjections.]
Afrikaans:
Ek praat altyd mooi vir julle. Agb Voorsitter, Minister...
English:
... we are not merely here to oppose you but also to act as sentinels and angels to warn you of impending problems. So, we are not all that bad and I will try to do that today. We were hoping you will bring in a new energy and focus in policies to bear on this department. Unfortunately, the state-owned enterprises leave much to be desired at this stage. Some are testimony to the fact that the government must not itself participate in the active economy.
SOEs fail for various reasons, some of which we wish to bring to your attention.
Afrikaans:
Alexkor is bewys dat die ANC se idee van die skep en bedryf van 'n suksesvolle mynmaatskappy bloot 'n hersingskim is. Alexkor was nie in staat om enige wins te wys tot herkapitalisasie in 2012/13 nie. Die vraag is of die wins volhoubaar is. Daar is ook vrae rondom die regering se beherende aandeel in die vennootskap tussen Alexkor en die Richtersveld gemeenskap. Die grond behoort immers aan die eerste nasie en daarom moes hul eerder in staal gestel gewees het om 'n private maatskappy aan te stel wat hul regte meer effektief sou kon ontgin. Die regering moet ag slaan op internasionale pligte rondom eerste nasies in Suid-Afrika.
English:
Minister, Eskom's importance to our economy must drive the department and the Minister to ensure on-time delivery of the Kusile and Medupi power stations. The only problem is that recurring delays have resulted in dramatic scope creeps of these projects. This plays a major part in the ongoing de-industrialisation that we are experiencing and it also undermines the government's own Industrial Policy Action Plan, Ipap.
This country needs firm delivery dates on power plants, assurances that Eskom will implement proper maintenance on power plants and distribution networks, and a commitment that Eskom will not fall prey to premium-priced coal from suppliers purely based on Broad-Based Black Economic Empowerment, BBBEE, credentials or otherwise.
Afrikaans:
SAL is tans besig met 'n omkeerstrategie maar feit is dat die meeste nasionale lugrederye wêreldwyd eenvoudig nie winsgewend is nie. SAL se bedryfskoste is te hoog en die belastingbetaler raak moeg daarvan om die instansie uit te help. Die regering wil ten spyte van oproepe tot privatisering niks weet nie. Dalk lê die antwoord iewers in die middel, waar SAL toegelaat word om ten dele te privatiseer in 'n publieke/private vennootskap.
English:
Lastly, Minister, it is important to take note of the challenge looming for Transnet. Its infrastructure investment is much needed for the economy. However, Transnet's reckless management and funding of its two legacy pension funds have now led to the largest damages claim in this country's history. The claim is almost R85 billion and comes in the form of a class action against Transnet and government. It will be heard in court next Monday.
Should the pensioners succeed in their claim - and they should because their case is strong and clear - then Transnet will be downgraded to junk status. This will also have an impact on the status of national government in the end. This will in effect bring Transnet's expansion programme to a complete halt.
As such, the Minister is advised to apprise herself of the situation and urge Transnet to settle on an equitable basis before the matter harms the whole country. The Minister is in a position to mete out justice to both the pensioners and the country as a whole. You have a lot of work to do, Minister, and we wish you all the best. Thank you.
Mr W M MADISHA
Mr A D ALBERTS
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 27
Mr W M MADISHA: Chair, it's my minute, so wait! [Interjections.]
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Hon Madisha, you cannot threaten a Presiding Officer. That is unparliamentary. [Laughter.]
Mr W M MADISHA: Hon Chair, instead of going through this lengthy input, I will ask the Minister some questions, through you, Chair. Firstly, we want to know from the Minister what exactly is meant by the department's definition of "market demand".
Secondly, we need to know more about the department's function in finding capital requirements to fund infrastructure plans. The information provided is too vague.
Thirdly, another matter that requires clarification relates to the department's role in securing private investors. How many private investors has the department secured in the past five years and what was the quantum of the investment? If you talk about the budget and say that we are moving forward, this has to be responded to. There has to be full clarity in respect of policy and regulation because both are pivotal to stimulating investment; facilitating industrialisation and localisation; improving the performance of state-owned companies, particularly in relation to rail and ports infrastructure; guaranteeing the reliable generation, transmission and distribution of electricity; improving logistics through a shift from road to rail; and improving port operations.
Fourthly, the department is budgeting for increased personnel travel, domestically and internationally. Going by the reasons that are given in the estimates, I am not convinced that this is warranted. The hon Minister needs to explain the necessity for this envisaged increased in travel.
Another matter that needs explanation is the increased expenditure to be incurred on consultants required to conduct technical research in transport, manufacturing, energy and broadband. I fail to see why such research cannot be undertaken internally and why the department is not investing in developing the skills of its full-time employees to undertake such research.
The hon Minister should explain or make available to the portfolio committee the previous research undertaken by consultants in the areas listed above, together with the schedule for such research. These are very important. Thank you very much, Chair. [Time expired.]
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Order! Hon Madisha, where you have failed us is that you have not said whether those questions are for oral or written reply. But we will leave that to the Minister. [Laughter.]
Mr R M TSELI
Mr W M MADISHA
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 28
Mr R M TSELI: Hon House Chairperson, hon Minister, hon Deputy Minister, hon members, distinguished guests, allow me to participate in the debate on Vote 11 of the Department of Public Enterprises on behalf of the ANC.
In his state of the nation address, President Zuma declared, and I quote:
We will utilise … Transnet's R50 billion locomotive contracts and Prasa's passenger rail projects, among others, to promote local content and boost growth.
The President further emphasised government's commitment to radical socioeconomic transformation to address the triple challenge of poverty, unemployment and inequality, which are central to the National Development Plan. My input will largely focus on three entities, namely Transnet, South African Airways and SA Express.
Transnet adopted the market demand strategy in 2012. This led to the investment of R300,1 billion in infrastructure, operations efficiencies, jobs and skills development, which will grow to R307,5 billion by 2020. Its revenue for the period under review grew to R56,6 billion, driven by a 14,2% increase in minerals and chrome volumes and a 25,2% rise in automotive volumes and containers on rail. The company is in the third year of its rolling seven-year investment programme aimed at revamping the country's logistics infrastructure. The programme is now up to a record of R312,2 billion. Surely this is a good story to tell, hon Michael. [Interjections.]
On human capital development, the company spent 3% of the labour cost on training during the year, prioritising training for artisans, engineers and engineering technicians. In the year under review, Transnet awarded 138 full-time engineering bursaries in various disciplines and also sponsored 3 699 high-school learners through the Rail Cadet Scheme. In addition, the company gave 339 engineering technician trainees workplace experience opportunities, with 1 552 new apprentices joining Transnet's apprenticeship scheme, and it contracted 89 graduates-in-training.
As the ANC, we feel that it is imperative that we expedite the implementation of the project that would see pipelines worth R24 billion being installed from Durban to Johannesburg. We are, however, impressed that the implementation phase has created job opportunities for the masses of our people.
South African Airways, SAA, contributes R8,6 billion to South Africa's GDP and is directly and indirectly responsible for 35 000 jobs. It is important to note that the airline has now come up with a turnaround strategy and its implementation has already begun. The company has topped the list of on-time airlines in the world after it achieved 91,7% on-time performance. This is according to a report produced by an independent entity, FlightStats. Its business class has also been voted the best business class product among Star Alliance carriers.
We must remind the hon members that the company has been voted the best airline in Africa for 10 consecutive years and the winner of Service Excellence Awards for three consecutive years.
Hon Minister, we appreciate the fact that SAA obtained an unqualified audit opinion in the 2012-13 financial year. The only matter of emphasis, which is irregular or fruitless and wasteful expenditure, should be closely looked at by us so that we can come up with an audit action plan.
SA Express continues to increase aviation's contribution to sustainable economic growth and job creation. It employs more than 1 000 people at its head office and operational outstations within South Africa and the Southern African Development Community, SADC. For capacity building, it trains and develops cadet pilots and technical apprentices.
As the ANC we support its 2020 Vision strategy and we would like to pledge our support to the Department of Public Enterprises in the monitoring and implementation processes. The turnaround strategy will go a long way in ensuring that we deal with any challenges that arises.
We remain confident that the Presidential Review Committee on State-Owned Entities will come up with monitoring and evaluation mechanisms to enhance the performance of state-owned companies and we will continue to work closely with the Department of Public Enterprises, also providing the necessary support in the implementation of the committee's recommendations.
The need for the involvement of the public in the activities of the state-owned companies cannot be overemphasised
Tshivenda:
Vho R T TSEDI: Hezwi a zwi nga thusi fhedzi uri lushaka lu dzhenelele kha thandela dza zwiimiswa zwo no nga sa, SA Airways na SA Express. Zwi do thusa hafhu na u tutula dzangalelo la vhaswa, nga maanda vha mahayani kha budo la vhufhufhi. Zwi do thusa hafhu na u divhadza zwikhala zwine zwa vha hone kha masia othe. Musi hu tshi avhelwa dzibazari, Mudzulatshidulo, ri livhalela uri zwi tshingamele nga maanda kha vhaswa, kha vhafumakadzi, na vhaholefhali.
English:
Hon Minister and hon Deputy Minister, together with the boards of the entities reporting to the department, be assured of our committee support as you intensify your role of exercising oversight over the state-owned companies to ensure that they effectively execute their mandate. A call for the dissolution of the department by people whose policies were rejected is just a dream and will never be a reality. [Applause.] We respect the mandate the people of South Africa gave on 7 May to the ANC as the only party they trust to move South Africa forward. The ANC supports the Budget Vote of the Department of Public Enterprises. I thank you. [Applause.]
Mr M A PLOUAMMA
Mr R M TSELI
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 28
Sepedi:
Mna M A PLOUAMMA: Mohl Tona, mohl Motlatšatona, ga ke ye go bolela ka Sekgowa. Nka leboga ge fela le ka nkadima ditsebe. Batho bagešo, ke nagana gore potofolio e tee fela yeo e ka hlongwago ke ya dipolelo, moo e ka bago bobolokelo bja dipolelo. Se ke se lemogilego mo ke gore dipolelo tše di a swana, gomme ga gona mo re yago. [Tšhwahlelo.] Seo ke bego ke nyaka go se botša Tona ke gore a be le sebete, a lwantšhe bomenetša le ge e le gore bo tšwa ka mo go ANC,le gona bo tšwa kgorong yeo e etilwego pele ke yena.
Ke be ke kgopela gore ge yena le Motlatšatona ba le mmogo, ba kgonthišiše gore ba matlafatša batho ba gaborena gore ba be le tokelo ya go reka dišere. Se sengwe gape seo ke nyakago go se bolela ke gore naga ye ya rena e ka se kgone gore batho ba bangwe ba gole R6 milione ka ngwaga mola ba bangwe ba gola R5000 ka kgwedi. Ke be ke kgopela gore a e lebelele ka šedi ka gore maemo ao a a swerego mo kgorong ye bjale ka Tona, ke maemo a histori.
Ka mantšu a mangwe, yena, le ba ba bušago gonabjale ba mo maemong ao e lego gore ba ka thibela tlhakahlakano mo nageng ya gaborena gore naga ya gaborena e kgone go itemogela temokrasi yeo e tseneletšego. Ke kgopela gore a se ke a theeletša batho ba, rena re tlile go ahlola yena ka morago ga mengwaga ye mehlano. [Tšhwahlelo.]
English:
Mr G S RADEBE: Chair, I have a point of order!
Sepedi:
Mna M A PLOUAMMA: Seo ke bego ke se kgopela ... [Tšhwahlelo.]
English:
Mr G S RADEBE: Chair, my point of order is that we are hon members here. We do not have madams in this House or EPC. The hon member said "madam" in the indigenous language, when he should have said "honourable". Must I teach him his language? [Interjections.]
The HOUSE CHAIRPERSON (Mr C T Frolick): Hon member, kindly refer to members as "hon members" and not as something else. [Laughter.]
Sepedi:
Mna M A PLOUAMMA: Mohl Modulasetulo, e no ba gore ka segagešo, ka Sepedi, ge re bitša motho mme re mo hlomphile go feta ge re mmitša mohlomphegi, fela ke tla no mmitša mohl Tona. Seo Agang e ratego go se kgopela go Tona ke gore a šome botse, ka gore re šetše re lemogile gore ka morago ga mengwaga ye mehlano re tlile go tšea pušo, gomme ge a ka šoma botse re ka mo gopola gape. [Disego.] [Tšhwahlelo.]
Rena mo Palamenteng ye e hlomphegilego ya Afrika-Borwa, ga se ra tlela go tlatša lešata, re tlišitše nnete. Le ge re le ba babedi goba ba bararo, re tlile go e botša Tona. [Tšhwahlelo.]
Sa mafelelo seo ke se botšago Tona ke gore dikotlo tšeo di fiwago boradikontraka bao ba sa dirego mošomo wa bona gabotse, ga di a enela. Re be re re tsela ya tlhokomelotiro e be ye e tiilego gore batho ba ba kgone go bona gore ge ba filwe mošomo ba o phethe ka tshwanelo. Sa mafelelo ke rata go fa ANC maele. [Tšhwahlelo.] Se se hlagetše mekgatlo ye mentši ya tokologo, ke nyaka go ba botša gore sebaka se se tlile go feta, ka fao ba se šomiše gabotse. [Tšhwahlelo.]
Ms G N NOBANDA
Mr M A PLOUAMMA
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 29
Ms G N NOBANDA: Hon Chairperson, Hon Minister and Deputy Minister of the Department of Public Enterprises, hon members, chief executive officers, CEOs and management of our state-owned enterprises, ladies and gentlemen,...
Setswana:
...madume gotswa go ANC.
English:
As we support the Budget Vote No 11 for the Department of Public Enterprises, it is important for us to remind ourselves from the beginning that the state has a central role to play in leading initiatives aimed at achieving a decent quality of life for all. That is possible with an effective and efficient democratic developmental state administration, underpinned by the values of Batho Pele.
State-owned enterprises serve as the vehicle of implementation of government programmes and their development mandate should be realigned to support radical economic transformation. Therefore, radical economic transformation programmes remain the focus of the government, and state-owned enterprises are central in this regard.
It is within this context that I will engage with the Budget Vote of Public Enterprises in general, but with particular focus on the state manufacturing enterprises of Denel, Alexkor and SA Forestry Company Limited, Safcol.
The ANC continues to applaud Denel's financial turnaround and its delivery on major products and projects in support of the SA National Defence Force. We also commit to our continued monitoring mandate on its implementation over the medium-term period to ensure Denel's sustainability and profitability.
Denel has contributed immensely through investment in advanced manufacturing capabilities in the country. The entity invests millions in research and development and has a comprehensive programme that addresses the socioeconomic challenges facing South Africa. This programme includes the following: A talent management programme, which promotes skills transfer and the training of its young engineers; a systems engineer development programme; mentorships; and bursaries and study loans.
Denel Technical Academy trained 231 apprentices and 754 young people in short courses in engineering and aviation-related fields in the 2013-14 financial year. In its schools outreach programme, maths and science improvement programmes were offered for learners in Grade 11 and 12 in Gauteng, North West, Mpumalanga, Limpopo and the Free State. Denel has assisted 480 learners in all these five provinces collectively. Denel has given 249 bursaries to successful matriculants, which included studying for university degrees, apprenticeships and technician training.
Denel collaborates with SA Women in Engineering to support and mentor women. Is this not a good story to tell? [Interjections.]
HON MEMBERS: It is!
Setswana:
Bona, gare ikoketse magetla ka maje!
English:
This Budget Vote is supported with a view to leveraging the company's advanced managerial capability in support of the industrialisation drive, aligned with the Industrial Policy Action Plan. To this effect, we should ensure that the SA Police Service, Department of Defence and Military Veterans and other security agencies of the state use the strategic capability of Denel in their operations.
However, we wish to caution the management of Denel about certain bloodsuckers called consultants. In this case, it would be those former employees of an organisation who resigned and became consultants because they saw a gap in their organisation, because it relied on so-called project managers or consultants.
Alexkor is a very important company, particularly now, due to the strategic interests of the state and sundry in the mining sector. Certainly, Alexkor had challenges before. However, we also recognise that the current board is turning the tide and is working hard to make it a profitable entity. Ours as the portfolio committee is to ensure that we support it so that it can develop and implement financially sustainable plans.
We also want to put it on record that the privatisation of Alexkor is not an option. The state should rather diversify its operations and with the issue of beneficiation being high on the agenda, we therefore urge Alexkor to frame a new future with significant and strategic national impact. We also support all the intentions to diversify its operations, such as the focus on mining of other minerals, for example lime.
I should also mention that the ANC government is strongly opposed to corruption of any sort. We view it as a cancer that does not have a place in our society at large. [Interjections.]
Setswana:
Nyaa ga ba ntshôse.
English:
We are happy to inform this House that the report on the investigation into the allegations of financial mismanagement by the trustees into the Alexkor Development Foundation have not been ignored and that the matter has been referred to the Master of the High Court. We further recommend that the outcomes of the investigation should not gather dust but be acted upon.
The forest resources of South Africa represent a considerable natural asset for economic growth. Most of the forests exist on communal land, where a number of value-added opportunities can be explored for small growers.
We urge Safcol to intensify the implementation of the land restitution strategy for claims over the Komatiland Forests land claims settlement model to ensure meaningful benefits to the successful land claimants over the medium term.
Whereas we recognise that the forestry industry has been faced with subdued demand and slower household consumption, particularly from traditional export markets such as the US and Europe, we remain deeply concerned about declining revenues and the general performance of this entity. We urge Safcol to become bold and innovative in assessing its business model and value proposition. It should plan for its sustainability.
In conclusion, as we begin the fifth administration of the democratic government, we should learn from an idiom of the Batswana people of Southern Africa to set the pace for our programme. The saying is:
Setswana:
Tloga tloga e tloga kgale, modisa wa dikgomo otswa natso sakeng.
English:
This important lesson applies to all of us to make sure that, right from the beginning of the term, we align the mandate and strategies of the public enterprises with the programme of the government of the day and also that we should move together on one footing with the Minister and the department, public entities and the portfolio committee to ensure accountability and improved performance.
Once again, on behalf of the ANC, we support Budget Vote No 11 of the Department of Public Enterprises.
Setswana:
Motlotlegi Modulasitilo, ke a leboga. [Legofi.]
Ms P T VAN DAMME
Ms G N NOBANDA
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 29
Ms P T VAN DAMME: Hon Chairperson, hon Minister, hon Deputy Minister, members of this House, firstly, on behalf of the DA, I would like to wish all those injured on the SA Airways flight to Hong Kong a speedy recovery. We hope that the Department of International Relations and Co-operation, Dirco, is providing all assistance to the injured and their families. Although initial indications show that the incident happened as a result of turbulence, we hope it will still be thoroughly investigated.
Minister, I would like to commend you. You made all the right noises and, frankly, it is quite refreshing. You mentioned that state-owned enterprises, executives and board members will be held accountable. We are sick and tired of chief executive officers of SOEs who receive salaries in the millions and also receive bonuses in millions. Minister, please get rid of dead weight.
Minister, you also mentioned that ...
IsiZulu:
...ungangiphazamisi nge-xenophobia. [Uhleko.] [Interjections.]
English:
The HOUSE CHAIRPERSON (Mr C T Frolick): Order, hon members! Continue with your speech, hon member.
Ms P T VAN DAMME: Minister, you also mentioned that you wanted to find meaningful and workable solutions to our energy crisis. The DA looks forward to working with you on turning the lights on and keeping them on for those who are currently in the dark. The first step in solving our energy crisis is breaking Eskom's monopoly of the energy sector and introducing competition. Do not, like your predecessor did, block the Independent System and Market Operator Bill.
Minister, you also mention that SAA would not be receiving bailouts any more. I really frankly do not see how you will do this without privatisation. If SAA does not receive a bailout this term, I will eat an EFF beret. [Applause.]
Finally, ... [Interjections.]
The HOUSE CHAIRPERSON (Mr C T Frolick): Order, hon members!
Ms P T VAN DAMME: Finally, Minister, it is great that the Department of Public Enterprises has decided to let go of Broadband Infraco. Frankly, Broadband Infraco has in the past been treated like the ugly stepchild of the department and we hope that the Department of Telecommunications and Postal Services will now assist Broadband Infraco in increasing broadband access in South Africa. I am sure Premier Helen Zille will be happy to give them advice on how to improve on that. I thank you. [Applause.] [Interjections.]
The HOUSE CHAIRPERSON (Mr C T Frolick): Order, hon members! [Interjections.] Order! Hon Radebe, will you respect the Chair, please? The same goes to hon Morapela – will you respect the Chair, please? While interjections are allowed, members may not interject to the extent that you collapse the debate. So please, let us give the speaker at the podium the chance to get their point across, even if you don't agree with it. Members have the right to be heard. [Intrejections.] Order! I call the hon Rantho to the podium.
Ms D Z RANTHO
Ms P T VAN DAMME
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 30
Ms D Z RANTHO: Hon Chairperson, hon Minister, hon Deputy Minister, hon members, ladies and gentlemen, good afternoon - or good evening. This government has a programme and we are implementing it. The Deputy Minister was here and outlined everything that this department is doing. It means we are not making up stories. [Interjections.] We are not just giving out words; we are doing. We are doers. We have already shown this to you. [Interjections.]
IsiXhosa:
Zininzi izinto esizenzileyo. Nifuna ntoni kanye kanye? Kudala kaloku sisebenza nje sisenza izinto ezibonakala.
English:
The Minister has also clearly outlined her role in the department.
IsiXhosa:
Musani ukoyika kube ngathi ikhona enye into eza kwenzeka. Iphelele kule uMphathiswa ayithethileyo.
English:
Let us also educate you, sisi ... [Interjections.] ... hon member, that the Minister is not giving bailouts to SA Airways but gives guarantees. [Interjections.] Let me educate you on what guarantees are. They provide credibility and surety to any deal that the entity has with a client by ensuring that in the event that the entity is unable to meet its contractual obligation, the state will be liable. [Interjections.] Yes, exactly, it is a guarantee.
Mr K J MILEHAM: Chair, will the hon member take a question? [Interjections.] Will you take a question or not?
The HOUSE CHAIRPERSON (Mr M S Frolick): Order, hon member! It is quite clear that the hon member is not prepared to take a question. Continue with your speech, hon member. Hon member, will you switch on your microphone, please.
IsiXhosa:
Nks D Z RANTHO: Umbono wakho mhle owokuba masiwancedise lama shishini karhulumente asebenze, aziwe ngabantu. Masiwathathe siwase ebantwini abantu bawubone umsebenzi wazo. Ndiyangqinelana nawe kuloo nto kuphela. Andingqinelani nawe kwenye, ndingqinelana nawe kuleyo kuphela.
English:
Hon Michael, the SAA has got a turnaround strategy. Let us as the portfolio committee monitor the implementation together so that we move South Africa forward.
Ms N W A MICHAEL: Absolutely! I agree.
Ms D Z RANTHO: The ANC and its government must build the capacity of the state to pursue the objectives of a developmental state and to ensure that while SOEs and developmental finance agencies remain financially viable and profitable, their primary responsibility is to support and lead in strategic government developmental objectives within a clearly defined public mandate and pursue an overarching industrialisation programme.
State-owned enterprises must be one of the key instruments of the developmental state. This will require a comprehensive transformation of the current policy framework and institutional architecture governing state-owned enterprises. Specifically on the role of state-owned enterprises, for the ANC, they are drivers and agents of economic restructuring to advance the developmental objectives of a developmental state. This requires that we enforce the optimal alignment and co-ordination of mandates and operations of SOEs with the broader objectives of a developmental state.
The broader aim must be to restructure the economy in order to create decent job opportunities, equitable income distribution, quality service delivery and social justice. We must ensure viable ways and means to strengthen public partnerships among and within the major state-owned enterprises.
SOEs were not created to maximise profit or incur losses, but rather to drive the developmental agenda. The mandate of SOEs is to achieve the balance between the required level of self-funding and understanding of developmental projects that the private sector under normal circumstances would not. SOEs tasked with costly developmental mandates must be strategically positioned to generate the revenues to pay the cost of these mandates.
A developmental state using the strength of SOEs must support and direct private sector investment in the productive sector of the economy to stimulate manufacturing and the promotion of entrepreneurship developmental programmes. These will enhance the deracialisation of the economy and the creation of new firms and industries, as opposed to tender dependence.
SOEs must underpin the role of the state in directing national economic development through the mobilisation of domestic and foreign capital and other social capital formation or partnerships to achieve the goals of the developmental state. The overall objectives and mandate of the SOEs is to advance the socioeconomic and political agenda of the developmental state; to promote social cohesion; to create decent jobs; and skills and training development.
There is overwhelming evidence of the poor alignment of SOEs with government policies and agendas in the short-term to long-term period, as well as an inability to comprehend and deliver on evolving government expectations, particularly short-term expectations. The challenges of the political mandate and the expectation of the shareholder have in recent years led to serious misunderstandings between the political authority and the boards of these institutions.
In some instances the conflict is as a result of the Public Finance Management Act, Act 1 of 1999, and now the New Companies Act, Act 71 of 2008, which determine how these organisations should work to comply with the respective pieces of legislation. A legislative framework, defining state ownership and the shareholder mandate, is necessary.
There is a natural conflict between the commercial interests of these entities and the state developmental interest. Several high-profile examples exist of where there is a dichotomy between public interest and the commercial interests of the SOEs. On the whole, South African SOEs seem to have mixed results when assessed against the competing but equally prioritised objectives of economic and sociopolitical objectives.
Although most of the SOEs understand the sociopolitical objectives of the government, there appears to be an element of self-policing in the way these objectives are managed, executed and reported on. On the surface it would seem as if SOEs were meeting commercial objectives because, from a financial statement perspective, they are growing. However, these measures do not take into account the monopolistic position of most SOEs, nor wider GDP-related measures that would provide a better view of performance.
The sociopolitical objectives of government are not clearly articulated nor commonly understood by SOEs and, as a result, a perception exists in some areas that sociopolitical objectives encumber the achievement of commercial objectives. For this reason, it is necessary for the shareholder to give leadership and guidance on what should be done to maintain a healthy balance between sociopolitical and economic objectives, as well as to ensure that such processes can be monitored and measured; to develop state capacity to effectively monitor and evaluate SOEs and implement cutting-edge monitoring and evaluation mechanisms; and implement best-practice guidelines for SOEs on governance, remuneration, performance and other relevant areas.
The NDP outlines a specific role for SOEs to play in the economy as drivers of economic growth, especially in the productive sector. The harnessing of this potential requires focus and dedication, hence the department exists. The fact that the department and the shareholder are dealing with governance issues and realigning the role of SOEs proves the correctness of this strategy. SOEs play a key role in the infrastructure programme of the country, especially in the building programme and achieving its objectives. Again, this requires specific and dedicated oversight.
IsiXhosa:
Siza kuyenza ke ...
English:
... together with the members of the portfolio committee, we will do the oversight. In developing the productive sectors of the economy, the SOEs play a key and a critical role in specific sectors. In developing public infrastructure, SOEs will continue to drive the build programme of government, covering energy, information communications technology, transport, water and sanitation. In addition, they will be fast-tracking social infrastructure, including education, health, human settlements, as well as public amenities and cultural facilities, which will be part of the overall infrastructure.
The political head of the department has shown us or has given us ...
IsiXhosa:
... indlela esiza kusebenza ngayo nendlela ekufaneleke ukuba sisebenze ngayo siyile komiti ejongene nemicimbi yesebe kunye nabo. Siyayixhasa le voti yohlahlo-lwabiwo mali yeli sebe ukwenzela ukuba siqhubele uMzantsi Afrika phambili. Sinabantwana, sinabantu abasithumileyo kwezi ndawo sikuzo, abalindele ukubona imisebenzi kwiindawo abahlala kuzo hayi imisebenzi esephepheni.
Ngoko ke siyangqinelana singulo mbutho ukuba zonke ezi nkampani mazibenoxanduva lokuya ebantwini, zaziwe, ukuze abantwana bethu bakwazi ukubona amathuba okwakha amashishini khona ukuze bakwazi ukuziphuhlisa ngokwabo. Enye into efaneleke ukuba yaziwe yeyokuba la mashishini karhulumente ayingowabantu abathile, awanakuba phantsi kolawulo labucala ngenxa yokuba kufuneka abe ngawabantu abathile. Aza kuhlala ephantsi korhulumente ukwenzela ukuba abantu bonke bakwazi ukufikelela kuzo. Ukuba awekho phantsi korhulumnte asingekhe sikwazi ukufikelela kuwo sisonke. Enkosi Sihlalo. [Kwaqhwatywa.]
The MINISTER OF PUBLIC ENTERPRISES
Ms D Z RANTHO
UNREVISED HANSARD
EPC – COMMITTEE ROOM E249
Wednesday, 16 July 2014 Take: 31
The MINISTER OF PUBLIC ENTERPRISES: Hon Chair, I am not sure whether I want to politic this or not. Let me just very briefly put it in the context of the ANC government's economic policy. We want to grow this economy so that we are able to meet the developmental goals that we have to achieve. The country has never been as well run for all South Africans as it is today, since before 1994. The economy has grown since 1993. To my young comrade in the EFF, the economy grew at -1% in 1993. It has now gone through a dip because there has been a global dip in the economy internationally.
In essence, the country now has to work for all its people. Of course, there are different pressures in doing so. To hon member Marais, you like the youth subsidy, and yes, the ANC has also made a decision for the youth subsidy. However, I would much rather have a Transnet or an Eskom plan to train civil engineers and artisans to grow our economy than do what the DA does in the Western Cape: spend R1 000 per month for somebody working in Kentucky Fried Chicken. That is the wage; the subsidy. I think that we have to deal with equalising and work for equality within our system and that is a very, very, very complex issue because we are reversing many years of apartheid capital in this country.
So, each one of the state-owned enterprises that we have were structured pre-1994 to deal with the poor-white problem in this country. For example, train stations were one of the areas that ensured that poor white people were able to benefit. What we want to do at the moment is to ensure that the majority of South Africans, who are black, also benefit from an economy that grows. [Applause.]
Within that framework, since 1994 no aeroplane has actually been unable to fly because we went bankrupt.
An HON MEMBER: Almost!
The MINISTER OF PUBLIC ENTERPRISES: No plane has been unable to fly. But let me deal with the issue of privatisation. Look at the number of the airlines that came about just post 1994: All of them - Nationwide, Flightstar - have gone under.
An HON MEMBER: Because they couldn't compete! It's anticompetitive! [Interjections.]
The MINISTER OF PUBLIC ENTERPRISES: It is not anticompetitive. One bailout guarantees ... [Interjections.]
The HOUSE CHAIRPERSON (Mr C T Frolick): Order, hon members!
The MINISTER OF PUBLIC ENTERPRISES: What you do not understand is that it is the same problem the DA has with thinking that a blackout is the same thing as load shedding. [Laughter.] A blackout is what happens in India when for three weeks there is no electricity ... [Interjections.]
The HOUSE CHAIRPERSON (Mr C T Frolick): Order, hon members!
The MINISTER OF PUBLIC ENTERPRISES: ... whereas load shedding is when you go about a controlled way of ensuring that you balance the energy and the electricity ... [Interjections.]
The HOUSE CHAIRPERSON (Mr C T Frolick): Order! Hon member, I do not want your continuous commentary. Allow the Minister to respond. You had your chance to respond during the debate. Hon member ... [Interjections.]
An HON MEMBER: She is provoking us!
The MINISTER OF PUBLIC ENTERPRISES: So what? Do you want to hit me?
The HOUSE CHAIRPERSON (Mr C T Frolick): Hon Minister, just wait a minute. Hon member, I am instructing you to keep quiet now and allow the Minister to complete her response to the debate. I did not recognise you to make an input and I do not want your running commentary. Continue, hon Minister.
The MINISTER OF PUBLIC ENTERPRISES: Thank you very much, Chair. I am committed to making all of these state-owned companies work with me in order to be well run, as they are able to be, and that is what we are committed to doing. In fact, if I did not hear the ANC today, I would have thought there were only two SOCs in my portfolio and that is Eskom and SA Airways. There are eight of them, and one will be leaving quite soon. We are doing this to make sure that we are able to grow the economy.
The hon Letsatsi-Duba raised the issue of the Government Shareholder Management Bill. That will come early next year. I want to say this year, but it will come early next year because it has to go through a series of discussions. The Shareholder Compact is the performance agreement between the state-owned companies and the shareholder.
I am unhappy with how the two SOCs have done thus far. They did not reach at least 70% of the performance agreements we have. Anything below that does not work for me, because it means that you are not able to meet something you have agreed to. That is something we have to deliver on. I have dealt with the issue of privatisation. But I also want to say that I do not want to grow the economy for just individuals. To me that is privatisation. Besides that, just look at the New Zealand Airline and Australian Airline, hon member Van Damme. These are long-haul airlines. Both of them were privatised and both their privatisations had to be reversed for the state to assist because they are long-haul destinations.
I am asking the standing committee to let us engage further on these issues so that we can deal with the matters in a direct way. In fact, in 1999, this South African government called on private bidders to come into Eskom, and nobody came. Yet the opposition fights for the Independent System and Market Operator Bill!
What we need to do, hon member Greyling, is to know what the end state of energy is. If it is the Independent Services and Market Operator Bill in its original form, then that is what it will be. But if it is not, whether you are in opposition to it or not, we will not be dealing with it in that kind of way. We must know what the end state is. Therefore, in your energy committee, you will see the integrated resource plan, the IRP, coming on line quite soon.
To the hon Singh and many other members, I welcome engagement with the department. Also, to the hon member Madisha, I am happy to answer all those detailed questions, but I think what we need to do is to deal with them in the standing committee or portfolio committee, because that is where they should be discussed. In addition, you could write to me and I could then respond to them.
I actually agree on the issue of salaries and that is why we have decided that the Government Shareholder Management Bill deals with the issue of salaries. But it is also linked to the Shareholder Compact because if they do not meet the targets agreed on, we will not be able to give them bonuses. If we changed salaries at this stage, that would be against the labour laws, especially for management. Even though the request was for much higher, 5% went to Eskom for the board members. I believe you must keep it at a level that makes everyone feel very proud. Hon members, thank you very much for participating. [Applause.]
Debate concluded.
The Committee rose at 18:52.
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