Hansard: NCOP: Unrevised Hansard
House: National Council of Provinces
Date of Meeting: 19 Oct 2017
No summary available.
THURSDAY, 19 OCTOBER 2017
PROCEEDINGS OF THE NATIONAL COUNCLI OF PROVINCES
The Council met at 14:02.
The House Chairperson: Committees, Oversight, Co-operative Government and Intergovernmental Relations took the Chair and requested members to observe a moment of silence for prayer or meditation.
HOUSE CHAIRPERSON (Mr A J Nyambi): Hon members, I would like to announce the appointment of hon Oliphant. The member was sworn in today. She is not in the House. I will do that officially when she is in the House.
HOUSE CHAIRPERSON (Mr A J Nyambi): Hon members, I would like to announce that the Programming Committee has agreed that the Minister of Tourism will respond to oral questions on Thursday, 26 October.
Therefore, the House will not deal with the item today. Let me take this opportunity to officially welcome the Ministers and Deputy Ministers.
Ms T J MOKWELE: Hon Chair, on a point of order: It has come to our attention that Ministers don’t attend to the House, after we have approved the programme and after we have prepared for the order of a particular department. We are raising this concern before you. Look into the matter. Let it be the last time. It happened with three Ministries, if I am not mistaken. We allow it for Tourism and it will be the last time. We have approved the programme yesterday. We were supposed to be informed about all the amendments at the programming meeting. So, I am pleading with you that this mistake never happen again.
HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Mokwele, the issue will be attended to accordingly at the programming meeting.
Mr J P PARKIES: Chair, we must clarify it. In this case, the Minister was not at fault. It was on the basis of the overseas trip
of the select committee. Hence, we collectively agreed that we will postpone it to another session. It is not because the Minister was not available.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon members, I am not going to allow the plenary to be about the programming. It will be addressed at that level. Thank you for the clarification.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Let me officially welcome hon Oliphant. This is the new member that has replaced Mr Manapole from the Northern Cape.
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): Hon Chair, the annual report considered at the Denel 2017 annual general meeting, AGM, was valid, as it had a properly issued audit report dated 30 July 2017. This has been signed off by the external auditors, Sizwe Ntsaluba Gobodo, SNG. The issue of whether the 30th of July ... By 3 October, SNG came back to Denel to tell Denel that they had to add a sentence into their report. It is now in an arbitration process.
I have called a meeting with the Auditor-General’s, AG’s, office, with SNG and Denel, to try to resolve this matter. Therefore, based
on the above, I am not in a position yet to take action against Denel. I must give them a fair chance and a proper opportunity to reach an agreement in terms of the arbitration.
So, assertion that an incorrect annual report was tabled to Parliament is incorrect and premature at this stage.
Ms T J MOKWELE: Hon Chair, hon Minister, I hear you say that you are going to give Denel a fair chance to deal with the matter. My question to you is: How long will you allow the process to continue? As a Minister, how long will you act on this matter? How long are you going to give Denel a chance to do that? I wish I had another chance to ask a question because I will have a follow-up question on whatever you are going to say. Chair, will you allow me?
The HOUSE CHAIRPERSON (Mr A J Nyambi): I am happy that you understand that it is a supplementary question, not supplementary questions.
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): Hon Chair, hon member, I actually gave them until Tuesday, this week. So, they had this week in which to report this matter to me. They have brought me a report. It is not a conclusive report. So, now it means that I
have to go to the second phase and then in a week’s time, I would have resolved this matter. I am sure I will send the hon member a letter to tell her how I have resolved the matter. Thank you.
Mr J W W JULIUS: Chair, Minister, you said that it was not an incorrect report submitted to the portfolio committee. I think it was last week Wednesday. The Auditor-General informed that this was an incorrect report because other things were omitted and Denel refused to add them to the report. Now, just like KPMG, we now have SNG with these doggy audit reports. Do you agree with the AG or do you agree with SNG or Denel? SNG, concurrently with the AG, changed the report afterwards. Who do you agree with?
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): The hon member is getting ahead of himself with all his Gs. The hon member must know that I will only take a decision once the process has actually walked its full process. You cannot just make a decision. I am not overseeing a spaza shop. I am overseeing a big state-owned company.
So, two weeks are enough time in which to deal with the matter. You must remember that AGMs are important institutions. It is where the annual reports are tabled. When an annual report is tabled, it means that it has been approved. So, anything that happens after that, I
have to take cognisance of and I have to look at it and I have to arbitrate it. An AGM is where we assume that that is what is factual and the right thing.
So, I am in an arbitration process with the AG’s office, SNG and Denel and I am hoping that I will be able to tell you who I am now deciding with, within a week’s time.
Ms E PRINS: Hon Chair, Minister, thank you for the response. Can you ensure this House that action will be taken against the people, after this intervention that they are busy with now?
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): Yes, of course, hon member Prins. If it is within the state-owned company, then we will ask the board to take action against the company because annual statements are actually statements that are drawn up by the executives of companies. Thank you.
The MINISTER OF PUBLIC ENTERPRISES: Eskom is not actually aware of a request of R3 billion capital injection. In fact, I’m not aware of a R3 billion capital injection so, if I had more information, guidance or reference to this request in order for me to be able to respond
to this question. However, it is a very, very good question because it does speak about the issue of state-owned entities, SOEs, industries and what is it that we do when an SOEs as industries.
Now, there are more than ... I know members in this House who have called me or the chair of the portfolio committee has called me about being stark on the aeroplane at the airport because of the SA Express. SA Express is one such company.
What we do is that we get them to draw up a business case and that business case has to have a financial basis for how it can be met. Therefore, the department, National Treasury and the company go into levels of discussion to look at whether it is the company building in greater prudence within its own spending patterns and to see whether we are able to get the company to come in line. Sometimes it means that very stringent prudence actions that the company needs to take and then we look at what the funding model should be. I must say that after Eskom’s R23 billion bailout I haven’t had such a problem yet. I do have that problem in relation to SA Express at the moment. That is also another problem because SA Express can’t exist without SA Airways, SAA.
Therefore, it is in us bringing the two companies with Mango together that the financial basis will be stronger and because of
that there will be greater economies of scale within the airline or the aviation industry within the country. Thank you very much.
Ms E PRINS: Chairperson, through you to hon Minister ... [Interjections.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): It is fine. Hon Parkies is fine, hon Khawula. No, we are fine, hon Prins. We are not going to fall ... it is covered.
Ms E PRINS: Chairperson, my question to the Minister is how far is the merger of some SOEs which are not profitable, the plans of the merging of the SOEs that are struggling ... [Interjections.] ... whatever, that are struggling with finances, that are financially
... what are you doing if a plane in place ... [Interjections.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Prins, can you be closer to the microphone.
Ms E PRINS: Is there any plans in place to merger some of those entities that are not profitable? Thank you.
The MINISTER OF PUBLIC ENTERPRISES: Actually, the hon Prins hasn’t asked about the specific area of mergers, but she does raise a wide ranging question that covers probably the 700 state-owned companies and entities that are within my portfolio. Therefore, there are many mergers that could happen out of all these state-owned companies. In essence, the one big merger that could happen is the merger of the airlines, but there could be other mergers as well. That is part of the state-owned companies, SOCs, and the Deputy President chairs that. It is going to take probably years before we get to that process. At this point we are dealing with the airline merger. It is led by the National Treasury and we are now having a report from banks, the company that actually worked on that. As soon as we are able to bring the two companies, we want to try and stabilise all the companies before we actually put them into a joint venture. We will be able to have done that.
However, having said that I don’t want to mislead the House by not telling you that there might be other mergers as well. We haven’t made that decision yet. We have to look at all 700 companies eventually. We are now looking at the 22 companies that are scheduled to companies within the sector on company time being.
Ms B A ENGELBRECHT: Hon Chair, through you to the Minister, to ensure that Eskom remains in a strong financial situation, it is very important to ensure that the merger cost drivers are kept down. I would like to find out from you, what would your plan B to ensure that the staff costs are reduced, the debts costs are reduced and consultants is reduced and, of course, the big challenge that we have is the municipal debts which is rising. What are your plans to reduce these issues? Thank you.
The MINISTER OF PUBLIC ENTERPRISES: I hope I have an hour in which to answer that question. However, if I start to the last one first, because I remember it better after 50, in terms of the municipal debts we have the team with the Department of Co-operative Governance and Traditional Affairs, SA Local Government Association, Salga, ourselves, National Treasury and Energy, and then each one of the municipalities. What Eskom has done up until now is to reach agreement with all the municipalities as how to pay. However, members here actually represent provinces. You know in your own provinces that there are municipalities that will never be able to afford these debts.
We have looked at a number of financial ways to get them out of it. Salga now put forward the fact that they want to be distributors
themselves in terms of the Constitutions. Again, not all the municipalities have that capability to do so. Some municipalities have paid back some of the money, others haven’t yet paid back and others are just not able to pay back. They don’t even have an economic base within the municipality and they don’t have a business in this municipality that can carry them, for example. At the moment though Eskom has made a profit of about R1 billion this year, just under R1 billion I think it is nine hundred and something million.
The year before, they made a profit of R5 billion. The reason why the profit was lower this year is that more of the bill programme, the independent power producers, IPPs, had to be paid for. That is why it is about R4 billion less. However, later I will deal with this issue around irregular expenditures and those kinds of things because I think that is also important part of it. The way we oversee the company is through the shareholder compact. The shareholder compact has a financial component where we see the finances on a quarterly basis and I have been having in my unit overseen what Eskom is doing. They have driven down the cost quite well over the last three years. In fact, that is part of why in 2015 Eskom was actually on the verge of bankruptcy.
In 2015, we were able to pull Eskom out of that through the
R23 billion bailout, but more importantly, as well as getting Eskom to have its own business productivity programme, BPP, its business processing dealt with so that they cut down on costs. For example, you have probably seen in the media recently the costs of the chairs. I saw that as well and, of course, it is the largest company in the country so it as to purchase chairs, but does it have to purchase shares at that price? That is a question that you have to ask. The only thing as an oversight department that is what I see as my responsibility to help them to drive down the cost. So, if they do business there ... [Interjections.] Sorry ... [Interjections.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Minister, you are protected. Hon Julius, order! I’m sorry, hon Faber.
The MINISTER OF PUBLIC ENTERPRISES: Sorry, I got a big shock that I got mocked from the side. If they have any of these issues, we have to deal with the matter. It is not in financial prices at the moment. We continuously have to ensure that they stay where they are and I can tell that on 15 January 2015, they were in the financial prices, they are not there now. Thank you.
Mnu L V MAGWEBU: Enkosi Sihlalo weNdlu, ndiyabulela. Mphathiswa ndicela ukuba apha kuwe.
This past Sunday, in the Sunday newspapers, an article was published that is very disturbing and it borders on your integrity and your fitness as the member of the executive. That article indicated that your partner and your long-time girlfriend received all tenders from Eskom despite having no expertise in the industry. Now, as you are standing there, could you tell us, as Members of Parliament and the fellow South Africans at home, whether this article is true or not. Thank you.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Magwebu, you know ... order members! Hon Magwebu, you know that the supplementary question must be linked to the original question. Your supplementary question
... [Interjections.] ... let me leave that to the hon Minister if she is going to comment about it. Hon Minister!
The MINISTER OF PUBLIC ENTERPRISES: I have delighted to respond to that question, hon member, because you probably didn’t read the newspaper at the night and the next day where both of those issues have been refuted. I have actually taken that matter to the press
ombudsman because I really do think that unfortunately my own character and my integrity were damaged very greatly in that question. In fact, as I walked in here, somebody asked me, I’m sure it is somebody here asked me the question about the oil deal. Now, it is not true. I have refuted the question and the issue. There were two articles after that that were also on the newspaper which I think you missed that also refuted that issue ... [Interjections.]
An HON MEMBER: Or he read selectively.
The MINISTER OF PUBLIC ENTERPRISES: Yes, or you read selectively.
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): Maybe you and Donald Trump think is perfect news. I don’t and I am not like Donald Trump and you. We know the Trumpets are here. In terms of the Electricity Regulation Act, only National Energy Regulator, NERSA, can determine the tariff that ESKOM may charge its customers. Eskom is required to apply for its allowed revenue in terms of the Multi year price determination, MYPD, methodology. This is what has been done. Thank you.
The MYPD methodology is developed for the regulation of Eskom’s required revenues. It forms the basis on which the NERSA will evaluate the price adjustment applications received from Eskom. The MYPD was first introduced in 2006 for implementation from the first of April 2006 to 31 March 2009. It is a cost of service based methodology with incentives for cost savings and efficient imprudent procurement and overall operations by the licensee and in this case the licensee is Eskom. The methodology also provides for services quality in centres for Eskom. MYPD runs concurrently with Eskom’s financial years.
In developing the MYPD methodology, the following objectives were adopted: to ensure Eskom sustainability as a business and limit the risk of excess or inadequate returns, while providing incentives for nil investments; to ensure reasonable tariffs ability and smooth changes over time; to appropriately allocate risk between Eskom and its companies. Eskom carries some risk and clients carries some risk; to provides efficiency incentives without leading to unattended consequences; to provide systematic a basis for revenue tariff setting and to ensure consistency between price control periods.
So, it is really about regulating the relationship between Eskom, its client and how it is able to raise or buy back what it has put into the company reasonably. So, for example if Kusile Unit one has been launched, and then there is 800 Mega-Watts they sell certain amount of megawatts and they allowed to claw back from the customer a certain amount of money. Not all the money. They can claw back a certain amount of money with regard to the customers. Thank you very much.
Mr J W W JULIUS: Hon Minister, I think it was a very academic answer, but let us get practical in our state owned enterprises, SOEs, just like the SAA bailout, taxpayer’s money is being spent every year for this huge amount of bailouts. Ordinary taxpayers in South Africa yet they never set foot in a plane but they must pay for SAA that doesn’t make money and is the same now with Eskom.
You want an increase, and currently you are producing too much electricity and that a fact which is resulting in an oversupply of electricity. As we all know, we can’t store this electricity because an everyday is a living to a waste. While you asking an almost 20 percent increase on the cost of electricity next year, currently electricity is so expensive but municipalities are going bankrupt even though the sale of electricity forms the bulk of the income and
you said it yourself that some municipalities will never be able to pay.
It causes a leafier cave. In other words, if it is too expensive, people will go off the grid. We will sell less electricity and the price will still increase and increase which have a very negative impact on our economy. They rapidly increase electricity prices by 19,9% not only will less people be able to afford this vital service but the non-payment of electricity will push municipalities into a deep dark well. Therefore, can you justify based on the severe consequences this will have because municipalities, I can guarantee you will collapse?
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Julius?
Mr J W W JULIUS: How can you justify this increase based on the consequences that it will have on local government and the economy at large? Thank you, Chairperson.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Julius?
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): The hon member tries to confuse the public consistently when you say Minister how
can you? Eskom goes and makes application. The Minister doesn’t make application. You must remember that I am not in charge of Eskom. I have oversight responsibility. I am sorry that you don’t read your laws. I am very sorry that you don’t read laws. I can’t be held responsible for that.
If you read your law and it led me take you there. Go to the companies Act. The Minister doesn’t apply for an electricity increase. Eskom at least applies for an increase. The fact that you are unable to understand, it is not my problem but having said that you make some very important points and I think that I ... No I don’t play politics with people’s life. You see, I don’t do that because I really feel very strongly.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Sorry hon Minister let me take the point of order.
Ms T J MOKWELE: On a point order, Chairperson. Can you tell the Minister that whatever that she wants to say must say it through you?
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): Yes.
Ms T J MOKWELE: If it is not like that we will exchange words with her.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Mokwele?
Ms T J MOKWELE: We will do that. We have that power to do that.
The HOUSE CHAIRPERSON (Mr A J Nyambi): No, hon Mokwele? Hon Nthebe, you are out of order.
Ms T J MOKWELE: No, it doesn’t mean she is capable if she is making noise.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Mokwele? Your point of order is sustained but there is no need after you have made your point order to make some other remarks. Your point of order is sustained. Hon Minister you are speaking to the NCOP through the Preceding Officer. You can continue hon Minister and you are protected.
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): I am very sorry, hon Chairperson. The issue is that the hon Julius makes a very important question. We must get to the point where the regulation of
electricity prices are within the boundaries and that is why we have NERSA. NERSA manages that process, so that it doesn’t do what the hon Julius says it will do. It will go sky high and people won’t be able to afford it. You know, all of these kinds of things that are not outside of people’s management power.
So, you must remember that last year Eskom only got two percent from NERSA. That is part of regulation. That is what this state has put in place to bring only two percent increase. The year before that, they got eight percent, so they have spent the 19% and that is what they want to claw back.
So, NERSA brings them down and say yes, you have spent that 19% but we say this year because of this economic and this social factors you will only get two percent or you will only get eight percent.
You must go and also equate yourself with electricity regulation Act because it is actually in there. It says how it regulates it so that this government doesn’t want our people to be poor. This government has put in place a number of policies across the board to ensure that we are able to pick people out who are in those positions.
The HOUSE CHAIRPERSON (Mr A J Nyambi): I am looking at hon Dlamini and I am saying hon Zwane. Sorry hon Mangethe.
Ms L C DLAMINI: Hon Chairperson, my question is that the recent statistics by Statistics SA indicates that more than 50% of our people live below poverty lines. With this approval, I just want to check if there are plans in place to assist those who can’t afford?
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): Remember we are not distributors in all; the municipalities are the distributors, so there is a planning taking place and that is the direct payment from National Treasury to the municipality for indigency and that is how we ensure that those who are very poor can actually apply for indegency. And I think what we should be doing collectively is to ensure that all our municipalities actually apply for this indigency because some municipalities actually don’t apply for it and so people don’t have access to the indegency policy.
So, we must just try and work on that as well because sometimes municipalities payback something like 30% of indegency policy monies that they not been able to spend or they don’t use within their municipality or people don’t know about it within the municipalities. You gave me an idea and it is something that we also have to try and focus on. Thank you, hon member.
Ms Z V NCITHA: Chairperson, let me appreciate the response from the Minister but what I would like to know from the Minister is that if NERSA set down the tariffs, does the municipality have a right to have an increase over and above what is set down by NERSA and is it legal to do so?
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): Yes, that is why when Eskom applies for its full amount, it never ever gets the full amount it applied for. It hasn’t got the full amount since 2001 I think and that is because the municipalities and the National Treasury gives the municipalities the upper limit it can apply for and this year National Treasury gave them upper limit of eight percent. Actually, NERSA will try and find a way not to bring both that first people over the poverty line, but municipalities do increase it themselves.
Mr O S TERBLANCHE: Hon Minister, you explained to us quite nicely what your responsibilities are. My question is despite the fact that you said that you are not in control of the price increase and so on, as a responsible Minister of this country, in the first instance, are you concerned that the prices are increasing at the rate that people can’t really afford?
Secondly, are you concerned ... [Interruptions.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Terblanche, it is a supplementary question, not supplementary questions.
Mr O S TERBLANCHE: Okay, I will stop there, but I want to know if the Minister ... [Interruptions.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Yes, allow the Minister to respond to your question.
Mr O S TERBLANCHE: ... is concerned about job creation and people who can’t work. Thank you.
The HOUSE CHAIRPERSON (Mr A J Nyambi): You have made your question. Let’s allow the Minister to deal with your question.
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): You know hon ...
The HOUSE CHAIRPERSON (Mr A J Nyambi): Order Minister! Sorry Minister. Hon members I don’t need your assistance. You are creating an unnecessary confusion. I am assisting hon Terblanche and the hon Minister is going to respond to the question.
Mr J W W JULIUS: My apologies hon Minister but if you make a ruling you say members, say ANC members.
The HOUSE CHAIRPERSON (Mr A J Nyambi): No, you are out of order. Take your seat hon Julius.
Mr J W W JULIUS: Because you refer to me and I am not out of order.
The HOUSE CHAIRPERSON (Mr A J Nyambi): No, Julius! What I am saying is applicable to all members of the NCOP. Hon Minister, can you continue with your response?
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): Hon Chairperson, you know when we took over in 1994 when we came into power, because we are a carrying government, it was the first time that we could increase electricity to poor black people’s homes. Now, you must remember that pre-1994 that couldn’t happen. There were 5 million households, largely white who had access to electricity.
This concerned government has increased that to 11 million households. The answer I will give you is that, does that not tell you that we are very concerned?
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Minister, we now come to Question 284 asked by hon Singh, in terms of the Rule he is not in the House and hon Zwane will be standing in for hon Singh.
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): Chair, in instances where an individual employed at a state-owned company within the Portfolio of the Department of Public Enterprises is found guilty through a process of investigation as conducted by the state-owned company. It is the responsibility of the respective state-owned company to follow the necessary due processes in order to institute criminal proceedings against the individuals concerned in accordance with the entity’s own fraud and corruption management framework and to ensure that such a framework is complied with by the employees.
The state-owned companies report to the department on a quarterly basis through the quarterly performance report on any cases of fraud and corruption that the entity is handling for the period under review as well as tabling a report on irregular, fruitless and wasteful expenditure as part of its integrated annual report and the integrated annual report is a public report so they report that, normally you will see them on television but they normally report it into the public space at the company’s general meeting and then ultimately it comes to Parliament. Against this background, as
Minister, I do not pursue criminal charges against an individual directly except when responding to matters reported directly to the department through whistle-blowing cases made by the general public or employees within the state-owned companies themselves. Thank you, Chair.
Ms L L ZWANE: Chairperson, thank you Minister for the answer that you have given because sometimes it is very easy to confuse the powers and functions of the Minister versus the powers and functions of the state-owned enterprises, SOEs, and the boards thereof.
Nonetheless, I would like to seek further clarity Minister that, in terms of the co-operative governance model of the SOEs, can the Minister intervene if there is a need to intervene outside the board of that SOE or the board is the only conduit that the Minister can use to intervene in certain, specific matters?
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): Thank you very much hon member, I will respond to this in a later question but I have intervened now. Remember I said earlier that there are a number of issues that have come to the fore for the state-owned companies in my Portfolio and so I have appointed a Special Investigative Unit, SIU, it is now with the President and the President must sign off on it. I have asked for an overriding investigation into two areas
specifically, into procurement practices and also into contract management because that will cover all the matters that are bubbling within the public space. So the issues around Trillian, McKinsey, all of that will be part of the overriding investigation and also looking at all the little investigations, I do not know if you saw on television yesterday with what is happening in the portfolio committee.
I mean there have been investigations into Eskom for example since whenever but all of those investigations we have got to bring it together and see what are the trends and practices within the company that should be dealt with and that is what I have done now with the SIU. But generally, the board is actually responsible for the running of the company but in order to deal with the issues at the moment, I have dealt with it in terms of the SIU. Thank you very much.
Mr F ESSACK: Chairperson, thank you for the opportunity, hello, good afternoon Minister. I hear what you are saying and I take in cognisance and recognise exactly what you are saying as far as this question is concerned but Minister the department has a record of officials – as you know well – that are charged with misconduct resigning before the department’s disciplinary actions have been
concluded. So first, if these charges are not then taken further by the department then these ex employees are then obviously not blacklisted by the department and finally, they even go on to claim their pensions, you are fully well with me on this one, what measures then, hon Minister I must ask, are being currently undertaken to stop this practice before their pensions are paid out? And I am sure that will be easy for you to handle hon Minister.
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): I am so grateful that you are giving me easy questions ... [Interjections.]
Mr F ESSACK: You are welcome.
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): ... thank you very much. Hon Chair, I must tell you that the hon member has now turned to another matter which is not actually in this question so I would like him to put that question to me in writing so that I can respond to him in detail because the details of that question they are ... [Interjections.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Essack!
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): ... they are about
... we are talking about 10 years of activities so the details are long and if you put that on paper for me I will be delighted to respond to you. [Interjections.]
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): I’ve been in the opposition too long. Hon Khawula from the IFP asked about whether R922 million includes R229,8 million relating to the prior year, which will then make it R254,8 million. The 229 million arose due to tax compliance requirements within Transnet for foreign vendors with no local presence in South Africa.
Transnet disclosed R229,8 million as under investigation in the prior year as agreement with SA Revenue Service, Sars, and National Treasury had not yet been reached. However, this was subsequently condoned by National Treasury as it was out of Transnet’s control. A formal process going forward, has been agreed with Sars and National Treasury on how to treat foreign vendors that do not operate in the country.
Eskom notes that the irregular expenditure balance at the end of the year, has increased from R348 million in 2015-16 to 2,9 in 2016-17
as shown below, which is R3 billion. This is a net of amounts condoned and not recoverable. The opening balance in the current year, they had R348 million of irregular expenditure from the year before. It is also to do with foreign vendors. The current year’s expenditure is R4 billion.
I’m not sure how much detail I should give you, but let me speak on a bridge of preferential procurement Policy Framework that was R95 million. Tender process not adhered to; commitments made before approval amounts to R549 million; quality management amounts to R1,5 billion; tax clearance certificates for international suppliers was R1,4 billion; noncompliance with the Construction Industry Development Board, CIDB, regulations was R97 million; and bridge of Public Finance Management Act, PFMA, the use of sole source and tender process not adhered to. There were three incidents of irregular expenditure totalling to R96 million where use of sole sources could not be adequately justified. There were 11 incidents of irregular expenditure totalling R189 million where approved supply chain management process was not adhered to.
So, you see my justification for investigating procurement and contract management is very justified if we just look at the
irregular and wasteful expenditure between the two large state owned companies. Thank you very much.
Mr M KHAWULA: Ngiyathokoza Sihlalo ohloniphekile.
Thanks hon Minister, there is so much confusion in the country. One is not sure whether by the end of the day we will still having the Deputy President or by the end of the day you will still be Minister of Public Enterprises. The response you. . .
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Minister and hon Khawula...
Mr M KHAWULA: Thank you Minister for the response that you have given me. The Minister has spoken on the issues of bridge of procurement, Preferential Procurement Act, irregular tenders, tax clearances not submitted, noncompliance, bridge of PFMA, rules and processes of procurement not adhered and so forth. Now, hon Minister, as South Africans, we have got Ministers of Departments who are responsible on our part as citizens for ensuring that they monitor compliance with all these issues. When these things are
happening under your watch Minister, how should South Africans really have confidence in you as the Minister and other Ministers? I understand you said there are boards dealing with these things, but, as South Africans we have a Minister who is our representative to monitor that all these wrong things don’t happen.
Secondly, when these things happen they take too long to be sorted out. We are talking here, especially Eskom . . . [Interjections.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Khawula, don’t spoil it.
Mr M KHAWULA: I’ve got two minutes.
The HOUSE CHAIRPERSON (Mr A J Nyambi): It’s a supplementary question.
Mr M KHAWULA: Yes, I’ve got two minutes. The challenge here is that it takes years before government can sort out whatever wrongs that were there and some of them end up not being sorted out. My question is how we should have confidence in government when these things are let out to go . . . [Inaudible.] and they are not attended to?
The MINISTER OF PUBLIC ENTERPRISES (Ms L Brown): Hon Khawula will know that you only really know what sits in the financial package at the end of the financial year and that’s why we have checks and balances in place. We will then know what has gone wrong and fix it. There has been a number of recovery plans within both Eskom and Transnet and it includes disciplinary measures and they are in the process of being executed because some of these matters have been violations of PFMA, which is an absolute basic.
We’ve also gone a step further and dealt with the matter in terms of rolling out PFMA training to all operating divisions. Remember, Eskom has 42 000 workers, its decent life spending and Transnet has
61 000 workers. We included of PFMA training in new employee induction manuals; forensics and procurement training on procurement processes; additional data analytic indicators developed; and emphasis on contract management.
A specific total of R158,6 million relates, for example, to fraud, out of the sum that you have given me in terms of Transnet. Now, that will potentially be recovered by Transnet because that’s what it has to do. In essence, a Critical Financial Control Step-up Initiative that was launched in December 2016 to review the control gaps emanating from year end PFMA findings and developing and
implementing solutions improve the control environment. Updating all the relevant documents such as the Control Frameworks, the Policies and Procedures and most important, is ensuring that the staff is continuously trained to ensure that we are able to deal with these issues.
But bigger than that, I still believe, and that’s the reason I went on the SAU process, that some of these things are systemic within the state-owned companies. It hasn’t happened because I am the Minister, it happened when somebody else was the Minister, a long time ago. Eskom is almost 100 years old. Remember Spoornet? It was there when you were a little boy, running around on the railways line. It happened a long time ago. I think that some of the processes are processes that must be uprooted once and for all.
This legacy that I want to leave, it’s a legacy that starts a new path of dealing with our state-owned companies. Thank you.
Ms Z V NCITHA: Chair, although the Minister has partly touched on the follow-up that I wanted to ask because it was more about systems put in place to ensure that such occurrences don’t repeat themselves. She partly touched on them when she was responding.
HOUSE CHAIRPERSON (Mr A J Nyambi): Okay, you are fine?
The MINISTER OF PUBLIC ENTERPRISES: The matter of Eskom’s payments is receiving attention and forms part of investigations undertaken by several relevant state institutions, and such investigations are still in the early stages.
The Special Investigating Unit, SIU, is one of the state institutions empowered by legislation and tasked in dealing with the issues of corruption. The department has a memorandum of understanding, MOU, with the SIU to ensure that these matters receive urgent attention.
The motivation submitted to the hon President Jacob Zuma requests a proclamation to be issued in order to authorise the SIU to, among others, investigate irregular payments or procurement that would facilitate, through the improper conduct of employees of Eskom, with undisclosed or unauthorised conflicts of interest, or any other person or entity in order to unduly benefit themselves or others through corrupt or fraudulent means.
In addition, the parliamentary Portfolio Committee on Public Enterprises commenced with its hearing aimed at further investigations into the allegations of corruption in Eskom’s affairs.
Once all these investigations are concluded it is inevitable that when there are allegations of wrongdoing against any official individual, criminal charges will be laid against that person and the law will take its course. Thank you.
Mr J W W JULIUS: Thank you Chair. Hon Minister, just to use up my two minutes; based on your previous explanation that you only conduct oversight over state-owned enterprises, SOEs, I think with loud applause by the ANC, I must explain something to you. As a Member of Parliament, I hold you accountable. I cannot go to the National Energy Regulator of SA, Nersa, and ask questions. I cannot go to Eskom and ask questions. I put my questions straight to you Minister because they fall under your watch. As a Member of Parliament I think you would also understand that. [Interjections.]
Minister, I don’t know whether they want to answer on your behalf or he wants your position on what ... but we have seen investigation after investigation in SOEs leading nowhere. However, you also have
a right. There are allegations, and just as you said now, whether the allegations are there, criminal charges will be laid. Why don’t you just lay criminal charges? These investigations are all there just to prolong the process and defend the corrupt. You have a right to lay criminal charges because there are allegations already. Why do you have to wait for investigations Minister? Will you lay charges against the guilty parties? There are allegations.
The MINISTER OF PUBLIC ENTERPRISES: I can’t ... I’m neither a
prosecutor nor the police nor a judge. What will happen is that we will ... Look there are people ... We have done small investigations that we can cover in the company and there are people who are facing disciplinary hearings at the moment. So we have done that in relation to the company you have raised with me.
However, the bigger financial investigation must happen. We have got to give people a fair chance and we have got to hear from them what they are saying. At the moment I can’t read the newspaper and the allegations are dealt with in the newspaper. So, I can’t just lay charges against ... You must remember, we are dealing with a company here. The company is Eskom, and so you don’t just go and lay charges against all the people who have business with Eskom. You have got to investigate whether there is any ... [Interjections.] Who says
that? You have made that decision. So we have to actually ensure that we investigate and if there is prima facie evidence, that we take the process forward. That is what we are doing at the moment.
Ms Z V NCITHA: Chair, whilst appreciating the response from the Minister that she is not the person who is directly involved in laying criminal charges or dc, what I would like to know from the Minister is whether she gets regular reports of such cases that are dealt with, with boards of entities. Thank you.
The MINISTER OF PUBLIC ENTERPRISES: Thank you very much hon member. I actually get quarterly reports of all the investigations into all the companies and all the individuals who are investigated, and for the two large companies they are actually quite many.
Mnu L V MAGWEBU: Mphathiswa ndicela ukubuza.
Minister, as you know, for law enforcement agencies to successfully investigate these cases they will need co-operation from officials, and in this instance officials from your department and from entities that you have an oversight role over.
Now, would you commit to ensure that the officials in your department co-operate, and encourage their co-operation so that the police can successfully and speedily investigate these matters, and bring them before the courts of law.
The MINISTER OF PUBLIC ENTERPRISES: Of course.
Mr M J MOHAPI: Thank you very much hon Chair. Hon Minister, we have observed that there are allegations of wrongdoing in and around the country. However, one has also observed the possibility where people are abusing the little information that our communities have with regard to the accuracy of the information.
What is it that the Minister is planning to do to ensure that our people are not fed wrong information for the mere fact that people want to give a bad reflection of the government of the day?
The MINISTER OF PUBLIC ENTERPRISES: To tell the truth. We must tell the truth. We must tell communities the truth about what is happening. There is a narrative that has been decided elsewhere and that narrative said ... In fact, everybody in this ... Not everybody but a large number in this House thinks that all the state-owned companies, SOCs, depend on loans. They can’t be run anyway else.
They are run on loans. There are many, many SOCs that do not depend on loans. There are many, many SOCs that do not even have guarantees, but because you say it often enough it sounds like SOCs are all dependent on loans. I am just using an example. [Interjections.]
A company like Transnet actually doesn’t have a guarantee. It has a smallish guarantee to just see it through but it actually lives off its own balance sheet. Thank you.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Thank you hon Minister and thank you hon Khawula for showing respect while the Minister was still responding. I indicated that I had noticed you. I’m recognising you now.
Mr M KHAWULA: Thanks hon Chair. My point of order is as follows. Why is hon Mohapi defending the criminals? [Interjections.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Khawula? Hon members, order! Hon members, allow me to thank hon Minister Brown, the Minister of Public Enterprises, for availing herself to answer Questions. Thank you Minister. Let me take this opportunity to invite the Minister of Science and Technology now.
The MINISTER OF SCIENCE AND TECHNOLOGY (Ms G N M Pandor):
Chairperson, thank you for the opportunity to respond to questions in this House. With respect to the question from hon Sefako, I think it is important to say that the private sector makes a significant contribution towards innovation in our country in a range of areas. For example, banking services are changing and improving everyday.
Many of the changes that we see are innovative. The services we receives in our homes; the products that we buy on day to day basis. So, there is a wide range of innovation. However, it’s very difficult for our department to be able to give a definitive indication of the contribution that the private sector is making to innovation. We would have to go from private sector business to business - identify product to product - identify new biometric process and other changes and then itemising that, give you a response.
I am going to refer Chairperson to two instruments that we have as the Department of Science and Technology which serve as an indicator of the contribution and the investment by the private sector to Research, Development and Innovation, RDI.
The first one is that annually we conduct a national survey on research and development expenditure in South Africa. The survey records both public and private sector investment in RDI. And it gives us a very good picture of the contribution government is making and that which is being made by the state in research and development investment. Now from the last survey, there is a concern that we are beginning as the public sector to be outpaced by the private sector. So we need to up the public sector investment in research and development because that’s what helps to put a country on the leading edge of innovation.
The second important instrument is a facility that is available to the private sector to clawback through a tax incentive in the tax law, large proportion of the outlay that they make towards Research, Development and Innovation. This tax incentive was introduced in 2012 and we are then able to provide the House with an indication that over 500 private sector companies have benefitted from this tax incentive since 2012 and you only approve application on very strict criteria on research and innovation. We see large numbers of applicants but those who successfully clawback the incentive have to prove in terms of the legislation that what they are claiming relates to original research has resulted in an innovative product or service that can be identified as such and that before processes
associated with research were followed in arriving at the outcomes that they report on.
I thought as well just in conclusion that I should indicate Chairperson that, through an assessment of the applications that we receive from the private sector that I could give the House a sense of the classification of the private sector companies in terms of the applications I have approved in the period 2012 to
February 2017. The bulk of the applications came from the manufacturing sector, the next largest investor in research and development, R&D is the financial and business service.
And as I said earlier, you as hon members can see this because the banks have changed so vastly and it is clear that they are investing in research. Then the next is Mining Quarry and the fourth large claimants come from agriculture and related sectors. You then have at a lesser number electricity gas and water supply and then you have the pharmaceutical sector and other sectors that also apply for the incentives. So the manufacturing sector and financial services stands out as significant investors in research and development.
The question also asked is, are there any examples? Well, there are several examples but unfortunately I can’t name the companies
Chairperson so I can only refer to them as company x which developed a new generation carbon deficiency, cobalt base, gas liquid catalyst. Or company y which developed an embedded sensor device which is installed in novel products such as cars to enable the discovery of stolen vehicles. Or company z which developed an augmented reality application which enables users to view real world environment enhanced by overlying computer generated layers of information through mobile screens. So these are examples of some of the innovative activities of South African companies.
We are really pleased that with us able to approve over 60% of the applications we receive from a range of companies, we have a clear indication that the private sector is indeed investing in research and development. So I think that’s very exciting for our country. We would like to see more of the small and medium size enterprises because it tends to be a bigger corporate that benefit from the tax incentive. And we are looking at how we reshape along with treasury, the tax amendment in order to allow greater access for small and medium size businesses. Thank you very much.
Mr S G MTHIMUNYE: Thank you hon Minister on behalf of hon Sefako. Hon Minister, you make reference to the fact that as the department you use for a lack of better word, as barometer in terms of the
involvement or the extent of the private sector in the innovation of the country. But then judging by the annual surveys you are doing, would you with total conviction or partial conviction say that as a country we are readying ourselves on the fourth industrial revolution that is talked about countrywide and the world at large.
The MINISTER OF SCIENCE AND TECHNOLOGY (Ms G N M Pandor): I think a
number of our companies are already world class in terms of the technology that they use. You would see many companies do use artificial intelligence for example. Where I think we still need to do more, is to link these technological developments to improve social services; that we still need to do. We need to see artificial intelligence being used in our health services for example, so that if we can do the initial assessment of myself as a patient arriving at a hospital and you gauge my blood pressure, my temperature etc.
And then assess that actually I am not in such a terrible condition that I have to see a doctor and thus I can go to clinical nurse or some other health support professional so that we than allow those who have more serious illness to actually be seen by medical professionals.
We have to develop those levels of support within the public services in order to ensure that we enhance quality and efficiency.
Border management is another area where I think we need to have far improved support through innovative technologies. So there is range of areas as we get older, we are looking at robots and the possibility of them supporting us to live a more comfortable quality of life and there are countries that are well advanced. But we are well aware as government of the need to begin to prepare our country to take advantage of the prevalence of technology in the world and to ensure that we are not left behind.
We recently established a Inter-Ministerial Committee on the fourth industrial revolution made up of various departments in the economic sector who are looking at what we should do to enhance research and innovation support in these areas of expanding use of technology, ensuring the in robotics, laser technology and many other areas we are not left behind but we are in the front line. Fortunately as South Africa, we do have in our science councils already advantaged technologies in use as you know we have a national Nanotechnology Centre. We have Nanotechnology innovation centres at various universities supported by our department. And in laser technology we have the national laser centre at the council for scientific and industrial research. A lot of work has been done but I really think that much more must be done by South Africa in the area of robotics
and in the link between technology innovation and support to society.
Mr M J MOHAPI: Hon Minister, South Africa is a scarce country when it comes to issues of water. We visited Ditsobotla where we realised that our people are still struggling with the issue of sanitation. I just want to check with the Minister if there are any means that the department is coming up with together with the public sector to ensure that we expedite especially around issues of innovations of addressing sanitations challenges like the areas in Ditsobotla where our people are still without sanitation.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon member, it’s a very interesting way of linking the innovation to the original question but I will leave it to the hon Minister.
The MINISTER OF SCIENCE AND TECHNOLOGY (Ms G N M Pandor):
[Laughter.] It is very interesting. I want to Chairperson perhaps seek your guidance because there is question on water that I will be responding to and I could touch on the matter of sanitation perhaps at that point.
The HOUSE CHAIRPERSON (Mr A J Nyambi): We will do justice when we get to it that is why I commented before allowing you.
The MINISTER OF SCIENCE AND TECHNOLOGY: Chairperson, yes, it is the very question on water. It’s important to say that support for innovation and development in the water sector, both in terms of purification and saving water technology, there is a range of work underway.
However, we don’t do it alone as the Department of Science and Technology because in South Africa, we have an unusual arrangement in comparison to other countries. In that, not all research councils fall under my department. We have sector departments that have research councils falling under their remit. The peculiar thing is that although they exist there, we tend to have to fund them. And I am hoping one day that the NCOP will support us to actually rearrange and ensure that the resources are directed to those councils by the sector departments.
The Department of Water and Sanitation has an excellent Water Research Commission and we work with them in promoting projects and research into water and sanitation innovations. We have established
together what we call The Water Technologies Demonstration Programme, which essentially is a process, firstly, of generating innovations ourselves, secondly, identifying innovations already in existence or in service in other regions of the world.
So, we work with colleagues throughout the world. If we identify a promising technology, we then together test it in South Africa.
Working with Waterberg Economic Development Agency, WEDA, we have begun to increase the adoption in South Africa of appropriate technologies which are enhancing the water innovation value chain. We provide funding to the water research commission to support technology demonstration through this initiative WEDA on an annual basis.
I just thought I should give one or two examples. The first innovation is called Aqua Trip. It is a permanently installed water leak detection and reaction system and reaction system, which monitors the flow of water into one’s property from 15mm to 100mm pipe diameters. If a leak burst pipe or a dripping in a toilet system is detected, the Aqua Trip automatically shuts off the water and sends a warning notice to the user that there is a leak on the property. The technology has the ability to distinguish between normal usages and leaks due to its patented flow sensor. It can pick
up as little as 30 ml of flow in the pipes. It’s a very sensitive sensor.
I am told that it detected leaks 755 times over 60 days in the piloting process and it therefore saved 3 785 000 litres of water... [Interjections.]
... No, no, I can count. I count very well. 3 785 000 litres of water, which translates to 25,3 million litres saved annually. That is pretty good. That is one of the innovations. And there are many others hon members. Thank you.
Mr L V MAGWEBU: Chairperson, Minister, I’m sure you will agree with me that we cannot all tab into innovations when we are facing challenges as a country. Generally, we should be an innovative country and promote that stance. And there should be programmes in schools where our learners are encouraged to be innovative in all spheres - it be water - it be energy saving etc.
I am saying this because in the formerly model c schools these programmes are there, but little do we see these programmes in township schools, rural schools – I know you have a few pilot programmes, like in the Province of the Eastern Cape particularly,
Cofimvaba. But we need to see more. What is the problem of us not seeing more? Are you lacking resources? Or what could be the problem Minister?
The MINISTER OF SCIENCE AND TECHNOLOGY: I don’t agree with you; because when you are facing problems, that is when you should seek out innovation. That is what innovation is about, to assist you to address problems. It helps you to identify solutions.
While indeed you are correct that there are pilots that are supported by my department, the responsible department is basic education. We collaborate with them; we have a joint set of initiatives that we implement together. And as you know, through the new norms and standards amendments in the schools Act, in terms of the building of the new schools infrastructure, part of the norms and standards require the provision of basic facilities such as science laboratories, libraries, and so on. That is why you have heard recently the Minister of Basic Education and her colleagues, the MECs in the various provinces talking about building state of the art schools in order to ensure that we have these facilities and all children in our country enjoy access to them.
Having been in New Brighton recently, meeting young pupil during the Science Week, I want to say to you, hon member, if you visit some of the quintile one schools that are participating in Science Olympiads you will be really amazed at the talent that we have in our country. And a range of institutions are lending their effort and support to initiatives to increase the competence of our young people in science and technology, including the Eskom that we pillaring so often. They support a very huge national Science Olympiad in which thousands of schools participate and our young people are then judged through the Olympiad process. And the top five proceed to the international Science Olympiad. It is amazing that in the last five years we have always featured among the top three as the young people of this country. So, I think in times of challenge lets focus on innovations. And we will find solutions. Thank you very much, Chairperson.
Ms L C DLAMINI: Chairperson, and thank you, Minister for the responses, but I think we all know that South Africa is a water scarce country. The last time I know ... [Interjections.]
... ngitakushaya wena.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Dlamini, can you withdraw that.
Ms L C DLAMINI: Ngiyamdlalisa Sihlalo.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Dlamini, you are protected.
Ms L C DLAMINI: But on a serious note, he is disturbing me Chair. I was saying that South Africa is a water scarce country. The last time I know we were amongst the top 30 countries that are water scarce. Therefore, it shows that we have a got a serious problem in terms of water.
I just want to check with you, hon Minister, don’t you think that it would be good to invest in terms of bursaries to the people who will be using the technologies that you have just referred to now, instead of waiting for the research outcomes and then when they are there, we don’t have the people to implement.
The MINISTER OF SCIENCE AND TECHNOLOGY: Chairperson, indeed, the hon Dlamini is correct. With any initiative that my department
undertakes, we always provide support for human capital development. So always we have bursaries for Honours, Masters and PhD, because we believe we must increase the stock of knowledge workers in our country.
To address the water shortages which you are so correct about, we have introduced water saving technology and sanitation through our initiative in Cofimvaba that the hon Magwebu referred to. We have introduced what is called an Aram loo developed by colleagues in researchers and in India. This toilet uses between 1 and 2,5l of water per flush which is an amazing and substantial saving of water.
We are currently testing it. It is still in the demonstration phase. But even the reception of the community to the technology has been very positive.
We also have a grey water recycling system which collects treats, and stores and recycle domestic grey water for toilet and flushing without the need for external energy sources. We are devising technologies that will address the issue of water scarcity.
I know that in the province of the Western Cape and we hope in the Eastern Cape as well, due to the wave energy in the waters in that
province, will be able to begin testing technologies that will support desalination. And other ways of recovering water that can be used by community. Indeed, we are giving attention to these areas including the human capital development that you so correctly referred to. Thank you, Chair.
The MINISTER OF SCIENCE AND TECHNOLOGY: Chairperson, I am pleased to report that the Technology Innovation Agency supports a significant number of small and medium enterprises, primarily through the Technology Stations Programme. This includes 2 250 Small, Medium and Micro Enterprises, SMMEs, in the past financial year of 2016-17 and
2 188 in the 2015-16 financial year. The demographic profile that the member asked me about is the following. In 2016-17, we provided support to SMMEs led by 619 women out of the total I referred to –
1 302 were black owned, 1 167 were youth owned and as I have said 619 were women owned.
In the previous year, 1 347 were black owned, 933 were youth owned and 664 were women owned. Of course, we hope that with the support we provide is the SMME’s move into full use of these technologies and no longer require the support that we have. Our support is intended to assist them to be able to provide innovative products
that they can then offer in contracting with large companies and thus taking up large tenders and large contracts. Several have succeeded through the assistance of the Technology Innovation Agency to do just that. Thank you, Chair.
Ms Z V NCITHA: Hon Chair and hon Minister, I thank you for the response, but what I would like to know hon Minister, do you have universities that are participating in such innovative projects? If so, which provinces are benefitting from those projects?
The MINISTER OF SCIENCE AND TECHNOLOGY: Chairperson, we have technology stations that are in every region in South Africa in all provinces. So, all universities would host at least one. They are providing support and our science councils as well. If we are unable to locate them in your regular universities, we then place them at universities of technologies such as the Vaal University of Technology, the Durban University of Technology and Mangosuthu University of Technology.
So, it is throughout the country, right through to the University of Zululand and what has helped us to do is reach large numbers of SMMEs that would have never had access to agroprocessing and to
3D printing technology. In addition to the technology stations, we
have provided fairly advanced facilities at the Council for Scientific and Industrial Research.
So, if for example you have an SMME as there is now that has discovered a hair product that helps me to comb my hair which is sometimes very difficult to do, there is a biorefinery at the Council for Scientific and Industrial Research with biologists that are able to support the persons who produced these hair products and help them to quality-assure and meet the standards of the SA Bureau of Standards and get their products on the shelves.
Mr F ESSACK: Chairperson, thank you so much again for the opportunity. Hon Minister, it is great to see you in the House. My follow-up question is absolutely relevant to the second part of my colleague’s question and it goes something like this: In the recent developments in KwaZulu-Natal, the MEC for Economic Development, Tourism and Environmental Affairs, Mr Sihle Zikalala has obviously been trying to shake up the black economic empowerment, BEE, policies to benefit black Africans. We have seen this in the press and also in the headline news - through a policy where government contracts Minister and Chairperson and I am trying to communicate
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon members, let us allow the hon Essack to raise his question to the Minister.
Mr F ESSACK: I just want the hon Minister to capture it correctly.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Yes. Hon Essack, you are protected.
Mr F ESSACK: Thank you. Indeed I am grateful, Chair. So, hon Minister, yes MEC Zikalala has been obviously trying to shake up the BEE policies to benefit black Africans through a policy where government contracts worth more that R50 million must not be given to Indians and Coloureds? Now, my question is very simple hon Minister. Who then is in fact is black enough to receive government contracts? Thank you, Chair.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Essack, I will leave it to the hon Minister. You know that your supplementary question - no, you can take your seat - is not linked to the original question, but I will leave it to the hon Minister. Hon Minister.
The MINISTER OF SCIENCE AND TECHNOLOGY: Chairperson, I think the hon member has asked the question. The question that I am answering had
demographics as part of the reply sought and so it is fine if you ask about demographics. As I said in the National Assembly, there is no change in the policy of government with respect to black economic empowerment policy and a statement by any person be they one or a million does not change the national policy. The way we change the national policy is through Parliament making amendments. I think it is important as Members of Parliament that we explain to the nation how the policy is formulated and where it may be altered or not altered.
Now, one of the things that we must all acknowledge is, we do need to ensure that more people of African descent in this country enjoy greater economic opportunity. This is an undeniable objective that all of us should pursue. However, we are also aware that in terms of our Constitution, the measures we take must not defeat the objectives of equality, but we are allowed by the Constitution, if we are pursuing affirmative action that is corrective in terms of discrimination we are all aware of, that we would take particular steps. However, as I am aware at this moment, there has been no amendment to the existing BEE policy of government which drives national implementation of such strategy. Thank you.
The MINISTER OF SCIENCE AND TECHNOLOGY: Chair, as a department, I think we have been very clear that, when we establish organisations or entities, they should not have overlapping mandates. So, we’ve been very careful when we framed the law that we avoid duplication and any overlapping of responsibility.
So, for example, I’ve recently submitted an Amendment Bill on the National Research Foundation, NRF, to Parliament because there were aspects that I felt needed greater emphasis and clarity in terms of policy development. So that will clarify certain aspects of the responsibilities of the NRF.
But, having said that, I am not concerned that the Academy of Sciences, the Technology Innovation Agency or the National Advisory Council on Innovation are in any way overlapping in their mandates. I really think it would be important that hon members do look at the appropriate legislation to understand what the different roles of these institutions are. One is an advisory body. The Academy of Sciences is a membership organisation of very senior, experienced and established scientists. The Technology Innovation Agency is directed to identify opportunities for innovation and ensure that we do not miss those opportunities and that we invest in those who have some exciting new ideas.
Let me conclude by saying that, in my view, the system of innovation in our country and our institutions of innovation have remained more or less the same since 1994. But what we have succeeded in is increasing the human capacity. So we have young people with PhDs and with engineering and technology qualifications. But, we don’t have the institutions to absorb them.
So I initiated a study last year on what we call the institutional landscape of the national system of innovation. It was my view then
– and the report appears to agree with me – that we need to consider expanding the system because we have many more knowledge workers in our country. We have much more talent that we’ve honed since democracy. We need to have institutions that will use them, absorb them and ensure that they support our country to enhance innovation and research. Thank you.
Mr E M MLAMBO: Hon Chair, I should like to thank the Minister very much for her detailed answer. I don’t have a follow-up question.
Mr L B GAEHLER: Chairperson and Minister, I missed my cue. I should have asked this question earlier, but I know the Minister will be able to answer it. I’m trying to ... [Interjections.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Please come closer to the mic.
Mr L B GAEHLER: I’m trying to smuggle a question in here!
Minister, as far as you know, is there any technology being designed to purify sea water, seeing that we are a water-scarce country? [Interjections.] I know you will answer that. [Interjections.] Don’t worry about the howlers here!
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon members! Hon members, it is very clear that he smuggled the question in. Let’s leave it to the Minister to answer or not. Hon Minister?
The MINISTER OF SCIENCE AND TECHNOLOGY: Chairperson, hon Gaehler has actually just answered himself! [Laughter.] Because he says he was listening earlier, and he knows that we are ... [Interjections.] [Laughter.]
Mr J J LONDT: [Inaudible.] ... one-person caucus ... [Laughter.] [Interjections.]
The MINISTER OF SCIENCE AND TECHNOLOGY: Hon Gaehler, sit down and calm down! Don’t worry; he’ll be part of a one-member caucus very soon! Don’t worry! [Laughter.]
Yes, there are technologies, and some of those are already being considered in some of our provinces. But really, it is at the proof of concept stage. It’s still early days, but there are scientists and technologists out there who have come forward and said, here is technology; we’d like government to invest in testing it.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Minister, we are now dealing with Question 293 asked by hon Julius who is not in the House, but a proper arrangement was made. In terms of our Rules, hon Londt will stand for hon Julius. [Interjections.] Mr Gaehler, allow the Minister to respond. [Laughter.]
The MINISTER OF SCIENCE AND TECHNOLOGY (Ms G N M Pandor): Well, I
don’t think that having a budget would have a negative impact on our competitiveness. Our competitiveness is enhanced by what we do with the resources that we have available to us. Also, I think that in the last few years, South Africa has been able to show the world that indeed it can be able to be globally competitive.
That is why we secure the Square Kilometre Array, SKA, bid; that’s why our scientists are participating in a need fashion in the vaccines, development and trials for HIV prevention; that’s why our scientists and institutions are developing a new malaria drug; that’s why we are doing leading research in tuberculosis treatments and diagnostic tools. So, we are competitive.
What we’ve got to do is to ensure that our researchers in our universities, who are able and competent in these fields, are properly supported. Of course, the key thing we have to do is to grow our economy, so that we do increase the resources available for research and development.
Chairperson, I think that it is also important to stress finally that, the private sector also has to come to the party because as I said, we need to encourage the private sector in South Africa to do even more than it is currently doing. That is how other countries’ economy has grown. It is a contribution of the private sector into research, development and innovation; not just the public investment in this that would make a difference.
We do want more funding, it will certainly aid us. I think using what we have maximally, and really targeting the areas where we have
excellence on, clearly, it’s where our country should focus on. Thank you very much, Chair.
Mr J J LONDT: Minister, previously, you have stated that you were not happy with the 2016-17 budget because it has showed no increase. Even the 2015-16 budget did not show an increase either. As you can see, this budget has no real increase from the previous years. It was basically kept up with inflation. Last year you said that, evidence shows that the countries that invest in science and technology during the global downturn, are better than others when conditions start improving.
You also said that, we are going to lose people to counties that are marshalling resources in invention. Also, you just made a call that the private sector needs to come to the party a bit more. But how can you make that call when the government is not willing to do that?
Minister, you clearly think that the ANC does not take innovations as a means to grow the economy seriously. You have given a very good answer trying to defend the budget that you’ve got now. Is this still your view, given that the real increases in the budget and that of the previous years?
The MINISTER OF SCIENCE AND TECHNOLOGY (Ms G N M Pandor): Of course
as the member of the ANC I will always defend the ANC and be proud to do so. With respect to the budget ... [Interjections.] I’m number me! With respect to the budget, I obviously would like to see South Africa meet its commitment that by 2020. It must be providing 1,5% of Gross domestic product, GDP, for science, technology and innovation. This is our target and we are making sure that we meet it.
As I said, the bottom line is that our economy has to grow. The reason for the economy not to grow is solely and purely not the fault of this government. It is related to a wide range of sectors in our country. We know that the private sector has a large amount of resources that are not being invested in infrastructure or any form of capital in the county.
We also want to see an increased take up of the challenges of South Africa, not just by the public sector but by all the sectors in our country. The ANC did not cause the problems that we are confronted with. We inherited them as part of the legacy of the terrible discriminatory system of social engineering. Therefore, we must acknowledge that.
As we act to change our society, it is those very aspects that we inherited, which reflect the discrimination that we must fundamentally address. This is why we have invested in ensuring that we built small and medium size enterprises capability, that they become innovative; they become successful and that they participate in the broader corridors of business transactions and business development.
Therefore, as the ANC, we understand the sorts of challenges that we are confronted with, and we know what must be done. So, of course, I’m, as is with the other Ministers, I suppose, not entirely satisfied with my budget. I’m realistically aware of the challenges confronting my country. One thing you can be certain of is that, whatever cent I get, I will put to good use in science, technology and innovation. Thank you very much. [Applause.]
Mr S J MOHAI: Through you Chairperson, Minister, I just want to make a follow up question on the following: What is the co-ordination in funding for innovation across the spheres of government? The second one is related ... [Interjections.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Mohai, you are asking ... [Interjections.]
Mr S J MOHAI: It’s one question, but I’m just saying ... [Interjections.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Yes, ask your question!
Mr S J MOHAI: I’m just saying, is there any progress in relation to sovereign innovation fund?
The HOUSE CHAIRPERSON (Mr A J Nyambi): Yes!
The MINISTER OF SCIENCE AND TECHNOLOGY (Ms G N M Pandor):
Chairperson, we are working hard on improving co-ordination. We are not quite where I would like us to be, but I think as I have indicated with the work we are doing with the Water Research Commission, WRC, that we have vastly improved the level of co- operation between ourselves; research in the health sector and research in agriculture.
In fact, next week, we will be launching a new wheat germ seed that we have developed along with the agricultural sector. It is drought resistant and has a larger yield. My department, the Department of Agriculture, Forestry and Fisheries and Agri SA are very excited
about that development. It is this kind of collaboration that we would like to see in our country.
We are also working hard with Treasury in order to achieve our ambition that we have established a sovereign innovation fund in South Africa. Our discussions on the funds are proceeding very well. I think that, should we be able to establish an initial sovereign innovation fund, it’s going to compliment in a very positive way, the seven sector innovation funds that we already have, mainly in the fruit and agricultural sectors. Thank you very much, Chair.
The MINISTER OF SCIENCE AND TECHNOLOGY: It’s Diwali we understand. So that is acceptable, we respect each other’s religions. Hon Chairperson, my department makes strenuous efforts to communicate on the services rendered by the Council for Scientific and Industrial Research, CSIR, and all science agencies that fall within the remit of my department. So when we launched the new initiative of the Biomanufacturing Industry Development Centre, we invited the private sector, small business sector as well as media outlets. We do also have communication initiatives by the CSIR itself. So there is not only the responsibility of our department, it is also that of that of the CSIR. In our department to communicate, we use all forms of
social media, including Twitter, Facebook and the very interactive website of the Department of Science and Technology. All the entities have similar initiatives underway, but I have realised through knowing and seeing that many members have very little
understanding of how their country is competent in science and technology that we actually need to communicate much more. Many of us don’t appreciate that in many sectors and I just want to name three. South African scientists rank among the top in the world, astronomy sciences, environmental sciences and clinical science research. In those three domains we are ranked among the top in the world and we will continue to be so with hardwork. Thank you very much, Chairperson.
Mr C J DE BEER: Hon Chairperson, referring to the hon Minister we can see that you have a very progressive - you and your department - a progressive and a hands-on approach. Does the CSIR have provincial footprint so that the people can be made aware of the programmes and the services of the CSIR closer to where they live?
The MINISTER OF SCIENCE AND TECHNOLOGY: Thank you very much, Chairperson. Yes, the CSIR does have a footprint, not in all the provinces. We have the CSIR units established in KwaZulu-Natal,
Western Cape, Gauteng and we are now working closely with Mpumalanga and Limpopo in initiatives and beneficiation of mineral resources.
However, what we are doing if I could go back to the Chief Whip’s earlier question is that we are working more closely now with the local government. The CSIR has amazing competence in providing support services for government delivery, such as geo mapping services, earth observation data and other service support for local and provincial government, mapping for human settlements, planning data and other resources, information systems for the health sector, for example. So, we are working with our provinces to encourage them to establish provincial innovation centres. We believe that will help us to massify the presence and an impact of the innovation institutions throughout the country. So this will be a collaboration between Department of Science and Technology, and of course, the various provincial governments. The metros has begun to buy in as have some of the larger municipalities. I think, we going to see some exciting developments in the next few years. Thank you, Chair.
Mr L B GAEHLER: Thank you, Minister, I think we only have about 10% of the DA, we don’t need to worry about this.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Don’t do that. [Laughter.] Ask your question.
Mr L B GAEHLER: Minister, on a serious note the CSIR has development numerous technologies one of them is the filling of potholes, the second one is innovative roles and the last one that I can remember is the technology on school buildings. Are you happy that the government is making use of these technologies that are being developed in the country? Are you happy with that, if not, what can be done so that these innovative methods can benefit the country as a whole? Thank you.
The MINISTER OF SCIENCE AND TECHNOLOGY: Hon Gaehler, I am happy when I see some of these technologies taken up. I have seen the Free State, for example utilising the technologies we’ve developed in fuel cells and I’ve seen parts of the North West using some of the potholes built-environment technology that was developed at the CSIR. But I haven’t yet seen us fully take up the opportunity of some of the built-environment technologies for human settlements that have been developed by the CSIR. I really would like to see progress there. In the security sector, of course, you know the impact they’ve had on cash-in-transit heists with the vehicles that they’ve developed. So, there are organisations and governments that have begun to take up the technologies, but as I said, I don’t think it’s prolific yet – I don’t think is sufficiently massified through our society. It really links to this issue of the lack of
information about what our country’s capable of. We still tend to see each other in very negative terms and we don’t believe that we have the capability that I am referring to.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon members, allow me to take this opportunity to thank the Minister of Science and Technology, Minister Pandor for availing herself to deal with questions in the NCOP. Thank you, hon Minister.
The MINISTER OF SCIENCE AND TECHNOLOGY: Thank you very much, Chairperson. [Interjections.]
Ms T J MOKWELE: Thank you, hon member Minister.
The MINISTER OF SCIENCE AND TECHNOLOGY: I wish we had you in the National Assembly. [Laughter.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Thank you, Deputy Minister of Science and Technology. [Applause.] Hon members, allow me to take this opportunity under the leadership of the National Council of Provinces to thank the Chief Whip for working with all the parties and the representatives of provinces. Probably this year it is for the first time since we started on Tuesday, all the Ministers were
available to deal with questions irrespective of the reshuffling of the Cabinet this weekend. This is because of proper planning. We thought it was going to give us challenges but the Ministers were here and they dealt with the questions. Keep up the proper planning for the effectiveness of the National Council of Provinces! [Applause.]
The Council adjourned at 16:07.