Hansard: NCOP: Unrevised hansard
House: National Council of Provinces
Date of Meeting: 28 Oct 2015
Summary
No summary available.
Minutes
WEDNESDAY, 28 OCTOBER 2015
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PROCEEDINGS OF THE NATIONAL COUNCIL OF PROVINCES
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The Council met at 15:07.
The House Chairperson: International Relations and Members Support took the Chair and requested members to observe a moment of silence for prayers or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col 000.
The HOUSE CHAIRPERSON (Ms M C Dikgale): Order, hon members! I have been informed that the Whippery has agreed that there will be no notices of motion of motion or motions without notice.
I would like to take this opportunity to welcome the Ministers and Deputy Ministers present in our House.
QUESTIONS FOR ORAL REPLY
ECONOMICS
Cluster 4B
MINISTERS:
Job creation
205. Ms E C van Lingen (Eastern Cape: DA) to ask the Minister of Economic Development:
(a) What is his department’s role in the Government’s nuclear build programme (details furnished) and (b) how many jobs are envisioned to be created in the (i) construction and (ii) operational phases of the programme when it is implemented? CO609E
The MINISTER OF ECONOMIC DEVELOPMENT: House Chairperson, the Department of Energy is taking the lead in the nuclear build programme and National Treasury is working on costing and funding models.
On completion of this work and subject to the decisions that government may take, the Department of Economic Development’s role will be to ensure, one, that the build programme is integrated into the national infrastructure plan and that regular monitoring of construction, localisation, jobs and spending levels take place; and, two, that the deepest possible localisation of the production of components is done in South Africa, both for any domestic build programme and for export, and that support is given for the development of a local skills pipeline for construction, operations and maintenance. And we would do this work in partnership with the Department of Trade and Industry and the Department of Higher Education and Training.
In respect of the part of the question on the number of jobs during the construction and operational phases, I would like to indicate that that will be a function of the size of the build programme and the scheduling of the construction. The Minister of Energy is best placed to address any other questions on the actual build programme. I thank you.
Ms E C VAN LINGEN: Hon Chairperson, I would like to ask the hon Minister the following. When the Infrastructure Development Act was promulgated in June 2014, the motivation behind it – and the Minister will clearly remember – was that it was put there to unblock the obstacles in infrastructure projects of the Presidential Infrastructure Co-ordinating Commission, the PICC, as the Sips project, the Strategic Integrated Project. So, in preparation for this programme, what skills transfer for the people of these three sites are now being scheduled, and has the Minister seen any blockages in the system so far? I ask this because I got in his earlier reply now the idea that he has referred it back to the Minister of Energy and he’s got nothing to do with it.
The HOUSE CHAIRPERSON (Ms M C Dikgale): Thank you very much, hon member. That is true, and you and I know that he is not the Minister for that department. But could I allow you, hon Minister, if you have something to say?
The MINISTER OF ECONOMIC DEVELOPMENT: Hon Chair, I am not sure if there has been a Cabinet reshuffle. If there has been, and I’m the Minister of Energy, I would have been very happy to answer.
On a more serious note: I think what we have with the Infrastructure Development Act in the rest of the announced infrastructure programme is identify areas where there are obstacles and unblock them. As an example on energy: When we do the big build programmes with Medupi, Kusile and Ingula, we may well find that there is a skills challenge, and then we would work with a college or university on addressing that. Let me take an example of a big dam-building programme. There may a regulatory issue relating to a licence that needs to be made available, and we’ll deal with that.
So, I think the other questions relating to the nuclear programme have been answered adequately in my earlier reply in respect of our role, but that doesn’t mean that the infrastructure programme is only made up of one area. It embraces energy, water and sanitation, transport, ICT – that’s the broadband roll-out that we are all so reliant on with our cellphones and our laptops – and, of course, crucially, social infrastructure. That is health, universities, schools and so on.
So the department plays a role there. The PICC, chaired by President Zuma, brings together all provinces, in fact. Every premier sits on the PICC as do the mayors of the different metros and the leadership of the SA Local Government Association, or Salga. So they pool together with national Cabinet their collective efforts to ensure that we unblock any obstacle to infrastructure. Thank you.
Mr S J MOHAI: Thanks, hon Chair. Hon Minister, the Quarterly Labour Force Survey was released yesterday. I just want to ask what the broad indications are according to the survey in relation to jobs. Thanks.
The MINISTER OF ECONOMIC DEVELOPMENT: Thank you very much to the hon Mohai for that question. I have the survey here. Firstly, we have two surveys that measure employment. The first is the Quarterly Labour Force Survey, which is when Statistics SA knocks on doors and asks people questions about their employment status. The other survey is the Quarterly Employment Survey in terms of which we phone or Statistics SA phones companies or e-mails them and obtains information.
On the Quarterly Force Survey, the big storyline that has come out of it is that if we take the past three months and we compare that with a year ago, then over that 12-month period the number of net new jobs in the economy is 712 000. If we only look, hon Mohai, at the past three months, then the number of jobs increased by 171 000.
You may well ask: Well, where did those jobs come from, which sectors of the economy? What the survey shows is – and this is quite interesting and somewhat surprising – that the biggest growth over the 12-month period has been in agriculture. Agriculture accounted for 211 000 additional jobs. The second biggest growth was in construction, and that accounted for 180 000 additional jobs for the year. Of course, construction is important because it is connected to infrastructure programme. Finance was the next biggest at 135 000. This is not purely in the banking sector, but also a range of private-sector business services. Then there is private households and, finally, government. Which provinces? If I had to take the top three for the year as a whole – this is 12-month figures that I use – the biggest generator of new jobs was the province of Gauteng, followed by KwaZulu-Natal. And the third biggest generator of jobs over the 12-month period was Limpopo.
One of the things that I looked at particularly is what is happening in youth employment, because that remains the single biggest challenge. We have to do so much more on this. And, the story is that for the 12 months as a whole, 375 000 additional jobs were created for young people. If we only take the three months, it was 62 000.
Our challenge, however, is that there are many more young people leaving school, college and university every year than our ability to absorb them. So, in spite of the progress we are making, we remain committed in government to doing a lot more. We have to give young people a sense of confidence and optimism for their sake. But there is another thing: Young people are not coming because they are only doing themselves good. They bring energy; they bring their passion; they bring their commitment. And when young people enter the economy, you also have a more resilient and stronger economy. So, if you look at the long term, we have to do even better on youth employment than we have done to date. Thank you.
Mr V E MTILENI: Thanks, House Chair. I am posing this question to the Minister as a follow-up question. Why is government insisting with the nuclear build programme, when there is ... [Inaudible.]
The HOUSE CHAIRPERSON (Ms M C Dikgale): Okay, hon member Mtileni. There is a hand ... Continue, hon member.
Mr V E MTILENI: Why is government insisting with the nuclear build programme when there are insufficient financial and scientific resources? The nuclear build programme will cost money South Africa cannot afford. It has been evident that the quality of education that we are giving to our students ... We saw them taking to the streets last week. We still don’t have an answer as to where we are going to raise the money that should cover the students’ tuition fees.
The MINISTER OF ECONOMIC DEVELOPMENT: House Chairperson, I think I’ve dealt with the question in that the Minister of Energy is leading our work. I understand that she had the honour and pleasure of sharing some time yesterday with members of the NCOP. So I don’t think I can add to whatever she has said.
I do want to make the point, though, that we have multiple national objectives that we have to pursue simultaneously. We have to find money for education – more money for education – because we then develop the basis for long-term sustainable growth. It’s an investment in young people. The young people who are there asking for the right to higher education are our children. They are young people that will add to this economy.
We also need sustainable energy solutions, because with sustainable energy solutions you power your industry and you generate the wealth that you can tax and pay for education. We need to expand our transport infrastructure. We need to support small business development. There are multiple objectives that any government - when a party is in power and it is in government – needs to ensure that it finds the resources, that it balances the multiple needs of an economy and of a society. That is what we are seeking to do.
Mr T C MOTLASHUPING: Thanks, hon House Chair. One should start first perhaps by acknowledging and expressing appreciation for the fact that the department has moved quite significantly in ensuring that youth development is prioritised. A substantial number of young people are getting into the mainstream economy. However, hon Minister, these jobs that were created, are they beginning jobs, or are they sustainable jobs that will carry the youth for a considerable number of years? Thank you.
The MINISTER OF ECONOMIC DEVELOPMENT: Thank you very much for that question. In the analysis we have done we haven’t sliced the youth jobs into each sector, because the survey was only released yesterday. So we have the aggregate sectors for the economy as a whole and we have the total youth numbers. So I am going to use a combination of that.
In agriculture the jobs will tend to be jobs that are dependent on our getting our agricultural policies right and weather conditions. So will we have those same jobs in six months or in a year’s time? I think the drought may affect some of that.
In terms of policies, we have the Agriculture Policy Action Plan in place now that will also have an effect. Construction jobs, by their nature, are not permanent jobs. They are jobs until you complete the project. But what we have tried to do, hon House Chair and hon members, is to begin to develop a long-term project pipeline, so that, as we complete one major project, we have already started another one, or we are about to start another one. This is so that we generally try to boost employment over the long term. I think this is a mix of that.
It is very interesting in that one of the things that Minister Davies, I think, would have been pleased about when his eye caught this is that manufacturing job numbers went up for the year as a whole and for the quarter. That has been our big challenge up to now. This doesn’t mean we are out of the woods when it comes to manufacturing. It doesn’t mean that at all, but it does mean that so far there have been positive indications even in a sector that we have struggled historically with. I thank you.
Ms E C VAN LINGEN: Chairperson, I think our Rule limits the length of time to answer the question. We have a whole lot of questions and, unless we work through this list according to our time schedule, we are going to lose the opportunity to ask questions again tonight because the Ministers will want to fly off.
The HOUSE CHAIRPERSON (Ms M C Dikgale): Okay, thank you very much, hon Van Lingen. Order, hon members! Order! Hon Van Lingen, the Ministers are allocated four minutes to respond to a question, so please bear in mind that we are a nation at work.
Empowerment of historically disadvantaged persons
229. Ms T Motara (Gauteng: ANC) asked the Minister of Economic Development:
Whether his department will democratise the (a) ownership and (b) control of the economy by empowering the historically disadvantaged persons such as women, youth and blacks to play a leading role in the decision-making by driving economic activities (details furnished); if not, why not; if so, what are the relevant details? CO633E
The MINISTER OF ECONOMIC DEVELOPMENT: Thank you very much, House Chair, and hon Motara. Let me start with the legacy issue that we deal with, because the question talks about empowering the historically disadvantaged persons in our society. Even though we are celebrating 21 years of democracy, the structures that we have inherited reproduce themselves every day. Public policy – government policy – is about combating that, about changing that. That is what I will turn to.
So, where do we stand today? Minister Oliphant, who is in the House, is responsible for the work of the Commission for Employment Equity, the CEE, and they have published their most recent report, which indicates that we still have a way to go. It indicates that white compatriots still occupy 70% of top management positions. The CEE report indicates that males still occupy 79% of top management positions.
In the private sector the CEE report shows that there are still challenges in transformation: 61% of top management positions, I am advised, are still occupied by white males, and only 3% by African women. So, that’s the challenge in a way that we need to address.
Now, why do we need to address that challenge? We need to do it for reasons of equity and we also need to do it for reasons of sustainable growth. I’ve made this point before: If China had to rely on only 10% of the Chinese population to power their economy, China would not have reached the high levels of growth that it has today. It relied on the talent pool of the whole of China. We need to rely on the talent pool of all South Africans. And that means, very importantly, that we must unlock the potential of black South Africans.
What are the actions that government is taking? I want to identify eight of them. There won’t be time to go into detail on all of them. There are, one, policy frameworks; two, skills development; three, support for small businesses and co-operatives – and Minister Zulu is here today. Four, there is procurement from black-owned enterprises; five, there is support for black industrialists by making capital available; six, there is support for young black South Africans through the Youth Employment Accord; seven, there is support in terms of bringing women into the economy; and, eight, there is support through the Infrastructure Development Act.
Our policy frameworks are clear. The National Development Plan talks about economic opportunities and positions that better reflect the country’s racial, gender and disability make-up. The New Growth Path talks about shifting the focus of black economic empowerment so that we make it more broad-based and we bring more black South Africans into the productive economy.
I want to give two or three examples of what we have done. The first example that I wish to point to is growing the pool of black industrialists. There is a later question in which I will elaborate a little bit more. In terms of the answer to that question, we have made available support through the Industrial Development Corporation, the IDC. If we take the 21 years of freedom - over this period - the IDC made available about R60 billion to companies that were either black-empowered or black-owned, in other words, companies with at least 25% of their ownership in the hands of black South Africans. That is a considerable sum of money, because in a way we want to lead the market into opening up – bringing black South Africans in.
The second area, an area that Minister Zulu has been working very hard on, is making funding available to young people, to women, to black entrepreneurs who are small enterprises or co-operatives. We created the Small Enterprise Finance Agency, Sefa, and currently Sefa is committing about R1 billion a year to supporting small businesses and co-operatives.
We want to take this even further. We don’t think that even getting to R1 billion is enough.
The HOUSE CHAIRPERSON (Ms M C Dikgale): Hold it there, hon Minister. Your time has expired. Hon Motara, do you have a follow-up, or a comment?
Ms T MOTARA: Thank you, Chairperson. Minister, thanks for the response. By your own admission, empowerment and transformation have not been at the rate that the department would have wished for. Besides the structural challenges and the structural realities, what other factors are also contributing to the slow rate of empowerment?
The MINISTER OF ECONOMIC DEVELOPMENT: Thank you for the question. I would indicate that one of the big challenges that many black South Africans face in coming into the economy is the presence of monopolies, cartels and price-fixing and in that it excludes people actively. So the remedy in part for that is to have a much more active competition policy, to have the capability in the state to investigate monopolies and cartels. Cartels occur when two or more companies get together and co-ordinate either their pricing or their other actions. The Competition Commission and the Commission Tribunal have been particularly active in the past four to five years in uncovering evidence of cartel behaviour in the economy.
The headline has been on the construction industry. But I am pleased to say that its work has gone way beyond only the construction sector. For example: it uncovered evidence of the abuse of market power in the fertiliser sector, involving Sasol a number of years ago. It uncovered cartel behaviour in the bread supply industry, in the supply of chickens, in cement, in each of these areas. And its job is to break open those markets so that black South Africans can also enter those markets.
Mr B G NTHEBE: Thank you so much, Minister. You indicated that part of your democratisation of the economic space would be to be inclusive in all fairness. Are we making, in your own assessment, progress in making sure that measures that are put in place, like your preference procurement systems, are bearing the same fruits to make sure that we also give the previously disadvantaged section of our society the power to be competitive? Thank you, Chair.
The MINISTER OF ECONOMIC DEVELOPMENT: Thank you very much. My answer is in two parts. The first part is to say that we are making progress in a number of areas, and I would like to illustrate that in a moment. I would like to say, against the expectations of our people, 21 years after democracy, there is clearly a need to step up that pace quite significantly. That is why the ruling party has put it to government that there needs to be radical economic transformation, that we need to ensure that what we are doing, what we are getting right, needs to be done on a much wider scale and much faster.
Let me give an example of success. Parliamentarians may not be using the MyCiTi bus service, but if you did and you used any of those buses, we have worked with one of the shareholders in the MyCiTi company; in fact, the dominant shareholder is a black South African. So there is an example of where we using the combination of localisation policies, support from an organisation like the IDC, and the natural talent and hunger of that entrepreneur, that industrialist. But we must now scale this up right across the transport sector, so we are now looking at how we can ensure that more of the component supplies for the auto sector, for example, are done by black South Africans.
So, this is really about saying, “We have to do a lot more; we have to speed up the process of transformation,” not just bringing in individual black South Africans, but giving opportunities for large numbers of people, ensuring that we change the structure of our society and we combat inequality.
Mr J W W JULIUS: Thank you, Chair of Chairs. Hon Minister, I would like to thank you for the acknowledgement that after 21 years of democracy this government and some policies, such as BEE, has failed the people they were intended to benefit. I think that is clear; it’s out of the way.
Part of this problem is due to the fact that the beneficiaries are those who are closest to No 1. Some gained, and some didn’t. The masses didn’t gain. Therefore the hon Motara is correct in questioning the failures of BEE.
But, hon Minister, what assurance can you give us, seeing that corruption is eating at the very heart of the plans that we are making. What assurance can you give that this is not yet another poor attempt to develop our people to actively take part in the economy? A lot of money is going into this, and if it is fruitless, hon Minister, it is actually wasting our people down there. What assurance can you give us that all your other plans will work, seeing that the others didn’t work? Do you have plans in place to curb this corruption and all other things that will make your plans not to succeed? Thank you.
The MINISTER OF ECONOMIC DEVELOPMENT: Thank you very much, House Chair. Of course, the hon member is entitled to make a speech, but as I understand it the real question is: Will we succeed? The answer is that we have had enormous successes. We want to do even more. We owe it to our own people, and instead of pointing to failures, what we’re saying is that compared to the country we inherited 21 years ago, we have made a sea change in the lives of our people. But compared to the country that we want to have, the vision we have set for ourselves, we have lots more to do and we are doing that. So, the hon member, as I understand it, comes from an opposition party that runs the provincial government of the Western Cape. The last time at the Western Cape economy we saw very little transformation. We saw Africans in the rest of the country much more actively absorbed into the economy, as workers, as entrepreneurs, as owners.
So, I think what the ANC-led government has shown is the courage to transform the economy. And what that government is saying, is based on our successes, we want to do even more. That is the answer that I gave.
The HOUSE CHAIRPERSON (Ms M C Dikgale): Hon Mtileni, you are the last member. Are you still drafting your question, hon member?
Mr V E MTILENI: No, I’m not.
The HOUSE CHAIRPERSON (Ms M C Dikgale): I gave you a chance ...
Mr V E MTILENI: Thanks, Chairperson. I am happy that the Minister is giving honest answers today. You saw yesterday, Mr Minister, the EFF already starting to knock on the doors of those who are actually in control of the economy. You must have realised the seriousness of this issue, and you must answer this question honestly because the people are watching.
Yesterday, we knocked on the door of the JSE, the Chamber of Mines and the Reserve Bank owing to this problem. Now, I just want to know: How do you plan to democratise ownership and control of the economy that is in the hands of white monopoly capital, which the very same government of yours, your government, has been seen to be failing since you took over the apartheid rulers? What assurance can you give South Africans? We are indeed going there. Are you going to be copying from the EFF, as you saw us do yesterday? [Interjections.]
The MINISTER OF ECONOMIC DEVELOPMENT: I guess, hon House Chair, the hon member has a deep sense of humour. Let me say that there are two key things that we need to do. The one is to change entrenched power structures. The other is to ensure that we have broad-based transformation. I have pointed to eight elements of the package of measures that we are taking, and in the available time it wasn’t possible to go into all of them in detail.
Let me give an example of the kind of things that we are doing. In the work that we have done through small business development, Sefa provided funding to 26 714 youth-owned enterprises. The vast bulk of them were enterprises owned by young black South Africans. When we do that we empower young people to provide components to our infrastructure programme, to provide services to manufacturing, to manufacture goods in the productive economy. That seems to us to a much more productive of transforming the economy than the example that the hon member has given.
But as we change our country, as we make progress in ownership and in each of these areas, we set the bar higher and higher. That is what economic transformation is about. You don’t rest on your laurels. You say, “We’ve arrived; we’re happy now.”
Earlier today Minister Davies and colleagues were talking about a programme around deepening black industrialisation.
The HOUSE CHAIRPERSON (Ms M C Dikgale): Order, hon Minister. There are two members who are standing up. Could we have order in the House, hon members? Thank you. Continue, hon Minister.
The MINISTER OF ECONOMIC DEVELOPMENT: So, my advice to the hon member from the EFF is to march in support of government policies, because government policies are actually beginning to transform this economy. They are actually beginning to make a change in the lives of black South Africans. They are actually providing opportunities for black South Africans to enter the mainstream economy. We look forward to members of the EFF supporting the ANC on our programme of radical economic transformation. Thank you.
Gini coefficient of SA
212. Mr M Khawula (KwaZulu-Natal: IFP) asked the Minister of Economic Development:
(a) What is the gini coefficient of South Africa and (b) how does this compare with (i) the Government’s job creation efforts and (ii) 16 million South African beneficiaries already on the social programmes? CO616E
The MINISTER OF ECONOMIC DEVELOPMENT: House Chair, the Gini coefficient is of course the most commonly used quantitative measure of income inequality in a society. It is derived by plotting the share of income that goes to every percentage share of the population. In theory, if everybody had an equal income, the Gini coefficient would be zero. If just one person in the country earned all of the income, then the Gini coefficient would be one. So, it is between zero and one, and that is how it is measured.
We measure the Gini coefficient through the Income and Expenditure Survey every five years. The latest one was done in 2011, and I am going to talk through that, but we are looking forward to the next one which hopefully will come out next year.
In the case of South Africa, I should note that one important source of income is social grants, so it is not just income earned at the workplace, but it is also cash transfers of this nature. South Africa has generally been regarded, during the period of apartheid, as one of the most unequal societies in the world, with the reasons for that rooted in exclusion policies, policies that excluded the majority of South Africans. The Gini coefficient, if measured by income – so there are two ways of measuring it – is 0,69. For us, we regard that as a very high Gini coefficient.
What is particularly worrying is that inequality is increasing globally. Not just in South Africa do we have an enormous challenge of income inequality, but it is one that is taking place in advanced economies and other developed economies. Some have said that there are two reasons for this. The one is when you rely solely on markets. When you don’t intervene enough to address some of the distortions that come out of it, then you may well find that the outcomes are concentration of wealth.
What are we doing about this? I want to point out five issues: social spending, wage policy, making funding or finance available, jobs, and fiscal policy. On social policy, most of our budget goes ... it is a pro-poor budget. It goes into the building of clinics and schools in historically disadvantaged areas. It goes to social grants. The World Bank did a study recently in which it looked at South Africa. The study was published last year in 2014, and it looked at wages of people, direct taxes, cash transfers, and indirect taxes, clinics, schools, and all of that. The study found something very interesting. It found that South Africa’s income inequality would drop if we take into account public policy interventions. It would go down from 0,7 to 0,59. I want to quote from the World Bank study. It says, “South Africa has had more success in using fiscal policy tools to reduce inequality and poverty than 11 peer countries”, in other words, for the sample they looked at.
The second intervention is minimum wages. The Deputy President is now leading discussions in Nedlac with business and labour for the introduction of a national minimum wage that would be the lowest wage that any South African would earn. Income matters when you look at inequality issues.
The third area is finance and funding. For example, through the Industrial Development Corporation, we make funding available to black empowered companies – I had given the figures earlier. We bring youth in because a lot of the inequality in this society is generated because a small group of people have the bulk of the assets in their hands, and large numbers of South Africans are asset poor.
The next intervention is fiscal. Our tax policy is broadly progressive. In the Medium Term Budget Policy Statement, Minister Nene noted that he was seeking advice from the tax commission on wealth taxes. Wealth taxes have been used in some countries to reduce inequalities in those societies. Thank you. [Time expired.]
Mr M KHAWULA: House Chair, I would like to thank the hon Minister.
Lo mbuzo kahle kahle ushaya itoyitoyi. [In reality, this question is toyi-toyi-ing.]
It relates to the whole issue of our country’s economy which does not only pertain to your department but the whole economic policy of our country. I will not address the “what ifs” like you have been doing. I am going to go straight to the facts. The facts of the matter are that the economic distribution in our country is very skew. Those who get have so much, and they are very few. The majority at ground level gets very little of what is there in the economy of our country. It is very skew. It points to the issues of slow growth in the economy. It points to the issues of job losses. It points to the issues of corruption and all the other negative aspects which affect this inequality. It points to the issues of the short-term relief measures which, in South Africa, do not remain short term. They are supposed to be short term, but they end up being long term. It points to the issues of the failing government entities which are not being attended to.
Hon Minister, my question is if you look at the table, of the 176 countries that were measured, South Africa is one from the bottom. Lesotho is below us. In Brics, we are at the bottom. We are number five. I can go on and on. When will we have an economic policy that moves South Africa towards job creation and takes South Africa away from giving handouts to people? Relief measures are alright, but they should be short term. In South Africa, they are not short term. Thank you.
The MINISTER OF ECONOMIC DEVELOPMENT: Chairperson, I would like to say that when we look at inequalities, there are two key things we look at. The one is income inequalities, and the other one is broader inequalities. The measures government has taken on tax and on public spending have addressed some of the wider inequalities, although, as I indicated, there is more to do. Where inequality has reproduced itself regularly is in the economy – on wages. So, our key intervention there is on minimum wages. It is not the only one, but it is the key one.
If the question that the hon member would like to focus on is job creation, I would say that we have a very clear bias in our policies towards job creation. In the Quarterly Labour Force Survey that I had quoted earlier, if we look at the period since the recovery from the global economic recess in 2010 when job numbers began to rise again, over that period, the employment numbers, the net new jobs created in the economy, exceeded two million. Does that mean we say that we’ve solved the crisis and challenges of unemployment and inequality? No. However, what it does show is that government is using the public instruments to combat these, to create new jobs, to facilitate the creation of new jobs in the private sector, to look at issues of income distribution.
We recently had someone invite a French economist, Piketty, who has done a lot work on income inequality and general inequality in Europe and elsewhere. The work that he has done shows that many of the processes of global economic integration exacerbate income inequalities. He had one other insight. His insight is that inequality is not only something that happens with incomes. When you inherit wealth, when you have wealth that has been inherited, often that wealth grows much faster than income. So, the measures that he has proposed and that policymakers are discussing in many parts of the world include looking at a comprehensive set of measures on addressing income inequality. Therefore, I have pointed to Minister Nene’s statement in the Medium Term Budget Policy Statement. Thank you.
Ms T G MPAMBO-SIBHUKWANA: Chairperson, through you to the Minister, surely you will agree with me when I say we need to restore the dignity of our fellow South Africans. The only way we can do this is by affording South Africans good, affordable education and also through the creation of jobs. I want to know the following from you, hon Minister: How does your department fit into the constitutional right to education? What will it do to fit into this, as you continuously give this House positive statistics, yet the employment rate is just moving in the opposite direction? I thank you, Minister.
The MINISTER OF ECONOMIC DEVELOPMENT: Chairperson, let me start with the question of the unemployment rate before coming to skills development. Yesterday, when the Quarterly Labour Force Survey was released, what it showed was a 0,5% rise in the unemployment rate, not because jobs were not being created but because many more people were entering the labour market looking for work than the capacity of the economy to create jobs.
So, if I take the 12 months as a whole, roughly speaking a million additional people entered the labour market. I think it was about 978 000 if I recall correctly. The economy created just over 770 000 new jobs. So, that explains the rise in unemployment, but the quarter before that the unemployment rate dropped. It has been doing a little bit of a seesaw over the last nine months or so. Every quarter it comes out. What is happening to real job creation is that it is going up. The unemployment rate still requires us to do more, and therefore I want to emphasise this duality. We are making progress, but we need to do more. That is the story we have.
Then, on the skills issue, what my department is doing in the area of skills development is the following. We facilitated, working with the Minister of Higher Education and Training and the Minister of Basic Education, an accord with the business community, with the main trade unions, and with a number of community organisations to work together to try and address the skills challenge. Practically, it is the following. It is strengthening the technical, vocational, and education training colleges. It is providing more opportunities for young people to be absorbed in workplaces as learners and as apprentices.
Also, very importantly, as part of that, we have worked with companies such Eskom and Transnet in the public sector but also private sector companies to fund bursaries for young people at university, particularly in scarce skills like artisanal skills and engineering skills. So, that is the kind of thing we are doing.
On infrastructure, we work with a number of different departments to try and identify where the skills shortages will be tomorrow and work with universities, in turn, to help produce those skills so that we get rid of the mismatch between what educational institutions produce and what the economy needs, that we breach that gap. Those are the kinds of areas that my department is involved in on skills development.
Dr Y C VAWDA: Chairperson, I greet you all. I would like to ask the Minister, if I am given the chance, of course ... Chairperson, we have seen recently in South Africa racial tension because of the discrepancy on racial grounds with regard to job creation and job opportunities, and we have seen this result in xenophobic attacks. What we are asking is the following: What has the Minister’s department done to analyse what impact job creation is having amongst the various race groups in order to identify areas where this could be addressed and, in the process, to reduce the level of tension so that what is called xenophobia today does not end up as ethnic cleansing tomorrow? Thank you, Chair.
The MINISTER OF ECONOMIC DEVELOPMENT: Chairperson, to hon Vawda I should indicate that during the period when there were attacks on some people, in particular townships earlier this year, we commissioned some work that analysed what the job creation effect is in South Africa on our trading relationship with the rest of our continent. Remember, in some cases – in a number of cases – these were attacks on fellow Africans. It was fascinating when we looked at the export figures to see how dependent job growth in South Africa is, including the absorption of young people, on us being part of African markets. In fact, what South Africa sold to the rest of the continent accounted for more than 250 000 direct job opportunities here in South Africa, excluding indirect jobs and induced jobs.
Today, if you look at the area where government is centralised in Pretoria, there is an auto manufacturer, Ford Motor Company, that produces the Ranger bakkie. One out of five of those Ranger bakkies is sold elsewhere on the African continent. If you look today at which countries our major trading partners are, who buys most of the televisions that we make in South Africa – because we now make televisions in Atlantis, in the Eastern Cape, and in other parts of the country – our single biggest market is not France. It is not Germany. In fact, it is Zambia. The single biggest market for South African plastic products is Zimbabwe. The single biggest market for South African clothing is not the United States through the African Growth and Opportunity Act. In fact, last year, it was Mozambique. So, it is about bringing this kind of facts into the public discussion.
Of course, doing that also requires that we need additional interventions to provide opportunities for young South Africans. Minister Zulu’s work is very much focused on finding opportunities in small business development, and we are all backing her in that endeavour. Some of the other areas are in the Expanded Public Works Programme, but they are also in helping to grow manufacturing, mining and agriculture. When we get positive news from agriculture, as we got yesterday in the Quarterly Labour Force Survey, it is something that we welcome.
We know there are challenges coming – I have indicated the drought and its effect – but that is how, ultimately, we want to deal with any potential resort to blaming foreigners. The one is to show the interconnectedness of African economies, and the other one is to step up our efforts to create more jobs here in South Africa for South Africans. Thank you.
Triple challenges experienced
228. Mr S J Mohai (Free State: ANC) asked the Minister of Economic Development:
Whether the Government has identified segments of the economy that are experiencing major challenges (details furnished), especially in ensuring that unemployment, poverty and inequality are addressed; if not, why not; if so, what are the relevant details? CO632E
The MINISTER OF ECONOMIC DEVELOPMENT: Chairperson, the Question that hon Mohai asked provides us with an opportunity to sketch a little bit of the context within which the economy is operating today.
We face a combination of global and domestic challenges. On the global side, global growth remains uncertain. China has significantly slowed down and a slowing Chinese economy directly affects South Africa, because China is a very important market for our own products. If we look at the recovery of our own economy as from 2009, a very big part of that is on the rise in export-based on Chinese demand. When Chinese demand shifts, it impacts directly on our domestic economy.
The International Monetary Fund, IMF, met recently in Lima and it restated global growth. So, the markets within which we operate – to which we sell our chairs, our televisions, our clothing – are slower, are growing slower and, in many cases, are mired in recessionary conditions.
Today, Brazil, Russia and Canada are in recession. All three those economies are mineral-rich economies. So it shows the impact of the global slow-down on a number of different economies.
There are also domestic challenges with which we need to deal.
So, what are we doing about this? The President in the state of the nation address in February of this year outlined a nine-point plan that is intended to reignite growth and address the slowing global demand by relying much more on what we can do here in South Africa and on the continent.
The first of those points deals with resolving the energy challenge. The second deals with revitalising agriculture and the agroprocessing value chain. The third is about advancing beneficiation. The fourth is about a more effective and higher impact Industrial Policy Action Plan – and Minister Davies is leading our work there. The fifth is about encouraging private sector investment – and we have had a number of successes in the renewable energy space. The sixth is about moderating workplace conflict – getting business and labour to work closer together. The seventh is about unlocking the potential of small, medium and micro enterprises, co-operatives, and township and rural enterprises. The eighth is about boosting the role of state-owned companies, the ICT sector, water, sanitation and transport. The final point is about Operation Phakisa, which is aimed at growing the ocean economy and other sectors.
One of the areas that we have specifically focussed on is the steel industry. I see there is a Question on the steel industry directed at Minister Davies. I am sure he will give more details of our interventions.
Let me just very briefly point to the interventions we have made in the clothing and textile sector. Seven or eight years ago, people were writing the sector off, saying it was a sector that is in sunset, it is destined to die, and that we need to prepare an exit strategy.
We took the view that nothing in the world, in the economy, in what we are able to influence, is inevitable. We need to fight for our space and for the jobs we have there. We put together a whole range of interventions, from a competitiveness fund that clothing factories can use to modernise their operations, to cracking down on illegal imports, to providing funding through the Industrial Development Corporation, IDC, and other government institutions, to the work that the DTI has done with clusters in the clothing sector.
What has been the effect? The effect has been that employment has stabilised in the sector. In fact, if you look at the factories that are part of the competitiveness enhancement programme that we have in place in government, then 6 000 new jobs have been created in that sector over the last two years or so.
That, for me, is an example of government responding to the sector challenges that there are.
Finally, the question of infrastructure. When an economy slows down, one of the key levers government has available to it is infrastructure spending, both because it is a boost to economic growth and to investment levels, and also because it creates the platform for future economic performance. That is where we have spent a lot more.
We currently spend approximately R1 billion per working day on infrastructure development – higher than was ever spent in the history of South Africa.
Mr S J MOHAI: Hon House Chair, I would like to thank the hon Minister for the comprehensive response on the performance of our economy and for clarifying the anchors of our economic strategy.
However, I would like to ask if the Minister can share with the House the successes of the localisation programme, where and what. Thank you.
The MINISTER OF ECONOMIC DEVELOPMENT: Chairperson, I would like to thank hon Mohai for that Question. Let me take a concrete illustration, a practical example rather than talking about the policy framework or the legislation. [Interjections.]
The HOUSE CHAIRPERSON: Hon Smit, you can’t do that. [Interjections.] Order members! Order! Please continue, hon Minister.
The MINISTER OF ECONOMIC DEVELOPMENT: Thank you, hon House Chair. Let me give an example of bus manufacturing, looking at localisation. Five or six years ago, hon members, all of the buses that municipalities were buying for municipal-provided transport services were imported. In fact, if you look at the older buses you will see that most of them were made in Brazil.
Now, had we imported soccer players, it may have been a different story, but we imported buses! [Laughter.]
So, what we decided was that we needed to change that story line. So Minister Rob Davies, using powers that are available to us under the PPPFA, designated the bus sector. That meant that any public entity that buys buses had to buy buses that are made in South Africa.
On the back of that, a number of foreign investors decided to either set up factories in South Africa, or expand their existing production capability. Today we find that more than 650 buses have been manufactured locally for the MyCiti programme here in Cape Town, for the Reya Vaya initiative in Johannesburg, for the Arieng programme in Tshwane, and for the Gautrain.
Now there is a concrete example where we used to import the stuff, and we now have changed that.
I don’t only need to use buses; I could use taxis as another example.
Again, a number of years ago, we were importing all of our new taxis. We tweaked policy. The Departments of Trade and Industry and Economic Development worked with Toyota, one of the big automakers. After the changes in the policy, today there are two major factories that assemble taxis in South Africa. We have now produced something like probably 33 000 taxis here in South Africa.
A few weeks ago, Minister Davies and I went to eThekwini to visit the Toyota factory. We saw evidence there not only of local assembly, but also of the company’s efforts to further deepen the localisation, and to buy components that go into the taxi from South African manufacturers.
So there are two examples of the kinds of things we are doing to change our storyline. Our storyline does not need to be one of only importing; it can be storyline of making things here in South Africa.
Those are not the only examples, hon members. But, in the available time I wanted to highlight those two. There are many others we can give if there are follow-up Questions that prompt us to do so.
Mr S G MTHIMUNYE: Hon House Chair, I would like to ask the Minister, now that the global economic dynamics are shifting from the, especially in terms of our export, commodity-driven economy to a new manufactured product, what is your impression of the development and creation of the intra-Africa free trade zone? Are we progressing there? I want to link these two to the follow-up Question that was raised earlier around the issues of “the economic migrants” that are in South Africa that have issues with our own people in the recent past which some people would like to term xenophobic attacks. What is your impression? Because I think that would also address that particular problem.
The MINISTER OF ECONOMIC DEVELOPMENT: Thank you very much for that Question. South Africa has 55 million people. We are a relatively small market by global standards. When we think of how we want to grow our markets, in our policy documents we talk about deepening the market and widening the market.
Deepening the market is really about fighting poverty, fighting income inequality, fighting joblessness and bringing more South Africans into the economy.
But the other part is about ensuring that we integrate the South African economy and other African economies.
About three years ago, President Zuma convened a summit in Johannesburg which 25 heads of state attended, and they all agreed that we should work towards a free trade area that would cover 600 million Africans, from South Africa right through to North Africa on the eastern side. At this stage it does not yet include West Africa, but it does include Southern Africa, East Africa and parts of North Africa. A fair bit of work has been done on it. In fact, Minister Rob Davies went to Egypt not too long ago. I think it is Sharm el-Shaik. He initialled a document that sets out the progress that has been made. There is a little bit of legal scrubbing that needs to be done and there are a few areas that need to be agreed upon, but we are well on the way to creating a major trading bloc of 600 million Africans.
We then want to focus on shifting that to include West Africa, so that ultimately, we look to the continent as a single economic space.
Now we are making some progress already. One of the stories that we were all fond of telling nine or ten years ago, was that Africa was a continent that does not trade with itself. There is an old statistic that some hon members might still remember. It said that intra-Africa trade is only 11% to 12% – that the bulk of our trade is in fact with other parts of the world.
We are beginning to shift that. If we look at the intra-African trade from a South African point of view, and we take sub-Saharan Africa as the measure, then we have increased it from about 12% to about 18% or 19%. We are trading more with the rest of the continent.
But trading is not just a function of political will. It means you have to have the infrastructure. You have to have the trains, the road transport, the energy links, and the air links so that aircrafts can fly to trading partners’ airports and so on.
So part of our investment is to be build an integration infrastructure.
The other part is to have industrial policy measure. If we produce platinum, and Zambia produces copper, there is no basis for trading. But if you have dynamic manufacturing economies that use our own minerals, that beneficiate that minerals, then Africa will trade with itself.
So part of the work ... A few months ago, Deputy Minister Masuku, the Deputy Minister of Economic Development, attended a major meeting of SADC countries that looked at the industrialisation of SADC. How to foster greater manufacturing activities in SADC so that economies are balanced economies, and we don’t become only the exporter of raw materials and the importer of finished goods.
But it takes time to get this right. It takes a lot of co-ordination between African countries. There are some early successes, but we still need to do more if we are going to make Africa the factory for itself and indeed something of a factory for the world.
Mr V E MTILENI: Chair, this one is just another follow-up. South Africa is not creating enough jobs and not growing the economy because the country does not have a rapid industrialisation plan. The Minister touched a bit on that one, but I think he needs to substantiate it. Could this be because South Africa failed to industrialise because of bad policy choices of the ANC, or somehow otherwise, Minister?
The MINISTER OF ECONOMIC DEVELOPMENT: First, can I thank the hon member, because I think there is an important acknowledgement when the hon member said that South Africa is creating jobs but not enough. That is what our challenge is – to increase the number of jobs even further. I think it is important that we point that out.
Coming to the Question of industrial policy, in fact, I have very good news for the hon member. The good news is that we have one of the more advanced industrial policy instruments. Many other African countries are talking to us to try to learn from our Industrial Policy Action Plan, Ipap. It is published and has been tabled in Parliament. Minister Davies updates it on a regular basis and then he tables a copy in Parliament. It is also available on the DTI website.
What Ipap does – and this is important – is that it doesn’t put the theory of industrialisation. It doesn’t say why industrialisation is a good thing, because that has already been done. It says what the sectors are that we need to focus on, what the steps are we need to take, what the budgets are we need to allocate, who must do what, and which departments must do what. Then it enters into partnerships with the private sector.
There are a number of sectors in Ipap. Maybe if there is more time I can go through, or Minister Davies can go through it. I’m sure we would happy to do a presentation of the Industrial Policy Action Plan. The Industrial Policy Action Plan has as one of its sectors automotive manufacturing. We are now one of the few growing automotive manufacturing hubs in the world.
If you look at our export numbers of five years ago compared to today, you will see that we are increasing the number of cars that we sell.
If you look at the jobs that are created, they are a significant employer of South African labour.
That is one example of the Industrial Policy Action Plan. There are many other sectors like that.
So I would like to encourage the hon member. In fact, what I think we would do is, we will arrange tomorrow morning to have a copy of the Industrial Policy Action Plan delivered to the member because we need to ensure that we deepen the knowledge about our public policy programmes, and we work closer together on these things. [Applause.]
Mr T C MOTLASHUPING: No, I will not become your spokesperson!
Chair, perhaps I should start on this note that South Africa is a unitary state and not a federal state. I will elaborate as to why I am saying that. Though we took some from the German model.
The ANC-led government has acknowledged the fact that we are facing triple challenge of unemployment, inequality and poverty. As early as yesterday, people were grandstanding and saying to the South African masses ... and I think this is an opportunity to clarify that issue, Minister, that we are here, and I quote, we are here because of the pain of poverty.
Now, when you listen to this statement and you compare the state of the triple challenge facing our country before 1994 and after 1994, just to make an analysis without necessarily going into statistics, as to how far have we gone to redress and how far are we moving at the moment to address these issues.
While the South African economy ... Minister, you have hinted also at some of the things that I am going to say ... continues to face serious challenges, things are looking up in the automotive, film, textile, clothing and footwear ...
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Motlashuping, I am afraid the time allocated to pose a supplementary Question is two minutes.
Mr T C MOTLASHUPING: There is a Question.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Please take your seat. That was a very long preamble.
Expansion of black industrialists
230. Mr B G Nthebe (North West: ANC) asked the Minister of Economic Development:
(1) Whether the Government has established any interventions and/or mechanisms to ensure the growth of black industrialists in order to ensure that the Industrial Policy Action Plan enables the achievement of transformation by expanding opportunities to black entrepreneurs; if not, why not; if so, what are the relevant details;
(2) what progress has been made to (a) expand the pool of black industrialists and (b) ensure that factories and other means of production are owned by black people? CO634E
The MINISTER OF ECONOMIC DEVELOPMENT: Hon Chairperson, hon members, the question raises the issue of the growth of black industrialists, and refers to the Industrial Policy Action Plan of government. I really would like to headline a few areas in replying to this question. The first is the reason we have created a black industrialist programme, and then perhaps I will talk about the steps we’ve taken to implement that.
In the older model of black economic empowerment, there were many instances where black South Africans were given support and assistance to get a share – perhaps 5% or 10% - of an existing enterprise. Our challenge is to move away from that model, to move to a model where black South Africans run factories, mines and the larger farms in the country; contribute to the green economy; run tourism establishments. In other words, mainstream the talent and the energy of all our people in the economy. That is really the heart of the black industrialisation programme.
What are we doing to support the entry of black South Africans into the economy? The first area is to make industrial funding available. One of the big challenges that many smaller enterprises who want to become large enterprises have is access to capital. So, in May this year, I announced a new fund that the Industrial Development Corporation, IDC, will put in place to make R23 billion available over the next five years to support and facilitate the expansion of black industrialists. That will be provided through concessional funding.
The IDC already has a concessional funding window in place. It will take off a further 150 basis points from that window to provide an incentive through cheaper capital for black industrialists to grow their businesses strongly - we hope aggressively - to find new markets, to get the appropriate technology, to invest in the skills of their people.
The second thing we are doing is on procurement. It is to ensure that we, in fact, have a very strong capability in our public procurement system.
Mr C F B SMIT: Hon House Chairperson, on a point of order: I want to know if it is parliamentary for the hon Cathy Dlamini to have been playing games for the last five minutes and thereby disrespecting her Minister in this House. [Interjections.]
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Hon members, order! I am ... let me make ... hon Smit, you are making a point of order. I am making a ruling. Let me make a general appeal to all hon members. Don’t do anything that will compromise the decorum of the House. It’s applicable to all of you.
I am very sorry about that. Could you try to conclude, hon Minister? Hon Minister Patel, I am very sorry for that inconvenience. Try to conclude.
The MINISTER OF ECONOMIC DEVELOPMENT: Hon Chair, I want to pick up on the point that I made. We use funding. We use state procurement. We use what I referred to earlier, competition measures, to begin to open up the economy. We use the development of skills, because black industrialists also need to use the skills and talents of South Africans to run and to grow their businesses. In addition, we have a forum, the BBBEE Advisory Council, and we meet on a regular basis with representatives of black business, and other South Africans, to see how we are doing and what we should do better.
I want to give one small example of the success of our programme. This is in the market for shoes. Some of the hon members here today who may have the tyranny of high heels to contend with will know how comfortable it is to have a pair of pumps that you can fold up and put into your handbag. When you get into Parliament and the presiding officer is not looking, you can take off your high heels and put on your pumps. [Laughter.]
Now, in the past, those pumps were manufactured in China. So, while the feet are comfortable, the workers there are without a job. We are trying to make sure that, not only are the feet comfortable, but we are also trying to create jobs. So, the IDC backed a local company called Chic Shoes. It is owned by a black woman. It is run by a black woman, and they make these comfortable pumps, here in South Africa. She set up a factory at a time when everybody said the footwear industry is dead in South Africa, we have got to import shoes.
Today, she employs 300 workers. She grew so fast, her premises became too small and she had to expand. When I visited her new premises and asked her what her plans were for the future, she said she hopes that she can grow to 500 jobs over the next year-and-a-half to two years, using the facilities that the IDC is making available, working with the Department of Trade and Industry, DTI, and other government agencies.
Now, that is an example of a black South African woman who is industrialising her area. She is bringing together the factors of production: the technology, the people, the factory, and the raw materials. She is finding the market in the retail sector. She is also ensuring that we have people who create wealth as much as people who ensure that wealth is distributed fairly. So, that, for me, is an example of the success of our programme on black industrialists. Therefore, I would like to urge the hon Members of the NCOP to wear South African-made shoes. Thank you.
Mr B G NTHEBE: Chair, I want to assure the Minister that I am very patriotic. I am wearing South African shoes.
In part of your response, Minister, you came out explicitly about one element. What you are seeking to do - and part of your competitive measures - is to make sure that you elevate such people so that they have some competitive advantage. I can give you an example.
Go to the former mining towns. Go to Welkom in the Free State, for instance. Mine dumps are just sitting there. Mines are not being rehabilitated. These mine dumps are worth millions. Our own people can start small and become big players in the mining industry through such processes. These things are not being done.
Are these competitive measures you are seeking to take seeking to open up such competitiveness that our people can go into such measures and be able to be competitive in that space? Is that what your R23 billion is apportioned to; and are we going in that direction? Thank you, Chair.
The MINISTER OF ECONOMIC DEVELOPMENT: Chair, the short answer is yes. It requires us to provide more than only funding. There are a few other challenges that we must overcome, so, we have now set up the Mining Phakisa. In the next few months, we will be bringing together not only the larger mining companies but also the small miners, community representatives, representatives from organised labour, and others, to look at how we can use the mining resource of the country. That is not just the ore that is beneath the soil. It is also the slags, the mine dumps, and so on.
It provides an opportunity for new industrialisation. Minister Davies will tell you about examples of our working in the iron ore area to find new technologies that can take the magnetite and convert it into product that can be used in our industrial processes. So, there is a bit of work that has been done in this area, but I think there is scope for small to medium-sized companies to come in. Perhaps this is an interesting area that we can look at with Minister Zulu, and sit with the Minister of Mineral Resources to see if there are policy tweaks that may be needed. Is it simply an issue of the availability of funding? In addition, if hon members have suggestions of ideas, feel free. This is your government.
Mr F ESSACK: Hon House Chair, hon Minister, I have sat here and listened to all your positive, motivational comments and replies. I must say, for the viewer out there, it sounds pretty impressive. If I might just add: In the next 12 months, how would you propose to recapitalise the IDC to begin to get it off the ground? Currently, the IDC is not, with due respect, playing its role as successfully for entrepreneurs that would really like to get off the ground, with the current red tape that is in place. What would your Ministry do to get the IDC to play the role it is designed for? Thank you, Chairperson.
The MINISTER OF ECONOMIC DEVELOPMENT: Chair, I thank the hon member for the question. Let me start by saying that the IDC is one of our very important national resources. Its impact on the economy is often not known. If a foreign investor had to come to South Africa tomorrow and offer to invest R10 billion in the economy, I think we all agree we would need to roll out the red carpet, because it would help to create jobs.
If one looks at the last five years, the IDC has committed R60 billion of its own money, directly - R60 billion. However, when the IDC commits money, it’s not only its own money that counts. There is a private sector partner on the other side – what you would call the counterparty. I sat with the IDC the other day and we tallied up the value of all the projects it has approved in the last five years. Over just the last five years, its own contribution, as well as that of the private sector counterparties, amounted to the sum of R163 billion. R163 billion! That is an extraordinary sum of money mobilised by a partnership between the public sector and the private sector.
What we have done is that we are sweating the balance sheet of the IDC much more actively than before. We sat down five or six years ago, looked at the IDC balance sheet, looked at its legacy investment, and did a prudency test - which is looking at what kind of debt-to-equity ratio you need to still maintain sustainability.
Over the last couple of years, the IDC has been stretching and doing a lot more. It has virtually doubled the nominal value of investment over the last five years compared to the previous period. I want to emphasise that it has done it and still maintained a very strong credit rating. In fact, the rating agencies have given it a very solid rating. That rating is important to us because it means the costs the IDC pays when it borrows money against its assets are cheaper than it otherwise would be. So, hon member, I would like to say that there are successes.
We would like the IDC to do even more. I sat down with the IDC board and I said that they had done very well. They have increased their approval rate to an average of R11 billion to R12 billion a year. That’s very good, but I now need them to stretch more in the future and look at a five-year period when they can try to reach R100 billion in approvals. Now, that is enormously hard for the IDC to reach, not because it doesn’t have the money, but because it constantly needs to look for good projects that are viable and when it backs them, it is not just wasting public money. However, it is now retooling to try to achieve that.
I would like representatives, hon members, from all political parties to join us in celebrating the success of the IDC, whether hon members are from the ruling party, the ANC, or the DA, the EFF, or any of the other political parties. When something good happens ... when Bafana Bafana wins – and we know we will have to wait for that to happen – or when we win in rugby, as we did against Wales, we all celebrate. [Interjections.] When the IDC does well, we all need to celebrate. Thank you very much. [Applause.]
Ms T G MPAMBO-SIBHUKWANA: Hon Chair, hon Minister, I would like you to explain something to this House, based on what you have created previously. I must say, a black industrialist now is not the same as a black industrialist created previously, in 1994. If you could, Minister, would you explain to me – and really get to the significance of the semantics – the difference between a black industrialist and an ANC crony? [Interjections.] I would be very happy. [Laughter.]
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Order, members! Order, members!
Mr S G MTHIMUNYE: Chair, I am not sure if this is a question and worth responding to. It’s not even relevant to the question on the Table now. [Interjections.]
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): No. You can’t make a point of order on top of a point of order. Let me make a ruling. [Interjections.] Can you take your seat while I make a ruling? Hon Mtileni, take your seat.
Hon Mpambo-Sibhukwana, you know that if you have a supplementary question, it must be linked to the original question in front of us. However, let’s leave it to the hon Minister, if he has any intention of commenting on what you have said. Hon Minister, it’s entirely up to you.
The MINISTER OF ECONOMIC DEVELOPMENT: Chair, I don’t think there was a question to respond to.
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Thank you. Hon Julius ... [Interjections.] ... can you stop there? Hon Mtileni, hon Mtileni!
Mr V E MTILENI: So, he is not answering because Mthimunye said it’s not a question?
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Hon Mtileni, let me remind you – perhaps it is because you were not in. We started with the Economics Cluster yesterday. If the hon Julius has the floor and you are not even recognised, can you please respect the hon Julius and allow him to ask his question. When it is your turn, you will be the opportunity, in the same way we have been doing since we started. Hon Julius.
Mr J W W JULIUS: Chair, I thank you. Hon Mtileni, the original Julius has the floor now. [Laughter.] Thank you, Minister. I think the confusion is inevitable. For the whole day now, the Minister has kept referring to trade and industry in his responses. This is because of a bloated Cabinet. We have Trade and Industry, then this and that, then Small Business Development also came in, later. So, there might be confusion, you know. You proved it today. You kept on referring to other departments, Minister.
However, my question is: How many black industrialists were supported by government? I am referring to government because of my preamble - the closeness of these departments, let me put it that way, the closeness of these departments. How many black industrialists were supported in Gauteng during the past financial year? Thank you.
The MINISTER OF ECONOMIC DEVELOPMENT: Chair, my response would be that that is obviously a quantitative question that the hon member is entitled to put as a written question. The convention of the House is that those kinds of things are dealt with by way of a written question.
However, let me use the opportunity to make the point – and again, I’m going to refer to the IDC as one of a number of instruments to support the development and growth of black industrialists. In the past 12 months, that is, the 2014-15 financial year, IDC approvals to black-empowered companies amounted to R5,9 billion. I imagine there would be a number of them in Gauteng, but that is just one part of it.
There is also the Small Enterprise Finance Agency, SEFA, itself, which supports the programme of government on black industrialisation. There is the direct funding made available from the DTI, and, by the way, I am proud to mention the DTI because we are actually a government that works together. [Interjections.] It is a government in which one Minister or one department does not try to pretend that it is a government. We work as a team. Today, I mentioned the DTI a lot but, on the minimum wage, I may well have wanted to mention the Department of Labour and the work that Minister Oliphant is doing; and on the promotion of co-operatives and small business and township enterprises, the work that Minister Zulu is doing. We integrate that.
Part of the work that my department does is to connect the infrastructure programme to help co-ordinate the work where there is overlap between what the province does and what national government does – that includes the Western Cape – and what local government and national government do. So, I would, in fact, take the point that, as we become more successful in the co-ordination of policies, we will mention what each of the others does, more and more.
Government requires the use of instruments across many different departments. Before Deputy Minister Cronin feels left out of this, Public Works is a critical driver in the economy in a number of different ways. It is, in fact, the biggest landowner in the country. It’s also the department that has a particular and very important mandate on the Expanded Public Works Programmes, EPWPs. When I look at the job numbers, I see how important that continues to be as part of one of a number of tools dealing with jobs.
So, I am proud to be associated with a team in Cabinet that works together to address the challenges of jobs, the challenges of increasing equity in the country and the challenges of making this a country of social inclusion. Thank you very much. [Applause.]
Fight against unemployment
226. Mr C J de Beer (Northern Cape: ANC) asked the Minister of Labour:
(1) Whether any discussions are in place between her department and private farmers to assist in the fight against unemployment; if not, why not; if so, what are the relevant details;
(2) what role is the private sector playing to assist her department in reaching its target of one million jobs?
CO630E
The MINISTER OF LABOUR: House Chairperson, the Department of Labour is engaging both the private and public sectors in its efforts to make a contribution in tackling joblessness. This is done through various schemes and programmes in the department, including the Training Layoff Scheme; the Labour Activation Programme; Productivity SA that deals in particular with those companies that are in distress; and also through job summits and job fares.
I must also say that the department acts with the private sector through the Employment Services system interface in its efforts to contribute towards national employment targets. We also work together with various departments on the integrated programme, particularly when it comes to the retraining of workers who are retrenched or injured at work.
When it comes to the Training Layoff Scheme, we use that scheme to avoid retrenchments so that workers can remain at their work. As a department we have just launched the Supported Employment Enterprises for people with disabilities, which was previously known as Sheltered Employment Factories.
Lastly, we have the agreement with Basic Education to supply school furniture to new schools, particularly in the Eastern Cape, and we are also working together with the Department of Health here in the Western Cape to supply linen that is being made by people with disabilities, to hospitals around the Eastern Cape. Thank you.
Mr C J DE BEER: Thank you hon Minister for the reply. Make a note also of the Northern Cape when it comes to furniture for schools. There is a challenge in that province as well.
Referring to the employment tax incentive and in looking at the agreements between your department and the private sector in terms of all the agreements, what are the success stories that you can inform us about?
The MINISTER OF LABOUR: Thank you very much, hon member. In terms of the agreement, firstly we do have the agreement that has been signed between the business forum that is chaired by the President and also the Human Resource Development Council, particularly with regard to skills development that is led by the Deputy President where the private sector identified the skills that are short in those various companies. We then agree to work together in training those people who are available to take those positions and we work together even through Sector Education and Training Authorities, Setas, to do that.
I must say that we do have good working relations and we also have the chamber at the National Economic Development and Labour Council, Nedlac, which deals specifically with the issues of job creation and also where there are agreements, in particular the accords that are signed. Those accords that were signed were led by the Minister of Economic Development. Thank you very much, House Chair.
Mr F ESSACK: Thank you, House Chairperson. Hon Minister, I feel compelled to ask, based on the original question from my colleague hon De Beer – where he asked what discussions are in place between your department and farmers to assist in the fight against unemployment – which is obviously a question that you have been privy to for the last two or three weeks. Based on that, and to make it easier for you, I must then ask you hon Minister, considering the issues – and I’ll go a little slow so that you can capture it correctly – of import input costs such as the diesel price, fertiliser, VAT, etc on farmers, what incentives are there in place for the private sector, including the farmers, to further create employment? It’s absolutely based on the original question.
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Hon Essack, I’ll leave it to the Minister to comment if she wants, but you are introducing a new question. Hon, Minister?
The MINISTER OF LABOUR: House Chair, I think the hon members must have an understanding of exactly what is the role of the Department of Labour and what is the role of the Department of Trade and Industry. The question that the member is asking now is a question that should be posed to the Department of Trade and Industry because they are the ones who deal specifically with those particular questions.
Mr F ESSACK: On a point of order, Chairperson: I made it very, very clear and I ... [Inaudible.] ... very slowly. My question is entirely based on the question that was asked by hon De Beer which the hon Minister has been privy to.
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Hon Essack, that is why ... [Interjections.] Can you take your seat? Hon Essack, you are not recognised. That is why when you posed the question I even tried to assist you because you introduced diesel, petrol to the question of farmers. [Interjections.] We are dealing with the economic cluster. We will get to that question. Hon Mathys?
Ms L MATHYS: Thank you, Chair; it’s so nice to be recognised in the House. [Interjections.] I’m always here. Minister, my question is talking to the issue of the Sectoral Determination of farmworkers. What exactly has the department been doing to ensure that farmworkers are actually implementing the wages that have been determined, and what is the department doing to those farm owners who are not complying?
The MINISTER OF LABOUR: Chair, in terms of those who do not comply with the Sectoral Determination, we do that through inspection and then we send the report based on the outcomes of that inspection. If the company or the farmer does not comply then we give the report to the Labour Court to decide because we do not have the powers to prosecute. So, they do that on our behalf. That is stipulated in our own laws in this country.
However, I must also say that when it comes to the Sectoral Determination, we have public hearings where we invite employers and farmworkers as well so that they can contribute to what kinds of issues should be included in the Sectoral Determination. In 2012-13 we even recommended to Nedlac that it discuss the issues that were the outcome of public hearings. That report is still before Nedlac, so business and organised labour are still looking at those issues. Thank you.
Ms E C VAN LINGEN: Hon Chairperson, perhaps the Minister can tell us how many cases have been laid against farmers for unfair treatment against farmworkers.
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Let me assist members and remind you that in terms of section 246 subsection 1, if the Chairperson is of the opinion that the question deals with matters of a statistical nature, the Chairperson may direct that it be placed on the Question Paper for written reply. Be that as it may, I’ll allow the hon Minister to respond if there is any need to comment; however hon members, I have already clarified about questions that are statistical in nature. It’s our rules.
The MINISTER OF LABOUR: Chairperson, I can’t give the figures today but I am must say that the only one I know of where there was a problem was where the farmer bribed the inspector. That case is in court and it happened here in the Western Cape. I do believe that the outcome of that case will be made soon. Thanks.
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Hon Mathys, we only have four supplementary questions. I’m writing them. It was De Beer, then Essack, then Mathys and the last one was hon Van Lingen. So, you are going to be the fifth one.
Ms L MATHYS: [Inaudible.]
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): We will do that.
Ms L MATHYS: [Inaudible.] ... don’t be so ... [Inaudible.] [Interjections.]
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Hon Mathys, order! Hon Mathys, I kindly request you to refrain from making utterances that are not right. [Interjections.] We now come to Question 241 as asked by hon Julius. Hon Julius ... [Inaudible.] your question?
Mr J W W JULIUS: Chair, I just need us to record that it’s a new thing in Parliament. I just want us to record that it’s an executive undertaking that you just made. Thank you. [Interjections.]
Constraining labour legislation
241. Mr J W W Julius (Gauteng: DA) asked the Minister of Labour:
Whether she is making a concerted effort to improve the constraining labour legislation, such as the amendments made to the Labour Relations Act, 1995 (Act 66 of 1995), that are job-killing, which came into effect in 2015; if not, why not; if so, what are the relevant details? CO645E
The MINISTER OF LABOUR: Thank you, House Chair. Let me just tell the members first on the previous question that when we submit to the Labour Court, we will wait for the outcome of the Labour Court and then we will submit that report to the members. That’s what I can do. On question 241, I think Chairperson; the assertion by the hon member has no evidence. I am raising this because when the member says that labour relations kills jobs, then I have a serious problem on whose behalf is the member talking. Fortunately, as the Department of Labour, we work with all social partners. That’s business, labour, community and the government. And if he is speaking on behalf of business, businesses have supported the amended labour laws of this country. In fact, even when it comes to the international obligation, the International Monetary Fund, IMF, report that was tabled in the International Labour Organisation, ILO, said, we are the best country. We have even moved six steps up since we have been told that we are the best labour market policy country and that has created stability in this country. The unfortunate part of it is that, those who really are against the transformation in this country will always say, our labour market policies are killing jobs. I must appeal to the hon member, that, firstly, maybe he has to go through the amended version and also when he does that, he must also look at the Regulatory Impact Assessment that was done when we were dealing with those amendments. Thanks, House Chairperson.
Mr J W W JULIUS: Thank you, House Chair. That was rather a political answer. I am happy with it, hon Minister, though. I think the flip flopping of policies is never a good thing for governance. Did the department do a Regulatory Impact Assessment to determine the effect of the current proposals on economic growth and job creation in respect of the amendments made to the Labour Relations Act No.66 of 1995? If so, what did this Regulatory Impact Assessment, RIA, revealed? If it wasn’t done, what are the implications then for economic growth? Minister, I am asking this question because I am concerned. We had in tourism the issue, Chairperson, with Home Affairs, right, the visa regulations and it had a severe impact on jobs, and this is the heart of government; I think economic development, the heart of government. It will impact on all others, Minister. So, my question is: Did you do the RIA, and that’s the Regulatory Impact Assessment to see whether this won’t have a negative effect like the other one that we have just seen, that government acknowledged that it was a mistake, those visa regulations. Thank you, Chairperson.
The MINISTER OF LABOUR: Thank you, House Chair. I have already said that the best thing for the member is to read the amendments together with the Regulatory Impact Assessment because before we amend any legislation, we have to do Regulatory Impact Assessment. It was done, hon member.
And secondly, when people are saying this is killing the jobs in our country, it’s only those who want to retain the status quo, particularly when it comes to the casualisation of the workers. We have said that we don’t want contract workers in perpetuation in this country. Those are the only people who are complaining, but unfortunately, the very temporary employment agencies, have said they welcome and support the amendments and they are working together with us as the government. And therefore, that is why I was saying, I wonder who are those people who are saying these legislations that we have amended, are still rigid. What they also said is killing jobs. Thanks, House Chairperson.
The HOUSE CHAIRPERSON: (Mr A J Nyambi): No.
Mr J W W JULIUS: [Inaudible.]
The HOUSE CHAIRPERSON: Mr A J Nyambi): You know ... Hon Julius! [Interjections.] Hon Julius! [Interjections.] Hon Julius! Hon Julius! Can you take your seat? Can you take your seat? Can you take your seat? I have noted people that want to ask supplementary questions.
Mr J W W JULIUS: On a point of order, Chairperson. [Interjections.]
The HOUSE CHAIRPERSON: (Mr A J Nyambi): Point of order on what?
Mr J W W JULIUS: On one.
Mr E MAKUE: Chair, I have the floor ... [Interjections.] Do I speak?
The HOUSE CHAIRPERSON: (Mr A J Nyambi): Hon Julius, can you take your seat and allow hon Makue to ask a supplementary question?
Mr J W W JULIUS: Are you not allowing me then? [Interjections.]
The HOUSE CHAIRPERSON: (Mr A J Nyambi): No, I am not going to allow you to dominate.
Mr E MAKUE: Chairperson? [Interjections.]
The HOUSE CHAIRPERSON: (Mr A J Nyambi): We have to give others a chance.
Mr J W W JULIUS: I am rising on a point of order.
The HOUSE CHAIRPERSON: Mr A J Nyambi): Okay, take your seat, hon Makue. Let me hear the point of order.
Mr J W W JULIUS: Please don’t be so negative, Chairperson, I am well within the Rules.
The HOUSE CHAIRPERSON: (Mr A J Nyambi): I am listening. I am attentive.
Mr J W W JULIUS: Thank you, Chairperson. We need to access whether we are holding Ministers accountable. If a question is not answered, I have the right to say is not answered. I didn’t hear the impact. The Minister didn’t reveal what my question ... My question was that ... [Interjections.]
The HOUSE CHAIRPERSON: Mr A J Nyambi): Hon Julius?
Mr J W W JULIUS: ... what are the details of the Regulatory Impact Assessment? [Interjections.]
The HOUSE CHAIRPERSON: (Mr A J Nyambi): Hon Julius? Hon Julius, can you take your seat so that I can address you? I am giving you an opportunity because I thought you are raising a point of order, but the point you are raising, is a point for debate. It can be debated. [Interjections.]
Mr J W W JULIUS: I withdraw, even if [Inaudible.].
Mr E MAKUE: Chairperson, I think it’s important ... [Interjections.]
The HOUSE CHAIRPERSON: (Mr A J Nyambi): Hon Makue, there is ... Sorry, hon Makue. Hon ...
microphones be operated from our seats, rather than for them to be remote control elsewhere? [Interjections.]
HON MEMBERS: ...No!
Mr M KHAWULA: It’s very inconveniencing there. [Interjections.]
HON MEMBERS: ...No!
AN HON MEMBER: What’s the point?
Mr M KHAWULA: That’s the point of order, Chairperson. [Interjections.]
HON MEMBERS: ...No!
Mr M KHAWULA: Can I please address the Chair? It’s ... [Interjections.]
The HOUSE CHAIRPERSON: (Mr A J Nyambi): Order, members. Let’s allow him to talk.
Mr M KHAWULA: It’s very inconveniencing, Chair, and we are adults here and very responsible. For these things to be remote controlled elsewhere, is really out of order, Chair. [Interjections.]
The HOUSE CHAIRPERSON: (Mr A J Nyambi): Let ... Hon members, order! [Interjections.] I take the point that you are raising, but the unfortunate part is that, I am not even sitting here controlling what you think we are controlling. It’s controlled somewhere to all of us. So, let’s allow hon Makue to ask a supplementary question.
AN HON MEMBER: No, we will abuse it!
The HOUSE CHAIRPERSON: (Mr A J Nyambi): But there is no way that we can change it now.
Mr E MAKUE: Chairperson, we have a consistent experience in the House, that when we raise matters that affect the working people in this country which we love, there are some parties that are always speaking against the interest of the workers of this country. I won’t say it’s the DA because the people out there would know. My question, Chairperson, is: Minister, you and your department, when we look at the amendments, part of the amendments that we made towards the end of last year, was particularly related to the contract workers and the casualisation of labour. Could you indicate to us whether progress has been made concerning following up with the companies that continue to casualise the workers of this country?
The MINISTER OF LABOUR: Thank you, House Chair. Yes, as the department, we have made the follow up through the inspection. Those companies that were trying to retrench the workers based on the amendments, Commission for Conciliation, Mediation and Arbitration, CCMA, has taken those issues up because they must give the evidence whether they really can’t afford. Those that have retrenched the workers based on the concept of saying they won’t afford, we have found out that they really do afford to pay those workers. They were then told to retain those workers because the evidence was not true.
But at the same time, what we are doing now; we took a step to make the follow-up, particularly through the inspection, particularly even in some government departments and state-owned enterprises, precisely because as the government when we pass the legislations, we are the first ones to implement. I must also thank the members of the ANC, the IFP and the NFP in the National Assembly, including the EFF that said, these are the companies that are still exploiting the workers and we have made follow-ups on those companies and have acted accordingly. Thank you very much, House Chairperson. [Applause.]
Mr V E MTILENI: Is it parliamentary that after every answer from the Minister, members from the ANC should clap hands? I think it’s inconveniencing. [Applause.] It’s inconveniencing us. [Applause.] They are making noise! [Applause.] What do you think?
The HOUSE CHAIRPERSON: (Mr A J Nyambi): You ... Hon Mtileni, take your seat!
Mr V E MTILENI: Chairperson, I think they are making a lot of noise. We cannot concentrate here ... [Interjections.]
The HOUSE CHAIRPERSON: Mr A J Nyambi): Hon Mtileni?
Mr V E MTILENI: ... because we are reading ... [Interjections.]
The HOUSE CHAIRPERSON: (Mr A J Nyambi): Yes.
Mr V E MTILENI: ... and they are clapping hands as if it’s a birthday party. [Interjections.]
The HOUSE CHAIRPERSON: (Mr A J Nyambi): Order, members! You raised a point of order. Let me assist you.
Mr V E MTILENI: We are on a...They are making a birthday party of a 21-year-old.
The HOUSE CHAIRPERSON: (Mr A J Nyambi): Can I assist you? Hon Mtileni, it’s parliamentary to clap hands. To clap hands is parliamentary. I am saying to clap hands is parliamentary. Thank you.
Mr B G NTHEBE: It’s very clear Chair that some are wearing overalls, yet they are not at work. [Laughter.] Minister, I just want correction. The Minister of Tourism was here yesterday. At no point was there an assertion that the latest discussion or concession in the industries has led to the loss of jobs in the tourism industry.
We know that in tourism there is a peak period and, there is an off-peak period. My question is one: Is there any other way, Minister, in appreciation of the question that we can be able to ensure that people who are entering the employment bracket are kept into the employment bracket other than the legislative framework that we have ascended to according to the amendments? Thank you, Chair.
The MINISTER OF LABOUR: Thank you very much, House Chairperson. If the company is recommending or proposing that they want to retrench, immediately what we do according to the law, the company, the unions that are recognised in that particular company and the CCMA on behalf of the Department of Labour as the institution that was created by the Department of Labour, will sit together and look at the evidence as to why the company wants to retrench. Then out of those discussions, with everybody represented, a decision will be taken and we will get a report.
On the issue of the ... particularly when it comes to workers that are coming from outside the country, I don’t want to link it with tourism per se, but there are those workers who have certain skills in the industry that comes from our neighbouring countries in particular. The three departments that is the Department of Labour, the Department of Trade and Industry – will recommend to the Department of Home Affairs if we don’t have those skills in the country to say whether those workers should be recognised or not.
So, Home Affairs is not really working alone in that particular angle. So, I am raising these so that people should refrain from the notion that when it comes to immigration laws, it’s only Home Affairs that deals with those particular issues. Thanks, House Chairperson.
Dr Y C VAWDA: Thank you, Chairperson. What is really killing jobs in South Africa is the unfair practice of labour brokers. The question we are asking the Minister, her government and also the league of Ministers that are sitting here today, when are they going to scrap and burn this unscrupulous practice in this country, which is really a form of glorified labour and totally unfair on the people. Thank you, Chair.
The MINISTER OF LABOUR: Thank you, House Chairperson. House Chairperson, if we are saying we respect the Constitution of this country, there are words that are not allowed to be used in this country, but at the same time, the ANC in its Manifesto was very clear on what they were going to do. We said we will prohibit the exploitation of the workers in this country. And that is why we have said according to the law, we don’t want contract workers in this country.
The three months that was agreed upon was through both Houses of Parliament because firstly, we were looking at the issue of when employing a person, if you want that person to do the job according to what the company or the public entity wants that person to do, that three months is for training. Where we have said even then, if that training is taking place, there must be a witness person, which indirectly will be either as shopsteward or a person that has been identified by the worker so that when the employer is saying this person is untrainable then that third person must be a witness that yes, the company has trained this particular person, but unfortunately, that person can’t be re-employed.
So, that is why we have allowed the three months period. We said, we are going to look at it. What we have also said was that, when it comes to the employment of a person, the person in between because that person in between who is employment agency or the temporary worker within those three months because that person will be trained and somebody will be looking at whether that is happening. So, both the company and the person that has brought that person will take the responsibility. What was happening previously, both the employer and the employment agency were saying we are not responsible for that particular worker? Indirectly, we have turned the issues of the employment or temporary employment services away.
Now, the pronouncement by the workers themselves – they said its either you burn or you prohibit. And we have said to the organised labour - they must go and learn from other countries, particularly Namibia which dealt with the same issues of labour broking. And when they said into their own law, we are burning and the law was thrown out of the window by the court, saying that you can’t use the word burn. Even the ILO has advised that you can’t use that particular word, precisely because we are a Constitutional State and we respect the Constitution. According to the Freedom Charter, it says you can establish a business in whatever or wherever you want to do it. So, we have to link those issues based on our main document, which is the Freedom Charter and the Constitution of this country. Thank you very much, House Chair.
Safety in construction industry
238. Ms T Motara (Gauteng: ANC) asked the Minister of Labour:
- Whether the Government has any mechanisms in place to promote the safety of workers in the construction industry (details furnished); if not, why not; if so, what are the relevant details;
(2) whether her department has taken any actions against any companies for violating safety standards; if not, why not; if so, (a) what are the impediments and (b) what are the further relevant details? CO642E
The MINISTER OF LABOUR: Hon House Chairperson, the construction regulations published in terms of the Occupational Health and Safety Act, Act 85 of 1993, hold the client responsible for health and safety on construction sites. The moral and legal obligations that are imposed on clients and contractors are clear: that is to comply with the construction regulations or bear the far-reaching consequences of non-compliance.
The construction regulations were reviewed in 2014 to place the greater responsibility on the client and construction supervisors to comply with the regulations. In pursuit of the key elements of the review and acknowledging the need to pay special attention to health and safety in the construction sector, the role-players recently signed a Construction Health and Safety Accord in which they commit to improve health and safety in the sector.
The Department of Labour’s inspectors constantly take action against errant employers in all the sectors covered by its mandate. It must be noted however, that construction companies that have been found to be on the wrong side of the law fall outside of the Department of Labour’s remit.
But I must also say that the amendments to the Health and Safety Act are before the National Economic Development and Labour Council, Nedlac, for discussion.
When it comes to the ... because the Question is related to the fall of the M1 bridge, I must indicate to this House that the findings regarding the cause of the incident in terms of section 31 were that, firstly, the design drawings used to erect the temporary structure were not signed by the designer, nor the client engineer, nor the approval engineer. Secondly, somebody supplied the design drawings but does not take the responsibility for the design. Thirdly, the engineers did not take the responsibility of ensuring that the design drawings for the temporary structure were approved before erecting it.
In terms of the law, we have found, firstly, that the company, Murray and Roberts, had contravened the law as Murray and Roberts had failed to ensure that all reasonable and practicable steps were taken to prevent the uncontrolled collapse of the new temporary structure or any part thereof which had become unstable and collapsed due to the carrying out of construction work.
Secondly, that, in terms of construction regulations 12(3)(n) – which deals with temporary works – the Murray and Roberts site engineer failed to comply with the construction sequence and method statement and that he erected the temporary structure without the approved drawings from the professional engineer.
Therefore, and based on that, we will now implement section 32 of the Health and Safety Act to fully investigate what took place at that particular area. On the basis of the outcome of that section 32 investigation, we will take a decision as to whether to fine the company or send a report to the relevant justice system. Thank you.
Ms T MOTARA: Minister, thank you for your response. My supplementary Question would have been about the preliminary findings around the M1 bridge collapse. I am therefore covered. Thank you.
Ms L MATHYS: Thank you, Minister, for bringing in the collapse of the bridge in Gauteng. But, I do think that a fine – and I am sure there are many others that will agree with us – for a multinational company such as Murray and Roberts – and this is not the first time they have been involved in price fixing, especially during the World Cup – is just a slap on the wrist. Therefore, I think we need to take more serious steps when dealing with this incident. Is the Department of Labour going to commit to doing more than just giving Murray and Roberts a little slap on the wrist? Thank you.
The MINISTER OF LABOUR: House Chairperson, I must say, yes, there were fatal injuries on the construction site and even on the road’s constructions. Where we have found that there were contraventions, in particular, those cases are before the National Prosecution Authority, NPA. The challenge is that we cannot control the programme of the NPA. We will therefore do what we have always done and that is to follow the matter up. After following it up we will give a full report of what exactly has happened in various companies. Thank you.
Ms E C VAN LINGEN: Chairperson, my concern is that, with all sorts of accidents like this, it is normally too late to say, oh my goodness, proper inspection was not held at the time! Because, by that time, there is some department sitting with a big problem and there are workers and people that are in unfortunate positions.
I wonder if the Minister can enlighten us with regard to the qualifications of certain expert groups like the building association, the Construction Industry Development Board, CIDB, and so on. Do those people have the necessary qualifications? Did they get to be in those positions over a period of years and on the basis of merit, and not just cheap-cheap through the front row to get the bigger contracts?
The HOUSE CHAIRPERSON (Mr A J Nyambi): No, hon Van Lingen, you know better than I do that you are smuggling in a new Question, different from the original one. But I will leave it up to you, hon Minister. You can decide if you want to comment.
The MINISTER OF LABOUR: House Chairperson, determining the responsibility of the constructors, in particular, including that of the CIDB, is the role of the Department of Public Works. The Department of Labour comes into the picture when there are fatal injuries, and our investigation is based on the qualified engineers in our department. That is why I said that the Department of Labour launches an investigation in terms of the Health and Safety Act and then, on the basis of the findings, it refers the cases to the relevant entities. Thank you.
The HOUSE CHAIRPERSON (Mr A J Nyambi): I have tried my best to provide advice free of charge. Unfortunately, it did not help. Therefore, we will skip Question 243, and go to Question 227, asked by hon De Beer. [Interjections.]
Question 243 falls away because the member is not in the House and no arrangement was made. We will now deal with Question 227, the one asked by hon De Beer. [Interjection.] Sorry, hon Minister. Yes, hon Mathys?
Ms L MATHYS: It has sort of been a standing practice that, if one of our members is not here, we will just recognise that we will be doing the follow-up Question. So, this has changed? When?
The HOUSE CHAIRPERSON (Mr.A J Nyambi): Can you take your seat so that I can address that. In terms of the Rules of the NCOP, if a member is not present, it is the responsibility of the member’s party or of that member to make an arrangement with a member who is present. Then, the presiding officer or the Chief Whip must be alerted that, for example, hon Mathys will be standing in for hon Mokgosi.
I have already raised the issue with the hon members – you were probably out. I have asked that you make the presiding officers aware of the fact that a member who had posed a Question is absent, so that we can deal with the issue.
Hon Minister, we are at Question 227. [Interjection.] Yes, hon Mtileni?
Mr V E MTILENI: Chair, I rise on a point of order.
The HOUSE CHAIRPERSON (Mr A J Nyambi): What is the point of order?.
Mr V E MTILENI: Chair, there are times when ... just to let you know you are inconsistent. You and you co-chairpersons ... there are times when you find that when you are not sitting there, you know ... chairperson X, for as long as members of that particular organisations are there, she will allow us to, like, you know, pose those Questions or answer on behalf of the member who is not in. We have seen it many times that members from your organisation ... [Interjections.] Yes! Members from your own organisation always stand in for the members who are not present. [Interjection.] So, I don’t know whether it ... [Interjections.]
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Mtileni, take your seat so that I can assist you.
Mr V E MTILENI: ... it is not controlled whether, like, there are times when ...
The HOUSE CHAIRPERSON (Mr A J Nyambi): Can you take your seat so that I can assist you. Rule 46(a) ... [Interjections.] ... take your seat. Let me assist you. [Interjections.] Hon Mtileni, I have allowed you to make a point of order. Can you allow me to make a ruling? [Interjections.] Hon Mtileni! Hon Mtileni!
Mr V E MTILENI: Speak!
The HOUSE CHAIRPERSON (Mr A J Nyambi): Can you take your seat, hon Mtileni. Rule 46(a) ... Hon Mtileni, let me assist you. [Interjections.] Oh, you know the Rules. [Interjections.] I am practising it now. [Interjections.] No, I am sorry . I am practicing it now.
Hon Minister, we are now at Question 227. [Interjections.] I am practising the Rules!
Unfair labour practices/farm evictions
227. Mr C J de Beer (Northern Cape: ANC) asked the Minister of Labour:
(a) How is her department dealing with matters of (i) unfair labour practices and (ii) farm evictions in the agricultural sector and (b) how serious is this problem to the farmworkers? CO631E
The MINISTER OF LABOUR: Chairperson, unfortunately it is a pity that the member who has asked the question is not in the House. I was prepared to answer this question. Hon House Chairperson, in terms of the Labour Relations Act disputes of unfair labour practice and unfair dismissal fall within the jurisdiction of the Commission for Conciliation, Mediation and Arbitration which is the institution that was established in terms of the law that falls under the Department of Labour. Any alleged unfair labour practice is provided for in the Labour Relations Act and farm-workers are also covered.
Dealing with farm evictions is a matter that falls outside of the Department of Labour’s remit; it is within the land and rural development. However, labour laws have also been tightened in terms of ensuring that farm-workers are not stripped of their labour rights in the event of evictions. This finds expression in the Ministerial Sectoral Determination that the Minister proclaims from time to time. Hon member, I must say that it is also part of the discussions at Nedlac because it forms part of the report of the outcomes of public hearings by the department. Thanks.
Mr C J DE BEER: House Chairperson, Minister, my follow-up relating to the Nedlac issue is covered. Thank you.
Re-employment of mine workers
239. Mr B G Nthebe (North West: ANC) asked the Minister of Labour:
(1) Whether her department has ensured the (a) placement and (b) employment of mine workers who were displaced by strikes in the recent years (details furnished); if not, (i) why not and (ii) what challenges are experienced in this regard; if so, what are the relevant details;
(2) whether any plans are in place to ensure that such workers find employment in the mining sector; if not, why not; if so, what plans? CO643E
The MINISTER OF LABOUR: House Chairperson, in terms of displaced workers there is a process between the employer and the unions. I was informed that presently only 42 workers have been integrated back to the company and that the union and in particular the National Union of Mineworkers, NUM, which was the affected union is still waiting for the signed integrating document between them and the employer. But, I must say, we will follow-up on the matter with the CCMA because that discussion is always done between the employer and employees that are represented by affected unions, the CCMA and the Department of Mineral Resources are part of those discussions. I am waiting for the outcomes of that integrated report. Chairperson, I must say that in terms of the agreement the process is still on.
Mr B G NTHEBE: Chair, Minister, the displacement did happen after the 2012 platinum belt uprisings. Would the Minister concede that part of the follow-up that you would do in relation to the information you just shared and in appreciation of our progressive labour laws that advocate for industrial peace, co-existence and all that, you would also make sure that the displacement of such workers is addressed adequately and smoothly. Thank you.
The MINISTER OF LABOUR: Yes. I must say, as I said before that the CCMA will always make a follow-up on those issues. Also just to caution workers in particular that they must not allow themselves to be used by employers because what started the challenges in the platinum belt was that the companies negotiated outside of the agreement with unrecognised workers because there was a committee of workers that is not recognised in terms of the law. However, I must say that I discussed that issue with those worker’s committees then and unfortunately they said that they were not aware that they cannot be recognised. After having those discussions we agreed that the relevant unions must discuss the issues with the workers and therefore, on behalf of those workers, they went back to the companies in order for companies to make the increase they agreed upon outside of the recognised agreement.
Expanded Public Works Programmes
213. Mr M Khawula (KwaZulu-Natal: IFP) asked the Minister of Public Works:
Whether his department will ensure that officials responsible for the Expanded Public Works Programmes are tight on persons who might corrupt the system (details furnished), especially to those who are paying salaries to ghost employees; if not, why not; if so, what are the relevant details? CO617E
HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Let me take this opportunity to thank the hon Minister of Labour for availing herself to respond to the questions. Hon members, let me remind you of Rule 46 about offensive and unbecoming language.
Hon Van Lingen, I am not going to raise a hand on your behalf. There was a follow-up question and people raised their hands. If there is no follow-up question, we are done. I have already thanked the hon Minister for availing herself. We are now dealing with the questions to the Deputy Minister of Public Works. Hon Cronin, unfortunately, Question 232 will not be asked. I don’t have that arrangement, where I am seated. I don’t want to disorganise you. Let’s get to Question 213. The person who asked the question is hon Mateme. He is not in the House and I don’t have any correspondence. [Interjections.] There is consistency. [Interjections.]
Mr J J LONDT: Chair, I just want to put on record that I actually wrote a letter to the EFF members that they only needed to sign and submit to you, in order to take rest of the question. So, I did my part, but unfortunately, they cannot even help themselves. [Laughter.]
Ms L MATHYS: Chair, can you just let the hon member know that it is not a question from the EFF. We don’t need his assistance. We are quite covered.
HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): I have already done that. It is hon Mateme of the ANC.
Ms L MATHYS: So, why is he standing up and making “smart ass” comments that has absolutely nothing to do with the EFF? Please ask him to withdraw his comments, so that we can move on in peace? Thank you.
HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Hon Londt, it is not the EFF, it is the ANC.
Ms E C VAN LINGEN: Chairperson, I just want the member to withdraw the language that she just used in the House.
Ms L MATHYS: I withdraw. No problem.
The DEPUTY MINISTER OF PUBLIC WORKS (Mr J P Cronin): Chairperson, I just want to give a brief background of the Expanded Public Works Programme, EPWP, and then I will deal directly with the question that was asked. The Expanded Public Works Programme is a multisectoral programme involving the infrastructure sector for which the Department of Public Works is the lead department, the social sector for which the Department of Social Development is the lead department, the environmental and cultural sector for which the Department of Environmental Affairs is the lead department and also what we call, the nonprofit sector, where the key implementing agencies on ground are social movement, community-based organisations – the community work programme. All provinces are actively involved in the Expanded Public Works Programme and all municipalities throughout South Africa, regardless of which political party, are involved.
Last year, we achieved over one million work opportunities, across the country. The reason why the Minister is not here today to answer questions is because he is in Benin. South Africa’s Expanded Public Works Programmes are seen as a global model for a world that is increasingly facing unemployment challenges and the precariousness of work.
I was in Turin with the International Labour Organisation three weeks and again the South African model of public employment programmes was widely celebrated and seen as a critical intervention into a world that is facing major unemployment.
Often this is treated as not real work or as if it was just about digging holes and filling them up again. Sometimes, this happens in bad case. There is sometimes poor management of the programme. One does not want to be in denial. I just want to give you a few basic figures. Something like R400 billion worth of water in South Africa has been saved, as a result of the Working for Water programme. Seventy-two percent of South Africa’s grazing area has been saved, as a result of clearing alien invasive species from farmland. The Working on Fire programme is a brilliant programme. The majority of the fire fighters that fought the fires here in the Western Cape earlier in the year were basically youth from this Working on Fire programme, who were incredibly well trained and very disciplined. They were brought in from all over the country – the Eastern Cape, the North West and so on, to assist the Western Cape during the fire season. Fifty-five of them were selected to help the Canadians last month, fighting a very serious fire season.
So, one could go on and on, multiplying examples. I would like to tell hon De Beer who raised the issue of shortage of school desks in the Northern Cape that 300 000 school desks have been created from the clearing of alien invasive species and through Eco-Furniture programmes. That produced 300 000 school desks for South African schools in just one financial year.
I thought I should introduce that into the background because in the first instance, the question is whether there are problems and how we deal with them, as the Department of Public Works, which has the overall co-ordinating responsibility. As I say, many departments, all provinces and municipalities are involved in the programme.
Are there problems in the selection of participants and what happens if there are ghost workers and other forms of corruption? It would be dishonest to say that there are no problems. There are problems. This is a massive programme and we frequently encounter allegations and concerns.
What are we doing about it? Firstly, when an allegation is being made, we dispatch senior officials from my department, regardless of whether it is my department that is running the programme or any other department, because the reputational risk to this overall brilliant programme, which all political parties, as far as I know, are supporting very actively get compromised through selections, which select brothers and sisters or party-political supporters to be on the programme. We must absolutely stamp out such behaviour and we take it very seriously, as the Department of Public Works.
We are also promoting fair selection processes and there are many excellent examples. Here in the Western Cape under DA administration, but also applied in other places, one of the ways of doing it is to put their identification documents into a bag or a box. In the Western Cape we announce to a community that we are going to develop this particular construction programme, perhaps build an Early Childhood Development, ECD, centre or whatever, and we are going to require, let’s say 50 participants in the EPWP. They then have a community meeting, they ask people to put their identification documents into a bag or a box and then there is a kind of raffle draw, which is public and transparent. We really think that is an excellent example. Similar things are found in other places.
In other cases, it is the indigence records that municipalities have and in some cases, communities themselves actively select. There is a meeting in which communities identify households that are most in distress and most in need of opportunities and so on. As the Department of Public Works, we are trying to popularise those approaches to the selection of candidates.
I would like to use the opportunity to really urge all members of the NCOP to please, if you are picking up... We hear many allegations that ANC councillors are selecting ANC members. [Interjections.] If that is the case, tell us about it. We will investigate. We hear similar allegations against other political parties. As an ANC member and as an ANC Deputy Minister, I completely condemn that action. It is criminal and wrong. [Interjections.] Don’t just make loose allegations. Please use your presence, as you should have, in your wards and constituencies, to draw our attention to it. To cut out all forms of corruption is a national responsibility that we all have. I just want to make that message very clear.
Secondly, if you are able to produce evidence, we will certainly take it extremely seriously. We want to deal with it, regardless of the political affiliation of whoever might be involved. It is hugely problematic.
The other part of the question is related to whether we are working with the private sector and with companies to also leverage funds in order to run these programmes. The answer is yes, but primarily the approach is to use public funding and to leverage off all budgets – municipal budgets, various national and provincial department budgets, so that an allocation is also made to public employment programmes. That is generally happening, but at the same time, we are seeking to leverage private-sector funding. We done so with the Skills Education Training Authorities, Setas, and in Vodacom, for instance, there is an interesting apprentice programme that we have developed jointly with them.
Is there a problem?
HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Hon Cronin, round up. Hon Julius, the first person that will have a bite is ...
Mr J W W JULIUS: I know. I just want to check whether the Minister answered Question 232. That is what I heard – the private stuff and so on.
The DEPUTY MINISTER OF PUBLIC WORKS (Mr J P Cronin): No, hon Julius. The person who asked Question 232 is not in the House. So, that one falls away. We are dealing with Question 213.
Mr J W W JULIUS: I heard another answer.
Mr M KHAWULA: Hon House Chair, hon Deputy Minister, hon Julius is quite correct. The Minister answered a variety of questions. It’s okay for us to be informed. We are not complaining. Hon Deputy Minister, I was specific in respect of my question and I asked how you tighten the loopholes. And the information you have given to the NCOP is been given to only 54 South Africans out of 54 million South Africans. How do those 54 million South Africans on the ground get the same information, so that they are able to do as you say? You are only talking to 54 here.
The unfortunate part is that those poor South Africans down there have to report these people that you are talking about. Where do they report them? How do they know that they can report them and to whom they can report?
You don’t have major problems with those that are municipal monitors, in terms of corruption. The problem is with the money of Public Works that you give to those people who are implementing on the ground. How do the poor South Africans get to know how they report those incidents? Thank you very much.
The DEPUTY MINISTER OF PUBLIC WORKS (Mr J P Cronin): Chair, I apologise to the hon Julius. I was getting conflated between two questions. So, the point is taken. However, I am enthusiastic about these programmes. So, forgive me for spilling over in lots of directions.
The answer how we get the message across, critically, we need to get it across to the practitioners, the implementing agents, whether it is local municipalities, whether it is provinces, provincial departments and so on. Critically, it is not the poor South Africans in the programmes who are causing the problems. It is in some cases and I think that they are the exceptions rather than the rule, but the exceptions are problematic. A rotten potato in a bag of potatoes causes reputational problems to the whole sack. That is why it is critical that, as politicians, in particular, we get across this message. That is the one answer.
It is not about trying to communicate with 55. It would be nice if we could communicate with 55 and use every platform and we certainly do, to get the message of many things about the public employment programmes across, including who we should select and how we should select people to participate in the programmes.
At the same time, as the Department of Public Works, specifically, we are constantly putting out manuals. We are putting out best practice guides to those who are practitioners. So, it is in those ways that we seek to manage.
At the same time, and this is really where I appeal for help, we want to make an example of people who are involved in corruption in this programme. And that is a very good way of sending out a signal to a large number of people. We need to make an example of people who are involved in corruption in this programme. So, help us to do that. That is what we want to do. That is the best way of sending a very firm signal to everyone.
Mr G MICHALAKIS: Hon House Chairperson, the Minister stated that he will take decisive action against such corruption, in terms of party favouritism. It is a good statement that he made, however will the Minister, in this House today, make an undertaking that he will take decisive action against such corruption, so that that specific undertaking or those cases can be referred to the Select Committee on Petitions and Executive Undertakings and can the Minister tell us exactly what that action in this regard would be?
The DEPUTY MINISTER OF PUBLIC WORKS (Mr J P Cronin): If there is a criminality involved, which there could be, then obviously the matter needs to go the courts. Will we take action? Yes, if we are provided with evidence or strong reasons to believe, prima facie reasons to believe, we will then certainly do.
So, there could be administrative actions. We have certainly fired individuals and officials within our department, using disciplinary procedures within the department. However, often the implementing agents are not in the Department of Public Works, but in a municipality, a provincial department, other national departments and so forth. We have a responsibility, as the co-ordinator within the programme, to be very firm on this. We have certainly taken very firm steps in the case of at least one metro to call on them to move more rapidly and effectively than, in our view, they were.
So, yes I certainly do undertake to do whatever I can to ensure that appropriate steps are taken against maladministration and corruption, in the process.
Ms E C VAN LINGEN: Chair, it is one thing to give the undertaking, but it is very difficult to implement it on the ground. The Minister has just said that he has fired people from his own department. There is an Act called the Prevention and Combating of Corrupt Activities, Act 12 of 2004. These people must be prosecuted. They must not just stay in the system, because if you fire them in this department, they still stay in the system. They must be criminally prosecuted. My question now would be: Has the Minister actually considered having these names submitted to the black list register for corrupt officials and has it ever happened in this particular case. I will not ask how many.
The DEPUTY MINISTER OF PUBLIC WORKS (Mr J P Cronin): I agree with the hon member that it can sometimes be difficult to carry through prosecution on these matters. I can only repeat what the Minister of Labour said a short while ago that a lot of this depends on the NPA’s capacity. It is often very overloaded. So, certainly what we can do, as a department, for instance, is carrying out administrative disciplinary matters, which could include firing or suspension or other measures of that kind. Certainly, we black list so that there is not a circulation of people through different departments. So, the records of those who are guilty of ill-discipline within a department need to be recorded essentially.
However, obviously, we cannot deal with the corruption matters ourselves, but we do actively open corruption or criminal cases, where appropriate.
I am a little bit concerned that at the gist of these questions is blemishing the importance of these programmes. So, I want to go back to where I began in answering the question. The point of dealing decisively with these things is because we must deal with corruption where it happens and deal with maladministration where it happens, but at the same time, let us not use so much time on talking and dealing with that and forget the bigger picture of a really good South African story to be told about public employment programmes. Thank you.
Mr E MAKUE: Chairperson, I have a bit of a problem with the Deputy Minister, because he reads my mind. I wanted to touch on that last point that he made, particularly based on our experience, as a select committee, when we visited Melmoth and heard about the sterling work that the Expanded Public Works Programme is doing in training young people and also in creating fulltime opportunities of employment for them. I spoke to the construction owner in that community and they are now employed by the company that is doing work in building the Melmoth Police Station.
We had a second experience also in the Moses Kotane Local Municipality where people were busy building big houses, but also laying the roads and making use of local labour in the road construction. The question to the hon Deputy Minister is: When I recently spoke to people in the township in the south of Johannesburg, they indicated that their difficulty is that it is very often the established construction companies that would win the ... It is not a tender. I don’t know what exactly you call it, but they have then requested us as Members of Parliament to assist and advise them as to how exactly the emerging construction companies can, through the utilisation of local labour and training young people within the local community, also access these Expanded Public Works Programmes opportunities. I was embarrassed ...
HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): Hon Makue, you know that you are taking a chance and taking it further to a new question. I will allow the Deputy Minister to comment.
The MINISTER OF PUBLIC WORKS (Mr J P Cronin): I think it is very important. Thank you to the hon Makue for stretching the question a little. It is very important because it links to a point that I was making. To answer the question that he is asking, there was a point made earlier by Minister Patel that one of the problems with infrastructure public employment programmes when you are dealing with construction is that when the construction ends, the work ends in that locality. You construct a footbridge, using labour-intensive methods, you construct an early learning centre or so, but the problem is when the construction ends, the work ends in that locality.
We are now in Phase 3 of the Expanded Public Works Programme. That is why, in Phase 3, one of the important things we are saying is, let’s shift the emphasis much more towards maintenance of infrastructure, so that we build a sense within communities that the infrastructure is their infrastructure. The library is their library. Don’t burn it. You might have good reasons to be frustrated, but take responsibility for your community. One way of doing it is through the public employment programmes.
We don’t want to be a delivery state or a wheelbarrow state, delivering things. We want to work closely with communities, so that they also ... Maintenance offers us very significant possibilities for many, many public employment jobs and also ongoing jobs, so that it does not come to an end after 60 days of work.
Amongst the brilliant programmes is precisely road maintenance. There are 48 000 poor households in KwaZulu-Natal involved in maintenance. Each household is allocated a half kilometre stretch of a rural road to do storm water clearing, verge clearing, basic patching and so forth. The more complicated stuff is left to proper construction. So, they have a responsibility for a stretch of a road. That has been going on since 2009 for the same households. So, it is two days of work that they are allocated and then they do other things in the other time. There are 40 000 similar households in the Eastern Cape.
So, there are some wonderful programmes in the direction of public employment programmes and particularly, in terms of maintenance, which is an important emphasis that we want to give when we talk about infrastructure. Thank you.
Assistance for Provincial Departments of Public Works
231. Mr B G Nthebe (North West: ANC) asked the Minister of Public Works:
- Whether the Provincial Departments of Public Works are making any progress in the provision of government infrastructure, management and maintenance of government immovable assets; if not, (a) why not and (b) what challenges are experienced; if so, what are the relevant details;
(2) whether his department has any plans in place to ensure that they are assisted in this regard; if not, why not; if so, what plans? CO635E
The DEPUTY MINISTER OF PUBLIC WORKS: Chairperson, basically as I am sure that members, particularly in the NCOP, will be well aware that public works is a concurrent mandate in terms of the Constitution, a mandate that does not have legislation yet. And that is why one of the priorities that we are setting ourselves as the National Department of Public Works, working closely through our Minmec - and we have an effective and well functioning Minmec - is to develop a White Paper leading on to a public works legislation so that we clarify the roles and responsibilities between provincial departments of public works and the national department.
There are many challenges in this space. Provincial public works departments are often not just public works. They are public works and transport or public works and roads. The roads, in terms of the national government, are not a national competence but they fall under the Department of Transport for instance. So, how do we get a public works White Paper and therefore legislation which makes our role clear.
The question I was asked is, are public works departments in provinces making progress in terms of maintenance, construction and management of infrastructure in their respective provinces? I think the answer is yes, but unevenly. That’s the honest answer. And one should ask a specific question about specific provincial departments - I don’t want to answer for them. But our impression is that there is progress but it is uneven. Sometimes the progress halts and there are regressions and things like that. We are dealing with real life.
But, at the same time, we are not waiting for legislation or for the White Paper process. We are actively engaged in seeking for tool that can assist us as a national department and our brothers and sisters in provincial departments. The critical instrument we have is the Government Immovable Asset Management Act 2007, GIAMA, which sets basic standards in terms of User Asset Management Plans, U-Amps, as they are called and Custodian Assets Management Plans, C-Amps, as they are called. So, we actively work with provincial departments, not just through the Minmec but through technical committees as well, in order to develop, advance and learn lessons from the collective tasks they have in terms of managing the public sectors’ immovable assets which are quite considerable. Thank you Chair.
Mr B G NTHEBE: Chairperson, would the Deputy Minister agree with me that the provision of this infrastructural development still needs more attention from the Department of Public Works just to ensure that there is ... In anything that you would want to do, infrastructural development is important; and some of the economic spinoffs that that we want to realise need infrastructural development as a base. Would you concede that these legislative frameworks would enable you to do just that? Thank you.
The DEPUTY MINISTER OF PUBLIC WORKS: Yes, indeed, but at the same time we cannot wait for the legislation. We know that legislation takes sometimes a painfully long time and we are setting ourselves in having the legislation by the end of this administration because we want to intervene in White Paper. But at the same time, yes, absolutely, many improvements are required and this is a global challenge for public works departments.
The world has changed from what it used to be in 1930s and 40s when everything was built by public works departments – the people in orange or whatever uniforms. That has changed with the growth of state-owned enterprises, the reactive in the space of infrastructure and so forth. So, the role of public works departments is increasingly and basically the building of public infrastructure used by government in building cities, offices, accommodation and others. That’s the core function we are doing - property management function. That is what we are working to achieve.
Part of the original question was: What are the challenges in this space? And a critical one is the skills issue. There is big challenge, country wide, with the built-environment professionals, particularly in the public sector in some of the provinces. I also notice that the hon member is from the North West province and I think that some of the more rural provinces in particular have many challenges. So, part of responding to the challenges is also to pay a lot of attention and we are. We are working closely with the Construction Industry Development Board, CIDB, which was mentioned, the Council for the Built Environment, CBE, as well as the Department of Higher Education and particularly the Technical Vocational Education and Training, TVET, colleges and universities to grow a much more substantial base of professions.
As a department we have got some 80 young interns. That is another problem. The people qualifying out of universities, particularly black students are not given work experience by the major corporations and cannot therefore acquire proper accreditation as engineers. So, we need to use the public sector to create the space in which experiential training can occur. Those are some of the approaches that we are taking.
Ms E C VAN LINGEN: Hon Chairperson, I have great appreciation for what this department has to do to look after the assets of South Africa. My concern is when it comes to a maintenance projects. It is cheaper to regularly maintain than to break down and rebuild from scratch.
So, once a tender has been awarded you still have to do another health and safety plan that must be submitted. That first part of the project to get the tender awarded takes about six months then the health and safety plan and by then it is the end of October - beginning of November. That leaves you with six weeks of the calendar year, another six weeks in the next year and then it is the end of the financial year, you must get your invoices in. The whole process takes too long. I want to know if the Minister has got a solution for that. The red tape is killing the maintenance projects in this country and we need a solution. I am asking whether we do have one.
The DEPUTY MINISTER OF PUBLIC WORKS: I think the question is spot on in a number of respects. In the first instance the member is absolutely correct to say that as a country we have not been good - and not just as a Department of Public Works - at doing regular planned maintenance of infrastructure, whether one is talking about water and sanitation across the board or at municipality or national department level. Generally we have not been good, and we are putting a lot of emphasis on getting that right. It is critical.
To connect to the previous question, it is also a wonderful space in which to create public employment programmes, basic maintenance and ongoing maintenance in addition to major planned maintenance. There is also a national policy - a national infrastructure maintenance strategy which has been approved by the Cabinet and we are busy developing life-cycle maintenance plans and assisting other departments as well, in that respect.
I will touch on it in my reply to another question. As a department having identified our core responsibility which is, property management entity, we have been managing our property like a bureaucracy rather than professionally. What we are now busy forming is a property management trading entity. As a government component it will not be privatised, it will remain answerable to the Minister and the Director-General but a professionalised property management trading entity. One of the key functions would be to facilitate management and maintenance of the very vast infrastructure property portfolio that we have.
One last thing is what the hon member has referred to as red tape. If we refer back to the safety issues of Murray and Roberts in the earlier question, what you are calling red tape - and I don’t have a problem with red – is often very necessary to make sure that whoever you are contracting with has the capacity and ability to do the work that is required. But I agree with you that - and this is why we are now working closely with the Chief Procurement Office - they have selected the Department of Public Works, and we have asked for ourselves to be selected, as the first department to work closely with what is in Treasury now, the Chief Procurement Office.
Infrastructure programmes are not budgetable easily within a one-year cycle. It’s not like acquiring envelopes or folders or pencils and pens it is about maintaining, building, and disposing, eventually, of long-term things. And therefore, we are re-looking at the regulations that govern the way in which maintenance, for instance, construction and other things in terms of our portfolio are conducted with strong support from within. So, not red tape but the need for firm regulation so that we do not waste or squander public money, and the need to make sense for the particular sector in which we are working. Thank you, Chairperson.
Ms L MATHYS: House Chair, my question to the Deputy Minister is about the high quality services that the presidency, the executive and even we, as Members of Parliament, receive at our residence. High quality services - the sprinklers come on time at our homes, we get water and I don’t even think we have ever had load-shedding. So, this means that the Department of Public Works can deliver high quality services. [Interjections.]. Yes! Woe, there goes the ANC chorus again. [Interjections.]
The HOUSE CHAIRPERSON (Mr.A J Nyambi): Order members. Order, members.
Ms L MATHYS: Are you done ANC chorus? So, what I am saying is that I know that the Department of Public Works is quite capable because I have seen how they have delivered services. My concern is that why is this not being applied to basic things like our schools, our clinics and our libraries? It can be done. What is the hold-up? Why is this not being done? Why do we, as Members of Parliament or the executive or the presidency, get such exclusive services and the people who need it the most don’t? Thank you, Minister.
The DEPUTY MINISTER OF PUBLIC WORKS: Chairperson, to the hon member, I was enjoying the hackling that you were getting for the good reason that you and I were among the few who were suggesting that Members of Parliament get a good service. One of the challenges that we have, which we concede as the Department of Public Works, is that those living in parliamentary villages for instance, are not ... And we have a Parliamentary Villages committee that meets and on which we are represented as the Department of Public Works.
The department has challenges with supplying quality services all-round. This morning I was beset by a particular Deputy Minister complaining about what was going on in his or her Pretoria house. So, there are challenges in managing the portfolio. But I don’t disagree with the point that you are making as well. Let us make sure that we don’t over privilege the so called, prestige portfolio which is parliamentary houses, ministerial houses, deputy ministerial houses and forget the critical importance of delivering quality services and quality basic building infrastructure to poor communities. That needs to be a priority, I don’t disagree with that.
Mr L B GAEHLER: Chairperson to the Deputy Minister, the problem of these young technical professionals is that they don’t have experience. I think we talked about it when I was in the committee. But I think the time has come that we deal with this strongly because it affects our people. We have been 20 years in this democracy. Now, what I would like to ask, which I have done before: Are you prepared to come up with a proper tool that would say, for instance, anybody getting work from the government, whether is a contractor or consultant, they must take from this youth as a condition of getting a contract from the government? For instance, as we know that contracts are for six months, two years and so on, have a tool to monitor the process in order to ensure that when the contract ends you take this youth to another project. Are you prepared to do that? We have been talking about this for sometime. We built stadiums but we still don’t have properly trained people. The monies that were spent for building the stadiums have gone to the big guys who colluded and all that, but South Africa is still battling with these poor youngsters who do not have proper training. Are you prepared to do that, as the government, for the sake of our people in this country? Thank you.
The DEPUTY MINISTER OF PUBLIC WORKS: The short answer is, yes. We must use the leverage of state procurement and state resources to ensure that there is effective apprenticeships, effective training - on the job training - and effective Small Medium and Micro Enterprises, SMME, developments. We must boldly use state resources, which are public resources after all, to ensure that there is effective transformation of the sector which still remains substantially untransformed. So, I do not disagree with the general point that you are making.
Construction of government buildings
242. Mr V E Mtileni (Limpopo: EFF) asked the Minister of Public Works:
Whether the Government will construct its own buildings to accommodate government departments and institutions instead of renting (details furnished); if not, why not; if so, what are the relevant details? CO646E
The DEPUTY MINISTER OF PUBLIC WORKS (Mr J P Cronin): Again, I would like to appreciate the drift of the question. Basically, the question where government construct its own building to accommodate government departments and institutions instead of renting - if not, why not, and if so, what are the relevant details. I think the original question is now been sanitised from white monopoly capital
The first part of the response to the question is that it’s not just about constructing new buildings, the Department of Public Works’ immovable assets portfolio includes nearly 100 000 building. If I am exact, 99 251 buildings are part of our immovable assets portfolio. That makes it the largest portfolio owner of buildings in South Africa. By-effect of some six or seven times, we are larger than Growthpoint - which is a private, probably white monopoly capital entity operating on this. That’s the next largest property owner in South Africa.
So, we have huge amount of buildings as the Department of Public Works. Therefore, a critical thing relates in part two; the hon Van Lingen’s earlier question. For all kinds of historical reasons, government has not used that property portfolio strategically and effectively. We have let it run down; we have not had a sense of what it is and where it is. In the next question that follows up; we will try to explain why some of those problems have occurred.
But, as a priority - we are now saying that we must get on top of this portfolio. Let us use it strategically. We don’t have to construct new buildings unnecessarily. Yes, we might have to, depending on the circumstances and ethical issues. But the key priority is to house government departments, municipalities, public entities and so on, in the immovable property portfolio of the national and provincial Departments of Public Works. We don’t need to proceed necessarily to build, that’s the first point that we want to make.
But we are building and one can mention ... Sorry, I am not talking into the microphone. I am so busy looking at the member that I forgetting to talk into the microphone. Please accept my apologies.
We have a multiyear 2,1 billion capital project building book and it involves something like 1 362 multiyear projects. We are building, and amongst the highlights are the Agrivaal building which is going to be the new headquarters of the Department of Public Service and Administration. We are also very focussed on developing precincts so that people who are using public facilities don’t have to go to the police station or Home Affairs at some distance.
In Polokwane and also in Pretoria, for instance, we are trying to develop a much more precinct-based approach so that we know when strategically plan and use the building infrastructure we have.
Having said all of that, unfortunately, we still need in the short and medium-term to lease some buildings from the private sector. It is a challenge. We simply don’t have the resources currently on our books. We are moving rapidly in the direction that you correctly suggesting. Let us move away as much as possible from leasing in, but we don’t want to make a promise that we can’t and pretend that we can do it tomorrow or next year. We are still going to rely on leasing and some of the leases are long-term and we have to head in that direction. But like you, we don’t like that approach, we think it’s problematic and we need to move in a different direction. Thnak you.
Mr V E MTILENI: The reason why we had to pose this question is that it is cause for serious concern in as far as the departments are using the public purse. Limpopo, in particular, spends almost 400 000 on office rental on a month-to-month basis. We have been asking this and seemingly it is falling on deaf ears; nothing seems to be happening. I could maybe go on to challenge you further, to check with other departments in other provinces. You might find that we could be losing a total of about R2 to R3 billion a year on office rental.
It would be nice if maybe next time, Deputy Minister, you can at least come with figures for all the provinces for the public to know. It is for this reason why we are seeing people taking to the streets week in and week out. They are dissatisfied about the services because they know that this country has money but it is not being spent wisely. So, I would just challenge you to just introspect other provinces, how much they are spending.
Lastly, before I take my seat, I just want to comment about buildings in the former homelands. I may give you an example of Limpopo, where we have nice offices there in the former Gazankulu, which have been neglected and are not used. You won’t understand why they are renting offices in Polokwane when there are offices in Giyani. I may also mention offices in Thohoyandou, where you find that they are not utilised. In Lebowa - in fact, former homeland offices; some are getting more dilapidated daily. [Interjections.] And what is actually happening?
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr.A J Nyambi): Hon Mtileni, I am afraid. The time for supplementary questions is strictly two minutes. [Interjections.] So, I’ve allowed the preamble for two minutes. [Interjections.] Hon Faber?
Mr W F FABER: Hon House Chair, through you to the hon Deputy Minister, the dilapidated buildings of the Department of Public Works we spoke about in a committee meeting at some stage. When we look at when are we buying or erecting buildings and when are we renting buildings in your department, the question to me is these dilapitated buildings. Did you do an audit already to actually see where all these buildings are and if it is worthwhile, renovating, demolishing or selling them?
I would like to know what the situation is on that because I believe there are millions of rands worth of buildings that dilapidated. We need to know what’s happening to these buildings. Do you have a concrete plan in place for this?
The DEPUTY MINISTER OF PUBLIC WORKS (Mr J P Cronin): No, in the way, that’s begin to prefigure the next question, which is the question about the immovable assets register. So, let me hold off considerably on that but just to say that unless you have an accurate immovable asset register which is your map of where you are moving - it’s very difficult to be able to develop a plan unless you have a sense of what buildings are beyond repair; where buildings are lying in former Gazankulu or whatever. Unless you have that map - the immovable asset register, you can’t develop an effective plan; you are basically playing blind. Let me try to answer more fully when we come to the next question but the point is taken.
Mr M KHAWULA: Hon House Chair, hon Deputy Minister, my question on this issue will be how the department deals with the issue of value for money. For example, one notices in instances where government is requiring a service, the price is inflated. And if it is not government, on the very same service, the price is a bit low, a very good example is the Nkandla issue, where value money was just not followed. But the problem is, it doesn’t get detected until it is late; until it is irreversible. How does Public Works deal with these issues before they escalate into something that is irreversible? Thank you.
The DEPUTY MINISTER OF PUBLIC WORKS (Mr J P Cronin): When I was referring to the next question in my previous response, in fact I was referring to the last question that is coming up. This relate to the supply chain management issues and again that is the next question. So, I am not trying to kick into touch, I want to answer, but let me try to do it in a comprehensive way because I agree with you that it is not about Public Works but internationally the departments of public works are notorious for this that when the private sector sees you coming, they just see dollar signs and they inflate prices left, right and centre. That is sometimes because there is internal corruption and there is a deal struck between departmental officials and the service provider or sometimes it is just amateurish behaviour on the part of the officials up against very wily profit maximises. So, it is a mixture of things and how to get it right is to really massively improve once supply chain management process which relates to the next question. [Interjections.]
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT (Mr A J Nyambi): You are taking chances. Hon Gaehler, I am the one presiding.
Mr L B GAEHLER: Hon Deputy Minister, there are buildings that you lease from the private sector; well, I will need an answer from you for this one. Who maintains them? Now, if the owner of the building maintains it, do you monitor that? Because, especially in the small towns, some of those building are in very bad state and the government is paying out millions. One would like to know how you monitor them. When are they inspected because the government is losing a lot of money on those buildings? Thank you.
The DEPUTY MINISTER OF PUBLIC WORKS (Mr J P Cronin): The answer to that would vary according to a particular contract and a lease that has been taken out. But again, you are absolutely right, we have not been professional in the way in which we manage our property portfolio - which is why, as I said earlier, what we are moving now to do is to establish what we call a government component within the Department of Public Works, with the support of Cabinet, which will be a property management trading entity. The entity will be light in terms of administrative personnel and much more heavy in terms of quantity surveyors, architects, property lawyers and so on. We want to professionalise it.
Typically, what happens is that in the past when we leased a building in major metro, the property owner will fly in property lawyers from London and we will negotiate with these high-flying lawyers, with chief directors who don’t necessarily have law degrees and so on.
We thought amateurish in the past and we should really professionalise. We are moving as fast as possible to professionalise our capacity and engage effectively with the private sector - but not just with the private sector, we want to really handle our portfolio professionally, in the public interest.
Supply chain management processes
234. Mr S G Mthimunye (Mpumalanga: ANC) asked the Minister of Public Works:
- Whether his department has put any mechanisms in place to strengthen the supply chain management processes, especially the appointment of contractors and their payment within 30 days; if not, why not; if so, what are the relevant details;
(2) (a) what challenges are experienced by his department regarding (i) supply chain management processes and (ii) the payment of service providers within 30 days and (b) what plans are in place to address the challenges? CO638E
The DEPUTY MINISTER OF PUBLIC WORKS: Chairperson, I have probably harshly answered this already. We have identified this and the Nkandla matter with one of the prompts but not the only one which alerted us to the importance of really ensuring that our supply-chain-management processes within the department were cleaned up, professionalised and made much more effective. What we have got as a department is a special division called the Inspectorate and Compliance Unit, which has been integrated into all supply-chain management process, or SCM processes. That is one way in which we are trying to do this.
We have made our annual performance plan. We are using it as a critical tool to evaluate and monitor, in an ongoing way, our commitment to improving our supply-chain-management function.
At an operational level the back office operations within SCM have been extensively re-engineered and streamlined. Every SCM activity has now been mapped out as a process flow with checklists, reports and templates along the way. In this way, we monitor the process of acquisitions and procurements in an ongoing and processed way. As I said earlier, we are now working very closely – we are the first guinea pig in this matter – with the office of the chief procurement officer from National Treasury to assist us with enhancing our ability in this field - bearing in mind, as I said also earlier, that procurement in a complex area of property and construction is not the same as buying pens and pencils. Therefore, we need to develop different protocols and methods.
We are also keeping a register of poor-performing contractors, so that we don’t have - again, this often happens with government - the same people that failed at a construction site in one place migrating to another province and repeating the performance. So, we are keeping an effective register in terms of procurement.
The question also asks about the 30-day payment time. We have significantly improved our 30-day payment time, and that’s an instruction from the Presidency to do so. Also, members need to bear in mind that sometimes there are good reasons for not meeting and sometimes bad reasons for not meeting the 30-day deadline. The bad reasons would include being useless and not moving effectively, or, alternatively, there are cases - not recent cases that I am aware of - in which officials say, “We are not going to pay you unless we get a backhander” of 10%, 5% or whatever. So that happens as well.
When there are delays in these things it’s often a trigger that we need to watch out for. Why is the delay happening? There are other reasons as well: often there is shoddy work and work that needs to be verified properly and sometimes that can take more than 30 days. Sometimes the invoices are incomplete or problematic. Also, the verification of banking details needs to go through the National Treasury banking platforms. So, there are challenges in the space of turning around. I forgot the exact figures, so let me not suck it out of my thumb, but I think our average now is very close to 30 days. We want to make sure that we get to 30 days, or have a very good reason for why we can’t meet the 30-day time period.
Without going into too much detail there are some other things. For instance, another problem with bid committees in government departments, including the Department of Public Works, is that they depend on a quorum – correctly – and people are very busy. They are deputy directors-general, or chief directors or whatever. Often there aren’t quorums and so the procurement process can be very delayed.
We have now set up permanent committees that are involved with procurement and permanent dates, times and hours at which they must meet. So, hopefully, that will also speed up and improve the procurement process. Thank you, Chairperson.
Hon Mthimunye?
Mr S G MTHIMUNYE: Thank you, Chair. I have no further question.
Mr W F FABER: Chair, through you, Minister, I am still on the previous question we are still busy negotiating the answer to. Minister, regarding this register you spoke about, I would like to know how far you are with the total reconciliation of how many of these dilapidated buildings there are. This is part of what I want to know: How far are you with your audit on that? Then, coming to the supply-chain management system: I want to know if you still do the training that has been done previously on supply-chain management, because I know there used to be solid training at the Department of Public Works for their people to be able to adhere to supply-chain management. If these people have been trained - if you say yes to me - and they don’t apply supply-chain management, what steps are you taking and are they really being held accountable? Thank you.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Faber, maybe the Minister can deal with the latter part of your question, but the question on the asset register is his last question. So he will give the details when he answers his last question.
The DEPUTY MINISTER OF PUBLIC WORKS: Yes, that’s right. Thank you, Chairperson. I would like to answer more fully when we get to the last question that I will be dealing with. Are we continuing with training? Yes, often this is not training but retraining and also developing new systems, as I was trying to suggest. If people fail with training to comply with what is required, then there must be consequences and the consequences will be varied, depending on the seriousness of the problem.
Ms L MATHYS: House Chair, I would be very glad to hear about this register. When is it going to be available and will it be able to be submitted? I think these companies need to be named and shamed. Also, I’d like to find out: Besides the companies that are blacklisted, we also need to blacklist individuals because they move on, they close down their companies, they go and open new companies under different names. So what are we doing regarding that? Because the directors of these companies are phenomenal for moving from province to province and opening up new companies?
Beyond blacklisting, we need to recuperate our money. What is the department doing in conjunction with the National Prosecuting Authority to see whether these companies are brought to justice and whether follow-ups are done? We can’t continually have the same problem of companies using state money and getting away with it. Thank you.
The DEPUTY MINISTER OF PUBLIC WORKS: Yes, I agree. The register would need to be and is a CIDB register, or Construction Industry Development Board register. This is a public entity which grades the construction sector - Grades 1, 2, 3 and so on. It is important because it is monitoring all construction projects developed by the public sector, not just Public Works. They are the ones that need to watch the performance and do the blacklisting. And that is one of the things that we are talking about in terms of the collusion that occurred around the 2010 stadiums and other 2010 build projects.
The maximum weapon we have as the Department of Public Works, through the CIDB, would be to blacklist those companies. Whether we can do it or not, given the fact that they dominate the thing and we might not then have construction companies and many jobs might be lost ... But, certainly, we are using that leverage to say to them that we can blacklist them, which wouldn’t prevent them from doing business but which would prevent them from doing business with government with any public sector. That is important leverage that we have, and we are using that in order then to reclaim. Obviously, there are a variety of ways in which we can reclaim money that has been fraudulently extracted from the pubic purse. This can be done through civil action, and we are undertaking and do undertake regularly such actions in the courts. There is also the possibility of criminal action. Those are all of the issues around which we are, do and can pursue wrongdoing.
Mr L B GAEHLER: Deputy Minister, I am happy with your answer, but this late payment issue cuts across departments. It would be unfair to say it is just your department. I also agree with you regarding cases in which there is corruption and shoddy work. Yes, I agree. But where I have a problem is where a liquid document is supplied, which is a payment certificate, and then that contractor does not get paid. That is a major problem because legally and otherwise that is wrong. For instance, the Asidi projects, or the Accelerated Schools Infrastructure Development Initiative projects, which were done from 2013, used emerging contractors. On the one hand, we are saying we want to develop these people, but, on the other hand, there are contractors whose final accounts have not been paid for years. We need to arrest this, because, as government, we cannot say we want to develop people but, at the same time, destroy the people we want to develop by not paying them. The government needs to do something about this. As I said, this cuts across departments and is destroying our people. Thank you.
The DEPUTY MINISTER OF PUBLIC WORKS: I agree, and that’s why across government departments we are under very strict instructions from the Presidency to ensure that we meet the 30-day payment period, failing which there must be very clear legitimate reasons. I agree with what the hon member says.
Finalisation of Immovable Asset Register
233. Mr B G Nthebe (North West: ANC) asked the Minister of Public Works:
(1) Whether his department has finalised the Immovable Asset Register; if not, (a) why not and (b) how far is the process from finalisation; if so, what are the relevant details;
- whether his department has set a deadline for the finalisation of the process; if not, why not; if so, when?
CO637E
The DEPUTY MINISTER OF PUBLIC WORKS: Chairperson, this is the question I keep anticipating and then failing to answer effectively. It is a question directed at where are we in terms of our Immovable Asset Register. Perhaps, very far advanced is the short answer, but I will come to that?
However, perhaps it is useful just to bear in mind some of the challenges that the Department of Public Works, nationally, but also provincial in the departments of public works have encountered in this space. The first thing is, the assets are immovable, they are buildings, basically, or land, but a register is never complete because it is a moving target. It is a dynamic thing, properties gets bought, sold, disposed off, or revalued or whatever.
So, we can never say that it is 100% done because it is an ongoing thing, okay. However, the fact of the matter is that as I was saying earlier, the Immovable Asset Register of the national Department of Public Works was woefully inadequate. I would say until the past three or four years in which there had been a significant push, very much later by Minister Thulas Nxesi to really get this thing right and up and running; and as updated as possible.
However, let us bear in mind the historical challenges that the government came into in 1994. So we had the Transkei, Bophuthatswana, Venda, and Ciskei, TBVC entities consolidated into a single South Africa, lots of funny things happened at that point, properties disappeared, other people occupied properties and so on, and the records of those TBVC states were typically quite uneven, to say the least.
So that has been a big problem, when that consolidation happened, where are the properties vested, and suffice to even know what the properties are. Is it with the province; is it with the Department for Rural Development and Land Reform; is it with the Department of Public Works and so on. So there has been a big challenge.
Additionally, it wasn’t just the TBVC, but let’s remember that prior to 1994 we had four provinces and not nine. Suddenly, after 1994, then nine provinces constitutionally and so forth. A lot of the problems in the government’s broad Immovable Asset Registers have been the vesting problem; who owns what and where is what? That is a big, big problem and I don’t think that it should be underrated.
At the time when obviously the government, including public works departments, – I don’t want to make it sound like suddenly because Thulas Nxesi and Jeremy Cronin are in the Ministry, things have improved. However, we do think that this has been a key turnaround priority that Minister Nxesi has driven, to get it right. So as I speak, what I’m told is that the Immovable Asset Register is 99% complete, okay.
So we think that we have vested properties appropriately that were wrongly vested with provinces, they have now been vested with us. Properties that were wrongly vested with us, and not with the provinces, have been vested properly and correctly. We have somewhat sorted out that TBVC thing.
However, we think that properties have disappeared into a black hole in some cases and that’s a challenge going forward; but fundamentally what we have done is, we have physically verified every property. Okay, that’s a massive task that we have to do. I said earlier that we have close to 100 000 buildings, for instance.
What is outstanding is the valuation of these properties, so we do not just have a physical description of the property, we know where they are in terms of co-ordinates and so forth, we know exactly where they should be vested, whether with us or others; but we also know what is the value.
The valuation process is roughly 60% complete as we speak. The problem there is that where municipalities have valued properties for rates purposes and others, it is quite easy then we just accept that; but many municipalities, often rural municipalities, and so forth, haven’t done evaluations. So that is adding to the complication.
The deadline for us is that we must complete the valuation process by the end of this financial year, for the beginning of the next financial year. That’s a requirement of Auditing because our Property Management Trading Entity needs to convert to the Generally Recognised Accounting Practice, GRAP, or has converted to GRAP standards, which requires a valuation. We have just been valuing the most, one round, basically.
We are now 60% in the process of effective valuation. So there is quite a tight deadline but we are convinced that we will get it; and just to say also, that this is not just the Deputy Minister of Public Works who says this. In our financial year Audit Report for the 2014-15, for the first time, there was no audit qualification in terms of the Immovable Asset Register.
So the Auditor-General was also acknowledging the point that I’m trying to make, which is, it is not yet complete, but a significant progress has been made; but we do need to meet the GRAP requirement by the end of this financial year.
Mr B G NTHEBE: Chair, the latter part of my question, Deputy Minister, would the department be able to meet the requirement of the Audit as per the deadline? Thanks.
The DEPUTY MINISTER OF PUBLIC WORKS: Yes, that’s why I’m saying that we do need to – the deadline is the GRAP requirement in terms of auditing standards, and we are putting a lot of pressure on our officials to ensure that – I’m sure that we will meet that deadline; so, yes.
Ms E C VAN LINGEN: Chairperson, the Minister has just said that there are a few deep rural municipalities that are outstanding with valuation rolls, and that is actually a very big problem because if the municipality have got no proper valuation roll, then serious action must be taken against such a municipality because they can’t collect their own revenue. They don’t know how to.
So in a case like that, the Minister may just call on the Minister of Co-operative Governance and Traditional Affairs, Cogta, to resolve that problem and force the municipality to do what they have to do, otherwise we will sit with more bankrupt municipalities and more amalgamations.
The HOUSE CHAIRPERSON: COMMITTEES AND OVERSIGHT: Is it a suggestion or are you posing a question, hon Van Lingen?
The DEPUTY MINISTER OF PUBLIC WORKS: It is a problem, we don’t have the power, so what we are doing is then doing the valuation ourselves. I mean, it is easier for us where evaluation exist within the municipality, but where it doesn’t we can’t wait for them.
We obviously do engage with the Minister of Cogta, the department, and the affected municipalities and we make exactly the point that you are making, which is if you don’t have a proper evaluation of the property in the municipality, you are not able to collect the rates and so on, that you should be collecting, and it is advancing.
However, often it is vicious circle precisely the municipalities that don’t have capacity, that can’t do it and therefore they get caught in the poverty trap, basically. So there is a problem and that is why you are absolutely right, we need to work collectively as government, including the Department of Cogta, but all of us to assist each other, including municipalities that are battling with this matter.
Mr W F FABER: Thank you, hon Chair. Through you, Chair, Minister, I understand what you are saying that there is a time period when this valuation is going to stop or when it should be completed, but the problem that I have, it has been starting for so long already, by the time you finished the evaluations of the first ones already differs. So this is the problem that I really have. It is a real problem because some of these buildings have become worse, even more dilapidated. Oh! I like that English word it is a new one.
However, it gets even worse and worse, so that the value of these buildings from when you actually started is not the same anymore. So if you on with a circle you are not really going to get a real vision of what is going on. This is why from the start I was saying that, when you say you are doing this audit, there should have been according to me, a specific time. I want to know from you, do you see that this process will just be the ongoing process, or how will you handle that?
The DEPUTY MINISTER OF PUBLIC WORKS: Chair, no you are right, it is an ongoing matter. Firstly, no one gave the impression that some of the valuations were conducted in 1994, and we still record them at the valuation. The valuations that we are talking about currently which are 60%, roughly complete are recent valuations.
However, as part of the public, the Property Management Trading Entity that I keep talking about, which is where we are trying to professionalise what we are doing in this vast property portfolio, one of the key divisions will be what is called the real estate information and registry services. Their job will be to do continuous evaluations and upgrading of evaluations.
That’s why right at the beginning, I said, it is a registry of immovable assets, but the registry itself can’t be immovable. It has to be a dynamic process, and so we need to develop the capacity to be dynamic in this phase. So I agree with you.
Red Tape Reduction Programme
207. Mr M J Mohapi (Free State: ANC) asked the Minister of Small Business Development:
(a) What is the progress to date of the Red Tape Reduction Programme in the local government sphere since its launch in 2014 and (b) what are the (i) successes and (ii) challenges regarding this programme? CO611E
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, good evening hon members. The red tape reduction, of course, is something that we are very committed to dealing with as a department. Under one of our programmes, which is the enterprise development programme; one of its outputs is the red tape reduction which in short means that they must ensure that the red tape reduction must be institutionalised at all institutions and all the spheres of government.
Since the launch of the red tape reduction programme, the department, in collaboration with the Department of Cooperative Governance and Traditional Affairs, the SA Local Government Association and the nine provincial departments of the economic development, have rolled out the local government red tape reduction guidelines to 109 municipalities.
This has been done the form of workshops within the districts and local municipalities. I must indicate here that when the department was formed quite a lot of work had already been done by the Department of Trade and Industry; so hon members can be able to see the guidelines for reducing municipal red tapes which I already found to be concluded.
There is an increased awareness in the red tape reduction programme within the three spheres of government. The partnership between the department, Cogta and Salga has influenced the inclusion of an indicator of red tape reduction in the plans of all municipalities in the country, in order to improve administrative procedures and processes, interface between the municipalities as well as addressing the unintended consequences of the policy.
However, we still do have some challenges and some of these regard to the reduction programme included understanding and by in at provincial and local government levels. That is why we believe that our continued efforts of working together with the three spheres of government not only on the issue of red tape reduction but generally in implementing our programmes would work. The red tape reduction programme is not included in the annual performance plans of some of the municipalities; and this is one of the challenges.
Inadequate application of the intergovernmental relations policy to addressing the red tape reduction across the function issues; and lastly, the lack of a monitoring and evaluation mechanism to assess implementation of municipal actions is a problem and we are committed to working with the three other areas I indicated to make sure that we reduce this because we also don’t want to be caught in the red tape tangle.
Mr M J MOHAPI: Chairperson, I am not yet covered. One of the symptoms, Minister, of red tapes is rules and regulations that are designed to but not achieve certain policy goal. The vision 2030 highlights the need to have a simplified regulatory environment and better co-ordination of SMMEs policies and programmes, at a local government sphere in particular. How do you see, Minister, the red tape reduction programme contributing effectively towards attaining this vision 2030 in terms of addressing challenges at the local government sphere?
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, and thank you, hon member for that question. I believe that the rigorous implementation already of the guidelines would be one of the ways in which we can be able to contribute towards the vision as you indicate. However, I would also want to say that there is another element which is important here; that of training, educating and ensuring that the people who are supposed to implement this understand the reason and the challenges that are faced when there is excessive regulation or rigid conformity to formal rules.
I think, as a department, we have an opportunity here as we are reviewing our programmes and we think that part of the reviewing of the programmes is to look at the best ways and the simplest ways of ensuring that small and medium enterprises and co-operatives operate in a conducive environment.
Lastly, it is about ensuring that the co-ordination between the three spheres of government – because we can be at national level and brandish the guidelines all over the shore; but if we don’t have people who can be held accountable to ensuring that they implement it almost comes to zero. However, as a department we are committed because we have seen for ourselves the challenges that are faced by small and medium enterprises because of red tapes.
Mr J J LONDT: Chairperson, hon Minister, since the Western Cape Province implemented its red tape reduction unit, there have been numerous success stories and it has dealt with more than 4 000 cases achieve a success rate of 85%. Being able to measure the effectiveness of the programme enables us to identify weak points to address it as well as roll out what is working in other areas. Considering this, is the Minister able to state how many cases have been dealt with in every other province; and what is the success rate in each of these provinces?
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, I must indicate that what the Western Cape has done has been submitted to us through hon Kruger who also asked questions with regard to these red tapes. And we indicated to hon Kruger that we are open to checking how they are doing it and to looking at their success stories because we believe that where there is success we must be able to look at the success; but I am sure that if we were to go deeper into the other provinces, which I don’t have the facts and the figures as to how far the provinces have done, if we were to pull out all the facts from all the provinces as I indicated that the guidelines have been rolled out to almost 109 municipalities; if you give us the opportunity to go back and pull that and see how much success has been done, I can only be able to submit that once I have all the data. I don’t want thumb suck the information. Thank you.
Ms Z B NCITHA: Chairperson, I want to make a follow-up to the hon Minister on the issue of having a monitoring tool, in terms of tracking the progress that is made by both departments and municipalities; because in my view, if we are not doing that, Minister, it can have serious implications in terms of delivering the services both by departments and municipalities. Thank you.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, in answering the question I said that one of the challenges we have, obviously, is that of monitoring and evaluation. As I have indicated, we have a unit that has this as one of its outputs. And I think that as we review our programmes; it is one of the things that we are going to focus on. [Interjections.] I thought there was something somewhere ... [Laughter.] I think we do believe that monitoring and evaluating is important and it is one of the reasons why we have, in the department, formed a special unit which is called “planning, monitoring and evaluating” because we believe that the planning and monitoring which is happening at a national level needs to have a connection directly into our department then we have to identify specifically the areas where we think the focus on monitoring and evaluation should happen. So, that unit is going to be assisting the enterprise development unit in the monitoring of the implementation of this red tape reduction. Thank you.
Mr J J LONDT: Chairperson, thank you, Minister for your commitment and for committing yourself to doing the evaluation and getting back to us. As a new department, in order to measure the effectiveness of this red tape reduction programmes; can you give us an indication as to by what time would you be able to come back to us, that is, you don’t just say you are going to comeback but to say, my department is busy in the planning process and by the end of this year or by March next or whenever; we would be able to come back to you, in terms of municipalities or provinces so that we can then evaluate what the success are and then address the problems where there are problems and those that are doing well we can then draw that up to the others.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, I am also an action oriented person and I don’t take kindly to things and work that takes too long to happen. I am very much conscious of the needs and especially the felt needs small and medium enterprises and the very fact that these guidelines that I am talking about were already developed by the Department of Trade and Industry. The implementation thereof for us needs to be done as quickly as possible. The evaluation of the department that we are doing is what we have already started and we have our first preliminary report around it and we are also conscious of the fact that there are parliamentary processes which we need to adhere to.
So, we will do the best that we can to try and get the information because the information that we are talking about is what already exists in the provinces; it would be a question of pulling that information. But may I also say that we decided that one of the things that we need to do as a department so that we can have a co-ordinated approach, not only on this, is to visit all the provinces where we can be able to raise the issues that we feel need to be implemented by both the provinces and the local government structures. So, I can safely say that by the first quarter of next year we will be able to give you the success stories, the facts and the figures because I don’t think it would be difficult to do. Thank you.
Struggling small businesses
216. Ms Z V Ncitha (Eastern Cape: ANC) asked the Minister of Small Business Development:
(1) Whether her department has any plans to assist the struggling small businesses to (a) flourish and (b) have sustenance in order to (i) achieve economic growth and (ii) create jobs; if not, why not; if so, what plans;
(2) whether her department has established offices near to the people for information dissemination regarding (a) the registration of businesses, (b) funding and (c) other advices; if not, why not; if so, what are the relevant details? CO620E
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Hon Chair and the hon member who asked the question, the Department of Small Business Development, through the Small Enterprise Development Agency, Seda, and the Small Enterprise Finance Agency, Sefa, which are in effect its implementing agencies, facilitates the development and growth of small businesses. May I also indicate that the last time we were here there were issues about whether Sefa and Seda are going to be migrating to the department from the Department of Trade and Industry. We would like to report that that migration has been successfully done.
The mandate of Seda is to develop support and promotes small businesses to ensure their sustainability. Seda also provides nonfinancial business support services to small businesses including pre-start-ups, start-ups and business growth and development. May I also indicate here that, what we are also looking at when we talk about small and medium enterprises is the informal business which, in our opinion, has not been really taken up very well in terms of both financial and nonfinancial support.
Therefore, in the review of our programmes, we are looking at how we can bring this mass of people who are outside. We do have a special programme but we are also looking at both Sefa and Seda’s contribution towards this. The Small Enterprise Development Agent has already revised its service offerings approach and moved away from making once-off interventions to working with small business for an extended period of time during this life cycle of the assisted small business.
We are doing this because in the year that we have been in office, we also realised that a lot of businesses do get the support but they are supported half way, and their hands are not held so that they walk together to ensure that their businesses are successful. Hence, Seda has now decided to look at its support.
Small Enterprise Development Agency has a vast number of partnerships and programmes focussing on township and rural enterprise development, manufacturing support supply development, trade facilitation, youth, women and people with disability and co-operatives and expo development programmes. All these plans and interventions are aimed at supporting small businesses to flourish and become sustainable.
Sustaining small businesses is very important because, - we are of the opinion that - if they are sustained, then they open up opportunities for those that are at entry level to also come through. In addition, if they are sustained, it means that the contribution that they make to their businesses and job creation might, in all probability, also be able to contribute towards the gross domestic product, GDP in the future.
The Small Enterprise Finance Agency on the other hand is committed to foster the establishment, survival and growth of small, medium and micro enterprises, SMMEs and thereby contribute towards poverty alleviation and job creation. The Small Enterprise Finance Agency does so by delivering the whole sale and direct lending providing credit guarantee to small, medium and micro businesses, and supporting the institutional strengthening of financial intermediaries so that they can be effective in assisting SMMEs.
I would also like to indicate quickly that the issue of intermediaries is an issue which was raised by the portfolio committee very sharply to us. Their feeling was that the intermediaries were taking a lot of money instead of the money going to small and medium enterprises; creating a strategic partnership with the range of institutions for sustainable SMMEs development and support; monitoring the effectiveness and impact of our financing credit guarantee and capacity development activities; and developing through partnership innovative finance products, tools and channels to catalyse increased market participation in the provision of affordable finance.
The Department of Small Business Development, through Seda and other key players such as Transnet, has an extensive network throughout the country. Small Enterprise Development Agency in the nine provinces has 55 branches and 48 incubators. Again, let me quickly indicate that one of the challenges that are being raised by small and medium enterprise that many of these offices find themselves in places where they are far away from the people who need the support, mainly. Therefore, Sefa also does have a co-location at 36 local municipalities and deploys 19 mobile units. Nineteen mobile units are not enough to cover the entire country or even to cover the small and medium enterprises and co-operatives.
The registration of business takes place at some of these sites in collaboration with companies and intellectual property commission. Together with Transnet, the department is rolling out enterprise development hubs in each province with a focus on rural and township areas. The hubs ... [Interjections.]
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Hon Minister, please round up.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Okay. The hubs host such agencies such as Sefa, Seda, National Youth Development Agency, NYDA, SA Revenue Service, Sars, Companies and Intellectual Property Commission, CIPC, and black economic empowerment, BEE, accredited companies. Thank you.
Ms Z B NCITHA: Chair, the hon Minister has eloquently responded to the question. I do not have a follow-up question, except to thank the Minister for such a progressive report. Thank you.
Mr T C MOTLASHUPING: Hon Chair, I will be very brief. Hon Minister, it has come to the attention of South Africans that there are sporadic attacks on foreign nationals. It has happened in KwaZulu-Natal, Gauteng and recently it is happening in Grahamstown. My question is ...
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Hon Mtileni, are you raising the point of order? Hon Motlashuping, there is a member on his feet. Is that a point of order, sir?
Mr V E MTILENI: I just want you to ask the hon member to stand up; he can’t talk while sitting down, please. [Laughter.]
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: That is not a point of order. Hon Motlashuping, proceed.
Mr T C MOTLASHUPING: Hon Chair, the hon member is too dark to see me. [Laughter.]
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Order, members.
Mr T C MOTLASHUPING: Hon Minister, my question relates to how small businesses are regulated and how your department is addressing the issue of unfair competition with these foreign nationals, because it has come to our attention that some foreign nationals sleep in these shops that they own. How is government assisting our people who used to own these small businesses to sustain their own businesses? Thank you.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Hon Chair, I think someone is claiming yellow bone here in this room. [Laughter.] With regard to the issues of attacks on foreign nationals, we have, as government, consistently indicated that it is something that South Africa cannot afford, first and foremost. Secondly, we have also said that we can be able to live side by side with people who are legal in the country, who have all the necessary documents. As government, we have also said foreign nationals who have the necessary papers are also protected by the law and the Constitution of South Africa. That we want to ensure that it is understood very well by all our people.
However, going beyond that remember that when it all started, our department formed an interdepartmental task team that was supposed to bring all the relevant stakeholders into discussion. It was good that the task team was an intergovernmental task team. Later on, we drew into the discussion the very foreign nationals who were in the organised formation to make sure that we have a discussion. Adding to that, the President also called an interministerial meeting, the results of which can be seen by the reduction on the number of attacks happening on foreign nationals because government decided to have it in two ways. One way is to deal with the security issue which included the security cluster but the other one also included the economic cluster because we wanted to specifically address the issues that the hon member is raising about empowering our own people in order to be able to understand, first and foremost, that there is competition in business. Secondly, to empower them with the necessary tools that will enable them to grow their businesses.
We are happy with the progress so far and we hope that this will not visit us again because it does not look very well on South Africa. Thank you.
Mr J W JULIUS: Chairperson, hon Minister, will you look into a question ... I had a written question and two weeks ago I got the response, and the question was on the department’s activities ... [Interjections.]
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Hon Julius, stay on this question and your supplementary must arise from there.
Mr J W JULIUS: Yes, obviously, it will, Chairperson. - on the West Rand. The response was a bit vague. It spoke about ... [Interjections.]
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Please, repeat yourself.
Mr J W JULIUS: The response was a bit vague, hon Minister. I will get to the question now. How the department’s activities on the West Rand support small businesses in the West Rand. The answer was in Lenasia and Roodeport, and they do not form part of the West Rand. In this, I wish to extend - Chairperson that is where I am getting to now - the second part of the question as a follow-up.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Which second part, hon Julius? That question ...
Mr J W JULIUS: The original question, Chairperson, 216, the second part.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: The question you must do is the follow-up on the response which the Minister gave. Now, you are saying you are extending ...
Mr J W JULIUS: The Minister responded to question two, Chairperson, 216 (2)
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Okay, let us hear you.
Mr J W JULIUS: That is my response now on that. The Minister responded that in provinces it’s doing fine. My question leads ... and please look at question 2 also before you jump, hon Mohapi. Did her department establish offices near to the people in the West Rand for dissemination of information, registration of businesses, and funding? Thank you.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, maybe with regard to his first input about the West Rand, I think the department is the national department that is concerned about the entire country, including the West Rand. Therefore, whatever answer I have been giving earlier on covers all the provinces.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Order, members!
The MINISTER OF SMALL BUSINESS DEVELOPMENT: However, maybe what I might also want to say to the member, you will recall when I was answering also about Sefa and Seda that they have offices all over the nine provinces and we have mobile offices, and so forth. I think what is important in the question that you are raising is the weakness in the system, of ensuring that national, provincial and local government have programmes that are co-ordinated and that talk to each other in as far as supporting small and medium enterprises, as well as co-operatives are concerned.
However, we have got provincial governments and local economic development programmes that are at the lowest level. We are trying to work very closely with the premiers and the MECs of the provinces to make sure that the first point of call for small businesses when they want support is access at the level of both local government and provinces, because there sits also sizeable resources which they need to access. Thank you.
Payment of service providers within 30 days
236. Mr L B Gaehler (Eastern Cape: UDM) asked the Minister of Small Business Development:
(a) How has the Government’s failure to pay service providers within 30 days of submission of the invoices affected the growth of small and survivalist businesses, (b) how does the lack of growth of this industry affects government’s commitment to procure locally, (c) what is the scale of this failure in each province, (d)(i) how many and (ii) which departments experience such failure and (e) what remedial actions, targets and/or time frames her department has to ensure that its strategic goals are not undermined by the failure of other government departments and entities in this regard? CO640E
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson and hon members, I must upfront say to you that this is one of the challenges that we continue to face, and I think the other Ministers also ventured to deal with this issue. Small businesses do business mainly with governments departments and if their invoices are not paid within 30 days their businesses run a risk of failing due to financial distress and constraints of cash flow. We understand, of course, that when small businesses are not paid they do not have the deep pockets that big businesses have because big businesses are able to play around with their resources, and also that they get better attention from the banks. So we are more conscious of this.
When most small businesses fail as a result of financial distress, the government and private companies cannot procure from small businesses exposing the few surviving small businesses to increase monopoly pressure from big business. I think this is one of the areas that Minister Patel spoke about earlier on.
The economy needs a thriving small business sector that will supply the government and the private sector and help build the lower and middle income classes of this country. The failure to pay invoices for services rendered by small businesses is of serious concern as it has direct impact on the cash flow of small businesses. According to the latest report from the Small Enterprise Development Agency, the culminative backlog from 21 September 2001 to date is, R125 499 836 and all government departments contribute variably to this amount.
Approximately, 155 departments have failed to pay small businesses within the 30 day period in the month of October 2015. However, the number fluctuates periodically as, again, Minister Patel and also the Deputy Minister Cronin spoke about it – it varies. In some cases it is the fault of government, but in some cases it is the fault of small businesses in the submission of their invoices. But he also spoke about the challenges of some of officials not being able to pay because they want to get something. So we are very conscious and accept the fact that there is a problem and we need to deal with it.
The top six departments with most outstanding invoices are the food and beverages, manufacturing industry sectors, education and training authority, Gauteng Department of Health, KwaZulu-Natal Department of Health, Free State Department of Health, Limpopo Department of Health and North West Department of Health.
Let me also say that this is one of the heaviest responsibilities that we have because we get calls and emails, and some people are even emailing everything that dates back to 2005 and 2001 where they have not been paid. Our department sits with that kind of a challenge.
I think I should indicate the fact that government has taken a very strong response to this to a point that we see the naming and shaming of some of these departments as one of the things that we need to do because at the end of the day it is the officials who sit behind the desks and do not push invoices properly. However, my department always strives to lead by example in ensuring that all its invoices are paid within the stipulated 30 days from the day of inception. Compliance with the 30 days payment stipulation forms part of the department’s performance reporting and it is incorporated into the department’s annual performance plan, 2015-16. The department monitors the presidential small, medium and micro enterprises, SMME, hotline managed by the Small Development Agency and ensures that government departments and entities pay for services provided by small and surviving businesses within the 30 days of submission. I thank you.
Mr L B GAEHLER: Chairperson and hon Minister, yes, part of the question has been answered by the Deputy Minister of Public Works, hon Cronin. But I also want to thank you upfront. I think I have written a couple of letters to you and you responded positively that you have addressed the issues. I also want to thank you for that.
However, Minister, would your department consider creating a tool that will monitor that not only departments, but also local municipalities and government entities do support small businesses and pay them within the specified time? Would the department consider creating that type of a tool? It is necessary for the country. Thank you.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Hon Chair, yes, we would like to do that. In fact, we have had a few presentations made by the people who develop such tools because we think that technology can also be able to assist us in this where a lot of information that needs to be there maybe speeded up through today’s technology. It may work better. But also it is accountability and openness if we have a tool that is properly monitored. We know that such tools do exist and we will consider the already done presentations to the department with regards to these tools. Thank you.
Mr J J LONDT: Chairperson, I think it is a very good idea that you are naming and shaming the departments that are not performing. I would also suggest that not just the departments, but actually put the individuals who are responsible for these departments - name and shame them as well.
But apart from naming and shaming, what leverage does this department actually have to address the departments and individuals who, after having been named and shamed, but are still not performing? What leverage do you really have to make sure that they pay as soon as possible or at least within 30 days?
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, I think the leverage that we have is, firstly, the commitment by overall government because we cannot do this on our own. But also the leverage we have is the very facts that at the level of the President’s Office, we have a structure that is supposed to be dealing with this. The Minister of Monitoring and Evaluation Minister Jeff Radebe is the one who is responsible for this.
Lastly, the fact that this is something that is being recognised by the overall government across the board, and I think as the other Ministers have indicated, across the board the fact that this is being recognised as a big problem, I think that most of my colleagues, if I can speak for them, so far our engagements with them not only from a point of view of just engagement, but also beginning to look into their own systems as to what exactly needs to be done, is of assistance.
We would like to take it to the next step and that next step obviously is that of ensuring that those individuals who are found not to have been paying on time, sanctions have to happen because without sanctions it is almost meaningless.
Unfortunately, many at times we do have people who hide in the system and just sit there in the system. We need to make sure that we develop mechanisms that can root and weed them out. Again I would like to go back to the fact that we are very much conscious of the implications of not paying small and medium enterprises. If we are to make sure that the figures that government itself under the National Development Plan is churning out as far as how much job creation should have been done by small and medium enterprises, it means we need to be very firm about the implementation of decisions that we take. Thank you, Chair.
Nkul V E MTILENI: Mutshamaxitulu, ndzi kombela ku vutisa Holobye. Tanihi murhangeri wa ndzawulo leyi pfunaka van’wamabindzu lavatsongo, loko mi languta etikweni ra hina van’wamabindzu lava a va ri na mabindzu lamatsongo a va ha ri na wona ku fika sweswi. (Translation of Xitsonga paragraph follows.)
[Mr V E MTILENI: Chairperson, I request to pose a question to the Minister. As the leader of the ministry that assists emerging business people, when we look at our country, business people who used to own small businesses no longer have them to date.]
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: I get the impression that there is no interpretation.
Mr V E MTILENI: Holobye va xi tiva Xitsonga. [The Minister understands Xitsonga.]
Mr V E MTILENI: Is it tough? You must learn these languages. You are Africans. You must learn these languages and not this thing of saying that we don’t understand.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Hon Mtileni, you are still in order just continue in that way.
Nkul V E MTILENI: Holobye, vanhu lava a va ri na mabindzu lamatsongo laha tikweni ra hina a va ha ri na wona hi mhaka ya ku mfumo a wu va pfuni hi nchumu. Loko mi languta sweswi, Holobye, swa vava. Vanhu lava humaka ematikweni ya le handle va fika va endla mabindzu laha, kutani mabindzu ya vona ma humelela. Mfumo wa hina wu na xiyenge lexi pfunaka van’wamabindzu lavatsongo. Ndzawulo leyi a yi tikombi yi ri karhi yi va pfuna. A hi se tshama hi swi twa leswaku eka xifundzankulu xo karhi ku pfuniwe vanhu va nhlayo yo karhi leswaku va yisa mabindzu emahlweni.
Leswi vavisaka swinene hi leswaku lavo huma ematikweni ya le ehandle va fika va sungula swibindzwana swa vona, kutani swi humelela lava va laha kaya va langutile. Va tivutisa leswaku ku humelela yini hi mfumo wa vona. Va ringeta ku ya eka nhlangano wa Small Enterprise Development Agency, Seda, kambe a va pfuneki.
Ndzi tlhontlha Holobye wa Mabindzu Lamatsongo leswaku a vona leswaku swiyenge leswi fanelaka ku pfuna vaakitiko, swi olovisa swilaveko loko vanhu va ya kombela ku pfuniwa hi swa mabindzu ya vona. Swilaveko swa vona swi le henhla swinene. A va ringeti ku swi hunguta leswaku van’wamabindzu va laha kaya va ta kota ku pfuneka va kuma mali yo pfuxa mabindzu ya vona. (Translation of Xitsonga paragraphs follows.)
[Mr V E MTILENI: Minister, the people who used to own small businesses in our country no longer have them due to the fact that the government does not give them any assistance. At this point in time, Minister, it is tough. Foreign nationals come and establish their businesses here, and they thrive. Our government has a section that assists small businesses. This Ministry does not seem to be assisting them. We have never heard of the number of people who got assistance in a particular province to further their business ventures.
What hurts most is the fact that foreign nationals come and establish their small businesses and thrive under the watchful eyes of the locals. They ask themselves as to what is going on with their government. They do try to go to the Small Enterprise Development Agency, Seda, but they do not get any help.
I challenge the Minister of Small Businesses to ensure that relevant sections entrusted with assisting citizens to lower their requirements when people go to request for assistance for their businesses. Their requirements are too high. They should try to lower them so that local business people can be able to get funding to revive their businesses.]
UNGQONGQOSHE WEZOKUTHUTHUKISA AMABHIZINISI AMANCANE: Sihlalo, ngifuna ukusho ukuthi ngiyazama ngayo yonke indlela ukuzwisisa zonke izilimi zaseNingizimu Afrika eziyi-11 futhi ngicabanga ukuthi wonke umuntu uyafuna ukwenza njalo. Kodwa-ke kwesinye isikhathi sinokukhuluma lolu lwimi lwethu bese lugxila kakhulu kanti ngokwenza njalo kubanzima ukuzwa ukuthi omunye uthini. Ngifuna ukusho nje ukuthi ngokuzwa kwami umbuzo wakho ukhuluma ngendaba yokuthi abantu abavela ngaphandle uma befika lapha eNingizimu Afrika amabhizinisi abo ayathuthuka ukudlula amabhizinisi abantu baseNingizimu Afrika.
Sihlalo ngiwuphendulile lowo mbuzo uma ngibuzwa lapha kodwa-ke ngizowuphendula futhi ukuze ilungu elihloniophekile lijabule ukuthi ngiphendulile. UMnyango wami uzimisele impela ukuqinisekisa ukuthi yonke into okumele siyenze ukuthuthukisa amabhizinisi amancane kufuneka sibanikeze: ... (Translation of isiZulu paragraph follows.)
[The MINISTER OF SMALL BUSINESS DEVELOPMENT: Hon Chairperson, I would like to state that I try my best to understand all 11 South African official languages and I think that everyone wish to do that. But then most of the time we speak our mother tongue languages and get used to them and that makes it difficult to understand what someone else is saying. If I understand your question correctly, you are saying that when the foreigners come to South Africa their businesses grow more than the businesses of South African people.
Hon Chairperson, I answered this question before, when I was asked here but I will answer it again so that the hon member will be happy that I answered his question. My department is determined to ensure that we have everything we need in order to develop small businesses further, we need to give them: ...]
... financial support, nonfinancial support, infrastructure ...
... nayo yonke into eyenza ukuthi osomabhizinisi abancane bakwazi ukusebenza. Ngiyathemba ukuthi ngiwuphendulile umbuzo wakho. [... and everything that enables small businesses to work. I hope I have answered your question.]
Interdepartmental relations
217. Mr E R Makue (Gauteng: ANC) asked the Minister of Small Business Development:
Whether her department has any plans in place to advance (a) interdepartmental relations and (b) collaboration with other sectors in order to strengthen the strategy of sustaining the co-operatives; if not, why not; if so, what are the relevant details? CO621E
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Hon Chairperson, the Department of Small Business Development is implementing its programme of developing, strengthening and sustaining co-operatives through building and strengthening interdepartmental relations and collaborations with other sectors in the co-operatives area. You will notice that we are really doing the best that we can to make sure that we do not only talk about small businesses because everybody keeps talking about small businesses. They are forgetting that it is small business development as well as co-operatives.
Our responsibility also entails promoting access to markets, business infrastructure support and other relevant business support necessary for co-operatives to develop and grow. The department is engaged in a bilateral discussion with various national departments that are involved in economic productive sectors to enter into transversal agreements. The department aims to identify and take advantage of business opportunities that will be beneficial to existing and new co-operatives. As it is, the department is in various stages of discussion on transversal agreements with the Departments of Social Development, Human Settlements, Transport, Energy and Environmental Affairs but that does not exclude the other departments.
Additionally, the department is in continuous discussion with several established private sector companies such as NTK companies, Landbou Property Limited, SA Breweries and Massmart that can offer business opportunities within the value chain of the companies to co-operatives which are predominantly and historically from disadvantaged communities. I thank you Chair.
Mr E MAKUE: Hon Chairperson and Minister, we welcome the reply because for us sustainability of a large proportion of co-operatives are dependent on these proactive interventions that you highlighted by way of the transversal agreements, and we want to thank you and wish you success in those endeavours. Thank you, Chairperson.
Mr V E MTILENI: I just want to propose this to the House. It is always fair particularly - you can see it is already late for hon Makue to stand up and say that we are happy for the answer. I think it is time wasting. If he did not have any question, he should have just reserved and sit down.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Your point is taken, Sir. Do I have any other member?
Nks T G MPAMBO-SIBHUKWANA: Sihlalo ohloniphekileyo, Mphathiswa silibonile eli sebe lakho ligaqa njengosana olusanda kuzalwa. Salubona lukakazwa, saza salubona luzama ukuma, lusiya ngapha nangapha. Siyakuncoma ke oko. Nawe umana usitsho ukuba kukho amasebe amane ekunonga ngapha nangapha, siyayibulela loo nto leyo. (Translation of isiXhosa paragraph follows.)
[Ms T G MPAMBO-SIBHUKWANA: Hon Chairperson, hon Minister, we have seen this department crawling like a baby. We have seen it being fed, trying to stand up and trying to walk. We commend that. You also told us that there are departments that keep on supporting you here and there, we thank you for that.]
With that being said Minister, the department is in a place and should be trying to facilitate some co-ordination, I suppose by now. Can the Minister to please indicate to this House the other departments who are working hand in hand with the co-operatives to fulfil the mandate of the Department of Small Business and Development? Thank you, Chairperson.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Hon Chair, I think this question is really well placed because as we have indicated from the very beginning that without the support of other departments, we can create a conducive environment for small and medium enterprises and co-operatives but if they do not get the markets; if they do not have access to finance; they do not get the opportunities to sell their products, it will almost be meaningless. I would like to say, from the beginning when the department started, we started on a good base by the fact that there was already some work that had been done earlier by the Departments of Trade and Industry and Economic Development.
I think the indication that was raised earlier on by Minister Patel where he started going into issues that are related to small and medium enterprises, was an indication of the ANC-led government’s commitment to ensuring that this area of work is now one of the priority areas. He also indicated amongst the nine point plans which were indicated by government today - I think what is important is the understanding that everybody in all the government departments understand fully well the importance and opportunity of small and medium enterprises and co-operatives in terms of job creation and in terms of alleviating poverty. But more than that, the same view the Minister indicated earlier on is about ensuring that black people in particular, who were left out in the past get the opportunities of being integrated into the greater economy of the country.
We see the very issue of black industrialists as an opportunity as a department because when you talk about the small and medium enterprises you talk about people who really have an understanding that even if you have to produce this pen – what is this pen and what are the measurements of this pen? When you talk about the black industrialists you talk about the people who know the value chain and the processes of everything. We think we are a department that can begin to identify those people that can be black industrialists of tomorrow. So far, I do have complete support from all the departments. Thank you.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Thank you Mam, the hon Khawula. Are you on a point of order hon Mthimunye?
Mr S G MTHIMUNYE: I am rising on a point of privilege hon Chair.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: You do understand that when you rise on a point of privilege, you must be very substantive. That privilege must be substantive. [Laughter.]
Mr S G MTHIMUNYE: Hon Chair, I am very considerate of the time factor and I am reliably informed through my informal consultation with some of the Ministers in the House that some need to fly out of Cape Town tonight and a crisis may arise in terms of flying. Now, I want to submit an application hon Chair that at least lobby the opposition that some of the questions that are necessarily not questions of life and death be converted to written questions for written replies. I duly submit, hon Chair.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Hon members, I am going to take hon Khawula to do the last supplementary question. The point that the hon Mthimunye is putting is something which should have been lobbied and should have been coming through, but I must also remind members that we are geared to finish all the questions because we have already made it attendant to all the Ministers and the members of this House that we need to conclude the programme of this year and that we do not have the carryovers. I will be informed by the Chief Whip when there is any agreement of any conversion on any questions into written responses. For now, we proceed. Hon Khawula, you are the last supplementary on this question.
Mnu M KHAWULA: Ngiyathokoza Sihlalo ohloniphekile, mhlonishwa Ndabezitha ngifisa ukwazi ukuthi lukhona yini uhlelo oluyisenzangakhona ukusiza imifelandawonye ukuze uma incintisana ikakhulukazi emisebenzini kahulumeni kubekhona iphesenti elizothi xaxa ngakubona ukwenzela ukuba basimame kangconywana. Uma ngabe kungekho mhlawumbe umgomo onjalo ngeke yini kube umqondo omuhle ukuthi kubekhona umgomo ozobanjalo ozosiza imifelandawonye ukuze izwelakale ngohlelo lwesenzangakhona.
Okunye ke ngoba washo umhlonishwa uNdabezitha ukuthi ungomunye wabantu abayithanda kakhulu imifelandawonye ngesikhathi eqala ukungena kule Ndlu wathi ezinye zezinhloso zakhe ukwenza imifelandawonye isimame kangcono kunakuqala. Engikuthokozela kakhulu mina ukuthi umholi ongiholayo owumshana wakini imifelandawonye le yiyona into aqala ngayo ukuthi abantu abafunde ukuzakha nokuzenzela. Manje ke ngiyabona ukuthi imimoya yenu iyezwana kuyasho ukuthi nihlobene. Kodwa ke kumele ifundiswe imifelandawonye ukuthi akukona kwahulumeni kuphela la kukhona imisebenzi, nangaphandle kwakahulumeni ziningi izinto ezingenziwa ukusimamisa imifelandawonye. Bengisafuna nje ukwazi ukuthi ukhona yini umgomo wesenzangakhona ozwelana nemifelandawonye? Ngiyathokoza. (Translation of isiZulu paragraphs follows.)
[Mr M KHAWULA: Thank you hon Chairperson, hon Ndabezitha(Clan name), I would like to know if you have any affirmative action programme to help the co-operatives so that they will have more percentage on their side when they are competing especially in the government jobs in order for them to develop further. If, maybe, there is no policy like that, would it not be a good idea to have that policy? It will help the co-operatives in order for them to be catered for from the affirmative action programme.
Another thing is that when hon Ndabezitha (Clan name.) first came to this House she stated that she’s one of the people that likes the co-operatives a lot, she said that one of her objectives was to make the co-operatives to develop further. What I am grateful for is that my leader is your nephew, he starts with the co-operatives to say to the people they must empower and learn to do things for themselves. No wonder you get along, it is because you are related. But the co-operatives must be made aware that it is not only in the governments where you get employment, there are a lot of things that can be done without the government in order for the co-operatives to develop further. I wish to know if there is a policy for an affirmative action programme that caters for the co-operatives.]
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Thank you very much for the question. I will be fair to everybody else because I can see that we are also pressed for time. Yes, hon member it is one of the ... [Interjections.]
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Hon Minister, do not feel pressed for time. Please respond the way you would do.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Ooh, okay my apologies.
Sihlalo ngifuna ukusho ukuthi indaba yomfelandawonye yinto esibona ukuthi singuMnyango singazama ukuthi usilekelele ukuze abantu baseNingizimu Afrika bakwazi ukuthuthuka. Eqinisweni ngithanda kakhulu le nto oyishoyo yokuthi abantu kufuneka bazi ukuthi ... (Translation of isiZulu paragraph follows.)
[Hon Chairperson, I want to state that, as the department we will try and assist with the co-operatives in order for the South Africans to progress. I actually like what you are saying, that people should know that ...]
... it is not only in government that this assistance can be received.
Yiyona le nto eyenza sikwazi ukuthi kubekhona nabanye esikhulumisana nabo nasemabhizinisini azimele ukuze sibone ukuthi singazama kanjani ukubalekelela. Okubuhlungu nje ukuthi sinemifelandawonye eminingi eyabhaliswa kuzo zonke izifundazwe. Esikhathini esiningi le mifelandawonye ayikwazi ukuzimela kepha yonke iyawa. Ngakho ke sigxila kulabo esibabonayo ukuthi bazimisele, banemigomo nemithetho yabo futhi abayilandelayo leyo mithetho yabo ngoba esikhathini esiningi bayahlangana bese bexatshaniswa nayizinto okungafanelanga ukuthi zibaxabanise. Ngiyabonga Sihlalo. (Translation of isiZulu paragraph follows.)
[This is how we are able to have other people that we talk to in the private sectors also, in order for us to see how we can assist them. What is sad is that, there are a lot of the co-operatives from all provinces that were registered. Most of the time these co-operatives are not able to work independently, instead all of them don’t grow. So we focus more on the ones that we see are determined, they have their policies and rules which they follow because most of the time they meet and disagree about the things that they are not supposed to disagree on. Thank you Chairperson.]
Corruption implications on small businesses
244. Ms L MATHYS (Gauteng: EFF) asked the Minister of Small Business Development:
Whether her department is conducting a study into the scale of corruption and its implications on small businesses; if not, why not; if so, what are the relevant details? CO648E
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, I would like to say upfront that government is committed to fighting corruption. We have quite a number of mechanisms and systems in place. We have anti-corruption initiatives, anti-corruption programmes, anti corruption reports that have been written over and over again and I think the previous Ministers also referred to the issues related to corruption.
The department is currently not conducting a study into the scale of corruption and its implication of small businesses. However, we do think that, that is very important. We do understand obviously that to conduct such a study will require a considerable amount of budget, time and collaboration with other stakeholders.
That being said though, the negative implication of corruption both at private and public sector level are well documented and adversely affects the growth of small business. This in particular, when the prospect of small business to access business opportunities are blocked and small businesses ‘s potential to contribute to the economic growth and unemployment is undermined. The department continues to advocate for transparent procurement processes and to create awareness on the potential of small business and co-operatives to contribute towards economic growth.
Chairperson, I also would to say it is very unfortunate in the South African context that corruption is one way and we believe as a department that firstly, society overall must take responsibility in working with us to make sure that we end corruption. In any situation there is somebody who is carrying something to go and corrupt somebody. And unfortunately, the focus is always on the one who is being corrupted. Not that I say those who are corrupted must not be dealt with, they must also be dealt with. We know that even in our own system we have rotten apples here and there and it is important for us to be seen to be weeding out those rotten apples.
But at the same time we would like to make a call for rooting up of all rotten apples at both levels.
Lastly, it pains me that when you look on the front pages of the South African papers when they talk about corruption, you always see a black face. You don’t see the other faces. This is of major concern for us because we believe that corruption is something that needs to be worked on by all of us. Even the private sector needs to put efforts instead of sometimes keeping the money and finding nice ways of doing it without being exposed. So it is a concern that in South Africa corruption has a black face. But we are committed to ensuring that we deal with it, because we understand the implications thereof, in terms of the abuse of resources that are supposed to go to our communities. Thank you.
Mr V E MTILENI: Minister, how many government officials including politicians have declared to be doing business with government departments and municipalities? It is not a new question. Leave it to the Minister to answer it. I am asking this question because there are people out there at home who are actually self employed in their own companies and are creating jobs to fellow South Africans and the very same people are not afforded an opportunity by government departments. Those who are in the employ of government departments, be it municipalities and departments, they are appearing to be the ones doing business with themselves.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Hon Mtileni, are you still going to ask a supplementary question?
Mr V E MTILENI: This is a supplementary question.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Please come to the supplementary question!
Mr V E MTILENI: This is a supplementary question.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: No!
Mr V E MTILENI: This is the one. This is what I have prepared hon Chairperson. You can leave it to the Minister to answer if she so wishes.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Of course, we can leave it to the Minister to answer. You have done an after amble not a preamble as we are warned to do in the House.
Mr V E MTILENI: It’s okay.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: But the fact of the matter is that the hon member also knows that he has in fact posed a new question. Hon Minister, it is a completely new question and it is entirely up to you whether you want to take the question or not.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: The hon member knows that I will always answer his questions and this is something the two of us can discuss outside. However, I would like to say that, we are committed, in fact, government has indicated that we need to have systems in place through the Department of Public Service. We need to develop mechanisms, but effective mechanisms because the honest truth here is that people always find creative ways of doing things. Therefore, it is up to the system that we can put in place.
Government has over and over indicated that it does not allow civil servants to do business in government. I think we have written policy after policy around this issue and we are now looking for firm mechanisms that we can be able to use to root out corruption. I think that is also the reason why as politicians, we are expected to declare our interests from time to time because it is important for us to make sure that we don’t engage ourselves in corrupt activities.
I cannot say that we have yet a watertight system, we have to work towards a watertight system. And my view is that working with communities also is something that can be able to help because we have got all this good institutions in place, but at the end of the day catching the people who want to do this and prosecuting them is another long process. The President keeps on saying it over and over again.
Our systems allow people to walk around because there are people who keep defending even when they know that those people have done something wrong. So I guess we just need to keep working towards finding stronger mechanisms for catching them out. Thank you.
Mr J J LONDT: Hon Minister, there is a saying that says “Instead of plugging the holes in the dam, let's try to divert the river or build a new dam.” There is a school of thought that says ‘if you want to tackle bad habits or practices it works well to find a big issue and set an example’.
Coming back to your answer, if you want to address corruption the easiest way would be to set an example of a few businessmen or individuals or even departments or officials who are corrupt and thus help ensure that other businesses and individuals tow the line.
In the Minister’s experience, is it more difficult to enforce and ensure culture where corruption is not accepted when government fails to lead by example when they do not tackle instances of corruption or mismanagement of funds, with examples ranging from Prasa, Eskom, Medupi, Nkandla, and now John Block?
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, I think that in all the issues that the hon member is raising the ANC-led government is committed to dealing with those issues. We are an open government, we are a transparent government and where corruption has been found, we have not been afraid of dealing with it. In fact, we are not flinching. If the hon member was to look at the examples that he puts in place, he is very much aware himself of the processes that have taken place to make sure that we address this.
If we were a banana republic or government that is not democratic, we would still be having quite a number of people in places of authority. And because we take this very seriously, many of those people are out. I can be able to pull out facts and figures of how far we have gone if the hon member wants. Even those that are outside of government today. The fact of the matter is that, we are dealing with a very difficult situation of corruption.
Earlier on as I said, it is something that is very unfortunate because it always points to one side which is the side of the government.
I agree, as government, we have the responsibility to make sure that we dig it out and make sure that we take a strong action. But ultimately, it is a societal problem. Because sometimes some of the people that are benefiting from this corruption, they come and live in our own community. We can see them and the kind of lifestyles that they lead. Sometimes we don’t even say anything when we can see for ourselves that you can’t be working here earning this amount of salary and living this way.
That is why government has decided that we need to do a lifestyle audit so that we can then be able to check who is who? Thank you.
Benchmarking within co-operative sector
215. Mr M J Mohapi (Free State: ANC) asked the Minister of Small Business Development:
(1) What are the key emerging best practices that can be used as a national benchmark within the co-operative sector;
(2) whether there are national norms and standards for the funding of co-operatives by the Government; if not, why not; if so, what are the relevant details? CO619E
The CHAIRPERSON OF THE NCOP: Hon members, we will take a decision a whether to break after this last question because we did prepare a snack for members, anticipating that we would finish very late today. So, it is up to you to either break for 30 minutes to have a snack or leave individually in a disciplined manner to have a snack and return. I am all yours. Hon Minister, please proceed.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson and hon members, as the department increases business support for co-operatives that are either self-member initiated or that emerged as a result of government encouragement, it is evident that the sustainability of co-operatives relies on the co-operatives’ compliance with universal co-operative principles.
Co-operatives that have been sustainable are entrenched in the application of good governance and this, for us, is at the centre of management and possibility of growth for co-operatives. In the year that I have been in office, I have also come to understand that one of the biggest challenges faced by co-operatives, especially from a lower level, is that of good governance and entrepreneurship of members. Many a time, some of the co-operatives are formed for reasons other than the purpose of forming co-operatives. Somewhere along the line, they begin to fight amongst themselves over things that they shouldn’t be fighting over.
Government financial and nonfinancial support thus should enhance their sustainability and should not be the core of their existence. What is important to us is that we need to look at the programmes the Department of Trade and Industry had to remove the whole issue of ticking the boxes and being excited that we have registered thousands of co-operatives that actually cannot operate and function properly. We would like to see co-operatives that finally are able to depend on themselves but, of course, knowing that many of those co-operatives are within our communities – communities that were previously disadvantaged – it still remains our responsibility to support them.
I would just indicate two examples of emerging best practices that could be used as a benchmark within the co-operative sectors. These are just two; there are many others. The Ikhwezi vegetable and poultry farming co-operative in Mpumalanga was established in 1996 by five women and was operating informally until members decided to each contribute R50 per month to start the co-operative which was registered in 2010. The co-operative obtained a grant from the National Development Agency to set up a cold storage room, packing house, administration office, irrigation pipes and a seven-hectare water pipe engine, delivery vehicles and office equipment from the Department of Social Development to acquire a three-piston engine and irrigation pipes. The co-operative produces the following vegetables: butternut, cabbage, onion, potato, chilli, green pepper, tomato, brinjal, okra, sugar beans, marrow, mealies, and beetroot. The co-operative has created 50 jobs: 32 permanent and 18 temporary. The co-operative has secured a market to supply some of the vegetables to Woolworths, Pick n Pay and Spar supermarkets. The co-operative also secured a contract with the Department of Basic Education to supply schools with oranges, cabbage, onions, tomatoes, etc. The co-operative’s profit has increased by 50% since 2012.
The Papazela community funeral service co-operative – I had an issue with this co-operative, and then they said this one is successful, so I shouldn’t be worried about dead people – was established in 2012 by a group of nine founding members from Papazela village outside the township of Malamulele. The co-operative acquired land from the Papazela Tribal Authority and has since had its main offices there. The co-operative mainly focuses on funeral services and funeral schemes and has more than 4 000 members. They have a total of 10 offices in and around the Malamulele, Thohoyandou and Giyani areas, as well as Polokwane, and have expanded to the Gauteng province. They have seven offices in Limpopo, ultimately making it easy for the co-operative to interact with the clients who visit the offices for business enquiries, making payments, regular consultations, submissions of claims, and other activities. The co-operative employs qualified personnel who provide excellent services to the clients.
This is one other issue that we found very difficult with co-operatives. Sometimes they have a very good idea, but then they don’t employ qualified managers who can manage. Sometimes they want to manage the business themselves without having the necessary management skills. These managers have received professional training, particularly in customer care and the ability to close deals. Over and above the nine members of the co-operative, they a staff complement of 47 people. The co-operative has acquired six heads ... finally, there are no standardised national norms for funding of co-operatives, and I think we need to work on this further. Government departments and agencies at national and provincial level have their own funding guidelines which sometimes become a problem because you find that some co-operatives dip two or three times at different levels of government, and so we have to work something around this. Thank you, Chair. [Time expired.]
Mr M J MOHAPI: Chairperson, honestly speaking, I am really impressed with how the Minister has responded to these questions. It is very clear – even the blind can see and the deaf can hear. Thank you very much.
The CHAIRPERSON OF THE NCOP: Hon Smit? Ditto, I know. You are making that point of order. It is not ...
Mr V E MTILENI: Yes, that point of order again.
The CHAIRPERSON OF THE NCOP: Yes, it is not you, hon Mtileni.
Mr V E MTILENI: This thing of singing praises and showering accolades, I think it must come to an end.
The CHAIRPERSON OF THE NCOP: It is noted. Hon Smit?
Mr C F B SMIT: Chairperson, through you to the hon Minister, in light of the well-known failures of co-operatives in the small-scale fisheries industry due to political manipulation for personal benefit by a few ANC cadres, why does your department forge ahead to push for more co-operatives in other industries as well?
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, I want to be correct here so my apologies. I just heard somebody doing something like there is a dog in the House. I am not sure what that was all about but, anyway, we will sort it out. I don’t understand these sounds you are making.
An HON MEMBER: Sucking up ...
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Sorry, my apologies, I thought there was a dog somewhere. [Laughter.] I am not a dog. [Interjections.] Anyway, with regard to ...
The CHAIRPERSON OF THE NCOP: Order! Order, Mtileni, the hon ... [Interjections.]
The MINISTER OF SMALL BUSINESS DEVELOPMENT: It would be interesting for the hon member to give us ...
The CHAIRPERSON OF THE NCOP: Is it a point of order, hon Motara?
Ms T MOTARA: Chairperson, hon Mtileni says there are dogs sitting behind the Minister. That is what he said.
The CHAIRPERSON OF THE NCOP: Hon Mtileni, did you say there are dogs sitting behind the Minister?
Mr V E MTILENI: I am saying that because she heard sounds behind her.
The CHAIRPERSON OF THE NCOP: No! Did you say there are dogs sitting there?
Mr V E MTILENI: I am referring to her fellow ANC members behind her.
The CHAIRPERSON OF THE NCOP: Hon Mtileni, withdraw that!
Mr V E MTILENI: That is what I meant. [Interjections.] She heard the sound from ...
The CHAIRPERSON OF THE NCOP: Order! Hon Mtileni, withdraw that. Withdraw!
Mr V E MTILENI: I do.
The CHIEF WHIP OF THE COUNCIL: Chairperson, he didn’t say that he withdraws: “withdraw”, not “draw”.
The CHAIRPERSON OF THE NCOP: He said that he withdrew.
Mr V E MTILENI: Maybe it’s the English. You asked me to withdraw, and I said I do.
The CHAIRPERSON OF THE NCOP: Thank you. Hon Mtileni has withdrawn. That is the understanding.
Mr V E MTILENI: Not “dog”, “doc” - “Dr Mateme”. When we want to abbreviate, we say “doc” – not “dog”. [Interjections.] I am referring to Dr Mateme.
The CHAIRPERSON OF THE NCOP: Hon Mtileni, please take your seat. If it is a play on the pronunciation of the words “dog” and “doctor”, that is unacceptable in light of animals and members of this House not being the same. That, you know, has been disallowed. It is not appropriate. Hon Minister, please continue.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chair, we will continue to forge ahead and ensure that co-operatives get the support they need on the ground because it is very important for us to provide them with the support. We will not stop supporting our co-operatives on ground level on the basis that some political people somewhere – I am not aware of who and where they are ... we will continue to support co-operatives.
As to the issue that the member raised about the fisheries and some political connectedness, I know nothing about it, and I cannot deal with it.
Mr T C MOTLASHUPING: Chairperson, the decorum of the House must be maintained at all times. Childish behaviour is not going to assist this House.
Hon Minister, my question relates to co-operatives, but I would not want to confine it to a situation that I experienced whilst on an oversight visit in the North West. I would want you to take it as a general concern in all provinces. I am just worried about where the products that the co-operatives produce end up. Ultimately, my observation during the oversight visit was that they get exploited at the end of the day. Does your department have measures to ensure that these people are not exploited that that they get fair compensation for their products? Thank you.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, I think somewhere in my answering some of the questions, I did indicate the fact that one of our challenges and one thing that we are committed to is to assist small businesses and co-operatives to access markets. This is usually where the problem lies; they produce and then their products are not sold. At the same time, it is about the infrastructure and the support that they get even when they are still in the process of production. Many a time, you find that the quality of their products is sad. It is not good enough, hence the problem of exploitation.
I think in some instances, their product is very good, but they get exploited, firstly, because of the education that has to happen, but it is also about their management of whatever they produce. For me, it does not make sense for you to produce vegetables and other things in a particular area, and you do not have the market. You need to start by ensuring that you have the market.
Let me just give an example of one co-operative in the North West which is being supported by the Department of Social Development. My heart was very sore when I got there. I found that the Department of Social Development had given them a building, had given them equipment like sewing machines, had even given them quite expensive machines, including one that does embroidery, and that embroidery machine is very expensive. I found that out of the 30 machines there, about eight did not work, and they had not worked from the time they were given to them. So, here is a question of government doing everything it can to support, but the women on the ground not having the necessary skills. If they have that kind of machinery, it means they must have done an analysis of what they are going to sew. I looked at the product they were producing, uniforms for schoolchildren, but when I saw the quality of the uniform, I thought to myself that no parent would buy it.
So, as the department, we are of the opinion that the other departments who assist co-operatives must not do so without us co-ordinating with each other because they don’t conduct the training and the rest of accessing markets for the co-operatives. We are looking at how we can work together with Social Development, for instance. We have had our meetings already to say that they shouldn’t go and open up the co-operatives when the training and the understanding of the area have not been done properly. Thank you.
Ms Z B NCITHA: Chair, what I would like to know from the hon Minister – first, I appreciate the fact that the profits for the co-operatives have increased from R250 000 to R500 000. What I would like to know is whether the department has a programme on providing business skills to those co-operatives for the purpose of the co-operatives sustaining themselves so that they don’t collapse. Thank you very much.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, we have a fully fledged unit focusing on co-operatives. One of the outputs it has is doing exactly that: giving support, both financial and nonfinancial, to co-operatives. However, we are also looking at other support that we have realised exists outside of government itself. By the way, remember we have the Small Enterprise Finance Agency and the Small Enterprise Development Agency. At the same time, they are also supposed to provide assistance.
What we would like to explore insofar as enterprise development is concerned is the opportunities of enterprise development that exist outside of government. If co-operatives are not looked at as enterprises, they will never succeed. I can assure you that the companies I spoke about earlier on, regardless of occasional contradictions with them – sometimes they want to help, and sometimes they close the markets, so those are the things that we need to deal with. We think the success of co-operatives is hinged on, firstly, the issue of good governance, secondly, the issue of training, and, thirdly, financial and nonfinancial support, but the sustainability of co-operatives rests, in the main, on the co-operatives themselves. Thank you, Chair.
SA Steel Industry
211. Mr M Khawula (KwaZulu-Natal: IFP) asked the Minister of Trade and Industry:
- Whether South Africa has taken any steps to protect the SA Steel Industry against the (a) cheap imports and (b) rising costs; if not, why not; if so, what steps;
(2) to what extent will the impact of cheap imports of steel products have on labour force in the country? CO615E
The MINISTER OF TRADE AND INDUSTRY: Chairperson, the challenges that are facing the SA Steel Industry are well-known to the Department of Trade and Industry, DTI, and probably also to the members. But it is worth mentioning that what we are facing right now is global glutted steel. This means that the demand for steel is way below the supply of steel internationally, and that steel producers particularly from countries where they have been supplying the domestic markets, have now found that their market is not absorbing steel.
They are seeking to put steel at very low prices in external markets. This has led to quite a lot of havoc in global steel markets. The world steel production of the 66 countries that report to the World Steel Association, is down with 3,7% compared to September 2014, but that is still above the levels of demand and is not evenly spread.
The US has therefore seen 8,5% decline in its steel production. Brazil has gone 13% down and Turkey has gone down with 14%. That is a global context. On top of that, we have seen that there have been failures by the dominant steel producer, particularly under investing and the coming increasingly uncompetitive in some of the local operations. That has contributed to a situation in which many steel users have become accustomed to importing steel.
Our position as government is that we need to defend primary steel manufacturing in South Africa. We need to ensure that this crisis does not result in us losing primary steel manufacturing capacity. But we have to defend primary steel manufacturing in such a way that it does not impact negatively on downstream steel users in South Africa, which are actually the more labour intensive parts of the value chain.
To try and do this, we have implemented a number of measures which include a trade remedy measures. The International Trade and Administration Commission has already made a recommendation which we have accepted as government. The government has also approved tariff increases on galvanised coal and steel products. In addition to that, there are a number of other applications for Most-Favoured Nation, MFN, tariffs raises up to the maximum boundary as well as for the imposition of antidumping duties that will follow the normal processes of International Trade Administration Commission, ITAC, where ITAC will make recommendation before the government can make an act on that.
At the same time, we have indicated support for localisation and designations of locally produced steel products for procurement, particularly, in infrastructure programmes. I also think that in this context it is important to mention that as a result of the ongoing investigation by the competition commission, there is an engagement taking place with the economic development department as well as DTI in looking for certain commitments in return for the following:
A long-term competitive pricing policy, an increased levels of maintenance and investments, a potential rebate system to support downstream manufacturers as well as transformation and Black Economic Empowerment, BEE, commitments. Already, one of the conditions that were imposed for the tariff increase that was granted was that, the tariff increase cannot be used by the steel manufacturers to raise their prices as a result of that. Rather, the tariff increase provides a degree of price competition protection for the local manufacturers.
In addition to that, we’ve been working together with the Department of Mineral Resources to ensure that a cost advantage for local steel manufacturing from the supply of, at least, part of the local Arno production’s price preference was introduced for local use of scrap metal, which was offered in local end-users with a discount of 20%. Export permits were only granted when International Trade Administration Commission, ITAC, was satisfied that there will be no offers from the local users.
Although this measure was widely supported, it has been challenged. There have been all sorts of resistance and manoeuvres which has led government to now consider further measures that are compatible with our obligations under the World Trade Organisation, WTO, and also the international agreements.
We have also been providing support under the National Cleaner Production Centre, NCPC. It has led to savings of R176 million in June 2013 by ArcelorMittal South Africa Ltd and the Saldanha Plant. There is also estimation that there could be savings of R362 million as a result of that by 2016.
In respect of the second part of the question, we should point out that job losses are not unique to South Africa. In fact, we haven’t suffered any at this stage. But just to put it into context, the UK has experienced 4 400 job losses, which is 15% of its labour force in steel making. [Interjections.] In the United States, we have seen nearly the same.
If the question wants to ask me to clarify the situation in one of the plants of the ArcelorMittal South Africa, Amsa, in Vereeniging, the Highveld Steel and the Cape Gate Steel, the three companies which are under sudden distress but with no job losses yet. But there are issues that are rising in some of the work which we are doing. If there are any questions regarding that in the supplementary questions, I would be happy to answer. Thank you.
Mr M KHAWULA: Chairperson, I would like to thank the hon Minister for the response so that we can continue. I would be happy if you can just cover whether the situation is stabilising, as you go on with the issues that you wanted to further elaborate on? Thank you.
The MINISTER OF TRADE AND INDUSTRY: Chairperson, three steel mills have filed section 189 Labour Relations Act notices in which they indicated their intention to partially close some of their operations. The Vereeniging Plant of ArcelorMittal South Africa was not the Vanderbijlpark plant, it is a smaller plant. They are talking about the male shop and the forge potential closure. For these, they say that the remaining rolling mills will be supplied from Newcastle.
The potential number of people who are affected is 388 of whom 264 are Amsa employees. But, there is an engagement continuing between our government and them on that and Amsa have said has said they will consider whether they can relocate their employees elsewhere or they have an early retirement or voluntary separations scheme.
The other one is Evraz Highveld Steel and Vanadium Ltd, but that has gone into business rescue. They have now put the plant into maintenance in order to cut thousand jobs. We are looking for another investor. Concerning the Cape Gate, we do not have details, but the company has started the discussions with the unions. Let me say that we are working on all of these challenges to try to avoid or mitigate the potential job losses in each case.
While we continue to try to ensure this, as I said earlier, we defend the existence of primary steel making in South Africa by addressing all the conditions that we can. We do this in such a way that we actually address the long-standing challenges unlike the pricing policies in relation to downstream steel users. Thank you.
Mr J J LONDT: Good evening, hon Minister, South Africa is a member of Brazil, Russia, India, China and South Africa, BRICS, and this government has on numerous occasions punted the advantages of being part of this group. It is stated that bilateral relations among BRICS nations have been conducted on the basis of non-interference equality on mutual benefit. In July, the Seventh Summit of this group was held in Russia and South Africa was also represented there.
Being a member of BRICS, what has South Africa done to utilise its influence and power within BRICS to protect our industries, specifically the steel industry? If we are not trying, why are we not? If we are trying, why has this not been successful and, does this show that effectively, being the junior partner in BRICS doesn’t really benefit South Africa and give us little to know negotiation power?
The MINISTER OF TRADE AND INDUSTRY: One of the things that we have been doing bilaterally with China is that, we have been seeking an additional investment in the processing of Highveld Steel or what Minister Patel referred to earlier, the processing of tailings by-products of other mining operations where we actually have larger supplies of Arno. That plant is an investment by Hebe and that investment is going ahead. We have therefore managed to engage with our Chinese counterparts to ensure that the investment goes ahead.
I can say also that there are many of the benefits from the BRICS, not least. We are the founder member of the BRICS’s new developing bank. We have seen now that everybody and his dog wants to join, because they can see that it is a very significant new founder of infrastructure development to another operations across the world, particularly, the developing world.
There is no doubt that there are many advantages that we have from BRICS membership. Of course, it doesn’t mean that we don’t have any antidumping duties when we need duties against each other. We do; good friends do. We have duties against products coming from other countries as well, if we maintain friendly relations. Thank you.
Mr L B GAEHLER: Let me sneak a question in, I hope you are going to take it, hon Minister. The corrugated iron is from steel end products and there are quite a lot of cheap steel products that are being dumped in this country. The products are inferior; they are substandard; they are not SA Bureau of Standards, SABS, approved; and I can name quite a lot of others, hon Minister. What is the government prepared to do to combat this steel, because it is really costly to the country? Thank you.
The MINISTER OF TRADE AND INDUSTRY: First of all, I think that the present situation in the steel industry and the need for primary steel manufactures to access some of the facilities the government has made available. This has actually turned the conversation that we have been trying to have with the government for a long time about pricing in a direction which I think has led to some real possibilities of a breakthrough on the long debate that we have been having about pricing policy.
I therefore did mention that it is part of the process we have been engaging with ourselves as the Economic Development Department, EDD, and the primary steel manufactures of this country. We have of course worked with the variety of them, like those using scrap metals, the Hebe investment, as well as the Astral Mittal. But I think that will be the first thing if we secure the long-term pricing arrangement that was supportive of downstream steel manufacturing.
The second thing is that, if there are downstream manufacturers that are facing dumped products, because it might not be just primary steel, it might be actually just products of primary steel; they are also welcomed to access the facilities available in the International Trade Administration Commission. We can’t say that we will grant you a tariff increase, because it has to go through the process of the ITAC and we can only act on the recommendations. We have actually said to downstream steel manufacturers that they are free to approach ITAC as well.
Promotion of industrialisation in provinces/municipalities
223. Mr C J de Beer (Northern Cape: ANC) asked the Minister of Trade and Industry:
- Whether his department has taken any actions to promote industrialisation in the municipalities and provinces; if not, why not; if so, what actions;
(2) what other (i) programmes and (ii) incentives are in place to draw investments to municipalities and
provinces? CO627E
The MINISTER OF TRADE AND INDUSTRY: Hon Chairperson, I think we should just take note that many of the core programmes on the regular work of the Department of Trade and Industry need to involve and do involve efforts to co-ordinate our work with provinces and municipalities. That includes that all industrial development projects, of course, have a geographic location and we have to work with provinces and municipalities to access whatever facilities that are available to support our competitiveness and to address any concerns or issues that may arise of manufacturers which we do on a regular basis. The same applies to the attraction of foreign direct investment – all of those projects have a geographic location. A lot of our work does involve interacting with provinces and municipalities.
In addition to that, the department does run some programmes which are intended specifically to promote industrial decentralisation as well as industrial investment in general. The obvious one here is the special economic zones programme. A special economic zones programme which is now really almost up and running; the board is doing its work and the regulations are almost finalised. However, that of course has gone along with a very close work with provinces as we were rolling out the framework. All provinces were actually involved in identifying potential special economic zones, SEZs, and those will be what the board will have to apply its mind to.
There’s also the critical infrastructure programme which supports infrastructure development, particularly district municipalities around infrastructure to promote economic development and then there’s an industrial part programme.
I could mention that we haven’t up to now being involved very much with local economic development, but right today, the deputy director-general who is in charge of the special economic zones and economic transformation division is also involved in the launch of a pilot programme which is being funded by the middle income grants of the African Development Bank and is the joint venture between ourselves and small business. This will focus on supporting local economic development. There will be key activities conducted under this to support local economic development, LED, in six pilot municipalities. There’s the development of a pilot specialised industrial facility programme. This will also set up technical vocational education and training colleges to support skills development for industrial development. There will be some further work to promote feasible industrial parks that are being rolled out today. We have – as I said – focused a lot on trying to support directly local economic development but this is an initiative which we are launching right now. Thank you very much.
Mr V E MTILENI: Hon Chairperson, through you to the Minister, we have been doing oversight in most parts of the country. What we came across is that the government seems to be failing people and continues to fail them more and more. During the apartheid-led government there used to be factories which used to be called factory units, where people used to be trained to acquire various skills such as welding, sculpturing and upholstery. These are the kinds of skills which I think our people still need and they can make use of such skills to fend for themselves and their families. What we see as we drive around is that most of these factories are no more. To call them white elephants is better because you call something white elephant, something that is still there. These factories have been vandalised, and ... [Interjections.]
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Are you aware that your two minutes is almost out?
Mr V E MTILENI: Okay, thank you. Therefore, Minister, I want to know what your aim is with regard to resuscitating these kinds of factories which used to assist people then. Thank you.
Mr E MAKUE: Please Chair, my point of order is that the hon Mtileni is misleading the House when he says that they are part of oversight. On the oversights we did we found that very often the EFF members were not part of them.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Hon Mtileni, I did not recognise you. Tshama hansi [Sit down.] Let us leave it to a point where you will debate as this House whether he has been part of our official oversight or he has been having his other oversight. Therefore, let us allow the Minister to respond to the question. Hon Minister!
The MINISTER OF TRADE AND INDUSTRY: Hon Chairperson, let me first of all say that, of course, we do accept the point that skills developmental is fundamental to industrialisation and that is what we seek to promote through, amongst other things, Black Economic Empowerment, BEE, where there is a subminimum score for skills development. We tell every investor in this country that you better invest in skills development. As a department, we invest in skills development ourselves even though we’re not the lead department on this because that is the work of the Department of Higher Education and Training.
Let me also say that I think that many of those factories’ projects were Bantustan border projects and staff like that. They were motivated by a logic which didn’t have an economic logic to it. It was a logic of separation and apartheid. We don’t necessarily accept that every single one of them is viable but some of them may be. On the basis of an assessment of each of them and in discussions with provinces, that’s where the industrial parks programme comes. If an industrial park is a pre-existing infrastructure and there’s a viability that we can assess now, we are happy to support that through the industrial parks programme and in some cases that is so. However, we are not committing to say that every single factory that is created under the border industrial scheme will be resuscitated, but where there is viability now as part of industrial parks programme we are assessing that.
The CHIEF WHIP OF THE NATIONAL COUNCIL OF PROVINCES: Hon Chairperson, the hon the Minister alludes to some pilot projects happening elsewhere as a message of hope to those people in those areas. Can the Minister indicate, even if he just indicates the provinces, where these pilot projects are being implemented? Thank you.
The MINISTER OF TRADE AND INDUSTRY: I think at this stage it is a little early, I don’t know and I have to go first. I don’t know whether the work is being done. However, what we did say was that there will be six pilot projects and that we will announce where they are going to be in due course. It is to support LED in district municipalities. That is the idea. I think we can come back with the information. Thank you.
Ms T G MPAMBO-SIBHUKWANA: Hon Minister, as you know, not every town in South Africa can be industrialised. That is why we have to establish economic hubs around South Africa as there are various factors such as access to water and wood which we could impact negatively on our South African citizens and which impacts on the viability of the industry. I want to know, hon Minister, what proper study was done in this regard, and if not, when do you plan to do one? In this case, I would prefer timeframes to save your department from the same embarrassment of Minister Gigaba of Home Affairs, who just ran in the direction of the visa regulation with his eyes closed. I thank you, Minister.
The MINISTER OF TRADE AND INDUSTRY: Well, I don’t even think the issues are remotely comparable. Let me just say that to start with. What we are doing, of course, when we talk about special economic zones, is that there’s an independent body, the SEZ board that looks carefully at all of them and assesses their viability. I have a question later on and I don’t know if we are going to get to it, where we can actually point out that a number of the industrial development zones have gained quite a lot of attraction in recent years and that we have rolled out a few more. Recently, there has been Dube Trade Port and Saldanha Industrial Development Zone, IDZ. I don’t know whether the hon member thinks the IDZ in Saldanha is a waste of time and space. However, I don’t suppose her party would agree with that. There’s also the one in Harrismith in the Free State. Let me just say that these are done on the basis of the assessment of viability.
We do accept that not every place can support industry but we do not accept either that industry has to be located in the three parts of the country which are currently in Gauteng, KwaZulu-Natal and the Western Cape. We do think that there’s potential for a degree of industrial decentralisation. There are many issues that we have to grapple with including issues about, as you say, the availability and the pricing of the electricity on top of what you have mentioned, such as water and all kinds of other physical assets. That is the work that we do regularly as the department as I answered in the questions of the hon De Beer. Thank you.
Extension of company registration services
245. Dr Y C Vawda (Mpumalanga: EFF) asked the Minister of Trade and Industry:
What action is he taking to extend company registration services to areas such as Thohoyandou, Musina, Mutale, Makhado, Bethulie, Beversfontein, Mmabatho, Keiskammahoek, Gatyana and other rural areas? CO649E
The MINISTER OF TRADE AND INDUSTRY: Hon Chairperson, the answer is based on information, which is being supplied by the Companies and Intellectual Property Commission, the CIPC. I’m taking the names of the towns that are in the question as examples, and just want to say that the Companies and Intellectual Property Commission has an access strategy that will include a number of initiatives, which will aim to make registration of companies from places like those much more accessible and cost-effective to ordinary people. Basically this involves the use of information and communications technology, or ICT.
The first of these is that we are rolling out self-service technology to all corners of the country. Interested third parties that want to provide registration services will be able to register for the provision of the service with the CIPC. They will have to be verified and they will have to be scanned in various ways so that we know that these are the genuine people. They will then have access to ICT and access to the system of the CIPC. They will be enabled to run a small business to register other small businesses in outlying areas. In this way we think that that will be a simplified way.
The CIPC is also partnering with Transnet via its business hubs and with various chambers of commerce in a number of provinces to roll out similar services through these mechanisms. Registration services have been rolled out in Tshwane, Johannesburg, Cape Town and Saldanha, and later in the year the same thing will happen in East London, Durban, Polokwane and De Aar. There’s also a partnership with banks, and so far this is with First National Bank, FNB, and Standard Bank. If you go to their business service divisions, it is possible to open a business bank account and, at the same time, register the company through those banks.
Nedbank and Absa are in the final stages of coming on board. All of these initiatives, as well as the kiosks which are being rolled out, do allow for very cheap, effective and rapid registration, and not just registration of the company, because under the Companies Act you can actually operate with just a number but also name registration. I’ve seen this done in about 20 minutes myself. This is the kind of facility that is being rolled out through a number of initiatives, which we hope will provide this service more cheaply and more accessibly to people in the outlying areas as well. Thank you.
Dr Y C VAWDA: Hon Chairperson, before continuing let me remind the hon members that are looking for the members of the EFF that we are Marching to Pretoria. [Laughter.] I was tempted to stop there, but I would be doing the hon Minister an injustice. Through you, Chair: Hon Minister, this is not only about extending the services of company registration, but also about monitoring the services to ensure that these services will be given adequately and intelligently to the community at large. What programmes will your department put in place to ensure that this takes place? Thank you, Chair.
The MINISTER OF TRADE AND INDUSTRY: We do have a number of programmes in which we take the Department of Trade and Industry to the people. We usually explain to them what the services are that we provide. The way which we accredit the people who can provide these services is also a check against people being subject to predatory practices, and so I want to make sure that the right kind of people have access to the system and register companies. I think that many people don’t actually even understand what registration is about; we have to tell people about that. What it does is it gives you access to limited liability, and that is the fundamental right that you get from registering a company. The Companies Act now makes this a very simple and easy process. We are working towards making implementation, through the use of ICT, a simple and easy process, and affordable process as well. That is basically the aim. Thank you.
Finalisation of SEZ regulations
225. Mr M I Rayi (Eastern Cape: ANC) to ask the Minister of Trade and Industry:
- Whether there is a policy consensus around the key players needed to take part in the implementation of the Special Economic Zones (SEZs) programme; if not, why not; if so, what are the relevant details;
(2) whether the current delays in the finalisation of the SEZ regulations indicates the lack of consensus amongst the key players that are needed to drive and differentiate the programme; if not, what is the position in this regard; if so, what are the relevant details? CO629E
The MINISTER OF TRADE AND INDUSTRY: Hon Chairperson, let me say that the special economic zones programme, or SEZ programme, is a programme that will allow for the proclamation of special economic zones broader than those which are already provided for under existing legislation – the industrial development zones. For example, it allows industry-specific special economic zones, or other forms of special economic zones other than industries that are located around ports and airports and are benefiting from the duty-free entry of products that are used for further processing. There will be a number of incentives backing these programmes. They include a major tax incentive, infrastructure incentives and one-stop-shop facilities to support the investors that go to these SEZs.
I did indicate earlier that I think that there has been progress in the implementation of the existing industrial developmental zones, and that progress is telling us that the incentives alone will not drive it. There has to be careful and active management by the entities that are running these. An entity usually operates under a province or a municipality or both. I also just want to say that I think that there’s a fairly strong consensus. I’m not aware of any substantial dis-sensus among the key players in the provincial and local spheres, in Nedlac, or the National Economic Development and Labour Council, and in economic Minmecs, or Ministers and members of executive councils. I think we have had a fairly high level of consensus around the legislation. We will continue to work with all key players to drive the implementation. The board has been appointed and so on.
The current delays in the finalisation of the regulations have nothing to do with any lack of consensus among key stakeholders. They are actually due to administrative issues, and the particular need to fulfil various requirements in terms of procuring external service providers to undertake a vetting and an international comparison of the drafted SEZ regulations. The quality control process is now almost complete. And in the fairly near future, we expect to be in a position to release the regulations in order to operationalise the Act and to get the process moving. Thank you very much.
Mr E MAKUE: Thank you very much, Chairperson. Hon Minister, we note with appreciation the fact that the deputy director-general for Special Economic Zones and Economic Transformation, Mr Sipho Zikode, recently, if not today, opened one of the SEZs in Pretoria with a R20 million investment. He mentioned there that it was meant to contribute, obviously, towards economic transformation. My question then in the context thereof and the initial question posed to you is whether the black industrialists and small business enterprises are also going to be beneficiaries in the establishment of the special economic zones.
The MINISTER OF TRADE AND INDUSTRY: Well, let me say that Mr Zikode didn’t open an SEZ, but was launching the programme I referred to just now, which is a R20-million support programme for pilot projects around basically facilitating the development of capacity in local economic development and also industrial parks. The SEZ can only be proclaimed on the advice of the board. The board is up and running, as I said. We need to get the regulations in place, then they need to apply their minds to the proposals which come through from the provinces. So that is the process that is there.
I just want to say that for all programmes of incentives and support that government provides, the amendments to the Broad-Based Black Economic Empowerment Act require that we seek a certain level of BEE recognition. So, they are all going to be conditional on this, and, in fact, to access the incentives we will have to determine what those are. For example, in the motor industry, I can tell you, the expectation is that all those who access the Automotive Production and Development Programme, the APDP programme, will have to hit Level 4 within three years. There will be a similar requirement - I can’t say the level at this point - to access the incentives applicable in the special economic zones.
As I indicated, the new codes also provide for sub-minima not just in terms of skills development, but also supplier development. So, we think that that tool should assist. In terms of the black industrialist programme - Minister Patel was talking about it earlier - what will happen, essentially, is that we will be picking the best of the bunch for a special set of support measures to try to encourage our black industrialists. If some of those are going to be located in SEZs, well and good, but that is not a criterion for admission to the black industrialist programme. Thank you.
Mr L B GAEHLER: Thank you, Chairperson. Minister, according to your plans and your focus as a department, how many of these SEZ zones are you planning to open and in which provinces? What would their relationship be with the current IDZs? For instance, you have the East London IDZ. Would you continue funding them and will their funding increase? What is very important is what their relationship would be and where you plan to open. For instance, let’s talk about the Eastern Cape: where do you plan to open there? There are areas like the former Transkei which is congested. That is where the majority of the hordes of the Eastern Cape are. Do you plan to open any there? That is very important. If you plan to open any there, in which area? Thank you.
The MINISTER OF TRADE AND INDUSTRY: Hon Chairperson, well, I just want to say that the existing IDZs will continue to exist and we could, in fact, proclaim new IDZs under the special economic zones. It is one form of special economic zone, but the new legislation will allow other forms as well. Regarding the East London IDZ, we have seen some significant traction. The IDZ there has attracted 19 investors with a total investment portfolio of R1 billion. We are also seeing that there have been a number of additional investors that have not yet committed and have not yet become operational. There are five more, with an additional possible investment value of R141 million. We have seen that these IDZs again in traction. The East London one, I think, in particular is a good example of a well-managed IDZ with a good image that is able to attract investors.
Let me just say that the range of potential SEZs is something, which we could probably share with the select committee. The range does include at least one per province. The one which the Eastern Cape put forward is an agroprocessing IDZ in the Umtata area. There are also SEZs that are platinum based. There is one in the North West and one in Limpopo. There are number of other agroprocessing-based SEZs. There are a few SEZs based on other concepts in other provinces. There is at least one for each province that is in the first round. They will be assessed by the SEZ board before coming to us in the executive for a final decision.
Ms Z B NCITHA: Chairperson, the question I would like to ask the hon Minister is about the funding model that they use for the SEZs or else IDZs. Does it take into consideration the size of the city - where it is located - or not, or the criteria used? This is because when you do oversight you find that some of these IDZs have financial challenges and you do not know the funding model that is with the government. Thank you.
The MINISTER OF TRADE AND INDUSTRY: Thank you for the question. The Department of Trade and Industry and national government are not the operators of any of them. What we do is hand over an operator permit to some entity that usually falls under a province or municipality or both. The operator is a company that reports to ... one of the development corporations or something of that sort. That’s how it works. The incentives and support that we provide through the national government and through the Department of Trade and Industry are for the infrastructure. Also, under the new SEZ now will be the tax incentives for the investors. Those are the main incentives that we provide. The operators, of course, have to derive revenue from the investors as well. The investors pay rent for the infrastructure that is there - the factories and accommodation. So there is an income stream back to the operators. The operators need to use that effectively to promote the SEZ in question. So, as I said earlier, these SEZs don’t function anywhere in the world just on the basis of incentives. They also depend on the skill and the ability of the management to develop and to actually promote the value proposition of the SEZ in question.
Ms E C VAN LINGEN: Hon Chairperson, the Minister has just referred to the fact that one can rent land in the SEZ. But we are wondering what influence the land tenure security has on foreign investment in terms of the amount that is being invested and the length of the lease. This is because the bigger the amount you invest, the longer you want your lease to be so that it can become a viable proposition for you. We were told in the select committee meeting that one can actually purchase land in the Coega development zone. We found from our oversight in Richards Bay that there are investors there who would like to purchase land. When it comes to the pending legislation in terms of which appropriation can terminate lease agreements, I think there’s a little bit of concern for a project that can create a lot of jobs and bring a lot of funds into the economy. Could you give us advice on that, or your plans in that regard?
The MINISTER OF TRADE AND INDUSTRY: I don’t think there’s any expropriation that goes along with the SEZs, except of course there may be the possibility, in terms of developing a coherent area for the SEZ, of using the general provisions of expropriation that could apply to any infrastructure project. There would be that, but I think that the land tenure arrangements that exist in an SEZ would probably depend much more on the operators than on the national department. Thank you.
Attraction of international investment
209. Mr J W W Julius (Gauteng: DA) asked the Minister of Trade and Industry:
Whether the widely reported incidences of government corruption have had any observable impact on the attraction of international investment required to create the much needed jobs in South Africa as stipulated in the National Development Plan; if not, what is the position in this regard; if so, what are the relevant details? CO613E
The MINISTER OF TRADE AND INDUSTRY: Chairperson, my colleagues who have been answering similar question have already indicated that government regards corruption as a scourge and that government believes that we need to redouble our efforts to eradicate the scourge from our country. Having said that, I think it is important that we do take note that corruption is not an issue unique to South Africa.
In fact, on Transparency International, whose calculations are not necessarily the gospel truth, they actually indicate that South Africa is followed by nearly two-thirds of 175 countries on the index as countries that are more corrupt than South Africa. So, it is not that we are the most corrupt country in the world. I am making that point for a reason that I will elaborate in a second.
The second point I want to make is that in the Department of Trade Industry, the DTI, in particular, we have a very robust policy towards any credible instances of corruption. We conduct investigations, we apply the law, we act without fear or favour and we have a zero-tolerance approach. I am making that point because I think that I can say with, my hand over my heart, given that we had a clean audit this year, that we run a clean investment promotion operation as the DTI.
I think those two factors together mean that the various instances that have emerged in the public domain about corruption in this country have actually had a very minor effect, if any, on international investment trends.
It is not necessary that you go through the Department of Trade Industry if you want to invest in South Africa. However, many companies, particularly those who want to make value-added foreign direct investment as opposed to portfolio investments, do because they want to have the support or facilities that are available, including getting to know all the regulatory requirements and whatever incentives are in place also.
Actually, the report that is coming from the Investment Promotion and Facilitation Division of the DTI is that as of the end of the third quarter of this year, September 2015, there was a healthy pipeline of potential investments for R31 billion that were in various stages of emergence as actual concrete investments.
Global companies such as Unilever - just to cite a few examples for recently - opened its Ice Cream factory as the fourth of the factories in South Africa that had either opened or expanded According to the Unilever’s global CEO, Mr Paul Pollman, they were investing in about 30 projects around the world. Four of them were in South Africa, which I think means there is more than proportional to the overall investment effort of the company.
Last week I visited BMW to celebrate the fact that they had won the JD Power platinum award for the best quality export product in automotive sector into the United States. Now, they are planning to ramp up their plant for the new 3 Series production in 2018.
Similarly, Mercedes Benz, Toyota, Samsung and many other companies in South Africa are expanding their operations. I think that this is an indication that, particularly in the areas that we are operating, which is value-added manufacturing and others, many investors believe in the African story, believe in the importance of South Africa and continue to express that confidence in actually investments.
I need to mention that this year’s World Economic Forum’s Global Competitiveness Index 2015, GCI, again which is not necessarily the gospel truth but a study, ranked South Africa number 49 out of 140 countries. We were up by seven places from 56th place that we held in the 2014 GCI report.
In other word, I am trying to say that corruption is an issue. We want to eradicate corruption but actually do not have a major detrimental effect on foreign direct investment that we can discern at this point. Thank you very much!
Mr J W W JULIUS: Chairperson, I actually think we are becoming complacent with corruption because having corruption all over the world doesn’t make it right for South Africa. I don’t think we should use that yardstick to say that it is all over and that is why it is not unique to South Africa. It should not be here at all.
Hon Minister, a good image of South Africa will lead to attraction of foreign investment - I am sure you would agree. Foreign investment is needed to create the much-needed jobs in our local economy, and I think that is why this department is in existence. Corruption in government is creating a bad image of South Africa. In order to attract foreign investments, concerted efforts must be made to curb the scourge of corruption in government and in South Africa.
The fact that foreigners doubt that we respect the rule of law and the Constitution, respect for the independence of the state institutions like the Public Protector and other law enforcement agencies. Does it make it more difficult for your department to attract foreign investment based on these things that are currently happening in South Africa? Is it giving you a tougher time as a department? Thank you.
The MINISTER OF TRADE AND INDUSTRY: Well, if any of the things that the hon member had mentioned were actually true as opposed to an image that some people, like the hon member’s party, feel is worthwhile to project out there. That maybe wouldn’t be an issue, but it’s not, that is what I am trying to point out. We need to put this into context. We don’t believe that any corruption should exist. We believe that we need to fight corruption more vigorously than we are doing.
I think that the other Ministers who answered the similar questions said the same. However, the question that you asked is: Was it happening and dampening the factor of foreign investment? I am pointing out: We are not the worst country in the world. We would rather clean investment promotion operation.
We don’t ask investors to give us a backhand, a backsheesh or anything like that when they come into this country. We give them a clean operation. Actually, foreign investors do their diligence work. They don’t necessarily read your website everyday. They actually do their own due diligence.
Someone like Mr Paul Pollman, I think is really a good example. He has heard all these stories – he has heard all your stories – but he knows that there is a lot more attractive in South Africa than there is negative in South Africa. Foreign investors are continuing to come into this country; and we continue to facilitate them coming into this country. Thank you very much. [Applause.]
Ms T MOTARA: Hon Minister, there seems to be a lot of stress on corruption in government. I don’t think that it is necessarily the case that there is only corruption in government. What is the department’s experience and what is the department doing to curb or address corruption in the private sector as well?
The MINISTER OF TRADE AND INDUSTRY: Well, I think that this is an appropriate point. Some of the biggest corruption incidents that we have in this country were cartel arrangements which increased the price of the construction of the stadia for 2010 Football World Cup. [Interjections.] Nobody disputes that now; it was the case! That was in the private sector!
There is now a whole process going on to try to address that matter. So, I mean, it is not just that there is corruption taking place in government. What I was saying earlier on is that in the DTI, we have no hesitation: We find a credible case; we do an investigation. What we can’t do is what some of the opposition parties want us to do: That when somebody is accused of something, we must just override their rights, fire them and throw everybody out.
Well unfortunately, people have rights. We have to respect that and we have to go through proper process. That is actually what we do every time. When we hear a credible case of corruption in the DTI or one of its agencies, which is what we’ve done. We’ve had numerous forensic investigations, numerous people have disciplined, we hand over the dossiers to the prosecuting authorities and everything, and we act without fear or favour. That is what we do!
As government and as a ruling party, we have said that we have to be much more effective in combating corruption in this country. We need to do it! [Interjections.] But it is not at the level where everybody wants to disinvest because ... [Inaudible.] [Interjections.] ... We are not!
Mr L B GAEHLER: Hon Minister, talking of corruption: One of the biggest corruption incidents in this country was when the world cup ... [Interjections.]
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Hon Gaehler, I have been accused of taking the soft ones. Now you are being very soft. [Laughter.]
Mr L B GAEHLER: Was the world cup stadia when they were built, that ran into millions? The big companies were involved? What I am worried about that corruption is the manner in which you deal with the small black business people and those big companies who are corrupt. Why do I say that? With those companies, you penalise them and it caused the taxpayers millions of rands. But you don’t downgrade them as you do with black business people. As a government, you’ve got to treat companies the same. You cannot have a situation where you treat those in a certain way because they are big companies and you are probably getting kickbacks from them. [Interjections.]
Ndiyamsusa apha phambi kwam, uyandihlupha nkosikazi. [I’m removing her in front of me, you are disturbing me madam.]
You have to treat them the same because when it is a black business in corruption, you penalise them and you downgrade them; but when it is big companies in corruption, you just penalise them. Can you just explain why you treat them different to the black businesses?
The MINISTER OF TRADE AND INDUSTRY: I mentioned the same example just now. I think that the point is an important one: If there is a small black firm that crooks government out of a couple of million rands, then the human cry from many quarters in this country is that those people must be in jail in this regard, for 15-20 years.
However, when you spoke about people that crooked this country out for the construction of the stadia, you were wrong about one thing: It wasn’t millions; it was billions. It was billions that they crooked out of this country for the construction of the stadia.
Then this is something else. I mean, if this happens by way of a marginal wink on the golf course, this is called white collar crime. This is somehow not so bad. These are respectable. They should just pay a bit of a fine or something.
Actually, this is what we are trying to grapple with. This is what we are trying to grapple with through the pyramid schemes ... [Interjections.] ... and there will be substantial penalties that will apply. That is all I can say at this point in time. This matter is being dealt with. I think it is a matter of justice that people that are involved in big deals, just because they are so called respectable, should actually be treated in the same way as people expect for some small tenderpreneurs who have crooked government out of a million rand of something.
Dr Y C VAWDA: I am very surprised: The hon Motara has raised a very mute point about the private sector and I am surprised that the hon Minister is utilising examples in the private sector to condone what it seems like or what is happening in the state sector. The state sector should set the example. There should be no corruption in the state sector. We should begin with Nkandla, and that is a bottom line.
In the private sector, we can go there and look at that but the state sector must set the example. To answer or even to attempt answering such a mute point made by the hon Motara, to me, is flabbergasting. Thank you.
The MINISTER OF TRADE AND INDUSTRY: I suggest to the hon member to adjust his hearing aid: I said no such thing. I was asked the question about the private sector and I answered it. There is corruption in the private; there is also corruption in the state sector. I didn’t say: Just because there is corruption, it means we don’t have to deal with corruption in the state sector. I never said it. I wouldn’t have said it because we believe that we must wipe it out wherever it is! [Applause.]
Decline in manufacturing sector
240. Mr E R Makue (Gauteng: ANC) asked the Minister of Trade and Industry:
- Whether the Government has considered the key factors that contributed to the decline in the manufacturing sector since 1993; if not, why not; if so, what are the relevant details;
(2) whether the Government has devised any interventions to (a) expand the sector and (b) ensure that it continues to (i) contribute to the economy and (ii) assist the nation to achieve its objectives of economic expansion and transformation; if not, why not; if so, what are the relevant details? CO644E
The MINISTER OF TRADE AND INDUSTRY: Chairperson, at this time of the evening I am not going to attempt to a very long answer. Simply I wasn’t to say that there were a couple of statistics that we referred to in various versions of our industrial policy action plan. In those we said that when this country had achieved 5% growth if we go back 84 quotas from the end of last year and go back into 1993, how many quotas did we achieve 5% growth for more? The number is 17. What drove the growth in those times? First, is the mineral commodity super cycle; second, consumption driven sectors imported goods consumed, things like wholesale retail trade, financial services, and funding consumers and things of that sorts. That was what drove growth in this country. that was a problem, a fault line and was something which was not transformed in the early years of our democracy. We also had an industrial sector that was based on under apartheid period, on very heavy resource intensive, energy intensive and upstream industries through giant companies like Sasol, Iscor, Columbus Stainless Steel, Telkom, Sappi and Mondi, those kinds of enterprises. There were insufficient downstream, more labour absorbing industries in this country.
What we have concluded from all of that we need to have an industrialisation in this country and move further up the value chain. We have never been where we are in the value chain as producers and exporters of primary products and importers of finished goods is never the place to be in the value chain. Most of the value is created higher up the value chain through value added activities. We need to industrialise our country, we need to industrialised and the continent that we are part of. I think that wWe have identified over time that industrial policy requires that we mobilise a series of policy tools including trade policy tools, industrial financing, various other measures like localisation and support for local content - those kind of measures.
I think that we have seen as it was mentioned earlier in the discussion with Minister Patel in a number of industries, the motor and the clothing industries, some parts of agroprocessing, and some parts industries providing import in infrastructure, things like the film industry, where we have acted purposefully, where we have defined a programme that actually does meet the needs of industrialisation and industrial development, we have seen progress, not enough progress.
Our challenge at the moment particularly with the current wave of the global prices which is striking us not just in terms of the overall depressed conditions in the world economy, but is striking particularly countries which are producers of mining commodities. The prices of mining commodities have gone down. Just to give you three examples, the price of platinum is one third down what it was at the height of the super cycle in 2012, gold is half the price it was at that time and iron ore is only one third of what it was. That is the situation that strikes us. We have got to raise our game and increase the scale.
We have identified infrastructure driven industrialization producing imports into the infrastructure Programme, beneficiation and particularly things like; platinum fuels technology that we can develop in this country and manufacture small scale power stations in underground railway vehicles; innovation driven industrialization and the regional integration. These are all the key components of our industrial strategy and is this that we think is absolutely essential for us to achieve the objectives of transformation.
Radical economic transformation means creating a different growth paths, drivers, and finding new basis of empowering people who have been disadvantaged in the past to find their place in the economy as leaders and drivers of productive sector activities, which is the drivers of growth in the first place. Thank you very much.
Mr E MAKUE: Through you Chairperson, I wish to thank the Minister for the embracive answer, but in the answer Minister make reference to policies, which are correct in stating that Minister Patel also raised it earlier on. Understanding that the global economic situation is very dynamic, the question that plagues now is whether the department that you are heading is working on policies that would enable us to be seen to be secure as a country against the fluctuations in the market, that we guard against a situation where we are only subjected to market poses but also locate ourselves strategically from a policy perspective to ensure that we will be able to increase particularly the manufacturing industry that Minister Patel has reported in terms of the recent report from the stats South Africa has indeed grown.
The MINISTER OF TRADE AND INDUSTRY: The challenge we face is that, if we look at our own experience, which is not different from others, there is probably about five to seven years lack[21:39:40] between the first implementation of the new programme and actually it’s having an impact. That was what we saw in the automotive production development programme, in the clothing textile, that’s what we have seen in the other programmes. What it mean is, we have to move steadily but actually we raise our game [21:39:57], that’s really what it is. Raise our game amidst challenges of a budgetary nature, but what we can’t do, is we can’t simply hang about and hope that none of these days the mineral prices would bounce back.
I think we can probably anticipate they might rise compared to what they are now, but they will never be as they were in 2012 because there are structural factors. The Chinese economy is restructuring to a less mineral intensive growth path. That is what it’s doing. There are all doubts about whether they are going to achieve it or not, it is also impacting. What we need to do is to ensure that we do move in that direction. Yes, we have identified a number of areas particularly things like some of the Operation Phakisa areas, build building, industries that are producing goods that will feed into the infrastructure programme, railway equipments and other stuff like that where we are developing manufacturing capability.
I don’t know how many people know about the most cost effective shanty locomotive that is available on the African continent, it’s produced here in South Africa. We do have a capability to produce competitive industrial products. We have the television manufacturing, like the Chinese company Hisense, came and invested in the Western Cape. When I went to meet the manager few months ago, they told me that this was the second most effective plant outside of China. I asked where the number one is. They said it was in the United States, number three was in Australia followed by various European countries.
We can produce competitive industrial products in the country.
Industrial development does not necessarily itself create the entire jobs, but supports the service sector which is much of higher quality and strongly rooted ... than if we try to grow service sectors completely unrelated to a diversified productive economy. That’s where we need to go, hold the cause, agree that we need to up our game, provide the support facilities and increase the impact of our industrial policy action plan as Minister Patel said. I don’t know how many members need to get a copy because of a member from EFF who need to get a copy.
It’s not a vision document, it’s a series of action plans which we monitor on a regular basis which are implemented by different government agencies to give a fact to industrial policy. We think we share in industrial policy works, the measures work, and we have to increase the scale in the operation of those measures. Thank you.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Thank you Minister, is there any other member? None. Hon Minister Trade and Industry you have completed your question session. Thank you very much for coming. [Applause.] Thank you members, we continue to Question number 246, just hold on Minister, the Question number 246 was originally posed by the hon Mokwele, my instructions were that the hon Mtileni would take care of the question, I do not see any member of the EFF in the House therefore, I cannot continue with this Question. I therefore have to proceed hon Minister. I have absolutely have no comment on that hon Londt. We continue to Question number 220 that is the question posed by the hon Ncitha.
Hon Minister ...
Scholar transport policy
220. Ms Z V Ncitha (Eastern Cape: ANC) asked the Minister of Transport:
Whether any progress has been made regarding the (a) finalisation and (b) implementation of the scholar transport policy (details furnished); if not, why not; if so, what are the relevant details? CO624E
The MINISTER OF TRANSPORT: Thank you hon Chairperson. Concerning this important question, I want to indicate that the Learner Transport Policy was approved by Cabinet in May, 2015. Following the Cabinet approval, the policy was submitted to a professional language practitioner for editing before its publication. The editing of the policy process was completed in September 2015. I am in the process of implementing the policy. I want to indicate that what we have done presently was to develop the framework for implementation. You would know ma’am Chair and hon members that this policy is implemented through provinces. Provinces have the right to determine which of the two departments; the Department of Transport or the Department of Basic Education will be the contracting authority concerning the implementation of the policy. I want to indicate that its all systems go concerning implementation of this policy.
The major challenge that we have regarding learner transport is mainly the operators, especially in the rural areas who would use very good quality vehicles to contract, and soon after use unroadworthy vehicles to transport our children. We have seen situations especially in the EC hon Ncitha, where one 14 seater vehicle operator transported 58 children. I want to indicate that law enforcement has been tightened. Once more, as I said previously in this House, we are appealing through hon members that we speak to our parents especially those who go into individual arrangements regarding procuring services to transport their children, to ensure that the operators have a valid drivers license, a valid Professional Driving Permit, PDP, and also that the vehicle is roadworthy and licensed to transport passengers because it is important that it be licensed. We are in the phase of implementation and law enforcement will be tightened.
Ms Z B NCITHA: Thank very much Chair. Chair I am happy that the hon Minister has touched on the challenges that are experienced by the commuters, which are our kids. What I would like to propose to the Minister rather than asking a question is the need for the department to have a coordinating structure that involves the Department of Education, the Department of Transport as well as the Department of Safety and Security if you like, for the purpose of looking at the speed limit and any other thing that our service providers continue to infringe.
The MINISTER OF TRANSPORT: Thank you very much for the proposal, however, hon Ncitha it is already part of the policy. The Department of Transport is working together with the Department of Basic Education and the provinces. We also have through the Departments of Transport in the provinces ensured that safety and security is part of it. Remember the Road Traffic Management Corporation, RTMC, as the agency responsible for road traffic management, meaning law enforcement regarding South African roads is working together with all security establisments to ensure that we tighten, in particular monitoring. We have also included in the plan, monitoring and evaluation on the roll out of the implementation process and also to look at which model as adopted by the provinces would be ideally suited to ensure that it can deliver to the needs of our learners. I want to indicate that the fact that the policy gives the option to the province, it therefore means that the provincial government as a whole has a responsibility to monitor through their provincial treasury and their security cluster as well as the contracting department which is either the Department of Transport or the Department of Basic Education.
Ms E C VAN LINGEN: Hon Chairperson, with regard to scholar transport, we are very concerned especially in the EC as you could see from our colleague here as well who posed a regional question that 96 000 learners must be transported of which 57 000 are being transported. This process carries on for a year, from 1 April till the end of November and suddenly the money runs out. In the new financial year the grade 8’s and the grade 1’s come into school and they are new into the transport system and suddenly there is no transport for them. There is also no money to run the last three months of the financial year. It is really a very critical problem and somehow the schools or the parents do not give the figures ahead or do not apply ahead. I know for instance that the Uitenhage office has already started with the planning for a year. It is a problem and I think you are being settled as a Minister of Transport with this issue whereas it is actually a departmental problem and the contractors are suffering because they are not being paid. Is there a solution?
The MINISTER OF TRANSPORT: I do take note of what the hon member has indicated but also to indicate to the House that the MEC for Transport in the EC has taken a decision to bring into the department the oversight and responsibility for managing the contracting arrangements for learner transport primarily because of the challenges that hon member is raising, especially of the spread of resources and ensuring that there is tracking of the most needy of learners and in particular those in the deep rural areas where there is a particular challenge with regards to transportation and the conditions of the road.
One of the challenges that we have on the issues that the hon member is raising is the fact that every year the Department of Basic Education does make pronouncements and also call on parents to register the learners at least by September so that there can be proper planning. There is a culture in our country and in our communities where parents always wait for the last minute. You would find at the beginning parents moving from one school to the other looking for space for the learners. These are the categories because we cannot say to them that we can’t accept learners, then we would find that the learners that end up having challenges are those that were not planned for. That is one thing that we have also been looking into because the planning happens already around September.
Another challenge is the total basket of resources. We will never have enough money to transport all the learners. That’s why we believe that it’s important that we attach a particular figure. I know the EC is between seven to nine percent of the learners in need of scholar transport. It would never be enough because you would always find those learners who are in the categories that are not necessarily catered for being the ones that end up being most affected. I do take the point that you are raising. It’s some of the issues that the monitoring and evaluation process would then have to help us to be able to address those particular issues.
One of the key things that we have looked at is to make sure that the most vulnerable of our learners, those who are in primary schools, those who are mostly in rural areas and those from the most needy communities or households are the ones that are covered. So, it would mean that the school itself does the means first to be able to ensure that the learners that are catered for are those that actually need to be covered. Also remember that initially we used to focus mostly on primary school learners but it has been extended up to grade 12. It does then mean that the basket of resources has to be expanded. Unfortunately, as the South African government and as the South African society, we all know that there is no new money to be able to cover the additional needs. We are also saying that it is important that those of our parents who can be able to provide need to be able to cover that particular gap that we have.
Ms C LABUSCHAGNE: Thank you Chair. Hon Minister, according to the current policy, who is responsible to keep the contractors accountable with regards to the vehicle conditions, the timetables, the number of learners and keeping on road?
The MINISTER OF TRANSPORT: Hon member, I indicated that the policy does give the option to the province to determine which department between transport and basic education would be best suited to do the contracting model. We have even gone ahead to say we need to make sure that we have an almost like a service level agreement with School Management Committees, SMCs, to ensure that as part of their responsibilities because they are in most instances the ones that are at the point of service, which is the school. They are able to ensure that they can include as part of their responsibilities in the School Governing Body, SGB, also, somebody responsible for monitoring the transportation of the learners as much as they do that for the feeding scheme. It is a service that is being provided to school. So, we believe that if we can strengthen that particular aspect where the principals and the SMCs can be able to have oversight, we would be able to deal more with the vehicle fitness as well as the driver fitness.
The additional area which we are looking at is the tightening of our law enforcement. That is why as part of increasing the number of traffic officials we have taken a decision to increase them at national level but also through provinces. That’s why you have seen provinces starting to build traffic training colleges and investing in traffic officer training. We are also busy with the process of harmonising the traffic policing system. The decision was made on 28 at the Minister and Members of Executive Council, Minmec, in Bloemfontein. We have also taken a decision that we need to implement the requirement of the Constitution as well as the Polokwane resolution with regard to a single policing system to ensure that we broaden the pool of law enforcement officers that can help us to ensure that our children, our community and society is safe especially on the roads.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Hon members, that was the end of question 220. I see that the EFF is back in the House. In your absence without any instruction, we had to jump question 246. In your absence without any indication, without any instructions we had no choice but to jump the question. We will proceed . . . Please take your seat hon member. Hon Minister, we proceed to question 214. It is a question posed by hon Khawula.
Number of vehicles vs roads
214. Mr M Khawula (KwaZulu-Natal: IFP) to ask the Minister of Transport:
Whether the number of vehicles in the country is compatible with the capacity of the roads; if not, how is her department planning to deal with this problem; if so, what are the relevant details? CO618E
The MINISTER OF TRANSPORT: Hon Chairperson ...
The CHAIRPERSON OF THE NCOP: Hon members, somebody has a very old-fashioned phone. Continue, Comrade Minister.
The MINISTER OF TRANSPORT: Hon Chairperson, as at the 31 August 2015 there was approximately 10,5 million registered vehicles, excluding trailers and caravans, on the Electronic National Administration Traffic Information System, eNatis, database. If these vehicles were spread evenly over the road network, there would be approximately 150 metres between them. Unfortunately, not all vehicles are on the road at the same time. Unfortunately, many do travel in the same direction on the same roads at the same time. This results in congestion during peak periods on the urban roads network, especially in Johannesburg and Ekurhuleni in Gauteng, as well as Tshwane, eThekwini and Cape Town.
The continued growth in the number of vehicles on our roads, combined with our limited funding for the meaningful expansion of the road network, will result in the situation exacerbating into the future.
The Department of Transport has recognised this potential outcome and is pursuing initiatives to curtail the use of private cars. Initiatives include the expansion of public transport services such as the continuing roll-out of the Bus Rapid Transit, BRT, system which we call the Integrated Rapid Public Transport Networks, IRPTNs, in urban areas and focussing on nonmotorised transport facilities. I am sure you would have seen during this month that MECs in the Eastern Cape, as well as in the Northern Cape, Limpopo and in many parts of the country were actually distributing nonmotorised transport.
We have also seen the benefit of the EcoMobility Festival in Gauteng which motivated and encouraged the use of nonmotorised transport, but also to make sure that we can reduce the number of vehicles on the road by utilising the infrastructure that municipalities have put in place for walkways in order to encourage people to use their natural transport which is their two legs; also to make it possible for them to utilise nonmotorised transport in terms of the cycleways that have been created.
The department will also continue to strive to implement the principle of ensuring that we focus on public transport in order to ensure that our road network does not become a limiting factor for economic growth.
You would also remember that the investment in alternative transport initiatives like the Gautrain was intended to make it possible for us to reduce the number of people who rely on privately-owned vehicles. You would also remember that the investment in the BRTs and the investment that government is now making in the rolling stock for Metrorail and the long-distance passenger services is also intended to make it possible for us to gravitate faster towards getting people off their privately-owned vehicles.
We are also encouraging hon members of this House to continue supporting the user-pay principle to ensure that we are then able to fund the much-needed expansion of our network. If you remember, in this country South Africa many of our communities do not have access to basic services, primarily because of the challenge of not having access to a road or having access to a bridge. So, it is important that you remember that we need to continue implementing the user-pay principle in areas which are highly economically active. That is intended to ensure that we can also accelerate infrastructure development, particularly in the transport network.
Hon members, we believe that it is important that we reduce our over-reliance. Our vehicle population is growing at an alarming rate. It is very consistent with the growth of road fatalities because if you look at the vehicle population over the years, the number of crashes seems to be increasing in tandem with the number of vehicles that is increasing. So, we need to actually reduce the vehicles on the road and gravitate towards public transport. Thank you very much.
Mr M KHAWULA: Thank you hon Chairperson and hon Minister. I realise that the hon Minister has sneaked in her government’s idea of the user-pay principle in her response.
Hon Minister, as you have said the problem here is that of congestion, especially during certain periods of the year and in some cities during certain hours of the day. Government needs to be proactive in saying how do we relieve our roads, especially at those times. As the Minister has said, those are the times – especially in the case of KwaZulu-Natal – and the periods when we have a high number of accidents on the roads because of congestion.
Hon Minister, there is too much talk and very little doing. I’m saying this because there was the proposal about the fast train between Pietermaritzburg and Durban to relieve that road of the pressure. It has become dangerous because of too much traffic between Pietermaritzburg and Durban due to the legislature in Pietermaritzburg. When are we going to see government beginning to do? Talk less and do more. Thank you.
The MINISTER OF TRANSPORT: Hon Khawula, because you raised this issue of the speed train I’m sure you would know that a feasibility study was done and that the cost factor was actually a deterrent. Obviously when you do a study you then need to have the much-needed resources to make it possible for you to meet the requirements of what would have been produced in the study.
We have said that we need to go back to that study and do it in a way in which ... because you would remember that the study indicated that the topography does not allow for a speed train. So, we said that we need to look at the bridges across the hills that you are talking about. The alternative would be tunnelling. One of the things that we said they should be able to do is that it should be a combined effort of all the necessary role-players.
We have included this particular study with the work that is being done by hon Rob Davies as chairperson of the Strategic Integrated Project, SIP, 2, of the route from KwaZulu-Natal, which is the SIP 2 KwaZulu-Natal to Gauteng or Gauteng to KwaZulu-Natal corridor development, and which includes the national road, N3, as well as the development in Harrismith. You would remember that he spoke earlier about the special economic zone, SEZ, in Harrismith as part of the initiatives around that particular SIP initiative.
So, we went back to the drawing board to say, can we get an engineering solution as opposed to just focussing on the financial solution? The engineering solution should also speak to the different phases that we can look into. We believe the study indicated to us that if we get a good engineering solution we can actually reduce the distance between Johannesburg or Gauteng and KwaZulu-Natal, and make the rail services and the airlines compete because it will then make it possible for people to reach Durban within less than two hours. If that can happen; if the study can give us those types of interventions that can be utilised; and the resources are available, we will then be able to look into it.
One of the things that the Treasury advised us was that it will be better for us to consider that as part of a triple-p initiative. So, that particular proposal would mean that we must go back to Treasury and get that particular process registered.
I will answer another one that is also following the same route in the same House today. However, it is a process that we are engaging in. Remember that Rome was not built in one day. [Interjections.] No, no, no; we are working on quite a number of interventions that are improving the lives of the people of South Africa. The networks of roads that we are building are actually intended to make it possible for the free movement of goods and services in South Africa to happen with ease, and these are the interventions that we are making. So, that is why one of the initiatives that you say I sneaked in is the user-pay principle which says that there is some infrastructure that the user will definitely have to pay for. We are saying that it does not actually discount the road itself. So, if we have to bring on everything – land transport in terms of rail and road but also air transport, we will have to consider all these particular factors.
Hon members, you are fully conversant with what is happening. The province has worked on the network between Pietermaritzburg and Durban and I would believe that the hon member’s member in the provincial legislature is duly required to ask the hon Mchunu in the legislature for answers concerning that particular network.
r L B GAEHLER: Hon Minister, what would assist to reduce the congestion, especially on the N2 road from East London to Durban, is to have bypasses in these small towns, because it creates a huge congestion when cars pass through these small towns. Are there any plans to build bypasses in the small towns? For instance, if you talk of Butterworth, it takes you three hours to pass Butterworth, hon Minister. If you talk of Dutywa it takes you about four hours to pass there. It takes about six hours to go through Mthatha. To get through Qumbu takes about three hours, with Mount Frere the same. So, yes ...
... yeka ukuthi hayi bo, usuka phaya wena. Musa ukuphendula. [... don’t say no, you are from there. Don’t react.]
Mr L B GAEHLER: In Mount Frere it is the same problem, hon Minister. So are there any plans to build bypasses?
The MINISTER OF TRANSPORT: I think the hon member wants to talk about alternative routes because since arriving in Transport I have realised that the word bypass is a vloek [swear] word, if you look at what bypasses have done in many of the towns. I’m sure the hon members from the Free State would know what we have been dealing with in the Free State with regard to the matter of the De Beers bypass. We have reached the stage where as a department we have conceded that we do have dead or spook dorpe [ghost towns] in South Africa, primarily because of the national networks that have actually bypassed. A bypass literally means you pass; you don’t get into the town but you pass through it. So those small, medium and micro enterprises in those towns die out and the businesses die out, and it has created serious problems.
So, we have taken that into consideration and looked at what needs to be done. I am sure you would know of some of the developments in terms of the networks that the SA National Roads Agency, Sanral, is building and also the networks that provinces are handing over to Sanral to make it possible that through their technical and engineering capacity we can come up with a solution.
Hon member, once that type of decision is made by the province which says that there is this particular problem and they have agreed they then ask national to take over the responsibility. We proclaim the road as a national road and then Sanral, through their 86% national funded budget is able to intervene.
I know what you are talking about with regard to the challenges of Butterworth, Mthatha and all those areas. I know many people who have passed through there have complained and some people have even missed flights because of this particular challenge. I would believe that it is important that we consider alternative routes because the towns are growing and the roads have not grown to accommodate the growth of the towns. If we want to develop these towns we will have to consider roads as catalysts for the further growth and expansion of towns. We attend to that once provinces have taken a particular decision. Thank you.
Moloto Rail Project
221. Mr S G Mthimunye (Mpumalanga: ANC) asked the Minister of Transport:
(1) Whether any progress has been made regarding the Moloto Rail Project in Mpumalanga (details furnished); if not, why not; if so, what are the relevant details;
(2) whether her department has any plans for (a) railways’ infrastructural upgrade and (b) the effective use of trains as a mode of transport; if not, why not; if so, (i) what plans and (ii) what are the further relevant details in each case? CO625E
The MINISTER OF TRANSPORT: Thank you, hon Mthimunye for this very consistent question that you raised. Is it in the committee or do you want to know where we are? That is very good. Yes, progress has been made on the Moloto Rail Corridor Development. The department conducted a feasibility study on the Moloto Rail Corridor Development, which was completed in October 2014.
The project is a registered public-private partnership with National Treasury in accordance with Treasury Regulation 16 and the public-private partnership guidelines. A rapid-rail option was recommended as the preferred option in the feasibility study and a detailed investigation of the rapid-rail option with due diligence, value assessment, procurement and implementation plan were conducted.
In January 2014, I instructed the board of passenger rail agency of South Africa, the body responsible for passenger rail services in South Africa, to establish a project implementation and management office for the Moloto Rail Development Project. On 3 October 2014, we formerly handed over the Moloto Rail Development Project to Passenger Rail Agency of South Africa, Prasa. The Prasa board has subsequently submitted a Treasury Approval, one application to National Treasury on 30 October 2014.
The TA 1 application is currently being reviewed by National Treasury and as a result several meetings have been held with the PPP unit, now known as the Government Technical Advisory Centre, and clarity was provided where it sought.
National Treasury has undertaken to provide an official response to the application by the end of October 2015. Hon member, with regard to the second part of the question, I would say yes, rail infrastructure upgrade are essential and yes, the effective use of trains as a mode of transport is also very important, so it is important that we realise that in addressing decades of underinvestment in public transport rail infrastructure, Prasa has embarked on a significant capital investment programme focused on modernisation of infrastructure and rolling stock.
The main key programmes include the rolling stock fleet renewal programme; issues of signalling; new locomotives; the 120km/h Perway Programme and station and depots modernisation. These investments support Prasa’s efforts to position passenger rail as a backbone of South Africa’s transport system. Spending will continue to be prioritising these areas, mainly to support metro rail services. Growth in passenger rail spending has until recently been constrained due to other competing public demands.
However, capital investment is now on the increase. Prasa’s capital spending will reach R45 billion over the next three years, which is largely driven by the rolling stock fleet renewal and signalling programmes. Prasa’s modernisation programme is the beginning of the roll out of the modern passenger rail transport system.
The modernisation has been designed to achieve a number of key government objectives such as the delivery of quality services to the commuting public; revitalisation of South Africa’s rail engineering industry through local manufacturing and ensuring local content as part of the government’s Industrial Policy Action Plan 2, as referred to by hon Rob Davies earlier on. And equally, dealing with preferential procurement issues, employment creation and skills development, as well as ensuring Broad-Based Black Economic Empowerment. Thank you very much.
Mr S G MTHIMUNYE: Hon Chair, hon Minister, thank you. My follow-up question is around the issue of the stakeholder engagement plan, if it’s in place. I am not ignorant of the fact that you yourself have engaged into that exercise before the project was handed over to Prasa and SA National Roads Agency Limited, Sanral.
The MINISTER OF TRANSPORT: Both Sanral and Prasa - Sanral for the road network as well as Prasa for the rail network; have their stakeholder engagement plans in place. In most instances, as you have said, hon Mthimunye, I have always been part of those particular programmes. I am happy to indicate that the Premier of Mpumalanga and myself are actually the champions for this particular development. It is something that we really keep focus on, despite the fact that it is being delivered by an agency of the department of transport.
It’s one of those things that we have included in the agreement with the agency to make sure that they can deliver on this particular one, but we also want to make it possible that we indicate to this House to strengthen stakeholder engagement at a political level because we have realised that with the changes in political principles, at times, there’s no proper handover and the feedback to communities get compromised consistently.
We are also bringing in the mayors of all districts that are in the corridor but also all the municipalities in that particular area into the political oversight committee as well as making sure that municipal managers are part of the technical oversight committee which is chaired by the director-general which is driven through the reporting channels from the work that Prasa is doing at a technical level. We believe that that is also some of the areas that we just need to strengthen.
One of the challenges that we have also picked up is that at the level of the technical committee, we have seen the juniorisation of the delegation. That is one thing that the team from the department has raised – which we need to raise with the political principles. To say that if the delegations go lower and lower, then you have officials that do not have decision making and also the key responsibility and therefore, the commitment to ensure that those stakeholder’s processes are held tightly, cannot happen. That is also what we also need to tighten whilst we are still working on the Treasury approval processes.
Mr F ESSACK: Hon House Chairperon, thank you for the opportunity. Hon Minister, thank you for your motivation. I have quite a bit to say at this hour. It is still difficult to digest everything but with due respect, hon Minister, if I might ask you, What other benefits does your Ministry envisage from these projects that will take place around Moloto Rail Project in terms of the skills and empowerment for various communities and areas that this Moloto Rail Project will be happening in?
To further substantiate, what other benefits will then be derived from that and this project in terms of the roads infrastructure and the bus and taxi routes - seeing that they are all part of public transport systems? Obviously, they are kind of interlinked. Thank you, Chairperson.
The MINISTER OF TRANSPORT: Thank you, hon member, for that question. We emphasised the integrated nature. We emphasised the integrated nature of this development.
The CHAIRPERSON OF THE NCOP: Hon members. Hon members, Mpumalanga and Limpopo, can we please pay attention?
Mr B G NTHEBE: If I ask something, I get better ... [Interjections.]
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Okay. Hon Essack is protected from badgering from there. Hon Minister, you have got the floor.
The MINISTER OF TRANSPORT: I was saying, hon House Chairperson, that the integrated nature of this development will truly bring benefits. One of the key things that the last political oversight committee observed was that in all the engagements that we had, as the transport sector, including the municipalities, the economic development imperatives were not been pronounced as we were developing the plan. We believe that it is important that it become part of the whole value chain.
We have taken a decision that in the political oversight committee; we need to have the MECs of this corridor for the economic development of this corridor. But also that at municipal level, the committees that are dealing with this particular project must include the Local Economic Development officers. You would know that any network has different notes and we need to be able to identify working together with the province and the municipalities - the notes for the stations, because stations in themselves are economic notes and if they are economic notes there are activities that are happening around it.
You would also remember that, equally, in the stakeholders, it is the taxi and the bus industry. We also believe that in those communities, which has more than 20 villages that have to be at every note that is being seen now in terms of the study, would need to be ferried or to be feeding into the rail network.
In essence, it means that from your household, the RDP standard of your accessibility of transportation in terms of 200 meters, the taxi kicks in. Where it is more than 5 kilometers radius, we would then have to speak about the buses. From the villages into the main network, there would be that particular feeder arrangement.
Obviously, every stakeholder has got a role to play and we already need to bring them in at this particular stage. We are also conscious of the fact that the way government is structured; it would mean the economic stakeholders would then be the responsibility of the MECs for Economic Development without losing the essence that transport in itself is an enabler, a facilitator for economic development.
In that way, we are saying the total corridor - equally so, with the road network, is important that we see it as a catalyst for the economic growth potential that is there. Also remember that, as part of the modernisation of our rail passenger services, we are building a factory in Danata in Nigel; we are also building the academy for training in terms of the skills that would be essential.
We believe that the skilled people that we would need for the service, would not necessarily only be people from Gauteng or from one area. In that whole corridor, we have been encouraging young people to study in the Stem field which is the science, technology, engineering and maths, so as to make it possible that we can produce the much-needed engineers, artisans, technicians but also the much-needed train drivers of both genders, male and female. We are encouraging young people to be actively involved.
In one of the meetings, the last one that I had in Ekangala in April, we actually had a special meeting with the youth to make it possible that we can start building their interest in the field of rail passenger services because we believe that it is the area that we need to be able to do.
Applications for Contracting Authority Functions
210. Ms C Labuschagne (Western Cape: DA) asked the Minister of Transport:
(a) How many applicants for (i) Contracting Authority Functions and (ii) Operating Licence Functions her department has received since the adoption of the White Paper on National Transport Policy in 1996 and (b) what is the average time of finalisation for such applications? CO614E
The MINISTER OF TRANSPORT: Chairperson, only one municipality has applied for the Contracting Authority Function, and only one municipality has applied for the Operating Licence Function. The application is subject to both internal and external processes. Therefore, I want to indicate to this House that there is no actual timeframe attached.
I also want to indicate that the hon member should be aware that we are busy with the National Land Transport Act amendment process. That also addresses this particular matter. The National Land Transport Amendment Bill was tabled before the Cabinet. Cabinet felt we needed to do more work on the draft Bill because it also addresses the Integrated Rapid Public Transport Networks, IRPTNs. If we need to talk to the IRPTNs, we need to have the lessons from the four that have already been piloted and factor those lessons into the legislation so that we don’t have comebacks every now and then. That is the reason there has been a bit of a delay in the decision being made.
Ms C LABUSCHAGNE: Chair, hon Minister, what is the reason that the application of Transport for Cape Town, which already has the endorsement of the SA Local Government Association, Salga, and the Financial and Fiscal Commission, is taking more than a year to finalise?
The MINISTER OF TRANSPORT: Chairperson, hon member, I have just indicated that, based on that one application for the Contracting Authority Function, we did a review of the legislation and took the legislation to Cabinet. Cabinet felt that we needed to make sure that we consider the lessons from the four municipalities and metros that have already implemented the IRPTN and then come back to Cabinet. So, it is important that you realise that, in the process of engaging this particular matter, we found a gap in terms of the legislation. That is why we are busy with a review of the legislation. So, I am saying that legislation is not yet finalised. If it were, you would have known, because it would have passed through this House.
Delays at the Beitbridge/Chirundu boarders
237. Ms Z V Ncitha (Eastern Cape: ANC) asked the Minister of Transport:
Whether her department has any mechanisms in place to address the delays at the Beitbridge and Chirundu boarders where commercial freight tonnage showed delays averaging from 24 to 48 hours, which heavily impact on cross-border turnaround delivery times; if not, why not; if so, what mechanisms?CO641E
The MINISTER OF TRANSPORT: Hon Chairperson, the Beit Bridge and Chirundu borders constitute the backbone of the North-South Corridor, which connects approximately nine countries in the Southern African Development Community region, and beyond. The North-South Corridor itself is a high-volume, high-value commodity corridor, with both Beit Bridge and Chirundu serving as important gateways to regional and international trade.
Given the scenario, the need for adequate infrastructure to accommodate the high volumes of trade and travel along the North-South Corridor cannot be overemphasised. In light of this, the sovereign governments of Zambia and Zimbabwe agreed to establish a one-stop border post at Chirundu in order to facilitate the cross-border movement of people and goods through their countries.
Clearly, the South African government does not have jurisdiction over Chirundu. However, there are bilateral forums that have been established between South African transport authorities and the governments of Zambia and Zimbabwe, respectively, for purposes of addressing the challenges relating to the cross-border movement of traffic. These forums provide the Department of Transport with a platform to influence decisions on the movement of people and goods through the Chirundu border post.
With regard to the Beit Bridge border post, the Department of Transport and its agencies are actively participating in the processes of establishing a border management agency, BMA, under the leadership of the Department of Home Affairs, as per the Cabinet decision of 26 June 2013. The proposed BMA is going to assume responsibility for the management of all South African ports of entry and the border line. With this in mind, the Department of Home Affairs, with the support of other government departments, is leading efforts to improve the efficiency at the port of entry, focusing on both operational and infrastructural elements. In this regard, the Department of Public Works has been assigned the responsibility of developing an overarching infrastructure development master plan for Beit Bridge.
The Department of Transport and its agency, the SA National Roads Agency Ltd, Sanral, are responsible for the roads development component of the Beit Bridge master plan. The interdepartmental task team has completed this assignment and is awaiting the North-South Corridor Interministerial Committee to meet and consider the proposals emanating from the master plan.
Remember, hon members, that this corridor links us with many countries that are part of the corridor in the AU. We need to make sure that we report to the forum of Ministers in the North-South Corridor and that we are able to get the concurrence of those Ministers on whatever we want to do. Therefore, there is general consensus that infrastructure development is a key component of improving traffic circulation at the Beit Bridge border post and its surrounds.
We, as the Department of Transport, have engaged with the municipality of Musina on how we can make it possible to support them to deal with the major challenges of congestion in the town of Musina itself. We know that that is a congested corridor. We all know that Beit Bridge is our biggest and busiest border post in the Southern Hemisphere. So, it is important that we deal with these particular challenges of Beit Bridge. Thank you very much, Chairperson.
Ms Z B NCITHA: Chair, I think the response from the Minister is eloquent and informative enough for this House, so I have no further question. Thank you.
The CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES: Thank you very much, madam. Is there any other member who has a follow-up question? [Interjections.] I am about to respond to the hon Londt. That then brings us to the end of our question session.
Hon members, I do quite enjoy seeing you at night. I do know that the hon Londt is eager to go home, but I just thought we should thank all the Ministers and Deputy Ministers who spent the afternoon and the evening with us. Thank you, Minister, for being the last one to stay through up to past 22:00 with this House. Thank you, members, for a really sterling day’s work, running well into the night.
See also QUESTIONS AND REPLIES.
The Council adjourned at 22:35.
__________
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
TABLINGS
National Assembly and National Council of Provinces
1. The Speaker and the Chairperson
- Report of the Commission on Gender Equality (CGE) on the Site Visit to the Chatsworth Refugee Shelter – July 2015.
2. The Minister of Transport
- Bilateral Air Service Agreement between the Government of the Republic of South Africa and the Government of the Republic of Sudan, tabled in terms of section 231(3) of the Constitution, 1996.
- Explanatory Memorandum to the Bilateral Air Service Agreement between the Government of the Republic of South Africa and the Government of the Republic of Sudan.
National Council of Provinces
Please see pages 5110-5149 of the ATCs.
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