Hansard: NA: Unrevised hansard
House: National Assembly
Date of Meeting: 31 Oct 2013
Summary
No summary available.
Minutes
UNREVISED HANSARD
THURSDAY, 31 OCTOBER 2013
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PROCEEDINGS OF THE NATIONAL ASSEMBLY
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The House met at 14:00.
The Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col 000.
NOTICES OF MOTION
Ms L N MJOBO: Mr Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House debates ways to fast-track development of sport at a grass-roots level.
Mr J H STEENHUISEN: Hon Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DA:
That the House debates the increasingly violent nature of public protests action across South Africa and the causes of these violent protests.
Mrs P A MOCUMI: Mr Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House debates increasing community participation in crime prevention and safety initiatives.
Mr G G BOINAMO: Mr Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DA:
That the House debates the the consequences of the Municipal Demarcation Board’s decision to merge the Municipalities of Midvaal and Emfuleni.
Mr D C ROSS: Mr Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DA:
That the House debates the investment strategy of the Government Employees Pension Fund in the light of the recent suspension of its CEO, John Oliphant.
Mr G D SCHNEEMANN: Mr Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House debates the importance of science and technology in human resource development and economic growth.
CELEBRATION OF DIWALI BY HINDU COMMUNITY
(Draft Resolution)
The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Mr Speaker, I move without notice:
That the House —
(1) notes that on 3 November 2013, the Hindu community celebrates one of the biggest and most important festivals for Hindus, the festival of Diwali/Deepavali;
(2) further notes that while Diwali/Deepavali is popularly known as the “festival of light”, the most significant spiritual meaning is “the awareness of the inner light” and symbolises the victory of good over evil; and
(3) extends its well wishes to the Hindu community during their celebrations.
Agreed to.
JOHANNES KANA FOUND GUILTY OF RAPE AND MURDER
(Draft Resolution)
Mrs S V KALYAN: Mr Speaker, I hereby move without notice on behalf of the DA:
That the House —
(1) notes that on Tuesday, 29 October 2013, the Swellendam Circuit Court found Johannes Kana guilty of the horrific rape and murder of 17-year-old Anene Booysen;
(2) recalls that Anene tragically passed ... [Interjections.]
The SPEAKER: Order! Will the hon members on the left please allow the speaker to be heard? Continue hon member. You have my protection.
Mrs S V KALYAN: Mr Speaker, I continue:
(2) recalls that Anene tragically passed away on 2 February 2013 after being raped, severely beaten and disembowelled at a construction site in Bredasdorp;
(3) further notes that this case infuriated South Africans and shocked the international community;
(4) recognises that the conviction of Johannes Kana is a major victory for our criminal justice system and a big step forward in the fight against the rape and murder of women and children in our country;
(5) further recognises that sentencing was scheduled to take place yesterday, 30 October 2013, but has been postponed until tomorrow, 1 November 2013;
(6) conveys its support and sympathy to the Booysen family and trusts that the conviction provides some sense of closure; and
(7) calls on all South Africans to work together in order to prevent sickening crimes like these from ever occuring in our society again.
Agreed to.
MORULENG MALL OPENED BY TRIBAL AUTHORITY
Mr I S MFUNDISI: Hon Speaker, I hereby move without notice on behalf of the UCDP:
That the House –
(1) notes that the Bakgatla-ba-Kgafela under Kgosi Nyalala Pilane in Maruleng in the North West Province have, like their neighbours in Phokeng, shown that economic development does not need to be imported;
(2) further notes that the tribal authority opened the Moruleng Mall over the weekend in pomp and splendour to show that given opportunity and resources, people in rural areas can uplift themselves;
(3) acknowledges that the R400 million mall with 85 retail shops, as opened by Kgosi Nyalala Pilane, will relieve the Bakgatla people of unemployment and reduce transport costs for going shopping in Northam and Rustenburg;
(4) appreciates that the enterprise will give employment to 1500 people who have been unemployed; and
(5) congratulates Kgosi Nyalala Pilane and the tribal authority for this giant leap towards economic emancipation.
Agreed to.
AWARD WON BY SOUTH AFRICAN PARLIAMENT IN BANGALORE, INDIA
(Draft Resolution)
The Deputy Chief Whip of the Majority Party moved without notice:
That the House -
(1) notes that on 19 September 2013, the Parliament of South Africa was announced the winner in the category Enterprise (Business and IT): Transformation and Planning at the iCMG Enterprise Architecture Excellence Awards 2013 in Bangalore, India;
(2) further notes that the award is a global validation by peers and industry leaders, on an international platform, for enterprise architecture excellence achieved and is the highest recognition that can be received in the field of enterprise architecture;
(3) recognises that Parliament won the category Planning and Transformation for applying enterprise architecture principles and methodologies to improve effectiveness and efficiency through information and communications technology (ICT);
(4) recalls that ICT is an important pervasive enabler to realise the mission of Parliament, which is to represent and act as the voice of the people in fulfilling its constitutional functions of passing laws and overseeing executive action;
(5) acknowledges that the nomination was based on how enterprise architecture was applied during the development of the 2009-2014 ICT strategy of Parliament;
(6) further acknowledges that the award is not just recognition of a past accomplishment, but it is also a promise of the continued capability in Parliament to leverage value from ICT; and
(7) congratulates all those in our Parliament who contributed to this achievement.
Agreed to.
BUSINESS OF HOUSE LIMITED TO QUESTIONS TO PRESIDENT ON 6 NOVEMBER 2013
(Draft Resolution)
The CHIEF WHIP OF THE MAJORITY PARTY: Hon Speaker, I move the Draft Resolution printed on the Order Paper in my name, as follows:
That the House, notwithstanding Rule 29 which provides for the sequence of proceedings, limits the business for the sitting on 6 November 2013 to Questions to the President.
Agreed to.
FREE MARWAN BARGHOUTI CAMPAIGN
(Member’s Statement)
Ms M N PHALISO (ANC): Speaker, the ANC finds it very unfortunate that a motion without notice on the launch of the Robben Island Declaration on 27 October 2013, which calls for the freedom of Marwan Barghouti and other prisoners in Palestine, was objected to by both the ACDP and the DA.
The global campaign for the freedom of Marwan Barghouti and other Palestinian political prisoners has the support of many of our freedom-loving people and those who sacrificed and fought for our freedom, such as Archbishop Desmond Tutu, Ahmed Kathrada and the ANC.
Archbishop Tutu stated, and I quote:
As South Africans, we feel very proud to be able to put our experience of the power of solidarity into action for the benefit of others ...
South Africa could not have achieved its democracy without the contribution of friends around the world. ... We learned that when people unite behind a righteous cause there is nothing that can stop them.
We know first-hand that, had it not been for the people of the world uniting against the apartheid regime, our icons of struggle, Nelson Mandela, Walter Sisulu, Govan Mbeki and Ahmed Kathrada would not have been freed and we would not be standing here today calling for the freedom of Marwan Barghouti and other Palestinian political prisoners. The DA and ACDP must remember this. I thank you, Speaker. [Applause.]
ANCYL SUPPORTERS WREAK HAVOC IN CAPE TOWN CBD
(Member’s Statement)
Mr M MNQASELA (DA): Speaker, yesterday chaos broke out in the Cape Town central business district, CBD, as protesters looted shops, broke down trading stores, injured innocent vendors, destroyed public property and disrupted public transport services. These actions by members and supporters of the ANC Youth League, led yesterday by ANC Councillor Loyiso Nkohla, and expelled ANC Councillor Andile Lili ... [Interjections.] ... are completely unacceptable.
The SPEAKER: Order! Order!
Mr M MNQASELA (DA): This is clear proof that these thugs have no real service delivery concerns and that their actions are all part of the ANC’s ongoing campaign to make the Western Cape ungovernable. [Interjections.] You will not succeed.
The ANC continues to whip up false figures about the Western Cape, while every single national and international report shows that the Western Cape is the best-run province in the country. [Applause.] Over the past year, unemployment in the Western Cape has decreased from 27% to 25%. This is because the DA’s policy on jobs is number one. The ANC cannot stand this. [Interjections.]
The ANC in Gauteng has failed. Unemployment has increased from 29% to 30% in the past year. In Limpopo, unemployment is so rife that, for every one person looking for a job, two people have already completely given up looking.
Know your ANC. The ANC will never succeed in making the Western Cape ungovernable. We will win! [Time expired.] [Applause.]
SPREAD OF VIOLENT SERVICE DELIVERY PROTESTS THROUGHOUT COUNTRY
(Member’s Statement)
Mr T BOTHA (Cope): Hon Speaker, the intensity of service delivery protests has grown to the point where an impression can be formed that government has either lost or is losing control of the wave of violence that is spreading throughout the country. It appears that any disgruntled group of people can simply gather a mob together, exploit citizens’ genuine grievances, and then go and loot shops and other businesses in the cities and towns. This leads to the destruction of commercial and public properties and threatens the security of citizens, tourists and the country as a whole. This needs to be condemned in the strongest terms possible.
It appears that government does not have a coherent approach on how to handle and prevent these violent protests, including the uprooting of the unruly elements that often infiltrate and exploit genuine grievances.
This gives the impression that the police and intelligence services are not adequately prepared and trained to deal with such situations. Yesterday, criminal elements were among the people who travelled into the city by train, taxi and bus to invade Cape Town. Why were the police and the intelligence services not in place to prevent the looting of businesses in the CBD? What guarantee do we have that this will not happen again? Thank you. [Applause.]
UNVEILING OF INTEGRATED HUMAN SETTLEMENTS PROJECT BY LEKWA LOCAL MUNICIPALITY
(Member’s Statement)
Mr J J SKOSANA (ANC): Hon Speaker, the ANC congratulates the people of Lekwa Local Municipality on the recent unveiling of a multimillion rand integrated human settlements project in Extension 8, Standerton.
This project will deliver 4 000 houses altogether, which will be integrated with schools and shopping centres, among other facilities. It will also create close to 21 000 job opportunities, which will include 1 000 permanent ones. On a much more sustainable basis, this initiative will boost the municipality’s revenue by up to R60 million a year.
This integrated human settlements project is one among a series that will be delivered by the ANC government in various municipalities of South Africa, as part of its renewed mandate of bringing to an end apartheid patterns of settlement and spatial development.
The project will be counted alongside the Joe Slovo N2 Gateway project in Cape Town, Cornubia in Durban, Cosmo City in Johannesburg, and Lephalale in Limpopo, to mention but a few.
We in the ANC will do everything in our power to ensure that we continue to build a country where people can live together, play together, pray together and learn together. I thank you, Speaker. [Applause.]
LACK OF WATER IN UMKHANYAKUDE
(Member’s Statement)
Mrs H S MSWELI (IFP): Hon Speaker, Umkhanyakude remains dry. On 30 October 2008, the IFP released a statement concerning the lack of access to water that the residents of the Umkhanyakude district had been struggling with. Exactly five years later, nothing has happened, despite the numerous promises made – and broken – by the government to the people of Umkhanyakude. Those promises have gone unfulfilled and will probably be resurrected for the benefit of the upcoming elections.
People have been reduced to fetching water from rivers because the water schemes at Shemula and KwaJobe are dysfunctional. It seems the tactic of government, especially of the Department of Water and Environmental Affairs, is to promise the people one thing to get votes while, in reality, they will be forgotten once the government gets what it wants.
This issue goes beyond political affiliation. People are suffering because leaders are refusing to take responsibility for the promises they made to get people’s votes. People will continue to disrupt government, and even the electoral process, if this situation is allowed to continue. I thank you.
ZAPIRO CARTOON AN INSULT TO HINDUS
(Member’s Statement)
Mr A J WILLIAMS (ANC): Hon Speaker, on Sunday, 27 October the Sunday Times published a cartoon by Zapiro which intended to ridicule the Board of Control for Cricket in India. The use of the image of the Lord Ganesha to accomplish this is totally unacceptable.
What sets the new South Africa apart from the old is the respect we accord one another. As South Africans, we not only tolerate and accept diversity, but we accord the deepest respect to other people’s religious convictions. We affirm that no part of society in South Africa should be treated with indignity and disrespect. Any action that offends one section of society should offend all sections. Freedom of expression is not an unfettered right within the Bill of Rights.
Accordingly, the ANC calls upon the Sunday Times and Jonathan Shapiro to apologise to the Hindu community in particular, and to all decent, caring and peace-loving South Africans. Thank you. [Applause.]
ABSOLUTION OF TEENAGER ACCUSED OF STEENKAMP FARM MURDERS
(Member’s Statement)
Mr I S MFUNDISI (UCDP): Hon Speaker, the UCDP is shocked at the news of the confession by Cornelia de Wet absolving the teenage boy accused of the Steenkamp farm murders that took place in Griquatown in the Northern Cape.
We are a troubled nation, any way you look at this. The fact that there are possibly many farm murders that remain unsolved, in which the Afrikaner Weerstandsbeweging hit squad and the security company, Boere Beskermings Forum, could have been involved, and perhaps many others in which innocents were framed or blamed, is a cause for concern.
The remnants of apartheid are evidenced in this, and political leaders across the board need to take steps to address it. It saddens us in the UCDP that there are Afrikaner groups intent, in fact hell-bent, on spreading such racial hatred as to murder their own in order to instil racial hatred. The surfacing of these claims harms the genuine cause and outcry against the killing of farmers.
We would like to assert further that our intelligence services are failing us in these matters. How can it be that we have such racially motivated terrorists in our midst, yet their actions are only revealed through a confession and not as a result of intelligence gathering? It boggles the mind to think that there have been racially influenced responses to farm killings – such as the recent October march – and yet there are cases like this.
Finally, the UCDP condemns the existence and actions of the AWB squad and the security company. We condemn the threats against Cornelia de Wet, who has taken the plunge to spill the beans on these despicable deeds. We hope the police will take these investigations seriously and shed more light on other crimes that could possibly have been committed by these parties. Ke a leboga. [I thank you.]
PROMULGATION OF BANTU EDUCATION ACT 60 YEARS AGO
(Member’s Statement)
Mrs A T LOVEMORE (DA): Hon Speaker, this month, October, 60 years ago, the 1953 Bantu Education Act was promulgated. The funding for Bantu children was 14% of that allocated for white children. Gardening was part of the Bantu education curriculum! White children, however, were exposed to art and to science. The opportunities for Bantu education learners were severely limited.
It is this outcome that we cannot allow to continue to haunt us. We cannot allow the quality of education we provide for our young people to be determined by the circumstances of their birth.
Today there is one curriculum for all children, but the achievements of learners are still powerfully linked to the circumstances of their birth. Our children are disadvantaged if they are poor. They are disadvantaged if they live in rural areas. They are disadvantaged if they live in dysfunctional provinces such as Limpopo and the Eastern Cape.
The argument that the Bantu education system was better than the system we have now is nonsensical. [Interjections.] It is nonsensical! There was little or no potential for excellence within the Bantu education curriculum. There is potential for excellence now but that potential must be harnessed.
Our learners deserve the best, no matter the circumstances of their birth, and it starts with quality education everywhere. [Applause.]
OVERWHELMING VICTORIES FOR PYA AND SASCO IN SRC ELECTIONS
(Member’s Statement)
Mr C M MONI (ANC): Hon Speaker, the ANC congratulates the Progressive Youth Alliance, PYA, in general and the South African Students Congress, Sasco, in particular on the resounding and overwhelming victories recorded in the recent student representative council elections held around the country. They lead in universities such as Wits University, the Nelson Mandela Metropolitan University - previously led by the DA Students Organisation, Daso - and the University of the Western Cape. Young people have rejected the DA and its Daso by conferring upon Sasco 100% of the seats available in the council.
The results of these elections have unequivocally demystified the myth spread by prophets of doom that young people have lost faith in mass democratic movements as led by the ANC. On many campuses Sasco and the ANC Youth League contested the elections and defeated those who posture as having the monopoly of the youth vote, particularly the youth from middle-class backgrounds.
The ANC calls upon the PYA to consolidate its gains by closing ranks against opportunistic elements, displaying unity in action across all its components and serving young people with selflessness, diligence and distinction. We have no doubt that the unstoppable PYA tsunami will never betray the confidence the youth continue to have in the congress movement when they govern these structures. I thank you. [Applause.]
NELSON MANDELA METROPOLITAN UNIVERSITY DENIES BLIND STUDENTS ADMISSION
(Member’s Statement)
Ms L L VAN DER MERWE (IFP): Hon Speaker, the IFP today calls on the Human Rights Commission to urgently take note of the conduct of the Nelson Mandela Metropolitan University after it denied admission to three blind matriculants from a school for the blind in Mthatha, who dreamt of pursuing their studies and who are now devastated by the university’s decision.
It seriously calls into question the government’s commitments made in this House yesterday that it is complying with the United Nations Convention on the Rights of Persons with Disabilities, and that it is doing everything possible to ensure that children with disabilities enjoy equal rights. The fact remains that people with disabilities are still sidelined in our society and often treated as second-class citizens.
The IFP denounces this university’s decision. What has made matters worse is that the Deputy Minister of Women, Children and People with Disabilities acknowledged during a recent visit to the university that the university does not have the necessary facilities to accommodate sight and hearing impaired students, yet nothing has happened to date. While this incident has caught the media attention, there are scores of learners with disabilities that face similar challenges on a daily basis.
The IFP calls on the Minister of Women, Children and People with Disabilities and also on the Minister of Higher Education and Training to urgently intervene in this matter. Furthermore, they must conduct an urgent audit of how many tertiary institutions are failing disabled students by not allowing them access and the necessary assistance to further their studies, which dashes their hopes and their chances of living meaningful lives. I thank you.
CONGRATULATIONS TO ORLANDO PIRATES
(Member’s Statement)
Mr L S NGONYAMA (Cope): Hon Speaker, it is with immense pride that I congratulate Orlando Pirates for reaching the Confederation of African Football Champions League finals that will start this upcoming weekend in Orlando. All of us, whether football enthusiasts, rugby die-hards or cricket pundits, must celebrate this great achievement of one of the iconic football clubs of our football-obsessed country.
Although Orlando Pirates held Esperance to a goalless draw at the Orlando Stadium two weeks earlier and followed this up with a one-one draw against Esperance in Tunisia in their semi-final second leg encounter, it was enough for Pirates on the basis of the away-goals rule. The players, and the coaching and technical staff, as well as the management and stalwart Pirates supporters, all deserve to be congratulated. It was a collective exercise, with each party playing its part.
Let us recall that it was the Buccaneers who, no more than a year after we achieved our democracy, thrilled the nation by winning the Champions League trophy. No other South African team has achieved this feat. Cope believes, as I do – and certainly all other parties believe this equally – that the Buccaneers will play beautifully this coming weekend and in Egypt, and repeat the success of their earlier campaign in 1995. It is time to shine internationally.
In order for the Buccaneers to do really well, you, hon Speaker, as well as all of us in the National Assembly, should join together to wish them well and throw our full support behind them. They must know that they are playing for all of us and what they achieve is for their glory as well as ours. Go, Buccaneers! Go! I thank you. [Applause.]
FORT HARE UNIVERSITY LEADS SOUTH AFRICA IN TRANSFORMATION AND QUALITY RESEARCH
(Member’s Statement)
Ms N GINA (ANC): Hon Speaker, the ANC is proud of the commitment of some of the country’s institutions of higher learning to achieving transformation while producing good quality work as well. Researchers at the University of KwaZulu-Natal have determined that the University of Fort Hare leads the country in achieving transformation of its academic staff, while maintaining good quality research output.
In their study, Govinder, Zondo and Makgoba, all from the University of KwaZulu-Natal, utilised a new indicator called the Equity Index to interpret the demographic profile of the staff and students at all South African universities.
When the 2011 Equity Index of academic staff at these institutions was plotted against their 2011 per capita research output, the University of Fort Hare was the only university to fall firmly in the quadrant depicting good equity and good per capita research output. The University of KwaZulu-Natal and the University of the Western Cape also fell in this quadrant, but were very close to the boundary. It is interesting to note that these three historically disadvantaged universities – but the University of KwaZulu-Natal partly – have begun to shrug off the legacy of apartheid.
The researchers concluded that the other 20 universities in South Africa could learn important lessons from these three universities.
The ANC congratulates these formerly disadvantaged institutions on their progress and dedication to succeeding. I thank you. [Applause.]
ANC SUPPORTERS VANDALISE DA POSTERS AND THROW STONES
(Member’s Statement)
Mr S C MOTAU (DA): Hon Speaker, last Thursday, 24 October 2013, people wearing ANC t-shirts were seen tearing down DA registration posters in Ga-Rankuwa. [Interjections] These posters urged people to register to vote during next year’s national and provincial elections. The DA has reported this vandalism to the local police station.
A week prior to this incident, also in Ga-Rankuwa, people wearing ANC t-shirts were seen throwing stones and other missiles at a gathering that was being addressed by DA Gauteng premier candidate, Mmusi Maimane, to disrupt his Believe Bus Tour. It does not matter whether these people were ANC members or not; with their attire they identified themselves with the ANC.
Many South Africans died for the right to vote and it would be a tragic irony if people wearing ANC apparel were to deny any citizen of this country the right to vote for the party of his or her choice.
The DA calls on the ANC President, Jacob Zuma, and the ANC Gauteng Premier, Nomvula Mokonyane, to call upon those who wear their party’s gear to desist from such undemocratic and violent behaviour. The DA reiterates its appeal for peace, political maturity and tolerance, and we urge the ANC to join us in this call. Thank you very much. [Applause.]
UPGRADING OF JOHANNESBURG ROAD INFRASTRUCTURE
(Member’s Statement)
Mr D W SWANEPOEL (ANC): Hon Speaker, the City of Johannesburg plans to spend around R2 billion over the next three years on rebuilding and upgrading road infrastructure. The business districts of Sandton and Rosebank, in particular, will be pleased at the news that roads in their areas - not least the M1 and M2 motorways and other key arterial roads - will be a major focus of the renewal programme.
This announcement by Mayor Parks Tau is particularly welcome, given the serious weekday peak-hour gridlock that has taken hold of key areas north of the city, as commercial development and redevelopment continue to outpace infrastructural maintenance and expansion. This investment will make a major contribution to productivity in this economic heartland of our country.
It is also encouraging that Mayor Tau has singled out for special attention the perennial pothole problem, on which Johannesburg will be spending almost R80 million in patching and fixing roads. By turning this problem around, Johannesburg will be restoring lost value to many individual streets, and even entire suburbs, which urgently need road maintenance and development. I thank you. [Applause.]
FCI WORLD AGILITY CHAMPIONSHIPS IN JOHANNESBURG
(Member’s Statement)
Mr G D SCHNEEMANN (ANC): Hon Speaker, the Fédération Cynologique Internationale World Agility Championships, involving some of the world’s top show dogs, were held at the Coca-Cola Dome in Johannesburg from 11 to 13 October 2013. This was the first time in the 18-year history of the championships that they were held outside of Europe, and the first time in South Africa.
Participating countries included South Africa, Germany, Spain, Switzerland, Austria, Norway, the USA and the Czech Republic. The event was extremely well run and again demonstrated South Africa’s ability to successfully host international competitions. The individual world champions crowned were from Switzerland, Spain and Austria, while the team champions were from Germany and Switzerland. South Africa won one silver and two bronze medals in the team competition.
Congratulations go to the organising committee, the volunteers and the Kennel Union of Southern Africa for putting together a competition of world-class standard.
The ANC constituency office in Randburg was proud to have worked with the organisers to ensure the successful World Agility Championships. The holding of this, and countless other international events, in South Africa since 1994 continues to demonstrate the confidence the world has in South Africa and this ANC government. I thank you. [Applause.]
SPREAD OF VIOLENT SERVICE DELIVERY PROTESTS THROUGHOUT COUNTRY
ANCYL SUPPORTERS WREAK HAVOC IN CAPE TOWN CBD
(Minister’s Response)
The MINISTER IN THE PRESIDENCY - NATIONAL PLANNING COMMISSION: Mr Speaker, let me first respond to the hon Botha, although I think he is no longer in the House. [Interjections.] I want to join with him and everybody else who condemns the behaviour of the thugs who looted shops, and especially the stalls of informal traders, in the City of Cape Town yesterday. Nobody should ever support that, and I think it’s very important that all of us together as parliamentarians speak out against that in the interests of democracy. [Applause.]
The SPEAKER: Order, hon members! Order!
The MINISTER IN THE PRESIDENCY - NATIONAL PLANNING COMMISSION: However, I don’t have the same views about what the hon Mnqasela raised. He’s also left the House. [Interjections.] Oh, there he is. Okay. He has got to make these outrageous statements because the DA is tolerating him in their ranks for a little bit now. [Laughter.] Let me just say to you, sir ... [Interjections.] Mr Speaker, let me just say to the hon Mnqasela that ...
The SPEAKER: Order, hon members! Order!
The MINISTER IN THE PRESIDENCY - NATIONAL PLANNING COMMISSION: ... the individuals concerned in this were mentioned by the leader of the DA, Ms Helen Zille, the other day and she said that Lili and Nkohla were probably EFF members. They’ve both been suspended from the ANC. So, let’s not pretend that they’ve done this in the name of the ANC. [Applause.]
Let me also say that ... [Interjections.]
The SPEAKER: Order, hon members! Order! [Interjections.]
Mr M MNQASELA: Mr Speaker, I would like to put a point of order.
The MINISTER IN THE PRESIDENCY - NATIONAL PLANNING COMMISSION: There’s no point of order. I’m responding to you!
Mr M MNQASELA: My point of order is: Firstly, the hon Minister said that I am only being tolerated in the DA because I am unruly. That is nonsense. Secondly, he is refusing to acknowledge that these people are ANC members, yet they are still in the ANC ... [Interjections.]
The MINISTER IN THE PRESIDENCY - NATIONAL PLANNING COMMISSION: That’s no point of order!
The SPEAKER: Order! Hon member, take your seat. Order hon members! Order!
The MINISTER IN THE PRESIDENCY - NATIONAL PLANNING COMMISSION: Let me say to the hon Mnqasela that the numbers on unemployment that he mentioned are outrageous. You may be entitled to your own opinion but not to your own facts! And certainly not in an environment where the Quarterly Labour Force Survey was released the day before yesterday. The Western Cape has an unemployment rate of 23,4%; Limpopo 17,8%; and KwaZulu-Natal 20,9%. [Interjections.] Moreover, in those statistics the Western Cape has an even higher rate of young people not in employment, education or training, the NEET rate, than Limpopo! [Interjections.] So, I must say to you and the DA ...
The SPEAKER: Order! Order, hon members!
The MINISTER IN THE PRESIDENCY - NATIONAL PLANNING COMMISSION:... claim no easy victories, mask no difficulties and tell no lies. This is something which was said by Amilcar Cabral. Thank you very much. [Interjections.] [Applause.]
ANCYL SUPPORTERS WREAK HAVOC IN CAPE TOWN CBD
(Minister’s Response)
The MINISTER OF STATE SECURITY: Speaker, questions have again been put about the protest in Cape Town. From the outset, let us say that we as the ANC-led government condemn violence during service delivery protests.
Secondly, we state categorically that the protest was not organised by the ANC, but was organised by suffering communities of the suburbs of this city, which are being neglected. [Interjections.]
Our analysis informs us that most of these protests start peacefully, but they soon degenerate into violence if those who have the complaints are ignored. [Interjections.] No, let me finish! Let me finish.
The SPEAKER: Order, hon members! Order!
The MINISTER OF STATE SECURITY: They deteriorate into violence if the authorities ignore them, and sometimes even refuse to engage with or listen to them.
We call upon the DA to stop discrimination and to act as a government and deliver basic services to all the communities of Cape Town, including those that are poor. I thank you. [Interjections.] [Applause.]
NELSON MANDELA METROPOLITAN UNIVERSITY DENIES BLIND STUDENTS ADMISSION
(Minister’s Response)
The MINISTER OF WOMEN, CHILDREN AND PEOPLE WITH DISABILITIES: Hon Speaker, let me say to the hon Van der Merwe that the fact that the Deputy Minister has been to universities and further education and training colleges clearly means that ...
... siwuphethe umcimbi. [... we are busy dealing with the issue.]
Also, the fact that we are dealing with the legacy of 400 years does not mean that in 20 years we will have addressed the injustices ...
The SPEAKER: Order! Order!
The MINISTER OF WOMEN, CHILDREN AND PEOPLE WITH DISABILITIES: ... of 48 years of apartheid and 300 years of colonialism. People with disabilities have been denied their rights. In particular, there have been no schools for people in this country who are black and have disabilities.
Sithwele uxanduva ngoku kufuneka siqale ekuqaleni. [We have a responsibility and we have to start from the beginning.]
Moreover, I want to ask: Since when has the IFP cared for people with disabilities? Since when has the IFP or the opposition cared about women?
Uphi uZanele Magwaza? Uzimele geqe kuba kwabashushu kwa-IFP kuba eyinkokheli engumama. Uyanithwaxa phaya ezivotini ngoku sithethayo. [Where is Zanele Magwaza? She is standing on her own now because it became hot within the IFP because of being a woman leader. She is defeating you during votes as we speak.]
The fact of the matter is that the IFP is bleeding to death.
The SPEAKER: Order! There is a point of order. Yes, sir. You have the floor. Order, hon members! Order! Proceed, hon member.
Mr V B NDLOVU: Somlomo, bengicela ukubuza la: Ingabe umhlonishwa ukhuluma ngani? [Uhleko.] [Ubuwelewele.] Ingabe uyamazi yini lo muntu akhuluma ngaye? [Speaker, I would like to ask: What is the hon member talking about? [Laughter.] [Interjections.] Does she know the person she is talking about?]
The MINISTER OF WOMEN, CHILDREN AND PEOPLE WITH DISABILITIES: Ewe, ndiyamazi ngumama owakhokela i-IFP, woyikwa, waze wakhutshelwa ngaphandle. Ngoku uyayithwaxa i-IFP ephaya ngaphandle. [Yes, I know her; she is the woman who has led the IFP. They were scared of her, and then they rejected her. Now she is defeating the IFP while on her own.]
Anyway, people with disabilities are saying, “Nothing about us without us.” Hon Van der Merwe, where are your disabled Members of Parliament in this House? DA, where are your disabled Members of Parliament in this House? Thank you.
Mr R N CEBEKHULU: Mr Speaker, on a point of order: ...
The SPEAKER: Order! Yes, sir. You have the floor. Order, hon members! You have the floor.
Mnu R N CEBEKHULU: Somlomo, ngicela ukukhumbuza umhlonishwa kulokhu akushoyo: KwaZulu-Natali sikhona isikole sabantu abakhubazekile. Leso sikole siseNkandla. Akulona iqiniso ukuthi eNingizimu Afrika yonke abazange banakekelwe abantu abakhubazekile! Lesi sikole sasakhiwe yiyo i-IFP. Ngiyabonga. (Translation of isiZulu paragraph follows.)
[Mr R N CEBEKHULU: Speaker, I would like to remind the hon member with regard to what she is saying: In KwaZulu-Natal there is a school for people with disabilities. That school is in Nkandla. It is not true that in South Africa as a whole, people with disabilities are not taken care of. This school was built by the IFP. Thank you.]
The SPEAKER: Order! Let us proceed. Thank you. Take your seat. Hon Minister.
The MINISTER OF WOMEN, CHILDREN AND PEOPLE WITH DISABILITIES: We are not talking about KwaZulu-Natal; we are talking about the whole country. Thank you, hon Speaker.
Ms L L VAN DER MERWE: A point of order!
The SPEAKER: Take your seat, hon member.
Ms L L VAN DER MERWE: A point of order, Speaker.
Ms L L VAN DER MERWE: Hon Speaker! Hon Speaker ...
The SPEAKER: Order! Order! Don’t speak until I recognise you.
Ms L L VAN DER MERWE: Hon Speaker!
The SPEAKER: Yes, proceed.
Ms L L VAN DER MERWE: Speaker, on a point of order: I take great offence at the fact that the Minister has launched a personal attack on my party and me. I raised a legitimate concern about people who have been denied access to education at a university. It is not a matter to do with the IFP or the ANC; it has to do with the lives of three people who have been denied education. I was not attacking the Minister personally and therefore she should not attack me or my party personally. [Interjections.]
The SPEAKER: Order, hon members. Order! Let the speaker be heard.
Ms L L VAN DER MERWE: I was raising a legitimate concern; I was not saying it was the Minister’s fault! [Interjections.]
The SPEAKER: You had your hand up, sir. Proceed, please. Order! Yes, sir. You have the floor.
Mr L S NGONYAMA: Speaker, on a point of order: I want to correct the Minister. They are definitely not referred to as “disabled people”; they are people with disabilities.
The MINISTER OF WOMEN, CHILDREN AND PEOPLE WITH DISABILITIES: They call themselves “Disabled People South Africa”, the activists that took part in the United Nations convention.
I want to say to the hon member there, hon Van der Merwe, it is hot in the kitchen of politics and, if you do not want to be in politics and in Parliament, get out of this kitchen! I thank you. [Applause.]
The SPEAKER: Order! Order! What point are you rising on, sir? [Interjections.] Order!
Adv T M MASUTHA: Hon Speaker, on a point of order: It is against the rules for Members of Parliament to abuse the process and raise frivolous points of order, and they should not be allowed. [Interjections.]
The SPEAKER: Order! Take your seat, hon member.
PROMULGATION OF BANTU EDUCATION ACT 60 YEARS AGO
(Minister’s response)
The DEPUTY MINISTER OF BASIC EDUCATION: Hon Speaker, I would like to thank the hon Lovemore for prefacing her statement with the realities of our past, in which there were enormous disparities in what the black child would receive in comparison to the white child. These are the realities that we grapple with in our democratic South Africa.
Indeed our mantra in the past administration and in this current administration is that there should be quality education. Whilst we can celebrate the reality that we have achieved universal education in primary school and much of our high school, the issue of quality education has had to be confronted.
What is it that the government has indeed done? We recognise that education is a continuum that should start, as the NDP says, from preschool. Today we can celebrate the fact that more than 680 000 of our children, black and white, are in preschool, within schools.
Secondly, we can celebrate the fact that every child, white and black, receives resources at preschool in our public schools.
Thirdly, we can celebrate the fact that we recognise the enormous challenges that we face as a country in regard to literacy and numeracy, and that to this end we have distributed more than 150 million workbooks from Grade 1 to Grade 9 to promote literacy and numeracy. It is important that we set in place an appropriate foundation for learning so that we can directly improve on the quality of education.
We as a government and as the ruling party can celebrate the fact that more than 10 000 educators are the beneficiaries of our Funza Lushaka scheme, which focuses on Foundation Phase learning which, in turn, focuses on mathematics, science and languages.
We can celebrate the fact that for the first time in the history of this country there is an integrated professional development programme which has been supported by all teacher unions. Therefore, we recognise the importance of content knowledge and pedagogy and that this is a process that is unfolding. Indeed, what we are doing no other country in the world has done.
We have recognised the importance of literacy and numeracy, and to that end we tested more than 5,5 million of our children from Grade 1 to Grade 6 on literacy and numeracy three years ago. We can tell you about the performance and the achievements of every child and what he or she is experiencing in every class, grade, school and district in the country. Last year we tested more than 7,2 million, and this year we have done so again. The indications are that from year to year there is an improvement, and I am cautiously optimistic that in terms of quality we will see a similar improvement this year. Thank you so much, hon Speaker. [Time expired.] [Applause.]
LACK OF WATER IN UMKHANYAKUDE
(Minister’s Response)
The DEPUTY MINISTER FOR CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS: Speaker, I am acting on behalf of my colleague, the Minister of Water and Environmental Affairs, who has no voice today.
The Minister has asked me to inform the House that three water projects have been completed. The first is the Hlabisa Bulk Water Supply Scheme. This is a project that will supply some 51 413 people in the Hlabisa area and 18 600 people in Ezibayeni area. This project has been completed and is scheduled to be launched on 30 November 2013.
The Mandlakazi Bulk Water Supply Scheme will benefit 27 000 people and is scheduled to be launched either in December this year or January next year.
Then, the Jozini-Ingwavuma Bulk Water Supply Project will benefit 134 864 people. That scheme has been completed and the Minister is waiting to set a date for its launch. I thank you. [Applause.]
BREACHING OF HOUSE RULES
(Ruling)
The SPEAKER: Hon members, before I proceed with the First Order of the Day I would like to make a ruling.
Order! On Thursday, 24 October 2013, during the Decision on the Question of the Second Reading of the Lotteries Amendment Bill, various points of order were raised after hon S V Kalyan requested a division on behalf of the DA and left the Chamber before voting commenced.
On that day I quoted Rule 88, which states that:
A member demanding a division shall not leave the Chamber until the result of the division has been declared and shall vote with those who, in the opinion of the presiding officer, are in the minority.
There’s no room for misinterpretation here. The hon Kalyan was, indeed, in breach of the Rules, since Rule 88 compels her to remain in the Chamber when she has demanded a division.
Rule 69 determines that “(a) member may, with the prior consent of the presiding officer ... explain matters of a personal nature”. Hon Kalyan has requested an opportunity to do so. Before granting her that opportunity, I want briefly to address a few issues that have had a disruptive effect on the ability of the House to fulfil its constitutional function of passing legislation.
The first is the quorum requirement created by the Constitution. The Constitution provides that a majority of the Assembly members must be present before a vote on a Bill may be taken. In other words, there must be at least 201 members in the House. The onus is on the House to ensure that it is quorate for a vote. The House consists of all members from all parties. It follows, therefore, that the responsibility of ensuring that the requisite number of members are present to constitute a quorum does not rest entirely with the members of the majority party. Constitutionally speaking, that responsibility rests with all members, individually and collectively.
When members are asked to record their presence to establish whether there is a quorum present, and they refrain from doing so, it can be construed as an attempt to frustrate the work of the House. As hon members and public representatives, it would not be appropriate for members to conduct themselves in that manner. Members must therefore record their presence when requested to do so by the Presiding Officer.
The second issue is that of committee meetings during the sittings of the House. Once again, a number of points of order were raised and numerous arguments offered after hon Kalyan explained that some members of the DA had left the Chamber before the vote to attend committee meetings. Though some committees have particularly heavy legislative workloads and may have to meet during sittings, permission for such meetings is given with the express understanding that, when the bells are rung to summon members to the House for a vote, meeting proceedings must be suspended immediately and members must make their way to the Chamber. That was explained on Thursday by the hon House Chairperson, C T Frolic.
Requiring members to be present in the House for a vote does not constrain them when it comes to expressing their support for or opposition to a piece of legislation. Members are free to vote for or against a Bill, or even to abstain should they wish to do so. The Rules are clear, however, that all members in the House, when the question is put, must vote.
That covers all points raised by members in regard to the division on the Lotteries Amendment Bill.
I appeal to hon members to keep in mind that we are taking decisions on behalf of the people we represent, and therefore a vote, whether on a Bill or any other matter, should be approached with thought and circumspection.
I now give the hon Kalyan the opportunity to give a personal explanation.
Mrs S V KALYAN: Mr Speaker, thank you for giving me the opportunity to offer a personal explanation in terms of Rule 69. On Thursday, 24 October 2013, I requested a division on the Lotteries Amendment Bill on behalf of the DA. When the bells started ringing, a number of our members left the Chamber. I was aware that some members were due to attend committee meetings that afternoon. So, I assumed that they were leaving for that purpose. I did not offer ... [Interjections.]
The SPEAKER: Order, hon members! Order! Proceed.
Mrs S V KALYAN: I did not offer the explanation with the purpose of misleading the House. The Portfolio Committee on Police was sitting in Committee Room G26, just outside the Chamber. So, I thought I had enough time to confirm my explanation whilst the bells were ringing. However, I got caught outside when the doors were closed for the vote. [Interjections.]
I transgressed the Rules by leaving the Chamber after asking for the division and I regret that greatly. I would like to assure the House that I hold its proceedings in high esteem. As a senior Party Whip, I am also fully aware of my added responsibility to contribute to maintaining good order in the House.
Once again, I humbly apologise and undertake to always conduct my interaction in the House in terms of the Rules. Thank you, Mr Speaker. [Applause.]
The SPEAKER: Thank you, hon member. That concludes the discussion on this matter.
CONSIDERATION OF REPORT OF STANDING COMMITTEE ON FINANCE – 2013 REVISED FISCAL FRAMEWORK
Mr T A MUFAMADI: Hon Speaker, hon Ministers and Deputy Ministers, hon members, and distinguished guests, on 23 October 2013 the Minister of Finance tabled the Medium-Term Budget Policy Statement. My task today is to present the analysis of the Revised Fiscal Framework, after the Standing Committee on Finance concluded its public hearings on the proposed Medium-Term Budget Policy Statement.
The fiscal path over the last 19 years has proved to be credible, reliable and predictable. As such it has always served as a basis to assure millions of South Africans that the South Africa of tomorrow will always be better than the South Africa of yesterday, and to ignite new confidence in the investor community, as was demonstrated in the course of the committee’s interactions with various stakeholders during our public hearings.
Allow me to take this opportunity to invite all hon members to congratulate our Minister of Finance, hon Pravin Gordhan, for being named by emerging markets as the Finance Minister of the Year for 2013 in sub-Saharan Africa. [Applause.] This is not new, and it is not something that should surprise us.
Since 2006 the Open Budget Index performance initiative has always rated South Africa as amongst the top five in the area of budget transparency and openness. In 2008 we were rated second; in 2010 we were rated first; and in 2012 we were rated second. We are and will continue to be a good example to many, in both the developed and the emerging economies. Hon Ministers, this is a part of the narrative that we are not telling but which we should tell, in order to continue to inspire confidence locally and internationally, and to sustain the investor confidence we need so much under these difficult global conditions.
Indeed, since the advent of democracy the ANC and its government have ensured that fiscal stability and sustainability remain the bedrock of our economic foundation: to achieve sustainable and inclusive growth; to create jobs; and to eliminate poverty and inequalities.
Minister, you have consistently raised a concern about the kind of narrative or story we are telling about ourselves, as individuals and as organisations, both domestically and internationally.
Let me bring to your attention something which you might be aware of. Only yesterday Business Day reported that the Chief Executive Officer of one of South Africa’s largest gold-mining companies, Neal Froneman, said that the government “seems to despise the industry.” He went on to say that government had to create the right platform for the mining industry whether they liked it or not. They had to create the right platform at the moment. We need a supportive government. Organised labour needs to take a long-term view and we all need to look at the long-term benefits rather than short-term agendas.
The point I am making here is that whilst it is correct for the industry to raise their expectations, we equally expect them to spell out their own obligations to government, labour and, in particular, the communities in which they conduct their mining activities.
In his own assertion, the CEO only expects the solution to come from government and labour, and in that regard the industry has no role to play in creating a conducive working and productive environment between employees and employers. In his view, government should remain central in resolving labour relations industrial actions.
Domestically, we have made huge social and economic advances that few other countries have been able to achieve in less than 20 years of democracy. Certainly, we still face challenges, but it is in the quality of the leadership provided by the ANC government that the answers to the economic challenges we face today are to be found.
Today we can say without a tinge of arrogance or fear of contradicting ourselves that the countercyclical fiscal path is responding to the challenges of the poor and the needs of our general population. The countercyclical fiscal policy has responded positively and continues to reaffirm the principles of long-term sustainability and fiscal consolidation to support inclusive economic growth and to ensure service delivery.
Over the medium term the Revised Fiscal Framework will ensure that government is able to meet the 2013 fiscal deficit target of 4,2%.
The ANC supports this Revised Fiscal Framework and so does the committee. Thank you. [Time expired.] [Applause.]
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Hon Speaker, I move:
That the Report be adopted.
Mrs S V KALYAN: Speaker, there are no objections, but the DA requests an opportunity to make a declaration.
Declarations of vote:
Mr T D HARRIS: Hon Speaker, last week the Minister told us that the news flow was what was damaging South Africa. I am afraid, hon Minister, it is government policies that are doing that. In 2011 your Treasury forecast that South Africa’s growth would be 4,4%. Actually, this year it’s 2%.
It is because this government has an inability to introduce a single plan for the economy. This means that our fastest growing budget item over the medium-term is interest payments, which will increase to 9,7% per year for the next three years. By 2016, the year before debt is meant to stabilise, we will be spending R140 billion a year servicing our R2 trillion debt. This is more than we will spend on health care in that year.
Now the problem, hon Speaker, is that achieving the stabilisation of debt in 2017 depends on the Minister’s forecast of 3,5% becoming a reality for 2017. The question is: If the Minister was so wrong three years ago in his growth forecast, how can we believe that this forecast is right, especially considering that this budget did not introduce any new measures from the National Development Plan, NDP, for implementation?
This year the Minister had to spend the entire R4 billion contingency reserve and rely on R3,5 billion’s worth of underspending by government departments without the capacity to spend the money that they were given. He also had to recalibrate the budget deficit, so now we can sell state-owned entities in order to make the budget balance.
The point is, if the Minister does not introduce real reforms to drive growth higher, he will run out of these tricks to reach his budget deficit targets, and our mounting government debt will become a serious problem. Thank you. [Applause.]
Mr N J J KOORNHOF: Mr Speaker, we concluded this report yesterday and we all approved it. We shall debate the budget framework next week.
The renewal emphasis in the National Development Plan is yet again welcomed, and only time will tell whether we have done enough to keep the credit rating agencies away from our door. All eyes will now be on the implementation that has been pledged.
Zambia, with a growth rate of 7%, has just been downgraded. We are still borrowing to fund social grants and to pay a huge state wage bill, and more than a third of our debt is held by foreigners. So it is important to remain focused. Cope will support the Minister of Finance, so that he remains focused and takes care of our economy.
Mr D D VAN ROOYEN: Hon speaker, the Revised Fiscal Framework reaffirms to the nation that the countercyclical fiscal policy of the ANC-led government is the most appropriate policy to use to address the economic challenges we face. It is precisely this fiscal policy, adopted in advance of the international economic crisis, that has enabled the country economically to come through this period with relatively less uncertainty than most countries.
This approach in managing the fiscus has enabled us to maintain infrastructure spending, and drive the industrialisation of the economy, despite sluggish growth in the economy and relative inflationary pressure. This Revised Fiscal Framework therefore grounds itself in continued fiscal consolidation and support for the economy.
Furthermore, it recognises the risk of servicing debt costs and continues to establish the economic path of creating great debt sustainability. The ANC government is doing this as a policy position, and we have noted with concern that the political party with no logical economic policy, the DA, agrees with us. Let us be reminded ... [Interjections.] You are even worse, because at this stage you are going to the extreme of claiming our policies. You are not the creators of this idea; it belongs to the ANC.
On the contrary, the fact that you are calling for regulatory impact assessments confirms the ANC’s long-held view that there are unnecessary administrative costs within our economy, and that this situation should be reviewed. This does not suggest, as some would want everyone to believe, that regulation of the economy should be relaxed. Again, on the contrary, in achieving the nature and character of the growth, we are seeking further strategic regulation of the economy by the state. This is necessary, given that we are a developmental state and we have a programme in the National Development Plan that must be achieved. This will not happen spontaneously; it has to be driven, and it has to be driven by us.
In conclusion, the ANC government continues to manage our economy in a manner that best addresses the current conjuncture. The ANC calls for the adoption of this report. Thank you. [Applause.]
Motion agreed to.
Report accordingly adopted.
FINANCIAL SERVICES LAWS GENERAL AMENDMENT BILL
(Second Reading debate)
The CHIEF WHIP OF THE OPPOSITION: Hon Speaker, may I address you on a point of order?
The SPEAKER: Yes.
The CHIEF WHIP OF THE OPPOSITION: Mr Speaker, I rise to address you on a point of order in terms of Rule 97(b): I wish to move the postponement of an Order of the Day as determined by Rule 97(c). I therefore move on behalf of the DA:
That the House postpone the Second Order on the Order Paper in terms of Rule 97(c).
That is the Second Reading of the Financial Services Laws General Amendment Bill [B29B—2012] and is in view of the fact that due process was not followed in facilitating the Second Reading debate. I so move.
The SPEAKER: Hon members, a motion has now been moved by the Chief Whip of the DA. Ordinarily, a motion without notice requires the unanimous concurrence of all members present in order for it to be moved. However, Rule 97 makes an exception for a motion for the postponement of, discharge of, or giving precedence to an Order of the Day, or referring a Bill to a committee. For that reason the motion has to be put to the House for a decision.
I now put the question: That the motion of the Chief Whip of the Opposition be agreed to. Are there any objections to the adoption of the report? No objections? Those in favour will say, “Aye”.
HON MEMBERS: Aye!
The SPEAKER: Those against will say, “No”. [Interjections.]
Mrs S V KALYAN: Speaker, when you put the question there was no objection ... [Interjections.] ... and there is still no objection.
The CHIEF WHIP OF THE MAJORITY PARTY: Hon Speaker, we object! [Laughter.]
The SPEAKER: Order! Order, hon members! There is no objection, so the report has been adopted. [Interjections.]
HON MEMBERS: No, no, no! It is the motion! You put the motion.
The SPEAKER: Order! Yes, we are actually on the motion that was moved by the DA, and the ANC objected to the motion. Let me put it again, in case there is lack of clarity. I now put the motion. Those in favour will say, “Aye”.
HON MEMBERS: Aye!
The SPEAKER: Those against will say, “No”.
HON MEMBERS: No!
The SPEAKER: I think the noes have it. If parties want their objections recorded, we will record their objections.
Mrs S V KALYAN: Mr Speaker, the DA calls for a division, and I promise to stay in the House! [Interjections.]
Division demanded.
The House divided:
AYES – 54:Alberts, A D; Boinamo, G G; Bosman, L L; Coetzee, T W; Davidson, I O; De Freitas, M S F; Du Toit, N D; Duncan, P C; Esau, S; Farrow, S B; George, D T; Greyling, L W; Harris, T D; Hill-Lewis, G G; James, W G; Kalyan, S V; Kloppers-Lourens, J C; Kohler-Barnard, D; Kopane, S P; Krumbock, G R; Lorimer, J R B; Lotriet, A; Marais, E J; Marais, S J F; Mnqasela, M; Mokgalapa, S; Motau, S C; Mubu, K S; Ollis, I M; Rabie, P J; Rabotapi, M W; Robinson, D; Rogers, F A; Ross, D C; Sayedali Shah, M R; Schafer, D A; Schmidt, H C; Selfe, J; Shinn, M R; Steenhuisen, J H; Steyn, A C; Swart, S N; Swart, M; Swathe, M M; Terblanche, J F; Van Dalen, P; Van den Berg, N J; Van Der Linde, J J; Van Der Westhuizen, A P; Van Dyk, S M; Van Schalkwyk, H C; Waters, M; Watson, A; Wenger, M.
NOES – 183:Abram, S; Adams, P E; Ainslie, A R; Bam-Mugwanya, V; Beukman, F; Bhengu, P; Bikani, F C; Bonhomme, T; Booi, M S; Borman, G M; Boshigo, D F; Botha, Y R; Bothman, S G; Burgess, C V; Cebekhulu, R N; Cele, M A; Chabane, O C; Chikunga, L S; Chili, D O; Chiloane, T D; Chohan, F I; Cronin, J P; Cwele, S C; Dambuza, B N; De Lange, J H; Diale, L N; Dikgacwi, M M; Dlakude, D E; Dubazana, Z S; Dube, M C; Duma, N M; Ferguson, B D; Fubbs, J L; Gasebonwe, T M A; Gaum, A H; Gcwabaza, N E; Gelderblom, J P; Gigaba, K M N; Gina, N; Gololo, C L; Goqwana, M B; Gumede, D M; Hajaig, F; Huang, S-B; Jeffery, J H; Johnson, M; Kekana, C D; Kganare, D A; Kholwane, S E; Khumalo, F E; Khunou, N P; Koornhof, N N J v R; Kwankwa, N L; Landers, L T; Lekgetho, G; Lesoma, R M M; Maake, J J; Mabasa, X; Mabedla, N R; Mac Kenzie, G P D; Madisha, W M; Madlala, N M; Madlopha, C Q; Mafolo, M V; Magama, H T; Magubane, E; Mahomed, F; Makasi, X C; Makhubela-Mashele, L S; Makwetla, S P; Maluleka, H P; Mandela, Z M D; Mangena, M S; Manuel, T A; Martins, B A D; Mashigo, R M; Mashishi, A C; Masutha, T M; Mathale, C C; Mathebe, D H; Mathibela, N F; Matlanyane, H F; Matshoba, J M; Maunye, M M; Mavunda, D W; Maziya, A M; McIntosh, G B D; Mdaka, M N; Mdakane, M R; Mfeketo, N C; Mgabadeli, H C; Mjobo, L N; Mkhulusi, N N P; Mlambo, E M; Mlangeni, A; Mnisi, N A; Mocumi, P A; Mohai, S J; Mohale, M C; Mohorosi, M M; Mokoena, A D; Molewa, B E E; Moloi-Moropa, J C; Moni, C M; Morutoa, M R; Motsoaledi, P A; Mpontshane, A M; Mufamadi, T A; Mushwana, F F; Ndabandaba, L G B; Ndebele, J S; Ndlazi, A Z; Ndlovu, V B; Ndude, H N; Nel, A C; Nene, N M; Newhoudt-Druchen, W S; Ngcengwane, N D; Ngcobo, B T; Ngcobo, E N N; Ngele, N J; Ngonyama, L S; Ngubeni-Maluleka, J P; Ngwenya-Mabila, P C; Nhlengethwa, D G; Njikelana, S J; Njobe, M A A; Nkomo, S J; Nkwinti, G E; November, N T; Ntapane, S Z; Ntuli, Z C; Ntuli, B M; Nxesi, T W; Nxumalo, M D; Nyalungu, R E; Nyekemba, E; Oosthuizen, G C; Pandor, G N M; Phaahla, M J; Phaliso, M N; Pilusa-Mosoane, M E; Radebe, G S; Schneemann, G D; Segale-Diswai, M J; Selau, G J; September, C C; Sibanyoni, J B; Sibiya, D; Sindane, G S; Singh, N; Sithole, K P; Sithole, S C N; Sizani, P S; Skosana, J J; Skosana, M B; Smith, V G; Sogoni, E M; Sonto, M R; Sosibo, J E; Suka, L; Sulliman, E M; Surty, M E; Swanepoel, D W; Thibedi, J D; Thobejane, S G; Tinto, B; Tsebe, S R; Tseke, G K; Tsenoli, S L; Tshabalala, J; Tsotetsi, D R; Twala, N M; van Rooyen, D D; Van Schalkwyk, M C J; Van Wyk, A; Wayile, Z G; Williams, A J; Williams-De Bruyn, S T; Xasa, T; Xingwana, L M; Yengeni, L E; Zulu, B Z.
Question not agreed to.
Motion accordingly negatived.
Mrs S V KALYAN: Mr Speaker, can the objection of the DA to this be noted, please?
The SPEAKER: Objection to the vote? [Interjections.] Thank you very much, but you cannot object to the vote. The vote has taken place.
Mrs S V KALYAN: We are objecting to the outcome of the vote.
The SPEAKER: The vote? [Interjections.] This is democracy. You can’t object to a democratic process. [Interjections.] Order, hon members! Order! Order! Order! [Interjections.] Order! Order! Order!
Mr D D VAN ROOYEN: Hon Speaker, democracy has prevailed and the masses have spoken through their duly elected representatives. [Applause.] We are not shocked by these tendencies emerging on the eve of the elections. There are weird tendencies emerging – people are objecting even to democracy itself!
The Financial Services Laws General Amendment Bill makes the financial sector safe by strengthening the regulatory powers of the Financial Services Board, FSB. The Bill is in line with international practice, which enhances the quality of supervision.
Indeed, after the 2008 global financial crisis the Group of Twenty, G20, the International Monetary Fund, IMF, the Financial Stability Board and all international regulatory associations ... [Interjections.]
The SPEAKER: Hon members, order! Allow the speaker to be heard.
Mr D D VAN ROOYEN: ... have shifted to a more intensive and intrusive approach to regulating the financial sector. In South African terms this approach is called draconian and “kragdadig” [hard-hitting].
The Bill aims to align nonbanking financial sector legislation with the international standards adopted by the cited international institution. As policymakers and regulators we are faced with the challenges of driving forward regulatory reforms, taking in lessons from the past and current experience.
We recognise the need to enhance the effectiveness of financial sector regulation and the ability of regulators to respond swiftly and decisively to risks to the stability of the financial system. At the same time, the regulatory framework must ensure appropriate accountability of regulators.
The Bill updates our approach to regulating the financial sector and it is an important interim step towards the envisaged implementation of the twin peaks regulatory framework. The Bill addresses debts identified by the Financial Sector Assessment Programme conducted by the IMF and the World Bank regarding South Africa’s adherence to international standards for financial regulation. Inter alia, the Bill provides for enhanced supervisory powers by establishing the FSB as the lead regulator where there is concurrent jurisdiction in respect of the same entities. It further clarifies the status of FSB legislation in relation to other legislation.
The Bill proposes a consequential amendment to the definition of a medical scheme in the Medical Schemes Act to facilitate the appropriate demarcation between health insurance products and medical schemes. Contrary to some misplaced and bizarre argument, in no way does the Bill seek to tamper with the appropriateness of its own tagging or that of the Medical Schemes Act.
Speaker, allow me to express sincere words of gratitude to members of the Standing Committee on Finance for their hard work in scrutinising the Bill. Their wisdom and insight have ensured that the Bill before the House keeps South Africa’s nonbanking financial sector regulatory framework up with the best in the world. We thank the Minister and his National Treasury team for prompt and succinct responses to concerns and queries that emerged during the process.
I humbly submit to the House the Financial Services Laws General Amendment Bill for its support. Ke a leboga! Baie dankie! [Thank you!] [Applause.]
There was no debate.
The CHIEF WHIP OF THE OPPOSITION: Hon Speaker, may we make a declaration of vote please?
The SPEAKER: You may indeed.
Declarations of vote:
Mr T D HARRIS: Hon Speaker, what a blow for democracy. The ANC uses its majority to shut down a debate on a Bill, and I certainly join the hon Kalyan in objecting.
This is because the fact that this is a statement rather than a debate sets a distressing precedent. The committee had no consensus that it should be a statement, because the DA consistently requested a debate, which we were within our rights to do. If this is the way ... [Interjections.] ...
The SPEAKER: Order, hon members! Order!
Mr T D HARRIS: ... Parliament conducts itself, then there is nothing stopping the ANC from using their majority to block a debate on any Bill! [Interjections.]
I sincerely hope that this does not set a precedent, because this Bill is deeply technical, but it is also very political. Here Treasury gives regulators draconian powers that are excessively harsh and severe, and, importantly, it does not balance these powers with increased accountability.
When it comes to financial regulation, the National Treasury consistently overreach themselves. They introduce draconian rather than appropriate measures, they give additional powers to the regulators at the expense of civil liberties, and they use direct intervention as a tool for regulation, when competition would clearly work much more effectively. This fundamentally threatens the financial sector, the largest contributor to our gross domestic product, the goose that lays the golden egg.
During the committee process we managed to get Treasury to agree to file off a few of the nastiest edges of the Bill. However, serious problems remain. On the limitation of liability, this Bill allows the FSB officials to act in a way that is grossly negligent. It sets the bar of accountability far too low. It means, in effect, that FSB officials will be able to act in a seriously careless way and not be held liable for their actions! Surely we cannot have regulators behaving in such a way.
Secondly, it defines the concepts of policyholder protection provisions, which we accept. However, these provisions should be published by the Minister and not the regulator. They should be of general application and Parliament should have oversight over them. None of these conditions are met in the Bill.
Thirdly and fourthly, there are problems with delegated functions and major question marks over this factor, and problems with the tagging of the Bill. It deals with health services defined in Schedule 4 of the Constitution as a provincial competency. Surely this should be a section 76 Bill. Not only are there problems with Treasury’s overreach, but there are problems with the tagging of the Bill too.
The DA put all of these arguments forward in the committee, and each one of them was systematically voted down by the ANC without their considering them. This is why the DA does not support this Bill. I hope that this Parliament never again sees a day when the ANC’s majority shuts down Parliament’s right to a full debate. I thank you. [Applause.]
Mr N J J KOORNHOF: Deputy Speaker, when this 280-page Bill landed on our desks earlier this year, I knew it was going to be a technical one. After it was advertised for comment, it was formally sent to the committee comprising 116 pages of proposed amendments to 11 different laws. One really got a feeling in the committee of the extent of the legislation that financial institutions and their fraternity must comply with.
According to Prof Robert Vivian of Wits, and I quote:
Even if persons working in the industry wanted to grasp the import of this mass of legislation, they would simply not be able to do so.
The period for public comment was extended twice. Many of the amendments flow from the policy paper, “A safer financial sector to serve South Africa better” and we can expect to see more in a shift towards the twin peaks model of financial regulations.
The primary objective of the Bill is to ensure that our financial services industry will be better, and also to address any further potential risk to our system. We have to be able to move fast in this environment, and therefore have slightly more regulatory powers. The Financial Services Board has been criticised in the past as being too slow. There are no excuses now.
More than 250 amendments were added by the committee. I want to thank the Treasury and all officials who assisted the committee. The DA had the chance to file a minority report – and we have not seen that report. [Applause.]
Me P E ADAMS: Adjunkspeaker, die ANC-regering bevorder stabiliteit in finansiële markte ten einde groei en ontwikkeling te bevorder waarsonder direkte buitelandse belegging vir werkskepping nie sal kan plaasvind nie. Die feit dat die ANC-regering daarin slaag om stabiliteit te skep, word algemeen deur internasionale organisasies erken.
In die geval van die wetsontwerp onder bespreking, gee toepaslike wetgewing, soos deur die Nasionale Tesourie voorgeskryf en toegepas, uitvoering aan Suid-Afrika se G20-verpligtinge ten opsigte van die versterking van die stryd teen finansiële markmisbruik en -manipulasie. Wysigings aan die onderhawige wette is ook nodig om gapings in die finansiële sektor se regulatoriese raamwerk aan te spreek en om die raamwerk te verstewig. Die gapings is geïdentifiseer deur die Internasionale Monetêre Fonds en die Wêreldbank se finansiële sektorevaluering van Suid-Afrika se nakoming van internasionale regulatoriese praktyke ten opsigte van die regulering van die bank- en versekeringswese.
Die Wet op Mediese Skemas, in sy huidige formaat, het ’n invloed op die finansiële dienstesektor waar doeltreffende finansiële toesig nodig is – doeltreffende toesig wat slegs deur die Raad op Finansiële Dienste uitgevoer kan word en dus vereis dat die wetgewing as artikel 75 geklassifiseer moet word. Die misplaaste logika van die DA is gebaseer op die foutiewe benadering dat mediese hulpskemas met gesondheid verband hou en gesondheid daarom ’n konkurrente funksie is wat dan sou vereis dat die wetsontwerp as artikel 76 geklassifiseer moet word.
Tydens die openbare verhore het die Raad op Mediese Skemas se verteenwoordiger genoem dat die DA se voorlegging in hierdie verband glad nie sin maak nie, aangesien mediese skemas nie provinsiaal gebaseer is nie en daar dus afgelei moet word dat die DA mediese skemas wil desentraliseer. Hierdie saak is eers op die laaste oomblik deur die DA te berde gebring toe die staande komitee op die punt was om die wetsontwerp af te teken. ’n Mens kan maar net raai wat die bedenklike motief agter hierdie onlogiese, obstruktiewe optrede is. Die DA gryp na grashalms in ’n patetiese poging om die regerende party in die aanloop tot die verkiesing in ’n swak lig te stel. Ek dank u. [Applous.] (Translation of Afrikaans speech follows.)
[Ms P E ADAMS: Deputy Speaker, the ANC-led government promotes stability in financial markets in order to promote growth and development without which foreign direct investment for job creation will not be possible. It is generally acknowledged by international organisations that the ANC-led government is succeeding in creating stability.
In the case of the Bill under discussion, relevant legislation, as prescribed and applied by National Treasury, gives effect to South Africa’s G20 obligations with regard to intensifying the fight against financial market abuse and manipulation. Amendments to the legislation in question are also necessary to address the gaps in the financial sector’s regulatory framework, and to reinforce the framework. These gaps were identified by the International Monetary Fund and World Bank’s financial sector assessment of South Africa’s compliance with international regulatory practices in respect of regulating the banking and insurance industries.
The Medical Schemes Act in its current format has an impact on the financial services sector where effective financial oversight is necessary – effective oversight that can only be exercised by the Financial Services Board, which consequently requires that the Bill be classified as section 75. The misplaced logic of the DA is based on the erroneous approach that medical aid schemes have relevance to health and that health is therefore a concurrent function, which would then require that the Bill be classified as section 76.
During the public hearings, the Medical Aid Board’s representative mentioned that the DA’s submission in this regard did not make any sense at all, and since medical schemes are not provincially based it could be deduced then that the DA wants to decentralise medical schemes. This matter was only brought up by the DA towards the end when the standing committee was about to sign off the Bill. One can only speculate about the doubtful motive behind this illogical, obstructive conduct. The DA is grasping at straws in a pathetic attempt to discredit the governing party in the run-up to the elections. I thank you. [Applause.]]
Question put: That the Bill be read a second time.
Division demanded.
The House divided:
AYES – 185: Abram, S; Adams, L H; Adams, P E; Ainslie, A R; Bam-Mugwanya, V; Beukman, F; Bhanga, B M; Bhengu, P; Bikani, F C; Bonhomme, T; Booi, M S; Borman, G M; Boshigo, D F; Botha, Y R; Bothman, S G; Burgess, C V; Cebekhulu, R N; Cele, M A; Chabane, O C; Chikunga, L S; Chili, D O; Chiloane, T D; Chohan, F I; Cronin, J P; Cwele, S C; Dambuza, B N; De Lange, J H; Diale, L N; Dikgacwi, M M; Dlakude, D E; Dubazana, Z S; Dube, M C; Dudley, C; Duma, N M; Ferguson, B D; Fubbs, J L; Gasebonwe, T M A; Gaum, A H; Gcwabaza, N E; Gelderblom, J P; George, M E; Gigaba, K M N; Gina, N; Gololo, C L; Goqwana, M B; Gumede, D M; Hajaig, F; Huang, S-B; Jeffery, J H; Johnson, M; Kganare, D A; Kholwane, S E; Khumalo, F E; Khunou, N P; Koornhof, N N J v R; Landers, L T; Lekgetho, G; Lesoma, R M M; Maake, J J; Mabasa, X; Mabedla, N R; Madlala, N M; Madlopha, C Q; Mafolo, M V; Magama, H T; Magubane, E; Mahomed, F; Makasi, X C; Makhubela-Mashele, L S; Makwetla, S P; Maluleka, H P; Mandela, Z M D; Mangena, M S; Manuel, T A; Martins, B A D; Mashigo, R M; Mashishi, A C; Mathale, C C; Mathebe, D H; Mathibela, N F; Matlanyane, H F; Matshoba, J M; Maunye, M M; Mavunda, D W; Maziya, A M; McIntosh, G B D; Mdaka, M N; Mdakane, M R; Mgabadeli, H C; Mjobo, L N; Mkhulusi, N N P; Mlambo, E M; Mlangeni, A; Mnisi, N A; Mnqasela, M; Mocumi, P A; Mohai, S J; Mohale, M C; Mohorosi, M M; Mokoena, A D; Molewa, B E E; Moloi-Moropa, J C; Moni, C M; Morutoa, M R; Moss, L N; Motimele, M S; Motsoaledi, P A; Mpontshane, A M; Mufamadi, T A; Mushwana, F F; Ndabandaba, L G B; Ndebele, J S; Ndlazi, A Z; Ndlovu, V B; Ndude, H N; Nel, A C; Nene, N M; Newhoudt-Druchen, W S; Ngcengwane, N D; Ngcobo, B T; Ngcobo, E N N; Ngele, N J; Ngonyama, L S; Ngubeni-Maluleka, J P; Ngwenya-Mabila, P C; Nhlengethwa, D G; Njikelana, S J; Njobe, M A A; Nkomo, S J; Nkwinti, G E; November, N T; Ntapane, S Z; Ntuli, B M; Ntuli, Z C; Nxesi, T W; Nxumalo, M D; Nyalungu, R E; Nyekemba, E; Oosthuizen, G C; Pandor, G N M; Phaahla, M J; Phaliso, M N; Pilusa-Mosoane, M E; Pule, D D; Radebe, G S; Schneemann, G D; Segale-Diswai, M J; Selau, G J; September, C C; Sibanyoni, J B; Sibiya, D; Sindane, G S; Singh, N; Sisulu, M V; Sithole, K P; Sithole, S C N; Sizani, P S; Skosana, J J; Skosana, M B; Smith, V G; Sogoni, E M; Sonto, M R; Sosibo, J E; Suka, L; Sulliman, E M; Surty, M E; Swanepoel, D W; Swart, S N; Thibedi, J D; Thobejane, S G; Tinto, B; Tsebe, S R; Tseke, G K; Tsenoli, S L; Tshabalala, J; Tsotetsi, D R; van Rooyen, D D; Van Schalkwyk, M C J; Van Wyk, A; Williams, A J; Williams-De Bruyn, S T; Xasa, T; Xingwana, L M; Yengeni, L E; Zulu, B Z.
NOES – 38:Alberts, A D; Boinamo, G G; Bosman, L L; Davidson, I O; De Freitas, M S F; George, D T; Greyling, L W; Harris, T D; James, W G; Kloppers-Lourens, J C; Kohler-Barnard, D; Kopane, S P; Krumbock, G R; Lorimer, J R B; Lotriet, A; Marais, S J F; Marais, E J; Mokgalapa, S; Motau, S C; Ollis, I M; Rabie, P J; Robinson, D; Rogers, F A; Ross, D C; Schafer, D A; Selfe, J; Shinn, M R; Steyn, A C; Swart, M; Swathe, M M; Terblanche, J F; Van den Berg, N J; Van Der Linde, J J; Van Der Westhuizen, A P; Van Schalkwyk, H C; Waters, M; Watson, A; Wenger, M.
Question agreed to.
Bill accordingly read a second time.
CONSIDERATION OF REPORT OF STANDING COMMITTEE ON FINANCE – EMPLOYMENT TAX INCENTIVE BILL
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Deputy Speaker, I move:
That the Report be adopted.
Motion agreed to.
Report accordingly adopted.
EMPLOYMENT TAX INCENTIVE BILL
(First Reading debate)
The DEPUTY SPEAKER: Hon members, before we proceed with the First Reading debate on the Employment Tax Incentive Bill, I have to inform you that the Speaker received an amendment to the Bill from the Minister of Finance. The amendment is printed in the name of the Minister on page 661 of today’s Order Paper. The amendment is meant to effect a technical correction to the Bill in terms of section 14 of the Money Bills Amendment Procedure and Related Matters Act, Act 9 of 2009, by omitting “22(1)” and substituting it with “21(1)”, in line 44 on page 5 of the Bill. The amendment will be put at the end of the First Reading debate on the Bill. We now proceed with the First Reading debate on the Bill.
The DEPUTY MINISTER OF FINANCE: Deputy Speaker and hon members, as we deliberate on the legislation before this House today, thousands of young and old workseekers are sending their curricula vitae to potential employers. They are queuing at business premises. They are answering advertisements for vacancies, or asking friends and family members about job opportunities at their places of work. Just on Tuesday this week the Quarterly Labour Force Survey results for the third quarter this year were released. These showed that approximately 3,3 million of the 10,4 million youth aged between 15 and 24 years were not in employment, or education, or training.
In its 2009 election manifesto, the ANC identified five priority areas, with job creation as the key to sustainable livelihoods and economic development. We said that these priorities would be tackled with all the means at our disposal: the resources of government, the vision of the Freedom Charter, and the energy and commitment of our people. Our priorities would specifically target the needs of the youth, women, workers, the rural poor, the elderly and people with disabilities.
To this effect, government is providing a number of incentives geared to increasing investment; enhancing competitiveness and productivity; supporting employment creation; encouraging on-the-job training; enhancing skills capacity; and addressing climate change challenges. A number of these incentives are in operation already.
The employment tax incentive is one aspect of the ANC government’s holistic programme of action on unemployment. Other aspects include the Expanded Public Works Programme; the Community Work Programme; skills development through universities, further education and training colleges, and Setas; the various programmes that flow from the Industrial Policy Action Plan; the Jobs Fund; and small business support.
Government also has a particular focus on youth unemployment, and the programmes that fall under the Youth Employment Accord address other factors that cause youth unemployment. We cannot succeed in any efforts to improve the lives of South Africans if our economy does not utilise the talents, energy, insights and efforts of all its people who are willing to work, including young, inexperienced workers.
Young workseekers are particularly vulnerable to unemployment because they do not have a proven track record to indicate their productivity to potential employers. In addition, long spells of unemployment early in life reduce the chances of eventual employment and the level of future income. We view the introduction of this incentive as a critical intervention, because young workers, the future of our economy, are currently not gaining the work experience that will form the basis of future performance.
The employment tax incentive proposed in this Bill can make a significant contribution in the fight against youth unemployment. It will also do so by sharing the costs of employment of young workseekers between employers and government. Government will reimburse employers up to 50% or R1 000 per eligible worker to stimulate employment. This presents a good business case for employers to expand employment by hiring workers that would previously have been overlooked.
In the past, most of our incentives for businesses targeted investment, which meant that capital-intensive industries received most benefits. This incentive specifically targets the hiring of a vulnerable group of workseekers, which will result in higher labour intensity of production. This is also the reason for extending the incentive to special economic zones and other designated industries, but without the age criteria in these areas. Finally, this is an incentive that can help small and medium-sized businesses most, because they are engines of employment growth and the design is intentionally simple.
Through the public comment process we received submissions from companies that indicated that they were ready to employ young workers due to the availability of this incentive, and we will hold them to that.
This mechanism will operate by lowering employers’ tax liability which arises through the pay as you earn, PAYE, system. This means that at the end of each month an employer will subtract the value of the incentive from the PAYE contributions he has withheld on behalf of Sars. Employers that do not have a high enough PAYE liability to offset the full incentive will be allowed to roll the unclaimed amounts over to the next month. In addition, Sars is developing a cash reimbursement mechanism for companies that have no PAYE system.
The intention is that the incentive will be implemented from 1 January in order to allow new school-leavers also to benefit from a better chance at finding employment.
This proposal has been in the public domain for two-and-a-half years, and all practicable suggestions for changes to the incentive have been taken into account as we implement the incentive. We will learn ways to improve the design even more as we implement it, especially since this incentive will be closely monitored and evaluated. Circumstances in the economy may change, which would necessitate adjustments to the incentive. This is always the case in policy implementation.
What we have in front of us is the best possible solution to the problem that we face, but it is not a panacea, given the information that we have available to understand the problem of youth unemployment. Now is the time to implement this solution and there is no better time to do it than now. Thank you, Deputy Speaker.
Mr T A MUFAMADI: Deputy Speaker and hon members, let me start by restating the point that has been made on numerous occasions, that of the objectives of this Bill. The Bill aims to improve employment prospects for young workers over the medium term by giving them experience. Moreover, Government would like to share with employers the initial costs of hiring young people to boost job creation. Work experience gained will improve their long-term employment prospects. We also need to incentivise employment in the special economic zones and designated industries, as identified by the Minister of Finance. Those employed under these tax incentives will enjoy protection under labour law in the same way as do those who remain and who are currently employed.
The Employment Tax Incentive Bill gives impetus to the announcement made by the President in his 2010 state of the nation address – or perhaps it was in 2011 – that government would subsidise the cost of hiring young workers.
In 2011 the National Treasury developed a policy document for discussion to give further clarity on the state of the nation reference, as pronounced by the President. That policy document, Confronting Youth Unemployment: Policy Options for South Africa, was the culmination of a research programme that looked into and analysed global options in addressing youth unemployment. To date, it remains the most comprehensive document on the subject.
The issue of youth unemployment is rife in South Africa. This is not a slogan. On Tuesday Statistics SA released the numbers. Of the 10,4 million unemployed people, 3,1 million are young people with no job experience, and are not at school or in training. Therefore, it cannot be that we end up with the highest number of unemployed people in South Africa being young people, and we stop there. We have to do something. As I said, the issue of youth unemployment is rife in South Africa. It affects all of us, but it has an especially debilitating effect, psychologically, on our young people.
Let me remind hon members, those on my left in particular, and particularly the hon Harris, who serves on our committee, that the issue of youth unemployment is not something that the ANC is raising today because it has become fashionable to talk about it. [Interjections.]
Let me remind you of this. If you have read our resolutions, and I think that you take most of our policies and do so, you will actually have read the resolutions of the ANC at Polokwane. You will know that the 52nd national conference of the ANC at Polokwane noted that the vast majority of the unemployed were black youth and women, many of whom had never held full-time employment and lacked the skills to gain entry into fast-growing sectors of the economy.
Our key challenge is to address the mismatch between the supply of largely unskilled and semiskilled labour that our history has bequeathed us and the demand for skilled labour that the economy is now generating. This requires direct interventions, such as the Employment Tax Incentive Bill. This was the ANC in 2007, not now.
Furthermore, our conference noted that programmes for the youth should seek primarily to give them training and experience to access formal employment in the formal economy. Therefore, we in the ANC said we would seek to develop a multipronged strategy to tackle youth unemployment, as the creation of decent work was one of the priorities of the ANC and its government.
What I want to drive home is simply that this is a programme that did not start today. It is a programme that branches of the ANC, the vast majority of our people, have spoken into and are making sure that we implement at the end of the day.
The Employment Tax Incentive Bill complements existing government programmes, such as the Expanded Public Works Programme, the Community Work Programme, skills development at colleges and further education and training issues, the Setas’ programmes and the National Skills Fund. This Bill seeks to complement the initiatives that the government has already started.
What are the key issues that were raised during the public hearings? One is the issue of the Nedlac process. One of the matters I want to highlight is that the Nedlac process had the opportunity to interact regarding the original concept as proposed by the Minister of Finance in 2011. Out of that process further amendments were made to that proposal. A few of those amendments concerned the shift in the draft Bill from a subsidy to tax incentives. If you recall, earlier on we spoke of the youth wage subsidy.
Out of the Nedlac process and consultation there was a shift that sought to emphasise tax incentives for youth employment. We also changed the criteria in regard to age limits; minimum wage requirements; the possibility of the displacement of workers and therefore the penalties that must go with the proposed Bill, or interventions; and the inclusion of seasonal and part-time workers and how we would deal with them. All of these are the product of thorough consultation in the Nedlac process.
I am raising this because, all of a sudden, the DA has found it very, very convenient to speak on behalf of the National Union of Metalworkers of South Africa, Numsa. I am not sure what the commonality between it and Numsa is, but I am certain that Numsa remains an affiliate of Cosatu, and it espouses the positions of Cosatu. [Interjections.]
In regard to the displacement and substitution of workers, one of the things that we came across, as raised by various stakeholders and clarified by National Treasury in the public hearings, was that the current Bill, on its own, has sufficient internal mechanisms to deal with abuse of the tax incentives.
The issue of downward pressure on wages has also been looked into, in order to deal with the possibility of exploitation.
In addition, we realised that there was a key area which was less emphasised in the deliberations on this particular Bill. The focus was on youth tax incentives, but there was much less emphasis on their impact on the special economic zones. That is one area we need to focus on in order to industrialise our country, to make sure that the manufacturing sector is actually propelled, and to begin to respond to the issue of the balance of payments deficit.
After these serious deliberations, the committee finally agreed that the Bill should be presented to this House for consideration and that it should be passed so that implementation can take place as soon as yesterday! On behalf of the committee, I therefore want to put it to the House. The ANC supports the Employment Tax Incentive Bill. Thank you. [Applause.]
Mr T D HARRIS: Hon Deputy Speaker, it goes without saying that unemployment is our most pressing crisis. I am sorry the hon Trevor Manuel is not here because he would have us believe that Limpopo province has the lowest unemployment rate in the country. This is absurd. The plain truth is that hopelessness is so entrenched in that province that for every person looking for work, there are two people that have given up looking. When these hopeless people are included in the unemployment measure, you can see the truth that unemployment among the provinces is the second highest in Limpopo.
One can also see that the Western Cape is the province of hope with, by far, the lowest level of unemployment and hopelessness. [Interjections.] This is what I mean – the Gauteng labour force is twice the size of the Western Cape’s, but there are 10 times more job seekers who have given up looking for work in Gauteng than there are in the Western Cape. [Interjections.] Statistics SA’s latest figures show that unemployment increased from 29% to 30% in Gauteng, while it decreased from 27% to 25% in the Western Cape.
But, hon Deputy Speaker, this is a good day for young unemployed South Africans across the country. This is because three years, eight months and 21 days ago, the President stood at this podium and announced a youth wage subsidy, the intervention to help reduce the cost of hiring young people, who make up 70% of the unemployed.
The policy document that Treasury published estimated that 423 000 young people would benefit over three years. The policy was supported by economists, trade unions and all of the parties in this House. Unfortunately, while it had this broad support, Cosatu opposed it and refused to debate it at Nedlac. So, the policy remained stuck at Nedlac for three years. Whilst it was stuck at Nedlac, 218 000 young job seekers joined the ranks of the unemployed. That’s the price of Cosatu’s delay.
Of course, the DA did not take this lying down. We were convinced that a youth wage subsidy could help thousands of young South Africans get much-needed work experience. So, in May 2012 we led a march of 3 000 young people to Cosatu’s head office to stand up to the trade union federation and protest their opposition to the policy.
Also, in the province of the Western Cape we moved quickly to pilot a youth wage subsidy in that province. Despite our very limited budget for such interventions, we have so far subsidised 4 000 young people and there is no evidence that a single one of them has displaced an existing worker. I must take this moment to thank the Development Bank of Southern Africa for their contribution of R67 million from the Jobs Fund to help us expand this scheme.
Now, obviously frustrated with this filibustering from Cosatu, Treasury simply tabled a Bill to implement a youth wage subsidy in Parliament earlier this year. This is not a good thing for Nedlac. According to section 5 of the National Economic Development and Labour Council Act, the Nedlac Act, it this institution that is meant to consider all significant changes to social and economic policy before they are introduced in Parliament or implemented. Normally, when Nedlac has attempted to reach consensus, they publish a report, and that clears the way for policy to be legislated, but here Treasury simply side-stepped Nedlac! They brought a Bill straight to Parliament.
Is this the final nail in the coffin for Nedlac? It is an important institution. It is meant to work towards consensus between business, labour, government and civil society, but it is now fundamentally compromised by the crippling divisions within the tripartite alliance! So this is a bad day for Nedlac, hon Deputy Speaker.
But it is a good day for young people. That said, it could have been a much, much better day. This is because the version of the subsidy before this House is significantly watered down from the version tabled in the 2011 policy. It provides a weaker incentive and it supports only half the number of young workers the original version would have supported. In fact, if this version works as it is predicted to work over the three years, it will only be able to absorb those young workers who have joined the labour force while the Bill has been delayed at Nedlac. So net job creation will, in effect, be zero.
You can also see that the Bill has been watered down in the cost to the fiscus. The first version would have cost R5 billion over three years. This version will cost somewhere between R1,3 billion and R3 billion. This is because key changes have been made to the incentive.
Existing young workers will no longer be subsidised. If you are worried about substitution, those are the people you should be most worried about. Some new jobs created for entry-level and part-time workers in sectors without wage determinations will no longer be subsidised. So some of the most vulnerable people looking for work will not be eligible for the subsidy. The mechanism to allow a cash pay-out for firms unable to claim their tax back because of the limit and the size of their tax bill has been suspended. A sunset clause has been inserted which, halfway through the next term of Parliament triggers self-destruct of the Bill, taking away Parliament’s power to decide on the continued existence of the Bill.
And now the Minister is able to introduce all sorts of conditions that beneficiaries would need to meet in order to be eligible for the subsidy. However, Treasury’s own policy document claimed that such conditions would discourage take-up of the subsidy and reduce the number of unemployed young people gaining vital work experience. Why would we want to do that? We as the DA proposed fixes for all of these problems in committee, and every single one was outvoted by the ANC in committee.
It is important to note that they were with the DA for a while, on the proposal to remove the sunset clause, until our legal advisor pointed out that this would delay the Bill. Suddenly the ANC members had a change of heart and decided that they could live with the sunset clause. This is law-making at its most expedient.
After three years of delays caused by an ideological standoff in the tripartite alliance, young South Africans are finally getting their youth wage subsidy, and we will be supporting the eventual introduction of it. This is not because it is a silver bullet for unemployment, but because it represents some much-needed hope for young unemployed South Africans. We strongly condemn, however, the way it has been watered down, to the detriment of hundreds of thousands of young people.
It will be interesting to see if the more than 30 members of Cosatu on this side of the House object, considering that their federation told the Portfolio Committee on Finance that they were committed to resisting the passing and implementation of the Bill. Or to see what the members of the SACP will do, considering that the hon Manamela rejected the Bill and said that he was firmly opposed to it. Perhaps that is why he is hiding in his office! Or to see whether Minister Obed Bapela will object, considering that he told this House that the money for the youth wage subsidy would now be funding the Youth Employment Accord, which deliberately does not mention the youth wage subsidy. Perhaps the hon Minister is hiding with the hon Manamela!
That is because the real choice today is not between a youth wage subsidy and something else. It is a choice that South Africans will make at the ballot box next year when they choose between the ANC, a party that holds up hundreds of thousands of jobs for young people, and the DA, a party that does what it says it will and puts young unemployed South Africans first. [Applause.]
Mr N J J KOORNHOF: Deputy Speaker, I can say that hon Jeremy Cronin is here to stand in for all his colleagues, who are hiding somewhere else! So the hon Harris can relax.
Gill Marcus warned us last week that the effects of South Africa’s high unemployment would be felt for decades. The youth unemployment index, a recently launched study, has warned that growing unemployment among South Africa’s youth is an issue that has far-reaching social and economic consequences for the nation.
The index is echoed by the findings of a study of the Development Bank of Southern Africa, which warned that South Africa could not sustain the pattern of youth unemployment that has characterised the democratic period. The study further says, neither can young people continue to leave the formal education system with no hope of attaining an income, dignity and self-worth through employment.
Joblessness is the most pressing economic issue facing us, and the world, today. The National Development Plan, NDP, has warned that youth unemployment could become a major source of destabilisation.
There is no uniqueness to the South African problem. What makes it a challenge is when Cosatu shoots down an initiative like this Bill. Our youth unemployment stands at almost 5 million. Furthermore, 122 000 people joined these ranks between the first and second quarters of 2013. Cosatu’s Patrick Craven does not like the unemployment figures and said they would campaign for the implementation of policies such as the Industrial Policy Action Plan, the infrastructure development programme and at least some of the New Growth Path, but is silent on the NDP. Cosatu is vehemently against any implementation of the youth subsidy, including this Bill. By not supporting this they are keeping young people unemployed. They are deliberately attempting to exclude young people from the economy. It is certainly very strange that Cosatu is against this Bill, if their own studies show the positive impact of such a youth subsidy on the problem!
The other benefit of this subsidy, according to Roelof Botha, is that because of indirect taxes the Treasury can expect a fiscal dividend of about 20% of the value of the wages paid. That is good news for the hon Minister of Finance.
However, all indications are that this subsidy will be a favourite mechanism, will be embraced by the youth and employers, and will lead, once again, to the tainting of Cosatu’s already harmed image. It’s all about perceptions in politics. If the youth turn against you, your growth potential is harmed. This should be a lesson to Cosatu and it is time for them to embrace policies that make sense for South Africa.
There was unanimous support in our committee for the scrapping of the sunset clause and further support for getting the employment date for those who can participate scrapped in the Bill, or at least brought forward to the date when the subsidy was announced. However, due to time constraints it was not possible. Legislation before a committee is always a compromise. In working against time you are sometimes forced to compromise, and this was even more the case with this Bill.
However, this is a positive Bill and this initiative will change the lives of thousands of young workers and allow them to grow and grab new opportunities. It will be reviewed after two years. Let us hope it is a success and then we shall at that time see the strengthening of the measures introduced.
The Bill is creating a seat for the so—called “unemployed” at the labour table. We hope it is a forerunner of many changes we would like to see in order to streamline our labour dispensation more, which has been pointed out by many commentators as one of the factors hampering our economic growth potential.
The fact that hon Minister Pravin Gordhan, with the support of the ANC caucus, has tabled this against a barricade of opposition from Cosatu, is introducing a new era in the tripartite alliance relationship. Cosatu’s opposition as a unified force is dwindling and maybe we can expect better policies from the government, and ignore Cosatu more and more. Cope will support this Bill. [Applause.]
The DEPUTY SPEAKER: Order! I now call upon the hon member Ms Nkomo. I wish to remind the House that this is her maiden speech.
Ms S J NKOMO: Deputy Speaker, it gives me great pleasure to stand before this honourable House and deliver my maiden speech on the Employment Tax Incentive Bill. I would like to express a special word of thanks to my party, the IFP, and its members for their confidence in me.
This Bill comes at a time in which we find sweeping unemployment in South Africa, with this year’s second quarter figures officially topping the 25% mark, yet with many pundits stating we are actually closer to 40% unemployment. Our Minister of Finance recently stated upon his introduction of this Bill that we currently have some of the highest rates of unemployment in the world. This intervention is therefore wholly welcomed and absolutely necessary.
Our youth unemployment remains at critical levels, and this Bill will hopefully incentivise employers through tax breaks to employ young people between the ages of 18 and 29, as currently our youth are experiencing extreme difficulty in securing internships or first-time gainful employment, which is necessary in order for them to build their future careers.
The government, through the National Development Plan, has set itself the goal of creating 11 million jobs by the year 2030. Without faster economic growth this challenge of creating sustainable jobs will not be met.
We, as the IFP, would like to see a holistic approach to job creation. This would encompass changes to our labour laws, which would make it easier for smaller businesses to create jobs; provide easier access to capital for small businesses and new entrants into our economy; improve our transportation infrastructure; and liberalise our communication sector.
Whilst we do not advocate an overinterventionist state, but prefer that greater emphasis be placed on the role of the private sector in promoting economic growth and employment, we do recognise that the state must get involved, and the important role the state can play as a catalyst for growth.
There is national consensus on the need to open the doors to youth employment by means of the youth incentive plan, and there are perhaps issues which could be explored further in the future. We cannot let our youth down. This is the time to be courageous.
In conclusion, the IFP supports the Employment Tax Incentive Bill, and we look forward to seeing the creation of real and sustainable jobs as a direct result thereof. I thank you. [Applause.]
Mr L W GREYLING: Deputy Speaker, this Bill has certainly been a long time coming. It had its genesis many years ago, as a possible yet only partial solution to the youth unemployment crisis that we are facing in South Africa. Any measure that can in any way reduce our completely unacceptable youth unemployment rate, which is currently over 60%, has to be welcomed.
We urgently have to give our youth a real stake in this economy, if we are going to have any chance of building the united and prosperous South Africa that we all aspire to. We have to give the youth of this country a foot on the economic ladder, so that they can gain the necessary experience and opportunities to build a thriving career. If we deny our youth this opportunity, we will be denying all of us a stable country and a better life for all.
The unemployment figures of the Quarterly Labour Force Survey that Minister Manuel referred to earlier today bear this out. What the Minister quoted, though, was derived only from the narrow definition of unemployment, and he neatly ignored all of those unemployed who have given up hope and have stopped even looking for work. If one includes those figures, then the Western Cape has the lowest rate of discouraged workseekers in the country, 10 times less than that of Gauteng. [Interjections.] The Western Cape is, in fact, offering hope to the unemployed, and this is in part due to the DA government’s piloting a form of the youth wage subsidy.
It is therefore extremely unfortunate that the youth have been forced to wait for so many years for this Bill to be passed, as the factional battles within the tripartite alliance have held the dreams of our youth hostage. It should never have been this way. [Interjections.] Close on 3 000 youth, led by the DA, were forced to march on Cosatu House last year in an effort to break the stalemate that had emerged in government over this legislation.
I honour those brave youth today, because they were not afraid to put their bodies on the line to fight for a measure that has the potential to help all the unemployed youth in South Africa. They endured bricks being thrown at them, and they have the scars to prove that they were prepared to go to battle for the unemployed youth of this country. For that I salute them, and let this be seen as their victory. I thank you.
Adv A D ALBERTS: Adjunkspeaker, die VF Plus is op rekord dat belastingverligting in plaas van meer belastings ekonomiese groei sal stimuleer. Die hele kwessie van belasting moet in sy geheel verstaan word teen die land se ekonomiese stand en dit wat ons wil bereik. In ’n neutedop is dit oor en oor bewys dat ekonomiese groei net plaasvind indien die staat ophou inmeng in die mark. (Translation of Afrikaans paragraph follows.)
[Adv A D ALBERTS: Deputy Speaker, the FF Plus has put it on record that tax relief, as opposed to more taxes, will stimulate the economy. The whole tax issue should be understood in its entirety against the country’s economic status and the goals we want to achieve. In a nutshell, it has been proven over and over again that economic growth only happens once the state stops interfering in the market.]
As for the Employment Tax Incentive Bill, we are of the view that it is a good start in lessening the tax burden of the taxpaying middle class. We are of the view, however, that this must not be limited only to employees within special economic zones but should extend to the country as a whole. The Special Economic Zones Bill has not been finalised as yet, and due to the fact that the process of declaring special economic zones is long-winded, it will thus take some time before the incentives can be effected.
Die realiteit is dat Suid-Afrika tans onmiddellike belastingverligting nodig het. Daar is geweldige finansiële druk op die middelklas, terwyl daar oral nuwe belastings opduik. Tans hou ’n klein minderheid belastingbetalers die land aan die gang, en dit kom al hoe meer voor asof die ANC-regering geen respek vir hulle het nie. In plaas daarvan dat hulle gekoester word, word net al hoe meer belastings ingestel wat verarming tot gevolg het. Voorbeelde is die e-tolstelsels wat in Gauteng geïmplementeer gaan word en die talle wat daarna landwyd gaan volg en soos paddastoele opspring. Talle pensioenarisse moet hul eiendomme verkoop, omdat hulle nie meer eiendomsbelasting kan bekostig nie, ensovoorts. (Translation of Afrikaans paragraph follows.)
[The reality is that South Africa is in need of immediate tax relief at the moment. The middle class is under enormous pressure, whilst new taxes are being imposed everywhere. A small minority of taxpayers are currently keeping the country afloat, and it seems increasingly as if the ANC-led government has no respect for them. Instead of cherishing them, more and more taxes are imposed that lead to impoverishment. A case in point is the e-tolling system that is to be implemented in Gauteng, and the many others that will follow across the country, springing up like mushrooms. Many pensioners have to sell their property because they can no longer afford rates and taxes and so on.]
So, while this Bill is a step in the right direction, the other tax Bills are enhancing a tax system that is tightening the noose around the throat of the average citizen’s financial health. This is taking place against a background where South Africa is regarded as the most vulnerable emerging market, according to a poll of investors conducted by the influential The Economist magazine. This country’s economy is underperforming due to internal structural problems that keep the true racing horses of our economy from bolting.
Dit is deur rasse-ideologiese verknegdheid wat gestalte gee aan perverse beleide soos regstellende aksie, wat kaderontplooiing moontlik maak en meriete ignoreer, en swart ekonomiese bemagtiging, waarvoor geen bewyse bestaan dat dit werklik werk nie, dat die ekonomie teruggehou word en almal uiteindelik benadeel word. (Translation of Afrikaans paragraph follows.)
[It is because of the obsession with racial ideology that shapes perverse policies such as affirmative action, which allows for cadre deployment and ignores merit, and black economic empowerment, with no evidence that it actually works, that the economy is hampered, which is ultimately to the detriment of all.]
The Minister of Finance has taken a step in the right direction, but on the other end of the spectrum there are too many steps in the wrong direction that will probably extinguish any advances arising from this Bill. Thank you.
Mr S N SWART: Deputy Speaker, many speakers have referred to the very high levels of unemployment, poverty, and inequality in our nation. We as the ACDP partake of that sentiment and are similarly concerned. We welcome this Bill as a move in the right direction.
We recognise that it is, as this Bill points out, the private sector that is the engine for the creation of jobs and that government creates the environment for that. That is what is foreseen in this Bill. As we see it, it seeks to provide an employment tax incentive to encourage job creation. This is an incentive in the form of an amount by which employees’ tax may be reduced.
As other speakers have indicated, we know that this Bill was opposed and stalled by Cosatu, to the detriment of job creation. It was suggested more than three years ago, but has only now seen the light of day. We commend the government for taking a strong stance at this stage and standing up to Cosatu, but, regrettably, it has taken a long time and should have been done a lot earlier.
Whilst we as the ACDP wholeheartedly support the Bill, we also expressed some concerns during the deliberations on it, such as the capping of the wage to qualify for the incentive, as we believe that this, in effect, excludes large numbers of persons from the low income group and those that are particularly vulnerable. We also regret that the incentive will apply only from 1 October 2013, which further excludes large numbers of existing workers, as pointed out by the hon Harris. However, we as the ACDP do understand that this is an experimental Bill, that it is phase one of a phased approach, and that one will be reviewing it in the future.
As we discussed in the committee, the one issue that we were unanimous about was the sunset clause, which would result in the ending of this tax incentive in the year 2017. This, we believed, would hang like a Sword of Damocles over employers and youthful employees.
National Treasury made it very clear that they wanted the incentive to work and, in fact, they wanted to roll it out further. They would, in fact, be reviewing it with the intention to roll it out further. The logical approach for us was then to review the incentive in 2015 or 2016, rather than having a clause now that effectively ended it in that year.
We are, in effect, legislating for the repeal of an Act for a future Parliament which I, in my experience, have not seen before. However, we understand that, had we insisted on the amendment, it would have resulted in the further delay of this incentive Bill.
The ACDP will support this Bill. We commend the government on eventually implementing this tax incentive, albeit in a watered down version, and we trust that the private sector will embrace it and seek the common good of creating jobs for the youth and giving them hope for the future. Well done, hon Minister. I thank you. [Applause.]
Mr D C ROSS: Deputy Speaker, previous speakers have indicated that today is indeed a very good day for the youth of South Africa, because the employment tax incentive is raising the expectations of thousands of young people. However, we need to ask ourselves very honestly today, Minister: How strong is the current incentive? The honest answer is, and this has been indicated by other speakers as well, that it has unfortunately been watered down to a certain extent.
The Employment Tax Incentive Bill, to introduce a youth wage subsidy, can be considered a disappointment compared to the 2010 aspirations for the subsidy. In its current form it might let the young people of South Africa and the poor down, because it is a watered down version of the Bill.
The DA believes that the Bill provides a weaker incentive, for three main reasons. The Bill introduces a minimum wage requirement and, secondly, existing young workers will not be considered for the incentive. The mechanism to allow the cash payout to the employer for the incentive, if a company’s pay as you earn bill is depleted, will not be implemented immediately, and the Bill gives us no indication of a timeframe in this regard.
My colleague Tim Harris made a concerted effort to introduce a really strong youth wage subsidy, but this Bill will now not introduce that really strong youth wage subsidy, because of the changes made to the original 2010 policy.
The cost estimate, and that is the example, of R1,3 billion to R3 billion is significantly less than the original R5 billion tax loss budgeted in 2010. The effect of this has unfortunately reduced the number of young people estimated to benefit from the subsidy. The original version would have helped 423 000 young people. However, only last week it was seen that the expected support will now go to only 200 000 jobs.
In closing, I wish to make the following remarks. The DA supports this incentive. We think it is a step in the right direction and it has, indeed, been calling for this action for a couple of years. However, we sorely regret, Minister, that the disagreements within the tripartite alliance have stood in the way of fixing the greatest crisis facing our nation. Thank you so much. [Applause.]
Ms J TSHABALALA: Deputy Speaker, hon Deputy Minister of Finance, hon Minister of Finance and hon members, today we are debating the youth tax incentive that has been introduced. It has been long awaited and it is important that we acknowledge its effects.
However, let me start by addressing hon Harris on the absorption vision he spoke about. I really cannot make sense of what you were talking about, the steps that you were talking about in connection with there being no jobs, and the fact that the Western Cape went ahead and implemented the tax incentive. It is their right to do that. However, then you cannot come here and cry about the issue of budgetary constraints.
Hon Jacob Zuma mentioned in 2010 that we needed a youth tax incentive to be implemented. However, we also need to acknowledge the fact that we need to have a democratic situation where we allow all social partners to engage in the deliberations, because this affects the fiscus and everything that we have to do.
On the issue of us and the ACDP, and also what you as the DA have raised around the Youth Employment Accord, it is there, and there will not be an impediment when it is implemented. The Youth Employment Accord takes cognisance of further issues that need to be dealt with. While we have to deal with the youth tax incentive, it is amongst the issues that we have to eradicate.
Gill Marcus has taken cognisance of the fact that youth unemployment has now risen. We say that there are a lot of measurable measures that we have to take, and we have to take cognisance of issues that we have to deal with, such as skills development; entrepreneurship development; further education and training, FET, colleges that we are introducing today in the education Bill; and learnership programmes. We are not just sitting and folding our arms. We are making a call to the South African youth to stand up and claim the youth tax incentive, because it is brought to them by the ANC to ensure that their lives are better.
We need to speak about the issue of the sunset clause. We as a committee shared the same sentiments, that with the sunset clause youth unemployment will not be able to be eradicated in the four-year period. As a committee we said that Treasury had to be able to implement the employment tax incentive with caution so that when it was reviewed after a two-year period, we could say, “Look, this has been tried, and therefore it is important for us to proceed with the Youth Employment Accord.” So, it is something that we need to take cognisance of – the House must note it.
On the issue of democratic processes and Cosatu, when we speak about the alliance partners – and I can see, hon Harris, you are very passionate about it but unfortunately you don’t have alliance partners in the DA – you cannot blame the ANC because we have that and we went to Nedlac. Nedlac involves an important process that needs to unfold and you need to appreciate that.
The issue of businesses is involved in that. The tax incentive states that we need to encourage businesses to ensure that they employ and absorb young people into the mainstream economy.
Let me make a point in regard to the National Development Plan, NDP. We are saying that young people need skills development to ensure that, when we roll out the NDP, we have young people who have job market readiness. That is what we are trying to deal with. To state that we are quiet about the NDP is your own illusion and you need to wake up there. It is high time you understand that this is not a youth subsidy. It is an employment tax incentive. Can this House note that? [Applause.]
We are starting with implementation and there is no three-year backlog. It is important for us to acknowledge that we are running government, and we did not just wake up one day and allocate the money because we felt like it. Hence, we are saying this is one area - as hon Jacob Zuma said in 2010 – where we need to put in measures to ensure that we deal with the scourge of unemployment.
Hon Deputy Speaker, in closing let me say that the youth employment tax incentive, learnerships, FET colleges, Adult Basic Education and Training, free basic education, and the Expanded Public Works Programme have been proudly brought to you by the ANC government. So, we are saying we are not sitting and simply folding our arms, and our young people are definitely with us. Ndolivhuwa. [I thank you.] [Applause.]
The DEPUTY MINISTER OF FINANCE: Deputy Speaker, if there is any deep scar of apartheid that I personally, and many of us in this House, have, it is that of job reservation and discrimination in the workplace. While some of us were such victims, it is clear that some of us were beneficiaries of that system. It is this history that continues to deprive them of the ability to see the reality of life.
I thank the hon Tshabalala for emphasising again that this employment tax incentive is not just about youth. While it is about the employment of young people, it also extends to the special economic zones, SEZs, where it includes all categories of people that are in the SEZs.
Hon Harris firstly bemoaned the reason that the process did not go to Nedlac. He also, in the same vein, complained that we have now sidestepped Nedlac. He said that the Bill was a watered-down version. He made a lot of inaccurate statements, among which was his disputing the figures that Minister Manuel put on the table, which arose out of the latest statistics in the Statistics SA report. I don’t know which one he was reading, and hon Tshabalala referred to that.
I get worried when people read these things. Perhaps I should just offer you one piece of advice, hon Harris. You see, this is the problem. You conveniently quote the expanded one when you want to mislead this House, and when you want to state your facts, you come back and say that the Western Cape implemented the youth wage subsidy. Let me warn you again: Stop turning youth unemployment into a political football! [Interjections.] It is because you have no experience of having an unemployed person under your roof. You have no experience of having been unemployed yourself. You have no experience of working in communities where this kind of unemployment is rife.
Let me repeat the numbers that you deliberately distorted, even if you don’t want to hear them. [Interjections.] The Western Cape stands at 23,4% and Limpopo – because that was the comparison that you made – stands at 17,8%. The Western Cape moved down. They were able to make a difference of 2%, whilst Limpopo was able to improve its employment statistic by 4,5%, and Mpumalanga by 4,5%. [Applause.]
This is the problem. [Interjections.]
An HON MEMBER: You can’t concoct ... [Inaudible.]
The DEPUTY MINISTER OF FINANCE: This is the problem. I do not know which ones you are reading.
The other thing that you said was this. You complained ... [Interjections.]
Maybe we should audit this, Minister. I think we should follow up on the R67 million that came out of the Jobs Fund, was given to the Western Cape, and was misdirected to the youth wage subsidy before we pass legislation on youth employment. [Interjections.] Maybe we should also follow up on the agency here in the Western Cape which undertook to place 3 000 workers in the workplace after training, using the very same Jobs Fund, and has only placed 647 workers in the workplace! [Interjections.] So, if those numbers that you are talking about are the actual numbers, then I think we need to look into the numbers, Minister.
I must take this opportunity to thank the committee for having worked with us in making sure that we followed a democratic process in arriving at this point. You can speak of three years, but democracy was actually earned over many years – decades and decades. Now that we have it, we will also take our time to preserve and defend it. Thank you very much. [Applause.]
Debate concluded.
The DEPUTY SPEAKER: Hon members, as I indicated earlier, I will now put the amendment to the Bill as printed on page 661 of the Order Paper, as follows:
On page 5, in line 44, to omit “22(1)” and to substitute “21(1)”.
Question put: That the amendment to the Bill be agreed to.
Amendment agreed to.
Bill, as amended, read a first time.
EMPLOYMENT TAX INCENTIVE BILL
(Second Reading debate)
There was no debate.
Bill, as amended, read a second time.
TAXATION LAWS AMENDMENT BILL
(First Reading debate)
TAX ADMINISTRATION LAWS AMENDMENT BILL
(Second Reading debate)
The MINISTER OF FINANCE: Hon Deputy Speaker and hon members, the Taxation Laws Amendment Bill, 2013, and the Tax Administration Laws Amendment Bill, 2013, amend existing tax legislation, and complete the tax legislative changes arising from the tax proposals announced in my 2013 Budget Speech. Tax legislation dealing with annual rates and monetary amounts was passed earlier this year.
Expected tax revenues for the 2013-14 year are projected to be R895 billion, which is R3 billion lower than previously projected. Personal income tax and corporate income tax collection in the first half of the fiscal year have shown resilience in the face of slower than anticipated economic growth. Revenue collections for the first six months of the year have grown by 9,5% compared to the same period in the previous year.
The changes in the Taxation Laws Amendment Bill, 2013, and the Tax Administration Laws Amendment Bill, 2013, focus on promoting investment and economic activity; simplifying processes and administration in order to decrease the costs of doing business; putting local businesses on an equal footing with foreign competitors; and encouraging individuals to save and to preserve these savings for retirement.
Insofar as business is concerned, this Bill introduces measures that contribute to a climate that seeks to encourage economic growth and competitiveness through private sector investment and employment creation. Achieving this requires policy certainty and a favourable business environment where investors can see the benefits of participating in the South African economy.
Amendments to the tax legislation seek to provide more certainty for companies wanting to make use of the research and development tax incentive to make spending on innovation attractive. A more favourable regime for shipping companies has been introduced, and new incentives are offered to attract and encourage investment in special economic zones and existing industrial development zones. Tax amendments have been put in place to make it easier for foreign companies who want to invest in Africa and use South Africa as their regional headquarters, thereby enhancing South Africa’s reputation as a gateway to Africa.
The value-added tax, VAT, registration process is being simplified for local businesses, in particular small businesses, to streamline administration and decrease business costs. At the same time, some businesses have been increasing their innovativeness with tax planning and, while we want to encourage businesses to invest and grow our economy, we need to clamp down on activities that are solely aimed at reducing the corporate tax base.
As a developing country with a high level of inequality, it is important to ensure that corporates contribute a fair share to the fiscus so that government can continue to fund infrastructure projects and social programmes that are core components of the National Development Plan.
Base erosion and profit shifting is a global issue that is being tackled at a global level. South Africa, along with many other countries in the Organisation for Economic Co-operation and Development and the G20, is taking steps to address it. In doing so, measures have been put in place to restrict excessive debt deductions and bring e-commerce into the VAT base.
In respect of individuals, our low savings rate is a serious concern and it puts many households in a vulnerable position. These households find themselves with inadequate savings to meet their own spending needs and run the risk of living a life of poverty in retirement.
The measures provided for in the Bill specifically target the preservation of these retirement savings to protect individuals who may be most at risk in the future. Individuals will no longer be allowed to withdraw the full value of future contributions to provident funds if they are below a certain age, thereby avoiding scenarios where individuals withdraw their full pension before retirement and use these funds for frivolous consumption. The Bill, I must emphasise, will protect the rights of current members, while enhancing the regime to create a more sustainable savings environment in future.
The taxation of retirement contributions has also been significantly simplified and the available deductions expanded to encourage further savings.
The Bills strike a careful balance between tax relief measures on the one hand and protecting the tax base on the other hand.
I wish to thank members in anticipation for their support of the Taxation Laws Amendment Bill, 2013, and the Tax Administration Laws Amendment Bill, 2013, and also thank the committee for its excellent work in processing these Bills. Thank you.
Mr T A MUFAMADI: Hon House Chairperson, as the Minister has already outlined the key elements and objectives of the Bills before us, both the Taxation Laws Amendment Bill and the Tax Administration Laws Amendment Bill, the most important elements that I want to reflect on are that they seek not only to align the tax treatment of individuals, but also to ensure that we encourage a culture of savings through retirement savings, so that we can contribute to the sustainability of our fiscus and economic growth.
What is also important is to protect the tax base from base erosion, particularly in the corporate sector through profit shifting sharing schemes. There is the research and development tax incentive for encouraging innovation and creativity, and there is also seeing to it that the e-commerce industry in South Africa is protected by ensuring that foreign companies operating in the e-commerce space are subject to VAT. Mineral and petroleum royalties are also critical for our own economic base.
The other most important element that I need to highlight is the evolution of our tax system since 1994. The obligation to pay tax to a democratic state is part of our social compact that enables the state to function, protects its citizens and invests in their future. At the birth of democracy in the United States of America, the slogan was, “No taxation without representation.” This underlines the connection between obligations of the citizenry and their rights within the state. This holds true for South Africans too, as evidenced by the Bambatha rebellion and the Pondo revolts.
The formation of the SA Revenue Service and its administrative reforms were envisaged in the Reconstruction and Development Programme, which stated that “improved and reformed tax systems will collect more tax without having to raise tax levels”. I think that for the years that the ANC government has been in power and for the years that it will remain in power, we have achieved, and will continue to achieve, our objectives.
Sars has evolved into an organisation respected and admired across the world. Sars has been at the centre of a series of tax administration and organisational reforms that have completely changed the relationship between the state and taxpayers. A key element of the social contract between government and its citizens is that of paying one’s fair share of taxes.
Revenue collection is about supporting economic growth, in our case to support job creation and to reduce poverty and inequalities. Therefore, tax enforcement is about service delivery. Equally, it is important that those of us who are in charge of the fiscus should instil confidence in taxpayers by making sure that they have confidence that their money is being put to good use.
Prior to April 1994 South Africa had 11 separate Inland Revenue and Customs and Excise institutions scattered across so-called independent states and self-governing territories, in keeping with the apartheid dispensation. These were amalgamated by the South African Revenue Service Act of 1997 into a single institution.
I am raising this matter to remind our colleagues that when we delay passing some of these Acts, we are in other words inadvertently trying to stall economic transformation and the impact of democracy on millions of citizens that have not really seen change in some areas of South Africa.
Let me just mention some figures. Since 1994 Sars has collected R7,3 trillion. For the year 1994 the total collection stood at R114 billion, and grew to R814 billion in the past fiscal year. This rise in revenue has been accomplished despite reducing the top marginal tax rate for businesses and individuals from 40% to 28% and 43% to 40% respectively. Over the same period there were significant adjustments to the tax brackets, which returned money to the pockets of taxpayers.
By 2007 South Africa could boast of a surplus budget, in contrast to a 10% deficit in 1994. This was during the tenure of hon Trevor Manuel as the Minister of Finance and the current Minister of Finance as the commissioner of Sars. This indicates to us that in the ANC you find embedded leadership with a vision that continues to implement the policies of the ANC in order to steer this country forward. I think all of us should appreciate the work that the ANC is doing for this country.
The consistent accomplishments of Sars have granted the government the fiscal space to carry out its programmes without resorting to significant international borrowing. Education spending has increased in manifold ways, and government has extended social assistance to over 15 million people. All this is supported by the provisions of the revenue Bills that we continue to amend and improve every financial year.
Over the years the democratic government has introduced a number of changes to make tax laws more progressive, by introducing reforms of wealth taxes such as the residence-based tax, capital gains tax, dividend tax, and so on. This was accomplished without reducing capital flight from the South African economy.
The modernisation programme and its systems have served as a template for the automation of government systems, as we witnessed during the 2010 Fifa World Cup, and the intervention and collaboration between Sars and the Department of Home Affairs. There is great potential in the collaboration between the Department of Home Affairs, Sars and the Companies and Intellectual Property Commission in laying a firm foundation for identifying the management of both individuals and business entities, which will benefit all of government’s programmes.
Two important developments have led Sars and the Department of Home Affairs to collaborate on a much broader scale. The first was the co-operation between Sars and the Department of Home Affairs to develop and implement the electronic passenger movement control system during the time of the 2010 Fifa World Cup.
The second is the overall modernisation of the Department of Home Affairs system, which is building a state-of-the-art integrated information technology platform for a more effective identity management system for the whole of government. This will be a more secure, cost-effective and efficient system, which will use biometric information. A key part of the project is the live capture system for the smart identity document cards, and passports.
It is important to mention this achievement by Sars so that, as we debate these Bills before us, we understand the impact some of these institutions continue to make, not only in developing or supporting the economy, but in changing the quality of our people’s lives.
Today our people can have access to IDs within a very reasonable, short space of time. That makes it possible for them to access social grants and it also makes it possible for them to be able to register for any other service that the government can offer.
Credible tax statistics improve policy formulation and form assessments, and therefore also promote a culture of transparency regarding fiscal affairs, as generally advocated by the provisions of the Bill of Rights and the Promotion of Access to Information Act. Our tax statistics once again confirm the responsiveness of the South African tax administration system.
We may recall that even during the most difficult period of the world economy and domestic issues, all taxes rebounded strongly from the slump in collection observed during the recession, with the exception of corporate income tax, which remains depressed due to there being many companies still carrying assessed losses incurred, from which they have not fully recovered to the levels preceding the recession.
For the 2012-13 fiscal year revenue collected amounted to R813,8 billion, and grew by R71,2 billion, or 9,6%, over the previous year. The tax to GDP ratio increased marginally, from 25% in 2011-12 to 25,3% in 2012-13. Even under these difficult conditions the current Medium-Term Budget Policy Statement indicates that the revenue under collection from the revised revenue collection figures is only R3 billion.
I take this opportunity to submit the report and also to say that the committee supports the Bill. Therefore, the ANC supports the passing of this Bill. I thank you. [Applause.]
Mr D C ROSS: Hon Chairperson, allow me to take this opportunity to agree with the Minister and the chairperson of the Portfolio Committee on Finance that our tax laws are indeed one of the most important contributors to our competitiveness. If we get it wrong, it will hurt our growth; and if we get it right it will enhance our growth. So we agree on that point.
Please allow me to touch on a few of the key issues that were raised in the Taxation Laws Amendment Bill and the Tax Administration Laws Amendment Bill.
With regard to our tax laws governing research and development goals, it is noted that South Africa operates in a competitive global economy. Therefore, any incentive that is implemented locally must be evaluated in terms of the extent to which it offers the country a competitive advantage.
Several countries across the globe currently offer a tax relief incentive promoting research and development. Based on the presentations made to the Standing Committee on Finance, there seems to be a general welcoming of the amendment reassigning the power to determine which activities qualify as research and development, from the SA Revenue Service to the Department of Science and Technology.
Objections to the proposed amendments centre on the wording of the new provisions. The fact that these terms are vague in the Bill will hamper implementation and ultimately detract from the intention of the incentive, which is to encourage innovation. The DA is of the opinion that the current framework need not be changed. Tax incentives must enhance, and should not restrict, research and development.
The second point that we would like to address is with regard to the retrospective application of legislation. We agree that the tax legislation in this regard - retrospective tax legislation - to counteract avoidance has become necessary. In essence, however, the legislation in this regard - tax matters - is being used to attempt to give tax authorities an upper hand in the race between themselves and the agents who practice avoidance behaviour.
The practice, however, is the exception and not the norm. There are very few examples of tax provisions whose effect is backdated prior to being announced. It should therefore be viewed as a weapon of last resort. The extent of retrospective legislation dealt with in the Tax Laws Amendment Bill should be questioned.
Retrospective legislation signals the intention to apply the amendments retrospectively from 1 October 2012. The retrospective amendments that pertain to the research and development incentive have failed to ensure that a fair balance is being struck between the interests of the country and the rights of the individual companies to equality, certainty and convenience.
The last point that I would like to allude to is value-added tax on e-commerce transactions. Value-added tax, as we all know, is an indirect broad-based consumption tax, the intention being that the tax is levied in the place where the product or service is consumed.
It is on this understanding that the National Treasury is proposing to level the playing fields by forcing multinational corporations who engage in e-commerce activities with customers in South Africa also to register as VAT vendors. In doing so, it is hoped that National Treasury will collect VAT from both these companies and domestic e-commerce businesses, thus affording the opportunity to domestic e-commerce businesses to compete with their global counterparts. We have no problem with this, as we know that there should be competition on an equal footing.
Whilst the proposed amendments are laudable, concerns centred on the practicality of such provisions have been raised.
May I just conclude by saying that the administrative burden may be too cumbersome and we have to look at the costs with regard to this? The costs of the new tax structure are likely to exceed the tax revenue gain in this regard.
Given South Africa’s straight deficit problems we, however, also have to consider the other side of the coin. The DA is of the opinion that the deficit problems might be affected, so international companies should be encouraged to invest in South Africa. We have to look at that possibility and the fact that South African consumers could perhaps also reap the fruits with regard to reasonable pricing. Those are a few points that we need to consider. Thank you very much. [Applause.]
Mr N J J KOORNHOF: Chairperson, serving on a finance committee without a proper background in taxation makes proper participation in regard to those laws very difficult sometimes. Without a full-time tax lawyer dedicated to the work of the Portfolio Committee on Finance, I sometimes wonder what role we play other than going through the motions of making law – making a few changes here and there in what we understand, but then carrying on with business as usual. We rely heavily on the public hearing process, and I want to thank those who participate every year by coming to our committee meetings.
However, there are a few valuable key issues in the pieces of legislation. The new and more beneficial tax regime for companies in special economic zones is welcomed. Further improvements to ensure that employers will be able to assist their lower income employees to acquire loans that are below market value to buy a house without a fringe benefit tax payable is good news.
There is also a range of changes in regard to retirement savings. Members must listen to this, especially Ministers. In terms of a new principle, any contribution made by an employer to an approved South African retirement fund will be taxable as a fringe benefit in the hands of the employee. Whether the new ruling is good for the principle of saving, which is something South Africans are not good at, is debatable. Also, the fact is that the employer’s contribution to an employee fund has been kept only at R350 000 tax free, and this is too low. The committee has asked for it to be raised and I hope our plea will be honoured in the next Budget, in 2014.
According to hon Dion George’s calculation of the extra monthly tax payable by Members of Parliament, the Speaker will pay R22 000 more; a Minister will pay R17 612 more; a Deputy Minister will pay R12 442 more; and a House Chair will pay R10 700 more in taxes per month, if this goes through. [Interjections.] I will not tell you what ordinary members will pay, but I am telling you that this is hitting hard! [Interjections.]
Let us go to another topic. Any bona fide bursary or scholarship granted by the employer to an employee or relative is exempted from income tax on certain conditions. This is welcomed and will assist underprivileged South Africans to enrol for postmatric education.
The Tax Administration Laws Amendment Bill is amended to bring search and seizure provisions in line with the Constitution. This is welcomed!
Let me conclude by thanking all taxpayers in South Africa who pay their due taxes on time and when they are asked for. Cope will support both Bills. [Applause.]
Ms S J NKOMO: Hon House Chair, at the outset let me say that the IFP supports the Taxation Laws Amendment Bill. By its enactment the Bill will give effect to a great number of the tax proposals that were announced in the 2013 Budget Review.
We particularly welcome the provisions which assist and stimulate. For example, there are the provision of affordable houses, particularly in the mining sector, and the assistance provided to funders of public benefit organisations, PBOs, regarding rollovers because of the important services that many PBOs provide in South Africa. There are also the exemptions that will now assist our maritime industry in an effort to revive it, and the gateway subsidies, which will assist in entrenching our country as a gateway to Africa.
This country is at a watershed moment, and we must do everything in our power to ease the lives of our citizenry, as well as the manner in which business can be conducted throughout South Africa. This Bill enacts a great deal to assist these efforts. Again, the IFP supports this Bill. I thank you. [Applause.]
Mr T D HARRIS: House Chairperson, let me start with the good news. We are considering two Bills here: the Tax Administration Laws Amendment Bill and the Taxation Laws Amendment Bill. The Tax Administration Laws Amendment Bill went rather well in committee. We had some issues around warrantless search and seizure, and assessments by Sars. They were dealt with in a very proactive manner by the members and Sars themselves, and I think that credit is due all round.
We cannot say the same about the Taxation Laws Amendment Bill. The hon Ross has already expressed the problems with research and development. We should not be limiting the incentive to investing in research and development. We are spending only about 1% of GDP on research and development. We should be spending much more, and incentivising much more.
We have problems with the fact that we are taking a unilateral position on VAT and e-commerce. We should be co-ordinating with other countries to ensure that South African consumers retain choice when it comes to buying online. We also had the usual set of complaints about the retrospective application of the tax laws. Those are the major problems that we had with the Taxation Laws Amendment Bill.
However, it is important, as the hon Ross said, to get our tax right, because it probably has the biggest impact on economic activity in a positive or negative way. Broadly, across our provinces, tax is consistent.
However, let us we look at the performance of provinces, as I want to do. Oh, I note that hon Manuel has left the House again. I hope it was not something that I said, because every time I stand up to speak, he leaves the House! [Interjections.]
When we are looking at these provincial comparisons - which the hon Manuel and the Deputy Minister seem to have some trouble getting their heads around - they are essentially saying that if somebody has given up looking for work, then they are no longer regarded as unemployed. I do not think that that is legitimate. I think that this is the reason why Limpopo miraculously has the lowest unemployment rate in the country! [Interjections.] I do not think that is a fair way of looking at the problem of hopelessness in this country. [Interjections.]
So let us look at it another way, using Statistics SA’s figures from this week. If you take the percentage of discouraged work seekers – people that have given up looking for work – as a percentage of the labour force among our provinces, and I do not think that the Deputy Minister or hon Manuel have a problem with this number, it is very easy to understand. In the Northern Cape and the Free State, 7% of the labour force have given up looking for work; in Mpumalanga, 16%; in KwaZulu-Natal, 17%; in the Eastern Cape, 20%; in the North West, 21%; in Gauteng, 23%; and in Limpopo, 30% of the labour force have given up looking for work. One in three people in Limpopo’s labour force has given up looking for work. [Interjections.]
What could the number in the Western Cape be? It gives me great pleasure to say that the number in the Western Cape is 1%. One out of a hundred people in the labour force in the Western Cape has given up looking for work! [Applause.] That is the DA difference; that is the difference between provinces governed by us and provinces governed by you. [Interjections.]
The HOUSE CHAIRPERSON (Mr M B Skosana): Order! Order, please! Order!
Mr T D HARRIS: And I am sure voters in next year’s election will take note. Thank you. [Applause.]
Ms Z S DUBAZANA: Hon Chair ...
... hhayi asikho nesidingo sokuthi sibe kubo ngoba vele incwadi ibhaliwe.[... no, there is no need for it to be with them because the letter has been written.]
Hon Chair and hon members, good afternoon. The main reason why the ANC-led government wanted to make the amendments to these two Bills, which are the Taxation Laws Amendment Bill and the Tax Administration Laws Amendment Bill, is because of the resolutions taken during its conferences. It was in the ANC’s 53rd National Conference that it was resolved that it would commit itself to a developmental strategy that promoted research and innovation facilities through various incentive schemes, including tax incentives. Today, the DA has a serious problem.
Now the ANC always addresses all South Africans, and not an individual Cabinet Minister in the House. I would therefore like to make South Africans aware that the ANC conference that took place in 2012 was the National Policy Conference where resolutions were taken, as I said earlier on.
Innovation, research and technological development are key factors for improved productivity, and lead to new or improved products, processes or services. This enhanced productivity in turn leads to increased economic growth and international competitiveness.
However, research and development are costly. We are all aware of this, but it has to be done. While South Africa offers a variety of direct subsidies for research and development, the South African tax regime for research and development also provides substantial tax incentives aimed at ensuring that local research and development is globally competitive.
Moving from the previous to the current tax dispensation, where companies are required to obtain preapproval for an additional deduction of 50% of research and development-related expenditure, has led us to stand here and debate today. Some unintended anomalies have become apparent. The language in the current provision has led to uncertainties in the interpretation of the legislation and blockages have arisen in the adjudication process. The proposed amendments will streamline and accelerate the adjudication process, particularly for projects in the information and communication technology and pharmaceutical-related sectors. I don’t know what the problem is with the DA.
Under current law the research and development regimen is available solely in respect of research and development undertaken within South Africa. The proposed legislation clarifies that these activities must have some level of significance, meaning that local persons should have some level of control over research methodology. Stated differently, the activity must enhance local skills development. That is what it means. One potential exception is clinical medical trials as determined by the Department of Science and Technology.
In essence the research and development must be directed towards advancing scientific or technological knowledge, as opposed to routine learning associated with ongoing processes. Hence, certain specific forms of knowledge, like management, enhancement of internal business processes, sales or marketing promotion, fall outside the scope of the incentive.
Hon Chairperson, it is important that we inform South Africans, and the private sector in particular, so that they understand that there are many of these initiatives that have been undertaken by the ANC-led government so as to ensure that the broad tax base is efficient and effective.
If you look at the oil and gas incentive in 2006, you will see that a new oil and gas tax regime was enacted in income tax. The purpose of the 10th Schedule is to provide incentives for oil and gas exploration and production. Since the inception of the 10th Schedule, a growing number of oil and gas exploration and production rights are now being granted under the Mineral and Petroleum Resources Development Act. Several transfers among oil and gas producers are also taking place. Then, if you look at the 10th Schedule you will see that it contained some ambiguities and unintended outcomes in the technical wording. As a result, we had to look at the amendments and make sure that those amendments were addressed and the people benefited at all levels.
In regard to international shipping, that too was a measure that was taken by the ANC-led government to make sure that these amendments were made, so that at the end of the day they were evenly distributed. International shipping transport by the South African companies is largely subject to a corporate income tax rate of 28%. The only incentives for international shipping transport owned by foreign-controlled companies are some depreciation incentives for capital investment in shipping transport. Government has long been aware that the international trend has been toward greatly reduced taxation of international shipping transport, due to the highly mobile nature of this activity. It is, therefore, proposed in this Bill that a new regime providing tax relief for shipping companies be introduced. In order to qualify for this relief, the company at issue must be resident and hold at least one or more vessels. [Interjections.] Chairperson, these amendments mainly focused on motivating South Africans to make sure that we own one or two vessels so that at the end of the day we benefit from the incentives. [Applause.]
Small business exemption eligibility is one of the initiatives, hon Chair. [Interjections.] I realise I am coughing, and that I am not really supposed to talk too much today! I don’t know what is happening to my throat. The ANC supports these two Bills. I thank you. [Applause.]
The HOUSE CHAIRPERSON (Mr M B Skosana): Hon Minister, are you going to allay the fears?
The MINISTER OF FINANCE: Yes, certainly. I am in a generous mood! So, don’t worry. The intention of that amendment is to actually ensure that there is easier administration on the one hand, and ultimately that there should be no additional tax to be paid. We will get back to my colleagues and give them the reassurance that they require.
On the question of the DA, the Western Cape and unemployment numbers, are we going to sit here for hours and debate one or two percentage points? Or are we going to say that we have a national problem that all of us as a nation need to deal with? We can’t worry about 19%, 21% or 22%. Unemployment should not be greater than 10% in this country! Let’s talk about how we get to that number below 10% and focus our minds on that. [Applause.]
Secondly, the hon Harris just doesn’t get it, despite the repeated explanations, that forecasts are forecasts. If conditions change, numbers change, and forecasts change. The IMF has changed its global growth forecasts and forecasts for different regions every few months in the last couple of years, because conditions have changed. It’s got nothing to do with the Treasury. It has nothing to do with our calculator. Put a different number into the forecasting, and then you will get a different outcome. [Interjections.] So, the problem is that the campaigning season has started and that’s the problem that we are confronted with.
On the question of regulation, his approach is a Neanderthal approach. Free marketeers around the world are virtually dead on the question of regulation. What we require is modern appropriate regulation.
Since we have declared this a season of campaigning, let me say that the ANC, through this legislation, is protecting our people to ensure that they have a decent retirement. They are supporting businesses so that they can provide housing and get a tax break for it. They are ensuring that there are incentives for investment in special economic zones. Small businesses get an easier go in regard to registering for VAT and we are promoting research and development in these particular areas. So, all in all, this is a wonderful campaigning tool. Go out and campaign, and get votes for the ANC. Thank you.
Debate concluded.
Taxation Laws Amendment Bill read a first time (Democratic Alliance dissenting).
Tax Administration Laws Amendment Bill read a second time.
TAXATION LAWS AMENDMENT BILL
(Second Reading debate)
There was no debate.
Bill read a second time (Democratic Alliance dissenting).
The House adjourned at 17:23.
__________
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
ANNOUNCEMENTS
National Assembly and National Council of Provinces
The Speaker and the Chairperson
1. Bills passed by Houses – to be submitted to President for assent
(1) Bill passed by National Council of Provinces on 31 October 2013:
(a) Geomatics Profession Bill [B 4B – 2013] (National Assembly – sec 75).
(b) Electoral Amendment Bill [B 22B – 2013] (National Assembly – sec 75).
National Assembly
The Speaker
1. Referral to Committees of Bills introduced
(1) The Division of Revenue Amendment Bill [B 38 - 2013] (National Assembly – sec 76(1)) has been referred to the Standing Committee on Appropriations in accordance with the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009).
(2) The Adjustments Appropriation Bill [B 37 - 2013] (National Assembly – sec 77) has been referred to the Standing Committee on Appropriations in accordance with the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009).
2. Message from National Council of Provinces to National Assembly in respect of Bills passed by Council and returned to Assembly
(1) Bills amended by Council and returned for concurrence on 31 October 2013:
(a) Mental Health Care Amendment Bill [B 39B – 2012] (National Assembly – sec 76).
The Bill has been referred to the Portfolio Committee on Health of the National Assembly.
3. Membership of Committees
(1) Ms R Bhengu has been elected as the chairperson of the Ad Hoc Committee on the filling of vacancies in the Commission on Gender Equality with effect from 31 October 2013.
TABLINGS
National Assembly and National Council of Provinces
1. The Minister of Finance
(a) Consolidated Financial Statements for the year ended 31 March 2013 [RP 337-2012].
(b) Report and Financial Statements of the Reconstruction and Development Programme (RDP) Fund for 2012-2013, including the Report of the Auditor-General on the Financial Statements and Performance Information for 2012-2013 [RP 337-2012].
COMMITTEE REPORTS
National Assembly
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