Hansard: NA: Mini-plenary 3
House: National Assembly
Date of Meeting: 18 May 2022
Summary
No summary available.
Minutes
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MINI PLENARY - NATIONAL ASSEMBLY
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VOTE NO 8 – NATIONAL TREASURY
Watch: Mini-plenary
PROCEEDINGS OF EXTENDED PUBLIC COMMITTEE – NATIONAL ASSEMBLY CHAMBER
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Members of the Extended Public Committee met in the Chamber of the National Assembly at 14:01
The Deputy Speaker, as the Chairperson, took the Chair and requested members to observe a moment of silence for prayers and meditation.
ANNOUNCEMENTS
The DEPUTY SPEAKER: Good afternoon hon members, ladies and gentlemen, I was locked in the wrong plenary session, but I’m
back now. Welcome to all of you, members and the Minister, I notice that you are already here, that’s good. Hon members, I would like to remind you that this virtual mini-plenary is deemed to be in the precinct of Parliament and constitute a meeting of the Assembly debating purposes only. In addition to the Rules, the rules of virtual sitting, the rules of the National Assembly, including the Rules of the national debate
apply.
Members enjoy the same powers and privileges that apply in the sitting of the National Assembly, and members should equally know that anything said in the virtual platform is deemed to have been said in the House and may be ruled upon. Hon members who have locked in shall be considered to be present and are
requested to mute their microphones and only unmute when they are recognised to speak. This is because the mics are sensitive and will pick up noise which might disturb the attention of other members. When recognised to speak, please unmute your microphone and connect your video, if that’s what
you are able to do. Members may make use of the icons on the bar at the bottom and or at the top, depending on what gadget you are using for an indication to put up your hand or to raise a point of order if that’s what you wanted. The Secretariat will assist in alerting us for members who are requesting to speak. So, we really plead with you members not to raise unnecessary point of orders or interjections, they are disruptive when we are operating on a virtual platform. We shall now proceed to the order, which is debate on Vote No 8, National Treasury
Appropriation Bill.
APPROPRIATION BILL
Debate on Vote No 8 - National Treasury:
The MINISTER OF FINANCE: Thank you, hon Deputy Speaker, hon members of the House, thank you for this National Assembly mini-plenary sitting on Budget Vote No 8 of National Treasury. It is an honour to stand before you and before the country to deliver this year’s Budget Vote for National Treasury. Hon Deputy Speaker, it is evident that this year will demand of us to face enormous obstacles, some old and many new. As the pandemic continues to create global uncertainty and devastating economic impact locally, we will need to show great resilience and tenacity in harnessing our efforts to resolutely and consistently overcome the systemic challenges of inequality, poverty and unemployment exacerbated by chronic low growth, rapid climate change and intensification of conflicts, contestations and ambiguity.
For National Treasury, this will require a determined effort in pursuing our ongoing endeavours to accelerate a growth economy including tackling structural constraints, applying measures to restore investor confidence and public trust, safeguarding the fiscal framework, reducing policy uncertainty
and lowering the cost of doing business. We have many hard choices to make. Many more difficult decisions lie ahead of us. We are not out of the woods yet. We cannot afford to be complacent. Our policy interventions must reflect the seriousness of the challenges we face and our constitutional
responsibility to forge a better today and a prosperous tomorrow for our people.
We must meet doubt and uncertainty with decisiveness. There are risks and there are opportunities on the path ahead. We must be prepared for both. The unprecedented crises that thecountry has found ourselves in have called on National Treasury and its wide-spanning programmes, to develop unique
responses and this year’s ambitious plan will build on the positive results achieved, as we deliver along with our government and all other stakeholders on the national reconstruction and recovery plan, supporting economic reform and realising transformation and inclusion. National Treasury will continue to support government’s ability to ensure stable, sustainable growth and equitable and efficient allocation of public resources. We will continue to pursue a balanced and prudent fiscal strategy in order to stabilise the public finances.
Although public finances remain under some strain, the fiscal position has improved somewhat in comparison to this time last year. We cannot let our guard down as we remain on course to restoring the health of public finances. To this end, the recommendations arising out of the spending reviews will be
implemented to improve expenditure efficiency and programme delivery impact over the medium term. The National Treasury is
responsive to our changing environment and continuously considers improvements to the budget process to deliver on our national priorities and foresee future needs. In this regard, work is being done on climate tagging as well as climate budget tagging, which is a tool for monitoring and tracking of climate-related expenditures in the national budget system. It provides comprehensive data on climate-relevant spending, enabling government to make informed decisions and prioritise climate investments. National economic growth is anchored in
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strong local economies which are reliant on an effective local
government. As a country we are faced with the formidable
challenge of an increasing number of municipalities which are
dysfunctional, either in experiencing financial distress or
even having deteriorated into crisis. The National Treasury
will be harnessing, together in partnership with DCOG, all of
our local government support mechanisms to intensify targeting
interventions for increased impact from our extensive capacity
building under the Accountant General, programmes to improve
municipal audit outcomes with a specific target on those with
the highest levels of irregular, fruitless and wasteful
expenditure to direct intervention in terms of section 139(7)
of the Constitution such as Lekwa, and more recently Manuguang
and Enoch Mgijima Municipality in the Eastern Cape.
There are 43 municipalities that meet the criteria to be
placed under mandatory intervention. I have already written to
the Premiers of all provinces in October last year, identifying
these municipalities and that, the mandatory intervention
process must begin in earnest. I must say that, we cannot be
dealing with these issues administratively, we only require
much political support from all the political parties
involved, in order to ensure political stability in a number
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of these municipalities. Nursing our municipalities back to
financial health will boost the quality of life of residents,
it will encourage economic activity and investment, and it will
encourage tax and ratepayers to pay for services. The National
Treasury will, in partnership with local government, implement
five township economic development strategies, as well as
identify and approve 20 catalytic projects in spatially
targeted areas within metropolitan cities, secondary cities
and rural towns to provide technical support to strengthen
infrastructure planning, delivery capacity and to support
spatial transformation and inclusive developments.
The government will continue to finance the gross borrowing
requirement while minimising refinancing risk, currency risk
and overall borrowing costs. To reduce their continuing
demands on South Africa’s public resources, the National
Treasury will outline, as we have indicated, Deputy Speaker, in
the budget speech, that government will outline criteria for
government funding of State-Owned Enterprises, SOEs. Eskom is
faced with a large amount of debt that remains a challenge to
service without assistance. The National Treasury is working
on a sustainable solution to deal with Eskom’s debt in a
manner that is equitable and fair to all stakeholders. We will
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say much of this, Deputy Speaker, in the Medium-Term Policy
Statement, as we are working on the details together with our
colleagues in Public Enterprise and Eskom.
There is also work on the review of governance systems of
several high risk state-owned entities, which is underway. In
order to implement the tax proposals announced in the budget,
the National Treasury will propose its annual amendments to
tax legislation that seek to meet government’s revenue
requirements and eliminate tax loopholes. Work will continue
to secure financial stability which supports economic growth,
and also ensures better access to the financial sector for all
residents and those doing business within South Africa.
Regulating the financial sector will continue in order to
ensure it is safe and provides enhanced customer services.
The Bounce Bank Support Scheme for businesses signalled in the
February 2022 Budget Speech has come into effect. The Bounce-
Back Scheme comprises of two mechanisms. The first mechanism
is a loan guarantee which facilitates loans guaranteed by
government to eligible businesses. The loans will assist
eligible businesses in recovering from constraints in
accessing finance due to COVID-19 lockdowns, the July 2021
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civil unrest, as disasters like the floods affecting KwaZulu-
Natal. The Bounce-Back Scheme will also support economic
growth and foster job creation in South Africa. Funds borrowed
from this Scheme, through participating banks, Development
Finance Institutions, DFIs, and non-bank Small Medium
Enterprise, SME, finance providers, can be used for growth and
expansion and to foster job creation within South Africa.
Our Twin Peaks regulatory system, established in 2018, is
beginning to bear fruit, to not only ensure that our financial
institutions are financially healthy at all stages, but also
where problems have been identified actions are immediately
taken. For this very reason, I have been dealing with the
concerns of the Prudential Authority that Ubank’s capital
adequacy levels have been deteriorating over the last 18
months, and the inability of the board and its shareholders to
adopt and implement an action plan to reverse this decline.
While these engagements began under my predecessors, they have
intensified to weekly meetings since March 2022, and daily
meetings over the past week. This intensification was
triggered by Ubank’s capitalisation falling below minimum
regulatory requirements.
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The Prudential Authorities engagement with the board over the
last months and weeks, has despite providing them with more
time to respond satisfactorily with a credible action plan,
resulted in a lack of alignment between the board and its
ownership trustees, and accelerated the need, and timing, of
the curatorship. On the recommendation of the CEO of the
Prudential Authority, the Deputy Governor, Tshazibana, and
acting in terms of section 69 of the Banks Act 94 of 1990, I
have deemed it to be necessary and in the public interest to
approve that UBank be placed under curatorship, effective from
Monday 16 May 2022. Curatorship is a mechanism to provide
regulators additional tools to save the bank, not to close it,
and as such, curatorship will assist in preserving depositor
funds that are held by the institution, and will allow for its
resolution to be done in a controlled and structured manner.
Over the last three years we have seen a steady improvement at
SA Revenue Service, SARS, which has contributed to the
necessary improvement in our fiscal position by way of
improved revenue collections and coordination of cash-flow
management in conjunction with the National Treasury resulting
in improved public debt management. In a democratic system,
taxation is a critical part of the social contract between the
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state and the citizens. Tax legitimacy and perceptions of
fairness in the distribution of the tax burden are crucial to
the willingness of citizens to pay taxes.
Therefore, it is of utmost importance to adhere to the
principles of a good tax system, namely, of efficiency,
equity, simplicity, transparency and certainty, as well as
ensuring a buoyant tax system that responds to the business
cycles of the economy. The SARS, will continue to expand the
tax register, respond to illicit trade by removing illegal
imports from circulation, investigate syndicate tax and
customs crimes, as well as investigate and hand State Capture
related cases over to the National Prosecuting Authority, NPA.
We are actively advocating coherent economic policy. The
National Treasury is reviewing the government’s macroeconomic
policies, from the global financial crisis of 2008 to 2020.
The review examines how key indicators have evolved as well as
assesses the implementation of policy.
Policy recommendations emanating from the review will be
engaged with stakeholders and would be communicated through the
budget process. Through Operation Vulindlela, in partnership
with the Presidency, there are decisive interventions to
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address structural problems cited as contributing towards
constraints on economic growth. In particular, we are
supporting government to address inefficiency and the high
cost of network services, including electricity, water,
transport and telecommunications that work against our goal of
reducing the cost and improving the ease of doing business. A
priority for National Treasury is to strengthen the
transparency, efficiency, effectiveness and impact of public
procurement by introducing the long awaited Public Procurement
Bill, strengthening procurement decision-making responsibility
and management at all public departments and institutions, and
most importantly, to modernise the procurement system.
This will strengthen data collection, enhancing analysis
allowing for better reporting and subsequently increasing
monitoring both by government and the public parties. We
received over 4000 submissions on the revised Public
Procurement Bill, and these have all been considered along
with the recommendations by the several recent Commissions of
Enquiries. Consultations with Nedlac commenced on 6 May 2022
as the Bill progresses towards tabling in Parliament this
financial year. Work is continuing at a pace on the Public
Finance Management Act and Municipal Finance Management Act
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reforms and support measures as well as accelerating the
implementation of the government’s integrated financial
management system with roll out of modules both in pilot
departments and provinces.
In addition to strengthening legislative frameworks, capacity,
capabilities, systems and processes of financial governance
and management, the National Treasury will continue to play a
role in fighting corruption and maladministration by conducting
forensic audits, special performance audits and review of
internal controls. We are also committed to supporting
infrastructure development and the growth of economically
integrated cities and communities. Treasury will continue to
facilitate conditional grants, providing financial incentives
for infrastructure planning and development to municipalities.
This will be achieved through the Local Government Financial
Management Grant; the Neighbourhood Development Partnership
Grant; the Programme and Project Support Grant; and the
Infrastructure Skills Development Grant.
Transfers to these grants are projected to be R6,9 billion over
the next three years. Through the international engagement
with Multilateral Development Banks, MDBs, and International
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Finance Institutions, IFIs, South Africa will continue to
foster collaboration, source technical best practice, as well
as source competitive financing as part of our borrowing
strategy. Five-year Country Partnership Strategies with the
Multinational Development Banks, MDBs, will focus on fostering
competitiveness, fostering investment, supporting small,
medium and micro enterprises, SMMEs, creating jobs and
economic recovery.
Deputy Speaker, the department’s budget over the next three
years is R2,8 trillion, close to 60% or R1,7 trillion, is for
transfers to provincial governments for the provincial
equitable share. A large portion of these funds will be
disbursed to the provincial equitable share for adjustments
related to compensation of employees in provincial
departments, inflationary adjustments for non-governmental
organisations within provincial departments of social
development, and for the implementation of the presidential
employment initiative in provincial departments of education.
Debt-service costs amount to 34,4%, or R1 trillion, of the
department’s budget over the Medium-term Expenditure
Framework, MTEF, period.
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With an additional R3 billion, a total of R34,3 billion has
been allocated to the South African Revenue Service, to build
the capacity of human resources and implement Information and
Communication Technologies, ICT, projects. The SA Special Risk
Insurance Association, SASRIA, has been key to our response to
the civil unrest in KwaZulu-Natal and Gauteng last year, and
we have an obligation to ensure that it can honour its
financial obligations. The 2021-22 expenditure also includes
the R18 billion paid to SASRIA as a direct charge from the
Revenue Fund. In aggregate, SASRIA has received a total of
R22 billion in the 2021-22 financial year.
Deputy Speaker, allow me to conclude by reiterating that we
are at an inflection point in our life as a society, and as an
economy. We are at a point of great uncertainty, but also at a
moment of great opportunity. We are required to make some
tough decisions. The moment demands that we stick to the
policy course of balancing support for the most vulnerable
households, with the careful rehabilitation of our public
finances. Lastly, I would like to thank my outgoing Director-
General, Mr Dondo Mogajane. He has served the National
Treasury and his country, with distinction and integrity.
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Our democratic project, and the institutions that are the
bedrock of a fair and prosperous society, rely on individuals
like Mr Mogajane, individuals who are willing to dedicate
themselves selflessly to a greater good. Our continued
gratitude goes to the Chairperson of our oversight committees.
We are looking forward to your continued support and guidance.
I thank you.
Mr M J MASWANGANYI: Hon Deputy Speaker, I have a problem with
the video. Can I proceed ... [Interjections.]
The DEPUTY SPEAKER: It’s okay! Go ahead!
Mr M J MASWANGANYI: Okay! Thank you very much. Deputy Speaker,
Members of Parliament, Ministers present, Deputy Ministers,
colleagues, thank you very much. The Minister of Finance, hon
Godongwana has tabled the Annual Performance Plans of the
National Treasury and Sars, as well as other entities under
the Finance portfolio, in line with section 10 of the Money
Bills Amendment Procedure and Related Matters Act for
consideration by this report.
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The National Treasury had briefed the committee on 23 March
2022, and also on 3 May 2022. The committee further conducted
an oversight visit to the South African Special Risk Insurance
Association, Sasria, the Land and Agricultural Bank of South
Africa, Land Bank, as well as the Financial and Fiscal
Commission, FFC, on 20, 21 and 22 April 2022, respectively,
where it, among other things, received presentations/updates
on the annual performance plans of those entities.
I heard the Minister addressing the issue that we raised when
he briefed us about the Budget, that there is a challenge from
Afriforum about the Preferential Procurement Policy Framework,
the matter which has been taken up to the Constitutional
Court.
Our concern as the committee is that we hope this will not
affect government’s policy of priority with regards to
transformation of the economy, and to ensure that the economy
is inclusive. The Minister has assured that he will attend to
this, because we believe that there should be high
prioritisation of government, where we have got an elected
government and we have got an interest group that want to co-
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govern. So, this matter should be taken seriously, and the B-
BBEE should not be affected.
Be that as it may, the National Treasury also assured the
committee that procurement has not stopped. Instead, the
National Treasury has stated that all organs of state will
have to apply for an exemption from implementing the B-BBEE
regulations and Preferential Procurement Policy Framework Act
to the National Treasury. We are satisfied that the Minister
will do everything to make sure that the transformation agenda
to transform blacks in general, and Africans in particular,
with regards to the economy will not be affected.
We are also glad that the Minister has raised the issue of
Public Procurement Bill, which we have been raising for quite
some time because government is the largest buyer in the
country. It had the responsibility to ensure that its
procurement policy support the economic growth and
transformation. The sooner the Minister tables this Bill in
Parliament, the better for the interest of the public and, in
particular, those who have been previously disadvantaged by
the economy.
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As we are emphasising the issue of a Public Procurement Bill,
the Treasury also has to attend to the issue of industrial
policy, together with their sister department, the DTI, so
that those who had been previously disadvantaged should
benefit. We know that there has been a policy to empower black
industrialists. We are not sure how far we are with regards to
this matter.
We are raising these issues because we know that the National
Treasury is at the centre of driving the macroeconomic policy
of this country. These issues of industrial policy and Public
Procurement Bill should be expedited as the Minister has
committed himself. Above that, we have also received a
briefing from the Minister and Deputy Minister and Sars
itself, on 3 May 2022, because Sars is a very important organ
of state.
Since it has been established 25 years ago, in 1997, Sars has
become one of the country’s shining lights of the democratic
dispensation. It is a well-functioning revenue service that is
very key to the development of this country. As I have said
that since its formation 25 years ago, Sars has collected more
than R17 trillion. Sars is commended for having contributed to
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the improvement of South African lives through raising
revenue. The money that Sars has collected had contributed in
uplifting the standard of the poor people in terms of
healthcare, education, social security and support for the
economy.
Without Sars collecting its revenues, the country would not
have been able to deliver services and support the economy.
During the Covid-19 pandemic, Sars had collected more revenue
than expected. This was assisted by the recovery of certain
sectors of the economy, especially in the mining sector.
Without an efficient and trustworthy revenue services, the
country would not have been able to achieve this commendable
achievement by Sars. So, we would like to commend men and
women who are running this institution for doing well, to make
sure that under difficult circumstances, they are able to
collect revenue that sustains the economy of this country.
In implementing the National Treasury spends for 2022-23,
there will be many obstacles in the coming year, as the
Minister has said that some of those obstacles were old, but
others are new. He indicated that there are global risks that
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could devastate the local economy and impact on National
Treasury. Among those, there is global warming, the challenges
in Ukraine and Russia and many other challenges that have been
there before.
The National Treasury’s key focus areas for the 2022-23
Budget, include, amongst others, managing the fiscal relations
of the three spheres of government, interacting with regional
and international organisations to increase South Africa’s
economic development, filling critical vacancies, and gender
mainstreaming.
We have raised this issue of filling vacancies, both in
Treasury and in entities that report to Treasury. The National
Treasury, through the Budget Facility for Infrastructure, BFI,
and partnerships with the Development Bank of Southern Africa,
DBSA and Infrastructure South Africa, is helping to build a
pipeline of viable projects for execution.
The Minister indicated that the BFI has considered 61 projects
that were submitted to it by public institutions and National
Treasury had approved a total of R6,7 billion in fiscal
support in the 2021-22 Adjustments Budget and over the 2022
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MTEF period. Most of these projects have multiple funding
sources and are designed to crowd in private investment.
The Infrastructure Fund is working in conjunction with public
agencies to prepare six projects to the value of R96 billion.
We are raising this matter, as you can see that the economy is
not doing well as expected, unemployment is increasing and we
are more concerned that youth unemployment is also increasing.
The National Treasury is reviewing government’s macroeconomic
policy from the global financial crisis to the present. This
review, we believe, will examine how key indicators, such as
economic growth and employment, have evolved since 2008;
assess government’s fiscal, monetary and macro-prudential
policy choices; and propose appropriate reforms to policy
targets and institutional frameworks.
A draft review document will be finalised at the end of March
2022 – it should have been finalised at the end of March, this
year - forming the basis for workshops, public discussions and
additional research.
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I’ve already spoken about Sars, I don’t have to repeat that
this is a very important organ of state and that it has
collected more revenue than expected under difficult
circumstances.
A total of R33,9 billion is allocated to National Treasury in
2022-23, of which 86% will be appropriated to transfers and
subsidies. The projected allocations for the 2023-24 and 2024-
25 are R32 billion and R32,1 billion, respectively. As I have
said that Sars has done well amongst others, it is also
receiving a lion’s share of the budget.
We want to also indicate that we conducted oversight visit, as
a Standing Committee on Finance to the Sasria, the Land Bank
and the FFC from the 20 – 22 April, this year. The Sasria
incurred claims amounting to R37,14 billion, as at 19 April
2022, as a result of the 2021 July unrests which affected
KwaZulu-Natal and parts of Gauteng. About R22,52 billion have
already been settled, representing a total of 8 853 claims.
About R14,62 billion, representing a total of just over 17 000
claims, remains outstanding.
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We also visited the Land Bank. The Land Bank is a very
critical institution in the agricultural sector and it is
facing a number of challenges. We are quite aware that
recently the Minister has appointed a board and we have met
that board. Be that as it may, the CEO has resigned to pursue
his career somewhere else. We urge the Minister to fill the
vacancy of the CEO, as soon as possible, because it is quite
very critical. We don’t want a situation where that bank is
left without a CEO for quite some time. With the challenges
that it is facing.
We also visited the FFC, which is a very critical
constitutional institution. It is doing quite very well. Hon
Minister, we believe that the FFC’s recommendations should be
taken serious because sometimes the FFC feels that whatever
they recommend with regards to budgeting is not considered.
Please take them serious and engage them on issues that they
have already raised with us. We also had engagement with
National Treasury, and what has been raised sharply by the
Auditor-General is what we call the implementation of the
audit action plans.
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We urge the National Treasury and its entities to make sure
that they have audit action plans in place, and the Minister
should from time to time meet officials from Treasury and its
entities to see to it that those audit action plans are
implemented.
The issue of filling of the vacant posts is quite important. I
have already mentioned the vacant post in Land Bank, which we
believe should be filled as soon as possible. We should also
indicate that we are quite delighted that at Sasria, the
vacant post of the CEO has been filled. When we visited
Sasria, there was a handover by the outgoing CEO to the
incoming CEO.
The other issues that we are raising as the committee are the
irregularities that have been picked up by the Auditor-
General, wherein the National Treasury has incurred fruitless
and wasteful expenditure of about R300 million on the
Integrated Financial Management System, IFMS.
We have agreed as a committee that we will be visiting
National Treasury, for them to explain to us: What is this
system all about; and why have they incurred so much money. We
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have also come to realise that despite National Treasury
having spent so much money on wasteful expenditure, the
contract has been renewed for another five years.
We believe that when we meet National Treasury, there will be
an explanation as to why that has been done. We are not taking
over as Parliament; we are quite aware of the separation of
powers. However, we have got a responsibility to play
oversight, and explanation has to be provided as to why do
they renew a contract which has incurred fruitless expenditure
grotesque in that manner. [Time expired.]
Okay, with all that we have received – the briefing that we
have received from the Minister and the oversight visits, we
are prepared to work very closely with the department to see
to it that this budget works for the interests of the people
of South Africa. We support this Budget Vote, hon Deputy
Speaker. Thank you very much.
Dr D T GEORGE: Deputy Speaker, the National Treasury is the
custodian of the people’s money and is mandated by our
Constitution to ensure the effective and transparent financial
management of our economy. In 2008, we started considering
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whether our economy was accurately measured, given so much
entrepreneurial activity in the former township areas that
were outside of the tax net and outside of formal measurement.
We have not yet seen mass starvation in South Africa because
hardworking people are eking out a living, hand to mouth, to
keep themselves and their families alive.
This despite the ANC government’s fixation on an economic
policy that places the state at the centre of our economy, a
failed model for Black Economic Empowerment designed to make a
few politically connected cronies rich while everybody else
remains in poverty, and a cadre deployment programme that
rendered the public sector largely dysfunctional. These
massive negative interventions, in a corruption-riddled public
sector, and long-term mismanagement of our public finances
brought our economy to its knees well before the COVID-19
pandemic further battered our growth prospects, followed soon
after by the Russian war on Ukraine. The hopelessly bankrupt
state-owned enterprises, SOEs, drained the Treasury of
hundreds of billions of rand and still failed. Government debt
has reached R4,3 trillion and our economy is still failing
because no amount of borrowing can fix what the ANC has
broken. The economic shock wave from the war that the ANC
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government toasted with champagne and failed to condemn at the
UN, has not yet hit us. This massive external macroeconomic
shock has fundamentally changed the global growth outlook.
Global prices are rising at the highest levels of inflation in
30 years and global supply chains and food supplies have been
disrupted. Fuel prices are rocketing and interest rates are
rising. When the full impact finally hits us, as an already
weak and failing economy within an incapable state, it will
hit the most vulnerable members of our society first and then
it will hit everyone else. We have already witnessed riots in
KwaZulu-Natal that cost the SA Special Risk Insurance
Association, SASRIA, R37 billion in claims from those who were
insured.
President Ramaphosa promised that those uninsured would also
be compensated. This has not happened because the government
has run out of money. We are also witnessing the rise of
violent xenophobic hatred towards black people resident and
not born in South Africa. That is driven by political thugs
desperate for populist validation and convenient to our failed
government looking for a scapegoat. The SA Special Risk
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Insurance Association was wiped out by the riots and cannot
pay for another outbreak.
Despite an R7 billion bailout, the Land Bank is still unable
to pay its creditors. The government must take decisive action
now if we are to avert mass starvation in South Africa. We
have already seen reports of children eating sand in KwaZulu-
Natal to comfort their hunger pains because our government is
broken and unable to respond.
In the absence of a coherent policy to prevent our economic
collapse, the government cannot even deliver the Social Relief
of Distress, SRD grant, to curb the looming mass starvation.
If our public finance were better managed and a coherent
policy developed for economic growth, a Basic Income Grant is
feasible as a measure to alleviate the grinding poverty that
robs our people of hope, dignity and opportunity. Our economy
needs capital... [Interjections.]
The DEPUTY SPEAKER: Thank you, hon member.
Dr D T GEORGE: Deputy Speaker, I have timed myself at three-
and-a-half minutes. I have got five minutes.
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The DEPUTY SPEAKER: Go ahead! Go ahead, yeah. Alright. Sorry.
Dr D T GEORGE: ... for growth. Measures to stimulate domestic
saving and attract foreign investment capital can be
implemented and can spark an economic recovery. The government
can create that environment and build the infrastructure
conducive to business. It needs to stop taxing hardworking
South Africans into poverty. And it needs an effective model
for privatisation.
The recent sale of the SA Airways, SAA, has revealed a new
scheme. A state asset is given away after it is mismanaged
into bankruptcy, the government guarantee of its debt is
retained and then it is restored to profitability and makes a
few cronies extremely rich. This is a replica of the Russian
privatisation model that created the oligarchs. Eskom’s
collapse paved the way for the R1 trillion nuclear deal that
almost happened and is still not yet off the table. This,
while more and more South Africans face the real prospect of
starvation. Although the National Treasury resisted state
capture, it was unable to ensure effective and transparent
financial management of the people’s money. That is now
manifested in the looming strike at SARS. Its budget is
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underfunded and it cannot pay increases to the deserving staff
because the taxes they worked so hard to collect were
mismanaged by the government. A bitter irony. What are you
going to do, Minister, to ensure that the people do not starve
this winter? Thank you, Deputy Speaker.
Mr D W MACPHERSON: Deputy Speaker, I have a point of order.
Before the, hon Shivambu, starts ... [Interjections.] ...
The DEPUTY SPEAKER: Yes, what?
Mr D W MACPHERSON: I just want to say that we did inform the
Table of the times that it was the hon George for five
minutes, the hon De Villiers for four minutes and the hon
Sarupen for four minutes. So we did do that ahead of time to
the Table. So they should ... [Inaudible.] ...
[Interjections.] ...
The DEPUTY SPEAKER: Yeah, it is alright. Thanks. Okay.
Mr N F SHIVAMBU: Deputy Speaker, the EFF rejects the committee
report and the proposed National Treasury budget. South Africa
has more than 12 million people that are capable of working
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and are fit to work but are jobless. That makes this country
have the highest level of unemployment in the world, which is
acutely manifested amongst black people and females in
particular. South Africa has the worst levels of now deepening
poverty because the only dependable mechanism to escape
poverty in the current capitalist scam is through a job and
our people are jobless.
South Africa has the highest levels of inequalities and
racialized inequalities reflecting the vision and plan of the
architects of colonialism and apartheid, who said we the
indigenous people must be hewers of wood and drawers of water.
The cost of living for those who are employed is drastically
rising due to rising fuel, electricity, transport, and food
prices. Despite these realities, we have a National Treasury
that is purposelessly piling debt from both domestic and
global lenders. South Africa has got a debt burden of more
than R4 trillion. And at more than R300 billion, the biggest
expenditure item is debt services cost. Despite their
obligation to disclose the names of the domestic lenders in
whatever form they come in, the National Treasury has
repeatedly refused to disclose who the lenders are,
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particularly the domestic lenders that are piling up debt
which is not having any impact on the growth of the economy.
The National Treasury has got a responsibility to co-ordinate
both macro and microeconomic policy, but also to co-ordinate
fiscal policy in a way that is going to grow the economy. But
nothing has been happening. If the National Treasury were a
medical practice, all its patients would come out of the
National Treasury dead because there is nothing that is
happening. And then part of the responsibilities and
obligations of the National Treasury is to oversee important
institutions of the state.
The SA Reserve Bank, which the Constitution says must
recurrently consult the National Treasury, is currently at the
forefront of destroying black-owned financial institutions,
insurance companies, and banks. The central bank in South
Africa should appreciate that its role is not to punish black
financial institutions but to constantly guide them so that
they must not fail. The very purpose of creating a prudential
authority after the 2008 financial crisis, was meant to
prevent financial institutions from failing. But for narrow
political and class interests, all the black financial
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institutions are being destroyed. The SA Revenue Service,
Sars, administrators came to the committee to wax lyrical
about how staff members are happy and how they are inspired,
which was not the reflection of the reality. All Sars workers
are currently unanimous that the working conditions and wages
that they are subjected to are less than satisfactory. And we,
as the EFF, stand on the side of the workers. All their
demands must be met.
Despite our repeated calls, Sars has got no mechanism nor
capacity to maximally collect revenue from multinational
corporations, particularly in the resources extraction sector.
The SA Revenue Service has got no sovereign and independent
capacity to maximally collect revenue from the digital
economy. From 1 April 2022, the people's Republic of Ghana and
the revenue authority in Ghana will be collecting taxes
maximally from Google, Netflix, Amazon, Uber, Instagram,
TikTok, Facebook and all the e-commerce spaces, but the SA
Revenue Service says that it is waiting for the Organisation
for Economic Co-operation and Development, OECD, to guide it
in terms of what should happen in the e-commerce business. The
Public Investment Corporation, PIC, which is supposed to play
a meaningful role in the transformation of the economy and the
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development of infrastructure, is currently directionless. And
those who are leading it are exploring ways of how they will
get their amateurish and childish benefactors to close deals
for them. The Land Bank is dysfunctional and will completely
collapse in the immediate future. As we said during the
oversight visit to the Land Bank, the Land Bank must be
legislatively reconstituted into land and agrarian
developmental financial institution which will purposefully
finance agricultural and food programmes in a manner that
reflects the demographics of South Africa.
Currently, the loan book of the Land Bank is 80% white male
farmers, who for some strange reason are given loans by the
intermediaries who were not supposed to be appointed in the
first place. But there is consistent incapacitation of the
Land Bank and its current model of going to the capital
markets to source money is not the best way. If the committee
does not introduce a Committee Bill that is going to
reconstitute the Land Bank, the EFF is going to introduce a
Private Members’ Bill to reconstitute the Land Bank into an
agricultural and food Development Finance Institution, DFI,
which is going to empower black people in the food economy.
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We will remain opposed to incapacitation and privatisation of
the state. We will, as the EFF, be approaching the South
African courts to challenge the senseless privatisation of the
SA Airways, which was sold to people who have got nothing as
capacity in the airline spaces in the aviation industry. The
reality is that SA Airways failed under the custodianship of
the National Treasury. The National Treasury has got no
political and administrative capacity to oversee important
state-owned companies and spheres of government. This is
proven by the fact that despite the repeated interventions in
provincial governments and municipalities, they remain in deep
crisis.
The North West government returned more than R17 billion to
the National Revenue Fund because the National Treasury
failed. We note that even the interventions that are being
made in municipalities will lead to nowhere. The majority of
municipalities have got no access to the conditional grants
because the National Treasury is not guiding the
municipalities on how they can gain access to the conditional
grants. We, as the EFF, are not associating with the manner
and the model in which the National Treasury is handling the
question of the conditional grants because the majority of the
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rural municipalities do not have access to do that. We, as the
EFF, have called for the Government Technical Advisory Centre,
GTAC to be fully capacitated with its internal capacity to
perpetually guide the municipalities on how to gain maximal
access to the conditional grants. In its current form, the
National Treasury, both at the political and administrative
level, is incapacitated. We, therefore, will not support the
budget that is proposed here because everything else that the
National Treasury leads to dismal failure. It is worsening the
conditions of our people. We stand at to reject the budget as
proposed. Thank you very much.
Inkosi E M BUTHELEZI: Hon Deputy Speaker and good afternoon to
hon members. Hon Speaker, each and every year we rise before
this House in debating the budget and each and every year we
say the same things. The opposition in this parliament is
united in calling on the ANC-led government to support
proposals that will get our country on track and to support
measures that will see corrupt comrades and officials behind
bars.
We are all on the same page when it comes to implementing
sound economic policies that will create jobs for the millions
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of South Africans who are sitting at home and doing nothing.
But Deputy Speaker, the reality is that each and every year,
our words are simply ignored. This ignorance flies on the face
of each and every worker who has lost their job due to
corruption, maladministration and lack of honesty that is
within our various government departments, from national,
provincial to municipal level.
National Treasury, as the custodian of economic policy and the
implementing agents of government’s spending directives
through legislations and regulations must aim to cut wasteful
spending and buffer departments from corrupt and supply chain
loopholes across the board. I reiterate the IFP’s belief that
local government is one of the most important sphere of
governance. This is because local councils directly deliver
services to residents and because it acts as an implementing
agent of government to serve and respond to basic needs of our
communities. Therefore, it is crucially important to grant
local councils special status by placing local government
first at the top of government’s agenda.
In light of the poor finncial statements of all
municipalities, it is imperative that we eliminate
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inefficiencies that are crippling our local councils
countrywide. We must address the exorbitant costs that is
incurred by outsourcing through hiring of external consultants
who are doing the work of officials who are already in the
employ of municipal councils. We must root out those who do
not belong in the public sector, who simply cannot do the job
properly and those who presently steal from the poor.
There are far too many missed opportunities and neglected
informal economy activities happening within our rural
communities that are not counted towards contributing to our
GDP. We believe that National Treasury, together with local
municipalities should work together to assist informal traders
and scaling up their business and counting their economy
contributions towards a development of local economy. The
informal sector is almost an untapped market that has the
ability to generate millions of additional rands that could
service the needs of the poor.
We simply cannot allow this department to fail. Our economic
future relies upon the sobering decisions that this department
needs to take in addressing economic injustices, making this a
reality for all our people. With the above-mentioned statement
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and the portfolio committee recommendations, taking into
account, the IFP support the Budget Vote. Thank you, Deputy
Speaker.
Mr W W WESSELS: Hon Deputy Speaker, South Africa’s economy is
failing. South Africans are suffering, and in particular, the
most vulnerable in our society. Government has run out of
money and nobody else is to blame but the ANC. The Minister
refers to programmes that would be established to access to
municipalities with the improvement of the audit outcomes. He
mentions the fact that noncompliance with laws and legislation
is one of the biggest challenges and one of the biggest areas
of concern raised by the Auditor-General repeatedly.
I agree with that, but the problem is that National Treasury
as a department in its own right also do not and does not
comply with laws, legislations and regulations. That gives us
particular concern. How can National Treasury ensure
compliance if they themselves are guilty of noncompliance? I
want to remind the hon Minister of his constitutional
obligation to enforce compliance with the ... [Inaudible.] ...
that National Treasury, in terms of section 216 of the
Constitution should enforce compliance with. And what is the
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problem is that National Treasury has failed to do that. That
is the reason why we have departments and spheres of
government that do not comply - that do not actually comply
with the Constitution and with legislation.
The hon Maswanganyi refers to the broad-based black economic
empowerment, BBBEE, and refers to the fact that the
Constitutional Court judgment does not mean that they should
not be transformation. I want to say to the hon chairperson of
the committee that BBBEE and the policies of the ruling party
has failed. It has failed to address inequality, and it has
rather created a few multibillionaire cadres and it has left
the majority of South Africans poor. Rethink your policies
because that is what is responsible for economic failures.
Lastly on the topic of the Preferential Procurement Framework
Act, it is unacceptable that the Director-general of National
Treasury gave instructions in direct contravention to the
ruling and judgment by the Constitutional Court and once
again, did exactly what the judgment said, National Treasury
and the Minister are not allowed to do. The fact that he gave
instruction that no new tenders may be advertised or rewarded,
caused chaos. There is spheres of government and provincial
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departments that still do not understand what to do, it has
created complete and further collapse in service delivery.
That is unacceptable and the Minister should address that.
The hon Minister was referred to section 139(7) intervention
in municipalities. He mentioned Mangaung Municipality, and I
also want to agree with the hon Buthelezi of the IFP that that
is the sphere of government where the most failures are
occurring as local government. But one looks at the 139(7)
intervention in Mangaung, in particular, it’s a concern. There
is a financial recovery plan that was drafted by provincial
government in 2019 - at the end of 2019 and beginning of 2020,
before COVID-19, and before a lot of other things that
happened.
The national government is going to implement that same
financial recovery plan; they are not even going to revise it.
Then Minister, your 139(7) intervention are not going to have
any effect. It is only meant for political gain and we all
know what is happening this year and we all know what’s
happening within the ruling party and we all know why these
interventions in certain municipalities, especially in
Mangaung. Stop with your political interference and rather do
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interventions that are in the interest of service delivery and
of the residents of South Africa. I thank you.
Mr S N SWART: Deputy Speaker, my apologies, I was disconnected
for a moment. May I leave my camera off, thank you? Deputy
Speaker and hon Minister, the ACDP would like to commend
National Treasury for holding the line against state capture
and corruption. In his state capture report, Judge Zondo
commends the then Deputy Finance Minister Jonas and other
senior Treasury officials for refusing to work with the Gupta
family during the years of state capture. One shudders to
think what would have happened had the planned capture of
Treasury actually succeeded.
The ACDP also commends South African Revenue Services, Sars,
for collecting R1,56 trillion last year, which was
R255 billion more than the previous year. The challenge is
obviously now to spend these additional resources wisely, and
to deal comprehensively with procurement malpractices. In this
regard, the ACDP shares the committee’s concerns about the
delays in the tabling of Public Procurement Bill, which will
assist in consolidating fragmented public procurement in the
country and help to root out corruption within the system.
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While National Treasury is trying its level best to stop
tender corruption, new Treasury directives will allow
departmental accounting officers to authorise contract
deviations that previously had to go through Treasury. This is
a matter of great concern.
Supply chain officials have correctly pointed out that there
will now be a high rate of deviations, which may not be
justified and will lead to increased irregular expenditure.
The new regulations place powers to vary tenders in the hands
of the very same department officials who are issuing them.
While the ACDP appreciates that the reason given for these new
directives is to speed up the tender process, it’s just not
good enough to say that corrupt actions will be dealt with
after the fact – sometime in the future - if the Auditor
General picks them up. The ACDP urges the hon Minister and
National Treasury to reconsider these regulations, and ensure
that proper checks and balances are in place, such as real
time auditing. Would it not be better to ensure that the
Office of the Chief Procurement Officer is better capacitated
to deal more speedily with requests for deviations? Hopefully,
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these issues will be considered in the Public Procurement
Bill.
On other specific findings of the committee, the ACDP shares
the view that there must be improved audit outcomes within the
finance portfolio, given that it is the custodian of public
finances and should set the example.
Lastly, we are also doubtful about the effectiveness of the
Municipal Finance Improvement Programme, given the dire
financial state of most municipalities. This is where the
worst service delivery challenges are experienced, and more
can and must be done in this regard. We support engagements
with the Committee of Cooperative Governance and Traditional
Affairs, Cogta, and Minister to find solutions in this regard.
I thank you, Deputy Speaker.
The ACTING CHAIRPERSON (Mr M G Mahlaule): Deputy Speaker, if I
may? The next speaker will be hon Kwankwa on the latest list.
The DEPUTY SPEAKER: Oh okay. In fact, now that you have said
that, you take over. Thank you very much. It is a good point
to change guards.
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Mr N L S KWANKWA: Hon House Chair, the South African economy
fails to deliver what is expected of it. While we acknowledge
that certain fundamentals are in place, it is equally true
that the urgently required jobs and economy growth are not
materialised. Since 1994 hundreds and thousands of jobs have
been destroyed. The formal employment or formal economy
shrinks at an alarming rate. While this occurs, not enough
support or interventions as measures are being provided,
especially to the informal sector of the economy in order to
formalise it, support it so that their businesses can be able
to flourish and actually export their produce to the Southern
African Development Community, SADC, region or to the rest of
the African market. Not enough of that is being made by the
current ANC-led government.
While that occurs, South Africa suffers from a chronic
unemployment problem, not only that, but it also suffers from
what President Zuma appropriately coined at some point as the
triple challenges of unemployment, inequality and poverty.
We are saying that it is important for government and National
Treasury in particular to develop a strategy that is
comprehensive which will deal with these challenges over the
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next five years. Chief among these is ensuring that there is
an efficient utilisation of public resources, but efficient
utilisation of public resources requires that, in this
respect, Treasury leads by example, but also where funds such
as conditional grants allocated or given to municipalities
that more support is provided to those municipalities instead
of being punitive in situations where they are not able to
utilise them. In other words, it is important for Treasury not
to only serve as a police officer or a sheriff of the
departments, but to also be able to come up with measures that
ensure that capacity is built in various municipalities,
especially those municipalities who do not have the skills and
the human resources to be able to comply or understand all the
very complex Treasury regulations.
You have departments such as the Department of Defence where
we did an oversight visit recently that complained that at
times the requirements and the regulations of Treasury, you
never really know what is expected of you up until you are
sent a document where it declines requests and outlines a long
list of regulations to which you need to comply.
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The other issue for us which has been a problem for many years
is the long outstanding issue of the Public Procurement Bill
because we feel that it is important that public procurement
is structured in such a way it supports the economy growth
objectives of government as well as the income redistribution
policies in order to address past imbalances and backlogs.
Minister, before I run out of time, we have started the
process of introducing a private members Bill that deals with
long-terms insurance amendment Bill Act. The issue here is
that you spoke eloquently about the need to regulate the
financial services sector, but we are not looking at issues
...
IsiXhosa:
... emincinci Mphathiswa ...
English:
... for instance, where you would find that a lot of insurance
companies that are underwritten ...
IsiXhosa:
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... owuu, seliphelile eli xesha? Kwekhu! Yintsomi kaMlingana
le.
The ACTING CHAIRPERSON (Mr M G Mahlaule): Yes, yes. Your time
has expired hon Kwankwa. I am sorry.
Mr N L S KWANKWA: Thank you.
The ACTING CHAIRPERSON (Mr M G Mahlaule): Thank you.
Mr J N de VILLIERS: House Chair, the state spends close to
R1 trillion a year on public procurement, which is the
acquisition of different goods and services that government
needs to fulfil its various functions. This is of course a
crucial part of government services and procurement guidelines
by National Treasury are supposed to be designed to support
economic growth and assist in transformation.
In February of this year, Afribusiness won its Constitutional
Court challenge of section 3 of the 2017 Preferential
Procurement Policy Framework Act, basically the current Black
Economic Empowerment, BEE, guidelines for state tenders. After
a few months of general confusion, it seems the current
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position supported by National Treasury is that current BEE
tender regulations will remain in place until it has received
clarity from the Constitutional Court on the way forward. So,
in short, the current position is that National Treasury is
still enforcing tender guidelines that have been found
unconstitutional. It goes without saying that this brings
major risk to tenders currently awarded by these guidelines
that have clearly been found unconstitutional, and we urge
National Treasury to get their clarity sooner than later.
But, let’s be frank, more clarity on tender rules that follow
BEE guidelines does not address the fundamental problem of the
state’s procurement policy and its failure to grow the economy
and assist in transformation. The current system of BEE,
coupled with the deployed cadres who run the system, has been
the main enabler of state-wide corruption and capture. It is
sold to us as a system that aims to do broad based
empowerment, but it is practically implemented to enrich an
already powerful and politically connected ANC elite, who make
sure the cadres who run the procurement processes share in the
proceeds of the tenders awarded using these current BEE rules.
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Current BEE regulations award tenders based on the narrow
criteria of race and ignores the many economic, environmental,
and social contributions that the private sector can and do
make. It goes without saying that this scares off investors,
both local and international. Thirty years of BEE policy have
done nothing to redress imbalances of the past, and it has
caused more inequality, higher unemployment and worse poverty.
The good news is that there is a solution. The DA supports the
total scraping of the BEE regulations in favour of procurement
practices that rewards private companies who compete on the
ability to deliver and those that make the most positive
socioeconomic impact as measures by the United Nations
Sustainable Development Goals, or SDGs. These SDGs include
fighting poverty and hunger, promoting good health and well-
being, quality education, gender equality, decent work and
economic growth, and many other sustainable goals that offer a
framework for companies to help redress society in an area
they are best fit to address. This is the only way the state
can encourage inclusive growth, as we need government and
private sector to take hands and partner in the achievement of
the UN’s SDGs.
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The DA supports the promotion of the state doing business with
companies that firstly have the ability to competently deliver
on products and services, offering tax payers bang for their
buck, but secondly, companies that actively promote
sustainability goals and work towards creating a more equal
and fair South Africa. Let’s scrap these apartheid still race-
based policies of BEE and reward companies for being competent
and socioeconomically responsible in their industries. I thank
you, Chair.
Mr I K MOROLONG: Thank you very much, hon House Chair. Hon
members, South Africa’s ... [Inaudible.] ... lines have a
distinct plus gender, racial, geographic, and age dimension.
They disproportionately affect black people, women, rural
communities and youths and persons with disabilities. More
importantly, these ... [Inaudible.] ... lines represent the
greatest threat to the process of ... [Inaudible.] ...
social and economic transformation. They require urgent and
decisive action.
The ANC’s fundamental task is to lead a concerted campaign to
address the persistent challenges of poverty, unemployment and
inequality. To do this, the ANC will set unambiguous targets
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to ensure that the economy empowers our people on a mass
scale, initiate lasting programmes to address the roots of
poverty, joblessness and inequality, intensify efforts to
bring together government, the labour movement, business and
communities in a social compact to achieve our core aim of a
more inclusive economy and a more united society.
The past 28-years of freedom and democracy have seen real
progress towards ending race and gender discrimination in core
services, in school, health care and work places. We have
adopted policies that have reduced poverty and have provided
basic infrastructure for millions of our people.
Today, we debate a Budget Vote that has everything to do with
insuring the safe and strategic management of our financial
resources. therefore, our oversight over this budget must
reflect critically on whether the primary management of our
strategic financial resources matches up to the objectives of
what the governing party the ANC has set this country to
respond.
When the ANC crafted the five-year Medium-Term Strategic
Framework, MTSF, 2019 and pass it on to the executive to craft
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it into a government five-year programme, it laid the basics
for National Treasury to respond to how the financial
resources of government would respond to the plan over the
five-year period. Therefore, within the strategic plan and the
Annual Performance Plan, APP, of the National Treasury, we
should fine resonance of this responsibility as well as in the
line items in the actual vote of funds.
Hon members, the allocation of the R33,9 billion, the thrust
of the work of the National Treasury over the medium-term will
continue with reforms to promote growth and employment while
ensuring the economic group Economic Reconstruction and
Recovery Plan, guides both the public and private sector
investment in the economy.
It is this Budget Vote that performs the critical functions of
provincial equitable share transfers, a significant portion of
which is adjustment for compensation of employees and for the
implementation of the once-off non-pensionable cash gratuity.
It is this Budget Vote that makes transfers to the South
African Revenue Service, SARS, and the Financial Intelligence
Centre, FIC, to carry out their critical mandates. We are
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encouraged by the fact that R3 billion transfer to SARS over
the MTEF period, has all its major weight, the building of
skills and the implementation of information communication
technology, ICT, infrastructure projects, matters that we have
debated at length in Parliament and are taking firm route in
the allocated transfer. The same applies to the FIC where
will R51 million is set aside for FIC to increase capacity in
responding to what the ANC has raised, about facing illicit
financial flows and illegal base erosion shifting.
We remain concern that National Treasury has become a price
for some to capture, and we’ll need to remain vigilant.
Whether it is approaching the Constitutional Court, or trying
to introduce a new legislation on how the National Treasury
should be run. All of this have an end point and goal that
they seek to drive.
Whilst the ANC seeks to ensure that we secure the mandate of
the National Treasury, it is the sub control of the management
of South African’s public finances. The technicalities that
the Constitutional Court ruled on cannot mask the fact that
there is no innocence in the matter of the 2017 Preferential
Procurement Policy Framework Act 5 of 2000, at regulation
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scenario that Afro business seeks to position the interest of
those they are mostly closely associated with.
As the ANC, we agree with the call by the National Treasury
for public comments in order to address issues in African
business judgement in the Preferential Procurement
Regulations, 2017, PPFA, regulations. Let us be clear on this
matter, procurement within government has not stopped. There
is no outlawing of the Broad-Based Black Economic Empowerment,
BBBEE, as some of public commentaries have mischaracterised
this as African business judgement.
Government is the largest buyer in the country and it has the
responsibility to ensure that its procurement policies
supports economic growth and transformation. Public
procurement is a powerful instrument of government to ensure
that it builds an economy that is inclusive and reflects the
demographics of South Africa.
The prescription of local content for certain goods, the
requirement of sellers of certain goods to the government, to
increase their local content, to create more jobs
industrialise and build the country’s manufacturing base are
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all part of our development and inclusive growth. And this is
what African business and the likes of hon Wessels and hon De
Villiers, for their own self accumulation paths want to
dislodge.
We note the latest undertaking to table the amendment
Procurement Bill to National Economic Development and Labour
Council, Nedlac. We note the progress reported by the Minister
just now. We trust that there will be no unnecessarily lengthy
delays. Addressing the fragmented procurement regime in this
country is necessary and will help to root out corruption
within the procurement system.
Hon George, wittingly or unwittingly elects not to give very
reasons why this country has not faced mass starvation. This
because the ANC-led government created social safety nets for
the vulnerable and the vulnerable only. Let’s dissect this
vulnerability so that we demystify the fallacy of a welfare
state. For instance, an old age citizen cannot work, a
disabled citizen is disempowered by their circumstances to
work, an unemployed parent cannot feed their children. And as
a consequence of COVID-19, Many jobs were lost.
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We conquer with hon Maswanganye that the matter that ANC
fights unacceptable is a six-years of fruitless and wasteful
expenditure amounting to R300 million on the Integrated
Financial Management System project since wonder 2016. We want
an update on this material irregularity in the next quarterly
briefing by National Treasury and whether investigations in
this regard have been finalized or not.
We join the Minister in commending the outgoing director-
general, DG, for his sterling service to the people of this
country. We wish him all the best in his future endeavours.
The ANC supports this Budget Vote. Thank you very much.
Mr M G E HENDRICKS: Thank you very much, hon Acting House
Chair. Hon Acting House Chair, if this debate the ...
[Inaudible] war comes ... [Inaudible.] once again like in the
debate on Transport which I took into earlier on and we now
have to go through this in every 40 Budget Vote debate which
we have to hear about Ukraine. We don’t hear about the ...
[Inaudible.] and the assassination of the Algeria journalist
from the official opposition. With regard to the views on
black economic empowerment, BEE, we cannot scrap BEE, then we
must take away their advantages like generational wealth away
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... [Inaudible.] during apartheid in the form of ...
[Inaudible.] and confiscation of property ... [Inaudible.]
acquired without compensation.
Treasury has an oversight role on money moving from the
fiscus. Treasury represents South Africa on Brazil, Russia,
India, China, and South Africa, Brics, and its bank it cannot
be that Treasury takes loan for the country and create
sovereign debt without parliamentary oversight and public
participation. It cannot be that Treasury get funding from
mega projects that results in false removals and demolishing
of houses. I hope the Minister responds to this matter so that
we can support the budget for his department. We know the
contexts of the Zondo report and the looting of monies from
funerals and during coronavirus disease, Covid. Treasury
released the money and must apologise for donations for not
making the cut looking of the fiscus and tell us how are they
going to protect the fiscus for next year so that hon members
can have peace of mind that money there ... [Inaudible.]
compliant for the service and projects. As we so support for
this budget we must call on a corporate sector to stop their
tricks looting from South Africa’s fiscus. Thank you very
much, hon Acting House Chair.
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Mr A M SHAIK EMAM: Thank you very much, Acting House
Chairperson. Acting House Chairperson, allow me to start off
by addressing the issue of BEE. There’s nothing wrong with BEE
under normal circumstances, but when BEE is introduced to
benefit a few which is what it has done in the country,
creating 17 and a half thousand black millionaires and multi-
millionaires at the expense of the majority of the
disadvantaged and vulnerable people in the country, then
certainly BEE cannot be the right way to go. Now, that’s the
first thing. The second thing is this, can we sustain
ourselves with only 13% in this country paying taxes and with
46% of people on some form of social assistance.
Now, let me help the Acting House Chairperson, for me this is
a ticking time bomb because in addition to that we are
borrowing and borrowing and borrowing. We are not borrowing to
use this money for infrastructure development I think so that
we can enhance economic growth. However, we are borrowing just
for consuming the amount of money that we are borrowing.
Therefore, that will pay administrative cost, wages, salary
and how long are we going to go in this direction. The petrol
price is expected to increase by at least R3 a litre at the
beginning of this month. Already we know the life of the old
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age pensioners in this country, government and SA Revenue
Service, Sars, is already talking about even taxing the more
than they already doing. Look at the issue of the state-owned
entities, particularly SA Airways, SAA, $3,58 United States,
US, dollars, is what we sold it for. Can you imagine?
No accountability and my understanding is Treasury knew
absolutely nothing about it. What are we doing about the
illicit financial flows, the big corporates in this country
that are showing losses in this country and profits abroad,
absolutely nothing ... [Inaudible.] Should our attention not
be to create jobs and boost economic growth rather than making
the entire country depend on social assistance. It will not
work. That for me is a system of populism because we want to
gunner votes and support and it’s not going to sustain us in
the long run.
Now, we talk about the assistance that we want to give in
terms of loan guarantee. What is the benefit of a loan
guarantee when they will not have any energy to conduct their
business? The cost of doing business is so high. The imports
of flowing into this country every day ... [Inaudible.]
industry are closing down. What is going to be the benefit of
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this? Who is going to take it? That is why only R18 billion
was used of the R200 billion guarantee that we are given
previously. Can we not see that we need a change in policy
direction in this country if we want to address the state in
which we are? We are in serious trouble and years to come and
not long from today this country is going to reach a fiscal
cliff, I can assure you and we will lose our sovereignty. That
is the direction we are going in. Let’s look at the issue of
sugar, I will give an example ... Thank you very much, Acting
House Chairperson. [Time expired.]
Mr A N SARUPEN: Thank you very much, Acting House Chairperson.
Acting House Chairperson, a critical function for National
Treasury to fulfil is allocative efficiency. It’s ...
[Inaudible.] economies that says that we do need to have a
single core ... [Inaudible.] department that ensures that the
programmes of the government once it’s not unnecessary,
inefficient or a duplication. I’m speaking about this today
because our fiscal environment is extremely constrained, our
debt to gross domestic product, GDP, ratio at historically
high levels, and debt repayments consuming more public funds
than education and policing combined, and we have an emerging
cost of living crisis that may well be the worst since the
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1970s. Therefore, the reason why National Treasury was such a
target during state capture was because they provided
guardrails to allocated efficiency. And without these
guardrails, many persons who want to capture the state and
squander its resources will be able to do so with carte
blanche.
However, it is important for Treasury to adapt to the times,
and ensure the allocative efficiency is based on current
circumstances. In this regard, there remains a lot of work to
be done. There are lots of programmes and projects across the
state that have not been reviewed for their efficiency or to
see if they have achieved their desired outcomes. Yet, they
continue to be funded year-in and year-out new projects for
the same outcomes of an audit year-in and year-out. I’m afraid
this is not my original insight or conclusion, it was a
comment from the Fiscal and Finance Commission on the budget
in 2019, and as Fiscal and Finance Commission ... [Inaudible.]
but this should not be ignored. There has not been a
comprehensive review of each department’s programmes and
spending despite this finding.
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Furthermore, over the years, massive duplication of projects
has crept in, and this leaches money out of the public
services. Let me give you one example ... [Inaudible.] and the
Finance Minister spoke about it himself that there are
programmes that support municipal budgeting. They run by the
National Treasury. Similar programmes run by Co-operative
Governance and Traditional Affairs, Cogta. However, similar
programmes are also run by the provincial treasury, and then
again by provincial Cogta. These are four government
departments running the exact same functions trying to achieve
the exact same outcomes, but actually achieve very little when
one is at the state of municipalities.
Therefore, the time has come for us to rationalise spending
across the state, and take a hard line during the budget
process. It is no longer efficient or prudent to use the
previous year’s budget with inflation as a baseline to
determine future spending. Zero-based budgeting was promised
in 2020, and this creates the prime opportunity for a
comprehensive spending review, as proposed by the Fiscal and
Finance Commission including long standing programmes that add
no value for money, or that are duplicated across departments.
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This could save the state billions of rands each year. It’s
high time that this is done.
The reality is that, with fuel prices is about to reaching R25
a litre, it is imperative that savings can be found so that
the fuel levy can be cut. Citizens can no longer afford to
have half of their fuel costs being state taxes. It is a
throttle on freedom of movement and economic activity. The
second reality is that fiscal space will have to be found to
zero-rate more food items from value-added tax, VAT, and
essential goods to alleviate the cost of living crisis as
South Africans are facing. Years of bad fiscal decisions
across the state, as a result of corruption and state capture
while they cannot be blamed the Treasury, but it does fall
under Treasury to do what is necessary to ensure that the
state becomes efficient and spending, and with this emerging
fuel price and cost of living crisis, it is absolutely
essential for Treasury to rise to the occasion. Therefore, I
urge the Finance Minister to steer this department in this
regard. Thank you very much.
Ms P N ABRAHAM: Hon Acting House Chairperson, Minister
Godongwana, Deputy Minister Masondo, hon members and fellow
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South Africans, the ANC-led government when it entered this
debate, carried the greatest responsibility, weight and
accountability of ensuring that the management of the
financial resources of government are in capable hands and are
redistributed to build a more equitable society and a more
just society. This is a society which reflects inclusion and
not exclusion. We need a more radical and more effective phase
of our transition from the economic structure of a colonial
economy, which apartheid only deepened, to an economy that
reflects the inclusion along race, class, gender lines, youth
and persons with disabilities.
During this phase, the ANC-led government will forge ahead
with interventions that seek fundamentally to change the
structure, systems, institutions and patterns of ownership,
management and control of the economy in favour of all South
Africans especially the poor, the majority of whom are
Africans and females. We seek a more equitable sharing of
prosperity and we are conscious that accelerated of
socioeconomic transformation is a framework in which this must
take place.
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In order to build a new inclusive economy, the first pillar is
to mobilise society around an infrastructure led recovery with
new investments in energy. The people of this country must be
on board ...
IsiXhosa:
... bayazi ukuba urhulumente umanxada-nxada ubazamela amanzi,
inkqubo yokuhambisa ilindle kakuhle, iindlela, iiblorho,
izindlu ezinesidima, impilo esemgangathweni kwakunye nemfundo
...
English:
... digital infrastructure as well as transport. To achieve
significant job creation, the emphasis should be on
localisation. We have to make use of local material.
IsiXhosa:
Ukuba abantu baseMzantsi Afrika bayakwazi ukuza nezinto
zokwakha, urhulumente weANC uthi mazithengwe kubo.
English:
State capacity will need to be strengthened through operation
of the District Development Model, DDM ensuring that all
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spheres of government work together. In taking responsibility,
we have, through government taking decisive steps to save
lives and restore livelihoods in the wake of the Covid-19
pandemic which was in 2020. This has included income support
to affected wage earners as well as social grant support to
those who are not employed.
IsiXhosa:
Urhulumente uzamile ukunceda abantu ngeendlela ezininzi
ngexesha bekukho esi sithwakumbe seCovid-19.
English:
The Budget Vote of the Treasury provides Parliament with the
opportunity to assess macro-economic issues. The voted funds
have at its core the financing of responsibility for sound
control and management of South Africa’s public finances.
IsiXhosa:
Kubalulekile ukuba abantu baseMzantsi Afrika babone ukuba
iimali ziyaphi kwaye zenziwa ntoni.
English:
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Sixty percent of this Budget Vote of Treasury has to do with
financial transfers. It is this budget vote, through its
mandate, that can claim to redistribute significantly finances
to ensure crucial functioning of the state at all levels. The
review that Treasury is undertaking with regards to
government’s macro-economic policies since the global
financial crisis of 2008, must be welcome. We need to add that
it is not just the Treasury which should be involved in this
exercise. The ANC Economic Transformation Cluster in
Parliament has begun a process in which we should seek to
examine through evidence-based research what are our options.
We shall remain informed by our needs for inclusive economic
growth and a vibrant mixed economy of state and the private
sector. We welcome that Treasury will assist in the fiscal
monitoring and macro prudential policy choices and propose the
appropriate policy reforms and institutional frameworks.
On local government, the financial status and management of
municipality has led the committee to express our doubt in the
effectiveness of the Municipal Finance Improvement Programme,
MFIP. The critical question is, what impact has this programme
had over the past financial years, given that it has been a
five-year programme? The irregularities that have been
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uncovered, on financial transfers to military veterans, do not
add value to the programme and the dignity that should be
attached to such a programme. We are aware of a number of
interventions including the Deputy President’s recent remarks.
We welcome the work of the Treasury with regards to the
funding of the Anti-gender-based violence efforts under
programme one. We look forward to a day where there will be no
transfer of these funds but they will be directly allocated
for this cause. We commend the contribution of SA Revenue
Service, Sars to the improvement of the lives of our people to
their efforts of raising increased revenue. The transfer of
revenue will enhance the work of Sars. Having said that, given
our developmental challenges, the tax base of our country has
to broaden through growing the economy and voluntary
compliance must improve.
Tackling tax avoidance and illicit financial flows are crucial
in improving the position of the country’s fiscal. In
addition, we welcome the re-establishment of the tax committee
led by Judge Dennis Davis to examine areas that pose the
highest risk of aggressive tax avoidance and illegal transfer
pricing. With regards to the performance of the department
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against the programmes in the vote, we are conscious that the
filling in of the leadership positions in particular the Head
of the Government Pensions Administration Agency, GPAA and the
challenges in the Government Employees Pension Fund, GEPF, are
matters that Treasury is ceased with.
However, we must record that the pace has not been as desired.
While we recognise that negotiations at National Economic
Development and Labour Council, Nedlac had also taken some
time. We have raised our concerns on pension fund reforms with
Treasury on a number of occasions and we share the concern
over pace.
In conclusion Acting House Chairperson, the ANC’s intervention
to stimulate investment and inclusive growth and the ANC’s
efforts to rebuild state capacity are informed by the vision
and strong capability of the state. The ANC-led government has
taken some steps to uproot corruption. The ANC wants to
support the budget and inclusive economic growth for us will
be built on strengthening industrial policy, macro-economic
stability of achieving economic growth, structural reforms of
network industries, closer co-ordination between government
and social partners as well as expanding regional trade with
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other countries on the African continent. I thank you Acting
House Chairperson, the ANC supports the budget vote.
The ACTING CHAIRPERSON (Mr M G Mahlaule): Thank you very much
hon member. Hon members, I am informed that from the initial
time that the Minister had been allocated of 30 minutes on his
introductory speech, he has left 11 minutes. Put together with
the 10 minutes that he is allocated to close the debate, he
has 21 minutes. May I now invite the hon Minister of Finance?
The MINISTER OF FINANCE: Hon House Chair, let me start by
dealing with procurement, which has occupied much space in
this debate this afternoon. Firstly, let me start with the
debate with what the policy goals of procurement are. The
opposition has argued that policy goals should not include
race. Let me just say the following: Deliberately, they ignore
or forget the provisions of the Constitution. The provisions
of the Constitution say that addressing the imbalances of the
past must be part of the policy goals of procurement. That is
the policy goals state in section 217 of the Constitution.
That policy goal is ignored by our detractors.
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You may then ask why? You know, the German economist Fredrich
List, who has served in America under the first US Secretary
of the Treasury, Alexander also watched how the British
developed and how they grew. He wrote in his book: The
National System of Political Economy, that it is common for
those who have used the ladder to kick the same ladder away,
kicking the ladder away.
The South African society is a society crushed in a racial
mode. Redressing the imbalances of the past presupposes that
you are going to redress that mode. So, it is a constitutional
imperative. So, it is disingenuous to ignore that political
imperative.
Let me then deal with the court case, not for the benefit of
us, but for the benefit of all South Africans who are
grappling with this question. The Supreme Court of Appeal
ruled against the Minister of Finance, but in its ruling, it
said that those regulations will apply for 12 months to give
the Minister the time period within which to correct that.
The Constitutional Court supported the ruling of the Appeal
Court, but was silent on the status of the regulations in
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between. National Treasury has applied to court for the
clarification of what the status of those regulations in
between are. That is point number one.
Point number two, what did the director-general do that is
misinterpreted here? In this conclusion, the director-general
then wrote and said - in support of the court, not against the
court – those tenders that were issued before 16 February,
before the judgment, must be adjudicated in terms of the old
regulations, but for those tenders that are issued after the
judgment, people must hold on for a new regulation. That is
what the National Treasury did.
However, fast-forward, we also created, in order not to create
confusion, a system of exemptions in terms of section 3 of the
Preferential Procurement Act. That system is in place and a
team in the procurement division is working on the side. We
have given them a 72-hour turnaround time. So, state
institutions at the moment are applying for exemptions in
order to do that. So, that is the second point.
The third point is that corruption is a glaring problem. It is
unfortunate that the opposition link that purely to BEE. Let
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us take corruption basically as something South Africans
across the board must fight. When you associate it with BEE,
you are making it difficult for those of us who support BEE.
Corruption is corruption. Let us deal with it.
The other point I must really, really say, clear the North
West. It is being said, even in newspapers that North West has
underspent by R17 billion. That is inaccurate. That is also an
inaccurate reading of section 32 publications by Treasury.
Treasury every quarter publish the total expenditures. We have
preliminary results that had been published in terms of
section 32. What is the story that they tell? The preliminary
results state that national departments combined, not just the
North West, national departments combined underspent by R17
billion. National departments. Provincial departments combined
underspent by R11 billion. So, that is the story. Please, keep
North West out of this. Keep North West out of this.
Let me turn to the local government situation. The local
government situation is bad up to a state of dysfunctionality
in a number of areas. Now, my sense is when we start
politicising it and say that the reason for the intervention
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in Mangaung is an expectation of the ANC conference in
December, it is absolutely crazy.
Anybody who is watching that municipality and they say a vote
of no confidence against this, vote of no confidence against
that, I want to say it is a source of instability. It may be
true that the political instability is also undermining the
functioning of the municipality. We must also address that
issue. We will not be addressing that issue because we are
going to a national conference; we are addressing that is
because it undermines the functioning of the municipality.
I am told that we have two municipal managers in Nelson
Mandela Bay. Who is going to sign the finances of that
municipality? Again, we have to intervene, not because of any
political motivations. In fact, I am trying to talk to a
couple of political parties in Nelson Mandela Bay to work with
the Minister of Finance to achieve stability in that
municipality. I am not talking to a single party; I am talking
to a multiparty option to deal with that issue.
Let me turn to the issue of not being transparent on debt. I
found it strange. When we tabled the Budget in February, we
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told Parliament two things or a couple of things. We say to
Parliament that this is the revenue we are going to collect.
This is the expenditure that we are going to incur, which in
most cases is bigger than the revenue. There is a gap, which
we call the deficit.
We also say that we would be doing debt service costs, we will
also have redemption, publically. The documentation that
accompanies that in the form of a budget review, we also
table. Now, when we leave Parliament, we do exactly what we
have told Parliament. We go to the market and raise money.
When you raise money, we come back to Parliament and we say
this is how much we have raised and these are the institutions
that we have raised it from, which is transparent.
The last point – I am not going to deal with all the points
that is mentioned. Hon Sarupen, I am sure he must have
listened when I said that one of the focus areas, - in this
speech - is going to be the outcomes of the spending reviews.
What do those spending reviews tell us? Those spending
reviews tell us that there are programmes that indeed need to
be reviewed. There are new spending areas, for instance, if we
look at what is happening in KwaZulu-Natal now, clearly, we
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need to rethink and think carefully about climate change and
its implications, and therefore taking a priority space in our
thinking.
So, we have said we are going to use those spending reviews to
do that. In addition, it is no longer that; it is the review
of some of the public entities. What is their role? Can there
be rationalisation? How do we manage the deficient? All of
that work is contained in that paragraph where I am saying,
with that spending reviews, we need to be doing that.
By and large, I must say thank hon members for the time. I
cannot respond to anything else. To hon Kwankwa, we are quite
keen to look at the contents of your Private Member Bill on
Insurance. If you ask me, I am not going to oppose it purely
because it comes from an opposition party. I will oppose it on
the basis of principle. I am not saying that I am going to
oppose it; I am saying it is going to be interesting to look
at the details.
Thank you, House Chair, I think I did not even take your 21
minutes. Thank you.
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The mini-plenary session rose at 15:56.
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