Questions and Replies

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04 October 2023 - NW2937

Profile picture: Alexander, Ms W

Alexander, Ms W to ask the Minister of Finance

Whether, in light of financial losses incurred by municipalities as a result of lower electricity sales due to the rolling blackouts, the National Treasury has taken any steps to assist struggling municipalities to adapt and recalibrate their budgets; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

The Municipal Finance Management Act, 2003 (Act No 56 of 2003) and through various sections of the Act, provide guidelines to municipalities on how to treat impending revenue shortfalls. In addition, the National Treasury also provides regular Budget Circulars to guide municipalities to prepare annual budgets and address situations like loadshedding.

Section 70 of the MFMA, subsection 1. “the accounting officer of a municipality must report in writing to the municipal council – (a) any impending (i) shortfalls in budgeted revenue, and (ii) overspending of the municipality’s budget, and (b) any steps taken to prevent or rectify such shortfalls or overspending.

Section 28 of the same Act provides guidance on Municipal Adjustments Budgets – (1)(a) that “a municipality may revise an approved budget through an Adjustments Budget and (2)(a) must adjust the revenue and expenditure estimates downwards if there is a material under collection of revenue during the current year.

Given the fiscal constrained environment within which the National Fiscus operates, the National Treasury was not in a position during the preparation of the 2022 MTEF, to make any additional funding available to municipalities for this purpose. As a result, they were advised to reprioritize their tabled 2023 MTREF Budgets to absorb the cost associated with loadshedding within baselines.

04 October 2023 - NW2918

Profile picture: Manyi, Mr M

Manyi, Mr M to ask the Minister of Finance

Whether the Government has run out of money; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

Government is working to manage public finances in a prudent and sustainable manner. This includes appropriately responding to the materialization of risks, include unforeseen economic and financial conditions. To be clear, the Government has not run out of money. Government publishes the "Statement of the National Government’s Revenue, Expenditure, and Borrowing" monthly, available on the National Treasury website. This statement provides detailed information into government revenue collections, expenditure and borrowing.

Revenue collections for the first four months of 2023/24 have performed below expectations, primarily due to under-collections in corporate income tax and higher VAT refunds. Therefore, the main budget deficit for the first four months of 2023/24 is higher than expected.

Compared to the 2023 Budget, the economic and revenue outlook has deteriorated, and tighter financial conditions have constrained government’s borrowing programme and led to higher borrowing costs. Government remains committed to prudent fiscal management and addressing these challenges to ensure the financial stability of the nation.

04 October 2023 - NW2909

Profile picture: Buthelezi, Mr EM

Buthelezi, Mr EM to ask the Minister of Finance

How does the National Treasury ensure that municipalities comply and lock their adjusted budgets and/or financial systems at the end of each month to ensure prudent financial management?

Reply:

The Municipal Regulations on a Standard Chart of Accounts (mSCOA), Gazette No. 37577, 2014, was promulgated on 22 April 2014. All municipalities and municipal entities had to comply with the mSCOA Regulations by 01 July 2017. In terms of mSCOA, municipalities should budget, transact and report on all six (6) legislated mSCOA segments and submit the required data strings as per the legislated timeframes to the National Treasury’s Local Government Database and Reporting System (LGDRS). The budget and adjustments budgets adopted by Council must be locked on the core municipal financial system before submitting the data strings to the LGDRS. Most of the municipal financial systems have built-in controls that do not allow transacting if the budget or adjustments budget has not been locked. Also, Section 65(2)(j) of the MFMA requires that the accounting officer must take all reasonable steps to ensure that all financial accounts of the municipality are closed at month-end and reconciled with its records before submitting the monthly data string to the LGDRS.

As communicated in MFMA Budget Circular No. 123 dated 03 March 2023, the LGDRS is locked on the 10th working day of the month following the legislated deadline. The late submissions of data strings are not accepted by the LGDRS. The timeous submission of credible mSCOA data strings to the LGDRS has been included in the equitable share release criteria for 2023/24 that was communicated in MFMA Circular No. 122 (dated 09 December 2022).

Since the financial system must be locked at the end of the month to generate mSCOA data strings, municipalities may not open during closed periods to correct errors. Errors must be corrected in the next open period. Providers of municipal financial systems have also been instructed by the National Treasury in 2019 to ensure that the necessary internal controls are built into the financial system to prevent the opening during closed periods on the financial system and the bypassing of such controls.

04 October 2023 - NW2908

Profile picture: Abraham, Ms PN

Abraham, Ms PN to ask the Minister of Finance

Whether he intends to continue financing and expanding public employment programmes such as the Expanded Public Works Programme and the 2021-22 Presidential Employment Stimulus programme over the medium-term expenditure framework; if not, why not; if so, what are the relevant details?

Reply:

Considerations for continued financing and expanding of public employment programmes such as the Expanded Public Works Programme and the Presidential Employment Stimulus programme are part of such the budget process, and the outcome of this process will be announced in the 2023 Medium Term Budget Policy Statement.  

04 October 2023 - NW2879

Profile picture: Herron, Mr BN

Herron, Mr BN to ask the Minister of Finance

(1)Whether, considering that in terms of the Municipal Fiscal Powers and Functions Act, Act 12 of 2007, a municipal base tariff includes a reasonable rate of return if authorised by a regulator and/or the Minister responsible for the municipal service, and whereas the National Energy Regulator of South Africa is the regulator for electricity services and that the annual approval of electricity tariffs levied by municipalities includes the reasonable rate of return or surplus margin, the City of Cape Town also charges a municipal surcharge on top of its electricity tariffs called a contribution to rates or an unregulated charge, he has prescribed compulsory norms and standards for municipal surcharges on electricity services as provided for in section 8 of the specified Act; if not, what is the position in this regard; if so, (a) on what date(s) were the norms and standards prescribed and (b) will he furnish Mr B N Herron with a copy of the norms and standards; (2) whether he has found that the City of Cape Town complied with the norms and standards as required by section 9(1)(a) of the Act; if not, what is the position in this regard; if so, what are the relevant details; (3) whether the City of Cape Town, on its own and/or as part of a group of municipalities and/or organised local government, applied for and was granted an exemption from compliance with the norms and standards as provided for in terms of section 9(1)(b) of the Act; if not, what is the position in each case; if so, (a) on what date did he gazette the exemption and (b) will he furnish Mr B N Herron with a copy of the notice in the Gazette; (4) whether he promulgated any regulations in terms of the Act, which provide for the municipal surcharge on electricity services currently levied by the City of Cape Town; if not, what is the position in this regard; if so, what are the relevant details; (5) (a) in terms of which provisions of the Act and/or any other applicable law is the City of Cape Town authorised to charge a municipal surcharge on electricity services and (b) what are the consequences to the City of Cape Town for charging a levy on a municipal surcharge on electricity services without being authorised by himself and/or the Act

Reply:

(1) Section 8(1) of the Municipal Fiscal Powers and Functions Act (MFPFA) stipulates that the Minister of Finance may prescribe compulsory norms and standards for imposing municipal surcharges. To date, the Minister of Finance have not prescribed any compulsory norms and standards for regulating the imposition of municipal surcharges. However, the absence of the norms and standards does not restrict a municipality from imposing surcharges in their tariffs given that this is a power given to municipalities in terms of section 229 of the Constitution and the Municipal Systems Act (MSA). Furthermore, if a municipality decides to levy a surcharge, approval is done by the municipal council in terms of a tariff policy, pursuant to section 75 of the MSA and will also be subject to section 8 of the Municipal Fiscal Powers and Functions Act (MFPFA), as soon as norms and standards for municipal surcharges are prescribed by the Minister of Finance. The National Treasury is currently reviewing the possibility of introducing compulsory norms and standards in terms of section 8 of the MFPFA and has appointed a service provider to assist with the development of compulsory national norms and standards for regulating municipal surcharges on electricity.

  1. Not applicable.
  2. Not applicable.

(2) It is not yet necessary for the City of Cape Town (or any other municipality) to comply with section 9(1) of the MFPFA given that the norms and standards referred to in section 8 of the Act is yet to be prescribed by the Minister of Finance. As soon as these norms and standards are prescribed, all municipalities levying surcharges on municipal services will however be required to comply with this provision.

(3) See response in (2).

  1. Not applicable.
  2. Not applicable.

4. See response in (1).

(5)(a) Various pieces of legislation regulate the levying of municipal surcharges:

The Constitution

Section 229 of the Constitution indicates that a municipality may impose—

(1) subject to subsections (2), (3) and (4), a municipality may impose

(a) rates on property and surcharges on fees for services provided by or on behalf of the municipality

(2) The power of a municipality to impose rates on property, surcharges on fees for services provided by or on behalf of the municipality, or other taxes, levies or duties—

(b) may be regulated by national legislation.

The Municipal Fiscal Powers and Functions Act (MFPFA)

Section 8 of the MFPFA gives power to the Minister of Finance to prescribe compulsory national norms and standards for imposing “municipal surcharges”. Furthermore, when levying surcharges, municipalities are required in terms of section 9(1)(a) of the MFPFA to comply with any norms and standards contemplated in section 8 of the MFPFA.

The Municipal Systems Act (MSA)

Section 4(1)(c)(ii) of the MSA indicates that the council of a municipality has the right to finance the affairs of the municipality by imposing surcharges on fees, rates on property and, to the extent authorised by national legislation, other taxes, levies and duties. In section 74(2)(f), the Act provides that a municipal tariff policy must reflect at least the following principles: “(f) provision may be made in appropriate circumstances for a surcharge on the tariff for a service”. In terms of section 94(1), the Minister responsible for Local Government may regulate the following matters: “(d) criteria to be taken into account by municipalities when imposing surcharges on tariffs for services and determining the duration thereof;”.

(b) Once norms and standards for municipal surcharges are prescribed for a specific municipal service as per section 8 of the MFPFA, any municipality that does not adhere to such norms and standards (e.g. exceeds prescribed levels) will be in non-compliance with the Act, except if the Minister of Finance has given approval to such municipality in terms of section 9(1)(b) to be exempted from complying to any of the norms and standards as contemplated in section 8 of the Act.

04 October 2023 - NW2869

Profile picture: Manyi, Mr M

Manyi, Mr M to ask the Minister of Finance

What are the full details of the (a) total amount of the public debt of the Republic and (b) debt of (i) state-owned companies and (ii) municipalities that have been underwritten by the national fiscus as a percentage of Gross Domestic Product?

Reply:

(a) Gross debt of the national government is disclosed in Table 7.7 of the 2023 Budget Review. It is estimated to reach R5.06 trillion or 72.2 per cent of GDP by the end of the 2023/24 Financial Year.

(b) (i) Government guarantee exposure to state-owned companies is disclosed on Table 7.10 on page 91 of the 2023 Budget Review, and these are explicitly underwritten. Other contingent liabilities are included with the provisions in Table 7.11 on page 92 of the 2023 Budget Review.

(ii) There is no debt (borrowing) or loans taken up by municipalities that have been underwritten by the national fiscus.  Chapter 6 of the MFMA sets the legal framework that enables municipalities to take their own decisions regarding borrowing. Specifically, sections 50 and 51 of the MFMA deal with municipal guarantees and national and provincial guarantees.

This decision-making process for Municipal Councils were empowered by the Amendment to the Constitution of the Republic, in section 230A.  Therefore, Municipalities borrow on the strength of their own financial standing and status.

04 October 2023 - NW2981

Profile picture: De Freitas, Mr MS

De Freitas, Mr MS to ask the Minister of Finance

(a) What tourism projects, undertaken by the Development Bank of Southern Africa, were initiated in the (i) past three financial years and (ii) current year to date, (b) on what date was each project initiated, (c) which of the specified projects were completed, (d) what was the set deadline for each project to be completed, (e) what are the actual completion dates for each completed project, (f) what are the reasons that each project was not completed by the set deadline, (g) what budget was allocated for each completed project and (h) what amount was spent in each completed project?

Reply:

The DBSA has seventy tourism-related projects, of which twenty-two have been completed, and forty-eight are in various stages of execution.

The detailed project list, which includes details (question (a)-(h)) is listed below.

No

Province

Work Package

Project Name (a)

Date IPW signed off by NDT to DBSA (b)

Status ( c)

Current Status (Planning & Design stage 1-3, Procurement (stage 4),Construction Stage 5, Close Out (stage 6-7)

Baseline Targeted Practical Completion & Occupation Date (d)

Actual & revised Practical Completion & Occupation date ( e)

Comments on Delays & targets not being met (pls be precise to the point) (f)

Total Budget (PSP, Construction, DBSA Fees) (g)

Actual Total Expenditure as at End August 2023 (h)

1

NW

Compliance Certificates

NW Lehurutshe Bird and Trophy Hunting owned by the Bakgatla ba Lencoe Trust

2020-12-07

Construction

Construction

2024-03-22

2024-03-22

Not Applicable

R28,209,243.11

R1,176,025.47

2

KZN

Compliance Certificates

KZN Isibhubhu Project

2020-12-07

Construction

Construction

2023-09-16

2023-11-15

Slow performance of the contractor at commencement due to cash constraints and material sourcing challenges. The DBSA loan facility to the contractor has assisted in procurement of material and the performance of the contractor has improved as they are recovering to complete on time. Suspension of works due to the yearly traditional reed dance for a week was the latest stoppage. Delay also caused by client request for change in design for the maidens change rooms.

R35,470,271.15

R13,489,181.26

3

KZN

Compliance Certificates

KZN Muzi Pan Project

2020-12-07

Concurrence

Procurement - Concurrence Requested

2024-06-13

2024-06-13

Not Applicable

R21,899,635.05

R578,852.36

4

MP

Community Tourism Projects

Numbi Gate - Nkambeni Safari Lodge

2020-12-07

Construction

Construction

2024-03-26

2024-03-26

Delays in commencement of the project due to community social issues and currently a land claim.

R24,563,693.62

R2,659,306.92

5

MP

Community Tourism Projects

Numbi Gate - Mdlhuli Safari Lodge

2020-12-07

Construction

Construction

2024-03-26

2024-03-26

Delays in commencement of the works due to the delays in appointment of the CLO and labour

R33,554,531.24

R3,455,932.19

6

LP

Community Tourism Projects

Nandoni Dam

2020-12-07

Construction

Construction

2024-05-16

2024-05-16

Not Applicable

R38,982,441.65

R1,738,488.51

7

LP

Community Tourism Projects

Tshathogwe Game Farm

2020-12-07

Construction

Construction

2023-09-09

2023-11-14

Poor performance of the Contractor. Penalties to be charged in accordance with contract.

R26,741,416.87

R9,476,563.90

No

Province

Work Package

Project Name (a)

Date IPW signed off by NDT to DBSA (b)

Status ( c)

Current Status (Planning & Design stage 1-3, Procurement (stage 4),Construction Stage 5, Close Out (stage 6-7)

Baseline Targeted Practical Completion & Occupation Date (d)

Actual & revised Practical Completion & Occupation date (e)

Comments on Delays & targets not being met (pls be precise to the point) (f)

Total Budget (PSP, Construction, DBSA Fees) (g)

Actual Total Expenditure as at End August 2023 (h)

8

LP

Community Tourism Projects

Mtititi Game Farm

2020-12-07

Construction

Construction

2023-06-10

2023-12-31

Poor performance of the Contractor. Penalties to be charged in accordance with contract.

R27,898,562.18

R14,455,737.46

2023-12-31

LP

Community Tourism Projects

Mapate Recreational Social Tourism Facility

2020-12-07

Construction

Construction

2023-06-16

2023-12-31

Suspension of works due to fatality on site, Poor performance by contractor at commencement of the constructions works.

R27,450,164.53

R9,245,260.80

2023-12-31

KZN

Local Community Museums

Product Enhancement at Anton Lembede Museum eThekwini Municipality (KZN)

2021-02-08

Construction

Construction

2024-03-02

2024-03-02

Not Applicable

R23,611,547.91

R979,096.02

11

NC

Local Community Museums

Product Enhancement at McGregor Museum (NC) WP1

2021-02-08

Evaluation

Procurement - Evaluation

2024-06-16

2024-06-16

Not Applicable

R240,750.00

 

12

NC

Local Community Museums

Product Enhancement at McGregor Museum (NC) WP2

2021-02-08

Evaluation

Procurement - Evaluation

2024-04-15

2024-04-15

Not Applicable

   

13

KZN

Local Community Museums

Product Enhancement at AmaHlubi Cultural Heritage (KZN)

2021-02-08

Concept NDT

Planning and Design

2024-03-11

2024-03-11

Not Applicable

R8,228,848.39

R979,069.02

14

NW

Local Community Museums

Product Enhancement at Sol Plaatjie Museum (NW)

2021-02-08

Construction

Construction

2024-02-01

2024-02-01

Delay in commencement of works due to an impasse on works to be implemented (new and maintenance work). Meeting between NDT, DBSA and Mahikeng Municipality to be held on 20.09.2023 to find way forward on scope.

R8,228,848.31

R832,007.41

No

Province

Work Package

Project Name (a)

Date IPW signed off by NDT to DBSA (b)

Status ( c)

Current Status (Planning & Design stage 1-3, Procurement (stage 4), Construction Stage 5, Close Out (stage 6-7)

Baseline Targeted Practical Completion & Occupation Date (d)

Actual & revised Practical Completion & Occupation date ( e)

Comments on Delays & targets not being met (pls be precise to the point) (f)

Total Budget (PSP, Construction, DBSA Fees) (g)

Actual Total Expenditure as at End August 2023 (h)

15

NW

Local Community Museums

Product Enhancement at Lehurutshe Liberation Heritage Museum

2021-02-08

Concept NDT

Planning and Design

2024-02-27

2024-02-27

Not Applicable

R15,384,460.00

R832,007.41

16

NC

lndi-Atlantic Route (Coastal and Marine Tourism initiatives)

Tourism development at Orange River Mouth (NC) as part of the Indi-Atlantic Route

2021-02-08

Design Development

Planning and Design

N/A

N/A

Project works to be completed till Design Stage. Further stages will await NDT instruction to Proceed.

R76,121,200.33

R949,421.57

17

EC

lndi-Atlantic Route

Tourism Development at Hole in the Wall (EC) as part of the Indi-Atlantic Route

2021-02-08

Design Development

Planning and Design

N/A

N/A

Project works to be completed till Design Stage. Further stages will await NDT instruction to Proceed.

R56,103,208.95

R1,760,791.87

18

KZN

lndi-Atlantic Route

Tourism development at Harold Johnson Nature Reserve as part of the Indi-Atlantic Route

2021-02-08

Design Development

Planning and Design

N/A

N/A

Project works to be completed till Design Stage. Further stages will await NDT instruction to Proceed.

R48,708,342.83

R1,443,770.69

19

GP

Maintenance & Beautification

Suikerbosrand Nature Reserve, Gauteng

2020-12-07

Evaluation

Procurement - Evaluation

2024-03-20

2024-03-20

Not Applicable

R8,733,665.78

R257,326.41

20

KZN

Maintenance & Beautification

J L Dube Precinct, KZN

2020-12-07

Design Development

Planning and Design

2023-11-27

2023-11-27

Not Applicable

R4,277,257.82

R37,527.79

21

FS

Maintenance & Beautification of Provincial State-Owned Attractions.

Gariep Dam Resort, Free State

2020-12-07

Construction

Construction

2023-09-14

2023-12-31

The contractor is behind schedule. Penalties to be charged in accordance with contract.

R4,999,748.71

R2,182,007.88

No

Province

Work Package

Project Name (a)

Date IPW signed off by NDT to DBSA (b)

Status ( c)

Current Status (Planning & Design stage 1-3, Procurement (stage 4),Construction Stage 5, Close Out (stage 6-7)

Baseline Targeted Practical Completion & Occupation Date (d)

Actual & revised Practical Completion & Occupation date (e)

Comments on Delays & targets not being met (pls be precise to the point) (f)

Total Budget (PSP, Construction, DBSA Fees) (g)

Actual Total Expenditure as at End August 2023 (h)

22

FS

Maintenance & Beautification of Provincial State-Owned Attractions.

Maria Moroka Resort in Thaba Nchu, Free State

2020-12-07

Construction

Construction

2023-09-15

2023-12-31

The contractor is behind schedule. Penalties to be charged in accordance with contract.

R4,999,748.71

R894,648.15

23

FS

Maintenance & Beautification of Provincial State-Owned Attractions.

Phillip Saunders Resort in Bloemfontein, Free State

2020-12-07

Construction

Construction

2023-08-15

2023-12-31

Additional scope of work requested by the end user Client and extension of time under review to determine the completion date.

R4,999,748.71

R2,637,239.48

24

FS

Maintenance & Beautification of Provincial State-Owned Attractions.

Sterkfontein Dam Nature Reserve, Free State

2020-12-07

Construction

Construction

2023-08-14

2023-12-31

The contractor is behind schedule. Penalty to be charged in accordance with contract.

R4,999,748.71

R2,967,908.65

25

MP

Maintenance & Beautification of Provincial State-Owned Attractions.

Manyeleti Nature Reserve, Mpumalanga

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

2023-06-08

Not Applicable

R3,736,433.94

R2,922,378.71

26

MP

Maintenance & Beautification of Provincial State-Owned Attractions.

Andover Nature Reserve, Mpumalanga

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

2023-06-08

Not Applicable

R3,736,433.94

R3,476,227.74

27

MP

Maintenance & Beautification of Provincial State-Owned Attractions.

Songimvelo Nature Reserve, Mpumalanga

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

2023-06-08

Not Applicable

R3,736,433.94

R3,801,835.77

28

MP

Maintenance & Beautification of Provincial State-Owned Attractions.

SS Skosana Nature Reserve, Mpumalanga

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

2023-06-08

Not Applicable

R3,736,433.94

R3,089,137.42

No

Province

Work Package

Project Name (a)

Date IPW signed off by NDT to DBSA (b)

Status (c)

Current Status (Planning & Design stage 1-3, Procurement (stage 4),Construction Stage 5, Close Out (stage 6-7)

Baseline Targeted Practical Completion & Occupation Date (d)

Actual & revised Practical Completion & Occupation date (e)

Comments on Delays & targets not being met (pls be precise to the point) (f)

Total Budget (PSP, Construction, DBSA Fees) (g)

Actual Total Expenditure as at End August 2023 (h)

22

FS

Maintenance & Beautification of Provincial State-Owned Attractions.

Maria Moroka Resort in Thaba Nchu, Free State

2020-12-07

Construction

Construction

2023-09-15

2023-12-31

The contractor is behind schedule. Penalties to be charged in accordance with contract.

R4,999,748.71

R894,648.15

23

FS

Maintenance & Beautification of Provincial State-Owned Attractions.

Phillip Saunders Resort in Bloemfontein, Free State

2020-12-07

Construction

Construction

2023-08-15

2023-12-31

Additional scope of work requested by the end user Client and extension of time under review to determine the completion date.

R4,999,748.71

R2,637,239.48

24

FS

Maintenance & Beautification of Provincial State-Owned Attractions.

Sterkfontein Dam Nature Reserve, Free State

2020-12-07

Construction

Construction

2023-08-14

2023-12-31

The contractor is behind schedule. Penalty to be charged in accordance with contract.

R4,999,748.71

R2,967,908.65

25

MP

Maintenance & Beautification of Provincial State-Owned Attractions.

Manyeleti Nature Reserve, Mpumalanga

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

2023-06-08

Not Applicable

R3,736,433.94

R2,922,378.71

26

MP

Maintenance & Beautification of Provincial State-Owned Attractions.

Andover Nature Reserve, Mpumalanga

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

2023-06-08

Not Applicable

R3,736,433.94

R3,476,227.74

27

MP

Maintenance & Beautification of Provincial State-Owned Attractions.

Songimvelo Nature Reserve, Mpumalanga

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

2023-06-08

Not Applicable

R3,736,433.94

R3,801,835.77

28

MP

Maintenance & Beautification of Provincial State-Owned Attractions.

SS Skosana Nature Reserve, Mpumalanga

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

2023-06-08

Not Applicable

R3,736,433.94

R3,089,137.42

No

Province

Work Package

Project Name (a)

Date IPW signed off by NDT to DBSA (b)

Status ( c)

Current Status (Planning & Design stage 1-3, Procurement (stage 4),Construction Stage 5, Close Out (stage 6-7)

Baseline Targeted Practical Completion & Occupation Date (d)

Actual & revised Practical Completion & Occupation date ( e)

Comments on Delays & targets not being met (pls be precise to the point) (f)

Total Budget (PSP, Construction, DBSA Fees) (g)

Actual Total Expenditure as at End August 2023 (h)

29

EC

Maintenance & Beautification of Provincial State-Owned Attractions.

Thomas Baines Nature Reserve, Eastern Cape

2020-12-07

Construction

Practical Completion Achieved

2023-08-08

2023-09-14

Certain areas on site were put on hold due to environmental concerns which did not form part of the scope. Practical completion has been achieved.

R4,285,162.35

R3,415,779.54

30

EC

Maintenance & Beautification of Provincial State-Owned Attractions.

Hluleka Nature Reserve, Eastern Cape

2020-12-07

Concept To be Approved

Planning and Design

2023-12-27

2024/25FY

Not Applicable

R4,185,939.39

R83,973.60

31

EC

Maintenance & Beautification of Provincial State-Owned Attractions.

Double Mouth Nature Reserve, Eastern Cape

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-06

N/A

Not Applicable

R3,528,146.03

R2,859,541.75

32

EC

Maintenance & Beautification of Provincial State-Owned Attractions.

Oviston Nature Reserve, Eastern Cape

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-25

2023-09-01

Project was affected by the hunting season as the contractor had limited access to site, hence the delay in completion against the baseline PC date. The project has achieved practical completion.

R3,504,584.39

R2,622,218.39

33

EC

Maintenance & Beautification of Provincial State-Owned Attractions.

Baviaanskloof Nature Reserve, Eastern Cape

2020-12-07

Construction

Construction

2023-07-25

2023-10-31

Change in the design of the kitchen building and location allocated by the end user.

R3,528,146.03

R2,182,741.34

34

EC

Maintenance & Beautification of Provincial State-Owned Attractions.

Cwebe and Dwesa, Eastern Cape

2020-12-07

Construction

Construction

2023-12-01

2023-12-01

Delays in granting contractor access to all facilities on site due to a movie recording or filming.

R4,263,982.64

R888,768.16

35

EC

Maintenance & Beautification of Provincial State-Owned Attractions.

Mpofu and Fordyce Nature Reserve, Eastern Cape

2020-12-07

Construction

Construction

2023-12-02

2023-12-02

Delay on works as some facilities had to be put on hold to accommodate the hunting season which generates revenue for the reserve.

R4,263,982.64

R1,502,586.19

No

Province

Work Package

Project Name (a)

Date IPW signed off by NDT to DBSA (b)

Status ( c)

Current Status (Planning & Design stage 1-3, Procurement (stage 4),Construction Stage 5, Close Out (stage 6-7)

Baseline Targeted Practical Completion & Occupation Date (d)

Actual & revised Practical Completion & Occupation date ( e)

Comments on Delays & targets not being met (pls be precise to the point) (f)

Total Budget (PSP, Construction, DBSA Fees) (g)

Actual Total Expenditure as at End August 2023 (h)

36

NC

Maintenance & Beautification of Provincial State-Owned Attractions.

Doornkloof Nature Reserve, Northern Cape

2020-12-07

Construction

Construction

2023-11-23

2023-11-23

Not Applicable

R5,254,310.06

R1,235,877.71

37

NC

Maintenance & Beautification of Provincial State-Owned Attractions.

Rolfontein Nature Reserve, Northern Cape

2020-12-07

Construction

Construction

2023-11-23

2023-11-23

Not Applicable

R5,254,310.06

R1,686,739.19

38

NC

Maintenance & Beautification of Provincial State-Owned Attractions.

Goegap and Witsand Nature Reserve, Northern Cape

2020-12-07

Construction

Construction

2023-11-23

2023-11-23

Not Applicable

R5,254,310.06

R3,410,098.70

39

LP

Maintenance & Beautification of Provincial State-Owned Attractions.

Makapans Valley WHS, Limpopo

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

N/A

Not Applicable

R3,145,623.58

R2,997,834.07

40

LP

Maintenance & Beautification of Provincial State-Owned Attractions.

Nwanedi Nature Reserve, Limpopo

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

N/A

Not Applicable

R3,145,623.58

R2,558,202.70

41

LP

Maintenance & Beautification of Provincial State-Owned Attractions.

Blouberg Nature Reserve, Limpopo

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

N/A

Not Applicable

R3,145,623.58

R2,465,052.22

42

LP

Maintenance & Beautification of Provincial State-Owned Attractions.

Musina Nature Reserve, Limpopo

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

N/A

Not Applicable

R3,145,623.58

R2,777,971.87

No

Province

Work Package

Project Name (a)

Date IPW signed off by NDT to DBSA (b)

Status ( c)

Current Status (Planning & Design stage 1-3, Procurement (stage 4),Construction Stage 5, Close Out (stage 6-7)

Baseline Targeted Practical Completion & Occupation Date (d)

Actual & revised Practical Completion & Occupation date (e)

Comments on Delays & targets not being met (pls be precise to the point) (f)

Total Budget (PSP, Construction, DBSA Fees) (g)

Actual Total Expenditure as at End August 2023 (h)

43

LP

Maintenance & Beautification of Provincial State-Owned Attractions.

Modjadji Nature Reserve, Limpopo

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-16

N/A

Not Applicable

R3,145,623.58

R2,430,597.23

44

WC

Maintenance & Beautification of Provincial State-Owned Attractions.

Kogelberg Nature Reserve, Western Cape

2020-12-07

Practical Completion

Practical Completion Achieved

2023-06-14

N/A

Not Applicable

R3,634,316.46

R3,003,843.38

45

WC

Maintenance & Beautification of Provincial State-Owned Attractions.

Goukamma Nature Reserve, Western Cape

2020-12-07

Practical Completion

Practical Completion Achieved

2023-06-14

N/A

Not Applicable

R3,634,316.46

R2,527,332.95

46

WC

Maintenance & Beautification of Provincial State-Owned Attractions.

Lookout Hill Khayelitsha, Western Cape

2020-12-07

Practical Completion

Practical Completion Achieved

2023-06-14

N/A

Not Applicable

R3,634,316.46

R3,277,649.65

47

WC

Maintenance & Beautification of Provincial State-Owned Attractions.

De Hoop Nature Reserve, Western Cape

2020-12-07

Practical Completion

Practical Completion Achieved

2023-06-14

N/A

Not Applicable

R3,634,316.46

R2,026,649.36

48

WC

Maintenance & Beautification of Provincial State-Owned Attractions.

Wolwekloof Nature Reserve, Western Cape

2020-12-07

Practical Completion

Practical Completion Achieved

2023-06-14

N/A

Not Applicable

R3,634,316.46

R3,072,463.11

49

WC

Maintenance & Beautification of Provincial State-Owned Attractions.

Cederberg Wilderness Area, Western Cape

2020-12-07

Practical Completion

Practical Completion Achieved

2023-06-14

N/A

Not Applicable

R3,634,316.46

R1,946,132.58

No

Province

Work Package

Project Name (a)

Date IPW signed off by NDT to DBSA (b)

Status ( c)

Current Status (Planning & Design stage 1-3, Procurement (stage 4),Construction Stage 5, Close Out (stage 6-7)

Baseline Targeted Practical Completion & Occupation Date (d)

Actual & revised Practical Completion & Occupation date (e)

Comments on Delays & targets not being met (pls be precise to the point) (f)

Total Budget (PSP, Construction, DBSA Fees) (g)

Actual Total Expenditure as at End August 2023 (h)

50

NW

Maintenance & Beautification of Provincial State-Owned Attractions.

Mafikeng Hotel School

2022-04-04

Concept NDT

Planning and Design

2024-09-12

2024/25FY

Not Applicable

   

51

NW

Maintenance & Beautification of Provincial State-Owned Attractions.

Pilanesberg Nature Reserve, North West

2022-04-04

PSP Appointment

Pre-Initiation

2024-06-11

2024/25FY

Not Applicable

   

52

NC

Construction Planning, Procurement & Implementation

NC Platfontein Lodge

2020-12-07

Concept

Planning and Design

2023-12-27

2024/25FY

Not Applicable

R36,944,350.33

R464,114.63

53

NW

Further detailed planning & construction

NW Lotlamoreng Dam

2020-12-07

Tender / Retender

Procurement - Contractor

2024-02-11

2024/25FY

Not Applicable

R21,680,806.49

R392,300.67

54

NW

Construction Planning, Procurement & Implementation

NW Manyane Lodge

2020-12-07

Evaluation

Procurement - Evaluation

2023-11-02

2024/25FY

Not Applicable

R25,788,890.01

R392,300.67

55

LP

Construction Planning, Procurement & Implementation

LP Matsila Lodge

2020-12-07

Construction

Construction

2023-12-14

2023-12-14

Contractor is running behind schedule due to cashflow constraints on purchasing the high value items. DBSA has approved a loan facility and is assisting the contractor with purchasing of the material.

R43,036,821.09

R9,940,053.98

56

LP

Construction Planning, Procurement & Implementation

LP Phiphidi Waterfall

2020-12-07

Construction

Construction

2024-03-16

2024-03-16

Not Applicable

R24,984,745.91

R1,258,843.25

No

Province

Work Package

Project Name (a)

Date IPW signed off by NDT to DBSA (b)

Status ( c)

Current Status (Planning & Design stage 1-3, Procurement (stage 4),Construction Stage 5, Close Out (stage 6-7)

Baseline Targeted Practical Completion & Occupation Date (d)

Actual & revised Practical Completion & Occupation date (e)

Comments on Delays & targets not being met (pls be precise to the point) (f)

Total Budget (PSP, Construction, DBSA Fees) (g)

Actual Total Expenditure as at End August 2023 (h)

57

LP

Construction Planning, Procurement & Implementation

LP Oaks

2020-12-07

Construction

Construction

2024-02-07

2024-02-07

Not Applicable

R30,540,765.25

R6,582,104.00

58

LP

Construction Planning, Procurement & Implementation

LP Ngove

2020-12-07

Construction

Construction

2024-05-19

2024-05-19

Not Applicable

R35,488,790.91

R1,951,886.39

59

LP

Construction Planning, Procurement & Implementation

LP Tisane

2020-12-07

Construction

Construction

2023-12-24

2023-12-24

The Contractor had cashflow constraints that affected purchasing of material. The DBSA has approved a loan facility and the material has already been provided to the contractor.

R32,500,362.51

R10,759,639.31

60

LP

Further detailed planning & construction

LP Vhatsonga

2020-12-07

Evaluation

Procurement - Evaluation

2024-04-11

2024/25FY

Not Applicable

R34,509,658.61

R1,164,067.68

61

FS

Construction Planning, Procurement & Implementation

FS QwaQwa Guesthouse

2020-12-07

Construction

Construction

2023-09-18

2023-10-30

The design of the sewer had to be changed by engineers.

R24,619,623.73

R20,195,710.68

62

FS

Construction Planning, Procurement & Implementation

FS Infrastructure through Monontsha

2020-12-07

Practical Completion

Practical Completion Achieved

2023-09-18

N/A

Not Applicable

R7,852,914.40

R5,605,553.72

63

FS

Construction Planning, Procurement & Implementation

FS Vredefort Dome

2020-12-07

Construction

Construction

2023-10-17

2024/25FY

Contract Terminated due to poor performance of the contractor

R28,163,338.17

R7,165,192.19

No

Province

Work Package

Project Name (a)

Date IPW signed off by NDT to DBSA (b)

Status ( c)

Current Status (Planning & Design stage 1-3, Procurement (stage 4),Construction Stage 5, Close Out (stage 6-7)

Baseline Targeted Practical Completion & Occupation Date (d)

Actual & revised Practical Completion & Occupation date (e)

Comments on Delays & targets not being met (pls be precise to the point) (f)

Total Budget (PSP, Construction, DBSA Fees) (g)

Actual Total Expenditure as at End August 2023 (h)

64

NC

Construction Planning, Procurement & Implementation

NC Kamiesberg Tourism Development

2020-12-07

Design Development

Planning and Design

2024-04-15

2024/25FY

Not Applicable

R19,816,186.00

R1,016,253.44

65

EC

Construction Planning, Procurement & Implementation

EC Maluti Hiking and Horse Trail

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-07

N/A

Not Applicable

R21,953,838.99

R21,099,619.33

66

EC

Construction Planning, Procurement & Implementation

EC Mthonsi Lodge

2020-12-07

Construction

Construction

2023-11-14

2023-11-30

Delay due to inclement weather. EOT approved

R7,563,919.96

R20,649,930.73

67

EC

Construction Planning, Procurement & Implementation

EC Qatywa Eco Tourism Development

2020-12-07

Construction

Construction

2024-01-16

2024-03-12

Delay due to inclement weather. EOT approved

R39,654,075.62

R18,654,465.84

68

EC

Construction Planning, Procurement & Implementation

EC Chalets at Nyandeni Great Place

2020-12-07

Practical Completion

Practical Completion Achieved

2023-08-15

N/A

Penalties charged to contractor for late completion

R22,996,656.27

R20,600,239.42

69

EC

Construction Planning, Procurement & Implementation

EC Western Thembuland

2020-12-07

Practical Completion

Practical Completion Achieved

2023-07-07

N/A

Not Applicable

R28,333,432.75

R26,545,363.06

70

LP

Construction Planning, Procurement & Implementation

Royal Khalanga Lodge

2021-09-13

Construction

Construction

2024-03-25

2024-03-25

Not Applicable

R17,772,742.44

R2,409,864.34

04 October 2023 - NW2677

Profile picture: Kruger, Mr HC

Kruger, Mr HC to ask the Minister of Finance

(1)Given the Auditor-General’s findings of 2020/2021 that 84% of municipalities consistently fall short of the statutory 30-day payment term which imposes a significant financial strain on small companies, sole proprietors and cooperatives, what (a) proactive measures are being developed by the National Treasury to ensure that municipalities honour their financial commitments to these entities within the required time frame and (b) considerations, frameworks and/or potential regulatory interventions are currently being contemplated; (2) what (a) are the details of the account of the fiscal liabilities and (b) proposed financial regulations and/or interventions are intended to enforce adherence to the payment time frame?

Reply:

(1)(a) Creditors with outstanding invoices have been encouraged to escalate matters to the National Treasury through the helpdesk facilities, [email protected], and [email protected], respectively. These are followed up with the respective Municipal Manager and Chief Financial Officer. Copies are also forwarded to the relevant provincial treasuries for their additional oversight, monitoring and facilitation of engagements with the relevant municipality, where required.

(1) (b) Section 65(2)(e) of the Local Government: Municipal Finance Management Act, 2003 (MFMA), requires the Accounting Officer to take all reasonable steps to ensure that all money owing by the municipality be paid within 30 days of receiving the relevant invoice or statement. The National Treasury has issued MFMA Circular 49 which includes a step-by-step approach to be adopted by municipalities to ensure that they consistently fulfil their financial obligations. Additionally, National Treasury has issued standard operating procedures for municipalities in relation to expenditure and liabilities management. These matters are also addressed when requested to develop Financial Recovery Plans.

(2) (a) The National Treasury publishes regular reports as required by section 71 of the MFMA. The latest publication of the Local Government Revenue and Expenditure: Fourth Quarter Local Government Section 71 Report, for the period 1 July 2022 to 30 June 2023, reflects amounts owed by municipalities to creditors for more than 30 days of R75,9 billion for the 4th Quarter of the financial year. The details of which, are available on the National Treasury website.

(2)(b) Accountability arrangements in the MFMA requires the Municipal Council and the Municipal Manager to take disciplinary action against officials responsible for non-compliance with internal control measures.

04 October 2023 - NW2619

Profile picture: Montwedi, Mr Mk

Montwedi, Mr Mk to ask the Minister of Finance

What is the total number of transactions that have been concluded since the launch of the blended finance with the Landbank in October 2022, (b) for which commodities were the transactions and (c) what are the reasons that there have been delays in finalising incomplete transactions, including those of acquiring livestock farms?

Reply:

a) What is the total number of transactions that have been concluded since the launch of the blended finance with the Land Bank in October 2022?

The total number of approved transactions as at 31 Aug 2023: 71

Total value of approvals as at 31 Aug 2023: R591.3 million (R279.9 million of loans, and R311.4 million of grants)

Total disbursements amount as at 31 Aug 2023: R153 million (R77 million of loans, and R76 million of grants)

b) For which commodities were the transactions?

Commodities of Approved Transactions as at 31 August 2023

Avocados

Nuts (Macadamia and pecan nuts)

Bananas

Poultry

Dry Beans

Raisins

Citrus

Sugarcane

Grains and Oilseeds

Table Grapes

Livestock (Red meat)

Vegetables

 

(c) What are the reasons that there have been delays in finalising incomplete transactions, including those of acquiring livestock farms?

(i) Reasons for delays in finalizing applications

1. Clients not submitting all the required application information simultaneously. The quality and accuracy of business and financial information contributes to the waiting time during which the processing of the transactions are paused until all the critical information is submitted.

2. Applications not viable and financial projections indicative of the business’s inability to service the loan – at times this leads into the submissions being reworked by the clients.

3. Lack of adherence to environmental and regulatory requirements such as environmental impact assessments, sufficient water volumes and water licenses. These issues generally take long to resolve, and are handled externally by the client through the relevant government departments. The application cannot be finalised without these matters being confirmed.

4. Poor credit records where clients need to resolve defaults and judgements prior to the application being taken forward.

5. Insufficient grazing capacity or applications with overgrazing where access to additional parcels of land are not easily accessible. The application will therefore be delayed as a result.

6. Intermittent capacity constraints and high volume of applications. Some of the Bank’s provincial offices were constrained to turn the transactions around at speed due to vacancies that are currently being field.

(ii) Delays in processing disbursements

  1. Delays in clients meeting the funding conditions which need to be fulfilled prior to disbursement of funds. These include the following:
    1. Delays experienced in clients obtaining licences for additional water rights from the Department of Water and Sanitation.
    1. Delays in obtaining the condition for provision of DALRRD’s written consent to cede all and any of the rights of the Borrower under the 30-year lease agreements.
    1. There are often delays where the client is required to provide Life Cover / Credit Life as clients undergo medical examination, and in some instances the clients may not qualify.
    1. The conversion of letters of intent to the required off-taker agreements may take longer to obtain.
    1. Title deeds in some of the provinces have restrictive clauses on selling to external buyers that are not from the location.

04 October 2023 - NW2922

Profile picture: George, Dr DT

George, Dr DT to ask the Minister of Finance

(1)Whether, with regard to the cost-of-living crisis that is currently exhibited most notably by the upward spiralling high food prices that are squeezing the average South African household, he intends to reconsider the position he outlined during questions for oral reply on 21 September 2022 in respect of the proposal by a certain political party (details furnished) to expand the zero-VAT rated basket of food items as a direct intervention; if not, why not; if so, what are the relevant details; (2) with regard to the announcement made by the Minister in The Presidency, Ms K P S Ntshavheni, that the Economic Cluster has been instructed by the President to develop a food security plan of action, what action is being taken by the National Treasury to relieve food insecurity of households in the Republic?

Reply:

  1. The position of the Minster has not changed since the last oral reply. As indicated then, zero-rating of specific foodstuffs provides a larger proportional benefit to the poor (i.e. progressivity is enhanced). Overall, goods have a progressive impact and a strong equity-gain ratio – poor people consume a relatively high share of zero-rated items. Nevertheless, the analysis of the independent panel in 2018 indicated that extending zero-rating to further food items would be inefficient, since high-income households tend to benefit more from such measures.
  2. We acknowledge the importance of the agricultural sector in tackling the issue of food insecurity which can both be addressed by increasing availability of food and affordability of food. National Treasury provides fiscal support to departments to support the agricultural sector. The fiscal support for agricultural sector is determined through the budget allocations to the Department of Agriculture, Land Reform and Rural Development, as articulated in the Estimate of National Expenditure (ENE) -Vote 29 and to provinces though the Division Revenue Act, and this information is available in various provincial budgets.
  3. Consolidated spending allocations for agriculture and rural development, as presented in the 2023 Budget, are R27.8 billion in 2023/24, R28.6 billion in 2024/25 and R29.9 billion in 2025/26.

17 July 2023 - NW1602

Profile picture: Zungula, Mr V

Zungula, Mr V to ask the Minister of Finance

What are the reasons that the National Treasury did not take any steps to prevent the Republic from being greylisted, considering that the Cabinet has known for several years due to illicit financial flows (IFFs), reports of spaza shop owners and the sanctioning of certain Durban businessmen (names furnished) that should have been an even bigger eye-opener; (2) Why must it take international bodies to punish the Republic before the National Treasury heed the calls of the opposition political parties, which it has ignored, to investigate and prioritise IFFs; (3) What (a) policy measures will the National Treasury take to ensure that grey-listing is prevented in future and that the Republic makes its way off the grey list as soon as possible (details furnished) and (b) framework has the National Treasury put in place that will ensure that the prevention of IFFs is both a (i) public and (ii) private sector duty that is highly punishable when transgressed; (4) What (a) time frames does the National Treasury have to resolve the grey-listing issue and (b) accountability measures are in place to ensure that the specified time frames are adhered to; (5) How does the National Treasury work together with the State Security, the SA Police Service and the Department of Justice to not only protect whistleblowers whose lives are constantly endangered in the Republic and yet they are integral to preventing IFFs, but also bring down persons who are suspected and accused of IFFs?

Reply:

1. Government has provided the reasons for South Africa being greylisted through public statements by National Treasury at the time (e.g. statement issued by National Treasury dated 24 February 2023[1], and related frequency asked questions), and responses to the many parliamentary questions, for eg Nos PQ943, PQ3967, PQ2641, PQ2642, and also a question for oral response for the Deputy President (CO254E).

The Financial Action Task Force (FATF) greylisted South Africa despite acknowledging the “significant and positive progress” made by the country in addressing many of the deficiencies identified in the 2021 Mutual Evaluation Report on South Africa. This included the enactment of two major pieces of legislation, namely the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 2022 (“General Laws Amendment Act”) and the Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act, 2022 (“POCDATARA Amendment Act”). The two pieces of legislation amended six Acts of Parliament, to deal with technical deficiencies in the legislative framework of the country’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) system. FATF concluded that the country needed to make further effectiveness (in implementation) improvements, through sustained progress in addressing eight (8) areas of strategic deficiencies related to the effective implementation of South Africa’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) laws.

2. Dealing or not dealing with illicit financial flows is not the reason for South Africa been greylisted, but is based on the extent of compliance by a country with the 40 FATF Recommendations and 11 effectiveness outcome measures, as assessed through a Mutual Evaluation conducted or overseen by FATF or associated regional bodies. It is important to note that the fight against money laundering and terror financing is generally broader than the fight against IFFs.

Also, contrary to the assumptioin made by the Honourable Member, Government has not ignored the call by opposition parties to deal with illicit financial flows and taken a number of measures to counter it. Government established an Illicit Financial Flows Working Group, which reports to the Interdepartmental Committee on AML/CFT that is chaired by the Director-General of National Treasury, to analyse illicit financial flows into and out of the country. There is also a working group that comprises of the SARS, NICOC, National Treasury and the DTIC that is currently working on formulating a National Anti-Illicit Economy strategy. This process will include an analysis of the underlying causes for IFFs and make recommendations that will enable IFFs to be traced, tracked and the perpetrators to be arrested.

3. (a) South Africa has committed to an Action Plan to address all remaining deficiencies identified in its anti-money laundering and combating the financing of terrorism. Implementing the Action Plan will assist South Africa to be removed from the FATF greylist, and further, to prevent South Africa from been greylisted in the fugure when the next mutual evaluation is conducted in the next seven to ten years. The General Laws (Anti-Money Laundering and the Combating of the Financing of Terrorism) Amendment Act, together with the POCDATARA Amendment Act (see above) are expected to improve the effectiveness of the country’s AML/CFT system. It is however important to note that as FATF standards or recommendations change, the South African AML/CFT system will also need to be continuously improved to address the evolving money laundering and terror financing risks.

(b) Refer to (2) above.

4. The FATF set, in consultation with South African authorities, a timeframe of January 2025 to address all outstanding deficiencies, for South African to be removed from the greylist. It is our hope that we will be removed sooner, sometime in 2024.

The Interdepartmental Committee on AML/CFT that is chaired by the Director-General of National Treasury monitors progress towards addressing all outstanding deficiencies fully and within the timelines agreed between South African authorities and the FATF. The Interdepartmental Committee on AML/CFT is required to report to Cabinet on a quarterly basis.

5. The Honourable member would be aware that National Treasury does not have the mandate and competence to offer protection to whistle blowers and relies on the law enforcement authorities to do so. National Treasury recognises the need to improve and strengthen our whistleblower system, as it is an essential tool to fight fraud and corruption in the public sector.

  1. https://www.treasury.gov.za/comm_media/press/2023/2023022401%20Media%20statement%20-%20Response%20to%20FATF.pdf

17 July 2023 - NW1283

Profile picture: Ntlangwini, Ms EN

Ntlangwini, Ms EN to ask the Minister of Finance

Whether (a) the National Treasury and/or (b) any of the entities reporting to him have any current contracts with the security company G4S; if not, what is the position in this regard; if so, what (i) are the relevant details of the specified contracts and (ii) is the monetary value of each contract?

Reply:

1. NATIONAL TREASURY

  1. No

(a)(i)(ii) N/A

2. ASB

We do not have contracts with G4S.

3. CBDA

  1. CBDA does not have any contract with G4S. The CBDA is currently housed in National Treasury building with dependence on their security.
  2. Not applicable
  3. Not applicable

 

4. DBSA

The Development Bank of Southern Africa (DBSA) has no security contract with the security firm G4S. The DBSA security officers are Bank employees.

5. FAIS OMBUD

We confirm that the Office of the FAIS Ombud does not have any contracts with G4S

6. FIC

(b) The Financial Intelligence Centre (FIC) does not currently have any contract in place with the security company G4S.

  1. Not applicable
  2. Not applicable

7. FSCA

The FSCA does not have any contract with G4S. The security company responsible for the FSCA premises is Tatanium Guarding Services.

8. GEPF

The Government Employees Pension Fund (GEPF) does not have a security contract with the company G4S.

9. GPAA

The Government Pensions Administration Agency (GPAA) can confirm that it has no contracts with G4S.

10. GTAC

GTAC does not have any contracts with the security company G4S.

11. IRBA

The Independent Regulatory Board for Auditors does not have a contract with G4S and has no position in this regard.

12. LANDBANK

Land Bank does not have any contract with G4S.

13. OPFA

The Office of the Pension Funds Adjudicator does not have any current contracts with the security company G4S. Its offices are leased from a service provider/landlord who is responsible for building security.

14. PIC

The PIC has no contracts with G4S.

15. SARS

(b) SARS follows a competitive procurement process and awarded security related services to various service providers. G4S did not win any award from SARS and currently is NOT a service provider to the institution.

16. SASRIA

Sasria SOC Limited does not have any current contracts with the security company G4S.

17. OFFICE OF THE TAX OMBUD (OTO)

Whether (a) the National Treasury and/or

  • any of the entities reporting to him have any current contracts with the security company G4S;

The OTO does not have current contract with G4S.

  • if not, what is the position in this regard;

The OTO relies on and follows the SARS procurement policies and procedures including awarding of contracts.

17 July 2023 - NW2358

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Spies, Ms ERJ to ask the Minister of Finance

(1)Whether he will furnish Ms E R J Spies with a list of municipalities that are currently in arrears with the payment of their mandatory pension and medical contributions for staff and councillors; if not, what is the position in this regard; if so, what are the relevant details; (2) (a) for how long has each specified municipality not been paying the arrears, (b) what is the total amount of the specified arrears, (c) what corrective action has the National Treasury taken against the defaulting municipalities and (d) what steps have been taken to compensate councillors and municipal staff who are affected by the specified nonpayment; (3) whether any criminal charges have been laid against the accounting officers who are mandated by the Local Government: Municipal Finance Management Act, Act 56 of 2003, to take all reasonable steps to ensure that they, among other obligations, comply with the pension and medical aid commitments of councillors and municipal staff; if not, why not; if so, what are the relevant details?

Reply:

1. National Treasury collects outstanding creditor’s information via the Local Government Database and Reporting System (LGDRS) hosted by National Treasury on monthly basis. However, although the list of outstanding creditors includes pension fund contributions, it does not provide a breakdown for outstanding medical aid contributions but this category is lumped under other payables. The National Treasury is putting measures to facilitate the collection of such information for further purposes. Another challenge is that some municipalities might choose not to disclose this information in their submissions to the National Treasury’s database which makes it challenging to get an accurate picture of municipalities owing the Pension Funds.

At this stage, the only four (4) municipalities in the Free State and five (5) in the Northern Cape have disclosed the information on arrears of monthly statutory contributions to the Pension Fund. However, municipalities in Limpopo and Mpumalanga disclosed no arrears since they are up to date with their respective monthly contributions to the Pension and Medical Aid Funds. The information is listed in Annexure A.

(2)(a)(c) The National Treasury has communicated the criteria for the release of the Equitable Share in its annual Budget Circulars. Included in the criteria is the requirement to table a funded budget in terms of Section 18 of the MFMA as well as making adequate provision to repay all creditors in terms of Section 65(2)(f) of the MFMA.

Every time we received correspondence from the respective pension funds administrator on outstanding payments / accounts, the National Treasury will send a letter to the respective municipality requesting reasons as to why they have defaulted.

(2)(b) The total amount reported for pension fund contributions are consolidated Retirement Fund R23.7 million and Municipal Workers Retirement Fund R6.3 million. More details attached as Annexure A.

(2)(d) At this stage, none of the above listed municipalities compensated any municipal officials or councillors affected by the no-payment of monthly contributions to the Pension Funds and/ or Medical Aid Funds. The responsibility to ensure this is avoided at all costs is with the respective Municipal Councils.

However, at Renosterberg Municipality, the municipal employees instituted a lawsuit against the municipality by an affected municipal official but there was no follow through, and the lawsuit was dropped.

(3) As indicated before, at Renosterberg Municipality, criminal charges were laid against the former administrative and political leadership (Municipal Manager, the Chief Financial Officer and the Mayor). At this stage, no arrest has been made and the criminal case is still under investigation by the law enforcement agencies as of May / June. The municipality had not received further communication from the law enforcement officers other than the charge sheet.

As for the remainder of the above listed municipalities, no criminal cases were reported to the police and reason cited by the Provincial Treasury was the instability at senior management in the respective municipalities that hampered the implementation of consequence management.

Annexure A

Kai Garib Local Municipality:

(2)(a) For how long has each specified municipality not been paying the arrears?

The municipality reported to have defaulted on third party payments since February 2022.

(2)(b) The total amount reported for pension fund contributions.

Renosterberg Local Municipality:

2 (a) For how long has each specified municipality not been paying the arrears?

The municipality reported to have defaulted on third party payments since May 2017.

2 (b) What is the total amount of the specified arrears?

The total amount reported for pension fund contributions and medical aid amounts to R19 million.

Ubuntu Local Municipality:

2 (a) For how long has each specified municipality not been paying the arrears?

The municipality reported to have defaulted on third party payments since March 2023.

2 (b) What is the total amount of the specified arrears?

The total amount reported for third parties amounts to R3.4 million.

Thembelihle Local Municipality:

2 (a) For how long has each specified municipality not been paying the arrears?

Defaulted from December 2021.

2 (b) What is the total amount of the specified arrears?

The total amount reported for pension fund contributions (cape joint retirement fund and amounting to R5.1 million.

Kheis Local Municipality:

2 (a) For how long has each specified municipality not been paying the arrears?

The municipality reported to have defaulted on third party payments since July 2021.

2 (b) What is the total amount of the specified arrears?

The total amount reported for pension fund contributions and medical aid amounts to R19.9 million.

Magareng Local Municipality:

2 (a) For how long has each specified municipality not been paying the arrears?

The municipality reported to have defaulted on third party payments since March 2021.

2 (b) What is the total amount of the specified arrears?

The total amount reported for third parties amounts to R4.3 million.

17 July 2023 - NW2190

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Myburgh, Mr NG to ask the Minister of Finance

What steps has the National Treasury taken to encourage high net worth individuals from foreign countries to live, work and invest in the Republic thereby stimulating economic growth and job creation?

Reply:

The National Treasury does not take steps to encourage any specific person to live and work in South Africa and focuses instead on creating a climate for encouraging both domestic and foreign investors to invest in South Africa. This approach does entail supporting the removal of obstacles to investment, like the red tape that prevents skilled personnel from foreign countries from working in South Africa. The recently completed work visa review that proposed amendments to streamline and improve immigration regulations is a good example of such an initiative. In addition, it is also important for us to continue to improve the domestic climate to keep skilled or high-net worth individuals to continue to live and work in South Africa.

17 July 2023 - NW1694

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De Villiers, Mr JN to ask the Minister of Finance

Whether he will furnish Mr J N de Villiers with a comprehensive breakdown of the procurement allocation of (a) the National Treasury and (b) every entity reporting to him in terms of the percentages allocated to (i) small-, medium- and micro-enterprises, (ii) cooperatives, (iii) township enterprises and (iv) rural enterprises with a view to evaluating the effectiveness of the set-aside policy of the Government in fostering an inclusive and diverse economic landscape (details furnished) in the (aa) 2021-22 financial year and (bb) since 1 April 2023?

Reply:

(aa) Procurement by National Treasury is largely for equipment, consultants or advisory services and it is not possible to accurately allocate amounts in the categories requested, as such classifications are not recorded on the BAS system. Our best estimate is that R98 460 381.90 has been allocated to SMME in the 2021/22 Financial Year.

(bb) For 2023/24, the information will be made available in 2024 after the end of the financial year.

17 July 2023 - NW2369

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Abrahams, Ms ALA to ask the Minister of Finance

(1)With reference to the Fourth Quarter Report for the 2022-23 financial year of the Department of Social Development which indicates that primarily the National Treasury and the Department of Employment and Labour need to provide comments and inputs before Cabinet is requested for approval to regazette the Green Paper for public comments (details furnished), (a) what are the reasons that the National Treasury has not provided comments and input on the presentation as it appears to be delaying the development of the green paper on Comprehensive Social Security and Retirement Reforms and (b) on what date does the National Treasury envisage to provide their comments and input on the green paper; (2) what is the National Treasury’s position on (a) the green paper and (b) the National Social Security Fund within the green paper; (3) what are the full and relevant details of the comments and input that the National Treasury intends to provide on the green paper?

Reply:

National Treasury has been part of the process to develop the policy paper on Comprehensive Social Security and Retirement Reform from its inception in 2007 and throughout the NEDLAC process, where it was tabled for discussion in 2016. The issues are complex, including the fiscal implications, and National Treasury continues to engage with the Department of Social Development. Such process is not merely one of submitting comments, as the fiscal framework is the responsibility of the National Treasury. The policy framework involves fiscal, economic and expenditure trade-offs, and requires the concurrence of all three departments. Ultimately, the policy paper will reflect the Government’s position, and not that of any one department, and will be made public as soon as governmental processes have been completed and approved by Cabinet.

13 July 2023 - NW2492

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Komane, Ms RN to ask the Minister of Finance

(1) Which departments are the main drivers of the misalignment of the economic policy; (2) whether the misalignment of the economic policy is because the Government does not have legislation that enforces collaboration and coordination; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

1. The Honourable Member is asking a very vague question. All departments and public entities must act in terms of the law, and the law may have both economic and non-economic objectives, like social or developmental objectives, as well as constitutional objectives. So, for example, spending on school education or health is necessary, and cannot be regarded as “mis-aligned” because it is not directly related to an economic policy programme.  The Honourable Member is therefore requested to be more precise when asking such a question.

2. Not applicable, refer to (a) on the need for the question to be more precise.

13 July 2023 - NW2334

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Buthelezi, Mr EM to ask the Minister of Finance

What new watertight measures has his department adopted to ensure that the monies allocated to various departments and ministries by the National Treasury are not misused through corruption? NW2669.

Reply:

Government has taken a number of steps since the era of state capture to strengthen the anti-corruption system, but even with such improvements, no system can be watertight against corruption. It is a fact that corruption has become deeply entrenched in all three spheres of government, at national, provincial and local government level and in public entities. We need to do more as a country to improve governance and oversight systems, but most importantly, to ensure that all accounting officers ensure that they always act in the public interest and spend funds for the purposes budgeted for. More broadly, that all in the public service in all three spheres of government, be it political office-bearers, legislators, councilors, accounting officers and authorities, and all officials and employees in the public sector, act honestly and with integrity at all times.

The President submitted to Parliament the Government’s response to the recommendations of the Zondo Commission, or more formally, the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector, on 22 October 2022. Many of these proposals are in the process of being implemented, and it is my view that both Parliament and Cabinet need to be more involved in overseeing its implementation. Government has also recognized that corruption is one of the highest risks facing any procurement process, and that we need to strengthen our planning, preventive and internal control systems, to reduce the scope of such corruption. In this respect, we are modernizing our procurement system, and also introduced a new Public Procurement Bill to give effect to the procurement-related recommendations of the Commission.

The Office of the Chief Procurement Office is also working closely with numerous stakeholders and partners such as the World Bank and OECD to learn the best lessons internationally and commencing with a review in collaboration with the OECD on the Methodology for Assessing Procurement Systems (MAPS) to guide the modernisation process, by identifying areas of deficiencies and vulnerabilities in the current system. The National Treasury also maintains the Central Supplier Database for the government and has made improvements to improve compliance with regulations for state employees and restricted suppliers not to do business with the state. A transparency initiative was launched through the eTender portal where procurement opportunities and procurement data are shared with members of the public. The initial phase of Open Contract Data Standards has been implemented enabling civil society to have access to procurement data in an international standard making it easier for interpretation. Transparency improves accountability and the National Treasury is continuing to implement transparency initiatives for reducing corruption and improving oversight on procurement activities.

Accounting officers and authorities are at the heart of our spending and reporting system. Section 38(1)(a)(i) of the PFMA (and similarly section xxx of the MFMA) requires accounting officers and authorities to develop and maintain an effective, efficient, and transparent system of financial, risk management and internal control. Whilst it is the responsibility of accounting officers and authorities to ensure that funds appropriated or under their control are not misused, the National Treasury monitors the spending patterns of national departments monthly and reports to Parliament on a quarterly basis to assist Parliament and oversight committees of government with their oversight role. There are similar reporting responsibilities on provincial treasuries and for municipalities.

Aside from the executive in each government in any sphere improving its oversight system over their accounting officers and authorities, it is also important for Parliament and all other legislatures to better use the reporting system to strengthen the system of oversight and accountability, especially given that they are the last line of accountability for our oversight and monitoring system. It is also important that all accounting officers and authorities (and elected office-bearers) be accountable, and have effective risk management and internal control systems, as well as their audit committees, to assist them to identify corrupt or suspicious transactions. It is also critical that post-financial year mechanisms like the audit process focus on potential fraud and suspicious transactions, particularly in the procurement system, and differentiate between corruption and minor compliance transgressions that do not involve financial losses.

Below are some specific recent initiatives undertaken by the National Treasury in addressing corruption, misuse of funds, building capacity and ensuring that proper governance systems are developed and implemented by departments.

Capacity building initiatives

  • Chief Financial Officers accelerated programme – In recognising the capacity challenges in departments, the National Treasury developed a competency framework for financial management to build capacity of officials in technical and behavioural competencies. An accelerated programmes for Chief Financial Officers (CFOs) was developed and piloted with the objective of enhancing the skills of CFOs and to equip new entrants from the private sector with public sector competencies. A Supply Chain Management Executive programme was also developed with the aim of providing an understanding of the key roles and responsibilities of all heads of procurement and CEOs. To improve governance, two capacity-building short learning programmes aimed at improving public sector internal auditors’ competencies in the ‘Development of Risk-Based Audit Plans’ and their ability to conduct Audit of Information Technology General Controls was developed and piloted.
  • Chartered Accountants Academy – The National Treasury continued to support the development of accounting professionals through the Chartered Accountants Academy (CAA). To date, the Academy has produced seventy-six (76) chartered accountants and National Treasury in partnership with the National School of Government is embarking on the journey to professionalize the public sector.

 

  • Public Sector Audit Committee Forum – National Treasury has continuously maintained its partnership with the Public Sector Audit Committee Forum (PSACF) which has developed several position papers and hosted virtual round table discussions to assist Audit Committee members to fulfil their roles effectively, efficiently, and independently.
  • Internal audit support – The National Treasury remains committed to advancing good governance through stakeholder engagements, provision of technical advice and implementation of legislative prescripts. The information sharing platform with chief audit executives and academia was convened to reflect on improving accountability and transparency in the South African public sector through continuous assurance. The standing MoU between the National Treasury and the Institute of Internal Auditors (South Africa) has made it possible for the National Treasury to participate in the latest review of the Global Internal Auditing Standards (public sector input) impacting the role and responsibilities of internal auditors and audit committees.

Specialised Audit Services

The National Treasury conducts specialised performance audits and forensic investigations to enforce financial management prescripts, ensure accountability, effective, efficient, and economical use of resources. The National Treasury assists the law enforcement agencies to investigate allegations of fraud and corruption and institute charges and assist with recovering proceeds of crime.

13 July 2023 - NW1495

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Zungula, Mr V to ask the Minister of Finance

What was the total percentage of spending by the National Treasury on small-medium and micro enterprises versus big businesses in the 2021-22 financial year?

Reply:

It is not possible to answer this question accurately as the payment system does not contain such classifications for size of business. What we can provide is our own estimate, which is that the total percentage of spending by the National Treasury on small-medium and micro enterprises is estimated to be 20% versus big businesses at 80% for all transactions in the 2021-22 financial year.

13 July 2023 - NW2034

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George, Dr DT to ask the Minister of Finance

Whether, following his remarks at a media briefing on 13 May 2023 which was hosted by Dr Sydney Mufamadi (details furnished) where he mentioned that the National Treasury had conducted calculations regarding the potential fallout from the incident involving the Lady R Russian vessel in Simon's Town, as brought to light by USA Ambassador to South Africa, Ambassador R E Brigety, who stated that the ship was loaded with weapons, which is an incident which could risk the benefits of the Republic under the African Growth and Opportunity Act (AGOA) and potentially invite secondary sanctions, he will elaborate on the specific calculations made by the National Treasury regarding the potential economic impact if the Republic were to lose the benefits under AGOA due to the specified incident involving the docking and alleged loading of weapons onto the specified vessel in Simon's Town; if not, why not; if so, what are the relevant details regarding the extent of the secondary sanctions' impact on the financial flows of the Republic as calculated by the National Treasury?

Reply:


The calculations referred to relate to the potential financial and macroeconomic impact of the market response following the comments by US Ambassador R E Brigety on 11 May 2023. The National Treasury conducted a preliminary analysis of the possible macro-fiscal impact of South Africa’s geopolitical tensions related to SA-US relations, focusing primarily on the impact on the current fiscal framework. The analysis considered that there was a significant depreciation in the rand against the US dollar in May 2023, in part due to the pronouncements of the US Ambassador to South Africa regarding the Lady R vessel. The analysis considered the possible negative consequences of this on key macroeconomic variables including higher inflation rates, borrowing costs and, subsequently, bond yields – all of which weaken the fiscal position. A protracted materialization of the events assessed in this analysis will require the Minister and the National Treasury to consider possible measures in mitigation. An analysis of a potential loss of benefits under AGOA and/or the risk of secondary sanctions is being considered; however, given this work’s nature and required detail, this is expected to take some time.

13 July 2023 - NW2482

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Maotwe, Ms OMC to ask the Minister of Finance

(1)What (a) number of tenders did Eskom award using deviations that required the approval of the National Treasury in the period 1 December 2019 to 28 February 2023 and (b) are the details of tenders that (i) were approved and (ii) were not approved; (2) what (a) was the total monetary value of each of the tenders, (b) were the services for which each tender was awarded and (c) were the entities that were awarded the tenders?

Reply:

The office of the Chief Procurement Officer within the National Treasury has provided the following information:

  1. (a) The total number of tenders that Eskom awarded using deviations was 49. Details are attached as Annexure A. Please note that the list ends on 31 March 2022 as from 1 April 2022, organs of the state were not required to seek approval from the National Treasury.

(b) Details of tenders [(i) approved and (ii) not approved)] are attached as Annexure A.

  1. (a) Details of each tender’s monetary value (R76 266 103 275,27) are attached in Annexure A.

(b) Details of each service on awarded tenders are attached in Annexure A.

(c) Details of each entity awarded tender/s are attached in Annexure A.

26 June 2023 - NW1360

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Schreiber, Dr LA to ask the Minister of Finance

Whether Ministers and Deputy Ministers are required to pay tax on the vast range of fringe benefits they receive, which include free housing, vehicles, staff, security, electricity, water and flights, in terms of the Guide for Members of the Executive, commonly known as the Ministerial Handbook; if not, what are the reasons that they are exempted from paying taxes on the vast range of benefits contained in the guide and which clearly constitute fringe benefits derived from their positions as Ministers and Deputy Ministers; if so, what are the relevant details?

Reply:

Taxable (fringe) benefits are calculated under the Seventh Schedule to the Income Tax Act. The legislation makes provision for which benefits are taxable, how the value of the taxable benefit must be calculated, and circumstances when no value is placed on a particular benefit.

The tax consequences below are based on the benefits as granted under the Guide for Members of the Executive (Ministerial Handbook). SARS accepts that Ministers and Deputy Ministers (Members) generally utilise these benefits as prescribed in the Ministerial Handbook.

Accommodation (Paragraph 9 of the Seventh Schedule)

Ministers and Deputy Ministers (Members) are entitled to State-provided residential accommodation. They may be provided with either one or two residences (one per seat of office).

  • If a member normally resides in his or her own residence, then any residence provided by the state will not attract a taxable value (no value).
  • If one residence is provided by the State, and the Member relocates and resides at that residence, the Member is liable to fringe benefits tax on the rental value. The rental value is calculated in terms of a formula linked to the Member’s remuneration.
  • Where two State-owned residences are provided, the Member must be taxed on the property with the highest rental value.
  • Any rental payable by a Minister for a second residence, may be deducted from the taxable rental value calculated under the formula.

Electricity and Water (Paragraph 9 of the Seventh Schedule)

The Ministerial Handbook provides that Members are liable for all costs related to a private residence. However, should the State pay a member’s private residence utilities bill, a taxable benefit would arise.

Electricity, water, and other property-related utilities supplied to a member occupying a State-owned residence is included in the rental value of the taxable benefit arising from the use of the accommodation, as referenced above.

Security (paragraph 2(a) and 2(e) of the Seventh Schedule)

The State does not provide security upgrades to Members’ private homes, so no tax consequences arise.

Any security upgrades effected at State-owned residences, accrue to the State, not the Member occupying the premises, and so no taxable benefit arises.

Static security is provided to Members both at private residences designated as “official” and at State-owned residences.

  • Static security at a private residence is a taxable benefit, the value is the cost to the State.
  • Static security at a State-owned residence does not result in a taxable value arising.

Close security provided to a member whilst in the course of performing duties of office will not be taxable. Use of close security when the Member is off duty will be a taxable benefit, the value being the cost to the State of the private cost.

Motor vehicles (Paragraph 7 of the Seventh Schedule)

State-owned motor vehicles are made available to Members to utilise for official purposes. The nature of a member’s duties is such that he or she will perform their duties outside of normal work hours. Private use is infrequent or incidental to business use, and so a no-value rule applies to Members, meaning that no taxable amount arises.

Staff (Paragraph 2(e) of the Seventh Schedule)

Personal staff are provided to Members to assist them with their official duties. No taxable benefit arises due to staff employed to assist with official duties at an official residence.

Flights

Official flights are not subject to fringe benefits tax. Private flights are taxable unless a no-value rule applies. The no-value rule applies if the flight is for the Member’s spouse or minor child, the Member is stationed more than 250kms from his or her home, is away from home for more than 183 days in a year, and the travel is for between home and the place where the Member is stationed.

Allowances (section 8(1) of the Act)

Most allowances paid to Members are fully taxable. Certain exceptions, such as travel allowances and subsistence allowances, are treated preferentially for all taxpayers, including Members, who may all claim deductions for business expenses.

Members also by law receive a public office allowance. 50% of this allowance is taxed monthly via PAYE withholding. The full allowance is taxable on assessment when the annual tax return is submitted, unless the Member can prove that certain qualifying expenses were incurred and paid (and not recovered from the respective Departments), which may reduce the tax liability on assessment.

26 June 2023 - NW1749

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Ceza, Mr K to ask the Minister of Finance

What fiscal proactive measures has he taken to resolve the ageing infrastructure, particularly in rural municipalities?

Reply:

The Minister of Finance is not directly responsible for managing any major infrastructure budgets, as such budgets reside within the appropriate national and provincial departmental budgets, municipal budgets or that of a public entity or state-owned entities. Each organ of state is responsible for maintaining appropriate and effective infrastructure budgets. From a national budget perspective, it is recognised that the issue of ageing infrastructure in South Africa has been a longstanding challenge, including for both rural and urban municipalities. There have been some proactive measures taken to address this issue. Here are some examples from the local government sphere:

  • Since the 2013/14 financial year, the local government equitable share (LGES) includes a maintenance estimate of 10 per cent. This amounted to R5.6 billion in maintenance funding for municipalities to recover the cost of providing free basic services to indigent households in 2021/22, and it will be R7.1 billion in 2023/24. These funds are unconditional transfers, meaning that they are discretionary in nature. So, the municipality has the choice of whether to use them for maintenance or any other priority or budget commitment.
  • Several reforms have been implemented following the review of infrastructure conditional grants in 2014. The Municipal Infrastructure Grant (MIG) includes provisions for infrastructure renewal and upgrades, a provision for road maintenance projects, as well as the ability for municipalities to develop Infrastructure Asset Management Plans using 5 per cent of their allocations. Small and rural municipalities are the main beneficiaries of this grant.
  • The government has provided training and capacity building programs for municipal officials and staff to improve their skills and knowledge in infrastructure planning, management, and maintenance. Since 2012, we have been pioneering the development of critical infrastructure delivery skills in municipalities through the implementation of the Infrastructure Skills Development Grant (ISDG). Since its inception, more than three hundred people have been professionalised and/ or certified within the built environment. These professionals then exercise their expertise to manage, operate and maintain public sector or municipal infrastructure.

These proactive measures are aimed at improving the quality of infrastructure in rural municipalities, which is critical for the provision of basic services, promoting economic growth, and improving the quality of life for rural communities.

26 June 2023 - NW1577

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Tambo, Mr S to ask the Minister of Finance

What (a) total number of public consultations have been held regarding the proposed exemption of Eskom from declaring irregular expenditure and (b) forms of public consultation methods will be used?

Reply:

a) The National Treasury has engaged with the Auditor-General and considered all public comments received through Government Gazette General Notice No. 3270 of 6 April 2023 which withdrew the Government Gazette General Notice No. 3247 of 31 March 2023 and invited public comment on a proposed exemption for Eskom. In total, fifty-six (56) comments were received, with twenty-three (23) comments received in formal correspondence and thirty-three (33) comments received through emails, covering a broad spectrum of accounting and reporting, auditing, governance, legal principles, and public interest issues have been duly considered. The National Treasury also engaged with audit firms, professional auditing and accounting bodies, a rating agency, and other relevant authorities to discuss the challenges and seemingly onerous compliance reporting requirements applicable to State-Owned Entities such as Eskom.

b) The consultation methods used for the consultations were in the form of online stakeholder engagement meetings, webinars, media statements and Government Gazette Notice for public comments. Please refer to the attached media statement dated 7 June 2023, in which the Minister of Finance has determined that Eskom not be granted a partial exemption from section 55(2)(b)(i) of the Public Finance Management Act (PFMA) and Treasury Regulation 28.2.1, from disclosing irregular, fruitless and wasteful expenditure and material losses from criminal conduct in its Annual Financial Statements.

26 June 2023 - NW1412

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George, Dr DT to ask the Minister of Finance

Whether, with reference to the withdrawal of the exemption issued by him on 31 March 2023 to Eskom Holdings SOC from section 55(2)(b)(i) of the Public Finance Management Act, Act 1 of 1999, and the National Treasury Regulation 28.2.1 for a period of three years, the exemption still applies to the 2022-23 financial year report by Eskom, as the exemption was still in place on 31 March 2023; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

In terms of the Government Gazette Notice No 3247 of 31 March 2023, the Minister of Finance granted a partial exemption from section 55(2)(b)(i) of the Public Finance Management Act, 1999 (Act No. 1 of 1999 – the Act) and Treasury Regulation 28.2.1 to ESKOM Holdings SOC Ltd in respect of the 2022/2023, 2023/2024 and 2024/2025 financial years. In terms of Government Notice No. 3270 of 6 April 2023, this exemption was withdrawn in its entirety, covering the 2022/2023, 2023/2024 and 2024/2025 financial years. The exemption would have applied and be still in be place had it not been withdrawn prior to the submission of the Annual Financial Statements to the auditors of Eskom and the National Treasury, i.e., two months after the end of the financial year as per section 55(1)(c) of the PFMA. For the 2022/2023 financial year, the date of submission was the 31 May 2023. Therefore, the withdrawal of the exemption on the 6th of April 2023 was possible.

After considering all public comments on the matter, the Minister of Finance has determined that ESKOM Holdings SOC Ltd not be granted a partial exemption from section 55(2)(b)(i) of the Public Finance Management Act (PFMA) and Treasury Regulation 28.2.1, from disclosing irregular, fruitless and wasteful expenditure, and material losses from criminal conduct in its Annual Financial Statements. Please refer to the attached media statement dated 7 June 2023 covering the Minister of Finance’s decision on the ESKOM Holdings SOC Ltd PFMA exemption.

26 June 2023 - NW1411

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George, Dr DT to ask the Minister of Finance

Whether, given the growing global concerns surrounding the dominant role of the United States Dollar (USD) as the primary reserve currency, and considering the ongoing discussions within the BRICS nations advocating for de-dollarisation in order to promote financial stability and minimise vulnerability to the United States economic and political influence, the Government has been approached, either directly or indirectly, to initiate serious deliberations regarding the adoption of alternative currencies for international settlement purposes by the Republic; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

There has been no direct request from BRICS focusing on de-dollarisation. However, there were discussions and agreement in the BRICS Payments Task Force on the following focus areas for 2023:

a) Feasibility study on the implementation of the following elements of the G20 Crossborder Payments Roadmap:

  • Building Block 1: The development of common cross-border payments vision and targets.
  • Building Block 10: Improving access to payment systems by banks, non-banks and payment infrastructures – broadening the range of eligible candidates for settlement accounts by changing access policies, technical standards and supervisory or oversight regimes; and
  • Building Block 14: Adopt a harmonised version of ISO 20022 for message formats (including rules for conversion/mapping) – promoting the adoption of common message formats, such as a harmonised version of ISO 20022 and common rules of mapping/converting data between different data formats.

b) The sharing of information on lessons from BRICS member countries on how sandboxes were operated; the aims of the sandboxes; how sandboxes are being utilised; some lessons learned and successes; and how sandboxes inform regulatory frameworks;

c) The sharing of experiences on central bank digital currencies (CBDCs) to draw lessons across the BRICS countries, look at the different experiences and to determine how central banks could leverage from the sharing of information; and

d) The BRICS member countries to consider, bilaterally, the interlinking of payment infrastructures for settlement in their own currencies.

The South African Government has also been approached by both Russia and India on areas of possible collaboration and cooperation, including the interlinking of payment insfrastructures for settlement in their own currencies. Preliminary discussions have taken place between the South African Reserve Bank and the central banks of the two countries (with the Indian Ambassador to South Africa being part of the delegation). The discussion with the Central Bank of the Russian Federation focussed on the interlinking of both the retail instant payment systems and settlement systems, while the engagements with the Reserve Bank of India were premised on the settlement systems interlinking, using their respective currencies.

The SARB guided that the interlinking discussions be held in abeyance until after the several domestic and regional payments initiatives led by the SARB have been concluded/implemented. These include the Real Time Gross Settlement System (RTGS) Renewal, the Association of African Central Banks (AACB) and the Southern African Development Community (SADC) initiatives. Additionally, progress and development will also be driven by the market’s appetite to settle in alternative currencies.

26 June 2023 - NW1366

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Kohler-Barnard, Ms D to ask the Minister of Finance

Whether, given that the SA Post Office (SAPO) has been put in provisional liquidation after a R2,2 billion bailout was promised in the budget speech earlier this year, and given that SAPO’s total debt amounts to approximately R4,4 billion, the National Treasury will refuse any further bailouts of SAPO in order to prevent the liquidation process from being finalised; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

Parliament approved the fiscal framework for 2023/24 on 8 March 2023. The provisional liquidation of SAPO and business rescue processes were initiated via a judicial process subsequent to the 2023 Budget and funding to support this process was not included in the approved fiscal framework. Government is responding through the judicial process, but various options are possible including reprioritisation of funds, within the approved fiscal framework. However, the Appropriation Bill has not been enacted yet and any adjustments in terms of section 6 would need to be considered for the adjustments budget later this year in October.

26 June 2023 - NW1974

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Mkhaliphi, Ms HO to ask the Minister of Finance

(1)Whether officials from the National Treasury met with representatives of SOSO South Africa Co-operative Limited to discuss the proposal for the establishment of a multi-donor trust fund that is earmarked to be the first local ward-based social impact development fund; if not, why not; if so, (2) whether further correspondence with the National Treasury was entered into; if not, why not; if so, what was the outcome?

Reply:

1. Yes, National Treasury officials within the International Development Cooperation unit of the Budget Office met with Mr Frazer Mbili on Thursday, 27 October 2022 at 14H00 to 15H00 (Ms Teams meeting).

2. Following the meeting of the 27th of October 2022, and as agreed, Mr Mbili was to send various documentation as verification of sources of co-financing (from co-financiers, UK Investment Group, the Humanitarian Forgive Loan Programme) of SOSO engagement with Government (Service Level Agreements) as well as the financing model proposed. The documentation sent by Mr Mbili of 7 November 2022 did not include any verification documentation. The National Treasury could therefore not verify the information received from Mr Mbili and he was requested to send the outstanding information.

26 June 2023 - NW2036

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Abrahams, Ms ALA to ask the Minister of Finance

Considering that the National Development Agency (NDA) was initially part of a list proposed by the National Treasury and The Presidency in an attempt to achieve financial savings by rationalising and/or closing public entities, (a) what was the rationale for having the NDA featured on the list, (b) what was the rationale for removing the NDA from the list, (c) what recommendations were given to the Department of Social Development and the NDA to improve on cost cutting measures and stay off the list, (d) under what circumstances can the NDA find itself back on the list and (e) what are the names of the other entities on the list?

Reply:

Given the very tight fiscal framework in 2023/24 and current problems such as the cost of the 2023 wage agreement, central government departments are re-opening discussions around rationalization of Departments (NMOG) and public entities. Whereas this process is starting up, there is at this stage no agreed upon list of entities that should be rationalized or closed. Thus, it would be premature to name any specific entities that might be under consideration. That said, government probably has far too many public entities especially given our fiscal circumstances.

26 June 2023 - NW2210

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Phillips, Ms C to ask the Minister of Finance

(1)Whether public officials who have left public institutions will still be issued with certificates of debt, considering that the Draft Auditor-General of South Africa (AGSA) 2023-2026 Strategic Plan and budget states in 2.4 that as opposed to referring material irregularities for investigation, and in the event that recommendations pertaining to material irregularities are not implemented, the AGSA must now take appropriate remedial action to address the failure of accounting officers and authorities to implement recommendations which include issuing a certificate of debt in the personal capacity of the relevant accounting officer and/or members of the accounting authority where a material financial loss has been suffered (details furnished); if not, why not; if so, what are the relevant details; (2) whether any certificates of debt in the personal capacity of the relevant account officer and/or member of the accounting authority have been issued, where a material financial loss has been suffered; if not, why not; if so, what total number of certificates were issued; (3) whether the identified individuals have settled the debt; if not, why not; if so, what are the relevant details?

Reply:

1) The Public Audit Act, 2004 (Act No. 25 of 2004) as amended in section 5(1B)(b) states that the Auditor-General has the power to issue a certificate of debt, as prescribed, where an accounting officer or accounting authority has failed to comply with remedial action. The Regulations published on 1 April 2019 state in section 12 that for purposes of this Part, “accounting officer” also includes a former accounting officer, and “member of the accounting authority” also includes a former member of the accounting authority. Public officials that have left the institutions therefore can still be issued with certificates of debt.

2) and (3) The National Treasury does not maintain this information. The Auditor General of South Africa should be engaged to obtain the detailed information.

29 May 2023 - NW1432

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Shaik Emam, Mr AM to ask the Minister of Finance

Whether, given the fact that police officers in the Republic are poorly paid with limited benefits, low danger allowance, live in informal settlements and are at high risk, he will consider exempting all police officers from paying income tax; if not, what is the position in this regard; if so, by what date?

Reply:

No, as the law does not allow for such exemptions in line with the principle that all residents earning an income, be they the President, a worker or a businessperson, are subject to our tax laws without exception. We recognise role played by the police is significant in ensuring public order, as well in ensuring the safety and security of citizens as a basic human right. The provision of safety and security as a public good that is funded by Government and such funds are raised through the levying of taxes.

The levying of taxation is a crucial mechanism utilised to generate revenue as part of country’s flagship fiscal policy. One of the linchpins of a good tax system is the principle of equity, which incorporates the concept of horizontal equity. Horizontal equity ensures that all taxpayers who receive employment or other income are taxed the same based on their ability to pay, irrespective of their vocation. Low-income taxpayers earning below R91 250 are also exempt from Personal Income Tax.

Based on the fact that the South African personal income tax system is progressive in nature, the exemption of a group of taxpayers based on their profession would be impractical and go against the principles of a good tax system. Marginal tax rates that increase with income and rebates that apply equally to all taxpayers, are the main tools to give expression to society’s preference to give relief for lower incomes through the tax system. Lastly, it will impede the fiscus, as it will negatively impact the ability to raise sufficient revenue to fund Government social programmes.

29 May 2023 - NW1399

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Shaik Emam, Mr AM to ask the Minister of Finance

Whether he will consider an exemption from pay-as-you-earn tax for all healthcare workers up to a certain level; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

No, as the law does not allow for such exemptions in line with the principle that all residents earning an income, be they the President, a worker or a businessperson, are subject to our tax laws without exception. We recognise the role played by healthcare officials is significant in ensuring provision of efficient and adequate healthcare to the public, as well in ensuring the provision healthcare as a basic human right. The provision of public healthcare services is a public good that is funded by Government and such funds are raised through the levying of taxes.

The levying of taxation is a crucial mechanism utilised to generate revenue as part of country’s flagship fiscal policy. One of the linchpins of a good tax system is the principle of equity, which incorporates the concept of horizontal equity. Horizontal equity ensures that all taxpayers who receive employment or other income are taxed the same based on their ability to pay, irrespective of their vocation. Low-income taxpayers earning below R91 250 are also exempt from Personal Income Tax.

Based on the fact that the South African personal income tax system is progressive in nature, the exemption of a group of taxpayers based on their profession would be impractical and go against the principles of a good tax system. Marginal tax rates that increase with income and rebates that apply equally to all taxpayers, are the main tools to give expression to society’s preference to give relief for lower incomes through the tax system. Lastly, it will impede the fiscus, as it will negatively impact the ability to raise sufficient revenue to fund Government social programmes.

26 May 2023 - NW1405

Profile picture: Buthelezi, Mr EM

Buthelezi, Mr EM to ask the Minister of Finance

Considering the fact that load shedding poses a threat to financial stability and that insufficient and unreliable electricity supply is likely to threaten the success of small and medium-sized enterprises (SMEs) as it has caused a reduction in business activity from SMEs, what measures has the National Treasury put in place to aid business owners in mitigating the financial impact of load shedding on their businesses, especially the SMEs located in rural areas?

Reply:

National Treasury is concerned with the impact of insufficient and unreliable electricity supply on the broader economy, including SMEs and households. In this regard, National Treasury has, as announced in 2023 Budget Speech, undertaken various interventions. Some aim to reduce the negative impact as a result of load shedding, while other measures aim to encourage an expansion in the country’s generation capacity – particularly from renewables.

The first intervention relates to the measures taken to return ESKOM to stability and sustainability given that ESKOM remains the principal electricity generat.ing entity. National Treasury proposed a total debt relief arrangement for Eskom of R254 billion. This consists of two components. One is for R184 billion, which represents Eskom’s full debt settlement requirement in three tranches over the medium term. The second is a direct take-over of up to R70 billion of Eskom’s loan portfolio in 2025/26. Because of the structure of the debt relief, Eskom will not need further borrowing during the relief period. Government will finance the arrangement through a R66 billion baseline provision announced in the 2019 Budget, and R118 billion in additional borrowings over the next three years.

Secondly, as announced in the 2023 Budget, from 1 March 2023, businesses will be able to reduce their taxable income by 125 per cent of the cost of an investment in renewables. There will be no thresholds on the size of the projects that qualify, and the incentive will be available for two years to stimulate investment in electricity generation capacity from renewables in the short term. Further, there is also a new temporary tax incentive introduced to encourage households to invest in clean electricity generation capacity which can supplement electricity supply. Individuals who install rooftop solar panels from 1 March 2023 will be able to claim a rebate of 25 per cent of the cost of the panels, up to a maximum of R15 000. This can be used to reduce their tax liability in the 2023/24 tax year. This incentive will be available for one year.

Thirdly, also announced in the 2023 Budget, National Treasury will make changes to the Bounce Back Loan Guarantee Scheme (introduced in 2022) to incentivize renewable energy, rooftop solar, and address energy-related constraints experienced by small and medium enterprises. Government will guarantee solar-related loans for small and medium enterprises on a 20 per cent first-loss basis. National Treasury will launch the Energy Bounce Back Scheme in the coming weeks.

For more information, I refer the Honourable Member to the 2023 Budget Review and subsequent Bills introduced in Parliament or published for public comment on the National Treasury website.

26 May 2023 - NW1434

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Herron, Mr BN to ask the Minister of Finance

(1)With regard to the recent announcement that conditional grant funding will be withheld from municipalities due to non-performance, (a)(i) which municipalities in each province were first identified as at risk of not spending part or all of their conditional grant funding and were given an opportunity to motivate why they should not have their grant funding stopped and (ii) what are the relevant details of the specified funding, (b)(i) which municipality in each province was not able to sufficiently motivate for the full transfer of their allocated conditional grant funding and will have that funding stopped and (ii) what are the relevant details of the specified grant funding and (c) what is the total amount nationally, from each conditional grant, that will be stopped and not paid to municipalities; (2) what is the impact on the residents of the specified municipalities of the reduction in their grant funding; (3) what role does he envisage the (a) provincial governments and (b) National Treasury should play in supporting municipalities to perform and spend their funding allocations; (4) whether he has found that the National Treasury and/or the respective provincial governments fulfilled their obligations to support the municipalities; if not, why not; if so, what are the relevant details?

Reply:

1. This is an annual practice which has been institutionalized over the last 10 years, to maximise spending and effectiveness of conditional grants. Such withholding and reallocation of grants is published in Government Gazette No. 48327 of 29 March 2023.

On 17 February 2023 National Treasury initiated the process of stopping and re-allocating the 2022/23 conditional grant allocations in terms of section 18 of the Division of Revenue Act (Act No. 5 of 2022) (DoRA), as amended by the Division of Revenue Amendment Act (Act No. 15 of 2022) (DoRAA). NT issued 171 letters to all under-performing municipalities on 17 February 2023 covering about 11 conditional grants that were reflecting under-performance against the 2022/23 conditional grant allocations. This process was done in consultation with the transferring national accounting officers/ departments that are responsible for the administration of the conditional grants.

The 2022/23 mid-year expenditure reports in terms of section 10 of the 2022 DoRA as amended and section 71 and 72 of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003) (MFMA) were utilized to determine if the municipalities are under-performing against their allocations as they report to both National Treasury and to the transferring officers.

In terms of section 18 of DoRA and section 38 (2)(a) of the MFMA the affected municipalities were afforded an opportunity to make a written presentation to National Treasury, by providing a motivation on why the grants should not be stopped. The municipalities were required to submit the motivation to the National Treasury within seven days after the receipt of the letters regarding expenditure against their allocations and project progress on the ground.

In total an amount of R7.4 billion was proposed to be stopped from municipalities in terms of section 18 of the Division of Revenue Act, 2022 (Act No. 5 of 2022) for various conditional grants due to their poor performance or slow spending as proposed by either the Transferring Officer (national department) administering the conditional grant or National Treasury. An amount of R2.7 billion was ultimately not transferred from the initial proposed amount of R7.4 billion. The details of the proposed non-transferred amounts per conditional grant per province are in the tables as per of Annexure A.

2. The stopping and non-transfer of the conditional grants against underperforming municipalities is to assist municipalities to address any issue hindering the spending of their conditional grant allocation in that year i.e. late approval of projects, late procurement, litigation etc., and re-allocate to municipalities that are ready to spend and have shovel ready projects. This is because the funds would not in any case be spent by the municipalities’ funds are proposed to be stopped from, therefore minimizing underperformance of the overall programme. Once these municipalities have addressed their challenges and they are ready, it will be able to spend its future annual allocations which are not normally affected by in year spending.

Therefore, the stopping of the allocation is to ensure efficiency in spending and protecting against possible misuse and usage of the conditional grants for operational purposes while the municipality is being supported to resolve its challenges.

3. With respect to infrastructure conditional grants, specific support includes technical support and assistance provided by DCoG’s Municipal Infrastructure Support Agent (MISA) for infrastructure delivery. Further, the municipalities that are affected by the stopping / suspension process due to governance and financial challenges will continue receiving support from NT, DCoG and the relevant stakeholders under the MIG cost reimbursement and invoice verification which has been a continuous process over the years. This is a process of safeguarding the cash in the interim before stopping of allocations is considered. In this case municipalities only have their funds transferred once an invoice against work done has been verified by MISA, provincial government, and national government.

The National Treasury has also made funds available in various forms of capacity support in ensuring municipalities and provinces have the capacity to implement infrastructure projects. For example, five per cent of the Municipal Infrastructure Grant and Integrated Urban Development Grant may be used for project management units in municipalities and 3 per cent of the Urban Settlements Development Grant can be used for capacity in metropolitan municipalities, and continuous financial management support and guidance by both National and Provincial treasuries on the usage and reporting of conditional grants is provided to municipalities in this regard.

Various other conditional grants provide for the option to convert part of the capital infrastructure grants for technical support to capacitate municipalities to spend more effectively. This could be in the form of engaging district municipalities to implement stalled projects on behalf of struggling municipalities, utilization of both national entities and municipal entities to assist municipalities (either through a service level agreement (SLA) or agency vs. principal option) to roll out struggling projects. National Treasury further utilizes the services of the provincial treasuries to assist struggling municipalities in terms of the system of “delegated municipalities” while National Treasury focusses on the non-delegated ones. A host of experts are also available to these municipalities through the support of the Municipal Finance Improvement Programme (MFIP) from National Treasury.

The National Treasury and relevant department administering the grants (Transferring Officers) with the support of the respective provinces have fulfilled their obligations in supporting the municipalities. On a quarterly basis, the national transferring officers conduct quarterly meetings across the country with the municipalities that receive their grants to assess performance of the previous quarter and advise municipalities on how to mitigate the challenges causing them to underperform. In addition, the national transferring officers conduct site visits to confirm the performance reported by municipalities align, where National Treasury is sometimes also invited.

Further CoGTA holds under-performance meetings with targeted municipalities to get to the root causes of underperformance. MISA also plays a crucial part in that it provides technical support to municipalities that experience challenges in the implementation of their infrastructure programmes.

Despite all the interventions in place, some municipalities still underspend. It is ultimately the responsibility of municipalities to take up the support provided and make their own decisions but still be accountable.

Annexure A

details of the proposed stopping amounts per conditional grant per province

Municipal Infrastructure Grant (MIG)

Integrated National Electrification Programme (INEP) Grant

Regional Bulk Infrastructure Grant (RBIG)

Water Services Infrastructure Grant (WSIG)

Energy Efficiency Demand Side Management (EEDSM) Grant

Neighbourhood Development Partnership Grant (NDPG)

Informal Settlements Upgrading Partnership Grant (ISUPG)

Public Transport Network Grant (PTNG)

Urban Settlements Development Grant (USDG)

Rural Roads Asset Management Systems (RRAMS) Grant

Annexure B

The following 171 municipalities received letters of intention to stop a portion of their conditional grants:

Eastern Cape (22 letters)

  • Buffalo City;
  • NMA Nelson Mandela Bay;
  • Amatole District Municipality (DM);
  • Joe Gqabi DM;
  • O.R. Tambo DM;
  • Alfred Nzo DM;
  • Dr Beyers Naude Local Municipality (LM);
  • Makana LM;
  • Ndlambe LM;
  • Kou-Kamma LM;
  • Mbhashe LM;
  • Great Kei LM;
  • Emalahleni LM;
  • Dr AB Xuma LM;
  • Enoch Mgijima LM;
  • Elundini LM;
  • Senqu LM;
  • Walter Sisulu LM;
  • Ngquza Hill LM;
  • Port St Johns LM;
  • Matatiele LM; and
  • Winnie Madikizela-Mandela LM.

Free State (17 letters)

  • Mangaung;
  • Fezile Dabi DM;
  • Letsemeng LM;
  • Kopanong LM;
  • Mohokare LM;
  • Masilonyana LM;
  • Tokologo LM;
  • Matjhabeng LM;
  • Nala LM;
  • Setsoto LM;
  • Dihlabeng LM;
  • Nketoana LM;
  • Phumelela LM;
  • Mantsopa LM;
  • Ngwathe LM;
  • Metsimaholo LM; and
  • Mafube LM.

Gauteng (9 letters)

  • City of Ekurhuleni;
  • City of Johannesburg;
  • City of Tshwane;
  • Emfuleni LM;
  • Midvaal LM;
  • Lesedi LM;
  • Mogale City LM;
  • Merafong City LM; and
  • Rand West City LM.

KwaZulu-Natal (34 letters)

  • EThekwini;
  • UThukela DM;
  • UMzinyathi DM;
  • Amajuba DM;
  • Zululand DM;
  • UMkhanyakude DM;
  • King Cetshwayo DM;
  • Harry Gwala;
  • UMzumbe LM;
  • UMuziwabantu LM;
  • Ray Nkonyeni LM;
  • UMshwathiLM;
  • UMngeni LM;
  • Msunduzi LM;
  • iNkosi Langalibalele LM;
  • Alfred Duma LM;
  • eNdumeni LM;
  • Nquthu LM;
  • UMvoti LM;
  • Newcastle LM;
  • Dannhauser LM;
  • eDumbe LM;
  • uPhongolo LM;
  • Ulundi LM;
  • Jozini LM;
  • Big Five Hlabisa LM;
  • UMhlathuze LM;
  • Mthonjaneni LM;
  • Nkandla LM;
  • KwaDukuza LM;
  • Maphumulo LM;
  • Greater Kokstad LM;
  • UMzimkhulu LM; and
  • Dr Nkosazana Dlamini Zuma LM.

Limpopo (20 letters)

  • Mopani DM;
  • Vhembe DM;
  • Capricorn DM;
  • Sekhukhune DM;
  • Greater Giyani LM;
  • Greater Letaba LM;
  • Greater Tzaneen LM;
  • Musina LM;
  • Thulamela LM;
  • Makhado LM;
  • Blouberg LM;
  • Polokwane LM;
  • Lepelle-Nkumpi LM;
  • Thabazimbi LM;
  • Lephalale LM;
  • Bela-Bela LM;
  • Mogalakwena LM;
  • Modimolle-Mookgophong LM;
  • Elias Motsoaledi LM; and
  • Makhuduthamaga LM.

Mpumalanga (14 letters)

  • Chief Albert Luthuli LM;
  • Msukaligwa LM;
  • Mkhondo LM;
  • Dr Pixley ka Isaka Seme LM;
  • Lekwa LM
  • Dipaleseng LM;
  • Emalahleni LM;
  • Steve Tshwete LM;
  • Emakhazeni LM
  • Thembisile Hani LM;
  • Thaba Chweu LM;
  • Nkomazi LM;
  • Bushbuckridge LM; and
  • City of Mbombela LM.

Northern Cape (23 letters)

  • Richtersveld LM;
  • Nama Khoi LM;
  • Kamiesberg LM;
  • Hantam LM:
  • Karoo Hoogland LM;
  • Khâi-Ma LM;
  • Ubuntu LM;
  • Umsobomvu LM;
  • Emthanjeni LM;
  • Kareeberg LM;
  • Renosterberg LM;
  • Thembelihle LM
  • Siyathemba LM;
  • Siyancuma LM;
  • !Kai !Garib LM;
  • !Kheis LM;
  • Tsantsabane LM;
  • Dawid Kruiper LM;
  • Sol Plaatjie LM;
  • Dikgatlong LM;
  • Joe Morolong LM;
  • Ga-Segonyana LM; and
  • Gamagara LM.

North West (13 letters)

  • Dr Ruth Segomotsi Mompati DM;
  • Moretele LM;
  • Madibeng LM;
  • Rustenburg LM;
  • Moses Kotane LM;
  • Ratlou LM;
  • Ditsobotla LM;
  • Ramotshere Moiloa LM;
  • Naledi LM;
  • Mamusa LM;
  • Lekwa-Teemane LM;
  • City of Matlosana LM; and
  • JB Marks LM.

Western Cape (19 letters)

  • City of Cape Town;
  • Cape Winelands DM;
  • Matzikama LM;
  • Cederberg LM;
  • Saldanha Bay LM;
  • Swartland LM;
  • Witzenberg LM;
  • Stellenbosch LM;
  • Breede Valley LM;
  • Langeberg LM;
  • Overstrand LM;
  • Cape Agulhas LM;
  • Kannaland LM;
  • Mossel Bay LM;
  • George LM;
  • Bitou LM;
  • Knysna LM;
  • Prince Albert LM; and
  • Beaufort West LM.

NB!! Details of the amounts stopped per province, per municipality and per conditional grant are attached as an annexure (Government Gazette No. 48327 of 29 March 2023).

17 May 2023 - NW1227

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Breytenbach, Adv G to ask the Minister of Finance

Whether, with regard to a legal obligation on a certain person (name furnished) to declare the person’s possession of currency in terms of section 15 of the Customs and Excise Act, Act 91 of 1964, upon his entry into the Republic, and in light of the fact that the failure to so declare is an offence in terms of section 81 of the specified Act, wherein the definition of goods includes currency, the SA Revenue Service has laid a criminal complaint with the SA Police Service in terms of the statute above read with section 34(2) of the Prevention and Combating of Corrupt Activities Act, Act 12 of 2004; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

Section 4(3) of the Customs and Excise Act prohibits the Commissioner and/or SARS officials from disclosing any information relating to any person, firm or business acquired in the performance of SARS duties, except in circumstances outlined in the Act. Accordingly, SARS is not able to disclose information requested to the Minister and Parliament.

17 May 2023 - NW1277

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Shaik Emam, Mr AM to ask the Minister of Finance

(1)Whether all tenders awarded by municipalities are reported to the National Treasury; if not, what is the position in this regard; if so, 2. whether he will furnish Mr A M Shaik Emam with a list of the (a) tenders awarded in the Zululand District Municipality, (b) names of the companies, (c) monetary value of the tenders, (d) itemised billing and (e) legal costs in the past financial year; if not, why not, in each case; if so, what are the relevant details in each case?

Reply:

1. No, municipalities do not currently report all their tenders to the National Treasury.

National Treasury issued MFMA Circular 83 (2016) regarding the advertisement of bids and the publication of notices in respect of awarded bids, cancelled bids, variations, and extensions of existing contracts on the eTender Publication Portal. This circular makes provision for the publication of tender opportunities and awards on the National Treasury Tender portal. Since this is a Circular, it is not mandatory for municipalities to publish procurement opportunities on the Treasury tender portal, unless the Municipality Council adopts the circular as policy. Some municipalities publish their tender opportunities while others are not publishing on the eTenders portal. National Treasury is considering reforms to make such publication of tender awards mandatory, but this will likely require legislative amendments.

2. We do not have any tender information regarding Zululand District Municipality or any procurement-related data for this municipality.

17 May 2023 - NW1271

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Madokwe, Ms P to ask the Minister of Finance

(1)Whether the National Treasury is informed of any investigations into the affairs of municipalities; if not, why not; if so, (2) whether he was informed of the squandered millions of Rand that were allocated to build the Ngcobo stadium in the Dr A B Xuma Local Municipality without being completed; if not, why not; if so, what are the relevant details; (3) whether he has been informed that the stadium was not completed when the municipality asked for a top up for the Nogqala bridge in Ward 19 that was initially allocated a budget of approximately R12,9 million, but left incomplete; if not, why not; if so, (4) whether the National Treasury has any obligation to regularly assess projects that municipalities claim to have spent money on and commission speedy investigations into corruption with the intention to ensure the prosecution of persons who are accountable; if not, why not; if so, what are the relevant details?

Reply:

1. I presume the Honourable Member is referring to a criminal investigation by the South African Police Services (SAPS). Like all such criminal investigations, the National Treasury is generally not informed of such investigations, unless any specific request is required from the National Treasury by SAPS. In terms of section 106 of the Municipal System Act, the MEC for Local Government (Cooperative Governance and Traditional Affairs) may conduct investigations if there are allegations of maladministration, fraud and corruption and other serious malpractices. The MEC would generally inform the National Treasury of the outcome of the investigation.

Also in terms of Section 5(2)(d) of the Municipal Financial Management Act (MFMA) “National Treasury may investigate any system of financial management and internal control in any municipality or municipal entity and recommend improvements”

2. National Treasury was not informed of the millions of Rand that was allocated by Dr A B Xuma Local Municipality to build Ngcobo Stadium.

a) The Transferring Officer i.e., the national department administering the conditional grant is responsible for the allocation and monitoring of funds to municipalities, as well as the approval of projects to be implemented and the budgets for the projects. The Department of Cooperative Governance (DCoG) administers the Municipal Infrastructure Grant (MIG) and National Treasury receives monthly financial reports, and quarterly financial and non-financial reports on the overall programme performance, and not on specific projects.

b) The specific details pertaining to the said project would be at the disposal of DCoG, i.e. the budgeted amount for the project, the progress on the project, and whether the project has been completed or not and also the reasons.

3. National Treasury was not informed that the stadium was incomplete when the municipality asked for a top up for the Nogqala bridge in Ward 19.

a)The National Treasury is not ordinarily informed of what projects have been approved for implementation and specific project budget for a particular year. The department administering the conditional grant is responsible for the administration of the programme and the said department must hold recipient municipalities of the grant accountable on the funding, approved projects and also ensure compliance with the conditions of the funding as outlined in the conditional grant framework.

4.Unless this is a conditional grant with such conditions, the DCoG is responsible to ensure compliance with the MIG framework in the Division of Revenue Act by holding municipalities accountable on allocated funding and approved projects to ensure projects are implemented and completed at the approved amounts, in compliance with the set conditions. Where funds are unspent at the end of the year and are not eligible for rollover and or funds are not spent in line with the intended purpose, the DCoG will not recognise such expenditure and, National Treasury will be duly informed and the said funds will be recouped from future transfers due to the municipality. Where maladministration, fraud and corruption and other serious malpractice is suspected, the onus is on the MEC of Cooperative Governance and Traditional Affairs to initiate an investigation in terms of section 106 of the Municipal Systems Act.

17 May 2023 - NW1401

Profile picture: Masualle, Mr PG

Masualle, Mr PG to ask the Minister of Finance

Whether, given that in March 2023 the International Monetary Fund cut the Republic’s gross domestic product growth outlook to 0,1% for 2023 (details furnished), he has found that at this rate of negligible growth the Republic is likely to experience a recession this year; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

Yes, the IMF has projected growth of 0.1 per cent for 2023 in its latest World Economic Outlook, published last month during its Spring Meetings, which is lower than the National Treasury’s projected GDP growth of 0.9 per cent in 2023 published in the 2023 Budget Review. There are other more recent projections on growth in 2023, and market consensus is currently for growth of 0.6 per cent in 2023. While growth projections are low and risks are high, the likelihood of a recession will largely depend on the impact of load shedding along with high inflation, rising borrowing costs and weak external demand. The National Treasury will announce a further update on its projections in the MTBPS later this year in October 2023.

The 2023 Budget projection itself was a downward adjustment from projected growth of 1.4 per cent for 2023 in the MTBPS last year. The 2023 Budget revision was informed by the negative impacts of loadshedding on the economy, stubbornly high inflation and accompanying rising borrowing costs and a relatively less supportive external environment among others. Since the publication of the Budget Review, some of the risks to the economy that were identified have materialized. These include the further worsening of domestic structural constraints in electricity and logistics, which continue to limit production and exports; a higher cost of living and higher borrowing costs which are expected to weigh on consumption and investment. Additionally, real GDP growth in the final quarter of 2022 was worse than anticipated by most forecasters, including the Treasury, (declining by 1.3 per cent). This contraction meant that annual GDP in 2022 came out weaker than expected, at 2 per cent, posing adverse carry-over effects into 2023. Beyond this, significant risks still remain including weaker global growth and lower commodity prices.

On balance however, while the occurrence of these risks weighs on the 2023 Budget Review economic growth outlook, available high-frequency data at the start of 2023 points to a marginal rebound in GDP growth in the first quarter. This is also supported by the lower than initially anticipated intensity of load-shedding in the first quarter of 2023. Moreover, GDP growth is expected to gradually recovery in the second half of 2023, as the worst impact of the electricity supply shortages start to ease following the peak winter demand period, and some electricity generation capacity is restored. Taken together, the prevailing view is for a positive GDP growth in 2023, albeit with higher downside risks compared to the time of the Budget Review. Lastly, the additional potential impact of the prevailing risks to the outlook can be seen in the uniform downward revisions by other official forecasters, which on aggregate still show positive growth projections in 2023.

09 May 2023 - NW923

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George, Dr DT to ask the Minister of Finance

Whether the Public Investment Corporation will use funds from the Government Employment Pension Fund to invest in Eskom in the (a) 2023-24 financial year and (b) any time during the medium-term expenditure framework; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

The Public Investment Corporation (PIC) invests according to the mandates of its clients in line with section 10(4) of the PIC Act as amended. Any potential investment in Eskom will be in line with client mandates or their approval and assessed on its merits taking into account the expected returns and associated terms and conditions, especially the security thereof.

09 May 2023 - NW1233

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Abrahams, Ms ALA to ask the Minister of Finance

(1)With reference to the Department of Social Development’s third quarter expenditure as at 31 December 2022, what were the detailed reasons that (a) R755,303 million was approved by the National Treasury to be transferred to the Department of Defence and (b) R2,937 billion was approved by the National Treasury to be transferred to the Department of Public Enterprises; (2) whether this was a once off shift of funds; if not, what is the position in this regard; if so, what are the relevant details; (3) whether any other department had funds shifted for this purpose; if not, what is the position in this regard; if so, what was the Rand value thereof; (4) what (a) is the total value of funds shifted from the Department of Social Development in the 2022 23 financial year and (b) was the purpose thereof?

Reply:

1. The National Treasury regularly revises or transfers funds of different programmes, when allowed by the law, via the Budget or Adjustment processes, published in various Adjusted Appropriation Bills and the Adjusted Estimates of Expenditure. Information is available in such Budgetary documents.

a) R755.303 million was transferred from the Department of Social Development to the Department of Defence to cater for the extended deployment of about 1 495 members of the South African Defence Force members in Mozambique until 15 April 2023. These funds will be used for compensation of employees and for items such as food rations, fuel, ammunition and transport. Additional details on the funding shift are provided on page 80 and 202 of the 2022 Adjusted Estimates of National Expenditure.

b) R2.937 billion was shifted to the Department of Public Enterprises to assist Transnet SOC Limited to repair infrastructure and assets that were damaged by the floods that occurred in April 2022 in KwaZulu-Natal. The National Treasury has put conditions on the allocation, to ensure that funds are spent towards approved areas and this will be monitored through monthly meetings to be held between the National Treasury, the Department of Public Enterprises and Transnet.

2. The shift was approved by Parliament through the Adjusted Appropriation Act. This was done after the Department of Social Development (DSD) declared savings. This was once-off adjustment.

3. No other departments had funds shifted for these purposes.

4. (a) A total of R9.162 billion savings was declared by DSD in 2022/23 and approved by parliament through the Adjusted Appropriation Act and the 2nd Adjusted Appropriation Act. R5.462 billion in the Adjusted Appropriation Act and R3.7 billion in the 2nd Adjusted Appropriation Act. The shifts in the adjustment budget are described above. (b) In the 2nd adjustment budget:

(i) R2.4 billion was shifted to the Department of Communication and Digital Technologies for the recapitalisation of the South African Post Office;

(ii) R1 billion was shifted to the Department of Public Enterprises for settlement of business rescue plan obligations; and

(iii) R300 million was shifted to the Department of Home Affairs for political party funding.

Despite these shifts, it is likely that DSD has underspent in 2022/23, to be confirmed when DSD submits its Section 32 Report (and the statement) in terms of the Public Finance Management Act.

09 May 2023 - NW1133

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Buthelezi, Mr EM to ask the Minister of Finance

(1)Whether the National Treasury intends to implement reforms to decrease the continued support for (a) loss-making state companies, (b) spending on temporary welfare grants and (c) increased debt-service costs which are predicted to see the budget deficit widen to 6,5% of gross domestic product in the fiscal year ending 31 March 2024; if not, why not in each case; if so, what are the relevant details in each case; (2) whether the National Treasury will heed the warnings from the International Monetary Fund; if not, why not; if so, what are the relevant details?

Reply:

1 (a) Between 2012/13 and 2021/22, state-owned companies (SOCs) received about R266.6 billion in bailouts from government, which has crowded out important social and other expenditure. The 2022 Budget Review outlined the need for a new framework for managing bailouts to state-owned companies to reduce fiscal risks and promote long-overdue reforms. In addition, National Treasury has issued an Instruction Note in 2020 (No.09 of 2020/21) on the minimum criteria which must be met before entities submit for approval or concurrence with regards to guarantees, indemnities, security and restriction on borrowings. The above-mentioned Instruction Note has resulted in a decrease in requests for government guarantees from SOCs as a result of requests not meeting minimum criteria. Managing the state’s guarantee portfolio is therefore a key mechanism to decrease the continued support for loss-making SOCs.

(b) The COVID-19 SRD grant has been extended only until 2023/24. Government is still considering various options, including employment and labour market activation initiatives, in providing support to the working-age population. No final decision yet.

(c) Between the 2022 Budget and 2023 Budget, the consolidated budget deficit expected for 2022/23 declined from 6 per cent to 4.2 per cent of GDP. The deficit is projected to narrow to 4 per cent of GDP in the fiscal year ending 31 March 2024 before reaching 3.2 per cent of GDP in 2025/26, as the main budget deficit narrows and social security funds, provinces and public entities move into a combined cash surplus in the outer year. Over the medium term, the composition of consolidated spending improves, continuing the shift towards capital rather than current spending. The medium-term fiscal strategy aims to:

i. Achieve fiscal sustainability by narrowing the budget deficit and stabilising debt.

ii. Support economic growth by maintaining a sustainable fiscal stance, directing resources towards infrastructure, increasing spending on policy priorities and contributing to energy reforms.

iii. Reduce fiscal and economic risks, including building fiscal buffers for future shocks and providing targeted conditional in-year support to key public entities and by taking a portion of Eskom’s debt with strict conditions.

2. To this end, the National Treasury remains committed to narrowing the budget deficit and stabilising debt. In the medium term, this will be achieved mainly by controlling non-interest expenditure growth and the use of a portion of revenue improvements to narrow the budget deficit and keep debt stabilisation on track. In-year allocations are made to mitigate economic and fiscal risks associated with selected SOEs.

09 May 2023 - NW924

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George, Dr DT to ask the Minister of Finance

Whether he will provide Dr D T George with a full list of the loans provided by the Public Investment Corporation to any (a) person, (b) organisation and/or (c) entity in the past five years; if not, why not; if so, what are the relevant details?

Reply:

The PIC’s does not provide any loans to individuals in their personal capacity. The PIC invests in companies or entities through the provision of funding using debt instruments that are disclosed in clients’ Integrated Annual Reports and its Annexures, that is available on the websites of the Clients.

09 May 2023 - NW617

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Kruger, Mr HC to ask the Minister of Finance

(1)Whether sole proprietors will be eligible to claim a 125% tax deduction when they install solar energy panels; if not, what is the position in this regard; if so, what are the relevant details; (2) whether sole proprietors will be classified as individuals who are only able to claim a rebate of 25% of the cost of solar energy panel installations; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

1. Sole proprietors earn business income as the base for the personal income tax. To calculate the taxable business income they would be able to claim depreciation and other capital allowances just like any other business. Therefore, should their investment conform to the requirements of the allowance, they will be able to claim the 125% tax deduction.

2. The rebate of 25% will not be available on any expenses that already enjoyed the 125% deduction against business income. If that deduction was not claimed, then a sole proprietor will be able to claim the rebate.

The policy process for the 2023 tax legislative amendments is underway. The Frequently Asked Questions document that was published on the day that the Minister of Finance delivered the Budget Speech states (and available on the website www.treasury.gov.za) that :

This incentive will be included in the annual tax amendments. A draft version of the legislation will be published for public comment no later than the publication date of the 2023 Draft Taxation Laws Amendment Bill. The Minister tables tax bills during the Medium Term Budget Policy Statement (MTBPS) in October each year. Parliament considers the amendments after which the President can assent to the amendments – usually by January of the year after the announcement. The aim of this note [the FAQ document] and the draft legislation to follow is to provide as much upfront clarity as possible so that individuals do not feel they need to wait for the tax bills later in the year before making a decision to invest and benefit from the incentive. The guidance provided is, nevertheless, subject to the outcome of the consultative process on the proposal and Parliament’s ultimate decisions on the legislation giving effect to the

proposal.”

18 April 2023 - NW943

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Buthelezi, Mr EM to ask the Minister of Finance

With reference to the greylisting of the Republic by the Financial Action Task Force, what possible pre-emptive impact has the National Treasury found this will have on the efforts to establish a national green finance taxonomy towards providing financial players with certainty of credible green, social and sustainable investments?

Reply:

We do not expect the greylisting by the Financial Action Task Force (FATF) to have any effect on any institutions implementing a Green Finance Taxonomy (GFT). The GFT is an important pillar in the comprehensive approach of reducing the carbon intensity of the South African economy. The primary purpose of the GFT is to provide market clarity for green/environmentally sustainable activities, thus reducing market risks. The GFT is a voluntary market tool and was established on 1 April 2022. While the Carbon Tax sets a price for emissions to help businesses fully internalize the costs of their activities, the GFT sets out those projects, investment and assets which are required to reduce the carbon intensity of companies (and thereby reduce their emissions). The GFT adopts international best practice in recognition of the fact that the capital required for investments into ‘green assets’ (as is the case generally) comes from both domestic and international sources.

In any case, as noted in National Treasury’s statement on the FATF greylisting: there are no items on the action plan that relate directly to the preventive measures in respect of South Africa’s financial sector. This reflects the significant progress that South Africa’s financial sector supervisors have made in the application of a risk-based approach to the supervision of banks and insurers. National Treasury therefore expects that the grey-listing will have limited impact on payments, broader financial stability or broader inward investment, including the use of the green finance taxonomy for green investment.

18 April 2023 - NW1232

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Abrahams, Ms ALA to ask the Minister of Finance

What are the detailed reasons that the National Treasury declined the Department of Social Development’s proposal to increase the monthly COVID19 Social Relief of Distress grant from R350 to R420 for successful applicants when R1,769 billion was unspent and declared a saving for the 2022-23 financial year as per the third quarter expenditure statement?

Reply:

The budget process involves making many trade-offs, including between different priorities. As stated in the 2023 Budget Review, the extension of the COVID-19 SRD grant and the inflationary increases to social grants cost R65.3 billion. Given the priorities and pressures facing the 2023 Budget and Medium-Term Expenditure Framework, it is clear that there was (and is) limited fiscal space to accommodate the increase in the COVID-19 SRD grant values. Under spending or savings from 2022/23 do not go through the next year because of the large budget deficit. In addition, a broader agreement on the future of the COVID-19 SRD grant is required, including the financial implications of the proposed change, and how to finance it.

18 April 2023 - NW1137

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Buthelezi, Ms SA to ask the Minister of Finance

Noting recent reports that the Nelson Mandela Bay Metropolitan Municipality used the declaration of the state of disaster to circumvent proper procurement processes, which resulted in the awarding of a contract to the value of R24,6 million (details furnished), and noting that the Republic is currently in a state of disaster, what preventative measures has his department put in place to ensure that, in the event of spending related to a state of disaster, there is no repeat of situations similar to what happened at the specified municipality?

Reply:

National Treasury issued MFMA circular 117 on 04 May 2022 titled “SCM Circular on reporting of procurement in response to the National State of Disaster as a result of severe weather events”

The purpose of the circular was mainly to provide a framework in relation to procurement in response to the national state of disaster as a result of the severe weather events and a need for greater transparency on procurement and expenditure related to the disaster.

All municipalities and municipal entities affected by the flood disaster, must when procuring goods and services, follow section 217 of the Constitution, the Municipal Finance Management Act and its regulations and circulars as well as supply chain management policies of institutions.

In addition to MFMA circular 117, National Treasury issued MSCOA Circular 14 on 16 May 2022 to give effect to the recording of disaster events in mSCOA.

Reporting and monitoring

As contained in MFMA circular 117, all municipalities and municipal entities affected by the disaster are required to report all disaster-related transactions on a weekly basis effective from 13 May 2022. Furthermore, all municipalities and municipal entities are required to report monthly as per sections 71(1) and 87(11) of MFMA for both municipalities and municipal entities respectively.

National Treasury has advised all municipalities and municipal entities affected by the disaster to utilize their internal audit units to undertake preventative audits for quality assurance on procurement to respond to the effects of the damage caused by floods.

The reporting template provided in MFMA circular 117 requires affected municipalities and municipal entities to report weekly and both MFMA section 71(1) (municipalities) and section 87(11) (municipal entities) reports to provide real-time information that will allow Auditor General to conduct real-time audits.

The aim of the real-time audits is to prevent, detect, and report on the findings to ensure an immediate response to prevent leakage, potential fraud, financial mismanagement and wastage.

The Auditor-General of South Africa will further provide real-time insights into the management and usage of funds earmarked for disaster relief in accordance with the objectives and targets set for those funds.

18 April 2023 - NW1132

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Buthelezi, Mr EM to ask the Minister of Finance

By what date does he envisage a decrease in the Republic’s debt servicing costs?

Reply:

Kindly refer to Figure 1.6 of the Budget Review 2023.

18 April 2023 - NW1033

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Buthelezi, Mr EM to ask the Minister of Finance

Whether, with reference to the concern of the SA Local Government Association about the proposal by the National Treasury for persons to consider the use and move to solar energy, and the possible revenue loss that this will have on municipalities and the ultimate increase of electricity prices for those who are not able to move off the grid, the National Treasury has (a) any plans and/or (b) a budget to stabilise and/or rebuild dysfunctional councils that desperately need the funds that they receive from providing electricity to the communities that they serve; if not, why not, in each case; if so, what are the relevant details in each case?

Reply:

National Treasury will be engaging with the South African Local Government Association (SALGA) on its concerns, as it is not necessarily correct that a municipality will lose revenue, especially if there is greater economic activity as a result of more secure electricity to business and households.

Further, households are being encouraged to use and move to solar energy as part of the government's deliberate attempt to reduce the demand for energy that is causing the load-shedding crisis. In the absence of such efforts, more pressure on the grid could result in grid collapses which would be more detrimental to municipal finances. Therefore, participating in this initiative may benefit municipalities as a result of a "payback scheme". By feeding excess energy back into the grid, customers can provide stored excess energy at lower rates than Eskom at peak times.

National Treasury has observed that many municipalities adopted tariffs that are not cost-reflective, which in essence means they are not recovering the full cost of providing electricity in the first place. To make the tariff more affordable, municipalities need to eliminate inefficiencies in the service value chain. The changing energy sector and its impact on municipal services must also be considered when setting tariffs. Energy conservation and efficacy must be facilitated and enforced in municipal consumption (across all services). Municipal operations should align with the decline in traditional electricity purchases by buying less from Eskom. It is also necessary for municipal strategy to re-align any earlier resolutions to flat rate selected areas with national policy, which limits the supply of basic water and electricity to 50 kilowatt hours of electricity and 6 kiloliters of water for indigent consumers.

The National Treasury is currently undertaking research on establishing norms and standards for electricity surcharges. This is in line with section 8 of the Municipal Fiscal Powers and Functions Act, 2007. This Act gives the Minister of Finance the power to prescribe mandatory national norms and standards for regulating municipal surcharges on electricity. The National Treasury is also working on identifying supplementary or replacement revenue sources for electricity surcharges as part of this ongoing research.

Considering the fiscal and economic risks posed by loadshedding, there is a need for further research into: 1) the implications of local trends in municipal finances; 2) how the municipal electricity business can adjust; and 3) how to minimize the adverse fiscal and economic impacts that energy sector reforms could have.

The National Treasury’s 2021 State of Local Government Finances report found that 165 municipalities were in financial distress at the end of 2020/21. Revenue management was the most prevalent factor contributing to financial distress. Moreover, many municipalities fail to adopt funded budgets, which means they will not be financially sustainable even if they remain within their budgets. This implies that they lack credible financial management. Those indicators are early warning signs of dysfunctional councils in the future.

In addition to issues that are leading to dysfunctional councils, our analysis shows that municipalities are diverting the LGES free basic provision to other initiatives, mainly paying salaries and a generous system of benefits for employees.

Once the research and engagements with SALGA are concluded, National Treasury will respond to the budgetary challenges via the annual budget process.

18 April 2023 - NW1001

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Shaik Emam, Mr AM to ask the Minister of Finance

What (a) is the total debt owed by the eThekwini Metropolitan Municipality to (i) local and (ii) foreign lenders and (b) measures does the National Treasury have in place to ensure some oversight over local municipal borrowing from financial institutions?

Reply:

a) The Consolidated 2021/22 Audited Annual Financial Statements for eThekwini Metropolitan Municipality reported the following breakdown on Borrowings:

  1. Local Lenders = R9 billion
  2. Foreign Lenders – Agence Francaise de Developpement (AFD) = R233 million

        Total = R9.2 billion

 It should be noted that in terms of Section 47 of the Municipal Finance Management Act, municipalities are not allowed to incur any debt in any foreign currency, and must ensure its debt is denominated in Rands.

b)  As part of the oversight responsibilities, the National Treasury performs the following:

(i) The National Treasury analyses the borrowing capacity of a municipality by evaluating the size of the Gearing Ratios – total borrowing liabilities divided by the total operating revenue (also an indicator used to determine if a municipality is in financial distress).

(ii) When a municipality intends to borrow from the authorised financial service providers (lenders), they are required to obtain National Treasury’s views in terms of Section 46 of the Municipal Finance Management Act, 2003. A decision to borrow or not is the prerogative of a municipal council.

(iii) National Treasury has put in a place a Borrowing Policy Framework (which has been endorsed by Cabinet on the 17th of August 2022). The Policy sets out the following principles:

  • Creditworthy municipalities should borrow prudently to finance capital investment and fulfil their constitutional responsibilities;
  • Municipal access to private capital, based on investors’ evaluation of municipal creditworthiness, this is key to efficient local government and fiscal discipline as their financial sustainability is seen from an objective perspective;
  • Municipalities should borrow in the context of long-term financial strategies, which reflect clear priorities and the useful life of assets; and
  • Neither national nor provincial government will underwrite or guarantee municipal borrowing, again contributing to fiscal discipline as it would lead local government to think carefully on how they approach the borrowing market.

18 April 2023 - NW940

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Buthelezi, Mr EM to ask the Minister of Finance

Whether, with reference to the use of exorbitant funds by municipalities on overtime payments, the National Treasury intends to engage with the Department of Cooperative Governance and Traditional Affairs to investigate the financial sustainability and soundness of the specified payments on the budgets in accordance with the specified department’s mandate to promote good governance through accountable, economic, efficient, equitable and sustainable management; if not, why not; if so, (a) on what date and (b) what are the further, relevant details?

Reply:

No, as we need more clarity on what specific problems or audits where exorbitant spending on overtime has been identified as a problem requiring National Treasury to intervene. Further, overtime is regulated by the Basic Conditions of Employment Act (BCEA-section 10) and the SALGA Collective Agreement.

There are no planned meetings between the National Treasury and Department of Cooperative Governance to discuss overtime payments by municipalities.

However, there are measures currently in place to guide the implementation of Overtime and the related payments, such as MFMA Circular No. 86 on Cost Containment.

Municipalities are advised that overtime budgets must not exceed 5 per cent of the total employee related cost budget as a norm to guide them in this regard.