Questions and Replies

Reply:

I am informed by the Public Investment Corporation (PIC) that:

(1)(a) The certain company is an associate of the PIC and it is a company where the PIC has influence but it has no control over the financial and operating policies of the certain company (Page 115; Note 5 of the Financial Statements as published in the PIC’s Integrated Annual Report 2015).

(1)(b) The relationship was established prior to certain person leaving the PIC. The Pan African Infrastructure Development Fund (PAIDF) was initiated during the 2005/06 financial year when certain person was Head of Corporate Finance and Isibaya Fund at the PIC (Page 29 of the PIC’s Annual Report 2006). Certain person was seconded by the PIC to head the PAIDF. During the 2007/08 financial year, the PIC established a management company; certain company Fund Managers, to oversee the PAIDF investments (Page 7 of the PIC’s Annual Report 2008) and certain person later became the CEO of certain company Fund Managers.

(2)(a) The PAIDF was established in the 2005/06 financial year to focus on infrastructure investments on the African continent (Page 4; 8 and 29 of PIC’s Annual Report 2006).

(2)(b) Certain company Fund Managers was established as a PIC associate in the 2007/08 financial year to oversee PAIDF investments (Page 7 of the PIC’s Annual Report 2008).

(3) The company is not a public company (Page 115; Paragraph 5 of the PIC’s Integrated Annual Report 2015)

The rest of the question falls away.

(4) The PIC has a 46% shareholding in certain company Fund Managers and a 30% shareholding in certain company General Partners (Page 96; Paragraph 6 of the PIC’s Integrated Annual Report 2015).

(5)(a) The PAIDF(I) is a 15 years Fund that matures in 2022. All investors, including GEPF, will realize value at maturity in line with the Fund Terms.

(5)(b) For purposes of confidentiality the PIC cannot disclose details on any future transactions.

Reply:

According to Information provided by the Public Investment Corporation (PIC):

(1) The PIC is legally authorised to make investments in terms of the mandates granted by its various clients. These mandates allow the PIC to invest in companies that are listed on the Johannesburg Stock Exchange and the investment in Lonmin is in alignment with these mandates. The investment case for investing in Lonmin at this time is threefold, namely:

• The long-term fundamentals for the Platinum Group Metals (PGMs) support higher prices than what is currently prevailing. These metals will be playing a key role in emissions control measures around the world.

• Lonmin has a sound asset base whose performance has been impacted by the short-term dip in commodity prices. However, based on the PIC’s outlook for PGM prices, value can be restored.

• Management has come up with a plan of action that has been reviewed by independent external experts, for the company to be able to withstand the current low price environment.

It is worth noting that the company held a general meeting for shareholders to vote on the rights issue and 88%of the shareholding represented at the meeting, which included the PIC (on behalf of the GEPF and the Unemployment Insurance Fund (UIF), voted for the company to proceed with the rights issue. The outcomes of the voting is a clear indication that other shareholders see the long-term value of the company. Lonmin is a going concern and has neither been declared bankrupt nor has it applied for business rescue.

(2) The PIC invests and manages funds for various clients and this is done in line with mandates granted by various clients. GEPF Trustees are not exposed to direct liability for investing on the JSE. The accountability, legal or otherwise, for these investments and their management is regulated in terms of the mandates. As the investment manager, the PIC takes full accountability for the performance of any such investments once made in terms of the mandate.

(3) Rights issue is a common method through which JSE-listed companies raise funds for various business initiatives. For an example, companies such as Naspers and PSG have recently gone out to the market to raise capital to fund their strategic business initiatives. In the same way, Lonmin approached all the shareholders, including the PIC about the rights issue, whereupon the PIC considered following its rights. The PIC was approached by Lonmin in early November. Following Lonmin’s approach, the PIC subjected the proposal to the internal investment processes, which entail conducting a thorough due diligence on the company and obtaining approval by the relevant committees within the PIC.

(4) The PIC, like all other shareholders, gets approached from time to time by companies with similar requests. However, as a responsible investor we are not at liberty to disclose whether any such transactions are currently being considered as this could be market sensitive information. In instances where we agree to follow our rights and agree to underwrite the rights issue, these companies would publish information in the notices for meetings. The PIC can disclose that it has expressed support for the ArcelorMittal’s rights issue, which will be voted for on the 11th of December 2015. Details of this rights issue is contained in the notice for the ArcelorMittal General Meeting of shareholders.

Reply:

1. (a) SAA had previous submitted an application in terms of Section 54(2) of the Public Finance Management Act (PFMA) for approval to amend the A320 purchase
   agreement with Airbus to enter into a lease of 5 A330 aircraft from Airbus. This was approved by the Minister in July 2015. Subsequently, SAA have submitted a further application as required in terms of Section 54(2) of the PFMA to amend the original Section 54(2) approval to provide for amendments to structure of the swap transaction. National Treasury (NT) issued a statement clarifying the outcomes in respect of this application on 3 December 2015. NT is not aware of any
   cancellation by Airbus. To the contrary, NT is aware that Airbus have extended the period for concluding the transaction.

(b) No request for funding has been received by National Treasury from SAA.

(c) NT has been informed that the SAA Board is still consulting on aspects of the
proposed expansion of the existing partnership with Emirates.

2. The question regarding the R2.59 billion loss in 2013/14 should be referred to the Minister of Public Enterprises who was the Executive Authority responsible for SAA over that period.

In total R14.4 billion of guarantees have been provided to SAA and a total of R2.293 billion
in funding has been transferred to SAA since 2007. This information is reported in the
Estimates of National Expenditure and the Budget Review.

Oxford Economics under took a study on the economic benefits arising from SAA’s long-haul international routes during 2014. According to the study, there was a direct contribution of
R350 million to South African GDP, around R800 million extra was generated in tax revenue and 5000 jobs were supported. In addition, the study estimated that, through SAA’s international operations, R5.9 billion was added to GDP in the tourism sector supporting 27000 jobs. The study did not estimate the further positive benefits arising from SAA’s operations for trade, nor did it look at the impact of SAA’s domestic and regional operations.

Reply:

Section 83(1)(b) of the PFMA states that if the accounting authority (Board) makes or permits fruitless and wasteful expenditure they may be charged with financial misconduct. It is therefore the responsibility of the accounting authority to ensure that sound controls are put in place to detect and prevent such expenditure from being incurred. The accounting authority is also required to ensure that disciplinary steps are taken against persons who have permitted or incurred fruitless and wasteful expenditure and that such is disclosed in the annual report and annual financial statement of the entity. The process for dealing with a charge of financial misconduct is outlined in the Treasury Regulations.

In this case, the accounting authority must make the determination whether expenditure incurred was fruitless and wasteful. The accountability arrangements applicable to State Owned Entities envisage that if accounting authority (the board) fails to act, then the shareholder Ministry is required to step in. It is only after all of these avenues have been explored that the matter can be investigated by the Auditor-General at the request of relevant authorities or as part of their audit.

Reply:

Yes, the National Treasury has formally written to all national and provincial departments who have outstanding debts with municipalities. Please note that the notification was done through a letter by the Director-General: National Treasury who wrote to all Directors-General on 21 July 2015 conveying the message and I reiterated the matter with correspondence on 13 August 2015 to all the executive authorities alerting them of the arrears owed to municipalities.

It is important to understand that the process of addressing these unsettled accounts is being co-ordinated through the President’s Co-ordinating Council (PCC), where Premiers of provinces, Cabinet Ministers, and Accounting Officers of departments have committed to directly address the issue and give regular feedback to the PCC. The written communication from the National Treasury to departments and provinces is part of this high-level process.

The Section 71 of Municipal Finance Management Act (Act No. 56 of 2003) report for June 2015 shows that various departments owed municipalities as per the table below.

Table 1: Age analysis of debt owed to municipalities by National Departments

Section 71 of Municipal Finance Management Act (Act No. 56 of 2003) for June 2015 see the link: http://www.pmg.org.za/files/RNW4066-151210TABLE.docx

Section 71 of Municipal Finance Management Act (Act No. 56 of 2003) for June 2015 see the link: http://www.pmg.org.za/files/RNW4066-151210TABLE.docx

(a) All departments listed above were written to by the Minister of Finance on 13 August 2015.

(b) At the time of writing, the following debts were owed to municipalities by national departments amounted to R1.7 billion and provinces owed R2.5 billion.

(c) In addition, the report shows that a majority of the debt has been outstanding for more than 90 days.

(d) The Department of Public Works has initiated a process to verify the outstanding amounts owed by government in order to resolve problems with contested bills. This process is being undertaken to ensure that all outstanding amounts reported by municipalities are legitimately due by the named departments and to correct any undue errors. This process of verification is a work-in-progress and the outcome is not yet available. The report will also indicate a more accurate picture of progress made with payments of outstanding amounts by departments and province.

(e) Once the outcome of the work done by Public Works is made available, this will inform the actions to be taken.

Reply:

1. The Chairperson of the Municipal Demarcation Board (MDB) wrote to the Minister of Finance on 16 March 2015 requesting the National Treasury to provide the MDB with inputs on a number of matters including a definition of municipal viability, indicators to measure viability and an analysis of the potential impact of each of the proposed boundary re-determinations.

In reply to the specific questions asked:

(i) No date was specified for the requested information to be provided to the MDB.

(ii) The Municipal Demarcation Board published notices in provincial gazettes in early July 2015 formally announcing the details of proposed re-demarcations that they were consulting on. The National Treasury conducted a thorough analysis of these proposals and the Minister of Finance wrote to the Chairperson of the MDB on 6 August 2015 to provide the Board with the information requested.

(iii) National Treasury did not make recommendations to the MDB. The inputs submitted provided information on the affected municipalities and analysis about potential impacts of the proposed boundary redeterminations, noting that in advance of the actual implementation of the proposals it is not possible to know with certainty what the impact will be. This information was provided, at the request of the MDB, to contribute further to the information on which the Board made its decisions.

2. The report compiled by the National Treasury and submitted to the MDB explored a number of different aspects of municipal viability that could be affected by boundary redeterminations. These included financial viability, institutional viability, economic viability and service delivery viability. Again, no recommendations were made to the MDB.

Reply:

a) No. It is not possible to share this report before the budget is tabled as it includes information on budget allocations to affected municipalities and all budget information is embargoed prior to the tabling of the budget. As such no report was presented to the Select Committee on Appropriations.

b) This report was shared with the Minister of Cooperative Governance and Traditional Affairs when it was submitted to the Municipal Demarcation Board, for information purposes.

Reply:

1. National Treasury was requested by the Chairperson of the MDB on 16 March 2015 to submit information on the potential impact on municipal viability of several proposed boundary redeterminations. A report providing this information was submitted to the MDB on 6 August 2015. Honourable van Lingen wrote to the Minister of Finance on 27 August 2015 and requested a copy of this report. In a reply dated 26 October 2015, the Minister of Finance informed Honourable van Lingen that it was not possible to share this report before the budget is tabled as it includes information on budget allocations to affected municipalities and all budget information is embargoed prior to the tabling of the budget. As such no report was presented to the Select Committee on Appropriations.
2. As outlined above, no report was presented to the Select Committee on Appropriations.

Reply:

1. Currently, four provinces (KwaZulu-Natal, Free State, Northern Cape, and Limpopo) have declared states of disaster and processes are underway to declare a state of disaster in Mpumalanga province. Requests for drought relief have been made to the National Disaster Management Centre (NDMC) in the Department of Cooperative Governance (DCOG). An allocation of R364.3 million in 2015/16 was made to the department for disaster relief grant transfers for provinces. The Eastern Cape has also indicated that it is in the process of finalising a request (a)The NDMC is currently working together with the affected sector departments to verify and finalise the funding requests. In addition, the Department of Agriculture, Forestry and Fisheries is also engaging with provinces and the NDMC and the National Treasury to finalise the funding requirements. This process will determine the extent to which financial resources are required over and above the already available disaster relief grant, as well as the extent to which other budgets and allocations can be reprioritised for drought relief assistance. Further details may be obtained from the NDMC, which is responsible for the technical assessment process(i) Requests are being processed and verified by the NDMC (ii) Allocations will be determined on the basis of the outcomes of the NDMC’s process. Otherwise, the existing allocation of R364.3 million that is already within the NDMC/DCOG budget was made at the beginning of the year and is available (b) It is anticipated that the funding requested will mainly be used for supply of water tankers, drilling, testing and equipping of boreholes (for both animal and human consumption) and supply of animal feed.

2. Funding for disaster relief is based on the verified damages and cost of repairs by the provinces and the NDMC. Once the disaster has been declared, the province will make an assessment of what damages occurred and what the cost of the repairs will be. This assessment is then sent to the NDMC, in the department of Cooperative Governance, which verifies the damages and the cost of repairs. After the verification, the NDMC will make a submission for funding to the National Treasury. However, the NDMC may decide that due to the urgency and seriousness of an event, the already available allocation can (in consultation with the Treasury) be made available immediately to assist with relief efforts while a full assessment is underway, as provided by the Division of Revenue Act, In addition the province may, as provided for in section 25 of the Public Finance Management Act (and provided that the legal provisions are complied with), urgently reprioritise funds towards an urgent disaster response while a final assessment is being finalised.

Reply:

1. Government borrows money to finance the main budget balance and maturing debt. As government is running budget deficits it will not be in a position to pay down its existing stock of debt. This will only be possible once government runs budget surpluses.

However, government has a strategy to mitigate sharp increases in debt repayments over the medium term whereby short-dated debt is exchanged for longer-dated debt. In 2015/16 and 2016/17, government will refinance the maturing domestic loans of R85 billion and foreign loans of R16 billion.

• (a) Details on loan repayments are available in Table A.7 on page 49 of the 2015 MTBPS.
• (b) Government finances its gross borrowing requirement through issuing domestic short- and long-term loans, foreign loans and also draw downs on its cash balances.

The term structure of debt is not necessarily an indicator of intergenerational equity. Intergenerational equity is about ensuring that future generations are not unfairly burdened by the fiscal decisions taken today. Swapping shorter-dated debt for longer-dated debt helps government to manage the risk of default and ensure long-term fiscal sustainability of its social programmes. Similarly, issuing long-dated debt for projects with long-term benefits (e.g. infrastructure) can enhance intergenerational equity.

2. Table A.7 on page 49 of the 2015 MTBPS discloses detail on the financing of national government’s borrowing requirement which includes maturing debt.

Reply:

I am not sure what the Honourable Member means about a tax revolt in our country, as most South Africans pay their taxes, and I thank them for doing so. The Government continually takes steps to improve tax morality in South Africa, as Government regards taxation as an essential component of nation-building, with taxation a form of social contract with all residents in exchange for public services and the realisation of developmental objectives.

A tax revolt could be interpreted as a condition that is manifested by (very) low tax morale and low tax compliance. South Africa does not exhibit such conditions. Despite weak economic growth, tax revenue has remained relatively buoyant over the past 4 years. In particular, personal income tax has performed well, with actual collections surpassing forecasts.

Government is continually focused on improving tax morality, and recognises that it is negatively influenced by incidences, or even perceptions of, corruption and wasteful expenditure. Government is undertaking a range of measures to improve the quality of spending and reduce corruption. Specifically, government, in 2012, introduced cost savings measures that place restrictions on air travel, car hire, accommodation, catering, entertainment and conferencing budgets. Procurement reforms are being rolled out to improve efficiency, reduce red tape and stamp out corruption. The Office of the Chief Procurement Officer, established in 2013, has introduced a range of reforms to make supply chain management processes more efficient and transparent. Government is also taking active steps to improve tax compliance including combating base erosion, profit shifting and misuse of transfer pricing.

Most importantly, our system of taxation, borrowing and spending are subject to annual auditing processes, with all organs of state accountable to Parliament, a provincial legislature or municipal council. The Constitution outlines the role of the Auditor-General to compel the auditing of all public funds, and lays the basis for laws like the Public Finance Management Act and Municipal Financial Management Act which provide the foundation for the accountability system. We recognize the challenges of poor financial management as outlined by the Auditor-General in his various reports and recognize that more needs to be done to bring those responsible for non-compliance or corruption to book.

Reply:

Government does not have a binding policy for setting the level of disaster relief contingency funding. Disaster relief funding is mainly included on budget, in conditional grants to municipalities and provinces, and also in the baselines of certain departments, like the Departments of Social Development and Agriculture, Forestry and Fisheries. Where disaster relief grants are insufficient, government can draw down on the national contingency reserve. Historically, immediate disaster relief transfers to provincial and local governments have been less than the provision on budget.

Once a disaster occurs, government distinguishes between two levels of disaster funding: 1) immediate disaster relief and 2) long term disaster reparations relating to infrastructure.

For immediate disaster relief (food, temporary shelter and temporary access roads), government introduced two conditional grants in 2011/12 – the Municipal Disaster Grant and the Provincial Disaster Grant – which allow for the release of funds within a 100-day period from a disaster being declared. Other government grants may also be reprioritised to focus funding in response to immediate disaster needs. The Disaster Grants are included in the baseline of the Department of Cooperative Governance. For 2015/16, the municipal disaster grant amounts to R261.1 million and the provincial disaster grant amounts to R103.2 million. Funds from these two grants have remained underspent for the past 3 years, as the full grant amounts were not required for disaster response. In 2014/15, R197.4 million was allocated to the Provincial Disaster Grant of which R85.9 million was transferred to provinces. For the same period R363.6 million was allocated to the Municipal Disaster Grant, of which R121.4 million was transferred to municipalities.

Required medium term disaster responses are dealt with using the normal MTEF budget process. This is done through the reprioritisation of budgeted funds, mainly within existing government infrastructure grants, or through draw downs on the national contingency reserve. The Department of Cooperative Governance administers the Municipal Disaster Recovery Grant for rehabilitation and reconstruction of disaster damaged municipal infrastructure.

Draw-downs from the contingency reserve are part of the in-year budget process, and need to be tabled by vote. This was done in 2013/14 for floods in the Eastern Cape and the Western Cape (R111.5 million from the contingency reserve) and in 2014/15 for infrastructure reconstruction in the Eastern Cape, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga and the Western Cape (R157 million from the contingency reserve). The 2016 MTEF budget process is in progress, with the national contingency reserve standing at R2.5 billion in 2016/17, R9 billion in 2017/18, and R15 billion in 2018/19. Depending on the severity of the current drought, after sector budget reprioritisation, part of the contingency reserve in each year may be allocated for additional disaster relief in the 2016 Budget and / or the 2016/17 Adjustments Budget.

Reply:

1. The Municipal Demarcation Transition Grant was introduced in the 2015 Division of Revenue Act to subsidise the additional institutional and administrative costs that result from the implementation of major boundary redeterminations. The grant is allocated R139 million over the 2015 MTEF. In the 2015 Medium Term Budget Policy Statement it was announced that this grant will receive increased allocations in 2016/17 and 2017/18. These increases include provision for the boundary redeterminations that were finalised by the Municipal Demarcation Board in 2015. Details of the increases will only be made public when the 2016 Budget is tabled.

The Municipal Demarcation Transition Grant only provides funding for operational costs that relate directly to the implementation of major boundary redeterminations. The capital investment needed to eradicate backlogs and upgrade services in these municipalities will continue to be funded through conditional grants in the same manner as they are funded in other municipalities. The data used to determine allocations for conditional grants and the local government equitable share will be updated to reflect the new boundaries.

2. Provincial departments responsible for cooperative governance are accountable for overseeing the implementation of boundary redeterminations in their respective provinces. These departments will be providing support-in-kind to affected municipalities and in some cases provinces may also provide financial support to municipalities. Details of any financial support provided should be published in provincial budgets once these are tabled.

Reply:

1. During the 2011/12 and 2012/13 financial years, Thabazimbi Local Municipality was allocated an amount of R34.8 million and R42.2 million respectively, against the Municipal Infrastructure Grant (MIG). The municipality, however, received a reduced allocation of R27.3 million and R13.2 million in the 2013/14 and 2014/15 financial years respectively, due to underspending against the programme. The current year’s MIG allocation in terms of the 2015/16 Division of Revenue Act is R27.2 million. Details of the allocations and spending are provided in Annex A.
2. The expenditure against MIG was R22.1 million (63.5%); R42.2 million (100%); R6.3 million (23.1%); R5.3 million (40.1%) and R0, respectively, from 2011/12 to 2015/16 financial years. There was no roll-over request for the first two years 2011/12 and 2012/13.

In 2013/14, the municipality requested a roll-over of R18.6 million and only R4.2 million was approved due to the municipality having insufficient funds in their bank account. About R14.4 million was not cash-backed by the municipality and hence the reduced approval of the rollover.

During the 2014/15 financial year, the unspent amount was R7.8 million as disclosed in the pre-audit annual financial statements. From this amount, only R5.8 million was requested to be rolled over. Due to the municipality’s inability to again fully cash-back their unspent conditional grants, only an amount of R3.3 million was approved as this was the balance in their bank account. The inability by the municipality to back up their rollover request with sufficient cash in the bank is an indication of a possible misuse of the conditional grants.

(3) The National Treasury is currently providing support through the Provincial Treasury due to Thabazimbi being a delegated municipality to the province. In the past year, the National Treasury engaged the municipality on numerous occasions regarding their poor performance on the MIG. The National Treasury approved a request by the municipality to repay their unspent 2013/14 MIG in four instalments.

Currently, the National Treasury in consultation with Provincial government and the National department of Cooperative Governance, are in a process of moving the MIG funds to their district (Waterberg District Municipality) due to poor performance. The district will assist the municipality to fast track the implementation and payments of projects that are on the ground.

With regard to the unspent 2014/15 MIG allocation of R4.5 million which has to be paid back to the National Revenue Fund, the National Treasury is considering assisting the municipality in spreading the unspent funds to be paid over a foreseeable period of time. This will be the second consecutive occasion that the municipality would be allowed to pay the unspent grant funds in instalments.

 

Annex A

Thabazimbi Local Municipality: Municipal Infrastructure Grant
MIG	Allocation	Adjustment	Revised allocation	Expenditure	Roll over request
	R'000	R'000	R'000	R'000	R'000
2011/2012	34 750		34 750	22 085	No roll over request
2012/2013	42 153		42 153	42 153	No roll over request(full expenditure)
2013/2014	40 019	-12 758	27 261	6 321	R18 639 requested: only R4169 approved because of insufficient funds in the bank
2014/2015	32 926	-19 756	13 170	5 290	R5,888m requested, only R3,300 approved due to insufficient funds.
2015/2016	27 172		27 172	0

Reply:

1 (a)

Yes, the National Department of Health requested National Treasury (NT) to investigate expenditure under the Hospital Revitalisation Grant in the North West Provincial Department of Health for the financial year 2011/12.

1 (b)

Yes, the NT completed its investigation, and provided detailed reports with findings and recommendations to the National Department of Health on 21 February 2014. Detailed copies of the reports were provided to National Department of Health, Office of the Premier in the North West Provincial Government and the MEC of the Department of Health in North West.

1 (b) (i)

The Investigation was commissioned on 18 January 2013 to the National Treasury by the National Department of Health.

1 (b) (ii)

The National Treasury’s Office of Accountant-General investigation team together with its co-sourced forensic investigation firm, JGL Forensic Services.

2 (a)

The Investigation was completed by the 21 February 2014.

2 (b) (i)

The National Department of Health is responsible for tabling the report, as NT executed the investigation at the request of National Department of Health.

2 (b) (ii)

The total forensic investigation costs were R4.4 Million.

Reply:

(1)(a) 2010-11

BEELD FINANCIAL TIMES SATURDAY STAR BURGER MAIL & GUARDIAN SOWETAN BUSINESS DAY NATAL MERCURY SUNDAY INDEPENDANT BUSNESS DAY RAPPORT SUNDAY INDEPENDENT CAPE TIMES SATUDAY INDEPENDENT SUNDAY TIMES CITIZEN SATURDAY ARGUS SUNDAY TRIBUNE DAILY NEWS SATURDAY BEELD THE ARGUS FIN WEEK SATURDAY BURGER THE STAR

(1)(b)2011-12 BEELD FINANCIAL TIMES SATURDAY BURGER BURGER MAIL & GUARDIAN SATURDAY STAR BUSINESS DAY NATAL MERCURY SOWETAN BUSNESS DAY NEW AGE SUNDAY INDEPENDENT CAPE TIMES RAPPORT SUNDAY TIMES CITIZEN SATUDAY INDEPENDENT SUNDAY TRIBUNE DAILY NEWS SATURDAY ARGUS THE ARGUS FIN WEEK SATURDAY BEELD THE STAR

(1)(c)2012-13 BEELD FINANCIAL TIMES SATURDAY BURGER BURGER MAIL & GUARDIAN SATURDAY STAR BUSINESS DAY NATAL MERCURY SOWETAN BUSNESS DAY NEW AGE SUNDAY INDEPENDENT CAPE TIMES RAPPORT SUNDAY TIMES CITIZEN SATUDAY INDEPENDENT SUNDAY TRIBUNE DAILY NEWS SATURDAY ARGUS THE ARGUS FIN WEEK SATURDAY BEELD THE STAR THE TIMES

(1)(d)2013-14 BEELD FINANCIAL TIMES SATURDAY BURGER BURGER MAIL & GUARDIAN SATURDAY STAR BUSINESS DAY NATAL MERCURY SOWETAN BUSNESS DAY NEW AGE SUNDAY INDEPENDENDANT CAPE TIMES RAPPORT SUNDAY INDEPENDENT CITIZEN SATUDAY INDEPENDENT SUNDAY TIMES DAILY NEWS SATURDAY ARGUS SUNDAY TRIBUNE FIN WEEK SATURDAY BEELD THE ARGUS THE STAR THE TIMES

(1)(e) BEELD MAIL & GUARDIAN SOWETAN BURGER NATAL MERCURY SUNDAY INDEPENDENT BUSINESS DAY NEW AGE SUNDAY TIMES BUSNESS DAY RAPPORT SUNDAY TRIBUNE CAPE TIMES SATUDAY INDEPENDENT THE ARGUS CITIZEN SATURDAY ARGUS THE STAR CITY PRESS SATURDAY BEELD THE TIMES DAILY NEWS SATURDAY BURGER SOWETAN DAILY SUN SATURDAY STAR SUNDAY INDEPENDENT

(2)(a)(i)(aa)(aaa) 2010-11 R8 664 948.96 (2)(a)(i)(aa)(bbb)2011-12 R 10 065 054.48 (2)(a)(i)(aa)(ccc)2012-13 R12 928 975.32 (2)(a)(i)(aa)(ddd) 2013-14 R14 011 694.16 (2)(a)(i)(aa)(eee)2014-15 R12 910 936.08 (2)(a)(ii)(aaa) 2010-11 Row Labels Sum of Qty Average of Price Sum of Total BEELD 38 808 3.62 140 484.96 BURGER 31 680 3.99 126 403.20 BUSINESS DAY 108 816 7.85 798 854.88 BUSNESS DAY 24 828 8.37 207 810.36 CAPE TIMES 88 680 4.76 422 116.80 CITIZEN 2 112 1.97 4 160.64 DAILY NEWS 92 400 3.52 325 248.00 FIN WEEK 180 11.97 2 154.60 FINANCIAL TIMES 273 312 1.50 409 968.00 MAIL & GUARDIAN 25 308 12.83 324 701.64 NATAL MERCURY 76 560 4.30 329 208.00 RAPPORT 41 040 7.19 261 780.00 SATUDAY INDEPENDENT 30 960 4.53 140 248.80 SATURDAY ARGUS 35 280 9.60 338 688.00 SATURDAY BEELD 7 200 3.62 26 064.00 SATURDAY BURGER 7 800 5.38 41 964.00 SATURDAY STAR 127 200 4.61 586 392.00 SOWETAN 29 568 2.05 60 614.40 SUNDAY INDEPENDANT 21 600 8.89 192 024.00 SUNDAY INDEPENDENT 3 120 10.54 32 884.80 SUNDAY TIMES 113 424 11.03 1 193 376.00 SUNDAY TRIBUNE 6 480 10.15 65 772.00 THE ARGUS 131 976 3.84 506 787.84 THE STAR 607 068 3.78 2 127 242.04 (2)(a)(ii)(bbb)2011-12 Row Labels Sum of Qty Average of Price Sum of Total BEELD 34 968 3.95 138 123.60 BURGER 30 240 4.22 127 612.80 BUSINESS DAY 104 172 8.20 804 332.04 BUSNESS DAY 23 544 8.82 207 658.08 CAPE TIMES 84 780 4.99 423 052.20 CITIZEN 1 944 1.97 3 829.68 DAILY NEWS 88 200 3.75 330 750.00 FIN WEEK 144 11.97 1 723.68 FINANCIAL TIMES 262 512 1.50 393 768.00 MAIL & GUARDIAN 36 480 12.83 468 038.40 NATAL MERCURY 73 080 4.53 331 052.40 NEW AGE 279 552 2.02 564 695.04 RAPPORT 51 300 8.23 389 733.00 SATUDAY INDEPENDENT 30 960 4.68 144 892.80 SATURDAY ARGUS 35 280 9.21 324 928.80 SATURDAY BEELD 7 200 3.95 28 440.00 SATURDAY BURGER 7 800 6.14 47 892.00 SATURDAY STAR 127 200 4.94 628 368.00 SOWETAN 27 972 2.10 58 741.20 SUNDAY INDEPENDENT 30 900 10.34 300 987.00 SUNDAY TIMES 141 780 11.33 1 536 706.20 SUNDAY TRIBUNE 8 100 10.93 88 533.00 THE ARGUS 126 168 3.99 503 410.32 THE STAR 578 208 4.14 2 217 786.24 (2)(a)(ii)(ccc)2012-13 Row Labels Sum of Qty Average of Price Sum of Total BEELD 133 680 5.26 703 156.80 BURGER 31 680 4.22 133 689.60 BUSINESS DAY 114 564 8.36 916 185.96 BUSNESS DAY 24 948 7.89 196 839.72 CAPE TIMES 88 200 5.23 461 286.00 CITIZEN 2 040 2.30 4 692.00 DAILY NEWS 92 400 3.90 360 360.00 FIN WEEK 240 13.82 3 316.80 FINANCIAL TIMES 274 248 3.68 1 009 232.64 MAIL & GUARDIAN 29 220 15.46 451 741.20 NATAL MERCURY 76 560 4.68 358 300.80 NEW AGE 817 884 2.31 1 889 312.04 RAPPORT 42 900 8.55 366 795.00 SATUDAY INDEPENDENT 24 768 4.84 119 877.12 SATURDAY ARGUS 28 224 9.60 270 950.40 SATURDAY BEELD 19 200 4.28 82 176.00 SATURDAY BURGER 6 240 6.14 38 313.60 SATURDAY STAR 101 760 5.26 535 257.60 SOWETAN 38 496 3.51 135 120.96 SUNDAY INDEPENDENT 25 500 10.67 263 727.00 SUNDAY TIMES 124 140 11.88 1 472 824.80 SUNDAY TRIBUNE 8 100 11.71 94 851.00 THE ARGUS 131 136 4.21 552 082.56 THE STAR 611 844 4.42 2 505 919.68

(2)(a)(ii)(ddd)2013-14 Row Labels Sum of Qty Average of Price Sum of Total BEELD 134 196 5.26 705 870.96 BURGER 33 120 4.38 145 065.60 BUSINESS DAY 116 448 9.47 1 030 657.68 BUSNESS DAY 25 932 10.10 261 913.20 CAPE TIMES 92 220 5.53 509 976.60 CITIZEN 2 208 2.30 5 078.40 DAILY NEWS 96 600 4.14 399 924.00 FIN WEEK 300 13.82 4 146.00 FINANCIAL TIMES 221 580 3.68 815 414.40 MAIL & GUARDIAN 29 184 16.39 478 325.76 NATAL MERCURY 80 040 4.92 393 796.80 NEW AGE 1 093 428 2.31 2 525 818.68 RAPPORT 41 040 8.66 355 406.40 SATUDAY INDEPENDENT 24 768 5.08 125 821.44 SATURDAY ARGUS 28 224 9.60 270 950.40 SATURDAY BEELD 19 200 4.28 82 176.00 SATURDAY BURGER 6 240 6.46 40 310.40 SATURDAY STAR 101 760 5.60 569 856.00 SOWETAN 41 172 3.51 144 513.72 SUNDAY INDEPENDENDANT 21 600 10.85 234 360.00 SUNDAY INDEPENDENT 3 120 12.89 40 216.80 SUNDAY TIMES 113 424 13.24 1 431 630.72 SUNDAY TRIBUNE 6 480 11.71 75 880.80 THE ARGUS 136 944 4.46 610 770.24 THE STAR 623 580 4.41 2 749 987.80 (20(a)(ii)(eee) 2014-15

Row Labels Sum of Qty Average of Price Sum of Total BEELD 139 704 5.26 734 843.04 BURGER 33 120 5.30 175 536.00 BUSINESS DAY 117 240 13.67 1 497 654.00 BUSNESS DAY 26 112 14.59 380 974.08 CAPE TIMES 92 220 5.53 509 976.60 CITIZEN 1 932 2.63 5 081.16 CITY PRESS 48 9.54 457.92 DAILY NEWS 96 600 4.30 415 380.00 DAILY SUN 276 2.63 725.88 MAIL & GUARDIAN 22 032 23.03 507 396.96 NATAL MERCURY 80 040 5.08 406 603.20 NEW AGE 506 460 2.31 1 169 922.60 RAPPORT 41 040 10.47 382 339.20 SATUDAY INDEPENDENT 24 768 5.31 131 518.08 SATURDAY ARGUS 28 224 11.13 314 133.12 SATURDAY BEELD 19 200 4.28 82 176.00 SATURDAY BURGER 6 240 7.37 45 988.80 SATURDAY STAR 101 760 5.92 602 419.20 SOWETAN 41 172 3.95 162 629.40 SUNDAY INDEPENDENT 24 720 13.57 297 535.20 SUNDAY TIMES 113 424 13.46 1 478 200.32 SUNDAY TRIBUNE 6 480 12.49 80 935.20 THE ARGUS 136 944 4.61 631 311.84 THE STAR 627 768 4.61 2 894 010.48 THE TIMES 1 380 2.31 3 187.80

(2)(bb) since 1 April 2015 Row Labels Sum of Qty Average of Price Sum of Total BEELD 70 014 5.92 414 482.88 BURGER 16 560 5.30 87 768.00 BUSINESS DAY 61 548 15.35 923 752.68 BUSNESS DAY 12 906 15.79 203 785.74 CAPE TIMES 46 350 6.14 284 589.00 CITIZEN 966 2.89 2 791.74 CITY PRESS 48 10.20 489.60 DAILY NEWS 48 300 4.53 218 799.00 DAILY SUN 138 2.81 387.78 MAIL & GUARDIAN 18 270 23.03 420 758.10 NATAL MERCURY 40 020 5.33 213 306.60 NEW AGE 414 000 2.31 956 340.00 RAPPORT 20 520 12.83 263 271.60 SATUDAY INDEPENDENT 12 384 5.46 67 616.64 SATURDAY ARGUS 14 112 11.89 167 791.68 SATURDAY BEELD 9 600 4.28 41 088.00 SATURDAY BURGER 3 120 7.37 22 994.40 SATURDAY STAR 50 880 8.23 418 742.40 SOWETAN 20 586 4.21 86 667.06 SUNDAY INDEPENDENT 47 160 14.39 624 447.60 SUNDAY TRIBUNE 3 240 13.67 44 290.80 THE ARGUS 68 892 4.99 343 771.08 THE STAR 316 602 4.94 1 564 013.88 THE TIMES 690 2.63 1 814.70 Grand Total 1 296 906 8.33 7 373 760.96

Reply:

1. It is assumed that this question relates to the GEPF. Please note that the GEPF has its own legislation that governs it (Government Employees Law No. 21 of 1996) and it does not fall under the Pensions Fund Act (Act No. 24 of 1956).

(a)(i) There is no debt in the conventional sense of the word. The GEPF provides affected divorced members with a funding mechanism to replenish their benefit after paying out the non-member spouse without adversely affecting other members of the Fund.

(ii) The GEPF is not aware of members who have lost their entire pension or those who are at the risk of losing their entire pension due to the application of the clean break principle under normal circumstances. It is important to note that the GEPF only applies the requirements of a divorce order. If the divorce order states that the spouse is eligible for a disproportional part of the pension benefit, 100%, the member’s pension is paid to the non-member spouse. This does not constitute a loss but the execution of a divorce order that the member spouse is party to.

2. Although it cannot be concluded that there are negative effects due to the current application of the clean break principle (as this also depends on whether this is the perspective of the member or the affected spouse), it is acknowledged that the application confuses members and changes the nature of the withdrawal benefit. The Board has therefore already decided to discard the current approach to the clean break principle and is busy consulting the employer and employee representative to make the necessary changes to the GEP Law and rules.

3. As far as the GEPF is aware, since there are two parties involved in a divorce, it is not obvious that the application of the clean break principle is adverse to both parties, other than the fact that the amount due to the non-member spouse on divorce has been correctly paid out to them in accordance with the divorce order in a cost neutral manner to the Fund and other members.

Reply:

1. (a) The ‘clean break principle’ in relation to the Government Employees Pension Law, 1996 (Proclamation No. 21 of 1996) (“the GEP Law”), which regulates the GEPF, was incorporated through the GEP Law Amendment Act, No. 19 of 2011, which came into effect on 14 December 2011. Section 24A was inserted into the GEP Law, to provide for the payment of pension interest upon divorce or dissolution of customary marriage.

It is important to note, that the GEPF is not regulated in terms of the Pension Funds Act, 1956 (Act No. 24 of 1956) (“the Pension Funds Act”), but is regulated in terms of the GEP Law. Section 24A of the GEP Law was modelled on and sought to align the GEP Law with section 37D of the Pension Funds Act, 1956 (Act No. 24 of 1956) in particular, to provide for the implementation of the ‘clean break principle’, by providing for the payment of a pension interest to a former spouse of a member on divorce or the dissolution of a customary marriage. Prior to the insertion of section 24A in the GEP Law, the GEP Law and the Rules of the GEPF did not allow a former spouse of a member to claim a portion of a member’s pension interest, in terms of a divorce order or an order for the dissolution of a customary, soon after the divorce order or the order for the dissolution of a customary marriage was granted. The former spouse could only receive a portion of the member’s interest after the exit of the member from the GEPF (on resignation or retirement). With the insertion of section 24A in the GEP Law and amendments to the Rules of the GEPF, a former spouse now can receive the proportion of a member’s pension benefit that is granted in terms of a court order for divorce or the dissolution of a customary marriage, soon after the order is granted.

In order to implement section 24A of the GEP Law, the Rules of the GEPF were amended, to include definitions of “divorce”, “divorce debt” and “divorce order”, and a new Rule 14.10 was inserted in the Rules of the GEPF with effect from 1 April 2012.

(b) GEPF and GPAA are still in the process of collating the statistics on members whose benefit has been reduced as a result of a divorce order settlement.

2. (a) The legal basis on which the ‘clean break principle’ is implemented is by virtue of section 24A of the GEP Law and Rule 14.10 of the Rules of the GEPF, as noted in the response to question 1(a) above. In relation to the administration of justice, a court issues a court order that includes an order for the distribution of pension benefits in terms of section 7(8) of the Divorce Act, 1979 (Act No. 70 of 1979). In terms of Rule 14.10 of the GEPF, the court order must then be provided to the GEPF, who then will implement the order in relation to the division of the pension fund benefits in accordance with the terms of the order and Rule 14.10.

(b) The implementation of the “clean break principle” for the GEPF is not in conflict with the Pension Funds Act (as amended by the Pension Funds Amendment Act, 2001 and subsequent amendments) as the GEPF does not fall under this Act. . Section 24A of the GEP Law gives effect to the ‘clean break’ principle for the GEPF.

It is not clear why the Honourable Member believes that the implementation of the “clean break principle” violates the National Credit Act. It is my understanding that the National Credit Act only applies in relation to “credit agreements” as defined in the National Credit Act. The “clean break principle” applies in relation to the implementation of a court order on divorce or the dissolution of a customary marriage, which is implemented in accordance with the GEP Law and the Rules of the GEPF. The court order does not constitute a “credit agreement” so the National Credit Act does not apply. Even if the court order was made in respect of a “settlement agreement”, it is an order of court, and cannot be construed as being a “credit agreement”.

3. The GEPF does not estimate the frequency of divorce. The GEPF will continue to honour divorce orders that are presented.

Reply:

The Board of the GEPF considers and grants pension increases every year in accordance with the Rules of the Fund and the investment performance of its assets. This is done with the concurrence of the Minister of Finance. In doing this the Board also considers the long term sustainability of the Fund. Granting pension increases that are above the inflation rate is likely to reduce the GEPF’s funding level which would lead to it asking the employer (Government) to increase its contributions to cover the shortfall. However, in line with the GEP Law and GEPF rules, the Board strives to grant pension increases that are in line with inflation to preserve the value of pensions.

Reply:

The reasons to decline the request from the South African Police Service (SAPS) were communicated to the SAPS. Therefore, the Honourable Member is advised to engage with the Minister of Police and SAPS on this matter.

Reply:

The Office of the Accountant-General has since implementation of the National Treasury Instruction 01 of 2013-14 received many requests from departments and entities on implementation of the cost containment measures. We have also made available a set of frequently asked questions that deal with issues raised most frequently with this office.

The Accountant-General has set up an Exemption Committee to evaluate all requests for deviation from accounting standards and Treasury Instructions. Deviations are only granted in very rare circumstances.

In addition to the general queries dealt with by the Accountant-General, the office has received the following deviation requests in the past 12 months:

INSTITUTION	REQUEST	APPROVED/NOT APPROVED	REASON	DATE OF REQUEST	DEPARTMENTS MOTIVATION
Brand-South Africa	Request to hold 3 additional credit cards to carry out operations in foreign countries.	NOT APPROVED	The entity was advised to use alternative payment methods as they could not provide evidence that payments in foreign countries could only be made using credit cards.	27 February 2015
Presidency	(Ex-post facto approval) To request approval for the upgrade of Group B hired vehicles to executive class vehicles for the National Orders Advisory Council Members.	NOT APPROVED	Vehicles in a category other than category B may be hired with prior written approval of the Accounting Officer, where a different class of vehicle is required for a particular terrain or to cater for special needs of an employee in terms of paragraph 4.18 of the Treasury Instruction. Therefore, the ex-post facto approval is not granted and non-compliance to this Treasury Instruction may be reported as such.	29 May 2014
	To deviate from the Cost Containment measure for travel and subsistence - SCM officials to travel to Cape Town to perform asset verification	NOT APPROVED	National Treasury has concluded that no compelling reasons were found to grant approval for this deviation.	29 May 2014
	Request to exceed the daily accommodation limit of R3000 for officials attending the – SONA/ officials accompanying President Zuma during the Treasury Budget Vote in Cape Town/ The special Advisor to the Deputy President accompanying the Principal/ Officials attending the National Orders Award Ceremony/ official GM as hotels were fully booked.	DEVIATION NOT NECESSARY	In terms of paragraph 4.16 of the Treasury Instruction, Accounting Officers is given an authority to approve accommodation costs that exceed R 1300 : a)During Peak Holiday periods b)When South Africa is hosting an event in the country or in a particular geographical area that results in an abnormal increase in the number of local and/or international guests in the country or in that particular geographical area.	29 May 2014
	Legal and Executive Services invited to attend an urgent consultation in Cape Town to discuss the way forward on a Constitutional Court Judgment Matters.	NOT APPROVED	There were no compelling reasons found to grant approval for this deviation.	29 May 2014
	Approval to procure business class ticket for an official to accompanying Deputy President to United Kingdom, University of Oxford due to medical reasons.	DEVIATION NOT NECESSARY	In terms of paragraph 4.9 of the Treasury Instruction, the Accounting Officer may approve the purchase of business class tickets for employees with disabilities or for those with special needs. Therefore approval from National Treasury is not required where the Accounting Officer has granted such approval in terms of paragraph 4.9	29 May 2014
	Request to arrange catering for the Cabinet and its Committee meetings	DEVIATION NOT NECESSARY	In terms of paragraph 4.23 of the Treasury Instruction, Departments may not incur catering expenses for internal meetings i.e. for meetings attended only by persons in its employ, unless approved by the Accounting Officer. Therefore approval from National Treasury is not required where the meetings indicated in this deviation were internal meetings and approval was granted by the Accounting Officer in terms of paragraph 4.23 for catering expenses incurred.	29 May 2014
	Request to retain commissioners appointed in May 2010 for a fixed period ending in April 2015.	APPROVED	The Treasury Instruction was issued after the Commissioners were appointed, The Presidency to retain all these Commissioners until the end of their contracts in April 2015.	29 May 2014
	Request to fly business class for officials as they are required to fly for about 20 hours in the economy class and still be fresh to work on arrival.	NOT APPROVED	The National Treasury can only consider deviations from this Treasury Instruction on a case by case basis.	29 May 2014
	Request to exceed prescribed threshold of R1300 as support staff of principals is often required to reside in close proximity to the hotels where the principals reside.	NOT APPROVED	The National Treasury can only consider deviations from this Treasury Instruction on a case by case basis.	29 May 2014
	The Presidency would like to be exempted from the restrictions relating to the approvals for the use of 4X4 vans as we would not timeously know the conditions of the road and the state of the terrain at the projects sites.	DEVIATION NOT NECESSARY	Where a different class of vehicle is required to cater for a particular terrain or special needs of an employee, such vehicles may only be hired with the prior written approval of the Accounting Officer.	29 May 2014
	Request to exceed the number of employee travelling to Parliament on official duty/ travelling by air to other centres to attend an official engagement on the same matter.	DEVIATION NOT NECESSARY	Accounting Officer is allowed to pre-approve a higher number of officials	29 May 2014
	Request to exceed the R2 000 entertainment allowance per person per financial year.	DEVIATION NOT NECESSARY	The Accounting Officer has the authority to approve allowance that is higher than R2000 if satisfied that there are sufficient and sound reasons to do so.	29 May 2014
Independent Electoral Commission(IEC)	The entity requested permission to serve alcohol at two functions namely, a gala dinner held immediately after election results are announced	DEVIATION NOT NECESSARY	Information submitted to NT indicated that the international guests attending the dinner will include Foreign Ministers who are delegates in the AU and Members of Parliament of various SADC countries who are in the SADC Parliamentary Forum delegation. Therefore on the basis that these international guests are considered to be Foreign Dignitaries, exception c) of paragraph 4.25 would be applicable and no exemption was therefore required.	25 February 2014
Independent Electoral Commission(IEC)	Secondly alcohol was to be served at a dinner to be held for sponsors. Therefore request for exemption from of Paragraph 4.25 of the Treasury Instruction 01 of 2013/2014 was requested.	NOT APPROVED	Upon review of the entity’s submission in relation to the dinner for sponsors, National Treasury found that there are no compelling grounds on which to grant the deviation.	25 February 2014
Department of Defence (DOD)	Engagement with consultants: The use of casual workers and laboratory services will be classified as outsourced services whilst the technicians for repairs of equipment will be classified as contractors for all minor and major assets	NOT APPROVED	In the DOD, consultants exclude for example casual workers, technicians for equipment repairs and the use of laboratory services that are classified as outsourced.	16 April 2014	All contracts relating to consultancy services procured by the DOD will be subject to the provisions contained in the National Treasury Instruction 01 of 2013/2014 paragraphs 4.1 to 4.5.
	Team Building and Social Events: Most of the social and year end functions are used to honour and recognise identified employees that have gone out of their way to ensure service delivery and perform well in their areas of work. It is good management practice that top management recognise high performers with a view to motivate others to do likewise.	NOT APPROVED	Treasury does not grant blanket approval for these kind of events	16 April 2014
	Uniqueness of the DOD: Officials of the Defence Intelligence and Special Forces Operation are officials employed within the establishment of the DOD and any expenditure related and incurred by the DOD on travel, accommodation, subsistence, catering and events of such officials shall be subject to the provisions of the Treasury Instruction.	NOT APPROVED	The Cabinet resolved in its discussion on 23 October 2013, that all PFMA compliant institutions must implement cost containment measures in their institutions to contain operational costs and to eliminate non-essential expenditure	16 April 2014
	Air Travel: The two (2) staff members of the Secretary for Defence and the CSANDF to travel business class for efficiency and security reasons.	NOT APPROVED	After careful consideration pertaining to the requests made for deviation, the National Treasury cannot grant blanket approvals for deviations of: Services and Divisional Chiefs to travel business class for flights less than five (5) hours.	16 April 2014
	Accommodation costs Exceed R1300	NOT APPROVED	The accounting officer of the DOD is allowed to approve amounts in excess of R1 300 in line with paragraph 4.16 of the Treasury Instruction	16 April 2014
	Vehicle hire: Application for foreign dignitaries on the class of vehicle that may be utilised for their official visits to South Africa.	APPROVED	To reiterate, the Treasury Instruction does not apply to foreign dignitaries hence there is no limitation on the class of vehicle that may be utilised for their official visits to South Africa, but it is expected that fiscal prudence is observed.	16 April 2014
State Security Agency	Team Building and Social Events The SSA was urged to ensure that paragraph 4.26 of the Treasury Instruction is implemented accordingly within the department in order to ensure compliance. Furthermore, it should be noted that wellness programmes do not form part of cost containment measures and should not be confused with the items listed above.	NOT APPROVED	SSA’s environment is necessary due to the nature of the business. Part of this is employee wellness and essential for the efficient functioning of teams performing and supporting intelligence and counterintelligence operations.
State Security Agency	Foreign Intelligence Services (FIS): Foreign Intelligence Services (FIS) are Intelligence Operatives from other countries that SSA liaise Intelligence Information with, e.g. the CIA.	DEVIATION NOT REQUIRED	These are considered foreign dignitaries and the Treasury Instruction on cost containment measures does not apply.	6 October 2014
	Accommodation Cost It is noted in your correspondence that the SSA has special operative work which requires officials of the SSA to stay in accommodations booked in line with their respective operative field of work.	APPROVED	The National Treasury after consideration of your request hereby grants the SSA to deviate from paragraph 4.15 of the Treasury Instruction provided that the domestic accommodation is approved by the accounting officer prior to the expenditure being incurred	6 October 2014
	Air Travel Request to not comply with cost containment measures	NOT APPROVED	After careful consideration of the SSA’s request to deviate from paragraph 4.17 of the treasury instruction the National Treasury found that there were no compelling reasons to grant a blanket approval as deviations can only be considered for approval on case by case basis.	6 October 2014
	Vehicle Hire Request to not comply with cost containment measures	NOT APPROVED	After careful consideration of the SSA’s request to deviate from paragraph 4.17 of the treasury instruction the National Treasury found that there were no compelling reasons to grant a blanket approval as deviations can only be considered for approval on case by case basis.	6 October 2014
Department of Defence	Team building (sponsored events)	NOT APPROVED	There are no compelling reasons.	20 October 2014	The aim for the request was to obtain National Treasury’s approval to utilise sponsorships in kind for the Inter Departmental Potjiekos event.
Department of Justice & Constitutional Development	Deviations From Cost Containment Measures Related To Judges	APPROVED	Given the constitutional independence of the courts, separate from the legislative and executive arms of the state, and specific laws regulating the appointment and conditions of service of judges and magistrates, it is clear that the members of the judiciary are not employees of the DoJ&CD. Therefore paragraphs 4.6 and 4.22 of the NT Instruction do not apply to the members of the judiciary and there is no need for a deviation.	30 January 2014
Department of Military Veterans (DMV)	Accommodation Cost	NOT APPROVED	After careful consideration and taking into account paragraph 4.16 of the National Treasury Instruction 01 of 2013/2014, the National Treasury has found that there were no compelling grounds on which to grant an exemption. The accounting officer of DMV is further advised to ensure that appropriate expenditure control measures are in place and the spirit of containing costs is prioritised within the department at all times.	4 February 2014	The DMV is experiencing problems with finding domestic hotel accommodation for a maximum amount of one thousand three hundred per night per person especially in the main cities such as Cape Town, Durban, Polokwane, Nelspruit etc. This is having a negative impact on service delivery in the DMV.
Mpumalanga Gambling Board	Request for deviation from the national treasury instruction 01 of 2013/2014: cost containment measures (Domestic Hotel Accommodation; Hiring of Vehicles and Entertainment allowances & Social functions)	NOT APPROVED	National Treasury reviewed and assessed the Department’s requests and found that there were no compelling grounds on which to grant any exemption.	18 February 2014.	Hotels around Mpumalanga at or below the rate of R1300 including dinner are generally not conducive for our board members because of safety issues, and other practical factors which have been raised by board members and board committee members Group ‘B’ cars are considered not adequately safe for trips to certain areas, and for long distance travel, the resultant health and safety risks created by use of substandard vehicles are unacceptable to the board. The nature of the MGB is such that the Executives are expected to host other stakeholders from time to time and in the normal course of business, therefore the R2000 limit is viewed as insufficient in certain instances. The MGB conducts wellness functions and sports days twice a year at least as a form of teambuilding initiatives. It has been a tradition and included as part of staff retention policies of this organization that annual yearend functions are observed.
Eastern Cape DoLGTA	Request for deviation from the national treasury instruction 01 of 2013/2014: cost containment measures(Domestic Hotel accommodation	NOT APPROVED	National Treasury reviewed and assessed the Department’s request and found that there were no compelling grounds on which to grant an exemption	02 October 2014	The MEC had appointed an external investigation team to internally investigate issues raised by a labour union in the department and the department was responsible for the accommodation thereof, the preferred place of accommodation was the East London Garden Court of which the cost was exceeding R1 300 limit.
Eastern Cape Social Development	Request for deviation from the national treasury instruction 01 of 2013/2014: cost containment measures(Domestic Hotel Accommodation	NOT APPROVED	National Treasury reviewed and assessed the Department’s request and found that there were no compelling grounds on which to grant an exemption	05 November 2014	Few challenges encountered by the department with regards to accommodation when trying to implement the NT instruction.
EC Provincial Treasury	Request for condonation of irregular expenditure incurred due to non-compliance with the national treasury instruction 01 of 2013/2014: cost containment measures – Accommodation(irregular expenditure amounting to R161 860.91)	NOT APPROVED	No other compelling reasons to condone the Irregular Expenditure	05 June 2015	There was value for money derived from the transaction.
EC Provincial Treasury	Request for condonation of irregular expenditure incurred due to non-compliance with the national treasury instruction 01 of 2013/2014: cost containment measures – Accommodation(irregular expenditure amounting to R279 896.30)	APPROVED	The entity was only aware of the instruction only after the orders were placed	05 June 2015	The entity was only aware of the instruction only after the orders were placed
EC Cooperatives Department and Traditional Affairs	Request for deviation from the national treasury instruction 01 of 2013/2014: cost containment measures - Hotel Accommodation and Hiring of Vehicles	NOT APPROVED	National Treasury reviewed and assessed the Department’s request and found that there were no compelling grounds on which to grant an exemption	11 August 2015	Rooms currently sourced at the limit rate of R1300 are not suitable for employees at level 15 and above. Group B rental cars not comfortable and affects effective participation by level 15 and above officials in crucial meetings.
Public Investment Corporation	Request for deviation from the national treasury instruction 01 of 2013/2014: cost containment measures - International and Specialised Consulting Services and Hiring of Vehicles	Approved in terms of section 79 of the PFMA	National Treasury granted the entity a departure from paragraph 4.2 of Treasury Instruction 1 of 2013/2014 as it relates to the remuneration of specialised and international consultants. Group C vehicles may only be hired when 3 or more persons are going to travel in the vehicle.	11 April 2014	Expenditure relates to the remuneration of specialised and international consultants. The Travel Policy of the PIC limits car hire to Group B for all employees and only provides for employees to hire Group C in instances where more than one person is going to travel in the vehicle. Group C vehicles may only be hired when 3 or more persons are going to travel in the vehicle.
Public Investment Corporation	Request for deviation from the national treasury instruction 01 of 2013/2014: cost containment measures - Hotel Accommodation; Travel and Subsistence and Expenses related to entertainment allowances and events.	NOT APPROVED	There were no compelling reasons on which to grant an exemption	11 April 2014	The entity has its only policy limiting the costs of accommodation to R2 000 per night. The entity claimed that business class provides flexibility and it is reliable and employees are able to work on arrival to their destinations. The entity claimed that the set allowance for entertainment is not sufficient for entertaining potential key or foreign clients and high level delegations.
South African Revenue Services (SARS)	Request for deviation from the national treasury instruction 01 of 2013/2014: cost containment measures–Accommodation, travel and related costs; Consultants’ and Employee’s travel and subsistence costs; Expenses related to catering and events; Team Building	NOT APPROVED	National Treasury could not grant a blanket departure	04 April 2014	SARS was of the view that the accommodation clause only apply to Time-Based Contracts and not Lump Sum(Firm Fixed Price) Contracts and no suitable accommodation for SARS officials; SARS wanted to accommodate disabled officials in selection of suitable cars to be used to travel for officials purposes; SARS was hoping NT can re-consider the impact of the removal of social functions, team building exercises and year-end functions on employee satisfaction.
South African Revenue Services (SARS)	Request for deviation from the national treasury instruction 01 of 2013/2014: cost containment measures - Fees/rates and related costs	APPROVED	The National Treasury noted that SARS operates in a highly specialised and competitive industry which is unregulated and also strives at all times to procure services of consultants through appropriate processes. After careful consideration, the National Treasury granted SARS a departure	04 April 2014	SARS operates in a highly specialised and competitive industry which is unregulated and also strives at all times to procure services of consultants through appropriate processes. SARS find it not always possible to find appropriate experts within the parameters of the Public Service remuneration scales.
Transnet	Request for deviation from the national treasury instruction 01 of 2013/2014: cost containment measures - Travel and Subsistence	NOT APPROVED	Blanket departures are not provided especially where there are financial implications. Such departures are only considered on a case by case basis after considering the motivations provided by the applicants.	16 May 2014	Transnet claimed that effectively the Business Class flight option as per their current Transnet travel policy would be the most cost effective for them.
Financial Intelligence Centre	Request for deviation, expenditure in excess of the maximum threshold for domestic hotel accomodation	NOT APPROVED	National Treasury did not find any compelling reasons to condone the irregular expenditure relating to expenditure in excess of the maximum threshold for domestic hotel accommodation of R1300	24 June 2015	Limited accommodation option
Financial Intelligence Centre	Request for deviation from the national treasury instruction 01 of 2013/2014: cost containment measures – accommodation	NOT APPROVED	National Treasury did not find any compelling reasons to condone the irregular expenditure relating to expenditure in excess of the maximum threshold for domestic hotel accommodation of R1300	16 April 2015	The cheapest accommodation was more than R1300
Financial Services Board	Request for deviation from the national treasury instruction 01 of 2013/2014: cost containment measures – accommodation	APPROVED		22 April 2015	It was impractical to book FSB delegates out of Sun City as delegates were required to arrive early at the conference and leave late and the roads outside Sun City can be dangerous.
Department of Science and Technology National Department	Request to deviate from paragraph 4.15 Domestic accommodation of R1300 per night.	NOT APPROVED	No compelling grounds on which to grant an exemption as R1300 is reasonable amount to pay for domestic accommodation.	12 March 2014
Inkomati Catchment Management Agency (ICMA) Schedule 3A entity	Request to deviate from paragraph 4.26 to arrange a team-building event.	NOT APPROVED	No compelling grounds on which to grant an exemption, advised to ensure appropriate expenditure management control measures are in place.	25 March 2014
National Research Foundation (NRF) Schedule 3A entity	Request for exemption from Treasury Regulation 31.2.5 in order to use multiple credit cards and travel lodge card per geographic location.	NOT APPROVED	No compelling grounds on which to grant an exemption as usage of alternative methods for payment will allow the entity to still meet its operational requirements.	28 November 2013	Operational requirements
National Urban Reconstruction and Housing Agency (NURCHA) Schedule 3A entity	Request to deviate from paragraph 4.26 to arrange a team-building event.	NOT APPROVED	No compelling grounds on which to grant an exemption, advised to ensure appropriate expenditure management control measures are in place.	18 November 2014
Free State Provincial Treasury	Request to deviate from paragraph 4.7 and 4.8 regarding air travel.	NOT APPROVED	No compelling grounds on which to grant an exemption.	03 August 2015
Free State Provincial Treasury	Request to deviate from paragraph 4.15 and 4.16 for Executive member VIP Protectors to exceed limit of R1300 domestic accommodation per night.	APPROVED	Executive Member VIP Protectors need to be in close proximity to their assigned Executive Member and to fulfil their duties cannot be in different accommodation to the Executive member	10 December 2014
Department of Trade and Industry	Delegation of any deviation from paragraph 4.6 of the Treasury Instruction No 1 of 2013/2014 to the Director-General of the Department of Mineral Resources (to approve business class travel)	NOT APPROVED	The National Treasury does not grant blanket approvals for institutions to deviate from cost containment measures as this process has to be done on a case by case basis. It is also worthy to note that approvals for deviations in terms of section 79 of the PFMA cannot be sub-delegated to any other functionary unless directed otherwise by the Minister in terms of section 10 of the PFMA.	04 September 2014
Department of Transport (ACSA and ATNS)	Deviation from the rates that were prescribed in paragraph 4.2 of the National Treasury Instruction 01 of 2013/2014.	NOT APPROVED	DoT requires the services of an accounting firm. DoT should consider another organ of state like the Council for Scientific and Industrial Research (CSIR) to provide the required service?, If no other organ of state can provide the required service, then DoT can proceed to acquire the services of an appropriate service provider in line with relevant supply chain management prescripts and taking into account the paragraph 4.2 of the National Treasury Instruction 1 of 2013/2014.	10 March 2014
Department of Trade and Industry	Deviation from the amount of R1300 per night for domestic accommodation in paragraph 4.15 of the National Treasury Instruction 01 of 2013/2014.	NOT APPROVED	The contents of Treasury Instruction No.1 of 2013/2014 on Cost Containment Measures was consulted extensively with Cabinet, the Minister’s Committee on the Budget and with the Director-General of The Presidency, all who agreed that R1300 was a reasonable amount to pay for domestic accommodation.	12 February 2014
Department of Energy	Approval to deviate from the following paragraphs: Paragraph 4.6 and 4.7 as there are persons with special needs in the department.	NO DEVIATION REQUIRED	Paragraph 4.9 of the Treasury Instruction provides for the accounting officer to approve the purchase of business class tickets for employees with disabilities or for those with special needs. Deviation is therefore not required in this instance.	6 March 2014
	Paragraph 4.8 as there are circumstances when the Minister/Deputy Minister or the DG needs to be accompanied by officials who do not qualify as per this paragraph.	APPROVED	Business class tickets may be purchased for the Minister, Deputy Minister, the Director-General and any advisor to the Minister appointed in terms of section 12A of the Public Service Act, 1994.
	Paragraph 4.15 as the department finds it extremely difficult to obtain accommodation at the rate of R1 300 per night per person (including dinner, breakfast and parking).	NOT APPROVED	The contents of Treasury Instruction No.1 of 2013/2014 on Cost Containment Measures was consulted extensively with Cabinet, the Minister’s Committee on the Budget and with the Director-General of The Presidency, all who agreed that R1300 was a reasonable amount to pay for domestic accommodation.
Independent Communications Authority of South Africa (ICASA) Constitutional Institution	Request to deviate from paragraph 4.26 to arrange a team-building event.	NOT APPROVED	No compelling grounds on which to grant an exemption, advised to ensure appropriate expenditure management control measures are in place.	11 December 2014	Operational requirements
North West Provincial Treasury	Accommodation cost: The accounting officer to approve amounts in excess of R 1300 in line with paragraph 3(a) and 3(b) of Treasury Instruction. To allow delegates to sleep at the same venue where the organised event is hosted.	NOT APPROVED	The National Treasury found no compelling reasons to grant a blanket approval of a higher limit of R 1800 for urban businesses that are not registered in the rural Supply Chain Management data base. The cost containment does not prohibit the use of accommodation in the same venue where there is a conference or other non-specifies event provided that the department has complied with the supply chain management and cost containment measures.	09 December 2014	NW wanted to have two different accommodation limits for rural as opposed to city hotels. They wanted a higher rate of R1800 for city hotels. To support the organised central venue for accommodation ad also be allowed to meet the expected cost charged by the supplier
North West Provincial Treasury	Approval for the Head of Department to reside in the same hotel as Executive Authority as a Private Member of stuff in terms of chapter 8, paragraph 1.1.1 & 1.1.2 of the Ministerial handbook.	NOT APPROVED	The National Treasury found no compelling reason to grant a blanket approval for the Head of Department to reside in the same hotel as the Executive authority and it is worthy to mention that the Head of Department does not fall within the category of private stuff member for the Executive authority.	09 December 2014	They wanted accomplice staff to the Executive authority including the Head of Departments not to be restricted by the Cost containment measures in this regard.

Reply:

1. (a) Government borrows money to finance the main budget balance and maturing debt. Government will only be able to pay down its existing stock of debt once it runs substantial budget surpluses over an extended period. Over the period under review budget deficit realised and government was therefore not in a position to repay maturing debt. As a result, over the period 31 August 2014 to 31 August 2015 the maturing debt of R38.4 billion was refinanced through issuing new debt instruments.

(b) As published in the 2015 MTBPS the ratio of government debt to GDP continues to stabilize. Revenue growth will continue to outpace spending growth, narrowing the budget deficit from 3.8 per cent in 2015/16 to 3.0 per cent in 2018/19. Over this period government will restore the primary balance ensuring a sustainable fiscal path resulting in lowering the rate of growth in the stock of debt.

1. (aa) NA

(bb) NA

(ii) NA

2. The 2015 Budget and 2015 MTBPS are aimed at ensuring long-term fiscal sustainability, which is a defining feature of intergenerational equity.

As stated in the 2015 Budget there is a long-term (or structural) imbalance between revenue and expenditure. This imbalance is being addressed by the increase in taxes which was implemented in 2015/16 and the reduction in the rate of expenditure growth. The bulk of the slowdown in spending growth has been targeted at government consumption. Government proposed a long-term fiscal guideline which aligns spending limits in the outer year of the MTEF with the long-term path of GDP growth.

The budget also aims to change the composition of spending, in order to ensure that government debt is used to fund expenditures with a long-term impact. Despite higher wage bill projections, government’s current balance will move into surplus over the medium term. Over the same period the capital financing requirement will remain broadly unchanged at about 3.8 per cent of GDP, financed in part by the current surplus. Achieving current surpluses over the medium-term suggests that government will borrow to finance capital and not current expenditure. The downward revision to GDP, shortfalls in revenue and the weaker exchange rate have led to an upward revision of the debt-to-GDP ratio. However, the debt-ratio trend stabilises in the years ahead as a result of continued restraint in expenditure growth and improvements in the budget balance.

Reply:

(a) According to statistics obtained, participating government institutions have spent an estimated amount of R179 675 926 between 2010 and 2015 on this contract. Of which R120 120 892 was spent during 2010-2012 contract cycle and R59 555 033 was spent during 2013-2015 contract cycle.

(b) To break this information down per department per year is a challenge as some departments enter comprehensive cleaning contracts that include the supply of toilet paper.

Reply:

1) (a) M Kalawe         R4 552 981.00

(b) W Meyer           R3 661 080.00

2) (a)(b) The CEO and the CFO are permanent full time employees of the company. They are also executive Directors which mean they are compensated to ensure execution of strategy and business imperatives. Their remuneration is based on a Total Cost of Earnings principle on their remuneration base at the time of negotiating appointment offers, industry/ market factors, and the ability of SAA to attract candidates for these executive positions. Annual increases are based on performance.

(i)(ii) The Chairperson and Non-Executive Directors are rewarded Director Fees in accordance with market practice and benchmarking against fees for Non-Executive Directors of the Board. Fees paid are determined on the basis of either an annual retainer fee or as per meeting fee.  The quantum of the fee established is based on the number of board meetings attended as well as the number of board sub-committees that they serve on.

Reply:

The numbers given here are from the Vulindlela database which draws the data from the Basic Accounting System (BAS) of government.  The system does not contain information on service providers; this will have to be requested from the respective departments.

Spending on transport equipment was R4.1 billion in 2010-11, R 5.4 billion in 2011-12, R4.6 billion in 2012-13, R5.2 billion in 2013-14 and R5.4 billion in 2014-15. Since 1 April 2015, the departments have spent R1.6 billion. Table 1 below shows the total spending per category of transport equipment excluding aircrafts. See attached annexure for detail by department.here's the link: http://www.pmg.org.za/files/RNW3673-151102.doc

Reply:

1. The investigation by Advocate Myburgh has been conducted on African Bank Limited at the request of the Registrar of Banks in terms of section 69A of the Banks Act 94 of 1990. The Registrar has informed me that the investigation, which commenced after 30 August 2014, was completed and a copy of the report in terms of section 69A(11) of the Banks Act was provided by the Registrar to the office of the Minister of Finance on 27 February 2015.

2. In terms of section 69A(13) of the Banks Act, the report on such an investigation is private and confidential unless the Registrar of Banks (Registrar), after consultation with the Minister, either generally or in respect of any part of the report, directs otherwise. In this instance both the Registrar and I are of the view that the report should be made public after the Registrar has completed a process of inviting persons referred to in the report to make representations relating to the report. This process is expected to be completed by the end of 2015.

3. No, as the Banks Act (section 69A (12)) only compels the Registrar and Minister to inform the National Director of Public Prosecutions to the extent that the findings identify that a crime has been committed or ‘it appears that any business of such bank was carried on recklessly or negligently or with the intent to defraud depositors or other creditors or for any other fraudulent purpose’. Bank failures are generally the result of a number of factors or actions; and may or may not be due to a crime or intent to commit a crime, but rather due to (for example) bad business judgement, poor risk management or governance systems, or other non-criminal related factors. Once the process outlined in (2) is completed, the Registrar and I will make a determination as to what action to take.

4. As noted in (3) above, the s69A investigation is a limited exercise, and does not necessarily deal with broader policy issues, mandate or activities of other regulators who may also be involved.

 

Reply:

The numbers given here are from the Vulindlela database which draws the data from the Basic Accounting System (BAS) of government.  The system does not contain information on service providers; this will have to be requested from the respective departments.

The total amount spent on hiring of aircrafts was R78.9 million in 2012-13, R82.4 million in 2013-14 and R34.7 million in 2014/15. Since 1 April 2015 spending on aircrafts hiring is at R9 million. The tables below show the breakdown by department. Related expenditure includes maintenance.

see the link for tables: Table 1 & 2 National and provincial departments

Reply:

The information requested by the Honorable Member is an element that forms part of the more aggregated figure used to prepare the regular reports on the current account and on the financial account, both of which are published in the Reserve Bank Quarterly Bulletin.

The South African Reserve Bank (“SARB”) records all inward and outward transactions for goods and services, for residents and non-residents through, “BOPCUS” - the “Balance of Payments Customer Transaction Reporting Electronic Message System”. Authorised Dealers in foreign exchange report all such transactions to SARB via the BOPCUS system, according to balance of payments categories.

The most recent SARB Quarterly Bulletin published (in September 2015) published the following figures for the first two quarters for 2015 (Table; page 34).

At the aggregated level, this shows the total outflow on the ‘net service, income and current transfer payments’ account of R138 billion on a seasonally adjusted and annualised basis. These are flows on the current account that are not related to trade flows. Indeed, the trade balance recorded a small (R14 billion) surplus on a seasonally adjusted and annualized basis.

Taken together with the services, income and current transfer payments, the balance on the current account has improved every quarter since 2014Q2; and now stands at 3.1 per cent of GDP.

On the financial account, however, financial inflows reached 2.9 per cent of GDP in the first half of 2015 from 5.9 per cent in 2014, as net outflows in ‘foreign direct investment’ and ‘other investment’ rose. Net portfolio inflows far exceeded total 2014 inflows of R49.5 billion, with demand for equities particularly robust.

a) (i) (ii) According to the information provided to me by the Reserve Bank, outward cross-border payments from non-resident rand accounts totalled 52,000 transactions amounting to R30 billion in 2013 (all figures are rounded off in this response); and 47,000 transactions amounting to R144 billion in 2014. These outflows were transferred to 161 countries in 2013 and to 138 countries in 2014. The average transaction value for 2013 was R586,000 and R3 million in 2014.

The Honourable Member should note that this should be compared to inward cross-border receipts, as they are linked in the sense that no inward flows are possible unless outward flows are allowed. Inward cross-border receipts into non-resident rand accounts totaled 42,000 transactions, amounting to R93 billion in 2013 and 40,000 transactions amounting to R194 billion in 2014; averaging R2 million and R5 million per transaction respectively.

b) (i) (ii) Table 1 sets out the highlights for the top 7 destination countries for transactions over R1 billion per annum.

In 2013, the top 7 destination countries represented 86% of the total transaction value, R26 billion, through 33 thousand transactions, averaging R778 000 per transaction. In 2014, the top 7 destination countries represented 96% of the total transaction value, R139 billion through 31 000 transactions, averaging R4,5 million per transaction.

 

Table 1

Outward Cross-Border transactions over R1 billion from Non-Resident Rand Accounts in top 7 countries

	2013	2014
	R billion	No. of transactions	R billion	No. of transactions
United Kingdom	16,3	17,319	102,6 *	16,686
United States	1,3	4,124	27,0	3,643
Germany	4,0	2,266	1,7	1,958
Switzerland	2,0	456	2,0	293
Australia	0,83	8,297	2,7	7,102
Thailand	0,2	82	1,1	84
Ireland	1,1	698	1,7	871
Total	25,7	33,242	138,7	30,637

* A sharp increase in outflows during 2014 was due to increased transfers to the UK resulting from the “Disinvestment of money market instruments by a non-resident” category.

Table 2

Outward transactions over R1 billion from Non-Resident Rand Accounts in 25 countries with the most transactions per annum

Table 2 reflects a further breakdown by the most active continents, i.e. Africa, Asia and Europe. Together with the top seven destination countries listed in table 1, in 2014, the transactions comprise 98% of the total transaction value (2013: 94%).

	2013	2014
Africa	Rm	No. of transactions	Rm	No. of transactions	2Y average R'000
Malawi	2	73	5.2	94	39
Zimbabwe	85	762	48.8	486	106
Namibia	36	260	109.6	213	327
Swaziland	57	101	11.5	90	346
Botswana	488	782	122.2	229	579
Mauritius	273	225	342.5	193	1495
Mozambique	439	198	513.7	208	2343
Total	1380	2,401	1153.5	1,513	5234

Asia
India	81	584	82.2	393	174
Taiwan	15	22	17.0	94	433
China	36	278	157.5	148	597
Singapore	53	115	329.0	90	2059
Total	186	999	585.6	725	3263
Europe
Poland	2	151	2.2	172	14
Portugal	30	2,130	42.4	2,272	16
Czech Republic	1	111	3.5	129	20
New Zealand	160	4,024	209.0	3,693	48
Canada	140	2,561	119.7	2,471	52
Israel	69	738	99.6	657	123
Spain	25	226	38.9	260	129
Italy	86	439	30.1	425	134
Greece	5	132	49.8	163	172
France	58	431	109.1	469	183
Austria	58	161	49.9	144	352
Netherlands	200	922	985.5	907	651
Sweden	133	164	176.9	109	1218
Jersey C.I	320	119	69.8	98	1703
Total	1288	12,309	1986.4	11,969	4815

Reply:

The collective bargaining for local government is under the auspices of the South African Local Government Bargaining Council (SALBC). SALBC recently entered into a 3 year salary and wage agreement. The agreement reached is as follows:

• 2015/16       -     7%
• 2016/17       -     average CPI (February 2015- Jan 2016) + 1%
• 2017/2018   -     average CPI (February 2016- Jan 2017) + 1%

                             

The following responses were provided by SALGA:

a) (i) The total cost of the negotiated 3 year collective agreement is estimated by SALGA to amount to approximately R16.682 billion. This increases the national wage bill for local government from R77.888 billion in 2014/15 to R94.570 billion in 2017/18. This calculation is based on the assumption of an average CPI of 5% for the 2016/17 year and an average CPI of 5.5% for the 2017/18 financial year.

 

(aa) 2015/16 - R5.884 billion; and

(bb) 2016/17 - R5.026 billion; and

(cc) 2017/18 - R5.772 billion

 

(b) The requested detail is not available per municipality. However, SALGA estimates that the increases applicable to each municipality’s current wage bill will be as follows:

 

2015/16 - 7.55%;and

2016/17 - 6.00% and

2017/18 - 6.5%

 

(c) These increases in the respective wage bills of municipalities will be funded from municipal income generated from property rates, trading services such as electricity, water and other related service charges such as refuse removal and sanitation charges coupled with equitable share transfers from national government.

Reply:

Question 1: Preliminary indications are that the 2015 public sector wage agreement will cost as much as R63.9 billion over and above what is provided for this purpose in the budget baseline over the 2015 MTEF. Of the above amount R41.5 billion is for cost of living adjustments, R11.1 is for medical assistance and R11.4 billion is for housing allowance.

Salary negotiations are taking place at the Public Service Coordinating Bargaining Council (PSCBC), which is established in terms of section 35 of Labour Relations Act 66 of 1995. The main purpose of the PSCBC is to allow Public Service parties to negotiate on transverse matters including terms and conditions of employment, resolve disputes and facilitate hearings to resolve disputes that arise in the Public Service. This excludes matters pertaining to Constitutional Institutions and Public Entities.

Question 2: National Treasury is certain that the agreement can be accommodated within the current expenditure limits. Contingency reserves will play a role in accommodating higher compensation budgets this year, and so will resources available due to projected underspending. Some reprioritisation from other budget lines will also be required from Departments and provinces.

National Treasury is currently coordinating the budget process in preparation for the Medium Term Budget Policy Statement (MTBPS) in Parliament in October 2015. The Minister of Finance will make an announcement at the MTBPS on how costs of the wage agreement will be financed.

Reply:

Question 1: Preliminary indications are that the 2015 public sector wage agreement will cost as much as R63.9 billion over and above what is provided for this purpose in the budget baseline over the 2015 MTEF. Of the above amount R41.5 billion is for cost of living adjustments, R11.1 is for medical assistance and R11.4 billion is for housing allowance.

Salary negotiations are taking place at the Public Service Coordinating Bargaining Council (PSCBC), which is established in terms of section 35 of Labour Relations Act 66 of 1995. The main purpose of the PSCBC is to allow Public Service parties to negotiate on transverse matters including terms and conditions of employment, resolve disputes and facilitate hearings to resolve disputes that arise in the Public Service. This excludes matters pertaining to Constitutional Institutions and Public Entities.

Question 2: National Treasury is certain that the agreement can be accommodated within the current expenditure limits. Contingency reserves will play a role in accommodating higher compensation budgets this year, and so will resources available due to projected underspending. Some reprioritisation from other budget lines will also be required from Departments and provinces.

National Treasury is currently coordinating the budget process in preparation for the Medium Term Budget Policy Statement (MTBPS) in Parliament in October 2015. The Minister of Finance will make an announcement at the MTBPS on how costs of the wage agreement will be financed.

Reply:

1. Preliminary indications are that the 2015 wage agreement will cost as much as R63.9 billion over and above what is provided for this purpose in the budget baseline over the 2015 MTEF. Of the above amount R41.5 billion is for cost of living adjustments, R11.1 billion is for medical assistance and R11.4 billion is for housing allowance.

Line departments at national and provincial level are being engaged to assess the magnitude of shifts required for reprioritisation.

2. National Treasury is certain that the agreements can be accommodated within the current expenditure limits. Contingency reserves will play a role in accommodating higher compensation budgets this year, and so will resources available due to projected underspending. Some reprioritisation from other budget lines will also be required.

3. National Treasury is currently coordinating the budget process in preparation for the Medium Term Budget Policy Statement (MTBPS) in Parliament on 21 October 2015. The Minister of Finance will make an announcement at the MTBPS on how costs of the public sector wage agreement will be financed.

Reply:

All the statistics that the Honourable Member is requesting already exist within specific breakdowns. The records are accessible from each Department.

Reply:

1. (a) (i) (aa) 1

(bb) 1

(cc) 0

(dd) 0

(b) (i) (aa) 0

(bb) 0

(cc) 0

(dd) 0

(ii) 0

2. (a) (i) Sao Paulo, South America

(ii) N/A

(b) Possession

(i) 8 years imprisonment

(ii) None

(c) None

3. No, this is an operational matter of the company that management and the board can deal with.

 

Reply:

1. Yes, the National Treasury does promote broader empowerment objectives through the Financial Sector Charter and financial inclusion policies, as outlined in the policy document “A safer financial sector to serve South Africa better” published in February 2011. The policy aims at increased access to affordable, convenient and appropriate financial services for all South Africans, particularly the poor and vulnerable, and takes into account the legacy of both racial and gender exclusion policies of the past.

Progress has been made in improving financial inclusion in South Africa, resulting in 80% of South Africans using some form of financial services from a regulated financial institution in 2014, up from 55 per cent in 2005. More will be done by setting stretched targets for the financial sector in the Financial Sector Code (FSC) (first adopted in 2003), and focused initiatives by National Treasury’s Cooperative Banks Development Agency (CBDA) established by the Co-operative Banks Act (No. 40 of 2007).

Through the FSC, the National Treasury advocates and promotes the advancement of women via specific targets in respect of access to finance and enterprise and supplier development for women as entrepreneurs and owners of small enterprises. For example:

• The target for procurement spend on suppliers that are 30% black women is 8% of total procurement spend
• The target for transformational infrastructure, black SME financing, black agricultural financing and affordable housing is R48 billion for banks and R17 billion for long-term insurers with recognition levels for certain types of beneficiary entities including 150% for 30% black-women-owned exempt microenterprises (EMEs), 100% for 30% black-women owned qualifying small enterprises (QSEs)

With regard to co-operatives, the CBDA has the mandate to regulate and supervise as well as provide capacity building to deposit taking financial co-operatives, commonly known as Co-operative Financial Institutions (CFIs). The Honourable Member should note that the financial sector is a highly regulated sector to protect both depositors, customers and taxpayers, and this cannot be regarded as overly stringent regulation as suggested by the Honourable Member in the original Question 336 on 26 August 2015 to my colleague the Honourable Minister of Women in The Presidency. The objective of the CBDA includes capacity building, to ensure that the CFI sector is adequately capacitated and therefore facilitates the growth of financial co-operatives.

Based on the sectoral analysis done by the CBDA, as at February 2015 women were empowered by CFIs as follows:

• The 26 CFIs serviced an estimated 7,274 females versus an estimated total of 17,318 members. This ultimately means that there is a 42% women ownership in the registered CFIs.
• CFIs are required to elect board members, for efficient and effective governance. 47% of an estimated 167 board members elected are women.
• 73% of an estimated total of 60 people employed by the CFIs are women.

The capacity building programmes developed and conducted covers a vast number of women particularly from the rural areas. Women have been empowered through financial management training and other training courses and coaching provided by the CBDA.

2. Yes, National Treasury is working with the Department of Women through the CBDA. For example, on 31 July 2015, the CBDA team met with officials in the Department of Women in the Presidency about the overall mandate of the CBDA and capacity building programmes for the CFI sector and discussed possible areas of collaboration. The CBDA will continue to work closely with both the Departments of Women and Small Business Development to assist vulnerable women to set up co-operatives and co-operative financial institutions thereby ensuring the financial empowerment and economic inclusion of these women.

National Treasury in line with its broader financial inclusion objectives, will work towards ensuring all South Africans have access to the benefits of using financial services both as part of the broader development agenda and to address poverty and the inequalities in South African society.

Reply:

(a) (i) The total amount spent on direct charges against the National Revenue Fund is   R 512 465 319 000 and the breakdown is listed in the table below. The audit for the National Revenue Fund for the 2014-15 financial year has not yet been finalized. These figures are therefore unaudited. 

(ii) and (b)

Department	Unaudited Amount (R’000)	Legal authority
Presidency – President’s salary	4,830	Sections 2(7) and 3(7) of the Remuneration of Public Office Bearers Act, 1998 (Act No 20 of 1998)
Parliament – Members of Parliament salaries	481,781
Provinces – Equitable share	362,468,075	Schedule 2 of the Division of Revenue Act (Dora Bill)
General Fuel levy	10,190,162	Schedule 1(2) of the Taxation Laws Amendment Act 17 of 2009
State Debt Interest Management Cost of raising loans	114,703,789 37,937 8,245,351	Section 73 of the Public Finance Management Act (PFMA) (Act no1 of 1999)
Higher Education and Training – SETA funds collected	13,838,798	Section 6(4) of the Skills development Levies Act, 1999 (Act No 9 of 1999)
Justice and Constitutional development – Salaries and allowances of Judges and magistrates	2,494,596	Section 2 of Judges’ Remuneration and Conditions of Employment Act, 1989 (Act 88 of 1989) and Section 12 of Magistrates Act, 1993 (Act No. 90 of 1993)

Reply:

(a)(b) Exempt supplies are supplies of goods or services where VAT is not chargeable at either the standard or zero rate. A person who only makes exempt supplies is not allowed to register as a vendor, charge VAT on supplies over deduct input tax incurred on its acquisitions.

Some examples of exempt supplies include:

• Financial services, including life insurance policies
• Residential accommodation in a dwelling;
• Passenger transport in South Africa by taxi, bus or train;
• Educational services provided by recognised educational institutions;
• Childcare services provided at crèches and after-school care centres;
• Services supplied by a bargaining council to any of its members; and
• Goods and services supplied by a political party to the extent of membership contribution.

The National Treasury publishes a tax expenditure estimate in the annual Budget Review. Included in this tax expenditure is the estimated cost of exemption of VAT in respect of public transport and education. The estimated cost reflects the net of the VAT that would have been charged and the input tax that is not refunded.

Estimates are not available for the other exemptions. It should be noted however that financial services is not purely exempt. South Africa introduced VAT on certain supplies of fee based financial services in 1996 which has resulted in a net output tax payable by the affected financial institutions.

 

The tax revenue forfeited on public transport and education according to Budget 2015 amounted to:

(i) 2010-11 - R999 million

(ii) 2011-12 - R1 088 million

(iii) 2012-13 - R1 175 million

(iv)(v) 2013-14 and 2014-15 is not available as yet and is expected to only be tabled in the 2016 and 2017 Budget Reviews respectively.

Reply:

(a)(b) Zero-rated supplies of goods and/or services are taxable supplies on which VAT is levied at a rate of 0%. Any VAT incurred to make zero rated supplies may be deducted as input tax.

Some examples of zero rated supplies include certain basic foodstuffs; fuel levy goods; paraffin: certain farming goods; the export of goods and services in certain instances; international transport and municipal property rates.

The zero rating of basic food items are intended to provide relief to low-income groups.

The list of zero rated food items includes the following:

Brown bread Brown bread flour (excluding wheaten bran) Dried mealies, and mealie rice Samp Maize meal Dried beans Lentils Edible legumes.

Rice Vegetable cooking oil (Excluding olive oil) Fresh fruit and vegetables Hen's eggs Milk, cultured milk, milk powder and dairy powder blend Pilchards or sardinella in tins or cans

The zero-rate is also applicable to goods or services that are exported provided the relevant legislative provisions are met. This is in line with the destination principle of South Africa’s VAT system whereby exports are free of domestic VAT as consumption of these goods and services takes place outside South Africa and the import of goods attracts VAT.

(i)(ii)(iii) The National Treasury publishes a tax expenditure estimate in the annual Budget Review. The tax revenue forfeited on zero rated items according to Budget 2015 for 2010-11, 2011-12 and 2012-13 are set out in the table below:

Tax expenditure estimates (R million)

Fiscal Year                                         2009/10               2010/11   2011/12   2012/13      

Value-added tax                                  

Zero-rated supplies                             

19 basic food items                                            14 258                   15 497   17 106   18 628  

Petrol                                                                       9 660                    10 845   13 797   15 343

Diesel                                                                         903                      1 107      1 532      1 759

Paraffin                                                                      519                          367        585         611

Municipal property rates                                     3 973                       6 032     7 568      9 598

Reduced inclusion rate for commercials              127                          147       153          175

Accommodation

Subtotal zero-rated supplies                          29 440                   33 989    40 742   46 115

1. Vat relief in respect of basic food items based on National Treasury research of 2010/11 and expenditure survey data
2. Based on fuel volumes and average retail selling prices

Because petrol, diesel and illuminating paraffin are zero-rated for VAT purposes, the resulting difference from a standard rating, when used by final consumers, is regarded as tax expenditure. It was assumed that 20 per cent of petrol sales was used for business purposes (by VAT vendors) and would have qualified as input tax should VAT have been levied at the standard rate. For diesel, it was assumed that 90 per cent of sales was used for business purposes and would have qualified for input VAT should VAT have been levied at the standard rate.

(iv)(v) 2013-14 and 2014-15 expenditure is not available as yet and is expected to only be tabled in the 2016 and 2017 Budget Reviews respectively.

The revenue foregone in respect of exports that qualify to be zero rated was not calculated.

 

Reply:

The relevant provincial authorities are empowered in law to take action; hence the report was handed to the Premier of the Free State as the executive head of the provincial administration.

Reply:

The matter is part of the budget process and consideration, if any, will be part of the Medium Term Budget Policy Statement (MTBPS) which will be announced by the Minister on 21 October 2015.

Reply:

Arrangements that apply to retiring members of the Government Employees Pension Fund (GEPF) are governed by rule 12.3 of its rules, which provides that "if a member resigns, retires or dies as contemplated in rules 14.3.2, 14.4.1 or 14.5.1, he or she has the right to transfer his or her actuarial interest in the Fund to an approved retirement fund: Provided that such transfer shall be subject to the provisions of rule 14.4.1(b)...".

A pensioner who is already receiving a pension from the GEPF after retiring would have had more than 10 years of pensionable service, and would have received a gratuity/lump sum on retirement and a monthly pension or annuity – the pensioner would thus have had the opportunity to invest elsewhere (or spend) the gratuity/lump sum received on retirement as he or she sees fit, but cannot do so with the portion invested in an annuity. It should be noted that there are benefits to an annuity as they provide a monthly income to the retiree, and in most cases, the benefits of the GEPF after retirement are good for members as they provide significant value compared to other annuities on the market. Further, there is no investment risk for retirees, as the GEPF is a defined benefit fund.

For those members still employed and contributing to the GEPF, only those members with more than 10 years of pensionable service will be able to qualify for the gratuity/lump sum and the monthly pension. These members cannot transfer their actuarial interests to an approved retirement fund if they retire from the GEPF.

Members with less than 10 years of pensionable service do not qualify for a monthly pension or annuity but can purchase an annuity/pension with an approved retirement fund of their choice with the gratuity/lump sum provided by the GEPF upon reaching retirement. Therefore, pensioners who fall within the provision of rule 14.3.2, which applies to pensioners with less than 10 years of pensionable service, are entitled to transfer their pension benefit to an approved retirement fund of their choice on retirement.

I would like the Honourable Member to join me in encouraging South Africans to preserve their retirement savings, given the risks and vulnerabilities they face when resigning from their jobs and cashing out their pensions prematurely. Government last year expressed its concern when some members of the GEPF were resigning from their jobs, probably because they were over-indebted or falling for false rumours on retirement reforms. Those resigning were not only giving up on their pension fund benefits (which are far better than most private pension funds), but also on certain non-contributory benefits (e.g. post-retirement medical benefits), which are funded by Government as the employer. No law has changed with regard to members’ access to their pension benefits; meaning that members of the GEPF will always be entitled to a gratuity/lump sum and an annuity, as per the Fund rules. Further, members resigning from pension funds before retirement will still be able to withdraw their benefits, though the withdrawal may attract higher tax liabilities.

Reply:

The budget and outcomes cited in the question relate to 2012/13 financial year as published in the Budget Review 2013. Public sector infrastructure budgets have increased significantly over the past 10 years, from R89.8 billion in 2005/06 to R262.4 billion in 2014/15. In some instances, capital budgets have grown faster than the capacity to spend. In addition, some projects experience implementation difficulties resulting in underspending. Despite this, inflation-adjusted infrastructure spend has more than doubled over the past 5 years.

Underspending of funds implies that projects may not be delivered on time and on budget, and the expected outcomes may be delayed. In some cases additional financial resources may be needed to complete the project. National Treasury has not undertaken any specific investigation in this regard. However, it closely monitors these matters on an on-going basis. When there is underspending at any level of government, the Accounting Officer for the relevant institution is responsible for taking appropriate action to address the situation. Every Accounting Officer ultimately has to account to Parliament. National Treasury plays an active role in building capacity and ensuring that resources are deployed appropriately to drive capital spending across all three spheres of government.

In addition to this government has put in place many programmes to improve infrastructure spending. For instance:

• The PICC is coordinating the implementation of strategic infrastructure projects.
• A performance-based approach to the allocation of infrastructure grants to provinces has been introduced. Provinces that adhere to best practice in planning and procurement are eligible for additional allocations.
• The provincial infrastructure skills development grant has placed 240 graduates in municipal jobs in areas such as civil and electrical engineering.
• The Municipal Infrastructure Support Agency is working with water services authorities to eradicate backlogs and conduct maintenance in water and sanitation infrastructure.
  
  
  END

Reply:

(a)(b) Internal Cases:

The requested information forms part of the ongoing investigative process.

The release of such information may prejudice the outcome of such investigations/ disciplinary proceedings.

External Cases:

Due to the taxpayer confidentiality provisions contained in Section 69 of the Tax Administration Act No. 28 of 2011, SARS is prohibited from disclosing any taxpayer information (Including whether or not a taxpayer is subject to an audit/ investigation) to any person other than a SARS official. SARS is, therefore, unfortunately not in a position to respond to the above request in relation to any tax matter.

Reply:

(1) The total number of voluntary withdrawals that were processed in respect of the GEPF, being the only contributory Fund the GPAA manages is detailed below. (The other Funds: IOD, Military Pensions, Post-retirement Medical Aid and Special Pensions are non-contributory.) The Government Pensions Administration Agency's (GPAA) records indicate (a) in each specified month and (b) in the (i) 2014-15 financial year and (ii) during the period 1 April 2015 up to the latest specified date that the following resignation claims were processed:

Month	2014/2015	2015/2016
April	2 830	4 334
May	2 433	4 055
June	2 701	3 240
July	3 528	3 615
August	3 456	3 092
September	3 726	-
October	3 717	-
November	4 482	-
December	3 411	-
January	3 811	-
February	4 949	-
March	4 236	-
Total	43 280	18 336

(2) The breakdown of these figures by (a) race, (b) gender, (c) sector for 2014-15 Financial year:

Race	Gender	Employer (sector)	Total
		Education	Health	SAPS	Correctional Service	Other
African	Female	8 571	7 517	474	207	3 067	19 836
	Male	5 164	2 767	1 480	635	3 249	13 295
Asian	Female	175	254	27	5	114	575
	Male	59	132	72	13	80	356
Coloured	Female	588	1 161	155	45	437	2 386
	Male	344	314	380	208	349	1 595
White	Female	1 047	639	238	47	519	2 490
	Male	293	237	303	191	349	1 373
Not allocated	Female	232	205	35	9	212	693
	Male	169	106	52	12	342	681
Total	16 642	13 332	3 216	1 372	8 718	43 280

(2) Continued: The breakdown of these figures by (a) race, (b) gender, (c) sector for 2015-16 until 31 August 2015:

Race	Gender	Employer (sector)	Total
		Education	Health	SAPS	Correctional Service	Other
African	Female	3 358	2 976	255	64	1 181	7 834
	Male	2 226	1 236	975	261	1 475	6 173
Asian	Female	89	109	9	2	34	243
	Male	30	53	33	4	34	154
Coloured	Female	221	342	74	12	204	853
	Male	152	115	206	76	174	723
White	Female	509	272	136	19	196	1 132
	Male	155	92	155	54	158	614
Not allocated	Female	113	94	10	5	92	314
	Male	85	49	18	7	137	296
Total	6 938	5 338	1 871	504	3 685	18 336

(2) Continued: The breakdown of these figures by (c) sector and (d) Province for 2014-15:

Province	Employer	Total
	Education	Health	SAPS	Correctional Service	Other
Eastern Cape	1 922	1 827		0	1 038	4 787
Freestate	878	644	27	0	272	1 821
Gauteng	4 987	2 623	2	0	556	8 168
Kwazulu Natal	3 734	3 562	6	6	667	7 975
Limpopo	1 493	1 074	7	0	436	3 010
Mpumalanga	1 289	740	0	0	342	2 371
North West	494	696	0	0	481	1 671
Northern Cape	362	387	0	0	150	899
Western Cape	1 057	1 691	0	0	456	3 204
National departments	425	88	3 174	1 366	3 950	9 003
Unknown Province	1	0	0	0	370	371
Grand Total	16 642	13 332	3 216	1 372	8 718	43 280

(2) Continued: The breakdown of these figures by (c) sector and (d) Province for 2015-16 until 31 August 2015:

Province	Employer	Total
	Education	Health	SAPS	Correctional Service	Other
Eastern Cape	676	591			294	1 561
Freestate	416	212	26		93	747
Gauteng	1 880	1 290	1		241	3 412
Kwazulu Natal	1 418	1 411	3		232	3 064
Limpopo	729	523	1		124	1 377
Mpumalanga	418	298			233	949
North West	372	299			161	832
Northern Cape	258	157			85	500
Western Cape	377	529			237	1 143
Unknown Province					146	146
National departments	394	28	1 840	504	1 839	4 605
Grand Total	6 938	5 338	1 871	504	3 685	18 336

(3) GPAA has conducted a pilot study in 2014, and is continuing with both, the qualitative and quantitative research, to assess the high level of resignation claims received and processed in respect of the GEPF since April 2014. It is implied that personal indebtedness featured prominently as one on the reasons why government employees were cashing in on their pension, by resigning from their employment in order to exit the GEPF. Furthermore the pilot study indicates the following other reasons stemming from the interviews conducted with members:

• A prospect of capital for a business venture;
• The easy re-employment of the resignee by the same or other state employer to their similar position;
• Ill-informed members about defined benefits versus defined contribution;
• Exclusion of children from monthly pensions,
• Concerns about spouse benefits;
• Negative perceptions fuelled by the public sector discourse; and
• The limitation of the Government Employee Pension Law to provide added benefits and flexibility to the Fund’s structure.

The study at the GPAA continues to explore the resignation trends.

Reply:

(1) Information on whether (i) departments, (ii) constitutional institutions and (iii) public entities complied with the (a) mandatory and (b) additional cost containment measures specified in the National Treasury Instruction 01 of 2013/2014 is not available at the National Treasury.

(2) Information related to reasons on why there was (a) failure to comply with the mandatory and additional cost containment measures is not available at the National Treasury. Regarding (b), enforcement of the cost containment measures must be overseen firstly by the accounting officers of departments and constitutional institutions and by accounting authorities of public entities, secondly by the relevant arm of state and finally by the Auditor-General of South Africa to ensure compliance.

Reply:

1. No metropolitan municipality received a disclaimer or adverse audit opinion for the
   2013-14 financial year.

A total of 58 municipalities (names supplied in the attached spreadsheet) had either a disclaimer or adverse audit opinion, as follows:

District municipalities: 5 disclaimer opinions and 1 adverse opinion

Local municipalities: 50 disclaimer opinions and 2 adverse opinions

 

District and local municipalities fall within the oversight of Provincial Government hence not all the information needed to fully respond to this parliamentary question is held by the National Treasury. Enquiries with the respective Provincial Treasuries have revealed that they too do not keep all the information needed to dispose of this matter.

In order to respond fully and properly, the National Treasury requests a period of 6-8 weeks to further consult with the respective Provincial Treasuries and the affected municipalities to collect and analyse the outstanding information.

In the interim, based on the information available to the National Treasury, all 58 affected municipalities reported that they had audit committees in place. Data on the audit committee meetings held during 2013-14 are shown in the graph below. It should be noted that all municipalities that held less than four meetings are non-compliant with the MFMA.

 

 

2. See table below;

No.	Province	Municipality	Type	Audit opinion	Audit Committee (AC)	No of times AC met during 2013/14 FY
1	EC	OR Tambo District	District	Disclaimer	Yes	3
2	EC	Great Kei	Local	Disclaimer	Yes	4
3	EC	Ikwezi	Local	Disclaimer	Yes	No Info
4	EC	Inkwanca	Local	Disclaimer	Yes	3
5	EC	Inxuba Yethemba	Local	Disclaimer	Yes	1
6	EC	Lukhanji	Local	Disclaimer	Yes	3
7	EC	Makana	Local	Disclaimer	Yes	3
8	EC	Mbizana	Local	Disclaimer	Yes	4
9	EC	Mhlontlo	Local	Adverse	Yes	4
10	EC	Ndlambe	Local	Disclaimer	Yes	4
11	EC	Ngqushwa	Local	Disclaimer	Yes	3
12	EC	Ntabankulu	Local	Disclaimer	Yes	3
13	EC	Sundays River Valley	Local	Disclaimer	Yes	4
14	FS	Letsemeng	Local	Disclaimer	Yes	5
15	FS	Mafube	Local	Disclaimer	Yes	4
16	FS	Maluti-A-Phofung	Local	Disclaimer	Yes	3
17	FS	Mantsopa	Local	Disclaimer	Yes	5
18	FS	Matjhabeng	Local	Disclaimer	Yes	3
19	FS	Moqhaka	Local	Disclaimer	Yes	No Info
20	FS	Nala	Local	Disclaimer	Yes	1
21	FS	Ngwathe	Local	Disclaimer	Yes	1
22	FS	Phumelela	Local	Disclaimer	Yes	2
23	GP	Westonaria	Local	Adverse	Yes	4
24	KZN	Amajuba District	District	Disclaimer	Yes	3
25	KZN	Hlabisa	Local	Disclaimer	Yes	4
26	KZN	Jozini	Local	Disclaimer	Yes	3
27	LP	Mopani District	District	Adverse	Yes	5
28	LP	Vhembe District	District	Disclaimer	Yes	4
29	LP	Ba-Phalaborwa	Local	Disclaimer	Yes	6
30	LP	Ephraim Mogale	Local	Disclaimer	Yes	5
31	LP	Fetakgomo	Local	Disclaimer	Yes	6
32	LP	Thabazimbi	Local	Disclaimer	Yes	No Info
33	LP	Tubatse	Local	Disclaimer	Yes	3
34	MP	Emakhazeni	Local	Disclaimer	Yes	3
35	MP	Emalahleni	Local	Disclaimer	Yes	4
36	MP	Mkhondo	Local	Disclaimer	Yes	4
37	MP	Msukaligwa	Local	Disclaimer	Yes	4
38	MP	Thaba Chweu	Local	Disclaimer	Yes	6
39	NW	Dr Ruth S Mompati	District	Disclaimer	Yes	4
40	NW	Ngaka Modiri Molema	District	Disclaimer	Yes	No Info
41	NW	Ditsobotla	Local	Disclaimer	Yes	No Info
42	NW	Greater Taung	Local	Disclaimer	Yes	4
43	NW	Lekwa-Teemane	Local	Disclaimer	Yes	4
44	NW	Mamusa	Local	Disclaimer	Yes	4
45	NW	Maquassi Hills	Local	Disclaimer	Yes	2
46	NW	Tswaing	Local	Disclaimer	Yes	No Info
47	NW	Ventersdorp	Local	Disclaimer	Yes	2
48	NC	!Kheis	Local	Disclaimer	Yes	No Info
49	NC	Dikgatlong	Local	Disclaimer	Yes	No Info
50	NC	Ga-Segonyana	Local	Disclaimer	Yes	No Info
51	NC	Kamiesberg	Local	Disclaimer	Yes	No Info
52	NC	Karoo Hoogland	Local	Disclaimer	Yes	No Info
53	NC	Kgatelopele	Local	Disclaimer	Yes	No Info
54	NC	Magareng	Local	Disclaimer	Yes	No Info
55	NC	Phokwane	Local	Disclaimer	Yes	No Info
56	NC	Renosterberg	Local	Disclaimer	Yes	No Info
57	NC	Thembelihle	Local	Disclaimer	Yes	No Info
58	NC	Tsantsabane	Local	Disclaimer	Yes	No Info

Reply:

KALAWE M R4 552 981.00

MEYER WH R3 661 080.00

KWINANA Y R753 522.15

MYENI DC R846 115.62

ROSKRUGE C R427 486.62

MPONDO B R553 089.69

MABIZELA A R285 181.10

NAITHANI R R272 480.29

LEPULE R R221 197.71

KHUMALO A R206 404.80

KUBEKA M R480 056.90

TAMBI J R200 590.92

DIXON AD R171 116.18

Reply:

SAA has a streamlined hand-over process for the transportation of bar items, major galley equipment and high value inflight items from the catering unit to the aircrafts (outbound flights) as well as from the aircrafts back to the catering unit (inbound flights). This process has security visibility in order to ensure that service providers adhere to SAA’s normal operating procedures and the security of these items is maintained.

(i) Bar Items – SAA monitors consumption daily and provides monthly reports and wherever there are spikes in consumption investigation pursues.

(ii) Major Galley Equipment – SAA provides the galley loading plans to the caterers, the caterers need to adhere to and not deviate from these loading plans. Checklists are in place to ensure that the caterers do not deviate from the loading plans and any deviations attract penalties.

(iii) High-value inflight items – SAA has a rigorous security and recycling program where items such as headsets, amenity kits, cabin comfort items and catering items are recycled and rotated to ensure that SAA derives full value for money on all its recyclable and re-usable items.

Reply:

(aa) SAA started buying The New Age newspaper in March 2011. SAA spent a total amount of R55,200.00 for the Financial Year 2010/11 on The New Age newspaper. During this period, the newspaper was only supplied onboard. The quantities were 24000 copies per month at a cost per copy of R2.30.

(bb) During the Financial Year 2011/12 SAA spent a total of R1, 864 560.00. For the period April to November 2011, the applicable quantities were 24000 copies per month at a cost per copy of R2.30 for onboard use only. For the remainder of the Financial Year, the quantities increased from 24000 per month to 154 000 copies per month at a cost per copy of R2.31 with the newspaper supplied to domestic onboard, Lounges and Airports.

(cc) During the Financial Year 2012/13 SAA total spend on The New Age newspaper was R4,268,880 00. The applicable quantities per month were 154 000 copies at cost per copy of R2.31.

(dd) During the Financial Year 2013/14, SAA total spend on the New Age newspaper was R4, 268 880.00. The applicable monthly quantities and cost per copy remained the same as the previous Financial Year.

(ee) During the 2014/15 Financial Year, SAA total spend was R2, 439 360.00 for the entire Financial Year. SAA spent R1067 220.00 for the first three months period (April to June 2014) of Financial Year 2014/15. For the second semester (July 2014 to March 2015) of financial year 2014/15, the quantities delivered to SAA reduced from 154 000 copies per month to 66000 per month with this newspaper being made available only onboard, as a complimentary item. A total spend of R1, 372 140.00 was incurred on The New Age newspaper for the July 2014 to March 2015 period at a cost per copy of R2.31

(i) The April 2015-March 2016 financial year to date spent as at end August 2015 is R762 300.00. The applicable monthly quantities are 66000 copies at cost per copy of R2.31.

Reply:

When all laws, regulations and instruction notes issued by organ of state, compliance with the cost containment measures has to be enforced and overseen (i) firstly within each department, constitutional institution and public entity, (ii) secondly, by the relevant legislative arm of the state and (iii) finally, by the Auditor-General of South Africa.