Questions and Replies
26 May 2023 - NW1434
Herron, Mr BN to ask the Minister of Finance
(1)With regard to the recent announcement that conditional grant funding will be withheld from municipalities due to non-performance, (a)(i) which municipalities in each province were first identified as at risk of not spending part or all of their conditional grant funding and were given an opportunity to motivate why they should not have their grant funding stopped and (ii) what are the relevant details of the specified funding, (b)(i) which municipality in each province was not able to sufficiently motivate for the full transfer of their allocated conditional grant funding and will have that funding stopped and (ii) what are the relevant details of the specified grant funding and (c) what is the total amount nationally, from each conditional grant, that will be stopped and not paid to municipalities; (2) what is the impact on the residents of the specified municipalities of the reduction in their grant funding; (3) what role does he envisage the (a) provincial governments and (b) National Treasury should play in supporting municipalities to perform and spend their funding allocations; (4) whether he has found that the National Treasury and/or the respective provincial governments fulfilled their obligations to support the municipalities; if not, why not; if so, what are the relevant details?
Reply:
1. This is an annual practice which has been institutionalized over the last 10 years, to maximise spending and effectiveness of conditional grants. Such withholding and reallocation of grants is published in Government Gazette No. 48327 of 29 March 2023.
On 17 February 2023 National Treasury initiated the process of stopping and re-allocating the 2022/23 conditional grant allocations in terms of section 18 of the Division of Revenue Act (Act No. 5 of 2022) (DoRA), as amended by the Division of Revenue Amendment Act (Act No. 15 of 2022) (DoRAA). NT issued 171 letters to all under-performing municipalities on 17 February 2023 covering about 11 conditional grants that were reflecting under-performance against the 2022/23 conditional grant allocations. This process was done in consultation with the transferring national accounting officers/ departments that are responsible for the administration of the conditional grants.
The 2022/23 mid-year expenditure reports in terms of section 10 of the 2022 DoRA as amended and section 71 and 72 of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003) (MFMA) were utilized to determine if the municipalities are under-performing against their allocations as they report to both National Treasury and to the transferring officers.
In terms of section 18 of DoRA and section 38 (2)(a) of the MFMA the affected municipalities were afforded an opportunity to make a written presentation to National Treasury, by providing a motivation on why the grants should not be stopped. The municipalities were required to submit the motivation to the National Treasury within seven days after the receipt of the letters regarding expenditure against their allocations and project progress on the ground.
In total an amount of R7.4 billion was proposed to be stopped from municipalities in terms of section 18 of the Division of Revenue Act, 2022 (Act No. 5 of 2022) for various conditional grants due to their poor performance or slow spending as proposed by either the Transferring Officer (national department) administering the conditional grant or National Treasury. An amount of R2.7 billion was ultimately not transferred from the initial proposed amount of R7.4 billion. The details of the proposed non-transferred amounts per conditional grant per province are in the tables as per of Annexure A.
2. The stopping and non-transfer of the conditional grants against underperforming municipalities is to assist municipalities to address any issue hindering the spending of their conditional grant allocation in that year i.e. late approval of projects, late procurement, litigation etc., and re-allocate to municipalities that are ready to spend and have shovel ready projects. This is because the funds would not in any case be spent by the municipalities’ funds are proposed to be stopped from, therefore minimizing underperformance of the overall programme. Once these municipalities have addressed their challenges and they are ready, it will be able to spend its future annual allocations which are not normally affected by in year spending.
Therefore, the stopping of the allocation is to ensure efficiency in spending and protecting against possible misuse and usage of the conditional grants for operational purposes while the municipality is being supported to resolve its challenges.
3. With respect to infrastructure conditional grants, specific support includes technical support and assistance provided by DCoG’s Municipal Infrastructure Support Agent (MISA) for infrastructure delivery. Further, the municipalities that are affected by the stopping / suspension process due to governance and financial challenges will continue receiving support from NT, DCoG and the relevant stakeholders under the MIG cost reimbursement and invoice verification which has been a continuous process over the years. This is a process of safeguarding the cash in the interim before stopping of allocations is considered. In this case municipalities only have their funds transferred once an invoice against work done has been verified by MISA, provincial government, and national government.
The National Treasury has also made funds available in various forms of capacity support in ensuring municipalities and provinces have the capacity to implement infrastructure projects. For example, five per cent of the Municipal Infrastructure Grant and Integrated Urban Development Grant may be used for project management units in municipalities and 3 per cent of the Urban Settlements Development Grant can be used for capacity in metropolitan municipalities, and continuous financial management support and guidance by both National and Provincial treasuries on the usage and reporting of conditional grants is provided to municipalities in this regard.
Various other conditional grants provide for the option to convert part of the capital infrastructure grants for technical support to capacitate municipalities to spend more effectively. This could be in the form of engaging district municipalities to implement stalled projects on behalf of struggling municipalities, utilization of both national entities and municipal entities to assist municipalities (either through a service level agreement (SLA) or agency vs. principal option) to roll out struggling projects. National Treasury further utilizes the services of the provincial treasuries to assist struggling municipalities in terms of the system of “delegated municipalities” while National Treasury focusses on the non-delegated ones. A host of experts are also available to these municipalities through the support of the Municipal Finance Improvement Programme (MFIP) from National Treasury.
The National Treasury and relevant department administering the grants (Transferring Officers) with the support of the respective provinces have fulfilled their obligations in supporting the municipalities. On a quarterly basis, the national transferring officers conduct quarterly meetings across the country with the municipalities that receive their grants to assess performance of the previous quarter and advise municipalities on how to mitigate the challenges causing them to underperform. In addition, the national transferring officers conduct site visits to confirm the performance reported by municipalities align, where National Treasury is sometimes also invited.
Further CoGTA holds under-performance meetings with targeted municipalities to get to the root causes of underperformance. MISA also plays a crucial part in that it provides technical support to municipalities that experience challenges in the implementation of their infrastructure programmes.
Despite all the interventions in place, some municipalities still underspend. It is ultimately the responsibility of municipalities to take up the support provided and make their own decisions but still be accountable.
Annexure A
details of the proposed stopping amounts per conditional grant per province
Municipal Infrastructure Grant (MIG)
Integrated National Electrification Programme (INEP) Grant
Regional Bulk Infrastructure Grant (RBIG)
Water Services Infrastructure Grant (WSIG)
Energy Efficiency Demand Side Management (EEDSM) Grant
Neighbourhood Development Partnership Grant (NDPG)
Informal Settlements Upgrading Partnership Grant (ISUPG)
Public Transport Network Grant (PTNG)
Urban Settlements Development Grant (USDG)
Rural Roads Asset Management Systems (RRAMS) Grant
Annexure B
The following 171 municipalities received letters of intention to stop a portion of their conditional grants:
Eastern Cape (22 letters)
- Buffalo City;
- NMA Nelson Mandela Bay;
- Amatole District Municipality (DM);
- Joe Gqabi DM;
- O.R. Tambo DM;
- Alfred Nzo DM;
- Dr Beyers Naude Local Municipality (LM);
- Makana LM;
- Ndlambe LM;
- Kou-Kamma LM;
- Mbhashe LM;
- Great Kei LM;
- Emalahleni LM;
- Dr AB Xuma LM;
- Enoch Mgijima LM;
- Elundini LM;
- Senqu LM;
- Walter Sisulu LM;
- Ngquza Hill LM;
- Port St Johns LM;
- Matatiele LM; and
- Winnie Madikizela-Mandela LM.
Free State (17 letters)
- Mangaung;
- Fezile Dabi DM;
- Letsemeng LM;
- Kopanong LM;
- Mohokare LM;
- Masilonyana LM;
- Tokologo LM;
- Matjhabeng LM;
- Nala LM;
- Setsoto LM;
- Dihlabeng LM;
- Nketoana LM;
- Phumelela LM;
- Mantsopa LM;
- Ngwathe LM;
- Metsimaholo LM; and
- Mafube LM.
Gauteng (9 letters)
- City of Ekurhuleni;
- City of Johannesburg;
- City of Tshwane;
- Emfuleni LM;
- Midvaal LM;
- Lesedi LM;
- Mogale City LM;
- Merafong City LM; and
- Rand West City LM.
KwaZulu-Natal (34 letters)
- EThekwini;
- UThukela DM;
- UMzinyathi DM;
- Amajuba DM;
- Zululand DM;
- UMkhanyakude DM;
- King Cetshwayo DM;
- Harry Gwala;
- UMzumbe LM;
- UMuziwabantu LM;
- Ray Nkonyeni LM;
- UMshwathiLM;
- UMngeni LM;
- Msunduzi LM;
- iNkosi Langalibalele LM;
- Alfred Duma LM;
- eNdumeni LM;
- Nquthu LM;
- UMvoti LM;
- Newcastle LM;
- Dannhauser LM;
- eDumbe LM;
- uPhongolo LM;
- Ulundi LM;
- Jozini LM;
- Big Five Hlabisa LM;
- UMhlathuze LM;
- Mthonjaneni LM;
- Nkandla LM;
- KwaDukuza LM;
- Maphumulo LM;
- Greater Kokstad LM;
- UMzimkhulu LM; and
- Dr Nkosazana Dlamini Zuma LM.
Limpopo (20 letters)
- Mopani DM;
- Vhembe DM;
- Capricorn DM;
- Sekhukhune DM;
- Greater Giyani LM;
- Greater Letaba LM;
- Greater Tzaneen LM;
- Musina LM;
- Thulamela LM;
- Makhado LM;
- Blouberg LM;
- Polokwane LM;
- Lepelle-Nkumpi LM;
- Thabazimbi LM;
- Lephalale LM;
- Bela-Bela LM;
- Mogalakwena LM;
- Modimolle-Mookgophong LM;
- Elias Motsoaledi LM; and
- Makhuduthamaga LM.
Mpumalanga (14 letters)
- Chief Albert Luthuli LM;
- Msukaligwa LM;
- Mkhondo LM;
- Dr Pixley ka Isaka Seme LM;
- Lekwa LM
- Dipaleseng LM;
- Emalahleni LM;
- Steve Tshwete LM;
- Emakhazeni LM
- Thembisile Hani LM;
- Thaba Chweu LM;
- Nkomazi LM;
- Bushbuckridge LM; and
- City of Mbombela LM.
Northern Cape (23 letters)
- Richtersveld LM;
- Nama Khoi LM;
- Kamiesberg LM;
- Hantam LM:
- Karoo Hoogland LM;
- Khâi-Ma LM;
- Ubuntu LM;
- Umsobomvu LM;
- Emthanjeni LM;
- Kareeberg LM;
- Renosterberg LM;
- Thembelihle LM
- Siyathemba LM;
- Siyancuma LM;
- !Kai !Garib LM;
- !Kheis LM;
- Tsantsabane LM;
- Dawid Kruiper LM;
- Sol Plaatjie LM;
- Dikgatlong LM;
- Joe Morolong LM;
- Ga-Segonyana LM; and
- Gamagara LM.
North West (13 letters)
- Dr Ruth Segomotsi Mompati DM;
- Moretele LM;
- Madibeng LM;
- Rustenburg LM;
- Moses Kotane LM;
- Ratlou LM;
- Ditsobotla LM;
- Ramotshere Moiloa LM;
- Naledi LM;
- Mamusa LM;
- Lekwa-Teemane LM;
- City of Matlosana LM; and
- JB Marks LM.
Western Cape (19 letters)
- City of Cape Town;
- Cape Winelands DM;
- Matzikama LM;
- Cederberg LM;
- Saldanha Bay LM;
- Swartland LM;
- Witzenberg LM;
- Stellenbosch LM;
- Breede Valley LM;
- Langeberg LM;
- Overstrand LM;
- Cape Agulhas LM;
- Kannaland LM;
- Mossel Bay LM;
- George LM;
- Bitou LM;
- Knysna LM;
- Prince Albert LM; and
- Beaufort West LM.
NB!! Details of the amounts stopped per province, per municipality and per conditional grant are attached as an annexure (Government Gazette No. 48327 of 29 March 2023).
26 May 2023 - NW1405
Buthelezi, Mr EM to ask the Minister of Finance
Considering the fact that load shedding poses a threat to financial stability and that insufficient and unreliable electricity supply is likely to threaten the success of small and medium-sized enterprises (SMEs) as it has caused a reduction in business activity from SMEs, what measures has the National Treasury put in place to aid business owners in mitigating the financial impact of load shedding on their businesses, especially the SMEs located in rural areas?
Reply:
National Treasury is concerned with the impact of insufficient and unreliable electricity supply on the broader economy, including SMEs and households. In this regard, National Treasury has, as announced in 2023 Budget Speech, undertaken various interventions. Some aim to reduce the negative impact as a result of load shedding, while other measures aim to encourage an expansion in the country’s generation capacity – particularly from renewables.
The first intervention relates to the measures taken to return ESKOM to stability and sustainability given that ESKOM remains the principal electricity generat.ing entity. National Treasury proposed a total debt relief arrangement for Eskom of R254 billion. This consists of two components. One is for R184 billion, which represents Eskom’s full debt settlement requirement in three tranches over the medium term. The second is a direct take-over of up to R70 billion of Eskom’s loan portfolio in 2025/26. Because of the structure of the debt relief, Eskom will not need further borrowing during the relief period. Government will finance the arrangement through a R66 billion baseline provision announced in the 2019 Budget, and R118 billion in additional borrowings over the next three years.
Secondly, as announced in the 2023 Budget, from 1 March 2023, businesses will be able to reduce their taxable income by 125 per cent of the cost of an investment in renewables. There will be no thresholds on the size of the projects that qualify, and the incentive will be available for two years to stimulate investment in electricity generation capacity from renewables in the short term. Further, there is also a new temporary tax incentive introduced to encourage households to invest in clean electricity generation capacity which can supplement electricity supply. Individuals who install rooftop solar panels from 1 March 2023 will be able to claim a rebate of 25 per cent of the cost of the panels, up to a maximum of R15 000. This can be used to reduce their tax liability in the 2023/24 tax year. This incentive will be available for one year.
Thirdly, also announced in the 2023 Budget, National Treasury will make changes to the Bounce Back Loan Guarantee Scheme (introduced in 2022) to incentivize renewable energy, rooftop solar, and address energy-related constraints experienced by small and medium enterprises. Government will guarantee solar-related loans for small and medium enterprises on a 20 per cent first-loss basis. National Treasury will launch the Energy Bounce Back Scheme in the coming weeks.
For more information, I refer the Honourable Member to the 2023 Budget Review and subsequent Bills introduced in Parliament or published for public comment on the National Treasury website.
17 May 2023 - NW1401
Masualle, Mr PG to ask the Minister of Finance
Whether, given that in March 2023 the International Monetary Fund cut the Republic’s gross domestic product growth outlook to 0,1% for 2023 (details furnished), he has found that at this rate of negligible growth the Republic is likely to experience a recession this year; if not, what is the position in this regard; if so, what are the relevant details?
Reply:
Yes, the IMF has projected growth of 0.1 per cent for 2023 in its latest World Economic Outlook, published last month during its Spring Meetings, which is lower than the National Treasury’s projected GDP growth of 0.9 per cent in 2023 published in the 2023 Budget Review. There are other more recent projections on growth in 2023, and market consensus is currently for growth of 0.6 per cent in 2023. While growth projections are low and risks are high, the likelihood of a recession will largely depend on the impact of load shedding along with high inflation, rising borrowing costs and weak external demand. The National Treasury will announce a further update on its projections in the MTBPS later this year in October 2023.
The 2023 Budget projection itself was a downward adjustment from projected growth of 1.4 per cent for 2023 in the MTBPS last year. The 2023 Budget revision was informed by the negative impacts of loadshedding on the economy, stubbornly high inflation and accompanying rising borrowing costs and a relatively less supportive external environment among others. Since the publication of the Budget Review, some of the risks to the economy that were identified have materialized. These include the further worsening of domestic structural constraints in electricity and logistics, which continue to limit production and exports; a higher cost of living and higher borrowing costs which are expected to weigh on consumption and investment. Additionally, real GDP growth in the final quarter of 2022 was worse than anticipated by most forecasters, including the Treasury, (declining by 1.3 per cent). This contraction meant that annual GDP in 2022 came out weaker than expected, at 2 per cent, posing adverse carry-over effects into 2023. Beyond this, significant risks still remain including weaker global growth and lower commodity prices.
On balance however, while the occurrence of these risks weighs on the 2023 Budget Review economic growth outlook, available high-frequency data at the start of 2023 points to a marginal rebound in GDP growth in the first quarter. This is also supported by the lower than initially anticipated intensity of load-shedding in the first quarter of 2023. Moreover, GDP growth is expected to gradually recovery in the second half of 2023, as the worst impact of the electricity supply shortages start to ease following the peak winter demand period, and some electricity generation capacity is restored. Taken together, the prevailing view is for a positive GDP growth in 2023, albeit with higher downside risks compared to the time of the Budget Review. Lastly, the additional potential impact of the prevailing risks to the outlook can be seen in the uniform downward revisions by other official forecasters, which on aggregate still show positive growth projections in 2023.
17 May 2023 - NW1277
Shaik Emam, Mr AM to ask the Minister of Finance
(1)Whether all tenders awarded by municipalities are reported to the National Treasury; if not, what is the position in this regard; if so, 2. whether he will furnish Mr A M Shaik Emam with a list of the (a) tenders awarded in the Zululand District Municipality, (b) names of the companies, (c) monetary value of the tenders, (d) itemised billing and (e) legal costs in the past financial year; if not, why not, in each case; if so, what are the relevant details in each case?
Reply:
1. No, municipalities do not currently report all their tenders to the National Treasury.
National Treasury issued MFMA Circular 83 (2016) regarding the advertisement of bids and the publication of notices in respect of awarded bids, cancelled bids, variations, and extensions of existing contracts on the eTender Publication Portal. This circular makes provision for the publication of tender opportunities and awards on the National Treasury Tender portal. Since this is a Circular, it is not mandatory for municipalities to publish procurement opportunities on the Treasury tender portal, unless the Municipality Council adopts the circular as policy. Some municipalities publish their tender opportunities while others are not publishing on the eTenders portal. National Treasury is considering reforms to make such publication of tender awards mandatory, but this will likely require legislative amendments.
2. We do not have any tender information regarding Zululand District Municipality or any procurement-related data for this municipality.
17 May 2023 - NW1271
Madokwe, Ms P to ask the Minister of Finance
(1)Whether the National Treasury is informed of any investigations into the affairs of municipalities; if not, why not; if so, (2) whether he was informed of the squandered millions of Rand that were allocated to build the Ngcobo stadium in the Dr A B Xuma Local Municipality without being completed; if not, why not; if so, what are the relevant details; (3) whether he has been informed that the stadium was not completed when the municipality asked for a top up for the Nogqala bridge in Ward 19 that was initially allocated a budget of approximately R12,9 million, but left incomplete; if not, why not; if so, (4) whether the National Treasury has any obligation to regularly assess projects that municipalities claim to have spent money on and commission speedy investigations into corruption with the intention to ensure the prosecution of persons who are accountable; if not, why not; if so, what are the relevant details?
Reply:
1. I presume the Honourable Member is referring to a criminal investigation by the South African Police Services (SAPS). Like all such criminal investigations, the National Treasury is generally not informed of such investigations, unless any specific request is required from the National Treasury by SAPS. In terms of section 106 of the Municipal System Act, the MEC for Local Government (Cooperative Governance and Traditional Affairs) may conduct investigations if there are allegations of maladministration, fraud and corruption and other serious malpractices. The MEC would generally inform the National Treasury of the outcome of the investigation.
Also in terms of Section 5(2)(d) of the Municipal Financial Management Act (MFMA) “National Treasury may investigate any system of financial management and internal control in any municipality or municipal entity and recommend improvements”
2. National Treasury was not informed of the millions of Rand that was allocated by Dr A B Xuma Local Municipality to build Ngcobo Stadium.
a) The Transferring Officer i.e., the national department administering the conditional grant is responsible for the allocation and monitoring of funds to municipalities, as well as the approval of projects to be implemented and the budgets for the projects. The Department of Cooperative Governance (DCoG) administers the Municipal Infrastructure Grant (MIG) and National Treasury receives monthly financial reports, and quarterly financial and non-financial reports on the overall programme performance, and not on specific projects.
b) The specific details pertaining to the said project would be at the disposal of DCoG, i.e. the budgeted amount for the project, the progress on the project, and whether the project has been completed or not and also the reasons.
3. National Treasury was not informed that the stadium was incomplete when the municipality asked for a top up for the Nogqala bridge in Ward 19.
a)The National Treasury is not ordinarily informed of what projects have been approved for implementation and specific project budget for a particular year. The department administering the conditional grant is responsible for the administration of the programme and the said department must hold recipient municipalities of the grant accountable on the funding, approved projects and also ensure compliance with the conditions of the funding as outlined in the conditional grant framework.
4.Unless this is a conditional grant with such conditions, the DCoG is responsible to ensure compliance with the MIG framework in the Division of Revenue Act by holding municipalities accountable on allocated funding and approved projects to ensure projects are implemented and completed at the approved amounts, in compliance with the set conditions. Where funds are unspent at the end of the year and are not eligible for rollover and or funds are not spent in line with the intended purpose, the DCoG will not recognise such expenditure and, National Treasury will be duly informed and the said funds will be recouped from future transfers due to the municipality. Where maladministration, fraud and corruption and other serious malpractice is suspected, the onus is on the MEC of Cooperative Governance and Traditional Affairs to initiate an investigation in terms of section 106 of the Municipal Systems Act.
17 May 2023 - NW1227
Breytenbach, Adv G to ask the Minister of Finance
Whether, with regard to a legal obligation on a certain person (name furnished) to declare the person’s possession of currency in terms of section 15 of the Customs and Excise Act, Act 91 of 1964, upon his entry into the Republic, and in light of the fact that the failure to so declare is an offence in terms of section 81 of the specified Act, wherein the definition of goods includes currency, the SA Revenue Service has laid a criminal complaint with the SA Police Service in terms of the statute above read with section 34(2) of the Prevention and Combating of Corrupt Activities Act, Act 12 of 2004; if not, what is the position in this regard; if so, what are the relevant details?
Reply:
Section 4(3) of the Customs and Excise Act prohibits the Commissioner and/or SARS officials from disclosing any information relating to any person, firm or business acquired in the performance of SARS duties, except in circumstances outlined in the Act. Accordingly, SARS is not able to disclose information requested to the Minister and Parliament.
09 May 2023 - NW923
George, Dr DT to ask the Minister of Finance
Whether the Public Investment Corporation will use funds from the Government Employment Pension Fund to invest in Eskom in the (a) 2023-24 financial year and (b) any time during the medium-term expenditure framework; if not, what is the position in this regard; if so, what are the relevant details?
Reply:
The Public Investment Corporation (PIC) invests according to the mandates of its clients in line with section 10(4) of the PIC Act as amended. Any potential investment in Eskom will be in line with client mandates or their approval and assessed on its merits taking into account the expected returns and associated terms and conditions, especially the security thereof.
09 May 2023 - NW1233
Abrahams, Ms ALA to ask the Minister of Finance
(1)With reference to the Department of Social Development’s third quarter expenditure as at 31 December 2022, what were the detailed reasons that (a) R755,303 million was approved by the National Treasury to be transferred to the Department of Defence and (b) R2,937 billion was approved by the National Treasury to be transferred to the Department of Public Enterprises; (2) whether this was a once off shift of funds; if not, what is the position in this regard; if so, what are the relevant details; (3) whether any other department had funds shifted for this purpose; if not, what is the position in this regard; if so, what was the Rand value thereof; (4) what (a) is the total value of funds shifted from the Department of Social Development in the 2022 23 financial year and (b) was the purpose thereof?
Reply:
1. The National Treasury regularly revises or transfers funds of different programmes, when allowed by the law, via the Budget or Adjustment processes, published in various Adjusted Appropriation Bills and the Adjusted Estimates of Expenditure. Information is available in such Budgetary documents.
a) R755.303 million was transferred from the Department of Social Development to the Department of Defence to cater for the extended deployment of about 1 495 members of the South African Defence Force members in Mozambique until 15 April 2023. These funds will be used for compensation of employees and for items such as food rations, fuel, ammunition and transport. Additional details on the funding shift are provided on page 80 and 202 of the 2022 Adjusted Estimates of National Expenditure.
b) R2.937 billion was shifted to the Department of Public Enterprises to assist Transnet SOC Limited to repair infrastructure and assets that were damaged by the floods that occurred in April 2022 in KwaZulu-Natal. The National Treasury has put conditions on the allocation, to ensure that funds are spent towards approved areas and this will be monitored through monthly meetings to be held between the National Treasury, the Department of Public Enterprises and Transnet.
2. The shift was approved by Parliament through the Adjusted Appropriation Act. This was done after the Department of Social Development (DSD) declared savings. This was once-off adjustment.
3. No other departments had funds shifted for these purposes.
4. (a) A total of R9.162 billion savings was declared by DSD in 2022/23 and approved by parliament through the Adjusted Appropriation Act and the 2nd Adjusted Appropriation Act. R5.462 billion in the Adjusted Appropriation Act and R3.7 billion in the 2nd Adjusted Appropriation Act. The shifts in the adjustment budget are described above. (b) In the 2nd adjustment budget:
(i) R2.4 billion was shifted to the Department of Communication and Digital Technologies for the recapitalisation of the South African Post Office;
(ii) R1 billion was shifted to the Department of Public Enterprises for settlement of business rescue plan obligations; and
(iii) R300 million was shifted to the Department of Home Affairs for political party funding.
Despite these shifts, it is likely that DSD has underspent in 2022/23, to be confirmed when DSD submits its Section 32 Report (and the statement) in terms of the Public Finance Management Act.
09 May 2023 - NW1133
Buthelezi, Mr EM to ask the Minister of Finance
(1)Whether the National Treasury intends to implement reforms to decrease the continued support for (a) loss-making state companies, (b) spending on temporary welfare grants and (c) increased debt-service costs which are predicted to see the budget deficit widen to 6,5% of gross domestic product in the fiscal year ending 31 March 2024; if not, why not in each case; if so, what are the relevant details in each case; (2) whether the National Treasury will heed the warnings from the International Monetary Fund; if not, why not; if so, what are the relevant details?
Reply:
1 (a) Between 2012/13 and 2021/22, state-owned companies (SOCs) received about R266.6 billion in bailouts from government, which has crowded out important social and other expenditure. The 2022 Budget Review outlined the need for a new framework for managing bailouts to state-owned companies to reduce fiscal risks and promote long-overdue reforms. In addition, National Treasury has issued an Instruction Note in 2020 (No.09 of 2020/21) on the minimum criteria which must be met before entities submit for approval or concurrence with regards to guarantees, indemnities, security and restriction on borrowings. The above-mentioned Instruction Note has resulted in a decrease in requests for government guarantees from SOCs as a result of requests not meeting minimum criteria. Managing the state’s guarantee portfolio is therefore a key mechanism to decrease the continued support for loss-making SOCs.
(b) The COVID-19 SRD grant has been extended only until 2023/24. Government is still considering various options, including employment and labour market activation initiatives, in providing support to the working-age population. No final decision yet.
(c) Between the 2022 Budget and 2023 Budget, the consolidated budget deficit expected for 2022/23 declined from 6 per cent to 4.2 per cent of GDP. The deficit is projected to narrow to 4 per cent of GDP in the fiscal year ending 31 March 2024 before reaching 3.2 per cent of GDP in 2025/26, as the main budget deficit narrows and social security funds, provinces and public entities move into a combined cash surplus in the outer year. Over the medium term, the composition of consolidated spending improves, continuing the shift towards capital rather than current spending. The medium-term fiscal strategy aims to:
i. Achieve fiscal sustainability by narrowing the budget deficit and stabilising debt.
ii. Support economic growth by maintaining a sustainable fiscal stance, directing resources towards infrastructure, increasing spending on policy priorities and contributing to energy reforms.
iii. Reduce fiscal and economic risks, including building fiscal buffers for future shocks and providing targeted conditional in-year support to key public entities and by taking a portion of Eskom’s debt with strict conditions.
2. To this end, the National Treasury remains committed to narrowing the budget deficit and stabilising debt. In the medium term, this will be achieved mainly by controlling non-interest expenditure growth and the use of a portion of revenue improvements to narrow the budget deficit and keep debt stabilisation on track. In-year allocations are made to mitigate economic and fiscal risks associated with selected SOEs.
09 May 2023 - NW924
George, Dr DT to ask the Minister of Finance
Whether he will provide Dr D T George with a full list of the loans provided by the Public Investment Corporation to any (a) person, (b) organisation and/or (c) entity in the past five years; if not, why not; if so, what are the relevant details?
Reply:
The PIC’s does not provide any loans to individuals in their personal capacity. The PIC invests in companies or entities through the provision of funding using debt instruments that are disclosed in clients’ Integrated Annual Reports and its Annexures, that is available on the websites of the Clients.
09 May 2023 - NW617
Kruger, Mr HC to ask the Minister of Finance
(1)Whether sole proprietors will be eligible to claim a 125% tax deduction when they install solar energy panels; if not, what is the position in this regard; if so, what are the relevant details; (2) whether sole proprietors will be classified as individuals who are only able to claim a rebate of 25% of the cost of solar energy panel installations; if not, what is the position in this regard; if so, what are the relevant details?
Reply:
1. Sole proprietors earn business income as the base for the personal income tax. To calculate the taxable business income they would be able to claim depreciation and other capital allowances just like any other business. Therefore, should their investment conform to the requirements of the allowance, they will be able to claim the 125% tax deduction.
2. The rebate of 25% will not be available on any expenses that already enjoyed the 125% deduction against business income. If that deduction was not claimed, then a sole proprietor will be able to claim the rebate.
The policy process for the 2023 tax legislative amendments is underway. The Frequently Asked Questions document that was published on the day that the Minister of Finance delivered the Budget Speech states (and available on the website www.treasury.gov.za) that :
“This incentive will be included in the annual tax amendments. A draft version of the legislation will be published for public comment no later than the publication date of the 2023 Draft Taxation Laws Amendment Bill. The Minister tables tax bills during the Medium Term Budget Policy Statement (MTBPS) in October each year. Parliament considers the amendments after which the President can assent to the amendments – usually by January of the year after the announcement. The aim of this note [the FAQ document] and the draft legislation to follow is to provide as much upfront clarity as possible so that individuals do not feel they need to wait for the tax bills later in the year before making a decision to invest and benefit from the incentive. The guidance provided is, nevertheless, subject to the outcome of the consultative process on the proposal and Parliament’s ultimate decisions on the legislation giving effect to the
proposal.”
18 April 2023 - NW943
Buthelezi, Mr EM to ask the Minister of Finance
With reference to the greylisting of the Republic by the Financial Action Task Force, what possible pre-emptive impact has the National Treasury found this will have on the efforts to establish a national green finance taxonomy towards providing financial players with certainty of credible green, social and sustainable investments?
Reply:
We do not expect the greylisting by the Financial Action Task Force (FATF) to have any effect on any institutions implementing a Green Finance Taxonomy (GFT). The GFT is an important pillar in the comprehensive approach of reducing the carbon intensity of the South African economy. The primary purpose of the GFT is to provide market clarity for green/environmentally sustainable activities, thus reducing market risks. The GFT is a voluntary market tool and was established on 1 April 2022. While the Carbon Tax sets a price for emissions to help businesses fully internalize the costs of their activities, the GFT sets out those projects, investment and assets which are required to reduce the carbon intensity of companies (and thereby reduce their emissions). The GFT adopts international best practice in recognition of the fact that the capital required for investments into ‘green assets’ (as is the case generally) comes from both domestic and international sources.
In any case, as noted in National Treasury’s statement on the FATF greylisting: there are no items on the action plan that relate directly to the preventive measures in respect of South Africa’s financial sector. This reflects the significant progress that South Africa’s financial sector supervisors have made in the application of a risk-based approach to the supervision of banks and insurers. National Treasury therefore expects that the grey-listing will have limited impact on payments, broader financial stability or broader inward investment, including the use of the green finance taxonomy for green investment.
18 April 2023 - NW1232
Abrahams, Ms ALA to ask the Minister of Finance
What are the detailed reasons that the National Treasury declined the Department of Social Development’s proposal to increase the monthly COVID19 Social Relief of Distress grant from R350 to R420 for successful applicants when R1,769 billion was unspent and declared a saving for the 2022-23 financial year as per the third quarter expenditure statement?
Reply:
The budget process involves making many trade-offs, including between different priorities. As stated in the 2023 Budget Review, the extension of the COVID-19 SRD grant and the inflationary increases to social grants cost R65.3 billion. Given the priorities and pressures facing the 2023 Budget and Medium-Term Expenditure Framework, it is clear that there was (and is) limited fiscal space to accommodate the increase in the COVID-19 SRD grant values. Under spending or savings from 2022/23 do not go through the next year because of the large budget deficit. In addition, a broader agreement on the future of the COVID-19 SRD grant is required, including the financial implications of the proposed change, and how to finance it.
18 April 2023 - NW1137
Buthelezi, Ms SA to ask the Minister of Finance
Noting recent reports that the Nelson Mandela Bay Metropolitan Municipality used the declaration of the state of disaster to circumvent proper procurement processes, which resulted in the awarding of a contract to the value of R24,6 million (details furnished), and noting that the Republic is currently in a state of disaster, what preventative measures has his department put in place to ensure that, in the event of spending related to a state of disaster, there is no repeat of situations similar to what happened at the specified municipality?
Reply:
National Treasury issued MFMA circular 117 on 04 May 2022 titled “SCM Circular on reporting of procurement in response to the National State of Disaster as a result of severe weather events”
The purpose of the circular was mainly to provide a framework in relation to procurement in response to the national state of disaster as a result of the severe weather events and a need for greater transparency on procurement and expenditure related to the disaster.
All municipalities and municipal entities affected by the flood disaster, must when procuring goods and services, follow section 217 of the Constitution, the Municipal Finance Management Act and its regulations and circulars as well as supply chain management policies of institutions.
In addition to MFMA circular 117, National Treasury issued MSCOA Circular 14 on 16 May 2022 to give effect to the recording of disaster events in mSCOA.
Reporting and monitoring
As contained in MFMA circular 117, all municipalities and municipal entities affected by the disaster are required to report all disaster-related transactions on a weekly basis effective from 13 May 2022. Furthermore, all municipalities and municipal entities are required to report monthly as per sections 71(1) and 87(11) of MFMA for both municipalities and municipal entities respectively.
National Treasury has advised all municipalities and municipal entities affected by the disaster to utilize their internal audit units to undertake preventative audits for quality assurance on procurement to respond to the effects of the damage caused by floods.
The reporting template provided in MFMA circular 117 requires affected municipalities and municipal entities to report weekly and both MFMA section 71(1) (municipalities) and section 87(11) (municipal entities) reports to provide real-time information that will allow Auditor General to conduct real-time audits.
The aim of the real-time audits is to prevent, detect, and report on the findings to ensure an immediate response to prevent leakage, potential fraud, financial mismanagement and wastage.
The Auditor-General of South Africa will further provide real-time insights into the management and usage of funds earmarked for disaster relief in accordance with the objectives and targets set for those funds.
18 April 2023 - NW1132
Buthelezi, Mr EM to ask the Minister of Finance
By what date does he envisage a decrease in the Republic’s debt servicing costs?
Reply:
Kindly refer to Figure 1.6 of the Budget Review 2023.
18 April 2023 - NW1033
Buthelezi, Mr EM to ask the Minister of Finance
Whether, with reference to the concern of the SA Local Government Association about the proposal by the National Treasury for persons to consider the use and move to solar energy, and the possible revenue loss that this will have on municipalities and the ultimate increase of electricity prices for those who are not able to move off the grid, the National Treasury has (a) any plans and/or (b) a budget to stabilise and/or rebuild dysfunctional councils that desperately need the funds that they receive from providing electricity to the communities that they serve; if not, why not, in each case; if so, what are the relevant details in each case?
Reply:
National Treasury will be engaging with the South African Local Government Association (SALGA) on its concerns, as it is not necessarily correct that a municipality will lose revenue, especially if there is greater economic activity as a result of more secure electricity to business and households.
Further, households are being encouraged to use and move to solar energy as part of the government's deliberate attempt to reduce the demand for energy that is causing the load-shedding crisis. In the absence of such efforts, more pressure on the grid could result in grid collapses which would be more detrimental to municipal finances. Therefore, participating in this initiative may benefit municipalities as a result of a "payback scheme". By feeding excess energy back into the grid, customers can provide stored excess energy at lower rates than Eskom at peak times.
National Treasury has observed that many municipalities adopted tariffs that are not cost-reflective, which in essence means they are not recovering the full cost of providing electricity in the first place. To make the tariff more affordable, municipalities need to eliminate inefficiencies in the service value chain. The changing energy sector and its impact on municipal services must also be considered when setting tariffs. Energy conservation and efficacy must be facilitated and enforced in municipal consumption (across all services). Municipal operations should align with the decline in traditional electricity purchases by buying less from Eskom. It is also necessary for municipal strategy to re-align any earlier resolutions to flat rate selected areas with national policy, which limits the supply of basic water and electricity to 50 kilowatt hours of electricity and 6 kiloliters of water for indigent consumers.
The National Treasury is currently undertaking research on establishing norms and standards for electricity surcharges. This is in line with section 8 of the Municipal Fiscal Powers and Functions Act, 2007. This Act gives the Minister of Finance the power to prescribe mandatory national norms and standards for regulating municipal surcharges on electricity. The National Treasury is also working on identifying supplementary or replacement revenue sources for electricity surcharges as part of this ongoing research.
Considering the fiscal and economic risks posed by loadshedding, there is a need for further research into: 1) the implications of local trends in municipal finances; 2) how the municipal electricity business can adjust; and 3) how to minimize the adverse fiscal and economic impacts that energy sector reforms could have.
The National Treasury’s 2021 State of Local Government Finances report found that 165 municipalities were in financial distress at the end of 2020/21. Revenue management was the most prevalent factor contributing to financial distress. Moreover, many municipalities fail to adopt funded budgets, which means they will not be financially sustainable even if they remain within their budgets. This implies that they lack credible financial management. Those indicators are early warning signs of dysfunctional councils in the future.
In addition to issues that are leading to dysfunctional councils, our analysis shows that municipalities are diverting the LGES free basic provision to other initiatives, mainly paying salaries and a generous system of benefits for employees.
Once the research and engagements with SALGA are concluded, National Treasury will respond to the budgetary challenges via the annual budget process.
18 April 2023 - NW1028
Buthelezi, Mr EM to ask the Minister of Finance
(1)Considering that data by the SA Revenue Service (Sars) revealed that the Republic was heading towards a worrying trend where high-earners, who make up a small percentage of the population but account for a huge chunk of taxable income, are changing their residency status and thereby compromising a substantial amount that Sars could collect in revenue, what is the position of the National Treasury in this regard; (2) whether, considering that the Republic would be losing millions of rands in revenue, the National Treasury has any other source to generate as much revenue; if not, why not; if so, what are the relevant details?
Reply:
The phenomenon of mobile higher-income earners is well-documented and known across tax jurisdictions – beyond South Africa. Indeed, “increased tax competition” of highly skilled, but mobile labour was identified as a key risk to inclusive tax policies as far back as 2018 (see Tax policies for inclusive growth in a changing world (oecd.org)).
Our highly unequal distribution of income coupled with very progressive marginal tax rates necessarily means that we collect a high proportion of our revenue from upper income groups – more so than many of peer countries. This is due to (1) a relatively high personal income tax exemption threshold and (2) high upper income tax rates (see Inchauste et al for a comparison to other developing countries).
1. The latest Tax Statistics includes an analysis of changes in residence (on pg 44) along with a new table regarding taxpayers that changed residence (Table A2.1.10 on pg 79). It indicates that 32 831individuals changed tax residence in the period between the 2017 and 2021 tax years. Of those individuals, 2 788 earned taxable income greater than R500 000 p.a. A total of 1 125 earned more than R1 million p.a., equating to R1.3 billion in taxed assessed during 2021. While any loss in revenue is important to track and understand, it is useful to indicate the scale of the phenomenon relative to our revenue raising capacity. As indicated in Ch. 4 of the Budget Review, we expect to raise R280.6 billion in 2023/24 from taxpayers with taxable income greater than R1 million p.a.
2. It is not clear that the country will be losing or gaining future revenue from PIT. The most important contribution that National Treasury can make at this point is to fight corruption and promote tax morality and confidence in the country, and to ensure that public finances stabilize, in order to lay the foundation for strong inclusive growth. Restoring growth is the most reliable determinant of increased tax bases.
Over the Medium-Term National Treasury aims to:
- Restore value-for-money in public expenditure, particularly through spending reviews.
- Make it as simple and as easy as possible to comply with tax requirements, as SARS did with automatic assessments over the last years.
- Increase the probability of detection of non-compliance, which is one of the main reasons behind rebuilding SARS and an increase in their budget allocation, and
- Broaden tax bases to lower tax rates, as high tax rates offer a strong incentive not to comply.
National Treasury is not currently considering any specific taxes to compensate for fluctuations in the tax base. Moreover, there are no new policy announcements or proposals that aim to prohibit or discourage taxpayers from leaving. Indeed, exchange controls have been relaxed over the last 2 years – to enhance South Africa’s position as an investment destination and to lower the cost of business. From a policy perspective, we are trying to reconcile our provisions with the commercial reality of more globalised operations and careers that include stints in numerous tax jurisdictions – notwithstanding the challenges posed by Covid 19. From a tax perspective, the objective is to ensure that the appropriate tax is paid for any assets that are transferred abroad. Some of the measures that had been in placed have become outdated as a result of exchange control reforms. As a result, the tax provisions regarding foreign remunerative work and pre-retirement pension withdrawals on cessation of tax residence have undergone significant reform in the last 5 years.
18 April 2023 - NW1001
Shaik Emam, Mr AM to ask the Minister of Finance
What (a) is the total debt owed by the eThekwini Metropolitan Municipality to (i) local and (ii) foreign lenders and (b) measures does the National Treasury have in place to ensure some oversight over local municipal borrowing from financial institutions?
Reply:
a) The Consolidated 2021/22 Audited Annual Financial Statements for eThekwini Metropolitan Municipality reported the following breakdown on Borrowings:
- Local Lenders = R9 billion
- Foreign Lenders – Agence Francaise de Developpement (AFD) = R233 million
Total = R9.2 billion
It should be noted that in terms of Section 47 of the Municipal Finance Management Act, municipalities are not allowed to incur any debt in any foreign currency, and must ensure its debt is denominated in Rands.
b) As part of the oversight responsibilities, the National Treasury performs the following:
(i) The National Treasury analyses the borrowing capacity of a municipality by evaluating the size of the Gearing Ratios – total borrowing liabilities divided by the total operating revenue (also an indicator used to determine if a municipality is in financial distress).
(ii) When a municipality intends to borrow from the authorised financial service providers (lenders), they are required to obtain National Treasury’s views in terms of Section 46 of the Municipal Finance Management Act, 2003. A decision to borrow or not is the prerogative of a municipal council.
(iii) National Treasury has put in a place a Borrowing Policy Framework (which has been endorsed by Cabinet on the 17th of August 2022). The Policy sets out the following principles:
- Creditworthy municipalities should borrow prudently to finance capital investment and fulfil their constitutional responsibilities;
- Municipal access to private capital, based on investors’ evaluation of municipal creditworthiness, this is key to efficient local government and fiscal discipline as their financial sustainability is seen from an objective perspective;
- Municipalities should borrow in the context of long-term financial strategies, which reflect clear priorities and the useful life of assets; and
- Neither national nor provincial government will underwrite or guarantee municipal borrowing, again contributing to fiscal discipline as it would lead local government to think carefully on how they approach the borrowing market.
18 April 2023 - NW940
Buthelezi, Mr EM to ask the Minister of Finance
Whether, with reference to the use of exorbitant funds by municipalities on overtime payments, the National Treasury intends to engage with the Department of Cooperative Governance and Traditional Affairs to investigate the financial sustainability and soundness of the specified payments on the budgets in accordance with the specified department’s mandate to promote good governance through accountable, economic, efficient, equitable and sustainable management; if not, why not; if so, (a) on what date and (b) what are the further, relevant details?
Reply:
No, as we need more clarity on what specific problems or audits where exorbitant spending on overtime has been identified as a problem requiring National Treasury to intervene. Further, overtime is regulated by the Basic Conditions of Employment Act (BCEA-section 10) and the SALGA Collective Agreement.
There are no planned meetings between the National Treasury and Department of Cooperative Governance to discuss overtime payments by municipalities.
However, there are measures currently in place to guide the implementation of Overtime and the related payments, such as MFMA Circular No. 86 on Cost Containment.
Municipalities are advised that overtime budgets must not exceed 5 per cent of the total employee related cost budget as a norm to guide them in this regard.
31 March 2023 - NW736
Madisha, Mr WM to ask the Minister of Finance
(1) Whether, considering that under the Customs and Excise Act, Act 91 of 1964, any person and/or entity are only allowed to manufacture cigarettes in the Republic if they are registered and/or licensed with the SA Revenue Service (Sars), he will furnish Mr W M Madisha with (a) a list of all the persons and/or entities that have an active registration and/or licence with Sars and (b) the registered manufacturing addresses linked to the specified registrations and/or licences; if not, why not, in each case; if so, what are the relevant details in each case; (2) (a) what total number of licences have been issued since 1 January 2022 and (b) to whom were such licences issued; (3) What criteria are used to issue such licenses; (4) Whether a tender system is in place; if not, why not; if so, what are the relevant details?
Reply:
1. Any legitimate trader ought to be licensed with SARS in terms Sections 19 (1),27 (1), and 60 (1) of the Customs & Excise Act, No. 91 of 1964 (the Act).
As per the Customs & Excise trader register, there is total of 64 (sixty-four) licensed facilities for tobacco products as follows:
(i) Manufacturer of tobacco products is 50 (fifty) Licensees
(ii) Storage of tobacco products as per register – 14 (fourteen) Licensees
(a)(b) In terms of the section 4 (3) of the Act, the Commissioner or any officer of SARS may not disclose any taxpayer-specific information, except in the performance of his or her duties under this Act or by order of a competent court. The taxpayer confidentiality provisions of the Act therefore prevent names and addresses of licensees to be shared as requested.
2. (a) Since the 01 January 2022 a total number of licenses issued for Manufacturers of
tobacco products is 8 (eight) and Storage of tobacco products is 4 (four)
(b) Licenses were issued to traders that submitted applications and met the criteria as per Sections 19 (1),27 (1) and 60 (1) of the Act.
3. Sections 19, 27 and 60 of the Act make special provision for Customs and Excise warehouses in which Excisable or fuel levy goods are manufactured or stored. Section 19A of the Act controls the activities in and movements of goods from and between such warehouses, with the rules numbered 19A1 thereto being specifically applicable to tobacco products.
Section 54E of the Act makes provision for a Customs and Excise manufacturing warehouse in which environmental levy goods are manufactured. Section 54J of the Act applies these licensing provisions in respect of Health Promotion Levy on sugary beverages.
No licensee may conduct other business / manufacturing in or on the same factory / plant that is licensed as a manufacturing or storage warehouse with the SARS.
Client is required to submit application through Customs & Excise branch with all relevant supporting documents and applicable annexures for the purpose of the application.
The following additional supporting documents must be presented with the application (DA 185):
i) Registration certificate of business (as issued by the Registrar of Companies or Master of the Supreme Court in a case of a trust);
ii) Resolution / consent or other authority applicable.
iii) Site plan:
A) Must be a detailed plan of the premises but need not be a blueprint although it must be according to scale.
B) Must show the position(s) of the proposed manufacturing or storage warehouse in relation(s) to the adjoining building(s) and public thoroughfare(s);
C) Adequate office space must be provided to enable excise officers to conduct enforcement functions on the premises; and
D) Must be signed and dated by the applicant.
iv) A list of plant and machinery; and
v) Identity / passport documents of –
A) Individual.
B) Partnership, Close Corporation and Trust (All members / partners / trustees).
C) Company (All Directors, including Managing Director and Financial Director).
Once application is submitted client is subjected to below verification processes before being granted with a license:
A).Case is generated at time of submission at branch office
B). Physical inspection will be conducted to ensure client meet the requirements
C).Compliance check is conducted – and client is required to lodge a bond (surety/guarantee) to minimum value of R 2 000 000.00
D) Once all applicable processes are conducted and client meets all criteria, license will be issued.
4. No, since licencing is a regulatory measure. [Optional: It is not a measure to allocate finite resources that are in high demand, such as radio spectrum.
31 March 2023 - NW804
Buthelezi, Mr EM to ask the Minister of Finance
Whether the National Treasury has a plan to balance the increase in employee compensation while also ensuring that funds are allocated to ensure service delivery; if not, why not; if so, what are the relevant details?
Reply:
In recent years, government has proposed difficult but necessary measures to curb the growing and unsustainable public sector wage bill. Given the size and the share of the public sector wage bill to total consolidated expenditure, it is critical that the public sector wage bill is carefully monitored and managed in relation to the broader economy. A faster growing public sector wage bill in relation to economic growth, will lead to a crowding-out effect on other critical priority spending areas.
Government thus far has successfully in curbing or slowing down growth on compensation expenditure given the fiscal consolidation measures introduced in Budget 2020 and Budget 2021. This has resulted in consolidated compensation of employees’ accounting for 31.6% of total consolidated expenditure in 2022/23, which is a reduction from the 35.7% share in 2013/14. Please refer to Figures 3.5 and 3.6 in page 29 of the 2023 Budget Review for relevant details regarding growth in compensation of employees’ spending relative to other service delivery areas.
31 March 2023 - NW835
Buthelezi, Mr EM to ask the Minister of Finance
What is the National Treasury’s position with regard to the request for funding of the Department of Basic Education for an additional 16 000 teacher posts to improve the teacher-student ratio?
Reply:
The National Treasury does not generally have any official position on specific funding requests and focuses on the process on how budgetary decisions are made as funding decisions always involve trade-offs between different priorities. Such process includes consultation with the technical Medium Term Expenditure Committee and Technical Committee on Finance processes, as well as political forums like the Budget Council, Budget Forum, Ministers Committee on the Budget, and ultimately, Cabinet.
In the 2022 Medium Term Expenditure Framework and the 2023 Medium Term Expenditure Framework, as reported on pages 72 and 60 of the 2022 and 2023 Budget Reviews, R24 billion and R20 billion respectively was added to the provincial equitable share for provinces to deal with compensation of employees in provincial education departments, which includes dealing with the learner-educator ratio.
27 March 2023 - NW463
Chetty, Mr M to ask the Minister of Finance
What (a) is the salary of each (i) chief executive officer and (ii) top executive position in each state-owned entity reporting to him and (b) total amount does each get paid to attend a meeting?
Reply:
State-owned entity |
(i)(a) Chief Executive Officer |
(ii)(a) Top Executive Position |
(i)(b) Chief Executive Officer |
(ii)(b) Top Executive Position |
Accounting Standards Board (ASB) |
R2 861 287 |
R2 139 230 |
The chief executive officer and top executives do not receive payment to attend meetings. |
|
Co-operative Banks Development Agency (CBDA) |
R594 000[1] |
R1 214 000 |
||
Development Bank of Southern Africa (DBSA) |
R8 061 383 |
R4 128 919 |
||
Financial and Fiscal Commission (FFC) |
R1 759 809 |
R1 450 275 |
||
Financial Intelligence Centre (FIC) |
R3 068 000 |
R2 073 000 |
||
Financial Sector Conduct Authority (FSCA) |
R4 166 667 |
R3 621 890 |
||
Government Pensions Administration Agency (GPAA) |
R2 137 000 |
R1 304 000 |
||
Government Technical Advisory Centre (GTAC) |
R1 466 778 |
R1 601 147 |
||
Independent Regulatory Board for Auditors (IRBA) |
R3 303 398 |
R2 651 221 |
||
Land and Agricultural Development Bank of South Africa (Land Bank) |
Vacant |
R3 535 999 |
||
Office of the Ombud for Financial Services Providers (FAIS Ombud) |
R2 385 313 |
R1 593 228 |
||
Office of the Pension Funds Adjudicator (OPFA) |
R2 586 223 |
R1 807 125 |
||
Office of the Tax Ombud (OTO) |
R2 697 684 |
R1 903 092 |
||
Public Investment Corporation SOC Limited (PIC) |
R9 500 000 |
R7 563 600 |
||
South African Revenue Service (SARS) |
R6 156 000 |
R3 023 000 |
||
South African Special Risks Insurance Association (SASRIA) |
R4 100 000 |
R3 800 000 |
All the related information is available in the Annual Report of the Public Entities reporting to the Department.
The Managing Director of the CBDA’s contract ended on 30 September 2021. ↑
27 March 2023 - NW489
Buthelezi, Mr EM to ask the Minister of Finance
Considering that the lack of proper financial management practices, insufficient financial reporting and widespread corruption are some of the biggest ills burdening our local government, and considering that the specified issues affect the development of the Republic and compromises the fiscal resources, what actions will the National Treasury take to address the abuse of public expenditure and consequent lack of service delivery to promote the appropriate use of public and private financial resources for social and economic development and infrastructure investment in line with its mandate?
Reply:
Generally, the causes of South Africa’s poor economic growth and development are complex and multi-faceted. It includes the impact of state capture, as outlined by the Zondo Commission findings published in 2022. The National Treasury provides a bi-annual update on the performance of the economy and the policy proposals to improve it in the annual Budget Review and in the Medium Term Budget Policy Statement.
From a local government perspective, interventions in terms of section 139 of the Constitution are being more actively pursued as a measure to address the lack of service delivery and poor financial management in municipalities. Where necessary, such interventions in terms of Section 139(5) are mandatory, and require a financial recovery plan to be imposed on the municipality. Monthly reporting on the recovery plan is a legislative requirement and creates the mechanism to monitor the performance of the municipality, including how funding is being utilised by the municipality, prioritization of service delivery and inclusion of programmes to enhance social and economic development. However, interventions are led by the relevant Provincial Executive Committee and the role of the National Treasury is limited in terms of the Constitution to the preparation of the financial recovery plan and overseeing the monthly reporting on progress.
For more details on some of the policy work done by the NT to enhance transparency of local government spending, please refer to Parliamentary Question 293.
27 March 2023 - NW490
Buthelezi, Mr EM to ask the Minister of Finance
Whether the National Treasury has any fiscal measures in place to support the recovery of the agricultural sector which has suffered a major economic setback through issues relating to the (a) crumbling roads and rail networks and (b) increase in taxes; if not, what is the position in this regard; if so, what measures?
Reply:
We acknowledge the importance of the agricultural sector and its potential to generate low-skilled jobs needed to address unemployment in South Africa, however, the Honourable Member’s question is not clear, as we do not necessarily agree on the underlying causes and potential impact of the reasons he has stated in his question for example we are not in agreement with his assumption that an increase in taxes is a factor responsible for the major economic setback to the agricultural sector. The Honourable Member may kindly provide more details on the economic setback in agriculture referred to.
The fiscal support for agricultural sector is determined through the budget allocations to the Department of Agriculture, Land Reform and Rural Development, as articulated in the Estimate of National Expenditure (ENE) - Vote 29 and to provinces though the Division Revenue Act, and this information is available in various provincial budgets.
27 March 2023 - NW266
Macpherson, Mr DW to ask the Minister of Finance
Whether the National Treasury plans to conduct consultations with the sugar industry on the impact of the Health Promotion Levy on the sector ahead of the planned increase on 1 April 2023; if not, why not; if so, what are the relevant details?
Reply:
As announced in the 2023 Budget, the planned increase on the health promotion levy on 01 April 2023 has been suspended for two years. Consultations with key stakeholders, like the health sector and sugar industry will take place after the publication of a discussion paper to extend the levy to pure fruit juices and lower the 4-gram threshold.
27 March 2023 - NW265
Macpherson, Mr DW to ask the Minister of Finance
Whether, with reference to the press statement issued by the National Treasury on 1 April 2022 where it was announced that the 4,5% increase in the Health Promotion Levy will be postponed for a year in order for consultations to take place on lowering the 4g threshold and extending the levy to fruit juices, the specified consultations have taken place; if not, (a) why not and (b) on what date will the consultations take place; if so, (i) on what date did the consultations take place, (ii) with whom and (iii) what were the outcomes?
Reply:
As announced in the 2023 Budget, the planned increase on the health promotion levy on 01 April 2023 has been suspended for two years. This has been done to enable stakeholders in the sugar industry to restructure or diversify, given the challenges on jobs and farmers from greater regional competitive pressures and the effect of recent floods and public violence.
No consultations generally take place before any tax announcement but is done after such an announcement as part of the legislative process that follows.
Government does, however, consult on policy proposals as explained in the 2022 and 2023 Budget. Government will also soon publish a discussion paper on the levy for consultation on proposals to extend the levy to pure fruit juices and lower the 4-gram threshold. Consultations on the proposals will take place after written comments on the discussion document have been received.
27 March 2023 - NW194
Chetty, Mr M to ask the Minister of Finance
(1)What are the details of the (a) destination and (b) total costs for (i) accommodation, (ii) travel and (iii) any other costs incurred for international travel of each (aa) Minister and (bb) Deputy Minister of the National Treasury since 1 June 2019; (2) what is the total cost incurred for domestic air travel for each (a) Minister and (b) Deputy Minister of the National Treasury since 1 June 2019?
Reply:
(1) |
(aa) Minister |
(bb) Deputy Minister |
(a) Destination |
Dubai |
Boston |
Egypt |
Botswana |
|
Ethiopia |
Dakar |
|
Germany |
Egypt |
|
Ghana |
Paris |
|
Indonesia |
Senegal |
|
Japan |
Swaziland |
|
London |
Windhoek |
|
Morocco |
||
Niger |
||
Rwanda |
||
Singapore |
||
Switzerland |
||
Tanzania |
||
Washington |
||
(b)(i) Accommodation |
R1 022 286,58 |
R 68 232,47 |
(b)(ii) Travel |
R1 808 642,36 |
R402 893,88 |
(b)(iii) Other costs |
R 220 082,08 |
R 16 833.29 |
(2) |
(a) Minister |
(b) Deputy Minister |
Total cost incurred for domestic air travel |
R637 211,56 |
R783 050,91 |
27 March 2023 - NW664
Komane, Ms RN to ask the Minister of Finance
(a) On what date will the thousands of pensioners under the Ciskei Government Pension Fund be paid out what is due to them and (b) what reasons has he found lie behind the unnecessary delays?
Reply:
(a)
The Ciskeian Civil Servants Pension Fund (CCSPF) of the former Ciskei was administered by the former Ciskei Government until 1993 when Sanlam took over the administration. The GEPF took over from Sanlam in 1999. The Ciskeian Civil Servants Pension Fund was, together with certain other pension funds as specified in the Government Employees Pension Law, 1996 (GEP Law), amalgamated into the Government Employees Pension Fund (GEPF).
Any member of the CCSPF whose pensionable service data was received from the CCSPF correctly, was transferred to the GEPF as part of the amalgamation. Such a member’s GEPF pensionable service includes his/her CCSPF pensionable service for which such a member was not already paid and is recognised as a continuous pensionable service record.
Members who exited the CCSPF prior to amalgamation, would have been paid their pension benefits through the then administrator being Sanlam.
Any member who was amalgamated into the GEPF as explained above, has his/her CCSPF pensionable service recognized as part of their GEPF pensionable service. When such a member exits the GEPF the full pensionable service (inclusive of the CCSPF) is considered to determine the pension benefits.
There is accordingly no knowledge of “thousands of pensioners” who were not paid what is due to them as any such member whose data was correctly transferred and who was not paid any benefit under the CCSPF, has their pensionable service for such period recognized as part of their GEPF pensionable service. The GEPF investigates any individual case where it is submitted that a member’s pensionable service record differs and assesses such in respect of each individual case.
(b)
Accordingly, the Fund is not aware of any delays in the payment of pensions for former CCSPF members.
27 March 2023 - NW654
Montwedi, Mr Mk to ask the Minister of Finance
Whether, in light of the disastrous weather conditions that have affected the wine grape subsector for the 2022 harvest, the National Treasury would be willing to review the excise tax burden for wine which is currently standing at 11% significantly above other emerging markets’ duties on wine; if not, why not; if so, what are the relevant details?
Reply:
There are many considerations when determining the rate of any tax. The National Treasury has undertaken an alcohol taxation review process and will soon publish a discussion paper for public consultation. The discussion paper will consider all the developments and relevant issues pertaining to the overall alcohol industry and the taxation of alcoholic beverages since the last review was performed in 2014. The excise duty regime for wine will also be specifically considered in relation to the industry and the excise duty regime for other alcoholic beverages.
27 March 2023 - NW636
Groenewald, Mr IM to ask the Minister of Finance
(1)Whether, in light of section 121 of the Municipal Finance Management Act, Act 56 of 2003 (MFMA) that requires all municipalities to table their annual reports to their respective municipal councils by 31 January every year, and/or request an extension from their provincial Members of the Executive Council (MECs), he and/or the National Treasury must be provided with reports of any municipalities that have failed to table their reports by 31 January 2023; if not, what is the position in this regard; if so, (a) which municipalities failed to table their reports, (b) what were the reasons for non-compliance, (c) did the specified municipalities timeously apply for an extension to the respective MECs and (d) of the municipalities that failed to table their reports by 31 January, which municipalities have also failed to apply for extensions to their respective MECs; whether he will make a statement on the matter?
Reply:
The provisions of section 121 of the Municipal Finance Management Act, Act 56 of 2003 (MFMA) together with section 127(2) – (3)(b) of the Municipal Finance Management Act, Act 56 of 2003 (MFMA) states that the mayor of a municipality must, within seven months after the end of a financial year, table in the municipal council the Annual Report of the municipality and of any municipal entity under the municipality's sole or shared control. Should the mayor, for any reason, be unable to table the Annual Report of the municipality or any municipal entity under the sole or shared control within 7 (seven) months after the end of the financial year to which the report relates, the mayor must: (a) promptly submit to the council a written explanation referred to in section 133(I)(a) setting out the reasons for the delay, together with any components of the Annual Report listed in section 121(3) or (4) that are ready and (b) submit to the council the outstanding Annual Report or the outstanding components of the Annual Report as soon as may be possible.
The responsibility to discharge this requirement in terms of the MFMA, vests with the respective municipality.
I have been advised from a report to the National Treasury, that Annexure A lists the municipalities that did not table their Annual Reports to Council by 31 January 2023 based on information received by the National Treasury. I am further advised however, the updating of such information for monitoring compliance, is ongoing.
Annexure A
Number |
Name of Municipality |
Province |
1 |
Senqu |
Eastern Cape |
2 |
Emalahleni |
Eastern Cape |
3 |
Ngqhuza Hill |
Eastern Cape |
4 |
Koukamma |
Eastern Cape |
5 |
Kopanong |
Free State |
6 |
Mohokare |
Free State |
7 |
Masilonyana |
Free State |
8 |
Tokologo |
Free State |
9 |
Nketoana |
Free State |
10 |
Maluti-a-Phofung |
Free State |
11 |
Mantsopa |
Free State |
12 |
Mafube |
Free State |
13 |
City of Johannesburg |
Gauteng |
14 |
uMkhanyakude |
KwaZulu Natal |
15 |
Steve Tshwete |
Mpumalanga |
16 |
Richtersveld |
Northern Cape |
17 |
Ubuntu |
Northern Cape |
18 |
Magareng |
Northern Cape |
19 |
Renosterberg |
Northern Cape |
20 |
Sol Plaatje |
Northern Cape |
21 |
Thembelihle |
Northern Cape |
22 |
Siyathemba |
Northern Cape |
23 |
Tsantsabane |
Northern Cape |
24 |
Kgatelopele |
Northern Cape |
25 |
Phokwane |
Northern Cape |
26 |
JB Marks |
North West |
27 |
Naledi |
North West |
28 |
Mamusa |
North West |
29 |
Ditsobotla |
North West |
30 |
Ngaka Modiri Molema |
North West |
31 |
Cederberg |
Western Cape |
27 March 2023 - NW429
Lees, Mr RA to ask the Minister of Finance
What are the details of all instances where (a) an accounting officer is alleged to have committed financial misconduct according to the National Treasury Regulation 4.1.3, (b) the National Treasury ensured that the relevant executive authority initiated an investigation into the matter and (c) a disciplinary hearing was held where the allegations were confirmed?
Reply:
(a), (b) and (c) Section 81(1) of the PFMA states that an accounting officer for a department or a constitutional institution commits an act of financial misconduct if that accounting officer willfully or negligently (a) fails to comply with a requirement of section 38, 39, 40, 41 or 42 or (b) makes or permits an unauthorised expenditure, an irregular expenditure or a fruitless and wasteful expenditure.
Section 85(1)(a) of the PFMA provides that, the Minister must make regulations prescribing the manner, form and circumstances in which allegations and disciplinary and criminal charges of financial misconduct must be reported to the National Treasury, the relevant provincial treasury and the Auditor-General including (i) particulars of the alleged financial misconduct; and (ii) the steps taken in connection with such financial misconduct.
Treasury Regulation 4.1.3 states that, if an accounting officer is alleged to have committed financial misconduct, the relevant treasury, as soon as it becomes aware of the alleged misconduct, must ensure that the relevant executive authority initiates an investigation into the matter and if the allegations are confirmed, holds disciplinary hearing in accordance with the prescripts appliable and agreement applicable in the public service. The relevant treasury may also direct that (a) an official other than the employee of the department conducts the investigation or (b) issues reasonable requirement regarding the way in which the investigation should be performed as provided in Treasury Regulations 4.1.4.
Information related to investigations conducted against accounting officers and disciplinary action instituted in departments can be found in the annual reports of those departments. In addition, the Frameworks issued by the National Treasury on unauthorised, irregular and fruitless and wasteful expenditure prescribes the process and requirements that should be followed by departments, constitutional institutions, trading entities and public entities when dealing with matters of financial misconduct linked to these expenditures. The Frameworks can be found on the National Treasury website at the following link:
09 March 2023 - NW84
Chetty, Mr M to ask the Minister of Finance
What are the details of the (a) make, (b) model, (c) year of manufacture, (d) cost and (e) purchase date of all the official vehicles purchased for (i) him, (ii) the former Minister, (iii) the Deputy Minister and the (iv) former Deputy Minister of the National Treasury since 1 June 2019?
Reply:
(i) Minister |
(ii) Former Minister |
(iii) Deputy Minister |
(iv) Former Deputy Minister |
|
(a) Make |
None |
Mercedes-Benz |
None |
None |
(b) Model |
C-Class (C180) |
|||
(c) Year of manufacture |
2016 |
|||
(d) Cost |
R653 943.27 |
|||
(e) Purchase date of all official vehicles purchased since |
28 June 2019 |
09 March 2023 - NW293
Buthelezi, Mr EM to ask the Minister of Finance
With reference to the State of the Nation Address on 9 February 2023, wherein the President of the Republic, Mr M C Ramaphosa, noted that 163 out of 257 municipalities are dysfunctional, and that one of the contributing factors for this was ineffective and corrupt financial and administrative management, how does the National Treasury intend to engage the affected municipalities to co-ordinate intergovernmental financial and fiscal relations as per their mandate to ensure the Government’s fiscal policy is implemented on a local level, in order to enforce transparency and effective management of national revenue within municipalities?
Reply:
In responding to the question, it is important to first contextualise the widespread and sometimes inaccurate use of the term municipal dysfunction. Municipal dysfunction refers to a situation where a municipality is not functioning as it is supposed to and the discharge of a municipality’s constitutional responsibilities is impaired for some or other reason. However, there are various degrees of municipal dysfunction ranging from dysfunction which is less serious or temporary in nature requiring only appropriate support to rectify and dysfunction that implies a full-blown crisis in the financial and service delivery affairs of a municipality warranting intervention. Often, the use of the term “municipal dysfunctionality” is construed to mean that a municipality is in crisis which is not necessarily the correct interpretation.
The 165 municipalities referred to by the President in his State of the Nation Address, are municipalities that the National Treasury has identified in its annual municipal financial health assessment to be in financial distress. This means that according to the 13 indicators used by the National Treasury to measure the financial health of municipalities based on their audited financial statements, these municipalities are showing signs of existing, recurring and/or potentially serious financial problems. Again, this should not be construed as a necessary crisis in the municipality’s financial affairs.
The assessment is just one of the many early warning systems developed by the National Treasury to indicate where problems are emerging in a municipality’s financial health and if used proactively as early warning systems should be, to avoid these problems from morphing into a financial crisis. This results of this annual assessment should be interpreted alongside many of the in-year monitoring systems already institutionalized by the National Treasury including the monthly S71 reporting process. The National Treasury also publishes on a quarterly basis municipal performance indicators outlined in Section 138 and 140 of the MFMA. S138 indicators are used to indicate “serious financial problems” in a municipality whilst S140 indicators refer to a “financial crisis”. Serious financial problems should ideally be addressed via a discretionary financial recovery plan prepared by the respective province whilst financial crises require that the Provincial Executive Committees institute a mandatory intervention in terms of Section 139(5) of the Constitution and imposes a financial recovery plan on the municipality.
The role of the Provincial Treasury is to implement S213 of the Constitution and to assist the National Treasury in enforcing compliance with the measures established in terms of S216 of the Constitution and chapter 2 of the Municipal Finance Management Act (no: 56 of 2003 as amended).
In terms of the delegation of responsibility, the National Treasury shares the responsibility for the oversight of municipal finances with the Provincial Treasuries. The role of the National Treasury is to develop the policies, regulations, norms and standards required to improve financial management and reporting in municipalities and the National Treasury is also responsible for directly monitoring the performance of the 17 largest municipalities responsible for 80 per cent of municipal expenditure. The remaining 239 municipalities are monitored by the respective Provincial Treasuries.
Apart from the development of early warning systems which help municipalities to identify the extent of their financial problems where they exist, there are several other support initiatives which the NT has focused on to strengthen and enforce transparency, improve fiscal discipline and promote the better use of municipal revenue. These include initiatives focused on improving budget compliance, such as the Municipal Budget and Reporting regulations which aim to standardize the format of municipal budgets, the adoption of a realistically funded and credible budgets by municipalities, integration and management of the revenue value chain, providing technical support to build municipal financial management capacity through the Municipal Finance Improvement Programme (MFIP), resolution of municipal financial problems through the development of financial recovery plans, the introduction of a Standard Chart of Accounts for municipalities (mSCOA) and processes to deal timeously with financial misconduct and consequence management.
National and Provincial Treasuries also engage municipalities annually through budget and benchmark engagements where the tabled budget is subjected to a rigorous assessment prior to adoption by the municipal council. There are also mid-year performance assessments which provide an opportunity to assess the financial and service delivery performance of the municipality against the adopted budget and effect the necessary adjustments. National Treasury also enforces compliance in terms of s18 of the Municipal Finance Management Act by ensuring that any municipality who adopts an unfunded budget must develop a credible funding plan which seeks to gradually improve the financial position of the municipality and achieve a funded budget status. The implementation of these funding plans is monitored on a quarterly basis by the Treasuries.
09 March 2023 - NW326
Ceza, Mr K to ask the Minister of Finance
What amount has been recovered from municipalities of the R32 billion that was lost to fraud and corruption during the finding of audits under the tenure of the Auditor-General of South Africa, Mr K Makwetu?
Reply:
Honourable Ceza’s question must be contextualised within the framework as contained in section 1 of the Municipal Finance Management Act (Act 56 of 2003) (MFMA). It outlines four instances where a municipality will incur irregular expenditure (a) where the expenditure incurred by a municipality is in contravention of, or that is not in accordance with a requirement of the MFMA, (b) where expenditure incurred by a municipality in contravention of, or that is not in accordance with a requirement of the Municipal Systems Act (c) expenditure incurred by a municipality in contravention of, or that is not in accordance with, a requirement of the Public Office-Bearers Act, or (d)
expenditure incurred by a municipality or municipal entity in contravention of, or that is not in accordance with, a requirement of the Supply Chain Management Policy of the municipality or entity or any of the municipality’s by-laws giving effect to such policy.
It is therefore incorrect to assert all amounts to fraud and corruption. To illustrate this using an example; the law requires a municipality to advertise a tender for 14 days and if a municipality advertises the tender for 13 days or less, the law requires for the associated expenditure to be disclosed as irregular expenditure.
Powers to deal with irregular expenditure vests with the Accounting Officer and the Municipal Council. Section 32 of the MFMA, requires municipalities to investigate the irregular expenditure and either recover the irregular expenditure from the person liable or write off that expenditure where value for money was obtained. Municipalities are also required to implement consequence management against officials who failed to comply with the MFMA and implement measures to avoid future recurrences of irregular expenditure.
Where matters are reported to law enforcement agencies, the recovery of proceeds of crime are largely dependent on the successful prosecution of criminal cases. This information is not maintained by the National Treasury.
09 March 2023 - NW261
Lees, Mr RA to ask the Minister of Finance
(a) Whether he has found that all legal prescripts were followed by the Department of Public Enterprises, the board and executives of the SA Airways (SAA) and the business rescue practitioners in the business rescue process that SAA was subjected to since December 2019; if not, what are the detailed reasons that all the legal obligations were not adhered to; if so, what are the relevant details?
Reply:
The purpose of Business Rescue process as per the Companies Act is to provide for the efficient rescue and recovery of financially distressed companies so as to balance the rights and interests of all relevant stakeholders (employees, creditors and shareholders)
The primary objective of business rescue is the development and implementation of a business rescue plan that either:
-
- Rescues the company by restructuring its debt and equity in a manner that maximises the likelihood of the company continuing in existence on a solvent basis; or
- Results in a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company
SAA was placed into voluntary business rescue on 06 December 2019 by its Board of Directors as they believed that the company was in financial distress, after which the airline’s Business Rescue Practitioners (BRPs) took over the management of the airline.
The National Treasury is not aware of any non-compliance to any legal prescripts in relation to SAA’s business rescue process as regulated by the Companies Act and the PFMA.
09 March 2023 - NW325
Ceza, Mr K to ask the Minister of Finance
In light of the fact that R1,2 billion was spent on consultants in the 2021-22 financial year to audit municipal financial books, (a) what qualitative outcomes have municipalities gained in relation to improved audits, (b) what are the reasons that consultants are hired when municipalities appoint chief financial officers for a similar job despite 59% of financials submitted for auditing which included inaccurate financial statements, (c) what impact would the specified amounts have on the delivery of municipal services and (d) how has the use of consultants improved municipal financial stability?
Reply:
(a), (b), (c), (d) It is assumed that the Honourable Ceza is referring to the 2020/21 municipal financial year in which R1.26 billion was spent on consultants by municipalities to assist them with financial statement preparations as reported by the AGSA in its MFMA General Report (see the link below for a copy of the 2020/21 MFMA General Report, https://www.agsa.co.za/Reporting/MFMAReports/MFMA2020-2021.aspx). Section 2.2 of the MFMA General Report (page 18) sets out the AGSA’s conclusions on the use of consultants for financial reporting. Furthermore, section 2.3 of the MFMA General Report (page 20) sets out the AGSA’s conclusions on the “Financial Health” of municipalities. Information for use of consultants for the 2021/22 municipal financial year is not yet available as the audits are still in progress.
Various disciplines and specialist knowledge is required in financial management. An appropriate use of consultants, coupled with transfer of skills to municipal officials, can assist in making a difference in stabilising and sustaining municipal finances. In this regard, the National Treasury issued a Circular to municipalities in 2016 dealing with cost containment, followed by Regulations in 2019, requiring municipal managers to only appoint consultants if a gap analysis confirmed that the requisite skills or resources are not available to perform the necessary work. It also reminded municipalities of the legislated requirements to closely monitor contracts and the importance of transferring skills. The responsibility for the effective use of financial reporting consultants lies with the Municipal Manager and the relevant Chief Financial Officer.
09 March 2023 - NW138
Buthelezi, Mr EM to ask the Minister of Finance
(1)What is his department’s position with regard to the status of stateowned enterprises (SOEs), considering they no longer maximise economic impact as they were missioned to do; (2) whether he has found the Government’s inability to manage SOEs efficiently is a cost that now burdens taxpayers; if not, what is the position in this regard; if so, what are the relevant details?
Reply:
1. Major public entities as listed under Schedule 2 of the Public Finance Management Act (1999) are required to operate as sustainable profit-generating businesses that borrow on the strength of their balance sheets. However, over the years the financial and operational performance of these entities has steadily deteriorated due in large part to state capture, corruption (as noted by the Zondo Commission), weak corporate governance, archaic business models and burdensome cost structures. Too many SOEs continue to rely on government bailouts. Various initiatives are underway across government to ensure that we create an environment where our SOEs can become sustainable and fulfil their developmental mandate without government support. In this regard, the 2022 Budget Review outlined the need for a new framework for managing bailouts to state-owned companies to reduce fiscal risks and promote long-overdue reforms. The framework, when finalised, will link bailouts of these entities to a range of reforms needed to make them sustainable and efficient.
2. Some SOEs have indeed become a burden on taxpayers. Between 2012/13 and 2021/22, SOEs received about R266.6 billion in bailouts from government. These bailouts crowd out important social expenditure. Therefore, government has shifted its approach in dealing with funding support to these entities, in particular those that are listed under Schedule 2 of the PFMA. Starting last year, and going forward, any fiscal support to SOEs is accompanied by strict conditions to ensure that these SOEs fix their underlying structural challenges if they are to qualify for support from taxpayers.
09 March 2023 - NW136
Buthelezi, Mr EM to ask the Minister of Finance
In view of the fact that the Government has displayed a clear inability to responsibly manage public finances which resulted in a deviation from its attempts to promote economic development, good governance, social progress and a rise in living standards, what measures is the National Treasury putting in place to regain efficient, equitable and sustainable management of the Republic’s public finances?
Reply:
The causes of South Africa’s poor economic growth and development are complex and multi-faceted. It includes the impact of state capture, as outlined by the Zondo Commission findings published in 2022. The National Treasury provides a bi-annual update on the performance of the economy and the policy proposals to improve it in the annual Budget Review and in the Medium-Term Budget Policy Statement. In addition, both publications provide an update on the state of public finances, with the Budget Review providing a comprehensive outline of the spending plans, division of revenue, the liability position of government, as well as government assets in the form of public entities. The President also submitted the response of Government to Parliament on 22 October 2022, which outlined the response of Government to the recommendations made by Judge Zondo in his report on State Capture. Members of Parliament and the public may examine the details of these publications for information on what government is doing to address the country’s challenges. All the documents are available on the National Treasury or government websites.
03 January 2023 - NW4668
Langa, Mr TM to ask the Minister of Finance
What intervention measures have been taken to bring relief by reducing the prime lending rate that is making life very difficult for the citizens of the Republic? NW5791E
Reply:
The Honourable Member appears to be basing his question on the underlying repurchase (repo) rate, which then impacts on the prime lending rate. The repo rates are the primary tool that the SARB uses to control inflation, which is the rate at which the SARB lends to commercial banks. The prime lending rate is the rate at which commercial banks then lend to their customers, and is higher than the repo rate, as it incorporates their costs and profit margin.
The raising of the repo rate (and thus prime the lending rate) is a necessary intervention in response to inflation. Inflation erodes the ability of households in South Africa – particularly workers and those living on fixed incomes such as social grants or pensions – to buy necessities. Inflation in South Africa has risen sharply over the past year, reflecting both high global inflation, markedly higher food and fuel inflation, as well as domestic drivers, particularly core inflation. As inflation rises, the ability to buy the same number of products becomes more difficult as prices rise.
National Treasury supports the South African Reserve Bank in the exercise of its constitutional mandate, which is to protect the value of the rand, in the interest of balanced and sustainable economic growth. The Governor of the South African Reserve Bank and the Minister of Finance and their officials are in regular consultation to maximise coordination between fiscal and monetary policy objectives. The national government pursues a comprehensive approach to assist households in the Republic facing cost-of-living pressures via the annual Budget process, by funding basic services, grants (eg old-age, child support and social distress grants) and specific programmes, including:
The South African government has suspended the anti-dumping duties on poultry imports from five countries and this should ease chicken prices and provide the much-needed relief to consumers. On August 1, 2022, the Minister of Trade, Industry and Competition announced a decision to suspend the imposition of Anti-Dumping Duties (ADDs) on poultry from Brazil, Denmark, Ireland, Poland, and Spain for a period of twelve months “considering the rapid rise in food process as well as the impact that the imposition of the anti-dumping duties may have on the price of chicken.
The government intervened through the introduction of the temporary reduction in the general fuel levy to provide relief to consumers. On 31 March 2022 the Minister of Finance and the Minister of Mineral Resources and Energy jointly announced a temporary reduction in the general fuel levy of R1.50 per litre from Wednesday 6 April 2022 until 31 May 2022 to provide limited short-term relief to households from rising fuel prices following the Russia/Ukraine conflict. This relief package was further extended for two months until 2 August 2022. (the reduction was adjusted downward to 75c per litre from 7 July 2022 to 2 August 2022).
The sharply higher domestic inflation is the reason why South Africans are finding their incomes unable to buy the same basket of goods they afforded just a few months ago. Raising of the repo rate is the necessary corrective intervention required to reduce inflation.
23 December 2022 - NW3591
Cebekhulu, Inkosi RN to ask the Minister of Finance
With reference to the revelation that was made earlier in the year where Cabinet had apparently blown more than R20 million in public funds on buying fuel and brand new luxury cars, what are the relevant details of the proactive accountability systems and measures of his department to ensure that the spending of Cabinet Ministers is within the confines of the budget given to them to spend on cars and fuel, particularly one that would flag and address the wasteful expenditure sooner as opposed to at the end of the year?
Reply:
The Honourable Member should note that Cabinet does not have any spending authority as an entity and its activities are funded under the vote of the Presidency, so it is incorrect to suggest that Cabinet as an entity has “blown” any public funds. Any spending to support a Cabinet Minister is done under the vote of the relevant department that a Cabinet Minister is responsible for, so any spending on official vehicles or fuel for any Cabinet Minister is done through their departmental vote, and not by Cabinet.
With regard to how spending on official vehicles is regulated by the National Treasury, it should be noted that Treasury issued an instruction no 6 of 2019-2020, revising the threshold for the procurement of official vehicles for members of the executive from R700 000 to R800 000.
The National Treasury also facilitates a transversal term contract (RT57) for the outright purchase of vehicles. Participation on the contract is voluntary as provided for by Treasury Regulation 16A6.5 and purchases of vehicles on the contract takes place at an organ of state level through the RT57 transversal term contract. Organs of state are compelled by the instruction issued to adhere to the limit that was set by the National Treasury when purchasing vehicles for the members of executive, regardless of whether a department chooses to use the transversal contract.
Adherence to the instruction is monitored on an annual basis through the audit process, and non-compliance leads to an audit finding that the relevant accounting office should account for with the Auditor-General and Parliament. Given that accounting officers have discretion on the procurement approach, there is no practical arrangement in place to monitor each transaction that participating organs of state undertake at the time when each transaction takes place.
Individual departments are responsible to make decisions on replacing the Executive Member vehicle on reaching the set mileage of 120000 kilometers or 5 years or when the vehicle experiencing mechanical problems as per the provisions of the Guide.
Any additional maintenance, such as tyres, fuel, oil, toll fees and repairs should be done through a transversal contract administered by the Department of Transport for this purpose. Therefore, the Department of Transport is best positioned to answer whether systems are in place to monitor in-year compliance to the limits set in the transversal contract relating to spending on fuel.
23 December 2022 - NW4633
Abrahams, Ms ALA to ask the Minister of Finance
Whether, considering that the child support grant of the SA Social Security Agency plays a critical role in improving child nutrition, health and education outcomes of vulnerable South African children, and noting that thousands of children continue to die due to malnutrition in public hospitals with many deaths not recorded, the National Treasury will approve an increase in the child support grant to be in line with the food poverty line; if not, why not; if so, by what (a) date and (b) amount will the specified grant be increased? NW5755E
Reply:
All budget related matters including increases to social grants will only be announced by the Minister of Finance in the February 2023 Budget Speech. The National Treasury does not make budgetary announcements before Budget Day
23 December 2022 - NW4634
Abrahams, Ms ALA to ask the Minister of Finance:
(1) Considering that the social work profession plays a critical role in ensuring the wellbeing of all vulnerable sectors of society against escalating levels of abuse in the Republic, and given that there is a critical shortage of social workers (details furnished), (a) which government departments have written to the National Treasury since the 2018 Cabinet resolution on the recruitment of social work professionals, to request additional budgets to employ social workers, (b) what is the frequency of such requests since the 2018 Cabinet resolution and (c) what total amounts have been requested; (2) whether the National Treasury will make additional funds available for this purpose; if not, why not; if so, what are the relevant details? NW5756E
Reply:
(1) The Department of Social Development is responsible for the hiring and bidding for funds for social workers. Since the 2018 Cabinet resolution allocations for the employment of social workers within the social development sector were as follows:
In Budget 2019, an average of R226.3 million per annum was shifted to provinces through the Provincial Equitable Share to sustain the employment of over 600 social worker graduates that were employed through the Social Worker Employment Conditional Grant.
In the 2019 Adjusted Budget the National Department of Social Development shifted R93.0 million from other programmes towards Social Crime Prevention and Victim Empowerment subprogramme for the employment of 200 social workers in areas of high prevalence of gender-based violence.
In Budget 2020, an average of R132.7 million per annum was shifted to provinces to sustain the employment of the 200 social workers in areas where they were most needed.
In the 2020 Supplementary Budget, the National Department of Social Development shifted R33.0 million from other programmes for the temporary employment of 1809 social workers.
In the 2020 Adjusted Budget, the Department received a further R92.5 million as unforeseeable and unavoidable expenditure to sustain employment of these social workers.
Most recently, in the 2021 Adjusted Budget, R120 million was added to the Provincial Equitable Share as part of the Presidential Employment Stimulus for the employment of 2000 social workers over a period of 10 months.
(2) Any announcement on additional funds will be made in the Budget Speech in February 2023. We do not announce such allocation decisions before the Budget.
08 December 2022 - NW2877
Buthelezi, Mr EM to ask the Minister of Finance
What total amount has the National Treasury been able to recuperate from the pension funds of persons accused of defrauding the State since the beginning of the year?
Reply:
The National Treasury has not recovered any funds from any person accused of defrauding the State since the beginning of this financial year commencing 1 April 2022, nor the previous financial year.
In terms of the Government Employees Pension Law, 1996, Government is able to recover or deduct from the pension benefit of an employee any amount of loss which has been sustained by the employer through theft, fraud or any misconduct on the part of the member, pensioner or beneficiary and which has been admitted by such person in writing or has been proved in a court of law.
I have been informed by the Government Pension Administration Agency (GPAA) that neither they nor the GEPF have been furnished with any court order since the beginning of the current financial year commencing 1 April 2022 requiring them to recover or deduct funds from the pension benefit of any person accused of defrauding the State.
05 December 2022 - NW3583
Buthelezi, Mr EM to ask the Minister of Finance
In view of reports that the current Chief Executive Officer of the Office of the Tax Ombud is currently the Acting Tax Ombud, what are the details of and update on the process of the appointment of a permanent Tax Ombud?
Reply:
The Minister of Finance has commenced with the recruitment process for the appointment of the Tax Ombud in terms of section 14 of the Tax Administration Act, 2011 (Act No 28 of 2011). The advert for the position was published in the Sunday Times on Sunday, 30 October 2022 and in the Business Day on Monday, 31 October 2022. It was also published on the following social media platforms, namely Twitter, Facebook and LinkedIn. The closing date for the advert was 14 November 2022. Following the closing date, the shortlisting process will commence and thereafter interviews will take place.
05 December 2022 - NW3940
Graham-Maré, Ms SJ to ask the Minister of Finance
(1)With reference to his reply to question 2088 on 27 September 2021 regarding the non-payment of pension funds by the Dr Beyers Naudé Local Municipality, what (a) progress has been made on settling the arrears on the payment of pension funds owed by the Dr Beyers Naudé Local Municipality to third parties and (b) is the status of the payments to medical aid contributions by the Dr Beyers Naudé Local Municipality on behalf of officials and councilors where the monies have been deducted from their salaries; (2) whether the Dr Beyers Naudé Local Municipality is up to date with payments to the SA Revenue Service; (3) whether the National Treasury has contemplated withholding equitable share to the Dr Beyers Naudé Local Municipality until it complies with its fiduciary duties; if not, why not; if so, what are the relevant details?
Reply:
The information below is provided by the municipality to National Treasury. It is not audited and so cannot be verified by Treasury.
1. (a) The Municipality paid an amount of R18.6 million in the month of September to the Pension Funds. That reduced the total arrear debt to R20.9 million in terms of the narrative report submitted by the municipality to both Provincial and National Treasury. It should be noted that non-payment of pension fund contributions constitutes a criminal offence in terms of Section 13(A) of the Pension Fund Act.
b) The narrative report indicates that the Medical Aids are paid up to date and there is no arrear amount on the account.
2. According to the municipality, it owes the South African Revenue Service a total amount of R30.3 million. This information is obtained from a narrative report the municipality submitted to both Provincial and National Treasury. SARS are unable to confirm with the National Treasury as they do not discuss taxpayers’ affairs of a taxpayer with third parties.
3. The National Treasury does have the power to stop the transfer of the equitable share to the municipality in terms of Section 216(2) of the Constitution and other applicable legislation in the event of persistent failure by a municipality to honor its financial commitments. National Treasury does require municipalities to report on the non-payments of its commitment to South African Revenue Service, pension and other staff benefit deducted from municipal officials to be paid over the appropriate funds and/ or institutions. Failure for municipalities to provide this evidence may result in their equitable share being withheld to influence compliance.
The onus lies with the Executive Mayor to impose consequence management to the Accounting Officer. The Executive Mayor must recommend financial misconduct proceedings against the accounting officer in line with Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings.
The other option is also for the relevant Pension Fund to implement their credit control policies to collect the monies due to their institutions. Pension Fund Administrator must also lay criminal charges against the accounting officer in terms of their own legislation.
Eastern Cape Legislature must further exercise its oversight responsibility effectively. The matter must be directed to the Provincial Legislature for the relevant committee to summon the Mayor to the Legislature to provide responses on how the municipality is planning to address the matter.
05 December 2022 - NW4194
George, Dr DT to ask the Minister of Finance
Whether, with regard to the Agri-Parks Initiative, where 44 Agri-parks were established by the Department of Agriculture, Land Reform and Rural Development, the National Treasury will undertake a (a) policy review and (b) financial cost benefit analysis of the specified initiative; if not, (i) why not and (ii) what action will be taken to hold those responsible for the initiative accountable; if so, what are the relevant details?
Reply:
The Agri-Parks Initiative falls under the domain of the Minister of Agriculture, Land Reform and Rural Development and not the Minister of Finance. I will, however, deal with some of your queries as related to the National Treasury.
a) According to the Department of Agriculture Land Reform and Rural Development, Agri-Parks entails the creation of a nexus of rural agricultural businesses across South Africa to serve as primary vehicles of agrarian transformation and comprehensive rural development in order to:
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- Enhance agricultural production and efficiency;
- Promote household food security and national food sovereignty;
- Engender agrarian transformation through rural enterprise development and employment creation; and
b) The AgriParks therefore aims to grow rural economies by facilitating the efficient movement of rural produce to markets. They support smallholder farmers by providing capacity building, mentorship, farm infrastructure, extension services, and the production and mechanisation inputs.
At conception the department has committed R2 billion per annum (this was part of the existing budget and no specific budget line was established for Agri Parks), for establishing and operationalising the Agri-Parks in all 44 Municipal Districts. However, this has been scaled down to 9 Agri-Parks.
Agri-Parks programme does not have a specific dedicated programme and budget item in the department, but is implemented through all the departmental programmes.
To maximise value for money and address inefficiencies in departmental spending, the department is embarking on the review of programmes, with Rural Infrastructure Programme as the first programme to be selected.
National Treasury does not intend to do a policy review. The programme falls under the oversight of Minister of Agriculture, Land Reform and Rural Development, the department is therefore mandated to undertake a policy review and financial cost benefit.
05 December 2022 - NW4120
Buthelezi, Mr EM to ask the Minister of Finance
Whether the National Treasury has engaged with the Department of Home Affairs to address the processing of the backlog of skilled visa applications to boost human and finance resources and reduce the risk of foreign investment retracting their activities in the Republic; if not, what is the position in this regard; if so, what are the full, relevant details of the (a) engagements with Home Affairs and (b) type of assistance that National Treasury will provide in this regard?
Reply:
National Treasury works with departments to assist them with their budget requests and implementation of processes that will allow them to achieve their strategic plans. Departments mostly will, through the budget process, inform the National Treasury if funding is requested for a specific project. These funding requests will then be dealt with through the budget process.
In terms of the policy and implementation timelines, the Department of Home Affairs will have this information and should be requested to submit the plans and their timelines. The National Treasury has not yet received the specific funding request for this specific project.
05 December 2022 - NW3973
Lees, Mr RA to ask the Minister of Finance
Whether, with regard to the Public Finance Management Act, Act 1 of 1999, that provides for the relevant treasury and/or executive authority to institute disciplinary action against an accounting officer charged with financial misconduct, the National Treasury has ever triggered the provisions against accounting officers in government departments in view of the perennial problem of fruitless, irregular and wasteful expenditure showing no signs of improvement; if not, why not; if so, what are the relevant details?
Reply:
The disciplinary process is governed by the Public Service Act and not the Public Finance Management Act (PFMA). The PFMA in its current form does not provide the National Treasury with powers to institute disciplinary action against accounting officers. Information related to disciplinary action instituted in departments can be found in annual reports of those departments. The Frameworks issued by the National Treasury on unauthorised, irregular and fruitless and wasteful expenditure prescribes the process and requirements that should be followed by departments, constitutional institutions, trading entities and public entities when dealing with matters of financial misconduct linked to these expenditures.
Section 85(1)(a) of the PFMA provides that, the Minister must make regulations prescribing the manner, form and circumstances in which allegations and disciplinary and criminal charges of financial misconduct must be reported to the National Treasury, the relevant provincial treasury and the Auditor-General including (i) particulars of the alleged financial misconduct; and (ii) the steps taken in connection with such financial misconduct.
Treasury Regulation 4.1.3 states that, if an accounting officer is alleged to have committed financial misconduct, the relevant treasury, as soon as it becomes aware of the alleged misconduct, must ensure that the relevant executive authority initiates an investigation into the matter and if the allegations are confirmed, holds disciplinary hearing in accordance with the prescripts appliable and agreement applicable in the public service. The relevant treasury may also direct that (a) an official other than the employee of the department conducts the investigation or (b) issues reasonable requirement regarding the way in which the investigation should be performed as provided in Treasury Regulations 4.1.4.
Therefore, The Frameworks can be found on the National Treasury website at the following links:
05 December 2022 - NW4363
Lees, Mr RA to ask the Minister of Finance
Whether the Government has decided to cancel the proposed tax incentive scheme to catalyse private rooftop solar installations that the President, Mr M C Ramaphosa, mentioned when he was presenting his Energy Response Plan in June 2022; if not, what are the reasons that he did not mention the tax incentive when he tabled the Medium-Term Budget Policy Statement; if so, what are the (a) relevant details and (b) reasons?
Reply:
The Minister of Finance does not generally make tax announcements in the Medium-Term Budget Policy Statement (MTBPS). However, the 2022 MTBPS did state that efforts to expand generation capacity would include “facilitating investments in rooftop solar by developing a feed-in tariff for small-scale embedded generation projects, and investigating the expansion of tax incentives for commercial installations”.
This is in line with what the President stated in the July 2022 announcement that a feed-in tariff would be developed by Eskom to incentivise greater use of rooftop solar.
To quote the President:
“Fourth, we intend to enable businesses and households to invest in rooftop solar. South Africa has a great abundance of sun which we should use to generate electricity. There is significant potential for households and businesses to install rooftop solar and connect this power to the grid.
To incentivise greater uptake of rooftop solar, Eskom will develop rules and a pricing structure – known as a feed-in tariff – for all commercial and residential installations on its network. This means that those who can and have installed solar panels in their homes or businesses will be able to sell surplus power they don’t need to Eskom.”