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02 August 2021 - NW1344

Profile picture: Kruger, Mr HC

Kruger, Mr HC to ask the Minister of Finance

(1)With regard to the letter from the Banking Association of South Africa dated 10 October 2020, what (a) total number of small-, medium- and micro-enterprises have been successfully assisted (i) with payment breaks on credit agreements and (ii) under the loan guarantee scheme since 27 September 2020 and (b) are the relevant details of the total assistance provided; (2) what (a) total number of requests by small-, medium- and micro-enterprises for payment breaks on credit agreements have been denied since 27 September 2020 and (b) are the relevant details of the total assistance denied; (3) what (a) total number of requests by small-, medium- and micro-enterprises for assistance under the loan guarantee scheme have been denied since 27 September 2020 and (b) are the relevant details of the total assistance denied; (4) what measures has the National Treasury put in place to ensure that more small-, medium- and micro enterprises receive appropriate and sufficient financial assistance

Reply:

1. I am not aware that there was any letter from BASA dated 10 October 2020, and the attachment submitted by the Honorable Member appears to be a public media statement issued by BASA on 11 October 2020. The Minister of Finance cannot be expected to answer or account for any statement issued by BASA, or for the loan policies of any private registered bank.

I will, however, assist the Honorable Member by commenting and highlighting relevant points from this and other BASA statements, some of which they also sent to the National Treasury. I refer the Honourable Member to the BASA website (www.banking.org.za) for other relevant statements, and also bring to the attention of the Honorable Member my response to a previous parliamentary question PQ 869, published on 29 September 2020.

a) (i) Payment breaks on credit agreements

Yes, I am aware that all the major banks took steps to provide relief to their customers soon after the start of the first COVID-19 lockdown in 26 March 2020, based on the public statements issued by BASA and various individual banks, as well as meetings between BASA and Treasury. According to the BASA statement of 12 November 2020 (https://www.banking.org.za/news/nov-covid-19-relief-update/), most of the major banks restructured loans and credit facilities for their clients and corporate customers in financial distress through their own credit relief process, almost immediately at the start of the first lockdown. In this regard, the credit relief (repayment holiday or payment breaks on credit agreements) was a voluntary initiative by commercial banks, which was offered to individuals and small and medium enterprises (SME) for the six months (April – October 2020). As at 24 October 2020, BASA reports that banks had provided R33,61 billion in payment breaks on credit agreements to South African businesses and individuals who were in financial distress as a result of the Covid-19 pandemic and the national lockdown.

According to BASA, over 83 per cent of individuals and 95 per cent of businesses who requested help, with personal and home loans, vehicle finance, business mortgages and credit facilities, received the required assistance. This cash flow relief for 2 684 271 credit agreements for eligible individuals and 135 540 businesses was critical to the preservation of quality of life, jobs, businesses and the functioning of the economy.

a) (ii) Loan guarantee scheme

According to the last update on the loan guarantee scheme released by BASA as at 19 June 2021, a total 13 324 loan applications were approved for SMEs within the different turnover bands, with a total rand value of R18.39 billion. The majority of approved applications were submitted by SMEs with a turnover greater or equivalent to R1 million but less than R20 million. The relevant statement is available on the BASA website.

2. This information is not available to National Treasury, as it is bank-specific, and covers financial assistance beyond the loan guarantee scheme. But BASA has indicated (as stated above) that at least 83 per cent of individuals and 95 per cent of businesses that requested help, with personal and home loans, vehicle finance, business mortgages and credit facilities, received assistance. This implies that 17 per cent of individuals and 5 per cent of commercial enterprises, respectively, did not receive financial assistance as a result of their respective credit facilities not being up-to-date in terms of repayments credit agreements.

3. As at 19 June 2021, BASA reports that a total of 28 430 covid19 loan guarantee scheme applications were rejected. Applications were rejected since, inter-alia, they did not meet the eligibility criteria for the scheme, as set out by National Treasury and the South African Reserve Bank, or because they did not meet commercial bank’s risk criteria. In some cases, applications were rejected as a result of outstanding financial records or documentation not submitted; or the loan value requested was either too high, being in excess of the R100 million maximum loan amount requirement, or that the reason for the application was not a COVID-19 related matter/distress.

4. The National Treasury, together with the South African Revenue Service (SARS), the Prudential Authority and The Financial Sector Conduct Authority (FSCA), have taken a number of measures to assist all businesses, using tax and regulatory instruments. The tax measures were outlined in announcements made by the Minister of Finance (see Supplementary Budget Review, page 32), and outlined in parliamentary questions PQ 850, 851, 852, 853, 854 and 869 in 2020. Small businesses (with gross income of up to R100 million) were able to defer a portion of up to 35 per cent of their employees’ tax payments and a portion of up to 35 per cent of their provisional tax payments. Businesses of any size could claim the increased Employment Tax Incentive and were exempt from the Skills Development Levy for 4 months. Companies that still face financial distress can utilise the existing tax administrative measures to apply for hardship relief.

FSCA, in consultation with the National Treasury, also provided further support to businesses and individuals by adjusting regulations to support insurance premium relief for policyholders, allowing them to claim while minimising disruptions to the expected income of intermediaries. In addition, the FSCA advised the boards of trustees for retirement funds and financially distressed employers to consider allowing appropriate relief with regard to retirement contributions.

The National Treasury continues to monitor the impact of the COVID-19 pandemic on the economy and jobs, and recognises the challenges facing both small and large businesses, particularly those in the hardest hit sectors. Existing support measures by the South African Reserve Bank and FSCA, as detailed in the 2021 Budget Review (pages 173-174), will continue, subject to conditions and regulatory mandates. National Treasury, working with relevant stakeholders, continues to explore more appropriate support and risk-sharing mechanisms, including proposals related to non-bank financial institutions and development finance institutions, mindful of the fiscal challenges facing South Africa.

02 August 2021 - NW742

Profile picture: Hill-Lewis, Mr GG

Hill-Lewis, Mr GG to ask the Minister of Finance

(1) Whether, in light of the fact that the Financial Sector Regulation Act, Act 9 of 2017, requires the formation of, inter alia, the Financial Sector Inter-Ministerial Council, the Financial System Council of Regulators, Financial Stability Oversight Committee, Financial Sector Contingency Forum, the Financial Services Conduct Authority Executive Committee, the Prudential Authority Oversight Committee, the Ombud Regulatory Council and the Ombud Regulatory Council Board, he will furnish Mr G G Hill-Lewis with the details of the (a) date each body was formed, (b) names of persons serving on each body, (c) dates of meetings of each body since January 2020 and (d) names of the chairperson and deputy chairperson of each body; if not, why not; if so, what are the relevant details; (2) whether the (a) chairpersons and (b) deputy chairpersons of each specified body were elected and/or appointed in each case; if not, why not; if so, by whom, (3) whether each specified body has ever met; if not, why not; if so, what were the details on agendas considered and resolutions taken?

Reply:

1. The Honourable Member’s question covers a number of different entities and forums operating in the financial sector regulatory system and established in terms of the Financial Sector Regulation Act 9 of 2017, which took effect on 1 April 2018. It is difficult to provide all the detail requested, as the regulators and the ombuds often deal with market-sensitive and confidential information, and may not have the power to even report such information to the Minister. This has also resulted in the delay in answering this question. Many of the entities are not fully-fledged entities listed as entities in terms of the PFMA, and are more like working committees or oversight committees/forums, and their membership is determined in terms of specific official positions rather than particular individuals. Some of the members of the various committees are determined by the positions held by members, be they the Governor, Deputy Governor of the SARB, or the Director-General or Minister of a specific department. However, all these committees or forums are built around the two core regulatory institutions established under the Financial Sector Regulation Act No. 9 of 2017, which are the Prudential Authority and the Financial Sector Conduct Authority, as well as the ombuds and tribunal system.

2. I am not in a position to answer the detailed information requested by the Honourable Member, which in any case is provided via the statutory reports required from the entities in terms of the PFMA and other laws, like the annual reports which are all tabled in Parliament every year. Hence, I will restrict my responses to easily available information, like the name of the chair or deputy chair of such institutions, and not the entire staff of any entity. The Honourable Member is free to engage with each fully-fledged entity after they have submitted their annual and other reports to Parliament, when the relevant portfolio committee convenes a hearing to consider such reports. I will not answer more granular information like the number of meetings held by any committee or organization, as such detailed operational information is generally not part of the statutory reporting system.

3. The Honourable Member should also note that there has been a transitional period for implementing the FSRA, which has also taken longer than initially anticipated, particularly for the new positions and structures created, like the appointment of the Commissioner and the Deputy Commissioners of the FSCA, or the establishment of the Ombud Council. Some of the committees will only begin to function once the transition period is over, which I expect to be by October 2021.

Financial Sector Conduct Authority

4. I am happy to confirm that the first Commissioner of the FSCA has been appointed. I appointed Mr Unathi Kamlana as the Commissioner of the FSCA, starting on 1 June 2021. Ms Astrid Ludin was also appointed as a Deputy Commissioner of the FSCA, commencing on the same date. I have just received the second report from the Shortlisting Panel recommending two persons for the vacant Deputy Commissioner positions, and hope to make a final decision on such appointments by early July 2021. The appointment of a further Deputy Commissioner will enable the Minister of Finance to disband the Transitional Management Committee and mark the end of the transition process for the FSCA, and put it firmly under the new permanent leadership. In the meantime, from 1 June 2021 until it is phased out, the new Commissioner is the chair of the Transitional Management Committee in line with the provisions of section 66(4)(a) of the FSRA. More details on the FSCA are available in its annual reports, as tabled in 2020.

5. The FSCA Executive Committee is a committee of the FSCA, comprising the Commissioner and Deputy Commissioners of FSCA, established in terms of section 60 of the FSRA. During the transition, whilst there was no Commissioner and Deputy Commissioners appointed, the Transitional Management Committee (TMC) served, in terms of the Financial Sector Regulations, as the Executive Committee. Those who have acted as Chairs of the TMC include Mr Abel Sithole, Adv Dube Tshidi, Mr Olano Makhubela and Ms Katherine Gibson. I have been informed by the FSCA that the Executive Committee (i.e. the TMC) has generally been meeting at least twice monthly.

PRUDENTIAL AUTHORITY

6. With regard to the Prudential Authority (PA), it is an entity that resides within the SA Reserve Bank, and its CEO is one of the Deputy Governors of the SARB in terms of section 36(1) of the FSRA. Deputy Governor Kuben Naidoo has been its CEO from the date it was established on 1 April 2018. The Prudential Authority Oversight Committee, which oversees the PA, is established in terms of section 41 (2) of the FSR Act, and comprises of:

(i) Governor of the South African Reserve Bank, who is the Chairperson;

(ii) CEO of the Prudential Authority, who is one of the Deputy Governors; and

(iii) All the other Deputy Governors of the South African Reserve Bank

7. The current chair of the Prudential Committee is thus Mr Lesetja Kganyago (as the Governor of the SA Reserve Bank), and its other members are the other Deputy Governors (Dr Rashad Cassim, Ms Fundi Tshazibana and Mr Kuben Naidoo). The Prudential Committee informed me that it held its first meeting on 16 April 2018.

OMBUD COUNCIL AND OMBUD COUNCIL BOARD

8 The Ombud Council was established in terms of section 175 of the FSRA. This section took effect on 1 November 2020. In terms of section 179 of the FSRA, the Board of the Ombud Council is comprised of:

  1. The Chief Ombud;
  2. The Commissioner of the FSCA;
  3. 4-6 members appointed by the Minister of Finance.

9. The Minister appointed the Chair and Deputy Chair and 4 other members to the Board for a three-year term, commencing on 1 November 2020, in terms of section 180 of the FSRA, as follows:

  1. Ms Deanne Wood (Chair);
  2. Ms Dikeledi Chabedi (Deputy Chairperson);
  3. Mr Emmanuel Lekgau;
  4. Ms Silindile Kubheka;
  5. Mr Adam Horowitz; and
  6. Ms Charmaine Soobramoney.

10. The Board could only be properly constituted once the Chief Ombud was appointed, which was done on 2 May 2021, when I appointed Ms Eileen Meyer as the Acting Chief Ombud for a term of one year, starting 2 May 2021, in terms of section 188(1) of the FSRA (refer to attached media statement dated 24 May 2021). The Ombud Council Board is thus properly constituted, and held its first meeting on 26 May 2021.

11. The Chief Ombud will establish and operationalise the Office of the Ombud Council. As such, the Ombud Council currently does not have an executive committee, and thus has not held any meetings.

 

FINANCIAL SERVICES TRIBUNAL

12. The Financial Services Tribunal was established in terms of section 219 of the FSRA. It commenced its operations on 1 April 2018. In terms of section 220(1) of the FSRA, the Financial Services Tribunal comprises as many members as the Minister determines. Currently, the Financial Services Tribunal has 20 members. The current Chairperson of the Tribunal is Justice Yvonne Mokgoro, and the current Deputy Chairperson of the Tribunal is Judge Louis Harmse.

13. Whenever there is a case, panels of the Tribunal (usually consisting of 3 members) convene to hear and adjudicate on the case.

14. The rest of the organisations/entities named by the Honourable Member are not self-standing entities regulated or listed in terms of the PFMA, but rather are merely committees or forums, designed to either co-ordinate activities between regulators and/or departments or to exercise oversight.

Structure

(a) Date formed

(b) Names of persons serving on each structure

(c) Dates of meetings of each body since January 2020

(d) Names of Chairperson and Deputy Chairperson

Financial Sector Inter-Ministerial Council

No meetings have been convened as yet, as Section 83 of the Financial Sector Regulation Act is not yet in operation. This structure will only be convened as and when deemed necessary by the Minister of Finance.

Sections 83 and 84 of the FSRA determines that the following Ministers will serve on this Council:

(a) Minister of Finance (chair);

(b) Minister of Trade and Industry (for consumer protection, consumer credit and economic development); and

(c) Minister of Health.

N/A

Minister of Finance, Mr Tito Mboweni

Deputy Chairperson - none

Financial System Council of Regulators

13 June 2019

This is an advisory body established in terms section 79 of the FSR Act, and its members are as follows:

(i) Chair: Director-General – National Treasury;

(ii) Director-General – Department of Trade, Industry and Competition;

(iii) Director-General – Department of Health;

(iv) CEO – Prudential Authority;

(v) Commissioner – Financial Sector Conduct Authority;

(vi) CEO – National Credit Regulator;

(vii) Registrar and CEO – Council for Medical Schemes;

(viii) Director – Financial Intelligence Centre;

(ix) Commissioner – National Consumer Commission;

(x) Commissioner – National Consumer Commission;

(xi) Deputy Governor responsible for financial stability matters – South African Reserve Bank.

22 January 2020

Chairperson – Dondo Mogajane

Deputy Chairperson – None

Financial Stability Oversight Committee

9 March 2018

In terms of section 22 (1) of the FSR Act, the Financial Stability Oversight Committee consists of the following members:

 

(i) Chair: Governor – South African Reserve Bank);

(ii) Deputy Governor for Financial Stability matters – South African Reserve Bank);

(iii) CEO – Prudential Authority;

(iv) Commissioner – Financial Sector Conduct Authority;

(v) CEO – National Credit Regulator;

(vi) Director-General – National Treasury;

(vii) Director – Financial Intelligence Centre;

(viii) Head: National Payment System Department – South African Reserve Bank;

(ix) Head: Financial Stability Department – South African Reserve Bank; and

(x) Head: Financial Surveillance Department.

31 March 2020 and 04 September 2020

Chairperson – Lesetja Kganyago

Deputy Chairperson – Rashad Cassim

Financial Sector Contingency Forum

Forum to assist the FSOC, and launched as a statutory forum on 1 April 2018 (as it was originally set up as an advisory structure in 2008, following the global financial crisis)

Section 25 of the FSR Act empowers the Governor of the SARB to establish this forum to assist the Financial Stability Oversight Committee (FSOC). It consists of the following members:

(i) the 3 Deputy Governors of the South African Reserve Bank;

(ii) a representative of the Financial Sector Conduct Authority;

(iii) a representative of the Financial Intelligence Centre;

(iv) a representative of the National Treasury;

(v) a representative of the Banking Association South Africa;

(vi) a representative of the South African Insurance Association;

(vii) a representative of the Johannesburg Stock Exchange;

(viii) a representative of the Payments Association of South Africa;

(viii) a representative of Bankserv;

(ix) a representative of Strate Ltd;

(x) a representative of the Association for Savings and Investment South Africa;

(xi) a representative of the National Disaster Management Centre;

(xii) a representative of the South African Bank Risk Information Centre.

This forum meets twice a year

Chairperson – Rashad Cassim

Deputy Chairperson – None

15. Where there is a Chair or Deputy Chair for any structure above, they are all appointed in terms of legislation, or by the Minister of Finance or Governor of the SA Reserve Bank, depending on the FSRA. No Chair or Deputy Chair is elected to such position.

16. As noted above, the only structure that has not been established as yet is the Financial Sector Inter-Ministerial Council, which will only be convened as and when deemed necessary, as it is an advisory structure. Further, section 83 has not taken effect as yet. More importantly, the underlying technical structure, the Financial System Council of Regulators, has been established, and has started meeting. Note that the aim of these two structures is to co-ordinate with related regulatory structures like the National Credit Regulator and the Council for Medical Schemes, which also regulate financial products, but report to different Ministers.

17. It should be noted that the agendas of many of these structures tend to be market-sensitive, and care needs to be taken not to make them public until appropriate steps are taken to present more comprehensive reports via public announcements by the regulators. Neither is the Minister involved with many of these structures. The regulators and entities will report to Parliament at least annually, and deal with the key issues, including on their performance.

 

02 August 2021 - NW1211

Profile picture: Buthelezi, Mr EM

Buthelezi, Mr EM to ask the Minister of Finance

Whether, in light of the recent developments about the refusal of some banks to provide banking facilities to certain black entities, the National Treasury has a strategy to ensure that banks contribute without discrimination to the (a) transformation agenda and (b) economic inclusiveness; if not, why not; if so, what are the relevant details?

Reply:

I am not aware of any registered bank in South Africa refusing to provide its services to clients on the basis of being black, or being black-owned. As the Honourable Member may be aware, the relationship between banks and their account holders is governed by the law of contract and hence confidential to any third party. The termination of any banking account is therefore not disclosed to the Minister of Finance or National Treasury, and we are not legally empowered to intervene in a bank-client relationship, as confirmed in case law, for e.g. in the 2017 Minister of Finance vs Oakbay Investments (Pty) Ltd and 2010 Bredenkamp and Others vs Standard Bank of SA. The only time National Treasury or I become aware of any specific closure of any bank account is when an affected customer contacts us (as was the case with Oakbay) or when it is reported in the media.

National Treasury does not have any evidence that implicates any bank in refusing to provide its services to any person or entity because of their race, gender or sexual orientation. Needless to say, any company or person discriminating on such a basis is breaking the laws of our country, and will have to face the Human Rights Commission, and also face criminal and regulatory sanctions in terms of the laws of our country. If the Honourable Member does have credible evidence on such discrimination by any bank, I invite him to provide such evidence to the Financial Sector Conduct Authority, the criminal prosecution authorities and Human Rights Commission. I do want to caution about certain individuals who make it their business to make such (and similar) allegations for personal financial gain, as they then market their services to “help” customers on their interest rates or charges etc – I would warn the public not to fall for such scams.

A bank may refuse to take on a customer, or terminate its services to a client, for many reasons, provided the reasons for such refusal or termination do not violate public policy or constitutional values. Such reasons also include the obligation on banks to reduce risks related to criminal or money laundering - banks face steep sanctions from both domestic and overseas regulators if they do not have effective customer due-diligence measures in place.

In order to ensure that banks do not abuse their power and treat their retail customers fairly at all stages, even when closing their accounts, the Financial Sector Conduct Authority (FSCA) has put in place conduct standards which came into effect on 3 July 2020 in terms of section 57 of the Financial Sector Regulation Act 9 of 2017. Section 9 of Conduct Standard 3 of 2020 (Banks) requires banks to provide reasons to an affected customer when a bank refuses, withdraws or closes any financial product or financial service to any customer, and also has to provide reasonable prior notice. Section 9 (4) of the standard, allows a bank to refuse, withdraw or close a financial product or financial service without providing prior notice or reasons if:

  1. compelled to do so by the law;
  2. it has reasonable suspicion that the financial product or service is being used for any illegal purpose; and
  3. it has made the necessary reports to the appropriate authority.

Treasury is aware that there are also more structural forms of exclusion due to the history of our country, forms of inequality and access to financial services. For such reasons, National Treasury has adopted a multi-pronged approach to transformation that seeks to enhance market conduct, market development and financial inclusion (deepening financial inclusion for individuals and small businesses).

(a) Transformation in the financial sector (including the banking sector) is set out in terms of the BBBEE Act and more specifically, the Financial Sector Code. It is led by the Financial Sector Transformation Council, and governed by the Financial Sector Code that was issued in terms of section 9 (1) of the Broad-based Black Economic Empowerment (BBBEE) Act 53 of 2003.The Financial Sector Code commits all participants to actively promote a transformed, vibrant and globally competitive financial sector that reflects the demographics of South Africa, and which contributes to the establishment of an equitable society by providing accessible financial services to poor and marginalized people and by directing investment into targeted sectors of the economy. Working together with the Financial Sector Transformation Council and its other members, National Treasury will continue working on the strengthening and implementation of the Financial Sector Code so as to enhance the transformation of the financial sector.

National Treasury is also developing legislation that will further seek to enhance the transformation imperatives of the South African financial services sector, with the publication of drafts of the Conduct of Financial Institutions (COFI) Bill for public comment in December 2018 and a second draft in September 2020 as the first steps. The current version of the Bill contains provisions (if enacted) that require financial institutions to develop transformation plans to guide them in meeting their commitments in terms of promoting transformation of the financial sector as envisaged in the BBBEE Act and the Financial Sector Code.

(b) Economic inclusiveness is also embedded in the financial inclusion leg of the multi-pronged approach. Treasury recently published a draft policy document on financial inclusion, titled “An Inclusive Financial Sector for All for public comment, which is available on the National Treasury website. The link is as follows:

http://www.treasury.gov.za/comm_media/press/2020/Financial%20Inclusion%20Policy%20-%20An%20Inclusive%20Financial%20Sector%20For%20All.pdf

 

02 August 2021 - NW1246

Profile picture: Buthelezi, Mr EM

Buthelezi, Mr EM to ask the Minister of Finance

(1)Whether he intends to revise the corporate taxation regime to boost post COVID-19 recovery; if not, what is the position in this regard; if so (2) whether he has plans to incentivise investment in local production through tax incentives; if not, what is the position in this regard; if so, (a) what are the relevant details of such plans and (b) how does he intend to mitigate the negative impact of high corporate tax?

Reply:

1. As Minister of Finance, I generally only make tax announcements on Budget Day, but given the exceptional circumstances after the first Covid-19 lockdown, I made some tax announcements on 29 March and 23 April 2020 to provide tax relief to businesses and individuals during the 2021/21 financial year. Two of these measures applied to corporations, namely delaying the base-broadening measures I had announced in the previous Budget and deferrals for provisional tax payments. These measures have now run their course. The corporate tax regime already contains automatic stabilisers as a tax on profits, and as companies’ profitability recovers so will revenue from corporate income tax. Companies that face financial distress can utilise the existing tax administrative measures to apply for hardship relief. To aid the medium-term recovery, I announced in the 2021 Budget speech the overall intention to restructure the corporate income tax system in a revenue neutral manner, through a combination of a tax rate reduction and base broadening measures. These measures are expected to enhance efficiency, transparency and fairness in the corporate tax system. The design of the corporate income tax system can influence taxpayer behaviour, which impacts the economy. A corporate income tax regime characterised by a broad base (fewer tax incentives and exemptions) and a lower rate is simpler with less loopholes and requires less onerous anti-avoidance legislation. By revising the corporate tax base in this manner, we can afford my proposed one percentage point reduction in the corporate income tax rate from 28 per cent to 27 per cent from April 2022 without a loss of revenue. 27 per cent is still higher than the current global average of around 23 per cent, but South Africa is working with more than 100 other countries on a multilateral solution for a global minimum tax rate of at least 15 per cent. A lower corporate tax rate is expected to make our tax system more attractive to investments: this can boost the post COVID-19 recovery; reduce the incentive for multinational firms to shift their profits to low-tax countries; and reaffirm our commitment to support business in working towards inclusive growth. The announced reduction from 28 to 27 per cent will be done in a revenue neutral manner by broadening the base through reducing the number of tax incentives and implementing the measures that were delayed last year, namely restricting the use of excessive interest deductions and limiting the setoff of accumulated assessed losses against taxable income. The combination of a rate reduction and base broadening measures aims to ensure affordability so that no social spending is affected as a result of these proposals.

2. No, as the tax system is a very blunt tool to achieve non-revenue related objectives, and introducing additional further tax incentives will also work against our objective to broaden our tax base and lower the tax rate for all businesses, and to do so in a revenue neutral manner. Tax incentives narrow the tax base, requiring a higher tax rate to raise a given level of revenue. The provision of tax incentives often undermines the principles of a good tax system, which should be simple, efficient, equitable and easy to administer. Tax incentives provide certain taxpayers/industries with preferential treatment compared to what is generally available to all, creating opportunities for vested interests and lobby groups. The 2021 Budget Review stated that “Government is reducing the number of tax incentives, expenditure deductions and assessed loss offsets…”. National Treasury has already commenced a process to review existing corporate tax incentives with a view to repeal those that are redundant and include sunset dates where there are none. Studies conducted by international organizations, such as the International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD) and the World Bank confirm that investors also value other factors above tax incentives when making investment decisions. These include political and policy certainty, infrastructure, access to markets, access to skilled labour, etc. Reducing the corporate income tax rate and broadening the base is a better means of benefiting all businesses. In turn, employees and consumers can also benefit from higher wages and lower prices.

06 July 2021 - NW950

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Hill-Lewis, Mr GG to ask the Minister of Finance

Whether, in light of the fiscal pressures facing the economy and the commitment of the National Treasury to implement zero-based budgeting, the National Treasury has ever considered and/or is considering the implementation of (a) a balanced budget amendment to the Constitution of the Republic of SA, 1996, which requires that the State cannot spend more than its income or any similar amendment, (b) budget balance rules that require the primary budget balance to achieve a net balance of zero over a specified period of time or any similar rule, (c) debt rules which require the Government to place a growth ceiling on consolidated government debt or any similar rule, (d) expenditure rules that require government to place a growth ceiling on government expenditure or any similar rule and/or (e) revenue rules that require the Government to abide by certain limitations as it pertains to raising and introduction of taxes or any similar rule; if not, why not; if so, what are the relevant details?

Reply:

a) The National Treasury is not proposing amendments to the Constitution.

b) The National Treasury is not proposing a balance budget rule but the 2021 Budget sets out a fiscal framework that targets a debt stabilising primary balance in 2024/25 with debt as a share of output stabilising in 2025/26. The spending ceiling announced in February 2021 remains a key fiscal anchor.

c) No, a debt rule is inappropriate because small changes to debt projection assumptions can have a very significant impact on the long-run debt outlook. Projections of debt are very sensitive to assumptions about future rates of economic growth, interest rates, exchange rates and the long-term path of the deficit. Unexpected increases in inflation or depreciation of the exchange rate would increase the cost of outstanding inflation-linked or foreign-currency bonds. A debt rule would encourage pro-cyclical fiscal policy stances which would worsen the conduct of fiscal policy.

d) Government already has an expenditure ceiling. It sets a maximum level of expenditure to which the government has committed itself. The ceiling is applied to national government departments and excludes spending that is financed from dedicated revenue sources other than the National Revenue Fund. The ceiling has helped to significantly slow the growth of non-interest expenditure.

e) No, government’s tax policy objectives are set out in chapter 4 of the 2021 Budget review. Tax rates are influenced by projections of government spending and borrowing and the nation’s debt stock and a single numerical revenue rule would be inappropriate. Within this framework, tax policy must also consider the effect of taxes on economic growth; the behavioural response of taxpayers; inequality and fairness; and revenue administration capacity. Short‐term tax policy changes factor in the state of the economy. Over the medium term, tax policy changes seek to create an environment that is conducive to broad‐based economic growth and that avoids complicated incentives for specific sectors or groups of taxpayers. Progressivity will be enhanced by restricting deductions for the wealthy and increasing overall collections through improved administration.

06 July 2021 - NW1680

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George, Dr DT to ask the Minister of Finance

Whether any funds have been made available for the Local Government Elections that will take place on 27 October 2021; if not, why not; if so, what are the relevant details?

Reply:

Yes. The funding for the local government elections has been provided for and is included in the baseline of the Electoral Commission. The procurement of the election devices is also funded and included in the baseline. The baseline for the IEC for 2021/22, including the operational expenditure of the Commission, is R2.2 billion.

06 July 2021 - NW1502

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Buthelezi, Mr EM to ask the Minister of Finance

(1)Whether the public debt decreased since June 2020 in accordance with the Government’s undertaking to reduce it; if not, by what total amount did it increase; if so, by what total amount did it decrease; (2) what are the (a) details of the strategies that the Government has implemented since June 2020 to reduce public debt and (c) estimated outcomes in 2021?

Reply:

1. The June 2020 Supplementary Budget projected that gross national government debt will reach R3.97 trillion or 81.8 per cent of GDP by the end of 2020/21. According to the preliminary outcome for 2020/21, gross debt amounted to R3.93 trillion or 79 per cent of GDP. According to the 2021 Budget, gross debt will stabilise in 2025/26 at 88.9 per cent of GDP compared to 95.3 per cent forecasted in the 2020 Medium Term Budget Policy Statement.

2. (a) The 2020 Supplementary Budget outlined how Cabinet had endorsed a 2021 budget process that moves towards debt stablilisation. Cabinet had reiterated support for the proposed public-service wage bill reductions announced in February, which would improve the composition of spending.

The 2020 Medium Term Budget Policy Statement (MTBPS) then proposed steps to reduce the fiscal deficit and stabilise debt-to-GDP ratio over a five-year period. The 2020 MTBPS proposed fiscal adjustments to narrow the main budget deficit by 7.3 percentage points of GDP over the 2020 medium-term expenditure framework (MTEF) period, and by an additional 1.8 percentage points in the subsequent two years after the MTEF. To partially offset the effect of the spending adjustment, government had weighted the largest share of reductions to the wage bill, while supporting capital grants and the Infrastructure Fund. Narrowing the deficit and improving the composition of spending requires reductions in the growth of the wage bill, which accounts for about one-third of the consolidated budget. Government proposed downward adjustments to main budget spending plans over the next three years. Relative to the 2020 Budget, total main budget non-interest expenditure was projected to decrease by R62.9 billion in 2021/22, R92.9 billion in 2022/23 and R150.9 billion in 2023/24.

(c) The 2021 Budget continues this path of expenditure restraint and fiscal consolidation. However, it withdraws the R40 billion in tax measures announced in 2020 SAB. Efforts to narrow the budget deficit and improve the composition of spending – primarily through restraining wage bill growth – remain on course.

06 July 2021 - NW1132

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George, Dr DT to ask the Minister of Finance

With respect to the first strategic risk listed under the Internal Environment Analysis on page 11 of the latest Annual Performance Plan of the Accounting Standards Board, (a) what are the reasons for the systemic delays in the determination of the implementation date of Standards of Generally Recognised Accounting Practice (GRAP) and (b) by what date will the amendments to GRAP 104 be implemented?

Reply:

The concerns raised by the Accounting Standards Board (ASB) in their latest Annual Performance Plan has been noted by the Ministry and the National Treasury. The process for the promulgation of Standards of GRAP approved by the ASB, including the consultation with key stakeholders, has been reviewed and streamlined to avoid any future backlogs.

With regard to GRAP 104 on Financial Instruments, the effective date of this revised standard will be 1 April 2025.

01 July 2021 - NW1300

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Wilson, Ms ER to ask the Minister of Finance

What amount in revenue has been raised from the Sugar Sweetened Drinks Tax since its inception in 2018; Budget/National Strategy for Prevention and Control of Obesity 2015-2020; (3) what are the proposed increases in the Sugar Sweetened Drinks Tax for the (a) 2021-22 and (b) 2022-23 financial years; (4) how has COVID-19 affected income from the Sugar Tax to the fiscus; (5) whether he has received any reports and/or research on the effectiveness of the Sugar Tax on the health of South Africans; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

1. I presume the Honourable Member is referring to the Health Promotion Levy (HPL) on sugary beverages that was introduced on 1 April 2018, to give effect to health policy to counter the rise in diabetes, obesity and other related diseases in South Africa. There is no “sugar sweetened drings tax” nor any “sugar tax”.

The HPL is administered and collected by SARS. The HPL is a domestic consumption tax and payable by manufacturers in the Republic. Imported sugary beverages are taxed when cleared for domestic consumption.

The cumulative revenue collected from the on domestically produced and imported products, from inception on 01 April 2018 to 31 March 2021, is R7.9 billion. Collections in 2018/19, 2019/20 and 2020/21 were R3.2 billion, R2.5 billion and R2.1 billion respectively. These revenue figures from both domestically produced and imported sugary beverages are published on the National Treasury website at http://www.treasury.gov.za/comm_media/press/monthly/monthly_2021.aspx.

2. Tax revenues from the HPL are not earmarked or ringfenced for any particular expenditures, but instead flow into the National Revenue Fund. However, additional funding for health promotion and chronic disease prevention was allocated in the National Department of Health budget (see 2018 Estimates of National Expenditure). This allocation is approximately R50 million per annum over the 2021 MTEF. The National Department of Health has spent R24 million in 2019/20 and R14 million spent in 2020/21 on the health promotion allocation.

3. The rate for the HPL was not changed for the 2021/22 fiscal year and no announcement has been made for the 2022/23 fiscal year. Rate and levy changes are normally only made as part of the annual Budget announcements.

In terms of revenue estimates, the 2021 Budget Review showed an expected growth of HPL collections from R2.0 billion to R2.2 billion for the 2021/11 fiscal year. Measured against the actual unaudited revenue outcomes for 2020/21, the estimates for 2021/22 were forecast to increase by R101.4 million (4.8%), with most of the growth emanating from the HPL on domestically produced products. In the next year, HPL collections were estimated to increase from R2.2 billion to R2.4 billion in 2022/23, representing a growth of R152.1 million (6.9%).

4. During the 2020/21 financial year, HPL collections from locally manufactured sugary drinks, which are the vast majority, contracted year-on-year by 16.4% when compared to the 2019/20 financial year. During the early stages of the hard lockdown levels, most manufacturers of sugary drinks were not classified as essential services and thus production was affected. Furthermore, it appears that the impact of the restricted sales on alcoholic products during the COVID- lockdown is one of the drivers behind the lower manufacturing of sugary drinks as demand has also fallen.

During the 2018/19 financial year the imports of HPL amounted to R1.34 billion with R53.1 million in duties collected, and imports increased to R1.45 billion with duties registering R67.8 million. In 2019/20 imports amounted to R1.23 billion with duties of R66.6 million.

The imports of HPL improved to R556.7 million and duties of R26.2 million in 2020 during the first five months of the strict lockdown, as compared to R444.4 million and R24.70 million of duties during the same period in 2019. Overall, Covid-19 had an insignificant impact on HPL collections from imports.

(5) At present there have been two studies that have been shared with the Ministry of Finance on the effectiveness of the health promotion levy. The first detailed the impact of the health promotion levy on the prices of beverages and did not find any evidence of price increases for beverages that were exempt from the health promotion levy, whiles those beverages that were taxed increased in price by around R1 per litre on average. The second study examined the impact of the health promotion levy on the consumption levels of sugary beverages. The study finds that there was a decrease in the consumption of taxable beverages, with a smaller increase in the consumption of non-taxed beverages, and that the impact was greater for lower income households. The citations of the two studies are provided below:

  • Stacey, N., Mudara, C., Ng, S. W., van Walbeek, C., Hofman, K., & Edoka, I. (2019). Sugar-based beverage taxes and beverage prices: Evidence from South Africa's Health Promotion Levy. Social Science & Medicine, 238, 112465.
  • Stacey, N., Edoka, I., Hofman, K., Swart, E. C., Popkin, B., & Ng, S. W. (2021). Changes in beverage purchases following the announcement and implementation of South Africa's Health Promotion Levy: an observational study. The Lancet Planetary Health, 5(4), e200-e208.

28 June 2021 - NW1282

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George, Dr DT to ask the Minister of Finance

(1)Whether the National Treasury has ever drawn up a consolidated balance sheet for Government; if not, why not; if so, will he furnish Dr D T George with a copy of the balance sheet; (2) whether the National Treasury is planning to draw a consolidated balance sheet for Government in future; if not, why not; if so, what are the relevant details?

Reply:

The National Treasury, annually as required by section 8 of the Public Finance Management Act, Act 1 of 1999 (PFMA), prepares consolidated financial statements (that include a statement of financial position or balance sheet) for national departments and Parliament (including the National Revenue Fund, State Debt and Loans Accounts) as well as for National public entities separately and these two sets of consolidated financial statements are then audited and tabled in Parliament. The consolidated financial statements are prepared separately for both national departments and public entities since these two types of institutions use two separate accounting frameworks. The latest sets of consolidated financial statements that were tabled in Parliament are for the 2019/2020 financial year. The consolidated financial statements are published on the Office of the Accountant-General website and can be obtained from https://oag.treasury.gov.za/Publications/Forms/AllItems.aspx?RootFolder=%2FPublications%2F04%2E%20Consolidated%20Financial%20Statements&FolderCTID=0x0120007EBBC03F454D95408FB944B7B07F6166&View={EA6E6B15-593D-4839-A804-A91A49CB20A0}

28 June 2021 - NW1716

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Hill-Lewis, Mr GG to ask the Minister of Finance

(1)What are the full detailed reasons that the Public Investment Corporation (PIC) has abandoned the inquiry into the loss of nearly R1 billion through the investment in the American MUSA Group in 2015; (2) whether the PIC will take any further legal steps to recover the specified investment; if not, why not; if so, what are the relevant details?

Reply:

(1) The Public Investment Corporation (PIC) has not abandoned its inquiry into Musa Group. The section 417 enquiry is chaired by a Commissioner and run by legal teams on behalf of the liquidators. Currently the forensic accountant is analysing the information gathered during the first part of the enquiry.

(2) Following the completion of the section 417 enquiry and the receipt of the Commissioner’s report, the liquidators and the PIC will be in a position to decide what legal and other steps should be taken.

28 June 2021 - NW1681

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George, Dr DT to ask the Minister of Finance

Whether the impact on schooling of the disabled children was assessed in view of the SA Revenue Service limiting tax relief on fees for schools for children with special needs; if not, why not; if so, what are the relevant details?

Reply:

Yes. The draft 2021 “List of Qualifying Physical Impairment or Disability Expenditure” (draft 2021 Disability List) was prepared by SARS following proposals made by a stakeholder who represents a special needs school for learners with disabilities and, in addition, represents an association of independent schools. These independent schools provide general education together with interventions required as per the disability of each learner.

The guiding principle for qualifying expenses has always been to determine what additional expenses the person with a disability would incur, without which the person would not be able to perform activities of daily living. The amendments proposed in the draft 2021 Disability List were intended to assist schools and parents in more accurately drawing the distinction between expenses for education in the ordinary course, which would be incurred irrespective of whether the learner was living with a disability or not, and expenses for interventions required in consequence of disability, the latter of which would enjoy a tax privileged status under the Income Tax Act, 1962.

The stakeholder put forward the proposition that it was feasible for the schools to itemise their invoices and/or provide a letter to SARS separating the expenses for general education from those incurred in consequence of a disability, with the latter qualifying for tax relief. This appeared reasonable from the facts presented and the draft 2021 Disability List was accordingly prepared and workshopped with various stakeholders representing persons with disabilities before being published for general public comments.

Concerns were, however, raised by the public at large and some other schools. SARS has always been empathetic insofar as expenses required in consequence of disability are concerned and so decided to withdraw the draft 2021 Disability List in order to permit more time to engage with relevant stakeholders, consider the comments/suggestions raised, and clarify the intent behind the draft changes. It is only once this process has concluded that a further draft may be published.

28 June 2021 - NW1560

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Marais, Mr S to ask the Minister of Finance

(1)        Whether, with reference to the letter dated 8 October 2020, to which no response was received to date, he has received the specified letter; if not, what is the position in this regard; if so, what are the reasons for not responding to the letter; (2) whether, given the recent confirmation of the additional landing and on-board entertainment costs, he will confirm, with reference to the letter of 8 October 2020, that he was consulted by Minister N Mapisa-Nqakula in terms of the Defence Act, Act 42 of 2002; if not, what is the position in this regard; if so, on what date; (3) whether he has approved the amount to be invoiced to a certain organisation (name furnished); if not, why not; if so, what are the relevant details; (4) what action steps (a) have been and (b) will be taken by the National Treasury to remedy the apparent transgressions and obvious omissions by the Minister of Defence and Military Veterans?

Reply:

1. After liaising with my officials, I confirm that the letter referred to was received and not responded due to the transition from manual processing of documentation to electronic.

2. The National Treasury was not consulted with prior to the Minister of Defence and Military Veterans undertaking the visit to Zimbabwe with the ANC delegation using the SAAF Falcon 900.

3. Furthermore, the National Treasury was not part of the determination of the costs to be paid by the ANC but did receive proof that R105 545 was paid to the Department of Defence for this purpose.

4. The National Treasury has and will always engage departments and entities to ensure that they comply with the provisions of legislation that require consultation and concurrence of the National Treasury. As you may be aware, this matter has been handled and finalised by the President in terms of remedial actions.

28 June 2021 - NW779

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Motsepe, Ms CCS to ask the Minister of Finance

What total amount has his department recouped over the past five financial years from the pension funds of public servants who were fired for defrauding the State?

Reply:

It is not a function of the National Treasury to recover such amounts but well that of the related department. Once any formal processes in such cases have been concluded, and if it has been found that the department is to recoup monies from an individual or entity, then a debt must be recorded by the department on its financial system. It is only when such records are contained in systems controlled by the National Treasury that some report can be provided but again the correctness and completeness of such report will rely solely on the full and correct information submitted by the department itself.

Of such systems that National Treasury maintain, 84 individuals were identified from 17 National and Provincial Departments for the financial years 2016/17 – 2020/21 where cases were recorded on the Personnel and Salary System (Persal) where it relates to financial misconduct. The total amount of R 23 449 484,48 was recorded during this period on Persal where it relates to these cases where 13 individuals were dismissed.

The data for these cases and related individuals identified through Persal as per the above was then used to identify the appropriate recording of the related debt on the Basic Accounting System (BAS). Information for 46 officials of the 84 identified in Persal was captured in BAS with a debt take on amount of R 479 801,28. Of the take on amount recorded in BAS, R 385 697,91 has been recovered. The information is based on the appropriate recording of the data on BAS. And it must be emphasised that the correctness and completeness of this information is based on the appropriate recording of the data by the related institutions.

10 June 2021 - NW1438

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Brink, Mr C to ask the Minister of Finance

(1)With reference to the court action by Astral Foods Limited compelling the National Treasury to prepare a financial recovery plan for the Lekwa Local Municipality in Mpumalanga, what are the reasons that such a financial recovery plan could not have been prepared by the Government without court action being taken by residents (2) on what date is the financial recovery plan expected to be (a) finalised and (b) implemented; (3) whether the National Treasury is currently a party to any other case that seeks to compel the Government to intervene in the financial management of a municipality; if not, what is the position in this regard; if so, what are the relevant details of each of the cases

Reply:

1. The court order granted in favour of the applicant Astral Operations Limited related to a failure of the Provincial Executive to ensure implementation of the financial recovery plan rather than a failure of government to prepare a financial recovery plan for the Lekwa Local Municipality. When the application for a national intervention was first sought by Astral Operations Limited in 2018, it was agreed that a national intervention at that time was premature, since the Province had already resolved to intervene in the Lekwa Local Municipality in October 2018. A national intervention is a last resort remedy in terms of the hierarchy of interventions outlined in S139 of the Constitution. Consequently, the key role players agreed to support the provincial intervention and the application was subsequently held in abeyance to allow the provincial intervention to unfold and for the financial recovery plan to be implemented with the view that the intervention would address the concerns raised by Astral.

However, since the approval of the financial recovery plan for the Lekwa Local Municipality by the MEC for Finance in the Mpumalanga Province in October 2019, no significant improvement has been noted in the Municipality. Astral Operations Limited has now revived the application on the principle basis that the financial recovery plan was not implemented and ultimately the provincial intervention has failed. Astral now insisted on a national intervention.

2. Section 139(1) (a) (v) (bb) of the Municipal Finance Management Act, No. 56 of 2003 (MFMA) requires that a financial recovery plan be prepared within a period not exceeding 90 days determined by the MEC for Finance in the Province. The court order issued on 12 April 2021 allows for a period of 6 months from the date of the order, however, the financial recovery plan will be prepared in terms of the timeframes in the MFMA.

3. There are court applications and orders in this regard against the following municipalities:

  • Emalahleni Local Municipality in Mpumalanga - a High court application brought by Save Emalahleni Action Group and Others to compel the province to invoke a mandatory intervention in the municipality. An order by consent of all parties was granted by the Court for the mandatory intervention. If the province fails to comply with statutory provisions relating to mandatory intervention and if the applicants intend to review any decision the applicants may enrol the matter file supplementary papers seeking appropriate relief which might possibly also include national intervention in terms of section 139(7) of the Constitution.
  • Enoch Mgijima Local Municipality in the Eastern Cape - a High Court application brought by Let’s talk Komani against the Premier and Others seeking a mandatory intervention in terms of section 139 of the Constitution. An order by consent of all parties was granted by the Court to the effect that the financial recovery plan approved by the province was made an Order of Court; the province reports quarterly to the High Court on progress on the implementation of the financial recovery plan.
  • Makana Local Municipality in the Eastern Cape - a High Court application was brought by the Unemployed Peoples Movement against the Premier of the Eastern Cape and Others seeking a mandatory intervention by the province into the Makana Local Municipality; the dissolution of the municipal council; and the appointment of an administrator.
  • Kannaland Local Municipality in the Western Cape - a High Court application brought by the municipality against the provincial government for judicial review of decisions of the provincial executive to intervene in the municipality, claiming that the financial recovery plan of March 2017 and appointment of administrators was unlawful and unconstitutional.
  • Maluti-A-Phofung Local Municipality in Free State province - a High Court application which was brought by Harrismith Business Forum to interdict Eskom from discontinuing electricity supply to Maluti-A-Phofung municipality and to compel national government to intervene in terms of section 139(7) of the Constitution. An order by consent of all parties was granted by the Court to, amongst others, establish a consultative committee chaired by the Minister of Cooperative Governance and Traditional Affairs and prepare a financial recovery plan;
  • Mafube Local Municipality in Free State province – a High Court application brought by Mafube Business Forum and Afriforum seeking declaration that the provincial intervention has failed and jurisdictional facts for national intervention in terms of section 139(7) of the Constitution are present.

10 June 2021 - NW1566

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Ismail, Ms H to ask the Minister of Finance

What (a)(i) are the details and (ii) is the total breakdown of the expenditure of the $4,3 billion loan approved and granted by the International Monetary Fund (IMF) to the Republic in July 2020, (b) are the reasons that part of the loan has not been saved for procurement of vaccines and (c) were the terms and conditions of the IMF bailout?

Reply:

a) The loan from the International Monetary Fundf (IMF) was a Rapid Financing Instrument (RFI) facility, which was a temporary arrangement by the IMF for its member countries in response to the Covid outbreak. It is a loan that provides rapid and low-access (including low-interest) financial assistance to member countries facing an urgent balance of payments need, without having to agree to a full-fledged IMF structural adjustment program. It provides support to meet a broad range of urgent needs, including those arising from commodity price shocks, natural disasters, conflict and post-conflict situations, and emergencies resulting from fragility. South Africa applied for the loan in the context of an unprecedented fall in government revenues, coupled with a spike in borrowing costs in the market. The loan was for the following purposes:

  • 1. Implement a counter-cyclical fiscal policy, by avoiding a dramatic and damaging reduction in government spending in response to an unprecedent fall in tax revenues as a result of the CoVid-induced economic crisis; and
  • 2. Finance a sizeable potion of the Covid relief package announced by the President on 21 April 2020 and implemented in the Special Adjustments Budget of 24 June 2020. At the time, this loan financed was estimated to finance between R70 billion and R75 billion of the overall fiscal relief package overall.

The loan supported the spending plans in the 2020 Special Adjustments Budget of 24 June 2020, along with other sources of borrowing. At the time of the Special Adjustments Budget, the total planned borrowings amounted to R776.9 billion. This was revised substantially down to R670.3 billion at the time of the 2021 Budget, with the IMF loan being around R75 billion of this. South Africa will repay the loan over a maximum 5-year period as stipulated in the Letter of Intent (LOI).

b) The loan is part of the overall pool of government borrowings and all the financing instruments that are accessed by government are used to finance spending appropriated by Parliament. At the time of finalizing the RFI arrangement with the IMF, there was no credible information internationally on a widely-available vaccine, and this was not the intended purpose of the loan. Following the development of a vaccine, government has made allocations for a full-vaccination programme over the MTEF. The spending ceiling was lifted in 2021/22 mainly for the vaccine, meaning that borrowings are in part directed towards the vaccine.

c) The loan was given with the broad understanding that it would assist with mitigating the effects of the economic crisis, and did not require earmarking of the funds towards specific spending items. The loan was not subject to conditionalities that compromised fiscal sovereignty. However, as outlined in the Letter of Intent (LOI) signed by the Minister of Finance and the Governor of the South African Reserve Bank (SARB), government is obligated to provide broad spending reports to the IMF in line with the requirements of the PFMA. The National Treasury has published spending reports on the 2020 Special Adjustments Budget in terms of section 32 of the PFMA, and provided an update on the spending against this package in the Budget Review published on 24 February 2021.

10 June 2021 - NW1492

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Malatsi, Mr MS to ask the Minister of Finance

(1)Whether the National Treasury has concluded any work exchange and/or employment agreements with any entity of the Republic of Cuba from the 2010-11 financial year up to the 2020-21 financial year; if not, what is the position in this regard; if so, what (a) total number of Cuban nationals (i) have been employed in each of the specified financial years and/or (ii) are due to be employed in the 2021-23 Medium-Term Expenditure Framework period, (b) are the details of the work that each of the specified Cuban nationals was and/or will be employed to perform, (c) are the details of the specific skills sets that each of the specified Cuban nationals possessed and/or will possess that South African nationals did or will not possess and (d) are the details of the total cost of employing each of the specified Cuban nationals in each case; (2) whether the National Treasury took any steps to ensure that the specific skills set of the specified Cuban nationals were and/or will not be available in the Republic amongst South African citizens; if not, in each case, why not; if so, what are the relevant details of the (a) steps taken and (b) outcomes of the steps taken in this regard?

Reply:

  1. & (2)

The National Treasury has not concluded any work exchange and / or employment agreements with any entity of the Republic of Cuba during the period 2010/11 FY to 2020/21 FY. The National Treasury is an equal opportunity employer and follows all prescripts in terms of employment in the public service. The department does not hold any formal position in regards to work exchange and / or employment agreements with any entity of the Republic of Cuba.

10 June 2021 - NW1443

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Brink, Mr C to ask the Minister of Finance

(1)With reference to the report of the Public Affairs Research Institute that found that R9 billion budgeted and disbursed by the Government to municipalities in the 2019-20 financial year for the provision of free basic electricity (FBE) was misappropriated and/or misspent on unauthorised purposes, what is the National Treasury's position on the misappropriation of funds meant to alleviate the plight of indigent persons by municipalities; (2) whether the National Treasury has put any mechanisms in place to monitor that funds allocated to municipalities for the provision of basic services to indigent persons are not misappropriated and/or misspent on unauthorised purposes; if not, what is the position in this regard; if so, what are the relevant details; (3) whether the National Treasury has been informed of the misappropriation and/or misspending of the specified R9 billion budgeted and disbursed to municipalities for the provision of FBE; if not, what is the position in this regard; if so, what action does the National Treasury intend to take against municipalities that have been found to have misappropriated and/or misspent the FBE funds?

Reply:

In terms of section 227 of the Constitution, local government is entitled to an equitable share of nationally raised revenue to enable it to provide a package of free basic services to poor households and to support additional costs for municipalities with limited own revenue 1. potential. The local government equitable share (LGES) is an unconditional transfer that supplements the revenue that municipalities can raise themselves (including revenue raised through property rates and service charges). The components and sub-components of the LGES formula are neither an indicative budget nor a guideline as to how much should be spent on each service. Its annual baseline growth is determined, taking into account household growth (typically about 3% per year) and cost increases, including for bulk electricity and bulk water, which are typically above inflation. Despite the government's progress in ensuring that millions of households receive basic services, the demand for services remains high and outstrips the pace of delivery. Municipalities are able to use a variety of targeting methods to distribute free basic services to households, including household income, geographical, property and service value. This flexible approach means arbitrary decisions may exclude certain households. The intended recipients of free basic services should be poor households. Each municipality identifies households falling within their prescribed classification method and municipalities develop a subsidy framework based on targeting mechanisms designed to ensure that wealthy or middle-income people do not benefit from free basic service; that is, so long as the household has a municipal account and is registered on the municipality’s indigent register, it can get the free basic services package. Therefore, the R9 billion is indicative of how much it costs to cover the costs of providing free basic electricity to poor households and is therefore used to determine a fair and equitale allocation that each municipality is entitled to receive. Some municipalities have actually a Free Basic Services (FBS) policy that provides higher level of services than the norm indicated by the formual. The decision of how and where these funds are spent is up to the respective municipal councils. The Division of Revenue Act (DoRA) as a legislation that governs how grants are monitored does not give National Treasury and the National Transferring Officer (NTO) the powers to monitor spending on Equitable Share in line with indicative amounts reflected by the formula. This is different for direct grants whereby the DoRA is explicit on the monitoring mechanisms to be applied on a monthly basis.

2. The LGES is transferred by the Department of Cooperative Governance (DCoG). Due to being an unconditional transfer, the DoRA does not give National Treasury and DCoG the powers to monitor LGES expenditure. This is different for conditional grants as the DoRA is explicit on the monthly and quarterly reporting and monitoring requirements for these transfers. As noted above, the poverty threshold used in the LGES formula - which along with the cost factor for each service – determines each municipality’s allocation for each service in the FBS component, is not an official poverty line or a required level to be used by municipalities in their own indigence policies. The Explanatory memo to DoRA does however state that, if municipalities choose to provide free basic services to fewer households than what they are funded for through the LGES, then their budget documentation should clearly set out why they have made that choice and how they have consulted with their community during the budget process.

  • Different national departments or NTOs administer conditional grants, and these departments are responsible for monitoring and ensuring that the conditional grants they allocate to municipalities are spent on their intended purpose. This is done through ensuring compliance with DoRA and the applicable conditional grants framework by municipalities, including providing business plans, implementation plans and cash flows. Municipalities also need to report on a monthly and quarterly basis to the national department administering the grant. The administering department also monitors and undertake site visits to ensure compliance by municipalities. Where there is non-compliance, they ought to apply the levers available to them through DoRA, which includes withholding transfers and they may propose the stopping and reallocation of a portion or an entire municipality's grant allocation.

In order to guard against the misuse of conditional grants, if the National Treasury (NT) anticipates that a municipality may underspend on the allocation or a portion of the allocation, NT may in its discretion or on request of a transferring officer, withhold, stop and re-allocate the transfer of a Schedule 4B or 5B allocation, or a portion to a municipality. This is in line with sections 17,18 and 19 of the 2020 DoRA and Section 38 of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003) (MFMA). Further, in instances where municipalities commit serious or persistent breach of any of the provisions of the DoRA or the MFMA, NT may decide to stop or withhold funds to a municipality by invoking section 216(2) of the Constitution and section 39 of MFMA for no more than 120 days subject to an approval by Parliament.

3. NT has not been informed and would not be in a position to determine that the funds for free basic services have been spent on other areas given that the allocations indicated by the formulal are not meant to be indicator of budgets but to ensure equitable allocations per muncipality. What can be of assistance is for the respective municipal councils to have ways of monitoring budget spending by municipalities and ensure that there is consequence management for non-compliance with the DoRA prescripts as the councils and municipal managers have powers to implement such measures.

10 June 2021 - NW1061

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Hill-Lewis, Mr GG to ask the Minister of Finance

(1)In light of confirmation by the Director-General of the Department of Public Service and Administration of endemic post vacancies within various government departments (details furnished), (a) what total number of posts are currently vacant in the National Treasury, (b) for what time period has each specified post been vacant and (c) what are the relevant details of each such post; (2) (a) what total number of vacant posts currently in the National Treasury have been filled on an acting basis, (b) for what time period has each such post been vacant and (c) what are the relevant details in each case?

Reply:

(1)(a) The total number of posts currently vacant in the National Treasury is 170.

(1)(b)(c) The time period and relevant details are as follows:

POST JOB TITLE DESCRIPTION

VACANT SINCE

Receptionist

2019/12/01

Parliamentary and Cabinet Support (OMIN)

2019/12/01

Administrative Support and Co-Ordination (OMIN)

2020/01/07

Director: Office of Deputy Minister

2019/06/30

Parliamentary Officer

2018/03/31

Private and Appointment Secretary (OMIN)

2019/12/01

Chief Director: Office of Minister

2018/03/31

Assistant Administrative/Appointment Secretary

2020/01/03

Administrative Assistant

2018/12/31

Director: Corporate Law

2021/02/01

Deputy Director: Corporate Law

2020/10/01

Deputy Director: Litigation and Administration

2020/05/31

Assistant Director: Legislation (ODG)

2021/02/01

Deputy Director: Marketing, Advertising and Public Relations

2020/10/01

Junior Graphic Designer

2020/02/29

Enterprise Risk Management Analysts

2021/02/28

Driver

2021/01/31

Analyst: Corporate Governance

2020/10/16

Snr Analyst: Prov Fin Development Institution

2021/01/01

Director: Treasury Operation

2018/04/01

Chief Director: Liability Management

2020/12/15

Analyst: Debt Issuance and Management

2020/02/01

Snr Analyst: Debt Issuance and Management

2021/01/31

Director: Debt Issuance and Management

2020/09/30

Helpdesk: Retail Bonds Operations

2021/02/13

Analyst: Accounting and Information

2021/03/01

Director: Accounting and Information

2020/09/01

Analyst: Market Risk

2020/12/10

Director: Energy and Telecoms

2021/03/31

Deputy Director-General: Budget Office

2017/12/01

Deputy Director: Programme Coordination

2020/09/01

Policy Analyst: National Budgets

2020/02/01

Snr Policy Analyst: Budget Reform

2021/04/01

Chief Director: Public Finance Statistics

2021/02/01

Policy Analyst: Extra Budgetary Accounts and Funds

2021/03/15

Snr Policy Analyst: Extra Budgetary Accounts & Funds

2019/09/30

Snr Policy Analyst: Portfolio & Strategic Management

2021/03/31

Snr Policy Analyst: Infrastructure Finance

2020/02/01

Assistant Director: Fiscal Research (BO)

2020/10/01

Snr Policy Analyst: Fiscal Research

2021/03/13

Chief Director: Public Sector Remuneration Analysis

2021/01/26

Snr Policy Analyst: Civil Pension

2020/02/01

Senior Budget Analyst: Public Finance

2020/12/17

Programme Coordinator

2019/06/30

Senior Budget Analyst: Public Finance

2020/10/01

Budget Analyst: Basic Education Sports & Recreation

2020/12/01

Senior Budget Analyst: Public Finance

2020/07/25

Director: Higher Education & Training

2020/11/11

Budget Analyst: Communications and Energy

2021/02/01

Senior Budget Analyst: Public Finance

2020/09/01

Director: Public Finance

2020/04/01

Director: Forecasting

2019/07/01

Economist: Econometric Research

2021/02/01

Economist: Econometric Research

2021/02/01

Senior Economist: Sectoral & Revenue Modelling

2020/10/01

Chief Director: Microeconomic Policy

2020/12/01

Snr Economist: Primary Sectors

2020/02/01

Director: Sectors

2021/04/07

Senior Economist: Secondary Sectors

2020/01/01

Director: Secondary Sectors

2020/09/01

Director: Environmental Economics

2020/10/01

Chief Director: Macroeconomic Policy

2020/08/07

Snr Economist: Growth

2020/11/01

Economist: Fiscal Framework (IGR)

2020/02/26

Director: Fiscal Framework (IGR)

2018/11/01

Director: Local Government Fiscal Framework

2020/11/11

Economist: Budget Process

2019/12/01

Snr Budget Analyst: Provincial Budget Analysis

2021/04/01

Snr Budget Analyst: Provincial Budget Analysis

2019/11/01

Director: Provincial Budget Analysis

2021/03/31

Deputy Director: Spatial Planning

2019/09/30

Project Coordinator

2020/09/30

Project Manager

2020/04/01

Budget Analyst: Provincial Budget Analysis

2020/10/01

Budget Analyst: Provincial Budget Analysis

2020/10/01

Snr Economist: Local Government Budget Analysis

2020/03/31

Director: Local Government Budget Analysis

2019/04/30

Snr Economist: Local Government Budget Analysis

2018/12/31

Director: Local Government Budget Analysis

2019/08/02

Manager: Investment Planning

2020/05/31

Project Manager

2021/04/01

Urban Economist: NDGP

2020/09/30

Project Manager

2020/11/09

Snr Economist: Financial Inclusion

2020/10/01

Snr Economist: Financial Sector Charter

2020/10/01

Snr Economist: Banking Development

2019/08/15

Chief Director: Financial Services

2020/10/01

Chief Director: Financial Markets & Stability

2020/07/31

Economist: Business Taxes

2020/11/01

Director: Business Tax

2018/10/15

Senior Economist: Tax Revenue Database

2019/09/01

Director: Environment & Fuel Taxes

2020/10/01

Team Assistant

2021/03/01

Deputy Director: International Tax Treaties

2021/02/01

Deputy Director: International Tax Treaties

2021/02/01

Economist: Africa Economic Integration

2020/10/31

Deputy Director: International Organisations

2020/10/01

Senior Economist: G20

2020/12/11

Director: BRICS

2020/11/04

Chief Procurement Officer

2016/12/31

Deputy Director: Transversal Contract Management

2020/10/31

Assistant Director: Transversal Contract Management

2020/10/01

Deputy Director: Transversal Contract Management

2020/12/31

Deputy Director: Transversal Contract Management

2020/02/29

Director: Central Supplier Database

2020/10/01

Assistant Director: Strategic Procurement

2020/10/01

Director: SCM Strategic Procurement

2021/03/15

Assistant Director: Strategic Procurement

2020/10/01

Director: SCM Client Support Local Gov

2020/06/30

Deputy Director: SCM Monitoring & Compliance

2020/09/30

Deputy Director: SCM GMC (OCPO)

2020/10/01

Deputy Director: SCM GMC (OCPO)

2020/10/01

Deputy Director: SCM GMC (OCPO)

2020/10/01

Deputy Director: SCM GMC (OCPO)

2020/10/01

Deputy Director: Programme Coordination

2020/09/01

Facilities Generalist: Help Desk

2020/06/30

Facilities Generalist: Help Desk

2018/11/01

Human Resources Support: Service Delivery

2020/01/01

Manager: Talent Development & Performance Management

2020/05/31

HR Support: Employee Wellness Programme

2020/01/01

Employee Relations Practitioner

2020/02/01

Manager: Organisational Development

2021/03/31

Deputy Director: Employee Health Wellness & Trans

2020/09/01

Human Resources Support: Recruitment

2019/10/01

Financial Admin Specialist: Internal Control

2019/12/01

Financial Admin Specialist: Budget

2020/02/01

SCM Database Administrator

2020/10/01

Bids Administrator

2021/03/12

Assistant Manager: Travel Coordination

2021/01/01

Manager: Performance & Risk

2019/11/30

Manager: Strategic Sourcing / Acquisition (Corporate Services)

2020/05/31

Receipt and Inventory Coordinator

2021/03/15

Deputy Director: SCM Operations (Corporate Services)

2019/07/03

Financial Analyst: Public Entities Oversight Unit

2020/10/01

Team Assistant

2020/06/03

ICT Administrator

2020/10/01

Deputy Director: Information Security

2020/10/01

Senior Security Officer

2020/12/18

Senior Security Officer

2020/09/30

Director: Security Management

2021/03/09

Chief Audit Executive

2019/07/31

Team Assistant

2019/12/01

Business Support Manager

2019/04/04

Jnr IT Audit Specialist

2020/04/30

Manager: IT Audit

2020/02/24

Manager: IT Audit

2020/08/31

Senior Manager: IT Audit

2019/05/31

Jnr Performance Audit Specialist

2019/09/30

Senior QA and Compliance Audit Specialist

2019/10/17

Senior Manager: Quality Assurance & Compl Audit

2019/06/17

Project Manager

2020/01/10

Accountant-General

2015/10/09

MFMA Advisor

2019/07/01

Director: MFRS

2019/10/31

Financial Analyst: NRF & RDP (Banking Services)

2019/08/31

Financial Analyst: NRF & RDP

2021/01/31

Director: Justice & Protection Services Cluster

2020/07/31

Director: MFMA Support

2020/10/01

Chief Director: Specialised Audit Services

2020/07/04

Snr Fin Analyst: Fin Man & Int Contr Systems Audit

2021/04/01

Chief Director: Capacity Building

2018/12/01

CAA Trainees

2021/03/11

Deputy Director: SCM Education Training & Development

2020/11/16

Chief Director: Financial Systems

2020/06/30

Refreshment Coordinator (Corporate Services)

2020/05/20

Financial Systems Administrator

2019/07/23

Systems Specialist: Projects Management

2021/02/11

Snr Systems Specialist: Projects Management

2021/03/31

Snr System Specialist: Training & Support

2021/02/28

Training Administration Officer (Financial Systems)

2019/07/01

(2)(a) The total number of vacant posts currently in the National Treasury have been filled on an acting basis is 17.

(2)(b)(c) The time period and relevant details are as follows:

VACANT POSTS FILLED ON AN ACTING BASIS

PERIOD POSITION HAS BEEN VACANT

ANY OTHER RELEVANT DETAILS IN EACH CASE

Deputy Director-General: Chief Procurement Officer

December 2016 to date

Headhunting stage

Deputy Director-General: Accounting General

October 2015 to date

Headhunting stage

Chief Director: Financial Systems

June 2020 to date

Waiting Organitational Review process finalisation

Chief Director: Capacity Building

June 2020 to date

Recruitment is underway: re- advertisement

Director: Provincial Fiscal Framework

July 2020 to date

Recruitment is underway: at offer stage

Chief Director: Microeconomic Policy

December 2020

Recruitment is underway

Director: Forecasting

July 2019 to date

To be re-advertised

Director: Secondary Sector

September 2020

Recruitment is underway: re- advertisement

Deputy Director-General: Budget Office

December 2017 to date

Recruitment is underway

Chief Director: Fiscal Policy

March 2021 to date

Awaiting funding confirmation, then will start with recruitment

Chief Director: Public Finance Statistics

February 2021 to date

Awaiting funding confirmation, then will start with recruitment

Chief Director: Public Sector Remuneration

January 2021 to date

Awaiting funding confirmation, then will start with recruitment

Director: Security Management

March 2021

The previous Director: Security Management got promoted to Chief Risk Officer

Assistant Director: Travel Coordinator

November 2020

Previous incumbent resigned pending disciplinary action

Chief Director: Financial Markets, Stability and Prudential Regulations

July 2020 to 15 March 2021

Recruitment is underway-assessment stage

Director: Treasury Operations

April 2018 to date

Recruitment is underway- assessment stage

Chief Director: Liability Management

August 2020 to date

Recruitment is underway: re- advertisement

19 May 2021 - NW811

Profile picture: Powell, Ms EL

Powell, Ms EL to ask the Minister of Finance

With regard to the irregular expenditure incurred in respect of the personal protective equipment tenders awarded to a certain supplier (name and details furnished), what remedial actions does the National Treasury intend to take in each case (details furnished)?

Reply:

The numbers referenced in the document are BAS Payment numbers.

Please find attached the extract of BAS payments made by the National Department of Human Settlements and Water and Sanitation to Travel with Flair. These payments were consolidated payments which included other items and or services that were not Covid-19 related.

(a) PM-2420322, Total payment of R487 735.00 of which R103 000.00 was Covid related.

(b) PM-2420317, Total payment of R437 710.00 of which R126 875.00 was Covid related.

(c) PM-2420328, Total payment of R496 715.20 of which R59 830.00 was Covid related.

(d) PM-2420330, Total payment of R272 005.00 of which R135 000.00 was Covid related.

(e) PM-2420329, Total payment of R492 595.00 of which R253 750.00 was Covid related.

(f) PM-2420326, Total payment of R199 105.00 of which R125 750.00 was Covid related.

In all cases the Covid-19 related expenditure (in red text on Annexure A) is referring to “Consumables: Medical Kit”. Based in this payment information, the National Treasury cannot completely determine whether these payments constitute irregular expenditure.

The National Treasury will, however, request the Department of Human Settlements and Water and Sanitation to provide the details of the transactions to determine whether the transactions complied with National Treasury Instruction No. 05 of 2020/2021 which was applicable at the time of the transactions.

19 May 2021 - NW1210

Profile picture: Buthelezi, Mr EM

Buthelezi, Mr EM to ask the Minister of Finance

Given the recent publication of the annual report of the SA Post Office’s financial results for 2019-20 financial year, which shows that the Post Office is technically insolvent, what is the National Treasury’s plan to return the Post Office to solvency?

Reply:

In terms section 51(1) of the Public Finance Management Act, the responsibility to, amongst others, manage revenue, expenditure, assets and liabilities lie with the accounting authority. The executive authority of the South African Post Office is the Minister of Communications and Digital Technologies, who has the responsibility to oversee any plans to return the Post Office to solvency. The National Treasury cannot take over the functions of the Minister of Communications and Digital Technologies, and the accounting authority, who is the board of the Post Office.

19 May 2021 - NW731

Profile picture: Brink, Mr C

Brink, Mr C to ask the Minister of Finance

Whether he and/or the National Treasury have taken any steps to assess the effectiveness of municipal audit committees constituted in terms of section 166 of the Local Government: Municipal Finance Management Act, Act 56 of 2003; if not, what steps does he intend to take for such an assessment to be done; if so, what are the relevant details of the findings of the assessment with regard to the failure of many municipal audit committees to prevent recurring financial and supply chain management related irregularities?

Reply:

The Municipal Finance Management Act (MFMA) section 5 mandates National Treasury to fulfil its responsibilities in terms of Chapter 13 of the Constitution and MFMA, to the extent necessary to comply with this requirement, the National Treasury may monitor and assess compliance by municipalities and municipal entities with the act; and any applicable standards of generally recognised accounting practice and uniform expenditure and revenue classification systems amongst others.

The National Treasury performs assessments on the establishment and the functioning of the audit committees in municipalities. The focus is on the Non-delegated municipalities, because of the size of their budgets and the types of services provided. The assessments are utilised to develop support programmes for audit committees and internal auditors in these municipalities. The review is performed annually and focuses on:

  • Establishment, membership and appointment
  • Skills, experience and training
  • Meetings of the committee
  • Resources
  • Relationship with council and management
  • Oversight responsibilities
  • Audit Committee assessments
  • Reporting

In terms of the oversight responsibilities of ensuring that management implements corrective action of previously reported findings by both Auditor-General and Internal Audit units, the National Treasury’s assessment found that the majority of the committees do track management’s efforts to implement corrective action, however, there is room for improvement on the rate at which management implements the recommendation from the auditors. This is one of the root causes for recurring or repeat findings from the auditors.

19 May 2021 - NW129

Profile picture: Schreiber, Dr LA

Schreiber, Dr LA to ask the Minister of Finance

(1) What is the breakdown of the current Rand value of each national government department’s backlog for failure to pay service providers within 30 days, in compliance with the provisions of the Public Finance Management Act, Act 1 of 1999; (2) (a) what is the breakdown of the current Rand value of each provincial government’s backlog for failure to pay service providers within 30 days and (b) which provincial department has he found to be the worst offender in each case?

Reply:

National Departments

1. Table 1 below provides the total Rand value of invoices older than 30 days that were not paid as at 31 December 2020.

Table 1: National Departments: Rand value of Unpaid Invoices as at 31 December 2020

No.

National Department

Rand Value

1

Cooperative Governance

R 17,850

2

Police

R 71,674

3

Home Affairs

R 636,813

4

Statistics South Africa

R 832,404

5

Women, Youth and Persons with Disabilities

R 1,712,016

6

Mineral Resources and Energy

R 4,311,452

7

Public Works and Infrastructure including PMTE

R 51,673,929

8

Water and Sanitation including Trading Entity

R 357,636,505

Total Rand Value

R 416,892,642

Provincial Departments

(2)(a) Table 2 below provides the total Rand value of invoices older than 30 days that were not paid as at 31 December 2020.

Table 2: Provincial Departments: Rand value of Unpaid Invoices at the end of December 2020

No.

Provincial Government

Rand Value

1

Northern Cape

R 517,636

2

Western Cape

R 600,546

3

Limpopo

R 28,471,372

4

Mpumalanga

R 97,788,753

5

Kwazulu-Natal

R 104,363,510

6

Free State

R 112,778,551

7

North West

R 351,858,302

8

Gauteng

R 389,973,533

9

Eastern Cape

R 2,114,327,450

Total Rand Value

R 3,200,679,654

b) Table 3 below provides a list of provinces that are worst performing in terms of payment of suppliers within the prescribed period.

Table 3: Worst performing provincial departments in each province at the end of December 2020

No.

Provincial Government

Rand Value

31 December 2020

Worst offenders (Department)

Rand Value

31 March 2021

%

1

Northern Cape

R 517,636

Education

R 517,636

100%

2

Western Cape

R 600,546

Education

R 600,546

100%

3

Limpopo

R 28,471,372

Health

R 18,000,716

63%

4

Mpumalanga

R 97,788,753

Health

R 97,788,753

100%

5

Kwazulu-Natal

R 104,363,510

Education

R 71,235,451

68%

6

Free State

R 112,778,551

Health

R 64,549,129

57%

7

North West

R 351,858,302

Health

R 327,595,920

93%

8

Gauteng

R 389,973,533

Health

R 342,257,759

88%

9

Eastern Cape

R 2,114,327,450

Health

R 2,025,125,297

96%

   

R 3,200,679,654

 

R 2,947,671,207

92%

Provincial departments of Health and Education contributed 92% of the total rand value not paid by provincial departments as at December 2020.

19 May 2021 - NW326

Profile picture: Lotriet, Prof  A

Lotriet, Prof A to ask the Minister of Finance

(1)What number of cash-on-hand days did the City of Ekurhuleni (CoE) have on 31 January 2021; (2) whether the CoE has failed to pay any portion of its (a) electricity and/or (b) water account within the stipulated 30-day period over the past 12 months, up to and including 31 January 2021; if not, what is the position in this regard; if so, in each case, (i) what were the outstanding amounts that were not paid within 30 days, (ii) for what service(s) were the unpaid amounts and (iii) what is the current total amount outstanding for electricity and water?

Reply:

The National Treasury receives limited financial information from each of the municipalities and we therefore recommend that this detailed information is sourced directly from the finance division of the City of Ekurhuleni who is best placed to give the explanations required.

19 May 2021 - NW128

Profile picture: Kruger, Mr HC

Kruger, Mr HC to ask the Minister of Finance

With reference to a certain letter and a list of unpaid invoices (details furnished), how does the National Treasury intend to make sure that all government departments at national, provincial and local level, as well as state-owned entities, adhere to the 30 days’ payment policy?

Reply:

a) On 2 December 2009, Cabinet resolved that departments must implement mechanisms to ensure that payments to suppliers are paid within 30 days from the date of receiving an invoice. On 22 November 2010, Cabinet reiterated its decision taken on 2 December 2009 regarding the payment of invoices.

b) In addition, the Forum of South African Directors-General (FOSAD) resolved that the National Treasury must provide the Forum with regular reports on the extent of compliance by departments with the requirement to pay suppliers invoices within 30 days.

c) In November 2011, National Treasury published a Treasury Instruction Note No. 34 which emphasised the importance of the payment of suppliers timeously and enjoins departments to submit reports to their relevant treasuries each month with information related to the:

  • number and value of invoices paid after 30 days from the date of receiving invoices;
  • number and value of invoices that are older than 30 days which remained unpaid; and
  • reasons for late and / or non-payment of the invoices.

The National Treasury Instruction Note 34 further requires accounting officers to put systems in place to enable tracking of invoices received.

d) Since 2012, the National Treasury has been actively monitoring compliance with Treasury Regulation 8.2.3 and report quarterly on the level of non-compliance with the requirement to pay suppliers within 30 days as well as the recommendations to improve the level of compliance to the Department of Planning, Monitoring and Evaluation (DPME) to present to the FOSAD. The National Treasury also submits an annual report to the Standing Committee of Public Accounts, Standing Committee of Finance and Cabinet. These reports are also shared with the Public Service Commission and Department of Small Business Development.

e) The National Treasury in its continued effort to assist public sector institutions to meet their contractual obligations and to remind heads of institutions of this requirement, issued a treasury circular on 23 March 2018 to urge heads of institutions to put measures in place to pay valid invoices and claims as required by the legislation, strengthen internal controls and monitor the implementation thereof, institute disciplinary steps against those employees who undermine the legislative requirement or set internal controls, and to remind relevant authorities that failure to take disciplinary steps against those employees constitute non-compliance and misconduct.

f) Some of the initiatives that the National Treasury took to address this matter are as follows:

  • The National Treasury in collaboration with DPME visited all provincial departments of Health to understand challenges that are faced by these departments in paying legitimate invoices within 30 days and to develop action plans to address identified challenges and improve compliance levels;
  • The National Treasury embarked on roadshows in certain provinces to encourage government departments at various levels to adhere to commitments made on payment of invoices within the stipulated 30-day period as a critical element to support SMMEs who do business with the state;
  • The National Treasury established a hotline where queries related to non-payment of invoices are received from suppliers. The National Treasury assists suppliers by following up with transgressing departments on reported late payment of invoices and provides feedback on to the supplier on (i) reasons for the delay and (ii) date payment will be effected. At a provincial level, the process is handled by the Office of the Provincial Accountant-General.
  • The National Treasury is in the process of finalising a guideline on payments within 30 days to assist accounting officers with measures to implement to improve the level of compliance and pay invoices on time and also improve their internal control systems in relation to processes and procedures to be followed when effecting payments.

g) Whilst it is not currently a legal requirement that public entities must settle their invoices within 30 days, it is considered a best practice. When amendments are effected to the Treasury Regulations, public entities will also be legally required to pay their invoices within 30 days from date of receipt of an invoice.

19 May 2021 - NW127

Profile picture: Kruger, Mr HC

Kruger, Mr HC to ask the Minister of Finance

(1)Whether, with reference to a certain letter and a list of unpaid invoices (details furnished), each specified invoice listed has been paid yet; if not, why not; if so, what are the relevant details; (2) whether the National Treasury intends to pay the outstanding invoices; if not, why not; if so, what are the relevant details?

Reply:

1. Unpaid Invoices

The accounting officer for a department, trading entities or constitutional institutions are required in terms of section 38(1)(f) of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999) to settle all contractual obligations and pay all money owing, including intergovernmental claims, within the prescribed or agreed period. Treasury Regulation 8.2.3 provides that “Unless determined otherwise in a contract or other agreement, all payments due to creditors must be settled within 30 days from receipt of an invoice or, in the case of civil claims, from the date of settlement or court judgement”.

Accounting authorities of public entities are required in terms of section 51(b)(iii) to manage the working capital of the public entity efficiently and economically.

A National Treasury Instruction Note No. 34 was issued to accounting officers of departments requesting exception reports to be submitted to their relevant treasuries on (a) number and value of invoices paid after 30 days from the date of receiving invoices, (b) number and value of invoices older than 30 days that has not been paid and (c) reasons for the late and/or non-payment of the invoices.

The National Treasury established a Call Centre to allow suppliers to log and report non-payment of invoices by government institutions for the National Treasury to take steps in ensuring that such suppliers are paid and make necessary follow-up with those respective institution to determine root cause for the non-payment of reported invoices that remain unpaid and facilitate and fast track the payment of those invoices with the relevant institution, the Call Centre can be accessed on the following address: 30daysqueries@treasury.gov.za.

Similarly, section 65 (2) (e) and 99 (2) (b) of the MFMA requires the accounting officer of the municipality and municipal entity to take all reasonable steps to ensure that all money owing by the municipality be paid within 30 days of receiving the relevant invoice or statement.

Information on invoices specified in the list will be followed up with the relevant institutions to ensure that payment is made.

2. Payment of unpaid invoices

Accounting officers, accounting authorities, municipal managers and accounting officer of municipal entities are entrusted with financial management responsibilities in terms of the Public Finance Management Act, Act No. 1 of 1999 (PFMA) and Municipal Finance Management Act, Act 56 of 2003 (MFMA) to ensure that all contractual obligations are met and that payment to suppliers are made on time. Accountability arrangements in terms of these two pieces of legislation require each institution to plan, budget, contract and pay for goods delivered and services rendered, and it is, therefore, the responsibility of the institution to ensure that all valid invoices paid on time.

The National Treasury does not make payments to supplier’s invoices that remain unpaid by other organs of state due to accountability arrangements embedded in the PFMA and the MFMA. The Call Centre is used to assist suppliers to ensure that organs of state adhere to legislative requirements and honor their contractual obligations.

11 May 2021 - NW110

Profile picture: Brink, Mr C

Brink, Mr C to ask the Minister of Finance

(a) Whether the National Treasury collects and collates any information at its disposal pointing to the employment as (i) chief financial officers and/or (ii) any other financial official in a municipality of any persons who have been found guilty by a municipality or other organ of state of serious financial misconduct and/or who has been convicted of any offence or set of offences involving fraud, corruption or criminal financial misconduct in terms of section 173 of the Municipal Finance Management Act, Act 56 of 2003, (b) in which municipalities are such persons appointed and (c) in which positions are they appointed within such municipalities?

Reply:

a) The National Treasury collates some information on the chief financial officers and other financial officials, however, not specifically regarding officials who were found guilty of serious financial misconduct or convicted of any offence or set of offences. The appointment practices and vetting of those appointed are the domain of the municipality. In terms of regulation 16(1) of the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings, municipalities and municipal entities must report any decision to institute or not to institute disciplinary proceedings against the person who allegedly committed a financial misconduct; the reasons for the decision; the outcome where disciplinary proceedings have been instituted; and whether a charge has been laid against the person concerned with the South African Police Service, if the alleged financial misconduct constitutes a financial offence in terms of section 173 of the Act. The above-mentioned reports must be sent to different stakeholders, including the MEC for local government in the province; the national department responsible for local government; the relevant provincial treasury; the National Treasury; and the Auditor-General. The municipalities must also report in their annual reports all suspensions, disciplinary or criminal proceedings instituted in cases of financial misconduct.

 

(i) The National Treasury monitors the establishment of disciplinary boards as required in terms of the above-mentioned Regulations, the effectiveness of the disciplinary boards as this is the instrument through which consequence management in relation to financial misconduct is implemented in municipalities and municipal entities. The National Treasury also monitors whether any municipal official has been charged with financial misconduct, including whether any disciplinary action has been implemented to address the financial misconduct.

(ii) The National Treasury also collates information on other financial officials within municipalities.

The National Treasury does not have information relating specifically to the appointment of CFOs or other financial officials falling within the category mentioned in the questions, however, the Honourable Member should note that the appointment of senior managers, including CFOs in municipalities requires that a process be followed that includes reporting to and seeking responses from provincial MECs responsible for Local Government, in terms of the regulations issued under the Municipal Systems Act. The table below provides information on instances where disciplinary processes have been instituted during 2020/21 financial year.

  1. Name of Municipality
  1. Position held by officials

Alfred Nzo District Municipality

Debt Collection Officer; Revenue Officer and Senior Debtors Clerk

Dr Beyers Naude Local Municipality

Chief Financial Officer

Buffalo City Metropolitan Municipality

Head of Supply Chain Management

City of Johannesburg Metropolitan Municipality

Acting Group Executive Director (4) and Acting Director

Ekurhuleni Metropolitan Municipality

Cashiers (7), Sub-Accountant; Administrators (2) ; Administrative Assistant ; Senior Clerk; Executive Managers (2); Accountant; Admin Officer; Senior Manager (2); Senior Clerk; Clerk; Manager (6) and Admin Assistant

eThekwini Metropolitan Municipality

Senior Manager; Project Executives, a total of 29 officials have been charged and disciplined

Okhahlamba Local Municipality

Cashier

Alfred Duma Local Municipality

Chief Financial Officer; Debt Collector Legal

uPhongolo Local Municipality

Senior Managers (2)

Collins Chabane Local Municipality

Manager Revenue; Manager Supply Chain Management; Manager Planning and Development

Lepelle-Nkumpi Local Municipality

Executive Manager Technical Services; Manager: Supply Chain Manager; and Executive Manager: Community Services

Modimolle-Mookgophong Local Municipality

Divisional Managers (2)

Polokwane Local Municipality

Assistant

Thaba Chweu Local Municipality

Supply Chain Manager

George Municipality

Director: Corporate Services and Director: Community Services

.

11 May 2021 - NW381

Profile picture: George, Dr DT

George, Dr DT to ask the Minister of Finance

(1)With reference to the 2020 annual report of the Public Investment Corporation, on what date will a collateral management system be in place; (2) whether the recommendations made by the Judicial Commission of Inquiry into Allegations of Impropriety at the Public Investment Corporation will be fully implemented; if not, why not; if so, what timeframe has been set?

Reply:

(1) A manual collateral management system is in place. This process involves the Portfolio Management and Valuations-, Legal- and Finance teams in consultation with the respective deal teams and the collateral will be valued by external valuers. A process has started to upgrade to an automated system.

(2) The Report of the Mpati Commission of Inquiry into the Public Investment Corporation (PIC), together with its recommendations, was adopted in full by the PIC Board and is being implemented. The Report contains more than 300 recommendations. As at December 2020, 16.36% of the recommendations were fully implemented and 52.12% partially implemented. Implementation is continuing on those that are still open.

(A detailed presentation to the Standing Committee on Finance on the implementation of the recommendations is available on the PIC website under “Presentations”)

Seeing that some recommendations require additional work to be done, a few of which by external parties, it is difficult to put a timeframe to the finalization of all recommendations.

11 May 2021 - NW296

Profile picture: Brink, Mr C

Brink, Mr C to ask the Minister of Finance

(1)What steps has he and/or the National Treasury taken to assess whether tariffs charged by municipalities for water and electricity are sufficient to cover the cost of bulk purchases; (2) to what extent do tariffs charged by municipalities for water and electricity cover the cost of bulk purchases; (3) which municipalities have been found to have tariffs that are insufficient to cover the cost of bulk water and/or electricity costs; (4) whether he will ask for such assessments to be done; if not, why not; if so, what are the relevant details?

Reply:

(1) A sustainable tariff is the one that is cost reflective (Includes all the costs of providing a service, such as bulk purchases). Several municipalities have not been able to establish a cost reflective tariff, which has negatively impacted the sustainability of municipal services. In response National Treasury has developed a tool for use by municipalities, that if used correctly it will see municipalities charging cost reflective tariffs that will cover the cost of bulk purchases. Treasury through its structures is also offering technical support to municipalities to assess and set cost reflective tariffs.

Additionally, National Treasury and CoGTA are jointly funding a Cost of Supply (COS) study that targets the top 20 municipal defaulters of Eskom and top 10 municipal defaulters of the water boards. The study is intended to assist municipalities determine the true cost for the respective services (water and electricity) which will subsequently influence better tariffs.

(2) Ideally the tariffs set by municipalities should cover the cost of bulk purchases. National Treasury consistently advocates this practice. In the same understanding full absorption of the costs such as bulk purchases into tariffs, might result in unaffordable tariffs for low-income households. In some instances, calculating a cost reflective tariffs makes use of municipal other revenue streams and the equitable share to subsidise the tariffs for the indigent and low income households.

(3) Municipalities that do not calculate tariffs through scientific means and merely impose a CPI incremental increase to the previous year’s tariff. There are observations that some rural municipalities or municipalities that have low revenue base, have been found to be charging tariffs which are insufficient to cover the cost or not cost reflective.

In some cases, as the result of improper methods for setting tariffs municipal councils reduce the proposed tariff based on their perception of is affordable to their constituencies.

Additionally, municipalities that have high distribution losses may also find it difficult to recover the cost of the service.

(4) No, it is enshrined in the municipal budget assessment process. All the budgets of municipalities are assessed by National and Provincial Treasuries to determine whether the budget of the municipality is funded or not. If the budget of a municipality is not funded National Treasury and Provincial Treasury determine the reasons why the budget is not funded and assesses specifically whether the tariffs are cost reflective to cover all the expenditure. If tariffs are cost reflective then the tariffs will cover all the cost the render that service. If the tariffs are not cost reflective then the municipality is advised to implement cost reflective tariffs and Provincial Treasuries will assist the municipality to implement such cost reflective tariffs.

The assessments are done annually during the budget process which have resulted in the development of a tariff tool by National Treasury to address the issue of non-cost reflective tariffs.

In addition, the National Treasury issue two budget circulars annual. These MFMA Budget Circulars can be obtained on the NT Website at the following link:

http://mfma.treasury.gov.za/Circulars/Pages/default.aspx.

The Tools to assist municipalities with cost reflective traffic can also be located on the National Treasury Website at the following link:

http://mfma.treasury.gov.za/Circulars/Documents/Forms/AllItems.aspx?RootFolder=%2fCirculars%2fDocuments%2fBudget%20Circular%20No%2098&FolderCTID=0x012000E772703726E2A8479752CF24A134692B

10 May 2021 - NW813

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Hill-Lewis, Mr GG to ask the Minister of Finance

With regard to the annual report of the Public Investment Corporation, what are the reasons that effective and appropriate steps were not taken to prevent irregular expenditure amounting to R9,817 million, as required by section 51(1)(b)(ii) of the Public Finance Management Act, Act 1 of 1999?

Reply:

The Public Investment Corporation (PIC) has policies and procedures in place to ensure that at all times procurement processes are fair, equitable, transparent and competitive as required by the Public Finance Management Act, Act 1 of 1999. However, during the audit for the 2019/20 financial year it was found that certain contracts have led to irregular expenditure. There were two main reasons for that:

  1. The PIC Management was of the view that Treasury Regulations in instruction note 3 is silent on deviations against internal processes, therefore the internal PIC Delegation of Authority was applicable and was duly applied. Subsequent to this audit finding, National Treasury and the PIC Management had discussions and agreed that this view was of a technical nature. The PIC Management has also engaged National Treasury through the State Owned Enterprises Procurement Forum (SOEPF) on concerns with instruction note 3. However, to avoid any recurrence, all procurement that is not explicit in the applicable regulations or legislation, is discussed with National Treasury to avoid any misinterpretation.
  2. In another instance the PIC Management approved a deviation as an emergency but due to the time frame taken to conclude the contract with the supplier, the audit opinion was that it should have been submitted to National Treasury for approval since it did not qualify as an emergency deviation that falls within the delegated authority of the Accounting Officer.

The PIC has improved its processes and procedures to prevent any recurrence.

10 May 2021 - NW691

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Hill-Lewis, Mr GG to ask the Minister of Finance

Whether the Director-General of the National Treasury attended in his official capacity any part of the National Executive Committee meeting of a certain organisation (name furnished) that was held between 23 and 24 January 2021; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

The Director-General of the National Treasury attended the ANC NEC on the 23rd and 24th January 2021 in his personal capacity.

10 May 2021 - NW478

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Hill-Lewis, Mr GG to ask the Mr T Mboweni

(1)With regard to the annual report and the procurement processes of the Public Investment Corporation, what are the reasons that some services were not procured through a procurement process that was fair, equitable, transparent, and competitive, as required by section 51(1)(a)(iii) of the Public Finance Management Act, Act 1 of 1999; (2)what are the reasons that management incorrectly interpreted procurement prescripts relating to deviations which ultimately led to management omitting to ensure that the supply chain management policy and the specified Act were adhered to?

Reply:

(1) The Public Investment Corporation (PIC) has policies and procedures in place to ensure that at all times procurement processes are fair, equitable, transparent and competitive as required by the Public Finance Management Act, Act 1 of 1999. During the 2019/20 financial year there were instances where the PIC Management were of the view that the PIC’s Delegation of Authority should apply during the procurement process, but assurance providers took a different view, as they believed that approval should have been sought from National Treasury.

(2) There are two main reasons:

  • The PIC Management was of the view that Treasury Regulations in instruction note 3 is silent on deviations against internal processes, therefore the internal PIC Delegation of Authority was applicable and was duly applied. Subsequent to this audit finding, National Treasury and the PIC Management had discussions and agreed that this view was of a technical nature. To avoid any recurrence, all procurement that is not explicit in the applicable regulations or legislation, is discussed with National Treasury to avoid any misinterpretation. The PIC Management has also engaged National Treasury through the State Owned Enterprises Procurement Forum (SOEPF) on concerns with instruction note 3.
  • In another instance the PIC Management approved a deviation as an emergency but due to the time frame taken to conclude the contract with the supplier, the audit opinion was that it should have been submitted to National Treasury for approval since it did not qualify as an emergency deviation that falls within the delegated authority of the Accounting Officer.

The PIC has improved its processes and procedures to prevent any recurrence.

10 May 2021 - NW670

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Faber, Mr WF to ask the Minister of Finance

Whether (a) the National Treasury and/or (b) any entity reporting to him makes use of private security firms; if not, what is the position in this regard; if so, in each case, what is the (i) name of each firm, (ii) purpose, (iii) value and (iv) duration of each specified contract?

Reply:

NATIONAL TREASURY

  1. Yes
  1. The appointed Security company is Excellent Security
  2. Rendering of security guarding services for the National Treasury buildings
  3. The contract amount for the services is R28 467 243.60
  4. The contract is for 3 years (January 2021-December 2023)

ASB

(i) NATIONAL SECURITY AND FIRE

(ii) Armed response and monitoring services

(iii) R645.84 per month

(iv) Contract commenced on 01 March 2020 – 1 month notice period, no specified contract length, but contract reviewed annually and request for quotations issued every three years.

DBSA

NO- The DBSA does not use private security firms, it has insourced security services. The personnel in that unit are all DBSA employees.

FIC

FINANCIAL INTELLIGENCE CENTRE, CENTURION

  1. Raite Security
  2. Providing physical security services
  3. R 2 126 840.27
  4. 01 April 2019 to 30 November 2023

FINANCIAL INTELLIGENCE CENTRE, CAPE TOWN

  1. Striving Mind
  2. Providing physical security services
  3. R 1 401 512.16
  4. 01 April 2020 to 31 March 2023

GEPF

The GEPF does not utlise private security firms as the landlord provides security services as part of the contract.

GPAA

The Government Employees Pension Agency (GPAA) does make use of private security firms for the sole purpose of protecting the employees and assets in respect of all of the GPAA’s 16 offices, which includes Head office, 15 regional and satellite office across the country in all nine provinces.

All procurement at the GPAA is in line with Public Finance Management Act prescripts. Therefore, the GPAA acquired the services after following an open tender process inviting bids to provide security services.

The details set out in Annexure A attached.

ANNEXURE A

Name of Company

Region (s)

Total value across multiple years

Duration of Service Agreement

     

Start

End

Peuloane (Pty) Ltd

Security Services to GPAA HQ & Traven

R 39 386 603,75

2019/08/01

2022/07/31

Peuloane (Pty) Ltd

Security Services to GPAA DBN, PMB

R 3 878 152,14

2019/08/01

2022/07/31

Peuloane (Pty) Ltd

Security Services to GPAA Polokwane, Nelspruit, Thohoyandou

R 11 417 272,73

2019/08/01

2022/07/31

Peuloane (Pty) Ltd

Security Services to GPAA JHB, Rustenburg, Mafikeng

R 8 733 493,76

2019/08/01

2022/07/31

Peuloane (Pty) Ltd

Security Services to GPAA BFN, Phuthadichaba, Kimberley

R 8 320 608,14

2019/08/01

2022/07/31

Peuloane (Pty) Ltd

Security Services to GPAA PE, Bisho, Mthatha

R 8 971 897,34

2019/08/01

2022/07/31

IRBA

  1. Fidelity – ADT
  2. Armed response for building security
  3. R926.72 per month
  4. The term of the building lease

LAND BANK

(b) The Land and Agricultural Development Bank of South Africa as an entity under the National Treasury uses private security firms for the following purposes:

  • Monitoring and Armed Response
  • Static or Physical Guarding of Property

(b)(i) The following is a list of all service providers being uses:

BUILDING

SERVICE PROVIDER NAME

Bloemfontein

Fidelity Security

Bethlehem

Wulfe Alarms

Kroonstad

CSS

Cape Town

Fidelity ADT

Beaufort West

Beaufort-Alarms

Worcester

Capital Security

East London

Chubb – National Security (Pty)Ltd

Cradock

Cradock Sekuriteit

Port Elizabeth

Atlas Security

Nelspruit

ADT Security

Ermelo

ASCU Security

Ermelo

Bethal Security

Pietermaritzburg

PMB Security

Vryheid

Link Up Security

Polokwane

Salute Security

Tzaneen

Northern Security - Kloof Alarms

Upington

Fidelity Security

Vredendal

Fidelity Security

Vredendal

BAI Security

Vryburg

Ravens Security

Lichtenburg

Golden Eye Security

Rustenburg

ARS Security

Rustenburg

Fidelity Security

Potchefstroom

Fidelity Security

Head Office

Fidelity Security

Head Office

ADT Security

 

(b)(ii) Purpose of the services, is to protect people and assets in the case of Monitoring and Armed Response. Additional to this, it is to exercise access control, in the case of Static Guarding.

(b)(iii) Contract values differ significantly and can be expressed in the following manner:

BUILDING

SERVICE PROVIDER NAME

Contract value p/a, ex VAT

Type of Service

Bloemfontein

Fidelity Security

R5,520.00

Monitoring & Armed response

Bethlehem

Wulfe Alarms

R5,060.76

Monitoring & Armed response

Kroonstad

CSS

R3,798.24

Monitoring & Armed response

Cape Town

Fidelity ADT

R8,263.20

Monitoring & Armed response

Beaufort West

Beaufort-Alarms

R3,005.16

Monitoring & Armed response

Worcester

Capital Security

R4,219.80

Monitoring & Armed response

East London

Chubb – National Security (Pty)Ltd

R7,074.36

Monitoring & Armed response

Cradock

Cradock Sekuriteit

R2,473.68

Monitoring & Armed response

Port Elizabeth

Atlas Security

R2,869.56

Monitoring & Armed response

Nelspruit

ADT Security

R6,758.52

Monitoring & Armed response

Ermelo

ASCU Security

R5,791.32

Monitoring & Armed response

Ermelo

Bethal Security

R5,530.44

Monitoring & Armed response

Pietermaritzburg

PMB Security

R6,125.16

Monitoring & Armed response

Vryheid

Link Up Security

R5,263.20

Monitoring & Armed response

Polokwane

Salute Security

R5,980.32

Monitoring & Armed response

Tzaneen

Northern Security - Kloof Alarms

R5,739.12

Monitoring & Armed response

Upington

Fidelity Security

R7,014.12

Monitoring & Armed response

Vredendal

Fidelity Security

R3,856.56

Monitoring & Armed response

Douglas

BAI Security

R2,784.00

Monitoring & Armed response

Vryburg

Ravens Security

R3,130.44

Monitoring & Armed response

Lichtenburg

Golden Eye Security

R3,394.44

Monitoring & Armed response

Rustenburg

ARS Security

R10,643.52

Monitoring & Armed response

Rustenburg

Fidelity Security (Static Guarding)

R163,428.72

Physical Guards

Potchefstroom

Fidelity Security (Static Guarding)

R307,527.60

Physical Guards

Head Office

Fidelity Security (Static Guarding)

R2,122,054.56

Physical Guards

Head Office

ADT Security

R8,133.60

Monitoring & Armed response

(b)(iv) Duration or expiry of each Contract:

BUILDING

SERVICE PROVIDER NAME

Contract Expiry Date/Duration

Bloemfontein

Fidelity Security

08 July 2022

Bethlehem

Wulfe Alarms

Month to month

Kroonstad

CSS

Month to month

Cape Town

Fidelity ADT

01 April 2021

Beaufort West

Beaufort-Alarms

Month to month

Worcester

Capital Security

Month to month

East London

Chubb – National Security (Pty)Ltd

Month to month

Cradock

Cradock Sekuriteit

Month to month

Port Elizabeth

Atlas Security

Month to month

Nelspruit

ADT Security

Month to month

Ermelo

ASCU Security

Month to month

Ermelo

Bethal Security

Month to month

Pietermaritzburg

PMB Security

Month to month

Vryheid

Link Up Security

Month to month

Polokwane

Salute Security

Month to month

Tzaneen

Northern Security - Kloof Alarms

Month to month

Upington

Fidelity Security

01 April 2021

Vredendal

Fidelity Security

01 April 2021

Douglas

BAI Security

17 December 2022

Vryburg

Ravens Security

Month to Month

Lichtenburg

Golden Eye Security

Month to month

Rustenburg

ARS Security

Month to month

Rustenburg

Fidelity Security (Static Guarding)

Contract is Expiring 30 March 2021

Potchefstroom

Fidelity Security (Static Guarding)

Contract is Expiring 30 March 2021

Head Office

Fidelity Security (Static Guarding)

Contract is Expiring 30 March 2021

Head Office

ADT Security

Month to month

PFA

The Office of the Pension Funds Adjudicator does make use of private security firms. Its offices are rented and situated inside a secure office park.

PIC

(i) Bidvest Protea Coin (Pty) Ltd

(ii) Provision of security services at PIC’s head office at Central Square; Menlyn Maine.

(iii) R13 754 696 inclusive of VAT

(iv) 3 August 2018 to 31 August 2021

SARS

(i)(ii)(iii)(iv) SARS has contracted security service providers to render a service on four categories,

in terms of the normal procurement processes.

Category A: Armed Guarding, Close Protection and Tactical Response Security Services for a period of twelve (12) months

    • Tshedza Protective Services CC : contract value R 16 386 785

Category B: Armed Response and Alarm Monitoring Services for a period of three (3) years

    • Maxi Phumelela Security: contract value R 1 827 355.75
    • Royal Security CC: contract value R 678 670.20
    • Fidelity Security Services (Pty) Ltd : contract amount R 574 259.40

Category C: National Guarding Security Services for a period of twelve (12) months

    • Royal Security CC: contract value R 33 605 282.70
    • Fidelity Security Services (Pty) Ltd : contract value R 35 638 716.30
    • Wenzile Phaphama Security Services : contract value R 36 092 011.71

Category D: Secure transport of high value goods for a period of 5 years

    • Fidelity Security Services (Pty) Ltd: R 54 058 010.61

SASRIA

Name: Mavee Security (Pty) Ltd - 2012/033849/07

Purpose: To provide 24-hour security to the premises

Value: R847 800.00

Duration: 36 Months (Commencement Date 01 January 2021)

TAX OMBUD

  • The Office of the Tax Ombud (OTO) uses physical security services for the Office building.
  • The Fidelity security services are contracted to provide the physical security services to the OTO.
  • The security company is contracted by the South African Revenue Service (SARS).
  • The physical security expenses relating to OTO is paid centrally by SARS.

10 May 2021 - NW947

Profile picture: Hill-Lewis, Mr GG

Hill-Lewis, Mr GG to ask the Minister of Finance

(1) What is the total amount of corporate tax that is received from the minibus taxi industry in the Republic; (2) whether the SA Revenue Service (SARS) is concerned about tax avoidance in the cash-dominated taxi industry; if not, why not; if so, what measures is SARS taking to address the problem?

Reply:

(1) SARS collected approximately R5 million in Corporate Income Tax (CIT) from the Taxi Operators; however, this amount includes tax collected from their employment income. This is because the industry does not correctly disclose income from taxi business on their CIT returns but included under a generic income source code. We were not able to determine income solely from taxi operations. Our analysis indicates that the majority of the taxi industry is declaring a nil return or are having a refund due to them.

(2) SARS is concerned about tax avoidance across the tax ecosystem in general; this is more so in this particular industry; to this end, SARS adopting a number of targeted interventions. The interventions are aimed at achieving the SARS strategic intent of building a tax and customs system that is premised on voluntary compliance. The strategic intent is achieved through the creation of clarity and certainty of tax obligations, making it simple, easy and seamless to meet tax obligations and ultimately by creating a credible threat of detection whilst making it hard and costly to remain non-compliant. To this end, SARS has a unit dedicated to improving compliance of SMMEs, Taxi industry included; we had various engagements with the industry bodies in the year 2020/21 to create alignment as well as to educate. Furthermore, SARS has worked in collaboration with the Department of Transport to share data on work on their Taxi industry transformation agenda. In response to the perceived non-compliance by the Taxi industry, SARS has commenced a process of developing a compliance plan for the Taxi industry to encourage voluntary compliance and potentially propose the appropriate tax regime specifically for the industry. This work will be concluded in the 2021/22 financial year.

The working with and through stakeholders as one of the stated strategic objectives is crucial and informs the stakeholder engagements as detailed above.

10 May 2021 - NW864

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George, Dr DT to ask the Minister of Finance

(1) Whether, with reference to the approval by the City of Ekurhuleni Municipal Council of item: A-TP (01-2021) in its virtual sitting on 28 January 2021, which sought to pay interim compensation to the Ekurhuleni taxi industry for the operation of phase 1 of the Integrated Rapid Public Transport Network project, the National Treasury has found that the compensation is necessary; if not, what is the position in this regard; if so, will the National Treasury be ensuring that the approved item is actioned; (2) (a) what is the total figure in respect of the approved recommendation stating that the payment of R10,00 fare per passenger on the Harambee Service between Tembisa-ORTIA and extension to Bartlett to affected taxi operators for the daily passenger revenue loss, which will be from the R17,00 per passenger fare collected, (b) why has the amount to be paid not been capped and (c) which taxi associations are part of the Ekurhuleni taxi industry; (3) whether the National Treasury has received correspondence from the caucus of a certain political party (name furnished) on this matter; if not, why not; if so, what are the relevant details?

Reply:

The Public Transport Network Grant (PTNG) is appropriated to Vote 40: National Department of Transport. Therefore, the responsibilities of approval of all aspects of the PTNG, industry compensation included, lie with the Department of Transport to ensure that money spent in the conditional grant meet the conditions in the Division of Revenue Act, but to also ensure that it is consistent with the Public Transport Policy and Regulations. It is therefore recommended that these questions be referred to the Ministry of Transport.

31 March 2021 - NW896

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Powell, Ms EL to ask the Minister of Finance

Whether the National Treasury intends to take any action against government departments that fail to publish the details of personal protective equipment procurement on the website of the National Treasury in accordance with the instruction to all government departments by the President, Mr M C Ramaphosa; if not, why not; if so, what are the relevant details?

Reply:

In terms of Instruction No.11 of 2020/21 (PFMA institutions) and Circular 105 (MFMA institutions), all institutions are required to report procurement transactions on a monthly basis. All procurement transactions related to the emergency procurement for COVID-19 PPE items, fabric masks as well as other goods, works or services that were procured to prevent an escalation of the national state of disaster, declared on 15 March 2020 (the Disaster) or to alleviate, contain or minimise the effects of the Disaster, must be reported. This includes, inter alia, expenditure for quarantine and isolation services, humanitarian relief, etc.

The reports are published monthly in the public domain and serves as a transparency mechanism to lay bare non-compliant government institutions. It is therefore the responsibility of the accounting officers and accounting authorities to ensure that the information provided to the National Treasury is credible, accurate and auditable.

National Treasury has thus far followed up with National Departments, in writing, to make the accounting officers aware of the non-compliance to Instruction no. 11 of 2020/21. It must, however, be noted that not all non-reporting is necessarily regarded as non-compliance as some departments do not procure on a monthly basis. There are instances where departments have not reported in a certain month because no procurement was done in that month.

National Treasury has also engaged the Auditor-General to request that AGSA follow up with selected government institutions whether any expenditure was actually incurred and whether the institutions reported the expenditure in accordance with Instruction no. 11 of 2020/2021 or Circular 105. This will be included in the next annual audit cycle.

31 March 2021 - NW1000

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George, Dr DT to ask the Minister of Finance

In light of the scourge of violent crime in the Republic, how does the National Treasury justify the 5,27% nominal cut to Vote 28: Police for the 2021-22 financial year relative to the 2020-21 financial year?

Reply:

Parliament approved a fiscal framework that proposes significant adjustments to spending over the medium term in order to stabilize government debt and reduce the pace of growth in debt servicing costs in October 2020. This approval by Parliament meant all spheres of government and all department’s budgets would be reduced to achieve debt stabilization. Furthermore, Parliament passed the 2021 fiscal framework tabled by the Minister of Finance in February 2021 proposing the same fiscal consolidation through lowering the levels of expenditure. The decision to reduce departmental budgets was not a National Treasury decision but a Cabinet decision.

Table 1 provides a summary of expenditure trends and estimates for Vote 28: Police. Between 2020/21 and 2021/22, the department’s budget for compensation of employees is expected to decrease from R76.1 billion to R75.3 billion, while its budget for goods and services is expected to decrease from R19.2 billion to R16.3 billion. The main items influenced under goods and services are non-essential in nature, e.g. advertising, consultants, catering, and travel and subsistence, and will be managed through cost-containment. Reductions on compensation of employees will be managed through salary freezes and non-filling of less critical post vacancies.

                                   

Table 1. Expenditure trends and estimates: Vote 28 (Police)

Economic classification

 Audited outcome

 Adjusted

appropriation

Average

growth

rate

(%)

Average:

Expen-

diture/

Total

(%)

 Medium-term expenditure

estimate

Average

growth

rate

(%)

Average:

Expen-

diture/

Total

(%)

R million

 2017/18

 2018/19

 2019/20

 2020/21

 2017/18 - 2020/21

 2021/22

 2022/23

 2023/24

 2020/21 - 2023/24

Economic classification

 

 

 

 

 

 

 

 

 

 

 

Current payments

82 469.3

86 118.7

92 232.1

95 366.4

5.0%

95.7%

91 570.7

92 036.9

92 097.1

-1.2%

95.2%

Compensation of employees

67 124.5

71 282.4

76 357.7

76 147.0

4.3%

78.1%

75 300.5

75 299.7

75 297.1

-0.4%

77.5%

Goods and services

15 344.8

14 836.3

15 874.5

19 219.4

7.8%

17.5%

16 270.2

16 737.2

16 800.1

-4.4%

17.7%

Transfers and subsidies

1 049.3

1 268.5

1 225.1

1 613.7

15.4%

1.4%

1 333.5

1 258.4

1 267.2

-7.7%

1.4%

Provinces and municipalities

44.5

49.5

52.8

53.2

6.1%

0.1%

55.6

57.6

61.4

4.9%

0.1%

Departmental agencies and accounts

39.7

45.6

52.9

51.0

8.7%

0.1%

49.9

51.4

53.5

1.6%

0.1%

Non-profit institutions

  –

1.0

  –

1.0

0.0%

0.0%

  –

  –

  –

-100.0%

0.0%

Households

965.1

1 172.5

1 119.5

1 508.5

16.1%

1.3%

1 228.0

1 149.4

1 152.2

-8.6%

1.3%

Payments for capital assets

2 947.9

2 894.7

2 440.6

2 580.8

-4.3%

2.9%

3 451.3

3 562.3

3 719.3

13.0%

3.4%

Buildings and other fixed structures

575.4

686.3

513.3

497.7

-4.7%

0.6%

946.7

960.9

1 003.2

26.3%

0.9%

Machinery and equipment

2 340.4

2 201.4

1 927.3

2 078.7

-3.9%

2.3%

2 497.3

2 593.8

2 708.2

9.2%

2.5%

Biological assets

5.9

7.0

  –

4.4

-9.2%

0.0%

7.3

7.6

7.9

21.4%

0.0%

Software and other intangible assets

26.2

  –

  –

  –

-100.0%

0.0%

  –

  –

  –

0.0%

0.0%

Payments for financial assets

13.9

15.6

32.3

  –

-100.0%

0.0%

  –

  –

  –

0.0%

0.0%

Total

86 480.4

90 297.5

95 930.2

99 560.9

4.8%

100.0%

96 355.5

96 857.6

97 083.6

-0.8%

100.0%

 

 

Over the medium term, compared to other departments in the Peace and Security function group, Table 2 confirms that the Police services baseline decreases least, i.e. a marginal rate of only 0.2 per cent. Government’s support to the attainment of the objectives and outcomes set out under priority 6 (social cohesion and safer communities) of the 2019-2024 medium term strategic framework is therefore corroborated.

Table 2. Peace and security function expenditure

 

2020/21

Medium term expenditure estimate

Percentage of total MTEF allocation

Average annual MTEF change

R million

Revised estimate

2021/22

2022/23

2023/24

   

Defence and state security

53 968

46 656

47 811

48 132

22.5%

-3.7%

Police services

106 603

104 570

105 946

105 994

49.9%

-0.2%

Law courts and prisons

48 263

48 482

49 632

49 919

23.3%

1.1%

Home affairs

9 780

8 862

9 463

9 372

13.4%

-1.4%

Total

218 615

208 570

212 853

213 417

100.0%

-0.8%

31 March 2021 - NW130

Profile picture: Schreiber, Dr LA

Schreiber, Dr LA to ask the Minister of Finance

(1)With reference to his reply to question 2000 on 14 October 2020 wherein he required the identification numbers, will he now advise whether any public funding of any nature whatsoever has been paid to (a) a certain person (name and details furnished) and (b) a certain person (name and details furnished) since 27 April 1994; if not, what is the position in this regard; if so, what are the relevant details; (2) whether there was an application of any nature to obtain state funding and/or tenders by the specified persons; if not, what is the position in this regard; if so, what are the relevant details

Reply:

1(a) National Treasury only has access to payments information from national and provincial departments using the BAS payment system. In order to search for information against individuals, the National Treasury would need the identification numbers as a search by names may result in inaccurate results.

1(b) A search was done on the BAS payment system for the period 1 April 2017 to date and no payments were found that were made to the entities or initiatives mentioned. (name and details furnished)

2 The National Treasury is not aware of any application of any nature to obtain state funding and/or tenders by the specified persons, entities and/or initiatives.

26 March 2021 - NW810

Profile picture: Powell, Ms EL

Powell, Ms EL to ask the Minister of Finance

Whether he will furnish Ms E L Powell with proof of all deviations for the purposes of personal protective equipment procurement that was authorised by the National Treasury in respect of the Travel With Flair (2004/028611/07) tender contracted by the Department of Human Settlements, Water and Sanitation from 1 January 2020 to 31 January 2021?

Reply:

National Treasury has not received nor approved any requests for deviations from procurement processes from the Department of Human Settlements (DHS) or Department of Water & Sanitation (DWS) for the procurement of personal protective equipment from Travel with Flair (2004/028611/07) for the period 1 January 2020 to 31 January 2021.

The National Treasury does, however, notice the Covid-19 transactions that were reported by DHS against Travel with Flair to the amount of R939 349.00. These transactions were undertaken by the authority of the accounting officer and not as a result of any deviation that NT approved.

National Treasury did not find any transactions for DWS against Travel with Flair on the Covid-19 Reporting Dashboard.

Human Settlements – Extract from the Covid-19 Reporting Dashboard

26 March 2021 - NW846

Profile picture: Steyn, Ms A

Steyn, Ms A to ask the Minister of Finance

(1)(a) What reasons did the Department of Agriculture, Land Reform and Rural Development (DALRRD) give to the National Treasury for spending only 49% or R1,3 billion of its allocated funds for its Agricultural Land Holding Account (ALHA), which was allocated R2,7 billion, by the end of the 2019-20 financial year when it requested a rollover of the unspent funds and (b) what proposed spending changes did the DALRRD provide in their application to the National Treasury for a rollover of funds that were originally meant for the ALHA; (2) whether the DALRRD provided the National Treasury with a schedule indicating the month(s) in which the expenditure is expected to be incurred; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

1. (a) The DALRRD’s requested the National Treasury to retain the surplus from the 2019/20 financial year due to underspending on a number of projects for the following reasons.

  • Recapitalisation and development projects: Non- Accountability of previous disbursements.
  • Guarantees on Land Acquisition: The DALRRD indicated that there were lengthy negotiations on some projects between sellers of land and the department which concluded at the end of quarter 3 and beginning of quarter 4. After conclusion of agreements, the projects had to go for conveyancing and registration process by Deeds Office which delayed the payments.
  • Contracted one Hectare one Household projects: were not completed due to slow mobilization of the projects due to lengthy stakeholder consultation process, and disputes amongst beneficiaries.
  • Contracted Land Development Support: The DALRRD indicated that they had to request Section 66 and Section 72 approvals (PFMA restrictions on borrowing, guarantees and other commitments) from the National Treasury to enter into contracts with ABSA and FNB for the purpose of mitigating the risk of farmers misusing the funds as experienced in the past with the Recapitalization and Development Programme (RADP) program. The approval was granted during December 2019. A team of agricultural engineers from former the Department of Agriculture, Forestry and Fisheries (DAFF) were assembled and deployed to the farms to reassess the infrastructure. Transfers were made after receipt of the assessment reports of relevant infrastructure required on farms, and some of these project assessments were only concluded during the 2020/21 financial year.
  • Contracted forensic audit: delays due to ongoing forensic audit. The DALRRD indicated that the amount would be paid after close up report is received on forensic audit performed. The expenditure was expected to be disbursed within 30 days after receipt of invoice.
  • Open orders: Valuations for land acquisition projects not yet concluded at the end of the financial year.
  • Further ALHA received an additional R277 million towards the end of March 2020 (end of 2019/20 financial year) for COVID-19 Disaster Fund.

2. 

(b) The DALRRD, did not provide any proposed spending changes. The retained surplus is supposed to be spend during the 2020/21, during which the approval would be valid.

  • The DALRRD provided the cash flow / expenditure disbursement terms, which ranges from 2 days after registration of land by Deeds Office; 30 days after receipt of invoice; and some projects expenditure to be disbursed within 1 year.
  • The table below indicates the disbursement terms, project values and project terms.

Table 1: List of commitments at the end of 2019/20

Commitment description

Project term (years)

Cash flow disbursement term

Reason for slow spending

Project budget (R’000)

Project Surplus (R’000)

Recapitalisation and Development projects

5

1 year

Non Accountability of previous disbursements

122 436

122 436

Guarantees on Land Acquisition

0.5

2 days after land registration by Deeds

Lengthy negotiations on some projects between seller and department which concluded end of quarter 3 and beginning of quarter 4, after agreement projects have to go for conveyancing and registration process by Deeds Office.

146 436

146 436

Contracted one Hectare one Household projects

unlimited

1 year

Slow mobilization of the projects due to lengthy stakeholder consultation process. Disputes amongst beneficiaries These commitments are mainly second or third tranches, which are earmarked to be finalised this financial year.

28 257

28257

Contracted Land Development Support

5

1 year

The Department had to request Section 66 and Section 72 approvals from Treasury to enter into contracts with ABSA and FNB for the purpose of mitigation the risk of farmers misusing the funds as experienced in the past with the RADP program. The approval was granted during December 2019. A team of Agricultural Engineers from DAFF were assembled and deployed to the farms to reassess the infrastructure. Transfers were made after receipt of the assessment report of relevant infrastructure required on farms. Some of these project assessments were only concluded in the current financial year.

716 990

716 990

Contracted forensic audit

1

I year

Retention amount will be paid after close up report is received on forensic audit performed.

1 710

1 710

Contracted project management

1

30 days after receipt of invoice

Balance for project will be paid after final review and sign off the close up report.

477

477

Open Orders

0.5

30 days after receipt of invoice

Valuations for land acquisition projects not yet concluded.

2 828

2 828

Total

     

1 019 135

1 019 135

COVID Disaster Fund

0.5

30 days after receipt of invoice

Current financial year, funds received from department during 2019/20.

513 844

513 844

Grand Total

     

1 532 979

1 532 979

26 March 2021 - NW601

Profile picture: Hendricks, Mr MGE

Hendricks, Mr MGE to ask the Minister of Finance

In view of the Government’s plans to launch a state-owned bank and whilst interest-free banking services may be the first step to reduce the draconian interest choking every South African, (a) what total amount was budgeted to fund interest on debt in the (i) 1995 budget and (ii) latest budget and (b) has he found this to be in line with inflation and/or poor fiscal frameworks year after year?

Reply:

It is generally not possible in South Africa for the state, or any bank or company, to secure loan funding without paying interest except, possibly, for small amounts of concessional funding. No bank in South Africa is likely to lend to customers without covering the full cost of capital, including interest. Some institutions may be able to structure a small part of their loan market for non-interest or sharia-related lending but such lending is very limited, and uses other mechanisms to recover their costs.

The question of whether any state bank can lend at lower interest rates than commencial banks, and whether such a business model will be sustainable, and bring no additional risk to the fiscus, is a separate question that the management of each state bank has to consider, including the extent of non-performing loans and affordability of its customers. It is imperative that no state bank must be a burden on the fiscus and that all state banks must be able to generate sufficient own-revenue to fund their operations. State banks which engage in lending activities need to develop robust lending and risk management models, so that they do not depend on fiscal transfers, or impose losses on depositors. As such, no funds have been budgeted to fund any interest-free lending, by any bank.

a) The amount of funds budgeted to fund interest on the national debt is available in the annual Budget documentation, including the Budget Review.

(i) The total amount of funds that was budgeted to fund interest on the national debt in the 1995 Budget for 1995/96 was R39,5 billion.

(ii) The total amount of funds budgeted to fund interest on the national debt in the latest, 2021 Budget is R232,9 billion for 2020/21.

b) As announced in the 2021 National Budget, the cost of servicing government’s debt, at R232,9 billion or 11,3% of consolidated expenditure in 2020/21, and rising in the next few years, is not sustainable. Hence, in the 2021 Budget, government has undertaken several measures which are expected to stabilise government debt at 88,9% of GDP in the 2025/26 financial year, and for the ratio to decline thereafter.

18 March 2021 - NW507

Profile picture: Walters, Mr TC

Walters, Mr TC to ask the Minister of Finance

(1)Whether any staff member in the National Treasury (a) performed work in addition to the responsibilities related to his or her work, outside normal working hours, in the past five financial years and (b) has been performing such work during the period 1 April 2014 up to the latest specified date for which information is available; if not, in each case, how is it determined whether such work is being performed or not; if so, in each case, (i) what number of staff members and (ii) in what job or work categories are the specified staff members employed; (2) whether approval for such work was obtained in each case; if not, what is the position in this regard; if so, (a) what is the policy of the National Treasury in this regard, (b) by whom are such applications considered and approved, (c) what number of contraventions of this policy were brought to the attention of the National Treasury in the past five financial years and (d) what steps have been taken against the transgressors?

Reply:

(1) (a) Yes

(b) The Public Service Regulations in this regard came into effect in August 2016. It should further be noted that the approval is only valid for a period of one year from date of approval. Below are the current valid cases:

(i) Number of Staff Members (25)

(ii) Job or work categories are the specified staff members employed

11

Economic Cluster

1

Human Resources

1

Security Management

11

Financial Cluster

1

Information Technology

(2) Approval was granted to all employees doing other remunerative work outside public service.

a) National Treasury is guided by the provisions of the Public Service Regulations, 2016 and associated procedures

b) All cases are sent to the Director-General for consideration and approval

c) No contraventions were identified following an investigation of such cases

d) There were no transgressors

18 March 2021 - NW606

Profile picture: Shivambu, Mr F

Shivambu, Mr F to ask the Minister of Finance

Whether procurement legislation will be adhered to in the procurement of COVID-19 vaccines; if not, what is the position in this regard; if so, what are the relevant details?

Reply:

Please note that the procurement of the Covid-19 vaccines is a line function responsibility of the Department of Health. The Department of Health is the sole procurer of Covid-19 vaccines in South Africa on behalf of the public and private sector.

The National Treasury plays an advisory; compliance monitoring; and oversight role in the procurement of the Covid-19 vaccines.

Insofar as the role of the National Treasury in this regard is concerned, the NT will ensure that procurement legislation is complied with which includes the appropriate requests and approvals for departures from procurement procedures in line with Treasury Regulation 16A6.4 and SCM Instruction Note 3 of 2016/2017 (Preventing and Combating Abuse in the SCM System).

The National Treasury engages with the Department of Health on an ongoing basis prior and during the vaccine procurement process, particularly in respect of departures from procurement procedures.

The funding and procurement of the vaccines are kept central (through the National Department of Health). This allows for comprehensive central control of procurement, governance and the spending of funds. This approach also minimizes the opportunities for corruption, provides for central record keeping of agreements and centralised contact with manufacturers.

18 March 2021 - NW580

Profile picture: Brink, Mr C

Brink, Mr C to ask the Minister of Finance

Whether the National Treasury has undertaken any studies and/or assessment projects to determine the reason why certain municipalities consistently fail to collect more than 80% of debt owed to them by consumers in any given financial year; if not, why not; if so, what (a) were the main findings of the assessment and (b) measures do municipalities have to put in place to ensure consistent and effective debt collection?

Reply:

Yes, National Treasury has appointed Revenue and Budget Advisors in seven (7) provinces. These advisors have undertaken a baseline assessment on revenue and budget management in municipalities in each of the seven Provinces through a tool called the “Survey Monkey” which is a questionnaire based assessment. The results of the assessments are collated into a support plan for the respective municipality.

a) The following are the main findings impacting on the revenue potential of the municipality:

Covid-19 impact - During the total lockdown some businesses had to close and a large number of customers lost their jobs and did not earn an income, consequently, their ability to honour the municipal account was affected, thus, increasing the consumer debt drastically. As the result unemployment increased and these consumers failed to register as indigent beneficiaries, causing the outstanding debt to increase.

On the municipal operations side:

Effective Credit Control - Although municipalities have Credit Control Policies in place, the ability to implement them efficiently is a challenge. The officials are reluctant to implement the credit control for various unethical benefits and there is no political will to support the implementation thereof. Additionally, municipalities lack of resources to implement the credit control policy effectively.

Bad Debt Write-off – Where the situation warrants a debt write-off, municipalities fail to correct their records timeously especially in cases where there is uncollectable debt due deceased estates and indigent households.

An effective Customer Care strategy is most neglected in municipalities. This unit is not well capacitated and lack the prerequisite skill to manage a “Help Desk” with a proper control over the handling of queries. Subsequently, feedback to the customer regarding their queries are very poor resulting in a very unhappy customer.

Poor Infrastructure (Water and Electricity Networks) - Due to the poor and dilapidated infrastructure, proper credit control cannot be implemented. With poor infrastructure, illegal connections cannot be controlled. The Free Basis Services of the indigent households cannot be monitored and the indigent household cannot be restricted or disconnected when the allocated consumption is exceeded.

Billing System and Inaccurate Billing - Incorrect and inaccurate billing pose a challenge in the municipalities. The communities in the various municipalities are dissatisfied with the municipal bills and public confidence suffers, communities are unwilling to pay for the bills issued and as such, municipal debt gradually accumulates and the municipal collection rates fall.

Illegal Connections is a huge area of concern. A lot of consumers use adverse methods not to pay for the consumption. In some municipalities the technical staff seems to promote illegal connections by bypassing the system for a bribe. This behavior is unacceptable and seriously impacts on the finances of the municipality.

Indigent management – The observation is that most municipalities do have an approved and adopted Indigent policy. Indigents are not properly vetted and several households that can afford to pay for services are benefiting unjustly.

Customer information – Capturing of customer information is a critical task in municipalities. Incorrect information and outdated information makes it difficult to implement credit control when required. Equally, credit checks are not adequately undertaken and municipalities lack the methodology to do credit check for new accounts.

Non-payment Culture - Culture on non-payment for municipal services is throttling the finances. Even customers that can afford to pay are reluctant to pay due to fear that municipal finances will be misappropriated.

b) The first and foremost the responsibility rests with the municipality to self-correct, put in efficient processes and procedures. These are underpinned by adequate policy formulation and oversight responsibilities. This means that governance and leadership is essential and critical to ensure that prudent financial management practices are carry out. This is complimented with well-functioning system as an enabler to bill and collect what is due to the municipality. Proper asset management serves as a conduit for efficient revenue generation in municipalities. Many municipalities underperform on their budgets for repairs and maintenance which is allocated to ensure that their revenue generating infrastructure are optimized thus impacting on a sustainable and reliable delivery of service.

18 March 2021 - NW84

Profile picture: Cebekhulu, Inkosi RN

Cebekhulu, Inkosi RN to ask the Minister of Finance

What are the full relevant details of the shortfall in businesses receiving 40% of the R500 billion stimulus package in loan (details furnished)?

Reply:

I presume that the Honourable Member is referring to the R200 billion Loan Guarantee Scheme (LGS), which is 40 per cent of the broader government-led R500 billion package that was announced by the President on 20 April 2020.

Firstly, there is no shortfall, or grant or loan, that any business is entitled to receive directly from the R200 billion scheme. Since it was introduced on 4 May 2020, the purpose of the loan guarantee scheme was to assist financially distressed businesses due to the Covid-19 pandemic. As stated in my response to a previous Parliamentary Question, No 1346 [NW1716E] on 24 August 2020, National Treasury entered into a partnership with the South African Reserve Bank (SARB) and the Banking Association South Africa, to launch the Covid-19 loan guarantee scheme on May 2020, to make it easier for banks to lend more than they normally would have, to small businesses during the lockdown, to assist them in their efforts to survive the pandemic. When the scheme launched, it applied to small businesses with a turnover below R300 million. On 27 July 2020, the scheme was improved and this turnover limit was abolished and replaced with a maximum loan R100 million per loan to qualifying businesses. Banks were to fund such loans from their own funds, using their own balance sheets. Government would only pay from the fiscus if these small businesses defaulted on their payments to their bank, and only after the bank had taken the initial losses, as follows:

  • First loss is absorbed by the lending bank, 2% on each Covid-19 guaranteed loan;
  • Second loss is indirectly absorbed by the lending bank – there is a guarantee fee with the SARB of 0.5%;
  • Third loss is also absorbed by the lending bank to a maximum of 6% of the Covid-19 guaranteed loans; and
  • Fourth loss is the guarantee provided, to be paid by Government.

As of February 2021, banks had provided R17.8 billion in relief to 13 173 approved beneficiaries. It should be noted that the actual take-up was lower than initially expected, as the demand for such loans was low, possibly because many small businesses were reluctant to take up additional debt, given the uncertainty around how long the pandemic would last. Companies may not want to re-invest and borrow more until they feel more confident about the future strength of the economy. In addition, even before the loan guarantee scheme took effect, many banks took their own initiatives to assist their customers, by allowing for payment holidays and other forms of forbearance, which provided significantly more relief than the loan guarantee scheme.

It is important to note that the National Treasury and the SARB never intended for the guarantee to be called in full, and expected only a relatively small portion of the R200 billion to be paid. Any call on the guarantee would impact negatively on our fiscal framework and our efforts to stabilise the debt-to-GDP ratio. As such, any underutilized portion of the scheme cannot be regarded as a “shortfall” nor should there be any expectation that it can be used to fund other programmes, as it would effectively increase such debt-to-GDP.

There is regular information on the take-up of the loan guarantee scheme, which is published in Treasury documents like the 2021 Budget Review, as well as on the website of the Banking Association South Africa at https://www.banking.org.za/news/jan-loan-scheme-update/ .

11 March 2021 - NW10

Profile picture: Marawu, Ms TL

Marawu, Ms TL to ask the Minister of Finance

(1)Whether the National Treasury approved the funding of the SA Health Products Regulatory Authority by the Bill and Melinda Gates Foundation; if not, what remedies will he implement; if so, what procedure was allowed; (2) what is the total value of irregular expenditure on the COVID-19 funds; (3) whether any person has been arrested or taken to court for corruption in the procurement of personal protective equipment; if not, why not; if so, what are the relevant details?

Reply:

1. National Treasury does not need to approve donations to public entities. Treasury Regulation 21.2.1 permits accounting officers to accept gifts, donations and sponsorships.

2. National Treasury is not able to quantify the irregular expenditure at this point.  Irregular expenditure is incurred when the resulting transaction is recognized in the financial records of a department, constitutional institution or public entity in accordance with the relevant Accounting Framework. For a department or a government component applying the Modified Cash Standards (MCS) to incur irregular expenditure, the non-compliance must be linked to a financial transaction. Although a transaction may trigger irregular expenditure, a department or government component will only record irregular expenditure when a payment pertaining to the non-compliance is actually made (i.e. when the expenditure is recognized in accordance with the Modified Cash Standards). For a government component, a constitutional institution, a trading entity or a public entity listed in Schedules 2 or 3 to the PFMA applying Generally Recognised Accounting Practice (GRAP) or International Financial Reporting Standards (IFRS) to incur irregular expenditure, the non-compliance must be linked to a financial transaction. Although a transaction may trigger irregular expenditure, a constitutional institution, government component, trading entity or public entity will only record irregular expenditure when a transaction is recognised as expenditure in the Statement of Financial Performance in accordance with GRAP or IFRS, whichever is applicable. The National Treasury only receives applications for condonation of irregular expenditure once it is declared as such and this is usually for previous financial years as a result of audit findings.

3. The National Treasury supports the work of the Fusion Centre with the review of bid processes followed. The reviews are conducted on cases referred and based on an assessment of specific procurement processes followed by a given institution in line with the principles of the definition of emergency procurement and its adherence with various COVID Emergency Instruction Notes. Findings are then submitted to the Fusion Centre for further handling. Further detail on the outcome of cases investigated can be provided by the Fusion Centre.

The Centre is compromised of the Special Investigating Unit (SIU), State Security Agency, SA Revenue Service, the Hawks and the Financial Intelligence Centre, and acts as the coordinating body of law-enforcement agencies tasked with looking into Covid-19 related graft.

24 February 2021 - NW144

Profile picture: Joseph, Mr D

Joseph, Mr D to ask the Minister of Finance

Whether a feasibility study was done on zero-based budgeting; if not, why not; if so, what (a) were the findings and recommendations in this regard and (b)(i) are the terms and references and (ii) time frames for identified departments that will participate in the pilot project?

Reply:

National Treasury is working on designing a Zero-based budgeting (ZBB) framework that will be implemented for the National Treasury and Department of Public Enterprises during the 2021/22 medium term expenditure framework. The framework will aim to reduce unnecessary government expenditure to create space for other priorities including prevention of deficits and spiraling of government debt. The objectives will include:

  • Improving the performance of programmes/projects
  • Identifying redundant programmes/projects
  • Identifying bottlenecks within government’s finance supply chain
  • Identifying possible duplication of activities between and within departments
  • Improve and optimizing resource allocation, to prevent wasting available resources

The framework to implement the ZBB will be mainly through utilising expenditure reviews, which are used by several countries that have implemented ZBB before. The elements of the framework will include, amongst others:

  • Identifying objectives and outcomes
  • Roles and responsibilities and required skill sets
  • The link between ZBB and the budget process

23 February 2021 - NW92

Profile picture: Hill-Lewis, Mr GG

Hill-Lewis, Mr GG to ask the Minister of Finance

With reference to the 2019-20 Annual Report of the Financial and Fiscal Commission, what are the reasons that there were initial material misstatements that had to be corrected after being pointed out by the auditor?

Reply:

There was instability and a lack of leadership and oversight in the Finance Division. This was related to the disciplinary hearing of the now dismissed chief financial officer, leading to the commission having to appoint acting Chief Financial Officers (CFOs) while finalizing the disciplinary process. This resulted in weaknesses in the processing and reviewing of transactions during the compilation of the Annual Financial Statements. The commission has appointed a permanent CFO and has capacitated the internal control systems.

23 February 2021 - NW91

Profile picture: Hill-Lewis, Mr GG

Hill-Lewis, Mr GG to ask the Minister of Finance

With reference to the 2019-20 Annual Report of the Financial and Fiscal Commission, what are the reasons for the exceptionally high levels of average leave days taken by each employee according to the annual and sick leave table, with the exception of salary levels 14 - 15?

Reply:

There are several factors that determined employees’ annual leave entitlement in 2019-20;

  • employees are entitled to a maximum of 22 – 27 days per annum (depending on years of service);
  • employees have a period of six months within which to take all annual leave days that they may have accumulated in respect of the previous calendar year;
  • employees may have had annual leave days from before the previous calendar year, as prior to a leave policy change, employees were allowed to maintain a carry-over balance of 10 days in accrued leave; and
  • some employees received once-off additional leave credits, to correct for leave unduly lost owing to an electronic leave system error.

 

 

SIGNATURE PAGE

NATIONAL ASSEMBLY

QUESTION FOR WRITTEN REPLY

QUESTION NUMBER: 91 [NW94E]

Deadline = 19 February 2021

Recommended / Not recommended

DR. KAY BROWN

CHIEF EXECUTIVE OFFICER: FINANCIAL AND FISCAL COMMISSION

DATE:

 

Approved / Not approved

DR. DAVID MASONDO, MP

DEPUTY MINISTER OF FINANCE

DATE:

23 February 2021 - NW216

Profile picture: Chetty, Mr M

Chetty, Mr M to ask the Minister of Finance

Whether value-added tax (VAT) was paid on the sale of tickets for the 2010 FIFA World Cup; if not, what are the reasons that no VAT was paid; if so, what total amount was paid?

Reply:

Value-added tax was levied at the standard rate of 14% on all 2010 World Cup ticket sales.

VAT revenue from such sales amounted to R318 million.