Questions & Replies: Finance
2010-07-13
THIS FILE CONTAINS 25 REPLIES.
FIND THE REPLY YOU ARE LOOKING FOR BY SELECTING CTRL + F ON YOUR KEYBOARD
QUESTION NUMBER3505 [NW4344E]
DATE OF PUBLICATION: 26 NOVEMBER 2010Dr D T George (DA) to ask the Minister of Finance:
(1) Whether (a) the National Treasury and (b) any of its entities provided any financial support to the National Youth Development Agency (NYDA) for the World Festival of Youth and Students to be held in Pretoria in December 2010; if not, why not; if so, (i) what amount was provided to the NYDA, (ii) from which budget were these funds drawn, (iii) who made the decision to provide these funds to the NYDA and (iv) how is this (aa) decision and (bb) amount justified;
(2) whether the NYDA made any other request to (a) the National Treasury and (b) any of its entities to provide support to the festival; if not, what is the position in this regard; if so, what are the relevant details?
NW4344E
REPLY:
| Department | (1) | (2) | (i)(ii)(iii)(iv)(aa)(bb) |
| National Treasury | No | No | Falls away |
| Entities | (1) | (2) | (i)(ii)(iii)(iv)(aa)(bb) |
| Accounting Standards Board | No | No | Falls away |
| Cooperative Banks Development Agency | No | No | Falls away |
| Development Bank of Southern Africa | No | Yes | See attached Annexure A |
| Financial Intelligence Centre | No | No | Falls away |
| Financial Services Board | No | No | Falls away |
| Government Employees Pension Fund | No | No | Falls away |
| Independent Regulatory Board for Auditors | No | No | Falls away |
| Land and Agricultural Bank of South Africa | No | No | Falls away |
| Pension Fund Adjudicator | No | No | Falls away |
| Ombud for Financial Service Providers | No | No | Falls away |
| Public Investment Corporation | No | No | Falls away |
| South African Revenue Service | No | No | Falls away |
| South African Special Risk Insurance Association | No | No | Falls away |
ANNEXURE A
Development Bank of Southern Africa (DBSA)
(1) The DBSA and its entities have not provided any financial support to the NYDA for the said festival. The reason being that as an infrastructure development bank, our support for job creation focused on youth would be aligned to our mandate of supporting infrastructure projects and not festivals.
(i) N/A
(ii) N/A
(iii) N/A
(iv) N/A
(aa) N/A
(bb) N/A
(2) The Bank received an invitation to the fundraising Gala Dinner event on the 19th November 2010 for the Festival. The dinner was subsequently cancelled prior to any payment being made towards a table for the event. No moneys were therefore paid by the DBSA towards this event.
(a) N/A
(b) N/A
QUESTION NUMBER 3457 [NW4292E]
DATE OF PUBLICATION: 26 NOEVMBER 2010Dr D T George (DA) to ask the Minister of Finance:
(a) How many employees of (i) the National Treasury and (ii) any of its entities who are on level 11 salary scale and above have been suspended with full pay (aa) in the 2009-10 financial year and (bb) during the period 1 April 2010 up to the latest specified date for which information is available and (b) what is the total amount of money that was paid by the National Treasury in respect of these salaries?
NW4292E
REPLY:
The following table and annexures provide the information required. Every effort is made to limit the period of suspension and expedite disciplinary processes. In some instances the suspended employee filibusters in an effort to delay disciplinary processes.
| Department | (aa) | (bb) | (b) |
| (i) National Treasury | None | None | Falls away |
| (ii) Entities | (aa) | (bb) | (b) |
| Accounting Standards Board | None | None | Falls away |
| Cooperative Banks Development Agency | None | None | Falls away |
| Development Bank of Southern Africa | 6 | 1 | See attached Annexure A |
| Financial Intelligence Centre | None | 1 | See attached Annexure B |
| Financial Services Board | None | None | Falls away |
| Government Employees Pension Fund | None | None | Falls away |
| Independent Regulatory Board for Auditors | None | None | Falls away |
| Land and Agricultural Bank of South Africa | 3 | 1 | See attached Annexure C |
| Pension Fund Adjudicator | 1 | None | See attached Annexure D |
| Ombud for Financial Service Providers | None | None | Falls away |
| Public Investment Corporation | 3 | 3 | See attached Annexure E |
| South African Revenue Service | 11 | 6 | See attached Annexure F |
| South African Special Risk Insurance Association | None | 2 | See attached Annexure G |
ANNEXURE A
(ii) DEVELOPMENT BANK OF SOUTHERN AFRICA (DBSA)
(aa) 6 employees were suspended in the 2009-10 financial year
(bb) 1 employee was suspended in the period 1 April 2010 up to latest specified date
(b) Total remuneration paid by the DBSA during the period of the suspension is R 3,521,604
ANNEXURE B
(ii) FINANCIAL INTELLIGENCE CENTRE (FIC)
(bb) 1 employee was suspended in the period 1 April 2010 up to latest specified date
(b) Total remuneration paid by the FIC during the period of the suspension is R 604 117
ANNEXURE C
(ii) LAND AND AGRICULTURAL BANK OF SOUTH AFRICA (LAND BANK)
(aa) 3 employees were suspended in the 2009-10 financial year
(bb) 1 employee was suspended during the period 1 April 2010 up to the latest specified date
(b) No money was paid by National Treasury. However, the following figures pertain to the entity, Land and Agricultural Development Bank of SA and comprise salaries paid during the suspension periods which range between 3 and 4 months:
· 2009/2010 salaries – R445 796.64
· 2010/2011 salaries – R259 200.00
(Please also refer to attached spreadsheet)
ANNEXURE D:
(ii) OFFICE OF THE PENSION FUND ADJUDICATOR
(aa) 1 employee was suspended in the 2009-10 financial year
(b) Amount paid (not by National Treasury) was R91 760 .38
ANNEXURE E
(ii) PUBLIC INVESTMENT CORPORATION LIMITED (PIC)
(aa) 3 employees were suspended in 2009-10
(bb) 3 employees were suspended in 1 April 2010 up the latest specified date
(b) The total cost paid by the PIC amounted to R276 889,41
ANNEXURE F
(ii) SOUTH AFRICA REVENUE SERVICE (SARS)
SARS was established in terms of the SARS Act, no 34 of 1997 as an organ of state within the public administration, but as an institution outside of the public service. The salary scales within SARS do not align to those in the public service. The information that SARS provides herein is made on what we believe are the equivalent of level 11 and above in the public service.
It should be noted that suspensions in SARS are effected in terms of the provisions of the SARS Disciplinary Code and Procedure and the SARS Suspension Policy. In terms of these provisions, suspension with full pay is a precautionary measure that does not constitute a finding of guilt regarding any allegation/s which may be levelled against SARS employees. Suspension with full pay is also not a disciplinary sanction.
Suspension with full pay will only be imposed under the following circumstances:
· if the employee is alleged to have committed an offence that is of a serious nature;
· to stabilise the work environment in order to conduct a proper investigation into the allegation/s levelled against the employee/s, and to avoid the potential tampering with evidence and/or interference with the investigation;
· to minimise any risk and/or potential damage to SARS property and/or danger to the wellbeing of other SARS employees during an investigation;
· to protect and secure witnesses and to avoid interference or intimidation of witnesses during the course of the investigation.
In terms of the SARS Disciplinary Code and Procedure and the SARS Suspension Policy, the period of suspension with full pay may not exceed thirty (30) working days. In the event that an extension of this period is needed given the nature of the alleged misconduct and the extent of the investigation, it requires the approval of the Commissioner of SARS. A critical factor in this regard is the capacity for investigation which is an area which SARS is working to improve.
(aa) + (b) [suspensions with pay during financial year 2009/10]
Employees suspended for a period of 30 days or less
| SARS Level | Number of SARS employees suspended | Amount paid by SARS during period of suspension |
| Grade 6 (Team Leaders / Junior Managers) | 2 | R 27,703.79 |
| Grade 7 (Managers) | ||
| Grades 8 and 9 (Senior Managers, Executives, Chief Officers) | 1 | R 51,487.26 |
| TOTAL | 3 | R 79,191.05 |
Employees suspended for a period longer than the 30-day period
| SARS Level | Number of SARS employees suspended | Amount paid by SARS during period of suspension |
| Grade 6 (Team Leaders / Junior Managers) | 4 | R 465,559.61 |
| Grade 7 (Managers) | 3 | R 464,304.12 |
| Grades 8 and 9 (Senior Managers, Executives, Chief Officers) | 1 | R 559,699.47 |
| TOTAL | 8 | R 1,489,563.20 |
(bb) + (b) [suspensions with pay during current financial year to 31/10/2010]
Employees suspended for a period of 30 days or less
| SARS Level | Number of SARS employees suspended | Amount paid by SARS during period of suspension |
| Grade 6 (Team Leaders / Junior Managers) | 1 | R 8,549.44 |
| Grade 7 (Managers) | ||
| Grades 8 and 9 (Senior Managers, Executives, Chief Officers) | ||
| TOTAL | 1 | R 8,549.44 |
Employees suspended for a period longer than the 30-day period
| SARS Level | Number of SARS employees suspended | Amount paid by SARS during period of suspension |
| Grade 6 (Team Leaders / Junior Managers) | 3 | R 491,332.71 |
| Grade 7 (Managers) | 1 | R 150,860.35 |
| Grades 8 and 9 (Senior Managers, Executives, Chief Officers) | 1 | R 267,183.38 |
| TOTAL | 5 | R 909,376.44 |
* Of the number of suspensions above, 3 of the suspensions are still ongoing
ANNEXURE G
(ii) SOUTH AFRICAN SPECIAL RISK INSURANCE ASSOCIATION (SASRIA)
(bb) 2 employees were suspended in the period 1 April 2010 to date. (Suspended from 27 April 2010 to 31 August 2010 and resigned during September 2010)
(b) Total salaries paid during suspension period: R 941,656 (Nine hundred and forty one thousand six hundred and fifty six rand)
QUESTION NUMBER 3378
DATE OF PUBLICATION: 19 NOVEMBER 2010Mr M H Steele (DA) to ask the Minister of Finance:
(1) Whether he intends (a) introducing any amendments to the Public Finance Management Act, Act 1 of 1999 or (b) issuing any new regulations to place limits on the period for which contracts can be extended; if not, why not; if so, what are the relevant details in each case;
(2) whether he will make a statement on the risks inherent in any department or entity extending a contract beyond its original time span?
NW4212E
REPLY
(1) The Public Finance Management Act (PFMA), 1999 is now in its tenth year of implementation and it is considered good practice to periodically review legislation to ensure that it remains relevant and easy to implement. Soon after the Act came into effect from 1 April 2000 several financial management reforms were introduced and over the years of implementation shortcomings have been identified in the legislation. The National Treasury is therefore giving consideration to amending the PFMA at an appropriate time to formally legislate the reforms that were introduced and to amend sections that are considered problematic.
The Multi Agency Working Group on supply chain management is, however, currently conducting investigations into supply chain management irregularities and may recommend amendments to the legislative framework to strengthen provisions related to supply chain management. Limiting the period for which contracts can be extended may be considered as well. As soon as this process is completed, the National Treasury will consider amending the PFMA and revising the Treasury Regulations.
(2) In terms of section 38(1)(a)(i) of the PFMA, the accounting officer is required to ensure that his or her department has and maintains effective, efficient and transparent systems of financial and risk management and internal control. Chapter 3 of the Treasury Regulations also requires the accounting officer to conduct regular risk assessments to identify emerging risks of the institution and to develop a risk management strategy. This strategy must include a fraud prevention plan and must be used to direct internal audit effort and priority. Risks inherent in any department or entity, including risks associated with extending a contract beyond its original time span, should be identified in the risk management process of the respective department or entity. Whilst risk management is an institutional function, the National Treasury will issue a practice note during the first quarter of 2011 on the extension of contracts, which will also address the risks associated with extending contracts beyond its original time span.
QUESTION NUMBER 3364 [NW4194E]
DATE OF PUBLICATION: 12 NOVEMBER 2010Mr P F Smith (IFP) to ask the Minister of Finance:
(a) What is the quantum of under spending by municipalities on their budgets in the (i) 2008-09 and (ii) 2009-10 financial years and (b) what steps has he taken with regard to such under spending?
NW4194E
REPLY:
(a) (i) On aggregate, municipalities reported under spending on their total budgets of R16.6 billion for the 2008/9 financial year.
(ii) On aggregate, municipalities reported under spending on their total budgets of R16.7 billion for the 2009/10 financial year.
(b) Under spending by municipalities may be caused by various factors, including over-optimistic / unrealistic original budgets, bad planning, problems with procurement and poor expenditure management. In addition, the reasons for under spending may differ between municipalities. Therefore, National Treasury is implementing a range of initiatives to improve the quality of municipal budgets and the management of expenditures. These include:
(i) The MFMA emphasises that a municipal budget must be funded. The municipal budget formats issued in terms of the Municipal Budget and Reporting Regulations provide for a funding compliance assessment in an effort to get municipalities to only table funded budgets, as opposed to unrealistic budgets.
(ii) National Treasury and provincial treasuries' benchmark municipalities' tabled budgets to establish whether they are funded – and where they are unfunded municipalities are advised accordingly.
(iii) National Treasury has allocated funds to build up the capacity of the MFMA Implementation Units within provincial treasuries. The purpose is to ensure that the provincial treasuries are better able to carry out their constitutional responsibility to monitor and provide support to the municipalities that have been delegated to them. The main aim of this support is to improve the capacity of municipalities to compile credible budgets and build up sound financial management systems – which will facilitate better budget implementation.
(iv) National Treasury is directly responsible for exercising oversight of the 17 largest municipalities in the country – the so-called non-delegated municipalities. National Treasury monitors the budgets and section 71 reports of these municipalities very closely, and interacts with them regularly in order to facilitate sound budgeting and proper budget implementation. When necessary National Treasury provides technical advice on budget implementation and other financial management matters.
(v) Plans are being developed to roll-out the IDIP programme to local government to assist with planning of capital projects which will improve the implementation of capital budgets.
QUESTION NUMBER: 3257
DATE OF PUBLICATION: 9 NOVEMBER 2010
Mr EJ Marais to ask the Minister of Finance:
Whether he intends simplifying the process which private businesses must follow in applying for private, public partnerships: if not, why not; if so, what are the relevant details?
NW4073E
REPLY:
The National Treasury has over past years undertaken a number of steps to simplify the PPP process. Detailed guidelines were developed for provincial and national projects and additional guidelines were developed for municipalities and tourism. All these recognize the different types of PPP and allows for adjustment of process based on size and complexity. A toolkit for serviced accommodation will be published next year. Recognizing the potential and capacity the private sector can bring in originating projects the National Treasury has designed and published an unsolicited bid framework which details the steps the private sector can take. PPPs require appropriate risk-sharing and contract management for them to be successful and beneficial to the state, business and the public. Therefore, while PPP processes need to be simplified, we need to ensure that appropriate risk management measures are in place.
We are in constant engagement with all stakeholders and would welcome any further suggestions.
QUESTION NUMBER 3213 [NW4027E]
DATE OF PUBLICATION: 12 NOVEMBER 2010Dr D T George (DA) to ask the Minister of Finance:
What is the (a) total cost and (b) number of copies of each (i) annual report and (ii) report on strategic plans that was produced by (aa) the National Treasury and (bb) any of its entities in the 2009-10 financial year?
NW4027E
REPLY:
(aa)
| Department | Name of document | (a) Total Cost | (b) Number of copies |
| National Treasury | (i) Annual Report | R 135 120.50 | 1000 |
| (ii) Strategic Plans | R 30 379.86 | 1000 |
(bb)
| Entities | Name of document | (a) Total cost | (b) Number of copies |
| Accounting Standard Board | (i) Annual Report | R 61 192.92 | 1500 |
| (ii) Strategic Plans | Not printed | Falls away | |
| Development Bank of Southern Africa | (i) Annual Report | R 625 930.00 | 2000 |
| (ii) Strategic Plans | Not printed | Falls away | |
| Financial Intelligence Centre | (i) Annual Report | R 78 017.00 | 1000 |
| (ii) Strategic Plan | R 38 170.00 | 300 | |
| Financial Services Board | (i) Annual Report | R 243 190.50 | 3000 |
| (ii) Strategic Plans | Not printed | Falls away | |
| Government Employees Pension Fund | (i) Annual Report | R 526 075.80 | 2000 |
| (ii) Strategic Plans | R 355 429.20 | 2000 | |
| Independent Regulatory Board for Auditors | (i) Annual Report | R 170 237.00 | 2000 |
| (ii) Strategic Plans | Not printed | Falls away | |
| Land and Agricultural Bank of South Africa | (i) Annual Report | R 264 510.02 | 2000 |
| (ii) Strategic Plans | Not printed | Falls away | |
| Office of the Pension Fund Adjudicator | (i) Annual Report | R 241 724.46 | 1000 |
| (ii) Strategic Plans | Not printed | Falls away | |
| Office of Ombud for Financial Service Providers | (i) Annual Report | R 225 847. 68 | 970 |
| (ii) Strategic Plans | Not printed | Falls away | |
| Public Investment Corporation | (i) Annual Report | R 258 524 (excluding VAT) | 1500 |
| (ii) Strategic Plans | Not printed | Falls away | |
| South African Revenue Service | (i) Annual Report | R 72 717.00 | 600 books and 100 CDs |
| (ii) Strategic Plans | R 39 330. 00 | 2000 | |
| South African Special Risk Insurance Association | (i) Annual Report | R 226 735.51 | 1000 |
| (ii) Strategic Plana | Not printed | Falls away |
QUESTION NUMBER 3194
DATE OF PUBLICATION: 5 NOVEMBER 2010Mr N J J v R Koornhof (Cope) to ask the Minister of Finance:
Whether, with reference to his department's annual report (details furnished) he has set a time frame or deadline for implementation of the electronic signature system design; if not, why not; if so, what (a) is the time frame or deadline, (b) measures have been put in place to ensure that the target is reached, (c) was the cost of the new system and (d) will the financial implication be as a result of a delay in the implementation?
NW4004E
REPLY:
Yes, a time frame or deadline for the implementation for the electronic signature system was set.
(a) The implementation deadline is 31/03/2011;
(b) The project team is working according to a detailed project plan that will ensure that the target is reached;
(c) The implementation cost of the e-signatures capability is R 88 350.00
(d) There will be no delay in the implementation and therefore no overrun costs.
QUESTION NUMBER 3120
DATE OF PUBLICATION: 5 NOVEMBER 2010Dr P J Rabie (DA) to ask the Minister of Finance:
Whether he intends giving a tax break to first time homeowners on interest payable on the first R500,000 investment on their primary residence; if not, why not; if so, what are the relevant details?
NW3920E
REPLY
New tax announcement are generally only made on Budget Day. I am therefore not at liberty to reveal which tax proposals are been considered. The Honourable Member is free to submit any proposals he has to the Department, or as Budget Tips to the Minister, as we do consider all proposals received. I will, therefore, only focus on existing tax provisions that encourage home ownership.
Government recognizes that the advancement of home ownership is an important social and economic objective. Several existing government programmes are targeted at achieving that objective, including the housing subsidy programme, and specific tax incentives. The tax incentives are aimed toward the construction of under-supplied housing stock, constructed by both developers and employers. These include allowances for housing projects (Section 13sex of the Income Tax Act, No. 58 of 1962), construction of low cost residential units (Section 13sept of the Income Tax Act, No. 58 of 1962) and an additional allowance for low cost housing units situated in Urban Development Zones (Section 13quat in the Income Tax Act, No. 58 of 1962). It is our hope that employers and developers will take full advantage of these incentives. Further, housing subsidies and grants may be exempted from income tax (Section 10(1)(y)(i)(ff) of the Income Tax Act, No. 58 of 1962).
Lastly, it should be noted that we also have lowered transfer duties significantly, which are now only levied on the houses whose value exceed R 500 000 for properties held by natural persons (Section 2 of the Transfer Duty Act, No. 40 of 1949).
QUESTION NUMBER 3016
DATE OF PUBLICATION: 29 OCTOBER 2010 MR J F SMALLE (DA) TO ASK THE MINISTER OF FINANCE(1) Whether the SA Revenue Services (SARS) has been informed of any cases where fake bank accounts have been established by non-existent directors of companies at the Companies and Intellectual Property Registration Office (Cipro); if so,
(2) whether any tax refunds have been diverted; if so, what was the total value in each case;
(3) whether any of the monies have been recovered; if not, why not; if so, how much (a) money was recovered and (b) cases have been resolved;
(4) whether these defrauded companies will be reimbursed; if not, why not; if so, what are the relevant details;
(5) whether any staff members of (a) SARS and (b) Cipro have been implicated in this fraudulent activity; if not, what is the position in this regard; if so, (i) how many staff members have been implicated and (ii) what (aa) action has been taken against each of these staff members and (bb) are the further relevant details?
NW3733E
REPLY:
(1) Since April 2009 SARS has recorded 16 cases where registered particulars were changed at CIPRO with the apparent intention to defraud SARS.
(2) Yes. There has been an actual loss of R50 949 743.80 in diverted refunds
(3) (a) R37 195 542.90 has been recovered and property/vehicles to the value of approximately R 20 000 000.00 are in the process of being attached.
(b) Arrests have been made in 10 cases which are currently before court.
The other 6 cases are still under internal investigation.
(4) SARS cannot penalize companies whose legitimate refunds were fraudulently diverted. Measures are in place to rectify fraudulently changed bank details so that outstanding refunds may be returned to those who have a rightful claim for such refunds.
(5) (a)(b)(aa)
(i) One SARS employee and one SARS contractor have been implicated. The SARS employee was suspended without pay pending the final outcome of a disciplinary hearing. Both individuals are currently on bail and face criminal charges of fraud and corruption.
(ii) SARS and CIPRO have set up a joint task team to address the situation. This co-operation has led to CIPRO alerting SARS of detected suspicious changes of registered particulars of companies as soon as these are detected. Early warning has enabled a swift response and the prevention of the diverting of refunds.
(bb) SARS recognises that motives and values of people play a key role in influencing their behaviour. For this reason, promoting a service culture based on the highest standards of professionalism is an ongoing priority for the Revenue Service.
This is reinforced by a theme that runs across all our internal communications and campaigns that of SARS's 'higher purpose' role in collecting the revenue at the heart of the country's development programme.
In enhancing integrity, SARS promotes a clear Code of Conduct to raise employee's awareness of the standards of personal and professional behaviour required of them to maintain public confidence in the integrity of SARS.
In addition, the following practices are also employed:· Managers are assessed and recruited for their commitment to the higher purpose.
· Ethical conduct is promoted at all levels.
· Staff who report corrupt activities are rewarded and celebrated at the annual awards ceremony and in many instances, take the top awards.
· Compulsory declaration of private interests by staff that is audited by internal ethics office.
· Aggressively vetting all new employees and all promoted employees prior to appointment in new position.
QUESTION NUMBER 2937
DATE OF PUBLICATION: 22 OCTOBER 2010Dr D T George (DA) to ask the Minister of Finance:
(1) Whether any financial modelling has been undertaken by his department (a) in the (i) 2007-08, (ii) 2008-09 and (iii) 2009-10 financial years and (b) during the period 1 April 2010 up to the latest specified date for which information is available to calculate the cost of the (i) implementation and (ii) administration of the proposed National Health Insurance scheme (NHI); if not, why not; if so, what are the relevant details;
(2) whether tax increases will be implemented to finance this scheme; if not, why not; if so, what are the relevant details?
NW3627E
REPLY
(1) As indicated in the 2010 Medium Term Budget Policy Statement, a joint ministerial committee, supported by research and advisory teams, is examining fiscal and financial aspects of national health insurance (NHI) proposals. It is recognized that the implementation of NHI will proceed in several phases over the years ahead, and the cost implications will depend on the details of these reforms. The Treasury's work on health financing in recent years has focused on public health service reforms, including the rollout of HIV and AIDS prevention and treatment programmes and improved remuneration of health sector personnel. A review of health financing issues was published by the National Treasury in the September 2009 Provincial Budgets and Expenditure Review. This work is currently being extended to include actuarial and financial modeling of the implications of alternative NHI administration and implementation arrangements, taking into account service delivery and health benefit options and health facility and medical personnel supply considerations.
(2) No specific tax increases to finance national health insurance are proposed at this stage. Detailed examination needs to be undertaken of the cost implications and alternative financing arrangements for the phased implementation of NHI, before specific tax measures can be proposed.
QUESTION NUMBER 2936
DATE OF PUBLICATION: 22 OCTOBER 2010Dr D T George (DA) to ask the Minister of Finance:
(1) Whether Treasury keeps a record of the debts incurred by municipalities; if not, why not; if so, (a) which municipalities have incurred debts in the (i) 2007-08, (ii) 2008-09 and (iii) 2009-10 financial years, (b) how much debt has been incurred by each municipality and (c) what is the current outstanding debt owed by each of these municipalities;
(2) whether a municipality who wishes to issue a bond will consult Treasury prior to the issuing thereof; if not, why not; if so, what are the relevant details?
REPLY:
(1) Municipalities are required to report to National Treasury on their borrowing activities by submitting the Quarterly Borrowing Monitoring Return (QBMR). In addition, National Treasury collects data from financial institutions for verification purposes.
In the past, the data submitted by municipalities was of poor quality and hence limited the National Treasury's ability to conduct thorough assessments. To overcome this, the National Treasury is currently requesting municipalities to verify their borrowing information from 2003, which is then compared with the information from the financial institutions. National Treasury is also strengthening the quarterly reporting processes to gather this information. The intention is to publish municipal borrowing information as part of the quarterly section 71 reports – starting in March 2011.
In light of the above information, the data on outstanding long term loans is only available on aggregate for 2007/08 to 2009/10 financial years (R20.5 billion, R22.5 billion and R24.1 billion for the 2007/08 to 2009/10 respective financial years).
Going forward, National Treasury has institutionalised a process to get financial institutions reporting on closing balances on long term loans per municipality. Therefore, the figures below show the closing balances on long term loans per category of municipalities as at 30 June 2010 as reported by financial institutions.
Table: Closing balances on long term loans at the end of municipal financial years
| Category of Municipality | 2007/08 | 2008/09 | 2009/10 |
| Category A (Metropolitans) | 16 645 | ||
| Category B (Locals) | 6 356 | ||
| Category C (Districts) | 1 135 | ||
| Total | 20 491 | 22 478 | 42 136 |
(2) Since municipal bonds are classified as long term debt instruments to raise capital, section 46(3)(a)(ii) of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003) requires a municipality to invite the public, relevant provincial treasury and National Treasury to submit written comments to the council with respect to the proposed debt. To date all municipalities that have issued municipal bonds have complied with this requirement and consulted with the National Treasury prior to issuing the bonds.
The details that the municipality needs to provide to National Treasury are contained in Circular 26, which can be accessed on the following link:
http://www.treasury.gov.za/legislation/mfma/circulars/default.aspx
QUESTION NUMBER 2829
DATE OF PUBLICATION: 22 OCTOBER 2010Mr M Waters (DA) to ask the Minister of Finance:
Whether the National Treasury will bail out the provincial health departments who have (a) overspent and/or (b) over-drafts on their budgets; if not, (i) why not and (ii) what steps will the departments take to eradicate their debts; if so, (aa) what plans, (bb) when will this bail-out happen and (cc) how much will be given to each province?
NW3618E
REPLY:
No, National Government will not bail out provincial health departments that have overspent their budgets and / or have overdrafts on their budget. Such a bail-out would not only reward those who do not comply with the PFMA but also undermine section 214 of the Constitution on the equitable division of revenue raised nationally.
(i) The bailout will create a moral hazard and will compromise the principles of fairness within the intergovernmental system. Such a bailout will reward provinces that are not prudent and efficient in managing their finances.
(ii) Provinces are currently busy instituting cost-containment measures and assessing inefficiencies within their entire provincial budgets to redirect savings to health departments. KwaZulu-Natal has succeeded in turning around the finances of their health department through such cost-containment measures. This demonstrates that provinces have the ability to manage their finances in an effective manner.
aa. Not applicable.
bb. Not applicable.
cc. Not applicable.
QUESTION NUMBER 2561
DATE OF PUBLICATION: 13 SEPTEMBER 2010
Dr D T George (DA) to ask the Minister of Finance:
(1) Whether any Value-Added Tax (VAT) refunds are overdue for payment; if not, why not; if so, what is the total outstanding amount per economic sector;
(2) whether any steps will be taken to resolve any backlog in the payment of overdue VAT refunds; if not, why not; if so, what are the relevant details?
NW3202E
REPLY:
(1) Value-Added Tax (VAT) refunds outside the prescribed 21 days amounts to R1,7 billion. These refunds are subject to audit and review and amount to 0.89% of the value of all VAT transactions in the 2010 financial year. A breakdown of these refunds per SARS defined activity is set out in the attached schedule.
(2) These refunds are as a result of refund verification procedures which are taking longer than 21 working days to finalise. VAT refunds have been a target for fraudulent activity; therefore any process change with a view to expediting refunds must take this risk into account and must balance the desire for service and efficiency with the responsibility SARS has to ensure that refunds are not erroneously paid.
SARS is however continually engaged in a process to improve the audit of VAT vendors to ensure that these refunds are processed as timeously as possible. VAT is also on the SARS Modernisation Agenda for future enhancements to the entire VAT process. The key reason for delays relates to difficulties in obtaining the correct data from taxpayers timeously to enable SARS to determine the accuracy and validity of the VAT refund claims.
QUESTION NUMBER 2541
DATE OF PUBLICATION: 20 AUGUST 2010
Mr N Singh (IFP) to ask the Minister of Finance:
Whether the country is on track to meet his recently projected growth path goal of 7% GDP growth despite the current Public Service strike and associated loss of production; if not, why not; if so, what are the relevant details?
NW3163E
REPLY:
No, as the 7% GDP growth is a target that we aspire to, not one that we have projected as a forecast. In the 2010 Budget, National Treasury forecasts expected the economy to grow by 2.3 percent in 2010, 3.2 percent in 2011 and 3.6 percent in 2012. These forecasts will change when the Mid-Term Budget Policy Statement is delivered on 27 October 2010. The economy performed slightly better than our projections in the first two quarters of the year so the actual growth outcome for 2010 may be moderately higher than our Budget forecast. However, growth is not expected to reach 7 percent over the medium term.
While we do not expect South Africa to achieve or be able to sustain growth or 7 percent any time soon, I believe that the goal of 7 percent growth is something that we should aspire to so that poverty can be reduced more quickly and the living standards of all South Africans can be improved. Modelling work by the National Treasury shows that if South Africa is able to sustain 7 percent growth for 10 years, national income would double and the economy would generate roughly 5.5 million jobs. As a result, there would be a very large reduction in poverty.
Although the Public Service strike caused disruptions to service delivery and economic activity, we do not expect our forecasts to have been materially affected. There will be a modest effect on consumption as workers who lost income during the strike cut back on spending, but the longer term impact of the higher wage settlement on the fiscus will be much more serious as interest costs rise in response to higher government borrowing and the wage bill crowd out investment spending. If large real wage settlements for public servants are not matched with higher productivity, the outcome of the strike could also fuel inflationary pressures. The less tangible effects of the strike on local and foreign confidence in South Africa, coming as it did so quickly after our success during the 2010 FIFA World Cup, are much more difficult to measure.
QUESTION NUMBER 2509
DATE OF PUBLICATION: 3 SEPTEMBER 2010Ms D Carter (Cope) to ask the Minister of Finance:
Whether the Government had informed all role players in the motor industry on all aspects of the calculation of carbon tax which was to be imposed from 1 September 2010; if not, (a) why not, (b) when will they be informed and (c) how will this be done; if so, (i) how and (ii) for what purposes such accrual of tax income will be used? NW3083E
REPLY
Yes, the National Treasury and South African Revenue Service generally engage with all key role-players after the announcements are made in the annual Budget. The proposed carbon dioxide (CO2) vehicle emissions tax was first announced in the 2009 Budget Review. This announcement was preceded by extensive consultation which included a briefing on background research on this topic, at the request of National Association of Automobile Manufacturers of South Africa (NAAMSA), to the Chief Executive Officers (CEOs) of the local motor manufactures on 25 July 2008. After further consultative meetings with NAAMSA during 2009 the proposal as announced in the 2009 Budget Review was amended as per the 2010 Budget Review. Further consultations with NAAMSA were held during the first half of 2010 to discuss some of the practical issues relating to the implementation set for 1 September 2010.
The draft Schedule and rules in terms of the Customs and Excise Act, setting out the legal provision relating to the CO2 vehicle emissions tax, was published for comment on 2 July 2010. At the request of NAAMSA the Minister of Finance met with the CEOs of the local motor manufactures on 19 August 2010 in order to clarify some misunderstandings relating to the definition of passenger vehicles. The major issue of contention was the inclusion of light commercial vehicles. It was agreed that double cabs will be subject to this tax as from 1 March 2011, in order to allow the industry to obtain accurate and reliable CO2 emission data for double cabs. Other light commercial vehicles will become subject to this tax at a later date.
The revenue from this tax instrument will form part of government's general revenue and not earmarked. The annual budget process then makes allocation to departments including those made for environment initiatives, e.g. measures to deal with air pollution, climate changes and incentives for renewable energy.
QUESTION NUMBER 2507
DATE OF PUBLICATION: 3 SEPTEMBER 2010
Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:
(1) Whether the National Treasury had revised their policy on entertainment, travel and subsidy in accordance with the financial conditions now prevailing; if not, why not; if so, (a) how much was spent in each case and (b) how does this present expenditure compare with that of the (i) 2008-09 and (ii) 2009-10 financial years;
(2) whether video-conferencing are being used more extensively to minimise costs; if not, why not; if so, what are the relevant details?
NW3081 E
REPLY:
(1) Yes, every opportunity is taken to cut expenditure on travel and other needs. However, the National Treasury has a larger number of obligations on behalf of government to international organisations which requires that officials are present at fora such as the G20, Financial Services Board, African Development Bank, Organisation for Economic Cooperation and Development (OECD), International Monetary Fund, the World Bank and others.
The National Treasury's policy is to evaluate and implement standards strictly based on the principles of cost effectiveness. The policies are developed internally and therefore no expenditure was incurred.
(1)(b) Table 1. Expenditure Trend
| Items | (i) Actual Exp 2008/09 | (ii) Actual Exp 2009/10 | Actual YTD Apr - Aug '10 |
| R'OOO | R'OOO | R'OOO | |
| Travel and Subsistence | 43,914 | 36,212 | 14,454 |
| Entertainment | 248 | 137 | 69 |
| Total of Goods and Services | 556,698 | 493,047 | 130,577 |
| T&S as % of G&S | 7.9% | 7.3% | 11.0% |
| Entertainment as a % of G&S | 0.0% | 0.0% | 0.1% |
(2) During 2009/10, 88 video calls conferencing calls were made compared to the 47 in 2008/09.There has been an increase of 87% in the use of this facility during this financial year. This has resulted in reduction of time spent on the road, increases productivity time while cutting costs on travelling and accommodation.
QUESTION NUMBER: 2465
DATE OF PUBLICATION: 3 SEPTEMBER 2010
Dr D T George (DA) to ask the Minister of Finance:
Whether he has taken any steps against administrators of retirement funds that have not submitted surplus apportionment schemes to the Financial Services Board to ensure their compliance; if not, why not; if so, what steps?
NW3035E
REPLY:
No, I have not, as the Minister is not empowered to do so in terms of any legislation. However, the Financial Services Board has advised me that the Registrar of Pension Funds regularly liaises with administrators of retirement funds to monitor the submission of surplus apportionment schemes, through the exchange of administrative information relating to apportionment schemes. The Registrar has taken this action despite the fact that the Pension Funds Act, No. 24 of 1956, does not empower the Registrar of Pension Funds to take any action against administrators of retirement funds, since the responsibility and duty to submit a surplus apportionment scheme rests with the board of management or trustees of a fund.
The Registrar estimates that there may be approximately 220 surplus apportionment schemes outstanding in relation to active funds (save for Bargaining Council Funds, which only became obliged to submit surplus apportionment schemes as a result of the 2007 amendment to the Act). The lack of interest and/or understanding from the funds seems to have caused delays in submitting their surplus apportionment schemes.
In order to address this the Registrar is empowered to appoint a specialist ad hoc tribunal in terms of section 15K of the Act to act on behalf of the board of a fund in finalising its surplus apportionment scheme. To date, the FSB has appointed 274 tribunals.
QUESTION NUMBER 2400
DATE OF PUBLICATION: 30 AUGUST 2010
Mr M Swart (DA) to ask the Minister of Finance:
Whether (a) the National Treasury or (b) any of its entities has signed any contractual agreements with a certain company (name furnished) or any of its affiliates (i) in the (aa) 2006-07, (bb) 2007-08, (cc) 2008-09 and (dd) 2009-10 financial years and (ii) during the period 1 April 2010 up to the latest specified date for which information is available; if so, (aaa) what is the nature of each contract, (bbb) what is the monetary value of each contract, (ccc) what is the (aaaa) start and (bbbb) end date of each contract, (ddd) what are the details of the process that was followed for the signing of each contract, (eee) who else tendered for each contract that was awarded and (fff) what amount did each tenderer quote in each case?
NW2969E
REPLY:
(a) No
(b) No
The rest falls away
QUESTION NUMBER 2339
DATE OF PUBLICATION: 30 AUGUST 2010
Dr D T George (DA) to ask the Minister of Finance:
Whether, with regard to the world financial crisis, any changes will be made to the local financial regulatory environment; if not, why not; if so, what are the relevant details?
NW2907E
REPLY:
I have already dealt with this issue in my response to the Honourable Member's similar question last month (Parliamentary Question Number 2192). As noted in that response, we have conducted a review, and continue to do so, on an on-going basis, on the global financial crisis and the lessons we need to learn from it. We are also following closely the changes being made in countries at the heart of this crisis, like the USA (Dodd-Frank Bill), UK and in the EU.
To repeat my response to the earlier parliamentary question, several changes have already been made to the local financial regulatory environment in light of the global financial crisis. The 2010 Budget Review noted some of the changes made to the local financial regulatory environment including reaffirming the important role of the SA Reserve Bank in overseeing and maintaining financial stability. It also noted the shift towards a more prudential approach on foreign exposure and a macroprudential approach to financial stability.
Further, as a member of the G-20, the President has fully committed the government to international efforts to address financial regulatory reforms. South Africa participates actively in both the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision, where global financial regulatory reforms are being proposed. This includes the agreement early this month (12 September 2010) at the Basel Committee on Banking Supervision on changes to the Basel II framework, on measures to raise the quality and quantity of capital, steps to reduce the pro-cyclicality of current rules, a new risk framework, and liquidity and leverage ratios. Implementation of the relevant proposals is planned from 2011/12.
The 2010 Budget Review indicated that although South Africa did not itself experience a financial crisis, the following steps have already being taken:
QUESTION NUMBER 2258
DATE OF PUBLICATION: 20 AUGUST 2010
Mr M Swart (DA) to ask the Minister of Finance:
Whether National Treasury and/or any of its entities has purchased any 2010 Fifa World Cup Soccer tournament (a) clothing or (b) other specified paraphernalia; if not, what is the position in each case; if so, in each case, (i) what are (aa) the details and (bb) the total cost of the items purchased, (ii)(aa) how many items have been purchased and (bb) why, (iii)(aa) to whom has each of these items been allocated and (bb) why have these items been allocated to these persons and (iv)(aa) on what basis was the decision taken to purchase each of these items and (bb) on whose authority was the decision taken to make these purchases?
NW2766E
REPL Y:
| Department | (a) | (b) | (i)( aa) (bb )(ii }(aa) (bb)(iii)( aa)(bb }(iv)( aa)( bb) |
| National Treasury | No | No | Falls away |
| Entities | (a) | (b) | (i)( aa) (bb )(ii }(aa) (bb)(iii)( aa)(bb }(iv)( aa)( bb) |
| Accounting Standards Board | No | No | Falls away |
| Cooperative Banks Development Agency | No | No | Falls away |
| Development Bank of Southern Africa | Yes | Yes | See attached Annexure A |
| Financial Intelligence Centre | No | Yes | See attached Annexure B |
| Financial Services Board | No | Yes | Falls away |
| Government Employees Pension Fund | Yes | Yes | See attached Annexure C |
| Independent Regulatory Board for Auditors | No | No | Falls away |
| Land and Agricultural Ban k of South Africa | Yes | Yes | See attached Annexure D |
| Pension Fund Adjudicator | Yes | Yes | See attached Annexure E |
| Ombud for Financial Service Providers | No | No | Falls away |
| Public Investment Corporation | No | No | Falls away |
| South African Revenue Service | Yes | Yes | See attached Annexure F |
| South African Special Risk Insurance Association | No | No | Falls way |
QUESTION NUMBER 2226
DATE OF PUBLICATION: 20 AUGUST 2010
Dr D T George (DA) to ask the Minister of Finance:
(1) Whether the National Treasury and any of its entities has (a) purchased or (b) leased any buildings for administration (i) in the (aa) 2008-09 and (bb) 2009-10 and (ii) for the 2010-11 financial years; if not, why not; if so, in each case, (aaa) what is the cost of the building, (bbb) what is the size of the building, (ccc) why was it bought or leased, (ddd) what will be its use, (eee) who will occupy it and (fff) approximately how many persons will occupy the total space of each building;
(2) whether National Treasury and any of its entities intends purchasing or leasing any buildings for administration for the (a) 2011-12, (b) 2012-13 and (c) 2013-14 financial years; if not, why not; if so, in each case, (i) what is the cost of each building, (ii) what is the size of each building. (iii) why will it be bought or leased, (iv) for what will it be used. (v) who will occupy it and (vi) approximately how many persons will occupy the total space of each building?
NW2734E
REPLY:
| Department | (a) | (b) | (i)( aa) (bb )(ii }(aa) (bb)(iii)( aa)(bb }(iv)( aa)( bb) |
| National Treasury | No | No | See attached Annexure A |
| Entities | (a) | (b) | (i)( aa) (bb )(ii }(aa) (bb)(iii)( aa)(bb }(iv)( aa)( bb) |
| Accounting Standards Board | No | No | Falls away |
| Cooperative Banks Development Agency | No | No | Falls away |
| Development Bank of Southern Africa | No | Yes | See attached Annexure B |
| Financial Intelligence Centre | No | Yes | See attached Annexure C |
| Financial Services Board | No | Yes | See attached Annexure D |
| Government Employees Pension Fund | No | Yes | See attached Annexure E |
| Independent Regulatory Board for Auditors | No | Yes | See attached Annexure F |
| Land and Agricultural Ban k of South Africa | No | Yes | See attached Annexure G |
| Pension Fund Adjudicator | No | Yes | See attached Annexure H |
| Ombud for Financial Service Providers | No | Yes | See attached Annexure I |
| Public Investment Corporation | No | Yes | See attached Annexure J |
| South African Revenue Service | No | Yes | See attached Annexure K |
| South African Special Risk Insurance Association | No | No | See attached Annexure L |
(2)
| Department | (a) | (b) | (c) | (i)(ii)(iii)(iv)(v)(vi) |
| National Treasury | Yes | No | No | See attached Annexure L |
| Entities | (a) | (b) | (c) | (d) |
| Accounting Standards Board | No | No | No | Falls away |
| Cooperative Banks Development Agency | No | No | No | Falls away |
| Development Bank of Southern Africa | No | No | No | Falls away |
| Financial Intelligence Centre | No | No | No | Falls away |
| Financial Services Board | No | No | No | Falls away |
| Government Employees Pension Fund | Yes | Yes | Yes | See attached Annexure E |
| Independent Regulatory Board for Auditors | No | No | No | Falls away |
| Land and Agricultural Ban k of South Africa | No | No | No | Falls away |
| Pension Fund Adjudicator | No | Yes | No | See attached Annexure H |
| Ombud for Financial Service Providers | Yes | Yes | Yes | See attached Annexure I |
| Public Investment Corporation | Yes | Yes | Yes | See attached Annexure J |
| South African Revenue Service | Yes | Yes | Yes | See attached Annexure K |
| South African Special Risk Insurance Association | No | No | No | Falls away |
QUESTION NUMBER 2192
DATE OF PUBLICATION: 20 August 2010Dr D T George (DA) to ask the Minister of Finance:
(1) Whether an analysis of the financial regulatory framework has been conducted in the light of the World Financial Crisis; if not, why not; if so, what are the relevant details?
NW2698E
REPLY
(1) Yes, the National Treasury has conducted an analysis of the financial regulatory framework in the light of the global financial crisis, and continues to do so, working closely with the financial regulators like the SA Reserve Bank and Financial Services Board. Both the 2009 and 2010 Budget Reviews, as well as the 2009 Medium Term Budget Policy Statement, have reported on some of this analysis. In particular, it was indicated in the 2010 Budget Review that although South Africa did not itself experience a financial crisis, given our more stringent regulatory system, we continue to remain vigilant, learning the lessons from other countries. As indicated in Chapter 2 of the 2010 Budget Review, steps have already been taken to review and, where appropriate, alter the regulatory framework. These include:
· The establishment of the regulators roundtable, which brings together all relevant financial regulators for purposes of increased coordination and information sharing, and which has already begun work on areas of financial stability, enforcement, market conduct and legislative alignment. We are in the process of formalising the roundtable into a Council of Regulators. This council will perform a similar role to the Financial Stability Oversight Council established as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act recently passed in the USA.
· Consideration of proposals to improve the governance and accountability of the financial regulatory agencies.
· Increasing the scope of regulation to cover previously unregulated activities, such as hedge funds and private equity firms. Changes to regulations governing over-the-counter derivative products have been incorporated into the Financial Markets Bill which will come before the house before the end of the year. Credit rating agencies, which play an important role in global investment, will also be brought under regulation through a Credit Ratings Services Bill which will be tabled in 2011.
In addition, South Africa has been fully committed to the international efforts to address financial regulatory issues. As a member of the G-20, the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision, South Africa has been an active participant in dialogue on improving financial regulation internationally. The outcomes of our international commitments in this regard include:
· The Basel Committee on Banking Supervision has proposed changes to the Basel II framework. These include measures to raise the quality and quantity of capital, steps to reduce the pro-cyclicality of current rules, a new risk framework, and liquidity and leverage ratios. Implementation of the relevant proposals is planned for 2011/12, following an impact assessment.
· During the first half of 2010 the IMF and World Bank reviewed South Africa's adherence to global regulatory standards in banking, insurance and securities and the balance between regulators independence and accountability, as part of the country's G-20 and FSB commitments. The results of these assessments are currently being used to inform our own ongoing review of the regulatory framework.
QUESTION NUMBER 2191
DATE OF PUBLICATION: 20 AUGUST 2010
Dr D T George (DA) to ask the Minister of Finance:
(1) With regard to the adjustments to the 2008-09 income tax assessments processed by the SA Revenue Service (SARS), how many adjustments were processed as a result of (a) appeals from taxpayers, including the total amount adjusted and (b) assessment errors by SARS, including the total amount adjusted;
(2) whether any readjustments were processed; if so, (a) how many and (b) what total amount was readjusted?
NW2697E
REPLY:
(1) Adjustments made to income tax assessments arise either as a result of a taxpayer submitting a revised declaration or a successful dispute (objection or an appeal), or as a result of an audit that is performed by SARS. A revised declaration submitted by a taxpayer includes any amendments requested by a taxpayer to any aspect of their declaration.
SARS does not, however, currently keep separate statistics for the entire income tax process which specify whether the adjustment made was required due to taxpayer error or an error made by SARS. Such granularity requires automation of the entire income tax process including the dispute process.
As part of the on-going Modernisation Programme such automation and detail is envisaged as a future model for SARS.
(2) (a) A total of 11 822 formal disputes were filed by taxpayers in respect of the 2008/9 income tax assessments.
(b) The value of adjustments arising from these disputes was R201million
QUESTION NUMBER 2166
DATE OF PUBLICATION: 20 AUGUST 2010Mr M G Oriani-Ambrosini (IFP) to ask the Minister of Finance:
Whether he has made any contingency plans to enable the economy to weather the impact of and mitigate the direct or indirect effects of a double-dip recession in the United States of America, Europe and Japan, which is foreseen to begin at the end of the year; if not, why not; if so, what plans?
NW2606E
REPLY:
The outlook for the global economy remains uncertain as the effects of fiscal and monetary stimulus and inventory restocking are beginning to wane. In June, concerns were dominated by fears of a sovereign risk meltdown in Europe; now in August, concerns have shifted to the weak pace of growth in the US and China.
Financial markets are weaker and talk of the double dip has reared its head again. In the American economy, the fiscal stimulus package is diminishing; in China, growth indicators are pointing lower as trade activity declines and recent monetary tightening measures begin to bite. In Europe, growth has been better, but driven largely by German exports – and fiscal tightening in the region will only begin to take effect in 2011.
There are also some grounds for taking a more balanced view of the global environment. First, both China and India continue to grow very rapidly, despite the need to moderate short-term inflation and property price concerns. Other Asian economies, such as South Korea and Indonesia are also performing well. In these economies, the drivers of growth are expected to continue to shift away from exports and to domestic investment and consumption, thereby providing demand for the rest of the world.
Second, whilst employment has yet to increase in the US economy, households are reducing their over-borrowed positions and corporate profitability has increased strongly. These factors suggest stronger investment, exports and consumption in coming years.
Third, the factors that usually drive recessions – inventory de-stocking, sharp declines in job growth and the shock of a retraction in bank lending – have already occurred. Finally, the space for further policy effort remains. The Federal Reserve's recent decision to maintain its quantitative easing policy suggests that monetary policy will continue to react in the event of further signs of a slowdown.
This, of course, does not mean we should be complacent. Talk of Europe and the US entering a Japanese style "lost decade" has grown – which suggests that even if a double dip is avoided, in developed economies the prospect of a long, anaemic "U" recovery is high. Such a scenario would not necessarily be an official contraction, but it may well be perceived as such, and could quickly tip into recession with a shock emanating from a sovereign risk crisis or sharply lower asset prices.
Slower growth or recession in the major developed countries has implications for the demand for South Africa's exports, since these are our major trading partners. It also raises the prospects of weaker commodity prices (although gold may remain well supported) and constrained government revenue. The risk of increased trade protectionism in the wake of a double dip would further reduce global growth and could harm our exports even more.
National Treasury has been warning for some time now of the fragility of the global recovery. This fragility is likely to be with us for some time as fundamental shifts in the structure of the global economy are underway – wide scale de-leveraging, the end of fiscal stimuli and bank balance sheet restructuring all have important implications for the sources of growth in the future.
The low growth rates in South Africa suggest we are not able to take advantage of upswings in global activity as they occur and we remain vulnerable to slower activity. As such, our contingency plan for the double dip recession is part of a broader strategy that aims to build up the resilience of the South African economy to external shocks and improve the manner in which the economy functions.
The government's efforts in this regard can be broadly categorised as:
· An emphasis on countercyclical policy, so that there is sufficient policy room in the event of a worsening of economic conditions to respond and enable the exchange rate to cushion the economy against international financial volatility. Over time we want to achieve a more competitive real exchange rate.
· The inflation targeting framework has enabled a steady reduction in domestic interest rates in line with weaker inflation outcomes, and this will lower debt service costs and support demand for credit in the economy. Recent credit aggregate outcomes reflect the accommodative monetary conditions.
· Emphasis on continuing government's infrastructure spending – particularly in energy, transport and communications, which should lower the cost of South Africans doing business and improve their connectivity, and provide a source of growth – now and in the future.
· The government already has in place a number of social support mechanisms, such as the Unemployment Insurance Fund (UIF), which helps to protect vulnerable South Africans from the income loss associated with unemployment. The Framework for addressing the global crisis, run by the IDC, also includes a means of supporting companies and workers by providing funds for training instead of resorting to layoffs.
· Efforts are also underway by the Department of Trade and Industry to facilitate South African businesses' expansion into those regions that are growing – such as Brazil, India and throughout Africa – through a renewed emphasis on promoting trade and investment. A more diversified economy broadens the sources of economic growth available to us.
The National Treasury continues to closely monitor international and domestic economic developments and will adjust policy as necessary to maintain macroeconomic stability and to support a feasible economic growth rate.
QUESTION NUMBER 2129
DATE OF PUBLICATION: 13 AUGUST 2010Mr M S F de Freitas (DA) to ask the Minister of Finance:
(1) Whether he has taken any steps to inform the public of the reporting of customs officials involved in allegations of bribery; if not, why not; if so, what steps;
(2) what processes, procedures and mechanisms exist to monitor the efficiency and effectiveness of such steps;
(3) with reference to the seven cases referred to in his reply to question 423 on 21 June 2010, (a) how many persons were (i) suspended, (ii) criminally charged and (iii) dismissed and (b) what are the reasons for certain persons not being suspended, charged or dismissed?
NW2569E
REPLY:
(1) SARS and its management team have been transparent and outspoken in public both promoting integrity among South Africans and the SARS staff and advancing the fight against corruption. Various public fora are utilised to publicize this message.
SARS launched a whistle-blower hotline in 2005. The purpose of the hotline is to provide taxpayers with an anonymous communication channel to report suspicions of corruption, bribery, tax evasion and fraud. The hotline has been widely publicised and all frontline SARS offices including customs border posts and international airports have posters calling on taxpayers to report bribery. The messages on these posters are quoted below:
· Blow the whistle on bribery
· Speak up on Corruption
· Offering a bribe is a Criminal Offence.
These messages are accompanied by the hotline number 0800 00 2870.
The SARS website also keeps a permanent hotline advert on the landing page. The public are also regularly reminded of the hotline and a zero tolerance stance on fraud and corruption by SARS through regular media engagement and press releases. Employees who are convicted of fraud and corruption are named within and outside the institution through staff newsletters and news coverage.
(2) A demonstrated capacity to act against corrupt officials by SARS, combined with access to an anonymous reporting channel is regarded as key to the ongoing registration of new cases for investigation. Since the start of the new financial year (1 April 2010 – new financial year) to date, 7 new cases involving allegations of customs corruption have been reported. New Case registration comprises tangible evidence that efforts to encourage reporting are indeed effective and reaping results.
(3) Of the seven cases of alleged bribery at international airports reported, four of these remain under investigation of which one has moved into a prosecution phase. The three concluded investigations led to a dismissal, a not guilty verdict and in the third case the employee resigned.
QUESTION NUMBER 2114
DATE OF PUBLICATION: 20 AUGUST 2010Dr H C van Schalkwyk (DA) to ask the Minister of Finance:
(1) Whether a tender for the procurement section of the Government's Integrated Financial Management System (IFMS) has been awarded by the State Information Technology Agency (Sita); if not, why not; if so, (a) which firm was the successful bidder for the procurement contract and (b) how many ICT consultancies tendered for the contract;
(2) whether a due diligence exercise was undertaken to ascertain whether the successful bidder has the capacity to deliver according to the scale of the IFMS contract; if not, why not; if so, (a) what is the value and (b) the further relevant details of the IFMS contract?
NW2553E
REPLY:
(1) The Tender (RFB 565) has been awarded.
(a) The successful bidder was ICT Works (Pty) Ltd., with whom a contract was concluded
(b) A total of Seventeen (17) bids were received and they are as follows:
| No. | Supplier Name |
| 1 | GijimaAST Holdings Pty Ltd IBM SA Pty Ltd Intenda Pty Ltd SAP Public Services Pty Ltd (Consortium) |
| 2 | Tactical Software Systems Accenture SA Pty Ltd Quadrem Africa Pty Ltd SAP Public Services Pty Ltd (Consortium) |
| 3 | Valor IT Intenda Pty Ltd (Partnership) |
| 4 | E Com Institute Pty Ltd |
| 5 | Conscripti Pty Ltd |
| 6 | Masana Technologies Pty Ltd |
| 7 | EOH Mthombo Pty Ltd |
| 8 | Redflex 47 Pty Ltd t/a Cityworks and Ramco systems (Joint venture) |
| 9 | ICT-Works Pty Ltd Arivia.Kom Pty Ltd (Consortium) |
| 10 | Oracle corporation SA Ltd Accenture SA Pty Ltd Waymark Infotech Pty Ltd Global Bits Thuta Pty Ltd (Partnership) |
| 11 | SAP Public Services Pty Ltd |
| 12 | Intenda Pty Ltd |
| 13 | Bula Communication Technologies Fraxion Pty Ltd (Consortium) |
| 14 | Logitek sewentien (Pty) Ltd t/a Sizwe business networking |
| 15 | Predicate logistics Predicate procurement services Pty Ltd |
| 16 | Predicate Logistics Pty Ltd Changepond Technologies (Joint venture) |
| 17 | Hewlett Packard SA Pty Ltd |
(2) Yes, a due diligence was carried out by an external audit firm, Sizwe Ntsaluba, who assessed the capability of the bidder to deliver according to the requirements of the Request for Bid (RFB)
(a) The total value of the winning bid was R516,896,346.49 over a ten (10) year period.
(b) A transparent bidding process was followed with a contract awarded to the winning bidder, namely ICT works.
The procurement process was monitored by the Auditor-General to ensure compliance with all statutory requirements.
QUESTION NUMBER 2069
DATE OF PUBLICATION: 6 AUGUST 2010Mr M H Steele (DA) to ask the Minister of Finance:
(1) (a) What were the required (i) qualifications and (ii) experience for the advertised positions in the national Treasury for senior staff tasked with providing local government budget monitoring and analysis and (b) how many officials have subsequently been appointed;
(2) (a) what is the current (i) scope and (ii) nature of their operations and (b) how are the priorities for their assignments chosen? NW2468E
REPLY:
(1) I presume the Honourable Member is referring to the advertisements for the post of Director: Local Government Budget Analysis as advertised on 11April 2010. The following are requirements as stated in the advertisement:
(a) (i) Degree / National diploma in Economics / Public Finance / Accounting
A postgraduate qualification will be an added advantage
(ii) A minimum of 10 years' relevant experience in local Government planning, finances, budgeting, the budget allocation system and requirements of the MFMA
(b) Of the six positions advertised, two have been filled and interviews have been concluded to fill the remaining four positions.
(2) In terms of section 215 and 216 of the Constitution, and the Municipal Finance Management Act, National Treasury is responsible for:
· Ensuring that the budgets and budget processes in all three spheres of government comply with the constitutional and legislative standards
· Enforcing compliance in all three spheres with generally recognised accounting practice, uniform expenditure classifications and uniform treasury norms and standards.
In this regard, National Treasury oversees the finances and financial management of the 17 largest municipalities. The provincial treasuries oversee the remaining municipalities, and National Treasury monitors and supports their work.
(a) (i) Scope for work Each Director:
Local Government Budget Analysis is responsible for exercising oversight of two or three of the 17 non-delegated municipalities, as well as working with provincial treasuries to monitor all the municipalities in one or two provinces.
(ii) Nature of operations
The following table sets out the standard key focus areas and outputs in the performance agreements of one of the Directors:
| Key Result Areas | Outputs |
| Budget Preparation and support | Assessed 2010 MTREF tabled budgets for all non-delegated municipalities in WC and NC |
| Compiled and distributed MTREF assessment reports for non-delegated municipalities in NC and WC | |
| Provided training /advise on budget regulations and formats (internal and external stakeholders) | |
| Budget Implementation and Monitoring (include the budget reform process) | Improved quality of In-year (S71) reports for all municipalities in WC and NC |
| Assessed mid year budget and financial performance for non-delegated municipalities in WC, NC | |
| Budget and financial data management | |
| Intergovernmental co-ordination | Provided input for LG hearings and discussions at intergovernmental level |
| Provided guidance on LG finance and budget related issues to intra and interdepartmental working groups, committees and forums | |
| Cross-cutting | Advise Minister/DG and Cabinet on LG issues and processes |
| Responded to all budget related queries received via the Paper Trail system and MFMA mailbox |
(b) The priorities of the Local Government Budget Analysis unit, and therefore each of the Directors in the unit are driven by the following four factors:
· The progressive roll-out of the local government budget reform agenda – which currently is focussing on:
Ø The implementation of the new Municipal Budget and Reporting Regulations
Ø The improvement on in-year financial reporting by municipalities in terms of section 71 of the MFMA
· Providing support to municipalities in the annual planning, budgeting, implementation and reporting cycle – including monitoring and assessing the municipalities' plans, budgets and reports at each stage of the cycle;
· Responding to issues/problems that arise within the municipalities for which they are responsible – which usually involves providing advice or support;
· Responding to information requests from the Minister, Cabinet and Parliament that relate to the municipalities for which they are responsible.
QUESTION NUMBER 1942
DATE OF PUBLICATION: 23 JULY 2010Mr G R Krumbock (DA) to ask the Minister of Finance:
What has been the financial impact of the recent Transnet strike in terms of (a) loss to SARS in customs and excise duty foregone as a result of the strike, (b) the loss to SARS in company tax, (c) the estimated percentage loss in GDP, (d) the estimated number of SMME's bankrupted as a result of the strike and the resulting loss of employment? NW2330E
REPLY
(a) The strike could potentially have had an impact on the South African imports and exports. Despite the strike, the number of import transactions processed by SARS actually increased by 7,000 (3.9%) from 180 000 in April to 187 000 in May 2010. For the same period, the exports increased by 5,000 (4.4%) from 114,000 to 119,000.
In value terms, imports increased by 3% from April to May and exports increased by 7%.
The export of agricultural products and base metals (such as iron steel and copper) seem to have been particularly affected during the month of May. However, the exports seem to have recovered in June, as vegetable products increased month-on-month by R1.3bn (92%), prepared food stuff and tobacco R1.2bn (78%) and base metals R3bn (45%).
Revenue collections for customs and excise duties remained buoyant during and after the Transnet strike (period 10-27 May 2010). The trends for fiscal Q1 2010/11 show a marked year-on-year growth in these duties, from R22.8 billion to R25.8 billion. A month-on-month comparison shows that the revenue collections increased by R0.3 billion to R9.3 billion in June 2010.
Table 1: Comparison of quarterly collections
(b) Corporate income tax (CIT) collections, particularly provisional income tax on companies, have at least a 6-month lag between companies' economic activities and receipt of corresponding CIT revenue. Any effect of the strike, if any, will be reflected at the end of September and December with the receipt of CIT provisional payments.
(c) Given that the sectors most impacted by the strike i.e. agriculture and mining recovered its exports in June, the effect of the strike on the GDP would be minimal. The sector GDP figures comparing the growth rate for the first six months of the year compared with the first six months of the previous year, shows that the agriculture and mining grew in real terms by 2.1% and 1.7% respectively (Stats SA Q2 2010 GDP report).
(d) There is no discernible link between the number of liquidations/ insolvencies and (resultant) employment statistics that can be inferred from the data gathered in May. The Liquidations/Insolvency statistics released by Statistics South Africa on 24th July 2010, show a growth in first half of 2010 (liquidations in the first half of 2010 increased by 6% y/y and by 22% in June vs. June 2009); however there is no specific mention in the report attributing this trend directly to the Transnet strike. A similar trend was observed with respect to May liquidations (and also the other previous months in 2010). The report in August 2010 shows a decline of -1.4% between January and July 2010 vs. January and July 2009. The change between July 2010 and 2009 was -34.3%.
(e) See comment above.
QUESTION NUMBER 1869
DATE OF PUBLICATION: 4 JUNE 2010
Mr S B Farrow (DA) to ask the Minister of Finance:
Whether he has considered any proposals of the Department of Transport regarding the undertaking of a nationwide quality audit of municipal road networks; if not, why not; if so, (a) how will the funds be sourced and (b) what are the further relevant details?
NW2162E
REPLY:
No specific proposals have been received from the Department of Transport in this regard. Conducting an audit (or conditional assessment) on the municipal road network would be a valuable exercise which is implicitly supported by current legislation – such as the Government Immovable Asset Management Act (GIAMA) and the Municipal Finance Management Act (MFMA). An assessment would support both planning and budgeting for municipal roads to prioritise spending towards preventative maintenance. National Treasury, during the Roads Construction and Maintenance Summit hosted by the Department of Transport, agreed that municipalities must take responsibility for such an assessment as it is their mandate. However, it was also suggested that the South African National Roads Agency Limited (SANRAL) would be best placed to support municipalities in this process as the entity has the necessary expertise and systems. Data collection for this process is not very expensive and can be done via a visual assessment done by semi-skilled labour in accordance with prescribed guidelines. Funds could thus be sourced through existing budgets, or be supplemented where necessary.
· The names and details of staff members arrested for suspect corrupt activities and the outcomes of their cases are publicised internally and in the media as part of a name and shame strategy to stigmatise such behaviour and so deter others from following suit.