Questions & Replies: Finance

2011-11-25

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QUESTION NUMBER 1894 [NW2132E]

DATE OF PUBLICATION: 29 JULY 2011

Mr A P van der Westhuizen (DA) to ask the Minister of Finance:

 

Whether he has employed a ministerial special advisor; if so, (a) what are the duties of the advisor, (b) at which post level was the appointment made, (c) what is the salary level of the advisor, (d) what is the duration of the employment contract entered into with the advisor and (e) why was it necessary to appoint this advisor?

REPLY:

Yes, the Minister has employed a Special Advisor.

a) He advises the Minister on global and other economic developments and their policy implications for South Africa.

b) Level III advisor

c) Salary level 15

d) Four years

e) To assist on policy matters during a very complex and challenging period of economic turmoil and uncertainty.

QUESTION NUMBER PQ1890 (NW2128E)
DATE OF PUBLICATION: 29 JULY 2011
Dr P J Rabie (DA) to ask the Minister of Finance:

What (a) are the reasons that pay-as-you-earn (PAYE), Unemployment Insurance Fund (UIF) and value-added tax (VAT) returns can no longer be processed by using various printed forms and that only e-filing will be accepted from July 2011 and (b) impact will this change have on small businesses that do not have access to internet or e-mail? NW2128E

REPLY

(A) In line with international practice, SARS has for a number of years been encouraging the use of electronic channels for the submission of various returns by both corporate and individual taxpayers. Such electronic interaction via the internet provides significant benefits to taxpayers in the form of convenience, security, speed and cost savings. At the same time, it also has considerable benefits for SARS including enhanced efficiency and effectiveness and cost reduction.

(B) In anticipation of the switch to eFiling, a legislative amendment was passed by Parliament in 2005 in terms of which the Commissioner is empowered to determine the manner in which returns and payments must be submitted. Following a number of years of voluntary adoption by corporate taxpayers of the free eFiling service, during which time more than 82 percent adopted this method of interaction, the time was ripe to make use of this provision. Late last year and earlier this year the Commissioner issued notices in the Government Gazette making it mandatory for large taxpayers to use eFiling for PAYE and VAT submissions where PAVE payments exceeded R10 million per annum and where turnover exceeded R30 million per annum respectively.

PARLIAMENTARY QUESTIONS


Currently, 75 percent of PAVE submissions and 93 percent of VAT submissions are received electronically.

(C) SARS is very aware of the requirements of small business, and the fact that in some instances they may not have access to the Internet or e mail. For this reason the thresholds for compulsory electronic submission were set at significantly high levels (R10 million in PAVE payments per annum and R30 million in turnover for VAT).

Registered employers and VAT vendors whose payments and/or turnover are below these thresholds are still allowed to submit PAVE and VAT returns manually (ie. on printed forms via the post or at a SARS branch).

These printed returns are posted to the vendors and employers at their request which can be made via the SARS Contact Centre (0800 00 7277) or at a SARS branch. The requirement to request such returns is in line with improvements to the income tax, PAVE and VAT processes which have seen significant reduction in cost and environmental impact associated with the automatic issue of printed returns which are never submitted.

QUESTION NUMBER 1852 [NW2089E]

DATE OF PUBLICATION: 29 JULY 2011

Mrs P C Duncan (DA) to ask the Minister of Finance:

(1) What is the relationship between the tax subsidy for people who have private medical aids and the means test used at public hospitals;

(2) what is the cost of the tax subsidy to the State

(3) whether any studies have been conducted with regard to what it would cost the State if all beneficiaries who are currently on private medical aids were to start using public health facilities; if not, when will such a study be conducted; if so, what were the findings? NW2089E

REPLY:

(1) There is no explicit relationship currently between any tax subsidy for people who have private medical aids and the means test used at public hospitals. However, forthcoming reforms proposed by the National Treasury in the 2011 Budget propose limited tax relief for contributions to medical schemes and out-of-pocket medical expenses, which if enacted, will provide a subsidy to individuals making use of private health care facilities that are in line with government's health expenditure per person in the public health sector. More information is available in a recent paper published by the National Treasury titled "Conversion of Medical Deductions to Medical Tax Credits - Tax Policy Discussion Document for Public Comment" published on 17 June 2011 and available on the National Treasury website (www.treasury.gov.za.) The Honourable Member should, however, note that these proposals are also subject to change, as discussions on the National Health Insurance are finalized over the next few years. The draft policy paper related to the proposed National Health Insurance has just been published for comment in the Government Gazette by the National Department of Health.

(2) Estimates of the tax benefit of medical deductions and exempt contributions by employers are provided in the 2010 Tax Statistics published by SARS and National Treasury. For 2008/09, the estimated tax benefit of medical deductions and exempt contributions by employers is R15.0 billion. Note that this is an estimate because the data only reflects those returns that have been assessed at the time (mid 2010) when the 2010 Tax Statistics was compiled.

(3) No such study has been conducted by the National Treasury in this regard. It may be that exploratory work in this regard is being undertaken as part of the research into the proposed National Health Insurance.

QUESTION NUMBER 1845 [NW2081E]

DATE OF PUBLICATION: 29 JULY 2011

Mr M Swart (DA) to ask the Minister of Finance:

(1) Whether his department is currently considering alternative measures for procuring funds for local authorities to augment their income; if not, why not; if so,

(2) Whether he intends introducing a local business tax for this purpose; if not, why not; if so, what are the relevant details?

REPLY:

(1) Yes. Initiatives currently underway in National Treasury that supports municipal revenue mobilisation include (a) introducing a differentiated funding approach to local government that takes into account the different service delivery and developmental responsibilities (expenditure needs) and tax base (own revenue raising abilities) of the different types and categories of municipalities; (b) strengthening municipal budget monitoring, oversight and support that will enable municipalities to optimize existing municipal revenues; and (c) exploring ways in which municipalities can leverage private finance to mobilise additional resources to fund infrastructure investments.

(2) Any new tax for a municipality is prescribed in section 5 of the Municipal Fiscal Powers and Functions Act. I will only comment on any new tax proposals as per the requirements stipulated in the Municipal Fiscal Powers and Functions Act, whereafter I will formally announce the outcomes of this process on Budget Day.

QUESTION NUMBER 1806 [NW2039E]

DATE OF PUBLICATION: OlJULY 2011

1806. Mr S Mokgalapa (DA) to ask the Minister of Finance:

(1) Whether the Government is currently finalising a loan agreement with Swaziland; if so, (a) who is negotiating the terms of the agreement, (b) what are the terms of the agreement and (c) what is the (i) nature of the discussions that have been held to date, (ii) amount requested from Swaziland and (iii) purpose of the loan;

(2) whether any conditions will be imposed in the loan agreement; if not, why not; if so, what conditions?

REPLY:

 

(1) The South African Government is currently considering its response to a request from the Kingdom of Swaziland for financial assistance. No final decision has been taken.

(a) Technical discussions between officials have been taking place.

(b) Covered by response to (a)

(c)(i) Discussions have taken place regarding the fiscal situation in Swaziland and possible macro-economic and fiscal remedial actions

(ii) During technical discussions, an initial amount of R2.5 billion was requested by Swaziland to cover their cash flow challenges

(iii) covered by the response to (ii)

(2) Any form of financial assistance to Swaziland will be conditional. Such conditionality will be decided by Cabinet.

QUESTION NUMBER 1782 [NW2012E]

DATE OF PUBLICATION: 01 JULY 2011

Dr D T George (DA) to ask the Minister of Finance:

(1) Whether the Financial Services Board has investigated certain provident funds (details furnished) for their investment in a certain empowerment trust (name furnished); if not, why not; if so, what are the relevant details;

(2) whether he has found a conflict of interest in the retention of a certain benefit services company (details furnished) as the benefit consultant of the said provident funds; if not, why not; if so, what are the relevant details?

NW2012E

 

REPL Y:

(1) Yes, the Financial Services Board (FSB) has advised me that this matter is under investigation. I am unable to provide more details until the investigation has been completed. To the extent any public statements are made on an investigation of this nature, I would prefer that these be made by the FSB.

(2) I am unable to respond at this stage as the FSB is still investigating this matter.

QUESTION NUMBER 1691 [NW1905E]
DATE OF PUBLICATION: 24 JUNE 2011
Mrs D A Schafer (DA) to ask the Minister of Finance:

(1) What is the detailed expenditure breakdown for the Ministry sub-programme under Programme 1: Administration in the (a) 2007-08, (b) 2008-09, (c) 2009-10 and (d) 2010-11 financial years;

(2) (a) what was the actual budget increase each year, expressed as a percentage, for funds allocated to this sub-programme and (b) how is the increase for each specified financial year justified? NW1905E

REPLY: (1)

Please see the Tables here for: Question 1 & Question (2)(a)
 

The budget increase in the different years is as follows:
 

· 2007-08 - R4 166 million which is a 33.78% increase when compared to the budget of R12331 million for 2006-07.

· 2008-09 - R2 134 million which is a 12.94% increase when compared to the budget of R16 497 million for 2007-08.

· 2009-10 - R955 000 which is a 5.13% increase when compared to the budget of R18631 million for 2008-09.

· 2010-11 - R5 566 million which is a 28.42% increase when compared to the budget of R19 586 million for 2009-10.

(2)(b) The increase for each specified financial year is justified as follows:
 

· (2007-2011) - The increase in salary for the Minister and Deputy Minister is in line with the proclamation by the President of South Africa which is gazetted.

· (2007-2011) - The annual salary adjustments for the Ministerial Office Support.

· (2007-08, 2009-10 and 2010-11) The purchase of vehicles.

· (2010-11) - Increase on foreign travel expenditure in the 2010 -11 financial year relates to the increase in International Monetary Fund and World Bank commitments during the economic recession to assess reforms (21.5% increase from 2009-10).

QUESTION NUMBER 1637 [NW1842E]
DATE OF PUBLICATION: 17 JUNE 2011
Dr D T George (DA) to ask the Minister of Finance:

(1) Whether the National Treasury is looking at other mechanisms besides the renewable energy feed-in tariff (Refit) programme to encourage investment in renewable energy; if not, why not; if so, what (a) mechanisms and (b) are the further relevant details;

(2) whether he will make a statement on the status of developments of financial mechanisms to promote renewable energy investments considering that he had previously set February 2011 as the target date for the release of procurement documentation; if not, why not; if so, when? NW1842E

REPLY:

1 (a) Yes, National Treasury (NT) has looked at other incentives to encourage investment in the renewable energy industry and these incentives are:
 

· Depreciation allowance: A three year depreciation allowance of 50:30:20 per cent for biofuels production.

· Biodiesel fuel tax concession: Biodiesel is taxed at a lower rate than conventional fossil based diesel to reflect environmental benefits of the fuel.

· Electricity generation levy: A levy is charged at a rate of 2.5 c/kWh on electricity generated from non-renewable sources, whilst renewable based electricity generation is exempt from the levy.

· Electricity generation levy: A proposal to exempt renewable based cogeneration from the electricity levy is being considered.

· Broader carbon tax reforms: NT is developing a carbon tax policy to price carbon and internalise the external costs of climate change. The tax will help create incentives to shift to low carbon, cleaner alternatives such as renewables. The options being explored are a tax on actual emissions and a proxy carbon tax on the fossil fuel inputs used.

· Tax incentives for investment in the manufacturing capacity to run from 2011 to 2015, which includes points for energy savings.

(b) Please see 1(a) above.

2 As I stated in my response to the question asked by Honourable Mrs H Lamoela in November 2010, the NT is part of an inter-governmental task team developing a "bankable" Power Purchase Agreement (PPA) as well as the procurement documentation for the REFIT program. All the departments are acting in a support role to the Department of Energy which is the lead department and responsible for the delivery of the REFIT program. However, having said the above, the Minister of Energy is in the process of obtaining concurrence from the National Energy Regulator of South Africa (NERSA) Board in terms of section 34 of the Electricity Regulation Act (ERA) to launch the procurement of the 3 725 MW Renewable Energy program. According to section 34 of ERA the Minister of Energy, in consultation with NERSA, has to determine when and how new capacity will be procured. The procurement documentation has been finalised and sent to NERSA, Eskom and other Departments for approval and notification.

QUESTION NUMBER 1631 [NW1836E]
DATE OF PUBLICATION: 17 JUNE 2011
Mr M Swart (DA) to ask the Minister of Finance:

(1) Whether (a) government departments, (b) provincial administrations and (c) municipalities are required to have independent internal audit committees; if so, what steps are being taken to ensure compliance with this requirement; if not,

(2) Whether the National Treasury intends introducing legislation that will enforce the appointment of such committees; if not, why not; if so, what are the relevant details? NW1836E

REPLY:

Yes. In this regard, sections 38(1)(a)(ii) and 51(1)(a)(ii) of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999 require national and provincial departments and public entities respectively to have and maintain systems of internal audit under the control and direction of auditing committees. Similarly section 166 of the Local Government: Municipal Finance Management Act (MFMA), 2003 (Act No. 56 of 2003) requires all municipalities and municipal entities to have audit committees.

It is therefore not necessary to introduce legislation requiring the establishment of audit committees in departments (national and provincial) and municipalities (including municipal entities) since current provisions in the PFMA and MFMA are considered sufficient.

QUESTION NUMBER 1504 [NW1589E]
DATE OF PUBLICATION: 10 June 2011
Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

Why is the Financial and Fiscal Commission not allowed to use outside auditors to curb audit fees charged by the Auditor-General's office? NW1589E

REPLY:

Section 25 of the Financial Fiscal Commission Act 99 of 1997 as amended provides that the Auditor-General must audit the accounts and financial records of the Commission. Section 40(1 )(i) of the Public Finance Management Act 1 of 1999 as amended also provides that the Accounting Officer of a constitutional institution must submit the financial statements of such an institution to the Auditor-General for auditing. Section 40(1)(d)(iii) of the Public Finance Management Act finally provides that the Auditor-General must report on such financial statements.

All these provisions are peremptory.

QUESTION NUMBER 1501 [NW1533E)

DATE OF PUBLICATION: 10 JUNE 2011

Mrs Dudley (ADCP) to ask the Minister of Finance:

 

(1) (a) Why were payments from SA Revenue Service (SARS) frozen for four months resulting in companies not being paid, (b) how many companies were affected by this and (c) what sum of money was frozen;

(2) whether he has been informed of the effects that this freeze on payments has had on businesses; if so, what steps has he taken to prevent such a situation from recurring in future?

REPLY:

 

(1)There has been no freeze on the payment of refunds from the South African Revenue Service over the past four months or any other period. Combined refunds for CIT and VAT for the four months ended 31 May 2011 amounted to R37.468 billion compared to R40.056 billion for the comparative period in 2010. With regards to VAT refunds specifically, refunds for the four month period in 2011 amounted to R33.691 billion compared to R35.958 billion in 2010.

It must be borne in mind that VAT refund fraud poses a serious risk to the fiscus. On the basis of objective risk criteria, a number of VAT refund claims are selected for further investigation and audit each month. In terms of the law, SARS pays market-related interest on any refunds which are not processed within 21 days of receipt of the refund claim or within 21 days of the receipt of information requested by SARS from the taxpayer necessary to complete an audit or investigation.

The attached explanatory note provides further information about VAT and current measures to reduce the risk of refund fraud to the fiscus as well as improvements to service.

(2) Not applicable

ADDITIONAL BACKGROUND INFORMATION ON VAT IMPROVEMENTS:

At the end of May 2011, the South African Revenue Service introduced a new sophisticated risk engine and other enhancements to the VAT system as part of an on-going Modernisation programme.

The improvements to the VAT system, which include a new VAT 201 monthly declaration form, an automated risk assessment tool and a case management system to track the progress of VAT assessments, audits and refund payments, will significantly increase the speed and accuracy with which SARS is able to release legitimate VAT refunds while simultaneously identifying highly risky or suspicious refunds for further review and investigation.

The new process replaces the previous manually-intensive process by which each VAT return was assessed for risk by SARS officials who either released refunds or marked the VAT return for audit. This previous system was not only less efficient but prone to human error and potential interference and corruption.

The new risk engine was born out of an additional verification process which SARS introduced in March this year in a bid to prevent illegitimate refunds and to test the efficacy of the old process as part of the development of new parameters for the risk engine.

Within the first month of this verification process, suspicious VAT refunds to the value of just under R1 billion were identified for further investigation. Over the past six months SARS's focus on VAT refunds has uncovered a number of refund scams involving tens of millions of rand - and led to the arrest of a number of suspects.

In terms of tax revenue collected and refunded, VAT is by far the largest tax administered by SARS. Due to the large portion of refunds, it also has the greatest scope for abuse. In 2010/11 SARS collected R287.2 billion in VAT, of which a total of R103.6 billion was paid out as VAT refunds.

Once paid, illegitimate refunds are very difficult - if not impossible - to recover as the criminals quickly move the money and then disappear. To prevent this, SARS has introduced a number of measures over the past few years specifically aimed at reducing the risk of VAT fraud.

The first of these measures, announced in November 2008, was aimed at reducing the risk of fraudulent registrations by introducing additional verification measures for VAT registration including inspections of business premises.

This was followed a year later with a clean-up of the VAT register in the removal of taxpayers from the VAT register who failed to meet the criteria. This has been an on­going exercise.

SARS's mandate is to collect all revenue that is due to the fiscus. In fulfilling this mandate it is also imperative on SARS to ensure that collected revenue is not put at risk because of fraud and corruption. This requires a careful balance between efficiency and enforcement.

SARS is mindful of the need by VAT vendors to recoup legitimate VAT inputs as quickly as possible and the impact these have on businesses' cash flows particularly smaller businesses - especially during difficult economic times. We remain committed to meeting our service standards of processing VAT refunds within 21 days. Where this is not possible, a highly competitive interest rate of 8.5% per annum is payable. At the same time, SARS must ensure that tax revenue is not compromised by unscrupulous and immoral people who seek to defraud the fiscus.

Individual taxpayers have experienced the power of the modernisation process which has resulted in the reduction in processing time for individual income tax returns from an average of three months in 2006 to just 24 hours in 2010.

SARS anticipates that the VAT modernisation programme - when fully implemented over the next two years - will provide similar significant enhancements.

QUESTION NUMBER 1361

DATE OF PUBLICATION: 27 MAY 2011

Mr N.J.J Koornhof (COPE) to ask the Minister of Finance:

 

Whether he intends to instruct the Financial Intelligence Centre to (a) investigate and (b) fast-track the process to enable individual citizens to register electronically to obtain a FICA number annually for all transactions relating to private mortgage funding, motor finance, Forex transactions and related household financial transactions; if not, why not; if so, what are the relevant details?

REPLY:

 

The principle objective of the Financial Intelligence Centre Act, 2001 (Act 38 of 2001), as amended, ("the FIC Act"), is to assist in the identification of the proceeds of unlawful activities and the combating of money laundering and the financing of terrorism and related activities. The FIC Act provides for regulatory control measures to facilitate the prevention, detection, investigation and prosecution of money laundering and terror financing activities. These control measures apply to a variety of financial and non­-financial institutions (referred to in the FIC Act as accountable institutions) and aim to ensure transparency in the financial system. This is achieved by means of, inter alia, requiring these entities to establish and verify the identities of their clients and keep records of their client's identities and their transaction activities. The purpose of this requirement is to ensure that a transaction or a series of transactions can be reconstructed during an investigation, clearly indicating not only what had transpired, but also who was involved in the transaction(s).

(a)The Financial Intelligence Centre ("the Centre") is currently considering various mechanisms to improve the levels of compliance with the Financial Intelligence Centre Act, 2001 (Act 38 of 2001) ("the FIC Act") and to reduce the impact of compliance on financial institutions and their clients.

It must be noted that inefficient application of the FIC Act by accountable institutions, particularly financial institutions, generates unnecessary public irritation and creates a stumbling block for those seeking easy and affordable access to finance and undermines proper application of AMUCFT controls. One reason for this is that many institutions identify their clients on the basis of each separate service or product offered, rather than having a "single view of the client regardless of the products acquired. As it happens, this also hinders the ability of clients to switch from one bank to another.

One of the mechanisms to reduce the impact of compliance on financial institutions and their clients which is being considered, is the use of centralised information to verify a client's identity. Such a mechanism may not necessarily take the form of enabling a person to "register electronically to obtain a FICA number annually", since a number of options are yet to be explored in this regard and a number of challenges relating to client confidentiality, market competitiveness among institutions and investment in technology remain.

(b) There is currently a process underway to design a new integrated process to enhance the integrity of data sources and creating an easier environment for compliance of citizens. This process involves other departments and entities. We are committed to reducing the compliance burden for citizens and businesses.

QUESTION NUMBER 1297 [NW1438E]
DATE OF PUBLICATION: 21 APRIL 2011
Dr D T George (DA) to ask the Minister of Finance:

Whether the Financial Services Board considered the payment of a professional fee by the fund to the curator of the specified fund, rather than a percentage of amounts recovered; if not, why not; if so, why was the professional fee model not adopted? NW1438E

REPLY

Yes, the Financial Services Board (FSB) has indicated to me that it did consider the above-mentioned option. The Honourable Member has posed this question before, and my response at the time is still valid. I attach a copy of my response for his convenience, published on 4 September 2009 (PQ 1061)
 

QUESTION NUMBER 1296 [NW1437E]
DATE OF PUBLICATION: 21APRIL 2011
Dr D T George (DA) to ask the Minister of Finance:

(1) Whether the Financial Services Board provided start-up capital to a certain pension fund curator (name furnished) or his law firm; if so, (a) how much and (b) why;

(2) whether the terms of the agreement can be provided; if not, why not; if so, what are the terms? NW1437E

Reply:

(1) No, the Financial Services Board (FSB) assures me that it does not provide, and has not provided, any start-up fund to any pension fund curators. As explained in more detail below, the FSB has provided funds in this instance, where the pension funds were not in a position to fund the curatorship investigations - this was done transparently, and sanctioned or noted by the court. I want to appeal to the Honourable Member to respect the integrity of our financial regulators, and not so readily rush to speak in the interest of those attempting to raid pension funds and who end up at the receiving end of the FSB and the appointed curators.

We should take care not to continually request information that is already in the public domain and competent parliamentary researchers should be able to access by contacting the FSB directly. I attach such a public document, a copy of the court order dated 7 September 2005 (attached marked "Annexure A") which will answer the question. lndeed, I would like to invite any Honourable Member, or any of their researchers, to raise such queries directly with the Registrar of Financial Services Board, who will be happy to provide any public or factual information. The facts in this case are as follows:

The Executive Officer of the Financial Services Board (FSB) applied for the Datakor Pension Fund, Datakor Retirement Fund and Cortech Pension Fund to be placed into provisional curatorship on 21 April 2005. Three practising attorneys were appointed as the curators to these funds. On 2 August 2005 a final curatorship order was granted. It soon transpired that save for an amount of R355 000, there were no funds available in any of these Funds to fund the curatorship and the work to be undertaken by the curators to recover the assets of the Funds. The FSB therefore resolved to make available from its special reserve fund an amount of R1 million to the curators to cover the disbursements which they would have to incur in anticipation of and during the recovery process of claims. This reserve is not funded by levies imposed on financial institutions, but by penalties imposed on non-compliant financial institutions, essentially in respect of the late filing of statutory returns. It subsequently transpired that the amount of R1million would not be sufficient to cover the curatorship expenses and consequently the Executive Officer applied to Court on 7 September 2005 for an order sanctioning the funding of the curatorship on a contingency fee basis. In this application to Court full disclosure was made of the amount of R1million which the FSB had resolved to make available. In its order, the Court noted that the FSB had agreed to contribute the said amount on the understanding that this contribution would be refunded to the FSB from recoveries made by the curators in the funds.

Of the amount of R 1 million which the FSB had agreed to contribute, it only expended R505 380.43, which amount was refunded by the curators to the FSB during March 2007.

(2) The terms appear from the Court order dated 7 September 2005 attached as Annexure "A".

QUESTION NUMBER 1294

DATE OF PUBLICATION: 21 APRIL 2011

Adv A de W Albert (FF Plus) to ask the Minister of Finance:

 

How many (a) African, (b) Coloured, (c) Indian and (d) White employees are currently working in the public institutions that report to him in terms of Schedules 1 to 3D of the Public Finance Management Act, Act 1 of 1999?

REPLY:

 

The breakdown in the number of employees in the public Institutions is as follows:

 

Public Institution	(a)	(b)	(c)	(d)
Accounting Standards Board	1	2	0	3
Cooperative Banks	7	0	0	1
Development Agency
Development Bank of	1026	68	72	308
Southern Africa
Financial and Fiscal	21	5	1	6
Commission
Financial Intelligence Centre	77	4	19	49
Financial Services Board	301	27	28	96
Government Pensions	759	59	32	155
Administration Agency
Independent Regulatory Board	30	5	4	29
for Auditors

 

Land and Agricultural Bank of	266	46	27	260
South Africa
Pension Fund Adjudicator	42	6	2	2
Ombud for Financial Service	30	0	3	9
Providers
Public Investment Corporation	157	45	32	62
South African Revenue	7831	1593	928	4578
Service
South African Special Risk	28	4	3	4
Insurance Association

QUESTION NUMBER 1276 (NW1300E)
DATE OF PUBLICATION: 21 April 2011
Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

(1) Whether any progress has been made to resolve the Southern African Customs Union (Sacu) revenue sharing formula; if not why not, if so:

(2) Whether his department will make sure that the new revenue sharing formula does not destabilise the revenue of Sacu members? NW1300E

REPLY:

(1) A study of the SACU revenue sharing arrangements has been completed by an international consultancy firm. The study has been discussed by officials and will be tabled at the June 21011 meeting of the SACU Council of Ministers. The April 2011 meeting of SACU was postponed.

(2) Yes

QUESTION NUMBER 1214 [NW1351E]

DATE OF PUBLICATION: 15 APRIL 2011

Adv H C Schmidt (DA) to ask the Minister of Finance:

 

(1) Whether he intends to amend taxation laws regulating the taxation of companies in the mining sector, in particular (a) the rate of taxation of mining companies and (b) the provisions relating to the Mineral and Petroleum Resources Royalty Act, Act 28 of 2008; if so, what are the relevant details; if not,

(2) whether he will support a request for a taxation dispensation wherein mining companies are more heavily taxed in terms of an amendment to the (a) general taxation laws and/or (b) Mineral and Petroleum Resources Royalty Act, Act 28 of 2008; if not, why not; if so, what are the relevant details?

REPLY:

 

1) No, the Minister of Finance does not make new tax policy announcements except on Budget Day. This is not only to protect the integrity of the budget process, but also to ensure that there is as much policy certainty as possible for those investing in any sector. I want to therefore urge the Honourable Member not to speculate on changes to existing tax policy, particular since no such announcement or intention was made during the 2011 Budget. The Honourable Member is referred to the 2011 Budget Review, particularly chapter 5, which deals with current tax policy proposals. The taxation laws amendment bill is also out in the public domain now.

2) As noted above, the Minister of Finance does not make new tax announcements except on Budget Day. The Honourable Member should note that the mining sector makes a significant contribution to national revenue. In addition to the mining sector being subject to the normal corporate income tax of 28% (except for gold mines, which have a special dispensation), VAT and other current taxes, the mining sector is also subject to a royalty which came into effect on 1 March 2010 in terms of the Mineral and Petroleum Resources Royalty Act no 28 of 2008. This royalty varies for different minerals, from a floor of 0.5% to a ceiling of 5% (refined minerals) to 7% (for unrefined minerals) according to the profitability of the mining company, and then the applicable rate is applied to the gross sales of that mineral resource (and not the profit). It is estimated that R3.6 billion was collected in the 20101/11 fiscal year (as published on the National Treasury website on 29 April 2011). Table 5.3 of the 2011 Budget Review also projects revenue from mining royalties to be R4.9 billion for the current year 2011/12, R5.2 in 2012/13 and R5.4 billion in 2013/14.

QUESTION NUMBER 1204 [NW1340E]

DATE OF PUBLICATION: 15 APRIL 2011

Dr D T George (DA) to ask the Minister of Finance:

 

Whether Mr. Lesetja Kganyago; Director-General of the National Treasury; requested the early termination of his contract; if not, (a) why was his contract terminated prematurely and (b) what steps were taken to identify a successor to ensure a successful handover takes place; if so, (i) on what date was the request made and (ii) what are the relevant details with regard to (aa) identifying and (bb) appointing a successor?

REPLY:

No, Mr Lesetja Kganyago did not request the early termination of his contract.

(a) The President appointed Mr Kganyago as the Deputy Governor of the SARB.

(b) An advertisement was placed in the media.

(i) See attached.

(ii) (aa) A shortlist was compiled from the 11 applications;

(bb) Shortlisted candidates were interviewed on 18 April 2011. Cabinet subsequently approved the appointment of Mr Lungisa Fuzile as new DG: National Treasury.

QUESTION NUMBER 1180 [NW1314E]
DATE OF PUBLICATION: 15 APRIL 2011
Dr D T George (DA) to ask the Minister of Finance:

Whether with reference to his reply to Question 570 on 18 June 2010, phase two of the review process of the financial model applicable to the state-owned enterprises has been initiated; if not, what is the current status of the process; if so, what are the relevant details?

REPLY:

The Honourable member is referred to the response provided in April 2011 to Question 942 (NW 1060E), wherein it was made known that:

(a) The first phase of the Capital Structure and Dividend Policy project which was scheduled to be completed by December 2010 has taken longer than anticipated. This is mainly due to the detailed technical work that needed to be completed and the subsequent extensive consultation with the relevant stakeholders. It is expected that this process will be completed in the 2011/12 fiscal year.

(b) The second phase of the project involves rolling out the project to other State-Owned-Enterprises. The timelines for the implementation of Phase 2 are still to be determined as its implementation will be dependent on the outcome of Phase 1.

QUESTION NUMBER 1163 [NW1286E]
DATE OF PUBLICATION: 15 APRIL 2011
Mr N J J Koornhof to ask the Minister of Finance:

Whether, in light of the findings by StatsSA that South Africa is the 3rd paying country for employees of state-owned-enterprises, but according to the International Monetary Funds' 2010 gross domestic product (GDP) figures, only the 27th largest economy; he intends proposing any steps to curb the unsustainable remuneration packages at state-owned- enterprises; if not, what is the position in this regard; if so, (a) what steps are being taken and (b) what are further relevant details?

Reply

a) Measures to regulate the remuneration packages at State-Owned-Enterprises have been in place since 2008. On 10 October 2008, Cabinet approved the State Owned Enterprises Remuneration Guideline for both executive and the non-executive directors' remuneration of State Owned Enterprises (SOEs) within the Department of the Public Enterprises (DPE) portfolio. Cabinet further recommend that the guideline be considered for other relevant institutions of State. It is the responsibility of each executive authority overseeing each SOE to ensure that the guideline is applied.

b) In instances where the legislation governing public entities requires the concurrence of the Minister of Finance on remuneration of board members of certain public entities, the National Treasury applies the National Treasury guideline/framework to ensure consistency in the determination of remuneration of office bearers of statutory and other institutions.

QUESTION NUMBER 1151 [NW1242E]

DATE OF PUBLICATION: 15 APRIL 2011

Dr S M van Dyk (DA) to ask the Minister of Finance:

 

Whether he intends giving tax relief to consumers who (a) purchase electricity-saving equipment and (b) install private electricity generators for (i) domestic and (ii) industrial use; if not, why not; if so, why were these measures not implemented as part of the 49m initiative?

 

REPLY:

 

No new tax policy announcements can be expected except on Budget Day, or when making public the annual tax legislation. If it is not in the 2011 Budget or in previous Budgets and related legislative documents like the tax or revenue laws amendment bills, then I will not comment on whether I intend to make such proposals in the future. I will not comment on (a) and (b), but would like to point out the following programmes that are currently available to (i) domestic households and (ii) business users.

(i) There is currently an Energy Efficiency and Demand Side management Programme for the rollout of energy efficiency measures in domestic households. Covering the 2008/09 to 2011/12 fiscal years, R1.149 billion grant is made available to municipalities and Eskom for this programme to improve energy efficiency. The exact allocations are as follows:

 

Department of Energy: Programme Energy Regulation (in Rmillion)
Rmillion	2008/9	2009/10	2010/11	2011/12
Municipalities	170	75.5	108.9	118.8
ESKOM		175	220	280

(ii) With regard to industry, there is currently the industrial policy tax incentive (refer to Government Gazette 33385 of 23 July 2010) which offers additional tax deductions for industrial projects that meet certain criteria, including energy efficiency. In addition, following an announcement made in the 2009 Budget, businesses can qualify for deductions for income tax purposes if they demonstrate the achievement of energy efficiency savings. The implementation of the incentive is subject to regulations to be gazetted by the Department of Energy which will set out the administrative process for claiming the allowance.

QUESTION NUMBER 1109 [NW1231E]

DATE OF PUBLICATION: 01 MARCH 2011

Dr D T George (DA) to ask the Minister of Finance:

 

(1) Whether the Financial Stability Oversight Committee has been established; if not,

why not; if so, what (a) are the names of the committee members, (b) institutions

do they represent and (c) are the further relevant details;

(2) whether the terms of reference have been agreed to; if not, why not; if so, what

are the relevant details?

Response:

 

(1) No, the Financial Stability Oversight committee has not been established as yet. As the Honourable Member will know, no legislation has been enacted to give effect to such a committee. Such legislation is only expected to be enacted next year, after the public consultation process on the discussion paper published on Budget Day entitled "A safer financial sector to serve South Africa better" is completed and formally considered by Cabinet and Parliament. In the meanwhile, however, the National Treasury and South African Reserve Bank meet at various levels to ensure that financial stability is continually monitored (as noted in my letter to the Governor dated 16 February 201U). Consideration is being given to setting up structure along the lines contemplated in the document published in February that will function until the enactment of legislation.

(2) No, this is still work in progress

QUESTION NUMBER: 1108 (NW1230E)
DATE OF PUBLICATION: 01 APRIL 2011
Dr D T George (DA) to ask the Minister of Finance:

Whether he intends introducing amending legislation to align insurance legislation with the European Court of Justice ruling that insurance premiums may not be determined on the basis of gender; if not, why not; if so, what are the relevant details? NW1230E

REPLY:

1. To date, no significant evidence has been provided to suggest that our insurance legislation is not consistent with our Constitution.

2. Pricing risk and insurance premiums differently for different gender groups can be considered fair and justifiable discrimination if based on and justified by the statistical analysis of risk profiles between females and males. Insurance is a form of risk management primarily used to hedge against the risk of a contingent or uncertain loss. Insurance premiums are, therefore, calculated to reflect the risk profile of individuals and gender groups. This calculation will, inter alia, take into consideration factors such as statistical trends in age and gender groups. This is to ensure that risk is correctly priced and the problem of adverse selection is minimised.

3. No, the Minister of Finance does not intend introducing legislation to align with the European Court of Justice. Section 9(5) of the South African Constitution and the Promotion of Equality and Prevention of Unfair Discrimination Act, allows for discrimination that is reasonable, justifiable and fair.

4. However, if there is evidence that there is gender discrimination which contradicts the SA Constitution, further steps will be considered.
 

QUESTION NUMBER 1091 [NW1213E]
DATE OF PUBLICATION: 1 MARCH 2011
Mr M Swart (DA) to ask the Minister of Finance:

Whether any steps are being taken by the National Treasury to assist provinces to access infrastructure development programme grants where an underspending of between R2 billion and R3 billion may be experienced at the end of the current financial year; if not, why not; if so, what steps? NW1213E

REPLY:

(1) The following steps are being undertaken to support provinces improve their capacity to deliver infrastructure:

a. The Infrastructure Delivery Improvement Programme (IDIP) has deployed Technical Assistants per province to provide Technical expertise and strategic support in the delivery of infrastructure in the IDIP departments (health, education, and public works). The Technical Assistants will assist departments to put in place capacity and systems to undertake proper planning and management of the infrastructure delivery process. This programme is at an advanced stage.

b. The provincial departments will be allowed to access the stopped amounts as part of the roll over process. Provinces will be expected to make a submission through the provincial treasuries that will outline the contractual commitments from last year in the form of unpaid invoices and ongoing contracts. The motivation will also need to clearly indicate that the project plans of departments are ready to fully absorb the current year budgets in addition to the roll over amounts. The IDIP Technical Assistants will assist affected provincial departments to unblock blockages to scale up delivery.

QUESTION NUMBER 1089 [NW1211E]
DATE OF PUBLICATION: 01 APRIL 2011
Mr M Swart (DA) to ask the Minister of Finance:

What is the (a) nature and (b) quantum of the tax liability that (i) would have been, and (ii) is now exempt in terms of section 8 of the South African Postbank limited Act 2010 (Act 9 of 2010)? NW1211E

REPLY:

(a) The tax liability of any entity is determined by the normal taxation laws like the Income Tax Act No 58 of 1962, It cannot be determined by the South African Postbank Act 9 of 2010, given that it was not introduced as a money bill in terms of section 73(2) and 77 of the Constitution of the Republic of South Africa Act 108 of 1996. The South African Postbank Act provides for the incorporation of the Postbank Division of the South African Post Office and for the transfer of the enterprise of that Division to the Postbank company.

(b) The actual tax liability of any taxpayer is determined by the South African Revenue Service, based on the tax return filed by that taxpayer. Even if this information is available to SARS, I am not in a position to disclose the income tax affairs of any taxpayer in terms of section 4 of the Income Tax Act.

More generally, it should be noted that in terms of section 42 of the Income Tax Act 58 of 1962, the formation of any new entity is free from income tax under current law. Also, the formation of a new entity can also qualify to be free from indirect taxes, such as from the transfer duty in terms of section 9 of the Transfer Duty Act 40 of 1949 and from the Securities Transfer Tax Act 25 of 2007. These sections could be utilised when incorporating an entity like the Postbank Division of the South African Post Office.

(i) and (ii) There is therefore no change in the tax liability of any entity in terms of section 8 of South African Postbank Act 9 of 2010. In the view of the National Treasury, this Act cannot determine the tab liability of the Postbank nor of the Post Office. Section 8 of the Act should therefore be regarded as a desired objective for the incorporation of the Postbank, with the actual tax liability determined by the normal tax laws of the country.
 

QUESTION NUMBER 1081 [NW1202E]

DATE OF PUBLICATION: 01 MARCH 2011

Mr N Singh (IFP) to ask the Minister of Finance:

Whether, in light of the pressure on the local fuel price as a result of the crisis in Libya and other countries in the Middle East, he intends (a) reducing the fuel levy as an interim measure and (b) delaying the imposition of the Road Accident Fund (RAF) levy until the price of crude oil in the Middle East stabilises; if not, why not, in each case; if so, what are the relevant details?

REPLY:

 

a) No, government does not intend to reduce the fuel levy as an interim measure. The increased international oil price was taken into account for the 2011 Budget proposals, where the general fuel levy was in fact increased by 10c per litre to 177.50 cent per litre, which is a smaller increase than in the previous two years. Whilst the general fuel levy is a small but significant revenue-generator, and was initially introduced for this reason, it is today also seen as an important environmental tool to internalise the "external costs" of climate change and local air pollution. The customs and excise levy, which is currently earmarked towards economic development in the SACU countries, was not increased but left at 4c per litre.

These fuel taxes form part of the fuel prices determined by the Department of Energy which takes into account both international (i.e. crude oil prices, supply and demand balances for petroleum products and the Rand/US Dollar exchange rate) and domestic influences (Le. transport costs, delivery costs, wholesale and retail profit margins and fuel taxes). Current fuel price fluctuations are primarily due to international influences and not domestic factors. The fuel tax burden on both petrol and diesel, expressed as a percentage of the fuel price, has actually declined over the last two years.

b) No, government does not intend to delay the Road Accident Fund levy increases an interim measure. The increased international oil price was taken into account for the 2011 Budget proposals, where the road accident levy was in fact increased by 8c per litre to 80c per litre, which is the same increase as in the 2010 budget proposals.

QUESTION NUMBER 1070 [NW1192E]

DATE OF PUBLICATION: 25 MARCH 2011

Mr N J J van R Koomhof (Cope) to ask the Minister of Finance:

(1) Whether the National Treasury has received the detailed savings plans prepared by each province; if not, why not; if so,

(2) Whether the National Treasury has found that these plans are guaranteed to secure value for money; if not, why not; if so, what are the relevant details? NW1192E

REPLY

(1) Yes, we have received savings plans from provinces.

(2) The plans have yielded positive results so far. R6.1 billion has been redirected from non-core to core spending. In some cases we have started to see a complete turnaround in the performance of key departments such as health and education where their administrative budgets are gradually decreasing. Health in KwaZulu-Natal had overspent its' budget in the previous 3 financial years and is currently projecting to underspend at the end of 2010/11 partly due to the reduction of wastage in supply chain management. Education in Mpumalanga has significantly reduced its administration budget by 36.9 percent year on year and at an annual average rate of 11. 5 percent over the 2011 MTEF (refer to Estimates of Provincial Revenue and Expenditure 2011 for Mpumalanga). Northern Cape Education has improved its expenditure from an over expenditure of R160 million in 2008/09 to projecting to spend the entire budget (break even) at the end of 2010/11. This progress is welcomed and highly commendable.

QUESTION NUMBER 1062 [NW1180E] DATE OF PUBLICATION: 25 MARCH 2011

Mr P J Rabie (DA) to ask the Minister of Finance:

When will the details of the intended payroll tax to fund the proposed National Health Insurance be made available to the public? NW1180E

REPLY

The proposals for the National Health Insurance still have to be considered by Cabinet and then published for public comment. Following public comment the policy document will be reviewed. As part of this process the National Treasury will release a discussion document on possible revenue options for financing the NHI. In the 2011 Budget Review, several options were identified including a surcharge on personal income tax, a payroll tax or I and an increase in VAT.

QUESTION NUMBER 1061 [NW1179E]

DATE OF PUBLICATION: 23 MARCH 2011

Dr P J Rabie (DA) to ask the Minister of Finance:

Whether the National Treasury intends introducing regulatory intervention to allow smaller accountancy firms to increase their market share to enable them to compete with firms such as Price Waterhouse Cooper and KPMG; if not, why not; if so, what are the relevant details? NW1179E

REPLY

The National Treasury is not considering any regulatory interventions to allow smaller firms to gain more market share. The National Treasury is not aware of any regulatory impediments to competition in the accounting industry. However, more competition and the growth of small and black-owned firms is to be encouraged.

QUESTION NUMBER 1004
DATE OF PUBLICATION: 15 MARCH 2011
Mr N J J van Koornhof to ask the Minister of Finance:

Whether the Department had undertaken an analysis since 2009 of Departments that were practicing fiscal dumping at the end of the financial year and thus in effect negating the purpose of a carefully constructed budget and proper frontline services to the public; if not, why not; if so, (a) which departments were guilty of this practice and (b) what action was taken against them?NW1125E


REPLY

No, the National Treasury did not undertake a detailed "March spike" analysis since 2009. The last detailed analysis for all departments was conducted for the 2006/07 financial year, followed by a special analysis of the housing sector done for the 2007/08 financial year. These were submitted to the Ministers Committee on the Budget and the Technical Committee on Finance. A high level analysis of the 2008/09 financial year revealed that there was a very limited incidence of fiscal dumping for that financial year and consequently no detailed report was compiled. Since these reports were compiled, the focus of reporting was shifted towards the production of quarterly spending reports to the Standing Committee on Appropriations, where the incidence of increased expenditure during the final part of the financial year is reported. In addition to this reporting procedure, the National Treasury has also put processes in motion to withhold the payment of certain Conditional Grants where it is clear that the payment of such grants would contribute to possible fiscal dumping at year-end. I reiterate that "fiscal dumping" is an unacceptable practice and will be discouraged.

QUESTION NUMBER 1003 [NW1124E]

DATE OF PUBLICATION: 18 MARCH 2011

Mr N J J v R Koornhof (Cope) to ask the Minister of Finance:

When the National Treasury has any stringent processes in place to ensure that (a) unauthorised spending and (b) fiscal dumping do not occur at the end of each financial year; if not, why not; if so, what are the relevant details?

NW1124E

REPLY

Yes, the National Treasury (NT) has procedures in place aimed at preventing (a) unauthorised expenditure and (b) "fiscal dumping" at the end of the financial year. In keeping with requirements of the Public Finance Management Act (PFMA), departments are obliged to seek National Treasury approval if new transfers to other entities are proposed or if transfer payments provided for in the Appropriation Act are increased. Control is also exercised through regular consultation with departmental Chief Financial Officers and monthly monitoring of detailed expenditure reports. However, the primary responsibility for ensuring that unauthorised or wasteful spending does not occur rests with the Accounting Officers. The NT will continue to endeavour to discourage fiscal dumping.

QUESTION No 943 NW1 061 E

18 MARCH 2011

Dr D T George (DA) to ask the Minister of Finance:

 

1) Whether, with regard to the impact of value-added tax (VAT) on the poor, the National Treasury has conducted a study on the impact of extending the zero-rate to additional basic necessities; if not, why not; if so, what are the relevant details;

2) Whether the National Treasury has conducted a study on the redistributive impact of the taxation; if not, why not; if so, what are the relevant details?

REPLY

 

1) Yes. The National Treasury commissioned a study in 2007 into the most appropriate VAT treatment of merit goods and services. The aim of the study was to determine whether current VAT concessions should be retained, whether the policy considerations that applied when VAT was introduced are still relevant, or whether changed circumstances would justify the introduction of further concessions for other merit goods and services. Additional merit goods and services considered included medical goods and services, books and other reading matter, funeral or cremation services, electricity and water. A copy of this study, which was also made available to members of the Standing Committee on Finance on 23 March 2011, is attached, and is available on the National Treasury website.

Detailed analysis suggests that existing VAT zero-ratings and exemptions in almost all cases confer substantially more benefits to higher income groups than to lower income groups. With the exception of maize meal, bread flour and maize rice, the savings derived by higher income expenditure groups from current zero-ratings are generally substantially higher than those enjoyed by lower income groups.

Targeted assistance in the form of focused expenditure and I or grants seem more appropriate to reach low income households.

It should also be noted that a VAT system cannot and should not be administratively too complex, and that generates revenue efficiently, will tend to better fund social and redistributive expenditure programmes and hence higher levels of income growth over time.

2) Yes, the 2007 study did consider the impact of VAT on different income groups. It is not clear what the Honourable means by the "redistributive impact of the taxation", but it should be noted that the actual redistributive impact is done through the expenditure side of the Budget, as the taxation system does not by itself redistribute income. . The perception that VAT is regressive is based on the fact that lower income households pay a higher proportion of their disposable income in a given period on VAT. This arises because higher income households tend to save greater portions of their income. However, these savings are used in subsequent periods (e.g. during retirement), at which stage they attract VAT. The proportion of disposable income paid on VAT by different income groups over their respective lifetimes therefore tend to converge. Hence, the full life cycle VAT burden is less regressive and might be more or less proportional.

Concessions that cannot be targeted exclusively to the poor distort equity in the economy as the affluent tends to benefit more in absolute terms. VAT concession has a negative effect on other tax policy considerations such as neutrality, efficiency and simplicity. The resultant distortion of consumer and producer choices and preferences often leads to requests for even more VAT concessions.

QUESTION NUMBER 942 [NW 1060E]

DATE OF PUBLICATION:

Dr D T George (DA) to ask the Minister of Finance:

(1) Whether, with reference to the review of the financial model applicable to the state -owned enterprises, the review process has been completed; if not, why not; if so, what are the relevant details;

(2) whether any (a) loans and (b) guarantees have been extended to the state-owned enterprises for the 2011-12 financial year; if not, why not; if so, (i) to which state-owned enterprise and (ii) which loan/guarantee was extended? NW 1 060E

Reply

(1) The Honourable member is referred to the response provided in 2010 to Question 510 [NW 689E]:

(a) The first phase of the Capital Structure and Dividend Policy project which was scheduled to be completed by December 2010 has taken longer than anticipated. This is mainly due to the detailed technical work that needed to be completed and the subsequent extensive consultation with the relevant stakeholders. It is expected that this process will be completed in the commencing financial year 2011/12.

(b) The second phase of the project involves rolling out the project to other SOEs. The timelines for the implementation of Phase 2 are still to be determined as its implementation will be dependent on the outcome of Phase 1.

(2) As the 2011/12 financial year only commences on 01 April 2011, no loans or new guarantees have yet been extended to the State Owned Enterprises for the 2011/12. Details regarding guarantees issued and exposure against issued guarantees up to 31 December 2010 are provided on pages 94 and 95 of the Budget Review.

QUESTION NUMBER 867 (NW944E)
DATE OF PUBLICATION: 11 MARCH 2011
Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

Whether any plans have now been formulated to manage the Government's consumption expenditure better and to obtain greater value for money; if not, why not; if so, what are the relevant details? NW944E

REPLY

Yes, plans have now been formulated to manage the Government's consumption expenditure better and to obtain greater value for money.

The following table depicts the components of current expenditure, for the 2011 Medium Term Expenditure Framework period, which comprises the majority of government's consumption expenditure.

See table: 2011 Medium Term Expenditure Framework period

QUESTION NUMBER 866 [NW866E]

DATE OF PUBLICATION: 11 MARCH 2011

Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

Whether National Treasury has identified any nonperforming or underperforming projects, programmes and entities which ought to be terminated in the interest of savings and better value for money; if not, why not; if so, (a) which projects, programmes and entities, (b) what is the Government planning to do with them and (c) what are the further relevant details?

NW866E

 

REPLY

Yes- certain nonperforming and underperforming projects, programmes and entities have been identified. A key output of each budget process is identifying cost reductions that can be made and where spending can be reduced by postponing, cancelling or winding down low- and ineffectual programmes. All departments have been tasked to continually assess the role, purpose and effectiveness of programmes and public entities, and whether relevant outputs and outcomes can be attained at a lower cost. The National Treasury assists departments in performing this task through the budget process. Budget baselines underwent rigorous review in the 2011 Budget process with the aim of identifying funds in any nonperforming or underperforming projects, programmes and entities, amongst others for reallocation to support government's 12 outcomes. The details of the cost reductions effected for this purpose can be found for each national department and each entity under the headings, "Savings and cost effectiveness measures", which can be found in each Vote chapter of the 2011 Estimates of National Expenditure publications. The 2011 Estimates of National Expenditure publications can be found on the National Treasury website at: www.treasurv.gov.za/documents/national%20budget/2011.

QUESTION NUMBER 804

DATE OF PUBLICATION: 11 MARCH 2011

Mrs D A Schafer (DA) to ask the Minister of Finance:

Whether (a) the National Treasury or (b) any of its affiliated entities have purchased any tickets for the ICC Cricket World Cup 2011; if not, why not; if so, (i) what process has been followed to purchase these tickets, (ii) how many tickets have been purchased, (iii) for which matches, (iv) what has been the total cost of these tickets, (v) what are the reasons for purchasing these tickets, (vi) to whom will each of these tickets be allocated and (vii) on what was the decision for the allocation of these tickets based? NW875E

REPLY:

(a) None

(i-vii) not applicable

(b) None

(i - vii) not applicable

QUESTION NUMBER 794 [NW865E]
DATE OF PUBLICATION: 11MARCH 2011
Mr D J Maynier (DA) to ask the Minister of Finance

(1) With regard to the implementation of the United Nations Security Council Resolution 1970 (2011), what (a) are the values of the (i) funds, (ii) other financial assets and (iii) economic resources and (b) is the breakdown of the (i) names and (ii) values of the (aa) funds, (bb) other financial assets and (cc) economic resources that have been frozen in respect of Libya;

(2) whether he will make a statement on the matter? NW865E

REPLY:

(1) (a) and (b)

These particulars relate to confidential information held by financial institutions and cannot be disclosed publically.

With reference to UNSCR 1973 (2011), financial institutions have suspended business with the entities in question. Particulars remain confidential and cannot be disclosed publically.

(2). South Africa remains committed to implementing the letter and spirit of UN Security Council Resolution, 1970 (2011).

QUESTION NUMBER 782 [NW853E]
DATE OF PUBLICATION: 11 MARCH 2011
Dr. D T George (DA) to ask the Minister of Finance:

Whether a certain person (name furnished) has been replaced as chairperson of the Board of Trustees of the Government Employees Pension Fund; if not, why not; if so, (a) when and (b) why was this person replaced? NW853E

REPLY

No, Mr. KA Moloto is still serving as Chairperson of the GEPF Board of Trustees. Mr. Moloto was sworn in as a Member of Parliament (MP) on 16 November 2010. The Minister of Finance (MOF) was then informed of his appointment as an MP; the Board made a formal request to the MOF to retain his services as Chairperson, for a period of up to a year subsequent to his appointment.

An investigation was undertaken on the issue of Mr. Moloto's continuation as chairperson of the Board and the findings were as follows:

1. The Handbook for the appointment of persons to boards of state and state controlled institutions (the Handbook) specifies principles in terms of which office bearers qualify to serve on the board of a state or state controlled institution. The Handbook defines the GEPF as a public interest institution. Paragraph three specifically indicates that a member of the National Assembly or a member of a provincial legislature, who is not a member of the Cabinet, a Deputy Minister or a member of a Provincial Executive Council, is eligible to serve on the board of a public interest institution provided that:

a. The enabling Act of the institution or any other Act does not expressly disqualify the member; and

b. The appointment of the member to the board does not create a conflict of interest in fulfilling the National Assembly or provincial legislature's role of overseeing the institution and/or the powers and functions set out in the Constitution.

2. Legal advice on the two exceptions that may prohibit him from continuing to serve on the GEPF Board was sought. The advice confirmed that:

a. Neither the GEP Law nor the Rules, prohibit a person who becomes a Member of Parliament to serve on the GEPF Board as a Trustee or as the Chairperson of the Board. No other legislation could be found to prohibit an MP from serving on the GEPF Board.

b. The code of conduct by which all members of parliament are bound also does not prohibit him from serving both institutions, provided that he discloses his position as Chairperson of the GEPF to Parliament as well as all remuneration (if any) received from the GEPF.

He is therefore eligible to continue serving on the GEPF Board.

QUESTION NUMBER 761 [NW779E]

DATE OF PUBLICATION: 4 MARCH 2011

Dr C P Mulder (FF Plus) to ask the Minister of Finance:

(1) What amount (a) in total, (b) in respect of each mine or mining company and (c) per province from mines or mining companies in the various provinces has the State received from mining and petroleum rights in terms of the Mineral and Petroleum Resources Royalty Act, Act 28 of 2008, since its enactment on 1 March 2010;

(2) whether the State has appropriated any of the royalty revenue received from mining and petroleum rights; if not, why not and what is the State planning to do with this money; if so, how was it employed? NW779E

REPLY:

(1) The member is referred to the response to Question Number 19, published on 10 February 2011. The Mineral and Petroleum Resource Royalty Act, Act 28 of 2008 came into operation on 1 March 2010.

(a) The total royalty payments collected in terms of this Act amounted to just under R3.5 billion for the period 1 March 2010 to 31 January 2011. This information is available on the National Treasury website at the end of each month, in terms of section 32 of the PFMA. Information of revenue per source is published 30 days after the end of each month, so the amounts for revenue collected as at 28 February 2009 will be published on 30 March 2011.

(b) It is not possible to provide information per province or per commodity, as one company might have operations in more than one province and in more than one commodity. Also, for confidentially reasons, even where such information is available, it cannot be made public at this stage, as one company might dominate in one province or commodity, and could be identified should such information be made available. However, given the public interest, I have requested the National Treasury and South African Revenue Services to consider whether such information can be published per commodity on an annual basis, after the end of each fiscal year.

(2) As with most other revenue that is received by national government, and in accordance with section 213 of the Constitution, money from the minerals and petroleum royalties are not earmarked, but are deposited into the National Revenue Fund. Funds are then appropriated to priority spending areas as determined in terms of the annual budget process.

QUESTION NUMBER 736 [NW805E]

DATE OF PUBLICATION: 7 MARCH 2011

Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

Whether, with reference to the Estimates of National Expenditure 2011, his department has identified (a) departments, (b) provinces and (c) State entities which need to reduce spending on administration and increase spending on frontline services; if not, why not, in each case; if so, what are the relevant details in each case? NW805E

REPLY

All national and provincial departments as well as public entities have been tasked to continually assess the role, purpose and effectiveness of programmes and whether relevant outputs and outcomes can be attained at a lower cost.

The 2011 Budget process thus focused on identifying funds for reallocation through collaboration between the National Treasury and line departments, in effect curbing inefficient expenditure, with particular attention to reducing administrative costs where possible and strengthening frontline service delivery. All budget baselines underwent rigorous review with the aim of realigning expenditure to support government's 12 outcomes. Cost reductions identified through this process amounted to R30.6 billion. Of the total amount identified, R6 billion resulted from a 0.3 per cent reduction in the baseline budgets effected across all national and provincial departments. Departments were tasked with effecting this reduction mainly on administrative costs without negatively impacting service delivery. To accommodate their reduction in expenditure, government departments were asked to decrease spending on noncore goods and services, reschedule expenditure, adjust foreign exchange projections, reduce transfers to certain public entities and improve financial management. The details of the cost reductions effected can be found for each national department and each entity under the headings, "Savings and cost effectiveness measures", which can be found in each Vote chapter of the 2011 Estimates of National Expenditure publications.

(b) With reference to the Estimates of National Expenditure 2011, the National Treasury during the 2011 MTEF Benchmark of provincial draft budgets identified a need for provinces to reduce the percentage growth in spending on administration in the following provinces and provincial departments:
 

· Eastern Cape: Health, Social Development and Human Settlement;

· Free State: Health;

· Gauteng: Health, Economic Development, Roads and Transport, Community Safety;

· KwaZulu-Natal: Community Safety and Liaison;

· Limpopo: Education, Sport, Arts and Culture;

· Mpumalanga: Cooperative Governance and Traditional Affairs;

· Northern Cape: Sport, Arts and Culture;

· North West: Sport, Arts and Culture, Public Safety; and

· Western Cape: Community Safety

The above-mentioned observations are based on the December 2010 submission of provincial 2011 MTEFdraft budgets. Provinces are still in the process of tabling final budgets and the information will be updated then.

While the above-mentioned initiatives provided specific measures to curb inefficient expenditure it should be noted that legislation through the Public Finance Management Act, 1999 (Act 1 No.1 of 1999), charges the accounting officer of a department, trading entity or constitutional institution with the responsibility to ensure the effective, efficient, economical and transparent use of the resources of the department, trading entity or constitutional institution. Hence over and above cost reductions identified for the 2011 Medium Term Expenditure Framework period, departments are tasked with further assessing the role, purpose and effectiveness of programmes and public entities, and whether outputs and outcomes can be attained at a lower cost in the budget execution phase. To ensure this, the Act requires that accounting officers maintain effective, efficient and transparent systems of financial and risk management and internal control and a system of internal audit under the control of an audit committee. Chapter 10 of the Act clearly stipulates the proceedings that need to take place should the accounting officer not be fulfilling these duties.

Guidelines issued by the National Treasury and the 2011 Estimates of National Expenditure publications can be found on the National Treasury website at: www.treasury.gov.za/publications/guidelines and www.treasury.gov.za/documents/national%20budget/2011

QUESTION NUMBER 735 [NW804E]

DATE OF PUBLICATION: 7 MARCH 2011

Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

Whether, with reference to the Estimates of National Expenditure 2011, his department has identified (a) departments, (b) provinces and (c) State entities which were lacking in capacity to manage and spend resources in a manner best suited to delivering frontline services; if not, why not; if so, what are the relevant details in each case? NW804E

REPLY

No, the National Treasury has not sought to single out departments, provinces or state entities lacking in capacity to manage and spend resources in a manner best suited to delivering frontline services. The Treasury recognises that financial management and service delivery challenges are widespread, and therefore provides a range of support services and interventions, which include, in many instances, support for capacity to manage and spend resources.

These include support for financial management systems across all of government, assistance and advice relating to financial management and reporting, supply chain and contract management, human resource budgeting, costing of services and infrastructure planning and management. The Office of the Accountant-General has developed a framework for assessment of financial maturity of government departments, which is taken into account in targeting financial management assistance. Dedicated capacity to provide financial management support includes the Financial Management Policy and Compliance Improvement initiative of the Accountant-General, the Technical Assistance Unit which provides project management support to various departments and state entities, the Public Private Partnership Unit, the infrastructure development improvement programme currently operational in nine provincial education, health and public works departments and continued support to provincial treasuries to assist in the discharge of their responsibilities.

Provincial treasuries (in terms of Chapter 3 of the PFMA Act, 1 of 1999) are in turn obliged to provide support to provincial departments. In instances where a lack of capacity to manage and spend resources has been identified by provincial treasuries, National Treasury can be approached for further assistance. During the current financial year technical assistance was provided to the Gauteng provincial treasury for the department of Health and the North West provincial treasury for the department of Public Works.

QUESTION NUMBER 650

DATE OF PUBLICATION: 07 MARCH 2011
Dr D T George (DA) TO ASK THE MINISTER OF FINANCE:

(1) Whether the SA Revenue Service's commitment to investigate irregular activities by customs officials at the 0 R Tambo International airport resulted in the initiation of an internal investigation; if not, why not; if so, (a) what are the relevant details and (b) how many customs (i) officials and (ii) management members have been (aa) suspended and (bb) criminally charged;

(2) Whether a criminal investigation will be conducted; if not, why not; if so, what are the relevant details? NW 695E

REPLY:

(1) Yes.

(a) During the 2010-2011 financial year, SARS investigated 20 suspected incidents of irregular conduct alleged to have been committed by customs officials and others at ORTIA relating to the release of detained counterfeit goods, the release of goods for which duties were not paid in full and some petty theft.

(b) The current status of investigations is as follows:

 

	Misconduct 10	Fraud 3	Corruption 7
Ongoing Investigations 13	6	2	5
Under Prosecution 3	2		1
Final Warnings 2	1	1
Resigned 2	1		1

*Included in the above is one person who was arrested and two others who were suspended.

2. Criminal investigations are conducted, as a norm, after internal investigations are completed.

NATIONAL COUNCIL OF PROVINCES
QUESTION FOR WRITTEN REPLY
QUESTION NUMBER 601 [CW748E]
DATE OF PUBLICATION: 18 November 2011
Mr M W Makhubela (COPE-Limpopo) to ask the Minister of Finance:

Whether the National Treasury will provide specific figures, including future projections, relating to the real non-interest consolidated expenditure by main economic category for (a) compensation of employees, (b) goods and services and (c) capital payments from 1 April 2002 up to the latest specified date for which information is available; if not, why not; if so, what are the relevant details? CW748E

REPLY

The National Treasury publishes nominal data in its publications, as such publications provide additional information on departmental appropriations and budgets which are presented in nominal terms. Included below are tables (Annexure A) presenting the consolidated non-interest expenditure in both nominal and real terms, by main category of expenditure. CPI was used as the deflator to calculate the real numbers.
 

Currently the consolidated government data includes 160 national and provincial departments and 181 entities of central government. The attached tables provides data from the 2006/07 financial year as the consolidation including public entities was first introduced in Budget 2006, resulting in comparable data for earlier financial years not being available at this stage.

QUESTION NUMBER 591 [NW634E]

DATE OF PUBLICATION: 7 MARCH 2011

Mr I M Ollis (DA) to ask the Minister of Finance:

(1) (a) Which travel agencies or travel service providers does his department use currently and (b)(i) how and (ii) when were they appointed in each case;

(2) what was the (a) budgeted amount and (b) actual amount paid to each specified service provider for departmental travel expenditure in the (i) 2007-08, (ii) 2008-09 and (iii) 2009-10 financial years? NW634E

REPLY:

(1 )(a) HRG Rennies Travel and WingsNaledi Corporate Travel.

(1 )(b )(i) The National Treasury bidding process was followed.

(1 )(b )(ii) The letter of acceptance was signed and forwarded on 17 November 2010.

(2)

 

	(2)(a)(i) 2007 -08	(2)(a)(i) 2008-09	(2)(a)(i) 2009-10
Budgeted amount	R32,527,700.00	R40,578,525.00	R33,737,500.00
Travel agency	(2)(b)(i) 2007 -08	(2)(b)(i) 2008-09	(2)(b)(i) 2009-10
Sure Travel Samber	R23,619,092.61	R15,437,735.37	-
Uniglobe Inkhwezi Travel	R275,219.73	R127,719.36	-
Rennies Travel	R222,500.00	-	-
Connex Travel	R28,538.35	-	-
Travel with Flair	-	R22,914,518.12	R33,675,655.41
TOTAL	R24,145,350.69	R38,479,972.85	R33,675,655.41

QUESTION NUMBER 548

DATE OF PUBLICATION: 25 FEBRUARY 2011

Mr N J J v R Koornhof (Cope) to ask the Minister of Finance:

Whether the Government had implemented wide-ranging cost cutting measures and a stoppage of expenditure on futile and frivolous items (a) in the 2009-10 financial year and (b) during the period 1 April 2010 up to the latest specified date for which information is available in order to set the example and curb public debt; if not, why not; if so, what are the relevant details?

NW595E

 

REPLY

(a) One key focus of each budget process involves identifying where cost reductions can be made and where spending can be reduced by postponing, canceling, or winding down low-priority and ineffectual programmes. This culminated in savings amounting to R19 billion and R25.6 billion being announced in the 2009 and 2010 Budget, respectively. Funds released through these processes were reprioritised towards key government priorities with related output targets. In addition, R 13.4 billion was identified within provincial budgets in the 2010 Budget for reprioritisation, mainly to the health and education budgets.

(b) Departments have been tasked to continually assess the role, purpose and effectiveness of programmes and public entities, and whether relevant outputs and outcomes can be attained at lower cost. The 2011 Budget process thus also focused on identifying funds for reallocations, in effect curbing unnecessary and wasteful expenditure. Budget baselines underwent rigorous review with the aim of realigning expenditure to support government's 12 outcomes. Cost reductions identified through this process amounted to R30.6 billion. This includes R6 billion resulting from a 0.3 per cent reduction in the baseline budgets across national and provincial departments. To accommodate this, governments departments were asked to decrease spending on noncore goods and services, reschedule expenditure, adjust foreign exchange projections, reduced transfers to certain public entities, improve financial management and cut expenditure on administration.

While the above-mentioned initiatives provided specific measures to curb wasteful expenditure it should be noted that legislation through the Public Finance Management Act, 1999 (Act No.1 of 1999), charges the accounting officer of a department, trading entity or constitutional institution with the responsibility to ensure the effective, efficient, economical and transparent use of the resources of the department, trading entity or constitutional institution. Departments are thereby tasked with assessing the role, purpose and effectiveness of programmes and public entities, and whether outputs and outcomes can be attained at lower cost. The accounting officer has a duty to prevent irregular and fruitless and wasteful expenditure. To ensure this, the Act requires that accounting officers maintain effective, efficient and transparent systems of financial and risk management and internal control and a system of internal audit under the control of an audit committee. The National Treasury has also issued several guideline documents and frameworks to assist accounting officers with the fulfillment of their duties. Chapter 10 of the Act clearly stipulates the proceedings that need to take place should the accounting officer not be fulfilling these duties.

Guidelines issued by the National Treasury can be found on the National Treasury website at: www.treasury.gov.za/publications/guidelines.

QUESTION NUMBER 485
DATE OF PUBLICATION: 25 FEBRUARY 2011
Mrs DA Schafer (DA) to ask the Minister of Finance:

Whether (a) his department or (b) any (i) agency or (ii) institution which receives transfers from his departmental budget employs staff to perform the duties set out in the Minimum Information and Security Standards (MISS) that were adopted by Cabinet on 4 December 1996 or any subsequent version of the MISS; if not, why not, in each case, if so, in each case, (aa) how many and (bb) what (aaa) is the job title, (bbb) is the salary, (ccc) are the other benefits of each specified staff member? NW528E

REPLY:

No. All employees of Government and related agencies or institutions are subject to the guidelines and prescriptions contained in the Minimum Information Security Standards (MISS).

QUESTION NUMBER 483 [NW526E]

DATE OF PUBLICATION: 25 FEBRUARY 2011

Dr D T George (DA) to ask the Minister of Finance:

(1) Whether the interdepartmental task team met in the past six months with regard to proposals for retirement fund reform; if not, why not; if so, (a) how many times and (b) on what dates;

(2) Whether a deadline has been agreed to for the completion of proposals for submission to Parliament; if no, why not; if so, what are the relevant details? NW526E

REPLY:

(1) Yes, the Inter-Departmental Task Team ('IDTT') for Social Security and Retirement Reform has met in the past six months. Four meetings were held between August 2010 and January 2011. The dates were as follows: 19 August; 26 August; 30 September; and 4 November 2010.

(2) The Inter-Ministerial Committee responsible for Social Security and Retirement Reform met on 8 February 2011 to consider recommendations of the IDTT and agreed that a consolidated Government paper on Social Security and Retirement Reform should be submitted to Cabinet this year for Cabinet's approval and wider consultation on the reform proposals.

QUESTION NUMBER 482 [NW525E]
DATE OF PUBLICATION: 25 FEBRUARY 2011
Dr D T George (DA) to ask the Minister of Finance:

(1) Whether, with reference to the statements made by a certain person (name and details furnished) during his testimony on the Cadac Pension Fund matter before court regarding his refusal to answer questions on the basis that he may incriminate himself and/or the Financial Services Board (FSB), he has requested this person to explain his statement; if not, why not; if so, what are the (a) reasons for his incrimination concern and (b) further relevant details;

(2) whether he will launch an inquiry into the tendency of the FSB to repeatedly recommend a certain person (name furnished) to the curatorship of retirement funds; if not, why not; if so, what are the relevant details? NW525E

REPLY:

(1) Yes, I did request, and received, a satisfactory explanation from the Financial Services Board, on the statements attributed to Mr Dube Tshidi in his testimony during the criminal trial of Mr Simon Nash and the Sable Industries Pension Fund. I am happy that the Honourable Member is seeking to establish the facts, particularly since the Democratic Alliance, under the name of the Honourable Member, issued a statement calling for the resignation of the Executive Officer of the FSB on 1 February 2011, without first establishing the facts. I want to appeal to all political parties, to defend the integrity of our regulators. In particular, members of the House must await the outcome of the court cases initiated by the FSB before jumping to any conclusions and pre-judging the FSB or its Executive Officer, particular when they act to protect the interests of policy-holder or members of pension funds.

(a) and (b) Mr Tshidi advised me that he was not admitting to doing anything wrong or illegal, either personally or as Registrar. Rather, Mr Tshidi, who was responding to a question under cross-examination by the presiding officer, was pointing out that he did not want to prejudice the Registrar's case in the parallel case involving the pending curatorship of the Cadac Pension Fund. On 21 December 2010 the Executive Officer successfully applied for the provisional curatorship of the Cadac Pension Fund. Mr Nash and his wife, Elena Forno-Nash, were at the time trustees of this Fund, and the extended return date of the provisional order is 6 June 2011.

(2) No, I will not be launching any inquiry into the FSB. The FSB has advised me that there is no tendency on its part to repeatedly recommend the appointment of a certain person as curator of retirement funds, even though there is a very small pool of such curators, and curators who have a record for recovering funds. The FSB recommends curators that are suitably qualified for the nature and extent of the curatorship, but it is up to the Court to consider the suitability of the person recommended and to make the decision on the appointment of a specific curator. The Honourable member must take into account how our judicial system functions. I am open to making suggestions to the Minister of Justice on any proposals to improve the system of curatorship, including on limiting the fee structure and increasing the pool and quality of curators, should the Honourable Member have any such suggestions.

QUESTION NUMBER 455

DATE OF PUBLICATION: 25 FEBRUARY 2011

(Interdepartmental transfer on 10 MARCH 2011)

Mr P J C Pretorius (DA) to ask the Minister of Finance

(a) What are the latest developments with regard to the present customs revenue sharing agreement between the members of the Southern African Customs Union (Sacu) and (b) when is the new agreement expected to replace the current revenue sharing Sacu agreement? NW495E

REPLY:

A study of the SACU revenue sharing arrangements has been completed by an international consultancy firm. The study has been discussed by officials and will be tabled at the May 2011 meeting of the SACU Council of Ministers.

A new revenue sharing arrangement for SACU will be subject to negotiations between the five (5) member states and possible changes to the international agreement.

QUESTION NUMBER 398

DATE OF PUBLICATION: 18 FEBRUARY 2011

Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

 

Whether the Land and Agricultural Development Bank of SA (the Land Bank) has been able to maintain the necessary capital adequacy ratio within the necessary limits in order to build confidence and ensure that it attracts and retains potential investors; if not, why not; if so, what are the relevant details?

NW432E

 

REPLY

 

The Land and Agricultural Development Bank of South Africa has achieved a capital adequacy ratio well above the 20% level, which was agreed with government as one of the conditions attached to the R3.5 billion Letter of Comfort (guarantee). The Land Bank achieved capital adequacy ratios of 42% and 46% during the period 31 March 2010 - 31 December 2010.

The maintenance and increase of capital adequacy, supported by the application of prudent corporate governance and controls, has enhanced the credibility of Land Bank among investors. This has led to the retention of, and increased investor support, culminating into the issuance of a 3 year Bond of R1.2 billion on 20 October 2010 in the domestic capital markets for the first time in 10 years.

QUESTION NUMBER 397 [NW431 E]

DATE OF PUBLICATION: 18 FEBRUARY 2011

Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

Whether he received any applications for public-private partnerships (PPPs) that will be launched this year; if so, (a) how many projects will be involved, (b) where will the projects be launched and (c) what are the estimated costs for the various projects in terms of (i) building costs, (ii) architectural costs, (iii) quantity surveyor costs and (iv) engineering fees?

NW431 E

REPLY

(a)(b)(c)(i)

There are currently 7 projects anticipated to be launched this year. Their estimated costs and location are listed below.

 

PROJECT	WHERE WILL THE PROJECT BE LAUNCHED	ESTIMATED COSTS
Department of Rural Development and Land Reform Accommodation and Services	Pretoria	R1,4 Billion
Department of Water and Environmental Affairs Accommodation and Services	Pretoria	R1,1 Billion
Tshwane Head office Accommodation and Services	Pretoria	R1,1 Billion
Department of Energy - 1000MW Peaking Power Plants	KwaZulu-Natal Eastern Cape	R7,S Billion
2 x Wind Farms (Renewable Energy)	To be announced	RS Billion
Photovoltaic Plant (Renewable Energy)	To be announced	R2 Billion

c (ii)(iii)(iv)

The professional fees (building cost, architectural cost, quantity surveyor cost and engineering cost) are estimated to be between 5% and 10 % of project cost.

QUESTION NUMBER 315

DATE OF PUBLICATION: 18 FEBRUARY 2011

Mr P J C Pretorius (DA) to ask the Minister of Finance:

(1) Whether there has been any impairments of investments made by the Government Employees Pension Fund (GEPF) (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; if so, (i) what amounts were involved and (ii) which (aa) companies or (bb) asset managers were involved in each case;

(2) whether the GEPF currently has any investments with any of the above companies or asset managers; if so, for each respective company or asset manager, (a) what are the reasons for the investment and (b) what amounts have been invested with each?

NW339E

REPLY:

(1) (a)(i-iii) Impairments were recognized by the GEPF over the past three financial years as follows:

Year 2007-08: R 330,654,894,37

Year 2008~09: R 2,509,317,844,23

Year 2009-10: R 4,682,972,174.72

(Please refer to Annexure A for details as attached)

 

(b) The impairment exercise is in the process of being performed for the 2009/10 financial year. The impairment of assets (if any) is recorded in the annual financial statements of the Fund and would therefore only be available once the Annual Report and Annual Financial Statements are submitted to parliament.

(2) (a) and (b) The majority of the impairments took place within the Isibaya portfolio of the GEPF and is managed by the Public Investment Corporation (PIC), Some of the impairments, in 2008/09, were in the GEPF's unlisted property portfolio which is also managed by the PIC,

The Isibaya Portfolio was established in 2002 and provides finance for projects which is able to generate good financial returns while also supporting positive, long-term, economic, social and environmental outcomes for South Africa. The majority of the investments in this Fund were in private equity but the Fund has evolved from having a mainly private equity focus to one which will predominantly focus on the following priority areas;

· Economic infrastructure (comprising energy, logistics, water, broadband, liquid fuels and commuter transport);

· Environmental Sustainability projects such as renewable energy, energy efficiency, clean technology, recycling and green firms, environmentally friendly construction, green buildings and conservation;

· Social infrastructure, focusing on health, education and housing;

· New Enterprise, Job Creation and BBBEE focusing of SMME development, support for fund managers espousing principles of BBBEEE and investments in sectors that foster growth. job creation and BBBEE particularly in those priority sectors identified by Government's Industrial Policy Action Plan (JPAP) (including agriculture, agro-processing, green and renewable energy technology, tourism and business process outsourcing).

The details of all impairments approved by the GEPF Board of Trustees are contained in the GEPF's Annual Reports that are submitted to parliament annually.

QUESTION NUMBER 314 [NW338E]

DATE OF PUBLICATION: 18 FEBRUARY2011

Dr D T George (DA) to ask the Minister of Finance:

 

What (a)(i) is the number and (ii) are the names of the pension funds to which a certain person (name furnished) has been appointed as curator, (b) is the amount in fees received by the person for each fund and (c) amount of recovered monies is paid to each specified pension fund?

NW338E

REPLY:

 

The Financial Services Board advises me as follows:

(a)(i) Mr. A Mostert has been appointed curator or co-curator to eleven pension funds, in terms of various orders from the High Court. Note that some of the funds are grouped together, where appropriate, ie. one curatorship may comprise three funds, such as in the case of the two Datakor and Cortech Funds.

(ii) According to the FSB, the funds are as follows:

· Datakor Pension Fund (under curatorship)

· Datakor Retirement Fund (under curatorship)

· Cortech Pension Fund (under curatorship)

· Lucas SA Pension Fund (in liquidation)

· Prestolite Pension Fund (in liquidation)

· Mitchell Cotts Pension Fund (in liquidation)

· Picbel Groepvoorsorgfonds (in liquidation)

· Powerpack Pension Fund (in liquidation)

. Sable Industries Pension Fund (under curatorship)

· Cadac Pension Fund (under provisional curatorship)

. SACCAWU National Provident Fund (under curatorship)

(b) The detail of the curator/liquidator fees. remuneration and expenses incurred in respect of all these funds (excluding the Cadac Pension Fund which was only recently placed under provisional curatorship) were provided in response to Parliamentary question number 1061 during October/November 2009 (copy appended). The Registrar informs me that since then, the funds (excluding Cadac Pension Fund and SACCAWU National Provident Fund) have submitted valuation reports and supplementary information from which the following recoveries. Fees, remuneration and expenses have been drawn. These amounts are still subject to FSB assessment and approval, during which process the Registrar will consider the various funds' valuation reports, surplus apportionment schemes, and finally their liquidation accounts.

 

NAME OF PENSION FUND	RECOVERY TO	LIQUIDATOR/CURATOR	LEGAL FEES AND
	DATE	FEES	DISBURSEMENT
Lucas SA Pension Fund	94 226 673	19 257 902	6 459 690
Picbel Pension Fund	97 008 640	12 770 398	6 985 701
Prestolite Pension Fund	13 979 907	3974108	20 986
Sable Pension Fund	122 010 365	23651656	7 215 244
Powerpack Pension Fund	106 886 022	23 895 371	4 676 638
Datakor Pension Fund	261 565 049	59 187 055	8318 544
Datakor Retirement Fund	27174361	6 141 947	1 049 880
Cortech Pension Fund	70 161 919	15 902 896	2 068 815
Mitchell Cotts Pension Fund	152 705 668	23 768 487	8 823 377
TOTALS	945 718 604	188 549 820	45 618 875

(c) Refer to table provided under (b)

QUESTION NUMBER 313 [NW337E]

DATE OF PUBLICATION: 18 FEBRUARY 2011

Dr D T George (DA) to ask the Minister of Finance:

 

Whether the Financial Services Board proposes the appointment of any specific curator when the High Court appoints pension fund curators; if not, (a) why not and (b) what are the criteria used to appoint a specific curator; if so, what are the relevant details?

REPLY:

 

The Financial Services Board (FSB) has informed as follows.

Curators are appointed by a Court under the provisions of section 5 of the Financial Institutions (Protection of Funds) Act, No 28 of 2001, on application by the Executive Officer of the FSB (the Registrar).Curatorship orders are initially provisional, and available to all interested parties, as well as the public (such orders are often also published by the media) before they are confirmed as final orders. In terms of the provisional orders interested parties are invited to show cause inter alia why the appointment of the proposed curators should not be confirmed. This is how our judicial process works, and I am merely outlining what normally happens, as indicated by the FSB.

The provisions of the Financial Institutions Act do not specify any requirement for the identification of curators. However, though not obliged to accept or take names of possible curators proposed by any party, the court normally allows the FSB to propose names to consider for the appointment when an application for a curatorship is brought before the High Court. Hence the Registrar conventionally identifies and nominates proposed curators for consideration and appointment by the Court. In making application for the appointment of curators, the Registrar attaches the proposed individuals' CV's to the Court papers and the Court has to be satisfied that they are suitable candidates.

The remedy of curatorship is a regulatory tool at the disposal of the Registrar. The appointment of a curator is by the court, and not an outsourcing of a function or service which would require a tender process. This regulatory tool is generally initiated by the Registrar under circumstances which demand urgent regulatory intervention in the interests of investors or the public. As such, curatorship applications are generally brought on an urgent basis. The exigencies of any particular case simply do not allow for a "tender process" and may unduly delay urgent regulatory action.

The Honourable Member should note the right of the Financial Services Board to take action against those financial service operators accused of breaking the law and/or accused of misusing policy-holders' funds and savings. In performing this duty, the law recognizes that financial service regulators have to act as soon as they become aware of such accusations or allegations.

(a) Not applicable.

The purpose of a curatorship order is to freeze all funds involved, and then to investigate the allegations whilst protecting the funds identified to be at risk. So when the FSB acts to secure a curatorship, they are often not aware of all the facts at that stage, and it would be unreasonable to expect otherwise. Neither can one expect a set of general criteria for taking such actions, as the FSB has to also exercise its judgment when it becomes aware of information on a licensed (or unlicensed and illegal) financial service provider. To the extent possible, given the often ad hoc nature of such a process, and given the need for urgent intervention in most such instances, the Registrar takes into account the contents of any inspection report or information that informed the decision to apply for the appointment of a curator. This entails an assessment of the skills and expertise required to address the specific problems applying to an institution, the irregularities and contraventions identified during an initial inspection.

(b) In identifying curators for the consideration of a court, the Registrar generally takes the following considerations into account:

. The task that curators need to undertake in each instance given the peculiar facts uncovered during an inspection;

. The ability and experience of a curator in recovering funds, and the need to limit costs in order to maximise the amount of funds recovered;

. The independence of management and control exercised by a curator; and

. The expertise introduced or capable of introduction into the affected financial institution.

QUESTION NUMBER 312 [NW336E]

DATE OF PUBLICATION: 18 FEBRUARY 2011

Dr D T George (DA) to ask the Minister of Finance:

(1) Whether, with regard to the R175 million agreement between a certain company (name furnished) and the curators of certain pension funds (names furnished) over which the Financial Services Board has oversight, recovered money was (a) received from the company by the curators, (b) received from the curators by the funds and (c) paid to the members of the pension funds by the funds; if so, in each case (i) on what date and (ii) what are the further relevant details; if not, why not in each case;

(2) whether interest will be paid on the outstanding amounts in each case; if not, why not; if so, what are the relevant details? NW336E

Reply:

(1) The Financial Services Board informs me as follows:

(a) Yes, the money was received from the company by the curators.

(b) Yes, the funds received the money from the curators. The distribution and allocation of the total amount to the individual funds was done in accordance with the advice provided by senior counsel to the curator/liquidator. Two funds, the Presto lite and Powerpack Pension Funds did not receive any portion of the settlement amount as they were in law not entitled to share in the amount.

(c) No.

(i) Not applicable.

(ii) The settlement amount represents surplus assets in these funds, ie. assets not underpinning a liability towards any member of the Fund. In order to distribute the amount in any given fund to its stakeholders (including former members as defined in the Pension Funds Act, 1956 "the Act") each fund has to submit a surplus apportionment scheme in accordance with section 158 of the Act. Surplus apportionment schemes and in particular the calculation of the actuarial surplus available for distribution are based on valuation reports submitted as at each fund's surplus apportionment date. For each of the funds concerned, valuation reports were submitted to the Registrar's office during or about November 2010. The valuation reports are currently being considered by the Chief Actuary of the FS8. Surplus apportionment schemes for each of the funds are awaited. The surplus apportionment scheme in respect of the Mitchell Cotts Pension Fund, the first of the funds to be placed under curatorship, has been communicated to stakeholders. The Registrar is constantly monitoring the communication and submission of the surplus schemes for the other funds and was advised by the curator/liquidator that surplus schemes for these funds will be communicated to stakeholders in the near future.

(2) Yes, the monies collected and to be distributed to the stakeholders of the Fund will only become "due" to such stakeholders upon the approval of each of the funds' surplus apportionment schemes by the Registrar in terms of the provisions of section 158(9) of the Act. The Act provides for the payment of "fund return" (defined in the Act) to stakeholders on the monies allocated as at the surplus apportionment date of each fund. Monies recovered are held in interest bearing accounts in the names of each of the respective funds.

QUESTION NUMBER 307 [NW329E]

DATE OF PUBLICATION: 25 FEBRUARY 2011

Mr T D Harris (DA) to ask the Minister of Finance:

Whether a cost benefit analysis has been done to weigh up the potential cost savings to the fiscus associated with proposed changes to the South African Customs Union's revenue-sharing formula against the potential of regional economic stability associated with the loss of revenue for our neighbours; if not, why not; if so, what are the relevant details? NW329E

REPLY

No, the National Treasury has not done a cost benefit analysis to weigh up the potential cost savings to the fiscus associated with proposed changes to the South African Custom Union's revenue-sharing formula against the potential of regional economic stability associated with the loss of revenue for our neighbours. The review is still to be discussed by the SACU Council.

The review of the revenue sharing arrangement of SACU was a joint decision taken by all member States of SACU. The purpose of the review was to examine how the revenue-sharing arrangement could be better aligned with a new set of objectives that cover regional industrialisation, improved coordination of trade policy and the financing of trade facilitation and infrastructure. The review was also intended to examine the funding of economic programmes which would render member States less dependent on customs revenue.

QUESTION NUMBER 270
DATE OF PUBLICATION: 18 FEBRUARY 2011
Mrs DA Schafer (DA) to ask the Minister of Finance:

(1) How many documents have (a)(i) his ministry and (ii) department and (b) any (i) institution or (ii) agency which receives transfers from his departmental budget classified as (aa) top secret, (bb) secret, (cc) confidential and (dd) restricted under the provision of the Minimum Information Security Standards that were adopted by the Cabinet on 4 December 1996 in the (aaa) 2005-06, (bbb) 2006-07, (ccc) 2007-08, (ddd) 2008-09 and (eee) 2009-10 financial years;

(2) What is the (a) name and (b)(i) rank or (ii) employment level of the official who decided on the classification at each specified public body? NW291E

REPLY:

1. These are matters relating to State Security and more detailed response may be provided to the Joint Standing Committee on Intelligence (JSCI).

2. These details requested here are set out in the Minimum Information Security Standard (MISS).

QUESTION NUMBER 261 [NW282E]

DATE OF PUBLICATION: 05 AUGUST 2011

Dr P J Rabie (DA) to ask the Minister of Finance:

 

(1) Whether he will take any steps to assist the 283 municipalities that owe more than R700 million to Eskom; if not, why not; if so, what (a) steps and (b) are the further relevant details;

(2) whether any terms and/or conditions will apply to the assistance provided to these municipalities; if not, why not; if so, what are the relevant details of these terms and/or conditions?

REPLY:

 

(1) It is Eskom's responsibility to put in place adequate credit control and debt collection mechanisms to operate effectively.

Furthermore, it is the responsibility of the accounting officer of the municipality in Section 65 (2) (e) of the Local Government: Municipal Finance Management Act, Act 56 of 2003 (MFMA) to ensure that all monies owed by the municipality be paid within 30 days of receiving the relevant invoice or statement.

The National and Provincial Treasuries have engaged municipalities are in arrears on their accounts based on section 41 of the MFMA and Eskom reports. The relevant municipalities were reminded to comply with section 65(2)(e) of MFMA, encouraged to engage with Eskom, conclude payment arrangements and provide adequately for such payments in their budgets. In the case of financial disputes the municipality must follow the process laid out in section 44 of the MFMA and the detailed guidance offered in Circular 21. In addition, municipalities have been requested to review their operations to ensure a sustainable solution.

As observed from the MFMA section 41 reports by Eskom, amounts owed by municipalities (excluding current accounts) have reduced to R418 million, as at June 2011.

(2) The approach to assisting municipalities is articulated in the above response as it relates to the requirements of the MFMA and the guidance provided in circulars and communication to municipalities.

QUESTION NUMBER 224

DATE OF PUBLICATION: 18 FEBRUARY 2011

Ms B C Blaai (Cope) to ask the Minister of Finance:

 

Whether National Treasury was able to eliminate the backlog in the processing of special pensions at 31 December 2010; if not, why not; if so, what are the relevant details?

NW219E

 

REPLY:

 

The administration had projected and committed on its organisational strategy that the backlog will be completed by end March 2011. As at end of March 2009/10 financial year, the total backlog was 6682 applications which consisted of 2872 appeal cases and 3810 applications that are still waiting for Political verification and research before they can be moved to adjudication.

The total backlog as at end January 2011 consists of 421 applications that are still waiting for Political verification and research before they can be moved to adjudication.

The administration has been experiencing a challenge on the balance of the backlog which is currently awaiting verification as most of the applications are incomplete. Efforts have been made to contact the applicants through telephone calls, written letters requesting outstanding information and Special Pensions officials were also deployed in the field to look for the applicants and outstanding documentation. Management has taken a decision to close all files with outstanding information and remove them from the backlog and classify them as dormant. Should an applicant resurface he/she will have write a letter to the Senior Manager: Special Pensions requesting the re-opening of his/her file. It should be noted that as part of the closing of files process, a final letter will be sent to the last address given by the applicant to notify them that their file is now closed due to failure to respond to numerous correspondence by the administration.

QUESTION FOR ORAL REPLY
QUESTION NUMBER 217 [NW236E]
DATE OF PUBLICATION: Interdepartmental transfer: 3 October 2011
Mr P J Groenewald (FF Plus) to ask the Minister of Finance

(1) Whether an investigation has been launched into the sale of the former Boskop training centre at Boskop, outside Potchefstroom; if so, what investigation has been launched, (b) who undertook or is undertaking this investigation and (c) when (i) was or will the report be completed and (ii) will he publish the findings;

(2) (a) what was the selling price, (b) how many hectares were sold, (c) what fixed properties formed part of the sale package and (d) to whom was the property sold;

(3) (a) what was the highest bid made for the centre and (b) why was this bid not accepted;

(4) whether some of the fixed properties are currently occupied by persons who are refusing to vacate the premises; if so, (a) how many fixed properties, (b) by how many persons, (c) why are they refusing to vacate the premises and (d) what is this costing the State;

(5) whether he will make a statement on the matter? NW236E

REPLY

1. (a) Yes, a forensic investigation was conducted.

(b) The investigation was undertaken by Ernst & Young (Fraud Investigation and Dispute Services) on the instruction of the Land and Agricultural Development Bank of South Africa ("Land Bank").

(c) (i) The final report, dated 1 August 2011, was sent to Land Bank on 8 September 2011.

(ii) The scope of the investigation was limited to internal Land Bank issues and therefore the report is for internal use.

2. (a) According to the Land Bank records, the selling price was R450 000.

(b) According to the Land Bank records, approximately 438,9642 hectares were sold.

(c) In terms of the Memorandum of Agreement between Boskop and Serfontein Trust, dated 13 November 1998, 438,9642 hectares were sold. These excluded the land where the training centre was established, two residential areas, the school building and the dam.

(d) Serfontein Trust.

3. (a) According to the Land Bank records, the highest bid was R1418 000.

(b) According to the Land Bank records, the offer was made by the Institute for the Deaf which paid a deposit of R450 000. However, the Institute failed to raise the balance and according to records, LVK Trust, the appointed liquidators of Boskop, refunded the deposit to the Institute for the Deaf.

4. (a) According to the Land Bank records, there are approximately twenty-seven (27) houses.

(b) The Boskop community residents have informed the Land Bank that there are approximately ninety (90) people.

(c) Boskop was liquidated on 24 August 1999. On 24 March 2003 the fixed properties, which served as the Land Bank's security, were given to the Land Bank by the appointed liquidators. The residents on these properties are former Boskop workers.

The Land Bank wanted to sell the properties but it was unable to do so due to the fact that there were people residing on the premises and no third parties were interested in purchasing.

In 2008 the Department of Rural Development & Land Reform (formerly, the Department of Land Affairs) ("Department") offered to buy the land for the residents.

Land Bank accepted the offer but the deal fell through when the Department indicated that it wanted to buy the whole Boskop farm instead of the residential area only. The Land Bank could not sell the whole Boskop farm since it only owned approximately 10 hectares thereof and the bulk of the farm appears to be owned by Serfontein Trust.

The same challenges were experienced last year when the Department once again offered to buy the properties for the Boskop community residents.

The Land Bank has since decided to donate the property to the residents. The Department is currently assisting the residents with the registration of the Community Property Association ("CPA") to which the property will be donated. The residents are awaiting confirmation of registration of the CPA and have the consent of the Land Bank to reside on the premises.

(d) The Dr Kenneth Kaunda District Municipality transported water to the Boskop residents as an emergency measure between February and June this year at the cost of R9 702.

As a long-term solution, the Municipality decided in May 2011 to install a solar pump costing R56 000 at Boskop to provide the community with water.

5. No.

QUESTION NUMBER 177

DATE OF PUBLICATION: 10 FEBRUARY 2011

Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

Whether the SA Revenue Service has been able to successfully implement measures to shorten queues at their various offices; if not, why not; if so, (a) what measures were implemented and (b) what results were achieved?

NW193E

REPLY:

The South African Revenue Service has successfully introduced an electronic queue management system in our branches which has had a substantial impact on reducing queuing times especially during peak periods. As indicated in the table below, despite a 58% increase in the number of taxpayers visiting branches during the 2010 Tax Season compared to 2009, this was accompanied by a 57% improvement in average queuing times.

 

Details	Average Performance Comparison October and November
	2009-2010	2010-2011
Total taxpayers visited branches	210,392	332,293
Taxpayers attended to within 30 minutes	23 899	216471
% Taxpayers attended to within 30 minutes	11%	53%
Average Queuing Time	01:10:27	34:18

Among additional measures to reduce queuing times especially around the deadlines for submission have been extensive communication campaigns to encourage taxpayers to submit their returns early to avoid the last minute rush.

In this regard, the 2010 Tax Season saw an increase in the number of taxpayers submitting returns earlier during the five month submission period (July to November). It took just seven weeks in Tax Season 2010 to reach 1 million submissions compared to 16 weeks in 2008.

Another indicator of early filing is that we received approximately 750,000 returns within the first month of Tax Season in 2010 compared to approximately 500,000 in 2009 and only 130,000 in 2008.

Further measures to reduce queues at branches include the establishment of additional branches, the deployment of mobile service vehicles, and the deployment of service staff to outreach points including in various shopping malls at which assistance is given by SARS in the completion of tax returns.

QUESTION NUMBER 118

DATE OF PUBLICATION: 10 FEBRUARY 2011

Mrs D A Schafer (DA) to ask the Minister of Finance:

What (a) statutory provisions, (b) regulations, (c) policy instruments and (d) practices govern the (i) classification, (ii) protection against the release or access, (iii) protection for other purposes such as preservation and (iv) release upon request for access of (aa) documented information and (bb) undocumented information held by (aaa) the National Treasury or (bbb) any other entities reporting to him?

NW130E

REPLY:

(aaa)

Department	(a)(b)(c)(d)(i)(ii)(iii)(iv)(aa)(bb)
National Treasury	Annexure A

(bbb)

Entities	(a}(b)( c)( d)(i)(ii)(iii){ iv)(aa) (bb)
Accounting Standard Board	Annexure B
Development Bank of Southern Africa	Annexure C
Financial Intelligence Centre	Annexure D
Financial & Fiscal Commission	Annexure E
Financial Services Board	Annexure F
Government Employees Pension Fund/ Government Pension Administration Agency	Annexure G
Independent Regulatory Board for Auditors	Annexure H
Land and Agricultural Bank of South Africa	Annexure I
Office of Ombud for Financial Service Providers	Annexure J
Office of the Pension Fund Adjudicator	Annexure K
Public Investment Corporation	Annexure L
South African Revenue Service	Annexure M
South African Special Risk Insurance Association	Annexure N

 

QUESTION NUMBER 63

DATE OF PUBLICATION: 10 FEBRUARY 2011

Mr S B Farrow (DA) to ask the Minister of Finance:

(1) (a) When has he been furnished with a certain report (details furnished) from the Gauteng provincial government, (b) what action was requested by the provincial government in this regard and (c) what action has been taken to date;

(2) whether a referral for investigation and prosecution has been made to investigative and law enforcement agencies in this matter; if not, why not;

(3) what (a) progress can be reported in this regard and (b) future action will be taken in this regard?

NW73E

REPLY:

(1) (a) The Minister of Finance has not been furnished with the Resolve Group report from the Gauteng provincial government

(b) and (c) not applicable (see answer to (1) (a)

(2) Refer to (1) (a)

(3) Refer to (1) (a)

QUESTION NUMBER 19

DATE OF PUBLICATION: 10 FEBRUARY 2010

Dr D T George (DA) to ask the Minister of Finance:

(1) Whether expected revenue from royalty payments in terms of the Mineral and Petroleum Resources Royalty Act, Act 28 of 2008, has been included in the estimates that are set out in the revised fiscal framework; if so, (a) how much revenue from royalty payments (i)(aa) has been collected and (bb) should have been collected during the period 1 April 2010 up to the latest specified date for which information is available and (ii) is expected in the current financial year and (b) how was the royalty revenue estimate calculated; if not, why not;

(2) whether royalty income will be included in future revenue estimates; if not, why not; if so, what are the relevant details;

(3) whether expected revenue from royalty payments over the next five financial years has been projected; if not, why not; if so, what are the relevant details?

NW28E

REPLY

 

(1) Yes, we publish the expected revenue estimates from both tax and non-tax sources in the annual Budget Review. The expected revenue for mineral and petroleum royalty revenues for 2010/11 can thus be found in Table 5.3 on page 75 of the 2010 Budget Review. In accordance with the international classification of revenues, revenue from mineral and petroleum royalties are regarded as non-tax revenues, as they are a resource rent and not a tax. With regard to the question on the amount of revenue collected, accurate figures can only be made available upon provision of audited statements within six months after the financial year has ended. This tax has only commenced implementation on 1 April 2010, and the amounts that I will provide are unaudited as the financial year has not ended yet. (a) According to SARS, the estimated collections for the current fiscal year as at the end of December 2010 were R3,399 million. (1)(aa) The information for the amount collected at the end of January 2011 will only be available within 30 days of the end of the relevant month, in line with section 32 of the PFMA.

The Member is invited to visit the treasury website at the end of the each month to obtain this public information. I am aware that this amount is currently captured in the line item "Rent on land" under Departmental Revenue (Schedule 1 of the Section 32 report). However, the department will henceforth show the mineral and petroleum royalty collections separately. I want to thank the Honourable Member for this question, as it has alerted the department to the need for making this amendment in its current format, in the interests of full transparency. (bb) As indicated above, page 75 of the 2010 Budget Review indicates that the amount expected during the current year is R3 540 million. We have not updated the projections, but it is highly likely that petroleum royalty revenues for the fiscal year 2010/11 will exceed the estimate as at the time of the 2010 Budget. (b) The royalty revenue forecast is based on estimated mineral sales and macroeconomic projections as published in the 2010 Budget Review.

(2) Mineral and petroleum royalties are already included in the revenue estimates. See Table 5.3, page 75 of the 2010 Budget Review. It is not clear why the Honourable Member is concerned that this might not be the case.

(3) No, South Africa works on a Medium Term Expenditure Framework of three years, and so we publish figures for three years and not five years. Refer to the 2010 Budget Review, Table 5.3, page 75.