Questions & Replies: Finance

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2012-12-31

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Reply received: December 2012

QUESTION NUMBER: 3433 [NW4353E]
DATE OF PUBLICATION: 23 NOVEMBER 2012

3433. Adv A de W Alberts (FF Plus) to ask the Minister Finance

Why did the Public Investment Corporation (PIC), together with the State, as shareholders in Telkom, recently vote against the reappointment of four nonexecutive directors on Telkom's board of directors?

NW4353E
REPLY:

The PIC is a shareholder in Telkom. It voted independently on the basis of the mandate it represents. It supported those Board members with the requisite skills given the challenges that Telkom is faced with at the moment.

Reply received: December 2012

QUESTION NUMBER: 3429 [NW4348E]
DATE OF PUBLICATION: 23 NOVEMBER 2012

3429. Dr S M van Dyk (DA) to ask the Minister of Finance:

Whether (a) the National Treasury and/or (b) any entity reporting to it sponsored any (i) event and (ii) promotion hosted by The New Age newspaper since its establishment; if so, in each case, (aa) what was the nature of the event or promotion, (bb) on which date was it held, (cc) what amount was paid, (dd) for what purpose, (ee) from which budget were the funds derived, (ff) what were the expected benefits to the National Treasury and (gg) what actual benefits were derived from the sponsorship?
NW438E

REPLY:

The National Treasury and entities reporting to it did not sponsor any event and promotions hosted by The New Age newspaper.

Reply received: December 2012

QUESTION NUMBER: 3373 [NW4275E]
DATE OF PUBLICATION: 23 NOVEMBER 2012

3373. Mr M W Rabotapi (DA) to ask the Minister of Finance:

(1) (a) How many copies of each annual report that was produced by (i) the National Treasury and (ii) the entities reporting to him were commissioned for print in the 201 1-12 financial year, (b) how many copies were actually printed and (c) what were the (i) total and (ii) individual costs of printing these reports;

(2) (a) who printed each specified report, (b) how was the specified printing services provider decided upon and (c) on what date did the specified printing services provider deliver the report to the specified entity;

(3) whether any of the specified reports that had been printed were found to be unsatisfactory; if not, what is the position in this regard; if so, in each case, (a) which reports, (b) for which entity, (c) by which printing services provider, (d) what action was taken and (e) what were the costs?
NW4275E

See attachment: PQ 3373 Consolidate Reply

Reply received: December 2012

QUESTION NUMBER: 3320 [NW4212E]
DATE OF PUBLICATION: 23 NOVEMBER 2012

3320. Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

(1) Whether the National Treasury intervenes in order to stop corruption and negligence in the supply chain management (SCM) of departments at the point when a service provider servicing a contract or tender in a department (a) is the subject of a tender investigation, (b) is the subject of alleged tender irregularity, (c) is delivering work that is below standard and (d) is already appearing in court for contractual and tax fraud within the same department before it is issued with another contract in accordance with section 36 of the SCM policy as set out in the Public Finance Management Act, Act 1 of 1999 (PFMA); if not, in each case, why not; if so, in each case, (i) which principles are generally applied and (ii) are the further relevant details;

(2) whether he has found that such measures (a) have proven to be a deterrent and (b) are an indication of the Government's determination to fight crime and corruption in departments; if not, what is the position in this regard; if so, what are the relevant details?
NW4212E

REPLY:

(1)(a), (b) and (c) In terms of the provisions of the PFMA, accounting officers/authorities are required to, on discovery of any unauthorised, irregular or fruitless and wasteful expenditure, report in writing to the relevant treasury the particulars of such expenditure.

The reports that are received by the National Treasury are scrutinised, where special attention is paid to the steps taken by accounting officers/authorities in exercising their obligations to investigate and to institute appropriate sanctions against transgressing officials. Where necessary, and subject to the availability of capacity within the National Treasury, interventions are made to ensure that the appropriate corrective measures are taken.

In an attempt to augment the investigative capacity within government, a Multi-Agency Working Group was established to coordinate and investigate supply chain management-related corruption.

A Specialised Audit Services Unit has also been established in the National Treasury to assist with investigations.

In addition, the National Treasury is in the process of finalising the appointment of a Chief Procurement Officer (CPO). The focus areas of the CPO will include the introduction of further measures to combat supply chain management-related fraud and corruption and to ensure better value for money.

(d) It is inappropriate to intervene in instances where court cases are not yet finalised. However, the Department of Justice and Constitution Development has been approached to sensitize public prosecutors to the provisions of Section 28 of the Prevention and Combating of Corrupt Activities Act, Act No 12 of 2004. This section provides for the endorsement of particulars of persons who have been convicted in a court of law for having been involved in corrupt activities pertaining to tenders and contracts, which will result in them being restricted from doing business with the public sector.

(2)(a) and (b) The measures as outlined above have certainly contributed to act as a deterrent and to demonstrate government's resolve to fight fraud and corruption. Government is committed to continue to enhance statutory and other measures to strengthen the combating of fraud and corruption.

Reply received: December 2012

QUESTION NUMBER: 3252 (NW4141E)
DATE OF PUBLICATION: 16 NOVEMBER 2012

3252. Ms M R Shinn (DA) to ask the Minister of Finance:

(1) Whether (a) the National Treasury or (b) any entity reporting to him, placed any advertisements in The New Age since the inception of the newspaper up until the most recent date for which information is available; if not, in each case, what is the position in this regard; if so, (i) which entity placed the advertisements, (ii) on what date was each advertisement placed, (iii) what was the nature of each advertisement and (iv) what amount was spent on each advertisement;

(2) whether any of these advertisements were placed through the Government Communication and Information System (GCIS); if not, what is the position in this regard; if so, what are the relevant details of the advertisements placed through the GCIS;

(3) whether an independent analysis was conducted by the National Treasury prior to placing advertisements to ascertain whether The New Age is read by the intended target market; if not, why not; if so, (a) who conducted the analysis and (b) what were the main (i) findings and (ii) recommendations of said analysis;

(4) whether any independent studies of said advertisements were conducted to ascertain whether they were effective within the relevant target market; if not, why not; if so, (a) who conducted the analysis and (b) what were the main (i) findings and (ii) recommendations of said analysis?
NW4141E

See attachment: Consolidated Reply PQ 3252

Reply received: December 2012

QUESTION NUMBER: 3230 [NW4118E]
DATE OF PUBLICATION: 16 NOVEMBER 2012

Mr D C Ross (DA) to ask the Minister of Finance:

(1) Whether he will publish the detailed funding models for the implementation of the 18 strategic infrastructure projects (SIPs) of the Presidential Infrastructure Co-ordinating Commission as referred to in his speech on the Medium-Term Budget Policy Statement (MTBPS); if not, why not; is so, (a) when and (b) what are the further relevant details

(2) what measures does he intend to put in place to mobilise the private sector capacity with regard to the infrastructure build programme?
NW4118E

REPLY:

1) Yes, details of the financing of the strategic infrastructure projects coordinated by the PICC will be published. As indicated in the Medium Term Budget Policy Statement of 2012, these are large and long-term multi-project initiatives. For component projects that are already underway or ready for implementation, the funding required is provided for in departmental budgets, provincial and municipal spending plans, and the plans of state-owned companies. The 18 SIPs also include concept proposals for component projects that have still to be developed into implementation plans. The financing requirements of the SIPs will therefore be published in phases, as part of the budget documentation and in the plans and programmes of responsible departments, municipalities and entities. These include:

  • Transnet, in respect of freight rail, national pipelines and ports;
  • Eskom's investment in electricity generation, the national transmission system, and investment in distribution to customers (together with municipalities);
  • Provincial departments' spending on the provision of schools and hospitals; and
  • Municipal investment in local roads, water distribution to residential customers and electricity distribution in metropolitan areas.
  • The National Treasury is also involved in the following:
  • Enhancing the role that the Development Bank of South Africa plays with respect to municipalities and other public entities that require assistance with access to finance;
  • Providing guarantees, where appropriate and strictly necessary, to public entities that require such support in order to boost their capacity to raise debt for the funding of infrastructure investment.

(1) The role of the private sector in infrastructure delivery was the subject of an agreement signed at an Investors' Conference hosted by the PICC on October 19th 2012. This agreement recognizes that the private sector plays a key role in several phases of the infrastructure process. For example:

Design, management and construction of infrastructure facilities, on behalf of client departments, municipalities and state enterprises.

Provision of debt finance to government entities, which enables them to invest in infrastructure to be paid for through future charges and tariffs.

Technical expertise and services to assist with project planning, development, commissioning, monitoring of construction progress, verifying plant performance, undertaking maintenance and operational functions;

Conducting pre-feasibility or feasibility studies;

Public-private partnerships or concessions which allow private sector players to take responsibility for delivering and managing an infrastructure facility and associated services over the long term.

The specific measures required to mobilise private sector capacity vary considerably from project to project. By way of illustration: in the renewable energy sector, following an extensive programme of consultation and technical project development and a competitive tender process, independent power producers are now contracted to invest in renewable energy plants, and will supply electricity to the national grid on terms agreed with Eskom and overseen by the Department of Energy. Investment by the private sector in co-generation and the emerging gas supply industry will also contribute to this sector, on terms that are appropriate to these activities.

Reply received: December 2012

QUESTION NUMBER: 3193 [NW3967E]
DATE OF PUBLICATION: 16 NOVEMBER 2012

3193. Mr L S Ngonyama (Cope) to ask the Minister of Finance:

Whether the National Treasury makes a continuous assessment of the national debt service costs on a three-months basis to determine whether the national debt burden is (a) easing progressively, (b)(i) at or (ii) close to where it has been for the past five years or (c) is rising in the form of a new quarter-on-quarter trend; if not, why not; if so, (i) what are the outcomes of these continuous assessments as at 30 September 2012 and (ii)(aa) how can the new developments be interpreted?

NW3967E

REPLY:

(a) and (b) Debt-service cost is influenced by the stock of debt, new borrowings (budget balances) and market variables such as interest, inflation and exchange rates.

Debt-service cost is monitored monthly against the budget and reported as required in terms of Section 40 of the Public Finance Management Act. Monthly statements on debt and debt-service cost are published on the National Treasury's website. As at 30 September 2012, actual debt-service cost amounted to R43.5 billion in line with the projections. The debt-service cost is expected to reach R88.8 billion in 2012/13.

Reply received: December 2012

QUESTION NUMBER: 3191 [NW3965E]
DATE OF PUBLICATION: 16 NOVEMBER 2012

3191. Mr L S Ngonyama (Cope) to ask the Minister of Finance:

(1) Whether he intends to categorise consumption side expenditure by each government department separately in the 2013 Estimates of National Expenditure in order to (a) indicate how the budget for this segment has been evolving over the years, (b) set out how it stands in relation to the gross domestic product, (c) assess its sustainability and (d) increase transparency; if not, what other measures are at his disposal to allow the executive to reign in consumption side expenditure; if so, what are the relevant details in each case;

(2) whether he will make a statement on the matter?
NW3965E

REPLY:

The terms current expenditure and consumption expenditure refer to different concepts. General government final consumption expenditure consists of compensation of employees, non-wage goods and services and consumption of capital; less fees and charges. It is a national accounts term (defined in the System of National Accounts) and is calculated using the accrual accounting methodology.

On the other hand, current expenditure includes compensation of employees, goods and services, interest payments, and rent on land. This definition is in line with the Government Finance Statistics Manual, 2001 and is calculated using the cash accounting methodology. Government departmental accounts are managed upon the cash basis of accounting and as such, current expenditure is shown in National Treasury's budget documentation. The questions will, therefore, be answered in reference to current expenditure data. According to the Economic Reporting Format (used for the budget documentation), current expenditure excludes transfers and subsidies. This is because transfers and subsidies – as currently classified – include both current and capital spending.

a. The Estimates of National Expenditure publications contain information on current expenditure for each national department vote and for all the programmes within a vote. This information is shown for a seven year period (three history years, the current year and three future years) such that spending trends can be observed over time. The Budget Review publication also contains aggregated information on current payments.

b. The Budget Review publication contains information for the actual and projected Gross Domestic Product, such that its relation to any elements of current expenditure as shown in the same publication and/or in the Estimates of National Expenditure publications can be easily calculated as and when required. Information is also published in relation to other categories of expenditure such as capital in the Budget Review publication and in the Estimates of National Expenditure publications. Equally this information on capital, and for other expenditure categories, can be compared to the Gross Domestic Product information and/or the current expenditure information.

c. The write-up on expenditure trends in the Estimates of National Expenditure publications provide the departmental spending focus in relation to departmental objectives and performance targets. Significant trends various categories of expenditure are explained together with the policies and factors that inform the trends.

d. The Estimates of National Expenditure publications, both the abridged version and the e-publications per vote, published on the internet, provide extensive information by vote and programme on current payments. Current payments are shown by detailed Standard Chart of Account items. In the 2013 publication, it is envisaged that transparency will be further enhanced when information on current payments as well as on other economic classification items will also be shown for selected departmental subprogrammes.

2. A separate statement, in addition to all the information contained in Budget documentation, will not be made in this regard.

Reply received: December 2012

QUESTION NUMBER: 3188 [NW4028E]
DATE OF PUBLICATION: 9 NOVEMBER 2012

3188. Mr M G P Lekota (Cope) to ask the Minister of Finance:

Whether the National Treasury had established an ad hoc financial and legal control centre to regulate and authorise hotel, travel and consultancy expenses following on the national intervention in Limpopo; if not, why not; if so, (a) what amount was authorised for use on (i) travel and (ii) hotel expenses, (b) for how many officials, (c) for what period of time and (d) what amount was approved to hire consultants? NW4028E

REPLY:

National Treasury utilises existing staff to monitor and authorize the expenses.
(a) (i) (ii) Ending 30 September 2012, National Treasury spent R1.163 797 million for the hotel, travel and subsistence allowance for officials assigned for the intervention. Each department involved in the intervention is responsible for the officials they deploy for the intervention and the costs thereof.
(b) From December 2011, seven (7) officials were working on the intervention.
 The Administrator - oversee the overall implementation of intervention
 Secretariat – coordination and reporting
 Budget Analyst – budgeting for provincial treasury,
 Chief Director seconded from KZN provincial treasury – to deal with cash management;

 Senior Manager – for Programme 1,
 Senior Manager – Accountant General's responsibilities
 Senior Economist – Forensic Investigations.
Only three (3) National Treasury officials remain in the province as a result of the intervention, the Administrator, the secretariat and the budget analyst responsible for Limpopo Province finances.
(c) Four (4) officials exited the intervention did so at different times, depending on the responsibilities and progress made on the tasks they responsible for.
 Programme 1 - Senior Manager exit date: 14 March 2012
 Seconded Chief Director - Cash Management exit date: 11 September 2012
 Accountant General responsibilities - Senior Manager exit date: 29 June 2012, currently with National Department of Public Works
 Forensic Investigation - Senior Economist exit date: 31 May 2012
(d) R11 million was approved and spent on consultants as follows:

 Specialists from an accounting firm were placed across all five (5) departments under section 100 to provide:

 BAS clean-up

 IFMS, Contract Verification and Supply Chain Management

 Accruals and Payment of Suppliers

 Cash Flow management
 Several specialists were appointed to handle Programme 1 functions for the Provincial Treasury after the withdrawal of the deployed Treasury official.


Reply received: November 2012

QUESTION NUMBER: PQ3134 [NW 3971E]
DATE OF PUBLICATION: 09 NOVEMBER 2012
Mrs J D Kilian (Cope) to ask the Minister of Finance:

Whether Sars intends investigating allegations of tax fraud contained in the charge sheet of a certain case (details furnished); if not, why not; if so, what are the relevant details pertaining to the investigation?

NW3971E
REPLY:
Due to the secrecy provisions contained in the Tax Administration Act, 2011, SARS is prohibited from disclosing any taxpayer information to any person other than a SARS official. SARS is, therefore, unfortunately not in a position to respond to the above request.

Reply received: December 2012

QUESTION NUMBER: 3126 [NW3952E]
DATE OF PUBLICATION: 9 NOVEMBER 2012

3126. Mr L S Ngonyama (Cope) to ask the Minister of Finance:

Whether, in light of Zimbabwe's inadequate fiscal governance, the Government has made a final decision on Zimbabwe's request for a loan of R100 million; if not, what is the position in this regard; if so, what are the relevant details?
NW3952E

REPLY

There has been no final decision made regarding a loan request from Zimbabwe. In my meeting with Zimbabwe's Minister of Finance, in Pretoria on 21 September 2012, we discussed a number of possible forms of assistance that South Africa would explore, including a credit line, budget support, development finance from the DBSA, and other areas of technical support and cooperation. The National Treasury is currently undertaking the necessary consultations and review on the various forms of assistance to Zimbabwe. The process is ongoing.

Reply received: December 2012

QUESTION NUMBER: 3101 [NW3930E]
DATE OF PUBLICATION: 2 NOVEMBER 2012

3101. Ms M R Shinn (DA) to ask the Minister of Finance:

(1) Whether the National Treasury is currently subscribed to The New Age (TNA) newspaper; if so, (a) how many subscriptions does the National Treasury have, (b) when was each subscription initiated, (c) what has been the annual subscription fee for each specified subscription since it was initiated and (d) what is the exact purpose of each subscription;

(2) whether a discount was negotiated for any of the specified subscriptions; if so, (a) for which specified subscriptions and (b) what discount in each case;

(3) whether the National Treasury has mass-purchased the TNA on an ad hoc basis since the inception of the newspaper; if so, (a) on what dates, (b) how many copies in each case and (c) why were the papers purchased in each case;

(4) whether (a) the publishers of the TNA and (b) any other entity donated copies of the paper to (i) National Treasury and (ii) any entity reporting to him; if so, in each case, (aa) which entity donated the papers, (bb) to which entity were they donated and (cc) how many copies were donated?
NW3930E

REPLY:

Pre-amble: National Treasury procures all national newspapers.

(1) Yes, NT receives copies of the New Age newspaper.
(a) Six copies.
(b) In December 2010.
(c) National Treasury (NT) does not pay annual subscription fees; NT pays R3.50 per unit delivered.
(d) Research and news monitoring.

(2) (a & b) No, NT procured the supply and delivery of newspapers through a bid process.
(3) No.
(4) (a & b) (i) No.

Reply received: December 2012

QUESTION NUMBER: 3045 [NW3864E]
DATE OF PUBLICATION: 02 NOVEMBER 2012

*3045 Mr M G P Lekota (Cope) to ask the Minister of Finance:

Whether the Government's current or consumption expenditure during the period 1 October 2009 to 1 October 2012 (a) was held to any predetermined baseline, (b) grew at the same rate as the official annual rate of inflation, (c) has reflected a constant percentage of gross domestic product (GDP) (details furnished), (d) maintained the historical percentage split with capital expenditure (details furnished) and (e) was sustainable at the projected rate; if not, why not, in each case; if so, what are the relevant details in each case?
NW3864E

REPLY:

Definition

The Honourable member appears to have assumed that the terms current and consumption expenditure can be used interchangeably. However, they refer to different concepts:

Consumption expenditure: only consists of compensation of employees and goods and services. It is a national accounts term (System of National Accounts) and is calculated using accrual data. The series for consumption expenditure can be found in the South African Reserve Bank Quarterly Bulletin.

Current expenditure: includes compensation of employees, goods and services, interest payments, and rent on land. This definition is in line with a definition provided in the Government Finance Statistics and is calculated using cash data – used in National Treasury's budget documentation. The questions will, therefore, be answered using current expenditure data.

According to the Economic Reporting Format (used for the budget documentation), current expenditure excludes transfers and subsidies. This is because transfer and subsidies-as currently classified-include transfers and subsidies as part of current expenditure

(a) The indicative baseline that government holds expenditure to is provided in the Budget Review each February. Government current expenditure has been broadly in line with the budget projections given in the MTBPS and the Budget and is often lower than budgeted estimates as a per cent of GDP and in nominal rand terms.

Consolidated government

Current expenditure (R million)

2009/10

2010/11

2011/12

2012/13

MTBPS 2009

489 944

539 495

592 867

627 904

per cent of GDP

20.4

20.6

20.7

20.3

MTBPS 2010

529 067

580 993

629 140

per cent of GDP

19.7

19.8

19.5

MTBPS 2011

591 538

640 612

per cent of GDP

19.9

19.4

MTBPS 2012

645 043

per cent of GDP

19.7

Audited outcome

466 804

517 928

582 406

per cent of GDP

19. 13

18. 82

19. 3


Government has managed to contain the growth in current expenditure, especially when compared to the budgeted estimate. For example, current expenditure for 2011/12 was projected to increase to 20.7 per cent of GDP in the 2009 MTBPS, but the actual outcome was only 19.3 per cent of GDP.

(b) Current expenditure has risen faster than CPI inflation. Since 2008/09, real current expenditure has been rising by an average of 6.0 per cent per year. This is because of above inflation cost of living adjustments, a larger public-sector workforce, the introduction of the Occupational Specific Dispensation as well as increases in health and education related goods and services.

Consolidated government

2007/08

2008/09

2009/10

2010/11

2011/12

Real current expenditure ( y/y growth)

3.5

6.2

7.0

6.9

6.5

Nominal current expenditure (y/y growth)

10.7

16.7

13.9

11.0

12.4

Inflation rate

6.9

9.9

6.4

3.8

5.6


(c) Current expenditure has been rising as a per cent of GDP from 16.9 per cent in 2007/08 to 19.3 per cent in 2011/12. The economic downturn has reduced the nominal GDP growth rate, while growth government current expenditure remained stable. This resulted in higher current expenditure as a share of GDP.

Consolidated government

2007/08

2008/09

2009/10

2010/11

2011/12

Current expenditure as a per cent of GDP

16.9

17.8

19.1

18.8

19.3


(d) The share of capital to total expenditure has been rising steadily since 2008/09, while the share of current expenditure has remained stable. Government has started the process of shifting resources from current expenditure to more productive investment.
Last year's MTBPS emphasised the need to shift the composition of spending in favour of the creation of social and economic assets. This process has begun. Over the MTEF period, real growth in compensation of employees will average 1.3 per cent, while capital payments will grow at 4.3 per cent.

Consolidated government

Per cent of total expenditure

2002/03

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

2010/11

2011/12

Current expenditure

66.4

64.9

63.2

63.1

61.2

59.4

57.8

56.7

59.2

60.4

Capital expenditure

5.2

5.1

5.2

5.9

5.5

5.6

7.0

6.9

6.2

6.9

Other expenditure

28.4

30.0

31.6

31.0

33.3

35.0

35.2

36.4

34.6

32.7


(e) Expenditure growth must balance the need to sustain the current level of social commitments with support for improved competitiveness, investment and maintenance of productive infrastructure. The spending plans outlined in the 2012 Budget targeted these objectives and allocated sufficient resources to achieve them. By reducing waste and inefficiency, government can achieve better outcomes within this resource envelope.

Accordingly, government has decided that there will be no upward adjustment of the overall spending projection set out in the 2012 Budget during the first two years of the MTEF period. This marks a necessary shift from the pattern of additional spending allocations that had come to be taken for granted over the past decade. Through savings and reprioritisation, government has also ensured that despite the larger-than-budgeted public-sector wage agreement, the overall spending envelope for the current year has not increased. The outer year of the fiscal framework makes provision for moderate growth of non-interest expenditure, consistent with the objective of stabilising debt.

South Africa's fiscal policy framework is based on the principles of counter cyclicality, debt sustainability and intergenerational equity. The stabilisation in the growth of spending achieved over the last three years will continue over the medium term as fiscal space is rebuilt. Real growth in goods and services, as well as compensation of employees is anticipated to average 1.3 per cent per fiscal year over the MTEF period – much lower than between 2008/09 and 2011/12. The moderation of the real growth in current expenditure is given further impetus following a three-year wage agreement reached this year between government and public-sector unions. This will enable government to be able to reprioritise spending from current to capital.

Reply received: December 2012

QUESTION NUMBER: 3019 [NW3786E]
DATE OF PUBLICATION: 26 OCTOBER 2012

3019. Dr D T George (DA) to ask the Minister of Finance:

Whether the accounting officer submitted the annual financial statements for the financial year ending 31 March 2012 to him by 31 August 2012; if not, (a) why not and (b) on what date (i) were the statements submitted to him and (ii) did he submit the annual report and financial statements to Parliament?
NW3786E

REPLY:

The Accounting Officer submitted the annual financial statements for the financial year ending 31 March 2012 to the Minister of Finance before 31 August 2012.

a) N/A.

b) 25 August 2012.
i) Yes.
ii) Yes.

Reply received: December 2012

QUESTION NUMBER: 2907 [NW3585E]
DATE OF PUBLICATION: 19 OCTOBER 2012

2907. Mr M G P Lekota (Cope) to ask the Minister of Finance:

Whether the National Treasury had, in the budget preparation process, approved of work involving expenditure on the President, Mr J G Zuma's Nkandla homestead; if not, where was the money sourced from to undertake the Nkandla project; if so, (a) what amount was approved for the project, (b) over what period, (c) for what specific purposes, (d) why was it not included in the Estimates of National Expenditure for 2012 and (e) why was the approval of the National Assembly not obtained about the intended expenditure?
NW3585E

REPLY:

The Department of Public Works used an existing baseline for the expenditure on the project and would therefore not have been required to submit a specific budget bid for the project. Details of the expenditure on the project concerned are available from the Department of Public Works. In addition, the Minister of Public Works has also announced various investigations into the project concerned. The overall budget, which is approved by Cabinet based on the recommendations of the Ministers Committee on the Budget (MinComBud), is tabled in parliament by the Minister of Finance. After the tabling of individual votes by respective Ministers, the budget is then approved by parliament.

Reply received: November 2012

QUESTION NUMBER: 2806 [NW3459E]
DATE OF PUBLICATION: 12 OCTOBER 2012
2806. Mr T D Harris (DA) to ask the Minister of Finance:

(1) What were the reasons for the delay of more than three months for National Treasury to pay Sanyati Holdings Ltd the monies owed to it by the Free State Provincial Department of Police, Roads and Transport;

(2) whether, to date, Sanyati Holdings Ltd has been paid all monies owed to it by the Free State Provincial Department of Police, Roads and Transport for services rendered; if not, (a) how much has been paid, (b) what is the shortfall and (c) what are the reasons for the short payment; if so, what are the relevant details;

(3) whether any disciplinary action has been taken against officials of the Free State Provincial Department of Police, Roads and Transport responsible for signing (a) illegal contracts and (b) loan agreements with Sanyati Holdings Ltd; if not, why not; if so, what are the relevant details?

NW3459E

REPLY:

1. All funds necessary to pay SANYATI have been made available to the provincial department by the Provincial Treasury in line with the approved budget of the department. The departmental officials (the Head of Department and the Chief Financial Officer) are directly responsible for making the actual payment. As already outlined in previous responses and media statements, the contractual arrangements made between the relevant provincial officials and some contractors were irregular and were entered into without sufficient funds in the provincial budget. The actions taken by the National Treasury and the decision by Cabinet to implement section 100 (1) (a) of the Constitution were based on this primary fact. However, the process of addressing this unfunded and irregular obligation was complicated by the fact that construction had already begun. Therefore and subsequent to national government's decision to address persistent non-compliance and intervene in the province, the parties (government on the one hand and the contractors on the other) had to do substantial work to find an amicable solution for a settlement agreement that had to take into account the need to avoid a systemic budget crisis for government, ensure that there was compensation for work done, and resolve a matter of legal violation. In this context, the fact that SANYATI indicated an amount some months ago that the company felt needed to be paid does not imply that the only obligation on government was to simply comply. The determination of fair value also required a detailed and objective assessment, and for this purpose the South African National Roads Agency Limited (SANRAL) and the Development Bank of South Africa (DBSA) were called to assist. The process has eventually translated into the settlement agreement that the liquidators of SANYATI have described as fair and reasonable. In its entirety, this matter illustrates the importance of ensuring that public financial management legislation and principles are adhered to, as failure to do so has serious and unavoidable consequences for industry and service delivery.

(2) In terms of the mutual agreement between the liquidators representing SANYATI Holdings and the provincial Department of Police, Roads and Transport, the amount agreed upon was in respect of compensating the contractor for value added to a government asset. Both parties have agreed on an amount of R25 million which then concludes any further contractual obligations between them. Although the provincial department has been instructed to make payment as a matter of urgency, and an assurance has been given that this will be done before 26 October 2012, all accountability mechanisms in Cabinet, Parliament and Provincial Legislature must vigorously examine the department's behaviour in this respect.

(3) Disciplinary action has been taken which has so far resulted in officials being suspended and dismissed from their positions. The specific regulations governing disciplinary action are applied in terms of the Public Service Act, and must be implemented by the accounting officer of the department as well as the executive authority (that is, the MEC for Transport in the province) who can provide the specific details of the charges directed against these officials and other details of the officials involved.

Reply received: November 2012

QUESTION NUMBER: 2773 [NW3422E]
DATE OF PUBLICATION: 12OCTOBER 2012
2773. Mr D C Ross (DA) to ask the Minister of Finance:

How did the Government Pensions Administration Agency (GPAA) (a) manage to accumulate R600 million in unpaid ex-employee benefits as of May 2012 and (b) advertise the call for applications for unpaid benefits by ex-government officials?

NW3422E

GPAA response

a) How GPAA managed to accumulate R600 million in unpaid ex-employee benefits as of May 2012.

Unclaimed benefits refer to benefits where the mode of exit and the last day of service are known but the benefit is not paid within 24 months of the last day of service in line with the rules of the Fund.

The main contributing factors are listed below:

i) Exit statements not submitted or submitted with errors.

49% (R301 million) of the total unclaimed benefits relates to cases where employer departments are unable to trace former employees after exit and, as a result, are unable to submit statements with complete and accurate information to enable payment of benefits. The largest number of cases relate to death cases where members have died without submitting a nomination form of eligible beneficiaries to the employer. This results in a long and complex process of tracing beneficiaries.

ii) Amendment to section 26 regarding the payment of interest on late payment of benefits.
Section 26 of the Government Employee Pension Law, Proclamation 21 of 1996 (GEP) Law) which deals with the payment of interest was amended on 11 November 2004.The amended section defines the exit date as the last day of service at the employer of that member or pensioner or the death of that pensioner. Previously, the exit date was defined as the date on which the Fund receives a duly completed statement in the prescribed form. Thus, the amended section does away with the concept of duly completed statements.

Consequently, interest is payable within sixty days of the exit date whether or not the necessary duly completed statements have been received from the employer.
This amendment resulted in approximately 47% (R290 million) interest being payable to members, most of whom it is difficult to trace.

iii) Other
The remaining balance of unclaimed benefits which accounts for 4% relates to benefits not being paid due to:

· Inability to obtain tax directives from SARS as the beneficiaries' tax affairs are not in order.

· Benefits returned to GEPF due to incorrect banking details, frozen or dormant accounts, incorrect pay points, etc.

b) How GPAA has raised awareness relating to unclaimed benefits

· Over the past two years, GPAA has embarked on road shows in all the provinces and established mobile offices in order to raise awareness about clients' benefits and services to stakeholders.

· The tracing unit at GPAA has been enhanced with effect from 23 July 2012 and is currently capacitated with seventeen competent officials. This has resulted in the reduction of unclaimed benefits by 4% to R580m at the end of September 2012.

In order to reach the deep rural areas, external service providers who will apply non-conventional measures of tracing beneficiaries through, for example, engaging traditional leaders, village chiefs, etc. will be engaged before the end of the current financial year.

Reply received: October 2012

QUESTION NUMBER: 2694 [NW3312E]
DATE OF PUBLICATION: 21 SEPTEMBER 2012

2694. The Leader of the Opposition (DA) to ask the Minister of Finance:

Whether the National Treasury has awarded any contracts to a certain company (Kopano Ke Matla Investment) since its establishment in 1996; if so, in each case, (a) when was the contract awarded and (b) what was the (i) nature of the contract and (ii) total accumulative value of the tender?

NW3312E
REPLY:

No

(a) & (b) Not applicable

Reply received: October 2012

QUESTION NUMBER: 2622 [NW3234E]
DATE OF PUBLICATION: 21 SEPTEMBER 2012
2622. Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

Whether the National Treasury has calculated the effects of the Lonmin strike and other mining strikes on the overall gross domestic product for the current financial year; if not, why not; if so, what are the relevant details?

NW3234E
REPLY:

Yes, the National Treasury has calculated the economic cost of the mining sector stoppages on the South African economy.

· Total rand value of production lost in gold and platinum was R10.1billion (bn); Coal R180million.

· Little indication to what extent these losses will be recouped during the rest of the year.

· GDP growth would have been 3% instead of the 2.5% we are currently forecasting.

· Export revenues projected to be about R12.5bn lower in 2012. Note that export losses exceed direct losses as mining has strong linkages with other sectors of the economy, which are also negatively affected

· Amongst the sectors most affected are: Fabricated Metal Products, Machinery and Equipment, Rubber and Basic Iron and Steel

· Intensification and protraction of mining activities can lead to large negative impacts on growth and employment.

Reply received: October 2012

QUESTION NUMBER 2608 [NW3217E]
DATE OF PUBLICATION: 21 SEPTEMBER 2012
Adv A de W Alberts (FF Plus) to ask the Minister of Finance:


(1) Whether, with reference to his reply to question 133 on 24 August 2011, he knows that (a) the rules of Transnet's Second Defined Benefit Fund (TSDBF) have still not been amended, (b) Transnet is refusing to make the funds available, (c) Transnet is compelling the TSDBF to make the R1,9 billion available from the pension fund's surplus and (d) the surplus is insufficient to execute the parliamentary instruction; if not, what is the position in this regard; if so,

(2) whether he intends taking any steps against Transnet so as to (a) execute the parliamentary instruction and (b) stick to the agreement between the Minister of Public Enterprises and the Minister of Finance; if not, why not, in each case, if so, what are the relevant details in each case?

REPLY:
(1)
(a) Yes.
(b) No. The Minister of Finance is aware that the TSDBF has insufficient funds to meet the Parliamentary resolutions and that Transnet would have to assist the fund in fully meeting its obligations. Nevertheless, the Minister of Finance's reply of 24 August 2011 indicates that the Ministers of Finance and Public Enterprises reached agreement that Transnet will be responsible for providing all of the funding. This resolution was further reinforced in the Minutes of the Portfolio Committee on Public Enterprises meeting of 25 November 2011, where the Department of Public Enterprises indicated that "The Minister of Public Enterprises had met with the Minister of Finance to discuss this issue and the Minister of Finance had indicated that National Treasury was not going to be part of the funding solution for the recommendations. As a result the Minister of Public Enterprises wrote to Transnet to say that they should find a funding solution on their own".
(c) No. Please refer to response to (b) above.
(d) Yes. Please refer to response to (b) above.

(2)

(a) No. The Department of Public Enterprises as the Executive Authority of Transnet is responsible for exercising Government's shareholder responsibilities.
(b) No. Please refer to response to (a).

Reply received: October 2012

QUESTION NUMBER: 2605 [NW3214E]
DATE OF PUBLICATION: 21 SEPTEMBER 2012
2605. Mr P J Groenewald (FF Plus) to ask the Minister of Finance:

(1) Whether, with reference to his reply to question 217 on 14 October 2011, the section of land upon which the former Boskop Training Centre at Boskop outside Potchefstroom is situated, has meanwhile been sold; if so, (a) to whom was the property sold and (b)(i) for what amount and (ii) when was the land sold;

(2) whether tenders in this regard were called for; if not, why not: if so, what are the relevant details;

(3) whether an auction took place; if so, (a) in which media was the auction advertised and (b) what was the highest bid;

(4) whether he intends ensuring the continued existence of the school in the interest of the learners; if not, why not; if so, what are the relevant details;

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

NW3214E

REPLY:

I am informed of the following by the Land Bank:

1) The original Boskop Training Centre comprised of 504 hectares of which 439 hectares were sold prior to the liquation to Serfontein Trust (See answer to question 217). The Department of Labour was the first bond holder over the remaining extent of portion 1, portions 10, 39, 40 and 43 of the Farm Opleiding 626 on which the training centre is located.

The Land Bank was the first bond holder over portions 2 to 9 and 11 to 37. The primary school is situated on portion 2.

Due to the liquidation of "Boskop Groep Opleiding Sentrum" in August 199 the properties were auctioned by the liquidators. Due to unsuccessful auction, the ownership of these properties, were given to the bondholders (Department of Labour and Land Bank) by the Liquidators.
The Honourable Member is requested to direct his question with regard to the Boskop Training Centre (the remaining extent of portion 1, portion 10, 39, 40 and 43) to the Minister of Labour.

The Land Bank sold portions 2 to 9.

a) Serfontein Trust;

b) (i) R50 000.00

b) (ii) 27 June 2003.

2) No tenders were called for. At the time it was not Land Bank practice.
3) No.
4) The Honourable Member is requested to direct this question to the Minister of Basic. Education.
. 5) No.

Reply received: October 2012

PQ NO: 2480 [NW3086E]
DATE OF PUBLICATION: 7 SEPTEMBER 2012
2480. Mr K S Mubu (DA) to ask the Minister of Finance:

(1) Whether (a) his Ministry, (b) National Treasury and (c) any entity reporting to him plan to host end-of-year parties; if not, in each case, what is the position in this regard; if so, in each case, (i) for how many persons and (ii) at what cost;

(2) whether the cost of the specified end-of-year parties has been budgeted for in the current financial year; if not, from where will the funding be sourced; if so, (a) what amount has been budgeted and (b) from which part of the budget will it be incurred?

NW3086E
REPLY

(1) and (2) The details requested are to be found in the attachment to this response.
I intend to ensure an interaction with the heads of all entities to ensure maximum prudence.

See attachment: Consolidated Reply

Reply received: December 2012

QUESTION NUMBER: 2477 [NW3080E]
DATE OF PUBLICATION: 7 SEPTEMBER 2012

2477. Mr M Swart (DA) to ask the Minister of Finance:

(1) How many permanent jobs (a) have been created through the Jobs Fund administered by the Development Bank of Southern Africa on behalf of the Government since the inception of the fund and (b) are envisaged to be created in this way during the remainder of the 2012-13 financial year;

(2) what are the names of (a)(i) organisations or (ii) companies and (b)(i) directors and/or (ii) owners benefiting from contributions by the Jobs Fund?

NW3080E

REPLY:
1)

a) Since the 1st year of the fund has been used for set up purposes, herewith the projected number of permanent jobs and placements over the life of the fund, only emanating from the First Call for Proposals:

Window

Projected No. of Permanent jobs

Projected No. of Temporary jobs

Projected No. of Trained beneficiaries

Projected No. of Internships

Projected No. of Beneficiaries placed

Enterprise Development

84,193

1,320

18,976

0

216

Infrastructure Investment

1,544

0

0

0

0

Support for Work Seekers

5,521

284

42,098

37,622

51,622

Institutional Capacity Building

16,625

75

800

800

Total (Projected)

107,883

1,604

61,149

38,422

52,638


b) Any other future projections will be dependent on the approved projects; thus it would be difficult to estimate future approvals.
[1]


2)

(a) From the first call for proposal applications, the following organizations have been approved to upscale their jobs fund projects.


Nr

Client

1

Anglo Zimele

2

LIMA

3

Harambee NPC

4

MBSA

5

Fetola

6

Drake & Scull

7

SANParks

8

Enablis South Africa

9

Teba

10

Child Welfare South Africa

11

SANBI

12

WDB Trust

13

DTI

14

Awethu Entrepreneurship Foundation

15

Cape Craft and Design Institute

16

Department of Environmental Affairs

17

Small Enterprise Foundation

18

AsgiSA-EC

19

Use-It

20

Akwandze Agricultural Finance

21

RedCap Foundation

22

Eddels Shoes (Pty) Ltd

23

Ubuntu Institute for Young Social Entrepreneurs

24

HH Durrheim (Pty) Ltd

25

South African Wildlife College

26

Guarantee Trust Corporate Support Services

27

Zimele Entrepreneurship Foundation

28

Ethics and Learning

29

KwaZulu Natal Progressive Primary Health Care

30

Technoserve South Africa

31

AsgiSA-EC

32

Shanduka Black Umbrellas

33

Technoserve South Africa

34

Economic Development in a Learning Province

35

Heifer International South Africa

36

Salesian Institute Youth Projects

37

Buhle Farmers' Academy (BFA)

38

National Council for People with Physical Disabilities in South Africa (NCPPDSA)

39

Project Preparation Trust KZN

40

Le Quartier Francais (Franschhoek Hospitality Academy)

41

Swiss-South African Cooperation Initiative

(b) All Jobs Fund grants are deposited into a ring-fenced project bank account for the sole utilization of creating jobs. This therefore means that the only benefiting beneficiaries will be the people who will be placed into new jobs and not any director or shareholder of a company.


[1] 1 This number is based on the revised job numbers as agreed with clients during contracting, as well as the original data supplied during application stage for the clients not yet fully contracted.

Reply received: October 2012

QUESTION NUMBER: 2384 [NW2975E]
DATE OF PUBLICATION: 31 AUGUST 2012
2384. Mrs J D Kilian (Cope) to ask the Minister of Finance:

(1) Whether he has found that the SA Broadcasting Corporation (SABC) has honoured the terms and conditions set by government for the loan guarantee it granted the SABC in 2009; if not, what is the position in this regard; if so, what are the relevant details;

(2) Whether the National Treasury intends to amend the terms and conditions of the guarantee; if not, why not; if so, what are the relevant details;

(3) whether he has found that the SABC has implemented the necessary cost-cutting exercises, including a reduction in the head count; if not, what is the position in this regard; if so, what are the relevant details in each case;

(4) whether a business plan for the 24-hour news channel has been presented to and approved by National Treasury; if not, what is the position in each case; if so, what are the relevant details in each case;

(5) whether he has found that the SABC's 2012-13 budget includes provision for (a) the 24-hour news channel and (b) all (i) operational and (ii) capital costs associated with it; if not, what is the position in each case; if so, in each case, what amounts have been budgeted?

NW2975E

REPLY:

(1) The SABC's progress in achieving the four main conditions attached to the loan guarantee are provided below:

See attachment: SABC's progress

(2) The SABC applied in March 2012 for an amendment of the government guarantee targets. After careful consideration this request was declined for the following reasons:

• The initial issues that were the cause of the financial stability at the SABC (cost escalations in excess of revenue growth) have not been adequately addressed.

• The downward revision in the targets increases the risk to government arising from the guarantee.

• The SABC needs to demonstrate progress in achieving the original targets to which it committed.

(3) As the MTT reported in February 2012 to the Parliamentary Portfolio Committee on Communications, as at the 31st March 2011 the SABC had successfully implemented some of the revenue enhancement and cost cutting initiatives committed to under the government guarantee. In respect of people costs, the target was to reduce people costs to R1.476 billion by March 2011. This was not achieved. Following the submission of the audited financial statements on 31 August 2012 as per the PFMA, the audited performance up until 31 March 2012 is still being assessed. Details are provided below.

See attachment: Financial Statements

(4) Although the business plan for the 24 hour news channel has been shared with the National Treasury, the financial aspects are still under consideration.

(5) The SABC has been amending its Corporate Plan, which incorporates its budget, to reflect the targets agreed to under the government guarantee. The final Corporate Plan of the SABC is still to be submitted to the National Treasury.

In addition to the above, the SABC management must take credible measures to stop wasteful and ill-considered projects and expenditure. This is not the time for vanity projects. Not when this country faces fiscal constraints.

Reply received: October 2012

QUESTION NUMBER 2375 [NW2957E]
DATE OF PUBLICATION: 31 AUGUST 2012
2375. Mr T D Harris (DA) to ask the Minister of Finance:

(1) (a) What were the selection criteria for appointing the Chief Executive Officer (CEO) of the Development Bank International (DBI), a subsidiary of the Development Bank of Southern Africa (DBSA), (b) how do the qualifications and experience of the newly appointed CEO of the DBI meet the criteria and (c) what are the names of the other candidates who competed for the position of CEO;

(2) What (a) are the details of the assessment process with regard to the said person before he was appointed as CEO and (b) is the detailed breakdown of his remuneration package as CEO of the DBI?

NW2957E
REPLY

I am informed by the Chairperson of the DBSA of the following:

1 (a) The position of the CEO of DBI required a candidate in possession of strategic leadership, operational skills and expertise in managing stakeholder relations. The aforementioned areas of expertise were used as criteria to select the potential candidate for the position.

(b) The CEO designate was found to have strong networks and relationships within the South African Development Community, all of which have been assessed as key to the success of DBI. He also displays strong analytical skills and deep understanding of national priorities which can be partly attributed to the various positions that he has occupied in government since 1994.

(c) The candidates could not be disclosed publicly because they could potentially suffer prejudice both personally and professionally. This is a general rule of employment practice.

2 (a) Each of the shortlisted candidates completed comprehensive psychometric assessments based on leadership and emotional intelligence competencies. Following these assessments interviews were conducted by a Sub-Committee of the DBSA Board of Directors.

(b) The cost to company for the CEO designate for the DBI is R2 million per annum.

Reply received: October 2012

QUESTION NUMBER: 2343 [NW2923E]
DATE OF PUBLICATION: 31 AUGUST 2012
2343. Mr M Swart (DA) to ask the Minister of Finance:

(a) On what date was the Development Bank of Southern Africa (DBSA) mandated to administer the Jobs Fund on behalf of the Government, (b) what amounts were (i) budgeted for and (ii) spent annually since the inception of the Fund and (c) how many (i) permanent and (ii) temporary jobs have been created through initiatives of this Fund since its inception?

NW2923E

REPLY:

a) The Development Bank of Southern Africa (DBSA) was appointed in April 2011.

b) (i) During the first year of operation R1, 872.5 billion of grant funding was allocated to projects. These funds will be disbursed in tranches over the agreed terms of the projects.



Window

No. of Projects

Grant Funding Approved

Grant Funding as % of Total

Matched Funding

Co-funding

(R mil)

(R mil)

Ratio

Enterprise Development

16

870.0

46.5%

816.9

1:0.94

Infrastructure Investment

1

50.0

2.6%

75.0

1:1.5

Support Work Seekers

20

548.1

29.3%

760.6

1:1.39

Institutional Capacity Building

4

404.4

21.6%

128.4

1:0.32

Total

41

1.872.5

100.0%

1,780.9

1:0.95


(ii) By end September 2012, R320 million would have been transferred to DBSA.

c) Since inception of the Jobs Fund, two open calls for proposals have been issued. Proposals are competitively assessed against the Fund's criteria. At the point where grantees are contracted, project implementation is initiated. In respect of the projects approved in the first call for proposals, the grantees estimate the following impact over the term of their projects.


Indicator*

3-Year Target Estimate

1. Number of new permanent jobs as a result of the funded initiatives

10 344

2. Number of beneficiaries placed in permanent positions with project partners

22 302

3. Number of Beneficiaries employed in permanent position

-

4. Number of new short-term jobs as a result of grant funding

39 873

5. Number of beneficiaries having successfully completing training

36 729

6. Number of beneficiaries completing time bound internships

18 280


Indicator*

1. Number of new permanent jobs as a result of the funded initiatives. A new job that has been created as a result of the project, for which a permanent employment contract has been signed. The new job opportunity is expected to exist beyond the grant funding period and is not maintained or paid for using Jobs Fund grant funds.

2. Number of beneficiaries placed in permanent positions with project partners. These are the participants/ beneficiaries that have successfully completed the work seekers training and/ or mentorship programmes as well as (where applicable) the time bound internship and have been employed by one of the project partners.

3. Number of beneficiaries employed in permanent positions beyond project partners. These are the participants/ beneficiaries that have successfully completed the work seekers training and/ or mentorship programmes as well as (where applicable) time bound internship and have found employment with companies/ enterprises other than the project partners.

4. Number of new short-term jobs as a result of grant funding. A new job that has been created as a result of the project, which will exist for a finite period of time and does not offer a permanent contract to the beneficiary, (e.g., construction work, technical assistance, farm work). The job is not expected to exist beyond the funding period and may be supported by Jobs Fund grant funds. }

5. Number of beneficiaries having successfully completed training. This is the number of participants/ beneficiaries that have successfully completed the entire accredited training and mentorship programme as designed by the grantee (as outlined in the grant agreement) and have received their qualification/ certificates. The training and mentorship programmes are expected to be strongly linked to employment opportunities for successful beneficiaries.

6. Number of beneficiaries completing time bound internships. These are the participants/ beneficiaries that have been offered work experience opportunities with potential employers over a pre-determined period of time and have signed contracts with the potential employers to this effect.

Reply received: November 2012

QUESTION NUMBER: 2290 [NW2872E]
DATE OF PUBLICATION: 24 SEPTEMBER 2012
PQ 2290. Mr D J Stubbe (DA) asks the Minister of Finance


a) What steps has he taken to give effect to the performance agreement that he signed with the President in 2010;
b) What outcomes have been measured; and
c) What follow-up steps has he taken with regard to each specified outcome?

NW2872E
REPLY

a) I signed the Delivery Agreement on Employment creation and growth (Outcome 4) jointly with the Ministers of Economic Development and Trade and Industry. The three ministers are jointly accountable for the outcome of employment creation and growth, but as the Head of National Treasury, the Minister of Finance is also directly responsible for certain outputs under the delivery agreement. In addition to my responsibility under Outcome 4, the Minister of Finance has also co-signed the Delivery agreements on a responsive, accountable, effective and efficient local government system (Outcome 9) and an efficient, effective and development-orientated Public Service (Outcome 12) of which the lead Departments are Departments of Cooperative Governance and Traditional Affairs (DoCG & TA) and of Public Service and Administration (DPSA) respectively.

To give effect to my responsibilities under the delivery agreements, I have appointed a coordinator for each Outcome. Specific responsibilities have also been identified, agreed and allocated for each of the outputs and sub outputs amongst the applicable divisions within the National Treasury. I have also incorporated additional activities in the National Treasury's Strategic Plan and Annual Performance Plan to contribute to the achievement of the objectives of the Outcomes' framework. As part of my joint accountability, I work with the other Ministers and participate in the ministerial cluster discussions on these delivery agreements.

b) Outcomes are evaluated based on the broader Government objectives such as poverty eradication, reduction of inequalities, employment creation and economic growth. Outputs and activities are measured and accounted for per the key indicators in the delivery agreement. Outcomes and outputs are measured on a quarterly basis and are published on the DPME website set up for this reason. The coordinator is responsible for tracking progress on the various outputs and reports to me, the Ministers responsible for the specific Outcomes and the Department of Monitoring and Evaluation on a quarterly basis.

Outcome 4

For Outcome 4, I contracted the following with progress indicated:

· Stable and competitive exchange rate: Measures addressing the volatility of the exchange rate were announced in the 2012 Budget. The rand averaged R/US$8.13 in the second quarter of 2012, from a first quarter average of R7.76/US$. The Rand traded in a range of R7.63 –R8.58 to the US$. In the second quarter of 2012, international reserves were sufficient to cover 19.8 weeks of imports, slightly more than in 2010 and 2011.

· Increased private savings: Treasury submitted several background documents on macroeconomic trends in savings for the Cluster's consideration in 2011. In 2012, Treasury submitted work on the financial drivers of household savings to a sub-committee of ministers responsible for this work. There has been agreement that Treasury should take the work forward. Treasury will finalise discussion papers on policy instruments to encourage savings for approval in the first half of 2013. Net private savings (households and firms) were 7.2% of GDP in 2011 and remain above the target. Net private savings (households and firms) as a percentage of GDP were 6.4% in the first quarter of 2012 while government dis-saved by 4.0% of GDP. Gross saving for the quarter were at 15.2% as a percentage of GDP;

· Monetary policy approach that supports balanced and sustained growth: Improved communication/engagement strategy on monetary policy has been adopted by the South African Reserve Bank (SARB). There is also regular engagement between the Governor and Minister of Finance. Inflation in May 2012 was 5.7%, down from 6.0% in March and 6.7% in April;

· Counter-cyclical fiscal policy: Government has developed an appropriate and credible framework for fiscal sustainability and aligned budgets with MTSF objectives. Fiscal guidelines were published in February 2011 and work on this continues in line with the normal budget cycle;

· Improved state procurement: Amended Preferential Procurement Policy Framework Act (PPPFA) regulations are being implemented and the first round of sector designations is complete. Training is being rolled out to all procurement staff;

· Multi-pronged strategy to reduce youth unemployment: Currently social partners are discussing a multi-pronged strategy, including the introduction of a youth wage incentive, to reduce youth unemployment at Nedlac.

· Expansion of Public Employment Programmes (EPWP): The Jobs Fund has been initiated and the second tranche of applications are being evaluated. Plans are also being developed to scale up the EPWP and in particular the Community Works Programme, with a strong focus on the youth.


Outcome 9


Under outcome 9 I am responsible for three outputs, namely (1) Implement a differentiated approach to municipal financing, planning and support; (2) Administrative and financial capability; and (3) Single window of coordination in relation to local government. Progress with regard to these outputs is as follows:

· Implement differentiated approach to municipal financing, planning and support: Various reforms have been introduced to target poor municipalities. Changes were made in the local government equitable share formula to direct more funds towards poor rural municipalities in 2011/12 and reinforced in 2012/13; as well as increasing funding for the remuneration of councilors and ward committees. In 2011/12 the Urban Settlements Development grant was introduced to provide a consolidated stream of funding for metropolitan municipalities for the provision of services necessary to upgrade informal settlements. The Infrastructure Skills Development Grant was introduced in 2011 to create work for unemployed graduates and develop technical skills that are required for sustainable local government infrastructure. To date 150 unemployed graduates have benefited from this programme. The local government equitable share (LGES) formula is being reviewed and a new formula which incorporates 2011 Census results will be introduced in the 2013 Budget.

· Improve Municipal Financial and Administrative Capacity: National Treasury is working closely with the Auditor General to improve various aspects of the audit process as a whole and to strengthen the quality of information received from municipalities. National Treasury is exploring a new approach to revenue management aimed at providing practical support to municipalities so that they can address the "root causes" of their billing problems. National Treasury through Municipal Budget Circulars provides guidance to municipalities and municipal entities on how they should finance repairs and maintenance when preparing their budgets.

· Single window of coordination: National Treasury participates in the committee that has been established by Department of Cooperative Government (DCoG) to review all local government legislation.


Outcome 12

Under outcome 12, I am responsible for elements of output 3, specifically for (1) Supply Chain Management and (2) Financial Management. Progress with regard to these outputs is as follows:

Supply Chain Management


On 31 May 2011 an instruction note on enhancing compliance monitoring and improving transparency and accountability in Supply Chain Management was issued. This includes submission of tender programmes by departments to relevant treasuries by commencement of financial year and verification of availability of funds by relevant treasuries prior to advertisement and award of any bids in excess of R10 million. Implementation of Preferential Procurement Regulations (PPR), 2011 which came into effect on 7 December 2011 in respect of National and Provincial Departments, Constitutional Institutions and Public Entities listed in Schedules 2, 3A, 3B, 3C and 3D to the PFMA as well as Municipalities and Municipal Entities.

Financial Management

The National Treasury has been engaged in several activities through the Office of the Accountant General (OAG) to strengthen financial management in the different spheres of government. The OAG works quite closely with the National Treasury's Inter-Governmental Relations Branch in programmes that relate to provincial and local government. These include the following:

  • Strengthening the monitoring and oversight responsibilities of role players: The development of guidelines to strengthen the monitoring and oversight responsibilities of role players including accounting officers. Information sessions have also been held with Standing Committee on Public Accounts, the Standing Committee on Appropriations, the Portfolio Committee on Public Service and Administration and to the KZN and Western Cape Public Accounts Committees.
  • Develop Financial Management Capability Maturity Assessments in departments: The Treasury has been using a Financial Management Capability Maturity Assessment (FMCMA) tool to assess the financial maturity of PFMA compliant entities over the past four years and is currently involved in revising the tool so as to ensure its applicability to Constitutional Institutions and public entities listed in schedules 3A and 3C, and for municipalities;
  • Develop Strategic Support Plans (SSPs) to selected departments/municipalities: The OAG has developed Strategic Support Plans to address financial management deficiencies for 12 national and provincial departments as well as 77 municipalities;
  • Development of a Capacity Building Strategy for Financial Management: The National Treasury has enhanced a capacity building strategy it had previously developed for national and provincial departments to comply with requirements for local government.


(c) As indicated under (a), the outputs under the delivery agreements have been incorporated into the Treasury Annual Plan. These are evaluated and reviewed internally as part of the strategic planning process. The key institutions for follow-up and coordination are the various Ministerial Clusters and the Cabinet. Ministerial Clusters report on all Outcomes to Cabinet on a quarterly basis. These reports form the basis for quarterly briefing of the media and the updating of the Presidency's website.

Reply received: October 2012

QUESRION 2285 FOR WRITTEN REPLY
DATE OF PUBLICATION: 24 AUGUST 2012
2285. Mr. T D Harris (DA) to ask the Minister of Finance:


(1) With reference to the statement that was issued on 9 August 2012 with regard to the appointment of a certain person (details furnished), (a) why was the position of chief executive officer (CEO) of the Development Bank International not advertised externally, (b) how did the appointed headhunters identify the nine persons who were mentioned in the statement, (c) why were the interviews conducted confidentially and (d) what are the names of the members of the subcommittee to choose the four candidates;

(2) (a) what course did the specified person complete at Harvard and (b) how has the course prepared him for the position of CEO;

(3) whether the State carried the costs of the specified course, if not, how was this conclusion reached; if so, (a) how is this justified and (b) what amount was paid for (i) tuition, (ii) course material, (iii) examination fees, (iv) flights, (v) accommodation, (vi) subsistence allowance and (vii) other specified costs?

NW2866E

REPLY:

I am informed by the Chairperson of the Board of the DBSA of the following:

1. (a) The position of the Chief Executive Officer (CEO) of the Development Bank International (DBI) was advertised internally and the external selection was managed through a head-hunting process.

(b) The position of the CEO of DBI required a candidate in possession of, strategic leadership, operational skills and expertise in managing stakeholder relations. The aforementioned areas of expertise were used as criteria to select the potential candidates for the position.

(c) The interviews were conducted in terms of the general rules of employment practice. The candidates could not be disclosed publicly as they could potentially suffer prejudice both personally and professionally. This is a general rule of employment practice.

(d) The panel consisted of the following Development Bank of Southern Africa's (DBSA) Board Sub-Committee members:
a. Mr Jabu Moleketi
b. Wendy Lucas
c. Thembisa Dingaan
d. Albertinal Kekana
e. Dawn Marole
f. Doleres Mashishi

2. (a) According to the candidate's Curriculum Vitae, he completed the Executive Development Programme at Harvard Business School.

(b) The course provided him with an understanding of global financial markets.

3. The National Treasury and the DBSA did not carry any costs in this regard and do not have this information.

Reply received: November 2012

QUESTION NUMBER: 2263 [NW2842E]
DATE OF PUBLICATION: 24 AUGUST 2012

2263. Mr TD Harris (DA) to ask the Minister of Finance:

What are the reasons why (a) he and (b) his deputy minister were not available to attend economics oral question session on 15 August 2012

NW2842E

REPLY:


(a) The Minister of Finance was unavailable to attend the economics oral question session on 15 August 2012 due to the previous international commitment in Argentina, which he had accepted prior to the scheduling of the questions to the Economic Cluster.


(b) The Deputy Minister of Finance was present in the National Assembly to answer the oral questions posed to the minister of finance.

Reply received: September 2012

QUESTION FOR WRITTEN REPLY

QUESTION NUMBER: 2229 [NW2804E]

DATE OF PUBLICATION: 24 AUGUST 2012

Mr. S G Thobejane (ANC) to ask the Minister of Finance:

Whether the National Treasury has a system in place for taxing churches; if not, what is the position in this regard; if so, which system?

REPLY

Background:

All Churches are required to be registered for income tax and are required to submit annual returns. However, the income tax legislation provides for the approval of a public benefit organisation (PBO) whose sole or principal object is the carrying on of one or more approved public benefit activities (PBAs). These activities include the promotion and practice of religion. Such approved PBOs enjoy certain benefits in terms of the legislation administered by the Commissioner including that certain of their receipts and accruals are exempt from income tax.

One of the requirements in the legislation is that the organisation must carry on the PBAs in a non-profit manner with an altruistic or philanthropic intent and that no such activity may directly or indirectly promote the economic self-interest of any fiduciary or employee of the PBO. The activities must also be carried on for the benefit of the general public and must be widely accessible to the general public at large and not for small and exclusive groups.

If the sole or principal object of a PBO remains the carrying on of one or more approved PBAs, an approved PBO may carry on certain trading or business activities within specific limits without losing its preferential tax treatment. These permissible trading activities include activities of an occasional nature, provided they are carried on with voluntary assistance. This will for example include fund raising activities such as fetes, jumble sales, gala dinners etc.


An organisation that carries out religious activities on a commercial basis for a profit will not qualify for approval and will be required to pay tax as a normal taxpaying entity. Similarly, churches which have business or commercial interests will be taxable for these trading or business activities even where the religious activities are exempt.

Reply received: September 2012

QUESTION NUMBER: 2224 [NW2799E]

DATE OF PUBLICATION: 24 AUGUST 2012

2224. Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

1) When does he envisage that his department's task force in Limpopo will hand over its administrative duties to the respective provincial departments;

2) whether he has found that the specified departments in Limpopo will be able to operate independently in future; if not, what is the position in this regard; if so, what are the relevant details?

REPLY:

1) National government will ensure that the administrative functions are returned to the provincial government as soon as possible. In this respect, the exit strategy is already being implemented, with critical capacity being established for the purposes of budget management, infrastructure management and supply chain management. Although the National Treasury is providing the primary coordination for the intervention in Limpopo Province, each national Cabinet member and the relevant department assigned to play the administrative role in terms of the Cabinet discussion of 05 December 2011 must determine whether the specific service delivery shortcomings that led to the initial intervention have been sufficiently addressed. It must be noted that project plans for the turnaround of every department were initially drafted in cooperation with the government of Limpopo Province. We are continuously monitoring progress in each area in order to reach a decision on the specific date for the termination of the intervention.

2) The first priority was to stabilise the cash position and then rebuild capacity which is a longer term process. The relevant Ministers can comment further on this question.

Reply received: November 2012

QUESTION NUMBER: 2161 [NW2684E]
DATE OF PUBLICATION: 17 August 2012
2161. Mr D J Stubbe (DA) to ask the Minister of Finance:


Whether (a) the National Treasury or (b) any entity reporting to him makes use of private security firms; if so, in each case, which firms and (ii) what is the (aa)purpose, (bb) value and (cc) duration of each specified contract?

NW284E

See attachment: CONSOLIDATED REPLY


Reply received: October 2012

QUESTION NUMBER: 2147 [NW2668E]
DATE OF PUBLICATION: 17 AUGUST 2012
2147. Mr D J Maynier (DA) to ask the Minister of Finance:


(1) Whether the National Treasury has met with representatives of the Commission of Inquiry into Allegations of Fraud, Corruption, Impropriety or Irregularity into the Strategic Defence Procurement Package; if not, what is the position in this regard; if so, in each specified meeting, (a) who represented (i) the National Treasury and (ii) the commission, (b) when did the meeting take place and (c) what was the purpose of the meeting;

(2) whether the National Treasury has handed over any documents to assist the commission in its inquiry into the arms deal; if not, why not; if so, in each specified case, (a) when were the documents handed to the commission, (b) which documents were handed to the commission and (c) how many documents were handed to the commission;

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

NW2668E

REPLY:

(1) Yes

(a) (i) The representatives from the National Treasury were:

- Director-General : National Treasury;

- Deputy Director-General Public Finance;

- Chief Director :Public Finance;

- Director : Public Finance;

- Director: Liability Management; and

- Chief Director: Legal Services.


(ii) The representatives from the Arms Procurement Commission were:

- Head of Legal Research;

- Two Senior Attorneys; and

- Principal Legal Researcher.

(b) 19 September 2012.


(c) The purpose of the meeting was to discuss what information held by the National Treasury might assist the Commission in its work.

(2) Yes

(a) 21 September 2012.

(b) (i)The arms procurement loan agreements that were entered into and signed off on 25 January 2000 between the National Treasury (former Department of Finance) as the borrower and four International Banks as the lenders:

Barclays Bank PLC;

AKA Commerzbank;

French Buyer Credit Agreement (Societe General);

Mediocredito Centrale S.p.A


(ii) The Defence Package Procurement Affordability Study; and
(iii) A list of documents that relate to the arms procurement.

(c) Six

(3) No.

Reply received: September 2012

QUESTION NUMBER: 2108 [NW2627E]

DATE OF PUBLICATION: 17 August 2012
2108. Mr N Singh (IFP) to ask the Minister of Finance:

With reference to the establishment of the Office of the Chief Procurement Officer (CPO), (a) what role will the National Treasury play in this regard, (b) to whom will the CPO report and (c) will this be a single person or an office?

NW2627E
REPLY:

(a) The National Treasury is responsible for the establishment of the Office of the CPO and has played the following role in this regard:

· A job description has been developed and evaluated;

· Consultations with the Department of Public Service and Administration (DPSA) have been initiated to formally establish the position;

· A job advert for the CPO has been drafted and will be advertised on 26 August 2012.


(b) The CPO will be part of the top management of the National Treasury and relevant reporting lines will be applicable. Clarity on the specifics will only be available after consultations with DPSA have been concluded.

(c) The CPO is a person and a post but will require the support of an office. The Office of the CPO will incorporate existing functions currently performed by Specialist Functions, a division within National Treasury, and will be partly staffed by personnel currently falling under Specialist Functions. If necessary and following consultations with DPSA, more capacity could be sourced in.


Reply received: September 2012

QUESTION NUMBER: 2102 [NW2609E]
DATE OF PUBLICATION: 17 AUGUST 2012

2102. Adv A de W Alberts (FF Plus) to ask the Minister of Finance:

Whether, in the light of the rising cost of living, of predominantly small pensions received by pensioners who contributed to the country's economy, he will consider any form of tax relief specifically for this group of tax payers; if not, why not; if so, what are the relevant details?
NW2609E

REPLY:

The Honourable Member is aware that the Minister of Finance generally only makes new tax announcements on Budget Day, or when responding to specific anti-tax avoidance measures. The question by the Honourable Member is also not entirely clear, as the request for "any form of tax relief" is very wide and does not take into account existing tax relief measures. I will focus on existing measures.

The tax announcements made on Budget Day this year indicated that for the tax year 2012/13, taxpayers 65 years and older but younger than 75 years will not pay any personal income tax on taxable income below R99 056 per annum (R8 254.67 per month) and for taxpayers 75 years and older this figure is equal to R100 889 per annum (R9 240.75 per month). It should be noted that this tax free threshold for taxpayers younger than 65 year old is equal to R63 566 per year (R5 296.33 per month). Taxpayers 65 years and older will also not pay any income tax on interest income up to R33 000 per annum.

In addition to the personal income relief already mentioned, additional support for targeted groups is best provided for on the expenditure side of the budget, through efficient government expenditure programmes, including inter alia those on education, health, social services and grants.

Reply received: November 2012

QUESTION NUMBER: 2094 [NW2574E]
DATE OF PUBLICATION: 10 AUGUST 2012
2094. Mr T D Harris (DA) to ask the Minister of Finance:

What is the (a) total cost to the fiscus, (b) effect on the budget deficit and (c) effect on government debt of the three-year public sector wage increase?

NW2574E

REPLY:

This year government and public service unions signed a three-year wage settlement. The agreement provides for cost-of-living adjustments of 7 percent in 2012/13 and consumer price index inflation plus 1 percent in both 2013/14 and 2014/15. The cost of this agreement is estimated at R5.5 billion for 2012/13 and R37.5 billion over the 2013 MTEF – i.e. 2013/14, 2014/15, 2015/16.
Improved conditions of service wage adjustments

R million

2013/14

2014/15

2015/16

MTEF

National

2,572,684

3,181,552

5,145,054

10,899,290

Provincial

6,631,974

8,210,893

11,769,460

26,612,327

Total

9,204,658

11,392,445

16,9,514

37,511,617


This has been planned for without increasing the national appropriation beyond that reported at the time of the 2012 Budget. Over the medium term, the cost of the agreement will be financed from drawdowns on the planned contingency reserves, with resources made available from savings and the reprioritisation of expenditure within planned baseline allocation. Therefore, the wage settlement will not increase the deficit or entail the government having to borrow to finance this expenditure.

Non-interest expenditure projections

R million

2013/14

2014/15

2015/16

BR 2012

953,024

1,030,539

MTBPS 2012

953,024

1,030,539

1,118,991


The three-year wage settlement between government and public sector trade unions, therefore, provides a stable medium-term basis for planning.

Reply received: September 2012

QUESTION NUMBER 2022 [NW2498E]
DATE OF PUBLICATION: 10 AUGUST 2012
Mr M G P Lekota (Cope) to ask the Minister of Finance:


Whether the Assets and Liability Management Division within the National Treasury is still using off-the-shelf debt management software such as (a) the Commonwealth Secretariat Debt Recording and Management System (CSDRMS) and (b) ARABAS; if not, in each case, what software is now being used; if so, in each case, (i) why and (ii) when does he intend to acquire new software?
NW2498E
REPLY:

a, b) The Asset and Liability Management Division (ALM) within the National Treasury is not using off-the-shelf debt management software.

(i) In 2003, the division investigated using Commonwealth Secretariat Debt Recording and Management System (CSDRMS) to manage the foreign debt portfolio; however a decision was made to rather implement an integrated debt management system which would cover both foreign and domestic debt instruments.

(ii) ALM has started rolling-out a new integrated system. To date a foreign debt module has been designed, developed and implemented. Currently, the domestic debt module is in parallel-implementation phase. The design of the retail savings bonds modules has commenced. The new integrated system replaces the foreign debt and money market "spread-sheet" registers; as well as the domestic and retail bond systems which were developed in 1989 and 2004 respectively using the Natural/ADABAS programming language and database.

Reply received: October 2012

QUESTION NUMBER: 2020 [NW2496E]
DATE OF PUBLICATION: 10 AUGUST 2012
2020. Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

Whether the National Treasury intends to take steps to prevent institutions and brokers from investing money in investment houses that offer investors unrelated market growth on their investments; if not, why not; if so, what are the relevant details?

NW2496E
REPLY:

Yes, when the regulators in the FSB or SARB (rather than National Treasury) are made aware of any scheme offering suspiciously high rates of return, they do investigate whether any laws are being contravened. In almost every case of unrealistically high rates of return being promised it is likely to involve illegal practices, such as 'Ponzi' / pyramid schemes, or investors being misled deliberately and fraudulently as to the returns they can expect. It is the intention that all financial service providers be registered; however, illegal schemes will rarely be registered as they do not want to be identified. Many of these schemes are only reported when they fail to pay as promised, rather than earlier when they start taking in contributions. It is not possible for the authorities to act unless such schemes have been brought to the attention of regulators (or law-enforcement agencies) in some way.

It should be noted that it is not feasible to try and determine what a market rate of return should be and therefore what is a high or higher-than-market rate of return. For this reason the focus can only be on unrealistically high rates of return. That said, it is the explicit aim of every investment house or asset manager to "beat the market", and they should not be prevented from doing so, provided that they do so within a framework of acceptable market conduct practices and the law. With regard to brokers, the FSB routinely conducts investigations into the activities of brokers who have recommended to investors that they invest in schemes which are in contravention of financial sector laws and regulations, in order to determine whether they were / are themselves in contravention of the requirements of the Financial Advisory and Intermediary Services (FAIS) Act.

In addition, the FSB currently runs the Treating Customers Fairly initiative, which requires financial service providers to adopt tougher business conduct oversight. This initiative is expected to significantly improve the quality of consumer protection for customers of financial services. The impending twin peaks model of financial sector regulation will also, by creating a dedicated market conduct regulator, strengthen the ability of the regulators to ensure that financial service providers behave appropriately towards their customers. This will further prevent abuses ranging from the provision of deficient financial advice to egregious and blatant cases of fraud and misrepresentation.

It is very important that all individuals need to exercise restraint when offered any product that promises returns that appear to be too good to be true. In addition, it is important for all individuals to check that anyone offering them a financial product is registered with the FSB or SARB. Individuals must also refuse to deal with any persons offering products via general email addresses (via 419 type scams or gambling winnings when you have not even entered any game), or requesting personal financial or password information, or who cannot prove their residence or identification.

Individuals should never allow greed to blind them from common sense realities. This is basic financial education and recent events have proven that even high-powered business executives have fallen for such schemes.