Questions & Replies: Finance

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2013-12-14

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Reply received: December 2013

QUESTION NUMBER: 3198 [NW3758E]

DATE OF PUBLICATION: 15 NOVEMBER 2013

3198. Mr N J J van R Koornhof (Cope) to ask the Minister of Finance:

When does he intend to start the process for a one-stop-border-post crossing between South Africa and Namibia?
NW3758E

REPLY:

South Africa is currently working towards the implementation of its first One Stop Border Post with Mozambique and intends using the lessons learnt from that process to inform its approach towards similar border crossing arrangements where applicable. The arrangement with Mozambique stems from a 1997 decision by the then respective Heads of State.

Further initiatives in respect of one-stop-border posts will be taken in due course.

Reply received: December 2013

QUESTION NUMBER: 3193 [NW3751E]
DATE OF PUBLICATION: 15 NOVEMBER 2013
3193. Mrs A Steyn (DA) to ask the Minister of Finance:

On what basis was each of the applications of a certain company (Cape Concentrate) turned down by the Jobs Fund?
NW3751E
REPLY:

The grant application for an amount totalling R73 190 000 (seventy three million one hundred and ninety thousand rand only) for the creation of 1439 jobs by Cape Concentrate Pty Ltd for the Cape Concentrate Value Chain Enhancement project was declined by the Jobs Fund Investment Committee on the grounds that it did not meet the Jobs Fund criteria including the fact that the project was not financially sound.

Reply received: December 2013

QUESTION NUMBER: 3192 [NW3750E]
DATE OF PUBLICATION: 15 NOVEMBER 2013
3192. Mr T D Harris (DA) to ask the Minister of Finance:

(1) How many jobs have been (a) created and (b) funded by the Jobs Fund in the (i) 2010-11, (ii) 2011-12 and (iii) 2012-13 financial years;

(2) what is the cost to the Fund for each job created;

(3) how are the jobs that have been created monitored;

(4) what are the criteria for selection for successful applicants?
NW3750E
REPLY

(1) How many jobs have been (a) created and (b) funded by the Jobs Fund in the (i) 2010-11, (ii) 2011-12 and (iii) 2012-13 financial years?


(a) The Jobs Fund was announced in February 2011 and launched by the Minister of Finance in June 2011 when the first call for proposals was issued. The first funding decisions were made by the Investment Committee in November 2011.

(a) (i) This means that question (1) is not applicable in respect of the 2010/11 financial year as the Jobs Fund was not operational during that period.

(a) (ii) During the 2011/12 financial year, the fund's operations consisted of processing and approving of funding applications.

(a) (iii) Projects approved by the Investment Committee during November 2011 only began implementing their operations at the start of the 2012/13 financial year. Jobs "created" will be considered to be the actual New Permanent jobs created by Jobs Fund supported projects, as reported by the projects in their quarterly reporting cycle and verified by the Jobs Fund Monitoring and Evaluation team. The table below sets out the relevant figures:

Table 1: Jobs Created

Financial year

(a)

Jobs created

Actual figures reported by projects in implementation

(i)

2010 - 11

N/A

(ii)

2011 – 12

N/A

(iii)

2012 – 13

2960

Cumulative total to end
2012-13

2960


(1) (b) In order to respond to the question of how many jobs have been "funded", this will be taken to be the Total Job Creation Target of projects approved by the Investment Committee over the relevant period, i.e. funding approved for the creation of jobs over the 3 year implementation period of the projects. This is shown in the table 1 below:

Table 2: Jobs Funded

Financial year

(b)
Jobs funded
Three year target for all projects approved in the financial year

Expected realisation of target

(i)

2010 - 11

N/A

N/A

(ii)

2011 – 12

65 761 (1st CFP)

2014 - 15

(iii)

2012 – 13

28 180 (2nd CFP)

2015 - 16

Cumulative total to end 2012-13

93 941


(2) What is the cost to the Fund for each job created?

▪ An assessment of the total cost per job created is completed at the end of a project's implementation period. Given that only 2 of the 66 funded projects have completed implementation it would be inaccurate to attempt to calculate the cost per job created to date on the basis of funds disbursed to date.

▪ The Investment Committee carefully considers the cost per job as part of the selection process. This cost varies considerably depending on the nature of the job being created and the sector in which it is being created.

▪ The current approved portfolio of 66 Jobs Fund projects will receive R3.480 billion in grant funding, to create 93,941 new permanent jobs (in addition to training 99,952 beneficiaries and placing 53,944 beneficiaries into existing / vacant jobs).

▪ This represents a cost to the Jobs Fund of R37 044 per new permanent job created. However the Jobs Fund is designed to leverage additional contributions from grantees towards the implementation of the project. When these contributions are taken into account, the overall cost per job is R63 742.

Table 1: Projected Cost per Job

A

Number of approved projects

66

B

Total Jobs Fund grant value

R3.480 bn

C

Planned (Cash) Contributions leveraged from JF partners

R2.508 bn

D

New permanent jobs target

93 941

Cost to the Jobs Fund per new permanent job created (B/D)

R37 044

Overall cost per new permanent job created (B+C)/D

R63 742


(3) How are the jobs that have been created monitored?

▪ Each project approved by the Investment Committee has a job creation target, which is realized over the three year implementation period of the project. Projects are required to report every quarter on the achievement of project milestones and thereafter funds are disbursed against targets achieved. The systemic nature of the projects funded is such that job creation will generally occur towards the end of a project's 3 year - lifespan, with training and internship targets being met sooner in the project lifecycle.

▪ Beyond the standard quarterly reporting processes, which specifically include the requirement for the submission of hard evidence of job creation by projects, there is a portfolio of evidence database that is used to track the validated and agreed-to evidence base for each grantee. Further, both the DBSA PMU and the NT PMO undertake regular field visits to the projects during which job creation evidence is verified. Finally, the Internal Audit team at DBSA conducts a project-level audit on an annual basis.

(4) What are the criteria for selection for successful applicants?

▪ The Investment Committee of the Jobs Fund makes the final decisions on selection. When making these decisions, the IC considers:

▪ The Investment Strategy of the Jobs Fund
▪ The existing portfolio of approved projects
▪ The eligibility and assessment criteria for the applicable funding window
▪ The full eligibility and assessment criteria of the Jobs Fund are publicly available on the Jobs Fund website www.jobsfund.org.za. The criteria document is also attached to this response for easy of reference.

▪ Each window has separate eligibility and impact assessment criteria. Eligibility criteria determine whether the applicant will be considered, whilst the impact assessment criteria are the basis on which applications are competitively assessed against each other.

▪ Given the different focus, goals and investment determinants of the different funding windows (Enterprise Development, Infrastructure, Support to Work-Seekers, Institutional Capacity Building), both the Eligibility and Impact criteria differ for each funding window (although there is a degree of overlap).

Please see attached Jobs Fund Criteria document

Reply received: December 2013

QUESTION NUMBER: 3190 [NW3748E]
DATE OF PUBLICATION: 15 NOVEMBER 2013

3190. Mr D C Ross (DA) to ask the Minister of Finance:

With regard to the interventions of the SA Reserve Bank into a certain project (details furnished), (a) what was the rationale for the intervention, (b) on what information was it based and (c) what (i) is the current situation with regard to the funds of investors and (ii) steps will be taken by the National Treasury to ensure that investors receive compensation?
NW3748E
REPLY:

The South African Reserve Bank has provided the following response:

a. The rationale for the intervention was that the Bank Supervision Department of the South African Reserve Bank ("BSD") received enquiries about the funding model employed by Sharemax. This resulted in the Registrar of Banks investigating whether Sharemax was taking money from members of the general public in contravention of the Banks Act.

b. The information was based on a detailed memorandum submitted to the BSD by a registered bank, which is regarded by the BSD to be confidential.

c. i) Except for the two property syndication companies where the construction of the shopping malls are as yet incomplete, the investors' funds are utilised by the various property syndication companies as capital investments – as was agreed to by the investors in terms of the section 311 schemes of arrangements, which was also sanctioned by the High Court. This implies that the investments are subject to the volatility of the economy, the quality of the asset and the performance of the property syndication companies. The investors in the above-mentioned two property syndication companies are, however, in a precarious position and stand to lose their investments if the shopping malls are not developed.

ii) It should be borne in mind that the above-mentioned property syndication companies are neither registered nor supervised by the BSD and have by all indications contravened the provisions of the Banks Act. Neither was the property syndication company registered by the Financial Services Board (FSB). As such neither the SARB or FSB nor the fiscus is empowered to compensate the losses suffered by investors. Whilst government strives to protect investors, an investor must take responsibility for investment decisions made when investing in any company, but more so when the company is not regulated nor registered with the SARB or FSB. The SARB has embarked on a number of awareness media campaigns warning members of the public against the dangers of investing in unregistered and unsupervised schemes. The SARB has also reported the matter to the South African Police Service who is investigating possible criminal action against the directors of Sharemax. The Financial Advisors and Intermediaries Services Ombud has, furthermore, taken action against some of the brokers and investment advisors in this regard.

Reply received: December 2013

QUESTION NUMBER: 3189 [NW3747E]

3189. Mr D C Ross (DA) to ask the Minister of Finance:

(1) Has the forensic investigation into supply chain management practices at the Government Employees Pension Fund been completed; if not, when will it be completed;

(2) will he make a copy of the report available to Mr D C Ross;

(3) (a) who will be (i) conducting and (ii) overseeing the disciplinary process relating to a certain person (name furnished) and (b) when is it anticipated that the process will be completed?

NW3747E

REPLY:

It should be noted that the Minister of Finance is not the executive authority of the GEPF as it is not a public entity in terms of the Public Finance Management Act.

I am informed by the Chairperson of the Board of Trustees of the Government Employee Pension Fund (GEPF) of the following:

(1) The forensic investigation conducted by PricewaterhouseCoopers (PWC) has been completed.

(2) The release of the forensic report at this stage might prejudice the rights of the individuals facing disciplinary action and compromise the integrity of the hearing as the disciplinary process is still underway.

(3) An independent Chairperson, who is also an Advocate of the High Court, has been appointed to preside over the disciplinary hearing. The date of the disciplinary hearing has been provided by the Presiding Officer to both the attorneys of the said person and the GEPF. The finalisation of the matter cannot be determined at this stage as the duration of the disciplinary process is dictated by various unpredictable factors.

I will request the Board to make public the findings once all processes have been completed.

Reply received: December 2013

QUESTION NUMBER: 3133 [NW3691E]

3133. Mr T D Harris (DA) to ask the Minister of Finance:

(1) Whether the National Treasury received any funds for the Expanded Public Works Programme in the (a) 2010-11, (b) 2011-12 and (c) 2012-13 financial years;

(2) whether any of these funds were earmarked for (a) capital or (b) infrastructure-related projects; if so, (i) what are the names of these projects, (ii) where are these projects situated, (iii) what is the value of each project and (iv) how many jobs have been created by each project

(3) in each case, what process was followed to appoint project (a) implementers and (b) consultants;

(4) in each case, were funds transferred to project implementers (a) in a lump sum or (b) through progress payment;

(5) whether any projects have been impeded due to maladministration or corruption; if so, (a) which projects have been affected and (b) what action has been taken in each case?

NW3691E

REPLY:

The National Treasury does not receive funds for the Expanded Public Works Programme (EPWP).


Reply received: December 2013

QUESTION NUMBER: 3124 [NW3682E]
3124. Mr J F Smalle (DA) to ask the Minister of Finance:


Whether certain creditors in Limpopo have not been paid since Limpopo was put under section 100 administration, if so, (a) how many creditors have not been paid and (b) what (i) is the outstanding debt, (ii) amount of penalties have been incurred for nonpayment and (iii) cost of legal fees has the National Treasury incurred for this nonpayment?

NW3682E

REPLY:

The only instances of creditors having outstanding claims since the intervention began are related to issues under investigation for tender irregularities. The National Treasury has made it clear that invoices emanating from illegal transactions will not be paid, and that investigations must take place where there is some evidence of this before state funds are released. Nevertheless, the section 100 (1) (b) intervention in Limpopo has had a very positive overall impact on the extent of unpaid invoices in the province. As previously reported to the National Council of Provinces (NCOP), the total amount of unpaid invoices declined from R1.2 billion to just under R634 million in the previous financial year. This has meant that Limpopo province began the 2013/14 financial year with the lowest amount of unpaid invoices as a percentage of the budget of any province (1.3 per cent). As at 30 September 2013, the amount of unpaid invoices (over 30 days) was R59 million.

Since the beginning of the intervention, as part of the financial recovery of Limpopo Province, all creditors were requested to submit information related to their claims or invoices to the Provincial Treasury for vetting and verification. This was because a large reason for the financial collapse in the province during 2011/12 was laxity or poor management of payments, the lack of proper systems of management and corrupt practices by certain officials whereby claims were issued and payments were made for services that were not delivered, or delivered at poor quality, as well as instances where the supply chain regulations were flouted. The details of these are contained in the Diagnostic Reports submitted to the NCOP, as well as the Auditor-General's reports for various departments. Therefore, the purpose of the vetting and verification process was to ensure that creditors had a legitimate claim on government, and that frivolous, wasteful and illegal payments were avoided. The process has played a critical role in the financial recovery of Limpopo Province.

a) There are usually multiple claims or invoices per creditor and these fluctuate on a daily basis (particularly claims or invoices for re-current goods and services). Therefore, the reporting system in government measures the amount and number of claims, not the number of creditors.

b)
(i) As at 30 September 2013, the total outstanding (accruals) payments were R59 million
(ii) The National Treasury is not aware of any penalties, and the Provincial Treasury has indicated that it has not received any request for funds specifically for the payment of departmental penalties.
(iii) The National Treasury has not incurred any legal fees.

Reply received: December 2013

QUESTION NUMBER: 3114 [NW3671E]
DATE OF PUBLICATION: 15 NOVEMBER 2013
Mr. P van Dalen (DA) to ask the Minister of Finance:

(1) (a) How often is the blacklist of restricted suppliers updated, (b) what criteria is used to decide whether to list a company or person on the national Treasury's blacklist and (c) what steps need to be taken in order to have a supplier blacklisted;

(2) Will the National Treasury provide a copy of its latest blacklist of restricted suppliers to Mr. P van Dalen? NW3671E

REPLY:

(1) a) National Treasury maintains the database of restricted suppliers. The restriction of the suppliers is made by the Accounting Officer of an institution. There are three instances wherein the list is updated.
i. The list of restricted suppliers is updated as and when an institution requests National Treasury to load the restricted supplier as determined by the Accounting Officer of an institution.

ii. The second instance when the list is updated is when there is a request to remove the name from the database before the period of the restriction ends. Section 2.4 of Practice note 5 of 2006 prescribes that the Accounting Officer/Authority is empowered, based on sound reasons, to amend/uplift any restriction imposed by him /her and informs National Treasury accordingly.

iii. The last instance when the list is updated is when the period of the restriction ends. National Treasury has a process of monitoring the database in terms of the end period of the restriction. The names are removed on the last day of the restriction.

b). In terms of Practice Note 5 of 2006 called "Restriction of Suppliers", the decision to restrict a supplier is vested with an Accounting Officer of an institution. The company is restricted from doing business with the public sector if:
i. The company or person obtained preferences fraudulently;
ii. Failed to perform on a contract; and
iii. Has been convicted by a court of law for having engaged in corrupt activities relating to contracts.

(c) Section 2.2 of the practice note also prescribes that should the Accounting Officer / Authority opt to restrict a supplier or any other person(s) from obtaining business with the public sector, the Accounting Officer / Authority must:
i. Inform the supplier or person(s) by registered mail or by delivery of the notice by hand, of the intention to impose the restriction, and provide reasons for such decision and the envisaged period of restriction.
ii. Accounting Officer / Authority must allow the contractor and/ or person(s) fourteen (14) calendar days to provide reasons why the envisaged restriction should not be imposed;
iii. Consider any reasons submitted by the contractor and / or person(s) in terms of paragraph (ii)
iv. Impose the restriction or amended restriction; and
v. Inform the National Treasury within five working days of such imposition of the name of the restricted person(s); the reason for the restriction; the period of restriction and the date of commencement of the restriction.

(2) The database of restricted suppliers is accessible on the National Treasury's website link: http://ntintranet/publications/other/Database%20of%20Restricted%20Suppliers.pdf.

Reply received: December 2013

QUESTION NUMBER: 3062 [NW3616E]
DATE OF PUBLICATION: 08 NOVEMBER 2013

Mr T W Coetzee (DA) to ask the Minister of Finance:

(1) With reference to his reply to question 2203 on 31 October 2013, how many departments are there in the Land Bank;

(2) was each department, including the head office, evaluated by Deloitte and Touche; if not, what was the motivation to exclude each department; if so, what were the results of the evaluation of each department;

(3) (a) how many of the staff are to be found redundant following the evaluation and (b) will they be (i) transferred or (b) retrenched respectively?

NW3616E
REPLY:

(1) There are six (6) business units as follows:
a. Operations (which includes the three banking divisions and the Agri-Finance Centres / branches).
b. Finance
c. Risk
d. Corporate Strategy and Planning
e. Human Resources
f. Legal

(2) The focus of Fit for Future was on the revenue generating part of the business and those business units that have a direct linkage to the banking value chain. In that regard, priority was given to Operations, Credit Risk, Legal and Corporate Strategy and Planning. The objective was to enhance revenue flows and shift focus to support functions once work on revenue streams was completed.

a. Operations: The operating model was found to be uncompetitive and expensive; core processes not in place and turnaround times too long. The following were implemented in response:
i. Enhancing the efficiency and sales focus in branches.
ii. Removal of back office activities to newly created administrative hubs.
iii. Creation of new banking division – Retail Emerging Markets (REM) to focus purely on emerging farmers.

b. Credit: There was insufficient capacity and all of it concentrated at head office. In response, credit skills were distributed to the two hubs to carry out credit assessments and reduce the administrative burden on both the branches and the credit committees.

c. Legal: There was insufficient legal capacity in the credit value chain. In response, legal skills were distributed to the two hubs to carry out legal related functions in the loan processing chain.


d. Corporate Strategy and Planning: There was insufficient input into the loan origination process from economic research, which had a potential impact on the quality of credit decisions. In response, a Business Intelligence section was introduced into the structure and research input was integrated into the credit committee structures.

(3) (a) There were 27 surplus roles that were identified. The Land Bank made a commitment to all staff that there would be no members of staff who would be retrenched in return for a commitment that staff would escalate the revenue drive and be flexible in the process of role re-allocation and relocations. It was agreed that retrenchments would only be considered if the new business plan failed to generate sufficient revenue.

(b) Of that 27, one resigned during the consultation period, seven accepted transfers, three opted for early retirement and one employee who qualified for early retirement opted for a retrenchment package instead of transferring to another branch. There are now only 15 individuals, for whom possible alternatives are being sought or negotiated.

The Honourable member is hereby invited to a meeting with the Land Bank, which I will facilitate, in order that all the questions the Honourable member has may be comprehensively addressed.

Reply received: December 2013

QUESTION NO. 3019- 2013
FOR WRITTEN REPLY

DATE OF PUBLICATION IN INTERNAL QUESTION PAPER: 1 November 2013
(INTERNAL QUESTION PAPER NO. 3019 - 2013)
Mr J. H van der Merwe (IFP) to ask the Minister of Arts and Culture
:

What language policy is being used in each province;

(1) Whether there is written language policy for each province; if not, why not; if so, (a) which languages are being used and (b) what are the relevant details;

(2) Whether he will make a copy of such written language policy available to Mr J. H van der Merwe;

3.Whether he will make a statement on the matter?

NW3569E
REPLY

(1) South Africa has two (2) national language policies that inform all other language policies in the country, the National Language Policy Framework for the nation as a whole (NLPF), and, the Language -in- Education Policy (LIEP) for education. Province work within these frameworks as they are bound by the Constitution to develop policy in this regard.

(2) Yes, there are written policies for each province which now have to be reviewed and aligned with new language legislation to be drafted by the provinces following a court order in the case of C J Lourens, 2010. (a) At this stage, without the promulgated language legislation and newly drafted policies, it is not possible to specify what languages have been legally adopted for each province. (b) Existing policies would need to be revisited in line with legislation.

(3) In light of the foregoing, there is no policy available at this stage.

(4) In the context of policy and legislation with regard to the development and promotion of official languages, provinces are encouraged to develop and adopt specific language policies and legislation.

Reply received: December 2013

QUESTION NUMBER: 2918 [NW3469E]
DATE OF PUBLICATION: 25 OCTOBER 2013
2918. Adv L H Max (DA) to ask the Minister of Finance:

(1) How much has (a) the National Treasury and (b) each of the entities reporting to him spent on advertisements placed on the Africa News Network 7 (ANN7) news channel;

(2) were these advertisements placed through the Government Information and Communications System?
NW3469E
REPLY:

Neither National Treasury nor entities reporting to me spent money on advertisement on the African News Network 7.

Reply received: December 2013

QUESTION NUMBER: 2885 [NW3436E]

DATE OF PUBLICATION: 25 OCTOBER 2013

2885. Mr A P van der Westhuizen (DA) to ask the Minister of Finance:


(1) What amount has (a) the National Treasury and (b) each of the entities reporting to him spent on advertising (i) in The New Age newspaper and (ii) on its website between 1 December 2012 and 31 August 2013;

(2) were these advertisements placed through the Government Information and Communication System?

NW3436E


REPLY:

I can confirm that;

(1)(b)(i) The South African Revenue Service placed advertising to the amount of R126,742.80 in The New Age newspaper.

(ii) No advertising was placed on the website.

(2) No, advertising was not placed through the Government Information and Communication System as SARS has a contracted media buying agency.

No other entities placed advertising in The New Age for the period in question.

Reply received: December 2013

QUESTION NUMBER: 2861 [NW3411E]

DATE OF PUBLICATION: 15 NOVEMBER 2013

2861. Mr J H Steenhuisen (DA) to ask the Minister of Finance:


Whether each provincial government department tabled its annual report in accordance with section 40 of the Public Finance Management Act, Act 1 of 1999; if not, (a)(i) which departments and (ii) in which provinces have they failed to comply with section 40, (b) in each specified case, what (i) are the reasons for non-compliance and (ii) steps does his department intend to take against the departments that have failed to comply and (c) how many of these departments remain in breach of section 40 as at 1 October 2013?
NW3411E

REPLY:

(a) (i) & (ii)

Tabling of annual reports by provincial departments is addressed by section 65 of the PFMA not section 40 of the PFMA, which relates to responsibilities of the accounting officer to submit the annual report to the relevant treasury and the executive authority for tabling in the relevant provincial legislature. The National Treasury therefore understands the question to be trying to establish whether provincial departments have tabled their annual reports in line with section 65 of the PFMA rather than having submitted these annual reports as per section 40.

Section 65 of the PFMA requires the provincial executive authority to table the annual report of their respective departments and public entities in the relevant provincial legislature within six months from the end of the financial year (i.e. by 30 September). The relevant provincial treasury is therefore the appropriate institution to provide the required information. The National Treasury is however in a position to share with the National Assembly the following information that is available to us.

As at the tabling due date of 30 September 2013, 96 out of 123 provincial departments tabled their 2012/13 annual reports and financial statements in the relevant legislature by the deadline date, being 30 September 2013. See the table below:

TABLING INFORMA

TOTAL

EASTERN CAPE

FREE STATE

GAUTENG

KWA-ZULU NATAL

LIMPOPO

MPUMALANGA

NORTHERN CAPE

NORTH WEST

WESTERN CAPE

Provincial Departments

Annual Report Tabled on Time

96

13

11

14

5

13

13

13

0

14

Annual Report Tabled Late

1

1*

0

0

0

0

0

0

0

0

Annual Report Not Yet Tabled

24

0

0

0

11

0

0

0

13

0

Explanation tabled

2

0

2**

0

0

0

0

0

0

0

123

14

13

14

16

13

13

13

13

14

* Department of Economic Development, Environmental and Tourism.
** Department of Agriculture & Rural Development; Department of Human Settlements

(b) (i)

The respective Provincial Treasuries have not yet informed the National Treasury of the departments' reasons for not tabling their 2012/2013 annual reports and financial statements timeously in relevant provincial legislatures.

(b) (ii)

The relevant legislatures are responsible to ensure that non-compliance matters are addressed and that the reasons for late or non-tabling of annual reports are tabled to them (legislatures) in writing, as required in terms of section 65(2)(a) of the PFMA.

(c )

Twenty four (24) provincial departments did not table their annual reports and financial statements in the relevant legislature by 30 September 2013. Details are as follows:

Province : KwaZulu-Natal

(11 Departments)

Province : North West

(13 Departments)

Office of the Premier

Agriculture and Rural Development

Legislature

Economic Development, Environmental Affairs and Tourism

Agriculture

Education and Training

Economic Development and Tourism

Health

Education

Human Settlements

Community Safety and Liaison

Local Government and Traditional Affairs

The Royal Household

Office of the Premier

Cooperative Governance and Traditional Affairs

Provincial Legislature

Arts and Culture

Public Safety and Liaison

Sport and Recreation

Public Works, Roads and Transport

Social Development

Social Development

Sport, Arts and Culture

Finance

Reply received: December 2013

QUESTION NUMBER: 2860 [NW3410E]
DATE OF PUBLICATION: 15 NOVEMBER 2013
2860. Mr J H Steenhuisen (DA) to ask the Minister of Finance:

Whether each municipal council tabled its annual report in accordance with section 127 of the Local Government: Municipal Finance Management Act, Act 56 of 2003; if not, (a) which councils have failed to comply with section 127, (b) in each specified case, what (i) are the reasons for non-compliance and (ii) steps does his department intend to take against the councils that have failed to comply and (c) how many of these councils remain in breach of section 127 as at 1 October 2013?

NW3410E
REPLY:

(a) Section 127 (2) of the Municipal Finance Management Act, Act 56 of 2003 (the MFMA) requires that the Mayor of a municipality must, within seven months after the end of the financial year, table in the municipal council the annual report of the municipality and of any municipal entity under the municipality's sole or shared control.

The National Treasury monitors compliance with the MFMA on a continuous basis. According to our records, 23 municipalities in 7 provinces countrywide did not table their 2011/12 annual reports by 31 January 2013, as required per section 127 (b) of the MFMA, as follows:

Eastern Cape

Western Cape

Limpopo

Free State

Mpumalanga

North West

Northern Cape

Ntabankulu

Swellendam

Bela Bela

Masilonyana

Thaba Chweu

Madibeng

Kamiesberg

Kannaland

Nala

Msukaligwa

Kgetlengrivier

Karoo Hoogland

Setsoto

Emalahleni LM

Tswaing

Khai-Ma

Ngwathe

Thembisile LM

Ditsobotla

Kheis

Moqhaka LM

Mamusa LM

Khara heis


(b) (i) The respective provincial treasuries retain the specific records of why municipalities did not table their annual reports. National Treasury hereby reports that at an aggregate level the most prevalent reasons provided by municipalities for not tabling their 2011/12 annual reports were:
▪ Political instability in municipalities, resulting in councils' inability to sit
▪ Failures by municipalities to prepare Annual Financial Statements in the preceding financial year(s), leading to late conclusion of the audit process
▪ Lack of competent staff or vacancies in key senior posts such as the CFO and / or Municipal Manager

(b)(ii) The National Treasury provides technical support to the relevant Provincial Treasuries; bearing in mind the delegations of authority per section 6 of the MFMA wherein the Minister of Finance delegated some of his powers to the MEC's for Finance in the provinces. Through the National Treasury/Provincial Treasury engagements with the municipalities concerned, 14 municipalities that did not table their annual reports by 31 January 2013 ultimately did so during the course of the year.

(c) As at 1 October 2013, a total of 9 municipalities in 4 provinces countrywide still did not table their annual reports before their respective councils and remain in breach of the requirements of section 127 (b) of the MFMA as follows:

Free State

North West

Northern Cape

Western Cape

Masilonyana

Mamusa LM

Karoo Hoogland

Swellendam

Nala

Kgetlengrivier

Kannaland

Setsoto

Moqhaka LM


The National Treasury, respective Provincial Treasuries and Department of Cooperative Governance are working together to put pressure on these municipalities to finalise and table their annual reports, and are also providing capacity where needed to assist the municipalities.

Reply received: December 2013

QUESTION NUMBER: 2796 [NW3301E]

DATE OF PUBLICATION: 18 OCTOBER 2013

2796. Mr A P van der Westhuizen (DA) to ask the Minister of Finance:


(1) What amount has the (a) National Treasury and (b) each of the entities reporting to him spent on advertisements placed on the SABC 24 hour news channel;

(2) were these advertisements placed through the Government Communication and Information System?

NW3301E

REPLY:

No amount was spent on SABC 24 hour news channel by National Treasury and entities reporting to me.

Reply received: December 2013

QUESTION NUMBER: 2792 [NW3296E]
DATE OF PUBLICATION: 18 OCTOBER 2013
2792. Mrs J D Kilian (Cope) to ask the Minister of Finance:

(1) What progress has the National Treasury made with regard to the development and implementation of a new system to curb tender malpractices where (a) civil servants and (b) political officials take advantage of the poorly managed government procurement system to win lucrative tenders through companies in which they allegedly have interests;

(2) Whether a pilot of the new system has been introduced; if not, when does the National Treasury intend to introduce it; if so, when;

(3) What measures are currently being implemented to arrest the tender malpractices revealed in the Auditor-General's most recent state audit which found that about R600 million in state tenders were awarded to suppliers linked to families of employees of state departments awarding the tenders?

NW3296E
REPLY:

(1) The Procurement Reform Initiative that is currently underway in the O-CPO will address the following areas:

a. SCM policy and Strategy: To manage and maintain the regulatory environment relevant to government procurement practices
b. SCM Governance, Monitoring and Compliance: To oversee and monitor government sector procurement practices to ensure compliance with the regulatory framework.
c. SCM ICT: To design and implement effective systems to improve government procurement practices
d. SCM Client Support: To provide advisory services and to implement initiative that will improve the capability of government procurement practitioners.
e. Transversal Contracting: To effectively manage government transversal contracts so that cost savings and socio-economic objectives are achieved.
f. Strategic Procurement: To research, develop and implement strategic procurement practices so that cost savings and socio-economic objectives are achieved.

The supply chain management regulatory framework has been strengthened to prohibit and bar persons in the employ of the state to do business and benefit from state contracts. The National Treasury has established a dedicated governance, monitoring and compliance unit to monitor non- compliance. Companies and individuals found to have unduly benefited from state contracts are being restricted from doing business with the state for a maximum period of 10 years and their contracts cancelled.

(2) The Chief procurement Office has begun with the process of modernizing the state procurement system. The National Treasury with the support from SARS is currently reviewing and improving procurement systems within the construction, health and education sectors, the property leasing environment in the Department of Public Works and the delivery of housing in the Limpopo Department of Cooperative Governance, Traditional Affairs and Housing.

(3) In addition to the strengthening of the regulatory framework, all matters reported to the National Treasury are being investigated by the Special Audit Services in collaboration with the CPO. Some are being referred to the relevant law enforcement agencies.

The Database of Restricted Suppliers can be accessed on National Treasury's website. http://www.treasury.gov.za/publications/other/Database%20of%20Restricted%20Suppliers.pdf

Reply received: December 2013

QUESTION NUMBER: 2790 [NW3294E]
DATE OF PUBLICATION: 18 OCTOBER 2013
2790. Mr M G P Lekota (Cope) to ask the Minister of Finance:

Whether he will take steps to initiate a RSA Debt Clock similar to the USA Debt Clock to allow citizens to monitor the (a) national debt, (b) foreign component of the debt, (c) cost of servicing the debt, (d) new costs of borrowing and (e) maturity dates of bonds; if not, what is the position in this regard; if so, what are the relevant details?
NW3294E
REPLY:

The Honorable Member is referred to the response sent to him on the 10th September 2013.

Reply received: December 2013

QUESTION NUMBER: 2789 [NW3293E]
DATE OF PUBLICATION: 18 OCTOBER 2013
Mr M G P Lekota (Cope) to ask the Minister of Finance:

Whether fruitless, wasteful and irregular expenditure with regard to national and provincial spending has decreased during the period 1 March 2008 to 1 March 2013; if not, what (a) unsatisfactory situation do the figures reveal and (b) steps have been taken by the National Treasury in relation to this; if so, what (i) gains do these figures show for the national government and each provincial government and (ii) decisive measures were implemented to improve the situation? NW3293E

REPLY:

Tables 1 and 2 below contain consolidated information related to irregular expenditure and fruitless and wasteful Expenditure for departments, constitutional institutions and public entities for the financial years 2009/2010 to 2011/2012. Information on the aforementioned categories of expenditure for the 2012/13 financial year is not yet available. For the past three years, the trend has been as follows:

Table 1 – Irregular Expenditure

2011-12

2010-11 dd

2009-10

Irregedular Expenditure

R 28.3 billion

R 22.1 billion

R 11 billion


** Source: Consolidated General Report on National and Provincial audit outcomes - AGSA

Table 2 – Fruitless and Wasteful Expenditure

2011-12

2010-11

2009-10

Fruitless and Wasteful expenditure

R 1.8 billion

R 1.5 billion

R 437 million


** Source: Consolidated General Report on National and Provincial audit outcomes - AGSA
(a) Table 1 reflects an increase in the amount of irregular expenditure from R11 billion in 2009/2010 to R28.3 billion in 2011/2012. Table 2 reflects an increase in fruitless and wasteful expenditure from R437 million in 2009/2010 to R1.8 billion in 2011/2012. The extent of irregular and fruitless and wasteful expenditure incurred over the 2009/2010 to 2011/2012 financial period is high and in this regard departments, constitutional institutions and public entities need to urgently institute measures to prevent the occurrence of such unwanted expenditure.

(b) In terms of sections 38(1)(c)(ii) and 51(1)(b)(ii) of the Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999), accounting officers of departments and constitutional institutions and accounting authorities of public entities are required to take effective and appropriate steps to prevent irregular and fruitless and wasteful expenditure in their respective institutions. During May 2013, the National Treasury developed Guidelines on Unauthorised Expenditure and Irregular Expenditure to assist accounting officers and accounting authorities with all aspects surrounding such expenditure. The Guideline also focuses on consequence management regarding the institution of disciplinary proceedings against employees that incur unauthorised and irregular expenditure. The National Treasury is in the process of developing a similar Guideline for Fruitless and Wasteful Expenditure.

The National Treasury has also strengthened provisions in the Treasury Regulations related to unauthorised, irregular and fruitless and wasteful expenditure that places an increased emphasis on conducting investigations post detection of such expenditure, reporting of such to the relevant treasuries and instituting recoveries from employees, where such employees are liable in law.

Reply received: December 2013

QUESTION NUMBER PQ 2787

DATE OF PUBLICATION: 18 October 2013
DUE TO PARLIAMENT: 1 November 2013
Adv A de W Alberts (FF Plus) to ask the Minister of Finance:

What (a) percentage of Members of Parliament from the opposition ranks are currently being audited for tax purposes and (b) are the criteria for such audits?NW3291E

REPLY:

(a) Due to the secrecy provisions contained in Section 69 of the Tax Administration Act No. 28 of 2011, SARS is prohibited from disclosing any taxpayer information (Including whether or not a taxpayer is subject to an audit) to any person other than a SARS official.

The South African Revenue Service (SARS) makes no differentiation according to taxpayers' political affiliation. SARS treats the tax affairs of all parliamentarians in exactly the same manner as all other taxpayers in accordance with the compliance model. This model is premised on three components to encourage tax compliance: Education, Service and Enforcement.

(b) The selection of taxpayers for audits is generated through an automated risk engine which is designed based on principles such as:

▪ The comparison of declared information to third party information e.g. Banks, Employers, Insurance Companies, etc.;
▪ The verification of claims;
▪ Year on year comparisons on income, deductions and movements in the aforementioned to identify exceptions;
▪ The verification of incomplete and inconsistent submissions of tax returns.

The majority of the audits referred to in (a) above relates to the verification of incomplete and inconsistent submissions of returns and hence merely involve requests for corroborative information.

Reply received: December 2013

QUESTION NUMBER: 2782 [NW3284E]
DATE OF PUBLICATION: 18 OCTOBER 2013
2782. Mr N Singh (IFP) to ask the Minister of Finance:

(1) (a) How many disciplinary cases are outstanding in the National Treasury and (b) what is the nature of each case;

(2) (a) how long have these cases been on-going and (b) when will most of them be concluded;

(3) whether the persons who are being charged have been suspended; if not, why not; if so, for how long will they be suspended;

(4) whether the specified persons are still receiving their salaries; if so, what is the total cost of their salaries to the State?
NW3284E
REPLY:

(1) (a) The National Treasury has no outstanding disciplinary cases.
(b) Not applicable (NA)

(2) (a) NA
(b) NA
(
3) NA
(4) NA

Reply received: December 2013

QUESTION NUMBER: 2704 [NW3205E]
DATE OF PUBLICATION: 11 OCTOBER 2013
2704. Mr T Botha (Cope) to ask the Minister of Finance:

How many Ponzi schemes were (a) shut down and (b) referred to the SA Reserve Bank by the Financial Services Board for investigation in the past five years?

NW3205E
REPLY:

Before replying to the question, it will be useful to provide context to it.

The reference to "Ponzi schemes"

I assume that the reference to Ponzi schemes in the question refers to pyramid and related schemes as described in section 43 of the Consumer Protection Act, No 68 of 2008 ("CPA").

In most instances, the promoters of these investment scams utilise funds from subsequent investors, to pay out earlier investors. In its "pure" form, these schemes simply use the method described above, and the operator or operators syphon off funds for their own purposes.

However, it is not uncommon for the scheme to have an element of lawful business, for the purpose of giving the scheme an air of legitimacy.

Typically these unlawful schemes are identified by the lack of an underlying (lawful) investment. In other words, the funds received from investors are utilised to pay other investors and are syphoned off, as opposed to being channelled to an actual investment product.

In terms of section 43 of the CPA, multiplication schemes and pyramid schemes are prohibited. This Act is administered by the National Consumer Commission, established in terms of the CPA.

In the CPA these schemes are described as follows:

"A 'multiplication scheme' exists when a person offers, promises or guarantees to any consumer, investor, or participant an effective annual interest rate as calculated in the prescribed manner, that is at least 20 per cent above the REPO rate determined by the South African Reserve Bank …"

A pyramid scheme is where "… participants in the scheme receive compensation derived primarily from their respective recruitment of other persons as participants, rather than from the sale of any goods or services; …"

The agencies responsible for enforcement

The CPA is administered by the National Consumer Commission ("Commission"). The Commission is responsible for investigating pyramid and related schemes and to enforce the relevant legislation and investigate contraventions of section 43. The Commission may refer contraventions to a Tribunal or the Consumer Court.

The FSB does not have jurisdiction to investigate pyramid and related schemes. However, a scheme might in some instances have a financial advisory and intermediary services component to it, in which case the FSB will investigate and take action.
By the same token, the South African Reserve Bank might also have jurisdiction, as these schemes in some instances amount to unlawful deposit taking and unregistered banking business.

When the FSB receives information with regard to a possible unlawful scheme, it does a preliminary evaluation of the scheme. In such instance the FSB might:

 Refer it to the South African Reserve Bank;
 Refer it to the Commercial Crime Unit of SAPS;
 Refer it to the Department of Trade and Industry; or
Take its own enforcement action, if it has jurisdiction.

List of schemes
I set out below a list of cases that we suspect involved at least some element of one of these types of unlawful schemes. The FSB does not keep an official record of these referrals, and the list is therefore likely to be incomplete.

2008

Entity

Status

EOS Fin 9(Pty)Ltd

The matter was reported to the SAPS (Brooklyn Police Station). A docket was opened under CAS 1003/02/2009

Investone Investment (Pty)Ltd

Mr Hermanus (director of Investone) was convicted and sentenced to imprisonment for a period of 17 years, effective 10 years

WallSt500 Investments

Mr Cilliers was convicted and sentenced to imprisonment wholly suspended on condition that he repaid investors.

Money Maker

The matter was referred to the Reserve Bank


2009

Entity

Status

Solomon Marais Zietsman

Mr Zietsman was convicted and sentenced.


2010

Entity

Status

Intergrated Investment Management SA CC

The matter was reported to the SAPS. Mr Peter Duvenage has since passed away.


2011

Entity

Status

Dynamic Life

The matter was referred to the DTI

Michael Toerin t/a Michael Toerin Brokers

Mr Torien was convicted and sentenced to imprisonment for a period of 10 years


2012

Entity

Status

After Mist Trading

The matter was referred to the Reserve Bank

Bennj Investments

The matter was referred to the Reserve Bank and

Entity

Status

DTI

CMM Cash Management Fund

The matter will be referred to the Reserve Bank

Hermanus Pretorius, Abante Capital

The matter will be referred to the Reserve Bank

Ikageng Tshaba dimaketse

The matter was referred to the Reserve Bank and DTI

Intsika Yethu Projects

The matter was referred to the Reserve Bank and DTI

Living Hope Financial Solutions/Thlala Nthebeni

The matter was referred to the Reserve Bank and DTI

Manna Lifestyle Travel

The matter was referred to the Reserve Bank

Queenswood Trading CC and /or Ms N Block

The matter was referred to the Reserve Bank

SDL

The matter was referred to the DTI

Shamabu Club

The matter was referred to the Reserve Bank

Siyabekezela Investments

The matter was referred to the Reserve Bank

Uphill General Consulting cc

The matter was referred to the SAPS

2013

Entity

Status

Aspaya Wealth Creation Partners

The matter was referred to the Reserve Bank

Defence X

The matter was referred to the Reserve Bank

Dumashe Trading and Service Cc

The matter was referred to the DTI

Dynamic Unlimited Empowerment

The matter was referred to the DTI

Ever Capital Investments

The matter was referred to the Reserve Bank

Green fields Trading Academy

This matter is under investigation

Greenfield/Goldfields

The matter was referred to the Reserve Bank

Home Rific Properties

The matter was referred to the Reserve Bank

ICFS Financial Services

The matter is under investigation

Jam Financial Planning

The matter was referred to the Reserve Bank and DTI

Ledimar Stock Trading Academy

The matter was reported to the SAPS (Johannesburg Central). ). A docket was opened under CAS 624/09/2013

Megashare

The matter was referred to the Reserve Bank

Megashares

The matter was referred to the Reserve Bank

Motsoto's Trading and Investment

The matter was referred to the Reserve Bank

Mr JPA Swanepoel and Souvenir Finansiele Dienste BK

The matter was referred to the Reserve Bank

Navashore Private Equity Investment

The matter was reported to the SAPS (Jeffreys Bay). A docket was opened under CAS 168/06/2013

Naxa Invest

The matter was referred to the Reserve Bank

Propalux 46 Limted

The matter was referred to the Reserve Bank

Young stars Traders CC

The matter was referred to the Reserve Bank

Zantech Trading

The matter was referred to the Reserve Bank

Reply received: December 2013

QUESTION NUMBER: 2703 [NW3204E]
DATE OF PUBLICATION: 11 OCTOBER 2013

2703. Mr T Botha (Cope) to ask the Minister of Finance:

What effect did the 18 Ponzi schemes which are under investigation have on the country's financial stability?
NW3204E
REPLY:

I assume that the reference to Ponzi schemes refers to pyramid and related schemes as described in section 43 of the Consumer Protection Act, No 68 of 2008 ("CPA").

It is not clear which 18 schemes are referred to and therefore the extent of the schemes cannot be determined. However, in principle it is our experience that financial institutions do not invest in these schemes (do not become victims to these schemes). The investors in these schemes are generally private individuals and therefore it is highly unlikely that these schemes in general will have an impact on the financial stability of the country.

Reply received: December 2013

QUESTION NUMBER: 2628 [NW3116E]

DATE OF PUBLICATION: 11 OCTOBER 2013
2628. Adv H C Schmidt (DA) to ask the Minister of Finance:

(1) Whether, with reference to his reply to question 98 on 5 March 2013, any performance bonuses were paid to staff in the National Treasury in the 2012-13 financial year; if so, what is the total (a) number of staff that received bonuses and (b) amount paid out by the National Treasury for these bonuses;

(2) what percentage of outputs were achieved by the National Treasury as measured against each target set in its Annual Performance Plan in the 2012-13 financial year?
NW3116E

REPLY:

(1) Yes, performance bonuses were paid to National Treasury staff in June 2012.

(a) 911 beneficiaries;
(b) R29,327,000.

(2) 87 per cent of outputs were achieved by National Treasury as measured against targets set in the Annual Performance Plan. The percentage was calculated as a percentage of the number of annual targets met, as can be verified in the National Treasury's Annual Report (2012-13).



Reply received: December 2013

QUESTION NUMBER: 2625 [NW3113E]
DATE OF PUBLICATION: 11 OCTOBER 2013
2625. Dr W G James (DA) to ask the Minister of Finance:

Whether his department intends to treat institutions that offer English as a foreign language as educational bodies and, therefore, zero-rated for the purposes of value-added tax; if not, what is the position in this regard?
NW3113E
REPLY:

No department has discretion on zero-rating, as any tax or exemption is generally determined by our tax legislation. Educational services are exempt (not zero-rated) from value added tax in terms of the law. Whether certain educational services (or particular institutions) qualify for such an exemption in terms of the Value Added Tax Act (Act No. 89 of 1991) is set out in section 12(h) of the said Act. A request for a VAT ruling relating to specific instances – providing all the necessary details as required in terms of section 79 of the Tax Administration Act No.28 of 2011- should be forwarded to VATrulings@sars.gov.za

Reply recieved: December 2013

QUESTION NUMBER: 2623 [NW3111E]

DATE OF PUBLICATION: 11 OCTOBER 2013

2623. Ms M R Shinn (DA) to ask the Minister of Finance:


1) Whether the Group Chief Executive Officer (GCEO) of the South African Broadcasting Corporation (SABC) approached the National Treasury with the relevant information of the SABC's agreement with MultiChoice (Pty) Ltd before the deal was concluded in July 2013; if so, (a) when was the information received, (ii) what decision did the National Treasury take with regard to the information and (c) when was this information communicated to the GCEO;

2) has any funding been approved for (a) capital or (b) operating costs necessary to convert the SABC TV archives from analogue to digital format; if so, (i) how much has been allocated, (ii) during which financial year was this allocation made and (iii) how long is the digitalisation set to take?

NW3111E

REPLY:

1) In terms of Section 54(2)(e) of the Public Finance Management Act (PFMA), the SABC is required to inform the National Treasury and submit the relevant particulars relating to any transaction relating to the commencement of a significant business activity. Approval must be sought from the Executive Authority (in this case the Minister of Communications). In compliance with Section 54(2)(e), the SABC had obtained the required approval from the Minister of Communications during 2012. No additional information was shared with the National Treasury prior to the deal being concluded in July 2013:

a) No decision was required from the National Treasury.
b) No decision or information needed to be communicated to the GCEO.

2) R202.9 million is provided to the SABC for the Digital Migration Project over the medium term in response to a request to cover capital costs for projects related to the digitisation process. This amounts to R76 million in 2013/14, R62 million in 2014/15, and R64.9 million in 2015/16. This is to fund of the balance of the cost of the digital playout centre and part of the cost of the digital library. The idea is to provide a digital repository for completed content undergoing a range of preparation activities ahead of playout or publication. The allocation is expected to be maintained over the 2014 medium term as the project is still on-going.

Prior to 2013/14, these services were funded from the operational transfer to the SABC (line item SABC: Public Broadcaster). According to previous budget submissions

provided by the SABC, a total of R850 million was allocated for this service between 2005/16 to 2010/11. From the R850m received, R104.4m was paid over to SARS in the form of output VAT, with R745.6m left for the broadcast infrastructure.

QUESTION NUMBER: 2623 [NW3111E]

DATE OF PUBLICATION: 11 OCTOBER 2013

2623. Ms M R Shinn (DA) to ask the Minister of Finance:

1) Whether the Group Chief Executive Officer (GCEO) of the South African Broadcasting Corporation (SABC) approached the National Treasury with the relevant information of the SABC's agreement with MultiChoice (Pty) Ltd before the deal was concluded in July 2013; if so, (a) when was the information received, (ii) what decision did the National Treasury take with regard to the information and (c) when was this information communicated to the GCEO;

2) has any funding been approved for (a) capital or (b) operating costs necessary to convert the SABC TV archives from analogue to digital format; if so, (i) how much has been allocated, (ii) during which financial year was this allocation made and (iii) how long is the digitalisation set to take?

NW3111E

REPLY:

1) In terms of Section 54(2)(e) of the Public Finance Management Act (PFMA), the SABC is required to inform the National Treasury and submit the relevant particulars relating to any transaction relating to the commencement of a significant business activity. Approval must be sought from the Executive Authority (in this case the Minister of Communications). In compliance with Section 54(2)(e), the SABC had obtained the required approval from the Minister of Communications during 2012. No additional information was shared with the National Treasury prior to the deal being concluded in July 2013:

a) No decision was required from the National Treasury.
b) No decision or information needed to be communicated to the GCEO.

2) R202.9 million is provided to the SABC for the Digital Migration Project over the medium term in response to a request to cover capital costs for projects related to the digitisation process. This amounts to R76 million in 2013/14, R62 million in 2014/15, and R64.9 million in 2015/16. This is to fund of the balance of the cost of the digital playout centre and part of the cost of the digital library. The idea is to provide a digital repository for completed content undergoing a range of preparation activities ahead of playout or publication. The allocation is expected to be maintained over the 2014 medium term as the project is still on-going.

Prior to 2013/14, these services were funded from the operational transfer to the SABC (line item SABC: Public Broadcaster). According to previous budget submissions

provided by the SABC, a total of R850 million was allocated for this service between 2005/16 to 2010/11. From the R850m received, R104.4m was paid over to SARS in the form of output VAT, with R745.6m left for the broadcast infrastructure.

Reply received: November 2013

QUESTION NUMBER PQ 2600
DATE OF PUBLICATION: 11 October 2013
DUE TO PARLIAMENT: 25 October 2013
Mr S J F Marais (DA) to ask the Minister of Finance:

(1) Whether value-added tax (VAT) is payable to and/or deductible by the SA Revenue Service (SARS) on Lotto grants made to sport organisations by the National Lottery Distribution Trust Fund (NLDTF); if so,

(2) whether such VAT payable to or deductible by SARS decreases the amount paid out to and available to the beneficiary organisation which amount it obtained from the NLDTF on the basis of its approved business plan; if not, who pays the VAT; if so, (a) what are the comprehensive and qualified reasons as to the circumstances where such deduction from a Lotto grant applies, (b) is such deduction by or payment in VAT to SARS deemed by the National Treasury to be spending in contravention of the business plan in terms of which the grant was obtained and (c) does the National Treasury deem such VAT payment to or deduction by SARS a breach of the Lotto conditions under which the beneficiary obtained the grant? NW3087E

REPLY:

(1) The lotto grant paid by the NLDTF to a sports organisation will generally not be subject to VAT. However, one of the requirements of the NLDTF in giving a grant is that the recipient must provide certain advertising services1 to acknowledge the donation by the NLDTF. As a result, if the sports organisation is a vendor, VAT at the rate of 14 per cent has to be paid over to SARS on the amount received for the advertising services.

1 It is understood that the Grant Agreement entered into between the NLDTF and the grant recipient contains a stipulation that the grant is conditional on the submission of a detailed publicity plan for the NLDTF and the agreement contains contractual provisions concerning the acknowledgement that the project is funded with proceeds from the NLDTF.

(2)(a) The VAT paid by the sports organisation should not reduce the amount the sports organisation is required to spend in terms of its approved business plan. The VAT payable to SARS on the advertising services will generally be equal to the VAT that the sports organisation will be entitled to deduct in providing the advertising services, e.g. the VAT incurred on erecting a billboard. As discussed above, the sports organisation will not be liable for VAT on the greater part of the amount received from the NLDTF.

(b) No. The payment of the VAT to SARS on the supply of advertising services to the NLDTF would not be regarded as an expense in contravention of the business plan. The liability and payment of VAT by the sports organisation in respect of the advertising services arises as a result of the operation of law i.e. the VAT Act.

(c) No. The reasons provided in (b) above are equally applicable to this question.

Reply received: December 2013

QUESTION NUMBER: 2562 [NW3049E]
DATE OF PUBLICATION: 11 OCTOBER 2013
2562. Mr A P van der Westhuizen (DA) to ask the Minister of Finance:

What total amount has (a) the National Treasury and (b) each of the entities reporting to him spent on promotional events organised by The New Age newspaper during the period 1 September 2012 to 30 August 2013?
NW3049E
REPLY:

SASRIA purchased 2 tickets with the cost of R1584.60 on 22 October 2012.

No other entity nor National Treasury incurred any amount in this regards.

Reply received: November 2013

QUESTION NUMBER PQ 2546 [NW3033E]
DATE OF PUBLICATION: 11 October 2013
Mrs A Steyn (DA) to ask the Minister of Finance:


How much imported Brazilian beef has been documented by the SA Revenue Service since 1 January 2013?
NW3033E

REPLY:

The South African Revenue Service can confirm that for 2013 to date there have been no beef imports from Brazil according to SARS trader declarations.

Reply received: December 2013

QUESTION NUMBER: 2512 [NW2999E]
DATE OF PUBLICATION: 11 OCTOBER 2013
2512. Mr N L Kwankwa (UDM) to ask the Minister of Finance:

Whether, with reference to the current account deficit he has devised plans to improve investor confidence in South Africa to attract the much-needed (a) portfolio investments to help fund the current account deficit and (b) fixed direct investment for job creation; if not, why not; if so, what are the relevant details?
NW2999E
REPLY:

The National Treasury of South Africa is committed to its active investor relations program and it continues to embark on initiatives that are aimed at improving investor confidence in South Africa.

a) In order to attract portfolio investments, the National Treasury conducts international roadshows and also interacts with investors on a frequent basis. The roadshows covers centres in Europe, US and other major financial centres. The objective of the roadshows is to keep investors informed about important economic, fiscal, political and other developments in South Africa. Over and above the roadshows, National Treasury introduced its investor relations website www.investor.treasury.gov.za aimed at providing timely and relevant information to institutional investors.

b) Similarly the Government continues to look at various initiatives aimed at improving investor confidence and attracting foreign direct investment, these initiatives include:

▪ Initiatives to streamline and promote the advantages of our taxation system, which includes, tax modernisation, double tax agreements, bilateral investment treaties, other industry policy initiatives, etc.
▪ Creating a framework for the review of complex cross-border investments, though looking at exchange control rules to provide greater certainty for firms investing in RSA and improve the efficiency of regulation.
▪ Also simplifying customs and trade with the rest of Africa and reforming the exchange control system, e.g. implementation of one-stop border post with Mozambique.