ATC200609: Report of the Standing Committee on Appropriations on the Appropriation Bill [B4-2020] (National Assembly – Section 77), Dated 9 June 2020

Standing Committee on Appropriations



Having considered the Appropriation Bill [B4 – 2020], referred to in terms of section 10(1)(a) of the Money Bills and Related Matters Act No. 9 of 2009 (as amended by the Money Bills Amendments Procedure and Related Matters Act, No 13 of 2018), the Standing Committee on Appropriations reports as follows(5 June 2020):


  1. Introduction


Section 27(1) of the Public Finance Management Act No. 29 of 1999 (PFMA) requires that the Minister of Finance (the Minister) tables the annual budget for a financial year in the National Assembly before the start of that financial year or, in exceptional circumstances, on a date as soon as possible after the start of the financial year, as the Minister may determine. Section 213(2) of the Constitution of the Republic of South Africa, provides that money may be withdrawn from the National Revenue Fund only in terms of an appropriation by an Act of Parliament. The Appropriation Bill proposes to appropriate money from the National Revenue Fund for the requirements of the State and to prescribe conditions for the spending of funds withdrawn. Section 26 of the PFMA requires that Parliament and each Provincial Legislature appropriate money for each financial year for the requirement of the State and the Province, respectively.


In executing this mandate, the Standing Committee on Appropriations, hereinafter referred to as the Committee, is established in terms of section 4(3) of the Money Bills and Related Matters Act, 2009, and herein referred to as the Act. In line with section 10(1)(a) of the Act and after the adoption of the Fiscal Framework, the Money Bills and Related Matters Act enjoins the Standing Committee on Appropriations with a responsibility to consider the Appropriation Bill, hereinafter referred to as the Bill, and report thereon to the National Assembly.  The national budget for the 2020/21 financial year was tabled on 26 February 2020 by the Minister of Finance together with the Bill and referred to the Committee for consideration and report on 11 March 2020. In addition to National Treasury briefing the Committee on Bill in its entirety, the Financial and Fiscal Commission, Parliamentary Budget Office, Public Service Commission, and Human Science Research Council were also invited to provide comments.

In terms of sections 10(5) and 10(6) of the Act, Parliamentary Committees may advise the Appropriations Committee on appropriations. There were no formal submissions received from other Parliamentary Committees in terms of sections 10(5) and 10(6) of the Act. In processing the Bill, section 4(4)(c)of the Act also requires the Committees on Appropriations of both Houses to consult with the Financial and Fiscal Commission (FFC). In addition to the FFC, the Committee also invited the Parliamentary Budget Office to comment on the Bill.


Section 10(8) (a) and (b) of the Act also requires the Committees on Appropriations to hold public hearings on the Bill and proposed amendments and for the Committee to report to the House on the comments on and amendments to the Bill. To this end, the Committee sent out invitations to interested parties and published an advertisement in national and community newspapers from 10 to 15 May 2020 inviting the publicand all interested parties to provide their inputs on the Bill. In response to the Committee’s advertisements, eight (8) submissions were received from the Griqua-Khoisan Tribal House, African Farmers’ Association of South Africa, Budget Justice Coalition, Black Sash, Congress of South African Trade Unions, Organisation Undoing Tax Abuse, South African Faith Communities’ Environment Institute, and Ms T Armstrong. The Committee held public hearings on the 5thof June 2020 via the Ms Teams virtual meeting platform.


  1. Overview of the 2020 Appropriation Bill


The Bill is a legislation that provides for the appropriation of money by Parliament from the National Revenue Fund (NRF) in terms of section 213 of the Constitution of the Republic of South Africa and section 26 of the PFMA. Spending is subject to the PFMA and the provisions of the Appropriation Act. The Bill deals with proposed national appropriations. In order to effect spending on conditional allocations from national’s equitable share to provincial and local government, the Division of Revenue Act sets out specific provisions on spending conditions.


The 2020 budget is centred on government’s commitment to achieving fiscal sustainability through the stabilisation of the debt-to-GDP ratio, by moderating spending as a share of GDP and reducing the public sector wage bill as a share of overall spending. The 2020 budget review highlights that since 2012, government introduced the main budget expenditure ceiling, with the goal of controlling spending growth and stabilising debt. Between 2013/14 and 2018/19, in response to lower economic and revenue growth, government repeatedly reduced the expenditure ceiling and expenditure are near or at historic highs as a share of GDP. Over the same period, the composition of spending has deteriorated. Debt-service costs have been the fastest-growing area of spending, rising from9.8 per cent of main budget revenue in 2010/11 to 15.2 per cent in 2019/20. The wage bill has grown strongly over this period, averaging 35.4 per cent of total consolidated expenditure. Due to lower nominal GDP and revenue growth since 2012, government interventions have not stabilised public debt as a share of GDP, the 2020 budget proposed huge adjustment to government spending plans and these adjustments affect the expenditure ceiling as follow;

  • A total of R63.3 billion in downward revision to estimates of tax revenue in 2019/20 relative to the 2019 budget.
  • Over the 2020 MTEF, the 2020 budget proposes a R261 billion in expenditure reduction, which included R160.2 billion reduction in the wage bill for national and provincial departments as well as national public entities.
  • Relative to the 2019 Budget, the 2020 Budget proposes net non-interest spending reductions totalling R156.1 billion over the medium-term expenditure framework (MTEF) period.
  • Reallocations and additional expenditure of R111.1 billion over the 2020 MTEF, of which R60.1 billion is set aside for Eskom and South African Airways.  Over the next three years, government will transfer R112 billion to Eskom to enable the utility to meet its short-term financial obligations. An amount of R16.4 billion has been set aside for South African Airways (SAA) to repay government guaranteed debt and interest costs.


The Bill is processed in the first year of the 2019-2024 Medium Term Strategic Framework (MTSF).Departmental spending objectives must be aligned to the MTSF priorities as these are short to medium-term government priorities intended for achieving the overall objectives as set out in the National Development Plan Vision 2030 (NDP 2030) which was adopted by government in 2012. The MTSF is the implementation plan and monitoring framework for achieving the NDP 2030 priorities for the sixth administration of government. The NDP 2030 sets out the overall outcomes that the government wants to achieve by 2030 with associated impact of improving quality of life by reducing unemployment, poverty and inequality. The MTSF aims to address the challenges of unemployment, inequality and poverty through three pillars, namely; achieving a more capable state, driving a strong and inclusive economy; and building and strengthening the capabilities of South Africans. The MTSF sets out the seven priorities ofgovernment with 81 intended outcomes to be achieved through 337 government-led interventions by achieving a set of 561 performance indicators. The three pillars set out in the MTSF underpin the seven priorities of the strategic framework (see table 1 below) and these priorities, which will be achieved through the joint efforts and collaborations between government, the private sector and civil society, are as follows:


Table 1: 2019-2024 MTSF priorities, lead and contributing departments


MTSF 2019-2024 Priorities1

Priority 1

A capable, ethical and developmental state

Priority 2

Economic transformation and job creation

Priority 3

Education, skills and health

Priority 4

Consolidating the social wage through reliable and quality basic services

Priority 5

Spatial integration, human settlements and local government

Priority 6

Social cohesion and safe communities

Priority 7

A better Africa and world

  1. Details of lead and coordinating departments on the 2019-2024 MTSF priorities are provided in the MTSF document. 


While the MTSF outlines the plan and outcome-based monitoring framework for implementing the NDP during the country’s sixth democratic administration, it outlines the implementation priorities across South Africa’s national development priorities. The MTSF focuses on implementation that requires all three spheres of government to work collaboratively. Therefore, the MTSF is both a five-year implementation plan and an integrated monitoring framework. The plan focuses on the seven priorities and related interventions of the sixth administration of government, and the integrated monitoring framework focuses on monitoring and outcomes, indicators and targets towards the achievement of priorities. The district development model coordinates implementation at local level and the new model bridges the gap between the three spheres of government to ensure better coordination, coherence and integration of government planning and interventions. The MTSF enables the sequencing and resourcing of priorities, taking into account the respective powers of each of the three government spheres. It is not the role of the MTSF to plan for each and every action, but to provide a clear, transformative framework within which national, provincial and local government can plan for and drive service delivery.


While it is widely acknowledged that the MTSF had limited participation of the other social partners and was largely government led; on the contrary, the MTSF is a culmination of the steps government and non-government stakeholders have taken towards integrated national planning and monitoring. It serves as a five-year building block towards achieving Vision 2030.  All national sector plans, provincial growth and development strategies, municipal integrated development plans, departmental strategic plans and annual performance plans must be aligned to the MTSF.


Table 2 below provides an overview of the voted funds for each national department for the 2020/2021 financial year.


Table 2: Appropriated funds per vote-2020 Appropriation Bill



Main Division (R'000)


The Presidency

611 612



2 180 453


Cooperative Governance

96 233 988


Government Communication and Information System

720 548


Home Affairs

9 029 629


International Relations and Cooperation

6 850 179


National School of Government

206 593


National Treasury

33 123 163


Planning, Monitoring and Evaluation

499 974


Public Enterprises

37 849 355


Public Service and Administration



Public Service Commission

297 627


Public Works and Infrastructure

8 070796


Statistics South Africa

3 452 173


Traditional Affairs

173 399


Basic Education

25 328232


Higher Education and Training

97 443 993




55 515 997


Social Development

197 718 275


Women, Youth and Persons with Disabilities

778 490


Civilian Secretariat for the Police Service

156 312


Correctional Services

26 799 962



52 438 621


Independent Police Investigative Directorate

355 667


Justice and Constitutional Development

19 860 621


Military Veterans

683 073


Office of the Chief Justice

1 259841




                  101 711 033


Agriculture, Land Reform and Rural Development

16 810 056


Communications and Digital Technologies

3 394 537


Employment and Labour

3 637 749


Environment, Forestry and Fisheries

8 954 669


Human Settlements

31 324 916


Mineral Resources and Energy

9 337 028


Science and Innovation

8 797 393


Small Business Development

2 406 783


Sports, Arts and Culture

5 720 164



2 480 984


Trade, Industry and Competition

11 082 138



62 036 252


Water and Sanitation

17 216 227

Total appropriation by vote excluding direct charges

                   963 114 208

Source: National Treasury (2020 Appropriation Bill)


The Bill also allocates funds in terms of economic classifications. It should be noted that even though the Bill allocates resources across the national sphere of government, 67 per cent of these allocations go into transfers and subsidies.These are transfers to provinces, municipalities, public corporations and other non-profit making entities. Current payments, payments for capital assets and payments for financial assets take up 27 per cent, 2 per cent, and 4 per cent respectively. It is worth noting that the economic classifications for Vote 2 (Parliament) are determined by Parliament in terms of the Financial Management of Parliament Act, 2009 as amended.Table 3 below provides an overview of the allocations in terms of economic classification.


Table 3: Allocation per economic classification-2020 Appropriation Bill


Main Division

Current payments


Transfers and Subsidies

Payments for Capital Assets


Payments for Financial Assets

Compensation of employees

Goods and Services

Interest and Rent on Land










963 114 208              

182 619  730             

77 203 156                 

160 526                

643 207 657                   

15 288 992              

42 453 694

Source: National Treasury (2020 Appropriation Bill)


  1. Comments and hearings on 2020 Appropriation Bill with identified stakeholders


The sections below provide a summary of the comments that were made by the invited stakeholders on the Bill.




  1. National Treasury 


National Treasury in its briefing to the Committee outlined the legislative process that relates to the passing of the Bill, highlighting the provisions made in the PFMA, which include section 29 that allows for expenditure before the Bill is passed. Furthermore, National Treasury outlined the legislative process as outlined in the Money Bills Amendment Procedure and Related Matters Amendment Act.  Therefore, the Billprovides for the appropriation of money from the National Revenue Fund with spending subject to provisions contained in the PFMA.


National Treasury highlighted in its briefing that the economic outlook for South Africa is weak with real GDP expected to grow at 0.9 per cent in 2020, 1.3 per cent in 2021, and 1.6 per cent in 2022. According to National Treasury, achieving faster economic growth requires far reaching structural reforms. While public finances continue to deteriorate, this low growth has led to a R 63.3 billion downward revision to estimates of tax revenue in 2019/20 relative to the 2019 Budget. Debt is not projected to stabilise over the medium term, and debt service costs now absorb 15.2 per cent of main budget revenue. National Treasury indicated that in order to halt these fiscal deterioration, South Africa requires a combination of continued spending restraint, fastereconomic growth, and measures to contain financial demands from distressed state ownedcompanies. Asa first step, the 2020 Budget makes net non-interest spending reductions of R156.1 billion intotal over the next three years, compared with the 2019 budget projections, including the largereductions to the public service wage bill.


In terms of baseline reductions, National Treasury submitted to the Committee that these mainly affected conditional grants and national and provincial programme spending. According to National Treasury, as far as possible, reductions were made in underperforming or underspending programmes. The largest reductions are made to the human settlements and public transport sectors. Furthermore, National Treasury submitted that baseline reductions in programmes imply the need to review programmes, possibly resulting in closure or downscaling and to use allocated budgets more efficiently.  However, it was further submitted that reductions on goods and services may negatively affect maintenance of government facilities and information communications technology infrastructure, and lead to increased accruals. National Treasury indicated that the following items in Table 4 below represents the largest positive reallocations and funding additions to budget baselines in 2019/20.


Table 4: Largest baseline reductions and additions over the MTEF period1



R million



R million

2020 Budget baseline adjustments

  -28 238

2020 Budget additions to baseline

7 499

Programme specific reductions


  -10 666


Post-retirement medical assistance




of which:


Common Monetary Area Compensation


Passenger Rail Agency of South Africa

  -4 469

Municipal Revenue Management Improvement Programme




Social grants



 -1 438

Universal Service and Access Fund: New model for broadcasting digital migration


Public entity transfers


Innovation Fund


Police: Reallocation to implement the integrated criminal justice strategy


South African Revenue Service: Infrastructure-related projects



TVET2 college: Infrastructure and efficiency grant


Provincial conditional grants


South African Social Security Agency


Other allocations4



Provincial equitable share

  -2 349


Provincial conditional grants

  -4 893

of which:


Human settlements development grant

  -2 331

Provincial roads maintenance grant


Health conditional grants


Education infrastructure grant


Local equitable share

  -1 000

Local conditional grants

  -4 622

of which:


Public transport network grant

  -1 049

Urban settlements development grant

  -1 420

Municipal infrastructure grant


Water services infrastructure grant


Cross-cutting reductions3

  -4 708

  1. Selected information on large baseline reductions over the MTEF period, details provided in the Estimates of National Expenditure
  2. Technical and vocational education and training
  3.  Mainly includes goods and services reductions in national departments and public entities
  4. Details of other baseline reallocations are provided in the Estimates of National Expenditure

Source: National Treasury (2020 Appropriation Bill)


In addition to the baseline reductions and additions highlighted in table 4 above, National Treasury further submitted that a total of R7.021 billion has been set aside as a provisional allocation not assigned to budget Votes in 2020/21. Even though these funds have not been assigned to any budget Vote, a total of R6.502 billion, R500 million and R19 million has been provisionally allocated to South African Airways SOC Limited, provision for disaster recovery efforts and other provisional government allocation respectively.


  1. Financial and Fiscal Commission


The Financial and Fiscal Commission (FFC) submitted to the Committee that, in terms of expenditure by various spending functions, the FFC submitted that over the next three years, R5.3 trillion is allocated to various spending functions; R1.72 trillion in 2020/21, R1.78 trillion in 2021/22, and R1.85 trillion in 2022/23. Overall, the FFC submitted that in order to manage cost pressures, various baseline reductions have been affected, with a total reduction of R260 billion projected over the 2020 MTEF and 61 per cent of these baseline reductions expected to come from a downward adjustment to the baseline wage bill estimates. Of the total R261 billion baseline savings, the FFC reported that R111 billion will be added to programmes, with 55 per cent allocated to financially support SOEs, Eskom and South African Airways in particular while 20 per cent allocated to other government programmes, and 73 per cent of the additions to SOEs is allocated in 2020/21 financial year. Functional allocations are reported to have grown by annual average of 3.3 per cent over the period of 2016/17 to 2019/20 while these growth rates declines to 0.4 per cent per annum over the 2020 MTEF. The FFC also reported that due to these baseline reductions, service delivery will be under significant pressure while also reporting thatthere is compensation for inflation in most allocations, there is no funding for population increases and cost increase above CPI. While acknowledging that remuneration has increased significantly above inflation in the past, cutting into the purchasing power of departmental allocations, the FFC has highlighted that service delivery levels will hinge critically on government reaching salary agreements below those of recent years.


The FFC also submitted that expenditure containment placed more pressure on some core and foundational functions of government like Home Affairs and Post School Education and Training, Agriculture and Rural Development, opportunities presented by these functions could be curtailed unless departments dramatically increase spending efficiencies. The FFC was also concerned about the potential reversal in gains made in the past due to expenditure reductions in areas like Post School Education and Training (PSED). Growth in PSED in allocation is projected to decline from the real annual average growth of 12.6 per cent between 2016/17 to 2019/20 to 1.5 per cent in 2020/21 before declining by 0.1 and 1.2 percentage points in 2021/22 and 2022/23 respectively.


According to the FFC, the effects these baseline reductions will have on government’s ability to expand fee free higher education and address the lack of TVET student accommodation are cause for concern. Furthermore, the FFC submitted that in order for government to ensure continued focus on building a more capable state and improving service delivery outcome, baseline allocations to the Department of Home Affairs, which is responsible for maintaining the national population register and regulating the movements of persons through our ports of entry, requires more investigations. Furthermore, the FFC highlighted that the identification system managed by the Department of Home Affairs underlines the country’s entire banking system and therefore commerce system, and this is very crucial to the functioning of the economy.


The FFC noted that appropriation by Vote issignificantly reduced in real annual average growth from 4.6 per cent per annum over the period 2016/17 to 2019/20, to a projected decline of 1.3 per cent over the 2020 MTEF. In comparative terms, the FFC submitted that the main drivers of real growth over the period of 2016/17 to 2019/20 were the Departments of Small Business Development at 18.4 percent, Higher Education and Training at 16.6 per cent, and Communications and Digital Technologies at 13 per cent. However, the Departments of Mineral Resources and Energy at -4.8 per cent, Trade, Industry and Competition at -4.3 per cent, and Statistics South Africa at -3.7 per cent experienced significant real annual average reductions over the same period. The FFC further submitted that over the 2020 MTEF period, the Departments of Cooperative Governance and Traditional Affairs, Social Development and Small Business Development are projected to strongly grow at an annual average real growth of between 2 and 3.5 per cent. On the contrary, the 2020 MTEF sees the Department of Communication and Digital Technologies experience unstable allocations, which first drop by 30 per cent in 2021 before increasing by 10 per cent in 2022 and declining by an estimated 35.5 per cent in 2023. The Departments of Trade, Industry and Competition, and Human Settlement are projected to see a real annual average decline of over 5 per cent respectively over the 2020 MTEF. Furthermore, the FFC submitted that despite some of departmental allocations being more constrained, its seven-year review indicated the existence of certain departments whose budgets were relatively protected and over the seven years period, these departments have experienced real growth in budget allocations while other departments have been under relatively more pressure by experiencing real annual reductions in their budget allocations.


The FFC also submitted that government’s efforts to protect allocations to the local government’s sphere has seen positive, above inflation growth in budget allocation to the CoGTA, and this according to the FFC is largely attributed to the delivery of basic services being rendered at a municipal level. The Department of Social Development has also seen a positive, above inflation growth in budget allocation over the seven-year period due to government’s effort of maintaining the safety net for the poor through the provision of social grant funding to the poorest of the poor. In government’s drive to promote future growth and job creation, the Department of Small Business Development has also experienced a strong positive-growth allocation.


However, the FFC submitted that cuts to the Department of Agriculture, Land Reform and Rural Development will potentially disable the lever for growth and put pressure on resources meant to assist the poor segment of the population in rural areas. The FFC further noted the budget reductions in the Department of Human Settlement due to reductions in conditional grants allocation to the department. The FFC was however surprised by the reduction in budget allocation to the Department of Trade, Industry and Competition given the need to kick-start growth and job creation in the country. Furthermore, the FFC expressed its concerns in the erosion of budget allocation to Statistics South Africa (StatsSA) given their role in producing official statistics that in turn form the basis of decision making across government. The FFC highlighted its concerns around StatsSA also emanated from the role it is anticipated to play in providing data as tools and assets in the fourth industrial revolution and according to FFC, StatsSAshould play a leading role in positioning government within that context.


In term of expenditure by economic classification, the FFC submitted that current payments dominate consolidated government expenditure. In comparative terms, the FFC submitted that between 2016/17 and 2019/20, current payments (salaries and wages, goods and services and interest) grew by a real annual average of 3 per cent. This contrasted with payment for capital assets that declined by a real annual average of 8.2 per cent, while compensation of employees, which is the biggest component of current expenditure grew by a real annual average of 2.6 per cent, with good and services growing at real annual average of just below 2 per cent for the same period. Furthermore, the FFC submitted that rapid growth in debt service cost is impacting on available funds, growing at an annual average of 7 per cent. The FFC noted that while capital expenditure in the Bill does not encompass all of government capital spending (with the bulk contained in transfers to local and provincial government, and other public entities like PRASA and ESKOM), the FFC noted that this expenditure item does not grow sufficiently, declining at a real annual average of 8 per cent over this period. The FFC was also concerned that compensation of employees was also growing faster than goods and services.


The FFC submitted that over the 2020 MTEF, the composition of expenditure per economic classification changes with current payments growing at a real annual average of just under 1 percent, mostly driven by the wage growth moderation while debt service costs grow at an annual average of 7 per cent for the same period. The 2020 MTEF sees a rapid increase in capital spending, averaging a real annual growth of 4.8 per cent, while both goods and services and transfers and subsidies experience a slower real growth and the FFC has emphasised the need for increased spending efficiency by government entities to safeguard service delivery. While the FFC welcomed the attempts to better manage the public sector wage bill, however, it emphasised that the extent to which potential gains from these steps remains uncertain. Furthermore, the FFC emphasised the need for government to effectively link pay increases to productivity while also highlighting that due to compensation of employees dominating provincial budget, provinces are largely responsible for the delivery of health and education and these might have a severe impact on provinces. The FFC identified this as a critical risk to the 2020 budget. In terms of capital spending by government, the FFC highlighted that government needs to ensure that accompanying steps are taken to improve spending on infrastructure repairs and maintenance.


In terms of public sector infrastructure spending, the FFC submitted that over the 2020 MTEF, government intends spending R815 billion on public sector infrastructure, particularly on new infrastructure, replacement, maintenance and repairs, upgrades, rehabilitation and refurbishment of infrastructure assets. The FFC highlighted that, apart from the real increase in 2019/20, allocations in public sector infrastructure have deteriorated from 2016/17 to 2019/20 and this trend continues over the 2020 MTEF, with projected real decline of 0.5 per cent, 1.3 per cent and 5.7 per cent in 2020/21, 2021/22, and 2022/23 respectively.


The FFC also highlighted that the overall trends in public infrastructure were not in line with the common statement that South Africa is implementing a strategy on infrastructure-led growth as highlighted in the 2020 State of The Nation Address by the President. Furthermore, the FFC submitted that from a real growth perspective, infrastructure spending in water and sanitation, administration services and in transport and logistic were relatively protected over the 2020 MTEF. The FFC submitted that it hoped that the R8.5 billion reduction to PRASA and the R4.3 billion reduction to the public transport network grant will not negatively affect government plans as outlined in the 2020 State of the Nation Address to fix and modernise the South African rail network. While there is a real decline in spending on energy infrastructure, the FFC submitted that spending in the human settlement sector faces a real annual average decline of 13.7 per cent over the MTEF. Furthermore, the FFC submitted that despite government establishing various initiatives to boost infrastructure spending, overall spending and outputs remain low.


  1. Parliamentary Budget Office


The Parliamentary Budget Office (PBO) submitted that the 2020 budget proposed a significant reduction in growth of expenditure to reduce the budget deficit and level of debt. Steps proposed in the 2020 budget included the:

  • Reduction of the public wage bill;
  • Reform of state-owned companies and the Road Accident Fund; and
  • Across-the-board cuts that affect core government programmes.


The PBO further submitted that the above-mentioned steps will moderate spending as a share of GDP and adjust the composition of expenditure, but will not reduce the government’s debt levels. Further expenditure cuts could severely harm service delivery while more discussion was required about options to increase taxes in the current economic environment.


In terms of public expenditure, the PBO submitted that real government expenditure per capita has been slow during the fiscal consolidation era and it was lower in 2016/17, 2018/19, and 2019/20 than it was in 2015/16. PBO also highlighted that in the 2020 appropriation, there was a significant reduction in real per capita expenditure on housing and community amenities, with real per capita expenditure on Health and Education being very slow during the same period. Furthermore, Social Protection expenditure was flat until there were slightly bigger increases in 2019/20 and most of the increase in expenditure from 2019/20 to 2020/21 was to assist Eskom.


The PBO in its submission highlighted on the adjustment made to non-interest expenditure in the Bill since 2019 budget, highlighting on the baseline reductions and allocations, and additional allocations made to the baseline. Theseproposed baseline reductions totalled R66.045 billion consisting of R28.238 billion and R37.807 billion on programme baselines and the public sector wage bill respectively.The PBO also highlighted on the proposed addition to the baseline of R59.293 billion consisting of R44.042 billion in financial support to State-Owned Companies, R7.753 billion net change in the adjustments announced in the 2019 budget and the R7.449 billion in programme re-allocations. The PBO also gave an overview of the departmental expenditure outcomes between the 2017/18 and 2019/20 financial years and submitted that on average, departments have spent 92 per cent of their current expenditure whilst only 69 per cent has been spent on capital assets over the same period. 


The PBO further submitted that the coronavirus not only exposed South Africa’s long-standing deep underlying problems such as inequality, failure to deliver key services and a failing health system. However, this pandemic required government to act immediately with funds provided for disasters and to reprioritise plans and budgets tabled to provide for fiscal support, preventative measures, policing, new programmes with new objectives, and recovery plans for fiscal sustainability and economic growth.


The PBO also gave an overview of government’s responses to deal with covid-19 including the disaster relief funds totalling R982 million in the 2020/21 budget, current programmes in the budget for immediate respond to disasters. Furthermore, the PBO highlighted onthe preliminary provisions ofR500 billion fiscal support package made to address the Covid-19 pandemic pressures and the increases in certain social grants for six months and related fiscal implications.


3.4        Public Service Commission


The Public Service Commission (PSC) submitted that the stimulus injection to mitigate the impact of the coronavirus shows government’s awareness of Covid-19’s social and economic ramifications for South Africa and being responsive to the needs of the citizens. However, the PSC emphasised on the need to ensurethat there is a balance between responsiveness, accountability and transparency, in that, the Covid-19 pandemic should not be used to loot state resources, especially in emergency procurement. With regard to the mooted reprioritisation of funds from the 2020/21, the PSC recommended that a risk-based oversight approach be adopted for the reprioritisation in order to facilitate efficient, economic and effectiveuse of resources. The PSC submitted that the reprioritisation of funds will mean more expenditure cuts and emphasised that new and innovative working arrangements should be developed to minimise the inevitable negative impact of these cuts on performance and service delivery.The PSC submitted that the implications of budget cuts on staffing generally meant:

  • Shrinking of head counts that often ignored the value chain of delivering services or key services that should instead be bolstered (e.g. health and police and schools).
  • Moratoriums, which often resulted in critical service delivery posts not being filled and may have a long-term effect on staffing if such posts were high priority functions.
  • Massive works programmes such as EPWP should focus on supporting social welfare and health-care functions, and preventative measures from cleaning schools, parks and playground equipment to disinfecting bus and taxi ranks and taxis. This lays the basis for a job guarantee scheme.
  • In overseeing the budget, whilst looking at the budget cuts government also needed to look at opportunities for example job creations through the expansion of the EPWP.


The PSC was of the view that failure to deliver on government policies disadvantaged future generations and inflicted disproportionate pain to the poorest of the poor with a case in point being the policy of digital migration for South Africa approved by Cabinet in 2010. Covid-19 has forced government’s hand in using ICT to improve service delivery and the function of public sector institutions, and has shown that South Africa is not prepared for the Fourth Industrial Revolution (4IR). Online service delivery channels needed to be increased and enhanced. For this purpose, departments should ensure their readiness to capacitate employees to deliver services online with efficiency. Furthermore, the PSC was of the view that digital infrastructure needed to be strengthened and its roll out should be accelerated and the usage of technology through broadband should be a key national and continental priority for all sectors.


The PSC proposed the following strategies to significantly improve management practices in the Public Service:

  • Planning – plans should list of objectives, like generally occurs in strategic plans and Annual Performance Plans and should also present the cost-benefit trade-offs between different service delivery options or models. Plans should include financial modelling and alternative strategies should be costed. There is also a need to fast-track the district delivery model (DDM) implementation which provides a focused and coordinated intergovernmental attention to the districts.
  • Disempowerment to manage – the delegation of powers and duties should be made to appropriate performance levels within the Public Service to fast track decision making and ultimately service delivery.


The public service wage bill, performance rewards, cost of doing business, use of consultants, litigation against the State, and gainful employment were highlighted by the PSC as areas that provided opportunities for efficiency, effectiveness and value-for-money. 


The PSC further commented on the issues of governance across the public service including the standard of professional ethics, efficient, economic and effective use of resources, and the payment of invoices within 30 days. The PSC also emphasised that services must be provided impartially, fairly, equitably and without bias and alluded to SA’s historical spatial planning which has largely affected development and equitable provision of services in the rural areas, especially in the peri-urban and rural areas.  It further submitted that the Covid-19 pandemic has presented several challenges, however government should seize the opportunity to work with members of the society and learn how best to deliver services to them under the current circumstances through public participation.


Regarding human resources management and career development practices, the PSC posited that major leaps in efficiency or effectiveness, development outcomes or change in policy direction require deep skills to develop the policy instruments and do the implementation planning. In relation to Covid-19, the PSC indicated that:

  • Government will have to gear up its systems to provide for managing remotely to ensure productivity from those working from home.
  • Officials over 60 years may create service delivery (in particular at the frontline) gap due to their vulnerability to Covid-19.


In conclusion, the PSC submitted that post Covid-19, there will be pressure on government to enhance its capacity to deliver public services especially for the vulnerable in society. These includes the mobilization of resources by the state to ensure and enable service delivery, which is a big lesson from how we have been dealing with the responses to Covid-19. Proper management of public funds will require:

  • Setting up proper accountability frameworks (aligning responsibility, authority and accountability); and
  • Detect and present unauthorised, irregular, fruitless and wasteful expenditure, and take disciplinary actions against negligent officials.


  1. Human Sciences Research Council


The Human Sciences Research Council (HSRC) expressed concerns at the baseline reduction under Vote 4: Cooperative Governance for the traditional leadership component as well as for Local Government Support and Management component, which was meant primarily for performance monitoring.  The HSRC emphasized the following current and post Covid-19 focal areas:

  • Social protection initiatives to focus on the poor and marginalized that would cushion and build resilience going forward;
  • Enhancing the health systems responsiveness and resilience to current and future shocks;
  • Building local capacities for service delivery through improved basic services infrastructure, i.e. water, sanitation, and energy; and
  • The proposed New District Planning Model launched by the President piloted in three provinces must receive high priority to be rolled out in full scale to address service delivery backlogs.


The table below provides an assessment by the HSRC of the budget allocations for 2019/20 and 2020/21 on two variables, namely, (i) relevance of budget item for Covid-19 containment and (ii) whether the spending contributes to a key government priority.




Cooperative Governance


Public Works and Infrastructure


Community Works Programme and Expanded Public Works Programme: Budget increase of 2-3 per cent is insufficient. There is an urgent need to scale up public employment programmes to address multiple priorities, i.e. (1) Covid-19 containment, (2) employment creation and (3) social protection.

Basic Education

School Nutrition: Budget increase of 6.7 per cent. Priority to expand reach to schools previously not covered e.g. in urban areas and as pre-school intakes expands.

Infrastructure spending is still critical and more is needed, now for the crisis but also for the future. The Covid-19 crisis has accelerated the need for tablets for school children. The four key issues in basic education are safety, electricity, teacher preparedness, and mass procurement.

Social Development

COVID-19 Social assistance responseis welcomed. The 6-month provision for grant top-ups and the Covid-19 Grant appears to be limited in the context of at least 18-month Covid-19 timeline for the discovery and production of a vaccine. The abrupt withdrawal at the end of 6 months of these top-up provisions without alternate interventions in place, while the situation remains largely unchanged may have a potential destabilizing impact on the economy, poverty and vulnerability levels and social stability.

Social Welfare Services:  18-27 per cent increase in budget is welcomed even though it is considered insufficient to address the significant demand for social services and psycho-social services arising from death, loss of income, displacement, ill health etc.

Early Childhood Development:  76 per cent increase is welcomed as it contributes to the realization of a strategic national priority.

National Development Agency:Budget increase of less than 6 per cent. The State needs to enhance support for and build partnership with the NPO sector in order to deliver programmes to support vulnerable households.

Agriculture, Land Reform and Rural Development

Departmental priorities are (1) food security, (2) food safety, (3) land reform, support for (4) smallholder farming and (5) capacitating rural youth for economic participation. Concerns about the reduced allocation of R400 million between 2020/21 budget and 2019/20 adjusted appropriation. Over the next two years of the MTEF, allocations are set to increase marginally.

Higher Education and Training

Concerns about the large reduction in infrastructure spending at TVETs with the focus still being on universities. TVETs have an important role to play in training those to accelerate the 4IR and more investment need to be made to ensure quality, relevance, desirability of TVETs.

Universities facing potential second crisis after CoVid-19 due to calls for tuition and residence fee refunds and HDIs are unlikely to cope with these demands.

Human Settlements

Whilst government has delivered 3-4 million subsidised houses since 1994, the backlog is still 1.9 million households. The government has been slow to invest in upgrading informal settlements – this is where the biggest threat from Covid-19 lies. The de-densification to temporary relocation areas is very controversial and there is a policy vacuum around backyard housing. Backyard housing has a major contribution to make to affordable rental accommodation and entrepreneurial dynamism. The shift from subsidy housing to serviced sites has not been communicated effectively to ordinary people


Regarding the health sector and Covid-19, the HSRC submitted that the pandemichas tested all elements of our health systems and it has become apparent that basic health promotion is key to disease prevention and spread.Medical interventions alone without social and behavioural interventions have failed to lead the society out of epidemics (eg Tuberculosis, HIV, and now Covid-19). The HSRC further put forward the following implications on the health budget:

  • Health budget annual average growth of 5.1 per cent is insufficient given the immediate and long-term health challenges of South African people.
  •  Experiences of people during the lockdown speak to the realities of many people even without lockdown (inaccessibility of chronic medication during lockdown especially for those living in informal settlements, rural (traditional tribal areas) and farms.
  • In the health envelop, allocation to primary health care is the least (less than 1 per cent), there is a need to strengthen health systems especially primary health care.
  • Health expenditure: HIV, TB, Malaria and Community outreach at R24 039 000 from R22 039 000 increasing by 11% will not be sufficient to meet the ongoing epidemic spread.
  • Young men and women (more so women) continue to carry the highest burden of HIV incidence in South Africa and only 39.1 per cent of all HIV positive are on ARVs.
  • HIV interventions can not only be clinical but need to be a behavioural intervention.
  • Social Impact Bond allocation begins to address these behavioural interventions.
  • A significant and direct allocation of Social Impact Bond related behavioural research should be directly to Human Sciences Research Council.
  • Reprioritising R800 million from the HIV/AIDS component to address the funding shortfall is detrimental.


The HSRC recommended that infrastructure be developedthrough the creation of an Outbreak Observatory for Covid-19 and other outbreaks or disasters and monitoring of indicators. The core of the observatory concept needs to be in line with the policy intent of the White Paper. Furthermore, the HSRC submitted that there was a need to develop a South African Social Stigma scale to establish a contextualised Social Stigma Scale that is culturally and contextually grounded which will assist social responsibility, participatory citizenship and nation building. The HSRC and other social science organisations can play a coordinating role in pandemics and outbreak control.


The HSRC also emphasised the need for stronger prioritisation of expenditure on innovation, science and technology (IST) in the public sector, and for promotion of increased private sector expenditure in that regard. It submitted that IST are critical to structural economic reforms, to promote productivity, investment, inclusive and sustainable development however the annual projected expenditure growth was slow, i.e. 4.2 per cent, over the MTEF period. It further submitted that the Covid-19 challenges intensified the problem of low expenditure growth as the redirection of IST expenditure would impact negatively on future growth and development potential. The HSRC further posited that a major opportunity existed, i.e requirement for innovation as a pre-requisite in Covid-19 stimulus/procurement contracts.

  1. Public submissions on the 2020 Appropriation Bill


The sections below provide an overview of the submissions that were made in response to the advertisementthat was published in print media.

4.1        African Farmers’ Association of South Africa

The African Farmers’ Association of South Africa (AFASA), in its submission, provided a problem statement and highlighted the following challenges within the agricultural sector in the Republic of South Africa (RSA):

  • Low inclusivity caused by high entry barriers for new black players;
  • Food availability but not accessible due to price;
  • Drought and diseases;
  • Climatic changes and the technological development 4IR;
  • Unemployment and specifically for educated youth & woman; and
  • Widening Dualistic agricultural economy in RSA.

AFASA also gave an overview of government spending on agriculture, land reform, and agricultural research over the past financial years and provided the following strategic objectives and a need for an increased budget:

  • To create an inclusive united and sustainable agricultural sector in the country;
  • To improve agricultural competencies for RSA to participate and compete meaningfully in all the markets platforms (local & international);
  • To mobilise resources for food security and economic growth; and
  • To improve employment specifically for youth and woman.

AFASA recommended for (i) a gradual increase in the agricultural budget, at least by 25% per annum, (ii) funding and repositioning of the Land and Agricultural Development Bank of South Africa, mainly to focus on agricultural development, and (iii) a reduction in poverty and unemployment through unutilized and undistributed state land.


  1. Budget Justice Coalition


The Budget Justice Coalition (BJC) gave and overview of economic stimulus relief package and also made suggestions in terms of where to appropriate funding. It further commented on possible legislative areas that required to be changed and gave inputs on the oversight of emergency procurement during a pandemic. The BJC made the following recommendations in terms of the Bill:

  • Ensure transparency on the conditions the government may be exposing future generations of South Africans to by taking money from multilateral lending institutions. The BJC calls on the government to reject finance that comes with conditions which impact our sovereign policy discretion and are anti-poor, and to focus on domestic resource mobilisation instead.
  • The budget for the social grant component of the relief package should be increased in recognition of the size of the population in need.
  • The Child Support Grant (CSG) increase of R500 should be attached to each child per grant paid.
  • Unemployed caregivers, who are in receipt of a CSG for their children’s basic needs, should not be excluded from the Covid-19 unemployment grant.
  • The assumptions, projections, and eligibility criteria for the Covid-19 unemployment grant (including the income threshold being applied) should be made public so that there can be informed engagement, prior to the regulations being finalised.
  • Cabinet urgently considers a universal income grant instead of a very narrowly targeted Covid-19 unemployment grant, which is likely to create inequality, confusion and conflict and to cost more. SARS should be used to recoup the grant from the upper deciles.
  • Informal food traders must have greater freedom to trade, with or without a permit.
  • Food parcel distribution must be ramped up, requirements for beneficiaries to produce SA ID’s abandoned, and community-based organisations allowed to distribute food relief without a permit.
  • Adequately fund Gender-Based Violence response and prevention.
  • Budget allocations be made to temporarily support additional provision of free basic services such as Free Basic Water and Free Basic Electricity.
  • Support the Auditor General’s offer to send experts from the AG’s office to safeguard the emergency COVID-19 budget.
  • Publish spending and procurement data on public platforms such as VulekaMali, at real-time and in accessible formats.
  • Transparency regarding all donated PPE in order to avoid doublespending.
  • Fiscal and Financial Commission be requested to undertake a study which investigates revenue sources for local government.
  • Engage the National Treasury to work on a special health budget which includes budget provision for key vacancies in the health sector to be filled.
  • Ensure efforts to enhance public participation in all stages of the budget process including during declared disasters.
  • Reform the national procurement system to entrench transparency, citizen participation and monitoring throughout the contracting cycle.


  1. Organisation Undoing Tax Abuse


The Organisation Undoing Tax Abuse (OUTA) specified that its submission was informed by the events related to the COVID-19 pandemic. The pandemic had impacted upon the National Budget, and therefore the submission focused on the Appropriations Bill and the potential implications of the pending Supplementary Budget on public spending. OUTA submitted that there was a clear need for disruption and inclusive change, but these required political barriers to be overcome through open and constructive debate that should be built on consensus and solidarity between taxpayers, consumers, and public officials. OUTA added that there was a need for inclusive reforms, which should be the cornerstone of post COVID-19 budgets.


OUTA’s focal point of the submission was that the state-centric monopoly in key industries like energy, water and transport had failed due to systemic contravention of the Public Finance Management Act and other legislation governing how tax revenue may be spent. OUTA put to the Committee that instead of diversifying inequality, the national government needed to cultivate working and middle-class growth through targeted public expenditure in a manner that did not constrain investment in the private sector but promotes it. OUTA further highlighted that the South Africa’s sovereign debt had grew from R450 billion in 2009/10 to almost R4 trillion to 2020/21 financial years, and this should be arrested as a matter of urgency.


On State-Owned Entities, OUTA submitted that these entities were near financial collapse and this had been compounded by the economic impact of a nationwide lockdown enforced to limit the spread of the COVID-19 virus. OUTA argued that the need for economic stability and growth in this extremely unfavourable situation demanded self-imposed “structural adjustments”. OUTA said these proposed South Africa’s structural adjustments should be tailored to fit the nation’s unique challenges. OUTA warned that if this was not implemented as a matter of urgency, the country ran the risk of a national debt spiral that would culminate in the loss of our economic sovereignty and the implementation of generic structural adjustment programmes that eliminate social spend. OUTA submitted that they soon hoped to see expenditure plans that better reflect the reality of SOEs’ and local government’ challenges in South Africa. OUTA put it to the Committee that contributing to Eskom’s inability to meet its debt obligations, was the inability of many municipalities to pay the entity what was due to it. OUTA also added that the current restructuring of the energy sector should go hand in hand with restructuring local government systems.


Even though it had not been tabled, OUTA also commented on the pending Supplementary Budget not yet tabled by the Minister of Finance. This, OUTA said, was in response to the unforeseen expenses demanded by the ripple effects of COVID-19. OUTA submitted that their submission was also aligned with the National Treasury economic growth paper published in 2019, titled “Towards an Economic Strategy for South Africa”. OUTA stated that they support suggestions for simple, competitive, and incentivising economic interventions such as lowering the cost of doing business and freeing up finance for Small, Medium and Micro Enterprises (SMMEs) owned by historically disadvantaged entrepreneurs. 


Moreover, OUTA submitted that some sectors at national level needed modernisation. OUTA suggestion was limited to six sectors: Energy, Public Enterprises, Transport, Communications and Digital Technologies, Water & Sanitation, Health and Basic & Higher Education. OUTA agreed that these sectors were crucial for innovation and inclusive growth and that they can facilitate bottom-up economic transformation. OUTA added that unfortunately due to their capital-intensive value chains, these were the key sectors targeted by organised state-capture networks. OUTA stated that the effects of the structural challenges and the entrenched criminal networks, which may continue to exploit government resources, cannot be overlooked and must be addressed before Parliament approves the allocations of more money to these six sectors.


Regarding specific recommendations to the Committee, OUTA submitted that a post Covid-19 Renewable Energy Investment Strategy, which may aid post-lockdown recovery should be proposed to the Executive. OUTA further recommended that:

  • An increase in electrification allocation towards off grid electrification;
  • A reduction in nuclear spending to the 2018 levels, specifically NECSA operations;
  • A rejection of Central Energy Fund’s attempt to use fuel levy and carbon tax to bail out Petrosa; and
  • An acceleration of legislative reform to restructure Eskom so that the costs of generation, transmission and distribution can be transparently reviewed in order to assess and adapt the Eskom business model for the future.


Furthermore, OUTA recommended that the Committee should follow up with National Treasury to determine whether the SOEs that had debt repayments and requiring bailouts were able to get debts repayment holiday due to the Covid-19 situation. In advocating for a debt repayment holiday for SOEs, OUTA said they were firm that if National Treasury or the Presidency were to successfully engage the multilateral lending institutions for a debt holiday, it should not be seen as an opportunity for further prolificacy, but rather as breathing room during Covid-19 to repair the damaged SOEs and allow other areas of spending not to be cut.


Additional measures recommended by OUTA to deal with what they called malaise at Public Entities included that:

  • Parliament should call for a report back on the progress against implementation of the recommendations of the SOE Entity review;
  • Legislative changes such as amendments to the Companies Act, a State-Owned Companies Act and the introduction of a Procurement Bill to be tabled in Parliament, should be put through a public engagement process and passed;
  • Government should assess which entities are unnecessary and can be shut down, amalgamated into others or the function assumed by a government department;
  • Auditor General should audit public entities which are currently not audited by the AGSA;
  • Public entities should sell off non-core assets;
  • Equity partners should be sought for certain public entities;
  • Prosecution should tackle corruption and state capture;
  • Board members who have been involved in financial misconduct should be declared delinquent and should not serve in positions of power where there are fiduciary duties;
  • All board appointments should be transparent and preceded by a rigorous due diligence process including probity checks; and
  • Institutions and persons mandated with oversight roles and who have failed to perform these oversight roles should face consequences. It is unacceptable that the checks and balances constantly fail.


On the transport sector, OUTA specifically recommended more impactful spending (by local and provincial government) on public transport alternatives such as bicycle lanes, subsidised and well-regulated mini-bus networks as well as properly maintained and managed passenger rail networks. OUTA said more investment of these public transport alternatives could alleviate the costs of commuting to work for those who live in far removed areas from both informal and formal productive activities.


  1. Black Sash


The submission from Black Sash focused both on the appropriations put forward in the Bill at the time of the tabling of the Budget in February, and on the implications the Covid-19 pandemic had for public spending and specifically, Vote 19, Social Development. Black Sash reported the following under-spending by the Department of Social Development on its allocated budget in prior years: R1.31 billion in 2017/18; R1.59 billion in 2016/17 and R1.76 billion in 2015/16. Black Sash further reported that, while the Social Development allocation grew by 4.7 percent in nominal terms and 3.6 percent in real terms over the 2020 Medium Term Expenditure Framework (MTEF) period, it was not growing at the pace of the need. While the long-term impact of the Covid-19 pandemic on poverty and unemployment would continue to emerge, it had already resulted in a humanitarian crisis with many losing their livelihoods. While Black Sash noted the rollout of the temporary Covid-19 Social Relief of Distress Grant as a significant intervention, it indicated that the amount of R350.00 was not enough to cover even basic food needs.


Black Sash summarised its recommendations as follows:

  • The Covid-19 Social Relief of Distress Grant should be converted into a permanent Social Assistance Grant for people between the ages of 18 and 59 years with no or little income; coming into effect in November 2020.
  • The Covid-19 Social Relief of Distress Grant should be increased from R350 to at least R 1 227.
  • A single Covid-19 Social Relief of Distress Grant should be created, where all unemployed adults with no access to the Unemployment Insurance Fund (UIF) are eligible for the same amount, irrespective of whether or not they care for children.
  • Those who are eligible for the Covid-19 Social Relief of Distress Grant, without access to the necessary technology, should be assisted with access and applicants should receive the grant for a full six months from May to October 2020, irrespective of date of application.
  • Contractual agreements should be put in place to ensure the protection of personal and confidential information.
  • SASSA and government departments delivering social security services should urgently open their offices with a full staff complement to give effect to the social and economic relief measures announced by the President; and SASSA should pay the banking fees to ensure that recipients receive the full cash value of the Covid-19 Social Relief of Distress Grant.
  • The package of R50 billion for social grants should be increased by an additional R180 billion and the entire amount should be spent on the social assistance net for the poor and unemployed.




4.5        Congress of South African Trade Unions


The submission from the Congress of South African Trade Unions (COSATU) addressed the 2020 Budget as a whole. The aspects that COSATU welcomed and supported, included the following:

  • The commitment to increase infrastructure expenditure;
  • The efforts of the Department of Trade, Industry and Competition to revitalise industries;
  • The commitment to table various legislation to grow the petroleum, gas, minerals and transport sectors and the state-owned entities (SOEs);
  • The release of the Public Procurement Bill;
  • That Value added Tax (VAT) and income tax upon working and middle class families had not been increased; 
  • That government provided inflation-linked tax relief for working and middle class families;
  • The initial steps taken by the new CEO of Eskom to begin cleaning up the mess and the initial green shoots in Denel;
  • The steps made by the South African Revenue Service (SARS) to rebuild its capacity and to tackle tax evasion;
  • The progressive pronouncements on the Sovereign Wealth Fund in the Budget;
  • The allocations to ensure all schools have sanitation, however the rising teacher learner ratios are not addressed;
  • The planned water infrastructure investments are welcomed, but the lack of attention to investing in water recycling and conservation is reckless; and
  • Whilst appreciating the President’s freeze of salaries for the Executive, COSATU believes this is too little.


The concerns raised by COSATU, included the following:

  • The lack of a detailed economic stimulus package to reduce unemployment;
  • The lack of urgency in implementing various legislative interventions to grow sectors;
  • The lack of concrete plans to stabilise SOEs;
  • The lack of commitment in the Budget to progressively reform taxes;
  • The need for massive interventions to improve customs enforcement;
  • The government’s seeming continuous attack on public servants;
  • The failure to deal with corruption and wasteful expenditure;
  • There is no indication of how government will intervene to halt the collapse of two dozen municipalities;
  • The land restitution allocations and targets are inadequate; and
  • The commitments made by the President in the 2020 State of the Nation Address are not reflected in the Budget. Specifically, the building of universities and colleges; implementation of the National Health Insurance (NHI); and the reduction of South African Police Service members.


4.6     South African Faith Communities’ Environment Institute


The South African Faith Communities’ Environment Institute (SAFCEI) focused on the analysis of energy sector appropriations and the analysis of the impact of Covid-19 on the energy sector and economy.  SAFCEI focused on how Eskom has become a major drain on the fiscus, entailing the extent of bailouts required by Eskom. It stated that as a major public entity, Eskom is meant to be financially independent from the fiscus however, state capture, corruption, inflated contracts and poor maintenance of the infrastructure led Eskom in to a financial crisis.  The unresolved issues that includes poor supply chain management and contracting practices at Eskom persist.


SAFCEI submitted that funds spent on repeated bailouts to Eskom can be reprioritised to education, health or other areas in need. SAFCEI submitted that increasing tariffs is raising the cost of living and the cost of doing business. According to SAFCEI, it is therefore important that the corporate governance and financial management at Eskom and in other departments and entities in the energy sector be managed effectively. 

SAFCEI submitted that economic activities have reduced due to the Covid-19 pandemic resulting in implications on the demand for electricity. SAFCEI submitted that the demand modelling that existed before the pandemic no longer holds true. Even in the aftermath of the pandemic, it anticipates that the demand for electricity is unlikely to return to previous levels, due to some business activities that will be lost. SAFCEI submits that there is decreased fiscal space for large capital projects despite the Integrated Resource Plan (IRP) not envisioning new nuclear projects before 2030.  Furthermore, SAFCEI calls for public interests to be put first and Constitutional provisions for public participation and transparency be upheld. SAFCEI submitted that prior to any energy procurement, there would need to be a Section 34 Electricity Regulation Act determination in place with public participation processes followed.

SAFCEI summarised its recommendations on the Bill as follows:

  • SAFCEI calls on Parliament to exercise its Constitutional oversight mandate rigorously in respect of proposed capital projects in the energy sector.
  • SAFCEI calls on Parliament to ensure that the Department of Energy and Eskom make transparent what financing mechanisms they intend to use for the proposed 2500MW new nuclear build.
  • SAFCEI calls on Parliament to ensure that Eskom is more transparent by making loan agreements and contracts publicly available.
  • When National Treasury sets requirements that public entities must meet when they receive bailouts or obtain loan guarantees, compliance with these requirements should be monitored as part of Parliament’s oversight role. Officials in public entities failing to comply with these  requirements should be called before committees to account for their failure to comply.  
  • The shareholder compacts for all public entities should be made available in the public domain for scrutiny.
  • The Appropriations and Finance Committees to request full costings for infrastructure projects. These costings must include provisions for decommissioning of plants and management of radioactive waste. 
  • SAFCEI calls on government to abandon nuclear energy entirely. South Africa does not need nuclear in its energy mix. It is a costly and unsafe power generation option.


4.7        Ms T Armstrong


Ms T Armstrong voiced concerns over the fact that money needs to be appropriated from National Revenue Fund for the requirements of the State. She submitted that she does not trust the State as there is too much fraud and corruption that has taken place and this is not about to end either.





4.8        Griqua-Khoisan Tribal House


Mr B Jacobs made his submission as Chief of the Griqua-Khoisan Tribal House and requested that immediate provision be made to recognise the Khoisan as the first indigenous people of South Africa.


  1. Committee Findings and Observations


Having deliberated and considered all the submissions made by the above stakeholders on 2020 Appropriation Bill (B4-2020), the Standing Committee on Appropriations makes the following findings and observations:


Overall thrust of the 2020 Appropriation Bill 


  1. The Committee notes that the 2020 Appropriation Bill proposes a spending shift from the social sector to a focus on economic development, community development, and social development while the peace and security (Defence, State Security and Home Affairs) and general public services functions see budget baseline reductions.


  1. The Committee notes that the 2020 Appropriation Bill proposesmajor budget baseline expenditure reductions and reprioritisation of funds in line with government proposed fiscal consolidation policy through a total of R66.045 billion reduction in budget baseline. The Committee also notes that these significant reductions in baseline expenditure by government are aimed at reducing the budget deficit and level of government debt.


  1. The Committee notes that out of theproposed R66.045 billion baseline reduction in the 2020 Appropriation, the Bill proposes a R28.238 billion in programme baseline reductions. Although the Committee supports government fiscal policy stance, however, it is concerned about the possible unintended negative impact programme baseline reductions might have on service delivery, particularly those services rendered by government to the poor.


  1. The Committee notes that out of the proposed R66.045 billion baseline reduction in the 2020 Appropriation, the Bill proposes a total of R37.807 billion reductionin the public sector wage bill. However, the Committee is of the view that it is premature for government to pronounce on the R37.807 billion reduction on the public sector wage bill because the successful realisation of this reduction is dependent on successful negotiations with trade unions, and the outcome of this process in unknown and uncertain at this stage. The Committee is of the view that government should have first negotiated and concluded on the public sector wage bill with all the affected stakeholder before pronouncing on the outcomes.


  1. The Committee notes the proposed R4.469 billion budget reduction to the Passenger Railway Agency of South Africa (PRASA) due to consistent underspending in its capital budget. While the Committee agrees in principle that funds should be shifted from low spending to high spending programmes of government, the Committee is concerned about the state of affairs at PRASA. The Committee is of the view that the role of PRASA in providing affordable and reliable public transport to the poor is very crucial for government, and continued underspending on CAPEX by PRASA is a serious concern to the Committee and in some way delays government’s efforts to reverse some of the apartheid spatial planning deficiencies. However, the Committee is optimistic that the appointment of PRASA Administrator by the Minister of Transport will soon bring about the required changes, positively yield the desired result, and allow PRASA to efficiently and effectively deliver on its legislative mandate as expected by all South Africans.


  1. The Committee notes that the 2020 Appropriation Bill proposes budget baseline additions of R44.042 billion for financial support to State Owned Companies. Even though the Committee supports this allocation, the Committee is still gravely concerned about the continued bailouts of State Owned Companies with no end in sight, particularly because these bailouts are more often needed as a consequence of both poor management and leadership in these entities. However, the Committee is encouraged and welcome government’s commitments made in the 2020 budget to focus more on reforms in State Owned Companies, and the Committee is optimistic that these reviews and reform processes will subsequently reduce the dependence on government guarantees and bailouts by SOEs.


  1. The Committee notes that the 2020 Appropriation Bill proposes an additional baseline allocation of R7.499 billion in 2020. The Committee welcomes and is encouraged that these funds will cater amongst other things for post-retirement medical assistance, Municipal Revenue Management Improvement Programme, Innovation Fund, SARS infrastructure related projects and addition to provincial grants allocation.


Budget principles of efficiency, effectiveness, economy and fairness


  1. The Committee notes and is encouraged by government’s effort to protect allocation to local government as reflected in the positive and above inflation growth to CoGTAgrants allocation and the overall above inflation baseline increase to community development expenditure. The Committee views this allocation as critical given that service delivery takes place at municipal level and when funds are efficiently utilised for their intended purposes, this in turn results in improved service delivery.


  1. The Committee also welcomes government’s efforts to continue maintaining the safety net of the poor segment of the population through higher than inflation grants allocationsto the Department of Social Development and this in turn translate to social grant funding to the poorest of the poor. The Committee views these allocations as key to poverty alleviation initiatives by government.


Education, training and skills development


  1. The Committee notes with concern thespending reduction in the post-school education and training infrastructure allocations, which is threatening to reverse the gains made in previous period, particularly spending to fund fee free higher education. The Committee is also concerned on the potential negative impact of expenditure reductions to Universities and TVET colleges, Science and Technology in as far provision of fee free education, addressing the lack of student accommodation in TVET colleges and innovation. The Committee notes with concerns the potential negative impact of the R688 million reduction in the TVET College’s infrastructure and efficiency grant, which focus on infrastructure maintenance.


  1. The Committee notes and welcomes the above inflation increases in baseline allocation for the National School Nutrition Programme. The Committee views this programme as critical for learners from rural school and poor families, while also aiding in government’s efforts to fight hunger and malnutrition.


Accelerating economic growth, infrastructure investment, and job creation


  1. The Committee notes and welcomes the prioritisation of certain elements within the economic development function, namely economic development regulation and infrastructure, job creation andindustrialisation and exports. However, the Committee is concerned about the declining allocations in Agriculture and Rural Development and Science and Technology. The Committee is concerned about the huge reductions in allocations for the land reform and the agricultural land holding account. The Committee views agriculture as a key to job creation, food security and economic growth in South Africa, reducing expenditure within this function is therefore a cause of concern. The issue of agricultural funding is further compounded by the insufficient allocation to the developmental mandate of the Land and Agricultural Development Bank of South Africa.


  1. The Committee notes the submission from stakeholders that the budget baseline for agriculture should be increased by at least at least by 25 per cent per annum while stakeholders further submitted that government sufficiently fund and reposition Land bank mainly to focus on agricultural development and reduce poverty and unemployment through economic use of unutilised and undistributed state land.


  1. The Committee notes with concerns the submissions from stakeholders that the overall trends in public infrastructure were not in line with the common statements that South Africa is implementing a strategy on infrastructure-led growth as highlighted in the 2020 State of the Nation Address by the President. This was due to a projected public sector infrastructure allocation real decrease of 0.5 per cent in 2020.  The Committee also aligns itself to existing evidence that infrastructure spending acts as catalyst for job creation and economic growth, therefore consistent reduction in infrastructure expenditure is a cause of concern for a country with high levels of unemployment compounded by low levels of economic growth. The Committee is concerned about the huge allocation decline to government infrastructure particularly on the allocations for buildings and other fixed structures.


  1. The Committee also notes the submissions by stakeholders that there is also a real decline in energy infrastructure spending by government. The Committee is particularly concerned about the reductions in human settlement infrastructure due to the huge backlog faced by government in providing housing and other human settlement related infrastructure to the poor.


  1. The Committee welcomes the strong real increase in the baseline allocation for the Department of Small Business Development. The Committee has always emphasised on the need for government to make more funding available to Small, Medium and Micro Enterprises because evidence suggests that these institutions are key to job creation, economic growth and redistribution.


Defence, peace and security, and building a capable state and improving public service


  1. The Committee notes with concern the possible negative impact of the baseline reduction on the Home Affairs and Defence budgets that are responsible for maintaining the national population register and regulating the movement of persons through our ports of entry. The Committee is in agreement with stakeholders that the Home Affairs allocation needs urgent attention because the identification system managed by Home Affairs underlines South African banking and commerce system and therefore crucial to the economy. Furthermore, the Committee has observed the continued decline in the Defence budget and whilst it is mindful of other societal needs, the Committee views Defence as important component in maintaining both the democratic order and the country’s sovereignty. Therefore, the Committee feels that the Defence budget needs urgent attention.





  1. The Committee welcomes the protection of the proposed budget allocation to the National School of Government due to the crucial role that the institution is expected to play in building State capacity.This is one of the key shortcomings that have been identified in the National Development Plan needing urgent attention if the State was to operate at an optimal level.


  1. Recommendations


The Standing Committee on Appropriations, having considered the above submissions and inputs on the 2020 Appropriation Bill, recommends as follows:


6.1   That the Minister of Finance should consider allocating requisite resources towards the developmental mandate of the Land and Agricultural Development Bank of South Africa. The Committee views the Land Bank as a critical institution in funding agriculture for job creation, economic development especially in poor and rural communities, and food security.


  1. Committee recommendationon the Bill


The Standing Committee on Appropriations, having considered the Appropriation Bill[B4–2020] (National Assembly: Section 77) referred to it and classified by the Joint Tagging Mechanism; recommends that the Bill be adopted without amendments.


  1. Conclusion


The Committee emphasises the need for government departments to always ensure efficient, economic and effective use of appropriated funds in line with the principles set out in Section 195 of the Constitution and other relevant legislations governing the use of public funds, and applicable to the Republic of South Africa.


The Committee is also mindful of the fact that budget assumptions and allocations that the 2020 Appropriation Bill proposals are no longer valid due to Covid-19 pandemic. Therefore, the Committee urges government departments to spend the allocated resources in a manner that is reflective of the negative impact that Covid-19 brings to the South African public purse.


Report to be considered.




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