ATC210923: Report of the Standing Committee on Appropriations on the Second Special Appropriation Bill [B17 – 2021] (National Assembly – Section 77), Dated 21 September 2021

Standing Committee on Appropriations

Report of the Standing Committee on Appropriations on the Second Special Appropriation Bill [B17 – 2021] (National Assembly – Section 77), Dated 21 September 2021

 

Having considered the Second Special Appropriation Bill [B17 – 2021], referred to in terms of Section 13 of the Money Bills Amendment Procedure and Related Matters Act No. 9 of 2009 (as amended by the Money Bills Amendments Procedure and Related Matters Amendment Act, No 13 of 2018), the Standing Committee on Appropriations reports as follows:

 

1. Introduction

 

Section 213(2) of the Constitution of the Republic of South Africa, provides that money may be withdrawn from the National Revenue Fund only in terms of an appropriation by an Act of Parliament.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 2021 Second Special Appropriation Bill (hereafter referred to as the Bill) proposes to appropriate additional urgent funding allocations in the 2021/22 financial year, to the Votes of National Treasury, Social Development,Defence, Police, and Trade, Industry and Competition. Furthermore, the Bill also includes expenditure authorised by the Minister of Finance in terms of section 16 of the Public Finance Management Act, No. 1 of 1999 (PFMA) for the extensionof the Social Relief ofDistress grant and support for small businesses. 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 Amendment Procedure and Related Matters Act, 2009 (as amended), and herein referred to as the Act.

 

The Bill was tabled in Parliament by the Minister of Finance on 23 August 2021 and was referred to the Committee for consideration and report to the National Assembly as prescribed in section 13 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 consulting with the FFC, the Committee also invited the Parliamentary Budget Office (PBO) to comment on the Bill. The Committee also consulted with the stakeholders who were directly affected by the Bill, namely the South African Special Risks Insurance Association SOC Ltd. (SASRIA), Department of Social Development, and Department of Trade, Industry and Competition. Furthermore, the Departments of Defence and Police were requested to submit their comments on the Bill in writing to the Committee, however, these two departments have not submitted their written responses at the time of the adoption of the report.

 

Section 13(2) of the Act also requires the Committee on Appropriations to hold public hearings on the Bill and for the Committee to report to the House on the comments and amendments to the Bill. In compliance with the requirements of the Act, advertisements were published in national and regional newspapers from 3 to 10 September 2021, inviting the general public and interested parties to comment on the Bill. The public hearings on the Bill were held on 17 September 2021 via the Zoom virtual meeting platform. In response, written and oral submissions were received by the Committee for consideration, and in line with the requirements of the Act from the Congress of South African Trade Unions and Mr PJ Stassen. The Committee viewed the submission from Mr PJ Stassen as not being relevant to the objectives of the Bill being processed, therefore the contents of his submission has not been included in the report.

 

1. Background

 

Section 16 (1) of the Public Finance Management Act, No.1 of 1999 (PFMA) authorises the Minister of Finance to authorise the use of funds from the National Revenue Fund to defray expenditure of an exceptional nature which is currently not provided for and which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds. Section 16 (2) of the PFMA states that the combined amount of any authorisations in terms of subsection 1 may not exceed two (2) per cent of the total amount appropriated in annual national budget for the current financial year.

 

South Africa, like the rest of the world, is still battling with the Covid-19 pandemic since March 2020. Many lives have been lost and many South Africans are still in hospitals fighting for their lives. Many South Africans’ livelihoods have been negatively affected by the Cobid-19 pandemic. According to the official statistics published by Statistics South Africa through the Quarterly Labour Force Survey (QLFS), unemployment remained stubbornly high. As at the end of the first quarter of 2021, unemployment was at 32.6 per cent, increasing to 34.4 per cent at the end of the second quarter of 2021. This was the highest unemployment rate recorded since the start of the QLFS in 2008. According to the expanded definition, unemployment increased by 1.2 percentage point from the first quarter of 2021to 44.4 per cent in second quarter of 2021. The youth were not spared. The official unemployment rate among the youth (15-34 years) was 44.2 per cent in the second quarter of 2021. Out of this 44.2 per cent, 11 per cent was among university graduates. On the economic front, the South African economy is slowly recovering from the hard lock-down.

 

Government has continuously emphasised the need to get more South Africans vaccinated in order to prevent the re-emergence of other waves of Covid-19, while slowly re-opening the economy. According to Statistics South Africa (StatsSA), the South African economy grew by 1.2 per cent in the second quarter of 2021. The main drivers of output on the production (supply) side of the economy were mining, agriculture and trade industries. On the expenditure (demand) side of the economy, household spending and changes in inventories helped to spur growth by 1.2 per cent in the second quarter of 2021. This was the fourth consecutive quarter of positive growth.

 

Government has continued to be agile in both fighting the Covid-19 pandemic while also cushioning the poor and vulnerable groups against the loss of income caused by the Covid-19 associated lockdowns. To that end, the President of the Republic of South Africa on 25 July 2021 announced the extension of the Social Relief of Distress (SRD grant until the end of March 2022. To accommodate this pronouncement by the President, the Minister of Finance had to use section 16 of the Public Finance Management Act (PFMA) in order to defray the expenditure by the Department of Social Development. This allowed the Department of Social Development to pay the SRD grant as per the pronouncement of the President. Whilst government was focused on fighting the Covid-19 pandemic in various ways, South Africa was hit hard by the July 2021 unrests and riots that engulfed the country, particularly in the provinces of KwaZulu-Natal and Gauteng. Many businesses were damaged and looted, resulting in huge costs to the economy.  Therefore, the need for additional funding as proposed on the Bill is as a result of the combined impacts of the Covid-19 pandemic and the July 2021 unrest that took place mainly in KwaZulu-Natal and Gauteng provinces. To this end, and as proposed in the Bill, the Minister of Finance as authorised by section 16 (1) of the PFMA, is requesting Parliament to appropriate funds from the National Revenue Fund to the Department of Social Development, in order fight the Covid-19 pandemic as follows:

 

• A proposed total of R9.763 billion is allocated out of the National Revenue Fund to fund the extension of the Special Covid-19 Social Relief of Distress Grant; and 
• A proposed total of R250 million is allocated out of the National Revenue Fund to the South African Social Security Agency (SASSA) for system enhancements to improve application and payment processes of the SRD grant, including the strengthened eligibility assessment.

 

In order to assist business affected by the July 2021 unrests, the Minister of Finance as authorised by section 16 (1) of the PFMA, is requesting Parliament to appropriate funds from the National Revenue Fund to the Department of Trade, Industry and Competition’s industrial financing programme as follows:

 

• A proposed total of R1.3 billion is allocated out of the National Revenue Fund to fund business affected by the July 2021 unrest through the department’s industrial financing programme.

 

1. Provisions of the Bill

 

The Bill proposes additional financial support to the following departments:

 

• A proposed additional R3.9 billion to National Treasury (Vote 8) to provide for a required equityinjection to the South African Special Risk Insurance Association SOC Limited (SASRIA);
• A proposed additional R26.7 billion to Social Development (Vote 19) to cater for the SRD grant, inclusive of R500 million (inclusive of the R250 million allocated through section 16 (1) of the PFMA) to SASSA for system enhancements to improve application and payment processes including the strengthened eligibility assessment system;
• A proposed additional R700 million to Defence (Vote 23) to fund the deployment of military personnel to assist police with bringing order to the July 2021 unrest and riots mainly in Gauteng and KwaZulu-Natal provinces;
•  A proposed additional R250 million to Police (Vote 28) for the deployment of police personnel to deal with the July 2021 unrest and riots mainly in Gauteng and KwaZulu-Natal provinces; and
• A proposed additional R1.3 billion to Trade, Industry and Competition (Vote 39) to support business affected by the July 2021 unrests and riots mainly in KwaZulu-Natal and Gauteng.

 

 

 

 

1. Comments and hearings on the 2021 Second Special Appropriation Bill with identified

stakeholders

 

The sections below provide an overview of the submissions made by the identified stakeholders in respect of the Bill.

 

1. Financial and Fiscal Commission

 

The Financial and Fiscal Commission (FFC) submitted that, the additional appropriations to the five Votes detailed in the Bill were essentially addressing the unanticipated implications of domestic and regional unrest. To this end, the FFC supported the additional allocations in the Bill as these largely constituted non-discretional spending. Notwithstanding the support to the Bill, the FFC made the following recommendations and observations:

 

• Whereas fiscal support for businesses and households impacted negatively by the unrest is vital, additional expenditure diverted to this is bound to undermine infrastructure and other expenditure supporting the nascent fiscal recovery driven by better economic performance; and to detract from the fiscal consolidation exercise aimed at reducing debt-servicing costs.
• The FFC appreciates that current economic conditions may necessitate a reduction in government spending. There is however a need to consider the choices made within this reduced resource envelope and to ensure a favourable balance between core and non-core spending and even unforeseeable spending.
• Given the experience of the implementation and relief brought by the SDR Grant, there is a need for the Minister of Finance to consider other policy options and affordability of some form of income protection/Basic Income Grant. This will enable better planning and prevent the need for stopping/reintroducing support measures for poor and vulnerable South Africans.
• Precise and detailed information relating to the specificities of the allocations so as to enable more in-depth analysis is not included in the Bill. To this end, the Commission recommended that:

 

• An indication of the outputs against the various proposed allocations be provided; and
• In the case of Social Development, Parliament should receive a clear plan detailing how the R500 million adjustment will be used to enhance the grant application and payment processes.

 

1. Parliamentary Budget Office

 

The Parliamentary Budget Office (PBO) submitted that the questions that the Committee would have to consider in processing the Bill are; whether it may have been avoidable if government had reassessed its fiscal consolidation stance; and whethersuch a reassessment would have allowed government to take into account warnings about the fragile social fabric and the impact of the 3rdwave of Covid-19 infections. The PBO submitted that reassessment rather than extension of fiscal consolidation would have allowed government to provide continued relief to poor households who were suffering before the pandemic and faced even greater hardship during 2020 and 2021. The PBO stated that several years of fiscal consolidation have had a cumulative negative impact on employment, investment and economic growth.

 

The PBO further submitted that the social, economic and political risks associated with extraordinarily high inequality were not the only risks facing South Africa and the global community. The PBO put forward the following arguments for consideration over the medium term:

 

• The ongoing pandemic and the risk of new devastating pandemics in the future have to be included in budget planning so that enough resilience is built within society to promote economic stability in the face of pandemics;
• Climate change risks related to severe weather disasters and also prolonged droughts are not far off events but are occurring now and have to be planned and budgeted for immediately;
• The impact of the fourth industrial revolution and also contagion from economic and financial crisis elsewhere in the global economy requires not only measures such as strategic capital controls and increased domestic manufacturing of key products but also planning and budgeting to enhance skills and foster resilience to disruption from technological change;
• Consideration is required for increased government expenditure on comprehensive social security, national health insurance, improved education and training opportunities to promote solidarity across society and to ensure social stability that are pre-conditions for political and economic stability;
• Social and political instability can cause huge material damage in a very short period of time. Spending on stability is an investment in preventing this damage;
• Fiscal policy responses to planning for risks and uncertainty could include the enhancement of automatic stabilisers as part of a comprehensive social security system as well as additional automatic stabilisers that kick in when there is a crisis;
• A developing and growing South African economy requires the stability associated with building an inclusive economy, which means government’s fiscal policy framework and long-term planning have to start increasing expenditure to ensure the socio-economic rights in the Constitution; and
• Decisions to increase taxes and when necessary to borrow more have to be seen as investments in the future and take into account that reconstruction and development cannot happen in an unstable environment.

 

1. South African Special Risk Insurance Association SOC Ltd.

 

The South African Special Risk Insurance Association SOC Ltd. (SASRIA) is a public enterprise listed under schedule 3B of the Public Finance Management Act (No. 1 of 1999). SASRIA is a non-life insurance company that provides cover for damage caused by special risks such as politically motivated malicious acts, riots, strikes, terrorism and public disorders. In order to be insured against these specialist risks, a policyholder must have an underlying policy in force that includes SASRIA cover at the time that of event that gave rise to a loss.

 

During the 2020/21 financial year, SASRIA reported that it improved its profitability by turning out profit after tax of R333 million, compared to a loss of R1.4 million in the previous year. Gross written premium collected increased by 11 per cent to R2.4 billion (2019: R2.1 billion), while insurance claims paid out declined by 37 per cent to R992 million (2019: R1.5 billion). SASRIA’s retained earnings saw a steady increase to R6.9 billion (2019: R6.6 billion) and total assets under management remained strong at R8.5 billion (2019: R8.1 billion).

 

The July 2021 events of public disorder, riots and civil unrest across the KwaZulu-Natal and Gauteng provinces haveled to extensive damage and destruction of property. SASRIA reported that the unrests in KwaZulu-Natal accounted for 70 per cent of losses and Gauteng accounted 30 per cent with losses being estimated at R20 billion to R25 billion. SASRIA provided an overview of its management actions to restore financial soundness and reported that the R3.9 billion cash injection would assist in the solvency cover ratio. However, this would not be sufficient to meet the 100 per cent solvency cover ratio as per the regulations. Early estimates by SASRIA was that claims emanating from these events could be upwards of R20 billion and the entity will require an additional capital injection from government to meet the 100 per cent regulatory solvency cover ratio requirement.The table below provides an overview of the financial projected injection required by government.

 

Table 1: Projected financial injection required as result of July 2021 unrests

Losses	Cash Injection required
	100 per cent regulatory solvency	Targeted solvency
R20 billion	R5.6 billion	R7.9 billion
R25 billion	R11.3 billion	R14.70 billion

SASRIA (2021)

 

1. Departmental comments on the Bill

 

The sections below provide an overview of the submissions that were made on the Bill by the invited departments.

 

1. Department of Social Development

 

The Department of Social Development (DSD) submitted that the July 2021 unrests in the KwaZulu-Natal and Gauteng provinces occurred at a time when the department was in the middle of Covid-19 pandemic. This was accompanied by sluggish economic growth, resulting in high levels of unemployment and a perpetuation of socio-economic challenges, including deepening poverty and inequality; part of this may have sparked the unrests. The DSD submitted that the unrests surfaced the seriousness of social inequalities and marginalisation faced by South Africans, especially with the limited participation of youth in economic opportunities resulting in high levels of unemployment and deepening inequality and poverty. The DSD however underscored, these socio-economic challenges should not result in the looting of stores and destruction of property. The DSD further submitted that a significant amount of jobs were lost during the recent unrests; thiswas in addition to the approximately 552 000 jobs lost during the first and third wave of the Covid-19 pandemic.  Furthermore, DSD reported that the number of people receiving no income increased from 5.2 per cent before the lockdown to around 15.4 per cent of the sixthweek of the national lockdown according Statistics South Africa and thus amplified vulnerability and food insecurity in many communities.

 

With regard to the R500 million towards SASSA for system enhancements, the DSD reported that the inception of the SRD grant required a complex approach to implementation as this was the first in the history of SASSA. Therefore, SASSA had to put a mechanism in place to ensure that all citizens who were eligible for the benefit of the SRD grant and some of whom may not be in SASSA’s database or enlisted as grant recipients were able to access the benefit as required. Thus, an innovative solution was necessary to meet the demand being placed on SASSA’s SRDG programme. To this end, DSD reported that external services were acquired to:

 

• Develop a web-service for applicants to apply for this grant;
• Ensure the integration with the USSD and GovChat application channels;
• Perform a deduplication service; and
• Develop and implement the Application Programming Interface for the validation of the grant against various databases and provide the outcome of grants in terms of being approved or declined.

 

The table below provides a breakdown of the planned distribution of the R500 million based on the cost elements involved in the payment of the Special Covid-19 SRD grant.

 

 

 

 

Table 2: Planned distribution of the proposed R500 million to SASSA

Department of Social Development (2021)

 

Regarding the uptake of the SRD grant, the DSD reported that a total of 12 261 895 complete applications have been received by 1 September 2021 from which a total 6 913 338 have been approved with the rest still being verified. With regard to the July 2021 social unrests in the KwaZulu-Natal and Gauteng provinces, the DSD also reported the key interventions it provided as per its social protection mandate. The DSD, in conclusion, submitted that the Committee should note that given the continued challenges the pandemic is having on the economy, there may be a need for further income support measures beyond March 2022. These further income support measures were needed especially for those aged between 18 and 60. The DSD further emphasised the need to link working age recipients to economic opportunities through active labour market programmes that include job placement and skilling, and thereby creating more sustainable livelihoods.

 

 

 

 

1. Department of Trade, Industry and Competition

 

The Department of Trade, Industry and Competition (DTIC) reported on its initiativesthat were introduced in the wake of the civil unrest that has engulfed the KwaZulu-Natal and Gauteng provinces as well asparts of Mpumalanga.The DTIC also reported on the outcomes of an online business survey that was launched on 18 July 20201. From this survey, 67 per cent of the respondents were from KwaZulu-Natal while 33 per cent were from Gauteng. DTIC reported that only 58 per cent of the respondents have insurance. Most businesses reported a combination of damages (temporary business closure; lower number of employees on premises;damages to existing stock, buildings, shop-fittings, equipment) and supply chain disruptions.The outcomes of this surveywas that 1099 businesses were impacted in the two provinces resulting in a R7.4 billion estimated cost of damages. Furthermore, the respondents reported potential lost orders amounting to R16.8 billion over the next 12 months with an approximate 14 016 job being lost.

 

The DTIC also reported that government has introduced a support package valued at R38.9 billion to support individuals andbusinesses that have been adversely affected by the recent destruction/looting as well asthe tightening of Covid-19 related restrictions to Level 4 from 28 June to 25 July 2021.These support packages were broken down as follows:

 

• Large portion of this support package (R26.7 billion) for the extension of the SRDG until the end of March 2022, in order to provide social protection to thepoor;
• Temporary Employer/Employee Relief Scheme amounting to R5.3 billion;
• Deferrals of pay as you earn taxes and excise duties for qualifying companies;
• Expansion of the Employment Tax Incentive scheme for 4 months;
• A R4 billion Economic Rebuilding Package was launched by the DTICgroup (i.e. the DTIC, National Empowerment Fund [NEF], and Industrial Development Corporation [IDC]) and the Department of Small Business Development to assist companies in distress, covering reprioritization of existing budgets, commitmentsfrom National Treasury and allocations from Industrial Development Corporation/National Empowerment Fund; and
• Further resources being mobilised from the private sector.

 

From these support packages, the DTIC reported that it had reprioritized R700 million within its budget, the R1.3 billion allocation from the Minister of Finance, IDC reprioritization/allocation of R1.5 billion and the NEF allocation and partner support amounting to R250 million. Furthermore, it was reported that different kinds of support would be provided generally as a ‘blended finance’ option through the following:

• Grants:  portion not repayable and normally granted based on need ordevelopmental objectives being achieved;
• Loans: granted at concessionary terms and it is typically allocated for working capital, machinery,repairs to premises, fitment replacement, etc; and
• Bridging finance: covers ‘cash-flow’ challenges until SASRIA pay-outs are made.

 

The table below provides an overview of how the DSD would ensure the efficient, effective and economic use of the funds through the Bill.

 

Table 3: challenges identified and mitigating measures

Challenge identified	Mitigation measure
Pipeline too small due to poor communication	Use of new ways of reaching clients, including site and area visits
Slow approvals due to red tape	Review approval processes
Reluctance to take on debt	Conditional grant funding portion; concessionary terms for loans
Potential corruption and fraudulent claims	• Develop faster methods of due diligence; steps to ‘know your client’ • Anti-corruption measures: DTIC email-hotline; Real-time audits including AGSA
Double-dipping/enrichment	Partnerships across the state, with open accounting and disclosure systems
Limited resources	• Coordinate insurance pay-outs (SASRIA) and financial support (the DTIC Group) • Combine financial and non-financial support

SCOA Committee Secretariat (2021)

1. Public submission on the Bill

 

The section below provides an overview of the submission that was made in response of the advertisement that was published in print media.

 

1. Congress of South African Trade Unions

 

The Congress of South African Trade Unions (COSATU) welcomed the Bill. It submitted that the intervention by government to provide badly needed relief to millions of the unemployed, to businesses suffering losses during the July 2021 unrestsand to help restore law and order in communities is also welcomed. COSATU further submitted that most of its proposals tabled in National Economic Development and Labour Council (Nedlac) were largely agreed to by government and business and are being rolled out to varying degrees.  However, it expressed concerns that no funds have been released by the Unemployment Insurance Fund (UIF) despite repeated engagements and SASSA has begun payments, yet these were frequently not being done electronically resulting in long queues at the South African Post Offices to dispense grant payments. COSATU made the following comments and proposals:

 

Table 4: COSATU comments and proposals on the Bill

UIF and SASSA payments	That Cabinet should intervene to address the delays in release of funds by the Unemployment Insurance Fund (UIF) and to disburse the South African Social Security Agency (SASSA) payments electronically.
SASRIA allocation	Government should ensure that this allocation is sufficient to cover all legitimate claims.  If needs be, an additional allocation should be provided for in the 2021 MTBPS.
SASSA allocation	That government makes the SRD Grant permanent, extend it beyond March 2022 and increase it to the food poverty line of R624. Parliament should ensure that SASSA does modernise its systems and payments are all done electronically.
Defence allocation	Parliament should engage with National Treasury and the Department of Defence on plans to address the systematic collapse of the South African National Defence Force (SANDF).
Police allocation	Parliament should engage with National Treasury and the South African Police Service(SAPS) on plans to address the systematic de-capacitation of the SAPS.
DTIC allocation	Parliament should reverse thebudget cuts to the DTIC in the 2021 Medium Term Budget Policy Statement (MTBPS) and the 2022/23 national budget and MTBPS

SCOA Committee Secretariat (2021)

 

1. Committee Findings and Observations

 

Having considered all the submissions made by the above stakeholders on the Second Special Appropriation Bill[B17 – 2021], the Standing Committee on Appropriations made the following findings and observations:

 

1. The Committee notes and welcomes the proposed allocation of R9.763 billion to fund the extension of the Special Covid-19 Social Relief of Distress Grant using Section 16(1) of the PFMA. Considering the negative impact that the Covid-19 pandemic has had on the livelihoods of many South Africans, the Committee welcomes this proactive response by the Minister of Finance in utilising the PFMA provisions to respond to the announcement made by the President on 25 July 2021.

 

1. The Committee notes and welcomes the proposed allocation of R250 million through section 16(1) of the PFMA to the South African Social Security Agency (SASSA) for system enhancements to improve application and payment processes of the SRD grant, including the strengthened eligibility assessment. Given the crucial mandate of SASSA, and impact of the Covid-19 pandemic, the Committee welcomes this interve4ntion by the Minister of Finance in order to ensure that SASSA’s systems are capable to deliver on these critical services of distributing social grants whilst also ensuring that the system is corrupt free. Public finances have been hit hard by the Covid-19 pandemic; therefore, the distribution of all government social assistance should only benefit legitimate beneficiaries.

 

1. The Committee notes and welcomes the proposed allocation of R1.3 billion to the Department of Trade, Industry and Competition to fund business affected by the July 2021 unrest and riots through the department’s industrial financing programme. The Committee welcomes this government initiative and is encouraged by the Minister of finance’s rationale use of the PFMA section 16(1) provisions. The urgent need to support businesses to recover losses incurred during the July 2021 unrest, cannot be overemphasised because it is critical for economic growth and job creation.  The Committee views this as an important injection by government given the negative impact that the July 2021 unrests had on businesses. The Committee views this government intervention as necessary if the South African economy is to return to a growth path that will ultimately boost government revenue through collected tax revenue.

 

1. The Committee notes and welcomes the proposed allocation of R3.9 billion to National Treasury to provide for a required capital injection to SASRIA. Given the number of business that were negatively affected by the July 2021 unrest and riots, the Committee welcomes this proposed allocation in order to allow SASRIA to quickly pay legitimate business insurance claims. This will allow business to quickly restore their operations and prevent job loses that will otherwise have detrimental effects on both the economy and levels of unemployment and further worsen the levels of inequality.

 

1. The Committee notes the submission by the PBO that it is unclear if the R3.9 billion equity injection to SASRIA was urgent enough to warrant its inclusion in this Bill. However, the Committee is of the view that the speedily payment of insurance claims by SASRIA to business affected by the July 2021 unrest is critical if the South African economy is to return to a positive growth path and speedily recover. The Committee views this proposed allocation as an important lever in the prevention of high levels of unemployment if many businesses were to close due to the July 2021 unrest and riots.

 

1. The committee notes the submission by the PBO that several years of fiscal consolidation have had a cumulative impact on employment, investment and economic growth. The Committee also notes the submission by the PBO that government’s policy choice of fiscal consolidation seems to be increasing social and political instability, particularly when government breaks social compacts and labour agreements. 

 

1. The Committee notes COSATU’s proposal that the SRD grant should be extended beyond March 2022 and be increased to be in line with the R624 food poverty line. The Committee is however cognisant of the current fiscal pressures being experienced by government and feels that there is a need for further research on possible funding streams for this proposal by COSATU.

 

1. The Committee notes and welcomes the submission by COSATU that Parliament should engage government on how the SANDF and SAPS can be adequately resourced to fulfil their respective constitutional mandates. The Committee has always implored government to carefully consider the resource allocations to the SAPS and SANDF in order to ensure that the constitutional mandate of these departments is not compromised. 

 

1. Recommendations

 

The Standing Committee on Appropriations, having considered the briefings and comments by invited stakeholders on the Second Special Appropriation Bill [B17-2021], recommends as follows:

 

1. That the Minister of Finance ensures that SASRIA provide Parliament with quarterly reports on the withdrawal and use of the proposed R3.9 billion government equity injection.
2. That the Minister of Finance ensures that SASRIA provides Parliament with quarterly reports on all the insurance claims and payments related to the July 2021 unrest. 
3. That the Minister of Social Development ensures that SASSA provides quarterly expenditure and progress report on the proposed allocation of R500 million towards system enhancements to improve application and payment processes including the strengthened eligibility assessment system for grant payments.
4. That the Minister of Trade, Industry and Competition ensures that the Department of Trade, industry and Competition provide Parliament with quarterly expenditure reports of the utilisation of the proposed allocation of R1.3 billion towards the industrial financing programme.
5. The Ministers of Finance, Defence and Police jointly report to Parliament on how best to fund the SAPS and SANDF in order to prevent a possible systematic collapse of these departments. This should be considered in light of the submission by the Department of Defence to the Committee at its previous meeting on 25 May 2021 that given the continued allocation reductions and inadequate funding, it might be unable to fulfil its constitutional mandate. This submission by the SANDF is crucial that it warrants urgent attention to prevent any compromise on the sovereignty of the country.

 

1. Committee Recommendation on the Bill

 

The Standing Committee on Appropriations recommends that the National Assembly adopts the Second Special Appropriation Bill [B17-2021], without amendments.

 

1. Conclusion

 

The responses to the recommendations as set out in section 8 above by the relevant Executive Authorities must be sent to Parliament as well as the Committee within 60 days of the adoption of this report by the National Assembly.

 

 

 

Report to be considered.