MTBPS & Adjustments Appropriation Bill [B28-15]: committee reports; DA proposal to amend Adjustments Appropriation Bill

Standing Committee on Appropriations

25 November 2015
Chairperson: Mr S Mashatile (ANC)
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Meeting Summary

The Committee Report on the 2015 Medium Term Budget Policy Statement was adopted.

The Democratic Alliance submitted a proposal to amend the Adjustments Appropriation Bill, The motivation for the proposed amendment was the conviction that the Department of Higher Education and Training (DHET) could not fund the zero fee increase without compromising the Historically Disadvantaged Institutions (HDI) development grant and taking money from the SETAs meaning that 20 apprenticeship centres, 3 966 apprenticeships over the next three years, and 500 TVET college lectureship positions would be negatively affected.

The DA identified a number of votes to government departments from which funds could be shifted to the DHET. The argument was that funding was going to areas that were not strategic priorities, and would in some instances amount to wasteful and frivolous expenditure.

After the submission, the ANC asked for leave to caucus.

The ANC returned to argue that the DA was not saying anything new. The ANC shared a concern about wasteful and frivolous expenditure. But there was a process underway to deal with funding the zero fee increase in 2016/17. A presidential task team had been appointed to deal with this. Using money from the HDI development grant had to be seen as a stopgap measure. Money would be replaced. The DA proposals could also be seen as pre-emptive of the 2016/17 budget process.

The DA appealed to the ANC that the Appropriations Standing Committee not only had the obligation, but also the power and the opportunity to ensure that money reached poor students across the broad spectrum of post-school education.

Discussion between the two parties was amicable, although some of the DA remarks were sharply critical. The parties agreed to differ.

The proposed shifting of voted funding to the DHET was voted on item by item. The DA consistently voted in favour, and the ANC against.

After the voting it was decided that the Committee Report would carry the DA proposal as a minority report. The Chairperson remarked that it was important that the House understand the DA’s views.

The DA stated that it would support the Committee Report, but not the Bill itself. A DA Member moved for adoption of the report, and an ANC Member seconded. The Committee Report on the Adjustments Appropriation Bill was adopted.

Meeting report

Introduction by the Chairperson
The Chairperson announced the names of four ANC Members from other parliamentary committees attending the meeting, as well as the names of Committee Members who had rendered apologies.

He noted that it had become possible to adopt the two Committee Reports as these matters had been formally referred to the Committee.

Dr M Figg (DA) asked if the referral could be circulated among Members.

The Chairperson agreed to that. The Committee would be adopting the second drafts of these reports. The DA had indicated that it wished to propose amendments to the Adjustments Appropriation Bill. He was in favour of the Committee allowing that.

Medium Term Budget Policy Statement
The Committee went through the MTBPS Committee Report page by page. The Chairperson asked if members wanted to add anything. The second draft was longer than the first, as comments from other stakeholders had been added, which included those of students from Tshwane University.

Mr A McLaughlin (DA) asked if the underlined sections indicated amendments added to the first draft.

The Chairperson replied this was so.

The Committee adopted the report.

Dr Figg noted that the DA reserved the right not to support the report  until its caucus had approved it. He introduced two Members from other committees: Prof B Bozzoli from the Higher Education Portfolio Committee, and Mr D Maynier from the Finance Committee.

The Chairperson accepted the visiting Members.

DA proposal to amend the Adjustments Appropriation Bill 2015
Mr D Maynier (DA) stated that the DA wished to propose amendments to the Bill, and also that the proposed amendments be included in the report. There were two processes involved. He suggested that proposed amendments to the Bill be dealt with first.

Dr Figg explained why the proposed amendments to the Bill had to be included in the report, suggesting that in the Adjusted Estimates of National Expenditure (AENE) that an allocation to higher education be prioritised. The DA was convinced that the recommended appropriation adjustments were not in areas of priority. He asked that Prof Bozzoli explain matters from the point of view of her portfolio, Higher Education and Training.

Prof B Bozzoli (DA) noted that the Department of Higher Education and National Treasury had claimed that funding could be obtained for zero fee increases for students. That presented a problem in itself. Treasury had been caught by surprise by the demand for zero fee increases. Treasury saw that there was only a small amount in the budget to deal with the funding crisis, and then went back to the DHET, compelling it to obtain funding. That was done under protest. The DHET would be forced to fund out of the Skills Education Training Authorities (SETAs) funds and the Historically Disadvantaged Institutions (HDI) development grant to black universities. Funds would be drawn from that were specific to student projects. SETA funding served 20 apprentice centres through the Technical and Vocational Education and Training (TVET). There would be implications for 3966 apprentices and 500 lecturing positions. Important educational projects would be jeopardised. The historically disadvantaged universities were granted R240 million per year for managerial and administrative purposes. That funding would be compromised.

Mr P Sibande (ANC, visiting Member) interjected that the DA had to talk to its own document.

The Chairperson replied that Prof Bozzoli had to be allowed to motivate why it was not advisable for money to be taken from the DHET.

Prof Bozzoli noted that the Committee had passed a report on reprioritisation of funding. What was about to happen amounted to the raiding of the DHET, not reprioritisation. The DA wanted reprioritisation to start immediately.

Mr Maynier asked if the Committee was satisfied with the referral procedure. In terms of the Money Bills Amendment Act, bills had to be served before the NA and the NCOP. There was a letter from Mr J Steenhuizen and Ms E Van Lingen, DA members of the Appropriations Select Committee, in which certain flaws in the NCOP process were pointed out. There was also inconsistency with the Mandating Procedures of Provinces Act of 2008.

The Chairperson asked if the letter had been sent to the Speaker.

Mr Maynier replied that the letter had been sent to the Speaker and the NCOP Chairperson.

Mr Gcwabaza noted the ANC position that more time was required for the MTBPS process. This deficiency had been indicated to the powers that be. He was satisfied that the legal processes to adopt Committee Reports on these matters had had been complied with.

Mr Maynier said that attention was drawn to procedural flaws in the NCOP. The MTBPS process had to be reviewed.

The DA proposed amendments to the Adjustments Appropriation Bill that would result in a shift of voted funding to higher education. The approach was to submit that the voted funding in the Adjustments Appropriation Bill would have no effect on strategic priorities, and amounted in many instances to wasteful and frivolous expenditure.

Prof Bozzoli said that all the proposed DA amendments were related to education.

Dr Figg added that the DA wished to propose that vote funding be diverted to education, without delay.

Dr Figg took the Committee through a number of budget votes to various government departments which could be diverted to education. Twenty line items were cited. Votes that caused particular concern to the DA were the following:

Vote 6
R729 million voted to the Department of International Relations and Cooperation (DIRCO) for expenditure for the impact of the depreciation of the Rand on foreign currency denominated expenditure. The DA argued that a decrease in missions not aligned to trade relations was aligned to Treasury proposals. R13.5 million was voted to a shortfall in funding for foreign allowances. The DA argued that if cuts were necessary, these had to be made.

Vote 16
R1.259 million voted to the Department of Health for vehicles for the Minister and Deputy Minister in line with the Ministerial Handbook. The DA saw this as frivolous expenditure.

Vote 18
R540,000 voted to Correctional Services for the purchase of bulls for reproduction purposes. This was seen as frivolous expenditure.

Vote 19
R11.149 million voted to Defence and Military Veterans for guard services rendered to the Defence headquarters. The DA argued that the DoD should be able to protect itself.

Vote 23
R26.5 million voted to the Police for office furniture and critical security equipment for members in VIP protection and security services. The DA argued that this was not a priority, and that the Police should be able to render its own protection services. R69.708 million was voted for protection and security services. It was argued that this was not a priority.

Consideration of DA proposals
The Chairperson noted that motivation for adjustments had to be in compliance with sections 10 and 12 of the Money Bills Act. The Committee had to agree with the proposed adjustments, and the Minister had to be granted four days to comment on these.

Mr Gcwabaza requested a short timeframe for the ANC to go into caucus.

The Chairperson granted the request.

[After the ANC had completed its caucus, the meeting resumed.]

Mr Gcwabaza said that the ANC would emphasise that the Minister had to be consulted. The ANC also felt that the proposed amendments would have to go through the Higher Education Portfolio Committee; the Finance Committee, and to Treasury. It had to be part of the process. He referred to a meeting with the Finance Committee and the Higher Education Portfolio Committee, with the Treasury present, three weeks before. The assurance was given that there was sufficient funding for education for the first four months of the year. Funding for the remainder of 2016/17 would be provided for. The President had announced that a task team would be appointed to look into higher education; sustainable funding of free education, and transformation. It was a broad process. The ANC was not only concerned with university education. There was a broader concern with post-school education. The ANC was satisfied that there was sufficient consideration and funding for 2015/16.

Mr Gcwabaza continued that the Adjustments Appropriation Bill was a product of a re-appropriation process. There had already been a review of non-priority spending, and the curbing of expenditure in departments had already started. A shifting of funds from lower priority areas had already begun. The amendments proposed by the DA were nothing new, as it was part of the reprioritisation process. A curbing of underspending and wastage was already under way. Funds would no longer be allocated to projects that were not yet ready to effectively use funding. The ANC thought it inappropriate to amend the Adjustments Appropriation Bill.

The Chairperson referred to the third bullet in the fourth paragraph 4 on page 9 of the DA submission. It had emerged from consultations with the Minister that the money would not be taken away forever. It was a stopgap measure. The money would be replaced.

Prof Bozzoli countered that to insist that the amendments move through other committees was to undermine the power of the Committee. The Committee had definite powers. The available money should be earmarked for high priority areas like apprentice training and appointment of teachers. The Minister had been misled into believing that the DHET could pay for the education shortfall. The demand for funding for the zero fee increase had arisen after the reprioritisation in the Adjustments Appropriation Bill. There was a major gap in university funding. The Committee had to choose between funding going to furniture, foreign missions and cattle competitions, or apprentice training. The granting of funds for frivolous and wasteful items had to be prevented.

Mr Gcwabaza replied that the budget reprioritisation process was already under way. Funds were identified that did not serve priority areas. The DA was saying nothing new. It was not appropriate to call for amendments to the Adjustments Appropriation Bill when that was already being done.

Ms Nyalungu stated that the ANC was agreed that amendments were not needed.

Ms M Mmanoko (ANC, visiting Member) added that there was a presidential commission at work on higher education. To attempt further amendment to the Bill would affect other departments and parliamentary committees.

Dr Figg argued that the DA was not proposing the amendments as a party, but on behalf of higher education. The DA granted that there was a reprioritisation process, but it was concerned about delay. Mistakes in the reprioritisation process had to be corrected. Reprioritisation had not channeled funds to the right areas. In addition, the higher education crisis had arisen only after that. There had to be changes in proposed votes, to see that money did not go to bulls or furniture. The education crisis was not over. The Committee had to think ahead. The DA could not condone wasteful and fruitless expenditure. Figures had been analysed. There were incorrect money allocations.

Mr Maynier added that the Committee had to comply with the Money Bills Act to amend the budget. Treasury could be approached about the shortfall in higher education. Reprioritisation within the DHET would be to the detriment of post-school education and training. The DA was suggesting that wasteful expenditure was being funded through the adjusted budget. Departments were dripping with wasteful expenditure. There was a unique opportunity for Parliament to gain control over the budget. There was adequate time available. The Act provided 30 days for the adjustment process to unfold. The period would only lapse on 2 December. There was enough time to allow the Minister four days to comment. The onus could be placed on the Minister to justify frivolous foreign missions and private security for Defence.

Mr McLaughlin wished to differ from Mr Gcwabaza about his statement that the DA was proposing nothing new. The party was proposing amendments to specific allocations to line items, for purposes which were not yet significant when the budget was adjusted. The DA was asking that the Committee suggest proposed adjustments to the Minister. The suggestions were deemed sensible.

Mr Sibande said that Mr Gcwabaza had stated the ANC conviction that justice had been done in terms of priorities and processes. There was consultation with the Portfolio Committee for Higher Education about funding for the 2015/16 financial year. Funding over the 2016 MTEF would be looked at. Committee recommendations for reprioritisation in the MTBPS were considered.

Mr Gcwabaza said that the ANC was in agreement about curbing wasteful expenditure and the reprioritisation of the budget. But there already was an ongoing process. By the time the 2016/17 budget was formulated, these issues would have been dealt with.

The Chairperson advised that the proposed amendments be gone through one by one.

Mr Maynier said that the onus was on the Committee to deliberate the matter. He asked the ANC what it considered more important: R1.26 million for a ministerial vehicle or 30 bursaries for poor students; R69 million for ministerial bodyguards or 1 742 bursaries for poor students. The DA was asking the Committee to support its proposed amendments, as it believed that the Committee had the power to do the right thing.

Mr Gcwabaza said that the ANC agreed that education was a priority. That applied to post-school education and training in general, not only the universities. Yet the ANC felt that the process was steaming ahead in a manner that responded adequately to the urgent need. The ANC was convinced that immediate issues related to the first four months of the 2016/17 financial year would be responded to. The ANC was in favour of free post-school education. There was a debate about how to find the money. He reiterated that the DA had come up with nothing new on reprioritisation. The Presidential task team would report back on issues related to sustained funding for free post-school education. The DA was asking for a shift of money until 1 April 2016. What budget items were more important was not relevant.

Ms Mmanoko said that there was no need for debate about whether education had been reprioritised. The President had indicated that a task team would be appointed, which would address the problem once and for all. The Committee was seeing the DA proposed amendments for the first time. The Committee Report had to be passed. The DA proposals could not be entertained.

The Chairperson concluded that the ANC would not support the proposed amendments.

Prof Bozzoli remarked that she was touched by the faith the ANC had in the government. There had been four commissions into higher education funding, and all four had found it to be grossly underfunded. There was no response to that. Funding for education had in fact gone down in real terms since 1994. Post-school education was steeped in chaos. The task teams had investigated, but there was no will to find the money. The DA was shocked that the ANC did not express displeasure at that.

Mr Maynier wished to contest the argument that reprioritisation was under way. The effect of approving the Adjustments Appropriation Bill would be that the items that the DA had pointed out, like ministerial cars and VIP bodyguards, would be approved, and the money would go there. The Committee would be approving money to be spent on 20 wasteful items that could have gone to poor students. He granted that it was the first time that the DA proposals were seen, but in terms of the Money Bills Act, it was the first opportunity the DA had to propose the amendments. There was no reason to feel under pressure. There was time for the Minister to respond within four days. Parliament had to vote within 30 days, and there was still time. The money that the Treasury proposed to find within the DHET could not be guaranteed, as there was fiscal pressure. He called on the ANC to support poor students, not bodyguards.

Dr Figg told Mr Gcwabaza that he appreciated the way that the different parties worked together in the committee. The DA merely felt differently about budget figures that were not in the right place. The Committee had a responsibility to ensure that the changes in the adjusted budget did not do harm. The DA had analysed the figures and concluded that these were re-allocated wrongly, as it had to go to education. It could be foreseen that the same figures would crop up in the following year.

Mr Sibande wished to remind the DA that cars were ageing, as well as furniture in schools.

Mr Maynier noted that the line items did not refer to furniture in schools.

Mr Sibande countered that he was just giving an example. The DA had to refrain from pre-empting matters. There were procedures to be followed.

Mr Gcwabaza agreed with Dr Figg that the parties worked well together. The DA was simply presenting a position. It was not an ‘us/them’ situation. The ANC agreed that there was wasteful expenditure in government and would not tolerate it. Corruption had to be snuffed out. Government was facing huge needs with scarce resources. However, his party’s position was that the proposed amendments could pre-empt the 2016/17 budget process. The ANC was satisfied that urgent needs were being accommodated for the moment.

The Chairperson noted that the ANC would object to all amendments.

Mr Maynier asked that all 20 proposed amendments be voted on.

The Chairperson asked if it could be taken as read. The ANC had six votes, and the DA had two votes.

Mr Maynier called for correct procedure. Dr Figg would take the Committee through each item.

Committee Vote on DA proposal to amend the Adjustments Appropriation Bill
The procedure followed was that Dr Figg read out the department budget vote and the amount that was proposed to be shifted from it to post-school education. The budget vote items were voted on one by one. Without exception, the ANC voted against each individual item, and the DA voted for it.

The Chairperson noted that the report would state that the proposed amendments to the Bill were not supported, but the Committee Report itself would now be adopted.

Mr Maynier requested that the Committee Report include the proposed amendments and a minority report, which could be furnished later.

The Chairperson asked that this be concluded today.

Mr Gcwabaza noted that normally when the Chairperson introduced a Committee Report in the House, he had to speak on behalf of the whole committee. The DA proposal would be part of the complete report.

The Chairperson advised that the DA produce a summary of its minority report that could be considered by the Committee and adopted. The House had to understand the DA’s views and these had to be captured.

Dr Figg asked for 30 minutes to produce a summary.

The Chairperson said that he would sign the report together with the DA proposals.

Mr Maynier advised that the Committee play safe in terms of procedure. The meeting could adjourn and the DA could submit these electronically.

Ms Nyalungu objected that the ANC could not agree to that.

The Chairperson concluded that the Committee could adopt a report that contained the DA submission. It could be adopted and he could sign this. Mr Gcwabaza had proposed flexibility. If there were legal challenges, the Committee could deal with this later. He agreed to adjourn the meeting for the DA to write up a summary.

Committee Report on 2015 Adjustments Appropriation Bill: adoption
The Chairperson noted that the report could be adopted with a DA minority report included. The DA could reserve the right not to support the report at this meeting, but asked if the party was satisfied that the earlier discussions and the DA submission were captured in the report.

Dr Figg replied that the DA was satisfied that everything had been captured. The DA in fact wished to support the report, though not the Bill.

Dr Figg (DA) moved for adoption of the Bill. Ms Nyalungu (ANC) seconded.

The Committee Report was adopted.

The Chairperson noted that the Committee had requested a debate in the National Assembly on the BRICS New Development Bank Special Appropriations Bill. There was to be a debate on the Finance Bill, but it was not the Committee that requested it. The Finance Bill debate would take place that afternoon in the House.

Mr McLaughlin added that the Standing Committee on Public Accounts (SCOPA) had requested the debate on the Finance Bill.

Mr Maynier thanked Mr Mashatile for chairing the meeting.

The Chairperson adjourned the meeting.

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