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thu rsd aythu rsd ay 15 NOVEMBER 2012 PAGE 1 of 125 THURSDAY, 15 NOVEMBER 2012 ____ PROCEEDINGS OF THE NATIONAL ASSEMBLY ____ The House met at 14:10. The Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation. ANNOU...

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thu rsd ay 15 NOVEMBER 2012 PAGE 1 of 125 THURSDAY, 15 NOVEMBER 2012 ____ PROCEEDINGS OF THE NATIONAL ASSEMBLY ____ The House met at 14:10. The Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation. ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col 000. QUESTIONS FOR ORAL REPLY THE PRESIDENT OF THE REPUBLIC: Social Dialogue Meeting on State of Economy concerning society’s ability to deal with challenges 19. Mr D D van Rooyen (ANC) asked the President of the Republic: What is the essential aspect of the message to the nation that he conveyed at a recent Social Dialogue Meeting on the State of the Economy when he referred to our capacity as a society to 15 NOVEMBER 2012 PAGE 2 of 125 deal with our immediate challenges and lay the basis for long- term growth and job creation? NO3869E The PRESIDENT OF THE REPUBLIC: Speaker, on 17 October this year I announced a package of measures intended to address the widespread and unprocedural strikes in the mining sector, the violence associated with it as well as the economic slowdown that resulted from slower global growth. The announcement followed a high-level dialogue on the economy with the National Economic Development and Labour Council, Nedlac, constituents, government, business, labour and the community sector. The essential message that came out was the need to pool together our collective strength and resources and unite in action for the common good of our country. Significantly, progress has been made since the dialogue. We have established a presidential taskforce on mining communities led by Minister Collins Chabane, which will look at human settlements, local economic development, transport as well as migrant labour issues in responding to the grievances and underlying causes of the strikes in mining towns. 15 NOVEMBER 2012 PAGE 3 of 125 We have seen a unified approach to responding to the labour issues since the dialogue. Union leaders have addressed meetings of workers to call on members to adhere to collective agreements and defend the collective bargaining system, whilst recognising the underlying grievances. A number of mining companies reversed decisions to dismiss workers and allowed for an orderly return to work, sometimes accompanied by negotiated settlements to grievances. At the height of the strikes in the mining sector, the Chamber of Mines estimated that 120 000 workers were on strike. Following these various interventions, this has been reduced to less than 30 000 workers who are still on strike, and negotiations are continuing. I must emphasise that the right of workers to strike and protest is constitutionally guaranteed. Our call is for this to be done within the framework of the law. In the spirit of making a statement against inequality as proposed by the dialogue, Cabinet has committed to a salary freeze for the next 12 months for Ministers and Deputy Ministers. [Applause.] The Forum of SA Directors-General has in turn endorsed the call for a salary freeze for the directors-general. We now await the processes of consultation within the private sector regarding their executive salaries. To promote the co-operation of all spheres of government, we have briefed provincial premiers, as well as district and local mayors of key mining towns. Since a number of accords were signed last year, 15 NOVEMBER 2012 PAGE 4 of 125 we have also convened discussions with social partners about the implementation of commitments to the green economy, localisation and skills development. One of the key problems identified in the Marikana area is the high level of debt by workers. The National Credit Regulator, together with the SAPS, has thus begun a crackdown on illegal and exploitative lending in the mining belt. To promote improved living conditions and job creation, a number of infrastructure as well as community works programmes have been mainstreamed into the budget, as per announcements in the Medium-Term Budget Statement by the Minister of Finance. We are encouraged by the co-operation we continue to receive from all the partners. We will continue to draw on the expertise and support of all partners in building our country. I thank you. Mr D D VAN ROOYEN: Speaker, I thank the hon President for an elaborate response. I am humbled by the effort. I am aware of the fact that as part of the action plan that you have alluded to, amongst other things, business has committed to using money provided for social plans as well as other social interventions to support local economic development. How will it be ensured that such interventions are economically viable and sustainable, instead of what I personally term bubblegum interventions? That is, providing 15 NOVEMBER 2012 PAGE 5 of 125 lip service to deep-rooted economic development challenges faced by most of these communities. I thank you. The PRESIDENT OF THE REPUBLIC: Speaker, as I have indicated, the social partners met to discuss not just the strikes but also the economic situation around the mine area, and the conditions, not just of the miners but of the communities around the mines. That is why we have agreed that there must be specific programmes that will deal with that kind of situation, including the human settlement question, which will go hand in hand with the activities of the economic development and really inject economic energy into those areas. There are a lot of decisions we took in that regard. So, it is not going to be a bubblegum type of intervention. It is going to be a real intervention. Thank you. [Applause.] Rev K R J MESHOE: Hon President, during the social partners’ meeting of 17 October that you referred to, you said, among other things, that you addressed the issue of violence that is associated with strikes in the mining sector. On a few occasions you have called on strikers not to get involved in violence and you have repeated the constitutional right of workers to strike, but your call seems to be falling on deaf ears. Whenever strikes take place, as is happening right now in the 15 NOVEMBER 2012 PAGE 6 of 125 Western Cape, there is violence that includes the destruction of property and loss of lives. Unfortunately, not much is heard from the President. The President seems to be quiet. There have again been calls ... [Interjections.] ... for the Western Cape ... The SPEAKER: Order, hon members, order! Rev K R J MESHOE ... to be made ungovernable, and we have not heard the President respond to that. My question to the President is, in the light of what is happening, particularly now in the Western Cape, what is the President saying to those who are perpetually and continually using violence that leads to the loss of property when they strike, and what is the President saying about the call to make the Western Cape ungovernable? Thank you. [Applause.] The PRESIDENT OF THE REPUBLIC: Hon Speaker, if the hon member is not selective in getting to know what the President says he will know that I have been making this call for a long time. I started making it long before the mine strikes, when the workers were marching and protesting. I have made this call very strongly and I have continued to do it. I also made it at the mines. It was not the first time. [Interjections.] I have been making this call all the time ... [Interjections.] ... because it is not acceptable that when people protest or strike, they undermine the rights of other people who are 15 NOVEMBER 2012 PAGE 7 of 125 exercising their own rights. This is what I have been saying, and I will continue saying so. I have not said anything about people who talk about the ungovernability of the Western Cape because I don’t exactly know what it means. [Interjections.] Absolutely ... [Interjections.] ... unless you explain it to me ... The SPEAKER: Order, hon members, order! The PRESIDENT OF THE REPUBLIC: ... unless you unpack it for me with regard to what it means ... [Interjections.] ... because it might mean protests because of the very harsh conditions here, which is also happening throughout the country. [Interjections.] I don’t know what it means. [Interjections.] If you unpack it for me, I will be able to give you a very intelligent comment. [Applause.] Rev K R J MESHOE: On a point of order, sir. [Interjections.] The SPEAKER: What is the point of order? Rev K R J MESHOE: The President has just requested that we unpack this matter for him. Can we do it now? [Interjections.] The SPEAKER: Sir, please take your seat. Hon Lekota, you have the floor. [Laughter.] [Interjections.] 15 NOVEMBER 2012 PAGE 8 of 125 Mr M G P LEKOTA: Speaker and hon President, our real potential as a country and the capacity of society to deal with the challenges of the moment lie on the basis of what we can do, and we need leadership. What we need now is leadership ... [Interjections.] ... and leadership for society must come from government. [Interjections.] Right now the country ... [Interjections.] The SPEAKER: Order, hon members, order! Mr M G P LEKOTA: ... is in turmoil and the levels of unrest and civil disobedience are increasing every day. [Interjections.] The lives of workers here in the Boland and in the vineyards are being lost every day. [Interjections.] Your Ministers are going there with conflicting messages. Some are encouraging the workers ... [Interjections.] ... to do things that are lawless and so on, and in the process we are losing more jobs than building them. Our situation is going to become completely untenable. [Interjections.] Extraordinary conditions and circumstances require extraordinary efforts on the part of leadership, and I want to ask the following question. Mr President, why are you so quiet? [Interjections.] Why do we not see decisive leadership on your part in marshalling your forces so that we can see solutions begin to happen? [Interjections.] [Time expired.] [Applause.] The SPEAKER: Hon member, your time has expired. 15 NOVEMBER 2012 PAGE 9 of 125 The PRESIDENT OF THE REPUBLIC: Hon Speaker, firstly I have not heard my Ministers conflicting on these issues. [Interjections.] I have not heard them. They have been going to address the issues as they pertain to their very specific portfolios. [Interjections.] They have been there ever since we had the strikes. [Interjections.] One of the interesting things is the definition of leadership of this country. I don’t know what we have in this Parliament and whether these are not leaders of their own parties. [Applause.] The pertinent question is what do they do in this House to give leadership to this country as representatives of the people and the public? [Applause.] Why, then, should the question be selective? Is this not the leadership? Are you not a leader, hon member? [Laughter.] [Applause.] Now, I don’t want to politic, because I can say that other leaders stand here to make the biggest noise and say nothing. Absolutely nothing! That’s not leadership. [Interjections.] That’s not leadership. If I had time I would have quoted Shakespeare with regard to what he says about such people. [Applause.] [Laughter.] This claim that there is no leadership in this country is totally out of order. [Interjections.] There is a leadership in this country ... [Interjections.] ... which you can divide into many categories. In political parties ... unless you say there’s no leadership in the political parties. [Interjections.] There’s a 15 NOVEMBER 2012 PAGE 10 of 125 leadership in government. [Interjections.] There’s a leadership in society. That is why, when Marikana happened ... [Interjections] ... the leadership immediately moved in – the church, traditional leaders ... [Interjections.] ... the government. The question would be, what was the effort of the other political parties to give leadership? [Interjections.] The SPEAKER: Order, hon members, order! The PRESIDENT OF THE REPUBLIC: I think it is very important that, except for making statements ... [Interjections.] The SPEAKER: There’s a point of order. Prince M G BUTHELEZI: On a point of order, Speaker. Your Excellency and hon members: I would like to inform his Excellency that opposition parties went to Marikana immediately. We didn’t meander ... [Laughter.] We went straight there, sir. [Applause.] [Interjections.] The SPEAKER: Order, hon members, order! The PRESIDENT OF THE REPUBLIC: Well, we all live in this country. They all gathered together to criticise and not to seek a solution. That was the problem. [Applause.] That’s the leadership I am talking about. Here was a country in trouble, and instead of coming together 15 NOVEMBER 2012 PAGE 11 of 125 to decide what we could do, they gathered to criticise. That is unfortunately the leadership we have. [Applause.] Thank you, hon Speaker. Mr T D HARRIS: Mr Speaker, Mr President, I think most South Africans saw the high-level dialogue as another talkshop of vague commitments. We heard a rehash of the same old stories about the infrastructure programme, the Expanded Public Works Programme, the Jobs Fund as well as a recap of Minister Patel’s ideas on youth unemployment that make a point of leaving out the youth wage subsidy. However, the only new message that came through clearly was your call to chief executive officers, CEOs, to impose a freeze on salaries to tackle inequality. Mr President, today you have had much to say on leadership, but do you not feel that if you are asking executives in South Africa to hold back, you should demonstrate your own commitment to spending restraint by putting a freeze on the R250 million to be spent on your compound at Nkandla? [Interjections.] [Applause.] The SPEAKER: Order! Order! The PRESIDENT OF THE REPUBLIC: Hon Speaker, well, firstly the social partners met; they are very serious and they discussed a lot of issues. I don’t know what the member is trying to say when he says 15 NOVEMBER 2012 PAGE 12 of 125 we rehashed this, because they rehash everything, every day! [Laughter.] Absolutely! [Interjections.] Now, the last point that he is making about the house at Nkandla is a question here. That question is coming. [Interjections.] That question is coming. I think the hon member is in too much of a hurry. [Interjections.] We are coming to the question, and I am not going to answer it now. The time is coming. It’s been asked by your leader, so its going to come and you are going to get the answer. [Applause.] The CHIEF WHIP OF THE OPPOSITION: Hon Speaker, I rise on a point of order: Please would you rule on the rowdiness of the visitors in the gallery? [Interjections.] The SPEAKER: Order, hon members! Order! Order, order, order, order! The visitors in the gallery ... [Interjections.] Order, hon members! We welcome your presence here, but I would like to appeal to you to show neither approval nor disapproval of what is said on the floor. You are most welcome here in the House, but in order for me to maintain order, I would appreciate your kind co-operation. I would not like for you to feel unwelcome. You are welcome, but please, no more noise from the gallery. [Laughter.] Land ownership issues and foreign land owners 20. Mr V B Ndlovu (IFP) asked the President of the Republic: 15 NOVEMBER 2012 PAGE 13 of 125 (1) Whether he intends to instruct his Minister of Rural Development and Land Reform to hold discussions with (a) stakeholders on land ownership issues and (b) foreign owners of land; if not, why not, in each case; if so, in each case, (i) when and (ii) what issues will be covered; (2) whether he will make a statement on the matter? NO2007E The PRESIDENT OF THE REPUBLIC: Hon Speaker, since the approval of the Green Paper on Land Reform by Cabinet in August 2011, the department has conducted numerous consultative workshops with a range of stakeholders. The stakeholders consulted include organised agriculture, emerging and commercial farmers, academics, nongovernmental organisations, agribusiness, donors, and other interested parties. The discussions have focused on all the policy proposals contained in the Green Paper. From these larger consultative processes, a national reference group was established, consisting of representatives from the earlier-mentioned groups. Six work streams aligned to thematic areas of the Green Paper on Land Reform have also been established and are operational. The streams include representatives from the SA Local Government Association, the SA Council of Property Valuers and other 15 NOVEMBER 2012 PAGE 14 of 125 government departments. The stakeholders are discussing the proposals in the Green Paper to find the best ways of reversing the legacy of the 1913 Native Land Act. The primary objective is to change the systems, patterns, ownership and control of land and landed assets. Our ultimate objective is to deracialise the rural economy for shared and sustained growth, and create democratic and equitable land allocation and use across gender, race and class. We also want to promote a strict production discipline in order to ensure national food security. That is why we promote the return to the land, so that communities, especially in rural areas, are able to plough and sustain themselves. Sifuna abantu abasezindaweni zasemakhaya, babuyele emasimini balime ukuze baziphilise. [Ihlombe.] Yingakho ukubuyela komhlaba ebantwini bakuleli lakithi kubaluleke kangaka. (Translation of isiZulu paragraph follows.) [We want our rural communities to return to the life of cultivating the land and sustaining themselves. [Applause.] That is why land redistribution is so important to us.] The Green Paper also sets out the objective of graduating black farmers into successful commercial farmers through the Recapitalisation and Development programme. It also calls for the creation of institutions such as the Land Management Commission and 15 NOVEMBER 2012 PAGE 15 of 125 the Office of the Valuer-General, which would become the arbiters of the principles of just and equitable land reform. As you are aware, the National Development Plan also makes proposals for land reform, which include the concept of district committees. It is proposed that these committees would identify and select people to be resettled. They would also identify people who demonstrate suitability, passion and commitment to rural development despite the limited space and resources. The centenary of the Land Act next year will provide an opportunity to galvanise the whole country towards meaningful land reform and redistribution in a manner that promotes redress and reconciliation. The consultations amongst stakeholders and the affected people will continue until the policy processes are finalised. Land remains a central issue in the restoration of the rights and dignity of those who were dispossessed. I thank you, hon Speaker. [Applause.] Mnu V B NDLOVU: Somlomo, mhlonishwa Mongameli siyabonga ngempendulo osusinike yona. Okokuqala nje, mhlonishwa Mongameli, leli lizwe lafelwa wobabamkhulu noyihlomkhulu ngoba bevikela umhlabathi, lapho-ke ngisho umhlaba. Uma uMongameli ekhuluma ngokuthi kune-Green Paper, thina bantu basemakhaya asazi ukuthi usho ukuthini. Okwesibili, uma uMongameli ethi kukhona izithangami okuhlalwa kuzo, thina lapho esiqhamuka khona kukhona abantu abazembulelwa izindawo 15 NOVEMBER 2012 PAGE 16 of 125 zabo zokuhlala bakha kodwa base bebhidlizelwa imizi yabo, sebelala ezigangeni. Abanye abantu bayimihambima ngoba ingekho indawo abangahlala kuyona. UMongameli akakuboni kufanele ukuthi, eminyakeni eminingi kangaka kusukela ngonyaka we-1994 kuze kube yimanje, ukuthi kuxoxiswane ngendaba yomhlabathi ngoba kwachitheka igazi ngomhlabathi. UMONGAMELI WERIPHABHULIKHI YASENINGIZIMU AFRIKA: Somlomo, nelungu elihloniphekile leNdlu yesiShayamthetho sikaZwelonke, uma kuthiwa iPhepha eliluHlaza ngesiZulu, phecelezi i-Green Paper ngesilungu, kusho ukuthi yiphepha lokuqala elindlalela indaba ukuze ixoxwe. Kusho lokho. Uma kuthiwa nje i-Green Paper noma iPhepha eliluHlaza, wazi ukuthi yiphepha lokuqala ngqa elizothula inkulumo esizweni. Ayalandela-ke amanye, nawo anemibala yawo. Izifundiswa ezasho njalo akumina Gatsheni! [Uhleko.] Leli phepha-ke limenyezelwe kabanzi ezweni. Uma izakhamuzi zangakubo kamhlonishwa zingakayizwa indaba ngizokhuluma noNgqongqoshe ukuze alilethe ngoba lilethelwa khona ukuthi kusunguleke izingxoxo zokuthi sizoyisombulula kanjani le nkinga. Hhayi ukuthi iyaqala, kade yayixoxwa le ndaba kwaze kwathathwa izinqumo. Kwaze kwenziwa ngisho uhlelo lokuthi umhlaba uzothengwa kanjani futhi uzobuyiswa kanjani. Sikubeke kwacaca ukuthi lezo zinhlelo sibona ukuthi azikwazanga ukufinyelela engqikithini yendaba, yingakho nje sesithi asibuyele 15 NOVEMBER 2012 PAGE 17 of 125 ezingxoxweni, njengesizwe, siluxoxe lolu daba ngoba sazi khona lokhu okushoyo ukuthi ngomhlaba kwachitheka igazi. Asifuni-ke liphinde lichitheke. Sifuna ukusebenzisa uMthethosisekelo ukuyisombulula le nkinga. Ngiyabonga Somlomo. [Ihlombe.] (Translation of isiZulu paragraphs follows.) [Mr V B NDLOVU: Speaker, I wish to thank the President for his response. First, hon President, our forefathers died fighting for possession of the land. As a rural man, I do not understand what the Green Paper the President is referring to is. Secondly, I do not know anything about the forums that the President is talking about. Where I come from some communities were allocated some land to build their homes, which were later demolished and they ended up having no place to live. Does the President not think that the time has come to seriously consider issues of land redistribution and resettlement when it is such a long time after 1994? We must not forget that blood was shed for possession of this very land. The PRESIDENT OF THE REPUBLIC: Speaker and the hon member of the National Assembly, a Green Paper is a tentative government report and consultation document of policy proposals for debate and discussion. It is the first step in changing the law, which the public is always informed about. Other papers with different colours 15 NOVEMBER 2012 PAGE 18 of 125 then follow. That is what educated people told me, Gatsheni! [Clan name.] [Laughter.] The general public was informed about the paper. If your community has not heard anything about it, I will ask the Minister to do it. The aim of informing the public about it is to initiate discussions to solve problems at hand. We have been discussing the issue for a long time and we even made decisions about it. We even devised the land redistribution programme. We have already explained that those programmes proved to be unsuccessful; that is why we are discussing the issue again, as a nation. We have not forgotten about the bloodshed for possession of the land and we do not want it to happen again. Our aim is to follow policies of our Constitution to solve this problem. Thank you, Speaker. [Applause.]] Mr J J VAN DER LINDE: Mr Speaker, Mr President, your response to this question deals with peripheral issues with regard to meaningful land reform and land tenure reform for the majority of poor South Africans. My question in this regard is: What will you and the Minister of Rural Development and Land Reform do to address the issue dealing with the fact that 27 million South African citizens living on communal land and in former homelands do so with no formal security of tenure? Will you hold discussions with traditional leaders to ensure practical feudal land tenure reform, which the 15 NOVEMBER 2012 PAGE 19 of 125 National Development Plan, NDP, refers to as the single biggest threat to comprehensive rural development in South Africa, and especially in the former homelands? I thank you. The PRESIDENT OF THE REPUBLIC: Hon Speaker, I don’t think in my answer I’m dealing with the peripheral issues; I’m dealing with the real issues. We are saying there is a Green Paper that is out there for discussion. If the hon member has views, that Green Paper gives him the opportunity to engage and deal with this very serious issue of land hunger in this country. He is absolutely welcome to engage. I don’t think he is expecting that, as we say “let us discuss this”, we must impose solutions or what we think. There is no one who is not going to participate. The traditional leaders are invited to participate. The political parties are also invited so that we can hear what their thinking is about the land issue because we haven’t heard it, as well as civil society. So, the matter is being reopened for debate, precisely to address the very picture that he has painted of the land question in this country. So, we are inviting everyone to participate. You are invited to be part of the debate as well, hon member. Thank you. [Applause.] Mr W M MADISHA: Mr Speaker ... [Interjections.] Ask “Skreepot” [the one who shouts] about that! Besides the positive developments in Nkandla, we believe that there are momentous challenges throughout the country. I can give you 15 NOVEMBER 2012 PAGE 20 of 125 examples in Limpopo’s rural areas of Nandoni, Muyexe and Mopani, though you gave the presidential programme on rural development, where you promised to address a number of problems apart from the agricultural problems, the land reforms there. You spoke of the water, the water pipes, boreholes, electricity, toilets, etc, something which has not been done until today, after a very, very long time. We want to know when you are going to handle that, or have you been able to go and hold a meeting with the people there at all, or even the relevant Minister? When are you going to handle these particular problems, agricultural problems, as cited in that particular area? The PRESIDENT OF THE REPUBLIC: Hon Speaker, well, the hon member, I’m sure, is aware that we have been to Limpopo many times. We have met the people in Limpopo and discussed the issues. Some of the areas he is mentioning, the Minister of Rural Development has visited. I have also been there at some given time. There is one thing that one cannot do. One cannot - unless one is a magician – solve the problems of this country overnight. There are programmes of rural development that have been rolled out and that are being implemented. I don’t think the Minister can be in every corner of this country at the same time. It is impossible, unless one is a magician. So, those matters and areas are being taken care of. This is in addition to the normal programmes of the 15 NOVEMBER 2012 PAGE 21 of 125 province and the municipalities. Rural development is an additional kind of programme that comes in to make the intervention. So, we do have those areas in mind and something is happening, particularly at Muyexe, which you have mentioned. Thank you. [Applause.] UMnu P S SIZANI: Mongameli, kukho abantu abafika kule Ndlu beze kumela abantu abangayi nokuya kubo. Iinkosi zelizwe lethu ziyayithatha inxaxheba kule ngxoxo yomhlaba, iNdlu kaZwelonke kunye nezindlu zamaphondo ziyakwenza oko. Umhlekazi uyayazi loo nto koko uyibuza nje kuba kukho abantu abaninzi abahleli apha. [Kwahlekwa.] Mhlekazi, mna ke ndifuna ukuqonda ukuba le comprehensive land reforms strategy evunywe yiKhabhinethi, ithini ngabantu abavela ngaphandle abangazimiselanga kulima, nabangazimiselanga ukuba ngabahlali baseMzantsi Afrika, abafika ngokuthenga umhlaba baze bawugcine bangawusebenzisi. Incedisa njani loo nto ekongezeni ukutya elizweni lethu? [Kwaqhwatywa.] UMONGAMELI WERIPHABLIKI YOMZANTSI AFRICA: Somlomo, hayi, eli phepha sithetha ngalo liyayichaphazela loo ndawo kwaye asisoze siyiyeke kwaphela. Indlela lo mhlaba wethu oza kuphathwa ngayo iyayichaphazela into yabantu abasuka ngaphandle beze kuthenga umhlaba, kwaye siza kuyilungisa xa kuqosheliswa lo mcimbi sithetha ngawo. Isisombululo siza kuba khona, abasayi kuvunyelwa ukuba babe nomhlaba apho basuka khona baphinde babe nomhlaba nalapha sibe singenawo umhlaba thina. [Uwele-wele.] [Kwaqhwatywa.] koko sifuna 15 NOVEMBER 2012 PAGE 22 of 125 ukuyenza loo nto phantsi kweempembelelo zoMgaqo-siseko kunye noMthetho. (Translation of isiXhosa paragraphs follows.) [Mr P S SIZANI: Hon President, there are members in this House who claim to represent people whom they do not even visit in their constituencies. Our country’s chiefs do participate in the land debate, under the auspices of the National House of Traditional Leaders and the provincial houses of traditional leaders. The hon member knows that, but just asked the question because there is a huge audience here. [Laughter.] Sir, as far as I am concerned, I would like to find out what the comprehensive land reform strategy, which has been approved by Cabinet, says about foreigners who have no intention to farm or to be residents of South Africa but just come to this country to buy land and do not use it. How does that contribute to food security in our country? [Applause.] The PRESIDENT OF THE REPUBLIC: Hon Speaker, the Green Paper I’m referring to touches on this issue, and we will address it. The manner in which our land will be managed will affect the question of foreigners who come to this country to buy land, and that is something which will be addressed by the Green Paper. We will find a solution, and foreigners will not be allowed to own land in this country whilst we ourselves do not have land. [Interjections.] 15 NOVEMBER 2012 PAGE 23 of 125 [Applause.] However, everything will be done in terms of the Constitution and according to the laws of this country.] Mrs S V KALYAN: Sorry, Speaker, may I address you? There is no interpreting. Mr President, we would love to hear what you are saying but there is no interpreting. The SPEAKER: Can someone check why there is no interpreting? Is there interpreting? [Interjections.] Order, hon members, order! [Interjections.] Hon members, order! Hon Deputy Ministers, order! [Laughter.] [Interjections.] Is there interpreting yet? [Interjections.] You will have to speak in all the official languages, Mr President, one after the other! [Laughter.] All right, we now have interpreting. Continue, hon President. The PRESIDENT OF THE REPUBLIC: Besendigqibile, Somlomo. [I have already made my point, hon Speaker.] [Interjections.] [Applause.] Economic downgrades and plan of action in response 21. Mr L W Greyling (ID) asked President of the Republic: Whether, in view of the recent downgrades by Moody's and Standard and Poor’s, he intends to present his programme of 15 NOVEMBER 2012 PAGE 24 of 125 action on the economy to Parliament (details furnished); if not, why not; if so, what are the relevant details? NO3871E The PRESIDENT OF THE REPUBLIC: Speaker and hon member, our task as government is to lay the foundations for long-term growth and job creation in a complex global environment where developments in other economies impact directly on local economic performance. Over the past few months, we have been faced by the twin challenges of slower growth, caused by a slowdown in the global economy, as well as unprocedural strikes in parts of the mining industry. Despite these difficulties, we remain focused on implementing our economic programmes aimed at achieving prosperity and a better life for all. We are building a thriving mixed economy, where the state, private capital, co-operatives and other forms of social ownership complement each other in an integrated way to eliminate poverty and foster shared economic growth. The state of the nation address this year outlined that the central and most pressing challenges we face are unemployment, poverty and inequality. In responding to the three, we must simultaneously accelerate economic growth, which will assist us to create jobs, and promote dignity and social stability. Ministers regularly share with this House various aspects of the implementation of our economic programmes. To be able to achieve the prosperous society we seek, we need to, in summary, do the following: enhance growth and job 15 NOVEMBER 2012 PAGE 25 of 125 creation; narrow inequality and the income gaps, especially between poor and upper-income groups, while expanding the ownership, control and management of the economy; continue improving the living conditions of poor communities; implement our economic and social policies more effectively; continue improving our education system and skills development; help small and medium-sized businesses to grow, employ and export. This should be done to sharpen the delivery of our infrastructure programme throughout the country and continue to deepen our fight against crime and corruption. Economic transformation remains central to these programmes, in order to address the legacy of the past and promote reconciliation and growth. This includes promoting the ownership, control and management of the economy by black people, women, the youth and persons with disabilities. To respond in particular to the global economic slowdown and its impact locally, on 17 October I hosted a dialogue of Nedlac social partners to consider the current economic challenges we face. The programme of action arising from that session builds on the coherent broader vision set out in the National Development Plan and the complementary economic strategy contained in the New Growth Path. In addition, on 25 October, the Minister of Finance tabled the Medium-Term Budget Policy Statement, which set out government’s fiscal and economic policy for the next three years. In the long term, what we want the world to understand is that our biggest 15 NOVEMBER 2012 PAGE 26 of 125 strength is the sound institutional framework of the country, built on the foundation of the Constitution. This framework has enabled resilience and makes South Africa capable of mediating the contradictions that sometimes become apparent in our young democracy. We have held four national general elections, which have given practical expression to the country’s commitment to democracy. We have a fully functional governance system with co-operation amongst the executive, the judiciary and the legislature. We have effective checks and balances, which include Chapter 9 institutions. All these ingredients provide a sound and stable environment in which we are implementing our socioeconomic programmes. I thank you. [Applause.] Mr L W GREYLING: Speaker, through you to the hon President, reading through the different reasons the credit agencies gave for their downgrade offers us an ominous warning of the many challenges that we will have to confront as a nation if we wish to restore investor confidence and signal that South Africa is a stable economy in which to do business. One of the problems that were identified is that the government is giving mixed messages and is failing to provide clear policy direction. On that point, the hon Minister of Agriculture, Forestry and Fisheries told protesting farm workers this week that no farm worker would face criminal charges for taking part in the violent strike and protest action and that she would speak to the 15 NOVEMBER 2012 PAGE 27 of 125 National Prosecuting Authority, NPA, to ensure that all cases of intimidation and public violence are withdrawn. Hon President, this is arguing directly against the rule of law in South Africa, and surely it cannot be the policy of this government. If it isn’t, will you then be taking harsh action against this Minister and distancing the government from her destructive utterances, which are inciting people to take part in violent wild-cat strikes and signalling to the world that we do not respect the rule of law? I thank you. [Applause.] The PRESIDENT OF THE REPUBLIC: Speaker, firstly, on the question of the downgrade of the country, I would like to state that there is a global economic meltdown which has led to many countries being downgraded by these institutions, including the United States, Greece, Spain, and many other countries. It has not said that it is because these countries are saying different things. They are examining many things in each country, in terms of where the economy is. Here, in this country, one of the reasons we met with the social partners was precisely to say that as the leadership of this country, we all need to speak in one voice. We need to speak in one voice, and we are speaking in one voice. [Interjections.] There is no doubt about it, including the social partners. Ministers from time to time intervene in situations to address the situations. I haven’t heard contradictions. Perhaps I have missed the news. What I have heard from the Minister of Agriculture, 15 NOVEMBER 2012 PAGE 28 of 125 Forestry and Fisheries has been them trying to mediate in order to try and calm down and solve this situation. [Interjections.] The SPEAKER: Order! Order, hon members! The PRESIDENT OF THE REPUBLIC: That is what I have heard. I didn’t hear the Minister saying anything that you are quoting. I didn’t hear that. [Interjections.] All that I know – what has been reported to me – is that the Minister has intervened in an attempt to solve the problem of the farm workers. That is what I have heard. Thank you, Speaker. [Applause.] Mrs J D KILIAN: Speaker, through you to the hon President, the President had indicated in response to the previous speaker that the perceptions about a country have a major impact on the grading of a country. Clearly, Mr President, you have mentioned Greece and everywhere else, but in South Africa it was specifically mentioned that political instability is a cause of concern in this country. What we have seen at Marikana and what we are seeing in the Western Cape is clearly not good footage on television that is being broadcast across the world. What is of graver concern is that messages are currently also running in the media about contestation within the governing alliance that has reached the point where a Member of Parliament marched into an ANC branch meeting, intimidating those present to support you. [Interjections.] 15 NOVEMBER 2012 PAGE 29 of 125 The SPEAKER: Order, hon members! Order! Mrs J D KILIAN: Would you not make a public statement condemning all such actions, so that you can make sure that within your party and within the country, a climate of political tolerance is created, so that the world no longer has these concerns about our country? [Interjections.] Would you make such a public statement? Thank you. The PRESIDENT OF THE REPUBLIC: Speaker, firstly, what comes first in the grading is the state of the economy of the country. Then they look at various things. You quoted Marikana. Marikana emerged from a strike. It is not political instability. The workers went on strike, which was a strike outside the framework of how labour and capital function in this country. As soon as that happened, as I said earlier, the leadership in this country moved in response to that situation. I think that is an important element which indicates the strength of this country in terms of dealing with its own problems. As soon as the Western Cape strike happened, the leadership moved in to deal with the situation. Where does it arise from? It arises from the poor salaries that those people get. It is not a political issue. [Applause.] It is not caused by the political situation; it is caused by the conditions of the farm workers. [Interjections.] Now, these are the two things indicated. Then you came to the ANC. Unfortunately, you don’t understand the democracy of the ANC. [Applause.] That is a problem many of you have. Democracy means that 15 NOVEMBER 2012 PAGE 30 of 125 there is a contestation in the party, and the ANC can claim to be number one in the contestation. [Applause.] In exercising democracy, the members of the ANC have the right to have preferences and make choices. That is what happened. That cannot be a minus; it is a plus to the democracy in this country. So, you cannot count that as a factor that influences the grading or downgrading of the country. It cannot be. It is, in fact, a plus that democracy works in this country. [Interjections.] In this country, anyone can stand up and make any statement. In Parliament here, people can talk until they sweat, making the wrong point. This is democracy. [Applause.] Thank you, Speaker. The LEADER OF THE OPPOSITION: Mr Speaker, the credit rating agency Moody’s attributed their downgrading of South Africa’s credit rating to: The challenges posed by a negative investment climate in light of ... increased concerns about South Africa’s future political stability. This, Mr Speaker, is an indictment of the President and his government’s ability to lead this country. The hon President has tried here today to pass the buck on leading this country. He has tried to claim that it is the responsibility of members in the opposition benches to run South Africa, yet he is the 15 NOVEMBER 2012 PAGE 31 of 125 head of state. These are the President’s questions, and not questions to the opposition. We elected you, hon President, to lead this country. [Interjections.] The SPEAKER: Order, hon members! Allow the member to be heard. The LEADER OF THE OPPOSITION: We elected you in this House to run this country as its leader. So, let us talk about leadership. Parliament is here to hold the hon President accountable for leading this country. There are indications that he is not doing the job adequately. So, my question to him is: Will he explain to this House – that elected him - why he thinks, in the face of increasing economic instability under his leadership, he deserves to continue his term of office as President of the Republic of South Africa? [Applause.] The PRESIDENT OF THE REPUBLIC: Hon Speaker, this country is stable. [Applause.] Once again, if you know democracies, you go to old democracies in this world, there are strikes continually but that does not spell the fact that there is instability. You can go to Paris, London and everywhere and you will find that there are strikes and those strikes are a feature of democracy. They are not instabilities. In countries where there is no democracy, if people protest or go on strike, they are dealt with. In democracies, they 15 NOVEMBER 2012 PAGE 32 of 125 continue as long as they do it within the framework of the law, and that is what is happening in South Africa. What the hon member is saying is the view of the opposition, and they have the right to have their own views. Nobody could compete with you. I do not think you would have an opposition agreeing with the ruling party. That is the a nature of democracy. This country is stable, absolutely. Thank you, hon Speaker. [Applause.] Dr M G ORIANI-AMBROSINI: Mr President, you are absolutely right and you have my absolute support on the statement that the importance of democracy is vital to the country and it is indeed vital to the credit rating. You and I and everyone else in this House know and would agree that if a country does not hold regular elections and refuses to hold elections, it will immediately get downgraded because the avoidance of losing power by preventing an election leads to the loss of investors’ confidence. My question to you, Mr President, is: What is the difference between preventing the holding of an election and preventing a vote of no confidence, which is a constitutional power of the opposition and each member of this House? The Constitutional Court has required this National Assembly not to impair and, in fact, to assist ... [Interjections.] Ms Z S DUBAZANA: Speaker, on a point of order: The member is not responding to the question that has been put to the President. 15 NOVEMBER 2012 PAGE 33 of 125 Dr M G ORIANI-AMBROSINI: I thought it was a question. If I were the President, I would gladly respond to questions put to me. In the meantime, the burden of answering the questions is on President Zuma. The question is: How can you authorise your caucus to prevent this side of the House from holding a vote of no confidence, which will have an enormous impact on the credit rating of the country, and how is that different from not holding an election? [Time expired.] [Applause.] The PRESIDENT OF THE REPUBLIC: Hon Speaker, the member definitely knows that I am not a Member of Parliament. I did not participate in the processes of this Parliament. I have heard that there was an issue raised and members of this House are dealing with the issue as they would want to deal with it. As I’m told, there are manners and procedures in which these matters are raised. I don’t want to enter into the details of the matter that I’m not involved in. I don’t think that the member is expecting me to answer the question which he must get from other Members of this Parliament. Thank you, hon Speaker. [Applause.] Presidential Infrastructure Investment Conference to improve quality of life and reinforce industrialisation strategy 22. Mr H P Maluleka (ANC) asked President of the Republic: 15 NOVEMBER 2012 PAGE 34 of 125 In light of his statement at the Presidential Infrastructure Investment Conference that infrastructure development is a catalyst to sustainable economic development and the improvement of the quality of life of our people (details furnished) (a) what constitutes actual change in the quality of life of our people through the envisaged infrastructure programme and (b) how he anticipates it to reinforce our industrialisation strategy? NO3870E The SPEAKER: Order, order! Question 22 has been asked by hon H P Maluleka, who is unfortunately absent due to illness. The follow-up question ... [Interjections.] Mr L SUKA: I am here, Mr Speaker. The SPEAKER: Are you back from the hospital? Mr L SUKA: No, Mr Suka is taking the place of Mr Maluleka. The SPEAKER: Are you Mr Maluleka? Mr L SUKA: I am replacing him, Mr Speaker. 15 NOVEMBER 2012 PAGE 35 of 125 The SPEAKER: Let me start from scratch. Mr Maluleka is absent due to illness. The follow-up question will be asked by the hon L Suka. [Applause.] The PRESIDENT OF THE REPUBLIC: Hon Speaker, hon member, the actual change in the quality of life of our people means that we provide more people with running water, electricity and gas, better roads and telecommunications, improved clinics and schools, parks and city buildings. These investments will give our people a better life and enable them to engage better, both as workers and as citizens. They are meant to correct the historic underinvestment and discrimination against black communities which, to this day, underpin poverty and inequality in our country. You will recall that at the time of the transition to democracy, less than half of African households had piped water on site, or electricity. Similar disparities existed for investment in roads, telecommunications, schools, clinics, parks and other services. We have already spent billions to overcome underinvestment in our communities, and work is ongoing. The Census 2011 results indicated that, amongst other achievements, access to basic services such as piped water, electricity and refuse removal more than doubled over the period 1996 to 2011. However, many more communities are still waiting for water, electricity, 15 NOVEMBER 2012 PAGE 36 of 125 sanitation and other services, hence the importance of prioritising infrastructure development. To make a meaningful impact in the poorest areas, the National Infrastructure Plan has identified 23 district municipalities, which are mostly in the former so-called “homelands”, where poverty runs deep. Providing services is harder in these regions. For a number of reasons, the households are often relatively scattered, increasing the cost of network infrastructure like roads and water. Unemployment is still highest in these regions, which were set up under apartheid deliberately to lack land and other productive resources. Our infrastructure investment will definitely change lives for the better. The National Infrastructure Plan will reinforce industrialisation in two main ways: Firstly, it will provide a market for capital goods and construction materials. We expect a substantial boost, amongst others, to producers of bitumen, cement, structural steel products, generators and electrical equipment of all kinds, as well as rolling stock for Transnet and the Passenger Rail Agency of South Africa, Prasa. Secondly, infrastructure will improve the overall competitiveness of our economy and open new economic opportunities for both established and emerging enterprises. Key projects in this regard include the 15 NOVEMBER 2012 PAGE 37 of 125 investments to open up the northern mining belt and improvements in rail and road transport between KwaZulu-Natal and Gauteng. They also include projects that will open new economic opportunities for people in impoverished rural areas, including the development corridors around the Eastern Cape and the North West. Lastly, significantly, we also won the rights to share the hosting of the Square Kilometre Array, SKA, which brings a host of development opportunities for the country. In addition, the Minister of Energy has also announced concessions on renewable energy. All these will add enormously to our infrastructure development successes. I thank you. [Applause.] Mr L SUKA: Mr Speaker, critical to sustaining the infrastructure development programme is the ability to maintain the high levels of public investment by government and public sector agencies backed by investments in skills development. Now, the question is: Are the President and Cabinet taking the necessary measures to ensure that our fiscus is able to sustain the level of investment required; and what steps have been taken in this regard in order to avoid what has happened in other countries, for instance Portugal, with similar programmes? I thank you. The PRESIDENT OF THE REPUBLIC: Hon Speaker, yes, government is taking all the necessary steps to ensure that our programmes succeed. 15 NOVEMBER 2012 PAGE 38 of 125 We have spent a lot of time discussing whether our plans will indeed have the resources to implement. Certainly, we have put forward figures and those figures have been announced publicly as to what amounts are there to implement our programmes. So, that has been taken care of and there is no doubt about it. What we have as plans are going to be implemented and funded. Thank you. [Applause.] Mr N SINGH: Mr Speaker and Mr President, there is no doubt that in general terms infrastructure development is a catalyst to sustainable economic development. When we look at some of the kinds of infrastructure development that have taken place in the past two years, like the World Cup stadia that have been built, many of them are white elephants. We need to question the desirability of that kind of investment in South Africa. But having said that, Mr President, I think we are sitting on a ticking time bomb at the moment because of a number of youth who are unemployed in our country. Some of those youth have tertiary qualifications and some of them do not have those qualifications. Have the President and the infrastructure group taken advantage of the fact that for any future investment in infrastructure, the youth would be favourably considered for employment so that in a few years from now, we can say that many of the youth are gainfully employed in our country? Thank you. 15 NOVEMBER 2012 PAGE 39 of 125 The PRESIDENT OF THE REPUBLIC: Hon Speaker, hon member, firstly, the question of youth unemployment is a global problem. It is currently not only a South African problem. All countries are trying their level best to address it. Unfortunately, it has come at a time when there is a global economic meltdown, which adds to the challenge. With regard to government, we discuss the issues of how we deal with the issue of youth. In fact, there are programmes that address the question of the youth. I am leaving aside the discussion that is at the National Economic Development and Labour Council, Nedlac, which we announced here, and there were others in a democratic country who held a different view. We are discussing with them because we thought it was a programme that was very important. We are very hopeful that, at the end, that discussion will be concluded and we will be able to have a clear programme. Different departments are, in fact, tackling the question of youth employment. It may not be known, because perhaps people have not talked about the specifics in their departments and I am sure that when the Ministers have the time to discuss their budgets they will be able to indicate what they are doing in their own departments. There is a lot that is being done, but of course the challenge is huge. Thank you. [Applause.] Mr L RAMATLAKANE: Hon Speaker, Mr President, following your response, massive infrastructure development is easy to announce, but more difficult to finance and impossible to execute if you do not have 15 NOVEMBER 2012 PAGE 40 of 125 sufficient high skills such as engineering, planning management, accounting and quantity surveying. Eleven billion rand was left unspent last year due to the very failure of the execution. As a result the finalisation of hospital and school programmes is lacking. We know that South Africa is rated the lowest and poorest in the world in maths and science. What are the active practical plans that have been implemented in securing and acquiring the relevant skills to ensure the success of this infrastructure development? The PRESIDENT OF THE REPUBLIC: Hon Speaker, putting aside our long-term emphasis on education, which we believe is an important element in any government to address the challenges of a country, which are ongoing, we have organised very recently an investment summit wherein we called everyone, including the private sector, unions, civil society, as well as people who deal with education of engineers, to allow those key players in the country to buy in to this programme; and we have placed an amount of money from the government into this. This has been welcomed by all these sectors as, in fact, one of the first in the country where there is total agreement, and they are prepared to put their money where their mouth is in terms of ensuring that these programmes succeed. We have a programme that is supported by all key players in the country, and I don’t think we will ever go wrong. From the government point of view, there are very concrete programmes that are being implemented to ensure that this programme succeeds. So, we should have no worries with all those challenges that we are aware of, but we are 15 NOVEMBER 2012 PAGE 41 of 125 acting within that knowledge to ensure that it succeeds. Thank you. [Applause.] Dr W G JAMES: Mr Speaker and Mr President, gross fixed capital formation, which is a measure of infrastructure investment, fell from 30% of gross domestic product, GDP, in 1982 to 18% in 1994, where it stayed till now. We therefore welcome this government’s planned expansion in infrastructure investment as recent events indicate that there is a particular need to invest in rural logistical infrastructure to make our agricultural enterprises more competitive and therefore better able to produce jobs and higher incomes for workers. So, why is it, Mr President, that instead of investing in rural areas, everywhere millions of rand are wasted on the indulgent and luxurious quarters fit for the emperor without clothes, which is you, sir, to sit in the pseudo monarchic seat of Nkandla? [Applause.] The PRESIDENT OF THE REPUBLIC: Hon Speaker, I thought that the next question deals with Nkandla, which is your last question. I don’t know why the hon member couldn’t wait so that he could get in and ask his question so that he could get clarity. I don’t want to pre- empt this important question from the Leader of the Opposition in Parliament. [Laughter.] Adv T M MASUTHA: Hon Speaker, I rise on a point of order: Rule 63 states that members may not use offensive language, and I believe 15 NOVEMBER 2012 PAGE 42 of 125 that the hon James, by referring to the President in the manner that he did, is actually insulting the President, and that is offensive language in terms of Rule 63. Could you please rule in this regard? The SPEAKER: Indeed, I will study Hansard and come back on this issue, hon members. We move on to Question 23. Implementable plans for Africa’s Integrated Maritime Strategy to improve security in South African waters 23. Mrs C Dudley (ACDP) asked the President of the Republic: Whether he, as president of the Programme for Infrastructure Development in Africa (PIDA), is taking any steps to co- ordinate implementable plans for Africa’s Integrated Maritime (AIM) strategy; if not, why not; if so, (a) how is this envisaged to improve security in South African waters and (b) what are the further relevant details? NO3843E The PRESIDENT OF THE REPUBLIC: Hon Speaker, Firstly let me clarify that I am not the President of the African Union Programme for Infrastructure Development in Africa. The initiative is led by the African Union Commission with the African Development Bank as the implementing agency. Its purpose is to develop a vision and 15 NOVEMBER 2012 PAGE 43 of 125 strategic framework for the development of regional and continental infrastructure. In January 2011 the heads of state of the African Union endorsed key priority projects and their respective champions, as identified by the New Partnership for Africa's Development High-Level Sub-Committee on Infrastructure. In this regard, Algeria is responsible for the Missing Links of the Trans-Sahara Highway and Optical Fibre projects along the same alignment; the Republic of Congo for the Kinshasa-Brazzaville Road-Rail Bridge project; Egypt for the Water Management, River and Rail Transport Infrastructure project; Nigeria for the Nigeria-Algeria Gas Pipeline project, and Rwanda for the Information and Communications Technology, ICT, Broadband and linking the fibre optic network into neighbouring states. Senegal is responsible for the Dakar-Ndjamena-Djibouti Road and Rail project. South Africa has been given the task of managing the North-South Corridor Road and Rail project. The Presidential Infrastructure Champion Initiative, which I therefore lead, covers broadly the following sectors: transport, energy, information and communication technology, water and sanitation, as well as agriculture. As such, the question of maritime safety is not within my mandate. However, I am aware that the African Union has a long- 15 NOVEMBER 2012 PAGE 44 of 125 term focus on maritime security as part of its comprehensive 2050 Africa’s Integrated Maritime Strategy. As a member of the AU, we have been actively engaged with this strategy through the Minister for International Relations and Co-operation, as well as the Minister of Defence and Military Veterans. The 2050 Africa’s Integrated Maritime Strategy remains in draft form and the African Union Commission has embarked on a consultation process with member states on the finalisation of its content. For our part, the South African Navy and the South African Maritime Authority played an active role in providing the initial input to the document. The Department of International Relations and Co-operation is consulting and co-ordinating with all relevant departments whose portfolios would be affected. Given that Africa’s Integrated Maritime Strategy remains a draft which has yet to undergo further consultation by the AU Commission, no implementation plans have been deemed necessary at this stage. We regard the strategy as a positive development that South Africa should support, given that it also talks to the protection and security of South Africa’s own maritime domain. I thank you. [Applause.] Mrs C DUDLEY: Through you, Speaker: thank you, Mr President, for accommodating my question, even though it is not in the context that 15 NOVEMBER 2012 PAGE 45 of 125 I expected that it should be. The African Union’s deadline for securing the continent’s coastal waters by 2050, of course, seems an incredibly long time. I think I will be 97 by then, I am not sure about you. Knowing that piracy in African waters is rife, I am particularly grateful that you agreed to answer this question. We know that while piracy remains lucrative, it is going to remain the problem that it is. How much of a priority is this matter to you particularly, and for South Africa, with piracy reported to have reached Namibia, Mauritius, Seychelles and Mozambique? It could be in South African waters anytime soon, if not already. We have a vast and vulnerable coastline. Sea-blindness is said to be our biggest threat. What are we doing locally, to address this threat? For example, are we able to ensure that a well-trained and equipped Defence Force regularly patrols South African and Mozambican waters? Thank you. The PRESIDENT OF THE REPUBLIC: Hon Speaker, I have given the answer with regard to the AU. If I may take the latter part of the question with regard to Southern Africa, certainly, the question of piracy is a major problem that is facing our waters. The Southern African Development Community, SADC, is planning, co-ordinating and making efforts to meet the situation and developing its military capacity. In fact, there is direct co-ordination between us, Mozambique and Tanzania to address this issue. There is a bigger picture of the 15 NOVEMBER 2012 PAGE 46 of 125 entire SADC. The matter is under active consideration and planning. Thank you. [Applause.] Ms A VAN WYK: Through you, Speaker, thank you, Mr President. Can you please inform the House whether you will ensure that the final integrated maritime strategy will also contribute to supporting government strategies for economic and social development; and that the envisaged strategy will not negatively impact upon trade in the waters of SADC countries and those bordering the Indian Ocean? I thank you. [Applause.] The PRESIDENT OF THE REPUBLIC: Hon Speaker, definitely, the efforts that I am talking about take into account the economic activities that happen in our waters. In fact, there is a discussion in our country as to how we utilise this resource – our waters - which we have not exploited sufficiently. That then goes with the question of: If that is the case, what are the plans for security? I am sure that in due course we will be able to brief the country about what we are trying to do. Given the economic potential, this is an important area that we cannot leave unattended. Precisely because of the economic potential, the question of its security becomes important. Therefore, that kind of debate is going to come. Perhaps even this House will benefit from that discussion. Thank you. [Applause.] 15 NOVEMBER 2012 PAGE 47 of 125 Mr B M BHANGA: Mr Speaker and Mr President, as part of Africa’s Integrated Maritime Strategy, our understanding is that charity begins at home. Currently in our country we are confronted with a challenge of a marine vessel, Africana, which is supposed to collect scientific data. This vessel has not been sailing for quite some time. We are also concerned about the state of the Ellen Kuzwayo, one of our vessels, which was also supposed to be patrolling our coastal waters, but is not doing so. To me, today, South Africa looks like a country without borders. Our marine waters are vulnerable to poachers because you and your government, within the broader African strategy, are doing nothing about making sure that the Africana and the Ellen Kuzwayo are sailing. Mr President, you remind me of the former spin-doctor for Saddam Hussein, who said that the country was stable when it was burning and being attacked with bombs. Today South Africa’s waters and streets are burning ... [Time expired.] The PRESIDENT OF THE REPUBLIC: Hon Speaker, the member said there is fire in the sea. [Laughter.] [Applause.] That is very serious. I haven’t seen flames there. [Laughter.] Hon Speaker, it is an exaggeration. Our sea and ships are active. They are, actually, regularly shown on TV. We have even seen the training of young people. I am sure the hon member missed all of this. It is not true 15 NOVEMBER 2012 PAGE 48 of 125 that nothing is happening. Charity has begun at home. Thank you. [Applause.] Mr E H ELOFF: Speaker, Mr President, I would like to highlight something - illegal, unregulated and unreported fishing is estimated to cost sub-Saharan Africa approximately one billion dollars a year. As a result of the dangers of sailing through the Gulf of Aden waterway, more and more ships are sailing through South African waters, past the point of Africa, en route to Europe. This makes South Africa extremely susceptible to organised crime and exploitation of our environmental resources. How does the President plan to deal with these matters and threats? Thank you. The PRESIDENT OF THE REPUBLIC: Hon Speaker, this is the point I’ve just made - that the matter is collectively being discussed by SADC, because it cannot be the challenge of one country alone. We are discussing the matter of how to capacitate our own countries, so that we are able to deal with the threat that is coming, particularly piracy which has been threatening the Indian Ocean and is beginning in the Atlantic Ocean. That led to our urgent discussion on that matter, and we need to take action. The matter is being considered by these countries. We believe that it is SADC that must form a collective system to be able to defend the respective countries. The matter is being attended to. Thank you. [Applause.] 15 NOVEMBER 2012 PAGE 49 of 125 Investigation into building on Nkandla home of President by Public Protector 24. The Leader of the Opposition (DA) asked the President of the Republic: (1) Whether he instructed his Minister of Public Works to cease all building on his Nkandla home pending the outcome of an investigation announced by the Public Protector; if not, why not; if so, when; (2) whether his instruction was carried out; if not, what is the position in this regard; if so, what are the relevant details? NO3849E The PRESIDENT OF THE REPUBLIC: Hon Speaker, hon member, let me make one thing quite clear from the outset. I have noted all sorts of public comments to the effect that the government built my home in Nkandla. My residence in Nkandla has been paid for by the Zuma family. [Interjections.] All the buildings and every room we use in that residence were built by ourselves as a family, and not by government. [Applause.] I have never asked government to build a home for me, and it has not done so. The government has not built a home for me. 15 NOVEMBER 2012 PAGE 50 of 125 A necessary distinction must therefore be made between work which I have mandated and initiated in my home, as opposed to the security enhancement undertaken by government. On the basis of a security risk assessment undertaken by a team drawn from the Departments of Defence and Military Veterans, Police, and State Security, I was approached to allow security upgrades or enhancements to be made to my Nkandla residence, which was already in existence. [Applause.] I was advised that the security upgrades were indeed necessary in terms of the National Key Points Act, Act 102 of 1980. Therefore, all the security enhancements that have been undertaken by the Department of Public Works at my residence in Nkandla have been part of these security requirements. Any other construction undertaken by government, beyond the premises of my home, such as the accommodation for government security personnel, are not part of my residence. [Applause.] I have been advised by the Minister of Public Works that he has established a task team of experts to investigate whether supply chain procedures were properly followed by the department when it carried out the security upgrades. In addition, the Auditor-General has been requested to audit all classified prestige projects. The Minister has also instructed the department to co-operate with investigations by any other authorised agency. I fully support these investigations. [Applause.] 15 NOVEMBER 2012 PAGE 51 of 125 We will not pre-empt the outcome of these investigations or respond to speculation at this stage. We must respect the institutions that are investigating, and the processes that have been started. Should the investigations unearth wrongdoing of any kind, the necessary actions will be taken, as we have done in respect of irregularities in other instances. [Applause.] Hon Speaker, I think it will be very beneficial for your House to have a clearer understanding of my residence, so that, when you discuss my residence, you are not basing it on speculation, but know exactly what has happened. Let me help this House, because the hon members have been asking questions and some have even visited my home. [Laughter.] There has been a lot written about and shown on the television about my homes. I think it is important for me to help you, hon Speaker, and your House, to understand the facts as they are, so that even those who will be asking follow-up questions do so within that context. We, as the Zuma family, have built our home. [Interjections.] Let me give you the background. What, for example, has been shown on television – which has caused a great hullabaloo among many people – are my houses, built by me and my family. They have not been built by government. [Applause.] My home has been there for a long time. At one point, because of violence in our province, much as I wanted to extend my home, I could not, because houses were being burnt down 15 NOVEMBER 2012 PAGE 52 of 125 as a result of violence. Indeed, my own residence was burnt down twice. I always replaced the rondavels as they were before because there was still violence. Once the violence was over, I took the decision to extend my home and I built more modern rondavels. I also fenced my home. I engaged the banks and I am still paying a bond on the first phase of my home. [Applause.] Even at that time, there were many allegations. If hon members remember, it is not the first time that my home has been paraded on television. Those rondavels were paraded, accompanied by lots of allegations. Yet, I am still paying a bond to this day. As a family, in our own time and right, we decided to upgrade our homestead. There are two homesteads that we have upgraded. The other one does not appear on television because there are no security features on it. That is where, in fact, we started upgrading. We started at our residence called Empindamshaye. All of us have a manner of working together as an extended family. We do things together. When the upgrading at that one had reached the finishing touches stage, we started with the one where I stay. We got contractors to come and construct, which meant we were extending our home. At that point, what was provided to me then as a Deputy President was static security at a particular level. They built their own place to sleep as they work shifts. There were very limited security features at that rondavel. 15 NOVEMBER 2012 PAGE 53 of 125 When I became the President, all of us in the family agreed to extend our home. Then government came and said that it had to install security features at my residence. By the time government came, the contractors were on site and they had been enlisted by the family and not by the government or Public Works. Government had a plan regarding what it wanted to do. Government wanted to improve the fence, etc. I told government that I had my own plan - which was a comprehensive plan – to extend my home. What then happened was that I allowed government to meet with the contractors who were already on site because government, from a security point of view, insisted that they needed to participate. So, even the manner in which the question was asked - the question being: have you instructed the Minister to tell the contractors to stop working - suggests that the contractors were brought in by Public Works. Public Works found those contractors who constructed my home. They had to agree to what government wanted them to do at my home. The government had specific things they wanted to do to my houses, not build houses for me. The wrong impression has been created in the country, that the government has built a home for me. That is not true. People are speaking without knowing, saying I have spent so much of the government’s money. I have never done so. [Applause.] 15 NOVEMBER 2012 PAGE 54 of 125 It is unfair, but I do not want to use harsher words, because you believe that people like me cannot build a home. What has government done? There are two different things: my homes that are built by me and my family, and the security features that the government wanted to attach to satisfy their own requirements. These are basically in my home, in the main, fencing, bullet-proof windows – not all the windows, specific ones – and the bunker. These are matters that the government ... [Interjections.] Don’t ask me, don’t ask me! I think you must respect me, because I have respected people on this issue and I don’t want to be a football. [Interjections.] [Applause.] You must listen! If you are genuinely concerned, listen, because I want to help you to understand. [Interjections.] The SPEAKER: Order, hon members! Order! The PRESIDENT OF THE REPUBLIC: Now, this is what has happened. The government installed security features at my houses, that were built by me, but constructed by the contractors that were commissioned by us long before the government came with its plan. That must be very clear. As for the houses that are paraded on television as having been built by government, that is not true. I am also happy because the investigations are taking place. 15 NOVEMBER 2012 PAGE 55 of 125 What government did, given its own considerations of security, was to build other houses beyond my home for the security personnel. These are not shown on television and these are really the government’s houses, but I do not know how much they cost. What is shown is my house that I have paid for, and it is a lie that it has been built by government. It has not been built by government. Today, hon Speaker, I have the opportunity to explain this, because my name is being used wrongly. My family is being undermined, by the very hon members who do not ask what actually happened. I feel very aggrieved, and I must tell you for the first time. You then have leaders of political parties who do not know whether they are provincial or national, taking trips to come and photograph my home and make a laughing stock of my family. I take exception to this! You must deal with the facts you know. The houses that were built by the government for its security personnel have not been shown. Now, I do not know where this amount of money went to, because it could not have been so much for just these three items. There are houses beyond my home meant for the government, which have nothing to do with my home. However, all of that is being piled on me as having used R200 million, and therefore I am very corrupt. I take exception! Whoever is going to insist, after this explanation, is not only going to tell me but also prove to me where I have used all of this money. [Applause.] 15 NOVEMBER 2012 PAGE 56 of 125 Hon Speaker, I respect all human beings and I cannot jump whenever there are rumours or allegations. We often say, if allegations have not been tested and proven, they remain allegations. I have been convicted, painted black, called a first-class corrupt man on facts that have not been tested. I take exception! I want you, when you ask your questions, to ask your questions properly. You must not discuss issues you do not know. If you want clarity, ask for clarity. I thought it important for me to explain this. It is absolutely important, when you ask the Minister of Public Works, to ask about specific issues related to the government and not about my home. Not about my home! I want everybody to be clear on this, because you have made people in this country believe that government has built a home for me. It is not true! It is not true! The Zuma family has built its own home for its own comfort. They have not asked anyone. [Applause.] Hon Speaker, I thought I should explain this to help your House, so that if it is interested in discussing this matter further, they must discuss it with correct facts, facts that are clear. I had nothing to do with the contractor who constructed houses out there. I have everything to do with the contractors who are still building my home today. Government only dealt with them to discuss how to install the security features, nothing more. Therefore, even the question asking me whether I have instructed the Minister to order 15 NOVEMBER 2012 PAGE 57 of 125 the contractor to stop construction is premised on ignorance and not on knowing what the situation is. I thought it important, hon Speaker, to clarify this. Thank you very much. [Applause.] The LEADER OF THE OPPOSITION: Hon Speaker, let me be very clear. The fact that the hon President’s house is his own home built by himself is exactly what is at issue today. The fact that government is spending R250 million to upgrade not a presidential house, but the President’s own house, built by himself - his own private residence and not a state residence - is at issue today. Clearly, the hon President is determined to hide behind the same apartheid laws that his Ministers are determined to hide behind. So, hon Speaker, I do have a follow-up question because, hon President, if you want to talk about security enhancements, let’s talk about security enhancements. There are 31 new buildings, six of which cost R8 million rand each. Is that a security enhancement? Two million and three hundred thousand rand for lifts to carry ... The SPEAKER: Order, hon members! The LEADER OF THE OPPOSITION: ... the hon President to his underground bunker. Is that a security enhancement? Are air-conditioning systems for every one of the houses, at a cost of R1,5 million, a security enhancement? Are guestrooms, a visitors’ centre and a gymnasium security enhancements? Mr Speaker, I will be 15 NOVEMBER 2012 PAGE 58 of 125 very clear. The fact that this is the hon President’s private home is something that we take exception to. The government does not have the responsibility to upgrade, at a cost of R250 million, the private home of the honourable President. [Interjections.] Adv T M MASUTHA: Speaker, on a point of order: There is a Constitution in this country over and above the Rules of this House. To my knowledge, there is a Bill of Rights in that Constitution, which is binding on this House as well. In that Bill of Rights there is a right to privacy. I cannot understand why every other South African has a right to privacy except the President, the first citizen of this country. Can’t the hon Leader of the Opposition ... [Interjections.] ... respect the right to privacy of the President? The LEADER OF THE OPPOSITION: Hon Speaker, when the public has to pay R250 million to upgrade that privacy, it ceases to be private. Hon President, do the gym, the guestrooms, the air-conditioning, the visitors’ centre and the 31 new buildings constitute security enhancements? Thank you very much. [Applause.] The PRESIDENT OF THE REPUBLIC: Hon Speaker, once again the hon member is premising her question on information that is not accurate. The additional houses that I put at my home number only five. She has given a huge number of houses that I have nothing to do with. She then added the amounts of money in respect of houses that neither I nor anyone has paid for. I paid for my five additional 15 NOVEMBER 2012 PAGE 59 of 125 houses, in relation to the rondavels I talked about. She must not include things that do not belong to me. She must talk about things that belong to me and that I paid for. What the security has done for security features does not include the houses you have counted. They are neither in my residence nor my home. She must put the question differently to the relevant people who could answer it. She must ask me about the five houses I have talked about and I will give you the answer. [Applause.] Mnu B H HOLOMISA: Mhlalingaphambili, Nxamalala, ndicinga ukuba ingcaciso oyinikileyo ukuba yayichazwe nguMphathiswa osingathe lo mcimbi kwakuqala kanye ngolu hlobo uyibeke ngalo, mhlawumbi ngowucacile lo mcimbi. Ngoku ke, kuba usithi ukuba le Palamente iyafuna ukuwuxoxa lo mcimbi, ingawuxoxa kodwa bendiya kucebisa ukuba laa mzi wakho yenye yeendawo ezingundoqo ngenxa yokuba unguMongameli. Ngoko ke, mna bendiya kucebisa into yokuba, ukuba kuyavunyelwana makuthunyelwe ikomiti eyahlolwayo ngokweenkqubo yezobuntlola apha ePalamente, iKomiti ejongene neMicimbi yeSebe lezobuNtlola ukuze iqwalasele - [Uwelewele.] [Kwahlekwa.] - hayi ... (Translation of isiXhosa paragraph follows.) [Mr B H HOLOMISA: Chairperson, Nxamalala [President’s clan name], I think if your explanation had been given by the Minister responsible for this right from the beginning and in exactly the same manner, this matter might have been clarified. Now you are saying, if Parliament wants to discuss this, it can discuss it, but I would 15 NOVEMBER 2012 PAGE 60 of 125 like to suggest that the Presidency, which is led by you, is the most suitable place for such a discussion. Therefore, if we agree on this, I would suggest that we delegate a committee that has been assessed using the parliamentary system of intelligence, the Joint Standing Committee on Intelligence so that it observes attentively ... [Interjections.] [Applause.] No ...] The SPEAKER: Order, hon members! Mnu B H HOLOMISA: ... unguMphathiswa into oyiyo. Ndiyacebisa apha kuba kukho ingxaki - ukuze iqwalasele zonke ezi zinto kuba abaphicothi ziincwadi aba kuthiwa mabenze uphando, abanye babo abahlolwanga ngokwenkqubo yezobuntlola. (Translation of isiXhosa paragraph follows.) [Mr B H HOLOMISA: ... you are a Minister. I’m offering my advice here because there is a problem – so that it observes everything, as some of the auditors who are tasked to do the audit were not assessed through the intelligence system.] This is a security risk exercise. Ndicela ukuba niyiqwalasele loo nto - ungabe ungxola nje wena ungazi nento apha. [I would appreciate it if you could take that into consideration – you must not just make a noise when you are clueless.] [Laughter.] 15 NOVEMBER 2012 PAGE 61 of 125 The PRESIDENT OF THE REPUBLIC: Hon Speaker, if I heard well, the hon member is making a proposal. There is an investigation already taking place and I would imagine that the hon member is perhaps correctly saying that we should have all the facts and then discuss them intelligently. At the moment, we are going to ask questions based on false information. If this House would want to discuss anything from that angle, it is not going to help. I think the proposal that has just been made is one for this House to consider. Insofar as I am concerned, the Minister has said that he will be sending an investigating team. I hope that there will be facts gathered. The Public Protector has said that she is conducting preliminary investigations. The member is saying that we need screened people because of the fact that it is a security point. That is a very sensible point. [Applause.] There is no country that discusses these kinds of matters in public. I think the member is sobering this House and I am sympathetic to his proposal. Thank you. [Applause.] Ms M DREYER: Mr Speaker, if the President is disputing the figures given by the Leader of the Opposition and the previous speaker, will he commit to giving us the correct figure spent by the Department of Public Works, as well as a breakdown of the items on which this money has been spent? [Applause.] 15 NOVEMBER 2012 PAGE 62 of 125 The PRESIDENT OF THE REPUBLIC: Hon Speaker, if the hon member thinks that I must know the accounting books of a department and count figures, I think she is demanding a lot from me. I don’t know the figures because it is not my job to do so. The proposal has been made by the hon member that we need people who have been properly screened to get the facts. This will help the hon Leader of the Opposition not to ask the question and give figures that do not belong to me. Thank you, hon Speaker. [Applause.] Mnu V B NDLOVU: Somlomo, mhlonishwa Mongameli, lokhu kukhuluma kungaze kube kuningi kangaka nje, mhlonishwa Mongameli, kudalwa wuNgqongqoshe wakho lo wezeMisebenzi yoMphakathi. Ukuba uNgqongqoshe wezeMisebenzi yoMphakathi wachaza njengoba uchaza nje ngabe akukho konke lokhu kukhuluma. Manje-ke, indaba la eyonakala khona yingoba akakwazi ukuhlukanisa izinto phakathi. Ngakho-ke, lokho okuphakamiswa wumhlonishwa uHolomisa, noma ungakwemukela Mongameli, kepha umhlonishwa uNxesi kufanele aze la kule Ndlu asitshele ukuthi wayethini kanti ngomuzi wakho. [Uhleko.] (Translation of isiZulu paragraph follows.) [Mr V B NDLOVU: Speaker and hon President, the reason this issue has been discussed so much, hon President, is because of your Minister of Public Works. If the Minister of Public Works explained as you are explaining, there wouldn’t be all these discussions. Now the problem is, he can’t differentiate between things. Therefore, what Mr Holomisa proposes, whether you accept it or not, hon President, 15 NOVEMBER 2012 PAGE 63 of 125 hon Nxesi must come to this House and tell us what he was saying about your home. [Laughter.]] The PRESIDENT OF THE REPUBLIC: Hon Speaker, the hon member is making a suggestion to this House, and I think it is this House that has the right to respond to that because I can’t determine what this House must do. I don’t know whether the Minister was asked the right question from the beginning. He must have answered on the basis of what questions were presented to him. I am not sure whether he was asked to describe the details of how my residence was built, not just now. Dealing with a specific issue which was asked, as I understood, he responded. However, if there was a proposal, I don’t think one would have a problem with that. Hon Speaker, I usually read the Hansard, even from the olden days. Before I sit down, I just want to share with the House an incident that happened some time ago and was recorded in Hansard. Maybe the House will be interested. This was in the olden days. Hon members, let me share with you an interesting quotation that I found in Hansard, a record of a parliamentary question during a question session in this House on 28 August 1981. The hon member, Mr R R Hulley, asked the hon Prime Minister P W Botha as follows: Whether the organisation known as the Congress of the People, Cope, has been provided with financial assistance by the state? If so, 15 NOVEMBER 2012 PAGE 64 of 125 (a) by which department? (b) What was the total amount involved? (c) For what purpose was such assistance provided? That was Cope, with C-O-P-E. [Laughter.] Prime Minister, P W Botha, responded as follows, and I am sure the finger was up there. [Laughter.]: No, the hon member must learn not to allow himself to be misused to spread unfounded stories. [Applause.] If hon Speaker were to ask the question: “Was Cope in existence then ... [Laughter.] ... or have we seen the reincarnation of the Cope? Was it deep and only resurfaced at a given time?”, that would be an interesting question. Thank you very much, hon Speaker. [Laughter.] [Applause.] Mr D A KGANARE: Speaker, on a point of order: I would just like to know whether the hon President is equating himself to P W Botha? The SPEAKER: You are out of order! Order, hon members! Hon members, the office has received a document for the Department of Defence’s withdrawal with regard to the response made, and this will be published. 15 NOVEMBER 2012 PAGE 65 of 125 See also QUESTIONS AND REPLIES. The House adjourned at 16:17. __________ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS ANNOUNCEMENTS National Assembly and National Council of Provinces 1. Classification of Bill by Joint Tagging Mechanism (JTM) (1) The JTM in terms of Joint Rule 160(6) classified the following Bill as a section 75 Bill: (a) Commission on Gender Equality Amendment Bill [B 36 – 2012] (National Assembly – sec 75). National Assembly The Speaker 1. Introduction of Bill (1) The Portfolio Committee on Justice and Constitutional Development 15 NOVEMBER 2012 PAGE 66 of 125 (a) Repeal of the Black Administration Act and Amendment of Certain Laws Amendment Bill [B 40 – 2012] (National Assembly – proposed sec 75) [Explanatory summary of Bill and prior notice of its introduction published in Government Gazette No 35874 of 2 November 2012.] Bill initiated by the Portfolio Committee on Justice and Constitutional Development of the National Assembly, and referred to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160. In terms of Joint Rule 154 written views on the classification of the Bills may be submitted to the JTM within three parliamentary working days. TABLINGS National Assembly and National Council of Provinces 1. The Minister of Trade and Industry (a) The Agreement on the amendment of annex IV and VI of the Trade Development and Cooperation Agreement between the Republic of South Africa, on the one part, and the European Community and its Member States, on the other part, regarding certain agricultural products “Referred to as the Cheese Agreement,” tabled in terms of section 231(2) of the Constitution, 1996. 15 NOVEMBER 2012 PAGE 67 of 125 (b) Explanatory Memorandum to The Agreement on the amendment of annex IV and VI of the Trade Development and Cooperation Agreement between the Republic of South Africa, on the one part, and the European Community and its Member States, on the other part, regarding certain agricultural products “Referred to as the Cheese Agreement,” tabled in terms of section 231(2) of the Constitution, 1996. COMMITTEE REPORTS National Assembly 1. Report of the Portfolio Committee on Health on a study tour to Bangkok, Thailand, dated 12 September 2012 The Portfolio Committee on Health having undertaken a study tour to Thailand from the 23-27 January 2012, reports as follows: 1. Background and Objectives The National Health Insurance (NHI) is currently high on the health policy agenda. The intention of this financing system is to promote efficiency and the equitable distribution of financial and human resources, improving health outcomes for the majority. The proposed NHI seeks to address health challenges. The Committee decided on the study tour pre-empting the piloting of the NHI in various areas of South Africa, as well as health care services in general. The NHI will reshape South Africa’s health care system. The Committee also decided on visiting Thailand as it is a country which is perceived to 15 NOVEMBER 2012 PAGE 68 of 125 have one of the good health care systems. The lessons learnt from the Thai government healthcare system would assist Members of Parliament (MPs) in their future oversight activities. The Committee was interested in the following areas of learning: , National Health Insurance; , Recruitment and retention strategies of doctors in the rural areas, which assist in the good functioning of primary health care; , Integration between Conventional and Traditional medicines; and , Their Office of Standards of Compliance. 2. Delegation The following members formed part of the delegation: Dr MB Goqwana, Committee Chairperson (ANC) Ms BT Ngcobo (ANC) Ms MJ Segale-Diswai (ANC) Ms MC Dube (ANC) Mr M Waters (DA) Mr DA Kganare (COPE) The following Parliamentary officials accompanied the Committee: Ms Vuyokazi Majalamba: Committee Secretary Ms Nonceba Mahlanyana: Committee Assistant Mr Zubair Rahim, Committee Researcher 15 NOVEMBER 2012 PAGE 69 of 125 3. Visit to the National Health Security Office (NHSO) Delegation at the NHSO The delegation interacted with the following persons at the NHSO: Dr Winai Sawasdivon: Secretary General of the NHSO Dr Yoslip Suchanwanich: Bureau of Information Technology Ms Netnapis Suchanwanich: Assistant Secretary Ms Netnapis Suchanwanich briefed the Committee and expanded on the constitutional provisions, the universal coverage reform objectives, the National Health Security Act, Thailand’s universal coverage, and the structure of the NHSO. 3.1 Constitution of Thailand Section 51 of Thailand’s Constitution B.E. 2550 (2007) stipulates that everyone has equal right to receive appropriate and standard public health services; and indigents shall have the right to receive free medical treatment. Section 80 stipulates that the State shall carry out the policy directive to: , Promote, support and develop the heath system that emphasise the health promotion; , Provide and promote the standardised public health service to people universally and efficiently; and , Encourage private sector and community to participate in the health development and provision of public health services. 15 NOVEMBER 2012 PAGE 70 of 125 The NHSO is a state agency, officially founded in 2002, under the National Health Security Act. It is responsible for the health security of 47.5 million Thai citizens. Every person born as a Thai should feel secured, irrespective of being sick or not. The mandatory duties of the NHSO are to manage the health security fund and allocate the subsidiary budget to 236 clinics and 963 hospitals to promote and develop a good health care system for all Thai people in order to assure the quality of care provided to Universal Coverage (UC) members. The NHSO has to control and supervise health care units to achieve the required standards of health services for all members. The vision of the NHSO is to have a health security system that ensures equitable accessibility, public confidence and provider satisfaction. The mission of the NHSO is to: , Promote and develop a quality health care system with public confidence and provider satisfaction; , Promote the participation of civil society and local administration organisations in health security development; , Promote and protect the people’s right to health security as well as reinforce the learning process of the public realizing their rights and duties. Manage the health security funding and the utilisation of the fund in the manner of sufficiency and efficiency; and , Establish an organisational management system which is of high standard and promote continuous development towards a learning organisation. 3.2 Aspects relating to health sector reform The presenter provided an overview of the universal coverage reform objectives, the Thailand universal coverage and aspects relevant to the National Health Security Act. 15 NOVEMBER 2012 PAGE 71 of 125 3.3.1 Universal coverage reform objectives The following objectives underpin the reform process of universal coverage: , To improve efficiency through: o Rational use of healthcare by level – beginning with primary care while ensuring proper referral; o Long-term cost containment through capitation contract model. , To ensure equity across schemes; , To ensure a sustainability system; and , To ensure quality of care through the accreditation system and utilisation reviews. 3.3.2 Thailand Universal Coverage (UC) There are three public insurance schemes, which cover 96% of the population, though 4% is still uninsured. The three schemes are as follows: , Civil Servant Medical Benefit Scheme (CSMBS) introduced in the 1960s, which covers government employees, their dependents and retirees. Ten percent of the population is covered in this scheme; , Social Health Insurance (SHI) which was introduced in the 1990s and covers private sector employees. Twelve percent of the population is covered in this scheme; and , Universal Coverage (UC) introduced in 2001. Seventy-four percent of the Thai population is covered by this scheme. 15 NOVEMBER 2012 PAGE 72 of 125 3.3.3 National Health Security Act The National Health Security Act ensures entitlement for health services according to the constitution, which applies to all Thai citizens. The National Health Committee is responsible to announce cost sharing of patients. However the poor have to be protected from financial burden. 3.3.3.1 Services covered under the National Health Security Act The services covered under the National Health Security Act incorporate promotive and preventative care, diagnosis, antenatal care, curative care, medicine, medical supplies, organ substitutes and medical equipments, delivery, boarding expense within health care unit, newborn and child care, ambulance or transportation for patients, transportation for disability persons, physical and mental rehabilitation; and other expenses necessary as prescribed by the Committee. 3.3.3.2 The National Health Security Act B.E 2545 (2002) In expanding on the National Health Security Act, the presenter provided an outline of the plan, current status, enabling factors for Thai universal coverage, future challenges and coping mechanisms. In relation to the plan and current status, financial sustainability was ensured by using multiple sources of funds. Currently, the general tax was the only source of fund. There was an attempt to propose a sin tax as an alternative source and there were forecasts that the total health expenditure as a percentage of GDP was still feasible in the next ten years. 15 NOVEMBER 2012 PAGE 73 of 125 In relation to the enabling factors for Thai universal coverage, there was political commitment with a policy agenda setting comprising evidence based policy formulation. The existing functioning of primary healthcare services was close to clients and easily accessible by rural populations. There was government effectiveness in scaling up and sustaining the universal coverage scheme. There was a high capacity on information systems, which enabled monitoring, evaluation and continued systems for fine tuning. Future challenges and coping mechanisms comprised the following: , Rapid demographic and epidemiological transition; , Little investment in primary preventions of risk and social mobilisation; , Unsettled debates on moving dependants (spouse and children) of SHI members currently covered by tax funded UC to contributory SHI; , Strong push by super-tertiary care (teaching hospitals) to extend high cost medical technologies; and , Slow progress in harmonising across three insurance schemes. Having completed the presentations, the Committee was taken on a tour to a call centre where all complaints and benefits were being administered. The call centre was a 24-hour service with 60 lines. They received approximately 1000 calls a day. Information at the call centre was kept for 6 months and then archived for 10 years. 3.3.4 Data Centre 15 NOVEMBER 2012 PAGE 74 of 125 The data centre was a centralised centre where all the data of people on the NHSO was administered. Applications were also managed at the centre. The centre was also responsible for checking and fixing problems from other branches. 4. Site visits to hospitals, clinics, and briefing by the Ministry of Public Health The delegation visited and received briefings from officials at the Samitivej Private Hospital, Rajavithi Hospital, Bang Sie Thong District Ka (primary healthcare) and a briefing by the Ministry of Public Health. 4.1 Samitivej Private Hospital Delegation at the hospital Ms Pat Phatraporn Donavanik Miss Rungnapa Attanung Ms Pat Phatapraporn Donavanik, Head of International Affairs informed the Committee that Samitivej was a private hospital, and not part of the hospitals that were offering universal coverage. 4.2 Rajavithi Hospital Delegation at the Hospital Dr Prakarn Thomyangkoon: Medical Technology Training 15 NOVEMBER 2012 PAGE 75 of 125 Mrs Niyom Somprasong: Human Resources Management Ms Khunying Duenpen Puengprakieat: Health Insurance Dr Sukit Paripimanmas: Deputy Director of the Academy Group Dr Warunee Jinarat: Assistant Director of Finance Ms Benjawan Khumparat: Deputy Director Mr Sompson Savarat: Interpreter 4.2.1 Presentation by Dr Prakarn Thomyangkoon The Committee was shown a video of Rajavithi Hospital and services that were being provided. Dr Prakarn Thomyangkoon informed the Committee that the hospital was initially a hospital for women and was converted to Rajavithi Hospital in 1976. Some of the services offered at the Hospital since 1995 were lung, heart, kidney and liver transplants. Dr Thomyangkoon informed the Committee that Rajavithi Hospital was the leading International Medical Centre, and its mission was to be the leader of academic international medical centres, by providing professional tertiary medical services, health promotion and having effective transferring systems. The core values of the hospital comprises enhancing the research and academic mind, creating joyfulness, alliance networking, victor, integrity, teamwork, humanising health care and innovation. The original Hospital was established in 1951. With 1 154 beds, it is the largest hospital under the thMinistry of Public Health. In April 2011, the hospital celebrated its 60 anniversary. The hospital is divided into different directing clusters consisting of the following departments - Departments of General Administration, Finance and Accountancy, Procurement, Planning and Evaluation, Customer Relations and Human Resources. 15 NOVEMBER 2012 PAGE 76 of 125 The academic cluster consists of the following – Centre of Medical Speciality in Otolaryngology Head and Neck Surgery, Departments of Emergency Medical Services, Obstetrics and Gynaecology, Surgery, Medicine, Physical Medicine and Rehabilitation, Orthopaedic, Psychiatry, Anaesthesiology, Ophthalmology, Pathology and Laboratory, Medicine, Radiology, Dentistry, Pharmacy, Nutrition and Dietetics Academic Support Information, Technology, Family Medicine, and Radiation Oncology (Radiotherapy). The nursing cluster consists of the following – Departments of Out-Patient Nursing, In-Patient Nursing, and Nursing Academy. Centres of excellence include ear, nose and throat, retina, organ transplantation, laparoscopic and endoscopic surgery, trauma, cardio-vascular and cancer, head and neck.unit The hospital also offers three to five year residency training programmes in 13 specialities as follows – general surgery, neurology, Thoracic Surgery, Orthopaedic Surgery, Obstetric – Gynaecology, Internal Medicine, Ophthalmology, Ear, Nose and Throat, Anaesthesiology, Emergency Medicine, Radiotherapy and Oncology. Fellowship training courses in 19 subspecialties include – cardiology, nephrology, Gastro-Enterology, Endocrinology, Rheumatology Gynaecologic Oncology, Spine Surgery, Hand Surgery and Microsurgery, Gynaecological Laparoscopy, Glaucoma, Retina and Vitreous, Maternal Foetal Medicine, Arthroplasty, Infectious disease, Head and Neck surgery, Minimally invasive Surgery, Hepatopancreatobiliary Surgery, Pulmonary Disease and Pulmonary critical care. 15 NOVEMBER 2012 PAGE 77 of 125 Short Courses Training include – laparoscopic cholecystectomy, Gynaecological Laparoscopic Surgery, Dialysis Course, Gastrascopic Technique, Head and Neck Surgery Oncology Course, Temporal Bone Surgery Training Course and Postgraduate Cardiovascular Perfusion. Mrs Niyom Simprasong, Human Resources Manager, presented the Human Resource Management plan of Rajavithi Hospital. The human resource agenda included staff engagement and the staff environment. Having concluded the presentations, the Committee was taken on a tour of the Out Patients Department where all patients that were in the Universal Coverage were being administered. 4.3 Primary healthcare of Bang Sie Thong District ka Delegation at the Hospital Ms Yupha Tarwonsarn Mrs Sabul Thongplere Ms Vipapoan Kernnak Ms Yupha Tarwonsarn briefed the Committee and informed the delegation that the clinic provided services to patients around the area. There were about 9000 people living in the area. The area was called area number 4. One of their responsibilities was to assist people to take care of themselves by advising them on healthy diets to follow. Patients were also encouraged to exercise. She informed the Committee that the clinic was taking care of patients under universal coverage. The funds for the clinic 15 NOVEMBER 2012 PAGE 78 of 125 were centralised and each patient was allocated 2000 BHT per year. They treated all patients even those who did not have money/funds, as all people have the same rights. The clinic on average attended to 20 patients or less per day. The clinic operated from Monday-Friday, from 08:30-16:30. A doctor visited the clinic twice a month but the facility was run by nurses who were also provided accommodation at the clinic. The clinic did not have an ambulance. Deliveries were not performed at the centre and those in labour were referred to a hospital, which was 5 kilometres from the clinic. From questions asked by the Committee about how the universal coverage operates, the nurse informed the Committee that they did not properly understand universal coverage. 4.4 Ministry of Public Health On arrival at the offices of the Ministry of Public Health, the Committee met the following officials: Dr Somchai Pinyopornpanich: Minister of Public Health Dr Suvaj Siasiriwattana: Acting Director General Dr Damrongsak Bulyalert Dr Tara Chirakarn Dr Taries Krassaniarawiwong Mrs Saewapa Jongkitipong Mrs Jonokolnee Tiensong Mrs Sirina Ratipichakul 15 NOVEMBER 2012 PAGE 79 of 125 Dr Damrongsak Bulyalert briefed the Committee and informed the delegation that the population of Thailand was around 66 million. It comprised of 76 provinces, 878 districts, 7,255 sub-districts and 74,955 villages. He informed the Committee that other public hospitals were managed by the: , Ministry of Defence; , Ministry of Finance; , Bangkok Metropolitan Administration; and , Ministry of Education (medical school hospitals). Thailand has four major healthcare schemes which include the universal coverage programme (used by the general population), social security programme (used by corporate employees), civil servant medical benefit scheme (CSMBS) (used by government employees and state-enterprise employees), and out of pocket, including private health plans. Some of for-profit hospitals are Bumrungrad International Hospital and Bangkok Hospital, and not-for-profit hospitals are hospitals like Mission, McCormick and Overbook Hospitals. Dr Bulyalert informed the Committee that there was a Thailand Medical Hub Project and its vision was to: , Promote Healthcare Services, Health Promotion Services, Health Products and Thai Herb Products, Traditional Thai Medicine and Alternative Medicine; and , Generate revenue while avoiding negative impacts on primary system of healthcare services through a monitoring mechanism. The mission of the project is to: 15 NOVEMBER 2012 PAGE 80 of 125 , Establish a central body to effectively implement various strategies; , Develop the country’s competitiveness in healthcare industry; , Generate revenue in healthcare services; , Promote healthcare service providers and educational institutions, both public and private, in all sectors to achieve international standards of services; , Create healthcare innovations with added values; , Develop a consumer protection system through the processes of quality assurance and consumer safety monitoring; and , Promote identities and wisdoms of Thailand. The objective of the project is to strengthen Thailand’s competitiveness in the healthcare industry through developing a healthcare service system of international standards in both public and private sectors. Thailand was also taking care of medical tourists and Dr Bulyalert in his presentation described medical tourists as people who: , Need care but lack adequate out-of-pocket (OOP) funds to afford a procedure in their home country; , Seek lower price for cost savings; , Seek better medical services; and , Avoid long waiting times. 15 NOVEMBER 2012 PAGE 81 of 125 Treatments undertaken by United States tourists include dental care, cosmetic, orthopaedic and cardiovascular surgery. The Committee was informed about a comparison of the price of care for selected procedures in the US, India, Thailand and Singapore. The American Medical Association (AMA) guidelines for patients travelling overseas for medical care were as follows: , Medical care outside the US should be voluntary; , Financial incentives to go outside the US for care should not inappropriately limit diagnostic and therapeutic alternatives, or restrict treatment or referral options; , Financial incentives should be used only for care at institutions accredited by recognised international accrediting bodies; , Local follow-up care should be coordinated and financing arranged to ensure continuity of care; , Coverage for travel outside the US for care must include the costs of follow-up care upon return; , Patients should be informed of rights and legal recourse before travelling outside the US for care; , Patients should have access to physician licensing and outcomes data, as well as facility accreditation and outcomes data; , Transfer of patient medical records should be consistent with Health Insurance Portability and Accountability Act (HIPPA) guidelines; and , Patients should be provided with information about the potential risks of combining surgical procedures with long flights and vacation activities. Issues , Public hospitals have to fulfil their primary missions in providing services to the people of Thailand; , Some hospitals such as university hospitals and regional hospitals show potential to provide services to medical tourists; and 15 NOVEMBER 2012 PAGE 82 of 125 , Monitoring mechanisms are needed to determine if they could provide additional services without negatively affecting their primary missions. Performance Indicators for Service Monitoring , Prevention quality indicator , Patient safety indicator , Paediatric quality indicators , US centres for Medicare and Medical Services , Drug related problems , Laboratory Services , Waiting time , Healthcare personnel indicators , Customer indicators 4.6 Bumrungrad International Hospital Mr Kenneth Mays welcomed the delegation and informed the Committee that Bumrungrad International Hospital was a private hospital, which operated in a business framework. He stated that government did not force private hospitals to join universal coverage. He indicated that the hospital was opened by doctors who wanted to start a private hospital. The main hospital was opened in 1997. It was the largest private hospital in Southeast Asia. Mr Mays informed the Committee that there were 100 private hospitals and about 30 public hospitals in Bangkok. Mr Mays indicated that the hospital was a 22-storey building with 450 operational beds. The hospital treated over 1 million patients a year (outpatients and inpatients). Over 420,000 were international 15 NOVEMBER 2012 PAGE 83 of 125 patients from over 190 different countries. The hospital was managed by an American-led international team and had over 1,200 physicians and dentists, many with international training/certification. The Committee was informed that the Bumrungrad Hospital also contributes to social responsibility. There was a Bumrungrad Hospital Foundation, which was established in 1990, which was dedicated to providing healthcare to underprivileged Thais. The foundation had provided over 100, 000 Thais with free services ranging from check-up programmes to life-saving surgery for children with defective hearts. 5. Findings by the Committee , Most hospitals in Thailand were private and were not part of the universal coverage. , Most officials in public health facilities that were visited did not know or fully understand universal coverage; , Half a million of the Thai people do not have insurance; , One seventh percent of Thai people were not employed which made it difficult to compare with South Africa as this country has a high unemployment rate; and , Thai traditional medicines were not covered in the universal coverage. 6. Conclusion Having concluded the study tour, the Committee agreed that there was a need to visit other countries to compare and to study their universal coverage. 15 NOVEMBER 2012 PAGE 84 of 125 The Committee would like to thank Ambassador Douglas Gibson and his office for their support and guidance in preparation for and during the trip. 2. REPORT OF THE STANDING COMMITTEE ON FINANCE ON THE 2012 MEDIUM TERM BUDGET POLICY STATEMENT, DATED 13 NOVEMBER 2012 1. Introduction The Minister of Finance (the Minister) tabled the 2012 Medium Term Budget Policy Statement (MTBPS) before Parliament on 25 October 2012. In tabling the MTBPS, the Minister met his obligation under section 28 of the Public Finance Management Act 1 of 1999 (PFMA) that requires the Minister to table multi-year budget projections for revenue, expenditure and key macro-economic projections on an annual basis. In addition to that, the Minister also met his obligation under section 6(1) of the Money Bills Amendment Procedure and Related Matters Act 9 of 2009 (henceforth referred to as the Money Bills Act) that requires the Minister to submit to Parliament the MTBPS. According to section 6(5) of the Money Bills Act, the Standing Committee on Finance and Select Committee on Finance (the Committees) must 30 days after the tabling of MTBPS report to the National Assembly (NA) and the National Council of Provinces (NCOP), respectively, on the proposed fiscal framework for the next three financial years. In line with section 6(2), the Committees report on a revised fiscal framework for the 2012/2013 financial year and the proposed fiscal framework for the following three years; and an explanation of the macro-economic and fiscal policy position, the macroeconomic projections and the assumptions underpinning the fiscal framework. Following the tabling of the 2012 MTBPS and the engagement with the Minister, the Committees conducted public hearings on 30 October 2012. These hearings were held together with identified 15 NOVEMBER 2012 PAGE 85 of 125 stakeholders, the Financial and Fiscal Commission (FFC); Business Unity South Africa (BUSA); the Manufacturing Circle and Earth-life Africa Company. 2. The 2013 Fiscal Framework 2.1 Economic outlook Growth in advanced economies is expected to remain moderate in 2012 and 2013 on the back of high debt and borrowing costs; high levels of unemployment and the problems in the banking sector. The International Monetary Fund (IMF) projects global economic growth of 3.3 per cent in 2012, increasing slightly to 3.6 per cent in 2013, before strengthening further to 4.1 per cent in 2014. These forecasts assume effective policy reactions in the US and the Euro area, continued monetary accommodation and improved financial conditions. The Euro area has seen a marked decline in economic activity driven by financial difficulties while employment and output growth prospects have notably weakened in the US. This indicates continued uncertainty in the global economy. Euro debt crisis and the US “fiscal cliff” remain significant risks to the global economic outlook. Over the medium term, the South African (SA) economy is projected to grow relatively slow, at a rate of 3 per cent in 2013, picking up slightly to 4.1 per cent only in 2015. Factors expected to contribute to an improved economic outlook include expanded infrastructure investment, activation of new electricity-generating capacity, relatively low inflation and interest rates and strong growth in the Southern African region, SA’s second largest export destination. BUSA’s economic forecasts converge closely with those of the National Treasury, assuming both the external and internal factors. BUSA projects that after 2013, an improving global economy is likely to support stronger growth in domestic exports, while implementation of key economic infrastructure should bring faster GDP growth. The FFC expects the SA’s economy to remain vulnerable to slow 15 NOVEMBER 2012 PAGE 86 of 125 global recovery and domestic factors such as the recent labour unrest. In absence of positive shocks, the Commission predicts that GDP growth is not likely to recover. Headline Consumer Price Index (CPI) is expected to remain within the target band of between 3 and 6 per cent over the next three years, averaging 4.9 per cent in 2015. BUSA is of the view that the pressure from food prices, administered prices and fuel costs would keep Headline CPI towards the upper end of the inflation target band. The Manufacturing Circle concurs with BUSA that administered prices, particularly Eskom’s electricity costs are a cause for concern in terms of both the billing and the administrative inefficiencies. According to the Circle, Eskom increased electricity costs significantly between 2000 and 2010 while other emerging countries decreased costs. The Circle further expressed concern that higher interest rates increase the cost of capital to internationally uncompetitive levels. Export volumes are estimated to decrease from 5.9 per cent in 2011 to 0.5 per cent in 2012. Domestic supply constraints including electricity rationing in manufacturing and disruptions to mining output have exacerbated the pressure on exports, from weaker global demand. The weaker rand has provided little support for manufacturing export growth, which remains subdued in the current economic environment. The National Treasury forecast a significant improvement in export performance, averaging 3.5 per cent in 2013, increasing to 6.5 per cent in 2015. The improvement in total export growth over the medium term assumes that mining production stabilises, external demand strengthens and trade with emerging and African economies expands. The current account deficit is projected to moderate from 5.9 per cent in 2012 to 5.5 per cent of GDP in 2015. The FFC highlighted the importance of mining and the manufacturing sector to SA’s export sector and labour absorption. The Commission is of the view that the government should closely monitor these sectors’ performance over the medium term given that over the past decade they have been shrinking. Economic growth is integral to job creation. The rate of unemployment increased to 24.9 per cent in 2012, however, the economy is projected to create 780 000 jobs over the medium term. The MTBPS 15 NOVEMBER 2012 PAGE 87 of 125 expects large public investments in energy, port infrastructure, export railway lines, national and provincial roads maintenance and upgrading to help alleviate supply bottlenecks, supporting stronger growth and job creation. Successful implementation of the National Development Plan (NDP) is also expected to address the domestic structural constraints and obstacles to faster growth. In light of the recent mining related strikes and stoppages, the Manufacturing Circle highlighted the importance of the mining industry on the manufacturing sector in terms of exports and employment. BUSA endorses widened and deepened commitment to the NDP and the vision 2030 as a vehicle to give direction and build confidence. BUSA believes that the NDP would gradually put SA in a better position to address the challenges posed by the current economic outlook. The MTBPS identified key risks to the SA forecasts as weak global demand for domestic exports, volatile capital flows, currencies and commodity prices, global investment uncertainty and domestic factors. The latter include weak business confidence, infrastructure bottlenecks, a widening current account deficit and protracted striking activity in mining and other sectors. 2.2 Revenue outlook MTBPS 2012 projects total consolidated government revenue of R986.1 billion in 2013/14, R1.092 trillion in 2014/15 and R1.205 trillion in 2015/16 financial year. Gross tax revenue is expected to remain subdued in 2013/14 but should improve during the third year of the MTEF period as economic conditions strengthen. Gross tax revenue forecast for the financial years 2012/13 and 2013/14 amounts to R821.401 billion and R901.392, respectively. Personal Income Tax (PIC), Value Added Tax (VAT) and Companies tax remain the main contributors to total tax revenue. Government’s tax revenue is highly dependent on the developments in economic conditions both at a global and domestic level. In addition to bleak global economic outlook, moderate economic growth 15 NOVEMBER 2012 PAGE 88 of 125 prospects and increased levels of debt in SA narrowed the fiscal space over the next three years. BUSA is concerned about alternative revenue options in an event that the economy fails to recover as projected. BUSA agrees with NT that government need to tackle internal challenges to build a stronger economy. BUSA further sees the recent labour market disputes having ripple effects on the economy and feeding into the MTBPS outlook in terms of growth, tax revenue, exchange rates, debt ratios and unemployment. 2.3 Expenditure The proposed fiscal framework makes R1.147 trillion available for spending in 2013/14, R1.238 trillion in 2013/14 and R1.139 trillion in 2015/16 financial year. Over the next three years, expenditure is expected to grow at a moderate average rate of 2.9 per cent, in real terms. This expenditure growth level would improve access to services and accelerate the pace of infrastructure investment. The bulk of consolidated government expenditure in 2013/14 is allocated to Defence, public order and safety (151.7 billion), Education and related functions (R234 billion), Social protection (R135.6 billion), Health (R132.3 billion) and local government, housing and community amenities (R132.5 billion). The proposed spending allowed government to shift the composition of expenditure towards infrastructure investment, economic competitiveness, education and health care without compromising key social and economic programmes. Accordingly, the budget for public sector infrastructure investment is projected to be R250 billion over the MTEF, in addition to the R845 billion construction programme that is currently in progress. Compensation of employees takes up the largest proportion of spending and has grown faster than other categories of spending over the past four years, a concern also shared by BUSA. Over the MTEF period, compensation of employees remains the largest budget driver, allocated R378 billion in 15 NOVEMBER 2012 PAGE 89 of 125 2013/14 financial year. Government aims to contain compensation of employees by implementing more effective controls over personnel expenditure to ensure value for money and ensuring that allocations are spent efficiently and effectively. The three year agreements signed between government and public sector trade unions provides a stable medium term basis for planning. Departments need to set specific three-year targets for personnel numbers and remuneration costs and monitor improvements in productivity and effective use of existing staff establishments. The Manufacturing Circle applauds the National Treasury for emphasising the importance of moderating the public sector wage bill increases to support growth and sustainable job creation in the economy. The departments have prioritised spending and identified savings amounting to R40 billion over the next three years, to improve value for money and ensure alignment with the NDP, a move also supported by BUSA. Government will step up efforts to combat waste, inefficiency and corruption, including procurement reforms. Government would also address shortcomings in planning, procurement and contract management. The FFC, BUSA and the Manufacturing Circle echo the abovementioned sentiments. The FFC further indicated that the Public Finance Management Act (PFMA) and the Municipal Finance Management Act (MFMA) make special provisions to address these issues and that these provisions should be enforced where applicable. 2.4 Government financing and debt Total national government net loan debt stood at R1.166 trillion (35.8 per cent of GDP) in 2012/13 and it is expected to peak at R1.7 trillion (39.2 per cent of GDP) in 2015/16. National Treasury acknowledges that rebuilding fiscal space depends on stabilising the level of public debt. Reduction of debt-to-GDP ratio will require government to maintain a small primary surplus to revert back to the pre-recession levels. 15 NOVEMBER 2012 PAGE 90 of 125 In line with the fiscal policy objective of stabilising debt, there should be provision for subdued growth of non-interest expenditure towards the last year of the MTEF. BUSA agrees that government puts a ceiling on SA’s debt as a percentage of GDP as that is essential for investment. Debt service costs continue to grow over the medium term, draining resources that could be spent on productive investment. Government debt cost is projected to rise from R88.8 billion (2.7 per cent of GDP) in 2012/13 to R114.8 billion (2.6 per cent of GDP) in 2015/16. The domestic bond market will remain the primary source of debt funding. The debt issuance will be achieved by drawing on cash balances, exchanging debt maturing within the next several years and borrowing in global capital markets. The public sector borrowing requirement remains at 7.1 per cent of GDP, moderating over the medium term. 2.5 Budget balance The budget made provision for total consolidated revenue of R986.1 billion in 2013/14 rising to R1.205 trillion in 2015/16. On the contrary, consolidated government expenditure is projected to amount to R1.147 trillion in 2013/14 reaching R1.238 in 2015/16. This translates into a budget deficit of 4.5 per cent in 2013/14 and as a percentage of GDP. It is expected that revenue would recover alongside economic growth and moderate expenditure increases. National Treasury remains optimistic that as the economy starts to grow in 2015/16, the budget deficit as a percentage of GDP would decline to 3.1 per cent. Recently, government has improved its budget estimates such that outcomes correspond more closely with planned expenditure. The primary risk to the fiscal outlook remains lower than expected GDP growth that is likely to result in poor revenue outcomes. This would prompt the need for policy shifts. The contingency reserve enables government to absorb risks, but remains lower in the beginning of the proposed fiscal framework. 15 NOVEMBER 2012 PAGE 91 of 125 The recent downgrade of the country’s credit rating position increased the cost of borrowing by government, state-owned enterprises and the private sector. The risk of further sovereign rating downgrades would exacerbate the cost of borrowing. The FFC is also concerned that slowing economic growth coupled with further credit downgrading may put pressure on government to extend the “switch programme” (offsetting maturing debt with long term debt), increasing government costs of borrowing. BUSA is concerned that unless recurrent government expenditure is moderated, external shocks such as recession and increase in interest rates could push the ratio of debt to GDP to a danger limit of 50 per cent. The FFC raised its concern that refinancing near-dated debt with longer term maturity bonds is likely to put pressure on bond yields as investors will likely seek to be compensated for increased risks associated with deteriorating economic conditions and a wide budget deficit. The Commission noted that the SA bonds are currently over-subscribed but that extending the duration of public debt combined with higher yields could result in increased costs for government in the future. 3. Conclusion South Africa’s fiscal stance targets medium term consolidation with moderate expenditure growth, stabilising government debt and improving outcomes and shifting the composition of spending from consumption to investment. Over the long term, government intends to restore and maintain a primary surplus and prepare a fiscal report that would assess sustainability of long term spending options and model the impact of various policy considerations including the introduction of national health insurance and proposals contained in the NDP. The Commission acknowledges that SA should continue on the path of gradual fiscal consolidation that takes into account the components of the budget that need to be consolidated but is of the view that the pace may be too slow, thus potentially undermining the credibility of government’s plans. 15 NOVEMBER 2012 PAGE 92 of 125 The Manufacturing Circle believes that SA’s fiscal policy needs a complete overview to strengthen development through the different spheres of government. According to BUSA, the degree to which investor confidence will be reassured by the MTBPS will depend on the commitments in key fiscal variables and targets being successfully implemented in the period ahead and more policy certainty being revealed in the main budget in February 2013. 4. Committee Observations Having considered the 2012 MTBPS and public submissions, the Standing Committee on Finance observed the following: 4.1 The global economic outlook remains uncertain and domestic economic growth is expected to remain moderate; 4.2 Recovery in economic growth is expected to create jobs, boost revenue, and eventually reduce debt levels and budget deficits; 4.3 Narrow fiscal space available to government over the medium term, elevating the level of debt; 4.4 SA’s fiscal position remains sound and sustainable, reinforced by accommodative monetary policy; 4.5 The contingency reserves are meant to absorb risks but remain low in the first two years of the proposed fiscal framework; 4.6 The revenue forecasts depend largely on global and domestic economic developments; and 4.7 Total national government net loan debt stood at R1.166 trillion (35.8 per cent of GDP) in 2012/13 and it is expected to peak at R1.7 trillion (39.2 per cent of GDP) in 2015/16. 15 NOVEMBER 2012 PAGE 93 of 125 5. Recommendations Having considered the 2012 Medium Term Budget Policy Statement and conducted public hearings, the Standing Committee on Finance recommends that the Minister of Finance ensures the following: 5.1 The National Treasury should establish a multi-task team to investigate and formulate a comprehensive response on the impact and effect of administered prices particularly on the cost of doing business and affordability for the ordinary consumer, and report back to the House within 90 days of the adoption of this report by the House; 5.2 The National Treasury should finalise a policy document on guidelines for cross-border investment in order to help contain a decline in foreign direct investment flows to the Republic of South Africa by 44 per cent in the 2011/12 financial year, and report back to the House within 90 days of the adoption of this report by the House; 5.3 The National Treasury should develop and provide the House with a contingency plan in the event that macro-economic projections do not result as expected in the Proposed Fiscal Framework, and report back to the Standing Committee on Finance; 5.4 The National Treasury should develop mechanisms to increase monitoring and to ensure value for money in terms of proper coordination and procurement processes, which will assist the containment of expenditure within the available budget, and report back to the House within 90 days of the adoption of this report by the House; 5.5 The National Treasury should report on government’s approach to managing overall employment and moderate expenditure on compensation of employees, and report back to the House within 90 days of the adoption of this report by the House; 5.6 The National Treasury should report to the House on actual spending on infrastructure by government departments and state-owned enterprises, within 90 days of the adoption of this report by the House; and 15 NOVEMBER 2012 PAGE 94 of 125 5.7 The National Treasury should facilitate development of Infrastructure Investment Plan that, in turn, should determine how it would generate levels of economic activity, within 90 days of the adoption of this report by the House. 6. References 6.1 BUSA, (2012), Business Unity South Africa: MTBPS Presentation to the Standing and Select Committee’s on Finance, Cape Town, 30 October 2012 6.2 FFC, (2012), Financial and Fiscal Commission: Submission on the 2012 Medium Term Budget Policy Statement, Cape Town, 30 October 2012 6.3 Gordhan, P. (2012), Medium Term Budget Policy Statement Speech, Parliament of RSA, Cape Town, 25 October 2012 6.4 National Treasury, (2012) Medium Term Budget Policy Statement, Pretoria: Government Printers 6.5 The Manufacturing Circle, (2012), Submission on the 2012 Medium Term Budget Policy Statement, Cape Town, 30 October 2012 Report to be considered. 3. REPORT OF THE STANDING COMMITTEE ON APPROPRIATIONS ON THE 2012 MEDIUM TERM BUDGET POLICY STATEMENT, DATED 14 NOVEMBER 2012 Having considered and heard comments from identified stakeholders on the 2012 Medium Term Budget Policy Statement, the Standing Committee on Appropriations reports as follows: 1. Introduction 15 NOVEMBER 2012 PAGE 95 of 125 The Minister of Finance tabled the Medium Term Budget Policy Statement (MTBPS) on 25 October 2012 as required by section 6 (1) of the Money Bill Amendment Procedures and Related Matters Act, No. 9 of 2009 (the Act), outlining the budget priorities of government for the medium term. The MTBPS was tabled together with the Division of Revenue Amendment Bill [B33 - 2012] and the Adjustments Appropriation Bill [B32 - 2012] in Parliament. Part of the MTBPS was referred to the Standing and Select Committees on Appropriations for consideration and report. This was done in accordance with their respective mandates as outlined in the Act. Among its responsibilities, as per Section 6 (8), in respect of the MTBPS, the Committee was required to consider and report on the following issues: , the spending priorities of national government for the next three years; , the proposed division of revenue between the spheres of government and between arms of government within a sphere for the next three years; and , the proposed substantial adjustments to conditional grants to provinces and local government, if any. The MTBPS provides an overview of government’s key spending areas as the setting for detailed sectoral policies and departmental programmes that will accompany the 2013 budget. The Committee, in order to deepen democracy, good governance and promote public participation during the budget process, public comments were invited. To give effect to this process a number of stakeholders were identified, namely, , Public Service Commission (PSC); , Human Sciences Research Council (HSRC); and , Financial and Fiscal Commission (FFC). 15 NOVEMBER 2012 PAGE 96 of 125 In response to the advertisement that was placed in national newspapers, the Committee also received a written submission from Earth Life Africa. The MTBPS was tabled amidst challenges of subdued growth in the world’s economy. The global outlook continues to deteriorate as the European debt and banking crisis remain unresolved. South Africa faces particular challenges such as a decrease in revenue collection, increase in government debt and recent domestic events such as the mining labour disputes. In an effort to respond to the challenges posed by the prevailing economic environment, the Minister of Finance pointed out the need to sustain public sector infrastructure investment, address the domestic and structural imbalances that permeate the country’s socio-economic landscape and institute measures to ensure that government realises value for money in its expenditure. Furthermore, shifts in the composition of expenditure are being made towards infrastructure investment, economic competitiveness and education and health care. In doing this, consideration must be given to the maintenance of discipline in administrative costs and consumption spending. Despite the reduction in revenues, the Minister highlighted the opportunity to expand infrastructure investment, broaden the social wage and continue with efforts at a revival of investment in productive activity. Better planning in government for projects including those that are still in the pipeline as well as the implementation of reforms in provincial and municipal infrastructure delivery will be critical moving into the future. It is against this background that the Committee engaged with the public and identified stakeholders on the MTBPS. 2. Medium Term Expenditure Framework 15 NOVEMBER 2012 PAGE 97 of 125 In the Fourth Parliament, government adopted an outcome based approach and prioritised its resources in the following areas: , job creation initiatives; , enhancing the quality of education and skills development; , provision of quality health care; , driving a more comprehensive rural development strategy; and , intensifying the fight against crime and corruption. In the 2012 policy statement the Minister of Finance pointed out that in order for Government to afford its priorities now and in the future, the rate of growth in public spending must be moderated. The fiscus does not increase funds available beyond the 2012 budget baseline. The spending framework takes account of the need to increase efficiency of existing allocations to improve public services. The proposed medium term budget framework proposes a total appropriation of R1.05 trillion in 2013/14, R1.14 trillion in 2014/15 and R1.23 trillion in 2015/16. This translates into expenditure growth of around 8 per cent a year or 3 per cent in real terms. Debt service costs will increase from R98.6 billion in 2013/14 to R106.8 billion in 2014/15 and reach R114.8 billion in the 2015/16 financial year. Debt service costs continue to outpace the overall growth in expenditure In particular; the costs of servicing government debt are projected to grow at an annual average of 8.9 percent in nominal terms over the medium term. The 2013/14 medium term budget framework allocates 47 per cent to national departments, 44 per cent to provincial departments and 9 per cent to local government. Budget allocations to the national sphere 15 NOVEMBER 2012 PAGE 98 of 125 increase by 7.4 per cent over the MTEF period, provincial allocations increase by 7.1 per cent and local government allocations increase by 9.1 per cent. The reprioritisation of funds in the next three years amounts to R40 billion. National Treasury considered the requirements of the public-sector wage bill, education and health in the share of additional allocations for the provincial sphere. Increased infrastructure investment and costs emanating from the wage bill were key considerations on additional allocations whilst infrastructure priorities were the main drivers for adjustments to the local government sphere allocations. Expenditure in health services is projected to moderate in the 2013/14 medium term budget framework. This follows significant growth in health spending in the past five years which averaged 15.8 percent per annum. Priority areas in health spending over the medium term will be on the roll-out of an improved diagnostic test to tuberculosis, additional allocations for the HIV/AIDS programme and investments in health and hospital infrastructure. In social development, the number of grant beneficiaries is forecast to increase from 16.2 million in 2012/13 to 17.3 million in 2015/16. The budget provides for the recruitment of graduates from the social worker scholarship programme. The sector is to realise savings of about R450 million per year as a result of the new grants administration contract. Savings realised will be allocated to improvements in the South African Social Security Agency’s (SASSA) infrastructure system. Priority areas in the education function for the medium term are to improve the quality of educational outcomes, develop a skilled and capable workforce and the promotion of an inclusive citizenship. The education function remains the largest expenditure item in the budget framework, increasing from R234 billion in 2012/13 to R268.9 billion in 2014/15. Additional funds flowing from internal reprioritisation will be allocated to the Education Infrastructure Grant to provinces and the Community 15 NOVEMBER 2012 PAGE 99 of 125 Library Grant to support the construction of new universities in Mpumalanga and Northern Cape. Government plans to achieve better performance in infrastructure delivery through new approaches such as requirements for provinces to bid for allocations two years in advance and build into the grants financial incentives for provinces implementing best practices in infrastructure delivery. Funding for the local government and housing function grows by an annual average of 9.0 per cent in the medium term from R121.7 billion in 2012/13 to R157.5 billion in 2015/16. Due to slow spending on the Municipal Infrastructure Grant, funds are to be reprioritised to a new interim water supply programme. The provision of water and sanitation services has expanded steadily over time with just over 10 million households serviced in 2011/12. Additional funding will be allocated to regional bulk water supply, acid mine drainage, De Hoop Dam pipelines, a pipeline from Flag Boshielo to Mokopane and waste water management at Magalies Water. Government is committed to expanding employment opportunities through active labour market policies and investments in a variety of public works and special employment programmes. Additional funding will be provided in the medium term to the Department of Labour’s public employment services. The Department of Public Works will spend over R4 billion in incentive grants to expanded public works projects implemented in the provincial and local government sphere. The 2013/14 MTEF provides for R7.6 billion for the Community Works Programme (CWP) and R8.5 billion for environmental programmes. The budget will include funding for non-governmental organisations (NGOs) that participate in non-state sector employment programmes. While there has been slow progress in establishing administrative capacity for the Employment Creation Facilitation Fund (Jobs Fund), an amount of R9 billion is expected to be committed to the fund over a five year period. The budget framework provides for growth in funding for transport, energy and communication from R83.5 billion in 2012/13 to R105.1 billion in the 2015/16 financial year. Government recognises that 15 NOVEMBER 2012 PAGE 100 of 125 investment in infrastructure is central to improving competitiveness, modernising the economy and enhancing the growth potential of the economy. The 2013/14 budget will focus on national public transport, national road upgrades, provincial road maintenance, electrification upgrades and information communications technology (ICT) investment. Expenditure on rail services is projected to grow an average annual rate of 19.7 percent in the medium term. Funding will be allocated for upgrades to municipal electricity distribution. Additional allocations will be set aside for digital television broadcasting and a new broadband strategy once approved by Cabinet. Government is committed to efforts geared at improving the growth potential of the economy. Funding allocations for government economic services will increase from R44.6 billion in 2012/13 to R52.6 billion in 2015/16. The Departments of Agriculture, Forestry and Fisheries; and Rural Development and Land Reform account for over 50 per cent of spending on economic services. The National Youth Rural Services Corps (NAYRSEC) has recruited 8 000 young people to work in rural communities. The 2013/14 budget makes available over R10 billion for the economic competitiveness support package announced in 2011. There will be additional resources allocated to the Department of Minerals Resources for support for the beneficiation strategy, regulatory obligations associated with shale gas exploration, the rehabilitation of the approximately 6 000 derelict and ownerless mines and the implementation of amendments to the National Environmental Management Act. South Africa and Australia have been selected to host the global astronomy project known as the Square Kilometre Array (SKA). The budget framework makes provision for South Africa’s leading role in the radio-telescope project, which is an international project that is expected to attract global funding of R20 billion over the long term. The science and technology function funding allocation rises from R14.5 billion in 2013/14 to R16.0 billion in 2015/16. 15 NOVEMBER 2012 PAGE 101 of 125 The budget framework provides for growth in allocations in the general public services function of 5.2 per cent a year from R53.3 billion in 2012/13 to R62.1 billion in 2015/16. The Department of Public Works is allocated R400 million for the implementation of its turnaround strategy to stabilise its operations. The turnaround strategy includes clean audit interventions, anti-corruption and maladministration initiatives and improvements in technical capacity. Consolidated spending on defence, public order and safety will grow at an annual average rate of 6.2 per cent in the medium term from R141.7 billion in 2012/13 to R169.8 billion in 2015/16. The serious crime rate per 100 000 of the population has declined from 4 299 in 2008/09 to 4 126 in 2011/12. Priority areas for reprioritised funds within the Department of Police are to support expanded detective and forensic capability. 3. Public Hearings 3.1 Public Service Commission The Public Service Commission was invited to comment on the 2012 MTBPS. In its submission it addressed the following issues: , Governance - Government expenditure vs. performance outcomes; - The quality of performance information; - Service delivery improvement; - Filing of Performance Agreements (PAs) by Heads of Department (HoDs); - National Anti-Corruption Hotline; and 15 NOVEMBER 2012 PAGE 102 of 125 - Financial Disclosure Framework and Financial Misconduct; , Effective and Efficient Performance - Quality of service delivery with focus on electricity, access to water, education, health, and housing; - Delivery in relation to need; and - Unemployment and government programmes , Human Capital Management - Reflections on the public service wage bill; - Areas of focus included organisational design and human resource planning, vacancy rate, average time it takes to fill posts, average tenure by SMS members, Human Resources Development and critical skills; and - Management of Discipline 3.1.1 Governance In its submission, the Public Service Commission (the Commission) noted that deficiencies in the public service are partly responsible for the lack of success in accelerating development in post-apartheid South Africa. The Commission focused its presentation on departments which were directly contributing to government’s five policy priorities. While most departments recorded expenditure that was above 90 per cent in 2010/11 and 2011/12, average performance against predetermined targets was below 60 per cent. For example, the Department of Agriculture, Forestry and Fisheries had spent 99.3 per cent of its budget allocation for 2011/12 but attained only 41 per cent of its performance targets. Moreover, the quality of submitted performance information remains poor. The performance information submitted in 2010/11 and 2011/12 by the Departments of Agriculture, Forestry and 15 NOVEMBER 2012 PAGE 103 of 125 Fisheries, Basic Education, Cooperative Governance and Traditional Affairs; and Rural Development and Land Reform was found to be not useful nor reliable. In many instances performance information found in annual reports overwhelms, rather than enhance oversight. The Commission pointed out that government recognised the need for improvements in public service but this needed to be supported by realistic and achievable plans. Over 74 per cent of departments assessed themselves as either non-compliant or only partially compliant in service delivery improvement requirements. Moreover, overall compliance with the submission of Performance Agreements (PAs) of Head of Department (HoDs) was 57 per cent nationally and 73 per cent provincially. The Commission noted that there was insuffient capacity to deal with cases reported to the National Anti-Corruption Hotline. There are no consequences imposed for incidents of irregular, fruitless, wasteful and unauthorised expenditure. The Commission assessed financial disclosures of Senior Management Service (SMS) members and found that only 48 per cent of national and provincial departments complied with the financial disclosure framework. The financial disclosures of a selected number of departments indicated that just over a third of SMS members had potential conflicts of interest. The Committee was concerned about the accessibility of the findings and recommendations of the Commission to Cabinet. The Commission indicated that it made regular submissions to Cabinet on all its findings. 3.1.2 Effective and Efficient Performance 15 NOVEMBER 2012 PAGE 104 of 125 The Commission noted that while there have been expansions in the levels of delivery of basic services; these have paradoxically been followed by rising levels of service delivery protests. In a recent survey on the levels of satisfaction with service at a public health facility, over 62 per cent of respondents said they were very satisfied with the service rendered. Survey results reveal that the main concerns of those enrolled at educational institutions were a lack of books, high tuition fees and large classes. Government needed to communicate its achievements more directly to citizens. Unemployment remained high at 25 per cent (narrow definition) and highly skewed with the largest number of the unemployed concentrated in the former homelands. The Commission saw the provision of short term employment programmes as a rational and appropriate response to expanding employment. The Expanded Public Works Programme (EPWP) created work opportunities for over 3 million individuals in 2011/12 whilst the CWP had over 100 000 participants in 2011/12. The CWP was viewed as more developmental as it was more community oriented and focused on local priorities. However, it was noted that the size of these government employment programmes was still relatively small. Approximately 17 million people or 30 per cent of South Africa’s population still resided in the former homelands. Only about a third of working age adults in the former homelands have a primary education compared to less than a quarter in the rest of the country. The impact of rural development is still unclear in the rural areas and there is no clear relationship between land reform and rural development. The Commission called for the need for additional allocations for the establishment of logistics and marketing institutions; education and health care services in rural areas. An additional challenge to the effective implementation of governments’ rural development programmes were the high costs incurred. For example, implementing the Community Rural 15 NOVEMBER 2012 PAGE 105 of 125 Development Programme (CRDP) in Diyatalawa cost the State R200 000 per household in the provision of housing units and community amenities. The CRDP rollout illustrated that taking the programme to scale is not viable and the work done by the Department of Rural development and Land reform is a duplication of work done by other departments. The establishment of the NARYSEC has contributed to youth employment and skills development in rural areas but employment in rural areas is still lower today than it was in 2009. The effective implementation of rural development programmes and expansion in the Community Programmes were seen as critical in the alleviation of unemployment in rural areas. Overall, government performance in many instances is uneven and inconsistent. A contributing factor is the complex regulatory framework which promotes compliance over effective service delivery. Public services need to be systematic and comprehensive. Examples include the inadequate provision of extension services to emerging farmers following the granting of farm land. 3.1.3 Human Capital Management The MTBPS shows that personnel spending have increased from 33 per cent of total government expenditure in 2008/09 to 35 per cent in 2012/13. The 2013 Budget framework seeks to limit the share for compensation of employees of total expenditure to 34 per cent in 2015/16. The Commission viewed the signing of the multi-year public service wage agreement as a positive step in containing the State wage bill. There was however a need to link wage and salary increases to productivity. The Commission was also supportive of the announcement by the Department of Public Service and Administration (DPSA) of the development of principles that would govern increases in remuneration wherein salary increases were based on productivity and performance improvements. 15 NOVEMBER 2012 PAGE 106 of 125 With regards to human resource strategies of government departments, over 65 per cent of departments rated themselves as not complying with the prescripts of organisational design and ensuring that all positions on the approved structure were funded. Just fewer than 90 per cent of departments had vacancy rates of above 10 per cent for professionals and Senior Management Service (SMS) members. The Commission was concerned that human resource management frameworks had become too complex. The State’s human resource strategies needed to be streamlined and simplified. In respect of human resource development, results of a study on a sample of 30 departments found that 43 per cent of the sampled departments had never conducted a skills audit. Distribution of personnel was skewed in some departments resulting in high concentrations of lower and semi-skilled employees. The Commission pointed out the need to improve opportunities for specialisation in skilled occupations. Addressing the skills shortages in specialised personnel such as architects, town and traffic planners, engineers, quantity surveyors, chemists, etc was critical in attaining the objectives of government’s human resource development plans. The Commission was concerned at the short tenure by SMS members on a given salary band. In a sample of 11 departments assessed by the Commission, the average tenure of employees on salary level 14 was three years before being promoted to salary level 15. This was deemed as insufficient to consolidate the necessary experience. Concern was also expressed at the poor management of discipline within the public service which was characterised by long periods of precautionary suspensions due to the poor management of disciplinary proceedings. The State needed to reconfigure its overarching approach to human capital management and human resource regulatory framework so that it became more sensitive to the unique challenges facing the 15 NOVEMBER 2012 PAGE 107 of 125 country and capacity constraints that permeate the public service. The Commission pointed out that it was unrealistic to expect each state entity to take responsibility of its own human resource management and development practices. The Committee noted and supported the signing of the multi-year public service wage agreement. The Committee noted the findings by the Public Service Commission on the lack of usefulness and the lack of reliability of the information contained in Annual Reports. Concern was expressed by the Committee at the level of compliance to the financial disclosure framework by SMS members of state entities and the potential conflicts of interests arising from SMS members’ ownership of companies that deal directly with the state. The Committee notes with concern the compliance oriented approach that has developed in the public service. In particular, the cumbersome human resource management frameworks do not seem to position government for effective and efficient service delivery. 3.2 Human Sciences Research Council The Human Sciences Research Council (HSRC) was invited to comment on the 2012 MTBPS. In its submission it addressed the following issues: , Health - What can be done to ensure that the health system is ready for the implementation of the National Health Insurance (NHI)? 15 NOVEMBER 2012 PAGE 108 of 125 , Education - What can be done to improve the delivery of schools infrastructure and quality education? - , Job Creation - Which areas of Government’s core delivery mandate can realise the most jobs? - How can these be unlocked? , Infrastructure - What can be done to improve the effective delivery of governments infrastructure programme? , Rural Development - How can expenditure be improved to attain the best outcomes with regard to rural development? 3.2.1 Health The MTBPS makes provision for spending on healthcare in the medium term on a number of priority areas which include the rollout of an improved diagnostic test to tuberculosis, additional allocations for the HIV/AIDS programme and investments in health and hospital infrastructure. National Treasury indicated that the provision of additional funding for the National Health Insurance (NHI) would be dependent on progress on institutional reforms and progress on the capacity of the health system to provide services. The HSRC outlined the main objectives of NHI as the creation of a single fund which consolidated all risks into one fund, procured services on behalf of the entire population, improve the resourcing of the public health sector and improve the quality of health services for all. While there were a number of 15 NOVEMBER 2012 PAGE 109 of 125 initiatives underway in the planning phase of the NHI, the Council was concerned that these were concurrent with a decline in government health expenditure. With regards to the performance of the NHI conditional grant, the Council pointed out a number of factors that were hampering the rollout of the grant. The budget allocations for the NHI were deemed inadequate for visible and meaningful demonstration of the various components of NHI and there were challenges such as lack of delegations to teams managing NHI Pilot sites and Supply Chain Management issues. The Council suggested that the NHI conditional grant be changed from a Schedule 5 to a Schedule 7 grant. The HSRC also pointed out that the establishment of a NHI fund was required. The Department of Health can establish a shadow operational unit for the NHI fund. The shadow unit should be capacitated and resourced to undertake preparatory work for the implementation of the NHI. The Council viewed the shadow unit as a crucial institutional infrastructure for delivery. This will ensure that NHI is understood in a coherent manner that is consistent across provinces. The Council pointed out the need to establish ICT infrastructure for NHI that will consolidate all data for the entire population and link with systems of other entities such as the Department of Home Affairs. The NHI will also need to develop a risk system that will detect and manage cases of fraud such as the overcharging of services rendered and link the system with the South African Revenue Services (SARS). The HSRC pointed out that the Department of Health (DoH) should add an additional 10 pilot districts as per the green paper and these should seek to address the design and test of a sub-national structure of the NHI fund; and DoH to pilot test models for the integration of public and private sectors in the provision of healthcare. 15 NOVEMBER 2012 PAGE 110 of 125 While the Committee noted efforts at repriotisation of funds within the Department of Health for the medium term. The Committee was concerned at the impact that moderate budget increases for the health sector will have on the implementation of the National Health Insurance (NHI) and to allocations for medical goods and services such as medicines and medical equipment. The HSRC noted that implementation of the NHI has been hampered by a lack of a common understanding of operational requirements of the project by the different spheres of government. The main concern was that there existed competing action plans from the different spheres of government in the implementation of common policy objectives. The Committee noted the Council’s suggestion for the NHI conditional grant to be changed from a Schedule 5 grant to a Schedule 7 grant. The NHI grant should be able to cover services at Primary Health Care (PHC) level. 3.2.2 Education The 2012 MTBPS maintains the spending trajectory of government in terms of preserving the resource envelope for critical government priorities such as education. The largest share of consolidated government expenditure, R234 billion, goes to education and related activities for the 2012/13 financial year. The Council was concerned at the prevailing inequalities that permeate the South African school system. The education system has been unable to significantly reduce infrastructure inequalities and 15 NOVEMBER 2012 PAGE 111 of 125 personnel deficits in schools among disadvantaged communities in the 18 years of democracy. Poor quality education significantly limited the future success of learners in the labour market. With regards to infrastructure shortfalls, out of the 24 793 total number of schools in the country, 14 per cent did not have access to electricity, 10 per cent had no access to clean water and 93 per cent had no stocked library. A conducive schools environment that facilitates effective teaching and learning would need to cater for classrooms according to the enrolment as per the teacher- learner ratio. The Council was concerned at the high levels of under spending on infrastructure budgets by provinces. Provinces that showed vast under-expenditure were the Eastern Cape and North West. While the Council supported the Accelerated Schools Infrastructure Initiative (ASIDI) programme, the main concern was the significant under-expenditure in the programme with less than 10 per cent of the projected budget spent as at March 2012. The Council urged for the finalisation of National Norms and Standards for Schools infrastructure. While calls for submission on National Norms and Standards were released in 2008, the formalisation of norms and standards has yet to be finalised. The Council viewed the formalisation of official norms and standards as critical in providing guidance to the development of basic indicators of adequacy and conducive learning space. For improved results in the roll-out of schools infrastructure, there needed to be clear roles defined for the Department of Basic Education and the Department of Public Works. While the National Education Infrastructure Management System (NEIMS) and other indicators could be used to cost and implement a multi-year budget to address deficits, systems need to be developed to effectively connect public works and the schooling system. 15 NOVEMBER 2012 PAGE 112 of 125 The Committee noted the high degree of under-expenditure in the ASIDI programme and was further concerned about the possible under expenditure for this grant in the 2012/13 financial year. The Committee noted that the formalisation of norms and standards for schools infrastructure was important for the roll-out of a uniform quality schools infrastructure nationally. Concern was expressed by the HSRC at the lack of clearly defined roles for the Department of Basic Education and the Department of Public Works in the roll-out of schools infrastructure. 3.2.3 Job Creation The MTBPS noted that employment gains have decelerated in the past year as growth in the domestic economy continued to slow. The number of persons employed in the public sector increased by 38 000 whilst that of the private sector increased by 87 000. An additional 1.1 million South Africans have been classified as discouraged since the end of 2008. The Council noted that efforts at accelerating job creation needed to be evaluated in the context of global and domestic economic developments. In terms of the global context, there were real concerns regarding the uncertainties in the United States, the slowdown of growth in China and India; and the stagnation of the European economy. However, there were still opportunities for growth in the Southern African Development Community (SADC) region. In terms of the domestic context, ongoing industrial disputes posed a significant threat to the economy’s growth trajectory, business confidence remained weak, private sector investment needs to 15 NOVEMBER 2012 PAGE 113 of 125 increase and there has been a decline in foreign direct investment. However, positive developments include the maintenance of fiscal stability and increased public infrastructure investment. The Council noted that the budget framework provided for a real increase in spending although this would cater mainly for the higher government wage bill. The Government needs to increase efforts at improving the quality of spending. In particular, the Council urged for a shift in the spending composition towards infrastructure investment, industrial policy and expanding the social wage. There should be less spending on consumption items such as administrative costs, staff salaries and wasteful spending. According to the Council, the main area of job growth would be in Government’s public works programme. Projections indicate increased employment in infrastructure, construction, agriculture, manufacturing, mining; green economy and even more substantial increases in jobs for tourism, business services and consumer services sectors. The Council pointed to uncertainties on how to effectively promote labour absorbing growth. The relationship between the private and public sector remained unclear. There are still no firm proposals on alleviating youth unemployment. There remained uncertainties on the strategy and practical implementation of the Jobs Fund. The Council emphasised that addressing these uncertainties was critical in efforts to expand the country’s levels of employment. 3.2.4 Infrastructure The 2012 budget provided for R844.5 billion in planned and approved public sector infrastructure projects. The 2012 MTBPS allocated funds to social and community infrastructure projects such as 15 NOVEMBER 2012 PAGE 114 of 125 schools, health facilities, and secondary roads. The bulk of the spending on infrastructure was to be financed from the balance sheets of State Owned Entities (SOEs). Costs would be recovered by charges levied on users. With regards to infrastructure delivery, the Council cited a number of challenges that needed to be addressed and these include: - Weak implementation capacity that causes significant delays and cost over-runs - Poor project planning - Poor coordination amongst government agencies and spheres of government - Lack of partnerships between government and the private sector The Council welcomed the formation of the Presidential Infrastructure Coordinating Commission (PICC). The PICC was formed to coordinate and accelerate the long term infrastructure build. The Council viewed the PICC as an important step in enhancing collaboration amongst State entities and removing barriers to inefficiencies. The Council also urged for the inclusion of participatory elements in Government’s plans for improving the delivery of infrastructure. In the MTBPS it is stated that government needs to improve on the overall effectiveness of infrastructure delivery and locate efficiencies within the delivery chain. There is recognition that large scale projects have the potential for corruption and maladministration. The Council has forged links with the Construction Sector Transparency Initiative (COST) whose aim was to ensure transparency at every stage of the infrastructure development process. COST will complement rather than replace the state’s existing supervision and regulatory framework. The Council viewed the rollout of the initiative as key in enhancing the levels of transparency in the delivery of major infrastructure and ensuring that communities obtain value for money on infrastructure projects. 15 NOVEMBER 2012 PAGE 115 of 125 The Committee supported proposals for a participatory approach that involve communities in the delivery of government infrastructure programmes. Initiatives such as COST may improve levels of transparency in the rollout of large infrastructure projects. 3.2.5 Rural Development The budget framework makes provision for funding allocations of R15 billion to rural development, land reform and agricultural development. However, the budget allocation to the lead departments in the implementation of rural development constituted less than two per cent of the total national budget. HSRC indicated that current levels of spending on rural development was far below the 2003 Maputo Declaration which stated that every Southern African Development Community (SADC) member is to allocate 10 per cent of the national budget for agricultural development. The Council noted that 62 per cent of land reform expenditure is now allocated towards the "proactive land acquisition" by the state. Direct land grant transfers to beneficiaries have fallen from 47 per cent in 2009/10 to 22 per cent in the 2012/13 financial year. However, the main concern was the lack of emphasis on the importance of smallholder farming. HSRC indicated smallholder farming has been successful in emerging economies such as Brazil. The Council urged for the development of new infrastructure and the revitalization of old infrastructure in rural areas. The Council welcomed projects such as the I-school Africa programme (13 Comprehensive Rural Development Programme (CRDP) schools) which sought to improve access to ICT in rural schools. Other positive initiatives included the rollout of several pilot projects for rural infrastructure development based on green principles. 15 NOVEMBER 2012 PAGE 116 of 125 The Council indicated that the NARYSEC was a core focus of the rural development programme and constituted over 40 per cent of the programme’s budget allocation. For each year over the MTEF, 5 000 new youths will be enrolled in NARYSEC. The Committee was concerned at the lack of a visible link between NARYSEC and the National Youth Development Agency (NYDA). The Council highlighted the sharp fall in primary agricultural employment in the past decade. Employment in primary agriculture has declined from 2.5 million workers in 2000 to less than a million in 2011. In terms of state support, small farm households do appear to have access to state sponsored Agricultural Development Support (ADS). However, the Council had concerns with reported beneficiary numbers and could not ascertain the impact that ADS is having on the livelihoods of small farm households. With regards to household food security, 3.2 million households were deemed to be food insecure in 2011. The Council indicated that rapid food price inflation was a real threat to food security. Food distribution was regarded as the main challenge to ensuring food security rather than food production. Hence food distribution should be the main area of focus for policy development. The Committee is concerned at the high number of food insecure households in the country which constituted 21.5 per cent of total households in 2011. The Committee noted the importance of food distribution in increasing the number of food secure households. The Committee notes government support to small farm households through the Agricultural Development Support (ADS). However, the Committee was concerned at the lack of a visible impact of the programme on the livelihoods of small farm households. 15 NOVEMBER 2012 PAGE 117 of 125 3.3 Financial and Fiscal Commission The Financial and Fiscal Commission (FFC) in its submission welcomed the 2012 MTBPS and viewed the proposed budget framework as reflective of the recommendations that the FFC has made over the years. The Commission stated that economic growth has come in slower than expected and this has been exacerbated by internal strife in the labour markets resulting in a downward revision of revenue by R5 billion and a higher than projected budget deficit. However, the Commission was also of the view that growth and employment in South Africa can only be achieved through a combination of fiscal consolidation and investment into future growth given the prevailing economic climate. The Commission was broadly supportive of government’s initiatives at job creation which seek to focus on active labour market policies and amended labour legislation. Furthermore, FFC supported proposed supplementary funding for maintaining factories providing jobs for disabled workers, expansion of employment opportunities through public works and special employment programmes (including EPWP and CWP). The FFC noted that Government has now made many proposals to stimulate job creation that include promoting education and skills development, the Manufacturing Competitiveness Enhancement Programme, the Jobs Fund, a Youth Subsidy, the Community Works and Expanded Public Works Programmes and the investment infrastructure programme. However, the Commission was concerned at the muted response to these proposals by business and labour. There was a need to foster cooperation amongst all parties on initiatives that seek to broaden employment. With regard to education, it was stated that due consideration should be made for operational costs of school infrastructure such as the safeguarding, maintenance and operation of completed school 15 NOVEMBER 2012 PAGE 118 of 125 infrastructure. The Commission indicated that most schools did not have the required conditions for effective learning outcomes and this impacted learners from disadvantaged backgrounds and disabled learners’ disproportionately. The Commission cautioned against fiscal consolidation through the indiscriminate cutting of education expenditure such as delayed or decreased funding to schools as there were concerns about the associated capability losses. Cost cutting should be done in a prudent manner that will not negatively affect educational outcomes. The budget framework provides for 0.2 per cent real growth in health spending over the MTEF. FFC welcomed government’s efforts at obtaining value for money from health spending. However, the Commission was concerned at the impact of fiscal consolidation to the quality of health care in an environment where provinces put salaries as a first claim on the fiscus above medicines and the maintenance and upkeep of medical equipment. There will need to be tighter monitoring of health budgets in the medium term. Given the efficiency challenges plaguing provincial Health Departments, the Commission suggested that human resource, financial management and procurement should be devolved to hospital management to in order to improve efficiencies. Furthermore, FFC called for the establishment of norms and standards that will define the level of service that should be expected from public health facilities. With regard to social development, the budget framework reprioritises funds already in the baseline towards strengthening selected child welfare programmes, improving SASSA infrastructure and systems, and the employment of additional social workers. The Commission was concerned that 15 NOVEMBER 2012 PAGE 119 of 125 provincial departments of social development were internally prioritizing away from transfers to NGOs to personnel costs and goods and services. This will have a negative effect on the resource envelope available to NGOs. The MTBPS proposes a number of reforms in the conditional grant frameworks with a view to improve conditional grant spending in the provincial and local spheres of government. The MTBPS calls for a performance linked and demand driven conditional framework for provinces. The FFC supports the reform in principle but calls for caution in its implementation as it may entrench inter-provincial inequities. The other main concerns with the conditional framework were the continual proliferation of grants, shortcomings of national departments in administering grant frameworks and the need to make transferring officers more accountable for grant performance. The Commission indicated that it was important to strengthen the monitoring and evaluation of local government grant outcomes as improved spending was not always linked with better outcomes. In pursuing constitutional interventions in local government, the State had to be mindful of balancing capacity and accountability. The FFC proposed for enabling legislation for constitutional interventions that foster the current accountability and oversight frameworks of government. The main concern was that punitive measures may be counterproductive. The Commission recommended that a framework be developed for Section 100 interventions. The framework should outline the parameters for the intervention, contain clearly defined roles and responsibilities for all stakeholders and define clear timelines. 3.4 Earth Life 15 NOVEMBER 2012 PAGE 120 of 125 Earth Life proposed the following with regard to the 2012 MTBPS: , The Department of Energy should complete an accurate cost analysis of proposed future nuclear energy that takes account of all relevant information. The provision of R1.7 billion allocated to the South African Nuclear Energy Corporation (NECSA) should not be approved until: - Integrated Resource Plan (“IRP”) has been revised so as to address the shortcomings of the IRP 2010 relating to the costing of the nuclear program and should include: o an accurate cost analysis of nuclear energy procurement o all relevant information not included in the IRP 2010 o an update of information that has arisen in the two years since the IRP 2010; , The Department of Energy should be required to act in a more transparent manner, providing adequate information to the public and Parliament as to its intentions and the decisions being taken regarding this proposed procurement; , That funds budgeted for large-scale energy procurement should be conditional on greater parliamentary oversight; , That there is a risk that South Africa will commit itself to order a large number of reactors that will impose huge additional costs on consumers. However, the more likely risk is that, as in 2008, the nuclear programme will prove impossible. 4. Committee Concerns and Findings Having considered all the submissions made by the above stakeholders, the Committee identified the following findings and areas of concern: 15 NOVEMBER 2012 PAGE 121 of 125 4.1 The Committee notes that the Division of Revenue Bill contains clauses that specify criteria and conditions in which infrastructure funds may be allocated and the Committee’s view is that similar conditions should be incorporated into the Appropriation Bill. 4.2 The Committee noted with concern the slow implementation of the Job Fund. 4.3 The Committee noted the declared savings of R3.021 billion in 2012/13 by national departments and envisaged savings in the medium term. The Committee however expressed concern at the lack of distinction between savings and under expenditure as well as the adverse effect of under expenditure on the performance by departments. 4.4 The Committee welcomed the reforms aimed at improving the conditional grant frameworks for provincial and local government but remained concerned at the cost of employing implementing agents. 4.5 The Committee expressed concern about the planning in the longer term by departments given the advantage that they should derive from the Medium Term Expenditure Framework. 4.6 The Committee welcomed the additional funding made available for infrastructure projects administered by the Department of Water Affairs but remain concerned at the readiness of the Department to implement the projects given the persistent under expenditure on infrastructure projects over the years. 4.7 The Committee welcomed the Public Service Commission’s proposal to develop a legal framework that will empower the Commission to enforce compliance with its recommendations. 4.8 The Committee noted government’s commitment for more prudent expenditure by departments however, it is the Committee’s view that such reprioritisation of funds should not be done at the expense of service delivery. 15 NOVEMBER 2012 PAGE 122 of 125 4.9 The Committee noted the challenges experienced by national departments to administer grant frameworks and stressed the need to make transferring entities more accountable for the performance achieved by way of transferred funds. 4.10 The Committee noted with concern the shifting of funds originally budgeted for filling vacant positions; and the extent to which this could negatively affect service delivery and budget performance over the Medium Term Expenditure Framework (MTEF) period. 4.11 The Committee is concerned about the decentralisation of infrastructure development to departments without such departments having the necessary capacity or skills to perform the tasks or where the tasks allocated fall outside the core functions of the departments. 5. Committee Recommendations Based on the findings in section 4 above, the Standing Committee on Appropriations recommends that: 5.1 The National Treasury reports to Parliament on: 5.1.1 Declared savings and projected underspending by departments and the effect thereof on performance targets of departments. The minimisation of costs associated with the employment of implementing agents for delivery of infrastructural programmes. 5.1.2 The possibility of reviewing the MTEF budgeting framework so as to strengthen the management, planning and spending in government departments to ensure credible budgets. 5.2 The Department of Water Affairs submits a report on: 5.2.1 The Turnaround plan outlining its readiness to implement and effectively deliver on its infrastructure programme. 15 NOVEMBER 2012 PAGE 123 of 125 5.2.2 The human resource capacity and concomitant skills required for effective service delivery. 5.2.3 The immediate steps to eliminate the backlog on issuing of water distribution licences. 5.3 The Department of Public Service and Administration- 5.3.1 Puts in place measures to ensure full compliance with financial disclosure frameworks and mechanisms to detect and prevent potential conflicts of interest particularly as far as officials transacting with the state are concerned. 5.3.2 Ensures the filling of funded vacancies within six months. 5.4 The Department of Basic Education expedites the process of formalising norms and standards for schools infrastructure. 5.5 The National Treasury puts in place measures to ensure that transferring entities are held accountable for the administration and performance of the conditional grants. 5.6 The Department of Performance Monitoring and Evaluation reviews the performance of agricultural support programmes and their impact on the livelihoods of people residing in rural areas. Report to be considered. 4. Report of the Portfolio Committee on Justice and Constitutional Development on the Repeal of the Black Administration Act and Amendment of Certain Laws Amendment Bill, dated 14 November 2012 1. The Portfolio Committee on Justice and Constitutional Development resolved to initiate a Repeal of the Black Administration Act and Amendment of Certain Laws Amendment Bill. The Committee complied with Rule 238 (1) by tabling a memorandum in the National Assembly on 23 October 2012. 15 NOVEMBER 2012 PAGE 124 of 125 2. The Portfolio Committee on Justice and Constitutional Development requested and was granted permission by the House to introduce legislation amending the Repeal of the Black Administration Act and Amendment of Certain Laws Amendment Act, No 28 of 2005. (See Minutes 37-2012 dated 24 October 2012 @ 3477). 3. Prior notice of introduction of the Bill was given in the Government Gazette, No 35847, dated 2 November 2012 and an explanatory summary of the draft Bill was published in the same Gazette. The Gazette also contained an invitation to interested persons and institutions to submit written representations before 13 November 2012. One submission was received and considered by the Committee. 4. The Committee, in accordance with Rule 243, reports that it has introduced the Repeal of the Black Administration Act and Amendment of Certain Laws Amendment Bill [B40-2012] (National Assembly- sec 75) by submitting a copy thereof to the Speaker. Report to be considered.
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