Second Adjustments Appropriation (2022/23 financial year) Bill: public hearings

Meeting report

The Chairperson of the Select Committee on Appropriation, Ms D Mahlangu, welcomed everyone to the meeting and informed Members that the meeting involved both the Standing Committee on Appropriations and the Select Committee on Appropriations. The meeting was a public hearing. Although interested parties had been invited, they had only received one submission.

She also welcomed her Co-Chairperson – the Chairperson of the Standing Committee on Appropriations, Mr S Buthelezi (ANC) – and mentioned that it was unusual for them to only receive one presentation. They would need to inquire why this was the case. The presentation would be from the Congress of South African Trade Unions (COSATU), presented by Mr Matthew Parks, Parliamentary Coordinator for COSATU.

Submission by COSATU

Mr Parks said that COSATU was concerned with the lukewarm nature of the budget and the accompanying Second Adjustments Appropriation Bill tabled in Parliament. He added that the South African economy had stagnated for over a decade and faced challenges. The budget and the Bill were not bold enough to address this. COSATU was hoping for a bold Budget and a Second Adjustments Appropriation Bill that would protect workers from inflation, rebuild the state, decisively tackle corruption, provide relief to the unemployed, and put measures to stimulate the economy. He acknowledged the fact that there were positive interventions in the budget and Bill. However, on a macro level, the budget and Bill failed to address the biggest challenge of economic stagnation.

Mr Parks mentioned that COSATU welcomed the R37 million allocated for Parliament, but he was concerned with the delays in rebuilding Parliament – which should be prioritised. He also said that they noted the R12 million allocated to Cooperative Governance and Traditional Affairs (COGTA), but they were concerned that there was no greater sense of urgency in COGTA given the state of local governments.

On Home Affairs, he indicated that the allocation of R92 million to invest in civic services was welcomed. He said more investments were needed to turn this key public service around. He also said that the R300 million to support political parties under the Political Party Fund was welcomed but it was not enough. It needed to increase substantially to R1 billion to wean political parties off an unhealthy dependency on private donors with dubious motivations.

On Higher Education and Training, Mr Parks said that the allocation of R156 million for Technical and Vocational Education and Training Colleges was welcomed and was a boost for young people looking for opportunities. He also said that the R6 million for appointment of National Health Insurance planners was a welcomed boost to lay the foundations for the National Health Insurance (NHI). Parliament needed to finalise the NHI Bill. COSATU was disappointed that, despite the flood of workers losing their jobs and wages, being denied their deducted contributions, being abused and forced to work in unhealthy conditions, there were no additional appropriations allocated to the Coalition for Conciliation, Mediation and Arbitration (CCMA) which had battled to cope with drastic cuts over the Medium Term Expenditure Framework (MTEF).

Mr Parks said they were happy about the R5 billion allocation to the Land Bank. It needed to be accompanied by the necessary management interventions to ensure that the Land Bank was well-run & could play the role the economy needed in the agricultural sectors. He said they supported allocating an additional R104 million to support agricultural investments & land reform. They also welcomed the allocation of R1 billion to settle outstanding South African Airways (SAA) debts. As SAA rebuilds, it needs to prioritise employing its former employees where possible. The R2.4 billion for South African Post Office (SAPO) was welcomed, as the entity was fighting for its life. The entity needed a turnaround plan not based on retrenching 4 000 employees and slashing wages of the remaining 9 000 workers by 40%. He added that there was a need to re-pivot Post Office to expand the services it offers, catch up with evolving sector, and become a government services site for services in rural & disadvantaged communities with Postbank. The South African Post Office and Postbank Amendment Bills needed to be expedited.

COSATU appreciated the R129 million to boost the Department of Mineral Resources and Energy (DMRE) capacity. They hoped it would slash mining rights applications backlogs that could unlock billions of investments and create thousands of jobs. They also hoped it would support the Mine Health Safety Inspectorate’s capacity & reduce the lives lost to mining accidents weekly. The DMRE needed to revive its Reconstruction and Development Programme (RDP) Housing Solar Panel Programme that was meant to cover 150 000 homes annually.

Mr Parks said they supported the R34 million allocated to boost industrialisation, manufacturing, exports & investment programmes. They could do better to grow key economic sectors & slash unemployment. COSATU welcomed the no mention of the bizarre R22 million national flag pole project and the proposal to donate R1 billion to an English football club. They hoped that the silence on the two issues meant they were abandoned.

Mr Parks mentioned that they were disappointed that, despite an unemployment rate being well over 40% and youth unemployment being in the range of 60%, the allocation to the Presidential Employment Initiative was not increased to accommodate at least R1 million participants. COSATU was pleased that their call for an extension of the Social Relief of Distress (SRD) Grant that has provided relief to about R8 million people was agreed to. The SRD Grant needed to be retained beyond 2024 and increased to a poverty line of R644. They were also concerned that the Department of Social Development (DSD) and Treasury had not paid enough attention to the SRD’s administrative challenges, including underspending. They stressed the importance of dealing with those issues if the programme was to be used as a foundation for a Basic Income Grant. He added that it was unfortunate that there were cuts of R3.7 billion for the SRD Grant & R81 million for South African Social Security (SASSA) administrative support.

On the security cluster, COSATU welcomed the additional appropriations to help rebuild & reinforce key security institutions, but more was needed. Mr Parks added that the R257 million allocated for protection & security services – compared to the R126 million for an overwhelmed Detective Services and the R10 million for Crime Intelligence – spoke to misguided priorities.

He concluded by saying that COSATU welcomed the positive aspects in the Second Adjustments Appropriation Bill, particularly to reinforce the law enforcement institutions, to rebuild key frontline services & stimulate economy, and provide relief for Post Office. COSATU was however aggrieved by key worrying aspects of the Second Adjustments Appropriation Bill, particularly massive cuts of R3.7 billion to SRD Grants & failure to increase allocations to the Presidential Employment Initiative. He added that the 2023 Medium-Term Budget Policy Statement (MTBPS) needed to be bold, progressive and stimulate the economy if things were to improve. He mentioned that COSATU implored government to return to Parliament in October with a bold, decisive, and sweeping budget that would deal with the unfolding capitalist system’s multiple crises.  

Discussion

Mr Y Carrim (ANC, KZN) said that they needed to be concerned by the fact that there was only one presentation, and they needed to engage with those who were involved in order for the Committee to carry out its mandate. He also said that he did not agree with everything in COSATU’s presentation. In the case of COGTA, he noted that there was a new Minister who he hoped would pay attention to the issues.

On the Universal Basic Grant, he said that they fully supported it. Although it would be costly, it would be more costly not to do it. Mr Carrim asked Mr Parks about the composition of the Employment Taxing Centre. On the SRD, he asked what the administrative failures were. He also inquired about the water crisis. He also said there was an increase in cases with the Department of Home Affairs, dealing with their services – especially with long queues.

Mr X Qayiso (ANC) agreed with COSATU’S recommendations, especially on political party funds. This needed to be looked at, and the R300 million was insufficient. On the issue of state-owned entities, he stated that things had to be done differently. He added that the non-performance of these entities was related to their management. Their administration needed to be looked at, even as they were given funding, to ensure accountability. He gave the example of the Post Office which was now retrenching 4 000 of its workers.

Co-Chairperson Buthelezi asked whether the Land Bank had played the necessary developmental role to assist emerging farmers. He also asked whether emerging farmers should get preferential rates in banks. On the SRD grant, he said that the qualification criteria were stringent, and asked what could be done to ensure that people deserving of the grant were not left out. He also said that more conditions should have been attached to the recapitalisation of the SAA. He asked Mr Parks what they thought about this issue and what conditions they thought needed to be added. He proposed that SAA workers should have a percentage of shareholding in the new equity holding.

Co-Chairperson Mahlangu said that the Committee agreed that funding for political party funding is insufficient. On rebuilding Parliament, she said that the Joint Standing Committee on Financial Management of Parliament would be meeting later that week to discuss the issue. She also said that she supported COSATU’s input on civic services, but she also expected them to mention the public servants strike. She added that the budget cycle vis-à-vis the negotiating cycle needed to be looked at. She agreed with COSATU that SAA should hire former workers but said that doors should not be closed on young people being employed. She reiterated that it was worrying that other interested parties did not want to present their views like COSATU.

COSATU Responses

Mr Parks hoped the new COGTA Minister would come with new ideas and energy. Municipalities in distress had escalated from 10% to 90% in ten years. A new sustainable model was needed.

He said they had raised the issue of funding political parties to reduce corruption and democracy. They were ready to go into discussions with Treasury to push the allocation to R1 billion.

He also agreed with Mr Qayiso that the era of bailouts was over. The entities needed to stand on their two feet and be accountable. He also added that they could borrow from the Chinese regarding how they manage state-owned enterprises.

On the SRD grant, he said that the grant was a valuable intervention. Although it had its challenges, it reached a lot of people. It needed to be pushed to the poverty line of R644. He added that there were challenges around the application and verification processes for the grant; they needed to be user-friendly.

On the Employment Taxes Centre, he said that it was a difficult issue. It was difficult because the South African Revenue Services (SARS) were not able to disclose tax information under the tax laws. It was therefore difficult to assess the impact. On the water crisis, he said they were pleased with the increased funding for the water infrastructure.

On the Land Bank, he said that they did not think the Land Bank played the role it should to support farmers. He also agreed with Co-Chairperson Buthelezi that there needed to be preferential rates to emerging farmers. He further added that commercial banks needed to have preferential rates for commercial farmers. On the SAA matter, he said that, as the SAA was being rebuilt, there would be opportunities for former workers who were interested. Workers should be compensated the monies owed to the

Mr Parks said that they welcome the rebuilding of Parliament. Due to the COVID-19 pandemic, Parliament had become more productive due to virtual meetings. He also said that Parliament meetings had become accessible to those far away.

On Home Affairs, he said the additional funding would solve their capacity and IT capacity issues. He added that there was progress on corruption but more had to be done. He said that the parties needed to listen to each other on the issue of public servant strikes. He also said that the state needed to mend its relationship with public servants and hoped they could move back to the three-year cycle.

Co-Chairperson Buthelezi welcomed the interventions suggested by Mr Parks. On the Home Affairs issues, he said that all departments should be responsible for their own IT departments to avoid unnecessary bureaucracy. He also mentioned the Concourt judgment around Black Economic Empowerment (BEE) regulations. He asked Mr Parks his understanding of the role of state-owned enterprises in terms of employment equity and economic transformation.

Co-Chairperson Buthelezi thanked the Chairperson for presiding over the meeting, and the Members, COSATU and the support staff for attending the meeting.

Chairperson Mahlangu thanked everyone for attending the meeting.

The meeting was adjourned.