Chairperson, Ministers, comrades and hon members, as the ANC we support the appropriation of an additional amount of R2,7 billion which will enable the Road Accident Fund to meet its liabilities for the period 2005-06.
In addition, this appropriation clearly indicates the caring nature of our government. The Road Accident Fund provides compensation to victims of motor-vehicle accidents for injuries, loss of income and loss of financial support. Without this appropriation many victims would be adversely affected and would not receive the much-needed compensation provided for by the Road Accident Fund.
We are mindful that this is not a permanent solution to the challenges facing the Road Accident Fund and we urge the Minister of Transport, together with the national Department of Transport and the Road Accident Fund, to ensure that the necessary measures needed for the Road Accident Fund to operate in a sound manner are introduced.
Amongst other things, attention will need to be given to minimising the cost of administration, promoting good governance and developing a sustainable economic model, which will put the Road Accident Fund in a financially sound position.
According to the estimates of National Expenditure in Vote 33 - Transport, the recommendations of the Road Accident Fund Commission have been assessed regarding both their impact and implications. It further states that, subject to a Cabinet decision, work on a no-fault benefit scheme will start with the publication of a White Paper during 2006.
This appropriation will generate a surplus of R1,7 billion that will assist in partially offsetting future deficits over the 2006 MTEF.
During 2005-06 a total of 185 773 new claims were received by the Road Accident Fund. Owing to slow progress in finalising claims, the backlog of claims grew to 443 399. This indicates the need for measures to be introduced to ensure the future financial sustainability of the Road Accident Fund.
Whilst changes can be made to the structure of the Road Accident Fund, a critical challenge is the high number of fatalities and accidents which occur on our roads each year with an estimated cost to the economy of some R40 billion per annum. During December 2005 there was a 16,9% increase in fatalities in comparison to December 2004.
Every year more and more new drivers take to our roads. An estimated 60 000 new vehicles were purchased last year.
The national Department of Transport and the Arrive Alive campaign have performed well in raising awareness of the need for road safety. Despite these efforts the number of fatalities and road accidents remain at an unacceptably high level. On the one hand we need more visible and tougher traffic law enforcement, whilst on the other hand the users of our roads have to take responsibility for their own driving practices and the roadworthiness of their motor vehicles. The owners of vehicle fleets must start to take responsibility for how the drivers they employ drive.
It is correct that government must take responsibility for the enforcement of traffic laws on our roads, but it is equally correct that the users of our country's roads must ensure that they abide by the traffic laws, which govern our roads. We are pleased that the Road Traffic Management Corporation has started to function. We urge the Road Traffic Management Corporation to approach its task with a sense of urgency, as it has an important role to play in ensuring order on our roads.
In conclusion, we in the ANC support this appropriation and also urge all the users of our roads to obey the rules of our roads. Together we can create safer roads and reduce the number of fatalities and motor vehicle accidents. I thank you. [Applause.]
Mevrou die Voorsitter, hierdie wetsontwerp kan beskou word as deel van die huidige boekjaar se aansuiweringsbegroting, waarvan die meeste aansuiwerings van ander departemente reeds einde verlede jaar in die Parlement aangehoor en bespreek is. Hierdie aansuiwerings ten opsigte van, onderskeidelik, Denel en die Padongelukkefonds word beskou as addisionele fondse en beredeneer as onvoorsienbaar en onvermydelik. (Translation of Afrikaans paragraph follows.)
[Madam Chairperson, this Bill could be regarded as part of the adjustments appropriation for the current financial year, of which most adjustments of other departments have already been addressed and discussed in Parliament at the end of last year. These adjustments, with regard to Denel and the Road Accident Fund, respectively, are regarded as additional funds and considered to be unforeseen and inevitable.]
The DA in principle supports the appropriation of R2,7 billion for the Department of Transport for further transfer to the Road Accident Fund in order for it to proceed with scheduled payments to successful claimants and to settle the outstanding payment to the SA Revenue Service. We base this decision purely on the knowledge of the 400 000 claims outstanding - some going back nearly three years - and the long and painful suffering these claimants have endured because of not receiving payment for injuries.
But just throwing R2,7 billion at the Road Accident Fund to bail it out of its state of insolvency is not the answer. The DA opposed the recent amendments to the Road Accident Fund Act, as did over 100 000 signatories to the Stop the Bill petition, because the Bill failed to address the real issues facing the fund, namely poor management and high costs of fees spent on lawyers, medical experts and actuaries.
In the long run the only thing that will make the Road Accident Fund sustainable is a dramatic reduction in the number of road accidents. Over 12 000 people died on our roads last year, and many more were injured and maimed. This costs the economy of the country as much as R40 billion per annum.
Die huidige toestand van Suid-Afrika se padnetwerk dra grootliks hiertoe by en die regering moet in 'n groot mate die mede-aanspreeklikheid daarvoor aanvaar. Ek het die Minister van Vervoer verlede jaar gevra hoeveel kilometer paaie op die waglys is vir onderhoud en rehabilitering. Uit sy antwoord blyk dit dat 105 627km paaie dringend aandag nodig het. [Tussenwerpsels.] Soos die agb Seremane dit stel, deesdae kyk 'n mens op sommige paaie nie meer uit vir die slaggate nie; jy soek eerder die pad wat oorgebly het tussen die slaggate! [Tussenwerpsels.] (Translation of Afrikaans paragraph follows.)
[The present state of South Africa's road network is largely contributing to this state of affairs and the government must, to a great extent, be held co-responsible. Last year I requested the Minister of Transport to provide details of how many kilometres of road were placed on the waiting list for maintenance and rehabilitation. From his answer it appears that 105 627km of roads need urgent attention. [Interjections.] As the hon Seremane puts it, these days you no longer look out for potholes on certain roads, but rather for the piece of road that has been left between the potholes! [Interjections.]]
The question needs to be asked whether any conditions have been linked to this appropriation in terms of ensuring that the fund won't end up looking for further appropriations in the future, or, for that matter, a further increase in the fuel levy.
The DA has on a number of occasions in this House asked for the Minister to commission an appropriate external task team to investigate the Road Accident Fund with a view to coming up with recommendations to restructure the fund in an appropriate way and to make it more sustainable, efficient and free of corruption.
The amendments to the Road Accident Fund have a number of controversial clauses. Amendments now take away the common-law right of the innocent motorist, whilst the offending or negligent driver carries no such burden and in many cases can walk away scot-free, despite the fact that he or she may be in a position to pay for any damages caused in excess of the Road Accident Fund's accountability.
I wonder whether the Minister took these issues into consideration when so generously bailing out the Road Accident Fund. Surely, some of this money could be well placed in campaigns to educate and provide the necessary enforcement to stop the continued loss of life of and injuries to our citizens, which is indirectly costing the economy billions. I trust the Minister will have time to ponder these areas where we seem to be robbing Peter to pay Paul.
Secondly, the DA supports the R2 billion bail-out of Denel to restructure itself, given present circumstances. We are appalled by the financial losses this company suffers year after year and we must emphasise that this drain on the fiscus cannot be allowed to continue indefinitely. Denel must shape up or be shipped out!
Nevertheless, Denel is a strategically important enterprise that should be salvaged if at all possible. It has long-term commitments to maintain and has to upgrade existing weapons systems in the Defence Force. It is the core of our valuable aerospace capability. Its internationally recognised scientific and technical expertise is a national asset that we cannot afford to lose or compromise. It has more than 10 000 employees. They cannot just be abandoned to the hardships of unemployment or the lure of emigration.
Uit voorleggings aan die Parlement blyk dit dat daar geen wanpraktyke by die organisasie voorgekom het nie. Agterlosige bestuur en die verkleining van Denel se hoofuitsetmark, die SANW, is verantwoordelik vir die organisasie se verliesgeskiedenis. Tog lyk Denel se nuwe visie en missie as internasionale vennoot vir die ontwikkeling van onderdele van wapentuig, eerder as om die volledige artikels te vervaardig, meer belowend. Die ontwikkeling van wapentuig het verreikende openbare en nasionale strategiese beleidsimplikasies.
Gevolglik is dit moeilik om Denel te privatiseer. Denel moet f herstruktureer word f, indien dit nie slaag nie, as organisasie gesloop en gelikwideer word. Die DA vertrou dat hierdie addisionele R2 miljard- inspuiting so 'n katastrofe sal voorkom en Denel eerder op die pad na herstel sal plaas. Die DA steun hierdie wetsontwerp. Dankie, Voorsitter. [Applous.] (Translation of Afrikaans paragraphs follows.)
[From submissions to Parliament, it appears that no irregularities occurred at this organisation. Careless management and the shrinking of Denel's main market, the SANDF, are responsible for the organisation's loss history. Though, it seems that the new vision and mission of Denel, as international partner to develop spares for armaments rather than manufacturing the complete items, is more promising. The development of armaments has far- reaching public and national strategic policy implications.
Consequently, it is not easy to privatise Denel. Denel has either to be restructured, or, if this does not succeed, dissolved or liquidated as an organisation. The DA trusts that this additional R2 billion injection will prevent such a catastrophe and will rather place Denel on the path of recovery. The DA supports this Bill. Thank you. [Applause.]]
Thank you, Chair. According to Denel's annual report of 2005, the net loss for the year is significantly worse than the loss of the previous financial year, which came to R377,5 million. According to the report, the major contributors to this year's financial performance were, mainly, the failure to achieve the sales target, an increase in provision for contract losses and the adverse impact of the exchange rate.
According to Ernst and Young, included in the cost of sales is an amount of R697,8 million, representing the expected contract loss on the Rooivalk attack-helicopter project. Unfortunately, they did not obtain all the information and explanations they considered necessary to satisfy themselves that this provision is fairly stated. They conclude by stating:
These conditions, along with other matters, as set out in the director's report, indicate the existence of a material uncertainty, which may cast significant doubt on the group's ability to continue as a growing concern.
Cash is the lifeblood of any living organism. And unless drastic steps are taken ... [Time expired.]
Chair, hon members, the UDM supports the Bill. However, the Bill before us constitutes large additional appropriations for two government entities that suffer from perennial financial woes. As far as Denel is concerned, its struggle to become and stay profitable has been ongoing for years. This, despite billions in taxpayers' money being invested in it, as well as the billions more spent on the arms deal, which should have produced positive spin-offs. We are being asked to sponsor another restructuring. Let's hope that this time the investment bears fruit.
The other entity that stands to benefit from additional taxpayers' money is the Road Accident Fund. It has also been the subject of restructuring over the years. Despite annual promises of improvement following annual bail- outs, the RAF remains a budgetary black hole that sucks up the taxpayer's money, without ever seeming to get out of the red. Nevertheless, we support the Bill. Thank you.
Chairperson, the ACDP notes the progress made by Denel with regard to securing equity partnerships and the selling of noncore assets. This is a welcome step towards the goal of reshaping our parastatals, so that they are in line with international standards. We have repeatedly been told that the shortage of professional skills is the greatest challenge facing our state-owned enterprises.
The ACDP exercises its faith that Denel's R2 billion injection will cover world-class human resource practices. State-owned enterprises are generally expected to become largely self-financing, and not to place an extra burden on the budget. It is therefore our hope that every effort will be made to address those issues that may have been identified as obstacles to the growth of Denel. Regarding the Road Accident Fund, the ACDP appreciates the precarious financial situation of the fund. The solution, however, lies in better management of the fuel levy funds and the eradication of corrupt practices, not the reduction of victims' rights to claim. Additionally, we urgently need to reduce the number of serious collisions on our roads, which, in turn, will reduce the number of claims to the fund. Thank you, Ma'am.
Madam Chair, like other parties, the National Democratic Convention, Nadeco, sees the similarity between the circumstances of the two institutions that seek additional funding. The similarity concerns their viability, and therefore whether the additional appropriations are justifiable.
Concerning Denel, with no real competitive advantage in a tough international market, it has found it difficult to succeed. The arms-deal- related work gave it something like a reprieve, but this is insufficient and unlikely to last. We note that British Aerospace recently decided against buying a substantial share of Denel pertaining to questions of commercial viability, and we therefore ask: "Is Denel's latest turnaround plan sound enough to justify an additional R2 billion?"
Then there is the Road Accident Fund, which has long been problematic. There have been too many failed rescue plans to remember over this period. Seemingly, a lack of management and an inability to do what it takes to make the fund viable remain. Solutions concerning the scope, nature and integrity of the claims allowed against the fund have yet to be introduced. So, here too, are we just pouring money into a bottomless pit?
Nadeco, however, supports the appropriations on the understanding that the Ministers for Public Enterprise and of Transport will now be taking a far more rigorous approach towards dealing with the problems of these two institutions.
Motsamaisi wa mosebetsi, PAC e amohela tshisinyo ena ya Tlatseletso ya Letlole lena la R2,7 billion bakeng sa Road Accident Fund, bakeng sa batho ba fumanang dikotsi mona ditseleng. PAC e boela ere ke maswabi a maholo hore ebe ho ntse ho ena le diketekete tsa batho hona jwale, ba so kang ba fumana ditlhapiso ha ba ile ba fumana dikotsi tsa ditseleng.
Re re ke boikarabelo ba mmuso hore baahi ba fumane tshireletso ya bohlokwa ditseleng, ele hore ba tle ba se ke ba iphumana ba le dikotsing. Mmuso o tlamehile ho bona hore o ntlafatsa mebila e le hore ho tle ho se ke ha eba le dikotsi tse etsahalang ha bobebe. PAC e amohela tlatseletso ena ya ditjhelete tsena, e le hore tshebetso e tle e kgone ho tswella pele hantle. Ke a leboha. (Translation of Sesotho speech follows.)
[MR M T LIKOTSI: Madam Speaker, the PAC supports the Adjustments Appropriation Bill for allocating an additional R1,2 billion to the Road Accident Fund to compensate people involved in road accidents. The PAC notices with despair that there are still thousands of people who have not yet received compensation from the fund.
We feel that it is the responsibility of the government to protect its citizens on the roads and to minimise accidents. The government should upgrade roads constantly to avoid an increase in road accidents. The PAC supports the Bill. Thank you.]
Madam Chairperson, the MF acknowledges and accepts that a total of R4,25 billion was appropriated in this Bill. We do feel that there is no need for a roll-over if sectors utilise their funds adequately. We are not, however, suggesting that expenditure should be created to avoid a roll-over, but in view of the fact that we are constantly complaining about a shortage of funds, that a roll-over does exist, it does not make sense.
We believe that because of the seriousness of unemployment, the Department of Labour should devise means to utilise funds adequately in the alleviation of unemployment. We have no reservations regarding additional funds appropriated to Public Enterprises and Transport. Considering the reasoning behind this addition, we support it.
We are, however, pleased that the funds are being made available to manage the Road Accident Fund and for the adequate payment of successful claimants. The MF supports the Adjustments Appropriation Bill.
Chairperson, I want to applaud the President and the Finance Minister on realising the importance of giving support to this very strategic entity, Denel, which is universally renowned for the state-of-the- art and sophisticated products it has to offer the defence fraternity.
Denel cannot ship out. Indeed, there are those who feel that Denel should be privatised and should not be given state funding. But the majority in our portfolio committee appreciate that the new leadership at Denel has a major responsibility to restructure it and make it a competitive, viable and world-class entity.
It is a fact that we as a nation do not face any external military threats because of the fact that we have made more friends than enemies since the demise of the apartheid regime. The picture that was painted last year by the new leadership of Denel, of the need to fundamentally transform it, seems reasonable to us.
We would like to call upon all relevant stakeholders to work together and do their utmost to reconstitute Denel and ensure that it serves the national interests and that it is commercially viable on a sustainable basis.
We believe the CEO when he says that part of the problem has been lack of clarity among the government and other stakeholders of the exact role Denel should play to the extent that there is convergence among the major stakeholders on the exact role of Denel and greater co-operation among them. We appreciate that.
If there is disagreement on this matter, particularly within government, surely there should be more political and financial support for Denel too, especially as we are told that defence companies globally rely on Denel.
The recent R2-billion injection by National Treasury to Denel is a positive move in that it will not only sustain jobs, but will also ensure that new skills in science and technology are acquired. This eventually enhances development, which will enable us to meet our economic growth rate goal of 6% by 2010.
In our interaction last year the CEO, Mr Liebenberg, said that fixing Denel included making Denel a profitable and dynamic organisation commercially; delivering consistent growth; attracting, developing, retaining and appropriately rewarding world-class skills; achieving world-class productivity; focusing on areas in which Denel can compete credibly; partnering with state agencies to meet the country's defence needs; and competing in the open market, which means behaving like the best in the open market.
Denel cannot achieve world-class results with a subsidy mind-set. Anything other than world-class will not cut it in this highly competitive environment. Denel needs to decide on what it is and focus on a game plan.
Global defence procurement is a US $360 billion market. Many of the global defence contractors such as Denel find it almost impossible to serve the United States, for example, and the Nato countries, which have a closed bidder and tender process. The USA and Europe are also trying to expand their markets to areas previously served exclusively by Denel, such as the Middle East, the Far East and South America. Independent contractors such as Denel are forced to become reliant on domestic markets.
To succeed, Denel should pursue a strategy based on prime contracting here at home, and the export of systems and components through selective equity partnerships and alliances. A process is under way to evaluate alliance opportunities and drive internal improvements across all business units.
In conclusion, this time round we as a committee are going to closely watch Denel's performance after its R2 billion allocation. Denel is the only state-owned enterprise getting money directly from the national fiscus. Hence, our committee will have a much more direct oversight role over Denel.
We need to be clear about what the money is going to be used for and we are going to monitor that it is being used for the correct purpose. We will be meeting with Denel very soon to make it clear that we are going to monitor them regularly. Hon members, ladies and gentlemen, the ANC supports this Bill. I thank you. [Applause.]
Thank you very much, Chairperson. Let me express appreciation for the support from all parties in the House, and deal with the issues at hand.
The first issue I'd like to deal with is that which the hon Gololo raised about the friendship that we enjoy internationally. Minister Erwin has assured me that this is not because of diplomatic endeavours, but rather because of the awesome array of weaponry that Denel has produced that has created this condition in which there are no external threats. So, it is in that context that we have to see the Additional Adjustments Appropriation Bill as well.
Of course there are different issues at play here. In agreeing, as this House does this afternoon, to an appropriation of an additional R2 billion to Denel, it is done against the backdrop of very intensive discussions, detailed presentations by the CEO and the Minister to the portfolio committee on state-owned enterprises; discussion then about the choices we exercise in order to retain the capacity in weaponry manufacture; and also against the backdrop of where Denel has been, understanding why this additional appropriation is now important.
The issues in the Road Accident Fund are considerably different. It's worth commenting on them again, because a number of hon members did so here this afternoon. We don't have a choice about the Road Accident Fund. The R2,7 billion that we're asking Parliament to appropriate to the Road Accident Fund arises against the backdrop of, firstly, understanding that the Road Accident Fund is an integral part of our social security network. It's part of the raft of social security that we have.
If we take that perspective, then a series of other issues follows. Yes, firstly, I think we must agree with those members who raised the fact that we have to do considerably more to ensure that drivers are held responsible for their conduct on the roads. It's too easy a cop-out to say that it's potholes in the roads. There is an incredible amount of driver irresponsibility in South Africa, and that is something we have to take joint responsibility for wherever we find ourselves.
The second issue is, of course, that this has been the most remarkable honeypot for all kinds of interests - lawyers, doctors, hospitals, people who claim way in excess of what they had previously - and what we need is a system that minimises the fault and minimises the payout.
Now, if you accept that this is part of our social security system, we then don't take responsibility for paying wealthy people more by way of pensions. Why should we suddenly have to pay wealthy people more when they have their private insurance as well? It's all part of retraining and re- educating, and I hope that this House will stand united as we transform the conduct of those who drive on our roads, those who are responsible for accidents, and ensure that we can maintain the RAF as an instrument within the raft of social security institutions we have in South Africa, recognise that there must be equity in how we go about this, and ensure that we can keep the fund solvent. I thank you for your support. [Applause.]
Debate concluded.
Bill read a first time.