Chairperson, hon members, in terms of the Public Finance Management Act, a national adjustments budget may only provide for the following key areas, namely adjustments required due to significant and unforeseeable economic and financial events affecting the fiscal targets, unforeseeable and unavoidable expenditure recommended by the Executive or any committee of Cabinet Members to whom this task has been assigned, any expenditure in terms of section 16 of the PFMA.
Section 16 of the PFMA deals with the use of funds in emergency situations, money to be appropriated for expenditure already announced by the Minister during the tabling of the annual budget, the utilisation of savings under the main division of a vote for the defrayment of excess expenditure under another main division, the shifting of funds between and within votes and the roll-over of unspent funds from the preceding financial year. The Adjustments Appropriation Bill recommends R11,5 billion in additional expenditure. The recommended R11,5 billion of expenditure is broken down as follows: R4,1 billion is for funds rolled over from 2006-07 to 2007-08; R3,8 billion is for additional allocations for unforeseeable and unavoidable expenditure; and R700 million is for amounts already announced in the 2007 budget.
The money is for the restructuring of Alexkor and for contractual and operational spending on the pebble bed modulator reactor. R1,9 billion is for the higher costs of the 2007 Public Service salary agreement. The hon Sibhidla will deal with most of the votes in detail.
Let me turn to two matters - the budget votes of Public Enterprises and Correctional Services. The Portfolio Committee on Finance had an extensive interaction with SA Airways and the Department of Correctional Services regarding matters raised in this Bill.
The Department of Correctional Services asked for a roll-over of R512,9 million allocated for the construction of the Kimberly Prison. During this interaction with the department, the Chief Deputy Commissioner, without the assistance of the Chief Financial Officer, indicated that the contractor on site had estimated that only R344 million would be required.
Parliament could not be expected to rely on such information from contractors. We therefore had to rely on the information stated in the Bill. Hon members, I must also state that the National Commissioner, Mr Petersen, subsequently retracted, in writing, the statement made by his Chief Deputy Commissioner.
The commissioner has assured the portfolio committee, in writing, that the whole amount, which is R531,9, will be utilised for the construction of the Kimberly Prison. We have noted the response of the commissioner and referred the letter to the Portfolio Committee on Correctional Services.
National Treasury has also made a commitment to assist in the contract management of the other three new generation correctional centres, namely Nigel, Klerksdorp and Leeukop. The feasibility studies have been finalised on Nigel and Klerksdorp.
The Department of Public Enterprises is requesting an amount of R744 million for costs associated with the restructuring of SA Airways. This amount is required to cover the labour restructuring costs. South African Airways is undergoing fundamental restructuring, which requires that the shareholders must cover certain costs. Once more, we call on Parliament to support the restructuring process of SA Airways and pay sufficient attention to the costs and deliverables outlined in the turnaround strategy of SA Airways.
I must mention a certain paragraph on page 19 of SA Airways' annual report that the committee found to be unacceptable. It says:
South African Airways was partly recapitalised at the year-end by securing a R1,3 billion subordinated loan from a SA financial institution. This is the first step in the recapitalisation process and the proceeds were used to strengthen the financial position of the SA Airways. Simultaneously, a guarantee was provided by the SA government ...
Hon members, this is the statement that I want to emphasise -
... that SA Airways can elect, at any stage and for whatever reason, not to repay the interest or capital due to the financier, at which time the claims are automatically ceded through the government terms of the guarantee. Should the government settle any capital or interest due to SA Airways' election not to make payment to the financier, they will have no recourse to SA Airways.
Really, it was not necessary that SA Airways should rub this in, in the light of the recent calling of a guarantee issued to Denel. We support the restructuring of SA Airways, but not statements that encourage moral hazards. We all acknowledge that the state will incur costs in the event that a guarantee is called. No state-owned enterprise has the right to rub this in. The ANC is satisfied that this Adjustments Appropriation Bill satisfies the requirements of section 30(2) of the Public Finance Management Act. Therefore, we call on the House to support this Bill. Thank you. [Applause.]
Chairperson, the Adjustments Appropriation Bill provides additional funding, focused on the built environment, covering housing, water and other services. Spending in these areas is welcomed as it could provide better service delivery, improved infrastructure and job creation.
A major area of concern, however, remains the inability of government departments to fulfil their mandates. Building the capacity of government departments will become a major challenge in the Medium-Term Expenditure Framework. A large number of departments just do not have the capacity to spend their current funding allocations, let alone spend the additional funds being made available now.
Underspending against budget is always attributed to a lack of capacity, resulting from the inability of departments to fill existing vacancies. This position is unlikely to be turned around and is particularly worrying in the departments of Transport and of Sport and Recreation. These two departments play a major role in the arrangements for Soccer World Cup 2010. Both departments are receiving substantial additional funding, but, judging by their current performance, however, they are unlikely to reach their spending targets.
The Department of Sport and Recreation has a vacancy rate of 50%, is badly managed in terms of its audit report and yet approves performance bonuses of R1,6 million to staff without conducting performance reviews.
The Department of Transport's strategic plan states that 10 000 of the oldest taxis on our roads were supposed to have been scrapped by the end of 2006. At the end of March 2007, the department had managed to scrap only 2 800.
The Adjustments Appropriation Bill provides for the recapitalisation of the Land Bank to the tune of R700 million. Given the investigations into fraud at the Land Bank and the dismissal of the board, it is not surprising that additional funds are required. Government would be well advised to await the outcome of the investigation before throwing more good money after bad.
Major additional funding is also being made available to state-owned enterprises, such as SA Airways. This is another bottomless pit, and an urgent intervention and investigation is required to determine whether continued support and operation of these enterprises is warranted.
The additional funding for the Hospital Revitalisation Programme and the School Building Programme should be welcomed. A lack of good management and the dismal failure by the Department of Health, however, to provide proper health services, is a cause for concern.
The Department of Education, in its disappointing performance in erecting only 21 schools out of a proposed 150 schools to have been funded by the European Union, is equally disturbing, and one wonders how they will perform with the additional funding now provided for the School Building Programme.
Whereas increased funding for local government, for the appointment of agricultural extension officers, for improvements to crime prevention and for the School Nutrition Programme should be welcomed, fraud and bad management have also been experienced in these areas.
Discipline and good management practice in government departments should receive priority attention. In this regard, the continuous inclination to roll over funds and move funds to other programmes within the same vote, indicate a misalignment of expenditure and poor planning generally. Thank you.
Chairperson, in general, the IFP supports the adjusted appropriations. However, we are concerned about the R4,1 billion in roll- overs from the previous financial year, indicating yet again that public spending is not up to scratch. The R3,8 billion appropriated for unforeseeable expenses is also a cause for concern, as it points to a lack of forward planning.
While we believe that the additional appropriation of R1,9 billion for Public Service salaries could be considered unavoidable, we, as the IFP, want to highlight the damage done to the country by this year's protracted Public Service strike, especially in the education sector. We do hope that negotiations will start much earlier so that we don't have a repeat of this year's performance.
Turning to SAA: we will find it difficult, but we will eventually support the R744 million allocated to SAA. And I can assure you, hon Minister, that it's not because they have cancelled two very important flights from Durban to Cape Town - the flights at 8:55 in the morning and 7:30 in the evening that we used to take - but we are going to find it difficult to support it for reasons other than the cancellation of those flights.
The R250 million given to Land Affairs for restitution grants is welcomed, but we have to call into question the ability of the department to deal with this money. The Director-General has been dismissed; he scored his last try in France. The Land Bank is under the Minister's supervision, and I think we really need to get to grips with the Restitution and Land Reform Programme.
As late as yesterday, there were still a number of advertisements for land claims, and this is nine years after the cut-off date. I think this is causing a lot of uncertainty in the agricultural sector.
We appreciate the money for the justice cluster, but we hope that there will be a lot more co-ordination between policing, justice and the prison services. We don't want a person to escape from prison after they have been arrested by the police, tried and sentenced in court. There has to be a lot more co-ordination in that regard.
As far as the conditional grants to provinces are concerned, the R300 million is welcomed, but we also have to ensure that there are models and policies in place in this regard. We know that you can't predict a disaster, but there have to be models in place so that, if farmworkers and farmers are affected by disasters, they get paid timeously and not two years after the disaster has taken place.
We will support the Adjustments Appropriation Bill. Thank you.
Chairperson, hon members, the Adjustments Appropriation Bill before us presents us with an opportunity to reflect upon the general management and direction of government departments, as reflected by the state of their finances.
Regrettably, some departments - which have a reputation for poor management - require massive appropriations. These are inordinately large amounts of taxpayers' money that one has difficulty believing can all be ascribed to unforeseen events or changing circumstances. In other words, we are left with a question about the quality and responsibility of the leadership in these departments.
We acknowledge that financial management has improved over the years. Be that as it may, there is still a long way to go in terms of the management of public finances.
The appropriations this year totalled billions of rand, and this simply does not reflect positively on the government's management of taxpayers' money. Nevertheless, the UDM supports the Bill. Thank you.
Chairperson, the Adjustments Appropriation Bill makes provision for an additional R11,5 billion of state spending. This includes R654 million for expenditure resulting from fires, floods and other adverse weather conditions, and R400 million for the prevention and treatment of multidrug resistant tuberculosis. Clearly, these amounts are to be supported.
There is another amount of R744 million to support the restructuring of SA Airways, and R1,9 billion for the higher-than-budgeted cost of the 2007 Public Service salary agreement. The ACDP also wishes to express concerns regarding the roll-over of R4,1 billion, as this clearly reflects negatively on the state's ability to spend funds.
We must also bear in mind that this Adjustments Appropriation Bill is in addition to the Special Adjustments Appropriation Bill of 5 September, which recommended additional spending of R5,2 billion, for urgent requirements.
Notwithstanding the above, the ACDP will, however, support the Adjustments Appropriation Bill as it is drafted in accordance with the provisions of the Public Finance Management Act. I thank you.
Chairperson, in view of adjustments made to budget allocations of the various departments, the MF notes that a variety of reasons may exist for roll-overs, extra funding, underspending, etc. We also note that unlike at budget time, reasons for these adjustments are not provided. However, we do hope that these adjustments are used effectively to enhance delivery and progress.
The MF calls on all departments to address issues that hamper their spending. Allocations are made on the basis of need, priority and policy. We have annually experienced roll-overs that have been complicated by issues such as vacant posts in departments. We need to address the shortfalls as they are keeping us from going forward.
Allocations are also indicative of government priorities. In view of the adjustments and the intentions of various departments that were voiced earlier this year, the MF supports the Adjustments Appropriation Bill. I thank you.
Chairperson, a feature that, hopefully, will force departments to pay more attention to how they administer funds is the threat of withholding or withdrawing funds if they fail to use their budget allocations.
It is unacceptable that municipalities have failed to use R817,740 million at their disposal, and the penalty for such slackness is the withdrawing of their finances.
There is clearly a capacity deficit in our municipal structures and it would appear that Project Consolidate is only a partial relief intervention strategy. We should look more carefully at increasing the skills capacity of our municipalities and impose further penalties on these structures should they fail to meet a specific skills regime.
With regard to the phasing out of the bucket toilet system, the added R200 million will add to the quality of life and the sanitation and health care of our communities. Despite our reservations about the inability of departments to spend their funds, the FD will support the Adjustments Appropriation Bill. I thank you.
Before the hon member makes her speech, let me say that this is her maiden speech, and we always make people making their maiden speeches feel welcome. I read somewhere that when Sir Winston Churchill made his maiden speech in the House of Commons, because he was somewhat shaky, after the maiden speech, he said, when asked, ``Well, it was terrible, but it was a delicious experience''. [Laughter.] I hope you are going to make it just delicious, not terrible!
Thank you, Chairperson. Hon members, finances of the public in the hands of the state are a potent weapon to fight poverty and underdevelopment. The ANC-led government has been entrusted with people's treasures to be used effectively for social progress. Underpinning the utilisation of the Budget is the essence of the Freedom Charter, especially the clause proclaiming the sharing of the country's wealth. Understanding that the majority of South Africans live below the poverty line, our Budget endeavours to address this by being skewed towards expenditure on social services.
Since we are a developmental state, we project and commit our state to play a role in growing the economy so that we deal with the scourge of unemployment. To this extent, this Adjustments Appropriation Bill becomes paramount to ensure that all branches of government do not overspend or underspend what is allocated to them.
A total of R387 million is requested by the Department of Provincial and Local Government for unforeseeable and unavoidable expenditure. This allocation will assist in the eradication of bucket toilets and help municipalities in KwaZulu-Natal that experienced damages caused by storms and tidal surges.
We hope this allocation will go a long way in meeting our target in relation to the bucket toilet system. In this regard, we encourage provincial governments and municipalities to plan properly so as to avoid unnecessary delays.
An amount of R50 million is requested by the Department of Health to deal with unavoidable expenditure arising from the higher-than-projected take-up of HIV/Aids treatment in the Western Cape, while the Department of Agriculture is requesting R400 million for the unforeseeable expenditure arising from disasters and combating swine fever.
The Department of Water Affairs and Forestry is requesting R161,9 million for unforeseeable expenditure arising from flood damage repairs in a number of areas. The Department of Transport is requesting R300 million for unavoidable expenditure for bus subsidies. These subsidies are meant to cover increases arising from the growing demand for and use of public transport.
Parliament is requested by the Department of Home Affairs to agree to a roll-over of R206 million. The amount is supposed to deal with the repair and maintenance programme for the department's offices. Part of the money is to be allocated to quick win projects as part of the department's turnaround strategy and the Home Affairs National Identification System's technology rehabilitation.
The Department of the Public Service and Administration is requesting that R12,5 million be rolled-over from 2006-07 to 2007-08 for the Global Forum Five on Fighting Corruption and Safeguarding Integrity. Part of the money will be allocated to completing the impact appraisal of the National Anti- Corruption Framework Project.
The SA Management Development Institute is requesting that R60 million be rolled over from 2006-07 to 2007-08. This money will be used to intensify and broaden the induction and orientation programmes of the institute. This is in line with our Reconstruction and Development Programme of building the capacity of the state.
The Department of Education is requesting that R195,8 million be rolled over from 2006-07 to 2007-08. The money is allocated to address the following: the early childhood development programme; HIV/Aids conditional grants; the recapitalisation of further education and training colleges; security in schools; the National Schools Nutrition Programme; and printing and distribution of the life orientation curriculum.
The Department of Minerals and Energy is requesting that R9 million be rolled over from 2006-07. This amount is allocated for rehabilitation and environmental management projects. Part of the money is for investigating fuel and gas retail margins as well as fuel price smoothing techniques.
The ANC supports this Adjustments Appropriation Bill, and trusts that the portfolio committees will ensure that moneys requested are spent accordingly. Thank you. [Applause.]
Chairperson, I'd like to express appreciation to all parties. I want to pay special tribute to the hon Sibhidla, who has clearly enriched the work of the Portfolio Committee on Finance. It was a very thorough maiden speech, so we want to express our appreciation for that. But Parliament is speaking on this issue.
I don't think there's much for me to say - Parliament must be heard on these issues. We've placed the facts before you and it's in the hands of Parliament, so, siyabonga kakhulu, Sihlalo. [Ihlombe.] [... thank you very much, Chairperson. [Applause.]]
Debate concluded.
Bill read a first time.