I thank you, Chairperson. The answer is that there were no penalty clauses written into the contractual agreement signed between the South African government and arms deal companies relating to job creation, direct or otherwise.
The penalties are applicable to obligations that were defined in terms of investments and sales, both locally and for exports. The job creation targets were estimates based on the expected outcomes, from the fulfilment of contractual obligations defined in these terms. Moreover, the estimated jobs include direct and indirect jobs and are cumulative in nature.
There is no contractual recourse available to the department should the 65 000 job target not be realised. The reality, however, is that this number has been exceeded. To repeat, the 65 000 jobs expected from the implementation of the National Industrial Participation Programme, NIPP, obligation, are both direct and indirect and cumulative in nature. The latest assessment conducted in 2009 on the NIPP reports that 26 442 direct jobs were created, compared to a target for direct jobs of 19 000, and that the total number of jobs - direct and indirect and cumulative in nature - since the NIPP started was 85 000 jobs of which 73 000 were attributable to the arms deal, compared to the 65 000 target. Thank you.
Chairperson, thank you. the Minister is correct in pointing out that the NIPP performance review claims that 26 000 jobs were created by arms deal offsets, but on 9 March 1999 the Minister of Defence, Joe Modise, stood before this House and promised the creation of 65 000 jobs from the arms deal offsets. He did not stand here and promise that the offsets would create 26 000 jobs, which would then stimulate further economic activity and which would then encourage additional job creation.
Will the Minister admit, therefore, that the arms deal was sold to the South African public on the strength of a promise that has not been kept? If so, what steps will he take against defaulting contractors?
Chairperson, there were a number of reports that emerged from the investigation that was conducted some years ago. One on the trade and industry looked at this matter in some detail, and the fact of the matter, as I said before, is that the job target totals were both direct and indirect and were cumulative. So, they included the jobs in the construction of the plant and the jobs created in the plants thereafter. That is how they were constructed. The total, then, of all that together was 65 000 jobs, as I said.
When we used the same methodology again, to see what was achieved, we have achieved it. And I think that is to say simply that part of the value for money of the arms deal was that we should achieve the obligations of the obligors, and I think we have done that. Whether the NIPP programme needs to be refined and made much more explicit in terms of job targets, I think, is something to work towards in the future. It certainly would be a focus for the refinement and the improvement of the National Industrial Participation Programme. Thank you.
Chairperson, thank you, Minister, for your comprehensive reply. So our new industrial policy programme seeks different ways to grow our economic base. Hon Minister, what could be done through the NIPP to indeed build the required capacity? Thank you.
Chairperson, member, thank you very much for that question. That is exactly the point I was trying to make at the end of my response to Mr Harris.
What we are doing is part of our comprehensive review of procurement in making sure that procurement becomes a tool for industrial development and to review the NIPP. At the moment, what is happening is that you import $10 million and you are supposed to negotiate an offset to the value of about one third of it.
The problem has been that it is not clear whether it is applicable to municipal government in the provinces or just the national government. I think that, in so far as an arms deal is concerned, we have achieved, broadly speaking, what was required at that particular point. But we need to be able to achieve much more from procurement by way of encouraging local industrial development and the reform of the NIPP as part of procurement to get much more local industrial development. This is one of the major objectives of the Industrial Policy Action Plan, and the work on that has proceeded to a quite advanced stage. Thank you.
Chairperson, my question is: Does the government have a standard approach to measure a number of jobs they intend to create, or can we simply inflate any real job target they have announced by around 3,5% to come up with this indirect job target, which somehow approximates a number of jobs created? Thank you.
I think that the indirect jobs do reflect the reality that if you create a job through a project it also spends our purchasing power, which creates other jobs so that that multiplier has a real effect. However, I do think from now onwards we are going to be much more explicit instead of, as in the past, defining obligations simply in terms of investments, exports and things of that sort so that we get a foreground of what we expect to achieve in terms of job creation. And I think that direct job creation is where we should really be focusing our attention. So far, if people would pay attention to the way it was constructed in the past and did not look at the detail, well, I am afraid that's their fault.
Hon Chairperson, hon Minister, one of the strategic objectives of this government is to create decent work, and one of the pillars of the National Industrial Participation Programme is the transfer of skills and technology from the countries where procurement of more US dollars has been done. So, in the past 10 years of the NIPP, was there any significant transfer of skills or technology to this country? Thank you.
Chairperson, yes, there was a transfer, there were investments. I think that one of the issues we want to address in refining the NIPP was the obligations that were required in virtually every sector. So, if you were an arms manufacturer, your obligations could be in virtually any other industry, and that is what happened. And I think what we want to do is to make the obligations much closer to the area of expertise of the company which is incurring the obligations and in that way, by also refining, as I said, to bring the job targets to the fore. We want to make this NIPP part of our overall attempts to get the industrial development of procurement programme. Thank you.
Particulars regarding distribution of agricultural machinery, equipment and other items to persons or groups engaged in agricultural activities 248. Mrs R E Nyalungu (ANC) asked the Minister of Agriculture, Forestry and Fisheries:
Whether her department distributed any (a) tractors, (b) agricultural machinery and equipment, (c) seeds, (d) fertiliser and (e) diesel to (i) persons or (ii) groups engaged in agricultural activities; if not, why not, in each case; if so, in each case, what (aa) were the criteria used to determine the beneficiary and (bb) are the further relevant details? NO3842E
The MINISTER OF AGRICULTURE, FORESTRY AND FISHERIES: Hon Chairperson, the Department of Agriculture, Forestry and Fisheries distributed tractors and agricultural machinery and equipment to the Mpumalanga and KwaZulu-Natal provinces to increase the capacity of the various projects and programmes implemented in these provinces to address the mechanisation needs of household food security and household food produces for subsistence farming.
The department has not distributed seeds, fertilisers and diesel because this is covered and budgeted for through the various support programmes implemented by provinces. So, items like seeds, fertilisers and diesel have been provided for by the provincial departments of agriculture.
The equipment will be deployed to target areas identified by the President where medium to high-potential agricultural land is available and where available land allocated to households is not cultivated. The tractors and implements will be available to groups on common land and to individuals with small land areas.
Operation and maintenance costs will be budgeted for through provincial budgets, as well as through the national budget. The equipment targets those that are not able to afford mechanisation equipment and do not have the ability to pay for contractors to cultivate their land. Due to the small size of plots, the mechanisation cost is considerably higher than at commercial farms. The other seven provinces will receive equipment during the following financial year.
The criteria used to allocate equipment are determined by various programmes in each province. The aim of all these programmes is to develop rural communities and to improve household food security locally. I thank you.
Chairperson, arising from the reply of the hon Minister, is there any liaison with provincial departments regarding the distribution of seeds, diesel and fertiliser? Without the two tiers of the department working together, tilling land will not be meaningful if these ingredients have not been supplied. When exactly, Minister, does the department hope to make equipment available in the other seven provinces?
The MINISTER OF AGRICULTURE, FORESTRY AND FISHERIES: Chairperson, hon member Nyalunga, yes, we are working with provincial departments to supply seeds, fertiliser, as well as diesel. We are also working with the Department of Higher Education, as well as the sector education and training authorities, Setas, in particular, to look at the licensing of farmers so that they have the necessary licenses to operate tractors.
The development of programmes in the remaining seven provinces will happen, as we are consistently evaluating what is happening in the first two provinces that we have supplied with these things. Before we do a roll-out or unfold this programme to the rest of the country, we have to correct the mistakes we made in the first two provinces. All of the mistakes we made were on the co-ordination of the supply of equipment versus that of the seeds and fertiliser, as you have correctly stated. I thank you.
Chairperson, thank you, Minister, we just hope that these were not expensive mistakes that were made, when the seeds and things were distributed. I am aware that about R15 million was spent in KwaZulu-Natal in the acquisition of seeds and fertiliser. In most of the areas, these were given to beneficiaries who are not agriculturally productive areas. So, this was really a waste of money, largely a waste of taxpayers' money.
But what I would like to know, hon Minister, is the following: Can you, at some stage, provide us with information on where in KwaZulu-Natal these tractors were distributed and whether there is a contractual arrangement between the recipients and government? Are the recipients individuals or co- operatives? What kind of maintenance plan is there to ensure that this equipment can be handed down over generations? Thank you.
The MINISTER OF AGRICULTURE, FORESTRY AND FISHERIES: Chairperson, I do appreciate that the hon member does not expect me to give that information immediately and that the question will be for a written response. I thank you.
Chairperson, hon Minister, does the department have an idea as to how many of the tractors delivered are replacements for previous issues and what the total cost was? Could you elaborate on the measures that are in place to monitor these sufficiently trained operators and to ensure that the process is sustainable? Thank you.
The MINISTER OF AGRICULTURE, FORESTRY AND FISHERIES: Thank you very much, hon Chairperson. I do appreciate the questions. But these are statistics which I do not have at hand. I shall provide them in written form. Thank you.
Particulars regarding guided tourism planning in local government and rural areas
252. Mrs J M Maluleke (ANC) asked the Minister of Tourism:
Whether his department has guided tourism planning in the local government and rural areas (details furnished); if not, why not; if so, (a) which municipalities have been reached and (b) what are the further relevant details? NO3852E
Chairperson, yes, the department has developed a toolkit for tourism planning in the local government. Workshops were held in all provinces, where district municipalities were invited and participated. It must be pointed out that the document received overwhelming support from various municipalities.
The interactive workshops focused on the following toolkit themes: the importance of prioritising tourism in the local government sphere; clarifying municipalities' role in tourism at the local government level; success factors; how to do strategic planning; and, by extension, where to start when planning for tourism.
Based on the lessons learned during our interactions, the department intends to focus on provinces and municipalities that are predominantly rural in nature. These future inductions will include dissecting the toolkit and practically highlighting possible first steps in planning for tourism. Interestingly, the department has been invited by the Eastern Cape municipalities in late November this year to kick-start this process. Thank you.
Thank you, Chairperson, and thank you, Deputy Minister, for your informative response. As you said in your response, you have interacted with provinces and district municipalities. Do you have plans to interact with local travel authorities, as they are the custodians of the land in rural areas? Thanks.
Thank you, Chairperson. As the hon member would recall, traditional leaders form part of municipalities. So, they participated in the process of consultation. They did this, of course, with the understanding of their role in rural development. This consideration will be prioritised in the upcoming interactions.
Chairperson, with all due respect, Minister, if that was a comprehensive response, I am not sure I would like to hear an evasive one. You are making reference to toolkits, dissecting the toolkits and workshops, yet there is very low support for rural tourism and local development.
In the capital city of KwaZulu-Natal, Pietermaritzburg, there is a pitiful amount of R800 000 to promote the city, difficult as it is. We know that you have cut up to R165 million from SA Tourism over the Medium-Term Expenditure Framework period, and that constitutes 60% of the budget. In fact, your department is critically underfunded. It cannot compete with our long-haul competitors, and we are losing ground.
Is it not true, Deputy Minister, that you actually cannot do enough to support local government and rural tourism because so much money is spent propping up state-owned enterprises and parastatals? We are going to take a very long time before we can actually do what we should do: support tourism in these areas and start alleviating poverty where it is needed most.
Thank you very much, Chairperson. Mr Krumbock has been asking this question in various ways throughout the time I have been in this Parliament. But it is important to say that this is a process in which we seek to assist the local government in their planning. The process so far has reached a situation where we have interacted with all the relevant stakeholders.
Moving forward, the plan that assists municipalities is under way. In subsequent questions, perhaps as part of the questions that have been asked, we will be highlighting exactly what our programme and strategy is, as the department, in enhancing domestic tourism. This would then focus on rural areas or rural municipalities in assisting them, as the department - aside from what SA Tourism is doing, which is also tackling issues of domestic tourism. Thank you.
Chairperson, hon Deputy Minister, it is a well-known fact that most municipalities lack critical skills and capacity. My question, therefore, is whether municipalities will manage with the new functions bestowed on them by the department. And again, what role will the department play to close the gap with regard to the capability levels between national, provincial and local government? I thank you.
Chairperson, may I start by saying that these are not new functions that are being given to municipalities but part of the functions of municipalities. What the national department is doing is to work with municipalities and assist them in the capacities that are not necessarily available to plan and develop programmes around tourism. Our department is also setting up a unit within itself that is going to focus on assisting municipalities around this matter. Thank you.
Particulars regarding ability of Sentech to meet its financial obligations
259. Mrs N W A Michael (DA) asked the Minister of Communications:
(1) Whether any measures have been put in place to ensure that Sentech is able to meet its financial obligations; if not, why not; if so, what are the relevant details;
(2) whether any application has been made to the National Treasury for bail-out funding for Sentech; if not, what is the position in this regard; if so, what is the anticipated amount for which Sentech will apply;
(3) whether any application has been made to the National Treasury for a government loan for Sentech; if not, what is the position in this regard; if so, what is the anticipated amount for which Sentech will apply? NO3863E
Hon Chairperson, I want to respond to hon Michael's question. The first part is whether there were any measures: The answer is yes. Measures have been put in place to ensure that Sensor technology, Sentech, is able to meet its financial obligations. Sentech's business plan for 2010-11 was revised by its new board of directors during the first quarter of the current financial year. The business plan was approved by the Department of Communications in June 2010 and was presented to Parliament in October 2010.
This plan recognises that unless specific cash management measures were introduced the company would not be in a position to meet its operational financial obligations by November 2010. The business plan was founded on the urgent need to restore the sustainability of the company, in order to avoid any reliance on the shareholder to provide additional funding for the company's operational expenditure.
In order to restore the sustainability of the company and to avoid any reliance on the shareholder to provide funding for the company, a number of stabilisation activities were implemented by both the executive management and the board itself.
These activities particularly focused on achieving financial cash flow stability through increasing the collections against the billings and minimising actual expenditure and additional commitments for spending. In support of this, the company also undertook additional internal mechanisms, including improvements in internal controls and reviewed its business processes and policies.
As a result of the execution of these measures, we now can report that the company's cash flow has improved significantly over the last two quarters. It is clear from the figures available from the company. The company has been able to turn around its cash flow position significantly and as a result, it is now able to meet its operational financial obligations and it is projected to continue to do so for the remainder of the financial year.
Chairperson, hon Minister, following the receipt of Sentech's financial statements and its revelation of its continued financial ill health, can you tell us if financial experts have been called in to assist Sentech in their attempted financial turnaround? If so, who are they? If not, will such experts be called in to assist Sentech in the future?
Chairperson, I do not have that information as to whether the experts have been called in available at this stage, but I am reliably informed that the measures that were executed were measures undertaken by the board.
May I also add the part which I omitted in the earlier part of the question? There were two parts to the question. That was whether there was any application made to National Treasury for bail-out funding. The answer to that is no. The last part of the question was whether Sentech made any applications to the National Treasury for a government loan, and the answer is no.
Chairperson, Minister, the former Minister and director- general visited Brazil and announced an about-turn on the European or Digital Video Broadcasting-Terrestrial, DVB-T, standards for digital migration. This about-turn of standards will, without doubt, also place additional strain on Sentech's financial viability. How should the institution protect their more than R300 million investment in Digital Data Transmitter, DDT, networks for European standards and how will they fund the prolonged dual elimination period that the standards issue has caused? How should the emerging manufacturers overcome this about-turn? Can the Minister please help us and advise us as to how he would handle this matter? Thank you.
Chairperson, hon Kilian has sneaked in a question on the standards issue which is also on the Order Paper in question 260. Let me just say that the matter of standards is open at the moment. It is still under discussion. We are certainly awaiting a report the from Southern African Development Community, SADC, which is meeting at the end of November, I am told. The SADC community has instituted a special task force to interrogate what might be the best and appropriate standards for the region.
All the Ministers in the SADC countries are awaiting the outcome of that particular report, which should be towards the end of November. That would give us an indication of what the region should do. Until then, we are continuing to assess and review what the position is, but I think we are all guided by the portfolio committees in Parliament that have instructed us to be very careful and assess the implications of the review. Should the review recommend alternative standards to the current policy, we will have to weigh these very carefully and come back and look at how we deal with them.
Right now, we have a policy, we have a review in place and we are awaiting the view of the region on all of this. Clearly, there are several lobbies in the market place as to what we should do. The emerging manufacturers are one such lobby, and they would have a preference for a particular standard. There are others that are saying, developmentally, we are counselled to have different kinds of standards, but at the end of the day, it is what is in the best national interest of this country that will determine how we move. Thank you.
Hon members, the time allocated for questions has expired. Outstanding replies received will be printed in the Hansard.
See also QUESTIONS AND REPLIES.