Chairperson, hon Deputy Minister, hon Ministers in attendance, hon members, chairpersons and chief executive officers of our state-owned companies, the director-general and distinguished guests, we are honoured today to present our Budget Vote for 2012-13 to this Extended Public Committee. We are doing so at a time when the global economic outlook is a major cause for concern, resulting in a great deal of uncertainty. Our response, though, in this Budget Vote is that we have good reason to be confident about the future, based in part on the investment programmes of our state-owned companies, SOCs, the aim of which is to get South Africa working, growing and moving.
In this presentation, we shall report back on some of our key achievements for the previous financial year, broadly outline the steps we have taken to bolster our shareholder management function and governance framework, and detail our plans for the infrastructure, aviation and manufacturing programmes. As expected, the Deputy Minister will give further details on some of our achievements in the areas delegated to him, as well as provincial co-ordination.
The investment programmes of our SOCs are dramatically transforming the South African economic landscape. By 2020, an additional 11 719 MW will have been added to the electricity system and 6 596 km of transmission network installed to support security of supply. Existing logistics corridors will be expanded upon, and new corridors will have been established. A total of 1 317 new locomotives and 25 000 new wagons will have been procured, and procured in a manner that puts in place a world- class, export-oriented, rail manufacturing sector. A total of 6 405 km of rail will have been replaced for the general freight, coal and ore lines, increasing the rail network capacity by 149,7 million tons, and 13 125 km of fibre optic cable would have been refurbished and strengthened to ensure carrier grade status. Our broadband network would have been expanded to include metros and underserviced areas.
Last year, I announced a new vision for the department, the key elements of which included changes in the way SOCs plan, fund and procure their investment programmes. The Transnet Market Demand Strategy is a concrete response to this new vision in that the company has expanded its capital expenditure framework from R110 billion over five years to R300 billion over seven years.
Critical in this strategy is that 55% of the capital expenditure will be investments in new logistics capacity, which goes beyond the predominant focus on maintenance of the previous capital expenditure plans. An amount of R200 billion of the funding will come from retained earnings while the rest will be raised in the market. Quite clearly, this massive capacity growth should unlock pent-up demand for logistics capacity and serve as a much-needed stimulus to growth and job creation. Over the next Medium-Term Expenditure Framework, MTEF, period, Transnet will spend R107 billion, with R31 billion budgeted for this financial year. Transnet's total contribution to employment is expected to increase by 54,8%, from 368 450 in 2011-12 to 570 263 jobs in 2018-19.
In the next quarter, Transnet will implement a seven-year locomotive fleet procurement of unprecedented scale in South Africa's history, amounting to approximately R35 billion for 1 064 locomotives. The Durban dig-out port, at a cost of over R100 billion, will fundamentally alter the logistics landscape of the region. A project of this scale will only be possible in partnership with the private sector, and we have already started developing a relevant implementation plan.
Our vision envisages a relationship between our SOCs and their customers that drives investment and enhances our national competitiveness, particularly in sectors identified as important in our industrial policy and the New Growth Path. In pursuit of this, we are establishing project- based forums between SOCs and key customer sectors. For example, we have established an automotive forum that will focus on improving operational efficiencies on rail and at the ports and on increasing investment in specialised automotive-related rail and port capacity, as well as on ensuring security of electricity supply.
Eskom continues to invest in building the required infrastructure to ensure adequate electricity supply. The funding plan to 2017 has been finalised, and about 75% of the funding has been secured. Over the MTEF period, Eskom will spend R201,6 billion, R65 billion of which is budgeted for this financial year. As the shareholder representative, we have increased Eskom's domestic borrowing programme from R65 billion to R100 billion to fund the approved build programme. During the 2011-12 financial year, Eskom was able to secure a total of $615 million in funding for its renewable energy programmes from the African Development Bank, the Clean Technology Fund and the World Bank. During this year, we will both commence the construction of the 100 MW Sere Wind Farm and conclude the feasibility study for the 100 MW Concentrated Solar Power project. In the current financial year, 260 MW is to be added to the system, with a further 894 MW added next year, when we include the first unit of Medupi, and 915 km of transmission network will be installed this year.
Owing to severely constrained generation capacity, we are implementing a public awareness campaign, 49M, which is a clarion call to all 49 million South Africans to do their part in saving electricity. Eskom has undertaken a number of interventions to ensure security of supply, which include enhancing reliability from electricity imports, especially from Cahora Bassa, procuring more than 370 MW from the medium-term power purchase programme, procuring about 400 MW additional generation capacity from municipalities, and the accelerated energy efficiency and demand-side management programmes. I have approved a strategy to keep the lights on which consists of, amongst other things, the voluntary energy conservation scheme involving Eskom's big customers, the short-term power buy-back programme to secure more than 1 000 MW of power saving from Eskom's customers, and the energy saving plan signed with all the SOCs in our portfolio. In the midst of the constraints we have been experiencing, I am delighted to announce that Eskom will in June this year conduct a pressure testing exercise on the first boiler at Medupi, which will be a key milestone of the process to ensure delivery of the unit by 2013.
Over the last year, the department has focused on bringing stability to Broadband Infraco's management, board and business processes. Key appointments, including that of the chief executive officer, have been made. The audit of problem areas has been finalised and remedial actions taken. I am pleased to announce that the West Africa Cable System, WACS, international connectivity became operational on 11 May 2012, thus increasing bandwidth capacity, providing for improved integration of the 10 African countries that are WACS customers and enabling the further reduction of the cost to communicate.
Over the MTEF period, Broadband Infraco's capital expenditure budget is around R3,1 billion, with R780 million budgeted for the 2012-13 financial year. Broadband Infraco is now well positioned to assume its role as a major player in the information communication and technology, ICT, sector. As a carrier of carriers, Broadband Infraco will work aggressively to promote competition in the services sector, by making critical infrastructure available to electronic communication services licensees. Further, as a wholesaler of ICT infrastructure, Broadband Infraco is well positioned to house and administer the scarce radio frequency spectrum currently under discussion. For interventions such as Broadband Infraco to succeed, it is necessary that government and its agencies be enlisted as major tenants on its network in order to enable the roll-out of the e- governance strategy and extend broadband infrastructure to underserviced areas. The department and Broadband Infraco are working on a detailed funding plan which aims to address the current cash position of the company.
In furtherance of the infrastructure roll-out plans announced by the President, and in order to ensure that I exercise prudent oversight over the programmes which shall be implemented by the SOCs in our portfolio, the department shall establish an integrated project office which will provide enhanced monitoring and reporting of progress and risks relating to the implementation of the programmes and will assist the SOCs in mobilising support from relevant government departments and agencies for the removal of bottlenecks.
For us to get South Africa working and growing, it is imperative that our SOCs lead in efforts to reduce the cost of doing business without compromising their financial sustainability. In response to the President's call for a lower electricity price increase this financial year, the department and Eskom successfully developed proposals to reduce the increase from 25% to 16%, effectively giving back more than R11 billion to South African consumers. Beyond this, the future price path will be determined in the context of the third multi-year price determination period, MYPD 3. In addition, the President further announced a R1 billion port tariff rebate for manufactured exports. In this regard, I am delighted to announce that the Ports Authority has already processed tariff rebates of R52,9 million against qualifying export cargos since 1 April 2012.
Aviation is well placed to continue its strong support of South Africa's trade, business and leisure tourism objectives. Together with SA Airways, SAA, and SA Express, SAX, we have drafted an African aviation strategy, which is to be submitted to Cabinet in June, and is aimed at focusing the state-owned airlines on opportunities on the continent and on promoting regional integration. The fact is that Africa must constitute the primary market and route for South Africa airlines. Given our location on the Southern tip of the African continent, and the extremely volatile nature of the airline industry, I believe that it is critical that we sustain a national flag-carrier to ensure security of air transport to our country. The damage both to business and tourism of unreliable air travel to South Africa will be immeasurable.
The dual challenge of a depressed global economy and high fuel prices means that shareholder support for SAA, in particular, to procure a modern and fuel-efficient fleet is vital, if it is to remain competitive. The substance of such support is the subject of an ongoing discussion between the department, National Treasury and SAA. However, there is much to celebrate in SAA. We launched the Johannesburg-Beijing route on 31 January 2012, which will contribute significantly to establishing South Africa as an aviation hub between South America and China, linking three of the five Brics countries and connecting three continents. We are delighted to announce that, in line with our African aviation strategy, we have introduced five new destinations in Africa since October 2011, with Cotonou in Benin commencing operation as of 17 May 2012, tomorrow.
We are working with the SA Express board to address the internal control challenges that the company is currently facing to restore public confidence in the company. Notwithstanding the above, the airline has launched three new domestic routes and has further established a base at King Shaka International Airport from which the airline will play a catalytic role in continental trade and economic integration, supporting the Dube Trade Port Industrial Development Zone as well.
Denel's core defence entities are breaking even, and there is a projected improvement in financial performance, programme delivery and export market penetration. During 2011-12, Denel secured orders of over R5 billion that will be delivered over the next five years. The department, together with National Treasury, is exploring various sustainable funding mechanisms for Denel, cognisant of the fact that a complete turnaround of Denel will not only depend on funding and new revenue streams, but also on improvements in operational efficiency, as well as enhanced alignment with the Department of Defence and Military Veterans. With regard to Denel Aerostructures, the renegotiation of the A400M contract with Airbus is progressing well, which will put the company on a firmer financial footing. The R700 million capitalisation of Denel Aerostructures announced by the Minister of Finance will allow the company to prepare itself for the serial manufacturing phase of the A400M programme starting in 2012-13. Furthermore, Denel Aviation will deliver the last fully certified and combat-ready Rooivalk helicopters to the SA Air Force during 2012, making this the first helicopter to be designed, built, qualified and fully certified an the African continent. [Applause.] The department welcomes the publication of the Defence Review 2012 draft document. Together with Denel, the department will make submissions to the review committee.
Our SOCs have a critical role to play in driving regional integration. Consequently, during the course of this financial year, we intend developing and announcing an integrated Africa expansion strategy, which will seek to leverage our SOC capabilities and competitive advantages. One of the critical pillars of the department's vision is to drive transformation. This entails initiatives relating to procurement, employment equity, skills development and broad-based black economic empowerment. In this regard, as an example of the progress being made by our SOCs, in February this year Transnet appointed Sizwe Ntsaluba Gobodo as the company's external auditors for the next five years, representing the single largest audit appointment of a South African black-owned auditing practice. However, much still remains to be done to develop a more robust transformation programme. Accordingly, the department will host an SOC transformation summit in July to align the SOC transformation programmes with our vision. Policies, processes and related systems have been revised to ensure that supplier development concerns are integrated into all significant procurements.
Thus far, Eskom has leveraged commitments of over R1,2 billion in investment in manufacturing capacity by suppliers, R644 million of which has already been invested. Transnet has entered into contracts valued at R14 billion, containing supplier development commitments of R5,4 billion, of which R2,9 billion have already been delivered to date. During the second half of this year, the department will also be hosting a supplier development summit where comprehensive details of Eskom and Transnet's procurement and supplier development plans for the next five years will be shared with industry.
Furthermore, our SOCs are playing a leadership role in the production of scarce and critical skills, both through internal training and through mobilising our suppliers to play their role. Our SOCs are committed to producing skills to meet both their needs and the requirements of a growing economy. In total, more than 15 000 learners were trained in various scarce and critical skills learning programmes within the SOCs in our portfolio in 2011-12. This year, an additional 5 500 learners will be enrolled. In addition, Eskom has leveraged training of 6 130 learners as part of supplier contractual obligations and the building of power stations, with some getting on-the-job experience abroad. Eskom's training budget has increased from R998 million in 2011-12 to R1,2 billion in 2012-13, while Transnet's has increased from R670 million to R870 million. In terms of Transnet's Market Demand Strategy, about R7,7 billion is budgeted for training, which translates to about R1,1 billion per year over seven years.
All SOC training facilities are being optimised to produce highly specialised skills for the industries in which they operate. In collaboration with the Department of Higher Education and Training, and as part of strengthening the Further Education and Training colleges, SAA signed a memorandum of understanding with Ekurhuleni West College to train youth in aviation skills. The department also launched the Youth Economic Participation Programme in June 2011 to systematically mainstream participation of youth in the economy within SOC business. A forum will be established between the department, the SOCs and development finance institutions to provide systematic support to young entrepreneurs, to enable them to access available opportunities.
The Companies Act, Act 71 of 2008, came into effect over the past year, and the department has made great strides in strengthening the governance of our SOCs in this context. However, since SOCs are not ordinary commercial enterprises in that they also have a mandate to achieve longer-term strategic economic objectives, a key responsibility of the department's annual activity is focused on the identification and design of improvements in the SOC oversight and governance with the objective of both securing SOC financial integrity and stimulating improved national economic performance. This includes making inputs on a range of governance processes for SOCs and implementing initiatives that leverage the assets, activities and capacities of SOCs for the benefit of the economy as a whole.
Thus far, we have developed innovative approaches and comprehensive guidelines to codify and harmonise shareholder management practices across the SOCs within our portfolio. In view of the expanding oversight role of the department and the increased need strategically to guide the SOCs investment programmes, we have conducted a review of the organisational structure and capacity of the department. This was to close the gap between the department's expanded oversight responsibilities and the resources available to it to execute its mandate. Arising from this review, we have reconfigured certain branches and created new divisions, which are currently being staffed within existing resource constraints.
Quite clearly, in many countries, as well as in both public and private sector companies, the issue of the remuneration of both executive and nonexecutive directors has assumed prominence. The benefit of this review has encompassed not only the individual needs of the SOCs, but also the policies of national government, as well as the department's shareholder expectations. We are creating a new remuneration model that is fair and transparent and can be consistently applied by all the SOCs within the department's portfolio. Aware of the constraints to the SOCs and the potential risks that the decision may hold for the boards and their chief executive officers, we shall strive to finalise the framework as speedily as possible.
Working with the SOCs, in 2011 the department developed a strategic framework to guide the SOCs in their responses to the challenge of climate change. Some of our SOCs will soon be announcing their carbon footprints, and certain management incentives have already been aligned with energy efficiency and reduced carbon emissions. The World Wildlife Fund has been appointed as our partner in developing the SOC positions and strategies relating to the framework. What is clear is that the SOCs in our portfolio are in the process of transforming the economic landscape of our country and, through their investment process and the resultant additional capacity, they are producing a myriad of new business opportunities for SOC suppliers, customers and other stakeholders. We can already see the private sector begin to engage with these opportunities, a process that I believe will gather considerable momentum resulting in increased growth and employment.
In conclusion, I would like to thank the Deputy Minister, Dikobe Ben Martins, also known as Ben Martins, the director-general, Tshediso Matona, and all the deputy directors-general and staff of the department for their relentless support and tireless work, particularly as we worked hard to change the vision of the department. I would like to thank the interns in the Ministry sitting up there in the corner, Ms Tebatso Nelane, Ms Koketso Modjaji and Ms Kagiso Segage, and wish them well during their tenure in the department. [Applause.] I thank the chairpersons, chief executive officers and all staff of our SOCs for their commitment to fulfilling the difficult goals and targets we set them, particularly during this difficult economic climate. I thank the chairperson of the portfolio committee, hon Peter Maluleke, the hon members of the portfolio committee and my Cabinet colleagues for their support and regular wise counsel. I am humbled, therefore, to request - and I am taking my hands out of my pockets - the Extended Public Committee to support this budget of R1 249,07 million ... You know, Chair, that much. I thank you. [Laughter.] [Applause.]
That is certainly a lot, hon Minister. Thank you very much.
Hon Chairperson, hon Minister Gigaba, hon Deputy Minister Martins, hon members, director-general and staff in the Ministry and department, our distinguished guests in the gallery, I wish to dedicate this speech to one of our many gifted and talented students, a student whose intellect had earned her an honours degree in mathematics and mathematical statistics, who had already, at the young age of 23, received a science degree. Here, surely, we had amongst the best that our new democracy has produced, with the promise of playing a future role in the development of our country in the fields of maths and science. On a Thursday evening in April she was to have graduated at Rhodes University. Whilst her parents assembled at the graduation hall she lay dead in the bushes off Ngqura Road outside Motherwell, with multiple stab wounds to her young body. It is to the late Lelona Fufu and to her grieving family that I pay tribute in this speech.
As we celebrate the centenary year of the ANC, we are indeed reminded of how far we have come since the organisation was founded 100 years ago at a humble Wesleyan Church in Waaihoek, Mangaung. Not only are we celebrating with the entire African continent, but we are also preparing for an important event in June, the ANC national policy conference. This policy conference will have an impact far wider than the organisation of the ANC. [Interjections.] Government and its departments are awaiting the policy deliberations that will culminate in the 53rd National Conference of the ANC in December this year in Mangaung.
These policy discussions have major implications for the state-owned entities, both the commercial and the noncommercial state-owned entities. The policy discussions will ensure a common comprehensive policy framework that guides state-owned entities. The role and architecture of state-owned entities will come under discussion and are of importance and relevance to this debate. These discussions will provide strategic direction for economic transformation by taking into account the role of state-owned companies as drivers and agents of economic restructuring to advance the objectives required by the successful creation of a developmental state, as was directed by the 52nd National Conference of the ANC in 2007.
Key here, which is also the experience of this portfolio committee through its oversight work, is that policies must reinforce optimum alignment and co-ordinate, mandate and operate state-owned companies. And it is here that we have some of our biggest challenges. This means consciously understanding the broader objectives of a developmental state.
The broader aim is to restructure the economy in order to create decent job opportunities, improve the current disparities with respect to income distribution levels, enhance the quality of service delivery and address social justice concerns in an all-encompassing manner.
We must appreciate that state-owned companies were not created to maximise profits or incur losses, but rather their existence was for the purpose of driving the developmental agenda. The mandate is to achieve a balance between the required level of self-funding and undertaking developmental projects that the private sector would ordinarily not undertake.
This balance must ensure that the state-owned companies, which are tasked with costly development mandates, are strategically positioned to generate sufficient revenues to cover the costs associated with executing their respective, but interrelated, mandates. The efficient utilisation of the strength of state-owned companies must support and direct private sector investments to productive sectors of the economy to stimulate the manufacturing and industrialisation programmes.
The state has the duty and responsibility to direct national economic development through the mobilisation of domestic and foreign capital and other social capital formation initiatives or partnerships, to achieve the stated goals of what the theory of our struggle and national democratic revolution ultimately seeks to achieve, which is the function of a national democratic society, free of the socioeconomic fetters of the past and truly democratic, nonracial, nonsexist and prosperous in its functioning.
We state these points mindful of the fact that we conduct our work within the context of the current global economic environment, which is characterised by volatile, turbulent and uncertain global financial markets accompanied by a weak demand in the export of goods and services, due to the global economic recession. Notwithstanding this, state-owned companies must operate as powerful instruments of economic transformation. They must remain firmly within the control of the state in order to have a capacity that is capable of responding effectively and efficiently to the developmental agenda of the ANC government. As the ANC, our mandate is derived from a conference, which shapes how the governing party shapes policy for government.
On state-owned entities the 52nd National Conference of the ANC in 2007 resolved that the ANC and its government must build the capacity of the state in order to pursue objectives of a developmental state. It must ensure that while state-owned entities remain financially viable, their final responsibility is to support and lead in strategic government-led developmental objectives within the realm of a clearly defined public mandate of pursuing an overarching industrialisation programme.
In October 2010, the ANC government adopted the New Growth Path policy, a macro- and microeconomic framework of strategies and interventions founded on a restructuring of the South African economy to improve its performance in terms of labour absorption as well as the composition and rate of growth. Therefore, the overall objective and mandate of state-owned companies is to advance the socioeconomic and political agenda of the developmental state, to promote social cohesion and the creation of decent jobs, as well as skills and training development, in addition to other socioeconomic needs.
What are the challenges we face with regard to state-owned companies specifically? Our oversight as a committee has demonstrated that there are certain very specific challenges that need attention. The ANC policy conference will certainly apply its mind to these matters and we look forward, when we debate the next Budget Vote in 2013, to the beginnings of change. This, of course, has its own budgetary considerations and no government commits money to the budget unless there is policy clarity. In that respect, the budget for 2012-13 does in certain instances reflect this.
In outlining the challenges it would be necessary to give some context. We have state-owned companies that are complex in terms of the legislation that established them, governance, modus operandi, funding and systems layout. The nexus between policy and legislation, and often conflicting objectives, has resulted in a difference in operation. Therefore, a department like public enterprises seeks to develop an overarching strategy for the respective state-owned companies under its jurisdiction but runs into a matrix of implications, legislation, governance, funding, operational functioning, boards and a strong mix of the subjective element.
The difficulties of implementing an overarching strategy are acknowledged in the context of decentralised and multiple policy frameworks, legislation and oversight approaches, as is the case at the moment. Any restructuring plans should seek to embed an overarching strategy for state-owned companies that effectively respond to the developmental state agenda; create an enabling environment, which, amongst others, seeks to create a universal policy framework and legislation; and develop state capacity to effectively monitor and evaluate state-owned companies and, in addition, also address the relationship with other government departments and the private sector.
There is a natural conflict between commercial interests of companies and the interests of the developmental state. Several high profile examples are illustrative of the existent dichotomy between the public interest and state-owned companies' commercial interest. On the whole, state-owned companies have mixed results when they are assessed against the competing, but equally prioritised economic and sociopolitical objectives. Although most state-owned companies understand the sociopolitical objectives of the government, there is an element of self-regulation in the manner in which these objectives are managed, executed and reported.
On the surface, it would seem as if state-owned companies are meeting commercial objectives, as they are growing from a financial perspective, in terms of turnover and profit levels. However, these measures are narrow and do not take into account the monopolistic position of most state-owned companies and the wider gross domestic product, GDP, related measures, which would provide a better view of performance.
The sociopolitical objectives of the government leave a perception, in the operational minds of state-owned companies, that sociopolitical objectives encumber the achievement of commercial objectives. For this reason, it is necessary for the state, as a shareholder, to provide leadership and guidance on what should be done to maintain a healthy balance between sociopolitical and economic objectives, as well as ensuring that such processes can be monitored and evaluated with financial sustainability.
Before I come to the budget, may I conclude that central to the necessary changes that should happen are matters of governance, investment strategy, public partnership, and funding options, such as state funding versus cost recovery or direct capital markets. On the direct capital markets, this must absolutely be a last resort, going forward. We should avoid funding that comes with conditions, which may not be suitable to the strategy of the state and its national sovereignty.
On the Budget Vote itself, for the 2012-13 financial year, the department has been allocated R1,2 billion. Given the nature of the department, most of this budget is for transfers; R1,05 billion, for that matter, for two entities, Denel and Alexkor.
The major increase for this year in the budget means that the department is left with R199 million to fulfil its oversight responsibility over state- owned companies. In reality, the department has been allocated less than the amount it was allocated for the 2011-12 financial year, which was R353,3 million. Once we have settled matters of policy and vocation, this situation should change.
Our report to the National Assembly, on the strategic plan and budget of the department, expressed its concern over the continuously declining budget of the department. In reality, the department has been allocated just about R199 million - R154 million less than the allocation it had received last year.
The central concern is in the ability of the department to address challenges faced by the department, especially on human resource capacity; whilst it is expected to oversee more than R800 billion of the infrastructure build programme. The oversight of the department should be equal to the strategic and important nature of the role of state-owned companies. In addition, the absence of legislation that empowers the department to act against noncompliance by state-owned companies to enforce priorities of government means that we must ensure that draft legislation is tabled to give effect to this.
In conclusion, I would like to thank the Minister, Deputy Minister and staff in the Ministry and the department for the sound working relationship we had over the past year. We will certainly need more of this going forward, given the challenges we face. The ANC supports this Budget Vote. Thank you [Applause.].
Chairperson, Minister Gigaba and hon members, the Department of Public Enterprises has one primary role. It is there to support and promote economic efficiency within the state-owned companies. This is a mammoth task and the role of oversight that is played by the portfolio committee can and must never be underestimated.
I think it is fair to say that state-owned companies are required to develop comprehensive strategies and operational plans, to ensure a growth of customers and suppliers, which in turn boosts the country's economic growth and creates an environment conducive to job creation. The Department of Public Enterprises is not a service-oriented department. This department's performance involves overseeing state-owned companies' commercial objectives. I applaud the department for being one of only three that have received clean audit opinions.
To increase transparency and add to the success of the portfolio committee's oversight role, I would, however, like to suggest that we, in future, be allowed to access the Minister's service delivery agreement with the President and that the shareholders' contracts signed with various state-owned companies be made available to us. Of great concern is the fact that at present, shareholder contracts do not include either their target job creation or skills development targets. This means that, if a state-owned company does not meet job and skills development targets, it has no bearing on that company's performance for the year. This creates a massive problem for Parliament, as it overlooks immediate government objectives that are necessary for skills development and job creation.
The Minister of Finance, Mr Pravin Gordhan, stated the following, and I quote, "Government will strengthen financial management in the public sector, pursue value for money with the greatest possible vigour and ensure that taxpayers' money is well used."
The Minister further said: "The government needs to activate both public and private sector energies, specifically referring to infrastructure progress and support for industrial development and special economic zones." With this in mind, it is most disturbing that the Department of Public Enterprise's budget allocation has steadily declined over the years. For the 2012-13 financial year, the department has been allocated approximately R1,249 billion, which reflects an increase of R353,3 million from the previous financial year. Do not let this fool you. Of the R1,249 billion, R1,05 billion is earmarked for transfers.
Chairperson, if one looks at the performance of some of the state-owned enterprises, in a word, it is worrying. Denel continues to pose losses due to, mainly, Denel SAAB Aerostructures. This division makes heavy losses and has a negative impact on Denel overall. Broadband Infraco received a qualified audit opinion as a result of auditors being unable to obtain sufficient appropriate evidence to support Infraco's claims of fruitless and wasteful expenditure of R1,89 million and an irregular expenditure of R151,1 million. SA Express not only received a qualified audit opinion, but also had financial statements for 2010-12 being withdrawn from Parliament for being incorrectly drafted. Chairperson, this is unacceptable.
Government is expected to approve a R6 billion bailout for South African Airways, SAA, whilst the airline has denied that this is a bailout. A substantial government contribution to a state-owned enterprise aimed at ensuring its sustainability can hardly be seen as anything else. It is ironic that a R6 billion bailout is being considered, the very day after the DA marched - a march which I was a part of - for the implementation of the R5 billion wage subsidy scheme. [Interjections.] This is the difference between the DA and the ANC government. We are fighting for practical solutions that can create hundreds of thousands of jobs, whereas the ANC government allocates billions to a bottomless pit of inefficiency, like the