Hon Chairperson, members of the executive present here today, members of the fourth democratic Parliament, ladies and gentlemen, it does not happen very often that you find a homeboy in the gallery. Among those clever minds, I have my homeboy, Banzi Majola, in the gallery today.
In 2011, the Portfolio Committee on Public Enterprises visited the Bolivian Republic of Venezuela, amid speculation and media suspicions that we had gone over to Venezuela to study nationalisation. Part of my conclusion in respect of the study tour was that, indeed, for a developing nation to achieve its developmental goals, state-owned companies have to play a catalytic role to stimulate economic development in the context of a developing country.
Siza kuxabana kungekudala. [We will soon fight against each other.] The R300 billion Transnet infrastructure build that was announced by the President early this year is one perfect example of a state-owned company playing that catalyst role. Inasmuch as we in Cope welcomed the pronouncement by the President, we could ... [Interjections.] It is none of your business. We could not help but think, given the recent reports, that the family of the President, his close friends and Chancellor House combined have been very active, with a particular appetite for projects of this magnitude. The Sunday Independent ran a story over the past weekend under the headline "Zuma's boys behaving very badly". Other journalists and commentators are calling it "Zuma Incorporated"; some call it ZEE instead of BEE.
Minister, as a country, we want you to take us into your confidence. You must assure us that the Transnet infrastructure project will not be another Eskom build or the Transnet acquisition of locomotives or the sole domain of a chosen few in our country either linked to the President or to the ANC. Assure us that the work flowing from it will be shared amongst all who live in this country.
They say that silence is golden. I was tempted not to say a word about South Africa Airways, but on second thoughts I realised that that would be dereliction of duty. It can't be every year that we talk about SAA asking for a government bailout. Recently they have found other terminology because it is too scary to mention bailouts to those MPs. I suggest that instead of wasting money and going on a vindictive witch-hunt against former chief executive officer Dr Khaya Ngqula, your focus and efforts must be on turning our national carrier, our national pride, into a profit- making business.
It is not just doom and gloom though, Minister. I would like to comment, as you have correctly pointed out, that last year SAA received new aircraft in the form of A330-200s delivered in early 2011 and in February this year they received some A320s. In addition, the opening of the new route between Johannesburg and Beijing is worth mentioning. We all know that China is the second largest economy in the world and in the context of Brazil, Russia, India, China, South Africa, Brics, we have to make some contribution on that route.
Last year, on Christmas Day, I was at home in Alice - you see, this is not a social cluster, we are reading here - with my wife and sisters. They were busy preparing food for the usual Christmas feast when all of a sudden the lights went off. Because everyone in the neighbourhood has my number - including Nkosi Mavuso, Aa! Zwelidumile - frantic calls came through from members of the community worried about the prospect of a Christmas without the usual feast.
In this regard, hon members, allow me to commend Messrs Mxolisi Phinda of Eskom in Alice; Maphelo Mvunelwa, who is Eskom's Senior Adviser on Parliamentary Affairs, seated in the gallery; and Thys Bekker, who is Eskom's Regional Manager in East London, for working tirelessly on that day, sacrificing their Christmas in the service of our people. In less than two hours, the lights were back on and we still had our lunch on time. Please convey my sincere gratitude to the three gentlemen I have just mentioned.
Having said that, hon members, I would like to bring to the attention of the Minister that the Eskom pricing structure is skewed against the poor and favours the big multinationals and mining houses. It is reported that to generate 1 kilowatt costs Eskom approximately 35c, whereas you and I buy a kilowatt from the municipality or Eskom for between R1 and R1,50.
Business has to be good for Eskom and municipalities, because their profit margins are in the region of 75% - 125%. However, what is frightening, hon members, and what we are never told is that Eskom has a 25-year contract to supply electricity to three smelters, which are owned by BHP Billiton at a fixed price of between 12c and 15c a kilowatt.
Hon member, I am sorry, your time has expired.
Can I join another party to get more time?
Your time has expired, hon member! [Applause.]
Hon members, can we please allow speakers to be heard? You are swallowing speakers and I cannot even hear what they are saying. [Interjections.] Especially when they are speakers from your own political party, could you please allow them to be heard?
Madam Chair, the Minister said that if he took his hands out of his pockets, he would be very much obliged if we would take our hands out of our pockets as well.
I have an enormous amount of respect for the Minister. I think he is doing a wonderful job as a Minister. Nonetheless, we will be opposing this budget for reasons which are of fundamental importance, and for reasons of details.
The fundamental reason is that this department should not exist. It's a leftover from the apartheid age and it makes no sense as part of the developmental function of the state and the good governance of the country. Each of the SOEs must be removed from this department and placed within the line function they belong to. It is the proper setting for them to be part of a unified policy framework. Eskom belongs to Energy and Transnet belongs to Transport. The residual function, which is that of dealing with matters like corporate governance and uniform remuneration, should resort under the capacity of the Department of Public Service and Administration.
Turning to the matter of the details that force us not to support this Budget Vote - it is not for our own sake, because I don't think many South Africans are pleased with what is happening in respect of Eskom, SAA and Denel, etc - let me add just a few points: On SAA, I fully endorse what the hon Michael said, but there are two additional points that must be stressed. The first point, Mr Minister - I would like you to deny this in your reply if I am incorrect - is the fact that SAA is bankrupt. It is bankrupt because a great deal of its liabilities that are comparable to the liabilities of a self-sustaining airline are actually carried on the books of Transnet. [Interjections.] This is a bail-out, and the language you are using today in respect of making an investment in SAA is at least not completely truthful.
The second reason is that SAA has become the great enemy of our travel and tourism industry. It is cutting South Africa out of all the major travel and tourism opportunities. The prices are outrageous, its activities are inherently monopolistic. They have been sued for antitrust violations in the US, in Europe and in South Africa. It is something that counters the objectives of this government, which has placed enormous emphasis, and rightfully so, on the developmental potential of our industry.
Pan-American in America was destroying the local tourism industry. Everyone in America was keen on having a national flag and there were great fears in privatising Pan-American. As soon as Pan-American was privatised, the industry flourished, prices went down and finally the US, in spite of its enormous distance from other locations, became a tourist location. If we want to make South Africa become a tourist location we need to have a $500 return ticket from London and Frankfurt, and we are not going to have that for as long as we have got such a monstrosity as a state-owned SAA.
My advice to you, Minister, if you will allow me, is to not bail them out, and to let them go under. Somebody else will do the job right and will take their place.
About Denel, Minister, most South Africans and I do not wish to own an arms manufacturer, especially not an arms manufacturer that cannot pay its own bills. I don't, and many other people don't, want to pay the bills of an arms manufacturer. We have no business owning Denel.
Eskom needs to be broken down. You told us very kindly that you gave us back R11 million. Thank you very much. Why not R15-R17 million? The fact is that the entire regulatory environment and pricing of electricity at the manufacturing side is the product of a monopoly. The build programme should have been given the opportunity of creating an Eskom 2 in competition with Eskom 1 so that, through competition, perhaps all of us would not only get back R11 million, but R17 million, and the hon Nhanha would be able to finish his Christmas dinner. [Laughter.]
Coming to Alexkor, why do we own Alexkor? It goes on and on. We keep being told every time that it is a transient solution. What goes into our lifetimes from one generation to the next ... [Interjections.] I cannot hear you. Perhaps when you speak, you may say something. [Interjections.] Do you want to ask me a question? Ask permission from the Chairperson ... [Interjections.]
Hon member, your time has expired.
I have no business, and you have no business owning Alexkor. [Interjections.]
Hon member, your time has expired. Can you please take your seat!
Has my time expired?
Yes.
Madam Chair, I could not hear a word of what you were saying ...
Hon member, can you please take your seat.
Chairperson, hon Minister of Public Enterprises, Mr Malusi Gigaba, Your Excellencies Ministers and Deputy Ministers, distinguished Members of Parliament, the director- general, senior officials and staff of the department, chairpersons and chief executive officers of state-owned companies, esteemed guests, ladies and gentlemen, in this centenary year of the ANC I wish to dedicate my address to all those visionary men, women, intellectuals, traditional leaders, workers, peasants, revolutionaries, innovators and pioneers who were brave enough to think differently, bold enough to think that they can change South Africa and talented enough to do so. Our democracy is founded on their sacrifices, blood, sweat and tears. They shall live forever in our hearts and memories.
We are today grappling with the idea to reconstruct our country and to extend the dividend of democracy and freedom to all - a responsibility bequeathed to us by those who came before us.
Today, I will report to you on the progress of the entities under my care, my reflections on their operations and their plans for the future.
Our active monitoring of state-owned companies entails keeping a close watch on matters of governance, performance and board appointments, to ensure the identification of potential challenges early and to mitigate them swiftly.
There are, however, external factors beyond our control that also have a critical bearing on the performance of these companies. Some entities like Alexkor, for instance, which are in the commodities sector, are affected by global demand, and any sluggish growth or challenges in the economic climate.
We continue to improve our oversight management of these entities. It is the department's ongoing goal to ensure the implementation of proper governance systems within each entity by strict adherence to the Public Finance Management Act and the entity's founding legislation. A critical part of our shareholder oversight is to create alignment by each entity to government's objectives.
With regard to Alexkor, we are continuing to implement the court order regarding Richtersveld. To date, all Alexkor and government-owned land, including land mining rights have been transferred, excluding the township erven. The pooling and sharing joint venture between Alexkor and the community has been established. An amount of R350 million has been allocated in our budget, in respect of Alexkor in terms of the deed of settlement.
Alexkor, however, requires a paradigm shift. This entails exploring opportunities for downstream beneficiation to contribute to the creation of new jobs, the development of requisite skills, investment in research and development, economic growth, sustainable development and cost-effective support for the broader priorities of government.
This strategy seeks to ensure the company's long-term viability, whilst contributing to the socioeconomic upliftment and development of the Richtersveld region.
A blot, however, on Alexkor's clean sheet has been the matter of its inadequate oversight of the Alexkor Development Foundation, which was established in 1993. The trust has experienced governance challenges over the years, attributed to mismanagement by trustees who are members of the Richtersveld community. This includes failure to provide financial statements of the trust to Alexkor and to recover monies owed to the trust. The department has intervened and reported the matter to the Master of the High Court.
A meeting with the Master of the High Court is scheduled for 31 May 2012, where we will explore, firstly, the removal and replacement of current trustees; secondly, the termination of the trust; and thirdly, any other legal recourse.
Alexkor's distinctive competitiveness remains its quality of diamonds and its unique land and marine mineral resources. We need to leverage the skills and expertise housed within Alexkor, to position it as a major player in its sector, both locally and continentally.
With regard to Aventura, hon members will recall that in 2001, the government decided to dispose of its noncore assets such as Aventura Resorts. After years of protracted litigation by parties, the department has made significant progress in transferring and registering most Aventura Resorts in the names of their rightful purchasers. An annual general meeting is scheduled for 28 May, where a resolution to have the company liquidated by the sole shareholder will be passed.
The SA Forestry Company Limited, Safcol, continues to contribute to rural welfare and development. It presently provides approximately 2 200 permanent jobs and 2 000 contractual jobs, in rural areas in Mpumalanga, Limpopo and KwaZulu-Natal, which are characterised by high levels of unemployment.
The department is presently assessing different business models and institutional structures, through which the developmental impact of Safcol's human and financial resources can be optimised. The conclusion of this exercise will provide certainty for the business and a clear direction for the company's operations. Consultation with key stakeholders is in progress. Downstream economic activities in rural areas to create jobs and provide skills from timber milling to furniture manufacture are focal areas.
Furthermore, as approximately 61% of land under Safcol's operation is under land claims, the department is playing a proactive role in facilitating the resolution of these claims through effective interdepartmental co- operation. The past year's preliminary results show that Safcol will be posting a profit. A key focus for the year ahead lies in ensuring improved financial and commercial sustainability.
The SA Forestry Company Limited is challenged to explore opportunities and options to ensure its continued sustainability. In this context, the company is examining vertical integration and expansion of its operations outside South Africa. Its expansionary potential is also in the green economy and carbon trading.
This will enable it to explore the possibility to partner with Eskom on biomass and with SAA, SA Express and Transnet on carbon trading. All these matters will be finalised between Safcol and the department in this financial year.
Matters with regard to the pebble bed modular reactor, PBMR, are also on track and the PBMR will remain under the care and maintenance of Eskom until 2013, when the future of the PBMR will be finalised.
In conclusion, I would like to thank the Minister of Public Enterprises for his leadership and stewardship of the department. I would also like to thank the director-general of the department, Mr Tshediso Matona, for his diligence and professionalism and the department's senior management and staff for their dedication and work ethic. I thank you. [Applause.]
Chairperson, Minister and Deputy Minister, the leadership of state-owned companies, the director-general of the Department of Public Enterprises, officials, comrades and members, the Auditor-General rates the Department of Public Enterprises as one of the three best managed departments in the Public Service. Congratulations to the Ministry, the director-general, Mr Tshediso Matona, and all your officials on a job well done! [Applause.]
As a shareholder in eight major state-owned companies, the department has oversight of companies that affect the majority of South Africans including manufacturing, transport, energy and broadband communications. Their economic impact on our economy is substantial. They have the ability to get South Africa growing, working and moving.
This is how we will start our journey towards 2030, the year in which we will be living in a country which we have remade. I wish that every Member of Parliament and every South African would read the vision statement of 2030 contained in the National Development Plan, which states:
We say to one another: I cannot be without you. Without you, this South African community is an incomplete community. Without one single person, without one single group, without the region, or the continent, we are not the best that we can be.
The question is: Do we all have the desire to become part of this success story?
Flowing from a chapter in the National Development Plan on improving infrastructure, the ANC refers in detail to an infrastructure building programme in its policy documents, highlighting the fact that we need to almost double the scale of the current infrastructure, including the need to maintain and expand our rail network and the need to double our capacity to generate electricity.
Members will recall that the President in his state of the nation address earlier this year announced that Transnet, as part of its market demand strategy, will spend R300 billion over the next seven years, of which R200 billion will be in freight, rail and ports projects. Nearly 70% of this capital investment will be funded from Transnet's operating cash flow. This capital spend will include maintenance and expansion. More importantly, the market demand strategy will result in the creation of more jobs in the South African economy as well as increased localisation and black economic empowerment.
Together with its current operations, Transnet is expected to create employment for 588 000 people at its peak with a large focus on skills and capacity-building. The Minister has referred to the fact that R7,6 billion will be spent on training over the next seven years, on average, more than R1 billion per year.
The faint-hearted who may try to identify the negative must take note that Transnet has already identified execution risks and mitigating actions as well as an implementation strategy. Minister Pravin Gordhan, in his Budget Speech on 22 February 2012, stated on infrastructure implementation:
We shall step up the quality of planning, costing and project management, so that infrastructure is delivered on time and on Budget.
This important point is emphasised in the ANC policy document on economic transformation: "Mechanisms should be put in place to monitor the implementation of the infrastructure programmes of the state-owned enterprises." This is not only the infrastructure spending plan of Transnet. It is our plan, and therefore the plan of South Africa. The ANC states in its policy document:
It is critical that infrastructure investment should not just be seen as a technical process, but an opportunity to mobilise our people to create a new society and expand economic opportunities.
Let us, as Members of Parliament and the oversight committee, ensure that Transnet has the capacity to implement; that it creates the necessary jobs over the next seven years; and that it remains financially sustainable. The objective must be to lower the cost of doing business in South Africa. The same applies to all other state-owned companies.
This urgent need for large-scale investment includes opportunities for public-private partnerships. The investment of R300 billion by Transnet and the investment of R200 billion by Eskom is simply not enough. We probably need to double these amounts as we have lost a whole generation of investment. We need to promote competition by placing an emphasis on localisation, private investors and other SOEs to bring in capital and skills.
In the report of the portfolio committee on our study tour to countries in South America in July last year, we recommended that the Department of Public Enterprises should consider exploring the successful development role model of state-owned companies in Brazil in establishing entities on clear-cut corporate governance principles, competitiveness and appropriate legislation. These critical success factors are the drivers of successful state-owned enterprises in Brazil. The question is: Do we all support the infrastructure spending programmes of the state-owned companies?
I also want to touch on the strategic importance of Denel as a state-owned company. Denel, hon Ambrosini, plays a strategic role as the custodian of defence capabilities as it is a critical supplier to our SA National Defence Force in the development of advanced manufacturing, skills and exports. This year, it will deliver the Rooivalk helicopter to our air force, as the Minister has announced. It will also deliver a ground-based air defence system and is in the process of procuring a modernised infantry fighting vehicle for our army.
Two important events occurred during the last three months which will impact on Denel, and they are: a budget allocation of R700 million for the recapitalisation of Denel Aerostructures; and the release of the draft SA Defence Review 2012. Our portfolio committee is excited about the allocation of the recapitalisation amount, following our oversight visit to Denel Aerostructures in June 2011.
Regarding the report of the Defence Review Committee, it is vitally important that Denel, through its shareholder, the Department of Public Enterprises, interacts with the recommendations on Denel contained in the report of the Defence Review Committee.
This Budget Vote implements the policy and the priorities of the governing party, the ANC. It emphasises the point that training and skills development must go beyond the own needs of a state-owned company. It confirms the intention of government to provide the leadership for the infrastructure build programme to be rolled out, facilitating collaboration between the public and the private sector. It creates a developmental state that is capable of delivering on its mandate.
The question is: Do we all support this Budget Vote, which will start South Africa on the path of growing, working and moving?
In conclusion, the future is ours. Let us join hands with the Department of Public Enterprises, including its eight state-owned companies, and create opportunities for all our people, from the Northern Cape to KwaZulu-Natal, from Limpopo to the Western Cape. Let us work to improve the lives of ordinary people. I end with a quote: "The steeper the mountain, the harder the climb, the better the view from the finishing line."
The ANC supports the Budget Vote. Thank you. [Applause.]
Hon Chairperson, I want to start by saying to the hon Minister that he said that certain steps are being taken to enhance the confidence of the public to use, for instance, SAA, and SA Express Airways.
Now, hon Minister, you have a responsibility towards the public of South Africa. Let us look at what happened with Velvet Sky. The public had trust in the financial situation of Velvet Sky, but they lost thousands of rands. You, as the Minister, have the responsibility to ensure that the finances of SAA and SA Express are viable and healthy.
I cannot understand SAA coming forward and asking for a R6 billion bailout, as said by other hon members, when, in sponsorships, they pay almost R300 million! [Interjections.] If a business is in trouble, how can that business still pay R300 million in sponsorships?
Dit ges, agb Minister, ek wil kom by SA Express. By die vergadering van die Portefeuljekomitee oor Openbare Ondernemings op 14 Februarie vanjaar het die hoofuitvoerende beampte van SA Express ges dat hulle Sizwe Ntsaluba aangestel het om 'n forensiese ondersoek te doen, na sekere aantuigings wat gemaak is deur die Ouditeur-generaal. Daar is ook ges dat hierdie forensiese verslag aan die raad van SA Express voorgel gaan word.
Ek wil nou vir die agb Minister vra: In daardie forensiese verslag, is daar enige bestuurslede wat betrokke is? Is daar enige dissiplinre stappe geneem teen die persone wat oortree het in terme van ongerymdhede wat daar plaasgevind het? En watter dissiplinre stappe is geneem?
Ek wil ook vir u vra: As daardie dissiplinre stappe geneem is, wat is die status daarvan? Daar is ook destyds ges dat deel van hierdie ondersoek gaan oor 'n R42 miljoen se BTW-inskrywing wat gemaak is. Dit is bedrog, agb Minister! Wie het daardie inskrywing gemaak, en is daar opgetree teen daardie persoon?
U het 'n verantwoordelikheid om te verseker dat die publiek daardie antwoorde kry. As die publiek nie daardie antwoorde kry nie, kan hulle nie vertroue om met SA Express te kan vlieg h nie. Andersins, gebeur met hulle wat met ander mense gebeur het met Velvet Sky, wat 'n "fly-by-night" geword het: Hulle betaal vir kaartjies met SA Express, maar dan gaan hulle geld in 'n bodemlose put. Daarom vra ek vir die agb Minister om vir die publiek die antwoord te gee. Moet nie s daar is 'n verslag, maar niemand weet wat in daardie verslag staan nie. Ek dank u. (Translation of Afrikaans paragraphs follows.)
[That having being said, hon Minister, I want to turn my attention to SA Express. At the meeting of the Portfolio Committee on Public Enterprises held on 14 February of this year, the chief executive officer of SA Express said that they had appointed Sizwe Ntsaluba to perform a forensic investigation into certain allegations that had been made by the Auditor- General. It was also said that the resultant forensic report would be submitted to the board of SA Express.
I should now like to ask the hon Minister: Are any members of management implicated in the forensic report? Has any disciplinary action been taken against those persons who had transgressed in terms of the irregularities that had taken place there? What disciplinary action was taken?
I also want to ask you the following: If disciplinary action has been taken, what is the position in this regard? It was also said that this investigation dealt with a R42 million VAT entry that had been made. That is fraud, hon Minister! Who made that entry, and has action been instituted against that person?
You have a responsibility to ensure that the public gets those answers. If members of the public do not get those answers, they cannot confidently fly with SA Express. Otherwise, the same thing will happen to them that happened to other people in connection with Velvet Sky, which became a fly- by-night operation: They pay for tickets with SA Express and then their money goes down a bottomless pit. That is why I am asking the hon Minister to give the public the answer. Do not say that there is a report but nobody knows what is written in the report. I thank you.]
Chairperson, hon Minister, Deputy Minister, hon members and distinguished guests, I visited a housing development in KwaZulu-Natal a fortnight ago, as part of my constituency work. Upon my arrival, I was confronted by a community of people who had gathered at the construction site office with a labour dispute. They had ordered the development to stop whilst the construction company listened to their grievances. Out in the cane fields, they could see tractors at work preparing sites for building to commence, and already, there were houses being erected. They wanted more people to be employed on the project. Now, this is not a unique story. All of us face the same situation every day as we go into our constituencies. The cry is always for jobs, jobs, jobs!
The Department of Public Enterprises has a new vision:
To drive investment, productivity and transformation in the department's portfolio of state-owned companies, their current customers and suppliers, so as to unlock growth, drive industrialisation, create jobs and develop skills.
This supports the New Growth Path strategy and the Industrial Action Plan policy objectives of government.
I want to focus in my speech today on "create jobs and develop skills". I do this in the face of a new report releasing figures of job losses in the first quarter of the year. Times are really tough!
President Zuma, in his state of the nation address in February, outlined a very busy infrastructure implementation programme between now and 2014, and appealed "to all our people to join hands ... as we deal decisively with the triple challenges of unemployment, poverty and inequality".
Amongst the state-owned companies, SOCs, Transnet and Eskom will receive the biggest slice of the R845 billion infrastructure spend. With the building of the Medupi, Kusile and Ingula Power Stations, it is estimated that between them they will create just over 24 000 direct construction jobs and 1 400 ongoing operational jobs. On our oversight visit to Medupi, it was encouraging to see the activity generated and the impact that it was having on Lephalale - a town come alive because of development. In the audited report for Eskom, there was an increase of just under 2 500 jobs created in 2011, bringing the total number of employees to just over 39 000.
We have already referred to Transnet having embarked on a new market demand strategy, with a capital investment programme of R300 billion over the next seven years. This will see the expansion of rail, port and pipeline infrastructure. Currently, the audited figures show an increase of some 3 500 jobs in 2011, bringing the total number employed by Transnet to just over 49 000.
It is interesting that the job-creation impact of the new market demand strategy is estimated to create employment peaking at 588 000 people in 2016-17. The hon Koornhof has referred to this. Of these, Transnet will employ 73 000, inclusive of contractors; 260 000 will benefit from indirect jobs, and 255 000 will benefit from the impact on the wider economy.
In addition, both Eskom and Transnet have a large focus on skills and capacity-building. Transnet will spend R7,6 billion on training over the next seven years. They will step up recruitment in critical skills and expand their annual intake - they plan to have 2 000 apprentices in training at all times, of which Transnet will employ 1 200. There are bursaries and grants for engineering students and chartered accountants; there is technician training.
In addition, management leadership programmes are being run. Eskom, in addition to having just over 5 200 learners in the pipeline, has committed itself to training an additional 5 000 learners. They have 26 training facilities, of which 18 are for artisan training. In 2011, Eskom presented some 6 000 courses. Wow, this is something! Do we even know that it is happening? [Interjections.]
As Parliament, we are concerned at the reported job losses regarding the SA Forestry Company Limited, Safcol, and Denel (Pty) Ltd, who lost 187 and 374 jobs respectively. We are pleased, though, that SAA and SA Express Airways have created extra jobs - 2 023 for SAA and 95 for SA Express. We want to say to the Minister that these SOCs will come under very close scrutiny by Parliament. They have the potential to perform much better. There are employment opportunities here.
On an oversight visit to Safcol - and the Deputy Minister has referred to the expansion that they are planning for this - we saw some of the initiatives that have been started to give people employment. This includes using timber to build a classroom, and running small upholstery businesses. This must be encouraged and expanded.
In his Budget Speech in February, the Minister of Finance said:
Economic uncertainty will be with us for some time, yet we have a programme of economic change that can steadily roll back ...
Sorry, I am just looking at my time.
... unemployment, poverty and inequality.
The ANC has confidence in the direction government is taking with this massive infrastructure spend. It will create employment and provide the necessary skills training for many people - young people, in particular - who are sitting at home with little hope of ever finding a job.
We want to say to the Minister that, as Parliament, we will be very responsible in our oversight role ... [Interjections.] ... to ensure that we get value for money, that the right people fill the vacancies in the strategic positions in the SOCs and that there are competent boards to give direction. This will result in the intended creation of jobs and skills development.
We must not fail. Indeed, we shall not fail! The ANC supports this Budget Vote. I thank you. [Applause.]
Hon Minister Gigaba, hon Deputy Minister, hon Chairperson, hon members, director-general and the staff in the Ministry and the department, our distinguished guests in the gallery ...
Obrigado! [Thank you!]
Muito obrigado! [Thank you very much!]
... any debate on the forestry sector must respond to the demands of government's macro and micro economic policy framework, the New Growth Path policy, which seeks to ensure that across the sectors of our economy we develop labour-absorbing practices - a long-standing ANC perspective. The forestry sector is no exception to this, given its huge potential to create decent work and jobs.
The SA Forestry Company Limited, Safcol, is government's forestry company, conducting timber harvesting, timber processing and related activities, both domestically and internationally. As an important stakeholder in the forestry sector, it has, for far too long, lived under the premise that it will eventually be disposed of. This is derived from the period of the 1997 National Forestry Action Plan, where there were large-scale disposals of state forests.
What is important to note is that there are two processes that have subsequently arisen. The rationale for these processes is to be found in the 52nd National Conference of the ANC. This conference resolved on state- owned enterprises, and I quote:
The ANC and its government must build the capacity of the state in order to pursue the objectives of a developmental state and to ensure that, whilst SOEs remain financially viable ... their primary 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.
That, Chairperson, is the mandate. Let us contextualise this further. The same conference resolved to begin a process that would culminate in both the ANC and government adopting the October 2010 macro and micro economic policy framework, the New Growth Path. The New Growth Path contains specific roles for state-owned enterprises and is consistent with the National Conference Resolutions that state-owned enterprises are key players in driving economic growth. Forestry is no exception.
Chairperson, let me state the case for Safcol since they are not doing that. Firstly, the institutional framework for the forestry sector and its programmes have been informed by the 1997 National Forestry Action Plan. Generally speaking, most policy documents, after 15 years in existence, require assessment and evaluation. The SA Forestry Company Limited had a specific role to play in this and the question is whether what the Forestry Action Plan set out to do has been realised, and if not, what are the challenges?
Secondly, in the 1990s, when the then Department of Water Affairs and Forestry released state forests, Safcol was left alone, but given the very important mandate of transformation of the forestry sector. This transformation project did not mean that disposal of state assets equalled transformation. Thirdly, the National Forestry Action Plan was drawn up in the first phase of a macroeconomic strategy, which at the time favoured the selling off of state forests to the private sector. This position no longer holds, and we are rather informed by the needs of the New Growth Path. Most importantly, the job drivers in the New Growth Path have relevance for employment levels and criteria that are measured by hectare of forests. The fact that 12 000 green jobs were created through the Forestry Livelihoods Strategy in the 2010-11 financial year bears testimony to the correctness of both policy and implementation.
Fourthly, the perspectives of spatial development in the rural areas and the development of the rural economy must converge in concept and practice with forestry. Rural development is one of the five priorities of government and therefore forestry must resonate and contribute to this priority. Forestry plays an important role in rural development and should have an integrated approach in both its own programmes and that of rural development. The design and implementation of these must be devised in collaboration with rural communities. The environmental and economic orientation of this collaboration must be driven by policy perspective that places the masses of our people in the rural areas at the centre.
Finally, the governing party, the ANC, is preparing for its June 2012 Policy Conference and its December 2012 53rd National Conference in 2012. At the same time the Presidency has, through the Presidential Review Commission on state-owned entities, undertaken a detailed and well-informed process of review. Both of these processes are material to the future of Safcol. The fact that Safcol has not been wound up by 31 March 2009 should indicate that a review is under way and the finality of that will determine the ultimate direction of Safcol.
In conclusion, Chairperson, Safcol plays an important role in rural development and various development projects have been initiated in order to contribute to poverty alleviation in the rural areas. The fact that Safcol created 2 200 permanent and 2 000 contract jobs in the rural areas means that we have to move Safcol into the New Growth Path paradigm and not the existing paradigm of fatalism. Financial stability is critical and as part of an integrated approach with the Department of Economic...
Hon member, your time has expired.
Chairperson, the ANC supports this budget. Thank you.
Hon Chairperson, Minister, Deputy Minister, members, officials, and members of the public, the strategic plan of the Department of Public Enterprises and Budget Vote 11 are aligned with the New Growth Path, the draft National Development Plan and the recent state of the nation address by the President. The challenge is implementing and executing the various programmes of the department and measuring the outcomes as planned, which must be an efficient, competitive and responsive economic infrastructure network.
The New Growth Path will require the creative and collective effort of all sections of the South African society, and strong governance will be essential. At present, the economy does not create sufficient employment opportunities. By creating such opportunities, we will fight poverty, reduce inequalities and address rural underdevelopment.
The DA welcomed the Budget Speech of 2012, by Minister Pravin Gordhan, specifically on the expansion of infrastructure investment to support job creation, with a particular focus on unemployed youth. The DA also supports 90% of the National Planning Commission's plan, headed by Minister Trevor Manuel, but we are all aware of several weaknesses in the state's infrastructure capacity.
So, what South Africa needs is for infrastructure to be delivered on time and within budget. South African engineering and construction firms have proven to possess the necessary expertise to successfully complete large infrastructure projects. Therefore, state enterprises and the Department of Public Enterprises need to improve their planning and management of capital projects. They need to spend their budgets, and no misspending or underspending will be allowed, or they will stand the risk of losing their allocations. We as members of the Portfolio Committee on Public Enterprises will fulfil our oversight role by proactively monitoring the spending of their budgets and the roll-out of infrastructure plans.
That brings me to Transnet and its budget of R300 billion for the capital investment programme, with the focus on expanding in rail, port and pipeline infrastructure. Transnet has a solid foundation and it aims to capture identified growth opportunities over the next seven years. Transnet has spent R118 billion as capital investment in the last seven years, but plans to increase it substantially to R300 billion over the next seven years. Seventy percent of capital investment will be funded from operating cash flows, and Transnet is confident that it can raise the balance externally. The majority of the investments will be in general freight and freight rail.
The impact of infrastructure development will be felt nationwide - the seven-year capital investment well-contributed infrastructure contribution of R28,6 billion to Saldanha; R3,9 billion to Cape Town; R25,9 million to East London, Port Elizabeth and Ngqura; R38,5 billion to Durban and R49,6 billion to Richards Bay.
Although expansion and investment focus on infrastructure and exports, job creation is the spin-off that ultimately addresses poverty, skills and capacity-building. The focus must be on improving employment equity. The DA supports this. As far as ports are concerned, the most exciting long-term project is developing the former Durban International Airport site into a dig-out port. Transnet must buy the Durban International Airport site and associated land needed in order to develop a deep water mega container port.
As far as the Port of Durban is concerned, the plan is to deepen the berths to handle larger vessels and the expansion of the Pier 1 Container Terminal into Salisbury Island to increase the number of container handling for export and import purposes. As far as the Ports of Cape Town and Ngqura are concerned, the focus is on container expansion. The DA welcomes the increase in iron ore exports through the Saldanha Bay port.
Port handling infrastructure, new loops and in-port rail track, as well as more berthing capacity, will stimulate local economic development on the West Coast of South Africa, as this is an economic growth point in the DA- led Western Cape province. Future development at the Port of Saldanha includes the construction of a liquefied petroleum gas terminal and storage site, and port infrastructure for the extension of the Mossgas quay dredging works to facilitate the quay extension and dry dock facilities. The increase in demand for manganese creates opportunities for the South African mining industry. It necessitates the construction of a new manganese handling plant at the Port of Ngqura and the associated rail investment in rolling stock and infrastructure, to facilitate the increase in capacity.
The provision for a new car terminal at Port Elizabeth is welcomed by the DA for increased export of new cars. Increasing demand for fuel in the Gauteng region, coupled with the age of the existing Durban to Johannesburg pipeline, necessitates the construction of a new pipeline. The scope of the project is to build a new 555 km, 24-inch diameter trunk line from Durban to Gauteng that addresses the increased demand for fuel in the heartland of South Africa's economic region, Gauteng. Overall, completion of this project is on schedule for December 2013.
Transnet has held a series of engagements with the National Planning Commission on its infrastructure development plans. The alignment is reflected in that all Transnet strategic infrastructure developments have been adopted as part of the National Development Plan. The DA supports this focus on infrastructure development as it will contribute to opportunities for all people in what we, as the DA, envisage as an open opportunity society for all.
While I am on the topic of ports, I want to stand still for a moment at my constituency, Saldanha Bay Municipality, which will shortly become an Industrial Development Zone. There is legislation for Industrial Development Zones and published draft legislation to provide for the creation of special economic zones. Tax relief is under consideration for businesses that invest in these zones, including a reduction in corporate income tax and support for employment and training expenses.
In the Budget Speech of 2012, by Minister Gordhan, an amount of R2,3 billion has been allocated for industrial development and special economic zones. As a Member of Parliament, I now publicly invite investors and business people to come and invest in Saldanha Bay Municipality. The DA- run municipality is also in line to invest majorly in infrastructure for the next four years, as the national and provincial governments are committed to doing, as all three spheres of government are focused on development and growth in Saldanha to stimulate the economy. I must actually invite the members of the public to come and invest there. You will have a very good return on your investment. I don't know if members in the House can afford it. [Laughter.]
As far as Alexkor is concerned, it is not a success and an amount of R350 million is earmarked for transfer to Alexkor for the finalisation of obligations to the Richtersveld community joint venture. There are major problems with community trust funds in the Northern Cape, which benefited from royalties received from Alexkor and other mining companies. These trust funds are being investigated. The new state-owned mining company can only be a success if it forms partnerships with experienced mining companies. The current shortfall in electricity supply equates to three times the electricity consumed by the City of Cape Town in one year.
Die ligte brand, maar teen watter onkoste? Eskom het op 14 Junie 2011 in die Parlement erken dat twee gasturbinekragopwekkers teen groot koste beurtkrag voorkom. Daar is 'n ernstige probleem met Eskom se energievoorsieningsprogram wat die moontlikheid van kragtekorte en kragonderbrekings weer na vore kan bring. Eskom se uitvoerende beampte het hierdie moontlikheid self uitgewys toe hy dit duidelik gemaak het dat Suid- Afrika se elektrisiteitsnetwerk onder groot druk sal funksioneer tot en met 2016, wanneer die laaste van Eskom se nuwe kragsentrales voltooi sal word. (Translation of Afrikaans paragraph follows.)
[The lights are burning, but at what cost? Eskom admitted in Parliament on 14 June 2011 that load shedding is being prevented at huge cost by two gas turbine generators. There is a serious problem with Eskom's energy supply programme, which could again result in the possibility of electricity shortages and power outages. This possibility was pointed out by Eskom's executive officer himself, when he explained that South Africa's electricity network will function under great pressure up to and including 2016, when the last of Eskom's new power stations will be completed.]
I must be fair and congratulate the department for obtaining a clean audit for seven consecutive years. Thank you. [Applause.]
Hon Chairperson, Minister and Deputy Minister, comrades, hon members and guests, good evening. I rise on behalf of the ANC in support of Budget Vote 11. In his state of the nation address in February, President Zuma announced the continuation of the ANC-led government's commitment towards ensuring government's role in the critical development and maintenance of key economic infrastructure, assuming an active responsibility for the future well-being of the country.
Amongst others the market demand strategy of Transnet and the Eskom programme through state-owned enterprises, SOEs, are a further acknowledgement of the ANC's recognition of the positive developmental potential SOEs can hold as a primary vehicle for public sector infrastructure. Regarding the task of government and its responsibility of nation-building, of dealing with rapid economic growth, dealing with debts, dealing with deficits, dealing with poverty and unemployment, a new role has been forged now for SOEs - one that requires innovation and change, one that has rarely occurred in the past.
Chairperson and hon members, studies in the 70s and the 90s by Haggarty and Shirley, some of which the World Bank also, by the way, published, asserted that SOEs did not meaningfully contribute then to the economic development in low and middle income countries.
International experience has shown that the distribution of infrastructure is not neutral. The developmental state is now rectifying as it should in dealing with inequality in the provision of social and economic infrastructure. In fact, what we saw in the 70s and the 80s, according to a report of the Reserve Bank, were serious declines in infrastructure investments, as opposed to now, since 2002, when 72% of investments through the ANC-led government's commitments have been brought through in terms of roads and power amongst many others - even the purchase of new aircraft by