I rise to this podium, Deputy Speaker, with deep disappointment that a few weeks ago we were celebrating the victory and possibilities of our country which the Springboks reminded all of us. They flied our flag the highest - yet our iron bird of the skies - which should be parading our flag at 30 000 feet high couldn't take off the ground.
However, Deputy Speaker, the IFF in calling for this debate of urgent national importance - was not to call a session of this assembly to simply grandstand and further bemoan the constant failures of a once successful airline.
We called for this debate, because like I said, we were reminded that together we can do better. That is what our policy as the IFP says and we are constructive. We also called this debate because South Africa warrants it.
Our people who elected us here warrant from us the actions required and robust debates to take place in this House so that we bring them the solutions that the government can implement.
Many have extensively diagnosed the rot and the cause for the failures; and more recently, some of the corrupt cronies have been allegedly been fingered in state capture.
To summarise the rot - it is the greed, corruption, flagrant abuse of public funds, the deliberate disregard
for our countries legislation, incompetent cadre deployment and compromised and unethical leadership.
In terms of those who were fingered in the state capture, we cannot pronounce ourselves on that as yet, but we can certainly say that the government has let us down and have spectacularly failed to bring the change to the SA Air Ways, SAA.
The IFP has long held that SAA's reliance on state resources should be limited and phased out into a more sustainable cost model through a public- private partnership agreement in order for it to become globally competitive, drive down costs and to restore service excellence.
Already South Africans and in particular SAA workers are frustrated, their constant frustration will turn into anger.
We have seen what fire and fury feels like when flights were grounded and when operations came to a standstill. You must never, hon Deputy Speaker, deceive ourselves and
think that the fact that workers have gone back to work that is the end of SAA's problem.
This moment even though it may seem all doom and gloom, it is perhaps exactly the breaking point we needed. It is the Rubicon moment of the SAA.
This moment certainly presents us with an opportunity to knuckle down and present solutions and save our airline carrying our country's flag from flying into flames.
Hon Deputy Speaker, let us be reasonable here. We know that change does not come or does not happen by the click of a finger.
The SAA's mandate and how it benefits each and every South African and how it benefits our economy and how it makes us the gateway to Africa again is what we need to be debating about at this House today.
South Africans don't appreciate the fighting and the noise. They want solutions and plans to be met with
political will, justice and strong actions over tough talk and many barks with no bite.
Just as we rose in saying we are stronger when united - let us use this moment, SAA's Rubicon moment to stand together in implementing a strong plan which will see the SAA take off.
We are looking forward to hearing constructive members engaging on this matter and ...
IsiZulu:
... ngiyakholelwa, Sekela Somlomo, ukuthi njengoba leNdlu namhlanje iphikisene nokuqashwa komunye ongafanele ukuba ubengaqashwa nomholi onogcobho ekutheni ahole i- public ... umnyango lo njengokhomishana ...
English:
... will do the same in addressing all our matters that are confronting us because now is time ...
IsiZulu:
... la kufanele ukuba sonke sibumbane siqhamuke nezixazululo kuzo zonke izinkinga esibhekene nazo njengezwe. Iqiniso lithi, izwe lethu selidinga ubuholi obuqotho. Kudinga ukuthi amaphutha esiwenzile ngaso sonke isikhathi esingemuva ikakhulukazi eqenjini elibusayo, siyibuke, sikwazi ukuwalungisa ...
English:
... for the sake of our country and for the sake of future generations ...
IsiZulu:
... esikholwa ukuthi sonke lapha sizimele ngoba asikwazi ukusebenzisa izimali zabantu ngezikhathi zonke ukuze zikhiphe otakwini u-SA-Airways, SAA, nazo zonke izinkampani eziphethwe uHulumeni ngaphandle kokuthi enze lokhu okufanele afeze imigomo nemiyalo yazo.
Siyacela-ke ukuthi iNdlu yonke ibambe iqhaza kule nkulumo mpikiswano ukuze sifikelele ezixazululweni, lezo ezidingwa yizwe futhi siyakholwa ukuthi abantu bakithi uma betatha isinyathelo sokuya emgwaqeni yingoba kunesikhathi eside izimfuno zabo singalekelelwa futhi
zingezwakali zingalalelwa abaphethe. Ngeke sikuvumele ukuthi inkohlakalo kulabo abaphethe idle lubi bese okufanele bafele lokho ekugcineni kosuku kube ngabasebenzi. Siyabonga kakhulu-ke, Sekela Somlomo, ohloniphekileyo.
English:
Thank you. [Applause.]
On 6 June this year, President Ramaphosa met with chief executives of over 20 key state-owned companies, SOCs, at the Union Buildings to discuss the contribution they can make to economic revitalisation and social development.
The President acknowledged that several entities were facing severe financial and operational challenges that pose great risks to the South African economy. In the end, the meeting recognised that SOCs have considerable resources and capabilities that if better co-ordinated and managed, could have a far greater impact on economic growth and job creation.
However, the challenges they face range from inadequate capitalisation and poor governance to outdated legislation and political interference. The ANC government is committed to work with the leadership of these SOCs to urgently address these difficulties. The decisions of the meeting with the President have formed part of the Presidential SOCs Council established to provide political oversight and strategic management to reposition and revitalise the SOCs as catalysts to economic growth and development.
While SAA found itself in dire straits on the brink of collapse needing cash injection of R2 billion to keep its operations going, the two majority unions served the company with a strike notice. It is worth noting that five other unions in the company did not strike. By the way, the strike had nothing to do with the wage increase but more to do with populist politics and demagoguery by both Solidarity and Numsa which are two sides of the same coin with an agenda to destabilise our economy and the state under the ANC government.
The call by the DA to privatise SAA and other SOCs is not a panacea to all their problems. In fact, that dogmatic call forgets the inconvenient fact that those who corrupt public sector employees and public representatives are business people who want to get an unfair advantage on their competitors. However, while the ANC supports the efforts by the government to sustain strategic SOCs through appropriating money from the National Revenue Fund, a number of moral questions do arise.
Firstly, should public funds be used to continuously sustain an airline which is used primarily by the bourgeois class and middle strata? Should not this money be channelled to fund the transport sectors used by the overwhelming majority of our people, trains, buses and taxis? The answer for me is pretty simple a big no.
We may not always agree with the Finance Minister, but the recapitalisation of these SOCs that continue to have bloated executives with layers of managers with executive perks; managers who award worth dodgy contracts is morally very difficult to justify. The government must seek to find partners with aviation expertise to buy
equity in SAA so that it can continue to fly the South African flag. We cannot continue subsidising the rich.
While we respect the ideological purity of some who claim they are opposed to strategic equity partnerships as a matter of principle; we know that some of them, such as the VBS cabal, advocate reckless appropriation of public funds to keep SAA and the other SOCs purely out of self- interest. They know it is easier for them to loot the public sector companies than entities that are part- privately owned, such as Telkom.
We know they will launch personalised attacks through their Twitter fake accounts against the Minister of Public Enterprises because to them, stealing and laundering the savings of elderly rural gogos to fund their lavish lifestyles is okay. [Applause.] With our mothers and grandmothers money, they have bought luxury cars and houses among the rich and well fed - the very same white capital they claim to hate so much.
The government needs to urgently better definition of the respective mandates of state-owned companies and align
policy to more effectively support their achievement. The legal and regulatory environment within which SOCs operate, which are often ill- suited to the specific needs of entities and constrain innovation must be updated. The exercise by government shareholder representatives of their oversight responsibility and inconsistency in the appointment of boards must be improved.
There have been many turnaround strategies at SAA that have met with limited success due to factors such as mismanagement, state capture, incorrect fleet configuration, discontinuity and disruptions at leadership levels and the erosion of skills.
The ANC supports the recommendations in various forensic reports that are being implemented, with some being handed to the Hawks for criminal investigation, and also at the National Prosecuting Authority for evaluation of evidence. As a result of this work, some employees suspected of involvement in wrongdoing have been subjected to internal disciplinary hearings.
As expressed in King Code IV, there is a greater need now, more than ever for leaders who carry the values of ethical leadership and effective leadership and those dialectically reinforcing one another.
In conclusion Deputy Speaker, as the ANC, we want to express our confidence in the Minister of Public Enterprises, Comrade Pravin Gordhan. The unwarranted attacks, even from within our movement, should not deter him from carrying out the responsibilities of his office by the President and the majority of the people of South Africa.
The ANC condemns in the strongest possible terms the ethnic chauvinism that rears its head from time to time. The ANC affirms its nonracial, nonsexist character which was built with sweat and blood by generations of outstanding leaders of our movement such as OR Tambo, Albert Luthuli, Yusuf Dadoo, Ruth First, Sophie de Bruyn, Bertha Gxowa, Joe Slovo, and many others. Nonracialism is a foundational principle of the ANC and the Constitution of the Republic of South Africa.
There is no transformation policy in the ANC that says white South Africans must never be appointed to senior public sector positions. We are the ANC of Freedom Charter, which says that South Africa belongs to all who live in it, black and white. I thank you. [Applause.]
IsiZulu:
Sihlalo, ngiyabonga kakhulu ukuthi usangibona namanje, kade ngagcina ukusebenza nawe.
English:
Madam House Chairperson, since 1994, the South African taxpayer has paid bailouts that amounts to R57 billion to the SA Airways. The SA Airways is bankrupt. The organisation is riddled with cadre deployment, corruption and entitlement amongst the unions representing the 11 000 employees.
Who in their right mind demands any salary increase at all from a bankrupt employer, let alone an 8% increase way above inflation? The irony is that they have been granted such an obscene increase by giving away other people's money.
Just this year alone, R5,5 billion in bailouts has already been paid to SA Airways all of it having to be borrowed at huge expense to future generations. Despite section 55 of the Public Finance Management Act, PFMA, that requires that the accounting authority submit financial statements within five months of the end of the financial year, the SA Airways board has not tabled annual financial statements for the past two financial years and is rapidly heading towards the end of the third financial year.
The SA Airways board of directors are simply flouting the law. They seem to think they are above the law and should be lauded for ignoring it. Section 22 of the Companies Act prohibits any company from continuing to trade when it is unable to pay its debts when they become due. This was made patently clear last week when Pravin Gordhan, the Minister of Public Enterprises, and the SA Airways board warned employees that SA Airways might not be able to pay salaries at the end of November.
There can be no doubt that the SA Airways directors are allowing SA Airways to trade recklessly and are acting in
violation of section 22 of the Companies Act. It is not only Dudu Myeni, the corporate warlord, who should be declared a delinquent director. It is unconscionable that the current directors allow SA Airways to continue to trade recklessly whilst they hold out a begging bowl for ever more bailouts.
The SA Airways board treats Parliament with complete disdain. Fourteen days ago, the Standing Committee on Public Accounts, Scopa, instructed SA Airways directors, who agreed, to provide the Scopa with certain documentation within 48 hours. The SA Airways is due to appear before the Scopa again on Wednesday, tomorrow, and yet none of the documents requested from SA Airways have yet been provided.
The board director who glibly quotes an unsupported figure of more than R40 billion that it would cost to liquidate the SA Airways is clearly attempting to frighten Parliament into agreeing to more bailouts. South Africans from all walks of life whether very poor or very rich have had enough of massive bailouts for SA Airways and it is only the ANC and the trade unions that
stubbornly persist with maintaining the SA Airways as a state-owned entity.
The SA Airways must be put into business rescue, the government guaranteed debt must be accommodated and SA Airways must be sold for whatever the best offer received from Branson, Emirates Airlines, Ethiopian Airlines or any other buyer. That is bottom line, Madam House Chairperson.
Thank you House Chairperson, the industrial action by the workers at the SA Airways is an indictment on the poor management of not only the SAA but the general state of state-owned enterprises.
The poor management is not accidental but it is part of a broader and co- ordinated agenda and machinations by the clique now in power; only in power as extensions of the greed and the desires of the finance years in the private sector. The objective is to deliberately run down the critical and strategic state-owned entities so that in the end they are privatised and handed over on a silver platter to the friends of those in power. This is a
classic state capture by the present regime under President Cyril Ramaphosa.
The workers are made to be casualties of this process. It is the workers who must bear the brunt of the greed of the private sector and woeful incompetence and the brazen corruption of the ANC politicians and their appointees at the state-owned enterprises.
The industrial action by the National Union of Metalworkers of SA, Numsa, and the SA Cabin Crew Association, SACCA, was a response to these evil machinations. It was a rejection of the attempts to make workers casualties of a battle that they are not part of. It was an affirmation of the central role workers play not only at the SAA but in the economy in general.
The failure of the SAA must be put squarely on the shoulders of Cyril Ramaphosa and Gordhan's government, who have failed to stabilise the state- owned entities. They have been presiding over the government for two years now. The SAA, like other state-owned entities such as Eskom, Denel and others are continuing to deteriorate.
There is no comprehensive plan by the Ramaphosa - Gordhan coalition to save state-owned institutions and the broader economic conditions of high unemployment. President Ramaphosa keeps misleading the country with investment conferences that promises billions of rands that no one feels on the ground. If there are billions in investment, why is the SAA planning to retrench workers?
It is therefore correct for workers to unite and fight against retrenchments. The failure of the SAA cannot be blamed on ordinary workers. They cannot be the ones who take responsibility by losing jobs which supports them, their families and their relatives. They are the ones who go to work everyday and relentlessly give up their time, sweat and blood for the SAA that has no regard for workers.
We cannot have an economy that keeps on shedding jobs on the pretext of prudent management of entities. We cannot have state-owned entities that are at the forefront of endangering the livelihoods of thousands of South Africans all because there is a bigger project of handing
over the sovereignty of the country to white monopoly capital.
The workers at the SAA must not lose their jobs. The workers at the SAA must be paid a living and respectable wage. The workers at the SAA must not fall victim to the greed of leeches in big business, which use their appointees in government to destroy state-owned entities. What is needed is a stronger government intervention at the SAA to rescue the airline from collapse.
The SAA should have its capacity developed to such an extent that they can dominate domestic travel routes together with other low-cost airlines. It should not be the case that we have airlines such as British Airways operating domestically in South Africa.
The SAA must own its aircrafts, train its own pilots, develop the capacity of its own engineers and expand its reach into the country and within the continent. The opportunities for growth and sustainability of the airline are massive. We only need to remove the political interference by the demigod of this administration, who
goes around masquerading as the messiah of the state- owned companies but who actually saw the seeds for their destruction while he was the Minister of finance. Pravin must fall. Thank you very much.
Hon House Chair, it is very clear that the hon Paulsen does not care about the livelihoods of the 11 000 workers at SAA. It is very clear that his party and most trade unions in South Africa are only interested in their own ideology and in their own interests and not in the long-term livelihoods of workers in South Africa.
Let me explain it. A salary with no increase is better than no salary. What is currently going to happen to those 11 000 employees is that they are going to be unemployed. That is what you want and that is what trade unions in South Africa want, because trade unions are only interested in short- term gains.
Trade unions are currently the tail that is wagging the head of government. It is trade unions that are preventing government from doing what is necessary to be
done to save our economy and to install the actual solutions that are necessary, especially in terms of our state-owned entities.
What are trade unions doing? If we look at Eskom, we see that a competent CEO was appointed - Phakamani Hadebe. He identified the crisis as an unsustainable and inflated wage bill. He proposed wage freeze and what happened? The trade union and the ANC member referred to the National Union of Metalworkers of South Africa, Numsa, as irresponsible because they don't form part of the tripartite alliance, but your own tripartite alliance trade unions that form part of your federation do exactly the same. The National Union of Mineworkers, Num, did exactly the same with Eskom - threatened with industrial action and stopped the plans of the new CEO and he resigned.
The same happened with the CEO of SAA. Vuyani Jerana also had the correct plans in place but was forced to resign. He saw that he was not going to be able to turn around the ship, because of trade unions.
We must take a stance and this government must take a stance. You have to take a stance against your own tripartite alliance. You have to say, enough is enough. You have to say that we cannot afford wage increases. This 5,9% wage increase is unsustainable. The back pay until April 2019 cannot be afforded. At this stage, SAA cannot even pay their salaries on time this month. How will they be able to pay this money?
We say that enough is enough! Down with bailouts! Stop the bailouts. At this point in time, money that should go too improving our infrastructure and should go to providing services to the poor is going to SAA and to failed state-owned enterprises. We cannot allow more bailouts. We are in a fiscal unsustainable position and government knows this. The President knows this. The Minister of Finance knows this, but his hands are tied, because of the power of trade unions.
Afrikaans:
Genoeg is genoeg! Daar moet standpunt ingeneem word. Hierdie ieologie kan nie wen nie. Die EFF en hulle maatjies kan nie wen nie. [Tussenwerpsels.] Hulle gaan
die land totaal en al vernietig met hulle ideologiese kortsugtige gesprekke en dieselfde met die ANC, wat nie standpunt teen die vakbonde wil inneem nie. Vyf-punt-nege persent kan nie 'n verhoging bo inflasie wees vir 'n instelling wat dit nie kan bekostig nie en vir 'n maatskappy wat insolvent is en wat 'n verlies van R500 miljoen 'n maand maak nie. Dit is onvolhoubaar. Genoeg is genoeg! [Tyd verstreke.]
House Chairperson, the ACDP thanks the IFP for calling for this much-needed debate. As we know, state-owned companies pose the greatest threat to the South African economy, with many repeatedly requesting guaranteed lines of credit from government. Clearly, this cannot continue.
The interest-bearing debt of 10 of the largest SOCs has grown from R266,7 billion to R738,3 billion in 2017-18 - a staggering increase of 177% over eight years.
While Eskom remains the most serious risk to the fiscus, over the past 13 years, SAA has incurred over R28 billion in cumulative losses. We know that the airline is
bankrupt, and in its current configuration, unlikely to ever generate sufficient cash flow to sustain its operations. Then we had a strike.
The workers, Numsa's own members are all poorer after the strike. After costing the workers eight days in unpaid wages in a strike that should never have occurred, Numsa accepted the 5,9% that was offered before the strike. In other words, the union has cost its members a quarter of their monthly salary for no additional financial gain. That is disgraceful!
The implementation of the increase is also dependent on the Minister of Finance's additional cash bailout. That takes the total cash bailouts to R59 billion over the past 23 years, while running at a cumulative loss. Clearly, this is unacceptable.
Government has an understandable reluctance to provide further bailouts to SAA for working capital to fund its daily operations. That is not capital investment; that is running costs. The very likely outcome of the settlement is that it will be a temporary respite.
There comes a point in every struggling company's life when shareholders must decide where to draw the line and how best to cut their losses. The government has never quite made that decision on SAA. That time is now. Instead, Treasury grudgingly gives and the department comes time and time again for bailouts. Clearly, the time for the hard decisions is now.
Business rescue is required. A possible private equity partner is there and it is required. We need to invite those equity partners before there is nothing left to say.
So, from the ACDP's perspective, let us cut our losses and let us see what we can save. It is like an aunty at your Christmas party. She is there, but how do you continue when she misbehaves? You have to deal with it once and for all, once and for all. Hard decisions are required. Now is the time for those decisions. I thank you.
House Chairperson and hon members, some in authority would have us believe that operations at SAA
are going like clockwork after an eight-day strike, which ended with a deal between management and unions last week Friday.
However, as you are aware, even the 5,9% increase given to the workers can only be implemented if and when SAA secures funds for working capital from the state. As usual, SAA hopes to receive this amount - another cash bailout from government - to fund its working capital needs. This is from an SOE that last published its annual financial report in 2017. To make matters worse, even in that financial report, SAA showed a loss of about R5,56 billion for the year.
Through these endless bailouts to SOEs like SAA, this uncaring government diverts resources that should be used to build houses for gogo Dlamini and tatu Jwarha from Site C and Site B in Khayelitsha. They use funds that should be used to address water challenges in Idutywa, Gcuwa, eRhini, money that should be channeled to the school infrastructure grant for the building of schools and the eradication of mud schools in rural provinces
like Limpopo, KwaZulu-Natal, the Eastern Cape, among others.
Given the amount of bailouts SAA has received from the taxpayers over the past two decades and the fact that South Africa itself is heavily in debt, it should be clear to all and sundry that the fiscus can no longer afford to extend further bailouts to the national carrier. The fact is having SAA 100% government owned is not sustainable under the current circumstances.
In addition, the airline has deep-seated governance challenges, which predate the likes of Dudu Myeni. Fellow South Africans, the fact of the matter is that SAA, like most SOEs, is a major drain on the fiscus.
For these and many other reasons that we cannot state here, due to time constraints, the UDM believes the time has come for government to find a strategic private equity partner for SAA. This must however be done in a manner that ensures that government has controlling interest, which will allow it to veto or overturn decisions. For examples in this regard, one has to look
no further than our fellow Brics partners, China and Russia.
As we undertake this important step, it is important for us as a country to ensure that the private partners bring their own money, skills and expertise to the table, in order to guard against using the same taxpayers' money to fund their stake at SAA, which, in our view, would be another sophisticated form of a bailout.
IsiXhosa:
Yiyani phaya kwiNkozo yoPhapho yase-Ethopia bafuna ukuninceda, bathi yizani sizakuninceda. Yekani ukuphakama kodwa nixakiwe yile nkonzo yophapho. La masela.
Hon House Chairperson, we cannot afford to continue to bail out our failing state-owned enterprises, SOEs. South African Airways, SAA, is in trouble and we all know it. Debt is too deep; revenue growth is too weak, and procurement problems are costing us too much. There is simply too many costs and not enough income. All households in South Africa know this problem.
We cannot keep adding to South African costs by raising VAT and fuel levies to pay for corruption and mismanagement. The rot must stop. The tens of billions sunk in to SAA have not yielded a profit or dividends for our country. Like Eskom, SAA has weakened the country by sucking up valuable funds we should have been using for service delivery, housing, and investment in growth- enabling infrastructure.
Good believes that SOE's must be financially independent from government and we will support anyone who can turn around the ailing SAA and stop the need for bailouts. State-owned enterprises must be run efficiently and professionally so that they yield dividends. We need those dividends and profits to be used for the benefit of all South Africans so that we can invest more for South Africa. We need more budget to ensure that social grants keep pace with inflation. We need more investment in critical social services like education, policing and health care. We need more investment in infrastructure that stimulates growth and job creation.
The argument that state-owned entities in this developmental state serve interests beyond profitability cannot be used to justify destroying the economy. Good is pleased that management and the unions have reached an agreement to work together. It is time to fix SAA so that we can fix South Africa.
Sepedi:
Modulasetulo wa Ngwako le Ntlo yeo e hlomphegago ...
English:
... the strike by members of two unions at SA Airways has brought to the national attention the grave challenges faced by SA Airways. The debate on the state- owned companies tends to polarise opinions in our country. Unfortunately, the real issues tend to be lost in the partisan squabble about state-owned enterprises versus private ownership, as if the two forms of ownership cannot coexist.
The ANC traditionally takes a rational approach that advances the interests of a country as a whole, informed
by the balance of evidence. State-owned companies play an important role in the country's economic growth as they provide strategic infrastructure and service delivery instruments. The National Development Plan, which is supported by the majority of parties in this House, emphasises the centrality of strong state institutions as key building blocks for a developmental state. For this reason, it is incumbent upon the government of the ANC to work tirelessly towards finding amicable solutions to the challenges faced by SAA and other SOEs.
A narrative has developed in South Africa that SOEs are mere feeding pans for greed and corruption. Those who promote this narrative forget to mention that these companies offer opportunities to thousands of young, poor and working class South Africans to receive training and experience in careers that the private sector does not ordinarily provide.
South African Airways for instance is currently offering airport operations and cabin crew training programmes to the general public. Young people, even from rural areas can apply and benefit from these accredited training
opportunities. State-owned enterprises such as Transnet have trained thousands of artisans, technicians and graduates in a variety of fields, thus contributing to much-needed skills and employment creation.
The ANC is committed to actively promoting a culture of integrity in our SOEs. These companies must embody high levels of professional ethics as part of a renewed public administration that is developmental, accountable and transparent. We condemn wasteful expenditure and corruption in all its manifestations at SAA. We support cost-cutting measures the company is pursuing and the recovery of misappropriated funds and stolen property.
The ANC must redouble efforts to ensure that all SOEs have boards and executives that are broadly representative of the demographics of the South African population. We want to see many more women as chairpersons and CEOs, especially of large companies like SAA, Eskom and Transnet. We must not lose sight of the fact that the business environment for airlines has deteriorated with the rising fuel prices and a substantial weakening of world trade.
According to industry experts, this year will be the 10th consecutive year in negative for the airline industry. We disagree with those who claim that the SOEs always fail. In our own country we have a number of companies in which the state holds a significant share such as the Airports Company of South Africa and Telkom that compete successfully in their sectors. On our continent, we are inspired by Ethiopian Airlines, a wholly state-owned company that has grown to become one of the most respected players in the aviation industry, with a footprint across Africa.
In conclusion, I want to finish by making an economic case why we need to turn around SAA for the good of our country. South African Airways - the South African national flag carrier, has a specific and important role to play as an enabler for tourism and a driver of economic growth through trade. The movement of people and goods by air is growing in our country and in the continent.
Tourism remains an important catalyst for growth in South Africa. It supports one in every 12 jobs. South African
Airways is a four-star rated domestic, continental and intercontinental airline. Mango is one of the most successful low-cost carrier on the continent. SA Airways Technical is the leading federal aviation administration, FAA-accredited maintenance facility in Africa. With the African Continental Free Trade Area treaty that has been ratified by the majority of African states, there are wonderful opportunities for South African state-owned companies to expand their operations on the continent and use their expertise to enter into partnership with African companies.
With a shared vision, we believe that SAA can develop a long-term strategic plan, driven by individuals who put the interests of the company and the people of South Africa before their own. South African Airways carries the name and flag of the nation and should once again be held in high regard as a symbol of national pride. I thank you. [Interjections.] [Applause.]
Thank you, hon House Chair. I think what we are doing here we are forgetting what is the root cause of why SA Airways and other state-owned entities
are in the position that it is today ... please do. First of all, let me highlight some of the challenges; SA Airways technical they contravened all the regulations, they disposed of our assets which we bought at R800 000 each and they sold them at R240 000 and the company that bought them then entered into a joint venture and secured a contract in South Africa for R1,46 billion. And, we are expecting SA Airways to succeed?
Coleman Andrews takes your entire fleet after being paid over R200 million for the two and a half-year contract. That is what his salary was. He sells his entire fleet and decides to go and lease the fleet again. So, you are still telling me that SA Airways can be successful. You get a R1,6 billion bail-out but you give R326 million in sponsorships. Does that make sense?
The solution is not in the sale or the privatisation, it is to deal with the root causes of why SA Airways is ... Yes, indeed, I think a business rescue with independent administration and supervision is the route to go if we want to save the SA Airways. I am not saying that SA Airways should remain solely a state-owned entity because
there is ... I cannot understand that with the challenges that the SA Airways faces currently - bankrupt as it is - you have the unions demanding an 8% increase. The question that I asked was: had there been a private industry, will they be demanding 8% or not?
Now, we have a call centre that we are operating from ... [Inaudible.] ... we have evergreen contracts that continue, we have water - the very same water which cost about R2 - which we are paying exorbitant amounts for, and very little or nothing ... I am told that our staff complement of almost 11 000 is three or four times more than any other airline for the number of flights that you have. The question is, if we will continue in this route surely we cannot expect it to be successful. As government we know these problems exist and the question is; what are we doing about it? If we don't have power and the control to be able to deal with it, put it under business rescue, let there be independent administration, give a guarantee ... [Inaudible.] ... [Time expired.] ... travellers that they won't lose their money otherwise they uncertainty ... [Inaudible.] ... SA Airways.
Sepedi:
Go bohloko banna.
English:
A few years ago SA Airways retrenched a thousand workers. Today we are talking about almost another 1000. The question is; what will actually happen to the lives of these people? Are they able to get jobs anywhere etc? Unemployment and hunger in that million will grow. That is a very serious problem, which says that South Africa has come to the end of the road. There is no money in the kitty to bailout most of the state-owned enterprises, SOEs, any further of course. This is the end of the road I want to say.
The handing over of control must be the last resort to keep SA Airways in business. It must be the last resort. For the government to get a share of the profit - of all the guarantees given to SA Airways and freed of all obligations to hand out perpetual bailouts - then we need to take that as the only option. Here, I am therefore talking about going to a business and saying that, take 49 and I remain with 51. We then can be able to move
forward and share. At the same time we will save the lives of the people.
The SA Airways will still display national identity. As for jobs, the government must see to what extend attrition can work. Thereafter, a strategy must be in place to preserve as many jobs as possible. Finally, for those who will be retrenched, the government must help with the retraining and reskilling. Australia, the United Kingdom, UK, Germany amongst many others have all put the running of their airlines in the hands of business people and South Africa cannot retain SA Airways as a vanity project, hence I am saying we need to look at a ... say half-half so that we then can be able to survive.
However, the working people there have to be saved. It must be a proper business and run as a business. If not, the government must indicate where the money will come from to bail it out every few months. [Time expired.] From what everyone knows the government hasn't got any money but then you have to supply ...
Sepedi:
MODULASETULO WA NGWAKO (Moh M G Boroto): Re a leboga.
Xitsonga:
Hi swona.
Hon Madisha, no,
you can't do that. This is a sacred place. The Mace is in the House! Okay ...
IsiZulu:
Ngiyakuxolela bazakutshela ukuthi wenzeni uma ungangizwa.
Sepedi:
Ba tla go bot?a, mokgalabje. [T?hwahlelo.] Agaa, ke go tshwaret?e, mokgalabje. Agaa!
Thank you very much, hon House Chairperson. I would like to repeat what the hon Inkosi E M Buthelezi said when he opened this debate. In diagnosing the problem he said many have extensively diagnosed the rot and root causes for the failure. More recently some of the corrupt cronies have allegedly been fingered in the state capture. To summarise the rot; it is greed,
corruption, ... [Inaudible.] ... abuse of public funds, the deliberate disregard for our country's legislation, incompetent cadre deployment, compromised and unethical leadership.
The IFP has long held the view that SA Airways' reliance in state resources should be limited and phased out into a more sustainable cost model through a public private partnership agreement in order for it to become globally competitive, drive down costs and to restore service excellence. Hon Chairperson, as things stand now, SA Airways is trading recklessly as it has already been put. Instead of bailing out SA Airways, SA Airways should be bailing out South Africans. We are paying so much money to a business which is supposed to be generating money for the state and the fiscus for us to meet the competing priorities and challenges of our people to alleviate their plight and to deal with what we have consistently told the ANC the triple challenge of poverty, unemployment and inequality. That money should be coming from the SA Airways making money, yet those who live in conditions of poverty through their taxes have to bailout SA Airways.
We need to bite the bullet. No more bailouts because what you have done is that you have made bailouts a norm whereas they are an exception. It is inexcusable that we have bailed out SA Airways with over R57 billion and been a vacuum either way without any consequences, without any turnaround strategy and it continues as business as usual. SA Airways is holding the gun to our heads to say; if you don't bail us out then the economy will tank, but what has tanked is SA Airways.
Hon House Chairperson, the problem here is that we have a management crisis at the SA Airways and we have a leadership crisis. We need people who are fit for purpose with the necessary skills, knowledge and expertise to run the entity so that it can fulfill the multiple strategic priorities in which government continues to want it to be kept amongst those is for it to be an economic driver to be a jobs driver. However, as things stand now, SA Airways has become a drain on the National fiscus. As I said we need to bite the bullet. We have lamented long enough. The issue is; the Zondo Commission which is dealing with state capture should focus itself - because it is clear that the tentacles of corruption and state
capture were very much in the space of the state-owned enterprises, SOEs. We should be prioritising the Zondo Commission to be investigating why these entities continue to collapse.
If it means a particular focus on SA Airways and Eskom then we ... eh ... hhayi bo!
Sepedi:
MODULASETULO WA NGWAKO (Moh M G Boroto): Aowa, nna ga se nna.
IsiZulu:
Uyabona indaba ye-"sabotage". Kusho ukuthi kukhona inxeba esengilithintile ke.
English:
Hon Chairperson, fundamentally what we are saying is that, if we do not deal with the systemic and endemic issues in so far as management collapses are concerned we will not fix SA Airways. We are throwing financial solutions to nonfinancial problems. The SA Airways must bail itself out by doing the right thing everyday in
generating money. The National fiscus cannot afford to continue doing that. The legacy of SA Airways is R57 billion taken from our taxes whereas it is
R57 billion that should have gone to change the lives of our people.
Who is travelling on SA Airways? Why are we so fixated on keeping SA Airways ... [Time expired.] ... whereas the majority of our people who actually are travelling on trains, are travelling in undesirable trains. Why aren't you bailing out ... [Inaudible.] ... Prasa, for example, and buy new trains? SA Airways must shake up!
Madam House Chair, many politicians fear that their nations will be irrelevant if they abandon their money-losing, flag-flying airlines. In most places, the market would fill the gap, provided the government got out of the way. But national pride is powerful, costly and often stupid. What is SA Airways, SAA's stated vision?
I quote:
To deliver a commercially sustainable world-class air passenger and aviation service in South Africa, the African continent and to our tourism and trading partners.
Well, that's fail then. It is a commercial disaster bar none, and a massive drain on the fiscus. SA Airways only continues to fly with massive government assistance to the tune of some R57 billion cumulatively since 1994. Think about that.
The airline has tried to restructure ten times in the past two decades.
According to Sean Gossel, who teaches at the Graduate School of Business at the University of Cape Town, down the road:
Over 50 African countries continue to dabble in the airline industry despite the continent's poor track record, mainly because a national carrier is believed to be a source of patriotic pride and
economic status, both of which are very seldom borne out in reality.
South Africa, along with Zimbabwe [Interjections.]
On a point of order, House Chair.
Ntate [Mr] Maake,
on what rule are you rising?
I wouldn't know the rule [Laughter.]
Well, then sit down.
Okay, let me
listen.
Ja [Yes]. Did I hear the speaker to be saying that national pride is stupid? [Interjections.]
Hon Cachalia, do
you want to respond to that? That is not a point of order but do you want to respond to that?
It's a very stupid point. [Laughter.]
Okay. Thank you.
I'm not going to ... hon
No, hon Chairperson, that language is unparliamentary; referring to other members as stupid.
Hon Cachalia.
House Chair, I rise on Rule 92. The word stupid is not unparliamentary when used to describe something. Hon Cachalia is not referring to anyone, he's referring to a thing. Therefore, he's not out of order.
What I would want to say to the hon Radebe: I wanted to say that he referred to no one and I know through our conversions and our rules we have not ruled it unparliamentary. Thank you.
Right. South Africa, along with Zimbabwe, India, Pakistan and Romania still have tight controls over their airlines, all of which are in debt to the tune of many billions.
Many experts hold that a country should offer subsidies to a foreign airline to run routes that the government wants served. South Africa might not get the boost of having its flag carrier abroad, but taxpayers would win.
Anyway, all of this is moot. SAA is dying; it is in the departure lounge. A lesson that governments should never be involved in airlines. And if they do, a hands-off approach is needed, where government, which may or may not own shares, acts in the background to prop it up, but doesn't meddle much in day-to-day operations.
But the post 1994 ANC government has provided a textbook case for meddling, dictating labour hiring by way of cadre deployment at every level, and the facilitation of graft. For example, at SAA Technical, the maintenance wing, this meant an inflation of between 30% to 40% due to middle men in the overall expenditure of R3,4 billion.
For doing nothing, dololo. Nice work if you can get it, assuming you have zero morality, that is.
It might have also helped if SAA were located in a place where operating an airline hub makes sense. And in case you need a lesson in geography, we are situated on the southern tip of this continent, along with Australia, New Zealand, Chile and Argentina; we are the closest land mass to Antarctica.
One continental success story is Ethiopian Air. A government-owned but business-driven enterprise that by most accounts is the only true global airline in Africa with a network stretching from Beijing to Los Angeles to Sao Paolo. It has been so successful that other African countries are asking it to manage their airlines.
So, sell this albatross to them or to Richard Branson or anyone else who may be interested. We'll probably have to pay them to take it off our hands. In any event, SAA is a limited liability company and the cost of closure standing at R19,7 billion.
The choices are clear: close it down, place it in business rescue or pay someone to take it over. And you might even negotiate a small carry to feed your socialist ego.
But to continue to bail it out, having shouldered bailouts to the tune of mega millions is sheer unadulterated madness. [Time expired.]
And as for Dudu Myeni, lock her up and throw the key away. [Applause.]
House Chairperson, Ministers, Deputy Ministers, Members of Parliament and viewers at home, let me quickly go to just this last point about the socialist ego. Do you even know what the socialist ego is? [Interjections.]
The socialist ego is the one that you were speaking about which you said you know it is the one that equates to triple challenges. The society is not equal. Where the DA is sitting it wants unequal society. That is the social ego that you know. Let us tell you what our social ego
is. It is the one that moves towards a just society. [Interjections.]
With that said, we want to say, as the ANC: We support the revolution of Cuba, where Cubans continue to fight for their own freedom. We are saying to them they must continue to dispose and dispel the neoliberals that want to take over and dictate what happens to their country. [Applause.]
The strike at SA Airways has been called off by the two unions, National Union of Metalworkers of South Africa, Numsa and SA Cabin Crew Association, Sacca. The strike was settled basically on the terms of the management before the strike.
In summary, after two days of discussions under auspices of the Commission for Conciliation, Mediation and Arbitration, CCMA, the parties agreed on an increased 5,9% on total cost of employment retrospective to 1 April 2019, which will be paid in the February 2020 payroll, subject to availability of funding.
The section 189 of Labour Relations Act on consultation of possible retrenchment will be deferred to January 2020. Consultations on retrenchment will continue for SA Airways management categories outside the bargaining unit. The parties further agreed to establish a task team whose main objective will be to identify and consider cost-saving initiatives, including insourcing and contracts.
The fact that the unions decided to go on strike before entering into a CCMA-facilitated mediation process means there is a serious trust deficit between organised labour, those in management and the board of SA Airways. The fact that workers took their own company to a brink of collapse, because they would not accept a 5,9% wage increase, suggests that there is more to this dispute than meets the eye.
The most progressive aspect of the settlement is that the agreement to establish a task team made up of management and organised labour to consider ways to save SA Airways. As the ANC, we support this initiative and we hope that it succeeds. Government, trade unions, board executives
of state-owned companies, particularly those facing financial challenges can take a leaf out of the SA Airways as a model of a collective problem- solving strategy.
Now, we need to build a social compact and reject privatisation. I will repeat that: We need to build social compact and reject privatisation. As South Africans, we must realise that with the exception of the likes of the AfriForum, Solidarity, the DA and the FF- Plus, who are still suffering from the apartheid hangover, we are not too far apart in our desire to build successful South African institutions.
In our elections manifesto as the ANC, we call for the strengthening of the social compact between the government, business, labour, civil society and traditional leaders to build a developmental state. We unapologetically say that we will, and I quote:
Strengthen and consolidate existing state-owned enterprises to ensure that they remain focused on their mandates to support socioeconomic
transformation while improving the government systems and containing the costs of their operations. The ANC will extend public ownership guided by the feasibility studies in pharmaceuticals renewable energy and the banking.
In his reply, the President, in the state of the nation address debate that took place this year, 2019, said, and I quote:
We disagree with the view that the most effective and efficient way to provide services to our people is through the private sector. [Interjections.]
Madam House Chair! Madame House Chair!
Hon member, on what Rule are you rising?
Will the hon member be prepared to take a question?
Let me clarify you on policy and where the ANC as the government is headed first. I will come to you later on. Anyway, there is nothing that you are going to ask because you asked me some stupid things. So, I don't have time for that! [Applause.]
In essence, the ANC has committed not only to reject the neoliberal notion that says only the private sector is capable of delivering services distributing resources in the economy. In our manifesto, we further said that we will extend the role of the state in various sectors of our economy.
Of course, we made this commitment with determination to run a clean state and intensify the fight against corruption. Those who claim that the ANC is seeking to privatise SOEs should read the ANC 2019 Election Manifesto and listen to the President of the country and the President of the ANC.
In this debate, we must be honest with ourselves. Which developmental state in history has ever succeeded by opening up its industries to competition with foreign
capital as South Africa has done? Perhaps, a thought we can consider is to revisit the policy of open skies in our country.
This could be achieved by limiting of a period the licence of foreign and domestic privately owned airlines in order to reposition SA Airways to compete and recover the profitable routes that it used to service. We need to oppose the Solidarity Union's court application.
In this instance, we are aware of this Solidarity, which is organised labour wing of the AfriForum and the DA that exist in the worst neoliberal tendencies that served papers on SA Airways, the Minister of Finance and Public Enterprises, asking the High Court: To put the national carrier on a business rescue; might be a means to stop South Africa's loses; and the airline should be sold to private investors.
We are not going to privatise. You don't have the mandate to govern. We are governing and we are telling you. You can scream all you want. I wish to call on the President, the government and SA Airways and the majority of trade
unions at SA Airways to oppose Solidarity's court application.
As said earlier, the best way to save SA Airways and all our SOEs is by building social compacts amongst patriotic South Africans to solve the problems confronting this National Treasury, similarly to the task of the SA Airways. The ANC says that we need to look into strategic partnerships, and that is what we are looking into.
So, on this motion, there is no confusion: We are going to move; and we are going to save this airline. So, this confusion that you want to create is not going to exist. And, let me respond to you about the unions that you are speaking about. They are trade unions and they are progressive because they are the leftist trade unions - the organised labour that deals with organised labour force that we have. [Interjections.]
Public service, as we speak, is the highest employer of government. Who is employing more than us in these instances? Then people want to tell us that we must close
down the airlines. Are you saying people must further be unemployed because you are comfortable?
We are stating that we want strategic partnership that will be able to have conditions. The conditions will that the private sector should come on board to make sure that they assist with issues of alleviation of poverty and unemployment. That is a progressive strategic partnership that we are going to have and the state will own the higher percentage.
We need to stand together against the business rescue. The chilly warning by a certain gentleman who is so- called experienced business rescue practitioner on Sunday newspapers was that the shareholder that is government will lose absolute control of the company and the business rescue alone will decide on the way forward. This is where I will employ my hon Comrade Shaik Emam to say that he needs to listen to the call.
So, as the ANC, we are saying that all progressive organisations cannot allow this to happen. It will signal a major setback of the project of building a democratic
developmental state and an advice by neoliberalism. So, I implore you that we come together and discuss this matter.
The worst thing is that this setback against progress will be inflicted by a group with neofascist leanings, regardless of our differences as the ANC. We must call on the parties that understand the stride to stand shoulder- to-shoulder with the workers, the board and the government to oppose the handover of SA Airways to business rescue practitioners.
Let me respond to you now, I am ready because I am done with the speech. Now, let's speak to FF-Plus very quickly. There is not much that you said; we know that you were going to say the same things in any case: Business rescue - you want us to sell the airline.
You really are oblivious to the past injustices that we find ourselves in. This is what we are trying to redress and you are busy telling it is better to have a salary than not to have anything. There is a Labour Act that implores bargaining that should happen.
Now, when you come as a responsible Member of Parliament and you are telling us it is better to have a salary than nothing: Don't you care about the black lives? Don't you care about a life of a black person that is employed at the lowest skilled labour force? Then you want to tell us that we must just agree! [Time expired.] Ooh my God, when I was about to start. Is my time over?
Yes!
Eish, I wanted to speak to Mazzone. The ANC, you are on course. Thank you. [Applause.]
House Chair, I
extend my greetings to the hon members of the House. I'm very thankful for the opportunity to participate in a debate on this important matter that hon Inkosi Buthelezi has put for discussion.
I'd like to say from the outset that, having listened to the hon members who came to engage in the discussion, I'm not so sure hon Buthelezi would be so inspired, particularly given how he framed the discussion. He
premised the discussion on invoking a national sentiment that is still ringing in our heads - a very powerful statement that says we are stronger together. It is that sentiment that, through difficulties, keeps us going. I think that was a very powerful platform laid for this discussion. [Interjections.]
I'm sure that cannot be stupid. It is definitely not stupid, and no one can think of it as stupid given just the recent memory we have of how that slogan has carried us through the entire world. I think that is made to be part of this ... is really very important. [Interjections.]
South African Airways is indeed our national flag- carrier, capable of providing reliable and extensive air transportation capacity, linking South Africa with the continent and the world.
Unfortunately, it is objectively the truth that the airline has been financially and operationally challenged for many years as a result of both external and internal challenges.
It is important at this point to say that it is a world- wide phenomenon that the aviation industry is characterised by very thin margins, a phenomenon experienced by the best-performing airlines in the world. South Africa has the added challenge that its geographic location is outside of the main traffic flows of the northern hemisphere.
Compounding these challenges are high costs relative to revenues, inefficiency, low productivity and poor management decisions. These factors have all contributed to the multiplicity of problems at the airline.
It is undeniable that, for the airline to compete effectively and cease being a drain on the fiscus, it is imperative that it be turned around and be made fit for purpose.
The Minister of Public Enterprises, during his Budget Vote speech in this august House, indicated that the department supports the turnaround strategy of SAA.
The turnaround strategy has four main pillars, and I would like to spend some time on it: firstly, revenue stimulation and network optimisation; secondly, the organisational redesign of the entity; thirdly, dealing with supply-chain transformation, as a many of the challenges reside within this area; and, fourthly, the business process transformation, particularly targeting SAA Technical.
During the course of the year, that strategy has been reviewed and updated to take account of the challenging external competitive environment as well as progress in implementing the initiatives.
Despite the challenges it faces, the airline has been making progress. I would like to indicate a few of those aspects of progress in terms of the implementation of that turnaround strategy. Firstly, the airline has obtained approval to lease four A350-900 aircraft to be utilised on the long-haul routes of New York, Frankfurt and Hong Kong. These aircraft are expected to reduce fuel and maintenance costs and boost revenues. The fleet that was used to operate such routes has proven itself to be a
lot more costly in terms of maintenance and fuel costs. Secondly, the airline has concluded its organisational design exercise aimed at streamlining operational and decision-making processes and improving productivity. The airline has initiated the mandated consultation processes to give effect to that redesign. Invoking the provisions of the Labour Relations Act in pursuit of the necessary restructuring that should take place has already been introduced to the airline's stakeholder community. The airline has reviewed contracts with its top 20 vendors - the so-called evergreen contracts - which account for just over half of the company's total annual spend. The airline is implementing initiatives to reduce costs. Thus far, over R500 million has been saved.
In addition, the airline has reformed its procurement processes to strengthen governance and eliminate corruption.
A new CEO has been appointed at SAA Technical and other key positions are being filled. Procurement issues have been addressed and the airline is ensuring compliance
with the regulatory requirements of the civil aviation authority.
Importantly, over the past few months, the airline has started to put a management and leadership team in place that is committed to and capable of delivering on its goals.
Government has also pledged support to the airline to enable its turnaround. South African Airways already has a R19,1 billion government guarantee facility of which R11,8 billion is currently utilised. R5,5 billion was transferred to SAA in the current year to enable the carrier to repay debt and fund its working capital requirements.
In addition, during the Medium-Term Budget Policy Statement, Minister of Finance proposed that R9,2 billion be allocated to SAA over the next three years to repay its existing government-guaranteed debt. He also highlighted that the recovery of the airline was unlikely in its current configuration.
In this, we are in full agreement. Many of the colleagues who spoke here are harping on this question.
To this end, Cabinet recently approved that the state- owned airlines be consolidated into a single group structure. Cabinet also approved that the process of searching the market for strategic equity partners to explore possible partnerships be commenced. In addition to bringing the management expertise required to turn the airline around, such partnerships can result in the burden of any future recapitalisation being shared between government and such partners.
The department has issued a request for proposal for the appointment of transaction advisors to assist in implementing these Cabinet decisions. However, given the challenges facing the airline, achieving a successful turnaround requires alignment and commitment from all stakeholders, including SAA's board and management, government, lenders, employees and unions.
That is why the message that hon Buthelezi carried in his introduction of this motion is so important because it is
only when there is alignment and when we act together that we are likely to see progress earlier.
The decision by the SA Cabin Crew Association and the National Union of Metalworkers of South Africa, Numsa, to embark on industrial action was indeed regrettable and unfortunate in the circumstances. Rather than contributing to the much-needed recovery of the airline, the strike has only served to exacerbate its problems.
Again, having said this, it has also provided an opportunity in which the future possibility of acting together exists. I think confidence needs to be strengthened, and that is what we will be supporting that environment to achieve.
The further aggravation by court action at this time may also not be helpful to the situation. There needs to be a better, nuanced approach to dealing with this difficult matter.
The department believes that the recovery of the airline is still possible and that this can be achieved within
the parameters of the fiscal support already on the table, but this will require determined, concerted action across the board. In saying this, I am speaking to the issue of whether there is still the need for additional support, be it in the form of guarantees or cash injections. The existing arrangements do make for a possibility to undertake all these ventures without the need for the fiscus to be relied upon again.
This can ensure that jobs at the airline are preserved to the extent that that is necessary. This will also maintain connectivity with South Africa's key trade and tourism partners, with positive spin-offs for the economy, particularly in the tourism sector, which employs many low-skilled people.
As I conclude, this requires that we act together. Of course, it is true that very tough decisions in the immediate need to be made. But, as we do so, it should be that everyone who matters ... of course, ultimately the public is taken into confidence about measures that are taken to conclude this matter so that we have a viable airline. A possibility of partners in the external
environment will strengthen this going forward. Thank you.
Debate concluded.
Let me just clarify that that concludes the debate, hon members. In case there is a question as to why a member of the executive is responding, allow me to point out that it is line with Rule 130(6) as this is a matter of national public importance. In other words, it can't be the IFP that responds. That is just by way of clarification.