Chairperson, hon members, in terms of the Public Finance Management Act, a national adjustments budget may only provide for the following key areas, namely adjustments required due to significant and unforeseeable economic and financial events affecting the fiscal targets, unforeseeable and unavoidable expenditure recommended by the Executive or any committee of Cabinet Members to whom this task has been assigned, any expenditure in terms of section 16 of the PFMA.
Section 16 of the PFMA deals with the use of funds in emergency situations, money to be appropriated for expenditure already announced by the Minister during the tabling of the annual budget, the utilisation of savings under the main division of a vote for the defrayment of excess expenditure under another main division, the shifting of funds between and within votes and the roll-over of unspent funds from the preceding financial year. The Adjustments Appropriation Bill recommends R11,5 billion in additional expenditure. The recommended R11,5 billion of expenditure is broken down as follows: R4,1 billion is for funds rolled over from 2006-07 to 2007-08; R3,8 billion is for additional allocations for unforeseeable and unavoidable expenditure; and R700 million is for amounts already announced in the 2007 budget.
The money is for the restructuring of Alexkor and for contractual and operational spending on the pebble bed modulator reactor. R1,9 billion is for the higher costs of the 2007 Public Service salary agreement. The hon Sibhidla will deal with most of the votes in detail.
Let me turn to two matters - the budget votes of Public Enterprises and Correctional Services. The Portfolio Committee on Finance had an extensive interaction with SA Airways and the Department of Correctional Services regarding matters raised in this Bill.
The Department of Correctional Services asked for a roll-over of R512,9 million allocated for the construction of the Kimberly Prison. During this interaction with the department, the Chief Deputy Commissioner, without the assistance of the Chief Financial Officer, indicated that the contractor on site had estimated that only R344 million would be required.
Parliament could not be expected to rely on such information from contractors. We therefore had to rely on the information stated in the Bill. Hon members, I must also state that the National Commissioner, Mr Petersen, subsequently retracted, in writing, the statement made by his Chief Deputy Commissioner.
The commissioner has assured the portfolio committee, in writing, that the whole amount, which is R531,9, will be utilised for the construction of the Kimberly Prison. We have noted the response of the commissioner and referred the letter to the Portfolio Committee on Correctional Services.
National Treasury has also made a commitment to assist in the contract management of the other three new generation correctional centres, namely Nigel, Klerksdorp and Leeukop. The feasibility studies have been finalised on Nigel and Klerksdorp.
The Department of Public Enterprises is requesting an amount of R744 million for costs associated with the restructuring of SA Airways. This amount is required to cover the labour restructuring costs. South African Airways is undergoing fundamental restructuring, which requires that the shareholders must cover certain costs. Once more, we call on Parliament to support the restructuring process of SA Airways and pay sufficient attention to the costs and deliverables outlined in the turnaround strategy of SA Airways.
I must mention a certain paragraph on page 19 of SA Airways' annual report that the committee found to be unacceptable. It says:
South African Airways was partly recapitalised at the year-end by securing a R1,3 billion subordinated loan from a SA financial institution. This is the first step in the recapitalisation process and the proceeds were used to strengthen the financial position of the SA Airways. Simultaneously, a guarantee was provided by the SA government ...
Hon members, this is the statement that I want to emphasise -
... that SA Airways can elect, at any stage and for whatever reason, not to repay the interest or capital due to the financier, at which time the claims are automatically ceded through the government terms of the guarantee. Should the government settle any capital or interest due to SA Airways' election not to make payment to the financier, they will have no recourse to SA Airways.
Really, it was not necessary that SA Airways should rub this in, in the light of the recent calling of a guarantee issued to Denel. We support the restructuring of SA Airways, but not statements that encourage moral hazards. We all acknowledge that the state will incur costs in the event that a guarantee is called. No state-owned enterprise has the right to rub this in. The ANC is satisfied that this Adjustments Appropriation Bill satisfies the requirements of section 30(2) of the Public Finance Management Act. Therefore, we call on the House to support this Bill. Thank you. [Applause.]