Chairperson, Minister, Deputy Minister and members, budgetary work is one of the most important oversight functions of Parliament. The budget reflects the choices that government has to make and it is the tool government uses to achieve its economic and development goals. However, budget work also has a larger purpose, which is to contribute by ensuring openness, transparency and accountability for public resources. The DA sees the principle of accountability as very important in the budget process.
The Department of Public Enterprises has been allocated R1,2 billion for the 2013-14 financial year. A total amount of R1,05 billion of this budget are transfers, meant for Denel and Alexkor. Denel will receive R700 million for the recapitalisation of Denel Aerostructures, while Alexkor has been allocated R350 million, which was meant to settle any outstanding unfunded obligations under the Alexkor-Richtersveld community deed of settlement, including the tax obligation of R69,9 million.
In his state of the nation address, the President did reflect on infrastructure investment as a key priority of both the National Development Plan and the New Growth Path. South Africa's economy could be stimulated by implementing a long-term, government-led infrastructure investment programme. As government we should lay the foundation for growth.
This is where state-owned enterprises play a major role. State-owned enterprises invested over R105 billion, mostly in infrastructure, during 2011-2012. The National Development Plan sets the target of 5 million new jobs by 2020. In July 2011 Cabinet announced that President Jacob Zuma was heading the Infrastructure Commission, which was set up to improve the visibility and co-ordination of South Africa's R860 billion public investment drives. It includes all spheres of government, various national departments and state-owned enterprises.
To achieve this, the Department of Public Enterprises plays the key role in contributing to the objectives of the National Development Plan, which include growing the economy, reducing poverty and increasing employment. [Applause.] The DA supports these objectives. The department plans to contribute to these objectives through Eskom's build programme and Transnet's capital expenditure programme in order to improve industrial capabilities and the productive capacity of the economy. The department will also focus on the development of the business plans of the strategic integrated projects to meet these objectives. State-owned companies provide apprenticeships and learnerships and play a major role to support the youth to qualify themselves for the formal workplace.
Some changes were identified as requirements to the shareholder oversight process. I want to highlight just two of them. New sources of funding for the expanded investment plans need to be mobilised. The Department of Public Enterprises needs to provide the Minister with relevant support for bimonthly meetings with the top management of the state-owned companies to monitor progress in the implementation of key efficiency-enhancing initiatives.
State-owned companies are insulated from failure. They are not allowed to go insolvent because government generally bails them out. Furthermore, if they fail, the option of a takeover bid, which may be viable for private companies, is also out of the question. This means the boards and management may slump into complacency. The power of the boards of state- owned companies is often usurped by government. Government sets and drives the strategy of state-owned companies, appoints and dismisses the chief executive officer and approves the financial and major capital expenditures of the state-owned companies. This creates a complex situation in which various factors contribute to confuse the board regarding its powers and their execution.
Referring to Broadband Infraco, today about 17% of South Africa's population is able to access the Internet - a number that is rising by about 20% per year. The use of digital communications has changed society in ways that are not yet fully understood. It is clear, however, that young people have embraced the new media and this represents a potentially powerful means of fostering social inclusion. To prepare for the advanced economy, we need to develop and expand the broadband network. In 2012, the private and public sector laid about 7 000 km of new fibre-optic cable. The DA supports this critical infrastructure project as a basic foundation for economic competiveness. The DA also supports establishing national, regional and municipal fibre-optic networks to provide the backbone for broadband access. This will create more opportunities for all South Africans in an open-opportunity society for all.
As far as Eskom is concerned, municipalities use a mark-up on Eskom's tariff to supplement their income stream. What is further of major concern is the wide percentage range of the mark-up between the various municipalities. The selling of electricity has become the main income source for municipalities, not property tax, and the consumer is placed under increasing financial pressure to survive. Outstanding payments for municipal accounts are increasing and the negative spiral of bad debt is becoming worse. It is of the utmost importance going forward to find a balance to support or finance the capital infrastructure plan of Eskom and annual increases.
The impact on small and medium businesses cannot be overemphasised. Forced closures because of running costs that are too high will lead to more people becoming jobless and consumer bad debt climbing. The Medupi and Kusile power stations are not on track and any further labour disputes would be disastrous for our power supply. A 20-month schedule overrun - at an additional R60 billion - in the construction of the boilers for Medupi and Kusile, and R20,9 million in fruitless and wasteful expenditure - is a great concern. Despite these inefficiencies, Eskom executives have seen generous pay increases. In the 2011-12 financial year, Eskom paid executive members 109% more than they were paid in the previous year. In recent years, executive pay has risen from R8,8 million in 2010-11 to R18,5 million in 2011-12 to the latest projected figure of R34 million. That the Eskom chairman earns R113 500 for each and every board meeting he presides over, while the average annual income for a black African household amounts to only R69 632, is irreconcilable.
Ek sluit graag af met die kwessie oor die benadeling van Transnet- pensioentrekkers. Die pensioenfondse is ondergefinansier en die situasie is ernstig vererger deur die vervreemding van die fondse van hul belangrikste bate, naamlik inkomstegenererende T011-effekte. Die effekte ter waarde van R10,394 miljard het 'n koeponkoers van 16% gedra. Dit het aan die pensioenfondse 'n inkomste van R1,6 miljard per jaar gegee vanaf 1990, toe die fondse gestig is, tot Januarie 2001, toe effekte ter waarde van R7,7 miljard geskrap en "geruil" is vir M-Cell-aandele, en later MTN-aandele. Transnet het daarmee R1,2 miljard per jaar aan rente en R7,3 miljard aan terugbetalings gespaar.
Die trustees het in 2001 besluit om die jaarlikse verhogings van pensioene tot 2% te beperk, strydig met vorige besluite dat verhogings minstens 70% van die inflasiekoers moet dek. [Tyd verstreke.] [Applous.] (Translation of Afrikaans paragraphs follows.)
[I would like to conclude with the issue of the Transnet pensioners who have been disadvantaged. The pension funds have been underfinanced and the situation has seriously been worsened by alienating the funds from their most important asset, namely the income-generating T011 stock. The stock to the value of R10,394 billion carried a coupon rate of 16%. It provided the pension funds with an income of R1,6 billion per year from 1990, when the funds were established, until January 2001, when stock to the value of R7,7 billion was cancelled and "exchanged" for M-Cell shares, and later for MTN shares. As a result of this Transnet has saved R1,2 billion per year in interest and R7,3 billion in redemption payments.
The trustees decided to limit the annual increases in pensions to 2% in 2001, contrary to previous decisions that increases should at least cover 70% of the inflation rate. [Time expired] [Applause.]]