Hon Chairperson, hon Ministers and Deputy Ministers, hon members and comrades, leadership of the state-owned enterprises, SOEs, and the department, ladies and gentlemen, the primary resolutions of the ANC's Polokwane conference that relate to the Department of Public Enterprises are strengthening the role of state-owned enterprises, SOEs, and ensuring that, while remaining financially viable, SOEs, agencies and utilities, as well as companies in which the state has significant shareholding, respond to a clearly defined public mandate and act in relation to our overarching industrial policy and economic transformation objectives.
At the heart of a developmental state is socioeconomic development and therefore public enterprises should and can play a key role in the continuous emergence of a developmental state. The SA Forestry Company Ltd, Safcol, can play a catalytic role in promoting economic activities in rural areas, and Broadband Infraco should continue to counter the market failure in the provision and pricing of broadband communications capacity. As the ANC, we support the recognition that, given the Department of Public Enterprises' strategic position, the department can play a critical role in both the customer and the supplier community in catalysing socioeconomic transformation in all communities - a case of shareholder activism.
As stated in our January 8 Statement this year, the ANC called for the role of SOEs and development finance institutions, DFIs, to be crucial in achieving the New Growth Path goals and that these institutions would need to operate differently and more effectively. The ANC therefore welcomes the department's commitment to increase the number of access points to broadband, especially in underserviced areas. This, however, is unlikely to be significantly realised, given the very low budget allocation to broadband enterprises.
A note of caution is the Department of Public Enterprises' position that infrastructure tariffs must be structured in a manner that allows for cost recovery and investment attraction. This could be positive. However, the issue of cross-subsidisation is not raised, which poses a danger of the poor being excluded from access to key infrastructure such as electricity and broadband. This may also skew infrastructure roll-out in a manner that benefits big capital only, and critical public responsibilities linked to the SOEs' mandate might be neglected.
On 11 February this year, a report in Moneyweb stated that the Minister of Public Enterprises and the Minister of Communications held discussions on exploring potential synergies between Infraco and Sentech. The ANC welcomes this development and calls on Sentech to have the same approach to development for the sake of ensuring long-distance national and international connectivity to previously underserviced areas. Infraco has to rise to the challenge to ensure that high-capacity communication technology is a major driver to grow our economy and ensure access to socioeconomic services such as our key priority areas of education and health, among others.
Sadly, the budget allocation for transfers to SOEs has declined significantly. Most concerning is the budget allocation for energy and broadband enterprises contracts. This decrease is not in line with the government's need to address the critical shortage in communications infrastructure and electricity, and also not in line with the objectives of creating SOEs that must perform developmental functions. The deficit is being supplemented by loans and private sector investments. In the long term this may have adverse implications for tariffs. As a country in transition, public investment in economic network infrastructure is critical. It cannot be expected from SOEs to champion the expansion required to address historical backlogs, and meet current and future demand, purely from their balance sheets. Furthermore, the heavy reliance on loans will compromise the policy integrity of government in future and it should be cautioned against. Likewise, the burden cannot be transferred to citizens. Tariffs have to remain affordable.
Likewise, the bulk of the funding directed to Safcol is towards concluding land claim settlements, and the role of Safcol in providing wood-based products is not adequately explored. Safcol, through the beneficiation of wood, could serve as a catalyst to revive growth in the sector and create jobs for local communities.
As the second national long-distance network provider in South Africa, Broadband Infraco aims to influence availability, access and market pricing for long-distance services positively, thereby contributing to lowering the costs of doing business in South Africa. In order to achieve this, Infraco deployed approximately 12 125 km of high-speed fibre optic network across the country. This network is channelling internet traffic within the metropolitan domain and between the long-distance points of presence. The points-of-presence sites are facilities that contain the network termination equipment, which is used to connect wholesale operations to those that are required by last-mile service providers like mobile operators, government entities, internet service providers, and value-added network operators.
With regard to forestry, the development of forestry in South Africa arose out of colonial development strategies. What is peculiar about South Africa's development history, however, is that economic development strategies were specifically designed to benefit one racial group exclusively to the disadvantage of the rest of the country's population, particularly between the 1950s and the 1990s. The present developmental strategies of Safcol under the present democratic government must therefore continue to specifically achieve equity.
The forestry sector, through Safcol, can play a role in helping a developing country to progress towards its developmental path. It can do this by creating a platform for trade and manufacturing and, in this way, expand the economic base. Indeed, forestry has played this role in many countries that now have developed economies. In countries like Canada and Sweden, forestry kick-started industrialisation and created a platform for diversification in other industries. As these countries moved up the developmental path, forestry's relative importance decreased. At the same time, the forestry sector tended to move up the value chain, supplying more processed forest products and fewer commodities.
Safcol is government's forestry company, conducting timber harvesting, timber processing and related activities, both domestically and internationally. It is undergoing a strategy review. We need clarity on the future of Safcol. Since 1996 the forestry sector has undergone restructuring. There has also been talk about leasing and handovers. Stability is required, and Safcol should not be disposed of.
South Africa's forestry policy and the restructuring of the plantation sector were motivated by key policy objectives at the time, namely the recognition that it is more appropriate for the private sector to perform an essentially commercial function; the recognition that the state's historical role distorted round-wood prices through the long-term timber supply contracts; and many others. The above is an outdated view and should be replaced by my earlier views on the need for a developmental path for Safcol and forestry as a whole.
As the ANC, we welcome the view that the Department of Public Enterprises' strategic plan seeks to provide clarity on the future of Safcol. As the ANC, we look forward to a leadership in public enterprises that will be hands-on, bold, give decisive leadership and policy clarity in order to achieve a national democratic society.
I quote from our icon Mandela who said:
My government's commitment to create a people-centred society of liberty binds us to the pursuit of the goals of freedom from want, freedom from hunger, freedom from deprivation, freedom from ignorance, freedom from suppression and freedom from fear. These freedoms are fundamental to the guarantee of human dignity.
... an integral part of a developmental state.
The ANC supports this Budget Vote. [Time expired.]