Appropriations 1859 2.
Progress report on the provisional suspension from office of Magistrate L B Maruwa, a magistrate in Daveyton, tabled in terms of section 13(3)(f) of the Magistrates Act, 1993 (Act No 90 of 1993).
Report of the Constitutional Review Committee on a study tour to the Venice Commission and Strasbourg, dated 3 June 2011.
The Constitutional Review Committee (CRC), had observed that it has not been aggressive in exploring, interrogating and exercising its functions during the first 12 years of South Africa's constitutional implementation, as Parliament was busy adopting the necessary pieces of legislation, most of which were about major and complex reforms. However, the CRC, in determining its role in this Fourth Parliament, has considered the legacy of its work during the first three Parliaments, as well as the mandate it has received from the Constitution in terms of which it is to review the Constitution annually. In addition, since the new Parliament elected in 2009 has styled itself as an "activist" parliament, the CRC had in its 2009-2014 Strategic Plan located its mandate within the context of an "activist'' Parliament that is driven by the ideals of exercising its constitutional powers in a manner that is effective and efficient. It is within this context that it sought to reposition its role so that it could be more effective.
In realising its effort to bring its capacity on par with its critical task, the Committee identified various opportunities to enhance its knowledge and understanding by seeking assistance from institutions such as the Venice Commission (the Commission), which is perceived as the world's thinktank and depository of knowledge, expertise and practical skills relating to constitutional matters. The Commission is a consultative body which cooperates with member states of the Council of Europe and with other nonmember states. It is composed of independent experts in the field of law and political science. The members are senior academics, particularly in the fields of constitutional or international law, supreme or constitutional court judges or members of national parliaments. The Commission has 57 full member states which are all Council of Europe member states, one associate member state -Belarus, seven observer states, as well as South Africa and the Palestinian Authority (PNA), which have a special co-operation status similar to that of the observers.
To provide constitutional assistance, which takes form of opinions to states or other international organisations of bodies that have approached it for opinions in relation to draft constitutions or constitutional amendments.
Identifying and developing standards in the area of elections through, amongst other things, codes of good practice on elections, referendums and on political parties.
To provide amicus curiae briefs on comparative constitutional and international law issues.
To give opinions on constitutional aspects of legislation relating to courts.
To co-operate with ombudspersons through opinions on legislation that governs their work.
The Commission extended an invitation to the CRC to send a five-member delegation to its two-day plenary session, which was held at the Scuola Grande Dis Giovanni Evangelista in Venice on 15 and 16 October 2010. The delegation included the co-chairpersons; Adv SP Holomisa (NA) and Mr BA Mnguni (NCOP), Ms JE Sosibo (NA), Dr MG Oriani-Ambrosini (NA) and Ms M Smuts (NA). The other nine member delegation; Mr AR Ainslie (NA), Ms C Dikgale (NCOP), Mr MM Dikgacwi (NA), Mr N Koornhof (NA), Ms HF Matlanyane (NA), Ms BV Mncube (NCOP), Mr GT Snell (NA) and Mr SN Swart (NA) joined the five-member delegation for the exchange meetings in Strasbourg from 18-21 October 2010. The delegation was accompanied by Ms P Jayiya, Committee Secretary; Mr M Dano, Committee Researcher, and Mr J van der Westhuizen, Committee Assistant. The entire 14-member delegation held further engagements with members of the Secretariat of the Commission in Strasbourg.
to check the different procedures which other member states follow when amending their constitutions; and to establish whether there were African countries which were members of the Venice Commission.
The issues dealt with during the engagement with the Commission related to the constitutional function and the mandate of the "activist" parliament. Some areas of focus included the status of the implementation of second generation and socio- and economic rights, which should drive the transformation of the society; the accommodation of the institutions of traditional leadership within the democratic framework; and the performance of the system of provincial and local governments. The CRC has also considered bringing within its fold the ongoing debate on whether or not the judicial system should have an apex court or whether there should be a twin peak system headed by courts with distinct areas of jurisdiction, as at the present time. The CRC also alluded to the continued debate as to whether the property clause in the Constitution does not hamper land reform so as to address the legacy of colonialism and apartheid.
The issues discussed with the Commission were on two phases: Firstly, the CRC needs to interpret the Constitution to determine what it requires of it, as the South African courts could not be called to interpret the relevant constitutional provisions as they do not provide advisory opinions. Furthermore, there is at present no case or controversy with which a court can be seized. Therefore, the Venice Commission would be uniquely qualified and positioned to assist in this regard. Secondly, the CRC is of the view that if a "review" of the Constitution involves, not only assessing whether or not the Constitution requires amendment, but also its "health"including the state of its implementation and its impact in society in respect of transformation - there would be a need to develop a new methodology for such purpose. This methodology would have an enormous importance way beyond South Africa, as it could be used in other contexts in which constitutional democracy is undertaking the delicate process of consolidation within society. In certain cases, such diagnostic methodology could prevent situations in which both the country concerned and the rest of the world suddenly wake up to a situation in which a constitution has failed, or is about to fail, in its intended democratic mission or policy of transformation. The Commission would uniquely qualify and be positioned to undertake and develop this phase. However, the second phase follows the completion of the first phase. It will require a more intense co-operation between South Africa and the Commission, a relationship which would possibly be better suited to a time when South Africa acquires full membership in the Commission.
The CRC feels that its mandate of reviewing the Constitution annually must take cognisance of the fact that its object is a document with which there is general satisfaction both domestically and internationally. Therefore, the CRC is of the opinion that the review should only suggest amendments when necessary to improve such a document. In addition, the review should also consider dispassionately the status of the implementation of South Africa's Constitution and how much the wide gap between reality and legality is being bridged through the progressive implementation of the Constitution.
South Africa still enjoys a "special status" within the Venice Commission, originally due to it not qualifying for membership or observer status before the advent of democracy in 1994. This is an anomaly, as the Commission played a significant role, not only in the constitutional negotiations leading from apartheid to democracy, but also in assisting the Constitutional Assembly in formulating the final Constitutional of 1996. The Commission further played a vital role in assisting the consolidation of South Africa's democracy through its assistance to the Constitutional Court, as well as the creation of a forum in which African constitutional court justices meet to exchange professional experiences and foster constitutionalism throughout Africa.
The Commission had taken a decision in principle not to extend its membership beyond its current number. Furthermore, the "observer status" was no longer available, but the Commission would gladly make an exception for South Africa. This exception would be motivated, not only by the Commission's long history of exchanges with South Africa, but also in consideration of the value the South African constitutional experience holds for many other countries, especially those on the African continent. It was felt that the richness and uniqueness of the South African constitutional experience might add to the unique pool of knowledge and expertise gathered in the Venice Commission. The membership fee for South Africa in the Venice Commission would be limited to Euro 21 000 per annum, subject to possible limited annual increases across the board. The South African government would be responsible for identifying an extraordinary South African Constitutional Law expert, who would be required to attend the Venice Commission meetings in Venice four times a year, at South Africa's expense. Such expert, though, would be appointed by the South African government, and would be fully independent from it. Once South Africa acquired membership of the Venice Commission, it would be able to request the Venice Commission to express advisory opinions and provide other assistance in respect of legislation or constitutional reforms, which the South African government might intend adopting, or other relevant legal matters.
The CRC is of the opinion that the inputs of, and the co-operation with, the Commission will enable the CRC to provide a much greater contribution to the consolidation of South Africa's constitutional democracy and act as a political mechanism to the early detection of any constitutional shortcomings or threats to the fledging democracy.
The CRC received a briefing from Dr Sooklal, the South African Ambassador to the European Union (EU). This entailed a brief background on the European Parliament (EP), the EU Parliamentary Committee on Constitutional Affairs and its responsibilities, and the Delegation for Relations with South Africa. The Delegation entails formal interparliamentary relations between South Africa and the EU. Interaction between the two Parliaments is also included in the SA-EU Strategic Partnership Joint Action Plan, which aims to enhance high-level political dialogue by institutionalising regular Parliamentary interaction. The existence of the Delegation for Relations with South Africa provides a great opportunity to lobby for support on SA's various issues of interest utilising the close relation that exists between the EP and South Africa. The Delegation also provides a platform for South Africa to brief the EU and influence EU policy on issues of interest to South Africa.
In addition, the CRC met with Mr O'Boyle, the Registrar of the European Court of Human Rights. He addressed the Committee on the European Convention on Human Rights and its importance in the protection of human rights and fundamental freedoms in Europe. Furthermore, he updated the Committee on the establishment and activities of the European Court of Human Rights. Information was given on the composition of the Court, and practice and procedure in relation to lodging applications, the registration and processing of cases, legal representation, publicity and access to information, the relationship with other courts, as well as the execution of judgments. The Committee was also informed about role of the Registry in the adjudication of cases lodged by individuals and how the Court dealt with backlogs.
The CRC also met with Mr Michael Cashman, the Chair of the Delegation, in the Office of Delegation for Relations with South Africa in the European Parliament in Strasbourg. He registered his willingness to engage further with the CRC during his visit to Cape Town (South Africa) in 2011.
Furthermore, the CRC had an exchange of views with the Chairperson and members of the EU Parliamentary Committee on Constitutional Affairs. The briefing was around the composition, functions and powers of the Committee.
The study tour was an overall success and was a beneficial exercise in that it not only met the Committee's expectations with regard to its mandate and core objectives, but was also an opportunity to study international best practices. The constructive engagement with the Venice Commission and the opportunities for further engagements provide fertile ground for effective and efficient constitutional reform. The Committee is now in a better position to consolidate on the work it has already started in grappling with its mandate, and to chart a way forward in outlining the path it seeks to take in following up on its programme of action. The Committee is buoyed by the constructive engagements with the Venice Commission and will shortly organise a workshop wherein concrete proposals on how best to pursue its mandate will be thrashed out.
The verbal invitation extended by the Venice Commission to South Africa to become a full member of the Commission should be conveyed to the Department of International Relations and Co-operation and the Department of Justice and Constitutional Development.
The Venice Commission held an exchange of views on a number of draft opinions with a view to their adoption. The following is the synopsis of the engagements on the draft opinions and reports that were deliberated during the 84th plenary session.
The Commission was invited to hold an exchange of views with Mr Akika Minashvilli and Mr Pavle Kublashvilli, Members of Parliament of Georgia, and to examine, with a view to adoption, the draft opinion on the draft constitutional law on changes and amendments to the Constitution of Georgia, drawn up on the basis of comments by Messrs Bartole, Scholsem and Sorensen and Ms Nussberger. The Commission held an exchange of views and adopted the opinion on the draft constitutional law on changes and amendments to the Constitution of Georgia.
The Commission was invited to examine, with a view to adoption, the opinion on the draft law amending the law on judicial powers and the draft law amending the criminal procedure code of Bulgaria, drawn up on the basis of comments by Messrs Gstöhl, Hamilton and Jeremy McBride, an expert of the Directorate General of Legal Affairs and Human rights. The Commission held an exchange of views with Ms Margarita Popova, Minister of Justice of Bulgaria, and adopted the opinion on the amendments to the draft Act on Forfeiture in favour of the state of illegally acquired assets in Bulgaria. Furthermore, the Commission held an exchange of views with Mr Anastas Anastasov, Vice President of the National Assembly of Bulgaria, and decided at the request of the rapporteurs to postpone the examination of the draft opinion on the draft law amending the law on judicial powers and the draft law amending the criminal procedure code of Bulgaria.
The Commission held an exchange of views with Mr Sadullah Ergin, Minister of Justice of Turkey, on the planned implementation of the constitutional referendum and the Commission's role in this respect.
The Venice Commission was requested by the authorities of the Slovak Republic to prepare an opinion on the amendments adopted in 2009, to Act No. 270/1995 on the State Language of the Slovak Republic. In January 2010, the working group travelled to the Slovak Republic in order to meet with the authorities as well as representatives of the minorities living in that country.
The Commission held an exchange of views with Ms Másnohorská, Director-General for Global Challenges, Human Rights, International Organisations at the Ministry of Foreign Affairs of the Slovak Republic, and adopted the opinion on the Act on State Language of the Slovak Republic.
The Commission held an exchange of views with Mr Yuriy Prytyka, Deputy Minister of Justice of Ukraine, and Mr Pylypenko, member of Parliament, and adopted the opinion on the law on the judicial system and the status of judges and the opinion on law on the prevention of abuse of the right to appeal, both prepared jointly with the Directorate General of Human Rights and Legal Affairs of the Council of Europe. In addition, the Commission adopted the joint opinion by the Venice Commission and Organisation for Security & Co-operation in Europe (OSCE) and Office for Democratic Institutions and Human Rights (ODIHR) on the draft law on Freedom of Assembly in Ukraine.
The Commission was informed of the request from the Monitoring Committee of the Parliamentary Assembly to prepare an opinion on the constitutional situation in Ukraine, following the recent decision of the Constitutional Court to declare unconstitutional the Law of Ukraine "On amendments of the Constitution in Ukraine" dated 8 December 2004 No 2222-IV due to violation of the constitutional procedures for its consideration and adoption.
The Commission was invited to examine, with a view to adoption, the Report on individual access to Constitutional Justice. The Commission postponed the examination of this report and invited all members to inform the Secretariat about the accuracy of the report, in relation to their own country, before 15 November 2010.
The Commission adopted the joint OSCE/ODIHR Venice Commission Guidelines on Political Parties.
A report on the role of the opposition, prepared in response to the request of the Parliamentary Assembly, and drawn up on the basis of comments by Mr Sejersted, Ms Nussberger and Mr Özbudun following consideration by the Sub-Commission on Democratic Institutions, was also adopted.
The Commission was briefed on the results and conclusions of the meetings of the working group which met on 1 October 2010 and 14 October 2010 respectively. The Commission adopted a set of proposals concerning the working methods, prepared by the Sub-Commission on procedural matters, to be implemented as of January 2011 and to be reassessed at regular intervals. The Commission decided on the composition of the Scientific Council, the primary responsibility of which would be to contribute to the high quality and the consistency of the Commission's studies and opinions. The provisional composition of the Scientific Council would be as follows: Mr Helgensen, Mr Buquicchio, Ms Flanagan, Mr Paczolay, Mr Dimitrijevic, Mr Esanu, Mr Hoffmann-Riem, Mr van Dijk and Mr Jowell.
The Commission was requested to examine, with a view to adoption of the above-mentioned brief in relation to a request of the Croat Caucus to the House of Peoples of the Parliamentary Assembly of Bosnia and Herzegovina for review of the constitutionality of certain provisions of the Electoral Law of Bosnia and Herzegovina, the Statute of the City of Mostar and the Amendment CIause to the Constitution of the Federation of Bosnia and Herzegovina. The Commission adopted the Amicus Curiae Brief for the Constitutional Court of Bosnia and Herzegovina on the compatibility with international standards of certain provisions relating to local elections and the statute of the City of Mostar.
The Commission adopted the joint opinion by the Venice Commission and OSCE/ODIHR on the Law on Public Assembly of Serbia.
The Commission adopted the above mentioned on the basis of proposals from the European Co-ordination Forum for the Council of Europe Disability Action Plan 2006-2015.
In addition, the Commission adopted the report on the timeline and inventory of political criteria for assessing an election, previously adopted by the Council for Democratic Elections.
The Commission was informed about a request for an Amicus curiae brief by the Constitutional Court of the former Yugoslav Republic of Macedonia on amendments to the system of salaries and remuneration of elected and appointed officials.
The Commission was briefed by Mr Mauricioa Gonzalez Cuervo, President of the Constitutional Court of Columbia, on the constitutional situation in that country and possible co-operation with the Commission.
The mandate of the Department of Performance Monitoring and Evaluation was derived from Section 85 (2) (c) of the Constitution of the Republic of South Africa which states that the President exercises executive authority, together with the other members of the Cabinet, by coordinating the functions of state Departments and administrations.
In terms of section 10 (1) (c) of the Money Bills Amendment Procedures and Related Matters Act, No 9 of 2009, the relevant members of Cabinet must table updated strategic plans for each Department, public entity or institution, which must be referred to the relevant committee for consideration and report. Budget Vote 6 was referred on 23 May 2011 to the Standing Committee on Appropriations, hereinafter referred to as the Committee, for consideration and reporting. The Committee was requested to confer with the Portfolio Committees on Public Service and Administration, and Cooperative Governance and Traditional Affairs in terms of Rules 139, 303 and 304 of the National Treasury.
The Department of Performance Monitoring and Evaluation (hereinafter referred to as the Department) was promulgated in January 2010 in line with Section 85(2) (c) of the Constitution which provides that, the President has the executive power, together with the other members of the Cabinet, to coordinate the functions of the State Departments and administrations. As from 01 April 2011 the Department is under Budget Vote 6 after being removed from Budget Vote 1 (The Presidency). The establishment of the Department bears testimony to the government's commitment to effect positive, meaningful, and sustainable impact on the lives of South Africans. The President of the Republic of South Africa established the Department in the Presidency to ensure the successful implementation of the 12 performance outcomes- identified by the Cabinet- which drive the strategic direction of the government. The Department is tasked to: 1) introduce an outcomes approach to detailed planning, implementation and monitoring and evaluation of the 10 priorities identified in the Medium Term Strategic Framework (MTSF); 2) Promoting monitoring and evaluation in government; monitor the performance of individual national and provincial Departments and municipalities; and 3) monitor frontline service delivery.
Furthermore, the Department is set to work closely with the National Planning Commission and other transversal Departments in setting expectations for improved outcomes across the three spheres of government and other organs of state through a results-oriented approach. Among other things, the Department will review government's data architecture to ensure that the required performance information is generated; and ensure that this information is used in intergovernmental planning and resource allocation.
Helping institutions turn around blockages and non-delivery.
Budget Vote 6 is divided into four funded programmes that seek to achieve its mandate.
Programme 4: Public Sector Administration Oversight -The objectives of this programme is to coordinate and facilitate public sector administration oversight services.
Administration 22 538.0 45 945.0 50 136.
Outcomes Monitoring and Evaluation 24 743.0 34 130.0 43 326.
Integrated Public Performance Data Systems 21 742.0 34 333.0 31 351.
Public Sector Administration Ovesight 6 767.0 26 621.0 35 629.
The Department of Performance Monitoring and Evaluation (DPME) is allocated R75.7 million for the 2011/12 financial year. During the Medium Term Expenditure Framework (MTEF), the Department is allocated R141.0 million for the 2012/13 financial year and R160.4 million for the 2013/14 financial year. These allocations are divided into four different programmes namely, Administration (R22.5 million), Outcome Monitoring and Evaluation (R24.7 million), Integrated Public Performance Data System (R21.7 million), and Public Sector Administration Oversight (R6.7 million).
Table 1 (above) indicates that more resources (R24.7 million) are allocated to Outcomes Monitoring and Evaluation programme (programme 2). This is precisely due to its broad mandate which includes outcome facilitation to ensure the development of the outcome approach to performance monitoring and evaluation. It also includes the outcome research to support the learning of outcomes-oriented performance monitoring and evaluation across government and coordinates research projects. This is followed by Integrated Public Performance Data Systems which is allocated R21.7 million to provide support through Information Technology. This will ensure performance monitoring and evaluation data integration across government. The programme includes maintaining and administering the programme of action by means of focusing on data acquisition. Part of the programme includes monitoring and evaluating capacity building which aims to promote the use of data as a performance management tool.
With respect to the Public Sector Administration Oversight Programme, it received the lowest allocation of R6.7 million for the 2011/12 financial year. This programme is funded to develop and implement an institutional performance assessment tool and to monitor frontline service delivery. Part of its mandate will also include providing detailed analysis and monitoring and evaluation reports of strategic plans across government.
In terms of economic classifications, current payments received R72.7 million of the total budget for the 2011/12 financial year.
An amount of R50.
An amount of R21.8 million earmarked for goods and services.
An amount of R2.
An amount of R600 thousand earmarked for software and other tangible assets.
Furthermore, given that economic classifications in the budget are informed by three budget components namely, current payments, transfers and subsidies, and capital payments. It is important to note that there are no allocations for transfers and subsidies for the 2011/12 budget. This is due to the fact that the Department does not make any transfer payments to other agencies thus far. However, this might change in future given the incremental approach that is used by the Department to build its capacity.
3.1 The Department is aware of the transversal/overlapping of responsibilities but that it intends to work closely or in partnership with other stakeholders, including Statistics South Africa and the National Planning Commission.
3.2 The Committee noted that the Department was mainly undertaking pilot projects in order to minimize risks and to cut on wasteful expenditure, should those projects not succeed. The pilot projects would however not be prolonged.
3.3 The Department was not responsible for administration of the Ministry and the Deputy Ministry of Performance Monitoring and Evaluation, which fell under the administration and the Budget Vote of the Presidency.
3.4 The monitoring and evaluation of provinces and municipalities differed as per their developmental patterns; the Committee was concerned that there might be problems in ensuring effective monitoring and evaluation in the absence of norms and standards.
3.5 It was noted that the budget of the Department of Performance Monitoring and Evaluation in the previous financial year resided under Budget Vote 1: The Presidency, therefore its annual report was incorporated into the annual report of The Presidency.
3.6 Since its formal separation from Budget Vote 1: The Presidency on 1 April 2011, no oversight structure had been put in place by Parliament to which this Department could account.
Given the fact that the Department's mandate covers 34 national Departments, 120 provincial Departments and 278 municipalities, it is clear that more financial resources are needed for effective monitoring and evaluation.
4.1 That the National Assembly approve Budget Vote 6: Performance Monitoring and Evaluation.
The Budget Vote 10: National Treasury (which comprises the National Treasury and the South African Revenue Service) was referred to the Standing Committee on Finance on 09 March 2011. Thereafter, the Minister of Finance, Mr Pravin Gordhan; the Director-General of the National Treasury, Mr Lungisa Fuzile (the Director-General); and senior officials at the National Treasury briefed the Standing Committee on Finance (the Committee) on the Budget Vote 10: National Treasury and the updated strategic plan of the National Treasury. In addition, the Minister of Finance (the Minister); the Commissioner of the South African Revenue Service (SARS), Mr Oupa Magashula, and senior officials at the SARS briefed the Committee on the Budget Vote 10 and the updated strategic plan of the SARS. This report presents the Committee's deliberations with the National Treasury and the South African Revenue Service. Both briefings took place in Parliament on 31 May 2011.
of the Money Bills Amendment Procedure and Related Matters Act, No 9 of 2009.
The national macro-economic and fiscal policy.
Amendments to the fiscal framework, revised fiscal framework and revenue proposals and Bills.
Actual revenue published by the National Treasury.
Any other related matter set out in the Money Bills Amendment Procedure and Related Matters Act, Act No 9 of 2009.
The mandate also encompasses the Committee's function to legislate, conduct oversight on the Executive's actions and its entities. The Money Bills Amendment Procedure and Related Matters Act, No 9 of 2009 makes provisions for a procedure for this Committee to amend money bills. Furthermore, the Committee must consider and report on any matters that are referred to it for consideration and reporting. In any of its activities, the Committee may confer with any Committee in the National Assembly as provided in Rules 139, 303 and 304 of the National Assembly.
The National Treasury derives its mandate from Chapter 13 of the Constitution of the Republic of South Africa (the Constitution). According to section 216(1) of the Constitution, national legislation must establish a national treasury and prescribe measures to ensure both transparency and expenditure controls in each sphere of government. Provision of the functions and powers of the National Treasury are contained in Chapter 2 of the Public Finance Management Act (PFMA).
Promote transparency to improve financial accountability and enforce effective financial management.
An efficient, effective and development-oriented public service and an empowered, fair and inclusive citizenship.
In order to make this contribution, the National Treasury stated that it fully adopted the outcomes approach in preparing its updated strategic plan.
The National Treasury reported on the existing economic status. The National Treasury reported that, although the South African Reserve Bank projected a gross domestic product's (economic) growth of 3.7 per cent for the 2011 calendar year, there was gradual increase in economic growth - caused by stable macro-economic conditions. The National Treasury further reported that the inflation rate was 4.2 per cent as at April 2011 and that this moderate rate of inflation, in the South African context, created basis for low interest rates which was at a 23-year low as at May 2011.
1.8 per cent annually and that the Statistics South Africa's figures showed that the number of persons in the South African labour force increased by 213,000 between the last quarter of the 2010 calendar year and first quarter of the 2011 calendar year. Furthermore, the National Treasury argued that admission of South Africa into Brazil, Russia, India and China (BRIC) economies to form Brazil, Russia, India, China and South Africa (BRICS) economies, would present a platform for South Africa to contribute to shaping economic reform. BRCS is the group of the countries which are all deemed to be at a similar stage of newly advanced economic development. The National Treasury was pleased to state that the South African Revenue Service had exceeded its revenue target by R2 billion in the 2010/11 financial year.
However, the National Treasury reported that, although the existing level of the inflation rate as at April 2011 was moderate, it was projected to reach an average rate of 5.2 per cent in the 2011 calendar year and to reach 6.0 per cent in the 2012 calendar year. Thus reaching the upper limit of the targeted inflation rate bracket of 3 - 6 per cent. The National Treasury further reported that another risk to the economic environment was rising costs of production owing to rising fuel prices - a process that would translate into higher food prices and, in turn, higher inflation rate. The National Treasury stated that, although employment was projected to increase by 1.8 per cent annually, unemployment remained stubbornly high in South Africa. The National Treasury described erratic capital flows, like in many developing countries, as a challenge for the country. Global risks affecting South Africa were reported as follows: slow demand in Europe (one of the South Africa's significant trade partners) which could slow demand for South Africa's exports; European sovereign debt's and banking risks; and rising inflation rate in emerging economies which could negatively affect economic growth of these economies.
Creation of employment: The President of the Republic of South Africa, Mr Jacob Zuma, announced the creation of 5 million jobs by the 2014 calendar year during his 2011 State-of-the-Nation Address. As a result, R9 billion jobs fund was created to support the expansion of existing job creation programmes and to pilot other innovative approaches to employment creation - with a special focus on opportunities for young people to gain skills in productive employment. In addition, the proposed youth employment subsidy, which was being reviewed by the National Economic Development and Labour Council (Nedlac), was another initiative to encourage employment of youth.
Finding of savings and reprioritisation of expenditure: The National Treasury reported that a total amount of R30 billion had been identified and included in the 2011 Budget allocations. Reprioritisation of expenditure was described by the National Treasury to mean recoupment of funds from less important programmes to more important ones.
Reformed supply chain and more compliance: This entailed contribution to the work of Anti-corruption Task Team; and combating corruption and fraud in the public sector.
Social security and health financing: This entailed exploring sustainable funding models for these initiatives - partly aimed at implementing the first stage of the National Health Insurance which is aimed at strengthening the Health Care system in the country.
Infrastructure investment, city planning and development: Approximately R800 billion would to be spent on this initiative over the following three years.
The National Treasury comprises 10 programmes, namely: Administration (Programme 1); Economic Analysis and Forecasting, Taxation, Financial Regulation and Research (Programme 2); Public Finance and Budget Management (Programme 3); Asset and Liability Management (Programme 4); Financial Accounting and Reporting (Programme 5); International Financial Relations (Programme 6); Civil and Military Pensions, Contributions to Funds and Other Benefits (Programme 7); Technical and Management Support, and Development Finance (Programme 8); Revenue Administration (Programme 9); and Financial Intelligence and State Security (Programme 10).
The Administration Programme is responsible for the overall strategic management and support for the National Treasury. It comprises only the Corporate Service Division.
Implement an automated registry where departmental information can be stored, managed and accessed electronically and easily - in an effort to move towards efficient and effective paperless office.
The purpose of this programme is to provide specialist policy research, analysis and advisory services in the areas of macro-economics, microeconomics, and taxation, the financial sector, and regulatory reform. It comprises two divisions, namely: Economic Analysis and Forecasting, and Tax and Financial Sector Policy.
Explore models for financing the National Health Insurance (NHI), with the first steps towards its implementation as announced in the 2011 Budget.
The purpose of this programme is two-fold: to provide analysis and advice on fiscal policy and public finances, intergovernmental financial relations, and expenditure planning and priorities; and to manage the annual budget process and provide public finance management support. It comprises three divisions, namely: Public Finance, Budget Office, and Intergovernmental Relations.
Implement key local budget reforms to improve budget implementation and reporting.
The Asset and Liability Programme aims to ensure prudent management of government's financial assets and liabilities. It is made of a single division, namely: Asset and Liability Management.
Manage (actively) government's debt portfolio through buy-back and switch/exchange programmes. A debt level is set to rise to R1.4 trillion, which would be 39.
Maintain debt service cost, as a percentage of GDP, between 2.
Strengthen financial oversight and monitor economic performance of Development Finance Institutions (DFIs) like the Development Bank of Southern Africa and the Land Bank.
The purpose of this programme is to facilitate accountability, governance and oversight by promoting transparent, economic, efficient, and effective (TEEE) management in respect of revenue, expenditure, assets and liabilities (REAL) in the public sector. It comprises two divisions, namely: Specialist Functions and Office of the Accountant-General.
Provide targeted support to priority departments and municipalities to improve financial management.
The purpose of this programme is three-fold: to advance South Africa's economic interests through regular strategic analysis, engagement and negotiation at financial and economic forums; to increase Africa's voice and improve South Africa's participation in international institutions; and to promote regional economic integration in the Southern African Development Community (SADC) and strengthen economic links within South Africa. It comprises of a single division called International and Regional Economic Policy.
Increase shareholding in the African Development Bank to 6 per cent.
Facilitate engagements between regional and international financial institutions and forums, and the Ministry of Finance, e.g. Group 20 (G20), International Monetary Fund (IMF), World Bank and so forth.
The aim of this programme is to promote public and private investment in infrastructure and public services by providing the following: technical support for capital planning and Public Private Partnerships (PPPs); advice on financing alternatives for municipal development; and financial assistance for neighbourhood development projects. This programme has 6 divisions, including the following: the new jobs fund which supports the creation of self-sustaining employment; and the post-disaster recovery and reconstruction transfer which deals with post-disaster recovery activities.
Ensure improved infrastructure delivery, through the implementation of the Infrastructure Delivery Improvement Programme (IDIP).
Develop project appraisal methodology for capital and infrastructure projects.
The National Treasury reported that Programmes 7, 9 and 10 account directly to Parliament. These programmes were not dealt with during this deliberation.
Administration 276,551 248,661 281,088 1.6 2. Economic Policy, Tax, Financial Regulation and Research 106,245 86,060 120,364 13.3 3. Public Finance and Budget Management 187,117 157,437 198,938 6.3 4. Asset and Liability Management 20,822,800 20,813,904 822,594 -96.
Operational budget 72,800 67,204 72,594 -0.
Eskom 20,000,000 20,000,000 0 -100.
Land Bank 750,000 746,700 750,000 0 5. Financial Systems and Accounting 639,222 559,125 658,220 3.
Operational budget 577,054 496,961 595,207 3.
Transfers 62,168 62,164 63,013 1.4 6. International Financial Relations 565,222 558,683 812,380 43.
Operational budget 31,917 26,587 32,624 2.
Transfers 533,305 532,096 779,756 46.
Sub-total 22,597,157 22,423,870 2,893,584 -87.
Operational budget 1,388,222 1,187,539 1,460,894 5.
Transfer budget 37,316,681 37,038,617 21,137,297 -43.
Percentage of operational to transfer budget 3.7% 3.2% 6.9% 86.
Civil and Military Pensions, Contributions to Funds and other Benefits 2,698,187 2,697,847 3,139,833 16.4 8. Technical Support and Development Finance 1,779,185 1,474,065 4,156,180 133.
Operational budget 136,538 104,629 160,079 17.
Transfers 1,642,647 1,369,436 3,996,101 143.3 9. Revenue Administration 8,142,208 8,142,208 8,653,573 6.3 10. Financial Intelligence and State Security 3,488,166 3,488,166 3,755,021 7.
Grand Total 38,704,903 38,226,156 22,598,191 -41.
Comments and questions of the Committee are summarised in this subsection as follows.
The Committee sought clarity on the increasing government's wage bill, and on whether a higher wage bill was not a risk for the economy since a higher wage bill could imply that the demand might be boasted.
The Committee requested an explanation as to whether savings as reflected in the strategic plan could be as a result of underspending or doing things efficiently as the former could be misleading if it was referred to as savings since underspending could mean compromising service delivery.
With regards to ODA, the Committee requested more information on the funding intake into the developmental agenda.
In terms of the equitable share, the Committee raised a question on whether South Africa would be using data from 2011 census for planning purposes in the 2011/12 financial year.
The Committee requested to know the potential impact of the social and political developments in Northern Africa on the fuel price and inflation.
The Committee requested to know the degree to which Members could get access to information on fraud and corruption, as relevant information could be classified in terms of the proposed Protection of Information legislation.
The Committee wanted to know how many of the reported 213,000 new jobs were created in the private sector. It also wanted to know what steps are being taken in ensuring that the creation of 5 million jobs, as was announced by President Jacob Zuma, was achieved.
The Committee wanted to know where South Africa stood with regard to SACU and when it will be concluded, and if this would not destabilise neighbouring countries.
The Committee wanted to know the position of the National Treasury with regards to Public Private Partnership (PPP) for prisons. The Committee noted that there are logistical problems in ports, as trade are not executed with ease and ask the National Treasury what was done to address this challenge in ports. Richard Bay ports were used as an example where these challenges existed.
The Committee noted that, in terms of outcomes, the National Treasury did not mention any training plans (skills development) since it needs additional expertise for itself and the economy at large in order to grow.
The Committee sought clarity on the benefits that the BRICS group would develop for South Africa as a country. Furthermore, the Committee requested to be informed about plans South Africa has in order to ensure that African business community would seize opportunities that might be presented by BRICS.
The Committee noted the rising debt cost and sought clarity on why service costs were rising and how it would be managed to acceptable levels.
The Committee wanted to know what systems would be used to assess the performance of programme 1.
The Committee wanted to know what the current shareholding in the African Development Bank was.
The Committee wanted to know on whether the National Treasury was satisfied with implementation of the Public Finance Management Act by relevant entities.
The Committee noted that transformation within the National Treasury was minimal in terms of women representation in senior management positions which was not in line with South Africa's percentage of women in the country, and wanted to know if the National Treasury was satisfied with the transformation (female representation in critical leadership positions) within it.
The Committee wanted to know who would look after municipalities which were not directly targeted by the National Treasury.
In relation to comments and questions of the Committee, the National Treasury responses are summarised below.
With regards to the high wage bill, the National Treasury argued that South Africa needed an understanding in the public sector to balance considerations of those who required wage increases in relation to increasing inflation versus increasing employment, particularly of frontline service delivery as opposed to administrative staff. Furthermore, the National Treasury reported that it creates a budget every year to cater for cost of living increases and additional employment. However, the National Treasury further reported that the additional employment portion had been severely eroded over past few years due to higher than expected salary increases.
With respect to the appropriateness of tax rates, the National Treasury informed the Committee that South Africa operated in a tight fiscal environment - for example, the tax GDP ratio was more than 28 per cent during recession and currently it was 25 per cent since there was slow economic growth in the South African environment. The National Treasury added that they could widen the tax base by either increasing businesses or individuals taxes (or both), or by creating more businesses that pay tax, but it was not happening at the required (or expected) rate.
With regards to SACU, the National Treasury responded that it was not the intention of South Africa to negatively contribute to the fiscal sustainability of neighbouring countries, but the current formula of SACU and the way of doing things with neighbouring countries was not sustainable in the long run.
In response to a question on staff training and skills development, the National Treasury explained that good progress is currently made in the talent management programme. There were a series of training activities, namely; training of chartered accountants and other accountants which is led by the Accountant-General.
With regards to BRICS and the benefits it might bring to South Africa and the African continent, the National Treasury responded as follows: Africa, of which South Africa is part of, is one of the biggest economies in the world, and agreements signed provides for areas of cooperation on trade, investment, and sharing research and ideas. The National Treasury argued that these agreements promoted competitive cooperation and advised that businesses should develop creative and innovative ways of deriving maximum benefits that would be presented by the inclusion of South Africa in BRIC to form BRICS.
With respect to savings and underspending, the National Treasury reported that savings of R30 billion at the end of 2010/11 financial year were as a result of withdrawal from programmes which were no longer relevant to the country. The National Treasury informed the Committee that savings were defined differently from underspending. Savings was further defined by the National Treasury to mean cheaper ways to procure goods and services by the departments- real savings.
With regard to the equitable share and the use of Statistics South Africa's updated figures, the National Treasury explained that it would be ideal to make use of the most recent numbers but it takes time to process high volumes of data from the census. This would be the reason for the delay in the use of data from the latest census. The National Treasury pointed out that the 10-year gap between censuses that were conducted in South Africa remains a challenge with regards to the appropriateness of data. This is the reason why the National Treasury would use updated data if it was available before it embarked on some of its projects.
With regards to supply chain, the National Treasury reported that information on the procurement of goods and services would be published on their website -including information in black-listed service providers.
The National Treasury reported if it could still find properly structured PPP's in the area of building prisons; where designs were not expensive and service providers delivered what was required at a reasonable price, it would remain committed to persuing PPP's.
With regards to challenges in mining activities and trade, the National Treasury admitted that logistics and transportation system (trading) remained a challenge in South Africa. Examples provided by the National Treasury were that licensing for water and access to energy was challenging for the mining sector. However, the National Treasury revealed that some remedies to these challenges would be partly addressed by R800 billion which was intended to address these challenges. National Treasury further indicated that Eskom would invest 36 per cent of the R800 billion, while Transnet was making certain investments to partly address these challenges.
With respect to the 14 per cent increase in spending, the National Treasury explained that it was as a result of economic research at different universities.
In relation to a question on debt costs, the National Treasury responded that South Africa ran a deficit during the recession owing to its counter-cyclical policy - for example, debt levels had to be increased in order to minimise the negative impacts of the most recent global economic crisis and that the higher levels of debt meant a slight increase in debt service costs. However, the National Treasury was proud to emphasis than South Africa compared favourably to most countries since the debt, as a percentage of the GDP, was currently at 40 per cent.
To a question on transformation and women representation in senior management position, the National Treasury responded that 3 of its 10 Deputy Director-Generals were women - although 1 of them is in an acting capacity. However, the National Treasury further reported that it was increasing the number of women in senior management positions in line with demographics.
With regards to compliance with the PFMA, the National Treasury responded that compliance with the PFMA was at a slow pace. The National Treasury reported that, in order to address this, specific departments facing financial management challenges had been identified and targeted and the National Treasury had reached an agreement on how they were going to work together in addressing financial management challenges.
With regards to shareholding in the African Development Bank, the National Treasury mentioned that the current shareholding was more than 200,000 shares in the bank, which could be translated to approximately 4.6 per cent. The National Treasury added that it was the third largest shareholders in the African Development Bank and that it was undersubscribed by 50 per cent. There was however room for increasing its shareholding in the Bank.
With regards to the impact of the northern Africa's social and political developments on South Africa, the National Treasury reported that Lybia was responsible for 2 per cent of oil supply, so it was not that significant and did significantly explain the type of increase realised in oil prices.
With regards to service delivery challenges at the local government, the National Treasury responded that it was always the challenge of adequately funding municipalities that was negatively contributing to service delivery, but there was a host of things including human problems, incorrect political choices, lack of planning, appointment of inexperienced and unqualified people into strategic positions and poor procurement practices. The National Treasury added that only a few municipalities could not perform better due to insufficient funding.
With respect to creation of jobs, the National Treasury reported that most of jobs were created in the private sector, mainly in sectors of finance and manufacturing.
Increased cost effectiveness, internal efficiency and institutional respectability.
SARS explained that the above-mentioned core outcomes manifest along the entire trader/taxpayer value chain which would be achieved through compliance philosophy. SARS further explained that compliance philosophy links its actions to the degree of taxpayer/trader compliance which would be achieved by increasing efficiency resulting from the Modernisation programme.
Effectively second human resources to broaden engagement with low revenue generation taxpayers and traders to improve tax and customs compliance.
Strategic priority 7: Deepen key external relationship to manage the whole value stream.
Conclude the voluntary disclosure programme to encourage proactive disclosure of non-payment by non-compliant taxpayers.
Implement a revised service delivery philosophy, service charter and channel strategy that meets taxpayer/trader needs.
Enhance a service offering (e.g.
Enhance the traveller experience when entering and leaving the country.
Embed (further) the SARS' values-based leadership model with appropriate resourcing and capabilities.
Accelerate the development of a small business segment in support of entrepreneurship, economic growth, and job creation - including the enhancement of the Turnover Tax system.
Build an external skills pipeline to enable sustainability and creation of employment.
Build institutional respectability and service delivery excellence for SARS and its governmental partners.
The South African Revenue Service reported that a focus to achieve its outcomes would be done in line with government's outcomes approach and that it would be tracking its progress. The following targets of SARS are summarised as per core outcomes.
Table 2 (below) presents performance targets to assess the achievement of this core outcome.
Achieving progress against identified benchmarks [e.g.
Table 3 (below) presents performance targets to assess this core outcome.
Cash recovered from debt book (Rbillion) 8.
Achieving progress against identified benchmarks (e.g.
Table 4 (below) presents performance targets to assess this core outcome.
Average processing turnaround time for PIT returns (working days) 1.7 1.7 1.7 1.
Average processing turnaround time for CIT refunds (working days) 2.85 2.85 2.85 2.
Table 5 (below) presents performance targets to assess this core outcome.
Treasury allocation to revenue percentage 1.3 1.2 1.2 1.
Table 6 (below) summarises the budget as per line item as follows.
Total funds available 8,331,000 8,910,573 9,512,723 10,037,482 0.
National Treasury Grant 8,066,810 8,653,573 9,244,374 9,757,215 0.
Interest income 48,000 30,000 30,000 30,000 -0.
Other income 216,190 227,000 238,349 250,267 0.
Funding allocation 8,331,000 8,910,573 9,512,723 10,037,482 0.
Modernisation and initiatives 838,376 896,700 957,296 1,010,105 0.
Enforcement 2,239,502 2,395,300 2,557,167 2,698,231 0.
Service 3,678,774 3,934,700 4,200,595 4,432,317 0.
Support 1,574,348 1,683,873 1,797,664 1,896,830 0.
Table 7 (below) summarises the human resource plan as follows.
Temps 862 650 550 400 per cent Net Growth Excl temps 1.9 per cent 1.9 per cent 3.0 per cent 4.
The Committee wanted to know if the target of R741bn was based on 3.4 per cent GDP, and whether it is possible that the growth rate continues on this trend that SARS may come in above its target.
The Committee noted corruption within SARS, and wanted to know what further steps do SARS intend instituting to stamp out corruption. The Committee commended SARS on good work done in this regard.
The Committee noted the interest income of R30bn and wanted more clarity on the matter.
The Committee sought clarity on over-collection. Whether the projection was intended to achieve that and how realistic projections were. The Committee also wanted to know what the impact of the 2010 FIFA World Cup was in over- collection.
The Committee noted that the strategic priorities from SARS decreased from 11 to 7 over the past 3 years, and wanted to know what benefits will this yield.
The Committee wanted to know what the cost and return on investment was for the modernisation programme, and at what point will this programme be completed. In addition, the Committee noted that it has become increasingly difficult to obtain a clearance certificate due modernization and requested reasons for this. The Committee also wanted to know to what extent compliant measures assist SARS in achieving its targets.
The Committee noted the increase in the tax payer database, and wanted to know the database was reliable.
Projections for accurate compliance remain a challenge because of the different amounts being collected. Higher economic growth, results in higher revenue collection. Although the 2010 FIFA World Cup assisted with revenue collection, the event costed a lot of money.
In terms of modernisation and return on investment, SARS is changing the institution in terms of design and products. Work started on VAT, to make it more efficient for both SARS and the tax payer. A huge change in customs modernisation is currently underway whereby less paper is produced and more electronic transactions are processed.
SARS admitted that corruption schemes exists and have lately arrested a lot of people, including 20 employees. Part of the benefits of modernizing VAT is the tracking of transactions people claim. Over the last two months, a process of modernising the VAT system has begun. This includes a higher level of security and enhanced identification of internal fraud capabilities.
In terms of the outcomes and strategic priorities, SARS had 11 priorities, with modernizing being one; there are still a few things outstanding. SARS have begun automating a lot of things, and linking up credit bureaus, there were issues of expansion, which were dropped, as priorities were revisited. Priorities continue to change, but core remains the same and are enduring.
Although SARS received a grant from National Treasury, the expenditure patterns did not match, hence the R30b interest on income.
With regard to tax certificate clearance, SARS indicated that tax clearance certificates are part of the modernization programme and that there are still a few flaws in the system. As SARS digitize and link systems, more stringent measures are put in place as to who get tax clearance certificates.
In terms of debt recovery, SARS reported that a total amount of R13.8 billion was recovered with the bulk the money recovered from administrative penalties. There were 86000 people that paid penalties, amounting to R761m.
The tax register contains over 10 million people. There are 4 million new SITE payers on the tax register which was automatically registered by their employers.
Having considered the strategic plans (including budgets) of the National Treasury and the South African Revenue Service, and the Budget Vote 10: National Treasury, the Standing Committee on Finance recommends that the House approves the said strategic plans and the Budget Vote 10.
The National Treasury should submit a detailed progress report to Parliament on the financing options proposed for the much-needed National Health Insurance Fund.
The National Treasury should submit a plan to Parliament on how they are going to contribute to the assistance of other municipalities that were not included in its strategic plan.
The SARS should provide the committee with a detailed report on the return on investment of the modernisation programme within 3 months after the adoption of this report by the House.
The Standing Committee on Finance would like to express its sincere thanks to the Minister of Finance, the Deputy Minister of Finance, and officials of the National Treasury and the South African Revenue Services for their continuous willingness to engage with the Committee on financial and fiscal issues in the spirit of cooperative governance.
The Standing Committee on Finance expresses its condolences to the Deputy Minister of Finance, Mr Nhlanhla Nene, for the loss of his family member - the Deputy Minister of Finance is in the prayers of the Members of the Standing Committee on Finance.
The Standing Committee on Finance further expresses its congratulations to Mr Lungisa Fuzile on his appointment as the Director-General of National Treasury.