9 NOVEMBER 2011
PAGE: 1 of 180
WEDNESDAY, 9 NOVEMBER 2011
____
PROCEEDINGS OF THE NATIONAL ASSEMBLY
____
The House met at 15:03.
The Speaker took the Chair and requested members to observe a moment
of silence for prayers or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col 000.
NEW MEMBER
(Announcement)
The Speaker announced that the vacancy which occurred owing to the
resignation of Mr S J Masango had been filled, with effect from
8 November 2011, by the nomination of Mr A Watson.
OATH
Mr A Watson, accompanied by Mrs S V Kalyan and Mr D J Maynier, made
and subscribed the oath, and took his seat.
9 NOVEMBER 2011
PAGE: 2 of 180
APPOINTMENT OF CHIEF WHIP OF THE OPPOSITION
(Announcement)
The Speaker further announced that Mr A Watson had been appointed
Chief Whip of the opposition with immediate effect.
Hon members, before we proceed, I wish to say that I have been
informed that the hon Watson has been appointed as the Chief Whip of
the Opposition. Congratulations, hon member, on your appointment.
[Applause.]
NOTICES OF MOTION
Mr T D LEE: Mr Speaker, I hereby give notice that on the next
sitting day of the house I shall move on behalf of the DA:
That this House debates the internal governance of Cricket South
Africa, and measures that need to be taken to regain public
confidence in our national cricket administrators.
I thank you.
Mr N SINGH: Hon Speaker, I hereby give notice that on the next
sitting day of this House I shall move on behalf of the IFP:
9 NOVEMBER 2011
PAGE: 3 of 180
That the House debates the appropriateness of the fact that full
salaries and other benefits are being paid to government officials
after they have been implicated in fraudulent or corrupt
activities or maladministration, and suspended from employment.
I thank you.
Ms M R MORUTOA: Hon Speaker, I hereby give notice that at the next
sitting day of the House I shall move on behalf of the ANC:
That the House debates the role of interfaith forums in promoting
moral regeneration, religious tolerance, social cohesion and
development.
I thank you.
Mr N J J KOORNHOF: Hon Speaker, I hereby give notice that on the
next sitting day of the House I shall move on behalf of Cope:
That the House debates the reasons why Moody’s has downgraded
South Africa’s debt outlook from stable to negative.
I thank you.
Mr M I MALALE: Hon Speaker, I hereby give notice that on the next
sitting day of the House I shall move on behalf of the ANC:
9 NOVEMBER 2011
PAGE: 4 of 180
That the House debates mechanisms to do away with unregistered
independent schools and vocational colleges.
I thank you.
Mr T D HARRIS: Mr Speaker I hereby give notice that on the next
sitting day of the House I shall move on behalf of the DA:
That the House debates how the Consumer Protection Act can be used
to improve service delivery in municipalities regardless of their
capacity and recommendations to improve the application of this
Act.
I thank you.
Mr J B SIBANYONI: Mr Speaker, I hereby give notice that on the next
sitting day of the House I shall move on behalf of the ANC:
That the House debates mechanisms for resolving political matters
other than resorting to the courts to solve political matters.
I thank you.
Ms D CARTER: Hon Speaker, I hereby give notice that on the next
sitting day of the House I shall move on behalf of Cope:
9 NOVEMBER 2011
PAGE: 5 of 180
That the House debates the continued uncertainty in the
agricultural sector, which has translated into a drastic decline
in the number of commercial farmers from 128 000 in 1980 to 40 000
today, and the impact this has on employment and food security.
I thank you.
Mr J H STEENHUISEN: Hon Speaker, I hereby give notice that on the
next sitting day of the House I shall move on behalf of the DA:
That the House debates the deplorable state of the police
accommodation at certain places solutions to improve the living
conditions of these affected police personnel.
APPOINTMENT OF MS P TLAKULA AS NEW CHAIRPERSON OF IEC
(Draft Resolution)
The CHIEF WHIP OF THE MAJORITY PARTY: Hon Speaker, I move without
notice:
That the House —
(1) notes that on 8 November 2011 Ms Pansy Tlakula was appointed
the new Chairperson of the Electoral Commission (EC);
9 NOVEMBER 2011
PAGE: 6 of 180
(2) further notes that she replaces outgoing chair Brigalia Bam
who chaired the EC from 1999;
(3) also notes that Ms Tlakula had held a previous post at the EC
as the chief electoral officer; and
(4) congratulates Ms Tlakula on her appointment.
Agreed to.
21ST ANNUAL HIMALAYAN STAGE RACE WON BY D BRAUN
(Draft Resolution)
The CHIEF WHIP OF THE OPPOSITION: Hon Speaker, I move without
notice:
That the House —
(1) notes that South African multi-sport enthusiast Deon Braun
from Durban won the 21st annual 160 km Himalayan 100 mile
Stage Race held from 18 to 22 October 2011;
(2) also
notes
minutes;
that
Braun
finished
the
race
in
18
hours
16
9 NOVEMBER 2011
PAGE: 7 of 180
(3) further notes that Braun scored a surprise win during the
opening 37 km stretch, from Manebhanjang at 2,100 m above sea
level,
climbing
1,500
vertical
metres
to
the
finish
at
Sandakhpur National Park at a height of 3,636 m above sea
level;
(4) acknowledges
the
dedication
and
training
involved
in
preparation for competing in such a taxing race that runs its
course through low-oxygen high mountainous altitudes, steep
inclines, rock, gale force winds, rapid declines, cold and
dense humid subtropical forests; and
(5) commends Braun for this incredible achievement.
Agreed to.
CONDOLENCES ON DEATH OF SEVEN ZION CHRISTIAN CHURCH MEMBERS
(Draft Resolution)
The CHIEF WHIP OF THE MAJORITY PARTY: Hon Speaker, I move without
notice:
That the House —
9 NOVEMBER 2011
PAGE: 8 of 180
(1) notes that seven Zion Christian Church (ZCC) members died in
an accident in Limpopo on Monday, 7 November 2011, while
returning from Zimbabwe where they attended a ZCC Prayer
Convention together with about 70 000 other church members;
and
(2) extends its condolences to the families who lost their loved
ones as well as the entire membership of the ZCC, while
wishing those injured a speedy recovery.
Agreed to.
2011 SOUTH AFRICAN RUGBY AWARDS
(Draft Resolution)
The CHIEF WHIP OF THE OPPOSITION: Hon Speaker, I move without
notice:
That the House —
(1) notes that the pride of SA Rugby was recently honoured at the
2011 South African Rugby Awards ceremony held on 3 November
2011 at Gold Reef City, Johannesburg;
9 NOVEMBER 2011
PAGE: 9 of 180
(2) further notes that SA Rugby honoured its top players, support
staff and coaches as sixteen awards were won across all age
groups and competitions in sixteen categories;
(3) acknowledges that Schalk Burger, commended for his superb form
in
the
Vodacom
Super
Rugby
Tournament
International Rugby Board, IRB,
and
the
recent
Rugby World Cup, was well
deservingly named SA Player of the Year, as voted for by the
accredited rugby media;
(4) further acknowledges that Bismarck du Plessis was chosen as SA
Players’ Player of the Year as voted for by all professional
rugby players in South Africa;
(5) congratulates all nominees and winners, which include the MTN
Golden
Lions
(ABSA
Team
of
the
Year),
Lions
coach,
John
Mitchell (ABSA Currie Cup Coach of the Year), Lions captain,
Josh Strauss (ABSA Currie Cup Premier Division Player of the
Year), Patrick Lambie (ABSA Young Player of the Year) and
Sevens Players, Cecil Afrika (Springbok Player of the Year)
and Sibusiso Sithole (Supersport Try of the Year);
(6) extends its appreciation to two retiring Bok stalwarts, Victor
Matfield and John Smit, who were also honoured by the South
African
Rugby
Union
at
this
event
for
their
contribution
towards not only Springbok Rugby but the game as a whole; and
9 NOVEMBER 2011
PAGE: 10 of 180
(7) wishes all nominees and winners the best for their future
playing careers and personal endeavours.
Agreed to.
RELAUNCH OF SOUTHERN AFRICAN LARGE TELESCOPE IN SUTHERLAND
(Draft Resolution)
The CHIEF WHIP OF THE MAJORITY PARTY: Hon Speaker, I move without
notice:
That the House —
(1) notes that on 7 November 2011, the South African Astronomical
Observatory, SAAO, the National Research Foundation, NRF, and
their international partners re-launched the Southern African
Large Telescope, Salt in Sutherland, six years after it was
first launched in November 2005;
(2) further notes that some major problems had to be overcome to
bring the telescope to its full capability, leading to the relaunch of the facility;
9 NOVEMBER 2011
(3) also
PAGE: 11 of 180
notes
that
the
re-launch
was
a
reaffirmation
of
the
international partnership that has been working on the Salt
project since its inception; and
(4) acknowledges
that
all
the
international
partners
in
the
project are allocated time, the extent of which depends on
their
interest
in
the
telescope,
with
South
Africa’s
allocation being one-third.
Agreed to.
ANNUAL WORLD RADIOGRAPHY DAY
(Draft Resolution)
Mrs S V KALYAN: Hon Speaker, I move without notice:
That the House —
(1) notes that Tuesday, 8 November, is annual World Radiography
Day;
(2) further
notes
that
this
day
supports
the
international
initiative to raise awareness and create further interest with
respect to radiography as a career and also focuses on the
shortage of radiographers;
9 NOVEMBER 2011
PAGE: 12 of 180
(3) recognises
that
it
was
Wilhelm
Conrad
Roentgen
who
first
discovered the wonderful field of radiography in 1895; and
(4) calls
upon
health
authorities
to
raise
awareness
of
this
career field, to inform and educate the public and prospective
students
on
the
vital
role
of
radiography
within
the
professional health sector.
Agreed to.
UN WORLD TELEVISION DAY
(Draft Resolution)
The CHIEF WHIP OF THE MAJORITY PARTY: Hon Speaker, I move without
notice:
That the House —
(1) notes
that
annually
the
observed
United
in
Nations’
many
places
World
around
Television
the
world
Day
is
on
21
November;
(2) further notes that the day recognises that television plays a
major role in presenting different issues that affect people;
9 NOVEMBER 2011
PAGE: 13 of 180
(3) recognises that television is one of the most influential
forms
of
media
for
communication
and
information
dissemination; and
(4) acknowledges
people
about
that
the
television
can
world,
issues
its
be
used
and
to
educate
many
real
stories
that
happen on the planet.
Agreed to.
2011 PUBLIC SECTOR INNOVATION AWARD
TO DEPARTMENT OF HOME AFFAIRS
(Member’s Statement)
Adv A H GAUM (ANC): Speaker, on 4 November 2011, the Department of
Home Affairs was the recipient of the annual Public Sector
Innovation Award for 2011 from the Centre for Public Service
Innovation. The award attests to the solid framework the department
has been able to implement to ensure that our government delivers
quality services to all our people.
The recognition of the Department of Home Affairs as leading the
turnaround strategy for better services to the citizenry is
therefore truly well deserved. This award follows the first
unqualified audit opinion for the department since 1994.
9 NOVEMBER 2011
PAGE: 14 of 180
In addition, the Department of Home Affairs was rated in the top 10
of the Humanities and Law section of Magnet Communications Survey
2010-11 for the employer of choice category.
The ANC conveys its sincere congratulations to the Minister and
Deputy Minister of Home Affairs, supported by their able management
team, for their dedicated efforts to ensure that the Department of
Home Affairs is able to create a better life for all. Thank you.
[Applause.]
PURCHASE OF VIP BUSINESS JETS FOR PRESIDENT AND DEPUTY-PRESIDENT
(Member’s Statement)
Mr D J MAYNIER (DA): Speaker, we were all shocked to learn this
weekend that the hon Minister of Defence and Military Veterans,
Lindiwe Sisulu, is on yet another shopping trip, this time for brand
new luxury VIP business jets for President Jacob Zuma and Deputy
President Kgalema Motlanthe. I am sure I speak for the House when I
say that it is an outrageous extravagance for President Jacob Zuma
and Deputy President Kgalema Motlanthe each to have a dedicated
long-range business jet, operated for their exclusive use by the SA
Air Force.
The price tag, reportedly estimated to be R1,6 billion, is the tip
of the iceberg, and would probably double if the operating and
9 NOVEMBER 2011
PAGE: 15 of 180
maintenance costs were factored in. The fact is that it is simply
wrong to spend R1,6 billion on new business jets when millions of
people in our country do not have housing, do not have access to
primary health care, and do not have access to basic services.
[Interjections.]
The President, Deputy President and Minister should be using
military aircraft, or chartered aircraft only in exceptional
circumstances. [Interjections.] If Prime Minister David Cameron can
fly British Airways, there is no reason why President Jacob Zuma
cannot fly SA Airways. [Interjections.] It’s high time more members
of the Cabinet began to enjoy the chicken or beef served up by SA
Airways. [Applause.]
CRICKET SOUTH AFRICA INVESTIGATION
(Member’s Statement)
Mr G P D MACKENZIE (Cope): Speaker, Cope welcomes the announcement
by the Minister of Sport and Recreation regarding the judicial
inquiry into the financial affairs of Cricket South Africa, CSA.
We believe that the Minister was responding to a written question by
Cope regarding this very matter. In September, Cope asked the hon
Minister whether he intended to take any action in respect of the
dismal financial management by CSA.
9 NOVEMBER 2011
PAGE: 16 of 180
That the Minister has done what the cricket fraternity is demanding
is indeed very gratifying. Corruption in all walks of life must be
defeated, and those who are destroying the social fabric of our
nation must be exposed for the crooks they are.
The jailing of three Pakistani cricketers in England is an
indication of the determination by governments of different
countries to stamp out fraud, manipulation and corruption,
particularly in sport. Cope supports the Minister in his efforts to
stem the tide of corruption in CSA.
It is clear that the majority of the board members in CSA perceive
themselves to be a law unto themselves. Their ganging up against
Dr Nyoka, the president of CSA, will be to no avail, as a judicial
commission will have powers to lay bare all that is rotten in CSA.
All South Africans and cricket-loving fans should hail Dr Nyoka for
waging a lone battle.
Now the matter is before Judge Nicholson and he has been empowered
by the terms of reference of the inquiry to dig deeper into the
affairs of CSA. We hope that, as a result of his work, South Africa
will learn of how CSA abused the trust of players and cricket
lovers. If it finds people have acted corruptly and fraudulently,
then the country must subject such people to the full rigours of the
law. We in Cope want justice to be served and the truth to be
revealed. I thank you.
9 NOVEMBER 2011
PAGE: 17 of 180
CORRUPTION IN DA-RUN MIDVAAL MUNICIPALITY
(Member’s Statement)
Mrs M T KUBAYI (ANC): Speaker, earlier this year, the DA employed an
election propaganda programme aimed at duping people into believing
that Midvaal was a clean, perfectly managed municipality. Voters
were promised that, should they vote the DA into more municipalities
in Gauteng, targeting Johannesburg, they would be run in the same
way as the Midvaal Municipality.
We are thankful that the voters saw through the DA’s lies and
ensured that its bid to secure more municipalities in Gauteng
failed. As the Public Protector’s report revealed, governing other
municipalities like Midvaal would have meant further opportunities
for party leaders to illegally take millions from the public purse
and breach municipal, financial and administrative laws.
By profiting from contracts worth millions, using his access to
information to score contracts for his illegal firm, and illegally
doing business with the very municipality he leads, Mr Andre
Odendaal has at last unmasked the real frightening face of his
party. Now the nation knows that the DA, far from being the champion
of good governance, is riddled with hypocrisy, fraud, deceit and
moral bankruptcy. Criminal charges must now be laid against
9 NOVEMBER 2011
PAGE: 18 of 180
Mr Odendaal and other municipal leaders and staff who colluded with
him.
The DA leader, Helen Zille, must now eat humble pie and apologise to
the Midvaal community for the damage the municipality has caused,
which includes compromising access to housing, and to the nation for
the lies she has spread regarding the Midvaal Municipality. Thank
you. [Applause.]
SADTU STRIKE COULD DISRUPT EXAMINATIONS
(Member’s Statement)
Mr J H VAN DER MERWE (IFP): Mr Speaker, once again, shockingly,
teachers belonging to the SA Democratic Teachers’ Union, Sadtu, are
threatening to strike in the middle of the matriculation
examinations.
Sadtu wants 53 000 Eastern Cape teachers to strike as from Friday.
They demand that the provincial education department reinstate about
4 000 temporary teachers whose contracts were terminated last year.
Sadtu also claims that the department failed to consult them over
the number of teaching posts the department will fund next year.
Almost every year now, Mr Speaker, teachers aligned to Sadtu find
some or other excuse to disrupt examinations and put the learners’
9 NOVEMBER 2011
PAGE: 19 of 180
futures in jeopardy. Teachers should respect the rights of learners
to education. Teachers should also demand that their union, Sadtu,
realise that every teacher has the right to uninterrupted teaching,
especially during exam times.
It is only a matter of weeks before all schools close and learners
begin their annual holidays. Why must the strike be called now? Is
it only to punish innocent learners, or pure blackmail?
The IFP strongly condemns the actions of Sadtu. We call on the
Department of Basic Education to demand that teachers put a stop to
disrupting schools during examinations. It is time that “the Blade”
did something. [Applause.]
FOOD PARCELS IN LIEU OF MONEY FOR EPWP WORKERS
(Member’s Statement)
Mr L B GAEHLER (UDM): Speaker, in today’s Sowetan it was reported
that over 500 Expanded Public Works Programme, EPWP, workers from
Limpopo have downed tools. They accuse the Department of Public
Works of unfair labour practices, because for two years the
department has given them food at the end of each month instead of
money. It is beyond our level of comprehension how our people are
expected to cater for other basic needs under these circumstances.
9 NOVEMBER 2011
PAGE: 20 of 180
While the UDM understands the food-for-work policy of the
department, which allows it to reward EPWP workers with food and not
with money in some projects, we believe that this policy needs to be
reviewed urgently, as it deprives our people of the freedom to
choose and prioritise their consumption and decisions. In fact, this
policy is no different from the method used by farmers under the
apartheid regime, where farmworkers were given food parcels and
alcohol for a month’s work. Every Expanded Public Works Programme
worker must be given a stipend for a month’s salary. Thank you.
EUROPEAN UNION DONATION TO AFRICAN ARTS INSTITUTE
(Member’s Statement)
Mr D W MAVUNDA (ANC): Speaker, the ANC believes that building social
cohesion through the support and promotion of arts, culture and
heritage activities at all levels is very important. Thus the recent
support and generous donation from the European Union to the African
Arts Institute is welcomed.
The funding is earmarked for leadership training programmes in the
arts in all African hubs, and aims to have people in every African
country with the skills to train artists in cultural policy,
fundraising and marketing.
9 NOVEMBER 2011
PAGE: 21 of 180
This is important as it allows for the development of effective
skills to develop creative industries on the continent and to look
after the interests of artists in Africa. The African Arts Institute
is partnering with GoDown Arts in Kenya, Groupe 30 Afrique in
Senegal, Doual’art in Cameroon, Casamémoire in Morocco and the
Goethe-Institut in Johannesburg to promote regional and
interregional and also international partnerships.
Also of significance is that this is an African project, undertaken
by Africans for Africans, and it reinforces local ownership and
building strong leadership in the African creative sector. I thank
you. [Applause.]
LIFE-THREATENING BLUE LIGHT BRIGADES
(Member’s Statement)
Me A M DREYER (DA): Mnr die Speaker, Suid-Afrikaners sien die
afgelope tyd al hoe meer Ministers in ampsmotors met flitsende blou
ligte jaag en wetsgehoorsame burgers eenvoudig van die pad af dwing.
Die houding spreek duidelik, “Te hel met die publiek!”
Verlede Saterdagoggend, 5 November, is Thomas Ferreira, 18-jarige
matriekleerling aan die Hoërskool Bastion in Krugersdorp,
niksvermoedend op pad met sy selfgeboude klein motorfietsie. Hy ry
9 NOVEMBER 2011
PAGE: 22 of 180
rustig oor die kruising van Windsor- en Paardekraalweg, want die
verkeerslig is vir hom groen.
Maar, Humphrey Mmemezi, provinsiale minister van Gauteng, is op pad
met flitsende blou ligte. Sy bestuurder steek links verby die
stilstaande voertuig voor hom, oor die geel streep, oor die rooi
verkeerslig, en tref die jong man op sy motorfiets. Die ongeluk
gebeur reg voor ander mense in stilstaande voertuie. Party neem
foto’s en ander wil help. Mmemezi, egter, gee vinnig pad.
Thomas lê nou in die Krugersdorp-hospitaal in ’n koma. Sy lewe hang
aan ’n draadjie. Burgers boet met hulle lewens vir ’n outoritêre
regime wat hulle mag misbruik met aggressiewe blouligbrigades. Soos
diktators, dink hulle hulle is bo die wet verhewe. [Tussenwerpsels.]
[Applous.] (Translation of Afrikaans member’s statement follows.)
[Ms A M DREYER (DA): Mr Speaker, in recent times South Africans have
been seeing more and more Ministers speeding in official vehicles
with flashing blue lights, simply forcing law-abiding citizens off
the road. The attitude clearly says, “To hell with the public!”
Last Saturday morning, 5 November, Thomas Ferreira, an 18-year-old
matric pupil at Bastion High School in Krugersdorp, was
unsuspectingly on his way on his home-made small motorcycle. He was
calmly crossing the intersection of Windsor Road and Paardekraal
Road, because the traffic light was green for him.
9 NOVEMBER 2011
PAGE: 23 of 180
But Humphrey Mmemezi, provincial minister of Gauteng, was on his way
with flashing blue lights. His chauffeur passed the stationary
vehicle in front of him on the left, over the yellow line, crossed
the red traffic light, and hit the young man on his motorcycle. The
accident took place right in front of other people in stationary
vehicles. Some took photos and others tried to help. Mmemezi,
however, quickly drove off.
Thomas is now lying in a coma in the Krugersdorp hospital. His life
is hanging by a thread. Citizens are paying with their lives for an
authoritarian regime that abuses its power with aggressive blue
light brigades. Like dictators, they believe that they are above the
law. [Interjections.] [Applause.]]
LAUNCH OF TECHNO GIRL PROJECT BY MINISTER OF WOMEN, CHILDREN AND
PEOPLE WITH DISABILITIES
(Member’s Statement)
Ms M D NXUMALO (ANC): Speaker, the ANC-led government has been
consistent, with the number of laws and policies it has enacted, in
empowering women to improve the quality of their lives and open up
their space so that their voices can be heard on matters concerning
their lives.
9 NOVEMBER 2011
PAGE: 24 of 180
Last Friday, 4 November 2011, the launch of the Techno Girl project
by the Minister of Women, Children and People with Disabilities was
another step further in ensuring that we redress gender inequality
and invest in the future of the young girls in the country.
The programme, a partnership between the government and the private
sector, seeks to empower young girls with scarce and critical
skills, such as mathematics, science, engineering and technology. It
exposes them to the world of work and gives them skills that are
desperately required by the economy.
The project aims to place 4 000 disadvantaged girls in structural
job-shadowing programmes in participating provinces, and expose them
to the world of work, so that they can make informed career choices.
The girls are therefore placed in an organisation whose core
business activities are focused on scarce career fields and
occupations where women are underrepresented, such as engineering,
construction, forensics and science.
Such programmes equip young girls with skills, confidence and selfassurance to create a better life for themselves and contribute
qualitatively to their communities. I thank you. [Applause.]
ID VERIFICATION INITIATIVE LAUNCHED BY DEPARTMENT OF HOME AFFAIRS
(Member’s Statement)
9 NOVEMBER 2011
PAGE: 25 of 180
Ms H N MAKHUBA (IFP): Hon Speaker, the IFP congratulates the
Department of Home Affairs on its recent launch of an ID
verification platform, in partnership with the SA Banking Risk
Information Centre. This initiative, which was launched yesterday,
will allow banks access to the Home Affairs national identification
system, enabling them to verify information given by their clients
with the Department of Home Affairs.
We are certain that this initiative will go a long way in reducing
identity-related fraud, theft and corruption, and as such is both
necessary and welcomed by the IFP. Furthermore, it is an indication
of the high level of confidence placed by private banking
institutions in the department, and for that both the Minister and
the department must be applauded. I thank you. [Applause.]
TEACHERS’ DISPUTE WITH EASTERN CAPE
PROVINCIAL DEPARTMENT OF EDUCATION
(Member’s Statement)
Mr M A NHANHA (Cope): Speaker, while Grade 12 learners elsewhere in
the country were simply nervous because of the approaching final
examinations, Grade 12 learners in the Fort Beaufort district in the
Eastern Cape were dealt a blow – they were abandoned by teachers in
80 schools, who refused to return to the classroom because of a
dispute with the provincial department of education. The Fort
9 NOVEMBER 2011
PAGE: 26 of 180
Beaufort district was named the worst-performing district in 2010.
It only managed a disappointing 44% pass rate!
It is clear that the SA Democratic Teachers’ Union, Sadtu, has taken
over education in this country and is a law unto itself. Sadtu made
it impossible for the Minister of Basic Education to perform her
constitutional duty of taking over that dysfunctional department,
until President Zuma intervened. Sadtu has now brought learning at
80 schools in the Eastern Cape to a screeching halt.
Cope wishes the class of 2011, especially learners in the Fort
Beaufort district, luck in their final exams. We also wish to urge
all communities and parents in the Eastern Cape to support
Superintendent-General Modidima Mannya in his endeavours to revive
the Eastern Cape education system and achieve a pass rate of 65%
this year. Thank you, Speaker.
INFANT AND MATERNAL MORTALITY RATE REDUCTION IN GAUTENG
(Member’s Statement)
Mrs L S MAKHUBELA-MASHELE (ANC): Somlomo wePhalamende [Speaker of
Parliament], the ANC welcomes the interventions implemented by the
Gauteng Department of Health and Social Development which have
resulted in a decline in infant and maternal mortality rates in the
province.
9 NOVEMBER 2011
PAGE: 27 of 180
According to a report tabled before the Gauteng legislature’s
Portfolio Committee on Health and Social Development, preliminary
data for 2008 to 2011 show an improvement in the maternal mortality
rate from 166 to 144 deaths per 100 000 live births. Data for the
first quarter of 2011 also indicate a decrease in the prenatal
mortality rate from 33,5 per 1 000 in 2010 to 28,7 per 1 000.
Neonatal deaths were also reduced from 11,7 per 100 to 10,5 per 100
in the same period.
These reductions are due to the interventions implemented last year,
such as improvements in the neonatal units at the Natalspruit and
Charlotte Maxeke Hospitals, as well as infection control at
Dr George Mukhari Academic Hospital and Chris Hani Baragwanath
Academic Hospital. The East Rand and Sebokeng hospitals were also
improved by installing waterless antibacterial handwash dispensers
in the neonatal wards.
The ANC regards the reduction in maternal deaths as an indication
that Gauteng Province is making progress in achieving the Millennium
Development Goal target of reducing the number of baby deaths. I
thank you. [Applause.]
FINDINGS OF PUBLIC PROTECTOR IN MIDVAAL MUNICIPALITY
(Member’s Statement)
9 NOVEMBER 2011
PAGE: 28 of 180
Mr J R B LORIMER (DA): Mr Speaker, where the DA governs, we strive
to do our best for the citizens we serve. When mistakes are made, we
go out of our way to ensure that they don’t happen again, and we are
open with the public about our shortcomings - we don’t try to hide
wrongdoing.
Despite the overblown adjectives from that side of the House, the
Public Protector found no evidence of corruption in Midvaal
Municipality. She did find some instances of maladministration. In
each of these instances the municipality had already begun a process
of remedial action. The Mayor of Midvaal, Timothy Nast, has
committed himself to carrying out the recommendations of the Public
Protector.
The DA leadership takes a special interest in the performance of the
governments under its control; hence our leaders have indicated that
they will be closely monitoring Midvaal to ensure that its systems
and processes are improved further.
Following the Public Protector’s report, the DA will be reviewing
the rules that govern the actions of its public office-bearers. In
the weeks ahead, we will take steps to prohibit DA office-bearers in
local government from doing business with DA governance. This is in
line with the Western Cape Procurement (Business Interests of
Employees) Act, 2010, that the DA has passed in the Western Cape.
9 NOVEMBER 2011
PAGE: 29 of 180
The DA is proud of its achievements in Midvaal. It is ranked the
number one municipality in Gauteng for quality of life, and number
one for job creation. [Applause.] It is the only municipality in
Gauteng with a debt collection rate of 100% and it has received
unqualified reports from the Auditor-General for the past eight
years. [Applause.]
ADMINISTRATION OF NATIONAL SENIOR CERTIFICATE EXAMINATION
(Member’s Statement)
Mrs H H MALGAS (ANC): Speaker, in 2010 the examination quality
assurance body, Umalusi, said that there was a clear indication of
marked improvement in the manner in which all assessments, as well
as the final examination, had been administered.
The provincial education departments have continued to demonstrate
their remarkable ability to administer and manage this high-stakes
examination with fervour. The Department of Basic Education also
committed itself to the fact that in the 2011 National Senior
Certificate, NSC, examination it would continue with its agenda of
building a credible national examination and assessment system. We
in the ANC commend the hon Minister and the department for a job
well done thus far.
9 NOVEMBER 2011
PAGE: 30 of 180
The running of the examination must be hitch-free. All learners
sitting for the examination in public schools are duly registered.
All public centres have been evaluated to ensure that they satisfy
the criteria for registration. The 325 question papers that have
been set have been subjected to high scrutiny and security in regard
to printing, packing and distribution.
We firmly believe that when the examination draws to a close, all
scripts will be safely returned to the provincial offices and to the
marking centres. We look forward to a good marking process and to
the release of the final results on 5 January 2012.
We in the ANC congratulate the hon Minister and the department on
the good preparation, and hope that the detailed analysis of the
2011 NSC results will assist in bringing more and better child
support to schools in order to improve the quality of our education.
I thank you. [Applause.]
LAUNCH OF TECHNO GIRL PROJECT BY MINISTER OF WOMEN, CHILDREN AND
PEOPLE WITH DISABILITIES
CORRUPTION IN DA-RUN MIDVAAL MUNICIPALITY
FINDINGS OF PUBLIC PROTECTOR IN MIDVAAL MUNICIPALITY
(Minister’s Response)
9 NOVEMBER 2011
PAGE: 31 of 180
The MINISTER OF HIGHER EDUCATION AND TRAINING: Hon Speaker, let me
take this opportunity to thank the hon Nxumalo for her comments
about the Techno Girl project, which was launched by Minister Lulu
Xingwana to assist girl students with disabilities to access skills.
This shows the ANC government’s commitment to skills development and
gender equality. But, much more importantly, it shows our commitment
as government to improving opportunities for the disabled. The
Department of Higher Education and Training has, amongst other
things, for this financial year set aside R77 million for bursaries
at universities for students with disabilities, as part of expanding
this support. [Applause.]
Hon Speaker, allow me also to observe that it is interesting that
only now in 2011 is the DA discovering that it must prevent its own
leaders from fishing, from dipping into the finances of governments
that they control, something which we discovered a while ago. The
response that has been given here does not tell us what they are
going to do with the people they have caught with their fingers in
the till. [Interjections.]
The SPEAKER: Order, hon members!
The MINISTER OF HIGHER EDUCATION AND TRAINING: It is high time that
the DA did what it normally preaches, which is now being exposed as
not being true. Thank you, hon Speaker. [Applause.]
9 NOVEMBER 2011
PAGE: 32 of 180
SADTU STRIKE COULD DISRUPT EXAMINATIONS
TEACHERS’ DISPUTE WITH EASTERN CAPE
PROVINCIAL DEPARTMENT OF EDUCATION
ADMINISTRATION OF NATIONAL SENIOR CERTIFICATE EXAMINATION
(Minister’s Response)
The MINISTER OF BASIC EDUCATION: Speaker, let me first respond to
the Cope member on Sadtu and section 100(1)(b). I think, let the
truth be told, that Sadtu has been very supportive of section
100(1)(b). The challenges that we had, which made us change the way
we were intervening, had nothing to do with Sadtu. It was something
else and not Sadtu. Sadtu has been supporting and continues to
support section 100 (1)(b). So, let the truth be told.
On Sadtu and the examination, as referred to by the IFP member, I
also have to say with some sadness, hon member, that we are very
disappointed that Sadtu has decided to go on strike for many
reasons, which are even beyond the dispute around post provisioning.
Yesterday I had a meeting with the officials from the national and
provincial sectors. I can report that we got an assurance that the
examination will be protected. The strikers will make sure that the
integrity of the examination is not compromised.
9 NOVEMBER 2011
PAGE: 33 of 180
The reasons for their strike are also located in the broad
challenges in the province beyond the current conflict, but I agree
with you that it is quite disappointing.
I also want to thank my chair for the comments on the exams. We are
quite relieved, as a department, that we are coming towards the end.
This is a very complicated exercise with high risks and serious
problems of criminality, but we are very relieved that so far it has
been going quite well and the integrity of the examination has been
protected. Thank you very much, chairperson. [Applause.]
LAUNCH OF TECHNO GIRL PROJECT BY MINISTER OF WOMEN, CHILDREN AND
PEOPLE WITH DISABILITIES
CORRUPTION IN DA-RUN MIDVAAL MUNICIPALITY
FINDINGS OF PUBLIC PROTECTOR IN MIDVAAL MUNICIPALITY
(Minister’s Response)
The DEPUTY MINISTER OF JUSTICE AND CONSTITUTIONAL DEVELOPMENT:
Speaker, thank you very much. Minister Nzimande has covered what I
had to say very well. Thank you.
SOUTH AFRICA’S STATE OF READINESS TO HOST COP17/CMP7
(Statement)
9 NOVEMBER 2011
PAGE: 34 of 180
The MINISTER OF INTERNATIONAL RELATIONS AND CO-OPERATION: Hon
Speaker, hon Ministers, hon members of the House, comrades and
friends, in less than three weeks from today South Africa will once
again be the focus of the world. We will in Durban be hosting about
20 000 people from all over the world for the 17th Conference of the
Parties to the United Nations Framework Convention on Climate
Change, UNFCCC, and the 7th Conference of Parties serving as the
Meeting of the Parties, CMP7, to the Kyoto Protocol.
You will be aware, hon members, that South Africa is participating
in this event as a party in the negotiations, and also as the host
and president of the conference. Hon Minister Molewa has been
leading us in playing the former role, and the Department of
International Relations and Co-operation is playing the latter role.
We have, however, established an IMC, or Inter-Ministerial
Committee, at the level of the Cabinet to ensure co-ordination and
synergy of the two roles, as well as that of hon Minister Manuel,
who is representing Africa on the Transitional Committee for the
envisaged Green Climate Fund. It was important that we defined the
delineation between the roles, as this has in the past caused
challenges in Cop gatherings elsewhere in the world.
The global awareness of the threat posed by human-induced climate
change to our planet and civilisation began in the late 1970s,
9 NOVEMBER 2011
PAGE: 35 of 180
culminating in the adoption of the UNFCCC, which came into force in
1994, the year of our freedom. This convention established a
secretariat based in Bonn, and provided for an annual meeting of
parties known as the Cop, that is, the Conference of Parties.
The Kyoto Protocol established in terms of the UNFCCC, which was
adopted in 1997 and came into force in 2005, commits some developed
countries, known as Annex 1 countries, to emission reduction
obligations. In terms of this Protocol, the first commitment period
for these countries expires in 2012. A new commitment period must be
negotiated and agreed to if the Kyoto Protocol is to have any
relevance in the future, and this is what is at stake in Durban. The
Kyoto Protocol also provides for an annual conference of
parties. So, what will be taking place in Durban, hon Speaker and
members, is the 17th Conference of Parties of the UNFCCC and the 7th
Conference of Parties, CMP7, serving as party members of the Kyoto
Protocol.
With South Africa’s opening its arms of ubuntu for Cop17/CMP7, it
will be the third time that an African country will host this global
climate change event. South Africa follows in the footsteps of
Morocco, which hosted Cop7 in Marrakech in 2001, and Kenya, whose
capital Nairobi received Cop12/CMP2 in 2006. Each of the two Cops
made a historic contribution to the global climate change
negotiations and the implementation of the UNFCCC. While Cop7 with
its Marrakech Accords is remembered for having consolidated the
9 NOVEMBER 2011
PAGE: 36 of 180
definition of the rules in the protocol and setting the stage for
the coming into force of this protocol, Cop12/CMP2 for its part gave
birth to a five-year programme of work to provide support to
developing countries in the adaptation efforts to climate change,
namely the Nairobi Work Plan.
There are other developing countries whose names are synonymous with
the UNFCCC climate change negotiations. The most spoken about
meeting today in circles of climate change discourse is Cop13/CMP3,
which Indonesia hosted in 2007 and which produced the famous Bali
Roadmap, whose purpose was to enhance the implementation of the
UNFCCC convention on the basis of four pillars, namely mitigation,
adaptation, technology and finance. Cop16/CMP6, which Mexico hosted
last year, will be before the negotiators in Durban, as its Cancún
Agreements have to be operationalised in Durban.
Today, hon members, we pay tribute to all the countries that have
hosted the Cop in the past. There are indeed other countries in the
North who have hosted this event with distinction, and whose
contributions we will always remember for their historic
significance. Each of the sixteen Cops and six CMPs that preceded us
was an important step on the road to Durban. We will do our best to
follow their high standard and stellar example.
Hon members, we have said that Cop17/CMP7 must be an African Cop. By
that we mean three things: The conference should be leveraged to
9 NOVEMBER 2011
PAGE: 37 of 180
advance African issues on sustainable development in general and
climate change in particular; it should showcase Africa’s success in
regard to sustainable development, including our green projects; and
it should harvest international partnerships for Africa’s green
initiatives, especially with respect to mobilising the necessary
means of implementation in the form of finance, technology, and
capacity-building.
As we prepare for this important global event, we have concentrated
our efforts in the main on the following three areas, namely
logistics, substance, and build-up, communication and outreach.
On logistics, we have an interdepartmental team, including KwaZuluNatal Province and eThekwini Municipality, leading us in this area.
We continue to monitor risks in the area, but in the main we are
happy with our state of readiness. You will be aware, hon members,
of our website, the logo, and the slogan of the conference, which is
“Working together, saving tomorrow today”. The 2010 Fifa World Cup
experience has prepared our cities for the hosting of events of this
magnitude.
On the state of readiness, logistical arrangements for the hosting
of the Cop17/CMP7 conference are now at an advanced stage. The Host
Country Agreement was signed in Panama on 3 October 2011. The UNFCCC
secretariat is currently relocating to Durban on an incremental
basis. The official website, which I’ve already referred to, is very
9 NOVEMBER 2011
PAGE: 38 of 180
much alive, and hon members can get more information from there. The
Inkosi Albert Luthuli International Convention Centre is the
official venue for the conference. Hotel accommodation arrangements
for the visiting delegates are at an advanced stage. Assistance
required by the least developed countries, LDCs, and the small
island developing states, Sids, is receiving priority attention.
Transport requirements are detailed in the transport plans. Security
plans are at an advanced stage, supported by a detailed
implementation plan. All accredited UNFCCC delegates will enjoy free
entry visas for this very important meeting, and the media and
communication streams are also in place.
Substance is where risk to the success of the conference lies. The
Cop is a party-led process – parties negotiate from the standpoint
of their sovereignty and national interest, which are not always in
sync with each other.
The disarticulation of the North-South and developed-developing
countries divide comes out sharply in this respect. With each of
these “developing” and “developed” country categories are other
groupings, each participating in the negotiations to extract
concessions that will further what is sometimes conflicting
interests.
South Africa is participating in this configuration of forces,
through hon Minister Molewa, in the Brazil, South Africa, India and
9 NOVEMBER 2011
PAGE: 39 of 180
China, Basic, group; the G77 plus China; the African Ministerial
Conference on the Environment, Amcen; the African Union’s Conference
of African Heads of State and Government on Climate Change, CAHOSCC,
process; and the Africa Group.
Our approach with the Cop presidency followed three phases. Early
this year we did the rounds, consulting with all party members,
which culminated in the final round at the intersessional
negotiations forum in Panama. We think that in all these phases our
interaction has paid off and our credibility as the incoming Cop
presidency remains intact.
Hon members, there are two competing visions of what should come out
of the conference in Durban, even though the gap is now beginning to
narrow. One vision wants to limit Durban’s focus to the
operationalisation of what came out of Cancún last year. The other
wants Durban to focus on both the Cancún Agreements or outcomes and
the finalisation of matters still outstanding from the Bali Road
Map.
In this context there are a number of messages we are hearing from
the parties, and topping the list is the second commitment period to
the Kyoto Protocol, and indeed the operationalisation of what came
out of Cancún. The conclusion of issues from the Bali Road Map is
still outstanding. Africa has singled out adaptation, adaptation and
adaptation as the key highlight of what should come out of Durban.
9 NOVEMBER 2011
PAGE: 40 of 180
Therefore, in Durban we’ll have to work hard to close gaps among the
parties on these key issues.
Hon Speaker and members, as mandated by the Cancún Agreements, South
Africa as the incoming Cop17/CMP7 president earlier undertook a
number of informal consultations, which I have already referred to,
at the ministerial and negotiator levels. Also, one of the important
meetings was the Leaders’ Dialogue that took place in New York on
the sidelines of the 66th United Nations General Assembly, led by
President Zuma and President Calderón of Mexico.
Informal ministerial meetings, which were cohosted by the outgoing
presidency of Mexico and me, have paid off very well and have been
very positive, because at these meetings Ministers emphasised that
there was a gap between the current level of ambition for emission
reduction targets and the level required according to science.
The resolution of questions relating to the legal form of the final
outcome and the next steps under the Kyoto protocol need further
attention as key elements of the Durban outcome. The dialogue
initiated as part of the ministerial segment was considered highly
constructive and the incoming Cop presidency was encouraged to
continue the dialogue, moving towards Durban. As the incoming Cop
presidency, we continue to make sure that, as I said earlier on, we
close up the gaps that we have identified.
9 NOVEMBER 2011
PAGE: 41 of 180
Hon Speaker, key messages that we are getting from this are that the
outcome in Durban should be balanced, fair and credible, an outcome
which preserves and strengthens the multilateral rules-based
response to climate change. The approach in order to reach a
balanced, fair and credible outcome in Durban must be informed by
the principles that form the basis of the UNFCCC climate change
negotiations. These principles include multilateralism,
environmental integrity, fairness, common but differentiated
responsibility and respective capabilities and equity, and honouring
all international commitments and undertakings made in climate
change processes.
The Cancún Agreements must be operationalised and the focus for
developing countries is, again, on the establishment of the Green
Climate Fund. For Durban to be successful, we have to do more than
make the Cancún Agreements operational.
Finally, the outcome in Durban has to be adequate to adhere to the
principles of environmental integrity, but also to continue to talk
to party members to make sure that multilateralism indeed remains
key.
Hon Speaker, we will also be focusing on making sure that in Durban
we work together with both developed and developing countries to
deliver a desirable outcome. We built up an outreach, where we
undertook road shows in the country to speak to other sectoral
9 NOVEMBER 2011
PAGE: 42 of 180
organisations, because climate change negotiations are not just the
preserve of governments, but also include the role of the Civil
Society Committee, C17, and other stakeholders.
When we hosted the World Summit on Sustainable Development in 2002
and gave the world the Johannesburg Declaration, we demonstrated our
commitment to the global struggle for sustainable development. At
the end of the month we will do the same again when we host
Cop17/CMP7. Hon members, failure in Durban will affect what will
happen in Brazil next year in Rio+20, and in India the following
year in the biodiversity meeting. As our leaders emphasised at the
India, Brazil and South Africa, Ibsa, summit, the three countries
cannot disappoint the world. The success of Durban will be a huge
victory for multilateralism. In Durban, our collective muscle as the
international community must triumph as we are “working together to
save tomorrow today”.
One of Africa’s great champions of the environment passed on
recently. I am referring here to Africa’s Nobel laureate, the late
Prof Wangari Maathai, whose struggle to save and protect our
environment won her respect the world over. One of her many words of
wisdom she left with us was, and I quote: “It’s the little things
citizens do. That’s what will make the difference. My little thing
is planting trees.”
9 NOVEMBER 2011
PAGE: 43 of 180
In Durban we must pick up her spear and continue planting trees
where Wangari Maathai left off in order to continue working together
to save tomorrow today. I thank you for your attention. [Applause.]
Mr G R MORGAN: Thank you to the Minister of International Relations
and Co-operation for her statement on our readiness. I certainly
agree that Durban, the city that I come from, is ready to host the
approximately 20 000 people that will come to our shores for these
important climate negotiations, an annual event which, the Minister
has said, has taken place for a number of years across the world,
including on two other occasions on the African continent.
Durban is an excellent venue for these negotiations. It has hosted a
number of other large negotiation meetings and forums in the
last 15 years, including those of the Commonwealth Heads of
Government Meeting, CHOGM, the World Aids Conference, and the NonAligned Movement. It is capable of hosting this event and, indeed,
we will put on a very good show for the 20 000 people who attend the
event.
The designation of responsibilities between the various Ministers is
exactly right. I am happy that the Minister of International
Relations and Co-operation is able to co-ordinate the actual
negotiations, freeing up the Minister of Water and Environmental
Affairs to conduct the negotiations on South Africa’s behalf and to
put our country’s position during the negotiations.
9 NOVEMBER 2011
PAGE: 44 of 180
Indeed, this must be an African Congress of the Parties, COP. The
impacts of climate change are going to affect the people of Africa
disproportionately. We are not responsible for the historic
emissions that are trapped in the atmosphere at this moment; yet the
people of Africa are going to have a disproportionate burden foisted
upon them. Therefore, it is very important that the question of
adaptation is addressed at COP 17 in Durban. Much of the emissions
that have already gone up since the Industrial Revolution are
trapped, and we have yet to even see the impacts of those emissions
on the world.
It is very important that we have a negotiated deal that continues
to honour the principle of historic and differentiated
responsibility. It is the burden of the developed world to take the
big cuts necessary to stabilise the climate. South Africa and other
emerging economies deserve the space to continue to grow.
The focus of Durban is going to be on operationalising many of the
agreements that came out of Cancún last year; indeed, it is the
right thing to do.
However, the big question which will be on everyone’s mind is
whether there will be a second commitment period under the Kyoto
Protocol – the Kyoto Protocol first commitment period ends at the
end of December next year. This is going to be exceptionally
difficult for the South African negotiators to achieve. Indeed, this
9 NOVEMBER 2011
PAGE: 45 of 180
is about national interest, and although our negotiators may do
their best, there is not much we can do in this regard. Many
countries, including Japan, Canada and Russia, have no interest in a
second commitment period under the Kyoto Protocol. Therefore, it is
very important that we keep the negotiations alive, and that we
salvage the most important instruments under the Kyoto Protocol so
that flexible mechanisms like the Clean Development Mechanism are
still able to survive, even if there is no second commitment period
under the Kyoto Protocol.
In some sense there is going to be a political deal in Durban, and
that is something that we must certainly fight for, bearing in mind
that our principal negotiating position is that there must be a
second commitment period under the Kyoto Protocol.
I think South Africa will be a very good host. There is much that we
can bring to these negotiations. We as a country negotiated
ourselves out of years of oppression. We must bring this to bear on
these negotiations and remind other countries of the world,
particularly developed countries, of the moral imperative to come up
with a fair, balanced and credible climate change outcome. I thank
you. [Applause.]
Mrs H N NDUDE: House Chair, the world will again be watching South
Africa in anticipation when we host the seventeenth session of the
Conference of the Parties, COP, in a little over two weeks. This
9 NOVEMBER 2011
PAGE: 46 of 180
specific conference will shape the future of the global climate
change regime and hopefully voice Africa’s concerns. It is therefore
of the utmost importance that we stand out above the rest in the way
we do things when we host this conference.
Climate change is a multilateral and global issue. It should
therefore be addressed in a co-operative manner to ensure that a
more viable and long-term climate change approach originates from
the conference. The extensive involvement of the global community
and business, as well as nongovernmental organisations, is of
paramount importance.
While there remains a North-South divide regarding the unlikely
second commitment to the Kyoto Protocol, South Africa can pursue
debate around vital issues that will include all countries’
committing to furthering the global fight against climate change. It
is most important to voice Africa’s concerns and to include those
who are most vulnerable.
South Africa will be entering the negotiations as the host nation
and therefore as a leader. Previous lessons learned from the COP
meetings should be taken into account. While it is an exciting time
being the host nation of a major international gathering, the time
post the conference is most vital. This will be the time for
government to lead South Africa into a more rigorous fight against
9 NOVEMBER 2011
PAGE: 47 of 180
the effects of climate change and to further educate all South
Africans regarding the issue.
Cope has confidence that we will be successful in hosting another
major international event. We wish the negotiating team, the
Minister of International Relations and Co-operation, and the
Minister of Water and Environmental Affairs, the best in this
important endeavour. Make us proud! Thank you very much. [Applause.]
Mrs C N Z ZIKALALA: Chairperson, I wish to thank the hon Minister of
International Relations and Co-operation for her statement, and must
say that I draw much confidence from same regarding our country’s
logistical readiness to host the upcoming COP17 Climate Change
Conference. I am sure that this conference will be an absolute
success.
South Africa is now perfectly poised upon the world stage to assume
a leadership role in the fight against climate change. It is no
coincidence either that we have been given one of the toughest COP
conferences to host, as the world knows very well that South Africa
is a veritable crucible in which miracles can and do occur.
It is in this spirit that the IFP wishes all participants a safe,
productive and, ultimately, very successful 17th Conference of the
Parties. I say this in memory of Prof Wangari Maathai. I thank you.
[Applause.]
9 NOVEMBER 2011
PAGE: 48 of 180
Mr L W GREYLING: Chairperson, I have no doubt that as a country we
are ready to host COP17 and that we will put on a great event for
the thousands of people who will be descending on Durban. I
certainly hope and trust that I won’t be proven wrong.
The real question, however, is whether the world is ready for COP17,
and on that front I have less faith.
This will be the fifth COP that I have attended over the last decade
and, unfortunately, they have not left me inspired with a sense that
the international community is resolute in its commitment to
avoiding dangerous climate change.
Minister, your position as President of the COP is an unenviable
one, as I believe that we have reached a stalemate in many of the
most pressing issues facing these negotiations.
As an African COP though, I believe that we cannot compromise on the
overriding message, namely that we want to see a legally binding
commitment that will see real reductions in the greenhouse gases
that threaten the livelihoods of so many people on this continent.
It is time for the world to truly hear the voice of Africa on this
issue. I thank you. [Applause.]
9 NOVEMBER 2011
PAGE: 49 of 180
The HOUSE CHAIRPERSON (Mr C T Frolick): Hon members, there are too
many members standing around in the passages having conversations.
Could I ask those members to take their seats, please?
Mr B H HOLOMISA: Chairperson and hon members, Cop17 could have been
used more effectively as a rallying point to create awareness and
educate South Africans about the dangers of climate change. We need
to make sure that beyond the Cop17 Conference our policies are
adequately integrated to mitigate the effects of climate change.
The position of the developed countries on climate change is well
documented. In this regard, this debate cannot be separated from the
politics of the global economy which are characterised by duplicity
and a lack of consensus on the modus operandi for the protection of
intellectual property rights.
Given this lack of consensus among the stakeholders at the World
Trade Organisation on trade policy issues, it is unlikely that there
will be any international climate change policy agreements now and
in the future. However, we wish our team success during the
negotiations. Thank you.
The DEPUTY MINISTER OF AGRICULTURE, FORESTRY AND FISHERIES:
Chairperson, South Africa’s constructive role in the multilateral
arena will be put to the test as the host of Cop17. Moreover, South
Africa will have to succeed in playing a double role during Cop17.
9 NOVEMBER 2011
PAGE: 50 of 180
On the one hand there is the objective role of chairing this
important event. On the other hand, there is the fact that we should
use this event to highlight the impact of climate change,
specifically on South Africa, but also on the African continent,
which has been the hardest hit by climate change effects.
In Copenhagen South Africa made certain commitments. “Practise what
you preach” is a well known saying. The Cop17 platform will provide
South Africa with an opportunity to successfully showcase the
implementation of its own green initiatives. We must be able to show
our future plans to implement, nationally, appropriate mitigation
actions, which must result in the reduction of emissions by 34% by
2020 and by 42% in 2025.
By vorige Cop-byeenkomste was daar geen verwysing in die finale
besluite na die rol van landbou nie, hetsy in die bevordering of die
bekamping van klimaatverandering nie. As ek my ander hoed as
Adjunkminister van Landbou opsit, is dit belangrik dat die byeenkoms
in Suid-Afrika in sy finale besluit die landbou moet inkorporeer en
daarmee saam die verskille tussen die ontwikkelende en ontwikkelde
lande uitwys, en ook dan die verskil wys in terme van
voedselsekerheid en ontwikkeling in hierdie gevalle. Ek dank u.
(Translation of Afrikaans paragraph follows.)
[In the final resolutions at previous Cop meetings no reference was
made to the role of agriculture, neither in the promotion nor in the
9 NOVEMBER 2011
PAGE: 51 of 180
combating of climate change. Wearing my other hat, as Deputy
Minister of Agriculture, it is important that the meeting in South
Africa should, in its final resolution, incorporate agriculture and
along with it refer to the differences between developing and
developed countries, and also point to the difference in terms of
food security and development in these cases. I thank you.]
Mrs C DUDLEY: Chair, the ACDP notes the Minister’s assurances that
Cop17 is on track and we hope that Cop17 will be successful in every
way.
At the heart of this Cop17 agenda, as I understand it, is the need
for an extended commitment to the Kyoto Protocol. This will be an
important interim legal instrument while a new instrument is
developed and agreed to by participating countries.
South Africa, we agree, needs to be committed to advancing a common
African position at the conference.
Clearly it is every country’s responsibility to adapt in response to
the effects of climate change. Mitigating these effects, or ensuring
that the effects of climate change are less severe, and that the
negative impact on human and natural systems is minimal, however,
requires a global response. The effects of action or inaction may
not be obvious in the short term, but will impact significantly on
future generations.
9 NOVEMBER 2011
PAGE: 52 of 180
South Africa’s commitment to emission reduction and carbon budgets
is impressive, but will require sustained effort and co-operation
from all spheres, including individual citizens, in choosing ecofriendly lifestyles and habits.
We congratulate you, hon Minister, on your election as president of
Cop – a big challenge! We have full confidence that you will do an
excellent job and wish you everything of the best in fulfilling the
function. Thank you. [Applause.]
Mr R B BHOOLA: Hon Chairperson, the much anticipated conference is
here. In his 2010 state of the nation address the hon President
committed government to ensuring that the country’s environmental
assets and natural resources would be valued, protected and
continually enhanced. When the world descends on Durban, in the
beautiful kingdom of KwaZulu-Natal, South Africa’s government has
the chance to lead and to ensure an important aspect, that this
continent, which is vulnerable to the effects of climate change,
will benefit abundantly.
Tourism must seize the opportunity to market our country in the
global arena. We are glad that we have been given the green light.
The MF is also glad of the Minister’s assurance that everything is
ready, which adds value to the fact that South Africa will be
hosting this most successful conference on the global threat, Cop17.
9 NOVEMBER 2011
PAGE: 53 of 180
In regard to readiness, the MF cherishes the hope that the
resolutions coming out of Cop17 will be implemented as the goals and
objectives in the strategic and performance plans of every
government department. They should take the lead, as the issues of
climate change and carbon emissions at the household level must be
dealt with to pave the way for a successful, bright and living
tomorrow, as Africa is the continent hardest hit by climate change.
Thank you.
Mr H T MAGAMA: House Chairperson, hon Minister and hon members, let
me take this opportunity to thank the Minister for her statement on
our country’s preparedness to host this august event and the
progress made in that regard. In less than a month, we will be
hosting the world in Durban to deliberate on what I regard as
matters of life and death.
This conference and meeting of parties are as much about climate
change as they are about the future growth and development
trajectory of the world, in particular that of the least developed
nations and developing states. As repeated many times before, this
will not be an easy Conference of the Parties.
The conference takes place when the world is facing, amongst other
things, dire economic conditions, which are, of course, crystallised
in occurrences in Greece, Spain and so on. Despite these
9 NOVEMBER 2011
PAGE: 54 of 180
difficulties, we must remain firm in our conviction that it is our
responsibility to protect Mother Earth, and we must act now.
I concur with the Minister when she said it was clear that it was
the end of the line for some of these pressing issues. We cannot
delay any longer. During the World Economic Forum on Africa
conference that was held in Cape Town in May 2011, President Zuma
characterised this dilemma in the following manner when he said:
We have to be firm about who is responsible.
As a global community, we have no alternative but to respond to
the challenges of climate change; we cannot wait, we need to act
now.
The thing we have to be very firm about is, where are the problems
and who is responsible for delaying us moving forward so that we
can focus on those who are finding it very difficult. Of course,
the problem is always the differing interests that come into play
when we have to take very serious decisions. We need to persuade
those who are finding it very difficult. For the sake of humanity,
I think we need to take very concrete decisions. We are different.
The common thing is that we are all being threatened. We have to
react and act and contribute in different ways.
9 NOVEMBER 2011
PAGE: 55 of 180
All of us have different capacities, different contributions to
make - some of us would have no contribution to make.
In executing its constitutional mandate of exercising oversight and
scrutiny over government action through its Portfolio Committee on
International Relations and Co-operation, Parliament received
briefings from the Minister and her department about our country’s
readiness to host the 17th Conference of the Parties, Cop17. We
understand that the single most important task of the President of
Cop is to facilitate an ambitious and balanced outcome.
In spite of the cynicism of some people predicting that Durban will
be the death and burial of the Kyoto Protocol, I have news for them
– South Africa has never hosted a failed event, never in the past.
Indeed, we remain confident that countries will raise their level of
ambition in respect of the outcomes of Durban, and that focus will
be placed not only on the implementation of the Cancún Agreements,
but also, as the Minister has elucidated, on the fact that those
elements that were left out at Cancún will be brought back to the
negotiating table.
It is common cause that African and developing countries are deeply
committed to seeing finality in regard to the second commitment
period to the Kyoto Protocol. Africa is also keen on tracking
progress in regard to the setup of the Transitional Committee and
the establishment of the Green Climate Fund. In this regard, the
9 NOVEMBER 2011
PAGE: 56 of 180
matter of governance and institutional arrangements should, as a
matter of course and principle, be addressed in such a way as to
ensure accessibility and an equal voice for small and developing
countries.
Furthermore, we draw inspiration from the concluding statement of
the Minister and incoming President of Cop, following the pre-Cop
ministerial meeting that was held in Stellenbosch in October of this
year. She said:
All parties appear to be in agreement that the outcome in Durban
should be balanced, fair, and credible, that it should preserve
and strengthen the multilateral rules-based system and its
response to climate change. The approach to reach a balanced, fair
and credible outcome in Durban must be informed by the principles
that form the basis of the United Nations Framework Convention on
Climate Change negotiations. These principles include
multilateralism, environmental integrity, fairness based on the
principle of common but differentiated responsibility and
respective capabilities, equity and honouring of all international
commitments and undertakings made in the climate change process
...
Climate change is as much the responsibility of Parliament as it is
the responsibility of government, civil society and business. It is
our collective responsibility to ensure that, in regard to the
9 NOVEMBER 2011
PAGE: 57 of 180
environment, we make our contribution to the fight against climate
change and its consequent devastating effects on those small island
states and least developed countries that are most vulnerable to the
effects of climate change.
Agb lede, die debat oor klimaatsverandering is inderdaad die storie
van oorlewing vir die hele mensdom. Dit vereis van ons om nou die
moeilikste besluite te neem. [Hon members, the debate on climate
change is indeed the story of survival for the whole of mankind. It
demands from us now to take the most difficult decisions.]
It is in this regard that we are encouraged by Parliament’s own
plans, such as the greening of Parliament, waste minimisation, and
reducing our usage of paper with a view to creating a paperless
environment. Furthermore, in an attempt to contribute to the broader
climate change debate and build a broad constellation of forces
around the country’s position towards Cop17, Parliament held a
consultative seminar on climate change just two weeks ago. It was
attended by various stakeholders, ranging from religious bodies, and
business and civil society, to provincial and local government.
The challenge for us today, as legislators and representatives of
our people, is to ensure that the climate change debate is nuanced
in such a way that it finds resonance with our people. Up until this
point the debates that have been taking place around this climate
9 NOVEMBER 2011
PAGE: 58 of 180
change matter, crucial as they may have been, have always been
somewhat technical and aloof, removed from the ordinary people.
As such, it is our responsibility as legislators and as Parliament
to ensure that as a matter of urgency we make climate change
everybody’s concern, because it is indeed everybody’s business. This
is in order for us to have a significant impact on the public
discourse and influence our collective and individual behaviour. I
thank you. [Applause.]
Debate concluded.
CONSIDERATION OF REPORT OF JOINT COMMITTEE ON ETHICS AND MEMBERS’
INTERESTS
The CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, I move:
That the Report be referred back to the Joint Committee on Ethics
and Members’ Interests for reconsideration and report as soon as
possible.
Motion agreed to.
CONSIDERATION OF BUDGETARY REVIEW AND RECOMMENDATION REPORT OF
PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES ON PERFORMANCE OF
DEPARTMENT OF PUBLIC ENTERPRISES FOR 2010-11 FINANCIAL YEAR
9 NOVEMBER 2011
PAGE: 59 of 180
Dr G W KOORNHOF: Chairperson and hon members, it is my privilege to
introduce this report to the House on behalf of the Portfolio
Committee on Public Enterprises. I am happy to say that the
Department of Public Enterprises is one of only three national
departments that have consistently received an unqualified audit
opinion from the Auditor-General for a number of years in
succession, and again done so.
For the first six months of the current financial year, from 1 April
to 30 September this year, the department managed to sustain its
excellent financial management performance. This is a great
achievement for the department – an indication of good managerial
skills on the part of management and also a reflection of strong
financial management systems and internal controls that are
effective and efficient.
The portfolio committee urged the department to ensure that it
sustains this performance and suggested, in line with the request
from the office of the Auditor-General, that the department should
share these successful strategies with other government departments.
The Department of Public Enterprises acts as a shareholder of very
important state-owned companies, including Eskom, Transnet,
SA Airways, SA Express, Denel, Safcol, Broadband Infraco and
Alexkor. These state-owned enterprises, SOEs, fulfil an important
9 NOVEMBER 2011
PAGE: 60 of 180
role in contributing to the developmental state, including
developing skills and creating jobs.
The portfolio committee resolved to undertake a visit to the head
office of the Department of Public Enterprises to familiarise itself
with the operations and oversight mechanisms that the department has
put in place to ensure shareholder management responsibility over
state-owned companies. As a matter of fact, we will visit before the
end of the fourth term.
In conclusion, the following recommendations have been made:
Firstly, the Standing Committee on Public Accounts should consider
paying more attention to fruitless and wasteful expenditure reported
in the annual reports of state-owned companies, especially the
irregular expenditure of R8,3 billion and fruitless and wasteful
expenditure of R36 million reported at Transnet.
Secondly, the Department of Public Enterprises should finalise the
report, with recommendations, on executive remuneration in stateowned companies.
Thirdly, the department should provide the portfolio committee with
shareholder compacts of state-owned companies, to enhance the
oversight work of the portfolio committee.
9 NOVEMBER 2011
PAGE: 61 of 180
I present the Budgetary Review and the Recommendation Report of the
Portfolio Committee on Public Enterprises to the National Assembly
for adoption. I thank you. [Applause.]
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Hon Chairperson, I move:
That the Report be adopted.
Motion agreed to.
Report accordingly adopted.
CONSIDERATION OF BUDGETARY REVIEW AND RECOMMENDATION REPORT OF
PORTFOLIO COMMITTEE ON JUSTICE AND CONSTITUTIONAL DEVELOPMENT
ON PERFORMANCE OF DEPARTMENT OF JUSTICE AND CONSTITUTIONAL
DEVELOPMENT FOR 2010-11 FINANCIAL YEAR
Mr L T LANDERS: Hon Chairperson, we present to you some of the key
issues in the Budgetary Review and Recommendations report of the
portfolio committee, especially specific recommendations relating to
requests for additional funding for the Medium-Term Expenditure
Framework.
9 NOVEMBER 2011
PAGE: 62 of 180
The recurring qualified audit opinion relating to the adequacy of
the Third Party Funds’ financial and control system and to irregular
expenditure remains the chief concern of the portfolio committee.
This concern has been echoed by the Standing Committee on Public
Accounts.
We acknowledge that our concerns are also shared by the directorgeneral, her senior staff, and the Ministry. Although there has been
progress, the committee will continue to monitor this in its
quarterly meetings with the department.
Vacancies in the department and the National Prosecuting Authority
remain a key concern. The department has improved its vacancy rate
overall in the past years to 9,8%. However, its vacancy rate in
critical positions, for example in the chief financial officer’s
office, which was at 24% at the end of February 2011, and in senior
management, is too high, given that the department must address key
governance and operational challenges.
The committee is sympathetic to the department’s requests for
additional funds for the repair and maintenance programme and its
provision for persons with disabilities. We have observed first-hand
the state of disrepair that prevails at many courts.
We have learnt that in some cases working conditions are so
compromised by the state of the buildings that officials are unable
9 NOVEMBER 2011
PAGE: 63 of 180
to carry out their duties effectively and efficiently. In one case,
a magistrate’s court building had raw sewerage running down the
corridors and into court rooms. Although court managers have a role
to play in the daily maintenance of courts, it is the Department of
Public Works that is directly responsible for the maintenance of
these facilities.
It is the committee’s strong view that maintenance of courts and
facilities might be better achieved were the Department of Justice
to assume responsibility for this function. [Applause.] Accordingly,
the committee has requested the department to investigate this
possibility. We have been informed that this matter is a concern to
all departments within the Justice, Crime Prevention and Security,
JCPS, cluster, and is being addressed at that level, with a proposal
being prepared for submission to Cabinet on how to proceed.
The committee is dismayed that, despite the recommendations of the
Criminal Justice Review and the Seven-Point Plan, which were
intended to address blockages in the system, the IT systems of the
JCPS cluster departments continue to operate in silos. The intention
of the review and seven-point plan was that these systems be
integrated to allow for seamless tracking of offenders as they
progress from arrest, to prosecution, to conviction and beyond.
The department concedes that this is a challenge, that sufficient
progress has not been made, and that it intends to address the
9 NOVEMBER 2011
PAGE: 64 of 180
problem. The committee requests that the department provide it with
a detailed action plan to address this issue, together with targets
and time frames.
Recently, litigation against the state has increased significantly.
The committee believes that a framework to manage state litigation,
including the use of alternative dispute resolution, is necessary
and will assist in keeping costs to the state in check.
The committee also learnt recently that the department has
difficulty in collecting monies it disburses on behalf of client
departments in legal proceedings. We are extremely concerned at the
negative effect this has had on the department’s already tight
budget and have asked for a full report on this matter.
Moreover, the absence of a specific policy to manage briefing
patterns by client departments creates difficulties in ensuring that
briefs are assigned to maximise representivity in terms of both race
and gender amongst legal practitioners and to encourage the passing
of knowledge and skills from senior to junior practitioners.
The committee also takes this opportunity to convey its deepest
gratitude to Justice Dunstan Mlambo for his outstanding contribution
to the provision of legal aid services while head of Legal Aid South
Africa, Lasa. [Applause.] With Judge Mlambo as Chairperson of the
board, Lasa has become a centre of excellence. The committee is
9 NOVEMBER 2011
PAGE: 65 of 180
extremely grateful for his leadership, and his presence will be
sorely missed because he is moving on. We wish him well in his
future endeavours. I thank you. [Applause.]
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Hon House Chairperson, I move:
That the Report be adopted.
Motion agreed to.
Report accordingly adopted.
CONSIDERATION OF BUDGETARY REVIEW AND RECOMMENDATION REPORT OF
PORTFOLIO COMMITTEE ON DEFENCE AND MILITARY VETERANS ON
PERFORMANCE OF DEPARTMENT OF DEFENCE AND MILITARY VETERANS
FOR 2010-11 FINANCIAL YEAR
Mr M S MOTIMELE: Hon Chairperson and hon members, the Portfolio
Committee on Defence and Military Veterans has interrogated the
outputs of the Department of Defence and Military Veterans and its
two entities Armscor, and the Castle of Good Hope, as per section 5
of the Money Bills Act.
9 NOVEMBER 2011
PAGE: 66 of 180
Armscor has to satisfy the defence materiel requirements of the SA
Defence Force, SANDF, and any other organ, and it has fairly
competently acquitted itself of this task. Challenges that require
attention include the funding and staffing of Simon’s Town dockyard,
and the transformation of its staff profile as well as the targets
set for Broad-based Black Economic Empowerment. It received an
unqualified audit report, and total revenue increased by 9,9%.
The Castle’s objectives are to preserve and protect the heritage of
the Castle, to optimise its tourism potential and to enhance the
accessibility of the Castle to the public. Although it has met these
objectives to a large extent, it does not have clearly stipulated
targets, nor is the gender and racial composition acceptable. It
does not have a strategic plan, while performance is not regularly
managed or appraised. The Castle received an unqualified audit
opinion for the period, but note is taken of its noncompliance with
the submission of quarterly reports and supply-chain management
policies and procedures.
The Auditor-General expressed a qualified opinion in regard to the
department due to challenges with the management of its moveable and
immoveable assets. This is, however, an improvement from the seven
audit qualifications in the financial year 2007-08. Currently it is
one audit qualification.
9 NOVEMBER 2011
PAGE: 67 of 180
The 2010-11 annual report highlights the impact a limited budget has
on the ability of the department to maintain and sustain its core
capabilities necessary to fulfil its mandate. The report focused on
eight programmes, among others Administration, Landward Defence, Air
Defence, Maritime Defence, Defence Intelligence and General Support.
The recurring challenge in all the programmes is the inadequate
budget, which impacts not only on morale, facilities and
maintenance, but also on operational readiness, jeopardising the
fulfilment of the department’s constitutional mandate.
Consideration should be given to the following: the deployment of
the SA Navy in an antipiracy role, an added responsibility; the dire
need to upgrade the prime mission equipment of the landward forces;
the urgency with which the facilities and their maintenance should
be addressed; the establishment of the Department of Military
Veterans and the forthcoming implementation of the benefits as
encompassed in the Military Veterans Bill; and the further roll-out
of Operation Corona in which the SANDF returns to guarding our
border. It is clear that the department’s request for additional
funding is justified and can thus be supported by the Portfolio
Committee on Defence and Military Veterans.
Besides recommending an increased budget, the committee recommends
that the current Defence Review process should take this reality
into account and ensure that the outcome is on par with the
9 NOVEMBER 2011
PAGE: 68 of 180
department’s current expanded role domestically and in Africa, as
well as its constitutional mandate. Thank you. [Applause.]
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Hon House Chairperson, I move:
That the Report be adopted.
Motion agreed to.
Report accordingly adopted.
CONSIDERATION OF REPORT OF PORTFOLIO COMMITTEE ON POLICE ON
OVERSIGHT VISIT FROM 2 to 5 AUGUST 2011 AND 10 to 12 AUGUST 2011 TO
POLICE STATIONS IN GAUTENG: DIEPKLOOF POLICE STATION, JOHANNESBURG
CENTRAL POLICE STATION, HONEYDEW POLICE STATION,DUDUZA POLICE
STATION, PRETORIA CENTRAL POLICE STATION, WIERDABRUG POLICE STATION
AND LOATE POLICE STATION
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Hon House Chairperson, I move:
That the Report be adopted.
9 NOVEMBER 2011
PAGE: 69 of 180
Motion agreed to.
Report accordingly adopted.
CONSIDERATION OF REPORT OF COMMITTEE ON PRIVATE MEMBERS’ LEGISLATIVE
PROPOSALS AND SPECIAL PETITIONS ON LEGISLATIVE PROPOSAL TO REGULATE
BUSINESS INTERESTS OF STATE EMPLOYEES (MR I O DAVIDSON)
Mr S G THOBEJANE: Hon Chairperson and hon members, we are discussing
the Report of the Committee on Private Members’ Legislative
Proposals and Special Petitions on the Legislative Proposal to
Regulate the Business Interests of State Employees, sponsored by the
hon I O Davidson of the DA.
The Committee on Private Members’ Legislative Proposals and Special
Petitions, having considered the legislative proposal to regulate
the business interests of state employees in terms of Rule 211 of
the Rules of National Assembly, having consulted with the Portfolio
Committee on Public Service and Administration, and the Ministry of
Public Service and Administration, and having had the presentation
by hon Davidson, recommends that permission not be granted to the
member to proceed with the legislative proposal.
The committee wishes to make the following observations with regard
to its recommendation. Firstly, the legislative proposal of the hon
Davidson pre-empts legislation soon to be introduced by the
9 NOVEMBER 2011
PAGE: 70 of 180
Department of Public Service and Administration. Secondly, the
objectives of the legislative proposal are largely similar to the
legislation envisaged in the Public Sector Integrity Management
Framework published by the Department of Public Service and
Administration. Thirdly, the legislation envisaged in the framework
will apply to public servants in the national, provincial and local
government spheres in relation to the regulation of their business
interests when doing business with the state.
Fourthly, the proposed legislation will cover the acceptance of
gifts, hospitality and other benefits. It will cover disclosure of
financial interests of public servants, and it will amend the
financial disclosure form of public servants. It will give
conditions for public servants with business interests seeking to
conduct business with government. It will place restrictions on
public servants doing remunerative work outside the Public Service,
and it will regulate post-Public-Service employment.
Fifthly, the proposed legislation will, in addition, provide for the
appointment of an Ethics Office - to ensure compliance, as well as
provide for employment agreements of public servants to include
specific key performance areas that will bind and commit employees
to complying with the measures.
It is further envisaged that a special unit will be established,
which will liaise closely with the Ethics Office to investigate all
9 NOVEMBER 2011
PAGE: 71 of 180
instances of conflict of interest and to ensure that disciplinary
measures are taken when necessary.
Finally, the undertaking of the Minister for the Public Service and
Administration that the proposed legislation will be tabled in
Parliament before the end of the 2011-12 financial year was
specifically noted. The committee resolves that, in its monitoring,
the progress made by the department will always be under scrutiny.
We move that this report be adopted by the House. Thank you.
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Hon House Chairperson, I move:
That the Report be adopted.
The HOUSE CHAIRPERSON (Mr C T Frolick): Thank you, hon member. A
request has been received that there be declarations of vote. I will
now allow for declarations.
Declarations of vote:
Mr P J C PRETORIUS: Thank you, Mr Chairman. I gladly follow the hon
member Thobejane. The DA will support this report, but we need to
point out why we are doing so with some reservations.
9 NOVEMBER 2011
PAGE: 72 of 180
This private member’s legislative proposal by Mr Davidson aims to
regulate business interests of state employees. It is based on
existing legislation already in operation in the Western Cape.
The Committee on Private Members’ Legislative Proposals and Special
Petitions considers proposals in terms of six technical criteria,
one of which is whether government is intending to introduce similar
legislation soon.
The committee was informed in person by the then Minister for the
Public Service and Administration, Minister Baloyi, that government
was indeed going to introduce its own legislation that would cover
the ambit of the proposal. Minister Baloyi confirmed that
government’s legislation would be introduced before the end of the
current financial year. That submission formed the basis for the
committee’s resolution to recommend that the proposal of Mr Davidson
should not proceed, since it pre-empted similar legislation to be
introduced by government.
Mr Chairman, a worrying factor, though, is that government has a
very bad record when it comes to giving undertakings on its own
legislative plans. On 18 August this year, I pointed out in a
declaration of vote on another proposal by the DA that was blocked
on the basis that it pre-empted government legislation, that that
particular legislation was at that stage already four months late.
It is now a further three months later, and sadly there is still no
9 NOVEMBER 2011
PAGE: 73 of 180
sign of the promised Executive Members’ Ethics Bill by government.
The committee took a similar resolution in respect of the proposal
to repeal the South African Boxing Act. Government’s deadline for
the introduction of its own Bill has now also passed and the
promised legislation is nowhere to be seen. And now in this case we
are again forced to accept government’s word.
I urge the new Minister for the Public Service and Administration to
personally involve himself in the matter and to ensure that
undertakings and deadlines are met. For this committee, the
Committee on Private Members’ Legislative Proposals and Special
Petitions, to be able to do its work and to be taken seriously, it
needs the support and cooperation of government. We will support
this report before the House, but we urge the executive to take this
committee and Parliament seriously. Thank you.
Mrs M T KUBAYI: Thank you, House Chairperson. I think it is not fair
for the hon member to come here and re-read what we as the committee
agreed upon. We as the committee agreed on the recommendations; we
understand what the rules say in regard to how we should operate;
and I feel that it is not fair to this House and the public for the
DA to come and grandstand on what was agreed upon in the committee
and the concerns that are recorded as part of the report.
I do not want to speak for long, Chair, but let me say that I don’t
think standing and showing mistrust in the executive is fair. We
9 NOVEMBER 2011
PAGE: 74 of 180
have members of the executive who have treated Parliament with
respect, and what is happening here in what hon member Pretorius is
doing is, he is casting doubt on the executive in regard to the
commitment that they have made to Parliament, and I don’t think it
is fair.
As a committee we have committed ourselves to monitoring what needs
to happen, as part of the work that we do, and the commitment that
the Minister has made. I don’t think there is anything that warrants
our coming and saying we don’t think it is going to happen. There is
proof that the Minister for the Public Service and Administration is
currently busy with the process and they have presented where they
are in terms of their progress. I think they should be allowed space
and come to Parliament to report as they have promised to do.
So we should not give the public an impression that the Executive
does not keep to the commitments that they make, or that they do not
deliver on the commitments that they make to Parliament, because
that would be incorrect, and I think that we need to set the record
straight on behalf of the committee as well. Thank you very much,
Chair.
Motion agreed to.
Report accordingly adopted.
9 NOVEMBER 2011
PAGE: 75 of 180
CONSIDERATION OF REPORT OF PORTFOLIO COMMITTEE
ON PUBLIC ENTERPRISES ON OVERSIGHT VISIT TO DENEL
Dr G W KOORNHOF: Chairperson and hon members, it is my privilege on
behalf of the Portfolio Committee on Public Enterprises to introduce
this report to the House for consideration and adoption. Our
committee undertook an oversight visit to Denel on 24 June 2011. The
purpose of the visit was to familiarise the committee with the
challenges facing Denel SAAB Aerostructures, DSA, which is one of
the business units in the Denel Group.
The committee learnt that DSA has been operating in an uncertain and
unstable business environment which is filled with complexities. The
environment requires DSA to remain competent and competitive in the
industry.
The committee furthermore observed some strengths of DSA, amongst
others, firstly, the ability to develop and certify complex metallic
and composite structures for the international and commercial
markets and, secondly, the development of highly skilled professions
and advanced manufacturing capabilities.
DSA plays a leading role in the aerostructures industry in South
Africa in regard to world-class design and manufacturing, and
produces highly skilled graduates in engineering. On the continent
and globally it continues to be the powerhouse for ability,
9 NOVEMBER 2011
PAGE: 76 of 180
opportunity and innovation in the aerospace industry. Locally, it
plays a critical role in the promotion of local manufacturing and
local skills through Broad-based Black Economic Empowerment.
At the same time, however, DSA has recorded significant financial
losses over the past five years for a number of reasons, of which
two are the delay and development cost overrun of the Airbus A400M
transport aircraft programme, and the suboptimal pricing of the
A400M work packages. In addition, in terms of the shareholders
agreement between SAAB and Denel, SAAB exercised its option in March
2011 and exited Denel SAAB Aerostructures.
Going forward, DSA has embarked on a fundamental restructuring
process to improve its financial and delivery performance,
including: a net loss improvement; cash utilisation improvement; a
reduced workforce; a reduced rental footprint; improvement in the
operational environment; negotiation on the Airbus A400M work
packages to secure market-related recurring cost prices;
importantly, a drive to secure new orders; and, lastly, a focus on
skills development and retention.
During the visit to DSA, the portfolio committee also visited the
Denel Training Academy, DTA, where we learnt about the training
methodology, inspected the facility, interacted with the students
and were briefed about the challenges facing DTA. Since our visit in
June, Denel has provided our portfolio committee with a DSA
9 NOVEMBER 2011
PAGE: 77 of 180
restructuring progress report on the DSA turnaround status, the
status of their negotiations with Airbus on the A400M, and the
status of its funding.
In conclusion, the portfolio committee regards the oversight visit
to DSA as successful. There we learnt first-hand about the
challenges facing DSA within its own facility and organisation.
Going forward, the committee will monitor the progress made by DSA
on its restructuring plan; interact with the Department of Public
Enterprises on the end state of Denel; conduct a meeting with the
Portfolio Committee on Defence and Military Veterans regarding
orders by the Department of Defence and Military Veterans from
Denel; and receive an update on the defence acquisition strategy.
Chairperson, I hereby submit this report on the oversight visit to
Denel SAAB Aerostructures to the House for consideration and
adoption. I thank you.
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: House Chairperson, I move:
That the Report be adopted.
Motion agreed to.
9 NOVEMBER 2011
PAGE: 78 of 180
Report accordingly adopted.
CONSIDERATION OF REPORT OF PORTFOLIO COMMITTEE ON HEALTH ON
OVERSIGHT VISIT TO CECILIA MAKIWANE HOSPITAL IN EASTERN CAPE
Dr M B GOQWANA: Chairperson and hon members, in March this year we
went as a committee to Cecilia Makiwane Hospital in the Eastern
Cape. This was prompted by the death of 29 babies and infants during
the month of February 2011.
On the visit we wanted to confirm whether it was true that 29 babies
had died in one month. Secondly we wanted to assess what the cause
of death was, if it was possible to find the cause of death.
Thirdly, we wanted to see whether this could have been prevented or
not.
We visited the hospital and we took a walk around it. We went to the
labour ward, the neonatal ward, high care, intensive care unit, ICU
and the area where the mothers lodge. We went to meet the
professionals – the doctors and nurses – and the hospital
management. We didn’t meet the MEC and the provincial officials at
that time.
We definitely confirmed that 29 babies and infants had indeed died,
and that the cause of death for all of them was natural causes.
9 NOVEMBER 2011
PAGE: 79 of 180
Specifically it was infections, and some of them died of
septicaemia.
Our conclusion was that these deaths were unnecessary and could have
been prevented if there had been a good referral system and a good
ambulance service. If there had been no shortage of good, working
equipment, these deaths could probably have been prevented. If there
had been consumables, those for cleaning the hospital, this could
probably have been prevented. If there had been no overcrowding in
the wards because of the poor referral system, we think this could
have been prevented. If there had been no shortage of staff,
especially the professional staff – the nurses and doctors – this
would probably not have happened. If there had been decentralisation
of some of the work and good primary health care, this could have
been prevented. Lastly, if there had been good family planning, we
think this could have been prevented.
We recommended that the management make sure that consumables were
ordered early and that they were used to make sure that the hospital
was clean. We recommended that the shortage of staff should be
addressed as a matter of urgency. We also recommended that they
should make sure that the equipment was working and that it was in
good condition, especially things like the cardiotocographs, CTGs.
We wanted them to make sure that primary health care and the
referral systems were working well in the Eastern Cape in order to
ensure that those things did not happen.
9 NOVEMBER 2011
PAGE: 80 of 180
Chairperson, let me just analyse the Eastern Cape a little bit. The
Eastern Cape Department of Health is one of those departments that
started working after 1994, with all the challenges that came with
the apartheid system. The Eastern Cape Department of Health, like
the departments in all the other provinces, started at a very
negative point.
Then what happened is this. They started working, the morale of the
staff was going on well, and they were united. They started building
clinics and hospitals in the Eastern Cape. In fact they worked so
hard that at a certain stage – I am sure some of us don’t know this
– they had an unqualified audit report in the Department of Health
in that region! That showed that at least something was happening in
the Eastern Cape Department of Health.
The problems started when the then leadership of the Eastern Cape
interfered with what was happening in the Department of Health. You
know, in 12 years in the Eastern Cape there were two MECs and two
HODs. That was in 12 years. After the disaster of the interference
by the leadership started, I think within four years there were four
changes of MEC and the problems started. The interference was caused
by the leadership that were in the ANC then, but fortunately all of
them moved over to Cope, which shows that those were the people who
actually destroyed the Eastern Cape Department of Health. Thank you
very much.
9 NOVEMBER 2011
PAGE: 81 of 180
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Hon House Chairperson, we must
congratulate Cope for getting back their luggage. I move that the
report be adopted.
Motion agreed to.
Report accordingly adopted.
CONSIDERATION OF REPORT OF PORTFOLIO COMMITTEE ON
ECONOMIC DEVELOPMENT ON PUBLIC HEARINGS ON
SMALL, MEDIUM AND MICRO ENTERPRISES’ ACCESS TO FUNDING
Mrs E M COLEMAN: Hon House Chair, we are introducing the committee
report on the Small, Medium and Micro Enterprises’, SMMEs’, access
to funding hearings that were held in November last year. The report
was published in the Announcements, Tablings and Committee Reports,
ATC in April this year.
The purpose of the hearings was to provide a platform for small,
medium and micro enterprises and their microfinance stakeholders to
give their first-hand experience and raise their concerns regarding
microfinance services offered by government.
9 NOVEMBER 2011
PAGE: 82 of 180
The committee also wanted to ascertain the extent to which
government’s SMME services were reaching the people and addressing
their needs.
Furthermore, as a committee we hosted these hearings so that we
could involve the public in establishing relevant intervention
mechanisms that would enhance the delivery of appropriate services
to the SMMEs who needed them the most.
In addition, the portfolio committee wanted to ascertain the role
that Parliament and the department should be playing in order to
intensify the fight against the high levels of unemployment and
poverty, and the huge income gap that is plaguing South Africa.
Finally, we wanted collective participation in finding solutions to
the high failure rate of SMMEs in the country.
With that, we would like the House to approve the report, with
special attention to observations and recommendations, as it appears
in the Announcements, Tablings and Committee Reports, ATC, tabled on
8 April 2011.
Furthermore, the committee would like to thank all those who
participated in the public hearings. We submit the report to the
House for approval. Thank you.
9 NOVEMBER 2011
PAGE: 83 of 180
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Hon House Chairperson, I move:
That the Report be adopted.
Motion agreed to.
Report accordingly adopted.
CONSIDERATION OF REPORT OF PORTFOLIO COMMITTEE ON LABOUR
ON PROGRESS MADE BY DEPARTMENT OF LABOUR TOWARDS
ATTAINING 2014 MILLENNIUM DEVELOPMENT GOALS (MDGs)
Mr M E NCHABELENG: Hon Chairperson, this is a report of the
Portfolio Committee on Labour on the progress made by the department
towards attaining the 2014 Millennium Development Goals, MDGs. This
progress concerns the Department of Labour and its entities.
The first Millennium Development Goal, MDG, applicable to labour is
MDG 1: “Eradicate extreme poverty and hunger”. In order to
contribute to this target, the committee recommends that the
Department of Labour should fast-track the new review extension of
social protection to certain categories of workers who are currently
not covered by the Unemployment Insurance Fund, UIF. These include
public servants, migrant workers and the youth registered for
9 NOVEMBER 2011
PAGE: 84 of 180
learnerships. Furthermore, the department needs to amend the
relevant legislation to ensure that vulnerable workers such as
domestic and farm workers are covered as beneficiaries in the
compensation fund.
With regard to MDG 3: “Promote gender equality and empower women”,
and in the light of the slow progress in meeting national targets to
empower women in the workplace, the committee recommends that the
department must accelerate implementing stricter regulations as
promulgated by proposed employment equity amendments.
In regard to MDG 6: “Combat HIV/Aids, malaria and other diseases”,
the committee recommends that the department should ensure that
occupational health and safety regulations are promulgated and
implemented through effective enforcement services.
On MDG 8: “Develop a global partnership for Development”, the
Department of Labour must strengthen the Southern African
Development Community’s, SADC’s, regional partnerships, as relations
within this region have a direct impact on South Africa’s
development. Furthermore, Parliament must actively participate in
regional forums that will have a direct impact on the country’s
labour policy development.
South Africa, being a labour-receiving country, should deliberate on
migrant labour challenges and work towards reaching progressive
9 NOVEMBER 2011
PAGE: 85 of 180
agreements to address challenges faced by migrant workers in the
SADC region, as this has a direct impact on the country’s labour
policy developments.
We make the following recommendations. Firstly, Parliament must
ensure that government delivers on decent employment in order to
curb growing inequalities in society. Through oversight, Parliament
should ensure that departments and entities align their programmes
with a decent work programme.
Through oversight, Parliament must ensure the institutional capacity
of the Department of Labour to prevent discrimination in the labour
market.
Although sheltered employment factories play a positive role in
equipping disabled people, they have the potential to unnecessarily
isolate individuals from the rest of their communities. Rather than
lessening obstacles to employment for persons with disabilities,
this segregation actually contributes to lowered expectations and
negative public attitudes. As a result, Parliament, through joint
oversight by committees, should ensure that policies encouraging the
active participation of disabled people not only focus on sheltered
employment, but also on employment in the mainstream economy.
Parliament must ensure that the Department of Labour monitors
employment trends in the informal sector. It should further ensure
9 NOVEMBER 2011
PAGE: 86 of 180
that policies recognise and improve conditions in the informal
economy, where most poor women and men earn their livelihoods, as
these policies are critical to poverty reduction.
Through proper oversight and monitoring Parliament must ensure that
labour market policies can create an environment for job creation,
productivity and wage growth. The Portfolio Committee on Labour must
conduct oversight and hold joint meetings with other committees that
fall under the Economic Transformation Cluster, such as Economic
Development, to ensure the alignment of employment legislation and
other economic promotion strategies.
Parliament recognises the country’s state of skills and that South
Africa faces challenges of serious skills shortages in a number of
critical fields. Thank you. [Time expired.] [Applause.]
There was no debate.
The CHIEF WHIP OF THE MAJORITY PARTY: Hon House Chairperson, I move:
That the Report be adopted.
Motion agreed to.
Report accordingly adopted.
9 NOVEMBER 2011
PAGE: 87 of 180
The House adjourned at 17:12.
__________
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
ANNOUNCEMENTS
National Assembly
The Speaker
1.
Membership of Committees
(1)
The following changes to Committee membership have been made by the African National
Congress:
Portfolio Committee on Human Settlements
Discharged:
Mdakane, Mr MR
Appointed:
Sosibo, Ms JE
Portfolio Committee on Sport and Recreation
Discharged:
Suka, Mr L
9 NOVEMBER 2011
Appointed:
PAGE: 88 of 180
Mdakane, Mr MR
Portfolio Committee on Public Service and Administration
Discharged:
Sosibo, Ms JE
Appointed:
Manana, Mr MC
Portfolio Committee on Transport
Discharged:
Manana, Mr MC
Appointed:
Suka, Mr L
TABLINGS
National Assembly and National Council of Provinces
1.
The Speaker and the Chairperson
(a)
2011 Third Quarterly Report of the National Conventional Arms Control Committee
(NCACC), tabled in terms of section 23(1)(b) of the National Conventional Arms Control
Act, 2002 (Act No 41 of 2002).
Referred to the Joint Standing Committee on Defence.
9 NOVEMBER 2011
2.
PAGE: 89 of 180
The Minister of Finance
(a)
Report and Financial Statements of the Government Employees Pension Fund (GEPF) for
2010-11, including the Report of the Independent Auditors on the Financial Statements and
Performance Information for 2010-11.
National Assembly
1.
The Speaker
(a) Report of the Public Service Commission (PSC) on the Management of Precautionary
Suspension in the Public Service – June 2011 [RP 201-2011].
COMMITTEE REPORTS
National Assembly
1.
Report of the Standing Committee on Appropriations on the Division of Revenue
Amendment Bill [B17 – 2011], dated 9 November 2011
1
Introduction
The Division of Revenue Amendment Bill (henceforth referred to as the Bill) was tabled in Parliament
on the 25 October 2011 by the Minister of Finance during the presentation of the 2011 Medium Term
Budget Policy Statement (MTBPS).
9 NOVEMBER 2011
PAGE: 90 of 180
This report focuses on amendments proposed in the Bill tabled by the Minister.
2
Equitable division of revenue raised nationally among the spheres of government
Table 1 (hereunder) outlines the equitable division of revenue raised nationally among the three
spheres of government.
Table 1
Spheres
of 2011/12 Allocation
Government
2011/12
Adjusted Adjusted amount
Allocations
R’000
National
566 322 576
562 174 845
-4 147 731
Provincial
288 492 831
291 735 509
3 242 678
Local
34 107 901
34 107 901
0
Total
888 923 308
888 018 255
-905 053
The net effect of the 2011 adjustments is a reduction in the 2011/12 estimates of expenditure from
R888.9 billion to R888.0 billion. The national allocation has been adjusted downwards by R4.148
billion from R566.323 billion to R562.175 billion. The provincial equitable share allocation is adjusted
upwards by R3.243 billion and the local government equitable share allocation remained unchanged.
3
Determination of each province’s equitable share of the provincial share of nationally raised
revenue
9 NOVEMBER 2011
PAGE: 91 of 180
Table 2 (hereunder) outlines each province’s equitable share of the provincial share of nationally
raised revenue.
Table 2
Provinces
2011/12
2011/12
R’000
Allocation
Allocation
Adjusted Adjusted Amount
Eastern Cape
44 120 028
44 644 170
524 142
Free State
17 520 835
17 722 579
201 744
Gauteng
50 428 480
50 967 615
539 135
KwaZulu-Natal
62 927 556
63 584 195
656 639
Limpopo
36 348 545
36 793 208
444 663
Mpumalanga
23 378 714
23 662 205
283 491
7 742 909
7 827 173
84 264
North West
19 271 431
19 481 922
210 491
Western Cape
26 754 333
27 052 442
298 109
Northern Cape
Total
288 492 831
291 735 509
3 242 678
The provincial equitable share was adjusted upwards from R288.493 billion to R291.736 billion to
provide for higher remuneration increases than what was provided for in the main budget. Provinces
were advised to budget for wage increases of 5.5 per cent; however the wage agreement between
labour and government resulted in a 6.8 per cent increase. The additional allocation of R3.243 billion
was allocated to provinces in proportion to their share of total expenditure on education and health
personnel and balanced with shares of expenditure on personnel in other sectors.
3.1
Allocations-in-kind to provinces for designated special programmes
9 NOVEMBER 2011
PAGE: 92 of 180
The R700.0 million allocation with regard to the Schools Infrastructure Backlogs Grant was
unallocated in the 2011 Division of Revenue Act. The Grant was established to assist provinces in
eradicating inappropriate school structures and the provision of water, sanitation and electricity at
schools. The Department of Basic Education finalised its needs-based analysis of the provinces and
has distributed the funds to the provinces, as follows: Eastern Cape (R520.7 million), Free State
(R22.3 million), Gauteng (R6.7 million), KwaZulu-Natal (R46.2 million), Limpopo (R41.7 million),
Mpumalanga (R38.3 million), Northern Cape (R8.0 million), North West (R11.1 million) and Western
Cape (R5.2 million).
4
Adjustments for local government for the 2011/12 financial year
No adjustments were made to the local government equitable share during the 2011/12 adjustment
period. In respect of conditional grants the following adjustments were proposed:
─ R790 000 was added to the municipal systems improvement grant;
─ R50 million of the Financial Management Grant was unallocated at the time of the
budget for engineering and technical intern programmes. Of this amount R39 million
was allocated through the adjustments process and R11 million was declared as savings.
─ R28.5 million was shifted to schedule 7 of the water service operating subsidy.
─ R28.6 million was shifted from regional bulk infrastructure grant to fund feasibility
studies.
An amount of R266 million is allocated to the Department of Cooperative Governance and Traditional
Affair’s vote for a once off gratuity for non-returning municipal councillors after the 2011 municipal
elections.
9 NOVEMBER 2011
5
PAGE: 93 of 180
Recommendation
The Standing Committee on Appropriations, having considered the Division of Revenue Amendment
Bill [B17 – 2011] (National Assembly – section 76(1)) referred to it and classified by the JTM as
Section 76(1) bill, recommends that the Bill be adopted without amendments.
Report to be considered.
2.
Report of the Standing Committee on Finance on the Tax Administration Bill [B11-2011]
(National Assembly- section 75), dated 09 November 2011
The Standing Committee on Finance, having considered and examined the Tax Administration
Bill [B11– 2011] (National Assembly – section 75), referred to it, and classified by the JTM as
a section 75 Bill, reports the Bill with amendments.
Report to be considered.
3.
Report of the Standing Committee on Finance on the Taxation Laws Amendment Bill [B19
- 2011] (National Assembly- section 77), dated 09 November 2011
The Standing Committee on Finance, having considered and examined the Taxation Laws
Amendment Bill [B19 – 2011] (National Assembly – section 77), referred to it, and classified
by the JTM as a Money Bill, reports that it has agreed to the Bill.
9 NOVEMBER 2011
PAGE: 94 of 180
Report to be considered.
4.
Report of the Standing Committee on Finance on the Taxation Laws Second Amendment
Bill [B20-2011] (National Assembly- section 75), dated 09 November 2011
The Standing Committee on Finance, having considered and examined the Taxation Laws
Second Amendment Bill [B20– 2011] (National Assembly – section 75), referred to it, and
classified by the JTM as a section 75 Bill, reports the Bill without amendments.
Report to be considered.
The report below replaces the Budgetary Review and Recommendations Report of the Standing
Committee on Finance, published in Announcements Tablings and Committee Reports (ATC No. 148
— 2011) of 08 November 2011, page no. 4395
5. The 2011 Budgetary Review and Recommendations Report of the Standing Committee on
Finance on the National Treasury, dated 03 November 2011
The Standing Committee on Finance, having assessed the performance of the National Treasury for the
2010/11 financial year, reports as follows:
1. Introduction
In terms of section 5(2) of the Money Bills Amendment Procedure and Related Matters Act No. 9 of
2009, committees must annually submit budgetary review and recommendation reports for tabling in
9 NOVEMBER 2011
PAGE: 95 of 180
the National Assembly for each department. A budgetary review and recommendation report must
provide an assessment of a department’s service delivery performance given available resources, an
assessment on the effectiveness and efficiency of a department’s use and forward allocation of
available resources, and it may include recommendations on the forward use of resources.
1.1 The Mandate and Role of the Committee
The Standing Committee on Finance was established in terms of section 4(1) of the Money Bills
Amendment Procedure and Related Matters Act No. 9 of 2009. The mandate of the Committee is
conferred to it by the Constitution, legislation, the standing rules or a resolution of a House, including
consideration and report on the following:

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;and

Any other related matter set out in the Money Bills Amendment Procedure and Related Matters
Act No. 9 of 2009.
Furthermore, the mandate 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.
1.2 Methodology.
9 NOVEMBER 2011
PAGE: 96 of 180
In complying with section 5(2) of the Money Bills Amendment Procedure and Related Matters Act,
Act No 9 of 2009, the Standing Committee on Finance held meetings on the 2009/10 Annual Reports
of National Treasury, the South African Revenue Services (SARS), the Financial and Fiscal
Commission (FFC), the Financial Intelligence Centre (FIC), the Public Investment Corporation (PIC),
the Land Bank, the Development Bank of South Africa (DBSA), the South African Reserve Bank
(SARB),the Financial Services Board (FSB) and the Pension Fund Adjudicator (PFA). The Office of
the Auditor-General was also invited to give input during the budget review and recommendation
report process. The report therefore reflects key issues that were identified by the Committee.
1.3 Mandate and role of National Treasury
The National Treasury is responsible for managing South Africa’s national government finances, and
draws its mandate from Chapter 2 of the Public Finance Management Act, Act No 1 of 1999, together
with Chapter 13 of the Constitution, 1996. National Treasury continued to monitor the impact of the
global financial crisis and was able to find appropriate responses (interest rates were cut five times,
increased the pace of government expenditure etc).
The budget process was enhanced as a result of the Money Bills Amendment Procedure and Matters
Related Act, (Act 9 of 2009) and National Treasury’s capacity was increased by creating a division
handling international and regional economic policy.
The legislative mandate of the National Treasury includes developing and prescribing measures to
ensure equitable resource allocation and proper expenditure control in each sphere of government, as
well as to ensure that this function is executed in a transparent manner. The National Treasury does
this by advocating and ensuring adherence to the following guidelines and procedures:
9 NOVEMBER 2011

Generally Recognised Accounting Practice.

Uniform Expenditure Classifications.

Uniform treasury norms and standards.
PAGE: 97 of 180
As the custodian of state funds, the National Treasury is therefore responsible for coordinating
departments’ budgets in all spheres of government. The Treasury’s role in this regard is to ensure that
appropriated funds are transferred to departments for implementation of government priorities, and
that government expenditure is continuously monitored.
1.4 Strategic Overview of National Treasury
The overarching aim of the National Treasury is to support and promote economic development, good
governance, social progress and rising standards of living through the accountable, economical,
equitable, and sustainable management of public finances.
During the period under review, the National Treasury continued to accelerate its coordinated
implementation of the key strategic priorities, as depicted in the Department’s Strategic Plan and
Estimates of National Expenditure: promoting the fiscal policy framework of the government,
coordinating intergovernmental financial and fiscal relations, managing the budget preparation process
which encompass revenue, expenditure, assets and liability management, exercise control on the
implementation of the national budget, facilitate the implementation of the Division of Revenue Act,
enforce effective financial management practices and contribute meaningfully towards employment
creation.
9 NOVEMBER 2011
PAGE: 98 of 180
The National Treasury will continue to build on its past achievements and good performance by giving
effect to government commitment of rooting out wastage, promoting cost efficiency and phasing out of
ineffective programmes.
1.5 Analysis of Expenditure Reports
National Treasury is established in terms of Section 216 of the Constitution, 1996 and Section 5 of the
Public Finance Management Act (No. 1 of 1999). Among its responsibilities, National Treasury is
required to enforce compliance with good financial management principles and monitor the
implementation of budgets. The department’s mandate is executed through programmes that largely
play a facilitation and coordination role of the budget. To ensure effective delivery on its mandate, the
department is allocated a budget as per programme and economic classifications that supports the
identified priorities of the department.
The Constitution requires that budgets and budgetary processes must promote accountability. In line
with this constitutional principle, the Public Finance Management Act (PFMA) requires each
government department and public entity to prepare reports (performance and financial) to account on
their activities. The scrutiny of such reports is very important to the oversight work of Parliament, as it
provides Members of Parliament with a holistic overview of the actual performance against plans. This
section analyses the expenditure performance of the National Treasury.
1.6 Budget Allocation
National Treasury was allocated an appropriation for the Department, amounting to R50.2 billion
(2009/10:R62.8 billion) during the year under review and is divided into two main budgets, that is,
9 NOVEMBER 2011
PAGE: 99 of 180
operational budget and transfers. Programme 1 to 6 constitutes the Department’s operational budget,
which amounted to R1.4 billion (2009/10:R1.3 billion), which is 2.9 per cent of the total appropriation
and the remaining budget of R48.8 billion (2009/10:R61.6 billion) falls under programme 7 to 9,
which is 97.2 per cent of the total appropriation. The report stated that the operational budget
comprised R552 million (2009/10: R408 million) for compensation of employees, R810 million
(2009/10: R788 million) for goods and services and R16 million (2009/10: R16 million) for the
acquisition of capital assets.
1.7 Expenditure at the end of the 2010/11 Financial Year
The following presents the spending trends by the National Treasury on its programme budget:
The total appropriation to the Administration programme amounted to R277 million (2009/10: R247
million). Expenditure for this programme totalled R249 million (2009/10: R243 million), which
comprises expenditure on compensation of employees of R109 million (2009/10: R92 million), goods
and services R134 million (2009/10: R143 million), transfers R2 million (2009/10: R1.4 million) and
capital expenditure R4 million (2009/10: R7.6 million).
The total appropriation for Public Finance and Budget Management amounted to R315 million
(2009/10: R265 million). The current expenditure for this programme totalled R230 million (2009/10:
R242 million) and comprised compensation of employees R144 million (2009/10: R123 million) and
goods and services R86 million (2009/10: R119 million). Capital expenditure amounted to R1 million
(2009/10: R1 million). Transfer payments amounted to R22 million (2009/10: R20 million).
9 NOVEMBER 2011
PAGE: 100 of 180
The total appropriation for the Assets and Liability Management programme amounted R73 million
(2009/10: R61 million). The total expenditure incurred within this programme amounted to R67
million (2009/10: R53 million) and consists of compensation of employees R47 million (2009/10: R38
million), goods and services R19 million (2009/10: R15 million) and payments for capital expenditure
R0.6 million (2009/10:R0.1 million).
The total appropriation for Financial Management and Systems amounted to R433 million (2009/10:
R459 million). The total expenditure incurred amounted to R395 million (2009/10: R406 million) and
comprises compensation of employees R43 million (2009/10: R40 million), goods and services R352
million (2009/10: R365 million) and payments for capital expenditure R1 million (2009/10: R1
million). The report cited further that the major cost pressure on this Programme relates to professional
service providers for maintaining the transversal systems and the development of the Integrated
Financial Management Systems (IFMS) project.
The total appropriation for the Financial Accounting and Reporting programme amounted to R206
million (2009/10: R139 million) and consisted of an operational budget of R144 million (2009/10: R86
million). The total amount spent by the programme was R164 million (2009/10: R137 million),
comprised compensation of employees R66 million (2009/10: R51 million), goods and services R35
million (2009/10: R33 million), and capital expenditure R1.2 million (2009/10: R1 million), while
Transfer payments amounted to R62 million (2009/10: R53 million).
The report stated further that this programme is responsible for the transfer of payments to the AuditorGeneral of South Africa (AGSA) in terms of the Public Audit Act (Act No. 25 of 2004), whereby
National Treasury is obliged to pay audit costs in respect of the auditing of statutory bodies for any
financial year concerned where such costs exceed one per cent of the total expenditure of such bodies.
9 NOVEMBER 2011
PAGE: 101 of 180
The transfer payments in respect of these statutory audit costs amounted to R21 million (2009/10: R19
million) during the year under review.
The total appropriation for the Economic Policy and International Relations programme amounted to
R130 million (2009/10: R96 million). The total expenditure incurred during the reporting period
amounted to R104 million (2009/10: R94 million) and comprised compensation of employees R68
million (2009/10: R59 million), goods and services R31 million (2009/10: R30 million) and capital
expenditure R0.5 million (2009/10: R0.5 million), while transfer payments amounted to R5.3 million
(2009/10: R5 million) for economic research.
The total appropriation for Provincial and Local Government Transfers amounted to R12.8 billion
(2009/10: R14.4 billion) during the year under review. Total expenditure amounted to R10.1 billion
(2009/10: R14.3 billion) and included conditional grants transferred directly from National Treasury’s
vote to provinces and municipalities amounting to R8.8 billion (2009/10: R9.2 billion) and R365
million (2009/10: R300 million) respectively. The balance of R882 million (2009/10: R578 million)
was in respect of the Neighbourhood Development Partnership Grant to municipalities.
The total appropriation for Civil and Military Pensions, Contributions to Funds and Other Benefits
amounted to R2.7 billion (2009/10: R4.9 billion) during the year under review. Expenditure for the
period under review amounted to R2.7 billion (2009/10: R4.9 billion) which comprised civil pensions
and other contributions R2.5 billion (2009/10: R4.8 billion) and military pensions and other
contributions R164 million (2009/10: R164 million) and goods and service amounted to R38 million
(2009/10: R25 million).
9 NOVEMBER 2011
PAGE: 102 of 180
The report highlighted that transfers are made to the South African Revenue Service (SARS),
Financial Intelligence Centre (FIC) and Financial and Fiscal Commission (FFC) for the fulfilment of
their statutory obligations, and to the Development Bank of Southern Africa for specified government
programmes. Domestic transfers accounted for 96 per cent of the total transfers allocated to this
programme and amounted to R12.7 billion (2009/10: R41.6 billion), of which the largest transfers
went to SARS, Secret Services and Eskom totalling R20 billion (2009/10: R40.2 billion).
Foreign transfer payments were made to:

The World Bank Group;

The African Development Bank (AfDB) and African Development Fund;

Common Monetary Area Compensation to Lesotho, Namibia and Swaziland;

The African integration and support programmes; and

Various international programmes, such as Common Wealth Fund for Technical Cooperation, the
Investment Climate Facility, and the International Funding Facility for Immunisation.
Total foreign transfers made by National Treasury amounted to R532 million (2009/10: R554 million)
during the reporting period; of which the transfers to Lesotho, Namibia and Swaziland make up the
largest portion of foreign transfers totalling R397 million (2009/10: R410 million).
1.8 Analysis of the Annual Report and Financial Statements
The indispensability and comprehensive analysis of annual reports cannot be underestimated. Annual
reports are the most salient tools to measure the performance of a department or entity, and play an
enormous role in holding government departments accountable to the legislature and the citizenry.
9 NOVEMBER 2011
PAGE: 103 of 180
According to the Guidelines for Legislative Oversight, annual reports are key reporting instruments for
departments to report against the performance targets and budgets outlined in their strategic plans, read
together with the Estimates of the National Expenditure (ENE). They allow Parliament to evaluate the
performance of a department after the end of a financial year. The critical information contained in the
annual report, which is backward-looking, include inter alia, service delivery information, presentation
of financial statements, audit report and accounting officer report.
This section provides a summary and analysis of the 2010/11 Annual Report for National Treasury and
looks at the overview of the identified programmes as per National Treasury‘s 2010/11 Annual Report,
wherein only the unattained targets shall be outlined. The section further explains the management
report as per 2010/11 Annual Report, the Auditor-General’s report. Financial statements are salient in
measuring both the performance and position of an undertaking and their short analysis is also
presented.
Programme Analysis
It is in the interest of good ethical reporting to present accurate, fair and correct information regarding
the department‘s annual performance against its planned objectives as set out in the different
documents to Members of Parliament and the public at large. The method or approach followed in this
section is to draw attention to targets that were not met during the 2010/11 fiscal year. The focus is on
output performance, targets, actual performance and reasons why the targets were not met.
Programme 1: Administration
9 NOVEMBER 2011
PAGE: 104 of 180
Within the Administration Programme, the Corporate Services sub-programme set a target to revise
and approve the Information Communication Technology (ICT) operational plan during the year under
review. This target was partially achieved in that ICT operational plan has been revised, but not
approved. The Corporate Service sub-programme further set a 60 per cent target to implement the
Electronic Procurement System. However, the report indicated that this target was not achieved during
the reporting period due to delays in the implementation of the Integrated Financial Management
System (IFMS). The report is not clear regarding the actual work done and what the status quo is.
Programme 2: Public Finance and Budget Management
With regard to the Public Finance and Budget Management Programme, the Budget Office subprogramme has indicated that the Official Development Assistance (ODA) resources should be aligned
to, and mobilised for, government policies and priorities with the focus broadened to include economic
and rural development. However, the report indicated that during the year under review, alignment
with the rural development programme has not commenced.
A further target for the department was that 500 officials would participate in both the budget
formulation and budget analysis courses per year. However, the report indicated that 129 participants
completed the Budget Formulation courses out of 221 and 88 participants completed the Budget
Analysis courses out of 170.
In terms of the Technical and Management Support sub-programme, the target to complete one
project as measured by the number of hospital Public Private Partnership (PPP) project reaching
financial closure has not been achieved during the year under review. The report indicated that the
9 NOVEMBER 2011
PAGE: 105 of 180
delays in concluding agreement with Provincial Health Departments and Treasuries resulted in the late
start of the project, but that the target will be met in the next 18 months.
Programme 3: Asset and Liability Management
With regard to the Governance and Financial Analysis sub-programme, the department set a target to
review three major metros (Cape Town, Durban and Johannesburg) and compile their individual
reports within the month of review. However, the 2010/11 Annual Report indicated that the target had
not been met due to challenges in obtaining understanding and municipal stakeholder buy-in.
Under the Liability Management sub-programme, with regard to finance government’s gross
borrowing requirement, the department has set a target to achieve gross issuance of R191.7 billion
during the year under review. However, the report indicated that the gross borrowing requirement of
R156.2 billion was financed during the reporting period.
The department further indicated that debt service costs will be managed at a target of 2.6 per cent of
Gross Domestic Product (GDP). However, the target was not met, as the report highlighted that debt
service costs were 2.5 per cent of GDP.
Programme 4: Financial Management and Systems
Under the Supply Chain Policy sub-programme, the department set a target to introduce strategic
sourcing principles to all spheres of government. However, the target was not met due to a decision to
reprioritise implementation of the Integrated Financial Management Systems (IFMS).
9 NOVEMBER 2011
PAGE: 106 of 180
Under the Financial Systems sub-programme, the department set a target to implement the
Procurement Management Module in the Department of Defence. However, the target was not
achieved due to delays experienced with the State Information Technology Agency (SITA). Another
target was set to implement the Human Resource Management Module in the Department of Public
Service Administration and Free State Provincial Department of Education. However, in Free State’s
Provincial Department of Education, the target was not met due to capacity constraints.
Programme 5: Financial Accounting and Reporting
Under the Technical Support Services sub-programme, the department had set to contribute toward
development of local and international standards on accounting, auditing and risk management; as well
as to attend all International Public Sector Accounting Standard Board (IPSASB) meetings and submit
a report within 7 days of attendance. However, the 2010/11 Annual Report indicated that the 3 of 4
meetings were attended and reports submitted. The report further stated that the February meeting
could not be attended due to unforeseen circumstances, which are not explained.
Under the Internal Audit Support sub-programme, the department had targeted 70 workshops to
support the implementation of audit committee guidelines. The report indicated that the target was not
achieved, thus the workshops were abandoned because the need had been reduced, and as most of the
audit committee had been trained in the previous financial year.
Under the Risk Management Support sub-programme, the department had targeted 15 learners for Risk
Management Learnership (RML) implementation. Although the preparation for roll out had been put
in place as reported, the target was not achieved due to funding constraints.
Programme 6: Economic Policy and International Financial Relations
9 NOVEMBER 2011
PAGE: 107 of 180
Under the Tax Policy sub-programme, the department has set a target to publish a discussion document
to explore options dealing with the tax treatment of financial instruments, carried interest in private
equity transactions and the deductibility of interest payments. However, the 2010/11 Annual report
indicated that the target was not achieved and the document would be completed in the 2011/12
financial year.
1.9 Report of the Accounting Officer
The report of the Accounting Officer cited that among key challenges faced by the department are the
attraction and retention of scarce skills despite the successful internship programme of the department.
The Chartered Accountant Academy Programme suggests real collaboration between the department
and the South African Institute of Chartered Accountants and the local government metros to expand
the programme to the wider public sector.
The report indicated that the wider income inequality necessitates reforms that are focusing on
reducing this imbalance through sustained job creation, combating the abuse of market power and
realisation of greater income security. The report further stipulated that the department undertook
several initiatives to monitor the implementation of the Public Finance Management Act (Act No: 1 of
1999) (PFMA) and Municipal Finance Management Act (No 56 of 2003) ( MFMA), such as the
introduction of a Financial Management Capability Maturity Model.
The introduction of the Financial Stability Board in 2009 in response to the global economic meltdown
by the G20 necessitated the alignment of the South African financial sector policy to the global
regulation of the financial services industry. The report cited that the rationale is to ensure regulation
9 NOVEMBER 2011
PAGE: 108 of 180
in important areas through bolstering a methodological risk approach to mitigate risk by hedge funds
and over the counter derivatives and improving bank resilience to market volatility. With regard to
regional integration, the National Treasury placed an emphasis on encouraging integration and
development through the Southern African Development Community (SADC) and fostering new
partnerships.
The Accounting Officer’s report further indicated that the department’s revenue during the year under
review amounted to R3.3 billion (2009/10: R3.5 billion) and consisted of sales of goods and services
of R51 million (2009/10: R300 million), fines, interest and dividends of R2.6 billion (2009/10: R2
billion) and other recoveries amounting to R0.7 million (2009/10: R1.2 billion).
The Local and foreign assistance received in cash amounted of R11 million (2009/10: R15 million)
during the year under review. The expenditure incurred amounted to R12 million (2009/10: R16
million) and other funds amounting to R34.2 million (2009/10: R10.3 million) were transferred to
external spending agencies on behalf of the Reconstruction and Development Fund.
The report indicated that payments of R193 million (2009/10: R71 million) were processed during
April 2011, which relate to the 2010/11 financial year. These payments were not included in the
financial statements for the 2010/11 financial year, which were prepared on the modified cash basis of
accounting. Departmental revenue amounting to R190 million (2009/10: R203 million) was received
after year-end and surrendered to the National Revenue Fund.
The report indicated that through the human resource business partnership model, there has been an
improvement with regard to internal hiring, which increased to 54 per cent against the target of 45 per
cent, and the quality of hiring new employees has improved to 85 per cent, there is still need for
critical and scarce skills. However, the skills database is being implemented to assist in this regard.
9 NOVEMBER 2011
PAGE: 109 of 180
The internship programme has improved with a conversion rate improving to 71 per cent, the
department employee base comprises of 6 per cent of interns in this regard, which reflect 4 per cent
higher than the target of 2 per cent as recommended by the Department of Public Service and
Administration (DPSA). The training remains an important element of capacitating the Department
and as such the Human Resources Development business unit has expanded its training portfolio and
provided an average of 8.15 training days per employee during the year under review. To further the
training, the business unit also introduced its Leadership Development Programme (LDP) for senior
management; from Deputy-Director to Deputy Director-General (DDG) level. During the year under
review, 53 per cent of staff in these positions has already attended the training. The human resource
management has improved its performance agreement to 95 per cent whilst escalating the submission
of performance reviews to 78 per cent.
In terms of the Information and Communication Technology (ICT), the department has adopted the
COBIT compliance framework as recommended by the DPSA, as its operational standard. This is in
line with the business unit’s strategy of developing its strategic information systems plan that includes
revision of existing ICT governance policies, processes and procedures that will also support its
implementation of an Enterprise Architecture.
With regard to facilities management, the report indicated that provision of parking is a significant
challenge to the department. Facilities Management is now providing an ergonomic working
environment in all business environments as well as 100% subsidised parking for all of National
Treasury’s level 9 and above employees. The department also achieved 100 per cent effectiveness
rating for its delivery against occupational health and safety standards and 84 per cent client
satisfactory rating on its service call resolution.
9 NOVEMBER 2011
PAGE: 110 of 180
The report has cited that programme 8 was administered by the Government Employees Pension Fund
(GEPF) and recently by the Government Pensions Administration Agency (GPAA) since 2010. During
the period under review, an irrecoverable accumulated loss of approximately R419.7 million of
pension benefits was realised which resulted from ineffectiveness of control activities.
1.10 Analysis of Financial Statements
The Auditor-General (AG) expressed an unqualified audit opinion on the financial matters of the
National Treasury as at 31 March 2011. His opinion means that that the financial statements present
fairly, in all material respects, the financial position of the National Treasury as at 31 March 2011, its
financial performance and its cash follow for the year then ended, in accordance with the Departmental
Financial Reporting Framework prescribed by the National Treasury and the requirements of the
Public Finance Management Act No 1 of 1999 (PFMA) and Division of Revenue Act No 1 of 2010
(DoRA).
The following are emphasis of matters as reported by AG report:
1.10.1 Irregular expenditure
The irregular expenditure to the amount of R11 million (2009/10: R12.1 million was incurred as a
result of contravention of the Special Pension Act No. 69 of 1996) and treasury regulations (TR) 8.2.1
and 8.2.2.
1.10.2 Material losses
9 NOVEMBER 2011
PAGE: 111 of 180
The report indicated a material loss to the amount of R3.6 million (2009/10: R4.5 million) were
reported as a result of criminal conduct and ineffectiveness of control activities within programme 8:
special pension
1.10.3 Financial reporting framework
The financial reporting framework prescribed and applied by the National Treasury is a compliance
framework. It reflected that the financial statements had been properly prepared instead of fairly
presented as required by section 20(2)(a) of the Public Audit Act of South Africa, Act No. 25 of 2004
(PAA), which requires an opinion on the fair presentation of the financial statements of the National
Treasury.
1.10.4 Predetermined Objectives
The findings of the AG indicate that there are no matters to report on the predetermined objectives.
1.10.5 Compliance with the laws and regulation
The report of AG has indicated the following finding with regard to the compliance with laws and
regulations:

The accounting officer did not prepare adequate quarterly reports on the progress made in
achieving measurable objectives and targets were as required by Treasury Regulation (TR)
5.3.1.,
9 NOVEMBER 2011

PAGE: 112 of 180
The accounting officer did not submit the annual performance report in time as required by Part
C of General Notice 1111 of 2010, issued in Government Gazette No. 33872 of 15 December
2010,

The accounting officer submitted financial statements for auditing that were not prepared in all
material aspects in accordance with the Departmental Financial Reporting Framework
prescribed by the National Treasury as required by section 40(1)(b) of the PFMA. The material
misstatements identified by the AG of South Africa with regard to irregular expenditure,
material loses and liabilities not fully quantified and disclosed subsequently corrected,

Expenditure was incurred without approval of a delegated official as per the requirements of
section 44 of the PFMA and TR 8.2.1 and 8.2.2, and

Payment that were made and identified within programme 8: special pensions were in
contravention of the Special Pension Act and PFMA.
1.10.6 Leadership
Management did not adhere to the internal policies and procedures and as a result there were instances
of non-compliance with the PFMA and TR. Internal control deficiencies and misinterpretations of the
Special Pensions Act resulted in instance of non-compliance thereof.
1.10.7 Investigations

A forensic investigation was conducted by the internal audit unit and an independent consulting
firm into allegations received from the Public Service Commission. The investigation was
initiated based on the allegations of possible procurement irregularities, the use of public
9 NOVEMBER 2011
PAGE: 113 of 180
resources for private purposes and leave irregularities. The investigation has been finalised and
the matter is now being dealt with through internal disciplinary processes.

An investigation is being conducted by the Specialised Audit Services (SAS) into an allegation
received from the Public Service Commission. The investigation was initiated based on the
allegation of possible irregularities in the appointment of a transversal contract. The
investigation is still in progress

An investigation is being conducted by the Public Service Commission into an allegation
received by their office in terms of irregular appointment of service providers by the National
Treasury. The investigation is still in progress
1.11 Human Capital
The department’s total staff complement of 1 111 comprises of the following:

55 per cent female,

79 per cent black,

at senior management level 66 per cent are black, and

38 per cent female.
The National Treasury had a vacancy rate of 14 per cent (179 posts) at the end of the 2010/11 financial
year.
A total of 140 critical skills positions were filled during the 2010/11 financial year.
One (1)
appointment was made in August 2011 and five (5) more internal staff members have declared their
status after awareness sessions. There is a concerted effort to recruit more people with disabilities
through relevant networks.
9 NOVEMBER 2011
PAGE: 114 of 180
2. South African Revenue Services (SARS)
2.1 Mandate and Role of SARS
The South African Revenue Service was established by legislation to collect revenue and ensure
compliance with tax law. Its vision is to be an innovative revenue and customs agency that enhances
economic growth and social development, and supports South Africa's integration into the global
economy in a way that benefits all citizens.
In accordance with the South African Revenue Service Act 34 of 1997, the service is an
administratively autonomous organ of the state: it is outside the public service, but within the public
administration. Although South Africa's tax regime is set by the National Treasury, it is managed by
SARS.
SARS aims to provide an enhanced, transparent and client-orientated service to ensure optimum and
equitable collection of revenue.
2.2 Economic Context of 2010/11
The Commissioner of SARS reported that the fiscal year ending showed significant improvement from
the previous year in both the global and economic environments. Strong growth levels persisted in
emerging economies, while in developed markets it remained uneven.
9 NOVEMBER 2011
PAGE: 115 of 180
Towards the fourth quarter of 2010/11, geographical instabilities in the Middle East and North Africa,
natural disasters in Asia, huge fiscal imbalances in Europe and United States, as well as rising global
inflation caused by high food and energy prices, began to gather momentum and increased uncertainty
for economic growth and investment.
The year in review tested SARS’ resilience in the face of the economic pressure and continuing
organisational change. This added to the significantly more demanding environment to meet revenue
targets in an economic downturn. SARS performed strongly, collecting a total of R674.2 billion, R2
billion above target. This reflected a growth of R76 billion, or 13 per cent against revenue collections
in 2009/10.
Six of the seven categorised tax types showed an increase year-on-year, with only Corporate Income
Tax (CIT) showing a marginal decrease. The main contributors to the overall increase were Personal
Income Tax (PIT), R21.6 billion, and VAT, R35.6 billion, which collectively added to R57.2 billion.
2.3 Cost of Collections
The cost of collection remained steadily in the 1 per cent to 1.2 per cent range over the past six years,
with the 2010/11 figure at 1.1 per cent or 0.1 per cent lower than the previous year.
This cost of around 1 cent for each R1 collected is in line with international practice and places SARS
among the more cost efficient revenue administrators globally.
2.4 Debt and Credit Books
9 NOVEMBER 2011
PAGE: 116 of 180
During the 2009/10 financial year, SARS reported a 30 per cent increase in the debt due to it to R79
billion, which was attributed to a combination of the economic difficulties of the financial year and its
own challenges, as well as those of taxpayers in managing their accounts.
SARS made significant investment through the modernisation programme in account maintenance and
debt management, providing further checks and balances and providing taxpayers the ability to view
and manage their own accounts. This is already having a significant impact on both the debt and credit
books, and the Commissioner reported that during the 2010/11 financial year SARS were able to make
significant gains into curtailing the growth in the debt due to just R6.6 billion, or 8.3 per cent.
On the credit side, SARS ended the financial year with a total of R49.8 billion in payment liabilities,
compared to R49.2 billion in 2010. The credit book saw an overall decline in credits for all tax types
except VAT and is further evidence of the improvements which the modernisation programme is
delivering for both taxpayers and SARS. PAYE credits dropped from over R8 billion at the end of the
2009/10 financial year to R5.9 billion last year as a result of PAYE enhancements.
The modernisation of VAT, which began at the start of this financial year, is already beginning to
show similar impact on the speed and accuracy with which SARS is able to process VAT declarations
and pay refunds. Currently over 80 per cent of VAT declarations are processed within 24 hours and,
where due, refunds are paid within 48 hours. This has seen the VAT credits reduce from R27.8 billion
at the start of the financial year to R22 billion currently, a decline of almost 21%. Further,
improvements are anticipated as the VAT modernisation continues. As part of the new VAT risk
process, VAT vendors selected for further verification of their refund claims are requested to submit
documents in support of their declaration or to revise their declaration where an error is suspected. To
date, almost a quarter of all vendors given this option have opted to revise their refund claims
downwards in the total amount of over R2 billion rather than to submit supporting documents.
9 NOVEMBER 2011
PAGE: 117 of 180
SARS have recently introduced a self-management functionality for VAT vendors in which they are
able to see and more importantly manage their own VAT accounts. These enhancements will continue
to be an important focus of their work in modernising VAT, Customs and Corporate Income Tax areas
over the next three years.
2.5 Tax and Custom Compliance
A tough economic environment resulted in a decline in compliance. However, SARS’s effective
approach of educating taxpayers of their tax obligations, providing efficient service to the compliant
while taking the appropriate enforcement actions to detect and deter non-compliant taxpayers and
traders, has helped to mitigate this trend.
Some key highlights in compliance gains during the year include:

A significant improvement in PIT on-time filing to 81 per cent compared to the 58 per cent in
2008/09. This is due, in part, to the introduction of the new administrative penalty regime and
the ongoing improvements in service.

An 11 per cent reduction in the outstanding returns book.

Recovery of R17.7 billion rand in cash from the debt book.

Over 80000 audits conducted with approximately 6500 investigative audits,
SARS also
achieved an 83 per cent success rate in these investigative audits.

The decline in the overall debt, excluding interest, is also evidence of greater compliance in ontime payment by taxpayers and traders.

A dramatic growth of 48 per cent in the overall tax and trader register, largely due to an 80 per
cent increase in the number of individuals registered as part of a drive to get employers to
9 NOVEMBER 2011
PAGE: 118 of 180
register all those in formal employment. This initiative led to more than 4 million additional
taxpayers being added to the register last year.
This growth will not necessarily translate into direct revenue gains, as these
individuals were and are already being taxed by their employer under the SITE system while others are
below the tax threshold.
The significance of having all those in formal employment on the tax register is twofold, firstly, it
recognises the contributions of all taxpayers rather than just those who are required to submit a return
each year and allows for a direct engagement between SARS and these taxpayers; and secondly it
provides for a more comprehensive compliance approach by providing insight into all taxpayers.
2.6 Enforcement achievements
Visible and effective enforcement is an important motivator for compliance. In this regard, SARS
reported a range of successes on both the tax and customs front during the year in review, including:

An 83 per cent success rate in investigative audits resulting in an audit yield of R3.9 billion.

More than 125 000 taxpayers with outstanding returns submitted these after being issued with
administrative penalties. This process also resulted in a boost to the fiscus of R191 million in
fines.

R765 million collected through post-clearance audits.

A total of 23 580 seizures with a street value of R994 million, including seizures in counterfeit
cigarettes, counterfeit CDs and DVDs, clothing and drugs, and

A 65 per cent success rate in litigation cases.
9 NOVEMBER 2011
PAGE: 119 of 180
2.7 Customs Modernisation
In addition to ensuring maximum compliance with tax and customs legislation, SARS has a second
and equally important mandate, to facilitate trade and to protect our country’s borders.
At no time has this mandate been more crucial to support of our government’s priorities of job creation
through economic growth. Facilitating trade is about speeding up the movement of goods in and out of
South Africa with the ultimate goal being the seamless, uninterrupted access to global markets by local
manufacturers. Protecting our borders from unwanted and illicit goods, on the other hand, is about
control and enforcement. It requires checking and
verification, often physically.
The way SARS and other customs authorities around the world are attempting to balance service and
enforcement is through a risk-based approach in which low risk goods are allowed to move relatively
unimpeded while high risk goods are subjected to more stringent verification processes. This is at the
heart of SARS’ Customs modernisation programme which they embarked on in 2009 and which seeks
to provide an automated, electronic risk-based process of goods clearance.
The new Customs Risk Engine has given SARS the ability to move from being a gate keeper to a risk
manager, targeting specific consignments with a higher it rate. The Customs Risk Engine has been
redesigned to such an extent that it enables more precise risk targeting and selection, thus driving
better efficiency and output. This precision has enabled declarations to be controlled by the risk
engine, thereby ensuring that cargo that are stopped for inspection have a more likely chance of being
non compliant. This reduces time and resource inefficiencies being employed on legitimate traders and
enforcing compliance on illegitimate traders.
9 NOVEMBER 2011
PAGE: 120 of 180
SARS reported that another aspect of the Customs modernisation programme is a re-engineered and
more robust inspection process. Importantly, this contributes significantly in the fight against
corruption in that inspectors are no longer allowed to select the cases they work on. Instead, in line
with SARS’ tax reforms, Customs now uses the “get next item” concept in which cases identified by
the risk engine are randomly assigned to inspectors.
SARS are increasingly focused on textile and other imported products to target undervalued imports by
working with industry through NEDLAC along with historical data gathered over a number of years to
improve and update their list of prices in a valuation database.
A cornerstone of the modernisation programme is the replacement of the Customs legacy system.
SARS’ investment in the subsidiary company Clidet 967 (Pty) Ltd provides the basis for the
development of a world-class customs software platform not only for South Africa but also for those of
other administrations in the region and in Africa. They have already offered the system to Lesotho free
of charge.
The ‘Preferred Traders’ initiative continues to grow. These are traders that have demonstrated a greater
assurance of their compliance and will therefore be rewarded with greater service benefits and more
rapid movement of goods. At the end of the financial year, a total of 125 client engagements were
conducted, 49 audits were finalised and 39 clients were recommended. The majority of clients that
were engaged with, have welcomed the initiative and are showing high levels of commitment to the
process.
2.8 Service Enhancements
9 NOVEMBER 2011
PAGE: 121 of 180
SARS reported that significant progress has been made over the past 3 years and this has realised
dramatic improvements in return processing turnaround times, increases in service levels and
efficiency improvements to the extent of releasing resources to focus on higher value-adding activities.
Further improvements to the income tax process for individuals together with enhancements to the
PAYE process have been realised in 2010. The modernisation programme has simultaneously
commenced with the modernisation of the CIT and VAT. Some of the key highlights during this year
were:

Achieving all service-related targets against the measures in the strategic plan, this included a
85 per cent first contact resolution in contact centres, a 15 day average turnaround time for
escalations and a 79 per cent uptake in electronic declarations from entities operating from
SACU countries.

The development and promotion of e-Filing as an online electronic channel was an integral
component of the modernisation strategy. Over the past five years, SARS have been able to
increase the number of registered e-Filing users from about half a million at the end of 2006 to
just over 6 million at the end of March 2011, representing a twelve-fold increase.

This growth in electronic submission has helped SARS to continue to improve their service to
taxpayers as reflected in the results of assessments issued within 24 hours of submission.
During tax season 2009, 2.3 million returns were assessed within 24 hours. This volume
increased by 18 per cent in tax season 2010 to 2.7 million returns.

This rapid turnaround allowed SARS to refund eligible taxpayers in record time. During tax
season this year, SARS paid R11.9 billion in refunds to individual taxpayers compared to
R10.5 billion last year, a 13 per cent increase. Of these refunds, 79 per cent were paid within 48
9 NOVEMBER 2011
PAGE: 122 of 180
hours of assessment. This means that the vast majority of taxpayers who were due a refund
received it in their bank accounts in less than three days after submitting their returns.

The SARS Call Centre handled a total of over 5 million calls last year including a record
number of over 3 million calls during the 2010 tax season, with more than 49 000 calls
answered on the final day alone. The year saw a decline in the abandonment rate from 14 per
cent in 2009/10 to 9 per cent in 2010/11.

SARS has also enabled taxpayers and employers to complete and submit returns, together with
SARS assistance, at a SARS branch through the Branch Front End (BFE), thus eliminating the
need for back-office processing and capturing of paper-based returns. This channel has proven
popular from a taxpayer service perspective, and during the most recent tax season, 38 per cent
(1.7 million) individual tax returns were submitted using this method.

The popularity of electronic channels has resulted in a significant drop in the number of paper
returns submitted to SARS for processing. By March 2010 the number of paper returns had
already reduced to 8 per cent (345 000) of individual income tax return submissions for that
year. By March 2011 the number has almost halved to 4.2 per cent or 186 000 returns with
taxpayers preferring to complete their submissions electronically.
SARS reported that during the past three years, they have also invested significantly in a Customer
Service Programme. To date, considerable progress has been made in the programme. Some key
achievements have been:

The enhanced quality of responses from agents to taxpayers.

The optimised self help channels for taxpayers.

The seamlessly transferring of calls and agents between contact centres in the event of a failure,
and
9 NOVEMBER 2011

PAGE: 123 of 180
The optimisation of productivity of all agents by prioritising taxpayers and traders calls when
volumes are high, and using spare capacity to conduct outbound campaigns.
2.9 Human Capital
SARS headcount increased very marginally during 2010/11, compared to the previous financial year
with a total of 15 296 employees, or 33 more than the previous year. This included the recruitment and
training of an additional 625 Customs and Border Control agents.
SARS reported that their commitment toward employment equity continues to grow with the number
of black employees, woman and woman-in-management on the upward trend.
The year under review saw the total percentage of black employees rise to 69 per cent from 67 per cent
a year earlier, comprising 52.32 per cent Africans, 10.64 coloureds and 6.2 per cent Indians. At the
management level, more than 60 per cent of management staff are African, coloured or Indian and 45
per cent are women.
2.10 Governance
The Auditor-General has given SARS an unqualified audit report for 2010/11, the seventh in a row
which reflects their on-going commitment to good governance.
SARS’s physical offices are established to provide ready access to taxpayers that are unable to utilise
their electronic channels. SARS leases property for its physical footprint to ensure that it remains agile
and responsive to the shifting patterns of commercial centres and transport routes. For the year ended
9 NOVEMBER 2011
PAGE: 124 of 180
March 2011, the total lease cost was R462 million relative to R412 million in the previous financial
year.
SARS attributed this variance to the contracted escalation rates applicable to lease agreements,
expansion of the branch office footprint, and increase in charges by the Department of Public Works
for government buildings in terms of the devolution of budget as well as the commissioning of
Riverwalk in Pretoria from the PIC.
SARS reported that they place extremely strict controls on S & T expenses. These include a reduction
of the budget on a year-on-year basis, utilisation of low-cost carriers where possible and practical,
discounted rates with preferred hotel suppliers and deduction of travel expenses directly from
employee salaries if the expenses are not acquitted within 7 days. For the year ended March 2011, the
total travel expenses were R96 million relative to R79 million in the previous financial year.
3. Financial and Fiscal Commission (FFC)
The FFC is coordinated by the Minister of Finance and consists of a full time chairperson and deputy
chairperson (nominated by national government), who is also the chief executive and accounting
officer of the FFC. There are seven other commissioners (two national, three provincial and two
organised local government [SALGA] nominees). All appointments are made by the President of the
Republic of South Africa.
3.1 Mandate of the FFC
9 NOVEMBER 2011
PAGE: 125 of 180
The primary mandate of the FFC is to provide recommendations to the three spheres of government
and other organs of state on: the division of revenue between and among the three spheres of
government and, any other financial and fiscal matters.
In the discharge of its mandate, the FFC timeously tabled submission and recommendation on the
following:

2011/12 Division of Revenue

2011/12 Division of Revenue Bill

2011 Fiscal Framework and Revenue Proposals

2010 Medium Term Budget Policy Statement(MTBPS)

2011 Appropriations Bill

Additional 2010/11 Submission
 Submission on the Financial Management of KwaZulu-Natal Legislature Bill 2010 to
the KwaZulu-Natal Provincial Legislature
 Submission on the Local Government Municipal Property Rates Amendment Bill, 2010
to the Department of Cooperative Governance and Traditional Affairs
 Submission on the Challenges Encountered With The Funding Norms Applicable To
Independent School to the Department of Basic Education
3.2 Report of the Accounting Officer
The Accounting Officer report indicated that the commission research has progressed rapidly owing to
the Commission’s Five Year Research Strategy and its response to challenges faced by the
9 NOVEMBER 2011
PAGE: 126 of 180
municipalities. The research work has benefited the commission researchers as well though the
presentation and journal publications and commission plan to disseminate its work through the use of
social networks with aim of enhancing the quality of its output.
The report further cited that the recent perception survey and the commission impact assessment had
established the need for the commission to interact with its stakeholders while at the same time
responding to their needs. However, the challenge in this matter is the requirement of adequate budget
and the presence of the Commissioner.
The report cited that although the staff turnover has been reduce the human resource dimension still
continue to remain a challenge. During 2010/11 the Commission review its operating model with
specific focus to a more specialised research and support structure that would benefit from the
outsourced specialist and technical skills. The vacant posts were freeze, except in core business areas
of the commission. This has impacted severely in the finance section, where inexperienced staff are
kept and trained to perform in high risk areas such as procurement. However, this challenge is
addressed through increased supervision for the staff. This challenge can be attributed to the
inadequate budget of the commission.
The Information and Communication Technology still remain a challenge for both Midrand and Cape
Town offices. This has led to an unbudgeted expenditure for the replacement of laptops for core
personnel.
The report indicated that with regards to finance, the commission budget is under immense pressure, as
a result of exorbitant audit fees, travel and accommodation costs with increase stakeholder focus. The
9 NOVEMBER 2011
PAGE: 127 of 180
decision to reduce office space in both Midrand and Cape Town officer will temporarily ameliorate the
budget pressure.
In terms of governance, the report indicated that the submission has being made to the Finance
Minister with regard to the conflation of the role of chairperson, Accounting Officer and Chief
Executive of the commission and two vacancies for part time commissioners that have been vacant
since 2008.
The Accounting Officer report indicated the key development as underpinned by the Commission’s
theme of its continued focus on expenditure outcomes, accountability institutions, equitable growth
and redistribution of resources, and flexible response in an effort to realise the ideal of positive public
expenditure outcomes. The report further cited that as part of the stakeholder focus, the Commission
will continue its effort to reach a broader set of stakeholders, strive for accountability to Parliament,
provincial legislatures and general public in the its alignment of allocated resources with expected
outputs.
The total appropriation of the Commission for the year under review was R31.8 million. The
programme allocations during the year under review were as follows:
 Research and Recommendations Programme was R12.9 million (expenditure was R11.3
million, which is 87.9 per cent of the programme allocation);
 Corporate Services Division was R8.1 million (expenditure was R8.7 million, which is 108 per
cent of the programme allocation);
 Finance Division was R3.8 million (expenditure was 4.4 million, which is 113 per cent of the
programme allocation); and
9 NOVEMBER 2011
PAGE: 128 of 180
 Administration was R8.9 million (expenditure was R8.9 million, which is 136 per cent of the
programme allocation.
Of the total revenue of R31.8 million received by the Commission, R31.4 million was from
government grants and R401 661 thousand from other income. The report indicated that the
Commission did not incur any expenditure in respect of a major non-mandate event during the year
under review. The report indicated that with regard to internal policy review, the Executive Committee
approved among others the following governance policies and prescripts for implementation:
 Facilities Policies and Procedures
 Human Resource Policies and Procedures
3.3 Highlight/Achievement and Challenges
The report indicated that the significant issues that the FFC sought to address was the appropriate
consolidation of deficit and debt reduction following an increased expenditures as a result of aftermath
of the 2008/09 global financial crisis. The report indicated further that the FFC had to address issue
pertaining to the appropriateness of government countercyclical stabilisation policy, increase
intergovernmental grants to generate employment and reduce the inequalities and poverty. The
creation of favourable condition for economic development in the urban environment was the other
issues that the FFC had to address. The other issue that the FFC has to address was the need for
government to focus more closely on fiscal responsibility, improving the quality of services and pay
attention to the issues of unfunded mandates
The reported indicated that, with regard to internal strategic dynamics, the Commission was concerned
by ever shrinking resource envelop and the need to adopt lean, highly-networked, research focus
9 NOVEMBER 2011
PAGE: 129 of 180
delivery model. The second issue was the antiquated Information Communication Technology and
systems which were at the brink of total collapse, and impacted negatively on Commission’s effort on
research, Information Management (IM), Enterprise Content Management (ECM) and Knowledge
Management (KM) as well as day to day operations. The increase demand on the service of
Commission brought about by among other changes in the legislation and stakeholder education,
engagement, and awareness programme. The report cited the legacy of R3.4 million deficit that the
Commission has been seeking to erase for more than four years. The report indicate the important
issues of the compliance, which consumed more than 8 per cent of the Commission’s budget
3.3.1 Achievement

The Commission indicated that it met all its constitutionally mandated obligations as
documented in the Commissions’ submission for the 2012/2013 Division of Revenue. The
submission indicated three pillars that sustainable economic growth and development relies on,
that is macroeconomic stability, progressive realisation and sustainable development. These
pillars suggest that government intervention should not only be financed in a sustainable, noninflationary manner at national, provincial and local government levels, but that attention also
needed to be paid to the allocations and technical efficiencies of public expenditure as well as
to their potential impact on the environment.

The report indicated that the Commission has responded timeously to all stakeholder requests
in line with the requirements of the Financial and Fiscal Commission Act.
9 NOVEMBER 2011

PAGE: 130 of 180
The Commission strengthened its engagement with Parliament, provincial legislatures, local
government, national and provincial executives, Institutions Supporting Democracy, as well as
a variety of non-state and non-government organisations.

The reported indicated further that the Commission published detailed research reports, made
supplementary submissions, provided advisories and detailed technical comments on a number
of important intergovernmental fiscal relations issues.

The Commission staff published articles in local and international accredited journals and
contributed book chapters in the field of intergovernmental fiscal relations.

The Commission, in partnership with the Poverty and Economic Policy Analysis Research
Network, provided training in modelling of the impact of macroeconomic policies with the
objective of further knowledge on the microeconomic impact on macroeconomic policies and
shocks.

The report cited that the Commission has assisted other African countries in thinking around
their own intergovernmental fiscal relation.
3.3.2 Challenges

The report indicated that under the human resource the complex change management strategy
is still remains work in progress. The Commission hope to complete the work by the end of
current financial year,
9 NOVEMBER 2011

PAGE: 131 of 180
Under the Research unit, the productive capacity has been challenge by the resource constraint
to fulfil broad mandate and this resulted in suspension of necessary staff training and
development,

The failure of the institution to consult with the Commission in situations where such
consultation is legally prescribed and the failure by line departments to response to the
Commission’s recommendations,

The serious issues of governance remain unresolved, that is the conflation of the position of the
Chairperson and Chief Executive Officer continue to pose an unacceptable and unmitigated
risks,

The Commissioners allowance has not been reviewed since 2008 and it pose as a disincentive
to the recruitment and active participation of suitably qualified part-time Commissioners,

The report indicate that the three vacancies within the rank of Commissioner remains unfilled,
and

With regard to compliance, the report indicated that the compliance has its own financial
implications, and audit fees currently stand in excess of more than 8 per cent of the
Commission’s budget.
3.4 Performance overview
The method or approach followed in this section is to draw attention to targets that were not met
during 2010/11 fiscal year. The focus is on output (deliverables) performance, targets, actual
performance and reason why they are not met.
3.4.1 Strategic objective: Generate quality, innovative, pioneering research that informs key
Intergovernmental Fiscal Relation strategic debate and choices
9 NOVEMBER 2011

PAGE: 132 of 180
The report indicated that the financing of Natural Disasters in South Africa Research Project
has not been achieved during the year under review and the Research project was extended to
the 2011/12 research cycle,

The report further indicated that the Building Accountable Provincial Government Institutions
Research Project has been partially achieved, and the delay was attributed to data constraints,

The Role of Intergovernmental Fiscal Relations in Promoting Innovation in South Africa
Research Project has not been achieved during the year under review, however, it is work in
progress, and

The National Planning in a Decentralised Environment: South Africa-A Case Study project has
not been achieved during the year under review because the project never took off due to staff
and resource constraints.
3.4.2 Strategic Objective: Compliance with legislation and adherence to relevant corporate
governance best practice

The report highlighted that the Protected Disclosure mechanisms initiative for the Fraud
Hotline was not achieved during the year under review due to pending written authorisation
from the Public Service Commission (PSC) for use of ITS Fraud Hotline,

The FFC Budget Performance project to spend as per the approved Business Plans and Budget
was partially achieved with an unqualified audit opinion but with matters of emphasis, and

The report indicated that the Commission and Committee Meetings as measured by Part 3 of
Financial and Fiscal Commission Act was partially achieved. However, 3 meetings of different
outputs under this project did not quorate due to vacancies.
9 NOVEMBER 2011
PAGE: 133 of 180
3.4.3 Strategic Objective: Progressive and Innovative management of human resources that
attracts, develops and retains key talent and leverage external expertise

The report indicated that the Review of the Delivery Model as measured by the Commission’s
approval of the New Delivery Model Concept was partially achieved. The delay was due to the
Organisational Development and Risk Assessment that is in progress,

The report indicated that the Recruitment of Talent programmes measured by appointment of
qualified personnel is on hold, pending reorganisation.
3.4.4 Strategic Objective: Coordinated, coherent, high-quality, innovative and cost-effective
approach to ICT that meets the needs of the Commission, the Commission Secretariat and
stakeholders

The report highlighted that the ICT governance as measured by the best practice approved ICT
strategy was not been achieved during the year under review due to prioritisation of stabilising
the system, and the implementation of the ICT Policies and Procedures have not been achieved,
and

The report goes further to indicate that the upgrade of ICT infrastructure and streamlining of
the ICT network and connectivity have not been achieved mainly due to budget constraints.
3.4.5 Strategic Objective: Facilitate engagement between stakeholders on key IGFR issues

The report cited that the Development of the stakeholder-inclusive engagement programme
was not achieved during the year under review due to funding constraints.
9 NOVEMBER 2011
PAGE: 134 of 180
3.4.6 Strategic Objective: Adopt a Prudent and Transparent Approach to the Management of
Finance

The report indicated that the Budget under Austerity programme as measured by savings was
not achieved due to the budget inadequacy, and

The Commission report goes further to pinpoint that the Alternative Revenue Sources initiative
have not been achieved due to the absence of convergence.
3.5 The report of the Auditor-General (AG)
The report of the AG indicated that the financial statements present fairly, in all material respects, the
financial position of the Financial and Fiscal Commission as at 31 March 2011, and its financial
performance and cash flows for the year ended in accordance with SA Standards of Generally
Recognised Accounting Practice (GRAP) and the requirements of the Public Finance Management Act
(PFMA) (Act No 1 of 1999). However, the following were the emphasis of matters that the AG drew
attention to:
3.5.1 Irregular expenditure
The AG cited that the Commission incurred irregular expenditure of R203 719 thousand, as the
expenditure was incurred in contravention of Treasury Regulation 16A9.1 (d) relating to supply chain
management.
3.5.2 Fruitless and wasteful expenditure
9 NOVEMBER 2011
PAGE: 135 of 180
The AG indicated that the Commission incurred fruitless and wasteful expenditure of R132 324 due to
interest and penalties arising from the late submission of EMP 201 returns and late payments to SARS.
3.5.3 Going concern
The Commission incurred net losses of R1.7 million as at 31 March 2011, and as of that date the
Commission‘s total liabilities exceeded its total assets by R3.1 million. These conditions indicate the
existence of a material uncertainty that may cast significant doubt on the commission’s ability to
operate as a going concern.
3.5.4 Restatement of corresponding figures
The corresponding figures for 31 March 2010 have been restated as a result of an error discovered
during 2011 in the financial statements of the Financial and Fiscal Commission, and for the year ended
31 March 2010.
3.5.5 Predetermined Objectives
The AG indicated that the reported performance against predetermined indicators and targets was not
consistent with the quarterly reports.
3.5.6 Procurement and contact management
The AG indicated that goods and services were procured from suppliers who failed to provide written
evidence from SARS that their tax matters were in order, as per the requirements of Treasury
Regulation 16A9.1 (d). The report further stipulate that contracts were extended or modified to the
9 NOVEMBER 2011
PAGE: 136 of 180
extent that competitive bidding processes were circumvented, contrary to the requirement of a fair,
equitable, transparent, competitive and cost-effective supply chain management system in terms of
Treasury Regulation 16A3.2.
The AG also stated that the Accounting Officer did not take effective and appropriate steps to prevent
irregular, fruitless and wasteful expenditure as per the requirement of section 38(1)©(ii) of the PFMA
and Treasury Regulation 9.1.1.
The AG indicated further that payments due to creditors were not settled within 30 days from receipt
of an invoice, as per the requirements of section 38(1)(f) of the PFMA and Treasury Regulation 8.2.3.
3.5.7 Oversight responsibility regarding reporting and compliance
The report of AG indicated that the accounting officer did not exercise adequate oversight over the
financial statements, report on predetermined objectives and the compliance process resulting in
material adjustments to the financial statements, findings on predetermined objectives, and noncompliance with laws and regulations.
3.5.8 Financial and performance management
The AG cited further that the financial statements and the report on predetermined objectives
contained a number of misstatements that were corrected. This was mainly due to staff members not
fully understanding the requirements of the financial reporting and performance reporting framework.
Furthermore, non-compliance issues were not identified due to the lack of adequate processes over
compliance-related issues.
3.5.9 Review and compliance with laws and regulations
9 NOVEMBER 2011
PAGE: 137 of 180
The AG report identified instances of non-compliance with laws and regulations that were not
prevented by the commission. This was mainly due to the lack of oversight and implementation of
processes to monitor compliance with all laws and regulations requirement of a fair, equitable,
transparent, competitive and cost-effective supply chain management system in terms of Treasury
Regulation 16A3.2.
The AG also stated that the Accounting Officer did not take effective and appropriate steps to prevent
irregular, fruitless and wasteful expenditure as per the requirement of section 38(1)©(ii) of the PFMA
and Treasury Regulation 9.1.1.
The AG indicated further that payments due to creditors were not settled within 30 days from receipt
of an invoice, as per the requirements of section 38(1)(f) of the PFMA and Treasury Regulation 8.2.3.
3.5.10 Oversight responsibility regarding reporting and compliance
The report of AG indicated that the accounting officer did not exercise adequate oversight over the
financial statements, report on predetermined objectives and the compliance process resulting in
material adjustments to the financial statements, findings on predetermined objectives, and noncompliance with laws and regulations.
4. Financial Intelligence Centre (FIC)
The FIC was established in terms of The Financial Intelligence Centre Act No 38 Of 2001 (FIC Act).
The FIC Act establishes the FIC as South Africa’s national centre to provide financial intelligence to
9 NOVEMBER 2011
PAGE: 138 of 180
law enforcement agencies, intelligence agencies and the revenue service. It is accountable directly to
Minister of Finance and funded from the national budget.
The FIC receives information for analysis and processing from ‘accountable institutions’. It refers
information to Law Enforcement such as the South African Police Services (SAPS), Hawks, South
African Revenue Service (SARS), and the Intelligence Services. It also exchanges information with
similar and equivalent bodies in other jurisdictions, such as other financial intelligence units, and
Interpol.
The FIC coordinates SA’s policy on the Anti-Money Laundering (AML) and Combating of Financing
of Terrorism (CFT) and administers the FIC Act. It liaises closely with National Treasury, other
departments and all stakeholders in public and private sector and internationally. It gives guidance to
the supervisory bodies (South African Reserve Bank and Financial Services Board), and accountable
institutions. The FIC monitors and inspects for compliance where no supervisory bodies exists, such as
the Post Bank, Ithala, and Kruger Rand dealers. It leads SA in the Financial Action Task Force (FATF)
and participates in other international bodies. It also maintains efficient and secure data systems.
4.1 Strategic Objectives
Unlike other reporting institutions, the FIC is not funded along programmes li nes, and as such,
the FIC reports on the following six pre-determined strategic objectives:

Improve consumption of FIC products and Services,

Improved Compliance by Accountable Institutions,

Improved Anti-Money Laundering/Combating Financing of Terrorism Capacity in the
Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) Region,
9 NOVEMBER 2011

PAGE: 139 of 180
Improved Anti-Money Laundering/Combating Financing of Terrorism Framework in
South Africa,

Develop and Commissioning of The FIC’S Information and Communications Techn ology
System, and

Become a More Sustainable and Capable Institution.
4.1.1 Improved Consumption of FIC Products and Services
In this case there were two objectives and accompanying targets of which only one was successfully
achieved. The focus below is on the one not achieved:
The FIC had planned to provide timely responses to requests for financial products by law
enforcement agencies and investigating authorities. The set target was 90 per cent requests responded
to within agreed response time; however the FIC only responded to 59 per cent of requests within
agreed period. As such the target was not achieved.
Reasons for not achieving the set target include:

capacity constraints,

the sharp increase in the number of requests for information, and

significant scope of work in some matters
4.1.2 Improved FIC Act Compliance of Accountable Institutions and Society in General
In this case the FIC had three objectives of which two were convincingly achieved; therefore the focus
below is on the one in which the set target was not achieved as planned.
9 NOVEMBER 2011
PAGE: 140 of 180
The FIC had planned to undertake administrative actions and assist in criminal prosecutions relating to
non-compliance in pursuit of improved compliance of the FIC Act. Target and actual performance was
as follows:

To establish inspectorate and regulatory enforcement capability in the fourth quarter. As at the
end of the financial year the FIC had not met the target as planned despite having made
progress.

Administrative action taken. Again, completion was not met despite progress made.

Report on support provided in the fourth quarter. This target was met as planned as reports
were compiled based on 122 joint compliance reviews conducted with supervisory bodies.
4.1.3 Improved Anti-Money Laundering/Combating Financing of Terrorism Capacity in
the Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) Region
In this case there were three objectives and accompanying of which two were successfully achieved.
Below are details on the unachieved objective and accompanying target.
The FIC had planned to improve the FIC’S understanding of the scope of and need for technical
assistance within the ESAAMLG region necessary to strengthen the region’s anti-money
laundering/combating financing of terrorism regimes. The target was to have a report on priorities and
needs for technical assistance within the ESAAMLG region approved in the second quarter. The target
was not achieved.
4.1.4 Development and commissioning of the FIC’S Information and Communications
Technology System
9 NOVEMBER 2011
PAGE: 141 of 180
The FIC had planned to establish a business continuity plan and business continuity system; and the
target was to have the business plan approved and the business continuity system implemented in the
fourth quarter. However only the business continuity plan was approved but the business continuity
system was not implemented. So the latter was not achieved.
4.1.5 Become a more Sustainable and Capable Institution
In this case the FIC had set three objective accompanied by their respective indicato rs and
targets; and only one was achieved convincingly. The focus below is on those that were either
not achieved or not clearly/convincingly achieved.
The FIC had planned to secure appropriate premises for it in the medium to long term. To
achieve this objective, the FIC had set a target of having an accommodation needs delivery plan
approved in the fourth quarter of 2010/11. As at the reporting period, the FIC has not clearly
indicated if such target was achieved or not.
The FIC had planned to maintain human resource capacity to sustain the business of the FIC; and the
target was to ensure 16 per cent staff increase year-on-year. The FIC reported that despite having
achieved the set target; the high staff turnover rate offset its recruitment efforts. Ultimately, year-onyear staff increase stood at 1.36 per cent instead of the targeted 16 per cent.
4.2 Financial Information
9 NOVEMBER 2011
PAGE: 142 of 180
The FIC funds are voted on the National Treasury budget. It has received an allocation of R181.4
billion during the year under review.
During the period under review, the FIC materially under spent by R45.4 million on its allocated
budget. The main determinant of this under spending is the FIC’s inability to expand human resource
capacity at the anticipated rate. There under spending impacted adversely on certain operations such as
those of analysis and compliance enforcement.
In addition to the under spent funds, the FIC had savings on Information Communication Technology
(ICT) expenditure.
The FIC’s statement of its financial position reflected a short term financial positions as it had
operating capital amounting to R54 million. Basically current financial assets exceed current financial
liabilities, which shows that the FIC is managing its debts and other liability well, therefore not
susceptible to short-term financial risks.
The FIC reported a surplus of R45.4 million, a 117 per cent increase from the previous year’s surplus
of R20.9 million.
4.3 Report of the Auditor General
The financial statements presented fairly in all material respects. The FIC Financial performance and
cash flows for the period under review ended in accordance with South African Standards of Generally
Recognised Accounting Practice (SA Standards of GRAP) and the Public Finance (PFMA)
Management Requirements. Therefore the FIC received an unqualified audit with the following
matters as follows:
9 NOVEMBER 2011
PAGE: 143 of 180
4.3.1 Emphasis of matters
4.3.1.1 Irregular and fruitless and wasteful expenditure
The report indicated that the FIC incurred irregular and fruitless and wasteful expenditure of
R4.9 million with regard to contravention of the National Treasury Practice Notes and Treasury
Regulations requirement relating to supply chain management, R47 000 thousand due to
interest and penalties arising from late payment of supplier invoices, and R281.9 thousand due
to poor performing contractors appointed and the work later scrapped and started over again.
4.3.1.2 Material under spending of the budget
The FIC has materially under spent its budget by R45.4 million due to capacity constraints
resulting from shortage of specialised skill in the market. As a consequence the entity did not
achieve 25 per cent of its planned targets for the year under review and this impacted adversely
on the analysis and compliance enforcement.
4.3.1.3 Compliance with laws and regulations
The AG had a finding on the following non-compliance with laws and regulations:

Procurement and contract management
9 NOVEMBER 2011
PAGE: 144 of 180
Goods and services were procured without inviting at least three price quotations as per the
requirement of Practice Note 8 of 2007-08 issued in terms of section 51(1)(a)(iii) of the PFMA. Goods
and services were not procured through competitive bidding and the deviation not approved in terms of
Treasury Regulations 16A6.4. Awards were made to suppliers who did not submit a declaration on
whether they are employed by the state or connected to any person employed by the state as per
requirements of Treasury Regulations 16A8.3 and Practice Note 7 of2009/10.

Expenditure Management
According to the AG, the Accounting Authority did not take effective and appropriate steps to prevent
irregular expenditure, as per the requirements of section 51(1)(b) (ii) of the PFMA.

Income Tax Act
Deductible tax from personal service providers were not affected by the FIC as required by the fourth
schedule of the Income Tax Act.

Annual financial statements
The financial statements submitted by the Accounting Authority were not prepared in all material
aspects in accordance with accounting practice (and supported by proper records) as per the
requirements of section 55(1)(a) and (b) of the PFMA. The AG had to correct material misstatements
regarding capital assets, expenditure and disclosure items.

Leadership
9 NOVEMBER 2011
PAGE: 145 of 180
The AG found that the FIC did not exercise oversight responsibility regarding compliance with laws
and regulations. Internal control processes are not in place to prevent and detect irregular and fruitless
and wasteful expenditure.

Financial and Performance Management
The AG found that reliable, complete and accurate monthly and quarterly financial statements are not
prepared and reviewed. Lack of appropriate means for monitoring compliance with applicable
legislation and Treasury Regulations on a regular basis resulted in the findings reported above. The
appropriate level of management does not regularly review compliance with Treasury Regulations,
practice notes and PFMA requirements.

Other Reports by the AG
The AG also reported that in 2009 an investigation was conducted for a case of fraudulent misconduct
by an employee who has since been dismissed. Criminal proceedings and investigations by the
relevant authorities against the employee in question are on-going.
5. Public Investment Corporation (PIC)
The mission of the PIC – having been established by an Act of Parliament to provide for the
investment by the Corporation of certain monies received or held by, for or on behalf of the
Government of the Republic and certain bodies, councils, fund and accounts – will:

Deliver investment returns in line with client mandates,

Create a working environment that will ensure that the best skills are attracted and retained,
9 NOVEMBER 2011

Be a beacon of good corporate governance, and

Contribute positively to South Africa’s development.
PAGE: 146 of 180
The PIC is an investment management company focussing on public sector entities, and is registered
with the Financial Services Board (FSB). Its investments are governed through client mandates. The
PIC was established in 1911 as the Public Debt Commissioners.
5.1 Highlights of the year under review

The report indicated that the Assets Under Management (AUM) of the PIC exceeded R1
trillion in the year of celebrating its centenary,

On the 1 February 2011, 14 new PICeeds were recruited, leaving the organisation with a group
of 20 PICeeds. The PICeeds programme intake increased by 33 per cent,

The report cited that R45 billion was earmarked for development investment, with the focus
being on social and economic infrastructure development, environmental sustainability, job
creation, enterprise development and Broad-Based Black Economic Empowerment (BBBEE),

The purchase of 50 per cent of the Victoria and Alfred Waterfront was one of the most
important transaction that the PIC undertook on behalf of the GEPF in the year ended March
2011,

The report indicated that the consolidation of the property division with regard to the
amalgamation of Advent Asset Management into the PIC Properties Division as well as the
acquisition of CBS Property Management business was finalised, and

The GEPF revised mandate allows for 5 per cent offshore investment and 5 per cent in Africa.
As at 31 March 2011, R25 billion has been invested in equities offshore.
9 NOVEMBER 2011
PAGE: 147 of 180
5.2 Key operational development for the year under review
In 2010 the organisation concluded the amalgamation of Advent Asset Management into the PIC
Properties Division as well as the acquisition of CBS Property Management business to form a new
properties division called PIC Real Estate Asset Managers (PIC REAM). The strategic priorities of the
PIC for the next 10 years include:

Grow the property assets under management;

Outperform IPD benchmarks;

Streamline Property Management business (service and profitability);

Enhance management capabilities; and

Incorporate ESG into the Property Investment process
5.3 Performance against predetermined objectives
Objectives 1: Conduct sustainable and efficient PIC Operation
The report indicated that the target to enhance reporting within the Customer and Stakeholder
relationship management system was not achieved but in the process due to the procuring of electronic
system. The target to Review the Fixed Income Portfolio and manager diversification has not been
achieved, but work is in progress.
Objective 2: Invest funds in funds targeted for development
9 NOVEMBER 2011
PAGE: 148 of 180
The report indicated that the target to achieve gross total quantum invested in Isibiya Funds of R14
billion was not achieved, however, the outcome was that R13.9 billion was invested during the year
under review.
Objective 3: Meet returns objectives for invested return
The target to achieve the investment return (General) (Isibiya), of 10 year plus 500 basis points (bps)
was not achieved due to asingle transaction that adversely affected the performance of Isibiya. The
target to achieve performance that exceeded benchmark by 50 per cent of average tracking error
assumed (internally managed funds) was not achieved (42 per cent achieved) because performance
was affected by the strategic and transition funds which were implemented per client decisions. The
target for Directly-held portfolio total return was not achieved.
5.4 Financial report
In terms of operating performance, the revenue increased to R347 million during the year under
review, which is an 11.9 percentage increase from the previous year of R310 million. The operating
expenses has increased to R246 million, which is a 7.4 percentage increase as compared to the
previous year of R229 million. The report cited further that the operating expenditure is mainly driven
by employee and Information Technology (IT) costs. This represent between 55 per cent and 65 per
cent of the revenue and 75 per cent to 85 per cent of the operating expenditure. The report indicated
further that the net profit of the organisation has recorded an increase of R111 million during the year
under review, which is a 54.2 per cent increase as compared to the previous year of R72 million. The
net assets have recorded an increase of R561 million, which is a 25.5 per cent increase from the
previous year of R447 million.
9 NOVEMBER 2011
PAGE: 149 of 180
In terms of the dividend policy, the report cited that the PIC did not pay dividend to the shareholder
(2010: R78.1 million). During the year under review the report cited that there have been no significant
changes to the organisation except for the Advent whose operation was absorbed into PIC’s operations
and the subsidiary company discontinued. The report indicated that the PIC exceeded the financial
sustainability targets during the year under review, with return on equity at 26.8 per cent, Earnings
before income and tax at 39.9 per cent, personnel cost/management fees at 45.5 per cent and IT
cost/management fees at 5.3 per cent.
5.5 Auditor-General report
The report of Auditor-General (AG) indicated that the financial statements present fairly, in all
material respects, the financial position of the PIC as at 31 March 2011, and its financial performance
and cash flows for the year then ended in accordance with SA Standards of Generally Accepted
Accounting Practice (GAAP) and the requirements of the Public Finance Management Act (PFMA)
(Act No 1 of 1999) and Companies Act (Act No 71 of 2008). The AG opinion had no findings with
regard to emphasis of matter.
6. Land Bank
Land Bank is a specialist agricultural bank guided by a government mandate to provide financial
services to the commercial farming sector and to agri-business and to make available new,
appropriately designed financial products that would facilitate access to finance by new entrants to
agriculture from historically disadvantaged backgrounds. Today, the Bank is a true South African
development finance institution that serves all farmers equally. The mission of Land Bank is:
9 NOVEMBER 2011
PAGE: 150 of 180

To develop and provide appropriate products for commercial and development clients;

To leverage private sector investment into the agricultural sector;

To develop partnerships with intermediaries for on lending;

To develop techniques for financing high-risk agriculture and new business areas;

To support programmes of the Ministry of Land Affairs and Agriculture by aligning the Bank's
products with these programmes; and
To contribute to rural development by linking up with government structures and activities.
6.1 Financial analysis
The Business and Corporate Banking provides mostly wholesale funds to agriculture cooperatives
and/or businesses, which in many instances lend funds to their customer base. The net operating
income for the 2010/11 financial year declined significantly from R183.6 million in 2009/10 to R10.1
million the current financial year. This translates in a 95 per cent reduction from the previous financial
year.
On Retail review, the net operating income increased significantly from R94.6 million in 2009/10 to
R269.0 million in the 2010/11 financial year which is an increase of more than 100 per cent.
6.2 Government imperatives
Over the past financial year, the Bank has given extra attention to this strategic area, including the
drafting of a development policy. The approved policy provides a basis for the Bank’s role in
agriculture and rural development. There are three instruments which are currently in place, among
others, an emerging farmer support facility, approved by Cabinet and in its pilot phase.
9 NOVEMBER 2011
PAGE: 151 of 180
6.3 Remuneration report
The remuneration increase of executive officers has increased significantly compared to the previous
financial year. Most importantly are bonuses which increased from R580 000 in 2009/10 to R2.5
million in the 2010/11 financial year. Basic salaries of the executive officers increased from R9.8
million to R13.1 million in the 2010/11 financial year. In total these salaries increased from R10.8
million in 2009/10 to R15.7 million in the 2010/11 financial year.
6.4 Learning and Development
The revitalised personal development plan for employees is encouraging academic (educational
qualification) and skills development (leadership, management and technical) amongst staff.
Ten bursaries in the fields of agriculture (primarily), information technology and finance were awarded
to previously disadvantaged individuals.
6.5 Performance against predetermined targets
The Bank has achieved most of its key performance indicators which is commendable, however, there
are areas where the Bank did not perform as expected. Some of the areas where the Bank did not
achieve include these key performance areas: Mainstream development into the operating model;
emphasise employment equity; and diversify income stream.
9 NOVEMBER 2011
PAGE: 152 of 180
In terms of environmental performance; the Bank has recognised that it has an important role to play in
addressing global environmental concerns such as water quality and sustainable agriculture. Going
forward the Bank will place more emphasis on the environmental impact when granting credit.
6.6 Financial Statements
In terms of cash and cash equivalents, the Bank does not show any significant improvement in this
component. However, it should be noted that the Bank’s overall trade and other receivables increased
remarkably from R47.9 million in 2009/10 to R189.2 million in the 2010/11 financial year. This is
attributed by the new line item of dividend receivables which amounted to R50 million. The LBICIntercompany balances, one of the items for trade and other receivables also increased significantly
from R22.3 million in 2009/10 to R109.2 million in the 2010/11 financial year. Loans to employees
increased from R1.1 million in 2009/10 to R1.2 million in the 2010/11 financial year.
Industrial share for local equities decreased from 43.25 per cent in 2009/10 to 40.13 per cent in the
2010/11 financial year.
The Bank had granted an amount of R333.4 million to individual farmers but not yet disbursed at the
end of the financial year.
6.7 Fruitless and wasteful expenditure
This refers to expenditure which was made in vain and would have been avoided had reasonable care
been exercised. The Land Bank incurred an amount of R0.1 million in the current year which shows an
9 NOVEMBER 2011
PAGE: 153 of 180
improvement compared to the 2009/10 financial year of R0.9 million. This includes late payment and
penalty interest charges regarding the non-timely payment of utility and Telkom accounts.
7. Development Bank of South Africa (DBSA)
The Development Bank of Southern Africa exist as a juristic person by the name the ‘Development
Bank of Southern Africa Limited’ and its role, powers, functions and duties are defined by the
Development Bank of Southern Africa Act, 1997. Published in Government Gazette No17962 –Vol.
382 on 25 April 1997 – No 641.
The DBSA is registered as a company in terms of the Companies Act, 1973, but is exempt from the
provisions of the Companies Act, 1973 (Act 61 of 1973). The Minister may however by notice in the
Gazette apply any provision of the Companies Act, 1973, the Banks Act, 1990, or such other law to the
Bank, in so far as such provision is not inconsistent with the provisions of the Development Bank of
Southern Africa Act, 1997 (Act 13 of 1997) with such modifications as the Minister may deem fit and
may specify in that notice, and may withdraw or amend any such notice.
7.1 The Chief Executive Officer’s report
The Bank, through the Siyenza Manje project has deployed 826 professionals to 186 municipalities
and 20 provincial departments; has assisted municipalities by deploying 1 114 technical and 1 994
non-technical DBSA officials and expedited Municipal Infrastructure Grants projects to the value of
R8.7 billion. In the Siyenza Manje project; the Bank contributes 30 per cent of the total allocation,
while the National Treasury contributes 70 per cent of the funding.
9 NOVEMBER 2011
PAGE: 154 of 180
7.2 Sustainability overview
The Bank is mandated to provide technical, financial and other assistance in pursuit of the objectives
as set out in section 3 of the DBSA Act. The Bank focuses its investment on infrastructure funding,
which is broadly defined in the Act and acts as a catalyst to maximise the private sector access to
opportunities in the provision of public sector funding.
7.3 Development impact overview
The report indicates that some organisational goals relating to capacity development and deployment,
community development facilitation and rural development were achieved.
7.4 Financial performance overview
The overall financial performance and position of the DBSA is fairly sustainable, however there are a
few issues with regard to the position of specific line items. Cash and cash equivalents have been
increasing over the past four years up to the 2009/10 financial year. In 2010/11, the Bank recorded
R1.2 billion in cash and cash equivalents which is below the average of the five year period (R1.9
billion between 2006/07 to 2010/11). The financial market assets declined from R5.5 billion in
2009/10 to R4.2 billion in the year under review.
In terms of its liabilities, the DBSA has reduced the value of its total debts (liabilities) for the year
under review from R27.3 billion in 2009/10 to R29.5 billion. Total equity slightly increased from
R17.8 billion in 2009/10 to R17.9 billion in the period under review.
9 NOVEMBER 2011
PAGE: 155 of 180
With regard to the financial performance of the Bank, interest on investments decreased from R525
million in the 2009/10 financial year to R469 million for the 2010/11 financial year. The profit for the
year (before transfer to the Development Fund) decreased significantly from R875 million in the
2009/10 financial year to R332 million for the year under review.
7.5 Annual Financial statements
The report of the independent auditor showed that the financial statements of the Bank presented
fairly, in all material respects, the financial position of the Bank as at 31st March 2011, and its financial
performance and cash flows for the year ended in accordance with International Financial Reporting
Standards and in the manner required by the Public Finance Management Act 1 of 1999 as amended
by Act 29 of 1999, (PFMA) and the Companies Act of South Africa, sections 284 to 303, as specified
in the Bank’s Act of 1997.
One of the challenges faced by the Bank as indicated earlier is the growing developmental needs and
the increasing risk levels of the Bank’s existing loan book.
8. South African Reserve Bank (SARB)
The South African Reserve Bank is the central bank of the Republic of South Africa. The primary
purpose of the Bank is to achieve and maintain price stability in the interest of balanced and
sustainable economic growth in South Africa. Together with other institutions, it also plays a pivotal
role in ensuring financial stability.
8.1 Overview of the Accounting Officer (Governor)
9 NOVEMBER 2011
PAGE: 156 of 180
The Accounting Officer indicated that owing to the recent global financial crisis, and the persistent
global imbalances and volatile capital flows, the international monetary system and international
monetary mechanism are at the centre of debate on global reform. These conditions happen to direct
the bank’s focus on stability, which include price stability, financial stability and the stability of the
banking system. Global developments have continued to impact on the domestic economic condition
and policy environment, with significant risks that emanate from Europe. The Accounting Officer
indicated further that tragic events in Japan also underlined the fragility of the recovery in the
advanced economies. However, unstable political conditions in the Middle East and North Africa have
put upward pressure on commodity prices, in particular oil and food.
Domestic inflation has remained within the target range of 3-6 per cent since March 2010, and as such
the bank was able to reduce the repurchase (repo) rate to 5.5 per cent, the lowest nominal level of the
policy rate in 30 years. However, the expected challenge for monetary policy going forward might be
caused by the global commodity price increases since this began to pose a risk to the inflation outlook.
The recent global financial crisis has taught a lesson that financial stability should be seen as a separate
objective with price stability. This has led to the Bank’s Financial Stability Committee to be
reconstituted and given responsibility for macro prudential oversight and policy implementation (work
is under way to determine the exact nature of such oversight and appropriate policy instruments). The
Accounting Officer’s report indicated that the credit market is subdued and there is no evidence of
incipient assets market bubbles.
The bank is an active member of Basel Committee on Banking Supervision, and as such it has been an
active participant on banking regulatory reform, which resulted in the publication of the global
9 NOVEMBER 2011
PAGE: 157 of 180
regulatory framework for more resilient banks and banking systems, which incorporates the details of
global regulatory standards on bank capital adequacy and liquidity. However, the report indicated that
these changes should not have a material impact on South African banks which remain well capitalised
and characterised by low leverage ratios.
Capital flows to emerging markets including South Africa moderated in the final quarter of 2010 and
early 2011, and between November 2010 and March 2011 there were cumulative net sales of bonds
and equities by non-residents. However, the report indicated that despites the unstable pattern of cash
flow, the bank, with the assistance of the National Treasury, has been able to continue with its policy
of foreign exchange reserves accumulation. In the 2010/11 financial year the Bank purchased
approximately US$10, 3 billion foreign reserves. However, the need to sterilise the impact of these
purchases of foreign exchange on domestic liquidity resulted in the Bank reporting an after-tax loss for
the second consecutive financial year, amounting to R1, 2 billion.
8.2 Strategic Overview
During February 2011, the bank reviewed its strategy in light of recent and envisaged future
development in the global and domestic environment, which includes:

different scenarios for global economic developments and possible implications for South
Africa and the responsibilities of the Bank;

the current domestic economic outlook;

developments in the regulatory environment in respect of both macro- and micro prudential
challenges;
9 NOVEMBER 2011

PAGE: 158 of 180
organisational priorities, including a review of the legal framework of the Bank, with a focus
on the necessary authorities required, especially as this affects financial stability and macro
prudential regulation, as well as the need for alignment of other relevant pieces of legislation;

the value statement of the Bank; and

challenges facing central banks as a consequence of the global financial crisis, now in its fourth
year
It was therefore agreed that the following strategic focus areas will guide the bank’s activities:

Giving effect to the bank mandate: Monetary policy formulation and implementation shall be
in accordance with the Constitution (Act No 108 of 1966) of the Republic of South Africa and
within the context of the elaboration of the Bank’s mandate contained in the letter addressed to
the Governor of the Bank by the Minister of Finance date 16 February 2010,

Understanding the regional, continental and global environments: The Bank will draw on its
participation in forums such as the Committee of Central Bank Governors (CCBG) in the
Southern African Development Community (SADC), the International Monetary Fund (IMF),
the Group of Twenty (G-20) and the Bank for International Settlements (BIS) to evaluate and
analyse developments, so as to be able to implement policies and risk mitigation measures
appropriate for South Africa,

Building the institution and investing in people: New impetus will be given to organisational
effectiveness and operational efficiency, and to enhancing a culture of excellence where people
and values matter, and

Understanding the domestic environment and enhancing the role of the Bank in society: The
Bank will continue to be a constructive role-player in society, actively engaging with
stakeholders and working to build the country.
9 NOVEMBER 2011
PAGE: 159 of 180
8.3 Monetary Policy
The report indicated that the subdued growth performance and slow recovery of economic growth in
developed economies have resulted in a prolonged periods of abnormally low global interest rates.
This has encouraged continued capital flows to more dynamic, higher-yielding emerging –market
economies. Domestically, the gross domestic product (GDP) growth has remained below potential and
growth has been relatively slow compared with that of South Africa’s emerging-market peers. The
report continued further to indicate that although household consumption expenditure showed signs of
recovery, it continued to be adversely affected by high levels of household indebtedness, continued job
losses and low levels of credit extension. These conditions have led to additional stimulus of monetary
policy, which resulted to the reduced repo rate by 50 basis points in September and again in November
2010, to its current level of 5.5 per cent per annum.
The World Economic Outlook published by the IMF projected in April that global growth would
average 4,2 per cent in 2010, compared with the 3,1 per cent forecast in October 2009. Domestic
economic growth prospects had also improved, and the domestic inflation outlook remained
favourable. However, the monetary policy report further stipulated that the risk to the global growth
outlook were viewed as having changed for the worse. Domestically, employment trends appeared to
be lagging the recovery. The Quarterly Labour Force Survey published by Statistics South Africa and
released ahead of the May 2010 MPC meeting reported that employment had contracted by 171 000
jobs in the first quarter of 2010. The report indicated that the MPC noted a concern over the level of
wage increase in the economy.
9 NOVEMBER 2011
PAGE: 160 of 180
During the July 2010 MPC meeting, the immediate liquidity concerns relating to the sovereign debt
crisis appeared to have abated somewhat, although longer-term solvency risks and uncertainties
remained. Growth in a number of advanced economies appeared to be losing momentum and planned
fiscal consolidation and austerity programmes in a number of countries were expected to lead to
persistently low growth going forward.
The report noted that the MPC stated that it was very aware of the impact of both the level and
volatility of the exchange rate on the economy, particularly on the manufacturing, export and importcompeting sectors, and that it was ready to continue to play its part, in a considered manner, such as by
way of increased foreign-exchange purchases when conditions permit. However, it should be noted
that the rand exchange rate was influence by a number of exogenous factors
The report indicated that the inflation expectations in the financial markets had also improved, and the
Bank’s inflation forecast had been revised downwards, with Consumer Price Index (CPI) inflation now
expected to average 3,7 per cent in the third quarter of 2010, rising to 4,8 per cent in 2011 and 5,2 per
cent in the final quarter of 2012. The biggest risks to the inflation outlook at the March MPC meeting
remained food and administered prices, in particular oil prices. International oil prices had already
accelerated in the latter part of 2010 in response to strong global demand and this upward trend had
been reinforced by the geopolitical events in North Africa and the Middle East, which had raised
concerns about the security of oil supplies.
The report cited that by contrast, there were indications that high real wage settlements, which had
been a significant upside risk to the inflation outlook, might be moderating. According to Andrew
Levy Employment Publications, the overall average wage settlement rate in collective bargaining
agreements amounted to 8, 2 per cent in 2010, compared with a rate of 9,3 per cent in 2009. The MPC
decision at the March 2011 meeting was to keep the repo rate unchanged at 5, 5 per cent per annum.
9 NOVEMBER 2011
PAGE: 161 of 180
This is because the MPC was of the view that the risks to the inflation outlook were on the upside, but
that these risks and underlying pressures were mainly of a cost–push nature.
8.4 Operational Review
The operations of the bank are related to the activities covered under the market operations, and are the
following:

Liquidity Management
The report indicated that during the 2010/11 financial year, domestic money-market liquidity
expanded with an injection of R80.8 billion, owing mainly to foreign-exchange purchases by the Bank.
The increase in the money-market liquidity was also partly neutralised by the transfer of the National
Treasury’s tax and loan account balances with commercial banks to the Bank amounting to R42, 5
billion and through longer-term foreign-exchange swap transactions

Accumulation of reserves
The report highlighted that the official gross gold and foreign-exchange reserves increased from
US$42, 0 billion on 31 March 2010 to US$49, 3 billion on 31 March 2011. The increase of US$7,3
billion was mainly due to foreign-exchange purchases for purposes of foreign-exchange reserve
accumulation amounting to US$6,0 billion, valuation adjustments of US$2,0 billion, and the proceeds
of the government’s foreign bond issuance, which were deposited with the Bank, amounting to US$0,8
billion, while US$1,6 billion was used to fund foreign payments on behalf of government departments.
9 NOVEMBER 2011

PAGE: 162 of 180
Reserve Management
The report cited that the management of the gold foreign-exchange reserves is guided by three main
objectives, namely capital preservation, liquidity and the enhancement of returns. The Bank aims to
achieve a market-related rate of return on the reserves within the constraints of a framework of
approved risk parameters. The bank gold and Special Drawing Rights (SDR) holdings are managed
passively; however, the foreign-exchange reserves are managed actively by the Bank and by six
external private-sector fund managers, plus the Bank for International Settlements (BIS) and the World
Bank. Due to the numerous risks that the bank is exposed to, the Governor Executive Committee
(GEC) approved the revised investment policy for the management of the foreign reserves.

Administration of exchange control
The report indicated that the policy decisions on exchange controls vest with the Minister of Finance
and the Bank is responsible for the administration of exchange controls in terms of authority delegated
by the Minister. In his 2010 Budget Speech, the Minister of Finance announced a tax and exchange
control Voluntary Disclosure Programme (VDP). The VDP provides, inter alia, the basis for and deals
with the procedures and processes applicable to regularise exchange control contraventions.
Furthermore, the Minister announced a project to modernise the exchange control legislation and
policy. The Financial Surveillance Department of the Bank and National Treasury are in the process of
preparing recommendations in this regard.

Maintaining a stable banking system
9 NOVEMBER 2011
PAGE: 163 of 180
The report indicated that a key objective of the Bank is to ensure that the legal framework for the
regulation and supervision of banks and banking groups in South Africa remains relevant, reflects
local and international market developments, and that it complies with the applicable international
regulatory and supervisory standards and best practice. The Bank has commenced with a formal
process to refine and, where necessary, amend the regulatory framework in accordance with the latest
internationally agreed regulatory and supervisory best practice and standards

Financial regulatory reform
In February 2011 the National Treasury released a policy paper entitled: A Safer Financial Sector To
Serve South Africa Better, on proposed reforms to the financial regulatory structure in South Africa.
The policy document sets out five key proposals, emphasising financial stability, consumer protection
and financial inclusion. The main proposal is to introduce a “twin peak” regulatory structure for South
Africa by separating prudential and market conduct regulation of financial institutions.

Internal Control
Internal control is a priority focus area and an integral part of the Bank’s management and
accountability function. The Internal Financial Control (IFCs) constitute an important component of an
overall internal control structure in the Bank and is designed and implemented to enhance the
probability of providing assurance on the integrity of the Bank’s financial information. The Internal
Audit Department (IAD) is mandated to evaluate and independently contribute to the improvement of
control process, governance and risk management of the Bank and its subsidiaries. The full mandate
and authority of the IAD are contained in an Internal Audit Charter approved by the Board and the
charter is revised and updated annually to ensure that the internal audit function remains relevant,
9 NOVEMBER 2011
PAGE: 164 of 180
current and in line with changes to the International Standards for the Professional Practice of Internal
Auditing of the Institute of Internal Auditors (the Standards), codes of ethics, governance and
legislation.

Human Resource
The report indicated that at the start of the of the 2010/11 financial year, the Bank had a total
permanent staff complement of 2 033, which increased to 2 101 by the end of 31 March 2011,
excluding the Governor and deputy governors. However, the overall turnover rate during the year
under review was 4.72 per cent compared with a turnover rate 3.36 per cent in the previous financial
year. Among the most reasons that resulted in an increase turnover during the year are the better
prospect and remuneration, retirement, voluntary separation (termination in terms of competency to
work programme), retirement (enhanced early retirement- 5 years). During the year under review the
number of contract worker amounted to 114, while people living with disability constituted 1.7 per
cent of the Bank‘s permanent workforce
In terms of equity, Africans constituted 63 per cent of the Bank’s total workforce, with African
females constituted 28 per cent. The report further indicated that the Bank’s expenditure on staff
training amounted to R26.1 million (R18, 7 million for local training and R7, 4 million for foreign
training) in respect of 1 190 employees of which 108 attended international training.
The report highlighted that the bank provides bursaries for higher education for dependants of all staff
and pensioners. Bursaries were provided to 393 dependants at a cost of R9,0 million during the review
period (298 dependants at a cost of R6,6 million in the previous review period). During the year under
review, 31 completed their studies, compared with 16 in the previous financial year.
9 NOVEMBER 2011
PAGE: 165 of 180
8.5 Financial Statements
The director’s report indicated that the preparation of the bank financial statement are prepared on a
going–concern basis, taking cognisance of certain unique aspects relating to the Bank’s ability to
create and withdraw domestic currency, its role as lender of last resort, and its responsibilities in the
area of financial stability, and in its relationship with government concerning foreign-exchange and
gold transactions.
The report indicated that the remaining profits due to government in terms of the South African
Reserve Bank Act over the past two years are as follows: R52.9 million as at March 31, 2011 (this
payment emanated from Corporation Public Deposit) and R37.5 million as at March 31, 2010. The
report indicated that under the year under review the bank incurred a loss after taxation amounting to
R1.2 billion. This was reported as the result of the high cost associated with holding the country’s gold
and foreign reserves
In terms of dividends declared, the bank declared a final dividend of 5 cents per share on 1 April 2011
and paid on 13 May 2011, bringing the total dividends paid to R200 000 for the year 2010/11.
In terms of financial position, the bank total assets during the year under review amounted to R363
billion, (R330.8 billion: 2009/10) which is an 8.9 per cent increase. This increase was largely caused
by an increase of R26.8 billion in gross foreign assets and domestic assets increase of R5.4 billion.
During the year under review, the total liabilities have increased to R354.3 billion, which is a 9.4 per
cent increase from the previous year.
8.6 Auditor’s opinion
9 NOVEMBER 2011
PAGE: 166 of 180
The Auditor-General expressed an unqualified audit opinion on the financial matters of the SARB as at
31 March 2010. His opinion means that the financial statements of the South African Reserve Bank
have been prepared, in all material respects in accordance with the basis of accounting described in
Note 1 to the financial statements and in the manner required by the South African Reserve Bank Act.
There was no emphasis of matter.
9. Financial Services Board (FSB)
The FSB was established in 1990, to regulate and supervise the non-banking financial sector of South
Africa.
The FSB is a unique independent institution established to oversee the South African Non-Banking
Financial Services Industry in the public interest. The FSB is committed to promote and maintain a
sound financial investment environment in South Africa.
The mission of the FSB is to promote, amongst other:

Fair treatment of consumers of financial services & products;

Financial soundness of financial institutions;

Systemic stability of the financial services industries; and

Integrity of financial markets and institutions.
The FSB administers the following Acts of Parliament:
9 NOVEMBER 2011
PAGE: 167 of 180

Financial Services Board Act (Act 97 of 1990);

Collective Investment Schemes Control Act (Act 45 of 2002);

Financial Advisory and Intermediaries Services (Act 37 of 2002);

Financial Institutions (Protection of Funds) Act (Act 28 of 2001);

Financial Supervision of the Road Accident Fund Act (Act 8 of 1993);

Financial Services Ombudsman Schemes Act (Act 37 of 2004);

Friendly Societies Act (Act 25 of 1956);

Inspection of Financial Institutions Act (Act 80 of 1998);

Long-term Insurance Act (Act 52 of 1998);

Pension Funds Act, 24 (Act 24 of 1956);

Short-term Insurance Act (Act 53 of 1998);

Supervision of the Financial Institutions Rationalisation Act (Act 32 of 1996); and

Securities Services Act (Act 36 of 2004).
9.1 Report by the Chief Executive Officer (CEO)
The Chief Executive Officer’s (CEO) report indicated that the organisation reviews human resource
policy and procedures annually, in consultation with its employees to ensure best practice. The staff
complement, which includes contract staff, was 449; an increase of 7 per cent from the previous year
when it totalled 418. In addition, 1.6 per cent of the staff are people with disabilities. During the year
under review, the staff turnover was 10 per cent, 2 per cent of which was employer controllable
(retirement and dismissal) and 8 per cent employee controllable (resignation). The FSB spent R2.5
million on staff training and other development programmes during the year under review. During the
period under review, 3 bursaries were awarded to full-time students (non–FSB staff). The Information
9 NOVEMBER 2011
PAGE: 168 of 180
Communication Technology (ICT) system was upgraded and approved for implementation on 30
September 2010.
In terms of ICT application development and maintenance, the FSB reported that the organisation
focus area was to streamline interaction with regulated industries, the regulator and the general public
through the use of system-to-system communication, online web applications and batch imports of
bulk data into various FSB systems. The project to develop a system that will enable the FSB’s
Collective Investment Scheme (CIS) department to receive fund data electronically from the
Association for Saving and Investment in South Africa (ASISA) has been initiated, and its completion
was scheduled for 1 July 2011.
9.2 Financial position and financial performance analysis
For the year under review, total net assets as indicated in the statement of financial position amounted
to R154 million, which is an 11.2 per cent increase when compared to the previous year’s R138.5
million. During the year under review, FSB revenue increased to R408.6 million, which is a 20.4
percentage increase from the previous year of R339.4 million. This resulted to a total net surplus of
R15.0 million during the year under review as compared with the deficit of R14.6 million in the
previous reporting period. The FSB income from investment accounted for R14.1 million during the
reporting period, which is a 6 per cent increase from the previous reporting period.
For the year under review, the total amount of incentive bonus paid to Executive management
amounted to R1. 8 million (2009/10: R1.2 million), while Non-Executive member’s fees amounted to
R870 790, which is an 8 per cent decrease from the previous year of R946 000.
9.3 Analysis of performance against predetermined objectives
9 NOVEMBER 2011
PAGE: 169 of 180
Strategic Focus Area 1: Clients/Partners
The objective of this focus area is to facilitate communication processes with clients and partners to
enhance performance, accountability and public confidence. However, the report indicated that the
FSB strategic objective, which was measured against the approval of the plan, was not achieved in
other divisions, such as Insurance and Capital Market department. The reasons given for this is that
there was a delay in finalising the plan due to coordination with other supervisory departments in other
divisions and the formal regulatory and supervisory plan was not approved.
The project to implement a regulatory and supervisory plan, which was measured against a 90 per cent
target, was not achieved in the Retirement Fund division (73 per cent achieved). The reason for the
underperformance was that the time required to visit large administrators was underestimated, as well
as the resignation of 5 staff members.
The project to annually prepare a comprehensive industry and stakeholder based engagement plan,
measured against the approval of the plan by 28 February 2010 was not achieved. The reason for the
underperformance was that apart from the FAIS and the Actuarial (Retirement Funds) Department,
none of the departments prepared the plan, and regular communication to stakeholder to provide
knowledge and guidance was not incorporated into the plan.
The project to review and update Service Level Commitments (SLCs) which was targeted to be
approved by 28 February 2010 was 82 per cent achieved. The reason for this is that there were 6
vacant positions during the period due to resignations and internal movements. One staff member is
reported to be on disability. The project was only reviewed in the Insurance division, but the internal
9 NOVEMBER 2011
PAGE: 170 of 180
process was not finalised. The delay in this regard was that the review of the SLCs did not highlight
the need for substantial change.
The project to design a policy to achieve consistency in regulatory action measured against the annual
industry survey was not achieved. The reason is that the annual industry survey was not conducted.
However, random checks are report to have been performed by the managers of the Retirement Funds
division.
Strategic focus area 2: Internal process
The objective is to protect all investors by ensuring integrity and confidence in financial services. The
project to compile an enforcement policy (DMA, Pensions, Insurance, FAIS, and Capital Markets) as
measured by the approval of the enforcement policy by 30 June 2010 was not achieved. The reason
was attributed to the nature of the new enforcement process, and the FSB opted for a set of guidelines
in the form of an enforcement manual rather than a policy. The manual was drafted, approved and
implemented and based on the second manual that was created for the Enforcement unit, the FSB
decided to execute the enforcement function based on the two manuals to build up history before
compiling a policy.
The report indicated further that the effective utilisation of committee and consultation processes with
industry as measured against the meetings of the advisory committee held (at least quarterly) was not
achieved within the FAIS division. The reason was that there was no specific submission for the
meeting held in May 2010 and members agreed to issue a report on on-going issues, while the
September meeting moved to August 2010.
9 NOVEMBER 2011
PAGE: 171 of 180
The project to implement processes and procedures required by relevant legislation as measured by 90
per cent adherence to SLCs was not achieved within the Insurance division. The reason was that shortterm process was programmed and tested. Only 75 per cent was achieved and the delay in finalisation
was due to additional functions that were added and staff turnover experienced by service providers.
The project for approval of the Information Technology (IT) strategy and plan as measured by the
approval by February 2010 was not achieved. The reason was that the rolling out of the IT strategy and
plan was only approved by the Board on 30 November 2010.
Strategic focus area 3: Learning and Growth
The objective is to implement organisational development strategies that will positively impact the
work environment. The project to compile a leadership development programme as measured by the
approval of the plan by 28 February 2010 was not achieved. The reason was that the project was
deferred to the following financial year (2011/12).
The project to conduct a staff survey by 30 September 2010 was only conducted during November
2010. As such, the target was not achieved within the timelines.
Strategic focus area 4: Financial
The objective is to ensure long-term financial sustainability by improving revenue collection, investing
strategically in the organisation, and improving financial reporting and managing it cost-effectively.
The project to approve a debtor policy by 28 February 2010 was only approved by the Executive
Committee (Exco) on 8 April 2010 and by the Board on 30 June 2010.
9 NOVEMBER 2011
PAGE: 172 of 180
9.4 The report of the Auditor-General (AG)
The Auditor-General expressed an unqualified audit opinion on the financial matters of the FSB as at
31 March 2010. His opinion means that the financial statements present fairly, in all material respects,
the financial position of the FSB as at 31 March 2011, its financial performance and its cash follow for
the year then ended, in accordance with the South African Statements of Generally Recognised
Accounting Practice (SA Statements of GRAP) and in the manner required by the Public Finance
Management Act (No: 1 of 1999) and FSB Act (No 97 of 1990).
The findings of the AG indicate that there are no matters to report on the predetermined objectives and
on compliance with laws and regulations. The report of the AG considered internal control relevant to
the audit of financial statements and the report on predetermined objectives and compliance with
Public Finance Management Act (Act No. 1 of 1999 (PFMA) and the FSB Act, but not for the
purposes of expressing an opinion on the effectiveness of internal control.
10. Pension Fund Adjudicator (PFA)
The office of the Pension Funds Adjudicator was established with effect from 1 January 1998 to
investigate and decide complaints lodged in terms of the Pension Funds Act (No. 24 of 1956). The
purpose of the Pension Funds Adjudicator is to resolve disputes in a procedurally fair, economical and
expeditious manner. The Adjudicator’s office investigates and determines complaints of abuse of
power, maladministration, disputes of fact or law and employer dereliction of duty in respect of
pension funds.
10.1 Operational report of the PFA
9 NOVEMBER 2011
PAGE: 173 of 180
The report indicated that the major challenges faced by the PFA related to compliance with the PFMA,
Treasury Regulations, implementation of the new policies drafted and approved by the Financial
Service Board (FSB), and an out-dated Information Technology (IT) and case management system. In
the finance division, the challenge was exacerbated by the sudden resignation of two key personnel.
The turnaround times in dealing with complaints remains a challenge for the PFA. However, it is
reported that a new case management system should alleviate a number of problems once it is fully
implemented and fully functional.
The report indicated that with regard to case management, 6 220 new complaints were received during
the year under review, 894 complaints were settled by conciliation, 1 430 were determined and 3 799
were resolved without requiring determination.
In terms of human resources management, the PFA has reported to have 55 staff members, compared
to 54 staff members in the previous financial year. The report indicated further that in an effort to
improve the quality of drafting, all staff members were required to undergo legal training, which
would result in improvement in the quality of work. The report further indicated that no funds have
been spent on the purchase of tickets for the 2010 FIFA World Cup. However, R8 666 had been spent
to purchase of 60 scarves, mugs and gift bags, and seven flags for staff members. Most of the
challenges faced by the PFA were reported to have been addressed or are in the process of being
resolved.
In terms of employment equity, out of 55 staff members, 37 were females and 18 were males. Africans
make 81.8 per cent of the total staff, while coloureds make 10.9 per cent.
10.2 Report of the Auditor General (AG)
9 NOVEMBER 2011
PAGE: 174 of 180
The Auditor-General expressed an unqualified audit opinion on the financial matters of the PFA as at
31 March 2010. His opinion means that the financial statements present fairly, in all material respects,
the financial position of the PFA as at 31 March 2011, its financial performance and its cash follow for
the year then ended, in accordance with the South African Statements of Generally Recognised
Accounting Practice (SA Statements of GRAP) and in the manner required by the Public Finance
Management Act (No: 1 of 1999) and the Pension Fund Act (No 24 of 1956). However, the AG draws
attention the following emphasis of matters:
10.2.1 Irregular expenditure
During the reporting period, the Office of the Pension Funds Adjudicator incurred irregular
expenditure of R1 216 609.
10.2.2 Fruitless and wasteful expenditure
During the reporting period, the Office of the PFA incurred fruitless and wasteful expenditure of
R590 164.
10.2.3 Predetermined objectives
In terms of reliability of information, the AG reported that the performance information was deficient
in respect of accuracy and completeness. The reported performance against targets is not accurate and
complete when compared to source information.
10.2.4 Compliance with laws and regulations
9 NOVEMBER 2011
PAGE: 175 of 180
In compliance with section 51 (1) (a) (i) of the PFMA, the report indicates that the accounting
authority did not ensure that the entity had and maintained an effective, efficient and transparent
system of internal control with regard to performance management, which describes and represents
how the institution’s processes of performance planning, monitoring, measurement, review and
reporting are conducted, organised and managed.
The AG report indicated that with regard to procurement and contract management, goods and services
with a transaction value of between R10 000 and R500 000 amounting to R1 080 357 were procured
without inviting at least three written price quotations from prospective suppliers, as per requirement
of National Treasury Practice Note 8 of 2007/08 issued in terms of section 76(4)(c) of the PFMA.
Furthermore, the AG report indicated that there was no evidence that goods and services with a
transaction value of between R2 000 and R10 000 amounting to R136 252 were procured by obtaining
at least three verbal or written price quotations from prospective suppliers, as per requirement of
National Treasury Practice Note 8 of 2007/08 issued in terms of section 76(4)(c) of the PFMA.
In terms of expenditure management, the report cited that the accounting authority did not take
effective and appropriate steps to prevent irregular and fruitless and wasteful expenditure, as per
requirements of section 51(1)(b)(ii) of the PFMA.
The financial statements submitted for audit purposes did not comply with section 55(1)(c)of the
PFMA. Material misstatements were identified during the audit, some of which were corrected by
management, as well as some that were not corrected, are included in the basis for qualified opinion
paragraph.
10.2.5 Property plant and equipment: Basis for qualified opinion
9 NOVEMBER 2011
PAGE: 176 of 180
The AG indicated that the fixed assets of the PFA did not meet the audit criteria and as such the AG
did not express an audit opinion on the depreciation calculation of R 699 341 and the amortisation
charge of R23 314 during the year under review. The accuracy of the fair value adjustment of R
424 653 could not be verified.
The PFA has re-valued its assets for the first time in the current financial year. However, it has not
applied GRAP3: Accounting Policies Change in Accounting Estimates and Errors correctly in that no
retrospective application per GRAP17: Property, Plant and Equipment, has been affected.
10.2.6 Internal control
The AG report did not indicate significant matters with regard to internal control.
10.2.7 Leadership
The following were raised by the AG’s report:
The Accounting authority did not exercise oversight responsibility regarding financial and
performance reporting and compliance and related internal controls.
Management did not implement proper record keeping in a timely manner to ensure that complete,
relevant and accurate information is accessible and available to support financial and performance
reporting.
9 NOVEMBER 2011
PAGE: 177 of 180
The accounting authority did not prepare regular, accurate and complete financial and performance
reports that are supported and evidenced by reliable information.
Management did not review and monitor compliance with applicable laws and regulations
10.2.8 Other reports
The AG indicated that two investigations were held during the year in respect of financial misconduct
with management:

A forensic investigation into possible fruitless and wasteful expenditure was conducted for year
ended 31 March 2010.

Matters identified in the management report of the Auditor-General in respect of the Office for the
Pension Funds Adjudicator for the year ended 31 March 2010.
10.3 Financial Analysis
The total assets of the PFA amounted to R11.6 million during the year under review, which is a 3.7 per
cent increase from the previous financial year. The liabilities for the reporting period amounted to R
2.2 million, which is a decrease of 55 per cent as compared to the previous financial year amount of
R4.9 million. Total revenue during the reporting period amounted to R35.3 million, a decrease of 7.0
per cent compared to the previous financial year R38 million. Total expenses amounted to R32.2
million, which is a 7.7 percentage decrease, compared to the previous year figure of R34.9 million.
This resulted in a surplus of R3.1 million, which has increased by 1.2 per cent when compared to the
previous financial year.
9 NOVEMBER 2011
PAGE: 178 of 180
11. Committee’s Observations
To adequately address the challenges faced by South Africa; the institutional framework, governance
and monitoring of government departments’ expenditure is critical to the mandate of National
Treasury, which is:
 To advance economic growth and job creation through appropriate macro-economic, fiscal and
financial policies.
 To play a pivotal role in the management of government expenditure, setting financial
management norms and standards for state departments, monitoring their performance and
reporting any deviations to the Auditor-General.
Within this specific mandate, the Committee raised a number of issues with regards to expenditure
trends. A number of government departments are allocated substantial amounts of monies to address
challenges, but further engagement is needed with National Treasury on the manner in which these
challenges would be addressed.
The Committee commended the work of National Treasury and the entities that report to it, and
commended entities with clean audits and for the well drafted annual reports, but also raised its
concern with the audit outcomes expressed by the Auditor General for some of the entities.
The Committee further stated that a lot of public funds were being wasted on irregular as well as
fruitless and wasteful expenditure and that processes and procedures need to be tightened in order for
this to be rectified.
9 NOVEMBER 2011
PAGE: 179 of 180
The Committee also found it alarming that a lot of money was wasted on rent, parking, travelling, and
subsistence and travel allowances, and urged the entities to exercise caution and to tighten up where
that was concerned.
The Committee further noted that fraud was rife in some entities, and that criminal charges should be
laid against those found guilty of abusing public funds.
The Committee noted that strategic objectives of entities would assist the Committee in its oversight
role and in determining what was achieved against financial allocations.
The Committee further noted that in some entities, strategic plans do not directly link with the annual
reports, and urged entities to clearly link the strategic plans with their annual report for the next
financial year.
The Committee noted that some key positions in entities remained vacant; some for long periods,
resulting in entities paying professional fees to companies contracted to do the work, and urged entities
to fill these positions with the urgency it deserves.
The Committee noted that some entities that had pending legislation should speed up the process of it
being considered by Parliament, as this may help the Committee to exercise better oversight.
12. Conclusion and Recommendations
The Standing Committee on Finance, having considered the annual reports and related documentation
from the National Treasury, the South African Revenue Services (SARS), the Financial and Fiscal
9 NOVEMBER 2011
PAGE: 180 of 180
Commission (FFC), the Financial Intelligence Centre (FIC), the Public Investment Corporation (PIC),
the Land Bank, the Development Bank of South Africa (DBSA), the South African Reserve Bank
(SARB), the Financial Services Board (FSB) and the Pension Fund Adjudicator (PFA), recommends
that:

Entities with audit finding should provide the Committee with a detailed response plan to the
findings by the Auditor General within 30 days of the adoption of this report by the House.

Entities that are conducting investigations, internally or criminally, should provide the
Committee with a progress report of such investigations within 30 days of the adoption of this
report by the House, unless such a report will influence any investigation.

Entities who did not meet targets for the financial year should provide the Committee with
detailed reasons why such targets were not achieved, with a detailed response plan within 30
days of this report being adopted by the House.
Report to be considered.