Medium Term Budget Policy Statement: hearings

JOINT BUDGET COMMITTEE
1 November 2006
MEDIUM TERM BUDGET POLICY STATEMENT: HEARINGS

Co- Chairpersons: Ms L Mabe (ANC) and Mr BJ Mkhaliphi (ANC) [Mpumalanga]

Documents handed out:
Federation of Unions of South Africa (FEDUSA) submission on 2006 MTBPS
Department of Education submission on 2006 MTBPS
People’s Budget Campaign
Public Works briefing
Department of Transport briefing
Department of Health briefing
Department of Housing briefing [available later on 10 November 2006]

SUMMARY
The Committee heard submissions by the Federation of Unions of South Africa and the Department of Education.

FEDUSA urged the Minister consider the option of promoting export growth in the next year budget. It noted with satisfaction that expenditure on public infrastructure would grow by a huge 15% per year to reach about R150 billion by 2010. Included in this amount was investment in the built environment of R83 billion and R15 billion for the World Cup and infrastructure projects to enhance the capacity of the economy. Such infrastructure included the Gautrain rapid rail link, King Shaka airport and the Vaal River augmentation project. A great concern was whether the government had the capacity to successfully spend such an amount. FEDUSA had raised concerns about the Gautrain project in the budget submission this year because it believed it would not money well spent. There were serious problems and the coaches were very old and parts to fix them were not even available. Safety was also a major problem. There was a need to improve current infrastructure. It did not help to create an expensive infrastructure while not taking care of the existing ones. The Cape Town and Gauteng rail system could not cope with the current demand. The 2010 Soccer World Cup would place serious strain our transport system.

FEDUSA would like to see more spending in the following areas:
- Higher childcare and old age grants. The current 190 a month was not enough and should increase to R200 per month. The old age grant should be R900 per month.
- More and better spending on education as the current skills were not at the levels of modern economies.
- Better justice and policing, as the crime levels remained very high despite "lower" crime statistics.
- Health care and better salaries for nurses, doctors and general medical staff. SA current had more than 44 000 vacant positions in the public health sector and this was a disgrace since the system could not serve the people well.

After the lunch break the People’s Budget Campaign and the Departments of Public Works, Health, Housing and Transport presented their views on the Medium-term Budget Policy Statement to the Joint Committee.

The Department of Public Works reported that R83 billion had been set aside for investment in the built environment. The Extended Public Works Programme was targeting at least one million unemployed people. Members questioned whether the programme was actually creating job opportunities and improving skills.

The People’s Budget Campaign presented their list of concerns and recommendations. Ensuing discussions focused on ways to make the People’s Budget Campaign work more effectively and closely with the Joint Committee to address some of the challenges of provinces and municipalities.

The Department of Health focused on their challenges and related funding. Members particularly questioned issues around municipal grants, hospital revitalisation and forensic pathology programmes.

As the Department of Transport’s Director-General, Deputy Director-General and the Chief Accounting Officer were not present, the Committee refused to accept the briefing by the Department of Transport.

PMG was unable to record the last input made by the Department of Housing, which was made at 19h45..

MINUTES
Submission by the Federation of Unions of South Africa
Ms Gretchen Humphries (FEDUSA Parliamentary Officer) made the presentation. (See document attached). She said that the economic situation in the South African economy had changed since the 2005 Medium Term Expenditure Framework (MTEF). The Minister of Finance was expecting the CPIX inflation to increase during 2007 to an average of 5,5%. It was thereafter expected to fall again to lower levels. Although the inflation might be moderated by the recent reductions in the domestic petrol price, FEDUSA was not comforted by the Minister's positive outlook on inflationary expectations.

The Minister had indicated that there would again be revenue over-run this fiscal year of some R20 billion. The extra revenue would not be used for tax reduction for the lower income groups but would be invested in infrastructure or be used to improve savings. Recent exchange rate developments because of the higher current account deficit might pose a serious risk to inflation via imported inflation. The dovetailing of monetary and fiscal policy required that the stance of fiscal policy should be more restrictive. The Minister had indicated that the budget deficit for this fiscal year would be lower and that there would actually be a surplus in the 2007/08 financial year. It was expected that the monetary and fiscal policies would lead to a somewhat slower household spending. This, together with declining oil prices, would lead to a lower current account deficit. The union was not convinced that the proposed deficit reduction and the interest hikes by the SA Reserve Bank would in fact contain the inflationary pressures that were caused by the wide current account deficit within a relatively short period of time. The Minister was urged to consider the option of promoting export growth in the next year budget.

Ms Humphries said that the union had for some time advocated the importance of large-scale infrastructure rollout programmes to get people working. It noted with satisfaction that expenditure on public infrastructure would grow by a huge 15% per year to reach about R150 billion by 2010. Included in this amount was investment in the built environment of R83 billion and R15 billion for the World Cup and infrastructure projects to enhance the capacity of the economy. Such infrastructure included the Gautrain rapid rail link, King Shaka airport and the Vaal River augmentation project. A great concern was whether the government had the capacity to successfully spend such an amount. FEDUSA had raised concerns about the Gautrain project in the budget submission this year because it believed it would not money well spent. There were serious problems and the coaches were very old and parts to fix them were not even available. Safety was also a major problem. There was a need to improve current infrastructure. It did not help to create an expensive infrastructure while not taking care of the existing ones. The Cape Town and Gauteng rail system could not cope with the current demand. The 2010 Soccer World Cup would place serious strain our transport system.

Treasury and the Minister had always under estimated the tax revenue over the last five years and over estimated the government's ability to spend especially on infrastructure programmes. FEDUSA recommended that the Minister should lower the taxes substantially and also involve the private sector to help get infrastructure spending up as this was a proven way of creating sustainable jobs in the economy. The Minister should use the revenue overrun to improve savings and to stimulate exports. The tax thresholds and tax rebates for individuals should be raised. The higher than budgeted revenue receipts came largely from personal income, company tax and value added tax.

She said that FEDUSA would like to see more spending in the following areas:
- Higher childcare and old age grants. The current 190 a month was not enough and should increase to R200 per month. The old age grant should be R900 per month.
- More and better spending on education as the current skills were not at the levels of modern economies.
- Better justice and policing, as the crime levels remained very high despite "lower" crime statistics.
- Health care and better salaries for nurses, doctors and general medical staff. SA current had more than 44 000 vacant positions in the public health sector and this was a disgrace since the system could not serve the people well.

Discussion
Mr G Schneemann (ANC) referred to FEDUSA’s input made last year in relation to the Public Works programme and the fact that wages paid in that programme needed to be increased. It was indicated that people used the money just to get to work and nothing much was left after that. He asked for an indication as to whether the union had seen any changes. The submission made this morning said that the Minister should consider an option of promoting export growth in the next budget. He asked FEDUSA to expand on what it would like to see in the budget particularly in the outer years. The submission also touched on spending on transport. The MTBPS mentioned particular amounts like R1, 1 billion for the restructuring of commuter rail, R5, 5 billion for transfers to local government for investment in public transport and R1 billion for the maintenance and rehabilitation of roads. What were FEDUSA’s views on the amounts? Were they sufficient? He also asked how FEDUSA was contributing at a local level in relation to the plans of the cities.

Ms Humphries replied that the public works programme and the wages paid was a frustrating process. A wage determination issue had been taken to NEDLAC. A standard rate was used in the programmes and the rate was about R50 per day. This rate was exhausted by the transport that people used in most cases. Some inroads had been made in terms of agreements on certain projects. The intention was to get a wage determination that would amend the current rate. A recommendation had been made in the Western Cape to the Provincial Development Council and this was being considered.

In relation to export growth, FEDUSA would like to see more long term and not short-term investment. There should be partnerships in housing and sanitation projects, for example. These were some of the projects in which investors could participate. One would like SA products to be more competitive on the global market. SA produced some of the best products in the world that were promoted through the Proudly South African campaign. FEDUSA participated in transport issues through organisations like United Transport and Allied Trade Union. One of the problems with transport was that train coaches were old. There had been no parts bought for approximately 14 years. There was a backlog of about 12 years. The turn around time for some of them was around 12 years before a whole coach was overhauled. This resulted in shortages in critical grades. The investment was welcome but there should more of it in order to see the rail system up and running. The only reason why transport spending was in the MTEF was that FEDUSA had declared as section 77 protest action at NEDLAC. There was a need for more investment as we looked forward to 2010. The Metrorail infrastructure depot in Woodstock had to wait for parts for up to eight months to get a small part to repair a wheel. Train windows were broken and doors were not functioning properly. It took a long time to fix such small things simply because parts were not available.

Ms Dambuza (ANC) noted that the presenter had proposed that the old age grant should be increased. She asked how FEDUSA viewed the grant. What was its purpose if the union was saying that it was not enough? It was also said that there were about 44 000 vacancies in the public health sector. What were the causes of such a vacancy rate? Last year the union had raised the issue of brain drain. She asked what role the union was playing to assist the government to control the brain drain. People were being trained but decided to leave the country. What should the Committee to do in order to assist in this regard?

Ms Humphries replied asked how R900 could be a living wage. Pensioners supported their grand children, sons and daughter as a result of the HIV/AIDS pandemic. The grants were used for food and medicines. People lived off grants simply just to survive. With regard to the vacancies in the public health sector, she said that there was a lot of behind the scene negotiations and red tapes on how to appoint people. The brain drain issue was raised by IDASA and FEDUSA was in consultation with the government on how to address it. How could one retain workers in their country if they could go and work in Saudi Arabia for four times their wages? There was a need for some incentives. Doctors were working a lot of overtime every week. The moratorium that was placed at certain stages also made things difficult. The government was under serious pressure since the money was.

Ms R Mashigo (ANC) said that last year FEDUSA was going to take some initiatives in order to address skills development with some Sector Education and Training Authorities (SETAs). She asked how far they had gone and whether the initiatives were having an impact on capacity growth in the country. There was a need to have export growth and growth in the economy as a whole.

Ms Humphries replied that FEDUSA had implemented 123 learnerships within its affiliates in the last year. It had placed 84 of the learners in permanent employment within some of its partners. It had also created lot of skills through the Labour Job Creation Trust. Sometimes there were administrative problems in the SETAs. The intention was to get more people in the learnerships and also ensure that they found permanent employment after getting skills.

Mr BJ Mkhaliphi (ANC)[Mpumalanga] said that FEDUSA had made an observation about the revenue overruns of the years. It was said that Treasury had over the years under estimated the revenue and over estimated government's capacity to spend. He asked if it would be correct to say that FEDUSA was saying that the revenue overrun was as a result of the under estimation in relation to tax collection. It was said that the Minister should have used the overrun to deal with tax paid by citizens. Recent discussions with the Governor of the SA Reserve Bank had indicated that more money in the hands of the people led to unsustainable consumption on credit. He asked how FEDUSA connected this observation and its proposal that the overrun should have been used to alleviate the tax burden.

Ms Humphries replied that Commissioner Gordhan had acknowledged the overrun was due to the very good work by the South African Revenue Services. SARS went out of its way to collect taxes and bring more people into the tax net. There were a number of factors that contributed to the overrun. The work done by SARS and lack of expenditure by some government departments had contributed to the overrun. On the tax rebate and unsustainable consumption, she said that one was dealing with human nature. The question was how to change human nature. People would always go out and buy whatever they could afford. FEDUSA was doing a lot in terms of Adult Basic Education and Training (ABET) to make people aware of the outcomes of extended credit and failure to pay the credit. It was human nature for people to always want more.

Mr Schneemann said that FEDUSA had said that the Minister should not only lower taxes but also involve the private sector to help get infrastructure spending grow as this was a proven way of creating sustainable jobs in the economy. He asked the presenter to explain how this should happen and also to indicate what should be done in terms of the budget for this to happen.

Ms Humphries replied that there were discussion to ensure that the private sector got more involved in public-private partnerships. There was a need to spend more in certain areas. It was important for the private sector to make more land available. The land reform issue was very critical. In Western Cape there were pockets of land in the hands of the private sector that could be used for job creation projects. The land was just kept vacant without any input or discussion on it. Huge prices were being asked for such land. The private sector should invest more and get more involved in local communities in terms of job creation projects. There were discussions in Gauteng on initiatives in which the private sector could assist not just in monetary terms but also with capacity building and skills development. There was a project to train poor people serving as volunteers to assist the HIV/AIDS orphans and families affected by HIV/AIDS. There was a need for more private sector involvement in such areas.

Ms Mashigo said that the Committee was aware and concerned that pensioners used money on grand children while the mothers of the children used their money of other things. She wondered if the union could recommend on how to deal with this. It was important to avoid unnecessary expenses especially in cases where it was know that parent did not use the money for its intended purpose.

Ms Humphries replied that the question as to how to deal with the old age grant was a serious issue. FEDUSA and the Minister of Finance did not support the Basic Income Grant because it would not have the desired effect. The current grants should be used effectively. She could not comment on mothers leaving their children with grand parents but still collected the grants. This was one issue that should be addressed in community forums. FEDUSA was trying to address this but it was a huge problem. There was a need for more volunteers to deal with the problem. FEDUSA had a role to play in the communities. There were shortages of social workers in the country and at the end it was just a vicious circle in terms of the problems that people were experiencing.

Ms Dambuza was not convinced about what the presenter had said in relation to the old age grant. The grant was not a living wage because the people were not given wages. It was given to them so that they could have something to support them and not to use on their grand children. FEDUSA represented the working class. She asked what role the union was playing to empower people who left their children with grand parents. Such people collected child support grants and used the money of different things. The union should educate people at the grassroots level before it could propose that the government should increase the grant. The problem was not with the government by with the society. One could not encourage people to abuse the government.

On the issue of vacancies, she said that people were being trained with the resources from the government and preferred to leave the country. South African had better labour relations. It had been realised that there were no incentives for people in rural areas. There was a need to sit down with unions and discuss the issue of incentives in rural areas. Departments had been complaining that people had no skills and unions should assist to ensure that people had the required skills. There was underspending by departments and municipalities because there was no capacity to spend moneys allocated to them. The question was what FEDUSA was doing about this. Trade unions had "forced" the employment of people with no skills to higher positions. There was a need for a clear programme from trade unions that would work closely with government's programmes.

Ms Mabe said that there was a serious problem of service delivery. Services that had been delivered were not to satisfactory level. A lot depended on the workers' commitment and productivity. She asked what role FEDUSA was playing to ensure that its members were committed to their jobs. There was not intention to say that all members were not committed. There were union members who were doing their best. Communities were not happy with the kind of services they were receiving. It had been indicated that municipalities were under fire because of lack of delivery. The question remained as to what the union was doing to ensure that workers had the will to drive the car of service delivery. Workers should put more energy on service delivery. This would make it easy for the Committee to recommend incentives for them. The government relied on unions to ensure that members were committed to doing what they were employed to do. She asked for the union's view on the role of SETAs in relation to development. There was a review of the institutions and it was found that they were not delivering as expected. They were expected to assist in skills development to ensure that the government did not have the current huge deficit. Were the SETAs giving the necessary output?

Ms Humphries replied that there were unions affiliated to FEDUSA that were working hard to ensure that municipalities had capacity. There was a need to address the issue of people who did not perform to the required standards. The Labour Relations Act specifically dealt with how to deal with such people without necessarily dismissing them. FEDUSA had held various discussions with the Ministers of Labour and Education on the SETAs. FEDUSA had been promised eight learners but it had not seen a single of them for more than a year and a half simply because some of the SETAs did not have capacity. They were always changing their staff and this made the operations difficult. FEDUSA was also looking at SETAs that were not functioning. Some of them had merged. The Minister of Labour had addressed some of the problems and the re-demarcation of sectors. SETAs should learn from each other as to how to function effectively.

Ms Mashigo said that everybody was concerned about mismanagement of money. The issue of old age grants was not correctly addressed in the submission. FEDUSA should leave this issue to the Department of Social Development or research it further. It could also approach the Social Development Portfolio Committee for further information. An institution should not come and make a submission on an issue that it had not adequately researched.

The Chairperson did not give FEDUSA an opportunity to respond to the comments by Ms Mashigo. FEDUSA had the right to make comments. It was up to the Committee to decide which point to take up and use as a recommendation to Parliament. People would always have different views on certain issues.

Submission by the Department of Housing
[PMG note: This presentation was postponed until the afternoon session as neither the Director-General nor the Minister could be present in the morning]

Mr M Dlabantu (Deputy Director General: Strategic Support), Ms Matlatsi Chief Director: Financial Services and Mr N Mbengo (CFO) attended the meeting. Mr Dlabantu said that the Director General was in a Cabinet meeting and had indicated that he would join the delegation at a later stage should the other meeting adjourn in time.

The Chairperson said that the Committee had expected the accounting officer or the executive authority to appear before it as required in terms of the law. She asked the Committee to indicate the direction to take. The accounting officer was the Director General and the executive authority was the Minister.

Ms Mashego said that the Committee was dealing with issues that needed commitment. The accounting officer was the person who could be able to come back to the Committee and indicate how the Department had dealt with issues raised by the Committee. The Committee could take a briefing from the delegation hoping that the Director General would come. The problem was that there was no guarantee that the Director General would arrive and the delegation did not have the power to take certain decisions. She felt that it would be unfair to allow the delegation to make its presentation in the absence of the accounting officer.

Ms Dambuza said that accounting officer had to come and account and commit himself to certain issues. The DG should have written a letter to the Chairperson to indicate that he would not be able to attend meeting. When this process started, three Directors General did not attend the meetings and had sent delegates. The Committee had decided to send them away. It would be unfair to allow the Department to present given that other Departments had been sent away. The delegation could be given a slot later in the day on condition that the Director General would attend the meeting.

The Chairperson said that there was a reason why the Committee wanted the accounting officer since that person had the authority to take certain decisions that would bind the Department. There was an increase of R472 million to the Department's budget. The Committee was interested in knowing how the money would be spent.

Mr Dlabantu said that the Department would welcome a slot later in the day. He indicated that he would go to the DG and impress upon him that the Committee wanted him to appear in person.

Submission by the Department of Education
The Department was represented by Mr D Hindle (Director General), Mr F Patel (Deputy Director General: System Planning and Monitoring), Mr P Banade (CFO) and Ms P Tyobeka (Deputy Director General: General Education).

The Chairperson welcomed the Director General and his delegation. She said that she had indicated to the delegation that they would not be allowed to make a presentation in the absence of the accounting officer or the executive authority. Some Departments had been turned away because the accounting officer had not attended the meeting. The Committee was looking for more interaction with the Department during the year since it was expected to monitor the monthly expenditure of the Department. The Department should therefore not be surprised should it be required to account to this Committee at any time during the year.

The Director General said that it had always been his intention to appear before the Committee but he first had to attend a cabinet meeting in the morning. It was unfortunate that the Cabinet meeting had taken longer than expected. He was optimistic about what was contained in the MTBPS. There was some significant funding increase to education and the additional resources weighed heavily on the Department and the challenge was to use them. The Department had experienced problems and concerns in terms of translating statements in the policy statements into rands and cents down at a provincial level. Too often the priorities were understood differently in provincial treasuries and the provincial Departments of Education could re-interpret them. Sometimes things that the government was leading did not find their way to the ground. An example could be made of the Further Education and Training recapitalisation money. The money flew though provinces as a conditional grant and the Department had a very tight control over it. One of the unintended consequences was that some provinces had decided to cut their budget for Further Education and Training (FET). The grant should not impact on the ordinary funding for FET in provinces.

The Director General asked Mr Patel to make the presentation. (See document attached). He focused on the financing progress and pressures in provincial education funding; strategic considerations and the MTBPS as it related to education.

The CFO took the Committee through the expenditure as at 30 September 2006 versus the 2006 adjusted estimates. He said that the Department submitted the monthly expenditure to the Minister. The Department had already spent 72, 13% of the budget. Members should not be surprised by such a high expenditure by this time of the year. The reason was that subsidies to institutions had to be paid out by December. Their year was not aligned to the government year as they still operate on a calendar year.

Discussion
Mr Schneeman focused on planning for the building of new schools. He asked what kind of interaction existed between the Department of Housing and the Department of Education especially in relation to "Breaking New Ground" that required that all other supporting structures should be available when building houses. It seemed that no such interaction existed in Cosmo City. It seemed like there were problems in relation to infrastructure especially looking at what had been planned for this year and what had been achieved so far. He asked if the Department would be able to spend the allocated money. Progress seemed to be slow. How would the Department be able to reduce the backlog? Would there be a need for more money in the outer years? Would the Department be able to spend should it get more money? The Department of Minerals and Energy had indicated that it did not know how many schools did not have electricity. The Department had said that it received different figures from the provincial and national departments.

The DG concurred that what was planned in relation to infrastructure was inadequate in terms of existing needs. Provinces had planned on the basis of resources available. The spending rate was in excess of 97%. It was not a case of under budgeting and underspending in this area. Province had a late spending spike on infrastructure because one could find that a building was completed in June but paid for in January. He was concerned about what the Department of Minerals and Energy had said about the electrification of schools. The Department of Education was consciously working very closely with the Departments of Minerals and Energy and Water Affairs and Forestry. The Department produced comprehensive reports on delivery of infrastructure on monthly basis. Such reports should be the only data or reports that anybody who wanted information of infrastructure delivery should consult. The Department did not simply rely on provincial reports. The Minister of Housing had given an undertaking to the Minister of Education that no new housing developments would be considered if there were provision for schools and other social services.

Ms Nawa said that there were schools that had not yet received their section 21 funding. She asked how the Department ensured that schools received their money on time. The changing of quintiles was problematic. One could find a school that was in quintile three being demoted to quintile one. She asked why such a school was not elevated to another quintile in order to address the shortages of commodities. The Department had planned for the building of 168 schools but had only completed eight. She asked what was the problem. There was a need to build schools in the communities.

The Chairperson said that the Department should also address the slow progress in the building of classrooms.

The DG replied that he was concerned that some schools had not received their money by this stage. Not all schools were section 21 schools. Section 20 schools did not get physical transfers but had a book account. A school that did not have the capacity to be a section 21 school should be made a section 20 school and its funds would be managed from a district level. This assumed that the district had better capacity to matter the funds and this was not always the case. The Minister had a very strong view that all schools should be section 21 schools. They should all get their money up front at the beginning of the year.

He said that the issue of quintiles was very difficult. One school should move up the quintile should one school drop down. Very few schools wanted to move up the quintile. Every school wanted to move down so that they could get more money. The real problem was that schools were classified according to the areas in which they were located. It was assumed that poor schools should be in quintile one. The reality was that more and more of what looked like wealthy schools were accommodating poor learners. Every province had the discretion to move school from one quintile to another. This ensured that the most deserving schools got more money.

Ms Dambuza asked if the Department did not have regulations on the use of the funds for FET. Could the funds not be taken from provinces that were not spending as expected and allocated to another province that could use them? Some provinces were not taking the FET issue seriously yet Treasury was allocating money to them. Adult literacy programmes were still behind in some provinces. The government could not be blamed because it had made funds available. What measures were in place to ensure that provinces complied with regulations and that government priorities were being met? She also asked if The Quality Education Development and Upliftment Programme (QIDSUP) programme was similar to the programme that was designed to roll out computers to rural areas. Schools in rural areas still did not have computers. Schools were built and left without resources. What measures were in place to ensure that schools benefited from the programme? She also asked how the Morkel model affected the performance of schools. It seemed that there was a problem with the model. There were funds for school nutrition programme. She asked if the Department had observed that funds were not being utilised properly. Schools bought soups from their own suppliers and it was a wasteful expenditure because children did not even eat the soups given their taste. Who monitored the programme?

The Director General replied that the Department had full control over the conditional grant funds and provinces were not allowed to touch it. What had happened was that provinces had pulled their equitable share money off and the Department had not control over that. The Department could only persuade provinces to do certain things but had no control over the money like it had over the conditional grant. Some of the MECs had asked whether FET colleges should still be under provinces. Some MECs had asked why the colleges were not centralised if they were key to the skills development agenda of the country. He took the point that some provinces were still behind in relation to ABET. The Department was looking at a massive community mobilisation programme to improve adult literacy.

He said that the Morkel model had often been understood and people blamed it for the fact that there were not enough teachers in schools. There would never be enough teachers in a school if there were not enough teachers in the province. People had often cited the model as the reason why there were huge classes. The reality was that SA had more teachers than classrooms. Most of situations of large classes were as a result of lack of classrooms and not inadequate teachers. Schools were forced to bundle a large number of learners in very few classrooms.

Ms Tyobeka replied that Qidsup was a new programme and targeted schools in the poorest communities. It focussed on schools in quintiles one and two. The main aim was to provide basic resources to schools.

The Director General said that the Department had a tight control on the school nutrition programme. There were teams that regularly visited schools to see what was happening. There were six million children who were being fed on daily basis in some 6000 schools. The Department could not be everywhere all the time. One head of a Department had once said that the programme should not be called School Nutrition because nutrition had nothing to do with it. The person had said that it should be called a School Feeding programme. Schools should be encouraged to have vegetable gardens.

Ms Mashigo said that three programmes had rollovers. The mistake was on the part of the Department because payment for computer equipment was not paid for by March. It had been said that the Department was in the process of absorbing temporary and substitute teachers. She asked for a progress report on this.

The CFO replied that rollovers included money related to the merging and refurbishment of institutions of higher learning. Some money had been withheld because some institutions had not submitted the required business plans. There was a merit award for one official and some of the money was used for the compensation of officials.

The Director General replied that eight of the nine provinces had absorbed temporary teachers. Some temporary teachers were not absorbed because they were not qualified. Some teachers were temporary because they were unqualified. The Department could never appoint unqualified teachers on permanent basis.

Mr Mkhaliphi said that it was disturbing to learn that there were different interpretations of what the additional allocation meant. Not so many candidates came out from school (matriculation) with the critical skills. Only about 4% of the learners in Eastern Cape had made it in maths and science. He asked if there would be no problems in relation to having candidates to admit to the FETs. It was like a case of having more food parcels but less hungry and relevant mouths to feed.

The Chairperson said that maths and science were a huge problem. She asked what measures were put in place to ensure that there would be radical changes. Everybody was looking at the departments of Labour and Education to see if there would be changes.

The Director General replied that there was an agreement with provincial heads of departments on what were the national priorities. The disagreement was with provincial treasuries. The Department was working on the disagreement and things were getting a lot better. He was also concerned that the numbers in matric were not going in the right direction. However, there was an additional 17 000 matriculants with endorsement last year even though the percentage went down. The quality of the passes had improved. There were also programmes like the Dinaledi programme. The programme had identified about 400 schools that were getting additional resources. A school had to double the number African High grade Maths and Science graduates by 2008 in order to remain a Dinaledi school. It was a good thing to be a Dinaledi school because the school got more resources. Schools were actively competing to be Dinaledi schools and were meeting the commitments. Maths literacy was compulsory from grade 0 to 12 in terms of the new curriculum statement.

Dr PJ Rabie (DA) focused on the adjustment estimates of national expenditure 2006 and programme seven. It was mentioned that there would an additional R500 000 for books in disadvantage. He said that his constituency was a very rural area and many of the learners had very limited access to the media. Books were an escape route for them. He asked if the amount was adequate and if there were plans to increase it. He asked if the merit awards referred to in the presentations were for learners, educators or staff?

The Director General replied that the Department was committed to getting books to schools. The Department spent over R2 million a year on textbooks. The target was one textbook per learner per subject. One could still find two or three learners sharing a textbook and this meant that there was something wrong with the system. The Department was working hard on trying to understand where the problems were.

The Chairperson said that the State of the Nation Address had said that no learner would be "learning under a tree" by now. He asked for the Department's comment on this.

The DG replied that he was confident that the Department had addressed all instances of learners under trees. The Limpopo province had recently reported that a number of community schools built under apartheid by the communities had collapsed. There were now learners under trees in Limpopo but not because they were there in 2003. The Department had made enormous progress in the use of mobile classrooms. Provinces were very quick to respond to damaged schools by supplying mobile classrooms. A school was recently damaged by fire in Limpopo and five mobile classrooms were delivered the following day. He said that an MEC from KwaZulu-Natal had recently told a summit of infrastructure development that the Department had delivered classrooms to accommodate learners who were under the trees. The MEC had gone back to the school to open the new classrooms only to find that there were more learners under trees. It was realised that learners from nearby schools got excited with the developments in that school that the decided that they should study there. There was a big planning problem and there were no zoning rules that provided that learners should attend the schools nearest to them. There was migration from one province or school to another. Five schools had recently closed in Soweto. The Department could not stop learners from migrating because they were doing so in search of better quality education. This was a problem because the new schools were now probably over crowded. Provinces were stretching their budgets as far as possible. The issue of water and sanitation was the most crucial. One could run a school without electricity but not without water and sanitation.

The meeting was adjourned for lunch.

Department of Public Works briefing
Mr Z Ntsaluba (Acting Department Director-General) reported that the Medium-term Budget Policy Statement (MTBPS) had set aside R83 billion for investment in the built environment. The Department’s main focuses were building capacity and improving the management of immovable assets. The Department was also trying to target contractors through the Emerging Contractor Development Program (ECDP) and the Contractor Incubator Program (CIP). The Department had contributed an estimated R6.7 billion to the country’s Gross Domestic Product (GDP) through its R5.2 billion expenditure. The number of jobs created by the Department had increased from 17 000 to approximately 22 800, over the past five years.

Mr B Gxilishe (Department Deputy Director-General: Extended Public Works Programme), gave an overview of the Extended Public Works Programme (EPWP). Within its first five years, the EPWP was planning to target at least one million unemployed people. Job opportunities would be created in four defined sectors, namely infrastructure, environment and culture, and the social and economic sector.

Discussion
Mr T Ralane (ANC) [Free State] argued that it was a major problem that the Department did not have a permanent Director-General, and this required immediate attention. Secondly, there was the question of whether the Department was ready to deal with the R83 billion allocated to the built environment. There was also a large pool of informal skills and the Department should elaborate on how they planned to accredit those with informal skills. The EPWP might have to rely on supplementary funding from the conditional grants and the Municipal Infrastructure Grant (MIG), and this would be a problem. Finally, he asked if the Department could provide a list of municipalities that the EPWP was trying to assist

The Department Chief of Staff stated that the Director-General post had been advertised, but those shortlisted had been unsuitable. However, a company had been contracted to intensely scrutinise new candidates and then make recommendations on shortlisting. The Department had been involved in a process of skills development, accreditation and training.

Mr Ntsabula argued that the R83 billion was for projects in the built environment jointly undertaken with other departments. Implementation and monitoring plans had already been developed.

Mr Gxilishe agreed with Mr Ralane on supplementary funding, but stated that the matter was beyond the Department's control, as it was not responsible for the allocation of the equitable share formula.

Mr B Dambuza (ANC) argued that many provinces and municipalities had opted to use other agencies instead of going through the Department of Public Works. The Department should give clarity on what was being done to address this matter. Another issue of concern was the monitoring of regional offices, and the visibility of projects, as many of their programmes were only visible in the big cities. Finally the Department should explain how the roll-overs had arisen.

Mr Ntsabula stated that the Minister of Public Works was working closely with counterparts to address the provinces using other agencies. The Minister had also shown concern about the issue of visibility, and interventions were already taking place in order to show the Departments visibility. The roll-over was a result of the R9 million that remained unspent from last year.

Mr G Schneeman (ANC) stated that the FEDUSA presentation had stated that the daily pay for the EPWP was too low. Could the Department elaborate on what was being done to address this? Mr Gxilishe said that the daily rate was not uniform, and that the EPWP did not displace people from existing employment.

Ms Mabe asked whether the asset register was up to date, as there would soon be huge spending on infrastructural development. In terms of the maintenance of government assets, could the Department give clarity on their turn-around strategy, as most departments seemed to have problems with the turn-around methods. Could the Department also provide more detail on skills development as there were scarce skills in the construction industry?

Mr S Mathobela (Department Deputy Director-General of Asset Management) assured Ms Mabe that the asset register was ‘fully-fledged’ and up to date. There was a turn-around strategy in place, but there were not sufficient rental charges accruing to governmental structures.

Mr Ntsabula stated that the staff vacancy rate had been a seriously challenge for the Department, especially in the area of the built environment. The Minister had held meetings with the Built Environment Board, and there were projects underway in conjunction with universities and technicons to address scarce skills in the building sector.

Mr Mkhaliphi (ANC) [Mpumalanga] argued that part of the delay in implementation was because construction companies were unaware that projects were taking place, and were not geared to implement major government projects or even provide expertise. The Department should elaborate on whether this situation had been resolved.

Mr Ntsabula felt that things could have been done better in the past, but there were many challenges facing the Department, such as human resources and the availability of materials. The Minister was meeting with the various stakeholders to resolve this issue.

People’s Budget Campaign briefing
The People’s Budget Campaign (PBC) was represented by Mr R Dicks (COSATU), Ms M Legum (Chairperson of the Board of SA New Economics), Mr N Newman (Parliamentary Researcher: COSATU/ NEHAWU) and Mr K Vermeulen (Parliamentary Officer; People's Budget Campaign).

The PBC provided their view on the MTBPS and a list of concerns to the Joint Committee. Their concerns included government's economic approach to the 2010 Soccer World Cup, budget policy shifts, and budget adjustments. They commended the Finance Minister's approach to state revenue collection, government expenditure, and the budgetary process. The PBC concluded that in order to assess the effects of the budget policy, government should make poverty alleviation its first priority.

Discussion
Mr Scheeman stated that South Africans should increase their spending, without getting into unmanageable debt. With regards to the 2010 World Cup, the PBC argued that benefits should also accrue to the rural areas. The government had set up development nodes in rural areas – could the PBC elaborate on their analysis of these nodes?

Ms Legum argued that it was possible to spend more without borrowing more. This could be facilitated by different forms of taxes. Ms Legum stated that capacity to deliver was the most crucial area in a developing state. In South Africa, most of the population lacked access to proper education.

Mr Ralane (ANC) [Free State] felt that people should not be preoccupied with the issue of 2010 but focus on more immediate concerns. On the issue of borrowing, municipalities tended to borrow money from commercial banks to sustain their projects, but underspend their state grant allocations. Slow municipal service delivery was partly due to trade unions that did not adhere to Batho Pele principles. The issue of remuneration was not only about money, but about leadership style.

Mr Dicks argued that COSATU needed to see how they could train their members to better fall in line with Batho Pele principles. A more holistic approach was needed.

Mr Newman said on the remuneration issue, that capital infrastructure had been the fastest growing portion of the provincial budget. However the employees’ compensation was constantly decreasing, which did not help with the acquisition of skills.

Ms R Mashigo (ANC) was concerned about the PBCs views on Alexkor and its benefit to the community. The PBC had also failed to mention what should be done to prevent the abuse of the childcare grants.

Mr Dicks said that they had no problem with companies such as Denel and Alexkor. However, some of the resources used by those companies might be used for better purposes.

Mr Vermeulen said the PBC had commended government for its spending on social security, but much more needed to be done. With regards to the abuse of childcare grants, they should instead focus on who qualified for the grants.

Ms Dambuza (ANC) felt there was a need for more regular interaction between the PBC and the Joint Budget Committee. Mrs Mabe agreed and said it was also important to focus on the issue of skills development, and the impact of HIV/AIDS on service delivery.

Ms Legum argued that COSATU’s job was to train and motivate people for leadership. It was important was to focus on training programmes within government.
 
Mr Dicks argued that the PBC was not opposed to presenting more regularly to the Joint Budget Committee, but wished to contribute on issues that could possibly be amended.
 
Mr Vermeulen said that in the legislation participatory process, there were constitutional laws regarding amendments. As the PBC represented a large number of South Africans, it was important that their submissions be taken seriously. The PBC would like to explore further a more participatory process.

Department of Transport briefing
As the Department’s Director-General, Deputy Director-General and the Chief Accounting Officer were unavailable, the Committee refused to hear the presentation by Mr D Pretorius (Chief Financial Officer).

Department of Health briefing
The Department was represented by Mr T Mseleku (Director-General) and Mr G Moen (Chief Financial Officer). Mr Mseleku stated that they faced many challenges, ranging from human resources to the slow pace of hospital revitalisation. The Department hoped to increase the health workforce by at least 30 000 staff over the next five years and phase in new remuneration packages. Hospital revitalisation was still a key priority, and R1 billion had been set aside over the next three years for this. Other key priorities included the improvement of the medical emergency services, and treatment and support for HIV/AIDS.

Mr Ralane argued that principals in the Departments of Health, Water and Forestry, and Minerals and Energy, needed to discuss planning community healthcare centres, as provinces and municipalities found it very difficult to allocate conditional grants to areas of greatest need.

Mr Mseleku said that a major challenge was access to provincial and municipal grants. In order to resolve the issue, they needed to look into the integration of all services at the municipal and provincial level.

Mr Dambuza (ANC) was concerned about the forensic pathology services, and asked whether the provinces were managing the allocated funds well. With regards to HIV/AIDS programmes, could the Department provide clarification on why roll-overs of condom supplies existed. Could the Department also say what was being done to integrate orphanages into some of the Department projects. In certain provinces, there were battles between the province and municipalities, to the detriment of healthcare service delivery. With regards to the emergency services programmes, how did the programmes reduce unemployment and were the intended programmes actually reaching the public.

Mr Mseleku stated that the forensic pathology laboratories had already been transferred to the Department. There had been a great deal of improvement in forensic pathology infrastructure, particularly in the mortuaries. However the big challenge was the lack of the high level expertise. Funding for orphanages was in place.

Mr Moen said there were comprehensive plans with various universities to deal with the roll-over. Since spending patterns were unpredictable, the Department had had to move funds from one section of the accounting structure to the universities. The comprehensive plan also supported HIV/AIDS Lifelines at the various universities. Part of the transfers went to supporting the programme.

Mrs Mchunu (IFP) [KwaZulu-Natal] asked the Department for clarity on what was being done to prevent ambulances from being hijacked. The Department should also look further into the childcare grant abuse issue.

Mr Mseleku said the Department had done such a study issue and found that the number of children on the grant was not as reported. At least 80% of the recipients received the grant to support one child. However, further qualitative work was being done to examine the causes of possibly 5% of beneficiaries abusing the grant.

Mr Scheeman asked if there was confidence in the MTBS approach in addressing issues such as backlogs in hospitals and reduced patient waiting times.

Mr Mseleku argued that one way of reducing hospital waiting times, was to invest in improved skills in the pharmaceutical industry. There needed to be more efficient pharmacies in hospitals as most patients spent much time waiting for medicines.

Ms Mashiko said the Department’s priority was to focus on the completion of the hospitals before embarking on future projects. With regards to the referral systems at clinics, please could the Department provide detail on mechanisms or educational programmes to reduce the load at hospitals. Finally, with regards to funding, could the Department give clarity on why some non-governmental organisations (NGOs) had not received funding, despite having followed the correct procedures.

Mr Mseleku argued that infrastructure expenditure planning could not wait for the completion of hospitals. They should to compare provinces, and funds should be transferred from non-performing province to performing ones. There were two levels of funding for NGOs and certain criteria had to be met. If an organisation met all the requirements and was not funded, then the Department should be notified immediately.

Mrs Mabe questioned whether the Department was ready to spend its estimated budget of R36.5 million, with particular reference to the forensic pathology labs. Secondly, the Department should explain why R20 million had been shifted from dealing with HIV/AIDS. The Statement referred to 192 treatment sites benefiting from expansion. Please could the Department give reasons for their location. Finally, she asked the Department to give a breakdown of the 16 000 workers employed over the past two years.

Mr Moen stated that the planning of the transfer of the function had been going on for some time. Initially the South African Police Service (SAPS) had begun improving the mortuaries. However, once forensic pathology had been transferred to the Health Department, the unspent money by SAPS was also transferred into the Health Department’s budget - hence the R36.5 million.

Mr Mseleku stated that information on personnel trends was available in the Intergovernmental Fiscal Review (Chapter 3). There was also information available on the 192 sites. Accreditation of these sites depended on the capacity of the municipal districts.

[PMG note: The PMG monitor left the meeting at 19h45 and was thus unable to record the last input, made by the the Department of Housing. A brief synopsis of the Department of Housing presentation is however included below]

Department of Housing briefing
Mr I Kotsoane, Director-General of the Department of Housing, gave an overview of the municipalities that the Department had prioritised. He also outlined the impact of making housing a priority in service delivery. Department challenges included the availability and readiness of key roleplayers in all spheres of government, and the growing housing backlog.