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Address by hon Yvonne Phosa (ANC) MP, debate on 2018 Adjustment Appropriation Bill, in the National Assembly

28 November 2018

I would like to congratulate the brand new Minister of Finance and National Treasury for an Adjustments Appropriations Bill that indeed has been broadly consulted, is pro-poor and in accordance with the ANC Government's priorities.

Fellow South Africans, every year during consideration and debate on the Adjustments Appropriation Bill, the DA shadow cabinet makes flimsy, clumsy and populist, shadow proposals that are not properly consulted, have no resonance with our people, and are merely intended to be the smoke screen f our people with the hope that they will garner more support during elections.

Again this year, they have concocted a shadow adjustments appropriation, which, if considered, will only lead to job losses, loss of state business and shift from the ANC Government's road infrastructure, and the SAA turnaround strategy investment, in favour of a once off end of the year bonus, which is nothing short of buying votes by the DA. These proposals are laughable and rejected by the ANC as they are not in the best interest of the people of this country.
Of the R5.9 trillion over the 2019 MTEF period, the ANC Governing party has allocated over the next three years, largest allocations, for learning and culture (R1.2 trillion); Health (R724 billion); Social Development inclusive of social grants (R911 billion); and Community development (R683 billion). Fellow South Africans that is why the ANC is the party to be trusted.

The African National Congress supports and recommends the approval of the 2018 Amendments Appropriations Bill. This we do for all South Africans to ensure continued investments in social and economic services and infrastructures, and social protection through the various Votes that the Amendments Appropriation Bill is proposing. We also do so, definitely so do, because Ma Albertina Sisulu reminds us that, and I quote "We are each required to walk our own road and then stop, assess what we have learnt, and share it with others. It is only in this way that the next generation can learn from those who have walked before them. We can do no more than tell our story. Then it is up to them to make of it what they will." What is required for the next generation has been optimally explored through the participation of stakeholders, that is constitutional, legal and non-state, and the different line departments through the public participation process of the Standing Committee on Appropriations. The Adjustments Appropriation Bill is what government has assessed and learnt in the context of our economic growth and investment challenges, the societal demand to address poverty and inequality, as well as, to reprioritize public spending through the different votes.

The ANC government has learnt from the economic and social challenges facing our society, and has the national responsibility to fund the continued rollout and improvements in critical areas of service delivery whilst simultaneously trying to kick-start growth in the economy aimed at reducing unemployment which is alarmingly high.. This, our government, is doing through a four-pronged approach in the Medium Term Budget Policy Statement (MTBPS) through:
(1) Maintaining the expenditure ceiling;
(2) Maintaining government's personnel expenditure ceiling;
(3) Re-prioritising spending towards the roll-out of the President's economic stimulus package (especially infrastructure investment); and
(4) Rebuilding state institutions.

This Adjustments Appropriation Bill provides for increases or decreases to allocations set out in the main 2018 Appropriation Act, including shifts in the anticipated economic classification of public spending. It sets adjustments to allocations. Furthermore, the Adjusted Estimates of National Expenditure explains national changes in detail, together with midyear performance and expenditure information. What is clear in terms of our rule-bound system which is the purview of Parliament's Standing Committee on Appropriations, is that all shifts of allocated expenditure and other adjustments are subject to the Republic's Constitution, Public Finance Management Act (PFMA); and its regulations; as well as, Section 5 of the Appropriation Act 2018. These adjustments to budgets as contained in this Bill serves both to effect necessary spending changes and to contribute to in-year oversight and management. And, as such, this Bill makes provision for 2018/19 unforeseeable and unavoidable expenditure of more than R668million with the amounts of:

  • R159.6 million for post-disaster construction and rehabilitation after floods to the Vote of Department of Cooperative Governance and Traditional Affairs;
  • R175.8 million for post-disaster rehabilitation of schools;
  • R199.5 million for post-disaster reconstruction and rehabilitation of hospitals; and
  • R100.1 million for post-disaster reconstruction and rehabilitation of housing and human settlements.

That ANC led government's commitment to ensure infrastructure investments for our present and future generation. We support the expenditure earmarked in the 2018 Budget for future allocation and would like to highlight the following allocations:
* R566.5 million for drought relief allocated to the Department of Agriculture Forestry and Fisheries;
* R2.947 billion for the South African Post Office to defray debt and fund operational requirements through the Vote of Telecommunications and Postal Services;
* R1.3 billion for drought relief through the function of Water and Sanitation;
* R800 million towards school infrastructure backlogs grant for capital assets; and
* R1.226 billion for more drought relief through the Vote of Co-operative Governance and Traditional Affairs. And, to remind those who are doomsayers, that the initiative taken by this Government to establish a Judicial Commission of Inquiry into allegations of State Capture, Corruption and Fraud in the public sector, including Organs of State has been funded by a whopping R386.5 million.

This is further strengthened by the Government's resolve, let me remind you that is the ANC Government, to make available more than R22.9 million for the Commission of Inquiry into Tax Administration and Governance at the South African Revenue Services. This is an illustration of the commitment of the ANC Government to fight and will continue to fight any form of fraud and corruption, including protecting our institutions to deliver on their public mandate, and thereby demonstrate public value.

Honourable Speaker, we are indeed concerned about the spiralling debt of state-owned companies (SOC) that has accelerated significantly since 2007 largely as a result of non-financial SOCs. Their total loan and bond debt increased from 8 percent of GDP in 2007 to 15.6 percent in September 2017. Non-financial SOCs represented about 86 percent of SOC debt which translates to 13.5 percent of GDP. Consequently, the SOC sector has primarily driven the expansion in contingent liabilities of the fiscus. Guarantees on SOC loans are the most frequent type of contingent liabilities and have been growing rapidly in the past ten years. They increased from 2.9 percent of GDP in 2007/08 to about 9 percent in 2017/18. We looking forward to the interventions to be undertaken by the executive government leadership of His Excellency the President Cyril Ramaphosa.

Water scarcity presents a serious challenge to South Africa's social well-being, food security and economic growth. The water scarcity problem is most likely to exacerbate rapidly as demand escalates due to population growth, urbanization, and unsustainable use, degradation of wetlands, water losses and climate change. Current estimates suggest that South Africa is experiencing a water deficit of approximately between 2.7 and 3.8 billion cubic meters per annum. Addressing water challenges requires bold steps from government, the affected stakeholders and the fiscal structure to prioritise water resource management and demand planning, invest in new sources of water and reduce water losses and pollution.

We accept that the county's growth trajectory must be set in balance given economic and fiscal risks and our undisputed commitment on education, health, social development and transport sectors. It should be noted that 'urgent and pressing matters in education' has been identified as one of the five components required to stimulate the economy as per the President's Stimulus Package. In this regard, one of the key risks to the fiscal framework is the wage bill. Currently over half of provincial budgets are dedicated to wages - this is predominantly led by sectors such as education and health. The 2018 MTBPS has indicated that no additional funding will be provided to cater for the higher than anticipated and budgeted wage agreement. The Minister is right to say we need to find a way to sustainably manage government's wage bill, which is consuming 35% of public resources.

With respect to health, one of the notable changes is the reprioritisation of funding amounting to R350 million, to fund critical vacancies in public health and R150 million for purchasing beds and linen. Our concern is that reprioritised funding may not be enough for the implementation of the National Health Insurance and to fill critical vacancies within the public health facilities.

In terms of transport, we note that the Economic Regulation of Transport Bill, now before Parliament, will contribute to competitive pricing and improved service quality in transport. Over the medium term, public transport expenditure, which includes rail infrastructure and provincial bus services is expected to increase to R101.1 billion, as integrated public transport networks are built and operated in 13 cities. The public transport network grant, will include incentive components that promote good governance and increase investment of municipal funds.

Honourable Speaker, as I conclude, I want to confirm through this input that as a going concern we will be vigilantly looking at compliance with legislation of supply chain management, regulatory and legislative compliance with the Public Finance Management Act, Treasury Regulation and other financial protocols.

I would like to thank the FFC, HSRC, PSC, for their objective analysis and briefings to the Committee. Also, we thank are thankful for the public submissions made by Budget Justice Coalition, COSATU, UNICEF, Rural Health Advocacy Project, Fairplay Movement, Mr DW Nott, and Professor SM Muller. Good governance in fiscal management is in our presence and definitely future.

I thank you.

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