National Council of Provinces - 14 November 2002



The Council met at 14:07.

The Deputy Chairperson of Committees took the Chair and requested members to observe a moment of silence for prayers or meditation.



                         (Draft Resolution)

Mr G A LUCAS: Chair, I hereby move without notice:

That the Council -

(1) notes that President Thabo Mbeki, in his statement to the National Council of Provinces, referred to an analysis of the South African Advertising Research Foundation which had found extensive development in living standards for the period 1994 to 2001;

(2) further notes that the analysis has shown -

   (a)  significant increases in  home  ownership,  provision  of  clean
       water and electricity, access to  household  durables,  such  as
       electrical stoves,  refrigerators,  television  sets  and  music
       equipment, and access to telephony;

   (b)  a steady decline in the proportion of people who earn less  than
       R2 500 a month; and

   (c)  a steady increase in the proportion of those who earn between R2
       500 and R 6 000 and above R6 000;

(3) believes -

   (a)  this bears testimony to the commitment of the ANC Government  to
       build a better life for all the people of South Africa; and

   (b)  that  it  is  a  vindication  of  the  correctness  of  the  ANC
       Government's policies in rolling back the frontiers of poverty;

(4) commends the ANC Government for making significant strides in improving the lives of our people; and

(5) calls on all people in South Africa to work with our democratic government in rolling back the frontiers of poverty.

Motion agreed to in accordance with section 65 of the Constitution.


                         (Draft Resolution)

Mntwana B Z ZULU: Sihlalo, ngenza isiphakamiso ngaphandle kwesaziso:

Ukuthi uMkhandlu -

(1) uzwakalisa ukudabuka okukhulu ngenhlekelele yengozi evele endaweni yaseMtshezi lapho kufe khona abantu abayi-18;

(2) uzwelana nemindeni kanye nezihlobo zabasishiyileyo. Ithi mabalale ngenxeba, akuhlanga lungehli;

(3) uzwile ukuthi laba bantu beSilo bashe ngendlela yokuthi kungabi lula ukubehlukanisa abesilisa kanye nabesifazane;

(4) unxusa abashayeli bezimoto ukuthi baqikelele kakhulu kulesi sikhathi lapho abantu bevakashela khona imindeni nezihlobo zabo; futhi

(5) unxusa izimanenja zamaRenke ukuthi zigcine uhla lwamagama abagibeli ukuze uma kwenzeka ingozi efana nalena zikwazi ukwazisa izihlobo zabashonile. (Translation of Zulu draft resolution follows.)

[Prince B Z Zulu: Chair, I wish to move without notice:

That the Council -

(1) expresses its profound sadness and shock at the terrible taxi accident that occurred near Estcourt in which 18 commuters lost their lives;

(2) expresses its condolences to the families and friends of the deceased and conveys to them its deepest sympathy;

(3) notes that these subjects of the King were burnt to such an extent that it was difficult to distinguish between male and female bodies; (4) calls on drivers of motor vehicles to be careful, particularly during the festive season when many people are visiting their families and friends; and

(5) calls on taxi rank managers to keep lists of the names of commuters so that when such accidents occur they are able to inform the relatives of the deceased.]

Mr A E VAN NIEKERK: Mr Chairperson, we cannot take any decision on it as we have no interpreting service and not all of us, unfortunately, could understand isiZulu. [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: But that is not an objection to the motion per se.

Mr A E VAN NIEKERK: Chairperson, it is not an objection to the motion, but an objection to the fact that we could not understand what the hon Prince Zulu has proposed for this House to take a decision on.

The DEPUTY CHAIRPERSON OF COMMITTEES: Thank you very much, hon member. We will look into that question of the interpreter.

It seems that there is no objection to the motion. So, the motion is agreed to.

Mr A E VAN NIEKERK: Chairperson, this House objects to your ruling because we cannot take a decision if we have not voted on it, and we cannot vote if we cannot understand. Therefore, I urge you, Mr Chair, to let it stand over and let us get the interpretation of it.

The DEPUTY CHAIRPERSON OF COMMITTEES: Hon Mr Van Niekerk, thank you very much. We will actually look into that. It is a pity that there is no device for interpretation.

This is a provincial matter, therefore I would like to know whether provinces have any objection to it.

Hon member, are you rising on a point of order?

Mr M V MOOSA: Yes. Chairperson, I believe that the motion is a good motion and it has been coloured by the debate. It may help if somebody just interprets it and explains it so that the House can support it.

Mr C ACKERMANN: Chairperson, I think it is quite correct and fair that if we do not understand the language in which the hon member has presented it, we just ask what the content of the motion is. Nobody is objecting to it as yet. We only want to know what the hon member said as there was no interpreting service. I think it is a fair request that we just hear what is going on.

The DEPUTY CHAIRPERSON OF COMMITTEES: There is no objection to the motion. The only issue is that the members want it to be put in a language that they understand. I wonder if the hon Prince Zulu could actually read the motion in English, as a compromise. [Interjections.]

Mr V V Z WINDVOëL: Chairperson, I would like to volunteer to interpret the motion. But I think this thing must be taken very seriously. Since I came to this House last August I have noticed it. It is a very serious thing that we do not have our African languages interpreted. It sets a very bad example for the country at large, when the highest institution in the country is not able to undertake such an important task of ensuring that, diverse a country as we are, we are in a position to understand one another. [Applause.]

Chairperson, as you know that I am not an expert interpreter, I will just try to interpret in the context of the content, as Mr Ackermann requested.


Mr V V Z WINDVOëL: The motion without notice refers to the accident which took place in a place called Mtshezi in KwaZulu-Natal and in which 18 people died. The motion requests this House to express its sincere condolences to the families and relatives of the deceased. It further requests that drivers of motor vehicles take extreme care, especially at this period when we are approaching the festive season when there will be a lot of traffic and other things. The motion also requests that rank managers keep a register of the names of passengers who board taxis.

That is the interpretation. [Applause.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Thank you, hon member, for that interpretation. It must be registered that it is very bad that we do not have people interpreting.

Motion agreed to in accordance with section 65 of the Constitution.


                         (Draft Resolution)

Mr M I MAKOELA: Chair, on behalf of the ANC I hereby move without notice:

That the Council -

(1) notes -

   (a)  the resilience of the South African economy, which has seen  the
       country  weather  the  impact  of  the  recent  global  economic
       downturn and withstand the  impact  of  a  substantial  currency

   (b)  that South Africa's national budget  deficit  was  revised  from
       2,2% of GDP to 1,6% in the current financial year as a result of
       strong tax revenue growth and steps taken to improve expenditure
       monitoring and control;

   (c)   that  provincial  governments'  budgets   also   overperformed,
       contributing to  a  narrowing  in  the  consolidated  government

(2) welcomes the improved rating of the South African economy by international agencies from stable to positive;

(3) believes the improved rating is in recognition of an improved domestic macroeconomic policy environment and a financial system that is sound and well regulated; and

(4) congratulates the Minister of Finance and the National Treasury of South Africa for fulfilling its responsibility and mandate with distinction.

Motion agreed to in accordance with section 65 of the Constitution.


                         (Draft Resolution)

Mr A E VAN NIEKERK: Chairperson, I move without notice: That the House -

(1) notes that there will soon be a change of leadership in the People’s Republic of China;

(2) calls on the new leadership to withdraw its 400 ballistic missiles aimed at Taiwan as this action impacts negatively on regional security and economic stability; and

(3) further appeals to both sides of the Taiwan Strait to resume peaceful dialogue in the best interests of the region.

The DEPUTY CHAIRPERSON: Order! Are there any objections to the motion?

Mr B J TOLO: I object, Chair.

The DEPUTY CHAIRMAN OF COMMITTEES: Order! The motion without notice will therefore become a Notice of Motion.

                         (Draft Resolution)

Mrs E N LUBIDLA: Chair, I wish to move a motion without notice:

That the Council -

(1) notes the healthy state of provincial finances and that provinces have greatly improved their spending capacity as reflected in the Medium Term Budget Policy Statement 2002;

(2) further notes that the most notable improvements are on -

   (a)  capital expenditure, which grew massively by 44 percent  to  R11
       billion, from R7,6 billion in 2000/2001;

   (b)  total provincial spending which also increased significantly  by
       over 10,9 percent to R122,5 billion, compared to R110,5  billion
       in 2000/2001; and
   (c)  social service expenditure which increased to R100,3 billion  as
       opposed to R90,6 billion in 2000/2001;

(3) also notes that the turn-around in provincial finances since 1997/1998 has created the fiscal space that enables provinces to give effect to national priorities such as infrastructure delivery, expansion of social services delivery, such as school education, social development and housing and strengthening the health sector;

(4) commends the provincial authorities on these improvements in their finances which is proof of accelerated delivery; and

(5) expresses the hope that this buoyancy will be sustained and assures national government that it is indeed getting value for money.

Motion agreed to in accordance with section 65 of the Constitution.


Mr K D S DURR: Chairperson, I move without notice:

That the Council -

(1) notes -

   (a)  the growing  concern  raised  on  the  effects  of  the  flavour
       enhancer monosodium  glutamate  (MSG)  on  public  health,  when
       overused in food, particularly fast food;

   (b)  that recent research reported by SAPA shows that eating too much
       MSG can cause blindness; and

   (c)  that most supermarkets and fast food  outlets  in  South  Africa
       sell foods and condiments that contain the flavour enhancer;

(2) calls on the Minister of Health to - (a) establish whether food companies adhere to any policy on the use of MSG;

   (b)  make it known whether Government and the  Department  of  Health
       have a policy on the use of MSG in South Africa; and

   (c)  do further research and enquiry,  in  the  interests  of  public
       health, to establish whether foods sold in South Africa  contain
       too much of the MSG substance; and

(3) further notes that the addition of MSG is severely restricted in many developed countries around the world.

Motion agreed to in accordance with section 65 of the Constitution.


                         (Draft Resolution) Mr M A SULLIMAN: Chair, I move on behalf of the Chief Whip of the Council:

That, subject to the concurrence of the National Assembly, Joint Rule 122(1) on the composition of the Joint Committee on Ethics and Members’ Interests be replaced with the following:

 122.   (1)   The Joint Committee consists of 18 Assembly members and  9
 Council members.

Motion agreed to in accordance with section 65 of the Constitution.


                         (Draft Resolution)

Mr M A SULLIMAN: Chair, I move on behalf of the Chief Whip of the Council.

That the Council -

(1) notes - (a) that women and men observe the 16 Days of Activism for No Violence Against Women Campaign annually in many countries;

   (b)  that the 16 Days programme links  violence  against  women  with
       human rights and emphasises the need to make these rights real;

   (c)  that the international anniversaries observed during this 16-day
       period include -

          25 November: International Day for No Violence Against Women;
          1 December: International Aids Day;
          3  December:  International  Day  for   People   living   with
          10 December: International Human Rights Day;

(2) further notes that government’s theme for this year is “South Africa united in fighting violence against women and children”; (3) calls upon South Africans to support the activities arranged by government in terms of its 16 Days Programme; and

(4) urges members to draw public attention to these activities and to mobilise against violence.

Motion agreed to in accordance with section 65 of the Constitution.

Mr T RALANE: Chairperson, hon Minister and hon members, it is with a sense of occasion that, as co-chair of the joint committee, I address this House on the recently released statement by the National Treasury on its Medium- Term Budget Policy Framework.

The National Treasury has once again fulfilled its constitutional responsibility and its mandate with distinction. The sixth Medium-Term Budget Policy Statement, it should be noted, achieved the following objectives. Firstly, it promotes greater certainty and predictability in our budget process. Secondly, it presents a bold programme of action, not only for the national and provincial departments, but also for municipalities and Government agencies. Thirdly, it proposes a framework that impacts on real growth in expenditure on public services, with special emphasis given to social services catered for by provincial departments. Fourthly, it substantially increases expenditure on social infrastructure and development. This is for me the noblest objective. The Medium-Term Budget Policy Statement re-affirms our country’s commitment to eradicating poverty.

On a more general note, if we take the long view and compare South Africa today to the position it was in just 12 years ago, we can only be enthusiastic about our accomplishments and excited about our future.

The miracle of South Africa is that we have emerged from the shadow of an apparently irreconcilable conflict and an unavoidable racial civil war, and we have created and established a common nation out of the ashes of the past. More than that, South Africa has negotiated two democratic constitutions and has conducted four successful nationwide elections for national and local government.

Most importantly, South Africa has establised the ever-expanding debt inherited from the apartheid era. Significantly, there have been impressive gains in employment opportunities and abundant evidence of poor people enjoying unprecedented improvement in access to basic necessities.

On this subject, to be more specific, the school feeding scheme remains our passionate interest. Our Government is very clear about one thing: Our children must not go to school hungry. While the integrated nutrition programme has not been as successful as we would like it to be, it remains our cherished project. Originally it was a presidential project of a dream come true for our former President Mandela. I am happy to say that, to make that dream a reality, during the public hearings we were reliably informed by the National Treasury that Cabinet had approved the transfer of the school feeding programme from the national Department of Health to the national Department of Education in 2004. The Department of Education quite obviously has infrastructure that is up and running. The Health Ministry will play a crucial role in shaping the nutritional content of the school feeding scheme. This will ensure the successful execution of the feeding scheme. All that Cabinet is now awaiting is the transition plan from both departments.

Of paramount importance is the fact that capital spending on the integrated nutrition programme will increase by almost 51% during the next financial period, commencing in March 2003. This increased spending will compensate for the rising food prices and will substantially increase the composition of the food parcels.

Permit me the opportunity to refer briefly to the prophets of doom. If these prophets were living in the era of the great depression of the 1920s, they would have predicted that the earth would perish by the year 1930. In fact, we would never have been born. They are, as hon members can see, wrong. They learnt nothing from their predecessors. As sure as the sun shines in the sky we will make a cracking success of the school feeding scheme, because it is a project that is very close to our hearts, as close to our hearts as the children of the nation.

During the public hearings several guests made various forecasts about the prospect of our future growth. The National Treasury, in the statement currently being debated in this House, tells us that our economy is expected to grow by 2,6% this year and by an average of 3,5% over the next three years. Our guests from JP Morgan tell us that growth for the same period will be 2,5% and a representative from Sanlam tells us that growth in our country for the same period will be between 2,1% for the financial year ending March 2003 and 3,1% for the remaining Medium-Term Budget Policy Framework.

It is not difficult to guess what thoughts are uppermost in the minds of members of this House. The question is: Why do these economists have such varying forecasts for the same country and the same period?

I wish to say to the members of the Joint Budget Committee with all the emphasis that I can command that they must not despair, and must not be intimidated by the forecasts of our guests at the public hearings. They must have confidence in the success of our constructive economic policy.

Let this put out them at ease. I quote:

Economics is the only field in which two people can share a Nobel Prize for saying opposing things.

While the Medium-Term Budget Policy Statement aims to promote certainty and predictability, it is presented against a background of considerable uncertainty. This uncertainty is demonstrated by the steep decline in equity prices on the stock markets, a marked retreat in international finance from developing economies and high crude oil prices. Let me put hon members at ease. Economics and finance are similar to the field of geology. Geology is the study of the earth’s crust. Geologists learn more about the earth’s surface after a volcanic eruption or an earthquake. Economists will learn more about economies and finance after a financial collapse.

I trust NCOP members will enjoy their interaction with and participation in the work of the Joint Budget Committee, and I would like to thank my co- chair in the National Assembly, Mr Nhlanhla Musa Nene, for his co- operation. [Applause.]

Dr E A CONROY: Chairperson, hon Minister of Finance and colleagues, the Medium-Term Budget Policy Statement is presented by the Minister of Finance in preparation of the main budget proposals to be tabled early in the new year. It presents the backdrop of the main tax policy developments and spending patterns up to that stage, against which the next year’s budget proposals will be presented and, as such, prepares the various participating role-players for what can be expected in the main Budget. It even goes further by not only setting out the economic context for the next year’s Budget, but also outlines the fiscal policy considerations, tax policy and expenditure priorities forming the basis of the budget proposals for the next three years.

The aims of the Medium-Term Budget Policy Statement, namely the encouragement of informed debate in Parliament at an advanced stage and the early and informed engagement of civil society with the social, economic and developmental challenges which need to be addressed by the Budget, have changed the previous almost erratic nature of budgeting - of moving from one budget speech to the next - to a continuous and dynamic flow and interchange of information. This encourages and enables civil society to take possession of the budgetary process and make it their own through their active participation.

Wat die begrotingsproses betref, ek verstaan die Minister is ‘n musiekliefhebber. Hy sal dit dan seker in orde vind as ek die vorige en huidige begrotingsprosesse met musiek vergelyk. Die vorige kan vergelyk word met syncopation'' wat in Engels gedefinieer word as a spasmodic movement from bar to bar’’. In teenstelling kan die huidige stelsel met ‘n harmonieuse musiekkonsert, met die Minister van Finansies as dirigent, vergelyk word. (Translation of Afrikaans paragraph follows.)

[As far as the budget process is concerned, it is my understanding that the Minister is a music lover. He will thus find it in order that I compare the previous and current budget processes with music. The previous processes can be compared with syncopation'' which, in English, is defined as a spasmodic movement from bar to bar’’. In contrast the current system could be compared to a harmonious musical concert conducted by the Minister of Finance.]

Chairperson, a process without secrets is a process better understood and a process better accepted. The 2002 Medium-Term Budget Policy Statement is no exception. It is an informative document which gives macroeconomic forecasts on a national and global basis and provides the framework for the 2003 Budget. It builds on the growth-oriented fiscal policy approach indicated in the budgets of the previous two years and places priority on the fostering of job creation, investment and growth, the improvement of service delivery and the alleviation of poverty and inequality.

Voorsitter, die huidige neiging in private kapitaalbesteding is bemoedigend en alle aanduidings is dat die gelykmatige ekonomiese groei in die komende finansiële jaar voortgesit sal word. Die werkloosheidskoers van 29,4%, wat in syfers na 4,7 miljoen werkers omgeskakel kan word, gee egter rede tot kommer. Dit moet egter in samehang met die wisselkoers van die rand en ‘n skerp styging in verbruikers- en produksiepryse beskou word. Die makro- ekonomiese perspektief dui ook op ‘n prioriteitsverskuiwing vanaf dié met ‘n klem op inflasie, na een wat meer die klem op groei plaas. Die aangekondigde inflasieteiken blyk ook heel realisties te wees.

Een van die verblydende aspekte is dat die verhoogde staatsbesteding blykbaar nie met enige skerp stygings in belastings gepaard sal gaan nie. Die Minister het dit trouens gestel dat dit een van die langtermyn doelwitte van die Medium-Term Budget Policy Statement is om persoonlike belasting te verlig en om die begrotingstekort onder die vlak van 2,5% van die bruto binnelandse produk te hou. Die Minister verdien beslis ons almal se gelukwensing met hierdie gestelde doelwit.

Dit blyk ook dat die inkomstegroei, as gevolg van die deurlopende verbetering in die doeltreffendheid van die belastinggaarder se stelsels, vir vanjaar op 17,5% staan. Gelukwensing ook aan die Kommissaris van die Suid-Afrikaanse Inkomstediens vir hierdie pragvertoning. (Translation of Afrikaans paragraphs follows.)

[Chairperson, the current trend in private capital expenditure is encouraging and all indications are that the gradual economic growth will continues into the next financial year. The unemployment rate of 29,4%, which, in figures, amounts to 4,7 million workers, gives cause for concern, however this should be viewed in conjunction with the exchange rate of the rand and a sharp rise in consumer and production prices. The macro-economic perspective also indicates a priority shift away from the emphasis on inflation towards a greater emphasis on growth. The announced target for inflation also seems to be quite realistic.

One of the more heartening aspects is that the increased state expenditure will apparently not be accompanied by any sharp rises in taxes. The Minister in fact said that this would be one of the long-term targets of the Medium-Term Budget Policy Statement to lighten personal tax and to keep the budgetary shortfall below the level of 2,5% of the Gross Domestic Product. The Minister most certainly deserves congratulations from all of us on this objective that has been set.

It also seems that the growth in revenue, because of the continuous improvement in the effectiveness of the Receiver of Revenue’s systems, this year stands at 17,5%. Congratulations to the Commissioner of the South African Revenue Service on this excellent performance.]

Chairperson, in conclusion it is my pleasure to mention that the New NP supports the Medium-Term Budget Policy Statement for 2002. [Applause.]

Ms B THOMSON: Chairperson, I just want to congratulate my co-chair, Mr Ralane. I notice that he took off on the right foot. Congratulations, comrade!

The Medium-Term Budget Policy Statement currently being discussed in this House displays Government’s social, economic and fiscal framework for the next three years. In addition, the Medium-Term Budget Policy Statement provides elected public representatives and citizens of this country with an opportunity to discuss how we are to proceed with the incremental realisation of social and economic rights as enshrined in our national Constitution.

Effective, progressive policy implementation depends on the combined efforts of all spheres of government, nongovernmental organisations, religious institutions and, most importantly, individual citizens. This also requires synchronisation between policies and budgets. The objective of the sixth Medium-Term Budget Policy Statement is to give meaning to this synchronisation and also to provide co-ordination, coupled with increased allocation to the provincial and local spheres of government, which in essence are ultimately saddled with the responsibility of completing the task of delivering social services.

We were informed that the Budget in February next year would build upon the policy priorities laid down in the 2001 and 2002 budgets. Therefore the Medium-Term Budget Policy Statement before us consolidates and deepens existing budget priorities. Other key elements of the development strategy involve strengthening employment creation incentives, deepening the skills base, reinforcing crime prevention and enhancing the private sector investment environment. In pursuit of these objectives, the 2002 Medium-Term Expenditure Framework prioritises the following areas: extending social assistance, health and education programmes administered by provinces; enhancing investment in municipal infrastructure and basic services in support of the rural development and urban renewal strategies; expanding capacity in the safety and security sector to prevent and combat crime, including a particular focus on the functioning of the court systems; higher education restructuring, including support for institutional mergers and investment in infrastructure; accelerating the land reform and restitution programme; re-engineering services to citizens provided by the Department of Home affairs; and, finally, an increasing international role through increased regional participation through support for the African Union and Nepad.

Siyakuqaphela nokuthi ukwandiswa kwesabelo semali akusho ukuthi imiphumela yokusetshenziswa kwayo isuke izoba mihle. Okubalulekile ukuthi leyo mali esuke yabiwe isebenze kanjani. Ngabe sikwazile yini ukwenza isiqiniseko sokuthi leyo mali eyabiwe ifinyelele kulabo bantu obekufanele ifinyelele kubo. (Translation of Zulu paragraphs follows.)

[We all note that increasing the budget does not mean that the results of its use are going to be good. What is important is how a budget is going to be utilised. Did we manage to ensure that that money reaches the targeted people?]

I want to give just one example of how spending priorities are being translated into better outcomes. Within the integrated justice cluster, a series of mutually reinforcing measures have been introduced, specially aimed at improving court efficiency and reducing court case backlogs. Additional Saturday courts have been introduced as a temporary measure to reduce the number of cases on the court roll. A new policy has been introduced which specifies more clearly the criteria applicable for judging if a case is fit for trial. This has lead to an increase in the number of cases being withdrawn. On a pilot basis, 26 semiautomated court centres have been established with a focus on improved management and co-ordination of court processes.

The Durban court process project has gone a step further. Full automation has already eliminated the incidence of lost and late dockets. Similarly, the incidence of lost charge sheets and the wrongful identification of accused persons have also been eliminated. As a result, the number of cases finalised by a verdict have increased by almost 34% over the past three years, while the trend in the case backlog is beginning to fall.

With these few remarks I congratulate the National Treasury on the manner in which it steers a difficult ship in trying times. [Applause.]

Ms C BOTHA: Chairperson, hon Minister, financial markets are notoriously fickle and difficult to analyse, and there is seldom anything certain about them. Until very recently, we had at least the certainty about inflation targets. That gave a measure of predictability with regard to our monetary policy. We had a reasonable idea about the future trends of inflation and thus also of interest rates. This was the position, more or less, until we came to the Medium-Term Budget Policy Statement.

The Minister of Finance, with the apparent agreement of the president of the Reserve Bank, decided to suspend the 3% to 5% target until further notice, while the 2004 target remains at 3% to 6%. The reason for the change presumably includes the discomfort caused when the results of inflation targeting translates into too high interest rates. As a matter of fact, in real terms interest rates are currently lower than at the end of last year.

I say this with a lot of sympathy for the conundrum of having to meet what is often conflicting expectations, particularly when short-term needs put pressure on long-term stability and requirements for growth. Fedusa makes a valid point when it says that policy authorities and politicians have the additional responsibility of managing market psychology and other types of risk perceptions to ensure foreign direct investment and a more stable rand.

The Medium-Term Expenditure Framework objectives strive to provide real growth in expenditure on social services, health, education and municipal infrastructure. This emphasis on poverty relief and social security spending is very badly needed. A lot of departmental effort and resources thus go to projects which aim at poverty alleviation. But we must constantly assess the efficacy of this spending, and also the priority given to this effort in relation to the core function of departments.

I am pleased about the R1 billion which will over the next three years go to labour-based infrastructure development. I think this direction of poverty alleviation and job creation needs further expansion.

Whilst the temporary measures are essential, given the extreme levels of deprivation and unemployment which characterise our society, our real focus must be on poverty eradication. The DA believes that the private sector is better equipped to deliver on growth and jobs than the various departments or municipal councils. This is not achievable without higher growth rates than the present 2,6% in 2002 and 3,5% in 2003, even if these are already, and gratifyingly, upwardly revised projections.

The increased allocation to the primary school nutrition programme is particularly welcomed. However, as the hon Ralane indicated, the programme is in need of in-depth restructuring. The delivery for the past year has been shocking in some instances and nonexistent in others. Thousands of needy children have not benefited from the present allocation of funds. I went to schools in Parys where one school out of 11 received food this past year. On our farm, due to the bureaucratic red tape involved, we were unable to access the available food. This is true for a vast area in the northern Free State. The programme must be monitored very closely to see that the increased funding reaches its target group.

I wish to conclude by saying that in the Medium-Term Budget Policy Statement the Minister continues to do what is a very difficult job very well. [Applause.]

Ms Q D MAHLANGU: Chairperson, I believe that one does not congratulate a fish for swimming in the water because it knows how to swim. Therefore I want to echo the sentiments that my colleagues have expressed around what the Treasury has done and its achievement in this regard.

During the hearings it was communicated to the committee that the school feeding programme was going to be moved from the Department of Health to the Department of Education. There are clear transitional mechanisms for how that is going to happen over a period of time. I think what my colleagues have talked about has been a concern in the past. Hopefully, when this function is going to be moved to the Department of Education, which has the infrastructure, we will see a lot of improvement in the future.

I just want to touch on a few issues which some of my colleagues have raised, as a question of emphasis, in particular around the policy priorities which are going to inform the 2003-04 Medium-Term Expenditure Framework.

Poverty reduction continues to remain a Government priority because of the many vulnerable groups in our communities. What we have seen is that there is going to be an increase in allocation to make sure that these programmes benefit people directly. Government is undertaking a lot of investigation at the moment to see what are the best mechanisms for making interventions with regard to communities that are vulnerable and suffering as a result of high unemployment and poverty. The committee welcomes that, and a number of stakeholders who came to the committee are also in support of the enhanced investment in municipal infrastructure, rural development and urban renewal.

The committee welcomes the fact that we are not seeing any new policy priorities being introduced, but rather that we are seeing consolidation. I think this point talks to the fact that we need to make sure that there is co-ordination and realisation. Programmes from all three spheres of government need to talk to each other so that they complement each other rather than compete against each other. The committee was pleased about that, and different committees of Parliament will have to ensure that in their daily work and oversight activities over their departments they look at some of these things. We need to make sure that we reach the people that we are supposed to reach.

With regard to accelerated land reform and restitution, what is important to be noted is the need to ensure that the land that has been redistributed to people is turned into economic opportunities in the areas where the people live, in the form of creating jobs and all those kinds of things. Government is looking at mechanisms to support these people. I think it is an important development that as MPs in different constituencies we make sure that we support this kind of programme.

I am not going to repeat what my colleague said. I think what is of importance is that this is an improvement on what we had from departments last year when the Joint Budget Committee held public hearings, and departments belonging to the same cluster came to the committee and talked about different approaches as if they did not belong to one cluster. What we have seen in these hearings is that departments are talking to each other, but they are also talking to policies which affect one another. However, there is still room for improvement in that regard.

Again, as I said earlier on, the different committees of Parliament will have to play a critical role in making sure that there is co-ordination in a particular cluster, so that departments do not talk as if they are outside of that cluster. This will enhance service and ensure that we deliver services to the people that need them.

My view is that the Joint Budget Committee established by Parliament has had very little time to engage with the issues. We were set up on a Tuesday, and the committee had to sit that afternoon and engage with the issues. As the committee has been set up as a full-time committee now, we have to sit down and plan properly regarding what exactly is going to be the role of this committee and how we will engage with other parliamentary committees.

That is going to necessitate in some instances a change in the parliamentary programme which my colleagues will have to be aware of. We would have to have a buy-in from different members of Parliament. This will ensure that the oversight work of members of Parliament is further enriched and enhanced. I would like to thank the hon Ralane and I hope that the Joint Budget Committee will in future be able to work in a more integrated way. [Applause.]

The MINISTER OF FINANCE: Chairperson, let me express appreciation to all members of the new Budget Committee, which is under the leadership of the hon Ralane, for the work that they have done. I think we all appreciate the fact that the Budget Committee was set a very unenviable task because it was convened right on the eve of the tabling of the Medium-Term Budget Policy Statement. I think that it has been a wonderful opportunity for members to acquaint themselves with issues in the process of budget-making and to engage with various clusters, even though that was not evenly spread across all Government departments. I think that that is a very important beginning and, hopefully, this work will continue.

Part of what the terms of reference require from the Budget Committee is to monitor, on a monthly basis, the expenditure trends in departments and to talk to portfolio committees so that there is a higher level of accountability. I think that as we do that the work of the Budget Committee will evolve and mature, and the oversight of Parliament will be strengthened. So, I would like to express appreciation to Mr Ralane who, together with Mr Nene, chaired that committee. I wish them well in their endeavours and trust that we will be able to develop and sharpen the inter- relationship between ourselves.

There is very little that members have said that requires further clarification or dispute. Perhaps I should just touch on two points raised in passing which may be worth talking about. The first point is the issue of inflation targeting which was touched on by the hon Botha. Let us just go back, revisit and confirm for all to know that inflation targeting is the preferred option because it gives effect to the constitutional imperative which defines the independence of the Reserve Bank by focusing on issues of price stability. While the interim Constitution spoke of the internal and external value of the rand, now we talk of price stability. So, that is one way in which we can deal with it.

The methodology of inflation targeting is still new. I do not think that there is a sense of failure. There have been a number of external factors that have come to bear on the economy in the past, which included the depreciation of the exchange rate, food prices and fuel prices. Fuel prices have been affected not only by depreciation but also by the increase in crude oil prices. Those factors have come to bear on our economy. So, I want to emphasise that there is not a sense of failure. If one looks at the current literature on inflation targeting, one will see that a number of countries that are targeters have actually missed their inflation targets. Those countries include Australia, New Zealand, the Czech Republic, Brazil and Mexico, amongst others. What we are very clear about is that we must continue to battle to ensure that there is price stability, because that is in the best interests of the economy. Whether one is a worker or an investor, the ability to take decisions about the future becomes important. Abstracting the risk of internal depreciation from that becomes important.

In respect of economic growth, I do not think that we are going to reach those magical figures merely because we announced them. It has to be worked for. But I think it is important that we should not feel a sense of despondency. If one looks at the content of our economy now, one will understand that there are a number of changes. Firstly, the tertiary services sectors have grown phenomenally. Secondly, our trade now accounts for about 65% of GDP imports and exports. That speaks volumes as well. If one looks at the content of our exports particularly, one can see that there is a higher value added on that side. That is something that we need to be thankful for as well.

As one of the resolutions in the House indicated today, the study on expenditure trends released by Stats SA yesterday reflects the fact that there is a change in consumer behaviour in this economy. That is going to be exceedingly important going forward. Of course, there remains a large chunk of South Africans who are still trapped in a vicious cycle of poverty. But we sit in this House because we believe that we can take such collective decisions in the interests of dealing with that poverty. I would like to believe that those are the issues that keep us here rather than anywhere else and we must retain the commitment to do so.

The accountability of Government for budgeting going forward would be reflected in that interaction, as I said, between the Budget Committee, its interaction with the portfolio committee and its interaction with us in the executive. We have a framework now, going forward. My invitation to all members of the House is to look forward with enthusiasm to the Budget that will be tabled in the National Assembly on 26 February and to use that as a launching pad for a new kind of interaction between the executive and legislature in respect of oversight.

I would like to thank very much all those who contributed to this debate. [Applause.]

Debate concluded.


 (Consideration of Bill and of Report of Select Committee on Finance

Ms Q D MAHLANGU: Mr Chairperson, hon Minister, hon members, I think it is important, once again, to step back from where we come from so that we can be in a position to better appreciate the miles that we have traversed thus far since 1994, when the ANC took over power.

We can now say with pride that we are proud of our past, and we are confident of our future. Why do I say so? One of the reasons is because we have passed legislation such as the Public Finance Management Act, which clearly was and will remain a milestone achievement of our Government.

One of the key objectives of the PFMA is to allow managers to manage and hold them accountable. Again, the PFMA has clearly demarcated responsibilities between the executive and legislature. The point I am going to talk about is the realities of what those demarcation of responsibilities are.

Section 30 of the PFMA requires that before the national adjustments are approved they must be tabled in Parliament, and they must be tabled within a particular context. Section 32 of the PFMA clearly stipulates the circumstances under which adjustments may be made. I will talk about some of the principles.

In addition to the main Appropriations which were made earlier in the year when the Minister tabled the Budget in February, one of the criteria which should inform the adjustment or where the money comes from are the unforeseen and unavoidable circumstances which, at the time of presenting the Budget, one did not foresee and, therefore because they were unavoidable, one had to incur costs.

One of these things was the hosting of the World Summit on Sustainable Development, which all members agreed was a success, as we passed motions to that effect in this Council. What has been achieved in terms of content from that summit will remain one of the key features of South African history.

Also, Parliament hosted the parliamentarians from the continent in preparation for the launch of the African Union and also hosted the parliamentarians from all over the world during the course of the summit to discuss parliamentary issues. Those things were unavoidable and unforeseeable. Also, the inflation rate which is higher than anticipated also necessitated that there should be some adjustments in the usage of funds which were earlier set aside to be used for those circumstances.

The second criteria is to use the roll-over of unspent funds from the preceding year, which is the previous financial year. One of the things I want to raise regarding this is to commend the department for the gradual decrease of roll-overs of unspent funds. I think if members have read their documents they will see that the rate of roll-overs has decreased very dramatically, and we should commend the department for this. However, more can still be done in the sense that we must not allow programmes such as the integrated nutrition programme, which my colleague has mentioned, and the HIV/Aids programmes continue to be rolled over whilst we have thousands of children who go to school hungry, and the only meal which they can rely on is probably the meal that they are supposed to get at school.

I want to reflect by quoting from ANC Today of 8 November 2002. The quote is as follows:

Many South Africans continue to live without adequate water and sanitation. The majority of women in South Africa are unemployed. Almost half of the women who are employed earn less than R500 a month, and as many as 60% of female-headed households are classified poor. The growth of about 23% of children under the age of six is stunted, indicating a lengthy period of undernutrition. The most seriously affected children are those in rural areas. The infant mortality rate is between eight and ten times higher in Africans than in whites.

The quotation above is a clear reflection of the challenges that we are faced with as a nation. Therefore, I would like to say that every rand spent on a poor community, in whatever form, will make a big difference to those people who need it most.

In our quest to improve the lives of the people, let us ensure that we do our oversight work, and even if the rate of unspent funds continues to decrease, let us ensure that as far as key programmes that are supposed to be benefiting the poor are concerned, they continue to benefit from them.

On that note, I would like to call upon this Council to support the adjustments estimate, as requested by the department for Parliament to approve, but also in compliance with legislation such as the PFMA.

I would also like to call upon members of this Council to scrutinise the individual Budget Votes of their respective departments and programmes, and the outcomes of what the department wants to achieve out of those moneys and programmes that Parliament appropriates from time to time. We will not push back the frontiers of poverty if we do not do our work as parliamentarians.

I would like to thank my committee members for their dedication and hard work throughout the year. However, there is always room for improvement. I would also like to thank the Treasury for its support, in particular the Ministry and the Parliamentary Services Office. [Applause.]

The DEPUTY CHAIRPERSON OF COMMITTEES (Mr M L Mushwana): I have been informed that questions will not be put to the Minister in respect of the Votes.

Vote No 1 - The Presidency - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 2 - Parliament - put.

Vote agreed to in accordance with section 75 of the Constitution. Vote No 3 - Foreign Affairs - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 4 - Home Affairs - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 5 - Provincial and Local Government - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 6 - Public Works - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 7 - Government Communication and Information Systems - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 8 - National Treasury - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 9 - Public Enterprises - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 10 - Public Service and Administration - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 11 - Public Service Commission - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 12 - South African Management Development Institute - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 13 - Statistics South Africa - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 14 - Arts, Culture, Science and Technology - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 15 - Education - put.

Declaration of Vote:

Mr D M KGWARE: Chairperson, the ANC is reflecting on 2002 as another historic and groundbreaking chapter in the transformation of the education system of our country. Despite the enormous challenges we still face, and although these challenges are still severely tainted by the legacy of apartheid, they will not slow down our momentum. We are pleased because we have taken up the challenges and converted them into victories within set time frames, and we have not once shifted from our constitutional responsibility.

We are continuing to expand access to education, improve the quality of teaching and learning and ensuring that we free the potential of learners at all our schools and of students in our higher institutions of learning.

Whilst we continue to face challenges within the area of basic school performance, we have, in the past year, begun to see benefits arising from our efforts to turn our education system around. The adjustments to the department’s budget do not reflect any changes in the commitment and key objectives of Government. In fact, it demonstrates a concerted will to sustain poverty relief programmes, infrastructure upgrading and the attainment of greater equity at all levels.

The ANC supports the adjustment estimate.

Vote agreed to in accordance with section 75 of the Constitution (African Christian Democratic Party dissenting).

Vote No 16 - Health - put.

Declaration of Vote:

Ms L JACOBUS: Mr Chairperson, the ANC supports Vote No 16 on Health. The adjusted estimates touch on some vital financial improvement areas such as the additional allocation of R50 million to the HIV/Aids budget.

These additional funds will be directed to the provision of post-exposure prophylaxis and prevention of mother-to-child transmission programmes. Over and above the aforementioned HIV/Aids allocation, the health budget includes an additional R2,9 million that was transferred from strategic health programmes for the undertaking of resistance studies on the use of nevirapine therapy, a further demonstration of this Government’s seriousness about addressing the effects of HIV/Aids from all angles.

This Budget Vote also recognises that we need a combined effort between South Africa and our SADC neighbours to combat the effects of malaria, hence the need for the additional amount of R5 million.

However, malaria is not the only disease that gave cause for concern. As we are all aware, KwaZulu-Natal has experienced increased occurrences of cholera which bit huge chunks out of their 2001-02 budget. This Vote recognises the difficulties faced by this province, and has therefore approved R147 million to support the fight against cholera in KwaZulu- Natal.

The ANC further believes that this Budget Vote is in keeping with the Medium-Term Expenditure Framework which encapsulates a political commitment to ensure that social services become one of the key priority spending areas of Government.

In keeping with this, Government has undertaken to spend R167,1 billion for 2003-04 on social services, and is focusing on, amongst other things, primary health care and hospital services.

The ANC supports this Budget Vote.

Vote agreed to in accordance with section 75 of the Constitution. (Democratic Party and African Christian Democratic Party dissenting.)

Vote No 17 - Housing - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 18 - Social Development - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 19 - Sport and Recreation South Africa - put.

Declarations of Vote:

Mr D M KGWARE: Chairperson, the aim and objective of the ANC-led Government is to improve the quality of life of all South Africans by promoting sport and recreation in our country, and through the participation of South African sportspeople and teams across the globe, especially those previously denied the opportunity. For example, the R12,5 million allocated for the 2003 World Cup Legacy programme entails the roll-out and upgrading of cricket pitches and infrastructure in the previously disadvantaged areas. Moreover, the department has ensured that the training objectives of the SA Sports Commission are broadened with increases in the number of people trained from 2 000 to 2 350.

We as the ANC support the department in its continued mission to prioritise the building of a nation in action for change through transformation and building a better life for all.

The ANC supports the Vote.

Mr N M RAJU: Chairperson, the investigation of the United Cricket Board by a ministerial committee was an utter waste of time and all of some R700

  1. [Interjections.] While it is important to focus on the composition of national teams to reflect the demographics of the country, the Ministry seems to ignore the arena where real development is concerned, namely on the ground where our children - our future national players - should enjoy unfettered access to facilities, proper coaching and equipment. The DP does not support this Vote.

Vote agreed to in accordance with section 75 of the Constitution (Democratic Party and African Christian Democratic Party dissenting).

Vote No 20 - Correctional Services - put.

Declarations of vote: Chief M L MOKOENA: Chairperson, I note that we are the only party which is going to make a declaration on this Vote. I note the objection by our colleagues in the New NP.

I want to state categorically that when one looks at sentenced prisoners who are released but are back in our prisons after a few months, one can see that our rehabilitation programme is not effective. What we should be doing as Parliament is to assist the department so that its programme can be effective, rather than merely objecting.

Again, when one looks at what is happening with the Jali Commission, one can see that there is a mammoth task for this Parliament to assist the department rather than merely to object. I consulted my colleagues very late this morning because I thought we were singing the same song, but they are just going to raise a concern, not an objection.

I want to urge all of us to support the department, and assist it to carry out the mandate of the people.

The ANC supports this Vote. [Applause.]

Mr P A MATTHEE: Chairperson, precisely for the reasons that the hon Mokoena mentioned, we ask that our objection to this Vote be noted. [Interjections.]

Vote agreed to in accordance with section 75 of the Constitution (New National Party dissenting).

Vote No 21 - Defence - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 22 - Independent Complaints Directorate - put.

Vote agreed to in accordance with section 75 of the Constitution. Vote No 23 - Justice and Constitutional Development - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 24 - Safety and Security - put.

Declarations of vote:

Mr J L THERON: Chairperson, we object and I would like to make a statement. I want to make this declaration regarding the police.

Die jaarverslag van die SA Polisiediens vir 2001-02 toon duidelik dat misdaad in reële terme tans steeds toeneem, terwyl die beskikbare funksionele polisiebeamptes verminder het tot ‘n laagtepunt van ongeveer 98 000 in Mei 2002. [Tussenwerpsels.] Hiermee saam is daar steeds onvoldoende hulpbronne, waarvan voertuie die grootste probleem is.

Ons kan nie misdaad voorkom of oplos sonder sigbare polisiebeamptes en voldoende, behoorlik toegeruste speurders om toe te sien dat misdadigers uiteindelik in die hof gestraf word vir hulle misdade nie. Totdat hierdie Regering nie ons polisiediens behoorlik bemagtig nie, kan die DP nie hierdie begrotingspos en addisionele toewysings steun nie. Die geld is eenvoudig te min vir doeltreffende polisiëring. Daarom stem die DP daarteen. (Translation of Afrikaans paragraphs follows.)

[The annual report of the South African Police Service for 2001-02 clearly shows that in real terms crime is presently on the increase, while the available functional police officers have decreased to a low of approximately 90 000 in May 2002. [Interjections.]. Together with this there are insufficient resources, of which vehicles are the biggest problem.

We cannot prevent or solve crime without visible police officers and adequately, properly equipped detectives to see to it that criminals are eventually punished in court for their crimes. Unless the Government fully empowers our police service, the DP cannot support this Budget Vote and its additional allocations. The money is simply too little for effective policing. The DP therefore votes against it.]

Mr B J MKHALIPHI: Chairperson, I rise to give a declaration on behalf of the ANC. At this stage the National Crime Prevention Strategy is starting to bear fruit. We see that in the intensification of the empowerment of community policing forums, as well as the existence and active participation of the business sector in the South African Business Trust. We are also noticing that the community policing forums are now working in tandem with ward committees, and that the Safety and Security cluster is well co-ordinated.

All sectors of society are agreed that crime fighting is a joint business, and not only for the police. It is not for us to blame the police for a lack of resources. The lack of visible policing and vehicles that was harped on in this House just now, is just a reflection of the correct deployment of those resources in other areas of society where they were not deployed before.

The hon member is expecting all the police vans and police officers, as in the past, to be roaming the northern suburbs and neglecting the black areas. In the past they would only go there to kick and throttle our people. [Interjections.]

The police services and other security sectors are now starting to reflect the true demographics of this country, especially in the higher echelons of these services. Only true democrats will support this Vote. [Applause.]

Vote agreed to in accordance with section 75 of the Constitution (Democratic Party dissenting).

Vote No 25 - Agriculture - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 26 - Communications - put. Vote agreed to in accordance with section 75 of the Constitution.

Vote No 27 - Environmental Affairs and Tourism - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 28 - Labour - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 29 - Land Affairs - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 30 - Minerals and Energy - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 31 - Trade and Industry - put.

Declaration of vote:

Mr M V MOOSA: Chairperson, I want clarity on some confusion. The DP put down that they objected and there was a whisper here that they were not objecting. In case they are not sure whether they should support this Budget Vote, I think we should clear up …

Mr J L THERON: Chairperson, on a point of order: Can we decide on what we object to as a party ourselves and not to be told what to object to?

The DEPUTY CHAIRPERSON OF COMMITTEES: Order! That is not a point of order.

Mr M V MOOSA: That is the problem with Mr Theron: He is politically illiterate. It is written here in black and white. The thing is that the DP said that they were objecting, and just to make sure that they understand why we should support this Vote, I am going to say a few things. The DTI has been busy with restructuring for the past two years. They have almost completed the restructuring process. If anybody looks at how these adjustments are taking place, they will see that they are taking place within the context of a number of laws that this Parliament has passed recently in order to give effect to this restructuring process.

Much of the money in this adjustment is going to Export Credit Insurance Corporation, which the DP and in fact everybody else supported unanimously. A large sum of this money is going to the Companies and Intellectual Property Registration Office to modernise the office so that our companies and close corporations can register more efficiently and be tracked in the economy. All the political parties unanimously supported these amendments recently.

A large sum of money is going to technology and incubator programmes and industrial innovation programmes of the IDC. I believe this House unanimously supported that. If anybody is objecting to this particular Budget Vote, there seems to be no point in doing so.

In conclusion, the DTI institutions that are receiving these funds, both the Export Credit Insurance Corporation and the Companies and Intellectual Property Registration Office or Cipro, will become self-funding, because that was part of the amendments we passed recently, for example, to ensure that Cipro starts charging fees. They will then probably not require budgets from next year or the year thereafter. They will be raising their own fees and become self-sufficient. The same applies to the Export Credit Insurance Corporation.

The ANC calls on this House to support this Vote.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 32 - Transport - put.

Declaration of vote:

Ms B THOMSON: Chairperson, I make a declaration on behalf of the ANC, especially around public transport and infrastructure.

Bus subsidies were paid to operators who had lifelong permits to operate subsidised buses on certain routes until Cabinet approved a system of regulated competition in 1997. The new contracts took the form of interim contracts whereby an existing operator was contracted for a certain period on condition that the lifelong permit would be renounced after the initial contract period and thereafter contracts would be tendered for.

To achieve this transition, escalation clauses were built into both the interim and tendered contracts to cater for inflationary adjustments. Bus subsidies are based on ticket sales. The escalation clause, coupled with a constant increase in patronage of subsidised bus services, have resulted in the actual need for bus subsidies to surpass the baseline on budget allocation. [Interjections.]

A joint task team of the Department of Transport and the Treasury is in the process of investigating alternative solutions, in particular to address the targeting of subsidies, with a view to reviewing the bus subsidies to a suitable and affordable level.

Rail commuter subsidies are paid to the SA Rail Commuter Corporation, while Metrorail, as subsidiary of Transnet, is the operator of the commuter service. The subsidy allocated to Metrorail is based on the operational shortfall between total expenditure and revenue earned. Metrorail also receives capital allocation for essential maintenance work of a capital nature. The SARCC has experienced difficulties to fund its capital requirements since 1998-99 and continues to experience major shortfalls in its available budget for capital. The maintenance expenditure for essential maintenance work of a capital nature continues to rise at a rate greater than inflation due to the ever deteriorating asset base, as a consequence of inadequate provision for capital to maintain the asset base. Lastly, insurance costs continue to rise due to vandalism and increases in amounts claimed for bodily injury by passengers.

Vote agreed to in accordance with section 75 of the Constitution (Democratic Party dissenting).

Vote No 33 - Water Affairs and Forestry - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 34 - Arts and Culture - put.

Vote agreed to in accordance with section 75 of the Constitution.

Vote No 35 - Science and Technology - put.

Vote agreed to in accordance with section 75 of the Constitution.

Schedule agreed to in accordance with section 75 of the Constitution.

Bill agreed to in accordance with section 75 of the Constitution.

                     REVENUE LAWS AMENDMENT BILL

The DEPUTY MINISTER OF FINANCE: Chairperson and hon members, the Bill before this House today represents the closing chapter of two years of fundamental structural tax reforms, which included the introduction of capital gains tax and the residence-based income tax system, with a view to broadening the tax base. This Bill ensures that these reforms will work more smoothly and consistently with one another. It also seeks to remove some anti-avoidance rules that impose unnecessary hurdles to valid business transactions.

This Revenue Laws Amendment Bill ensures that the various tax aspects of all the reforms fully tie together. This adjustment process is a typical natural by-product of any major legal change. Indeed, in many developed countries this process can take years to unravel, a process that we expect to avoid with a clear intention of lowering tax rates and rendering this economy a more attractive investment destination. The Revenue Laws Amendment Bill accordingly makes technical adjustments to all the base- broadening efforts.

The biggest changes came in two areas. First, sweeping technical changes were made for the tax rules regarding company reorganisations. Second, sweeping technical changes were made for the taxation of foreign currency. Both levels of changes were instigated by extensive internal review within National Treasury and Sars, as well as by taxpayer submissions.

Consistent with international practice, both areas are quite complex, representing systems on top of systems, and systems within systems. Much of this complexity stems from their objective and transparent nature. Here it needs to be noted that true democracy demands that all rules be fully stated within the text of the law. Full disclosure of the law avoids time- consuming requests for Sars rulings, and the exercise of discretionary powers, all of which could act as barriers against speedy corporate action and could considerably add to otherwise avoidable transaction costs.

Corporate reorganisations are a critical element for any economy. Rules favouring mergers, acquisitions and other corporate takeovers promote economic efficiency. Takeovers allow more efficient business management to acquire businesses held by the less efficient, thereby promoting the productivity of the economy as a whole. Unbundlings are equally important because they allow companies to flatten highly complex multi-tier share structures or to spin off less efficient structures that best operate as stand-alone entities with more focused activities.

Although special relief for corporate reorganisations dates back many years, these regimes had become too narrow for a modern economy such as ours. The National Treasury accordingly found it necessary wholly to revise this regime, especially since reorganisations could otherwise become an all- encompassing and burdensome tax event with the introduction of capital gains tax. This regime was initially introduced in October last year, covering company formations, share-for-share acquisitions, intra-group transfers, unbundlings and liquidations.

However, the relief described was initially somewhat limited due to possible anti-avoidance concerns. The current Bill now seeks to expand this relief. The new rules allow for a wider array of corporate combinations, additionally caters for amalgamations and also contains special measures that facilitate the tax free, inbound movement of foreign assets into South Africa. Similarly, this Bill provides for the tax free acquisition of foreign companies by South African companies.

The most notable aspect of the Bill involves banks, insurance companies and similar financial institutions. Under law prior to this Bill, these institutions could not partake in taxfree company reorganisations, because banks remained the subject of the banking review as a result of their low effective tax rate.

The Revenue Laws Amendment Bill lifts these restrictions, thereby ensuring that banks, insurance companies and similar institutions can fully participate in tax free reorganisations. This relaxation could be afforded as the banking review revealed that the low effective rate for banks stemmed largely from other concerns, such as preferred share schemes, leasing schemes, and derivative transactions.

While these topics remain a subject of concern, the National Treasury believes that company reorganisation relief is necessary to facilitate the restructuring of financial institutions so as to ensure a more internationally competitive and vibrant financial services sector.

The second major topic for reform contained in the Bill involves the taxation of foreign currency. Foreign currency issues arise as a natural consequence of the newly introduced worldwide tax system and South Africa’s increased participation in the global economy. Foreign-earned income and losses must be translated into rands for purposes of calculating the tax thereon.

Foreign currency issues also arise in terms of foreign investments. Many taxpayers generate substantial gains and losses by speculating for and against the currency. This form of activity generates economic wealth just like all other forms of investment wealth.

The Revenue Laws Amendment Bill clarifies many ambiguities and inconsistencies in the foreign currency arena. These problems have emerged because the rules relating to foreign currency have been added piecemeal over the years dating as far back as 1993. The result was an incoherent array of rules that left many perplexed, with others seeking avenues for tax avoidance.

The Bill seeks to translate all foreign income and loss into rands under a unified averaging regime. Under this average regime taxpayers can either convert all foreign income and loss into rands, utilising a simple average or a weighted average, whichever they desire, as long as they use the same system for all income and loss throughout the same taxable year. Also, taxpayers can elect this averaging on a daily, weekly or monthly basis. This averaging system clearly means that Government is an equal partner to changes in the value of the rand.

I would like to assure the House that the taxation of currency speculation, already a subject of change over the last two years, was streamlined consistent with our overall policy. Taxpayers with liquid foreign portfolio investmests remain fully subject to tax on their currency gains and losses with respect to those investments. Other assets are ignored.

This balanced approach ensures that businesses remain competitive while not being given an artificial incentive to enter into foreign currency speculation. Limited taxation of these gains also ensures easier enforcement and compliance. For instance, the new regime wholly ignores the currency gains stemming from private travel and comparable personal expenditure. Such gains are time-consuming to process, tedious for compliance and generate little real Government revenue.

The Revenue Laws Amendment Bill further seeks to resolve some long-standing administrative problems that have emerged over the past two years. These issues involve business travel and the taxation of foreign diplomats.

Under prior law, taxpayers could disregard advanced lump sum domestic and foreign travel allowances for purposes of their tax calculations, if those sums fell within specified monetary thresholds. These rules allowed taxpayers to disregard any tax on these sums without the use of tedious receipts which were difficult for taxpayers to maintain and wasteful for Sars to review. I am sure a lot of members will be aware of this.

All that was needed was proof of actual travel. Problems had arisen of late with these advances because the monetary thresholds had become obsolete and wholly insufficient to cover rising domestic and international costs of travel.

The Revenue Laws Amendment Bill modifies these thresholds by leaving them to be periodically fixed by Government stipulation in the Gazette. As announced at the parliamentary hearings, these advances are currently fixed at $190 for foreign travel, R173 for domestic travel to the extent the advance covers meals and incidental subsistence, and R53 for advances covering only subsistence.

The taxation of diplomats had also become an issue over the past few years. As a matter of legal interpretation and administration, Sars correctly applied the law by asserting that all foreign allowances received by diplomats were subject to tax. However, full debate on the matter reveals that the law itself needs change. No policy reason exists for taxing diplomats on their foreign-related allowances. It is well recognised internationally that diplomats fall within their own sui generis category of taxation, given the unique demands of their tasks. The Revenue Laws Amendment Bill accordingly exempts these foreign-related allowances. Our diplomats can now operate free from tax at their foreign posts as originally intended.

Like all tax bills, the Revenue Laws Amendment Bill is not entirely free from controversy. These areas of controversy fall into two categories. One is issues of process, and the other, rules to prevent avoidance of transfer duty.

On issues of process, some practitioners have criticised the Bill for its volume. What these tax practitioners fail to recognise is that these changes were largely designed to assist taxpayers at their own insistence. Indeed, many of the practitioners at the parliamentary hearings who complained about the volume of changes simultaneously asked for even greater change and tax relief. These comments seeking greater change amounted to over half of the requests submitted. Surely taxpayers cannot have it both ways - they either want change or they do not. They cannot ask Government to make changes in their favour and then condemn Government on the grounds that the level of change is too much to handle.

In terms of the process some practitioners criticised Government for its failure to provide timely consultation prior to the parliamentary hearings. Government had admittedly hoped to provide for more time in this regard, but was effectively caught between ``a rock and a hard place’’. Government had essentially two choices - either to act now at the insistence of many taxpayers so they could move forward with their legitimate business transactions, or delay the relief until next year in favour of a longer period for comment.

Government ultimately believed that immediate relief best served the economic needs of the country. We reiterate our belief, as espoused in the 2002 Budget Review, that South Africa’s tax policy ultimately needs a period of consolidation. With the main base-broadening objectives achieved during the past two years, the volume of future tax Bills can be reduced in favour of more in-depth consultation.

On the issue of transfer duty avoidance, as announced in the 2002 Budget Review, Government had become increasingly concerned about techniques employed to artificially avoid the transfer duty on the sale of residential and holiday homes. These avoidance techniques unnecessarily narrow the tax base, thereby increasing the rate for taxpayers who transfer their residential properties without such artificial ploys. Clearly this avoidance has become a matter of equity and was in urgent need of reform.

Prior to the Bill, many taxpayers were previously able to avoid the transfer of duty by placing ownership of that residential property into a company or a trust. These taxpayers would then sell the shares or trust interests free of any transfer duty that would otherwise have applied had that residential property been sold directly.

The Bill terminates this practice by imposing the transfer duty despite the existence of these company and trust structures. No legitimate economic reason exists for these forms of property to be owned by a company or trust when most home owners would otherwise hold these residential properties directly.

I would like to conclude by thanking everyone involved in the preparation of this Bill, including members within Sars, the National Treasury’s tax policy unit, parliamentary members within the Select Committee on Finance, and interested parties commenting constructively on the Bill. Once again, the open, transparent nature of the deliberation process only serves to improve the overall quality of tax legislation. [Applause.]

Ms Q D MAHLANGU: Chairperson, Deputy Minister and hon members, in the normal course of managing a tax system it is necessary periodically to revise, clarify and streamline the tax laws. The Revenue Laws Amendment Bill of 2002 can best be viewed in that light. The Bill provides a number of technical corrections and clarifications, and while it moves tax policy forward in a number of areas, it does not reverse the prior policies. As such, the Bill maintains the continuity and predictability of the tax environment in South Africa, supporting a stable and transparent macroeconomic framework that provides the basis for growth, job creation and development.

In the light of the considerable extent of tax changes in many countries undergoing tax reform, the proposed Bill follows the natural course of tax reform, which requires ongoing clarification and fine-tuning, in line with the dynamic behaviour of taxpayers and the evolution of the tax environment.

Most of the proposed amendments are straightforward and noncontroversial, involving only the clarification of wording or the ironing-out of ambiguities. It is not necessary to elaborate on this. Amongst other things, the Bill attempts to bring tax legislation in line with other legislation and to scrap provisions which have become obsolete.

I will restrict my comments to areas of particular note. First of all, the amendment of section 104 of Act 58 of 1962 increases the maximum term of imprisonment for a conviction under the Act for evading tax with intent from two years to five years. This is in line with international norms and standards. For instance, conviction in the United States and Germany can lead to prison terms of up to five years and in South Korea of up to seven years.

Similarly, the amendment of section 75 of the Income Tax Act of 1962, increasing the maximum penalty from 18 to 24 months, not only brings the Act in line with the Valued-Added Tax Act of 1991, but also aims to further improve tax compliance by raising the cost of tax evasion. This will benefit all law-abiding taxpayers.

In addition, the proposed Bill closes loopholes that have undermined the horizontal equity of the tax system, for instance an individual can no longer avoid transfer duty by holding fixed property in a company, close corporation or trust. The intention to address this problem was first articulated by the Minister of Finance when he tabled the Budget in February 2002.

The proposed amendments concerning corporate reorganisations clarify tax law in respect of such events, lowering transaction costs and fostering tax certainty. In particular, the rules regarding financial institutions are substantially relaxed. Nevertheless, the problem of the low effective tax rates paid by some financial institutions, rooted in the use of preferential listing and derivatives, is still a matter of significant concern. We support the ongoing work in this regard.

The substituted Part III of Chapter 2 of the Income Tax Act provides clear rules that address company formations, share-for-share transactions, amalgamation transactions, and intragroup, unbundling and liquidation transactions. These amendments ensure that tax provisions clearly reflect the underlining guiding principles.

The introduction of the concept of an allowance asset facilitates company formation by enabling the bundled transfer of an asset along with its associated allowances and deductions. This also applies in respect of share- for-share transactions, amalgamations, intragroup transactions and liquidation distributions. In effect, allowance assets allow the transferee to step into the shoes of the transferer, clarifying and simplifying the treatment of the capital allowance. The transferer and the transferee are deemed to be one and the same with respect to the transfer of these assets.

The amendments include provisions to deter transactions structured primarily for the purpose of avoiding tax. For instance, if a company receiving a transferred asset disposes of that asset within 18 months, the proposed rules restrict the gains resulting from the disposal. This provision discourages taxpayers from shifting built-in gains assets into companies with excess losses with the intention of immediately reselling the assets purely for tax avoidance purposes.

The new corporate restructuring provisions also relax the restrictions on the tax-neutral transfer of financial instruments. In order to effect this, the amendments introduce the concept of a domestic financial instrument holding company. Generally, the transfer of financial assets or companies primarily consisting of financial assets is unacceptable. However, exceptions are made for debts in respect of goods sold or services rendered by that company where the amount of the transaction was included in the income of that company and the debt is an integral part of that company’s business. Further exceptions apply to certain regulated financial institutions.

There are a number of amendments which I will not delve into because of time constraints. I am just going to highlight what are in my view critical issues. The proposed Bill includes a number of provisions that deal with exchange rate calculations. While it may appear that there is a trade-off between complexity and equity, the need for a consistent framework is apparent. Too much flexibility in the choice of exchange rate calculation increases the scope for tax manipulation and undermines tax efficiency.

The proposed Bill articulates a balanced compromise, using an average exchange rate translation rule that shares the risk between the taxpayer and the fiscus. By allowing for the use of an averaging rate determined by banking institutions and the choice of daily, weekly or monthly averaging, the burden of compliance is reduced.

The introduction of a new section 50A allows the establishment of border posts jointly administered by the Commissioner of the SA Revenue Service and the customs authority of a neighbouring state. This co-operative arrangement depends on the establishment of an agreement between the Republic of South Africa and the adjoining state. The amendment supports the SADC protocol and will generate practical benefits in terms of reducing the administrative burden of customs and excise taxes on both the importer/exporter and the respective governments.

In closing, it is worth noting that while the time available for comment was unfortunately short, at the time of presentation both Sars and the National Treasury indicated that in some instances where they had consulted stakeholders, some of the documents had been leaked. That compromised the process of appropriate consultation.

Most of the proposed changes favour the taxpayer and result from comments from and lobbying by taxpayers, as the Deputy Minister said. In fact, the processes of engagement on these tax changes have been substantially longer than the formal period provided for comment. It is worth noting that approximately 40 persons had time to submit comments and criticism to the National Treasury, which in turn comprehensively addressed the issues and relevant concerns and brought them back to the committee.

I therefore call upon this House to vote in favour of this Bill, noting that it is a section 77 Bill. [Applause.]

Mr J L THERON: Chairperson, Deputy Minister and members, it is said that the Revenue Laws Amendment Bill contains mere technical amendments or corrections to major tax policy changes introduced last year. However, this is not the case, as Saica pointed out in its submission. While industry players were under the impression that this year would be one of consolidation, thereby contributing to tax certainty, the Bill before us today introduces considerable change.

The Bill brings changes in the areas of the resident basis of taxation; corporate reorganisation rules to cater for corporate restructuring, mergers and acquisitions; taxation of capital profit liquidation; currency rules for capital gains tax; source rules for capital gains tax, which were strangely omitted from the previous legislation; a number of other provisions related to capital gains tax, including the alteration of the definition of controlled foreign entity'' to controlled foreign company’’ to restrict its scope; and customs and excise amendments.

The changes before us today add fuel to the fire of those who warned against the administrative complexity of capital gains tax, or CGT, a complexity that implies substantive change and resultant tax uncertainty.

While these changes do not alter policy, they are considerable alterations and not merely technical corrections, as National Treasury maintains. Both Saica and PriceWaterhouseCoopers raised this point in their submissions, in which they raised concern about tax certainty, and therefore business certainty, in the context of all these changes. In Saica’s words:

We do not believe that the current set of proposed amendments can merely be seen as of a textual nature, as there are a number of changes that will have a marked impact in the tax planning and offshore structure of South African multinationals.

Indeed, the question arises whether some of the new tax changes themselves constitute a clear disincentive to offshore listings.

What further ought to be clear, is that those who opposed policy decisions on the introduction of capital gains tax and/or the change from source- based taxation to residence-based taxation will find it difficult to support legislation that tinkers at the margins of complexity and of what are considered to be bad tax policy choices for South Africa.

The administrative complexity of the major tax reform South Africa is undertaking speaks clearly from the voluminous Bill we consider today and its numerous retrospective provisions - always bad law irrespective of whether it acts to the benefit of taxpayers, as it perpetuates tax uncertainty. In addition, areas of uncertainty remain, despite the changes in lieu of corporate reorganisations, as consequential amendments to the UST and VAT Acts will be required due to the alterations to the corporate reorganisation rules, new policy decisions that will have to wait until budget time.

While many industry players are favourably inclined to aspects of the Bill, they all raised concerns about the retroactivity question at its heart. As Sacob stated in their submission:

Retrospective taxation measures are bad measures in the sense that they generate a high level of uncertainty for both business and taxpayers in general. It is a legislative device that is and has been strongly opposed by Sacob.

In their submission to the portfolio committee, PriceWaterhouseCoopers raised the legitimate question on whether the time allocated to the committee to consider a Bill of this magnitude and complexity was sufficient for the committee to adequately fulfil its role. Indeed, all the submissions raised the question of insufficient time for comment and engagement, and although Parliament cannot amend the tax codes it should have more time to engage with the issues, with technical assistance for the finance committee to be in a position to engage on an equal footing with tax policy advisers in both the Treasury and Sars.

We in the select committee had the same problem to engage properly with such a technical and thick Bill. Whether we were really in a position adequately to engage with the Bill before us is a question each member of the committee must honestly ask himself or herself.

The Bill introduces a new concept of liability which will have far-reaching consequences and which the DP believes to be problematic. In terms of tax liability, the concept of joint and several liability is a significant departure from taxpayers being liable for their own tax only, and represents a dangerous precedent, as many submissions pointed out.

In conclusion, in considering supporting or opposing the Bill, competing considerations arise. There is no doubt that the Bill seeks to bring at least greater clarity, particularly in crucial areas such as corporate reorganisations, residence-based taxation, and capital gains tax. There is further no doubt that many provisions would act to the potential benefit of the taxpayer. However, this has to be seen against the broader background that the Bill before us furthers tax policy decisions that were not seen by the DP to be in the interests and responsive to the needs of an emerging market economy such as South Africa’s. These are policy decisions that bring great administrative complexity and resultant tax uncertainty, as this Bill attests. The Bill implements policy decisions that in some areas were not sufficiently thought through or articulated and now result in undesirable retroactive provisions, with the biggest issue in the Bill being the question of effective dates.

For all these reasons, the DP cannot support this Bill.

Dr E A CONROY: Voorsitter, agb Adjunkminister van Finansies en kollegas, die instrumente wat nodig is vir die insameling van die fondse wat die keiser toekom, is dinamies en moet voortdurend aangepas word ten einde te verseker dat vermydingsmoontlikhede tot die minimum beperk word en om ontduiking natuurlik so onaantreklik moontlik te maak. Die dinamika spruit voort uit die feit dat belastingwetgewing deurlopend beïnvloed word deur veranderings wat ook op ander terreine plaasvind. Dit veroorsaak dat wysigings feitlik jaarliks aan die belastingverwante wette aangebring word en vanjaar is nie ‘n uitsondering op dié reël nie. (Translation of Afrikaans paragraph follows.)

[Dr E A CONROY: Chairperson, hon Deputy Minister of Finance and colleagues, the instruments required for the collection of funds that are due to Caesar dynamic and must continually be adjusted to ensure that possibilities for avoidance are limited to the minimum and to render evasion as unattractive as possible. These dynamics arise from the fact that taxation legislation is continually being influenced by changes taking place in other areas. This causes amendments to be made to taxation legislation almost annually and this year is no exception to this rule.]

Chairperson, the amendments introduced to inter alia the Marketable Securities Act, 1948; the Transfer Duty Act, 1949; the Estate Duty Act, 1955; the Income Tax Act, 1962; the Customs and Excise Act, 1964; and the Stamp Duties Act, 1968 are technical and mostly of a consequential and textual nature.

The fact that this Revenue Laws Amendment Bill, 2002, includes amendments to the Revenue Laws Amendment Acts 2000 and 2001, as well as the Second Revenue Laws Amendment Act, 2001, underscores the dynamic nature of South Africa’s taxation laws that I have already alluded to in my opening remarks.

The limited speaking time allocated to me for this debate does not allow me even to attempt a detailed review of every amendment contained in a total of 130 clauses tabled today. I will therefore refer to only one of these; though not necessarily the most important, it is certainly an amendment that will bring relief to some of our compatriots.

The amendment I am referring to is contained in clause 11 of the Bill, where it proposes the amendment of section 8 of the Income Tax Act, 1962, by the addition in subsection (1) to paragraph (a) of the following subparagraph, and I quote:

… to exclude from tax, the allowance benefits and privileges of a person stationed outside the Republic and employed by the national or provincial entity.

In layman’s language this means that South Africa’s diplomatic personnel stationed abroad will no longer be required to pay tax on the allowances and benefits portion of their foreign service salaries. They will still pay tax on the basic salary, but the portion that allows them to be able to maintain a reasonable standard of living abroad, with the high cost of living prevailing in the countries where they are stationed, will not be taxed.

Voorsitter, ek het self vir ‘n groot deel van my diensbare lewe in buitelandse missies van Suid-Afrika gedien en ek kan dit uit eie ondervinding kategories stel dat dit vir geen staatsamptenaar moontlik is om ‘n redelike lewenstandaard in enige van die wêreldstede op slegs sy of haar Suid-Afrikaanse salaris te handhaaf nie - nie wanneer hy of sy kinders daarop skool moet hou, gereeld mense op ‘n hoë diplomatieke vlak moet onthaal, en hul kleredrag van so ‘n hoeveelheid en gehalte moet wees dat hulle hul verteenwoordigingspligte kan nakom sonder om ‘n verleentheid vir Suid-Afrika of ons President te wees nie.

Dit is om dié rede dat Suid-Afrika se diplomate, in lyn met die praktyke wat internasionaal toegepas word, ‘n buitelandse dienstoelaag ontvang waarop hulle tot onlangs geen belastings betaal het nie. Daarom is die besluit verlede jaar dat Suid-Afrikaanse diplomate inkomstebelasting op hul toelaes moet betaal, met skok en verontwaardiging ontvang. En dit is daarom verblydend dat dié oënskynlik ondeurdagte besluit nou met die reeds genoemde wysiging reggestel is. Die Nuwe NP steun hierdie wetsontwerp. [Applous.] (Translation of Afrikaans paragraphs follows.)

[Chairperson, I myself served in foreign missions of South Africa for a large part of my working life and I can state categorically from my own experience that it is impossible for any public servant to maintain a reasonable standard of living in any of the world’s cities on only his or her South African salary - not when he or she has to keep children at school, regularly has to entertain people at a high diplomatic level, and their clothes have to be of such quantity and quality that they can meet their representational needs without being an embarrassment to South Africa or our President.

It is for this reason that South Africa’s diplomats, in line with practices that are applied internationally, receive a diplomatic allowance on which they until recently had not paid any taxes. Therefore the decision last year that South African diplomats must pay tax on their allowances was received with shock and indignation. And it is therefore heartening that this apparently ill-considered decision is now being rectified by means of the aforementioned legislation.

The New NP supports this Bill. [Applause.]]

Mr T B TAABE: Mr Chairperson, it is my pleasure once again to share with members a few highlights of the Revenue Laws Amendment Bill, 2002, currently before this House. I do not wish to run the risk of having to repeat what the Deputy Minister and also the chairperson of the committee has said before this House this afternoon, but, in the words of the hon Tlhagale in one of the debates yesterday, I probably would want to stay on the periphery myself this afternoon. [Laughter.] I shall confine myself to the residence-based worldwide system of taxation, which basically required minor technical corrections in this Bill.

As hon members would know, residence-based taxation was introduced in 2000 and deals with the taxation of income of residents from foreign sources. In terms of the current legislation, a person is a resident for payment of income tax if such a person is physically present in the country for a period exceeding 91 days in one financial year, or 91 days during the three preceding years, or for 549 days aggregate during those preceding years.

The issue raised is whether persons in transit through South Africa, that is, in transit between two places outside the country, should be treated as being physically present.

The current Revenue Laws Amendment Bill amends the definition of ``resident’’ specifically to exclude days that a person is in transit through South Africa between two places outside South Africa, where that person does not formally enter the Republic through a port of entry; or a regular commuter to and from South Africa who has his or her main dwelling outside the country and is also not employed nor carries on any business in South Africa.

One of the major strengths of this legislation is therefore that it will close the transfer duty gaps in the existing legislation, in the sense that individuals who have bought homes in the name of a company, close corporation or trust can no longer take advantage of tax benefits with the latest amendments to South Africa’s tax regime.

Property owners will be obliged to pay transfer duty of 10% each time a company changes hands. Also, people who have bought homes through companies, trusts and close corporations can be expected to be subject to capital gains tax on any profit that they make when they sell the property.

This legislation therefore reflects the strategic approach and dominant strategy of the SA Revenue Service of widening the tax net to effectively close loopholes and deter tax avoidance schemes.

The Bill further regulates provisions relating to corporate reorganisations. The Bill aims to reduce the tax liability when corporate restructuring takes place. Tax free corporate reorganisations are consistent with international practice, thereby keeping the South African tax system internationally competitive. Tax free corporate reorganisations, as the hon the Deputy Chairperson also knows from the discussions flowing from the briefings by the Treasury, promote on-shore restructuring as well.

The Bill before us makes a new proposal with regard to mining which is critical for the economy of South Africa. In this case, taxpayers that are subject to tax on their foreign income may receive a rebate, that is, a tax credit for foreign taxes paid. This rebate is a key component in any worldwide tax system.

Our existing tax regime allows a foreign tax credit to be granted against South African tax, payable on any income where a resident is taxed in another country on that same income. It is therefore crucial to note that this Bill proposes that no foreign tax credit be allowed in these instances, as it is effectively income attributable to South Africa’s mining rights or services in respect of which South Africa has the first right to tax. What this means is that no foreign tax credit will be allowed in respect of foreign taxes paid on those amounts.

It is also important to note that clause 92 of this Bill effectively excludes capital gains tax liability when a taxpayer is rewarded for claims submitted for land restitution in terms of the Restitution of Land Rights Act of 1994.

When we view the entire tax regime of our country, it is clearly consistent and compatible with our national priorities, in the sense that the existing tax laws are very labour friendly. I had hoped that I could expand a bit more on the provisions in this Bill as they relate to incentives for skills training and employment, but I will not do so because of time constraints. But I will just say, for the benefit of members, that the learnership allowance is catered for in this Bill. The Bill allows firms an additional deduction when they enter into a learnership agreement and the learner successfully completes the learnership programme.

Hon members would know that to date about 285 new learnership programmes have been registered with the Department of Labour. I will not go into the details of the benefits for an employer entering learnership agreements with learners already employed by the employer or with those who were previously unemployed. However, I think it is important to mention the kind of progress we have made in this area.

In conclusion, the design of our existing tax regime favours all classes, in the sense that it aims to become a positive sum where all segments of our communities benefit. I must also say that as elected public representatives we have indeed taken the route of appealing to our citizens’ moral fabric to pay their taxes. In this way we will be able to push back the frontiers of poverty, as the hon the Deputy President said in the House yesterday, and in the process extend the frontiers of prosperity.

The ANC supports this Bill and we want to implore members of other political parties to do so too, except, obviously, the right-wing political formations. [Laughter.] In any event, the kind of noise they have been making in this Chamber throughout this year has never really worried those of us who belong to this gigantic army of the African people, the ANC. I can only say that these kinds of comments were to me, more than anything else, bordering on sheer political naiveté if not myopia. [Laughter.] [Applause.]

The DEPUTY MINISTER OF FINANCE: Chairperson, there is not much to say except to thank members for their participation and interest in the matters raised.

Perhaps I can pick up on a few points. The issue has been raised that whilst we maintain that we have been making a lot of technical corrections and changes, in actual fact we have introduced substantial changes. I would maintain that it is still our view that we have largely used this legislation to effect a lot of corrections and clarifications where practice has shown us that we needed to move in a particular direction. One will find, for example, that in some areas in earlier amendments or policy changes we have introduced in the past, we had taken a cautious approach because we wanted to gain better insight from experience. With the benefit of that experience, we are now able to effect further changes in that direction. We are therefore of the view that this is largely a Bill through which we have tried to clarify, simplify and make corrections.

Of course, one has to understand that matters around tax are always controversial. They are matters around which we can never really hope for 100% consensus. It may well be that there is residual opposition to the fact that we introduced capital gains tax, which is a policy choice that we made for reasons of equity. I want to emphasise that for reasons of equity we chose the route of capital gains tax. It cannot be acceptable in a country with the kinds of challenges that South Africa has, to have everyone else paying their dues whereas those who are most able to pay have all sorts of avenues through which they avoid paying tax. It is therefore an equity measure. We do not apologise for it, because the issue of equity is one of the major challenges confronting us in South Africa today. It may well be that there is residual opposition to that.

We are constantly striving to make sure that our tax law is simple and that it enhances efficiency in the economy. We would maintain that we are moving along that route.

On the issue of the taxation of the allowances of foreign diplomats, I would like to say to the hon Conroy that I do not think it was so much a decision to tax foreign diplomats, but rather the unintended consequences of changes that were made some years ago. We were trying to deal with abuse in the system, where people would hide the true income they got through a whole array of allowances. An unintended consequence of that was that it impacted on the treatment of the allowances that foreign diplomats get. It is a matter that we have now dealt with and we have decided that we should use this legislation to correct that. I thank all members. [Applause.]

Debate concluded.

Bill agreed to in accordance with section 75 of the Constitution.

                      GAS REGULATOR LEVIES BILL

            (Consideration of Bill and of Report thereon)

Mr Z S KOLWENI: Mr Chairperson, hon Minister, hon members, ladies and gentlemen, the gas industry in our democracy is expected to expand over the next two decades. Therefore, it is important for this sector to be regulated in order to facilitate growth and the orderly development of the gas industry that will contribute productively to our economic growth. This Bill is therefore based on this premise.

Last year we passed the Gas Act, Act 48 of 2001, which provided for the establishment of the Gas Regulator, which will be the custodian and enforcer of the national regulatory framework for the piped gas industry.

This Bill empowers the Gas Regulator to impose a levy on any gas entering a facility licensed in terms of the Gas Act, from its point of production, or the border in the case of importation, as well as specifying various terms and conditions relating to the levy’s imposition. The aim of the levy is to fund the establishment and operation of the Gas Regulator.

The Bill aims for the Gas Regulator to impose those levies subject to consultation and ministerial approval. This means that the Minister of Minerals and Energy and the Minister of Finance can approve or disapprove the imposition or variation of levies and the determination of interest on overdue levies and recommend alternatives.

This Bill further requires the Gas Regulator to submit an annual budget and business plan to the Minister of Minerals and Energy. In addition, it requires that the performance of the Gas Regulator be assessed every five years.

Last but not least, this Bill provides for the levies to be imposed on the gas entering transmission or distribution pipelines, rather than at the point of consumption, for reasons of administrative efficiency, international best practice and the Government policy of taxing at source.

Finally, my committee recommends that the House passes the Bill. [Applause.]

Debate concluded.

Bill agreed to in accordance with section 75 of the Constitution.


Mr J L THERON: Chairperson, the proposal to establish a regional anti-money laundering group in Africa was first recommended at a workshop held in South Africa in October 1995. The Eastern and Southern African Anti-Money Laundering Group, or the ESAAMLG, was launched at a meeting of ministers in Tanzania in 1999. [Interjections.]

Chairperson, I would like to ask the hon Moosa not to distract me please, and to switch off his screen.

Nine countries from the Commonwealth were represented at the launch, including South Africa. The launch meeting agreed on a memorandum of understanding to establish the group as well as the objectives of the group. It also agreed that once seven countries had signed the memorandum, the group would be formally established. Observers from the Financial Action Task Force, or the FATF; the Caribbean Financial Action Task Force, or the CFATF; and the Commonwealth secretariat were also present.

The Republics of Kenya, Malawi, Mauritius, Mozambique, Namibia, Seychelles and Uganda, and the United Republic of Tanzania signed the memorandum of understanding, followed more recently by the Kingdom of Swaziland. The Minister of Finance signed the memorandum of understanding in July 2002 after approval by Cabinet. South Africa’s membership application was accepted at an ESAAMLG council of ministers meeting in August 2002.

The objectives of the ESAAMLG are to make a political commitment to implementing the FATF standards; to adopt and implement the 40 recommendations of the FATF by enabling the necessary legislation and deployment of capacity; to apply anti-money laundering measures to all serious crimes; and to implement any other measures contained in multilateral agreements. All member countries should establish financial intelligence units. All member countries should agree to undergo self- assessments and mutual evaluations of their extent of compliance to the FATF/ESAAMLG standards. This applies to their legislation, financial intelligence and law enforcement capacity. The memorandum establishes the structure of the ESAAMLG, which is comprised of a ministerial council, a task force of senior officials and a secretariat. Three subcommittees have been established, namely legislation, law enforcement and financial. These are not yet functioning.

The memorandum provides for co-operating and supporting nations who are not members of the group but express their support for the objectives of the group. It also provides for observer countries or organisations. The initial observers to the group are the Commonwealth secretariat, the UN Global Programme against Money Laundering, the Financial Action Task Force secretariat, the World Bank, the International Monetary Fund, Interpol, the World Customs Organisation, the African Development Bank, the Southern African Development Community secretariat, the Common Market for Eastern and Southern Africa secretariat, the East African Community secretariat and the East African Development Bank.

The ESAAMLG has initiated a process to start evaluations of member countries to be conducted by their peers or fellow members. South Africa has volunteered to undergo such a mutual evaluation process. Training to equip evaluators will be provided by a combined FATF/ESAAMLG team in late January next year. South Africa has been approached to host this training programme. It is expected that this mutual evaluation will be conducted in March 2003.

This evaluation process is different from FATF-style assessments, which in future will be conducted according to the new assessment methodology which was adopted by the FATF at its recent plenary meeting in October in Paris, France. This methodology will include an assessment of measures taken to combat terrorist financing. In addition, the IMF and World Bank have now been accepted as institutions which may undertake such assessments, although the law enforcement component thereof will remain solely within the ambit of the FATF. South Africa will undergo such an assessment in late February or early March 2003. The financial implication for South Africa is for the payment of an annual membership fee of US$20 000.

We hereby ask all members of the House to support and adopt the report of the Select Committee on Finance. [Applause.]

Debate concluded.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Dr E A CONROY: Chairperson, hon Deputy Minister of Finance, colleagues, international juridical double taxation can be generally defined as the imposition of comparable taxes in two or more states on the same taxpayer in respect of the same subject and for identical periods.

Its harmful effects on the exchange of goods and services, and movements of capital, technology and persons are so well known that it is scarcely necessary to stress the importance of removing the obstacles that double taxation presents to the economic relations between countries.

It has long been recognised that it is desirable to clarify, standardise and confirm the fiscal situation of taxpayers who are engaged in commercial, industrial, financial or any other activities in other countries through the application by all countries of common solutions to identical cases of double taxation.

The Council of the Organisation for European Economic Co-operation adopted its first recommendation concerning double taxation in 1955. This was to a large extent due to the work commenced in 1921 by the League of Nations. This work led to the drawing up in 1928 of the first model bilateral convention and to the model conventions of Mexico in 1943 and that of London in 1946, the principles of which were followed with certain variants in many of the bilateral conventions concluded or revised during the period up to 1955.

The increasing economic interdependence of the member countries of the OEEC in the postwar period showed increasingly and clearly the importance of measures for preventing international double taxation. The need was recognised for extending the network of bilateral tax conventions and, at the same time, harmonisation of these conventions in accordance with uniform principles, definitions, rules and methods, and agreement on a common interpretation became increasingly desirable.

Experience gained in the negotiation and practical application of bilateral conventions; of changes in the tax systems of different countries; the increase of international fiscal relations; the development of new sectors of business activity; fundamental changes taking place in the ways in which cross-border transactions were undertaken; the emergence of new complex business organisations at the international level; and the increasing sophistication in tax avoidance and tax evasion methods, were all factors that contributed to even further refinements of conventions and agreements on double taxation.

With that brief definition and background history of double taxation, I come to the purpose of this statement. The Government of the Republic of South Africa and the Government of the United Kingdom of Great Britain and Northern Ireland have expressed their desire to promote and strengthen the economic relations between our two countries by the conclusion of a new convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains.

They have therefore agreed that the convention shall apply to all persons who are residents of one or both of the contracting states; that it shall apply to taxes on income and on capital gains imposed on behalf of a contracting state or of its political subdivisions, irrespective of the manner in which they are levied; and that it shall apply in particular in the case of South Africa to the normal tax, the secondary tax on companies and the withholding tax on companies, while in the case of the United Kingdom, it shall apply to the income tax, the corporation tax and the capital gains tax.

It shall also apply to any identical or substantially similar taxes imposed by other contracting states, after the date of signature of the convention, in addition to or in the place of the existing taxes. The competent authorities of the contracting states shall notify each other of any significant changes that have been made in their respective taxation laws.

The main body of the convention consists of 28 articles, covering every aspect from the various types of taxes included, to the date of entry into force and the termination of the convention. In the limited speaking time available to me, it will hardly be possible to deal with each article individually, nor will it add to my popularity with hon members if I should even attempt to bore them with the technical details.

This convention was signed by the hon Trevor Manuel, South Africa’s Minister of Finance, in London on 4 July 2002. The Select Committee on Finance has adopted a report which recommends that this House should vote in favour of the ratification of the convention. I now request hon members to do so. [Applause.]

Debate concluded.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Mr G A LUCAS: Hon Chairperson, hon Deputy Minister of Finance and hon members …

Motswana a re mojamorago ke kgosi. Ke dumela fa gompieno ke le kgosi. [Setshego.] O intshwarele Kgosi Mokoena le dikgosi tse ding. [Setshego.] [A Motswana says that one who perseveres and remains to the last reaps the greatest benefits. I believe that today I am a chief. [Laughter.] Please bear with me, Kgosi Mokoena and other chiefs. [Laughter.]]

The Government of the Republic of South Africa and the government of New Zealand have concluded an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

It is a practice in most countries for income tax to be imposed both on the worldwide income derived by residents of a country and on income derived by nonresidents which arises in the country. The effect of such a system is that income derived by a resident of one country from a source in another country is subject to tax in both countries.

As this position clearly discourages foreign investment, it is normal for countries that have trade relations to conclude double taxation agreements. Such agreements commonly provide that income of a particular nature will either be taxable in only one of the countries or may be taxed in both countries, with one of them allowing credit for tax imposed by the other.

This agreement applies to persons who are residents of South Africa and New Zealand. The agreement covers the following areas, and I hope that hon Maloyi will listen attentively because he might go to New Zealand very soon: income from immovable property; business profits; operation of ships and aircraft; associated enterprises where, for example, South Africans participate directly or indirectly in the management, control or capital of an enterprise physically located in New Zealand or vice versa; dividends and interest paid by a company which is a resident of New Zealand for the purpose of its tax, being dividends or interest which are beneficially owned by a South African; royalties; alienation of property; income from property; directors’ fees; entertainment and sportspersons - I hope hon Maloyi is listening; pensions and annuities; government services; and payment received by students from sources in New Zealand for purposes of education in South Africa and vice versa - this relates to those South Africans who want to study in New Zealand.

This agreement is consistent with the model of the Organisation for Economic Co-operation and Development, widely known as the OECD. The OECD comprises mainly industrialised countries. For hon Maloyi’s information, South Africa is not a member of the OECD.

I therefore put forward that the House adopts this agreement. [Applause.]

Debate concluded.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Order disposed of without debate.

Question put: That the Report be adopted. IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Order disposed of without debate. Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Order disposed of without debate.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Order disposed of without debate.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Order disposed of without debate.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Order disposed of without debate.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Order disposed of without debate.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Order disposed of without debate.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Order disposed of without debate.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.


Order disposed of without debate.

Question put: That the Report be adopted.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Report accordingly adopted in accordance with section 65 of the Constitution.

                          FAREWELL SPEECHES

The CHIEF WHIP OF THE COUNCIL: Chairperson, on Tuesday, when the President addressed the House, hon members may have noticed that I was unable to complete my speech. There were two important things that I was going to do at the conclusion of my speech. The first was to congratulate you personally, and in my capacity as Chief Whip of this Council, on your appointment as Deputy Chairperson of the Council. I do so now on behalf of the Council.

The second was to tell this House that I am indeed proud to be part of a team that is so committed, and conducts its work with so much passion and pleasure. I think it has been an extraordinary privilege to be part of this team. I would like to thank the leadership of this House. Mrs Pandor is not here today, but she has very ably led this House, and has been a great inspiration to all of us. You are now here with us, and we remember Mr Mushwana for his contributions, and we believe that you will do as well in terms of providing support to Mrs Pandor in leading this institution.

I would also like to thank all the Whips for their support, both the provincial Whips from the ANC, as well as the multiparty Whips. I think the co-operation was wonderful this year. I would like to thank all the chairpersons and members of the House. My special thanks to each member who has contributed in one way or another to the success of the programme that we have had this year.

Let us not forget the work of the Secretary of the NCOP, Lulu, Lindikhaya, the table staff Benni and Jodi, the researchers, the technical staff who are sitting up there and are assisting us, the administrative assistants who are helping us all the time, and our programming staff that assist us. I think we must recognise their contribution. Overall it has been their incredible contribution that has made this year a very successful year for the NCOP.

As we now say goodbye - this is our last sitting - there is a festive season ahead of us. We wish members well. Merry Christmas to those members who are going to celebrate Christmas, a happy new year, and for those who are fasting, a happy Ramadan, and a happy Eid that follows. Be careful during the festive period. Also for those members of the ANC who are going to have their national conference, I wish them well in that.

Before I conclude, I have this opportunity now to say farewell to a very good friend who started with me in 1994: Mohseen Moosa. We are aware that he is leaving. He has served the Senate and this House with distinction. He has very ably chaired the Select Committee on Justice and Constitutional Affairs in the first term. He has done an excellent job and has really excelled this year as chairperson of the Select Committee on Trade and Industry. He has also served in various other capacities on behalf of this House in terms of rules and in terms of equality legislation. He has also done his bit in terms of a contribution towards the Constitution.

We will miss his ability as a politician, his legal skills, his sharp mind, and his very frequent mischievousness, especially in terms of the new technology that we have with us, but we wish him well in his future pursuits in the private sector, and we do believe that he will be in a position to make a very meaningful contribution in terms of economic empowerment for those who have been disadvantaged. We certainly wish him well.

I have next to me, Mr Renier Schoeman. It is a pleasure to invite him here to our House and to have him present next to us. We would like to extend, on behalf of the Council, our heartiest congratulations on his appointment as Deputy Minister and on his being part of the executive. We do believe that he will have a wonderful working relationship with this House. Finally, I take this opportunity to say: ``Farewell, go well, my friends.’’ [Applause.]

Ms E C GOUWS: Chairperson, this time I will do it fair and well - without any interjections. No individual member, no party, not even all the people assembled here, are the NCOP. The NCOP is an institution that will continue to exist long after we have all left. But while we are here, year after year, we as members have the privileged opportunity to contribute to the image and the spirit of the NCOP. We had that opportunity again this year. Sometimes we used our unique opportunity wisely and positively; sometimes we failed to build.

Be that as it may, we go home today with some sadness. After all, despite political differences, we are a unique club of friends. Our thanks to our Chairperson, a truly competent and fair person, and to you, the new Deputy Chair: Welcome to the NCOP family. I also express my thanks to the Chief Whip, the Deputy Whip, my Eastern Cape Whip and the Whip of my party, the Chairperson of Committees and Mr Moosa. We appreciate their hard work and wish them all a well-earned rest.

Let us come back next year, determined to continue to build our tradition. Remember: There is so much bad in the best of us, there is so much good in the worst of us, that it ill behoves any of us to speak bad about the rest of us. May all my hon colleagues enjoy a wonderful Christmas and recess period with their friends and families. May God bless all members. [Applause.]

Mnr P A MATTHEE: Voorsitter, ek wil ook graag namens die Nuwe NP my aansluit by die woorde van bedanking aan al die persone wat reeds deur die vorige sprekers genoem is. Natuurlik, die Hoofsweep het homself nie genoem nie, en ons wil ook almal graag vir hom baie dankie sê vir sy harde werk en die uitnemendheid waarmee hy sy pligte volvoer het gedurende die afgelope jaar. Ek wil ook almal wat reeds genoem is, verseker van ons opregte dank en hoogste waardering vir al die harde werk en goeie diens.

As ‘n instelling het ons sonder twyfel oor die afgelope jaar vooruitgegaan en bewys dat die Nasionale Raad van Provinsies besig is om ‘n absolute sleutelrol te speel in die verwesenliking van die ideale van ons jong demokrasie. Daar is egter steeds ruimte vir verbetering en harde werk wat vir ons voorlê. (Translation of Afrikaans paragraphs follows.)

[Mr P A MATTHEE: Chairperson, on behalf of the New NP I would also like to associate myself with the words of thanks conveyed to all the people who have already been mentioned by previous speakers. The Chief Whip, of course, did not mention himself, and all of us would also like to thank him for his hard work and the outstanding way in which he performed his duties during the past year. I would also like to give everyone who has already been mentioned the assurance of our heartfelt thanks and highest regard for all the hard work and good service.

As an institution we have without a doubt made progress during the past year and proved that the National Council of Provinces is playing an absolute key role in the realisation of the ideals of our young democracy. However, there is still room for improvement and hard work lying ahead of us.]

We have, for instance, not as yet succeeded in getting the provincial legislatures to be more proactive in channelling through to us their concerns, problems, viewpoints and proposals, as well as those of their electorate in respect of matters which should be addressed at national level by way of, for example, motions, questions and legislative proposals by permanent delegates.

I also wish to thank Mr Moosa for his outstanding services to this institution, and for his friendliness and collegiality over many years, and wish him everything of the best for the future. I am, however, a bit worried that now that Mr Mushwana has left us, and Mr Moosa is also leaving us, we are running out of lawyers in this House. I think it is only Mr Surty, Mr Lever and myself that are now left. Mr Mkoena says he too. [Laughter.] I also noticed that I seem to be the only lawyer left in the Joint Committee on Ethics and Members’ Legislative Proposals. I think this should be addressed as soon as possible.

In conclusion, I wish to leave hon members with a thought on something which one normally does not speak on at this time of the year. It is a thought on problems, which I think is very apt for us. I came across this in a book by John Maxwell:

The decisions we make today concerning problems we have will shape our future. Remember, the circumstances in which we find ourselves today are a direct reflection of the decisions we made yesterday. Problems are reminders. They remind us that we need God’s help to handle the upheavals of life. Problems are solvable. They always have an answer. Perhaps the answer is hidden, but there is an answer. The difficulty lies not so much in not finding the answer, but in being unwilling to pay the price for solving it.

I therefore do not wish hon members a problem-free period until we meet again, because problems there will always be, but I wish that members will be able to find the right answers to all the problems which may come their way. I hope, and I trust, that we collectively, as an institution, will in the new year be able to play our vital role to the fullest in helping to solve the problems which our people are still being faced with. I hope hon members also find time to have a very good rest. Best wishes. [Applause.]

Mrs J N VILAKAZI: Mr Chairperson and hon members, our House is rising today as we start our preparations for the hectic festive season. I wish to congratulate our Chairperson, Mrs Pandor, for being such a charismatic leader who is always striving for development. Our Chamber is what it is today because of her special talent in leadership.

The NCOP has also been very lucky to have had Mr Mushwana as its Deputy Chairperson. He has since left for the higher position of Public Protector and we wish him well. I also extend a hearty welcome to our new Deputy Chairperson, Mr Mahlangu, who I know has been elected to this position on account of a proven record. He will fit well in his predecessor’s shoes. I congratulate all our committee chairpersons, all Whips, the secretariat and all the members of the support staff for the hard work they undertook so well. I also wish to pay tribute to our Chief Whip, the hon Mr Surty. He is soft-spoken, listens well, acts impartially, and provides dynamic leadership in his capacity as Chief Whip.

Finally, I wish to put a feather in our Chairperson’s cap for having arranged a most profitable study tour to China. It was very educational indeed. [Interjections.]

We are sorry to lose hon Moosa. But he will always be in our minds.

I wish all my colleagues a safe journey home and they must have a happy stay with their families. A happy Christmas and a prosperous New Year. May God bless you till we meet again.

Ndlela ntle. [Farewell.] Mnu H T SOGONI: Mhlali-ngaphambili, malungu ahloniphekileyo ale Ndlu, ndivumele nam ndaleke umsundulu kumazwi asele ewisiwe ngoogxa bam, sisithi omnye komnye ``ndlela ntle’’.

Uthi umzi wakwa UDM mandidlulise ilizwe elicatshulwe kwivesi yokuqala kwiculo lamaWesile elithi `side sibuye sihlangane, wang’uThixo anganawe, akuxhase, akukokele. Wang’ uThixo anganawe’.

Le ngoma sidla ngokuyicula xa sonwabelene, sincumelana, sibambene ngezandla, simbambazelana, sisithi kulo simthandayo ``Ndlela ntle. Side sibuye sihlangane’’. Sitsho njalo kuba intlalo yethu apha ibiyintlalo yokuthandana, iyintlalo yokumanyana, iyintlalo yokusebenzisana, iyintlalo yokubonelelana. Kungoko ke sisithi masihambe, siye kubona izihlobo nabahlobo, side sibuye sihlangane.

Kodwa, sifuna ukudlulisa ilizwi lokubulela ngokungazenzisiyo kwiinkokeli zethu kule Ndlu yeBhunga leSizwe lamaPhondo, sizidibanisa, sizibopha ngabhanti linye zonke ngobunkokeli bazo obunobuchule, obunobulumko, obungqongqo kodwa bunobulungisa, kwa nobungena mkhethe. Sifana nendlu enye phantsi kwesandla senu naphantsi kobunkokeli buka mam’ uPandor nakuwe ke Sekela Sihlalo, njengentonga yakhe yasekhosi. Zimbalwa intsukwana sinawe kodwa sele ubonakalisile into yokuba impawu zobunkokeli zikho kuwe, kwaye uza kuyifunqula le nqwelo uyibeke emanqwanqweni aphezulu.

Asi libali ukudlulisa ilizwi kuMbhexeshi omKhulu nabanye ababhexeshi abasebenzayo ukuqhuba imicimbi yale Ndlu. Singalibali ukubulela uSihlalo wekomiti zonke noosihlalo beekomiti, kananjalo, nababhexeshi abakhoyo. Asi libali ukubulela kubasebenzi bayo le Ndlu, singalibali nokubulela kubasebenzi okanye koomabhalana boosihlalo beekomiti zethu. Sibe nexesha elimnandi sikunye.

Kuthiwa ke mandidlulise ilizwi lokugqibela kumzukulwana kaMoosa, ogqibe ekubeni axwaye ibhatyi yakhe awenze ubemfutshane umthwalo ulingane ikhwapha, abambe indlela ebeze ngayo. Kuthiwa yindlu yakwaUDM mandithi kubaw’ uMoosa ebekade engumfana odlamkileyo, egqadaza ukunyathela, egqadaza ukuthetha, engesiso isanyamtya. Kuthiwa masithi ``ndlela ntle’’. Nalapho aya khona aze abe njalo.

Ngaloo mazwi ambalwa ithi iUDM: Side sibuye sihlangane. [Kwaqhwatywa.] (Translation of Xhosa speech follows.)

[Mr H T SOGONI: Chairperson, hon members of this House, allow me to follow suit and add on to the words expressed by my colleagues and say ``farewell’’.

The UDM says that I should quote from verse one of the hymn book of the Methodists, the words: ``God be with you till we meet again …’’

This hymn we normally sing when we are happy, smiling at one another, holding hands, hugging and saying to the one we love: Farewell. Till we meet again.'' We say so because our life here has been a life of loving, uniting, co-operating and sharing. It is for that reason that we say: Let us go and visit relatives and friends, till we meet again.’’ However, we want to express a sincere word of thanks to our leaders in this the National Council of Provinces, all of them, for their astute, wise, firm but just and fair leadership. We are like one family under the leadership of Mama Pandor and you, Deputy Chairperson, as her right-hand man. You have been with us for a few days, but already you have shown leadership qualities, and that you are going to take this institution to new heights.

We do not forget to give a word to the Chief Whip and other Whips who manage the affairs of this House; not forgetting to thank the Chairperson of Committees, the chairpersons of the committees as well as all the Whips present here. We cannot forget to thank the staff of this House, as well as the staff or secretaries to the chairpersons of our committees. We have had a good time together.

I have been instructed to convey a word of thanks to Moosa’s grandson, who decided to pack his bags. The UDM says to tell Tata Moosa he is an energetic young man, with a spring in his step, and not a slouch. The UDM instructs me to say: ``Farewell. Good luck for the future.’’

With those words the UDM says: Till we meet again. [Applause.]]

Mr J O TLHAGALE: Mr Chairperson, hon colleagues and comrades … [Interjections.] … saying farewell, as usual, brings about mixed feelings. One is usually looking forward with anxiety to a homeward journey and to those that one loves. But at the same time one is also finding it difficult to part with those friends that one got accustomed to living with. We have lived together as members of a broad family, and in spite of our different political affiliations we have learned to work together and to love each other. We shall undoubtedly miss each other during the next two months. But the thought that it will be for only two months will sustain us and keep us going.

We are proud of our leadership in the NCOP, which, in my assessment, is second to none. The Chairperson is a very strict and capable lady with a very pleasant and likeable disposition. To the Deputy Chairperson …

… mogaetsho, re a go rata, o re tshware fela jalo! [… fellow countrymen, we love you, continue to give us such a warm reception!]

The Chief Whip is a gentle and down-to-earth man of unequalled benevolence. As we take leave of one another today I wish to thank the staff of the NCOP for their meritorious service and devotion to work, and I want to wish every one of us a happy Christmas period and a prosperous New Year. May the good Lord bless you until we meet again. [Applause.]

The DEPUTY CHAIRPERSON OF THE NCOP: Order! I just wish to remind you that there is a new South African Oxford Dictionary as well. [Interjections.]

Mr K D S DURR: Mr Chairperson, I have to say that that is a very hard act to follow.

We miss of course our Chairperson today. We would have liked to have taken leave of her also. We know that she is very distinguished and she is leading a delegation to Japan. We wish those that are away well and a safe return.

You, yourself, Deputy Chairperson, have put your stamp of authority on the Council. You look as if you have always been sitting in that Chair. You fit like a glove. That gives us a tremendous feeling of comfort. You really add lustre and dignity to this House.

I would simply like to add our thanks, as the ACDP, to the staff, the messengers and also the people that we do not see, the Hansard, the police, the cleaners, and the catering staff who look after us so well - all of the people that make up the infrastructure of this place.

We wish Mr Moosa well. He is a most energetic and able man. I am sure wherever he goes he is going to make his mark and we will hear more of him for sure. I would wish members all godspeed. To all our people that are going home: a safe return to their families and a safe return to this Place. For those of them that are celebrating Ramadan: a happy Ramadan and a happy Eid. For the Christians, a very happy and blessed Christmas period. I thank you and godspeed to you all. [Applause.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M J Mahlangu): Order! Hon members, in summary, on behalf of the presiding officers, I wish to join you in saying go home, go and work, but create some space to rest as well. Your families need you. I am aware that you have been here the whole year. You have not had time to actually be with your families. They need you too. Please do create one or two days to be fully with them. They need you down at home. We as presiding officers wish you a merry Christmas and a prosperous New Year.

I just want to remind you of one thing. I am sure it is about five days since I have joined the National Council of Provinces. I am avoiding saying ``NCOP’’. I have enjoyed the spirit in which debate takes place in this little House. I found myself in a family of people who differ with ideas but laugh thereafter again. The spirit is so cordial. One enjoys to chair from the seat where I am. It is unlike in the National Assembly. [Interjections.]

There is one thing I would like to say. This might interest you. I have been married for almost 30 years. I do not know who in this House has been married for almost 30 years like me. Oh, there are many. A writer once said: ``During the first year of marriage, the husband speaks and the wife listens. During the second year of marriage, the wife speaks and the husband listens. During the third year of marriage, both speak, and the neighbours listen.’’ What I am trying to say is that the friendliness I have seen here and the good debates I have listened to since I have been here, should not divide us.

As we go home and meet our families out there, let us be seen as public representatives who are keen to represent our South African citizens, and who are elected to come and conduct our duties here with dignity and represent those people that have shown confidence in us. Let us not be divided there, but rather show people that we can speak and be divided on issues, but there are nationally important issues where we have to agree and move this country forward. I wish to thank you all.

The Council adjourned at 17:30. ____



National Assembly and National Council of Provinces:

  1. The Speaker and the Chairperson:
 (1)      The   Minister   of   Trade   and   Industry   submitted   the
     Wysigingswetsontwerp op Patente [W 64 - 2002] (National Assembly  -
     sec 75) to the Speaker and the Chairperson  on  14  November  2002.
     This is the official translation  into  Afrikaans  of  the  Patents
     Amendment Bill [B 64 - 2002] (National Assembly - sec 75).

National Council of Provinces:

  1. The Chairperson:
 (1)    The following papers have been tabled and are  now  referred  to
     the relevant committees as mentioned below:

     (1)     The following papers are referred to the  Select  Committee
          on Labour and Public Enterprises:

          (a) Report and Group Annual Financial Statements of the  South
              African Post Office Limited for 1997-1998.

          (b) Report and Group Annual Financial Statements of the  South
              African Post Office Limited for 1998-1999.

          (c) Report and Group Annual Financial Statements of the  South
              African Post Office Limited for 1999-2000.

     (2)     The following paper is referred to the Select Committee  on
          Public Services:

          Report and Financial Statements of LANOK (Proprietary) Limited
          for 2001-2002.

     (3)     The following paper is referred to the Select Committee  on
          Economic and Foreign Affairs:

          Annual Report of the Mine Health and Safety  Inspectorate  for

     (4)     The following papers are referred to the  Select  Committee
          on Security and Constitutional Affairs:

          (a) Proclamation No R 73 published in  Government  Gazette  No
              23951 dated  18  October  2002:  Referral  of  Matters  to
              existing   Special   Investigating   Units   and   Special
              Tribunals, made in  terms  of  the  Special  Investigating
              Units and Special  Tribunals  Act,  1996  (Act  No  74  of

          (b) Proclamation No R 74 published in  Government  Gazette  No
              23951 dated  18  October  2002:  Referral  of  Matters  to
              existing   Special   Investigating   Units   and   Special
              Tribunals, made in  terms  of  the  Special  Investigating
              Units and Special  Tribunals  Act,  1996  (Act  No  74  of

          (c) Proclamation No R 75 published in  Government  Gazette  No
              23973 dated  25  October  2002:  Referral  of  Matters  to
              existing   Special   Investigating   Units   and   Special
              Tribunals, made in  terms  of  the  Special  Investigating
              Units and Special  Tribunals  Act,  1996  (Act  No  74  of

          (d) Proclamation No R 76 published in  Government  Gazette  No
              23973 dated  25  October  2002:  Referral  of  Matters  to
              existing   Special   Investigating   Units   and   Special
              Tribunals, made in  terms  of  the  Special  Investigating
              Units and Special  Tribunals  Act,  1996  (Act  No  74  of

          (e) Proclamation No R 77 published in  Government  Gazette  No
              23973 dated  25  October  2002:  Referral  of  Matters  to
              existing   Special   Investigating   Units   and   Special
              Tribunals, made in  terms  of  the  Special  Investigating
              Units and Special  Tribunals  Act,  1996  (Act  No  74  of

 (2)    Bills passed by National Council of  Provinces  on  14  November
     2002: To be submitted to President of the Republic for assent:

     (i)     Adjustments Appropriation Bill  [B  66  -  2002]  (National
             Assembly - sec 77).

     (ii)    Revenue  Laws  Amendment  Bill  [B  67  -  2002]  (National
             Assembly - sec 77).

     (iii)   Gas Regulator Levies Bill [B 47 - 2002] (National  Assembly
             - sec 77).


National Assembly and National Council of Provinces:


  1. The Minister of Transport:
 Report and Financial Statements of the  South  African  Civil  Aviation
 Authority for 2001-2002.
  1. The Minister of Social Development:
 Report and Financial Statements of the National Development Agency  for
 2001-2002, including the Report of the Auditor-General on the Financial
 Statements for 2001-2002 [RP 183-2002].


National Council of Provinces:

  1. Report of the Select Committee on Members’ and Provincial Legislative Proposals on the proposed Promotion of Multilingualism Bill, dated 13 November 2002:

    The Select Committee on Members’ and Provincial Legislative Proposals, having considered the proposed Promotion of Multilingualism Bill, submitted by Mr A E van Niekerk and referred to the Committee, recommends in terms of Rule 179(4)(a) that permission be given to proceed with the proposed legislation.

 Report to be considered.