National Assembly - 26 October 2004





The House met at 14:01.

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



The MINISTER OF FINANCE: Madam Speaker, Cabinet colleagues, Governor Mboweni, honourable members and fellow South Africans. NgoFebruary satyala umthi, ngoku ihlobo lithwasile. [In February we planted a tree, and now summer is approaching.]

Look at it. You know, in February, Madam Speaker, we planted a tree and those members who failed to plant the trees that we gave them have clearly incurred fruitless expenditure. But now it is spring. Our trees are flowering. They are full of colour, energy and are filled with passion. The spirit of springtime inspires South Africans to reach new heights.

The 2004 MTBPS is tabled in an environment of rising economic growth, increased investment, strong business confidence, low inflation and low interest rates. The economy has recovered remarkably well from the slowdown experienced last year. Encouraging signs of a significant increase in employment are also evident.

A year ago, hon members, we had to report on an uneven scorecard: rapid growth in the retail sector and strong increases in corporate investment combined with weak manufacturing production and a decline in exports. Today, the economy is expanding in a much more balanced fashion. Investment is growing across a wide range of sectors and manufacturing is recovering strongly. The housing boom has contributed to an upswing in construction, and the services sector continues to expand steadily. Inflation is now firmly within the target range and the low interest environment should last into 2005 and beyond.

While the factors driving the present economic boom include a strong international economy, high commodity prices and improved confidence, the main reason that we find ourselves in this position is that the reforms of the past decade are bearing fruit. Sound fiscal policy and the introduction of inflation targeting have contributed to low interest rates and a buoyant property market.

The trade reforms implemented during the 1990s mean that we are able to penetrate a range of international markets with a diverse array of products. Eight years ago, the current account deficit, that is, the difference between our imports and our exports, was seen as a binding constraint to higher growth. Today, the capital inflows and the resilience of the economy show that our economy can grow faster and can finance a higher current account deficit.

We are mindful that the current strength of the rand, particularly against the dollar, creates difficulties for some of our mines and other exporters or import-competing industries. We would like to see greater stability in the exchange rate. But Finance Ministers and central bankers throughout the world have learnt the hard way over the past two decades. Their attempts to fix the price of currencies carry huge costs for taxpayers. It may just be a feature, Governor Mboweni, that governors of central banks are not particularly good forecasters.

But, while there are adjustment problems for industry at R6 to the dollar, there would also be growth-inhibiting stresses at R10 to the dollar, particularly with oil prices at their current levels.

Madam Speaker, because of the tough choices we have consciously made over the years and because we continue to pursue sound economic policies, we are in a position to make faster progress in creating work and fighting poverty. After a decade of reform, business now sees substantially lower risk, substantial productivity gains and a more resilient and competitive productive sector.

While unemployment remains a critical policy challenge in South Africa, encouraging signs are beginning to emerge that growth is being translated into employment gains across the economy.

Between March last year and March this year the labour force survey estimates that employment increased by around 400 000 jobs and that the unemployment rate fell by 3,4% points.

Honourable members, we are not pursuing economic growth for the sake of economic growth. Our approach is part of a broad-based development strategy to create work and improved opportunities for the millions of South Africans who survive on meagre subsistence activities or on remittances or grants. We pursue higher economic growth so that we can generate the resources to plough into education, health care, social security, fighting crime and reducing poverty. We pursue higher economic growth as part of a sustainable strategy to address deep-seated poverty and social exclusion in our society.

In opening the Third Parliament in May this year, President Mbeki said:

  The core of our response to all these challenges is a struggle against
  poverty and underdevelopment, which rests in three pillars. These are:
  encouraging the growth and development of the first economy,
  increasing its possibility to create jobs, implementing our programme
  to address the challenges of the second economy and building a social
  security net to meet the objective of poverty alleviation.

Our policy agenda focuses on both growing the formal economy and expanding economic opportunities for those who are marginalised; those who, without direct policy interventions, will not benefit from the fruits of a growing economy.

Reducing this social exclusion through drawing in the millions of people who find themselves trapped in the second economy is a fundamental principle of our policy stance. To achieve this objective, we will have to intervene directly in the way in which the fruits of economic growth are shared, in the way in which economic opportunities are parcelled out.

South Africa’s development challenge is to build a single and integrated economy that benefits all, encompassing both growing, competitive relations with the global economy and a caring, inclusive network of social services and support for the disadvantaged. This is, hon members, on a larger scale, the central challenge also of our international relations: the struggle for modernisation and solidarity against deeply embedded inequalities, conflict and prejudice.

The policy challenge we face involves important choices about the sequencing and complementarity of critical interventions. In the short term, investment and job creation can be accelerated through targeted incentives and public works programmes. For sustained longer-term growth, interventions required include investment in economic infrastructure, spatial development reforms, and a more effective competition policy. In the short term immigrant skills may be critical. In the longer term, further education and training yield increasing returns. In the short term, the distribution and pricing of water and energy resources can be made more efficient. In the longer term, new supply capacity has to be built.

Similarly, in social policy there are sequencing and co-ordination issues. Housing development can be accelerated, but it also needs to be better aligned with spatial plans, job creation and community services. The integration of public and private health networks through social health insurance is a long-term goal, but the modernisation of public hospital infrastructure and administration is a critical precondition. Land redistribution and agricultural development need to be given greater impetus, but completion of the restitution programme is the pressing claim on resources over the MTEF period ahead.

The Medium-Term Budget Policy Statement outlines the choices that government has made about the sequencing of reforms and priorities for the period ahead. The Statement presents an overview of government’s economic, social and development policy priorities in the context of projections for the performance of the economy over the next three years and a coherent framework for fiscal policy and the national Budget.

Let me comment briefly on certain aspects of our medium-term strategic framework. First, government aims to facilitate an increase in the rate of investment: gross fixed capital formation in both the public and private sectors from 16% GDP at present to 25% by 2014.

The investment required for growth must come largely from the business sector. Private sector gross fixed capital formation growth of 7% last year and 7,6 % in the first half of this year is encouraging. An environment supportive of continued investment growth in the years ahead will include moderate inflation, low interest rates, a broadly stable competitive currency and the implementation of appropriate microeconomic reforms.

Overhauling the public transport systems, investment in ports and the renewal of rail rolling stock are key challenges for the public sector, and will rely in part on appropriately structured public-private partnerships. Public-sector investment priorities also include health and education infrastructure, roads, housing, water and electricity services.

Second, in intervening in the second economy, we must balance direct income support with investing in human capital amongst poor communities. The acquisition of skills, the emergence of new businesses and agricultural improvements, better work opportunities and improved livelihoods are critical determinants of social and economic mobility, and are links between the first and second economies, between security and vulnerability and also between accumulation and survival.

Policies and programmes organised around this objective cover a wide spectrum. This includes the Expanded Public Works Programme, which aims to extend job creation into a widening array of public services and infrastructure needs; the new directions in housing and municipal grants, which seek to give greater impetus to community development; small and microenterprise development is set to be boosted by regulatory reforms, microcredit initiatives and business support; a progressive expansion of investment in skills is under way, including growing numbers of registered learners in workplace opportunities; revitalisation of further education; and stepped up financial assistance for students. Land restitution, land reform and agricultural support programmes aim to expand the opportunities and resources of rural communities. Our third objective deals with social services, income support and human development. We need to acknowledge that our social security net is under severe strain. Rapid growth in disability and foster care grant applications indicate both rising income support needs and apparent deficiency in administrative systems. A sustainable social security system must balance, bringing in everyone who is entitled to grants and keeping out everyone who is not entitled to them.

The caseloads of public hospitals and clinics reflect large numbers of victims of crime and road accidents and a rising burden of HIV and Aids, TB and other diseases. Unemployment and social dislocation impact on crime and household insecurity. Social welfare services are unable to respond adequately to the range of needs and distress that confront them.

There are several important directions for reform. The creation of a single social security agency should contribute, in time, to more cost-efficient grants distribution and improved targeting of income support programmes.

Government is putting in place steps to reduce the number of grants going to people who do not warrant them. These include a clear definition of disability and tightening procedures for other grants. Comprehensive proposals for the modernisation of tertiary health services have been developed, building on the successful implementation of targeted hospital rehabilitation projects.

Renewal of the primary school nutrition programme is in progress, following its transfer to provincial education departments. Steady progress is being made with early childhood development programmes and the reorientation of further education colleges.

In strengthening social services, we must be mindful of the continuous challenge to enhance the quality of services, increase value for money and improve the targeting of our services.

Fourthly, a challenge for the decade ahead is to improve the performance of the state, to consolidate the institutional reforms of democratic transition, to build capacity where service delivery falls short and to promote greater participation and interaction of people with organs of government. This is partly about creating an environment conducive to growth and development, particularly in respect of local government planning, administration and the promotion of business opportunities.

Government’s responsibilities for combating crime and violence, ensuring safety on our roads and security in commuter transport services, promoting an efficient and effective justice system enjoy particular priority. Expanding public services needs to be appropriately balanced against the costs of equitable compensation of public service employees. The 2005 Budget will provide for further improvements in the remuneration of police and educators. That is all. [Applause.]

Thank you, Madam Speaker. I was wondering whether everybody had been lulled to sleep in the House. [Laughter.]

Fifthly, South Africa’s partnerships with other states in the SADC region and across Africa are aimed at promoting both democracy and more rapid development. Priorities include the development of efficient transport and communications networks, co-operation in energy and water affairs, expansion of business and trade links and the promotion of shared interests in the wider international community. We also share in the international responsibility to address the impact of both drought and famines, and we should add locusts, occasionally.

Pressing challenges include the normalisation of the situation in certain southern African countries with a view to faster economic growth and strengthened relations within the SADC region. Participation in peace- keeping missions will remain an important responsibility. Within the context of Nepad strengthening the institutions of the African Union and the SADC is an ongoing priority. South Africa continues to play an active role in multilateral institutions, in pursuit of a more just international order and more rapid growth and development in Africa.

Greater co-ordination between government and the private sector is needed in South Africa’s own international marketing, tourism promotion, trade and industrial relations, a financial centre for Africa and hosting of international events. Planning is under way for South Africa’s largest international opportunity yet, the hosting of the 2010 Soccer World Cup. [Applause.]

While the economy grew by just under 3% a year between 1994 and 2004, our projections, and those of most analysts, suggest that the economy is set to grow at a sustainable higher rate over the next five years. When we forecast that the economy would grow by 2,9% this year, most analysts stated that our projections were too optimistic. We cannot find any of them now. But today we are able to reaffirm that we anticipate that we will reach this level of growth, and that most other economic analysts have had to revise upwards their projections towards our own.

Continued fiscal impetus, firm commodity prices and a more competitive real exchange rate are expected to reinforce the effects of lower interest rates and rising disposable income to support average growth rates of around 4% in the medium term.

Our projection for CPIX confirms the wise leadership that Governor Mboweni has given to monetary policy. [Applause.] The CPIX will remain firmly within the target range over the next three years. For 2004, CPIX is projected to be an average of 4,4% despite the rapid increase in the international price of oil this year. With this success in hand, we reaffirm our commitment to low inflation and to the inflation target range of between 3 and 6%. The changes we made to the inflation-targeting framework last year - that is, the shift towards a continuous target - have reinforced the credibility of the target and contributed towards the lowering of inflation expectations.

Although high oil prices pose risks to both global growth and our inflation outlook, we are confident that the inflation-targeting framework can deal with such external shocks without damaging the long-term trajectory of declining inflation. We are also confident that the resilience in our economy will mitigate the negative impact of high oil prices.

We are mindful that various prices or price trends in our economy are controlled or influenced by government. Statistics South Africa has released a discussion document on administered prices, proposing the introduction of an index to monitor this component of consumer price inflation. The regulation of tariff setting by public utilities is a complex matter, requiring detailed understanding of underlying costs, investment requirements, demand conditions and the impact of prices on many different users. Administered prices in the electricity, water, transport, education and health sectors have been examined, and we recognise that in all these sectors there is room for improvement in the price-setting process and the efficiency of prices.

Cabinet has agreed that we should extend further our work on administered prices with a view to achieving an appropriate balance between price stability, financing investment requirements and meeting service-delivery objectives.

As in other aspects of public policy, the sequencing of reforms is critical in respect of exchange controls. Our end goal is to abolish exchange controls on individuals and companies and put in place a set of prudent financial benchmarks to protect the institutional savings built up over decades by our working people.

Following discussions with the Governor of the Reserve Bank, I am pleased to announce several further steps. We propose to abolish exchange control limits on new outward foreign direct investments by South African corporates. Application to the South African Reserve Bank’s Exchange Control Department will still be required in terms of existing foreign direct investment criteria, including demonstrated benefit to South Africa. In addition, South African corporates will be able to retain foreign dividends offshore. Foreign dividends repatriated to South Africa after 26 October this year may be transferred offshore again at any time for any legal purpose. Further details will be published by the South African Reserve Bank.

In line with promoting foreign investment into South Africa and positioning ourselves as a financial centre for Africa, we announced in February this year that foreign companies, governments and institutions may list in South Africa’s bond and securities exchanges. Next month, we will have our first foreign listing in the form of Aquarius Platinum, an Australian mining concern. To support these aims further, we are eliminating restrictions on investment by South Africans in these companies.

In pursuing broad-based economic development, black economic empowerment remains a key objective. Over time, we have to extend economic opportunities to those who were denied access to own the means of production because of their race or gender. As the economy grows and opportunities expand we must ensure that a larger proportion of these opportunities go to historically disadvantaged people. Broad-based black economic empowerment is about extending the number of women and black people who own their own businesses, broadening the number of blacks who own meaningful stakes in larger companies and achieving greater representivity in management positions in industry. [Applause.] Quite correctly, therefore, the Financial Services Charter places ownership as one important dimension of empowerment. But, it also identifies human resource development, increasing access to financial services, outsourcing and procurement from black companies and investment in community development as key elements of economic transformation.

Members of this House will, I am sure, share my concern that many of the proposals appearing these days do not contain such a multi-dimensional view of black economic empowerment. In some cases, the ownership criteria in their draft charters are, sadly, not realistic, leading to unnecessarily complex and risky financing structures. This is self-defeating. While increasing the level of ownership of black people in corporate South Africa is absolutely important, building the economy, increasing production, creating jobs, developing young black managers and investing in social development are just as critical in shaping economic transformation. [Applause.]

As a tangible sign of how soundly structured charters can contribute towards increasing access to services, major banks launched the Mzansi bank account yesterday. This initiative stems directly from the Financial Sector Charter and will go a long way towards bringing in the unbanked millions into our financial system.

Turning then to the fiscal framework, one of our most successful areas of economic reform has been in the implementation of fiscal policy. After a concerted effort to reduce the deficit between 1996 and 2001, we were able to use the dividends of lower interest costs to increase public expenditure in real terms. In addition, we were able to use fiscal policy as a means of stabilising the economy during the economic slowdown earlier this decade.

In 2003-04, we recorded a budget deficit outcome of 2,4%, although revenue fell somewhat below expectations. This year, while our revenue forecasts suggest a marginally higher revenue performance, higher spending on social security grants and higher personnel costs result in borrowing rising to 3,2% of GDP compared to a budgeted 3,1%.

For the 2005 Budget, it is expected that rising corporate profits, the continued strength in VAT and personal income tax receipts and further broadening of the tax base will result in a moderate increase of the overall tax burden.

The Budget deficit will widen to 3,5% next year, bringing the net borrowing requirement to its highest level relative to GDP since 1997-98.

Recognising the importance of maintaining a sustainable fiscal stance over the medium term, the deficit will be reduced to 2,7% by the fiscal year which ends on 31 March 2008. The costs of servicing our debt stabilised at 3,6% of GDP.

Non-interest spending on services is projected to rise by 4,3% a year in real terms over the next three years. The revised fiscal framework makes provision for an additional R50 billion to be added to departmental budget estimates.

Of this, about R21 billion is required to finance rapid growth in the take- up of disability and foster care grants. The recently signed salary agreement has also required additional resources to be added to personnel budgets. The requirements of land restitution proposals, social grants and salary adjustments will take up the greater part of the available additional resources in the first and second years of the MTEF. In the third year, additional allocations will also be made for infrastructure, further education and training, municipal services and other key priorities.

The Budget framework also takes account of a rising public sector borrowing requirement as state-owned enterprises fund a large proportion of their capital investment plans by borrowing from the capital markets. In addition, strong growth in infrastructure spending by provincial and municipal governments will contribute to the general government borrowing requirement. The public sector borrowing requirement is expected to reach 4,6% of GDP in 2007. Although this borrowing increases the overall debt of the public sector, the increased investment, targeted at economic infrastructure, is strongly supportive of economic growth.

However, Madam Speaker, it is not our borrowing but our revenue capacity that has built the foundation of our fiscal position. After a decade of fundamental reforms of our tax structure and improvements in revenue administration, these foundations are firm.

We are once again able to report that revenue is likely to exceed its target for the current fiscal year. Last year, the outcome was R5,1 billion short of the original Budget estimate because of low profits in resources sectors primarily.

The contribution of companies to tax revenue remains below target this year, but this is offset by a notable recovery in personal income tax and VAT receipts.

In 2003, we announced an exchange control amnesty partly in order to broaden our tax base. We received about 43 000 applications. To date 16 033 have been adjudicated, yielding a total of R826 million in levies payable. At this stage, indications are that the value of foreign assets declared by applicants will be about R65 billion, and we estimated that this will raise about R2,2 billion in levies. The long-term benefit to the economy is a wider tax base and a new relationship of trust between citizens and the authorities. We take this opportunity to thank South Africans for their participation in this amnesty. [Applause.]

Madam Speaker, the 2004 Revenue Laws Amendment Bill, which gives effect to the main tax proposals announced in the Budget Speech on 18 February this year is also tabled before this House today.

Allow me to highlight a few areas that are dealt with in this Bill. We announced several measures to encourage investment inflows and to underpin South Africa’s role as a regional economic centre. Government is eliminating the existing tax on interest-bearing investments by residents from Swaziland, Namibia and Lesotho.

Changes have also been made to the VAT system to support our position as a freight distribution hub. The proposals contained in the Revenue Laws Amendment Bill will also contribute to broad-based empowerment by offering tax breaks for truly broad-based share plans directed at lower level employees. Companies will be permitted to provide shares of up to R9 000 in value to employees over a three-year period without any fringe benefit tax consequences, provided this arrangement meets the prescribed conditions, one of which is that 95% of the employees must benefit from the scheme. [Applause.] At the same time, tax benefits from share options for high- income earners become subject to more stringent limitations.

Against the background of the robust trend in consumer spending and our need to avoid undue reliance on borrowing, tax relief will not be a prominent feature of our 2005 Budget. However, efforts to simplify…I thought that would pick up an applause as well, Madam Speaker. [Laughter.] Efforts to simplify the income tax system and reduce the compliance burden on small businesses will continue. Consideration is also being given to possible reforms of the tax treatment of medical scheme membership and health insurance.

To limit the ease with which deemed business travel cost can be claimed against the existing motor vehicle tax allowance, taxpayers can expect certain adjustments in these tax rules. These changes will have the effect of reducing the present encouragement of high-value vehicle purchases financed, in effect, through travel allowances incorporated into cost-to- company salary structures. The tax system should allow for legitimate business travel costs, but this need not be accompanied by such a high tax loss, as is presently the case.

The National Treasury is currently undertaking parallel reviews of the South African retirement fund industry from both a regulatory and a tax perspective. The new regulatory framework will form the foundation of an improved retirement industry, directed at the following key policy objectives: more transparent disclosure rules regarding cost structures of retirement and risk benefits, the encouragement of preservation of built-up reserves while discouraging early withdrawals and improving competition in the industry by providing incentives for portability between one scheme and the next.

A discussion paper on the regulatory aspects of pension funds will be released for comment later this year. A subsequent tax policy discussion paper will deal with the existing shortcomings of the retirement fund tax regime and proposals to align the South African tax position with international best practice. The central aim of the pension fund reform initiative is to promote and protect individuals’ savings for their retirement. I do hope that we will be able to deal with this matter in some detail on 23 February when the Budget is tabled.

In respect of the mining industry, two tax initiatives will be advanced during 2005. The 2003 Mineral and Petroleum Royalty Bill will be revised, taking into account comments from various stakeholders. It will address outstanding issues such as differentiation of royalty rates, marginal mine treatment, the elimination of double royalty risk and transitional matters.

Secondly, a holistic review of the mining sector will focus on the low effective tax rates of mining companies, recommendations relating to the gold mining tax formula, the appropriateness and international comparability of the current mining investment allowances and the consideration of special allowances for exploration activities and mining rehabilitation programmes. Possible tax measures to assist the small-scale mining sector will also be investigated. Proposals will also be brought to Parliament next year to deal with tax matters relating to South Africa’s hosting of the 2010 Fifa World Cup Soccer Competition.

I turn now to the Adjustments Appropriation Bill, through which the executive seeks Parliamentary authority for its revised spending plans for the current fiscal year. The Adjustments Appropriation Bill provides for various kinds of changes to spending plans, detailed in section 30(2) of the Public Finance Management Act. As members will recall, the law sets strict limits to the adjustments that may be proposed.

This year, adjustments raise the estimated main Budget expenditure level of R368,9 billion by a further R2,8 billion. Details are set out in the 2004 Adjusted Estimates of National Expenditure, which includes breakdowns of all the changes on each national Budget Vote.

In the February Budget, funds were set aside for contributions for black economic empowerment and drought relief. The adjusted appropriations include R150 million for the National Empowerment Fund to finance proposed BEE financing products based on an agreed business plan. An amount of R430 million is allocated towards emergency drought relief interventions on the votes of the Departments of Provincial and Local Government, of Water Affairs and Forestry and of Agriculture.

The revised estimates include R1,65 billion for unforeseeable and unavoidable expenditure, recommended by the Treasury Committee. A total of R2 billion in roll-overs of funds unspent last year is added to the national department appropriations.

Including adjustments to conditional grants, the additional allocations to provinces amount to R4,2 billion and will assist in meeting the revisions arising out of the wage settlement and for faster than expected growth in social grants beneficiary numbers.

As in the past, the Treasury Committee has been scrupulous in reviewing requests from national departments for funding of unforeseeable and unavoidable expenses. The larger amounts are the following: R599 million on the Department of Public Works Vote to settle outstanding claims for rates and service charges owed to municipalities; R500 million for working capital requirements for the Pebble Bed Modular Reactor Company, following unanticipated delays in its negotiations to secure a foreign equity investment partnership; R200 million to settle targeted land restitution claims on the Land Affairs Vote; R45 million for the Independent Communications Authority of South Africa’s VAT liability resulting from a dispute that has, as usual, been resolved in favour of the South African Revenue Service; R73 million to Public Works for essential repair work on important buildings, for the installation of lifts and for office and residential accommodation for members of the executive appointed after the 2004 elections; R40 million to Social Development for improving the integrity of the grant system and for implementing steps to address deficiencies in the administration of social grants.

There are also smaller adjustments arising from important matters. The Department of Sport and Recreation receives an allocation of R1,6 million for the additional capacity required for the department’s responsibilities relating to the 2010 FIFA World Cup. Provision is also made, members will be relieved to hear, and I see a number of them smiling at me, for salaries and office staff of the newly appointed Deputy Ministers in the Departments of Sport and Recreation, Foreign Affairs, Communications, Science and Technology, and a new ministry for Arts and Culture, Minister Mangena. [Applause.] So, you no longer have to share the house with Dr Jordaan. Each one of you is now taken care of.

Madam Speaker, these and other changes are set out in the Adjusted Estimates. I am also pleased to be able to report that, partially offsetting these increases in expenditure, departments have identified savings of R1,1 billion, mainly resulting from downward revisions in the costs of the strategic arms procurement, Minister Lekota. The National Treasury has also reduced its projection of the costs of servicing state debt by R815 million.

Taking these changes into account, we expect expenditure on the national Budget this year to amount to R371,7 billion. The revised estimate of revenue is R328,2 billion, bringing the projected deficit for the year to R43,5 billion, or 3,2% of GDP.

For the next three years, national transfers to provinces and local government will grow by 4% and 4,3% a year in real terms. Provinces receive an additional R33,5 billion while municipalities will receive a further R2,8 billion. The additional amounts for provinces provide for the increased take-up of social grants, higher personnel costs, increased infrastructure spending and a consolidation of education and health spending.

The payment of social security grants will shift to the national sphere once the social security agency is up and running. As an interim measure, provinces will continue to deliver social grants, but these will now be financed out of a conditional grant as opposed to their equitable share components.

The provincial equitable share formula is adjusted to take account of this shift as well as new data from the 2001 Census. The restructured equitable share formula has larger education and health components as well as elements taking into account backlogs in infrastructure and an economic activity component. The shift in the social grants function will allow for better planning and budgeting, which should allow for more stable education and health budgets going forward.

In addition to a step-up in provincial infrastructure grant, the housing grant and allocations for the municipal equitable share and municipal infrastructure grants receive substantial boosts. Minister Mufamadi is a very nice chap. This will allow for the new housing strategy to be phased in over the next three years, together with expanding the provision of basic household services.

In conclusion, South Africa is reconstructing its social and economic order under intense international scrutiny. For those who believe that inequality and fear can give way to development and compassion, our progress during the first decade of freedom has been a source of hope. Our success in building a dynamic economy and better opportunities for our children and grandchildren will assist in charting a new course for overcoming divisions in a fragmented world.

Governing is about making choices. The privilege of hard-won democracy carries with it the profound responsibility to make these choices, rather than have them imposed on us. We make these choices guided by our vision of a people-centred society in which the interests of the poor are advanced, in which economic growth is accompanied by broad-based development and in which the divisions between our first and second economies progressively diminish.

Madam Speaker, I hereby table for consideration in this House, the following documents: the 2004 Adjustments Appropriation Bill, the 2004 Revenue Laws Amendment Bill, the 2004 Adjusted Estimates of National Expenditure and the 2004 Medium-Term Budget Policy Statement. Hon members and all those listening to this, I thank you for your patience. [Applause.]

The Bills, together with the related papers tabled, referred to the Portfolio Committee on Finance for consideration and report.

                        MOTION OF CONDOLENCE

                   (The late Mr Dumisani Makhaye)

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move without notice:

That the House –

     1)  notes with shock and profound sadness the untimely death of
         Dumisani Makhaye, who passed away on 24 October 2004;

 2)  recognises that Dumisani Makhaye was a South African patriot who,
    throughout his youth and adult life, demonstrated a deep commitment
    to the liberation of the people of our country and the continent of

 3)  remembers that –
       a) Dumisani Makhaye was one of the stalwarts of our people’s
          struggle for a nonracial, nonsexist, democratic South Africa;

       b) in 1991, he was elected into the executive committee of the
          ANC Southern Natal region;

       c) at the time of his death, he was a serving member of the
          National Executive Committee of the ANC;

       d) he was Chairperson of the Standing Committee on Finance in
          the KwaZulu-Natal provincial legislature from 1994 to 1999,
          served as MEC for Housing from 1999 to 2004, and at the time
          of his death was serving as MEC for Local Government, Housing
          and Traditional Affairs in the KwaZulu-Natal province;

 4)  believes that he leaves a legacy that epitomises heroism and
    dedicated service, and that his untimely death has robbed South
    Africa of a great son who still had a tremendous contribution to
    make to the reconstruction and development of our nation; and

 5)  conveys its deepest-felt condolences to the Makhaye family, his
    loved ones and the ANC.

Agreed to.

The SPEAKER: The condolences of the House will be conveyed to the family.

                        MOTION OF CONDOLENCE

                 (The late Mr Mbongeni Jan Ngubeni)

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move without notice:

That the House –

(l) notes with shock and profound sadness the death of Mbongeni Jan Ngubeni, a former member of this House, who passed away on Saturday, 24 October 2004;

(2) recognises that Mr Ngubeni was a South African of unwavering commitment to the goal of the realisation of a better life for all;

(3) recalls that he played an active role as a member and leader of the ANC and the SA National Civics Organisation;

(4) acknowledges his valued contribution as a member of this House;

(5) believes that his commitment to the creation of a nonracial, nonsexist and democratic South Africa will serve to inspire future generations to continue working for the creation of a free and just society; and

(6) conveys its sincere condolences to the Ngubeni family, their friends and the ANC.

Agreed to.


                         (Draft Resolution)


That the House –

 1)  notes that on Sunday, 24 October 2004, the government and people of
    Zambia observed their country’s 40th independence celebrations;

 2)  recalls –
      a) the contribution that the government and people of Zambia made
         in the struggle to defeat colonialism and apartheid; and

      b) that, since her independence, Zambia became host to many
  Southern African liberation movements; and

      c) (3) wishes the people and government of Zambia well in their
         40th independence celebrations.


Agreed to.

                     ELECTION OF LINDIWE MASEKO

                         (Draft Resolution)

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Speaker, I move without notice:

That the House -

1) notes –
     a) the election, of the hon Lindiwe Maseko, MPL, as Chairperson of
        the Commonwealth Women Parliamentarians for the next three

(b) that Ms Maseko’s election took place during the 50th Commonwealth Parliamentary Conference held from 29 August to 9 September in Canada; and

    c)  Ms Maseko became the first directly elected representative of
        women parliamentarians on the Commonwealth Parliamentary
        Association (CPA) Executive Committee;

2) believes that Ms Maseko’s election as Chairperson of the Commonwealth
   Women Parliamentarians represents another milestone in the struggle
   for meaningful participation of women in structures of global
   governance; and

3) congratulates Ms Maseko on her election as Chairperson of the
   Commonwealth Women Parliamentarians and wishes her success in her new
   and very important role. [Applause.]

Agreed to.

                         MEMBERS’ STATEMENTS


                        (Member’s Statement)

Ms S P RWEXANA (ANC): Mam’uSomlomo, umbutho wesizwe i-ANC uvuyisana neentsapho ezingamashumi amahlanu zase Mizamo Yethu, ngokufumana kwazo izindlu ezakhiwe ngezitena. Le nto yenzeka ngenxa yemfesane yabemi baseIreland, abathe bazinikela ekwakheni ezi zindlu bengajonge nzuzo. Phakathi kwabantu abaza kuzuza kweli phulo ngumama uNongenile Mshiyo, ominyaka ingamashumi amathandathu anesine nophila ngendodla. Uthi ebengazi ukuba uya kuze afumane indlu esemgamgathweni esaphila. Kule minyaka ilishumi elinesihlanu elapha kwelentlanzi, okoko wahlala etyotyombeni, namhlanje uziva echwayitile kukubuyiselwa isidima sakhe. Umama uMshiyo uthi ubulela uRhulumente oxhuzula imikhala kweli izwe ngemisebenzi neenzame zakhe zokuphucula ubomi neemeko zokuhlala zabantu belijongile. Ndiyabulela. [Kuyaqhwatywa.] (Translation of Xhosa member’s statement follows.)

[Ms S P RWEXANA (ANC): Chairperson, the ANC would like to congratulate the 50 families of the Imizamo Yethu community who were given the keys to their RDP houses recently. These houses have been built for free with the assistance of Irish citizens who were committed to seeing the building campaign becoming a success.

Mrs Nongenile Mshiyo, a 64-year-old woman, who also receives a monthly grant, is one of the people who received a house and she said that she had lost hope that she would ever own a house. She says that she has lived in a shack since she came to Cape Town more than 15 years ago. Today she is very happy because she feels that her dignity has been restored. Mrs Mshiyo is grateful to the ANC-led government for its efforts to improve the lives and living conditions of its citizens whilst they are still alive. I thank you. [Applause.]]


Dr J T DELPORT (DA): Madam Speaker, the DA is concerned at reports that the Office of the President is considering using taxpayers’ money to fund the Deputy President’s legal bills in the Shaik trial. Deputy President Jacob Zuma is not facing charges in this case and the allegations linking him to fraud and corruption charges, against his benefactor Schabir Shaik, referred to acts which occurred before Mr Zuma became Deputy President.

Furthermore, none of the allegations referred to the Office of the Presidency or that of the Deputy Presidency. On the contrary, all the allegations referred to him in his personal capacity as an, albeit influential, ANC member. The legal costs may well exceed half a million rand. This money should be used for service delivery and not to protect the reputation of an ANC member whose financial difficulties have come under public scrutiny.

In these circumstances it is Mr Zuma, in his personal capacity, who should foot the bill. Taxpayers should not in any way be burdened with his legal costs. There is no moral or legal imperative for the government to do so. The DA urges the President to reject this application for funding. [Applause.]


                        (Member’s Statement)

Mrs S A SEATON (IFP): Madam Speaker, in a survey conducted by the bilateral chamber consultative committee investor survey among several European and Scandinavian chambers of commerce, members have found that 70% of the respondents view corruption as the most significant future concern in South Africa despite high confidence levels. The concern for corruption was followed by a concern for the competency of the Public Service, flexible labour relations, crime and violence.

A 79% bad to very bad return was made on the government’s HIV/Aids policy, which means that this has also damaged the image of the country and crippled our chances for luring foreign investment. This is a clear indication that there is much work that needs to be done to combat these fears that ultimately hinder foreign investment, and that hinders economic growth with regard to foreign investment.

The government needs to invest time and money to, first of all, stamp out corruption and its devastating effects. Time and money needs to be invested in further lowering the crime and violence levels as well as improving perceptions on labour relations. The government should also simultaneously wage a campaign for improving perceptions about stability and growth in South Africa in order to make the country friendlier for investment.


                        (Member’s Statement)

Mr M P SIBANDE (ANC): The ANC congratulates Miss Peggy Mkhondo and her team on winning the Community Builder of the Year Award. They won the award in recognition of the success of the Titirheleni Vamanana Project, a brick- making and fencing project. The project started out with six women, and today it has grown four times in size.

The annual Community Builder of the Year Award ceremony, which was held on 21 October 2004, is sponsored by the Sowetan, Old Mutual and SA Broadcasting Corporation (SABC). The focus of the programme is to recognise people who do extraordinary things in their communities, often with little or nothing in the way of resources.

The ANC commends this shining example of the people’s contract in action, where communities and businesses come together in the fight against poverty. [Applause.]


                        (Member’s Statement)

Adv A H GAUM (NNP): Speaker, ons het die afgelope paar dae twee van ons oud- Springbokrugbyspelers verloor: ds George Daneel, wat voor sy dood in die ryke ouderdom van 100 die oudste lewende Springbok was, en die legendariese Okey Geffen. Ds Daneel was deel van die toerspan na Engeland, waar die Springbokke geen afrigter gehad het nie en tog al die toetse gewen het, wat ’n mens nogal laat dink. (Translation of Afrikaans paragraph follows.)

[Adv A H GAUM (NNP): Speaker, we have lost two of our former Springbok rugby players in the past few days: Rev George Daneel, who, before his death - at the ripe old age of 100 - was the oldest living Springbok, and the legendary Okey Geffen. Rev Daneel was part of the touring team to England where the Springboks were without a coach and still won all the tests, which rather makes one think.]

What made the prop forward Okey Geffen so remarkable was not so much his scrumming ability as his extraordinary ability to kick the ball between the posts with unerring precision.

Ons eer die nagedagtenis van hierdie twee groot sportmanne en betuig ons meegevoel aan hul naasbestaandes. [We honour the memory of these two great sportsmen and express our sympathy to their next of kin.]

While we salute yesteryear’s Springbok greats, we welcome our new heroes that are included in the Springbok group for the tour to England, Ireland and Argentina. The outrage amongst some with regard to this group is cause for concern. It is a pity that there isn’t much more appreciation amongst some minority communities as this team bears testimony to the progress that has been made with regard to transformation in rugby.

It is also regretted that some newspapers only highlighted criticisms of the team selection, and treated the fact that this Springbok group of 33 is the most representative of all time as a side issue. We believe that South Africans should have confidence in this team and the Springbok selectors that also selected the Springbok team that won us our second Tri-Nations Cup.

There should also be much more appreciation for South African rugby’s efforts to select a representative, high-quality Springbok team that is willing and able to take on and conquer the top rugby teams of the world. I thank you. [Applause.]


                        (Member’s Statement)

Mnr P J GROENEWALD (VF Plus): Adjunkspeaker, die VF Plus het met skok verneem dat ’n afhanklike van ’n diplomaat wat adv Gerda Ferreira aangerand en gepoog het om haar te verkrag, skotvry daarvan afgekom het as gevolg van diplomatieke immuniteit. Diplomatieke immuniteit kan nooit ’n paspoort tot misdadige optrede wees om vervolging vry te spring nie.

Die VF Plus doen ’n beroep op die Regering om dadelik in te gryp sodat die oortreder vervolg kan word. Die Regering behoort dadelik te onderhandel vir die uitlewering van die oortreder. Die diplomatieke korps behoort ook ’n rol te speel om misdadigers wat agter immuniteit skuil, uit te lewer ten einde die integriteit van die diplomatieke korps te verdedig en te handhaaf. Die VF Plus versoek spoedige optrede in dié verband.

Wat die situasie vererger, is dat die oortreder nie direkte familie van die diplomaat is nie, en ook nie by die diplomaat inwoon nie. Die indruk word gewek dat politieke immuniteit so wyd moontlik gedefinieer word ten einde ’n misdadiger te beskerm. Dit is vir die VF Plus onaanvaarbaar, en vereis onmiddellike optrede. Dankie. (Translation of Afrikaans member’s statement follows.)

[Mr P J GROENEWALD (FF Plus): Deputy Speaker, the FF Plus learnt with shock that a dependant of a diplomat, who assaulted Adv Gerda Ferreira and attempted to rape her, was let off the hook as a result of diplomatic immunity. Diplomatic immunity can never be a licence for criminal behaviour to escape prosecution.

The FF Plus appeals to the government to intervene immediately so that the offender can be prosecuted. The government ought to negotiate immediately for the extradition of the culprit. The diplomatic corps should also play a role in the extradition of offenders who hide behind diplomatic immunity, in order to defend and maintain the integrity of the diplomatic corps. The FF Plus calls for speedy action in this regard.

What aggravates the situation is the fact that the culprit is not a direct relative of the diplomat, and neither does he lodge with the diplomat. The impression is being created that diplomatic immunity is being defined as broadly as possible in order to protect a criminal. This is unacceptable to the FF Plus and requires immediate action. Thank you.]


                        (Member’s Statement)

Mr C L GOLOLO (ANC): Madam Speaker, 5 October is International Teachers’ Day, a day on which South Africa has based its National Teachers Awards. The fifth National Teachers Awards ceremony was held last week in Pretoria.

The ANC salutes Miss Elizabeth Maboakae Nekhwevha, a teacher who has been in the teaching profession for the past 27 years. Last week her dedication paid off when she won the Lifetime Achievement Award. This was in recognition of her courageous work in establishing a remedial unit for learners with learning problems. While utilising RDP funds, she led efforts in the reconstruction of her school.

The ANC further thanks all the teachers across the length and breadth of our country and encourages them to emulate the example of those who won. I thank you. [Applause.]


                        (Member’s Statement)

The CHIEF WHIP OF THE OPPOSITION (DA): Madam Deputy Speaker, MPs not involved in the travel voucher scandal are becoming increasingly irritated at the huge delays which have occurred. Travelgate was uncovered two years ago, and the delays mean that the scandal will still hang over Parliament and MPs well into next year.

Reports that the SAPS is holding documents relating to Travelgate and has refused, or neglected, to hand these to the Scorpions came as a shock to many. Turf battles between rival organisations cannot be permitted to prolong Parliament’s embarrassment about allegations of widespread dishonesty and corruption. The hon Minister of Safety and Security needs to instruct the commissioner to hand over the documents without delay.

Parliament itself seems to be dragging its feet, and I would like to know why Bathong, the travel agent, has not been liquidated. Interrogation in liquidation will uncover the truth.

The DA insists that those who are convicted of being dishonest with public money must be punished and they must lose their seats in Parliament. [Applause.]


                        (Member’s Statement)

Ms S RAJBALLY (MF): Madam Deputy Speaker, the acknowledgement on the front page of the Sunday Times that half of South African parents admit to hitting their children and that a third of these parents admit to beating their children severely, was shocking. It was explained in this article that parents tend to hit their children with the intent to cause pain, not injury, for the purpose of correction or control.

A study was carried out nationally by the HSRC with approximately 1 000 respondents nationally. It was deduced that this violence is transferred from generation to generation. Though it is felt that parents have a right to chastisement, as it serves to teach the young social skills in terms of right and wrong, violence is not supported, especially if it is taken into the future. There are other ways to instil discipline. Parents should seek advice on this, and education regarding discipline should be advanced at school so as to avoid such violence in future adults. Also, alternate methods of discipline should be suggested that would not cause as much physical or emotional trauma as that of chastisement.

At present, as parents we need to realise that at some stage beating may turn into abuse. Further, children are innocent and, as adults, we need to educate them as to what is right and wrong. However, greater benefit may be attained by using civilised methods of discipline. I thank you.


                        (Member’s Statement)

Ms L N MOSS (ANC): Madam Deputy Speaker, the ANC applauds the decision taken by the Minister responsible for energy in the Southern African Development Community to sign the intergovernmental memorandum of understanding on the Western Power Corridor Project, Westco.

Westco is a joint venture project by national power utilities aimed at providing low-cost, affordable and environmentally friendly energy. The project will build power stations at various sites in a number of countries, including the Democratic Republic of Congo, Angola and Namibia.

This regional initiative is a Nepad flagship project that will further enhance our efforts to unite Africa politically, economically and socially. Positive spin-offs will flow from this initiative, providing sustainable energy to our people throughout the region.

The ANC believes that the provision of cheap, reliable and sustainable energy will strengthen our efforts aimed at the achievement of a better life for all the people of Africa. I thank you. [Applause.]


                        (Member’s Statement)

Mr R JANKIELSOHN (DA): Deputy Speaker, Parliament should use the constitutional powers of subpoena at its disposal to force the Minister of Safety and Security to release crime statistics on a more regular basis. The decision by government to release crime statistics on an annual basis - and then five months after the due date - is not in the interests of accountability or transparency.

A briefing by the SA Institute for Security Studies to Parliament confirmed that the annual national release of crime statistics leads to suspicion and questions about the accuracy of such statistics.

The regular release of crime statistics at local level will assist individuals to assess the types of crimes and the frequency of crime committed in their neighbourhoods. This will enable them to take preventative measures to secure their property and their families. The public have the right of access to information that affects their lives in such a dramatic manner.

The Portfolio Committee on Safety and Security should also receive regular updates on crime statistics in order to enable it to carry out its oversight function.

Parliament represents the interests of the people of South Africa and not the interests of the Minister of Safety and Security. The moratorium on crime statistics is an executive decision that may be ruled on by Parliament if it has the political will to hold the executive accountable. Thank you. [Applause.]


                        (Member’s Statement)

Prince N E ZULU (IFP): Madam Deputy Speaker, what was meant to be a day of joy and celebration turned into a nightmare when eight people were killed and 62 injured after the bus that they had been travelling in overturned between Vryheid and Dundee in KwaZulu-Natal on Saturday 23 October 2004. The passengers were returning to their homes after attending wedding festivities. In a separate incident a few days earlier one person was killed and 42 injured when a school bus was involved in an accident in Johannesburg.

We offer our deepest condolences to the families of the deceased and wish all the injured a full and swift recovery. We also urge the relevant authorities to conduct thorough investigations into these two incidents. I thank you.


                        (Member’s Statement)

Ms M R MORUTOA (ANC): Deputy Speaker, on 27 October 1917 a giant South African, Oliver Reginald Tambo, was born in Bizana, a small rural town in the eastern part of Pondoland.

As we celebrate the first decade of liberation tomorrow, our celebrations will assume a heightened sense of pride and commitment. Tomorrow, South Africans from all walks of life will celebrate the 87th birthday of Comrade President Oliver Tambo.

O R Tambo led the liberation forces of our people during the most difficult times in the history of our country. He led us through bans and banishments. He motivated us to rise up against the full might of apartheid colonialism. Comrade O R led our efforts to mobilise the international community in support of the noble objective to create a nonracial, nonsexist, truly democratic and prosperous South Africa.

His leadership, as we began the efforts aimed at normalising the political climate in our country and as we worked for peace among all our people, remained and remains a beacon in our history. His unshakable commitment to justice, peace and freedom remains our guarded asset embodied in the letter and spirit of our Constitution. Long live the spirit of Oliver Reginald! Long live! Thank you very much. [Applause.]


                        (Minister’s Response)

The MINISTER OF SAFETY AND SECURITY: Madam Deputy Speaker, I want to share with the hon Gibson the experience of how our systems of democratic governance work, which is obviously an experience he’s never going to be participating in during his lifetime.

There are structures that government has formed. The Ministries of Justice and Safety and Security serve on a structure that is called Crime Prevention, Justice Crime Prevention and Security. That structure is serviced by a cluster of directors-general and the Director of Public Prosecutions also serves in that cluster. What this means is that if there is a problem at any level of prosecutions, the Director of Public Prosecutions approaches the national Commissioner of the SA Police Service. If there is no joy there, the Director of Public Prosecutions approaches the Minister of Justice, and the Minister of Justice raises that problem with the Minister of Safety and Security. In that kind of communication you do not require any documents.

All of these people work together on a daily basis, and each one of them is just a phone call away from the other one. I have not heard from the Minister of Justice that such a problem exists. I have not heard from the National Commissioner that such a problem exists, and I’m not in the business of picking things up from the street and responding officially to such things. [Applause.]

Mr Jankielsohn, please raise the same question next week, because I would want to engage fully with you on that question. Because I only have two minutes now, I won’t be able to deal with it. [Interjections.]

The DEPUTY SPEAKER: Order! Order! Hon Minister, you actually have more than two minutes. Three statements were referred to your portfolio, which means you have a total of six minutes, and you have just used two and a half minutes. [Applause.]

Mr M J ELLIS: Madam Deputy Speaker, on a point of order: That is not the way the Rule reads. He is allowed two minutes. If there are other Ministers who require time as well, he can reply again after that. He does not automatically get three turns just because three questions were directed at him.

The DEPUTY SPEAKER: Order! Hon Minister, I have made a ruling and you therefore have the floor. [Applause.]

The MINISTER OF SAFETY AND SECURITY: Madam Deputy Speaker, hon Jankielsohn, you know what happens when we are compiling a report. Let’s for example take an ordinary company; the first day one starts compiling that report will be many months away from the time that report will be tabled. You should know this. In other words, if the financial year ends on 31 March, the report you will give starts on 1 April, and therefore some of the information in that report will be 12 months old. You should understand that.

It is the same with statistics. [Interjections.] What we have said in regard to statistics is the following: One needs to explain away statistics. They are figures only. We need to explain what those figures mean, and the only way to explain them is in an annual report. Please, Mr Jankielsohn. [Interjections.] The annual report is therefore submitted within a timeframe that has been defined by this Parliament, and we are acting within the ambits of the laws of this Parliament to do these things the way that we do them. Please, Mr Jankielsohn, that is how it is done. [Interjections.] [Applause.]

                      FIGHT AGAINST CORRUPTION

                        (Minister’s Response)

The MINISTER OF DEFENCE: Madam Deputy Speaker, the attention of the House has been drawn to the urgency with which we need to tackle the question of corruption. I must agree with the hon member that it is in the interests of our country that this issue be given priority attention. I think that explains why, in the programme of action for government in this term of office, we have made a commitment to place it very high on our agenda. I must therefore say that we agree with the member that the battle against corruption must not ease, but rather be intensified.

Now, of course in saying that, we must immediately add that corruption is of such a nature that it does not involve the executive alone. The executive must lead in the battle against corruption, but society as a whole - all the political parties in this country and other sectors of society, such as business, sporting bodies and so on - must be mobilised in the battle against corruption.

I have been reflecting, since the member commented, on how many of the members of our various political parties have been seen to be working with communities, coming to the police stations, or even supporting efforts to expose corruption, because it is clear that people who are talking about corruption in this House, whether on the side of the ruling party or the opposition, are aware that there is corruption. However, it is surprising that none of us is seen in actual practical campaign work, either leading communities or working with them, to expose corruption there where we see it happen, whether in police offices, the Department of Transport offices, and so on. We do not see this leadership coming from the parties.

                        CORPOREAL PUNISHMENT

                        (Minister’s Response)

The DEPUTY MINISTER OF EDUCATION: Hon Deputy Speaker, we would like to support Ms Rajbally by endorsing her sentiments. We have abolished corporeal punishment in our schools and took it from the statute books. We do believe that the issue of violence in the home is something that has to be addressed.

The Constitution specifically provides that every person has a right to be free from all forms of violence, from either public or private sources. In relation to the rights of the child, the Constitution also provides that a child should be free from maltreatment, abuse and degradation. We do believe that whilst at school we ensure that no corporeal punishment is executed, there is a responsibility at home to ensure that our children are free from any form of violence.

May I also respond to the issue regarding the national awards by saying that whilst we support and endorse the statement, and in fact salute Ms Elizabeth Mabakae, the recipient of the award, we would also like to indicate that at the national awards ceremony there were awards in different categories, namely primary school, high school, as well as ABET and early childhood development. The event was a great success, and in fact affirmed our commitment to quality education and dedication from amongst the teachers. Thank you. [Applause.]


                      (Subject for Discussion)

Mr C M LOWE: Deputy Speaker, could I at the outset thank the ANC for agreeing to this debate this afternoon and for the wonderful floral display that they have put on especially for the debate. [Laughter.] It is a matter of huge importance, given our skills crisis in the country and also the critical unemployment figures, and on that score I would have hoped to have seen the Minister of Labour here this afternoon, taking part in the debate, or at least here on the benches. It is a really shame that he is not here.

Nonetheless, I hope that we shall have a constructive debate that focuses on finding solutions, because government’s Seta system fails to address South Africa’s current skills crisis, which is the main supply-side cause of our 42% unemployment rate. All recent research shows that there is a gross lack of intermediate and high-end skills, while this year’s HSRC skills survey showed that less than 40% of school-leavers found jobs.

Nearly 90% of all registered Seta learners drop out before completing their courses, because they see it as a stopgap while they search for a real job. Twenty-five per cent of Sacob’s learners absconded or found other work and are in breach of their contracts.

The data from the National Skills Authority up to June this year show that only 9 502 of a total of 70 000 registered learners have completed their learnerships since implementation in March 2001, a completion rate of just 14%. There is little, if any, information available to say how many of those paltry 9 502 learners actually found a job after completing their learnerships. As to the remaining 60 498, who knows?

Small, medium and micro businesses, SMMEs, meanwhile, the only net generator of new jobs in the next decade, are bogged down by the administrative burden of implementing learnerships. They cannot afford to cut through the layers of red tape as large corporations do, because the accreditation requirements prevent them from becoming workplace training providers. Yet, it is in these small businesses, not the large corporates, that we must train and reskill to create jobs if we are ever to reduce the 8,4 million unemployment queues.

Solving a problem of this magnitude means clearly delineating responsibilities between the Department of Education and the vocational training initiative used. Yet it seems that the Departments of Education and Labour are involved in a turf war over who is responsible for what. The integration of a National Qualifications Framework, which was meant to resolve this standoff, is now two years overdue.

The Seta system costs R3,2 billion a year and ratchets up the payroll tax of business by 1%. In the last three years Setas underspent by R2, 8 billion, and many face problems of institutional capacity. Only 21% of the 120 000 firms paying the levy in 2002 had grants disbursed to them. This situation has now improved, but not substantially, and more than 80% of grants disbursed are to entities other than SMMEs with more than 200 employees.

The idea that a few bureaucrats can effectively co-ordinate vocational skills acquisition in an economy is long outdated. So far, the state has classified 701 types of learnerships, but no matter how many they list, or how many initiatives they launch, they will still fail to match development programmes to employers’ needs.

The administrative rigmarole required is too onerous for small businesses that stand to claim back a measly R325 per month on a reasonable payroll of R50 000. It is simply not worthwhile for small businesses to fill out all the paperwork and employ a skills development facilitator to implement the required formal training when the business owner knows that on-the-job training, not recognised in the current scheme, is a far better development solution.

The Minister reported that eight Setas required attention and two were underperforming, but our detailed analysis of all the Seta annual reports showed that only 43 145 learnerships were arranged in 2004, at an average cost of just under R18 000 per learnership. Even if we accept the official claim that 69 000 people are currently enrolled in learnerships, for which we can find no statistical evidence, this figure is still just a drop in the ocean and assists less than 0,9% of the 8,4 million unemployed South Africans.

Large businesses may benefit, but the system is failing small businesses. There are nowhere near enough learnerships to fill the skills deficit and, where they are taking place, the fallout rate is nearly 90%. There are no statistics to show how many learners successfully find full-time employment. It’s time for radical change!

The DA’s solution to the skills crisis is to allow businesses, which are by their very nature forward thinking, to decide which skills will be required in the future. Companies and private sector bodies have the analytical, logistical and managerial ability to develop skills far more effectively than Setas. We estimate that it will cost between R1,6 billion and R2,5 billion to fully reimburse employers for approved training, including schemes administered by employer associations.

The combined, decentralised actions of thousands of South African businesses will result in an economy-wide, responsive, efficient training environment. If the entire existing budget for Setas, currently at R3, 2 billion, were channelled into such an initiative the amount left over would easily fund a nationwide tax rebate equivalent to one third of tertiary institution fees for four years of successful study.

Combining such a scheme with a tax deduction of 150% of the first R2 000 per month of every employee’s salary would create a situation where businesses are incentivised not only to employ more workers, but also to train and develop them to meet the future skills needs of the business.

If such an initiative was backed up by labour law reform for SMMEs, liberalisation of the labour market and the provision of opportunities and bursary vouchers to promising students and young people, we could beat our skills and unemployment crisis. It’s time to stop the name-calling and the finger-pointing, and for government to take the initiative.

I sincerely hope that the ANC speakers that follow me this afternoon will respond to the issues I have raised and address themselves to finding solutions. We are all in this together and we have got to find a solution to the unemployment and skills crisis that we face. I thank you. [Applause.]

Mr S A MSHUDULU: Thank you, Madam Deputy Speaker. Hon Ministers, hon members of this House, distinguished guests and the country at large, I join this debate on behalf of the ANC at the time when government is tabling a Medium-Term Budget Policy Statement to the nation. It takes only a responsible and accountable government to do this.

Our subject, as has been presented today, will allow us to educate the DA a bit. When we passed the Skills Development Act in 1998, the ANC-led government wanted to provide an institutional framework to devise and implement national sector and workplace strategies to develop and improve the skills of the South African workforce; to provide for learnerships that lead to recognised occupational qualifications; to provide for the financing of skills development by means of a levy grant scheme and a national skills fund; and to regulate employment services.

This is against a background not pleasant to most of us in South Africa. As a black man, I tell you of the background that humiliated us through a fragmented, inferior and irrelevant education system - an apartheid and colonial education system that was not developmental; a system that was used as a tool of discrimination, marginalisation, exploitation and displacement. We come from a situation where the very members of the DA were beneficiaries of these inhuman systems. [Applause.] Today, they pretend to be better advocates of our own democracy.

The central truth about the apartheid labour market, with its distortions, was to ensure that it served the needs of the white minority. In addition, the job reservation Act prevented blacks from entering specific professions, whilst various education Acts ensured that we could never get the skills that would be required to participate above certain levels in the labour market - a deliberate attempt to keep black workers, women and the disabled unskilled and illiterate.

During the free elections of 1994, 1999 and 2004, our people demonstrated their confidence in the ANC by voting it into power. That happened because of its progressive policies that include human resource strategy as a core policy priority aimed at undoing the ravages of the past. For this reason, the ANC-led government is investing a lot in skills development to maximise productive capacity. Hence, in these 10 years of its mandate, the ANC has not disappointed the people’s expectations, despite the severe constraints inherited from the apartheid system.

However, skills development should be seen in the context of a component of a broader set of strategies whose outcomes need to be measured against the Vision 2014 goals: government aims to halve unemployment by 2014, halve poverty by 2014, and radically reduce inequalities that were created by those members on that side by accelerating equity and broad-based black economic empowerment, as earlier alluded to by the Minister of Finance.

It is important that we remind this House that the National Skills Development Strategy for 2001 to 2005 has five objectives, namely developing a culture of high quality lifelong learning, fostering skills development in the formal economy for productivity and employment growth, stimulating and supporting skills development in small businesses, promoting skills development for employability and sustainable livelihoods through social development initiatives, and assisting new entrants into employment. Therefore, the ANC and the majority of South Africans cannot support the DA’s call that only business should drive training. They failed 48 years ago.

The following evidence supports this total rejection, and previous experiences under apartheid are particularly pertinent here in that most white males benefited under apartheid. The nature of the so-called South Africa’s skills crisis is such that most of our unskilled workforce is composed of historically disadvantaged persons. In order to ensure equal distribution and access to opportunities, government intervention is required. The disparities in South Africa are so vast that simply repealing discriminatory laws and allowing market forces to dictate training conditions cannot address them.

We know that, with the rise in population and the rise in economically active people, during the period between 1997 and 2000 there was an increase of 8,7 million to 11,4 million because of the legacy of apartheid which, of course, was reflected in the same Mail and Guardian he quoted from. He did not read the other part, which stated that Africans were about seven times more likely to be unemployed than any other population group if we didn’t speed up, because of the past.

In response to these challenges, our President, for instance, last year called on Nedlac constituencies to start a dialogue which led to last year’s Growth and Development Summit - which they failed to talk about. One of the themes was “more jobs, better jobs and decent work for all”. Challenges dealt with were: how best to deal with the South African structural unemployment; how parties could commit themselves to millennium goal targets; how to spearhead public investment initiatives; how to make the Expanded Public Works Programme work towards addressing infrastructure backlogs; how to facilitate and give an account on sector strategies; and making procurement of government services accessible to all. The second theme was “advancing equity, developing skills, creating economic opportunities for all and extending services to all”.

To this end, parties at Nedlac - which were not represented by the DA but by government, business, labour and the community - agreed that they should accelerate efforts to overcome inequalities left by apartheid. That was agreed at Nedlac. [Interjections.] That member must behave. It was agreed that parties would work through the Setas to achieve the National Skills Development Strategy goal of ensuring that at least 70% of workers have at least basic literacy and numeracy by March 2005.

Parties agreed to strengthen the Setas. Nedlac will set key performance indicators and ensure annual monitoring and evaluation. In addition, parties will ensure more senior representation in the board by people who have a responsibility. That means whatever steps the Minister has taken have been dictated to by an Act of Parliament, one which was passed in this House.

In conclusion, we should therefore note that constituencies at Nedlac recognise the important role the government has played in addressing challenges posed by the legacy of apartheid and incorporating the products of social dialogue in policy framework in a number of areas. More detail will be covered by my colleagues in terms of successes, but let me conclude in Sesotho.

Modula setulo, mphe sebaka ke kgutlele hae kapa bohweng. Bana ba DA, ba itseka ka phethoho tse tlisitsweng ke mmuso o eteletsweng pele ke ANC. Tebe- tebe eo ba re siileng ho yona, ya hore batho ba bangata ba ha bo rona ba seke ba ruteha, ha ba na tharollo ya yona hobane thuto ya bona e ne e ena le kgethollo.

  Mesebetsing mane, nnakeneemosebetsi, ke bona ba neng ba ithut ka ditjhelete tsa difeme. Ho ne ho ena le di-Industry Training Boards, tse neng di laolwa ke bona, sepheo e le hore… (Translation of Sotho paragraph follows.)

[Chairperson, allow me to go back to my roots. Those from the DA are protesting about the changes that the ANC-led government has brought about. They dug a grave for us when they caused a multitude of our people to become illiterate; they do not have a solution to that because their education was biased. In the workplace I was an employee, and they were the ones who were given financial assistance by the company. There were Industry Training Boards that were under their authority, the reason for that being…] [Time expired.]

Prince N E ZULU: Deputy Speaker, the Seta under discussion today is demarcated into 13 constituencies, ranging from the national Department of Education, universities, trade unions, political parties, down to nongovernmental organisations with a budget of well over R77 million up to the end of March 2004. The Seta has underperformed, like its sister Setas, but nevertheless its flag is still flying on the country’s landscape. It has plans to improve its performance, leading up to March 2005, especially in the areas of learners with disabilities and other special needs.

On numerous occasions the Minister has been reported as being gravely concerned about the performance of Setas in general. They are failing to provide the job market with the necessary skills. Rural youth and young women are the immediate victims of joblessness in the country. The high level of unemployment denotes a national crisis of proportions too ghastly to contemplate. This Seta will have to accept that a massive restructuring of it is necessary and cannot be avoided. It has to step up the initiatives it has set for itself to achieve.

The unemployment crises cannot wait any longer for Seta in the boardrooms before the upcoming generation is devoured by poverty and want. Foreign skills cannot be a lasting solution to our country’s economic ills. The Seta has problems in the areas of accredited black training providers, the reluctance of some employers to commit to the idea of hosting learnerships within their organisations, etc. These obstacles can be dealt with decisively if the Seta accelerates its speed and activism in the marketplace. The Seta has to make itself more visible in the regions and provinces in order to attract registration of learnerships in the areas of information and communication technology in rural areas.

It was unfortunate that ideas such as co-operatives and credit unions as a primary means of development of communities in rural and semi-urban areas were never canvassed. Co-operatives and credit unions build business confidence amongst their members, hence their motto: Education, knowledge and conviction in a sustained group action. This idea, if canvassed correctly, can afford their clients incredible outputs within the first five years of its implementation.

Interestingly, a presentation this morning by the Department of Labour revealed that a worker co-operative proposal was on the cards. One would hope that such proposal would be canvassed wide enough to make co- operatives and credit unionism a reality for young entrepreneurs. I thank you.

Ms S N SIGCAU: Madam Deputy Speaker and hon members, the need for skills development in this country is undisputed. In fact, the UDM supports the view that the lack of skills is one of the leading obstacles to greater economic growth, as well as domestic and foreign investment.

For the employer the skills development levy has become another tax, requiring further time and effort to comply with. As a result, many employers do not bother with accessing these funds, neither for training purposes, nor to participate more actively in Setas, since this would entail further time and administration that takes them away from their core business.

We urge government to urgently intervene in the management of these Setas to ensure that they are managed effectively. We believe that the overwhelming majority of employers are aware that greater skills development will be an asset, not only to their individual businesses, but also to the economy as a whole. They realise that more skills mean higher productivity. We recognise that the overall output of Setas have increased in the past few years. However, this is less an indication of success than a reminder of the previous low level of performance.

Whilst tens of thousands of people have benefited from skills development, the reality is that millions have yet to receive any benefit. I thank you. [Applause.]

Mr V C GORE: Madam Deputy Speaker, an ex-colleague of mine once said that the Minister had been in labour for nine months, but had not delivered. This may well be true, but perhaps a better description is that the current Minister has given birth to a child, perhaps a bungling, stumbling child, but a child nonetheless that requires nurturing and caring in order for it to grow up and achieve its full potential.

This is particularly relevant in today’s debate on whether Setas are effective or not. Setas are fully committed to transformation. We passionately believe that dramatic and drastic action needs to take place in order to undo the damage of the past.

We believe that the great injustices of the past have resulted in great imbalances, and left an inheritance of great challenges. One of the greatest of these challenges must surely be unemployment and the associated scourge of poverty. There can be and there must be no debate on the solutions to the higher unemployment rate: skills, skills and more skills.

The Setas are an attempt to overcome the shortcomings in the higher educational sector to ensure the most efficient transfer of skills to as many previously disadvantaged individuals as possible in the shortest possible time. The idea is laudable and should be supported.

There have been some successes, and there have been many failures. However, as we all know, nothing is perfect, and we are not going to get it right the first time. In this regard, we must be unashamedly brave in rooting out fraudulent service providers. We need to continue to support sector approaches such as domestic worker training and ensure that all learnerships are accessible for all people with disabilities, and not just a few token specially designated learnerships.

In conclusion, the ID is a party that wants to build and not destroy. We want to be part of the solution, and not the problem. We believe that Setas are delivering, but not fast enough. The Setas require much support and nurturing, some honest debate and introspection and the courage to fix what is broken and not to destroy what is working. Above all, hon members, we must ensure that we simply do not throw out our baby with the bath water. I thank you. {Applause.]

Mrs C DUDLEY: Madam Deputy Speaker, the ACDP believes the purpose for the existence of Setas is of tremendous importance to nation-building. It is critical for us to succeed in effectively facilitating skills development en masse in South Africa. While many unskilled and unemployed South African citizens have been empowered to create or find employment because of Seta training programmes, the concern is whether these successes are sufficient in relation to the number of people that have not managed to access the various Seta training initiatives.

It has been suggested that, in view of the amounts of money going into Setas, too few people have actually benefited and it is time to radically assess the situation in terms of value for money. Have we established whether or not the current approach is adequate for the task, or is there a need for a rethink in order to better meet the needs for mass education of unskilled and unemployed people? Should we be expanding the role of secondary and tertiary education institutions to take over these functions instead?

Problems facing some Setas include the old friends of bureaucracy, corruption and mismanagement; the inability to spend budgeted funds within given timeframes; funds being allocated to programmes and training that leave students without the relevant skills to make them employable in the formal sector; and not adequately reaching the intended target market of previously disadvantaged communities effectively.

What is it that has made some Setas successful while others have failed? My personal experience of helping people access a learnership through a Seta was fraught with obstacles. Surely, there must be a better way. Thank you.

Ms O R KASIENYANE: Thank you, Madam Deputy Speaker. It makes me really proud to stand before all here today to celebrate what this ANC-led government has managed to do in the past 10 years, particularly on the issues of skills development. Hon Mshudulu has already spelt out the situation and the political realities, which demand government intervention in skills development. However, allow me to briefly remind some who may have forgotten where we started from in 1994.

I believe that by now, every member of Parliament has received copies of the annual report of the 24 Setas. To those who have read the reports, like ourselves, we know that the Auditor-General’s report qualified not a single Seta during the 2003-04 financial year. [Applause.] We have also read how Setas collectively contributed towards the achievement of a total of 69 000 learners by the end of March this year, and that this figure had since increased to 75 000 by the end of August this year. [Applause.] We know that Setas have contributed towards the training of a further 3,5 million adults in various skills programmes, apprenticeships, HIV and Aids, Abet and SMME initiatives.

I am saying this is the crucial time because there are two major processes that are currently under way: the Seta renewal of certificate of establishment process and the final negotiations process on the second National Skills Development Strategy 2005 to 2010.

Before the passing of the Skills Development Act in 1998, we had 33 industry training boards established under the Manpower Training Act. If the ANC government had not intervened, I am convinced that today we would be sitting with maybe 60 ITBs or more focussing on specific industries. We have since moved from a voluntary manpower training system that used to generate about R100 000 million per annum across 33 industry training boards to a compulsory skills development levy grant that is generating in the region of R3,9 billion per annum used by 25 Setas and the National Skills Fund. The amount of money involved in these processes has, no doubt, generated a lot of interest amongst politicians, the general public, the media, etc, to the extent that if I open a newspaper and there is no story about a Seta, whether good or bad, I become worried.

Despite the DA’s call for Setas to be scrapped and the negative reports from the media, we are very supportive of the steps initiated by the Minister to review the Seta landscape and make the necessary adjustments as the situation in the next five years is going to be qualitatively different from the pre-1999 to 2000 period. We know that the Minister will consider the performance of each Seta over the last four years. On the advice of the National Skills Authority, he will align the new landscape with the new strategies and charters adopted by various departments. He will consider the views of the various departments and economics sector stakeholder, as these Setas are there to serve their needs and not only his department.

Setas are organs of people’s power and we know that because they affirm 85% blacks, 54% women and 4% people with disability. [Applause.] These equity targets are something that is not welcome in the DA circles as they are aimed at enforcing transformation. The Portfolio Committee on Labour has interacted with nine Setas. Recently, the Banks Seta briefed us on its achievements. Everybody who attended that meeting commended this Seta on the work it has done. However, we also highlighted that they need to investigate ways and means to take their training programmes on microfinancing into the deep rural areas. They have given us a commitment that they will endeavour to do so. We all know that the rural working poor are among the most vulnerable in South Africa, and helping them achieve financial responsibility through this kind of training is just one way in which the ANC-led government is fulfilling our end of the people’s contract.

There has been a real challenge in that several of our SMMEs have not taken advantage of the opportunities that are available to them through learnerships, and this is a situation that needs our serious attention. The problem cannot simply be that they find the administrative process too difficult, as some members of the opposition have been known to suggest. It is very dangerous to underestimate the level of sophistication of our people and I will suggest that business owners are more than capable of handling the administrative side of registering a learnership.

It is true that some SMME owners do not know which Setas to register their learners with. Obviously, this is an unacceptable state of affairs. We have sought and received assurances from various Setas that they will attend to this matter. We will also continue to use our multipurpose community centres, labour centres, constituency offices and other means of communication to make people, including the small business owners, aware of the opportunities available to them. We will strive to ensure that all South Africans are able to access these benefits.

Something that is of great concern to the ANC is that we must ensure that people who complete their learnerships go on to find jobs. As President Mbeki said during his state of the nation address, it is important to realign skills development to those areas where skills are scarce so as to ensure that we improve the capacity of these learners to ensure income- earning employment.

If 85 000 people have completed learnerships, then 85 000 people must find jobs. This realignment is an area we are attending to. Our skills development strategy that is going to be launched, of course in April next year, will draw on these and other lessons learnt in order to shape and direct our work in this arena for the coming years.

Setas play a fundamental part in the ANC-led government’s vision to halve unemployment and poverty by 2014, and we cannot allow issues such as bad management, corruption and ineffective implementation to divert us from these goals. Equally, we cannot allow ourselves to be persuaded that we must leave something as fundamental as equity in skills development in the hands of market forces. The market by its nature is not overly concerned with issues of equity and we do not expect it to be. [Time Expired.] [Applause.]

Mr W D SPIES: Agb Adjunkspeaker, daar word dikwels gesê dat ’n mens versigtig moet wees om nie die baba met die badwater uit te gooi nie. Ek dink enige pleidooi vir die summiere skrapping van Setas loop, na ons mening, juis die gevaar om dit te doen. Daar is beslis tekortkominge in die huidige funksionering van Setas en as fasiliteerders van opleiding behoort Setas sentra te wees van uitnemendheid wat as rolmodel kan dien vir die industrie.

In ons voorbereiding vir hierdie debat het ons verskeie rolspelers geraadpleeg, en tipiese voorbehoude wat deur die mense genoem is, is die volgende.

Eerstens is daar ’n klaarblyklike onvermoë by sekere Setas om tydig aansoeke om akkreditasie deur verskaffers van opleiding af te handel en eenheidstandaarde vir sekere opleiding vas te stel. Tweedens is daar sekere belangrike groei-industrieë wat nie gedek word nie weens die onbuigsaamheid van sekere sektorale vaardigheidsplanne.

Derdens is daar ook by sekere werkgewers ’n neiging om die 1%- vaardigheidsheffing as ’n koste te beskou wat nie verhaal gaan word nie, en sodoende word eienaarskap vir opleiding en ontwikkeling op die owerheid afgeskuif. In die laaste plek is werkgewers ook onwillig om werknemers vir lang tye weg te stuur van die werk af vir behoorlike opleiding, en dit plaas ook sekere beperkinge op die opleiding wat verskaf word.

Ons as die VF Plus meen dat daar eerlik gekyk moet word na die tekortkominge, en die ontbrekende skakels moet in die proses gevind word.

Organisasies tree op volgens die maatstawe wat vir hulle ingestel is. Tans is die maatstaf vir die uitkeer van fondse die voldoening aan sekere burokratiese reëls. Indien die klem, na ons mening, verskuif word na uitkomste eerder as die nakoming van sekere reëls, kan hierdie hindernisse oorkom word en glo ons kan die stelsel beter werk. Baie dankie. (Translation of Afrikaans paragraphs follows.)

[Mr W D SPIES: Hon Deputy Speaker, it is often said that one has to be careful not to throw out the baby with the bath water. We are of the opinion that any argument for summarily scrapping Setas will run the risk of doing just that. Shortcomings certainly exist in the current functioning of Setas and, as facilitators of training, Setas should be centres of excellence that can serve as role models for the industry.

In preparation for this debate we consulted various role players and typical reservations that were mentioned, were the following:

Firstly, there is the apparent inability of some Setas to timeously process applications for accreditation by providers of training and to establish unit standards for certain training. Secondly, there are certain important growth industries that are not covered as a result of the inflexibility of certain sectoral skills plans.

In the third instance, there is also a tendency among certain employers to see the 1% skills levy as a cost that will not be recoverable, thus resulting in ownership of training and development being pushed onto the authorities. In the last instance, employers are also unwilling to send employees away from work for long periods of time to undergo proper training, and this also places certain restrictions on the training that is provided.

We as the FF Plus are of the opinion that the shortcomings should be reviewed honestly, and that the missing links should be identified in the process.

Organisations operate according to the criteria that are set for them. At present the criterion for the payout of funds is compliance with certain bureaucratic regulations. We believe that if emphasis is placed on outcomes rather than on compliance with certain rules, these obstacles can be overcome and the system will be able to operate more effectively. Thank you.]

Mr M T LIKOTSI: Deputy Speaker, the promulgation of the Skills Development Act, Act 97 of 1998, brought much hope to many unemployed youth and working people who perpetually worked below their level of qualification. This Act has brought some positive results in that some African people are being elevated to top managerial positions and others to senior management levels.

The percentage between 2000 and 2001 is about one percent, which does not reflect well on the good intentions of the Act. Our country has a high level of unskilled people of all ages. They are therefore unable to compete on par with their fellow countrymen and women who were advantaged all along. In order to develop our country to the level of a first world country, government should invest immensely in human capital.

The decisions of the Growth and Development Summit of June 2003 has yet to be implemented, thus weakening any endeavours for effective job creation in the country. The PAC is committed to compulsory and free education up to tertiary level. The state should increase the budget for education and streamline the curriculum as per the needs of our country.

We must all be committed to reshaping our country by providing skills to all those who must be capacitated. Business must play their part wholeheartedly in implementing the spirit of the Act. I thank you. [Applause.]

Ms S RAJBALLY: Thank you, Madam Deputy Speaker. The Setas were introduced largely to promote and enhance skills development in South Africa. The Setas are definitely a valuable instrument in overcoming the seriousness of poverty and unemployment by promoting the eagerness to build the South African economy.

The National Skills Development Strategy, launched in 2001 by the Minister of Labour, operates on the principles of target setting, monitoring and evaluation of the processes of skills development. This is valuable information in assessing our progress, loopholes and challenges in skills development. The 5 strategic objectives, 12 success indicators, and 3 equity indicators, which were then set as challenges for the Setas, in reality appear quite large.

From the report released in 2002 by the NSDS, it is clear that the more organised Setas were attaining greater progress. However, as recently reported in the papers, the Setas will not succeed in sending the minimum of 80 000 people through learnerships by March 2005. This has been blamed on the unrealistic target set in the strategy for the success indicator.

Furthermore, the setting and the management of the majority of Setas are effective. The Minority Front feels that Setas have great potential in developing the necessary skills in South Africa. But this potential can only be effectively achieved if the correct tools and plans are implemented. Setas aim to promote skills development and act as mediators between learners, employers and trainers in learnership agreements.

In order to mediate, Setas need to be organised, well established and effectively managed. The co-operation of small and large businesses and their staff could assist in the effectiveness of Setas. The Minority Front calls for the architects to assist with regard to the loopholes in Setas, so as to stimulate actual potential in order to focus on skills development in South Africa. Thank you very much. [Applause.]

Dr E NKEM-ABONTA: Madam Chair, let us face the fact that unemployment is about our single biggest socio-economic problem. It is a very intractable problem, which has defied all standard orthodox attempts of dealing with Aids. Unless we try something radical, different, creative and pragmatic - something all our political parties and trade unions would support - the future would be bleak and even dangerous.

Yes, we could see our beloved country, as one commentator graphically put it, as a privileged, multiracial elite perched atop a simmering cauldron of repressed expectations that will never be met. Fortunately, such an Armageddon is not ineluctable if we all close ranks and tackle the matter in concert with resolve and creativity.

Our President has informed us that we have two economies in our country. The one is developed with employees enjoying protection and decent salaries, while the other is underdeveloped and rife with unemployment and lowly skilled or unskilled players. Millions of our unemployed belong to the so-called second economy.

The President’s hypothesis of a two-economy system, or a two-tier economy, is useful, at least in one respect. It naturally suggests a two-tier type of solution. I would therefore accept it for the purpose of this speech. We could retain our current market labour legislation arrangements for the first economy, despite the inefficiencies they engender, if only for the fact that neither the government, nor the trade unions, want to see any dilution of the first economy employee privileges.

For the second economy we ought to try something new. Most players in the second economy are willing to work for much lower wages and lower levels of protection than that obtained in the first economy. Currently they cannot do so, because our labour laws do not allow them. Since these second economy players are insufficiently skilled for work in the first economy, employers are reluctant to hire them at first economy levels of protection and wages.

The results have been, of course, high structural and growing unemployment. Unemployed persons in the second economy should be freed from our current labour laws if they so desire. The solution, as I have already hinted, is a two-tier labour market. Persons who have been unemployed for more than six months should, on request, be given the certificate of exemption from current labour laws. Employers of such persons would also be exempt from the consequences of such legislation.

I would be free to enter into a job contract with a holder of an exemption certificate. A person so employed would still be protected by common law. Such an arrangement will encourage the employment of the unskilled and lowly skilled, affording them the opportunity to acquire on-the-job skills and to build an employment record.

So empowered, they will be able to exit the second economy and obtain employment in the first economy, which would be expanding as a result of the gains made by relaxing legislation for the second economy. In this way, a bridge is built between the two economies, which would one day disappear after the first economy shall have absorbed the second. Thank you.

Mr M S MANIE: Madam Deputy Chair, the thrust of what Mr Lowe was proposing to us is that we should scrap all the Setas that we have set up and go back to the old dark days of apartheid, where only business could decide, on its own, whether it should train or should not train people. Now, if we cut away all the trimmings of what he has said and how he said it, that is, in fact, what he has proposed to us.

I must say I find it strange that after having been exposed to how we have worked, setting up the Setas, he could come up and propose a debate that is based on, in fact, such … AN HON MEMBER: Reality!

Mr M S MANIE: Reality! In fact, the old reality of what existed there is what they now want to reintroduce. However, we are not stupid anymore. We are now 10 years into our new democracy and we can see through these things. [Applause]

Now, let us look at what we have proposed. We’ve taken our economy and divided it into 25 economic sectors. We said, instead of doing it the old way, let the people in the industry, organised business and organised labour come together and, based on the needs of the industry and the sector, together, determine what the needs of the industry are. Out of that, you will develop what courses, what training and what strategy you have. Doesn’t that sound a lot better than saying we should scrap the whole thing and do it the old way? [Interjections]

Anyway, I think the fact that Mr Lowe is suggesting that unemployment in South Africa is due to the nonperformance or underperformance of Setas, just gives me an indication that he is not the kind of person that one should trust to solve the unemployment problem. [Applause.] What he will do is to come up with something that suggests that unemployment can only be solved by addressing the skills problem.

Skills, of course, are an important component of our economy as a whole and must be addressed. However, you cannot just address that in isolation and say there is a skills problem and, therefore, we have unemployment. That is very narrow and simplistic and I hope some of the people who voted him into Parliament will wonder why the man is here, especially when he comes up with such very narrow and simplistic solutions. [Applause.]

Let me just say that the question of learnerships was one of the things that Mr Lowe referred to, but it’s not just a question of learnerships. We all acknowledge that, because of Bantu education, because of the old apartheid system and because some of you are sitting there and shouting so loudly now, you have been party to some of the reasons that we have the skills crisis in our country. [Applause.]

Obviously, we could not leave the thing as it was, but it is not just about learnerships. We need to upgrade the complete skills base of our country. We all understand that. Even young children who are in primary school understand it, so it’s not something that we have to be told. We know that it is an important component, but it is also training that goes beyond just learnerships, training that looks at not only white-collar workers and skilled workers, but also at people throughout the labour market. I think that is what we are talking about.

Now, because most of what my comrades said here previously, covers what I wanted to say, I just want to end off by saying that I acknowledge that setting up the 25 new Setas did not happen without problems. However, let’s look at what had to be done. In certain cases, it was easy to take some of the training institutions and training boards and convert them to form the basis of the Setas. In other sectors and industries, we actually had to create completely new entities from scratch. We had to create the infrastructure, we had to staff them and we had to create the kind of systems to actually make it operate.

Obviously, whilst we were doing that, we were not then able to spend the money that was accumulated to spend in that sector, because we said that before we start training in that sector, the sector should come up with a skills plan for itself, so that the kind of people that are trained in that sector can actually be absorbed in the sector.

I know that when I was a young man and people were trained as apprentices, in the old days, there was very little or no correlation or connection between your apprenticeship training and what was actually required of a person going out into the field and doing the work. Many people saw that as a problem, but in the old days, the system said things had to be done that way.

I remember when I did an apprenticeship in electronics we were doing integrated circuits and transistors every day, but the theory that they taught us and the things that we were tested on were the old valves. I don’t know if people understand electronics. [Interjections.] However, for those who do understand, if you take that and apply it where people did motor mechanics apprenticeships, they would be tested on outdated engines and gearboxes that did not exist any more and when they qualified they would have to go and practise on things that were not related to what they had been tested on.

So, obviously, we had to overhaul, radically, that kind of system and produce people at our training institutions who could be absorbed into our actual industries. I think we have done an enormous amount of work, but there is a lot more to be done. However, I think we have to acknowledge that some of these things are not going to be without problems.

In conclusion, I just want to say that when I listen to some of the proposals of Mr Lowe and company, of how they would like to do the training in this country, then I feel extremely happy that they will never have the chance to rule this country and put those proposals into place. [Laughter.] [Applause.]

Mr C M LOWE: Chairperson, thank you very much and thank you to the speakers for taking part in the debate this afternoon. It’s a great pity that so many ANC speakers did not use the opportunity to really address the issues and actually face up to some of the realities, Mr Manie.

For the first time this afternoon, I realise why the ANC removed you as Chairperson of the Portfolio Committee on Labour. [Interjections.] This afternoon, we failed the 8 million unemployed people of South Africa, and we failed the people that are looking for skills, development and training.

Mr Manie asked about some realities. Let me share some realities with you. Up to 8,4 million people are unemployed and there is something like 500 000 skilled jobs that we cannot fill, and yet you are talking about 69 000 or 75 000 learnerships that are being created. That is not even 1% of the problem.

Then, if we even take those 70 000 learnerships, less than 10 000, which is 14%, of those learners actually complete their courses. What I want to say to you this afternoon is that the reality is that we are failing, and I would have hoped that the ANC would have joined us so that, together, we can find solutions. [Interjections.]

It is not working. The Setas are not working. We accept that the ANC will need to fundamentally change the framework and the strategy of what has happened in the past but, recalling the horrendous racist apartheid skills and the Bantu education, as true as it is, that is not relevant. I would refer you to your MP colleagues who are not even here this afternoon and who are now your allies. They were the ones who put that into place.

What happened in the past does not help at all. It was wrong and we need to change it. We need to stop living in the past and look to the future. Summits and strategies have their place but they are no solutions. That is the problem: We have got no solution before us today, a year on from the Growth and Development Summit, and we are no closer to filling that job deficit of 8 million people. That is the problem we have to face. Attacking the DA won’t create new skills, it won’t find more jobs and it certainly won’t solve the problem.

I want to make an offer this afternoon to the ANC on behalf of the DA. We are open to an answer. We are there to sit down and make it work. That takes more than rhetoric. Thank you. [Applause.] [Time expired.]

Debate concluded.

The House adjourned at 16:18. ____


                       FRIDAY, 22 OCTOBER 2004


National Assembly and National Council of Provinces

  1. Membership of Committees
 (1)    Mrs W S Newhoudt-Druchen has been elected Chairperson of the
     Joint Monitoring Committee on Improvement of Quality of Life and
     Status of Children, Youth and Disabled Persons with effect from 22
     October 2004.

 (2)    Mr D D Gamede has been elected Deputy Chairperson of the Joint
     Monitoring Committee on Improvement of Quality of Life and Status
     of Children, Youth and Disabled Persons with effect from 22
     October 2004.

National Assembly

  1. Messages from National Council of Provinces to National Assembly in respect of Bills passed by Council and transmitted to Assembly:
 (1)    Message from National Council of Provinces to National Assembly:

     Bill, subject to proposed amendments, passed by Council on 21
     October 2004 and transmitted for consideration of Council's
     proposed amendments:

     (i)     National Energy Regulator Bill [B 9B - 2004] (National
          Assembly - sec 75)   (for proposed amendments, see
          Announcements, Tablings and Committee Reports, 14 October
          2004, p 868).

          The Bill has been referred to the Portfolio Committee on
          Minerals and Energy of the National Assembly for a report on
          the amendments proposed by the Council.

          Note: The Announcements, Tablings and Committee Reports of 21
          October 2004 incorrectly indicated that the Bill has been
          referred to the Portfolio Committee on Finance.
  1. Membership of Committees
 (1)    Ms M P Mentor has been elected Chairperson of the Standing
     Committee on Private Members' Legislative Proposals and Special
     Petitions with effect from 22 October 2004.


National Assembly

  1. The Speaker Letter from the Minister of Social Development dated 21 October 2004 to the Speaker of the National Assembly, in terms of section 65(2)(a) of the Public Finance Management Act, 1999 (Act No 1 of 1999), explaining the delay in the tabling of the Annual Report of the National Development Agency (NDA) for 2003-2004:

    Dear Madam Speaker


    The National Development Agency (NDA) is a Public Entity that is listed as a Schedule 3A of the Public Finance Management Act, 1999 (Act No 1 of 1999) [PFMA] and reports directly to me in my capacity as its Executive Authority.

    In terms of section 65(1)(a) of the PFMA, I am required to table in the National Assembly the Annual Report and Financial Statements of my department and public entities reporting to me. Sub-section (2)(a) further requires me to table a written explanation in Parliament in circumstances where I am unable to table such reports within six months of the end of the financial year (i.e. 30 September 2004), setting out the reasons why they were not tabled.

    In this regard I would like to report that I was unable to table the annual report and audited financial statements of the NDA for the year ended 31 March 2004 for the following reasons:

    1. The finalisation of NDA’s annual audit by the Office of the Auditor-General was delayed because of the problems and management challenges faced by the NDA during the period under review, including:

      1.1 The late submission of annual financial statements of NDA to the Office of the Auditor-General by a period of two weeks due to the adjustments that had to be made on them before the audit could be commenced; and

      1.2 The fire that broke out at NDA offices in July 2004 whilst the audit was in progress, which destroyed some financial information, which was essential for the completion of the audit. The auditors had to carry out additional alternative procedures and in some instances repeat the work previously performed in order to verify some of the information submitted to them as audit evidence following the fire.

    The NDA Board has recommended the appointment of the Chief Financial officer to take over the work currently done by the consulting firm, KPMG and the post of the Chief Financial Officer has been advertised. I believe that the filling of these two critical positions will assist in improving financial and strategic management and bridging the leadership gap at the NDA.

    The audit has now been completed and I expect to table the Annual Report of the NDA in November 2004 as soon as the Board submits it to me. I trust that this motivation will receive favourable consideration by Parliament.

    Kind regards,

    signed Dr Z S T Skweyiya, MP MINISTER


National Assembly

CREDA PLEASE INSERT - Insert No 1 from “ATC1022e”

                       MONDAY, 25 OCTOBER 2004


National Assembly and National Council of Provinces

  1. The Minister of Finance
 (a)    Government Notice No R1128 published in Government Gazette No
     26853 dated 30 September 2004: Policyholder Protection Rules
     (Short-term Insurance), 2004, in terms of the Short-term Insurance
     Act, 1998 (Act No 53 of 1998).

 (b)    Government Notice No R1129 published in Government Gazette No
     26854 dated 30 September 2004: Policyholder Protection Rules (Long-
     term Insurance), 2004, in terms of the Long-term Insurance Act,
     1998 (Act No 52 of 1998).

 (c)    Government Notice No 1130 published in Government Gazette No
     26860 dated 30 September 2004: Statement of the National Revenue,
     Expenditure and Borrowing as at 31 August 2004 in terms of the
     Public Finance Management Act, 1999 (Act No 1 of 1999).

 (d)    Government Notice No 2174 published in Government Gazette No
     26863 dated 4 October 2004: Draft Preferential Procurement
     Regulations, 2004, in terms of the Preferential Procurement Policy
     Framework Act, 2000 (Act No 5 of 2000).
  1. The Minister of Health
 (a)    World Health Organisation (WHO) Framework Convention on Tobacco
     Control, tabled in terms of section 231(2) of the Constitution,

 (b)    Explanatory Memorandum on the World Health Organisation (WHO)
     Framework Convention on Tobacco Control.
  1. The Minister of Arts and Culture
 Replies from the Minister of Arts and Culture in regard to the 109th
 report of the Standing Committee on Public Accounts, 2003:

 Referred to the Standing Committee on Public Accounts.