National Assembly - 19 February 2008



The House met at 14:02.

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


                          NOTICES OF MOTION

Mrs C DUDLEY: Madam Speaker, on behalf of the ACDP I give notice that I shall move:

That the House debates —

 1) whether or not the proposed national school pledge will unite or
    divide the country;

 2) whether or not the perceived need for such a pledge is valid; and

 3) the response of the public to the suggestion.

Dr J T DELPORT: I hereby give notice that I shall move:

That the House debates the challenges facing the criminal justice system in South Africa.

The HOUSE CHAIRPERSON (Mr M B Skosana): I hereby give notice that I shall move at the next sitting of this House:

That this House debates —

 1) the positive and negative political and socioeconomic features of
    Western-sponsored democracy in pre and post colonial Africa; and

 2) the search for a conflict-free model of democracy appropriate to
    peace, stability, co-operation and development for the wellbeing of
    all the peoples of Africa.


                         (Draft Resolution)

Mr M J ELLIS: Madam Speaker, I move without notice:

That the House —

 1) notes that on 11 February 2008 the Soweto Gospel Choir won a Grammy
    Award in the best Traditional World Music category for their album
    African Spirit;

 2) further notes that this is the choir’s second consecutive Grammy
    Award and that they follow in the footsteps of South African music
    greats like Ladysmith Black Mambazo;

 3) recognises that the choir is truly representative, not only
    consisting of members between the ages of sixteen and forty but
    also singing in six of South Africa’s eleven official languages;

 4) further recognises that in 2003 the choir founded its own Aids
    orphans foundation, Vukani, which raises funds for Aids orphans
    establishments that receive little or no government or private
    funding and are ambassadors for Nelson Mandela’s 46664 campaign;

 5) acknowledges the vital role the choir plays not only in inspiring
    all young South African musicians, but also in showcasing the
    unique talent our country has to the rest of the world; and

 6) congratulates the Soweto Gospel Choir on the great honour that has
    been bestowed on them and wishes them well for their current United
    Kingdom tour and upcoming tours that include Lebanon, Australia and

Thank you. [Applause.]

Agreed to.


                         (Draft Resolution)

Mr M J ELLIS: Madam Speaker, I move without notice:

That the House —

  1) notes with profound sadness the death of the head of protocol in
     the office of the President, Johan Reinders, at the age of 56 on
     Monday, 18 February 2008;

  2) recognises that he is the longest serving official in the
     President’s office and worked for former presidents such as F W de
     Klerk and Nelson Mandela;

  3) acknowledges the fundamental role he played in ensuring all
     functions and public engagements hosted and attended by the
     President and Deputy President were properly managed, co-ordinated
     and of a high standard;

  4) further recognises that last week’s opening of Parliament was the
     first one he had missed in twenty-seven years; and

  5) conveys its condolences to his family and friends.

Agreed to.

The SPEAKER: The condolences of the National Assembly and the presiding officers will also be conveyed to the Reinders family.


                        (Member’s Statement)

Mr B L MASHILE (ANC): Madam Speaker, the ANC welcomes the decision by the Public Protector that by publishing unfounded and unverified allegations of misconduct against the President and the medical team of the Donald Gordon Centre, and by failing to co-operate with the Public Protector in the investigation of his complaint, the hon Waters acted unconstitutionally and in a manner that is unbecoming of a member of this Parliament. The Public Protector has found that the claims that the hon Waters made in this regard were without any foundation or substance. The ANC agrees with the Public Protector that the public has a right to be informed of any misconduct by the President. However, reasonable steps must be taken to verify the information before it is published.

It is scandalous that hon Waters did not do this. It is telling that the hon Waters has been found to have acted in a manner inimical to the very Constitution he has sworn to uphold. In accordance with the findings and recommendations of the Public Protector in this regard, we call on the DA to demonstrate its loyalty to our Constitution and democratic institutions by acting firmly against hon Waters. I thank you. [Applause.]


                        (Member’s Statement)

Mr M J ELLIS (DA): Madam Speaker, I’m particularly pleased to be able to rise after the previous speaker, because I wish to make the following statement: Public Protector Lawrence Mushwana’s recent recommendation that Parliament should take action against DA MP, hon Mike Waters merely serves to demonstrate once again the ANC’s complete lack of respect for the Constitution. This shows that the ANC would rather choose to pursue its own interests, no matter what the constitutional costs may be.

While the Public Protector is meant to be completely independent from government and any political party, past decisions made by Mushwana, such as those relating to Oilgate, leave no confusion over where his allegiances lie. This is a concern which was raised by the DA as far back as 2002 when he supposedly resigned from being an active member of the ANC to take up his position as Public Protector.

What is confusing though, Madam Speaker, is the Public Protector’s decision to …

Prof A K ASMAL: Madam Speaker, on a point of order: Will the hon member recognise in the House that under Chapter 7 of the Constitution every member of the House is obliged to respect the authority and status of the Public Protector? Will he recognise that if he has any objection to the role of the Public Protector he should put down a motion which this House can discuss? Otherwise I would like you to rule, Madam Speaker, that it’s totally improper and out of order for him to impugn the integrity of the Public Protector. [Applause.]

The SPEAKER: Hon Ellis, in actual fact you will also recognise that that is true. Mr M J ELLIS: Yes. Can I finish my statement?

The SPEAKER: Hon Ellis, as long as your statement does not impugn the integrity of the Public Protector.

Mr M J ELLIS: I don’t believe it does, Madam Speaker. I want to say that very categorically. May I continue and I want to say …

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: No, it’s not a question of whether his statement will impugn, the statement has already impugned his integrity. And he needs to withdraw it.

Mr M J ELLIS: Not at all, Madam Speaker. I do not believe that it can impugn his integrity.

The SPEAKER: Hon Ellis, the hon members are pointing out something that comes out of the statement you have just read. In actual fact, in as far as your statement casts aspersions on the integrity of the Public Protector, it actually has to be withdrawn. Because constitutionally and legally it is wrong to do that, except through a substantive motion, in the same way as it relates to other members of Parliament.

Mr M J Ellis: Madam Speaker, I will obey your ruling. I will withdraw the statement, but I wish to give notice then that we will be moving a substantive motion in this House in the very near future. Thank you.


                        (Member’s Statement)

The HOUSE CHAIRPERSON (Mr M B Skosana (IFP)): Madam Speaker, we commend the Australian Prime Minister, Kevin Rudd, and the Parliament of Australia for formally apologising on behalf of the people of Australia for the grave injustices committed against the Aborigines for more than two centuries. Mr Rudd said, “We apologise for the laws and policies of successive parliaments and governments that have inflicted profound grief, suffering and loss on these our fellow Aborigines.”

The forceful removal of Aborigine children from their families in order to assimilate them into the white settler colonies has resulted in what is now known as “the stolen generations”, ie a people marooned in a political and cultural wilderness. In his book, The African Predicament, Kofi Awoonor recalls Nkrumah’s perspective on a relative situation when he said the following:

Unblessed with the arts of good government, material and spiritual progress, we were still regarded as representing the infancy of mankind. Our highly sophisticated culture was said to be simple, paralysed by inertia and we had to be encumbered with tutelage. Thank you.


                        (Member’s Statement)

Ms Z A KOTA (ANC): Madam Speaker, the Cape High Court has ruled that members of the public who were instigated by a DA councillor to illegally occupy houses in Delft must vacate them. The DA, true to form, has again acted opportunistically and manipulated the difficult circumstances that our people and the country face in an attempt to score cheap political points. They have encouraged ordinary people to break the law in an attempt to burnish their tarnished image.

The DA have, uncaringly and without concern, abused poor people’s aspirations for decent housing. This is despicable, shameless politicking of the worst order. All South Africans have a right to a secure place in which to live in peace and dignity. Housing is a human right. The ANC-led government is committed to the goal of realising a better life for all our people, including the provision of decent housing for all.

The ANC urges all people who have been asked to vacate those houses to ensure that they register and that their names appear on the housing list. The ANC is urging the Minister for Provincial and Local Government Sydney Mufamadi to investigate the behaviour of the councillor concerned and act appropriately. The DA leader, Helen Zille, must show leadership by acting on this matter as a matter of urgency. I thank you.


                        (Member’s Statement)

Rev K R J MESHOE (ACDP): Madam Speaker, in response to questions I raised with the President regarding the serious allegations against the National Police Commissioner, the President said that I must explain to this House and the nation why, “I saw fit to make the grievous insult which sought to challenge not only the integrity of the person of the President of the Republic, but also the Office of the President and our government as a whole”.

In my speech I said that the ACDP believes that in the light of the very serious revelations contained in Advocate Mpshe’s affidavit, the President owed the public an explanation as to exactly when he became aware of the serious allegations against Mr Selebi. The President must explain also why he failed to suspend him, rather than answer my straightforward questions, albeit based on allegations. The President chose to see our questions as an insult which sought to challenge his and the government’s integrity.

Whenever there are perceived contradictions coming from government and the Presidency, the ACDP will always ask for clarity and for the truth to be told. We believe that the truth must be told to and by individuals, also to restore the integrity of government. Only the President can tell us the truth regarding this matter.

Now it is even more important, following the further allegations by Advocate Vusi Pikoli’s lawyer that his client will tell the Ginwala Commission that everything points to the fact that his suspension was linked to attempts to stop the Selebi investigation. Therefore, our question to the President still stands; we want to know when he first became aware of the serious allegations against Commissioner Selebi and why he did not immediately suspend him or, at the very least, in September 2007 after the NPA had obtained warrants of search and arrest? Thank you.


                        (Member’s Statement)

Dr C P MULDER (FF Plus): Madam Speaker, the FF Plus finds it shocking that whilst the government has phased out compulsory religious education, scripture reading and prayers at public schools, it now wants to expose those same children to a new ideology. Minister Pandor was quick to state that the wording of the proposed pledge comes from the Constitution. However, that is only half the truth.

Why did the ANC government decide to conveniently ignore the very next phrase in the preamble of the Constitution that says, “We respect those who have worked to build and develop our country and believe that South Africa belongs to all who live in it, united in our diversity”. That was ignored.

Children, especially from the minority groups, do not know the past which they now have to distance themselves from through this oath. What they are experiencing at present is the persistent way in which affirmative action is now being forced on them. It is rather necessary to teach children basic values such as respect for life and for the property of others.

The FF Plus cannot accept that any government through whatever means wants to lay claim to the consciences of South African children. Do we have to remind the Minister of Education and the ANC government of the provisions of section 15 of the Bill of Rights that guarantee freedom of conscience, belief and opinion? The FF Plus is opposed in principle to the concept of introducing any pledge or oath into our schools and will oppose any efforts by this government to force this new plan on our children.

                       TRANSFORMATION IN SPORT
                        (Member’s Statement)

Mr M M DIKGACWI (ANC): Madam Speaker, last year Parliament passed the National Sport and Recreation Bill, which, amongst others, made provision for all sports federations to enter into performance agreements with the Department of Sport on transformation matters. It also reserved the right for the Minister to intervene in federations where sport is brought into disrepute.

Extensive public hearings were held across the country to enrich the legislation. In Parliament a wide range of stakeholders participated in the proceedings of the portfolio committee, including AfriForum which is closely aligned to the FF Plus. AfriForum raised objections to the principles of transformation, equity, equality in sport and alleged political interference in sport.

On the other hand the SA Rugby Union raised concerns which were addressed in the final version of the Bill. During the debate on the Bill, the FF Plus threatened to approach the Constitutional Court if the President assented to the Bill. The Bill has subsequently been signed into law by President Mbeki. The ANC notes with concern the approach taken by AfriForum in collaboration with former Springbok captains to use individuals in SA Rugby as a conduit to raise their objections to alleged political interference in rugby with the International Rugby Board.

It is ironic that the FF Plus accused the ANC of political interference in sport while they use AfriForum, former rugby captains and naïve individuals in the South African rugby leadership to pursue a political agenda. The FF Plus and AfriForum know very well that the Sport and Recreation Act is morally and constitutionally sound. The ANC calls on all South Africans to embrace transformation in sport as an integral instrument to build a caring and inclusive society. Thank you.


                        (Member’s Statement)

Mr P H K DITSHETELO (UCDP): The Departments of Provincial and Local Government and Housing have come up with a programme to assist provinces to run their affairs efficiently and successfully. However, the question still remains unanswered. What is the use of compiling a budget for a department which is not going to follow it? Nothing, of course! We are being requested to help in the alleviation of poverty, year in and year out but the amount earmarked for the purpose is rolled over, again and again every year.

For example, the budget of the Department of Agriculture in North West was R366,7 million and the expenditure stood at R270,9 million; which is 73,8% of the total budget. The figure for environmental affairs was R56,9 million and the spending was only R33,6% million; which is 59% of the allocation. The amount budgeted for conditional grants was R8,28 million and only 2,8% of it was spent.

Is this because the need for the original budget has become irrelevant? Surely not. I think it is just poor service delivery. What are the reasons for the underspending?


                        (Member’s Statement)

Ms D VAN DER WALT (DA): Thank you Madam Speaker. The DA wishes to express its general support for the idea of a pledge for learners. Such a pledge, if based on values and a genuine effort to unite, can serve as a constructive point of departure for helping young South Africans engaged with issues of good citizenship, responsibility and social cohesion.

However, the DA would like to draw attention to the possibility of the proposed pledge doing more harm than good, if the public is not consulted and involved sufficiently in the process. If this pledge is designed to build better social cohesion, there must be a well-planned and structured mechanism for people of all ages to participate and give their views. This must happen in order for people to feel included and to prevent resentment at having a decision imposed upon them.

Watter versekering of waarborg bied die Minister aan die publiek dat hul insette oorweeg sal word? [What assurance or guarantee can the Minister offer the public that their inputs will be considered?]

Furthermore, the DA wishes to draw attention to the need for broader social engagement with issues of responsibility, ethics and good citizenship. It is more important that our children see in the leaders of the country exemplary conduct and impeccable ethics that at all times provide clear examples for them to emulate. We must hold our leaders to account using the same standards we would want our children to live by.

When a Bill regarding the responsibilities of the youth of South Africa is tabled, the DA will call for a First Reading debate on it. Thank you.


                        (Member’s Statement)

Nksz B N DAMBUZA (ANC): Somlomo, urhulumente oxhuzula imikhala nokhokelwa ngumbutho wesizwe i-ANC usebenzisana nabantu ekwakheni ubomi obungcono babantu bonke beli loMzantsi Afrika. Ukuzalisekisa esi sithembiso, urhulumente weMpuma Koloni uvuselela umzila kaloliwe odibanisa iMonti noMthatha. Ukuvuselela lo mzila kudle urhulumente isixa semali esimalunga ne-117 lezigidi zeerandi.

Uvuselelo lwalo mzila kulindeleke ukuba luqinise amathuba ezoqoqosho kwingingqi yomPhesheya kweNciba. Amatikiti aya kuthengiswa kwezi zikhululo zikaloliwe zilandelayo: eMonti, eAMabhele, eQumrha, eGcuwa kunye naseMthatha. La matikiti aya kuxabisa ama-R30 ukusuka eMonti ukuya eMthatha.

Ukhuseleko lwabahambi-ngololiwe luya kuqinisekiswa ngamapolisa kaloliwe. Lo loliwe uya kuqala ukusebenza ngomhla wokuqala kweyoKwindla okanye uMatshi apha kowama-2008.

Thina singamalungu e-ANC, siya kuthi gqolo sisebenzisana nabantu ekwakheni ubomi obungcono obuya kungcanyulwa nguye wonke ubani singajonge bala lamntu. Ndiyabulela. [Kwaqhwatywa.] (Translation of isiXhosa member’s statement follows.)

[Ms B N DAMBUZA (ANC): Madam Speaker, the ANC-led government, in partnership with the people of South Africa, is striving to achieve a better life for all. In this regard, the government of the Eastern Cape has revived the railway line between East London and Mthatha at a cost of R117 million.

The revival of this railway line is expected to lay a firm foundation for future economic expansion in the impoverished eastern half of the province. Train tickets will be available for sale at East London, Amabele, Komga, Butterworth and Mthatha stations. A one-way trip from East London to Mthatha will cost R30,00.

South Africa’s railway police will be responsible for the safety of train commuters. The service is expected to be operational by 1 March 2008.

As members of the ANC we will always work with the people towards creating a better future for all. Thank you. [Applause.]]


                        (Member’s Statement)

Mr H J BEKKER (IFP): Madam Speaker, the IFP is extremely concerned that Tiger Brands’ Health Care Unit Adcock Ingram and several smaller health care groups faced the threat of huge fines for colluding to fix tenders and prices. This incident is highlighted at a time when the public is being hit by the rising cost of food, electricity, petrol and health care. It also comes shortly after Tiger Brands were fined R98,8 million following the bread price-fixing scandal.

We also note that the fine paid by Tiger Brands at that time did not benefit any of the victims of poverty. The IFP would therefore like to call on the National Treasury to amend the regulations on the deposit of Competition Commission fines into the Revenue Fund, and to rather provide for the victims of anti-competitive behaviour to benefit in a direct manner.

We believe that government should not be the main beneficiary of this scandalous behaviour of consumer groups but that the poorest of the poor and especially HIV sufferers should benefit if Adcock Ingram and others are to be fined because of this latest scandal. I thank you.

                       MAKING OUR SCHOOLS WORK

                        (Member’s Statement)

Nmz J B SIBANYONI: Isitatimende ngejima lokwenza iinkolo zisebenze.

Sithanda ukuthokoza indima edlalwe ziinqhema ezilandelako zeMetsweding District: UmNyango weFundo eGauteng nesiYingi sangeTlhagwini yeGauteng, i- Ofisi yePalamende esemphakathini yangeKungwini e-Bronkhortspruit, i-Ofisi yePalamende yangemphakathini iNokeng Tsa Taemane, uMasipala weKungwini, uMasipala weNokeng Tsa Taemane noMasipala wesiYingi seMetsweding.

NgoNobayeni we-2007, ngoTjhirhweni noMhlolanja we-2008, iKungwini neNokeng Tsa Taemane ngokubambisana neKomitjhana yeluTjha yeGauteng zabamba ijima lokukhuthaza abafundi bonyana babuyele eenkolweni. Lokhu kwenziwe ngokunikela iimfundobandulo zokuhlwengisa nokuqinisekisa bonyana abafundi nabafundisi babuyela eenkolweni ngelanga lokuvula. Baqinisekise godu kobana ukufunda nokufundisa kuthoma ngelanga lokuthoma lokuvulwa kweenkolo.

Ijimeli laswaphelisa ngomnyanya wokugidinga ohlanganyelweko esikolweni iCullinan Combined, lapho iinkolo nabafundi abasebenze kuhle khulu batlonyeliswa khona ngeentifikedi, abonongorwana namaphrintha.

Sithanda ukuthokoza zoke iinkampani ngomnikelo eziwenzileko, begodu sithokoza nabafundisi ngokusiza iinkolo nabafundi ukuthumba babe badosiphambili.

Njengombana ijima leli lenziwa qobe ekuthomeni komnyaka omunye nomunye, sikhuthaza abafundi beBanga 12, kulomnyaka we-2008 bonyana basebenze khulu ukuphala beminyaka egadungileko khona kuzakuba khona iinkolo nabafundi abanengi abaziinkutana. Siyathokoza.[Iwahlo.] (Translation of isiNdebele member’s statement follows.)

[Mr J B SIBANYONI: This is a statement about the campaign to make schools work effectively.

We would like to express our appreciation for the role played by the following stakeholders from Metsweding district: The Department of Education in Gauteng and the Gauteng Department of Education, Northern District; the Community Parliamentary Constituency Office based in Kungwini, Bronkhorstspruit; the Community Parliamentary Constituency based in Nokeng Tsa Taemane and the Metsweding District Municipality.

During December 2007, and from January to February 2008, the Kungwini and Nokeng Tsa Taemane Municipality, together with the Gauteng Youth Commission, conducted a campaign to encourage learners to go back to school. This was done by providing cleaning workshops to ensure that learners and teachers go back to school on the opening day of schools, in order to ensure that learning and teaching start on the first day of the opening of schools.

This campaign was completed with a celebration ceremony held at Cullinan Combined School, where schools and learners who performed very well last year, were issued with certificates, awards and printers.

We would like to thank all the companies for their sponsorships, and would also like to thank teachers for helping schools and learners to win so that they become leaders.

This campaign is held at the beginning of each year. We encourage Grade 12 learners of 2008 to work even harder so that they will rise above those of the previous years, and so that there will be more schools and more learners who will be heroes. Thank you. [Applause.]]


                        (Member’s Statement)

Dr S M VAN DYK (DA): Speaker, gegewe die landswye elektrisiteitskrisis waarin Suid-Afrika verkeer, is dit onaanvaarbaar dat die regering slegs om verskoning vra daarvoor, maar steeds weier om die ware redes wat tot die fiasko bygedra het te erken.

Die argument dat Suid-Afrika die slagoffer is van sy eie ekonomiese groei, is ’n skande. Die gevolge van die ANC-regering se agtelosigheid in behoorlike ekonomiese beplanning, ondeurdagte owerheidsbesteding, en die ANC se ekonomiese magsbeheptheid, wat privaatbelegging blokkeer, kos Suid- Afrika nou R2 miljard in verlore produksie per dag en ’n afname in die BBP van 2,2% per jaar. Tog weier die regering dat die ware redes, naamlik swak bestuur, ’n tekort aan kundigheid, Eskom se monopolie-posisie, gebrekkige instandhouding, en onaantreklike beleggingsmoontlikhede van die vernaamste redes vir die krisis was. Nou sit Suid-Afrika met ’n vooruitsig van groter werkloosheid, emigrasie van kundiges, en groter onsekerhede by buitelandse sakelui om in Suid- Afrika te belê. Die regering behoort nou ’n eed af te lê aan alle Suid- Afrikaners en te verklaar dat hy sy transformasiebeleid sal hersien om kundigheid en kapasiteit te herwin; verder dat die ANC ook sy politieke beleid van inmenging in die ekonomie sal wysig sodat markkragte, die privaatsektor en buitelandse beleggers die land se ekonomie sal laat groei.

Die regering behoort ’n belofte af te lê aan Suid-Afrika dat hulle die land van nou af so sal regeer dat Suid-Afrika se belange bo ANC-partybelange gestel word en dat ’n toekoms vir alle Suid-Afrikaners geskep word waar almal veilig en ekonomies welvarend sal kan leef. Dankie. (Translation of Afrikaans member’s statement follows.)

[Dr S M VAN DYK (DA): Speaker, given the nationwide electricity crisis in which South Africa finds itself, it is unacceptable that the government has only apologised for the crisis, but is still refusing to acknowledge the real reasons which have contributed to this fiasco.

The argument that South Africa is a victim of its own economic growth is disgraceful. The consequences of the ANC-led government’s carelessness with proper economic planning, ill-considered government spending and its obsession with economic power that blocks private investments, has now cost South Africa R2 billion in lost production per day and has resulted in a decline in the GDP of 2,2 % per year. Yet the government still refuses to admit that some of the most important reasons for this crisis, are poor management, a shortage of expertise, Eskom’s monopoly position, insufficient maintenance, and unattractive investment possibilities.

South Africa now faces the prospect of greater unemployment, emigration of experts, and greater uncertainty on the part of foreign businessmen when it comes to investing in South Africa. The government should now lay down an oath and declare to all South Africans that it will review its transformation policy in order to reclaim expertise and capacity; and furthermore that the ANC will adjust its political policy of interference in the economy so that market forces, the private sector and foreign investors will allow the country’s economy to grow.

The government should make a promise to South Africa that from now on it will govern South Africa in such a manner that South Africa’s interests are placed above ANC party interests and a future is created in which all South Africans will be able to live safely and prosperously. Thank you.]


                        (Member’s Statement)

Mr J D ARENDSE (ANC): Chairperson, marine resources must be managed and controlled for the benefit of all South Africans, especially those communities whose livelihood depends on resources from the sea. The fishing stock must be managed in a way that promotes a sustainable yield and the development of new species.

The ANC will always assist people in having access to these resources. Barely three weeks after the diving ban regulations on abalone were gazetted authorities have arrested 17 suspected poachers during a night- long operation in Hout Bay and Robben Island.

There are four areas where a total ban has been placed on driving as part of the measures for the protection of wild abalone and to promote the recovery and rebuilding of the resource. The arrests follow collaborated enforcement between officials from the Department of Environmental Affairs and Tourism and the SAPS.

Amongst the equipment seized during the arrests were the following: a super- duck fishing vessel, 77 pieces of abalone and abalone shucking equipment. The ANC-led government is continuously providing skills to law enforcement agencies to more than match the criminals and their syndicates. I thank you.


                        (Member’s Statement)

Mr C D KEKANA (ANC): Chairperson, the primary task of the ANC remains the mobilisation of all classes and strata that objectively stand to benefit from social change. The dictum that the people are their own liberators remains as relevant today as it was during the days of the anti-apartheid struggle.

The Northern Cape provincial government led by the ANC has committed R90 million towards ensuring community participation in the government development programmes. The plans to be funded include the following: community and social development workers; safety volunteers; school governing bodies; ward committees; and community safety forums.

The ANC believes that all spheres of government should invest in strengthening capacity in pursuance of enhanced service delivery. The goal of the ANC is to create a South Africa in which all experience an improved quality of life, and enjoy human rights with access to opportunities that freedom has brought about, bound together by our humanity. I thank you. ENFORCEMENT OF NEW PLEDGE AT SOUTH AFRICAN SCHOOLS

                        (Minister’s Response)

The MINISTER OF EDUCATION: Chairperson, allow me to begin, unusually, by thanking the DA for this statement on the pledge, and we certainly look forward to their suggestions as to the wording, because we have published a Gazette and welcome comments on the proposed pledge.

Now, as far as I recall, not a single line of the pledge makes reference to the ANC, and I don’t know where the hon Mulder got that reference from. But, of course, we would expect him to object to anything that seeks to build a nation and seeks to inculcate positive values in the children of our country.

If one looks at the values that are elaborated in the current draft - and it is a draft - it refers to very positive values that we would want our children to internalise and reflect both in their conduct as well as in their attention to our society. However, as I have said, we look forward with great interest to the submissions in response to the gazetting.

The HOUSE CHAIRPERSON (Mr G Q M Doidge): Thank you, Minister.

The MINISTER OF EDUCATION: Sorry, I wonder, Chairperson, if you could briefly allow me to say that, in the bill of responsibilities, hon Van der Walt, the word ``Bill’’ is used in order to link the document with the Bill of Rights. It is not a formal Bill which would come before the House but it would be available for debate in society, schools, colleges, universities and the broader public domain.

So, it is not a formal instrument. It does what all of us have been talking about, which is that, as we have tabled rights before the nation, let us also get the nation to understand that rights come with responsibilities. So we have sought to elaborate what some of the responsibilities that are attached to the rights in our Bill of Rights are, and we hope that the South African public will welcome such an elaboration, which many of us have called for in the past. [Applause.]


                       (Minister’s Statement)

The MINISTER FOR PUBLIC ENTERPRISES: I regret I can’t thank the DA for their statement on energy. [Laughter.] In fact, I find it somewhat sad that although we had a three-hour briefing this morning where we dealt in detail with a whole range of matters around the energy issue, the hon Van Dyk, 14 years into democracy, is essentially arguing that every problem that has occurred with energy is as a result of affirmative action.

I think that is a very sad statement for a party that should try and represent all the people of this country and not just your people. [Interjections.] That is the problem, because you are essentially implying that race is at the heart of this. I haven’t heard a single statement from that side of the House that’s committed that party to doing something about energy, and the hon Van Wyk, in particular, I think would really like to see a disaster in this country, because you do nothing to support investment in this country; you do nothing other than attack the policies of this government, and frankly, I think that you’re an anachronism and your position, in my view, is blatantly racist. [Applause.]

The HOUSE CHAIRPERSON (Mr G Q M Doidge): Hon Ellis, are you rising on a point of order?

Mr M J ELLIS: Chairperson, I ask you, sir, to rule along the lines of what the hon Minister has said. He has said that the party is racist and I believe that that is unparliamentary. [Interjections.]

The DEPUTY CHIEF WHIP OF THE MAJORITY PARTY: Chairperson, I distinctly heard Minister Erwin saying that ``your position is racist’’, but if you want to consult Hansard and rule on the matter … [Interjections.] The HOUSE CHAIRPERSON (Mr G Q M Doidge): Order, order! The comment made by the hon Minister is not unparliamentary. We will now proceed with the response from Minister of Housing. [Interjections.]

I am going to ask the hon members to observe the Rules. If you don’t know what the Rules are, then I will have to remind you from the Chair. When an hon member has the floor, we ought to give that hon member an opportunity to be heard. Now, if you contravene the Rules, I have to take action from the Chair. I asked for order and didn’t get a positive response.

I am now going to allow the Minister of Housing to go ahead. I don’t know what you are heckling for, because the Minister hasn’t even spoken yet! Please proceed, hon Minister.


                        (Minister’s Response)

The MINISTER OF HOUSING: Thank you very much, Chairperson. I am very glad I come in at this point when we are talking about the issue of race. I would like to commend the hon Zoe Kota for her very incisive statement on the situation in Delft. I think it is an absolute disgrace that the DA should sink so low in its desperate bid to rally support. It has deliberately sought to sow racial tension and divisions in the Western Cape. I must commend the people who have been moved from Langa and are presently living in temporary shelter. I commend them for their restraint and understanding in the face of this violation. I would also like to thank the other backyard dwellers in Delft who did not respond to the irresponsible calls of the DA councillor. The matter will now be rectified, and the intended beneficiaries should move in very soon.

I welcome the hon Kota’s call for the DA Mayor of the City to deal with her delinquent councillor. I would also like know from the DA members here what their responsibility is in the face of this racial problem that is being sown. If, in fact, the opposition and in particular, this particular opposition, does not subscribe to the definition of being called racist, I would like them to show that they actually will not stand by a councillor who is blatantly racist. [Applause.]

                       TRANSFORMATION IN SPORT

                        (Minister’s Response)

The MINISTER OF SPORT AND RECREATION: Chairperson, Mr Peter de Villiers is a young South African citizen from the small town of Paarl. He is an excellent rugby coach by his own records. As a matter of fact, in the records of South African rugby, the Springboks have never had a better qualified rugby coach in the whole history of the Springboks from 1906 to date. So, for everybody … [Interjections.] Of course, this is a fact.

Chairperson, Peter de Villiers started his coaching at school. He brought back the World Cup for the under-19s, the under-21s, and the A side. [Applause.] Nobody else has ever done it before him. We don’t know if there will be anyone who will do it after him.

The fact that he is black has nothing to do with the fact that he is a Springbok coach today. It has to do with the excellence that this young man displays in the art of coaching rugby.

For the politicians who are in rugby tracksuits… [Interjections.]

Mr P J GROENEWALD: On a point of order, Chairperson. I rise on a point of order. Is the hon Minister prepared to take a question?


Mr P J GROENEWALD: Chairperson, I want to ask the hon Minister this: If Mr Peter de Villiers is the best qualified coach since 1906, why was he not appointed and why was Jake White appointed?

The MINISTER OF SPORT AND RECREATION: You should know better – because of political interference, which is always ascribed to us, when in fact it comes from yourselves. My father was never a Minister in the apartheid government. [Interjections.] It is a point; it is the root of the answer to your question. I’m tracing that answer to its roots - the root of parallel development; the root of multinationalism in sport. That is the root of the answer to your question. [Interjections.]

We have now eradicated that root and Peter de Villiers, purely on the basis of his ability and his curriculum vitae and credentials, has been identified as such. As for those skeletons in rugby tracksuits masquerading as sportspersons, when in fact they are ultraconservative politicians, we say they must go back to the ideological Jurassic park where they belong. We move forward. [Applause.]


                      (Subject for Discussion)

Mrs C DUDLEY: Chair, hon Ministers, colleagues, food inflation in South Africa is clearly out of control, especially the price of bread. For the ACDP, this is a cause for extreme concern as it affects poor and vulnerable people without exception. Behind the emotional reaction to soaring bread prices - we are told - two indisputable facts stand out: Firstly, that the dramatic surge in the price of wheat in the past 18 months is here to stay, and secondly that higher prices are likely to hit South Africa’s independent bakers, who are the producers of 45% of the country’s bread, far harder than they will hit big companies. Over the past twelve months the price of wheat has risen from R1 700 to R4 000 a ton; global wheat stockpiles are at a 30-year low as climate change has taken its toll; and wheat consumption has outstripped global supply for the last four years. South Africa produced 1,77 million tons of wheat last year but consumed 2,8 million tons. At the same time a growing demand for biofuels has enticed farmers to shift from wheat to maize production, and the price of fuel is continuing to escalate, adding to a long list of factors contributing to bread price increases.

Mr S N SWART: Chairperson, on a point of order: We cannot hear the speaker at this stage. Could we have some silence, if possible? [Interjections.]

The HOUSE CHAIRPERSON (Mr G Q M Doidge): Order! Order!

Mrs C DUDLEY: Global markets and the rand value are, of course, also culprits and often used to explain price increases. We are, however, yet to see a decrease in the price of staple foods when the rand actually strengthens. I’m not used to the silence. [Interjections.] Come to think of it – why would white bread increase by 2,8% and brown bread by 5,4% when production processes and inputs are the same for both? Interesting!

The National Agri-Marketing Association still has to evaluate costs and margins in the industry, but what we do know right now is that bakeries and dairies have been colluding, and collusion leads to higher prices. The speedy and thorough action being taken and significant consequences in the form of hefty fines are commendable.

In future, the ACDP hopes collusion will be viewed as bad for business. Even so, the ACDP calls on government to tell us into whose coffers the R100 million admission-of-guilt fine has gone? Who will benefit from this and other fines? How will this money be utilised to relieve the burden of bread price increases on society?

The outrage sparked by the price-fixing scandal and the recent price increases has elicited several calls for government to intervene, with labour unions and others arguing that the rising cost of staple foods could force millions of people deeper into poverty. The argument against government intervention is that it distorts the market allocation of goods and services. When prices are kept artificially low, suppliers allocate fewer resources to the production of goods, leading to shortages.

It is argued that if producers were making superprofits in bread production, consumers could simply vote with their feet and force the bread companies to lower their prices to win back customers. The problem with this argument is that when it comes to a staple food like bread, consumers have no choice but to pay higher prices – whatever they are. Consumer demand is therefore price insensitive and bread producers could increase prices without suffering the reduction in demand that would usually go with price hikes.

One very interesting piece of the puzzle, however, is highlighted in research by South Africa’s milling industry, which shows that government, through VAT, is in fact the biggest beneficiary of the recent bread price hikes. It is estimated that government will earn about R1,29 billion in VAT on white bread alone this year. Brown bread, of course, is VAT exempt.

The fiscal benefit for government does not stop there, as VAT is earned on products right along the value chain – from the farmer to the miller and baker, not forgetting the 2% import duty per ton of wheat. Is it perhaps time for white bread also to be VAT exempt, and what about the import duty on wheat? Certainly, these are options which government must seriously look at. I thank you. [Applause.]

Mnu S J NJIKELANA: Sihlalo obekekileyo, Baphathiswa abahloniphekileyo, Malungu ePalamente kunye nabo bonke abemi beloMzantsi Afrika. Kukho umntu owakhe wathi abantu befuna isonka waphendula wathi “banike ikeyiki”. Ndithemba ndiqinisekisile ke noko ukuba kwezi nzingo sijongene nazo kwezi ntsuku, urhulumente wethu unxaxhile kwimpendulo elolo hlobo. (Translation of isiXhosa paragraph follows.)

[Mr S J NJIKELANA: Hon Chairperson, hon Ministers, Members of Parliament as well as all fellow South Africans, there was once a person who, when people were asking for bread responded by saying “give them cake”. I trust that with all the challenges that face us our government would not respond in such a negative manner.]

The recent incidents of increases in the bread price are definitely a cause for alarm. At the same time we need not exaggerate alarm on this matter. We have a government that is always responsive to issues that affect the poor. It is obviously on this basis that this Parliament is addressing the matter of increases in the bread price.

We need to delve quite deeply into the causes. Certain quarters claim that the astronomical price rises in respect of wheat and fuel and other factors are the cause of the recent price increases. However, in the words of Cosatu in KwaZulu-Natal, and I quote:

This situation threatens the livelihood of many workers and their families. Living standards are becoming unbearable for the unemployed people in our communities.

When inaccessibility of staple foods becomes an issue, as is the case in our country, this obviously constitutes a challenge to, amongst other things, food self-sufficiency, which is central to food security, as it has become an issue due to the liberalisation of agriculture-based economies. The Board on Tariffs and Trade investigated prices in the food chain in 1992 and observed two divergences, namely that food price inflation was higher than overall inflation between 1981 and 1991, and that retail food price inflation was higher than farm-gate inflation over the same period. In response to this situation, the Department of Agriculture and Land Affairs is currently busy increasing local wheat production, strengthening co-operatives along the bread production value chain, as well as encouraging local bakeries in peri-urban and rural areas.

The recent incident of bread price-fixing has brought to our attention lessons such as the callousness of those driven by greed and avarice, who have been exposed as siphoning even the last penny from the poor. Deficiencies in the current price regulatory systems need serious attention. In any case, the growing effectiveness of regulatory institutions, such as the Competition Commission, has come to the fore. Recently, the commission has uncovered a number of fraudulent pricing practices and ensured that culprits were brought to book. This has also enhanced public awareness of the institution’s activities, although more still has to be done.

There are challenges with regard to economic morality. Raising the price of bread despite recent penalties is one cause for concern. As if that was not enough, collusion on pharmaceutical products has just been exposed as well. An interesting feature is the deafening silence on the morality of making a living out of the plight of the poor. In fact, the question is: At what stage can we say price collusion and/or fixing is devoid of fraud and criminality in its character, since this is an activity that results in the misery of those whose daily struggle is to fill their stomachs?

The role of directors, shareholders and consumers has never been so challenged. The rampant excuse of saying “we did not know” is brought under the spotlight by these circumstances. Let me say that active shareholding can no longer be mere lip service. Shareholders must ensure that their managers account for their activities. The need to focus on consumption as part of the economic cycle in South Africa has never been so strong.

I am definitely making a strong call to consumer groups to intensify their awareness campaigns and, amongst other things, to ensure that citizens, as consumers, are able to influence the pricing of commodities to ensure accessibility thereto. Public accountability of private companies is almost nonexistent. These should be a special focus on businesses that produce bread, whether it be producing wheat, baking or distributing. They should ensure that they are as transparent as is necessary.

The current focus on economic transformation is supposed to be enablement more than regulation. However, unfortunately, recent events display a demand for the latter. The unfortunate part is that resources that are supposed to be allocated to enabling economic development have to be redirected to punitive measures due to malpractices in the prices of commodities, including bread.

The culture of exploitation of the poor through, inter alia, price collusion by large cartels has triggered a lot of responses, as reported in the newspapers. Our government should therefore intervene in this matter and ensure food security for the poor and the economically marginalised, who are the most vulnerable targets of this practice, which is best described by the CEO of Tiger Brands, Mr Nick Dennis, when he says, and I quote:

The anticompetitive activity that took place was completely unacceptable and contrary to our ethical standards.

Indeed, the practice is not only anticompetitive but also unethical. Unfortunately, the practice continues in other companies.

Any intervention undoubtedly has to include the following considerations: Enhancement of the social wage by government such that the poor are able to absorb any dramatic price increases, especially on staple food, which must be given urgent attention; the development of a vibrant and dynamic consumer movement in keeping with our historical goal of deepening democracy – as consumers, South Africans need to resocialise themselves and consumer activists have to mobilise intensively for the highest possible consumer consciousness; a strong focus on small, medium and micro enterprises, in particular co-operatives, could provide some viable solutions; and further enablement and/or empowerment of the Competition Commission and sister regulatory bodies.

Whilst short-term interventions are more than essential, it is only long- term strategies that will address this quagmire on a sustainable basis. Some of these long-term strategies are: The refinement of relevant legislation; compliance with company policies to be made a public issue; enhancement of global alliances against price collusion at global level; the need to intensify moral regeneration beyond the current focus into economic morality; the possibility of the reintroduction of the regulation of food prices, especially on staple foods, has to be debated; and addressing the broad socioeconomic issues that shape the overall environment for the determination of food prices.

Our government needs to heed the call of the resolutions that were taken at the ANC’s 52nd National Conference, which spoke of “transforming the structures of production and ownership, including through antimonopoly and anticoncentration policy, aimed at creating competitive markets, broadening ownership and participation by our people, addressing monopoly pricing and other forms of rent-seeking and anticompetitive behaviour.”

Food price-fixing should be seen as an effect whose cause is the further growth of monopoly capital and its accrual of profit at all costs results in exploiting and further impoverishing the poor and economically marginalised. Chairperson, I see my time is up. Thank you. [Applause.]

Dr P J RABIE: Chairperson, the recent escalation in food prices and in particular the recent hike in the price of bread has enraged consumers with reference to particular segments of the food industry.

The milling industry was criticised when it was announced that the four big bread producers, namely Tiger Brands, Pioneer Foods, Foodcorp and Premier Foods, are being investigated by the Competition Commission for collusion in setting bread prices. Tiger Brands has already paid a R100 million admission of guilt fine, while Foodcorp and Pioneer are set to be charged by the Competition Commission.

Chairperson, price fixing of staple foods like bread is totally unacceptable. In light of the fact that millions of needy South African consumers are battling at the present moment to make ends meet, bread is a key component of the daily diet of needy consumers.

I am perfectly aware that any tax system must be as simple and straightforward as possible, but recent research conducted by South Africa’s milling industry shows that since the escalation of the price of bread the government’s VAT income has increased to 76c on the cost of a single loaf of white bread which sells for R6,20. This is of grave concern.

I am aware that brown bread is VAT exempt but it must be mentioned that the government earns VAT on products along the value chain, from the farmer to the miller and baker.

The DA welcomes the government’s initiative in asking the National Agricultural Marketing Council to investigate and evaluate costs and margins in the baking industry. My request, however, is that government investigates and evaluates the cost possibility of reducing the VAT to zero- rating on white bread.

South African bakeries produced roughly 1,7 million loaves of white bread and 1,1 billion loaves of brown bread in 2007. What is of concern however is that the CEO of the Chamber of Milling, Mr Jannie de Villiers, says that Albany Bakery, a subsidiary of Tiger Brands and the South African market leader, has been losing 40 cents per loaf of bread since August 2007. I am saying this because if an industry is not able to break even, retrenchments and jobs losses are inevitable.

The bread industry was heavily regulated in the past. It is an undeniable fact that price-fixing and the manipulation of trading conditions lead to higher prices. The bread industry has been deregulated, and as has been stated before any anticompetitive business practice in this sector affects needy consumers negatively.

The DA is aware that the price of bread is of vital importance to the wellbeing of millions of needy consumers. We appeal to all the respective role-players, farmers, bakers, millers, transport, the retail sector and government, to refrain from unfair trade practices.

Die bekamping van armoede is van groot belang vir ’n groeiende, vooruitstrewende Suid-Afrika. Voldoende, bekostigbare voedsel - in dié geval die prys van brood – moet gesien word in die maatskaplike omstandighede wat in Suid-Afrika heers. Indien instellings egter broodpryse vir korttermyn finansiële gewin manipuleer, word streng optrede teen sodanige instellings verwelkom.

Armoede as normatiewe verskynsel word teen die sogenaamde broodlyn gemeet. Dit is die regering van die dag se plig om toe te sien dat, soos persoonlike veiligheid, brood en ander graangewasse, soos byvoorbeeld mieliemeel, ook bekostigbaar vir die verbruiker is. Indien dit nie gebeur nie, toon die geskiedenis dat sosiale onrus onafwendbaar is. Ek dank u. (Translation of Afrikaans paragraphs follows.)

[Combating poverty is of great importance to a growing, prosperous South Africa. Sufficient, affordable food – in this instance the price of bread – should be seen in the light of the social circumstances that prevail in South Africa. If, however, institutions manipulate bread prices for short- term financial gain, strict steps against such institutions would be welcomed.

Poverty, as a normative phenomenon, is measured against the so-called breadline. It is the government of the day’s duty to make sure that, like personal safety, bread and other cereals, for example maize meal, are also affordable for the consumer. If this does not happen, history has shown us that social unrest will be unavoidable. I thank you.]

Mr H J BEKKER: Baie dankie, mnr die Voorsitter. [Thank you, Chairperson.]

Chairperson, one characteristic of our fledging democracy is the great disparity that still exists between the various communities of our society. While many people are thriving and have improved their lives greatly, there are still too many South Africans who struggle daily with the devastating effects that hunger and poverty have on their lives. It is these people, in particular, who are the worst affected by the unscrupulous actions of those companies involved in this pricing scandal.

We in the IFP strongly condemn the unethical behaviour displayed by the companies in this price-fixing scandal. In their attempts to further increase their profit margins they have inflicted much suffering and pain on people who are amongst the most vulnerable in our land. Strong action should be taken against the companies and individuals responsible for this unethical behaviour. They must be held accountable for their actions and should apologise to the public.

We therefore welcome the resignation of the chief executive officer of Tiger Brands as being honourbound when he figuratively fell on to his own sword. The IFP also welcomes the massive fine issued to Tiger Brands in the amount of R98,8 million following this bread price-fixing scandal.

It is interesting though that the shareholding, and the Stock Exchange, because of this incident and, of course, there is also the natural loading of the share prices on the Stock Exchange, has lost R350 million. This is also an indication that the public and even the investors are taking this particular matter very seriously.

However, we note that this fine paid by Tiger Brands did not benefit any of the victims. Therefore, the IFP calls on National Treasury to amend their regulations on the deposit of Competition Commission fines into the Revenue Fund and rather to provide for the victims of anticompetitive behaviour to benefit in a direct manner.

We believe that the government should not be the main beneficiary of this scandalous behaviour of consumer groups but that the poorest of the poor should rather be the beneficiary in the future.

For the future, one must realise that the price of wheat has, for the first time, smashed the R4 000 per ton barrier, thereby doubling in price within one year. This is a bad omen for the future of the bread price. We will have to dig deep and become original in our thinking, particularly in view of global demands and the weakening of the South African rand.

The IFP, in its philosophy of self-sufficiency and self-help, would encourage consumers to bake their own bread but then there must be sufficient and economical bread flour on the shelves. Should the South African milling industry not be coming to the table, then import duties and levies should be zeroed.

Government and particularly the Department of Agriculture and Land Affairs must also look into the situation of the farmers. There is virtually no support for our farming industry. The production of the farmers is going down and we must ask ourselves: Why?

Is it not time that we should look at our farmers and assist them with this? Because we must also bear in mind, in terms of corporate governance and the King Report, that we must not look at the bottom line of profit only. There must be a triple bottom line which embraces the economic, environmental and social aspects of a company’s activities.

Corporate governance and social responsibility are issues that should be ingrained into every organisation’s culture at every level, from the top to the bottom of that organisation. I thank you.

Mr J BICI: Chair, hon members, the UDM has noted with dismay the exposure of the price-fixing racket that has been a feature of the bread industry for several years. The one inescapable fact is that bread is a major staple food in this country. Therefore, the poor must not be excluded from accessing this food. Yet, the escalating price is effectively putting this staple food beyond the reach of many people.

The steep fine that has been imposed for the price fixing does not translate into any relief for the poor. Since the imposition of the fine, the price of bread has risen again and it is still to increase by a further 40c.

Various factors have an impact on the price of bread. For example, maize prices play a major role and a combination of supply shortages as well as the use of export parity pricing by domestic maize producers places continuous upward pressure on the price of maize and therefore of bread.

These factors all collide at a time when the economy is slowing down, and the hardships of the poor are on the increase. The onus is on the government to find creative ways of encouraging lower bread prices. For example, the government can intervene by way of subsidies. The other option is to regulate that a percentage of the penalties realised on price fixing should be used on a bread subsidy. I thank you.

The MINISTER FOR AGRICULTURE AND LAND AFFAIRS: Thank you, Chairperson. The Ministry for Agriculture and Land Affairs is gravely concerned about the rise in the bread price, as this inevitably affects the poor and vulnerable groups most, for whom bread is a staple food.

Although various explanations have been given by various role-players from the milling and baking industries and other organisations, the perception still exists that increases in bread prices constitute misuse of market power. In this regard, two aspects need to be explained: Firstly, the extent to which international market forces contribute to an increase in the price of bread; and secondly, the dynamics in the local wheat-to-bread value chain and the role of wheat producers, processors or millers and retailers in the pricing of bread.

International market forces in the wheat-to-bread value chain have had a great impact on the price of wheat and bread in South Africa today. The prices of food worldwide, including grain products such as bread, have been decreasing for decades following the Green Revolution. Research shows that there are indications that we have reached the end of that downward trend.

This reversal is the result of a rising demand for food, animal feed and fuel, particularly from the great nations of the East. This is exacerbated by climate change having a negative impact on crop yields leading to low supplies of food commodities, especially grains. Grain is also increasingly in demand in the production of biofuels and this is also putting additional pressure on the supply and the price of food.

The current low stock of grain globally and the slow rate of growth in outputs, have unfortunately resulted in a continuation of the upward trends in food price right into the forcible future.

South Africa is a net importer of wheat, which makes it the main input in the production of bread. We are therefore exposed to these international forces owing to the fact that we have to import wheat at import parity prices. We are discussing this matter with the Minister of Trade and Industry.

In the past, South Africa produced a lot of wheat in the Western Cape Province and it still does, even though it is not as much as in the past. The Eastern Cape and the Free State used to produce wheat as well, but they have ceased doing so and we need to ensure that we encourage production again in these two provinces.

We should go back to ensuring that we increase wheat production, to ensure food security as well as to stabilise the price of wheat and food in the long run. It has been shown in the current Safex wheat prices that in the past year the price of wheat has increased by almost 200%. Recent hikes in the price of bread have been justified to a certain extent by using these explanations.

Notwithstanding the international forces we have referred to above, in addition, South Africa has been rocked by price-fixing scandals involving the bread industry and the dairy industry. I want to support the hon members who have condemned these practices; I also want to commend the Competition Commission which has come out with very clear investigations and sanctions against these companies. I would suggest that we introduce firmer measures and sanctions to ensure that we discourage these practices. We have expressed our grave concern, especially considering that the poor are most affected by the rising food prices.

On 25 January 2008, I met with the collective key stakeholders in the agriculture sector to look into the escalation of the bread price and to find common working solutions to make bread affordable to all South Africans. During that meeting the role-players resolved that a detailed investigation into the wheat-to-bread value chain is necessary in order to ascertain that we have ensured that there is no unreasonable profiteering by certain firms at the expense of the poor and other role-players in the value chain.

The Department of Trade and Industry and the Department of Agriculture and Land Affairs are also looking at the tariffs, especially the wheat tariffs, to ensure that they do not have a negative impact on the price of bread. The National Agricultural Marketing Council – NAMC - was subsequently requested to establish a section 7 committee to investigate the entire wheat-to-bread value chain.

Section 7 of the Marketing and Agricultural Products Act, Act 24 of 1996, empowers the NAMC to establish section 7 committees to undertake investigations; as they may be needed on matters concerning agricultural marketing, especially those issues that affect the poor, and make recommendations to the Ministry for Agriculture and Land Affairs.

The meeting was attended by farmers, millers, bakers, retailers and consumers. At this meeting the grain producers committed themselves to increasing wheat production in the country to strengthen co-operatives along the bread production value chain. Also, as the department, we have made a commitment to ensuring that we encourage the establishment of these co-operatives for the production of bread. We will also assist local bakeries, especially in our rural areas and peri- urban areas to produce their own bread. The Ministry has made a commitment to assist farmers in ensuring that they increase wheat production locally and in ensuring that we set up co-operatives and small businesses.

We would also like to work with women‘s organisations and encourage them wherever they are to bake their own bread. We believe that this would go a long way towards ensuring food security and stabilising the price of bread.

I want to close off by saying that as the Department of Agriculture and Land Affairs, together with other role-players in the wheat-to-bread value chain, we are committed to ensuring that we work together and continue to examine this issue. It’ll not only be the bread prices, but we are also working with the dairy industry on dairy products prices, like milk prices, that are also increasing.

We would like to call on all hon members and all stakeholders to come together, to pool our resources and work on a strategy that will ensure that we reduce the price of bread. We have joined forces with trade unions, community organisations and churches to join their campaign to ensure that we fight the escalating price of bread, milk and all foodstuffs in the country. Thank you very much. [Applause.]

Mr M H HOOSEN: Chairperson, the collusion and blatant exploitation of the poor by the main bread producers in South Africa is not only an insult to the nation, but a deliberate and premeditated attack on the poorest people of our country.

The R99 million fine imposed on Tiger Brands last year was not enough to deter cartels from colluding with each other at the expense of the most vulnerable in our society. The need to strengthen the hand of the Competition Commission to impose harsher and stricter penalties has now become more evident than ever.

The existing Act of Parliament that mandates the Competition Commission needs to be urgently amended. Currently the Act allows the commission only to impose a fine, but it needs to be changed to make provision for criminal prosecution as well.

We live in an equal society which the ID has shown must treat corrupt politicians and businessmen the same. We would also like to propose that government implements specific rural development programmes to increase the local production of wheat. I thank you.

Mnr P J GROENEWALD: Agbare Voorsitter, ek wil in hierdie debat begin om ’n wanpersepsie uit die weg te ruim. Daardie wanpersepsie ontstaan wanneer die publiek van Suid-Afrika op televisie sien dat die prys van koring R4 000 ’n ton is en almal dink dit is die boere wat hierdie geweldige voordeel kry. Dit is nie die boere nie. Die boere het Desembermaand reeds klaar hulle koring geoes en hulle kry beslis nie R4 000 ’n ton soos wat gesê word nie.

Wat is die kern van die problem van die hoë broodprys? Die kern van die problem is weer eens die skuld van die ANC-regering en spesifiek die Minister vir Landbou en Grondsake. Hoekom sê ek dit? Die agb Minister het dit netnou hier in ’n mate erken. Sy’t gesê die Oos-Kaap, die Wes-Kaap en die Vrystaat produseer nie meer koring nie. Hoekom nie, agb Minister? Weet u hoekom hulle nie meer koring produseer nie? Omdat dit nie meer kostedoeltreffend is vir ’n boer om koring te produseer nie.

GraanSA het die ANC-regering en u voorganger Thoko Didiza in 2000 gewaarsku en gesê ons moet ’n behoorlike landboubeleid kry sodat ons die voedsel in Suid-Afrika kan beskerm, maar toe was dit mos nou goedkoop om koring van die buiteland in te voer. En wat gebeur as ’n mens koring goedkoop kan invoer? Dit is nie vir die boer kostedoeltreffend om dan met koring voort te boer nie.

GraanSA het u gewaarsku, maar u het nie geluister nie, net soos in die geval van Eskom, want u word lank voor die tyd gewaarsku, maar u dink net aan korttermyn-beplanning en nie aan langtermyn-beplanning nie. Dit is hoekom die boere in daardie provinsies nie meer produseer nie.

Nee, agb Minister, as u die probleem wil oplos, moet u ophou om ‘n ideologies gedrewe beleid in die landbou uit te voer. U moet begin om landbou te dien en sorg dat die boere ’n behoorlike beleid kry wat hulle ook kan beskerm in onsekere tye, want die ANC staan deesdae net vir “ANother Crisis”. U moet die krisisse begin oplos. Dankie. (Translation of Afrikaans speech follows.)

[Mr P J GROENEWALD: Hon Chairperson, in this debate I want to commence by getting rid of a misconception. That misconception arises when the South African public sees on television that the price of wheat is R4 000 per ton and everyone thinks that it is the farmers who gain this tremendous benefit. It is not the farmers. The farmers had already finished harvesting their wheat in December and they most certainly do not get R4 000 per ton as is suggested.

What is the crux of the problem of the high bread price? The crux of the problem is once again the fault of the ANC-led government and particularly the Minister for Agriculture and Land Affairs. Why do I say this? The hon Minister admitted it to a certain extent just now. She said that the Eastern Cape, the Western Cape and the Free State no longer produce wheat. Why not, hon Minister? Do you know why they no longer produce wheat? Because it is no longer cost-effective for a farmer to produce wheat.

GrainSA warned the ANC-led government and your predecessor Thoko Didiza in 2000 and it said that we need a proper agricultural policy in order to protect food in South Africa, but then it was cheap to import wheat from overseas. And what happens when one can import wheat cheaply? Then it is no longer cost-effective for a farmer to continue farming with wheat.

GrainSA warned you, but you did not listen, just as in Eskom’s case, because you are warned for in advance, but you only think of short-term planning and not long-term planning. This is why the farmers in those provinces no longer produce wheat.

No, hon Minister, if you want to solve the problem, you have to stop implementing an ideologically driven policy in agriculture. You must begin to serve agriculture and ensure that the farmers get a proper policy which can also protect them in uncertain times, because these days ANC is only short for “ANother Crisis”. You should start solving these crises. Thank you.]

Mr D M DLALI: Chairperson, “the people shall share in the country’s wealth”. How we can express this clause of the Freedom Charter in the context of a democratic developmental state is another question. In this context the ANC conference said:

Our most effective weapon in the campaign against poverty is the creation of decent work. Moreover, the challenges of poverty and inequality require that accelerated growth takes place in the context of an effective strategy of redistribution. The President of the Republic of South Africa said in his state of the nation address that we require a national war room for a war against poverty, bringing together all the departments concerned, different spheres of government and civic organisations to deal with this war collectively as a matter of urgency.

Having said the above, the critical issue that we need to address and deal with is the question of food security. Poor South Africans need food at all times. There is no doubt about the fact that the price of bread has a negative impact on society and in particular the poorest of the poor.

The big businesses that monopolise and take advantage of the ANC-led government’s approach of being a caring government, and want this government also to take care of them, are making a big mistake. These monopolies are making a big mistake – monopolies such as Tiger Brands, Pioneer Foods, the producer of Albany bread, and Premier Foods raised the price of a loaf of bread by between 30c and 35c in the week before Christmas. Their timing was also wrong and taking advantage of the Christmas holidays.

I’m also informed that this situation threatens the livelihood of many workers and families. The living standard has become unbearable for the poor, underpaid and unemployed people in our communities.

The Times of Wednesday, 6 February 2008, first edition, stated on page 18, “Consumers must rise against the outrageous prices”. It went on to say:

The news is not good. As everyone who has done regular grocery shopping will tell you, food inflation in South Africa is out of control. The deregulation of agricultural markets that began in the dying days of the protectionist apartheid government has led to greater efficiency in the market.

One may agree with some of the issues raised here, but may not agree entirely with others, the reason being that the markets always want a hands- off approach in order for them to do what they want. As a democratic developmental state we’ll have to intervene in the markets, not be dictated to and driven by the markets. The same article went on to say:

The Competition Commission has rightly begun investigating the pricing of basic foodstuffs such as bread and milk, and has already fined Tiger Brands for price-fixing. But this is not enough. Consumers need to stand up and make their voice heard over the extortion they encounter while buying staple foods.

Again, there are certain issues that are correct in this article, while one may not agree with other issues raised here. But the message is loud and clear that we need to advance the agrarian revolution we spoke of at the ANC conference. This also underlines the necessity for effective rural development programmes, ensuring that investment in infrastructure, services and training reaches those areas of the country that have been most adversely affected. We need to advance the agrarian revolution for a war against poverty.

I’m also informed that accelerating growth and transforming the economy require a democratic developmental state that is able to lead in the definitions of a national economic agenda and mobilise society and direct resources towards achieving this agenda. Unlike the said quote from the Times of 6 February, while acting to promote growth, efficiency and productivity, it must be equally effective in addressing the social conditions of the masses of our people and realising economic progress for the poor.

I’m further informed that the developmental state should maintain its strategic role in shaping the key sectors of the economy. In my view this debate today centres around the role of a democratic developmental state and where it is supposed to allocate its priorities. Therefore the ANC leads and the ANC lives.

Getting back to the agrarian revolution, the producers of wheat, the farmers in South Africa, are not subsidised in the way that wheat producers in the EU, US and Canada are. Agriculture is heavily subsidised in the EU, US, Japan and many other countries. The input cost is not felt by those farmers or producers at all, and the result of this is that Africa becomes a dumping ground, while we also import wheat at a very high cost from these countries that subsidise their producers.

At the general GrainSA meeting held recently in Elsenburg in the Western Cape, Neels Ferreira, chairperson of GrainSA, claimed that South African producers had the capacity to supply the local wheat demand and were eager to do so. Unfortunately, wheat prices, combined with the high input costs, did not justify such an expansion. What next then?

Due to reduced earnings, farmers downscaled wheat production, but now there is an international wheat shortage. Prices have skyrocketed, making it more expensive to import wheat.

Sakkie van Zyl, market researcher and economist at GrainSA, says the wheat supply is at a historic low. Due to climatic conditions, international production was hampered in three of the five major exporting countries, namely Australia, the EU and Canada, so production expansion amounted to only 602,5 million tons in 2007, compared to 591,5 million tons in 2006. At the same time international consumption rose from 610 million tons to 620 million tons, decreasing supply levels by 110 million tons and resulting in a supply-consumption ratio of only 18% compared to 20% in 2006.

Increased local production will not happen overnight. I’m told that many farmers have lost faith in the wheat industry and have restructured their enterprises around strong livestock components. Agricultural input costs have also increased astronomically, in some cases by 70%.

Neels Ferreira, chairperson of GrainSA, said there is a misperception that higher consumer prices are due to farmers making huge profits. This is not true. Distribution costs have had a much greater impact on the wheat price over the past year than producer prices. He further said:

We are currently evaluating the whole supply chain to identify exactly where the money is going to. We need to ensure the whole industry functions in a free-market environment.

There is also the view that producers who want to produce very fine quality wheat must be rewarded for it and those who would rather aim at mass production must be rewarded for that. I’m not sure whether this approach is correct. We need to debate this issue. We need to look carefully at these suggestions and how and by whom they can be effected.

I’m also informed that government could intervene in the bread price by removing the tax on white bread, which would reduce the price by 80c and would also force down the price of bread. I’m not sure of this either. We’ll just need to look at this carefully.

Given South Africa’s deregulated and open-market economy, global market trends have important implications … [Time expired.]

Mr M V NGEMA: Chairperson, when the regulation of agricultural marketing was introduced in South Africa, the main objectives were as follows: To achieve a more efficient use of this country’s agricultural resources; to ensure investment and employment in agricultural marketing activities; to conserve political and bureaucratic time and energy formerly spent on price setting; to place less of a burden on government finances; and to lower real food prices.

Chairperson, deregulation of the agricultural sector has assisted in ensuring that prices started to become regionally differentiated to reflect transport costs and regional variations in demand and supply. One of the main objectives of agricultural deregulation has been to promote competition and to reduce costs throughout the supply chain of various agricultural products to the benefit of consumers as well as farmers.

The key question is: Has deregulation reduced food price inflation and as such benefited the majority of the poor consumers for whom food constitutes an important part of their total expenditure? The government needs to strengthen co-operatives within the agricultural sector to ensure that they become significant economic actors as this has proved to be effective in other countries like Brazil, Canada and Uruguay. Research by SA Milling Industry shows that government, through VAT … [Time expired.] Thank you, Chairperson.

Mr B E PULE: Chairperson, the levels of poverty in South Africa have risen. The number of unemployed people has also risen. There are also a considerable number of people seeking work, and this includes a greater proportion of women from rural areas. The gap between the rich and the poor is enormous. All these classes of people pay the same price for a loaf of bread.

This increase indeed has a negative impact on the poorest of the poor. The UCDP calls upon the Competition Commission to investigate whether big bread producers have not connived to increase the price artificially. This has to be done in the milling, storage and baking value chain.

South Africans are really reeling with the increase in the price of basic foods and energy and interest rates. Regulators, watchdogs and audit bodies have not decisively intervened by way of investigation. The claim by Tiger Brands Ltd that the 40c increase in the price of a loaf of bread results from the rise in the price of wheat and fuel is not acceptable. No amount of good reasons will really convince the poorest of the poor.

The UCDP, however, appreciates the attempt by the hon Minister for Agriculture and Land Affairs to have discussions with interested parties and to also look into ways of increasing local wheat production and the strengthening of co-operatives along the bread production value chain. I thank you.

Mr R B BHOOLA: Chairperson, in terms of the price-fixing scandal on bread, it appears that role-players have been severely fined and that the 90% dominance in the milling industry that these parties have luxuriously indulged in, has now come to an end.

It is understood that the deregulation of the wheat market has introduced a lot of competition since 1997. It is indeed upsetting that this dominance of power has also led to collusion in the fixing of prices. We are an impoverished nation that requires the private sector’s assistance to overcome poverty, stimulate social and economic growth and assist in transforming South Africa into a first world country.

Both affirmative action and black economic empowerment or BEE, were used to force the private sector into the process of transformation. But, it appears that some in the private sector remain profit-driven and refuse to form part of the bigger South African vision of and for democracy.

We have to realise that bread is part of a basic diet. While prices continue to increase, we have an increase in the number of families that cannot afford the exorbitant price of bread.

With poverty comes malnutrition. If we are to constructively turn hungry bellies into full bellies then we need to address the prices of basic necessities such as bread, milk, rice, maize, salt, sugar, eggs, meat, chicken, fish and vegetables. We have children who go to school hungry. We have government striving to address the dilemma through a feeding scheme. Then we have the private sector working hard at impeding our progress to assist the hungry for their own greedy profitable gain.

Government needs to evaluate what may be deemed as basic necessities in food and also look at addressing the pricing in the market so that not only the poor but also the aged may survive. The MF sincerely feels that we need to evaluate the cost of living and serve the community by making survival more accessible by reducing the cost of living. I thank you.

Mr B A MNGUNI: Chairperson, hon Ministers and colleagues, the SA Reserve Bank noted in the December 2007 quarterly bulletin that inflationary pressures in the domestic economy intensified concurrently at the producer and consumer price levels from the middle of 2006, primarily due to sustained increases in food prices.

The bank further noted that owing to an increase in international grain prices, the drought conditions during the planting and harvesting seasons, and a weaker exchange rate, particularly in the first half of 2006, food price inflation already exceeded the upper end of the inflation target range for 18 consecutive months. These developments in domestic food prices were also evident on the international front as demonstrated by the acceleration of food prices in numerous other countries over the past two years.

On 17 January this year, China imposed price controls on a wide range of goods, ranging from grain, edible oil, milk, meat and liquefied petroleum gas to school fees and fertilisers. Producers of specified products or services are now required to submit any planned increases in prices of more than 4% to the government for approval 10 days prior to any adjustments.

In addition, the Chinese cabinet amended the regulation on administrative punishment for price violations to allow harsher penalties for price manipulation, collusion and other price-related malpractices. Meanwhile, local governments have been instructed to conduct special checks on grain, oil, meat and liquefied gas prices to ensure price stability and enforce the new regulations.

What I’m saying in a long-winded way is that food price increases are inevitable in the face of increasing oil prices, which has a knock-on effect on other commodities and basic necessities such as food and transport. However, this does not mean that millers, bakeries and other role-players involved downstream should be unscrupulous and take advantage of the situation.

Various studies have been done on the income and expenditure of the poor sections of our country, and the indications are that the majority of our people in South Africa spend more than 50% of their income on food. Therefore, the increase in food prices, especially bread, denies this majority better socioeconomic conditions and food security.

Talking of food security, it exists when all people, at all times, have physical and economic access to sufficient food to meet their dietary needs for a productive and healthy life. To sustain food security, availability, access and utilisation of food have to be secured.

South Africa has the most advanced economy on the African continent, with an abundance of natural resources. Statistically, South Africa has sufficient food resources to feed its population. It also has a relatively high per capita income compared to its neighbouring states. The alarming food insecurity is clearly a failure of livelihood to guarantee access to sufficient food at the household level and not primarily an agricultural failure, as it might be in other Southern African states.

The negative trends in agriculture, in my view, seem related to government’s strong ideological leaning towards free market economies. In my view, we followed an economic strategy with full liberalisation of agricultural markets, and failed to introduce a system of stockpiling and further state control in the setting of tariffs and prices for agricultural products so as to secure affordable access to sufficient food for everyone. Our land reform programme, based on the willing seller-willing buyer principle, has redistributed less than 10% of the land to date, and is a key factor in the food insecurity of many families in the rural areas.

Again, this does not mean that the likes of Tiger Brands and others must be let off the hook. Their price fixing is an indication of market failure and, to some extent, a weak regulatory environment as far as the Competition Commission is concerned. Collusion is a bad business practice and is equivalent to unethical behaviour. For us to have a caring society and a better life for all, we need to impose stiffer sentences on companies that cheat.

In the new Bill that is under discussion in Australia, price fixing and collusion is an offence which can land a director or directors of that company in jail for a period of up to three years. The company might be fined up to 10 million Australian dollars or 10% of its annual revenue, depending on which is the greatest. Even though the penalties in South Africa are higher than those in Australia, I would still advocate for harsher penalties, because this price collusion will have a greater impact on the day-to-day lives of the poor.

A study conducted by Watkinson and Makgetla in 2002 on the fishing industry in the Western Cape concluded that globalisation, through external policy prescription, is not the only reason why vulnerable communities with little or no disposable income are facing deeper social inequalities. Therefore, our policies also need to be in favour of the poor. Thank you. [Applause.]

Dr S E M PHEKO: Chairperson, hope is the poor man’s bread. The escalating prices of food, milk and other daily nutritional foodstuff are an assault on the poor of our country. This situation is stealing hope from the hearts of millions who depend on bread for their daily sustenance. Bread has always been a measure of human survival. It has been said that, ``to the hungry, God is bread’’.

Our country has the means and capacity to eliminate hunger from our daily lives. We need only the will, a real political will that will defeat the hunger and poverty from which millions of our people suffer. The question we have to ask ourselves is: On which side is our bread buttered? Is it buttered on the side on those who want to exploit the poor with price increases they cannot afford or is our bread buttered to end poverty?

The PAC believes that it is not just bread but food that should be secured, because food prices have escalated dramatically. Food sovereignty is based on the human rights to food, to self-determination, on the rights of rural people to produce food for local and national markets. Food sovereignty depends on agriculture, with farmers and fisheries. Give our people land and skills to produce their own bread and not be subjected to bread companies that exploit them.

The state must play a strong role in policies of agrarian reform and food production. The state must apply policies that recognise rights and democratise access to land, to coastal areas, forests … [Time expired.] Thank you very much.

Mr L M GREEN: Chairperson, it is people like Mr Imraahn Mukaddam, the independent bread distributor in Cape Town responsible for exposing price fixing in the milling industry, who deserve to be honoured today as true patriots and defenders of peoples’ rights and interest. His courage in standing up to big business cartels has brought to light the increasing levels of unethical behaviour within white-collar business in South Africa.

Corporate South Africa, with its continued anticompetitive practices and disdain for the ordinary consumer, is in need of justice. Price collusion is but one example of an endemic practice fuelled by greed, control and unrestrained power. Should such business practices collude with willing partners in politics, the rules of governance are geared to benefit the few.

The FD feels that collusion like white-collar crime should be viewed as a criminal offence punishable by imprisonment, yet most companies can expect a hefty fine from bodies like the Competition Commission, while in most cases the responsible action taken by an executive or director is to resign from the affected company.

We wish to commend the Minister for Agriculture and Land Affairs and her department for the announcement that she made here today concerning the role of co-operatives to ensure food security. We believe that is a step in the right direction.

Collusion is a crime against humanity, and it is unconscionable that South Africa, with its high rate of poverty and unemployment, should endure companies like Tiger Brands and others that care very little for our endeavour to overcome the injustices of the past and build a society in which all our people can prosper.

The company was fined 5,7 per cent of its bread sales last year, which amounted to R98,8 million, which indicates that collusion is a profit- making strategy irrespective of who may suffer as a result. Such a practice is unethical and reprehensible. Although a fine cannot wipe away these companies’ contribution in perpetuating poverty, it at least helps in naming and shaming them for what they are.

As a result of its collusion it is reported that Tiger Brands shareholders have lost about R6 billion. The CEO of Tiger Brands, at the time, is alleged to have said that the anticompetitive activity that took place was completely unacceptable and contrary to their ethical standards. Unfortunately, events of recent weeks seem to contradict this statement, as the company is again embroiled in price-fixing scandals with a pharmaceutical company.

The FD, an alliance partner of the Christian Democratic Alliance, recommends that the fines imposed on Tiger Brands and other companies should not be handed over to the Competition Commission, but passed on to the consumer through a subsidy to keep bread prices low.

Finally, as a further recommendation of the FD, we would like to suggest to government that it use those funds as a start-up fund to adopt a bread policy whereby certain brands are governed by a government pricing structure as a means of protecting the price of bread. Thank you.

Dr A I VAN NIEKERK: Thank you, Chair. Hon Minister, I would like to direct this to you today because the high bread price that we are dealing with is a negative symptom of a serious economic disease, which, if left unattended as the government of the day is doing, will eventually affect all of us in South Africa, with extremely high food prices and no bread on the table for the poor.

Die kern van die probleem rondom wisselende broodpryse is die bron en die beskikbaarheid van koring en in Suid-Afrika ten opsigte van ingevoerde koring. Ek wil dit hard en duidelik stel: Die broodprys is nie ’n eenvoudige storie nie, maar tot dusver het die regering van die dag in sy apatie vir die probleem van die koringbedryf, soos geopenbaar in die optrede van die Ministers van Handel en Nywerheid en van Landbou, grootliks tot hierdie probleem bygedra.

Die publiek en arm mense betaal nou die hoë prys as gevolg van die regering en sy Ministers, wat die kommersiële landbou en veral koringboere nie na waarde gereken het nie en die koringboere se advies konstant eenkant gegooi het en totaal geïgnoreer het. Daar is nie geluister na die waarskuwings uit die bedryf oor wat sal gebeur met voedselpryse indien die land nie na sy landbou omsien nie en boere gevolglik ophou om koring te plant – soos wat deur Neels Ferreira van die georganiseerde landbou daargestel word. Wêreldvoorrade van voedsel neem af. Die Financial Mail verklaar –

  ... global production of wheat will this year fall short of demand to
  make it the fifth of the last six years where demand has exceeded

Nogtans, ten spyte hiervan, het die regering van die dag rustig sit en kyk hoe ingevoerde koring die land binnekom. Hulle het niks daaromtrent gedoen nie. Vertoë vir ’n heffing om dit te keer, is eenkant toe geskuif, want goedkoop kos moet inkom. Die prys word nou betaal as gevolg van die ingevoerde koring. Boere kon nie meer suksesvol produseer nie … (Translation of Afrikaans paragraphs follows.)

[The crux of the problem concerning fluctuations in the bread price is the source and availability of wheat and in South Africa, in respect of imported wheat. I want to say it loud and clear: The bread price is not a simple matter, but to date the government of the day, in its apathy towards the problems of the wheat industry, has greatly contributed to this problem, as revealed in the actions of the Minister of Trade and Industry, and the Minister for Agriculture.

The public and the poor are now paying a high price because of the government and its Ministers, who failed to appreciate the importance of commercial agriculture in general, and of wheat farmers in particular, and who constantly cast aside and totally ignored the wheat farmers’ advice. No attention was paid to warnings from within the industry as to what would happen to food prices if the country failed to take care of its agriculture, and if farmers consequently stopped cultivating wheat, as organised agriculture’s Neels Ferreira has pointed out.

The world’s food stocks are declining. The Financial Mail declared that -

... global production of wheat will this year fall short of demand to
make it the fifth of the last six years where demand has exceeded

Nevertheless, and in spite of all this, the government of the day calmly stood by and watched as imported wheat entered the country. They did nothing about it. Requests for a levy to prevent this were set aside, because cheap food had to enter the country. Now we are paying the price for the imported wheat. Farmers could no longer successfully produce wheat …]

… and that is why people in the eastern parts of our country stopped producing wheat. They couldn’t, because there was no profit in it and we were depending on imported wheat. That resulted in cheap prices. All of a sudden the international supply just disappeared. What happened in South Africa? In the past we had 1,4 million hectares under wheat and now we only have 600 hectares under wheat. In the past we produced 2,5 million tons of wheat, but now we only produce 1,8 million tons of wheat.

Currently we have 1,2 million tons of wheat being imported every year whereas in the past we imported only 400 000 tons of wheat. This resulted in a drop in our food security. In the past our food security was 84% for wheat and it has now dropped to 60%. What is going to happen in the future? People will depend on what happens outside.

The price of wheat has increased from R1 500 to R3 000 per ton and now it is nearly R4 000 per ton, and the ad valorem tariff of 2% that government has is still has not been attended to. Why? Because the Department of Trade and Industry did not have a single person from agriculture to help them to decide what the correct tariff should be. The implication of what will happen was not really judged by the department, and agriculture was relaxing. So, there was negligence, as far as I am concerned, on the part of the government of the day and the Ministers concerned, because they just ignored all the …

… waarskuwings wat hulle gekry het oor tyd. [… warnings they received over time.]

They didn’t do anything and now we have a fait accompli, with 800 000 tons more being imported than previously; that means R1,6 billion in foreign exchange.

Thousands of jobs have been lost. The bread price is high and our food security is low. What must we do? The first thing that has to happen is that the Department of Agriculture and the Minister must let their arrogance towards agriculture pass … [Time expired.]

Ms L L MABE: Hon Chair, I would like to appeal to South Africans. We need to be vigilant when it comes to consumer education. Where we are treated unfairly we also need to take action to protect ourselves. That is one of our rights as consumers in this country. We are exploited by those who control the market; we are exploited by those who control the means of wealth at the expense of the poor in this country. It is time that we take action to protect ourselves as consumers.

We also need to educate our people on consumer issues so that they understand the difference between a 700g and a 800g loaf of bread; so that they can tackle head on those flouting the laws and the rules of the country.

I would also like to thank the Minister of Education for the massive literacy campaign, which will further enable our people to read and make them aware of the issues that affect them as consumers.

I would also like to appeal to all the departments, including tertiary institutions, that they need to train more people on economic issues. The departments should also take the responsibility of ensuring that unemployed graduates are trained to become inspectors across all fields not only on trade and industry issues, but also on agriculture and other issues. The more inspectors we have, the more people we’ll have to check whether or not people are flouting the laws of this country.

I would also like to indicate that without further massive skills training we will always have problems of collusion, abuse of monopoly of power, etc. Therefore, it is important that we make a massive effort. That is why the ANC, in its January 8 statement, said that education is a right and we must make a massive drive in the sphere of education.

I would also like to point out some of the issues that members have indicated that impact on the increase in the price of bread. One of the issues is biofuel production. This is economically fashionable, and if we are not careful, hon Minister, we will also have a problem with maize, because of the increase in the maize price. At the moment it is very difficult for a poor person to buy a bag of maize meal. It is also very expensive for a poor person to buy a loaf of bread.

How possible is it going to be for school children to buy “sephatlho” [bunny chow]? It will be very expensive. These learners depend on “sephatlho” [bunny chow] for their lunch. In some areas it costs R6,00 and in some areas R8,00, which is a lot for a poor person to spend in just half a day. We need to take a look at some of these issues.

Another issue that I would also like to raise is the rise in the price of both wheat and maize that impacts negatively on the poor, especially in Southern Africa, because this is where the two commodities form the staple food. If we do not have control over the price of bread - and I am not saying that government must determine the price of bread, but we need to have some control to ensure that the poor are not impacted on negatively – we’ll be in trouble.

Another thing that we cannot ignore is that the rise in oil prices as a result of attacks in the Middle East is also causing a problem. The question is: Is taking up arms, fighting against other countries which produce oil, the only way we could solve problems in the Middle East? The price of oil is almost US$100 a barrel. This impacts negatively on the price of basic foodstuffs.

Maybe we need to change our approach towards the behaviour of farmers in our country. Farmers need to co-operate with farmworkers and we need to give more land to farmworkers and to previously disadvantaged people so that they can produce more food and enable us to have food security.

It seems like the hon Van Niekerk and the FF Plus have said that the ANC’s ideological policies are what is at fault. I do not agree with that argument, because without ANC ideological policies you cannot change production or landownership in this country. Therefore, there is no way that we can run away from ANC ideological policies because it is the ruling party and its ideological policies must be put into effect. We cannot allow the minority ideological points or positions of the minority to be the position of the government of the majority. It is not possible.

It is important that the price of bread is re-examined. As I said, we need to have inspectors. When you consider the people who receive social grants, the more the price of bread increases the less they will have to spend on such commodities; the less they will have to spend on maize; and the less they will have to spend on transport. Unfortunately, most of them rely on the “yellow pages” [they travel on foot]. They cannot afford cars, taxi fares and all these luxurious commodities. It therefore means we must re- examine how our policies can benefit the poor more than the rich.

Subsidies are one of the issues, because the US, the EU and other developed countries continue to subsidise their farmers and maybe it’s time that we also look at subsidising emerging farmers. I am not referring to all farmers, but to emerging farmers only, so that they can become sustainable and produce more foods, including maize which we are experiencing problems with at the moment; that is why the price of bread is increasing the way it is.

An article in today’s Business Day says:

While there has been an outcry in South Africa, bread prices here still lag behind global prices with bread in the US, UK and Australia costing as much as R15,00 a loaf.

The person who wrote this article has forgotten that he is comparing a developing country to developed countries. This is an unfair comparison. Why can’t the person compare developing countries with each other, because as South Africa we must compare ourselves to developing countries that are poor like us? We are not as rich as the developed countries. [Interjections.] Zimbabwe is fine, don’t worry about it.

I also want to say that it is important for us to ensure that, as Members of Parliament, and as the public, we go out and fight for our rights. These rights of low bread prices, of no collusion on bread prices, will assist our children. I pity our children who rely on R6,00 or R8,00 a day to buy “sephatlho” [bunny chow] with chips and “machangani wors” [Vienna sausages]. This kind of meal means a lot to those children. Let us all take our position and assist these people to have food security.

Mrs C DUDLEY: Chair and hon Minister, in spite of some confusing statements, clearly nobody refutes the fact that food inflation is out of control, especially the bread price, and everyone shares grave concerns for poor and vulnerable people.

The ACDP notes your commitment, hon Minister, to various projects intended to impact positively on the bread price and we support those proposals. By the way, I also wanted to know why we have stopped producing wheat in the Eastern Cape and other provinces. And thank you, hon Van Niekerk, for your perspective.

The ACDP is very aware that agricultural and land policies are of critical importance and must be handled wisely or the people will perish.

We may not be able to make immediate inroads with regard to the production of wheat, the value of the rand value or fuel prices, but certainly it has been shown that collusion will not be tolerated and again the ACDP applauds those who have aggressively addressed this plight.

The ACDP calls on government to ensure that victims of the collusion scandal benefit directly and indirectly with immediate effect. The ACDP welcomes calls for government to intervene, but exactly how this should be done may still be in contention.

Should bread prices be controlled or should there rather be subsidies which target the poor? Perhaps it would be more appropriate to start by cancelling out government’s hands out of the past in the issue by part exempting white bread from VAT. The import duty on wheat must also be urgently re-evaluated.

Interventions by governments in other countries to keep bread prices from rising include Argentina which placed a ban on wheat exports; Brazil and the EU which lowered import duties on wheat; Israel which removed state price controls on bread and provided subsidies for the poorest members of society. Many other examples exist and should be seriously considered.

I want to thank everybody for participating in this debate and for responding to the ACDP’s call to facilitate it. Thank you. [Applause.]

Debate concluded.


Mr N T GODI: Chairperson, comrades and hon members, it is my pleasure and honour to present to the House the 13 reports of Scopa, the Standing Committee on Public Accounts, as part of our oversight work. These reports can be divided into two, firstly, those dealing with unauthorised expenditure and, secondly, those dealing with our review of annual reports.

In the annual reports review, Scopa is gravely concerned at the deteriorating state of affairs in the Department of Defence. There has been some deterioration, with more than double the qualification issues compared to the previous year.

Whilst there have been some improvements in the Department of Health, concerns remain about the Division of Revenue Act and the effectiveness of monitoring by management to ensure compliance with legislation, policies and procedures.

We are also concerned about underexpenditure on programmes dealing with HIV and Aids. We are also unhappy about the nonactivity of the SA National Aids Trust, which is a contravention of the Deed of Trust, section 3 of the Public Finance Management Act and the Public Audit Act.

The Department of Correctional Services is another department that needs “Business Unusual”. However, I’d like to highlight Scopa’s concern about, amongst others, the public-private partnership jails. In the year under review, the department incurred a cost of R560 million from these PPPs. As Scopa, we are worried whether this huge cost is justifiable and whether the department is run cost-effectively.

Comrades will recall the corruption that went with the negotiation of these deals. Thus Scopa is calling on the department to supply Parliament with the cost benefit analysis in terms of value for money to the taxpayer within 60 days of the adoption of this report by the House.

We are also concerned about governance arrangements in the Department of Justice and Constitutional Development insofar as it relates to third-party funds, that is moneys in trust that got a disclaimer of opinion. This largely results from reluctance on the part of the department to accept accountability and responsibility for the funds.

The National Prosecuting Authority got a qualified audit opinion as a vacancy rate of 30,7% impacts negatively on the strategic objectives and operations of the NPA. We recommend that these vacancies be filled urgently to enable to the NPA to the fulfil its mandate.

We are also concerned about the Criminal Asset Recovery Account that is run by the Criminal Asset Recovery Unit: there are no systems or processes to account for and track the status of finalised confiscation and forfeiture orders, and to track all cases handed over to curators.

CARA or the Criminal Asset Recovery Account, has a vacancy rate of 8%. This bad state of affairs cannot be allowed to persist.

I’m now coming to unauthorised expenditure. With the passing of these resolutions, we will have dealt with all outstanding cases of unauthorised expenditure that were brought before the committee. We want to thank the Auditor-General’s Office and the National Treasury for their assistance in this regard.

In all the reports, we are recommending that the House approves the amounts involved. We do so because the accounting officers have confirmed that, one, services for the expenditure were to the department’s satisfaction; two, no individual benefited unduly; three, measures are in place to prevent a recurrence.

The unauthorised expenditure involved the following departments and amounts: The Department of Foreign Affairs, an amount of R6 879 000; the Department of Land Affairs, an amount of R7 182; The Presidency, an amount of R15 331,06; the Department of Justice and Constitutional Development, an amount of R139 052 849,71; the Department of Trade and Industry, an amount of R32 246 285,72; the Department of Public Works, an amount of R299 218 429,94.

Lastly, we are greatly impressed with the improved co-ordination between Scopa and all role-players, which saw the reports before the House in record time. We commend these reports to the House. Thank you.

Ms L M MASHIANE: Chairperson, from what the chairperson, hon Godi, has said, Scopa does not only review the financial management side of performance by departments and entities in order to determine compliance with the frameworks that Parliament has put in place, such as the Public Finance Management Act. Scopa also carries out this vigorous scrutiny, because there is a link between service delivery and sound financial management.

Today Scopa is tabling before this House reports, and departments and entities were all called to a hearing. I’m going to name them, specifically because if we keep this under wraps departments’ performance does not improve. The departments that were called to hearings are: The Department of Defence; the Department of Health; the Department of Correctional Services; the Department of Justice and Constitutional Development; the Department of Public Service and Administration.

Regarding unauthorised expenditure, which has been tabled by hon Godi, the following departments were involved: The Department of Foreign Affairs; the Department of Land Affairs; The Presidency; the Department of Justice and Constitutional Development; the Department of Trade and Industry; the Department of Public Works.

Furthermore, the Department of Public Works continues to face serious challenges regarding ownership of assets. This is in relation to moneys for refurbishment and improvements, paid by the departments concerned, not being transferred to the department, as well as classification as current versus capital expenditure.

Scopa would like the House to note that it is far from satisfied with the general position regarding public sector financial management, especially taking into account that some of these departments appear before the committee each and every year. If one considers the key elements of effective financial management, one can assess the ability of a department to manage its finances and, therefore, to deliver on its mandate on a daily basis.

We are able to assess whether a department is at an elementary level of financial management or has progressed to stronger, effective financial management and resource utilisation.

The key challenge is a proper control environment. Without proper controls and associated practices, there is lack of sustainable practices of financial management. Without a basic control environment, assets might not be adequately protected or resources adequately controlled.

We do come across too many departments and entities that establish a proper control environment where the required capacity has not yet been reached, for example with respect to internal audit units, audit committees, fixed asset registers.

I would also like to ask portfolio committees, when they deal with their reports, to look not only at the policy, but also at the strategies of the department versus the finances of that particular department. That will also give you an indication of whether there is proper monitoring going on within that particular department.

Another key challenge is the availability, reliability and utilisation of sound financial and operational data, commonly referred to as “management information”. Once a stable control environment has been established, departments can focus on integrating their financial and nonfinancial systems, practices and procedures. The aim is to provide information that can be used to manage resources and take decisions with caution, in an efficient and economical manner.

This information provides the basis for developing performance indicators and cost and quality measures, and for monitoring performance to ensure that intended results are achieved and to demonstrate accountability.

We still come across too many instances where the management of information is of a poor quality. Surprisingly, we also come across instances where it seems as if management does not use the information available. Thank you, Chairperson. [Applause.]

Mr J J M STEPHENS: Chairperson, hon members, we are very pleased to note that the Standing Committee on Public Accounts’ resolutions are now put before the House much closer to the time they were passed by the committee. This makes for a timelier and more relevant debate, as the hon Trent argued previously. It is indeed a very positive development in our parliamentary practice.

Many colleagues inform me that this debate is traditionally regarded as the most boring of them all. I have no intention of breaking with such an esteemed tradition, and I shall consequently endeavour to make my five minutes feel like 10.

Scopa reports, by their very nature, deal with history, a subject many would instinctively avoid. They are probably regarded as boring, because what happened a year or so ago does not seem relevant to the here and now. They have nothing to do with the present challenges; with today’s headlines. They do not deal with the future, but rather dwell on the past. It is these perceptions that I wish to challenge.

It was Cicero who said that those who are ignorant of the past remain forever children. And Sir Winston Churchill had it right when he said that when we are ignorant of history we are forever condemned to repeat it. Clearly, knowledge of the past serves as a guide to the future, and that is how Scopa reports should be viewed.

As a Parliament we have the exacting and onerous responsibility of oversight. We cannot put all our effort and attention into developing policies and passing budgets, enacting legislation, monitoring expenditure and then be laissez faire about the utilisation of state resources in the process of implementation.

Scopa recommendations must serve as a basis for oversight. The fundamental question the Auditor-General and Scopa ask of every role-player is this:

Can you account fully and satisfactorily, at an accepted reporting standard, for the performance of the directives you have been given and the money you received from this Parliament in order to carry out those directives?

All other questions are ancillary to that fundamental question, but the answer is sealed in a simple yes or no. Sometimes, like the case of the Department of Home Affairs, the answer is no. In others, such as the case of South African Airways in the second report now before the House, the answer is yes. But mostly there are degrees of compliance.

Once the fundamental question has been answered, recommendations are required. What must be done to rectify and / or improve the situation? It is not only a very bad audit report that should cause portfolio committees to sit up and take notice. Valuable recommendations abound, even after a clean audit report.

In the present case of SAA, which has a clean audit report, there are nevertheless three areas of concern on which recommendations are made: SAA as a going concern; compliance with legislation; and capacity and / or people-related issues. To ensure that these recommendations are implemented properly and that we get value for money and our effort, we will require a regular and persistent inquiry by the Portfolio Committee on Public Enterprises in this case.

Scopa cannot monitor the implementation of its recommendations. That must be the function of the portfolio committees, but that is seldom, if ever done. This lack of follow-up causes departments to have the same problems year after year, when they come to Scopa, and often they backslide ever deeper into the mire. Nothing is fixed, because only the Auditor-General and Scopa complain of the inadequacies. Everyone else ignores these reports. They are filed never to be read again, apparently.

We shall never get the service delivery we seek and we shall never get the service quality our people so desperately need, if we fail to rectify the identified deficiencies, mistakes and attitudinal problems of the past.

I want to appeal to all portfolio committees to set aside at least one session every year to deal with the relevant Scopa reports. Please interrogate them, analyse them and internalise them. Only then will you be able to oversee their proper implementation. It is an ongoing process that has to be persistently pursued throughout the year as you interact with your departments.

It is an iterative process to build an efficient and devoted civil service. We all have a role to play. Scopa reports are an excellent point to start from. Thank you.

The HOUSE CHAIRPERSON (Mr K O Bapela): Hon member, if you wanted to ask a question you should have stood up at the time when the member was still at the podium. When I wanted to recognise you, you then withdrew. I am sorry about that.

Mr H J BEKKER: Chairperson, if the hon Eddie Trent so desperately wants to ask a question, he can ask me, but anyway, I don’t think he will try me on this. It is a known fact that the previous Auditor-General, as the present one in terms of philosophy, has increased and lifted the bar in terms of audit reporting and, particularly, in terms of financial reporting. Thus, the relevant departments are now being scrutinised year by year in a stronger way and this is to get our public accounting up to scratch and to get it in right.

The Scopa reports before this House reflect inter alia that the Departments of Defence, Correctional Services, Justice and Health received qualified audit opinions from the Auditor-General for the 2006-07 financial year. The IFP is very concerned that these departments have become serial offenders. Bear in mind that we are talking now about, for instance, Correctional Services and it may ring a bell if we’re saying serial offenders in terms of that specific department.

It is also of great concern that the shortcomings or failures in their financial management are repeated from one financial year to the other. Some of these failures include inadequately trained and skilled financial personnel, high vacancy rates, non-compliance with Treasury regulations and the Public Finance Management Act and inadequate asset management.

What is most worrying is that the accounting officers at these departments appear to be incapable of effectively addressing these failures. If they did, the departments would not have received qualified audits on an ongoing basis.

Repeated qualified audits raise questions whether these accounting officers are capable financial managers that are fit to take overall responsibility for their departments and account to Parliament. That does not appear to be the case, and the IFP would therefore want to see a situation where stronger action is taken specifically against the accounting officers who fail in their duties.

South African taxpayers deserve full value for their contributions to the national fiscus, but in respect of certain state departments this does not appear to be the case at all.

We’ve also got SAA, which is being referred to here, and although this is not directly relevant to the specific financial year, I just want to issue a personal view with regard to the issue of Mango, which indirectly is being subsidised by the taxpayer. Should it, in the next financial year, appear that there is no real profit-making so that this could be paid back, this should surely be looked upon as irregular expenditure.

The IFP supports the recommendations made by the committee, and looks forward to full compliance by the accounting officers involved with these recommendations … [Time expired.]

Ms S RAJBALLY: Chairperson, Scopa has an extremely positive role to play as an instrument of transparency and effective governance. We call for all bodies to be extremely co-operative under their review and to take the recommendations made by Scopa seriously.

We believe that Scopa reports need to be made more accessible to the public for scrutiny on the positive running of government structures.

The MF feels that maybe we have lost sight on the fact that we are a government by the people for the people. That clearly indicates that we are answerable to the people and dependent upon the decision of the people. The people have a right to decide and we have a right and duty to serve.

The MF thanks Scopa for its assistance in serving the nation and we support the reports. Thank you. [Applause.]

Mr P A GERBER: Mr Chairperson, thank you for the opportunity to address this House on the 13 Scopa reports tabled before us today. I would also like to thank the Whippery for bringing them to the House so soon after we passed them in the committee. Normally, these reports are discussed at the end of our term, when it is basically “injury time”. So, I would like to thank them.

Scopa never used to debate its resolutions or reports in the past. This is a new practice which we have developed in this House in the past couple of years. In essence, Scopa is basically “a resolution factory”. So, we all welcome this new extension of Scopa’s work.

I do, however, wish to say that it is totally unfair that every time Scopa debates its reports in this House, it is always at the end of the day’s sitting, with very few members in attendance. This is also the case with some other committees. I think we should rectify this. If there are other committees, and there might well be, that experience the same problem, then that should also be rectified.

I also want to convey my disappointment that while we are dealing here with at least ten Ministries there is only one Deputy Minister present in the House. That is not fair, really. [Applause.]

Scopa has undertaken a couple of overseas study visits in recent past years to enhance training for our members. Various models were investigated. I think the one that has shown the most potential that we can use in South Africa is the one that the public accounts committees are using in India.

In India there are two public accounts committees – one dealing only with departments and the other one dealing with parastatals and government companies only. This is a model we should investigate as it could be used in South Africa. At the moment, in terms of parastatals and government companies, we are only scraping the bottom of the barrel.

Scopa has in recent years decided to do more monitoring of parastatals, with excellent results. We need to do even more.

Often, when you look at the financial statements of these parastatals, who mostly have external auditors, they appear to be very clean and in a good state. Many of the external audit reports are one-pagers. If you look at the Transnet Report on page 140, the external auditor’s report is a one- pager. If you look at Eskom, pages 25-26, it is two pages. If you look at SAA, page 18, it is a one-pager.

We at Scopa decided that these one-pager picnics can no longer continue. So, we decided to call some of these parastatals for public hearings over the past couple of months.

When we do call a particular parastatal to a public hearing, the Auditor- General and the external auditors of that specific parastatal must, in conjunction with each other, prepare a briefing to Scopa before such a hearing can take place.

One such parastatal with a one-page external auditor’s financial report that we did decide to call to Scopa was SAA. Since the promulgation of the Public Audit Act until now, the Auditor-General has not exercised his right to elect to audit SAA, and SAA has thus continued to appoint external auditors in terms of the Companies Act. Perhaps the Auditor-General should review his decision not to audit SAA.

The financial report of the external auditors of SAA is once again a one- pager. That is on page 18. However, when we called SAA for a hearing, their external auditors supplied us with the real external auditor’s report, and here it is, all 104 pages of it. So, what you get is from one page to 104 pages. Parastatals must put fewer pages with fancy pictures in their annual reports and more financial information.

Many issues and problems came to the fore from these 104 pages of financial information. For example, for the 2006 period, the SAA had expired contracts with 12 companies which they continued to pay to the extent of more than R192 million. There were also contracts with 11 companies that did not go through the Tender Board, totalling more than R70 million. Then there were also contracts with four companies totalling more than R20 million that could not be located. In total, in 2006 R283 million slipped through the cracks at SAA. This we would not have been able to pick up had we not called in SAA for a hearing.

Another issue that came up was that the Minister of Trade and Industry issued his report, compiled in terms of section 258 of the Companies Act, resulting from an inquiry into the affairs of SAA. The report invalidated the share issue arising from the R6 billion recapitalisation, which occurred in 2004.

The issuing of shares in parastatals to employees is a matter that should be dealt with very carefully. I raise this matter because Eskom, in their latest report, have a deferred bonus scheme which offers bonus shares to the CEO, the finance director and the divisional managing directors. So far Eskom has awarded more than 35 million shares to these individuals. But, on the other hand, we stand here and we say government is a single shareholder. That doesn’t make sense.

Another significant issue that came out of these 104 pages of external audits is that various SAA subsidiaries were technically insolvent in 2006. For example, SAA Technical incurred a further loss of R253 million and Air Chefs incurred a further loss of R32 million.

In the executive summary conclusion - this is a thick report - the following comments were made by the auditors, and I would like to read this to you:

SAA has some work to do on its internal control system …

The responsibility for implementation of sound internal controls is broader than just a finance team. Every department within the airline must be committed to the implementation of controls.

This may require a substantial increase in the number of suitably skilled individuals, with appropriate financial and commercial skills.

It may also be necessary for the entire Exco team to undergo training on COSO, or some other globally accepted governance best practice, to ensure consistency of understanding in regard to internal controls.

My question is: Why didn’t the external auditors mention this in the tabled report to Parliament for us as parliamentarians? I think it shows disrespect for Parliament and it could actually be interpreted as misleading when it comes to not giving all the information. This kind of economical skeleton financial reporting has in the past led to the Enron and Parmalat disasters that we have read about in the past couple of years. We must not allow this to happen in South Africa! [Applause.]

With regard to the Mango issue, the resolution before the House, in clause 4, specifically asks SAA to report to the House on their Mango operation. At 31 March 2007, Mango had an accumulated loss of R61 million. This includes the prestart-up expenditure of R33,8 million.

We therefore ask that SAA provides the House with a cost benefit analysis in terms of value for money to the taxpayer of why we are doing what we are doing. We need this study to be supplied to Parliament before the Mango hits the fan.

We should standardise and expand the skeleton financial reports of external auditors to Parliament. For instance, I would like to read to you, just in short, the notes from the 2006 report of the external auditors on SAA:

Based on the audit procedures performed, we are unable to express an unqualified opinion on SAA’s PFMA compliance.

It doesn’t say that it is qualified; it says it is “unable to express an unqualified opinion”. So, it’s already softening it. Yet, in 2006 it doesn’t even have any qualification; it just has an emphasis of matter.

When we get to the 2007 report – also from the thick report which I have shown you – it says here:

Based on the audit procedures performed, we are unable to express an unmodified opinion. Why doesn’t it say it’s “qualified” again in plain English?

In conclusion, these statements are very, very economical with the truth or reality. We need to take all steps, as members of Parliament, to have more comprehensive and complete financial reporting by external auditors to Parliament so that we don’t have a disaster in a couple of years time.

With these few words, I would like to put these 13 resolutions to the House. Thank you very much, Chairperson. [Applause.]

Debate concluded.

Mr D K MALULEKE: Chair, I move, on behalf of the Chief Whip of the Majority Party:

That the reports be adopted.

Thank you.

Motion agreed to.

Reports accordingly adopted.



National Assembly and National Council of Provinces

  1. The Minister of Finance

    a) Report of the Registrar of Short-term Insurance for 2006.

    b) Report of the Registrar of Long-term Insurance for 2006.

  2. The Minister for Public Enterprises

    a) Strategic Plan of the Department of Public Enterprises for 2008 to 2011.

  3. The Minister of Arts and Culture

    a) Report and Financial Statements of the Performing Arts Centre of Free State (PACOFS) for 2006-2007, including the Report of the Auditor-General on the Financial Statements for 2006-2007.


National Assembly


The Portfolio Committee on Correctional Services, having considered the Annual Report and Financial Statements of the Department of Correctional Services for 2006/07, reports as follows:

  1. Introduction

The Portfolio Committee on Correctional Services scrutinised the 2005/06 Annual Report of the Department of Correctional Services (DCS). The oversight process comprised briefings and discussions with the Department as well as public hearings on the DCS Annual Report. The Committee also participated in meetings held by the Standing Committee on Public Accounts (SCOPA) and the Portfolio Committee on Finance, where the DCS’ audit report and request for a rollover of R515 million were discussed.

  1. Research Analysis of the 2006/07 Annual Report

The research analysis revealed the following findings in terms of certain selected targets.

2.1 Programme 1: Administration

Strategically the DCS planned to in 2006/07 prioritise and implement a range of measures aimed at streamlining its human resource strategy, as well as to develop comprehensive, standardised training on the Minimum Information Security Standards and Minimum Security Standards for Head of Security, Heads of Correctional Centres and Area Commissioners. The implementation of certain recommendations emanating from the Report of the Jali Commission would also have been implemented. The Department planned to continue to provide training for junior and middle management staff and to extend its leadership training to senior management. While the Department managed to reduce its audit qualifications in 2006/07, train 970 financial and supply chain management personnel at Head Office as well as in all six regions, establish a baseline of the identified risks of corruption, fraud and maladministration, recruit 2 211 new employees and to ensure that many of its decisions were informed by adequate research, it failed to ensure that its Head Office and regions were capacitated to perform financial and supply chain management, to vet its officials, to train management at Centres of Excellence on policy implementation and to reduce its vacancy rate by the envisioned 3%. These deficiencies could have far-reaching consequences especially with regard to the widespread corruption within the institution. The Annual Report is not clear as to whether the Department’s investigation, prosecution and censure of fraud, corruption and maladministration was successful nor on whether its retention strategy has been approved.

Expenditure: 96,05% of the R2,668,061 allocated budget.

2.2 Programme 2: Security The Department planned to complete and implement the biometric system and install fences. It also aimed to develop and implement a 5-year security plan based on the Minimum Security Standards as well as to build capacity for its security information management.

It succeeded in reducing the number of escapes by 17%, 7% more than their target. Despite this success the DCS failed to meet the targeted 10% decrease in assaults and the 5% decrease in unnatural deaths. It also did not manage to develop a 5-year security management plan, to submit quarterly security analysis reports at those centres fitted with CCTV cameras, or to approve its anti-gang strategy.

Expenditure: 100% of R2,931,981 allocated budget

2.3 Programme 3: Corrections The Department intended to implement the Offender Rehabilitation Path, corrections programmes via accredited service providers, systems for improving centre and offender management and to develop and implement policy.

As far as unit management is concerned the DCS succeeded in determining a baseline, implementation at Centres of Excellence and 25% of other centres and to approve the framework for structured day-programme as a principle of unit management, but failed to fully implement risk assessment and profiling tools, the correctional sentence plan and correctional sentence plan revision framework (at all centres of excellence) or to approve, finance and implement the case management committees, comprehensive assessment units, CIUs or CRTs at all centres of excellence. It also did not succeed in approving policy procedures in the areas of privilege systems, the orientation programme for ATDs, correctional programmes or restorative justice. The report is not clear as to the implementation of a structured day programme at COEs, the approval of the national offender profiling system or the report on the implementation of the 4 external programmes at centres of excellence.

Expenditure: 98,76% of the R731,049 allocated budget.

2.4 Programme 4: Development The Department intended to finalise its policy on compulsory programmes, implement the Offender Skills Development Plan, provide existing skills and education programmes and expand national agriculture and production workshops.

Although the DCS succeeded in surpassing its envisioned daily average number of work opportunities (internally by 125 and externally by almost 100%) the number of offenders employed in agricultural work decreased by about 250, and those in production workshops decreased by about 20. The programme also did not succeed as far as the targeted number of offenders involved in agricultural, textile, wood and steel workshop training. Although the number of inmates involved in skills development programmes was nearly doubled, those participating in formal education programmes did not reach the desired level. The report is not clear as far as whether the approved policies and procedures were implemented in 50% of management areas as was the target.

Expenditure: 94,94% of the R365,553 allocated budget.

2.5 Programme 5: Care The Department set out to finalise the HIV prevalence survey and the policy on compulsory programmes, to phase in provision of primary health care and to provide needs based programmes (social work, spiritual and psychological programmes).

While the DCS managed to provide psychological services to 17 818 offenders, it failed to provide the targeted number of social work sessions. The Department submitted its policy on compulsory programmes but failed to report on the pilot phase of its implementation in 6 COEs. According to the report the policies in relation to development and care, social work services, youth, offenders with disabilities and infants and mothers were approved, but it is not clear on whether these policies had been implemented at COEs. The report also states that a number of new care programmes were developed but gives no indication as to whether these were implemented.

Expenditure: 97,89% of the R1,114,156 allocated budget.

2.6 Programme 6: Social Reintegration The Department intended to prioritise social reintegration and ensure improved community participation, to improve the functioning of departmental paroling system (CSPB & CS & PRB),to implement classification system for Parolees and probationers, and to develop programmes for pre- release, supervision and reintegration.

There appears to have been little or no success as far as meeting the targets set for this programme too. The ratio of probationers and parolees to supervisory officer is still at 46:1, 16 probationers and parolees per supervisory officer too many. Only 28% of absconders have been traced and only 14 235 of the targeted 40 000 released offenders received financial and material assistance. Neither the targeted implementation of the social reintegration policy and framework, nor the implementation of the assessment tools for probationers and parolees, or the implementation of integrated support systems were achieved. Only 36 of the 52 positions of chairpersons of the parole boards were filled. 24 720 offenders underwent pre-release programmes, but the report is not clear as to the overall implementation of pre-release programmes.

Expenditure: 98,43% of the R324,258 allocated budget.

2.7 Programme 7: Facilities The Department’s strategy for this programme entailed the continued management of upgrading, the building new facilities, the development of departmental capacity for its own resource and management of devolution of functions from DPW, and the development of Medium Term Facility Development and Management Plan.

The Department appears to have failed dismally in achieving any of its targets for this programme. The five year facilities programme was not finalized, construction on only one of the first four new prisons began, none of the feasibility reports for the second group of these prisons were approved, the budgeting of the prisons was not finalized. The feasibility study of the new head office was not completed. Due to financial constraints the Department could not commence with the feasibility study on the cost effectiveness of small correctional centres. The maintenance plan has not yet been developed. The upgrading programme was still in the consultation phase. The Annual Report is unclear as to whether the target to implement 10% of the maintenance programme focusing at centres of excellence had been met.

Expenditure: 75,30% of the R1,696,454 allocated budget.


i) Although the number of escapes decreased there is growing concern about the increasingly violent nature of these escapes. ii) The dramatic increase in the number of unnatural deaths is worrying and needs explanation. iii) The unexplained failure to submit quarterly reports on centres where the CCTV’s and biometric security equipment is being used is a matter of concern. iv) It is worrying that a number of security management related policies and plans have been carried over to the 2007/08 financial year. Safety and security in correctional centres is of integral importance. v) Although the total personnel capacity increased by 11%, the vacancy rate has increased from 5% to 8% in the past two financial years. Doctors, pharmacists, psychologists and nurses show very high turnover rates. vi) Only 25% of the total number of employees are women and the Department needs to do more to do more in terms of achieving greater equity. vii) Unless the procedure for the vetting of officials is finalised and agreed upon with other relevant agencies, that weakness will pose a threat to efforts to address corruption and ultimately to safety and security. viii) The decrease in the number of social work sessions will inhibit efforts to rehabilitate and reintegrate offenders as per the aims of the White Paper on Corrections. ix) Excessive virement, even within the National Treasury limit of 8%, is not good practice. Virement could also possibly have negative implications including the misalignment of expenditure to strategy and poor planning. x) There is a lack of correlation between the targets outlined in the 2006 Estimates of National Expenditure, the targets in the Strategic Plan 2006/07 – 2010/11 and those reported on the 2006/07 Annual Report. It is hoped that the alignment of planning, budgeting and reporting which is underway will bear visible results in the next reporting cycle.


In 2006/07 the DCS received a budget of R10,63 billion. This allocation was adjusted to R9,83 billion and the Department managed to spend R9,25 billion i.e. it under spent on its budget by R580 million. About 24, 7% of the allocation to the facilities programme was not spent - most of the under spending can be ascribed to the delays in the tendering process for the Kimberley centre. The department requested rollovers of R4,3 million to finance vehicles for the KwaZulu-Natal region, and R512 million to finance the Kimberley Correctional Centre project. Funds were shifted between numerous programmes, mainly to finance the Kimberley Correctional Centre, the shortfall in the nutritional Services and to fill vacancies. The Portfolio Committee on Finance, because of its concern regarding the amount the DCS has requested to be rolled over, invited the Department to brief Members on the motivation for its rollover request. The Portfolio Committee on Correctional Services participated in that discussion.

3.1 THE FOLLOWING CONCERNS EMANATED FROM THAT INTERACTION: i) Concern around the length of time it is taking to make real progress as far as the building of the new correctional facilities, specifically the Kimberley facility, towards which much of the virement had been directed and for which the bulk of the rollover would be used. The project has been receiving allocations since 2002 and yet no progress appears to have been made. The many delays could be indicative of weaknesses as far as contract and project management. The fact that very little is reported regarding the other 7 facilities is also a matter of concern.

ii) Concerns were raised regarding the fact that although it would take
    R344 million to get the Kimberley facility on track, a rollover of
    R515 million was being requested.

iii) The apparently casual manner in which money had been shifted from programme to programme, and the fact that the DCS was identified as a “usual customer” when it came to rollover requests, reflected poor planning on the part of the Department. iv) The Annual Report did not make the targets and deliverables with regard to the construction of these facilities clear. This made it difficult to assess how much progress had actually been made or how well past allocations had been spent.

 v) Many difficulties arise from the fact that although DCS is
    providing the funding for the construction of the facilities in
    question, the DPW is in charge of the actual project. A meeting of
    the National Treasury, the DPW as well as the DCS should be held as
    soon as possible so that matters of concern could be addressed and
    cleared up.

The Department received a qualified audit report for the 6th year running. Although it has managed to reduce the matters of qualification from 5 to 4, the Standing Committee on Public Accounts, pointed out that the matter on which they improved, related to housing loan guarantees was thus not to the DCS’ core function. Deficiencies in the areas of asset management, medical expenditure, staff debt and understated accruals remained and were the basis of the year under review’s qualification. The Department has drawn up an action plan aimed at ensuring full compliance with internal controls, good governance policies and regulations and has reported to the Portfolio Committee on the progress made on the plan.

The Standing Committee on Public Accounts (SCOPA) met with the Department to discuss its Audit Report. The Portfolio Committee on Correctional Services was invited to take part in these discussions.

  1. MAJOR CONCERNS EMANATING FROM THAT INTERACTION INCLUDE: i) Despite the continued concern regarding poor internal controls and despite it being an area of audit qualification, monthly reconciliation of staff debt is still not being done. The Auditor General has also raised concerns about deficiencies in controls in the following areas: asset management, medical aid contributions, staff receivables, poor and inefficient control activities,

    ii) Despite the implementation of a new recruitment strategy the vacancy rate in key management areas remains high.

    iii) The Department’s under spending and the high staff turnover is worrying and can be directly linked to challenges in terms of service delivery.

    iv) The huge increase in the money spent on employee compensation – expenditure in that area increased by more than R 500 million - only 4 412 additional people were employed.

    v) The R53 million increase to the spending on consultants brings the total expenditure in that area to R206 million. Departments should source skills inter departmentally instead of using consultants.

    vi) The fleet management remains weak and in 2006/07 saw R3 million in material losses.

    vii) The amount spent on claims against the Department is also a cause for concern. SCOPA requested the Department to provide it with a breakdown of the details of those claims.

 viii) The backlog as far as the building of the new correctional
       facilities reflects poor management and poor planning on the
       side of the Department.

   ix) There is a need for a multifaceted approach to overcrowding.
       Such an approach would require participation from all role

    x) The Committee raised concerns about the fact that it had had to
       learn about the contents of the Judicial Inspectorate of
       Prison’s report through the media. From media reports it
       appeared as though the report contained useful information as
       far as the conditions in prison especially as far as the impact
       the large number of awaiting trial has on overcrowding.

   xi) SCOPA recommends that the Portfolio Committee on Correctional
       Services closely monitor the areas of concern it had identified.
       The Department should provide that Committee with regular and
       detailed progress reports.

The Department acknowledged the Committee’s rigorous oversight of its activities. DCS officials worked in a challenging environment and in 2006/07 had successes in key areas – the 2006/07 Annual Report was an improvement on previous years’ reports. It was emphasized that further successes would be heavily dependent upon unity so as to ensure greater harmony in the provision of services.

5.1 Key developments and challenges in 2006/07 (i) There was a need to reassess the DCS’ planning cycle so that planning is done at local level, and so that the Head Office’s role would be to monitor and report on what was happening at ground level. To this end the Department has established the Operations and Management support component which would focus on streamlining the DCS’ operations.

   ii) A joint pilot project between National Treasury and the DCS was
       aimed at identifying clearer indicators for performance
       management. This project would measure not only outcomes but
       also input and would include monitoring of the DCS’ expenditure.

  iii) The managing of overcrowding in prisons remained a challenge
       especially in relation to awaiting trial detainees. The
       Department emphasised that the Department of Justice and
       Constitutional Development was responsible for the efficient
       processing of awaiting trial detainees. While the DCS attempted
       to reduce the number of awaiting trial detainees through its
       Management Remand Detention, the efficiency of the Justice
       Department’s case flow management impacted on the success of
       that programme.

   iv) The DCS has appointed a Chief Financial Officer. This
       appointment would assist it in strengthening its internal audit
       weaknesses. The DCS would henceforth pay greater attention to
       financial management and audit-related issues.

    v) The building of five new correctional facilities has been
       approved by National Treasury. Upon the instruction of the
       Minister work on two of the facilities had been halted but the
       work on the Kimberley project was progressing well and it is
       expected that that facility will be completed by 2009.
   vi) The Kokstad correctional facility had been identified and
       rehabilitated for the incarceration of dangerous criminals. The
       DCS concurred with the Committee on the fact that dangerous and
       violent offenders ought to be isolated.

  vii) The Department had made some inroads as far as its audit
       qualifications of the previous year are concerned: the housing
       loan guarantees were being monitored on a monthly basis,
       qualifications related to asset procurement have been addressed
       and life certificates have been issued to continuation members
       thus addressing the qualification on medical expenditure. In
       addition the functionality of the accounting system has been
       enhanced and progress has been made as far as the implementation
       of the Judge White cases.

 viii) The migration to the LOGIS asset management system has been
       approved. The 2006/07 qualification related to asset management
       and the absence of an asset register. The Department explained
       that assets occupied by the DCS were actually owned by the
       Department of Public Works. The system used for the recording of
       asset values reflected incorrect figures. The DCS would strive
       to reconcile both book and current values. The Department failed
       to meet targets with respect to fixed assets structure but was
       working on addressing that weakness.

   ix) The Department was in the process of updating its asset
       register. Intangible assets were not disclosed in 2007, and the
       DCS should seek clarity from the Office of the Auditor General
       as to how items should be defined.

    x) The Department was in the process of reconciling the debtors’
       files, but did not have the details of former members who had
       debtors. The qualification on receivables resulted from the non-
       delivery of some files containing the records of old debtors who
       still owed money.

   xi) The non-reconciliation between the personnel system PERSAL, and
       the BAS accounting system also resulted in a qualification. In
       response the Department reviewed its system so as to identify
       ways of recovering debt from the debtors’ pension fund.

  xii) Government was in the process of migrating from a cash basis to
       a modified cash basis and this involved much manual
       intervention. Because the DCS was very decentralised it was
       difficult to handle issues of accruals. The Department has
       requested the Auditor General to supply them with cut-off dates
       for the submission of accrual statements.

The Committee received submissions from the South African Council of Churches (SACC), the Civil Society Prison Reform Initiative (CSPRI), the Police and Prisoners’ Civil Rights Union (POPCRU) and Khulisa Services.

6.1. SACC submission The SACC identified four main areas of concern namely overcrowding and the criminal justice strategy, the monitoring of recidivism and rehabilitation, inmate care and social reintegration. Despite the budget proposal’s claim that the DCS’ central focus has shifted to rehabilitation, recidivism –related evidence remains “anecdotal”. Although the long-term strategy envisages greater community mobilisation around issues such as social cohesion, social justice, moral and ethical values and socio-economic development, joint ventures between civil society and the DCS are not being provided for in the financial allocation.

  While the SACC commends the DCS for its commitment to the introduction
  of three meals a day, it fears that the amount allocated to the
  process would not be sufficient to ensure that those meals are
  nutritious. Concerns were also raised about the provisions of the US
  President’s Emergency Plan for AIDS Relief, which tie assistance to
  abstinence and fidelity based initiatives. Concerns were also raised
  about the fact that spiritual care services, which could play a major
  role in social reintegration and rehabilitation programmes as well as
  restorative justice projects, have enjoyed an exceedingly small

  Receiving less than 4% of the budget, the after care programme for
  released offenders remains the most poorly supported programme within
  the correctional services budget. This was particularly worrying
  considering the DCS’ new focus on social reintegration and


    i) The minimum sentencing legislation should be amended in an
       attempt to alleviate overcrowding.
   ii) Joint ventures between civil society and the Department that
       would promote the mobilisation of the community so as to unlock
       resources and to generate additional data analysis as well as to
       halt and understand the cycle of crime, should be provided for
       in the budget.
  iii) A balanced and multi-faceted HIV/AIDS programme that promoted
       the use of condoms as a legitimate and effective option to
       prevent transmission of the virus needs to be implemented.
   iv) The number of spiritual care sessions should be improved and
       spiritual and moral development workers should enjoy additional
       support as they have the capacity to complement the work of
       chaplains and thus could contribute to restorative justice
    v) The social reintegration programme needs to be expanded so as to
       ensure that former prisoners have genuine alternatives to crime.
       This would contribute to the reduction of recidivism.
   vi) Additional resources should be allocated to promote employment
       creation opportunities as well as support for community based
       training institutions.
  vii) The Department should explore the possibility of funding halfway
       houses for just released offenders.
 viii) Strategies of restorative justice that build community skills in
       mediation and resolution of specified social problems should be

6.2 Civil Society Prison Reform Initiative submission The organisation’s main concern related to inmate - safety. It raised concerns about the dramatic increase in the number of unnatural deaths and the number of reported assaults. There was also concern that although South Africa was a signatory to the United Nations’ Convention Against Torture (CAT), it has failed to meet its obligations. The fact that the South African Police Service seldom followed through on the cases inmates made against DCS officials was also worrying.


     i) The Portfolio Committee should liaise with its Justice and
        Constitutional Development counterpart with regard to the
        progress made towards criminalizing torture.
    ii) The JIOP should hold a thorough investigation to determine what
        the underlying and direct causes for unnatural deaths are as
        well as what actions had been taken in cases where officials
        were implicated.
   iii) DCS staff should receive training on the CAT especially as far
        as the provisions relating to the use of minimum force so as to
        ensure that that provision was implemented within the
        limitations contained in Article 10 of that convention.
    iv) General awareness raising programmes on the prohibition of
        torture, cruelty, inhuman and degrading treatment of inmates
        must be put in place.
     v) Prisoners must upon admission be informed of their rights
        especially in relation to torture. This information should be
        reinforced on a continuous basis.
    vi) The JIOP should monitor the progress made as far as the
        investigations dealing with assaults and deaths.
   vii) Results of investigations on the unnatural deaths should be made
        public in the interest of transparency and accountability.

6.3. POPCRU Submission

  POPCRU raised a number of concerns in its submission. The major
  concerns related to the relationship between the union and the
  Department. The union argued for greater involvement in the policy
  development and pleaded for adherence to the skills development
  legislation. It also called for measures to address the areas of audit
  qualification. POPCRU was convinced that the high levels of corruption
  could be ascribed to systemic problems and expressed concern that the
  media created the impression that all officials were corrupt. Concern
  was also expressed at the large number of consultants the Department
  used for functions it should be performing itself. There was also a
  concern that these consultants comprise disgruntled former employees
  of the Department and that therefore their “expertise” was
  questionable. It was felt that contrary to what was currently the
  case, the largest number of officials should be deployed at the lower
  levels – at the moment the DCS structure was top-heavy with too many
  officials appointed at the head quarters.


  (i)   The Relationship Building by Objectives platform should be fully
       implemented, so that unions can play a greater role as far as
       policy development is concerned.
   ii) Personnel should be most concentrated at the lower levels –
       excess staff should be redeployed so that they can beef up
       facilities across the country.
  iii) Measures that would address the concerns raised in the Auditor
       General’s report around audit control, should be implemented.
   iv) POPCRU sees over reliance on consultants as waste of resources
       and calls for that practice to be halted immediately.
    v) Adherence to the time frames and targets as far employment
       equity is concerned.

6.4 KHULISA submission

  Khulisa’s concerns centred on corrections, development and care
  programmes. They felt that the DCS’ budget did not allow for the rapid
  introduction of delivery in terms of the White Paper and that
  therefore there should be greater cooperation among the Department and
  the NGO sector. The presenter also expressed concern about the fact
  that the DCS was losing a lot of staff and thus a lot of institutional
  memory. It was hoped that efforts have been put in place so that new
  recruits are fully aware of what the DSC organisational changes and
  that they were trained in the new approach towards corrections.
  Concern was raised about the limited use of the NGO sector especially
  in areas where the DCS is under-resourced and not able to run
  sufficient corrections, rehabilitation and reintegration programmes.


    i) A personal development component to the development programmes
       offered to inmates would prove useful in the prevention of
   ii) Government should explore the creation of a Department dedicated
       to juvenile or youth offenders. Such a department should pay
       particular attention to the young offenders who can still be
       easily rehabilitated.

The Portfolio Committee on Correctional Services makes the following recommendations with respect to the 2006/07 Annual Report and Financial Statements of the Department of Correctional Services:

  (i)   Members were concerned that the Department appeared to have set
       targets that it could not reach. There was a need for better and
       more realistic planning. Information should match the targets
       set out in the strategic plan with the outcomes reflected in the
       Annual Report.
   ii) A large amount was spent on claims against the Department. While
       the Committee is pleased that the Department won most of these
       cases, Members are concerned about the financial impact drawn-
       out court proceedings have. The Department has set aside
       contingency funds for claims but such cases should be avoided
       and unsubstantiated claims must be resolved speedily, so as to
       minimize their financial impact.

  (iii) The high staff turnover in critical areas remains a concern as
       it impacts directly on delivery. It was worrying that despite
       the recruitment strategy, vacancies in the Department had
       increased, not decreased. While the report made mention of the
       retention strategy that had been finalized, the problem
       persists. Concerns were also raised about how the new recruits
       were distributed and about whether the rural areas which were in
       dire need of staff were adequately provided for. The DCS should
       in addition make sure that its processes for filling vacancies
       are in line with regulations especially when it came to job
       evaluations. It was not acceptable that 617 of the 690 posts at
       salary levels 9-12 had not been evaluated.

  (iv)  Asset management is a longstanding problem within the
       Department. The Department must provide the Committee with a
       record of all the buildings it was leasing from the Department
       of Public Works. The Committee will give the Department clear
       deadlines by which to provide it with progress reports as far as
       its asset management systems are concerned. While the Committee
       appreciates the complexities around cataloguing and managing
       assets, the Department could not function without the necessary
       asset management systems.

  (v)   Collusion between officials and inmates is a matter of serious
       concern because it poses a threat both to the safety of
       offenders who are incarcerated, as well as to ordinary South
       Africans when such collusion leads to escapes. The Committee
       sees such collusion in the most serious light and the Department
       must put all necessary measures in place to ensure that security
       at correctional centres is not compromised.

   vi) The Committee remains concerned about the speed with which the
       Department concludes its disciplinary proceedings and
       investigations. These proceedings and investigations are often
       long drawn out procedures, which see officials suspended for
       long periods of time (according to POPCRU, up to two years).
       This places a burden not only on the functioning of the already
       understaffed and under-resourced Department, but also on the
       taxpayers. The Department of Correctional Services has agreed to
       provide a written response on the length of time that officials
       have been suspended without pay. This refers to the 4 cases
       identified in Table 5.5.6 in the Annual Report. This information
       must be forwarded to the Committee by 1 March 2008. The
       Committee will closely monitor developments in this regard.

  vii) The Department must ensure that its representation of women is
       in accordance with Government policy. At present only 47 of the
       125 management positions were occupied by women. That is
       unacceptable and must be increased.

 viii) The Committee acknowledges the need for inmates to be treated
       fairly but emphasises that many offenders commit violent crimes
       including the killing of police officers and correctional
       officials. Correctional officers therefore deal with offenders
       who pose a threat to their lives on a continuous basis. Although
       there are cases where inmates assaulted officers, the
       presentations made no mention of them. While the Portfolio
       Committee would never condone assault, it had to be very
       objective in its assessment of the environment correctional
       officers worked in. The Committee requests all stakeholders to,
       in their recommendations and comments, be mindful of the reality
       correctional officers are faced with on a daily basis.

   ix) The Committee was interested in how many released offenders were
       able to get employment upon their release. Being able to earn an
       honest living was an important part of the after care process as
       it played a major role in the prevention of recidivism. The
       Department should provide the Committee with regular updates
       regarding its after-care and rehabilitation programmes.

    x) The Committee agreed that it was important that the needs of
       officials were provided for – a strong management component was
       of little consequence if the officers on the ground, who dealt
       with inmates on a daily basis, were not well taken care of. It
       was also important to instill the sense that while officials had
       certain rights, those rights came with an enormous

   xi) The Department of Correctional Services must ensure that, in all
       future annual reports, there is alignment of the targets
       reported on in terms of the Estimates of National Expenditure
       and the Strategic Plans for that year. Performance in terms of
       all (and not just some) of the targets should be included in the

  xii) More effort should be made in future annual reports to ensure
       that when progress is reported, it is made clear as to whether
       the relevant target has been achieved or not achieved.

 xiii) In future reports, more effort should be made to explain the
       failure to reach targets when these have not been met.

  xiv) The Department should also provide information in the reports
       when targets have been reduced (instead of increased) in
       comparison with the previous year. More specifically, the Annual
       Report does not stipulate which targets where revised during the
       mid term review process. This information should be contained in
       all future reports.

   xv) The Committee notes with concern the fact that the Department
       has again received a qualified audit opinion, but acknowledges
       some of the progress that has been made during the 2006/07
       financial year.  The Department of Correctional Services must
       provide a written report to the Committee by 30 April 2008 on
       steps taken to address the audit qualifications outlined in the
       2006/07 Report and provide the Committee with clear timeframes
       as to when each of these qualifications is expected to be
       completely resolved.

  xvi) The results of the HIV and AIDS prevalence survey will
       apparently be made public on 30 November 2007. The Report on the
       Survey must be made available to the Committee as soon as the
       report is made public. The Department will be expected to brief
       the Committee on the results of the Survey in the first quarter
       of 2008.

 xvii) The Department of Correctional Services must provide the
       Committee with written documentation and meet with the Committee
       on a quarterly basis on the following issues, in order to ensure
       effective oversight:

     • A quarterly expenditure report
     • Progress made on audit qualifications and matters of emphasis
     • Performance progress per programme
     • Progress on implementation of recommendations made by the
       Inspecting Judge

Report to be considered.

1.Fifteenth Report of the Standing Committee on Public Accounts on the Annual Report and the Report of the Auditor-General on the Financial Statements of the Department of Public Enterprises for the Financial Year ending 31 March 2007, dated 06 February 2008.

The Standing Committee on Public Accounts (SCOPA), heard and considered evidence on the Annual Report and the Report of the Auditor-General on the financial statements of the Department of Public Enterprises, for the year ended 31 March 2007.

The Committee commends the management of the Department of Public Enterprises for the unqualified audit opinion expressed by the Auditor- General and trusts that future audit opinions shall be equally unqualified. However, the Committee raised concerns that needed urgent interaction with the Accounting Officer and reports as follows: General matters

The Committee noted with concern the following issues raised in the annual report:

  1. a turnover of 10.8 percent, especially in skilled and contract level for the 06/07 financial year, and
  2. the Department incurred a fruitless expenditure amounting to R80 thousand regarding late cancellation of a conference. The officials involved have since left the Department. Approval has been granted to write off the amount.

The Committee recommends that the Accounting Officer:

  1. Establishes and review reasons for staff turnover, develop and implement strategies that will eliminate the problems experienced.

The Committee expects the Accounting Officer to expeditiously rectify the issues in question. The Committee will await the report of the Auditor-General for the 2007/08 financial year to determine whether there had been any improvement on these issues.

Report to be considered.

2.Sixteenth Report of the Standing Committee on Public Accounts on the Annual Report and the Report of the Auditor-General on the Financial Statements of the Department of Public Works (DPW) for the Financial Year ending 31 March 2007, dated 06 February 2008.

The Standing Committee on Public Accounts (SCOPA), having heard and considered evidence on the Annual Report and the Report of the Auditor- General on the financial statements of the Department of Public Works (DPW), for the year ended 31 March 2007, reports as follows:

  1. Capacity and/or people related issues The Committee is concerned about the high level of vacancies within the department. The previous year’s report indicated that the Department had an average rate of 19, 3% vacant posts and currently, the average rate is 17, 5%. Of these, a high percentage is on critical posts.

    The Committee recommends that the Accounting Officer ensures that:

    a. vacancies, especially the senior management and positions in highly skilled levels, are filled; b. applicants with relevant skills and qualifictions are considered in filling those posts and appropriate training is provided where it is lacking; c. Parliament is updated quarterly with the progress on how the Department is addressing the high level rate of vacancies.

    1. Asset management The report highlighted some significant shortcommings in the management and control of assets which were caused by the following:

    a. inadquate monitoring over some movable assets, resulting in the questionable integrity over the completeness, accuracy and valuation of the movable asset register; b. inadequate policies and procedures regarding the monitoring of immovable properties, resulting in the questionable integrity over the completeness, accuracy and valuation of the immoveable asset register; c. lack of monitoring over the completeness, rights and obligations over state-owned properties, resulting in the non-confirmation of amounts disclosed in the financial statements; d. lack of monitoring over issuing of confirmation letters to other departments, and e. no direct classification of current and capital expenses in maintenance, repairs and running costs.

    The Committee recommends that the Accounting Officer:

    a. excercises strict controls over management and all staff in supervisory positions; b. ensures that all asset registers are accurately updated; c. must put controls in place to ensure that there are complete, accurate and valid asset registers; d. ensures that training as well as disciplinary action are taken against staff members who do not perform as required; e. ensures that the management consistently monitor policies and procedures; f. must ensure that National Treasury classifies the expenditure and gives report back to Parliament; g. ensures that outstanding balances and all unallocated deposits are collected, reconcilled, and cleared

    1. Internal control weaknesses

    The report highlighted significant control weaknesses with regard to recovery of rental debtors, policies and procedures not implemented, and non-compliance with applicable legislation. The report further highlighted various shortcomings in information technology environment.

    The Committee recommends that the Accounting Officer ensures that:

    a. the management implements proper monitoring controls to ensure compliance with applicable laws, regulations, policies and procedures;

    b. follow- up on outstanding debts is done before any write-offs take place; c. strict controls are implemented and executed against officials who are not adherering to rules, and d. qualified candidates are taken into account for employment in order to enhance service delivery and reduce systems deficiency.

Report to be considered

3.Seventeenth Report of the Standing Committee on Public Accounts on the Consideration of the Approval of Unauthorised Expenditure incurred by the Department of Public Enterprises, dated 06 February 2008. Expenditure totaling R 11,006,245.00 incurred during the 1997/98 to 99/00 financial years was regarded as unauthorized in terms of the Exchequer Act, 975 (Act No. 66 of 1975).

The Committee considered the following incidents which arose owing to procedural contravention of Treasury Regulations, State Tender Board and procurement procedures.

  1. R10,928,245.00 arising out of a request of the inter-Ministerial Committee on restructuring, for the incumbent consultants contract to be extended, however State Tender Board ratification was not obtained;

  2. R78,000.00 was paid to a consultant for a leadership development programme without having invited official tenders.

The Accounting Officer confirmed that:

  1. Services for the expenditure were received to the satisfaction of the department;
  2. Control measures are in place to prevent this from reoccurring;
  3. Systems have been put in place to address expenditure control and financial management;
  4. Official procurement training was conducted for all officials in the department in 2006, which was compulsory. When new officials are appointed there is a compulsory induction programme in place. Training and education on expenditure control, procurement and finance related issues are part of this process. Further all policies and procedures are available on the department’s intranet for easy reference, and these documents are revised as and when needed. Having considered the evidence and the steps taken by the Accounting Officer to prevent similar cases of unauthorized expenditure from recurring, the Committee recommends the approval of the amount of R11, 006,245 by Parliament.

Report to be considered.

                      TUESDAY, 19 FEBRUARY 2008


National Assembly and National Council of Provinces

  1. Classification of Bills by Joint Tagging Mechanism (JTM)
(1)    The JTM on 19 February  2008  in  terms  of  Joint  Rule  160(4)
     classified the following Bills as section 76 Bills:

      a) Housing  Development  Agency  Bill  [B  1  –  2008]  (National
         Assembly – sec 76)

      b) Second-Hand Goods Bill [B 2 – 2008] (National Assembly  –  sec


National Assembly and National Council of Provinces

  1. The Minister of Arts and Culture

a) Report and Financial Statements of the National Archivist and the National Archives Advisory Council for 2004-2005.


National Assembly

  1. Report of the Portfolio Committee on Science and Technology on the Technology Innovation Agency Bill [B49-2007] (National Assembly – sec 75), dated 19 February 2008:

    The Portfolio Committee on Science and Technology, having considered the subject matter of the Technology Innovation Agency Bill [B49-2007] (National Assembly – sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Bill with amendments [B49A-2007].