Medium Term Budget Policy Statement: Input from Departments of Education, Health, Trade & Industry, Home Affairs, People's Budget Campaign and HSRC

Meeting report

JOINT BUDGET PORTFOLIO COMMITTEE
3 November 2004
Medium Term Budget Policy Statement: INPUT FROM DEPARTMENTS OF EDUCATION, HEALTH, TRADE & INDUSTRY, HOME AFFAIRS, PEOPLE'S BUDGET CAMPAIGN AND HSRC

Chairperson: N Nhlanhla (ANC) and Mr N Nene (ANC)

Documents handed out
Department of Education submission
Department of Health submission
Department of Trade and Industry submission
People’s Budget Campaign submission
Department of Foreign Affairs submission
Minister of Home Affairs submission
Social Services, Income Support and Human Development Theme
Article on Social Health
Human Sciences Research Council submission (document awaited)

Summary
The Committee heard submissions from different departments of the social cluster. The Director-General of the Department of Education reported that the Department had provided food for learners at lower primary schools. Outcomes-based education would be improved, particularly for rural schools.

The Department of Health reported that the Department would build more clinics in rural areas. The Minister of Home Affairs reported syndicates had been using false Identity Documents to access social security and devise ‘false marriages’. The Committee heard a submission by the Chief Executive Officer of the Human Sciences Research Council. She then reported that more than half of all hospital beds were occupied by people with HIV/AIDS related diseases. Furthermore, South Africa was in need of a national health insurance system to benefit all citizens. The People’s Budget Campaign wanted the Government to introduce a ‘Tobin Tax’ that would limit damage done by currency speculators. The Department of Trade and Industry reported, among other matters, that it had been participated in the NEPAD Trade Secretariat.

In the afternoon session, the Department of Foreign Affairs reported that, due to the strengthening of the Rand, there had been under-spending on personnel, land and buildings, and professional services. However, these savings had been offset by unbudgeted expenses for the Office of the second Deputy Minister, the Pan African Parliament, the NEPAD Secretariat, new SADC headquarters, and humanitarian assistance to Mali. The Department could discharge its mandate for the current financial year, but it would need additional funding for the remaining Medium-Term Expenditure Framework as its mandate had increased significantly, but not its budget.

Minutes

Department of Education submission
Mr Mseleku, Department Director-General, reported that education expenditure had decreased from 21% of government spending to 17 %. Provincial education departments had been allocated a declining share of the budget, in some cases less than 30% of provincial spending. The D-G welcomed that the provincial Treasuries had been fully compensated for the 2004 salary adjustments.

Discussion
Mr Ralane (ANC) asked why the Department had spent so much money on the 10 Years of Freedom celebrations, instead of the Department of Arts and Culture paying for this.

The Department Chief Financial Officer replied that as part of the social cluster, the Department was obliged to contribute to freedom celebrations

Ms Mashangoane (ANC) enquired about the decline in funding for the schools feeding scheme and the National Students Financial Aid Scheme.

The D-G replied that the schools feeding scheme would be decreased, and the child support grant would be extended up to age of fourteen. The National Student Fund allocation was not enough because more students were entering tertiary education level.

Mr Botha (ANC) asked the reason for the roll-over. The D-G replied that the Department had meant to address the roll-over, but had been confronted by capacity problems, particularly in the Eastern Cape.

Ms Helen Zille (DA) asked what measures the Department would take to ensure improvement in learning outcomes, especially in the poor provinces.

The D-G answered that those outcomes and the improvement of educators’ performance, was being addressed and learner’s progress would be monitored.

Mr G Scheenman asked the Department what measures would be taken to ensure that schools would be built in new housing developments.

The D-G replied that building of schools were the responsibility of provincial departments. The Department had to take into consideration the distance from the nearest school, availability of teachers and population density.

Dr Rabie asked what steps had been taken by the Department to improve science and maths teaching and results in schools.

The D-G replied that maths and science results had improved slightly and the Department would put greater emphasis on outcomes.

Department of Health submission
Ms K Chetty, Acting Director-General, reported that the Department had significantly invested in the public sector and infrastructure. Public hospitals had been overwhelmed by the large numbers of victims of crime, road accidents and the increasing burden of HIV/AIDS, tuberculosis and other diseases.

She mentioned the R73 billion allocated for essential repair of public buildings. Opportunities could be found in the large allocations of health budgets at provincial level. The Department had a roll-over of funds and faced significant challenges.

Discussion
Mr Ralane asked about the chances of under-spending and ‘dumping’ on provinces.

The Chief Financial Officer replied that expenditure in provinces like Mpumalanga showed slight under-expenditure. The Northern Cape had a small budget for a large area and the North West was plagued by management problems. The Eastern Cape had vast amounts left over towards the end of the financial year.

Ms Gcina commented that there was a need for the Department to build more clinics in rural areas.

Ms Chetty replied that when building clinics, the Department considered population density of a catchment area. However, government could not build a clinic in every village.

Dr Rabie (DA) asked for clarity on the legislative bungle with the new pharmacy legislation.

Ms Chetty answered that the Department wanted South Africans to be able to access affordable drugs, but the livelihoods of pharmacists had to be taken into consideration.

Ms Mashangoane (ANC) enquired about the role of traditional healers. What was the government doing about the shortage of nurses?

Ms Chetty replied that the Department had introduced community service to address the shortage of nurses in rural areas. Cabinet was still discussing the Traditional Healers Bill, which would ensure the maintenance of standards.
 
Department of Home Affairs submission.
Minister Nqakula reported that the Department had been dealing mainly with issues of citizenship, which were crucial in accessing social security, health and other services. The problem of duplicate Identity Documents had undermined their efforts, because syndicates used the IDs to access the social security system. The Department had commissioned a study by the Council for Science and Industrial Research (CSIR) to determine the number of citizens without IDs, and the effectiveness of the current birth registration campaign. False marriages had been investigated. The Minister reported that her Department would participate in the envisaged Social Security Agency with the Department of Social Development. They had noted the importance of ensuring that administration systems improve to prevent the abuse of the social grant systems, and to ensure public accessibility.

Discussion
Mr Ralane asked about the chances of under-spending at the end of the financial year, and about transfers of subsidies to municipalities.

Mr Nkambule, Department Chief Financial Officer, answered that under-spending was due to delays in the implementation of the Hanis Project and the slow procurement system. A new Deputy Director-General for Information Technology had been appointed to deal with such problems. Computerisation of paper-based fingerprints had been going smoothly. There had been no dumping.

Mr Swart asked why the Department had not decentralised the issuing of passports. Mr Nkambule said ID production could not be decentralised, but the Department would computerise the data-capturing process to minimise time delays in applications.

Mr Zitha (ANC) asked about the size of the problem of corruption in the Department. The Minister replied that corruption had long been a problem in the Department, but it was declining. Officials had been arrested together with their ‘runners’ and ‘middle men’. The newly appointed Chief Director had already been dealing with cases.

Ms Mashangoane asked why the Department took so much time in rectifying the problem of wrong birth dates in Identity Documents. The Minister replied that the Department was correcting mistakes free of charge.

An (ANC) member asked how successful the Campaign to reverse false marriages had been. The Minister answered that the campaign against the marriage scam had been a success, but the Department had not known how to properly deal with the trauma suffered by “victims” of false marriages.

Social Services Submission
The Director-General, Mr V Madonsela, reported that spending on social grants had risen by R3.4 million over four years. The Highest growth rates were in the Eastern Cape, Kwazulu-Natal, Gauteng and the Northern Cape. Reasons for the growth include the expansion of the social safety net, and the extension of the child support grant. The Department had been planning to replace the grant payment system and to review the disability grant. Policymakers were in the final stages of developing the Youth Development Strategy. R600 000 had been rolled over because of reports had not been finalised on support to children. The Department had established Social Security Agency in order to increase monitoring.

Discussion
Mr Ralane asked why the Department had not been using the Post Bank for grant payments because it was accessible throughout the country. What were the Departments plans to ensure there would be no financial dumping?

The Director-General replied that the use of the Post Bank would depend on the capacity and reach of the Bank. The Department had been monitoring spending.
 
Dr Rabie asked about the most common forms of abuse in the system. The Deputy Director General replied that although there was abuse in the system, research had indicated that grants were a positive contribution to poor households.

Ms Mashangoane asked how the Department controlled temporary disability grants. What measures had been taken to ensure that micro-lenders did not abuse elderly citizens?

The DD-G replied that temporary disability grant were valid for six months, and the legislation required three months before the option of expiry. The Department had negotiated with micro-lenders not to offer funeral benefits, because most older people were spending huge amounts on funeral Insurance.

Ms Chalmers asked about the impact of HIV/AIDS on the social security system.

The DD-G reported that a study had been commissioned to look at the impact of HIV/AIDS on the grant system. Results had showed that rural Provinces had the highest applications for HIV grants.

Mr Schneemann (DA) enquired about their working relationship with Department of Home Affairs. The DD-G replied that their Department had a good working relationship with that Department.

Human Sciences Research Council submission
Dr O Shisana, HSRC Chief Executive Officer, reported that the high increase in the number of disability grants was because of the increase in AIDS-related diseases. Some 64% percent of hospital beds were occupied by AIDS patients. Data from Statistics South Africa had shown that numbers of people in the private sector with medical aid had been dropping. More people depended on the public health system, burdening it more and more. There was a need for new streams of funding. Furthermore, South Africa needed a national health insurance system. She appealed for more funding to support social science research.

Mr Zitha (ANC) asked about the differences between the Cosatu/ANC and HSRC proposals on national health insurance. Dr Shisana replied that national health insurance had been raised by the ANC and Cosatu a long time ago, and their idea was similar to the proposal of the Human Sciences Research Council. The new health insurance system could force improvements in the public hospitals. There was a need for additional taxation.

People’s Budget submission
Mr Elroy Poulus, Cosatu Parliamentary Officer, reported that the People’s Budget Campaign proposals had focused on poverty eradication, spending proposals, and building participation and financing development in an integrated development strategy. The government’s priority should be to ensure that capital and money were used to best promote a growth path, and not to destroy jobs. Furthermore, the decision to permit companies to retain foreign dividends offshore would undermine gross domestic gross fixed capital. The People’s Budget Campaign had been calling for the introduction of a Tobin Tax to stave off speculative investment.

Discussion
Dr Rabie asked for the views of the Campaign on pension fund taxes.

Mr Poulos replied that they were not opposed to tax cuts, but tax cuts should benefit everyone. Pension fund tax could be used for developmental purpose. Retirement funds should be exempted from taxation.

Department of Trade and Industry submission
Ms Jodie Scholz, DD-G, reported that her Department needed to work with other developing countries in the World Trade Organisation on development policies that favoured Africa. The Department had been intensifying bilateral arrangements with other regions like North Africa, the Middle East and equatorial Africa. All negotiations entered into should contain tariff standards, dispute resolution mechanisms, and ports documentation.

Discussion
Ms Rajbali (MF) asked whether South Africa had more imports than exports, or vice versa. Ms Scholz replied that South Africa had more exports to, than imports from, other African countries and this imbalance was unsustainable. The Department had been targeting the Chinese and the Indian markets.

Dr Zitha asked what had been the role of South Africa in facilitating trade. Ms Scholz replied that the Department had seconded members to the NEPAD Secretariat on trade.

Mr Zitha suggested that it was critically important to position the continent strategicaly in the electronics industry.

Department of Foreign Affairs submission
After the lunch break, Dr Ayanda Ntsaluba, Department Director-General, noted that there had been under-spending on personnel, land and buildings and professional and special services. The overall surplus was R199.9 million and this saving was attributed to the strengthening of the Rand. The following had not been budgeted for: the Office of the second Deputy Minister, the Pan African Parliament, the NEPAD Secretariat, the new SADC headquarters, and humanitarian assistance to the government of Mali. These expenses had thus been offset against the surplus. The Department believed that it could discharge its mandate for the current financial year with the current budget, but more funding would be needed in future. Over time, the Department’s mandate had increased significantly in terms of missions, but their operational budget had not been increased accordingly. The priorities for the 2004/2005 financial year were highlighted. There was a request for new funding for the ‘African Agenda’ and international commitments, improvement of service delivery, and for expanded capital works.

Discussion
Dr S Cwele (ANC) asked whether the funding for the Pan African Parliament included its construction costs.

Dr Ntsabula replied that it had been agreed that Gallagher Estate would be rented for the first five years for the Pan African Parliament, and thereafter a site would be chosen and a building constructed. Money for the latter was not in the current Medium-Term Expenditure Framework (MTEF), but only the rental provision. In Year Five of the MTEF, funding would be necessary to start looking for a site. The constitution of the delegations for the Pan African Parliament still had to be addressed and this would affect the size, type and design of the building needed.

Mr B Martins (ANC) asked about the land issue in the identification of a site for the headquarters of the Department of Foreign Affairs.

Dr Ntsabula replied that the process of obtaining a new building for the Department had been very long. A piece of land had been identified in 2001 below the Union Building in Pretoria. This had later been withdrawn because of the inadequacy of the property for the structure and size of South Africa’s Foreign Ministry. An appropriate piece of state land in the centre of Pretoria that could be used for the Ministry’s headquarters, had been very difficult to find.

Ms S Rajbally (MF) asked if the Department was looking for a further budget allocation.

Dr Ntsabula replied that the Department was not asking for additional money for the current financial year. He had tried to explain the deficiency in the figures for the full MTEF period.

Mr L Zita (ANC) asked if the ‘African Agenda’ had been adequately provided for.

Dr Ntsabula replied that there were shortfalls, and that was why his Department was asking for additional funding. The prioritisation of the African Agenda and the undertaking of all the operations needed on the continent, would require additional funding.

Dr Cwele welcomed the acquisition of properties in other countries, instead of using of rented accommodation and offices. He asked what the savings would be in comparison to paying rental. Did the Department’s budget include the other departments that were working closely with the Department of Foreign Affairs in overseas countries?

Dr Ntsabula said that many new missions had been established in foreign countries during the period under review. The Department had tried not to enter into long leases in these countries before it knew well how those countries’ property markets functioned. When the system of ownership and repayment of bonds was similar to South Africa, monthly repayment of a bond would offset a monthly rental payment over time.

Dr Ntsabula continued that the Ambassador to a foreign country had to ensure that the needs and requirements of other Departments were met when setting up a new mission. Accommodation for the representatives of other departments, however, was handled slightly differently. The money referred to in the budget was for the purchase of an official residence for the Chancellor and Ambassador. It would take a very long time before other officials of the mission also occupied property that had been purchased by the Department.

The Chairperson asked the Director-General to provide the Committee with his Department’s cash-flow projections in the near future.

The meeting was adjourned.