National Treasury & SARS Budget Review and Recommendation Report

Meeting report

National Treasury & SARS BRRR
The Chairperson welcomed Members, the Parliamentary support team, the Parliamentary Budget Office (PBO), National Treasury and all stakeholders. He moved to item two of the agenda which involved the discussion of the 2021 Budgetary Review and Recommendations Report (BRRR). He would continue with the assumption that Members had studied the report.

Members were directed to the ‘Committee Observations and Recommendations’ at point 8 (page 16) of the report. Members agreed to the observations in 8.1, that there were some improvements in the number of unqualified audits across the finance portfolio in 2020/21.

 [Audio was lost between the adoption of points 8.2 – 8.9 along with the response of Mr Dondo Mogajane, Director General: National Treasury in relation to one of the observations]

Mr Dondo Mogajane, Director General: National Treasury, said that recommendation in 8.9 gave the impression that National Treasury never came when asked to by the Committee. He asked the Committee to reflect this nuance. National Treasury confirmed that it had presented the Integrated Financial Management System (IFMS) Forensic Report to both Committees on the 20 November 2018. The presentation would be forwarded to the Secretariat.

The Chairperson confirmed that the background in observation 8.9 would be corrected. The position however remained that the Committee would conduct an oversight visit to National Treasury early in 2022. Members proceeded and agreed on observations 8.10 – 8.11.

Dr D George (DA) spoke about the Government Pensions Administration Agency (GPAA). In a previous meeting he had raised the issue about the escalating number of complaints that were coming from members of the fund. These complaints specifically came from the widows of deceased members and retirees. There seemed to be a problem because these issues were raised to Members of Parliament and the DG said that National Treasury would investigate. He proposed that the Committee adjust observation 8.12 so that it would read, “the Committee notes increasing complaints regarding poor service from the Governments Pensions Administrative Agency. The Committee requires a report on current service levels and steps to be taken to improve performance”. He believed that service levels were getting worse.

The Chairperson wanted to know what the Director General’s response was before the Committee proceeded.

Mr Mogajane responded that the facts, as they were presented by Dr George, were correct.

The Chairperson noted that the use of the phrase “poor service” may not be an appropriate phrase to use when defining the work of GPAA.

Dr George proposed to type his comment into the Zoom chat for it to be nuanced. He was not overly fixated on the words ‘poor service’. He perceived the service as ‘poor’ because of the number of dissatisfied and “starving” recipients who had reached out to him to highlight that the call centres “never answered anything” and recipients received no response to their queries. Some recipients reported waiting for up to 8 months for a reply. “I believe that’s poor service” he said. This was a problem. The solution was that the Committee needed a report on the service levels and steps that need to be taken. Fixing the issue is what was important. In the Zoom chat he typed, “The Committee notes increasing complaints regarding poor service from the GPAA. The Committee requires a report on service levels and steps to be taken to improve performance.”

The Chairperson welcomed Dr George’s proposal. He mentioned the new ‘omicron’ variant and the potential negative effects COVID-19 could further have on the economy. Members agreed on observations in 8.13 to 8.15. The Chairperson noted a repeat in 8.9 and 8.16 in respect of the IFMS.  

Dr Zakhele Hlophe, Committee Content Advisor, explained that the recommendations on the IFMS in 8.9 were mainly directed to the Minister. Whereas the recommendations in 8.16 – 8.17 directly spoke to the DG of National Treasury urging the submission of quarterly reports to the Committee on issues (recurring findings and material irregularities) surrounding the IFMS project. There was merely cross referencing, nothing was being repeated.  

The Chairperson thanked Dr Hlophe for the clarity. Members agreed to observations listed in 8:16 – 8:18. The Chairperson paused to reflect on the devastating impact COVID-19 has had since March 2020. He asked Mr Mogajane whether the new variant and any others to come after it would have a serious impact on revenue, the projected growth and the unemployment. “I know you are not a sangoma or a prophet” he said.

Mr Mogajane said that the new variant would have a devastating effect. How we respond is also important.
The first level of response was welcomed seeing that the country did not revert to a stricter lockdown level. Government is cautiously approaching the pandemic this time around. National Treasury would look closely at the impact of COVID-19. It is important that the virus be contained. The hysteria around the new variant could be used as an opportunity to encourage more people to get vaccinated in order to minimise the impact of COVID-19. The tourism sector was already feeling the impact of the new variant. A service provider in Cape Town had to cancel bookings because tourists were no longer coming. National Treasury would look into this impact. The tourism sector would have contributed to “a welcomed number in terms of increases from tax collections”. December and January would have been fended for. An increase in the unemployment rate was anticipated because opportunities for employment in tourism during the holiday season had been lost. If there were temporary people employed in the tourism sector, it means they will not find opportunities to be employed or to earn an income. National Treasury would need to prepare itself and be realistic in projections in anticipations for the arrival of any “sister [variants]” that are to follow in the future. The team would be working on the impact and challenges of COVID-19 and comment further on these issues in the February budget.  

The Chairperson said that he was equally worried because European countries and “surprisingly Rwanda” had placed a travel ban on Southern Africa. This travel ban meant that these countries would not be visiting South Africa during the summer holidays. South Africa formed part of the global economy. Isolation from the global economy would have a devastating impact on the country. The media portrayal of South Africa in particular and Southern Africa in general after the discovery of the new “omicron” variant had been very negative. “We are going to pay a heavy price for all this”, he said. The Committee along with all other relevant bodies would need to look at the impact of the travel bans on the economy early in 2022.

Members agreed on the observations/recommendations in 8.18 – 8.21.

The Chairperson interjected to ask whether SARS had abandoned the ‘track and trace’ project.

Mr Mogajane confirmed that SARS had abandoned the ‘track and trace’ project. The Commissioner of SARS, Edward Kieswetter, had appeared before the Committee on 9 November. When asked about the position on the ‘track and trace’ project the Commissioner responded that the project had been abandoned because it had certain loopholes. A new strategy was however being implemented. SARS must fully brief the Committee on what is being implemented in place of the ‘track and trace’ project.

The Chairperson said that SARS did not have to be “ad hoc” because there was a lot of work done around the ‘track and trace’ project. Since it had abandoned the project what was the new strategy it would implement in its place? Was there anyone from SARS who could speak on the ‘track and trace’ project?

Mr Mogajane said that he was not sure whether SARS would completely abandon the ‘track and trace’ project. He would speak to the Commissioner. There was no one in his team who directly dealt with SARS and could speak on the matter.

The Chairperson expressed concern about the rise in illicit tobacco trading. This was a serious issued raised by the tobacco industry in many hearings. There was no clear strategy to curb the illicit trading. If there is a new strategy, what is that strategy called and how are they going to implement it? The response should be received as soon as possible to prevent stranding the issue.  

Members agreed on the recommendations/observations in 8.23 to 8.24.

Mr Mogajane confirmed that the ‘track and trace’ project had been abandoned as a stand-alone project after following up with the Commissioner. SARS would adopt a holistic model in terms of the whole value chain. There was a change in strategy but elements of the ‘track and trace’ project would be part of the “total value chain”.

The Chairperson asked whether there was a new strategy or a project to deal with illicit tobacco trade.

Mr Mogajane said that there was a new strategy being worked on. This would not be a stand-alone project but part of the whole strategy SARS would implement.

The Chairperson asked Members to move for the adoption of the report.

Ms M Mabiletsa (ANC), moved for the adoption of the 2021 Budgetary Review and Recommendations Report. Mr G Skosana (ANC), seconded.

Dr George maintained that the Democratic Alliance (DA) reserved its position on the report.

Read ATC’d Report: ATC211130: Budgetary Review and Recommendation Report of the Standing Committee on Finance, Dated 30 November 2021

The Chairperson thanked all the Members, the Parliamentary support staff, National Treasury, media and all in attendance of the meeting.

The meeting was adjourned.