Hon Chairperson, hon Minister Gigaba, hon Deputy Minister Martins, hon members, director-general and staff in the Ministry and department, our distinguished guests in the gallery, I wish to dedicate this speech to one of our many gifted and talented students, a student whose intellect had earned her an honours degree in mathematics and mathematical statistics, who had already, at the young age of 23, received a science degree. Here, surely, we had amongst the best that our new democracy has produced, with the promise of playing a future role in the development of our country in the fields of maths and science. On a Thursday evening in April she was to have graduated at Rhodes University. Whilst her parents assembled at the graduation hall she lay dead in the bushes off Ngqura Road outside Motherwell, with multiple stab wounds to her young body. It is to the late Lelona Fufu and to her grieving family that I pay tribute in this speech.
As we celebrate the centenary year of the ANC, we are indeed reminded of how far we have come since the organisation was founded 100 years ago at a humble Wesleyan Church in Waaihoek, Mangaung. Not only are we celebrating with the entire African continent, but we are also preparing for an important event in June, the ANC national policy conference. This policy conference will have an impact far wider than the organisation of the ANC. [Interjections.] Government and its departments are awaiting the policy deliberations that will culminate in the 53rd National Conference of the ANC in December this year in Mangaung.
These policy discussions have major implications for the state-owned entities, both the commercial and the noncommercial state-owned entities. The policy discussions will ensure a common comprehensive policy framework that guides state-owned entities. The role and architecture of state-owned entities will come under discussion and are of importance and relevance to this debate. These discussions will provide strategic direction for economic transformation by taking into account the role of state-owned companies as drivers and agents of economic restructuring to advance the objectives required by the successful creation of a developmental state, as was directed by the 52nd National Conference of the ANC in 2007.
Key here, which is also the experience of this portfolio committee through its oversight work, is that policies must reinforce optimum alignment and co-ordinate, mandate and operate state-owned companies. And it is here that we have some of our biggest challenges. This means consciously understanding the broader objectives of a developmental state.
The broader aim is to restructure the economy in order to create decent job opportunities, improve the current disparities with respect to income distribution levels, enhance the quality of service delivery and address social justice concerns in an all-encompassing manner.
We must appreciate that state-owned companies were not created to maximise profits or incur losses, but rather their existence was for the purpose of driving the developmental agenda. The mandate is to achieve a balance between the required level of self-funding and undertaking developmental projects that the private sector would ordinarily not undertake.
This balance must ensure that the state-owned companies, which are tasked with costly development mandates, are strategically positioned to generate sufficient revenues to cover the costs associated with executing their respective, but interrelated, mandates. The efficient utilisation of the strength of state-owned companies must support and direct private sector investments to productive sectors of the economy to stimulate the manufacturing and industrialisation programmes.
The state has the duty and responsibility to direct national economic development through the mobilisation of domestic and foreign capital and other social capital formation initiatives or partnerships, to achieve the stated goals of what the theory of our struggle and national democratic revolution ultimately seeks to achieve, which is the function of a national democratic society, free of the socioeconomic fetters of the past and truly democratic, nonracial, nonsexist and prosperous in its functioning.
We state these points mindful of the fact that we conduct our work within the context of the current global economic environment, which is characterised by volatile, turbulent and uncertain global financial markets accompanied by a weak demand in the export of goods and services, due to the global economic recession. Notwithstanding this, state-owned companies must operate as powerful instruments of economic transformation. They must remain firmly within the control of the state in order to have a capacity that is capable of responding effectively and efficiently to the developmental agenda of the ANC government. As the ANC, our mandate is derived from a conference, which shapes how the governing party shapes policy for government.
On state-owned entities the 52nd National Conference of the ANC in 2007 resolved that the ANC and its government must build the capacity of the state in order to pursue objectives of a developmental state. It must ensure that while state-owned entities remain financially viable, their final responsibility is to support and lead in strategic government-led developmental objectives within the realm of a clearly defined public mandate of pursuing an overarching industrialisation programme.
In October 2010, the ANC government adopted the New Growth Path policy, a macro- and microeconomic framework of strategies and interventions founded on a restructuring of the South African economy to improve its performance in terms of labour absorption as well as the composition and rate of growth. Therefore, the overall objective and mandate of state-owned companies is to advance the socioeconomic and political agenda of the developmental state, to promote social cohesion and the creation of decent jobs, as well as skills and training development, in addition to other socioeconomic needs.
What are the challenges we face with regard to state-owned companies specifically? Our oversight as a committee has demonstrated that there are certain very specific challenges that need attention. The ANC policy conference will certainly apply its mind to these matters and we look forward, when we debate the next Budget Vote in 2013, to the beginnings of change. This, of course, has its own budgetary considerations and no government commits money to the budget unless there is policy clarity. In that respect, the budget for 2012-13 does in certain instances reflect this.
In outlining the challenges it would be necessary to give some context. We have state-owned companies that are complex in terms of the legislation that established them, governance, modus operandi, funding and systems layout. The nexus between policy and legislation, and often conflicting objectives, has resulted in a difference in operation. Therefore, a department like public enterprises seeks to develop an overarching strategy for the respective state-owned companies under its jurisdiction but runs into a matrix of implications, legislation, governance, funding, operational functioning, boards and a strong mix of the subjective element.
The difficulties of implementing an overarching strategy are acknowledged in the context of decentralised and multiple policy frameworks, legislation and oversight approaches, as is the case at the moment. Any restructuring plans should seek to embed an overarching strategy for state-owned companies that effectively respond to the developmental state agenda; create an enabling environment, which, amongst others, seeks to create a universal policy framework and legislation; and develop state capacity to effectively monitor and evaluate state-owned companies and, in addition, also address the relationship with other government departments and the private sector.
There is a natural conflict between commercial interests of companies and the interests of the developmental state. Several high profile examples are illustrative of the existent dichotomy between the public interest and state-owned companies' commercial interest. On the whole, state-owned companies have mixed results when they are assessed against the competing, but equally prioritised economic and sociopolitical objectives. Although most state-owned companies understand the sociopolitical objectives of the government, there is an element of self-regulation in the manner in which these objectives are managed, executed and reported.
On the surface, it would seem as if state-owned companies are meeting commercial objectives, as they are growing from a financial perspective, in terms of turnover and profit levels. However, these measures are narrow and do not take into account the monopolistic position of most state-owned companies and the wider gross domestic product, GDP, related measures, which would provide a better view of performance.
The sociopolitical objectives of the government leave a perception, in the operational minds of state-owned companies, that sociopolitical objectives encumber the achievement of commercial objectives. For this reason, it is necessary for the state, as a shareholder, to provide leadership and guidance on what should be done to maintain a healthy balance between sociopolitical and economic objectives, as well as ensuring that such processes can be monitored and evaluated with financial sustainability.
Before I come to the budget, may I conclude that central to the necessary changes that should happen are matters of governance, investment strategy, public partnership, and funding options, such as state funding versus cost recovery or direct capital markets. On the direct capital markets, this must absolutely be a last resort, going forward. We should avoid funding that comes with conditions, which may not be suitable to the strategy of the state and its national sovereignty.
On the Budget Vote itself, for the 2012-13 financial year, the department has been allocated R1,2 billion. Given the nature of the department, most of this budget is for transfers; R1,05 billion, for that matter, for two entities, Denel and Alexkor.
The major increase for this year in the budget means that the department is left with R199 million to fulfil its oversight responsibility over state- owned companies. In reality, the department has been allocated less than the amount it was allocated for the 2011-12 financial year, which was R353,3 million. Once we have settled matters of policy and vocation, this situation should change.
Our report to the National Assembly, on the strategic plan and budget of the department, expressed its concern over the continuously declining budget of the department. In reality, the department has been allocated just about R199 million - R154 million less than the allocation it had received last year.
The central concern is in the ability of the department to address challenges faced by the department, especially on human resource capacity; whilst it is expected to oversee more than R800 billion of the infrastructure build programme. The oversight of the department should be equal to the strategic and important nature of the role of state-owned companies. In addition, the absence of legislation that empowers the department to act against noncompliance by state-owned companies to enforce priorities of government means that we must ensure that draft legislation is tabled to give effect to this.
In conclusion, I would like to thank the Minister, Deputy Minister and staff in the Ministry and the department for the sound working relationship we had over the past year. We will certainly need more of this going forward, given the challenges we face. The ANC supports this Budget Vote. Thank you [Applause.].