Chairperson, I am not sure whether it is Prof or Dr James, but he is still finding his feet. I am sure he will get used to the Rules as we go along. May I also, on behalf of the Ministry and the accounting officers of the Treasury and Sars, invite you to a cocktail of water later on? [Laughter.]
In responding to all of the contributions, we thank both colleagues on the ANC side and the various opposition parties for their contributions. I think that all of us, if we hear each other properly, will begin to make contributions that will help South Africa out of what we all clearly agree is a difficult time that the country finds itself in.
Whichever political party we belong to, I think it requires extraordinary leadership, as the chairperson of the committee, Mr Mufamadi, pointed out, to look beyond the necessities of this environment and ask ourselves what else we can contribute in terms of the way in which this country works its way out of a crisis that is not only affecting this country.
It is going to take, as Mr Mufamadi pointed out, a great deal of resilience. It is going to take a lot of decisiveness and, clearly, as some of you have said, this is not business as usual. We have to learn to do things differently, we've got to reshape the state, reshape the way the Budget and its expenditure works and the way in which this government works generally.
I hope that all of us will listen to Mr Koornhof when he says that we require, not only on this side, but on all sides, good heads and hearts if we are to put our efforts together in working our way out of this crisis. Indeed, Dr George, happiness will then return, sooner rather than later.
If we look at the points we agree on, apart from the banter we engage in, there are many. The counter-cyclical approach of this government is absolutely necessary, the infrastructure expenditure is necessary, government spending must continue, albeit on a more careful basis, on a different basis, and a more value-added basis. We need to create not less but more public sector jobs through the EPWP if we are to help large sections of our population to cope with the current crisis. There is no way in which we can reduce social security. We need to enhance it in the various forms in which we provide it to the South African population. We must also, as the hon Chiloane pointed out a few minutes ago, help Sars to collect more revenue. Hopefully they will give you a hotline number where you can report where additional taxes can be collected on the basis of information you picked up at the last cocktail party you went to! That will certainly help us to widen the tax base.
The improvement of tax compliance is a national function - it's not a government function - and one which all of us can share responsibility for, particularly in the kind of times we live in. We can also agree that, whether it's a developmental state or whatever state we want to agree on and the description we want to agree on, we want an efficient and effective state. We want a state that is able to deliver; we want a state that is able to be responsive and is able to intervene in an appropriate way, given the context in which we find ourselves. We might well disagree about the extent of that intervention.
As Mr Manamela pointed out, over the last 18 months or so, if the state was not there, if government didn't have the resources that it had around the world, this world would have been in a huge crisis - much bigger and severer than the crisis that we find ourselves in currently. If the banking system wasn't saved in the US and partly nationalised - virtually all the banks in the UK that are of any significant order are nationalised - we would have seen a crisis of major proportions, which we would have deeply regretted. I think it is time to go beyond our ideological barriers and ask ourselves whether the experiences of the last 18 months or so have certainly demonstrated that there is a role for government of a very different order. I think we need to be gracious to one another and be able to conceive that, apart from the debating and scoring points. And we must ask ourselves how this state can become more effective and how the state can play a developmental role - however you want to actually describe it.
There is no doubt that had the state and its various machineries, particularly the Competition Commission more recently, not intervened on behalf of public interest, the bread cartel would have continued to operate. We don't know what the investigation into the retail cartel is actually going to show and the petroleum industry has been exposed and has paid huge fines. On a number of other fronts the Competition Commission has, on behalf of the state and for the sake of fairness, made interventions that are crucially important.
I appreciate the point that Mr Koornhof made about the role of banks and the necessity to review whether their approach to credit and assistance to firms and individuals that is currently being practised is something that they actually need to review. The Treasury will certainly look into this and if there is cause for it, we will meet with the chief executives of the banks to establish whether the kind of approach they are using is a justifiable one. Regarding state-owned enterprises, a number of us have made contributions and they certainly have an important role to play. Government is mindful of the fact that we need to align what they do, what they spend money on and the way in which they're governed with government's priorities and objectives. My colleague, Minister Hogan, is certainly willing to work with us in that particular regard to ensure that that alignment takes place.
Similarly, on the DFIs, prior to the election a review was undertaken; Minister Manuel was overseeing that. Various strengths and weaknesses and gaps in the DFIs have, in fact, been identified.
A DFI council is to be established, chaired by the Minister of Finance, to improve governance within DFIs and certainly, from the Treasury point of view, we will do all that is necessary to ensure that they are properly capitalised; that they have the appropriate credibility to go into the market to borrow money; but also, as many of you have pointed out, ensure that that money is spent wisely and correctly. There is a lot of work to do in that particular area.
Certainly with regard to the two DFIs that report to the Ministry, the Land Bank and the DBSA, one is going through a significant turnaround and the other is very well managed and, as I said in my speech, is going to be increasingly capitalised in order to perform the developmental role that it has performed.
Mr Singh raised questions about the Land Bank. I can assure him that my colleagues have looked carefully at the report that investigated the Land Bank and the various entities associated with it. That report was handed to the former Minister of Agriculture and Land Affairs and was used as a basis to devise the turnaround strategy. Action has been taken against several officials who were suspended initially and some have been found guilty and fired through the necessary disciplinary processes and other have had their cases handed over to law enforcement agencies. The debtors have been pursued - that is where that R500 million odd has, in fact, been recouped - so there is more work going on in that particular area.
The numbers I have indicate that five officials have been fired and six have been suspended. So this is a work in progress, as far as the Treasury is concerned. I have every confidence in the board and in the management of the Land Bank that they will help us to turn this around.
Dr George raised some concerns, and I am glad Minister Manuel is here to hear this, about whether the transference of Statistics SA to the Minister in the Presidency is going to result in what he called "political manipulation" and threaten the independence of Statistics SA. On behalf of Minister Manuel, I want to assure you that he has no such intentions, that's not our way of doing business and if you look at the records of many of us, we have specialised not in destroying institutions, but in building them and making them a lot more effective. [Laughter.]
Concerns have been raised about the events in KwaZulu-Natal and the Treasury has been in touch with the Premier and the MEC of Finance in KwaZulu-Natal. It is true; a R2,3 billion overexpenditure did take place. Treasury officials are aware of what is going on and are managing that on a day-to-day basis. Overspending and cost-cutting measures have been put in place and we are ensuring that the money that we spend is spent on core pro- poor functions and not on any wastage that they might want to actually engage in.
The overdraft has been reduced from R2,1 billion to R1,3 billion as of yesterday, so this is certainly work that we intend to do in collaboration with the province and under the leadership of the Premier. I am confident that what we might have seen as lack of control in that particular area will be sorted out.
I agree with all of you who have raised concerns about bills being paid on time by national departments, provinces and municipalities. Particularly for small businesses, this is crucial to their cash flow and we have also had discussions with Cabinet colleagues on this. We will support that 100% and the Treasury will add its weight to that as well.
As far as municipalities are concerned, let's be frank: Our municipalities are about ten years old in terms of their current institutional form. They have a long way to go in most instances for them to develop the right kind of capacity, capability and technical expertise. This is not going to be done overnight, but what you can be assured of is that, whether it is from the Treasury, the DBSA or my colleague in Co-operative Governance and Traditional Affairs, we are putting in immense efforts to make sure that municipalities get the capacity, either in the form of financial managers or engineers or planners.
We are trying to ensure that we monitor their finances more carefully. We are very aware of where the deficiencies are in the municipalities. I agree with you fully, being aware of it is one thing, putting a process in place that will cure some of these problems is quite another; but that is not going to happen overnight. We don't want to say that we refer back to the past, but certainly, legacies of the sort that we have inherited aren't going to be cured in 10, 15 or 20 years.
At the same time, I will join you in expressing impatience at the fact that we could do better, that we could get better political leadership in all of these structures, and, more importantly, better administrative leadership that is going to be committed, as all of us appear to be, to ensure good governance in provinces, in municipalities and indeed in national entities. There was a question raised about bus subsidies in the last moments of Mr Singh's speech and I am told that if he talks to the Treasury officials, there is an answer for him. But I am not going to give it to him in detail, since he didn't give me the question in detail, but he is welcome. I hope you don't have anything to do with the bus industry anymore!