Parliament steps up its financial oversight role

Five Rand

Nene briefs parliamentary oversight chair Carrim…

Commencing its work for the fifth Parliament, the standing committee on finance passed a resolution, before the recent recess, following a strategic plan briefings from SARS and Statistics SA, to step up its oversight on treasury and all other government institutions concerned with finance.

Whilst Parliament’s oversight role on the executive is a constitutional requirement, new chair Yunus Carrim, a diligent parliamentarian who has a record of running a particularly “tight shop”, appears to be fully aware of the mood of the public on state funding and that consequently the current oversight situation is not “business-as-usual” .

Reporting to Carrim and the joint standing committee, finance minister, Nhlanhla Nene, said South Africa’s economy was growing at a moderate pace but was still performing below expectations.

Picture changing

He said South Africa had to grow faster in a way that advanced the interests of the poor and which eliminated poverty. He also asked MPs to be aware that treasury’s strategic plan had been developed at a time of a better global outlook.

He said that whilst the global economic environment is showing signs of improvement, it also remains below optimal levels.   “South Africa is not an island, cut-off from the rest of the global economy”, he said.  “So our economy is performing way below the level of growth that is required to deal with the country’s triple challenges of unemployment, poverty and inequality”.

SARS, he said, was poised to collect R1 trillion in revenue but the volume of national government debt would increase from between R1.4 trillion to R2 trillion in 2016/17, the equivalent of 43% of GDP.  Projected growth figures, minister Nene told parliamentarians, would be provided when the Medium Term Budget Policy Statement was tabled later this year.

At this stage he saw no cutting back on budget votes as provisions were in place to cut back should the situation demand it.

Big backing for state lending

In the current financial year, minister Nene said, the government will recapitalise the Land Bank with R500m and DBSA with R2.5bn.    He said he would also “continue to engage with the various unions and stakeholders to in an attempt to enable a government retirement system to offer good value and protection for retirement savings.”

Finally, he said, he was committed filling all vacant positions in treasury “in order to enhance the functioning of the institution” which he saw as a pillar of the economy.   However, “stringent measures” were already in place to control over-spending or wasted expenditure by the public sector.

Treasury DG, Lungisa Fuzile, in presenting detail of treasury’s plan for the next five years, said there would be more reform of the financial sector so that it was more tightly regulated.

Down the line purchasing

In the coming year, national treasury department planned to implement an upgrade of the management of state financial systems which would allow government to control its supply chain business more efficiently. A new office of Chief Procurement Officer had been given an elevated function in line with reforms in order to centralise procurement and to save costs, in the meanwhile reducing financial leakages.

It was part of the strategic plan to immediately create a technical support programme for infrastructure, he said, and a technical advisory centre was to be completed, which had, as its mandate, oversight of major capital projects on a top priority basis.

DG Fuzile also told the MPs that further priorities were the completion of financial agreements with BRICS countries.  An example of this was the recently much publicised  establishment of a bank and a pool of virtual reserves, not in competition with the IMF, but giving alternative propositions.

Pensions to be re-engineered

Also important, he said, was that public service pensions, both civil and military, administered by the government pension fund would have their business processes “re-engineered and modernised.”

Members of the standing committee expressed the view that the deficit on the current account was of concern to them, as was the balance of payments position. Chair Yunus Carrim requested that parliamentarians be updated immediately on the work of the Davis Tax Review Committee.

Other articles in this category or as background
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