Tag Archive | budget

Budget 2016: more on amnesty

 sent to clients 8 April….

Deadline extended for amnesty…..

In the 2016 Budget presentation, which included an amnesty offer on undeclared overseas funds, it was claimedpravingordhan by the main opposition party that that this year’s financial plan may not have been bold enough to avert a downgrade, top of the mind remaining possible future tax hikes, particularly VAT – on which the jury is still out – and the ballooning public service wage bill.

Among the many other points raised in this year’s budget was the remark by Minister of Finance, Pravin Gordhan, that “The principles of honesty and fairness needed to be embraced by all South Africans in order to overcome the challenges.”

The amnesty plan

To follow this up with action, Treasury have made a second offer for all those with undeclared assets abroad to get on the right side of the law without penalties and now have extended even that deadline because more time is often needed for applicants to prepare submissions.

“In acting together”, the Minister said, “we can address declining confidence, the retreat of capital and we can combat emerging patterns of predatory behaviour and corruption.” On this issue, he offered amnesty on undeclared offshore income and assets and another chance of the regularisation of offshore affairs.

Very little reaction occurred in parliamentary benches, possibly because the implications meant little personally but in having had to sweep the floor for further tax revenue inputs, any idea that works is a good one and a “voluntary disclosure programme” (to give it it’s technical name) could raise between R2bn to R4bn, once applied. Clearly also the Minister is looking for more reaction to increase funds resulting in the deadline being moved along the calendar.

Budget papers

budget 2016This offer was included with the usual raft of Bills the Minister tabled before he commenced his Budget speech and a few days later debated by the Standing Committee on Finance. They are “money” Bills and cannot be altered by Parliament, only commented upon.

Gordhan warned in his speech that “in terms of the new global disciplines on exchange of information between countries time was running out for tax dodgers who still have undeclared assets outside South Africa.”

Details

There are a number of conditions of course.

SARS will only include 50% of the total amount used to fund the declared acquisition assets before March 2015 in the taxable income column, as it were, and this will subject to normal tax. All refers to items from March 2010 onwards as taxable income at normal rates. Investment returns prior to March 1 will be exempt. Interest arising from tax debts as a result of the voluntary disclosure will only commence from March 2010.

Bearing in mind that relief is also granted from the appropriate penalties that would have applied and any criminal action not taken, this say experts, is a pretty fair offer. Levies will be applied of between 5% and 10% according to whether the funds from proceeds are repatriated or not, which levy must be paid from outside external funds. On levies generally, there are a number of special conditions according to circumstances.

Not just business

Minister Gordhan made it quite clear that the offer was coming from both the Treasury and the Reserve Bank. He said that deceased estates and beneficiaries of discretionary trusts can participate in the programme if they deem and if they admit that the funds were destined for them. Resident South Africans are included in the amnesty.

The grace period was given originally in the Budget for the period October 1 to March 31 of the current government financial year but in hearings before Parliament later, the Standing Committee on Finance listened to business submissions on the Budget and “recommended” to Treasury that this is impractical given the amount of time it takes to come up with all the necessary information and submit, bearing in mind, as we say, Parliament cannot touch a money Bill. Treasury obviously heard this

Public submissions worked

It was chairperson of the Finance Standing Committee, Yunus Carrim, who pointed this out to Treasury after listening to public submissions, so at least he will find that more applicants will probably be encouraged to submit.
Previous articles on category subject
Budget vote speeches: Out of touch with each other – ParlyReportSA
Minister Nene maps survival route – ParlyReportSA
Parliament votes on 2014 budget – ParlyReportSA

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Second fiasco before Zuma’s SONA address…

Fools go where angels fear to tread…SONA..

The theatrics before the SONA address in front of the world by Julius Malema of EFF, the partyHouses_of_Parliament_(Cape_Town) which objects to the Expropriation Bill on the basis that no compensation should be paid at all for land expropriated, has once again demeaned South Africa.

As if this poor nation had not suffered enough already from the giddy behaviour of the government towards foreigners over visas, land ownership, AGOA, intellectual copyrights and international agreements, the EFF has again sent to them the message that the country might well be ungovernable.

Core issues

ZumaWhy President Zuma should have fired Finance Minister Nhlanhla Nene and replaced him with Minister David van Rooyen is not of the slightest interest to South Africa going forward. The fact is he did and the result is that Minister Pravin Gordhan has his finger in the dyke. To know what was in the mind of President Zuma when he pronounced this change is to go down a very dark road and serves no parliamentary purpose at all, other than curiosity.

It appeared that the EFF really got it wrong this time when trying to disrupt Parliamentary procedure before SONA and the Speaker of House didn’t do much better either. In any case, the EFF was mysteriously upstaged by Patrickpatrick lekota Lekota and COPE walking out and an hour of the nation’s time lost, together with a good deal of national credibility.

In fact, it was no better than a performance under the Boswell Wilkie big top, our nation’s famous circus which sadly had its last performance in December 2015, but at least its traditions have been preserved.

Stop the side shows

WYSIWYG or “what you see is what you get” is how things work in parliamentary portfolio committees and before us we see Minister Pravin Gordhan at the pump head because of ANC malfunctions and because of an attempt to reign in the President before his cabinet ministers do any more harm to the economy.

So, in parliamentary terms, it is important that all get back to normal issues of whether or not business and industry agrees with the legislation tabled before Parliament; to continue to “get voices heard” and to determine whether government policy, in terms of mining, manufacturing, finance and banking, is giving the country the breaks it needs to score at the try line.

That is what Parliament is really about but dealing with the EFF is much like dealing with a family hooligan who hasEFF SONA just been given a new motor bicycle.

Fitch, Moodys, Standard & Poor

Such matters as firepools, the upgrading of chicken runs and the influence of various moneyed persons are of great interest to Malema, the EFF and gossip columns. However, the main issues involve the loss of billions of rands being misspent; obdurate government inaction coupled with incompetence; and whether South Africa can restore its economic image, reduce its debt and turn the fiscus around.

clem-sunterThe only road forward (and the only issue to march for in the streets) is for people to have jobs; jobs with skills that contribute towards economic output; jobs that increase tax input by employers making profits and jobs therefore that reduce the national deficit. That means investing in people and creating those skills. Its seems so long ago that Clem Sunther said this when describing the “High Road”.

Roll up the shirt sleeves

There are other forums to address the issues brought up by the EFF, especially matters regarding the re-incarnation of the office of Thusi Madonsela. To drag the Constitutional Court into the political arena is indeed a sad reflection of what political parties put first. As business heads have said, let’s stop this nonsense and put into action plans to save the economy.

At least President Zuma has acknowledged the superb effort by business leaders to avert the course being plotted by the present Cabinet. Creating more jobs in the public service is not the answer to job creation. Sadly, for those involved, this exercise of non-productive job creation in the public service must shrink urgently.

Now let’s see what the Budget produces and whether what President Zuma has said, after a ruler has been brought down across his knuckles, can be translated into practice.  (go to SONA article) History teaches us that leaders can emerge in times of trouble but a nation wearied of unfulfilled departmental targets and broken promises now awaits the outcome of a belt tightening budget.

previous articles in this category

http://parlyreportsa.co.za/cabinetpresidential/zuma-vs-parliament/

http://parlyreportsa.co.za/earlier-stories/state-of-the-nation/

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Minister Nene maps survival route

Not so merry Christmas….

Editorial……

candlesWithout wishing to put a dampener on festive arrangements, the last few weeks of the closing parliamentary session, which included the medium term budget from minister Nene, have seen a difficult period, not in the least caused by fiascos in the National Assembly with the EFF. Baiting President Zuma, whatever the reason, has nothing to do with running a country.

Such hooligan behaviour completely demeans the status of Parliament but worse, it also denigrates all the real work that is going on the engine room of Parliament, the working committees.  Some observers are quietly happy that the ANC Alliance is being called to account on certain matters but the overall effect has been to take South Africa perceptually into dangerous waters.

Nkandla unpleasant diversion

The Nkandla issue has clearly damaged the political standing of Parliament as well as giving the media a field day, or a field month as the case turned out to be.  But in the parliamentary portfolio, ad hoc, finance standing and NCOP select committees, the work has gone on and it has been a busy and difficult period as a result of the necessity to approve finance minister Nene’s medium term budget.

Difficult because some fifty utilities, government departments and section nine companies had to declare their objectives, say how things were going and reflect upon the auditor general’s findings on each of them.   Difficult because cabinet statements are really giving no true direction on questions being asked every day in Parliament.   Difficult because it is still the first year of a new Parliament and everything is running late with new MPs.

Whilst the auditor general (AG) may have declared that government departments only received 15% unqualified reports, the balance of 85% are qualified to some degree by the AG.  A learning process. This means the working committees have seen it, everyone knows about it and the system works. This is the difference between weekend newspaper reporting and monitoring. It is not just a question of putting a positive spin on things but recognising that there is, indeed, a force working for morality and financial correctness.

Focus is on medium term budget

Nevertheless, minister Nene’s budget speech was still the key issue of the last month, not Nkandla as the perception might be.  Nene’s remarks that “business is a key area in fostering the ideal that the NDP becomes a reality” had the all too familiar ring of what Alec Erwin had to say twenty years ago when the ANC promised private and public partnerships on energy matters. Nothing happened of course, the ANC embarking upon ten years of infrastructure inactivity.

In fact major private sector participation in the country’s development was totally halted at that point and has since never really got going.

When is when?

Now the question is being asked once again as to whether the government will actually ever embark upon real hard core private/public investments, other than dishing out a few solar and wind power projects. This is the question being asked by opposition MPs in Parliament at working committee level, ignoring for the moment the embarrassing fracas upstairs in the National Assembly.

It is difficult to imagine in parliamentary terms that minister Rob Davies, minister Tina Joemat-Pettersson, minister Jeff Radebe, minister Lindiwe Sisulu and minister Lynne Brown will ever truly understand the tenets, motivations and passion that drive businesses, even perhaps the President himself.  South Africa suffers from bad politicians, not necessarily bad government.

Circus with no ringmaster

What the presidential national planning commission is actually saying to the cabinet is an issue that cannot be guessed at by anybody at this stage, such private messages certainly not being conveyed in Parliamentary papers. In fact nobody seems to be talking, the DA having as little knowledge as half the SA cabinet, it appears.

Consequently minister Nene’s hopes appear somewhat lame at this stage. To be positive however, it may be that as next year’s parliamentary oversight programme on service delivery targets gains momentum, as it has already, accompanied with all the political pain that will occur if voters remain dissatisfied, political reality may force the governing party to at last start walking the talk that minister Nene espouses.

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Parliament brings government to account

Editorial, October end…

Six month review of targets…

FSY001803or three weeks now, the parliamentary working committees have been exercising oversight on the forty seven government departments responsible for service delivery throughout the three tiers of government service.  In terms of the Constitution, oversight is necessary to qualify and quantify the appropriations made to each department for the next six months of the budget year.

Under each department have also come the reports of the many state owned entities (SOEs) described under section twenty nine of the Constitution and scheduled into categories under the Public Finance Management Act. There are the many national government business enterprises similar to Eskom and Telkom; then the funding entities controlled by boards such as the Road Accident Fund; and finally the less self sufficient and less commercial entities such as CSIR and SABS.

Owned by the public

Generally speaking, SOEs are funded from the public purse, meaning that the public has a legitimate interest in the workings of the SOEs.   In the case of the large national enterprises, it could be said that the public is an indirect shareholder through the shareholding minister. The new and so far quite successful system of evaluation by Parliament involves reference to performance rating by the newly established presidential evaluation department.  

Also contributing are the auditor general reports produced on time, and thankfully every time, by the backbone of South Africa’s essential and probably most un-applauded department, the office of the auditor general. We have watched these mainly young men and women in action. Thank heavens for their contribution.

Monolithic structures

Following minister of finance Nhlanhla Nene’s address on the medium term budget statement, there will follow a pause and even perhaps a vacuum of expectation.  It is an enormous machine that he addressed in the public sector; a government structure which has 34 ministers, 33 deputy minister, 159 directors general, 642 deputy directors general, 2,501 chief directors and 7,782 directors.

In a sour note, the Freedom Front pointed out for what it is worth that 40 years ago the country had 18 ministers, six deputy ministers and 18 directors general and in the most recent quarter of 2014 it has been reported, they said, that more than 44 000 public servants have been appointed bringing the number of public servants to just over 3m, or 22.6% of the total labour force of South Africa.

Catch 22

The dilemma now is that all the regulatory processes put in place to monitor spending of tax payer’s money could so easily establish more red tape and further hinder the delivery process.    But to be positive, the oversight system seems to be working and has established a far better ethos in spending procedures and also seems to have established an improved sense of morality.

Politicians such as chairperson of the standing finance committee, Joan Fubbs, may seem fuddy-duddy at times but such are erudite and responsible people and bad performance on delivery receives little change when in debate. Performance of SOEs is now is now clearly the key issue in South Africa and whether what is happening in Parliament can be translated down to provincial, municipal and local level, where local governance controls are often shaky, is now the constitutional issue facing minister Pravin Gordhan.

Bigger by the day

The overall trend is also clear – employment in the private sector has declined while public sector employment has grown. Public service and administration minister, Lindiwe Sisulu, in charge of what has been rapidly expanding public service, faces a major problem ahead in dealing with the intimidating annual wage negotiation period, which is not a good time to rein things in.

In the coming weeks, until the year end possibly, the uneasy feelings expressed in many portfolio committees that nothing is happening will probably persist until some sort of positive results emerge from the massive infrastructure spend. Like a tanker making a turn at sea, any large public service in any country is slow to respond and it will no doubt take time before this change in economic direction, now being better monitored in the parliamentary sphere, can be distinguished as a turn for the better.

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Parliament votes on 2014 budget

Editorial _

Men and women at work…

Parliament  is currently a place of learning, particularly bearing in mind the 2014 budget is the first oversight task.   With so many new parliamentarians and newly re-structured committees with new chairpersons, insofar as learning is concerned,  it is more than just simply a new school term but a new school term in a new school.

As in the past, it will be a little time before things settle down and MPs gather enough understanding to perform the role with which they are entrusted; the role of oversight.

Most are savvy enough to understand the separation of powers even though party whips can become quite intimidating at times.  In any case, the system soon sorts out those with nothing useful to say and those with critical and questioning minds.

Approving the budget

The learning curve is steep. Many have been thrust straight into a committee programme where the task of each committee is to approve the national budget allocated to each of the many government departments according to their performance for the last five years. All of this departmental knowledge MPs have to read up on, study their plans for the next five years and listen to the same departments giving briefings presented at working committee level.  This is  currently where Parliament is.

To not contribute and not to perform is a quick trip to political oblivion.

MPs must also understand the views expressed of the auditors general on the previous year’s financial performances of the particular department and of state utilities; how the plans interlock, or don’t interlock properly, into a cluster of associated departments; a fair idea of what the presidential ministry of performance, monitoring and evaluation thinks of them and the party line on the issues of the day dealt with by the particular section of state machinery.

At this stage in the new Parliament the whole question of current legislation in process has probably not arisen but shortly, for many MPs, it will just be a case of listening and absorbing viewpoints, particularly of those who drafted the legislation and why they did.

Implementation of NDP

Two important things are therefore happening at the moment. Each government is justifying not only its past performance but committing itself to a plan with targets for the next five years together with strategies for a longer term and medium and long terms budgets. Secondly, they will learn what legislation is in draft and in the pipeline and the policy reasons for such legislation.

Consequently, question time in debate is critical and whilst questions from MPs can range from probing enquiries to the frankly banal, the change is refreshing. Witness minister Hanekom’s turnaround on immigration visas; the cabinet turn around on independent power producers; and on the affirmation of nuclear power in the energy mix and the sending back of the improbable Gender Equality Bill – all as examples of changes in thinking.

More interesting are the questions being asked by new MPs. Such as the new ANC energy committee member when she asked candidly of the DG for clean energy whether he thought all the “greening” regulations and air quality capital costs might be scaring off investors. Or the EFF MP who demanded a list of all Eskom blackouts and the reasons for the interruption in service.

Where it happens

To a certain extent the questions might appear naïve but a more candid and new perspective does no harm.  The parliamentary system still remains the crucible of political policy and legislative debate, despite the undermining effect that can take place with a heavily weighted political opinion coming from a strong political majority.    Nevertheless, South Africa is protected by one of the strongest constitutions in the world and the parliamentary process fortunately basks in its strong light.

Once the budget vote is debated, the Appropriations Bill – a section 77 money Bill protected from amendment by any party but Treasury by the same Constitution – Parliament’s attention will move towards the legislative landscape, hopefully tackling with as much vigour some of more the contentious issues facing the country.

Ends

 

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