Archive | Finance, economic

B-BBEE included with Covid relief regs

Covid relief & BEE don’t mix, say MPs

When the Department of Trade, Industry and Competition (DTIC) were presenting their 2020/21 performance plan to Parliament and after stating that all Covid19 distress funding would be allocated using B-BBEE guidelines, DTIC’s director general, Lionel October, found himself in a spot during questions.

He was asked directly by DA MP, Timothy Brauteseth, what DTIC would say to employees if children went hungry after application by a small time employer failed on such grounds.

Rules are rules

Although the question could be described as a little unfair, DG October replied tactfully that his department was staffed by civil servants “whose job it was to faithfully implement B-BBEE legislation”.

He said all DTIC incentive programmes were conditionally subject to a B-BBEE level and the private sector was usually most co-operative. DTIC was committed to all transformation processes, he said, but he was sure that the scenario in question would not happen.

In other words, the DG had dived for cover.  Later during further questioning on the subject he remarked that DTIC did not “anticipate exclusions of this kind coming up with any programmes associated with the current crisis”.

Well done

The DA complimented DG October during the same meeting on his personal responses over the past months generally to opposition queries and  on his dedication to trade issues during a difficult period.  DA’s Dave McPherson said the DG was one of the few who responded timeously and in detail to their concerns, whereas a good number DG’s failed, he said, to even acknowledge a parliamentary query.

In general, on future plans, DG October told parliamentarians that any framework for the coming years would be subject to a number of downwards adjustments,  especially on the issue of budgeted projects.

This, October said, was in the light of the forthcoming July cuts in budget appropriations as a response to the Covid-19 pandemic in terms of the R 500bn economic recovery package. (Parliament are to debate the DTIC adjustments in the next week or so)

Summation

DG October outlined the department’s total budget of R 11 bn for the 2020/21 financial year, of which 61% or R 6.8 bn is expected to be transferred to public corporations and private enterprises for incentives programmes. Of the total budget, 19% or R 2.1 bn will be transferred to the departmental entities in terms of agreed projects and targets.  DTI operational expenditure, which comprises mainly of compensation of employees, and goods and services, is 18% or R2 bn of the total budget.

DTIC is working on the basis of global economy shrinking by 3% for 2020 as a result of Covid-19.  This is working on IMF figures which figure that South Africa’s economy will probably  shrink by approx. 6%, he said.    To improve growth prospects domestic interventions included the R 500 bn COVID-19 package. There were also “Master Plans” for the automotive sector, poultry industry and retail – clothing, textiles, leather and footwear industries and others were being developed.

October concluded by describing ten key strategic programmes but again stating that all budgets and targets would have to be reviewed in July based on the progression of the pandemic. Accordingly, at this stage, it is quite clear that government planning and associated major capital spending is “on hold” for the moment

The good, bad and ugly

When asked what measures DTIC was taking to reduce the cost of doing business to create an enabling investment environment, DG October answered by quoting instances such as “how much easier it was to register a company and how better to apply for related benefits such as UIF.”   He promised DTIC would make it easier to register properties and process building permits.

DTIC, he said, was also in discussion with Treasury for additional funding for a tax allowance as “an economic responsive package to assist companies in distress as well as to stimulate investment while retaining existing jobs”.

when asked about Section 121 tax allowance schemes where a budget of R 75m had been provided for support of greenfield or brownfield local investment schemes, this had come to an end October concluded.  This was, he said, because almost all the budget had been used up and the fate of what was left would be the subject of “the diversion of funds and projects  which are “gagged by the advent of Covid 19”., he said

Fielding the questions

Dr Corné Mulder re-expressed the hope that B-BBEE would not be applied in the midst of a pandemic with any future schemes (his main theme for the whole meeting).

Dave McPherson asked about DTI pressure upon the National Credit Regulator (NCR) to invoke Section 11 of the in order to allow credit needed under Covid-19 situations.   October ducked this one and said that the NCR’s office and DTIC were currently studying the matter.

On questions on the need to build value-added exports, he quoted a platinum fuel cell production unit which had recently begun operations in Dube Trade Port SEZ.

Looking outwards

Mathew Cuthbert, (DA’s shadow minister of trade), asked Lionel October why South Africa had failed to sign WTO Global Value Chain agreements (GVCs) in the past.   (GVCs assist in reducing trade barriers, lower costs of transportation, can create additional jobs and assist in economic growth in developing countries – for example motor industry assembly plants). 

October looked somewhat perplexed.   In an inconclusive answer, he said he would check with the WTO Ambassador and reply to Cuthbert later in writing.

 

Cuthbert responded to remark that October had said earlier that support was continuing to be given to  the motor assembly industry and it was in “fair condition”.     He said that his feedback told him that this was not the case, particularly in the Eastern Cape where “some motor plants had gone about 98% inactive due to Covid 19 and that the situation was dire.”

He said that DTIC should note this fact and that the department must give the situation its urgent attention. He said Minister Ebrahim Patel must hear that “DTIC had got this completely wrong”.

The meeting ended abruptly due to timeout, but not before EFF’s Yoliswa Yako said that in her opinion Minister Ebrahim Patel was holding back on information and had not participated with any value to the meeting.

 

 

Posted in Agriculture, BEE, Finance, economic, Labour, Trade & Industry0 Comments

By-passing Parliament at one’s peril

….editorial,  30 May 2020

Regulations mania hits South Africa …..

Winston Churchill, perhaps the greatest political and parliamentary figure of the last century, said that if you make 10,000 regulations you destroy all respect for the law.  Take a look at South Africa where far too many conflicting and nonsensical regulations are espoused on a weekly basis, some of them with only a loose and highly doubtful connection to the law, the Disaster Management Act, under which they are gazetted.

What started with good intent in the rush to halt the spread of Covid 19, ‘flatten the curve’ and buy time to build medical supply lines and PPE reserves, has turned into a regularised pattern of government by dictate.  We are in danger of getting used to the idea of government finding a way around the people’s Parliament just because 400 people can’t gather together in the light of social distancing, in itself another regulation.

This shortcut to governance has to be stopped before it becomes regularised in any way.  In the process of searching for a way to speed up what at times can be a cumbersome system of democratic checks and balances, the country has invented an immensely powerful and what could well be an illegal intervention named, by somebody unknown, as the National Coronavirus Command Council.

Rules in bulk

After only a month of the president’s announcement of the declaration of the national state of disaster, more than 50 sets of Covid-19 related regulations, directives, notices and directions have been published nationwide in its name.    Lawyers and business chambers are struggling to keep up with it all.

The problem now being faced is two-fold.  Firstly, the high-sounding and most unfortunately militarised name of “Command Council” represents an entity not recognised in the Constitution, or anywhere in the statute book.   It is purely an invention of a clique within the governing party as an instrument to administer a law cobbled together in a few months called the Disaster Management Act.

Somehow, without the knowledge of Parliament, a handpicked number cabinet ministers, chosen one has to assume by persons residing at Luthuli House, has granted executive functions and powers to a pick of between 8 and 19 cabinet ministers (the number varies) who meet at undisclosed places and take national decisions.

The same unknown group has ignored some thirty to forty other cabinet ministers for reasons unstated to form this command unit and there we have it, a new grouping administering a whole country by regulation.  It is so important that we do not get used to this alien concept as a substitute for ordinary democracy, whether or not it has a body a scientific expertise advising it or not.

Power point

On the subject of powers, the Constitution is quite clear – all cabinet ministers are accountable “collectively and individually to Parliament”.   But to repeat, this caveat is made nonsense of when a cabinet cabal, including the Deputy President, start making government policy affecting citizens’ rights without even a parliamentary nod.

Granted, that originally there was a need for speed and given the fact that Covid 19 is a disaster of global proportions, it was understandable that hastily convened and rushed virtual parliamentary portfolio committee meetings tried vainly to “debate” the issues that might arise as a result of implementing the Disaster Management Bill.    In fact, they did remarkably well in the circumstances and South Africa became the first country to try and handle parliamentary debate electronically in the light of lockdown.

Law by laptop

Virtual meetings make any meaningful debate nearly impossible at the best of times. They are designed more for briefings than for discussion.  In the understandable rush, the buttons pressing the “ayes” became the norm in the short time allowed. The Disaster Management Act (DMA) is the result and is now history.

Now, the buttons are being pressed by Dr Nkosazana-Zuma, the Minister of Cooperative Governance and Traditional Affairs (COGTA), the department which the DMA empowered, most assuming that COGTA would be more of a spokesperson for the system to be adopted.

Governance by regs

However, “risk-adjusted strategy regulations” were published in a flash by COGTA in the light of the disaster (not emergency) powers with a statement that read, “The Cabinet minister responsible for cooperative governance and traditional affairs upon the recommendation of the cabinet member responsible for health and in consultation with cabinet, declare which of the following alert levels apply, and the extent to which they apply at a national, provincial, metropolitan or district level.” It all sounded like we had things in hand.

In the UK or Commonwealth countries, this process would have amounted to making Dr Nkosazana-Zuma prime minister and Dr Zweli Mkhize her deputy prime minister.  Nevertheless, Parliament in SA  soon fell outside of the inner circle when it came to oversight. Parliament deals with legislation not regulation.

What sticks to the wall

After a week or so,  it became more than noticeable that many of the regulations just did not link up and appeared randomly unconnected. The cooked chicken problem, no flip flops and absurd choices on who could and could not work.   Looking at it from a parliamentary aspect, to create temporary hospitals and to ban liquor and cigarette sales, and then cancel one factor but not the other, seemed not only a stretch under the same law but also a legal anachronism.

Worse, just the act of banning liquor sales and thus damaging the tourism and hospitality industry possibly forever is unlikely to pass any “justification analysis” constitutionally.    Most of the public comments called for in the form of  business submissions are now accumulating in government offices or parliamentary boxes and certainly unlikely ever be seen by Dr Nkosazana Zuma.   She is known for having no appetite for this sort of thing, as was discovered by the African Union.

LIFO

Now many of the regulations are causing serious “unintended consequences” in application, such as schooling, resulting in a law gone rogue.  A further well publicised example has been where regulations allow religious gatherings whereas most major religions did not call for them, nor will exercise them. Gatherings include funerals for the dead but not a healthy game of bowls for the elderly. Most have no idea of who consulted who on outcomes, representing more muddled thinking by a body which records no minutes and meets in secret.

South Africa has invented a most dangerous mechanism where everybody just relies on the Presidency to eventually “put things right” when the panic is over.  To do this, President Ramaphosa, in the light of a forthcoming ANC conference, will have to dissolve this mechanism somehow and terminate its powers. This politically powerful entity is led by a person who contested with him the position of president and who split the governing party in half doing this.

Its going to be a bumpy ride.

Posted in cabinet, Cabinet,Presidential, Finance, economic, Fuel,oil,renewables, Justice, constitutional, Security,police,defence, Special Recent Posts, Trade & Industry0 Comments

Tax Avoidance Bill: NPA and Hawks on illicit flows

Treasury, FIC, Hawks, NPA give Parly update…

report to clients end of April …

It now seems inevitable that the Minister of Finance will be tabling a General Anti Tax-avoidance (GATA) Bill by July 2019 as part of National Treasury’s plan to protect the tax base primarily aimed, as one MP put it, at “knocking profit shifting on the head”.   Changes to the Companies Act are also to be introduced.

A high-powered meeting, chaired jointly by Yunus Carrim of the Standing Committee on Finance and Joan Fubbs of the Portfolio Committee on Trade and Industry, listened  a few days before Parliament closed in April, to report-backs which came from National Treasury, the Hawks, National Prosecuting Authority (NPA) and others combiningg to stem the flow of illicit funds.

Read more…Tax avoidance Bill

Posted in Cabinet,Presidential, Finance, economic, Justice, constitutional, Police, Security, Trade & Industry0 Comments

Parliament censures CEF and PetroSA

….PetroSA, CEF and SFF mess gets worse…

Article circulated  5 May 2019…..

Despite the claim by new acting Group CEO, Sakhiwo Makhanya, that the Central Energy Fund (CEF) annual accounts for 2017/8 have “provided sufficient headroom for growth due to cost containment”, the CEF executive team was unable to convince  the parliamentary energy  committee chair, Fikile Majola, (now Deputy Minister of Trade and Industry) that CEF had a viable future in any energy scenario.

Read morePetroSA

Posted in Finance, economic, Fuel,oil,renewables, Trade & Industry0 Comments

Latest Cybercrime Bill free of state apparatchik

New Cybercrime Bill   

……Every business must have a battle plan

In the light of the fact that the Cybercrimes Bill, now passed by Parliament, places obligations on financial institutions and service providers to report incidents to SAPS, it would seem imperative that preparedness by business for a cybercrime incident must include a well-planned response plan.

Read more...New Cybercrime Bill

Posted in Communications, Finance, economic, Home Page Slider, Justice, constitutional, Police, Security, Security,police,defence, Trade & Industry0 Comments

Parliament looses control on government spending

SA’s big black hole in its fiscal galaxy…..

It  looks like the governing party knows even more about the daylight robbery going on in certain provincial and local government structures than was originally disclosed.    A big hole in local givernment spending is still swallowing up millions in taxpayer revenue.    Not good news when an election is happening.

As a result of the disclosures, this is a delicate moment for South Africa waiting to learn the make-up of the parliamentary political balance and who is nominated to Cabinet, and just as important as it is to see the structure of provincial government where most of taxpayer’s money is spent.

With the economy in peril, what happens now in terms of responses with regard to the outcomes on state capture and corruption, and how it is handled, is a matter of dancing on the edge of a financial cliff.  Financial commentators from the around the world are watching.

Gearing up

With Parliament re-opening, the third pillar of the South African democratic structure will again assume its critical role in debating and shaping government policy.    Equally important, it will resume its position as a listening post for business and industry.   We have sharpened our pencil.

Its seems such a short time since 1994 when Parliament started its first five-year government term. Looking back over the five terms, what a roller coast ride it has been.

Watching, waiting

Now, for the sixth time, 400 members on the national political party lists are allocated to the National Assembly (NA) and a further 90, representing provincial interests, go the National Council of Provinces (NCOP) in the form of 10 delegates for each of the nine provinces.

The NCOP has the task of monitoring the NA in fact, therefore representing, somewhat tenuously, the voice of the people in those provinces.

Good start

The home of the NCOP is a building opened in 1884 as the first parliament of the Cape of Good Hope which interestingly enough was multi-racial, condescendingly so some say.  Its good-looking edifice dominates the central portion of the parliamentary precinct, next to the more modern National Assembly building.

With political balance of the 490 MPs on the precinct about to be established and the voice of the people thus represented, there is a shadowy side to Parliament as well which many politicians at national, provincial and local government have learned to use or abuse.

 In reality, the NCOP is the combined voice of the nine legislatures of the provinces acting as a watch-dog and checking that the National Assembly is not disregarding their interests.

The watchers

Only 54 of its 90 seats allocated have voting powers, the balance of 4 members per province having a special status to be heard but who cannot vote.  One of those members with special status is the Premier of each province, all Premiers rarely attending being too busy with their legislatures.

The other three seats allocated as special status are for provincial members assigned for particular reasons, maybe on a specific debate, and who travel from the provinces.  Ordinary citizens cannot be heard unless invited to do so but may watch, unless the meeting is closed for good reason.

Basic work

When legislation is tabled, it goes first to the NA for debate and approval.  If it has strong provincial interests it is “tagged” to go to the NCOP not just for simple “concurring”. In this case, the matter is sent with a special call to all nine provinces for comment Houses_of_Parliament_(Cape_Town)and majority vote or rejection.  This mandate in reply from provincial power bases is then expressed upwards by the NCOP.

In the National Assembly, the 400 members are spread out into “portfolio” committees for debate on national government reporting on policy matters and in accounting terms.  Their main tasks are to approve the budget and allocate same to the nine provinces, also to debate tabled legislation and monitor how all national departments are performing against targets.

Numbers game

In the NCOP there is a problem. There are only 54 members allocated to it and who can vote.   With and far too many government departments to watch, as a result their monitoring brief on national departments is broken into selected groups. (Hence the term used by Parliament of “select” committees.)

In addition to the provincial presence, local government is represented in the NCOP by SALGA who can also attend meetings in the NCOP with a voice but have no voting powers. This really is the only contact Parliament has with local government.

Three-tiered cake

However, the snag with the system now becoming more and more evident is simply that the traffic on money matters is one-way only.  It goes from the top, downwards.    That is not because the system is wrong, since it was designed that way so that the NCOP is fully briefed on budgets and allocations to the provinces.

However, such a system can be easily “worked” to provide an outcome that hides criminal intent or sloppy accounting since no information is coming upwards other than when MPs decide to make personal visits as a committee team on a specific issue and travel themselves “downwards”.

Mushroom club   

Consequently, nobody in the NA has really any idea of what is happening in the nine provincial legislatures or how municipalities and local governments are spending the budget in a reportable audit form other than what is reported by to it by national government entities and departments.

For example, in the Free State, heaven knows what has been going on there for a number of years with past Premier Ace Magashule and his cohorts, who seemingly have only been monitored by AmaBhugane but certainly not properly by the Premier and the Free State legislature.

Nobody seems to have listened the DA in the Free State complain and their accounting experiences with Free State audits investigated, such matters having been brought up in question time in the NA again and again but written off as opposition trouble making. The NCOP, of course, does not come into the equation.

Another world

The net result is that none of the frightful qualified audits on Free State budget spending on infrastructure representing an accounting malaise of epic proportions have come fully before Parliament. At the moment the big black hole in the economy at provincial level appears to have much to do with the distortion in accounting terms between how the money was used for spending and what actually was the value of the work done, if at all.

When the power shortly returns to Parliament the President will only have a very short time to deal with his compatriots who, as Archbishop Tutu put it, have lost their moral compass and taught so many how to steal from the poor.

Perhaps the new challenge of the Sixth Parliament is to have better contact with provinces, municipalities and local government, since here lies the gaping hole in the economy coupled to lack of service delivery.

 

ends/ editorial /parlyreport/1 May 2019/sent to subscribers

 

 

 

 

 

Posted in cabinet, Finance, economic, Special Recent Posts0 Comments

Sixth Parliament will debate Expropriation Bill…

Expropriation Bill top subject for new parliament….

sent to clients early Jan 2019….

In December 2018, a new draft of the Expropriation Bill was published by government gazette with a 60-day period for comment.   This means the final document will no doubt become the kingpin of debate in the first session of the new Parliament. It will also form the basis of much comment by President Cyril Ramaphosa in his second State of the Nation Address.

Not many were expecting a final legislation proposal for comment so soon after the ConCourt constitutional decision on the subject.  Land restitution, as distinct from land reform, is the kind of hot-potato subject that many say should never be debated just before an election.  With the whole issued being overlaid with a tinge of fear, it is also an ideal subject for fake news, they say. 

Read more….Expropriation Jan 2019

Posted in Agriculture, cabinet, Finance, economic, human settlements, Justice, constitutional, Trade & Industry0 Comments

World Bank gets the cold shoulder

From the Aug/September 2018 ParlyReport…….

Go to:   World Bank gets the cold shoulder

Posted in Finance, economic, Trade & Industry0 Comments

This website is Archival

If you want your publications as they come from Parliament please contact ParlyReportSA directly. All information on this site is posted two weeks after client alert reports sent out.

Upcoming Articles

Draft List: The minimum number of words is invalid - it must be a number

Earlier Editorials

Earlier Stories