Tag Archive | Minister Tito Mboweni

Warning shot fired over PPE stocks

….article July 20…..

Parliament slaps Treasury on PPE procurement……

Last week a corruption weary public learnt that Parliament’s Finance Standing Committee were as outraged as them on the subject of state PPE purchasing arrangements. The complaints started as case after case of cronyism was aired by the media picked up when the additional Supplementary Budget was being processed through Parliament at committee stage.

This furore was heightened by the appearance of  somewhat arrogant Zulu clansman found by the media who had allegedly  included himself in the R500m COVID 19 emergency relief allocation. It was subsequently reported that after finding out that his apparent initiative was unacceptable, he may have then sold his successful tender bid to another party for R80m.

King rat

The fact that the royal person told everybody that he was attempting to benefit his tribal responsibilities did not wash with anybody, according to press reports and interviews.   The case for his innocence was not helped after a TV interview with the smiling gentleman who seemed not to understand that his problem was that his daughter was spokesperson for the President.  When it came to tendering, he said he thought all persons were equal.

Thank goodness this was all exposed in time  but the whole affair struck the same chord with MPs that has being plaguing South Africa for years.  This same problem was illustrated again by ANC secretary general Ace Magashule who reasoned, when discovered dipping into the same PPE pot with the state, that his sons who had been named as part of a Free State PPE tender process, “had the right to participate in the economy as do any other persons and small businesses”.

As a result of these cases, MPs across party lines in Parliament have called upon Finance Minister, Tito Mboweni, and his Treasury officials to come back to Parliament and give the background on all COVID 19 disbursements and some idea of who is responsible for what and Treasury understands as the parameters for state tendering.  This will final stand off presumably will take place sometime after the short recess in September.

Accounting issue

Not that the President did anything wrong, nor National Treasury either, but it just seems that  month after month Treasury signs off money but has no idea of, or even responsibility for, what happens once the allocations are made.  MPs have complained that Treasury merely seems to call upon the Auditor General, one year later, in order to reconcile with an annual report, opposition parties complained.

In the first case, instead of landing up as part of the small business developmental process,  the award nearly went to a chief exercising grace upon his fiefdom which it appears to consist of some forty or fifty persons, it was reported.   On such subjects, Parliament got specifically involved again when the Finance Minister came to the point where he had to answer questions during the closing debate on the Special Adjustment Appropriation Budget Bill, which had allowed for all the COVID 19 funding in the first place.

Serious implications  

Whilst all of this has been rather  a slap in the face of Minister of Health Mkhize personally, it must also have been a shock for the Department  of Health as well, bearing in mind that the NHI scheme is supposed to have a centralised “transversal” procurement system in place in a few years’ time where such things cannot be allowed to happen.

Furthermore, the Ministry of Finance has been for years planning a Procurement Bill allowing for centralised purchasing  when the budget for a centralised computer system can be afforded, so Minister Mboweni may have got some inkling of what the problems will be when it comes to political interference being wielded amongst those apparently without a moral understanding of what is required in the case of government process.

Fired in anger

That the Covid-19 emergency provision, or officially the Adjustment Appropriation Budget, would be passed by the National Assembly was never in doubt.    It had to be passed.   But for the first reading of the Bill, the vote was 226 in favour with 129 against recorded as a token protest and consequently the Bill was carried through on the back of the ANC numbers in the House.

The Bill from Treasury, being a Money Bill, cannot be stopped by Parliament but a warning shot had therefore been fired at treasury officials and the Minister.

 

Posted in Finance, economic, Health, Public utilities, Trade & Industry0 Comments

Face out in Parliament 

editorial….July 13 2020…             

High Noon…

Parliament recently saw a drama being played out that was reminiscent of the old and famous movie where, after a long number of small confrontations, the two parties shoot it out in Main Street.  With the critical matter of the approval of South Africa’s economic direction at stake, shooting straight was not really the issue but who pulled the trigger the fastest.

The movie set for the shootout occurred before the Finance Standing Committee under chair Yunus Carrim on 7 July.  The stage was the public sector hearings debate on Minister Tito Mboweni’s Supplementary Budget, and this was before the house for adoption in conjunction with consideration of the report from the Financial and Fiscal Commission (FFC), the independent entity that represents government opinion.

Amongst the twelve or so public submissions, including those from South African Institute of Chartered Accountants; Organisation Undoing Tax Abuse (OUTA); COSATU; and the C19 People’s Coalition; was a new group, the Economists Initiative (EI), who had been on e-NCA the night before with spokesperson Neil Coleman of the Institute for Economic Justice and COSATU fame speaking on their behalf.

Neil Coleman claimed his group represented 122 economists and policy experts.   How fast this grouping had been cobbled together, we do not know. Coleman (brother of well-known Colin Coleman, businessman and also COSATU veteran) said in his interview at the time his group were going to reject the Budget in its entirety and ask Parliament to do the same.   Should Parliament fail to do this, he said, an approach to the Constitutional Court would be considered.   Most pricked up their ears at this and plugged in to the virtual debate following.

Broken promises

The shootout between EI and Treasury did eventually take place and most dramatically at that, the chosen venue being a Finance Standing Committee meeting on 7 July.    EI’s primary complaint was a repeat of what had been said before, in that in their view the Tito Mboweni austerity Budget had “completely betrayed the President’s R500bn Covid 19 rescue package”.  They told MPs that they strenuously opposed the extensive austerity package to be introduced over the next two to three years since it involved cuts of more than R400bn.

Joined by the Budget Justice Coalition (BJC – a coalition of civil society formations), both were the primary critics of the Budget and most vociferous on the subject, EI maintaining that National Treasury were “misleading the country by suggesting that the only route government had in financing the expenditure and the shortfalls arising from the economic crisis, was to borrow on international markets or from financial institutions internationally.”  This was totally untrue, they maintained.

BJC suggested that the Budget was “so regressive that it was probably unconstitutional”, EI stating that the Budget was “tantamount to committing economic suicide”.  As intimated on TV, they took the extraordinary step of calling for Parliament to reject the Budget and send it back for revision based on fresh ideas.

Re-action

National Treasury’s response to the attacks was overwhelming in its anger, particularly towards the EI. Treasury DG, Dondo Mogajane, begged MPs not to be “deceived and misled” by such submissions, or for Parliament to be used as a “platform for false, misleading statements”.   Importantly, DG Mogajane attacked the BJC and Economists Initiative inputs as being “politically motivated”.

There it was, a clear statement by Treasury that political interference was at the heart of the EI submission.

In the open

Immediately the chair of the Committee, Yunus Carrim, intervened and reprimanded DG Mogajane severely for first dictating to his committee what they should or should not believe;  secondly, for insulting members of a public sector submission invited to Parliament;  then for advising Parliament how it should respond to a submission, and in particular, for calling EI’s input “false, alarmist and misleading”.   Yunus Carrim as chair said this was all outrageous and insulting.

Carrim noted, “The DG is normally a mild-mannered man” and said that he could not understand the DG’s “change of character”. Carrim then insinuated quite clearly that perhaps Minister Mboweni had put the DG up to this. This was a most unpleasant exchange. The Treasury team denied strenuously that they had been told to say anything.

Carrim must have been perfectly aware of what was really going on and that MPs were being asked to go above the Finance Committee by EI and appeal to President Ramaphosa, but he still chose to lambaste Treasury representatives.

So, let’s look at the reason why our respected, experienced and usually quiet DG Mogajane uncharacteristically exploded.

Long war

The gun battle between National Treasury and the extreme left-aligned followers in the governing party alliance, such as COSATU, SACP and a number of ANC followers, has been going on for almost a year.  Maybe it was started some time ago with comments from Ace Magashule on nationalising the Reserve Bank, then followed by the quantified easing or QE issue and the possibility of using PIC benefit funds. Perhaps even the issue spoken of in hushed tones, the printing of money.

To this grouping of opinion, strict debt control and Budget cutting on social projects hurts the “poorest of the poor” in a disproportionate manner as compared to the wealthy and middle-class sector, not necessarily where the power base of the governing party lies.  This theme of thinking has been expressed many times by a multitude of observers.

No, no issues

On the other hand, Minister Mboweni and National Treasury, hating debt in any form especially crippling long-term debt, intend to curtail any proposal to accumulate vast quantities of debt.  This might be an over-simplification of policy calls but the suggestion in Parliament clearly came from the EI, as was forewarned, that the Budget should be re-written, or at least “revised”, representing a call to battle between the two ideologies.

For National Treasury it was the final insult and boiled down to a suggestion that Treasury should be constitutionally arraigned.  Another low level had been reached in the intercine war being conducted between the two schools of thought within the governing party. President Ramaphosa as always and characteristically said nothing.

After this altercation, EI then laid out before parliamentarians how the Budget had departed from the R500bn package promised.  The most important commitment to COSATU, EI said, was the implementation of the R100bn job creation promise but now, they said, just a mere 6% of this allocation was left.

Furthermore, Treasury in their view had gone back on the President’s promises had made cuts of more than R400bn, most of them they said affecting social delivery.

Arrived in Parliament

This rift in the governing party at the expense of national objectives is becoming more evident daily. For one party to the argument, the problem appears to be that the economy, spiraling downwards, is seen as becoming debt endemic which could well result in bankruptcy, no possibility of growth and therefore coupled into a scenario of endless poverty.

For the other party, the problem appears to be the view that the poor will not only continue to be poor, but that poverty will worsen unless further debt is risked by spending more into growth and spending to get out of debt.

Cul de sac

The legislation for the Supplementary Budget, the subject of the confrontation contains two Bills as with any budget, both of which are section 77 Money Bills in terms of the Money Bills Act.  This means that Parliament is allowed to comment upon the Bill in terms of the Constitution but not alter it in way, using a majority vote or not, unless so agreed by National Treasury.

The Constitution insists on this, in order to protect its people from interference in any Budget by any political party on an ideological basis or with motives not based on fiscal reasoning.

Particularly sensitive would therefore be any changes made subversively to the Division of Revenue Bill, the mechanism which breaks up the Budget and specifically passes the sums of money to the appropriate National Departments and to local government via the nine provinces. The reference to “political interference” is therefore the cause of the National Treasury’s discomfort  and what altered the mindset of the mild-mannered DG Mogajane.

 In conclusion

The person paid to make the final decision between the two choices is Minister of Finance Mboweni, and when he tabled the Division of Revenue Amendment Bill No 9 and the Adjustments Appropriation Bill No 10 said clearly in his speech on 24 June to Parliament that debt must be controlled. To change that, EI must go to the courts. So far nothing has happened.

Minister Mboweni summarised the details of his approach to the problem in his speech by stating that the “herculean task” for Treasury was to put measures in place to grow the economy but at the same time close the “hippopotamus mouth of burdening interest and loans”, i.e. the enormous sums required to repay debt in the future “in order to avoid a sovereign debt crisis”.

One man standing

Such a spectre could haunt any incumbent Minister of Finance, that of being considered as a bankrupt nation and a financial pariah, as was Greece, and dealt accordingly by creditor nations and international lenders.

Always we shall be distracted by the latest in Covid 19 regulations and the frightful pandemic engulfing our country but, in the background, this gun battle will continue within the governing party and, unfortunately, will play out in Parliament further.

 

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