Some of the sharpest words about the Budget were said by ANC members in Parliament this week, writes Gaye Davis
IT was the first Budget on which the ANC was able to exert its influence — but that didn’t stop ANC MPs from handing out brickbats along with bouquets in their assessment of it this week.
The four-day National Assembly debate on the Budget kicked off as auditor-general Henri Kluever released his annual report on state finances. His grim warnings about the dire state of the public service, billions of rands of taxes unpaid because of inefficient collection and doubts about whether the country had the administrative capacity to run a federation with nine provinces matched concerns raised by ANC MPs.
ANC MP Gill Marcus, chair of the Joint Standing Committee on Public Accounts, said the Budget was “a beginning” in turning it into “what it should be — a tool with which to address the urgent social needs crying out for attention”. But a strategy had to be found to “match the vision”.
“The Department of State Expenditure has expressed dissatisfaction with the level of skill to adequately handle internal departmental financial controls with limited internal audit functions in place and virtually not a single chartered accountant in employ as financial controller, even though departmental Budgets run into billions of rands,” she said.
Instead of dealing with structural problems within the Commission for Inland Revenue, it seemed the government was proposing quick-fix solutions. “The Katz Commission recommendations for administrative autonomy need to be taken seriously and acted on without further procrastination,” she urged. Vigorous scrutiny to ensure taxpayers’ money was well-spent should also address the question of waste and abuse. Yet it was clear the Office for Serious Economic Offences (OSEO) was not taken seriously at all, she said.
“Inadequate staffing, a total budget of R6-million, no computer-linked data-base and no financial analysts are but some of the glaring weaknesses.” Given that about 80 percent of crime was white-collar and electronic- based, the office urgently needed highly qualified analysts and adequate resources. Marcus called for a task group to determine what the OSEO needed and report back to parliament within three months.
ANC MP Marcel Golding warned new pressure would increasingly be put on tax authorities. “We hear of extensive staff losses, outdated computers and R8- billion which is outstanding. More interesting was the Commission for Inland Revenue warning Pretoria drivers to be careful in case they knocked over the man who manages the computer system.
“To crown all this we hear the minister himself say some of the measures pursued by various companies and consultants border on fraud. If this is the case, it seems to me the measures announced are not adequate to address the problem.
“We have to cut through all the petty turf protectionism of departments and the Public Service Commission and get our house in order in respect of revenue administration.” This applied also to the Commissioner of Customs and Excise, he said.
Warning that further doses of “strong financial medicine” for Transkei might kill off the patient as well as the malady, ANC backbencher Professor Jeff Peires gave a homeboy’s account of the impact of finance minister Chris Liebenberg’s fiscal discipline.
Umtata was becoming a ghost town since the capital moved to Bisho. The integration of the Eastern Cape, Ciskei and Transkei public services meant many people had “fallen off the organogram”, losing their jobs. Cuts in housing subisidies, other perks and increased PAYE meant the Transkei National Building Society was facing bankruptcy as people could not pay their mortgage bonds.
These moves had been accepted because it was understood Transkei had to become an integral part of South Africa once again. “We have accepted all these things even though we have not yet seen a single road, a single house or even a single tap provided by the famous Reconstruction and Development Programme,” Peires said. “We have now reached the point where we must say to the minister of finance that this is enough. The cure is becoming worse than the disease.”
He appealed that a Budget proposal to harmonise former TBVC states’ tax laws be phased in over three, rather than the planned two years — as the loss of tax incentives could lead to industries deserting the region. “Those industries were conceived in sin, we admit that,” Peires said. But they employed more than 15 000 people, while the Development Bank of South Africa estimated that every person with a job in Transkei supported between 10 and 15 others.
It was the duty of the Department of Trade and Industry and not Finance to provide tax incentives to keep industrialists in a region with poor infrastructure that was removed from their sources of raw materials and markets, Peires said.
Asking the minister to give “his most attentive consideration” to a pending proposal for a longer phasing-in period of new tax laws, Peires said: “The tax concessions are riding off into the sunset on the back of the Department of Finance but the cavalry from the Department of Trade and Industry shows no sign of coming over the hill.”
Marcus expressed concern that R700-million returned to the Defence Budget — “which one can only assume will enable the much publicised purchase of the Corvettes” – – was granted without any discussion by way of a White Paper on defence policy.
Provinces appeared to be budgeting for deficits, without provision for funding them. This needed the attention of the finance department, the Financial and Fiscal Services Commission and MECs in charge of finance, she said.
The government’s “six-pack” plan — aimed at changes in the Public Service Commission, re-organising state assets and achieving viable, stable inter-governmental financial relationships — gave the strategic vision for economic transformation but was not receiving enough attention, she said.