Statement issued by Andre Kriel, General Secretary, SACTWU, February 24 2011:
MANUFACTURING FOCUS WELCOMED BUT COULD BE UNDONE BY STRONG RAND
The Southern African Clothing & Textile Workers' Union (SACTWU) notes the budget speech by the Minister of Finance, Pravin Gordhan.
SACTWU supports the more comprehensive response issued by COSATU, but wishes to draw specific attention to issues affecting the manufacturing sector and the clothing, textile, footwear and leather (CTFL) industry in the budget.
We welcome the increased focus on the manufacturing sector, including the support for the Industrial Policy Action Plan (IPAP2).
SACTWU believes that the allocation towards the production incentive for the CTFL industry, as well as other allocations such as the Jobs Fund and tax incentives will further help to stabilise this industry by securing employment and industrial capacity. We would urge the government to ensure that these incentives are linked to commitments by businesses to grow employment and comply with tax and labour laws.
We are especially encouraged by the announcement of a major programme to tackle customs fraud in the clothing and textile industry. While we have seen some good work recently from SARS to deal with this problem, a better resourced and coordinated programme is required. Customs fraud does not only destroy South African jobs, it also deprives the fiscus of income.
The need for this initiative is reflected by the fact that an estimated one third of all clothing and footwear sold in South Africa is imported illegally. For instance, in a possible case of under-invoicing to evade customs duties, a consignment of cotton socks were imported from China at R4.85 per kilogram in November 2010. This price is impossible since the world price of raw cotton (used in the manufacture of these socks) was in excess of R20 per kilogram in November 2010.
For some time, SACTWU and COSATU have been calling for a revision of the mandate of our Development Finance Institutions (DFIs) to allow these to focus much more on the creation of decent work. We appreciate that our call has been heeded with the establishment of a Development Finance Institutions Council. Such a council will allow for a realignment of DFIs' mandates with developmental goals.
We do fear that the focus on the manufacturing sector, especially the allocations towards it, will be undone by our overvalued currency.
We welcome the fact that the budget commits government to investigate further tools, including tax and regulatory measures, to deal with the strong Rand. We would urge government to adopt such tools because while the Rand has weakened recently, we fear that this is not because of the current tools utilised, such as the purchase of foreign reserves, but rather because of investment decisions taken by third parties. We need to be equipped to deal with future inflows of speculative investments.
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Statement issued by SADTU, February 23 2011:
Reaction to the Budget Speech
SADTU notes and welcomes the budget speech by Finance Minister Pravin Gordan. We note that education continues to receive a sizeable budget (R189,5 billion). This is an indication that the government continues to prioritize education as a key tool to addressing the problem of skills shortages in the country.
We further note that the budget has also made provision for the other Government priorities - job creation, health, housing, rural development, and fighting crime. Overall, the budget shows the country's commitment to creating job opportunities and skilling the youth.
However, we are concerned about the R5 billion employment subsidy for the youth. From SADTU's point of view, these subsidies may be open to abuse by the employers. They can create a situation where full time employment is sacrificed in favour of subsidized employment.
Would this not lead to a situation where the youth may never receive permanent employment?
We therefore call on government to consult all the stakeholders on this particular matter and further call on government to develop mechanisms so that the system is not abused. We also call for strict monitoring of processes of consultation at NEDLAC and continuous report backs to all structures.
We note the following on the additions to spending plans:
•· An amount of R8.3 billion is added for schools infrastructure: We call on the Ministry of Performance Monitoring and Evaluation to monitor progress made in the eradication of mud schools and provide feedback on a six-monthly basis. We call for the Department of Basic Education not to allow provincial departments to divert this money to fund political administration by creating unnecessary directorship positions.
•· R9.5 billion for expanding further education and training colleges and skills development: This is an absolute necessity for the development state. We want to see an investment in the quality of lecturers in Further Education and Training Colleges. We therefore call for the establishment of a think-tank between the Departments of Basic and Higher Education which will do extensive research on new methodologies for teaching, in particular Math and science learning areas.
•· We welcome the under R1 billion added for funza lushaka teacher bursaries but continue to raise our call for the reopening of colleges of education as the universities are not enough to train the teachers needed to close the backlog. The reopening these colleges is long overdue. The Department must not beat about the bush but should state categorically clear whether they are prepared to reopen these colleges or not. We can no longer afford to listen to lip service.
Overall, this budget will not increase the number of teachers to be employed. This is quite disturbing because teachers are the most important input towards quality education. The budget is also not clear about measures to increase administrative personnel in order to unlock the time needed for teaching by teachers. Failure to address this will go against the President's Triple T campaign which calls for more Teachers, Texbooks and Time.
The budget is silent on the conclusion of OSD and salary adjustments. We need better remuneration for teachers so that the profession can attract and retain new talent and quality teachers.
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Statement by Section27 and TAC, February 24 2011
SECTION27 AND THE TREATMENT ACTION CAMPAIGN WELCOME THE INCREASED BUDGET FOR HEALTH BUT EXPRESSES CONCERNS ABOUT -
SECTION27 and the TAC welcomes the proposed increases in health expenditure outlined in the budget tabled by Minister of Finance Pravin Gordhan on 23 February 2011. In particular, we welcome the Minister's commitment to significant investment in strengthening the public health sector.
However, we are concerned that the additional R11 billion available for 2011/12 will not necessarily translate into improvements in the delivery of health care services in the absence of a reasonable plan to address endemic and systemic problems with budgeting and expenditure within health departments at all spheres of government.
Such problems make it difficult to determine precisely what health service is being delivered, what needs to be delivered, and how much it will all cost. The constitutional right to have access to health care services can only be realised if budgets are aligned to objectively identified health needs and priorities, and if sufficient information is available to departments to formulate and implement appropriate budgets.
National Health Insurance (NHI)
Importantly, Minister Gordhan acknowledged that the phasing in of NHI requires "substantial reforms to address imbalances across the public and private sectors". However, he did not clearly articulate what these reforms will entail. In our view, the Health Minister's comments earlier this week about the unsustainability of private health service pricing provide an important indication of where to start.
In this regard, we note the Finance Minister's commitment to addressing the findings of the Panel of the Banking Enquiry established by the Competition Commission in 2006 and headed by former Judge Thabani Jali. In our view, there is an urgent need for a similar investigation into the private health sector to ensure that prices are "fairly set, are transparent and do not create undue hardship". This, we believe, would be integral to addressing the imbalances between the public and private health sectors and guiding the government on how to regulate prices.
Implement the Money Bills Amendment Act to strengthen Parliament's capacity in the budget process
Once again we must raise concerns about delays in proper implementation of the Money Bills Amendment Procedure and Related Matters Act 9 of 2009 ("the Money Bills Act"). This is a concern we raised in 2010 in our submission - as the AIDS Law Project - to the Select Committee on Appropriations on the Division of Revenue Bill, where we pointed out as follows:
"The Constitution vests Parliament with the responsibility for establishing budgeting procedures and passing the annual national budget. More fundamentally, Parliament has the responsibility to ensure that the manner in which resources are raised, appropriated and ultimately spent advances the constitutional project, the cornerstone of which is the Bill of Rights and the obligation it imposes on the state to respect, protect, promote and fulfill those rights, including the progressive realisation of the right to have access to health care services.
...
The Money Bills Act, as required by section 77(3) of the Constitution, provides Parliament for the first time with the statutory powers necessary to fulfill its constitutional mandate in respect of the budget. However, implementation of the Money Bills Act must be prioritised urgently by Parliament. Given the limited timeframes in the Money Bills Act and the complexity of the budget, there is insufficient time to engage substantively with the [Division of Revenue Bill] as tabled. However, for Parliament to implement fully this constitutional mandate for the 2011/12 financial year it is essential that the [Parliamentary Budget Office] be established urgently. The submission is available at http://www.section27.org.za/2010/03/04/submission-on-the-division-of-revenue-bill-2010/."
Two years after the Act was passed the Parliamentary Budget Office (PBO) has still not been established, severely handicapping the ability of MPs to fulfill their constitutional duty in the budgetary process. There is some indication in the Estimates of National expenditure 2011documentation over next two years the formation of the PBO will be resourced using unspent funds from Parliament's surplus account.
This is inadequate. There is the danger that Parliament may not generate surplus funds.
In our view, Parliament has the constitutional duty and power to ensure that dedicated funds are allocated from its equitable share for this process. We call on Parliament to ensure that the PBO is established and fully functional by the time of the 2012-13 budget.
Finally, we consider a few aspects of the health budget in some detail - HIV/AIDS, provincial health spending and the revitalisation of the public health system.
HIV/AIDS, STIs and TB: ensure better accountability for expenditure in provinces
The need for better monitoring and evaluation of health spending is particularly true for the HIV/AIDS programme. This programme will receive increases to its allocation totaling R27 billion over the next three years. It is planned that these increases will be used for the expansion of antiretroviral (ARV) treatment to 2.6 million people by 2013/14. For this to happen, the state needs accurate data on how many people are on or need ARV treatment, and must put in place adequate controls over financial and other resources that have been made available.
SECTION27 and TAC are concerned that over the last few financial years some provincial health departments have continued to reduce contributions from their own coffers to the funding of the HIV/AIDS, sexually transmitted infections (STIs) and TB programme. Thus at the same time that the national Department of Health (DoH) has increased its funding of this provincially-implemented programme through the conditional grant, these provinces have cut back on supplementing this funding from their equitable share. This means that those activities not funded through the conditional grant, such as those related to the integration of HIV/AIDS and TB services and the treatment of STIs, continue to receive less money.
This could be addressed in one of two ways:
• By expanding the conditional grant to include such essential activities and services; or
• By adding a further condition in that grant that effectively compels provinces to cover the costs of such activities and services from the equitable share.
Once again, Parliament has the duty and power to ensure that this happens.
Provincial health spending: resolve the problem of accrued debts and fully implement the IST recommendations
Over the past few financial years provinces have continued to overspend on their budget allocations for health. In the main, however, this has not been matched with increased levels of service provision.
While much of this overspending was as a result of poor financial management, a significant proportion of it relates to the compensation of employees. Of particular concern here is the state's inability to resolve longstanding issues relating to the Occupational Specific Dispensation and ensure that the process is properly formulated, funded and implemented.
This provincial overspending has resulted in growing provincial debt that must then be serviced out of subsequent budgets. This effectively reduces the budget available for the delivery of services in the current year, as old debts have to be paid first out of the new allocations.
We have already seen the impact of this debt in Gauteng and the Eastern Cape, where there have been reports of hospitals running out of funding well before the end of the financial year and suppliers have been forced to suspend services due to non-payment. This has happened all too often in the past few years.
The Integrated Support Team (IST) reports into the functioning of provincial health departments - which were commissioned by former Minister of Health Barbara Hogan in 2009 - provide a clear indication of what needs to be done to rectify problems within provincial systems. These reports offer a range of findings and recommendations that need to be integrated into strategic and turnaround plans and must be implemented as a matter of urgency.
Revitalisation of the public health system
SECTION27 and TAC welcome the additional funding for Family Healthcare Teams, infrastructure, and district-based maternal and child health services. These are important components in the delivery of primary healthcare and will play an important role in the revitalisation of this sector and in laying the foundations for NHI.
Funding for the Family Healthcare Teams is a particularly important addition to this year's budget as it starts the process of bringing community healthcare workers - who play a critical role in the delivery of primary healthcare - into formal employment. For far too long the livelihoods of these essential health care workers been made vulnerable as a result of shortages of funding, poor management and them being kept at an arm's length from the public service. We urge government to ensure that this programme is carefully implemented and monitored and that civil society is consulted throughout the process.
Conclusion
We urge Parliament, the National Treasury and the DoH to fulfill their constitutional obligations and provide the necessary oversight and assistance to provinces to ensure the end of poorly formulated budgets and an inability to track expenditure adequately. Without such interventions, the state will be unable to deliver on the constitutional promise of access to health care services.
One area that does show some promise in this regard, however, is the introduction of measures to combat corruption by tightening controls over tenders and public procurement. That said, we will continue to work with government to ensure that the increased controls do not limit the DoH's ability to ensure the sustained availability of essential medicines and other health products.
SECTION27 and TAC will release further statements in the coming weeks once it conducts a more detailed analysis of the national and provincial health budgets. This statement is endorsed by the Treatment Action Campaign.
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