Month: June 2020

The Minister of Employment and Labour, Thulas Nxesi, must come clean on the reasons why the Unemployment Insurance Fund (UIF) has still not opened June applications for the Covid-19 Ters benefit.

There is clearly something desperately wrong at the UIF that goes beyond mere “systems glitches”.

The Fund’s tardiness in disbursing benefits, which is having a devastating impact on the livelihoods of millions of workers and their families, raises a critical question: Is the UIF running out of money?

Last week, it was revealed that R5.7 million in UIF funds, intended for hundreds of workers impacted by the national lockdown, was paid to a single person. The money was then rapidly disbursed to friends and business associates of the recipient over the course of five days.

This instance of fraud and money-laundering, which surely required the involvement of UIF officials to succeed, is probably only the tip of the iceberg.

Most public institutions in South Africa are regarded as a private piggy bank for venal officials, and it would be surprising if the UIF were any different.

So far, of the R40 billion that was set aside for the Covid-19 Ters benefit scheme for the months of April, May and June, the UIF has paid out roughly R26 billion. Many workers have still not received their payments for April. Only about R6 billion worth of benefits have been disbursed for May, compared to R20 billion for April.

Even taking into consideration the fact that more workers would have been allowed to go back to work on full pay as the lockdown eased, this suggests there are substantial backlogs at the UIF.

A recent reply to a parliamentary question indicated that – according to the UIF’s own actuaries – if the unemployment rate peaks at 41.4% (which is likely) and Covid-19 Ters benefits cost between R48- and R68 billion, then the UIF will become financially unsound and will have to borrow money. If the unemployment rate peaks at 53.7% (which is not impossible) and Covid-19 Ters benefits cost between R48- and R68 billion, then the UIF won’t be able to pay all claims when due.

The UIF is already struggling to pay Ters on time. Minister Nxesi needs to take the nation into his confidence, announce when the applications for June benefits will open, and be honest about whether the UIF can honour its obligations.

Click here to contribute to the DA’s legal action challenging irrational and dangerous elements of the hard lockdown in court

The Democratic Alliance (DA) calls on the Auditor General of South Africa to audit the National Energy Regulator of South Africa’s (Nersa) pricing and regulatory account determinations on an annual basis.

Nersa has reportedly withdrawn oppositions in two court cases against Eskom and conceded to having made mistakes in calculating tariffs for the parastatal, costing Eskom billions in revenue. In a third court case, fault against Nersa has already been determined, and the fourth case before court will likely follow suit.

Nersa’s “mistakes” will cost the South African public dearly.

The entity has become overly complicated and bureaucratic in its processes, leading to errors such as this. And once again consumers will have to bear the brunt of the burden.

Are we to trust that this was Nersa’s only mistake, or could this open the door for a review of all Nersa’s pricing determinations, spiking further increases?

South Africans can barely afford electricity prices as it is. The economy is in free fall due to the extended Covid-19 lockdown and years of state abuse. Unemployment numbers are soaring, and businesses of all sizes are closing their doors permanently. To top this all off Eskom is suggesting a price hike of 15% to recoup the loss that Nersa’s error has cost them.

Now more than ever, South Africa needs an Independent Electricity Management Operator, as proposed by the DA’s private member’s IEMO Bill, currently before parliament for consideration. This would level the playing field by creating an independent grid operator, which would be at liberty to purchase from all generation sources (including Eskom and independent power producers) at market related rates.

The Democratic Alliance (DA) notes with concern that the Department of Sport, Arts and Culture seems to once again have released regulations without consulting those in the arts industry.

It is time the Minister of Sport, Arts and Culture, Nathi Mthethwa, truly engaged with the industry in ways that will assist, instead of hamper, the reopening the sector and help artist desperate to return to their craft and earn an income, by exploring support funding for artists and theaters for online performances. The Minister should meet with the industry to find solutions for Government to assist the community to safely and securely perform their productions online.

We will remind the Minister that most South African artists were excluded from his Department’s Covid-19 relief funding due largely to its ill-conceived application process and his refusal to reopen the application process.

The DA has extensively engaged with the arts community and there are several concerns around the recently gazetted regulations:

• Capacity constraints: Restrictions allowing no more than 50 people in a theatre, will mean that most theatres will operate at a considerable loss and will therefore be more likely not to reopen;
• Foyer bars: Theatres are dependent on the sales from snacks and beverages from foyer bars. Without this income, most theatres will not be able to carry the cost of opening;
• Limited cast and crew: Although it can be easy enough to create performances with a small cast and crew, the regulations are unclear in a lot of aspects, for instance do the 15 people allowed in productions include understudies;
• Like all other business reopening during the Covid-19 lockdown, theatres are responsible for sanitising their own spaces. Without financial aid from Government, and the other restrictions causing an economic strain, theatres will simply not be able to afford the cost of reopening.

A new revenue stream that has recently become more viable due to the lockdown, is to stream performances on online platforms. Many artists have had to make this jump to virtual performances, some with great success. But theatres and producers have expressed concern that they will not be able to cover the full production cost of streaming performances online with concerns about secure and encrypted platforms as well as internet costs.

Unless the Minister takes the time to truly engage with artists and understand their concerns and realities, he can never offer anything other than poorly drafted regulations that only serve to confuse and prolong suffering.

The relaxation of certain regulations by the Minister of Cooperative Governance and Traditional Affairs, Nkosazana Dlamini-Zuma, gazetted yesterday, whilst welcomed by the Democratic Alliance (DA), remain illogical and not backed by any scientific data.

Late yesterday, the Minister released regulations which confirm the announcement by President Cyril Ramaphosa two weeks ago.

These new regulations allow for certain entertainment and social establishments such as restaurants and casinos to begin operations with strict enforcement of Covid-19 safety protocols.

Whilst these additional regulations will assist the growth of our failing economy, it still does not explain Government’s rationale for the continued closure of open public spaces such as beaches, parks and swimming areas.

To be clear, the DA has welcomed the opening of more sectors of the struggling economy in a safe manner and in accordance with correct health and safety protocols in place, and we will continue to do so. We do however question the reasoning behind the continued ban of people using spaces like beaches and parks to exercise.

In our view, the closure of open public spaces such as beaches and parks are having the opposite effect of the intended purpose. In cities such as Durban and Cape Town, thousands of residents are forced to squeeze onto the beach promenade but may not dare to set a foot in the beach for fear of prosecution.

The opening up of the beaches will assist in contributing towards better social distancing and thus provide further protection to citizens.

The same principle applies to other public open spaces such as parks and picnic sites.

During a recent Cooperative Governance and Traditional Affairs portfolio committee meeting, Minister Dlamini-Zuma, undertook to consult with the portfolio committee prior to the drafting of new regulations. We urge the Minister to do what is right and give consideration to these additional measures.

Click here to contribute to the DA’s legal action challenging irrational and dangerous elements of the hard lockdown in court

The Democratic Alliance (DA) is extremely concerned that the 2020-21 budgets of Education and Science will be reduced by R5.2 billion in the Adjustment Budget tabled by the Minister of Finance, Tito Mboweni. Funding will be transferred to help pay for the costs of managing the Covid-19 pandemic. The plundering of one budget to fund another is not what we expected to find when the President boasted about his R300bn support for the Covid effort.

R2.1 billion will be cut from Basic Education, R1.7 billion from Higher Education and R1.4 billion from Science and Innovation. That is an enormous amount of money and these cuts will cascade down to Provinces where funding is already extremely tight and many schools are struggling with basics such as the supply of sufficient classrooms, or the installation of toilets, and cannot open during the Covid-19 pandemic because of this.

To make this worse, huge further cuts are being made to Provincial budgets, with very serious consequences for the two main functions of provinces – health and education. Provincial education departments are already unsure of how they will cope with the scale of the cuts envisaged and sustain the education system they manage.

During this pandemic, education should be an area which receives additional funding rather than having its funding slashed. There have been multiple new expenses involved in getting schools, Universities and Colleges re-started in times of a pandemic and these will continue.

Education and science spending should not be considered as consumption spending, but as investment spending.  Indeed the cuts will affect the most important investment our society can make in its own future – the education of its children and young adults, and the pursuit of crucial research and higher degrees.  Areas which will be affected will go far beyond the limited infrastructure in many schools.

• Precious programmes will be weakened.
• Young learners will be squeezed into even bigger classes.
• Teachers will be even more burdened, because there is no sufficient additional teachers that will be employed.
• Badly-needed classrooms will not be built.
• College curricula will not be updated as promised.
• Students and universities will once again be set back after just having reached a reasonable level of funding.
• Postgraduates, who are already grossly underfunded, will find themselves in an even worse situation,
• critical research projects will have to be paused.

If we look at the Departments whose budgets will be boosted under the adjustment budget, it is ironic that the Education cuts are very similar in scale to the increases in both the Police and Army budgets.

The latter two Departments will receive an additional R3.7bn and R2.8bn respectively, totaling R6.5bn. What does this say? It says we seem to be becoming  a society that prefers to fund the forces of law and order rather than ensuring the futures of millions of young people.

The DA is deeply concerned about these cuts. And the plundering of education is of particular concern to us as it affects the long term future of society. Education budgets worldwide are suffering during the Covid epidemic, and educationists and activists in many countries are pushing back against this. We will be joining them.

Please find attached a soundbite in English and Afrikaans by Dr. Leon Schreiber MP, DA Shadow Minister for Public Service and Administration

Out of every R1 paid in taxes, 58 cents now goes towards paying the salaries of public servants – and that figure may soon increase to 61 cents. Alongside explosive spending on debt repayments, which now cannibalises 22 cents out of every R1 in tax revenue, this means that almost none of the taxes paid by South Africans are used for productive investments to grow the economy. With salaries and debt devouring 80% of all tax revenue, only 20 cents out of every R1 paid in taxes is now available to pay for everything from social grants to education, healthcare and infrastructure development.

These shocking facts were revealed in the supplementary budget review tabled in Parliament by Finance Minister Tito Mboweni on Wednesday. According to National Treasury, main budget revenue this year is set to decline from R1.398 trillion to R1.099 trillion as tax collection collapses due to the ANC lockdown crisis. At the same time, the state will still spend at least R638.9 billion this year on paying salaries for public servants. This spending includes continuing to pay the exorbitant salaries of 29 000 millionaire managers, many of whom are ANC cadres appointed to powerful positions to capture the state on behalf of the party.

To make matters worse, the amount of R638.9 billion is based on the assumption that there will be no further wage increases this year. The government on 1 April unilaterally froze the salaries of public servants in a belated attempt to lower the wage bill. However, the state did so in contravention of its own 2018 collective bargaining agreement that guaranteed above-inflation wage increases until 2021, after public sector wages already increased by 66% over the past decade.

As a result, public sector unions have taken the government to court to reverse this last-ditch attempt to freeze wages. If the unions win their court battle, the wage bill will increase to an astronomical R675.2 billion this year – which means that the state will spend 61 cents out of every R1 collected in taxes to pay wages.

The Democratic Alliance (DA) has warned for years that the public sector wage bill is spiralling out of control and presents an urgent threat to South Africa’s fiscal sustainability. In October 2019, we proposed a new solution that would trim R168 billion from the wage bill by freezing the salaries of all non-frontline staff and reducing the number of millionaire managers by a third, while still securing inflation-linked increases for our frontline service delivery heroes.

The reality is that the ANC dug South Africa’s grave with the 2018 wage agreement, and were then too cowardly to renegotiate the agreement following the DA’s timely and repeated warnings. With at least 58% of revenue going to fund the salaries of public servants – including millionaire cadres – the state’s unilateral move now to freeze wages is far too little, far too late.

It seems that no one knows this better than Minister Mboweni himself. In his supplementary budget speech, it was telling that the only thing Mboweni had to say to Public Service and Administration Minister Senzo Mchunu – who is tasked with cutting the wage bill – was the following: “We wish him well.”

Far too little, far too late

Click here to contribute to the DA’s legal action challenging irrational and dangerous elements of the hard lockdown in court

The Democratic Alliance (DA) noted the insinuation by the South African Airways (SAA) Business Rescue Practitioners (BRPs) at the SAA meeting with creditors, employees and other stakeholders on 25 June 2020, that the SAA bailout funding of R26.3 billion has ostensibly been agreed to by the Shareholder and the Department of Public Enterprises (DPE) and that any changes to the business rescue plan that require additional funding would be unfunded. 

If this is true it would indicate a violation of the Public Finance Management Act (PFMA) as the DPE cannot make decisions for Parliament about the appropriation of funds.

It is astounding that affected parties were being asked to vote for a SAA business rescue plan that requires a total of R 33 billion in funding but which funding has not been sourced. It would be irresponsible in the extreme for parliament to appropriate any further funds for the ANC SAA dead duck project.

The adjournment of today’s SAA meeting with creditors, employees and other stakeholders until the 14th of July 2020 is yet another pointless delay. The whole SAA business rescue plan is based on obtaining a further R16.25 billion in bailout funding. This funding is highly unlikely to be obtained from any private investors and is clearly intended to be further taxpayer bailouts over and above the R16.4 billion already approved by parliament. It is impossible for the approval of parliament to be obtained for the appropriation of a further R16.25 billion in bailout funds for SAA by the 14th of July 2020.

All the delay achieves is to extend the inevitable for unpaid employees who are unable to claim UIF retrenchment benefits because they have not been retrenched.

The DA will robustly oppose any attempt to obtain parliamentary approval for the appropriation of any further funds for bailing out SAA.

Click here to contribute to the DA’s legal action challenging irrational and dangerous elements of the hard lockdown in court

The Democratic Alliance (DA) welcomes the arrest of the first municipal official in the VBS crackdown.

The official reportedly faces charges of criminal financial misconduct under section 173 of the Municipal Finance Management Act.

The DA has made the point that far too few officials and councillors who breach their fiduciary duties have been prosecuted under section 173.

While charges such as fraud, corruption and money laundering are difficult to prove, evidence of financial misconduct in South Africa’s 267 municipalities is not in short supply.

Evidence obtained from municipal officials arrested for this lesser offence can also help prosecutors secure convictions on more serious charges.

The trail of evidence might even lead to the doors of powerful politicians, including Members of Parliament.

The DA hopes that if this happens the police and prosecutors will maintain the courage and determination now on display.

Click here to contribute to the DA’s legal action challenging irrational and dangerous elements of the hard lockdown in court

Finance Minister Tito Mboweni let slip during a media briefing after delivering his Emergency Budget speech yesterday that a crucial part of his speech had been removed at the last minute – a section dealing with proposed amendments to Regulation 28 to browbeat pension funds to fund the government. This is the clearest indication yet that Mboweni is warming up to the disastrous idea of prescribed assets.

Now that the cat is out the bag, the Minister should be honest with the public and clarify what was removed from his speech, and what his position is on prescribed assets. We call on him to do so without delay.

Regulation 28 of the Pension Funds Act directs how money in retirement funds can be invested. At a time when South Africa needs to lower the risk profile associated with our country, and improve its attractiveness to investors to enable economic growth and job creation, pursuing asset prescription will harm the entire economy.

Asset prescription is a policy straight out of the apartheid government playbook, used to prop up the failing apartheid state when global markets would no longer extend credit. That the ANC would even consider such a policy now is an admission of the comprehensive failure of their government.

The Democratic Alliance will fight against any attempt to raid the pensions of hardworking South Africans to subsidise the ANC failures. The only way out of South Africa’s current economic challenges is a comprehensive programme of structural economic reform.

Click here to contribute to the DA’s legal action challenging irrational and dangerous elements of the hard lockdown in court