Zombi municipalities pose a major fiscal risk in South Africa

The Medium-Term Budget Policy Statement clearly warns that the growth of unpaid bills and accruals within provincial and local governments constitutes a serious fiscal risk.

These risks are referred to in the MTBPS as “hidden costs” that are NOT included in the Budget.

National Treasury estimates, in other words their considered thumb suck, that the unpaid bills in provinces amount to R25 billion with a further estimate of R80 billion contingent liability risks of medical malpractice claims.

For municipalities the estimate amounts to R23.4 billion for outstanding bills.

None of these provincial and municipal liabilities are included in the determination of the Division of Revenue allocations to provinces and municipalities.

What we do know about municipalities is that 113 municipalities adopted unfunded budgets for 2018/19, i.e. 41% of the 278 municipalities, openly and without caring about where the money will come from, voted to enter into long-term contracts and to spend more than the revenue available to them.

What this means is that municipalities simply spend billions of rands excessively on vanity projects and other wasteful expenditure and land up not having the money:

  • To pay suppliers such as Eskom;
  • To provide water to millions of South Africans who have to make do with water from rivers, dams or sporadic tanker deliveries;
  • To provide refuse services;
  • To fix potholes;
  • To stop raw sewerage from flowing into our rivers.

These zombie ANC-run municipalities are knowingly bankrupting themselves and the poor who are unfortunate enough to live under their financial tyranny. Ultimately, if unchecked, they will bankrupt South Africa.

It is not a shortage of equitable share that has brought municipalities to their knees. It is simply incompetent and corrupt ANC councilors and cadre appointed officials.

It seems that contrary to the popular refrain of top down, the ANC is rotten from the bottom up!

Eskom fails to publicise China loan terms and conditions within 30-day PAIA period

The DA will not allow China’s model of “debt trap diplomacy” to take root in South Africa, and we will approach the courts if necessary to ensure that government is transparent with the public about the terms and conditions of loans received from China.

On the 10th of September, I submitted a Promotion of Access to Information Act (PAIA) request for the terms and conditions of the R33 billion loan from the China Development Bank (CDB) to Eskom to be made public. In terms of the Act, Eskom had 30 days to answer to my request for this information. This deadline has passed, and the terms and conditions of the loan remain suspiciously secret.

I have therefore submitted a Notice of Internal Appeal to Eskom in terms of section Section 75 of PAIA for not granting my request for access to the terms and conditions of the loan. If Eskom fails to honour the further 10-day deadline set by this Notice of Appeal, the DA will not hesitate to take the necessary legal action and approach the courts for relief.

In addition, I have formally approached President Cyril Ramaphosa, Eskom Chairperson, Jabu Mabuza, and CDB Liaison in South Africa, Jiangtao Cao, none of whom have been willing to play open cards and disclose the terms and conditions of this R33 billion loan. South Africans need to be assured that this loan does not tie our country and taxpayers to unaffordable and unfair terms and conditions. We will not allow China’s model of “debt trap diplomacy” to take root in South Africa.

President Ramaphosa has committed his administration to greater transparency and accountability. However, when pressed with a real example like this loan, he has chosen to follow the path of secrecy that was entrenched under President Zuma. This is an opportunity for President Ramaphosa to play open cards with the public about what this loan commits us to, and we expect him to do so.

Finance Minister, Tito Mboweni’s, maiden Medium-Term Budget Policy Statement (MTBPS) this week confirmed that ‘Eskom’s weak financial position remains a risk that could lead to a call on guarantees.’ After Eskom made a R2.3 billion loss with R41.5 billion gross finance costs and over R20 billion in irregular expenditure in the last financial year, there is reasonable doubt as to Eskom’s ability to pay back this R33 billion loan to the CDB.

If Eskom and the failing ANC government refuse to open the books on this loan, the DA will not hesitate to take the appropriate legal action.

Let’s vote out job-killing corruption, and vote in change that builds one SA for all

The following remarks were delivered today by Democratic Alliance (DA) Leader, Mmusi Maimane, at the Eastern Cape provincial launch of the party’s Team One SA campaign outside a failed public/private job-creating initiative in Chatty, Port Elizabeth. Maimane was joined by Eastern Cape Premier Candidate, Nqaba Bhanga, Team One South Africa Spokesperson for Women, Nomafrench Mbombo, and DA Federal Chairperson, Athol Trollip.

Fellow South Africans,

Today we kick off the DA’s 2019 election campaign in the Eastern Cape. A campaign in which, over the next seven months, we will take our message of “Change that Builds One South Africa for All” to every corner of this province.

And while our focus this morning is on bringing our vision of a better future to the people of South Africa, our attention tomorrow will be on Finance Minister Tito Mboweni’s first Medium-Term Budget Policy Statement, where he will have the opportunity to show whether the ANC can finally put its own interests second and the people’s interests first.

Our people are suffering, and they are suffering as a direct result of ANC policy failure. Our recession, our falling currency, our tax increases and petrol price increases, our spiraling unemployment and our growing poverty aren’t because of global conditions. Our global peers are growing. Our African neighbours are growing. Our economic trauma is all self-inflicted.

Tomorrow Minister Mboweni has a chance to start correcting this. To disassociate himself from EFF-style rhetoric and to walk away from his damaging statements on state intervention in everything from mining and banking to land ownership. This is his chance to finally put poor, unemployed and mostly young South Africans first.

Minister Mboweni has an opportunity tomorrow to show that he can increase private sector investment, that he can stabilise national debt below 50%, that he can take rational decisions on our failed SOE’s, that he can bring stability to SARS and that he can provide clarity on the mega-loans being negotiated with China behind closed doors.

If he can’t do this, then it surely makes no sense to persist with this ANC government.

Fellow South Africans, there is a very good reason why we’re launching our election campaign in Chatty, and specifically here by this building behind me. We chose this site because this building stands as a testament to the corruption and neglect of the ANC in government here in NMB.

What you see here – the crumbling structure, the stripped out interior and the lack of any activity and enterprise – is a perfect metaphor for the legacy of the ANC. The very same ANC who, with the help of the EFF and the UDM, have now been allowed back in to government here so that they can pick up where they left off.

Back in 2003, this building was chosen to be the home of the Bethelsdorp Hand Weavers, a carpet factory started as part of a project to provide jobs, develop skills and eradicate poverty in this part of NMB. It was run by an NGO that received funding from the local ANC government, and it employed 200 women from the community.

In principle, this all sounds good. But in reality, this turned out to be just another looting scheme where the money ended up in the pockets of a few corrupt individuals, and government provided no oversight and no control over where its funds went.

And so, while the corrupt got rich, this enterprise failed. The women who worked here went for months without being paid. Today, a decade after the factory closed its doors, most of these women are still unemployed.

In a province like the Eastern Cape, and specifically a community like Bethelsdorp with its sky-high unemployment rate, it is shameful that there was no accountability in the ANC government for precious public money, and particularly money meant for job creation.

And yet this is the standard operating procedure for the ANC. Here in NMB, this kind of looting of public money happened in virtually every contract, tender and project undertaken by the ANC government over two decades. It was all just easy money, and no one bothered to think of the people affected by it.

When Jacob Zuma said, back in 2009, that charges against him should be dropped because corruption wasn’t a “real crime” and that there are no victims involved, he wasn’t just speaking for himself. He was speaking for every ANC minister, mayor and councillor who believed that all money was there to be taken.

Well, I’m here today to tell them they are wrong. Corruption has victims. Real people with families and dependents. Parents, siblings, breadwinners. Corruption’s victims are those who are left to deal with the unemployment and poverty, and all the crime, drugs and violence that follows.

The people of Bethelsdorp are victims of corruption. The hundreds of women who lost their jobs at this factory are victims of corruption. Their families who were counting on an income are victims of corruption. These factory doors may have closed ten years ago, but they remain victims today.

If you want to know why communities like these need change, just speak to the people affected by corruption-failed projects like these. Some of these women are here with us today. Ask them if they want to go back to the ANC way of doing things.

We cannot go back there. The Eastern Cape certainly can’t go back there. This is the province with the highest expanded unemployment rate in South Africa. Almost 46% of working-age men and women in this province cannot find a job. Young people leave this province in droves in search of opportunities elsewhere.

That is why we are gathered here today to launch our election campaign in this province. We are here to say: Our country needs change. We need a fresh start so we can rebuild our society and an economy that works for all.

Under the ANC government we ended up with a massively divided nation. There are those on the inside, people with jobs, education, opportunities, and there are those on the outside, millions of South Africans who live in poverty and who have no hope of finding employment. This must change.

Under a DA government we will bridge this divide. We will focus all our efforts on bringing the outsiders into the economy by supporting enterprise, attracting investment and helping businesses large and small to create jobs. We will unite South Africans around this goal instead of dividing, blaming and creating enemies.

The DA will bring change that builds one South Africa for all.

No other party is promising to do this. No other party even pretends to speak for all South Africans, or offers a plan that will grow the economy, create jobs, make our communities safe and speed up basic service delivery.

Under the leadership of our Premier candidate, Nqaba Bhanga, we will take this message to every city, town and village in the province. Because it is of the utmost importance that we bring clean, accountable DA government to the people of the Eastern Cape.

In two short years, the DA-led coalition government in NMB brought more progress to areas like Bethelsdorp than the ANC did in two decades. Not far from where we’re standing is the new depot for the new Integrated Public Transport Service. Also near us is the new station for the Metro Police. Roads were tarred, basic services were expanded.

Now all this progress is threatened once more by the reinstatement of the ANC/EFF coalition of corruption in this metro. This is a step backwards, towards neglect, towards poverty and towards unemployment.

Fellow South Africans, we need to move forward as a country, not backwards. And to do so we need a government that looks to the future, not the past. There is only one party that can be this government, and that party is the Democratic Alliance.

Tito Mboweni must deal with a “six pack” of challenges during the “mini budget” in Parliament

Please find the Preview Statement of the Medium-Term Budget Policy Statement 2018 here.

President Cyril Ramaphosa’s “new path” of economic growth, employment and transformation was shattered when the economy slipped into recession in South Africa.

We are now in deep economic trouble, with ordinary people, experiencing an income squeeze, following tax increases and petrol price hikes, and with 9.6 million people who do not have jobs, or who have given up looking for jobs, in South Africa.

What this means is that the Minister of Finance, Tito Mboweni’s, “mini-moon” is over and he faces a six pack” of challenges that will have to be dealt with in his “maiden” Medium-Term Budget Policy Statement, which will be delivered on 24 October 2018 in Parliament.

We believe the minister should:

  • define himself by explaining his flirtation with radical economic transformation and clarifying his views on extending state ownership in the mining sector, establishing a state bank and creating a sovereign wealth fund;
  • present a credible plan to boost economic growth to at least 3% by announcing a package of structural reforms designed to increase private sector investment;
  • hold the fiscal line by announcing a comprehensive spending review and presenting a credible plan to stabilise national debt at, or below, 50% of GDP;
  • restore public trust by announcing that the Commissioner of the South African Revenue Service, Tom Moyane, will be removed and a new appointment will be made without delay;
  • announcing that the national airline will be placed in business rescue with a view to privatising, or part privatising, South African Airways; and
  • disclosing the terms and conditions of the confidential R33.4 billion loan to Eskom from the Chinese Development Bank.

We believe that if Minister of Finance, Tito Mboweni, deals decisively with the “six pack” of challenges during the Medium-Term Budget Policy Statement, he will give hope to the 9.6 million people who do not have jobs, or who have given up looking for jobs, in South Africa.

Resignation of Michael Sachs plunges the budget process into chaos in the middle of a fiscal crisis

The Minister of Planning, Monitoring and Evaluation, Jeff Radebe, tried to reassure us that there was “nothing to fear” from the new “budget prioritisation framework” during his briefing following the medium-term budget policy statement on 26 October 2017 in Parliament.
However, the shock resignation of veteran budget office head, Michael Sachs, which is a huge blow to National Treasury, confirms our fears that decision-making on budget priorities, and the budget itself, have now been centralised under President Jacob Zuma.
We now have:
• a “Presidential Fiscal Committee” making decisions about the budget at the expense of the Minister’s Committee on the Budget;
• a “Mandate Paper” setting out budget priorities, in terms of a new budget prioritisation framework, compiled by the Department of Planning, Monitoring and Evaluation, at the expense of National Treasury; and
• that is not to mention rogue elements, such a Morris Masutha, who are reportedly peddling a R40 billion budget-busting plan for higher education, with the support of President Jacob Zuma.
What this means is that in the middle of a “fiscal crisis”, which Michael Sachs himself described as the most challenging since the global financial crisis, decision-making on the budget has been plunged into chaos.
And it seems that National Treasury are slowly being “defanged” and reduced to “bookkeepers”, with declining influence over budget priorities, and the budget itself, under President Jacob Zuma.
That is why I will write to the Chairperson of the Standing Committee on Finance, Yunus Carrim, requesting him to schedule an urgent hearing on this matter before the end of recess in Parliament.
We can only hope that there is no snowball effect and that other senior officials at the apex of the system hold steady do not resign from National Treasury.

MTBPS 2017 reveals the full horror of President Jacob Zuma’s catastrophic mismanagement of the economy in SA

The Minister of Finance, Malusi Gigaba’s, “maiden” medium-term budget policy statement exposes the full horror of President Jacob Zuma’s catastrophic management of the economy in South Africa.
The minister’s medium-term budget policy statement reveals a full-scale budget “blow out” with:

  • a massive revenue shortfall of R50. 8 billion, which is the largest revenue shortfall since the global financial crisis;
  • a breach of the expenditure ceiling by R3.9 billion, which was in part caused by the R10 billion bailout of South African Airways, and which had to be offset mainly by using the contingency reserve (R6 billion), projected underspending (R3 billion), and selling the family silver, in the form of shares in Telkom shares (R3.9 billion); and
  • a “blow out” in the budget deficit by R54 billion to R203 billion, or 4.3% of GDP in 2017/18.

The budget deficit “blow out” results in an increase in national debt of R67.9 billion to R2.3 trillion, or 54.2% of GDP and an increase in debt service costs of R900 million to R163.3 billion, in 2017/18.
The budget “blow out” ricochet’s through the medium term pushing national debt to R3.4 trillion, or 59.7% of GDP, in 2020/21.
The full horror of the medium-term budget policy statement and the failure to stabilize national debt is that, in three financial years’ time, we will be spending:

  • R33.8 billion more on debt service costs than we will spend on health in this financial year;
  • R129.7 billion more on debt service costs than we will spend on police this financial year; and
  • R44.7 billion more on debt service costs that we will spend on social protection this financial year.

Worse, any prospect of the recovery now rests with a mystery “presidential committee” under President Jacob Zuma, who is “ground zero” of the meltdown in the economy in South Africa.
That is why we have proposed a package of structural reforms to boost economic growth and job creation, a Comprehensive Spending Review to identify savings, with a view to cutting expenditure over the medium term, and placing the national airline in business rescue with a view to stabilizing and then privatizing South African Airways.

Secret budget prioritization document should be made public

The reply to DA Shadow Minister of Finance, David Maynier MP’s, request for access, in terms of the Promotion of Access to Information Act (No. 2 of 2000), to the document setting out the budget priorities, referred to as the “Mandate Paper”, can be found here.
The Minister of Planning, Monitoring and Evaluation, Jeff Radebe, who appears to be the new “budget tsar, has refused my request for access to a document setting out government’s budget priorities, on the grounds that it is a “classified cabinet record”, just days before the medium-term budget policy statement is delivered in Parliament.
On 18 September 2017 I submitted a request for access to the so-called “Mandate Paper”, in terms of the Promotion of Access to Information Act (No. 2 of 2000), which sets out government’s budget priorities, in term of a new “budget prioritization framework”.
However, in a letter dated 17 October 2017, my request was refused on the grounds that the “Mandate Paper” was a “classified cabinet record”.
The fact that the document setting out government’s budget priorities is classified and cannot be made public is bizarre, especially when the Constitution specifically states that the “budgetary processes must promote transparency”.
Worse, the reply states that:
“…the Minister indicated that the Mandate Paper is an instrument for budget prioritisation, and the process through which it is developed will be strengthened as part of the process of institutionalizing planning, which includes the introduction of legislation. At this stage it is part of the process that will culminate into the engagement of all stakeholders towards institutionalisation of planning more broadly, which will kick-start during the Planning, Monitoring and Evaluation Forum hosted by DPME on 12 and 13 October 2017.”
What this really means is unclear but what it does suggest is that, when it comes to the budget prioritization process, chaos reigns in government just days before the medium-term budget policy statement is delivered in Parliament.
That is why I have requested the Chairperson of the Standing Committee on Finance, Yunus Carrim, to request the Minister of Planning, Monitoring and Evaluation, Jeff Radebe, to make a presentation on the budget prioritization process at the briefing on medium-term budget policy statement scheduled to take place on Thursday 26 October 2017 in Parliament.

We can’t throw billions at SAA while 4 children a day die of starvation in SA

The following remarks were made today by Democratic Alliance (DA) Leader, Mmusi Maimane, at a billboard launch at Park Station, Johannesburg. 
On Wednesday Finance Minister, Malusi Gigaba, will present us with his Medium Term Budget Policy Statement. Then we will get to see whether he will offer South Africa a Gupta budget designed to prop up a failing ANC, or a budget that serves the poor and marginalised of our country.
Judging by Minister Gigaba’s track record in all his cabinet positions, I am not holding my breath for the latter. Because to date he has shown no capacity to serve the interest of the people. All he has shown us is that he is there to do the bidding of Zuma’s handlers, the Guptas. That he is a captured man.
Three weeks ago Minister Gigaba stuck his hand into your money and handed SAA another R3bn. Three months earlier he did the same, this time for R2.2bn. And this R5.2bn is just half of what is needed to keep the airline aloft this financial year.
If you look back at past bailouts given to the airline since 1999, that amount goes up to R19bn. And if you include the government guarantees – money that taxpayers will fork out if Eskom can’t pay its debts – then we’re talking about a massive R35bn.
Under the “leadership” of Dudu Myeni – and I use the word leadership in its loosest possible sense – this airline has made a loss of almost R16bn over the past five years.
During her time as chairperson, SAA failed in every way to deliver on its mandate. I would describe her as a delinquent director. Thank goodness she is finally gone, and not a moment too soon.
But the basic question that no one in government is able to answer is this: why?
Why are we doing this? Why are we keeping this airline going with massive bailout after massive bailout, when it clearly serves no helpful purpose to ordinary South Africans at all?
Why keep subsidising the comparatively wealthy who can afford to fly, at the expense of the very poor and the unemployed? Why do we have to keep saving SAA? No one in government can answer this.
On Thursday, the Deputy President said that SAA is a “national asset”. I would have thought a businessman like Cyril would know the difference between an asset and a liability. Let us also not forget that Mr Ramaphosa chaired the Inter-Ministerial Committee on State-Owned Enterprises, but was not willing to implement any measures to curb the mismanagement.
No, Deputy President Ramaphosa, calling SAA a national asset is not a good enough answer. Not a single person in government can answer the basic question of why we should keep saving SAA.
So let me give you the answer. We are propping up the failing SAA because its just another great place for cadres and cronies to make lots of money.
Our parastatals have become massive ATMs from which the leeches who feast on our precious resources suck money every month. This is done not only with the knowledge of our government, but with their assistance. And all evidence points to Minister Gigaba as the man appointed to hand over the keys to our nation’s wealth.
That’s why we keep being forced to bail out SAA. Let’s just be honest.
And dealing with the anger of the public and the fallout in the media when these stories break is seen as a small price to pay for all that wealth. That’s why you and I and every South African continue to fund this endless corruption, bailout after bailout.
People ask: What is the effect of corruption? Who are its victims?
Let me tell you who they are.
Earlier this year, in answer to a Parliamentary question, the Department of Health said that 4900 children under the age of five had died over the past three years in South Africa due to severe acute malnutrition. Let that sink in.
That’s 136 children a month, or more than four a day, dying of hunger right here in our own country. And they’re dying because their mothers cannot feed them on the R380 a month they’re given as a child support grant. When asked why the child support grant is just R380 a month, the Minister said: That’s all the money there is.
The same government that will throw R35bn at a failing airline tells us there simply isn’t enough money to stop four children a day from starving to death.
How, friends? How is this acceptable in South Africa in 2017?
Must we accept this and go on with our lives? Are four starving children a day not a big enough problem for us to consider stopping these endless multi-billion Rand bailouts and diverting the money instead towards our social safety net?
Or should we feel angry about it? Should we refuse to accept this government’s criminal priorities?
I know what my answer is.
Fellow South Africans,
We don’t need to carry on propping up a national carrier for the sake of a corrupt elite, at the cost of millions of desperately poor South Africans. We must let it go.
SAA must be placed into business rescue until it has stabilised, and then it must be dismantled and sold. The vast sums of money we will save can be ploughed straight back into any number of programmes that directly benefit the poor.
We won’t be the first country to give up its national airline, and we certainly won’t be the last either. In a globally competitive world, the most efficient, cost effective players will quickly step in and fill the gaps.
Life will carry on after SAA, but only with more money for the poor and less for the corrupt. Which is the way it should be.

DA to probe Gigaba's bloated private office at National Treasury

The Minister of Finance, Malusi Gigaba, claims there is no truth to the suggestion that he has centralized power in his private office and that all appointments in his private office are in accordance with the Ministerial Handbook.
However, the Ministerial Handbook: A Handbook for Members of the Executive and Presiding Officers is clear:
• The core staff of the private office of the minister may comprise of ten staff members including Chief of Staff of the Ministry, Administrative Secretary, Media Liaison Officer, Private Secretary/Appointments Secretary, Assistant Appointments and Administrative Secretary, Parliamentary Officer, Secretary/Receptionist, Registry Clerk and Aide or Driver/Messenger; and
• More importantly, the organizational structure of the private office must be determined after consultation with the Minister of Public Service and Administration and in terms of Public Service Regulations.
The minister reportedly brought in 17 new staff members, and took over five existing staff members from his predecessor, bringing the total staff complement of his private office to 22, which appears to be far in excess of the ten posts provided for in the Ministerial Handbook.
I will, therefore, be submitting parliamentary questions probing claims that the minister has set up what amounts to an “imperial finance ministry” by requesting him to provide information on:
• The total number of staff members employed in his private office;
• The names, designations, job descriptions and salary levels of each staff member in his private office; and
• Most importantly, whether, and when, the organizational structure of his private office was approved by the Minister of Public Service and Administration.
We simply cannot afford a “civil war” between the Presidency, the Ministry of Finance and National Treasury ahead of the Medium-Term Budget Policy Statement on 25 October 2017 in Parliament.