Tito Mboweni should take on the wreckers and nutters in the governing party in SA

  1. Introduction

The new Minister of Finance, Tito Mboweni, delivered his “maiden” medium-term budget policy statement four weeks ago in Parliament.

The metrics were bad and took the markets by surprise, and as a result, the rand tanked and bond yields spiked.

But there were elements of the medium-term budget policy statement that were courageous.

To his credit, the minister took on the wreckers inside the governing party, warning them not to attack the mandate and independence of the reserve bank.

Which is exactly what the wreckers inside the governing party needed to be told as they force us closer to the brink.

  1. Economic Trouble

We are in deep economic trouble and the minister was absolutely right when he warned that we are at a crossroads.

We have a growth problem, with an average economic growth rate of 2% expected over the medium term between 2019/20 and 2021/22.

We have a revenue problem, with a revenue shortfall of R57 billion expected over the medium term between 2019/20 and 2021/22.

We have an expenditure problem, with an expenditure overrun of R23 billion over the medium term between 2019/20 and 2021/22.

We have a state-owned enterprises problem, with zombie state-owned enterprises requiring billions of rands in bailouts between 2019/20 and 2021/22.

We have a deficit problem, with our fiscal deficit expected to blow out to R251 billion, or 4% of GDP, by 2021/22.

We have a debt problem, with our national debt expected to reach a staggering R3.7 trillion, or 59% of GDP, by 2021/22.

And we remain a small open economy with “twin deficits” making us vulnerable to external shocks.

  1. Debt Ceiling

Which is why we welcome the minister’s announcement that it is now time to consider a new “fiscal anchor”.

The aim of fiscal policy has been to stabilize national debt, which has been a spectacular failure given the fact that national debt will increase from R627 billion, or 26% of GDP, in 2008/09, to a staggering R3.7 trillion, or 59% of GDP, in 2021/22.

What this means is that we will be spending a staggering R247 billion on debt service costs in 2021/22, which is the equivalent of what we will spend on basic education this year, in 2018/19.

We think the solution is a statutory fiscal rule and we are in the advanced stages of preparing a Private Members Bill, called the Fiscal Responsibility Bill, which will make provision for a “debt ceiling”.

  1. Wreckers

We cannot go on like this and we hope that the minister will not allow himself to be muzzled and will continues to take on the wreckers inside the governing party.

He started off well by:

  • by saying that zombie state-owned enterprises like South African Airways should be shut down; and
  • by saying that those who support land expropriation without compensation are ill informed.

Which, of course, was greeted with horror by the wreckers inside the governing party, because they still reminisce fondly about the good of days of Check Point Charlie and Aeroflot.

The minister needs to take on:

  • Jeremy Cronin, who is still shackled to the idea of a Soviet-style central state planning commission and who thinks the National Development Plan consists of “some useful insights and recommendations, intriguing but untested proposals, summaries of programmes long under way, and much else”.

He needs to take on

  • Rob Davies, who is still shackled to the idea of a Soviet-style smokestack economy with workers toiling around blast furnaces happily singing “Arise ye workers” as they deliver a perfect rendition of the “The Internationale”.

The minister needs to take on:

  • Ebrahim Patel, who is busy weaponizing the competition commission to stamp out monopolies in the private sector, while doing everything in his power to protect monopolies in the public sector, including desperately clinging on to the biggest monopoly in the country, Eskom.

Of course, there is one wrecker the minister does not have to take on and that is Yunus Carrim, because he is a “Communist of a Special Type”.

He fights the struggle of the working class, not from the factory floor, or from the plains of Outer Mongolia as he often claims, but from the lobbies of the most lavish hotels in Washington.

And that is because his best kept secret is … wait for it … that despite being a leading member of the Communist Party, he serves as a board member on the parliamentary network of …wait for it … the World Bank and the International Monetary Fund.

  1. Nutters

Oh, and the minister should not forget Nomvule Mokonyane, who is more of a nutter than a wrecker, and who thinks that we can just “pick up the rand”.

  1. Conclusion

In the end, we welcome the fact that the minister:

  • has decided to remain on Twitter; and
  • has decided to be more careful on Twitter.

We know he has had a bad start, but things will get better and we look forward to debating the best ideas to take us forward in South Africa.

Bailing out SA Express a waste of taxpayers’ money

Media reports exposing the dysfunctionality and financial mess at the state-owned SA Express, makes a complete mockery of the scheduled taxpayer bailout of R 1,7 billion rand to SA Express.

The DA will propose amendments to the Adjustments Appropriation Bill (Bill 35 of 2018) to prevent the payment of the R 1,7 billion to SA Express.

Reports that SA Express is paying R 40,0 million a month to lease aircraft that are essentially scrap because they have been stripped of useful parts, is mind-boggling and brings into question the wisdom behind National Treasury’s decision to saddle the South African taxpayer with more funding for the airline.

While SA Express cannot find money to keep its aircraft flying and generating revenue, there is no indication that the company’s highly paid board members and executives have had to forego any of their lucrative pay packets and bonuses

Tito Mboweni, the Minister of Finance, announced that the revenue collection for the next three years will be R 85,0 billion less than the February budget and yet he saw it fit to add R 1,7 billion for SA Express over and above the expenditure declared in the February budget.

It is unconscionable that SA Express is kept “alive” with taxpayer bailouts simply to provide “employment” and salaries to highly paid executives and staff. This bailout alone could have been used to pay an extra R 12,00 per month for a full year to Child Grant recipients.

The DA believes that the only moral and logical option is to immediately put SA Express into business rescue, and if this fails, it must be liquidated.

DA welcomes decision to institute an independent inquiry into the PIC

We welcome the fact that the Minister of Finance, Nhlanhla Nene, has finally taken action to stop the bleeding at the Public Investment Corporation.

There is hardly a day that goes by without some new scandal surfacing at the PIC including:

  • allegations of irregular payments made by the Chief Executive Officer, Dr Dan Matjila, which now appear not to have been investigated thoroughly, following the leaking of an “internal audit” report;
  • allegations that the Minister of Cooperative Government and Traditional Affairs, Dr Zweli Mkhize, received a R4.5 million “kickback” in return for facilitating a R210 million loan from the Public Investment Corporation; and
  • allegations surrounding questionable investments, or potential investments, in inter alia Ayo Technology Solutions Limited, Sagarmatha Technologies Limited, Steinhoff International Holdings N.V. and VBS Mutual Bank.

The independent inquiry, and the forensic investigation, will hopefully get to the bottom of the various allegations and begin to restore public trust in the Public Investment Corporation.

However, there is now a risk that the outcome of the independent inquiry may be used as an excuse to put important legislation, aimed at strengthening governance and boosting transparency at the Public Investment Corporation, on ice in Parliament.

We cannot afford any delay in passing legislation, such as the Public Investment Corporation Amendment Bill [B1-2018] (Private Members Bill), or the Public Investment Corporation Amendment Bill (Committee Bill), in Parliament.



DA welcomes the long overdue removal of Myeni

The DA welcomes the reported removal of Dudu Myeni from the South African Airways (SAA) board. She has done untold damage to SAA and should not have been reappointed to the board, and certainly not as board chair, in September 2016.
The question remains as to where Malusi Gigaba is going to find the R 10 billion that is required to meet the R 5,2 billion already paid to SAA for loans and working capital as well as the R 4,8 billion required as working capital to keep the airline trading until the end of the 2017/18 financial year.
The crisis at SAA has now got so bad that the Minister of Finance, Malusi Gigaba, was apparently finally forced to take action in an effort to stop the mismanagement at SAA.
The reported restructuring of the SAA board apparently includes an experienced aviation expert, after a year a calling for this since the current board was appointed on the 1st of September 2016.
Make no mistake, this reported restructuring of the SAA board and the removal of Myeni is far too little, too late to save the airline. There is no saving SAA.

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.

Gigaba and SAA board breach Companies Act

The DA has written to Malusi Gigaba, the Minister of Finance, to request that he urgently provide reasons for why the South African Airways (SAA) annual financial statements are not ready, as is required by law.
Minister Gigaba seems to have been mischievous when he says in his letter of the 20th of September 2017, to the Standing Committee on Finance (SCOF), that it was not foreseeable that the SAA annual financial statements would not be ready in time for an Annual General Meeting, before the 31st of August 2017.
It was completely foreseeable given that SAA is clearly not a “going concern” and that Gigaba himself, as well as the SAA board, were likely to do everything in their power to delay the finalisation of the annual financial statements until they are able to secure funding from the national revenue fund by way of section 16 of the PFMA, the PIC or some other illogical source to enable SAA to be assumed to be a “going concern” for another year.
The SAA board appear to have delayed the annual financial statements despite section 30(1) of the Companies Act, which states that these be finalised within 6 months of the financial year end, which was up on 31st of August 2017.
Therefore, by not ensuring these statements were ready by the stipulated time, they are now in breach of the Companies Act.
The international rating agencies are watching how Minister Gigaba handles the SAA crisis very closely. Right now, he is acting irresponsibly and getting it wrong. It seems that all of this is just to comply with the wishes of President Jacob Zuma to keep his close friend Dudu Myeni on the SAA board.
Malusi Gigaba’s reluctance to act decisively to put SAA into business rescue and on the road to either privatisation or, if this proves to be not possible, into liquidation, will very likely only have a heavier toll on the already 9.3 million unemployed South Africans.

Myeni failed to hand over reports on SAA corruption to Parliament

Yesterday, I was informed by the Chairperson of the SAA Board, Dudu Myeni, after the disastrous meeting of Parliament’s Finance Committee, that she had in her possession copies of forensic investigation reports into SAA, yet failed to table them before the committee.
The DA will today write to the Minister of Finance, Malusi Gigaba, and his Deputy, to demand that the investigation reports be tabled in Parliament immediately.
There can be no further delays particularly if the reports confirm the SA Cabin Crew Association’s (SACCA) allegations of widespread corruption at the national carrier.
For 7 months the DA has been requesting these reports. However, National Treasury has refused to hand them over. Last month, the Deputy Minister of Finance, Sfiso Buthelezi, promised to release these reports to the finance committee, he has failed to make good on this promise.
Given the accusations of corruption that Myeni has recently alluded to – which coincidently was highlighted by SACCA immediately after Myeni appeared before Parliament – the DA finds it surprising that Myeni did not inform the finance committee that she had, apparently in her briefcase, investigation reports which expose the corruption she referred to.
These reports include, but are not limited to:

  • An investigation into the sale of surplus materials such as rotables and consumables;
  • An investigation into SAA Technical with respect to Commercial aircraft leases between SAA and Mango;
  • Investigations into various allegations against primarily SAA’s former CEO, Mr Khaya Ngqula; and
  • An investigation into the alleged irregular awarding of a tender for dry snacks by Air Chefs.

If these accusations of corruption are true and are not just tactics to divert attention away from the failures of Myeni in her role as SAA Board Chair, they must be fully interrogated by Parliament.
SAA is on the brink of bankruptcy, with the South African taxpayer very close to having to meet the guarantees of some R 9,0 billion to pay off maturing loans to SAA. If this were to happen the consequences for South Africa’s sovereign ratings will be dire.
There is no longer a choice – SAA must be placed under Business Rescue now before it is too late.

Malusi Gigaba’s marathon press conference on the economy was a complete disaster

The Minister of Finance, Malusi Gigaba’s, press conference on the “way forward”, following the shocking news that the economy had slipped into recession, was a complete disaster.
The fact that the press conference took place nine days after the announcement that the economy had slipped into recession, and three days after postponing a press conference to deal with the fact that the economy has slipped into recession, created the impression that the Minister would announce new measures to deal with the recession.
However, after delivering a 2698-word press statement, during a marathon two-hour press conference, all the Minister was able to announce was that President Jacob Zuma would be convening a full-day meeting in two weeks time with the “economic cluster” to deal with the recession.
The fact is that the Minister’s press conference was a complete disaster that will damage the investor confidence it was presumably designed to restore and it demonstrates there is no recession-fighting plan in place in South Africa.

Battle over the implementation of the FIC Amendment Act far from over in Parliament

We welcome the fact that the Minister of Finance, Malusi Gigaba, has signed and gazetted the Financial Intelligence Centre Amendment Act (No. 1 of 2017), which is one of the most important “legislative weapons” in the fight against corruption in South Africa.
However, the battle over the implementation of this legislation is far from over because the implementation of the provision ensuring that “Domestic Prominent Influential Persons”, doing business with the state above a certain threshold amount, will be subjected to enhanced scrutiny by financial institutions, is now going to be delayed until after 02 October 2017.
There is a risk that the process of determining the threshold amount, taken together with the process of generating the required database, may cause an undue delay or even an indefinite delay, in implementing the Financial Intelligence Amendment Act (No. 1 of 2017).
Moreover, an “inter-departmental forum”, which is not provided for in the legislation, and for which there is no authority in law, will be established to replace the “Counter-Money Laundering Advisory Council”.
There are no particulars provided about the establishment of the “inter-departmental forum”, but there is a real risk that it may be dominated by the “security cluster”, and amount to a “power grab” by the “security cluster”, who are desperate to get control of the Financial Intelligence Centre.
The formation of the “inter-departmental forum”, taken together with the delay in implementing the provisions relating to “Domestic Prominent Influential Persons” doing business with the state could have the effect of “defanging” the Financial Intelligence Centre Amendment Act (No. 1 of 2017).
That is why we will write to the Chairperson of the Standing Committee on Finance, Yunus Carrim, requesting that he schedule a hearing on the progress of implementing the Financial Intelligence Centre Act (No. 1 of 2017).

DA requests a snap debate on the recession and mass unemployment in SA

The Minister of Finance, Malusi Gigaba’s, response to the shock news that the economy had entered into a recession was pathetic and suggests government has no concrete plan to pull the economy out of recession and deal with mass unemployment in South Africa.
We are now in deep economic trouble with the economy slipping into recession after GDP in the first quarter of 2017 contracted by -0.7%, following a contraction of -0.3% in the fourth quarter of 2016, and a staggering 9.3 million people now do not have jobs, or have given up looking for jobs, in South Africa.
What is so disturbing is the fact that the recession is, to a large extent self-inflicted by, to quote Deputy-President Cyril Ramaphosa, “a government that is at war with itself”, which has railroaded any chance of implementing the structural reforms necessary to boost economic growth and create jobs in South Africa.
We would have expected the minister to roll out a concrete plan to pull the economy out of recession. However, all the minister could do was whimper that he would be “seeking a meeting with business leaders as soon as possible to discuss ways of working together to achieve inclusive economic growth”, which is rather like fiddling with the deck chairs on the Titanic.
What we need is concrete action, not more meetings, and that is why I have today submitted a request, to the Speaker of the National Assembly, Baleka Mbete, in terms of National Assembly Rule No. 130, for a debate of urgent national public importance on government’s response to the recession and mass unemployment in South Africa.
We cannot, and we will not, sit back when a staggering 9.3 million people do not have jobs, or have given up looking for jobs, in South Africa.