Mon, 18 Jan 2021

Finance Minister Tito Mboweni found himself in the crosshairs of parliamentarians as he once again found himself defending the allocation of R10.5 billion to the business rescue process of troubled national airline, South African Airways.

Faced by a barrage of questions from opposition party members, he insisted during the virtual plenary on Thursday that the allocation to SAA in the medium-term budget policy statement (MTBPS) was not a "bailout" but sought to facilitate the business rescue process at the airline.

"This is not a bailout because the allocation is made for the business rescue practitioner's plan. It's not for the whole of SAA. If you check carefully, the sub-allocations show provision for retrenchment costs, un-flown tickets, commitments and so on," he said.

Members of Parliament at the NCOP expressed misgivings about the allocation announced in last month's MTBPS, saying the movement of funds from other departments and functions to SAA should not infringe on the rights of the poorest and most vulnerable.

"National Treasury and COGTA should conduct assessments of service delivery standards on the ground where it relates to changes in allocations to assist SAA. Poor and vulnerable South Africans could be and may be affected. This should include measures to mitigate negative impact," said Select Committee on Appropriations chair Dikeledi Mahlangu.

A number of departments lost out on some funding so that SAA could get R10.5 billion, including the Department of Basic Education and The Department of Defence and Military Veterans.

Mboweni reminded MPs of the grave situation South Africa's economy was in, referring to the R332 billion decline in revenue, which meant that South Africa's projections compared to expectations in February were worse than originally expected.

"We are no longer as rich as we thought we are. In fact, there are a number of things that we will need to scale down on because we simply cannot afford them. We need to bring down the debt to GDP ratio and, of course, part of that growing the economy and structural reforms," said Mboweni.

'Not my own private decision'

Regarding continued assistance to state-owned entities, which he has vocally opposed on other platforms, Mboweni simply said: "The responsibility of the minister of finance is to implement Cabinet decisions. It's not my own private decision."

Democratic Alliance MP Dennis Ryder took immediate exception to the allocation to SAA, saying the provincial and local spheres of government had to pay the price, in the form of a more than 51% reduction in the regional infrastructure development fund in Gauteng, amongst other things.

"This project could not have been delayed by the lockdown as the entire value chain fell under essential services. Imagine my disappointment and anger when Treasury told us that the money that have been originally allocated had been taken away since the department of human settlements, water and sanitation had no plan," said Ryder.

Ryder said it was unfair that an efficiently run province or municipality would have to bear the brunt of R25.3 billion in cuts to provincial government allocation due to a national government that failed to prevent corruption of a grand scale for a whole decade.

'Crazy dreams'

"It seems, minister, that you have run out of ideas to keep funding the crazy dreams of your Cabinet colleagues. That unless you start winning some of those battles, this country is destined for banana republic status. The developmental state has become a survivalist state," Ryder said.

African National Congress MP Yunus Carrim said challenged Ryder's assertion that South Africa was ill-equipped and ill-prepared to absorb the blows of the Covid-19 pandemic, looking to examples in the developed world of economies that were hard hit.

"Ryder makes much of the fact that this lockdown was overdone, but in the rampant free market economies that he loves so much, if what I have seen on the news is correct, the UK is expected to have -11.2% growth rate next year. That's worse than us," said Carrim.

While Carrim did spring to Mboweni's defence, he did also acknowledge that provincial governments are right to question why they are being made to bear the brunt of the reprioritisation in the midst of the pandemic.

"Equitable share has to be reviewed in a more comprehensive way, particularly as it applies to municipalities. Nobody predicted the destructive effects of Covid-19. There should be a review, given the fact that the pandemic and its impact are going to persist," Carrim said.

Source: News24

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