Cape Town – The Democratic Alliance (DA) said it will attempt to “crack open” the Public Investment Corporation (PIC) and ensure that it is “firewalled” from becoming a “corporate battering ram” and a “piggy bank” for the African National Congress.
Replying to Finance Minister Pravin Gordhan’s Treasury Budget Debate at Parliament on Wednesday, DA shadow minister of finance David Maynier explained what his party will attempt to achieve as the opposition party.
The PIC, which oversees the bulk of the South African government’s pension fund money and is mandated to make investments on its behalf, faced a grilling from MPs in April about its investment mandate and whether there is any political meddling when such decisions are made.
MPs also questioned the PIC about “questionable” direct loans to “obscure” companies, and requested to have sight of the body’s investment policy.
At the time, Deputy Finance Minister Mcebisi Jonas acknowledged that the PIC needed to balance its mandate to invest in companies that will serve South Africa’s developmental agenda with the imperative to yield a positive return on investments.
“There’s a big debate about the mandate of the PIC. But we need to find a balance between transformation and getting value for money. Yes, the PIC needs to play a transformational role, but not to the detriment of investors,” Jonas said.
PIC to invest R70bn in developmental investments - Jonas
On Wednesday, Jonas told Parliament that with more than R1.8trn under management, "the success of the PIC is critical in ensuring that as a defined benefit fund, the GEPF (Government Employee Pension Fund) will always be able to meet its obligations".
"The PIC will invest R70bn in developmental investments in the next three to five years to drive economic growth and job creation," he said. "The sectors that PIC will focus on are agriculture and agro processing, mining and beneficiation, manufacturing, infrastructure and real estate, social infrastructure, and energy (renewable and conventional).
"The PIC will further allocate about a R1bn towards investments in small and medium enterprises. These investments are expected to improve the risk profile of our client portfolios and deliver sustainable returns.
"The PIC has allocated a further R5bn towards job saving in vulnerable sectors such as mining, construction and manufacturing. Strengthening governance remains a focus of our work.
He said the chief executive officers of the PIC and Standard Bank are co-chairs of a working group, driving key investment projects in targeted sectors, which was established between government and the private sector.
"This working group is aimed at getting government, labour and the private sector to identify a core set of priority economic sectors and enterprises," he said.
DA wants to increase budget by R9.5bn
The DA also wants to propose over 300 amendments to the 2016/17 budget, adjusting the budget by over R9.5bn, to fund proposals aimed at: creating jobs; fighting crime; supporting poor students; combatting corruption; and providing relief to the poor.
It will also propose a comprehensive spending review aimed at identifying savings and eliminating wasteful expenditure in all three spheres of government in South Africa.
Maynier said the DA will introduce four private members bills:
- the Public Finance Management Amendment Bill providing for an expenditure ceiling
- the General Laws Amendment Bill providing for a debt ceiling
- the Public Service Amendment Bill providing for concurrent powers for the finance minister to sign off future public sector wage agreements
-the Employment Tax Incentive Amendment Bill to provide a youth wage subsidy for young people who do not have jobs, or have given up looking for jobs, in South Africa.