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RNZ News
22-05-2025
- Business
- RNZ News
Words and Numbers: Beginning Budget Day in the House
Budget 2025. Photo: VNP/Louis Collins In Parliament's debating chamber Budget Day begins as a surprisingly sedate affair. It makes up for it later, mostly with sheer volume, but at the beginning it is both formal and formulaic. The first Budget-related business - while everyone is on tenterhooks for the big reveal - is only about the previous Budget. The tabling of the Supplementary Estimates is a palpable let-down for the public in the galleries. This document is an update on last year's Budget, looking to update permission from the House for spending that has deviated from the previous Budget. When the Budget is tabled it comes with such a slew of related materials it feels like an afterthought. We call it the Budget, and Budget Day but the naming is clumsy. The Budget is an event, a concept, a speech, a number of documents, and a lot of numbers. It is also, in part, a piece of legislation that permits the government to spend money in an agreed way. It is a trove of documents associated with the bill that detail the actual spending plan. In common parlance it often refers to the Budget Statement - the speech given by the minister of finance. This year, that is Nicola Willis. All Budget statements are a sales pitch rather than a fair summary. The most telling aspects are chosen, polished and displayed for their best angles. The usual focus for ministers of finance is on positivity. Things are heading in the right direction, improving, building, advancing, etc towards a better, richer tomorrow. Few are brave enough to list the cuts they plan (Ruth Richardson may be considered an especially brave exception here). Instead they focus on new programmes and new spending. You will likely still hear talk about savings or reprioritisation though. They sound gentler. This Budget, Nicola Willis noted savings of $5.3 billion a year. "The result," she said "of ongoing efforts by multiple ministers." I expect that means that many different government entities will have reduced funding. Specifics were not carefully enumerated in her speech, but she did note savings of $2.7b per year achieved by walking back Pay Equity legislation. Finance Minister Nicola Willis on Budget Day. Photo: VNP/Louis Collins Willis also noted that "savings have been made by closing a number of tagged contingencies and from reviewing the value for money of grants and fund across government." Willis continued: "This is not austerity. In fact, it is what you do to avoid austerity, because getting the books in shape ensures New Zealand has financial security and choices into the future, and, as I am about to set out, savings in this Budget have allowed us to make much-needed investments in health, in education, in law and order, and in rebuilding our defence force." Her Budget Speech was relatively short, at a little over half an hour long by my watch. Despite the relative brevity, this article can't possible canvas it all any more than Willis's speech could hope to canvas the vast detail in the Budget itself. It doesn't hope to. As I already mentioned, the purpose is to sell the Budget, not to read it. The second speech is equally political (they all are). Second is always the Leader of the Opposition. This year Chris Hipkins. The Leader of the Opposition has a few jobs in this second speech. Traditionally it begins by moving an amendment to the question being debated - to turn it into a no-confidence motion instead. In theory, the debate from this point is about that question as well as the Budget. Opposition Leaders also seek to influence press coverage by naming the Budget with an insulting moniker that journalists will pick up. They hope to portray it in a fashion that will negatively affect public opinion toward both the Budget and government. Hipkins used a few options to see what might stick. I noticed both "a scramble without the lollies", and "the Budget that left women out", were both picked up by media. Labour leader Chris Hipkins. Photo: VNP/Louis Collins It is always interesting to listen to all of the speeches in their entirety. The speeches from across the House often mirror each other, blow for blow. For example, the "this is not austerity" section above from Nicola Willis and this from Chris Hipkins. "They are choosing austerity and cuts. And austerity is exactly what it is. It failed in the United Kingdom and it will fail here. It will leave New Zealand a poorer country and it says to the next generation of New Zealanders, who are already giving up in record numbers, that they may as well leave the country because there is no hope here." Parliamentary speeches are not just policy positions, they are often like aural Rorschach tests, brimming with signifiers of person, party, culture, and attitude. The prime minister is something of an afterthought on Budget day, speaking after the leader of the opposition. Again this year Christopher Luxon took the unusual approach of launching not into praise of the new Budget but into the opposition. "Well, hasn't it been a shambolic year for the Labour Party - hasn't it? I have to say: has there ever been a leader of the opposition with less substance than Chris Hipkins?" He did speak about the Budget, but it took about 1700 words on attack before he got there. Prime Minister Christopher Luxon. Photo: VNP/Louis Collins The full Budget Debate is a lengthy affair and will include speeches from much of Parliament, but on Budget Day it only gets as far as the party leaders (or their surrogates). At that point it typically gets shelved for a few days of debating about budget and budget-adjacent legislation under urgency. This year the government has listed 12 different bills to debate under urgency, six of them through all stages, six for only a first reading. MPs are going to have a long week. *RNZ's The House, with insights into Parliament, legislation and issues, is made with funding from Parliament's Office of the Clerk. Enjoy our articles or podcast at RNZ.
Bloomberg
22-05-2025
- Business
- Bloomberg
South Africa to Provide $2.8 Billion Guarantee to Transnet
South Africa's transport ministry with the concurrence of the minister of finance agreed to provide a 51 billion-rand ($2.8 billion) guarantee facility to Transnet SOC Ltd., the nation's beleaguered rail and ports operator. The company will be able to access the funds immediately to support its 'capital investment program and to enable it to meet its debt obligations,' the transport ministry said in a statement Thursday.
Asharq Al-Awsat
22-05-2025
- Business
- Asharq Al-Awsat
Saudi Arabia Grants Civil Aviation Authority Financial Independence
The Saudi government has approved a new regulatory framework for the General Authority of Civil Aviation (GACA), granting it expanded powers to achieve financial sustainability and operate independently from the state budget. Under the new structure, approved recently by the Council of Ministers, GACA will gradually transition to self-funding through revenue generated from its services. While it will initially receive allocations from the state budget, the long-term goal is for the authority to maintain its own independent annual budget and a reserve fund equal to twice its previous year's expenditures. The move is part of Saudi Arabia's broader strategy to modernize and privatize key sectors, in line with the national transport and logistics strategy. GACA's updated mandate includes regulating and developing the civil aviation sector, improving oversight, and making the industry more attractive to private investment. GACA is now authorized to invest its revenues to support its financial goals. The Minister of Transport and Logistics—who also chairs the authority's board—and the Minister of Finance will jointly oversee how these investments are managed. The authority can also impose service fees for activities and operations it oversees. However, these fees must be coordinated with the Ministry of Finance and the Center for Non-Oil Revenue Development, until a broader regulatory framework for government service charges is finalized. The new structure empowers GACA to set policies, draft regulations, and monitor compliance across the aviation sector. This includes oversight of airport operations, enforcement of safety and performance standards, and ensuring alignment with the civil aviation strategy. GACA will also handle flight permits for scheduled, charter, military, and diplomatic flights, and approve commercial agreements involving domestic and international carriers. It will set unified standards for smart airport technologies to improve passenger experience, in collaboration with the Communications, Space and Technology Commission. Environmental protection will also fall under GACA's jurisdiction, including the design and supervision of aviation-related sustainability programs, while agreements between Saudi and foreign airlines operating to and from the Kingdom must comply with international treaties and reflect economic, social, and security priorities.
News24
09-05-2025
- Business
- News24
Reserve Bank clarifies actions taken against Ithala
The SA Reserve Bank would like to clarify actions taken against Ithala due to concern about incorrect and misleading information that has surfaced in some media coverage. For more financial news, go to the News24 Business homepage. The South African Reserve Bank (SARB) has received several media queries relating to the Prudential Authority's (PA) decision to apply for the liquidation of Ithala SOC Limited (Ithala). In addition to the media queries, the SARB has noted, with concern, several instances of misleading and/or incorrect information surfacing in the media, which warrants the clarifications below. SARB is not able to respond to some of the queries as the matters are before the courts. Further context on the liquidation proceedings against Ithala can be accessed on the SARB's on its website. 1. If Ithala was never a registered bank, why was it allowed to take deposits? Even though Ithala has never been registered as a bank, it had been permitted to operate the business of a bank (which included accepting deposits from the general public) through various exemptions, which were originally issues by the Registrar of Banks together with the Minister of Finance. Subsequently, these exemptions were issued by the PA (the successor to the Registrar of Banks). All exemptions expressly required Ithala to separate its deposit-taking activities from its other businesses, such as its business as a credit provider advancing loans to the public, which Ithala did not do. 2. Have all Ithala's bank accounts been frozen? No. The Repayment Administrator (RA), which was appointed by the PA, has instructed Absa Bank Limited (Absa) to freeze only those accounts related to Ithala's deposit-taking business. As a result, from 16 January 2025, Ithala could no longer receive deposits into its deposit-taking accounts, nor could it make payments from those accounts. This also affected depositors. This action was taken to protect depositors by preventing a run on the entity – a situation where large numbers of depositors try to withdraw their funds at once, potentially causing the institution to collapse. Freezing the accounts and instituting a liquidation process allows for an orderly and fair repayment to all affected depositors. Note: Absa acted as the intermediary bank, as Ithala is not a licensed bank. 3. Has the RA/PA acted contrary to Judge Ncube's order delivered in the Pietermaritzburg High Court? No. The PA and RA have not acted contrary to Judge Ncube's order delivered in the Pietermaritzburg High Court. In the judgment, it was confirmed that the RA was entitled to take control of Ithala's deposit-taking activities and that Ithala was not permitted to accept deposits from the public. The RA has applied for leave to appeal the judgment to the extent that it prevents him from taking control of all of Ithala's assets. The RA deems this necessary because Ithala did not separate its deposit-taking activities from its other businesses, such as its business as a credit provider advancing loans to the public. While an application for leave to appeal automatically suspends the operation of the judgment, the RA has nevertheless taken all necessary steps to comply with Judge Ncube's order. In this regard, the RA has only frozen accounts related to Ithala's unlawful deposit-taking, in line with the judgment. 4. Has the RA lied about Ithala's solvency and liquidity in order to place it in liquidation? No. The RA commissioned independent forensic accountants to assess Ithala's solvency and liquidity. Their report found that Ithala is technically insolvent, meaning its liabilities exceed its assets. Specifically, Ithala's liabilities amount to R2.79 billion, while its total assets stand at R2.35 billion, resulting in a shortfall of R441.63 million. This insolvency report has been submitted to the court as part of the liquidation proceedings and is now a matter of public record. The PA had previously reported that, between 31 March 2008 and 31 March 2024, Ithala incurred losses totalling R520 million. The institution has, over time, operated with a high-cost structure that is misaligned with its size, complexity and risk profile. 5. When will the outcome of the liquidation application be communicated? The PA and RA are currently awaiting communication from the court regarding the outcome of the liquidation application. 6. Was it the RA's decision to apply to court for Ithala to be liquidated? No. The RA does not act independently of the PA. The PA appointed the RA in terms of section 84 of the Banks Act 94 of 1990 (Banks Act), which defines the powers and duties of the RA. The RA executes his mandate under the direction of the PA. At no stage has the RA taken any steps in relation to Ithala without the express consent of the PA. The application for the liquidation of Ithala was instituted by the PA, as it is entitled to do in terms of the Banks Act. The PA is therefore the only applicant in the liquidation application. The RA is, in fact, a respondent in the application. The ultimate purpose of the RA's appointment is to safeguard Ithala's assets and repay its depositors. 7. Has the RA or PA unlawfully transferred Ithala's client database to another commercial bank? No. The RA, following the PA's instruction, has engaged with certain registered banks, with the aim of appointing a Repayment Bank. This will enable the repayment of deposits owed to Ithala clients, which were unlawfully taken by the bank. This is a necessary step in terms of the Banks Act. 8. Are the loans by Ithala customers no longer payable? Ithala's clients remain liable for all loans they have taken out. The PA's actions in relation to Ithala do not extend to its loan business. However, the PA is aware that Ithala has sent SMS notifications to all clients informing them that loan repayments must now be made to an alternative Ithala account.
