KwaZulu Natal joins the NHI roll out wagon

NHI on cards for two areas in KwaZulu-Natal

KwaZulu-Natal would roll out the National Health Insurance (NHI) in two districts this year, Premier Zweli Mkhize said yesterday. “At long last, after so many years it fills me with joy to proclaim that the NHI is here. And it is here to stay,” he said. The two districts would be announced by Health MEC Sibongiseni Dhlomo.

The premier said the government was sorting out compliance matters from national, provincial and local government levels ahead of the roll out.KwaZulu-Natal will roll out the National Health Insurance (NHI) in two districts this year, premier Zweli Mkhize said on Tuesday.

“At long last, after so many years it fills me with joy to proclaim that the NHI is here. And it is here to stay,” he said in his state-of-the-province address.

The two districts would be announced by health MEC Sibongiseni Dhlomo.

The premier said the government was sorting out compliance matters from national, provincial and local government levels ahead of the rollout. The NHI would require sufficient staff, especially nurses.

“The vacancies of all nursing posts in hospitals and clinics must be filled and training of nurses fast-tracked. Without this the NHI will be doomed to fail.”

The health department describes the NHI as a financing system that will ensure all South Africans have access to healthcare, regardless of their employment status and ability to contribute to the NHI fund. - Sapa

Source : iol.co.za

Tags : nhi,nhi natal, nhi kwazulu natal, national health insurance, nhi roll out

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Mpumalanga NHI plans

By Gabi Khumalo

Nelspruit - In a bid to create an environment conducive to the successful implementation of the National Health Insurance (NHI), seven community health centres and clinics will be constructed and existing facilities upgraded in Mpumalanga.

Premier David Mabuza announced this during his State of the Province Address on Friday.

He said that when the national Department of Health conducted an assessment of 33 hospitals and 278 primary health care facilities in the province, all facilities were found to be non-compliant with the national core standards and the six priority areas.

"This is an area of work that will receive special attention to ensure that we speed up institutional readiness for the NHI implementation in the province," Mabuza said.

He stressed that provincial care facilities were expected to comply with the agreed core quality standards and six priority areas of performance if they were to be accredited to deliver health services within the NHI.

The national core standards include patients' rights, patients' safety, clinical support services, public health, leadership and governance, operational management, as well as facilities and infrastructure.

Mabuza highlighted the need to invest in the upgrading of infrastructure of health facilities, improving the quality of service as well as leadership and governance of provincial health facilities.

In response to these challenges, Mabuza reported that all districts and institutions have developed Quality Improvement Plans to address the shortcomings that exist and the monthly reports that are being monitored by the Quality Assurance team.

"All health facilities in the province are implementing Quality Improvement Plans in line with the six priorities of core standards.

"In 2012/2013 financial year, the province will prioritise interventions to improve the overall health system effectiveness...part of this process will entail the revitalisation of the health care system through primary health care re-engineering," he said.

Also to be look at is the appointment of suitably qualified people to manage health facilities, accelerated training of nurses, pharmacists, allied health professional need and the introduction of an efficient and effective system for drug supply, management and distribution.

Reported by: South African Government News Service

Source :7thSpace.com
Tags: NHI,national health insurance,provincial plans

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KPMG analysis of the 2012 budget speech

The KPMG team of tax and economic experts have provided their insights and analysis in response to the 2012 National Budget, delivered by Minister Pravin Gordhan in parliament yesterday, 22 February 2012.

Michiel Els, transfer pricing and international tax, states, "As most are aware there are some material changes to our transfer pricing rules coming into effect on 1 April 2012. To date we are waiting for a new Practice Note addressing the application thereof. This issue was not raised in today's budget speech."

However, the following was mentioned which may have an influence on transfer pricing:

• Foreign non-interest bearing loans to be treated as shares in line with the decision to treat certain forms of debt as shares. 
• The introduction of offshore reorganisation provisions to prevent value stripping from South African multinationals
• With the increased rate of dividend withholding taxes, we also anticipate that offshore entities might try to find alternative ways of extracting profits from South Africa.

 

Withholding tax on foreign payments

Roy Naudé, associate director in international tax, comments, "In order to achieve a uniform rate, it is proposed that the current withholding tax rate in relation to royalties paid to non-residents be increased from the existing rate of 12% to 15% and similarly, the withholding tax on interest will be increased from 10% to 15%, once it comes into effect from 2013. It is further proposed that the various procedures in relation to these regimes be streamlined."

Financial transaction tax

Brokers are exempt from securities transfer tax (STT) on shares bought as beneficial owner. The Minister announced that brokers would become subject to STT on such purposes, albeit at a lower rate than the standard 0.25%. (The lower rate has not been announced.)

Ominously, the Minister announced that the feasibility of levying STT on derivatives would be investigated. However, shares purchased to support derivative hedging will qualify for the lower STT rate. Effective date: 1 April 2013

Mark-to-market taxation of financial instruments

SA tax law adopts a fragmented approach to recognise gains/losses on financial instruments based on market value movements.

Generally, corporate traders may recognise unrealised losses but do not have to account for unrealised gains on financial instruments other than shares. In addition, an elective procedure allows certain but not all classes of debt and derivative instruments to be taxed on a mark-to-market basis. The scope of this dispensation in relation to instruments with residual obligations is currently under dispute. Foreign exchange movements on debt instruments are recognised on a mark-to-market methodology that differs from the accounting methods.

Against this background, the Minister announced that a concerted but cautious move to greater alignment of the tax and accounting treatment of financial instruments. 

The treatment of foreign currency instruments will be prioritised. The elective regime will be expanded to cover a wider set of assets and liabilities, subject to pre-approval by SARS. Ongoing changes will be made over several years, comments Stephan Minne, director in tax services.

On the subject of estate and capital gains tax, Mohammed Jada, associate director: corporate tax, points out that Pravin has increased capital gains tax rates and this will have a negative impact on taxpayers' pockets. What is disappointing is that no change to estate duty has been made. It is uncommon to find both capital gains tax and estate duty in the tax system. We welcome a repeal of an estate duty in the near future

Source : bizcommunity.co.za

Tag : budget speech, Budget South Africa 2012, Budget speech analysis

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Budget Speech 2012 what to hope for

Finance minister Pravin Gordhan faces a stern test of his mettle on Wednesday when he delivers his 2012 budget in Parliament.

Not only will Gordhan have to balance the books in uncertain global economic times, but he will also need to find funds for government programmes heavily dependent on spending.

He has been saddled with the challenge of providing details of funding for not only the national health insurance scheme and the ambitious infrastructure programme unveiled in President Jacob Zuma's State of the Nation address, but also several other peripheral social programmes government wishes to introduce.

Faced with the need to increase spending while actual income into government coffers has not increased correspondingly, Gordhan has few options for increasing revenue.

The most obvious strategy would be to raise taxes with an even spread across the income, corporate and value added tax (VAT) base.

But this might be difficult as the South African tax base has not grown in a meaningful manner since the global economic crisis of 2008.

Tim Harris, the Democratic Alliance's spokesperson on matters relating to finance, agreed there was a need to find more funding.

"But any further burden on our taxpayers is not the solution," he told the Mail & Guardian. "Increased corporate taxes discourage job creation, more income tax leads to less spending and an increase in VAT will adversely affect the poor."

Budget Pie Chart Example

Harris said that any moves on taxes would undo the "fine tax-paying discipline" shown by many South Africans.


"If we were to burden people with more taxes, we could easily slip into the same problem experienced by places like Greece, where citizens find ways of shying away from taxes," Harris added.

The DA will deliver their alternative budget later on Monday, in which Harris said the official opposition will be proposing a strictly "growth-driven" budget.

Even spread

Harris's theory was accepted in part by Adenaan Hardien, a senior economist at Cadiz, who said that while there was little scope for it, an increase in taxes might be inevitable.

"If these programmes are funded through national government's coffers, we are going to have to pay it back eventually, and that may well come from taxes," Hardien said.

Hardien suggested a combination of strategies might be employed by Gordhan to fill in any shortfall.

"Funding these projects would require raising revenue from a small tax base, so you wouldn't be able to load one section of the population alone. It may come from an increase in income and corporate tax, as well as VAT," Hardien said.

Waste not, want not
But Chris Hart, the chief economist at Investment Solutions, argued that even if taxes were increased, this would not deal with the "fundamental problem" of a lack of "capacity to deliver".

"I don't know how Minister Gordhan will keep a straight face if he puts up taxes in the face of all this excess wastage by government. Year after year we have a situation where the money is there, but is not used properly. You can't solve that by throwing more money at the problem," Hart said.

This was echoed by the DA's Harris.

"We can increase revenues and get more money coming in, but we need to use it effectively to ensure the promises made are kept," Harris said.

Defeating the purpose
Besides increasing revenues through taxes, there were rumblings that increased costs could be met by introducing so-called "user fees".

This would involve increasing the cost of electricity and water, or presenting levy or toll structures on the infrastructure developed by the government.

But Hart argued that any introduction of fees to users of government infrastructure would be counterproductive.

"We will not taste the fruits of any infrastructure plan if it is not funded properly. If funding it involves end users paying for that service, it defeats the purpose entirely, as we've seen with the furore over the introduction of toll gates in Gauteng," Hart said.

Source : mg.co.za
Tags : Budget Speech,Budget Speech 2012, Pravin Gordhan,Finance minister, South Africa budget speech, Value added tax,President Jacob Zuma,tax news south africa

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Department of Health on NHI issues in SA

Cape Town - The Department of Health has embarked on a massive audit of clinics and hospitals in preparation for the implementation of the National Health Insurance (NHI), the Minister of Health Aaron Motsoaledi said today.

Briefing media in Parliament on Thursday, Motsoaledi said so far the audit, which looks at cleanliness, safety and security, drug stock count, long queues, infection control and the attitude of staff at clinics, had addressed 3 336 of the department's 4 200 health facilities.

The attitude of staff and cleanliness were two of the biggest problems, he said, adding that the department this week had trained a team of 40 health experts to prepare them to provide assistance in improving health facilities.

Motsoaledi said the department would start with four districts and 214 facilities in KwaZulu-Natal, Gauteng, the Free State and the Northern Cape. These districts are: Zululand (KwaZulu-Natal), Sedibeng (Gauteng), Motheo Free State), and Pixley ka Seme (Northern Cape).

He said his department was also refurbishing nursing colleges and homes to increase the capacity of these colleges to produce more nurses.

In all, 122 colleges had been targeted and 49 colleges were already being refurbished.

Motsoaledi said his department was still tackling the problems of the Gauteng Provincial Health Department, particularly in its non-payment of service providers.

He said he had held conversations with the Minister of Finance Pravin Gordhan to ensure that provincial health departments had to fulfil certain non-negotiables when allocated funding from the Budget.

This could be for example to ensure that provincial health department's set aside allocations for such areas as immunisations of key infections, he said.

Turning to HIV and Aids, he said the mother-to child infection rate for HIV and Aids had dropped from 8 percent in 2008 to 3.5% last year, for children born to mothers infected with HIV.

This had helped to save 30 000 babies per year - most of these in KwaZulu-Natal, he said.

He also called on South Africans to get tested for HIV and Aids at least once a year.

The department would also be tackling non-communicable diseases, such as alcohol and tobacco abuse.

He said South African government's regulations against smoking had already resulted in a sharp drop in smoking over the last few years.

"We have to deal with the scourge of alcohol advertising where this is projected as product bringing success," said Motsoaledi, who pointed that adverts often depicted images of success and a depiction that drinking was "cool" for young people.

A more difficult issue, he confided, was how to get South Africans to exercise more and to mind their weight. -

Source : buanews.gov.za
Tags : HIV, Aids,health insurance , insurance South Africa,national health insurance,NHI, insurance news, gr8insurance

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National health insurance funding debacle

After the South African Government released its long expected Policy Paper on National Health Insurance (Policy Paper) (NHI) funding on 11 August 2011, quite a few questions remained unanswered.


According to the Policy Paper, Government planned for an additional R145 billion funding requirement in real 2010 prices for the roll-out of NHI over the next 14 years. 

The expectation is that these additional funds will be sourced through increased tax revenues. An additional R15 billion is needed over and above the Medium Term Expenditure Framework (MTEF) estimated health budget for the implementation of NHI in the 2012/13 financial year. 


This represents an increase of 14% in the MTEF budget estimate and will bring the health budget from the original estimate of R110 billion to R125 billion in the 2012/13 financial year. Over the entire roll-out period, the estimate equates to an average of R10.4 billion in additional funding in real 2010 prices being required every year. 


Some of the funding mechanisms currently being discussed include a potential increase in the VAT rate, a surcharge on individuals' taxable income and the phasing in of a payroll tax (payable by the employee). 


When governments consider increasing tax rates to fund a new policy decision, it is not a straightforward decision. Factors such as equity, efficiency, flexibility, ease of administration and collection and potential revenue should be taken into account. 


Questions around equity will centre on whether or not the tax promotes an equitable or fair distribution of income. This would typically speak to the regressive or progressive nature of taxes. The debate round VAT, and those opposed to it, is that it is regressive in nature, meaning it affects the poor relatively more than the rich. 


On the other hand, proponents of VAT as a source of funding feels the tax base is broadened and that everybody can contribute. By zero-rating certain necessary items, the regressive nature of VAT is also reduced and it is relatively cheap and easy to administer if compared to income tax. 


Due to the broader nature of the tax base, research conducted by KPMG on the nature of a tax increase to fund NHI through VAT or through personal income tax, also indicated that increasing VAT might have a slightly less distorted nature. However, due to the socio-economic make-up of South Africa, changes in the VAT rate can and should be carefully considered. 


There is another, less common alternative. Many people believe that increasing the tax on cigarettes and alcohol could and would discourage harmful behaviour and, in turn, improve the population's health. From that perspective, it makes sense to use sin taxes as a potential source of funding for public health policy initiatives. In addition, sin taxes also serve as a source of revenue and are considered by some analysts to have less distortionary effects than other types of taxes. 


On the downside, research indicates that sin taxes might be regressive in nature and if the consumption of taxed products actually reduces on the back of the introduction of sin taxes, it might have a negative impact on the estimated revenue. Increasing sin taxes, on the face of it a potentially reasonable alternative, might therefore have other, unintended consequences that the Fiscus might like to avoid. 


Finally, it is important to consider that tax revenue in South Africa goes into one pool and are normally not ring fenced. The policy stance is unlikely to change with the introduction of NHI. Therefore, no matter the tax revenue source considered, the funds will be paid from the same pool of tax revenue. 


The question remains - who will contribute and how much? 


* Lullu Krugel is an Associate Director and Senior Economist at KPMG 

Source : businesslive.co.za
Tags : health insurance , insurance South Africa,national health insurance,NHI, insurance news, gr8insurance

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South African insurance market changes

PRETORIA – The big-four players in short-term insurance face fierce competition and are even losing some market share from the smaller direct writers such as Outsurance and Auto & General.

According to a report by the ratings agency Fitch these direct writers have increased their market shares, particularly in personal lines, at the expense of the larger companies.

"The increasing competition has put pressure on the larger non-life insurers' profitability. Fitch expects earnings to remain under pressure in the near term," the report reads.

Nicole Gibb, associate director in Fitch's insurance team in South Africa, said in an interview that the bigger players are adapting and have created their own direct distribution lines in place to win back market share.
"It will take some time to see if they can get back their market share," she said.

The fierce competition in the sector is a good thing as the four-big players still dominate the market with a combined market share of roughly 50%.

Santam is the leading short-term insurer with a market share of more than 22%. Second is Mutual & Federal with 11%, followed by Hollard with 9% and Zurich South Africa with 8%.
Outsurance has already increased its market share to 6%, while Auto & General is currently on 5%.
According to the report, direct sales now represent nearly 20% of the personal lines market, a market that was historically served by intermediaries.

Gibb says that Fitch maintains a cautious outlook regarding credit ratings for the short-term sector, as well as life insurers, in South Africa.

She adds that ratings are likely to stay constant if conditions remain as they are.
"If there would be an improvement in performance it would only be a slight improvement," says Gibb, highlighting the volatile investment markets and continued pressure on consumers' disposable income as constraining factors.

Gibbs also says that South Africa has been more sheltered than the rest of the world against the economic downturn. "South Africa obviously has been impacted and I do think a serious fall-out will filter down, but not on the same scale as for the rest of the world."
Ratings actions are important for life and short-term insurers as higher ratings help these companies to issue debt more cheaply.

The insurers actually approach the ratings agency to obtain a credit rating.
"Within the insurance market ratings also demonstrate the security and strength of an insurer to its policyholders and can be a bit of a selling point for them," David Prowse, senior director at Fitch's UK team, said.

As far as growth opportunities go, Africa remains a possible market for both life and short-term insurers, Gibb said.

"The South African market is quite saturated for life-insurance products and the big players have been expanding into Africa. A very cautious approach is being taken when moving into these markets that are still relatively untapped," Gibb said.

Expansion into Africa as a diversification strategy would initially be seen as a credit negative due to the risk involved with moving into new markets, Prowse said.
"Once the company has successfully diversified it becomes a credit positive as the risks are then spread more geographically,"

Source : moneyweb.co.za
Tags : insurance market South Africa,direct marketing, insurance news, gr8insurance

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Natural disasters hit insurance industry

CAPE TOWN, South Africa, Feb 06, 2012 (BUSINESS WIRE) -- In 2011, the mining insurance market was not only hit by $2.7 billion in natural catastrophe losses, but over 60 operational losses totaling $835 million.

The $3.5 billion total estimate of losses facing mining insurers has prompted a 30 percent withdrawal in insurance capacity since the start of 2011. This is according to the latest Mining Market Review released today by Willis Group Holdings plc (WSH) , the global insurance broker.

The report, published to coincide with this week's annual African Mining Indaba in Cape Town, a conference held for natural resource professionals, estimates that the current global capacity available to mining Property

Damage & Business Interruption (PDBI) insurance programmes is $1.25 billion, down from $1.75 billion at the start of 2011. Willis says that "whilst this does not represent the dramatic loss of capacity that precipitated historical hard markets such as 2001, it may indicate a difficult year ahead for the renewal of mining PDBI programmes".

Willis' report identified resource nationalism, natural catastrophe exposure, and supply chain disruption and globalisation, as the three biggest risks facing mining companies:

-- Resource nationalism and punitive taxation regimes are no longer only an issue in emerging markets, noted Willis, with "developed countries (notably the United States, Australia and Canada) increasingly adopting resource nationalist policies that include the blocking of Chinese investments and the tightening of fiscal regimes in the extractive sectors". The report includes a chapter on the myths and realities of resource nationalism by global analysis and advisory firm, Oxford Analytica.

-- The huge impact of the Japanese earthquake and tsunami, the Christchurch earthquakes, the Queensland floods, earthquakes in Papua New Guinea, the weather events and floods in Brazil and South Africa all served to reinforce the threat to the mining sector posed by natural catastrophe events.

Source :marketwatch.com
Tags: insurance,mining,natural disaster
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