Division of Revenue Bill: Negotiating Mandate

Meeting report

DA submission on Division of Revenue Bill [B3-2021]

Mr R Mackenzie (DA) referred to the publicly available information, and lamented the equitable share allocation to the Western Cape. He also took issue with allocations to ailing parastatals.

“What we still see are videos of Denel employees crying over their salaries not being paid for the month,” he said. He blasted the government for wasteful expenditure on failing state enterprises like South African Airways (SAA), on which it had spent billions of Rands without it having yielded the desired results. He commented that this money could have been allocated to provinces for housing that could bring working class people closer to urban areas. He stressed that the Western Cape’s housing crisis had been well-known.

He expressed his gratitude that the human settlements budget had received a marginal increase, and said that the national Department of Human Settlements (NDHS) should redirect unspent grants by other provinces to provinces that had actually spent their equitable share for the financial year. He lamented the lack of consequence management in departments and government parastatals.

He accused the National Treasury (NT) of selective condemnation when it came to whom it chose to exercise rigorous financial management oversight over. There had been many instances where NT had failed to hold the likes of SAA to account for gross mismanagement.

He recalled that the Western Cape had been the only province that had continued with the National Schools Nutritional Programme during the hard lockdown. The province had ensured that millions of schoolchildren had received a warm meal every day. Other provinces had followed suit only after the courts had directed them to do so.

He lamented the lack of consequence management against those provinces whose allocations had not been spent. This money could have gone to other provinces that had the capacity to spend the money. According his estimate, about 90% of the Division of Revenue Act (DORA) funds had been allocated to failed entities, so he could not reasonably support the DORA.

The Chairperson thanked Mr Mackenzie for his input.

She then called on the procedural staff to check for any spelling mistakes in the document, and to furnish the legislature’s research office with a copy so that statistics could be double-checked.

She then went through the DORA allocations for the Western Cape.

Mr Mackenzie added that he had copied and pasted the actual information that comprised the DORA allocations directly from the DORA book.

The Chairperson said that Mr Mackenzie had already indicated his opposition to the DORA and called on other Members to express their opinions on the DORA as well.

Discussion

Ms W Philander (DA) spoke in support of Mr Mackenzie’s inputs, which she dubbed as having been “comprehensive,” and said they explicitly conveyed why the DORA should be opposed by the Western Cape.

Ms N Nkondlo (ANC) said the argument about the equitable share formula that Mr Mackenzie had highlighted had been raised previously with National Treasury, which had indicated that they would certainly look at the concerns that had been raised by the Western Cape. “I think it is important that we do not add our own facts to the National Treasury's determination,” she said, as “it was agreed that Treasury would come and brief us on the formula.” It seemed as if the formula would continuously be brought up by the Standing Committee.

She conceded that Mr Mackenzie’s presentation had raised valid points, but expressed her support of the DORA. She also expressed her thanks to the NT for having taken note of the population increase in the Western Cape, and the subsequent marginal increase in the budget. The Committee had constantly raised the large migratory influx into the province and the consequential pressures on the provincial authorities to deliver basic services to citizens. These concerns had been taken up by the NT.

She thought that the additions that had been made to the training grant for medical interns had also been a step in the right direction, especially since the country was entering the third wave of the Covid-19 pandemic

She also touched on the spending patterns of municipalities, when it came to conditional grants having to be returned to the NT. The Treasury abhorred this practice, as the end result was decreased allocations from the fiscus.

She referred to administrative penalties that had been levelled against citizens due to the failure of government departments to implement the necessary systems, arguing that citizens should not have to pay for government failures.

Mr L Mvimbi (ANC) said he wished the Committee would consider calling both the NT and the Western Cape Provincial Treasury (PT) to a meeting in order to provide a thorough explanation on what modalities they had used to determine the equitable share allocations.

He had not been in that particular meeting with NT which Members had referred to earlier, but it seemed that the Western Cape Provincial Government continued to raise the same objections to the DORA allocations. Having perused the document, he had satisfied himself that the funds had been adequately disbursed among the nine respective provinces.

He emphasised that the formula should not always be the reason behind the Western Cape’s objection to the DORA. He hoped that the Committee would consider adding a resolution to this effect.

He said the presentation by Mr Mackenzie had been comprehensive, and he had the right to his views. He expressed his support for the DORA, and indicated that the money that had been redirected for the fight against Covid-19 continued to be utilised to strengthen South Africa’s health system.

Mr R Allen (DA) expressed his support for the inputs that had been made by Mr Mackenzie. He added that Mr Mackenzie had also mentioned that the funding allocation towards safety and security had not really been sufficient. He therefore supported the proposal that the Western Cape should not support the DORA.

Mr Mackenzie said that the Standing Committee on the Premier and Constitutional Matters had extended an invitation to the Independent Electoral Commission (IEC), as well as the Department of Home Affairs (DHA), to be briefed on the readiness for the local government elections, as well as the population growth in the country. This would also allow him the opportunity to get more clarity on the equitable share and the distribution they are proposing.

He supported Mr Mvimbi's proposal that the NT should come and explain again how they had determined the equitable share.

He recalled that in the last meeting that the Standing Committee had with the late Prof Daniel Plaatjies of the Financial and Fiscal Commission (FFC), he had asked the professor whether the government had taken the FFC's research into account when the equitable share was determined. The professor had been very diplomatic in his response, saying: “At some stage, Treasury had stopped listening.”

Mr Mackenzie was adamant that he would not stop raising his objections to, and problems with, the equitable share and how it was distributed. The Member of the Executive Council (MEC) responsible for Finance in Gauteng had appeared on the news two weeks ago, where he had raised the same issues as the Western Cape, about the equitable share not being in line with the population growth of the province. Though the MEC had not said it in so many words, he had picked up on what the MEC had inferred.

He added that he would not stop highlighting the equitable share issue if the problems still persisted, because if the province did not get what was due to it, it would not be able to deliver its services

Mr G Brinkhuis (Al Jama-ah) said he would also like the NT to come back and explain how the equitable share determination worked.

The Chairperson said that in one of the previous meetings with the NT, it had been agreed that there was a need for the NT to come back and provide an explanation on the equitable share distribution. He concurred with Members Allen and Philander that the equitable share had not taken issues like crime and gender-based violence (GBV) into account.

She aligned herself with the position that had been taken by the DA Members of the Standing Committee.

She also agreed that the Standing Committee should have a discussion on conditional grant spending with municipalities. This could be included in the budget workshops that had been planned for later in the year.

The Chairperson then asked the procedural staff to flight the Standing Committee's draft report on the DORA.

She provided guidance to the procedural staff on which words had to be removed from the document, and indicated that the divergent views of Mr Brinkhuis had to be noted as well. The same should apply to the views of Mr Mackenzie, as well as the majority view.

She asked Members Brinkhuis and Mvimbi whether their divergent views had been accurately captured.

Both Members responded in the affirmative.

She then put the draft report up for consideration and adoption by the Standing Committee.

Mr Mvimbi moved the adoption of the report, and Mr Mackenzie seconded.

The motion was carried by the Standing Committee, after which the Chairperson read the report into the record that the Western Cape had opposed the DORA Bill, and that the ANC and Al-Jamah had voted in support.

Budget workshop

The Chairperson informed the Committee that the date for the budget workshop had been set for 30 June to 2 July. Three days had been set aside for deliberations.

The agenda had not yet been finalised, as the Committee was awaiting feedback from the departments that were expected to present.

She then informed Members who the provisional presenters would be. These would comprise introductory remarks by the Western Cape MEC for Finance; a briefing by national Parliament’s legal unit on its research; the WCPP's legal unit; the national and provincial treasuries; the FFC; the Parliamentary Budget Office (PBO); and Premier Alan Winde and his departmental delegation (legislative drafting). She commented that the Committee had to know how to draft legislation, especially on the technical parameters.

Invitations had also been extended to the Auditor-General (AGSA) and a professor from a knowledge institution.

Another three days in November had been earmarked, in conjunction with the Chief Whip's office, for a second budget workshop, where more deliberations could be had on what had emanated from the first one.

Due to time constraints, no more entities could be invited.

The first workshop would take place in St Helena Bay, and she asked Members to avail themselves.

Discussion

Ms Nkondlo proposed that for the second workshop, the Standing Committee should include discussions on how to improve public participation in the budget process. She stressed her firm conviction on the need for strengthened public participation.

The Chairperson commented that one of the entities that had been invited to present during the first workshop might refer to public participation. However, she could allocate a slot during the second workshop for a dedicated discussion on how to strengthen public participation in the budgeting process.

She suggested that the Standing Committee should also invite a professor from a knowledge institution that had conducted research on public participation in the budgeting process, as well as the proposal by Member Bosman that an international budgeting non-governmental organisation (NGO) be invited as well.

She said that the workshops would be organised around the physical attendance of Members, but a hybrid facility would be available. She conceded that finance was not considered a sexy topic, and could thus lead to boredom.

Mr Bosman replied tongue-in-cheek that he had never been any good at mathematics, and had therefore never found maths sexy.

He went on to propose that the Standing Committee should also consider an invitation to Ms Christina Nomdo, the Western Cape Children’s Commissioner, who had considerable experience in public participation and had recently toured the province on a public participation drive.

The Chairperson agreed with this proposal, and recalled that the Gender Commission had on previous occasions briefed the Committee on gender mainstreaming within the budgetary process.

Ms Nkondlo proposed that the WCPP public outreach office should also be roped in to strengthen public participation. She made a further call that the detailed breakdown of errant municipalities -- those that had not spent their conditional