Hon Deputy Speaker, hon members, the Standing Committee on Appropriations would like to congratulate the Minister of Finance for presenting the Medium-Term Budget Policy Statement, MTBPS, the Adjustments Appropriation Bill, B32 of 2012, and the Division of Revenue Amendment Bill. The majority of South Africans, if not all, agree that this was good work under very trying economic circumstances, domestically and internationally. At the beginning of the year, the Minister said, and I quote:
This budget sets out a clear challenge for government at all levels to achieve more by using public resources with greater efficiency. Our success in achieving the ambitious goals we set ourselves will be determined by our ability to execute our plans in full and on time. At the introduction of the MTBPS, the Minister again indicated very clearly that the fiscus as it stands today will not increase available funds beyond the 2012 budget baseline. The Minister had to ensure that the departments improved efficiency, effectiveness and economic utilisation of scarce resources. We, however, congratulate the departments for their co-operation in ensuring that savings were realised. However, as a committee we would like to ensure that we agree on the usage of terminology, so that savings is savings to all of us.
The Division of Revenue Amendment Bill proposes that Parliament approves revisions of R4 billion to the provincial budgets' improvement on the conditions of service for personnel for higher than budgeted wage agreements, as government had settled on 7% with the unions instead of the 5% that was budgeted for, including R87 million for the FET colleges grant.
The African Cup of Nations, Afcon, will be played on our shores next year. The Division of Revenue Amendment Bill proposes to allocate R15 million for the provision of medical services in the five provinces that will be hosting the matches. The Medical Services grant will make the provision for the establishment of, amongst others: medical centres for primary health care and emergency treatment capacity at specific venues; secondly, it will provide emergency medical services; thirdly, it will command and control functions to ensure the health security strategy; and fourthly, to provide mass gathering preparations.
Provinces will have to maintain separate budgets in relation to this grant. A further R180 million is added to KwaZulu-Natal for unforeseen and unavoidable spending on the Health Infrastructure grant, whilst R186 million is set aside for the Hospital Revitalisation grant, of which R166 million is earmarked for the Free State and R20 million for KwaZulu- Natal.
For local government, the Division of Revenue Amendment Bill proposes the approval of rollovers of over R20 million for Regional Bulk Infrastructure grants and R17,4 million for the Expanded Public Works Programme, EPWP, to municipalities. These funds were already committed before the end of the 2011-12 financial year. A further R123 million is allocated to the 2013 Afcon host cities operating grants so that South Africa can host a successful Afcon tournament.
Lastly, R45,5 million for the EPWP is allocated to provide for full incentive amounts for the third and fourth quarter for the municipalities that were not allocated their funds by the end of the financial year. As the ANC, we propose the approval of the Division of Revenue Amendment Bill. I thank you.
There was no debate.
Declarations of vote:
The net effect of the Bill before the House today is that the national expenditure for the 2012-13 financial year was reduced from R969,365 billion to R967,463 billion. The national allocation has been adjusted downwards by R5,860 billion whilst the allocation to provinces has been adjusted upwards by R3,958 billion.
Regrettably, the allocation to local government, where service delivery is supposed to be closest to the people, has remained unchanged. The amounts allocated to provinces will need to be changed in future years following the results of the latest census 2011 statistics, where particularly Gauteng and the Western Cape have experienced a large influx of citizens by way of migration, which obviously places a burden on their financial resources. Moreover, the process in which the provincial allocations are adjusted needs to be expedited. Growing provinces need to receive additional funds to manage the resultant surge in the demand for services.
These demands are a current reality and, therefore, the provincial budget allocations need to reflect this. The most noticeable adjustments to municipalities include R123,11 million for the African Cup of Nations, R6,46 million to the Regional Bulk Infrastructure grant and an increased provision of R62,859 million for the Expanded Public Works Programme. A large proportion of monies to provinces and municipalities reach these entities by way of transfers and subsidies from national funds.
Unfortunately, there is huge underexpenditure and mismanagement of these funds by provinces and municipalities. When the appropriations committee enquires about this, the stock answer is virtually always a lack of capacity to properly spend the funds allocated. Quite often the entity paying over the transfer and/or subsidies refuses, quite correctly, to pay the funds to the receiving entity as the receiving entity neglects to comply with the provision of plans and documents required by the paying entity. The result is often major underexpenditure in respect of funds provided in the budget.
A case in point is the Expanded Public Works Programme, which again receives a higher allocation in the Division of Revenue Amendment Bill despite the fact that this important job creation project has experienced major underexpenditure during the last few years. But then, the cited lack of capacity is not surprising if one considers the reply to a parliamentary question by the DA in which the hon Minister for Co-operative Governance and Traditional Affairs confirms that more than a hundred municipal managers have been dismissed for financial misconduct since the last local government elections.
Entities paying out funds to provinces and municipalities must therefore make sure that the receiving entities have both the capacity and the ability to administer the funds received to ensure proper service delivery to citizens before such grants and/or subsidies are paid over. The DA supports the Division of Revenue Amendment Bill. Thank you. [Applause.]
Deputy Speaker, Cope supported the fiscal framework as presented by the Minister. Today, we support the Division of Revenue Amendment Bill because we understand that service delivery to the people is key. As we support the Division of Revenue Amendment Bill we want to register some concerns that we want government to address. The past financial year's overall expenditure indicated that national government underspent by R11,4 billion, which is an increase from the R9,6 billion of the previous year. This is a concern because many services do not reach the people as a result of this underspending.
In the first quarter of 2012-13, the national government projected to spend R129,9 billion, but it only spent R115,8 billion, which is R13,3 billion less than the projected amount. In terms of the Division of Revenue Act, the conditional grant that contributed to this anomaly, we understand, was the Provincial Disaster grant that was allocated R180 million, but at the end of the first quarter it had spent nothing.
The Municipal Disaster grant was allocated R330 million, but at the end of the first quarter it had spent nothing on that particular account. When you look at the municipal Expanded Public Works Programme, incentives for municipalities again were allocated R599,2 million, but at the end of the first quarter 0,0% was spent. The same thing happened with regard to the Municipal Infrastructure Grant, Mig, funds. We are concerned about this persistent underspending that runs from the first quarter, to the third quarter but spirals out of control in the fourth quarter.
We are worried that this does not project the value for money and the fact that programmes are implemented; it is the same as dumping the money. The Public Service Commission reported that almost all the departments reported 99% expenditure, but when you look at the expenditure, in terms of meeting their measurable objectives, they achieved less than 60%. Education reported only 47%; Public Works 44%; Health 37%; Rural Development 41%; Co- operative Governance and Traditional Affairs, Cogta, 44%. You can see why there is a problem in terms of people toy-toying for service delivery.
We, in fact, support this budget, but we want government to address these concerns in terms of making sure that service delivery, as we approve the budget, reaches the destination where it is meant to be. We support the Division of Revenue Amendment Bill.
Madam Deputy Speaker, this Bill has been necessitated by the proposed national Justice budget for the 2012-13 financial year, which affects the division of revenue between the three spheres of government. The ACDP notes that changes to these allocations have been made possible by the reprioritisation of funds within the existing expenditure envelope. This is noteworthy and commendable.
The requirements of education and health and the higher than anticipated costs relating to the public sector wage settlement largely determine the provincial share of these additional allocations. Salary costs and infrastructure priorities are the main factors behind the adjustments to the national share, and infrastructure requirements are the main cause of the adjustments for the municipalities. The ACDP supports that.
Looking forward, it is significant that both the provincial and local government equitable shares are to be revised following the 2011 census. The total population and school-going age population account for a substantial weighting in the formula and should result in changes to provincial allocations, with the Western Cape and Gauteng set to benefit at the expense of the other provinces. Clearly, the question as to what impact this will have on service delivery in those provinces that may lose funds as a result of this will have to be considered. The local government equitable share funds the provision of free basic services to the poor and helps defray administrative costs.
A new formula will be introduced next year, in the 2013 budget, and additions of the Medium-Term Expenditure Framework, METF, will compensate for rising costs of bulk water and electricity. It will, as we understand, apply a revenue adjustment factor, reflecting municipalities ability to generate their own revenue to ensure that poorer municipalities are assisted. We look forward to those proposals. The ACDP will closely study them as we go forward, but for the present purposes we support this Bill. Thank you very much.
Chair, am I allowed to make a declaration as well?
Hon member, any member can make a declaration. I thought people had requested it and that is why you see them sitting here.
Madam Deputy Speaker, hon members, Ministers present here, we are a country faced with unemployment. The 2011 census results show that a high percentage of our youth are unemployed. We also know that the National Development Plan states that a country with future orientation is a country that develops the capacity of its youth.
Amongst the challenges identified in the diagnostic report is that too few people work and the standard of education for most black learners is of poor quality. On that basis, ladies and gentlemen, I am happy that we all support this Division of Revenue Amendment Bill, because it is divided on the basis of our need for capable youth that will be properly skilled and educated to fill the posts. We shouldn't look outside for skills, because we shall have all the resources and skilled people as well as a well- informed Parliament, which has policies that can facilitate all these things. So, with our division of revenue, we know that we will achieve these things.
The New Growth Path gives top priority to boosting employment and tackling poverty and inequality. This we can do through this division of revenue. We can address this by using the money. As you know the further education grant has been adjusted. Let us as Parliament go out there to support and promote the objectives of further education so that we can get the skills from institutions that already exist. The upward adjustment of provincial allocations was actually due to the wage settlement which everyone has already referred to. We should honour that agreement.
We know that as Parliament we have constitutional powers to call everybody to account, to come and tell us why there is underspending, why some plans and their targets are not met. We must be able to stand firm as Parliament, as representatives of the people, and call whoever is responsible to account for their underspending, which should not be taken as savings.
Underspending is underspending, and we, as Members of Parliament, know what saving is and what underspending is. Let us not just shake our heads and say, "yes, we understand, you underspent". No! Let it not happen like that. Let the department be capacitated by people who are capable and know their work and are able to implement government policies, which we are overseeing.
Let us not just stand there every day and say, "Yes, we know there are vacancies". Those vacancies must be filled. We know we have unemployed graduates. On that basis, let the conditional grants be used for their purposes and not be renamed. [Time expired.] [Applause.]
Deputy Chair, may I make a declaration on behalf of the IFP?
Yes.
Madam Deputy Speaker, I understand that one can declare from anywhere in the House. This is on behalf of my colleague, Mr Singh, who had to go to the airport in a hurry. So, I am not a member of the committee, therefore, committee members, forgive me. The IFP supports the additional allocation of funds, but we must express concern about the ability of provinces and municipalities to not only spend the funds effectively and efficiently, but to have in place high degrees of accountability for such spending.
It is a matter of concern that, as of now, Limpopo, and departments within certain other provinces still fall under the administration of national government. This reality, combined with a high degree of mismanagement, corruption and poor service delivery in many municipalities, does not bode well for the future. We note that additional funds have been made available to certain provinces, KwaZulu-Natal in particular, in the form of a Hospital Revitalisation grant - I think it is R20 million - and a Health Infrastructure grant of R180 million.
Now, given the sad state of affairs regarding what is happening in well- renowned hospitals in the province, like the Addington Hospital in Durban, we trust these additional allocations will be utilised to maintain and improve such facilities and not allow them to deteriorate to unacceptable standards.
If what we have heard about the Department of Health wanting to replace third party catering services at hospitals and provide such catering services in-house is true, we are deeply concerned, as we believe the Department of Health should only be attending to its core function, namely that of providing proper health care. We trust that the matter will be looked into before it is implemented.
This Amendment Bill also provides for an adjustment of R123 million to five cities in respect of the 2013 Africa Cup of Nations. Whilst it is good to host such an iconic tournament, it may be prudent to remind ourselves of the hundreds of millions spent on World Cup stadia, many of which are now white elephants.
We also note that R138,9 million is being declared as savings on the Rural Household Infrastructure grant and has been reallocated to other government priorities. One cannot understand such reallocations in light of the fact that the need in our rural areas for basic services remains so great. The IFP supports the Bill. Thank you.
Bill read a second time.