House Chairperson, may I first take the opportunity to wish you well in your retirement, as I do to Mr Marius Swart as well. We are going to miss his nonpartisan approach to many issues in the committee. I'm sure the committee members would acknowledge that. What is this debate on the division of revenue about? It is about saying, having presented the Budget, that there are three key pillars to our Budget. The first is the fiscal framework which asks, how much revenue do we collect; how much are we going to spend; how much are we going to borrow; what is our debt looking like; and how do we make all that sustainable?
The second pillar, having decided on how much are we going to spend, is asking how much do we allocate in terms of our Constitution to each sphere of government - national, provincial and local.
Thirdly, having decided on what goes to the national government, we also determine through the Appropriation Bill - which the next administration and next Parliament will deal with - how much is going to each Vote that we have in our current system. I now come to the answer to the question: How much does each sphere get? To put it plainly, R489 billion goes to the core level, national, in terms of this Division of Revenue Bill; provinces get R444 billion and local government R90 billion.
The next thing that happens, in addition to the equitable share, is that provinces and local government or municipalities also receive conditional grants. There have been many contributions today about the nature of these grants, the conditionalities, whether they are direct or not direct. Some of them are direct and some are not. Direct means the recipient of the grant, in terms of the broad mandate, can determine how that grant is actually spent. Indirect means that the national department will spend the money on behalf of the municipality or province, because that particular entity does not have the capacity. However, at the same time, as several members have said, the national department must build the capacity of that particular entity.
So, in designing a new set of grants and a new way in which these grants will be assigned, there is a balance between the direct and the indirect conditional grants. A particular flexibility has been introduced, which we will experiment with for the next few years. The best example is in the health area, where three different grants have been brought together, without the necessity to go through all sorts of rigorous processes, and the national department can transfer money from one area to the other. There are also provisions for service delivery agreements between national and provincial governments.
In addition to these factors, the Division of Revenue Bill provides for institutional liaising and better planning in provisional infrastructure programmes. We want to move towards multiyear planning, as has been correctly pointed out, to a situation where provinces and municipalities submit plans two years ahead of their actually wanting to spend the money so that we don't run into this perpetual problem of not having a plan nor the money.
However, more importantly, we must also improve the rate of delivery and better use of money, and better value for money as well. Secondly, we laid the foundation for faster and more inclusive growth in municipal economies, particularly the bigger municipalities, but also the rural municipalities. The hon Sogoni has referred to the built environment performance plan, which is one of the elements that we are trying to institutionalise within the planning system of municipalities.
Thirdly, there is the growing role of indirect grants. As I pointed out, whereas in the past we gave repeated opportunities to provinces or municipalities to come up with ways of delivering services, now we are saying national departments must take some responsibility for this area. A valid point has been made by hon Snell, namely that national departments are often policy-orientated. What they have to learn, firstly, is to monitor; secondly, what delivery actually means; and, thirdly, to develop the capacity themselves, if they lack it, in order to undertake the delivery.
Another key programme that many hon members made reference to is the prioritisation of the eradication of the bucket sanitation challenge that we have. Lots of money has been assigned, and Human Settlements and other departments are working co-operatively in this area. One of the things we need to recognise is that when we have such rapid migration to the cities as we do, this problem becomes more and more accentuated over the years, and future administrations will have to take care of that.
There is also a new set of grants that have been introduced in this Medium- Term Expenditure Framework: grants in respect of substance abuse treatment centres; a new grant for education sector therapists; and a municipal human settlements capacity grant to enable municipalities, particularly Metro municipalities, to deliver better.
Having said that and laid out that framework, let me firstly thank hon Sogoni, Chaane and the members of the appropriations committee for their excellent contributions over the years. As has been correctly pointed out, the appropriations committee has a vital role to play, but it still inadequately plays that role either because we have limited resources or that role is not properly played out.
One hopes that in future Parliaments, the appropriations committee will be properly resourced and will be able to examine more rigorously the expenditure that each department and indeed each sphere undertakes. I also want to thank provincial members of executive councils, MECs, and officials, because a Division of Revenue Bill involves a long process, which involves a great deal of consultation, including the Financial and Fiscal Commission, FFC - and I want to come back to Mr Ross's point on this - before we can actually produce that Bill before Parliament.
Mr Harris, thank you for your very gracious remarks in respect of myself. However, let me point out, unfortunately, that when you say the Western Cape spends at a 76% level, our records show that that is the lowest amongst the provinces. So, we should share the facts in that particular regard. I'm sure there are areas in which the Western Cape does well, but clearly there are areas where the Western Cape doesn't do so well. [Interjections.]
Hon Speaker, may I rise on a point of order?
Sorry, hon Minister. What point are you rising on, sir?
Hon Speaker, the Minister of Finance is misquoting my speech. I said the DA spends 76% of its budget in the Western Cape in poor areas.
That is a point of information, sir, not a point of order. Continue, Minister.
Thank you, Mr Speaker, but we can debate that a little later, when you provide us with water at the reception.
Now, the second major point he makes is about being radical or conservative. If you consult the Oxford dictionary, you will see radical is about getting to the root of a matter. It is about tackling something at a very fundamental level. I would submit that what we have - unfortunately that's the nature of politics in South Africa, and I imagine in most democracies as well - is a very conservative populism which actually masks a neoliberal core and a very laissez faire approach to our politics and our economy. I think I would submit that that is, in fact, a precise description of what we have in the DA manifesto and elsewhere.
I now come to the repeated reference to this so-called paper of the National Treasury. It is not a Treasury paper, but a paper of three individuals. The Governor of the Reserve Bank has issued a clear, categorical denial that this is the official position of the Reserve Bank. Yet, hon members come to this platform with the repeated idea that this is something that we have actually issued as a formal paper and belief.
Remember that, like many things in politics, many of these areas rely on a whole lot of ifs and buts. If one can do x, then one will get y. The difference between us and that "if" proposition is that we actually do it; we actually deliver and we actually spend money. [Applause.] We understand that in the process of delivery one has successes, challenges and even failures, but it only apply to people who do it and confront those challenges. So, Mr Ross, the point that you made about audits is a welcome one. [Interjections.]
Order! Order!
I want to suggest, though, that as Parliament we need to more carefully interrogate this concept of a clean audit. I think we misdirect it. The audit profession does not know anything about clean audits. In the private sector one does not have clean audits. One either has audit opinions that are qualified, unqualified or -there is another word, which I just forget at this point in time - when there is no evidence available that auditors can actually work with. So, if we stick to the facts, one will find on page 101 of the Budget Review, Chapter 7, marginal improvements in audit outcomes for municipalities. The improvement is from 117 in 2011-12 to 122 in 2012-13. If one wants to look at issues about reducing corruption, one will find that on page 101 of the Budget Review.
Other hon members, I think hon Singh among them, made a valid point about amending the Budget, but I think we do take the FFC seriously. Let me say emphatically that, if the FFC is not happy, my doors are open; they must come along and say what their problems are and we will deal with them. However, there are long processes, of which the FFC is, in fact, a full part.
I am afraid that I can't specifically address the other contributions that hon members have made, because of limitations of time. But, may I wish you all well, particularly those who are not returning to Parliament. I wish you well in your future careers or in your retirement. I thank everyone concerned for their co-operation during these five years. Thank you very much. [Applause.]
Debate concluded.
Bill read a second time (Democratic Alliance dissenting).