[Hon Chairperson and hon members, we welcome the appointment of the new SA Revenue Service, Sars, commissioner, Mr Edward Kieswetter and wish him well in his ... rebuilding Sars. The Minister of Finance, Mr Tito Mboweni, tabled the 2019 annual national Budget including the Division of Revenue Bill in the National Assembly on 20 February 2019. The purpose of the Bill is to] (Audio interrupted; preceding paragraph transcribed from member's speech notes.)
... provide for;
The share for each sphere of government of the revenue raised for the relevant financial year;
Each province's share of the provincial share of that revenue; and
Any other allocations to the provinces, local government or municipalities from the national government's share of that revenue, and any conditions on which those allocations are or must be made.
The conditions are very important. The 2019 Budget has been reprioritise in response to the weaker than expected economic and fiscal environment. In order to remain within the revised expenditure ceiling, the government's policy priorities for the 2019 Medium-Term Expenditure Framework, MTEF, period that are funded through reprioritisation in the division of revenue includes the following:
Improving the implementation of the upgrading of informal settlements by ring-fencing funds within conditional grants;
Eradicating pit latrines in schools; and supporting the roll-out of free sanitary products to learners from low-income households. It is
important to note that 68% of the Budget is allocated to social commitments. The division of revenue is distributive and developmental. The reprioritisations complement baselines that provide R1,97 trillion to provinces over the MTEF period and R414,7 billion to local government in transfers. These transfers will fund basic education, health, social development, roads, housing and municipal services. The Bill was the outcome of an extensive consultative process between the three spheres of government which culminated in the tabling, for consideration and adoption, of the Division of Revenue Bill. Over the MTEF period, after budgeting for debt-service costs - which are high - the contingency reserve and provisional allocations, 49,9% of the nationally-raised funds are allocated to national government, 43% to provinces and 9,1% to local government. All the allocations are captured in the report that was in the Announcements, Tablings and Committee Reports, ATC. The Select Committee on Appropriations jointly with the Standing Committee on Appropriations received its briefing from the National Treasury on 8 March 2019, held public hearings on 9 March and went to provinces on 14 and 15 March to brief each provincial legislator on the Division of Revenue Bill and public hearings were held in the nine provinces.
On 20 March, the negotiating mandates were tabled by provinces where eight provinces voted in favour of the Bill and the Western Cape did
not support the Bill but provided reasons. On 27 March the final mandates were submitted to the committee by the nine provinces. We received Limpopo's final mandate this morning, and I am tabling it now that is official. Eight provinces voted in favour in the final mandate, the Western Cape voted against. I will go immediately to the recommendations ... [Inaudible.] The Select Committee on Appropriations, having considered the 2019 Division of Revenue Bill recommends as follows: - you will hear "monitoring" and "evaluation" consistently - In order to ensure that the new and additional provincial conditional grants are utilised and monitored according to the conditions of the Bill -
The Minister of Finance, the provincial treasuries - and that includes MECs - the Minister of Health and provincial health departments should ensure that measures, including proper monitoring and evaluation systems, are put in place to ensure that the new R2,8 billion for the human resources capacitation grant is utilised as required by the framework conditions to fill critical posts in health facilities. Why? Because there was an outcry for this ... This monitoring should include the new components which are added to the comprehensive HIV, Aids and TB grant. The National Council of Provinces, NCOP, will monitor progress on a regular basis. What does it mean? On a quarterly basis and that will be in the Sixth Parliament for the next five years;
The Minister of Finance and the Minister of Basic Education should ensure that measures, including monitoring and evaluation systems, are put in place to effectively spend the additional R2,8 billion for the school infrastructure backlogs grant to provide for safe and appropriate sanitation at schools as required by the conditions in the framework, do we hear the words "required by the conditions in the framework" consistently. This monitoring should include the R200,3 million ring-fenced for the rehabilitation of schools in KwaZulu- Natal;
The Minister of Finance, the Minister of Agriculture, Forestry and Fisheries should ensure that the provincial departments of agriculture and those MECs and the Land Bank put measures, including proper monitoring and evaluation systems, in place, to ensure that the funds reprioritised from the comprehensive agricultural support programme grant, which will be used for the implementation - listen here - of a new blended finance mechanism to extend more affordable credit to black farmers, are effectively spent as required by the framework;
The Minister of Finance and the Minister of Human Settlements should ensure that measures and proper monitoring and evaluation systems are put in place for the ring-fenced R2,5 billion for the human settlements development grant to be effectively used as required by the conditions;
The Minister and the Minister of Human Settlements should ensure that the National Housing Finance Corporation develops a realistic implementation and monitoring plan for the Finance Linked Individual Subsidy Programme to increase the qualifying beneficiary uptake, and this should be monitored quarterly.
With regard to the new additional conditions to the local government sphere -
The Minister of Finance and the Minister of Co-operative Governance and Traditional Affairs should ensure that a new integrated urban development grant is administered and implemented as required as required by the framework conditions without compromising service delivery;
The Minister of Finance and the Minister of Transport should ensure that the R2,8 billion which is added to the public transport grant for the City of Cape Town's new phase of the MyCiti public transport network is administered and implemented as required by the framework conditions without compromising service delivery;
The Minister of Finance and the Minister of Co-operative Governance and Traditional Affairs and provincial treasuries - including those MECs -
should ensure that provincial departments of the Department of Co- operative Governance and Traditional Affairs have the requisite capacity to support and monitor municipalities. This will reduce the prevalent instances of underspending and poor performance of conditional grants.
With regard to local government in general -
The committee further emphasises the need for municipalities to improve their revenue management mechanisms, billing and debt collection systems, and to ensure that their budgets are aligned to their Integrated Development Plans, IDP;
The Minister of Co-operative Governance and Traditional Affairs, in consultation with the SA Local Government Association, Salga, and National Treasury, should investigate whether there is still a need for the existence of district municipalities, given their heavy reliance on conditional grants and their lack of capacity to effectively support local municipalities. The Department of Co-operative Governance and Traditional Affairs should finalise its study on where there is a need for two tiers of municipalities. [Time expired.] Hon Chair, I table this report. The committee supports and voted in favour of the division
of revenue, eight provinces voted in favour and the Western Cape voted against. Thank you, Chair.
Declarations of Vote: