Hon House Chair, hon Ministers, Deputy Ministers, hon Masondo, hardworking members of the Standing Committee on Appropriation, fellow South Africans, ladies and gentlemen, the African National Congress supports the 2019 Division of Revenue Amendment Bill hereafter referred to as Bill, because it continues to be a redistributive and pro-poor. This is a short Bill which does not drastically change the 2019 Division of Revenue Act. The net effect of the adjustment to the 2019-20 budget is an increase of about of R24,645 billion. The biggest contributor to this increase is the recapitalisation of Eskom. You will remember, hon members, that a Special Appropriation Bill recently passed by Parliament to assist Eskom to pay its debts and interests.
Hon members, the Money Bills enjoins Parliament to consult citizenry as it considers the Bill. This is inline with what the ANC believes that the people should be the architects of their destiny. During the process the committee engaged SA Local Government Association, Salga, and the Organisation Undoing Tax Abuse, Outa, and receives submissions from equal education. The input provided by the Financial and Fiscal Commission, FFC, is also valued.
The committee urges the Minister to engage with Salga meaningfully before the next budget. We are aware that they are part of the Budget Forum, but it was clear from our interaction that there are things which need more time between and amongst them. The biggest complaint is that the equitable share formula is loaded against local government. Thus, hon Deputy Minister, it is imperative that you engage with Salga. What has always been missing in these engagements is the voice of provincial governments. Although we had a few representatives from legislatures, unlike in Salga, there is no united voice representative of the sphere of government. Yet, provinces are 95% grant funded.
Lastly, what informs the bid is a lack of spending or underspending of the budget items and reprioritisation. Obviously,
hon members, the broader economic environment and Fiscal Framework have a bearing on the Bill. The downward revision of the GDP growth from 1,5% to 0,5% and unemployment rate of 29,1% in the country are critically factors in this Bill. The Bill will continue to try and help with stimulating the economic growth, assisting with job creation opportunities and providing the much needed safety net for those who are most vulnerable in our country.
The Division of Revenue ensures that there is redistribution of resources to the poor and rural areas. Although tax base is concentrated in urban areas, hon members, allocation through the Division of Revenue transfers higher per capita per household amount to rural areas and also, hon members, provinces that are poorer receive bigger share per capita. Rural municipalities receive more than twice allocations compared to the metros which have higher own revenue raising abilities. For instance, on average, rural municipalities receive R11 200 per household compared to R4 900 receive by metros per household.
Hon members, the committee is concerned about the inability to spend allocated monies by certain departments and local governments as can be seen in some conditional grants. The usage
of funds made available for capital projects as operational expenditure also denies our people of much needed services. This coupled with a detoriating state of financial management and local government level contributes to the lack of service delivery. Although Salga calls for more resources, we are making the point that money is not necessarily a panacea to local government challenges. As a committee, we are unequivocal in our demand for improved governance and financial accountability.
Local government debtors' book amounts to more than R165 billon - please note that. Local government debtors' book amounts to more than R165,5 billion, while their creditors amount R60,2 billion. This means that if everyone were to pay what he or she owes, local government would be in a positive cash position of R105,3 billion and everybody would be happy thereafter. What is worrying is that Parliament appropriates money to, among other things, pay municipalities. Some of them as reflected by the R10,3 billion at government institutions owe to municipalities. We are, therefore, calling on hon Ministers and director-generals to settle their debts owed to municipalities. [Applause.]
Abanye abantu-ke abangafuni ukukhokha komasipala, osomabhizinisi. Bakweleta omasipala ...
... R24,7 billion. This is more than two times the amount owed by government.
Kodwa uma sikhuluma asikhulumi ngabo ukuthi bayakweleta futhi asazi ukuthi yini indaba bengakhokhi ngoba izimali banazo. Bangabokuqala ukufika lana bathi, hhayi, umasipala uyakweleta, kodwa kubona ngokwabo bayakweletwa.
Sithi-ke, osomabhizinisi nezinkampani zabo nezinhlangano zabo ake benze isiqiniseko ukuthi kuyakhokhwa. Bese sithi komasipala, hambani niyolanda imali yenu kosomabhizinisi abanikweletayo. Lingisani umashonisa ukuthi uma ekuthola uhola abe esekulinde esangweni. Hambani-ke nani niyolanda izimali zenu.
Hon members, what is even more worrying at least from our interaction with Salga, is that we did not find a credible and clear strategy to collect what is owed to them. In addition, the
weak economy which has resulted in, among other things, under collection by the SA Revenue Service, Sars, and climbing debt-to- GDP ratio has closed the fiscal space for financial manoeuvring. Thus, reprioritisation and efficient use of the funds remains the only option. A situation where funds are allocated but not utilised can no longer be tolerated. We know that there are funds which are banked and not used an institution's budget on interests from their banks. This is suboptimal because the cost of that money to National Treasury is higher than what they get from the banks that is apart from the opportunity cost of that money.
Hon members, it is this understanding that made us to challenge local government and also come up with viable and sustainable growth strategies for the municipalities. Also the role of the small, medium and micro enterprises, SMMEs - women and youths own businesses - cannot be overemphasised. Growth shall not only come from big companies, but from these new players. It is thus critical that we, as parliamentarians, create enabling environment through proper funding and legislation. More energy for Salga should be stand on trying to identify growth opportunities.
As I conclude, House Chair, let me deal with the economics of small business being the source of economic growth and the employment creation.
Uma usomabhizinisi omncane enza inzuzo ka-R1 million ...
... the chances is that that small business will reinvest that money.
Kodwa uma ungxiwankulu enza inzuzo ka-R1 million uzoyithatha leyomali ayise ebhange ngeke ayitshale uthi emnothweni.
So, this is the long and short of it. Therefore, when we call for the support of small businesses, it is not just because of the good sounding phrases or we want to be political correct, we are also economically correct.
Asisekeni osomabhizinisi abancane. Ukhongolose uyaweseka loMthethosivivinyo. Ngiyabonga. [Ihlombe.]