I meant they are not omnipresent - they can't be everywhere at the same time. This debate ... as I
said ... takes place in a very difficult economic situation and under very significant constrained fiscal outlook in the midst of high unemployment and high levels of inequality.
The Division of Revenue Act is a powerful tool for redistribution. It takes revenue raised primarily from taxes collected in the core urban areas and reallocates resources to spend on delivery for public services across our country particularly in rural areas. It provides for schools, clinics, roads and basic services in deep rural areas, informal settlements, townships and suburbs in our growing cities.
The Division of Revenue Act recognises the uneven development of our country. The rural parts of our country continue to be much poorer and as a result, the division of revenue allocation allocates more per capita to rural provinces. It also allocates grants for infrastructure based on infrastructure backlogs for service delivery in different parts of our country.
The Bill before the House today amends some of the allocations in the Division of Revenue Act but it does not alter the contours of the redistribution achieved through the Act. The Bill contains
several relatively small and mainly administrative changes to the Division of Revenue Act.
Funds are shifted between direct and indirect grants between provinces and municipalities to ease the implementation of some of the projects. Funds on projects that are anticipated to underspend are reduced thereby reducing the need for government to borrow money that is likely to go unspent.
Allocations are reprioritised to relieve pressure in some of the critical areas such as hiring critical staff in the health sector. The nature of these adjustments reflects a government that is responsive to change and also prudent in how we manage public resources. The fact that there are fewer changes in this amendment Bill reflects that government is sticking to the plans that we laid in the budget that we tabled in February thereby providing stability and predictability in the transfers to the provinces and municipalities.
The Minister of Finance, in tabling the Medium-Term Budget Policy Statement, MTBPS, in this august House on 30th August, highlighted the growing debt. Our debt now is R3,1 trillion and is projected to grow to R4,5 trillion in 2020. The root causes of this debt is
the low economic growth leading to low revenue, wage bill, the recapitalisation of the state-owned enterprises, SOEs, and the contingent liabilities are amongst other causes of this debt.
The low economic growth has a significant impact on the fiscus because it reduces our ability to generate revenue. The debt service costs, the interest that we pay on our debt, wage bill, recapitalisation of the SOEs have shifted our expenditure away from infrastructure and other needs of our people.
We are one notch towards a junk status by the Moody's rating agency. If we continue on this fiscal and economic trajectory, we will be further downgraded to a junk status. The junk status will increase our payment on this debt, which is a big problem. Therefore, our funding shortfalls on imported expenditure items such as infrastructure and learner support material will increase. The corporates operating in South Africa will also have to pay high interest rates thus making it difficult for them to retain and increase investment which will lead to the decline with regard to revenue as well as job losses.
If we continue on this unsustainable fiscal path, which is based on borrowing to finance the wage bill, bailouts of SOEs, we will
not be able to provide the services that the people have elected us for.
We don't have to wait anymore before we are in trouble. Procrastination of implementation of concrete policy programmes and projects is no longer acceptable under these conditions. Dealing with the current unsustainable debt levels will require collective efforts, including sacrifices by all of us; labour, business, communities and ourselves as public representatives.
All spheres of the government need to play their part in making sure that we grow the economy, we reduce the wage bill and resolve the problems besetting the SOEs. This will mean, amongst other things, looking at the wage bill, SOEs, for instance, we should not just look at the national government but we should look at all spheres of government; local governments and the provincial governments. In other words, we should look at entities at the provincial government as well as local government. [Time expired.] ... It is for this reason that we have been visiting municipalities to basically deal with all these challenges, from wage bill, as well as the SOEs at the local level and municipality level. Thank you House Chairperson. [Applause.]
Debate concluded.
Question put: That the Bill be read a second time.
Division demanded.
The House divided.