Yes, but I always check my time when I speak. House Chair, Deputy Minister of Finance, fellow select committee chairpersons who are here, fellow members of other provincial legislatures who are here and NCOP permanent delegates, it gives our province pleasure to address this august House on the occasion of the debate and adoption of the Division of Revenue Bill for the 2012-13 financial year. We do so fully aware that the 2012-13 Budget was tabled under unfavourable global economic conditions.
I wish to take members back to the sitting of the National Assembly on 22 February, when the Minister had this to say when he presented the 2012-13 Budget:
This Budget ... reflects the collective determination of the government to address with energy the challenges of creating jobs, reducing poverty, building infrastructure and expanding our economy.
The Budget sets out a financial framework for implementing this vision, a framework that is sound and sustainable. It recognises that building South Africa is a multidecade project that must invigorate our capacity to grow, and must include all South Africans in that growth.
This Budget sets us on a path ... that will be neither easy nor uncontested - hard work and difficult choices lie ahead. But the journey is under way. We have embarked on the long walk to economic freedom. All South Africans aspire to these freedoms: freedom from poverty; freedom from need; freedom to exercise our talents and thrive as individuals; freedom to work together as communities, as organised social formations, as business enterprises and as a proud and forward-looking nation.
This Budget is about making South Africa work smarter, harder and differently.
The allocations to the three spheres of government for the 2012-13 financial year Medium-Term Expenditure Framework are mainly informed by the outcomes-based planning and budgeting adopted by national government. Particular emphasis is on infrastructure development, job creation, better health care and promoting quality education and skills development across the three spheres of government.
We note that National Treasury, in developing the Division of Revenue Bill for the 2012-13 financial year, consulted and engaged the Financial and Fiscal Commission, which is mandated by section 220 of the Constitution to provide information to all organs of state in order to make informed decisions about complex fiscal matters. Section 214 of the Constitution requires that an Act of Parliament must provide for the equitable division of revenue raised nationally among the national, provincial and local spheres of government; the determination of each province's equitable share of the provincial share of that revenue; any other allocations to provinces, local government or municipalities from the national government's share of that revenue; and any conditions on which those allocations may be made.
We are aware that the Bill seeks to give effect to, among other things, the provisions of section 214 of the Constitution. The Bill is in sync with the Constitution and other relevant statutory frameworks. Before the Bill is tabled in Parliament, all provincial Treasuries are afforded an opportunity to comment. As such, our inputs are captured in the Bill.
Although we continue to face challenges of in-migration, which affect our education and health services, as the hon member Montsitsi said, we nevertheless concur with the Bill as tabled and we welcome the changes that have been effected in the Bill pertaining to the Expanded Public Works Programme, EPWP, and provincial infrastructure conditional grants.
We note that the structure of the provincial equitable share for the 2012 Budget remains unchanged, except for slight refinements to the health component. The following components determine the provincial equitable share: education, poverty, economic activity, and institutional as well as basic shares allocated per province. In this regard, we received the second- largest share of the Budget, after KwaZulu-Natal. However, it is important to note that we received the largest proportion, that is 33,9%, of the economic activity component. This is measured by the economic contribution of provinces to the gross domestic product. We acknowledge that the economic component is still a small component of the formula, but our province received a bigger share of that component.
Having taken into account the provincial equitable share as far as it relates to the betterment of basic standards of living, we are of the view that the 2012 allocations are in line with the government priorities of creating jobs through infrastructure development, better health care and quality education. Our province receives an amount of R54,5 billion from the equitable share in the 2012-13 financial year, increasing to R58,6 billion in the 2013-14 financial year. We know that a large part of the Bill remains the same annually.
Furthermore, the following significant changes are welcomed. On the EPWP grant, the grant has been reconfigured to ensure that incentive payments to provinces and municipalities are calculated on the basis of the number of jobs created during the previous year. On infrastructure conditional grants, in attempting to fast-track infrastructure delivery in provinces, section 13 has been added, which places additional responsibilities on department heads of provincial departments with infrastructure conditional grants.
Furthermore, to deal with corruption as it pertains to infrastructure delivery in the province, the following conditions have been added under section 13: All infrastructure expenditure partially or fully funded by condition allocations is reported through project and asset management segments in the standard chart of accounts; maintaining an up-to-date database of all contracts that are fully or partially funded by conditional allocations that are compliant with the register of projects and i-tender system; and lastly, ensuring that infrastructure projects comply with best- practice standards and guidelines contained in Practice Note 22, which was issued in terms of section 5 of the Construction Industry Development Board Act, Act 38 of 2000. The whole section 13, as added in the Division of Revenue Bill, is welcomed and it further entrenches our decision regarding how infrastructure should be delivered in the province.
On the conditional grants, we know that all Gauteng train-related provisions have been deleted from the Bill due to the phasing out of the grant, and I would encourage members who have not been on the Gautrain yet to get on it. It is a joy to travel on that train.
We agree with the concern about spending patterns on some conditional grants. It is therefore important for National Treasury, working with provinces, to strengthen monitoring and evaluation on conditional grants in order to avoid material underspending and the diversion of funds. Infrastructure development remains a critical catalyst for the alleviation of unemployment and poverty. It is for this reason that we support initiatives aimed at expediting and investing in infrastructure development. However, this cannot be totally attained without proper skills development, including efficient project management across the three spheres of government.
We also welcome National Treasury's efforts to further strengthen and regulate supply chain management policies. This will go a long way in preventing noncompliance with supply chain management requirements, thereby preventing fraudulent activities from occurring.
In its recommendation to National Treasury on the 2012-13 Budget, the Financial and Fiscal Commission, FFC, identified the ever-increasing personnel cost as a major concern or threat to future service delivery. Consequently, we should collectively address this potential threat. This should be done with the full appreciation of socioeconomic conditions affecting both the state and public servants.
We further note the interventions made by National Treasury in an attempt to remedy the problems occurring in our department of health and department of social development. However, we are of the opinion that an early warning system should be employed by National Treasury, in collaboration with provincial Treasuries, to avoid fiscal distress in key provincial departments. We note the increase of allocations to local government, as detailed in the Bill. It is our view that the increase will assist municipalities in dealing with service delivery demands.
We wish to reiterate the following: National Treasury should strengthen the framework regulating conditional grants to ensure proper monitoring and evaluation as a way of avoiding material underspending and diversion of funds. National Treasury, in collaboration with provincial Treasuries, should enhance early warning systems to avert fiscal distress in key provincial departments. National Treasury should work closely with all three spheres of government to strengthen human resource management in an effort to meaningfully address challenges of escalating personnel costs. Measures should be developed to avoid scenarios where employees are recruited to positions that are not funded in any given financial year. Our province is ready to implement all measures in the Division of Revenue Bill. [Applause.]