Hon House Chair, the Division of Revenue Bill is possibly the most significant money Bill that comes before Parliament, as it concerns the revenue raised nationally among the national, provincial and local spheres of government for the financial year, and also ensures that money raised is appropriately spent by those spheres of government.
Principally, there are two concerns in this regard, namely, how revenue is divided and how revenue is spent. On the issue of how revenue is divided, one thing is clear: There is less money for government to spend, as we did not generate enough revenue to satisfy the needs of the country. The 2015 Budget amounts to approximately R1,2 trillion. After making provision for debt service costs, the total revenue available for the 2015 year amounts to roughly R1,1 trillion. A slowdown in spending growth has been proposed, with the expenditure ceiling being reduced by R10 billion in the 2015-16 financial year and R15 billion in the 2016-17 financial year. There will also be reductions of R11 billion in the allocations for provinces and an almost R2 billion deduction in allocations to local government over the next two fiscal years.
The revenue allocations to the three spheres of government, particularly those for provinces and local government, will grow at a slower rate than in previous years. The impact this will have on service delivery cannot be overstated.
President Zuma proudly boasts about government's Back to Basics local government revitalisation programme. However, with insufficient funds and maladministration at local government level, it seems the government is turning its back on basics: basic service delivery and basic infrastructure growth.
Local municipalities and local government are at the coalface of service delivery and economic growth as city-led infrastructure growth paves the way for job creation, yet only 9% of the national revenue is allocated to local government.
The Minister of Finance says that local government received a smaller share in the division of revenue because municipalities have significant revenue- raising powers, which include property rates and service charges. What the Minister is effectively saying is: For local government to function effectively, the funding will not come from the national government but from the pockets of the people. The reality is that South Africans are being made to pay for an ailing economy that cannot grow at a healthy pace in order for the revenue to increase.
The outlook for the domestic economy is bleak. The forecast for economic growth is 2%. This is far below the 5,4% target of the NDP in order to create 11 million jobs. The direct effect of low GDP growth is that output and domestic trade will shrink. There is a further adverse effect on investor and consumer confidence.
It is useful to note that economic growth has been revised down for the fifth consecutive year. Slow growth means that the economy does not raise the revenue to balance the budget. So, in order to balance the budget, it has to be funded by increasing debt, which is currently at R1 584 billion. The net debt has grown from 21,8% of GDP in 2009, when Zuma became President, to 48% in the 2014-15 financial year. Debt servicing costs for the 2014-15 financial year are estimated to be R115 billion. Added to this, more than one third of the country is without a job. As the broad unemployment rate persists at 36%, the high unemployment rate results in lower than expected tax revenue.
The Finance Minister has decided to place a further burden on taxpayers by increasing the personal tax rate. The poor will also be negatively affected, as fuel levies and electricity tariffs are to increase. The Road Accident Fund levy will also increase, bringing the total fuel levy to 80,5 cents a litre. This is not taking into account any depreciation of the rand and an increase in the price of crude oil. This will further increase the price of fuel. There is no good story to tell here.
On the issue of how it will be spent, whenever the words, "money" and "government", are used in the same sentence, the alarm bells start to sound. Whether it is tender corruption, government's wasteful spending, the bloated Cabinet, the public sector wage bill, the nuclear deal with Russia, or Nkandla, the ANC's track record does not inspire confidence.
According to the Corruption Perceptions Index 2009, when Jacob Zuma became President South Africa was ranked at number 55. We are currently ranked at number 67.