Thank you very much, Acting Chairperson and the hon members. The National Treasury and the Minister of Finance would like to thank the National Council of Provinces for the thorough and expeditious manner in which it processed the 2008 Division of Revenue Bill.
As the Minister of Finance and Treasury we would also like to express our sincere gratitude to the select committee under the stewardship of Mr Ralane for meticulously guiding the consultative process and also for ensuring that the National Council of Provinces is able to get through this Bill.
Because of the Division of Revenue Bill, which is an annual piece of legislation, it is also possible for some of us to ensure that at the end of the day some of the provisions of the Constitution are met. Yet in many ways this is one piece of legislation which, if we were to fail to pass it in time, would cause the wheels of government to grind to a halt and would also cause undue difficulties for government.
Given the amount of time that the NCOP devotes to the Division of Revenue Bill there is no doubt that it appreciates its significance in the operations of all spheres of government. The Division of Revenue Bill is, and will continue to be, the embodiment of co-operative governance which is fundamentally important for the efficient functioning of our intergovernmental system. It is an outcome of extensive consultative processes which culminated in a meeting of the extended Cabinet which comprises of the national executive, the provincial Premiers and representatives from the organised local government.
The Bill represents a critical link between policy choices that political office bearers make and the programmes that get funded through national, provincial and local government budgets and thus implemented by various administrative arms of government to deliver a better life for all citizens of South Africa.
Although a substantial part of the Bill has remained unchanged over the last few years, some of the amendments introduced this year represent a profound change in financial governance. If implemented in their entirety, the changes will entrench transparency and should further deepen accountability for the management and utilisation of public resources within our own intergovernmental systems.
The introduction of systematic gazetting of three-year allocations for cost centres such as hospitals and schools will give the managers of these institutions certainty about the resources they are going to receive over the medium term. This should enable them to plan better and to implement the various programmes even much faster.
Similarly, the process that the Bill proposes with regard to forward planning for housing and the requirement that provincial departments of housing should agree on project and indicative allocations for future years should lay a sound basis for better human settlement planning in the periods ahead. This should allow municipalities to earmark land for housing development, to budget for and lay out infrastructure necessary to support well-integrated housing developments.
If this works, as it should, we should begin to break the stubborn apartheid spatial settlement patterns which beset many of our cities and towns today.
I am aware that the select committee would have preferred to retain the clauses relating to housing accreditation that were in the previous Acts but was, indeed, persuaded otherwise. [Interjections.] This again attests to the flexibility with which the NCOP approaches the debate on the Division of Revenue Bill.
Some of the changes contained in this year's Bill address specific concerns that the select committee brought to our attention. For instance, this Bill requires institutions and agencies that undertake to deliver on behalf of government departments to report funds they receive from departments and the actual spending on those resources.
The days of using government agencies to hide underspending are over. This fiscal dumping has come to an end. This deals with a matter of mutual interest between the National Treasury and also the National Council of Provinces.
As hon members will recall, this year's Bill allocates R115,6 billion in additional spending over the next three years, in comparison with our spending plans from a year earlier. Of the additional resources, national departments will receive R55,5 billion, provinces R45,7 billion and municipalities R14,4 billion. Schedule 1 of the Bill provides the summary of the allocation of funds to the three spheres of government, after taking account of the revisions of baselines.
Of the R611 billion budgeted for the 2008-09 financial year, national departments received R386,8 billion, which include debt serving cost of R51,2 billion, a contingency reserve of R6 billion and conditional grants to provinces and municipalities. Provinces received R199,4 billion, and R24,9 billion is also allocated to local government as per their equitable share.
Including conditional transfers, allocation to provinces will amount to R238 billion in the financial year 2008-09. The increase over the baseline for the next three years amounts to R46 billion to provide in particular for improvement in education, health, welfare and housing programmes.
This year's Bill adds R14,4 billion over baseline allocation to municipalities. This will see the local government sphere receiving a total of R152,7 billion, which includes R7,5 billion in allocation in kind over the next three years. The local government equitable share receives a further R6,5 billion over the baseline to sustain the momentum gathered over the years in the delivery of free water, electricity, sanitation to all poor households.
Municipal infrastructure related spending is also allocated an additional R7 billion over the next three years. This results in the total infrastructure transferred to municipalities totalling just under R57 billion over the next three years.
Host cities for the 2010 Fifa World Cup received further allocations to facilitate the provision of infrastructure and services related to this great competition. The Bill requires municipalities to confirm the budget for 2010 related infrastructure by June so as to facilitate the covering of this cost.
On Budget Day and during the subsequent debate on the Division of Revenue Bill in the National Assembly the Minister of Finance alluded to the challenge of misalignment between national priorities in relation to concurrent functions and provincial budgets which are suppose to give effect to these priorities.
I am aware that only yesterday the select committee held discussions with select provincial treasuries and departments of educations with a view to seeking clarity on why a substantial portion of the R2,7 billion earmarked for school infrastructure is not properly reflected in their budgets. While the discussion might not have been entirely conclusive, it is a very important and welcome development. It represents yet another positive development in the exercise of accountability within the context of our intergovernmental relations arrangement.
Now, more than ever before, provinces know that the NCOP does not merely pass a Bill that allocates the resources between the spheres, but it pays particular attention to very important detail. It checks whether the money ends up in the priorities and programmes that inform the divisions of revenues in the first place, and this is what I believe accountability is all about. For concurrent functions we need to see more of this in the future.
The Bill is also about to be passed and most processes relating to the allocation of resources are also about to be concluded. The next critical aspect in our accountability cycle kicks in, namely regular reporting on expenditure and service delivery. Again, we should applaud the Select Committee on Finance for the enthusiasm and the rigour with which it deliberates on the spending trends and service delivery performance every quarter after the publication of the Section 32 report. Provinces are aware that the threat of losing conditional grant allocations due to slow spending is real. This, I think, is a most important development that, at the end of the day, the issues of conditional grants and the ability to improve service has come into sharp focus by the NCOP and I believe that my colleagues at the provincial level are also aware of this great challenge of us needing to ensure that resources earmarked for specific activities reach those destinations. This is what gives real meaning to democracy.
We need to increasingly complement financial information with nonfinancial information so that we can always be sure about the correctness of our decisions and the value we get from each and every rand. To this end the 2008 Division of Revenue Bill will assist us by requiring more systematic reporting on nonfinancial information, albeit with some lag, of course.
As we improve the system of reporting on performance, our ability to evaluate efficiency of spending will be enhanced. We shall make more informed resource allocation decisions as required by our own mandate.
Chairperson and hon members, the allocation contained in the Bill we are debating today set a firm basis for accelerated delivery of more and better services to our people. This places our government, as a whole, provinces and municipalities in a particular position that enhances the delivery of services and improves the lives of our people. Thank you very much.