Acting Chairperson, I want to share some reflections with my colleagues.
As the Deputy Minister said, yesterday we convened a very urgent meeting. Now, in convening that meeting, we did not call the Western Cape. I want to congratulate the MEC in the Western Cape for doing the right thing. We also did not convene KwaZulu-Natal for doing the right thing. However, we did invite our colleagues in education, precisely because this is a very critical matter.
About two or three weeks ago we were told that additional funding was given to provinces, specifically for infrastructure, namely, schools, classes, etc. However, then we were also told that some of these provinces had not allocated the money. So the discussion yesterday was very, very heated. I've never seen Mr Fuzile so heated in a meeting. [Laughter.]
The meeting was very, very heated yesterday. Almost everybody was fighting. Even the members were very much heated in that meeting. It was so difficult to handle, precisely because some of the provinces denied knowing about this money. And so, for instance, when we were in Mpumalanga, the head of department in Mpumalanga denied knowing about this money. He said to us he still wanted to go and do research to find out where this money was, etc. This was discussed in his presence three or four times at the Budget Council. And, again, in that meeting in Mpumalanga - I'd never seen Mr Brown before and he is not here - he was very much heated in raising the issues in that discussion. So, we have taken a decision, therefore, that the National Treasury and the provincial treasuries must go back and trace every cent of this money.
Secondly, this money must be allocated to where it must go to, failing which it must then be withheld and be given to the Western Cape and KwaZulu- Natal for doing the right things. So, clearly there are very serious problems of hiding money somewhere in the provinces, if we are not very careful.
There is one matter we want to raise with members, because they are going to the constituencies. We were in Mpumalanga, where there is a certain municipality. I'm raising a matter that relates to section 13 of the Local Government: Municipal Finance Management Act, which talks about cash management and investment. Now, this municipality says to us that they need R18 million, but then they have an investment of R300 million. Yes. Now, the intention of the law is clear. The law is also clear - you invest money that you do not need immediately.
There is a general practice, therefore, in the municipalities, across the country, where, if you go through their budgets - all of them - you will find there is investment in every municipality. Now, it is not a big deal, but for us the issue is, one, that they need money now. They come before the committee and plead poverty now, yet there is money sitting in some market. The second issue is the morality of investing in the midst of massive poverty, unemployment, etc. It's a very serious matter.
As we go to the constituencies, there is a matter that we also need to check with our municipalities, in terms of the same budgets, with the focus on the capital budget versus the operational budget. In the majority of cases, operational budgets are much higher than capital budgets, but in the operational budget the biggest chunk goes to salaries. Again, in Mpumalanga, one municipality said to us that they have identified 1330 positions, and they have filled 642 positions, but the salary bill as we speak is about 45%. If the additional 700 plus positions are filled, what is it going to do to service delivery? The problem is that service delivery is going to be compromised.
The other problem that we have picked up - it's unfortunate that I'm talking about this one province - is that one municipality gave us a report but, two weeks ago, they reported something different on the same issues to the National Treasury. This is about the credibility of a budget. Members, if a budget is not credible, it poses some problems, and those problems relate to service delivery, the sustainability of the budget, and the quality of service delivery. The other thing we want to raise with you to monitor and engage on with our colleagues in the municipalities is something called a Mayor's Discretionary Fund. It's something that does not exist in the MFMA, but then our own mayors have introduced this thing in a clever manner, because it is now called "Special Projects in Mayors' Offices". The problem with this is that you are not able to do oversight on it, because it is not a particular programme. So, it is a matter that we are raising and engaging with to ensure that these tendencies do not happen.
Now, part of what we've introduced in the brand new Division of Revenue Bill is as a result of what we also saw in the last financial year. In one province - let me also name it - the Eastern Cape, the department of health has built about 60 clinics. The problem with these clinics is that there are no roads leading to them. How do you deal with those matters? It's all wasteful spending.
What we have done, therefore, in terms of the new Division of Revenue Bill, is to ensure that every project that is going to be undertaken must be in line with the Integrated Development Plans. Every project undertaken must be in line with the IDPs, so that as you do whatever projects you do, you should not parachute the projects.
We've seen this again in the Gateway to Africa. We received a report from the Eastern Cape that the department of roads is not building roads to farms. It is the department of agriculture that is doing that. When we went to Limpopo, we had the same departments under one roof. The department of roads said it was not aware that the department of agriculture was building roads. Again, it has to do with the issues of the IDP integration and proper planning.
So, I'm raising all of these things as challenges that all of us must engage with, in the context of this brand new Division of Revenue Bill, to ensure that all of this money that the Deputy Minister talks about - there is so much money that is going to municipalities and to provinces - goes to service delivery. I thank you very much. [Applause.]