Chairperson, Deputy Minister, MECs in the House, my colleagues, the debate on dealing with revenue that we are having today, cannot just be regarded as an ordinary piece of legislation, because it embraces intergovernmental fiscal relations and it is one Bill that cannot be postponed or delayed.
The Constitution entitles provinces to a share of nationally raised revenue. It is divided among provinces on the basis of a provincial equitable share formula. The equitable share formula is reviewed and updated every year for the new data, taking into account the recommendations of the Financial and Fiscal Commission. For this year's budget, the structure of the formula was not changed but only updated with the data from the previous 2007 Community Survey, the 2007 Education Snap Survey, and the 2006 General Households Surveys.
The two main funding channels from the National Revenue Fund to provinces and local government are equitable shares and conditional grants. The equitable share is a block grant. Although equitable shares have no conditions attached the spending thereof is governed by national priorities. The conditional grants' aim is to enhance the delivery of specific services according to prescribed national norms.
The equitable shares are intended to strengthen provincial social services programmes that have a high impact on human development and the quality of life. The focus continues to be on public schooling, health and programmes contributing to social development. In education the focus is on scaling up Grade R, training more practitioners and the procurement of textbooks for Grades 10, 11 and 12 learners.
The provincial health budget is geared towards the reinforcement of the public health system and to ensure that it meets the needs of those who depend on it. Health allocations are set aside to mitigate TB and Aids, redesign existing facilities and to build new hospitals.
Now, with reference to the conditional grants to provinces, two changes are introduced in this 2008 Division of Revenue Bill. The changes are as follows: Firstly, the Further Education and Training College Capitalisation Grant will be phased into the provincial equitable share from 1 April this year. The programmes funded through this conditional grant will continue to receive funding, but as part of provincial departments of education's normal responsibilities. Secondly, a new transitional grant is introduced, namely, Devolution of Property Rate Fund Grant, in order to ensure that provinces take over the responsibility of paying the property rates and the municipality charges of properties that were administered by national government on their behalf.
Conditional grants remain an important part of the intergovernmental transfer system, to supplement programmes, also funded by provinces, such as infrastructure and central hospitals and also support for transition and capacity building.
On aggregate, provinces failed to spend R4,4 billion in the financial year ending 2006, and have as well failed to spend R2,4 billion during the 2007 financial year. The figures for the current financial year ending in March 2008 will soon be released.
The concerns outlined do not reveal difficulties in the intergovernmental relations. In fact, if anything at all, the marked improvement in provincial financial management and the first ever release of the three- year budget by the municipalities from 1 July 2003, are excellent demonstrations of our continually evolving intergovernmental fiscal relations. The provinces, moreover, have increased their year-on-year spending when compared with the previous financial year.
So, at this level there is no need for prophets of doom when we are confronted with new dilemmas. What is required is a consistent application of vision of our movement which is spelt out in the manifesto, so as to produce the desired outcome. The ANC, having succeeded before, has no reason why it cannot succeed now and in the future. The ANC must continue to probe national and provincial departments, thereby consolidating our national framework for social change and transformation. Some of the plausible explanations advanced for this underspending are as follows: Provinces experienced natural disasters such as floods. These unanticipated events, required that plans originally drafted before the new financial year commenced, be changed and re-crafted at short notice in the financial year - in some instances, the late approval of business plans and tenders, or the late approval of tenders and lack of a foolproof process in awarding tenders to successful bidders. The ANC supports this Bill without amendments. Thank you. [Applause.]