Acting Chairperson, Deputy Minister and members, the Division of Revenue Bill for 2008 was tabled in a very different climate to that in which these Bills have been tabled previously.
South Africa, in 2008, has an environment of high inflation, high interest rates, slipping consumer and business confidence and increased market volatility. Given that particular landscape, we believe the Minister has responded well to the challenges before us, by announcing a Budget with a cautionary tone that we should all heed, but a Budget that, nonetheless, increases equitable shares quite significantly, as well as considerable increases in conditional grants to both provincial and local governments.
As members of this House are well aware, the DA has long championed the belief that services are best delivered when they are closer to the people. That is why we defended strong provinces during the constitutional negotiations and why we continue to do so today. It is therefore pleasing to see that the 2008 division of revenue sees a significant redirection of funds away from national government to the local and provincial spheres. Over the medium term, local government's share of total national revenue will rise to 8,3%, up from this year's figure of 7,6%. The rise is even more marked at provincial level. We were also pleased to see 15,3% and 20,3% increases in the equitable share for provinces and local government respectively.
It is also encouraging to see that government is taking the need to invest in infrastructure seriously and recognising its importance in the growth of our economy. Infrastructure is the backbone of our economy and investments such as the additional R2,7 billion for school infrastructure are most welcome.
However, there are some important points of concern on which we need to focus. Firstly, we need to raise serious concern about the chronic underspending of many provincial departments. Although third quarter expenditure was slightly improved this year, departments are still persistently failing to meet their expenditure targets. This means that services are not being delivered to the poor, those most needy of reliable delivery, whether it be in the provision of water, nutrition for their children, clinics or roads, which are vital for the success of businesses and, of course, schooling.
In hearings, expenditure failures are often attributed to the now-clichd lack of capacity. It was therefore most heartening to hear an MEC from the Northern Province yesterday quite candidly declare that lack of capacity is a euphemistic excuse for rank incompetence. Consequently, worthy programmes such as the school nutrition programme cannot be extended until provinces show that they can deliver on their present allocations. Provincial departments must stop hiding behind these kinds of excuses and begin to accept full accountability for missed targets. Stricter and more rigorous monitoring must also be enforced. We need to be able to identify problem areas with departments and intervene before the reporting date, not after the event. What we need to do is prevent underspending by intervening proactively instead of punishing retroactively.
Secondly, we have noticed for several years now that the ability of civil society, of political parties and of Parliament and indeed of citizens to engage with the Budget process is limited at best. The Treasury employs huge amounts of resources in developing and marketing the Budget, resources which those other stakeholders cannot match. Participation in the Budget process therefore tends to take government's position on certain key budgetary debates for granted. The budgetary process is sometimes rushed to fit in with Parliament's programme, to the extent that there is not enough public participation or opportunity to really influence the Budget. This, to a certain extent, limits debate and the accountability role of Parliament and of our citizens.
Statistics South Africa is busy determining our national definition of poverty, ...