Chairperson of the National Council of Provinces, Ministers present here, premiers present, the Premier of Limpopo in absentia, MECs, permanent and special delegates, traditional leaders, ladies and gentlemen, I greet you.
This month, which celebrates human rights, is indeed an important milestone in our country, as it not only marks the 50th anniversary of the Sharpeville and Langa massacres as the most important events of the liberation struggle but also acknowledges the progress we have made to restore the dignity and rights of all South Africans. I want to take this opportunity to commend the National Council of Provinces, NCOP, for having taken a decision at this time, during this month, to bring the people's Parliament to where it belongs, to the people.
The national orders, the highest awards that our country bestows on its citizens and foreign nationals who have contributed to our nation's attainment of democracy, as well as building democracy and human rights, were awarded to three distinguished Limpopo veterans and stalwarts who distinguished themselves in the struggle for justice, democracy, human rights and development. These recipients include Mr Tlou Theophilus Cholo, an activist and public representative in his own right, Mr Rashaka Frank Ratshitanga, and Ms Lydia Komape-Ngwenya, a former Member of Parliament, and many others. It is through their sacrifices and endeavours that today we can talk about the freedom and the democracy that we share.
Again I commend the NCOP for having brought this programme at this time and having chosen Limpopo because of the contribution made by these stalwarts and many others whom we all know. It was also in this province that the ANC's 52nd conference was held and ground-breaking resolutions were passed to accelerate service delivery and to further democratise the state in pursuit of the noble objective of a better life for all. We reaffirmed our commitment towards a developmental state that is responsive to the people's needs and allocates resources to fight poverty, inequality and social deprivation. As our first democratically elected President, Tata Nelson Mandela, put it in his address to the US Congress on 26 June 1990:
We must also make the point, very firmly, that the political settlement, and democracy itself, cannot survive unless the material needs of the people, the bread-and-butter issues, are addressed as part of the process of change and as a matter of urgency. It should never be that the anger of the poor should be the finger of accusation pointed at all of us because we failed to respond to the cries of the people for food, for shelter, for the dignity of the individual.
These important events are very appropriate for the 2010 Division of Revenue Bill that the NCOP is considering today, as the allocations contained in this Bill are intended to restore the dignity and rights of all South Africans by catering for services such as education, primary health, housing, water and sanitation, and electricity. It really makes it important that our oversight bodies, such as this Council, the legislatures and the National Assembly, use this legislation and all other information that National Treasury generates to ensure that the goals that many of our people in the country fought for during the liberation struggle, including the stalwarts from Limpopo, as I have identified, are realised.
In terms of section 214 of the Constitution, government needs to ensure a transparent and equitable system to divide nationally raised revenue between the three spheres of government. The Division of Revenue Bill that is before us today and its underlying allocations are the culmination of extensive consultation processes between national, provincial and local governments. Of the R112,2 billion additional resources available for spending over the next three years, national departments will receive R56,2 billion, which is about 50,1%. Provinces will receive an additional R45,6 billion, which is 40,6%, and municipalities will receive R10,4 billion, which is 9,3%.
The Division of Revenue Bill that was tabled in the National Assembly by the Minister of Finance on Budget Day was, as we all would recall, for the first time processed in terms of the Money Bills Amendment Procedure and Related Matters Act, Act 9 of 2009. A report was tabled with the Budget, explaining how the division of revenue and National Budget gave effect to the recommendations contained in the committee reports of the 2009 Medium- Term Budget Policy Statement. In that, we also indicated the reasons for taking this into account, as well as those recommendations that were not taken into account. So, I am happy to announce that the recommendations by the Select Committee on Appropriations were taken into account when we processed it, and responses were provided.
This Bill covers in detail all transfers to be made to provinces and municipalities over the next three years. The explanatory attachments also contain detailed information on the formulas for the provincial and local equitable share allocations and a detailed framework on each conditional grant to a province or municipality. However, allow me to caution that certainty of flows alone is not sufficient to ensure that services are delivered to our people.
In light of the need to speed up progress on South Africa's developmental challenges, government is now shifting away from focusing on activities to targeted outcomes to improve service delivery and increase accountability. That will become the focus of policy and implementation. These objectives, with associated activities and defined targets to be reached by 2014, have helped shape the 2010 Budget. It is important that all national and provincial departments, as well as municipalities, cut nonessential expenditure from their budgets and prioritise activities that will lead to improved outcomes.
Chairperson, let me turn to some of the highlights of the deliberations in the Select Committee on Appropriations on this Bill that the House is considering today.
Some of the issues that were raised by those who made representations to the committee point to the following pertinent matters about our budgeting, financial management and performance monitoring system: Firstly, and most importantly, the deliberations highlighted the importance of the NCOP in exercising its oversight role.
Secondly, the discussions highlighted not only matters of capacity and quality of spending but also spending pressures faced by provinces and municipalities. I am told that members of the select committee raised concerns regarding the ability of certain provinces to deal with costs associated with the implementation of the occupation-specific dispensation for health and education. Concerns were also expressed regarding the funding of smaller municipalities that struggle to maintain institutional capacity for effective local governance and administration. The lack of sufficient road maintenance was also highlighted as a key area of concern.
Thirdly, the latest available data needs to be used to determine grant allocations to individual provinces and municipalities in order to ensure that service delivery responsibilities are appropriately matched with resources.
Lastly, discussions also focused on the effectiveness of conditional grants currently in place. The importance of ensuring that grants' objectives are met prior to such grants being withdrawn or abolished, such as those that cater for water, sanitation and electricity facilities in schools and clinics, was stressed. The importance of transferring national offices communicating to receiving offices the qualifying criteria and grant conditions prior to the commencement of the financial year was also emphasised.
The committee supported the introduction of a number of new conditional grants to provinces and municipalities, such as the Rural Household Infrastructure Grant. These recommendations will be taken forward in subsequent budgets. The need to ensure an equitable division of the available resources to individual provinces and municipalities is one of the founding principles of our intergovernmental fiscal system.
The equitable share formula relating to provinces and municipalities therefore need to be appropriately structured. In other words, it should adhere to the principles of equity, efficiency, spill-over effects and facilitating democracy.
A review of the provincial equitable formula is under way that will, amongst other things, focus on education, health and social development, provincial infrastructure, which includes roads, economic services, governance and administration. The review should be completed in time to be adopted in the 2011 Division of Revenue Bill.
Similarly, a review of the local government fiscal framework and equitable share formula are under way in order to more appropriately deal with the different challenges faced by the 283 municipalities. Accordingly, historical backlog service delivery responsibilities and socioeconomic and demographic realities - a one-size-fits-all, therefore - does not recognise these differences and that is why we are looking at it.
The review, amongst others, also includes a review of all conditional grants to local governments and that is one of the recommendations that I indicated will be taken into account in the next financial year.
With regard to provinces, the increase of a baseline for the next three years to provinces is to sustain the social progress made in recent years to meet government's broader developmental objectives and mitigate the effects of the current economic downturn on the poor. Of the additional allocation to provinces, R33,9 billion is added to the provincial equitable share and R11,7 billion to conditional grants. Including these revisions, allocations to provinces will now amount to R322,9 billion in the 2010-11 financial year.
These allocations are in line with government's efforts to upgrade the quality of basic education, improve health outcomes and life expectancy at birth and develop sustainable rural communities and human settlements. An amount of R12,9 billion is intended to step up service delivery in health and education, and to implement the occupation-specific dispensation agreements in these sectors. Also, an additional R18 billion is intended for the carry-through costs of the 2009 public service salary agreements.
In support of government's commitment to step up efforts to deal with HIV and Aids decisively, R8,7 billion is also added over the next three years to ensure sufficient resources are available for government to deliver on its commitment announced on World Aids Day.
Turning to local government, over the next three years municipalities will receive R210,4 billion, including in-kind allocations and the sharing of the general fuel levy with metros, or an additional R12,2 billion. These additional allocations build on previous spending programmes and are directed to the local government priorities, namely the local government equitable share, which receives a further R6,7 billion to protect the poor from increased electricity prices and secure the delivery of free basic services to poor households.
Municipal infrastructure-related spending is allocated an additional R2,5 billion over the next three years. A process is under way to accredit large municipalities to administer national housing programmes. This policy shift should improve co-ordination and alignment of interventions in the built environment. Reforms are also under way to introduce programmes targeted at rural areas. Over the Medium-Term Expenditure Framework R1,2 billion is made available to cater for the roll-out of on-site water and sanitation services to very poor households where conventional connector services are not viable or appropriate.
In conclusion, Mr Chairperson, I would like to thank the hon Chairperson of the Standing Committee on Appropriations, Mr T Chaane, for his leadership and the members of the standing committee alike for their hard work in the processing of this Division of Revenue Bill.
Chairperson and members, it is clear that the allocations contained in this year's Division of Revenue Bill should put government in a better position to accelerate delivery and improve the efficacy of public services. Thank you very much. [Applause.]