National Council of Provinces - 27 March 2003

THURSDAY, 27 MARCH 2003 __


The Council met at 14:03.

The Chairperson took the Chair and requested members to observe a moment of silence for prayers or meditation.


                          NOTICES OF MOTION

Mr N M RAJU: Madam Chair, at the next sitting of the House I shall move:

That the Council -

(1) notes that -

   (a)  as a  result  of  the  Constitution  of  South  Africa's  fourth
       amending Act, ie the floor-crossing legislation, there has  been
       a flurry of activity on the floors of the National Assembly  and
       in provincial legislatures;

   (b)  one of the main  victims  of  the  "coalition  forces",  to  use
       current military parlance, is the almost total decimation of the
       New NP, which lies comatose in the ICU ward  of  politics  as  a
       prelude to its demise;

(2) wishes to record this historic occasion in South African politics so that we can finally lay to rest the unlamented legacy of apartheid as fashioned and championed by the former National Party, parent of the New NP; and

(3) notes that the DA wishes to welcome the former members of the New NP who have finally jettisoned the baggage of the past and joined an inclusive, progressive and modern DA.

Mr K D S DURR: Chairperson, I hereby give notice that at the next sitting of this House I shall move:

That the Council -

(1) notes -

   (a)  with concern the crippling effect the arms  purchasing  deal  is
       having upon the capability of the SA National Defence  Force  as
       half of its budget is being consumed by funding arms  purchases,
       leaving it incapable of being able to  effectively  sustain  its
       operational requirements, including  our  peacekeeping  role  in

   (b)  that according to the Mail & Guardian of 20 March  2003  -  with
       reference to a quote from the  Director  of  the  Institute  for
       Security Studies - "There is a  structural  crisis  building  up
       which at some point is going to blow up in our faces"; and

   (c)  that what this means, in essence, is that  training  of  Defence
       Force personnel will  suffer,  there  is  a  shortage  of  basic
       equipment such as clothing and  troop  carriers,  there  are  no
       financial resources to retrench or replace personnel, and  there
       is no money to pay for operations; and

(2) calls on the Government to -

   (a)  institute an urgent investigation into the  direct  implications
       of the arms deal on the capabilities  and  strength  of  the  SA
       National Defence Force;

   (b)  scrap or downsize the arms deal with immediate effect; and

   (c)  invest in our Defence Force as a vital element that is  required
       to protect our country and our democratic society in Africa  and
       in a dangerous world.


                         (Draft Resolution)

Mr P A MATTHEE: Chairperson, I hereby move without notice:

That the Council -

(1) takes note that, according to a written reply from the Minister of Transport to a question by Mr P A Matthee -

   (a)  the comprehensive statistics in respect of fatal road  accidents
       for 2002 will only be available towards the middle of 2003;

   (b)  due to the high number of accidents in  other  accident  groups,
       information  is  collected  only  for  fatal  accidents  and  no
       information is currently available  on  the  number  of  serious
       injury accidents and the  number  of  persons  injured  in  such

   (c)  the Arrive Alive  National  Fatal  Accident  Information  Centre
       (NFAIC) at the  Department  of  Transport  continuously  obtains
       information  on  fatal  accidents  only  directly  from   police
       stations country-wide, which information is provided daily on  a
       voluntary basis - not all information is submitted  as  required
       and additional information on fatal accidents is  obtained  from
       the  CAS  system  of  the  SAPS,  which   information   is   not
       comprehensive  in  that  no  information  is  provided  on,  for
       example,  the  number  of  fatalities,  vehicles   involved   or
       contributory factors;

   (d)  the total number of fatal accidents for 2002 is 9818;

   (e)  the total number of fatalities in  respect  of  the  6329  fatal
       accidents reported to the NFAIC is 7897, but that the number  of
       fatalities in respect of the 3489 fatal accidents obtained  from
       the CAS system of the SAPS is not known; and

The CHAIRPERSON OF THE NCOP: Order! Hon member, your time for tabling this motion has expired. Given that it is a motion that you wish to move without notice, I will allow you to come to the nub of the motion so that we may deal with voting on it.


   (f)  the estimated all-inclusive cost of only fatal accidents to  the
       South African economy, is R4 318 billion; and

(2) urges the Minister of Transport and the Government to take whatever steps may be necessary to reduce the number of serious road accidents in South Africa maximally.

Motion agreed to in accordance with section 65 of the Constitution.


                         (Draft Resolution)

Mrs E N LUBIDLA: Chairperson, I hereby move without notice:

That the Council -

(1) notes and commends once more another stinging joint operation by the Anti-Corruption Task Team made up of representatives of the Scorpions, the SAPS, the National Prosecuting Authority’s Special Investigative Unit and other law-enforcement agencies in the Eastern Cape in which at least 25 people were arrested because of corruption by government employees;

(2) further notes that this joint operation returned to the Eastern Cape Government approximately R3 million which had illegitimately been paid by government employees to suppliers;

(3) further notes that this operation brings the number of people arrested to 75 in total; and

(4) believes that this is in line with the ANC Government’s commitment to root out corruption wherever it occurs.

Motion agreed to in accordance with section 65 of the Constitution.


                         (Draft Resolution)

Mr T B TAABE: Chair, I move a motion without notice:

That the Council -

(1) notes -

   (a)  the fact that the American and British forces have attacked Iraq
       in a war that has no international legal sanction;

   (b)  that the earliest victims of the military campaign are  innocent
       Iraqi children and women from  the  resulting  humanitarian  and
       environmental disasters;

   (c)  that the invasion of Afghanistan by the same military powers has
       not, as yet, produced tangible commitments to the reconstruction
       and development of Afghanistan, as promised in  the  preinvasion
       period;  and

   (d)  the regime change in Afghanistan has not  produced  peace  since
       internecine fighting and human rights abuses  continue  in  that

(2) therefore condemns the American and British attack on innocent civilians;

(3) calls for more drastic measures to ensure that the promised peace settlement in postwar Iraq is not a remote vision;

(4) appreciates the efforts of peace-loving people worldwide in expressing solidarity with the Iraqi people; and

(5) thanks members of Parliament and the provincial legislatures for demonstrating their antiwar position by picketing this afternoon, 27 March 2003, on the corner of Wale and Adderley Streets; and

(6) appeals to the United Nations and the Security Council to - (a) resume its humanitarian aid programme;

   (b)  call on America and Britain to immediately stop the war;

   (c)  institute measures to ensure that the invading parties also bear
       the cost of constructing postwar Iraq; and

   (d)  call on these forces to disarm Iraq peacefully for the  sake  of
       peace in the world.

The CHAIRPERSON OF THE NCOP: Is there any objection to that motion? [Interjections.] Yes, there is an objection. The motion will therefore become a notice of motion.

Mr A E VAN NIEKERK: Chairperson, mine wasn’t an objection, it is …

The CHAIRPERSON OF THE NCOP: There was an objection from Mr Lever.

Mr L G LEVER: No, Chairperson, I want to propose an amendment.

The CHAIRPERSON OF THE NCOP: Oh, you wish to propose an amendment. You’re not objecting. All right. What is the amendment you wish to propose? I noted Mr Lever first, and then I’ll come to you, Mr Van Niekerk.

Mr L G LEVER: Chairperson, that this Council also condemn Saddam Hussein for defying the UN Security Council’s resolutions to disarm for a period of 12 years. [Interjections.]

Mr A E VAN NIEKERK: Chairperson, this is a motion with wide consequences. We have not had insight into it at all. My request is merely that we get a copy of it and take a decision later so that we can see what it is all about, because there are some details that will have consequential effects.

The CHAIRPERSON OF THE NCOP: Hon member, that is not an amendment. Mr Taabe, you have a proposed amendment from Mr Lever. Mr T B TAABE: Chair, I honestly would not accede to that very cheap request to amend this meticulously crafted motion. [Laughter.]

The CHAIRPERSON OF THE NCOP: I then put the motion. Is there any objection to the motion? There is an objection. The motion therefore becomes a notice of motion.


                         (Draft Resolution)

Mr J O TLHAGALE: Madam Chairperson, hon Minister in the House, I move without notice:

That the Council -

(1) notes with amazement that the so-called political firebrand of the PAC which had described the defection legislation as political prostitution, and had vehemently opposed the legislation all the way up to the Constitutional Court, has now found it convenient to use the very legislation to deprive the PAC of one of its seats in Parliament; and

(2) further notes that this goes to corroborate an African truism that, “motshega-kgaretswana ke ena monyadi wa yona”, literally meaning that a person who laughs at a young girl, very often is the one who ultimately marries her.

Motion agreed to in accordance with section 65 of the Constitution.


                         (Draft Resolution)

Mr P D N MALOYI: Chairperson, I move without notice:

That the Council - (1) notes with concern the lack of civility displayed by some leaders of the Treatment Action Campaign towards the Minister of Health, Dr Manto Tshabalala-Msimang, during an official engagement;

(2) believes that while rigorous debate and the right to peaceful protest is an essential requirement for democracy, this should not be confused with disrespect towards others;

(3) is of the opinion that the level of disrespect shown towards the Minister by the TAC leadership exceeded all bounds of civility; and

(4) therefore calls upon them to unreservedly apologise to the Minister so as to dispel any suspicion that their tactics are calculated to encourage ordinary TAC members to show the same level of disrespect towards Ministers and other elected public representatives.

Motion agreed to in accordance with section 65 of the Constitution.


                         (Draft Resolution)

Mrs J N VILAKAZI: Chairperson, I move without notice:

That the Council -

(1) further to a motion moved by Ms J N Vilakazi on 16 May 2002 regarding SA Express Flight 1607 on the Johannesburg-Richards Bay Route, notes with appreciation the detailed response to the above resolution received from Mr J Radebe, the Minister of Public Enterprises;

(2) acknowledges the input from SA Express in this regard, supports the suggestion of the testing of market response to the introduction of a new flight on the said route, in terms of advance reservation, and accepts that should market response not be favourable, the flight would not be introduced; and

(3) expresses the hope that in testing the market response, sufficient energy is put into advertising the said flight, as otherwise the results yielded on the advance booking may not truly reflect actual demand.

Motion agreed to in accordance with section 65 of the Constitution.


                         (Draft Resolution)

Mr T RALANE: Chairperson, I move without notice:

That the Council -

(1) notes with concern -

   (a)  the  hospitalisation  of  Ms  Ntlabati  in  the  Southern  Cross
       Hospital since last Thursday;

   (b)  that Ms Ntlabati has been in the Intensive Care Unit since then;

   (c)  that whilst her condition is critical, it remains stable; and

(2) therefore -

   (a)  wishes her a speedy recovery;

   (b)  urges members to visit her when they are able to; and

   (c)  expresses its sympathy to the family.

Motion agreed to in accordance with section 65 of the Constitution.

                         (Draft Resolution)

The CHIEF WHIP OF THE COUNCIL: Chairperson, I move that subject to the concurrence of the National Assembly, the request from the Minister in the Presidency regarding the appointment of commissioners to serve on the National Youth Commission, the term of office of the current commissioners coming to an end on 30 June 2003, be referred to the Joint Monitoring Committee on Improvement of Quality of Life and Status of Children, Youth and Disabled Persons for consideration in terms of section 4 of the National Youth Commission Act, Act 19 of 1996, the committee to report to this House by no later than 28 May 2003.

Motion agreed to in accordance with section 65 of the Constitution.


(Consideration of Bill and of Report of Select Committee on Social Services thereon) Ms N C KONDLO: Madam Chairperson, the National Development Agency Amendment Bill is merely a technical Bill which seeks to amend the National Development Agency Act of 1998 in the following ways.

The Bill amends the definition of “Minister” from the “Minister of Finance” to the “Minister of Social Development”. With the promulgation of this Bill, the responsibility of the NDA will rest entirely with the Minister of Social Development.

Secondly, the number of members of the board representing civil society has been reduced from nine members to six members, and those of Government to five. According to the department, this reduction was based on financial considerations, and the committee could find no fault with that rationale.

The term “civil society organisations” has been changed to read “civil society”. This takes on board the fact that any member of the public will have the right in his or her personal capacity as well as a representative of an organisation to serve on the board. This consideration brings welcome relief to communities, especially those from the rural areas that are not organised into recognised formal structures. Individuals from these and similar communities will now be afforded an equal opportunity to serve on the board.

The Minister will, on the recommendation of the board, appoint a chief executive officer. In addition, through the amendment to section 9, the Minister will be able to retain the link between the National Development Agency and the Department of Social Development so that the two can operate in tandem, rather than in isolation from each other.

The Select Committee on Social Services, therefore, having considered the Bill, is in full agreement with the Bill as amended by the National Assembly’s Portfolio Committee on Social Development. I thank you, Chair.

Debate concluded. Bill agreed to in accordance with section 75 of the Constitution.

                      DIVISION OF REVENUE BILL

 (Consideration of Bill and of Report of Select Committee on Finance

The CHAIRPERSON OF THE NCOP: Hon members, please note that there is a typographical error on the Order Paper. The Bill is Bill 9D of 2003, not Bill 9D of 2002.

The MINISTER OF FINANCE: Madam Chairperson, hon members, the Division of Revenue Bill is the embodiment of co-operative governance, which is at the heart of our Constitution. The division of resources amongst the three spheres of government is one of the most critical steps in the Budget process, as it provides the basis for the preparation of the national, nine provincial and 284 municipal budgets for the next financial year.

The Division of Revenue Bill, 2003, gives effect to section 214(1) of the Constitution and to the Intergovernmental Fiscal Relations Act, 1997, which require an annual Act of Parliament to provide for the equitable division of revenue anticipated to be raised nationally amongst the three spheres of government.

The Bill this year is much thicker, larger and, I dare say, better. It’s thicker because each local government grant is allocated over three years to 284 municipalities, hence the large number of schedules in the explanatory memorandum. The Bill is better because it achieved this objective of publishing local government grants per municipality, for both the national and municipal financial year.

The explanatory attachments also contain detailed information on the formula for the provincial and local equitable share allocations, and a detailed framework on each conditional grant to a province or municipality. The Bill therefore provides critical information for every province and municipality, and for every national and provincial department, in order to prepare their budgets.

I want to emphasise that the Bill deals with aggregate allocations only, and not how these funds are to be spent. The national Government allocates its equitable share allocation through the Appropriation Bill. Each of the nine provinces and 284 municipalities will follow the tabling of the national Budget by tabling their own budgets, indicating how these allocations are to be spent. In fact, all of the provinces have now tabled their respective budgets already. This is in accordance with our Constitution, which creates three spheres of government which are distinctive, interdependent and interrelated, each with the power to determine its own budget.

This Bill therefore does not appropriate for the budgets of departments or sectors, and does not indicate what outputs the allocations will buy and what outcomes will be accomplished. In making these allocations, the Bill indirectly challenges Parliament, provincial legislatures and municipal councils to put in place adequate mechanisms to ensure that the 294 budgets, collectively, give effect to Government priorities, and to ensure that monitoring and accountability mechanisms for the spending of these funds allocated are in place and, indeed, are continually strengthened.

In order to provide information and spending by provinces and municipalities, we will be tabling the 2003 Intergovernmental Fiscal Review in this House on 8 April. This document covers both the 2003 provincial budgets and the 2002 local government budgets. Such spending information will also be complemented in provinces by the tabling of strategic plans of departments.

These documents are all meant to deepen the budget oversight process in Parliament and the nine provincial legislatures. They will assist the portfolio and select committees in Parliament and the provincial legislatures to benchmark and compare departmental budgets with those in other provinces. They should provide nonfinancial performance information linked to the budget. By providing all this information we are shaping the role of Parliament, provincial legislatures and municipal councils in the budget approval process, by putting at their disposal information that can be used to begin to evaluate whether the budgets we request them to approve are true to our commitment of a better life for all.

We are also laying the basis for accountability for performance, both in- year through quarterly reports, and after the end of the financial year through annual reports. This oversight is even more difficult for a complex intergovernmental system such as ours. The challenge facing Parliament, provincial legislatures and municipal councils is to be able to use this information to influence performance and the quality of service delivery. It is only with strong oversight that we can deliver more and better services to our people. Such oversight is the right thing to do.

In this respect, the two parliamentary portfolio and select committees for a provincial function may want to convene workshops with their colleagues in provincial portfolio committees to share and discuss the information in the Intergovernmental Fiscal Review, the Estimates of National Expenditure and provincial strategic plans before adopting the budget of the department in their own legislatures.

The process of making budget decisions is at the heart of co-operative governance, as envisaged by the Constitution. The Budget is driven by policy priorities determined through a consultative process involving the three spheres of government. The Division of Revenue Bill and its underlying allocations are the culmination of this consultation process, which began soon after the 2002 Budget. This consultation process involved the Budget Council which includes all provincial MECs of Finance, and the Budget Forum which includes Salga and its provincial local government associations.

A joint MinMec with local government MECs and organised local government was also held, and premiers and the chairperson of Salga were invited to an extended Cabinet meeting, which decided on the divisions set out in the Bill before this House today. We follow this process because it is the right thing to do. At least somebody is awake in the House. [Laughter.] Thank you, Chief Whip.

In making the decisions regarding the allocation of revenue anticipated to be raised nationally amongst the three spheres, Government has also taken into account the recommendations of the FFC. The explanatory memorandum to the Bill, or Part 2 of Annexure E, provides the formal response of national Government to the 2003 proposals of the Financial and Fiscal Commission.

The Budget builds on and takes further the policy priorities laid down in the previous two years. It signals Government’s recognition that provincial and local governments are at the coalface of delivery of services intended to ensure progressive realisation of the basic social and economic needs of our people. The Bill enables provincial and local governments to give effect to the Government priority of reducing poverty and vulnerability. What we now need is targeted resource allocations to address these challenges.

The heart of the Division of Revenue Bill is Schedule 1, which allocates funds to the three spheres of government. Of the R334 billion in the Budget for the new fiscal year, the national Government is allocated R185,2 billion. This allocation includes R54 billion for debt-servicing costs and the contingency reserve, leaving the national Government with R138 billion to allocate to national departments and for conditional grants to provincial and local governments.

Schedule 1 also allocates the provincial equitable share amounting to R142 billion, and the local government equitable share amounting to R6,3 billion. Schedule 2 allocates provincial equitable share, and Schedule 3 reflects allocations of local government equitable share per municipality.

The total allocation for provinces - including both conditional grants - increases from R137 billion in the present fiscal year to R159 billion in the new year, rising to R192 billion in the fiscal year which ends on 31 March 2006. This reflects strong real growth in national transfers to provinces of 6,1% a year over the next three years, and has, in fact, even calmed down the very effusive MEC, Mr Godongwana.

The total local government share, inclusive of conditional grants, increases from R8,8 billion this year to R12 billion in 2003-04, and R14,6 billion two years later. The local share increases rapidly at 12,2% in real terms per annum.

Schedules 4 to 7 allocate conditional and other grants to provinces and local government. Provinces receive conditional grants amounting to R16,6 billion in 2003-04, increasing the provincial share of allocated funds available after debt servicing to 56,8%. Local government receives a further R6,3 billion in conditional grants, bringing its share to 4,3% of allocated expenditure.

The 2003 Budget maintains strong growth in the allocation targeted for provincial infrastructure development and maintenance, rising from R1,6 billion in the present year to R3 billion two years later. As a result, provinces will receive R8 billion from the infrastructure grant over the three-year period, an increase of 25% a year. It is anticipated that provinces will use this grant effectively to deal with infrastructure backlogs in schools, health facilities and provincial roads.

The infrastructure programme in the health sector is further supported through increased allocations for the hospital revitalisation programme, from R649 million in the current year to R1 billion in the third year of the MTEF, with 18 additional hospitals earmarked for major rehabilitation.

The allocation to provinces further reinforces spending to reduce poverty and vulnerability through increased allocation for social security to provide for increases in values of grants and further extensions of the social security net, with particular focus on children. A new conditional grant, which provides for the phased extension of the child support grant to children until they turn 14, is introduced. The phasing in will take place over the next three years. The allocation for the child support extension grant amounts to R10,9 billion in the 2003 MTEF. Support targeted at poor children is further enhanced by increases of about 21% a year in the allocation of the integrated nutrition programme.

The Budget strengthens Government’s efforts to deal with pressures arising from HIV/Aids on provincial budgets. Earmarked allocations for HIV/Aids amount to R2,1 billion over the three-year period. In addition, provinces are also expected to allocate at least R1 billion more in this year’s MTEF from their budgets towards HIV/Aids programmes for prevention and support to those infected and affected.

I’d like to draw the attention of the distinguished members of this Council to the fact that in the Budget this year we were able to take forward the relationship between the national Government and provincial government significantly. We were able to find additional resources, which some in national Government would have wanted as new conditional grants.

The provinces were able to demonstrate that they could allocate that money to specific areas without a conditional grant. Those areas include what we now call in Education, for instance, noncapital/nonpersonnel expenditure. These are things like school books, maths kits, laboratories in schools, starting with the provision of libraries in the poorest of our schools, and so on. Those kinds of things will make a difference to the outcomes.

That we can take this forward in the true spirit of co-operative governance is, I think, a tribute to the endeavour of provinces in the interrelationship and the way in which the Budget Council has matured in its dealings. So I would like to express a special word of appreciation to all the provinces for that fact, which we have now demonstrated in the change.

In respect of local government, the substantial increase in its share is mainly targeted towards the provision of free basic services, the extension of services to areas not currently serviced and job creation through investment in labour-based infrastructure programmes. In total, R4,1 billion over the 2003 MTEF is made available for water, electricity, refuse removal and sanitation as part of Government’s commitment to providing free basic services.

In addition to the tax incentives announced in the Budget Speech, infrastructure grants to municipalities remain a key instrument in urban renewal and rural development. An additional R1,8 billion over the next three years is allocated for infrastructure delivery, increasing infrastructure grants to local government to about R14 billion.

Capacity-building continues to be an important programme in order to enable effective service delivery by municipalities. The allocation is increased by R300 million over the three years, to a total of R2,4 billion over the Medium-Term Expenditure Framework. Spending will focus on financial management and reform, and on improving strategic management and service delivery skills. We need to emphasise the need to build in-house skills in municipalities, in order to deliver services effectively, by offering internship programmes to our recent graduates to achieve equitable skills development.

The Bill also respects accountability for municipal services by requiring nonmunicipal public entities that provide municipal services to respect the service authority role of the relevant municipality and adhere to the Local Government: Municipal Systems Act as an external service provider. Clearly, there’s a big issue in respect of the distribution of energy. In some cases Eskom is doing it itself; in other cases local authorities are doing it. So getting into that interface, especially in respect of the provision of free basic services, becomes an enormous challenge for local government. This will enable municipalities, we believe, to take full political responsibility for providing basic services to former townships and rural areas.

The Bill also makes provision for municipalities to adhere to basic financial reporting norms and standards, and hence improve their accountability on the use of the equitable share allocations prior even to the enactment of the Municipal Finance Management Bill.

I want to conclude by noting that it is now six years since the introduction of the current fiscal framework for provincial and local government. Much has happened since the creation of our nine provinces and municipalities, including the passage of the foundation-laying legislation for the establishment of co-operative governance institutions like those I’ve mentioned - the Budget Council and the Budget Forum, and MinMecs.

We are now better aware of the spending responsibilities of provinces and local governments, and need to review our formulae for allocating these grants. The impending publication of Census 2001’s results later this year provides us with a golden opportunity to do this.

For provinces, the National Treasury intends to lead a process to review all grants to provincial governments, and the formulae for the equitable share and all conditional grants.

On local government, the review will be even more comprehensive, given that many more significant changes have occurred or are still occurring. National Government is therefore proposing that the comprehensive review of the local government fiscal system include an assessment of whether current revenue-raising powers match the functions of various categories and types of municipalities, the tax-raising powers of local government and their assignment within the local sphere, the future of the RSC levies, the feasibility of municipal levies on key municipal services like electricity and water, and the division of fiscal powers between category B and C municipalities.

The review will also include the formula for the equitable share and conditional grants. It must include the phasing in of other grants, such as water service operating subsidies, into the equitable share. National Treasury will convene key stakeholders for the review, including national departments - this includes the Department of Provincial and Local Government, the Department of Minerals and Energy, and the Department of Water Affairs and Forestry - Salga and the FFC. The Budget Forum and Cabinet will consider the proposals for implementation in the 2004 Budget.

The information that accompanies this Bill goes beyond the legal requirements set out in the Constitution and other relevant statutes. The additional information provided with the Bill represents, I believe, another milestone in enhancing political oversight and transparency, and ensuring accountability. More importantly, the allocation of all local government grants per municipality further deepens co-operative governance in the budget allocation process.

In commending the Bill to the Council here, I do so with the fervent hope that the Bill, together with the Intergovernmental Fiscal Review, will be taken forward by members of this Council to ensure that not only members of provincial legislatures but also our people have an insight into what is allocated, and ensure that we can remain accountable and committed to the principles of Batho Pele. I thank you. [Applause.]

Ms Q D MAHLANGU: Chairperson of the NCOP, hon Minister, special delegates and hon members, I think the report we adopted just before this debate will give details of the committee’s discussion achievements, as a result of the recommendations we have been making to departments over the years and the further recommendations on issues we would like to see improved on by the government departments.

Therefore, I will not elaborate on that because the report is in the ATC. Also, I will not elaborate on the details of the Bill, because I think the Minister has dealt adequately with that. However, I will touch on some of the key issues that in my view and the opinion of the committee are critical. Other members of the committee will also deal with that.

March is the human rights months, because many heroes and heroines of our struggle died on 21 March 1961 at the hands of the apartheid regime, while peacefully protesting against the regime. Our Constitution, which is informed by our history and the circumstances that surround us today, should give us the vision of where we are going and, also, that we should not repeat the mistakes of the past.

Sections 25(5), 26(1) and 26(2) of the Bill of Rights - Chapter 2 of the Constitution - give the right to housing; sections 27(1), 27(2) and 27(3) refer to health care, food, water and social security; section 28(1)(c) refers to every child having the right to basic nutrition, shelter, basic health care services and social services; whilst section 29 refers to everyone having the right to education, including children.

It is therefore important to properly place the Division of Revenue Bill discussion in the context I outlined above, which is that all the resources allocated to the three spheres of government respond directly to the supreme law of our land, which is the Constitution and, in particular, refer directly to the Bill of Rights, issues contained therein and specifically to the sections I have referred to.

We have seen significant improvement in the Division of Revenue legislation over the years. In 2003-04 the Bill that we are talking about, currently, has clearly given municipalities their allocation for the first time, and those allocations are published. This, amongst other reasons, is because the powers and functions of category B and C municipalities have been finalised. Hence, it was easy to determine who gets what from the equitable share, the nationally raised revenue. All municipalities by now know and can plan their budgets with certainty. This is also because their allocation covers the MTEF period or the MTEF cycle, which is over three years. In the past, we have made the recommendation that conditional grants be rationalised and, where possible, incorporated into the equitable share, particularly because small conditional grants in certain provinces tended not to be spent because the provinces said it was too much of a tedious process for them to apply for those grants. Therefore these recommendations were in line with that.

We are therefore happy to report to the House that some of the grants have, indeed, been incorporated into the equitable share, and that others are in the process of being incorporated. But with other grants, there is also a clear case, a reason, for them to continue as conditional grants.

A case in point is the early childhood development grant that in coming years will no longer be regarded as a grant, but instead will be incorporated into the equitable share. More information, particularly around the census, will further assist the provinces in making sure that all children who belong to Grade R directly benefit from this grant or these resources.

We have also reported to this House that there has been underspending in some of the grants, but that has since improved with a few exceptions. We are convinced that the Department of Health in particular and the Department of Housing will address the situation, and that the select committee concerned and the Select Committee on Finance will use the quarterly reports that are published in the national Government Gazette to monitor whether spending is happening according to the framework stipulated in the Division of Revenue Bill.

We are also happy to report that the school nutrition programme, in which underspending has been reported in the past, is, from next year onwards, going to be incorporated into the Education department Budget Vote, because we believe that the Education department has a better infrastructure and systems to be able to deliver. However, there has been a significant increase in this grant. Therefore we think that members, in doing their constituency work, and the relevant select committees should be able to take up these matters with the respective departments.

In the report we have cited and that I talk about in the ATC are new recommendations, which are informed by the discussion which took place in the committee during the public hearings. We noted in some provinces that there was difficulty in the co-ordination between two departments and among the spheres of government.

To cite a case in point: in Gauteng, for instance, housing is not delivered because the environmental policies which are stringent inhibit the construction of houses. So we do believe, in terms of the co-ordination and integration we have been talking about, that we should strive for this and that all select committees, including provinces and special delegates that are here, should go back to their provinces and ensure that we do away with these things in our system.

The committee believes that it is the responsibility of all members of Parliament and provincial legislatures to keep departments on their toes by checking whether budgets are talking directly and responding to policy priorities, because the PFMA requires them to do so by clearly stipulating that budgets should also result in measurable outputs. Therefore this is in the interests of the country and in the interests of what you get from the money you spend.

In the Bill before the House we have a new provision in terms of the duties of the Auditor-General, in that the Auditor-General may audit the conditional grants, and the report should be tabled in Parliament. We think this is a step in the right direction as it will allow us to engage with the report, and to evaluate whether accounting officers are indeed complying with the spirit and letter of the law. In the past people complied with the PFMA, but without those things necessarily resulting in adequate measures.

However, the Auditor-General has raised serious matters with the committee that we think we should raise before the House. Some departments - I repeat, some departments - both at national and provincial level, do not pay their audit fees on time - beyond periods of 30 days, 60 days and 90 days. Therefore that results in cash flow project problems in the Office of the Auditor General. We do think that the departments concerned should raise these issues sharply and that all members who belong to different committees, in their engagement with departments, should raise these issues sharply.

We also think that the Auditor-General must put in place adequate measures to collect these debts and come to Parliament and raise these issues when the situation has reached disproportionate levels. Also, some municipalities do not pay their fees on time, primarily because they do not necessarily have the necessary revenue to do so. I think that there should be some mechanism of differentiating in those cases.

In our discussion it became clear that some municipalities needed to be supported, and this is also provided for by section 154 of the Constitution. In terms of this section, national Government and provincial governments, by legislative and other measures, must support municipalities. Therefore we think that the conditional grants that are aimed at doing so must be directed at municipalities which have little capacity. This is because, when we had a discussion with the Department of Minerals and Energy, we were informed that certain municipalities returned their moneys because they could not spend them. Therefore those monies have to be allocated to other municipalities with capacity.

Lastly, we noted with interest that the relevant national Government departments have not made funds available to nodal points in different provinces and in relevant municipalities. We would like to make the appeal that nodal points be funded by all stakeholders concerned, who are supposed to be continuing funding until those projects have been completed and we see the difference. Failure to do so would undermine, or has undermined, the very noble objective that the President talked about when he announced these nodal points.

Therefore we think that it is important that national departments, who have not come to the party and pledged their resources to this effect, do so without fail. I make the appeal that members of the committee, who belong to the Department of Provincial and Local Government and other committees which are supposed to be forwarding funds to this effect, also engage with them. However, we will continue our engagement with this department.

I do believe that all conditional grants, as reflected in the Bill and in the different budgets of provinces, directly respond to the constitutional provision I talked about. I also hope that all of us will actively participate in ensuring that the noble goals enshrined in our Constitution are, indeed, realised, and that our country becomes a beacon of hope in the future for all who live in it, black and white.

We would like to call upon the House to support the Bill before it, as amended by the select committee. We chose deliberately not to talk about the technicalities of the Bill, but rather to concentrate on the conditional grants. The equitable share of this portion is dealt with extensively by provincial legislatures. I do thank you, Chairperson, and the hon members for listening. [Applause.]

The CHAIRPERSON OF THE NCOP: Order! I now call the hon Godongwana, the MEC for finance, economic affairs and environmental affairs and tourism … [Laughter.] … of the Eastern Cape!

Mr E GODONGWANA (Eastern Cape): Madam Chairperson, hon members, the test for any intergovernmental fiscal relations system is its ability to achieve both vertical and horizontal equity. This budget is attempting to grapple with that delicate balance. As the Minister would attest, our critique from the Eastern Cape has always been that the provincial share of the nationally raised revenue has been declining - from 58% in 1998 to about 56%. That, in our view, is happening in the context of too much pressure on provincial budgets in the form of social services, such as social security. In our view that would therefore create, what we would call, vertical imbalances. We are pleased at the moment that that matter is being addressed.

In terms of the Medium-Term Expenditure Framework the provincial share begins to rise - up to 57% of nationally raised revenue. An equally important point is the increase in the local government sphere.

We are also pleased that the Eastern Cape tops the rest by getting R1,5 billion in this current financial year, rising to R1,7 billion and R1,9 billion over the MTEF period. That, in itself, is an important milestone. The fact, also, that local governments now have certainty about their budgets - four months into their financial year, they know the figures up front - we hope will assist in the planning process. Equally important is the format in which budgets are presented. It enhances accountability of executives and assists in the oversight process by the legislatures.

This budget is also an attack on poverty in that it is pro-poor. It focuses on the vulnerable of our society - the old, the disabled, children from poor backgrounds. In the context of our province, the Eastern Cape, where the majority of our population - more that 60% - is rural, we have been able, with the growth in our budgets, to focus on what we call “the rapid impact programme”, a key element of which is agriculture. I am pleased to announce that our budget for agriculture has been increased by almost 41% in the coming financial year.

Also, a fundamental part of our rapid impact programme is infrastructure. Because infrastructure is critical in crowding in investment, it creates an environment conducive for growth in the economy. The focus in this budget has been on this infrastructure. We have about R6 billion over the MTEF which, in itself, is an important development.

In the light of the above, we support the Bill with the amendments attached to it. Thank you. [Applause.]

Dr E A CONROY: Agb Voorsitter, agbare Minister van Finansies en kollegas, daar is vanjaar weer, soos in vorige jare, wyd gekonsulteer en onderhoude en gesprek gevoer oor hierdie belangrike onderwerp wat ‘n wye spektrum van belanghebbendes raak, naamlik die wetsontwerp op die verdeling van inkomste van 2003.

Hierdie wetsontwerp gee, met inagneming van die bestedingsverantwoordelikhede van staatsdepartemente, van provinsiale regerings en van munisipaliteite, beslag aan die verdeling van inkomste tussen die drie vlakke van regering.

Aspekte van vanjaar se voorleggings aan die Gekose Komitee oor Finansies wat aandag getrek en kommer gewek het, was, onder andere, die bewering deur die Buffalo City Metro dat daar heelwat staatsdepartemente is wat belasting- en dienstegelde aan hom verskuldig is, asook die stelling deur die Ouditeur-generaal dat vele munisipaliteite nie hul fooie vir oudits, wat deur die Grondwet vereis word, aan hom betaal nie.

Aangesien die Ouditeur-generaal nie ‘n begrotingstoekenning ontvang nie en finansieel van sy ouditfooie afhanklik is, is dit dwingend noodsaaklik dat daar spoedig aandag hieraan gegee word. ‘n Moontlikheid wat oorweeg kan word, is die weerhouding of vertraging van ‘n gedeelte van die oorbetalings aan ‘n munisipaliteit of munisipaliteite weens hul erge en volgehoue materiële verbreking van tesourienorme en standaarde. Een van dié norme en standaarde is die vereiste dat statutêre finansiële verpligtings nagekom word. (Translation of Afrikaans paragraphs follows.)

[Dr E A CONROY: Hon Chairperson, hon Minister of Finance and colleagues, as was the case in previous years, extensive consultations, interviews and discussions were once again held this year regarding this important subject affecting a wide spectrum of interested parties, namely the Division of Revenue Bill, 2003.

This Bill gives effect, with due allowance for the expenditure responsibilities of Government departments, of provincial governments and of municipalities, to the division of revenue between the three tiers of government.

Aspects of this year’s submissions to the Select Committee on Finance which attracted attention and caused concern were, inter alia, the allegation by the Buffalo City Metro that there were quite a number of Government departments that owed income and service fees to it, as well as the statement by the Auditor-General that many municipalities do not pay him their fees for audits, as required by the Constitution.

Since the Auditor-General does not receive a budget allocation and is financially dependent on his audit fees, it is of the greatest necessity that attention be given to this as soon as possible. A possibility that may be considered is that of withholding or delaying part of the transfer payments to a municipality or municipalities as a result of their serious and sustained material violation of treasury norms and standards. One of these norms and standards is the requirement that statutory financial obligations should be met.]

Section 214(2) of the Constitution requires the Financial and Fiscal Commission to make recommendations on the division of revenue and, obviously, on matters related thereto.

The FFC duly made a variety of recommendations which were considered. I will only refer to the FFC’s proposals as far as provincial government is concerned, namely those on provincial own revenue.

Allow me to refer to the national Government’s response to these proposals, with which I fully agree, namely that it recognises the need for more improvements in existing provincial revenue collection capacity, particularly in the area of motor licence fees and road traffic enforcement. A further improvement, which has been initiated, is a revenue classification project which ensures that all revenue collected is properly classified and reconciled with the financial management system.

I mentioned that I agree with these responses, the reason being that I am still not convinced that provinces fully exploit their existing revenue collection possibilities. The New NP supports this principle and the details of the Division of Revenue Bill, 2003.

Let me conclude by saying that the New NP has thrown off some dead weight which might have, and most probably would have, become a serious liability, nay an embarrassment, and which would undoubtedly have tried to sabotage us in the implementation of our stated policy of co-operative and constructive engagement with the Government. [Interjections.]

We, in the New NP, remain convinced that we have chosen the right course to make South Africa work for all its people. We will not falter in our resolve to follow that course and to fulfil our promise to our voters that we will steer them away from isolation, away from marginalisation and away from polarisation, because, in the words of the hon Minister of Finance, “It is the right thing to do.”

Ons staan by die mense wat aan die nuwe Suid-Afrika bou. Ons staan by die mense wat aan die nuwe Suid-Afrikaanse nasie bou, want, geagte Voorsitter, dit is die regte ding om te doen. Ek dank u. [Applous.] (Translation of Afrikaans paragraph follows.)

[We stand by the people who are building the new South Africa. We stand by the people who are building the new South African nation, because, hon Chairperson, it is the right thing to do. I thank you. [Applause.]]

Mr G A LUCAS: Hon Chairperson … [Interjections.] Hon Krumbock is disturbing me here. He is fighting his battles with the New NP. I’m not sure how I come into that.

Hon Chairperson, hon Minister, hon MEC from the Eastern Cape and special delegates, hon permanent delegates, the tide has turned. The people’s contract for a better tomorrow is taking shape. These were the closing remarks by the President during the State of the Nation address.

Clearly, this Division of Revenue Bill expresses explicitly the letter and spirit of our President and Government’s assertion that the tide has turned. Not only has it increased revenue allocation to provinces and municipalities, but for the first time it has created budgetary certainty for our local municipalities.

Our provincial budget has increased substantially by 13,5%. This increase is both as a result of the Division of Revenue’s allocations and the province’s own revenue collection. This expanded provincial budget clearly creates the space and scope to intensify our struggle against poverty and underdevelopment.

Overall, in monetary terms, we have R469 million to spend and invest in the improvement of our people’s lives, unlike in the previous financial year. It is a real increase for a small province like the Northern Cape.

Accordingly, the provincial budget prioritisation is based on the desired need to a make real impact on pushing back the frontiers of poverty. Thus, the social development department has received the largest share of the provincial budget, and has to carry both the mandate of increased social grant payments and targeted poverty alleviation projects.

With respect to social grant payments, our old age pensioners and other grant recipients no longer have to suffer the humiliation of long queues and unfriendly service. Our provincial payment system has improved drastically, to such an extent that at all paypoints, by 12 o’clock midday, every pensioner or any other social grant recipient has received his or her payment.

This, indeed, clearly reflects our provincial government’s commitment to maintaining the dignity and respect of our people, especially the most vulnerable, in particular the elderly, people with disabilities and children.

Beyond this, our province has already put systems in place to ensure that our people benefit from the food security programme announced by our national Government. On 21 March, the premier of the province launched this programme and this was fitting as the right to food constitutes a basic human right. Already 5 000 people are benefiting in Galeshewe, which is part of the urban renewal nodes identified by the President. This programme has been allocated R9 million for this financial year.

Owing to the increased revenue base, the province established an innovation fund two years ago to stimulate economic growth and development. Thus far two major export-orientated projects have been launched, namely the Paprika Project in Namaqualand and the Goat Project in the Kgalagadi rural nodal point. These projects have already employed more that 1 000 people, with further employment earmarked for this year.

A further R20 million will be allocated to this fund in this financial year, with a total of R102 million over the next five years, in order to invest in strategic economic sectors in the province. Indeed, the tide has turned. The Northern Cape has responded to our President’s call for a people’s contract, that we unite in action to push back the frontiers of poverty.

In responding to this call our province has made two major announcements with regard to water and sanitation. In the Karoo region, where the hon Sulliman comes from, some of our communities still do not have access to water on a daily basis. There are also 30 000 households that still continue to use the bucket system, and this is the most derogatory way of using the bucket system.

We have therefore committed R30 million over the next three years to building the necessary infrastructure for water provision to the Karoo region. Together with the private sector, we will be able to raise the R100 million required to construct the water canal from the Vanderkloof Dam. After three years, hon Sulliman, there will no longer be a water shortage in the Karoo; it will be a thing of the past. So you must smile.

The bucket system eradication programme has been allocated R90 million over the next three years. By 2005, 75% of the bucket system will have been wiped away from the lives of our people. That is why we are proud to say that it is the right thing to do to support this Division of Revenue Bill. There is no way that the province cannot support it. Thank you. [Applause.]

Mr Z S KOLWENI: Hon Chair, Minister, special delegates and hon members of this House, I feel honoured to address this House on behalf of my province on such an important debate as the division of revenue which, in essence, constitutes the foundation of this House.

With regard to the Division of Revenue Bill of 2003 and developments in our province, I am pleased to announce the following. The Division of Revenue Bill has indeed walked the extra mile, especially with regard to transfers to local municipalities, a practical point of service delivery, particularly the rural villages, a sector that was ignored for ages by the previous governments of this country.

By 31 January this year, the province had already spent 79% of its allocated budget for the 2002-03 financial year, more than the national average of 71%. My counterpart in the provincial standing committee on finance in the North West hosted a public hearing across the province. Municipal councillors, statutory bodies and other organs of civil society who attended these hearings articulated their views on the distribution of provincial and local government equitable share of the nationally raised revenue.

During these hearings some very insightful recommendations were made. The formula in terms of local government equitable shares relating to rural municipalities should be urgently reviewed and a special formula should be designed to cater for their peculiarities. Rural villages do not have an income base and offer a modest volume of basic services. The Financial and Fiscal Commission is encouraged to collect and develop a database in this regard.

In addition, clause 34(2) of the Local Government: Municipal Finance Management Bill, currently under review in the national Parliament, requires that the Minister or the MEC responsible for finance in a province must, to whatever extent possible, when tabling the national annual Budget in the National Assembly or the provincial annual budget in the provincial legislature, make public particulars of any allocations due to each municipality in terms of that budget. The annual national and provincial budgets must include the amounts to be transferred to municipalities during each of the next three years.

I am pleased therefore to announce that this step has already been taken. For the first time this year, a breakdown of national transfers to local government by municipality is published in the Division of Revenue Bill on Budget day four months ahead of the municipal financial year. Early publication of municipal allocations from national Government enables municipalities to incorporate these allocations into their budgets, to improve planning and budgeting, and thus facilitate the timely execution of projects. This early release also enhances transparency in the intergovernmental fiscal system.

Whereas clause 5(3) of the Division of Revenue Bill of 2003 clearly stipulates that each municipality must receive its equitable share in quarterly instalments, I must draw attention to clause 5(6) which allows National Treasury, for local government, to delay or withhold the transfer of an instalment on the grounds of a municipality’s serious or persistent material breach of uniform Treasury norms and standards. This is similar to the liability of provinces.

I must also quickly give a synopsis of other aspects that are required: regular and prompt submission of financial statements to the Auditor- General; submission of budgets for the forthcoming financial year to the National Treasury, provincial treasury and the provincial department responsible for local government, and that must be done no later than within 30 days; and, submission to the National Treasury, the national accounting officer responsible for local government and the provincial department responsible for local government no later than 10 days after the end of each quarter.

The North West provincial budget process is integrated with national Government’s Medium-Term Expenditure Framework to ensure the co-ordination and complementary nature of programmes. The budget process is marked by intense planning sessions at the political level to determine policy priorities and discussions between the provincial treasury and provincial departments.

In the North West province a solid foundation for qualitative financial management has been established through improvements in the asset management system in that we will find better cash flow management, internal audits, and the upgrading of the information technology system. This has prompted the SA Institute of Government Auditors to say the following about this province:

A high fraud awareness factor normally results in relatively lower fraud occurrences. This supposition is supported by data relating to the North West province. The North West province has the highest fraud awareness factor and also the lowest incidence factor.

This is the outcome of our aggregate fiscal prudence, a drive to ensure more efficient service delivery, supported by the reforms of the budget process and management of public finances.

Some of the key achievements of the financial year ending this weekend, March, are the following. Regarding procurement reform, a decentralised procurement system will replace a centralised one. The Provincial Tender Board Act will be repealed on 1 April, which will have the effect of abolishing the current tender board and substituting it with a departmental tender committee.

Currently, each department has appointed a procurement committee whose members were trained by the Institute of Purchasing of SA. The provincial treasury will maintain an oversight function within a delegated regulatory framework. A compliance unit has already been established for this purpose. Of course, black economic empowerment will be our objective through affirmative procurement. Our province is currently developing a supplier database with possible accreditation to ensure supplier development.

In restructuring the Public Service, the cost of personnel is a significant component of a budget, as you know. Our aim is to train and redeploy skills within the Public Service, with an exit strategy being the last resort. The deadline for the finalisation of this process is 30 June this year. The Government and organised labour have agreed on a framework for the restructuring of the Public Service. In terms of the current wage Bill, I am pleased to announce that personnel expenditure as a percentage has been reduced to 52% in the forthcoming financial year. This is a reduction of 5%.

In terms of own revenue in our province, for the first time in nine years the North West province has exceeded its revenue collection by 10%. This higher than normal collection can, in the main, be attributed to the enhancement of internal controls and computerisation of revenue receipts.

The North West supports this Bill. [Time expired.] [Applause.]

Ms C BOTHA: Chairperson, Minister, I can’t help wondering if the Minister’s desire to do the right thing isn’t a problem for his left wing.

Almal is bekend met die feit dat hulle ná begrotingsdag waarskynlik meer gaan betaal vir hul sigarette en drankies, maar nie met die volle impak van die nasionale Begroting nie. Dit vervat die belangrikste besluite wat enige parlement neem en raak bykans alle aspekte van ons lewens. Dis hier waar die onderskeid tussen politieke partye dikwels die duidelikste sigbaar is, aangesien beleidsverskille uitdrukking vind in begrotingsprioriteite.

In baie opsigte is dit nie veel anders as ‘n huishoudelike begroting nie. As jou uitgawes jou inkomste oorskry, beland jy in die skuld en moet jy leen om jou lewenstyl te handhaaf, wat beteken dat jy rente betaal. Keuses word uitgeoefen tussen ‘n nuwe motor of ‘n nuwe kombuis. Hierdie eenvoudige beginsels geld ook vir die Regering. Uiteindelik moet iemand opdok en betaal. In die geval van die staat is dit die belastingbetaler wat die rekening kry.

Die wetsontwerp op die verdeling van inkomste, wat vandag onder bespreking is, bevat besonderhede oor hoe die belastingbetaler se geld verdeel word tussen die nasionale Regering, die provinsies en die munisipaliteite. Terwyl die Grondwet ‘n belangrike outonomie verskaf aan dié drie regeringsfere, is hulle tog onlosmaaklik verbind deur die begrotingsproses, maar uiteindelik onderworpe aan die Minister van Finansies, wat die finale sê het. Die gewone burgers se seggenskap oor die begroting verdwyn sodra hulle in ‘n algemene verkiesing gestem het. Selfs verkose verteenwoordigers het nie die vermoë om te verander aan die begroting wat voorgelê word nie.

Dinsdag, egter, het die Parlement se gesamentlike beleidmakende Reëlskomitee ‘n besluit geneem wat hierdie posisie kan verander. ‘n Nuwe rol vir die Parlement is in die begrotingsproses voorgestel. Terwyl die Parlement nie die uitvoerende gesag se rol kan oorneem nie, stel die komitee voor dat die Parlement invloed moet hê gedurende die tyd wat die begroting ontwikkel word. Dit vul die Parlement se verpligte oorsigtelike rol aan, wat in elk geval behels dat daarop gelet word dat die belastingbetalers waarde vir geld moet kry. Hierdie aanbevelings sal nog die debatsprosedure van beide Huise moet deurstaan.

Ons kan ook verstaan dat die Tesourie maniere soek om seker te maak dat die geld wat aan departemente, provinsies en plaaslike regering gegee word, gespandeer word op dít waarvoor dit geoormerk is. Dit sal nie gebeur as slegs 149 uit die 284 munisipaliteite, soos in Maart verlede jaar, beide finansiële kontrole en rekenkundige beleid in plek gehad het nie.

Die Ouditeur-generaal het in sy oorsig ook pertinent verwys na die betalingsgebreke van munisipaliteite en staatsdepartemente. Die feit dat munisipaliteite ook nie daarin slaag om hulle eie inkomstes te versamel nie en reeds R24 miljard aan agterstallige skulde op hulle boeke het, onderstreep die noodsaaklikheid van beter finansiële kontrole.

In hierdie wetsontwerp sowel as in die Municipal Finance Management Bill sien ons tekens van hierdie kontrole, soos die weerhouding van fondse deur die Tesourie indien munisipaliteite nie voldoen aan die uitbreidingsvoorwaardes nie.

Terwyl die DA glo dat optrede nodig is, is ons bekommerd oor die feit dat die Regering die Grondwet verander om ‘n mate van beheer oor die uitgawes van munisipaliteite te bekom. Dit verander die magsbalans tussen die drie sfere. Die Grondwet het ‘n spesifieke keuse uitgeoefen met die onafhanklikheid van die drie sfere. Ons glo nie dat die antwoord op interne politieke probleme verkry moet word deur verandering aan die Grondwet of groter sentralisering nie.

Die probleem moet by sy wortels aangespreek word en die probleem lê nie by derdevlakregering per se nie: dit lê dikwels by ANC-aanstellings. Hierna word pertinent verwys in die wetsontwerp: die feit dat beduidende bedrae spandeer is om kapasiteit te bou op plaaslike regeringsvlak, maar dat dit weinig - dit is die wetsontwerp se woorde - indien enige sukses behaal het. Kapasiteitsbou- en herstruktureringstoelaes word verdubbel, van R498 miljoen in 2002-2003 tot R995 miljoen in 2005-06. Dit is ‘n aansienlike bedrag.

Kaderherontplooiing is ‘n groot deel van hierdie probleem. Ek het gesien hoe uiters bekwame mense in die Noord Vrystaat vervang word deur politieke aanstellings van mense wat doodeenvoudig nie gehaltewerk doen nie. [Tussenwerpsels.] Ja, terwyl daar ander beskikbaar was. Ek het dit so gesien en sal dit vir jou so wys, mnr Sulliman. Gevolglik het munisipale dienslewering gely, terwyl onbenutte personeel nietemin met volle betaling in diens van die munisipaliteite gebly het.

Dit bring ons weer by die kwessie van prioriteite. Die DA is bly oor die addisionele bedrae wat bewillig is om die sosiale nood te verlig en steun wel die wetsontwerp, maar ons wil nou sien dat dit die behoeftiges bereik … (Translation of Afrikaans paragraphs follows.)

[Everyone is familiar with the fact that they are probably going to pay more for their cigarettes and drinks after budget day, but not with the full impact of the national Budget. It contains the most important decisions that any parliament makes and affects almost every aspect of our lives. It is here that the difference between political parties are often most visible, as policy differences find expression in budget priorities.

In many respects it does not differ much from a household budget. If your expenditure exceeds your income, you land in debt and you have to borrow money to maintain your lifestyle, which means that you pay interest. Choices are made between a new vehicle or a new kitchen. These simple principles also apply to the Government. Ultimately someone has to cough up and pay. In the case of the state, it is the taxpayer who receives the bill.

The Division of Revenue Bill that is being discussed today contains details of how the taxpayer’s money is being divided between the national Government, the provinces and the municipalities. While the Constitution provides an important autonomy to these three spheres of government, they are, however, inextricably linked to the budget process, but ultimately subject to the Minister of Finance, who has the final say. The ordinary citizen’s say regarding the budget disappears as soon as they have voted in a general election. Even elected representatives do not have the power to change the budget that is submitted.

On Tuesday, however, Parliament’s joint policy-making Rules Committee made a decision that may change this position. A new role for Parliament was proposed in the budget process. While Parliament cannot take over the role of the executive authority, the committee proposes that Parliament should have an influence during the time the budget is developed. It complements Parliament’s compulsory oversight role, which in any event entails that it should be seen to that taxpayers get value for money. These recommendations will still have to withstand the debating procedure of both Houses.

We can also understand that the Treasury is looking for ways to ensure that the money that is given to departments, provinces and local government is being spent on what it has been earmarked for. This will not happen if only 149 out of the 284 municipalities - as in March last year - have both financial controls and an accounting policy in place.

In his oversight the Auditor-General also referred pertinently to shortcomings with regard to payment by municipalities and state departments. The fact that municipalities also fail to collect their own income and already have R24 billion in debts in arrears on their books underlines the necessity for better financial control.

In this Bill as well as in the Municipal Finance Management Bill we see signs of this control, like the withholding of funds by Treasury if municipalities do not comply with the conditions for expansion.

While the DA believes that action is necessary, we are concerned about the fact that the Government is changing the Constitution to gain a degree of control over the expenditure of municipalities. This changes the balance of power between the three spheres. The Constitution exercised a specific choice with regard to the independence of the three spheres. We do not believe that the answer to internal political problems should be achieved by means of changes to the Constitution or a greater degree of centralisation.

The problem should be addressed at its roots and the problem is not at third-level government as such; it often lies with ANC appointments. This is pertinently referred to in the Bill: the fact that significant amounts were spent to build capacity at the local government level, but that it has achieved little - these are the words used in the Bill - if any, success. Capacity-building and restructuring grants are being doubled, from R498 million in 2002-2003 to R995 million in 2005-2006. It is a considerable amount.

Redeployment of cadres is a major part of this problem. I have seen how extremely competent people in the Northern Free State were replaced by political appointments of people who simply do not do quality work. [Interjections.] Yes, while others were available. I have seen it as such and I will show it to you like that, Mr Sulliman. Consequently municipal service delivery suffered, while unutilised staff nonetheless remained in the service of municipalities with full pay.

This once again brings us to the matter of priorities. The DA is glad about the additional amounts that were appropriated to relieve the social plight and in fact supports the Bill, but we now want to see that it reaches the indigent …]

The DEPUTY CHAIRPERSON OF COMMITTEES: Sorry, hon member. Yes, hon Lubidla, are you rising on a point of order?

Mrs E N LUBIDLA: Chairperson, will the hon Botha take a question?

The DEPUTY CHAIRPERSON OF COMMITTEES: Will you take a question, hon Botha?

Ms C BOTHA: No, Chair.

The DEPUTY CHAIRPERSON OF COMMITTEES: Okay. Will you please continue, hon Botha. Ms C BOTHA: Dit bring ons weer by die kwessie van prioriteite. Die DA is bly oor die addisionele bedrae wat bewillig is om die sosiale nood te verlig en steun dus ook hierdie wetsontwerp, maar ons wil nou sien dat dit die behoeftiges bereik. Om dit te verseker, moet effektiewe dienslewering nie onderhewig wees aan die bou van politieke “empires” nie. As transformasie of “preferential procurement” dienslewering in die wiele ry, moet dit op ‘n ander manier aangepak word.

Daar is geen regverdiging daarvoor om mense sonder kapasiteit verantwoordelik te maak vir die besteding van fondse - soos byvoorbeeld skoolvoeding, wat vir werklik behoeftiges bedoel is nie - wat dan nie, as gevolg van hierdie aanstellings nie by hulle uitkom nie. Baie dankie. [Applous.] (Translation of Afrikaans paragraphs follows.)

[Ms C BOTHA: This once again brings us to the matter of priorities. The DA is very glad about the additional amounts that were appropriated to relieve the social plight, and therefore also supports this Bill, but we now want to see that it reaches the indigent. To ensure this, effective service delivery should not be subject to the building of political empires. If transformation or preferential procurement prevents service delivery, it has to be done in another manner.

There is no justification for making people without capacity responsible for the expenditure of funds - like for example school feeding, that is meant for the truly indigent - which do not, because of these appointments, reach them. Thank you very much. [Applause.]]

The DEPUTY CHAIRPERSON OF COMMITTEES: I now call hon Fubbs, chairperson of the standing committee on finance in Gauteng.

Ms J M L FUBBS (Gauteng): Thank you, hon Deputy Chair of Committees, for the opportunity to address the House on the Division of Revenue Bill on behalf of the Gauteng provincial government.

Hon Deputy Chairperson of Committees, hon members and colleagues, for us in Gauteng the division of revenue is the celebration of our constitutional principles. It is the celebration of co-operative governance and human rights, and is reflected in principles of equity, human dignity, housing, health care, food, water, social security and education.

The division of revenue is also the celebration of the principle of accountability and transparency, introduced during the new dispensation that came about with democracy in 1994. The equitable shares and allocations of revenue in the Constitution, section 214(1) - later detailed in the Intergovernmental Fiscal Relations Act - provides for, among other issues, the sharing of revenue in a manner that takes care or account of regional disparities. This is enhanced within the framework of co-operative governance and, most importantly, recognises the unitary state of South Africa while acknowledging the fiscal decentralisation of responsibility and effective delivery.

The increase in the provincial share of revenue releases further funds for social development and does not, as my hon colleague from the DA indicated, provide funds only for emergencies in this area. Rather, these funds are released for a sustainable approach to developmental social services. [Interjections.]

With regard to education, may I say that in Gauteng we have a burgeoning population of learners. Currently, we are looking at 300 000 learners per year. Certainly, the NPNC will help Gauteng meet its target in this direction. This target is an 81% matric pass rate in 2003 - the end of this year.

The release of extra funds to provinces has also enabled Gauteng to prioritise expenditure towards infrastructure development, which will enhance service delivery. It has enabled us to increase allocations for health and education. Currently, we are looking at 32% within the province for education, 30% for health, 17% for social services.

Other factors which, perhaps, are important, and which my hon colleagues and members may not be too aware of, is that in Gauteng we have moved from 101 000 beneficiaries to 256 000 beneficiaries this year. We project this upwards in 2004 to 320 000. Only the broader increases in social grants have facilitated this, and hardly the emergency relief.

With respect to the increase in the provincial share of revenue, we believe that the division of revenue harnesses our revenue to push back the frontiers of poverty and that it harmonises the division in such a way that it enables provinces to more effectively deliver services this year. It has extended the social net to support the most vulnerable, including women, children and the youth. This has also more effectively tackled the issue of basic service delivery through local government. It continues to prioritise infrastructure, accelerates the acquisition of skills development and strengthens higher education. Indeed, Gauteng welcomes this last point, given the significant shift in our province from primary to tertiary industries. On a broader level, the support for peace and development operations through Nepad is also welcomed as Gauteng’s economic development and stability, as other provinces recognise, are also linked to regional peace, economic development and stability. We, also, indeed recognise, unlike the United States, that we are not silos of sufficiency, but rather that we need our neighbours if we are all going to develop economically much more and faster than we did in the previous century.

Furthermore, the division of revenue recognises the importance of capacity. We see this in the increase to provincial and local government from the National Treasury, and this will enable us to accelerate delivery. However, one thing is clear: There needs to be a great complementarity of programmes among the three spheres of government and a focus on implementation and execution of policy through delivery.

Gauteng is currently using capital expenditure more and more to strategically grow the economy and, in this way, reduce poverty. The identification of revenue gaps and the continued robust collection of taxes, as well as savings on the debt costs, have contributed significantly to increased revenue available from the national fiscus or the national pool. I think that we ought to commend Sars in this respect and, indeed, the National Treasury for the management of our debt.

Gauteng supports the approach to use the equitable share for the major revenue resource to fund measures to address the scourge of HIV/Aids, while at the same time we welcome the decision to fund the treatment for mother- to-child transmission of Aids, home-based care and awareness programmes through conditional grants.

This is informed by our understanding that HIV/Aids cuts across health, education, social services, housing, finance and economic affairs, and labour, among other things. Thus, to isolate the funding would minimise rather than optimise the use of financial resources. In this way, all departments, we believe, in Gauteng are responsible for factoring in measures to address Aids and to do so during microprioritisation.

Once again, it is this principle of complementarity and harmonisation of efforts, which Gauteng believes will underpin integrated allocative efficiency and effective expenditure of financial resources in a sustainable manner.

We believe that allocative efficiency has two preconditions. Most importantly, the first one is to choose the right goods and services. The second one is that resources should be allocated to the activities that are most efficient at achieving the goals we have set.

Gauteng has also learnt the hard way that earmarked grants can sometimes lead to underexpenditure. For example, in housing the grants could not be used due to a number of challenges, including capacity at a local level, delays in environmental assessment and rezoning.

Gauteng also recognises the fundamental difference between equitable and conditional grants, with the former recognising the relative demands of provinces and contextualising provincial circumstances, whereas conditional grants, as welcome as they may be in certain circumstances, are ring- fenced, though an equitable share of such funds could have been effectively utilised in other programmes by employing disciplined shifts within Votes or between Votes.

In respect of the proposed national grants agency, Gauteng believes that sound institutional arrangements should be established, and that robust mechanisms should be developed to underpin efficient and effective implementation. The increase in the housing subsidy will effectively address Gauteng’s focus on quality housing and will also address the increasing costs of building houses.

Gauteng shares the concerns raised during the hearings on the provisions to align programmatic expenditure and conditional grant planning and budgeting across the three spheres of government. This is particularly relevant with regard to the goal to maximise quality service delivery through integrated delivery.

The timing of the publication of the IGFR addresses the concerns raised by several legislatures who wish to use the information captured therein to assist in the oversight of the respective current budgets.

This, I can tell you, hon Minister, is going to provide Gauteng with an invaluable resource instrument for its portfolio committees and will effectively encourage improved oversight. This, in turn, will contribute to more effective quality service delivery.

Hon Chairperson, in respect of the grants we are getting, may I tell you that Gauteng is not only building classrooms and clinics - though these are, indeed, important - but what we are also doing is saying that it is of no value to build a classroom unless the quality of education can be improved, which we are now focused on. Gauteng rises in support of the Division of Revenue Bill of 2003. Thank you, hon Chair. [Applause.]

Mr J F AULSEBROOK (KwaZulu-Natal): Mr Chairman, in the past KwaZulu-Natal delegates engaged rather vigorously in the Select Committee on Finance and in the debates of this House on the Division of Revenue Bill. This year the tenor of our participation may come across as far more subdued, but I must say that we have approached the Division of Revenue Bill with far more focus on the text of the Bill than the numbers in the schedules.

The KwaZulu-Natal provincial government is satisfied that its equitable share allocation, as reflected in the 2003-04 Division of Revenue Bill, reached the agreed target of 20,6% in the equitable share formula. It was initially agreed that the province’s equitable share would grow by 0,2% points each year in the period from 1999-2000 to 2003-04 - that is, from 19,8% in 1999-2000 to 20,6% in 2003-04. Therefore, the province strongly believes that equity has eventually been achieved. However, the province is mindful of the fact that the 2001 census may disrupt this long-awaited equity. For example, the province’s equitable share could be negatively affected if the census shows a population figure that proves to be less than is currently applied in the equitable share formula, yet the socioeconomic challenges facing the province remain the same and are even worsening.

In KwaZulu-Natal we accept that the division of revenue process is maturing, with most issues on the equitable share being dealt with, certainly in the Minmec’s budget council and other technical committees, and in terms of the horizontal and vertical divisions being acceptably equitable at the moment. This relative contentment shown by us, and certainly by most provinces here today, is partly due to the increases in the equitable share we have all received, and has been made possible through increased tax collection by the SA Revenue Service. For that, we compliment the commissioner and his team.

Having said that, I doubt if there is a single province, more so provinces with large rural populations, that is not feeling the pressures of increased social demands. What we must acknowledge is that the national fiscus will never be in a position to satisfy these growing demands. I take this opportunity to suggest to the Minister, and certainly this House, that we approach this challenge in a very different manner than we have in the past and that we be far more proactive.

Firstly, we need to accept that creeping poverty is a reality. As a compassionate Government, we can merely provide a degree of poverty relief. This is where we need to be proactive in finding solutions, and I venture to suggest that there is only one solution and that is ensuring economic growth. The cycle of poverty can only be broken by economic expansion. This is a task that cannot be placed at the door of a single national Minister.

The national and provincial budgets must reflect this focus with buy-in from all sectors - public, private and labour - and with the understanding of the population as a whole. The latter may prove to be the most difficult, considering the plight they find themselves in. Furthermore, this would have to be a long-term plan - five years or more. There is no quick fix to this and we all accept that.

Whilst Sars has done us proud in recent years, there is a limit to how much can be raised from the economically active portion of our population before a level of taxation is reached that becomes an inhibiting factor in the economic growth of this country. The considered introduction of a poverty grant, which will no doubt alleviate extreme poverty, is something we all welcome, but in itself is not a solution but a mere alleviation of the problem.

If we do not take drastic measures soon it won’t be long before members come before this House to consider the Division of Revenue Bill not being as content as they appear to be today. They will, in fact, bring the pressures from their constituencies with them to this House.

I now turn to another issue, which is of concern and which is highlighted in this Bill, and that is the lack of financial accountability displayed by municipalities, considering that they now have a considerably increased equitable share and also bearing in mind that this is only a small portion of most of their revenue. Indicative of this are the outstanding amounts owed in audit fees to the Office of the Auditor-General.

This Bill is not the vehicle for addressing the financial management shortcomings of municipalities, and the sooner we, as a House, pass the Local Government: Municipal Finance Management Bill, the sooner this problem will begin to abate. Certainly, we agree that the Division of Revenue Bill must continue to reflect grants to local government for capacity-building as part of the solution.

In conclusion, we in KwaZulu-Natal are of the opinion that the intergovernmental fiscal system has matured. In addition, there are no policy differences between national and provincial governments. In fact, national and provincial policy priorities, which underpin the allocation of resources, are closely aligned. As a result, the provincial government believes that the time is now right for the national Government to release control and give provinces greater accountability. This can be achieved by phasing out conditional grants and making them part of the equitable share allocation.

It is my pleasure on behalf of the province to support this Bill. Thank you. [Applause.]

Mr T RALANE: Deputy Chair of Committees, Minister of Finance, MEC from the Eastern Cape and special delegates, if the Chair would allow me, I’d like to be out of order for about two seconds. You know how disciplined and quiet I am in the House. [Interjections.] I am very disciplined. I just want to raise a small point.

In 2000, whilst I was in the provincial legislature of the Free State, I chaired an ad hoc committee investigating the conditions with regard to farmworkers. We dealt with a whole range of things, wages and so on, as part and parcel of our terms of reference. We also went to the northern Free State, which my colleague referred to here. This colleague here is a farmer in that area. One of the submissions made was that the party on whose behalf she was speaking was using coercive measures in recruiting farmworkers. [Interjections.]

Many issues were raised by some of the workers from that area that came out in this regard. I don’t want to share with the House the outcomes of the investigations for now, but I do want to raise the fact that, I think, from time to time, the member here does create the impression that they are spokepersons for the poor. That is where my problem lies. I do want to share further with the House the kind of findings we made as that committee. I just wanted to raise this part for now.

I do want to focus on the issues of the Free State as far as the Budget is concerned. Since its inception, the child support grant has had about 115 000 beneficiaricies. The 2003-04 social development budget of R2,4 billion stands in stark contrast to the 1995-96 allocation of R827,8 million, which reflected the remnants of the previous system based on the legacy of years of inequality.

In February 1995 social pensions, in total, reached 148 000 beneficiaries in the Free State. This total included the aged, war veterans, the blind, the disabled and those qualifying for family allowances. In February 2003 a total of 281 820 people received Government grants, and 115 986 children received child support grants.

Dear members of this august House, we, therefore, cannot apologise for our bias in our spending pattern. In this light, social development will take up 21,1% of the Free State’s provincial budget. This will increase to 24,7% at the end of the medium-term expenditure period.

Social development is thus now a larger Vote than health in terms of the relative size of its budget, and now becomes the second largest department in this province after education. This allocation serves as testimony to this Government’s seriousness in alleviating the plight of the poor, the disabled, the vulnerable and the elderly.

Clearly, any suggestion, from whichever quarter, that this Government is not bent on serving the needs of the poor is nothing but cheap propaganda, and can only come from those who have no desire or intention whatsoever to respect the truth or meaningfully engage with empirical facts. Such political dinosaurs, driven by their own narrow interests to discredit this Government, even at the cost of totally disregarding the facts and denying that progress is greatest when the lives of ordinary people are changed, should best be handed over with a shudder to specialists in mental diseases.

With regard to health, the provincial budget will take up 22,4% of provincial resources in the new financial year, and education will take up 15,8% of the provincial budget.

I wish to remind my colleagues and friends in this House and in our legislatures that in the previous political regime provinces were mere spending agencies for national government, distributing funds according to the policies and priorities determined at national level. In the past, provinces were no different from national departments with regard to budgets.

However, my colleagues and friends do know that currently provinces are in a position to determine their own provincial budgets according to their own regional, social and economic priorities within the national framework. Of course, this flexibility is limited to the provincial equitable share of nationally raised revenue and provincial own revenue collections. This flexibility does not extend to conditional grants.

In this light, I appeal to my colleagues and friends in the provincial legislatures and in the National Council of Provinces to play a more active and vital role in monitoring spending by provincial departments. If a discrepancy exists in provincial financial reporting, it is likely that it will be revealed on delivery as well. Moreover, MPLs and NCOP members should exercise extraordinary vigilance in order to monitor the spending patterns of conditional grants to provincial departments.

We should raise the following questions? To what extend does the budget and the resources allocation it describes reflect policy decisions taken by the province, department or country as a whole? To what extent does financial input produce the desired output and outcomes?

We should also raise the question of whether provinces received an increase or decrease in total allocation. Did they incur roll-overs from the previous year? What is the position in this regard? What percentage of provincial allocations are conditional grants? What proportion of total revenue comprises own revenue? Are provinces collecting and spending revenue effectively and efficiently? Are provinces instituting provincial taxes? Have provinces allocated an additional amount for contingency reserves, and how will they be utilised in the new financial year? These are some of the questions members could raise.

With these few remarks, the Free State votes in favour of the amended Division of Revenue Bill. I thank you. [Applause.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Thank you. I now call upon Cllr Mvoko, the mayor of Cacadu District Municipality.

Cllr M MVOKO (Salga): Chair, it’s pronounced “Cacadu”. Mr Minister, the MEC from the Eastern Cape, equitable share provides a good indicator of Government support to municipalities in delivering basic services to poor households.

In 2003 such transfers constitute 17% of total Government revenue, with the remainder coming from own municipal revenue. This should be put into context to indicate that urban municipalities raise a large portion of their revenue - estimated at round 98% in 2002 - and there are signs that this trend is continuing. This extends to the fact that income in smaller and rural or poorer municipalities is derived mainly from transfers.

The variation noted above should be viewed not only in terms of fiscal capacity and disparities in municipalities, but also in terms of a reflection of limited institutional capacity that emanates from insufficient planning and implementation of IDPs and budgets. There has to be some correlation between allocations or transfers and output. Current municipal budget roll-overs and increases in municipal debt cannot be reconciled with this notion.

Estimates of infrastructure backlogs in local government remain a concern, at approximately R52 billion. This calls for a greater need to strengthen transfers in line with revised powers and functions, and for a departure by the provincial sphere from practices which may hamper better planning and implementation at municipal level. The 2003 Budget has built upon these, but there is a need for more improvement so that this status is maintained and reinforced in the MTEF to achieve the object of promoting long-term planning and predictability.

National transfers to local government increased at an average rate of 18,4% from R8,8 billion in the previous financial year’s budget to R14,6 billion in 2005-06. Against the background that approximately 90% of municipalities finance their budgets from own revenue, this figure thus has a limited yield.

The provision of free basic services remains a key priority of local government. As an unconditional transfer to municipalities, equitable share is directed at improving basic service delivery such as water, electricity, sanitation and refuse. It appropriately favours poorer municipalities. It is anticipated that the review of the equitable share will rationalise data that inform this process.

Approximately 38% of the equitable share is distributed to the 30 largest municipalities according to the size of their budgets, serving approximately 49% of the poor. We, however, need to begin looking at how targeted the equitable share is in reaching the intended group, which is the poor households. Furthermore, we believe that a better understanding of municipal fiscal environment conditions would promote even better focus and targeting of transfers by municipalities.

The equitable share will rise from 45% in 2002-03 to 53% in 2005-06, giving an increase of R3,9 billion to R6,3 billion. The allocation is to be supplemented with a R1,4 billion allocation for free electricity and a R2,7 billion allocation for free basic water, sanitation and refuse, but we need to strengthen the sanitation and refuse provision.

Infrastructure transfers are geared especially towards addressing basic infrastructure services to poor households and towards being directed towards providing job creation through labour-intensive mechanisms. Once more, an assessment of how funds eventually drive employment creation should be done to establish whether the object of the grant is actually achieved. Capacity-building grants are predominantly focused on larger municipalities or on supporting municipalities experiencing severe financial problems as well as other parameters. Given this and the aforementioned institutional limitations, there needs to be a parallel process that addresses institutional capacity to develop plans and implement IDPs and budgets.

The 2003 Budget initiated the review of the equitable share to some extent. The formula for the division of revenue between municipalities is based on the principle of equity and predictability. It is therefore critical that a review of the equitable share formula is premised on this principle.

For instance, the hyphotheses that are in the current formula under “Institutional Grant I” could be tested. For example, is there evidence to support the assumption that a rise in population has been accompanied by a drop in “Institutional Grant I” per capita? Clearly, a revisit of the formula should not be limited only to data on household poverty variables, but should also cover broader aspects which impact on the principle advanced in the argument for equitable share.

Section 5(2) of the Division of Revenue Act of 2002 on criteria for determining the division clearly outlined the need for consultation with Salga, taking into account the fiscal capacity of each municipality with a view to prioritising funding for service delivery. The omission of this provision in the current Bill is noted, and we believe that it is unfounded at this point.

Section 5(5) of the 2002 Act dealt with transfers to municipalities, being determined by the national accounting officer responsible for local government after consultation with the National Treasury. This has not been included in the 2003 Bill, and it is proposed that it be considered and added to limit any misunderstanding of levels of accountability in terms of the disbursement of funds.

In terms of section 5(6) of the current Bill, the National Treasury may delay or withhold the transfer of an instalment on the grounds that a municipality experiences serious or persistent breach of the uniform Treasury norms and standards determined to ensure that the municipality’s budget complies with the measures to ensure both transparency and expenditure control.

This aspect raises concerns as it is not in accordance with section 216(2) of the Constitution. Moreover, not only has a generally recognised accounting practice not been introduced by national legislation, but the provisions of section 216 have also been ignored. There is obviously a need to consult and, where appropriate, reach consensus. What this provision entails is outside co-operative governance principles, and it impedes the constitutional obligations of municipalities.

It is therefore proposed that the recently amended section 139 of the Constitution be applied in this regard, and that the current provisions be deleted or brought into line with the substance as contained in the amended section 139.

The new provisions which compel municipalities to report to the National Treasury by no later that 30 June 2003 and to certify to the National Treasury that an entity complies as an external mechanism, as contemplated in chapter 8 of the Local Government: Municipal Systems Act, is not in accordance with section 151 of the Constitution. This section states that the executive and legislative authority is vested in the municipal council.

If some form of certifying compliance in this regard is necessary, let it be done through the Department of Provincial and Local Government until there is clear legislation that directs municipal entities, because the legislation that deals with this provision sits with that department. What is proposed in the Bill could limit the municipality’s ability to deliver services through external mechanisms.

There is concern with regards to the conditionality of these conditional grants. Essentially, these conditions are not only varied but, in certain areas, request municipalities to furnish information that is not readily available or which demands that certain infrastructure requirements be in place. There is therefore a need to bring these conditions into line in a manner that does not limit municipalities from obtaining these grants, but, rather, that they have systems that address qualifying requirements so that some of the grants are accessible, especially those that impact directly on service delivery to poor municipalities.

Considerations of financial viability, revenue collection, budget roll-out and funding to support the extension of services to underserviced areas should constitute the overall basis for developing formulae and ensuring that all targeted municipalities do, in fact, benefit from transfers. Equitable share should facilitate the shift in resources towards poor municipalities. The next budget cycle therefore needs to indicate that this shift is not just achieved, but that it is spread across municipalities which do not have revenue-raising capacity. There is further concern with regard to the constitutional definition of basic services. The current studies will guide us in determining whether certain provincial functions need to be assigned to municipalities.

Grants directed towards capital projects should be interfaced with the overall system of intergovernmental transfers to municipalities. This would ensure greater discretion in the use of funds to enhance the sustainability of assets and encourage buy-in and better implementation.

Given the limited institutional capacity in some municipalities to plan and implement IDPs and budgets, there should be a conscious effort to build capacity to achieve better service delivery to our communities. Equally important is the capacity drive that will impact on the ability to monitor service delivery agreements and ensuring that service providers carry out their obligations.

There is an urgent need to develop policy guidelines that deal with matters relating to the indigent. Until there is a framework that guides municipalities on this issue, there will remain differentiation in allocations, which do not particularly ensure a transparent system of allocation. [Time expired.] [Applause.]

Ms S SITHOLE (Northern Province): Hon Chairperson, hon Minister of Finance, thank you for the opportunity to address this House. The purpose of my coming here is to do exactly what my province sent me to do, namely address three things.

The first is to support the amended version of the Division of Revenue Bill. The second is to ask the Minister of Finance to act very quickly with regard to the Local Government: Municipal Finance Management Bill. The third thing is to ask the Minister of Finance to have a second look at the allocation to Limpopo as far as welfare is concerned as the province has spent more than 100% of its allocation. This gives us the impression that something is quite abnormal. We believe that this is because many people spend their active years in other places and come home to retire in Limpopo, and the fact that we have the neighbouring states of Mozambique and Zimbabwe. Those are the three things that I have come here to address.

Perhaps it is important for me to make this Council understand the dynamics of the province from which I come. I come from a province where about 95% of the population was black and where it is not by accident that there is underdevelopment as it was the design of the previous regime. So, I come from that type of province. I also come from a province where there is poverty and where more than 50% of the population are rural women, and I represent that constituency.

I say this so that you can understand that we do not have the sophistication that other provinces may have. We are not so literate as to be able to read newspapers, and perhaps we cannot even afford televisions. Our only bible in life is the Freedom Charter. We are guided by “The people shall govern”, and “Power to the people”.

I come from a province where, in order for people at grass roots to listen to you, you have to tell them where you found your information and whether you’re quoting former President Mandela, President Thabo Mbeki or the Minister of Finance, Trevor Manuel. Otherwise, you will be wasting your time; people won’t listen to you.

In order that I don’t risk not being listened to, I’ll do exactly that: I will quote from what the president of the ANC said in an address on January 8:

We must use the state Budget to improve the quality of life of especially the poor, while contributing to the expansion of the economy. Among other things, we must ensure the proper functioning of our social welfare system and effective use of poverty alleviation funds.

He went further to say that:

Relying on the improved system of accountability for our members deployed in Government, we must also ensure that our members discharge their responsibilities with regard to the functioning of the system of governance. Through this, we must ensure that members of the ANC deployed in Government treat this issue as a priority matter.

I would also like to quote my favourite Minister, Trevor Manuel, who said: “Those who do not embrace the spirit of Batho Pele should do the right thing and leave the Public Service.” We in this House, in provincial legislatures, are charged with ensuring that the funds we vote to departmental programmes and Government agencies are responsibly and effectively employed. There can be no delivery without accountability and no accountability without oversight.

By this, I am trying to say that if Government does not deliver, it will not be the administration, the executive councils or the Cabinet that is to blame. The buck stops with us. It will mean that as hon members we did not play our oversight role. We must understand that it is the responsibility of the legislatures, the NCOP and Parliament to keep Government accountable to the people of South Africa.

The main role of a plenary is to provide a forum for public debate and decision-making. The most important role of committees is to develop expertise to gather information and to do the detailed work that must underpin properly informed decisions about public policy.

The role of the finance committee is to scrutinise physical aggregates and not sectoral budgets. Therefore, there also need to be formal co-ordination mechanisms between finance and other sectoral committees. To quote Tania Ajam:

The introduction of the Public Finance Management Act, together with a host of other financial and budget reforms in the public sector, has necessitated that members of Parliament and provincial legislatures acquire a broad range of oversight skills. In order to scrutinise budgetary allocations thoroughly, committee members need information on which to base their analysis and recommendations. The problem of lack of information, in essence, is not one of nondisclosure, but rather a system problem of the information not being generated - unless committees have access to reliable and timely flow of information throughout the year. Therefore, without ongoing information it is difficult to achieve effective oversight.

Finally, I would like to say that improving legislative oversight is likely to be a slow and arduous process. Yet, its importance cannot be overemphasised in ensuring that public expenditure generates maximum value for money for all South African citizens. To do less in a society with such high levels of legitimate needs and aspirations and such tight resource constraints would be morally culpable.

Therefore, as the finance committee of Limpopo, we have put in place strategies and mechanisms to make sure that every department accounts for the funds that have been allocated to it. That is why we have the courage to actually support this Bill. We have put in place systems and arrangements to ensure that, on an ongoing basis, all chief financial officers appear before the committee to give us reports - reports that are informative and which are placed before the committee, written according to the Public Finance Management Act. I thank you. [Applause.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Thank you. I call the hon Ozinsky, deputy chairperson of the standing committee on finance and economic development, Western Cape.

Mr M OZINSKY (Western Cape): Hon Chair of Committees, hon Minister and hon members, I want to thank my province and the ANC for giving me the honour of speaking in this House for the first time. [Applause.]

The last five days have seen terrible floods in many parts of the rural areas of the Western Cape, especially in the Boland, Overberg and Southern Cape. We want to send our condolences to those who are suffering as a result of these floods, and especially to the family of Vusi Mxolisi Njokeni from Dam-se-Bos in Knysna who died during the flooding.

Once again, these floods have shown that those who suffer the most are black and poor, those who suffered under apartheid and those who this Budget must assist.

On behalf of the Western Cape, I want to say that we are pleased that in this Bill the provincial share of the Budget increases by 0,8% over the MTEF period, which in real terms is an increase of 6,1%. We are pleased with this, not because we feel that provinces should be strengthened in relation to the national sphere, but because we believe that the responsibilities of the province are increasing in terms of service delivery to the people.

Let me also say that the ruling co-operation in the Western Cape between the ANC and the New NP, in contrast to the previous DA government, agrees with the equitable share formula used to divide revenue between the provinces. I say this even though the equitable share of my province, the Western Cape, has been declining and will probably decline further in the current MTEF period. In 1999 our share was 9,8% and in 2003-04 it will be 8,9%, which amounts to a shift away of about R1,3 billion in 2003 rands.

We say this because our province does not exist as an island in South Africa. We are part of the broader South Africa, and we have been relatively privileged in terms of resources and infrastructure by the apartheid and colonial governments.

The poverty and lack of resources of our neighbouring provinces put strain on our government delivery and the infrastructure of our province. For instance, many people move backwards and forwards between the Western Cape, the Eastern Cape and the Northern Cape in search of job opportunities and services such as health care and education and, obviously, to visit their families. In some cases this puts an increased burden and occasionally a strain on the resources of our province. I believe this has often been overstated by those who want to claim a lack of progress in overcoming the injustices of the past.

As our neighbouring provinces increase their infrastructure and ability to deliver services to their people by making good use of the increased allocation from the equitable share, so the pressure on services and infrastructure in our province will be reduced. In particular, we believe that the new framework for the provision of tertiary care in the health sector, while initially causing some problems in our province, will, in the long term, take considerable pressure off the health facilities of our province.

We are also thankful for the increase in the health revitalisation fund, which will be used to improve the state of our hospitals and allow us to accelerate the redistribution of services in our province to the poor areas, something which was long delayed under DA rule.

The reduced equitable share also has a positive effect on service delivery in our province. It is forcing every department and every programme to become more efficient and thrifty about how money is spent and on what it is spent.

Increasing fiscal discipline, effectiveness and efficiency in spending and service delivery, and increasing capital expenditure are now part of the policy priorities in the province. I am also pleased to say that our province is now aligning its policy guidelines with the national Government’s guidelines.

We also welcome the actual increase in the share of our province of 12,38% this year and 9,08% next year, which will bring the increase in our provincial expenditure closer to the CPIX. This will allow our province to deal with many of the pressures on our budget, especially in the areas of social security growth, acceleration of social and economic infrastructure and development, investment, service delivery, economic development and job creation. In particular, we want to thank the hon Minister for the increase in child support grants, pensions and other grants which will help the poorest of the poor.

Lastly, let me say that there has been some concern raised in our province around the timeframes in which local governments need to submit their accounts and statements to the Treasury. Unfortunately, there remain two municipalities in our province which have still not submitted their account statements for 2001-02. They are Kannaland and Witzenberg, both of which were controlled by the DA in the years in question. [Interjections.] We hope this Bill will increase the pressure on local governments to get their house in order.

On behalf of the Western Cape, we give our support to this Bill as a mandate. [Applause.]

Mr T B TAABE: Hon Deputy Chair of Chairs, hon Minister, hon members, special delegates and representatives from Salga, this afternoon we are debating the Division of Revenue Bill, 2003-04, which provides, in the main, for the equitable division of revenue anticipated to be raised nationally and by the three spheres of government for the 2003-04 financial year.

Whilst we consider the Division of Revenue Bill this afternoon, it is instructive that hon members in this august House are reminded of the words of one of the foremost thinkers in economic discipline, Adam Smith, who had this to say: “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”

Like this giant, we, as members of this Council, must also echo the same view that our society cannot be flourishing and happy, when the far greater part of the members are poor and miserable. Therefore, the challenge confronting this our nation, which is before all of us without exception, is not only poverty, but also the realisation of the objective of eradicating it.

My province, Mpumalanga, receives R11,1 billion in terms of the 2003-04 Division of Revenue Bill. The amount of R911 million, which is our provincial share, constitutes conditional grants, with the balance, therefore, attributed to the equitable share. In essence, we receive about 5,48% of the total conditional allocations to provinces. Conditional grants in Mpumalanga grew from R13,5 billion in the 2002-03 financial year to R16,6 billion in the new financial year.

This growth is linked largely to the extension of the child support grants, as hon members would know. These grants constitute an important part of the intergovernmental transfer system as they provide for national priorities in provincial budgets; for compensation to provinces for cross-boundary flows and specialised services; and for support for transition and capacity- building.

Our spending in Mpumalanga on social services has been gradually increasing as a share of total Government spending. In the previous financial year, our spending stood at 70% of total provincial revenue. Accordingly, as Mpumalanga, we intend to spend about 80% of our budget on social security. It is our well-considered view that spending on education, health care and social security will not only enhance capital formation, but also promote equity and effectively reduce poverty.

Strides have indeed been made in the area of financial management and control in Mpumalanga. Our resources are being efficiently managed, and the situation in this regard, which existed previously, has improved remarkably. Departments and other statutory bodies have come to the party, at least for the first time, precisely because the letter and spirit of the PMFA are being followed and implemented fully. We argue that we must ourselves continue to deepen the budgetary process in our province. The critical and most pressing challenges remain the enhancement of the financial management capacity of our social service departments, namely health, social services and education.

The Intergovernmental Fiscal Review, as hon members in this House this afternoon would recall, will be released in April, which will greatly assist departments in our province to plan properly. This must ensure, further, that the capacity of our province to direct its limited resources to areas of priority is enhanced. This must also ensure that our own elected representatives, gathered here this afternoon, are able to effectively exercise their oversight role and function in a responsible way.

As hon members would know, our equitable share as a province for the 2003- 04 financial year stands at R10,219 billion. We are of the view, as a province, that the fact that we have this money should deepen our commitment to changing the lives of all our people. Our view, in relation to this commitment, remains one that is firm, unshakable and, indeed, unquestionable, because we believe that with the limited resources at our disposal we have, indeed, made a difference to the most vulnerable in our communities, provided that we spend the funds allocated responsibly and effectively and ensure that they benefit those for whom they were intended.

A substantial chunk of our allocation as Mpumalanga will fund programmes aimed at, inter alia, accelerating the provision of infrastructure, which was reinforced through the school building programme. As a province we are also stepping up the provision for scholar transport and school infrastructure. Although spending on infrastructure has improved, much remains to be done given the existing backlogs in infrastructure, thereby allowing us to continue our noble and sustained fight against the twin evils of unemployment and poverty.

In conclusion, I think all of us must continue to foster an understanding amongst South Africans of all persuasions, indeed all patriots, to form a broad-based front for reconstruction and development. The long road we have travelled since 1994, we must admit, has not been easy. Sometimes it has been very bumpy and, indeed, very rocky.

The words, again of Adam Smith, are as instructive and relevant to this very day as they truly were then: “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” This continues to be the challenge. I thank you, hon Deputy Chair. [Applause.]

The MINISTER OF FINANCE: Deputy Chair, may I express appreciation, firstly, to the select committee and then to all the contributors to this debate. I think that both the report, as published in the ATC today, and the bulk of contributions to the discussion here this afternoon indeed demonstrate that the intergovernmental fiscal relations system has matured quite considerably.

The evidence of the change, not only in the allocations, but also in the management of the resource is there for all to see. Because we’ve been consistent in the application of norms and standards in intergovernmental fiscal relations because the Budget Council has matured in the way that it has, we have over the past few years been able to nuance the approaches.

The reference I made earlier to the noncapital, nonpersonnel issues, I think, is part of the demonstration of that; but also, whereas we had to ring-fence certain moneys for capital expenditures in health, education and transport a few years ago, now that the capacity is there we have to roll that out and continue rolling it out. And, I think, that distinguished members of the NCOP who are mandated by provinces, as virtually all the contributors here have demonstrated today, would in fact be in reflection of that growing maturity. I’d like to express sincere appreciation for that.

The point I’d like to make in response to the hon Sithole is that what we can’t do in the Division of Revenue Bill is to do what the Bill is not intended to do. We said earlier that every sphere of government must allocate from its share to its needs. We cannot sit at the national level and increase the welfare grant to the Limpopo province, because that would in fact undermine the fundamental responsibility of the Limpopo government to undertake that. What we are doing, and what the Bill does provide for, is to ensure that there’s a conditional grant to help us roll out the child support grant until we reach 14.

So that bit is ring-fenced. It doesn’t need to be ring-fenced, but we need to monitor it to ensure that providing for the increasing age limits, in terms of the child support grant, doesn’t flow over into the rest. Because these kinds of social grants are statutory commitments, we have to meet them, and the provinces in meeting them sometimes have to shave off from other responsibilities and that has created a contradiction in the past.

So the introduction of this element as a conditional grant is one that we must actually understand. Having said that, the detail of what we will have available from Census 2001 must help us understand these issues.

I think, in a not dissimilar way, because we aren’t dealing with a perfect position, the points raised by the hon Sithole about people who spend their working lives in one province and then retire to another province is not a uniquely Limpopo issue. They go to provinces like Limpopo, the Eastern Cape and KwaZulu-Natal for retirement and also may work elsewhere and leave children with gogo [grandmother] in those provinces, and that creates this kind of contradiction. So we aren’t dealing with perfection. We need to understand that, and I think the kind of discussion we’re having here this afternoon and the hearings in the committee over the past few weeks have helped us understand that a bit better.

Similarly, I want to make the appeal again that the Intergovernmental Fiscal Review, when it is available after 8 April, must be used. I’d like to believe that the fact that we’re publishing so close to recess must place us in a position in which the document is taken for discussion into every province. It must become a very important part of our political work.

With regard to the comparisons between provinces, colleagues would remember that in previous years we were able to demonstrate how, in fact, the distribution of medical personnel demonstrates some interesting contradictions. The North West has the poorest distribution of doctors and specialists out of all provinces. Why does that happen? How do we address those kinds of issues? How does that impact on the quality of health services rendered? Can we meet our Batho Pele commitments if those contradictions obtain?

That becomes the political message out of this document and I think, as with the child support grant and so on, these issues must be taken forward. I certainly heard that resonating through the contributions of a number of contributors to the debate this afternoon.

Another view I heard is some concern about payments to the Auditor-General. Now, I should perhaps say that I take a less charitable line on this issue. If you run a spaza shop and you give people bread and you don’t say: Please pay me for it'', you're not going to remain in business for long. If you have a statutory power of undertaking an audit and you don't say: Pay me for this’’ and use your statutory power, but then come to the legislature and say, ``We don’t know how to run a business’’, I think you’ve got a problem.

So, rather than feel sympathy, I think all of us must hold hands and say to the Auditor-General: Run your business properly. Please, it's in the interests of democracy that you do so.'' As we say that, we must also say to local authorities: You, individually and collectively, have an obligation to settle, because you can’t run the business of local government and be accountable if you’re not prepared to be audited so that those who vote for you can see what you’re doing right and wrong.’’

I’d like to campaign for this position. I’ve said to the Auditor-General, and I’ve said to the Audit Commission, that I will not take a dime out of other people’s money to give to the Auditor-General for circumstances in which he has failed to collect what genuinely he should collect. I’d like to believe that we can in fact have consensus about that issue.

Let me turn to some of the contributions by the Mayor of Cacadu, on behalf of Salga. Now, clearly we would want to provide a more detailed response, but I hope that the situation in respect of financial management in local government can mature to the same extent that the situation in the provinces has matured. I think that anybody from the provinces would concur that the Public Finance Management Act has helped us considerably. And so the battle for the Local Government: Municipal Finance Management Bill will help us to ensure that there is, firstly, a consistent form of budgeting, including a medium-term expenditure framework; and, secondly, a consistent form of reporting. That, I think, would bring a lot of the local government financial management issues out of the shadows into the limelight and compel improvements.

Now, some issues have been raised about section 5(6) of the Division of Revenue Bill. I need to remind the distinguished representative of Salga that we’ve recently amended the Constitution to ensure that for material and persistent breach - material and persistent breach - we can, in fact, take away the municipal functions. Now it has to be a big step. That constitutional amendment, I think, would only be used in the severest of circumstances. However, it is a big step and one that has been introduced as part of the Local Government: Municipal Finance Management Bill to ensure that there can be no doubt about the accountability, nor should there be any limitation on the ability of local government to be able to borrow against its own revenue stream.

So it’s an empowering feature of that legislation. The mayor did talk about section 216 and the powers that we have there, but I think that we should invite Salga to look again at their concern, because I’d like to read section 5(6). It says:

Despite subsection (3) …

Which deals with quarterly instalments and so on -

… the National Treasury may, after consultation with the national accounting officer responsible for local government…

In other words, the DG for the Department of Provincial and Local Government -

… delay or withhold the transfer of an instalment on the grounds of a municipality’s serious or persistent material breach of uniform treasury norms and standards.

That is, a serious or persistent material breach of uniform Treasury norms and standards. Now, my pleading to the distinguished representatives of Salga is that we are able to draw a distinction between a little mistake which, on the one hand, in the course of the maturing sphere of Government, we will encounter and must be able to deal with, support and mentor, and, on the other hand, what the section says: serious or material breach of uniform norms and standards. I don’t think anybody who is a democrat should say that we will support those who don’t give a damn and don’t mind being in serious or material breach.

So I’d like to ask that those matters be considered by Salga again. I will, in the course of the next period, be in conversation and in written communication with the distinguished reverend, His Worship the Mayor of Tshwane, about this matter. But I think that we must use these kinds of instances to start building those platforms for maturity.

We are not in competition. We are not about undermining that sphere of government which is, in many instances, the coalface of what our people experience every day. This is because when the provinces aren’t there and when we in national Government aren’t there, people wake up and see the filth around them, they see the streetlights that aren’t working, they turn on their taps and there’s no water - like the local authority in Acacia Park doesn’t provide water and so on - then, of course, people are very angry with government and the government that they’re angry with is local government. So I believe that we have a collective responsibility to ensure that local government can meet these objectives.

As we deal with those issues, the definitions of what basic services are become clear, but let me also be blunt about the fact that I think we need consistency. We need consistency about the fact that the Auditor-General ought to collect what’s due to the Auditor-General. We need consistency to ensure that local authority collects what’s due to local authority, because there are many instances in which they aren’t collecting. So, you have people melded together whose circumstances are desperate because they’re so desperately poor, with businesses which don’t bother to pay, because a local authority doesn’t get its act together to ensure that it has a reasonable billing and collection system.

Now, the distinguished mayor did make reference to the point about a policy on indigence, and I want to echo that. I want to ask that Salga actually don’t wait for some directive, but that Salga demonstrate some leadership. Optimally, I think the system would work in such a way that an individual goes to a local authority and registers the family as poor or indigent. The local authority must have the ability to investigate the circumstances to ensure that nobody who happens to be a member of Parliament and earning a salary like we do registers. This is so that people who are truly unemployed, who are really indigent, will be treated quite separately.

We will then have a national roster. Some of the circumstances would be temporary, some are permanent, but unless there’s action from local authority, a number of other initiatives, I think, are going to run into difficulty. This is because that same register should then be the basis for demonstrating a policy that we really care.

I think I’ve run out of time.

Whether it be through the distribution of food parcels or the provision of services to people who aren’t paying because they can’t afford to pay, that’s what a caring democracy does. The frontline of that has to be local authorities. So my pleading in support of the contributions of the distinguished mayor of Cacadu is that Salga in fact demonstrate a bit of leadership and bring the rest of Government into line with a policy on indigence, which we must make work. I think that that, in many respects, would be the acid test of our democracy. For all of the contributions, once again, and for the support for the Division of Revenue Bill 2003, I thank all contributors. [Applause.]

Debate concluded.

Question put: That the Bill be agreed to.

IN FAVOUR OF: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, Northern Province, North West, Western Cape.

Bill accordingly agreed to in accordance with section 65 of the Constitution.


 (Consideration of Bill and of Report of Select Committee on Finance

Mr M I MAKOELA: Deputy Chair, the Food Relief Adjustments Appropriation Bill is a money Bill. The objective of the Bill is to appropriate amounts of money for the requirements of the Department of Social Development and the Department of Foreign Affairs, in respect of the financial year ending 31 March 2003.

The following amounts are appropriated from the National Revenue Fund for the following national departments: an amount of R230 million for the Department of Social Development, in respect of the financial year ending March this year, to fund the implementatiton of domestic food relief interventions; and an amount of R170 million for the Department of Foreign Affairs, in respect of the financial year ending March this year, to give effect to South Africa’s commitment to assisting in the provision of food relief to those countries in the SADC region more seriously affected by the food crisis.

The 2002 adjustments estimate set aside R400 million for emergency food relief for vulnerable groups, including a contribution to the regional food relief programme as part of the revised expenditure proposal. This amount was not allocated to a particular department at the time of the adjustments budget, because the relevant departments were still investigating appropriate interventions through an interdepartmental technical committee.

The committee comprised officials of the National Treasury, Statistics SA, and the Departments of Agriculture, Health and Social Development. This committee discussed several options to address the domestic food situation. The main component of the committee’s proposals is the targeted distribution of food parcels through nongovernmental organisations and community-based organisations.

Functions related to providing direct assistance to vulnerable groups fall within the ambit of the Department of Social Development. In addition to the measures to be taken on the domestic front, South Africa has made a commitment to donate 100 000 metric tons of maize to countries in the SADC region.

The contribution to regional food relief will be transferred to the World Food Programme through the Foreign Affairs budget. Funds were not appropriated in the relevant departmental budgets during the adjustments budget for 2002-03. A special adjustments appropriation Bill is therefore required to put the departments in a position to incur this expenditure.

Members of the Select Committee on Finance should encourage members of this Council to endorse the Food Relief Adjustments Appropriation Bill as placed before the House. Thank you. [Applause.]

Debate concluded.

Bill agreed to in accordance with section 75 of the Constitution.


 (Consideration of Bill and of Report of Select Committee on Finance

Mr K D S DURR: Chairperson, what this Bill seeks is the approval of Parliament for the defrayal of a loss accrued on the Gold and Foreign Exchange Contingency Reserve Account.

Sections 25 and 27 of the South African Reserve Bank Act, Act 90 of 1989, provide for the management by the SA Reserve Bank of a gold price adjustment account, a foreign exchange adjustment account and a forward exchange contracts adjustment account. Any profits or losses arising are recorded on these accounts and accrue to the Government.

Section 28 of the South African Reserve Bank Act provides that the balances in these accounts shall be transferred at the close of each financial year to the Gold and Foreign Exchange Contingency Reserve Account, which is managed by the bank on behalf of the Treasury. On the other hand, any losses or any debit balances result in a charge against the National Revenue Fund.

On 31 March 2002 the deficit balance on the Gold and Foreign Exchange Contingency Reserve Account was R28,024 million. This amount is subject to an audit investigation currently being undertaken. The losses are largely the result of losses incurred in the bank’s forward exchange operations between 1995 and 1996 when the account was last settled.

During the periods of rand depreciation, losses arose. At times the bank’s provision of forward exchange cover has exceeded its foreign assets by a wide margin. Over recent years, by agreement, the bank has steadily reduced this exposure. The net open forward position has declined from a high US$23,2 billion in 1998 to US$1,5 billion in January 2003 - major progress indeed. As a consequence, the Treasury has agreed to settle the outstanding balance on the reserve account, subject to the findings of the current audit investigation, over a four-year period.

An amount of R7 billion will be charged to the National Revenue Fund in the 2002-03 financial year, and R21,024 billion will be charged over the next three financial years.

Nil coupon Treasury bonds worth R7 billion were issued to the SA Reserve Bank in September 2002-03 and, of this amount, R3 billion has subsequently been converted into fixed income bonds. Parliamentary approval is thus sought to regard the defrayal of these losses on the reserve account as a direct charge against the National Revenue Fund.

The Bill reflects major progress in the macroeconomic financial state of our nation and, as such, should be welcomed as a high achievement both for the SA Reserve Bank and for the Treasury. Our congratulations thus go out to the Minister of Finance and the Governor of the Reserve Bank respectively.

The Select Committee on Finance of the NCOP has deliberated carefully and considered the legislation, and we recommend the Bill to the House for approval. I thank you. [Applause.]

Debate concluded.

Bill agreed to in accordance with section 75 of the Constitution.

The Council adjourned at 16:57. ____


                      WEDNESDAY, 26 MARCH 2003


National Assembly and National Council of Provinces:

  1. Assent by President in respect of Bills:

    Constitution of the Republic of South Africa Fourth Amendment Bill [B 69B - 2002] - Act No 2 of 2003 (assented to and signed by President on 19 March 2003).

    NOTE: The name of the Act is the Constitution of the Republic of South Africa Amendment Act, 2003.

  2. Introduction of Bills:

 (1)    The Minister for Provincial and Local Government:

     (i)     Local  Government:  Property  Rates  Bill  [B  19  -  2003]
          (National Assembly - sec 75) [Bill and  prior  notice  of  its
          introduction published in Government Gazette No  24589  of  18
          March 2003.]

     Introduction and referral to the Portfolio Committee on  Provincial
     and Local Government of the National Assembly, as well as  referral
     to the Joint Tagging Mechanism (JTM) for  classification  in  terms
     of Joint Rule 160, on 27 March 2003.

     In terms of Joint Rule 154 written views on the  classification  of
     the Bill may be submitted to  the  Joint  Tagging  Mechanism  (JTM)
     within three parliamentary working days.
  1. Translations of Bills submitted:
 (1)    The Minister of Defence:

     (i)     Molaotlhomo wa Kiletso ya Meepo ya Twantsha motho [M  44  -
          2002] (National Assembly - sec 75).

     This is  the  official  translation  into  Setswana  of  the  Anti-
     Personnel Mines Prohibition Bill [B 44 - 2002]  (National  Assembly
     - sec 75).

National Council of Provinces:

  1. Report of the Select Committee on Finance on Hearings on Division of Revenue Bill , dated 26 March 2003:
 The Select Committee on Finance, having held hearings on  the  Division
 of Revenue Bill, referred to it, reports as follows:

 A.     Introduction

     On 6 March 2003,  the  Division  of  Revenue  Bill  [B  9  -  2003]
     (National Assembly - sec 76), after introduction  in  the  National
     Assembly, and amendment [B 9B - 2003] by  the  Portfolio  Committee
     on Finance, was referred to the Select Committee on Finance of  the
     National Council of Provinces. The Committee proceeded to  work  on
     the Bill by hosting  public  hearings  from  Monday,  10  March  to
     Thursday, 14 March 2003.

     The Committee wishes to express its  sincere  appreciation  to  all
     the participants for their  submissions  and  contributions  during
     the hearings. The Committee  would  further  like  to  express  its
     appreciation to National Treasury, the chairperson of  the  Finance
     and Fiscal Commission and his  staff,  SALGA,  the  Office  of  the
     Auditor-General, Directors-General,  Deputy  Directors-General  and
     Chief Financial Officers from the Departments of  Housing,  Health,
     Water Affairs and  Forestry,  Social  Development,  Provincial  and
     Local Government, Education  and  Minerals  and  Energy  for  their
     participation via submissions.

 B.     Objectives of hearings on the Bill

     The Constitution, in section 214, Chapter 13, provides that an  Act
     of Parliament should provide  for  the  equitable  distribution  of
     revenue raised nationally among the national, provincial and  local
     spheres  of  government  to   ensure   that   the   provinces   and
     municipalities are able to provide basic services and  perform  the
     functions allocated to them. Hence, the Division of  Revenue  Bill.
     Section 214(2)  details  criteria  to  be  taken  into  account  in
     determining the division of revenue and indicates the  consultation
     process necessary before  enactment  of  the  Division  of  Revenue

     Over  the  past  three  years,  a  number  of  reforms  have   been
     introduced  in  relation  to  the  administration  of   conditional
     grants, with the view of enhancing their effectiveness as  a  means
     of facilitating improved delivery at sub-national  level.  Notably,
     provinces and local government now receive  three-year  allocations
     for conditional grants and a  framework  for  each  grant,  setting
     out, amongst other things, the purpose  of  the  grant,  measurable
     objectives, conditions, allocation criteria and past performance.

     The  objective  of  the  hearings   on   the   conditional   grants
     administered by departments/municipalities via oral submission  was
     based on the following requirements:

     1. To gather a detailed exposition  on  the  formula  and  criteria
          used for  allocating  each  grant  for  2002/03,  2004/05  and
          2005/06, and the extent to which these comply with section 214
          of  the  Constitution.  In  particular,  how  the   allocation
          mechanism takes into account each of the factors  set  out  in
          section 214(2) (a) to (j); to  also  furnish  all  statistical
          data used for the formula, and indicate the source of all such
          statistical data; to note that this  information  is  critical
          for the  Committee  to  assess  whether  a  department  is  in
          compliance with the criteria outlined in sections 214(2)(a) to
          (j) of the Constitution, stating which  criteria  may  not  be
          applicable, and in respect of those that are  applicable,  how
          the grant gives effect to them.

     2.  To  record  trends  in  allocations,   transfers   and   actual
          expenditure of all departments'  conditional  grants.  Analyse
          the actual allocations by province and municipality, including
          the per head allocation for that grant (using  the  population
          numbers per municipality, published in Appendix E7 of the 2003
          Division of Revenue Bill, or  for  provinces,  the  population
          data in Annexure E, used for the  provincial  equitable  share

     3. To briefly assess  the  Departments'/municipalities'  monitoring
          capacity and past performance, for both the  current  and  the
          past years, how Departments monitor compliance every month  by
          provincial and/or local governments as required  by  the  2002
          Division of Revenue Act, including the  conditions  pertaining
          to the grant, as set out in the framework for  the  grant.  To
          indicate whether departments ensure that they do  receive  the
          monthly reports required from receiving provincial departments
          or municipalities, and if not, what is being  done  to  ensure
          compliance.  Where   non-compliance   occurred   in   2001/02,
          explaining the steps taken to ensure full  compliance  in  the
          current financial year (2002/03), and indicate  whether  there
          is evidence of  improvement.  Where  the  Auditor-General  has
          qualified an audit due to a conditional grant, explaining  the
          steps Departments are taking to address the  Auditor-General's

     4. To assess quantitative  and  qualitative  indicators/information
          on  performance  of  conditional  grants  administered  by   a
          department for the 2001/02 financial year, using the ones  set
          out in the framework for the grant as a point of departure. In
          particular,  a  focus   on   the   non-financial   performance
          indicators used by departments.

     5. To motivate why this grant should continue to be  a  conditional
          grant, and not part of the equitable share or an unconditional

     The Division of  Revenue  for  2003/2004  is  consistent  with  the
     previous  years  -  2001/2002  and  2002/2003.  The  previous   two
     financial years showed  a  slow  increase  in  real  terms  of  the
     equitable share for Provinces and  municipalities.  Schedule  1  of
     the Division of Revenue:

     Spheres of    Column A   Column B   Column C
     Government    2003/2004  Forward Estimates       Forward  Estimates
     Allocation    2004/05    2005/2006
        R' 000     R' 000     R' 000

     National *    185 235 905      200 954 497      220 351 687

     Provincial    142 386 031      155 313 096      167 556 442
     Local     6 343 478   7 077 546       7 698 179

     Total   333 965 414 363 345 139     395 606 308

     The above table illustrates the point that because of improved  tax
     collection  we  are  able  spend  more   money   on   social   non-
     infrastructure- and social infrastructure-related issues.

     This table also shows that  municipalities  are  getting  a  bigger
     share of the nationally-raised revenue. Again, for the first  time,
     share of the  equitable  share  for  all  municipalities  has  been
     published in the Division of  Revenue  Bill,  2003/2004,  which  is
     before the Council. This will assist municipalities  to  know  what
     they are getting from the nationally-raised revenue, but also  this
     development will assist them to plan and to  put  adequate  revenue
     collection policies in place in order that they should be  able  to
     deliver basic services to people.
 C.     Presentations by Departments and Municipalities

     In conducting the public hearings we needed to bring  to  the  fore
     the importance of the Public Finance Management Act, Act No.  1  of
     1999. Management of these grants  is  very  important  in  ensuring
     service delivery. Departments must ensure that  these  grants  flow
     smoothly  between  the  transferring  officer  and  the   receiving
     officer as per the requirement in the framework of the  conditional

     The importance  of  conditional  grants  cannot  be  overemphasised
     because they fund  important  functions  such  as  Early  Childhood
     Development, HIV/Aids, the Integrated  Nutrition  Programme  (which
     includes the Primary School Nutrition Programme), extension of  the
     Child Support Grant up to the age of 13, provision  of  bulk  water
     supply by water and forestry, home-based care, poverty relief,  the
     Consolidated Municipal  Infrastructure  Programme  (CMIP)  and  the
     Integrated National Electrification Programme (INEP).

     Performance of Grants, its Successes and Difficulties

     1. Early Childhood Development

          In the next cycle of the MTEF, this  will be incorporated into
          the equitable share so that provinces can decide on their  own
          how best to utilise the resources without deviating  from  the
          principles of providing classrooms for grade  Rs  in  all  the

     2. Primary School Nutrition

          This programme will in the next MTEF cycle be included in  the
          Department of Education's budget vote but it will continue  as
          a conditional grant. We welcome this decision since this grant
          was not being utilised fully under the Health  Department.  We
          have been assured that the two departments  are  finalising  a
          transitional plan. In 2004/05 and over the MTEF  from  2005/06
          going forward this function will fall under Education. Notably
          there has  been  a  huge  increase  in  the  school  nutrition
          programme, because of the high number of learners  who  go  to
          school without meals and who  will  probably  come  back  from
          school  to  the  same  circumstances.  These  meals  are  very
          important for such learners, who dearly need them most.

     Grants managed by Department of Water Affairs and Forestry

     3. Water supply systems built by Department of  Water  Affairs  and

          These  supply  systems  will  later  to  be  handed  over   to
          municipalities and are welcomed. However, we would like to see
          a clear plan of hand-over to  those  municipalities  who  have
          capacity and that it be ensured that the maintenance of  these
          do appear in their budgets before they take over the  function
          of maintenance. The water schemes that have  been  built,  are
          indeed important for poor people to get clean and  safe  water
          from their taps.

     Grants managed by Department of Health

     4. Health Professions Training and Development Grant

          This grant is very important, because  it  will  assist  rural
          provinces to attract professionals to go and work in the under-
          served provinces. It will also  enable  shifting  of  teaching
          activities from central hospitals  to  regional  and  district
          facilities. Therefore, it is very crucial that we monitor  how
          this grant is going to perform throughout the financial  year.
          This is a direct  response  from  the  issues  raised  in  the
          Intergovernmental Fiscal Review of 2001, where it  was  stated
          that professionals are concentrated in Gauteng and the Western
          Cape in the main.

     5. HIV/Aids grant

          This grant has not performed well because the amounts involved
          are too small. At this point we have indicated over the  years
          that some of these grants must be consolidated  into  one  big
          grant so that the impact can be  felt  and  we  can  be  in  a
          position  to  measure  the  stated  measurable  objectives  or

     6. Hospital Management and Quality Improvement Grant

          The purpose of this  grant  is  to  strengthen  management  in
          hospitals, development  of  management  and  structures.  This
          grant is very important because many public hospitals  do  not
          have good and strong management. Systems are not effective and
          efficient for proper utilisation of the limited resources that
          government is providing to these public  health  institutions.
          It is the view of the Committee that these  improvements  will
          lead to many people using public hospitals.

     Grants managed by Social Development

     7. HIV/Aids Home-Based Care

          The purpose is to render services to  orphans  and  vulnerable
          children who are infected and affected by  HIV/Aids.  Some  of
          these grants are clearly meant to intervene in the scourge  of
          HIV/Aids,  but  it  is,  however,  disappointing   that   some
          provinces  have  not  spent  the  whole  allocation  given  by
          national departments.

     8. Extension of Child Support Grant (CSG)

          We have seen a major increase over the years - in the  current
          financial year the CSG was supposed to be  extended  to  three
          million children in the country. In the 2003/04 financial year
          we have seen the grant being extended up to the age of 13, and
          it will continue over the METF. This will be done  in  phases:
          2003/04 - seven- and eight-year old children; 2004/05 -  nine-
          and 10-year old children; and 2005/2006 - 11-, 12- and 13-year
          old children. The phased approach will assist  to  absorb  the
          shocks that might impact on the budget process because  if  it
          is introduced all at once, for all the above  age  groups,  it
          will indeed have a negative impact.

     9. Food Relief Grant

          This grant is aimed at assisting poor households who have been
          severely affected by the increase in food prices. The criteria
          used were the household expenditure per province, which  gives
          an indication of poverty levels per  province,  in  particular
          targeting women and children in the rural areas.

     Grants managed by Department of Provincial and local Government

     10.     Consolidated Municipal Infrastructure Programme grants

          Transfer of  funds  from  the  transferring  department  to  a
          particular municipality should  not  be  transferred  via  the
          province,  but  must  be  sent  directly   to   the   relevant
          municipality because the flow of funds is very slow.
          The allocation to the 21 nodal points remains a key concern to
          the Committee in particular, because National Departments have
          not contributed their portion in the financing of these  nodal
          points. We would like to raise  a  serious  concern  that  the
          failure of these departments to contribute, will undermine the
          stated objective of the nodal  points.  We  will  continue  to
          raise the matter with the Department of Provincial  and  Local
          Government and other affected departments.

 D.     Auditor-General

     The Auditor- General (A-G) has  engaged  with  National  Government
     Departments on their failure to monitor conditional  grants,  which
     were given to provinces and different municipalities. We also  have
     a new provision in the Bill, Clause 20, which refers to the  duties
     of the A-G. This Clause allows the  A-G  to  audit  the  grant  and
     submit the report to  Parliament.  This  is  as  a  result  of  our
     engagement with the A-G.

     The A-G has given the Committee  shocking  figures,  in  that  some
     national  departments,  some  provincial   departments   and   some
     municipalities do not regularly pay audit fees. This seems to be  a
     matter of concern to the Committee.

     Municipalities need to ensure that their budgets  reflect  what  is
     contained  in  the  Integrated  Development  Plan.  This  is   very
     important in order for us as a country and a nation to be  able  to
     measure outputs. The conditional grants  for  financial  management
     is aimed at assisting municipalities with capacity building.

     Municipalities which appeared before the Committee, indicated  that
     some provincial and national departments do not regularly  pay  for
     their rates and taxes.
 E.     Achievements

     *  The report of the Select Committee, dated March 2001,  based  on
       the Division of Revenue Bill [B 11B - 2001], indicated that some
       grants were introduced rather late  during  the  financial  year
       (gazetted 28 August 2000), which posed a spending problem.  With
       the division of revenue being tabled earlier and  the  budgetary
       system in constant refinement, this problem seems to  have  been
       addressed. At this stage, this issue is being addressed  and  we
       welcome the efforts made by Treasury.

     *  The publication of municipal  conditional  grants  is  surely  a
       step in the right direction and would give municipalities a more
       predictable  and  stable  fiscal  environment.  That  will  make
       municipalities more attractive to private lenders and investors.
       Another achievement well noted.
     *  The recommendations made by the Committee in the  2002  Division
       of Revenue hearings report have also been adhered  too,  in  the
       context  of  the   need   to   strengthen   accountability   and
       transparency and increased efforts to improve reporting. A clear
       indication of this is the Local  Government:  Municipal  Finance
       Management Bill currently before Parliament, to be enacted soon.

     *  Introduction of tight measures to  deal  with  departments  that
       have not implemented the PMFA, is a challenge that was noted  in
       the report on Division of Revenue, 2002.  This  has  been  dealt
       with in section 55 of  the  PMFA  and  also  Clause  20  of  the
       Division of Revenue Bill, 2003, and will further be strengthened
       in the regulation catered for in Clause 33 of the Bill.

 F.     Recommendations

     *  Strategic plans  need  to  speak  to  budgets  and  vice  versa,
       especially  at  national  and  provincial   level,   to   ensure
       consistency and performance.

     *  Provinces need  to  table  a  summary  of  their  allocation  to
       municipalities timeously to allow municipalities to plan.

     *  Office of the Auditor-General: The Audit Committee and  internal
       auditing should be strengthened. This  should  be  done  in  the
       broader context when the intergovernmental  system  is  reviewed
       after the first 10 years of our democracy.

     *    Encourage   discussions   between   service   providers    and
       municipalities  to  negotiate  service  delivery  agreements  to
       strengthen    accountability    (political     authority)     to
       people/clients (basic service rendering).

     *  Municipal budgets should be aligned with Integrated  Development
       Plans (IDPs).

     *   Division  of  Revenue  allocations  to  spheres  -   challenges
       municipalities and provinces to take allocation  of  grants  and
       own revenue and align it with own revenue and budget  consistent
       with IDPs.

     *  IDPs are in the process of change, the growing  development  due
       to statutory requirements of IDPs, municipalities must  use  the
       conditional grant for capacity  building  in  order  to  produce
       credible and proper IDPs and avoid usage of consultants.

     *   Cash-flow  plans  should  be  monitored/reported  quarterly  to
       prevent fiscal flow dumping - early warning systems in the  form
       of quarterly reports should be used  effectively  as  tools  for

     *  Devolution of further  functions  is  supported.  However,  such
       functions must be followed by funds.

     *  Where possible, we would like to call upon National  Departments
       to give funds direct to municipalities who have capacity.

     *  There  are  difficulties  with  the  published  figures  by  the
       Treasury vis-à-vis the departmental figures, and  we  will  urge
       all departments to work toward systems that talk to  each  other
       or one another.

     *  Policy differences, which result in delays in  the  delivery  of
       services, must be avoided at all costs. We want to appeal to all
       government departments at  all  levels  and  to  departments  in
       between to improve in this area.

     *  The A-G's response indicates that  alternative  measures  should
       be employed to resolve differences between spheres of government
       other than the extreme measure of litigation.

 G.     Conclusion

     We  would  have  appreciated  more  time  to  allow  provinces  and
     municipalities to engage more on the bill. In future we would  like
     to see the NCOP Programme Committee take into account the  Division
     of  Revenue  Bill  and   allow   more   time   to   provinces   and
     municipalities to engage the bill.

     Sincere thanks go to the Ministers who took time to  appear  before
     the Committee, including those who sent written apologies  or  made
     phone calls to the chairperson of the  Committee.  Many  thanks  to
     those colleagues from provinces. Thank you also  to  the  permanent
     delegates,  as  your  contribution   and   interaction   with   the
     departments were very informative. Our sincere thanks go  to  Henry
     Eksteen for his hard work and dedication to assist the Committee.

     Lastly, we would like to thank the NCOP Presiding Officers and  the
     Chief Whip, who gave permission for us to remain in Parliament  and
     conduct the public hearings.


     List of attendants

     Ministry of Education
     Joint Budget Committee: National Parliament
     Chairperson of Standing Committee on Finance: Eastern Cape
     Chairperson of Standing Committee on Finance: Free State
     Chairperson of Standing Committee on Finance: Northern Cape
     Chairperson of Standing Committee on Finance: Limpopo
     Special Delegates: KwaZulu-Natal
     South African Local Government Association (SALGA)
     Finance and Fiscal Commission (FFC)
     Department of Education
     Department of Health
     Department of Housing
     Department of Minerals and Energy
     National Treasury
     Department of Provincial and Local Government
     Department of Public Works
     Department of Social Development
     Department of Water Affairs and Forestry
     Buffalo City Municipality
     Ekurhuleni Metropolitan Municipality
     Nelson Mandela Metropolitan Municipality

 Report to be considered.
  1. Report of the Select Committee on Finance on the Division of Revenue Bill [B 9B - 2003] (National Assembly - sec 76), dated 26 March 2003:

    The Select Committee on Finance, having considered the subject of the Division of Revenue Bill [B 9B - 2003] (National Assembly - sec 76), referred to it, reports the Bill with amendments [B 9C - 2003].

  2. Report of the Select Committee on Finance on the Food Relief Adjustments Appropriation Bill [B 16 - 2003] (National Assembly - sec 77), dated 26 March 2003:

    The Select Committee on Finance, having considered the subject of the Food Relief Adjustments Appropriation Bill [B 16 - 2003] (National Assembly - sec 77), referred to it, reports that it has agreed to the Bill.

  3. Report of the Select Committee on Finance on the Gold and Foreign Exchange Contingency Reserve Account Defrayal Bill [B 17 - 2003] (National Assembly - sec 77), dated 26 March 2003:

    The Select Committee on Finance, having considered the subject of the Gold and Foreign Exchange Contingency Reserve Account Defrayal Bill [B 17 - 2003] (National Assembly - sec 77), referred to it, reports that it has agreed to the Bill.

  4. Report of the Select Committee on Finance on the Pensions (Supplementary) Bill [B 11 - 2003] (National Assembly - sec 77), dated 26 March 2003:

    The Select Committee on Finance, having considered the subject of the Pensions (Supplementary) Bill [B 11 - 2003] (National Assembly

    • sec 77), referred to it, reports that it has agreed to the Bill.
  5. Report of the Select Committee on Social Services on the National Development Agency Amendment Bill [B 70B - 2002] (National Assembly - sec 75), dated 25 March 2003:

    The Select Committee on Social Services, having considered the subject of the National Development Agency Amendment Bill [B 70B - 2002] (National Assembly - sec 75), referred to it, reports that it has agreed to the Bill.

                     THURSDAY, 27 MARCH 2003


National Assembly and National Council of Provinces:

  1. Bills passed by Houses - to be submitted to President for assent: (1) Bills passed by National Council of Provinces on 27 March 2003:

    (i) National Development Agency Amendment Bill [B 70B - 2002] (National Assembly - sec 75).

    (ii) Food Relief Adjustments Appropriation Bill [B 16 - 2003] (National Assembly - sec 77).

    (iii) Gold and Foreign Exchange Contingency Reserve Account Defrayal Bill [B 17 - 2003] (National Assembly - sec 77).

  2. Referrals to committees of tabled papers:

 (1)    The following papers are referred to the Portfolio Committee  on
     Environmental Affairs and Tourism and to the  Select  Committee  on
     Land and Environmental Affairs for consideration and report:

     (a)      Southern  African  Development   Community   Protocol   on
          Fisheries,  tabled  in  terms  of  section   231(2)   of   the
          Constitution, 1996.

     (b)     Explanatory Memorandum on the Protocol.

 (2)    The following paper is referred to the  Portfolio  Committee  on
     Finance and to the Select Committee on Finance:

     Explanatory   Memorandum   on   the   Food    Relief    Adjustments
     Appropriation Bill, 2003.

 (3)    The following paper is referred to the  Portfolio  Committee  on
     Transport and to the  Select  Committee  on  Public  Services.  The
     Report  of  the  Auditor-General  is  referred  to   the   Standing
     Committee on Public Accounts for consideration and report:

     Report and Financial Statements of the Department of Transport  for
     2001-2002, including the  Report  of  the  Auditor-General  on  the
     Financial Statements for 2001-2002 [RP 167-2002].

 (4)    The following paper is referred to the  Portfolio  Committee  on

     Response to a resolution passed by the House on 23 October 2002  in
     respect of the safety of travelling  on  Metrorail,  with  specific
     reference to an incident on a train to Khayelitsha.

 (5)    The following paper is referred to the  Portfolio  Committee  on
     Home Affairs and to the Select Committee on Social Services:

     General Notice No 487 published  in  Government  Gazette  No  24952
     dated 21 February 2003: Regulations for public comment in terms  of
     section 7 of the Immigration Act, 2002 (Act No 13 of 2002).

 (6)    The following papers are referred to the Portfolio Committee  on
     Foreign Affairs  and  to  the  Select  Committee  on  Economic  and
     Foreign Affairs:

     (a)     Report on South Africa's International Relations for  2002-

     (b)     Strategic Plan of the Department  of  Foreign  Affairs  for

 (7)    The following paper is referred to the  Portfolio  Committee  on
     Defence and to the Select Committee on Security and  Constitutional

     The Strategic Business Plan of the Department of Defence for  2003-
     2004 [RP 25-2003].

 (8)    The following paper is referred to the  Portfolio  Committee  on

     Strategic Plan of the Department of Housing for 2003-2006.

 (9)    The following paper is referred to the  Portfolio  Committee  on
     Trade and Industry and to the  Select  Committee  on  Economic  and
     Foreign Affairs:

     The Medium-Term Strategy Framework of the Department of  Trade  and
     Industry for 2003-2006.

 (10)The following paper is  referred  to  the  Portfolio  Committee  on
     Agriculture and Land Affairs and to the Select  Committee  on  Land
     and Environmental Affairs:

     The Medium-Term Strategic and Operational Plan  of  the  Department
     of Land Affairs for 2003-2007.

 (11)The following paper is  referred  to  the  Portfolio  Committee  on
     Communications and to the Select Committee  on  Labour  and  Public

     Strategic Plan of  the  Government  Communication  and  Information
     System for 2002-2005.


National Assembly and National Council of Provinces:


  1. The Minister of Education:
 Strategic Plan of the Department of Education for 2003-2005.


National Council of Provinces:

  1. Report of the Select Committee on Land and Environmental Affairs on Appointees to Board of South African National Parks, dated 26 March 2003:

    The Select Committee on Land and Environmental Affairs, having considered the list of members appointed to the Board of South African National Parks for the period 1 January 2003 to 31 December 2003 (see Announcements, Tablings and Committee Reports, 25 February 2003, p 86), tabled in terms of section 8(1) of the National Parks Act, 1976 (Act No. 57 of 1976), and referred to the Committee, is of the opinion that the list of members is in order and recommends, pursuant to section 8(2) of the said Act, that the Council does not disapprove any appointment.

    The Committee, however, wishes to express its dissatisfaction with the procedure followed in making the appointments, and will seek to amend this in upcoming legislation.

 Report to be considered.