Division of Revenue Amendment Bill [B17-2011]: Final Mandates; Report on Medium Term Budget Policy Statement

NCOP Appropriations

16 November 2011
Chairperson: Mr T Chaane (ANC, North West)
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Meeting Summary

The Select Committee on Appropriations unanimously voted to adopt the Final Mandate: The Division of Revenue Amendment Bill without amendments. The delegate from Mpumalalnga has previously expressed concerns that his province was not benefiting from the Disaster Grant due to the adjustments. Mpumalanga received allocations of R360 000 for Housing, as well as R3.6 million for Education. Mpumalanga was unsuccessful in a request of R22 million in disaster relief for the flooding of farms. There were two issues around the Mpumalanga disaster: excessive waterlogging and this was never declared a disaster and the province did not follow proper procedure. Even if the correct process was followed Mpumalanga would not have received funds in any case.

The Committee reviewed the Report on Medium Term Budget Policy Statement (MTBPS) and members raised issues of lack of technical capacity in the municipalities affecting the performance of the External Public Works Programme. The report was adopted with amendments.

The Committee adopted the minutes from 15 November 2011 with amendments.

Meeting report

Opening Remarks
The Chairperson opened the meeting and stated that a draft report was circulated to Committee members on Tuesday the 15th of November. Apologies were offered on behalf of Mr P Zulu (IFP, Kwazulu-Natal) and Ms T Memela (ANC, Kwazulu-Natal). Even with the apologies there were enough members to form a quorum to deliberate on the final mandate.

Division of Revenue Amendment Bill: Final Mandate
The Chairperson tabled the Final Mandate: The Division of Revenue Amendment Bill and requested the delegates from all 9 provinces to read out the mandates from their respective legislatures.

Eastern Cape Provincial Legislature
Mr S Mazosiwe (ANC, Eastern Cape) indicated that his province supported the Bill without amendments.

Free State Provincial Legislature
Mr D Bloem (COPE, Free State) mentioned that his province voted in favour of the Bill without amendments.

Gauteng Provincial Legislature
Mr C De Beer (ANC, Northern Cape) stated on Mr S Monthshisi’s (ANC, Gauteng) behalf that Gauteng supported the Bill without amendments.

Kwazulu-Natal Provincial Legislature

Mr A Lees (DA, Kwazulu-Natal) voted in favour of the Bill without amendments.

Limpopo Provincial Legislature
Mr M Makhubela (COPE, Limpopo) voted in favour of the Bill without amendments

Mpumalanga Provincial Legislature
Mr B Mashile (ANC, Mpumalanga) noted that the Legislature voted in favour of the Bill without amendments. However, the Legislature had expressed concern that the tight programming of section 76 Bills put provincial departments under pressure and this affected the quality of inputs.
Northern Cape Provincial Legislature
Mr De Beer informed Members that the Legislature supported the Bill without amendments.

North-West Provincial Legislature
The Chairperson noted that Legislature voted in favour of the Bill.

Western Cape Provincial Legislature
Mr J Bekker (ANC, Western Cape) voted in favour of the bill without amendments

The Chairperson noted that all provinces voted in favour of the Bill without further amendments.

The Chairperson returned to the point that Mr Mashile had raised in the previous meeting during the negotiating of the Mandate. Mr Mashile had requested National Treasury to follow up on concerns from Mpumalanga related to the Disaster Grant. Mpumalanga felt that it was not benefiting from the Disaster Grant due to the adjustments. There were disasters in the previous year that cost R22 million. Mpumalanga realised late in the process that the province took the wrong procedure in terms of raising the matter for consideration on the adjustments. The view that the Committee took during the previous meeting-in which Mr Mashile was absent from- was that first there needed to be an understanding about what the right procedure for provinces were in terms of raising issues relating to disasters so that Mpumalanga could be advised as to what was the right procedure going forward. Once this happened the Committee could also be able to make a sounds decision on the point of grant adjustments for disasters.

Ms Wendy Fanoe, Chief Director: Intergovernmental Policy and Planning, National Treasury stated that there were two issues around the Mpumalanga disaster. During the 2010/11 flooding, which affected most the provinces, there was a verification process undertaken by the National Disaster Management Centre in collaboration with the affected sectors: Agriculture, Education, Housing and Transport. On that basis, Mpumalanga received allocations of R360 000 for Housing, as well as R3.6 million for Education. The agriculture sector in Mpumalanga was not impacted by the flooding hence there was no allocation earmarked for the Agriculture department. After the first flood, there was another flood where many farmers experience excessive waterlogging and this was never declared a disaster. This was when the Provincial Department of Agriculture decided to approach the legislature for the request of R22 million. The Department was informed that the request did not follow the correct process. Even if the Department had followed the process, because the flooding was not declared a national disaster, the allocation would not have been forthcoming. The Agriculture policy in terms of assisting farmers was limited to land rehabilitation, damage to crops was not covered by disaster relief. There were a number of reasons why even if the correct process was followed Mpumalanga would not have received funds in any case. The issue of process was important the normal process that needed to be followed was for the Provincial Sector Departments needed to submit the request to the Provincial Treasury and the Provincial Treasury would then pass the request on to the National Disaster Management Centre.

Mr Mashile welcomed the explanation by National Treasury. However this was a situation where the relief was necessary and necessary accommodative action needed to be taken.

Report on Medium Term Budget Policy Statement
The Committee reviewed the Report on Medium Term Budget Policy Statement (MTBPS)

The Chairperson proposed that the Committee go through the report page by page and make additions, correction and deletions if necessary. The Committee reviewed the draft of the Report on Medium Term Budget Policy Statement page by page and made a number of grammatical and syntax changes to phrases that needed minor rewording grammatical and syntax correct.

Mr Lees noted that throughout the document it needed to be indicated whether the adjustments made were up or down.

Mr Mashile stated that specific grants available for cities with technical the capacity were affected by performance related to issues of compliance. Mr Mashile asked how the debate on the helpfulness of the grants was captured. The South African Local Government Association raised this same issue. In his view the Grant was biased and did not help democracy.

The Chairperson suggested that the point would be taken under further observation.

Mr Mashile stated that there was a lack of clarity on the issue itself, because in smaller municipalities there was a lot of work taking place in the Expanded Public Works Programme (EPWP).

The Chairperson stated that the reality was that most municipalities did not benefit from the Grant because they did not have the technical capacity.

Mr Mashile stated that municipalities who lacked capacity but had compliance still struggled to complete their projects. It was a well-intended grant, but what was the point?

Mr Mazosiwe suggested adding another sentence to the report that reflected the point that Treasury should assist smaller municipalities with technical capacity in a manner that benefited all municipalities.

Mr Lees agreed with Mr Mazosiwe’s suggestion.

Ms Fanoe pointed out that the Standing Committee on Appropriations also dealt with the same issue. She added that the allocation criterion was different for larger and smaller municipalities. The allocations were based on size of the respective Municipal infrastructure Grant.

Mr Mazosiwe proposed adoption of the report with amendments.

Mr De Beer seconded the adoption.

Mr Lee also seconded the adoption of the report

The Chairperson stated that he would engage with other actors and there would not be a debate on the division of revenue but rather a statement would be issued.

Adoption of Committee Minutes
The Chairperson tabled minutes of 15 November 2011.

Mr De Beer proposed adoption of the minutes with amendments.

Mr Bekker seconded the adoption.

Mr Mazosiwe also seconded the adoption.

The Chairperson adjourned the meeting.




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