Chairperson, hon members, section 214 of the Constitution requires that the government ensures a transparent and equitable system to divide nationally raised revenue between the three spheres. The Constitution also enjoins our three spheres of government to co-operate.
The Division of Revenue Bill we tabled in this House last Wednesday is an expression of the co-operative relations between the three spheres of government. By setting out three allocations for the equitable shares and conditional grants for provinces and local government, the Division of Revenue Bill further entrenches the transparency and accountability in our intergovernmental fiscal system.
It allows all spheres to plan ahead and get down to the business of delivering services to our people. Provinces and municipalities will budget for these allocations, each determining how its share of funds will be used to give effect to the policy priorities that have been agreed on through the Minmecs, the Budget Council, the Budget Forum and the extended Cabinet.
From 1 March of last year, our country's municipal and provincial boundaries were redemarcated. The resource allocation aspect of these changes were introduced in the municipalities from 1 July of last year, while the changes for provinces will only take effect from 1 April this year.
I am pleased to advise this House that all allocations contained in the 2007 Division of Revenue Bill have been determined on the basis of the new boundaries. The division of revenue set out in this year's Bill gives further impetus to accelerating economic growth, modernising our public services and infrastructure, and reducing poverty and inequality.
The Budget framework allocates R89,5 billion in additional spending over the next three years. National departments will receive R32,3 billion of this, provinces R39,2 billion, and municipalities R18,1 billion.
True to our commitment to fighting poverty and vulnerability, the shares of provincial and local government rise by one percentage point each over the Medium-Term Expenditure Framework period. Schedule 1 of the Bill provides the summary of the allocation of funds for the three spheres. After setting aside R52,9 billion for debt service costs, this Bill allocates R289 billion to national departments and their agencies, R171,3 billion to provinces, and R20 billion to local government in the 2007-08 financial year.
Including a contingency reserve of R3 billion, total government spending amounts to R533,9 billion, growing by a whopping 7,7% in real terms to R650,3 last year. Transfers to provinces grow by 12,7% a year, with the bulk of additional resources going towards education and health personnel, social welfare services, and provincial infrastructure. An additional R8,1 billion is allocated for the hiring of teachers, teaching assistants, support staff in schools and districts to improve remuneration levels of teachers.
Together with resources set aside in the provincial equitable share for the implementation of no-fee schools and a substantial increase in resources for classroom building and provision of water, electricity and sanitation in schools, these resources should go a long way to improving the quality of teaching and learning in public schools, where the majority of South African children learn.
This should accelerate the process of closing the gap between spending per learner and spending per learner between private and public schools, thus giving meaning to the theme of this year's Budget, that human life has equal worth.
Provincial budgets will reinforce the strengthening of the health sectors, so that South Africans who do not have medical insurance can also enjoy good quality health care.
In respect of local government, over the next three years, municipalities will receive R129,2 billion, including R7,4 billion in allocations in kind or an additional R20,4 billion of the 2006 baselines.
The Municipal Infrastructure Grant receives R400 million more to speed up the completion of the eradication of bucket sanitation; a further R600 million for the electrification programme; R1,4 billion for bulk water and sanitation infrastructure, and R950 million to deliver water and electricity to schools and clinics. This was one of the questions asked earlier today.
The public transport infrastructure and systems grants, and the local neighbourhood development partnership grant are allocated R6,7 and R3,7 billion over the 2007 MTEF period.
Turning to the Financial and Fiscal Commission, the division of revenue set out in the Bill before this House today takes account of the recommendations we received from the FFC. The explanatory memorandum to the Bill contains government's response to the FFC's recommendations, and this is set out between pages 53 and 90 of the Division of Revenue Bill.
As the response indicates, we are in broad agreement with most of the recommendations that are contained in the FFC's original submission. The differences are, firstly, in the proposal from the FFC that we roll the Hospital Revitalisation Grant into the Infrastructure Grant for Provinces. We respectfully disagree with this proposal, because we would like to maintain the momentum that the Hospital Revitalisation Programme has gathered to date.
Secondly, the FFC proposes that we merge the Land Care Grants and the Comprehensive Agricultural Support Programme. Again, we respectfully disagree with the FFC in this regard, because we are of the view that the two grants serve very different purposes. The Land Care Grant funds land rehabilitation and restoration, while CASP provides targeted support to beneficiaries of the Redistribution for Agricultural Development Programme. In their submission to the Portfolio Committee on Finance on 22 February, the FFC tabled an entirely new proposal suggesting, and I quote, that our:
... economic assumptions ... verified by an independent, competent public authority.
Because this proposal was not part of the original submission, we have not had the opportunity to comment on or respond to it until now. Without derogating from the constitutional independence of the FFC ... [Interjections.]
Hon Minister, just a minute. Hon members, I think the level of noise is now getting out of order. We are no longer listening to what the Minister is trying to say.
I think hon Mabe will be speaking as well, so ...
Without derogating from the constitutional independence of the FFC, we find this proposal particularly problematic. Budget decisions in all modern democracies are intensely politically driven. The macroeconomic assumptions so vital to the construction of the fiscal framework are an integral part of these decisions.
It's quite hard to contemplate what it means to subject its decisions to the scrutiny of independent, competent public authorities, as the FFC suggests, especially since all parties fight elections for the purpose of being able to advance their policy preferences, and the recognition that this would not be possible unless an elected government could decide on the Budget.
The proposal begs the question: What additional information and capacity will such independent, competent public authority have to produce better quality forecasts than government has? Moreover, is government not a public authority elected for this purpose?
Perhaps the view of the FFC is that whilst government might be a public authority, it's not competent to take responsibility for its macroeconomic assumptions. Perhaps the view may exist that whilst government is a public authority, and whilst it may even be competent, economic decisions need to be taken by political eunuchs.
It is possible to give all manner of interpretation to this new proposal from the FFC. It is government's view that this submission is incorrect. I invite this House to support us in rejecting this proposal from the FFC.
On that note, I want to reiterate that the Division of Revenue Bill before this House places us in a better position to do things that we never imagined possible a decade ago. On Friday last week, we launched the second discussion paper on social security and retirement reform at the Nedlac offices in Johannesburg. In it, we set out our thoughts on how we'd like to see the social security system unfold in the period ahead.
I invite members of this House to study these proposals, which can be found on the website of the National Treasury. These proposals are about providing for our people, post-retirement.
Again, we say: Human life has equal worth, and you will find the measure of this in the Division of Revenue Bill that serves before this House. Thank you very much. [Applause.]
Chairperson and hon members of this House, on the occasion of the tabling of the Budget last week, I was intimidated by the Minister of Finance when he mentioned the aggregated budget over the coming Medium-Term Expenditure Framework period. I am still struggling to explain to my constituency in the small town of Kranskop how much two trillion is, let alone translate it into isiZulu. [Interjections.] No, there are no noughts in isiZulu.
Uzongisiza baba uSkosana siyibhale phansi. [Hon Skosana will help me write it down.]
The Division of Revenue Bill is a constitutional requirement that presents us with the opportunity to, at least, address ourselves to the coming financial year's Budget, as it is vertically allocated to the three spheres of government. This Bill is a culmination of a lengthy process of consultation amongst these spheres of government co-ordinated by the Ministry of Finance. I refer here to the Budget Council, the Budget Forum meetings of the national departments and other forums that the Minister has alluded to that include all stakeholders in the Budget process.
This process gives effect to one of the key pillars of the Reconstruction and Development Programme - that of democratising society and the state. The RDP is at the centre of the ANC-led government's agenda to fight poverty and bring about sustainable development. Both the January 8 Statement and the state of the nation address enjoin all three state organs and society to benchmark all our programmes against the RDP, as is evident in this Division of Revenue Bill. The equitable division of revenue amongst the three spheres of government is also premised on one of the main pillars of the RDP - that of meeting the basic needs of the people.
Chapter 8 of the 2007 Budget Review outlines the shift that reflects a significant increase in the allocation to local government and provincial governments, that sees more than 60% of additional allocations transferred to these spheres. This is in line with the continuing trend of ensuring that more funding is deployed where actual delivery needs to take place - that is, at local and provincial government levels. Local government's share of national revenue shows the strongest growth, of 19%, over the MTEF period, according to this chapter, mainly to support the roll-out of free basic services and infrastructure; while national and provincial shares grow by 10,3% and 12,7% respectively. The provincial allocations mainly cater for the acceleration of social services, with a particular focus on housing, education, HIV and Aids, hospital revitalisation and public transport.
Lokhu kuzibophezela kukahulumeni oholwa uKhongolose ekwenzeni izimpilo zabantu bonke zibe ngcono kubonakala ngokusobala kulesi Sabiwomali, ikakhulu lapho seyabiwa ngezigaba zohulumeni ngokwehlukana kwabo. Bheka ngoba umthamo uya ngokuya ukhula ezifundeni nasezifundazweni lapho umsebenzi wokuthuthukisa izimpilo zabantu ukhona.
Ukwakhiwa kwezingqalasizinda kungumgogodla ekuxosheni ikati eziko kanti futhi kuyisisekelo sokuthuthukisa umnotho ezindaweni zethu. Lokhu kwabiwa kwezimali ezifundazweni, kuphinde futhi kubhekele ubuhlwempu nokusilela emuva kulezi zifundazwe ngenhloso yokuzama ukulinganisa izimpilo zabantu.
Ukulethwa kwezidingongqangi zabantu nakho futhi kuthola umthamo othe xaxa ezindaweni lezo ezisilele emuva kakhulu. Mangikusho lapha, Somlomo, ukuthi mhlawumbe umuntu kufanele avumelane nobaba uMpontshane maqondana nokuthi, ekulethweni kwezidingo zabantu, amanzi, ugesi nokuqedwa kokusetshenziswa kwamabhakede, kufanele sengeze ukuze kuqedwe lesi simo. [Ubuwelewele.] Cha, siyavumelana. Asijwayele ukuvumelana kodwa siyavumelana nobaba uMpontshane. (Translation of isiZulu paragraphs follows.)
[The commitment of the ANC-led government to make better life for all is clearly evident in this Budget, especially when it is distributed to different spheres of government. The larger portion of the amount is gradually directed to the provinces and the local governments where the work of making people's lives better is.
The building of infrastructure is core in getting rid of hunger and it is the foundation of economic development in our places. This distribution of revenue to provinces sees to it that poverty and backwardness in provinces are addressed with the aim of uplifting the lives of the people.
The delivery of services to the people also receives a larger amount to those areas that are far behind with development. Let me say here, Madam Speaker, that maybe one must agree with hon Mpontshane that we need to work a little harder in delivering services like water, electricity and the eradication of the bucket system. More should be done to do away with this situation. [Interjections.] No, we agree. We are not used to agreeing, but we agree with hon Mpontshane.]
We are always warned by the defenders of apartheid that we should not blame our backlogs on apartheid. But it is not possible to forget that had apartheid not excluded the vast majority of our people from the provision of basic services, we would not be talking about it today. The resources that are being spent on addressing the backlogs would have been used in maintaining the infrastructure instead of building it. Thanks go to the people of South Africa for realising that only the ANC could deliver them from the evils of apartheid, and our resolve to do so is growing stronger by the day.
One of the flagship programmes that receives a sizeable chunk of funding is the neighbourhood development partnership. This grant provides financial assistance to municipalities for partnership-based community and commercial infrastructure in townships and informal settlements. Its main focus is on precinct, town centre and high street development projects with an estimated project value of over R9,2 billion over the next decade. As explained in the Budget Review, it supports the creation of high-quality development that aims to overcome spatial and economic distortions endemic to townships.
The principle here is to retain and increase the buying power within townships, and create environments that improve the quality of life and attract private sector investment. In his speech, the Minister mentioned the areas that have taken advantage of this programme, taking up an amount of about R50 million in technical assistance to date.
A number of other grants are allocated to provincial and local governments to further strengthen and enhance service delivery in these spheres. Of particular note to provinces, is the Community Library Services Grant, which is meant to consolidate library services at provincial level. We trust that this grant will be put to good use, and promote the culture of reading, especially if library services are going to be located where the majority of the people live, and be properly and adequately resourced.
My colleagues will speak on the other grant allocations and the Financial and Fiscal Commission's recommendations. Minister, I trust that Ms Mabe will cover that area that you raised as a concern. Ms Mokoto will focus on the 2010 Fifa World Cup, related funding and the capacity-building transfers. Ms Mabe will also have to cover the expenditure trends in provinces and our oversight role as Parliament.
The ANC government's commitment to achieving a better life for all is a matter of policy, and not grandstanding, as colleagues on the other side of the iron always make it. It dates back to our founding, and our record speaks for itself.
The committee considered the Division of Revenue Bill and passed it without amendments. We trust that the Select Committee on Finance will apply its mind without prejudice, and with the information at their disposal. They are under no obligation to endorse our position. If it is in the interest of the country, they have every right to propose amendments. The ANC supports the passing of the Division of Revenue Bill in this House. I thank you. [Applause.]
Chair, the Financial and Fiscal Commission is required by both the Constitution and the Intergovernmental Fiscal Relations Act to give comment on government's annual Division of Revenue Bill. The Intergovernmental Fiscal Relations Act also requires the Minister of Finance to consult with the commission prior to the introduction of the Division of Revenue Bill. In preparing its commentary on the Division of Revenue Bill, the commission assesses and analyses the equitable allocation of revenue amongst the three spheres, and horizontally within each sphere of government, taking into account key principles of intergovernmental fiscal relations in South Africa.
The commission's overall finding is that it is in agreement with the general spirit in which the 2007-08 Division of Revenue Bill has been drafted, a view which the DA endorses. In its commentary, the commission makes submissions on the macroeconomic implications of the division of revenue proposals. It is these submissions that I would like to further comment on. It is correctly stated that the Bill is premised on important economic assumptions that underpin the macroeconomic projections used to determine the overall resource envelope underlying the Bill. What is referred to here is a set of macroeconomic forecasts which will determine the value of important fiscal variables. As we are all aware, very often market outcomes will deviate from the forecasts, resulting in - as you have seen over the last three years - substantial budget revenue overruns. These overruns have been increasing from R11,6 billion for the 2004-05 financial year to R44,5 billion for 2005-06, and an estimated R32,8 billion for 2006-07. If prior estimations are anything to go by, it would not surprise me if the final figure for 2006-07 is even higher.
Now, I am aware that tax revenue buoyancy is primarily a factor of new revenue resources, improvements in tax administration compliance in collection and, importantly, higher nominal gross domestic product. I am also aware that Treasury has determined the average responsiveness of gross tax revenue to changes in nominal GDP.
Without detracting from the efficiency of Sars, it is the accuracy of the forecasting of nominal GDP which perhaps bears closer scrutiny. The overruns have not escaped the attention of the International Monetary Fund, which has in the past expressed concerns about "the repeated underestimation of tax revenues". The IMF said in 2005 that overruns needed:
... careful investigation, possibly leading to adjustments in revenue forecasting methods and procedures. Reliable revenue projections are particularly important for the design of credible medium-term expenditure plans.
In a written response to the IMF's concerns, the Treasury said it agreed that its revenue forecasting should be improved, and yet, as we have noted since then, the overruns remain indeed increased in size.
It is with these points in mind that the commission's recommendation of independent verification of underlying macroeconomic assumptions - not policy assumptions, the Minister is quite right in respect of policy assumptions, that is a preserve of the ruling government - cannot be dismissed lightly. Likewise their recommendation that this process be institutionalised, which they are correct in saying, would raise even further the transparency and credibility of the forecasts moving forward.
Following on the whole question of revenue overruns is a related matter of the ratio of revenue to domestic product. This ratio, as the commission points out, is expected to be as high as 28,2%. Now, the commission raises a pertinent question as to whether the tax burden is too high and therefore, as it puts it, inimical to economic growth.
Now, it is not my intention to debate here any of the levels of taxation or recent changes to these levels, or the nature of such changes announced by the Minister in his recent Budget Speech. That could possibly be dealt with in the Budget debate. Where I do seek clarity is on the government's policy or philosophy in respect of the whole question of taxation. So, it is not the technicalities of the tax numbers that we need to hear, but rather the underlying philosophy.
Leading on from that, I am not aware of what informed the often-quoted benchmark of 25% revenue to GDP as being the optimal desired percentage revenue burden. This is a figure that Treasury itself has often mentioned. Is this still appropriate? If not, what informs government's thinking as to the change? As indicated, the ratio is now well beyond that figure, and that is even before the imposition of the royalty tax, as well as any windfall tax on the synthetic fuels industry or on the mineral resource industry as a whole.
I have to identify with the sentiment of the commission expressed, namely that policy choices should be informed not only by up-to-date needs and the capacity of the economy, but by international benchmarking experience. Surely there has to be a case against ad hoc changes to the fiscal regime in favour of the certainty of a stated policy or philosophy by government which, barring exogenous shocks, would be implemented by government over a stated timeframe and under certain conditions. Surely it is this certainty that will help produce a positive climate for investment.
Finally, I would like to mention two specific comments which the commission made, which I find myself in agreement with. The first is in respect of the Municipal Infrastructure Grant where it recommended that the formula be reviewed to take into account the operational and maintenance needs of infrastructure roll-out.
While it is accepted in principle that municipalities, in line with section 17(2) of Municipal Finance Management Act, should fund the maintenance and operations from their own budgets, the reality is that some municipalities just do not have sufficient resources to do so. I am reliably informed by officials in the programme that this often results in costly projects degenerating into all but unusable condition as a result of the reality of a lack of sufficient resources for operations and maintenance.
Secondly, and briefly, in respect of the national housing allocation, the commission proposed that the formula should take into account the variations in regional costs for constructing subsidised housing, and ensuring uniform standards across the provinces.
While I appreciate the government's desire not to unduly further complicate the formula, it has to be acknowledged that the recommendation stems from the significant impact that variations in regional costs have on the quality, completion and lifespan of the government-subsidised houses, not least of which is the cost of land which differs significantly across regions.
The resulting implication is that the cost of meeting the same quality and the standards set out by the national Department of Housing can differ greatly, depending on the location of the housing project. Notwithstanding, the DA supports the Bill. Thank you. [Time expired.] [Applause.]
Madam Chair, the 2007 Division of Revenue Bill provides for the equitable division of nationally-raised revenue between the three spheres of government. This year the amount to be shared between national, provincial and local governments amounts to R480 billion. In the 2007-08 financial year, a total amount of R202 billion consisting of the equitable share and conditional grants will be transferred to the nine provinces to meet their expenditure responsibilities. Local government will receive R34 billion in this financial year to improve their delivery of basic services such as water, sanitation, roads and infrastructure.
The Minister has indicated that the National Treasury has not accepted certain Financial and Fiscal Commission recommendations about conditional grants to provincial and local government. For instance, the FFC wanted the Land Care Grant and the Comprehensive Agricultural Support Grant to be placed together to lessen the administrative workload for the provinces, but Treasury disagreed. Other grants that were the subject of disagreement included the Municipal Infrastructure Grant and the National Human Settlement Grant.
The IFP accepts that, from time to time, there will be disagreements between the FFC and the government. But, considering the vital role played by this institution, the FFC, we have to raise concern that it could be sidelined if care is not taken.
Faster than expected, national economic growth in the last few years and better tax collection have meant that the Minister of Finance is in the fortunate position of having a larger revenue cake to slice up between the three spheres of government. However, the availability of money to allocate is no longer the main problem. The main problem now is the ability of provincial and local governments to spend their allocations for the provision of basic services, infrastructure and other essential functions.
Over the past few weeks Parliament has heard that the third quarter spending in the 2006-07 financial year by provincial departments is lagging behind target. For instance, provincial departments of public works and transport had spent 63% of their allocations by the end of the third quarter.
Even more worrying is the fact that local governments are even worse off in terms of their ability to spend the allocated grants. For instance, municipalities were able to spend only 46% of total municipal infrastructure grants in the first three quarters of the current financial year. In total, some 106 municipalities or about one-third have been classified as underspenders. Therefore, the IFP welcomes the actions of the Department of Provincial and Local Government to delay payments to municipalities that are unable to spend their allocations. Even more so, the IFP applauds the fact that such allocations may, in fact, be cancelled and diverted to local governments that have the ability to spend it.
The IFP supports the Division of Revenue Bill. But, we stress that allocating money is one thing, efficiently spending it on projects that address the needs of the poorest communities is a completely different animal. We need more interventions from the relevant authorities to ensure that spending is stepped up and we need closer monitoring to ensure that allocations are in fact translated into basic services, improved infrastructure and other improvements in people's daily lives. The IFP supports the Budget. Thank you. [Applause.]
Madam Chair, hon members, the UDM would like to take this opportunity to congratulate the Minister of Finance on a good national Budget made possible by revenue collection again exceeding forecast. The UDM is pleased with the salary increase for teachers, medical workers, social workers and Police Service members. They are the backbone of building a caring and democratic society.
The social grant increase is welcomed, though it is relatively small. We believe that, with the better than the expected revenue at its disposal, the government should show its commitment to the fight against HIV/Aids by lowering the threshold for ARV treatment. For instance, by commencing treatment at a higher CD4 count than currently is the case would mean we would be saving more lives by providing treatment at an early age.
Notwithstanding the good intentions of the national Budget, we are concerned about the ability of departments, provinces and local governments to spend money correctly. These capacity and management shortfalls are significant and have the perverse effect that big budgets are promised but often little delivery occurs.
The Division of Revenue correctly seeks to distribute the bulk of revenue to the lower spheres of government. However, their capacity to correctly utilise this revenue remains suspect. The array of grants and conditional grants earmarking infrastructure development of some sort or another are welcomed and should go a long way towards addressing the grievances of those neglected communities who now resort to protest and unrest to draw attention to their plight. Nevertheless, the UDM supports the Bill. Thank you. [Applause.]
Madam Chair, consolidated non-interest expenditure by all spheres is set to increase at an annual nominal average rate of 11,9% over the next three years or 6,2% in real terms. Social services expenditure is set to increase at an annual average real rate of 6% over the next three years. Social expenditure therefore increases at a faster rate than expected GDP growth. Given the huge resources now at the government's disposal and the increase in the tax to GDP ratio, this is not surprising. However, social expenditure grows at a slightly lower rate than total government expenditure. This, to the ID, indicates a subtle shift from social towards the economic function of the MTEF period.
The new year budget allocation to national departments represents the largest share of the national Budget. Subnational governments will collectively receive the larger share of additional resources in the consecutive two years. This raises serious questions, in light of local and provincial government spending ability.
The provincial equitable share is projected to grow by a real annual average rate which is slightly higher than forecasted economic growth rates over that period. This raises possible future funding questions for the Minister or alternatively an adjustment in allocations.
The emphasis in the Minister's speech as well as in the Budget Review is on fostering growth while remaining aware of the risks associated with increased integration in a global economy. However, the ID would have welcomed a more robust increase in social services expenditure but with specific emphasis on the social grant. There is no doubt that savings to fund investment are required and that the government savings are but only one way of achieving this. It remains imperative to balance long-term investment needs with measures which soften the impact of poverty now.
In the final analysis, much rests with the validity of how policy-makers currently assess risk and therefore what constitutes due prudence. It is hoped that, in looking back from the future, it will not be decided that the actions taken were not bold enough. The ID supports the Bill. [Time expired.]
Chairperson, hon Minister, you will recall that last year the ACDP raised the issue as to whether the equitable share formula had been realigned, following the redemarcation of provincial boundaries. As pointed out in the 2007 Budget Review, the demarcation affects education, health, poverty and economic activity components of the formula.
The ACDP welcomes changes to the provincial equitable shares implemented in the 2007 Budget as this will undoubtedly allay fears regarding service delivery to those communities whose municipalities have been moved from one province to another. Provinces are preparing their 2007 budgets based on the realigned provincial equitable shares. Hon Minister, are you expecting any further adjustments to be made? Is it expected that there will be additional costs and if so, will they be substantial?
The FFC proposed that:
Any additional costs faced by the provinces and municipalities that cannot be met through the revised equitable share allocations be funded through a once-off allocation from national government.
The government's response to that proposal was that, "no additional allocations were made to the local government sphere", whilst provinces "may be able to absorb any additional costs that arise through the demarcation". Is this fair, and should the additional costs, if any, not have been funded by national governments, or is this a contingency included in the increased allocations to provinces?
Notwithstanding the above, the ACDP wishes to commend the Minister and the Treasury. We support this Bill. I thank you.
Madam Chairperson, hon Minister of Finance, hon members and members of the public, when the ANC leadership, together with its alliance partners, took a conscious decision that it will engage in multiparty talks with the apartheid regime to prepare for the democratisation of the country and to eventually contest the elections, it was propelled by the need to deliver a better life for all South Africans and the great saying that:
None of the great social problems we have to solve is capable of resolution outside the context of the creation of jobs, the alleviation, and the eradication of poverty; and therefore, the struggle to eradicate poverty has been and will continue to be a central part of the national effort to build a new South Africa, where all human life is equal.
Our historic decision and the subsequent ascendance of the ANC to power has consistently derived its importance from the reality that it will impact significantly on the current situation and the future of our country and its people. In 2005, at its national general council held in Tshwane, the ANC sincerely declared that South Africa had reached a new phase of the national democratic revolution. This has, therefore. meant that the consolidation of political democracy, the growing electoral strength of and the support for our movement, and the relative stabilisation of our economy have created a new set of opportunities and challenges for social transformation.
Indeed, as the ANC, we have no other option but to agree with the hon Minister of Finance, Minister Trevor Manuel, when he expressly said: "In the spirit of the Freedom Charter, people's lives hold equal value". For the past six years, our economy has recorded a steady growth and wellbeing, when compared to other economies around the world.
Our current budget has increased significantly since the 2004-05 financial year, and it has continued to do so at a very exceptional rate. This has paved ways for a phenomenal increase on the additional allocations expected to remain at R89,5 billion over the medium-term. The additional allocation arose as a result of major savings on the government expenditure and a savings on the interest accumulated as a result of the low cost of servicing debt.
It is important to note that the additional allocations are appropriated for focused government programme areas within departments and other layers of government only serve to augment the already existing allocations provided in the main Budget. The additional allocations will, therefore, address identified priorities for the government at a specified time.
We are, however, of the view that the allocations cannot be used to substitute any form of revenue collection, especially in municipalities, an exercise which still remains a dilemma for many of our municipalities which still struggle to collect own revenue for self-sustenance.
I want to highlight that our government has now been provided with renewed impetus and possibilities to introduce accelerated growth, broad-based development with more emphasis on key government priorities like social services, education, health, crime prevention, public sector, infrastructure, and the much-awaited 2010 Fifa World Cup tournament.
As the ANC, we will continue to acknowledge the fact that the rapid growth in the budgeted expenditure does pose a challenge with regard to the capacity to utilise these amounts, particularly in the municipalities and within certain departments, at both national and provincial levels. Government spending patterns in most instances leaves too much to be desired. As part of exercising our oversight roles as parliamentarians, we have to ensure that in all, the government fully accounts on the mandate of the people. It is important to highlight that this kind of mannerism, which is gradually becoming a norm, can neither be tolerated nor condoned as it continuously compromises service delivery to our people, as a consequence of insufficient and untimely planning by certain senior managers in the government.
However, regarding the situation, we have to acknowledge that real spending on capital expenditure in proportion to the unspent capital funds dropped by 8% in 2005-06 financial year from 14% in the previous financial year. Despite this drop, we expect a much higher rate of underspending in 2006-07 financial year.
As Members of Parliament, we have taken note of the levels of seriousness with which the government is tackling this matter. It is the view of the ANC that the Siyenzamanje and Project Consolidate intervention programmes jointly run by the Development Bank of South Africa and national government in several municipalities around the country are surely and gradually emitting positive results for the many municipalities that previously suffered serious scarce skills shortage.
It has taken us more than a century to convince the world what a great potential Africa holds. The initial allocations of R4,1 billion made for the 2010 Fifa World Cup further increased with an additional of R13,3 billion for the building of stadiums and associated infrastructure. The government, through this generous appropriation for the Fifa World Cup, has fully reasserted its position and commitment towards the successful holding of this tournament in a manner which was not anticipated.
We are greatly encouraged by the positive spin-offs that will arise as a result of hosting the 2010 Fifa World Cup tournament. These benefits will surely have an immense impact on the economic growth, job creation, youth development, tourism and skills development in the country. This will produce further ripple effects for the rest of the African continent.
As seasoned revolutionaries, we wish to declare that the age of hope shall never leave our people or our continent. The ANC supports the Budget Vote. Thank you. [Applause.]
Chairperson and hon members, the Budget tabled before this Parliament addresses the needs and concerns of a human being. The hon Minister was spot-on to stress that ...
... motho ke motho ga a na bosetlhana.[... a human being is a human being, there is no lesser human being.]
A human being is a human being. There is no lesser human being; whether rich or poor, black or white, local citizen or alien, we all have common needs. We, in the UCDP, have this philosophy ... rata motho, tlotla motho, direla motho, rerisa motho, itshokele motho ... [love, respect, serve, inform and be patient to a person]
... thereby meaning love, respect, serve, consult and be tolerant to a human being. That is the legacy we left where we governed. To us, this Budget does exactly that: for love, it shows how much it cares through the social grants, more allocations for education; for respect, it shows that the Minister listened and showed respect for the views of the people on their concerns about crime, hence resources have been poured into the protection services; for service to the people, the amount thrown into the Fifa World Cup attests to this; and for consulting people, Trevor's Tips are testimony that ... motho ke motho ga a na bosetlhana [a human being is a human being, there is no lesser human being ...] and even concerning issues that the Minister is hard put to handling such as lobola, he has declared that he will consult further.
The tolerant nature of the Budget is displayed in the pains taken to address the question of pensions to avoid the situation where people work for the better part of their active years of life, but retire and go into poverty. The reforms proposed by this Budget would benefit the people, who would otherwise have had no access to cost- effective retirement benefits and eliminate unnecessary hardships among their families.
The cherry on top in this Budget is the fact that the government has come to its senses by introducing bursaries for those who want to train as teachers. The vast amount set aside for education is a clear example that the government accepts that liberation without education is worthless. From this exercise, we hope to have people who will have the necessary skills and manage the booming economy of this country. We only hope that government departments will use this money profitably. Thank you. [Time expired.]
Chairperson, the PAC wishes to acknowledge the challenging task done by the Minister of Finance, the Treasury and the portfolio committee in drafting the Bill before us. We hope the three spheres of government, as beneficiaries, will prudently utilise their budget to address the issue of poor service delivery and other related matters.
The PAC wishes to advise the Minister to exercise a firm hand and an iron fist in the monitoring of the fiscals to prevent underspending and roll- overs by provinces, municipalities and some national departments. Our people must not languish in poverty, disease, and suffer due to poor service delivery owing to inefficiency of provinces, municipalities and some national departments. The target set to eradicate the bucket system, the supply of water and electricity to all must be realised. This may only be achieved if proper monitoring and control mechanisms are put in place. Our people were promised free basic services, and that must not be compromised by incapable and inefficient provinces, councillors and national departments.
The PAC, further, could not understand why Mangaung local municipality is deprived of the status of a Metro. It is 13 years into our fledging democracy, and one of the most significant cities of our country is still struggling to become a Metro due to unnecessary bureaucracy. A political decision must be taken for this to happen as early as possible.
The PAC wishes to draw your attention to the most poor and disadvantaged rural areas such as the Greater Sekhukhune in Limpopo, KwaZulu-Natal, and the Eastern Cape when the revenue is shared. These provinces are at the receiving end when it comes to issues related to provision of infrastructure of all sorts, water, electricity, housing and sanitation.
The provinces without world-ranking stadiums must be attended to in the future, as they are to lose a lot of revenue when projects such as the 2010 Fifa World Cup are staged in our country. The PAC supports the Bill.
Madam Chair, Minister, the Division of Revenue Bill is anxiously awaited annually as it clearly indicates government's intentions and commitments to manage South Africa efficiently and rescue it from the shackles of poverty. For that, hon Minister, we thank you very much.
We note minor changes to the percentage allocated to national, provincial and local spheres of government. In view of the provincial allocation for 2007-08 we are pleased to see the 21,64% made to KwaZulu-Natal. Noting the large population and challenges in this province, these funds need to be effectively utilised to rescue its residents from poverty-stricken lives and develop the province into a promising democracy. We further trust that these funds shall find their way to establishing better schooling, health facilities and transport.
The MF has expressed its concern over the crime situation. Funds need to be speedily made available to equip our SAPS with the necessary resources, personnel and training to address crime. Our commitment to supply electricity to every household, provide proper sanitation and potable water is crucial for better living. We have also had a budget that clearly spelt out government's commitment. We hope that this year's Budget is one of commitment to delivery.
The MF, however, has a concern regarding the targets we set for government that give us directions and supply us with instruments to measure progress and shortfalls. Our concern is the growth of needs and whether our output to overcome the needs is sizeable enough to conquer the challenge. The MF supports the Division of Revenue Bill.
Madam Chair, the UPSA supports and commends the hon Minister's Finance Bill. The success of the hon Minister and his department has become a cornerstone of government's achievements, of late.
Die sukses en effektiewe fiskale dissipline gehandhaaf deur die Departement van Finansies is alombekend. Die agb Minister het heelwat politieke wil openbaar met sy toegewing ten opsigte van fondse vir die uitbreiding van die getal polisielede, asook aanpassing van salarisse vir onderwysers.
Die UPSA is egter van mening dat hierdie stappe, alhoewel welkom, nie naastenby die probleme van misdaadoplossing en verbeterde onderwys aanspreek nie. (Translation of Afrikaans paragraphs follows.)
[The success and effective fiscal discipline maintained by the Department of Finance is widely recognised. The hon Minister displayed a great deal of political will with his concession with regard to funds for the increase in the number of members in the Police Service, as well as adjustments to teachers' salaries.
However, the UPSA is of the opinion that these steps, although welcome, do not adequately deal with the problems of solving crime and of improving education.]
The UPSA is of the opinion that greater emphasis should have been put on the improvement of the competency levels of serving SAPS members and teachers. This would culminate in SAPS members who are better equipped to deal with criminals, and deliver the required levels of service to the general public. So, too, should teachers face up to the challenges in our schools. This action would be further justified by the handsome surplus announced.
The principle of greater emphasis on the training of serving public servants should be extended to almost all areas of the public sector to improve the general level of service delivery. We trust that this matter of training serving public servants will continue to enjoy the hon Minister's attention.
Once more, the UPSA supports the Bill. I thank you.
Madam Chair, Minister, hon members, if we all accept that human life has equal worth, as the Minister quoted Will Hutton in his Budget Speech this year, and that we need to deepen the debate that will result in the improved implementation of government programmes - programmes that will ultimately deliver sustainable democracy and development - then the sum total of the Budget and its component parts would need to be interrogated so that we can establish whether the expectations of those of us who want to see a South Africa that we can all be proud of are being met.
The President's state of the nation address and the Minister of Finance's Budget Speech set government's agenda, an agenda for debate and delivery. How the rest of us in Parliament therefore participate in this broader debate within each portfolio committee will determine the depth of the debate and whether we can in fact influence government's agenda for the next financial year.
How we achieve national consensus, as the President recently encouraged us, will be determined by mostly the attitude and tone of the words not lightly spoken in this Chamber and in the portfolio committees. If we do not use these opportunities and approach them by making progressive proposals, but simply use them in an attempt to embarrass one another and polarise voters, then we will not listen to one another and will lose the opportunity to really get to know one another.
The debate will, to a large extent, be influenced and informed by the Community Survey 2007, which will focus on 280 000 households and give them the opportunity to have their living standards measured. With this ideological diagnostic data, we must then find consensus on at least the three topics the President highlighted in his state of the nation address, social cohesion, poverty alleviation and crime prevention and its eradication.
The PIM, therefore, looks forward to our joint efforts to influence government so that we can affirm and express the idea that human life has equal worth and human beings are equally entitled to political, economic and social right, which allow them to choose a life they have reason to live. I thank you.