Chairperson, the ANC would like to congratulate the hon Minister on the Budget that he has presented to this House. We would also like to encourage him to do more than what he has done, and that includes other institutions such as SA Revenue Service, which we would like to encourage to collect more, on behalf of this country.
Chairperson, I am going to focus on the Financial and Fiscal Commission recommendations, but I will only give examples. I just want to remind this House that the FFC is an independent authority. It makes recommendations to government, and then government, in its response during the budget presentation, responds to the FFC either by agreeing or disagreeing with the proposals of the FFC. But if the government disagrees with those proposals, it gives reasons why they are not accepted. If they will be considered in future, government states clearly that those proposals will be considered in future. I wanted to clarify this one so that, as I continue with my presentation, all of us will be moving at the same pace.
I would also like to indicate that we appreciate that relationship that the FFC has with national government, in terms of the proposals that it makes. We would also like to indicate to the FFC that they must continue engaging with the portfolio committees, the select Committee and the Joint Budget Committee.
We cannot respond to what has not been presented before the three committees or until it appears before the three committees. In this case I am referring to the independent public authority that was suggested or proposed by the FFC. We will consider it in the committee and, for now, we do not have any comment on that authority. Especially because the more institutions we create as government, the more problems we have in terms of how those institutions carry out their mandate and how they spend money, for example, the Sector Education and Training Authorities that we have at the moment.
I would like to comment on the Hospital Revitalisation Grant. We fully agree that the grant should not be included in that provincial infrastructure grant, because it will not achieve the intended national priorities. In this instance, I would give an example of what happens in Moses Kotane. For the first time, we have two hospitals running at the same time - one in Mabeskraal and the other in Ledig. They were constructed at the same time, and this is unprecedented. I would want to say that if we maintain the separate grants, then we are sure that the provincial government would not take the money that was allocated at national level for the construction of those hospitals and utilise it elsewhere.
I would also refer to the Land Care and Comprehensive Agriculture Support Grant. We support the fact that they cannot be merged because the time is not yet ripe for the two to be merged, and will not be until such time that we are sure that the provinces will utilise the grant for what it is intended for, especially the Land Care and the Comprehensive Agriculture Support Grants. They will lose the meaning if we combine the two before we achieve our objectives.
Regarding the National Housing Allocation, we request National Treasury to consider the fact that construction costs in different provinces and in different municipalities are not the same and it will create problems if allocations are based on particular regional conditions. For example, in Rustenburg the price of building materials is not the same as in Koster, in Kgetleng Municipality. But Kgetleng Municipality orders its building materials from Rustenburg. So, how will you be able to control such price differences? It becomes difficult and that is why, for now, we are saying, let us not allocate according to different regional price fluctuations, because it is going to create serious problems for the municipalities to make proposals or to present estimations to the national government.
Concerning grants in general, we want to make a plea to the national departments: Please use your responsibilities to monitor the grants in the provinces and at local government level. It seems that the national departments are absconding from their responsibility and they are putting the whole responsibility on National Treasury. This is uncalled for, because they are the ones who bid for these grants and receive plans from the provinces and the municipalities.
Therefore, they must take the responsibility to monitor those grants, whether construction is taking place or whether the conditions are being implemented through monthly and quarterly reports.
Unfortunately, some of the national departments do not monitor those grants. They leave the monitoring either to the province or to the National Treasury, whereas they are the ones who dispense. The Division of Revenue Act is clear that the national dispensing departments must monitor and be accountable as accounting officers.
I would also like to indicate that we really appreciate the fact that, over the medium term, allocation for grants will increase to a greater degree. This shows that the government is committed to ensuring that infrastructure development is given priority. But, as I have indicated earlier on, the department must take responsibility because we do not want to see protests from time to time, with people saying there is no delivery on the ground, but where national departments have failed to fulfil their responsibility.
I would like, in this instance, to give an example of the health department. The Auditor-General, in his reports of 2005-06, reported that payments of R1,3 billion were made prior to approval of business plans. How can a national department make divestment to provinces when plans have not yet been approved? At the same time, the Auditor-General raised the fact that the amount of R110 million is more than the amount approved in the individual business plans.
How can you dispense that amount of money without looking at the business plans? The departments cannot expert the National Treasury to come and do monitoring on their behalf. They are the ones who dispense, and they must also be in a position to monitor, and make sure that they guide the provinces.
It is the imperative of the national department to take the initiative concerning intervention measures, because, as a national department, you are the accounting officer and you must ensure that the provinces and local governments utilise funds according to national priorities. Also, regarding quarterly report and quarterly visits, we urge the departments, and we are going to call them at a later stage to find out what they are doing, to monitor on monthly and quarterly bases, to tell us what is happening on the ground, and whether those grants are being utilised for what they are intended, but, at the same time, to know which projects are at a stalemate and which ones are at an advanced stage, and again to know which projects will not be achieved in that particular year. It is important for us to know, as Parliament, but, like I say, we are going to make follow up on such issues during the course of the year.
We would like to welcome the fact that the national government has established an intervention task team, which is referred to as the Infrastructure Delivery Improvement Programme. This intervention strategy is good, in the sense that we have seen a change in spending on infrastructure for education. We have also seen an improvement in housing. Although housing has been one of the victims of underspending in infrastructure, but, at least, for now, for the last three quarters, there has been an improvement in this intervention. That is why we are calling on the national departments to do the same, not to wait for the National Treasury. They must take that initiative.
I would also want to remind this House that the President announced in his state of nation address two years ago that no learner will learn under a tree. That issue has been a concern to us as the ANC, but if it was not because of this intervention, up to now we would still be having question marks of how many classrooms or how many learners are still learning under trees. This intervention has speeded up the process of building more additional classrooms, and, like I say, I presume that it is the same intervention that has improved capital spending in housing.
We would also like to welcome the new grant on community library services. We are a nation that has to learn and read. I thought Minister Pallo Jordan would be here, so that he would be made aware that we are going to have an interest in seeing whether the department has plans. What are they going to do throughout the course of the year to ensure that there will be no fund- shifting at the end of the financial year or that during the MTBPS there shall be no shifting of funds?
We expected that by now they ought to be having plans of how they are going to implement that grant, because people want to consult through using libraries. People want libraries to be up to date in terms of the services they offer to them.
I would also like to finally indicate to the Minister of Finance that today South Africa is financially where nobody ever dreamt it will be. [Applause.] When you took over in 1996, there were Messiahs who could foretell that a Minister from the ANC could not do anything good. And we have proved them wrong. I want to congratulate you and your staff. Even those institutions that are under your administration or your control have done an excellent job. The ANC supports the Bill. [Time expired.] [Applause.]
Chairperson, I would like to express my appreciation to all parties in the House, because it's clear that everybody supports the Division of Revenue Bill, but let me deal with some of the issues that have been raised. Firstly, regarding the support expressed by the hon Davidson for an independent body doing the micro forecast, we recently undertook an interesting exercise where we looked at trends in respect of this consensus forecast. There are two groups of consensus forecasts by private sector economists: one is run by Reuters and the other by Beeld.
We looked at our own forecast over the past few years and, just yesterday, the GDP growth for last year was announced as at 5% year on year. The Beeld consensus was 4,05% for last year and the Reuters consensus was 4,05% while ours was 4,9%. In the previous year, where growth was 5,1%, the Beeld consensus was 4,1% and the Reuters was 4,0%. Treasury was marginally better at 4,3% but less strong.
Now, if you go back over the history of the last decade you will find the same trends. I think the observation that we can make is that whilst Treasury may have been wrong, we were significantly less wrong than these consensus forecasts. There is a very important point here, because if you take this responsibility and hand it over, where is responsibility for this vested?
I am saying it's an intensely political function. We take responsibility; we will stand before this House and debate the issues. But, to hand this thing over to some other institution out there and believe that they would be the determinant of the forecast on which we must put the premise of fiscal framework to allocate resources, is probably taking the economic functions of government into some kind of belief system where you leave it all to automatons. There is no government in the world that operates like that, and that is the first problem I have with it. [Applause.] In respect of the tax to GDP ratio, I would like to leave that and perhaps when we have the Budget debate, we can give a bit more attention to that. Regarding the support expressed, again, by the hon Davidson for the operation and maintenance costs, let's firstly explain that when we use conditional grants, we use them in order to try and influence another sphere of government in respect of national priorities. Therefore, if you look at the local government and go through the list, you will find that there are grants that would support the eradication of the bucket system, water, sanitation and electricity; and then from the equitable share, financing for free basic services.
If you fail to understand that there are limitations in respect of the different functions, you are running the risk that the hon Mokoto raised, namely that you then open a huge moral hazard, because municipalities don't have to collect the revenue that they must collect, because somebody else is going to do it for them. Operation and maintenance costs are key to what municipalities ought to do, and whilst it is also something that the national level must do, to do it through conditional grants is not entirely rational.
Regarding the hon Swart and the demarcation, there is an issue that arose in the past few days. As luck would have it, in the area of Moutse which is now part of Limpopo province, somehow there was a miscalculation and teachers have been taxed twice and thus they are in uproar. They believe that you pay more tax in Limpopo. It is something that we will resolve together with the government of Limpopo in the next 48 hours, but these kinds of things happen.
We think that provinces are adequately resourced to deal with the changes. We have calculated this very carefully and we have been in very close consultation with them. So, there are no real additional costs. There is an endeavour to hide costs or to recalibrate the costs in some way where it's clearly unaffordable, but I think we are on top of that.
About issues raised by the hon Likotsi, monitoring and control are issues that are part of political oversight. Don't leave it to the Treasury. Our constituency officers should be doing a lot more of this and we must defend the rights and the responsibilities of Members of Parliament to be part of that monitoring and oversight, ensuring that the IDPs are there and are linked to provincial growth and development plans, and that the money is spent as planned.
This Parliament should be a repository of all that information, so that monitoring and evaluation of the money that we allocate would be much better. Democracy would be better served because all Members of Parliament would be involved in the process. Thank you very much for the support from all parties. [Applause.]
Debate concluded.
Bill read a second time.