Hon Deputy Speaker, hon members, comrades and distinguished guests, the African National Congress sees the Division of Revenue Bill as a critical financial instrument by which the state ensures equitable allocation of resources, to effect economic and social transformation that will bring about a prosperous nation, based on nonracialism, nonsexism and equality. We recognise the enormous economic imbalances that exist in our country between and within provinces, as well as between and within municipalities.
Our country is still characterised by unequal developments and deep social and economic inequalities, the persistent legacy of the apartheid racial- spatial planning and development. This is particularly evident when we look at the massive backlogs in social and economic infrastructure development, the distribution of people living in extreme poverty, and high rates of unemployment in the former Bantustan geographic areas, the predominantly rural provinces and municipalities.
Underdevelopment, squalor, crime, poverty and unemployment are equally the defining features of our predominantly black townships and villages. These conditions make it difficult, if not impossible, to achieve financial viability in the majority of municipalities and it therefore affects their ability to provide services. It is these challenges that define the basis on which we assess this Division of Revenue Bill of 2011 and the debate thereon.
The Reconstruction and Development Programme says:
Our history has been a bitter one, dominated by colonialism, racism, apartheid, sexism and repressive labour laws. The result is that poverty and degradation exist side by side with modern cities and a developed mining, industrial and commercial infrastructure. Our income distribution is racially distorted and ranks as one of the most unequal in the world. Lavish wealth, side by side with abject poverty, characterises our society.
The economy was built on systematically-enforced racial division in every sphere of our society. Rural areas have been divided into underdeveloped Bantustans and well-developed, white-owned commercial farming areas. Towns and cities have been divided into townships and villages without basic infrastructure for blacks and well-resourced suburbs for whites.
Segregation in education, health, welfare, transport and employment left deep scars of inequality and economic inefficiency.
The Division of Revenue Bill we are debating today is firmly responding to the challenges raised in the Reconstruction and Development Programme, RDP. It is a fact that since 1994, much work has been done to turn the plight of our people around. The ANC-led government has achieved so much in just 16 years.
Hon Speaker, it is clear that we are continuing to fulfil the aspirations of the overwhelming majority of South Africans, black and white, to live in peace in the country of their birth, to reconstruct its future and share its fruits, to put an end to the centuries of racist tyranny, exploitation, misery and humiliation. We agree entirely with the Minister of Finance when he says:
All South Africans aspire to these freedoms. Freedom from poverty; freedom from need; freedom to exercise our talents and thrive as individuals; freedom to work together as communities, as organised social formations, as business enterprises and as a proud and forward-looking nation.
A number of changes are introduced in this Division of Revenue Bill and allocations to provincial and local government this year. Revisions have been made to conditional grants to differentiate between and better respond to the needs of rural and urban municipalities. The formula to allocate the equitable share to municipalities has also been adjusted to direct more resources towards poorer municipalities. The changes will be built on after a review of the local government's fiscal framework to be conducted later this year.
In debating our national revenue and how we should use it to drive transformation and achieve the kind of society we aspire to, as enshrined in our Constitution and the Freedom Charter, we must always remind ourselves of the principles upon which this ANC government was elected. These principles include continued democratisation of our society based on equality, nonracialism and nonsexism; national unity in diversity, which is the source of our strength, and building on the achievements and experience since 1994. It also includes an equitable, sustainable and inclusive growth path that brings decent work and sustainable livelihoods, education, health, safe and secure communities and rural development as well as, targeted programmes for the youth, women, workers, rural masses and people with disabilities, and a better Africa and world.
In our analysis and debate we need to use these principles to ask the following questions regarding the Division of Revenue. Firstly, to what extent does it provide adequate financial resources to the least developed provinces and municipalities in order to address uneven development, disparities and to promote inclusive growth?
Secondly, does it adequately provide financial resources for the most critical priorities of the present government, such as job creation, health, training and education?
Thirdly, does it adequately provide financial resources to support the implementation of the New Growth Path programmes in order to transform our country's economy to benefit the majority in our society?
We pose these questions because of the recognition that policy and plans are only good and achievable when backed up by appropriate resources; otherwise they remain pipedreams. From the ANC's perspective, the financial allocations, as tabled in this Bill, have provided us with positive answers to all these questions. We believe, furthermore, that these questions are not only important for the technical assessment of the budget allocations, but that they are particularly important to the Division of Revenue Bill because it is at the heart of the nature and character of our nation state.
The nature and character of our state is unitary and developmental within a constitutional democracy which is underpinned by the principles of co- operative governance. One of the most important building blocks for the maintenance of the unitary, co-operative and developmental character of our state is the Division of Revenue Bill. Provisions such as equitable share and allocations of both conditional and unconditional grants, and the formulae by which these allocations are determined, are made through division of revenue.
The allocation of financial resources to the three spheres of government is a critical step in the budget process, which is required before the national government, the provinces and municipalities can determine their own budgets. The allocation process takes into account the powers and functions assigned to each sphere of government. The process for making this decision is at the heart of co-operative governance as envisaged in the Constitution.
Section 214(1) of the Constitution of South Africa requires that every year a Division of Revenue Act determines the equitable division of nationally- raised revenue between the three spheres of government. The Intergovernmental Fiscal Relations Act ... [Interjections.]
Hon members, I can't hear the speaker. You are out of order. Do you know that? I can't hear the speaker. Please, those who prefer to talk, I am sure can leave the House so that others who want to listen can do so. They are missing something if they can't hear.
Thank you, hon Deputy Speaker, for protecting me against hon Ellis. Conditional grants to local government aim to eradicate backlogs and build institutional financial capacity in local government. The total value of conditional grants, directly transferred to local government, including the water operating subsidy, increased from R27,5 billion in 2011-12 to R30,4 billion in 2012-13 and R32,7 billion in 2013-14.
The allocations referred to previously will indeed strengthen the developmental agenda of local government throughout the length and breadth of our country. As an activist Parliament, our committees are therefore called upon to exercise quality oversight to ensure that funds go where expected.
We must ensure that there is value for money, quality in spending, sustainability of projects and that the developmental impact is felt by our communities.
The current Bill under consideration is most important in the sense that it forms the foundational base for financing the New Economic Growth Path which takes the country into an innovative developmental trajectory. It is a path that focuses on the sustainability and inclusiveness of our economic model. It promotes economic growth, but also the quality of that growth, in the form of equity, job creation, improvement of the quality of all the people's lives, irrespective of their economic or social status.
It is a growth path that takes us to the society espoused in the Freedom Charter. In this regard, we welcome the emphasis it has placed on providing financial resources towards job creation programmes, education and training, social and economic infrastructure and health services. Most importantly, we are pleased with the progressive increase in the allocations towards local government, as this is the bedrock of service delivery to our people.
Going forward, we wish to continue on this path in order to increase the capacity of the provincial and local spheres of government. The 2011-12 Division of Revenue Bill places us firmly on course for addressing uneven development, economic disparities, unemployment, poverty, and the legacy of the past apartheid spatial planning and development. As the ANC, we commend and support this Division of Revenue Bill. I thank you. [Applause.]
Madam Deputy Speaker, as members know, the Division of Revenue Amendment Bill in essence provides for the division of revenue between the three spheres of government. An amount of R808 billion is made available for division in the 2011-12 Budget. National departments are allocated 47%; provinces 44,3% and municipalities 8,7% of this amount.
Special emphasis was placed on the provision of funds for job creation by all three spheres of government in both the state of the nation address and the Budget Speech. By creating jobs, citizens are able to move out of the cycle of poverty, which in turn could assist in reducing the huge provision required for social grants. The emphasis on job creation by government as one of its main priorities is therefore supported, but the way in which government wants to achieve this objective is questionable.
The first problem is the R73 billion provided for the Expanded Public Works Programme over the next three years. There is nothing wrong with the principle of providing these funds. The inability of government, however, to actually spend the money is of major concern.
At the end of the third quarter of 2010, the Department of Public Works had spent only 49,75% of the R1,4 billion Budget allocated to it for this purpose. When asked for reasons for the underexpenditure, the department explained that the EPWP; are operated as incentive schemes for municipalities to create jobs. Municipalities have to apply to the department for approval of an EPW Programme; if approved, they may continue with the programme, but use their own money in the first instance. Once the programme has been completed, they can reclaim the money from the department.
It follows therefore that only those municipalities with the necessary human capacity and funds can gainfully make use of this system. Municipalities in rural areas, in particular, battle because most of them are cash-strapped and lack human capacity. The EPWP therefore does not help much in the rural areas or poor municipalities, and it is particularly in rural areas where jobs are more necessary than anywhere else. The result is that a majority of poor municipalities create very few jobs through the EPWP system. The system has to be changed to become effective.
Government has proclaimed its aim to create an additional five million jobs by 2020. Currently a gross domestic product, GDP, growth rate of just over 3% this year, escalating to just over 4% in 2013 is projected. At these growth rates, the five million jobs will remain a pipedream. Only with annual growth rates in the order of 7% per annum is the target likely to be attained. The goal of five million jobs by 2020 seems to ignore the major structural changes required in our economy to reach the necessary growth rates and further disregards the possibility of another global recession in the next nine years. Five million jobs by 2020 sounds like a great election promise, just like the ANC has been promising "jobs, jobs, jobs" since 1994, without making any progress.
Creating jobs requires outstanding organisational skills and control over expenditure. One can therefore only laugh or maybe cry about the R1,2 billion made available to the National Youth Development Agency for job creation. They themselves have proved to be totally disorganised. They have a complete lack of skills as far as control of expenditure is concerned and what aggravates the situation is that they do not report to any parliamentary committee which could exercise parliamentary oversight. This organisation wasted R100 million of taxpayers' money on a fruitless congress, or shall we call it a party, yet government seems so scared of losing the youth vote that they reward the National Youth Development Agency with a further R1,2 billion of taxpayers' money for wastage. [Interjections.] A disgrace indeed! A serious rethink on some of government's job creation programmes is called for. [Applause.]
Deputy Speaker, Ministers, hon members, today the committee tables its report to the National Assembly. We do so as directed by the Money Bills Amendment Procedure Act. It is important to remember that as Members of Parliament we are empowered in terms of the Act to amend the Budget. Through acting in the spirit of democracy and accountability, we, as the committee, must engage with the departments on the details of their forthcoming strategic plans.
The year 2011 has been announced as the "year for job creation", which we support. Therefore, each one of us must ask our departments to demonstrate how the twin problem of unemployment and poverty will be addressed in a sustainable manner in using this Budget.
We must look closely at the performance output throughout our government institutions. Currently South Africa is faced with a number of burning and worrying issues that have to be addressed if we want to build on our democracy base. It is disturbing, to say the least, when those in positions of authority do nothing when public reserves are misdirected and officials misuse public funds. There is little or no evidence that the Public Finance Management Act, PFMA, or Municipal Finance Management Act, MFMA, is strictly adhered to.
Our future is in jeopardy if we do not attend to the education of our children. It is unacceptable when our school children have to walk more than 5km to get to school because of the poor or improper transport that has been arranged for them. It is even more worrying when school nutrition programmes are disbanded and those who are appointed to operate them open spaza shops and redirect the bread from the feeding scheme. We must stamp our authority and demand that our children receive proper and fair treatment from the state. Cadre deployment is rife in every level of government. We are short of critical skills. In 1994, 5 100 engineers served 14 million people outside the former homelands. Today, an estimated 1 800 engineers serve almost 47 million people. Minister Blade Nzimande must do something to address this issue and change the skills arrangement.
Nothing is done when officials of the state direct the very meagre resources to close relatives and their businesses, only to find that this money is used corruptly. We want to see action when these misdemeanours are detected. So far we have seen little, to say the least, only the rewinding of the corrupt practices.
The adoption of the Division of Revenue Act, Dora, and the allocation of over R888 billion therein, R288 billion to provinces and R34 billion to local government, should not and must not communicate the message "it's our turn to eat". Creating a strong political will is a starting point to a sustainable and effective anticorruption programme. Preventing changing values, creating a culture of professionalism with punitive measures, will be a deterrent measure for all.
Accountability, transparency, integrity and oversight are essential elements of a democratic institution and its processes. Accountability is a pillar of democracy and good governance. We are concerned and worried that the performance auditing is being delayed. These delays are of course not giving us the opportunity to interrogate the value for money as in terms of the Auditor-General's auditing.
We are aware that national government's net loan is projected to increase to R1,3 trillion in 2012-13. South Africa's debt, as well as the Public Sector Wage Bill, remain a concern and need serious management. We do believe that the Minister of Finance will manage this with the able director-general.
In closing, the fact that the department has been given an overall mandate for "jobs, jobs, jobs" requires a plan that must be tabled. All social partners have a role to play and this must be taken into account. These plans must be comprehensive and it is our responsibility to engage with the details of this department, monitor its implementation and ensure that all are sustainable, moving forward. Cope will, in fact, support this Bill. Thank you.
Madam Deputy Speaker, Minister, the Division of Revenue is all about how much money you put where. And in determining the need for how much money needs to be put where, the issue is how much is going to be spent. We are in a situation where what needs to be spent is not just determined by the money which is available, but by overspending.
Two days ago, I raised, once again, I don't know whether it was the third or fourth time in this House, the issue of the skyrocketing hidden unaccounted for municipal overspending and the municipal indictment. The Minister, who is not here today, saw fit to mock me. He did not provide me with an answer and in mocking me, he mocked all those of you who may have an interest in knowing how much we are really responsible for and how much our children will have to pay.
That was not the first time that the Minister addressed my questions and those of the country by being mocking in his answer. I've asked twice in parliamentary questions about the size of the municipal deficit and received no answer. I've asked him twice about how he intends to pay ... [Laughter.]... silence please - for the national debt. By 2015 there will be R1,5 trillion, which means R300 000 for each of you to pay. That's the nature of our indictment and I'm asking a very simple question: How are you going to answer? I've written an open letter and received only answers which mock the question, the same way as he mocked me two days ago in front of you.
This is, in short, irresponsible. [Interjections.] I'm sorry, do you want to ask something?
Continue, continue.
Come on, ask! Do you have the answer? [Laughter.] Perhaps you can tell me how we are going to pay for the national debt. Where will the money come from? How much money are we overspending? Without answers to these questions, the understanding of the Bill before us is short from complete and it is the attitude of the Minister, who on the one hand is extraordinarily charming, extremely capable, and on the other hand has the capability of cutting down the guillotine on the real and hard issues. And from a parliamentary point of view, I find this extraordinarily difficult to digest.
We appreciate the effort made in pushing money to local government. Not enough has been done. The amount of money allocated by our government remains disproportionate, but it is a vertical division. If you look at it segment by segment, take education for example, money is not spent on schools and teachers or on school books or on structures. Well, structures are public walls, but if you do it horizontally, that will come under the same picture. It is part of the governance of a system.
This is a major flaw and it compounds with the tendency, which is horizontal, of allocating the bulk of the money that we are spending today, that we are authorising to be distributed today from the highest level of government. It's money spent by government to run itself; and until or unless there is a fundamental revision of what government needs are at the top level and whether or not we need to involve national departments, these allocations will remain flawed.
In conclusion, my main thrust was lost, as the Minister is not here today, to stop mocking and begin answering. I want to refer him to the answer given by Richard V, the dauphin's ambassador - this is the last sentence - he can research it himself and read in there how I feel about him. [Laughter.] [Time expired.]
Deputy Speaker, hon Ministers, Members of Parliament and listeners at home, today is a big day for South Africans who are waiting out there to listen how the money is appropriated and distributed from national, provincial and local spheres of government. Our people out there are happy to get something that will keep them going. They are happy to see that the projects that are there and that are being promised by the ANC-led government will be attended to.
In the Preamble of the Constitution of the Republic of South Africa it is stated that:
We, therefore, through our freely elected representatives, adopt this Constitution as the supreme law of the Republic so as to improve the quality of life of all citizens and free the potential of each person.
In the January 8th Statement, President Jacob Zuma mentioned that:
We know that we have not succeeded in the economic liberation and advancement of the majority of South Africans. That is why the ANC is adamant; we will pursue this aspect of the national democratic revolution with more vigour and dedicated attention in this phase.
As we all know, the state of the nation address speaks about jobs, jobs and jobs, and that is what we will be discussing in this Division of Revenue, because we need decent employment opportunities, which have the modern infrastructure, a vibrant economy and high quality of life. I mean that we don't start today talking about the Division of Revenue; we started long ago, before 2009 when we planned for the manifesto. Our manifesto comes out very clearly that decent work embraces both the need for more jobs and a better quality of life for all. The creation of decent work and a sustainable livelihood will be central to the ANC's agenda. As it is today, it will always be.
I am focusing my speech on the recommendations of the Financial and Fiscal Commission, FFC, which we all know is mandated by Chapter 13 of the Constitution of the Republic of South Africa. It is an independent institution that has to be consulted by Parliament with regard to Division of Revenue.
The recommendations, as I continue, are interrelated and evidence-based as the result of consultations with various stakeholders and research. With regard to the Fiscal Framework and coping with vulnerabilities, it deals with consolidation and limiting spending on successful programmes; expanding social grants; and reprioritising expenditure towards maintenance and repairs. Government has prioritised very important departments, such as Health and Education, because there should be access to these services as a matter of policy.
The new infrastructure grant backlogs will address eradication of mud schools and inappropriate school infrastructure and provide water, sanitation and electricity because we need accessibility to health therefore, children will be willing to go school. The Medium-Term Expenditure Framework, MTEF, has allocated R8,2 billion to eradicate all the backlogs and will lapse at the end of this period.
We also spoke about the National Student Financial Aid Scheme, NSFAS, whereby poor students at the end of their third year will be able to convert their student scheme into a bursary. That is a very good effort based on the fact that poor students who were unable to access funds and stressed about the fact that they have to start refunding this money, will start building their own lives.
With regard to school learner transport, the Bill of Rights on Basic Education, hon members, states that measures should be taken to progressively make education available and accessible. When a child misses a school bus in the morning and doesn't go to school, the child, parent and the community as a whole will expect answers from the Department of Basic Education on why it did not provide transport. This is a burning issue, hon members.
In 2009, the Financial and Fiscal Commission recommended that national norms and standards for the provision of learner transport should be established. This will be possible once the location of this function has been clearly demarcated between the national Departments of Education and Transport.
In this regard, the commission recommends that the location of the responsibility for the provision of learner transport should be clarified as a matter of urgency. As Parliament, we really request that this be clarified as a matter of urgency because the people who are suffering are our children - the future leaders of tomorrow.
With regard to access to health, hon members, the overused and underresourced health facilities are found in the public sector, and the private sector only caters for 20% of the population. The introduction of the National Health Insurance that is under way will address these imbalances in health care. It will address this in the way that you will share the facilities with all of us wherever we are.
Spending on programmes should be cost-effective and outcomes-based. We should refocus on reprioritisation of spending, but not compromise the importance of social infrastructure. With regard to the social assistance reform, we know that people are poor, and 15 million of them depend on social grants in the form of pension, disability and children living in poor households. In the state of the nation address, it was stated that this intervention is a necessity and not a creation of welfare; it is a means towards a developmental state. We have to start somewhere by intervening in the form of social grants. As time goes on, we will reach where we all want to be at the developmental state.
Regarding the efficiency and transparency of the intergovernmental fiscal system, we know that much as they recommended it, we have the Public Finance Management Act, PFMA and the Municipal Finance Management Act, MFMA, to address the issues of efficiency, effectiveness and transparency.
With regard to the urban public transport, hon members, we know that people moved to urban areas for economic reasons; they ended up living as squatters and creating informal settlements. This problem is not of our making. We are addressing apartheid spatial planning which created dormitory type townships and underdeveloped rural areas. As a result, the ANC-led government is addressing that issue of informal settlements where an urban settlement grant of R21,8 billion will be allocated for the next three years to address the targeted upgrade of 400 000 homes in informal settlements.
Regarding the transport grant, the involvement of the Passenger Rail Agency of South Africa, Prasa, is to bring integration of transport between the cities where there will be transfer of funds from Prasa to address the local issues like local government issues. This integration will be much appreciated, and the amount will be moved from R66 billion to R80 billion at the end of the MTEF.
Another issue of concern, hon members, is the recommendation from FFC which states that the government should make a concerted effort to estimate the fiscal capacity and fiscal effort of the municipality to dispel the perception that certain municipalities will never be financially viable. The reply from government is that the notion that certain municipalities will never be financially viable is a misrepresentation of both the design of the local government fiscal framework and the practical reality of local economies.
There are obviously divergent issues here. Respecting all the legislation governing municipalities, we cannot only rely on systems, but we also need scientific and empirical evidence to inform this discussion. Municipalities can be self-sufficient, but they also need capacity, on the other hand, to expand their local economies.
In conclusion, to succeed in transforming local government, the ANC must continue to be part of the lives and experiences of our people. The fundamental principle is that we must remain faithful to our people at all times, as we are, hon Swarts, even when we have not met their expectations. We must tell them the difficulties we come across, including the reality that resources are not limitless.
This is not a campaign, hon members; it is what people expect from us at local government. They know that the ANC is there to listen to them and give them feedback and listen and listen and attend to their problems. The local government elections are coming and people are relying on the ANC to address their local issues. Thank you. [Time expired.]
Hon Deputy Speaker and hon members, the Bill before us is the main thrust of government's expressed policy for the coming year. Let me then hasten to add, however, that our biggest concern lies with the huge discrepancy that exists between what we approve here today and what actually gets delivered to our people.
At the heart of the matter is a severe lack of skills. We cannot build a winning nation against the backdrop of an institutional culture that celebrates ineptitude, and turns a blind eye to cronyism and tender fraud. We must go back to basics.
National government must take steps to improve its ability to monitor expenditure at all levels of government, starting with its own track record. All national departments must lead by example, including the Presidency. Despite our numerous calls in the past for the national government to lead from the front on this matter, there does not seem to be an improvement in national government's expenditure priorities and wasteful expenditure.
The recent wasteful expenditure of R100 million by the National Youth Development Agency, NYDA, on some preposterous jamboree is a case in point. We are doubtful whether the NYDA will be able to account for this wasteful expenditure, as required to do so by the diligent Public Protector. Nor will they be able to account for the R385 million allocated to them for this fiscal year.
It is these basic issues which undermine the beautiful intentions of the budget process. Once again, we need to go back to the basics. We ought to replace the culture that celebrates ineptitude with one that celebrates and rewards competence and dedication. The UDM supports the Bill. [Time expired.] [Applause.]
Agb Adjunkspeaker, daar word baie oor plaaslike regering gepraat, maar ek wil vandag vir die ANC-regering s een van die basiese aspekte en funksies, as dit gaan oor plaaslike regering, is die betaling van dienstegelde. Daar word in hierdie stadium R34,1 miljard onder plaaslike regerings verdeel, maar die jongste syfer wat ek vir die uitstaande dienstegelde gekry het, is R56 miljard.
Dit is 'n totale onreg wat op plaaslike regeringsvlak gepleeg word. Mense wat wel vir hul dienste betaal, moet daardie mense wat nie vir hul dienste betaal nie, subsidieer. Moet nie vir my kom s dat dit arm mense is wat nie kan betaal nie. Hulle kan betaal, want daar is basiese watertariewe en basiese elektrisiteitsvoorsiening vir die armstes van die armes wat nie kan betaal nie.
Voorsitter, die VF Plus wil aan u 'n voorstel doen omdat hierdie agterstallige dienstegelde net meer en meer word. Ek weet ander politieke partye is versigtig om hieroor te praat, want dit is mos nou verkiesingstyd. Hulle is bang hulle verloor stemme. Ek wil vandag vir u s die agb Minister van Finansies moet aan daardie munisipaliteite wie se agterstallige dienstegelde vergroot is, nie 'n enkele sent van die sentrale fondse gee nie. Dit sal hulle dan laat besef dat hulle iets omtrent agterstallige dienstegelde moet doen.
Dan moet daar 'n glyskaal ingestel word. Daar moet 'n sekere persentasie vermindering van die agterstallige dienstegelde wees alvorens hulle kan kwalifiseer om verdere fondse van die staatskas te kry. Anders s ek vandag vir u gaan die agterstallige dienstegelde net groter en groter word, en die onreg groter en groter, aangesien di wat wel betaal diegene moet subsidieer wat nie betaal nie. Dis onaanvaarbaar. (Translation of Afrikaans speech follows.)
[Mr P J GROENEWALD: Hon Deputy Speaker, much is said about local government, but I would like to say to the ANC government today that one of the basic aspects and functions, where local government is concerned, is to ensure payment of service fees. At this stage R34,1 billion is apportioned to local government, but the latest figure I received for outstanding service fees amounts to R56 billion.
What is happening at the level of local government is a total injustice. People who are actually paying for their services must subsidise those people who are not paying for their services. Don't tell me it is poor people who cannot pay. They can pay, because there are basic water tariffs and basic provision of electricity for the poorest of the poor who cannot pay.
Chairperson, the FF Plus would like to make a proposal to you because the outstanding service fees are just increasing. I know that other political parties are wary to discuss this, because it is election time, of course. They are afraid to lose votes. I would like to say to you today that the hon Minister of Finance should not allocate a single cent of the central funds to those municipalities whose outstanding service fees have increased. They will then realise that something has to be done about outstanding service fees.
Then a sliding scale should be introduced. There should be a certain reduction on a percentage basis in the outstanding service fees before they can qualify to get further funds from the Treasury. Otherwise, I am saying to you today, the outstanding service fees will just increase some more, and those who are actually paying will feel greater injustice because they are subsidising those who are not paying. This is unacceptable.]
Deputy Speaker, provinces and municipalities are assigned key service delivery functions such as school education, health, social development, housing, roads and the provision of electricity, water and municipal infrastructure. That we all know. We are also aware of the provincial equitable share formula that was reviewed last year, and we notice that a new health component has been introduced in this Bill, which the ACDP supports.
A review of the local government equitable share is also under way, with a new formula expected to be introduced only after the data from this year's census is made available. We also see that a series of municipal boundary changes comes into effect in May. This will impact the equitable share, so there will be some changes in the equitable share.
However, the ACDP's main concern lies with project management capacity. We know departments overspend on current expenditure, such as salaries, as Mr Oriani-Ambrosini pointed out. However, underspending of capital budgets is evident at various levels, particularly at provincial and municipal levels. We also notice that, for the 2009-2010 financial year, government failed to spend R12,4 billion budgeted for capital expenditure, and that, I am sure, is a cause for concern for all of us.
As for municipalities, they struggled to spend their capital allocations. They also found it difficult to collect their revenues, with aggregated municipal consumer debts amounting to R62 billion.
The Finance and Fiscal Commission recommended that government adopt standard indicators or early warning systems to measure and detect municipalities facing fiscal stress. Improving municipalities' management of their own revenues will yield substantially greater returns than those given through the equitable share that I referred to earlier, but not along the lines of the billing chaos that we see in Johannesburg.
The ADCP particularly supports capacity-building grants aimed at building management, planning, technical, budget and financial management skills, as contained in this Bill. We also welcome the changes to the conditional grant framework for provinces and municipalities in an attempt to address the persistent capital backlogs.
We trust that the Infrastructure Development Improvement Programme will ensure that government builds capacity in provincial treasuries and the Departments of Health, Education, and Public Works, to smooth out the roll- out of capital projects. This is long overdue, as the shortage of engineers and project managers at local and provincial levels has meant that government has had great difficulty in finalising these capital projects. Hopefully, we have learnt from the Fifa Soccer World Cup experience on how to complete massive capital projects on time and within budget.
We, as parliamentarians, must ensure that all spheres of government have the capacity to spend the vast monies allocated for capital projects, and that rollovers for capital underexpenditure do not occur again. The ACDP will support this Bill. I thank you.
Hon Deputy Speaker, the Division of Revenue Amendment Bill provides for the division of revenue between the three spheres of government. The emphasis of this Bill is to create jobs. The DA agrees that dramatic measures are required to create five million jobs by 2020, given that 75% of the presently unemployed, unskilled are between 18 and 35 years of age.
The current budget deficit is 5,3%, which is manageable by international standards. Allow me to congratulate the hon Minister of Finance in that, despite criticism from the left wing in his own party, he maintained countercyclical fiscal policy in the 2011 Budget.
The following measures are welcomed, and should encourage employment: a R5 million youth subsidy, tax incentives for manufacturing investment of R20 billion and R10 billion on an industrial investment promotion.
As a member of the Appropriations Committee, it is evident to me that a budget allocates funds, but sadly, cannot guarantee that the money will be spent in an acceptable and efficient manner. My colleague, hon Marius Swart, mentioned specific examples, but what this country needs is an environment with the political will to attract investment and encourage business to employ more people. The fact that 16 million people depend on social grants places a severe financial constraint upon government.
At present government signs performance measures and outcomes agreements in departments. Whether this will have the desired effect is uncertain, especially if the generous, well-above-inflation salary increases of public servants are taken into account. Education, for example, will rise to R190 billion in 2011-12, or 21% of noninterest allocations. However, our standards in Mathematics and Science are well below acceptable international standards, and there is no evidence that they will improve in the foreseeable future.
South Africa lost more than a million jobs during the past recession. This led to a decline in our tax base and a decline in our economic growth rate. One of the reasons is that our labour laws are restrictive and contribute to low absorption of labour. Treasury's 2011 Labour Review says that the unit cost of labour in the formal sector has risen by 14% over the past two years. Our productivity growth is far below that of our trade partners in the Brazil, Russia, India and China, Bric, bloc.
The DA has a solution. We believe in an open society with equal opportunities. A free labour market will mean more jobs, faster economic growth, higher standards of living and less crime. The country with the highest economic growth rate, namely China, has a flexible labour market that absorbs millions of workers. The sooner we review our current labour legislation, the better.
The bottom line is that it is easier and less burdensome to do business in developing countries, such as Brazil, than in South Africa, because there is less red tape and less of an administrative burden of compliance on issues of labour. We will only attain an economic growth rate of 5% or more if the ANC finds the political will to implement a modern, free labour regime. South Africa is a commodity-driven economy with vast mineral resources, which, if properly managed, can provide thousands of people with jobs.
A survey conducted by the Fraser Institute, which was released in the last week of February, showed that South Africa slipped further down the rankings. South Africa ranks 61st out of 72 countries in the 2009-10 survey, according to page 37 of the Financial Mail on 25 February. What it means, in essence, is that South Africa is not investor friendly, and that the scary talk of nationalisation of the mines has had a profound effect on growth and jobs.
Allow me to conclude. I think the controversial demographic quota which was discussed by Cabinet has also done immeasurable damage to our future labour prospects. I thank you. [Applause.]
Speaker, members of the executive, hon members of the House, in the 2011 state of the nation address, President Zuma re-emphasised five priority areas which continue to be the focal point of government this year and in the Medium-Term Expenditure Frameworks, MTEF, period.
This includes areas of job creation; enhanced quality of education; improved health and expectancy of our nation; vibrant rural communities and food security; as well as crime and rooting out corruption, particularly, in government. In supporting and financing these priorities, the allocation process takes into account the powers and functions assigned to the three spheres of government. The process of making this decision is at the heart of co-operative governance as envisaged in our Constitution.
Section 214(1) of the Constitution requires that every year a Division of Revenue Act determines the equitable share division of nationally raised revenue between the three spheres of government. The Division of Revenue Bill classifies nine schedules in order to divide revenue between three spheres of government. In support of the five million job creation targets which are spelt out in the Budget Review and state of the nation address, amongst other things, is the implementation of the new growth path. In this regard an amount of R94,1 billion was added to the baseline, R48,8 billion to the national government, R40,2 billion to the provinces and R5,1 billion for the local sphere of our government.
Furthermore, R10 billion is set aside to stimulate the economy, and coupled with that intervention is a special vehicle of R10,4 billion for mainly transport infrastructure, which includes roads and rail networks. If hon Lekota were here, I would have told him that these are the specifics that he demanded the President must address.
The area of skills development and up-skilling of our people is most welcome through a further injection of R9,5 billion. This will be channelled through the further education and FET colleges, amongst other initiatives. This is very important because after trainees have acquired their skills, they will be expected to open their businesses and employ more people.
Rural development is an important priority of government, hence we welcome a further R2,5 billion injection to develop a framework in support of emerging farmers, amongst others. It must be noted that most of our poor and vulnerable people in our land are found in the rural areas. So, in our quest to address the immigration of our people to big cities, we need to find meaning for them to participate in the economy where they reside.
On municipalities, my committee is awaiting with interest the consolidated report on the full state of our municipalities throughout the country on their readiness to implement the government priorities assigned to them. This is an important arm of government because it acts directly with municipalities in terms of service delivery.
We, therefore, as Parliament, need to engage with Treasury in order to access whether the interventions to assist mainly under-resourced municipalities are bearing any positive outcomes, for example, Project Consolidate. This also speaks to a number of conditional grants outlined by the Minister of Finance in this House.
The number of grants has increased from eight to nine this year as compared to previous years. This is due to a new conditional grant schedule earmarked to address disasters and flood relief, so this is a responsive government. While this is a step in the right direction, we are, however, very concerned about the accountability issues for some of these grants.
My committee uses the Section 32 Report by the National Treasury as a tool for in-year monitoring and expenditure patterns of provincial and national departments. It unfortunately does not give reports in some of the schedules 4 and 8 of the conditional grants. This is a concern to us as we want to engage with all stakeholders to address this issue.
This includes Comprehensive Agriculture Support Programme, Casp; Further Education and Training Colleges Grant, National Treasury's Grant to Provinces, Public Operations Grant and Public Works, EPWP Incentive Grant. We would like, therefore, to see a more co-ordinated approach in the way these grants are administered.
In this regard, it is with concern that a higher level of spending reported by some provinces, like the Eastern Cape and Free State should be looked at and addressed as a matter of urgency. According to Section 17 of the Division of Revenue Bill, a grant can be stopped if an unexplained expenditure is experienced, as was witnessed by the Standing Committee on Appropriation during its oversight visit to the Eastern Cape some time last year.
Before I deal extensively with the political issues, let me address the Minister of Finance in his absence, but his deputy is here. Let me address the issue of DFIs, particularly your Provincial Development Institution. I will cite two examples, that is, ECDC in the Eastern Cape and Ithala in KwaZulu-Natal. During the late 80s and early 90s, it was with pride for me as an African child to drive to Umtata from Durban, notwithstanding the fact that Transkei then was an apartheid-created homeland. The African black people of that area had something called their own. They owned properties; they had the best, clean and most vibrant town. Umtata was the place to be. Sasidansa khona. [We danced there.]
Today, if you go there, the town is dirty, there are potholes all over, most robots are not working and there are far less businesses run and operated by African black people. This is a concern, Minister, because I am going to ask the Treasury one day to show me anywhere in the country where black businesses are located. Had it not been for the current debate, I was going to tell you what that town looks like today, but I will leave it at that.
Here I am referring to business enterprises; I am not referring to deals. I just want somebody to tell me where black businesses are located in South Africa. In KwaZulu-Natal we grew up pointing up to success stories of our people who managed to build their own enterprises without any form of assistance from the regime of the time, because there was life in the townships.
We used to hear of successful people, the likes of the late Thalente Goqo of the famous Executive Hotel, and numerous other enterprises in and around Umlazi Township. In KwaMashu we heard of the late Mr Sifiso Dlamini of KwaMashu Shopping Centre who was the first black person to run a mall.
When the violence started in KwaZulu-Natal around the 80s, most businesses were severely affected. They relied on funding by Ithala to resuscitate their businesses. Twenty-five to thirty years down the line, all those businesses today have been repossessed by Ithala. All those thriving businesses of that time remain white elephants.
Ithala repossesses them without putting them to better use; they are left as white elephants. This is due to the lack of leadership which was meant to assist some of these businesses with strategies to revitalise their businesses. Ithala is destroying businesses in KwaZulu-Natal, businesses that have been developed over decades and people used their hard-earned money. In fact, this is how the former Deputy President of Nafcoc in KwaZulu-Natal described Ithala 15 years ago "Ithala is the worst and most vicious animal I have ever seen. It gave birth to children, it did not teach them how to crawl, how to walk, but it managed to kill them all prematurely."
I concur with that sentiment; in fact I describe Ithala as the monster of our times. This must be corrected, because South Africa is in dire need of creating enterprises in order to absorb jobs. Coming back to politics, the underspending of conditional grants is a major concern, since they are an instrument of government to achieve its stated objectives. As a matter of principle, all spheres of government are mandated by the Constitution to implement some of the agreed national priorities as set out in the national agenda.
This is a unitary stage ... Alikho ixoxo eligxuma liye lapho lithanda khona. [No one does as one pleases.]
The affected provinces and national departments need to come with clear strategies to address these shortcomings.
South Africa is a user-friendly constitutional democracy. People who are tasked with implementing our policies and programmes of government are given a chance to develop strategic plans which talk to their service deliveries. They present that to Parliament and get approval. Therefore, it is absurd that 12 months down the line officers cannot account for the money appropriated to their programmes; that is not acceptable.
While on this issue, I agree with the statement that we need to respect the executive and the officials. Equally important, the executive and the officials must respect Parliament, the Constitution and most importantly, the people of South Africa. [Applause.] Those people put us into power, and they are waiting with patience. Let us not take advantage of them. The principle is simple: If funds have been appropriated to you, then you must to account for them. Let me finish by saying that I am a member of the ANC, and 21 years ago I was made the chairperson of the KwaDabeka branch by Mr Mtshali. I still remained a committed member of the ANC. I want to say that the ANC does not condone corruption in any form or manifestation.
We remain the true leader of our masses. I have a story for corrupt officials. You may have succeeded in the short term to frustrate people, intimidate them, and instil fear of a robust debate and oversight. You may have managed to redeploy people through your influence, demote them and threaten them with all sorts of things, including recalling them, but the message is simple here.
Our people have resilience and patience, but they are not stupid. In less than a century they defeated apartheid, led by the ANC. Today they are saying that they are tired of waiting; they want service delivery today. That is why I dare say that victory against corruption is certain in our lifetime. And that project will be co-ordinated and led by the ANC and the ANC supports this Bill. I thank you. [Applause]
Before I call the Deputy Minister of Finance, let me just remind members that they may not address each other directly. They have to do that through the Chair. The Deputy Minister is a member of this House and a Member of Parliament, and he has been addressed directly several times. That is against the Rules.
Chairperson, hon members of this House, firstly, let me take this opportunity to thank all members for their valuable inputs in taking forward the process of the Division of Revenue Bill, which is an important part of our Budget process. As it has been indicated by a number of members and in terms of our Constitution, government ensures a transparent and equitable system in dividing the nationally-raised revenue between the three spheres of government.
This tabling of the Division of Revenue Bill and its underlying allocations is the outcome of extensive consultation between all spheres of government. The NCOP will continue with this process in the weeks to come as per its mandate. The lively debate one has seen here today will be seen continuing and it is the strength of this organisation that out of this debate come the products that will continue to make the lives of fellow South Africans better.
The proposed Medium-Term Expenditure Framework, MTEF, has been structured to enable government's policy priorities to be implemented in accordance with delivery agreements that Ministers have signed with the President. The Division of Revenue Bill, which sets out the three-year allocations for the equitable shares and conditional grants for the provinces and local government, will enable government to intensify its activities that will make a difference to the lives and prospects of all South Africans.
This is the second time that the Division of Revenue Bill is processed in terms of the Money Bills Amendment Procedure and Related Matters Act, Act 9 of 2009. I am glad to report that substantial progress has been made in implementing the recommendations made by the Standing and Select committees on Appropriations when they commented on the 2010 Division of Revenue Bill and 2010 Medium-Term Budget Policy Statement, MTBPS.
Firstly, the Standing Committee on Appropriations recommended that the provinces should come up with detailed savings plans and promote value for money in their spending, and a lot of members alluded to this important element of our Budget process. Through implementing austerity measures and recovery plans, provinces were able to secure savings amounting to R13,3 billion during the 2010 MTEF.
Secondly, the committee recommended that, as government terminates grants for backlogs in electricity, water and sanitation at clinics and schools, sufficient funding should be provided to address the remaining backlogs. A grant-in-aid in order to address this, amounting to R8,2 billion over the 2011 MTEF, will enable the national Department of Basic Education, in consultation with provinces, to fast-track the eradication of unsafe school structures and eradicate water, sanitation and electricity backlogs at schools over a three-year period.
Thirdly, the committee also recommended that the national Department of Higher Education and Training should establish at least one university in Mpumalanga and Northern Cape provinces before the end of the 2009 to 2014 government term. An amount of R300 million has been made available over the MTEF for the establishment of these two universities. The Department of Higher Education and Training will be responsible for building these facilities. This reaffirms our commitment, as the ANC government, to access to education for all.
Fourthly, concerns were raised during last year's deliberations on the Division of Revenue Bill on the section dealing with authorisation of expenditure, particularly virements and disaster funding. This section has been removed and the funding of immediate costs spanning a period of three months and related to disasters will now be funded through a new conditional grant, and the release of such funding will be expedited.
A number of members made some important points that might require some kind of response. The chairperson of the Standing Committee on Appropriations, Mr Sogoni, spoke about the local government equitable share formula and the inability of some municipalities to be viable. The formula, as you would note, has been adjusted to benefit poorly resourced municipalities. All municipalities, including those that are largely reliant on transfer, should also optimise their own revenues and a number of members made mention of that point.
We would like to sincerely encourage ... Mr Groenewald actually went to the extent of saying we should not allocate funds to those municipalities. I don't think that would be responsible.
As far as we are concerned, we need to support those municipalities. We need to come up with monitoring mechanisms of making sure that those municipalities are supported. That is why there is now a capacity-building grant that has also been allocated in order to assist municipalities to be able to spend so that our people are able to access service delivery.
The chairperson also referred to the racial divide in large urban towns. The grant system has also been enhanced. For metros it has been amended so that they can take greater ownership of service delivery and spatial patterns - particularly housing, public transport and municipal services - so that these can be planned and funded in a more integrated manner.
Hon Deputy Minister, there is a request from the people sitting at the back that you kindly raise your voice. I took it for granted because I can hear you, but, perhaps, they can't hear you.
Mr Ellis has volunteered to lend me his voice. Hon Swart from the DA referred to job creation and also raised concerns with regard to R73 billion for expanded public works where expenditure is a concern. The oversight role of Parliament, hon members, cannot be overemphasised when it comes to expenditure of these funds. As we allocate funds to departments and spheres of government, Parliament has a critical role of ensuring that those funds are spent.
Fortunately, Mr Swart himself is a member of the Standing Committee on Appropriations that receives section 32 reports on a monthly basis, and I would imagine he would continue to actively participate in the committee and make sure that, through oversight, expenditure is improved. If there are concerns on how the funding system is structured, and a view that it should also be reviewed, we will await recommendations from the committee that he serves.
With respect to rural municipalities, the rules and conditions have been made easier. There is a minimum threshold that has been applied in the 2010- 11 financial year, which was specifically made to take into account the concerns of capacity and lack of financial resources in those municipalities.
Mr Oriani-Ambrosini indicated that he has twice raised the question of how we are going to fund expenditure in this country. Even though this is not part of our Division of Revenue Bill, I would imagine that if he reads the documents carefully, he will again do himself a favour because he will then get a better understanding.
How does one fund a budget deficit? We have indicated that, with the countercyclical fiscal policy that we have adopted in this country, we will allow the deficit during the tough times to increase. However, when the economy recovers and he himself becomes a responsible taxpayer and pays his taxes instead of calling for the tax ombudsman all the time, Christmas will come every time. He says the Minister mocks him. The only thing we can request him to do is to read the documents.
He also complains about municipalities that have a large revenue base and compares what municipalities collect and what is outstanding. The property rates and the tariffs for municipal services are adequate, but we also, as I indicated earlier, encourage municipalities to improve their collection capacity.
Mr Swart from the ACDP complains about overspending on operating and underspending on infrastructure; this is a cause for concern for us as well. The provincial infrastructure grant has now been restructured - as I said earlier - to assist with building the capacity for spending. Also, we have since developed a requirement that project plans would now need to be submitted before funding is approved. And I hope Parliament would be able to use this as an instrument of oversight in making sure that oversight in provinces and allocation to provinces is strengthened.
Most members have indicated their support for this year's Division of Revenue Bill. I therefore wouldn't want to bore you with the figures and statistics as most members have alluded to that.
However, Mr Mbili has vociferously raised the issue of lack of support for small black businesses. His passion is understandable, and I agree with him that we might be running out of patience because we want to see change, and we want to see it now. A number of institutions and interventions are in place and I trust that, working together with Mr Mbili in his previous capacity as a member of the Standing Committee on Public Accounts, Scopa ... From time to time he forgets that he is no longer with Scopa, but it is a good spirit because it takes us to where accountability actually resides. Accountability does not reside with the opposition, and I am glad that Mr Mbili has raised the issues with the passion, vigour and as vocally as you have. I can give the assurance ...
... Baba uMpontshane ngeke axoshwe embuthweni, sifuna izinsizwa ezinje-ke. Ngakho-ke Baba uMbili angisho ukuthi ... [... Mr Mpontshane won't be expelled from the organisation, because we want men of his calibre. Therefore, Mr Mbili, I must say that ...] ... the matter of development finance institutions, DFIs, is receiving attention at government level. There is a review on these DFIs and soon there will be a document before us. We will also look at the mandate of these DFIs and whether they are able to achieve what would be better than what the apartheid regime was able to achieve in our areas.
There are black entrepreneurs; there are people who are prepared. In his speech, the Minister referred to a number of people who have actually made a difference in their lives. It just depends where we are looking in order to be able to respond to some of these things.
Some specific sector concerns were raised in the report. One of them is the issue of the slow pace of delivery. It is agreed that appropriate investments in rural infrastructure and roads are critical. However, I want to say that this will only have the necessary impact if the current pace and quality of spending are improved. Again, Parliament has a critical oversight role to ensure that the latter is achieved. The importance of ensuring that sufficient funding is directed towards sport and recreation infrastructure funding in communities and schools is also supported and we agree with the report as it so states.
Again, the important point that funds should follow function principle and be adhered to is supported as we have seen in housing and in public transport. We have assigned those to municipalities and a number of new clauses give effect to this.
I would like to take this opportunity to thank the Standing Committee on Appropriations for the work that they have put into processing this legislation, the House and all those who participated and made inputs. Allocations contained in this year's Division of Revenue Bill enable all spheres of government to intensify activities that will make a difference to the lives and prospects of all South Africans as per our mandate as the ANC since the advent of our democracy. I therefore request that this House passes the Division of Revenue Bill. I thank you. [Applause.]
Debate concluded.
Question put: That the Bill be read a second time.
Bill read a second time.