Hon House Chair, hon Ministers, Deputy Ministers and hon members, the Minister of Finance tabled the Division of Revenue Bill on 25 February 2015 as required by section 214(1) of the Constitution, which stipulates that every year a Division of Revenue Act should determine the equitable division of nationally raised revenue among the three spheres of government. The Division of Revenue Bill is also tabled in line with the requirement of section 271 of the Public Finance Management Act, Act 1 of 1999, which requires that the Minister of Finance tables the annual Budget before the start of the financial year.
As part of the budget process, section 91 of the Money Bills Amendment Procedure and Related Matters Act, Act 9 of 2009, requires that the Standing Committee on Appropriations from the National Assembly considers reports on the Bill immediately after the adoption of the fiscal framework. In addition to the National Treasury's input, a number of submissions were received by the committee from various stakeholders, namely the SA Local Government Association and the Financial and Fiscal Commission, as well as the Parliamentary Budget Office. These inputs were also considered in the processing of the Bill.
It is for this reason that I would like to take this opportunity to table the report of the Standing Committee on Appropriations on the Division of Revenue Bill, 2015. Let me indicate at the outset that the report was unanimously adopted by the committee and it is available in the Announcements, Tablings and Committee Reports of Parliament for members' perusal. I will therefore not read the report. I should also indicate that while the report was unanimously adopted, the DA did indicate that they reserved the right to decide in the House whether they would support it or not.
Furthermore, I would like to make a few remarks on the Division of Revenue Bill, 2015. The overall 2015 Division of Revenue Bill makes available an amount of R1,2 trillion, which is an increase of R86 billion, or 7,6%, for the current financial year compared to the previous financial year. The Medium-Term Expenditure Framework budget allocation is also expected to increase up to R1,4 trillion by 2017-18 at an average of 7,8%.
Hon members should appreciate that this budget growth takes place at a time of sluggish economic growth in South Africa. Economic projections have been revised downwards to 2% for 2014 to 2016 and forecasted to increase marginally to below 2,5% by 2016-17. Despite these challenges, government has ensured that adequate resources are allocated over the MTEF and that service delivery will not be compromised.
The allocations in the Division of Revenue Bill, 2015 are in line with the nine national strategic priorities outlined by the President in the state of the nation address in February of this year, namely resolving the energy challenge; revitalising agriculture and agroprocessing; adding more value to mineral wealth; enhancing the Industrial Policy Action Plan; reducing work conflict; unlocking the potential of small business; boosting infrastructure investment and supporting the implementation of the NDP.
Although there has been a downward revision and reprioritisation of some provincial grants, this has been done in a manner that cushions key basic service delivery areas and infrastructure provision. As a result, these changes affect, in the main, noncore service delivery areas.
We note the increase in funding of indirect conditional grants to allow the national government to spend on behalf of other spheres to ensure that service delivery is not compromised. However, we still need to enhance and intensify the impact of capacity building and skills transfer programmes to ensure that all spheres of government have adequate capacity of their own.
We acknowledged the use of incentive grants to improve planning and spending performance in provinces, but it will be important to ensure that adequate support is also provided to provinces that did not qualify for incentive grants on education and health last year to ensure better planning across the country.
We have noted that the lifespan of some important conditional grants is coming to an end in 2015-16, namely the Bucket Eradication Programme Grant and Rural Household Infrastructure Grant. Most importantly, we should always ensure that most of the objectives of such grants are met before the grant is terminated.
We support the additional clause in the Division of Revenue Bill which emphasises performance monitoring of grants, as well as the substantial requirements that need to be met by a transferring officer on withdrawal or stopping of conditional grants. Most importantly, the withdrawal or stopping of conditional grants should not be an impediment to service delivery.
The fiscal rebalancing, which includes cost-containment measures and an intensified effort to improve efficiency in the expenditure of our budget, is welcomed. We welcome the need to maintain fiscal consolidation as a means to achieve economic sustainability without compromising the poor and infrastructure. This is why the capital budget remains the fastest-growing item for the noninterest spending over the medium-term period.
The first Deputy Managing Director of the International Monetary Fund, Mr David Lipton, agreed with our approach when he was speaking at the University of Cape Town early in March this year. He acknowledged the progress made by our government and had this to say, and I quote:
The country has made tremendous progress in reducing poverty but the levels of income inequality remain significant.
Cuts should not be used with a one-size-fits-all approach in order to maintain the expenditure ceiling across the board, but the focus should be on poorly spending programmes or nonperformance.
The new clause 14 in the Division of Revenue Bill, which aims to institutionalise the Built Environment Performance Plan as a tool for changing the spatial development pattern of our cities, is welcomed.
This development initiative also aims to give direct expression to other important intentions of the Division of Revenue Bill, such as furthering municipal financial capacity, certainty and accountability. It should also foster better integration.
The provincial equitable share has been affected by a number of issues, including function shifts. It has declined by R2,3 billion as a result of the following function shifts: further education and training, National Health Laboratory Services, Port Health Services and the SA National Roads Agency Limited, Sanral.
An amount of R149 million has been reprioritised from the Provincial Roads Maintenance Grant to Sanral, for the delivery of the Moloto Road infrastructure project to help reduce road fatalities.
We have noted that the local government equitable share allocation has experienced positive real growth of 5,6%, above the 4,3% inflation growth over the MTEF, as the main instrument for funding basic services. We have noted the potential reduction of expenditure with a special focus on noncore goods and services and the establishment of an e-tender portal, a price-referencing system and the expansion of Treasury's Instruction Note as part of the pillars to entrench cost-containment measures. We believe the 2015 Division of Revenue Bill ushers our country into the second phase of our ongoing transition from colonialism to a national democratic society that is truly nonracial, nonsexist, united, democratic and prosperous. It is in this phase of our transition that government is called on to accelerate the pace of social and economic transformation by implementing radical programmes that will place our country on a different development path. Therefore, this Division of Revenue Bill lays the basis for the implementation of such radical changes over the MTEF period and beyond.
Our icon, Dr Nelson Mandela, once said the following, and I quote: "It always seems impossible until it's done." Martin Luther King Jr had this to say, and I quote:
If you can't fly then run, if you can't run then walk, if you can't walk then crawl, but whatever you do you have to keep moving forward.
[Applause.]
I believe, hon House Chair, that this Division of Revenue Bill, 2015, is indeed moving South Africa forward. I therefore move that the Division of Revenue Bill, 2015, be supported by this House without amendments. I take this opportunity to thank all the members of the committee for their hard work. I thank you, hon members.
Ndza khensa. Inkomu. [I thank you.]