Chairperson, indeed it is a privilege for me to address you, in my maiden speech, on the last day of the sitting of this House, of course. Firstly, let me express my sincere appreciation and gratitude to everybody who has participated in the processing of the 2009 Division of Revenue Bill. In particular, we are eternally grateful to the Select Committee on Finance, under the leadership of Mr Ralane, for their sterling work. This is particularly remarkable bearing in mind that, due to the elections scheduled for 22 April 2009, the processing of the Bill had to be expedited, which afforded the NCOP limited time for the processing of the Bill.
The Division of Revenue Bill is the embodiment of co-operative governance, which is at the heart of our democracy and Constitution. It's an outcome of extensive consultative processes among technocrats and between the political leadership of the three spheres of government.
The division of resources among the three spheres of government is one of the most critical steps in the Budget process as it provides the basis for the preparation of the national, 9 provincial and 283 municipal budgets for the coming financial year.
The Bill gives effect to section 214(1) of the Constitution and the Intergovernmental Fiscal Relations Act of 1997, which require an annual Act of Parliament to provide for the equitable division of revenue anticipated to be raised among the three spheres of government.
There is no doubt that this Division of Revenue Bill is presented to you when the world economy is in turmoil and each and every country in the world is finding ways of protecting itself from the adverse effects of the sharply slowing economic conditions.
A large part of the strategy is to explore ways of ensuring that we do more with the little that we have, that we employ our resources more smartly and more efficiently and that we minimise and, at most, eradicate wastage.
The period ahead will require of us, as a collective, that we improve our oversight over the scarce resources to ensure that the quality of services is improved and that the poor are not left behind during these difficult times.
The Bill before us covers in detail all transfers to be made to provinces and municipalities over the next three years. The explanatory attachments also contain detailed information on the formulas for the provincial and local equitable share allocations, and a detailed framework on each conditional grant to a province or municipality.
The publication of this information will enable every province and municipality, and every national and provincial department, to prepare their multiyear budgets in terms of the Public Finance Management Act.
The good strides made by South Africa in ensuring a transparent budget process have been recognised internationally. South Africa is ranked second in the world on the Open Budget Index, which measures the transparency and quality of budget information. This is indeed a remarkable achievement.
Allow me to caution that the certainty of flows alone is not sufficient to ensure that services are delivered to our people. This House has an exceedingly important role to be even more vigorous in its oversight role to ensure that these fiscal flows result in services being delivered to our people.
This House has been vigilant in the past in ensuring that funds are spent and that these funds are spent on the programmes that seek to ensure that the poor receive quality services. We expect that this good work will continue to ensure that value for money is indeed attained during these leaner fiscal times.
More effective and efficient spending by every province and municipality will make sure, for instance, that no children learn under trees; that clean and cholera-free potable water is delivered to our people; and that access to housing and public transport for our people is fast-tracked.
This Bill, with the wealth of information it contains, such as the outputs set out in the frameworks for conditional grants, is but one of the tools we put before this House for it to exercise oversight over national departments, including National Treasury, provinces and municipalities. Let me now turn to some of the highlights of the deliberations in the select committee on the Bill that this House is about to adopt today, as I believe it will.
I am aware that some of the discussions were quite vibrant. Some of the issues that were raised by those who made representations to the committee pointed to some pertinent matters about our budgeting, financial management and performance monitoring system.
Firstly, and perhaps most importantly, the deliberations highlighted the importance of the NCOP in exercising its oversight role.
Secondly, the discussions highlighted matters of capacity and the quality of spending. I am told that members of the select committee raised concerns that insufficient investment in libraries, community and sports facilities should be addressed as these types of interventions are essential tools in creating an environment that supports the development of our youth. At the same time, attention needs to be given to putting in place appropriate scholar transport systems that are supportive of urban and rural scholar transport needs.
Thirdly, employment-generation programmes will have to be supported in the present economic climate the country finds itself in, hence phase two of EPWP, the Extended Public Works Programme. I am informed that there was rigorous debate on this matter. The concerns raised by the committee have been noted and the allocations will be adjusted in future to ensure that the programme is also institutionalised in rural municipalities.
Lastly, the importance of ensuring that more poorly resourced municipalities are appropriately funded was stressed throughout the hearings. As part of the ongoing review of the local government fiscal framework, the focus will be on strengthening the revenue base of metropolitan and other larger urban municipalities and increasingly targeting transfers to more poorly resourced municipalities.
A number of reforms have already been introduced to fund poorly resourced municipalities more appropriately, such as introducing a minimum of R500 million for the Municipal Infrastructure Grant allocation and making appropriate adjustments to the revenue-raising component of the local government equitable share formula.
Again, additional resources alone will not address the challenges faced by these smaller and rural municipalities. Steps will have to be taken to ensure that these additional flows to these smaller and rural municipalities result in tangible service delivery improvements and are not used to pay salaries and consultants' fees only.
The division of revenue, as set out in this year's Bill, gives effect to the priorities articulated by President Kgalema Motlanthe in his state of the nation address on 6 February, which were further elaborated on in the speeches of the Premiers in our nine provinces. The budget framework allows us to provide R161 billion in additional spending over the next three years, in comparison with our spending plans from a year earlier. Over the period ahead, government's spending plans are focused on enhancing the quality of education; improving the provision of health care, particularly for the poor; reducing infant, child and maternal mortality rates; reducing the level of crime and enhancing citizen safety; expanding the built environment to improve public transportation and to meet universal access targets in housing, water, electricity and sanitation; and decreasing rural poverty by taking steps to raise rural incomes, and improving livelihoods by extending access to land and support for emerging farmers. The resources provided for in this Bill will enable each sphere of government to step up the programmes targeted in these priorities.
Of the R161 billion additional resources, national departments will share R101,5 billion - including the R50 billion for Eskom - provinces R47,8 billion and municipalities R11,3 billion over the Medium-Term Expenditure Framework. Further details on the specific programmes and projects to be implemented in each province and municipality over the Medium-Term Expenditure Framework can be found in their 2009 budget statements.
Schedule 1 of the Bill provides a summary of the allocation of funds to the three spheres of government. Of the R738,6 billion Budget in 2009-10, the national department functions amount to R483,7 billion. This includes debt service costs amounting to R55,3 billion and a contingency reserve of R6 billion. Provinces receive R231,1 billion and R23,8 billion is allocated to local government.
Schedules 2 and 3 allocate equitable shares to provinces and municipalities. Schedules 4 through to 6 allocate conditional and other grants to provinces and local government. Schedule 7 allocates in-kind transfers to municipalities. Schedule 8 allocates incentives for provinces and municipalities to meet targets with regard to priority government programmes. The 2009 MTEF allocations to provinces provide for the further strengthening of social services programmes that have a high impact on human development, the quality of life and social transformation.
A substantial share of the additional resources is expected to go to education to ensure that services and quality are improved. The 2009 Budget extends the no-fee-schools policy from the poorest 40% to the poorest 60%; reduces the teacher-learner ratio in the poorest 20% of schools; caters for facilities for learners with disabilities; and extends the coverage of the national school nutrition programme. Provision is also made in the infrastructure grant for provinces to increase classroom space for Grade R learners and to upgrade school infrastructure, secure facilities and install libraries and laboratories. These investments constitute a considerable effort to improve the quality of schooling in our country.
Provincial budgets will reinforce the strengthening of the health sector so that South Africans who do not have medical insurance can also enjoy good quality health. Allocations are set aside to expand the range of vaccines provided to children in order to reduce maternal and child mortality and to combat HIV and Aids, and Extreme and Multidrug Resistant Tuberculosis. The hospital revitalisation programme is also prioritised in the period ahead. In addition, provinces are expected to step up their own hospital maintenance budgets.
Our housing budget receives a further R3,7 billion, taking the total allocation over the next three years to R44,7 billion. In 2003-04, we spent R4,6 billion on housing. By 2011-12, the end of our present budgeting period, the budget rises to R17,2 billion. Allocations for water, sanitation, electrification and municipal roads all rise in a complementary fashion. It is thus very important that this House continues to ask questions concerning the returns for this sizeable investment.
Access to public transport has a major impact on the economy and on people's lives, particularly the poor that are mainly reliant on public transport to get to work and education facilities. The need for an effective public transport system is therefore critical to creating a better life for all. Transport-related adjustments include the creation of a new conditional grant, the public transport operations grant, of R11,5 billion over the period for bus subsidies.