Turning to local government, I've spoken about provinces; over the next three years municipalities will receive R181,7 billion, including in-kind allocations or an additional R11,3 billion. This includes R22,9 billion for the sharing of the general fuel levy with metropolitan municipalities, which will be introduced from the 2009 Budget as the primary replacement for the former regional services council levies. The local government equitable share receives a further R2,5 billion for the delivery of free basic services to all poor households.
Municipal infrastructure-related spending is allocated an additional R8 billion over the next three years. This results in total infrastructure transfers to municipalities of just over R58,3 billion over the next three years, which increases to R67,5 billion, if infrastructure that is provided on behalf of municipalities, that is in-kind transfers, is also included. These adjustments are intended to enhance access to water, sanitation, electricity and roads; to extend regional bulk infrastructure to support such services to the poor; to promote municipal initiatives that will support more efficient use of energy; and to support host cities in their preparations for the Fifa Confederations Cup in 2009 and the 2010 Fifa World Cup. We need to ensure that the intergovernmental grants at our disposal are designed in such a manner that they support optimal outcomes. It has become evident that there is a need to reform the Municipal Infrastructure Grant to respond appropriately to the different demographic, economic, infrastructural and institutional challenges faced by the 283 municipalities in our country. From the 2009 Budget, the Municipal Infrastructure Grant to cities will enable cities to manage more effectively, and to support and account for built environmental outcomes by rather focusing on their entire infrastructure programme performance than solely on project outputs. Although smaller, more rural municipalities will continue to account for project outputs, attention will also be given to introducing innovations that will address the capacity and resource deficiencies faced by these municipalities so as to improve expenditure outcomes.
Finally, allocations for capacity-building total R1,7 billion over the 2009 MTEF period. This is further complemented by the Siyenza Manje programme, via the Development Bank of SA, to develop skills in engineering, planning and financial management within municipalities. In the period ahead, government will take steps to co-ordinate these capacity-building initiatives to avoid duplication and contradictions. These allocations are aimed at supporting local programmes that will provide for sector investment in underserviced communities. Together with increases in housing allocations, this should provide a major boost to local economic development.
In conclusion, provinces and municipalities continue to play an important role in accelerating growth and job creation, broadening economic participation and reducing poverty. Taking into account the current economic downturn, it will be exceedingly important in the period ahead to take stronger action in pursuit of efficiency and better targeted expenditure. Expenditure priorities of provinces and municipalities therefore need to focus on more efficient and effective service delivery, protecting the poor and creating employment.
Chairperson and hon members, once again, thank you very much. And together, we can do more. [Applause.]