Chairperson, Minister, colleagues and hon members of this august House, I must mention that we feel honoured to have the opportunity to participate in this important discussion.
From the outset, we want to agree with the sentiments expressed by the chairperson of the committee when he said that the President's stewardship of our country, including the stewardship demonstrated by the Minister of Finance, is clear for everyone to see and is indeed commendable. Their stewardship is carried out against a background of uncertainty across the world, and we are indeed honoured to see that there is a brighter future for us, certainly in terms of their command of the issues at hand.
As part of contributing to this discussion we would like to make the following observations. From our point of view, one of our tasks is to extend the reach of our democratic government. As a developmental state - as we have come to be defined - we face new challenges. Whenever we make advances, new challenges emerge.
As part of the review of our equitable share distribution, we welcome the review that has been introduced to the provincial equitable share formula. We would specifically like to make the following observations.
We welcome the review of the health component, and we especially appreciate the changes that have been made to the education component. Going forward, however, we would like some of these aspects to receive attention and be addressed on a continuous basis. We are sure that, working with the Minister, this can be achieved.
I would like to give an example. Because data sets change from time to time, there will be impacts on the equitable share. When some of the cost structures remain in place, the changes as we go forward impact on available resources, while their cost to the provision of such services remains unchanged. We think this is a matter that should be addressed and, given the capable leadership of the Minister and his team, it is very possible to address this.
Again we would like to note specifically that one of the major tasks of our government is the elimination of poverty. Indeed, as things stand, poverty is spread disproportionately across the country. In the rural areas particularly, this creates a much stronger need for resources because, unlike with poverty in the urban centres, it is not possible in far-flung areas to benefit from economies of scale as would happen when the same problems are addressed in urban centres. Again, this is a clear legacy issue, bequeathed to us by that notorious system we had before the democratic government came into being.
We specifically want to express our appreciation for the contribution and commitment towards infrastructure development, because poverty in rural settings can only be effectively dealt with by ensuring the roll-out of infrastructure. The commitment over this Medium-Term Expenditure Framework period to the infrastructure roll-out is indeed commendable and appreciated because only through the provision of such infrastructure are we effectively able to reduce the dependence of the majority of the people on social grants and other related grants from the state. The President has actually warned all of us to try to reduce this dependence.
It is indeed heartening to see the particular commitment made in this Budget for this period to areas that deal with the backlogs that we have experienced as a province, particularly those that relate to education infrastructure. Over this period of time a significant injection is made to enable us to deal with such backlogs. It is a commitment that we appreciate.
To conclude, we wish to identify with the recommendations made by the committee and will be working with National Treasury and the Minister to ensure that we deepen the advances that have been made. We will work tirelessly to remove from our systems some of the impediments to the smooth delivery of services to our people. Thank you, Chair.
Mrs C M CRONJ (KwaZulu-Natal): Chairperson, as KwaZulu-Natal we fully support Minister Gordhan's fiscal and budgetary guidelines of a countercyclical fiscal stance, long-term debt sustainability and intergenerational equity. We tabled the KwaZulu-Natal budget yesterday and it was indeed a good news budget. Fortunately for us we are now cash- positive and we have been cash-positive since May 2010. This has had a very positive impact on the finances of our province.
The savings that we made, through our crosscutting measures, have been paying for our provincial priorities. For instance, the austerity measures that we took assisted us to finance and maintain our roads better, of course supplemented by a healthy injection from the national fiscus. The so- called pothole money that we are distributing to our department of transport will certainly go a long way in maintaining our provincial road network.
Also, one of the things that we have been able to do with this budget - thanks to the added allocations from the national fiscus - is implement the expanded extension officer programme in the food security programme. This means that the department of agriculture will recruit a large number of agriculture graduates as extension officers. We think this will have a very positive impact on food security in our province.
Further savings from our austerity measures will be re-allocated to service delivery projects in various departments and they will be used mainly for job creation purposes. There is no point in stopping wastage, which we have done on a very big scale in the province, but then not allocating the savings to job creation and service delivery programmes, so that is what we have been doing.
It is a known fact that there were adjustments to the equitable shares of provinces. Now, KwaZulu-Natal did not benefit from those adjustments. In fact, our equitable share was reduced by R316 million in 2011-12, R471 million in 2012-13, and R302 million in 2013-14, due to various technical adjustments.
Now, let me say up front to the hon the Minister that we think that those cuts were fair. We were not happy about them - I want to be clear about that! It's always nice to get more money, but when we looked at the cuts and analysed them, the ball really was in our court and we could only conclude that those adjustments were fair and justified in the circumstances.
How, then, did we manage to fund those reductions in our equitable share? The first source of funding is the surplus, which the province has been budgeting for. When we were in deep trouble as a province, we took a decision to budget for a surplus. And now we are out of trouble. We are not paying any interest any more on an overdraft because it does not exist. That surplus is now being used, to a very large extent, to make good on that cut in our equitable share.
We are now also able to use the money that we are saving because we are no longer paying for an overdraft to further supplement the cuts and also to embark on additional programmes. So, Minister, not only are we able to make good on the drop in our equitable share, but we actually have some money to spend on service delivery programmes. We did take a tiny, miniscule proportion away from each department to help with the funding of those cuts, but all in all, as I say, it has actually gone very well.
We are pleased that in the budget we were given additional ring-fenced funding, specifically to pay for the carry-through costs of the 2010 wage agreement. We are getting R1,1 billion for 2011-12, and this is set to increase in the future to R1,263 billion. That is real money. We are also pleased about the occupation-specific dispensation offer for educators of some R348 million in this financial year, increasing to R438 million in 2013-14. This makes a real difference.
Part of our financial work in previous years was directly attributable to underfunding of the occupation-specific dispensation, OSD, and wage increases. So, Minister, we really believe that you listened to our cries that we couldn't keep absorbing these underfunded mandates when it came to salaries from within our own budgets. This year you actually demonstrated to us that you did listen to our pleas and we got the additional funding.
We also got significant amounts of money for certain health priorities, including the OSDs for doctors, therapists, maternal and child health, and the ARV 350 threshold, among others. In the current financial year, we have R373 million. In 2013-14 the amount for these health priorities actually increases to close to a billion rand. We think this truly is very necessary.
For the first time KwaZulu-Natal has received the full payment for OSD and this is making a dramatic difference to the state of our finances. We are also very pleased that the Budget provided for the shortfall in the devolution of the property rate funds to our province. This is making a significant difference to the old issue of government debt to the municipalities. This is very interesting and, Minister, we have been working on this since May last year.
At that time we called on all municipalities to submit what they believed government owed them. They submitted to us invoices to the amount of R1,2 billion. This is now down to R37 million, not because we have paid all of it but because R424 million was actually a national department debt to municipalities. And may I say that we were very generous to the national Department of Public Works because we paid some of their debt.
Some of the invoices that were submitted to us were actually bills for properties owed by the municipalities, but they are on their books as government debt to municipalities. I can say a lot about this because we really researched this intensely, but the good news is that from the initial R1,2 billion we are down to R37 million in the province. And most of that is in dispute because some of that is interest of interest on interest.
We are dealing with all these matters because we have committed ourselves to wiping out that government debt to municipalities. We may ask for your assistance, Minister, in helping us with the national departments who are not paying their debt. I have no doubt that a lot of those debts will be in dispute, as is the case in the province. Still, some of them will be legitimate debts and I think we must do the right thing and pay all outstanding debt to municipalities.
I have one more plea, Minister: When the conditional grants are phased back into the equitable share, please do not reduce the amounts. We had this very unhappy experience in the previous financial year, when the FET college money that we had budgeted for FET colleges was taken out of the equitable share and given back to us in the form of a conditional grant, and we got less than we gave. The same is now happening with this forensic pathology service grant. We are getting less than we are giving. Can you please look into that, hon Minister? Thank you very much. [Applause.]