Division of Revenue Bill: final mandates

Meeting Summary

The Committee heard a legal opinion from a Parliamentary Senior Legal Adviser regarding the concerns and proposal raised by National Treasury at its 17 April meeting for the 2013 Division of Revenue Bill. Treasury’s concern was that the conditions stipulated in the conditional grants only come into effect once the Division of Revenue Act had been enacted. There was a risk if the money was transferred as the conditions stipulated in the framework would not be applicable as long as the Act was not enacted. If the Division of Revenue Act had not been approved or commenced on 01 April, Treasury was able to transfer 45% or less of the annual budget as a direct charge against the national revenue fund. Last year’s Act covered all the transfers, but did not cover any new conditional grants or substantially reconfigured grants. Treasury had picked up the problem and was aware that it created challenges. The release of the money was not an issue. The issue not dealt with by the Act was the conditions. Treasury wanted to alert the Committee to these challenges and make proposals for legal changes to the conditional grant framework for the 2013 Division of Revenue Bill, by adding conditions and changing deadlines on provincial conditional grants to around the middle of May when the Act became operational.

The Parliamentary Senior Legal Adviser said that changing the conditions on conditional grants was an administrative function and this should not delay the passing of the current Bill. The Act was abstract and did not state clearly if the 45% provision could be spent on reconfigured grants. It was important to interpret all legislation, including the new Division of Revenue Bill in the context of the Constitution. This required that government achieve a progressive realisation of socio-economic rights, and it should never take a step backward in their delivery. This was more so when the conditional grant related to service delivery. The Committee needed to look at how it could empower the Minister to put conditions on transfers before the Division of Revenue Bill became an Act. However things stood, there was nothing that should stop the Committee from passing the Bill.

All provinces, except Free State which was to decide on the Bill the following day, mandated delegations to the National Council of Provinces to vote in favour of the 2012 Division of Revenue Bill. It then adopted its amended Committee Report on the Division of Revenue Bill public hearings.