Report
of the Select Committee on Appropriations on the 2009 Medium Term Budget Policy
Statement, dated 13 November 2009
1.
Introduction and
Background
The Minister of Finance,
Honourable Pravin Gordhan,
tabled the Medium Term Budget Policy Statement (MTBPS) on 27 October 2009,
outlining the budget priorities of government for the medium term. The MTBPS
was tabled together with the Adjustments Appropriation Bill [B13 - 2009]. The
Adjustments Appropriation Bill was referred to the Select Committee on
Appropriations for consideration and report while the MTBPS was referred to the
Select Committee on Finance and the Select Committee on Appropriations to
consider, in accordance with their respective mandates as outlined in the Money
Bills Amendment Procedure and Related Matters Act No 9 of 2009. Among its
responsibilities in respect of the MTBPS, the Select Committee on
Appropriations (the Committee) is required to consider and report on the
following issues:
The
Committee, in collaboration with the Standing Committee on Appropriations,
invited the national departments of Basic Education, Health, Rural Development
and Land Reform, Public Works, Water and Environmental Affairs as well as
Cooperative Governance and Traditional Affairs as they were considered
strategic partners in the implementation of policy priorities. These
departments were required to account for their budget plans. Furthermore, the
Human Sciences Research Council, the Financial and Fiscal Commission,
independent economists and the Peoples Budget Coalition were invited to comment
on the 2009 MTBPS. All the invited organisations and individuals made their
submissions with the exception of the People’s Budget Coalition.
The
Committee acknowledges that the MTBPS is tabled during a time when world
economies, including
2.
Budget priorities for the
medium-term
The
budget priorities over the medium-term support policy priorities of government.
In line with the second 2009 State of the Nation Address (SONA), government
prioritises its resources in the following five areas:
These
priorities are supported by a government strategy which includes the shifting
of resources to labour intensive sectors of the economy. Furthermore,
government will strive to improve State performance with specific regard to the
delivery of services to the poor. In the light of the current budget pressures,
the Committee is of the view that limited resources should be utilised to produce
maximum output, without compromising the quality of services. The fiscal framework makes an addition of R78
billion to the baseline budget. A substantial share of this budget is allocated
to provinces for health and education. This increase in provincial baselines is
intended to finance health and education for salary increases as well as the
Occupational Specific Dispensation (OSD). Other resources are allocated for
antiretroviral treatment, workbooks for early phases of schooling and housing
programmes. Infrastructure programmes including the Municipal Infrastructure
Grant (MIG) received an additional allocation. The additional budget to
national departments will finance the child support grant, rural development,
the criminal justice sector as well as industrial development and job creation.
The consolidated expenditure of government is expected to be R841.4 billion,
and R1 052.8 billion in 2009.10 and 2012/13 financial years, respectively.
3.
Overview of the Budget
Adjustments
The
downturn in the global economy and various domestic constraints have affected
millions of South Africans where the economy has contracted by 2 per cent in
the first quarter of 2009 which was eventually estimated to 1.9 per cent for
2009. However, an estimate of 1.5 per cent economic growth in 2010 has been
projected in the domestic economy as a result of an increase in government
spending on transport projects and soccer stadiums for the 2010 Federation of
International Football Association (FIFA) World Cup. Domestic economy is driven
by a strong investment growth and continuous investment in the economic
infrastructure to provide an important support to economic recovery, reduce
infrastructure backlogs and attract more private investors. The International
Monetary Fund (IMF) expects the rest of the world to grow by approximately 3.1
per cent in 2010. The additional R14
billion that has been proposed in the Adjustments Appropriation Bill is
welcomed. This addition includes R5 billion on the higher interest costs and R9
billion in higher non interest spending. It is noted that, initially, the
overall budget was R738.5 billion and this has been adjusted to R752.5 billion
during the adjustment period. While the departments have only managed to spend
R368 billion in the first six months of the 2009/10 fiscal year, the MTBPS
allocates an additional budget of R14 billion.
The
Committee supports the proposed increased lending capabilities of the
Development Bank of Southern Africa (DBSA) by about R102 billion over the next
five years to focus and contribute to development. The Committee also supports
an additional funding of R1 billion a year in the provincial equitable share
for spending in frontline services particularly in education and health in
order to accommodate higher salaries for teachers and doctors and to strengthen
good governance and oversight in provinces and municipalities.
Public
infrastructure is allocated R872 billion over the medium term to invest in
school buildings, public transport, water and sanitation. The Committee
welcomes this allocation, as infrastructure development is needed to boost the
recovery of the economy. Careful planning and monitoring of infrastructure
projects is essential to limit the risk of costs escalation.
An amount
of R1.5 billion, which emanated from the rollovers arising from commitments
related to unspent funds in the 2008/09 budget, has been noted. Among other
things, the non-payment and non-completion of projects within specific
timeframes result in unspent funds. This state of affairs remains a cause for
concern according to the Committee as most of these projects are regarded as
essential projects which are associated with job creation as well as with the
2010 FIFA World Cup. This is indicative of poor planning and non compliance
with certain supply chain management and finance legislative frameworks.
The
Committee welcomes the additional funding of R12 billion in order to the
increase in the public service’s compensation of employees particularly with
regard to the Occupational Specific Dispensation (OSD) agreements; it is hoped
that this will assist in retaining scarce skills in the public sector such as
those of doctors, civil engineers, architects etc.
The
Committee supports the additional allocation of R509 million to compensate
municipalities for the escalating costs of providing free basic services such
as water and electricity to citizens that qualify for free basic services under
the indigent policy of municipalities. This will assist in reducing pressure
imposed by the costs of free basic services to municipal budgets which must be
provided to indigent households in order to keep up with the Bill of Rights as
stipulated in chapter 2 of the Constitution of the
The 2009
MTBPS proposes a culture of savings rather than under-spending. It was
indicated that there is a need for the government to identify areas of savings
through rearrangement of government priorities and reduction of spending in
non-core functions. This can be achieved through reduction in irregularities,
corruption and fraud as well as reduction of fruitless and wasteful
expenditure, and creating a culture of doing more with less.
4.
Budget Estimates for the
2009/10 Mid-Year
National
departments were allocated R399.6 billion in the 2009/10 financial year,
excluding the direct charge. The Adjustments Appropriation Bill proposes an
additional spending of R9.2 billion for national departments in the 2009/10
financial year. Of these funds, R1.9 billion was rolled over from the previous
year’s budget. It was indicated to the Committee during public hearings that
rollover funds have already been committed by the departments. Among the
Committee’s concerns was a lack of spending of infrastructure budgets by
various departments. This pattern was evident in respect of the MIG projects,
which required a rollover of R287.8 million.
The
budget adjustments propose a shift of R2.3 million from the Department of
Cooperative Governance and Traditional Affairs (CoGTA)
to the Department of Rural Development and Land Reform. This shift was
necessitated by the transfer of the rural development programme from CoGTA to the Department of Rural Development and Land
Reform, in line with the reconfigured government structure. The Department of
Cooperative Governance and Traditional Affairs (CoGTA)
indicated that the lack of spending in MIG was due to 33 municipalities that
could not spend their allocations. CoGTA indicated
its intention to withhold funds and request National Treasury to redirect them
to spending municipalities. It is
determined that of the 33 municipalities that did not appropriately spend on
the MIG, three were affected by the recent service delivery protests. These
were the
The
lack of spending on the MIG is a matter of serious concern, particularly in
light of recent service delivery protests in some of the under-spending
municipalities. The Committee notes that the shifting of funds from under-spending
to other municipalities would be problematic as it could create infrastructure
backlogs for the under-spending municipalities. This intervention might
therefore have undesired political outcomes. Needless to say, its
constitutionality and legality might be questionable.
The
Department of Public Works is allocated an additional amount of R524.9 million
for unforeseen and unavoidable expenditure. This includes funds for the offices
and residences of new Ministers and Deputy Ministers, the Devolution of
Property Rates Grant and salary increases. Some of these funds are for the
creation of new jobs through the Expanded Public Works Programmes (EPWP) to
meet the targets announced by the President, His Excellency Mr. Jacob Gedley’hlekisa Zuma, during the State
of the Nation address. The Department
rolled over R116.7 million for infrastructure projects from the previous
financial year. These include funds for Re Kgabisa Tshwane projects, upgrading of some buildings in
The
Committee understands the purpose of the Re Kgabisa Tshwane projects to be the refurbishment and provision of
office space for national departments. It also understands its operations to be
limited to the City of
The
Adjustments Appropriation Bill proposes a shift of functions from the
Department of Water Affairs and Forestry due to the reconfiguration of
government structure. This shift of functions resulted in R487.6 million
originally allocated to this Department being shifted to the Department of
Agriculture, Forestry and Fisheries. The shift of the sanitation function to
the Department of Human Settlements has not been fully implemented and no funds
have been shifted for this purpose. The Department rolled over R232.3 million
of the funds for capital projects from the previous financial year. These
include funds for the construction of the De Hoop Dam and the Regional Bulk
Infrastructure grant. The funds for the De Hoop Dam have been rolled over since
the 2007/08 financial year. The Department has indicated that delays in
finalising a memorandum of agreement with 23 mines contributed to the slow
spending in the 2008/09 financial year. Furthermore, continuous rainfalls
delayed the timeous completion of projects. The late
submission of invoices delayed spending on the Regional Bulk
Infrastructure.
The
Department of Rural Development and Land Reform indicated that it had requested
an additional budget of R4.4 billion for the 2009/10 budget adjustment to fund
rural development, new offices of the Ministry as well as the Restitution and
Deeds Trading Entity. Due to the bad economic conditions, the Department
revised its request downward to R1.7 billion. An additional budget of R292
million was allocated to rural development, R9 million to the Ministry and R31
million for general salary adjustments.
Of the R3.5 billion requested for the Restitution programme, only an
additional budget of R1.1 billion was granted. The Department indicated that it
might be difficult to meet the objectives of rural development due to budget
constraints. Shifting of funds will need to be made to finance the restitution
programme.
The
Committee is in agreement with the Department that the budget allocation to the
Restitution programme is not sufficient to support the development needs of the
country. The Restitution programme had already spent 91 per cent of its budget
by the end of the second quarter and the lack of sufficient funding in this
area compromises the rural development agenda of government. It is reported
that this challenge is worsened by the attitude of land owners who inflate land
prices when negotiating the land sale agreement with government and the cost of
land is selling at the price which is three times more than the market price
which makes the purchase of land expensive. This is worrying since land
is central to the implementation of the government’s comprehensive rural
strategy and if resources are not prioritised for land reform programmes, the
objectives of this strategy might not be achieved.
The Department of Education received a total Adjustment of R561.686 million. The Department rolled over
R8.6 million for operations, R3.5 million for HIV/Aids conditional grant (for
Limpopo province) and R9 million for new functions of the Council on Higher
Education (CHE). The Department also received an additional budget of R8
million for the new ministry of Higher Education. This will go towards
sustaining the ministerial offices and those of the Director-General. In
future, it is anticipated that more funds will be required for the running of
the new Department of Higher Education. A substantial amount of R524.1 million
was allocated for workbooks for literacy and numeracy
for grades 1 to 6 learners in quintiles 1 to 3 schools. An amount of R8.5
million was allocated for increase in improvement of conditions of service.
The Department indicated that R94.4 million was requested for
examination and assessment, and R291.7 million for the National School
Nutrition Programme was requested but funding was not
provided for these. The Department noted that the Occupational Specific
Dispensation for Educators was not
fully funded. The Committee expresses is concerned about the lack of
sufficient funding in the National School Nutrition Programme.
5.
Medium Term Spending
Priorities
The Minister of Finance indicated to a joint meeting
of the Finance and Appropriations committees that ambitions of government are
curtailed due to the financial pressures. He noted that borrowings will burden
some parts of future generations and that savings will be made in government
spending. The Minister called upon the business sector to commit and outline
its role in the government savings programme. He indicated that employment is
not as fast as expected and that it was necessary to improve training
programmes and basic education in
The
Financial and Fiscal Commission (FFC) noted that, the national proportion of
the Division of Revenue continues to decline over the Medium Term Expenditure
Framework (MTEF) from 50.1 per cent in 2009/10 financial year to 46.9 per cent
in the 2012/13 financial year. On the other hand the provincial and local
proportions are increasing over the MTEF (refer to table 1 below).
Table 1: Division of nationally collected
revenue
|
|
2009/10 revised |
20010/11 |
2011/12 |
2012/13 |
|
% share |
|
Medium-term estimates |
||
|
National
|
50.1 |
48.3 |
47 |
46.9 |
|
Provincial
|
42.6 |
43.6 |
44.4 |
44 |
|
Local |
7.3 |
8 |
8.7 |
9.1 |
Source: FFC presentation
The
Commission was particularly concerned about the unanticipated wage bill. It
suggested that there should be a deliberate attempt to synchronise the centralized bargaining process of the
public sector with the budget process to reduce undue burden to sub-nationals
by decisions over which they have no direct control. The high wage bill led to
immense pressure on provincial budgets. Of the R39 billion added to the provincial fiscus, R32.7 billion is transferred in the form of
equitable share while R7.1 billion is transferred in the form of conditional
grants over the MTEF. The Commission highlighted the need to identify which
conditional grants were impacted by the increase.
5.1 Expanding employment and safeguard social security
The MTBPS proposes a shifting of resources towards
labour intensive sectors and the creation of jobs in the delivery of public
services. While government expects all its prioritised programmes to contribute
to job creation, its main target for expanding employment is skills development
and training, infrastructure development and the expanded public works
programme. Government intends to create 4.5 million jobs over the next five
years. An amount of R114.5 million is provided for community works programme in
the budget adjustments in the current financial year. This programme is
expected to create 180 000 full time jobs by 2014. New incentives to encourage government
departments and municipalities to use their budgets for labour intensive
programmes in the infrastructure sector are proposed. These incentives will be
extended to the environmental, cultural and social sectors.
The
Human Sciences Research Council (HSRC) welcomed the government’s commitment to
generate sustainable employment. It noted however that it was not always easy to
make the connection between the need to create employment and the budget.
It was critical for the country not to compete purely on price but also to
explore product development, venture capital and market access. Continued
infrastructure spending is critical in creating jobs. The HSRC highlighted a
need to prioritise the youth over the next four years of the current
administration. It is reported that more than 50 per cent of the youth leaving
school are unemployed. About 65 per cent of black youth leaving school is
reported to be unemployed. To this end
the provincial grant aimed at sport and recreation was seen to be inadequate.
The HSRC noted that this grant could be critical
pre-labour market intervention in the context where youth was marginalised from most social organisations. In addition,
the HSRC recommended the introduction of a youth transitional jobs scheme. It
is of the view that commitment to further education and training is critical.
However, the budget set a target of 350 000 enrolments by 2014 which was a
third of the HSRC’s expectations.
The Department of Public Works (DPW) plays a leading
role in the job creation initiatives through the Expanded Public Works
Programme (EPWP) and other infrastructure projects. It has received an
additional budget of R9.7 billion over the Medium Term Expenditure Framework
(MTEF) period. This includes R3.5 billion
for EPWP and R4.4 billion for infrastructure budget. The Department has been
allocated additional allocation of R835.8 million in the 2010/11 financial year
to strengthen the EPWP incentive scheme. This scheme will be extended to such
sectors as the social sector, environmental sector and community work
programmes. Labour intensive methods are enforced through this scheme with
ongoing monitoring done to ensure that empowerment is attained. Of the
additional budget for infrastructure, R451.1 million is allocated for the
2010/11 financial year. This goes to Border Control Operational Coordinating
Committee (BCOCC). The DPW is the custodian of immovable assets at 54 land
ports of entry. This budget goes for infrastructural
development at the land ports of entry by 2010 and beyond. The implementation
of this programme is expected to be labour intensive and pro-Black Economic
Empowerment (BEE).
An additional budget also provides for R771.6
million in 2010/11 for the construction of a new Parliamentary precinct,
construction of parking bays and a multipurpose centre. This project is
expected to cost R2 billion and the feasibility study has been completed. The budget also provides for additional R16.2
million in 2010/11 financial year for accessibility to State-owned buildings
and R214.8 million to address the problem of old and inefficient water works
systems in State-owned buildings. The DPW indicated its challenges in
attracting strategic and technical skills, and the budgetary constraints make
it more difficult to retain skills and create the necessary capacity needed to
maintain and manage immovable property.
The DPW indicated that it is still
enhancing the asset register and the valuation of State-owned buildings will
not be done in the 2009/10 financial year. It also indicated that the chief
directorate was established within the Department to focus on the asset
register. However, the Committee is concerned about the slow progress in the
development of the asset register. The department continuously receives
qualified audit outcomes as a result of the outstanding asset register. The
Committee calls upon the department to capacitate itself in this respect in
view of the fact that it is responsible for all other departments’ asset
registers.
The Department of Water and Environmental Affairs
plays a crucial role in the job creation initiatives of government. For the
period ahead the Department plans to contribute in job creation, particularly
in rural areas, through its construction programmes. It intends to fill vacant
positions in its regional offices and to be less dependant
on consultants. The Department values the role of the Small Medium and Macro
Enterprises (SMMEs) in creating jobs and stimulating
economic growth, and as such will appoint SMMEs for
its work. The Department contributes to the EPWP through the Working for Fire
and Working for Water programmes. The Working for Fire programme is allocated
R184.4 million in 2010/11 which increases to R254.6 million in 2012/13. The
Working for Water programme is allocated R579.9 million in 2010/11, which
increases to R855.5 million in 2012/13. For its capital expenditure, the
Department proposed an additional budget of R4.8 billion, R10.9 billion and
R8.1 billion in 2010/11, 2011/12 and 2012/13 financial years, respectively. The
proposed additional budget was scaled down to R2.4 billion, R4.1 billion and
R8.4 billion in 2010/11, 2011/12 and 2012/13 financial years, respectively. The
Department indicated that no allocation was made for other projects after the scaling
down. These include Mooi–Mngeni
Transfer Scheme, Komati Water Augmentation Project
and Mokolo and Crocodile River Water Augmentation
Project. The Department indicated that the National Treasury was of a view that
these projects can be funded off-budget through the Trans-Caledon
Tunnel Authority (TCTA). Part of the mandate of the TCTA is to fundraise for
bulk water infrastructure through loans from the commercial water users that
benefit from these projects.
The Committee views rural development as one of the
urgent priorities of government, and notes that some of the water scheme
projects that are not funded are in rural areas. Their funding from the fiscus would support government’s commitment to develop
rural areas, since farming activities are expected to be at the centre of rural
development. These farming activities would create self employment and create
more job opportunities that are much needed by rural youth. It is the Committee’s
view that funds should have been directed to these programmes in support of
government priorities and to ensure participation of rural communities in the
country’s economic activities. Furthermore, in interacting with the
Department, it became evident that additional funding for the refurbishment of
water infrastructure might not adequately cover the maintenance needs of
infrastructure. The lack of sufficient funding in this area
introduces new risks of collapse in infrastructure. If funds are not made
available for the maintenance of water infrastructure this might lead to
challenges similar to those experienced during the electricity crisis.
The Department of Cooperative Governance and
Traditional Affairs recognises that the role of municipalities is important in
job creation through programmes aimed at building infrastructure. Its role in
this regard is to provide support to municipalities to ensure prudent
management of funds earmarked for infrastructure development and to ensure that
they achieve the desired objectives. It undertook to increase its monitoring activities
to ensure value for money.
5.2 Improving the Quality of Education and Skills Development
Over the next three years, government intends to
improve literacy and numeracy by providing workbooks
to children in poorly-resourced schools. The target of learners who will
benefit from workbooks will increase from 3.5 million in 2010/11 financial year
to 5.5 million in 2011/12 financial year. Improving access and quality of
education will be prioritised and additional funds are allocated to building of
schools and teacher training. Furthermore, a new conditional grant will be
introduced to provide additional resources for the improvement of the education
system. Government intends to increase the coverage of the national schools
nutrition programme to reach more learners and to improve the quality of meals.
A
study conducted by the HSRC showed that there are structures aimed at improving
governance in schools, but these structures are not being fully utilised.
Further, the criterion used for promoting teachers was not known among
teachers. Government needs to be more transparent in this respect. According to
the HSRC, there is a need for universal access to the Early Childhood
Development (ECD) programme and the number of 0-4 year old children in the ECD
should doubled by 2014. This will reduce the number of grade 1 learners who
start school without adequate foundation and preparation at ECD level.
The Committee supports the prioritisation of
resources to improve the quality of education and the development of skills.
The education system is an important factor in producing skills that are much
needed by the economy. Many government departments have always under-spent over
the years in personnel budget as a result of lack of skills, particularly in
the engineering sector. The Department of Public Works indicated during the
public hearings that, technical skills remain a challenge that impedes the
execution of its projects. The national education system coupled with other skills
development institutions play a crucial role in providing social cohesion and
skilled human resources in the developmental state. The requirements of the
economy always play a central part in determining the output of the education
and training systems. In order for government to deliver appropriate skills to
the workplace, strong controls over the institutions responsible for education
and training and investment of resources to education are important.
During
the public hearings, the Department of Education was requested to attend to
the concerns raised about the moral of teachers at schools with a view to
address the causes thereof. Notwithstanding the fact that the Further Education and Training
colleges now resided with the newly established Department of Higher Education,
the Department was requested to ensure that service delivery is not compromised
in the process of restructuring the Education Department and the transfer of
functions in this regard.
The
Department was also requested to ensure the improvement of the quality of education,
the provision of adequate Learner Teacher Support Material (LTSM) and adequate
provision of the National School Nutrition Programme
to all the relevant beneficiaries as well as to ensure that the workbooks
distributed by the Department reached all the targeted learners.
5.3 Enhancing the Quality of Heath
Care
It
was reported that the Department of Health has developed a 10-point plan to
improve the quality of health services. This plan includes overhauling the
management and operation of public hospitals, improving human resource
planning, enhancing staffing levels and ensuring efficient procurement of
medicine and medical drugs. These are seen as initiatives that lay foundation
for a national health insurance system. In order to stabilize the health
sector and to ensure the implementation of the ten-point plan a resolution was
taken to:
The
fight against HIV and Aids is a key priority for the Department of Health and
the target for new entrants to the treatment intake is expected to be more than
300 000 a year and more than 900 000 people are expected to receive
antiretroviral treatment by 2011/12 financial year. Additional funds were made
available over the medium-term period for expansion of the treatment programme
to accommodate a higher number of people on antiretroviral treatment. On
the target of 900 000 people who are expected to receive treatment by 2011/12,
the HSRC argued that this target would be reached earlier. This conclusion was
based on a study it conducted which showed that 800 000 people with HIV/AIDS
are already on ARV treatment.
The HSRC noted that, according to a study conducted by
the
The
Department of Health received a total increase of R1.4 billion. Of the
R1.4 billion, an amount of R231.1 million is for roll over funds for the
2008/09 financial year resulting in an increase of 17 per cent. An amount of
R160 million is earmarked for the H1N1 Influenza pandemic. A further R900
million has been allocated for the comprehensive HIV/AIDS care, R20 million for
countrywide measles and polio immunization campaign and R30 million for the
2010 World Cup Health Preparation Strategy Grant. While it seems as if no
allocation was made in the 2009 MTBPS for the National Health Insurance (NHI),
the Department indicated that the ten-point plan relates to the NHI. The funds
for various programmes within the ten-point plan are
funds for the NHI. The details of the NHI would be made available once the
Minister of Health has gone through the relevant processes at the Cabinet
level.
New
salary scales for doctors, dentists, pharmacists and emergency medical
personnel will be phased in over the two years. An amount of R400 million
was requested for the OSD of doctors for the respective financial years over
the MTEF. The different categories of health professionals were being dealt
with in phases. It was reported that the doctors and pharmacists have been
catered for and a review of their OSD would be reviewed in 2010.
5.4 Rolling out a Comprehensive
Rural Development Strategy
The
comprehensive rural development programme aims to raise rural income, increase
food production, improve the viability of small farms and draw on the economic
potential of rural areas. A two-year pilot project was launched in
The HSRC is of the view that rural areas have been
neglected for many years. Poor conditions in respect of water and land are among
the challenges experienced in these areas. About 40 per cent of the South
African population lives in rural areas and less than 10 per cent are
economically active, mostly in agricultural activities. This was noted as a
sign of lack of support and channelling of resources. Growing spending on rural
development from R6 billion to R8 billion by 2012/13 financial year was noted
to be a large increase but still very small relative to the challenge and
levels of neglect in rural areas.
While the HSRC appreciates the dramatic effect of
social grants in reducing poverty and hunger, it noted that approximately 50
per cent of households still experienced hunger and under-nutrition.
Furthermore, 50 to 80 per cent of households could not afford minimum nutrition
at current prices. Rural households spend 9 to 15 per cent more than urban
households for the same basic food basket. According to the HSRC 51 per cent of
all severely hungry households qualified for grants but did not receive them.
To this end, the HSRC recommended that a policy should be formulated to guide
the urgent rolling out of grants in a more comprehensive way while expanding
the household food production in the form of food gardening. It added that
budgets aimed at improving food security should be ring-fenced and monitored
stating that it is expensive to be poor, but more expensive to be hungry.
The
HSRC was of a view that, the budget as outlined in the 2009 MTBPS is
constraining given the amount of work that the department had to embark upon. Out of the 18 Land Redistribution for Agricultural Development
(LRAD) projects that had been initiated by the former Department of Land
Affairs, only two of them are still in place. Others have collapsed and
the land was sold back to its original white owners. The HSRC noted that, for
the Department of Rural Development to successfully carry out its mandate, more
funding and human resources are required.
The
programmatic budget structure of the Department of Rural Development and Land
Reform has been condensed from 7 to 5 programmes to reflect the new rural
development mandate. The Department requested an additional budget of R18.3
billion over the medium term. Rural Development and Restitution programmes
together requested R16.5 billion (90 per cent) of the Departments total
request. There is no baseline budget over the medium term for the rural
development programme and the department indicated that the indicative baseline
for the Restitution over the MTEF (R2.2 billion) is less than the 2007/08
level. The Department of Water Affairs (DWA) indicated that it will support
rural development through investing in water resource infrastructure in rural
areas to make water available for economic growth and development. Furthermore,
the Department of Water Affairs intends giving employment preferences to the
people from rural areas where DWA project exists.
The
Committee is of the view that one of the key priorities of government is rural
development, which the country cannot afford to postpone any longer. Rural communities
have been marginalised and neglected over the years
through the uneven distribution of resources between rural and urban areas.
This has resulted in a lack of economic activities in rural areas, thus forcing
people to migrate from rural areas to urban areas in search of employment and
better living conditions. A serious burden is put on government’s social
programmes, like housing, water, and electricity as a result of this
phenomenon. The Committee notes the underdevelopment of rural areas in
Another
concern of the Committee is a lack of sufficient funding in the Restitution
programme. The lack of sufficient funding in this area compromises the rural
development agenda of government. In some cases, this problem is worsened by
the attitude of land owners who inflate their land prices.
5.5 Creating a Built Environment to
Support Economic Growth
Infrastructure
and the service delivery function need to complement each other in order to
promote efficiency, employment and integrated development. Government continues
to prioritise spending on housing with a goal to eradicate informal settlements.
The budget makes provision for an increase in subsidy and for additional houses
to be built. As a way of investing in infrastructure, the Municipal
Infrastructure Grant (MIG) received an additional budget of R2.5 billion,
increasing to R45.9 billion over the medium term. The Neighbourhood Development
Partnership Grant will receive additional resources over the three-year period.
These are for regeneration of townships projects. A total of R8.2 billion is
added to local government equitable share over the MTEF period to cater for the
increased costs of bulk services.
The Financial and Fiscal Commission (FFC) reiterated its previous
recommendation that there should be a link between the Municipal Infrastructure
Grant and the Local Government Equitable Shares (LES). This is such that, as
infrastructure is rolled out through the MIG allocations to municipalities, and
those from the LES reflect the need associated with the infrastructure that is
been rolled out. This would eliminate the current challenge where
municipalities roll out infrastructure without having the necessary funding to
maintain it. Moreover, the performance of the Neighborhood Development Grant
needs to be reviewed given its poor spending over the years.
The
Department of Cooperative Governance and Traditional Affairs (CoGTA) initiated alternatives to augment and complement the
management of additional budget over the MTEF period. In striving to achieve
clean audits and good financial management in municipalities by 2014, the
department has launched Operation Clean Audit campaign. A key objective of this
campaign will be that of building and ensuring prudent financial management of
public resources in municipalities. The Department will also launch a programme
aimed at improving revenue enhancement in municipalities. Presently,
municipalities are owed between R50 to R53 billion by residents, businesses and
other government departments. This programme of revenue enhancement will assist
municipalities to become more financially viable as they seek to accelerate the
roll-out of their service delivery programmes. The Department is also
establishing a programme that will allow close monitoring of funds that are
allocated to municipalities for infrastructure development. The main objective
of the latter programme is to ascertain if government is deriving
value-for-money from the scarce funds allocated to municipalities. CoGTA indicated that the MIG faces some challenges. These
include MIG funds being consumed by bank overdrafts of certain municipalities,
some legislative impediments, poor and weak capacity in planning, project
management and financial management in some municipalities, and lack of
continuity and sustainability in municipal management.
The
Committee commends the initiatives that are provided by CoGTA
to increase capacity in municipalities, particularly the Operation Clean Audit
2014. However, more intervention is needed in the implementation of the MIG
projects. The ability to spend funds that are allocated to the MIG is a matter
of serious concern to the Committee. The Committee views the role played by the
MIG in the development of infrastructure as critical, particularly for those
municipalities who do not have revenue base. The tendency of under-spending in
the MIG is a cause for concern since some of the service
delivery aspects, particularly infrastructure, are linked to this grant.
The Committee recognises the role of CoGTA to be to
give support to municipalities without capacity. Such intervention from CoGTA, National Treasury, Provincial Treasury and
5.6 A Broad-Based Approach to
Fighting Crime
Government
has committed to curbing the high level of crime. The government understands
the fight against crime to be including enhanced partnerships, strengthened
social security and job creation. The aim of government is to recruit an
additional 22 447 police personnel by 2012/13 to strengthen detective services
and crime intelligence. The fight against crime will be boosted by a proposed
allocation for the Directorate of Priority Crime Investigation, which will
increase its investigators to 2 400 by 2012/13. The additional budget, in this
regard, supports the implementation of the Children’s Act of 2005, the Child
Justice Act of 2008 and the Sexual Offences and Related Matters Act of 2007.
The
HSRC is of the view that commendable work has been done in the fight against
crime; however there has been a lot of emphasis in the use of force and less
emphasis on working with communities and raising awareness among communities.
The Committee supports initiatives that seeks to curb
crime in our society.
6. Key Findings
Having
considered and deliberated on the 2009 MTBPS, the Select Committee on
Appropriations notes the following
6.1
Communities in rural areas are not receiving serious attention they deserve.
Rural communities have been neglected for many years in the past. Given the
current economic downturn, life in rural areas is difficult. This undesirable
situation has led, and continues to lead, to the migration of people from rural
areas to urban areas in search of decent jobs and better living condition; and
6.2
The need to contain state expenditure as a percentage of gross domestic product and fully supports the strategy of government to ‘do
more with less’, namely:
·
6.2.1 Find savings through reduced spending on non-core
functions and activities, including shifting resources from administrative
components to frontline services;
·
6.2.2 Rationalise public entities and agencies to save money
and improve accountability;
·
6.2.3 Review public spending to weed out poorly performing
programmes, low priority activities and ineffective policies;
·
6.2.4 Reform procurement systems to reduce corruption and
obtain better value of money, including giving consideration to centralising
the procurement of selected goods and services; and
·
6.2.5 Change the culture of the public service to reduce
waste and to prevent extravagant spending, shoddy work and corruption.
7.
Recommendations
The
Select Committee on Appropriations, having satisfied the requirement of section
6(8) of the Money Bills Amendment Procedure and Related Matters Act, recommends that:
7.1
The National Treasury considers allocating additional funds during the 2010
National Budget to the Department of Rural Development and Land Reform for
economic development of rural communities. The Committee also recommends that:
·
7.1.1 The Department of Public Works extends their Expanded
Public Works Programme to rural areas in the medium and long term with the aim
of creating decent jobs and providing much-needed infrastructure;
·
7.1.2 The Department of Water and Environmental Affairs
expands their water projects to rural areas in order to provide them with water
for agricultural and domestic use and providing people in rural areas with
decent jobs; and
·
7.1.3 The Department of Cooperative Governance and
Traditional Affairs develops programmes to assist municipalities in rural areas
in their development agenda.
7.2 The Committee recommends that the training layoff
scheme and other programmes encapsulated in the Framework Response to Global
Economic Crisis by the National Economic Development and Labour Council
(NEDLAC) are implemented within six (6) months to help mitigate the effects of
the economic crisis;
7.3 The Committee recommends that government extend
the wage-based incentive mechanism to other sectors to help drive a massive
increase in employment creation;
7.4 The Committee recommends that the Presidency
reviews the efficiency and effectiveness (outcomes) of education expenditure
that is amongst the highest, as a percentage of gross domestic product, in the world;
7.5 The Committee recommends that government
facilitate the implementation of the much-needed National Health Insurance
system;
7.6 The Committee recommends that National Treasury,
Provincial Treasury and the Department of Cooperative Governance and
Traditional Affairs work together in capacitating under-spending municipalities
instead of shifting funds from under-spending municipalities to adequately
spending municipalities as the latter practice will create additional backlog
in service delivery; and
7.7 The Committee recommends that additional
increases in health budgets are appropriated in 2010 to improve the efficiency
and quality of service in the public sector.
Report
to be considered