ATC210316: Report of the Standing Committee on Appropriations on the Division of Revenue Bill [B3 –2021] (National Assembly – Section 76), Dated 16march 2021

Standing Committee on Appropriations

REPORT OF THE STANDING COMMITTEE ON APPROPRIATIONS ON THE DIVISION OF REVENUE BILL [B3 –2021] (NATIONAL ASSEMBLY – SECTION 76), DATED 16MARCH 2021

 

The Standing Committee on Appropriations (the Committee), having considered the Division of Revenue Bill [B3-2021](National Assembly), referred to it on 10 March 2021and tagged as a section 76 Bill, reports as follows:

 

1. Introduction

 

Section 214(1) of the Constitution of 1996 (the Constitution) requires that a Division of Revenue Act (DORA) determines the equitable division of nationally raised revenue among the three spheres of government (National, Provincial and Local). This is intended to foster transparency in the sharing of nationally raised revenue and ensure smooth intergovernmental relations. The Intergovernmental Fiscal Relations Act, No. 97 of 1997 prescribes the process for the determination of an equitable sharing and allocation of revenue raised nationally. Sections 9 and 10 (4) of this Act set out the consultation process to be followed with the Financial and Fiscal Commission (FFC), including the process of considering recommendations made with regard to the equitable division of nationally raised revenue.

 

In giving effect to Section 73 of the Constitution, the Money Bills Amendment Procedure and Related Matters Act, No. 9 of 2009 (the Money Bills Act) as amended by the Money Bills Amendment Related Matters Amendment Act No.13 of 2018 was enacted. In line with Section 7(1 and 3) of the Money Bills Act and Section 27 of the Public Finance Management Act No. 1 of 1999; the Minister of Finance tabled the 2021 National Budget including the 2021 Division of the Revenue Bill (the Bill) on 24 February 2021. The Bill was then referred to the Committee on 10 March 2021 in line with Section 9 (1) of the Money Bills Act.

 

Subsequent to the Bill being referred to the Committee, the Committee received a briefing from National Treasury and the Parliamentary Budget Office (PBO). The Committee had engagements with the Financial and Fiscal Commission (FFC) as required by Section 9 (7) (a) of the Money Bills Act. Furthermore, a briefing was received from the South African Local Government Association (SALGA) as required by Section 214 (2) of the Constitution of the Republic. In line with section 9 (5) (b) of the Money Bills Act, the Committee is required to hold public hearings on the Division of Revenue Bill. To this end, adverts calling for public submissions on the Bill were published in regional radio stations as well as in both national and local print media from 26 February to 4 March 2021. Public hearings were held on 12 March 2021 with the following parties who have made submissions:

• Amandla.mobi
• South African Institute for Chartered Accounts; and
• Congress of South African Trade Unions.

 

1. Division of Revenue Bill 2021

 

The central fiscal objectives over the 2021 medium term expenditure framework (MTEF) period are to:

• Narrow the budget deficit and stabilise the debt-to-GDP ratio, primarily by controlling non-interest expenditure growth;
• Provide continued support to the economy and public health services in the short term, without adding to long term spending pressures; and
• Improve the composition of spending, by reducing growth in compensation while protecting capital investments.   

 

The 2021 MTEF fiscal objectives are framed on the two government objectives as set out in the 2020 Medium Term Budget Policy Statement (MTBPS), namely; promoting economic recovery and fiscal consolidation. Government’s immediate fiscal path focuses on supporting high levels of economic growth largely depended on more easing of the Covid-19 pandemic lockdowns through mass vaccination programme that are fully funded by government. Over the medium term, government’s structural reforms aim to lower barriers to faster, inclusive growth by improving access to reliable electricity, water and sanitation services and enabling cost effective digital services. Furthermore, government plans to promote the green economy and support industries with high employment potential, such as tourism and agriculture. Table 1 belowindicates overall allocation to national, provincial and local spheres of government for 2021/22, 2022/23, 2023/24 financial years respectively.

 

Table 1: Equitable Division of Revenue Raised Nationally

Spheres of Government	Column A	Column B
	2021/22	Forward Estimates
		2022/23	2023/24
National allocations1,2	R’000 1 232 566 664        523 686 351       77 999 135	R’000 1 263 660 751      524 088 024      83 084 515	R’000 1 302 172 028        525 303 747      83 569 989
Provincial allocations
Local government allocations
Total allocations	1 834 252 150	1  870 833 290	1 911 045 764

1. National share includes conditional allocations to provincial and local spheres, general fuel levy sharing with metropolitan municipalities, debt-service costs, the contingency reserve and provisional allocation
2. The direct charges for the provincial equitable share are netted out

Source: National Treasury (Division of Revenue Bill: 2021)

 

1.  Main Budget Allocation

Over the 2021 medium-term expenditure framework (MTEF) period, after budgeting for debt service costs, the contingency reserve and provisional allocations, 48.7 per cent of nationally raised funds are allocated to national government, 41.9 per cent to provinces and 9.4 per cent to local government. As proposed reductions to the public-service wage bill affect only national and provincial governments, local government’s share of revenue has risen in relative terms.

 

Transfers to provinces grow by an annual average of 1 per cent over the medium term, with the equitable share growing by 0.3 per cent and conditional grants growing by 4.1 per cent. Local government transfers grow by an annual average of 2.3 per cent over the medium term, equitable share declines by 0.4 percent and conditional grants grow by an annual average of 7.3 per cent over the same period. The Division of Revenue Bill is redistributive as funds allocation are based on the demand for public service in each province and municipality, and not its contribution to national revenues. Table 2 below indicates the overview of the division of nationally raised revenue between the period 2017/18 and 2023/24.

 

Table 2: Division of nationally raised revenue

1. Includes support to Eskom, amounts for Budget Facility for Infrastructure projects and other provisional allocations 

Source: National Treasury (Budget Review: 2021)

 

1.  Changes to the Bill and reductions in transfers to provinces and municipalities

In order to achieve government’s fiscal objectives over the 2021 MTEF, allocation reductions to previously announced spending levels were made across all three spheres of government to fit within the revised expenditure ceilings. The 2020 MTBPS announced that that provincial transfers were reduced by R221.8 billion over the MTEF period and transfers to local government were reduced by R17.7 billion. Following the expenditure reductions as announced in the 2020 MTBPS, further changes were made both in provincial and local government allocations as follows:

 

• The provincial equitable share has been reduced by R205.9 billion over the medium term.
• Direct conditional grants to provinces have been reduced by a net R10.7 billion, as the reduction of R13.5 billion is partly offset by reprioritisation and additions of R2.6 billion.
• The local government reductions comprise of R14.7 billion reduction in the local government equitable share, R2.7 billion from the general fuel levy sharing with metropolitan municipalities and R2 billion reductions in direct conditional grants.

 

To limit growth in government expenditure and ensure the sustainable public debt, several local government infrastructure grants that are likely to go unspent or spent less effectively have been reduced. Grants that have persistently underperformed have been reduced by larger amounts. The proposed wage bill reductions represents the largest reductions to national and provincial allocations. Relative to the 2020 budget, the provincial equitable share will be reduced by R58.3 billion in 2021/22, R83.5 billion in 2022/23 and R64.1 billion in 2023/24. This wage freeze has lowered national and provincial shares of the division of revenue and has increased that of local government in relative terms.

 

To meet government policy objectives, while remaining within the revised expenditure ceiling, existing budgets needed to be reprioritised to meet government’s policy objectives. These budget reprioritisations complement baselines that provide R1.9 trillion to provinces and R432.6 billion to local government in transfers over the 2021 MTEF period. These transfers fund core policy priorities, including basic education, health, social development, roads, housing, and municipal services.

 

1. Changes to provincial allocations

 

Transfers to provincial government are reduced by R220 billion over the 2021 MTEF period, of which direct transfers are reduced by R219.4 billion and indirect transfers are reduced by R571 million. These reductions include reductions to compensation of employees to reduce the wage bill and other reductions to meet government fiscal consolidation objectives.

 

An amount of R3.8 billion (R1.7 billion in 2021/22 and R2.1 billion in 2022/23) from the reductions in provincial compensation of employees has been shifted to conditional grants from the provincial equitable share. These changes were made in order to account differently for the reductions made in compensation of employees and reductions made to meet government’s fiscal consolidation objectives. These reductions were previously made in compensation of employees that should have been accounted for in conditional grants that fund compensation of employees, and that error has since been corrected.

 

1.  Additional allocation to provincial equitable share

 

An amount of R8 billion has been added to the provincial equitable share over the MTEF period to allow provinces to cover the costs of responding to the Covid-19 pandemic.

 

1.  Overall grants allocations to provincial government

 

Over the 2021 MTEF, direct conditional transfers to provinces average 4.1 per cent. Direct conditional grants baseline increase from R115.8 billion in 2021/22, to R119.3 billion in 2022/23 and R121.5 billion in 2023/24. Indirect conditional grants increase from R4.4 billion in 2021/22, and stabilise at R4.9 billion in 2022/23 and 2023/24 respectively.

 

1.  Changes to the provincial conditional grant allocations

 

• HIV, TB, malaria and community outreach grant: a total of R2.4 billion is allocated to the Covid-19 component of the grant to provinces for the administration of the Covid-19 vaccines to subsidise provinces for service delivery costs over a period of two years.
• Human resources and training grant: a total of R140 million has been reprioritised from the health facility revitalisation grant and the national insurance indirect grant to the human resources and training grant to fund the shortfall of appointing medical interns funded within the grant.
• Tittle deeds restoration grant:the tittle deeds restoration grant introduced in 2018/19 to eradicate the pre-2014 tittle deeds registration backlog and it comes to an end in 2020/21. The grant has been incorporated back into the human settlement development grant and provinces will continue to eradicate tittle deeds registration backlogs using allocations from the human settlements development grant.

 

1. Overall allocations to local government

 

Funds raised by national government are transferred to municipalities through conditional and unconditional grants. Over the 2021 MTEF period, R432.6 billion will be directly transferred to local government, and a further R23.7 billion is allocated through indirect grants. National transfers accounts for a relatively small portion of the local government fiscal framework, with the majority of local government revenues being raised by municipalities themselves through their substantial revenue-raising powers. However, due to the variations in municipalities, poor rural municipalities rely on receiving most of their revenue from transfers, while urban municipalities raise the majority of their own revenue.

 

1. Changes to local government allocations

 

• The local government equitable share is reduced by R14.7 billion over the 2021 MTEF period as part of the fiscal consolidation measures announced in the 2020 MTBPS (R3.1 billion in 2021/22, R4.1 billion in 2022/23 and R7.5 billion in 2023/24).
• Direct conditional grants allocations to local government are reduced by R2 billion over the 2021 MTEF period. Of this amount, government redirects R329 million form the municipal infrastructure grant and R21 million from the integrated urban development grant to fund a once-off gratuity payment to non-retuning councillors.
• Indirect grants to local government are reduced by a total of R268 million over the MTEF period.
• Integrated urban development grant: a technical change is made in 2021/22 where a shift of R15 million is made from the municipal infrastructure grant to the integrated urban development grant to fund sports infrastructure in Polokwane Local Municipality.

 

1.  Changes to the local government grants allocation

 

• Informal settlements upgrading partnership grant:a component that was created within the human settlement development grant for the upgrading of informal settlements has since been established as a new informal settlements upgrading partnership grant with a total allocation of R12.5 billion over the 2021 MTEF period. R3.9 billion, R4.2 billion and R4.4 billion is allocated for the 2021/22, 2022/23 and 2023/24 financial years, respectively. This grant will focus purely on the upgrading of informal settlements.
• Programme and project preparation support grant:the integrated city development grant has been repurposed to support metropolitan municipalities in developing a pipeline of investment-ready programmes and projects through establishing and institutionalising an effective and efficient systems of programmes and project preparations. The new programme and project preparation support grant is allocated R1 billion over the 2021 MTEF.
• Municipal infrastructure grant: form the 2021/22 financial year, municipalities will be allowed to use up to 5 per cent of their allocation to fund the development of infrastructure assets management plans in order to build the necessary assets management capabilities within municipalities. This incentivises municipalities to do appropriate budgeting for repairs and maintenance of municipal infrastructure.

 

 

 

1. Stakeholders and Public Inputs on the 2021 Division of Revenue Bill

 

This section provides an overview of the comments on the Bill from the Financial and Fiscal Commission, Parliamentary Budget Office and the South African Local Government Association. Furthermore, this section will also provide a summary of pubic submissions received on the Bill.

 

1. Financial and Fiscal Commission

 

The Financial and Fiscal Commission (FFC) welcomed the R10 billion allocation to deal with provincial Covid-19 interventions. This wassupplemented by R6.5 billion over two years for vaccination procurement to the National Departmentof Health and an estimated R9 billion which could be drawn on from the contingency reserve and emergency allocations. The FFC however called for better alignment of responsibilities between the spheres of government to ensure well-synchronised implementation of programmes. The FFC expressed concern that the vaccination allocation may be incompatible with government’s goal of achieving herd immunity within a 12-month period.

 

With regard to the PES, the FFC submitted that the 2021 budget made for provision a total of R1.5 trillion and R356 billion in PES and provincial conditional grant allocations, respectively, over the 2020/21 MTEF period. The FFC also noted with concern the fluctuations of annual MTEF forward estimates which create uncertainty and undermines the integrity of MTEF.It submitted that initial over optimistic MTEF estimates not only send wrong spending signals but also destabilise provincial budgets during implementation. The FFC also submitted that there are overwhelming concerns that the provincial equitable share formula is not responsive to the unique needs of the various provinces.

 

In terms of conditional grants to provinces, the FFC submitted that constant reprioritisation has a negative impact on service delivery.  It further submitted that the PES must be guarded as the default funding mechanism for provincial expenditure responsibilities and suggested that Parliament and provincial legislatures should receive regular reports on the impact of budget cuts on service delivery to beneficiaries, especially the vulnerable.

 

In terms of local government, the FFC stated that the Covid-19 pandemic has threatened the viability of many municipalities and compounded their financial, fiscal, governance and service delivery challenges. The FFC cautioned that it should be noted that the pandemic was creating negative legacies for the local government sector, including the following:

 

• Wider deficits for municipalities due to the rapid expansion of Covid-19 related expenditures in the face of widespread revenue under collections;
• Amplification of challenges of citizen’s access to basic services including housing, water, and sanitation;
• Higher debt levels as revenue collections fall far below the norm; and
• Amplification of inequalities as many communities cannot access required technology to deal with the new norm brought about by Covid-19.

 

The FFC also submitted that the share of local government allocations rises over the MTEF, from 9 per cent in 2021/22 to 9.7 per cent in 2023/24. However, the said growth was not due to more resources being transferred to the sector, but is relative, to reductions to the public‐service wage bill. The FFC further cautioned that the decline in the real average growth rate of the LES allocation may adversely affect the delivery of basic services to the poor and vulnerable.The FFC therefore implored municipalities to strengthen their revenue collection systems and plug revenue leakages, through harnessing new smart technologies.

 

Mindful of the Covid-19 circumstances, and the quickened fiscal deterioration, the FFC noted the financial and performance dysfunctionality, including fiscal leakages, wastage and inefficiencies. It suggested that the aforementioned challenges require the following:

 

• Decisive and coherent strategy and the political will;
• Implementation of the fiscal consolidation, targeting cuts at areas of underspending and questionable performance;
• Eradication of duplication of functions;
• Investment in the use of technology and other areas of improving the capability of public sector personnel;
• Eradication of contract mismanagement and procurement irregularities; and
• Zero Based Budgeting, based on expenditure reviews and mindful of the importance of pricing and costing public services; and
• Consequence management and accountability mechanisms must be more effective.

 

5.2     Parliamentary Budget Office

 

The Parliamentary Budget Office (PBO) submitted that the Covid-19 pandemic has worsened already high levels of poverty in South Africa. Furthermore, there was slow progress in dealing with large service delivery backlogs and poor provision of services even before the advent of Covid-19. The PBO submitted that whilst there was improvement in provincial and local government social and economic development indicators, the Covid-19 pandemic has erased some of the service delivery gains achieved which put more pressure on service delivery at both provincial and local government.

 

The PBO expressed concerns that government intends to consistently decrease coverage of basic services components of the LGES which provide for free basic services to indigent households over the MTEF. The PBO also highlighted the initiates in progress such as the review of the PES formula which include the following:

 

• Developing options to take account of costs associated with living in a rural location;
• To revise and update the risk-adjusted factor of the health component; and
• To develop options on how to account for different funding needs of different types of schools and learners.

 

 

The PBO further submitted that many stakeholders have expressed concern that current elements of the current local government fiscal framework make it difficult for municipalities to balance their revenues with their expenditure responsibilities. A proposal is on the table to review the structure of the local government framework and to agree which issues that must be addressed. The PBO also emphasised the need for adequate skills and capacity to implement budgets by government and municipalities, and that governance measures function according to legislation.

 

1. South African Local Government Association

 

The South African Local Government Association (SALGA) submitted that it acknowledged the national government’s gloomy picture of the economic outlook and related fiscal challenges which are exacerbated by the unforeseen and continuing demands on the fiscus as a result of the Covid-19 pandemic. SALGA undertook to work with national government on resolving the challenges faced by local government.

 

SALGA expressed concerns at the proposed decrease in the equitable share from the previous financial year and reducing by 0.4 per cent over the MTEF. Furthermore, SALGA was of the view that the reduction in the LGES did not serve the communities well in view of the prevailing economic climate, increased unemployment figures and the negative impact of Covid-19 on municipal revenue collections. It also noted the marginal increase of 7.3 per cent in conditional grants with concern as this will not ease of the pressure on local government to address the growing infrastructure backlogs caused by migrations to cities.

 

SALGA further stated that own revenue by municipalities declined during the Covid-19 lockdown and that the extra R20 billion Covid-19 relief did not match revenues collected in the previous year. Furthermore, municipal expenditure on goods and services, especially water increased due to extra demands from municipalities to cater for Covid-19 related preventative measures like sanitizing public facilities.

With regard to infrastructure grants, SALGA submitted that the marginal increase of 7.3 per cent in conditional grants will not ease the pressure on local government to address the growing infrastructure backlogs caused by migrations to cities.Furthermore, poorly capacitated municipalities underperformcapital expenditure resulting in conditional grants getting taken away i.e. the Public Transport Network grant. Therefore, SALGA suggested that capacity building measures should be undertaken to fast track capital expenditure spending in municipalities. In order to deal with capacity building, SALGA recommended that the Division of Revenue Bill should provide for the following:

• The creation of effective capacity to support municipalities to root out and prevent corruption particularly in this period of pandemic.
• A mechanism to support municipalities to build technical, managerial and leadership capacity in the new normal.
• SALGA must be involved in the study of consolidating capacity building initiatives undertaken by National Treasury.
• The Municipal Systems Improvement Grant must be disaggregated to show the cost of regulatory compliance e.g. Municipal Standard Chart of Accounts which is costly to municipalities.
• The grant to undertake the District Development Model (DDM) study must be monitored in the 21 identified districts to inform future allocations to the next batch of districts or intermediary cities to form part of the DDM.

 

1. Amandla.mobi

 

Amandla.mobi submitted a call to extend the Social Relief of Distress (SRD) Grant of R350 beyond April, introducing the Basic Income Support Grant, increasing social grants, and the expansion of the Child Support Grant that will start at pregnancy. Amandla.mobi indicated that the latest household affordability index shows that many households in the country are starving and as little as the SRD grant was, it provided some relief. It further submitted that removing the SRD will plunge many into a food crisis.Amandla.mobi made the following proposals:

 

• Provision of Basic Income Support for people aged 18 to 59;

• Implement permanent social assistance for those aged 18 to 59 valued at the upper-bound poverty line, currently R1,268.00 per month. Caregivers, who receive the Child Support Grant, must qualify for this grant;
• The extension of the Covid-19 SRD grant to April 2021 is completely inadequate. The government must lead with urgency on issues of poverty affecting a majority of people in the country.

• Child Support Grant increase of R500 for the next 6 months.
• Provision of Maternity Support Grant to help reduce stunted growth in our children.
• Government must give pensioners R2500 and a 13th cheque in December.
• No to National Treasury reduction of the Commission for Conciliation, Mediation and Arbitration’s budget.

 

5.5     South African Institute for Chartered Accountants

 

The South African Institute for Chartered Accountants (SAICA) focused, amongst others, on the role of parliament in overseeing government institutions recommended the following to the Committee:

 

• Be courageous to implement drastic changes as seen in other countries that successfully implemented turnarounds;
• Ensure that budgeted spending equals actual funding;
• Learn from others who were courageous like New Zealand and Ireland in changing budgeting practices especially as to inclusion of efficiency criteria; and
• National Treasury delegations to provincial treasuries of oversight of municipal budgets is not working and needs drastic intervention by the Committee.

SAICA also emphasized the implications for the delayed implementation of the Generally Recognized Accounting Practice (GRAP) resulting in questionable budget data. It also expressed concerns at the lack of skills, especially at the municipal level where the vast majority of the Chief Financial Officer positions remained vacant. SAICA also commented on the lack of accountability throughout government institutions and emphasized the need for consequence management enforcement at all levels of government. It further emphasized the need for infrastructure revitalization focusing on water and sanitation, electricity and logistics.

SAICA further made an expenditure analysis focusing on what government spends and why; it also emphasized the increased expenditures on certain areas. SAICA focused on compensation, consultants, contractors, catering, agency costs, legal costs, fleet management, and travel and subsistence and expressed concerns at the amounts of funds being wasted within government institutions.

 

5.6     Congress of South African Trade Unions

The Congress of South African Trade Unions (COSATU) submitted that the budget was not pro-poor as it does not have any impact on poverty and unemployment. COSATU submitted that it expected the budget to focus more on speeding up economic development in order to create jobs, focus on supporting rural and township economy, ensure people in all parts of the country have access to services, and then intensify the rural development and urban renewal programmes.

COSATU submitted that the Bill did not just fail in addressing most of the pressing concerns, it also did nothing to fix the broken systems inside the state. It is a pro-business budget that is divorced from the realities of ordinary South Africans.

COSATU submitted that the eradication of public services through expenditure cuts will expose government to possible constitutionality questions. It asked if government was not undermining constitutional rights by cutting essential public services e.g. social grants, health, education, transport, water etc. COSATU made the following proposals:

• National Treasury and COGTA should explain the plan to deal with the billions lost to corruption and wasteful expenditure and in some cases the outright collapse of municipalities.
• A ramped up vaccine plan needs to be urgently developed to ensure more than 40 million persons receive their vaccines within 2021.Further reinforcements of the health care infrastructure, including the filling of vacancies needs to happen before the expected third wave in June 2021.Preparations for the National Health Insurance need to be accelerated and this requires increasing healthcare expenditure not decreasing it.
• Extend the R350 Covid-19 Grant for the duration of the 2021/22 fiscal year.
• Extend the UIF Covid-19 TERS for restricted workers and businesses for as long as they remain under disaster management restrictions that prevent them from working.
• National Treasury, the South African Reserve Bank and the commercial banks should present proposals on a revamping of the Loan Guarantee Scheme to Nedlac for engagement with organised labour and business.

• A revamp should look at lower interest rates, easier payment terms, the usage of DFIs and the Post Bank to disperse loans and grants to incentivise job retention and creation.

• The tabling of the agreed amendment bill to allow workers who have experienced financial losses or distress limited access to their pension funds. 

• This must be tabled at Parliament by Easter 2021 in order to come into effect by 1 October 2021.

• A revamped single online and transparent public procurement system covering and binding upon all departments, municipalities, entities and State Owned Enterprises.

• This must be provided for in the Public Procurement Bill which needs to be fast tracked and tabled in Parliament by the end of 2021 not 2022.

• Government must commit to respecting collective bargaining and the 2020 wage agreement. Government must engage with unions at the PSCBC on the wage bill and the next wage agreement.

 

1. Findings and Observations

 

 

Having deliberated and considered all the submissions made by the above stakeholders on Division of Revenue Bill (B3-2021), the Standing Committee on Appropriations makes the following findings and observations:

 

1. The Committee notes and welcomes government’s decision to reverse funding reductions on conditional grants that fund infrastructure as announced in the 2020 MTBPS. The Committee has always implored on government not to reduce infrastructure budgets as empirical evidence points to the economic and social benefits of infrastructure investments in any economy. The Committee has always been of the view that government infrastructure spending plays a pivotal role in both providing access to services and redressing the apartheid investment disparities across South Africa.
2. The Committee notes and welcomes that government has continued on its commitment in fighting the Covid-19 through the R8 billion added to the provincial equitable share over the medium term to allow provinces to cover the costs of responding to the Covid-19 pandemic. Considering the levels of poverty, inequality and the negative impact that the Covid-19 pandemic has had on the livelihoods of many South Africans, the Committee is encouraged by this commitment from government in fighting the pandemic.
3. The Committee notes and welcomes the R140 million that has been reprioritised from the health facility revitalisation grant and the national insurance indirect grant to the human resources and training grant to fund the shortfall of appointing medical interns funded within the grant. The Committee appreciates the importance of health and other frontline workers in fighting the Covid-19 pandemic and is of the view that this allocation will be helpful to provinces, particularly within the context of the Covid-19 pandemic.
4. The Committee notes and welcomes the R2.4 billion allocated to provinces within the HIV, TB, malaria and community outreach programme’s Covid-19 component for the administration of the vaccine to subsidise service delivery cost. However, the Committee would like to appeal to all South Africans, the provincial health departments and National Treasury to ensure efficient and effective use of these resources. Furthermore, they must vigilant of corrupt elements that can compromise the successful roll-out of the Covid-19 vaccine.
5. The Committee notes and welcomes government’s decision to redirect R329 million form the municipal infrastructure grant and R21 million from the integrated urban development grant to fund a once-off gratuity payment to non-retuning councillors. The Committee appreciates the selfless work that councillors plays in local government, both in local economic/community development and in the leadership role that they play in bringing about stability within the country.
6. The Committee notes and welcomes the establishment of the informal settlements upgrading partnership grant with a total allocation of R12.3 billion for provinces and R12.5 billion for municipalities over the 2021 MTEF period. The Committee views this allocation as an important step taken by government in addressing informal settlement related challenges.
7. The Committee notes and welcomes government’s initiative to allow municipalities to use up to 5 per cent of their allocation in the municipal infrastructure grant to fund the development of infrastructure assets management plans in order to build the necessary assets management capabilities within municipalities. The Committee if of the view that if municipalities were to correctly use this provision, municipal infrastructure assets will be better managed in the medium to long term.
8. The Committee notes with concerns the continued reduction of the Public Transport Network Grant by a total of R1.3 billion over the 2021 MTEF period, even before the Covid-19 pandemic. The Committee maintainsthat government should find a better solution to improve spending in this grant. The Committee will escalate engagement with National Treasury and the Department of Transport in order to find a sustainable solution on how to increase expenditure in this grant without using the punitive measures of suspending this grant from other cities due to poor spending.

 

1. Recommendations

 

The Standing Committee on Appropriations, having considered submissions from various stakeholders on the Division of Bill (B3-2021), recommends as follows:

 

1. That the Minister of Finance submits quarterly reports to the Committee on the R8 billion allocated to the provincial equitable share to fund costs associated with the Covid-19 pandemic.
2. The Minister of Finance submits quarterly reports to the Committee on the R2.4 billion allocated to the HIV, TB, malaria and community outreach grant for the administration of the vaccine to subsidise service delivery costs.
3. That the Ministers of Transports and Cooperative Governance and Traditional Affairs along with the South African Local Government Association provide a comprehensive report on the challenges faced by the Mbombela, Buffalo City and Msunduzi municipalities to spend more effectively and efficiently on the Public Transport Network Grant. Also, they must provide a plan to address those challenges.

 

1. Committee Recommendation on the Bill

 

The Standing Committee on Appropriations, having considered the Division of Revenue Bill [B3-2021], (National Assembly) referred to it and classified by the Joint Tagging Mechanism (JTM) as a Section 76 Bill, recommends that the Bill be adopted, without amendments.

 

 

1. Conclusion

 

 

The responses by the relevant Executive Authorities, to the recommendations as set out in section 7 above must be sent to Parliament within 60 days of the adoption of this report by the National Assembly.

 

 

Report to be considered.