Social Grants Appropriation Bill; Burundi Protection Support Appropriation Bill: briefing & adoption; Division of Revenue Bill:

BE IT ENACTED by the Parliament of the Republic of South Africa, as follows :-

1. (a) Subject to the Public Finance Management Act, 1999 (Act No. I of 1999), there is hereby appropriated out of the National Revenue Fund for the requirements of the Department of Social Development an amount of R2 billion (two billion rand) in respect of the 2001/2002 financial year to fund arrear payments to social grant beneficiaries.

(b) The money contemplated in paragraph (a) must be made available to the nine provincial administrations as determined by and on the conditions imposed in the Division of Revenue Act, 2001 (Act No.1 of 2001).

2. This Act is called the Social Grants Appropriation Act, 2002.

Regulation 10 issued in terms of the Social Assistance Act, 1992 (in effect until 31 March 1998) stated that social grants accrue from the day of attestation (application) and placed no limit on the time for which arrears could accrue. Regulation 11, promulgated on 31 March 1998 determined that grants only became payable from date of approval and that grants would not accrue for a period longer than three months from date of approval.

On 11 September 2001 the Transvaal Provincial Division of the High Court in the case of the Minister of Social Development and the Trustees of the Black Sash, ordered by consent that Regulation 11 be declared invalid and be set aside and that the repeal of Regulation 10 be declared invalid and set aside.

The implication of this decision is that for the period from 31 March 1998 qualifying beneficiaries were entitled to benefits from date of application. The actual practice, fully within the law, was to pay only from date of approval. Back pay was paid in some cases but seldom for the full delay between application and approval. Everyone who applied successfully for a pension or grant after 31 March 1998 is therefore entitled to claim the back pay (arrears) due to him or her from the date that his/her application was attested.

As provinces acted fully within the law and changes to regulations were, in effect, made retrospectively, provinces did not budget for the additional implications of regulatory change and could not have been expected to do so. Furthermore the financial implications are substantial and cannot be accommodated within current provincial baselines. Hence the Social grants Appropriation Bill, 2002 makes provision for the funding of the arrears payment from central government funds.

INTRODUCTORY SPEECH BY THE MINISTER OF FINANCE ON THE SOCIAL GRANTS APPROPRIATION BILL, 2002
12 MARCH 2002

Madam Speaker,

In the President's State of the Nation Address of 8 February 2002 as well as my Budget Speech of 20 February 2002, reference was made to the need to support the Department of Social Development and provinces to deal with arrears in social grant payments that developed over the last three years.

The relevant arrears developed because provinces implemented regulations that we have now agreed are inequitable and which led to a set of inappropriate incentives in the administration of social pensions. The implementation of the regulations had the effect that poor South Africans who qualified for grants only received payment from the date of approval of grants, and not from the date that they applied and qualified. Where there were delays in processing and approval of grants poor beneficiaries were not always paid for the period of the delay. This certainly had severe negative effects for many poor households.

The relevant regulations in terms of the Social Assistance Act, 1992 have now been amended with effect from December 2001, with the result that beneficiaries are entitled to payment from date of application, if they qualified on that date, and where there are delays in payment they will be entitled to payment for the period of the delay.

Government has, however, agreed that it is not sufficient to change the situation as we move forward and acknowledged its debt to those grant beneficiaries who qualified for grant payments between April 1998 and December 2001. These people, about 1,8 million who qualified for grants for the first time during that period, have to be compensated for the lapse of time between application and approval.

The payment of these arrears is estimated to cost provincial welfare departments R2 billion. This provides for current active cases (that is, people still receiving grants) inactive and lapsed cases and some administrative expenditure. Provinces cannot be expected to foot this Bill from their equitable share as they implemented regulations as they stood in good faith and therefore did not make budgetary provision for what subsequently became arrears owing.

The Social Grants Appropriation Bill, 2002 therefore provides for R2 billion to be allocated to the national Department of Social Development to dispose of this matter. The funding will flow from the Department of Social Development to provinces as a conditional grant to be used to implement payment of the arrears. Based on further verification of arrears owed by the different provinces, the amounts to flow to the different provinces, and conditions in this regard will be gazetted in terms of the Division of Revenue Act, 2001.

The Bill therefore makes good Government's undertaking to do the right thing in this case and to be sensitive to the plight of the poor and vulnerable. An implementation plan is currently being finalised and more details about payment will be communicated soon. It should be acknowledged that the payment of these arrears is a mammoth undertaking - R2 billion exceeds the normal monthly benefit payments -and that to do it right, without disruption of normal processes and without negative effects on beneficiaries, will require careful planning which will take some time. Our commitment to pay, and the funding to effect this is made clear through the Social Grant Appropriation Bill.

Our ability to make these payments derives from our success in establishing a sound and sustainable fiscal framework and from improvements in tax administration. We cannot in future expect to be in such a fortunate position again, and in future such unplanned impositions will impact on the delivery of other services. The President has indicated clearly that administrative failure, which, in addition to its harsh effect on poor South Africans, causes budgetary uncertainty and has service delivery implications in other areas, cannot and will not be tolerated.

Madame Speaker, I hereby table the Social Grant Appropriation Bill, 2002.

BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:-

1. (a) Subject to the Public Finance Management Act, 1999 (Act No.1 of 1999), an amount not exceeding R130 million in respect of the 2001/2002 financial year is hereby appropriated out of the National Revenue Fund for the requirements of the Department of Defence to defray expenditure incurred in the provision of protection support services to returning opposition leaders participating in the Transitional Government of the Republic of Burundi.

(b) Any funds that may be received from the international community to cover all or part of the expenditure contemplated in paragraph (a), must be deposited into the National Revenue Fund

2. This Act is called the Burundi Protection Support Appropriation Act, 2002.

Appendix 5

In terms of the UN Security Council Resolution 1286 (2000) of 19 January 2000, the appointment of former President Nelson Mandela as the new facilitator of the Arusha Peace and Reconciliation process to achieve a peaceful solution to the conflict in Burundi was strongly supported. Resulting from the above, the Department of Defence entered into negotiations with the former Burundi government to deploy a protection detachment to protect returning exiled leaders to Burundi in October 2001. After the signing of a Memorandum of Understanding with the Burundi Government, President Mbeki, in terms of the powers vested in him by the Constitution of the Republic of South Africa, 1993 and the Defence Act, 1957, on 26 October 2001 authorised the deployment of protection support services to returning opposition leaders participating in the Transitional Government in Burundi. The deployment of 701 SANDF members commenced on 27 October 2001. Funds were not provided in the Department Of Defence's budget and a dedicated appropriation bill is therefore required to put the Department in a position to deal with this unexpected expenditure.

Despite initial indications that Ghana, Senegal and Nigeria would be involved in providing troops, it is not anticipated that it will realise in the near future. The SA Defence Force will therefore be involved in this operation for the best part of the 2002/03 financial year - at least for 8 months.

The international community has made pledges amounting to R266 million of which R17 million has been received. Agreements with the European Union, Belgium and the Netherlands have been finalised while the agreement with the United Kingdom is at an advanced stage.

Generally funds from the National Revenue Fund are appropriated in the annual budget at the beginning of each financial year. In cases that warrant adjustment to budgets, such adjustment may be presented to Parliament, usually during September or October of the relevant financial year.

However, the National Legislature accepted that there could be urgent cases where the general budget process would be too restrictive. In terms of section 16 of the Public Finance Management Act, 1999, the Minister of Finance was therefore empowered to authorise the use of funds from the National Revenue Fund to defray expenditure of an exceptional nature which is not provided for and which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds. The more pertinent limitations 10 this power are -

i. that the combined amount of any such authorisations may not exceed two (2) per cent of the total amount appropriated in the annual national budget for the current financial year;

iii the expenditure must be included in appropriation legislation within 1 20 days of the date that the expenditure was authorised.

In terms of the United Nations Security Council Resolution 1286 (2000) of January 2000, the appointment of former President Nelson Mandela as the new facilitator of the Arusha Peace and Reconciliation process to achieve a peaceful solution to the conflict in Burundi was strongly supported. South Africa was accordingly requested to contribute military personnel to perform protection tasks for the returning exiled leaders before the inauguration of the interim government

in Burundi. A Memorandum of Understanding was signed with the Burundi Government. The President, in terms of the powers vested in him by the Constitution of the Republic of South Africa, 1 993 and the Defence Act, 1 957, on 26 October 2001 authorised the deployment of protection support services to returning opposition leaders participating in the Transitional Government in Burundi. The deployment of 701 troops commenced on 28 October 2001.

Funds for the deployment were not provided in the Department of Defence's budget. On 12 February 2002, in terms of the powers vested in myself by section 1 6(1) of the Public Finance Management Act, 1 999,1 authorised the used of an amount not exceeding R130 million for the Burundi deployment. This allocation was announced in the budget speech made on 20 February 2002. A dedicated appropriation bill is therefore required to put the Department of Defence in a position to deal with this unexpected expenditure.

Despite initial indications that Ghana, Senegal and Nigeria would be involved in providing additional troops, it is not anticipated that this would realise in the near future. The Department of Defence will therefore be involved in this operation for the best part of the 2002/03 financial year - at least for B months. However, the actual duration of the deployment is dependent on the effective functioning of the Transitional Government and the progress of the peace process.

Reports from Burundi indicate that the members of the South African National Defence Force have been well received by the local population. This has created a possibility for South Africa to be requested to provide additional protection support, should the need arise.

The projected expenditure for the 2001/02 financial million consisting of the following:

a) personnel allowances - R18,407 million

b) Equipment and facilities - R19.350 million

c) Medical consumables and equipment - R3.417

d) Sustainment - R14,268 million

e) aircraft chartering and transport - R74, 282 million

Total - R129.282 million

An amount of R270 million has been allocated in the 2002/03 budget of Defence to finalise the project.

The international community has made pledges amounting to R266 million of which R17 million has been received. Agreements with European Union, Belgium and the Netherlands have been finalised while the agreement with the United Kingdom is at an advanced stage. The USA is also considering making a contribution either in cash or in kind. Any funds received will be deposited into the National Revenue Fund.

Madam Speaker, I hereby introduce the Burundi Protection Support Appropriation Bill, 2002.

Chair. Thank you for the opportunity to address this Committee.

The protection support requirement was initiated by the Arusha Peace and Reconciliation process, when the former President Nelson Mandela, requested that South Africa should investigate the possibilities of providing military support to the peace process in Burundi The Minister of Defence was consequently mandated to form a coalition with other African countries to further investigate the matter. South Africa was accordingly requested to contribute military personnel to perform protection tasks for the returning exiled leaders before the inauguration of the interim government in Burundi.

From a financing point of view the requirement to render support in Burundi became a reality at too late a date to accommodate the funding thereof in the general budget process adopted by Parliament. This is said because the President (in terms of the powers vested in him by the Constitution of the Republic of South Africa, 1993 and the Defence Act, 1967,) authorized the deployment of the protection support services on 26 October 2001. The deployment of 701 troops commenced on 28 October 2001 - too late for the adjustment to budgets usually presented to Parliament during September or October of the relevant financial year.

It is accepted that the budget of the Department of Defence provides for preparation of forces and that funds for the deployment of forces are not provided in that Department's budget. The reason for this is the unknown cost for specific deployments - i.e. number of personnel to be deployed, where the deployment is to, what equipment will be required and for what period the deployment will be.

Initial costing estimates are as follows:

Because funds were not provided for in the budget of Defence, the Minister of Defence requested the Secretary for Defence to provide funds for the proposed

Burundi deployment. The Secretary for Defence subsequently informed the

Minister of Defence that funds were unavailable and that the mission placed the

Department at risk of over-expenditure of the Defence. vote. The Minister of

Defence thereupon directed the Secretary for Defence in writing to proceed.

The following provisions of the PFMA should be noted:

Section 63(1)(a):

"Executive authorities of departments must perform their statutory functions within the limits of the funds authorised for the relevant vote."

Section 39(1)(b):

"The accounting officer for a department is responsible for ensuring that expenditure of a department is in accordance with the vote of the department and the main divisions within the vote."

The total operation would probably be financed from donor funding. Donor funding is usually paid into the RDP Fund to be utilised to finance reconstruction and development projects and programmes authorised by the Cabinet as well as in accordance with a technical assistance agreement. It is the position of National Treasury that it is inappropriate not obtain Parliamentary authority to incur expenditure on a significant military deployment. In order to legalise the expenditure the Minister of Finance was requested to exercise the powers vested in him by section 16(1) of the Public Finance Management Act, 1999.

In terms of that section (16(1) of the Public Finance Management Act, 1999) the Minister of Finance is empowered to authorise the use of funds from the National Revenue Fund to defray expenditure of an exceptional nature which is not provided for and which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds. The more pertinent limitations to this power are -

i. that the combined amount of any such authorisations may not exceed two (2) per cent of the total amount appropriated in the annual national budget for the current financial year;

ii. the amount authorised must be reported to Parliament and the Auditor-General -usually within 14 days but in the case in question within a period determined by the President as the funds were required for the deployment of the security services; and

iii. the expenditure must be included in appropriation legislation within 120 days of the date that the expenditure was authorised.

It might be objected that "serious prejudice to the public interest" would not result from a failure to fund the Burundi mission. However, "public interest" in its broader reading is certainly possible and there is little doubt that a successful transition to peace in Burundi would be a public good of considerable scale. More generally the Burundi deployment constitutes an exceptional expenditure of the kind envisaged by section 16.

On 12 February 2002, in terms of the powers vested in the Minister of Finance by section 16(1) of the Public Finance Management Act, 1999, the Minister authorised the use of an amount not exceeding R130 million for the Burundi deployment. This allocation was announced in the budget speech made on 20 February 2002. A dedicated appropriation bill is therefore required to put the Department of Defence in a position to deal with this unexpected expenditure.

CLAUSE 1

1. On page 2, from line 16 to 19, omit the definition of "financial year".

2. On page 2, in line 26, after the word "municipality" insert the words "or such other person who has been instructed or delegated by the council to perform the functions of an accounting officer".

4. On page 3, from line 3 to 6, substitute the definition of "next financial year" with ' "next financial year" means the financial year commencing on 1 April 2003 and ending on 31 March 2004.

CLAUSE 4

1. On page 4, after line 18, insert: "(2) A recommended division of anticipated revenue for each province for the next financial year and the 2004/2005 financial year and which is subject to the provisions of the annual Division of Revenue Act for those financial years, is set out in Column B of Schedule 2."

2. On page 4, and as a consequence of the insertion of a new sub-clause (2)-

CLAUSE 8

1. On page 5, in line 40, omit the words "or private".

2. On page 5, in 41, substitute the words "or other" with "or municipal".

CLAUSE 12

1. On page 6, in line 36, omit the words "on the budget of the benefiting municipality".

CLAUSE 14

1. On page 7, in line 20, insert after the words "end of that month" the words "and for the financial year up to the end of that month".

2. On page 7, in line 22, insert after the words "reported on" the words and for the financial year up to the end of that month".

CLAUSE 15

1. On page 7, in line 42, insert after the words "the Treasury must" the words ", not later than the date determined by the National Treasury,".

CLAUSE 16

1. On page 7, in line 54, insert after the words "month reported on" the words "and for the financial year up to the end of that month".

2. On page 7, in line 56, insert after the words "month reported on" the words "and for the financial year up to the end of that month".

3. On page 7, in line 58, insert after the words "month reported on" the words "and for the financial year up to the end of that month".

4. On page 8, after line 6, insert:

CLAUSE 17

1. On page 8, in line 18, substitute the words "be made at the end of each quarter" with the words "include reports for each quarter and be in such format determined by the National Treasury.

CLAUSE 18

1. On page 8, in line 24, omit the words "during the financial year".

2. On page 8, in line 41, insert after the words "Public Finance Management Act" the words "or in any other national legislation or prescribed".

3. On page 8, in line 43, omit the words "during the financial year".

CLAUSE 20

1. On page 9, in line 9, omit after the words "in the audit" the word "of" and insert the words

"report on the".

2. On page 9, in line 10, insert after the word "statements" the words "of a department or municipality".

3. On page 9, from line 15, substitute the whole of clause of 20(c) with "(C) the evaluation of evidence supporting the amounts and disclosures in monthly and annual reports contemplated in this Act".

CLAUSE 21

1. On page 9, in line 27, insert after the words "the National Treasury and", the words ", if the National Treasury deems it appropriate,".

CLAUSE 22

1. On page 9, in line 42, substitute the words "Schedule 3, 4, 5 or 6" with the words "Schedule 3, 4 or 5".

2. On page 9, in line 43, omit the word "approved".

CLAUSE 25

1. On page 10, in line 29, omit the word "national".

CLAUSE 27

1. On page 11, in line 6, substitute the words "subsection (1)" with the words "subsection (2)".

2. On page 11, in line 11, insert after the words "National words "and the relevant provincial treasury".

CLAUSE 28

1. On page 11, in line 22, insert after the words "the National Treasury and" the words ", the National Treasury deems it appropriate,".

2. On page 11, in line 25, insert after the word "improved" the words "accountability or".

SCHEDULE 3

1. On page 14, above the column marked insert the words "Column A", and above Outer Years" insert the words "Column B".

2. On page 15, above the column marked insert the words "Column A", and above Outer Years" insert the words "Column B".

SCHEDULE 4

1. On page 16, above the column marked "2002/03 Allocation R'000" insert the words "Column A", and above the column marked "MTEF Outer Years" insert the words "Column B".

2. On page 17, above the column marked "2002/03 Allocation R'000" insert the words "Column A", and above the column marked "MTEF Outer Years" insert the words "Column B".

3. On page 18, above the column marked "2002/03 Allocation R'000" insert the words "Column A", and above the column marked "MTEF Outer Years" insert the words "Column B". In paragraph c of the column marked "name of allocation" substitute the words "(councilling and testing)" with the words "(health)". In paragraph c of the column marked "purpose" insert after the words "councilling and testing" the words "homebased care, mother to chiuld prevention programmes and other HIV / AIDS related matters."

4. On page 19, above the column marked "2002/03 Allocation R'000" insert the words "Column A", and above the column marked "MTEF Outer Years" insert the words "Column B".

5.On page 20, above the column marked "2002/03 Allocation R'000" insert the words "Column A", and above the column marked "MTEF Outer Years" insert the words "Column B".

6. On page 21, above the column marked "2002/03 Allocation R'000" insert the words "Column A", and above the column marked "MTEF Outer Years" insert the words "Column B".

SCHEDULE 5

1 On page 23, above the column marked insert the words "Column A", and above Outer Years" insert the words "Column B".

2. On page 24, above the column marked insert the words "Column A", and above Outer Years" insert the words "Column B".

3. On page 25, above the column marked insert the words "Column A", and above Outer Years" insert the words "Column B".

4. On page 26, above the column marked insert the words "Column A", and above Outer Years" insert the words "Column B".

SCHEDULE 6

1 On page 27, above the column marked "2002/03 Allocation R'000" insert the words "Column A", and above the column marked "MTEF Outer Years" insert the words "Column B".

2. On page 28, above the column marked "2002/03 Allocation R'000" insert the words "Column A", and above the column marked "MTEF Outer Years" insert the words "Column B".

3. On page 29, above the column marked "2002/03 Allocation R'000" insert the words "Column A", and above the column marked "MTEF Outer Years" insert the words "Column B".

4. On page 30, above the column marked "2002/03 Allocation R'000" insert the words "Column A", and above the column marked "MTEF Outer Years" insert the words "Column B".

On the 18 March 2002, Advocate J. Machaka, Assistant Legal Advisor of the Free State Legislature briefed the Committee on the report from inter-provincial meeting.

The Committee was informed about amendments effected on the Division of Revenue Bill.

The Committee considered amendments on the Bill and information received. The Committee supports the Bill with amendments.

The Committee recommends that:

Authority be conferred to the Free State Delegation, to vote for the adoption of the Bill with amendments.

Chairperson: Finance Committee Free State Legislature

18 March 2002

Secretary to the Legislature

[B5B-2002]

DATE : 15 MARCH 2002

The Provincial Standing Committee on the National Council of Provinces mandates the KwaZulu-Natal delegation to the National Council of Provinces to support the DIVISION OF REVENUE BILL [B5B-2002] and the agreed amendments of the Select Committee on Finance.

The legilslature of the Northern Province has at its sitting held on 14 March 2002, adopted the report of the Portfolio Committee on Finance, economic Affairs and Tourism on the Division of Revenue Bill (B5 - 2002) and conferred mandate to NCOP delegates to vote in favour of the Bill.

The Portfolio Committee on Finance and Economic Affairs deliberated and tabled a Report on the Division of Revenue Bill [B5B - 2002]. The following concerns which have an effect in the allocation of funds in Mpumalanga have been raised:

1. The use of the statistics of the 1996 census which are currently unreliable as data.
2. The surge in population of the province, caused by the influx of illegal immigrants from neighbouring countries, was not properly considered when allocating funds to Mpumulanga.

The Permanent delegates representing Mpumulanga in the NCOP are conferred with authority and mandated to vote in favour of the Bill.

The Mpumulanga Provincial Legislature gave this mandate at its siting on 14 March 2002.

TO: THE SECRETARY TO THE NCOP

FROM: OFFICE OF THE SPEAKER

After having considered the Bill, the Northern Cape Province Permanent Delegates to the National Council of Provinces, are hereby mandated to vote for the Division of Revenue Bill [B5B-2002] as recommended by the Portfolio Committee on Finance, taking into consideration the attached concerns.

In the definitions, the Committee supports the addition in terms of category C Municipalities, as we have municipalities with large District Management Areas. Siyanda Municipality previously did not get the equitable share, it is a positive step for them;

Part 1 Clause 2: The objectives of the Bill are in line with the Constitution, as Local Government is a sphere of Government;

Clause 7: The Committee recognises the criteria of allocation of funds but recommends more research in this regard. Treasury and FFC should reach a common understanding of the uniqueness of the Province. Heavy-duty trucks in transit on national and provincial roads in our province, contribute to its dilapidation. Proper research on the contribution of our province to the National GDP should be conducted. Mining happens in our province whilst the revenue collection happens in other provinces where the head offices of such mining companies are located.

On Conditional grants: We urge National Treasury to roll out an improved accessing process in order for provinces and local government to obtain grants;

On Poverty Relief grants: we support the phasing out of the grant and support the alternative Poverty Alleviation Programmes, which are more permanent and sustainable. The programmes need to function in a co-ordinated fashion.

Different departments, which issues Poverty Alleviation grants, should interact to ensure proper co-ordination;

National Treasury must develop a mechanism to ensure that grants to Municipalities be used for the intended purpose; further to relay information in this regard to Provinces to enable them to exercise proper oversight.

Report of the Standing Committee on Finance and Economic Development, on the Division of Revenue Bill [B5B -2002] (NCOP), dated 14 March 2002, as follows:

The Standing Committee on Finance and Economic Development, having considered the subject of the Division of Revenue Bill [B5B -2002] (NCOP), referred to the Provincial Parliament in terms of the rules of the National Council of Provinces (NCOP), begs to report that it confers on the Western Cape's delegation in the NCOP the authority to support the Bill.

15March 2002

The Chairperson of the Finance Committee, Ms J L Fubbs, tabled the voting mandate on the

Division of revenue Bill as follows.

The Standing Committee on Finance deliberated on the Division of Revenue Bill (B5B - 2002), a

Section 76 Bill. which was introduced in the National Council of Provinces and tabled a negotiating mandate on Tuesday 11 March 2002.

- The Finance Committee deliberated on the Division of Revenue Bill and satisfied itself that the Bill addressed the constitutional requirements for an equitable division of revenue, taking cognizance of economic disparities and addressing the fiscal capacity and efficiency of provinces and municipalities.

- Member UD Moiloa who was nominated to attend hearings on the Division of Revenue Bill at the NCOP briefed the Committee on Thursday 07 March 2002.

- On Monday 11 March 2002, the Chairperson of the Select Committee on Finance, Ms DQ

Mahlangu who is also the Gauteng permanent delegate to the NCOP, briefed the Committee on the deliberations of the Select Committee.

- The Finance Committee also took cognizance of the support by the Member Of Executive Council for Finance and Economic Affairs in Gauteng, to the Division of Revenue Bill

- The Voting Mandate on the Division of Revenue Bill [B5B - 2002], was adopted by the Finance

Committee on Thursday 14 March 2002.

The principle of the Bill is informed by Section 214(1) of the Constitution and the Intergovernmental Fiscal Relations Act, 1997, to provide for the following:

- the equitable division of revenue raised nationally among the national, provincial and local spheres of government

- the determination of each province's equitable share of the provincial share of that revenue;

- any other allocations to provinces, local governments or municipalities from the national

government's share of that revenue, and any conditions on which those allocations may be made; and

- section 214(2) of the Constitution requires that the Bill nay only he enacted after the provincial and local spheres of government and the FFC have been consulted, and after any recommendations of the FEC have been considered.

All of the concerns raised by the Finance Committee in the negotiating mandate on the Division of Revenue Bill were addressed The detail and the negotiating positions adopted by the committee with regard t') the douses raised in the negotiating mandate were also covered. These were Clauses 8,18, 20, 21 and 28. However1 the responses by Treasury to the Auditor-General's comments on douse 30 was not raised as a concern.

The role and function of the Auditor-General's Office in respect of ensuring compliance with the requirements of the Public Finance Management Act (PFMA) is pertinent The Bill, implementing as It does the requirements of the PFMA, takes a significant step in promoting transparency and accountability of government spending.

The bill also set out specific obligations on the reporting of conditional grants, to be included in the financial reports submitted to the auditor-general for audit. The Finance Committee studied the concerns raised by the Office of the Auditor-General and Welcomes the amendments particularly those of clauses 8.18(2), 20,27(3), 21(5) and 28(3).

The Standing Committee on Finance supports the principle and the detail of the Division of

Revenue Bill [B5B - 2002] as negotiated in the meeting of the Select Committee on Wednesday

13 March 2002 at the NCOP.

In terms of Section 65 of the Constitution, the Finance Committee recommends that the House confer authority on the Gauteng Provincial Delegates to the NCOP to vote in favour of the Division of Revenue Bill [B5B - 2002].