The Financial and Fiscal Commission explained its mandate and that it dealt with Inter-Governmental Fiscal Relations (IGFR) in terms of legislative provisions or executive decisions that affected either provincial or local government from a financial and/or fiscal perspective. The Commission had to be consulted in terms of the FFC Act. The FFC had to submit an Annual Submission on the Division of Revenue which was submitted ten months prior to the tabling of the Division of Revenue Bill by the Minister of Finance and contained recommendations for the following fiscal year and Medium Term Expenditure Framework (MTEF). The FFC also made a submission on the Medium Term Budget Policy Statement which contained the FFC’s response to the MTBPS and adjustments to the division of revenue. Government was obligated through an Act of Parliament to explain how it had taken the FFC recommendations into account in arriving at the division of revenue for any given year. The FFC also had to identify strengths and weakness within the IGR system and propose evidence based policy proposals. Inter-Governmental Fiscal Relations concerned the structures of public finance in a state with more than one level of government. It involved how powers and functions, spending, taxing, borrowing and regulatory functions were distributed amongst levels of government. It also concerned the nature of transfers (grants) between national, provincial and local levels, and the institutional mechanisms for coordination, monitoring, support, supervision and intervention.
Looking specifically at funding for children, disability and women specific services, the FFC noted trends as well as explaining the highlights of key past FFC Recommendations. The budget trends for provincial child welfare in 2011/12 to 2013/14 showed that real funding of and spending by provincial child welfare sub-programmes declined by -0.3% per annum. The sub-programme Crime Prevention and Support was projected to decline by -1.7% per annum and the largest real declines in spending were recorded for Limpopo (-2.44%), Free State (-1%) and the Western Cape (-0.9%). Spending was projected to increase in real terms for child welfare services in the Eastern Cape (1.4%), and Gauteng (0.4%). On average, provincial departments spent R 6 053 per beneficiary on early childhood services, and R 14 512 on crime prevention and support services.
The Committee thanked the FFC for the presentation and acknowledged that Members desperately needed the interaction. There was poor assistance within education for people with disabilities, especially the deaf. Many of them dropped out because they did not receive support at a tertiary level and any assistance from the FFC would be highly appreciated. The country needed more specialised schools for people with disabilities and those with autism. Some autistic schools were privately funded and children received one on one teaching. One on one teaching was so fruitful that some students were integrated into normal schools and universities. The FFC recommendations had to look at more autistic schools and the role which NGOs and NPOs play in helping those children. Children with disabilities struggled with transport plus payment for such transport had to be done privately. Some students could not get their degrees because they did not have second languages as this was a requirement. The Committee asked if the FFC itself had achieved the 2% target for employing people with disabilities; what would it recommend to achieve Millennium Development Goals 4 and 5; requested recommendations on how and when vulnerability would be taken out of the vulnerable and how they could be made to sustain themselves.
Financial and Fiscal Commission (FFC) presentation
Mr Bongani Khumalo, FFC Acting Chairperson, said the Commission was a permanent statutory body established in terms of Section 220 of Constitution. It was independent and subject only to the Constitution and the law and functioned in terms of an Act of Parliament. The mandate of the Commission was to make recommendations, envisaged in Chapter 13 of the Constitution or in national legislation to Parliament, Provincial Legislatures, and any other organs of state determined by national legislation. The FFC’s primary outputs/reports in terms of Section 221 of the Constitution were to submit an Annual Submission on the Division of Revenue (DoR). The Annual Submission on the DoR was submitted 10 months prior to tabling of the DoR Bill by the Minister of Finance and contained recommendations/proposals for the following fiscal year and Medium Term Expenditure Framework (MTEF). The submission on the DoR Bill and the Appropriation Bill were submitted to Parliament in February and April outlining the FFC’s response to the Bills and relevant annexure. The entity also made a submission on the Medium Term Budget Policy Statement which contained the FFC’s response to the MTBPS and adjustments to the division of revenue. The Commission reported on any other special reports made at own initiative or request by organs of state.
The Commission dealt with Intergovernmental Fiscal Relations (IGFR) regarding legislative provisions or executive decisions that affected either provincial or local government from a financial and/or fiscal perspective. The Commission had to be consulted in terms of the FFC Act. The important stakeholders for consultation in IGFR were the Ministry of Finance, The Presidency, Organised Local Government, Ministry of Cooperative Governance and Traditional Affairs, Parliament, Provincial Departments and Legislatures, National sector Departments. The FFC had to identify strengths and weakness within the Intergovernmental Relations system and propose evidence based policy proposals. It had to interact and participate in forums and institutions responsible for Inter-Governmental Relations (IGR) policy.
The FFC participated in the Budget Council and Budget Forum through the FFC Chair and Deputy Chair, and it attended on invitation various MinMecs, and interacted with various committees within parliament. Parliamentary oversight was the instrument for ensuring that FFC recommendations were acted upon, even though the recommendations were not binding. Government was obligated through an Act of Parliament to explain how it had taken the FFC recommendations into account in arriving at the division of revenue for any given year.
Ms Tania Ajam, FFC Commissioner, said Intergovernmental Fiscal Relations concerned structures of public finance in a state with more than one level of government on how powers and functions, spending, taxing, borrowing and regulatory functions were distributed among levels of government. It also concerned the nature of transfers (grants) between national, provincial and local levels, and the institutional mechanisms for coordination, monitoring, support, supervision and intervention. The linkages in the IGR system included the policy making role; the implementation role; fiscal flows and budgets, accountability regarding purpose and target group; and to see that fiscal decentralisation was “multi-dimensioned”. Any disjuncture in the above undermined service delivery and vulnerable groups often depended disproportionately on public services and were therefore disproportionately affected by poor service delivery. The IGFR was important for the incentives and disincentives for service delivery (efficiency, effectiveness); distributional impact and developmental outcomes (inter-regional equity, interpersonal equity); governance values (politically inclusive, transparency, accommodating diversity, public participation, national cohesion vs subnational autonomy).
The primary focus on child, disability and victim-focused service provision lay with provincial education, health and social development departments and South African Social Security Agency (SASSA). The important programmes were: Child-specific: For (0-5) Early childhood development (Basic Education and Social Development); For (6-18) Primary, secondary education; child justice and protection; SASSA – child support, foster care grants. The Disability specific programmes focused on: Special schooling; disability welfare; and disability grant. The victim or women specific programmes focused on victim empowerment. The remaining provincial education, health and welfare programmes would need to distinguish beneficiaries by gender and age.
The primary channel for funding children, disability and women specific services was the unconditional Provincial Equitable Share (PES). The New Health Component of the formula did distinguish between beneficiaries according to women and children. The impact assessment of conditional grants on women and children were only possible when beneficiaries were specified by gender and age. The exception was education-related conditional grants (National School Nutrition Progamme, HIV-Aids) that were child-specific and the Expanded Public Works Programme Incentive Grant for the social sector that was women-centric and other health, sports and libraries grants.
Mr Vincent Makinja, IGFR Programme Manager, presented the highlights of key past FFC Recommendations. The FFC recommended that social security should be a national responsibility administered through the establishment of the national social agency (2002/03). Government accepted the proposal and it was implemented. The Commision proposed the incorporation of Early Childhood Development (ECD) Education Component (2003/04). Government accepted the proposal and ECD was part of the educational component in the equitable share formula. The entity recommended a design of the poverty alleviation package which should align the social security payments with provision of free basic services (2003/04). Government undertook a review of the poverty alleviation programmes and had decided to phase most of the poverty into the equitable share or into the infrastructure grants. The FFC recommended that that specific consideration be given to allocating funds to social welfare services in the provincial equitable share (2006/07). The Government agreed and had increased the basic component to allow provinces the discretion to increase allocation to social welfare. The entity proposed that there be setting norms and standards for the delivery of a defined minimum basket of social welfare services by provinces (2006/07). The Government agreed with the FFC and undertook to do a study to clearly define this basket services.
The Commission proposed the National School Nutrition Programme (NSNP) to be extended to secondary schools (2008/09). Government supported some of the plans and took a cautionary stance against the decision to extend the programme to secondary schools. The entity recommended that government should introduce a block grant for education, health and social development that funded clearly defined and costed outcomes in those areas in the medium and long term. Government did not except this recommendation. The FFC recommended that National, Provincial and Local government should further reprioritised expenditure in respect of equitable share and conditional grants for 2012/13 to move towards attaining the MDGs. Work was still in progress regarding this recommendation. The Committee proposed the carry out of independent cost effective and quality review (both public and private) in education, health and social wage (2009/10). The recommendation was accepted and the Ministry of Monitoring and Evaluation had been assigned the function as part of its future role.
Mr Conrad van Gass focused on the budget trends for the provincial child welfare 2011/12- 2013/14. The real funding of and spending by provincial child welfare sub-programmes declined by -0.3% per annum. The sub-programme Crime Prevention and Support was projected to decline by -1.7% per annum and the largest real declines in spending were recorded for Limpopo (-2.44%), Free State (-1%) and the Western Cape (-0.9%). Spending was projected to increase in real terms for child welfare services in the Eastern Cape (1.4%), and Gauteng (0.4%). On average, provincial departments spent R 6 053 per beneficiary on early childhood services, R 14 512 on crime prevention and support services. These averages masked some very wide variations amongst provinces. For example, per beneficiary spending on ECD was R 2 500 in the Northern Cape and R 13 750 in Gauteng; R 5 700 was spent per beneficiary on child justice services in the Northern Cape and R 31 330 in Gauteng. On average, over the 2011-12 to 2013-14 medium-term budget, real per beneficiary spending was anticipated to decline by -5.74% per annum.
The Acting Chairperson of the FFC stated that the future projects relating to vulnerable groups for 2011/12 research cycle included Assessing Gender Responsive Budgeting in the Local Government Sphere in South Africa; Large Scale Model for Policy Analysis in South Africa; The Impact of Climate Change on the Agriculture Sector, Water and Food Security in Rural South Africa; Impact of No Fee Schools Policy; and Financing Natural Disasters. The FFC concluded that the impact of the intergovernmental fiscal system on children, women, and persons with disability cut across many different sectors and spheres. The Budget Review and Recommendations Reports (BRRR) could be important in creating a cross department focus on women, children and persons living with disability. The entity looked forward to engaging further with the Committee on these critical issues.
The Chairperson said it was very interesting to listen to the FFC and many questions were prompted upon hearing the presentation. It was true that the Committee dealt with issues across various Departments, but very little had been done by other Departments, especially addressing the needs of the most vulnerable.
Mr D Kekana (ANC) asked the FFC if it considered the needs of vulnerable people to be addressed. He asked why the Department/Committee of Women, Children and People with Disabilities were established, besides policy formation if its work had been dealt with across other Departments, and he wondered where the entity belonged within the total scheme. The Department would always have a limited budget unless it was defined properly.
Ms P Petersen-Maduna (ANC) asked if the FFC achieved its 2% target of having people with disabilities employed and what it would recommend in achieving MGD 4 & 5.
A Member asked how and when would vulnerability be taken out of the vulnerable and how could they be made to sustain themselves. She understood that it was the first time the FFC interacted with Committee and she always thought on how the rural areas could be made better, especially for the vulnerable. She recommended that there should be a stipend or incentive for people who work in rural areas. It was good to see the notion on non school fees and future projects of financing natural disasters. She asked why schools in urban areas like Gauteng were rebuilt much faster than schools in rural areas when there were disasters.
Ms M Nxumalo (ANC) said it was good to see that some of the recommendations had been accepted and asked if the FFC requested its information on gender programmes from all Government Departments.
Ms D Robinson (DA) thanked the FFC for the presentation and said the Committee desperately needed the interaction. There was poor assistance on the education side for people with disabilities, especially the deaf. Many of them dropped out because they did not receive support on tertiary level and any assistance form the FFC would be highly appreciated. The country needed more specialised schools for people with disabilities and those with autisms. Some autistic schools were privately funded and children received one on one teaching. The one on one teaching was so fruitful that some students were integrated into normal schools and universities. The FFC recommendations had to look at more autistic schools and the role which NGO’s and NPO’s play in helping those children. Children with disabilities struggled with transport and payment for transport services had to be done privately and some students could not get there degrees because they did not have 2nd languages as it was a requirement. She saw it as a serious issue which needed to be looked at. She asked for all government departments gender budgeting expenditure with all its figures.
The Chairperson asked why there were so many large discrepancies per capita spending for provincial child welfare in 2011/12.
The Acting Chairperson responded that other people made decisions on the structure of the government and not the FFC. The main challenge was regarding the coordination of all programmes so that all stakeholders could assist with the implementation process. The question that had to be asked was whether progress had been made in terms of advancing the historically disadvantaged people and if the country was in line with the global trends in looking after the vulnerable. There was definitely a position and arrangement for the Department in focusing on the vulnerable groups. The FFC made recommendations every year and could determine whether people abused social grants. It was more concerned whether people could access social grants and wanted marginalised people to be part of the system. At times it seemed as if many people forgot that the main purpose of the education system was to get people out of poverty. The FFC had not done anything yet in achieving the 2% target of people with disability and there were no disabled people employed. The Commission did not want to place people in jobs for the sake of doing it, but understood that the issue was important and needed to be addressed. The entity had been working on the Gender based project and had been in discussion with the Minister of Cooperative Governance where they raised various issues dealing with gender. The Commission could not get enough information on gender based programmes and had to select a sample of municipalities to look at the issue. The Committee could assist on how the budget would be presented on gender based programmes and on how to tackle the issue of vulnerable groups. There was an institution dealing with all language related issues but he requested the Committee to raise norms and standards for all learners with special needs. It was important for all concerns to be raised and the Commission would have a discussion with the Department of Basic Education on the issue.
Ms Ajam replied that social development was not under the priority services and that caused the huge discrepancies per capita spending for provincial child welfare, and the other issue was the massive provincial overspending which caused delays in the payment of NPOs. It seemed as if the budget was mainly for existing facilities rather than new ones and this trend continued the apartheid pattern of spending. Non Profit Organisations needed support to get going and the issue of capital funding needed to be looked at. The absence of norms and standards made it more difficult for NPOs to be allocated proper funding. The ECD was a good example of an area of norms and standards. The norms and standards were very critical for budgeting and could not be budgeted for or monitored if not well defined. Social services really needed to think on how to approach the issue and the role of the Committee was to first provide Government with a wide view of what was happening on gender issues so that it could be budgeted for and monitored. The FFC received gender reports from Government departments and thought it was the role of the Committee to make that information available. The urban responses were quicker regarding disaster management because it had more financing than the rural areas. It seemed as if the FFC underestimated the need for support to children with disabilities. The issue of autistic children was very sensitive and she agreed that they needed more help.
Mr Ramos Mbugu said MDG4 spoke to the resolution of child mortality and MDG5 looked at reducing maternal mortality. It was alarming to see that the mortality rate of children and maternal mothers had gone up since 1990 instead of going down, and the country was for years away from the year 2015 when the MDG’s had to be met. The death rate had to be reduced by 2/3rd by 2015 and the figures were currently going the wrong way. The Health budget had to be doubled in order for the country to attend to MDG 4 & 5 but he doubted that it would be possible. The country could at least turn the tide within the Health sector because it had a fair idea on what was causing the deaths. The deaths were mainly due to HIV/AIDS and people who died while within the health care system. Tackling the issue of HIV/AIDS and the challenges within the Health care system would reduce the deaths. National and Provincial government needed to realign its budget to those issues which could turn the tides.
Mr D Kekana (ANC) stated that education was key in addressing gender issues, and the well being of vulnerable groups. Approximately 70% of the country’s population was youth and they needed to be prepared for the future. However, it seemed as if the youth was still the core of the problem because majority of them could not find jobs and therefore could not be empowered. The Government did not do well in addressing the plight of the youth.
Ms D Robinson (DA) indicated that victims of abuse were increasing and there was a desperate need for more safe havens for women and children.
Ms Ajam replied that the education of the whole society was more of societal issue. The Committee had to engage with the Department of Education on how gender issues could be mainstreamed.
The Acting Chairperson said that issue of unemployed graduates was a serious problem. They had had to seriously address current youth unemployment and for employment for the future youth. There were far too many drop-outs within the Basic Education system and fixing the link between education and unemployment would require the intervention of various Departments.
Mr Ramos Mabugu stated that the country almost achieved its target of universal primary education and now had to ensure that what had been achieved remained sustainable. It seemed as if more boys than girls participated within the education system and it was important for the trend to be sustained. The notion regarding creating jobs was also influenced by issues beyond the education’s sphere like economic performances. Most women were in agriculture and the textile industry in the economic sector and that trend needed to change.
The Chairperson thanked the FFC for its presentation and stated that the Committee had much power but did not realise it.
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