Division of Revenue Bill: final mandates

Meeting report

Introduction by Chairperson
The Chairperson said that there would be a response from the National Treasury (NT) on issues raised by the provincial legislatures about the negotiating mandates.

Mr O Terblanche (DA, Western Cape) said that the NT had not responded to issues raised by the Western Cape. The report was not complete.

The Chairperson said that minutes of the previous meeting would go to the Finance Portfolio Committees in all nine provinces.

Mr Steve Kenyon, Director: Local Government Budget Process, NT, said that the Western Cape had made two comments in the negotiating mandates. However, the NT had responded only to comments that were headed “recommendations”. The Western Cape had only cited reasons why it would not vote in favour of the Division of Revenue Bill. 

Mr Terblanche responded that he had been placed in a difficult position. It would be asked of him why there was no response to the Western Cape comments.

The Chairperson asked Mr Kenyon to see to it that a response be added to the NT document.

National Treasury responses to negotiating mandate recommendations

Mr Kenyon said several provinces had raised concerns about the state of provincial roads and the funding for maintenance and improvement. There were concerns about the equitable share (ES) and the criteria used to determine it. There were requests for a review of the ES formula. Other recommendations were related to libraries and sports facilities; management and spending of grants; intergovernmental relations; bucket toilet eradication; revenue enhancement for local government; government debt; bloated government departments; debt owed to municipalities; funding of health care services; rain harvesting; Expanded Public Works Programme (EPWP) training and employment; agricultural infrastructure; unfunded mandates; revitalising of the rail system, and the coal haulage grant. The North West province had recommended that the NT look into the concept of food stamps as a mechanism to lessen the burden of the VAT increase on poor people.

Discussion

The Chairperson said that the NT response would become part of the Committee’s DORB report. He asked whether it had to be included as an annexure.

Mr T Motlashuping (ANC, North West Province) commented that he had a feeling that the NT was not taking the recommendations from his province seriously. He referred to the recommendation North West Province had made -- that the NT look seriously into the matter of affording the province a limestone, cement , platinum and coal haulage grant. Recommendations had to be shared with the National Department of Transport. The coal haulage grant had been given to Mpumalanga, but North West Province faced the same issues. One would have thought that the NT would have brought a formula comparable to the Provincial Equitable Share (PES) formula. The NT had not properly responded to that. All committees had to be convinced that there was an equitable distribution of resources among provinces. The grant had been given to Mpumalanga because of an electricity grant. It was supposed to cease after the crisis had been addressed, but it seemed to have continued as something perpetually given. The continuation meant that every province was entitled to the grant, especially North West Province. The issue had to be discussed with the Department of Transport.  He asked what the criteria for awarding the grant were. It was a process without targets or a clear objective. It was an open-ended undertaking which could only be concluded in the next Parliament.

The Chairperson said that after the week of 14 May, there would be meetings with national departments on the spending of grants. Mr Motlashuping had raised an important point. He would advise that the NT and the Department of Transport (DoT) be called to engage on the matters he had raised. Provincial departments had to be instructed to report back. The Chairperson of the Transport Portfolio Committee (PC) could be called, and it could be extended to the PCs on roads in the provinces. Roads were a highly important issue. Mr Motlashuping’s concerns had to be accommodated.

Mr F Essack (DA, Mpumalanga) remarked that there was a lot that he agreed and disagreed with. Within the financial scenario, only a limited amount could be accomplished. Mr Motlashuping had compared North West Province and Mpumalanga. He agreed that the Transport PC and the DoT had to be called. Mpumalanga was a mining region, but that was at the expense of the tourist industry, which had been destroyed. The scenic Long Tom pass, which rivaled the Swiss alps in beauty, had been destroyed by trucks travelling to Maputo harbour. Road networks had been destroyed by trucks from illegal mining. He wondered who had taken the decision to do away with what used to be referred to as ‘goods trains’ in the past. It was costing billions to repair potholes in the roads, and due to tender corruption, work had to be redone. He asked Mr Kenyon how long unfunded mandates would be condoned. The report referred only to the Northern Cape, but it applied to other provinces. He asked when the NT was going to draw the line to insist that unfunded mandates were not in accord with the business model. Municipalities owed billions to Eskom. The NT had to monitor expenditure of the Provincial Roads Maintenance Grant (PRMG). He asked what the provinces were doing.

The Chairperson told him that he had to ask the portfolio committee in the provincial legislature.

Mr Essack continued that departments of finance had to submit a report on debt owed to municipalities within 21 days. He asked if the national or provincial departments of finance had to do that.

The Chairperson remarked that it was a matter of intergovernmental fiscal relations, and monitoring and evaluation. The Committee would go into local government as from the following week. There had to be a report from local government on the ‘back to basics’ programme. The matter of roads had to feature. It had to be known what had to happen at the regional level. Heads of Departments (HoDs) met with Directors General (DGs) at the provincial level every week. That had to filter down to the regions, where regional directors had to meet on a weekly basis, to capture cross-cutting issues like public works, education, school buildings and the like. The Committee would be setting its agenda for the third term in its oversight of local government.

Mr Motlashuping remarked that the Committee was not responsible for tourist agendas. That matter had been exhausted. The equitable share to the provinces had been fully covered the previous week. The negotiating mandates had been dealt with in a three-hour session.

The Chairperson commented that the NCOP represented the provinces, and highlighted issues.  Matters had to be taken to the provincial legislatures for oversight. Oversight had to determine how information was dealt with in portfolio committees. Provincial legislatures had to brought on board during oversight. It could be done immediately in the Free State and Gauteng. He was sick and tired of “blah-blah-blah” stories. He had had enough of that in his political and Parliamentary career.

Mr L Gaehler (UDM, Eastern Cape) remarked that the situation with regard to roads was the same as the previous year. Roads were a moving target. He referred to the road maintenance grants. He had suggested in the past that the roads fund be monitored by the NT. It had been taken to the provinces in preceding years, and nothing had happened. Roads were getting worse by the day. Municipalities were not doing maintenance. Rail transport had to be relied on to cut down on wear and tear on roads. Contractors were doing bad work. The best roads in the Eastern Cape were maintained by the South African National Roads Agency Limited (SANRAL).

Mr Kenyon replied to Mr Motlashuping’s comment that the NT was not responsive to road issues. The NT would focus on road maintenance in the provinces through the budget process. Pressure had to be placed on provincial departments. He agreed with the suggestion that the Transport PC and the NT be called together on the matter.

He answered Mr Gaehler about the PRMG. There were a lot of different pressures on road funding from the provinces. Not enough was available for maintenance. He agreed that SANRAL had done well with road maintenance in the Eastern Cape, but it could not be taken to every road in the country. It was advisable to have the provinces adopt the same practices as SANRAL -- there had to be a mini-SANRAL in every province.

Mr Essack remarked that the tender process was killing the tourist industry in Mpumalanga.

Mr Kenyon responded about unfunded mandates. The NT did not control budgets. A stronger stand could be taken towards provincial treasuries to assume budget responsibility. When the Bill was implemented, the NT could monitor the situation.

Mr M Shabangu (EFF, Free State) referred to a road in the Free State that left much to be desired. When it rained the road was eroded, and it cost millions to repair.

The Chairperson advised that the matter be taken to the debate on local government in the following week. Mr Kenyon would note the point made. He suggested that Mr Shabangu take part in that debate in the plenary. The Minister would also be there. There would be a debate on the DORB report that afternoon.

Mr Shabangu asked if it was a repeat of what had been done in the previous week.

The Chairperson responded that it was a reply by the NT to the report by the provinces of the previous week.


Final Negotiating Mandates

The provinces of the Free State, Gauteng, KZN, Mpumalanga, Limpopo and Northern Cape voted in favour of the Appropriations Bill. The Eastern Cape was still meeting on the matter.

Ms T Motara (ANC, Gauteng) Committee Whip, said that six votes were needed. North West Province and the Eastern Cape could vote in the House.

Mr Motlashuping said that North West Province would present at the plenary.

The Chairperson said that there were six signed mandates in support. One mandate was not signed. The Office of the Speaker had given a commitment that the Western Cape did not support the Bill. He hoped that the North West vote would be received before 12h00.

Committee’s draft report on DORB

The Chairperson said that the response of the NT to the Committee’s recommendations had to be added to the report, as well as the section in the report covering the final mandates. The report had been circulated to Members on the previous Thursday, and he trusted that it had been worked through. It would be dealt with in the plenary that afternoon. The Chairperson would make a statement, and then each province would make a declaration. He asked if it had to be taken to debate, or if a response from the provinces had to be waited for.

Ms Motara said that there had to be a correction to the report, under 6.2(5). At the time of the signing of the report, the Limpopo final mandate had not been included. The rest was fine, and by the time the report was adopted, the responses from the NT would be included. The report had to indicate that the Western Cape submissions had not been treated in the same way other provinces had been treated.

The Committee Secretary referred to the matter of whether the NT responses to recommendations had to be captured in the draft report on the DORB. He advised that a paragraph would be added just above 6.2, to the effect that the issues raised by the provinces had been responded to by the NT, and that the NT document was available for perusal. It was better to acknowledge the NT response in a paragraph. If it were to be attached to the Committee report, it could jeopardise the report.

Mr M Monakedi (ANC, Free State) supported the Secretary. The Committee was not happy with the NT’s responses to the North West Province recommendations, and if the NT report was attached, it would seem to indicate support for the NT report in its entirety. The NT still had to include a response to recommendations from the Western Cape in its report.

Ms Motara also agreed with the Secretary. She suggested that the paragraph be inserted just before 6.2. The paragraph could refer to a detailed document that was available.

Mr Essack agreed that it was a good suggestion. He and Mr Terblanche would be questioned in the DA caucus about why it had been accepted that there had been no response to the Western Cape’s recommendations in the NT report.

The Chairperson asked that it be minuted that the NT had to add a response to the Western Cape recommendations. The Western Cape could make a declaration.

The Chairperson proceeded to take Members through the Committee report on the DORB. Matters referred to in the report included comments by the NT on recommendations; provincial equitable shares; reductions to baselines; equitable share allocations to local government; grants; the South African Local Government Association (SALGA) and the Financial and Fiscal Commission (FFC) submissions; submissions by the Kagiso Trust, Equal Education and Mr Matlala, and provincial mandates. The report stated that issues raised by the NT had been thoroughly dealt with.

The Chairperson remarked that through the observations on pages 17 to 19 of the report, the Committee was setting its agenda for the rest of the year.

The Chairperson put the report up for adoption. Mr Gaehler moved its adoption, and Mr Motlashuping seconded.

Mr Terblanche said that the Western Cape did not support the negotiating mandate. He asked that an objection be recorded, and that the Committee report be adopted with the Western Cape rejection recorded.

Adoption of minutes and Committee programme

The minutes of 24 April were adopted without amendment.

The Chairperson said that the O R Tambo district municipality had to be met with before 28 June. Oversight had to be conducted there. He had asked that the matter be concluded.

Mr Gaehler referred to the suggested meeting with the Transport PC and the Department of Transport.

The Chairperson replied that the Committee had a very tight schedule. Fridays would have to be looked at, or else the Committee could meet for an entire Tuesday. It could be excused from the plenary.

Mr Gaehler suggested that the provinces be called in when the DoT and Transport PC met. A whole day could be devoted to that. He suggested that there should also be a meeting with SANRAL. He referred to the Select Committee on Finance oversight week.

Ms Motara replied that Committee oversight would be done during the oversight week. The visit to O R Tambo district municipality could take place when the Committee schedule was not so tight.

The meeting was adjourned.