Committee Reports: Adjustments Appropriation Bill 2019 & Proposed division of revenue and conditional grant allocations to Provinces and Local Government in 2019 MTBPS

NCOP Appropriations

05 December 2019
Chairperson: Ms D Mahlangu (ANC, Mpumalanga)
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Meeting Summary

Draft report on proposed division of revenue and conditional grant allocations
Draft Report on Adjustments Appropriation Bill

The report was adopted with amendments, with the DA reserving a right to check on legality.During consideration of the draft report on the Adjustments Appropriation Bill, the DA questioned the notion that the Select Committee had the power to approve rollovers. There was a focus on the lack of skills at local government level to use budgets effectively and productively. Attention had to be given to infrastructure stress caused by drought and water scarcity, and the need for funding support. The Committee had to point out to the NT what it expected of it, and the NT had to respond to the findings of the Committee’s research team.

In the consideration of the draft report on the proposed division of revenue to provinces and local government in the 2019 medium term budget policy statement (MTBPS), it was submitted that inputs made by the Financial and Fiscal Commission (FFC) were not adequately represented in the report. The National Treasury (NT) was not taking the FFC and the South African Local Government Association (SALGA) seriously about local government under-funding. There was a lack of funding to develop skills to use grants effectively. ANC Members submitted that there was a need for discussion about the sphere of government system, which was seen as too sophisticated, and was causing wastage. The district model was discussed.

The report was adopted with amendments. The DA and the EFF did not support the Bill, but the DA did support the report, which was seen as a good one.

Meeting report

Draft Report on Adjustments Appropriation Bill

The Chairperson advised the Committee to turn to page 7 of the report, to deal with observations and findings.

Mr D Ryder (DA, Gauteng) commented that it was a good report. However, reference was made under 6.2 and 6.3 to the Select Committee approving rollovers. He opined that the Committee did not have the power to approve rollovers.

Mr Y Carrim (ANC, KwaZulu-Natal) remarked that budgets had to be approved by Parliament. If the Select Committee did not approve, it would mean that the National Council of Provinces (NCOP) would be bypassed.

The Chairperson asked the Parliamentary Legal Adviser to comment.

Adv Frank Jenkins, Senior Parliamentary Legal Adviser, agreed that if it was part of the adjusted appropriation process, it had to be approved by Parliament. However, it was rather a matter of the Select Committee recommending approval to the House.

Mr Carrim commented that it did not necessarily diminish the power of the Select Committee. No Committee had the power to approve. Committees could only recommend to the House. Still, if the Committee was agreed on a matter, and made a recommendation, it would be taken seriously by the Plenary.

Mr Ryder responded that the two parties could agree to disagree on the matter.

Mr F du Toit (FF+; North West) referred to the under-expenditure of infrastructure budgets (6.4). He asked that agriculture be added to the list of sectors needing additional support.

Mr Carrim remarked that the matter of support given to use budgets effectively and productively, had been raised with the National Treasury (NT). He was in favour of the NT stipulating that 10% of the budget had to be used to develop skills to use budgets. The Committee needed a guiding principle to decide what it would approve, and what not. Infrastructure budgets were under stress because of the drought and water scarcity. The Committee could say to the House that things had to be done differently. It had to be responsive to what the research team was saying. The NT also had to respond to the research findings included in the report.

The Chairperson agreed with Mr Du Toit about the inclusion of agriculture. Decisions taken by the Committee had to identify whatever was falling through the cracks. The NT had to be told what the Committee expected of it, on the way forward. The Committee represented the interests of the provinces.

Mr M Moletsane (EFF, Free State) supported additional funding to cope with drought.

The Chairperson asked for a mover for adoption of the report.

Mr E Njandu (ANC, Western Cape) moved for adoption, and Ms M Mamaregane (ANC;Limpopo) seconded.

Mr Ryder said that the DA would reserve its right to check on legalities.

Mr Du Toit supported Mr Ryder.

The report was adopted with amendments.

Draft report on proposed division of revenue and conditional grant allocations

The Chairperson asked that the Committee proceed to observations and findings in the draft report on the proposed division of revenue and conditional grant allocations to provinces and local government in the 2019 medium term budget policy statement (MTBPS).

Mr Ryder opined that there were things left out of the report. Inputs from the Financial and Fiscal Commission (FFC) had been left out. The Select Committee interacted frequently with the FFC. The NT was not taking FFC inputs seriously. The South African Local Government Association (SALGA), the FFC and the Organisation Undoing Tax Abuse (OUTA) believed that local government was under-funded. The NT disagreed with that, arguing that municipalities could raise revenue through collection of rates and taxes, and margins on the provision of services. The matter could be dealt with under observations. It could be proposed that there be more discussion about funding to local government.

The Chairperson agreed that it could be added to observations.

Mr Carrim remarked that it was already included in the fiscal framework report, but it could be repeated, because it belonged more properly in the report on the table. He agreed about funding deficiencies, but it had to be admitted that a lot of money was being wasted at local government level. It was true that municipalities struggled to raise revenue where people were not paying property rates. But there was also a lack of capacity to spend money received, and there were officials who were using the Equitable Share (ES) to buy cellphones and fancy cars. The ES could not be made into a conditional grant. If local government could use money received effectively and productively, it would be in a better position to ask for more revenue. The challenge was that rural municipalities lacked the skills to use funding effectively. Constant coalition changes in local government caused instability, and the public interest was not served. Provisions had to be put into law to prescribe the grounds on which coalitions could change. Provincial and local government could benefit from a reduction in the number of provinces.

The Chairperson commented that the reduction of provinces was a party matter.

Mr Z Mkiva (ANC; Eastern Cape) said that it had to be discussed, as appropriations were being dealt with. The ruling party had adopted a position on the matter, as resources were being lost between the national and provincial spheres.

The Chairperson suggested that the relevant Portfolio Committee to engage with about that, would be Cooperative Government and Traditional Affairs (CoGTA). The Committee’s motivation to discuss that had to be based on the fiscus.

Mr Njandu referred to the district model as a means to co-ordinate funding. Municipalities worked in silos. With the district model, municipalities could share the responsibility of complying with NT regulations.

Mr Carrim advised that it be inserted that the Committee had observed that the constant rollovers and virements were related to the structure of the state. A more effective relation between the three spheres of government was needed. The State was too sophisticated, and it resulted in wastage. It could be stated that the Committee wanted to consult with CoGTa about challenges related to a too sophisticated sphere of government system.

Mr Njandu suggested that CoGTA be identified as a role player, and that CoGTA and the NT should expedite the pilot project of the district model.

Mr DuToit commented that if Mr Carrim’s suggestions were to be inserted, it would push a well thought through report in a new direction. The district model posed the risk of replication of functions. There was a lack of appropriate skills, because people were not employed where they were supposed to be employed. Appointments had to be on the basis of merit.

Mr Njandu said that district municipalities were the suppliers of bulk water. Skills had to be developed within them.

Mr Ryder commented that it had to be known what the Presidential proposal on the district model entailed. The pilot project could provide answers about risks and challenges, including duplication.

The Chairperson reminded Members of Mr Carrim’s statement that municipalities needed increased capacity to spend effectively, so that budgets could be increased on the grounds of performance. It would not do to simply increase funding. She asked the NT for comment.

Ms Keitumetse Motshegwe; NT Senior Budget Analyst, responded with reference to the FFC, that clarity could be provided about matters that the NT had to provide feedback on.

Mr Lubabalo Nodada; Committee Secretary, remarked that the comments made about inadequate funding to local government by Prof Daniel Plaatjies of the FFC, had been made during discussion, and was not included in black and white in a presentation. The question was how that comment had to be structured.

Mr Ryder responded that he understood the reluctance of the administration, but the Committee had to be combative in order to stir the NT into action. It was recommended that SALGA have a deeper conversation with the NT. The NT had to engage more with SALGA and the FFC, and had to respond comprehensively to the FFC, as it was a constitutionally mandated entity.

Mr Carrim suggested that a separate point had to be made about SALGA. The NT had to engage more effectively with SALGA, although it was not constitutionally mandated like the FFC, and rather resembled a trade union. Still, the NT had to engage with its demands.

The Chairperson asked for a mover for adoption.

Mr Njandu moved for adoption, and Mr Du Toit seconded.

Mr Moletsane said that the EFF had been very vocal about local government funding, and would reserve support for the Bill.

Mr Ryder remarked that his party did not support the Bill, but the report was a good one, and he would support it.

The draft report was adopted with amendments.

Adoption of minutes

The Committee’s minutes of 26, 28 and 29 November were considered and adopted without amendment.

Leave-taking and farewells

Members were in agreement that much had been learnt during the preceding six months, and commended the mutual respect and collegial spirit shown by the different political parties. It was remarked that the NCOP had to play a more important role than ever before.

The Chairperson adjourned the meeting.


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