The Committee held public hearings on the Division of Revenue Bill, and received presentations from the South African Local Government Association (SALGA), the Pietermaritzburg Pensioners Forum, the Amandla.mobi Campaigner Fellowship and the Organisation Undoing Tax Abuse (OUTA).
SALGA said the issue that most needed attention was the fact that the Bill perpetuated the continuation of the financial incapacitation of local government that SALGA had decried for years. It continued to place an unaffordable burden on struggling ratepayers. Over the past 20 years, the financial resources available to municipalities had fallen short of the demands on municipalities for services and infrastructure delivery, and this had been worsening over time. The ratio of consumers who could afford to pay for services versus poor consumers who could not, could be as low as 1:9. This meant that in addition to paying for their own cost of receiving services, the paying consumer was expected to pay on behalf of nine other households. Its recommendations included establishing a “war kitty” to capacitate the fight against corruption in local government, and the provision of a mechanism to support municipalities to build technical, managerial and leadership capacity.
The Committee discussed SALGA’s lack of capacity issues and unfunded mandates, as well as the abuse of community-based public work services.
The Pensioners Forum said it was not happy with the budget presented by the Minister. The pension grant of R1 780 was not enough, and they wanted it increased to R2 500, with a 13th cheque every December. With unemployment at high levels, the grant often had to cover the expenses of the extended family. Treasury responded that the grant allocation was intended for an individual, and that the government was facing fiscal constraints. The Forum indicated that the increase should be funded through an increase in the wealth tax, as a resolution to inequality as well.
Amandla.mobi raised the issue of the R1.1 billion comprehensive response to gender-based violence (GBV) promised by the President in the declaration of the Presidential summit against GBV and femicide, as well as the additional R15 million mentioned by Finance Minister Mboweni. The Committee discussed where these amounts were allocated in the budget, and how the money should be used to combat GBV and femicide.
OUTA said that it would like to see more emphasis on infrastructure and capital budgets in the division of revenue. There should also be more cooperation between the Appropriations Committee and other portfolio committees in order to enforce the Auditor General’s recommendations and deal with irregularities. There needed to be more cuts on expenditure for projects and entities that did not benefit the public. It supported the limitations on the remuneration of public officials, but was concerned with cuts to social spending, such as education and health. It focused on four problem areas -- government debt, revenue, state owned entities (SOEs), and financial mismanagement. The Committee discussed what should be done with SOEs and the wage bill reductions.
The Chairperson said the purpose of the public hearing was to invite stakeholders to make their contributions to the Division of Revenue Bill. Each organisation would be granted an opportunity to introduce themselves and give a presentation, which would be followed by a discussion.
South African Local Government Association (SALGA)
Mr Bongani Baloyi, National Executive Committee (NEC) member: SALGA, said the issue that needed attention was the fact that the 2020 Division of Revenue Bill (DORB) perpetuates the continuation of financial incapacitation of local government that SALGA had decried for years. He said there was a backlog, as well as increasing demands on municipalities for services. The 2020 DORB continued to place an unaffordable burden on struggling ratepayers. Over the past 20 years, the financial resources available to municipalities had fallen short of the demands on municipalities for services and infrastructure delivery needs, and this had been worsening over time. There were also subjective factors of poor leadership (such as wrong decisions being made) and pervasive corruption (such as leeching from municipal resources) that had to be acknowledged. SALGA
Mr Mthobeli Kolisa, Chief Officer: Infrastructure Delivery, Spatial Transformation and Sustainability, SALGA, said that local government was responsible for 46% of the responsibilities listed in the schedule under the Constitution. The remaining 54% was shared between national and provincial government responsibilities. Although local government was responsible for 46% of the constitutional functions, it received the lowest share of the national expenditure allocation, at 8.8%. The equitable share did not contribute towards the delivery of the 36 municipal functions listed in the presentation. Therefore, the paying ratepayer was expected to contribute 100% towards provision of the 36 municipal functions to poor households, which was a significant burden. In a small municipality, the ratio of consumers who could afford to pay for services compared to the number of poor consumers could be as low as 1:9. This meant that in addition to paying for their cost of these services, the consumer was expected to pay on behalf of nine other households in respect of the 36 functions.
The equitable share, which contributes towards the operational costs of providing free basic services to poor households, provides for the provision of free basic water, sanitation, electricity and refuse removal. However, the contribution of the equitable share was less than the cost of providing these services. There were two reasons for this. Firstly, the equitable share subsidy was lower than the cost per household for the basic level of the service. Secondly, poor households tended to consume more than the basic level. This meant that the ratepayer also had to subsidise the balance of the cost of providing water, sanitation, electricity and refuse removal to poor households. This could be addressed by setting rates at the highest possible amount, to close the gap between the cost and supply of services. However, this would mean fewer ratepayers would be able to afford to pay rates.
There were three areas that impacted on municipal financial viability. There was a structural problem in the funding of local government. Government had tried to address this by amalgamating financially non-viable municipalities with those that had a tax base, to make them viable. The result was that municipalities that were financially viable became non-viable. The problem required another solution, where the national fiscus needed to contribute significantly for the provision of services in relation to poor households.
Another problem was that due to community pressures, municipalities that were at the coal face of service delivery were often forced to deliver unfunded mandates, while revenue instruments stayed with the provinces. Municipalities essentially picked up the slack from the provincial government -- for example, in disaster management and primary health services.
Electricity distribution was a municipal function in terms of the Constitution, but Eskom supplied electricity directly to about 50% of the consumers, including major energy consumers. The inability to use electricity cut-offs as a means of credit control impacted on the collection of other streams of municipal revenue, such as rates and water services. Payment levels for rates and other services in areas where municipalities were electricity suppliers were typically at 80% and above, but payment levels for rates and other services in areas where Eskom was the electricity supplier were typically as low as 20%.
Municipalities performed functions on behalf of provinces without assigning full expenditure to the functions. This had implications for the equitable sharing of nationally collected revenue and the delivery of services. For instance, four Western Cape municipalities spent no less than R1 billion in subsidising services that were provincial government services. The result was that nine municipalities became bankrupt, 98 were insolvent, and 39 were solvent but unable to pay creditors.
The financial constraints had an impact on the municipal services. For instance, municipalities had a shortfall of 4 185 environmental health practitioners (EHPs), according to the required number in the national environmental health policy (2003). Municipalities could not employ the required employees to meet service standards.
Municipalities could not afford the appropriate project management capacity required to deliver capital projects according to specifications on budget and on time. Municipalities established under the democratic government had inherited old infrastructure which needed to be replaced on a large scale. There needed to be a mechanism for infrastructure investment in local government.
There were also subjective factors of poor leadership (wrong decisions) and pervasive corruption (leeching from municipal resources) that must be acknowledged. Therefore, the DORB must provide for:
- the creation of effective capacity to support municipalities to root out and prevent corruption;
- a mechanism to support municipalities to build technical, managerial and leadership capacity.
To conclude, even though the transfers to municipalities have been growing with time, there was still a huge fiscal gap. There needed to be a radical review of the proportions of allocations to the three spheres of government. As a way forward, SALGA suggests that:
- The DORB should ensure that in cases where functions were delegated/ assigned to municipalities, funding for those functions must be appropriated directly to those municipalities in the DORB.
- Government must establish a “war kitty” to capacitate the fight against corruption in local government.
- The DORB must provide for a mechanism to support municipalities to build technical, managerial and leadership capacity.
In the medium term, SALGA would like Parliament to be alert in its oversight function, to ensure that stakeholders remain fully accountable in the commitment to review the Division of Revenue through the budget Lekgotla process.
Mr Z Mlenzana (ANC) welcomed SALGA’s input, and remarked that it went beyond the division of revenue and towards appropriation. He would have liked to hear more details from them on the district development model and its implementation. He mentioned that there had been talks of reductions -- what was SALGA’s take on this? What had been the impact on human resources of the shift in functions to municipalities? Regarding corruption, what were their views on the abuse of community-based public works services? SALGA’s service delivery implementation plans were not monitored or approved by council. However, its performance management went to council. In this set up, how were incentives justified?
Mr Baloyi responded that the Service Delivery and Budget Implementation Plan (SDBIP), which was part of the integrated development plan (IDP), became the basis of municipal performance evaluation by council. Regarding the abuse of vacant positions in the community works programmes, it may not be that that was the case. The community works programmes were implemented at the local government level, but they were implemented and led by provincial government. Municipalities played some role in identifying people, but the advice given was not linked to municipal resources. The community works programme was not the best use of resources, as municipalities did not need an implementing agent for what happened at the local level. Municipalities received equitable shares in tranches, which limited their ability to do proper financial planning and investment. The grants were being reduced where they were needed the most. Who effectively was being punished by the reductions due to structural issues? The reductions would not help government to do what it was supposed to do.
Regarding the impact on human resources, Mr Kolisa explained that municipalities did hire some people who were willing to do the work, such as picking up waste, but it does not happen within a set structure, which was not ideal.
Mr D Joseph (DA) referred to the economic outlook mentioned in the introduction, and remarked it would probably get worse going forward. How did SALGA get to the 8% figure for local government? Were they of the opinion that municipalities implemented the management policy to the best of their abilities? Did SALGA continue to raise the point of unfunded mandates at the relevant places? He said the Eskom issue raised was critical going forward, as the income from electricity distribution would probably decrease over time. What plans or preparation did SALGA have in place to provide the basic services, given the diminishing income, as the services were human rights? He agreed that there needed to be infrastructure replacement. Where should National Treasury invest money to assist the government to fight corruption? Had SALGA started conversations with the relevant ministers in cooperative governance, regarding unfunded mandates? He wanted to know exactly what the ‘war kitty’ was. He agreed that technical capacity was critical. What was the percentage of that capacity in local government at the moment? Was there a shortage of engineers, municipal managers and financial officers?
Mr Baloyi responded that municipalities had prepared their draft budgets for the following year with the assumption that services were at breakeven with the providers and municipalities. There was also an expected reliance on cross-subsidisation from those who paid, to those who did not pay. People would have to change their water utilisation habits to be efficient, and recycle water where possible, which SALGA planned to encourage as one of the responses to the water and electricity delivery challenges. Municipalities had debt management policies, such as increasing debt coverage or increasing tariff thresholds. However, the tariff increases were larger than household salary increases, making them more unaffordable to cover. The impact of these policies in municipalities that had mostly reconstruction and development programme (RDP) housing, needed to be considered. Municipalities were limited in their use of debt strategies.
Regarding the ‘war kitty,’ Mr Kolisa said that the fight against corruption would be very costly. SALGA thought it would be appropriate for the Bill to make provision for resources to be appropriated to an institution that would help local government to fight corruption. It could be through having another arm of the Hawks, or the Zondo Commission. He said that these issues were being raised in the correct forums. It had been raised for the past six to 10 years, that the budget was not reflecting the responsibilities of local government.
The Chairperson requested that SALGA expand on the issue of a lack of capacity. What did it specifically refer to? The presentation had stated that “the cost base had significantly increased,” but the challenge was capacity. The phrasing of the challenge of a lack of capacity did not suggest insufficient funding.
Mr Baloyi said that the issue of capacity arose from two areas, one being structural and the other being the material conditions on the ground that frustrated several projects. With procurement, there was the challenge of some municipalities not being attractive to suitably viable individuals -- for instance, Giyani. There was also a reliance on consultants on how to approach this issue. He asked if the funding was speaking to the realities of local government. There was a direct link between the instability of political parties and the instability of municipalities. The role of political parties was significant in the conversation on corruption.
Mr Kolisa explained that capacity had to be bought from the operating account, and shortages could not be covered by money in the capital account. For instance, the money used to appoint engineering professionals was from the operating accounts. Not being able to afford these professional services affected the performance of local government, so the grant money was in the wrong account.
Mr Bheki Stofile, NEC member, SALGA, said that government was operating in silos, yet Section 145 of the Constitution stated that national and provincial government must support municipalities. He asked if the reductions were intended to punish the municipalities, or the communities.
Mr Steven Kenyon, National Treasury Director: Local Government Budgets, remarked that the metaphor of a municipality as a child was inappropriate, when it was recognised at the same level as national and provincial structures. Municipalities drafted their own budgets and adopt them. They had resources available, and there should be more accountability on the use of those resources.
It was misleading to count functions without looking at their nature. For instance, the provincial government had the function of education, which was labour intensive and would obviously cost more than the function of providing electricity, which was capital intensive and revenue oriented. Therefore, in that function, the provincial government would be allocated more. Treasury was sympathetic with SALGA regarding the strain on ratepayers. In spite of a very tight fiscal situation, more was being allocated to local government in 2020 than in 2019, and more was paid to local than provincial. The government was doing its best to provide resources.
Mr Mlenzana said that the questions raised on powers and functions had not been responded to. These should be addressed in a follow-up engagement with SALGA.
The Chairperson thanked SALGA and mentioned that another engagement was necessary to address the concerns that had not been addressed. He announced that the remaining presenters would have 15 minutes each.
Pietermaritzburg Pensioners Forum
Ms Doreen Taylor, a member of the Pietermaritzburg Pensioners Forum, said that the Forum was not happy with the budget presented by the Minister. The pension grant of R1 700 was not enough, and it was asking if the Minister could add to the amount. She added that the pensioners had come to Parliament many times, and were also tired of coming.
Mr Mlenzana asked if the presentation was different from the written submission that had been distributed to Members.
The Chairperson clarified that her presentation was a summary of what had been submitted
Mr Mlenzana proposed that to save time, the presenters speak without a translator.
Ms Thoko Ngubane, a fellow pensioner from the Forum, said she was thankful for the R80 increase, bit it had come about after several outcries and multiple pleas. The law said people should retire from 60 years of age. The amount was not enough to live on, and one was prevented from supplementing the amount with a piece job, due to the law. Pensioners were also South Africans and taxpayers. Union members and students strike and destroy property in making demands, and the government listens to them. Pensioners do not do this, yet their pleas are not heard. She asked if Members could live off of an amount of R1 780. The amount was consumed by food, mainly starch and beans, and was not even enough to visit the clinic.
Amandla.mobi Campaigner Fellowship
Ms Palesa Ramolefo, a campaigner for Amandla.mobi, said that in the declaration of the Presidential summit against gender-based violence (GBV) and femicide, which took place in 2018, the President had made a commitment to have a resourced, implemented and monitored National Strategic Plan (NSP) on GBV and femicide. The President had since spoken about a R1.1 billion comprehensive response to GBV after the nation had stood up and demanded that GBV be recognised as an important issue. To date, this money had not been mentioned. There had been no follow-ups and no indication of where it would be coming from. This year, Finance Minister Mboweni had spoken about an additional R15 million which would be for a national council to combat gender-based violence and femicide. It was puzzling that there were no specifications on what the existing budget was, and to which departments it had been allocated. The additional R15 million was definitely not the R1.1 billion President Ramaphosa had spoken about. Who was in this national council to which the R15 million would be allocated? What about the funding which was supposed to go into the NSP? The President had presented an interim steering committee which was still waiting to this day for the government to allocate resources for the NSP. What would the national council bring that was different from the steering committee?
Organisation Undoing Tax Abuse (OUTA)
Mr Matt Johnson, OUTA Parliamentary Engagement Officer, said that OUTA wanted to see more emphasis on infrastructure and capital budgets in the division of revenue. It believed that compliance with the basic financial management legislation would be a step in the right direction. It would like to see cooperation between the Appropriations Committee and other Portfolio Committees, in the enforcement of the Auditor General’s (AG’s) recommendations, and remedial action after identifying irregularities. It would be good for the Committee to insist on getting feedback on the remedial interventions, and to cooperate transparently with the AG.
There needed to be more cuts to expenditure that did not benefit the public -- for instance, savings going primarily to Eskom and SAA. There needed to be more transparency on meetings. For instance, with the budget Lekgotla, it had been recommended that it be opened up to other stakeholders in society that were impacted by the decisions made. Regarding the reductions, OUTA supported the limitation on the remuneration of public officials. However, it was concerned about the cuts on social spending, such as education and health. It supported the small cuts to ministerial benefits and perks, but thought that this should go further.
For the past five to ten years, there had been talk about where money was being wasted, primarily at Eskom and SAA, but without enough action being taken. How were things going to change? Audit outcomes showed that borrowed money had been used ineffectively due to corruption and maladministration. More concrete steps had to be taken to address municipal debt. National Treasury should not be placed under too much pressure. Other organs of the state should be held accountable. Government should partner more with academia and civil society to contribute towards solving problems.
On the problem of revenue, there was a small base of taxpayers which had been declining for the past two years. Taxpayers would be happy to pay more tax if money was spent effectively, which was not the case at the moment. A recommendation was to make the budget more inclusive by giving more opportunities for civil society to be involved in the budget formulation process. He acknowledged the pilot project by Treasury, to include civil society more, but it was not enough. He did not see why there should be more international representation and less South African representation amongst the stakeholders.
The main concern was the problem of State-Owned Entities (SOEs), which would be absorbing a large chunk of the savings from cuts to the wage bill and selected programmes. Government should open up the engagements between Treasury and Eskom and SAA, while also maintaining the discretion of the business rescue practitioners. The cost of the SOEs was reflected in the cuts to conditional grants to provinces and local government. SALGA was asking for more, but there was no more. There had to be structural interventions alongside the reductions.
Regarding financial mismanagement, not a single SOE assessed had obtained a clean audit, which was fundamentally concerning. Regarding health, there were plans to cut expenditure over the next three years. This was a concern, given the context of the Coronavirus and healthcare practitioner capacity. On education, OUTA was concerned with the relative reductions in the infrastructure allocation. How would the division of revenue change when sector reforms were implemented? The district development model was one such issue. On governance, there was very little intervention on the issue of procurement. Cooperative Governance and Traditional Affairs (CoGTA) and Public Administration should also intervene, not just Treasury.
OUTA welcomed the Public Procurement Bill, and intended to engage with it more in the future. It requested the Committee to be more aggressive in demanding financial management, with consequences for non-compliance. It recommended that the Committee cooperate with CoGTA on issues of capacity and the Municipal Systems Amendment Bill. There needed to be human resource management independence, and more robust oversight on it.
Mr O Mathafa (ANC) remarked that he was impressed by the sentiments presented by OUTA, which were in line with those of the Committee. He expressed concern over the issue on the second slide, “Compliance with PFMA,” being brought forward even though the Bill had been passed already. On the third recommendation, SAA had already been put under business rescue. He was comfortable that the business rescue practitioners were implementing cuts, but additional inputs would be appreciated. Eskom might be a bit of a challenge, and the Committee was going over the appropriations robustly. OUTA could be assured regarding the Committee’s oversight activities. It received a quarterly report from Treasury on the status of deviations and what had been implemented, and had a process on how to follow-up with this. Three days ago, it had received a report on the third quarter expenditure from the Department of Planning, Monitoring and Evaluation, which was part of a set schedule of activities.
Mr Johnson replied that information and the status of certain issues were not always forthcoming or obvious. The public should be made aware of the implementation of measures. Centralised procurement would be addressed in the Procurement Bill. The oversight mechanisms in place were not necessarily effective. OUTA suggested that external engagements should be made the norm -- not just once a year, and on revenue. It would give a written response regarding the SAA issue. .
Ms Mlenzana asked OUTA what their understanding of the genesis of SOEs was. The presentations suggested that SOEs should belong in the rubbish bin. He asked Amanda.mobi to suggest where it would wish for the GBV budget to be allocated. He would like to know the expenditure trends of pensioners. Was there an understanding amongst pensioners that the money was specific to individual elderly people, not the household? Additional family members should be catered for through other grants available, such as foster care grants.
Mr Johnson responded that there was a strong debate on how state capture was related to apartheid and the centralised structure of SOEs. OUTA could not comment on whether the SOEs should be done away with, but it had stated that those SOEs that did not confer a direct benefit to the public should be wound down or closed. There was a positive move in the division of revenue to withhold funds from entities that were not functioning well.
Ms Ngubane explained that R300 was used to pay for prepaid electricity, and there was also payment for water and food. There was a contribution towards funerals and a monthly 10% tithe to the church. She said a R400 grant was received for children, and was entirely used on buying school shoes or equipment and food. She asked if children and grandchildren should be disowned in order for pensioners to use the R1 700 entirely on themselves.
Ms Ramolefo responded that money should be invested in the training of police officers on how to deal with victims of GBV, counsellors and forensics. For instance, police stations tended to have a shortage of red kits. She also suggested the appointment of judges who were sensitive to cases of GBV. The responsible committee had submitted a draft strategic plan which had not yet been approved by Cabinet. She wondered if Parliament was dragging its feet on matters of GBV.
Mr Joseph said that important points had been raised. The current pensioners were those who had been most affected by racial oppression and exploitation in the past. He noted the call to implement an increase in the wealth tax to resolve inequality, and for a yearly 13th cheque. A written submission had been sent to the DDG. He said the Committee could take it forward to the ministry. What were OUTA’s proposals on dealing with the SAA situation? At the moment it was money going into a dark hole. SAA was not for the poor -- it was funding a service for people who could afford to fly.
Ms D Peters (ANC) said there were several factors playing into the GBV situation, some of which were difficult to enumerate into the budget. GBV occurred on an interpersonal platform. For instance, how did one cost the psychological and interpersonal factors at play? How did one cost a women’s safety at the post office, or in an employer-employee relationship? There needed to be engagement with other departments, such as health, the police and the Department of Cooperative Governance and Traditional Affairs (CoGTA), to create an environment of safety for women and children. What had Amandla.mobi said the government had not done, so that the Committee could follow up on it, even beyond finances? Outside of the public hearings, how could Members of the Committee engage with the issues they identified with?
Regarding the Pensioners Forum, she emphasised that the allocated amount was intended for an individual. She responded to the comment on unions, and said that their increase had been due to their lobbying. She asked the pensioners to not lose hope. The government cared about the vulnerable and aged. She asked where the proposed R2 500 should come from. Where should government make cuts in order to get the additional R700 to contribute to pensioners? One the cost side, water and electricity should not be there because pensioners should receive free basic water and electricity. She had spoken to the Minister about a 13th cheque, but the money was not there. She requested Treasury to give the total basket of interventions for services for the poor and needy.
She remarked that OUTA’s presentation had seemed like something that had come from the Committee. Regarding the recommendation, “Small cuts to ministerial benefits and perks: deeper cuts to spending that does not benefit the public needed,” where exactly should the cuts be made? OUTA should be more explicit about what needed to be done with reductions in the wage bill. What was OUTA’s view regarding the Congress of SA Trade Unions’ (COSATU’s) proposals on the pension funds being used for funding SOEs, not only Eskom?
Ms Ngubane responded that protesting workers or students destroyed property, and the government took taxpayers’ money and replaced what was destroyed. However, when pensioners came with pleas, the pensioners were turned back and told there was not enough money. Also, pensioners do not destroy -- they simply come to ask.
Ms Taylor said that she had registered and signed papers to receive the free water and electricity grant, but she did not receive any of the free services.
Ms Noxolo Mfocwa, a member of the Pietermaritzburg Pensioners Forum, said that money could be obtained by taxing the wealthy. The cutting of social spending affected the pensioners. For instance, cutting on health would affect pensioner’s access to medication, so ultimately pensioners have to subsidise. It was impossible for the pension grant to remain with oGogo because of the context of black households in this country. Child grants ended at age 18, but there were unemployed graduates who had needs that had to be catered for by oGogo’s grant money as well. She said that the Forum had been sent from pillar to post. The Minister did not meet with the Pensioners Forum after promising to do so on 27 November last year. The sit-in at the Treasury had come about as a result of this. At Treasury, the right DDGs had not come to meet the pensioners and address them.
Mr Johnson said that OUTA was not afraid to engage on the Wage Bill. The presentation had not gone into depth on this because a week ago, a submission had been made to the Finance Committee, with a focus on COSATU. OUTA would respond to the Committee in writing as to whether it supported COSATU’s proposal for the use of government employee pension funds to alleviate Eskom’s debt.
The Chairperson asked for OUTA’s opinion on the illicit flow of money in the country, which ate into the country’s revenue. Why was OUTA not speaking on this? He expressed concern over the lack of response from the Ministry on the memorandum submitted by the pensioners, and apologised for that. The Committee would engage with the Ministry to get a written response on the memorandum.
Mr Johnson explained that the illicit flows were not focused on in the presentation because OUTA tended to focus on them in their submissions to the finance committees. OUTA was of the strong view that it must be clamped down on. It had made recommendations on improvements for entities like the South African Revenue Service (SARS). This could also be elaborated on in writing.
Mr Mlenzana said he believed several of the responses given were informed by an information gap, and he hoped Treasury’s response would fill that gap.
Response by Treasury
Mr Kenyon commented that it was a tough budget, and Treasury was unhappy with some of the decisions. However, the decisions were made out of a lack of options. Since Treasury had run out of time at yesterday’s meeting, it would attempt to address some of the questions that had been there raised as well.
Most of the concerns with Treasury that had been raised fell under the tax division. The team that presented yesterday had been from the intergovernmental relations branch of the Treasury, which was one out of its ten branches. He would ensure that his colleagues who dealt with the social grants in the Appropriations Bill, received the submission from the Pensioners Forum.
In response to the GBV issue, the amount of R15 million was under the Department of Women’s vote, which was vote 25. He agreed that GBV cuts across many parts of society, so it was difficult to fund it in the budget. He noted that Amandla.mobi wanted to see a lot being done in the crime and justice sectors. In the budget, there was a target to move from 90 specialised sexual offences courts in 2019 to 148 by the end of 2022/3. The big amounts were spread over several budget votes.
Chapter 4 of the Budget Review explained that South Africa already had a high tax rate compared to its middle income peer countries, such as Indonesia, Malaysia, and Mexico. Brazil was the only one with a higher rate. All taxes had been increasing over the last few years.
Regarding OUTA’s concern on the reflection of structural reforms that promote economic growth in the Division of Revenue Bill, a lot of the reforms did not directly impact on expenditure. Education was the biggest value for money investment. The largest addition in the Division of Revenue Bill was the R1.4 billion towards Early Childhood Development (ECD). The per child amount for ECD was gradually increasing over time. He acknowledged that the per child amount was not enough for quality ECD, but it was a step in the right direction, given the constrained resources.
On the extent of bail outs to SOEs, Chapter 8 of the Budget Review gave details on the bail outs to SOEs over the past 12 years. A total of R162 billion had gone towards bail outs during that period.
In response to the question as to who was spending money in the Vaal river system, he said it was the defence force and sanitation engineers.
Regarding the public network transport grant suspension in certain cities, the grants had been suspended because those cities were not providing those services. For instance, the cities were given money to spend on buses for the system, and not a single bus had been bought. Treasury had tried capacity reform before, but the consequence was to take away the grant.
The issue on provinces without bulk infrastructure and the issues on mega projects were related. Often, a province builds without zoning permission from the local municipality. Thus the amendment to the clauses requires greater consultation between the provincial and local government.
Regarding Treasury’s engagement with the Financial and Fiscal Commission (FFC), the response to the FFC had been adequate. The planned targets for school infrastructure were 400 schools to be upgraded to have water, and 1 030 to be upgraded to have sanitation.
The Chairperson asked where the framework of guarantees to SOEs could be found.
Mr Kenyon said that the details on who the government owed could be found on page 82 of the Budget Review. Currently, foreigners owned majority of the bonds taken out. Formerly it had been pensioners. Chapter 7 of the document was entirely on government borrowing and debt for SOEs, and the issues of guarantees. The Budget Review document was available online to the public on the National Treasury website.
In closing, the Chairperson thanked all members of the public who had made an input and attended the hearing. He said that the Committee would engage on the issues that had been raised in its own time.
The meeting was adjourned.
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