The Committee met to consider and adopt the Committee”s draft report on the Division of Revenue Bill [B3-2020]. A motion on the desirability of the bill was read and adopted.
Members questioned whether the Parliamentary Budget Office (PBO) should not also be mentioned as having been consulted, and whether they were also not to be considered as a stakeholder. A discussion ensued on who qualified as stakeholders. A Senior Parliamentary Legal Adviser said the PBO was a Parliamentary institution, but was an entity separate from the administration and important in relation to the Money Bills Act, so they were not to be identified as a stakeholder.
Under the Findings and Observations section, Members felt that the comments on ways of capping or monitoring corruption were said in a soft tone in the report. The Chairperson suggested that “measures should be put in place to ensure that corruption is eliminated,” should be included in the wording.
Members questioned why the word “serious” was used to describe a reduction of R123m in the Schools Infrastructure Backlogs Grant, while the phrase “note with concern” was used to describe a R1.9b reduction in the Education Infrastructure Grant, and proposed that the word “serious” should be taken out. The Content Advisor said that the term “serious” had been used because the grant was the one used to eradicate pit latrines, which the President had made a commitment on. Spending of this grant had not reached 100%, and Treasury had taken back the unspent money. Members said the problem was the poor performance in utilising the grant, rather than the reduction of the grant’s value.
The Content Advisor gave some background on the Public Transport Networks Grant and on the exclusion of three cities -- Mbombela, Buffalo City and Msunduzi -- from the current grant because of corruption issues and an inability to spend the grants. However, the communities of these areas suffered the negative consequences, and the Committee should call on Treasury to reverse this decision to exclude the three cities.
The draft report had been given to the Treasury to check if all the figures were accurate. Treasury’s response had indicated certain figures that needed correction, and this had been done.
The report, with amendments, was adopted by the Committee. The DA had reserved its rights on the Bill.
Draft Report on Division of Revenue Bill
The Chairperson read the motion of desirability of the Bill, and this was adopted. The meeting then turned to the consideration of the draft report and additional amendments, and went through it page by page.
Mr Z Mlenzana (ANC) asked that the meeting focus on the content of the report rather than on the grammar, which he had done and would submit.
The Chairperson said both would be done simultaneously.
On p1, Mr D Joseph (DA) asked if the Parliamentary Budget Office (PBO) should not also be mentioned as having been consulted, and be slotted in after the Financial and Fiscal Commission(FFC) in the last paragraph.
The Chairperson agreed.
On p2, Mr Joseph questioned use of the word “growth” in the sentence, “by reducing growth in the public sector wage bill,” and suggested it be replaced with “cost.”
Ms D Peters (ANC) said it should read “by reducing the growth of the public sector wage bill.”
Mr Sifiso Magagula, Committee Content Advisor, said the wording in the report reflected the wording of the Treasury document.
Adv Frank Jenkins, Senior Parliamentary Legal Adviser, agreed that the rate of growth was the key issue.
On p4, the Chairperson asked if the figures contained on the page had been checked.
On p10, Mr Joseph asked if the Parliamentary Budget Office (PBO) should not also be included as a stakeholder, as the Financial and Fiscal Commission(FFC) had been in point 5.
Mr Magagula pointed out that the PBO was part of Parliament, and could not be regarded as a stakeholder. He did not know the position of the FFC.
Adv Jenkins said the PBO was a Parliamentary institution, but was an entity separate from the administration and was important in relation to the Money Bills Act, so they were not to be identified as a stakeholder. He said the FFC was outside of Parliament, and the Committee had to report that it had consulted with the FFC because it was a requirement in terms of the Money Bills Act.
Mr Joseph said he saw the PBO and FFC as stakeholders.
The Chairperson said the FFC were not stakeholders because the Committee was required to deal with them under the Money Bills Act.
Mr Mlenzana said stakeholders was a new word. A stakeholder was someone one had consultated with. He said both the PBO and the FFC had assisted the Committee through their input on stakeholders’ input. They were not on an equal footing with stakeholders.
Ms Peters said they were stakeholders. They had come to the Committee because of legislative requirements. She suggested avoiding lumping them with those that had come to make presentations as a result of public hearing advertisements. The two groups should be separated.
Mr Joseph said he accepted what stood in the report and was said the report needed to reflect the consultation with the FFC and the South African Local Government Association (SALGA), and the PBO”s position needed to be determined for the next time.
Mr Darrin Arends, Committee Secretary, said the confusion had arisen because a summary from the PBO on the Bill had not been included. The FFC had not commented on the Bill -- it had commented on the entire Budget -- and therefore there was confusion.
The Chairperson said there should be engagement on the PBO and the FFC being placed separately from stakeholders in the report.
On p19, Mr Magagula suggested that the Committee go through the wording of the Findings and Observations, paragraph by paragraph.
On point 6.5, the Chairperson sought clarity whether it was for the financial year 2020/21 or for the Medium Term Expenditure Framework (MTEF).
Mr Magagula said it was for the MTEF. 2020/21 would be removed.
On 6.6, Mr Mlenzana said there should be a reflection on ways of capping or monitoring corruption, as it was referred to in a soft tone in the report.
The Chairperson said there should be something on the lines of “measures should be put in place to ensure that corruption is eliminated.”
Mr Magagula said there was a lot of corruption in non-profit organisations (NPOs), where money was claimed for work that was not done, so Treasury had to be cautious.
On 6.8, Mr A Shaik Emam (NFP) questioned the wording, as it said that provinces did not have tax powers -- it was more a case that they did not have a tax base.
Mr Magagula replied that the wording was as it appeared in the Treasury document.
Mr Joseph said that provinces did not have revenue or income streams to generate their own funds.
On 6.9, the words “in the education sector” would be removed.
On 6.10, Mr Mlenzana questioned why 6.10 used the word “serious” relating to the reduction of an amount of R123m, while point 6.9 dealt with a R1.9b reduction, and used the phrase “note with concern”. He said that the word “serious” should be taken out.
The Chairperson said that “serious” would be removed.
Mr Magagula said that the reason for the inclusion of the word “serious” was that the grant was the one that was used to eradicate pit latrines. The President had made a commitment, and had instructed the Minister to do an audit of pit latrines in public schools.
The Chairperson asked how this grant had performed.
Mr Magagula said that spending of this grant had not reached 100%, and Treasury had taken back the unspent money. He said it was a problem of the Minister of Education.
The Chairperson said the problem was in the performance of the grant, rather than the reduction of the grant value. He said pit latrines were an emotive issue, because the country could not eradicate pit latrines and it was not because of a lack of money, but because of poor performance.
On 6.11, on the Public Transport Networks Grant, Mr Magagula said that the Public Transport Infrastructure Grant had been introduced just prior to the World Cup to improve transport networks, initially in metros. The three cities of Mbombela, Buffalo City and Msunduzi had been excluded in the current grant meant to provide affordable public transport, and Buffalo City had included areas like Mdantsane, which was a product of apartheid spatial planning. While the exclusion of these three was over issues like corruption and an inability to spend grants, the communities of these areas suffered the negative consequences. He said the Committee should call on Treasury to reverse this decision to exclude the three cities.
The Chairperson said the “one size fits all” approach did not work. He asked how prescriptive the infrastructure grant was.
Ms Peters said the 13 cities identified initially were the cities that would host world cup matches, and the drive, motivation and intergovernmental coordination that existed at that time was no longer present. Municipalities also had differing capacities to do infrastructure work. She gave some historical background on Port Elizabeth, Mbombela, Buffalo City and Msunduzi areas. She said Treasury and the Department of Transport should inform the Committee how they would address issues related to public transport where municipalities were excluded from the grants, resulting in the community being punished, not the officials of the municipalities who were responsible and had failed to do their work.
Mr Arends asked if the sentence reading “immediate exclusion” should read “immediate suspension.”
Mr Magagula said the book said “suspended cities.”
On what was covered by the grant, he said the grant could fund all integrated public transport networks’ related infrastructure.
Mr Shaik Emam said the report should maintain the word “suspension.” At the end of the day, it was a problem of service delivery and the Committee should call on relevant stakeholders that were not performing to explain why this was so. He was still looking for the R1b legacy fund for development as a result of the World Cup that had been promised. He said apartheid spatial planning had marginalised people all over the country.
Mr X Qayiso (ANC) said the Committee should consider what it had already called for in the Recommendations. The report did say that all those responsible people must be called.
The Chairperson said that the report had to capture that those parties responsible for the failure to deliver must be called.
On 6.12, the Chairperson said that the people responsible for pollution -- the polluters -- should pay.
Mr Joseph asked if the phrase, “however, the Committee recommended...” should be made part of the Recommendations.
Ms Peters noted that here the sentence was a reminder of the recommendations of the 2019 Division of Revenue Act (DORA) Bill.
Mr Mlenzana said he had made his own observation regarding the findings. He did not think the Committee had scratched the surface regarding the findings when one looked at the Budget.
The Chairperson said that the staff needed to keep track of the Committee”s resolutions and their implementation.
On section 7, Recommendations, Mr Magagula said that in 7.2 the wording “Minister of Higher Education” should be taken out.
Mr Mlenzana said 7.3 needed to be given more flesh and needed to be broken down to the “nitty-gritty” details like the pit latrines and the incapacity to spend the grant.
The Chairperson agreed it should be beefed up.
On 7.4, Ms Peters said the three municipalities, Msunduzi, Buffalo City and Mbombela, should be mentioned in the preamble to 7.4. She said the language should be consistent, and that “suspended” should be used, and not “excluded.”
Mr Magagula said the reason behind not mentioning the three municipalities was that the Select Committee of the National Council of Provinces would also be preparing a report, and these names should be mentioned in their report.
The Chairperson said there was the possibility that they would not mention them in their report, so the Committee should err on the side of including them in its report.
Mr Joseph questioned the use of the word “unsolvable”, as it implied that it could not be solved.
The Chairperson asked that the word be removed.
Mr Arends read out an additional clause, clause (e), that dealt with the three cities of Msunduzi, Buffalo City and Mbombela. The new clause read:
“(e) That the Mbombela, Buffalo City and Msunduzi municipalities should appear before the Committee to explain in detail the challenges faced by these cities in spending and implementing the public network grant according to the grant framework. These municipalities should provide evidence of where they have solicited assistance from other government structures in order to spend this grant and provide these important services to the communities in these cities. The implications on service delivery and job creation in these cities should also be highlighted”
On the lack of utilising grant allocations, the Chairperson said a budget was meant to deliver a project. He said the lack of spending of grant allocations had a multiplier effect impact on a city, and the implications were huge.
Mr Mlenzana asked if 7.1 and 7.3 could not be put together as one, and whether the recommendations not be topically based.
The Chairperson said the draft report had been given to the Treasury to check if all the figures were accurate. Treasury’s response had been the additional amendments he had mentioned at the beginning. Treasury had indicated that the figure in the last bullet point on p7, of R400m, should be R750m.
It had also noted that on p20, under point 6.7, the figure of R1.4b was an additional sum provided, and the actual total figure was R3.2b.
It had said that on p21, under point 6.12, the figure of R400m should be R750m for the financial year.
Mr Joseph questioned whether there were options, other than paragraph 8 of the report, for a minority party to make a statement on the Bill, and not in the Committee report.
Mr Arends said the rules allowed that political parties could express their views in a paragraph to be included as a minority view within the report. The party had to give the secretary a submission, which the Committee needed to consider, before it could be included in the report.
The Chairperson said that Mr Joseph still had the debate in which to raise issues.
The report, with amendments, was adopted by the Committee.
Mr Joseph said the DA reserved its rights on the Bill.
The meeting was adjourned.
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