Division of Revenue Bill: negotiating mandates

NCOP Finance

29 February 2004
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Meeting report

The Chair

FINANCE SELECT COMMITTEE
1 March 2004
DIVISION OF REVENUE BILL: NEGOTIATING MANDATES


Chairperson: Ms Q Mahlangu (ANC) [Gauteng]

Documents handed out
Portfolio Committee Amendments to Division of Revenue Bill [B4A-2004]
Drought Relief Adjustments Appropriation Bill [B5-2004]
Gauteng negotiating mandate
Northern Cape negotiating mandate (Appendix 1)
Kwazulu-Natal negotiating mandate (Appendix 2)
Western Cape negotiating mandate (Appendix 3)
Free State negotiating mandate (Appendix 4)
Limpopo negotiating mandate (Appendix 5)

SUMMARY
The Committee received negotiating mandates on the Division of Revenue Bill from only six provinces. Representatives from Parliament's Legal Services Office and the Legislation and Proceedings Unit indicated that any substantive amendments would have to be referred back to the Portfolio Committee, and this would be difficult because the National Assembly had adjourned for this term. Alternatively, these amendments would have to be considered afresh by the new Parliament. The Committee decided that the amendments raised by the negotiating mandates would be referred to Legal Services Office for consideration, and the final mandates would then be discussed in the meeting on 3 March 2004.

The Committee adopted the Drought Relief Adjustments Estimates Bill.

MINUTES
Drought Relief Adjustments Estimates Bill
The Chair reminded Members that the Committee had received a briefing on this Bill the previous week but, because a quorum was not constituted, it could not be voted on. She stated that the Committee was quorate today, and put the Bill to the Committee. The Committee adopted the Bill without amendments.

Division of Revenue Bill
The Chair noted that the Committee had received mandates from only six of the provinces, as negotiating mandates had not been received from Mpumalanga, North West and Eastern Cape provinces. She proposed that the six mandates be read in turn, and the issues raised could then be considered. The Committee was also faced with a dilemma because any amendments proposed by this Committee would have to be apporived by the Portfolio Committee on Finance. However the National Assembly had already adjourned permanently for this term. She stated that she was not saying that Members should not raise possible amendments.

Gauteng province
Mr M Saloane (ANC) [Gauteng] presented the Gauteng province's negotiating mandate (document attached).

The Chair noted that no concerns were raised with this negotiating mandate.

Ms M Ngqaleni, Treasury Director: Intergovernmental Relations Division, stated that some of the concerns raised by this negotiating mandate were matters that Treasury would be grappling with. This included the review of the entire intergovernmental fiscal system, the equitable share and the conditional grants.

She stated that with regard to welfare allocations, it was not merely that the Gauteng Province spent more relative to the weighting of the welfare needs employed in the formula. Instead it was a national issue because approximately 29% of the provincial equitable shares were spent on social services as the national government was considering adopting these functions from provinces. The review of the formula would be considered in light of this change in the social security system, as well as all the issues concerned.

The concerns raised by the negotiating mandate on the possible overspending on HIV/AIDS had been raised by the Department of Health with Treasury. Cabinet approved the allocation because international experience had shown that such programmes usually took a while to take off. The agreement was that this allocation would then address this problem, and if the roll-out employed more funds than the allocation, additional funds could be accommodated via the adjustments budget. Clause 23(2) of the Bill in fact provided for the interim shift of funds, because government acknowledged that some provinces might actually spend their allocated funds at a faster rate than others. This then enabled funds to be made available broadly to provinces.

With regard to the roll-out of the nutrition programme, there was quite a process that involved both the Department of Health and the Department of Education in each of the provinces. She stated that her understanding was that most of the provinces were preparing themselves to roll-out this programme. Treasury was also involved in ensuring that institutional infrastructure was in place in these two government departments, and they have been provided with funds to establish the administrative systems required to enable them to take over this programme. This programme was thus expected to be rolled out, a monitoring system will be put in place to determine exactly how the programme was unfolding. Constant investigation would be conducted throughout the year to evaluate potential improvements that could be made to the programme.

Ms Ngqaleni noted that a concern had also been raised on the fluctuations of conditional grants, but stated that she did not understand the problem raised by the question.

The Chair said that this concern had also been raised by SALGA the previous week. The problem was that there were different monetary allocations for the outer and inner years of the MTEF cycle. This deprived municipalities to some extent of predictability in being able to plan properly.

Mr M Booysen, Treasury Director: Intergovernmental Fiscal Relations, replied that the changes in the allocations in the equitable share were primarily due to the update of the census information. Treasury did however introduce some sort of corrective measure to limit the implication of this. Government has guaranteed the allocations that were published in 2003 at 100%, which means that municipalities will either get what was published in 2003 at 100% or more. Some of the shifts were due to the phasing out of the R293 component in the equitable share.

Free State
Mr S Ralane (ANC) [Free State] stated that, in view of the dilemma the Chair raised earlier with the rising of the National Assembly, he had consulted the Chairperson of the Free State province Finance Committee and the new mandate of the Free State province was that it supported the Bill without amendments.

The Chair requested Treasury to respond to the issues raised in the Free State negotiating mandate in any event.

Ms Sidondi stated that in terms of the concern raised about Clause 1 of the Bill, the aim was to align the Bill with the Municipal Finance Management Act. The concerns raised about Clause 16 of the Bill were appreciated, because they aimed to clarify the Bill and would be considered.

Kwazulu-Natal Province
Mr H Bekker (IFP) [Kwazulu-Natal] presented the Kwazulu-Natal negotiating mandate on the Bill (document attached) which noted that the Kwazulu-Natal Finance Committee unanimously accepted the tabled version of the Bill. He stated that the Kwazulu-Natal province would also agree to the B version of the Bill. If this was not the case the Kwazulu-Natal Committee would have to meet again to consider the amendments.

The Chair stated that the South African Local Government Association (SALGA) had raised certain issues with the Bill during a meeting of this Committee the previous week. She asked whether Treasury had received and responded to their input.

Ms N Sidonde, Treasury Director: Legal Services, replied in the negative. She stated that SALGA had only sent through the Powerpoint presentation they had submitted to the Committee, but did not forward any concerns or issues with the Bill.

Mr H Eksteen, Committee Secretary, stated that SALGA had informed him that it had forwarded that information to Treasury, but he was not sure whether Treasury had responded to SALGA's concerns.

Mr Booysen informed Members that Treasury had not received anything in writing but merely received SALGA"s presentation.

The Chair stated that if that was the case, the matter should be closed. She stated that SALGA itself was very disorganised, and it appeared that SALGA did not read the Bill properly and were merely "looking for issues to pick up about". The issues they raised were in any event addressed at the Budget Forum and Budget Council meeting. This, together with the facs that they have not provided the response they were requested to provide last week nor were they present at this meeting, clearly indicated that the response given by Treasury last week was clear enough.

Northern Cape Province
Mr G Lucas (ANC) [Northern Cape] stated that the Northern Cape supported the Bill, subject to a technical amendment regarding the correct name of a municipality listed in the negotiating mandate (document attached).

Mr Booysen replied that he had consulted his office on the change of name, and stated that it appeared that the name reflected in the Bill was in fact the correct name of the municipality.

Western Cape Province
Mr K Durr (ACDP) [Western Cape] presented the negotiating mandate (document attached) and noted that it had no difficulties with the Bill.

Limpopo Province
Mr M Makoela (ANC) [Limpopo] presented the negotiating mandate (document attached), but stated that the conclusion reached in the negotiating mandate differed from the actual decision reached by the Committee. The fact of the matter was that the Committee had considered the B version of the Bill and not the tabled version of the Bill, as indicated in the negotiating mandate. He stated that the Limpopo Province supported the B version of the Bill.

The Chair requested Mr K Pauw, Parliament's Legislation and Proceedings Division, to advise Members as to the procedure involved in effecting any amendments to this Bill if the National Assembly has already dissolved.

Mr Pauw informed Members that the role of the Legislation and Proceedings Unit was to edit and proof read legislation before introduction. The legislation would then be forwarded to the Committee Section where the A, B, C, and D drafts of the Bill would be considered. At the end of the process the last version of the Bill agreed to by Parliament would then be converted into an "act form" by the Unit, and presented to the State President for signature.

He stated that as a rule Parliament was very strict on this issue and thus unless any change whatsoever was purely administrative, it would not be acceptable without referring the Bill back to the previous Committee for reconsideration. If the Unit could not easily discern whether it was a purely administrative amendment, the matter would then be referred to the legal advisors for an opinion.

Mr Pauw stated that he had not properly considered the amendments raised by the negotiating mandates, but suggested that a cursory look indicated that a number of them could only be effected via formal amendments. Formal amendments would be difficult to effect at this stage. Any requests for administrative amendments to the B version of the Bill would have to be put in writing to the legal advisors for consideration

Adv F Jenkins, Parliament's Legal Services Office, agreed with Mr Pauw that the amendments raised would have to be effected via formal amendment, and the Bill would then have to be referred back to the National Assembly. If the National Assembly cannot be reconvened to consider the Bill, it would lapse, and the new Parliament would have to pass a resolution to resurrect the process. He stated that he was not sure whether the National Assembly would be reconvening to consider legislation, as all indications were that it had adjourned on 27 February.

Mr Pauw reiterated that he would recommend that any possible request from this Committee be put in writing, and be referred to the legal advisors. He would not however be able to provide an opinion either way at this moment.

The Chair agreed that this be the route followed, and encouraged discussions between Parliament's legal advisors and Treasury. She stated that this Committee cannot pass a bad law which contained technical errors, and these errors in the legislation must be resolved so that the Bill could read better. At the same time it would have to be borne in mind that the National Assembly has already adjourned and the costs involved in bringing the Portfolio Committee back.

Adv Jenkins agreed.

The Chair expressed her concern that this has been the trend for three consecutive years that no negotiating mandate had been provided by Mpumalanga.

Mr Bekker asked Mr Pauw to indicate whether the B version of the Bill was available.

Mr Pauw answered in the affirmative

The meeting was adjourned.

Appendix 1 : Northern Cape Negotiating Mandate

NORTHERN PROVINCE PROVINCIAL LEGISLATURE
NEGOTIATING MANDATE ON DIVISION OF REVENUE (64-2004] S76

The House considered the draft resolution of the Portfolio Division of Revenue Sill (B4-2004], and mandates the NCOP to participate in the deliberations on the Bill, and due considerations given to the following concerns: Committee on Finance on the Permanent Delegates to the to support the Bill subject to due considerations give to the following concerns:

(a) Flactuation and downward trend in the allocation of condition of grants to the Province;

(b) Clarity on the existance of a municipality in the Francis Baardt district, namely NCO92 Thusanang.

HON CAT SMITH
SPEAKER: NORTHERN CAPE PROVINCIAL LEGISLATURE

Appendix 2 : Kwazulu-Natal Negotiating Mandate


PARLIAMENT OF KWAZULU-NATAL PROVINCE

Ms QD Mablangu
Chairperson; Finance Select Committee

Dear Madam

Absence of Negotiating Mandate on Division of Revenue Bill [B04B-2004]

The Provincial NCOP Standing Committee met on Wednesday, 25 February 2004 to consider our negotiating mandate for the abovementioned Bill. Unfortunately at this rime, the Committee was only in possession of the amendments to the Bill as laid out in B4A-2004. Thc Committee was aware anti the mandate required by the Select Committee should be on the consolidated 'B' version of the Bill, but the Committee decided that a vote should only be taken on B4A-2004], the Bill in hand.

The Committee unanimously supported this Bill but subsequently took to the further decision that as long as the amendments of the 'A' version were accurately and correctly reflected in the 'B' version upon its receipt and verification by the Committee's Legal Advisor; they would support the 84B-2004 version of the Bill. However, should this not be the case the Committee advocated to meet again to consider any amendments not correctly reflected in B04B-2004.'

The Legal Advisor did, upon receipt and comparison of the two versions of the Sill, discover that there was an anomaly reflected in Clause 24 on page 14. Discussions with the Director of Legal Services of National Treasury, Ms N Sidondi, resulted in our Legal Advisor being informed that the said clause did not correctly capture the amendment agreed to by the Portfolio Committee of Finance. Ms Sidondi stated that the Portfolio Committee agreed that on page 14, line 19 should read "The Minister must publish in the Gazette any revisions after 1 April 2004 in the allocations or conditions in term of sections 9 and 23." She stated, further, that this has however been correctly reflected in the B4B-2004 version of the Bill.

In light of this, our NCOP Standing Committee does not have a negotiating mandate on B4B-2004 to present to this meeting of the Select Committee, but the Standing Committee will meet again on Tuesday, 2 March 2004 to consider our final mandate on the B-04-2004 version of the Division of Revenue Bill.

Yours sincerely

Mrs LOCAL GOVERNMENT Ngcobo
Chairperson: NCOP Standing Committee


Appendix 3 : Western Cape Negotiating Mandate

WESTERN CAPE PROVINCIAL PARLIAMENT
NEGOTIATING MANDATE OF THE WESTERN CAPE PROVINCIAL PARLIAMENT


Report of the Standing Committee on Finance and Economic Development, on the Division of revenue Bill [B4-2004] (NCOP), dated 26 February 2004, as follows:

The Standing Committee on Finance and Economic Development, having considered the subject of the Division of Revenue Bill [B4-2004] (NCOP), referred to the Provincial Parliament in terms of the rules of the National Council of Provinces (NCOP), begs to report that it confers on the Western Cape's delegation in the NCOP the authority to support the Bill without amendments.

MR SL ANDERSEN
CHAIRPERSON
26 FEBRUARY 2004B

Appendix 4: Free State Negotiating Mandate

FREE STATE LEGISLATURE
PORTFOLIO COMMITTEE ON FINANCE, OFFICE OF THE PREMIER AND LEGISLATURE

Report on negotiating mandate on the Division of Revenue Bill[BILL 4B-2004]

1. Terms of reference
The Division of Revenue Bill was referred to the Finance, Office of the Premier and Legislature Committee.

2. Consultation
The Committee considered the scope of consultation In the Bill and resolved that enough consultation was done.

3. Briefing
(1) On 26 & 27 February 2004 Mr T Ralane3 Permanent Delegate and Advocate J. Machaka3 Assistant Legal Advisor of the Free State Legislature briefed the Committee on the bill.

(2) Officials from the Provincial Treasury also attended the meeting to clarified some matters.

4. Consideration
The Committee considered the bill, the National Assembly amendments to the Bill and further proposes the following amendments.

Clause 1
-
Page 2 to delete the words "budget year" in the definition and wherever it appears in the Bill and to substitute " financial year".

Motivation: A particular budget year remains a financial year and any changes from the current "financial year" does not bring a new meaning.

- Page 3 to delete the definition of "municipality" and to retain the current definition. The current definition under the Division of Revenue Act, 2003, reads-"municipality" means a municipality established in terms of the Municipal Structure Act.

Motivation: In the Municipal Structures Act, "municipality" includes a municipality referred to in section 155(6) of the Constitution. The Constitution itself refers to both a municipality as a corporate body and in terms of a geographical area and therefore the current definition is sufficient.

Clause 16(3)
Page 10 to delete the words "accounting officer of a municipality" and to substitute "municipal accounting officer"

Motivation: See in the definitions "municipal accounting officer".

Clause 16(3) (a)
Page 10 to delete the word "immediately" and to substitute "not later than 30 days".

Motivation: the word "immediately" is too wide and may be open for abuse.

Clause 16(3) (b)
Page 10 to delete the word "immediately" and to substitute "not later than 30 days".

Motivation: See clause 16(3) (a)

Clauses 4(3), 8(2), 11(3) and (5), 12(3), 14(3) and 30

The above clauses should be divided in Roman figures (I) and (ii) as in other clauses only to improve the quality of the Bill.

Mr A. Marals
Chairperson: Finance, Office of the Premier and Legislature Committee Free State Legislature

27 February 2004

Appendix 5: Limpopo Province Negotiating Mandate

LIMPOPO LEGISLATURE
NEGOTIATING MANDATE ON THE DIVISION OF REVENUE Bill,[B -2004]

1. INTRODUCTION
The above mentioned Bill was referred to the Legislature by the NCOP And the Legislature in turn referred it to the Portfolio Committee on Finance and Economic Development on 24 February 2004 for consideration and inputs

2. PURPOSE OF THE BILL
Thc Bill seeks to provide for the equitable division of revenue anticipated to be raised nationally among national, provincial and local spheres of government for the 2004/5 financial year and the reporting requirements for allocations pursuant to such division; to permit the withholding and the delaying of payments in certain circumstances; to provide for liability for costs incurred in litigation in violation of the principles of co-operative governance and international relations; and to provide for matters connected therewith.

3. BRIEFING BY NCOP DELEGATES
The Portfolio Committee on Finance and Economic Development was briefed on the principle and provisions of the Bill by our NCOP Permanent Delegate, Mr I Makwela, during a Committee meeting held on 27 February 2004.

4. FINDINGS
The Committee has during consideration of the Bill realized that there were additional clauses inserted on the Bill to provide for checks and balances on the amounts allocated to the various spheres of government. The Committee has supported the additional clauses.

5. NEGOTIATING MANDATE

The Committee having considered and supported the Bill recommends to the NCOP negotiate in favour of the Bill as introduced by the Minister of Finance.

S.C.N SHOPE SITHOLE
CHAIRPERSON: PORTFOLIO COMMITTEE ON FINANCE AND ECONOMIC DEVELOPMENT

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