Division of Revenue Bill: Negotiating Mandates; Second Adjustments Appropriation (2023/24 FY) Bill & Gold and Foreign Exchange Contingency Reserve Account Defrayal A/B: Committee Reports

Meeting report

Opening comments:
Mr Lubabalo Nodada, Committee Secretariat, confirmed that the Committee had formed a quorum and could thus begin with their meeting.

The Chairperson asked if Mr Nodada was aware of any Members from the provinces who would join the meeting.

Mr Nodada responded in the negative.

The Chairperson said she hoped those Members would soon join the meeting because they had been invited. She also would understand if they could not make it, because of the current season they were in. She greeted everyone and mentioned that they were in the last phase of their term. She appreciated the Members for being able to do their Parliament work as well as their political work. She noted the absentees with apology. She asked that Mr Nodada send Mr Z Mkiva (ANC, Eastern Cape) the access link for the meeting. She noted another absentee with apology. She then outlined the agenda for the meeting and mentioned that they would use alphabetical order. She would try to accommodate everyone, even those who were not yet ready. She called for Free State first, since the Eastern Cape was not yet ready.

Negotiating mandates: Division of Revenue Bill [B4-2024]
Free State
Mr M Moletsane (EFF, Free State) apologised for not switching on his video; his environment would not allow him to do so and he was using a small electronic device. He said that the Free State legislature voted in favour of the Division of Revenue Bill [B4-2024] with the date of deliberation being 17 April 2024. Taking the following into consideration: it was crucial to consider the unique economic dynamics of the Free State provinces, especially with said province being surrounded by six other provinces. National Treasury should consider this when doing budget allocation. He then proceeded to read from the mandate – see attached.

The Chairperson called for the next province which was Gauteng.

Mr Nodada interjected to say that there were provinces who had submitted reports and negotiating mandates, and he requested guidance from the provinces on which documents to flight.

The Chairperson asked Gauteng which document they would want flighted.

Mr D Ryder (DA, Gauteng) said he would work with either document flighted.

The Chairperson relayed this to Mr Nodada, who said he would first flight the report and thereafter the negotiating mandate.

Gauteng
Mr Ryder greeted everyone present and mentioned that the Gauteng Portfolio Committee on Finance met briefly to discuss the Division of Revenue Bill for 2024. He noted that the report had been with National Treasury for some time. He wanted to focus on the recommendations towards the end of the report.

Whilst the committee did advertise a call for public participation, there were no submissions made from the public on the Bill, and this was very concerning for Gauteng who had high levels of capability. They may need to revise their method of calling for submissions from the public. He then proceeded to read from the mandate – see attached.

Mr Ryder mentioned that the province supported the ‘general thrust of the Bill’ and would like National Treasury to comment on the issues raised. He wondered if the mandate too should be flighted, this was done. He then read from said mandate.

KZN
Mr Y Carrim (ANC, KZN) said the province supported the Bill – see attached for further details in the mandate.

Limpopo
Ms M Mamaregane (ANC, Limpopo) mentioned that there was not yet a mandate from Limpopo.

The Chairperson noted that there was no mandate.

Mpumalanga
The Chairperson read out the Mpumalanga mandate to support the Bill – see attached for further details.
 
Eastern Cape
Mr Nodada asked for Mr Mkiva to be given an opportunity to speak for Eastern Cape since he had recently joined the meeting, this was so granted.

The Chairperson noted that Mr Mkiva was also chairing another meeting.

However, he was experiencing network issues, so Mr Carrim was asked to read on behalf of the Eastern Cape.

Mr Carrim began reading out the flighted mandate.

Mr Mkiva interjected to say he would like to take over as he struggled with the network earlier.

The Chairperson interjected to remind Mr Mkiva that he was supposed to speak through the Chairperson on the platform and not interrupt the process, so she asked if he wanted to take over.

Mr Mkiva responded in the affirmative.

Mr Mkiva apologised to the Chairperson, saying that he thought that the platform had kicked her out. Mr Mkiva read out from the flighted negotiating mandate. The province supported the Bill – see attached for further details.

The Chairperson requested that Mr Mkiva stay online for the duration of the meeting.

Northern Cape
Mr W Aucamp (DA, Northern Cape) said the province supported the Bill. He read from the recommendations under point 6 – see attached for further details.  

North West
Mr F du Toit (FF+, North West) read from the mandate, reading from specific sections to save time. The province supported the Bill – see attached for further details

Western Cape
Receiving no response, she asked if Ms L Moss (ANC, Western Cape) was on the platform.

This was met with a negative response.

The Chairperson requested that the mandate be flighted.

Mr Nodada interjected to say that the first page was the negotiating mandate which was then followed by the report - the recommendations were towards the end. He asked if the Chairperson wanted to start with the recommendations before returning to the mandate.

The Chairperson approved of this plan; she thought they had received the reports and forwarded them to National Treasury. She thought there would be thus no need to go through the report. She sought confirmation if those were the recommendations.

Mr Nodada responded in the affirmative and confirmed that all the mandates and reports had been forwarded to National Treasury. If the Chairperson wished, she could return to the mandate.

The Chairperson did not see the need to engage on the entire report and asked that they only look at the mandate. All Members had the reports. She read out from the mandate.

Someone interjected to inform the Chairperson that Mr Ryder’s hand was raised, and she recognised the raised hand.

Mr Ryder wanted to state for the record that it was very disappointing for Members to be absent at the meeting where all the other Members made sacrifices to attend the meeting, and there was no apology submitted.

The Chairperson said she would address the Members on the side and continued reading. The Western Cape did not support the Bill—see attached for further details.

The Chairperson then suggested that the Committee adopt the presented mandates. Of the nine provinces, seven were recorded as being in favour of the Bill with the exception of the Western Cape and Limpopo had not yet submitted a mandate.

The mandates were adopted.

NT response
The Chairperson mentioned that National Treasury would attend the meeting and make comments. She asked if National Treasury could provide a written response on the mandates of the provinces. She called on them to give comments.

Ms Wendy Fanoe, Chief Director: Intergovernmental Policy and Planning, National Treasury, confirmed that National Treasury had received all mandates from all provinces except Limpopo. They would respond to the negotiating mandate and recommendations from Limpopo by Friday.

Some of the questions received required National Treasury to consult with other units, who may need to follow up with national departments, so they would need more time to respond to questions.

In their responses on the allocation to local municipal grants, National Treasury would indicate which clause in the Division of Revenue Bill would allow for this provision. They will also indicate the process to be followed.

A similar concern was raised by the Free State - National Treasury was asked to support it here, too. The Department of Cooperative Governance administered the Municipal Infrastructure Grant (MIG), so they would require the national department of Cooperative Governance to provide this support. This could be converted from a direct allocation to an indirect allocation and the national department would spend this money on behalf of the municipality. This was over and above the provisions of forfeiting the money.

Regarding Gauteng, they did not implement the Census 2022 information. This was because they received the information very late, and further to this, StatsSA revealed that they would release the data in batches. With the Provincial Equitable Share, they were only able to update less than 50% of the data, and the Local Government Share was even worse. The Basic Services was the largest component of said share - this was to provide poor households with a basic service subsidy. The only information received from StatsSA was the population per municipality, but they did not have the poverty data to be inserted into the formula. This data was still awaited. National Treasury was working closely with StatsSA to implement the data from the full set.

Regarding poor management of high debt levels, additional funds were allocated to the Provincial Equitable Share after the Medium-Term Budget Policy Statement (MTBPS) last year. She was aware that provinces were facing significant financial strain; the additional funds provided flexibility in terms of the budget.

Ms Fanoe said she had been in frequent communication with the Committee about the disasters in the Northern Cape. They were concerned about the late applications and assessments not conducted on time. They were reviewing the Finance Risk Policy which would also look at insurance to deal with disasters.

Regarding the North West and the Western Cape, the Provincial Equitable Share was not equitable because it did not factor in enough of the rural areas. This also applied to the Eastern Cape and Free State. The share was rural biased - they needed to readjust this to ensure it was equal for further use. They were aiming for the deadline of Friday.

The Chairperson asked if there were more comments from the National Treasury team.

Noting no response, she asked Mr Ryder if he was satisfied with the answer received on the chart. If he was unsatisfied, he should indicate where he was not satisfied so that this could be escalated further.

Mr Ryder said that he was reluctant to accept the fact that StatsSA was volunteering to send batches [of information] through. He requested a timeline from them as this decision had to go through government. He hoped a concrete answer would be provided by Friday.

The Chairperson asked that National Treasury respond to the unanswered questions and concerns. She acknowledged that the missing mandate from Limpopo would make the task difficult for them, but she would engage with the respective offices in this regard, which should be indicated in the report. She requested that the responses be sent to the Committee.

Report of the Select Committee on Appropriations on the Second Adjustments Appropriation (2023/24 Financial Year) Bill [B6 – 2024]
The Chairperson went through the report page by page.

It was mentioned that there was an input received from Mr Ryder which had to be cast into the Committee observations. This input was warmly received and correctly captured what the Public Finance Management Act (PFMA) stipulated. There were no issues in this regard.

Mr Carrim asked why they had to bring this in now - why were they doing this?

Mr Ryder responded by saying that the PFMA required very specific reasons for processing an adjustment, and they stated that some of the issues raised here did not meet the criteria of Section 30 of the PFMA. National Treasury never fully responded to the concern. He read partly from 5.2 of the flighted document. He wanted to raise the issue that these were the requirements that had not yet been met.

The Chairperson asked if Mr Carrim was now satisfied with the response.

She continued going through the report pages.

Thereafter the report was adopted. While the DA was satisfied with the report, it did not agree with the conclusion.

The Chairperson asked if the DA outrightly rejected this report/

Mr Ryder confirmed this statement.

The Chairperson laughed and said the DA was rejecting what they had just added.

The FF+ reserved their position.

The Chairperson said that this was better than rejecting it.

The EFF reserved its position.

The Chairperson observed that the report was adopted by the majority. https://pmg.org.za/tabled-committee-report/5818/

Report of the Select Committee on Appropriations on the Gold and Foreign Exchange Contingency Reserve Account Defrayal Amendment Bill [B7 – 2024] (National Assembly – Section 77)
The Chairperson invited comments along the way.

Regarding point 4.3, Mr Ryder said he did not have any objections to this as it was not a recommendation which called for action. There was no harm in capturing. He appreciated all the Members for their contributions; it made their work easier to be done.

The Chairperson asked Mr Ryder to elaborate on why he felt it necessary to have the additional sentence. Their private discussions in the office noted that this would not have an effect on the content.

Mr Ryder mentioned that this was a simple observation from their discussions which he felt the need to raise. Supply and demand affected everything including currency and increasing liquidity impacted how currency was received. This was based on monetisation. He said this should have been in 4.2 not 4.3. He asked that they scroll up a bit, which should have been part of 4.2 (he read this aloud).

The Chairperson noted that the change was being made and asked if the economists could advise on whether they were right in making this change. Would it drastically change their content? She also asked Mr Carrim for his advice.

Mr Carrim said this was satisfactory. The Reserve Bank wanted to bring inflation under control. The Governor and his team were obsessed with inflation, surely the Reserve Bank would have taken this into account. Other entities had attacked the Governor; it was hard to believe that they had not considered this. This was fine as is.

The Chairperson continue to ask for more inputs. She wanted to ensure that there would be no negative impact on the report; she wanted to hear from others.  

Ms Fanoe mentioned that this was more a matter of the fiscal framework. National Treasury was not appointed to deal with such issues. They would consult the relevant units in National Treasury and provide feedback to the Committee.

The Chairperson mentioned that she wanted to consult as much as possible because they had to adopt this report. Whatever they discussed would directly impact the market so they had to be sure.

The Committee Researcher corrected what Ms Fanoe said. The Committee was dealing with the Second Adjustments Appropriation Bill, not a Division of Revenue that required the mandate, so National Treasury would not need to respond. This was not a recommendation but a finding to note, not to call for action. This was to warn National Treasury and the Reserve Bank on the impact on inflation. He agreed with Mr Carrim on giving the Reserve Bank a mandate to handle inflation and place it under control. There was nothing wrong with the Committee expressing their views. It was important to note that there may be an adverse impact. He was satisfied.

Mr Carrim said he approved of the Bill as is. While it was the Reserve Bank’s duty to manage inflation, the Committee was concerned. He was satisfied.

The Chairperson found the Bill satisfactory as is and mentioned being sensitive towards the market so that they were not the cause of negative responses. She requested that the change be made to the report.

The report was adopted.
 
The DA, EFF and the FF+ reserved its positions on the report. https://pmg.org.za/tabled-committee-report/5819/

The minutes of 27 March 2024 were adopted.

The Chairperson thanked everyone for their time and participation and hoped they would proceed with their political work.

Mr Carrim interjected to remind all of the sitting at 14h00. The Select Committee on Finance would meet on Friday and the ANC Members would briefly meet this afternoon. The notices had been received yesterday.

The Chairperson thanked everyone again and wished them well.
  
The meeting was adjourned.