Division of Revenue Amendment Bill: Negotiating Mandates

Meeting report

The Chairperson sought confirmation that all Members were on the platform to present the mandates on behalf of their provinces.

Mr J Britz (DA; Eastern Cape) indicated that he was attending a Magistrate Commission’s meeting in Pretoria on behalf of Parliament and wished to leave soon after presenting the mandate of the Eastern Cape Province.

The Chairperson outlined the process to be followed. Delegates from each province would be allowed to submit on their provinces' behalf. For easier reference, the Committee Secretary was tasked to flight the documents on behalf of Members. Once done, she would request Members to, by show of hands, indicate whether the mandates should be adopted. National Treasury would be given an opportunity to respond verbally to the submissions of each delegate. National Treasury would also be requested to submit written responses to the Committee by 12:00 on Monday, 2 December 2024. The responses would be forwarded to the different provinces to prepare for the meeting on Wednesday, 3 December 2024 and to the Committee to finalise the negotiating mandates. The Chairperson said the intention was to proceed alphabetically however, to accommodate Mr Ryder, the Gauteng mandate would be done before the Free State mandate. She sought confirmation that the negotiating mandates of all provinces were received.

Negotiating Mandates
Mr Lubabalo Nodada, Committee Secretary, confirmed receipt of all negotiating mandates and added that they were in compliance with the prescriptions.

Eastern Cape
Mr Britz said it is a qualified mandate. The Eastern Cape Legislature supported the Bill and mandated the Eastern Cape delegate to the NCOP to vote in favour of the Bill within the following parameters:

a) The study conducted by SALGA, reflecting the lower-than-expected revenue-generating capacity and alternative means of funding, should be considered;

b) The unemployment rate in provinces should also be considered;

c) The remuneration of public office bearers, traditional leaders, and municipalities should be paid directly from the fiscus; and

d) An increase to the Municipality Disaster Fund is recommended.

Gauteng
Mr D Ryder (DA, Gauteng) said the provincial committee met under difficult circumstances. The meeting had to be adjourned briefly due to a bomb scare at the legislature but proceeded after precautionary measures were implemented and nothing of concern was found. Both the report on the negotiating mandate and the negotiating mandate were submitted. He highlighted the following clauses in the report:

Clause 4 – Executive assessment of the Bill
No material changes were reported to the equitable share in Gauteng. We appreciate the rollover of unspent but committed funds from the 2023/24 financial year.

Clause 10 – Stakeholder submissions
The Legislature acknowledged the following stakeholders, SALGA, LOPECO, and Amandla.mobi, who raised matters related to the Bill. He was hoping that the National Treasury would consider their recommendations.

The Finance Portfolio Committee recommended that the National Treasury work with the Gauteng Provincial Treasury to ensure financial prudence in infrastructure spending and implement consequence management in instances where government officials have not been exercising their duties in the utilisation of allocated funds. He thanked all officials and the support staff who made it possible to submit the negotiating mandate. The Gauteng Legislature supported the Bill.

The Chairperson permitted Mr Britz and Mr Ryder to leave and indicated that National Treasury would provide written responses to the matters raised.

Free State
Mr B Rade (ANC, Free State) said the Portfolio Committee on Public Accounts and Finance met on Wednesday, 27 November 2024, and voted in favour of the Bill. The Committee flagged certain aspects in the National Treasury report, including the following:

Disasters
The focus should be on floods and wildfires, which tend to wreak havoc, especially in the Free State, where farmers lost livestock and crops.

Compensation of employees (COE)
Departments are not able to appoint professionals due to insufficient resources and budget.

Provincial Road Maintenance
The Provincial Treasury cannot match the Maintenance Grant due to the provincial economic outlook.

Lack of national funding
The province did not receive financial support through the DORA Bill or the Provincial Maintenance Grant allocation to respond to the disasters.

Inability to match funds locally
The Provincial Treasury is unable to match national grants, so the province is unable to support the cost of disaster recovery.

KwaZulu-Natal
Mr J Majola (MK, KwaZulu-Natal) said the Finance Portfolio Committee met on 28 November 2024 and accepted the Bill. The quality of the two public participation meetings raised concerns because the issues raised by the public were not relevant to the topic on the agenda. The Committee recommended that organisations such as SALGA be part of the process to ensure that relevant information is obtained.

Limpopo
Ms S Ndhlovu (ANC, Limpopo) said she had attended the meeting with the Provincial Finance Committee on 27 November 2024. The Committee mandated the permanent delegate in the NCOP to negotiate with recommendations in favour of the Bill. The Committee requested that the National Treasury support municipalities with disaster management, especially to resolve challenges such as recent foodborne diseases, and increase the EPWP Grant to assist with resolving the foodborne disease crisis.

Northern Cape
Ms M Siwisa (EFF, Northern Cape) stated that the Portfolio Committee on Economic Development and Tourism met on 27 November 2024 and agreed to vote in favour of the Bill. Stakeholders raised concerns about the lack of disaster funding to fix infrastructure, especially fire damage to schools and farms. Stakeholders recommended that provincial and national departments collaborate to ensure funds are available when disasters occur. It was noted that the province did not submit infrastructure plans to National Treasury to secure funding. Stakeholders recommended that the process be streamlined to ensure that the province submits plans for additional funding to upgrade dams for adequate water supply and roads in rural areas. Additional funding should be requested to ensure that traditional leaders are adequately resourced. The Committee submitted several recommendations, including that the National Treasury should provide appropriate funding for a centralised system for all Departments of Health to ensure that medico-legal claims can be adequately addressed. Timeframes for disaster application funding should be amended to allow adequate and qualitative applications to be submitted. The Committee mandated the permanent delegate to the NCOP to vote in favour of the Bill.

Mpumalanga
Ms S Nxumalo (ANC, Mpumalanga) said the Portfolio Committee on Finance met for a briefing on the Bill and agreed that the Committee should proceed with the mandate. The Committee observed that disaster funding is normally received late but was nevertheless satisfied with the appropriation to the province.

North-West
The Chairperson said the Portfolio Committee on the Premier and Finance met on 27 November 2024, where the permanent delegate briefed the members on the Bill. Public participation processes took place in four districts of the province on 28 November 2024. The many issues raised have been captured in the report, including the disappointment about the Bill not addressing disaster management funding. The weather conditions in the province are disadvantageous to many people, considering that it is rural. Participants recommended that the Bill provide for the reprioritisation of the public transport network and the enforcement of rehabilitation centres by the Department of Social Development and local municipalities to address the community drug problem. Concerns were raised about the non-allocation of municipal grants in local municipalities. Participants requested to be involved when the Bill is discussed to ensure accountability for the allocated funds. The Committee adopted the report, recommending that the proposed amendments to the Bill be considered. The Committee mandated the permanent delegate in the NCOP to vote in support of the Bill as tabled by the Minister of Finance.

Western Cape
Mr P Swart (DA, Western Cape) said the Budget Committee met with National Treasury on 27 November 2024. Having considered the bill, the Committee conferred on the Western Cape delegate to the NCOP the authority not to support the bill for several reasons. Key among the reasons was that the National Treasury did not fully fund the costs of the 2023 wage agreement to provinces, which led to a shortfall in the provincial budget. The National Government is recommended to fully fund all above CPI public sector wage increases for frontline services in all provinces. Additionally, the effect of the 2021 and 2023 MTEF fiscal consolidation on provinces resulted in budget cuts on the provincial equitable share of the Western Cape. It is recommended that the National Government increases provincial funding to fully accommodate service delivery demands faced by the Health, Education and Social Development departments in provinces.

National Treasury Response to Negotiating Mandates
Ms Ogalaletseng Gaarekwe, Acting Head, Intergovernmental Relations, said some negotiating mandates were received shortly before the meeting. Therefore, she asked the Chairperson to reconsider the deadline for providing the responses.

Dr Letsepa Pakkies, Director: Local Government Fiscal Framework, National Treasury, said National Treasury would provide written responses to each province. He briefly responded to some of the issues based on the comments and recommendations from the different provinces. Given the demographic challenges of rural provinces, the main concerns appeared to be centred around the distribution of the equitable share. He advised that to ensure the credibility of the allocation, National Treasury can only use official data for determining the equitable share. He would outline the process for other disasters in various provinces to address the concern about the Bill not providing wildfire provisions. He would respond to the Western Cape claim that only R12 million was allocated for damages assessed at R70 million. A response to the recommendations about infrastructure reforms will be provided. He would outline the process of appropriating funds from conditional grants to address the requests for better support from municipalities and local government. The challenges experienced by municipalities about the Eskom rollover process would be referred to Eskom. The issue of adequate funding for traditional leaders would be referred to the Department of Traditional Affairs, which was developing a handbook on the matter. A progress report on the medico-legal claims will be provided. National Treasury would be responding to the Department of Human Settlements on the specific issues of the Northern Cape Province housing projects.

Ms Gaarekwe said all questions and comments were noted. A response relating to the study that SALGA conducted will be provided. Responding to the comment on the remuneration of office bearers, she explained that the money follows where the function goes. She disagreed with the comment that the COE was not fully funded by National Government. A response would be provided to address the concerns about food-borne diseases. Responding to the issue of roads in the Free State, she explained that previous applications for road infrastructure funding did not meet the requirements. National Treasury would be assisting to improve the packaging of the problem. National Treasury supported the request for an integrated system for medico-legal claims.

The Chairperson said the response deadline would not be reconsidered because of the congested schedule. The provincial committees must finalise the mandates by 2 December 2024. The Committee will be meeting on December 3, 2024, to consider and adopt the final mandates for the decision in the NCOP to be tabled on December 4, 2024. She, therefore, expected the National Treasury to provide feedback by 12:00 on 2 December 2024. She asked for an indication from Members on whether the mandates could be adopted based on the verbal responses from National Treasury.

Mr Swart asked if National Treasury had committed to provide feedback on 2 December 2024. He sought guidance from the Chairperson on what is expected from Members in preparation for the meeting on December 3, 2024. He wanted to know if delegates would also receive National Treasury responses.

The Chairperson confirmed that responses from the National Treasury would go directly to the provinces to finalise their mandates. The Committee will meet on December 3, 2024, for the final mandates. With Mr Majola's and Mr Radebe's support, she declared the mandates duly adopted.

The Chairperson thanked the Members for their engagement and deliberations throughout the process. She also thanked National Treasury for their feedback and the support staff for their assistance.

The meeting was adjourned.