Appropriation Bill; Committee Report on Provincial Expenditure hearings; Annual Committee Report: adoption

NCOP Finance

14 June 2006
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Meeting Summary

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Meeting report


14 June 206

Mr T Ralane (ANC)

Documents handed out:
Appropriation Bill [B2-2006]

Presentation on the Appropriation Bill
Committee report on hearings on conditional grants and capital expenditure
Committee's annual report

The Committee considered and adopted the Appropriation Bill. The Chairperson noted his hope that this might be the last time that the Committee would have to consider such a Bill as the Joint Budget Committee was mandated to deal with Appropriation Bills. He also expressed the hope that the Joint Budget Committee would be able to deal with the Bill in great detail. The Committee also adopted its report on provincial expenditure and its annual report.

Mr N Cole (Chief Director: National Budgets) made the presentation. (See document attached). He said that an additional amount of R106 billion was added to the 2005 Medium Term Expenditure Framework (MTEF) period. National departments and provinces received R30, 5 billion and R42, 9 billion respectively out of the additional funds. The amount allocated to provinces included money for the Gautrain project. Certain amounts were funds allocated for the preparations for the 2010 FIFA World Cup. The amounts should be appropriated through the adjustment budget or in the next budget.

He said that the Bill was intended to legislate spending of the 34 national budget votes. The votes were for the different government departments and state institutions. The appropriation would stretch from 1 April 2006 to 31 March 2007. Treasury was considering whether it should lengthen the appropriation period. The Bill would give effect to policy commitments made through legislation and policy. Funds would be appropriated per main division within a vote. One of the difficulties with the way that the Appropriation Bill was structured was that some of the main divisions were interpreted as programmes. For instance, National Treasury had eight main divisions. Programme two was composed of the Budget Office, Public Finance, Intergovernmental Relations and Economic Policy. In essence there were four programmes within one main division. In the Department of Land Affairs, Land Restitution was a main division but also a programme. Certain issues had to be sorted out. Treasury was of the view that the Bill should recognise appropriation to main division but that next year the Bill should break up the programmes under the main divisions. This would allow Parliament to have a clear sense of where money would go.

The Bill did not include things such as state debt costs, the provincial equitable share and the Skills Development Programme because these were direct charges against the National Revenue Fund. It included current payments, transfers and subsidies, payments and capital assets and funds that were specifically and exclusively appropriated for certain purposes. There was no roll over of money budgeted for compensation of employees. For instance, if a department had planned and budgeted for the appointment of a director but had ended up not employing a position in that level, the money that would have been used to pay such a person could not be rolled over to the next financial year. The reason was that the salary of such a person formed part of the establishment and there would always be money for paying such a person every year. It was not as if the person would have to be given back pay.

Transfers and subsidies to foreign governments and international organisations would include membership fees to international bodies. Funds specifically and exclusively used for particular purposes could not be used for any other purpose except the one for which they had been appropriated.

The Chairperson gave out copies of the rules that governed how money should be spent so that the Committee, when conducting oversight, could see if anyone was breaking the law. People had the tendency to say that they had saved some money especially in the context of employing people.

Mr E Sogoni [Gauteng](ANC) noted that certain things were excluded from the Bill. He wondered how the Committee would conduct its oversight.

Mr Cole replied that oversight was not restricted to one Act. There was a huge number of Acts in relation to which the Committee exercised oversight. The skills development levy was not included in the Bill even though it was about taxation. It was excluded because companies paid their contributions to the South African Revenue Services. The contributions could not be put in the kitty for reallocation but had to be used for training.

The Chairperson asked if the local government equitable share was included in the Bill. Mr Cole replied that it was included.

The Chairperson said that there were problems and the sooner they were addressed the better. Provinces did all sorts of things with the equitable share. There was some top slicing in almost all provinces in the context of their development funds. It was clear during the public hearings that people had shifted funds willy-nilly. It was importantly to deal with the clarification of issues around the main divisions and programmes that fell under the main divisions. The Budget Focus Group had raised question as to what it was that Parliament was voting for in the appropriation? Was it for the whole budget, votes or programmes? The answer was beginning to come out. A certain consultant had once said that in passing the Division of Revenue Bill, the Committee was merely passing information and not money. The consultant went on to say that the only Bill that dealt with money was the Appropriation Bill.

Mr Cole replied that Parliament voted for the vote as provided for in the Public Finance Management Act. For instance, Parliament would appropriate R123 993 for the administration programme under the Department of Provincial and Local Government. The amount would go to Current Payments, Transfers and Subsidies and Payments for Capital Assets. Provinces had their own budget processes. Oversight on how provinces spent their equitable share should be exercised by the provincial portfolio committees. The fact that the provincial equitable share was not included in the Bill did not mean that Parliament would play no oversight role but pointed to the fact that the oversight function lay somewhere else.

Ms Mchunu (KwaZulu-Natal] (IFP) asked from where would money to deal with disasters come since there was no money set aside for disasters in the Bill.

The Chairperson replied that money for disasters would come from the Contingency Reserves.

Voting on Appropriation Bill

The Committee adopted the Bill. The Chairperson commented that he hoped that this was the last time that the Committee would have to deal with such a Bill as the Joint Budget Committee was mandated to deal with the Appropriation Bill.

Committee Report on Provincial Expenditure Hearings
The Committee considered its report on the third and fourth quarters provincial expenditure. The report was adopted with amendments.

Committee Annual Report 2005
The Committee adopted its annual report.

The meeting was adjourned.


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