ATC200730: Report of the Select Committee on Appropriations on the Adjustments Appropriation Bill [B10b – 2020], Dated 30 July 2020

NCOP Appropriations

REPORT OF THE SELECT COMMITTEE ON APPROPRIATIONS ON THE ADJUSTMENTS APPROPRIATION BILL [B10B – 2020], DATED 30 JULY 2020

 

The Select Committee on Appropriations, having considered the Adjustments Appropriation Bill [B10B -2020] (National Assembly – section 77),referred to in terms of section 12 (15) of the Money Bills and Related Matters Act No. 9 of 2009 (as amended by the Money Bills Amendments Procedure and Related Matters Act, No. 13 of 2018) (the Money Bills Act), reports as follows:

 

1. Introduction

 

On 24 June 2020, when presenting the 2020 Special Adjustments Budget in the National Assembly, the Minister of Finance tabled, among other budget instruments, the Adjustments Appropriation Bill [B10 – 2020] (henceforth referred to as the Bill). The Bill was tabled in terms of sections 12(1) and (2) of the Money Bills Act. Section 12(1) of the act requires the Minister of Finance to table a national adjustments budget as envisaged in section 30 of the Public Finance Management Act, 1999 (Act No 1 of 1999) (hereafter referred to as the PFMA). In terms of section 12(2) of the Money Bills Act, “an adjustments appropriation Bill must be tabled with a national adjustments budget”.

 

On 27 July 2020, afurther request was made by the Minister of Finance that Parliament consider amendingsection 6 of the Appropriation Act (Act No. 7 2020) through the Bill. This section enables the Minister of Finance to approve expenditure which cannot reasonably be delayed without negatively affecting service delivery and is unforeseen and unavoidable, or was announced by the Minister during the tabling of the budget in February 2020, or was appropriated in the 2019/20 and to be rolled over. This expenditure may not exceed contingencies for the 2020/21 financial year. The provision for contingencies in the 2020 Budget Review includes the contingency reserve of R5 billion and a provisional allocation of R7 billion, not assigned to a vote but earmarked for the Department of Public Enterprises. To enable the use of section 6 of the Appropriation Act up to the introduction of the second adjustments appropriation Bill in October 2020, it was proposed that section 6(1) of the Appropriation Act be amended by removing the word “an” and inserting the words “the second”in reference to an adjustments appropriation Bill. The Standing Committee on Appropriations considered and agreed to this request on 24 July 2020. The Bill, as amended, was agreed to by the National Assembly on 29 July 2020 and referred to the Committee for consideration and report in terms of section 12(15) of the Money Bills Act. However, prior to that the Committee met jointly with the Standing Committee on 23 July 2020 to receive a briefing from National Treasury on the Bill as well as the Minister’s request.

 

1. Stakeholder consultation andpublic engagementprocess

 

The Committees consulted with the Financial and Fiscal Commission (FFC) and the Parliamentary Budget Office (PBO) on the Bill. In order to strengthen the democratic process and facilitate public participation, the Committee published adverts, calling for comments on the Bill, in print media in all 11 official languages from 26 June to 2 July 2020. Written submissions were received from the Congress of South African Trade Unions (COSATU);the Organisation Undoing Tax Abuse (OUTA); Equal Education, together with SECTION27 and the Equal Education Law Centre; Energy Governance South Africa (EGSA) Network; Ilifa Labantwana;Agroecology South Africa; and Prof E Atmore. COSATU, Equal Education/SECTION27, and OUTA also made oral submissions during a joint public hearing held on 24 July 2020, in accordance with section 72(1)(a) of the Constitution.

 

1. Overview of the Adjustments Appropriation Bill

 

The Bill reflects adjustments to allocations mainly targeted at COVID-19 interventions. The fiscal and economic impact of the national state of disaster declared as a result of the pandemic made it essential for the Minister to table a special adjustments budget to revise government’s spending priorities for 2020/21. The Bill provides for the following:

1. A total of R145 billion mainly allocated for the following interventions:

• A total of R122.4 billion allocated to the relief package;
• A total of R3.2 billion as an equity investment to recapitalise the Land Bank; and
• A provisional allocation of R19.6 billion.

1. The Bill proposesto secure funding by shifting resources from existing programmes, with a total of R100.9 billion to be temporarily suspended from baselines, of which R80.9 billion will come from national departments, as follows:

• A total of R54.4 billion in national departmental allocations;
• A total of R13.8 billion in provincial conditional grants; and
• A total of R12.6 billion in local government conditional grants.

1. Provincial suspensions included R20 billion funded from the provincial equitable share (PES).

 

1. Proposed additions in the Bill

The Bill proposes that national government departments receive a net total allocation of R55.3 billion in additional funding to fund government’s response to the COVID-19 pandemic. Table 1 below outlines the additions as proposed by the Bill.

 

Table 1: Adjustments Appropriation Bill Net Additions

Source: National Treasury (2020) Adjustments Appropriation Bill

 

Out of 41 national government departments (Budget Votes), seven Votes benefit from the R55.3 billion additional allocations, as follows:

1. The Department of Social Development (Vote 19) receives the largest additional allocationof R25.5 billion, intended for the provision of financial support to vulnerable households through the increase of various social grants and the payment of the special COVID-19 Social Relief of Distress (SRD) Grant of R350 per month, for six months. This additional allocation increased the 2020/21 budget baseline allocation to the Department by 12.9 percent, from the R198 billion to R223 billon.
2. The Department of Cooperative Governance (Vote 3) receives the second largest additional allocationof R11 billion through an addition to the local government equitable share (LGES). This is to support municipalities in their increased expenditure related to the provision of basic services, including shelter for the homeless; and increases the Department’s baseline allocation by 11.4 percent from R96 billionto R107 billion.
3. National Treasury (Vote 8) receives the third largest net additional allocation of R9.3 billion, to cover debt service costs as well as R3.2 billion for the recapitalisation of the Land Bank, increasing the National Treasury’s 2020/21 baseline allocation by 1.1 percent from R815 billionto R824 billion.
4. The South African Police Service (Vote 28) receives an additional baseline allocation of R3.7 billion or 3.6 percent, increasing its budget allocation from R101.7 billion to R105.4 billion. This is to support the Department’s COVID-19 response, including the procurement of personal protective equipment (PPEs) for police officials.
5. The Department of Health (Vote 18) receives an additional allocation of R2.9 billion or a 5.2 percent increase in the Department’s 2020/21 budget allocation from R55.5 billion to R58 billion. This is intended to fund COVID-19 lab tests; costs related to the Cuban health professionals; contracting with private hospitals; the procurement of PPEs and thermometers; and communication campaigns and occupational health interventions.
6. The Department of Defence (Vote 23)receives an additional allocation of R2.9 billion or 5.5 percent of its main budget allocation, increasing the Department’s budget from R52 billion to R55 billion in 2020/21. This is intended to fund ration and fuel costs; aircraft fuel and troop transport as part of Operation Notlela; and the procurement of medical supplies. Furthermore, these funds are aimed at procuring disinfectant tunnel; set up quarantine clinics; the deployment of the Reserve Force, including allowances; the procurement of personal PPEs for deployed soldiers and the repatriation of South African citizens. 
7. Government Communications and Information Systems (GCIS) (Vote 4)receives an additional allocation of R30 million or 4.2 percent of its main budget allocation, increasing its budget from R721 million to R751 million to fundCOVID-19 related expenditure.

 

1. Proposed downward revisions in the Bill

The Bill proposes baseline reductions to the budgets of national government departments of R31.7 billion(see Table 2 below). These baseline reductions are made in order to fund government’s direct response to the COVID-19 pandemic. Out of the R31.7 billion baseline reductions, 10departments account for R28 billion or 88 percent of the proposed reductions.

 

Table 2:Adjustments Appropriation Bill Net Reduction

 

Table 2 above shows all the proposed baseline reductions from national government departments, of which the following are the top ten votes in Rand value:

 

(1)    The Department of Higher Education and Training (Vote 17) budget is reduced by R9.9 billion or 1.8 percent of the main budget allocation, decreasing the Department’s budget from R116.9 billion to R107 billion in 2020/21. The proposed main budget reductions include the following:

• R8.1 billion from the skills development levy, mainly due to the four-month holiday for contributions.
•  R875 million through the postponement of infrastructure programmes.
• R383 million from delaying the Historically Disadvantaged Institutions Development Programmes and Generation of Academic Programme.
• R316 millionfrom non-essential goods and services and savings due to the delays in filling vacant posts.
• R155 million from TVET colleges, by delaying the operationalisation of new colleges and deferring the intake of the Centres of Specialisation Programme to the 2021 academic year.

(2)     The Department of Transport (Vote 40) budget is reduced by R4.6 billion or 7.5 percent of the main allocation, from R62 billion to R57 billion in 2020/21. The proposed main budget reductions include the following:

• R250 million from the Taxi Recapitalisation Programme, resulting in fewer taxis being scrapped in 2020/21.
• R1.8 billion from the Provincial Roads Maintenance Grant.
• R1.9 billion from the Public Transport Network Grant.
• R1 billion from the Passenger Rail Agency of South Africa (PRASA) capital budget (Rolling Stock Fleet Renewal Programme).
• R1.1 billion from the South African National Roads Agency Limited (SANRAL) non-toll roads funding.

(3)    The Department of Agriculture, Land Reform and Rural Development (Vote 29) budget is reduced by R2.4 billion, or 14 percent of the its main budget allocation, from R16.8 billion to R14.4 billion. The proposed reductions include the following:

• R300 million from the compensation of employees’ budget, by suspending the filling of funded vacant posts.
• R189 million from the rural social infrastructure coordination project due to restricted economic activity caused by the COVID-19 pandemic.
• R366 million from the restitution programme due to restricted economic activity imposed by the COVID-19 pandemic.
•  R317 million from the Comprehensive Agricultural Support Programme (CASP) Grant for infrastructure projects.
•  R121 million from the Ilima/Letsema Project Grant from the funding for support to subsistence farmers and food security programme.
•  R444 million reduction from the land acquisition and redistribution programme.
• R611 million from funding for food security, partly due to fewer farmers supported as a result of restricted economic activity.

(4)    The Department of Human Settlements (Vote 33) budget is reduced by R2.3 billion or 7 percent, from R31 billion to R29 billion in 2020/21.The proposed reductions include the following:

• R1.7 billion from the Human Settlements Development Grant.
• R1.1 billion from the Urban Settlements Development Grant.
• R337 million from the Title Deeds Restoration Grant.
• R29 million from non-essential goods and services and R4 million from bursary funding for non-employees of the department.

(5)     The Department of Basic Education (Vote 16) budget is reduced by R2.1 billion or 8.3 percent, from R25 billion to R23 billion in 2020/21. The proposed reductions include the following:

• R2.2 billion from funding earmarked for education infrastructure through the Education Infrastructure Grant.
• R282 million from non-essential goods and services.
• R68 million from teacher training in maths, science and technology through the Maths, Science and Technology Grant.
• R60 million from life skills education through the HIV and AIDS (Life Skills Education) Grant.

(6)      The Department of Trade, Industry and Competition (Vote 39) budget baseline is reduced by R1.8 billion, or 16 percent, from R11.1 billion to R9 billion in 2020/21. The proposed reductions include the following:

• R1.6 billion from public corporations and private enterprises incentives.
• R184 million from non-essential goods and services in the Department and its entities.
• R20 million from foreign governments and international organisations, as well as non-profit organisations.

(7)     The Department of Mineral Resources and Energy (Vote 34)budget is reduced by a net R1.6 billion, or 17 percent, from R9 billion to R7.8 billion in 2020/21. The proposed reductions include the following:

• R1.5 billion from the Integrated National Electrification Programme for both Eskom and Municipalities.
• R42 million from non-essential goods and services.
• R22 million from the Energy Efficiency and Demand-side Management Grant.

(8)     The Department of Science and Innovation (Vote 35) budget is reduced by a net R1.4 billion or 16 percent, from R8.9 billion to R7 billion in 2020/21. The proposed reductions include the following:

• R783 million from non-essential goods and services for the Department and its entities.
• R359 million from the Square Kilometre Array (SKA) Programme.
• R200 million from the National Integrated Cyber Infrastructure System.

(9)     The Department of Tourism (Vote 38) budget is reduced by R1 billion or 40 percent, from R2.5 billion to R1.5 billion in 2020/21. The proposed reductions include the following:

• R973 million from local and international marketing activities.
• R27 billion from non-essential goods and services.

(10)    The Department of Sports, Arts and Culture (Vote 37) budget is reduced by R965 million or 17 percent, from R5.7 billion to R4.8 billion. The proposedreductions include the following:

• R312 million from the construction and maintenance of community libraries.
• R224 million from the Mass Participation and Sports Development Grant.
• R114.9 million from the Mzansi Golden Economy (MGE) programme.
• R152.7 million from infrastructure support to various museums and the National Archives, as well as from some legacy projects.
• R128.9 million from non-essential goods and services.
• R46 million from heritage institutions (operational transfers to museums, the National Heritage Council, the National Library of South Africa and the South African Heritage Resources Agency).
• R28.6 million from Cultural and Creative Industries Development transfers to households, non-profit institutions and private enterprises.
• R10 million from compensation of employees for funded vacant posts. 

 

1. Comments and submissions from stakeholders

 

4.1        Financial and Fiscal Commission (FFC)

 

The Financial and Fiscal Commission (FFC) submitted that, with regard to technical changes, the removal of section 6 was vital as it would allow the Minister to approve urgent reasonable expenditure without delay to ensure effective service delivery. However, the FFC warned that financial discipline and transparency would have to be ensured at all times. On the removal of section 7, the FFC was of the view that whilst this was due to the adjustment budget that took place in 2020/21, it was still imperative that forecasts and estimates as per the original section 7 should remain in place for planning and budgeting purposes.

 

With regard to adjustments by economic classification, the FFC indicated that the transfers and subsidies component saw the largest upward adjustment of R12.3 billion and the bulk of this increase was earmarked for vulnerable households through increased social payments and transfers to local government. The FFC further acknowledged the net increase of R2.4 billion to current payments, mainly driven by additions to goods and services. Whilst the compensation of employees was revised downwards by R591 million. While noting the R3 billion allocation to recapitalise the Land Bank, the FFC indicated that persistent financial assistance to ailing state-owned entities (SOEs) diverted funds from critical areas of service delivery. The FFC pointed out that reforms to ailing SOEs were long overdue and that efforts to stabilise, re-purpose and rationalise SOEs were urgent.

 

On the upward adjustments by function category, the FFC noted that the largest net increases were to the Department of Social Development (R25.3 billion); the Peace and Security cluster (R5.9 billion); and the Department of Health (R2.9 billion). The FFC acknowledged the importance of these essential, frontline sectors in directly responding to COVID-19 and of scaling up and maintaining social assistance interventions to vulnerable households. In addition, the FFC noted that the general public service was to receive an increase of R759 million. These funds were meant for supporting the provision of quarantine sites for people who test positive for COVID-19 and repatriation of South Africans stranded abroad. The Commission submitted that it supported the prioritisation of funding towards fighting COVID-19 while protecting livelihoods and the economy. 

 

On downward adjustments by function category, the FFC noted the difficult balance government had to achieve in this Bill. The FFC pointed out that the biggest reduction was in Learning and Culture with a net decrease of R13.1 billion; and that Science and Innovation could not be relegated to outer years’ allocations as it would play a pivotal role in determining the new economy and our global competitiveness.

 

On adjustments to selected budget votes, the FFC expressed concern over the decrease of R2.3 billion in the budget of the Department of Agriculture, Land Reform and Rural Development, as the Department played an important role in food security. The FFC welcomed the increase of R2.9 billion for the Department of Health, as important in responding to COVID-19, and called for continued commitment to prioritise public health to save lives. The FFC was concerned over the R2.2 billiondecrease in the budget of the Department of Human Settlements, given the housing need in the country. The FFC welcomed the downward revision in the budget of the Department of Public Enterprises of R61.8 million, indicating that the Commission would continue to express concern over the stability of some SOEs under this Department, which continued to be a burden on the country’s fiscus.

 

The FFC welcomed the fact that the budget of the Department of Public Works and Infrastructure had remained unchanged in the adjustments budget, as a reflection of intent by government to use infrastructure to spur economic growth. However, the FFC was concerned over the R67 million decrease in the budget of the Department of Small Business Development, adding that, although this adjustment was relatively small, this Department was important for employment creation and economic growth, and also supported small businesses which that were under strain due to COVID-19 pandemic.

 

With regard to the R111 million decrease in the Communications and Digital Technologies budget, the FFC commented that the digital technology would be important going forward for teaching and learning and businesses and therefore it was concerned that the reduction may hinder widespread internet penetration and the creation of a digital economy. While the FFC noted that the decrease of R257 million in the Water and Sanitation budget was one of the smaller reductions in votes, it emphasised that access to water and sanitation remained an important objective of government, and that it was even more important during this time of COVID-19 as it mitigated against the spread of virus.

 

While acknowledging that the COVID-19 containment measures had resulted in limited movement during the lockdown and may have provided space for some reprioritisation, the FFC cautioned that infrastructure-related budgets, including day to day operational maintenance and rehabilitation, should be protected; and that it was important that the outer years of the 2020 MTEF prioritised these. In addition, government should provide clear funding and delivery plans for delayed 2020/21 infrastructure projects and maintenance. The FFC further indicated that the criteria for the reprioritisation of R20 billion by provinces were not clearly determined, which could result in unevenness of services delivered to households in different provinces. The FFC recommended that provinces report to Parliament on the reprioritisation criteria they used. The FFC further submitted that, despite the disruptions caused by the COVID-19 pandemic, adjustments should prioritise the national priorities and be aligned to the National Development Plan (NDP) and the sustainable development goals. Finally, the Commission advised that the adjustments budget be passed as soon as possible, in order to give government institutions certainty regarding their budget baselines, and enable them to plan.

 

4.2        Congress of the South African Trade Unions (COSATU)

The Congress of South African Trade Unions (COSATU) welcomed the reinforcement of key departments on the health frontline against COVID-19, as well as National Treasury’s intervention in the government credit guarantee scheme. In both cases, however, COSATU questioned whether it was sufficient.

 

COSATU raised several concerns related to the supplementary budget, including the following:

• Budget cuts to key departments on the economic frontline and no mention of key economic and regulatory interventions or local procurement, as well as very little on job creation and retention interventions. COSATU also wanted more clarity on the infrastructure programme.
• The lack of plans to intervene in collapsing state-owned entities (SOEs), municipalities and even some departments, with very little action to address the rising levels of corruption and wasteful expenditure and the provincial and local government debt to Eskom.
• The impact of the neglect of school infrastructure, especially sanitation, and the failure of the Department of Basic Education (DBE) to ready schools for reopening.
• COSATU questioned the reduction in allocations to employ health personnel and the emphasis on building temporary health facilities at the expense of building permanent health infrastructure, much of which had been neglected for years.
• The R2.2 billion and R1.9 billion cuts in PRASA and public transport, respectively, the weak health and safety plan for Metro Rail and the fact that most lines had not reopened and many had experienced increased cable theft.
• The R2.2 billion and R257 million cuts in the Department of Human Settlements, Water and Sanitation with no clear indication of how many informal areas would be upgraded and by when, or of how many would still not have sufficient water and sanitation, undermined the fight against COVID-19; of which informal areas had become epicentres.
• The lack of clarity in the budget about the impact of reprioritisations and of not filling vacant posts, as well as the scope for permanent reductions in wasteful expenditure as opposed to austerity cuts.
• The R67 million cut in the budget of Small Business Development while SMMEs need relief of R11 billion; the R1 billion cut in Tourism, while the industry is dying and the need for more sectoral support for Agriculture, Land Reform and Rural Development.
• The cut in South African Police Service (SAPS) posts, instead of the increase promised in the State of the Nation address and the 10 000 infected SAPS members; the cuts in Correctional Services and the large number of infections in prisons; and the massive backlogs in Labour Courts and the silence on action to deal with corruption in the State Security Agency.

 

COSATU made various recommendations, which included the following:

• Frontline public servants and the 2020 wage agreement shoud be honoured and there should be engagement on the next three agreements, including a sliding scale and inflation protection; cuts in politicians and management posts and salaries; and a single government collective bargaining process. The Public Investment Corporation (PIC) should provide home and education loans for public servants.
• There should be a credible plan to reduce debt through stimulating growth and increasing revenue; and the powers of the Public Audit Amendment Act, the Chief Procurement Office and the National Prosecuting Authority and SAPS should be used to combat corruption and wasteful expenditure.
• The R1.1 billion relief to the taxi industry should be conditional upon compliance with labour, traffic and tax laws and COVID-19 regulations.
• Higher Education and Training should shift to online learning and provide students with laptops, data and data free sites.
• The Department of Employment and Labour should appoint 500 inspectors and reverse the R55 million cut to the CCMA; the R1.7 billion cut in Trade, Industry and Competition should be reversed, including the R1.2 billion from industrial financing. The R1.5 billion cut to the Integrated National Electrification Programme (INEP) should also be reversed.
• The digital economy needs to be fast-tracked and Home Affairs needs to shift its services online and investigate a single election option.
• The South African Revenue Service (SARS) needs further capacitation to crack down on tax evasion, customs and illicit goods, and wealth taxes should be considered.
• To maximise the impact of the R200 billion credit guarantee scheme, loan disbursements could be increased to R25 billion or R35 billion; criteria could be relaxed and incentives incorporated and excessive interest rate charges capped. Parliament should call the banks to account and request a monthly progress report from National Treasury.

 

4.3        Organisation Undoing Tax Abuse (OUTA)

The Organisation Undoing Tax Abuse (OUTA) welcomed the proposed zero-based budgeting, stating that there was not enough tax revenue to cover the expenses from state programmes that failed to deliver year after year; but expressed concern that it would be targeted at large programmes that were poorly defined. OUTA further welcomed the reprioritisation of expenditure and support for businesses, but expressed dismay that much of this reprioritisation was through reductions in other existing support initiatives for businesses. OUTA also expressed serious concern over the reduction of R1.5 billion in the Integrated National Electrification Programme Grant in the face of unaltered support for the Nuclear Energy Corporation of South Africa (NECSA). 

 

OUTA called for the establishment of an independent water regulator, as the Department of Water and Sanitation and the water boards had had poor audit outcomes for years and as such, the COVID-19 pandemic had been worsened by their failure to deliver water and sanitation effectively. With regard to Transport, OUTA indicated that they were still waiting for Cabinet to end the Gauteng e-tolls and this vote emphasised the difficulty of trying to keep e-tolls running and having to arrange last minute bailouts for the South African National Roads Agency Limited. (SANRAL). Added to that, OUTA argued that the mismanagement and looting of the Passenger Rail Agency of South Africa (PRASA) programmes had left the Department of Transport in a very weak position to provide safe public transport. Furthermore, OUTA recommended that the Committee reject the proposed additional allocations to the security cluster, indicating that funds should rather be found in existing budgets, as these departments were known for systematic waste, failure to react to negative audit outcomes and corruption.

 

OUTA further submitted that the government wage bill was unaffordable; and that compensation and debt-service costs were the largest expenditure items over the mediumterm - more than any investment in social development or infrastructure. OUTA supported National Treasury’s efforts to reduce the disproportionate cost of remuneration in line with performance outcomes and relative public benefits.

 

With respect to public entities, OUTA put it to the Committee that it was now routine that billions in bailouts and guarantees went to SOEs every year; and that these entities were a significant fiscal risk and therefore governance, financial, structural, and policy reforms were urgently needed, as per the National Planning Commission (NPC) position paper.

 

In conclusion, OUTA recommended the following:

• Government should implement zero-based budgeting based on National Treasury’s guidelines and Parliament should hold a debate on how this would work. In addition, National Treasury should include increased transparency in the zero-based budgeting guide.
• An example should be made by rejecting additional appropriations to the SANDF and SAPS and there should be a demand for fiscal discipline and internal reprioritisation of original allocations.
• Parliament should hold SOEs to the conditions of their bailouts and there should be a demand for timelines for reforms in line with the NPC position paper.

 

4.4        Equal Education, SECTION27, and Equal Education Law Centre

Equal Education, SECTION27 and Equal Education Law Centre made a joint submission on the Supplementary Budget. They presented an overview of how funding for Basic Education had been decreasing even before the COVID-19 pandemic and submitted that many schools were no longer funded at the minimum per learner threshold established by the Minister of Basic Education. They indicated that the COVID-19 pandemic had amplified the historical challenges with school infrastructure and the need to boost non-personnel funding and address infrastructure backlogs, including sanitation, in schools. They submitted that the reduction in funding to school infrastructure grants by a net R1.7 billion proposed in the Supplementary Budget would ensure that these backlogs remained for years to come. They further indicated that the National School Nutrition Programme (NSNP) had not been allocated any additional funds in the Supplementary Budget, but instead, R50 million of existing funds from the programme were reprioritised to provide for COVID-19 necessitated sanitation measures in the preparation and distribution of meals. However, studies showed a marked rise in poverty and hunger levels in households since the beginning of the lockdown period, and the NSNP budget may need to be increased in October to ensure meals could be provided to all learners, by alternative means, if necessary. They expressed serious concern that the Department of Basic Education (DBE) was not considered a COVID-19 frontline department by National Treasury, and that a reduction of R2.1 billion had been made to its fundingin the Supplementary Budget, while the SANDF and SAPS, who were deemed to be frontline services, received a combined increase in funding of R6.7 billion. They further expressed concern that many budget reprioritisations had been made at the cost of the long-term fulfilment of the right to basic education, rather than due to savings, and called for improved transparency and open discussions on trade-offs prior to the tabling of the budget.

 

Equal Education, SECTION27 and Equal Education Law Centre recommended that the Committee:

 

• Advocate for the basic education sector to be deemed a frontline service in the fight

against COVID-19;

• Advocate for the basic education sector to receive additional funds to support and enable its COVID-19 response, including funds from the fiscal relief package;
• Demand that minimum per learner funding thresholds are met for the remainder of the 2020 school year, especially to no-fee schools and increase oversight of provincial education departments;
• Demand that National Treasury implements a system to monitor and oversee provincial COVID-19 expenditure, as national departments have no ability to monitor the effectiveness of COVID-19 spending;
• Consider the need to provide additional funding to the National School Nutrition Programme (NSNP) to cover new COVID-19 related sanitising and safety needs as well as the likely increased need resulting from the socio-economic challenges brought about by the pandemic and lockdown;
• Advocate against the deprioritisation of school infrastructure, and ensure that sufficient funding is provided to the School Infrastructure Backlogs Grant (SIGB) and the Education Infrastructure Grant (EIG) for long term infrastructure projects;
• Support advocacy calling for improved transparency early in the budget decision-making process, so that trade-offs which affect rights fulfilment are adequately and meaningfully participative; and
• Monitor key decisions in the lead up to the MTEF planning process, discourage further

cuts and ensure that peoples’ views on this process are put forward in whichever possible way.

 

4.5        Energy Governance South Africa (EGSA) Network

The Energy Governance South Africa (EGSA) network made its submission broadly in support of the submission by OUTA on the amendments to Vote 34: Department of Mineral Resources and Energy (DMRE) in the Supplementary Budget, and to draw particular attention to certain key points. EGSA indicated that the budget of the DMRE was being reduced by 17 percent, or R1.6 billion, of which the lions’ share came from cutting a total of R1.5 billion from the Integrated National Electrification Programme (INEP) grants. R1 billion less would be going to Eskom, (INEP Eskom) and R500 million less to municipalities (INEP municipalities), to electrify households. Due to these reductions, Eskom’s spending on electrifying households would be reduced by 33 percent and the funds that municipalities had available to spend on electrifying households would be reduced by 27 percent. EGSA submitted that such households were part of the poorest and most vulnerable in South African society, and probably those hardest hit by the COVID-19 pandemic, and questioned National Treasury’s rationale for cutting spending on activities that would help poor and vulnerable South Africans cope with the pandemic. EGSA further indicated that the reduced funds were unlikely to be reinstated in the next budget process.

EGSA further submitted that, while Nuclear Energy Regulation and Management had a budget reduction R10.8 million, the transfers to the Nuclear Energy Corporation (NECSA) remained untouched. EGSA submitted that NECSA, as a nuclear industry SOE, had an appalling financial track record, and that continuing to reward NECSA for its financial mismanagement and irregular expenditure, would send a signal to those corrupt and malleable officials that they could continue with business as usual. In addition, support to the nuclear industry was something that could temporarily be suspended without negatively impacting on such programmes.

 

In conclusion, EGSA recommended that, instead of taking funds only from the Energy side, a 17 percent reduction should be applied across the Mineral Resources programmes. In light of COVID-19, additional monies could be allocated to mine health and safety, but a reduction across the mineral resources-related entities would provide additional savings. EGSA further proposed that savings should be made in other programmes, while additional electrification is implemented, as the manner in which the DMRE budget had been reduced, deepened inequality and further impoverished the poor. EGSA called on Parliament to reject the adjustment to Vote 34, and to support the virement of monies from administration to mine health and safety during the COVID-19 period as well as the continuation of electrification programmes. EGSA recommended that a substantial amount of the R1.5 billion reduction (presumably required by Treasury) should be removed from the nuclear programme and from NECSA’s allocation, with the balance to be drawn from the rest of the DMRE programmes.
 

4.6        Illifa Labantwana

Ilifa Labantwana’s submission focused on the absence of financial relief to the early childhood development (ECD) sector to respond to the impact of COVID-19. In response to the pandemic, all ECD operators had been instructed by the Department of Social Development (DSD) to close on 18 March 2020, in order to prevent the spread and acceleration of infections. Since then, ECD operators had not collected fees, which they relied on to pay salaries and other fixed costs. In line with government’s concern for lives and livelihoods, Ilifa Labantwana submitted that ECD operators must be supported under the circumstances they found themselves in due to the pandemic.  While the DSD financially supported a subset of ECD operators that were registered and continued to do so during the lockdown; there were still challenges with registration, resulting in most of the ECD operators not being registered and not receiving financial support. A number of ECD operators would have to close down if not financially supported and hundreds of employees would lose their jobs while children’s learning would be negatively impacted.

Ilifa Labantwana had developed and proposed various support and sustainability packages for consideration. These included a standardised cost package, offering a standardised monthly amount per programme, regardless of programme type or number of children enrolled; a differentiated cost package, using the estimated loss per programme, differentiated by programme type; a standardised cost per child package offering a standardised monthly amount for each child that attended the programme before the lockdown; and a start-up COVID-19 resource pack. Given the financial position of ECD sites highlighted above, it was critical that unfunded sites serving poor communities be supported with COVID-19 resource packs. To date, government had only allocated R65 million in the emergency adjusted budget and this was estimated to only cover 7000 sites with basic health and hygiene resources.

 

 

 

4.7        Agroecology South Africa

The submission by Agroecology South Africa (Agroecology) focused on the implications of the supplementary budget for food security and land reform. Agroecology was concerned about the reductions made to the budget of the Department of Agriculture, Land Reform and Rural Development (DALRRD) and believed that the DALRRD budget cuts and reallocations were an act of bad faith. Agroecology was also concerned over the Department of Environment, Forestry and Fisheries (DEFF’s) budget cuts, which it felt penalised the already under-funded small-scale fisheries sector. Agroecology submitted that productive employment in producing food created a crucial new economic growth node. Agricultural development was a primary industry and fundamental economic driver, and allocations to small-scale producers and appropriate rural infrastructure were precisely the kind of investment needed to mitigate against future challenges.

Agroecology made the following recommendations:

• A full restoration was needed of​ funds taken from household and local food security programmes, including for small enterprise​ support in ecological input supply, agro-ecological production, small-scale fisheries, processing, distribution and retail, and fresh produce markets situated close to end users, all managed in a participatory and decentralised way.
• The Minister of Agriculture, Land Reform and Rural Development (DALRRD) should show good faith by an internal reallocation​ of the revised DALRRD budget back to food security, land reform and​ integrated rural development.
• The Minister and Department of Environment, Forestry and Fisheries should make an internal budget reallocation towards the Fisheries Management programme, particularly towards the Small-Scale Fisheries Unit and its support and capacity building programme.
• There should be active participation​ of popular rural movements, small-scale farmers and​ fishers, and other civil society organisations in decisions on budget allocations and programmes in DALRRD and DEFF, not just as recipients of decisions made by the departments.
•  Government should publicly recognise the critical role​ of rapid land redistribution, tenure security, release of commonage land, local food production and distribution, and democratised food systems
• A ​participatory, rapid and critical review was needed of producer support programmes​ over the past 15 years, including Ilima/Letsema and CASP, the Land Development Support policy and other relevant policies; for the development of concrete proposals for revised, more transparent and participatory, land and producer support programming, and a commitment from the leadership of DALRRD to materialise revised producer support programmes in alliance with civil society.
• ​State capacity and budgetary support should be directed to agrarian reform​ that is aimed at addressing the combined hunger, climate and water crises, and a producer support strategy that explicitly acknowledges the serious climate, biodiversity and related ecological crises by promoting ecologically and socially sustainable forms of production (such as agro-ecology, organic, bio-intensive, permaculture, biodynamic and regenerative) and the role of small-scale producers.
• Bureaucratic bottlenecks that inhibit farmers from accessing funds and other support for their farming activities, should be identified and unblocked immediately.
• There should be an immediate moratorium on all evictions​ in the midst of the pandemic, and this moratorium should be extended into longer term tenure security for all, even beyond the immediate crisis.
• Government should ​prioritise the livelihoods of rural farmers instead of pushing mining (particularly coal mining) ​as a source of jobs given that mining displaces hundreds of people and negatively impacts on thousands who potentially have the capacity to feed themselves and their families.
• Government should initiate talks at continental and international levels to ​challenge and undo the current balance of forces in international trade arrangements ​that result in unequal returns for small-scale farmers and food producers in global and domestic value chains.
• Social movements, small scale farmer and fisher organisations and other community-based and ​civil society​ organisations should not only resist the austerity budgets, but also ​mobilise and organise independently​, without waiting for the state to act, to respond to the immediate food crisis and to continue to advance the longer term imperatives for democratisation of our food system.

 

 

 

4.8.       Prof E Atmore

Prof Atmore submitted that the Department of Social Development (DSD) had failed children and parents across the country during the COVID-19 lockdown period by not setting a date for the reopening of early childhood development (ECD) centres, despite numerous calls, letters and requests to the DSD, nothing was forthcoming except a harsh instruction to ECD centres not to open under any circumstances. Prof Atmore submitted that the consequences of the lockdown for about 2.5 million children, their parents and about 180 000 ECD workers were significant. Children were required to stay at home, often in dangerous environments where they were at considerable risk. More than two million vulnerable children depended on attendance at an ECD centre for their main meal each day. The children had not been able to access these meals for three months, which had resulted in increased child hunger and malnutrition, as indicated by leading medical professionals.

Prof Atmore, on behalf of the Centre for Early Childhood Development in Cape Town, made the following recommendations:

 

• National Treasury should allocate R2 billion to the DSD to support 32 000 ECD centres when they re-open. This will ensure that personal protective equipment (PPEs) is available for staff at ECD centres and for children through a once-off grant of R20 000 to every ECD centre across South Africa. This will enable ECD centres to be ready to receive children.
• The additional cost of this proposal will be around R640 million for the once-off grant and R1. 34 billion for the ECD subsidy, making a total of about R 2 billion. This is a small cost to ensure the jobs of 180 000 ECD teachers and to ensure meals and early learning to 2.5 million children. It is also less than 1 percent of the government’sCOVID-19 recovery package announced by the President.

 

4.9.       Parliamentary Budget Office (PBO)

The Parliamentary Budget Office (PBO) indicated that, in the Special Adjustment Budget, government had attempted to set out commitments to strengthen public finances and position the economy for faster and inclusive growth, and address the immediate demands of the COVID-19 pandemic. The PBO reminded the Committee that regulations to limit the spread of the COVID-19 pandemic had been gazetted; policy priorities set and funding proposed to support the health sector, households and revenue shortfalls due to limited economic activity.

 

The PBO recommended that Parliament accede to the Minister of Finance’s request to amend section 6 of theAppropriation Act (Act No.7 of 2020), as this was a legal requirement for compliance.

 

The PBO indicated that the response to the COVID-19 pandemic had become the government’s central priority and this had placed huge responsibilities on health, social services and the peace and security sectors. This was due to government’s attempts to save lives, scale up capacity in the public health system and contracting private hospitals to supplement publicsector capacity. With regard toresponsibilities shared by national and provincial governmentin the social development sector, the PBO highlighted the need for scaling up and maintaining social assistance interventions for distressed and vulnerable households. The PBO noted the reprioritisation of funding to prepare social facilities for safe reopening and service delivery, including funding of psychosocial services for people affected by the pandemic. The PBO further indicated that there was an increased deployment of police service and national defence force officials during the lockdown period, which was mainly provided by the national government.

 

The PBO further submitted that government’s response to the COVID-19 had included putting together an economic relief fiscal package of R500 billion, the breakdown of which was as follows:

 

• R70 billion in tax policy measures;
• R200 billion loan guarantee scheme to support short-term economic activity;
• R40 billion wage protection; and
• Adjustments as reflected in the Bill: The reprioritisation of R45 billion (R100 billion reduced and R145 billion reallocated); additional allocations of R23.6 billion (including R7.2 debtservice costs and R3 billion to the Land Bank); and provisional allocations of R19.6 billion, which was not in the Bill.

 

The PBO further reported that government had revised baseline allocations to national departments, with the biggest additional amounts allocated towards Social Development (R1.2 billion towards the Social Relief of Distress Grant); Cooperative Governance (R11 billion towards the local government equitable share); and Health (R3.5 billion towards theCOVID-19 component). The PBO submitted that baselines of some national departments were decreased. The departments whose baselines had been decreased, included Basic Education; Higher Education and Training; Agriculture; Human Settlements; Trade and Industry; and Transport.

 

The PBO reminded the Committee that the main purpose of the Billwas to reprioritise funds towards the COVID-19 response, in order to deal with health issues and to support vulnerable households. However, other adjustments, such as the recapitalisation of the Land Bank, had also been included and should be welcomed. The PBO further indicated that the R500billion relief announced by government had not translated into a R500billion injection into the economy, meaning that the health measures and support to vulnerable households had been lower than anticipated. Secondly, economic measures to support employment and businesses had been much less than stated in the recovery programme, and the offset to the decline to GDP would be less than the stated R500 billion.

 

5.         Committee findings and observations 

 

Having considered and deliberated on all the submissions made by the above stakeholders on the Adjustments Appropriation Bill [B10B–2020], the Select Committee on Appropriations made the following findings and observations:

 

5.1 Whilst the Committee welcomes the Adjustments Appropriation Bill [B10B – 2020] which contains upward revisions for certain national government departments in response to the COVID-19 pandemic, it remains concerned about some downward revisions as a result of the inability to spendon capital projects. In particular, those that might cost the state more money in the longterm, including the maintenance of infrastructure, such as the Provincial Roads Maintenance Grant, the Public Transport Network Grant, the Passenger Rail Agency of South Africa (PRASA) (Rolling Stock Fleet Renewal Programme)and those earmarked for redress, as well as the movement of funds away from non-toll roads to fund e-tolls. The Committee is of the view that the effective spending of these funds would have contributed greatly towards much needed economic recovery and job creation.

 

5.2 The Bill, as tabled by the Minister of Finance on 24 June 2020, was amended by the National Assembly, and referred to the National Council of Provinces for concurrence as the Adjustments Appropriation Bill [B10B – 2020]. The amendments seeks to empower the Minister of Finance to approve expenditure that cannot reasonably be delayed without negatively affecting service delivery. Furthermore, the Committee notes that the proposed amendments do not have any implications for the adopted revised fiscal framework and the adopted Division of Revenue Amendment Bill [B9 – 2020], as required by the Money Bills Procedure and Related Matters Act 09 of 2009 (as amended in 2018).

 

5.3 Whilst the Committee supports the funding of healthcare services given the challenges of the COVID-19 pandemic, it is of the view that a proper economic stimulus package is equally important to economic recovery. The Committee further observed with concern the high levels of imported goods and servicesused by some government departmentsas opposed to supporting local small, medium and micro enterprises (SMMEs), creating local jobs and bolstering much needed economic growth. The Committee believes that this denies small businesses continued growth and a meaningful contribution towards the country’s Gross Domestic Product (GDP).

 

5.4 Whist the Committee welcomes the R200 billion government loan guarantee scheme to assist struggling small, medium and micro businesses, it is concerned that large banks are the only platform to disburse the funds. The level of transparency around the terms and conditions of such loans is also a concern, as well as whether National Treasury, together with the South African Revenue Service (SARS) are givingadequate support to small businesses to comply with the conditions for access to the scheme. The Committee is concerned at the very low uptake on the loans.

 

5.5 The Committee is concerned about the R2.4 billion reductions in the Department of Agriculture, Land Reform and Rural Development, affectingthe Comprehensive Agricultural Support Project Grant (CASP), and the implications for food security and jobs, especially given the levels of poverty, unemployment and hunger in South Africa. The Committee is doubtful whether the current allocation to the sector will support South Africans to enable them to produce food for themselves, given the uncertainty created by the current pandemic.

 

5.6Whilst welcoming the additional R11 billion for local government to assist in responding tothe COVID-19 pandemic, the Committee is extremely concerned about the current reports of mismanagement and corruptionrelated to the COVID-19 relief funds at various levels of government;as well as the Auditor-General of South Africa’s (AGSA’s)  recent report on municipal finances;and whether National Treasury, together with provincial treasuries and AGSA have adequate capacity and systems to track COVID-19 expenditureand whether strict consequence management will be implemented for transgressors.

 

5.7 Whilst the Committee welcomes the R1.1 billion relief fund for the taxi industry, given that the industry has not been properly formalised and receivedno support from governmentother thanthe taxi recapitalisation programme, the Committee questioned whether this relief is still relevant given the relaxation of lockdown regulations and high level of non-compliance with traffic and other laws by the industry. The Committee further noted that the taxi recapitalisation programme has been underspending for years,as it is demand-driven, but is of the view that this is an important programme to improve the safety and reliability of public transport for the many commuters with no other mode of transport to work.

 

5.8 While the Committee notes that the majority of the resources to respond to the COVID-19 pandemic has been allocated to the Health sector, it notes that the Defence and Police budgets have also significantly increased. The Committee obviously had reservations about such a huge increase for the South African National Defence Force (SANDF), but National Treasury explained that the increased funding takes into account the disaster management regulations that provide for the mobilisation of all services within the SANDF, including medical and engineering assistance; help with water purification; improving border management; and providing much needed support for the South African Police Service during the COVID-19 pandemic.  

 

5.9 With regard to the reported lack of consultation by National Treasury with some provinces, the Committee notes the existing channels of communication between National Treasury and other spheres of government, includingthe Budget Council, Budget Forums and the interactions between National Treasury and all nine provincial treasuries andmany other intergovernmental relations forums, such as meetings between various sector Ministers and MECs (referred to as MINMECs).

 

5.10 The Committee notes that there is R16 billion set aside for the South African Airways (SAA) lenders as well as R3.2 billion earmarked for the recapitalisation of the Land Bank, which will remain in the National Treasury’s budget vote under transfers and subsidies until the Bill is approved.

 

5.11The Committeeis concerned over the reported progress with regard to public service wage negotiations, with the mediation process not resolving the impasse between government and organised labour and the process moving toarbitration, with one court case in progress.

 

5.12Whilst acknowledgingthe different environments in different provinces, the Committee notes with concern the inefficient and ineffective procurement processes and aspects of corruption which haveled to huge disparities in the cost of food parcels distributed across provinces as part of the COVID-19 pandemic relief intervention.

 

5.13 Whilst welcoming the R350 Social Relief of Distress (SRD) Grant to assist the unemployed, the Committee notes that, out of 7 million applications, only 3.5 million has been approved, with 3.1 million being reconsidered. It further notes the reported complaints about the delays in the payment of the grant; however, it welcomes the extension of the period and the progress made with regards to Unemployment Insurance Fund (UIF) payments. The Committee further observes with keen interest the discussions in various constituencies regarding the Basic Income Grant becominga permanent feature in the social security system to serve as a safety net and to cushion the poor, given the high levels of poverty and inequality.

 

5.14 The Committee is also concerned about the municipalities and government departments thatare unable to spend their allocated funds for programme implementationand surrender the funds to the National Revenue Fund (NRF) at the expense of addressing poverty, unemployment and inequalities. The Committee views this as an opportunity cost to addressing the triple challenges faced by poor and vulnerable South Africans.

 

5.15The Committee notes that most stakeholders were concerned about the effectiveness and the impact of parliamentary and provincial legislature committee reports and follow-up on the recommendations adopted as part of theiroversight responsibilities; as well as the level of responsiveness, transparency and public participation during the Executive’s budgeting process.

 

6.         Recommendations

Having considered the Adjustments Appropriation Bill [B10B–2020] and all the submissions received, the Select Committee on Appropriations recommends as follows:

 

6.1 The National Treasury and the Department of Planning, Monitoring and Evaluation should strengthen monitoring mechanisms for budget expenditure and programme performance, particularly for the funds made available to respond to the COVID-19 pandemic. Corruption and illegal activities absolutely cannot be tolerated and drastic measuresneed be taken to enhance departmental internal controls and financial management to detect and prevent financial mismanagement, fraud and corruption.Swift and effective action needs to be taken against any suspected irregularities, including reporting the matter to investigative authorities.A progress report in this regard should be tabled in Parliament during the Medium Term Budget Policy Statement (MTBPS) in October 2020.  

 

6.2 The National Treasury and the Department of Planning, Monitoring and Evaluation should investigate the root causes of under-expenditure on the Payment for Capital Assets budget (CAPEX) by sector departments and ensure such issues are resolved. The Committee is of the view that the movement of funds from programmesdue to under-expenditure should only be used as a last resort as this disadvantages beneficiaries of the affected programmes. A progress report in this regard should be tabled in Parliament during the Medium Term Budget Policy Statement in October 2020.

 

6.3The National Treasury, together with other sector departments,should ensure that consequence management programmes and policies are strengthened and areintegrated into contractual obligations for capital projects, and for any transgressors to be acted on swiftly. Furthermore, should the Office of the Auditor-General of South Africa become aware of any misuse of tax payers’ funds, it must not hesitate to invoke the Public Audit ActNo. 25 of 2004 (as amended by Act No. 5 of 2018).  

 

6.4The amendment of section 6(1) of the Appropriation Act 2020,which seeks to empower the Minister of Finance to approve expenditure that cannot reasonably be delayed without negatively affecting service delivery, should be supported as it does not have any implication for the adopted revised fiscal framework or the Division of Revenue Amendment Bill [B9 – 2020], as required by the Money Bills Procedure and Related Matters Act 09 of 2009 (as amended in 2018). However, the Committee will continue to monitor the implementation of Section 6(1).

 

6.5The National Treasury should consider includingdevelopment finance institutions (DFIs) and smaller banks as part of the institutions to disburse the R200 billion government loan guarantee scheme to assist struggling small, medium and micro businesses(SMMEs) during the COVID-19pandemic, and ensure improved levels of transparency around the terms and conditions of the scheme. National Treasury, together with the South African Revenue Service (SARS), shouldensure that adequate support and assistance is given to small businesses to enable them to comply with the conditions to access thescheme.National Treasury should expedite the Public Procurement Bill which will ensure that local SMMEs are well supported through local procurement. The Committee believes that localisation of procurement is a vitalpart of the measures to revive inclusive economic growth and address job losses, as recently reported by Statistic South Africa. A progress report in this regard should be tabled in Parliament during the Medium Term Budget Policy Statement in October 2020.

 

6.6The National Treasury should consider reinstating as much as possible of the R2.4 billion reductionfor the Department of Agriculture, Land Reform and Rural Development; which affects the Comprehensive Agricultural Support Project Grant (CASP) as well as drought relief for all farmers;to protect food security and address job losses caused by the pandemic, especiallygiven the levels of poverty, unemployment and inequality in South Africa. The Committee is of the view that more resources are required in the agricultural sector to support South Africans to produce food for themselves, given the uncertainty created by the pandemic. A progress report in this regard should be tabled in Parliament during the Medium Term Budget Policy Statement in October 2020.  

 

6.7The Committee supports the R1.1 billion relief fund to be provided to the taxi industry, given that the industry has not obtained any support from government other than the under-performing taxi recapitalisation programme. However, the Committee is of the view that proper assessment needs to be done to determine whether the relief is still necessary, given the relaxation of lockdown regulations and high level of non-compliance with traffic and other laws by the industry. The Committee believes that the taxi recapitalisation programme is also critical and National Treasury, together with the Department of Transport, should work to improve the programme performance and expenditure, given that the safety and reliability of transport is vital for the many people using minibus taxis as a mode of transport to work.A progress report in this regard should be tabled in Parliament during the Medium Term Budget Policy Statement in October 2020.  

 

6.8 The Committee is of the view that the R3.2 billion earmarked for the Land Bank recapitalisation should only be transferred to the Bank upon submission of credible turnaround strategic plans and,if need be, government and the Land Bank should revisit the current banking model of the Bank,to make it more efficient and effective, so that itcan becomeless reliant on state bail-outs.The reliance of state-owned entities (SOEs) and public entities on government bail-outs should be urgently addressed as it takes away resources from service delivery and the poor.

 

6.9While being acutely aware of the severe budget constraints, the Committee supports making the Basic Income Grant a permanent feature in the existing social security system, especially because of the devastating consequences of COVID-19. The Committee requests that the Parliamentary Budget Office (PBO) do research on the feasibility of this and provide a report within six weeks.

 

6.10 Whilst the Committee is mindful of the progress made with regard to the public service wage negotiations, it is of the view that government and organised labour should find a way of resolving the impasse between them without any disruption to service delivery programmes, especially during the COVID-19 pandemic.Parliament will continue to monitor progress in this regard.

 

6.11 In order to address the high level of disparity in the cost of food parcels across provinces, and also to avoid corrupt practices and unexplained price escalations, while being mindful ofthe differing environments in each province, the Committee recommends that National Treasury, together with the Department of Social Development, put proper procurement systems in place, which will allow for digitisation or issuing of vouchersgiving people the option to buy the food of their choice. This will also assist in addressing the risks of longqueues and possible stampedes which have been witnessed during the pandemicwhen social distancing is required.A progress report in this regard should be tabled in Parliament during the Medium Term Budget Policy Statement in October 2020.

 

6.12 With regards to the effectiveness and the impact of the recommendations contained in parliamentary and provincial legislaturereports, the Committee recommends that Parliament and provincial legislature committees should strengthen their in-year monitoring and ensure improved oversight over the quarterly performance of sector departments; and align the recommendation tracking mechanism of the House with those of sector committees. National Treasury must respond to letters submitted by civil society and promote public participation during the Executive stage of the budgeting process.

 

6.13 The Committee believes that it is unacceptable that departments and municipalities, being unable to spend their allocated funds for programmes including infrastructure projects, surrender those funds to the National Revenue Fund (NRF) at the expense of addressing poverty, unemployment and inequality. The National Treasury, together with the Department of Planning, Monitoring and Evaluation, should take specific measuresto prevent this, as it disadvantages the livelihood of the poor and vulnerable, as the intended beneficiaries of the such programmes.This should include assisting these departments and municipalities to develop the skills to effectively and efficiently spend their budgets.

 

7. Conclusion

 

After having complied with section 12 of the Money Bills and Related Matters Act No 9 of 2009 (as amended) and having considered the AdjustmentsAppropriation Bill [B10B – 2020], referred to it, and classified by the Joint Tagging Mechanism as a section 77 Bill, the Select Committee on Appropriations reports that it has agreed to the Bill, without proposed amendments.  

 

The Democratic Alliance (DA) and the Freedom Front Plus (FF+) reserved their positions on this Report.

 

Report to be considered.