ATC100601: Report Appropriation Bill

NCOP Finance

The Report of the Select Committee on Appropriations on the Appropriation Bill [B3-2010] (Section 77), dated 01 June 2010.


The Select Committee on Appropriations, having considered the Appropriation Bill [B3-2010], reports as follows:


1. Introduction and Background


In terms of Section 4(4) of the Money Bills Amendment Procedure and Related Matters Act, No. 9 of 2009, “a committee on appropriations has the power and functions conferred to it by the Constitution, legislation, the standing rules or a resolution of a House, including the considering and reporting on-

(a)     spending issues;

(b)     amendments to the Division of Revenue Bill, the Appropriation Bill, Supplementary Appropriations Bills and the Adjustment Appropriations Bill;

(c)     recommendations of the Financial and Fiscal Commission, including those referred to in the Intergovernmental Fiscal Relations Act, 1997 (No. 97 of 1997);

(d)     reports on actual expenditure published by the National Treasury; and

(e)     any other related matter set out in this Act (No. 9 of 2009)”.


According to Section 7(3) of the Money Bills Amendment Procedure and Related Matters Act, No. 9 of 2009 (Act 9 of 2009); Section 10 of the Intergovernmental Fiscal Relations Act, No. 97 of 1997; and Section 76(4) of the Constitution, the Minister of Finance must introduce the Division of Revenue Bill in Parliament. In accordance with these sections, the Minister of Finance, Mr. Pravin Gordhan, tabled the 2010 Appropriation Bill before Parliament on the 17 February 2010.


2. The Appropriation Bill


The Appropriation Bill provides for the appropriation of money from the National Revenue Fund in terms of section 213 of the Constitution and section 15 of the Public Finance Management Act (PFMA). However, the spending of the money is subject to the PFMA and provisions of the Appropriation Bill. The Act 9 of 2009 stipulates that, among other things, the legislative framework for amendments to the Appropriations Bill by the House facilitated through the processes of Parliament and its Committee on Appropriations. Furthermore, Parliament is expected to amend, or pass without amendments, the Appropriation Bill as soon as it is feasible so that the President can assent to it and the Act can be promulgated before the end of July each year. This is necessary as the financial year has already commenced and departments are incurring expenditure in terms of section 29 of the PFMA which makes provision for spending before an annual budget is passed. From April to July, expenditure by departments may not exceed 45 per cent of the 2009/10 financial year budget; and after July monthly, expenditure can only amount to 10 per cent of 2009/10 vote budget. However, departmental activities may be constrained should there be delays in an Appropriation Act coming into effect.



3. The 2010/11 Budget Priorities


The 2010/11 Appropriation Bill mainly supports the five policy priorities of government. These are:

  • Enhancing the quality of Health Care Services;
  • Creating decent jobs;
  • Improving the quality of education and skills development;
  • Supporting rural development; and
  • Promoting public safety.


In compliance with the Money Bills Amendment Procedure and Related Matters Act 9 of 2009 and section 59(1) of the Constitution, the Committee invited certain National Departments to comment and make inputs on the 2010/11 Appropriation Bill. The invited departments were: National Treasury, National Department of Health, National Department of Basic Education, National Department of Higher Education and Training, National Department of Cooperative Governance and Traditional Affairs. Additionally, the Fiscal and Financial Commission (FFC) was also invited by the Committee.  


3.1 Enhancing the quality of health care


In order for the Department of Health (DoH) to achieve its mandate and aims, the National Treasury allocated R21.4 billion for the 2010/11 financial year and 91 per cent of the allocation is for conditional grants transfers to provinces. The DoH anticipates budget pressures that will have a negative impact on achieving set goals and objectives specifically under compensation of employees funding which it reported as inadequate. The Committee noted the challenges the Health sector experiences; these include ageing infrastructure, spending of conditional grants and lack of critical human resources. The Committee wishes to advise the department to improve its spending on its conditional grant allocations.


While the Committee noted that the DoH has set a 30 and 40 minutes ambulance benchmark response time in urban and rural areas respectively and the fact that the Province of the Eastern Cape has recently purchased 500 ambulances, it is concerned about the state of road infrastructure in rural areas. If the bad state of gravel roads is not urgently addressed, it may contribute to the increase in mortality rate.   


3.2 Creating decent jobs


The Committee has noted with great appreciation the R13.3 billion allocated for the job creation, and infrastructure upgrading.  This allocation is reflected through conditional grants and public entity subsidies designed to provide regional or municipal water, electricity, road and sanitation infrastructure, public transport, expanded public works programme (EPWP) and national fuel pipelines, by means of labour-intensive techniques.  Also included are increased subsidies to the clothing and textile and automotive industries to preserve jobs. This priority is not a responsibility of a single department or public entity, therefore the funds for job creation are spread throughout the government votes. The private sector is also expected to contribute to this priority because government alone cannot achieve this objective.




3.3 Improvement of Education and Skills Development 


For the 2010/11 financial year, the National Treasury has allocated R6.1 billion for the Department of Basic Education (DoBE). This budget will help the department to improve the quality of basic education by:

  • Improving National Senior Certificate examinations performance;
  • Providing high quality of teaching and learning through appropriate teacher development initiatives;
  • Improving literacy and numeracy at schools;
  • Enhancing early childhood development;
  • Assisting the department to refocus the entire basic education sector and have one strategic plan; and
  • Strengthening implementation through support, monitoring and accountability.


Education and skills development is highlighted through the implementation of the occupational specific dispensation for educators as well as provisions for workshops. Furthermore, higher and special mathematics and science school education is highlighted by Government’s policy priorities. The DoBE faces some challenges; notwithstanding the financial pressures in Government there are no enough financial resources to implement some priorities. However, this calls for reprioritization of the budget without impacting on services delivery by the DoBE. The DoBE may face some budget constraints and, to avoid that, it will have to seek to optimise quality of spending.


The Committee noted the objectives of the DoE; however, it wishes to advise the DoE to consider reviewing it curriculum and relook at the role of circuit managers when it comes to monitoring performance and management of schools.


The Department of Higher Education and Training (DoHET) has received R23.7 billion for the 2010/11 financial year. The DoE submitted that even though it appreciates the budget allocation, there is limited funding for its operations. The funding of Further Education and Training Colleges (FET) is shifting from provinces to the national Government. The equitable share baseline is adjusted by about R3.4 billion a year to reflect this shift. These funds will flow from national Government to FET Colleges. Furthermore, the Sector Education Training Authority (SETAs) are further contributing to skills development through utilising the skills development levy which they claim from Government. Most importantly, tertiary institutions are expected to produce employable graduates and researchers based on the needs of the country.


The DoHET has set aside R3.7 billion for recapitalization of FET and technical colleges. The Committee noted with great appreciation the initiative taken by the DoHET. The budget set aside by the DoHET strengthens government’s priority for improvement of education and skills development. However, the DoHET must consider employing appropriately-qualified lecturers in FET colleges because the South African community is of the view that FETs are underperforming because lecturers are under-qualified. Furthermore, the Committee wishes that the DoHET takes very seriously the issue of establishing two tertiary institutions in Northern Cape and Mpumalanga respectively as pronounced by the President of the Republic of South Africa, Mr Jacob Zuma.




3.4 Rural Development

The Department of Rural Development and Land Reform is allocated an amount of R6.7 billion in the 2010/11 financial year. The largest share of the budget of about R4 billion is earmarked for Land Reform programme. The aim of this programme is to ensure sustainable land redistribution in South Africa. About 40 per cent of the South Africans reside in rural areas, the majority of which is poor. The Committee wishes to advise Government that this priority needs more money to address land reform.


3.5 Submission by COGTA

The Department of Cooperative Governance and Traditional Affairs is allocated an amount of R43.9 billion in the 2010/11 financial year. The largest share of the budget of about R43.5 billion is earmarked for Governance and Intergovernmental Relations programme. The purpose of this programme is to improve vertical and horizontal coordination and alignment between the three spheres of government and to promote public participation in governance through regulatory mechanisms as well as oversight, intervention and support programmes to provinces, municipalities and associated institutions. About R42.9 billion of the total allocation is meant for conditional grants (that is equitable share, municipal systems improvement grant, and municipal infrastructure grant) translation to 98 per cent of the total vote.  


4. Recommendation


The Select Committee on Appropriations, having considered the Appropriation Bill [B3 2010] and submissions by identified stakeholders, recommends that the National Council of Provinces approves the Appropriation Bill without amendments.



Report to be considered.


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