ATC211214: Report of the Select Committee on Appropriations on the Adjustments Appropriation Bill [B20 – 2021] [National Assembly (Section 77)], Dated 14 December 2021

NCOP Appropriations

Report of the Select Committee on Appropriations on the Adjustments Appropriation Bill [B20 – 2021] [National Assembly (Section 77)], Dated 14 December 2021

 

The Select Committee on Appropriations, having considered the Adjustments Appropriation Bill [B20 – 2021] (National Assembly – section 77), referred to it 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

The Minister of Finance tabled the Medium Term Budget Policy Statement (MTBPS) on 11 November 2021, outlining the budget priorities of government for the medium term estimates. The 2021 MTBPS was tabled in Parliament with the Adjustments Appropriation Bill [B20 - 2021] (the Bill). Section 12 (15A) of the Money Bills Act provides that “after the National Assembly passed the Adjustments Appropriation Bill, the Bill must be referred to the National Council of Provinces and referred to the Select Committee on Appropriations.” Accordingly, the NCOP referred the Bill to the Committee for concurrence on 10 December 2021.

 

1. Public participation process

To facilitate public participation and involvement, and in compliance with section 72 of the Constitution of the Republic of South Africa, an advertisement in all 11 official languages was published in national and community newspapers from 18 to 26 November 2021 inviting the general public and all interested stakeholders to make written submissions and comments on the Bill. Subsequently, in addition to receiving a briefing from National Treasury on the contents of the Bill and consulting with the Financial and Fiscal Commission (FFC) and the Parliamentary Budget Office (PBO), the Committee received written submissions from the Congress of South African Trade Unions (COSATU), the Police and Prisons Civil Rights Union (POPCRU) and the People’s Budget Collaborative (PBC), in response to the aforementioned advertisement. COSATU and the PBC also made oral submissions during a virtual public hearing on 10 December 2021.

 

1. National Treasury briefing

National Treasury reported that the purpose of the Bill was to effect adjustments to the appropriations of money by Parliament from the National Revenue Fund (NRF) for the requirements of the State in respect of the 2021/22 financial year to votes and main divisions within a vote; and amendments to the specified purposes.

 

National Treasury submitted that section 30(2) of the Public Finance Management Act, No 1 of 1999 (PFMA), stated that the adjustments budget may provide for -

• Significant and unforeseeable economic and financial events affecting the fiscal targets set by the annual budget;
• Unforeseeable and unavoidable expenditure recommended by a committee of cabinet and through section 6 of the Appropriation Act;
• Any expenditure in terms of section 16 of the PFMA, which governs the use of funds in emergency situations;
• Money to be appropriated for expenditure already announced by the Minister during the tabling of the annual budget;
• The shifting of funds between and within votes;
• Utilisation of unspent funds under a main division of a vote to defray excess expenditure in another main division, in terms of section 43 of the PFMA which governs the use of virements and section 5 of the Appropriation Act; and
• The roll-over of unspent funds from the preceding financial year.

 

National Treasury submitted that section 43(1) of the PFMA allowed accounting officers to utilise a saving in the amount appropriated under a main division (programme) within a vote to defray excess expenditure under another main division within the same vote. However, sub-section 2 of the same provision required that the saving to be utilised may not exceed 8 percent of the amount appropriated under that main division. Importantly, National Treasury indicated that section 43(4)(b) of the PFMA did not allow the utilisation of funds from the amount which was specifically earmarked for transfer payments to another institution or entity, and according to section 43(4)(c), funds earmarked for capital expenditure may not defray current payments. National Treasury added that all virements exceeding 8 percent could only be approved by Parliament.

 

To this end, a total of 13 national departments which exceeded the 8 percent requirement of the PFMA were listed and National Treasury supplied the reasons for these virements and requested the Committee to approve them. These departments were the National Treasury; Basic Education, Higher Education and Training; Health; Justice and Constitutional Development; Police; Communication and Digital Technologies; Environment, Forestry and Fisheries; Mineral Resources and Energy; Science and Innovation; Small Business Development; Tourism; and Trade, Industry and Competition.

 

4. Stakeholder submissions

4.1 Financial and Fiscal Commission (FFC)

The Financial and Fiscal Commission (FFC) indicated that the Bill was driven by adjustments to –

• Fund increased costs associated with the 2021 public service wage agreement (totalling R20.512 billion, of which R5.833 billion was for national government and R14.678 for provinces);
• Implement the second phase of the Presidential Employment Initiative with a distinct focus on youth employment (R11.243 billion);
• Assist Denel in meeting its repayments obligations (R2.923 billion); and
• Purchase vaccines (R2.342 billion).

 

The FFC supported the Bill and made the following comments: 

• Provision for wage increases, the purchase of vaccines and, to a lesser extent, the assistance provided to Denel, could be seen as necessary adjustments where government had limited discretion. Notwithstanding government's guarantee obligation, action to restructure state-owned entities (SOEs) was urgent and remained a long-standing challenge as they continued to be a drain on already stretched state resources. The FFC awaited the details of the public sector remuneration strategy which should provide a blueprint for a sustainable approach to managing the public sector wage bill into the future.
• The Commission welcomed the roll-out of phase 2 of the Presidential Employment Initiative that had a distinct focus on youth employment, given the current high levels of unemployment facing the youth. It was anticipated that this programme would bring relief and build additional skills that would assist in gaining full time employment. If this realised, it would buoy the economy and enable inclusive economic development for a sustainable future.   

 

4.2 Parliamentary Budget Office (PBO)

The Parliamentary Budget Office (PBO) presented a summary of the 2021/22 adjustments, reporting that total estimated expenditure increased from R1834.3 billion to R1893.1 billion, and that the adjustments to vote appropriations were offset against the provisional allocations and contingency reserve and increased by R15 023.500 million. Adjustments to estimates of direct charges against the National Revenue Fund amounted to R26 936.284 million more than anticipated at the time of the main Budget.  Adjustments also included a contingency reserve of R2.961 billion and provisional allocations of R11 billion that had not been assigned to votes at the time of tabling of the adjustments budget.

 

4.3 Congress of South African Trade Unions (COSATU)

COSATU welcomed the R19 billion adjusted allocations to departments to provide for the 2021 wage agreement, even though it was below inflation and a once-off. COSATU emphasised that government should respect collective bargaining in the public service, entities, state-owned entities (SOEs) and local government, and engage with the relevant bargaining councils and/or fora on matters of collective bargaining, including the wage bill and signed wage agreements. COSATU suggested that government should work with organised labour to establish a single collective bargaining and wage regime for the entire state, including SOEs. COSATU further proposed that government should implement wage caps for executive managers in the SOEs and entities.

 

Moreover, COSATU welcomed the R11 billion allocation for the Presidential Employment Stimulus Programme which would create 550 000 jobs and provide young people with a salary and experience; as well as the proposed allocation of R74 billion over the next three years, but felt that it should be increased further.

 

COSATU expressed concern over the impact of cuts to key public service delivery functions, including the below inflation increase to the Department of Basic Education (DBE); but welcomed the additional allocation of R113 million to school infrastructure, including for sanitation and water; which included -

• R132 million for the Eastern Cape;
• R 26 million for the Free State;
• R14 million for KwaZulu-Natal; and
• R36 million for Limpopo.

 

COSATU commented that the inability to spend R149 million when thousands of schools still lacked adequate sanitation, was indefensible; and that the shifting of R97 million from sanitation to the appointment of Maths teachers pointed to a serious project management capacity problem in the DBE; resulting in an inability to ensure all schools had access to decent sanitation and water. In addition, the DBE’s failure to meet 80 percent of its targets to provide sanitation to 1000 schools during the pandemic, was unacceptable; and the Minister and Director-General needed to be held accountable. COSATU further proposed that a clear and realistic plan to ensure all schools had access to decent water and sanitation, must be tabled by the DBE in Parliament by the end of 2022. COSATU welcomed the allocation of R6 billion for the employment of more than 310 000 teaching assistants.

COSATU submitted that government should implement a 25 percent package cut for members of the Cabinet, Provincial Executive and Mayoral Committees, as well as executive managers in the state, entities, SOEs and metros. COSATU also felt there was a need for government to open the Ministerial Handbook for public scrutiny, to ensure that the exorbitant perks for the executive were removed and a more modest regime adopted. COSATU further indicated that government should reverse the headcount reduction for key frontline service delivery posts, such as Police and Basic Education.

COSATU submitted that the R350 Social Relief of Distress Grant should be extended beyond March 2022. COSATU welcomed the adjusted allocation of R841 million to the Neighbourhood Development Partnership Grant which had also seen the employment of 32 663 persons in neighbourhood cleaning and greening programmes. COSATU submitted that such programmes should be enhanced and extended and means found to ensure their sustainability. On the other hand, COSATU expressed concern about the R52 million cut to financial accounting and supply chain management (SCM) systems, when Government’s SCM and accounting systems were a porous sieve with billions lost annually to corruption and wasteful expenditure.

COSATU commented that government should reverse cuts to key programmes that would impact on its ability to implement industrial, manufacturing and export programmes. COSATU expressed concern about the R1.3 billion cut in university infrastructure projects, given the backlog in student accommodation and the need to expand the size of classrooms to adjust for social distancing in future. COSATU welcomed the R90 million allocation for the employment of junior lecturers in tertiary institutions, through the Presidential Employment Programme; as well as the R245 million for employment opportunities under the Presidential Youth Employment Programme.

COSATU submitted that government should reverse the proposed reductions to the Department of Health over the Medium Term Expenditure Framework (MTEF), in particular funding for the National Health Insurance fund (NHI). COSATU welcomed the following proposed increases for health:

• R2.3 billion for the fight against COVID-19;
• R 246 million for medical interns (Human Resources and Training); and
• R15 million for primary health care jobs under the Presidential Employment Programme.

In conclusion, COSATU expressed the hope that government would table a 2022 budget that would -

• Stimulate the economy and support job creation;
• Provide relief to the unemployed;
• Tackle corruption and wasteful expenditure;
• Rebuild SOEs and the state; and
• Respect collective bargaining.

 

4.4 People’s Budget Collaborative

While acknowledging the combined effect of the COVID-19 pandemic and the July 2021 unrest on an already ailing economy, the People’s Budget Collaborative (PBC) believed that Treasury was not adequately addressing the effects of unremitting poverty; unequal healthcare access; the denial of basic services to many townships and rural areas; unacceptable school infrastructure; gender-based violence and growing unemployment. The PBC was of the view that the 2021 MTBPS did not prioritise the urgent needs of the poorest of the poor and lacked clear allocations geared towards properly addressing and reducing poverty, social injustice and inequality in South Africa.

 

Vote 18: Health

The PBC found it unacceptable that health spending was set to decline in real terms over the MTEF by -13.7 percent. The PBC was further concerned about the Department of Health’s R160 million in declared unspent funds; indicating severe under-performance within the Department that was not being addressed. The PBC called for urgent action, with clear accountability for failures as well as measures for redress. The PBC was concerned over the notable decrease in the number of patients receiving antiretroviral treatment, with the number still below the target of 5.7 million, at just under 5.2 million. In addition, the PBC indicated that the National Health Insurance (NHI) should be prioritised.as one of the most economically strategic ways to target rising inequality in South Africa, and it found the R310 million cut from Programme 2: NHI to be incredibly regressive. The PBC was further concerned about the cuts to Programme 4: Primary Health Care, impacting on programme management, district health services and emergency medical services and trauma.  The PBC emphasised the need to prioritise Community Health Care Workers (CHWs) and to ensure that health professionals were trained in primary health care settings and the stronger implementation of pro-rural and pro-equity policies. The PBC noted that increased spending within the Department was only in relation to the purchasing of COVID-19 vaccines, evidencing a worrying trend to prioritise emergency interventions at the expense of, rather than in conjunction with, health systems strengthening. The PBC called for urgent increased allocations to both the above programmes and for the introduction of a primary health care conditional grant.

 

Vote 16: Basic Education

The PBC indicated that South Africa had one of the most unequal schooling systems in the world and had placed last in international assessments of basic literacy and numeracy. The PBC expressed shock that no public schools had reportedly been supplied with home language workbooks for learners in Grades 1 to 6, even though there had been a projected 100 percent target for 2021/2022; and the fact that the percentage of public schools supplied with Mathematics workbooks for learners in grades 1 to 9 had been 0 percent against a projected target of 100 percent. No reasons had been given for this non-performance; and in light of these indicators, the PBC was dismayed to note that National Treasury was cutting R 12 .8 million from Curriculum Implementation and Monitoring. While the allocation of R 210 million for school infrastructure had seemed promising; closer inspection had revealed that this was not a new allocation, but rather a roll-over from the previous year. In addition, R 97 million was being cut from this allocation, leaving only R 113 million for school infrastructure. Budget allocations for Basic Education had been progressively declining in real terms when taking into account inflation, from R 281.6 billion (1.7 percent in 2019/2020to R 257.5 billion (-8.6%) in 2023/2024. PBC further argued that funding for Basic Education had been characterised by under-spending, irregular expenditure, and fruitless and wasteful expenditure. PBC called for increased, progressive funding for this key sector, capacity building, and investigations and penalties for people involved in irregular spending.

 

Vote 17: Higher Education and Training

The PBC indicated that this sector was a priority area for the economic recovery; but the performance indicators had fallen far short of targets, except for the number of students who enrolled in higher education institutions, becoming eligible for NSFAS funding in the first half of 2021/2022; which had been due to an unplanned increase in the number of students registering at UNISA. PBC was very concerned about the slow progress with the enrolment of students in the Vocational Education and Training (TVET) colleges - against a projected target of 21 500 students, only 4 931 had registered. The number of artisans who had qualified in 2021/22 had been only 3 605 against a target of 19 500; and work-based training opportunities had drastically reduced to 16 521, against a target of 103 750. While COVID-19 may have played a role in this, it showed a lack of creative and innovative planning and development of online and other resources. The number of lecturers trained, at 1 597, went far beyond the target of 900; which was explained by the inclusion of non-formal and non-accredited programmes, whose quality was questionable. TVET had always been a neglected area of education, with a history of closures of TVET colleges, poor planning and mismanagement. Given the large number of unemployed graduates, the role of TVET becomes even more crucial. South Africa was producing graduates and diploma-holders whose skills were mismatched with the needs of the labour market; pointing to poor coordination between training and employment needs and opportunities. The PBC called for increased funding for the promotion of multilingualism in Higher Education and the development of community engagement and service-learning programmes, both of which would make university education relevant to local communities and promote the use of indigenous languages and cultures.

 

Vote 41: Water and Sanitation

The PBC indicated that, while the Constitution guaranteed access to water and sanitation as basic rights, more than three million South Africans lacked access to a basic water supply and more than 14 million lacked access to safe sanitation. In recent years, the water situation in South Africa had reached a crisis point and water-borne diseases were also on the increase Therefore, the PBC found it hugely distressing that not a single large regional bulk water infrastructure project had been completed in the first half of 2021/22, against a target of nine; and only one of eight small regional infrastructure projects had been completed during the same period. The roll-over of R 582.2 million enabled slight increases to adjusted appropriations; but the mismanagement and corruption which had led to huge losses in infrastructure development was not acknowledged. Makhanda in the Eastern Cape was only one example of the lack of planning and oversight, where water was being released to consumers only every second day. PBC was of the view that National Treasury needed to be more proactive in funding and deploying reliable services in the management of water.

 

Vote 20: Women, Youth and Persons with Disabilities

The PBC felt that the performance indicators for this Department were woefully inadequate; which was particularly concerning for a department with a budget of R1.195 billion. What PBC found even more shocking was that, even with so few indicators, performance was fairly low, with actual expenditure at only 39.3 percent, halfway through the 2021/22 financial year. The PBC indicated that the Department’s targets and indicators needed radical revision, through public consultation processes, as well as processes that prioritise feminist economics and economics of care, towards a systems-strengthening approach for the Department. The PBC further indicated that cuts to the following critical areas further exacerbated the severe levels of inequality and Gender-Based-Violence in South Africa:

• Programme 2: Social Transformation and Economic Empowerment, R 6.1 million cut;
• Programme 3: Policy, Stakeholder Coordination and Knowledge Management, R 3.2 million cut; and
• Programme 4: Rights of Persons with Disabilities, R 1.3 million cut.

 

The PBC welcomed the R 430 million for Programme 5: National Youth Development, as part of the new Presidential Employment Intervention; but noted that investment in this new intervention was not necessarily “new spend”, but was largely cut from other critical areas through reprioritisation. The PBC cautioned against the apparent rush to massively invest in re-branded mega projects, operated largely through existing systems that were being increasingly de-capacitated and abandoned from a systems-strengthening approach; and questioned whether the vulnerable groups represented by this Department had been consulted at all in this process of making direct cuts to frontline interventions, in order to fund the new Presidential Youth Employment Intervention; and also how women and people with disabilities would be integrated into it. The PBC was shocked that there were currently no specific indicators addressing the needs of LGBTQI+ people in South Africa, specifically in the worrying context of increased brutality against, and murder of, members of the LGBTQI+ community. According to the PBC, the revised allocations did not protect the most vulnerable and marginalised in South Africa.

 

Vote 28: Police

The PBC noted that total allocations to this Vote were higher than the total adjusted appropriation to Basic Education; and questioned the R 3.9 billion addition to this Vote, of which R 2.4 billion was for Programme 2: Visible Policing; as it disagreed with increased deployment of police personnel, believing it severely increased the vulnerability of the most marginalised. The PBC was concerned about continued massive allocations to this Vote, despite a lack of adequate performance, as evidenced through a roll-over within the Department of just over R 1 billion. The majority of the roll-over funds were due to the poor spending performance of Programme 2: Visible Policing. The PBC strongly recommended immediate investigation into poor spending performance within the Vote, with clear ameliorative measures being developed for implementation. The low detection rates for crimes against women and children also required urgent intervention; and must include the creation of properly safe and supportive, quality reporting processes, accessible to all. In relation to increased violence against the LGBTQI+ community, indicators must be developed within this Vote to specifically track and address hate crimes against the LGBTQI+ community. The PBC also pointed out very concerning performance indicators around a failure to intervene in organised crime (with only one serious operation terminated this financial year); and a failure to address crime network operations (with only six terminated thus far, out of an annual target of 162). The PBC recommended that funds to this Vote be significantly decreased in the 2022 Budget Review; with the funds being redirected towards important and required measures for restorative justice.

 

Vote 29: Agriculture, Land Reform and Rural Development

The PBC expressed serious concern over the following performance indicators of the Department, in light of the need to create a more equitable and food secure South Africa and the recent riots:

• Only 2.8 percent of the target towards “Number of subsistence and smallholder producers supported per year” has been achieved.
• Only 4.1 percent of the target towards “Number of hectares of strategically located land acquired per year” had been achieved.
• Only 29.6 percent of the target towards “Number of land claims finalised per year” had been achieved.
• Only 10 percent of the target towards ”Number of infrastructure projects completed to support farmers per year” had been achieved.

 

Of further concern to the PBC, was the lack of gender-specific indicators to track performance or impact in relation to agriculture, land reform and rural development in South Africa. It felt that gender-specific targets needed to urgently be developed within the Vote, in order to more properly address issues of equitable land reform. Women and youth were highly vulnerable groups, concentrated at the rural level and allocations towards rural areas needed to be significantly increased in order to provide necessary social assistance and protection, beyond the limitations of cash transfers. Despite R750 million being allocated in the AENE for the Presidential Youth Employment Initiative within this Vote, it seemed there were no measures put in place to safeguard the administration of these funds from within Programme 3 to address the amount rolled over from previous under-spending of a massive R243 million. PBC was also worried that R18 million had been cut from “Land redistribution and tenure reform”; a further R18 million from “Restitution”; and R43.6 million from Programme 4: Rural development, from the Programme for “Rural infrastructure development”. The PBC asserted that the described neglect of this critical Vote, particularly in relation to the rural and in relation to creating gender equity, beyond an almost singular allocation to the new presidential employment initiative, the success of which is not yet guaranteed, severely exacerbated a lack of progress towards a truly equitable South Africa. It demanded urgently increased prioritisation of both the rural and of pro-poor land and agricultural reform, mapped out in a clear process of systems-strengthening for this Vote.

Vote 40: Transport

The PBC submitted that investments in transport were important economic multipliers that could generate a large annual return; but the transportation system was plagued by several substantial and structural challenges, including: high, unreliable and increasing transportation costs; lack of effective interlinked public transport systems, particularly in the townships and rural areas; severe equity and accessibility imbalances; and unsafe congestion and quality of transport, which put commuters’ lives at risk. Despite the importance of transport in South Africa at this time, there was a massive R1.34 billion in declared under-spending on the Public Transport Network Grant; which was related to the failure to roll out the MyCiti bus rapid transit system. According to the PBC, the Department also reflected very worrying low indicators being met around the maintenance and upgrading of transport infrastructure and on usage of bus rapid transit passenger trips; showing a significant disinvestment in existing and newly-created transport systems. This would undoubtedly force a decline in the substantial returns that could be realised through adequate investment in transport. With the establishment of accessible and affordable public transport systems being an absolutely essential component of socio-economic development, a strengthening of this Vote’s allocations, and reducing efficiencies, were essential.

 

4.5 Police and Prisons Civil Rights Union (POPCRU)

The Police and Prisons Civil Rights Union (POPCRU) noted that the MTBPS had been delivered months after the unprecedented uprisings of July 2021, which had left a trail of destruction in Kwa-Zulu Natal and Gauteng; and that it was partially informed by the country’s continued efforts to respond to the COVID-19 pandemic and its economic and social impact; and focused its submission on the South African Police Service (SAPS) and the Department of Correctional Services (DCS). Whilst welcoming the additional budget allocations for the two departments, POPCRU urged the National Treasury to provide adequate budgets to enable these departments to effectively execute their functions in accordance with their constitutional mandates. The crime rate that was exponentially rising, signified the poor numerical capacity and lack of other resources besetting these departments.

  

The South African Police Service (SAPS)

POPCRU regarded the R250 billion additional allocation made to SAPS budget in response to the July unrest as insufficient. It had repeatedly argued that the only way that the country could fight crime and realise the goal of the National Development Plan (NDP) to build safer communities, was by employing more police officers to ensure police visibility within the community. POPCRU reported that the country’s police to population ratio, at one officer to 413 persons, was far below the United Nations norm of one officer to 220 persons. The data sourced from SAPS’ internal administration system showed that, as of 15 March 2021, a total of 5 128 officers had left the Police Service over the previous financial year.  Moreover, during the period between April 2020 and 31 March 2021, 34 police officers had lost their lives. POPCRU called for SAPS to be allocated more funds to recruit more police officers and indicated that those at national and provincial offices with the requisite crime-fighting expertise, should be deployed to the ground level. In addition, police stations must be adequately resourced to effectively respond crime. POPCRU was of the view that the allocated budget would not make any meaningful impact as long as SAPS was continuously haemorrhaging personnel whilst also severely lacking the required resources. POPCRU welcomed, with caution, the announcement made in Parliament by the Deputy Minister of Police, Honourable Cassel Mathale, that SAPS was intending to recruit 10 000 new police officers in the next financial year; and hoped that this would realise.

 

The Department of Correctional Services         

POPCRU noted the R7.580 million and R56.977 million adjustments made to administration and incarceration programmes in the Department of Correctional Services (DCS) to procure uniforms for officials and security equipment and uniforms for emergency support team members. Lack of tools of trade had been a long standing challenge in the DCS and POPCRU believed that this allocation would improve the situation, especially on security infrastructure as there were continuous reports of prison escapes which were attributable to poor security infrastructure and overcrowding. The safety and security of POPCRU’s members depended mainly on the infrastructure where they were deployed to. Hence POPCRU strongly called for increased budget allocation towards the construction of new correctional centres with strong security features and the refurbishing of the current ones to safeguard its members whilst also curbing the long standing challenge of overcrowding.  Furthermore, POPCRU submitted that inmates must be provided with appropriate rehabilitation programmes and training which would equip them with relevant skills, rather than idling around and plotting attacks on its members. This would ensure that offenders were turned into valuable economic role players upon their reintegration into society. This would play a pivotal role in the reduction of recidivism in the country.

  

5. Observations and findings

The Select Committee on Appropriations, having considered the inputs from the above stakeholders on the Adjustments Appropriation Bill [B20 - 2021], made the following findings:

 

1. The Committee notes that 13 national departments exceeded the 8 percent virement threshold in the 2021 Budget adjustment, which is provided for by section 43(2) of the Public Finance Management Act. These included National Treasury; Basic Education, Higher Education and Training; Health; Justice and Constitutional Development; Police; Communication and Digital Technologies; Environment, Forestry and Fisheries; Mineral Resources and Energy; Science and Innovation; Small Business Development; Tourism; and Trade, Industry and Competition.

 

1. The Committee notes the roll-over amount of R2.8 billion as well as the R1.1 billion for self-financing from revenue generating activities of various departments, which should be retained by the same departments.

 

1. The Committee notes that main budget non-interest spending has increased by a net of R59.4 billion in 2021/22, with the total of in-year upward adjustments to spending amounting to R77.3 billion in order to reinstate the special COVID-19 Social Relief of Distress Grant until March 2022; to cater for the costs associated with the implementation of the 2021 public sector wage agreement, and the outbreak of public violence in July 2021.

 

5.4 The Committee notes that the in-year adjustment amount of R77.3 billion was partially offset by projected under-spending, drawdowns on the contingency reserve and provisional allocations announced in the 2021 Budget.

 

  5.5 The Committee notes that R11 billion was provisionally set aside in the 2021 Budget for phase 2 of the Presidential Employment Initiative until the end of March 2022 for the unemployed youth. However, it is the Committee’s view that the implementation of this initiative can still be improved to achieve better results.

 

5.6 The Committee welcomes the fact that there is no reduction proposed in the 2021 Medium Term Budget Policy Statement (MTBPS) due to the improved revenue, which will assist to lower the fiscal pressures posed by increasing debt levels over the medium term.

 

5.7 The Committee welcomes the work of the National Treasury with certain departments to assess the efficiency, effectiveness and performance of selected programmes. The Committee further takes note of the general findings of the spending reviews conducted in 2020/21.

   

5.8 The Committee notes the FFC observation that government needed to urgently restructure state-owned entities (SOEs) which remain a long-standing challenge as they continue to drain the already overstretched state resources. 

 

5.9 Whilst welcoming the additional amount of R113 million to school infrastructure, sanitation and water for the Eastern Cape, Free State, KwaZulu-Natal and Limpopo, the Committee agrees with COSATU’s concern around the budget cuts to key public service delivery functions, including the below inflation increase to the Department of Basic Education, as well as its failure to spend.  

 

5.10 The Committee notes COSATU’s concern around the failure of the Department of Basic Education to meet its own 80 percent performance targets to provide sanitation to 1 000 schools during the COVID-19 pandemic and the Department should account to the relevant sector committees in Parliament.    

 

5.11   The Committee notes the issues raised by the People’s Budget Collaborative and will share them with sector committees for further processing and continuous monitoring and follow-ups.  

5.12 The Committee notes COSATU’s recommendation that, given the current economic conditions, National Treasury and Cabinet should explore implementing a 25 percent package cut for members of the Cabinet, Provincial Executive and Mayoral Committees, as well as executive managers in the state, entities, state-owned entities and metropolitan municipalities.

 

5.13 The Committee notes COSATU’s recommendation that the Department of Public Service and Administration considers opening the Ministerial Handbook for public scrutiny, to ensure that the exorbitant perks for the executive are reduced and a more modest regime adopted.

5.14 The Committee notes COSATU’s recommendation that government should consider reversing budget cuts to key programmes that will impact on its ability to implement industrial, manufacturing and export programmes to improve economic growth.

5.15 The Committee notes COSATU’s view that government should respect collective bargaining in the public service, entities, state-owned entities and local government, and engage with the relevant bargaining councils and/or fora on matters of collective bargaining, including the wage bill and signed wage agreements.

5.16 The Committee notes COSATU’s recommendation that government should consider working with organised labour to establish a single collective bargaining and wage regime for the entire state, including state-owned entities.     

 

1. Recommendations

The Select Committee on Appropriations, having been briefed and engaged with the above stakeholders on the Adjustments Appropriation Bill [B20 - 2021], recommends as follows:

 

1. The National Treasury should ensure that any movement of funds is always done according to the provisions of the Public Finance Management Act and Treasury Regulations. The Committee does not support any movement of funds emanating from poor planning and performance by government departments.

 

1. The National Treasury should approve the roll-over amount of R2.8 billion in line with the Public Finance Management Act and Treasury Regulations for projects that have already been committed or nearing completion. However, the rolling over of funds due to poor project management, planning and execution cannot be allowed.

 

1. The National Treasury and the Department of Social Development should consider extending the R350 Social Relief of Distress Grant beyond March 2022, taking into account budgetary constraints and depending on the COVID-19 impact and economic recovery plans.  

 

1. The Department of Public Service and Administration should fast-track the finalisation of the detailed public sector remuneration strategy, which will provide a blueprint for a sustainable approach to managing the public sector wage bill into the future.

 

1. Noting and supporting COSATU’s proposal, that a clear and realistic plan to ensure all schools have access to decent water and sanitation must be tabled by the Department of Education in Parliament by the end of 2022, the Committee is of the view that the relevant sector committees should follow up on this matter.  

 

1. The Committee agrees with COSATU’s recommendation that the Department of Transport should table a clear plan to rebuild the Passenger Rail Agency of South Africa (PRASA) in Parliament, given the challenges around rail infrastructure maintenance and cable theft, leading to inefficient train operations. The Committee is of the view that the relevant sector committees should follow up on this matter.   

 

6.7 National Treasury and the Department of Public Service and Administration should consider COSATU’s proposals as captured under points 5.12, 5.13, 5.14, 5.15 and 5.16 above, and report back on progress in this regard during the next budget cycle.

6.8    The Committee has long supported gender budgeting and gender mainstreaming; and further stresses the importance of recognising the rights, needs and interests of the LGBTQIA+ community and requests National Treasury to, in future, explicitly set out what cross-cutting funding furthers these. The National Treasury and Cabinet should look into these matters very closely and the Committee will monitor this.

7.    General comment

The Committee recognises that this Parliament belongs to the people of this country and public participation is crucial to its effective functioning. Whilst the Committee welcomes and encourages civil society to engage robustly with it, this has to be done in a way that is consistent with Parliament’s Rules, norms and procedures and with the necessary decorum.  While civil society must be fully heard and its views given due consideration, ultimately, in any democracy, it is elected Members of Parliament that have to take final decisions, after taking into account various competing interests in society. 

 

8.    Conclusion

After having complied with section 12 of the Money Bills and Related Matters Act No 9 of 2009 (as amended), the Select Committee on Appropriations, having considered the Adjustments Appropriation Bill [B20 - 2021], referred to it for concurrence, and classified by the Joint Tagging Mechanism as a section 77 Bill, reports that it has agreed to the Bill, without proposed amendments.  

 

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

 

Report to be considered.