ATC221202: Report of the Select Committee on Appropriations on the Adjustments Appropriation Bill [B23 – 2022] [National Assembly (Section 77)], Dated 02 December 2022

NCOP Appropriations

Report of the Select Committee on Appropriations on the Adjustments Appropriation Bill [B23 – 2022] [National Assembly (Section 77)], Dated 02 December 2022

 

The Select Committee on Appropriations, having considered the Adjustments Appropriation Bill [B23 – 2022] (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 Adjustments Appropriation Bill [B23 – 2022] (the Bill) in Parliament on 26 October 2022 during the presentation of the 2022 Medium Term Budget Policy Statement (MTBPS). The Bill was tabled in terms of section 12(1) and (2) of the Money Bills and Related Matters Act as amended by the Money Bills Amendment Procedure and Related Matters Amendment Act, 2018 (Act No. 13 of 2018). Section 12(1) of the Money Bills and Related Matters 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) (the PFMA). Section 12(2) of the Money Bills and Related Matters Act requires that “an adjustments appropriation Bill must be tabled with a national adjustments budget”. The Bill was referred to the National Council of Provinces (NCOP) and the Committee for concurrence on 01 December 2022, after the National Assembly had passed it.

 

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 27 to 30 October 2022, 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 Public Service Accountability Monitor (PSAM), the Organisation Undoing Tax Abuse (OUTA), and Equal Education. COSATU, PSAM and OUTA also made oral submissions during a virtual public hearing on 25 November 2022.

 

1. National Treasury briefing

The National Treasury reported that a net of R12.9 billion in additional funding was effected through adjustments to the 2022/23 allocations and included the following:

 

• R6.4 billion in unforeseeable and avoidable expenditure to be directed towards the Department of Cooperative Governance and Traditional Affairs, and the Department of Transport for disaster management following the April 2022 floods.
• R500 million earmarked in the 2022 Budget Speech for the Department of Home Affairs Digitisation Project, as part of the Presidential Employment Initiative (PEI).
• R990.5 million in roll-overs; the bulk of which emanated from the Agriculture, Land Reform and Rural Development Vote and the Communications and Digital Technologies Vote for the roll-out of Phase 2 of the PEI.
• R1.6 billion in self-financing expenditure from the revenue-generating activities of Departments.
• R1.9 billion in declared unspent funds, of which R1.8 billion was attributed to the Department of Social Development due to a lower-than-expected uptake of the COVID-19 Social Relief of Distress (SRD) Grant in 2022/23, as more stringent qualification criteria had been introduced.
• R7.2 billion in additional direct charges against the National Revenue Fund (NRF) not anticipated at the time of the main Budget, which included debt service costs of R5.9 billion.
• R13.4 billion in provisional allocations not assigned to Votes.

 

The aforementioned amounts were offset by a R5 billion reduction in the contingency reserve, R3.9 billion in projected national government under-expenditure, R2 billion in local government repayments to the National Revenue Fund (NRF) and R4.2 billion in the Infrastructure Fund not assigned to Votes.

 

The Bill also provides for the shifting of funds within and between Votes. This is to allow the use of unspent funds to defray increased expenditure within the main division of a Vote by shifting between different segments (sub-programmes and economic classifications) of the main division, or to another Vote. The shifting of funds has zero impact on the overall budget allocation, as the effects of additions and reductions cancel each other out.

 

Furthermore, the Bill requires Parliament to approve some virements between main divisions within Votes. These include funds totalling more than 8 percent of the amount appropriated for a main division for a financial year; the use of funds appropriated for compensation of employees; the use of funds appropriated for transfers and subsidies; and the use of funds appropriated for payment for capital assets.  

 

4. Stakeholder submissions

4.1 Financial and Fiscal Commission (FFC)

The Financial and Fiscal Commission (FFC) indicated that the 2022 in-year spending adjustments amounted to R13 billion. Of this, R7.45 billion was in respect of adjustments to Vote appropriations, of which the bulk, R6.4 billion, related to unforeseeable and unavoidable expenditure prompted by flood damage. The FFC highlighted the proposed roll-overs, amounting to R990.5 million, the bulk of which emanated from two Votes relating to Phase 2 of the Presidential Employment Initiative (PEI) roll-out. A roll-over of R231 million was proposed for the Agriculture, Land Reform and Rural Development Vote and related to the payment of subsistence producers selected in Phase 2 of the PEI. The FFC was concerned over the poor spending of this department on the implementation of the PEI, when assessing roll-overs relating to Phase 1 of the initiative. The second largest roll-over, amounting to R200, million was proposed for the Communications and Digital Technologies Vote.

 

The FFC noted the additional allocation of R48.5 million, classified as unforeseeable and unavoidable expenditure, proposed for the provincial equitable share (PES) to assist provincial departments of social development to continue caring for flood victims placed in shelters as a result of the April 2022 floods in Kwa-Zulu Natal. While the FFC welcomed the assistance to households affected by floods, it emphasised that government should initiate a more permanent solution for relocating the flood victims. To this end, a timeline and milestones should be shared with Parliament so that oversight could be exercised in this regard.

 

With regard to the proposed R618.8 million to be added to the skills levy for sector education and training authorities (SETAs), the FFC stated that, whilst additional funding in support of skills development was essential, the effective and efficient utilisation of funding was equally important. The FFC alluded to a recent presentation by the Auditor-General South Africa (AGSA), highlighting some of the challenges characterising SETAs. The FFC was of the view that it was pertinent to ensure that additional funding was coupled with strong oversight by Parliament and other role-players in respect of the use of the resources, to avoid further maladministration.

 

The FFC welcomed the in-year adjustments relating to the provision of funding to repair flood damage, rebuild damaged infrastructure and support affected households. However, it emphasised the importance of ensuring minimal delays and quality when repairing and rebuilding damaged infrastructure; and of Parliament receiving regular updates on progress in this regard.

 

4.2 Parliamentary Budget Office (PBO)

The Parliamentary Budget Office (PBO) gave an overview of the Bill, as well as the expenditure by Vote, which stood at 47.4 percent of the adjusted appropriation of R1.094 trillion as at the end of September 2022. The PBO highlighted that a total of R44 billion had been allocated for the Social Relief of Distress (SRD) Grant in the 2022/23 financial year, to serve 10.5 million people. It reported that the Department of Social Development (DSD) had published amended regulations for the Grant on 16 August 2022, which had resulted in the means test threshold being increased from R350 to R624. The PBO noted that the DSD had reported in August 2022 that only 7.5 million people were receiving the benefit on a monthly basis; which would result in a significant projected under-spending by the end of the 2022/23 financial year.

 

The PBO emphasised the importance of the SRD Grant and the need for the discussions around social security to continue, as the Grant would be terminated in March 2024. In this regard the PBO made reference to the household survey conducted by Statistics South Africa in 2021 and the recent findings of the Household Affordability Index. The PBO concluded that the cost of living crisis had plunged more people into destitution after the shock caused by the COVID-19 pandemic; and asked whether government could afford not to spend more in order to address the ongoing risks to the livelihoods of South African citizens and the economy at large.

 

 

 

4.3 Congress of South African Trade Unions (COSATU)

COSATU welcomed the positive allocations in the Bill, in particular for the following:

 

• Disaster management emergency housing and infrastructure repair allocations.
• Additional allocations for Parliament, Home Affairs and Statistics South Africa (StatsSA).
• Additional allocations for industrial financing, electrification grid connections and the Department of Employment and Labour IT capacity.
• Additional funds for basic education infrastructure, the National Student Financial Aid Scheme (NSFAS) and technical and vocational education and training (TVET) colleges.
• Additional funds for the South African National Defence Force (SANDF) deployments and South African Police Service (SAPS) visible policing.

 

COSATU expressed concern over the following key trends:

 

• Disaster management relief disbursements delays.
• Cuts in export incentives and minimal industrial financing.
• The never-ending shifting of the school infrastructure backlog and continuing NSFAS administrative chaos.
• Massive cuts in Social Relief of Distress (SRD) Grant expenditure, South African Social Security Agency (SASSA) administrative chaos and cuts to social grants.
• Cuts to SAPS budget lines in the face of a massive decline in the SAPS headcount.  

 

4.4 Public Service Accountability Monitor (PSAM)

The Public Service Accountability Monitor (PSAM) submitted that the continued under-spending by key service delivery departments and local government needed to be addressed as a matter of urgency, as the reasons most frequently cited for shifts/virements and under-spending were not satisfactory explanations in the current context. PSAM indicated that fruitless and wasteful expenditure further undermined service delivery.

 

PSAM further pointed to systemic deficiencies, contributing to weak governance and poor service delivery, at the provincial and municipal levels of government; despite government having spent R9.1 billion across 40 state agencies to support the proper functioning of municipalities. PSAM submitted that adequate and effectively executed resources (financial and non-financial) were central to addressing these challenges and underscored the implications of weak or unwilling political motivation to ensure compliance with legislated public finance management prescripts. PSAM expressed serious concern over the R 2 billion that had been returned to the National Revenue Fund (NRF) owing to local government under-spending; in the context of slow service delivery achievement. PSAM was further concerned that the budgets for the Department of Cooperative Governance and Traditional Affairs’ Institutional Development Programme and Anti-corruption sub-programme had been reduced by R3.56 million and R500 000, respectively; given its key role in fostering sound financial management in municipalities and ensuring that they perform their basic functions; deliver quality municipal services and promote transparency and accountability.

 

With regard to infrastructure projects, PSAM pointed to backlogs occurring mainly in the Departments of Health, Basic Education and Human Settlements which impacted on services. Management of procurement, contracts and expenditure needed to be improved to ensure value for money, and that transparency and accountability requirements were adhered to. PSAM was encouraged by government’s stated commitment to scaling up efforts to improve the project pipeline and the provision of additional resources for project preparation, but remained concerned about measures to safeguard funds and manage contracts and expenditure throughout the project duration.

 

With regard to funding for institutions fighting crime and corruption, PSAM indicated that budget and other resource constraints continued to undermine the capacity of the National Prosecuting Authority (NPA). While the recent increases to the NPA’s budget were positive,  limited year-on-year growth was a risk to its ability to continue to compensate recently recruited staff. The Special Investigations Unit (SIU) had received no additional funding in both the 2021 and 2022 MTBPS, despite the entity’s important role in providing forensic investigation and civil litigation services to combat corruption, serious malpractices and maladministration. In addition, the budget for the function under which the SIU budget was allocated, was set to decrease by 0.5 percent in the 2023/24 financial year. PSAM was concerned that, overall, the Peace and Security function budget was declining on average by 2 percent in real terms over the MTEF.  

 

PSAM expressed further concern over whether the institutions supporting democracy, such as the Public Protector and the South African Human Rights Commission, would be able to perform their duties, with allocations to them declining in real terms over the MTEF; and encouraged the Committees to ensure these institutions were adequately resourced.

 

PSAM welcomed the introduction of a pilot mechanism to garner public input on fiscal policy - the Fiscal Openness Accelerator (FOA) project; as it had the potential to deepen meaningful public participation and increase transparency and efficacy of fiscal policy decisions; and encouraged National Treasury to consider ways to continue to partner with civil society beyond the conclusion of the FOA pilot in September 2022.

 

The PSAM made the following recommendations:

• The Committees should request further information from under-spending departments to determine the challenges; what was being done to resolve them and to insist on corrective measures to prevent persistence of these trends.
• The Committees should ensure that the notices for material irregularities (MIs) issued by the Auditor-General of South Africa (AGSA) to national government departments are acted upon, and that those who continue to mismanage funds are held accountable.
• The Committees should further play a role in strengthening internal controls and accountability mechanisms to improve the performance of departments.
• There should be greater transparency of spending data and information to enable the public to monitor performance and demand justifications from departments on their spending and planning decisions.
• The Committees on Appropriations, Finance, Public Accounts and Cooperative Governance and Traditional Affairs should exercise their powers to call for political support for technical interventions aimed at bolstering capacity and compliance.
• The Committee should consider requesting a comprehensive report from the National Treasury detailing all interventions to improve municipal functioning through capacity-building, technical support and resourcing over the past decade, and their impact.
• The Committees should insist on open and transparent contracting processes to enable public oversight for all major public infrastructure projects; in order to ensure that these projects had the intended developmental impact.
• The Committees should consider a pilot of social audits in areas where local government was failing to deliver services. In addition to improving participation in the budget process, this could improve spending outcomes and provide opportunities for skills development and income support for communities facing high levels of poverty and unemployment.
• Parliament should allow any member of the public or any civil society organisation to testify during its hearings on the budget proposal prior to its approval. Additionally, allowing members of the public or civil society organisations to testify during hearings on the Audit Report would contribute to improving budget efficacy and citizen trust. The role of the parliamentary constituency offices should be considered in this regard.

 

4.5 Organisation Undoing Tax Abuse (OUTA)

The Organisation Undoing Tax Abuse (OUTA) called for government to procure locally manufactured vehicles; submitting that the silence on this initiative indicated government’s reluctance to adopt robust economic measures to improve the economy. OUTA further called on government to reduce the vehicle allowances for politicians at all levels of government.

 

With regard to Vote 34: Mineral Resources and Energy, OUTA noted the proposed roll-overs in programme 5: Mineral and Energy Resources Programmes and Projects; and that R28 million was rolled over to finalise non‐grid projects through the Integrated National Electrification Programme (INEP). In addition, R43.8 million was rolled over to finalise payments to service providers for the solar water heater programme, and R1 million to finalise 50 electrification connections for households in the Dikgatlong Municipality. In light of the current load shedding by Eskom, OUTA said it expected the Department of Mineral Resources and Energy (DMRE) to expedite non-grid electrification to ensure that households had access to energy. OUTA expressed concern that the allocated funding had not been spent. It also submitted that the solar water heating programme had been dogged by problems in recent years, as the DMRE had incurred storage costs which were flagged by the Auditor-General of South Africa as wasteful and fruitless expenditure.

 

OUTA welcomed the promise that the National Prosecuting Authority (NPA) Investigating Directorate would be permanent and the commitment to increase the NPA budget from the 2023/24 financial year; in particular, the proposed increases with regard to specialised tax units, specialist services and the promise of the establishment of a digital forensic data centre and increased funds for witness protection. OUTA submitted that it wanted to see considerable strengthening of the resources and capacity of the NPA to implement the recommendations of the Zondo Commission, which were aimed at strengthening institutional governance and accountability mechanisms in the country. OUTA felt that the current annual budget of R4.9 billion for the NPA was insufficient to achieve the priorities listed in the 2022 MTBPS and the President’s response to state capture. OUTA compared the NPA’s allocation to the budget for VIP Protection Services and Static Protection in the Police and highlighted the disparity, giving an indication of government’s priorities.

 

OUTA welcomed the fact that funds had been reprioritised in the Justice and Constitutional Development Vote to the Financial Intelligence Centre (FIC) to implement recommendations from the Zondo Commission. However, it felt that this should not have had to be deducted from other law enforcement functions. OUTA further welcomed the additional reprioritisation for court security, replacing computer equipment, procuring vehicles for provinces, and enhanced capacity at the Thuthuzela care centres.

 

OUTA welcomed the promise of additional resources in 2023 to the country’s security forces, with 15 000 additional constables to be recruited over the next three years; stating that it hoped that the budget would also include sufficient resources for the police to operate. However, it raised concern that the Police Vote had been reduced for the year, and particularly over the removal of R326 million for the construction and upgrading of police stations and R32 million from detective services.

 

Noting the proposed additional allocation of R3.6 billion to the Cooperative Governance and Traditional Affairs (CoGTA) Vote for the reconstruction and rehabilitation of damaged municipal infrastructure as a result of natural disasters in Kwa-Zulu Natal and the Eastern Cape, OUTA called for stringent oversight over the funds to ensure effective and efficient spending. It also noted the promise of additional funds in 2023/24 for the delivery of free basic services to poor households to counter the rising cost of free basic services. While welcoming the principle of this support, OUTA expressed concern that much of this funding would go to municipalities where it was diverted to other spending and not used for subsidising these services.

 

OUTA referred to the current situation where 43 municipalities were in crisis and planned government interventions including prioritising, revenue management, audit outcomes, supply chain management, the Municipal Standard Chart of Accounts and strengthening monitoring and enforcement of financial recovery plans. However, given the state of municipalities, OUTA questioned how these would be resourced and implemented; in light of the significant resources spent through CoGTA on support for municipalities. OUTA proposed that National Treasury introduced mechanisms to halt the allocation of grants to municipalities that continued to misallocate or misspend. It also submitted that the policy of paying once-off gratuities for non-returning Councillors needed to be reviewed, and either scrapped, or the amount significantly reduced.

 

While welcoming the additional allocation of R1.4 billion to NSFAS in the Higher Education and Training Vote, OUTA indicated that the current funding model for NSFAS was unsustainable within the fiscal constraints and recommended that government prioritised the urgent finalisation of a new funding framework for the sector. OUTA further noted the additional allocation of R618.8 million to the skills levy and sector education and training authorities (SETAs), bringing the funding to R21 billion. While supporting skills development as essential for improving the economy and individuals’ lives, OUTA emphasised that these funds should be used efficiently and effectively. OUTA mentioned the AGSA’s report on challenges in the SETAs, including irregular expenditure of R3.5 billion and its own previous report on corruption in the Services SETA; to emphasise the need to ensure that the addition of funding was coupled with strong oversight to avoid further maladministration.

 

OUTA submitted that the realisation of the right to basic education would regress under austerity budgets and that the decline in real expenditure on education was concerning. In addition, teacher vacancies and overcrowded classrooms, combined with the commodification of education through private schools, meant that the existing gap in the quality of education would continue to grow. OUTA submitted that government needed to derive sufficient return on investment for the funds invested in education and suggested that school principals, governing bodies and teachers must have performance targets to encourage retaining learners in basic education. Furthermore, OUTA felt strongly that the Grade 9 exit certificate must be prioritised to create multiple exit pathways for the youth. It also welcomed the promise of additional funding in 2023/24 for the National School Nutrition Programme Grant and for improving and expanding early childhood development (ECD) programmes. OUTA continued that the ECD model needed to be strengthened to ensure that all stakeholders cooperated for the transition of this programme from Social Development to Basic Education to work effectively. OUTA looked forward to more detailed information about these aspects in the 2023 national budget.

 

OUTA welcomed the extension of the SRD Grant for another year but expressed concern that the MTBPS was silent on how government would address the plight of citizens as they battled to survive the relentlessly upward-spiralling cost of living and high levels of unemployment. OUTA was disappointed that the SRD Grant had not been adjusted for Consumer Price Index (CPI) inflation and that there was still no clear pathway for how permanent social support would be introduced following its termination. It also expressed concern that the Grant was not being accessed by all the people who needed it and were entitled to it, mainly due to a more stringent qualifying criteria; submitting that the shift of R2.9 billion from the Department of Social Development to the Department of Public Enterprises was an example of how social spending was cut to fund other priorities. OUTA believed strongly that the reductions in social spending was linked to the depletion of state resources due to years of state capture, corruption and mismanagement.

 

With regard to Water and Sanitation Vote, OUTA expressed concern over the continuous roll-overs on the Regional Bulk Infrastructure Grant for the Vaal River Pollution Remediation project; indicating that about 15 million people were dependent on the Vaal River in some way or another, making it imperative that the project be given urgent and immediate attention.

 

OUTA reported that government had undertaken to contribute R100 billion over 10 years to the Infrastructure Fund; but that this had not happened. Instead, every year the budget allocated funding over the MTEF and every year the MTBPS removed it. The 2022 Budget had allocated R4.2 billion to this initiative for 2022/23, R15.4 billion for 2023/24 and R7.8 billion for 2024/25; but the MTBPS deleted this year’s funds and halved the following years’ allocations, promising to make it up in future years. OUTA questioned the purpose of the Infrastructure Fund and asked whether it was merely being used as a contingency fund; indicating that it would like to see this fund used not just for new infrastructure, but also for repairs to infrastructure such as water supply systems and water treatment works that had been left to collapse.

 

4.6 Equal Education (EE)

Equal Education (EE) emphasised the fact that basic education was a fundamental human right under the Constitution and that government had the obligation to actively take steps to promote and fulfil this right. EE further explained that basic education consisted of certain core components, including safe and sufficient infrastructure, transport, as well as learning and teaching materials such as textbooks and furniture. EE submitted that South Africa’s schooling system was in crisis, with persisting systemic inequalities leaving many schools with overcrowded classrooms, burnt-out teachers, unsafe and deteriorating school infrastructure, and a lack of basic services such as sanitation, water, and electricity; and that poor black learners living in rural areas were disproportionately disadvantaged.

 

EE was concerned that, despite the situation described above, the 2022/23 Medium Term Expenditure Framework (MTEF) showed a continuation of existing trends in basic education funding, not keeping pace with inflation, growing learner enrolment, and the real costs of providing education services across the provinces. The additional allocation of R3.7 billion to basic education for the current financial year, as well as increased medium-term estimates, were erased by higher-than-expected interest rates, as funding levels did not keep up with inflation over the medium term. Real consolidated basic education funding was anticipated to experience negative growth from 2022/23 until 2025/26 and when rising learner enrolment was factored in, spending per learner declined even more sharply over the following three years. While the additional R116.8 million allocated to the Education Infrastructure Grant (EIG) to repair schools affected by floods in KwaZulu-Natal and the Eastern Cape was welcomed, EE reported that it still fell short of the current infrastructure backlog's funding needs. The DBE had reportedly stated that it would need R442 million to address the flood damage to schools in KwaZulu-Natal alone; and that an additional R5 billion would be needed to address the overcrowding crisis in schools across the country. These figures did not factor in the building maintenance crisis, with existing functional school infrastructure across the country risking falling into disrepair, further deepening the existing school infrastructure crisis. EE was deeply concerned that the DBE and provincial education departments were not meeting their targets for school infrastructure grants. In the first half of the 2022/23 financial year, only six out of the targeted 30 schools for the year had been built through the School Infrastructure Backlogs Grant (SIBG); only 149 out of the targeted 450 schools had been provided with sanitation facilities; and only 19 out of the targeted 50 schools had been provided with water.

 

EE further reported that the basic education system suffered from endemic under-spending, and irregular, fruitless and wasteful expenditure, impeding government’s ability to provide an equal and quality basic education for all learners and impacting the ability of basic education to advocate for additional funding from National Treasury. EE reported that under-spending was often the result of a lack of capacity to effectively plan and implement projects. In addition, the current outstanding balance of identified irregular expenditure that the DBE had not dealt with, totalled R6.6 billion.

 

EE asked the Committee to –

• Reject the 2022/23 MTEF, and call for a budget for basic education that grows in line with inflation and learner enrolment;
• Call on National Treasury to adopt a human rights-based budgeting approach that prioritises socio-economic rights like quality basic education;
• Take its oversight responsibilities seriously, by actively engaging the departments on how they spend their money, in particular basic education; and institute public hearings for the Budgetary Review and Recommendations Reports (BRRR)s and create consequences for departments that do not follow its recommendations, and seek increased consultation with civil society and the public on their findings on government spending;
• Ensure that the DBE and provincial education departments use their money efficiently and effectively; and
• Work in the public's interest by implementing the Zondo Commission recommendations on parliamentary practice.

  

1. Observations and findings

The Select Committee on Appropriations, having considered the inputs from the above stakeholders on the Adjustments Appropriation Bill [B23 – 2022], made the following findings:

 

1. Whilst the Committee welcomes the Bill, it also notes that some national departments have exceeded the 8 percent virement threshold in the 2022 Budget, which is provided for in section 43(2) of the Public Finance Management Act, and this requires Parliament to approve it upon adequate information being presented during the 2022 MTBPS process.

 

1. The Committee notes the proposed adjustment amount of R12.9 billion in additional funding for the 2022/23 financial year, meant for unforeseen and unavoidable expenditure (natural floods, in April 2022), the Home Affairs Digitisation Project, roll-overs, self-financing expenditure, the rebuilding of Parliament, declared unspent funds, an additional amount towards direct charges against the National Revenue Fund (NRF) and provisional allocations not assigned to Votes.

 

1. The Committee notes the proposed R618.8 million to be added to the skills development levy for sector education and training authorities (SETAs), and the recent presentation by the Auditor-General of South Africa (AGSA), highlighting some of the challenges of corruption at SETAs. The FFC’s view on the need to ensure that additional funding was coupled with strong oversight in respect of the use of the resources, was also noted.

 

1. The Committee notes that over the medium term, provincial education budgets will stabilise as funding is added for compensation of employees to fill teacher vacancies and to reduce class sizes and support learning outcomes, and further notes the need to keep compensation spending in line with resources over the long term.

 

 

1. The Committee agrees with the FFC that government should initiate a more permanent solution for relocating the flood victims, and a clear timeline and milestones should be shared with Parliament and provincial legislatures so that oversight can be exercised in this regard.

 

1. The Committee agrees with the PBO about the importance of the SRD Grant and its impact on the neediest and most vulnerable people; and on the need for the discussions around social security to continue, since the Grant will be terminated in March 2024.  

 

1. The Committee notes National Treasury’s submission that the adjusted appropriations and the special appropriation were trying to balance the need to address a very significant unforeseen and unavoidable event, such as the floods, and other needs, such as supporting the continued deployment of the SANDF to Mozambique, with the fact that long simmering risks to the fiscus, emanating from SOEs, were materialising and becoming a reality.

 

1. The Committee notes that an additional R6 billion had to be allocated to debt service costs in the adjustments budget, due the fact that the costs were higher than anticipated during the main Budget of 2022; and that this is negatively impacts on efforts to address the shortcomings in the education and health sectors.

 

1. The Committee shares COSATU’s concern over the reduction of R1.3 billion in land reform and the reduction in the budget of the South African Police Service (SAPS), especially to detective services; as well as over government’s apparent inability to deliver infrastructure projects; with funds continually being moved from implementation to planning.

 

1. The Committee notes COSATU’s concern around the need for the Department of Social Development to address administrative challenges and ensure fair criteria for the distribution of the SRD Grant. This is in line with the Committee’s recommendations in previous Reports.

 

1. The Committee agrees with COSATU’s view about the importance of government having ample available reserves and of capacitating the State for rapid response in the case of natural disasters; and also of having strong transparency and accountability to avoid corruption with disaster relief funds.

 

1. The Committee agrees with PSAM’s view that increasing budgets does not translate into better service delivery outcomes. Moreover, some departments still spend their total allocated budgets but fail to achieve all the performance targets contained in their annual performance plan.  

 

1.  The Committee notes PSAM’s view that there is a need for government to prioritise development objectives through a pro-poor budgeting framework; as well as a need for government to continue to address the impact of wasteful and fruitless expenditure to ensure that public funds are effectively spent for the intended purpose.

 

1. The Committee agrees with PSAM that the continued under-spending by key service delivery departments and local government needs to be addressed as a matter of urgency; and that fruitless, wasteful and irregular expenditure further undermine service delivery programmes meant for the poor and vulnerable.  

 

1. The Committee shares OUTA’s concern over the continuous roll-overs on the Regional Bulk Infrastructure Grant allocation for the Vaal River Pollution Remediation Project; where about 15 million people are affected and dependent on this River in some way or another.

 

 

 

1. Recommendations

The Select Committee on Appropriations, having been briefed and engaged with the above stakeholders on the Adjustments Appropriation Bill [B23 – 2022], recommends as follows:

 

1. The National Treasury should ensure that any movement of funds is approved according to the provisions of the Public Finance Management Act of 1999 and Treasury Regulations. However, the Committee does not support the movement of funds above 8 percent, when it is as a result of poor planning and project management and unsatisfactory performance by government departments.   

 

1. The National Treasury should approve and gazette in the Adjustments Appropriation Bill [B23 -2022] an adjusted amount of R12.9 billion, of which R6.4 billion (49 percent) goes to the Department of Cooperative Governance and the Department of Transport to address the April 2022 floods in KwaZulu-Natal and the Eastern Cape. The Committee implores both Departments to strengthen expenditure control and financial management systems to realise value for money.

 

1. The National Treasury and the Department of Home Affairs should ensure that proper financial management controls and clear plans and milestones are developed and put in place for the spending of the proposed adjustment amount of R500 million for the digitisation project, to avoid wasteful and fruitless expenditure.    

 

1. The National Treasury should approve and gazette the roll-over amount of R990.5 million, emanating from the Department of Agriculture, Land Reform and Rural Development and the Department of Communications and Digital Technologies. The Committee implores both Departments to develop clear and time-bound remedial actions, with specific targets, to address under-spending and improve service delivery performance; while ensuring project are completed on time.   

 

1. The Department of Cooperative Governance and the National Disaster Management Centre (NDMC), together with National Treasury, should undertake a review of the disaster management and administrative processes in order to ensure rapid response and transfer of much-needed relief funds for victims; and to ensure quality standards when repairing and rebuilding damaged infrastructure, while ensuring that projects are completed on time. Parliament will continue to follow up on this.  

 

1. The Committee implores the Department of Higher Education and Training and National Treasury to ensure that the issues of maladministration and corruption raised by the Auditor-General of South Africa (AGSA), which are negatively affecting the capacity of sector education and training authorities (SETAs) to deliver, are urgently addressed and consequence management implemented, where necessary. Parliament will continue to monitor progress.  

 

1. The National Treasury and Department of Planning, Monitoring and Evaluation should ensure that better alignment between performance targets and budget allocations is realised at a planning and budgeting phase, to ensure correlation between expenditure and performance targets achieved at the end of the year. Notwithstanding the fact that there is a need to improve planning, the Committee also believes that government should evaluate its programmes, and discard those that are continuously not bearing any results; instead of relying on incrementalism.

 

1. The Committee implores the Department of Social Development (DSD) to address all the administrative challenges in the Social Relief of Distress (SRD) Grant application system and to ensure proper internal controls to effectively manage and distribute the Grant to all the deserving beneficiaries. The Committee is of the view that the conversation around a basic income grant should continue amongst all the relevant stakeholders to find a permanent solution in this regard.  

 

1. With regards to the Vaal River Pollution Remediation Project, the Department of Water Affairs and Sanitation, together with the National Treasury, should ensure that project planning for the Regional Bulk Infrastructure Grant projects is properly done timeously to avoid funds being rolled over to the next financial year or returned back to the fiscus. The Committee believes that the failure to spend on infrastructure budgets continues to undermine government’s commitment to implement an infrastructure-led economic recovery. 

 

1. The National Treasury, together with the Department of the Police, should ensure that adequate resources are allocated for detective services, and that planning is continuously improved for the Integrated Criminal Justice Strategy (ICJS), to avoid non-expenditure, such as the R30 million, by the Department.  

 

7.    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 [B23 - 2022], 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 the Report.

 

Report to be considered.