ATC111109: Report Division of Revenue Amendment Bill [B17 – 2011]
Standing Committee on Appropriations
Report of the Standing Committee on Appropriations on the Division of Revenue Amendment Bill [B17 – 2011], dated 9 November 2011
1 Introduction
The Division of Revenue Amendment Bill (henceforth referred to as the Bill) was tabled in Parliament on the 25 October 2011 by the Minister of Finance during the presentation of the 2011 Medium Term Budget Policy Statement (MTBPS).
This report focuses on amendments proposed in the Bill tabled by the Minister.
2 Equitable division of revenue raised nationally among the spheres of government
Table 1 (hereunder) outlines the equitable division of revenue raised nationally among the three spheres of government.
Table 1
Spheres of Government R’000 |
2011/12 Allocation |
2011/12 Adjusted Allocations |
Adjusted amount |
National Provincial Local |
566 322 576 288 492 831 34 107 901 |
562 174 845 291 735 509 34 107 901 |
-4 147 731 3 242 678 0 |
Total |
888 923 308 |
888 018 255 |
-905 053 |
The net effect of the 2011 adjustments is a reduction in the 2011/12 estimates of expenditure from R888.9 billion to R888.0 billion. The national allocation has been adjusted downwards by R4.148 billion from R566.323 billion to R562.175 billion. The provincial equitable share allocation is adjusted upwards by R3.243 billion and the local government equitable share allocation remained unchanged.
3 Determination of each province’s equitable share of the provincial share of nationally raised revenue
Table 2 (hereunder) outlines each province’s equitable share of the provincial share of nationally raised revenue.
Table 2
Provinces R’000 |
2011/12 Allocation |
2011/12 Adjusted Allocation |
Adjusted Amount |
Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo Mpumalanga Northern Cape North West Western Cape |
44 120 028 17 520 835 50 428 480 62 927 556 36 348 545 23 378 714 7 742 909 19 271 431 26 754 333 |
44 644 170 17 722 579 50 967 615 63 584 195 36 793 208 23 662 205 7 827 173 19 481 922 27 052 442 |
524 142 201 744 539 135 656 639 444 663 283 491 84 264 210 491 298 109 |
Total |
288 492 831 |
291 735 509 |
3 242 678 |
The provincial equitable share was adjusted upwards from R288.493 billion to R291.736 billion to provide for higher remuneration increases than what was provided for in the main budget. Provinces were advised to budget for wage increases of 5.5 per cent; however the wage agreement between labour and government resulted in a 6.8 per cent increase. The additional allocation of R3.243 billion was allocated to provinces in proportion to their share of total expenditure on education and health personnel and balanced with shares of expenditure on personnel in other sectors.
3.1 Allocations-in-kind to provinces for designated special programmes
The R700.0 million allocation with regard to the Schools Infrastructure Backlogs Grant was unallocated in the 2011 Division of Revenue Act. The Grant was established to assist provinces in eradicating inappropriate school structures and the provision of water, sanitation and electricity at schools. The Department of Basic Education finalised its needs-based analysis of the provinces and has distributed the funds to the provinces, as follows: Eastern Cape (R520.7 million), Free State (R22.3 million), Gauteng (R6.7 million), KwaZulu-Natal (R46.2 million), Limpopo (R41.7 million), Mpumalanga (R38.3 million), Northern Cape (R8.0 million), North West (R11.1 million) and Western Cape (R5.2 million).
4 Adjustments for local government for the 2011/12 financial year
No adjustments were made to the local government equitable share during the 2011/12 adjustment period. In respect of conditional grants the following adjustments were proposed:
─ R790 000 was added to the municipal systems improvement grant;
─ R50 million of the Financial Management Grant was unallocated at the time of the budget for engineering and technical intern programmes. Of this amount R39 million was allocated through the adjustments process and R11 million was declared as savings.
─ R28.5 million was shifted to schedule 7 of the water service operating subsidy.
─ R28.6 million was shifted from regional bulk infrastructure grant to fund feasibility studies.
An amount of R266 million is allocated to the Department of Cooperative Governance and Traditional Affair’s vote for a once off gratuity for non-returning municipal councillors after the 2011 municipal elections.
5 Recommendation
The Standing Committee on Appropriations, having considered the Division of Revenue Amendment Bill [B17 – 2011] (National Assembly – section 76(1)) referred to it and classified by the JTM as Section 76(1) bill, recommends that the Bill be adopted without amendments.
Report to be considered.
Documents
No related documents