ATC121105: Report of the Standing Committee on Appropriations on the 2012 Division of Revenue Amendment Bill [B33 – 2012], dated 2 November 2012

REPORT OF THE STANDING COMMITTEE ON APPROPRIATIONS ON THE 2012 DIVISION OF REVENUE AMENDMENT BILL [B33 – 2012], DATED 2 NOVEMBER 2012

The Standing Committee on Appropriations having considered the 2012 Division of Revenue Amendment Bill [B33, 2012], reports as follows:

1 Introduction

The Division of Revenue Amendment Bill (henceforth referred to as the Bill) was tabled in Parliament on 25 October 2012 by the Minister of Finance during the presentation of the 2012 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	2012/13 Main Allocation	2012/13 Adjusted Allocations	Adjusted amount
National Provincial Local	622 434 681 309 057 382 37 873 396	616 574 150 313 015 798 37 873 396	-5 860 531 3 958 416 0
Total	969 365 459	967 463 344	-1 902 115

The net effect of the 2012 adjustments is a reduction in the 2012/13 budget estimates of expenditure from R969.365 billion to R967.463 billion. The national allocation has been adjusted downwards by R5.860 billion from R622.434 billion to R616.574 billion. The provincial equitable share allocation has been adjusted upwards by R3.958 billion from R309.057 billion to R313.015 billion. 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	2012/13 Main Allocation	2012/13 Adjusted Allocation	Adjusted Amount
Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo Mpumalanga Northern Cape North West Western Cape	46 940 272 18 531 165 54 545 389 67 802 913 38 721 016 24 874 453 8 255 155 20 614 831 28 772 188	47 559 888 18 795 286 55 212 862 68 638 663 39 259 637 25 202 843 8 356 001 20 871 195 29 119 423	619 616 264 121 667 473 835 750 538 621 328 390 100 846 256 364 347 235
Total	309 057 382	313 015 798	3 958 416

The provincial equitable share was adjusted upwards from R309.057 billion to R313.015 billion to provide for higher than budgeted remuneration increases .. Provinces were advised to budget for wage increases of 5 per cent; but the wage agreement between labour and government resulted in a 7 per cent increase. The additional allocation of R3.958 billion was allocated proportionally to provinces in relation to their personnel numbers as at 31 March 2012.

3.1 Allocations to provinces to supplement the funding of programmes or functions funded from provincial budgets

Adjustments for the Hospital Infrastructure grant were made to provide for unforeseen and unavoidable expenditure and adjustments for the Further Education and Training (FET) Colleges grant were made for the higher than budgeted wage agreements. The Hospital Infrastructure grant was adjusted upward by an amount of R180.0 million and allocated to the KwaZulu-Natal province. The FET Colleges grant was adjusted upwards by an amount of R87.336 million. The Department of Higher Education and Training has distributed the funds for the FET Colleges grant to the provinces in proportion to their share of personnel in FET colleges, as follows: Eastern Cape (R11.330 million), Free State (R5.849 million), Gauteng (R19.712 million), KwaZulu-Natal (R19.025 million), Limpopo (R9.156 million), Mpumalanga (R2.589 million), Northern Cape (R1.743 million), North West (R4.556 million) and Western Cape (R13.376 million).

3.2 Specific purpose allocations to provinces

A new conditional grant, the 2013 African Cup of Nations: Medical and Services Grant, is to be established as a once off allocation for the provision of health and medical services for the 2013 Africa Cup of Nations (AFCON). The Department of Health has distributed the R15.0 million grant allocation to the provinces, as follows: Eastern Cape (R3.0 million), Gauteng (R3.0 million), KwaZulu-Natal (R3.0 million), Mpumalanga (R3.0 million) and North West (R3.0 million). Adjustments to the Hospital Revitalisation grant were made to provide for unforeseen and unavoidable expenditure. The purpose of the Hospital Revitalisation grant is to enable provinces to plan, manage, modernise, rationalise and transform health infrastructure, health technology, monitoring and evaluation of the health facilities in line with national policy objectives and supplement expenditure on health infrastructure delivered through public private partnerships. The Department of Health has distributed the R186.0 million grant allocation to the provinces, as follows: Free State (R166.0 million) and KwaZulu-Natal (R20.0 million).

4 Adjustments for local government for the 2012/13 financial year

No adjustments were made to the local government equitable share during the 2012/13 adjustment period. In respect of conditional grants the following adjustments were proposed:

· R62.895 million was added to the Expanded Public Works Programme Integrated Grant for Municipalities;

· R123.111 million will be allocated to the new conditional grant, the 2013 Africa Cup of Nations Host City Operating Grant. The purpose of the grant is to assist host cities with the operational responsibilities associated with the hosting of the 2013 Africa Cup of Nations championship;

· R6.460 million was added to the Regional Bulk Infrastructure Grant for municipalities; and

· R138.875 million has been declared as savings on the Rural Household Infrastructure Grant for municipalities.

5 Technical corrections

Technical corrections to the 2012 Division of Revenue Act are required. These technical revisions will however not alter the baselines of the conditional grants concerned. The following corrections are made:

· For Hlabisa Local Municipality an allocation of R11.9 million instead of R21.9 million in

2012/13; and

· For Mtubatuba Local Municipality an allocation of R20.9 million instead of R10.9 million.

· A correction is needed to the Northern Cape Expanded Public Works Programme Integrated Grant for Provinces allocation in the 2012 Division of Revenue Amendment Bill to reflect the correct department name of Environment and Nature Conservation that receives the allocation from the grant instead of Economic Development and Tourism as shown in the 2012 Division of Revenue Bill.

The above three corrections need to be effected through a Government Gazette as required in terms of section 15(3)(b) of the 2012 Division of Revenue Act.

6 Recommendation

The Standing Committee on Appropriations, having considered the Division of Revenue Amendment Bill [B33 – 2012] (National Assembly – section 76(1)) referred to it and classified by the JTM as a Section 76(1) bill, recommends that the Bill be adopted, without amendments.

Report to be considered.