Division of Revenue Bill & Second Adjustments Appropriation (2023/24 FY) Bill: Public Hearings

Standing Committee on Appropriations

13 March 2024
Chairperson: Ms D Mahlangu (ANC, Mpumalanga) & Mr S Buthelezi (ANC)
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Meeting Summary


The Standing Committee on Appropriations and the Select Committee on Appropriations convened jointly to receive briefings from various organisations, including Equal Education, the Public Service Accountability Monitor, the  Rural Health Advocacy Project, the TB Accountability Monitor, the Western Cape Children’s Commissioner , Amandla.mobi,  Budget Justice Coalition,  Section27, and the Congress of South African Trade Unions, on their comments regarding the Division of Revenue Bill [B4 – 2024] and Second Adjustments Appropriation (2023/24 FY) Bill [B6 – 2024].

The concerns raised included budget cuts across government in the run up to 2023’s medium-term budget policy statement (MTBPS), the stalling of the Basic Income Grant, rising unemployment, the calculation of the Equity Share Formula, Basic Education Conditional Grants and Health Care Conditional Grants.

It was of great concern among all the organisations the trend of disinvestment in public service allocations where the value of these investments which would likely impact the quality of provincial service delivery, freezing of the Early Childhood Development (ECD) subsidy value at R17 per child per day. The 2023/24 Division of Revenue Amendment Bill cuts R58 million from the infrastructure component of the ECD conditional grant.

Some recommendations included participatory human rights impact assessments to be applied as a measure to protect the most marginalised learners and people in this country, the stopping of budget cuts to public service, education projects, school infrastructure development, school nutrition programmes, youth unemployment programmes, filling of vacancies in the public service, clear plans for the Basic Income Grant and holding those holding local government offices accountable.

Members expressed frustration over the overwhelming problems listed in the various presentations. They found it difficult to disagree with the requests and recommendations made by the organisations.

Local government service delivery is really where ordinary people feel work being done. There are all these problems with municipalities, but the most pressing issue is cadre deployment. Should the state not rather be employing people who are fit for purpose rather than people with whom they have a particular political alliance with? Members asked what COSATU thinks could have been done differently. What does COSATU think could have been done differently with the budget and the Division of Revenue Bill? With SA’s population growth, what does COSATU think about having a balance between the public servants and the population while ensuring that service delivery is provided by those public servants? Many public servants work very hard and have long hours, so what then is the appropriate ratio between public servants and the population? What specific steps should be taken to turn around the situation with Transnet without using government bailouts?

A Member proposed a radical approach with these problems, such as dismissing ministers – especially with the Human Settlements Department. Directors-General should be dismissed because they are the ones who deal with the budget. The Ministers must be held to account as to why these funds were not spent.

The Chairperson remarked that the most important thing for the budget to do was to take care of the most vulnerable in society. The budget is funded through taxes and through borrowing to cover the deficit. However, the issue with a state borrowing funds is that it could become difficult to hold onto its sovereignty if the International Monetary Fund starts cutting the social welfare budgets.

Meeting report

Opening Remarks by the Chairperson
The Chairperson welcomed everyone to the meeting, and the apologies were noted. The Chairperson stated that each of the presentations should take a maximum of fifteen minutes to present. Members were also asked to keep their questions brief and move straight to their relevant questions.

Equal Education Law Centre Submission
Dr Elizabeth Biney, Head of Research: Equal Education, started off by introducing the delegates from Equal Education and the individuals who would be delivering the presentation.

Mr Mahfouz Raffee, Researcher, Equal Education, started the presentation by giving an overview of what Equal Education does, speaking about how exactly budgeting for Human Rights needs to occur. He mentioned that the main tenets of obtaining education are universality, equity and redress.

He explained that education funding depends on a number of things such as enrolment numbers, sufficient number of classrooms and teachers, so that everyone can be accommodated. Given that basic education is an immediately realisable right now, it could not be denied to a child just because of budget constraints. This means government must maximise the available funds to provide education and other socio-economic rights. The problem currently being faced is that learners at many non-fee-paying schools are under-resourced, overcrowded and ill-equipped, and these disparities could grow. Any budget cuts to the Department of Basic Education are subject to a greater level of scrutiny because the right to basic education is an immediately realisable one. The current budget cuts are across the board and not just with Basic Education, and this is causing a negative effect in the education sector. He recommended that the budget withstand constitutional scrutiny by reversing cuts and ring-fencing the children’s budget. Further, he stated that the Equitable Share formula be revised so that there is real equality division of the budget.

National Treasury needs to commit to a timeline for public participation while also being transparent with this education budget review. The education component of the budget is determined by the school-going population, and it does not provide for the needs of different schools in different parts of the country. The equity share needs to account for scholar transport, the building of infrastructure in rural areas, supply chains are different and the different quintile systems.

On the different quintile systems, he said that only 40% of schools in the Western Cape are non-fee-paying schools, but 77% of schools in Limpopo are non-fee-paying schools. The problems of a particular area not being analysed. Instead, the budget only looks at the education inequities as a whole rather than contextually. Mr Raffee also stated that the poverty component is only given a three percent weighting. Furthermore, KwaZulu-Natal will only provide a subsidy of R955 per learner at non-fee-paying schools. However, the National Norms and Standards for School Funding prescribes a minimum subsidy of R1 627 per learner at non-fee-paying schools.

Mr Raffee presented a table of the school infrastructure which showed the order of magnitude value. This table shows a list of priorities, the cost of these priorities, the time it will take to eradicate the priorities, and the annual investment in the listed priority. The diagram also included a list of maintenance requirements for these projects, the capital investment, the cost of maintenance, and the total investment for these priorities. He advised that, to meet these priorities by 2023, there would need to be an investment of R40 billion each year.

Mr Raffee recommended that the value of the Education Infrastructure Grant be increased to R19.9 billion, as this will allow provinces to address the most pressing infrastructure backlogs. He also stated that the value of the School Infrastructure Backlogs grant increased to R6 billion for schools in need of urgent infrastructure. This included sanitation facilities and classrooms.

Moving to the Early Childhood Development (ECD) sector, he said that it was recommended that there be an increase of the value of the ECD subsidy from R17 to at least R46 by 2029. There has been a reprioritisation of the funds necessary for nutrition support, even though this programme was already negatively affected due to budget cuts. These centres need to be fully equipped to also be able to pay the employees’ living wages.

Moving to the Learner Teacher Support Materials (LTSM), Mr Raffee reported that R97 million has been cut from the budget which has been used for learner workbooks. He added that cost-containment measures will affect the quality of workbooks for the entire year. These cost-containment measures need to be stopped so that learners can have high quality workbooks.

Mr Raffee explained that the National School Nutrition Programme (NSNP) is a poverty alleviation programme. Here, National Treasury needs to revise the estimates of food inflation figures so that the figures are more consistent with the status quo.
On teacher training, the Funza Lushaka Bursary Scheme has also received some budget cuts. Currently, there are only 9 000 students being funded by this bursary, and 13 000 students were previously funded by this scheme. The plan is to increase this to 10 000 students. It has been planned, especially for funding to postgraduate education students, but the plan has not come to fruition.

The recommendation provided here is to prioritise teacher training through sufficient funding to the Funza Lushaka Bursary Scheme and to reverse the bursary withdrawal from PGCE students.

Only R4 billion has been allocated to the Presidential Youth Employment Initiative, which is concerning because this initiative hires teacher assistants through the Basic Education schools employment. There needs to be a reversal of cuts to this initiative to support job creation and educational services. Mr Raffee stated that there is a serious education funding crisis impeding the right to basic education. Treasury needs to consider this when considering budget cuts, as the right to basic education is an immediately realisable right in the Constitution.

See attached for full submission

Public Service Accountability Monitor (PSAM): Submission on the 2023/24 Second Adjustments Appropriation Bill
Ms Lisa Higginson, Budget Advocacy Coordinator, PSAM, first outlined what work PSAM does, which is the monitoring of the work done by the public service sector to ensure accountability and transparency, especially when additional adjustments are tabled before Parliament.

The presentation further addressed frameworks for adjustments budget; increasing frequency of additional adjustments; insufficient information regarding additional adjustments; some significant and concerning adjustments; potential impacts; implications and recommendations.

In terms of legislation such as the Public Finance Management Act (PFMA), National Treasury Regulations and Guidelines, Appropriations Act, Money Bills Amendment Procedure and Related Matters Act, and the Intergovernmental Fiscal Relations Act, the Minister is able to place an adjustment before Parliament when necessary, with certain conditions. There needs to be significant and enforceable reasons for these adjustments being made, and these adjustments also need to be voted in by Parliament. These are all for first adjustments that need to be made, but there are no guidelines provided for the second adjustments that need to be made. PSAM enquired about whether these additional adjustments have been tested against the guidelines provided in terms of the frameworks above.

On the increasing frequency of additional adjustments: in the period of 2011/12, there were adjustments made to the additional adjustment Bill for the Gauteng Freeway Improvement Project. This was valued at R5.75 billion.

There were no second adjustments for the period between 2012 and 2021. However, for the period between 2021 and 2022, there were second adjustments made for the July riots and for the purchase of Covid-19 vaccines. For the period of 2022/23, there was another adjustment wage agreements and SOE bailouts. Finally, for 2023/24, there are planned adjustments for wage agreements.

Ms Higginson then moved on to speak about insufficient information. She stated that there is insufficient information on why the adjustments are being made; more information is needed. The Parliamentary Budget Office presentation also provided details on why the second adjustment is needed. Ms Higginson stated that these details should have been included in the Bill. It was not clear from these adjustments where there would be room for public participation and oversight.

Moving to the concerns, Ms Higginson pointed out that there is a proposed R400 million reduction to the Community Works Programme (CWP), R8 million reduction to the Extended Public Works Programme (EWP) and R50 million reduction to Property and Construction Industry Policy and Research. These are particularly concerning given that these programmes offer employment opportunities to marginalised communities. These government employment programmes already provide a small stipend, and then these funds are shifted to already well-paid public servants. She questioned whether this was fair or not.

Moreover, these reductions have been used elsewhere, on priorities such as the compensation of employees and the Represented Political Party Fund. Ms Higginson questioned whether these are within the frameworks of enforceability, being significant and being within budget votes.

Regarding the implications, Ms Higginson stated that the lack of transparency goes against good practice. There needs to be more credibility for appropriation and adjustment. This has an impact on formal oversight and social accountability monitoring. These issues can also cause a fragmented budget process. It is concerning that these budget reductions continue despite this Committee's recommendations in 2023.

The recommendations put forward by PSAM are that there needs to be justifications, and explanations must be included in the second adjustment. National Treasury needs to explain these new trends, and these processes need to be tested against the frameworks to protect budget credibility. Lastly, Ms Higginson stated that the 2023/2024 Bill adjustments must be further interrogated.

See attached for full submission

Submission by the Rural Health Advocacy Project: 2023/24 Second Adjustments Appropriation Bill
Ms Zimbini Madikiza, Outreach and Training Coordinator, Rural Health Advocacy Project, led the presentation by stating that it was encouraging to see Minister Godongwana make direct references to Health, introducing budgeting initiatives that would tackle some of the most pressing challenges. She emphasised that it was only the first step, and more detail was needed to ensure that people's constitutional health rights would actually be realised.

She pointed out that the health needs of rural communities had changed since the establishment of the National Health Act, as it served as a framework and regulation for the provision of equitable quality access to healthcare.

She stressed the need to reassess past and future realities, noting that budgets were still designed to address the health needs communities had about 12 years ago. She emphasised the importance of ensuring that current budget divisions spoke to the improvement of the health system in general and prioritised infrastructure and human resource provision for rural communities, particularly focusing on improving primary healthcare services.

Moving on to the priorities for essential healthcare for rural communities, Ms Madikiza stated that the RHAP research team had conducted a desktop literature review to assess and highlight the progress of South Africa's journey towards achieving universal health coverage in rural districts where RHAP works. She mentioned that data was obtained from the district health barometer, South African Health Review, and Provincial Annual Financial Reports. She emphasised the need for a strengthened primary healthcare and district health system to achieve Universal Health Coverage by 2023, particularly prioritising areas such as reproductive, child, and maternal health, infectious diseases like HIV and TB, and non-communicable diseases such as diabetes.

Regarding service capacity and access, which mainly focuses on staffing and access to medicine, Ms Madikiza welcomed the recent filling of medical officer posts. She stressed the need to address issues of maladministration of rural healthcare worker posts.

Regarding access to quality rural healthcare, Ms Madikiza acknowledged additional provincial budget allocations, including for the Department of Health. She reiterated the need to address the maladministration of rural healthcare posts and prioritise filling these rural posts.

She emphasised the importance of effective coordination of budgets to ensure that constitutional obligations were met and that funds were administered according to the health needs of rural communities.

She called for a joint sitting of the parliamentary Committees on Health, Finance, and Appropriations to prioritise budgets for meeting constitutional mandates, for provinces to present plans detailing measures to protect rural health services from budget cuts, and for the national department to outline plans for the implementation of the National Human Resources for Health Strategy. She emphasised that budget allocations were crucial to meeting constitutional obligations and achieving universal health coverage.

See attached for full submission

Submission by the TB Accountability Consortium: Division of Revenue Amendment
Ms Sihle Mahonga, Project Officer, TB Accountability Consortium, introduced the organisation to the Committee and stated that the presentation would be about continued resilience in funding accountability. She said that, according to the WHO 2023 Global TB report, TB is the second leading cause of death of an infectious disease. In South Africa, around 280 000 people developed TB. Of that, 152 000 are people living with HIV.

Ms Mahonga mentioned that the occurrence of COVID-19 had caused a stalling of the Sustainable Development Goals, the UN High-Level Meetings Declaration, the National Development Plan (NDP), and the National Strategic Plan on HIV, TB, and STIs. Due to this, the TB Recovery Plan, set up as a TB programme intervention to address care cascade loss and accelerate efforts, had been affected. The plan focused on four key areas: finding those with TB, treating those with TB, retaining those on treatment, and putting those who have been in contact with TB patients on preventative therapy.

She explained that TB services were mainly provided for in provincial budgets, falling within the District Health Services grant along with other primary healthcare services. While there had been an increase in the equitable share for District Health Services allocation, there had also been fiscal constraints during the 2023 MTBPS due to large-scale debt relief for Eskom with new energy investments. She expressed concern that, unless TB programme budgets were protected, access to TB services might be compromised.

Ms Mahonga highlighted a marginal decrease in the TB mortality rate within the 2022-2023 period but expressed concern about the trend of TB patients with comorbidities who were unlikely to complete treatment. She called for TB multi-morbidity health policies and better reporting on TB plans, urging for ring-fencing of TB budgets to ensure adequate funds for TB testing and treatment.

Regarding considerations, Ms Mahonga emphasised that the Constitution afforded everyone equal enjoyment of rights, including access to healthcare. She stressed the need for coordinated action, priority, and transparency in TB programme implementation, citing the National Health Act's directive for the Minister to strive to protect, promote, improve, and maintain the population's health.

Lastly, she outlined the organisation's key requests, including the safeguarding of TB funding by the government and the need for improved accountability across all tiers of the health system. She called for a multi-sectoral response involving civil society, and emphasised the importance of prioritising resources to save lives with adequate health services.

See attached for full presentation

Submission by the Western Cape Commissioner for Children on the 2024 Division of Revenue Bill and 2023/24 Second Adjustments Appropriation Bill
The co presenters of this presentation were the commissioner, Ms Christina Nomdo, Commissioner for Children, as well as Ms Liyanda Sokuyeka, Child Government Monitor.

Ms Sokuyeka stated that the Western Cape Commissioner for Children (WCCC) calls for the following recommendations: the development of a child-centred and child-friendly governance system: the consideration of the debt burden on children, avoidance of cuts to social sector spending, and the bolstering child welfare and child protection budgets.

Children analysed budget speech, infographic and PowerPoint and it was determined that the budget documents were not child-friendly. National Treasury has approached WCCC to make budget information more child-friendly. Child-centred budgeting requires application of more technical expertise.

Ms Nomdo then stated that children were invited to try to understand the national budget, and this was in collaboration with PSAM. The children were invited to give their own input and views on the Bill. The children were shocked to see the reduction in children’s services. They also listened to the State of the Nation Address (SONA) and the State of the Province Address (SOPA) – the national and provincial budget speeches. The children have also analysed the Provincial Budget votes. The children will focus this year on the Health and Social Development budget vote in the Western Cape. The reason for this is to try to get children to be part of budget analysis. They have a campaign called #ChildBudgetAnalysis & #FollowTheMoney. The children will work in partnership with the Department of Health in understanding where funds come from and where they get spent.

Ms Nomdo further explained that there should be child-centred and child-friendly budgets.

Ms Sokuyeka then proceeded to speak about the debt burden on children. Children were relieved that the VAT rate was not increased, and they appreciated the ‘climate change’ tax. Children are concerned about the drawdown from the South African Reserve Bank (SARB). There is also concern about early access to retirement pension. Children worry that they will pay high taxes and look after financially vulnerable parents in the future.

Ms Nomdo stated that the debt burden was one of the issues, which the children also analysed further where revenue would be coming from and how this revenue would be spent.

Moving on to social sector funding, Ms Sokuyeka stated that Children were happy about inflationary increases in social grants. WCCC pointed out that the marginal increases of most conditional grants in the social sector and the decreases in the foster care grant allocation and national health insurance grant allocation were confusing. The WCCC understood the nominal increases and decreases as allocations that need to be aligned with inflation. This is where the Committee and National Treasury can explain the necessity for these decreases in the foster care grant allocation and National Health Insurance grant allocation.

Ms Sokuyeka stated that Children understand that provinces receive most of their money from national government. The WC Finance MEC noted that Census 2022 re-ranks WC as the third largest province by population size, not the current fifth ranking. WCCC wishes to understand if the Equitable Share formula will be amended as a result.

Ms Nomdo then said that the WCCC would also like to learn about the equitable share formula – how it is developed and how it will shift with the growing demand in every province. WCCC wants to understand if the formula will be adjusted, how it will be adjusted, when it will be adjusted, and who can provide this information.

Ms Nomdo said that the WCCC always makes a written submission on budget processes in which they have been involved. She then explained that the presentation made was also made for children to understand. She emphasised that the Committee and other organisations present should partner with the WCCC so that younger people can be part of the budget process.

See attached for full submission

Submission by Amandla.mobi: 2024 Division of Revenue Bill and 2023/24 Second Adjustments Appropriation Bill
Ms Tlou Seopa, Senior Researcher, Amandla.mobi, provided an overview of the organisation's work, which focuses on addressing and campaigning for the needs of the most marginalised in society. She explained that, with each presentation made by the organisation, there seemed to be decreasing concern around societal needs. Despite some positive developments, such as the extension of the R350 grant and increases in taxes on alcohol and tobacco, there were ongoing concerns about the adequacy of funding for initiatives like the Presidential Youth Employment Initiative. Ms Seopa highlighted that these decisions by the Treasury could exacerbate poverty among the most vulnerable, as evidenced by the increasing levels of inequality, poverty, and unemployment between 2018 and 2022.

Regarding the R350 grant, Ms Seopa expressed that it was insufficient and did not align with the food poverty line, and suggested it could be expanded into a Basic Income Grant. However, she noted challenges with access due to exclusionary regulations. She also raised concerns about the adequacy of the Child Support Grant and its ability to cover the costs of nutritious meals for children, especially in light of rising food prices.

Ms Seopa mentioned political support for the Basic Income Grant from various parties but stressed the need for clarity on its implementation and funding. She called for increased taxes on the wealthy to fund social grants, and emphasised the importance of transparency from the National Treasury. She highlighted a disconnect between the words and actions of political parties regarding social grants. She cautioned against using economic conditions as an excuse to delay the implementation of the Basic Income Grant.

In conclusion, Ms Seopa urged for concrete plans to implement and fund the Basic Income Grant, emphasising the need for contributions from the wealthy to support the most vulnerable in society.

See attached for full submission

Submissionby Budget Justice Coalition Submission: The Division of Revenue Bill 2024
Mr Elroy Paulus, Advocacy Coordinator, began his presentation by first giving an overview of what the Budget Justice Coalition (BJC) does, which is a collaboration of different organisations, which assists in building people’s understanding and participation in South Africa’s planning and budgeting processes – placing power in the hands of the people to ensure that the state advances social, economic and environmental justice, to meet people’s needs and wellbeing per the Constitution.

Mr Paulus then went on to state that it was disappointing to see the budget cuts and the lack of consideration of the lived experience and human rights of the people of South Africa. The BJC makes a call to Treasury to make due consideration of especially those that are marginalised in the country. Further, Mr Paulus called for urgent implementation of gender-responsive budgeting to protect marginalised womxn from disproportionately shouldering these socio-economic challenges worsened by austere budgeting.

There are clear constraints within the budget, such as a 6.9% cut in the forecasted 2024/25 budget, which means that Treasury cannot effectively allocate funds where resources will not be adequately provided. This continues a trend of disinvestment in public service allocations where inflation erodes the value of these investments - a form of blatant austerity which would likely impact the quality of provincial service delivery. As such, there is a continued call for allocations to the provinces to align with CPI, population growth, and the increased number of people relying on public services.

There was also a note of welcome for the progress reported in the Budget Review on gender-responsive budgeting in the form of the completion of the development of GRB guidelines, and the intention to workshop these this coming financial year. There was an expectation for the 2024/25 Budget to present the first iteration of a gender-responsive budget in the country as a major step in wielding fiscal policy to redress gender inequity. However, there was disappointment expressed at the repeated postponement of enacting a gender-responsive budget to the medium-term budget later this year.

Furthermore, there were concerns raised about the impact of budget cuts on healthcare services for women, particularly on women’s reproductive and maternal health, as well as the disproportionate risk and prevalence of HIV/AIDS that is gendered. Urgent implementation of gender-responsive budgeting was called for, with a commitment to participate in public consultations.

In terms of efforts to "contain" the public sector wage bill, it was emphasised that compensation spending has fallen in real terms for the last four years. Regardless of future wage agreements, the locked-in underfunding of the public sector wage bill was highlighted as concerning, with potential implications for future service delivery.

Regarding conditional grants, it was noted that, while allocations had increased, reversals of cost containment measures towards certain grants were welcomed. However, concerns were raised about nominal cuts to certain grants, which could further disenfranchise marginalised learners who rely on these programmes and interventions.

In the education sector, there were concerns about proposed budgets that disinvest in basic education, with nominal increases not keeping pace with inflation and increased learner enrolment. There were also calls for increased support for early childhood development (ECD) and addressing the pressing issue of the Education Infrastructure Grant (EIG) funding.

In terms of healthcare, there were concerns about proposed cuts to the comprehensive HIV/AIDS component of district health programmes, with implications for underspending and gender considerations overlooked. The importance of adequate funding for health facility revitalisation grants was emphasised, particularly in the context of infrastructure backlogs and climate resilience.

Concerns were also raised about municipal revenue models, with recommendations for studies to explore options to alleviate challenges, and calls for greater transparency and accountability in municipal billing practices. Additionally, recommendations were made for revisions to the Public Procurement Bill to address concentrated powers and strengthen institutional frameworks in order to prevent corruption and uphold standards of public service delivery.

See attached for full submission

Submission by Section 27: 2023 Division of Revenue Bill [B4-2024]
Ms Matshidiso Lencoasa, Budget Researcher at Section 27, gave an overview of the work which Section 27 does – campaigning and advocating for the right to basic education and access to healthcare to everyone. She said that the challenges faced by South Africa, particularly regarding severe economic conditions and the impact on marginalised communities, require urgent attention and action.

The prevalence of Severe Acute Malnutrition (SAM) and malnutrition-related deaths among children in the Eastern Cape highlights the severity of the situation. Additionally, high unemployment rates, especially among qualified professionals like doctors, teachers, and nurses, exacerbate the strain on public services, leading to poorer quality services for users.

Policy, legislation, and funding must be wielded effectively to alleviate the suffering experienced by people in the country. Despite budget cuts, it is crucial to protect the constitutional rights to basic education and healthcare for all citizens. Gender-responsive budgeting is essential, and there is a need for urgent implementation to address the disproportionate impact on women, who constitute a significant portion of the public sector workforce.

Recommendations include public workshopping of GRB guidelines to allow women to shape the national budget effectively. Moreover, a gendered lens should be applied to decisions on the public sector wage bill, considering the high representation of women in critical sectors like nursing and teaching.

The equitable share allocation, while increased, is still below the CPI inflation rate forecasted for the period, limiting resources for core functions. Chronic understaffing in the public health and education sectors is attributed to budget constraints, which affect service delivery and exacerbate existing challenges.

In education, despite a nominal increase in funding, there are concerns about the real impact due to inflation. Cuts to programmes like the Funza Lushaka bursary scheme hinder access to education, particularly for marginalised groups. Similarly, in healthcare, while there is a nominal increase in funding, it is insufficient to cover inflation-linked wage increases, leading to staffing challenges and overworked healthcare professionals.

The funding situation for mental health and HIV/AIDS services is particularly worrying, with proposed cuts that could worsen already dire situations. There is a need for redirected funds to strengthen health systems and scale up interventions to address these critical health issues effectively.

Investment in basic education must prioritise addressing infrastructure backlogs and ensuring adequate resources for safe and quality education provision. Similarly, programmes like the National School Nutrition Programme need continued support to address child hunger effectively.

In conclusion, a human rights-based approach to funding allocations, conditional grants, and fiscal policy is crucial to alleviate the hardships faced by millions of people in South Africa. Participatory human rights impact assessments and gender-responsive budgeting are essential tools in this effort to overcome inequality and build a more inclusive society.

See attached for full submission

Submission by COSATU: 2024/25 Budget for the Division of Revenue Bill & 2023/24 Budget for the Second Adjustments Appropriation Bill
Mr Matthew Parks, Parliamentary Coordinator, Congress of South African Trade Unions (COSATU), began his presentation by acknowledging some positive aspects of the budget allocations and interventions in certain sectors. However, he highlighted several pressing issues, including budgetary cuts, slow economic growth, and various challenges facing South Africa:

- High Unemployment: South Africa is grappling with 41% general unemployment and 59% youth unemployment, exacerbating social and economic challenges.

- Crime and Corruption: Endemic crime and corruption continue to plague the country, undermining social cohesion and economic progress.

- Infrastructure Challenges: The country faces challenges such as load shedding, with cable theft affecting railways, inefficient ports, and dysfunctional municipalities, particularly in provinces like the Eastern Cape, North West, and Free State.

Poverty and Inequality: South Africa continues to grapple with ingrained poverty and inequality, exacerbating social tensions and hindering inclusive development.

Mr Parks expressed concern about misguided austerity measures, emphasising the need for a more nuanced approach to budget cuts and expenditure prioritisation. He stressed the importance of stimulating the economy and investing in public services to address systemic challenges effectively.

Regarding the Division of Revenue Bill, COSATU acknowledged the need for adjustments in allocations due to under-expanditure and new priorities. However, the union stressed the importance of protecting workers' wages and rebuilding collective bargaining mechanisms to avoid future budgetary adjustments.

Regarding specific allocations to provinces and sectors, COSATU welcomed initiatives such as the Letsima Programme for emerging farmers and investments in basic education, particularly in early childhood development. However, there were concerns about budget cuts affecting critical areas like the Presidential Youth Employment Initiative and the Department of Human Settlements.

On local government, he highlighted widespread financial distress among municipalities, with many struggling to pay staff wages and provide basic services. He called for increased oversight and intervention to address these challenges effectively.

Mr Parks then went on to list the municipalities which continuously fail to pay their workers, these are:

- Eastern Cape: Amathole, Amahlati, Raymond Mhlaba, Enoch Mgijima and King Dalindyebo.
- Free State: Matjhabeng, Mohokare, Kopanong, Masilonyana, Tokologo, Maluti a Phofung, Mafube & Letsemeng.
- Northern Cape: Magareng, Renosterberg, Kama Kheis, Thembelihle and Kai !Garib.
- North West: Ditsobotla, Lekwa Teemane, Ratlou, Kgetlengrivier, and Mamusa.
Limpopo: Fetakgomo-Tubatse, Aganang/Polokwane & Modimolle-Mookgophong.

In conclusion, Mr Parks proposed various measures to stimulate the economy, including reducing taxes on fuel, expanding employment programmes, and filling critical vacancies in the public service. He emphasised the need for a sustainable path to rebuilding the state, growing the economy, and creating jobs, underscoring COSATU's commitment to engaging with the government to achieve these goals.

See attached for full submission

The Chairperson appreciated the presentations by the different organisations, and said that it was especially good to see the many young people being part of these civil society organisations and calling for drastic changes in the budget process.

Mr M Moletsane (EFF, Free State) asked the Rural Health Advocacy Project whether the intervention of government providing more funding for unemployed doctors has addressed this issue in totality. What should be done to address this challenge? Mr Moletsane then posed a question to COSATU, about the culprits in some Free State municipalities in that they fail to pay workers. Is there any intervention to resolve this bad practice? If COSATU did make any invention, what was it? Is the union succeeding in resolving this matter?

Mr W Aucamp (DA Northern Cape) thanked the presenters for their presentations. He said that there was a lot of valuable information to grasp. Mr Aucamp stated that he shared sentiments around worries to the country’s growth rate, and that it would be difficult to get out of the current national problems without economic growth. Local government service delivery is really where ordinary people feel work being done. There are all these problems with municipalities, but the most pressing issue is cadre deployment. Should we not employ people who are fit for purpose rather than people with a particular political alliance? Mr Aucamp also asked what COSATU thinks could have been done differently. What does COSATU think could have been done differently with the budget and the Division of Revenue Bill? Could COSATU outline the steps that Treasury can follow for future budget processes?

With SA’s population growth, what does COSATU think about having a balance between the public servants and the population while ensuring that service delivery is provided by those public servants? Many public servants work very hard and have long hours, so what then is the appropriate ratio between public servants and the population? What specific steps should be taken to turn around the situation with Transnet without using government bailouts?

Regarding the Rural Health Advocacy Project, with the research on progress in achieving health in rural districts, which has been presented to the relevant authorities, how effective have the district health programmes been in addressing some of the challenges? What specific steps should be taken by government to ensure that there is adequate access to quality healthcare resources allocated to these communities?

Going back to COSATU, the issue of human settlement was quite concerning. About 45% of the funding in the 2022/23 period was not spent. Certain areas in this sector could have received assistance if this funding was fully used. There have also been large cuts for informal settlements. What should be done about this so that services can be delivered to these communities?

The Chairperson then stated that it is vital that the needs of communities are put first. There is talk of qualified doctors and nurses who are unemployed. On the other hand, there is also a shortage of teachers, nurses and doctors – which negatively impacts basic education and healthcare services.

Mr Y Carrim (ANC, KZN) expressed frustration over the overwhelming problems listed in the various presentations. He said that no one can disagree with the requests and recommendations made by the civil society organisations. There are constraints on the part of portfolio members, which should be taken into consideration. Portfolio Committees do all they can to hold the executive branch of government accountable. What is it that we can do to ensure that the system of exchange does not have repetition? There should be a forum where civil society can come together to address their concerns and pick out the most pressing items from their list and bring these to the Portfolio Committee.

Mr Carrim proposed a radical approach to these problems, such as dismissing ministers – especially with the Human Settlements Department. Directors-Generals should be dismissed because they are the ones who deal with the budget. The Ministers must be held to account as to why these funds were not spent. “We should be taking a more conscious step in taking to resolve these problems”, he said. Can there not be a much stronger view on the BIG? Can the incoming committee not be ensure instructed to ensure that steps are taken to bring forward the BIG within six months?

Moving on to cadre deployment, Mr Carrim said this is abused with most municipalities applying cadre deployment. He reiterated that there needs to be a forum created for civil society organisations to come together to address their concerns with Parliament. The Committee needs to engage with the civil society organisations.

Ms T Tobias (ANC) addressed PSAM and stated that the entity was not shown any information on the procedure for these second adjustments. When a quarterly report is presented, it reflects these adjustments and these are government legal documents. Ms Tobias asked Ms Higginson to elaborate on what she meant by a lack of information on how these second adjustments are made. When second adjustments are being made and when they come before the Appropriations Committee, these documents are made available to the public.

Mr X Qayiso (ANC) addressed Section 27 and made a proposition for the next coming committee. The issue he spoke to was that of pit latrines, asking about where these pit latrines are located. Some oversight needs to be done around what a pit latrine is. Mr Qayiso further went on to agree with Mr Aucamp on cadre deployment and stated that it is an ongoing practice within the ANC and the DA.

The Chairperson requested that Mr Aucamp not respond to the issue of cadre deployment addressed by Mr Qayiso.

Co-Chairperson Buthelezi thanked the presenters for their presentations. He reiterated Mr Carrim’s sentiments that no one can disagree with the fact that major problems need to be resolved. He explained that the most important thing for the budget to do was to take care of the most vulnerable in society. The budget is funded through taxes and through borrowing to cover the deficit. However, the issue with a state borrowing funds is that it could become difficult to hold onto its sovereignty if the IMF starts cutting the social welfare budgets.

Regarding the weak economy, revenue needs to increase and the question is how the different civil society organisations put in measures for economic growth to the level of five percent for economic growth. Mr Buthelezi also asked how inclusive economic growth can be ensured. The concerns raised by PSAM about transparency need to be addressed. He agreed that when decisions are being made, there needs to be clear information on how these decisions are being made. He emphasised that it is important to place more focus on the generation of revenue.

The Chairperson asked Equal Education regarding the recommendations made on the committee reversing the cuts and ring-fencing the children’s budget and whether Equal Education could assist the committee by identifying the specifics in terms of the budget cuts.

The next question was about school infrastructure. These questions and issues would need to be addressed with relevant department and specific committees. The Chairperson requested that specific questions to sector departments be raised with those relevant sectors so that the questions can be fully answered.

The Chairperson stated that this Committee will pass the Division of Revenue Bill, which contains the Education Infrastructure Grant & School Infrastructure Backlog Grant. These recommendations can go to both houses of Parliament. So, these civil society organisations need to effectively recommend on how their proposals need to be implemented. She further asked for Equal Education’s view of school rationalisation programmes which the Department of Basic Education is implementing. How can they be improved to ensure a smooth transition?

Dr Biney (EE) responded to the questions by the Co-Chairperson and the Chairperson. She stated that since Equal Education is not made up of economists, it cannot specifically address how funds can be generated. Since the entity does not have the expertise, it could spread misinformation and cause or create confusion. The budget is a tool for transformation and highlights important areas for the Committee and government. Dr Biney stated that the entity understands the complexities that come from the budgeting process, so it cannot come up with where the funds for allocation can come from. The issue that comes to mind is that public consultations only occur after a Bill has been proposed, which means that, regardless of the recommendations that the presenters have put forward, the Bills will be passed as they are. It is difficult to know how civil society groups will be able to influence policy decisions before a bill/policy is passed. The budgetary process is reflective of the recommendations made and of the people that it is meant to serve.

Regarding the ring-fencing of children’s budgets, Dr Biney stated that South Africa has made a commitment to the UN Children’s Commissioner that it will ring-fence children’s budgets. Children’s rights should be protected and not be subjected to austere decisions. Equal Education mainly focuses on infrastructure grants and teacher provisioning. These are the outcomes that learners are supposed to enjoy in terms of their right to basic education. She further stated that any right that impacts a child’s right to education is within the purview of Equal Education, and this needs to be constitutionally protected. The right to education is an immediately realisable right so it needs to be a top priority to safeguard this right.

Dr Biney took note of the sentiments that some issues raised are not within the purview of the committee. Equal Education does not just deal the current two committees, but there are several other committees that it deals with. The information that was presented to these two committees had already been presented to other respective committees. Dr Biney explained that Equal Education deals with all stakeholders, money and policy stakeholders.

On school infrastructure, as one of the children’s rights being eroded, Dr Biney also stated that it is important to look at the environment where children learn, not just if learners have textbooks or sufficient teachers. Infrastructure has a direct impact on achieving educational outcomes. She said that funding education needs to occur broadly and holistically. Infrastructure almost undermines the gains that have been made otherwise. So, if the interventions are not accurately addressed, this is a real concern for Equal Education.

Regarding school rationalisation, Dr Biney stated that the process around it causes problems. Public participation, when not done properly, will receive resistance. The Department of Basic Education needs to do a proper needs analysis and find schools that are not viable and do not provide resources to them.

Mr Parks (COSATU) then spoke about the Free State being at the centre of local government problems. He responded that COSATU has put in quite a few interventions, such as marches, meeting the mayors, meetings with the Minister and the president of the South African Local Government Association (Salga). He admitted that these are not sustainable solutions to these problems, and that a sustainable solution would be about what is the right model to follow with local government.

Regarding Mr Aucamp’s question about cadre deployment, Mr Parks answered by stating that the country has public servant regulations. An example of such is that, if an official is the head of electricity, they need to have some sort of electrical engineering background. However, people in the municipalities choose to ignore these requirements and hire friends or family members for these positions. Mr Parks also stated that there needs to be growth in the economy, especially in terms of revenue generation.

The budget can be cut in whichever way, but this is not really a solution as it will just cause a brain drain with people looking for more lucrative jobs overseas. Support has been given to Eskom in the increase in the budget, and this is similar to SARS and PRASA. With SARS, there has even been a filling of vacancies which has significantly impacted its efficiency. This kind of work also needs to be done within the SETAs, the police, other sectors, and the labour markets. He stated that society benefits when public service is invested in. There is funding for infrastructure in the budget, and it needs to be adequately used.

Intervention programmes have been put in place; hopefully, these will bear fruit. Mr Parks hoped to see more investment into services with frontline services. Youth unemployment grants are constantly being cut, leading to a growing unemployment rate in the country. These grants have not been accordingly adjusted for the rise in inflation. More support needs to be given to law enforcement programmes to fight crime. This goes hand in hand with SARS doing well to improve tax compliance.

There needs to be serious intervention on the wage bill, and it needs more investment. Within Eskom, a competent manager needs to be appointed, and the utility needs support on its debt relief as this can encourage more investment. Staff jobs need to be secure and to make sure that their skills are being invested into.

On the issue of Transnet, he said that copper cable theft is a serious problem that needs to be addressed, but an alternative to copper needs to be found as it is impossible to keep criminals away. Lastly, Mr Parks said that there may be a budget reprioritisation of the funds allocated to Human Settlements, and then these funds would perhaps be put into local government.

People should then rather be given land to build their own homes. COSATU supports the idea of tapping into the Reserve Bank Reserves and not going to the IMF and rather fixing the problems internally. Unemployment fell by five percent last year. The country also did far better with dealing with COVID-19 than many other countries.

In answering Mr Carrim’s question on repercussions on Ministers and Directors-General, Mr Parks agreed that Parliament is lenient with them.

Ms Lencoasa (Section27) addressed the question of public participation. She stated that there were pre-budget consultations piloted in 2022 with the fiscal open accelerator, but there was not much movement beyond that. She advised that this was a powerful intervention to ensure that there is public participation ahead of the budget, as the budget would be better shaped by the people affected by it.

Regarding the question on the pit latrines, she said that the 800 pit latrines are from the DBE’s website. This explains how many pit latrines are in the country and where they are located.

Regarding the constraints to solutions, Ms Lencoasa stated that there are people in the respective civil society organisations who can assist with budgets and who do have backgrounds in economics and finance and can propose recommendations. These recommendations sometimes do get implemented. So, platforms like these committees do assist in advocating for change in society.

Regarding struggling to make revenue, certain programmes which are attached to constitutionally protected rights must not suffer simply because there is a shortage in revenue. Tough decisions need to be made but human rights still need to be respected and fulfilled. The recommendations show the power of the budget and how it can be used to benefit the most vulnerable; to end suffering and to protect people in the country.

Ms Nomde (Western Cape Children’s Commissioner) asked the Chairperson to implore National Treasury to make the budgeting process child-friendly and consider the needs of children.

Ms Sokuyeka was happy to be part of the platform and commended everyone on the reports which they made. She was happy to hear many of the organisations speaking about children’s issues such as education, healthcare, mental health, and nutrition. She noted that certain terms were used in the presentations that certain people would not be able to understand. Perhaps simpler terms need to be used.

Ms Higginson (PSAM) stated that when information is unavailable, people are left speculating about the budget. She explained that the documents, which are available to be viewed by everyone, are simply just not enough to understand the adjustments that need to be made. As a minimum, an explanatory note needs to be included to these documents for adjustments to be made so that it is clear why the adjustments are being made.

Ms Zukiswa Kota, Programme Manager, PSAM, explained the frameworks as per the question asked by Ms Tobias. She explained that PSAM is the biggest champion for accountability around public finance. Regarding the issues around the second adjustment appropriations, there is no clarity on why there is an increase in allocation. There needs to be concrete justifications for the increase in allocation. This will ensure budget credibility and openness, which are especially important for democracy. There could be higher risks of budgeting if these concerns are not addressed. Ms Kota advised that, after quarterly reports have been made, the relevant accounting officer can come back to Parliament to explain where the changes are useful and needed.

Ms Kota examined that there must be a pre-emptive explanation that these framework requirements are satisfied. Treasury needs to place emphasis on the availability of these reports and that a platform for dialogue is strengthened and that there are no possible regressions.

Mr Paulus (BJC) answered the question on the civil society forum. He explained that there was previously such a forum with discussion on certain issues with 21 civil society organisations. He explained that the BJC is a forum that was described by Mr Carrim as being formed in the late 90s.

Ms Madikiza (RHAP) answered the question about the extra budget for doctors. She explained that these unemployed doctors need to be allocated to ensure that those in greatest need are prioritised. With the National Human Health Resource Strategy, this is a solution that could be useful in terms of having transparent engagements with provinces in terms of developing HR plans. This will prioritise the area in need. Regarding progress for district health programmes, this does paint a picture regarding the provision of primary healthcare system. An example would be ensuring that medication is available to these communities and that they do not have to travel long distances to access basic needs and make use of their constitutional rights.

Regarding monies that are being spent, there is a need for ethical leaders that will not view associability as an attack, but rather as a solution to social justice. Ms Madikiza stated that coordinating resources is one of the most important things that drives the medication, money, and workforce. This is very important for transparency. It would be helpful to say that, when the national Health Department asks for funds, they include civil society, even at local government. This means the condition of these programmes.

Ms Tobias stated that the issue with PSAM was whether certain material would be disclosed. She wanted to know whether there was a specific budget which she wanted to be disclosed to the public so as to see what exactly they could engage on.

Ms Kota answered Ms Tobias’s question about whether there was an example of a budget that PSAM wanted to disclose. She stated that they especially looked at the NPA which was set to receive additional funding in the second adjustment Bill. This is not necessarily a lack of transparency but rather no justification for a particular action being taken. She stated that Treasury guidelines have a clear stipulation on the explanations that must be provided. The recommendation is that the second adjustment should have similar obligations to explain in detail on what the adjustment is for and why they are being made.

An apology was received from Mr N Kwankwa (UDM) for his absence.

The committees would hold another meeting on 15 March 2024.

The Chairperson thanked everyone for the time spent with the Committee and raising issues relevant to communities and campaigning for their rights.

The meeting was adjourned.

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