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A joint meeting of the Standing and Select Committees on Appropriations yesterday (Thursday, 8 November 2018) received a briefing from the National Treasury on the 2018 Division of Revenue Amendment (DORA) Bill and the Division of Revenue in the 2018 Medium Term Budget Policy Statement.

Members of the committees posed various questions relating to the reprioritisation of resources as stipulated in the 2018 MTBPS. Mr David Maynier said the above-inflation public wage bill agreement is an unfunded mandate and places a grave burden on provinces, which were neither included in the discussions when the agreement was made or given additional funds to cover these costs.

During his presentation of the MTBPS, Finance Minister Tito Mboweni said the public service wage agreement exceeds budgeted baselines by about R30.2 billion over the medium term. Mr Maynier thus enquired why the cost to cover this was not included as part of the Bill.

Ms Malijeng Ngqaleni, Head of Intergovernmental Relations of the National Treasury, said the process of negotiations did include provinces; albeit it may not have gone all the way in what was expected. Ms Ngqaleni said the fact that the National Treasury is unable to allocate more money to provincial and local government, is an acknowledgement of the limitations in the fiscal framework which does not allow resources to be shifted from other areas to address the challenge around the public wage bill.

The agreement is that provincial and local government must try to manage and find the tools to build on to what government can afford. While the National Treasury remains committed to resolving the outstanding debt owed to municipalities, changing the culture of non-payment within government and improving consequence management for those that do not meet the 30-day payment requirement in the Public Finance Management Act (PFMA), Mr Munzoor Shaik Emam wanted to know how the National Treasury ensures compliance to this, since this remains an ongoing challenge in government departments and municipalities.

He also wanted to know how the National Treasury deals with the fact that the Urban Settlement Development Grant (USDG) often goes unspent. The National Treasury said this is a government problem, there has to be accountability. The executive should hold their Heads of Departments (HODs) accountable in terms of complying with the law. It starts at the top by holding the executive accountable. There is a concern when departments do not spend what they are supposed to, this could be attributed to the lack of planning and timelines. As part of the stimulus, the National Treasury is putting much more effort into preparation, which will ensure value for money is prioritised in all departments.

The National Treasury reported that “R800 million is added to the Indirect School Infrastructure Backlogs Grant for the completion of school infrastructure projects where plans have already been approved and are ready for implementation”. Mr T Motlhashuping said there are a number of mud schools, many which face sanitation issues. He enquired whether the grant makes provision for these schools and whether the grant prioritises the severe sanitation challenges which have led to a number of deaths in rural school pit toilets.

The National Treasury said the School Infrastructure Backlogs Grant is an indirect grant which is spent on behalf of provinces by the national department. It is targeted at specific projects which can be found under the Accelerated Schools Infrastructure Delivery Initiative. The conditional grant framework states that the purpose is to “eradicate all inappropriate school infrastructure, and to make provision for water, electricity and sanitation to those schools. It is thus specifically targeting those schools, although it does not go to all the provinces. The Schools Infrastructure Backlogs Grant thus stands alongside the Education Infrastructure Grant which goes to all the provinces to ensure that everyone gets their fair share.

Mr Ockert Terblanche questioned the reprioritisation of R100 million which will be used to fund the Department of Public Works (DPW) to resolve the ownership of buildings and register them correctly on the deeds registry. He said this exercise was done before and consultants were paid large amounts to conclude this process.

The National Treasury said there had indeed been previous efforts to address this, the most recent of which concluded that there are a large number of cases where the deeds are not properly recorded. This they said, was an identification process, not a resolution process, hence this allocation is intended to resolve the problems identified. The responsibility for paying the bills on these properties does not lie with the DPW, it (the DPW) is the custodian of government buildings, but the responsibility for payment resides within the departments which operate from those buildings.

The committees will this week continue their briefings with stakeholders such as the South African Local Government Association (Salga) on the Division of Revenue Amendment Bill [B34 - 2018] tabled by the Minister of Finance in Parliament on 24 October 2018, during the presentation of the 2018 Medium Term Budget Policy Statement.

By Felicia Lombard

9 November 2018