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The Standing Committee on Appropriations (Scoa) yesterday adopted its report on the 2019 Division of Revenue Bill [B5—2019]. The section 76 Bill, which determines the equitable division of nationally raised revenue among the three spheres of government, was referred to the committee on 6 March 2019.

One of the key features of the report highlights the committee’s concern around the capacity of provincial and local government to spend conditional grants, and the subsequent R3 billion reduction in the Human Settlements Development Grant (HSDG).

The committee highlights in its report, the need for the National Treasury to investigate the department’s use of conditional grant funds. This follows the National Treasury’s explanation on the reduction, which they attribute to a mismatch between the department’s performance and expenditure. Officials told the committee that a number of provinces have been transferring HSDG funds to Housing Development Agencies, creating the impression that the HSDG funds have been spent while the grant remains unspent in the agencies’ account. Officials reported that the National Treasury had revoked more than R1 billion in surplus funds from the Housing Development Agencies in 2018.

The report include inputs received from stakeholders such as the National Treasury and the Financial and Fiscal Commission (FFC) as required by section 9 (7) (a) of the Money Bills Act, and both the written and oral submissions were received during the committee’s public hearings held on Friday, 8 March 2019.

One of the submissions received from the South African Local Government Association (Salga), for instance, raised concerns about the underfunding of local government by approximately R55 billion. Salga is of the opinion that this could be filled by restructuring conditional grants in terms of flexibility and maintenance, but also by reviewing the municipal demarcation to focus on financial viability, among other things.

Another submission, received from the Western Cape Forum for Intellectual Disability (WCFID), highlighted issues around the Learners with Profound Intellectual Disabilities Grant. The WCFID expressed concern that the grant reportedly excluded the majority of the requirements of the court order handed down by the Cape High Court on 11 November 2010. This court order included the provision of funding to centres that look after the needs of these learners, for adequate staff and facilities, as well as transport for the learners at these centres.

The committee’s findings, observations and recommendations take into consideration all the submissions received and the country’s current financial climate. Its report emphasises, among other things, the need for the Department of Cooperative Governance and Traditional Affairs (CoGTA) to investigate if provinces and municipalities have the requisite implementation capacity before conditional grants are introduced.

It further emphasises the need for municipalities to improve their revenue management, billing and debt collection systems, as to avoid using the Municipal Infrastructure Grant for things other than its intended purpose. The committee’s report will be tabled in the National Assembly on Wednesday, 13 March 2019.

By Felicia Lombard

13 March 2019