Debate On The 2011 Division of Revenue Bill
By Roman Liptak MPL
Shadow KZN MEC for Finance


KZN Legislature Pietermaritzburg: 1 April 2011


Madam Speaker 

The Division of Revenue Bills continue to show a bias towards a centralised government. The current Bill allocates the bulk of funding to the national government, 44.3 percent to the nine provinces and only 8.7 percent to South Africa’s 278 municipalities. It appears that the closer one gets to the frontline of service delivery, the less government funding one can hope to receive. This distribution formula, which reflects the government’s top-down approach, has to change if we are to deliver services to our people more effectively. 

The Division of Revenue Bill before us today contains a number of useful innovations. One of them is improved oversight of conditional grants by National Treasury. This includes the steps National Treasury is now taking to re-allocate unspent conditional grants between provinces. I spoke about this issue at length during yesterday’s debate on the Second Adjustments Estimate Bill, which we supported in the hope that it would improve our spending capacity.  

But the improved oversight of grants by National Treasury does not absolve this House of its own oversight responsibilities. This Division of Revenue Bill contains details on all allocations and each individual grant: its purpose, criteria for allocating the grant, and an account of the performance of each grant. Such information is vital for deepening parliamentary oversight over the Executive and we, as Members of the Legislature, must use it to the maximum benefit in our portfolio committees. 

Another innovation in the current Division of Revenue Bill is the phasing in of some notoriously under-spent conditional grants, such as the Hospital Revitalisation grant, into the relevant department’s equitable share. We support this move because we believe that it will allow for greater flexibility in the spending of the grant across several projects. The more direct approach to the funding for disaster management must also be welcomed since it caters for immediate release of funds following a declared disaster. 

We are pleased to hear that the Department of Health is confident that additional allocations towards the carry-through effects of previous wage agreements and OSDs are sufficient to cover our obligations in the current financial year. We hope this will be the case in the Department of Education, where Treasury is currently on a fact-finding mission. And we are equally pleased to note that the Department of Public Works is happy with their allocation for the Devolution of Property Rate Funds Grant, which was previously inadequate and had to be adjusted during Adjustments Estimates.  

One issue that has the power to derail this budget is the upcoming 2011 wage agreement. We are currently budgeting for a 7 percent wage increase, which consists of an inflationary adjustment of 5.5 percent and a 1.5 percent pay progression. If the increases negotiated by government and organised labour later this year exceed these provisions, we are likely to eat into our budgeted surplus or, worse, begin to incur another cumulative overdraft. I am sure this is not something anyone at Provincial Treasury is wishing for.  

Madam Speaker, the IFP supports the 2011 Division of Revenue Bill.

I thank you. 

Roman Liptak
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