Debate On The Division of Revenue Bill
By Dr LPHM Mtshali MPL


Kwazulu-Natal Legislature
Pietermaritzburg: Thursday, 11 November 2010 


Mr Speaker


The Division of Revenue Bill has far-reaching implications with the aim to improve service delivery and the quality of life of all our citizens. The Bill empowers all spheres of government, including the provincial and local governments – the two levels of government closest to the citizens - for service delivery and economic development, through, amongst other things, the equitable division of revenue.


The Division of Revenue Bill, which is before us today, contains substantial increases in both equitable share and conditional grants divided up among all provinces, of which KwaZulu-Natal is among the largest recipients. The increases towards the cost of wage agreements and the cost of implementation of OSD for medical staff are proportionally the highest among all provinces based on the number of civil servants concerned, of whom KwaZulu-Natal has the highest number.


We are naturally pleased that these additional allocations are being made to KwaZulu-Natal to help fund what are essentially unfunded mandates. We are, however, concerned about the substantial shortfall. Equally disconcerting is that these unfunded mandates have not been addressed in any constructive way and are here to stay to exert pressure on our future budgets.


The fundamental issue with the upcoming budget, for which this Division of Revenue Bill paves the way, is that the costs of compensation of employees will likely escalate close to three quarters of the entire provincial budget. Nowhere is this demonstrated more starkly than in the budget of the Department of Education. Such a distribution of the fiscus will undoubtedly impact negatively on the service delivery needs across the provincial government. 


The latest public sector strike went a long way to highlight the discrepancies in salaries and working conditions between the cadre-deployed bureaucratic elite and those who serve at the front line of service delivery. It is clear to everyone but this government that more money is required for vacancies at the coalface of service delivery and fewer in the bloated administration.


The bottom line is that this government has not taken sufficient steps to restrain its expenditure on unproductive activities. The public sector wage bill is increasing well in excess of the rate of inflation, without any productivity improvements or additional service to the people. The outcome of annual audits of government departments continues to reveal an entrenched culture of wasteful and opulent spending, little of which is ever penalised.


The government expenditure pattern indicates substantial under-expenditure on conditional grants. What is the point of ever increasing these grants, as is the case in this Division of Revenue Bill, when they are not spent and the funds allocated through them have to be surrendered to the National Treasury?


There is growing concern over this government’s failure to implement the necessary improvements to its procurement practices and to take decisive action to root out corruption. Yes, it will be promptly pointed out to us in this House that adequate measures to improve SCM procedures are in place. But are they really working? How many instances of corruption that have been investigated, have resulted in successful prosecutions?


The failure to act against corruption decisively increases pressure on the understanding between government and compliant taxpayers and significantly increases the risk of future non-compliance by taxpayers whose perception of value added service from government is steadily eroding. This ultimately impacts negatively on poor members of society who rely on the redistribution of resources through the taxation and public financial system.


Mr Speaker, the Division of Revenue Act Bill allows for planning and accountability, but does this happen effectively on the ground where it matters? This Bill, for example, .. provision for emergency funding during disasters. Yet, in many instances, some of these disasters can be prevented if there is proper planning: spatial development planning by respective government departments in conjunction with municipalities.


I thank you.


Contact: Dr Lionel Mtshali, 078 302 0929