Debate on the 2010 Division of Revenue Bill


By Roman Liptak MPL

KwaZulu-Natal Legislature
Pietermaritzburg : 23 March 2010


Madam Speaker


Along with the budget, the Division of Revenue Bill is the clearest expression of government’s policy intentions. In 2010, both of these documents must be seen in the context of 900,000 South Africans losing their jobs due to the economic recession last year. This also means that only 12 million South Africans are permanently employed today and that 14 million South Africans depend on some kind of government grant.


In KwaZulu-Natal, the highest proportion of the national figure - that is 222,000 people lost their jobs last year while the province already had by far the highest number of discouraged work seekers in the country - 448,000 - who are described as people who are available for work, but have given up actively looking for employment.


According to provincial Treasury, unemployment in KwaZulu-Natal is set to reach 36 percent and poverty is expected to rise by up to 8 percent in the next two years. Together with the recent escalation in the price of electricity of 24.8% and other inflationary factors, this means that within two years the number of people who depend on social grants in KwaZulu-Natal could increase beyond a sustainable level.


Madam Speaker, it is precisely because we cannot ignore the plight of poor and the needy that we must ensure that the limited resources of government are spent properly and that the benefits of the taxes flow through the system without hindrance. We must view allocations towards health care, education, municipal infrastructure and social grants not as an end in itself, but as an investment that will grow employment opportunities and broaden the future tax base.


To achieve a free flow of taxpayers’ money towards government goals, there has, for a very long time, been an urgent need for a holistic and effective anti-corruption campaign. The supply change management process has to be reviewed and the procurement process must be tightened to reduce the prospects of fraud and corruption. Some promising measures have recently been announced both by the Hon. Premier and the MEC for Finance and our job on the opposition benches is to see to it that they go far enough.


Madam Speaker, there is a special task in all this for this very House. The 2010 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.


From what we have seen so far, we contend that an in-depth review of targeting and management of conditional grants is overdue. One area where government efforts are largely misplaced is job creation though government agencies. Yes, we welcome the increased public sector infrastructure investments and the renewed focus on promoting youth employment. And yes, we welcome the additional capacity for proper performance audits to be conducted in dysfunctional public entities.


While we support the end, we differ in the means of achieving it. The proposed allocation of R52-billion to create 4.5 million job opportunities over the next three years for the Expanded Public Works Programme is controversial. Past practice shows that such jobs are unfortunately of a short-term nature - lasting only 45 days on average - where no or very little skills transfer can possibly take place. Likewise, the number of successfully created EPWP jobs has previously been hugely exaggerated, considering that any worker employed in more than one job opportunity was counted more than once, inflating the total.


Mister Speaker, we are all aware of the pressure that wage agreements in 2009 have placed on provincial spending over the MTEF. Of the R33.9 billion added to the provincial equitable share, R30.9 billion is to cover the cost nts and occupation specific dispensation agreements in health and education. While these additions should attract and retain experience and skill in the public sector, it is a substantial sum of money that does not necessarily translate into additional service delivery outputs. We simply cannot afford to continue expanding personnel expenditure, especially if we do not see substantially improved quality of services from the public sector.


It is clear that the funding of OSD for nurses is the single main culprit for the over-expenditure in KwaZulu-Natal. Clearly, the provincial Department of Health had no idea about the cost associated with the OSD. Coupled with this failure, national Treasury also failed to verify the figures provided by the province when it approved the OSD system for nurses. We sincerely hope that everyone concerned will draw the necessary lessons for the future from this episode.


Mister Speaker, given the sorry state of local government, there needs to be a review of all grants to municipalities to ensure co-ordination of the grants and their more effective use. The future Division of Revenue Bills have to ensure a more equitable and differentiated support to municipalities. The formula for the equitable share also has to be reviewed, partly to ensure that it is more redistributive and provides more support to financially weaker municipalities. By the same token, I wish to say that we welcome the new process designed to ensure that previously unspent conditional grants not repaid by municipalities are deducted from their future allocations.


In conclusion, I would like to applaud two specific allocations in the 2010 Division of Revenue Bill. Last year, national government announced that R500-million would be added to the infrastructure grant for provinces to ensure that classroom space is available for Grade R learners entering the system and that R1-billion would be made available for schools to upgrade infrastructure, to improve security, and to install libraries and laboratories. These improvements should become visible during this and next year.


The 2010 budget also introduces a new conditional grant for the social sector which, we believe, will encourage the role of the civil society in advancing government’s social agenda. In 2010, this grant will perform as a basic wage subsidy for non-profit organisations working in home-based care, allowing them to pay salaries to volunteers. This grant clearly creates incentives for provinces to encourage labour intensive employment that provides joint relief and support for the needy and vulnerable.


With those words, the IFP supports the 2010 Division of Revenue Bill.


I thank you.


Roman Liptak
078 302 0929