Tuesday, 21 July 2020] 151 No 52 - 2020] SECOND SESSION, SIXTH PARLIAMENT PARLIAMENT OF THE PROVINCE OF THE WESTERN CAPE ========================== ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS ========================== TUESDAY, 21 JULY 2020 COMMITTEE REPORT (Negotiating Mandate stage) Report of the Budget Committee on the Division of Revenue Amendment Bill [B 9–2020], dated 16 July 2020, as follows: The Budget Committee, having considered the subject of the Division of Revenue Amendment Bill [B 9–2020] (NCOP) referred to it in accordance with Standing Rule 217, confers on the Western Cape’s delegation in the NCOP the authority to not support the Bill for the following reasons: The Division of Revenue Amendment Bill [B 9–2020] (NCOP) and Adjustments Appropriation Bill [B 10–2020] was tabled on 24 June 2020 by Minister Tito Mboweni, which modified much of the 2020 budget. R130 billion was cut, R30 billion of which will be cut within respective provincial budgets (excluding conditional grants). There are currently no changes to the provincial equitable share in the Bill – thus the previous equitable share remains. 1 The cuts will come from within the respective provincial budgets. Thus, each province will have to fund their own COVID- 19 response. Reprioritisations for COVID-19 expected within provincial budgets 2 R Thousand Equitable Share Funds reprioritised to: Total Health Other Sectors Western Cape 10.3% 1 538 426 512 809 2 051 234 National Total 100% 15 000 000 5 000 000 20 000 000 1 08 July 2020. National Treasury Briefing to NA Standing Committee on Appropriations and NCOP Select Committee on Appropriations. COVID-19 Response: Division of Revenue Amendment Bill, 2020. 5 24 http://pmg- assets.s3-website-eu-west-1.amazonaws.com/200708UPDATED_NT_presentation.pdf (Accessed 14 July 2020). 2 Ibid.
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Tuesday, 21 July 2020] 151
No 52 - 2020] SECOND SESSION, SIXTH PARLIAMENT
PARLIAMENT OF THE PROVINCE OF THE
WESTERN CAPE
==========================
ANNOUNCEMENTS, TABLINGS AND
COMMITTEE REPORTS
==========================
TUESDAY, 21 JULY 2020
COMMITTEE REPORT
(Negotiating Mandate stage) Report of the Budget Committee on the Division of Revenue
Amendment Bill [B 9–2020], dated 16 July 2020, as follows:
The Budget Committee, having considered the subject of the Division of Revenue Amendment
Bill [B 9–2020] (NCOP) referred to it in accordance with Standing Rule 217, confers on the
Western Cape’s delegation in the NCOP the authority to not support the Bill for the following
reasons:
The Division of Revenue Amendment Bill [B 9–2020] (NCOP) and Adjustments Appropriation
Bill [B 10–2020] was tabled on 24 June 2020 by Minister Tito Mboweni, which modified much
of the 2020 budget. R130 billion was cut, R30 billion of which will be cut within respective
provincial budgets (excluding conditional grants). There are currently no changes to the provincial
equitable share in the Bill – thus the previous equitable share remains.1 The cuts will come from
within the respective provincial budgets. Thus, each province will have to fund their own COVID-
19 response.
Reprioritisations for COVID-19 expected within provincial budgets2
R Thousand Equitable
Share
Funds reprioritised to: Total
Health Other Sectors
Western Cape 10.3% 1 538 426 512 809 2 051 234
National Total 100% 15 000 000 5 000 000 20 000 000
1 08 July 2020. National Treasury Briefing to NA Standing Committee on Appropriations and NCOP Select Committee on Appropriations. COVID-19 Response: Division of Revenue Amendment Bill, 2020. 5 24 http://pmg-assets.s3-website-eu-west-1.amazonaws.com/200708UPDATED_NT_presentation.pdf (Accessed 14 July 2020). 2 Ibid.
Thus, the Western Cape province will need to cut R2 051 234 000/> R2 billion within its own
budget.
Local Government will receive an addition of R11 billion to its equitable share (See Table below)3.
Every District and Local Municipality in the Western Cape will see an increase in their
equitable share, amounting to a total of R721,7 million. Thus, out of the R11 billion increase
for all local governments in South Africa, Western Cape province municipalities will receive
a total of 6.56%.
Provincial grants are adjusted down by R7.2 billion and local government conditional grants
by R3.6 billion.4
R138,5 million from the Provincial Disaster Relief Grant for drought relief has been
approved. The National Treasury claims that the amounts allocated reflect the severity of
3 Republic of South Africa. Division of Revenue Amendment Bill [B9 – 2020]. 14 64. http://pmg-assets.s3-website-eu-west-1.amazonaws.com/B09-2020_Division_of_Revenue_Amendment_Bill.pdf (Accessed 14 July 2020). 4 08 July 2020. National Treasury Briefing to NA Standing Committee on Appropriations and NCOP Select Committee on Appropriations. COVID-19 Response: Division of Revenue Amendment Bill, 2020. 10 24 http://pmg-assets.s3-website-eu-west-1.amazonaws.com/200708UPDATED_NT_presentation.pdf (Accessed 14 July 2020).
The total grant increases to the province amount to R577,22 million (of which the majority of the
amount is for the ‘COVID-19’ component of the ‘HIV, TB Malaria and Community Outreach
Grant’)19 and the total grant decreases to the province amount to R634,113 million. Thus, there is
a net decrease of R56,893 million in grants to the Western Cape province.
The following tables highlight adjustments to allocations in Western Cape municipalities.
Allocations to Municipalities to supplement the funding of functions funded from Municipal
Budgets20:
National
Dept (Vote)
Name of
Allocation
City 2020/21
Main
Allocation
Adjustment 2020/21
Adjustment
Allocation
R’000 R’000 R’000
Human
Settlements
(Vote 33)
Urban
Settlements
Development
Grant
City of Cape
Town
1 481 604 (144 459) 1 337 145
Supplementary and Specific Purpose Allocations to Municipalities:
13 Ibid. 19 64. 14 Note that this grant may seemingly not be used for infrastructure; appointment of permanent staff; ventilators or oxygen, based on the conditions of the grant. 15 Ibid. 20 64. 16 Ibid. 20 64. 17 Ibid. 22 64. 18 Ibid. 19 Ibid. 60 64. 20 Ibid. 16 64.
Regional Bulk Infrastructure Grant Allocations to Municipalities (per project)27:
Project Name
Cat
ego
ry
Municipality
2020/21 Main Allocation
Adjustment 2020/21 Adjustment Allocation
R’000 R’000 R’000
Citrusdal Waste
Water Treatment
Works
B Cederberg Local
Municipality
- 15 000 15 000
Calitzdorp and
Ladismith Waste
Water Treatment
Works
B Kannaland Local
Municipality
30 000 (30 000) -
The total grant increases to Western Cape municipalities amount to R30.78 million and the total
grant decreases to Western Cape municipalities amount to R314.214 million. Thus, there is a net
decrease of R283.434 million in grants to Western Cape municipalities.
In summary, the reasons for non-support for the Bill:
1. Despite the increase in the equitable share of Western Cape local governments (R721,7
million); President Ramaphosa promised R20 billion to Local Government across South
Africa.
a) According to the FFC presentation to the NA and NCOP, “[t]he Adjusted Budget
provides for only R11 billion additional funds, while the remaining amount is
secured through repurposing funds within various LG grants.”28
b) Essentially, R9 billion will come from cuts to local government budgets nationally.
2. The Western Cape is receiving an increase in HIV, TB, Malaria and Community Outreach
Grant for the COVID-19 component (R552,22 million); however, this grant seemingly
does not allow the provincial Health department to use the funding for infrastructure;
appointment of permanent staff; procuring ventilators or oxygen, based on the conditions
of the grant.
3. The Western Cape welcomes the Drought Relief Funding amounting to R25 million from
the Provincial Disaster Relief Grant; however this amount is wholly inadequate to address
the drought in the Western Cape.
4. Despite receiving grant increases to the following three Western Cape municipalities; the
increases are but a drop in the ocean based on the cuts to local government grants in the
Western Cape as a whole – cuts which will critically affect infrastructure and economic
growth.
26 Ibid. 27 Ibid. 58 64. 28 09 July 2020. Financial and Fiscal Commission. Briefing to the Standing and Select Committees on Appropriations on the Division of Revenue Amendment Bill and Adjustments Appropriation Bill. Slide 33 43. https://pmg.org.za/committee-meeting/30630/ (Accessed 15 July 2020).
11. Local Government in South Africa (Incapable State, Corruption, Maladministration and
Cadre Deployment).
a) Only 20 of 257 municipalities in South Africa have received a clean audit, and the
bulk of clean audits come from the Western Cape;
b) 28 municipalities in South Africa could not be audited because they didn’t even
have financial statements to submit;
c) Across 200 municipalities, R2 billion was lost to corruption and unaccounted for
expenditure;
d) R32 billion was classified as irregular expenditure at local government level;
e) Municipalities are spending over R1-billion a year in consultants, which is only
made necessary as a result of appointing politically connected staff who cannot do
their jobs; and
f) Provincial and Municipal debt in South Africa to Eskom amounts to 37-billion
Rands.
12. What is the purpose for the Air Defense budget receiving an adjustment increase of R239
million in the Adjustments Appropriation Bill [B10 – 2020]? 33
13. SAA Business Rescue / Bailout
a) It has been reported that the creditors of SAA have approved its business rescue
plan. The airline last made a profit in 2011. SAA indicated that it required R26.7
billion (of which 10.3 billion will be a new request to National Treasury) in
order to restructure – to settle the airline’s debt, to fund the restart of its
operations, and pay retrenchment packages to workers and creditors. SAA has
previously received R36.9 billion in bailouts already spent over the years.
b) National Treasury is requested to indicate where the R10 billion for the SAA
restructure will be sourced from?
14. Eskom loadshedding – “For the economy to work, Eskom must work!”
a) The President promised during his SONA 2020 that Bid Window 5 of the renewable
energy Independent Power Producers (IPPs) would open up. This is yet to occur.
b) The President promised during his SONA 2020 that measures will be put in place
to enable municipalities in good financial standing to procure their own power from
IPPs. Despite new regulations being gazetted regarding municipalities procuring
energy directly from independent power providers, the regulations are vague and
do not provide clarity.
15. Western Cape provincial government already previously committed the following
adjustments within its own budget:
a) Vote 6 – Health: An additional R1 billion required by the Department of Health to
be spent on COVID-19 activities related to staff and facilities.34
b) Vote 10 - Transport and Public Works: An additional R400 million required for
the hiring of venues and facilities and the purchasing of associated services for
quarantine and isolation purposes as a key component of the Health strategy to
combat and deal with Covid-19.35
33 Republic of South Africa. Adjustments Appropriations Bill [B10 – 2020]. 9 20. http://pmg-assets.s3-website-eu-west-1.amazonaws.com/B10-2020_Adjustments_Appropriation.pdf (Accessed 14 July 2020). 34 06 July 2020. Parliament of the Western Cape. Announcements, Tablings and Committee Reports. No 46 – 2020. Second session, Sixth parliament. Tabling in terms of section 25(1) of the Public Finance Management Act, 1999 (Act 1 of 1999) (PFMA). 133 133. 35 Ibid.