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.
152
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).
153
drought in the different provinces.5 Thus, the Western Cape will receive R25 million for drought
relief (See Table below).
Provincial Disaster Relief Grant Allocations 2020/216
R’000 2020/21 Allocations
Western Cape 25 000
National Total 138 489
Adjustments to Western Cape provincial Grant Allocations:
National Dept
(Vote)
Name of
Allocation
Type of
Allocation
2020/21
Main
Allocation
Adjustment 2020/21
Adjustment
Allocation
R’000 R’000 R’000
Basic
Education
(Vote 16)7
Education
Infrastructure
Grant
General
conditional
allocation to
Provinces
1 091 162 (159 441) 931 721
Transport (Vote
40)8
Provincial
Roads
Maintenance
Grant
General
conditional
allocation to
provinces
1 067 344 (161 654) 905 690
Agriculture,
Land Reform
and Rural
Development
(Vote 29)9
Comprehensive
Agricultural
Support
Programme
Grant
Conditional
allocation
111 555 (21 212) 90 343
Agriculture,
Land Reform
and Rural
Development
(Vote 29)10
Ilima/Letsema
Projects Grant
Conditional
allocation
50 464 (9 084) 41 380
Basic
Education
(Vote 16)11
HIV and Aids
(Life Skills
Education
Grant)
Conditional
allocation
19 878 (4 802) 15 076
Basic
Education
(Vote 16)12
Maths, Science
and
Technology
Grant
Conditional
allocation
35 479 (5 069) 30 410
5 Ibid. 16 24. 6 Ibid. 7 Republic of South Africa. Division of Revenue Amendment Bill [B9 – 2020]. 15 64. http://pmg-assets.s3-website-eu-west-1.amazonaws.com/B09-2020_Division_of_Revenue_Amendment_Bill.pdf (Accessed 14 July 2020). 8 Ibid. 9 Ibid. 17 64. 10 Ibid. 11 Ibid. 18 64. 12 Ibid.
Health (Vote
18)13
HIV, TB,
Malaria and
Community
Outreach
Grant14
Conditional
allocation
1 867 472 552 220 2 419 692
Human
Settlements
(Vote 33)15
Human
Settlements
Development
Grant
Conditional
allocation
1 907 551 (202 265) 1 705 286
Human
Settlements
(Vote 33)16
Title Deeds
Restoration
Grant
Conditional
allocation
67 952 (44 432) 23 520
Sports, Arts and
Culture (Vote
37)17
Community
Library
Services Grant
Conditional
allocation
186 126 (34 700) 151 426
Sports, Arts and
Culture (Vote
37)18
Mass
Participation
and Sport
Development
Grant
Conditional
allocation
83 491 (22 684) 60 807
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.
Name of Grant Category Municipality 2020/21
Main
Allocation
Adjustment 2020/21
Adjustment
Allocation
R’000 R’000 R’000
Energy
Efficiency and
Demand Side
Management
Grant21
A City of Cape
Town
10 000 (1 000) 9 000
B Swartland 4 000 (400) 3 600
B Theewaterskloof 4 000 (400) 3 600
B Hessequa 4 000 (400) 3 600
B George 5 000 (500) 4 500
Integrated
National
Electrification
Programme
(Municipal)
Grant22
B Cederberg 22 754 (5 754) 17 000
B Bergrivier 3 000 (1 000) 2 000
B Saldanha Bay 5 000 (2 000) 3 000
B Swartland 7 652 (2 000) 5 652
B Drakenstein 27 000 (10 000) 17 000
B Stellenbosch 16 200 (4 200) 12 000
B Breede Valley 22 097 (5 097) 17 000
B Langeberg 3 000 (1 000) 2 000
B Theewaterskloof 6 737 (1 737) 5 000
B Overstrand 8 000 (2 000) 6 000
B Mossel Bay 12 000 (2 000) 10 000
B George 7 000 (1 000) 6 000
B Bitou 5 000 (1 000) 4 000
B Knysna 5 000 (5 000) -
B Beaufort West 6 400 (1 186) 5 214
Public Transport
Network Grant23
B George 153 645 (24 388) 129 257
Allocations-in-Kind to Municipalities:
Name of Grant Category Municipality 2020/21
Main
Allocation
Adjustment 2020/21
Adjustment
Allocation
R’000 R’000 R’000
Municipal
Systems
Improvement
Grant24
B Kannaland 1 900 (265) 1 635
Integrated
National
Electrification
Programme
(Eskom) Grant25
A City of Cape
Town
76 547 (27 411) 49 136
B Saldanha Bay 3 892 (3 892) -
B Swartland 885 (2) 883
B Stellenbosch 2 548 (6) 2 542
B Breede Valley 15 203 (5 410) 9 793
B Theewaterskloof 8 073 780 8 853
B George 2 852 (707) 2 145
B Cederberg 36 587 15 000 51 587
21 Ibid. 45 64. 22 Ibid. 23 Ibid. 24 Ibid. 52 64. 25 Ibid.
Regional Bulk
Infrastructure
Grant26
B Kannaland 30 000 (30 000) -
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).
157
a) Increase in Integrated National Electrification Programme (Eskom) Grant to
Theewaterskloof Local Municipality amounting to R780 000.
b) Increase in Regional Bulk Infrastructure Grant to Cederberg Local Municipality
amounting to R15 million. c) Increase in Citrusdal Waste Water Treatment Works to Cederberg Local
Municipality amounting to R15 million.
5. Zero Change to Western Cape equitable share in the Division of Revenue Amendment Bill
(DORA) 2020 budget. Thus, previous concerns have not been addressed.
6. R2 051 234 000/> R2 billion will need to be cut from within the Western Cape provincial
budget – of which R1 538 426 000/> R1.538 billion will be allocated to the provincial
Health portfolio. “Reprioritised funds is actually a “cut” in the budget. These cuts will
directly impact on frontline service delivery.
7. Western Cape province fundamentally disagrees with the current equitable share formula.
a) The Provincial Equitable Share (PES) formula does not adequately make provision
for learners moving across provinces for better education each year. Further, the
PES formula does not adequately provide for learners who require special
education.
b) The FFC has noted with concern the quality and reliability of data used in the
calculation of different components of Human Settlements grant (drawn from 2010
Household Survey and 2011 Census) and in transport sector grants.29
c) In the review of the Provincial Equitable Share formula, the above factors need to
be considered.
8. Net decrease in grant allocations to the Western Cape province (R56.893 million). This
will critically affect the building of new infrastructure (such as schools and roads) and will
impact economic growth. There also seems to be no criteria to determine which grant
allocations will be cut.
a) The FFC indicated that, “[t]he criteria for 7reprioritizing the R20 billion is not
clearly determined and this may result in unevenness in the services delivered by
provinces. In the absence of a uniform criteria it is important for provinces to report
to Parliament on the 7reprioritization criteria used.”30
b) There are no impact indicators that exist for measuring the success of grants.
9. Uncertainty regarding the Unallocated amounts in provincial grants (Total: R1
042 280 000 / > R1 billion)
a) School Infrastructure Backlogs Grant31 (Total: 185.445 million)
b) National Health Insurance Grant32 (Total: R856.835 million)
i. Health Facility Revitalisation Component: R4.583 million
ii. Personal Services Component: R175.32 million
iii. Non-Personal Services Component: R676.932 million
10. Net decrease in grant allocations to the Western Cape local governments (R283.434
million).
29 Ibid. 37 43. 30 Ibid. 27 43. 31 Ibid. 62 64. 32 Ibid. 64 64.
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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.
159
16. Education
a) Previous concerns were not addressed in DORA 2020 Budget (Money does not
follow learners and infrastructure).
b) In fact, in the DORA 2020 Budget, the following provincial Education grants will
be cut:
i. Education Infrastructure Grant – R159.441 million cut
ii. HIV and Aids (Life Skills Education Grant) - R4.802 million cut
iii. Maths, Science and Technology Grant - R5.069 million cut
c) Further, the cuts will cripple the provincial Education portfolio as the provincial
Education Department is already using the existing infrastructure grant for COVID
19 relief, amounting to approximately R650 million.
17. Health
a) Previous concerns not addressed in the Adjustment Budget (Money does not follow
patients and infrastructure).
b) President Ramaphosa promised extra funds for Western Cape for COVID 19 health
response, indicating “cost no issue”. The President indicated that the government
would direct R20 billion towards fighting the pandemic. However, the R20 billion
would come directly from cuts from programmes within respective provincial
budgets. Further, the President promised that the Department of Defense and
Military Veterans will bring in defense personnel who will be able to come to the
Western Cape province immediately to assist.
c) The funding for the Western Cape shortfall for the COVID-19 relief response was
not received as mentioned by the President at the extended Cabinet meeting that
took place at the CTICC.
18. Transport
a) In the DORA 2020 Budget, the following provincial Transport grant will be cut:
i. Provincial Roads Infrastructure Grant - R161.654 million cut.
19. Agriculture
a) In the DORA 2020 Budget, the following provincial Agriculture grants will be cut:
i. Comprehensive Agricultural Support Programme Grant - R21.212 million
cut; and
ii. Ilima/Letsema Projects Grant - R9.084 million cut.
20. Human Settlements
a) In the DORA 2020 Budget, the following provincial Human Settlements grants will
be cut:
i. Human Settlements Development Grant - R202.265 million cut; and
ii. Title Deeds Restoration Grant - R44.432 million cut.
21. Sports, Arts and Culture
a) In the DORA 2020 Budget, the following provincial Sports, Arts and Culture grants
will be cut:
i. Community Library Services Grant - R34.7 million cut; and
ii. Mass Participation and Sport Development Grant - R22.684 million cut.
22. Police & Safety
Previous concerns were not addressed in the Adjustment Budget (the Western Cape is
160
23. District Command Councils
National government is attempting to deploy Ministers and Deputy Ministers to local and
provincial governments as part of the Command Council system. It is further unclear what
powers and responsibilities the deployed District Champions will have; may duplicate and
/ or supersede current constitutional structures; and is likely unconstitutional.
24. International Loan Term Agreements
National Treasury must publish the details of the South African-IMF, World Bank and
BRICS Bank loan term agreements for COVID-19 relief; including whether any racial
criteria is being used for the disbursement of the relief.
Minority View
In terms of Standing Rule 90, the African National Congress expressed its minority view that it
supports the Bill.