National Assembly adopts financing bill despite fierce opposition
A common theme of the opposition to the bill is that local government receives only 9% of the pie, even though it is at the coalface of service delivery
Opposition parties united in the National Assembly on Tuesday to oppose proposed legislation that allocates a share of national revenue to the three spheres of government.
A common theme of the opposition to the Division of Revenue Amendment Bill was that local government received an inadequate share (9%) of the pie, even though it is at the coalface of service delivery.
The second reading of the bill was nevertheless adopted by the ANC majority and it will now be sent to the National Council of Provinces for concurrence.
The proposed amendments to the Division of Revenue Act, which were based on the February budget, were tabled together with the medium-term budget policy statement in the National Assembly in October. The act divides government revenue between the three spheres of government and includes the amounts allocated to provinces and municipalities by way of conditional and other grants.
Additional provisions have been made in the amendment bill for drought and disaster relief for provinces and municipalities; funding for infrastructure backlogs and capacity building; and allocations to address critical staff shortages in the health sector as well as to procure beds and linen.
Deputy finance minister Mondli Gungubele emphasised in his speech concluding the debate that government remained committed to maintaining the expenditure ceiling; to decreasing the budget deficit over time; continuing with the transformation of state owned enterprises; and engaging on how to deal with the public sector wage bill.
In his maiden speech, DA MP Michael Shackleton noted that many people had no running water, basic sanitation or refuse removal, which was due to the “inefficiency of spending and failure to monitor how spending has been carried out. Efficiency of spending is exceedingly poor,” he said.
The EFF criticised the use of the Division of Revenue Bill as a mechanism to address the country’s developmental challenges. Municipalities were not given an adequate share of national revenue, the party said.
IFP MP Mkhuleko Hlengwa criticised the government’s wasteful expenditure on a bloated cabinet, excessive foreign missions abroad and bail-outs of SAA. All development was local, he stressed and the budget should reflect this rather than spend so much money at national level. Municipalities were in desperate need of funds to stimulate local development and create jobs. The approach to economic growth should be bottom up rather than the other way around, Hlengwa said.
UDM MP Nqabayomzi Kwankwa supported the bill but also said the 9% of national revenue allocated to local government was “hopelessly inadequate” considering that municipalities were at the coal-face of service delivery and that they had limited revenue-raising capacity.
FF Plus MP Wouter Wessels criticised the ANC’s government’s distorted priorities while COPE MP Willie Madisha concentrated on the deteriorating economic and fiscal situation in the country.
Madisha said the governing party was at war with itself and was unable to effect the structural changes required to ignite growth and to take the unpopular decisions necessary to reduce government expenditure. “This bill merely rearranges the deck-chairs on the Titanic," he said.
DA finance spokesperson David Maynier highlighted the fact that the Division of Revenue Amendment Bill did not include increases in the equitable share for provinces in order for them to finance the above-inflation public-sector wage agreement reached with trade unions. Over the medium term, this would cost provinces an estimated additional R18bn.
DA deputy finance spokesperson Alf Lees referred to the growth of unpaid bills and accruals within provincial and local governments. The budget policy statement said this constituted a serious fiscal risk but did not address it in the revised allocations to provinces and municipalities.