ANC Welcomes Adoption of Division of Revenue Bill and Financial Matters Amendment Bill

13 March 2019

The Office of the ANC Chief Whip congratulates the National Assembly for passing two crucial finance Bills today, namely, the Financial Matters Amendment Bill and the Division of Revenue Bill.

Division of Revenue Bill [B - 2019]

The Division of Revenue Bill (also known as the 'budget') provides for the equitable division of R1.66 trillion in revenue raised nationally among the national, provincial and local spheres of government for the 2019/2020 financial year.

The 2019/2020 budget is a reflection of the ANC government's commitment to improving the lives of South Africans. The budget is redistributive in nature with the bulk of the spending funded through this Bill allocated towards the provision of free and subsidised services to take care of the poor and vulnerable in our society.

The Local Government Equitable Share funds free basic service subsidies for an estimated 10 million households while the Provincial Equitable Share funds public schools and health facilities that provide free schooling and healthcare to the majority of our people. Through this Bill, the National School Nutrition Programme Grant funds free meals for over 9 million learners, delivered at 20 000 schools every school day - ensuring even the poorest learners do not have to learn on an empty stomach.

Over the medium term, this Bill funds' investment of R36.5 billion in provincial roads; over R40 billion in school infrastructure (including the eradication of unsafe sanitation facilities); over R23 billion for health facilities and over R130 billion towards municipal infrastructure.

The 2019 Division of Revenue Bill as adopted today achieves an impressive redistribution of funds from taxes raised from the wealthy, to fund the provision of services to people in all parts of our country. At the same time, it invests in rebuilding state capacity and strengthening the foundations of future economic growth and promoting new partnerships through which government can improve delivery and stimulate much needed economic growth.

Financial Matters Amendment Bill [B1 - 2019]

The Financial Matters Amendment Bill essentially gives effect to the ANC's National Conference Resolution on the establishment of a State Owned Bank. The Amendment Bill amends, among other, the Banks Act to enable qualifying state-owned companies to apply for a banking licence subject to executive approval, thereby addressing the long outstanding issues of transformation in the financial sector and the licensing of the Post Office as a Bank.

Currently, the Banks Act only allows for public companies to establish a bank. As a result, state-owned companies meeting prudential and other requirements of the Banks Act are unable to apply for authorisation to establish banks. To limit fiscal risks of state-owned banks, it is proposed that only qualifying state-owned companies that are financially sound may apply for authorisation to establish banks.

The Amendment Bill proposes that a state-owned company must first obtain approval of the Minister of Finance, acting with concurrence of the Minister responsible for State-Owned Companies. The assets of the company, and its holding company must exceed its liabilities. These are all measures to ensure that state banks do not rely on the fiscus for their survival but are self-sustainable.

This move might see a service like the social grants for an example, being distributed by a State Owned Bank with lower interests as compared to that of normal commercial banks. The adoption of this Bill is especially important given the recent expose on the alleged conduct of First National Bank (FNB) allegedly charging interest rates along racial lines.

The ANC believes that it is the role of the developmental state to be responsive to the needs of the poor by providing basic services such as banking.

Other amendments effected by the Financial Matters Amendment Bill include the amendment of the Insolvency Act (1936) by ensuring that government's international objectives for enabling over-the-counter (OTC) derivatives transactions is consistent with international counterparts and in compliance with G-20 commitments, to which South Africa is a party.

The Amendment Bill also ratifies the Military Pensions Act (1976) by introducing gender neutrality and recognising various forms of legal marriages for purposes of benefits for all military staff in accordance with right to equality, as enshrined in section 9 of the Constitution.

Lastly, the Amendment Bill addresses the Government Employees Pension Law (1996), by introducing the principle of "service reduction approach" to ensure that a member's pension pay-out to former spouses upon divorce are not converted to debt obligation, as is case under the current law.

Both the Division of Revenue Bill and the Financial Matters Amendment Bill will be sent to the National Council of Provinces (NCOP) for concurrence.

Issued by the Office of the ANC Chief Whip, Comrade Jackson Mthembu.

Enquiries:

Nonceba Mhlauli
Spokesperson