Speech by Hon Grant Snell in the National Assembly on the division of revenue amendment bill on Tuesday

15 November 2011

Honourable Speaker,
Honourable Deputy President
Honourable Minister Gordhan
Honourable Deputy Minister Nene
Honourable Members
Distinguished guests

The Appropriations Committee has unanimously supported the content of the Amendment to the Division of Revenue Bill. To simplify a complex and technical process, a budget is the aligning of figures to the policy within a legislative framework. It is this framework that specifies the process and procedures of how the budget is to be passed and allocated. Various mechanisms are legislated regarding how it is to be allocated and ultimately accounted for.

According to Jeremy Heimans of the Organisation for Economic Co-operation and Development, the budget is the most important economic policy tool of Government and provides a comprehensive statement of the nation’s priorities. Heimans adds that as the representative of the people, Parliament is the appropriate place to ensure that the budget best matches the nation`s development priorities within available resources.

It is within the application of the various budgets that requires us, as legislators, to apply our minds to evaluating the optimal utilization of state resources in achieving the national developmental agenda of the State.

The developmental state leads in the definition of a common national agenda. The national agenda set by the developmental state is a product of broad and extensive consultation with society. Our priorities are a product of inputs from the public and a scientific analysis of the obligations imposed by the challenges of the epoch on the state and its people. The constitution does not only provide for prohibitive obligations but imperative ones, the state must protect and fulfill the rights in the Bill of Rights, socio-economic rights not excluded. The developmental state`s structures and systems facilitate the realization of the set agenda.

Measures must not only be rationally linked to the purpose they are intended to realize but there must also be reasonable likelihood that such measures will eventuate in the said purpose. Legal instruments regulating powers and relations of the spheres of government must enhance meaningful cooperation among the said structures. There should neither be duplication of duties nor parallel functions where there is a convergence of interests. Means must be proportionate to ends of poverty eradication, elimination of inequalities, and the obliteration of unemployment.

We must never undermine the progress that this government has made in the last 17 years of democracy and being the progressive government that we are, we must also provide meaningful responses to the glaring challenges that we face.

Now is an appropriate time to reflect on a number of areas that may inhibit the implementation of National Policies across the spheres of government.

Chapter 3 of the Constitution dealing with co-operative government, states that "the national, provincial and local sphere are distinctive, independent and inter-related". It requires the spheres to provide "effective, transparent, accountable and coherent government for the Republic as a whole". It is clear from the intention of these provisions that the drafters of the Constitution envisaged the various spheres to work together to achieve the national agenda whilst recognizing the distinct and separate roles of each sphere.

The Division of Revenue Act, allocates revenue raised nationally amongst the three spheres of government. The provincial and local spheres are allocated their share of national revenue by virtue of transfers and grants. Provinces` equitable share is crafted into a provincial budget in the form of an appropriation bill and is subjected to provincial legislative processes prior to being enacted. There are a number of government co-coordinating structures established at a national level that facilitate the alignment of national budget to achieve national priorities by all spheres of government.

These structures have the ability to influence the allocation of funds broadly in meeting national policy objectives, however their influence is limited in respect of aligning specific allocations to specific objectives pertaining to national policies within a provincial budget. The result of which can transpire in departments established at a national sphere and those established provincially with concurrent competencies not utilizing the revenue raised nationally to affect policy implementation in an integrated co-ordinate manner. The net result of which, is that service delivery is compromised and the state does not extract from the fiscus, the optimum utilization of its resources.

Besides relying on the provisions of co-operative government, the national sphere of government has no power over provincial departments other than to persuade provincial government to ensure that national policy is implemented at a provincial level.

Compounding the problems associated with implementing a seamless system of government between national and provincial spheres, both horizontally and vertically, within and between the spheres is Chapter 5 of the Public Finance Management Act.

This chapter sets out the functions and responsibilities of Accounting Officers pertaining to their role within departments or constitutional institutions. These functions and responsibilities are contractually specific to the department or constitutional institution the Accounting Officer is employed by. In effect this contract specific employment of Accounting Officers creates a measure of autonomy and independence. This results in entrenching a silo-based approach to governance and leads to a fragmentation of service delivery.

No central administrative authority is empowered to co-ordinate any integrated action across and between the spheres of government. Currently Government relies on Accounting Officers embracing the letter and spirit of cooperative government to implement government policies in a unified co-ordinate manner leaving much to chance.

Section 100 of the Constitution provides that when a Province cannot or does not fulfill an executive obligation in terms of the Constitution or legislation, the National Executive may intervene by taking appropriate steps to ensure fulfillment of that obligation. This provision of the Constitution is utilized as a means of last resort by National Government to maintain essential national standards or meet established minimum standards for the rendering of services.

In no way can section 100 be seen or utilized as a mechanism in co-coordinating the day-to-day implementation of national policy at a provincial level.

In a unitary state all other government bodies are subject to the authority exercised by the national government bodies. The distribution of authority to other government bodies or levels can never restrict the authority of the national government to exercise authority. The distribution of authority in a unitary state is never so extensive or entrenched that any authority is exercised totally independently of the national government, and that the national government is irrevocably divested of such authority.

Notwithstanding the unparalleled historical achievements the ANC government has made to date in transforming the lives of South Africans, we must consider whether now is not an appropriate time to review the present legislative and constitutional structure pertaining to governance to assess whether in the current form are conducive to achieving the developmental objectives within a unitary state. Bearing in mind that a developmental state needs to be constructed with strong core institutions capable of driving development.

Thank you