26 November 2024

Enhancing accountability of public funds to attain targeted socioeconomic outcomes The appropriation of funds for the three spheres of government is distributed through an equitable share for the local, provincial and national governments through the division of revenue bill.

The division of revenue allocates a relatively lower percentage for local government, which is currently 9.8% of the revenue. Despite this, the national and provincial governments allocate funds for local municipalities to provide various basic services through conditional and non-conditional grant allocations. These grants ensure local government municipalities with different financial capacities have supplemented resources to meet their constitutional mandate.

A major contributor to the capability of local government to spend allocated funds is having the required technical capacity to plan, implement, and manage the whole project lifecycle and the lifecycle of the asset. Planning the life cycle of assets is critical to ensure adequate operations and maintenance are undertaken on time, and the required funds are allocated. This will ensure that the government’s provision of basic services is efficient and reliable. Honourable Minister, we are concerned about the reported misuse of grant allocations for their intended usage, which undermines the intended objective of the grant. This has a significant impact on developmental objectives, undermining policy implementation. In the review of the grants, consideration should be made to have emergency grants to respond to emerging challenges to ensure conditional and non-conditional grants are used for their intended purpose.

We welcome the merging of the comprehensive agricultural support programme grant with the Ilima/Letsema grant and the education infrastructure grant with the school infrastructure backlogs grant. This will optimise the prioritisation and management of grants. We are concerned with the community library services grant being incorporated into the provincial Page 1 of 3 equitable share, as this can result in a lack of prioritisation for community libraries. To develop and harness literacy and innovation, a culture of reading and knowledge sharing is critical for the nation.

We call on the Ministry to enhance its measures to ensure the National Treasury implements robust monitoring and evaluation systems, which will enable a detection of misuse of grant allocations on time.

Another area of concern is the rate of underspending, which defers muchneeded development by communities. We believe that responding to the skills audit study of the technical capacity of critical infrastructure units undertaken by the National School of Government and the Human Sciences Research Council is fundamental to diagnosing and developing an appropriate support intervention to build internal technical capacities and reduce outsourcing of services which our state institutions should have. We must remember that the consequential effect of outsourcing key technical services results in the state’s inability to develop the required capacity.

A critical area that the Auditor General has highlighted as an area of concern is the quality of a number of infrastructure projects, which display poor workmanship, undermining the quality of expenditure. With a higher risk of climate change, the quality of infrastructure should be disaster-resilient to ensure durability, which we will continue to reconstruct, impacting our ability to finance and develop new infrastructure.

The third priority of the government of National Unity is to build an ethical and capable developmental state which meets the developmental needs of the people and upholds the human rights of all South Africans.

Accountability over the use of public funds is an imperative which should be continually advanced to improve the quality of expenditure. A major area which requires the attention of the National Treasury is ensuring we enhance the accountability of transfers made by National Departments to different spheres of government and public entities. Accountability of appropriated funds appropriated to votes begins with the National Executive, and therefore, the robustness of the mechanism is important to ensure the quality of expenditure and to achieve the objectives of the National Development Plan.

There are matters in the public which require clarification to have a contextual understanding of the linkage of policy priorities and budget allocations. Horizontal budget allocations in provinces are determined by provinces based on their policy priorities. In the Western Cape, the province prioritised alternative energy solar projects worth 700 million, while the teacher post requirements are 400 million for the year. Other provinces also allocate funds in a manner that impacts critical social services. The reduction of the wage bill should be balanced with protecting critical positions, such as teacher provisioning, nurses, technical functions and frontline workers.

We welcome the implementation of Public-Private partnership projects which focus on critical social facilities, such as efforts to increase the pool of funders to diversify public infrastructure financing through new mechanisms and instruments. These include build-operate-transfer (BOT) structures and other concessions.

• Two hospital projects, including a district hospital in Limpopo;
• Landside capacity expansions at the Cape Town Container Terminal;
• Capacity upgrades on the rail network from Watloo to Gqeberha; Rehabilitation of water infrastructure in eThekwini; and

This is not privatisation but a way of harnessing our domestic capital markets to support the provision of public goods and services through financing mechanisms. These projects reflect the commitment of the government to increase public investment and attract private investment in infrastructure development, which has the highest multiplier effect for job creation. We must also ensure we transform the construction sector value chains to ensure there are maximum redistributive benefits for local producers of construction inputs and contractors.

What is critical is ensuring the financing structures do not result in risky developments which result in failed projects, increasing state liability.

We support the division of revenue adjustment bill.