National Council of Provinces (NCOP)
Budget Readjustment Debate on Vote
Chairperson of the NCOP,
Honourable Deputy Chairperson of the NCOP
Honourable Members, Representatives and Delegates of the House
All protocol observed
Thank you for the opportunity to address the Council regarding the Special Adjustments to Vote 3: Cooperative Governance. We are presenting this Readjusted Budget as part of the expanded stimulus package and the proviso that municipalities are allowed to reprioritize grants in response to these difficult times.
This budget is a balance between the need for business continuity, the importance of funding capital within a constrained fiscal and budget environment and redirecting funds towards Covid-19. Our adjusted budget represents inevitable trade-offs, but our reaction has been swift.
We responded to the National COVID19 Strategy, by modelling the economic impact on municipalities and coordinating a comprehensive local government municipal response. This was achieved together with MEC’s and critical local government stakeholders. With National Treasury, SALGA, National Departments, Telkom, the DBSA, Tirisano, municipalities and various stakeholders we worked to support municipalities to identify critical economic and infrastructure challenges, providing a comprehensive support package and strengthening local responsiveness through the delivery of water tankers, sanitisers and boreholes. These initiatives assisted us to make informed and strategic adjustments to our budget. This was based on a sound determination of the requirements from local government.
This budget was then framed by three broad tactical approaches:
Repurposing: reorientation of funding towards Covid-19, to assist municipalities with Covid-19 while ensuring funding for critical infrastructure projects
Fast-tracking coordination: measures to fast track coordinated implementation of various programmes to support the DDM, implementation of IUDF (our national strategic plan for cities), an economic stimulus for local government; all within the existing performance hurdles that were committed to before.
Internal gearing and improved capacity: redirection of funds in the Department of Cooperative Governance to respond to Covid-19: includes an improved Disaster Management Nerve Centre, ICT enablement for remote working, workplace safety measures and protection.
Our commitments to this House one year ago, remain. However, we have refactored our plans to accommodate Covid-19. Our six programmes continue from last financial year.
1. Repurposing for Local Government
The President announced funding of R20 billion for municipalities to provide emergency water supply, increase sanitization of public transport and facilities, and provide food and shelter for the homeless. As such:
R20,4 billion has been budgeted and consists of the following allocations:
An additional R11 billion through the Local Government Equitable Share
The remaining R9,4 billion is obtained through the repurposing of the existing Division of Revenue Act grants, which are already allocated to municipalities. The 9,4 billion is broken down into the following grant allocations:
Municipal Infrastructure (Direct Conditional grants) – 4,4 billion
Integrated Urban Development (Direct Conditional grants)- 190 million
Urban Settlements Development (Direct Conditional grants) – 2,2 billion
Public Transport Network (Direct Conditional grants) – 1 billion
Regional Bulk Infrastructure (Direct Conditional grants) – 401 million
Regional Bulk Infrastructure (Indirect Conditional grants) – 409 million
Water Services Infrastructure (Direct Conditional grants) – 689 million
It must be noted that the additional funding of 20,4 billion available to municipalities has been provisioned through the existing budget. This is not an increase in the budget, but rather the reallocation of funds from other programmes so that we may be able to accommodate Covid-19 municipal-responses and interventions.
While our efforts are to control and flatten the curve, we have to support municipal economic recovery and resilience in the medium to long-term. Therefore, we have undergone an intensive review of our strategic plan and annual performance plan. Our own programmes and projects are being refocused to ensure an effective municipal wide recovery.
Specifically, we have reallocated funds within existing Vote 3 for:
Community Works Programmes: 1,4 billion
Integrated Urban Development Grant: 189 million
Municipal Infrastructure Grant: 4,4 billion.
2. Fast-tracking coordination
The District Development Model brings all spheres of government into cooperative action, to deal with challenges and problems we face in local government, the role of NCOP is far-reaching as it exercises oversight with all three spheres of government over intergovernmental processes.
To implement the District Development Model, we have developed an implementation plan for the Integrated Urban Development Framework to complement the various tools and initiatives at a municipal level, this has been accompanied by work we have been doing in partnership with National Treasury, SALGA and other development partners on Economic Recovery for Local Government and a need to Re-think Municipal Finances, responding to revenue and expenditure concerns and the growing levels of municipal debt, aggravated by the lockdown. We are developing a Smart City Framework. All planning instruments are in place to reinforce citizen participation and change our current operating model.
3. Internal Departmental gearing and improved capacity to respond:
⦁ R20 million is shifted to provide for key projects e.g. ICT and communication (voice and data) part of the Department’s Business Continuity Plan;
⦁ R22 million from the Disaster Assessment funds to provide for the effective management for COVID-19 responses through the National Disaster Nerve Centre.
⦁ Operating expenses – salaries and wages have remained the same
The need for enhanced multi-level governance & building municipal resilience.
Covid-19 has highlighted the critical need to enhance intergovernmental relations, moving towards a coordinated regional model for emergency and crisis management, and beyond the crisis, to deepen intergovernmental planning, resourcing and implementation. Strengthening compacts between all government spheres through the District Development Model, as we improve regional planning and governance. We remain ahead of the curve globally in our approach.
We face well-known leadership and governance challenges in local government. 44 municipalities are under administration. An increase of four from last year. The governance challenges include poorly capacitated Provincial COGTA offices. However, we must acknowledge joint responsibility for restoring good leadership in municipalities. Current interventions through Section 139’s to deal with root causes – presents limitations.
As role-players in this House, we have to collectively review what has been done and adopt a more comprehensive set of interventions. A Report by the Public Affairs Research Institute (PARI), commissioned by National Treasury, entitled ‘Mind the Gap’ gives a clear synopsis and set of recommendations to enhance Section 139 interventions. This presents opportunities to work with civil society, research institutes and various stakeholders to find ways to restore good governance. Warranting, a first-in-class package of new legislation, policies and interventions, including the work of this House to expedite the Monitoring and Intervention Bill. As we construct a better way forward. The COVID19 pandemic has precipitated the worst economic crisis in history. The OECD predicts global economic activity to fall between 6% and 7.6% in 2020, depending on whether a second wave of infections hits before the end of the year, with similar projections for the South African economy.
Our budget adjustment reflects the urgent need to respond to Covid-19, while building municipal resilience. It calls on all levels of the South African government, civil society and business to work together, to strengthen relations between society and government and to design a recovery programme that mitigates the impacts of a deteriorating economic climate and the COVID19 pandemic.
Lastly, this speech is dedicated to all those who have succumbed to Covid-19. My condolences to the Kegakilwe Family with the passing of MEC, Gordon Kegakilwe (Cooperative Governance, Human Settlements and Traditional Affairs in North West). Honourable Joyce Pekane former member of the Gauteng Provincial Legislature. And all those who have lost their lives to the pandemic. Hambe kahle.