NEGOTIATING MANDATE

WESTERN CAPE PARLIAMENT

COMMITTEE REPORT:

Report of the Standing Committee on Finance, Development Planning and Gambling on the Division of Revenue [B 8 - 2000], dated 22 March 2000, as follows:

The Standing Committee on Finance, Development Planning and Gambling, having considered the subject of the Division of Revenue [B 8 - 2000], referred to the Provincial Parliament in terms of the Rules of the National Council of Provinces, (NCOP), begs to report that it confers on the Western Cape’s delegation in the NCOP the authority to support the Bill with the following proposals:

    1. In the National Assembly the Portfolio Committee on Finance proposed that the first portion of the column marked "Additional Conditions" of Schedule 3A be amended by inserting the underlined wording "projected spending on health". This proposal cannot be supported as it is open- ended and makes fiscal discipline difficult.
    2. Supplementary allocations to provinces (clause 10)
    3. Clause 10(1) provides that this grant must be transferred in three installments to provinces, while clause 10(2) provides that the first installment be paid over not later than 18 July 2000, subject to certain conditions. It is recommended that four equal payments be made, i.e. in April, July, and October 2000 and January 2001 as the last installment for 1999/2000 was transferred in January 2000, 6 months prior to 18 July 2000. This means that expenditure to be incurred will have to be financed from the weekly equitable share transfers, which are already committed, e.g. personnel expenditure and social grants.

    4. Transfers not listed (clause 16)
    5. The clause provides that a notice must be published in the Government Gazette "without delay" for allocations, which are not set out in the schedules to the Bill. To maintain orderly financial administration it is suggested that the frequency of such publications be provided for, e.g. quarterly or half-yearly with a formal cut-off date which is achievable within the provincial adjustment budget process. A suggested date would be 15 November 2000.

    6. Next financial year (clause 19)

Clause 19(1)(a) of the Bill provides that the Director-General of Finance may, inter alia, effect transfers to provinces in the first six calendar months of the next financial year to a maximum of 55 per cent of the "equitable share" of each province set out in schedule 2 of the Bill. This provision is not consistent with section 29(2)(b)(i) of the Public Finance Management Act, 1999 (Act 1 of 1999), which refers to the "amount appropriated" in the previous annual budget. It is recommended that the Division of Revenue Bill be aligned with the Public Finance Management Act.

A ISMAIL 29 March 2000

CHAIRPERSON