South Africa: National Assembly Passes the 2023 Division of Revenue Bill

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The National Assembly (NA) has, during its sitting today, passed the 2023 Division of Revenue Bill and the Second Adjustments Appropriation (2022/2023 financial year) Bill without amendments as recommended by the Standing Committee on Appropriations.

Section 214(1) of the Constitution requires that the Division of Revenue Act determines the equitable division of nationally raised revenue among the three spheres of government (National, Provincial and Local). This is intended to foster transparency in the sharing of nationally raised revenue and ensure smooth intergovernmental relations.

The 2023 Division of Revenue Bill strikes a balance between building institutional capacity and ensuring real growth in transfers to provinces and municipalities to meet the needs of growing populations.

The 2023 Budget increases allocations for all three spheres of government to assist with urgent spending pressures. Over the medium term, direct provincial allocations will increase by R92.7 billion to R2.17 trillion. This increase consists of R76.9 billion added to the provincial equitable share and R15.8 billion added to direct conditional grants. Local government allocations will increase by a total of R14.3 billion, made up of R8.1 billion in the local government equitable share and R6.2 billion in direct conditional grants. This takes the total direct allocation to local government to R521.7 billion over the same period. These allocations alleviate some of the financial pressures, particularly in health, education and basic services, where the costs of providing services are rising.

The NA has welcomed the redistributive spirit in this year’s budget allocation and will ensure that, through its committees, efforts are put in place for the attainment of a balanced socio-economic development across the country without leaving anyone behind.

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Meanwhile, the 2023 Second Adjustments Appropriation (2022/23 financial year) Bill proposes to appropriate additional funding allocations for expenditure approved in the 2022/23 financial year.

Section 213(2) of the Constitution of the Republic of South Africa, provides that money may be withdrawn from the National Revenue Fund only (a) in terms of an appropriation by an Act of Parliament; or (b) as a direct charge against the National Revenue Fund. Section 30(1) of the Public Finance Management Act (PFMA) states that the Minister of Finance may table an adjustment budget in the NA as and when necessary. Section 30(2) of the PFMA further states that the adjustments budget may provide for, amongst others, money to be appropriated for expenditure already announced by the Minister during the tabling of the annual budget, as well as the shifting of funds between and within votes.

The Bill proposes allocation of additional funding to Vote allocation to fund the carry-through costs of the 2022 public services wage increase, the South Africa Airways SOC Limited as a settlement agreement that was reached between the SAA business rescue practitioners and the airline’s creditors providing for a gradual payment of historical debts, the South African Post Office (SAPO), the Land Agricultural Development Bank of South Africa, and additional allocation towards political party funding.

The Bill proposes additional financial support to the following Votes:

i) A proposed additional allocation of R1 billion to the Department of Public Enterprises (Vote 10) for a settlement agreement that was reached between the SAA businesses rescue practitioners and the airline’s creditors providing for a gradual payment of historical debts.

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ii) A proposed additional allocation of R2.4 billion to the Department of Communications and Digital Technologies (Vote 30) for the recapitalisation of the South African Post Office SOC Limited.

iii) A proposed additional allocation of R5 billion to National Treasury (Vote 8) for the purchase of equity from the Land and Agricultural Development Bank of South Africa.

iv) A proposed additional allocation of R300 million to the Department of Home Affairs (Vote 5) for addition support to the operation of political parties.

v) A proposed addition of R4.5 billion to various Vote allocations to provide for the carry-through costs of the 2022 public-service wage increases.

The 2023 Division of Revenue Bill and the 2023 Second Adjustments Appropriation Bill will now be sent to the National Council of Provinces (NCOP) for further consideration.

Distributed by APO Group on behalf of Republic of South Africa: The Parliament.