This Gazette is published in terms of the Division of Revenue Act, 2011 (Act No.6 of 2011), as amended by the Division of Revenue Amendment Act, 2011 (Act No. 20 of 2011)) and provides information on additional allocations and adjustments to existing allocations to provinces and municipalities in the 2011/12 financial year.

This is necessitated by the need to allocate additional funds to provinces and municipalities, as approved in terms of the Adjustments Appropriation Act, 2011 (Act No. 23 of 2011) and effected by the Division of Revenue Amendment Act, 2011. It is also necessitated by the need to allocate unallocated allocations to provinces and municipalities, and the re-allocation of funds in terms of Section 18 of the Division of Revenue Act, 2011, as amended.

This Gazette therefore updates information that was originally published in Government Gazettes No. 34258 of 28 April 2011 and No. 34280 of 10 May 2011.

This notice affects the following:

Provincial allocations

Improvement in conditions of service (ICS)

The provincial equitable share is adjusted by R3.243 billion to provide for higher than budgeted for wage agreements. This amount is shared between provinces primarily in proportion to their shares of total expenditure on education and health personnel and balanced with shares of expenditure on personnel in other sectors. The adjusted provincial equitable share per province is shown in Schedule 2.

The Further Education and Training (FET) Colleges grant is adjusted by R49.3 million for higher than budgeted for wage agreements. These funds are allocated for the same reason as the adjustments to the provincial equitable share explained above and shared between provinces in proportion to their share of personnel expenditure at FET colleges. The adjustments per province for ICS in FET colleges are shown in Schedule 4. The distribution of funds available for ICS is shown in Table 1 below.

Table 1: Distribution of ICS adjustments, 2011/12

Roll-overs of withheld conditional grants

During 2010/11, a range of conditional grants to provinces were withheld due to noncompliance and/or underspending by provinces. The withheld funds have been rolled over and the conditional grants below have been adjusted. The adjustments per province are shown in Schedule 4 and for the remainder are shown in Schedule 5. The adjustments are as follows:

Table 2 below shows the approved roll-overs of provincial conditional grants.

Table 2 (Conditional grants to provinces: Approved national roll-overs to 2011/12) can be found in Government Gazette No. 34880 dated 20 December 2011.

Funding for flood damage

Specific disaster related grants, introduced in the Division of Revenue Amendment Act, 2011, make provision for funds for the repair of infrastructure damaged by floods in 2010/11 and these funds are distributed to provinces based on the assessment of flood damage by the National Disaster Management Centre. The adjustments per province are shown in Schedules 4 and 5. The adjustments are as follows:

The allocations per province are indicated in table 3 below.

Table 3: Additions per sector for flood damage, 2011/12

Allocation of unallocated funds

In the Division of Revenue Act, 2011, R700 million in the School Infrastructure Backlogs grant was unallocated. The national Department of Basic Education has finalised the distribution of the need for the grant and these funds are now allocated to the nine provinces for the eradication of inappropriate school structures. These allocations are shown in Schedule 7.

Local government allocations

Roll-overs

Rural Households Infrastructure grant: A roll-over of R26 million for funds that were committed in 2010/11 financial year. This is an indirect grant implemented by the national Department of Human Settlements to fast-track the rollout of on-site water and sanitation solutions for rural households.

Water Services Operating Subsidy grant administered by the national Department of Water Affairs: A roll-over of R3.15 million from the previous years funding on the Schedule 6 grant.

Regional Bulk Infrastructure grant: A roll-over of RI 0.6 million was approved as a result of funds committed to projects in 2010/11. This is an indirect grant through which the national Department of Water Affairs, on behalf of municipalities, builds bulk water supply systems that cross municipal boundaries.

Re-allocation of funds between municipalities

Neighbourhood Development Partnership grant allocations are being re-allocated away from under-performing municipalities. These funds will be re-allocated to municipalities that have a good track record for the implementation of projects and have accelerated expenditure against the allocation.

An amount of R11 million was declared as savings from the unallocated funds amounting to R50 million under the Local Government Financial Management grant administered by the National Treasury. These funds have been returned to the National Revenue Fund during the 2011 Adjusted Estimates of National Expenditure. The savings do not come from allocations that had been earmarked for specific municipalities and the remainder of the unallocated amount of R39 million will be allocated to municipalities for a new engineering internship programme.

The national Department of Energy is re-allocating funds between municipalities under the Integrated National Electrification Programme grant (Schedule 6) and Electricity Demand Side Management grant (Schedule 6). Slow spending and delays in contractual agreements, poor business plans and non-compliance by municipalities are the main reasons for the decision to re-allocate funds between municipalities.

Shifts

Water Services Operating Subsidy grant (WSOS): In compliance with Section 19 of the Division of Revenue Act, 2011, as amended, the national Department of Water Affairs is adjusting the WSOS programme and has added an amount of R6.9 million from the department's budget to fund wage increases and leave gratuity payments.

An amount of R28.6 million is shifted from the management budget of the Regional Bulk Infrastructure grant and earmarked for feasibility study costs in respect of regional bulk infrastructure.

Correction of error made on the original allocation

An amount of R790 thousand is allocated to the new municipality ''NW397" (formed out of the merger of Kagisano and Molopo local municipalities in the North West). Funds were not allocated on the Municipal Systems Improvement grant due to an oversight in the allocation process for the grant. The Select Committee on Appropriations, in its recommendations on the Division of Revenue Bill, 2011, recommended that "The national Department of Cooperative Governance should locate funds within the department's own revenue to allocate to the new municipality NW397". This has been effected in the 2011 Adjusted Estimates of National Expenditure through the shift of R790 thousand from the budget of the national Department of Cooperative Governance into the Municipal Systems Improvement grant for NW397.

Other related allocations

An amount of R266 million is provided for as a once-off gratuity for non-returning municipal councillors post the 2011 municipal elections. Given that this amount is not allocated to municipalities, it will be reflected on the vote of the national Department of Cooperative Governance as part of the Adjustments Appropriation Act, 2011 and not as an allocation through the Division of Revenue Amendment Act, 2011.

NB: Municipalities are requested to effect adjustments to their projections of grant income from these programmes accordingly, through the passing of a municipal adjustments budget.

Schedules 2, 4, 5, 6, 7 and 8 can be found in Government Gazette No. 34880 dated 20 December 2011.