Honourable Speaker, our Constitution requires an equitable division of nationally collected revenue between national, provincial and local government. This is set out in the Division of Revenue Bill and its accompanying Explanatory Memorandum. The allocations are explained in the Budget Review and elaborated in the Estimates of National Expenditure.

In preparing these proposals, we have benefited from recommendations of the Financial and Fiscal Commission and Parliament’s committees. As is required by the Money Bills Amendment Procedure and Related Matters Act of 2009, the Budget Review includes a report which responds to concerns raised by the finance and appropriations committees, and in portfolio committees’ budgetary review and recommendation reports. We greatly appreciate these contributions of Parliament to the rigour and integrity of our budget process.

The national share of non-interest expenditure is about 48 per cent, provinces receive 43 per cent and 9 per cent goes to municipalities.

Allocations to basic services provided by municipalities have been prioritised, despite the constraints of the budget framework. A new approach is proposed for cities, to support their growth and restructuring and strengthen infrastructure investment. A review of local government infrastructure grants is in progress, which will lead to simplification and consolidation of the financing arrangements.

Over the longer term, progress in municipalities requires local economic growth, property development and revenue capacity, alongside national support. These are key elements in the “back to basics” municipal development strategy championed by Minister Gordhan.