Speech By Mr. Mandla Nkomfe, Gauteng MEC for Finance, on the occasion of tabling the 2012/13 Adjustments Budget and Medium Term Budget Policy Statement, Gauteng Provincial Legislature

Madam Speaker And Deputy Speaker
Honourable Premier, Nomvula Mokonyane
Colleague’s in the Executive Council
Honourable Members
Ladies and Gentleman

Madam Speaker, it gives me a great sense of honour and gratitude to stand in front of this revered house to table one of the most critical component of our financial governance system, the 2012/13 Budget Adjustment and the Medium Term Budget Policy Statement 2012.

The 2012/13 adjustments budget takes the province closer to the end of 2009/14 term of governance and is therefore an essential part of consolidating the priorities and finalising critical deliverables identified at the beginning of the term.

Madam Speaker, the 2012/13 main revenue appropriation has been increased upwards by R1.1 billion, comprising of the Equitable share amount of R667.47 million to fund the difference relating to the improvement in conditions of service agreed to in the 2012 public sector wage agreement which were 2% higher than anticipated, Conditional grants amount to the tune of R35.8 million to cater for Expanded Public Works Programme (EPWP), improvements in conditions of service for Further Education and Training Colleges (FET) as well as Medical Service Grant. The remaining amount of R364 million comes from the upward adjustment of the Provincial Own Revenue.

Madam Speaker as part of improving its systems of governance to serve the People in the best appropriate and efficient ways, Executive Council continuously aims at ensuring alignment of function with the most effective methods of service delivery. This occasionally results in the shift of a function from one department to another with a concomitant shifting of funds to the receiving department.

• A total of R25 million has been suspended from the Department of Finance and allocated to a number of departments to fulfil the executive decisions to decentralise procurement and human resources functions. The amount relates to the migration of personnel responsible for performing the aforementioned functions.
• The total amount of R23.45 million is transferred from the Department of Economic Development to the Department of Sport, Arts, Culture and Recreation for the Gauteng Film Commission.
• The function of Development Planning with the budgeted amount of R14.1 million has been moved from the Department of Economic Development to Office of the Premier to ensure efficient and effective integrated development planning in the province.

Madam Speaker, a total rollover amount of R585.9 million has been approved and allocated to departments following a rigorous evaluation process undertaken by the province and national government. This is comprised of both the resources from the conditional grant and the provincial equitable share.

The rollovers were approved in lieu of the fact that departments have made commitments on goods and services but have not spent due to unforeseen circumstances. The rollover amounts are distributed as follows:

• The amount of R94.3 million has been rolled over in relation for to the commitments on the National School Nutrition Programme and Technical Secondary School Recapitalisation grants in Public Ordinary Schools in the Department of Education.
• Roads and Transport has a rollover amount that have been approved for the Provincial Roads Maintenance Grant (PRMG) of R424million as well as the Public Transport Operations Grant (PTOG) of R525 000. These amounts will allow the department to complete the refurbishment and rehabilitation projects and settle outstanding invoices from the 2011/12 financial year.
• An amount of R12.9 million is rolled over for the Comprehensive Agricultural Support Programme, Agriculture Disaster Management and Ilima/Letsema conditional grants in the Department of Agriculture and Rural Development. The rollover is for invoiced amounts and commitments in relation to infrastructure damaged by floods including infrastructure on farms.
• An amount of R28 million for the Devolution of Property Rate Funds grant is being rolled over for the Department of Infrastructure Development for claims from municipalities which could not be paid at the end of the financial year.
• Gauteng Legislature receives rollovers amounting to R7.4 million for capital projects that were not completed as scheduled or were deferred due to operational reasons. The projects that were not completed are as follows: Replacement of the City Hall chairs at R1.5 million; Integrated Security Project at R3.9 million, SAP ESS/MSS project at R600 000; as well as ECM at R1.4 million.
• A rollover which relates to unspent funds on goods and services is received by the Department of Social Development amounting to R5.6 million from the 2011/12 financial year.
• The Department of Finance had its rollover request of R12 million approved from the 2011/12 financial year to the 2012/13 financial year. The rollover related to the procurement of equipment that was procured in the 2011/12 financial year but payment was effected in the following financial year.

Madam Speaker the PFMA makes provision, through the adjustment budget, for what is considered unforeseeable and unavoidable expenditure i.e. expenditure which in all sensibleness could not have been anticipated by the department at the beginning of the financial year. An amount of R8million has been made available to cover this expenditure.

• An amount of R3 million is allocated to the Department of Health as a once-off medical services allocation conditional grant for the 2013 African Cup of Nations tournament scheduled for 19 January 2013 to 10 February 2013.
• The Office of the Premier received R5 million to cover the expenses relating to the two funerals that were declared as official state funerals in the current 2012/13 financial year.

Madam Speaker, an additional amount of R651million has been made available for the purposes of higher than anticipated improvement of conditions of service and Expanded Public Works Programme which will result in an increase in job creation and ensure that stipends are paid to participants. These additional amounts for the Improvement In Condition of Service (ICS) is distributed as follows:

• The Department of Health is allocated R254.3 for this purpose. The department will also receive an additional R700 000 for EPWP incentive grant. The Department of Education has been allocated an amount of R351.1 million for ICS. An additional amount of R19.71million has also been made available to the department for ICS in the Further Education and Training Colleges.

Madam Speaker through our own prudent financial management, we are making an additional funding to the tune of R3.7 billion from the provincial resources to various departments in the province.

• An amount of R5 million is allocated to the Office of the Premier for financing the costs of converting the operating system of the Public Service Hotline to SAP and equipment. The department is migrating to a SAP platform which will be cost effective as the province already has the SAP facility.
• R13. 9 million is being re-appropriated to the Legislature from its retained income to ease some of its budget pressures.
• The Department of Health receives R2.4 billion as additional funding. These are allocated to the department to comprehensively deal with its financial management challenges and also assist in the implementation of the Health Turnaround Strategy. This will ensure that service delivery mandate of the department to deliver quality health care to the citizens of Gauteng remain a priority and continues without disruptions. Furthermore, a total of R40.9 million has been made available to the department for the payment of commission on revenue collected from the Road Accident Fund.
• The additional funding received by the Department of Education amounts to R230 million. This is for the provision of new schools and additional classrooms for the coming new school term commencing in January.
• Social Development Department is allocated an additional amount of R30 million for the infrastructure programme to pay accruals from the previous financial years and projects that were not ready for implementation during the main budget allocation.
• An additional amount of R940.2 million is allocated to the Department of Roads and Transport to assist the department with its efficient management of the Gautrain Rapid Link; to deal with public transportation through the bus services and also to improve the DLTCs.
• An additional allocation of R6 million is received by Gauteng Department of Agriculture and Rural Development (GDARD) for the infrastructure portfolio to accommodate payment of accruals from the previous financial years and to roll out urgent repairs and maintenance to existing infrastructure.
• Sport, Art, Culture and Recreation receives additional funding of R19 million to cover costs related to the build-up and hosting of the African Cup of Nations in Gauteng.
• The Department of Finance is receiving an additional R6.4 million for SAP configurations. The configuration is intended for all the officials that have migrated to different departments to configure their system access in the new departments.
• An amount of R10 million has been made available to the Department of Infrastructure Development for the development of the Gauteng Integrated Infrastructure Master Plan to guide planning and implementation in line with Gauteng 2055 as well as the design and modelling of the planning house working in conjunction with the Gauteng Planning Commission.

Madam Speaker, the main appropriation of R69.3 billion that was allocated for the 2012/13 financial year has been revised upward by R4.8 billion to an adjusted appropriation of R74.1 billion. The Conditional Grant appropriation is adjusted upwards by R596.8 million from R15.6 billion to R16.2 billion. The Estimate of Capital Expenditure appropriation is being adjusted upward to R8.9 billion from R8.3 billion.

Madame Speaker, the Gauteng Provincial Treasury is working with all departments especially the department of health towards stabilising their finances. A special attention is being given towards clearing all accruals in the province; I should however hasten to state that this is a process not an event. In the coming week, I will be tabling the Unauthorised Expenditure Bill to this house to ensure that we reduce the unauthorised expenditure in the province, where unauthorised expenditure has not been condoned, this will be the first charge in the departments’ budget for 2013/14.

Madam Speaker as we table this adjustment, I need to emphasise that financial management in the province is a responsibility that should be discharged by all those that have been tasked with the responsibility of stewardship of the financial resources, this include all Accounting Officers, all Chief Financial Officers in the province.

MECs must hold their Accounting Officers (as CEOs of the Departments) responsible for ensuring that finances in their respective departments are managed in a sound manner and all financial legislations are adhered to. Making payments to suppliers within the legislated 30days is a non-negotiable and HODs must be held accountable for not complying with this aspect of the law.

Honourable Speaker, allow me to express my appreciation to Premier Nomvula Mokonyane for her sound leadership. I am grateful for the support of the colleagues in the Executive Council and my team from the department led by the HOD Ms Nomfundo Tshabalala.

I would also like to commend the Chairperson of the Portfolio Committee Mr. Skhiwe Khumalo and the rest of the committee members for the constructive manner in which they continue to engage the department, words of appreciation goes to Mr Sipho Magama Chairperson of Standing Committee on Public Accounts (SCOPA) and Committee Members for their continued support and cooperation with the department and the rest of the Provincial Government.

Honourable Speaker, I hereby submit the 2012 Medium Term Budget Policy Statement, and I table the Adjustment Appropriation Bill for consideration by Legislature.

I thank you.