Eastern Cape Provincial Treasury Policy Speech 2017/18
Honourable Speaker, Deputy Speaker, Honourable Premier, Honourable Members, Senior Government Officials, Distinguished guests and Ladies and Gentlemen,
Good afternoon.
Honourable Speaker, during the first week of March this year, we tabled the 2017/18 Provincial Budget to this august house. The Budget was informed by the National Development Plan and the Provincial Development Plan which are our blue prints for the creation of a South Africa and an Eastern Cape that is free of the triple challenges of poverty, unemployment and inequality.
We must hasten to add that these blue prints are the continuation of the work that was started by the founding fathers of our democracy. They conceived the idea of an inclusive South Africa where all the citizens will leave together in peace and harmony enjoying equal rights and opportunities. The ANC led government continues to be seized with the work of bringing this vision to life through a number of policy imperatives and programmes of actions. Hence the policy speech we are tabling today will outline what we intend to do in the 2017/18 financial year and over the MTEF to solidify the gains we have made since 1994.
However, the current economic environment remains subdued and will not make our task easy, with prospects for growth projected to be at 3.4 % and 1.3 % respectively by the IMF and National Treasury. We must therefore reiterate the call for continued collaboration and partnerships between government and all key stakeholders in our province including business and labour.
Honourable Members, during the Budget Speech we highlighted to our people that we are now in the middle of this 5th term of government and reflected on the progress we have made in improving the quality of their lives.
As government we have made significant progress in building the structures of a democratic state designed to serve transformative and developmental objectives.
The Provincial Treasury has and will continue to play this transformative and developmental role through the provision of strategic and technical leadership in the allocation, management, and utilisation of financial resources in order to improve the quality of life and advance radical economic transformation.
In the 2017/18 financial year and over the Medium Term Expenditure Framework (MTEF), we will continue to focus on:
- Fiscal Sustainability
- Supply Chain Management Reforms
- Municipal Infrastructure support
- Municipal Finance governance and
- Governance and Accountability
Fiscal Sustainability
Honourable Speaker, the tight fiscus environment has forced us to implement a sustainable fiscal framework.
In order to realise this Provincial Treasury will continue to focus on the containment of the Provincial Wage Bill, Implementation of Cost Containment measures, the rationalisation of Public Entities, Infrastructure investment, revenue generation initiatives and maintaining the Provincial Revenue Fund (PRF) liquidity.
Cost Containment Measures
Honourable Members, at the beginning of this term, we committed to implement strict measures to curb expenditure on items that we deemed non-core. We have realised savings from this initiative which have been redirected to core service delivery and economic growth. We will continue enforcing adherence by provincial departments and public entities by issuing a circular on cost containment measures, where all departments must report on how much have saved.
In addition, we are going to do an assessment of tenders and quotation values to determine if they are based on better market conditionswhichprovidessavingsfortheprovince. Furthermore, assessments of departments’ Subsistence & Travelling will be done, and those departments which are found to be in excess especially on individuals will also be top sliced.
Moreover, prices paid for infrastructure projects will also be closely monitored to determine the price paid for construction.
Honourable Members, these initiatives will be done to ensure fiscal sustainability and value for money by doing more with less.
Containment of the Wage Bill
Honourable members, the Compensation of Employee (COE) still remains high but we making steady progress toward its reduction. We will continue to do a quarterly analysis of personnel numbers and CoE expenditure within the departments of Education, Health, Rural Development and Agrarian Reform and Social Development by pursuing reprioritisation and programme reviews.
We will continue to work in collaboration with the Office of the Premier through Provincial Coordinating Monitoring Team (PCMT) with regards to the centralization and screening of the posts to be filled and ensuring that core programmes in departments are filled with the right skills.
The centralisation of PERSAL will remain under Provincial Treasury with regards to the authorisation of appointments.
Departments that have not filled their positions in time will have their funds returned to the Provincial Fiscus in order to supplement the funding of our core priorities.
Enhancement of Own Revenue
Honourable Speaker, our provincial own receipts constitutes 2 per cent of our provincial revenue fund. With the continued decline in the National allocation due to the current economic outlook it is necessary for us to be innovative in finding new streams of generating our own revenue besides the departments that are already doing such.
We have added the Department of Rural Development and Agrarian Reform (DRDAR) to contribute in generating own revenue. In line with the draft provincial revenue generation strategy Provincial Treasury will conduct research on new sources to maximise own revenue.
Rationalisation of Public Entities
Honourable Speaker, the process of restructuring and rationalizing of provincial public entities as stated in the 2016/17 Policy statements is underway.
Currently, the Provincial Treasury has engaged all key stakeholders on the preliminary discussions, deliberations and proposals regarding rationalization of entities.
Furthermore, Provincial Treasury in conjunction with National Treasury is developing a provincial Framework to regulate the processes to be followed on the appointment and remuneration of board members. This initiative is to ensure the standardisation of the remuneration packages of respective board members based on their experience, education qualifications and the size of the entity.
Supply Chain Management Reforms
Honourable Speaker, in line with advancing radical economic transformation and empowerment of local business, we made a bold a statement during the commencement of this term that 50% of government procurement is to benefit local suppliers. We have since started implementing the Local Economic Development Procurement Framework (LEDPF) as an instrument which we could use to achieve this target.
Provincial Treasury has identified a number of opportunities for off-take agreements that include Learner Teacher Support Material, School Nutrition and Patient Food, School and Office Furniture, Infrastructure Input Materials, Fertilizer and Mohair Innovation. This initiative is aimed at establishing new industries that will create sustainable jobs and thus decrease unemployment which is prevalent in the Province. In 2017/18, the relevant user departments supported by Provincial Treasury and DEDEAT will be at the forefront to establish these agreements by engaging the market. Prospective investors should prepare themselves to seize these opportunities.
Honourable Speaker, during the tabling of the Budget Speech earlier this month, we highlighted that we have recently awarded a three year Transversal Term Contract for protective clothing wholly to Eastern Cape based manufacturers. We are now in discussion of finalising another off-take agreement on the Traffic Officers Uniform. This is indication that we are moving speedily in the implementation of our LEDPF.
Honourable Speaker, the payment of our SMMEs within 30 days remains our central focus.
We will regularly monitor the payment of invoices by departments to ensure the sustainability of these enterprises. In addition, Provincial Treasury is putting in place a web base instrument for SMMEs to log their complaints of non-payments by departments within the 30 day payment period. This will assist in following up of the complaints within a stipulated time frame.
Honourable Members, we must continue to urge our SMMEs to register on the Central Supplier Database (CSD) which currently has 31 171 suppliers registered in the Province.
The majority of these businesses are located within the two metros. We encourage businesses outside the two metros to take advantage of this platform in registering their business in order to enable them to do business with government. The suppliers are no longer required to come to Bhisho in order to register but can go to any organ of state in the Province to receive this support.
Honourable Speaker, in our quest to professionalise Supply Chain, Provincial Treasury will continue with the capacitation of supply chain management practitioners that will have a high impact in improving performance of officials.
Social Infrastructure
Honourable Members, our Province is still confronted with infrastructure backlogs of unimaginable proportions which are evident in the former Bantustans within our province.
That is why a concerted effort on social infrastructure, with more investment over the longer term in economic infrastructure, incorporating small town revitalisation and township regeneration, will receive priority.
To date, Sidwadwa Sub-station, which was launched by the Honourable Premier on 3 February 2017, provides electricity to 5317 households within KSD. Moreover, in Nelson Mandela Bay, electricity connections and sanitation to alternative accommodation of what was an Informal Settlement in Walmer Township was provided.
Furthermore, Burgersdorp, in Walter Sisulu Local Municipality, moved from being a dark-town to visible lighting with the installation of High Mast Lights. Equally important, the face of Ntabankulu Municipality has changed through the resurfacing of internal streets thereby attracting investors to make the town economically viable, wherein employment opportunities have been created for our people.
In the drought stricken Joe Gqabi District Municipality we are in the process of constructing or equipping pumps for Chipianni’s Klip Dam 2, construction of 6 Mega litres concrete reservoir under Walter Sisulu municipality as well as construction of additional concrete reservoirs and drilling of additional boreholes in Senqu municipality.
We will continue to provide the necessary support to the Social Infrastructure Programme in order to change the faces of our small towns in addressing the socio economic infrastructure challenges.
Honourable Members, we also took a conscious decision working together with the Department of Roads and Public Works to improve rural access roads to enhance the mobility of our people accessing their villages, school and health care facilities. We have thus far resurfaced an estimated 900 kilometers throughout the six District Municipalities and this indeed will continue throughout the MTEF.
To improve the infrastructure co-ordination across the province, the Standard for Infrastructure Procurement and Delivery Management (SIPDM) came into effect in 2016 and Infrastructure Departments and their Implementing Agents have been trained on this.
This Standard forms an integral component of the Government’s Infrastructure Delivery Management System (IDMS), which has been adopted in order to deliver value for money on our infrastructure assets.
Municipal Finance Governance
Honourable Members, our wish is to see the same level of improvement on financial governance at our municipalities as at provincial government. We congratulate the 7 municipalities that have obtained clean audit reports and encourage the 14 that received unqualified reports to correct the issues that are holding them back from attaining a clean audit status. These municipalities should be applauded as they have improved HR practices, stabilised leadership and effectively used resources in a tightly controlled environment.
Following the survey conducted on municipalities regarding the maturity of their financial management capabilities, Provincial Treasury and COGTA are implementing programmes to address weaknesses in areas that include Supply Chain Management, Asset Management, Risk Management, Revenue and Expenditure Management, including strengthening Financial Governance structures.
With municipalities experiencing ongoing cash-flow challenges that result in them not being able to meet their financial commitments, Provincial Treasury is focusing on assisting them improve their revenue enhancement strategies.
Municipalities that are defaulting on the payment of their creditors, especially payments to ESKOM and other major creditors, will continue to be assisted to develop financial recovery plans to ensure that they meet their obligations and move towards financial sustainability.
Honourable Speaker, one of our main priorities is to continuously ensure the appropriate expenditure of the municipal infrastructure grants (MIG) and other grants by our municipalities as it directly affects the allocation of resources from the National fiscus. Provincial Treasury will monitor the expenditure of these grants by municipalities and should it be found that allocations are not used appropriately; proposals will be made on rescheduling of unspent grants to fund needy municipalities.
Honourable Members, with the commencement of the implementation of the Standard Chart of Accounts (SCOA) at municipalities on 01 July 2017 to improve transparency and accountability, Provincial Treasury will continue to provide support and guidance, and monitor implementation.
Governance and Accountability
Honourable Speaker, governance and accountability becomes crucial in building a capable state that can drive radical economic transformation. Since the implementation of our Financial Management Accountability Model in 2011, there has been a need to revise the approach undertaken. We have focused on the In-Year monitoring in order to improve financial management. We have further developed an Oversight Framework and a CFO Capacitation Framework. We are of the view that the implementation of these frameworks will pave a way for good governance and accountability thus putting our province in a positive audit space.
Following improved audit outcomes in the previous financial year, a special focus will be put on the Department of Education and DRDAR to ensure that their transformation plans are implemented, also ring-fencing the positive audit results in other departments by emphasising the implementation of basic controls.
Honourable Speaker, the Provincial Treasury has always valued it human resources as a key asset to enhance service delivery and aims to maintain a highly competent, productive staff by being an employer of choice and attracting and retaining the best skill sets.
The currency vacancy rate of 2.3% has been influenced by the recruitment processes which have been fine-tuned to turnaround the time of filling a vacancy post well within the standard of 90 days. In addition, Provincial Treasury aims to meet its equity targets moving from a baseline of 36% women representation at SMS level to at least 50% over the MTEF. Executive development of women in middle management is being prioritised in an effort to reach this target.
Furthermore, Provincial Treasury will be focusing on increasing its target of employing persons with disability from 1.7% to 2%.
Budget and Programme Allocations
Honourable Speaker, let me present the budget allocations which will drive our programmes in the 2017/18 financial year.
The Provincial Treasury has been allocated R724.522 million and the breakdown per programme is as follows:
Programme 1:
Administration ................................................ R158.403 million
Programme 2:
Sustainable Resource Management ................ R66.109 million
Programme 3:
Asset and Liabilities.......................................... R25.205 million
Programme 4:
Financial Governance....................................... R88.970 million
Programme 5:
Municipal Finance Governance...................... R385.835 million
Conclusion
In conclusion Honourable Speaker, the economic climate limits our ability to move at a rapid pace in advancing radical economic transformation. We need to deepen a sense of responsibility throughout government in ensuring that are our efforts are integrated and coordinated in a seamless manner to do more with less. We cannot do it on our own; we need our key stakeholders in business and labour to advance this vision.
Napoleon Hill once said: “One of the most common causes of failure is the habit of quitting when one is overtaken by temporary defeat.”
The current economic hurdles we are facing are temporary and in time we will overcome them and continue our journey of creating a better life for all our people.
Madam speaker, allow me to table formally the Strategic Plan, Annual Performance Plan and Service Delivery Implementation Plan for 2017/18 financial year.
I thank you
