MPL, during the tabling of the 2006/07 Budget Vote
6 June 2006
AGE OF HOPE
Madam Speaker, Mrs Pinky Phosa,
Honourable Premier, Mr Thabang Makwetla,
Honourable members of the legislature,
Heads of departments,
Representatives from the business sector,
Representatives from local government,
Members of the community,
The media,
Distinguished guests,
Ladies and gentlemen,
Comrades and friends;
Madam Speaker, allow me to remind the House again that we are in the âAge of
Hope,â a hope for a better life. A better life where there is dignity and
respect, a better life, where there is care and love for our elders and a
better life where children are cared for and loved.
Madam Speaker, hope for a better South Africa began in the dark days of
apartheid. Hope for a better South Africa began with the realisation that South
Africa needs to be a better nation and the rejection of the apartheid
order.
With the advent of democracy in 1994 the will of democracy loving South
Africans laid the foundations for future economic growth and people centred
development.
It is pursuant to this quest for âa better life for allâ that one is
reminded of Maya Angelouâs words:
âHistory, despite its wrenching pain, cannot be unlived but if faced with
courage need not be lived again.â
It is against this background that South Africans need to re-double their
efforts to ensure that this democracy is fully protected and the age of hope
transforms into a sustained improvement of the quality of life.
As the Department of Finance, we cannot continue in a âbusiness as usualâ
mode but commit ourselves to stepping up several gears in order to meet the
timelines of government programmes with regards to service delivery. The
Department has a duty for the attainment of accelerated service delivery
because its oversight mandate puts it in better stead to influence the
provincial administration to the right direction.
The Department of Finance, in the province, has put the fundamentals in
place for improved financial management ideals and has successfully maintained
focus on treasury matters as envisaged in its mandate. The mandate of the
Department is amongst others to promote and enforce transparency and effective
management in respect of revenue, expenditure, assets and liabilities of
provincial departments and public entities; and to ensure that its fiscal
policies do not materially and unreasonably prejudice national economic
policies. The Department should also assist provincial departments and
provincial public entities in building their capacity for efficient, effective
and transparent financial management.
Review of the 2005/06 financial year
When we presented our policy and Budget speech for the 2005/06 financial
year, we made certain undertakings on which I now wish to report and outline
our plans for 2006/07.
The departmental structure and capacity was enhanced by the introduction of
new directorates such as legal services, infrastructure co-ordination, economic
analysis and internal audit. In 2005/06 financial year, a total of 98 positions
were filled. Amongst these posts 13 were senior management positions, with five
of them being filled by women and four filled by men. I must state that our
total establishment is fully compliant with our employment equity objectives as
far as race, gender and people with disabilities considerations are concerned.
We therefore can confidently state that most of the senior management positions
that were vacant and were necessary for a successful execution and discharge of
our mandate have been filled.
We, as a Department are also confronted by the skills shortages hence the
slower rate in filling vacant posts. We are addressing the skills shortage in
the province through the learnership and internship programmes and the awarding
of bursaries. Once again we continued with the learnership and internship
programmes in the 2005/06 financial year and these programmes will continue in
the current financial year. For the 2006/07 financial year, we have already one
an intake of 13 interns and 15 learnership candidates and plan to increase the
intake.
The legal services section in the Department of Finance was established
during November 2005. We have managed to facilitate the enactment of the
Mpumalanga Finance Matters Act, 2006, which intends to provide for a procedure
for the amendment of a Money Bill, the utilisation of funds in emergency
situations and the withdrawal of funds before the annual budget is passed.
The Premier and the Executive Council (ExCo) assented to this Act, which
gives effect to the Public Finance Management Act, in May 2006 and was
published in the Government Gazette so that it can take effect.
Through the assistance of this unit the Department has finalised all
policies that are necessary to streamline its operations.
The accounting services unit has worked tirelessly to ensure that amongst
others existing accounting policies and practices are implemented in provincial
departments and municipalities, in line with Generally Recognised Accounting
Practices (GRAP) standards to enable the transition from the cash basis to an
accrual basis of accounting. Its primary objective is to improve the quality of
financial reporting and information. More efforts will be made to ensure that
there is financial discipline within departments and municipalities. The public
finance unit will be strengthened to monitor the effective implementation of
provincial budgets and ensuring compliance with the Public Finance Management
Act (PFMA).
The financial affairs of provincial departments and municipalities will be
continuously monitored by utilising systematically collected data on specified
indicators. The Monitoring and Evaluation Directorate will provide credible and
useful information that can be incorporated into or used as reference points
for future project or programme management. These will assist the Financial
Governance Chief Directorate to plan in order to continuously strengthen the
capacity of departments and municipalities through value adding training,
workshops and counselling.
The Chief Directorate on Financial Governance has developed and implemented
a strategy to assist departments to address issues raised by the
Auditor-General that seems to be common amongst departments.
The strategy is stating corrective measures to be taken by departments and
public entities in the province in order to avoid similar or new matters of
emphasis to be raised in the audit reports for 2005/ 2006 financial year.
Of course, the Auditor-General will continue to raise issues in order to
assist the provincial administration to improve its financial controls and
avoid complacency.
In order to ensure the full implementation of the Supply Chain Management
Framework (SCMF), the ExCo has approved the Provincial Supply Chain Management
Policy. The policy provides guidelines to ensure uniformity and common
understanding of Supply Chain Management (SCM) issues. We believe that the
implementation of the Provincial Supply Chain Management Policy will assist
Departments to realise governmentâs objectives with regards to small, medium
and micro enterprise (SMME) development and the overall economic development of
the province. We will continue to ensure that policy guidelines are adhered to.
As per the time frames set in the National Treasury guidelines, we managed to
establish the Public Private Partnership (PPP) unit before the December 2005
deadline.
We are still facing challenges with regard to implementing fully, some of
the policies of government such as the Broad Based Black Economic Empowerment
(BBBEE) and the Supply Chain Management (SCM) because we still cannot account
for the Departmentâs contribution to BBBEE in terms of expenditure in the
2005/06 financial year. On a lighter note one may even be tempted to borrow a
solution from the date on which this policy and Budget speech is delivered,
that is 6 June 2006 and suggest that we set a future target of six from every
10 cents spent should go towards BBBEE. On a more serious note, we are
suggesting to the ExCo that the province should set a BBBEE target.
We are at an advanced stage in finalising the PPP policy framework for the
province. It is our intention to launch the approved policy before the end of
the current financial year. PPP initiatives indeed can contribute to developing
solutions to many service delivery challenges.
These solutions include service delivery aspects like provision of quality
water, healthcare, roads and many more. We are of the belief that PPP
interventions will assist in increasing employment opportunities, skills
development and transference and does contribute to economic growth.
In the 2006/07 financial year we will tighten our monitoring capacity in
order to be able to provide accurate information and support to departments.
This will contribute towards the achievement of the Presidentâs call for set
asides targeting women, the youth and people with disabilities on the
procurement of goods and services. The 2006/07 financial year will be
characterised by innovative interventions such as road shows to educate women
and the youth on tendering processes to enable them to seize opportunities
which exists.
These road shows will be done in phases meaning that the road shows
targeting the youth will be scheduled to coincide with the youth month, which
is June, so that they can be incorporated with the celebration of the 30th
anniversary of the Youth Day. A similar round of road shows targeting
specifically women will be conducted in August to coincide with the celebration
of Womenâs Day. This is in line with the spirit of Accelerated and Shared
Growth Initiative for South Africa (AsgiSA) as the Deputy President stated:
âIf AsgiSA doesnât work for women, it will not work for South Africa.â
This will certainly generate much more exposure and generate better
awareness amongst the target groups. We call upon the private sector to join
the public sector in partnership and establish a fund towards assisting the
target groups.
The Department of Finance established its own internal unit in July 2005, to
monitor and ensure that there are effective risk management, control and
governance processes within the Department.
We have also managed to have an Audit Committee established in July 2005, to
monitor and oversee the internal audit and provide advice to the Department.
The Internal Audit Unit has conducted a risk assessment in September 2005 to
determine the risks in the Department. A three-year and annual audit plans
based on the risk assessment was developed and approved by the audit
committee.
Let me also state that as we have previously said in the 2006/07 provincial
budget speech, the implementation of the Municipal Finance Management Act
(MFMA) received much attention in the previous financial year. We found a
common set of challenges in most of the municipalities that we have visited.
These include but not limited to the following:
* Municipalities battle to have government departments and public entities
settle their accounts within the prescribed maximum period of 30 days after
presentation of an invoice. Maybe, Madam Speaker, one should at this stage
appeal to our Heads of Departments and my colleagues in the ExCo to ensure that
we pay municipal accounts in time.
* Lack of capacity in the financial management and the usage of different
financial systems with some being so outdated that they are unable to generate
desired management reports. This is a challenge that demands a holistic and
provincial wide attention so that the solution adopted should ensure full
integration.
* Submissions of reports as per prescription by the MFMA and the proper
compilation of their Integrated Development Plans (IDPs).
* Ability to stimulate and enhance their local economies.
* Debt Management Policy and Register. Municipalities have been unable to
categorise their debtors and do a proper age analysis of their debtors.
The financial matters of municipalities delegated to the provincial
Department of Treasury will be monitored to ensure accountability in terms of
the management of their revenues, expenditures, assets and liabilities and the
handling of budgetary and financial planning. A lot of work has been done to
capacitate and help these municipalities to comply with the MFMA.
The overall aim of my Department is to improve the status of these
municipalities, so that we should eventually be left with high capacity
municipalities. It is through capacity building in municipalities and of course
prompt settlement of municipal accounts that this aim will be achieved. Most of
the delegated municipalities are now submitting monthly reports on expenditure
as prescribed by the MFMA. The interventions of the Department of Finance have
also enabled all high capacity municipalities to compile their service delivery
Budget Implementations Plans (BIPs). We have finished compiling Memorandum of
Understanding (MoU) for immediate signing by the honourable MEC for Local
Government and Housing and me, in order to integrate and align our efforts
because of the joint mandate over municipalities between our departments.
Madam Speaker, we have indeed successfully managed to provide comprehensive
and systematic support to departments through the provision of a dedicated
information technology network and financial systems. This has assisted our
interface internally and externally in order to develop efficient business
solutions through the engagement and the use of latest technology.
Madam Speaker, the capacity of provincial departments to spend and deliver
on infrastructure remains a challenge and will be more so with the increase on
infrastructure spending as planned by national government in AsgiSA. We are
going to strengthen the capacity of the infrastructure co-ordination unit to
facilitate the implementation of the Infrastructure Delivery Improvement
Programme (IDIP) which is a capacity building programme. The programme aims to
give government departments appropriate skills and systems to plan and manage
the delivery of infrastructure well; and the envisaged.
Infrastructure Maintenance Plan (IMP) in departments to deal with
infrastructure development and perform continuous monitoring in terms of these
programmes. This will ensure proper planning and execution of infrastructure
projects and regular maintenance of existing infrastructure.
Our plans for 2006/07
Our plans for 2006/07 financial year are centred on the Departmentâs
responsibility to support other provincial departments by strategically playing
an oversight, advisory and co-ordination roles.
The following chief directorates are in place to implement the mandate of
the Department:
1. Sustainable resource management
The programme provides professional advice and support to the member of the
ExCo on provincial economic analysis, fiscal policy, public finance development
and management of annual budget processes. We will ensure that the programme
continues to play a key role in supporting the other departments to achieve
their objectives.
Budget management
Madam Speaker, budget management remains central and key to the management
and oversight of the provincial budget process. The unit is building capacity
to analyse departmental strategic and performance plans and budgets. The proper
analysis of departmental budget documentation will ensure that departmental
budgets are aligned with the broad national and provincial policies and
priorities.
The Budget Management Unit is positioning itself to assist municipalities in
assessing and analysing their Integrated Development Plans (IDPs) and
budgets.
This analysis will assist in establishing the extent to which their budgets
give expression to national and provincial policies and priorities. The unit
will also assess capacity in budget units and conduct workshops to build
capacity in budget compilation and management.
Fiscal Policy
Madam Speaker, the Fiscal Policy Unit in the Department continues to assist
departments by capacitating them to collect revenue. The unit will continue to
hold regular workshops with all departments on revenue management and the
identification of new revenue sources. We are in the process of working with
Department as alluded to in the main budget speech in order to increase revenue
collection potential. I will be reporting on the outcomes in the adjustment
budget on progress made in this regard.
Economic analysis
The support to the economic growth of the province will be provided through
the economic analysis functions of the Department, which will provide strategic
economic direction to the budgeting process of the province. Through AsgiSA and
other government policies and programmes as our action drivers, economic
analysis becomes critical for the identification of further areas for growth by
the province.
The Economic Analysis Unit will continue to conduct relevant research that
will inform the strategic direction of the budget and planning processes; build
modelling capacity to conduct effective impact assessments and forecasts. The
unit will also continue to provide the updated socio economic outlook of the
province and municipalities, for more improved decision making processes.
2. Assets and liabilities management
The objective of this programme is to provide policy direction, facilitating
the effective and efficient management of physical and financial assets, PPP
and Information Technology (IT) services to all provincial departments.
Madam Speaker, we will develop a customised Preferential Procurement Policy
Framework (PPPF). The objective of the framework is to ensure consistency in
the adjudication of tenders or bids. We want to instil confidence amongst our
people and as such, we will introduce a complaints register for the province.
In order to ensure a broad based submission of bid documents, we will during
this year focus on the establishment of bid advice centres. This will make it
possible for ordinary members of the public, especially women, people with
disabilities and the youth to have easy access to information on available bids
as well as the pre-requisite for bidding and how to complete bid documents. We
will ensure accessibility to bid documents as widely as possible including the
usage of the Internet.
We will invest more to improve the information super highway by developing
an Integrated Information Technology Plan (IITP) for the province. This will
also include the replacement of old IT infrastructure by new and advanced
systems.
3. Financial governance
This programme serves to facilitate, monitor, support and provide
professional advice to ensure financial compliance and to enable enhanced
service delivery in the province. It furthermore promotes accountability
through substantive reflection of financial and non-financial activities.
Financial governance remains key to fulfilling our mandate which ultimately
would ensure effective service delivery and bring about tangible changes in the
quality of lives for the ordinary South African.
We have and will continue to support departments and make sure that all
departments submit their annual financial statements to the provincial
Auditor-General as required by the Public Finance Management Act (PFMA). We are
pleased to announce that all provincial departments were able to submit their
2005/06 annual financial statements to the Auditor-General (AG) by 31 May
2006.
Revenue generation
Madam Speaker, the institutional set up in Mpumalanga is that departments
are responsible for provincial own revenue collection and generation. The
provincial Treasury will assist departments review existing sources of revenue
and identify potential sources of revenue in order to expand the overall
revenue base.
Tariffs
As a province we need to review our own revenue tariffs annually as per
chapter seven of the Treasury Regulations, in order to increase own revenue
collection. The Mpumalanga provincial government could greatly increase the
collection and generation of own revenue by focusing on annual review of the
various tariff categories. The major tariff categories include Road Traffic Act
fees, gaming revenue and hospital patient fees.
Currently five departments in the province have taken action to review and
revise tariffs. They are the Department of Agriculture and Land Administration,
the Department of Economic Development and Planning (gaming levies), the
Department of Roads and Transport (Road Traffic Act fees), the Department of
Health and Social Services and the Department of Culture, Sport and
Recreation.
These departments will be assisted to review the 2007/08 tariffs as early as
June 2006, in preparation for implementation on 1 April 2007.
Gaming fees
Implications of the proposed revision of rates for casino levies
The current gambling levy charged in terms of the Mpumalanga Gambling Act
(Act No. 5 of 1995), as amended is fixed at a rate of five percent across the
board (i.e. for all casinos irrespective of the turnover of their gross gaming
revenue). Based on the survey conducted by the Mpumalanga Gaming Board and
after a thorough consideration of the structure of gaming levies of other
provinces, it was concluded that the most equitable method of determining
gaming levies should be on a sliding scale.
This will assist in accounting for any amount of gross gaming revenue which
is in excess of R10 million, thus realising an increase on the total gaming
levies to be paid. The province will benefit from this exercise as some of the
casino licensees have already exceeded the R10 million marks. In the light of
these findings, the Department of Economic Development and Planning has drafted
a bill which will be tabled for comments in due course. It should be further
noted that this revision is long overdue and has been overtaken by the
tremendous growth of this industry during the period 1997 to 2005.
Horse racing and sport betting
Madam Speaker, it is with great pleasure to announce that the regulatory
function of the horse racing and sport betting for our province has now been
taken over from the Gauteng Gambling Board, with effect from 1 April 2006. The
province will now save on the interest that was previously accumulated and
earned by the Gauteng Gambling Board for their services in regulating this
sector of the gambling industry, on our behalf. As a result of this the
province will also be in the position to contribute towards the development of
sport, since one percent of winnings from sport betting will be used for this
purpose as provided for in the horse racing and betting ordinance, 24 of 1978,
as amended.
Madam Speaker, it should be noted that the key critical success factor is
the setting of targets for revenue generation and collection. A bottom up
approach should inform the setting of these targets. In other words the
provincial departments should inform the provincial Treasury about their
revenue targets. In departments that have regional offices and public entities,
the institutions themselves should prepare revenue projections. This will
ensure ownership and commitment to the targets.
It is lastly proposed that to build on the success and desire of managing
revenue efficiently and effectively, the sources of revenue must be clear and
documented.
The human resource capacity must also be built and must be available to
deliver on enhancing revenue generation and collection in all departments.
Budget proposal: 2006/07
Honourable members, we believe that the budget we are proposing here this
afternoon will enable us to deliver on our mandate and according to our planned
outputs for 2006/07 financial year. Allow me then, Madam Speaker, to table the
proposed 2006/07 budget for the Department of Finance (Budget Vote 3), which
amounts to R133,741 million broken down as follows:
Programme 1: Administration
The objective of this programme is to provide overall leadership and
strategic management and to ensure appropriate support to all departmental
programmes in terms of human and non-human resources management. A total of
R36,338 million has been budgeted for the programme to provide policy direction
on public expenditure priorities and to improve the effective and efficient use
of resources within an affordable level as required by the PFMA.
Programme 2: Sustainable resource management
An amount of R29,690 million has been budgeted for this programme to provide
professional advice and support to the member of the ExCo on Provincial Fiscal
Policy, Public Finance, the development and management of the annual budget
process.
Programme 3: Assets and liabilities management
The objective of the programme is to provide effective and efficient
management of assets, the implementation of the PPP projects and the supply
chain management framework by all departments. The programme also provides
functional support on financial and non-financial systems. To carry out its
mandate, the programme is allocated an amount of R53,008 million.
Programme 4: Financial governance
An amount of R14,705 million has been allocated to the programme to promote
accountability through substantive reflection of financial activities of the
province, as well as compliance with financial norms and standards. The
programme also provides prompt support to line functions by developing and
implementing norms and standards (financial and non- financial).
Overall budget
Madam Speaker, I now table the expenditure proposal of R133,741 million and
the policy and Budget Speech of the Department of Finance for the 2006/07
financial year, for consideration and approval by the house.
Conclusion
In closing, honourable members, Madam Speaker, let me state that due to the
nature of the mandate of the Department of Finance we will have our moment of
joy:
* when all provincial departments get unqualified reports;
* when the aspirations of our people are addressed, their trust maintained and
their interests advanced;
* when the provision of basic services are improved to levels never imagined
before;
* when the poor and the vulnerable are promptly assisted to change their
status.
Until then we will maintain a consistent level of dissatisfaction with the
status quo and unreservedly double our efforts towards the realisation of these
goals.
I want to end by thanking the honourable Premier, members of the Executive
Council, members of the Portfolio Committee for their oversight role and the
manner in which they have guided and assisted the Department.
I would also like to thank my family, especially my husband and daughters
for their continuous support.
As we are in the age of hope, this budget will assist in transforming the
hopes of our communities into reality. Madam Speaker, that is why we can afford
what the quote by Anne Lamott is stressing:
âHope begins in the dark; the stubborn hope that if you just show up and try
to do the right thing, the dawn will come. You wait and watch and work. You
donât give up.â
I thank you!
Issued by: Department of Finance, Mpumalanga Provincial Government
6 June 2006
