Paul Mashatile, at the Gauteng Provincial Legislature
22 June 2006
Comrade Speaker and Deputy Speaker,
Honourable Premier,
Colleagues in the Executive Council,
Honourable members of this House,
Esteemed guests,
Ladies and gentlemen:
Introduction
As from 1 April this year, the Gauteng Treasury became a separate vote from
the former Department of Finance and Economic Affairs. This follows an
announcement by the honourable Premier last year that the Provincial Treasury
will be separated from the Department of Finance and Economic Affairs.
Comrade Speaker, Gauteng Treasury is the custodian of provincial resources.
Through the development and implementation of fiscal policy, Treasury supports
the long term growth and development of the provincial economy. In addition and
through the promotion of prudent fiscal management it ensures that as a
province we live within our means. This is particularly important as we all
know that one of the basic lessons of economics is that there are never enough
resources to satisfy all the needs.
We will continue to rely on Treasury to maximise provincial revenue and to
facilitate efficient allocation of resources in support of the provincial
political imperatives and our strategic priorities. It is critical for us to
develop adequate responses to the challenges posed by rapid in-migration that
put strains on the limited resources we have.
We also expect Treasury to work closely with the Department of Local
Government to support municipalities. This we must do in order to deliver on
our pledge to make local government work better.
During this year of the 50th anniversary of the historic Women's March to
the Union Buildings, the 30th anniversary of the Soweto Uprisings and the 10th
anniversary of the adoption of our country's Constitution, the Gauteng Treasury
will honour these important milestone in the history of our country by ensuring
that there is proper mainstreaming of youth and women's issues in implementing
provincial budgets.
Treasury will also play a central role in ensuring that as directed by our
Constitution we improve the quality of life of all citizens and free the
potential of each person. This Treasury will do by implementing policies that
will contribute towards expanding access to social and economic
opportunities.
More specifically, Treasury will pay attention to the following key
areas:
a) strengthening financial management to achieve operational efficiency and
promote accountability in government;
b) attracting and retaining an appropriate technical skills base to the Gauteng
Provincial Treasury;
c) providing technical assistance including analysing, monitoring, evaluating
and advising departments to enable good financial planning and
management;
d) developing and implementing efficient internal systems and processes;
e) assisting municipalities with the implementation of the Municipal Finance
Management Act (MFMA).
Treasury will also take over the management of all our current and future
Private, Public, Partnerships (PPP) initiatives. It will also play a critical
role in strengthening the capacity of the Offices of Chief Financial
Officers.
The economic environment and revenue collection
Comrade Speaker, there is a direct link between the performance of the
provincial economy and our ability to increase the provincial own revenue
portion of our total revenue.
In line with the trend nationally, the provincial economy continues to show
signs of positive growth. We remain confident that we will sustain the current
positive growth trend of the provincial economy. We are equally confident that
our objective of growing the provincial economy at a rate of eight percent by
2014 is within reach.
Due to the strong performance of the provincial economy, we expect
provincial own revenue to grow at an average of 7,9 percent in nominal terms
over the next three years.
We expect revenue rose from vehicle licences which accounts for almost 55
percent of provincial own revenue to continue to show a positive increase.
Revenue raised by the Gauteng Gambling Board on behalf of the provincial
government is expected to grow at an average 5,8 percent over the next three
years.
As we said in the past, we are investigating measures that will assist us to
increase provincial own revenue. We wish to reiterate that there will be
extensive consultation with affected stakeholders before any announcement is
made in this regard.
It is crucial for us to continue looking at ways of increasing provincial
own revenue as this will contribute significantly to our ability to respond to
the spending pressures placed on us by the challenge of rapid in-migration to
our province.
Comrade Speaker, the total budget for the Gauteng Provincial Treasury for
the 2006/07 financial year is R70,4 million. I will now outline how this budget
will be broken down among the various business units of Treasury.
Fiscal and economic management
Budget management
The budget management unit will focus on the management and improvement of
the provincial budget allocation process. This will be done in order to ensure
allocative efficiency, a transparent and credible budgeting process.
During the current financial year the unit will prioritise the review of all
budget processes conducted both within and across departments to ensure among
others that policy imperatives are properly costed and that initiatives by
departments contribute to the achievement of provincial priorities.
Public finance
The public finance unit is a newly established function within Treasury. It
will focus on sector policy priorities and sector financing as well as
monitoring, evaluation and reporting on financial management. More importantly
this unit will monitor, evaluate and report on service delivery performance
management across departments.
Immediate challenges facing the unit include developing the necessary
capacity and technical expertise to execute its mandate, ensuring efficient
budget implementation and strengthening reporting systems.
Economic analysis and fiscal policy
The economic analysis and fiscal policy unit will focus on ensuring that our
province receives its equitable portion of nationally collected taxes and will
undertake provincial and economic analysis.
In addition to building capacity for economic analysis, the unit will
immediately pay attention, among others, to the continuing research on ways of
increasing provincial own revenue and developing a provincial borrowing
framework within the prescribed legislative framework.
The total allocation to the Fiscal and Economic Management unit is R18.5
million.
Provincial financial management governance
Financial accounting
The provincial financial management governance unit will continue its work
of ensuring that the Gauteng Provincial government obtains an unqualified audit
opinion on its consolidated annual financial statements.
We however wish to caution that the achievement of this important objective
is dependent upon the individual departments themselves getting clean audits
reports. From our part we will put mechanisms in place to effectively assist
departments to achieve clean audit reports.
The unit will also undertake research on the feasibility of introducing
monthly management reports by departments. These reports will go a long way
towards shortening the process of auditing departmental statements.
Asset management
For the current financial year, the asset management unit will focus on
ensuring that all departments have an asset strategy approved by the Head of
Department (HOD). The strategy should comprise of acquisition, operation,
maintenance, disposal, funding and risk management plans for departmental
assets.
Risk management
In an effort to ensure that government property and interests are
safeguarded, Treasury will co-ordinate and monitor risk management activities
in and across departments. This will contribute to the creation of an
environment that allows for innovation and responsible risk taking while
ensuring that precautions are taken to protect public interest and maintain
public trust.
In order to effectively perform this function, we will implement phase two
of the risk management project which we started in the 2005/06 financial
year.
This year the emphasis will be on the implementation of the architecture of
risk management processes such as risk policy frameworks, risk management
structures, reporting processes, control reviews and action plans.
Cash management and banking services
We will continue to focus on strengthening cash flow forecasting in
departments. To achieve this we will implement a cash management system in
departments that will assist with projecting spending patterns of
departments.
With the provincial government having changed banks from Standard Bank to
ABSA with effective from 1 July 2006, we will work closely with ABSA to ensure
a smooth transition.
The unit is also increasing capacity in order to optimise interest on
investments which contributes substantially to provincial own revenue.
Comrade Speaker, the provincial financial management governance unit
receives R15,7 million for this financial year.
Provincial financial reforms
Municipal finance management
As part of our ongoing effort to make local government work better, the
municipal finance management unit will continue to oversee the implementation
and compliance with the Municipal Finance Management Act (MFMA) in the nine
delegated municipalities across Gauteng.
These municipalities have already been assisted with tabling their budgets
and their service delivery budget implementation plans in line with their
integrated development plans.
During the financial year 2006/07 the municipal finance management unit will
be implementing amongst others, the following programs:
* The municipal banking sector imbizo - this initiative is intended to
enable Treasury to intervene in as far as issues of external funding to
municipalities are concerned. The goal is to allow Treasury to explore better
financing packages for our municipalities to finance some of their capital
projects.
* The Municipal Support Plan - this project is managed jointly with the
Department of Local Government. Its purpose is to provide support to
municipalities on issues of financial management, governance and
administration.
* The municipal fora - through this initiative, Treasury seeks to drive
improvements in terms of financial management related processes. These fora are
also aimed at driving MFMA related reforms throughout municipalities in Gauteng
and ensuring that uniform standards are applied in terms of municipal finance.
These fora comprise of the following:-
a) a municipal CFO forum;
b) a municipal budget council; and
c) a municipal Budget Lekgotla.
Public finance management
The public finance management unit will play a leading role in developing
financial management skills and capacity within departments. This will be done
in order to increase the number of departments who obtain unqualified audit
opinions. The unit will also ensure that departments and public entities comply
with the Public Management Act (PFMA) and Treasury regulations.
During the financial year 2006/07 the unit will be implementing amongst
others the following programs:
* Financial Management Capacity Building - this initiative seeks to
co-ordinate efforts towards financial management capacity development and
enhancement. It will also ensure that the CFOs' offices are adequately staffed
and capacitated to execute their functions as outlined in the PFMA.
* The roll-out of the supply chain management policy and relevant
regulations in municipalities - this is an initiative which seeks to steer
municipalities towards good procurement practices and ensure that there is
compliance with the MFMA in terms of supply chain management issues.
The total allocation of the Provincial Financial Management Reforms (PFMR)
unit is R17,4 million.
Public Private Partnerships (PPP)
As we have said during the 2006/07 provincial budget speech, we are
establishing a fully fledged Public, Private Partnership (PPP) unit within
Treasury.
This unit will regulate, oversee, manage and execute our current and future
PPP initiatives. This move was necessitated by the fact that National Treasury
has devolved more powers to Provincial Treasuries to handle PPPs.
An amount of R10,5 million has been set aside to establish the PPP unit.
Conclusion
Comrade Speaker, allow me to take this opportunity to wish our "new baby,"
the Gauteng Provincial Treasury well as it executes its important
mandate.
In particular, I wish to thank the management of Treasury under the leadership
of Nomfundo Tshabalala for ensuring that our provincial Treasury finds its feet
and delivers what is expected.
The task ahead of us is not an easy one. The people of Gauteng look up to us
to be the true and efficient custodians of their resources. Their hopes and
aspirations of a better Gauteng whose finances are well managed rests on our
shoulders. We dare not disappoint them.
Let me also thank members of the finance committee for their oversight
role.
Thank you!
Issued by: Department of Finance and Economic Affairs, Gauteng Provincial
Government
22 June 2006
