Provincial Legislature by Mr Sa'ad Cachalia, MEC for Finance
3 May 2007
Honourable Speaker
Mr Premier, Honourable Sello Moloto
Honourable and Distinguished Colleagues of the House
Distinguished Guests Members of the Media
Ladies and Gentlemen
Freedom is both the primary aim of development, and also the principal means
of development. A person's actual capability to achieve or develop is
influenced by economic opportunities, political liberties, social facilities,
and the enabling conditions of good health, basic education, and the
encouragement and cultivation of initiatives.
These opportunities are, to a great extent, mutually complementary, and tend
to reinforce one another. Freedom we have won to choose our own destiny, and in
so doing, take our development into our own hands. Freedom we have won to
choose our own representatives, and in so doing, to decide for ourselves the
character of our state and the actions we direct it to take on our behalf.
Freedom, writes the philosopher and economist Amartya Sen, is the primary aim
of development, and also the principal means of achieving it. There are a
number of elements of the development equation that are often very hard to
quantify yet are fundamental to achieving the outcomes we seek. One of these is
the quality of the services we deliver as government. When people experience
poor service delivery, or our projects fail, then, not only are citizens denied
the services to which they are entitled, but in turn their capacity to
contribute further to the development process is undermined.
Unless our policies are implemented efficiently, courteously, honestly and
enthusiastically, we will achieve far less than we intend, and far less than
our people surely deserve. Honourable Speaker, it is proposed that the
allocation to the Limpopo Provincial Treasury over the next Medium Term
Expenditure Framework (MTEF) period be as follows:
2007/08 - R286,296 m
2008/09 - R310,576 m
2009/10 - R335,284 m
These allocations represent an increase of approximately 9% per financial
year. Financial Year 2007/08 61% of the allocation will be funded from the
provincial equitable share and 39% from departmental own revenue sources. The
Provincial Treasury does not receive any national conditional grants.
Furthermore, estimates by economic classification result in the following
relative shares of different categories of expenditure:
1. Compensation of Employees: R122,861 m (42,9%)
2. Payment for Capital Assets: R6,804 m (2,4%)
3. Transfers Government Employees Medical Scheme; (GEMS) R1,082 m (0,4%)
4. Goods and Services: R155,549 m (54,3%)
The vote is shared as follows between the four programmes: Budget Allocation
per programme for year 2007/08
1. Administration: R82,930 m (28%)
2. Sustainable Resource Management: R51,729 m (18%)
3. Assets and Liabilities Management: R40,160 m (14%)
4. Financial Governance and Systems Development: R111,477 m (40%)
Departmental Receipts
The Provincial Treasury as a department has its own sources of revenue which is
collected and transferred on a weekly basis to the Provincial Revenue Fund. The
estimated departmental receipts for the 2007/08 financial year amount to
R111,424 m.
2007/08 - R111,424 m
2008/09 - R118,098 m
2009/10 - R125,197 m
An increase of approximately 9% per financial year
Expenditure proposals in respect of the four programmes for 2007/08.
Honourable Speaker, Permit me to now present an overview of the various
expenditure programmes in our Vote as this will give an indication of the main
services that the Provincial Treasury is expected to render over the 2007/08
MTEF period.
Programme 2: Sustainable Resource Management and Intergovernmental Fiscal
Review (IGFR) R51, 729 m (18%)
Sustainable Resource Management provides professional advice and support to
the MEC on provincial economic analysis, fiscal policy, public finance
development and management of the annual budget process as well as
inter-governmental fiscal relations and provincial asset restructuring. An
amount of R1 m has been allocated for programme support. The allocation
referred to above, includes salaries and other personnel related costs.
The programme is comprised of the following sub-programmes:
CD: Economic Analysis (R4,691 m)
Purpose: To provide provincial economic and social research and analysis that
informs fiscal policy development and the annual budget process, thereby
contributing to the attainment of the objectives of the Provincial Growth and
Development Strategy (PGDS). The Chief Directorate: Economic Analysis will also
ensure that we publish the Medium Term Budget Policy Statement (MTBPS) by
October this year (2007) and publish a citizens' guide on the impact of the
provincial government's spending in the last financial year.
CD: Fiscal Policy (R6,543 m)
Purpose: To provide fiscal policy advice, determine the provincial Medium Term
Fiscal Framework and identify, develop and optimise the provincial revenue
base. The unit also deals with the revision and adjustment of the public
entities' fees, rates and tariffs. This Chief Directorate will champion the
development and implementation of a provincial revenue policy during this
financial year. As we mentioned in the Provincial Budget Speech, our own
revenue is unacceptably low. Treasury must play a leading role in finding
strategic mechanisms to maximise our revenue collection and identify new
sources of revenue as a matter of extreme urgency. The revenue to be collected
by the province during 2007/08 is estimated at R468,866 m.
CD: Budget Allocation and Public Finance (R26, 514 m)
Purpose: To ensure that there is optimum budget resource allocation (allocative
efficiency) and expenditure management within the province. The component
further ensures that the Provincial MTEF Statement, Appropriation Bill and
Budget Speech are aligned to the PGDS objectives, Integrated Development Plans
and national priorities. Through this unit the Provincial Treasury will also
implement the Annual Appropriation Act and monitor departmental spending trends
via in-year monitoring reports. We have already appointed programme analysts
who will assist departments in their planning and budget management.
CD: Intergovernmental Fiscal Relations (R12,876 m)
Purpose: To provide financial management support to municipalities and conduct
workshops to capacitate municipalities on budget related issues, annual
reporting, internal audit and any other matter that relates to financial
management as envisaged in the Municipal Finance Management Act (MFMA).
Honourable Speaker, This year marks the third year since the MFMA was
promulgated. The record with regard to financial management is mixed. While
compliance has improved insofar as meeting deadlines for submitting financial
statements on time is concerned, the quality of audit outcomes is still cause
for concern.
The department has just concluded an agreement with the provincial
Department of Local Government and Housing, which stipulates the different
roles that the two departments will play in respect of municipalities. This
will assist each department to focus on its core business and increase the
impact we will make towards assisting municipalities to deliver better services
to our people. The cherished ideal and commitment of Government to extend
services to citizens who were previously denied, including infrastructure,
whilst ensuring that the quality of public service delivery improves and
remains at an acceptable standard, compels the Provincial Treasury to continue
to actively play its designated role regarding the implementation of the MFMA
in respect of, inter alia:
* The institution of service delivery and budget implementation plans to
support multi-year budgets
* Compliance in respect of monthly, quarterly and annual reporting, in line
with the MFMA norms and standards
* The implementation of appropriate supply chain management policies and
processes
Honourable Speaker, this programme also has a unit that deals with the
restructuring of provincial assets. The role of the unit is to provide
technical assistance and support to provincial departments on restructuring
initiatives and to ensure efficient and effective delivery on infrastructure
programmes and to look at alternative service delivery models in the
province.
The unit's priorities for the 2007/08 financial year
For the restructuring management component, the priorities for the year include
the following projects:
* Initiated project: The provincial property facilities management project,
which aims to develop a strategy on the management off all assets and
facilities in the province.
* Approved projects: Hospital Big Bang Revitalisation Project that will upscale
the pace of hospital revitalisation in the province through increased capacity
and funding levels.
* Integrated Water Supply System: This project will look at an integrated
approach to the supply of water in the province - this presents an opportunity
to enhance the systems and integrate the infrastructure to meet the needs of
all the main sectors, including mining, energy, agriculture and
households.
* Projects in implementation: Renal Dialysis Public Private Partnership: This
PPP project was signed in November 2006 and the assistance provided by the unit
aims to achieve partnership management, performance management and contract
administration.
For Capital projects appraisals, the priorities for the year include the
compliance to Division of Revenue Act and the Provincial Appropriation Act by
assisting departments with:
* Infrastructure plans and delivery
* Infrastructure cash flow reports
* Infrastructure expenditure and monitoring
* The finalisation of the 10 year integrated infrastructure plan
The implementation of the Infrastructure Delivery Improvement Programme
(IDIP) will also entail the launch of Phase II assessment and design of the
business case for the Department of Health and Social Development. Through the
IDIP, we intend to close the gap in terms of our identified weaknesses insofar
as planning and spending on infrastructure is concerned. We have to address the
serious backlog we face in terms of infrastructure.
Honourable Speaker, the Provincial Treasury intends to start conducting
visits to different infrastructure projects in the province, to assist
departments to verify project implementation information contained in the
provincial infrastructure model, as well as the information provide by
officials in the departments' infrastructure plans, in order to facilitate
better performance assessment of infrastructure delivery and its impact on key
economic variables.
Programme 3: Assets, liabilities and Provincial Supply Chain Management
(SCM) R40,160 m (14%)
Assets, liabilities and Provincial Supply Chain Management is responsible
for providing policy direction and supporting provincial departments on the
effective and efficient management of non-current and financial assets,
liabilities as well as supply chain management. Further, this programme will be
providing training on policies relating to SCM, Manage the provincial cash
flows and provide provincial departments with face value documents. The
allocation for this programme includes salaries and other personnel allowances.
This programme is comprised of the following sub-programmes:
CD: Assets and Banking and Cash Flow Management (R19,9 m)
Purpose: This sub-programme will ensure the effective, efficient and economic
management of assets and liabilities in the province; co-ordinate the
maintenance of a comprehensive provincial asset register; implement a
provincial asset management plan; ensure the availability of a signed banking
contract and service level agreements; open 15 bank accounts; maintain adequate
stock levels for face value documents; monitor bank accounts to ensure that
there are no overdrafts; increase departmental revenue through profitable
investments; and the payment of all interest charges on all provincial PMG
accounts.
Honourable Members may be aware of the fact that we will be advertising the
tender for banking services during this year since our contract with the
current bank will be coming to an end early next year. We shall endeavour to
procure the services of a bank that makes the best offer and provides the best
solutions to our challenges and needs. We will critically analyse the
performance of both the department and the current bank so as to ensure that we
maximise gains for the provincial administration by learning from our previous
mistakes and reinforcing existing best practices. In addition, this
sub-programme will need to ensure the implementation of the necessary economic
life cycle and value for money mechanisms through the introduction of not only
systems and processes to support the preparation of forward asset strategies in
respect of acquisition, use and disposal of assets, but also in respect of
managing the related risks and costs over all phases of the asset life
cycle.
CD: Provincial Supply Chain Management (R18, 423 m)
Purpose: To regulate and ensure effective and efficient SCM implementation;
empower local Historically Disadvantaged Individuals (HDIs), Small, medium and
micro-enterprise (SMME) and the youth; build capacity on SCM in provincial
departments and public entities; ensure the effective and efficient
implementation of SCM prescript; and ensure the effective management of demand
and acquisition of transversal goods and services in the province, through the
central procurement committee (CPC). In an effort to strengthen the CPC's
capacity to effectively manage the acquisition of transversal goods and
services, we have directed that only Chief Financial Officers (CFOs) must
represent departments on this structure. We will also involve the risk
management component in the department to participate and oversee certain
phases of the tendering process in order to make it more transparent as well as
to ensure that the imperatives of the SCM policies are attained. We have to
ensure that the provincial resources are distributed as widely as possible so
that we can truly speak about broad based black economic empowerment. We cannot
allow a situation where only a few benefit at the expense of the majority of
our people.
Honourable Speaker, it is important for us to recognise that eradicating
this problem is complex and will take time, effort and thorough planning.
Simple solutions that rely on weak and generalised assumptions about who the
poor and disadvantaged business people are, how and where they operate from,
what they need and what they want are destined to fail. We need to work
together to find lasting solutions. To this end, the department will be
working, in partnership with the Department of Economic Development,
Environment and Tourism, to host a provincial business summit, which is aimed
at engaging business people in the province on how we can improve, inter alia,
our supply chain management processes and procedures to improve on the services
we render and make it easier for them to do business with government in the
province. The provincial SCM regime must ensure:
* Value-for-money in public expenditure through engineering a reduction in
procurement costs over time
* Effective supplier performance management in line with pre-determined norms
and standards
* The development of strategic sourcing methodologies to assist with the
progressive realisation of preferential procurement targets, through the
development of small, medium and micro-enterprises and the implementation of
effective broad-based black economic empowerment strategies and the
mainstreaming of historically disadvantaged operators into formal economic
activities.
Key to the achievement of the aforementioned will be the implementation of a
provincial suppliers' management information system, which will afford
government the technical means to evaluate the province's progress towards
meeting the targets we have set for ourselves.
Programme 4: Financial Governance and Systems Development R111, 447 m
(40%)
This programme executes the functions and responsibilities of the Provincial
Accountant General and promotes accountability through the substantive
reflection of the financial activities of the province, and compliance with
financial norms and standards as well as the provision of financial systems
support to provincial departments. The aforementioned allocation includes
salaries and other personnel related costs. This programme is comprised of the
following sub-programmes:
CD: Accounting Services (R35, 669 m)
This Chief Directorate is responsible for ensuring the effective implementation
of accounting practices in line with the generally recognised accounting
practice(GRAP) and the preparation of consolidated financial information that
reflect the overall financial position of the province; co-ordinating annual
financial statements for departments and public entities; consolidating and
evaluating monthly progress report on audit outcomes; monitoring the closure of
financial books, including the Traditional Authorities Account; supporting the
Audit Committee and monitoring the implementation of the Audit Committee and
Auditor General's resolutions.
The sub-programme will provide for the training of 800 officials on
financial systems; register five youth with the Chartered Institution of
Management Accountants and enrol ten youths for Chartered Accounting as well as
ten officials to pursue a course on Advanced Project Management. Lastly, the
sub-programme will be charged with the responsibility to develop and implement
a provincial skills development plan.
The sub-programme of the Provincial Accountant General and its supporting
directorates remains the champion of financial governance in the province and
work will continue in this financial year and beyond to foster prudent
financial practices in provincial departments and public entities.
CD: Internal Control and Risk Management (R4,564 m)
Purpose: This sub-programme is tasked with the responsibility of managing
provincial risks; establishing a Risk Management Forum; developing a provincial
risk management plan and policies; as well as assisting municipalities to
develop financial policies.
CD: Systems Development (R69,645 m)
Purpose: This sub-programme will mainly focus on the development of sound and
reliable financial systems in the province; ensuring the availability of
financial systems; maintaining data lines; and the modification of the
following
FINEST modules: Assets (R6 m), Revenue (R1 m) Disaster Recovery Plan (R500
k)
It goes without saying that the improvement of financial governance and
efficiency remains key to the achievement of the objectives of the PGDS and the
prescripts of the Public Finance Management Act (PFMA). The main focus in this
regard remains the promotion of greater transparency to ensure the production
of credible information with regard to government's financial transactions in
line with the prescribed standards of GRAP.
Work in this area of operation does not only aim at ensuring that no
unrecorded transactions with financial implications can take place unnoticed
but also that financial results are analysed and interpreted to serve both the
needs of public interest and internal use that can further improve financial
management practices.
Furthermore, work executed to ensure adherence to the PFMA and MFMA also
aims to improve not only performance management, but also to enhance the
efficiency of oversight bodies such as those of the Provincial Legislature and
the Auditor General. Availing such information for use by oversight bodies not
only gives an indication of how well-vested the development and implementation
of normative financial norms are throughout provincial departments and
entities, but also contributes towards greater efficiency in operations,
financial compliance in terms of existing prescripts and regulations as well as
the internalisation of risk-reduction practices in the provincial
government.
Programme 1: Administrative R82,930 m (28%)
The administration programme focuses on the overall management of the
department and aims to provide strategic leadership and strategic management in
accordance with applicable legislation, regulations and policies, through
planning, organising, co-ordinating and controlling departmental functions so
as to ensure that there is adequate support services available to all other
departmental programmes, thus enabling the achievement of overall departmental
goals as efficiently, economically and effectively as possible.
The development and approval of departmental policies is high on the agenda
of the programme for this year. We have identified all the areas in the
department where policy gaps exist and every effort will be made to close those
gaps during the course of the year. Treasury has to lead by example. We
therefore cannot afford a situation where we are found wanting on such an
important yet basic requirement.
This programme is comprised of the following sub-programmes:
CD: Office of the MEC (R4,498 m)
The budget for this office will be used to render secretarial, administrative
and office support services and act as a link with the department, the
Provincial Legislature and the National Ministry of Finance, enabling the MEC
to realise his treasury responsibilities. The budget consists mainly for the
compensation of employees and other administrative costs.
CD: Management Services (HOD and HOD SUPPORT) R2,379 m
The HOD support staff mainly focuses on providing strategic and administrative
support to the Head of Department and assists the office to follow up on
Executive Council, EXCO Clusters, Heads of Department, Portfolio Committee and
all inter-governmental structures' resolutions.
CD: Corporate Services (R33,421 m)
This sub-programme's key responsibilities are to ensure the provision of human
resource management, human resource development, legal administration and
labour relations services. The department is operating under severe constraints
as a result of the high vacancy rate. The chief directorate will mainly focus
on the advertisement and filling of 36% of the vacant posts; increase the
allocation of bursaries and employee training and skills development
initiatives as well as improve on the department's contract and SLA
management.
CD: Information Management
This sub-programme's function is to ensure management of communication
services, information and technological services and the implementation and
maintenance of sound records practices. The budget is mainly for branding and
marketing the programmes of the department, providing technological support
services to directorates and effective records management. The chief
directorate will be allocated a budget of R3, 507m for goods and services and
R7, 036m for personnel cost.
CD: Strategic Operations
The chief directorate will co-ordinate strategic planning, organisational
development and performance as well as ensure the co-ordination of
transformation and employee wellness programmes. The BATHO PELE awareness
campaigns and service delivery improvement strategies are central to the
operations of this unit.
CD: Financial Management (CFO) R36,725 m
The greatest portion of the CFO's budget is located under Logistics. The
additional funds requested under Logistics will be used for the renovation of
Finance House in Paul Kruger Street (R10,845 m) and the procurement of office
furniture. The Logistics directorate is also responsible for the payment of
water and electricity; the leasing of the two buildings in Paul Kruger Street
(R6,649 m) and the payment of physical security services (R1,761 m) at all
three buildings. R15,601 m of the chief directorate's budget will go towards
compensation of employees.
Directorate: Risk & Security Management (R5,101 m)
R 1,380 m of the budget will be used for an effective access control system,
vetting and investigations. The core function of this directorate is to
administer the provision of risk management services that will minimise the
impact of the department's risk exposure and to manage security services. The
directorate has a budget of R4,724 m for compensation of employees.
Honourable Speaker, this Vote and the programmes that it supports will make
an important contribution to the extension of our freedom and the unlocking of
our capabilities. We remain true to the spirit, courage, passion, commitment
and values that propelled us to the freedom we enjoy today.
Our commitment to the majority, who are poor and unable to fully enjoy the
benefits of our freedom, remains unwavering. For us, development will be about
nothing else but the people â the poor people! Under totally different
circumstances and in a very different political context President J F Kennedy,
spoke to a similar theme when he said, "If a free society cannot help the many
who are poor, it cannot save the few who are rich."
I thank you!
Issued by: Provincial Treasury, Limpopo Provincial Government
3 May 2007
Source: Limpopo Provincial Government (http://www.limpopo.gov.za/)
