L Brown: Western Cape Provincial Treasury Prov Budget Vote
2007/08

30 May 2007

Mr Speaker, one of the Provincial Treasury's roles is to ask whether our
monetary investments within the different programmes and projects run by
government are resulting in accelerated and shared growth and development
within the province. In doing that, we are committed to fulfil a role that
would:

* act as a facilitating or change agent towards achieving those
socio-economic objectives that would contribute to the greater well being of
the general public
* promote the effective utilisation and safeguarding of provincial assets.

In his State of the province Address on 16 February 2007, Premier Rasool
presented Governance as one of the "ten programmes of concrete, on-the-ground
delivery, designed to make a difference for people?" Following on this, I
prioritised the programme by setting responsive and responsible governance as
one of the four themes in my provincial budget speech. Let me remind the House
that the Provincial Treasury, as custodian of our province's financial
resources, centres on the three pillars of financial management, namely:
Internal Control, Risk Management and Good Governance.

"You can not do all the good the world needs, but the world needs all the
good you can do." (Anonymous)

Reflections on progress and challenges per programme and sub-programme for
2007/08

Programme 1: Administration

As the name implies, this programme essentially focuses on the staff
functions of Provincial Treasury to ensure that the department has the
necessary skills and resources to enable myself and my Head Official of
Treasury to attain strategic direction in line with our functional
responsibilities. I will focus on Corporate Services and Financial
Management.

Corporate services

Mr Speaker, the role of Human Resource Management has always been mainly
determined by legislative mandates. However, the sub-programme is being
repositioned towards building and strengthening internal capacity and being the
driver of transformation in its wider application in the department. The
implementation of the external internship programme commenced this year with
the hope that at the end of the contracted period the appointees will be ready
to be absorbed into the labour market, preferably, within Provincial Treasury
or the wider Provincial Government. This programme is geared at targeting the
scarce skills requirements of Provincial Treasury and meeting the underlying
objectives of iKapa Elihlumayo and Accelerated and Shared Growth Initiative for
South Africa (AsgiSA). Human Resources will also foster leadership development
and performance management. In essence the key challenge for Corporate Services
in the coming years will be to stabilise the Treasury team by focusing on
retaining the current skills base together with short and long-term skills
development programmes.

Financial Management

The Office of the Chief Financial Officer (CFO) has many diverse roles that
consist of Management Accounting, Financial Accounting, Supply Chain
Management, Auxiliary Services, Internal Control and Risk Management as well as
providing registry services. All these roles have to be executed within
stringent legislative prescripts and regulations, which leave little room for
errors.

For the second consecutive financial year, the Provincial Treasury has
attained one of its key targets of staying within one percent under-spending on
its adjusted budget. Mr Speaker, it is my intention to continue on this trend
by staying within the voted amount of R119,001 million for my vote in 2007/08
too.

The R15,245 million or 11,4 percent decrease on the 2006/07 main estimates
is primarily due to the decentralisation of State Information Technology Agency
(Sita) costs to provincial departments. Financial Management inter alia set
themselves the following priorities for 2007/08:
* enhanced management accounting to ensure that performance measures in our
2007/08 Annual Performance Plan (APP) are better planned and to provide
efficient accounts control and ensure all payments are within set time
limits
* manage risk management strategies and improve internal control
management
* co-ordinate all the said activities within the sub-programme and obtain the
co-operation of all directorates within Provincial Treasury.

Programme 2: Sustainable Resource Management

This programme houses the research arm of the Provincial Treasury, in the
main socio-economic analysis, fiscal policy, budget allocation and the
monitoring thereof.

Economic Analysis

The unit's main function is to determine and evaluate economic parameters
and socio-economic imperatives within a provincial and national macro-economic
context. This is to better inform resource allocation in the province, which in
turn contributes towards the achievement of iKapa Elihlumayo. The unit is
strategically positioned to influence service delivery through applied research
that encourages implementation of research findings by sector departments. For
the unit to function in such a competitive environment, building internal
capacity is important.

Mr Speaker, for 2007/08, we acknowledge the limitations associated with
skills retention in furthering our endeavours to deepen our analytical
capacity. Our approach to recruitment is innovative, identifying candidates
with potential and intentionally targeting those graduates that are
underemployed to our talent pool to "practically" deal with the skills
mismatch. On that note, as the Provincial Treasury's economic analysis brand
strengthens, we will continue sharing the emerging trends and our understanding
of the Western Cape's socio-economic environment.

In addition, the socio-economic profiles of local government (SEP-LG) will
move a step further by building on the initial publications as a monitoring
tool to assess and better understand the depth of regional economic activity,
following the findings of the first iteration. We would also like to be rolling
out economic analysis training to municipalities and further strengthen the
team's capacity to be better equipped to deliver on our objectives. By its very
nature the work performed by this unit has medium and long-term results. As a
Chinese proverb says, "With time and patience the mulberry leaf becomes a silk
gown."

Fiscal Policy: Provincial Government

The main aim of the unit is to enable the provincial government to finance
its service delivery objectives that will incorporate the optimisation of the
current revenue base and exploiting the revenue potential of other
sources.
The focus for 2007/08 will be on:
* delivering a credible medium-term fiscal framework leading to sustainable
medium-term expenditure budgets
* expansion of the own revenue base inclusive of legislative processes to
enable tabling of required legislation on the fuel levy and the finalisation of
research around a range of possible tourism related levies.

Fiscal Policy: Local Government

This fairly new unit came into being as necessitated by the implementation
of the Municipal Finance Management Act (MFMA) with the aim of providing
professional advice and support on local government revenue collection and
fiscal policy. The Unit has identified the following strategic objectives for
2007/08:
* improve input-output sequencing of information and the quality thereof within
the municipal budget processes
* develop effectiveness of the local government in-year revenue monitoring
system towards attaining level three auditable municipalities
* provide policy advice, effective technical and strategic support and a change
agent service to municipalities.

For the unit to succeed, it is imperative to recruit and retain suitable
staff and build internal capacity and strategic relationships with all
stakeholders, primarily municipalities but also external role players.

Budget Management

Budget Office, as the unit is commonly known, drives the annual provincial
budget process and also provides guidance for and oversight over local
government budgets. For the third year in succession, Provincial Treasury in
co-operation with Local Government and Housing and Economic Development
undertook detailed assessments of municipal draft budgets and associated
Integrated Development Plan IDP, Local Economic Development (LED) and financial
health assessments. The process for assessing quarterly non-financial
performance of provincial departments has been enhanced and should move to a
higher level in the coming year.

For 2007/08 the focus will be on deepening post-Local Government Medium-Term
Expenditure Committee (LGMTEC) engagements and assessing municipal Service
Delivery Budget Implementation Plans (SDBIP). The unit will also work on
improving alignment between provincial priorities and local government IDPs and
improving the quality and transparency of local government budgets. On the
provincial government side, the two main outputs will be the Budget Overview
and the Medium Term Budget Policy Statement. The Budget Office will also embark
on a baseline analysis exercise that will be refined over years to come.

Provincial Government Finance

This sub-programme is tasked with ensuring efficient budget application in
provincial departments. This includes the development of efficiency measures,
integral to the in-year expenditure monitoring system and the development of
more refined financial performance indicators. One of the focus areas in
2006/07 was on fiscal discipline within budget programmes in provincial
departments. The unit also took steps to improve the quality of financial
management, which inter alia included deepening the credibility of Budget 2007
by linking national and provincial priorities with budget allocations, and
augmenting the in-year-monitoring (IYM) reporting information.

A key challenge for 2007/08 is to, in association with the Budget Office,
build the analytical capacity both in the Provincial Treasury and provincial
departments to better link service delivery relative to that of expenditure
performance and further enhancing the credibility of budget allocations.

Local Government Finance

The MFMA mandates the Provincial Treasury, in partnership with National
Treasury to monitor financial compliance for municipalities and municipal
entities in the province. National Treasury has delegated 28 municipalities to
the province while retaining two of the 30. In essence the unit is actively
involved with the implementation of the MFMA by facilitating initiatives and
creating a conducive environment for smooth implementation. The sub-programme
also made considerable progress in respect of its roles and responsibilities as
required by the MFMA and includes some of the following:
* full nominal compliance in the submission of municipal IYMs, inclusive of the
quarterly publication of the outcomes per municipality and the tabling of the
IYM information in this House in line with the MFMA requirements
* quarterly IYM site visits to municipalities to enhance the quality of
reporting and strengthened intergovernmental relations
* the successful planning, co-ordination and implementation of the LGMTEC
processes.

A major focus of this sub-programme will be on improved and substantive
compliance with municipal financial management legislation, policies,
regulations and practices to contribute towards attaining a level
three-capability audit rating at the municipal sphere and to build and
consolidate on the gains made during the previous year.

Programme 3: Asset and Liabilities Management

This programme aims to provide policy direction, facilitating the effective
and efficient management of physical and financial assets, public private
partnerships (PPPs) and liabilities.

Financial Asset Management

This sub-programme is responsible for the management and control of the
Provincial Revenue Fund that consists of the provincial exchequer account and
fourteen departmental bank accounts. One of the accomplishments for 2006/07 was
the smooth switch in bank tenders from ABSA to Nedbank on Sunday, 1 April
2007.
The main challenges are credible annual cash flow projections to minimise
deviations from actual payments, cash positive banking accounts at all times
with minimal balances, and that any funds not immediately required to defray
expenditure are invested at various financial institutions in line with
Treasury's investment policy.

Moveable Asset Management

The unit is tasked with the stewardship of supply chain management (SCM) at
both provincial and municipal level. It aims to provide strategic leadership
and support and develop guidelines to ensure effective supply chain management
of goods and services. In 2006/07 the unit performed SCM assessments in
provincial departments and engaged municipalities on the implementation of SCM
policies. This team also facilitated the arrangements of transversal contracts
and the implementation of asset management requirements within the
province.

For the new financial year this team endeavours to establish a centre for
excellence to render strategic support and training, and drive best practices
in SCM units. The unit will also promote and facilitate the Asset Management
Reform Strategy in conjunction with National Treasury.

Immoveable Asset Management

Mr Speaker, this team is responsible for two key areas in the province. The
first focus area is to facilitate the effective and efficient management of
immovable assets. Secondly, the unit aims to elicit sustainable PPP projects.
During 2006/07 the team provided support for the implementation of the new
framework "toolkit" for infrastructure best practices and engaged Public Works
on specific areas on Property Management to be monitored by Provincial
Treasury.
The focus for 2007/08 will be on the further rollout of IDIP (Infrastructure
Delivery Improvement Programme), providing assistance and support in the
implementation of the envisaged Government Immovable Asset Management Act
(GIAMA), marketing PPPs externally, engaging core departments and
municipalities on problem areas around PPP projects and monitoring completed
PPP projects to determine value-for-money and affordability aspects.

Supporting and Interlinked Financial Systems

The systems team provides for the oversight, enhancement and management of
existing financial systems and the transition to the Integrated Financial
Management System (IFMS). The systems currently in use are the Basic Accounting
System (BAS), the Personnel and Salary Administration System (Persal), The
Logistical Information System (Logis), and Vulindlela (Management Information
System).

As stated earlier in this speech, Sita costs have been decentralised to the
various departments from 1 April 2007 with the aim of further improving
efficiency and user management of the different systems in use. However, the
unit will still be responsible for the imp

Programme 4: Financial Governance

This programme aims to enhance performance-orientated financial
management.

Accounting Services

The main purpose of this unit is to ensure that financial reporting is a
full and true reflection of the financial position of the province, including
municipalities. The unit implemented a financial management improvement plan
for departments and public entities as necessitated by issues raised by the
Auditor-General (AG) in the 2005/06 audits. Accounting services has, therefore,
been actively involved in identifying and monitoring remedial steps instituted
by departments and public entities to address financial management
improvements.

For 2007/08 the unit will continue to assist departments in the transition
from the modified cash basis of accounting to the accrual basis of accounting.
This will be a gradual process and ongoing training and capacity building will
be provided to departments as a prerequisite. With regard to capacity building
in municipalities, training interventions are also planned in consultation with
National Treasury in order to improve on their reporting outcomes.

Norms and Standards

The responsibility of Norms and Standards has been broadened to include the
co-ordinating of the oversight support function for public entities within the
province. A Provincial Treasury Action Plan was compiled based on the analysis
of all the Auditor-General reports, management letters and overarching issues
raised in the respective Internal Audit reports. The purpose of the action plan
was to identify transversal issues that require remedial steps.

For 2007/08 the following quality improvement measures are planned by the
unit:
* to develop a process to ensure a co-ordinated approach to assist departments
to reach a Level four auditable organisation
* revising the current monitoring tool for public entities to include
high-level governance process and to co-ordinate their oversight functions.

Risk Management

This sub-programme encompasses both Enterprise Risk Management and
Governance Systems. The departmental Risk Management units were approved
followed by a recruitment drive and training for all the departments. During
2007/08 the unit will drive and promote risk management awareness programmes
for the Audit Committees that will lead to more rigorous monitoring of
management responsibilities in respect of risk management. The unit also
intends to promote governance awareness within departments and the framework
will be affected in the 2007/08 financial year. Other quality improvement
measures are to:

* drive the implementation of risk management and governance rollouts more
rigorously
* form close co-operation and co-ordination with all Provincial Government
assurance providers to capitalise on synergies
* provide ongoing training and support to chief risk officers to enable them to
operate more effectively and add value to the departments

Provincial Internal Audit

The organisational structure for the Internal Audit unit was completed and
approved by the Cabinet in the fourth quarter of 2006/07. The approval of the
organisational structure will result in an increase of the staff establishment
from 24 to 92 staff members, to be phased in over a three-year period. This
will enable the provincial government to recruit and capacitate the staff
required to take over the service from the external service provider within the
next two to three years.

For 2007/08 the following improvement measures are inter alia envisaged:

* recruit and train adequate resources to take over the function from the
service provider
* providing ongoing training to audit committee members and clarifying the
reporting relationships between audit committees, Accounting Officers,
Executive Authorities and Standing committees
* increasing the number of audit committees in the province to enable them to
deal more effectively with the departments they serve.

Population survey of the Western Cape
Mr Speaker, it is with pleasure that today I present you with the findings from
the "Perceptions of Government Performance and Service Delivery: A Population
Survey of the Western Cape." In 2004, Provincial Treasury put forward the idea
of conducting a survey to measure opinions and develops a benchmark for
attitudes on service delivery in the province. The results of this survey are
important because:
* They provide a direct link between service delivery and peoples' perceptions
of service delivery.
* They provide a snapshot and raise questions to help government to better
understand progress and target strategies for service delivery in the Western
Cape.
* They can be used as a management tool to judge our performance as government
and to further refine the responsiveness of our strategies to peoples'
needs.
* They allow us to link perceptions on service delivery to how we allocate
funds to different service priorities.

At the end of 2005 and early in 2006, interviews and surveys were conducted
with different stakeholders, ranging from ordinary citizens to provincial and
municipal managers. The report being released today represents the key findings
from a representative survey of the population of the Western Cape. A total of
4 039 adults living in the Western Cape were interviewed. The report also looks
at how people perceive their socio-economic conditions and what they see as the
most important socio-economic challenges for government. When asked about the
most important challenges facing the province, the majority of respondents
identified crime, unemployment and housing. Nearly a third of respondents (29%)
rated crime as their first most important problem. Unemployment is the second
most often mentioned problem, and was rated as the primary problem by 17% of
respondents. Third came housing, which was selected by 12% of respondents as
the most important problem. The results help us to gain a better understanding
of how our people view and experience government service delivery. If we are to
improve service delivery, we must listen to those people who use those services
and to whom we are accountable.

Closing remarks

In the words of Hubert Humphrey, "the moral test of government is how that
government treats those who are in the dawn of line, the children; those who
are in the twilight of life, the elderly; those who are in the shadows of life;
the sick, the needy and the handicapped." It is with this in mind that we are
committed to delivering on each of its objectives to ensure that the mandate of
those who put us in power is fulfilled. A lot of work still lies ahead, but I
believe we have laid a solid foundation to ensure future success for all the
provincial departments. To Dr Stegmann and his Treasury team, thank you all for
your hard work and dedication. Our former President Nelson Mandela once said
"And as we let our own light shine, we unconsciously give other people
permission to do the same". Thank you again for your leadership and
guidance.

Issued by: Provincial Treasury, Western Cape Provincial Government
30 May 2007
Source: Western Cape Provincial Government (http://www.capegateway.gov.za)