Provincial Legislature by MEC for Finance Mrs EM Coleman
6 March 2007
"The challenge confronting all of us is to turn South Africa around to make
of her the opposite of what she has been. Where she has been the exemplar of
racism and national antagonism, we must turn her into the exemplar of
non-racism and national harmony. As our task will not end with the election of
a democratic government, so do we believe that our task will also not end at
that point?
We believe that we must stand together in the new South Africa. When our
work is done, let us look at the new south Africa with hope and encouragement
hope and encouragement because she will have demonstrated that it is possible
for people of different colours and different races and nationalities to live
together in peace and friendship, sharing a common sense of nationhood and
humanity." African National Congress (ANC) President O R Tambo "From apartheid
to peace, democracy and development." February 1993.
The Honourable Speaker, Mrs YN Phosa,
The Honourable Premier, Mr TSP Makwetla,
Colleagues in the Executive Council,
Honourable Members of the Legislature,
The former MECâs for Finance, Messrs JB Modipane, LLL Chiwayo and JI
Mabena,
Honourable Mayors and Councillors,
Chairperson of the House of Traditional Leaders, Inkosi Mthethwa,
Members of the House of Traditional Leaders,
The Director-General,
Heads of departments and public entities,
The business community,
Pastor Tony and his wife,
Social partners,
Distinguished guests,
The media,
Ladies and gentlemen,
Family and friends,
Madam Speaker, when these words were uttered a few years ago, just before
our freedom, we did not know the enormity of the challenges that were
associated with the statement. Some of us thought then that the struggle for
human emancipation from the bondages of apartheid that came in all forms was
going to be easier than the struggle we waged against oppression and
degradation.
From where I am seated today, I want to declare that "It isnât easy, and it
will never be," but like Mahatma Ghandi, in his speech "I have a dream" (not
confusing it with the popular "I have a dream" speech of Dr Martin Luther
King), "Whenever I have a feeling of despair, I remember that all through
history, the way of truth and love has always won." It is only the
hard-hearted, ones who will stand the test of time. Not because they are immune
to hardship, but because they stay focussed at all times and do not let
anything to distract them. We need people who have a sense of purpose, a sense
of urgency and realisation that our people do not have patience to endure any
further hardship, because they too are equal with others, hence cannot afford
to be second-class citizens of Mpumalanga.
Economic outlook
Madam Speaker, honourable members, allow me to remind you of where we stand
in terms of socio-economic outlay of our province.
Population
After re-demarcation, Mpumalanga, which covers 79 500 square kilometres in
surface area, has a population of more than 3,5 million people, which is 7,4%
of the total national population. The population of Mpumalanga is 51% females
and 49% males. The youth below 24 years of age comprise a bigger portion of the
population (56%). It is against this background that our biggest expenditure in
the province is on education.
Over the previous Medium Term Expenditure Framework (MTEF)(Financial Years
2003/04 to 2005/06) period Mpumalanga spent a total of R15,18 billion rand.
Our estimated expenditure on education for the 2006/07 Financial Year is
R6,314 billion rand. Our expenditure estimates for the next MTEF period,
starting from 2007/08 to 2009/10, on education is R25,93 billion rand.
We are a youthful population. Out of the total population, 32% is between
the ages 15 to 35, 11% is between the ages 50 and 74, those at age 75 and above
constitute only 1%. More than 1,8 million people live in poverty and half the
population live in unfavourable conditions.
Economic growth
Agriculture
One always feels perturbed by the fact that we are always faced with the
challenge of continuous decline in agricultural activity in the province. We
normally hear farmers complaining about reasons emanating from lack of
sufficient support from government, crime and rain. But I would like to paint a
real picture in terms of agricultural activity statistics, as informed by the
national Department of Agriculture, supported by Statistics South Africa. We
have 4,770 million hectares of farming land in the province and only
approximately 2,05 million hectares is tilled. Of the hectares tilled, only 130
million tons are produced for domestic consumption and 600 million tons for
export purposes.
The question you may ask yourself is, what really happened to 2,72 million
hectares and corresponding tons that are supposed to be ploughed and harvested.
No wonder agricultural contribution to employment declines yearly. We therefore
need to pay more attention to agriculture as growth in the sector makes an
impact on jobs and unemployment. The provincial government has a plan for
rejuvenation of agricultural activity in the province. Masibuyele emasimini is
an intervention in this regard. The aim of the project is not only to till all
available arable land, but also to involve as many households as possible. In
the process, job opportunities will be created.
Madam Speaker, our power lies in the land, an asset that should be looked
after and need to be invested wisely, so as to be able to reap sweet fruits for
the betterment of the lives of our people. In 2005/06 we had planted 336 000
hectares of white and yellow maize and harvested 1 615 000 tons of the same,
while 2006/07 had ploughed 470 000 hectares and only harvested 1 562 000 tons
of the same.
We experienced a decline in both the production and harvesting of soya beans
where in 2005, 140 000 hectares were planted and 210 000 tons produced, while
90 000 hectares planted and only 117 000 tons harvested in the following year.
This represents a decline of 36% in the hectares planted and 44% in the
harvest. This situation cannot be allowed to go on as the maize and sunflower
are the main contributors in the agro-production share to our Gross Geographic
Product.
Mining
The province is very rich in coal reserves (producing about 80% of the
countryâs coal). It has the countryâs major power stations and three of the
biggest power stations in the southern hemisphere are situated in Mpumalanga.
We are nonetheless aware of the highest air pollution potential of these. We as
a province are aware of the negative effects of pollution on our environment.
Hence, one of the Big 5 projects is aimed at greening the province so as to
preserve the environment for future generations. We are also lobbying Spoornet
to fast track the rehabilitation of rail to take the pressure off our roads
infrastructure.
Madam speaker, having touched the countryâs major power stations, we stated
in the previous yearâs Budget Speech that Eskom has commissioned various
projects, to return to service three mothballed stations, these being Camden,
Grootvlei and Komati power stations. Spending on these projects to date is
approximately R11 billion. Camden should be in operation at the end of this
month (March), Grootvlei will be up and running in May, ahead of its original
date and Komati is also expected to be ahead of target, by September 2007.
Other operations of four units (two Atlantis and two Mossel Bay) which are
outside the province should be operating by May 2007.
Unemployment levels
In addition, as we reported to this house during the tabling of the 2006
Provincial Budget, the unemployment rate in the province for September 2005 was
26,9 percent as compared to the rate of 24,8 percent during September 2004. The
level of unemployment in the country as at March 2006 was 25,6 percent, down
0,7 percent from September 2005, while in Mpumalanga the rate of unemployment
at March 2005 was 27,4 percent and remained at 27, 4 percent for the period up
to March 2006. This stabilisation in the unemployment levels indicate that we
are creating more jobs and our labour absorption rate has improved. However, we
are still not absorbing new entrants or graduates as quickly as we should. The
stabilisation offers our government and opportunity of developing strategies to
reduce the unemployment rate, at least to a level of the national unemployment
rate or lower. We are no longer chasing a moving target.
Growth trends
The upsurge in economic activity has benefited the high growth in the
country and in particular Mpumalanga. In 2004, Mpumalanga contributed 6,8% to
the national Gross Domestic Product, which was the fourth largest contribution
to South Africaâs economy. Mpumalanga recorded an economic growth rate of 4,1
percent during 2004, in comparison to the national average of 4,5 percent.
During 2005, South Africaâs growth rate was 5,1 percent, while Mpumalangaâs
economy grew by 4,3 percent. In 2006 the provincial economy was projected to
grow by 5,6 percent.
We re-iterate what we have stated before, Madam Speaker, that growth is not
enough if it cannot optimally translate into reduced poverty levels, less
income disparities and job creation in the province. The statistics by the
Labour Force Survey indicate that, as at the end of March 2006, with personal
monthly income for the employed (between the ages 15 to 65), 84 percent of
those earning R2 500 or less are African. The challenge of income disparities
has to be tackled as a matter of priority in order to reduce the levels of
poverty. Lest we stand the risk of failing to realise the United Nations
Millennium Development Goal of reducing levels of poverty by half by 2015.
Let us remember that, as a country, we have set ourselves more ambitious
targets, than the global ones. We aim to have no household using the bucket
sanitation system by the end of 2007, to provide all communities access to
clean potable water by 2008, to provide all communities access to decent
sanitation by 2010 and to provide all our people access to electricity by
2012.
Key growth drivers
There has been faster growth in manufacturing and mining and these sectors
still remain the key growth drivers in the economy of the province. We need to
pay special attention to potential growth sectors like tourism and agro
processing, so that we can reduce the unemployment rate of 27,4%. The reduction
in unemployment rate will only be realised through investment that is labour
absorbing.
Tourism has a significant impact on job creation. Tourism has the potential
to be a leading growth sector in Mpumalanga, given the scenic beauty of our
province. The Plan of Action of the Economy, Investment and Employment Cluster
for 2007/08 has the following targets for tourism:
* launching of the Brand Awareness Campaign
* increasing the number of tourists by 10%
* moving Mpumalanga from position seven to position five nationally as a
tourism destination of choice.
Value added
According to Statistics South Africa the most important sectors to the
economy of Mpumalanga, are fuel, petroleum, chemical and rubber products, which
produce R2,450 billion or 38,5 percent of the total Mpumalanga gross value
added. Other important sectors are metal products, machinery and household
appliances. In addition, food products and beverages are significant
contributors to the gross value added total. The five main manufacturing
sectors i.e. chemicals, iron and steel, food, wood products, paper and paper
products, together contribute more than 88% to the value of manufacturing
output in the province. Recent research shows that Mpumalanga has more
potential for improving on value added initiatives rather than exporting
primary products. This would contribute to exports, and to economic growth. The
point being made is that a large proportion of the value added potential in
downstream activity is not realised within the province.
SMME (Small, Medium, Micro Enterprise) development
Madam Speaker, among the detailed programmes the government identified, was
a programme to promote the growth of the small and medium business sector. In
order to develop a support programme for the small enterprise sector, the
Department of Trade and Industry conducted a ten-year review of public sector
support for South Africaâs small enterprise sector from 1995 to 2005. The
ten-year review findings, coupled with annual reviews on small enterprise
support from 2003 onwards, indicated that:
* the sector has doubled in size over the past decade
* small enterprises have become increasingly sector differentiated.
* the differentiation trend has also spread into the informal sector and
survivalist enterprise activities with operational, technical and market
challenges of each niche differing significantly from others.
* insufficient depth and professionalism amongst the network of service
agencies is leading to erratic service delivery.
The review provided a basis for the development of the Integrated Small
Enterprise Development Strategy tabled and approved by Cabinet in October 2005.
The pillars of this strategy can be summarised as follows:
* promoting entrepreneurship and increasing the supply of entrepreneurs
through various measures, including entrepreneurship education, promotional
campaigns and removing barriers to entry
* improving the conditions for starting and operating an enterprise through
more flexible regulations, better access to finance and markets, improved
infrastructure facilities and business support
* enhancing competitiveness and capacity at enterprise level, through skills
training, more focussed support to increase quality, productivity and
competitiveness of small enterprise, and the facilitation of technology
transfer and private sector partnerships to support small business incubation
programmes.
In the 2005/06 financial year, 557 small, medium, micro enterprises (SMME)
accessed funding, while 1 456 entrepreneurs have received training. During the
2007 the Department of Economic Development and Planning, has set highly
encouraging targets, which are demonstrative of the Provincial Governmentâs
resolve with regards to SMME Development. These targets include establishing 10
co-operatives in the growth sectors, facilitating access to finance for 200
enterprises, and three dedicated programmes for targeted groups (women, youth
and disabled). In addition, the provincial goods and services budget of R12,03
billion over the next MTEF period, will be implemented in compliance with the
Preferential Procurement Framework Act, in order to maximise the development of
SMMEs.
However, SMME development is not only governmentâs concern. Other role
players, especially conglomerates, could help towards ensuring the
sustainability of existing enterprises by affording these enterprises the
opportunity to benefit from their procurement processes.
Growth of the financial services sector
We indicated in our last budget speech, Madam Speaker, that there is scope
to grow our financial services sector further, especially with the growing
trends, nationally, towards call centres and business process outsourcing (BPO)
industries. We went on to urge the province to take advantage of this trend,
which would contribute significantly to enhancing the potential of attracting
foreign direct investment. It could be, Madam Speaker, that because of the
finalisation of the merger process, our parastatals, some of whom are
responsible for industrial development and attracting foreign direct
investment, were not yet ready for this task, as they had to consolidate their
organisations first.
However, the managers of these entities, as well as the relevant government
departments, must know that such opportunities, once lost, will be lost
forever.
Broad Based Black Economic Empowerment (BBBEE)
We indicated to this house, in our tabling of the 2006 Provincial Budget,
that our focus would be around the performance of the Preferential Procurement
Policy Framework Act (PPPFA), and Supply Chain Management Framework.
We have realised that departments are not adhering to the pre-requisites of
the PPPFA. This is a major challenge that hinders the province to effectively
contribute to the empowerment of the historically disadvantaged individuals. We
will, therefore, during the coming financial year, introduce a policy framework
that will ensure uniform application of the PPPFA across departments.
In order to have a well-informed policy, the Department of Finance will
commission a study and analysis of the Provincial Spending that is, to analyse
procurement decisions in departments in terms of who benefits, geographic
spread and compliance with the PPPFA. This will ensure that money is retained
within the province.
Madam Speaker, in order to streamline and improve on government procurement
methods at a provincial and local government level, we have continued to
support departments and municipalities to adhere to critical supply chain
management procedures and practices in line with applicable regulations. We
continue to strengthen internal controls through building the necessary
capacities particularly through training and on-site management and technical
support. We are also providing advisory and management services to
municipalities. This will ensure that they establish the necessary structures,
delegations and other pre-requisites to ensure smooth implementation of Supply
Chain Management.
Madam Speaker, the Executive Council has in September 2006 approved in
principle a provincial framework on Public Private Partnerships (PPP) with the
objective of ensuring uniformity in approach and a coherent method in enabling
the province to improve its infrastructure and service delivery.
We will also continue to transform our service points in an attempt to
enhance our image. This will include exploring new cost-effective innovations
of conducting business so that we are able to speedily and accurately respond
to the needs our clientele. The provision of ongoing training, support and
development will always be encouraged in order to build a responsive and an
empowered cadre of practitioners. For this purpose, as an addition to our
current efforts and initiatives, we are exploring an exchange programme with
the private sector to assist with skills development, attitude and ethic
transformation.
Madam Speaker, the procurement of goods and services should enable any
institution to meet the objectives of Supply Chain Management. Therefore, we
will assist in building capacities of the low and medium capacity
municipalities around supply chain management. All our interventions in this
regard, which include facilitation and co-ordination of training, assistance in
the establishment of committees and the appointment of qualified personnel and
other related technical assistance, will play a role in avoiding qualified
reports by the Auditor-General.
Madam Speaker, Information Technology (IT)effectively supports and enhances
the business of government and improves the ability to deliver responsive,
cost-effective government functions and services to our clientele. As a result
we have continued to ensure effective utilisation of technology to achieve
business functions and services. We are thus increasing citizen access to those
services, sharing information and resources at all levels of government.
To this effect we are maximising investment in Information Technology
resources through the development and implementation of Master Systems Plan
(MSP) that will contribute to the creation of an information subway for the
province.
The "Big 5" projects of Mpumalanga: Mpumalanga in Action:
The "Big 5" Projects, namely Maputo Development Corridor, Moloto Rail
Development Corridor, Tourism, Heritage and Conservation, Water for all, and
Accelerated Capacity Building, have been identified as projects that will give
impetus to economic development in the province. They will not only massify
employment creation, they will also contribute to the provision of much needed
infrastructure and improved service delivery.
The Accelerated Capacity Building project, in particular, aims to build
capacity within the provincial administration to effectively implement
policies. The state is increasingly expected to intervene where markets have
failed to deliver, especially on the broader social goals of ensuring a more
inclusive economy. Delivery on such an expectation requires that capacity
within departments and other public entities be addressed commensurately.
As the Honourable Premier indicated, we all believe that the Big 5
Development Programmes will soar and enjoy the majestic reputation that the
"Big 5" of our abundant wildlife has. These "Big 5" of Mpumalanga must be like
development sunbeams of the African Sun in our province. "It is therefore
around these projects that the citizens of Mpumalanga should focus and
co-ordinate efforts. Activities in all spheres of government should be
co-ordinated towards success of the Big 5. Indeed, the implementation of the
Big 5 should be the embodiment of Mpumalanga in Action. To ensure that these
projects get off the ground, the budget we are tabling today provides for R58
942 million to ensure that all the work that must be done, preceding the
implementation of these projects, is catered for.
Provincial Medium Term Expenditure Committee hearings
Madame Speaker, in order to work towards a coherent budget process, the
Provincial Treasury has introduced Medium Term Expenditure Committee hearings
(MTEC hearings) during 2006/07 financial year.
Objectives of MTEC
The objectives of MTEC are:
* to improve analysis of key policies
* fully examine the extent of reprioritisation
* evaluate realistic spending plans
* focus on policy areas and concurrent functions
* finalise recommendations for consideration by the Budget and Finance
Committee as well as the Executive Council
* reach agreement with departments on revisions to their medium-term
budgets;
* assist in deciding on allocations to departments
* determine the need for increase or decrease of funds.
The MTEC Hearings enabled the Provincial Treasury to take a leading role in
assisting and directing departmentsâ budget bids and ensuring that the limited
resources available to the province are used in the most efficient manner. MTEC
Hearings also assisted determining whether the implementation of the agreed
priorities that informed the preparation of the 2007/08 budgets is on track
from an implementation perspective. Key to this was to determine whether the
funding for these priorities was adequate in the first instance and
subsequently whether the department will be confronted with any pressures in
this regard. Lastly, MTEC Hearings provided an opportunity to check whether
there are any synergies between the 2007 priorities and the proposed 2008
priorities.
Infrastructure delivery
During 2005/06 and the beginning of 2006/07, the province found itself
facing several challenges in terms of infrastructure service delivery and
expenditure thereof. The consequences of failure to deliver on the provinceâs
infrastructure needs have dire impact on development and future funding. In
terms of the Division of Revenue Act, the requirements for infrastructure
funding to flow to a province are the submission of infrastructure plans, which
include organisational support plan and infrastructure programme implementation
plan, in the prescribed format on a date determined by National Treasury as
well as submission of quarterly reports on physical progress with
implementation of infrastructure projects in addition to in-year expenditure
monitoring reports. Reported information should cover the full infrastructure
budget in the province, not only the grant allocation.
Reports should also indicate progress in terms of expenditure and jobs
created with EPWP designated projects.
The flow of the grant is conditional upon submission and approval of
quarterly reports.
The Provincial Treasury realised that without additional operational and
programme management support in the Provincial Departments that are responsible
for delivering infrastructure, the province was facing a possible
under-expenditure on its 2006/07 infrastructure budget.
The province has exercised its option as per the Division of Revenue Act
Section 9 (3) to ensure that successful service delivery takes place moving
forward into 2007/08 and the Medium Term Expenditure Framework (MTEF) period.
The Provincial Treasury has procured Operational Support Teams for all
infrastructure delivery departments
The following Provincial Departments were identified as needing additional
operational support to ensure successful and sustainable infrastructure service
delivery:
Roads and Transport
Health and Social Services
Local Government and Housing
Education
Public Works
Agriculture and Land Administration
Culture, Sport and Recreation
Additional support in the form of project managers and financial experts has
been provided to the seven infrastructure delivery departments listed
above.
Operational Support Teams
The Operational Support Teams will primarily be responsible for:
* ensuring that all necessary activities are planned and implemented in
order for effective infrastructure service delivery to take place on behalf of
Client Departments
* implementing best practice methodologies and systems in the infrastructure
delivery function as defined within the National Treasury Guidelines of the
Infrastructure Delivery Improvement Programme (IDIP)
* implementing change management methodologies in the infrastructure delivery
processes
* where appropriate, building the Departmentâs capacity for the delivery of
infrastructure.
Infrastructure Delivery Improvement Programme (IDIP)
Madam Speaker, we would like to confirm that the flow of the grants has now
normalised and the Provincial Infrastructure grant for 2006/07 has been
received on due dates.
Madame Speaker, in 2001 the National Treasury commissioned a review of
provincial service delivery systems with the view to enhance infrastructure
delivery. The review identified various deficiencies that impacts negatively on
the effective and efficient delivery of infrastructure by the provincial
departments.
The review recommended amongst others that a framework be developed to guide
and structure the management of infrastructure delivery and that support be
provided to provincial departments to develop their capacity to plan, manage
and sustain infrastructure delivery. Subsequently, the government decided to
promote the recommendations of the review report by means of a multi-sector and
multi-partner capacity building programme. The IDIP philosophy came into
existence.
The IDIP aims to assist in addressing identified deficiencies in
infrastructure delivery management. It identifies and addresses capacity and
skills deficiencies through technical assistance, and improves infrastructure
delivery, both in terms of long-term planning and short-term delivery.
Provincial Technical Assistance Support Teams (PTATs)
Madame Speaker, currently the National Treasury has deployed two Provincial
Technical Assistant Teams for the Department of Public Works and Education to
perform the following functions:
* promote the principles supported by the IDIP and which are embedded in the
Delivery Management Toolkit comprising guidelines, templates and a delivery
management system
* assist the Departments to define their infrastructure planning and delivery
management business processes
* assist the Departments to improve their infrastructure plans, programme
management plans, service delivery agreements and to establish the appropriate
programme management capacity within the departments
* promote the best practice guidelines set down within the CIDB Standard for
Uniformity in Construction Procurement.
The Provincial Programme Steering Committee on Infrastructure Delivery
"Committee" has been established. This committee is constituted to manage the
IDIP on an executive level. The primary objective of the Committee is to
provide vision and direction to the other infrastructure committees in the
province.
Own revenue
Madam Speaker, the drive to improve efficiency and effectiveness in spending
within provincial governments, the desire to boost economic activity and to
provide for a better life for all, necessitates provincial departments to
prudently look at own revenue policies, which remains an essential source of
provincial funding.
The need to provide for provincial priorities, requires provincial
governments to seek revenue sufficiency, i.e. a stream of cash receipts
equalling or exceeding the financial obligations, when due. Thus as a province
we need to find ways and means to optimise collection on existing sources as
well as exploring new sources of own revenue as stated in Chapter 7 of the
Treasury Regulations.
The role performed by provincial departments in terms of revenue management
also varies largely across departments. Provincial departments with dedicated
revenue sections tend to play a more active role in revenue generation and
management and also have regular interactions with revenue sections even at
regional level. Where departments share revenue management with other
functions, such as expenditure management, the tendency is to focus more on
expenditure management.
All departments will be assisted to have monthly own revenue workshops that
aim to look at trends of own revenue within each department and address
problems that may arise. Certain revenue sections are already quite progressive
in their approach to revenue management and continuously seek to improve on
revenue management.
The Provincial Treasury with the assistance of National Treasury will
implement a revenue-forecasting model that will be rolled out to the department
of Roads and Transport, which is a main collector of own revenue. The
Provincial Treasury will also assist the rest of the provincial departments
with revenue forecasting in a more credible way.
Capacity Building in all cash offices cannot be over emphasised. The
Provincial Treasury will continue to assist provincial departments with
training on revenue management issues.
The Own Revenue Forecasting Model will assist with the following:
* it caters for all the relevant financial and statistical information to
make better sense of the data
* form a basis for better decision-making
* automate statistical and economic calculations
* conduct scenario and sensitivity analyses to point critical areas
* audit and track forecasting performance
* aid in more accurate forecasting and forecasts of revenue figures over the
budget period on monthly basis using certain information from NaTIS as well as
assumptions on hospital fees, interest on bank balances and investment and
casino taxes.
The Revenue Forecasting Model will be rolled out to the provincial
departments as soon as the National Treasury gives approval to do so. Madam
Speaker, provincial own revenue to be raised during 2007/08 financial year
amounts to R337,855 million. The contribution per major source of revenue is as
follows: gambling and betting taxes, R25,951 million, hospital patient fees â
R22,145 million and motor vehicle licences, R174,831 million and others â
R114,928 million. The projected own revenue budget for the remaining MTEF
period is as follows: R355,025 million for 2008/09 and R384,358 million for
2009/10.
Redemarcation
The changes in boundaries resulted in significant and immediate shifts in
expenditure responsibilities among provinces. The movements above had
implications on assets, liabilities, rights and obligations for all sector
departments from both provinces, operating within the areas mentioned
above.
The implementation protocol entered into and signed on 28 February 2006
between the Honourable Premiers of both Mpumalanga and Limpopo provincial
governments provides for a full audited record of assets, liabilities, rights
and obligations associated with functions and services of both provinces.
The Provincial Treasuries of Mpumalanga and Limpopo worked together to
ensure the implementation of the protocol.
The administrative issues affecting all departments with regard to the
protocol are to be monitored by the Provincial Treasury until the end of the
financial year 2006/07.
The budget of the Province has been amended to cater for the additional
responsibilities in terms of the new demarcations. The Provincial Equitable
share for the MTEF period increased by R1,266 330 billion (2007/08), R1,338 317
billion (2008/09) ,and R1,790 837 billion for 2009/10 to cater for the increase
in the population of Mpumalanga by approximately nine hundred people.
Fiscal Policy and the Budget Framework
Provincial Equitable Share
The Provincial Equitable Share has been increased from R12,559 billion in
2006/07 to R14,140 billion representing an increase of R1,581 billion or 12,6%
in 2007/08. On the other hand the Conditional Grants have increased from R1,475
billion in 2006/07 MTEF to R1,729 billion in 2007/08 financial year. All these
increases are to provide for the following priorities:
Social services priorities
Education
Teacher development, targeted at developing valuable skills that would
enhance teaching quality in subjects like Maths Literacy and Life Orientation.
Grade R teaching and School Management, both vital conditions to the delivery
of quality teaching and learning, is also targeted
Education systemic evaluation is targeted to determine the efficacy of the
system so that appropriate interventions can be introduced. Funding will allow
the Province to conduct its own evaluation and introduce interventions that are
specific and more focused areas.
The provincial fiscal framework provides for the scaling up of the
remuneration packages of school managers (principals) from Sunday, 1 April 2007
and extending it to other educators over the MTEF. The exact detail on how the
revised remuneration packages are to be introduced will be communicated to
provinces once finalised. The framework also provides for the employment of
administrative staff in schools.
Health
Madam speaker, 90% of the population in Mpumalanga is wholly dependent on
government for the provision of all their health services. Health Emergency
Medical Services (EMS) are prioritised to speed up rollout of the EMS model
(shorter response times, better communication systems, vehicle replacement,
introduction of aero-medical services, training course for basic ambulance
assistants). This should significantly enhance the readiness of the service for
the 2010 World Cup.
The implementation of the Health Professional Remuneration Review and the
creation of additional posts for health professionals, government intends to
further improve the service conditions of professional health workers and boost
health professional numbers over five years
Social Development
The employment of social auxiliary workers would be responsible for tasks
that do not legally require a social worker. It is intended that, through
in-service training and further studies, some would progress to becoming social
workers. Scholarships implemented to boost the increase supply of social
workers in the social development sector.
Non-Social Services
Provincial roads, agriculture, economic affairs and tourism that contribute
to rural development should give effect to government's labour-based and labour
intensive programmes.
Movements in inflation
This yearâs budget framework has been adjusted to take account of movements
in inflation since the 2006 Budget. Departments were advised to take into
account the following revised inflation projections, published in the 2007
Medium Term Budget Policy Statement:
* 6,0 percent in 2007/08
* 5,0 percent in 2008/09
* 5,0 percent in 2009/10
as well as 1 percent pay progression of the wage bill. The salary increases
come into effect on 1 July each year for salary levels 1 to 12, or 1 January in
respect of Senior Management Staff and political office bearers.
Financial governance
The Public Finance Management Act (PFMA)
Madam Speaker, Honourable Premier, as we indicated to this august house in
our tabling of the Provincial Budget Speech of 2006, our aim was to produce 12
unqualified reports. We have not achieved our aim, as we got 11 unqualified
reports and one qualified report. We did not get disclaimers. In addition, two
departments received clean audits, while three had one emphasis of matter and
the rest had more than four emphasis of matter each.
As we have done with the previous audit outcomes, the Provincial Treasury
has put in place a Plan of Action per department, to address all the concerns
raised by the Auditor-General. Internal Audit units of each department are
responsible to ensure that the issues raised by the Auditor-General are
corrected.
Madam Speaker, we have informed departments, during the Medium Term
Expenditure Committee hearings on the 2007 Budgets, of the shortcomings,
identified by Provincial Treasury, in their departments, regarding financial
governance. We do not expect any department to overspend on their allocated
funds, while equally; there is no justification to underspend, while we still
have a myriad of development problems to resolve.
The Municipal Finance Management Act (MFMA)
As reported in the tabling of the 2007 Budget, the department continued to
assist municipalities and will continue to do so, in the following areas:
Compliance with the provisions of the Municipal Finance Management Act
Financial management:
The Municipal Finance Management Unit has assisted the Lekwa Local Municipality
to update its books of account and have them ready for audit. We have also
provided training, to municipalities, in financial management, in order for
them to sustain their financial management capacity. In addition, the Minister
of Finance has increased the number of delegated municipalities by 4 to 21.
As soon as time and obligations permit, all the newly delegated
municipalities will be visited in order for the staff of the unit, and myself,
to familiarise ourselves with the status quo regarding financial management,
compliance, and other issues.
Financial management
As has become the norm, the province continues to be one of the best performers
in relation to spending its budget allocation. We had spent 70,7% of our
adjusted budget at the end of the third quarter, against a national average of
69,9% for the same period. Mpumalanga is the fourth highest spending province
in this period.
We must caution, Madam Speaker, that, given the impressive spending levels,
we should not be oblivious to value for money issues. In addition, as the
Honourable Premier indicated, we need to fight corruption. We have in place the
Monitoring and Evaluation Unit, which ensures that there is compliance with the
PFMA, MFMA and norms and standards in all infrastructure projects.
Provincial revenue and allocations per department
We wish to indicate, Madam Speaker, that the Medium Term Expenditure
Framework approach to budgeting entails multi-year budgeting, implying that
financial planning is not a single year activity. We therefore wish to present
the provincial budget for the MTEF period 2007 to 2009.
The budget we are tabling for the 2007/08 Financial Year is R16,211 billion,
which represents a 26, 3% increase from the previous yearâs budget of
R12,832 billion. The R16,211 billion is made of R14,013 billion of equitable
share, R1,729 billion of conditional grants, R335,110 million of own revenue
and R133,626 million from the provincial surpluses. The remaining R58,942
million is put aside as a Contingency Reserve to cater for the "Big 5" Projects
and other unforeseen and unavoidable provincial expenditure.
VOTE 1: Office of the Premier
The Office of the Premier is allocated an amount of R148, 821 million to
continue with among other functions the governance coordination role, and
management of international relations. The estimates for the outer years are
R157,453 million (2008/09) and R144,051 million (2009/10).
VOTE 2: The Provincial Legislature
The Provincial Legislature is allocated an amount of R70,260 million in order
to fulfil its oversight functions. These functions include bringing government
closer to the people. The estimates for the outer years are R69,426 million
(2008/2009), and R72,897 million (2009/2010).
VOTE 3: Department of Finance
The department is allocated an amount of R145,052 million. The Department is
responsible for, among others, the uniform application of supply chain
management, proper management of assets and liabilities, IT and for 20
municipalities delegated by the Minister of Finance. The estimates for the
outer years are R147,645 million (2008/09); R158,790 million (2009/10).
VOTE 4: Department of Local Government and Housing
The Department of Local Government and Housing is allocated an amount of
R839,586 million, amongst others, to recapitalise five LED projects in targeted
municipalities; the construction of a Provincial Disaster Management Centre,
the renovation and completion of 14 Multi-Purpose Community Centres, and for
social housing and upgrading of informal settlements. The estimates for the
outer years are R958,944 million (2008/2009); R1,060 billion (2009/10).
VOTE 5: Department of Agriculture and Land Administration
The Department of Agriculture is allocated an amount of R621,073 million,
which will be used amongst others for Masibuyelâemasimini, assisting 7 498
peasant farmers, support for the establishment of five apple projects, and for
the distribution of 600 Agricultural Starter Packs in the three districts. The
estimates for the outer years are R685,672 million (2008/2009); R743,876
million (2009/10).
VOTE 6: Department of Economic Development and Planning
The Department of Economic Development and Planning is allocated an amount
of R361,348 million, which will be used amongst others, to identify and scope
economic opportunities along Moloto Rail Development Corridor, the finalisation
of the Provincial Industrial Strategy; trade industry and tourism development
and the promotion of Foreign Direct Investment. The estimates for the outer
years are R359,389 million (2008/09); R386,486 million (2009/10).
VOTE 7: Department of Education
The Department of Education is allocated an amount of R7,956 022 billion
which will be used to recapitalise Further Education and Training (FET)
colleges; recapitalise public primary schools as part of the QIDS-up programme,
and for food security and nutrition, among others. The estimates for the outer
years are R8,600 billion (2008/09); R9,372 billion (2009/10).
VOTE 8: Department of Public Works
The Department of Public Works is allocated an amount of R355,070 million,
among others, to massify and up-scale the Expanded Public Works Programme
(EPWP)and implementation of the Infrastructure Delivery Improvement Programme
(IDIP). The estimates for the outer years are R374,668 million (2008/09);
R402,917 million (2009/10).
VOTE 9: Department of Safety and Security
The Department of Safety and Security is allocated an amount of R44,510
million, to, among others, support school safety initiatives, to mobilise
communities in the fight against crime and to develop the 2010 Integrated
Safety Plan. The estimates for the outer years are R44,136 million (2008/2009);
R46,343 million (2009/10).
VOTE 10: Health
The Health component of the Department of Health and Social Services is
allocated an amount of R3,595 billion which will be used to improve rural and
urban EMS response times, recruit health professionals. The estimates for the
outer years are R4,132 billion (2008/09); R4,662 billion (2009/10).
VOTE 11: Department of Roads and Transport
The Department of Roads and Transport is allocated an amount of R1,421
billion, which will be used for amongst others, the upgrading of 57 kilometres
roads and improvement of drainage along 14 kilometres of road, thus creating 1
800 job opportunities and on Public Transport Capital Projects. The estimates
for the outer years are R1,441 billion (2008/2009); R1,576 billion
(2009/10).
VOTE 12: Department of Culture, Sport and Recreation
The Department of Culture, Sport and Recreation is allocated an amount of
R156,075 million, for the construction of the Provincial Archive Centre, the
renovation of eight public libraries in eight municipalities; the development
of film and video sector in the province, in terms of the 2010 FIFA World Cup,
the establishment of fan clubs, public viewing sites, etc. The estimates for
the outer years are R184,603 million (2008/09); R213,704 million (2009/10).
VOTE 13: Social Services
The department is allocated an amount of R497,517 million, which will be
used to scale up welfare services to deal with, among others, welfare services
legislation: Childrenâs, Older Persons and Child Justice Acts; for increased
support for childrenâs homes, and to address the challenges of substance abuse.
The estimates for the outer years are R669,022 million (2008/09); R719,450
million (2009/210).
The total amounts, Madam Speaker, to be voted for in the Mpumalanga
appropriation bill 2007 is R16,210 778 billion for 2007/08, R17,824 634 billion
for 2008/09 and R19,559 413 billion for 2009/10.
Madam Speaker, allow me to table the following documents for consideration
by this house:
The 2007 Policy Budget Speech
2007/08 Appropriation Bill
2007/08 Budget Statement
2007 Budget Made-Easy booklet
Conclusion
Madam speaker, allow me to conclude by thanking the Premier, Members of the
Executive Council, Members of the Legislature, public servants especially those
from my department, the Portfolio Committee for their oversight, guidance and
support and continued confidence in me.
Let us all make 2007 a year where we will be returning confidence back to
youngster like Mandisa Ngomane when she asks questions like: "Is the Minister
of Finance compensating nurses for negligence of patience and forever
disappearing of medicines?" Let us continue making ugogo Buthelezi from
Thekwane South, who was so proud to own a house for the first time, but was
happy irrespective of the fact that the house did not have internal doors and
the electricity was not connected. In the pursuit of "A Better Life for All",
we experience difficulties and challenges, but let me remind that:
"Every government or institution, no matter how great it is, it faces
difficult times. There are no enduring great institutions that have a perfect,
unblemished record. They all have ups and downs. The critical factor is not the
absence of difficulty but the ability to bounce back and emerge even stronger.
"Adapted from Jim Collins "Good to Great"
To my family, thank you for always giving me a shoulder to lean on. To our
guest, we thank you for taking time to be with us, on this important day.
I thank you.
Issued by: Department of Finance, Mpumalanga Provincial Government
6 March 2007
