Ladies and gentlemen,
Good morning.
Thank you very much for honouring the invitation to attend this early morning media briefing.
Women empowerment
This briefing takes place during an important month in the struggle for women emancipation and total freedom of all in the country.
We are bound by the historical significance of the determined and selfless efforts of women generation of 1956 to dedicate this democracy to total liberation of women and girl children; to expanding access to opportunities in accordance with the progressive objectives set out in our Constitution and defeat the heinous crimes against women and children.
The Provincial Government has adopted various policies to advance equal opportunities for all, women and people with disabilities included. More specifically and relevant to the operational context of the Department of Finance,
- Preferential procurement policy is being actively implemented to leverage state resource to realise women economic empowerment;
- The department has assisted in the development of a tailor-made procurement policy to suit the operational environment at the CDRP areas;
- R145.2 million or 54% of the total budget allocated to the department for 2013/14 financial year is managed by women at the level of executive management of the department.
Policy mandate
The Department of Finance supports the delivery outcome of ensuring the Provincial and Local Government sphere is responsive, accountable, effective and efficient. Accordingly, the budget outcomes of the funds committed to the department is expected to demonstrate the extent to which it is supporting other provincial departments, public entities and municipalities in becoming efficient and development orientated.
The responsibility of this department is to maintain fiscal discipline, consider the fiscal environment while ensuring that the state is flexible in its approach and responsive to the five priorities and especially the needs to the people.
The department has demonstrated its capacity to be a leading institution, however we acknowledged that more still needs to be done to ensure outcome-based support programme to departments, public entities and municipalities to reach the desired level of financial prudence and outright compliance with financial management regulations.
We have therefore agreed that this outcome statement will define the performance undertakings of the senior management of the department going forward to ensure more outward-looking performance delivery by the Provincial Treasury.
Fiscal environment
The global economic outlook remains fragile and challenging due to the continuing deeper recession in the Eurozone and slowdown in a number of systemically important emerging market economies.
The 2013 growth forecast for Mpumalanga has also been revised down to a level of just more than 2%, in line with national growth expectations. A provincial growth of more than 3% is forecasted for next year and recovering to more than 4% in 2016.
The latest Quarterly Labour Force Survey (QLFS) of Statistics South Africa, indicated that Mpumalanga performed well in the labour market on a quarterly and also on an annual basis.
The net job creation (especially in the trade, finance, construction, agriculture & utilities industries) for Mpumalanga was 33 000 jobs (one third of the net job creation nationally) in the second quarter of 2013 and 49 000 jobs (17.9 per cent of the net job creation nationally – especially in the community services, agriculture & manufacturing industries) on an annual basis (between the end of the second quarter of 2012 and 2013).
Mpumalanga’s job creation number and employment growth of 3.4% in the second quarter of 2013, were the highest/best among the nine provinces. Mpumalanga also recorded the third highest job creation figure on an annual basis and the joint second highest employment growth (5.2%) in the same period.
Mpumalanga’s unemployment rate remains relatively high at 29.4%. The good news is however, that the rate remained the same in the second quarter of 2013 compared to the previous quarter. It is interesting to note that Mpumalanga recorded an employment level (in the second quarter of 2013) above the 1 million level – for the first time ever!
According to the latest Statistics South CPI (consumer price index) report, the provincial annual inflation rate in June 2013 was 5.2 per cent, which was lower than the 5.6 per cent measurement in May 2013 and the joint third lowest among the nine provinces.
It was also lower than the national headline inflation (5.5%) and below the inflation target zone of 6 per cent for the fourth consecutive month. Food & non-alcoholic beverages and also housing & utilities, exerted upward pressure on the increase in the average price level. The main risks to the inflation outlook remain rising food, oil/fuel, administrative prices and also exchange rate and wage pressures.
Provincial budget and expenditure
Review of financial performance
There was improvement in the expenditure of the annual budgets in the Province. The Provincial Government has spent 99.3% of the allocated budget for implementation of 2012/13 priorities. This represents 1.2% increase compared to the previous financial year of 2011/12.
Budget commitment
The Appropriation Act 2013 has been assented to, committing the provincial budget amounting of nearly R33.7 billion to the nine budget priorities. The budget has also been committed to implementation of specific policy priorities and programmes as outlined in the policy and budget statements of all departments between May and June this year.
Expenditure
The Department of Finance has to date transferred a total of R8 billion to all departments and entities in accordance with the approved expenditure projections to ensure that departments and public entities execute their policy mandates. At the end of the first quarter (30 June 2013) the provincial departments had spent R7.8 billion of the total projected estimates of budget for the quarter.
We will continue to monitor the spending patterns to advise on measures that must be taken to ensure optimal expenditure and that spending is consistent with the Appropriation Act and that the economy of scale is achieved in this constrained economic and fiscal environment. The department has since initiated a provincial review of expenditure as part of the effort to realise efficiency dividends.
Improve financial management controls
Accruals
The department is committed to assisting the Provincial departments to eliminate wastages and accruals that deplete resources earmarked for service delivery programmes. In line with the recent Cabinet decision, R658 million in accruals declared as at 31 March 2013, for the last financial year have been cleared to date.
The Department will monitor the situation and provide policy support to ensure that the accruals are managed effectively and that the balance of resources for delivery is not adversely affected.
Chairpersons of the three governance clusters will monitor and account at both Budget and Finance Committee as well as at Executive Council level for the achievement and non-achievement of cluster priorities including on under-spending/overspending of a cluster department.
Litigation claims
Another item that required intervention is the litigations against the Provincial Government, especially because settling litigation is equivalent to double dipping in the already limited public funds for service delivery.
The Provincial Government was able to reduce litigation claims by R15 800 000 between 30 April 2013 to date. The Government has also saved an amount of R3 300 000 through settlement processes.
We are grateful to all parties that continue to recognise that the innocent people should not bear the brunt for actions or non-actions by officials. We appreciate and appeal to all parties in all disputes to seek ways of protecting the little resources that the government has so that more people can benefit from planned service delivery programmes.
Savings
On the 1st March 2013, Premier DD Mabuza committed the government to redirect government expenditure from consumption to investment in infrastructure. He directed that growth in personnel should take place only in critical areas of public service delivery. The budget that we presented shows that the government has indeed contained the growth of our personnel costs to a national acceptable rate, and saved about R300 million.
Municipal finance support
The process of supporting the municipalities to clean up their billing systems is underway. All municipalities have adopted their budget for the current fiscal period. The municipalities are current being assisted with IT governance and hands-on support on IT audit outcomes and other related issues. We are stepping up interaction at the executive level to assist the functionality units to assist the government to move towards clean audit by 2014.
Infrastructure delivery
The provincial government has committed R2.6 billion on capital assets in this financial year, whilst spending in the first quarter of 2013/14 amounts to R551.4 million. The Infrastructure budget in 2012/13 financial year amounted to R2.5 million with expenditure amounts to R437.5 million.
We will soon submit the Infrastructure Delivery Management System (IDMS) to the Executive Council as part of the efforts to improve forward planning, monitoring, and delivery and improve expenditure on infrastructure funds in line with new reforms.
Improving Supply chain environment
SCM systems
The programme of improving efficiencies in supply chain management processes is continuing well. The Provincial Treasury has provided training and support on the functioning and operations of bid committees to 37 officials. Of the 25 officials enrolled with the University of Pretoria only 22 officials wrote the final examination in June 2013 and are awaiting their results.
We have developed and are implementing additional Supply chain management control measure to minimise risk exposure which often leads to accounting challenges at the municipal level.
Price standardisation
The Provincial Government has established a Price Standardisation Committee to assist in restoring confidence in the management of public funds. The committee will ensure uniformity in the pricing of commodities procured by the Provincial Government, eliminating unacceptably high prices that some of the service providers have been charging the government. The committee has commenced its work and it is expected that this will further save the government from paying exorbitant amounts of money on commonly procured items.
Operation Clean Audit
The Provincial Treasury is up-scaling its support to the provincial departments, public entities and local government to assist the Province achieve clean audit reports by 2014. We will meet the Members of the Mayoral Committees who are responsible for finance to emphasise the urgency of implementing and accounting for financial management and audit improvement plans on 15 August 2013. This will be our second quarter Finance MUNIMEC.
Tabling of audited financial reports
The provincial departments and public entities will table their audited annual reports at the legislature later this month. The reports will indicate the extent to which we have moved in terms of progressing to the desired level of audit outcomes. I would like to congratulate those that have performed well and urge others to join us in the pursuit of clean administration.
For more information contact:
Letshela Jonas
Cell: 079 5000 154
Tel: 013 766 4323
