Honourable Premier;
Colleagues in the Executive Council;
Honourable Members of this House;
The HOD and Management of the Gauteng Department of Finance;
Comrades and Friends;
Ladies and Gentlemen;
Madam Speaker, in tabling the 2010/2011 Annual Report of the Department of Finance, I would like to briefly outline milestones recorded on key projects and programmes that we implemented in accordance with our mandate.
As Members of this House would know, the Gauteng Department of Finance was established soon after the start of this term of government in 2009.This was done through the merger of the former Gauteng Treasury, the Gauteng Shared Services Centre and the Gauteng Fund Project Office.
This decision set into motion various processes that had to be implemented in order to operationalise the new department. Central amongst them is the creation of an organisational structure and filling of funded vacant post, I am pleased to announce that, the organisational structure has been adopted and the filling of funded vacant posts is in motion and moving speedily.
The second important issue in operationalising the department was the review of the Gauteng Shared Service Centre. The review process is finalised. It recommends that the Shared Service Model shall be reconfigured to a hybrid and strategically focused.
Madam Speaker, during the GSSC review the Project Management Office was established to oversee the reconfiguration process. The labour relations strategy was developed to manage the engagement process going forward. In addition, we conducted change readiness assessment workshops to ensure that GPG departments, particularly, the Departments of Health and Social Development as well as Education are ready to receive the functions that will be handed over to them when the process is complete.
Shared Service Centre
Madam Speaker, the Shared Service Centre continues to provide background support to the GPG Departments. During the year under-review, the Shared Service managed to provide a customer- focused and consultative Human Resource service to the GPG through the provision of specialised and efficient HR solutions.
In the previous financial year, we successfully piloted the automation of the termination process in our department; we are intending to roll it out to the rest of GPG departments. This will ensure that we fast track the process of termination of service, and reduce debts due to salary over payment.
Madam Speaker, we launched the Professional Job Centre in Soweto, this facility brings government recruitment to where people are. At the operational level, this facility will assist us to improve response handling turnaround times.
Madam Speaker, in the year under review, we continued with our strategy to use procurement spend as a strategic tool to facilitate Broad Based Black Economic Empowerment, develop small and medium sized companies and facilitate the creation of job opportunities.
In this regard, we ensured that 2% of all agricultural products consumed in provincial hospitals and other GPG facilities were sourced directly from emerging farmers. We are intending to increase the supply of agricultural products to provincial hospitals to be in line with the production capacity of our farmers.
In line with government’s commitment to creating employment opportunities, 74, 1% of maintenance contracts for medical equipment were awarded to Broad Based Black Economic Empowerment suppliers who are Original Equipment Manufacturer accredited agents.
In addition, 8% savings amounting to R11, 2-million were realised on the procurement of Medical Equipment.
Madam Speaker, we also introduced innovative and effective measures to address process and regulatory inhibitors to the payment of small businesses.Amongst other things, these included:
- Preparations for the piloting of electronic submission of supplier invoices have been finalised, resulting in reduced costs and the elimination of payment delays;
- Preparations for the piloting of the Purchase Card project during February have been concluded.The project objective is to enhance business opportunities and improve cash flows especially for SMME’s.
In this regard, we also completed preparations for piloting of the Purchase Card project. This project will enhance business opportunities and improve cash-flows for SMME’s.
The Gauteng Fund Project Office
Madam Speaker, the Gauteng Fund Project Office, continues to be seized with the responsibilities of securing alternative sources of funding and creation of new revenue streams. During the course of the past financial year, the GFPO managed to complete the following four Mega projects with proposals for optimal financial solutions:
- Hospital Information System;
- Upgrading and Refurbishment of Hospitals;
- Kopanong Precinct Project; and
- William Nicol Road Project.
Treasury services
Madam Speaker, the Public Finance Management Act provides GDF with a mandate to prepare the provincial budget. As such, we continue to review the provincial budget process with the aim of strengthening its effectiveness in driving provincial planning, the implementation of our prioritised outcomes, and monitoring and evaluation of public spending to accelerate service delivery to our people.
Last year, following the July Cabinet Lekgotla, which focused on planning to inform the budgeting process, President Jacob Zuma announced the adoption of the outcomes approach to service delivery.
This meant that all departments should ensure that their MTEF plans and budgets were outcomes driven. GDF through Treasury championed this process in the province, supported by the Gauteng Planning Commission; we made sure that all identified and agreed upon outcomes were funded.
Madam Speaker, as the department, we remain committed to maximizing current revenue sources and the creation of new revenue streams. During the previous financial year, we produced a research report that informed measures to improve revenue management processes in the Department of Health and Social Development as part of that department’s turnaround strategy. We provided funding for the implementation of an electronic data interface to assist the Department of Health and Social Development in submitting electronic bills to Medical Aid Schemes. This project is now operational in 14 hospitals and has yielded significant improvement in patient records management and revenue collection.
Madam Speaker, in the year to March, GPG generated a total of R2.8-billion an increase of R100-million from the adjusted appropriation of R2.7-billion. This was from motor vehicle licences, gambling and betting taxes and hospital patient fees.
Madam Speaker we are committed to restoring the financial wellbeing of the Gauteng Provincial Government; it is at the centre of our Mandate and primary existence as Treasury. So every time when we stand in this platform we will continue to speak about austerity measures and fiscal discipline until we get our acts in order.
In the previous financial year, we continued with austerity measures. The focus was on budgetary reprioritisation, strict cost containment measures, contract management reform processes and stringent payment plans to ensure compliance with the Public Finance Management Act. Our aim in this regard has been on ensuring that departments spend within their allocated budgets and that there is no wastage.
To ensure that the Gauteng Provincial Government departments exercise fiscal discipline in the years to come, we tabled a comprehensive research paper at the inaugural Finance Lekgotla entitled “Restoring Financial Discipline to Gauteng Provincial Government”. This paper outlined inter alia, expenditure rules that were adopted and implemented to enforce prudent management of financial resources.
We understand that our task is to provide strategic leadership, guidance and support to all GPG departments in terms of financial management. That is why we introduced measures to instil and engender the stringent culture of financial control and management. These were:
- Ring-fencing conditional grants and infrastructure funds to ensure that suppliers are paid on time;
- Ensuring that the age analysis of accruals is less than 30 days in a given month;
- Ensure that departments operate within the agreed cash forecasts and/or allocations;
- Reduce substantially the unauthorised expenditure;
- Decrease inflow of ex-employee debts;
- Reduce reliance on overdraft for funding purposes;
- Ensure that the employees in the system are validated.
Madam Speaker; we implemented the measures that we have outlined above because as custodians of provincial resources, we understand that it is only through sound financial management that provincial outcomes could be resourced, ensuring quality service delivery to our people.
Madam Speaker; our relentless march towards achieving clean audits by 2014 in line with Operation Clean Audit is continuing. And all indications are that we are on course, but our eyes should continue to be stuck on the ball.
Our assertion is informed by the 2010/2011 Audit Outcomes of GPG Departments and entities from the Office of Auditor General. The 2010/2011 Audit Outcomes indicates that out of 12 government departments in the province, a total of 11 including GDF received unqualified audit reports in the year ended in March 2011.
Two departments, the Office of the Premier and the Gauteng Provincial Legislature, achieved unqualified audit reports with no other matters. Only the Department of Health and Social Development received a qualified report in the year under review.
GPG departments recorded improvements in two important areas – unauthourised expenditure on personnel costs and foreign currency commitments.
However challenges still exist, therefore, we urge departments to comply with regulations and develop or enhance policies and procedures that will improve the internal control environment. These are the things that will ensure that we maintain and improve on this trend and, ultimately achieve our target as set in Operation Clean Audit.
GDF is also implementing a number of key interventions to assist departments to improve financial management. These include training and development of staff in the Offices of Chief Financial Officers, auditing interim financial statements, provide feedback on monthly reports by departments, clearing of confirmed interdepartmental balances and process review and re-engineering.
Madam Speaker; the situation at municipal level is also improving. The improvement that we see at municipal level can be attributed to the Municipal Finance Indaba’s that we convene quarterly in conjunction with the Department of Local Government and Housing. Through the Municipal Finance Indaba, we managed to provide the following support to municipalities:
- The deployment of suitably qualified accountants in municipalities to support and assist in financial management;
- Introduction of the first ever Gauteng Municipal Internal Audit Forum, where best practices around the role of internal audit and audit committees are shared;
- Participation in the Accounting Standards Board Public Sector Accounting Forum, to stay abreast of the latest changes in accounting, particularly the GRAP standards so that we can roll out the information to Gauteng municipalities.
Madam Speaker, we have also established the Gauteng Municipal Risk Management Forum. This is a platform for risk practitioners in municipalities to constructively engage on risk management, share best practices, and to highlight the role and importance of effective risk management in municipalities.
In Conclusion
Madam Speaker as the Chinese would say “a journey of a thousand miles begins with one step”, as GDF we can safely say that we have taken a first step towards the achievement of Clean Audit by 2014. The Department of Health and Social Development for the first time in many years have moved out of the disclaimer, and with the process that we have set in place together with the Department of Health and Social Development we can only hope for the better.
Madam Speaker, let me take this opportunity to thank the Portfolio Committee, SCOPA, Gauteng Audit Committee, Auditor General and the HOD, Divisional head of Treasury and all concerned for their steeling work.
I thank you.
