Honourable Speaker,
Honourable Premier,
Colleagues in the Executive Council,
Honourable Members of this House,
Heads of Departments present here today,
Leaders from various sectors of our society,
Fellow citizens of this great province,
Introduction
I am humbled by the honour bestowed on me, once again, to stand here today and present to this House - which is an important component of our democratic system – the 2013 Medium Term Budget Policy Statement.
This is the fifth MTBPS of this political term of government. Its presentation to this Fourth Term of the Legislature is significant. This is because the MTBPS take the Provincial Administration closer to the end of the 2009-2014 political term of government, and is therefore an essential part of consolidating our priorities and finalising critical deliverables identified at the beginning of the term.
Perspectives on economic outlook
Honourable Speaker, our country is part of the globalised world. In this globalised world, our economy is interconnected with the economies of the rest of the world. The interconnectedness of our economy with the rest of the world is such that what happens in one region has a profound impact in our domestic economy as well. That is why when we frame our fiscal position, we strongly consider what is happening elsewhere in the world.
The economic outlook has deteriorated significantly since the 2013 Budget. To this end the National Treasury has revised the economic forecast for 2013/14 and the medium-term expenditure framework significantly. Growth for 2013/14 is now revised down to 2.3 per cent from the 3.0 per cent presented at the time of the 2013 Budget. The current forecast shows growth only improving to 3.5 per cent in 2016/17.
The downward revisions in economic growth were as a result of weaker global conditions, domestic labour disputes and maintenance stoppages in major industries, binding constraints in electricity production and other areas, and declining domestic confidence. Weaker domestic business confidence has translated into weaker investment. Total growth in investment slowed to 4.1 per cent in the first half of 2013, coming down from 6.0 per cent in the first half of 2012.
South Africa continues to face stagnant export growth, fast rising imports and declining terms of trade which increased the trade deficit. As a result, the current account deficit is projected to remain above 6 per cent over the medium term.
Honourable Speaker, all of these have a direct impact on government revenues. As it currently stand, gross tax revenue for 2013/14 has been revised down by R3 billion to R895 billion. The lower tax revenue was due to poor domestic Value Added Tax and excise duties performance which point to reduced consumer demand and likely weaker income tax collection over the medium term. What this means is that all of us have to work in a manner that shows prudency and eliminate wasteful expenditure.
As the economic hub of the country contributing 35.7 per cent to the gross domestic product, Gauteng has also been affected by the global and domestic economic challenges which have resulted in budgetary constraints. Our interventions in response to the economic downturn were timely, tailored and specific. We restructured our spending patterns by reprioritising resources towards investing in infrastructure projects to boost economic growth and create employment.
As a result the province has made significant strides in achieving set priority outcomes adopted in 2009 and improving the socio-economic lives of Gauteng citizens. These are the outcomes linked to the National Development Plan and the Gauteng Vision 2055, and are focused on key issues such as equitable growth, good governance, sustainable development and social cohesion.
Therefore the 2013 Medium Term Budget Policy Statement that we are presenting today tells a story of the performance of the fiscal framework throughout this political term of office with regards to the allocation and utilisation of resources, and own revenue collection.
Fiscal framework
Our challenge over the next three years is to use the fiscal framework as a tool to stimulate the economy and create an enabling environment for job creation as part of a broader approach to address the triple challenge of unemployment, poverty and inequality, as directed by the National Development Plan and the Gauteng Vision 2055. To achieve these objectives, we must ensure that our fiscal framework is sustainable.
Therefore the Medium Term Budget Policy Statement advises us that our fiscal policy choices and budgetary framework must take note of the following:
- A constraint environment of economic downturn is still with us, therefore the Gauteng province has to operate within certain budgetary constraints,
- In this regard the MTBPS reprioritises resource allocation to strengthen service delivery while paying attention to efficiency in expenditure,
- We must continue to invest in public infrastructure so as to meet the service delivery needs of communities while creating decent work for our people,
- Spending on key social and economic programmes must be maintained to ensure social net benefit of Gauteng citizens
We must continuously reinforce our fiscal stance. In this regard GPG departments have begun reprioritising expenditure, with emphasis placed on spending on the more essential items.
Monitoring and overseeing the work done by departments therefore becomes important to ensure that they comply with all legislation, conduct risk assessments, manage financial resources prudently, deliver services in accordance with their operational and strategic plans.
Debt owed to municipalities is still a challenge. Therefore we must accelerate our interventions to assist municipalities to collect debt from households that do not fall under the indigent groups and businesses which are in operation.
In addition we are working on assisting municipalities to find creative and innovative ways of ensuring that services are delivered optimally, in a sustainable and equitable manner.
Adjustments Appropriation
Honourable Speaker, Section 31, subsection (1) of the Public Finance Management Act makes a provision for the MEC of Finance to table the provincial adjustments budget under certain specific conditions. Amongst others, these are:
- the appropriation of funds that have become available to the Province,
- unforeseeable and unavoidable expenditure,
- any expenditure in terms of section 25,
- the shifting of funds between and within votes or to follow the transfer of functions in terms of section 42,
- the utilisation of savings under a main division within a vote for the defrayment of excess expenditure under another main division within the same vote in terms of section 43, and
- The role-over of unspent funds from the preceding financial year.
In line with the above, we are adjusting the main appropriation to make provision for amongst other things, the following:
- Gauteng is a magnet for people in search of job opportunities and improved standards of living. This has led to a rapid increase in learner numbers, and this situation coupled with other operational matters in education has resulted in budgetary constraints. We are therefore adjusting the budget of the Gauteng Department of Education upwards to enable the department to improve efficiencies in the management of demand and supply resulting from the rapid increase of learner numbers in the province.
- As we have stated before our status as the economic hub of South Africa and the continent has led to in-migration to Gauteng. This situation is putting pressure on our healthcare facilities. In spite of this we remain committed to providing quality healthcare services to everyone who presents themselves to our healthcare facilities. As such, additional funds are allocated to the Gauteng Department of Health to provide quality healthcare services in line with our objective of ensuring “A long and healthy life for all South Africans”.
- As the engine of SA’s economy, the mobility of our people becomes critical, to this extent adjustment budget is made available to the department of Roads and Transport to deal with maintenance and upgrades of our roads, and also to deal with the operational requirements of Gautrain.
At the beginning of this financial year I announced a strategic review of the Gauteng Online Schools Programme, as well as its replacement by an e-Learning Solution. We decided to upgrade to an e-Learning Solution due to significant advances in technology, and the inclusion of curricula into the ICT environment, which rendered the physical computer laboratory obsolete. The future classroom will result in all learners using their own devices (e.g. tablets, smart phones, netbooks etc.) that would contain all their e-Books and grade specific curriculum content.
Through the use of specialised software packages, we will be able to personalise educator-learner encounters, and thus expedite constructive interactions to maximise learning experiences. Likewise, learners will easily access libraries, instead of spending a limited amount of time every week in a physical computer laboratory.
Honourable Speaker this adjustment makes provision for the transitory period from the Gauteng Online to e-Learning Solution. As from January when the schools open, our learners will be provided with the e-learning devices.
In six months’ time our country will celebrate a significant historical milestone. On the 27th of April 2014, it will be exactly twenty years since the birth of our democratic dispensation. As the province we are gearing ourselves for this momentous occasion.
We have identified infrastructure as one of the key mechanisms to enhance socio-economic growth and development. Therefore the amendment of the Appropriation Act 2013 has necessitated upward adjustments to conditional grant and equitable share allocations to infrastructure departments with the socio economic growth and development.
Demonstrating value for money and cutting costs
Honourable Speaker, addressing senior government officials from member countries in Chile last month, Angel Gurria, the Secretary-General of the Organisation for Economic Co-operation and Development said the economic downturn, and the implications of perceived mismanagement of public funds on the livelihoods of millions of people around the world had eroded their trust in government.
He therefore called on officials to restore trust in the state by mainstreaming “integrity, transparency and engagement” in their work, adding that this is “crucial for the legitimacy, efficacy and strength of governments” going forward.
In line with these profound words from the OECD of which our country is a member, I would like to re-emphasise that financial management in the province is a responsibility that should be discharged by all those that have been tasked with the responsibility of stewardship of the financial resources.
These include all Accounting Officers and all Chief Financial Officers in the province. MECs must hold their Accounting Officers (as CEOs of the Departments) responsible for ensuring that finances in their respective departments are managed in a sound manner and all financial legislations are adhered to.
In order to restore trust in our administration, we must demonstrate value for money in all our work, we must improve efficiencies so we could stretch each and every rand that we spent and avoid wastage of public funds.
Honourable speaker as government we need to work extra hard to eliminate waste and reinforce good governance. We need to be counted amongst the generation that made responsible choices, a generation that was mindful of tomorrow in their actions.
In the last few weeks, both the Premier and the Minister of Finance pronounce that all state credit cards are cancelled. This Treasury has already communicated this message to all departments, I should reiterate that this message also applies to our entities as well.
In addition to this, the province continues to save in excess of R3 million a month through the implementation of the Identity Verification Solution which is a system to identify and stop fraudulent transactions in our payroll system. Forensic investigations have been launched to root out those who operate with impunity from continuing to pillage public resources through our payroll system.
Honourable Speaker, in spite of the fiscal constraints that we are facing as government, we fully understand that we must continue to provide effective public services to our people. Therefore we are adjusting the 2013/14 budget upwards from R76 billion to R79 billion.
Conclusion
Honourable Speaker, allow me to present the following documents for consideration by the House:
- Adjusted Estimate of Provincial Expenditure and Revenue
- Adjusted Estimate of Capital Expenditure
- 2013 Medium Term Budget Policy Statement
- Adjusted Appropriation Bill
- 2013 Provincial Economic Review and Outlook
Thank you!
