SPEECH BY MR. MANDLA NKOMFE, GAUTENG MEC FOR FINANCE, AT THE TABLING OF THE 2011/2012 BUDGET VOTE OF THE GAUTENG DEPARTMENT OF FINANCE, GAUTENG PROVINCIAL LEGISLATURE, 12 JULY 2011.
Madam Speaker;
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.
INTRODUCTION
Madam Speaker, the 2011/2012 Budget Vote speech is presented in a different political and economic climate as compared to 2010/2011 Budget Vote.
On the political front, South Africa recently held the 3rd democratic local government elections. The election campaign was characterised by robust and dynamic engagements. During this campaign our people explicitly gave a mandate to the elected representatives to accelerate delivery and to do so in a fair, just, transparent and equitable manner.
On the economic front, the South African Reserve Bank recently released the 4th quarter Economic Performance Report which stated unequivocally that the economy is on the upswing. A key feature of this recovery is that household consumption expenditure has roughly been in line with income growth. This means therefore that households have not been forced to resort to credit to finance their spending habits. Household income growth was at 5.4% in the first quarter of 2011 and exceeded the household consumption growth of 5.2%.
The economy of Gauteng also performed well, contributing over 35% to the country’s economy. The Gross Domestic Product by Region (GDPR), which has grown from R389-billion in 1996 to R625-billion in 2009, remains the highest in the country. According to HIS Global Insight, it is estimated that our GDPR reached R645 billion in 2010.
What is disturbing however, Madam Speaker, is that this economic growth has not translated into employment creation, the relationship between the two remains unbalanced and not correlated. The unemployment rate of Gauteng was a worrisome 27% as of the 4th quarter of 2010.
Our financial position, as the Provincial Government, however remains positive. During the financial year 2010/2011, we collected R2.8-billion in revenue, an increase of R100-million on our projected amount of R2.7-billion.
REVIEW OF THE 2010/2011 FINANCIAL YEAR
Madam Speaker, in reviewing the previous financial year, allow me please to briefly outline achievements recorded on key projects and programmes that we implemented in line with our mandate.
As part of the Renewal Agenda of the Gauteng Provincial Government, which began soon after the start of this term of government in 2009; the Gauteng Department of Finance was established. This was done through the merger of the former Gauteng Treasury, the Gauteng Shared Services Centre and the Gauteng Fund Project Office. As part of that process a new organisational structure was formulated to provide an operational framework for the department.
I must report that after months of negotiations, the department and labour unions representing employees reached an agreement on the organisational structure. I signed this structure and it was presented to the Department of Public Service and Administration (DPSA) for final endorsement. We are pleased to announce that the DPSA has indeed endorsed the organisational structure of the GDF. As such the necessary processes will now unfold to place existing personnel in posts and to fill funded vacant positions.
In line with the Renewal Agenda of GPG that we have spoken about, we also undertook a comprehensive review of Gauteng’s model of shared services. The aim was to assess the Gauteng Shared Service Centre’s performance against set targets of streamlining and improving transactional processes while realising economies of scale through GPG’s bulk buying power.
This review process was completed last year. Amongst other things, it recommended that shared services as a model should be retained. However the nature of the shared service centre must be one that is strategic and highly focused. This report was approved by EXCO thus giving us a mandate to reconfigure the Shared Services Centre in line with the recommendations of the review process.
Madam Speaker, significant progress in this regard has been made since then. The Project Management Office was established to oversee the reconfiguration process. The labour relations strategy was developed to manage the engagement process going forward. Furthermore, there have been ongoing 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.
We are confident that we will meet our September deadline of migrating certain HR and Procurement functions to these departments.Whilst this process is very urgent it is must be handled with sensitivity as it concerns employees whose conditions of employment might be affected by the change. We are engaging with the unions as representatives of employees to ensure that all labour issues are taken into consideration.
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 priorities, 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 championed this process in the province, supported by the Gauteng Planning Commission. It was no easy task, due to amongst others, the ever increasing demand for scarce resources. In spite of this, allocative efficiencies were improved and all strategic requests were accommodated. The result was the implementation of the outcomes based budgeting approach for the 2011 MTEF, which gave impetus to the new political directive.
As the department, we remain committed to maximising the 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 operational in 14 hospitals and has yielded significant improvement in patient records management and revenue collection.
We have continued with austerity measures. The focus has been 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 this was achieved, 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 would, if enforced, result in more prudent management of financial resources.
Madam Speaker; we are committed to provide a world class customer-focused and consultative Human Resource service to the Gauteng Provincial Government through the provision of specialised and efficient HR solutions.
In the previous financial year, we successfully piloted the automation of the termination process at our department, the Gauteng Department of Finance. This project will ensure that we fast track the process of termination of service, and reduce debt as a result of salary over payments.
In a first for the public service in South Africa and in response to the high volumes of job applications that we receive, we launched the Professional Job Centre at Thusong Centre in Maponya Mall, Soweto. This facility brings government recruitment closer to where people are, in a retail complex frequented by thousands on a monthly basis. At the operational level, this facility will assist us to improve response handling turnaround times. This is an area that has previously led to complaints from client departments.
As a result of our automation initiatives, people can now apply for government jobs from anywhere in the country provided that they have connection to the Internet, thereby increasing the pool of individuals from which we can select the best people to fill vacant positions in GPG.
THE 2011/2012 BUDGET VOTE:
Madam Speaker, the total allocated budget of the Gauteng Department of Finance for this financial year is one billion, five hundred and forty four million, eight hundred and sixty one thousand rand (R1 544,861.000). We plan to use these resources to provide strategic and operational support to the province in order to facilitate the achievement of inclusive economic growth.
We are fully aware that this will be no easy task. However, I am confident that we have the necessary skills, knowledge and experience to carry out our mandate. Our employees are committed to their work; and they are driven by the desire to facilitate service delivery to our people.
Madam Speaker, we have structured our work this financial year in line with Government’s Programme of Action, which strongly focused on job creation. The Gauteng Department of Finance therefore has allocated R1.82bn over the MTEF as its contribution to decent employment through inclusive growth. This will encompass key projects in ICT infrastructure delivery via the G-Link Project, increasing access to jobs in the GPG by strengthening our recruitment strategies and portals and reviewing the Procurement Framework to realise the GPG’s Preferential Procurement targets.
Speaking during the State of the Nation Address in February this year, President Zuma called on government departments to fill all funded vacancies this year. The Gauteng Department of Finance is responsible for the recruitment function of the Gauteng Provincial Government. We have already identified all funded vacant posts in the system and we will be working with departments to ensure that these are filled within set timeframes.
As a Department of Finance we will be allocating R400m to the outcome focused on quality education through over involvement in the Gautengonline Schools Project.As part of our plan to accelerate the implementation of the Gauteng Online Schools Project, we will train 1 200 IT technicians and deploy them to GoL enabled schools in the province to address technical problems and enhance the operational efficiency of the system. Our efforts to speed up the process of implementing GoL have also given us an opportunity to provide work opportunities and develop a pool of young people with much needed IT skills.
Madam Speaker; let me now turn to the province wide initiatives that we will implement this year. When we developed our strategic framework in 2009, we took a conscious decision to anchor our vision statement on three key words.
We said we are Activists, the nature of our work is Developmental and we will, if needs be, become Interventionists in our approach to ensure that we facilitate inclusive economic growth that will see us creating jobs for our people, lifting them out of poverty and bringing about a better life for all.
This approach is the nucleus that drives our every day work and will continue to do so in this financial year as we implement two of the eight outcomes of the Gauteng Provincial Government that the Gauteng Department of Finance is responsible for.
These are: “Building an efficient, effective and development oriented public service”; and facilitating “a responsive, accountable, efficient and effective local government”, and this one we are implementing it in conjunction with the Gauteng Department of Local Government and Housing.
This will be no easy task. But as a strategic partner to provincial departments and municipalities, we see no reason why we should fail because, as I stated, we have the necessary skills, knowledge and experience.
Madam Speaker; we are committed to ensuring that municipalities in the province are effective in the way they are managed, are efficient in delivering public services to the people and are accountable and responsive to the needs of the communities that they serve.
We say this because we know that it is only when our municipalities work better that the quality of life of our people will improve. Refuse should be collected on time, every week; water and sewer networks must work efficiently; there should be an uninterrupted supply of electricity in communities so even businesses will see an increase in productivity, while street lights will be operational to increase visibility and reduce crime.
That is what will make our municipalities attractive investment destinations for all types of businesses and spur entrepreneurial activity; this leading to local economic growth and access to job opportunities for our people.
As GDF we have a role to play in assisting local government to work better. We will provide the necessary oversight and support on both sustainable resource management and financial governance matters. In this financial year, we will provide a comprehensive support on municipal financial management to facilitate a smooth handover to the new political leadership and top management.
Strengthening the system of intergovernmental fiscal relations with specific reference to the interface between planning, budgeting and the transfer of funds will be another priority area for us.
We will intensify our support programmes to enhance the capacity for proper financial management in local government. Training and capacity building programmes including technical support in the implementation of General Recognised Accounting Practice standards and strengthening of the capacity of internal audit and audit committees to work towards the achievement of Operation Clean Audit in 2014 have been developed.
The GDF shall continue to convene the Municipal Chief Financial Officer’s forums and the Municipal Finance Indabas. These intergovernmental platforms have greatly enhanced communication, planning and co-ordination in the implementation of the financial management reforms as required in terms of the Municipal Finance Management Act both at an administrative and governance level.This financial year will see us paying particular attention to ensuring that there is proper interface between the Municipal Finance Indabas and the Premier’s Coordinating Forum.
To contribute to the outcome of a responsive, accountable, efficient and effective local government, the GDF will allocate R13 million to initiatives that seek to instill and strengthen prudent financial management in municipalities.
The provincial Supply Chain Management team will provide support to municipalities and departments in the province. This year, our focus will be on monitoring implementation of policies, rules and regulations; reducing the number of deviations from normal procurement processes; implementing a reporting system in all departments which will assess preferential procurement policy outcomes; and training to facilitate reforms.
Madam Speaker, we will strengthen measures to deal decisively with fraud and corruption. Working together with other Departments, will respond to the need to ensure that all people in South Africa feel and are safe and also that indeed our public service is efficient, effective and development-oriented.
In this regard, we are allocating R115 million to these outcomes. Our interventions will include implementing IT Forensics (Digital Evidence Management) and conducting fraud detection reviews. We will also reduce fraud and corruption through stricter recruitment reference, qualifications and criminal records checking.
On building an efficient, effective and development-oriented public service, we have sub-divided our work responsibility into four (4) broad categories:
Firstly, we want to ensure prudent management of financial matters across all GPG departments. Therefore we will continuously review and improve the outcomes based budgeting approach to strengthen its effectiveness in driving provincial planning, monitoring and evaluation of public spending and service delivery.
Working together with the Planning Commission, we will develop systems and tools for reporting on financial and non-financial performance. This will strengthen the linkages between spending and service delivery and assist with the attainment of provincial objectives.
It is important that we must intensify the monitoring of expenditure on Conditional Grants in line with the grant frameworks as set out in the Division of Revenue Act. This will be done through regular interaction with respective grant managers to ensure adherence to grant frameworks, attainment of intended outcomes, and value for money, and ultimately the impact on the residents of the province
As we indicated when we presented the provincial budget in March, the infrastructure budgets of GPG departments have increased to address backlogs and meet future requirements.
For us to achieve this, we have to improve the way we plan our infrastructure projects. We need to achieve high levels of efficiencies in our supply chain management units. This will lead to improvement in procurement processes, contract management and enable us to achieve significant cost savings in infrastructure service delivery. Decentralisation of maintenance of infrastructure is another initiative that will speed up delivery of maintenance at cost centres.
We will also work closely with departments to ensure that allocated resources are spent accordingly and address problems in the infrastructure delivery process. This relationship will focus on assisting departments to attract people with the right set of skills to work on infrastructure projects in order to improve the job creating potential of infrastructure delivery.
Whilst still on infrastructure, there is a need to prioritise updating Roads Asset Management System with road condition data and traffic volume data. This is a requirement of Government Immoveable Asset Management Act and the Public Finance Management Act, and is absolutely critical for ensuring expenditure across a road network is efficient and leads to desired network, social and economic outcomes. Prioritise preventative maintenance in the roads budgets before allocating budgets to new roads or reconstruction.