Date: 3 June 2008
Source: Department of Finance
Title: SA: Modiselle: 2008/09 Departmental Budget Speech

Madam Speaker,

Let me preface my budget submission with the remarks by former President Nelson Mandela at his Inauguration as the President of the Republic of South Africa in 1994. He says:

"We have triumphed in the effort to implant hope in the breasts of millions of our people. We enter into a covenant that we shall build a society in which all South Africans, both black and white, will be able to walk tall, without any fear in their hearts, assured of their right to human dignity a rainbow nation at peace with itself and the world."

I have elected to invoke the instructive words of the former President to remind all of us that, whilst we have entered our Season of Hope, many of our people remain on the outskirts, without benefiting from our many developmental programmes that are key to restoring their human dignity, and with it, their ability to walk tall.

I am reluctantly reminding members that this budget takes place a few weeks since those deplorable xenophobic violent incidents in Alexandra. As a South African I am deeply sad and ashamed.

As South Africans, we are all ashamed that such a dastardly thing happened in our country. One hardly believes that a few criminals would turn on our African brothers and sisters in this manner. Such prejudice and ignorance defies reason and must be condemned and recorded. Lest we forget!

To continue with the subject matter at hand, two pieces of legislation which guide our endeavours are the Public Finance Management Act (2000) and the Municipal Finance Management Act (2003).

These two Acts are intended to ensure that government departments, public entities and municipalities manage their financial affairs better and deliver improved and sustainable services to our people.

However, when we peruse the recent Auditor General's Reports, we glean that serious challenges are still evident in some municipalities and departments regarding financial management systems, processes and internal controls.

Our financial management support therefore is strategic and we regard it as an abler because through this support we progressively ensure that business activities of departments and municipalities are funded and that those funds are used efficiently and effectively. This in turn enables departments and municipalities to implement the necessary programmes and realise their priorities set in their annual performance plans.

Our performance

This budget, Madam Speaker, builds on the foundation set by the many business plans presented to your august house in the past.

It is therefore not a stand alone but part of a continuum of the many events which culminate in an integrated service delivery to our clients. Before presenting the business plan for the Medium Term Expenditure Framework allow me to provide a synopsis of our achievements in the past financial year on which our business plan is built.

Two learnerships in internal audit and public sector accounting were implemented as well as enrolled our cleaning staff on the Adult Based Education Training (ABET) programme. In an effort to improve the productivity of our staff, a physical exercise programme was launched during the year.

For the first time, the Auditor-General came to the conclusion, after carefully reviewing the Internal Audit function's work, that they could rely on the work of the Provincial Internal Audit for the 2008/09 audit of our provincial departments. The department obtained an unqualified opinion for the seventh consecutive year.

Although we experienced tremendous pressure on the fiscus due to various factors such as the after effects of the disestablishment of cross-boundary municipalities and over expenditure by the Dept of Education, we still managed to finance the expenditure of the province.

The Infrastructure Delivery Improvement Programme (IDIP) was implemented within the Department of Education, Public Works and Department of Health. It is further being rolled out to other provincial departments to address and identify problems that undermine effective delivery of infrastructure. Our provincial Supply Chain Management unit trained five hundred and twenty three (523) government officials, on the new electronic tendering system.

We also conducted forty five (45) outreach workshops throughout the province involving one thousand three hundred and forty two (1 342) small, medium and micro enterprises (SMMEs) business entities out of which one hundred (100) suppliers were offered grants by the Department of Trade and Industries (DTI) through this programme.

Regarding the Municipal Finance Management Act, we were able to provide assistance to municipalities with the preparation of the 2007/08 Adjustment Estimates, as well as the 2008/09 Draft Budgets.

The Municipal Support Unit conducted fifty (50) training workshops for municipal officials. We are certain that this initiative will go a long way to address the problems of sound financial management in our municipalities.

An in-depth study to assess the capacity of these municipalities, with the view to devising a turn-around strategy to improve the level of service delivery was also done. The Information Technology Directorate focused on addressing six critical information communication technology (ICT) issues in 2007/08. Fundamental to this was the need to stabilise the provincial ICT architectures by making sure that ICT services are available throughout the year.

As we all know, fraud and corruption in both the Public Service and the Private Sector affects the entire country. These undermine the fight against poverty, by putting money that is meant for infrastructure and development into the pockets of corrupt individuals. For the successful implementation of the provincial budget, we therefore launched a vigorous awareness campaign code named: "It's your budget, become a player/get on de bus" against fraud and corruption in departments and municipalities throughout schools and communities in the North West province, nationally via ETv and other print media.

Strategic focus for the year ahead

Madam Speaker, our performance plan is consistent with the five-year Strategic Plan we submitted in 2005/06 financial year and Annual Performance Plan tabled in this august house on 18 March 2008. I will now highlight our key focus areas for the period ahead.

Corporate Services

The department will review the Strategic Plan and organisational structure, to ensure that we are able to perform in terms of our mandate. We will continue to perfect the Performance Management Development System (PMDS) and implement policies on Human Resource and special programmes in line with Labour Legislation.

In addressing our objectives, the department will implement two learnerships and internship programmes and also promote the wellness and well being of all our staff. We will continue to strive to obtain an unqualified audit opinion from the Auditor-General.

Sustainable resource management

As far as this programme is concerned, we will continue to implement fixed and non-fixed budgeting techniques in order to determine value for money, and implement "use it or lose it" approach to maintain an overall fiscal discipline in the province.

A continuous effort will be made to roll out the implementation of the Infrastructure Development Improvement Programme (IDIP) in other departments to improve and fast track the delivery of infrastructure projects in the province.

The department will address the budget challenges of the Social Cluster, with particular reference to the Department of Education, by assessing their strategic plans and allocated budgets.

Madam Speaker, we will develop a Provincial Revenue enhancement strategy with the view to increasing revenue collection in order to expand provincial revenue envelope. Furthermore, during the current financial year, we will scale-up the level of monitoring departmental spending on monthly and quarterly basis.

Madam Speaker, we will also assess and evaluate the effectiveness of budget allocations and implementation, to confirm that funds allocated are utilised in terms of the relevant mandates.

We will continue to assist departments and Public Entities in planning, budgeting and expenditure management and we will step-up the monitoring of the implementation of infrastructure projects.

In the same context, Madam Speaker, we are going to constantly monitor the Department of Education budget spending in order to assist them to remain within the allocated budget.

Supply Chain Management

Madam Speaker,

The department is in the process of repealing the North West Tender Board Act during this financial year. The delay in repealing the Act was as a result of the contracts and cases which were still unresolved.

As part of our Treasury responsibilities, we will continue to provide training, support and give policy guidance on Supply Chain Management to all departments and municipalities.

The Department will continue to monitor compliance oversight with regards to Supply Chain Management reforms and Legislation. Furthermore, the programme will empower service providers by conducting outreach training and workshops on Supply Chain management to training the public on how to access Government opportunities.

We also want to assess the success of the impact of these outreach programmes in terms of jobs that will be created for the local people in particular women, youth and people with disabilities.

Financial governance

The financial management training programme is the vanguard forming the bedrock on which the future the North West Provincial administration is going to be built. We have already completed phase 1 with 600 graduates, out of which the top five achievers obtained university entrance and bursaries from PricewaterhouseCoopers to further their studies. Most of the graduates from this programme are now employed in various departments around the province.

Madam Speaker,

In addition to our previous success with this programme, we decided to continue by now focusing on the training of non - core financial managers on levels nine to 12. We have identified one thousand (1 000) officials in this category and have officially launched this programme on 17 March 2008. We do not intend to convert them into financial experts but rather equip them with enough ammunition to enable them to make good judgement on the decisions they make on financial matters like budget and project management. We hope by Improving financial management skills on this layer of management will certainly improve the quality of financial accountability and reporting.

Unlike the phase one which was held only in the central region, we have added a new dimension to phase two by providing training venues in the regions to minimise travelling and other logistics. This will provide business to small medium and micro enterprises (SMMEs) in the areas where this training is offered.

In an effort to improve on previous audit outcomes, we have established a Centre of Excellence in collaboration with the Auditor General and Internal Audit to focus on those key areas that pose a challenge for most departments like asset and risk management.

This centre will also be the training hub for the implementation of the Public Finance Management Act and Municipal financial management act.

We will assist all the Provincial Government Institutions to prepare their financial statements and to develop plans to address audit outcomes with the view to receiving unqualified audit opinions.

We will continue to provide training to improve the Technical Financial Management Capacity in departments, Public Entities and municipalities in particular.

We will also continue, this year, to assist and encourage departments to improve on the Electronic Funds Transfer (EFT) to speed up supplier payment turn-around time, to comply with the Public Finance Management Act (PFMA).

Provincial Internal Audit Function

During this financial year, we will conduct specialised audits, including the performance and Information Technology Audits. However, the high staff turn-over of Internal Audits remain a challenge.

Madam Speaker, the department will continue to conduct follow-up audits on the implementation of the Auditor-General's findings. However, what we have observed in the past was the lack of implementation of the audit findings by departments.

We therefore, draw the attention of departments to the Public Finance and Municipal Finance Management Acts requirements regarding this matter, and to confirm that, we are always available, and ready to support the Accounting Officers in dealing with their Internal Audit matters.

Municipal Finance Management Act (MFMA)

Madam Speaker, I am highly convinced that you will agree with me that, the implementation of the Municipal Finance Management Act has challenging issues such as Revenue-base, Capacity, Role clarifications, etc. We have assessed the status quo of municipal performance and already assisted in the development of draft budgets for the year 2008/09, given the capacity constraints in the unit.

We are currently increasing the staff component to fill all critical vacant posts. In June this year, we will advertise the positions of Chief Director, Co-ordinator and Unit Managers which are critical if the unit is to be fully functional.

To this end, the department has planned to support municipalities to implement and comply with the Municipal Finance Management Act on planning, Budgeting, Supply Chain Management, Accounting and relevant Policies. We will continue to work with all stakeholders including the Department of Developmental Local Government and Housing where monthly meetings have already been agreed upon to avoid duplication.

As part of providing hands-on support, we will assist municipalities with the development of, amongst others, Supply Chain Management and other financial related policies and guidelines.

Madam Speaker, allow me to report that nationally, the structure of Municipal Support Unit is being developed in conjunction with the leadership of the National Treasury. Budget and systems reforms will also be implemented to enhance the implementation of the Municipal Finance Management Act with effect from this financial year.

Information Technology

The department will establish an Information Resource Centre to support users with websites, e-mail and other related Information Technology matters.

We will embark on upgrading of Local Area Networks for the Departments of Health, Social Development and Arts, Culture and Sports, Transport and Community Safety. Furthermore, the department will upgrade the Wide Area Network and the environment infrastructure to be in line with National priorities.

During the same period, we will establish architecture integration, for example, Government services, and assist departments in website design and development and customisation of e-mails in terms of departments.

The budget for 2008/09

The total budget for the Department for the 2008/09 financial year is R255, 287 million (two hundred and fifty five million two hundred and eighty seven thousand rand) which shows a decrease of three percent as compared to the main budget allocation for the previous year.

The budget allocations for the two outer years of the MTEF period are R270, 284 million (two hundred and seventy million two hundred and eighty four thousand Rand) and R286,169 million (two hundred and eighty six million one hundred and sixty nine thousand rand) respectively.

Madam Speaker, allow me now to table the budget of the department for the 2008/2010 financial years per programme as listed below:

The allocation of the budget to the six main programmes is as follows:

Administration

The objective of this programme is to provide administrative leadership, human resource and communication support services to the Department and to build working relations with stakeholders.

The programme is allocated R48,301 million (forty eight million three hundred and one thousand rand) in the 2008/09 financial year and R44,715 million (forty four million seven hundred and fifteen thousand Rand) and R44,620 million (forty four million six hundred and twenty thousand rand) respectively in the two outer years of the medium term expenditure framework (MTEF) period.

Sustainable Resource Management

The Sustainable Resources Development is responsible for the development of policy guidelines and ensuring effective implementation of Public Finance Management Act (PFMA), consolidation and monitoring of the provincial budget and providing effective and efficient control over provincial revenue and other resources.

The programme is allocated R33,773 million (thirty three million seven hundred and seventy three thousand Rand) for the 2008/09 financial year and R38,543 million (thirty eight million five hundred and forty three thousand rand) and R44,777 million (forty four million seven hundred and seventy seven thousand rand) respectively for the two outer years of the MTEF period.

Asset and Liabilities Management

The role of this programme is to manage provincial assets and liabilities and to provide policy guidelines on supply chain management.

The programme is allocated R11,245 million (eleven million two hundred and forty five thousand rand) for the 2008/09 financial year and R10,649 million (ten million and six hundred and forty nine thousand rand) and R10,142 million (ten million one hundred and forty two thousand Rand) respectively for the two outer years of the MTEF period.

Financial governance

The Financial Governance Programme comprises of the sub programmes of accounting services, norms and standards, centralised creditor payments and the provincial internal audit.

The programme is allocated R80,406 million (eighty million four hundred and six thousand rand) for the 2008/09 financial year and R86,934 million (eighty six million nine hundred and thirty four thousand rand) and R91,652 million (ninety one million six hundred and fifty two thousand rand) respectively for the two outer years of the MTEF period.

Municipal Financial Management

The primary objective of this programme is to assist municipalities to comply with the provisions of the Municipal Financial Management Act in order to enhance their capacity to deliver. It aims at putting a sound financial governance framework in all the municipalities.

The programme is allocated R11,472 million (eleven million four hundred and seventy two thousand Rand) for the 2008/09 financial year and, R11,610 million (eleven million six hundred and ten thousand rand) and R12,078 million (twelve million and seventy eight thousand rand) in the two outer years of the MTEF period respectively.

Information Technology

The key responsibility of this programme is to offer information technology strategic direction in the North West Provincial Administration by providing information technology solutions. These include development and maintenance of enterprise applications, management and support of network services and architecture, database and data storage, ICT security, mainframe and server systems, and provision of E-government services.

The programme is allocated R70 090 million (seventy million and ninety thousand rand) for the 2008/09 financial year and R77,833 million (seventy seven million eight hundred and thirty three thousand Rand) and R82 803 million (eighty two million and eight hundred and three thousand Rand) in the two outer years of the MTEF period respectively.

Madam Speaker, preparing a budget is as difficult as determining its effective and efficient utilisation.

I therefore wish to sincerely thank the following people:

* The Premier, Mrs Edna Molewa for her continued support and adroit leadership.
* Colleagues in the Executive Council for their support.
* Honourable members of the Finance and Public Accounts
* Committees and all the other committee members whose invaluable contributions made the compilation of this year's departmental budget possible.
* Honourable Members of this august house for your attention, time, vigilance and patience.
* Heads of Departments, for your contribution and support by providing us with the necessary information we needed as usual.
* The Head of Department of Finance, Mr Johannes Mohlala.

* The Deputy Director-General and head of Sustainable Resource Management, Mr Ernst Van Wyk.
* The Deputy Director-General and Head of Financial Governance, Mr Geo Paul and the formidable members of "Team Finance" whose dedication and professionalism assisted immensely in ensuring that we always deliver on our promises.

I would therefore like to show my appreciation and thanks by quoting one of Edward Everette Hale's poems:

"I am only one,
But still I am one.
I cannot do something.
But still I can do something.
And because I cannot do everything,
I will not refuse to do
the something that I can do."

On that note, with your permission, may I table the 2008/09 Budget allocated to the Department of Finance before your august House.

Ke a leboga
Ngiyabonga
Baie dankie
Merci
I thank you.

Issued by: Department of Finance, North West Provincial Government
3 June 2008
Source: North West Provincial Government (http://www.nwpg.gov.za)