Issued by: North West Communication Service
PRESENTATION SPEECH BY THE NORTH WEST MEC FOR FINANCE AND ECONOMIC AFFAIRS ON THE ADJUSTMENT APPROPRIATION BILL - MARCH 5 1995
Honourable Speaker, this is the first year in which we fully implemented the budget designed by ourselves. I believe it is opportune to reflect on our performance for the year with regard to aligning the budget to our policies and strategies. The 20 April 1995 Budget Speech gave us a benchmark against which to control expenditure and it is in this context that I wish to report to Parliament on the performance thereof. Above all I am submitting today, the Adjustments Estimate in terms of section 4(5)b of the Exchequer Act, 1994. Perhaps, before I proceed with my presentation let me refresh the Honourable Members' memory of why I need to report on the Adjustments Estimate. The Adjustments Estimate serves the following purpose:
It is an instrument through which to effect necessary adjustments to the current main estimate (budget) for the current financial year. The utilisation thereof is however limited by making provision for only the following:
Additional allocation of funds due to:
The above, Honourable Speaker, are the main reasons why the Adjustments Estimate is required and it is clear that the Exchequer Act, requires of us to formalise the total Revenue and Expenditure in this manner. Against this background allow me, Honourable Speaker, to table the Adjustments Estimate for 1995/96 financial year.
Policy implementation
Honourable Speaker, it will be unfair on my part only to high- light our responsibility in limiting expenditure to budget without giving due regard to policies of Government which gave rise to the current budget. I wish to remind ourselves on the main policies around which the current budget was prepared. As Government, we have committed ourselves to the principles of the RDP and the main pro- nouncement was made in this regard. Our commitment to deliver on the RDP was mainly directed by linking growth to development. Special emphasis was laid on infrastructural and human development that will ensure sustainable growth of our economy.
The budget allocation in this regard was indicative to this commitment and I hope that departments ensured adherence to this commitment through specifically utilising funds allocated to the policy areas efficiently. The above components of our policy will be briefly revisited during the Adjustments Estimate debate to determine the extent to which this budget has addressed them.
Estimates of Expenditure 1995/96
As the honourable members will remember, the original Estimate of Expenditure amounted to R6,304 billion with the anticipated deficit of R361 million. Of this deficit R228,57 million was negotiated with National government and will be transferred to us in due course.
Revised Expenditure level for 1995/96
Honourable Speaker, the total revised expenditure level is R6,727 billion. This is R422,56 million more than the estimate of R6,304 billion contained in the Printed Estimate of Expenditure.
However, before I deal with the main components of expenditure to be voted I wish to clarify the movement of funds during the year.
There were funds which moved to National Government due to transfer of functions and these amounted to R96,8 million. The movement was done through suspension of funds on our budget in order to allow National government to draw them. In this case there is a downward adjustment in the budget. Funds which flowed into the Provincial Exchequer amounts to R519,39 million.
This shows that although the net increase in the revised budget is R422,56 million, the amount to be voted is R519,39 million. The increase of R519,39 million can in the main be attributed to the following:
i) 1995/96 Salary adjustments
During the year an amount of R209,6 million was received from National government in respect of the 1995/96 salary adjustments.
ii) Department of Education
Due to transitional problems, viz agency arrangement, an unreliable data base on which to prepare the budget, etc. the Department of Education under-budgeted personnel expenditure. What was initially projected to be an about R800 million shortfall was managed down through strict fiscal controls to R100 million. This was achieved through close cashflow management and continuous reviewal of the expenditure pattern in the Department of Education .
I am pleased to announce that the National Government has approved to fund the shortfall to the tune of the negotiated R100 million.
iii) Budgeted deficit
Due to inter-transfer of functions between National Government and the Province some of which were not accompanied by sufficient funds and the overstatement of our own revenue budget by the National Government, a deficit of R361 million was budgeted.
During the year numerous discussions were held with National Government with a view to resolving this issue. Ultimately it was agreed that R228,57 million be paid over to the Province in order to in part cover the budgeted deficit. It must be noted that expenditure covered by this revenue was already voted.
This means therefore that although this revenue was received later than anticipated it was not earmarked for increasing the budgeted expenditure level.
iv) Drought relief
An amount of R44,5 million was received in respect of drought relief. Although the funds have already been received it is doubtful whether this amount will be utilised because of the good rainy season.
v) Local Government Elections
An amount of R36,3 million in respect of Local Government Elections was received from the Department of Constitutional Development and Provincial Affairs. This amount, although voted, was transferred to local government structures to facilitate the elections.
vi) Assistance to Local Government
An amount of R19 million has been appropriated through a virement from the Department of Finance to the Department of Local Government and Housing to address infrastructure problems in the local government structures. This once again shows our commitment to improve the quality of life of our citizens while at the same time encouraging payment of services rendered to the communities. It is my belief, Honourable Speaker, that the funds will help to promote the Masakhane campaign which in the end will bring about awareness to the communities to pay for their services.
vii) RDP Funds
An amount of R167,36 million in respect of RDP related projects was approved the details of which are contained in the adjustments estimate schedules. Honourable Speaker, it is my belief that this amount was utilised to the benefit of our needy communities.
viii) Transfers between votes
Transfers (virements) between votes were dealt with by the Provincial Treasury Committee. Presentations were made and every submission was treated on merit using the strict criteria designed to deal with additional requirement of expenditure (shifting of expenditure) between departments.
This means therefore that expenditure resulting from the unforeseen and unavoidable criteria did not go through without prior approval of the Provincial Treasury Committee. The expenditure dealt with in this manner amounts to R96,84 million.
Individual votes
Honourable Speaker, I now wish to give a brief rundown of individual votes with regard to the revised expenditure.
i) Department of the Premier
The revised expenditure amounts to R79,77 million against the original voted amount of R46,21 million. The increase of R33,56 million is mainly due to Premier's discretionary fund (RDP) of R30 million and the Project Preperation Facility Fund (R3 million).
ii) Office of the Legislature
The revised expenditure amounts to R23,08 million against the original voted amount of R21,09 million. The increase of R1,99 million is mainly due to Constituency allowance (R1,08 million) and insurance for Members of the Legislature (R501 thousand).
iii) Health and Social Welfare
The revised expenditure amounts to R1,95 billion against the original voted amount of R1,80 billion. The increase of R150 million is mainly due salary adjustments (R149,06 million).
iv) Office of Provincial Service Commission
The revised expenditure amounts to R31,81 million against the original voted amount of R21,80 million. The increase of R10.01 million is mainly due to amount transferred by National Government in respect of management and Persal training (R6,07 million).
v) Safety and Security
The revised expenditure amounts to R5,01 million against the original voted amount of R1,97 million. The increase of R3 million is mainly due to Community Policing Programme (R2 million) and the staffing of the new organisational structure (R1 million).
vi) Economic Affairs
The revised expenditure amounts to R78,91 million against the original voted amount of R56,54 million. The increase of R22,37 million is mainly due to the carry over amount in respect of compensation of damaged businesses in 1994 (R5,9 million), assistance for Miss World Pageant and Million Dollar Golf (R6 million) and General Export Incentives (R5,88 million).
vii) Finance and Provincial Expenditure
The revised expenditure amounts to R309,93 million against the original voted amount of R329,19 million. The decrease of R19,26 million is mainly due to the transfer of the Inland Revenue function to National Government.
viii) Education and Culture
The revised expenditure amounts to R2,18 billion against the original voted amount of R1,84 billion. The increase of R340 million is due to mainly the salary adjustments for 1995/96 (R152 million), roll over funds in respect of books and equipment (R56 million) and an additional amount of R100 million negotiated with National Government to cover in part the deficit occasioned by underbudgeting of the salary expenditure.
xi) Local Government, Housing and Planning
The revised expenditure amounts to R501,94 million against R417,97 million. The increase of R83,97 million is mainly due to assistance to local government (R19 million), local government elections (R36,3million) housing (R11 million) and RDP Funds (R6,7 million).
x) Transport and Civil Aviation
The revised expenditure amounts to R261,34 million against R258,86 million. R12 million was allocated to this department in respect of vehicles for ex Bop traffic cops (R6 million) and salary adjustments (R6 million). On the other hand R9,8 million was suspended in respect of subsidised transport. R5 million of the suspended amount was transferred to the Department of Finance for use of subsidised vehicles for the whole Province.
xi) Public Works and Roads
The revised expenditure amounts to R726,37 million against the original voted amount of R707,61 million. The increase of R18,76 million is due to salary adjustments (R27,82 million) and the Kaalpan reconstruction project (R7,94 million). On the other hand Government Printer (R17 million) was transferred to Media, Arts and Culture.
xii) Public Media, Arts and Culture
The revised expenditure amounts to R205.39 million against the original voted amount of R169,58 million. The increase of R35,81 million is due to Government Printer transferred from Public Works (R17 million) and general salary adjustments (R13,59).
xiii) Agriculture and Environmental Affairs
The revised expenditure amounts to R373,81 million against the original voted amount of R311,59 million. The increase of R62,22 million is mainly due to drought relief (R44,5 million) and salary adjustments (R10,23) million.
Budget position
Honourable Speaker, I am pleased to announce that our commitment to fiscal discipline is starting to pay dividends. For 1995/96 financial year the Province has attained a fully funded budget.
Although, overall expenditure has been contained within budget, the next move is to intensify financial discipline in departments.
Expenditure in departments needs to be monitored strictly in order to achieve maximun benefit from our scarce financial resources. When we enter the budget estimate debate it will be interesting to see whether our policies for 1995/96 have been implemented to good effect in various departments.
Before we celebrate, I must point out that although we managed our budget properly, our cash flow position is being unsettled though to a lesser extent by the cashflow problems inherited from the past. Tremendous progress has been made to bring this matter to finality.
Revised Estimate of Own Revenue
The main challenge faced by government is not only that of most effectiveness and efficiency but also the ability to generate revenue to address the many demands placed on Government.
To this end the own revenue collection has improved from its budgeted level of R408,4 million to R454,4 million, an increase of R46,4 million or 11,3%. The main contributors to this positive in- crease are departmental revenue (R19 million), revenue derived from property (R5 million) and miscellaneous revenue (R22,4 million). The latter revenue increase is mainly made up of revenue from sale of motor vehicles and redemption of policies taken by the former administration.
In conclusion I wish to express my sincere thanks and appreciation to the Premier, the EXCO, the Provincial Treasury Committee, the Director General, Standing Committees on Finance and Public Accounts for the fiscal discipline maintained in 1995/96.
I wish to mention that your continued support in maintaining a high standard of financial discipline is appreciated. Honourable Speaker, I thank you.