Issued by: Gauteng Provincial Government
SPEECH BY THE MED: FINANCE & ECONOMIC AFFAIRS TO THE GAUTENG PROVINCIAL LEGISLATURE
DEBATE ON VOTE 3; FINANCE & ECONOMIC AFFAIRS
25 May 1998
1. Introduction
Honourable Speaker, Honourable Premier, Members of the Legislature, Ladies & Gentlemen, etc.
My speech this year is in three parts. I will first outline what has been achieved with the funds allocated to Vote 3 last year. Secondly, I will set out our intentions for this financial year. I will then make some concluding remarks.
2. Delivery during 1997/8
I do not intend to cover our achievements exhaustively. Since Vote 3 covers so many diverse areas of work, this would take too long. Instead, I will cover only the highlights here. For the detail, I have arranged to distribute our annual report for 1997/8 to each Member of the House for you to examine at your leisure.
My department operates with the vision of a financially well-managed provincial government that effectively contributes to the economic development of Gauteng and South Africa. Its mission is therefore in three parts:
I will group the work of the Department to date in terms of these mission elements.
2.1 Promote the provincial economy
Promoting the provincial economy means promoting economic growth by means of the promotion of trade, investment and tourism, promoting economic empowerment, and promoting consumer rights.
The Department last year produced its Trade & Investment Policy, a significant intervention based on substantial research which provides direction to the overall economic policy of the province, and which seeks to correctly position Gauteng to meet the challenges of the global economy in the 21st century. This work will shortly result inn the announcement of a Spatial Development initiative for the province.
The Department and GEDA handled queries and requests from over 1500 potential investors during the year, and converted them into 3 completed investments and 24 projects in progress. This implies a conversion rate of around 65.1, which is well above the benchmark of 500.1.
During 1997 R15 billion of private sector investment funds was committed to projects in Gauteng, of which R8 billion was foreign investment.
The Gauteng Tourism Agency was launched, and immediately started work. It now has a well-developed business plan, which emphasises marketing Gauteng as a destination of choice, particularly for business tourists, and as a province with tourism investment opportunities. The Department and GTA is rapidly putting the plan into action, with numerous tourism activities underway.
The Department and the Gauteng Gambling Board processed the 23 applications for casino licenses over the last year. This was a very substantial and challenging task, involving extensive probity investigations and public hearings. I am pleased to report that the process was very competently carried out. To date there have been no serious challenges to the license awards make.
The casinos and their associated developments should generate nearly 20 000 jobs for Gauteng during the construction phase (over the next two years) and over 11 000 parmanent jobs. The total investment in the six projects will be R5.2 billion rand.
After extensive negotiations and work, a Memorandum of Understanding was signed with the horse-racing industry, in terms of which horseracing is to be restructured and corporatised into a listed company with a substantial empowerment component.
The new horseracing company was launched under its new name, Phumelela Gaming & Leisure, in January this year. I would like to congratulate Peter Malungani upon his election b the shareholders as Chairman of the company, and Brian Mell upon his appointment as CEO.
In order to further promote economic empowerment, the Department has opened three Business Advice offices, in Soshanguve, Johannesburg and Katlehong. We have also facilitated the accreditation with Ntsika of three local business centres, in Soweto, Auckland Park and Braamfontein. Work has also been undertaken to accredit 15 local NGOs with Khula to provide SMMEs with access to finance.
Examples of the organisations that have received support from the department include: the Business Support Centre (Braamfontein), the Centre for Entrepreneurial Development & Training (Dube), the Institute for Economic Empowerment (all over the province), 17th Shaft (NASREC), Business Skills for South Africa (Vaal) and Madunsa Organisation for Disabled Entrepreneurs.
Approximately 300 emerging entrepreneurs benefited from various forms of business and technical training arranged by the Department. There were also 850 participants in the 18 tender awareness workshops run in the Department. In addition, the Department arranged development programmes for entrepreneurial groups of women, youth and the disabled.
The department handled 2 167 consumer complaints during 1997. To provide members with a sense of the nature of these complaints, 14.5% involved home improvements, 12.1% related to housing, and 8.2% involved cars. Furniture, banking, mail orders and credit and insurance were the other major categories.
Eighty-nine of these cases could not be resolved through mediation and were held over for referral to the Consumer Court.
The Gauteng Liquor Board processed 2 168 liquor license applications in various categories in the 11 months to November 1997. The Department eliminated the backlog of a year ago and all applications are now dealt with in the minimum statutory time.
2.2 Ensure sound public finances
To ensure sound public finances means to maintain effective treasury control, and to ensure sound financial and procurement administration.
As this House is well aware, the Treasury continued its record of producing its budgets on time ad to the requisite technical standard. It also produced quarterly expenditure reports for cabinet, which where thereafter tabled with the Standing Committee for Finance & Economic Affairs. Close monitoring by the Provincial Treasury led to corrective actions which significantly reduced projected over-expenditure.
Our projections regarding our need for an overdraft at the end of March 1998 were accurate: the province was in overdraft by approximately R267 million as at 31 March 1998. That overdraft has since been liquidated. We are still doing the detailed work necessary to determine the final expenditure position of the departments for the last financial year.
Procurement administration continued to be rigorously handled, with effective administrative procedures to ensure transparency and fairness in the awarding of tenders. The Tender Board in its awarding of tenders sought to ensure the empowerment of disadvantaged supplies. An example was the stationery contract, which historically has been dominated by two suppliers and is now handled by 18 SMMEs. Despite a few inevitable teething problems, I believe the exercise has been a success and provides an indication of what can be achieved with an affirmative procurement policy. Of the tenders processed by the Gauteng Tender Board over the last two financial years, 26.5% were assigned to SMMEs. This is a dramatic change from the situation when the Board started work.
The Department continued to provide a sound financial administration service to the provincial government, including staff renumeration, expenditure administration bookkeeping, and the control of accounts.
The Fraud Hotline which I announced in March has been very active and has already borne substantial fruit. Fifty-eight of the 181 calls received related to alleged fraud within the Gauteng Provincial Government and were referred to the relevant departments for action. As an example of the benefits of this hot line, I am able to report that a hospital superintendent has been suspended pending an investigation into his alleged corrupt activities.
Fifty of the calls reported alleged fraud outside the Gauteng Provincial Government. The balance of the calls involved requests for information, duplicate complaints, or calls in which insufficient information was provided.
2.3 Build a professional department
To maintain and further develop the standard of these services over the long term, it is important to ensure that the Department develops into a professional organisation wit sound systems and procedures, and a sound human resources strategy.
During 1997 the organisation development activities of the department got underway. Aspects of the programme included a staff survey, a customer survey, a customer service programme, a programme to enhance internal communications, and the implementation of the province's personnel performance management system. Numerous staff training initiatives were also undertaken. A new staff induction programme has been put into place.
The Department of Finance & Economic Affairs had 272 staff as at 1 April 1998. Of these 58% were African, 6% were Indian, 6% were coloured and 31% were white. 47% of the staff were women and 53% men.
The management echelon, that is from Director upwards, consists of 11 people. 55% of these are African, 0% coloured. 18% Indian and 27% white. 64% of the managers are male and 36% female.
These figures indicate a substantial transformation of the representivity figures for the Department. When we started on 1 April 1995, the staff was more than 90% white and of course the management echelon was entirely white and male.
3. Intentions for 1998/9
I should start out by pointing out to members of the House that the budget for Vote 3 is effectively R5,5 million less for 1998/9 than in 1997/8. After the provincial shortfall reserve of R219,5 million has been set aside, the budget for the department is almost exactly R74 million, of which R14 million is a new item, Namely the transfer to fund the activities of the Gauteng Gambling Board. The Department therefore is budgeted to spend only R60 million in 1998/9.
Were I not aware of the bigger picture, namely the need to control spending, I too would be joining joined the chorus for more funds. Although this is one of the smaller votes, we must of course make our contribution to limiting Gauteng's expenditure. We will make the best possible use of these funds in order to further our objectives.
3.1 Promote the provincial economy
We intend to announce a Spatial Development Initiative for Gauteng shortly, and also intend to finalise five anchor projects for the SDI during the course of the financial year. Our servicing of investors by GEDA and the Department will be expanded, and two overseas investment promotion trips are planned. In addition, we will work with five local authorities to develop local investment strategies that fit with the provincial Trade & Investment policy.
I intend shortly to introduce legislation to promote tourism in the province. As I have previously indicated to this House, the legislation will make provision for levies on the tourism industry in the province in order to fund tourism marketing. It will also establish the GTA as a statutory body.
In the meantime GTA will take forward its tourism marketing strategy, and will also work on its plans to develop tourism infrastructure for the province.
The Gauteng Gambling Board will issue licenses for route operators and for additional gaming machines, and the new horseracing company will be listed on the Stock Exchange. Both of these developments will provide significant empowerment and investment opportunities for the province.
The Department will also open 3 further sub-regional business advice/tender advice centres for SMMEs. We intend to ensure the accreditation of 8 local business service centres with Ntsika. We will also publish a handbook for SMME's. Our technical and business training is intended to reach approximately 1000 entrepreneurs in this financial year. We also ensure 50 business linkages between SMMEs and established businesses.
We will during this year get the long-awaited Consumer Court going. Members are well aware of the reasons for the delay on this. It has been most unfortunate, and it was not the result of any ineffectiveness on the part of my department. The matter will be rectified this year.
We will also open two more consumer advice offices, on the Vaal and the East Rand. We expect to process approximately 40 consumer complaints per day.
If the new national liquor legislation is passed during this year as expected, my department will be tasked with implementing it in Gauteng. This will involve the big task of registering the numerous illegal liquor dealers in the province. We will also have to facilitate their registration for tax purposes.
3.2 Ensure sound public finances
As in the past, Treasury will monitor provincial expenditure closely and will provide a monthly report to myself, and a quarterly report to the Executive and the Standing Committee for Finance & Economic Affairs, on the state of revenue and expenditure. Both of these reports will be within three weeks of month end. As in the past, Treasury will run a detailed budget process by which the resources available to the province are divided among the various Votes.
Treasury will also take a number of initiatives to improve financial management in Gauteng. The first of these is to implement LOGIS, a computerised provisioning administration system developed for the Department of State Expenditure (DSE). DSE will provide extensive assistance and we expect to have it fully rolled out over the next two years.
Secondly, Treasury is currently implementing a new budget database system, the Oracle Financial Analyser. This will ensure greater accuracy in budgeting by making sure that costs, for example of personnel, and correctly calculated by departments.
Thirdly, to assist managers who cannot use FMS, Treasury is also currently implementing Executive Information System (EIS), a financial management reporting system which will provide quick, accurate and user-friendly reports on the state of expenditure per vote, or programme or even sub-programme. This is a module which takes information from FMS and presents it in a fashion that ny manager must be able to understand. I hope that this will put an end to the complaints that FMS cannot provide the information that managers required.
Treasury will also providing training for another 600 FMS users.
Finally, Treasury is now responsible for monitoring whether local authorities have kept to their growth, in drawing up their new budgets, keep to the growth limits set by the Minister of Finance. This is a new function for which we have had to develop the capacity.
Every year at this time, our Financial Administration section must, as well as keep the normal creditor payments, salary payments and bookkeeping services going, also close the books for the past financial year and prepare the necessary reports for the Auditor-General. This is a massive task for a R15 billion operation and I ask the House to spare a thought for those staff who are working long hours to complete the job on time.
Beyond this, Financial Administration has also taken over the financial administration function from our Education department, which will in the short-term substantially increase their workload, as Education will not be sending many people with the function.
Another major project for this section is to rebuild our control capacity, particularly accounts control.
The section will of course continue to strive to deliver effective, accurate and punctual services in salary and payments administration, as well as to provide user support for PERSAL & FMS users.
We will be establishing a Compliance Office during this financial year, to ensure accuracy of enterprise declarations made by companies who tender to the Provincial Government, and also to check that companies do in fact keep to commitments made in tender documents.
The Compliance Office will also ensure that provincial departments comply with tender regulations, and will produce the performance reports in this regard.
This second function of the Compliance Office will be achieved mainly by means of new procurement management software that is currently being installed and entering a test phase. Once this software is rolled out to cover all the department of the province, and once it has been linked to the LOGIS provisioning software I have already mentioned, it will be easy to have up to data reports on the provisioning activities of departments. This will greatly enhance efficiency in provisioning as well as ensuring compliance with procurement policy.
In addition, the Office of the Tender Board intends to improve the support given to line departments, to ensure that tenders can be processed smoothly, and to further develop its term contracts. Both of these should improve efficiency in procurement and provisioning.
3.3 Building professional department
I have already outlined our organisational development initiatives in the department. Each of the aspects of this programme will be further developed and expanded.
On the administrative side, we will shortly introduce a system of electronic security in our building, to ensure a more rigorous control of the security of personnel and assets. We also intend to establish a personnel administration component to greater facilitate the processing of personnel issues. Our departmental Local Area Network will be shortly be operational, which should also improve our efficiency.
4. Conclusion
I would like to conclude by restating my commitment to promote our objectives with maximum efficiency and effectiveness, in order to maximise our impact within the resource constraints that we all face.
I would like to extend a word of thanks to the Department for their efforts in the past, and for their commitment to our future efforts. As you can see I have brought the managers of the Department to the House today. I know that I put them under pressure to deliver, and I wanted them to be here to hear me thank them for their work. I also wanted them to hear my expectations of them for this year.
Mr Speaker, I thank you.