15 February 2001
GAUTENG ADJUSTMENT APPROPRIATION BILL 2000/01
Honourable Speaker,
Honourable Premier,
Honourable Members,
Ladies & Gentlemen.
I am pleased to present to this House the adjustment budget proposals for the 2000/01 financial year.
It seems as if the reforms introduced to financial management in the public sector hs taken away the secrecy and mystery of budgets. There are fewer if any surprises left in budget making.
The timing of this adjustment budget has been affected by the local government elections held late last year. I suppose, however, that all members would agree with me that the final steps in creating a truly democratic South Africa is a good enough reason for delaying this adjustment budget until now. We plan to return to our plan to introduce adjustment budgets in October/November each year.
Economic overview
The Premier, in his opening address to the Legislature on Monday this week, covered some of the salient points on the performance of the economy.
Certainly, for the first time in recent years, the provincial economy is expected to grow at a higher rate than the national average. Rather than go into details of the state of the provincial economy at this juncture, I would prefer to cover the matter during my presentation of the main budget on 27 February.
State of Provincial finances
Gauteng has certainly begun the dawn of this new millennium on a positive note. The spectre of overspending no longer plagues us.
The efforts of the previous years in managing and controlling expenditure have paid off. No overspending is projected for the province. In fact a slight under spend will be recorded. It is projected that the under spend will be within the 2% of total budget norm used by National Treasury.
With these circumstances, Treasury has shifted emphasis from one of controlling expenditure to getting departments to focus to improving the quantity and, more importantly, improving the quality of service delivery.
The challenges that we face in eradicating poverty and extending service delivery are daunting. We continue to strive to meets these challenges and take comfort in the thought that we are fulfilling our promises to our people.
Progress on key projects
Several strategic projects and programmes were launched by the budget of 2000/01. Many critics, some within this House and others were very sceptical of government's ability to match promises with action. We were told that the plans sounded good but there were action plans for implementation. Well, progress has been recorded on each and every project.
In some instances, substantial progress has been made.
Implementation is well and truly underway.
The shared services centre, the strategic economic infrastructure investment programme, the PFMA implementation and the traffic policing improvement plan are all not just talk. Action and indeed some benefits from these projects are beginning to be seen. Promises- yes; action- definitely; improving the quality of life of our people- absolutely!
Main features of the adjustment budget
Turning now to the main features of the budget:
Revenue side - National allocations
The better than projected performance of state finances has allowed for additional resources being made available to provinces in the adjustments to the Division of Revenue Act.
Gauteng has been allocated R179 million as its equitable share of the additional resources. This allocation has been made to take account of the adjustments necessary on salary increases and other elements of the agreement reached at the Central Bargaining Chamber.
Further cognisance was taken of the pressures on the social grants budgets of provinces. In Gauteng this has manifested itself in the higher than projected take up rate in the child support grant.
Other conditional grants have been allocated to Gauteng. These are amounts that were identified in the main Division of Revenue Act but had not been allocated between provinces. A total of R26,3 million has been allocated to Gauteng. The main amounts are R10 million for flood reconstruction and R5 million for financial management in Education.
Revenue side - Own revenue
Own revenue projections show higher than budgeted collections.
The key own revenue areas that are projected to exceed budget are motor vehicle licence fee collection, gambling and gaming taxes and interest income.
The efforts of the department of Transport and Public Works in monitoring and controlling motor vehicle licence fee collections by local authorities on our behalf is showing positive results. An additional R40 million is expected from this source.
Notwithstanding this effort, we continue to goad our colleagues in Transport to strive for better.
Gambling revenue has been performing well above expectation.
Admittedly, Treasury has adopted a conservative model for gambling revenue, but collections are most encouraging. Collections are expected to exceed budget by R25 million. Our decision to award the full compliment of licences has been vindicated. Each of the casinos developed has brought substantial investment, increased economic activity, and created jobs and are proving to be viable.
The more than double of budget interest income earned is a tribute to my Treasury team. Although the budget of R19m was based on a model of total revenue, an internal target of R50m was set. A treasury investment specialist was brought on board with a clear mandate to meet the target.
Well, I can let members into a secret, Ms Motsoea and her team have already exceed the target with still 2 months of the year to go. Gauteng Treasury is a major player in the short-term deposit market, investing in excess of R8billion to date.
Expenditure side
With the advent of the PFMA, the tabling of adjustment budgets is guided by fixed criteria.
The adjustment budget can only provide for:
The additional appropriations sought by the bill tabled today are done within the above framework.
Adjustments
The departments of Health and Education benefit from the additional equitable share to fund the implications of the final agreement reached on the remuneration of employees at the Bargaining Chamber. This includes the payment of service bonuses during the months of January, February and March to qualifying employees.
During the year to date, departments have requested the suspensions of amounts on their budgets to mainly Transport and Public Works for the execution of projects or the purchase of vehicles on their behalf. These total R323 million. There has also been the suspension and transfer of funds for the interdepartmental HIV/AIDS programme from Health of R5,5 million. Other suspensions include R9,2 million from Finance and Economic Affairs to Agriculture, Conservation, Environment and Land of R9,2 million for the world heritage site and NEGI projects. There are also minor suspensions in respect of the decentralisation of some HR functions from the department of the Premier as well as the costs of the CFOs appointed in departments. The net effect of these suspensions and transfers does not increase the total expenditure level.
It has also become necessary to allocate additional resources from the surplus reported in the main budget to the department of Welfare, Transport and Public Works and Finance and Economic Affairs. A total amount of R120 million has been allocated from the surplus.
Finance and Economic Affairs
The allocation to the department of Finance and Economic Affairs is to cover R40 million of the additional cash flows of the shared services centre project and a further R25 million has been allocated to fund the Gauteng Tourism Authority in keeping with the announcement in the main budget speech but not taken up in the details of the vote.
Welfare
R35 million has been allocated to Welfare. In keeping with our commitment to target the most vunerable of society, the allocation is to cover for statutory obligations in respect of social grants. The increased allocation again arises mainly from a higher than anticipated take up of the child support grant.
Transport and Public Works
R20 million has been allocated to the department from reserves to take account of the commissions payable on motor vehicle license fee collected on our behalf by local authorities. The budget for commissions is not adjusted each year in line with the announced increases of the fees and the subsequent revenue budgeted. It is our intention to deal with this matter in the new year with appropriate legislation.
Health
Finally, it is my pleasure in allocating R19 million to the department of Health. The amount is allocated not out of reserves but from additional revenue collected by Health in the previous year. I made an undertaking in this House during the previous budget. Any revenue collected in excess of budget by Health will be made available to Health. Today I make good on that undertaking. Well done to Health for taking up the incentive.
Conclusion
Delivery has been our buzzword. We continue to work tirelessly in meeting our objectives and ensuring delivery. We are making headway. Our efforts to manage our finances have produced pleasing results. The spectre of overspending does not hang over our heads any longer.
The space we have created by managing our finances prudently has allowed for innovative and exciting projects that have the potential to forever change Gauteng becoming a reality. Improving the quality of our spend is the challenge that drives us today. I am truly grateful for the opportunity to share in this challenge. Gauteng has been a leading light in our infant democracy and we aim to continue to be the benchmark for all.
Acknowledgements
I want to take this opportunity to acknowledge the contribution of all those that have contributed to another outstanding financial year. I salute all the departments in their continuing efforts and their commitment to fiscal discipline.
I must of course acknowledge the efforts of all the people who have worked on the budget, which is before you today. My colleagues in the Executive for their co-operation and understanding in making my task easier, the Premier for his guidance and support in drawing a firm line and all the heads of departments and their financial staff for ensuring that tight deadlines are met.
Finally, my Treasury team, a changed Treasury team. They just seem to get better each year. My heartfelt thanks for the long and sometimes frustrating hours spent on the budgets.
Honourable Speaker, I today table the following documents for the consideration of the House:
I thank you.
Issued by: MEC for Finance and Economic Affairs