Vote 3: Provincial Treasury Main Estimates Speech 2015

Speech by Dr Ivan Meyer, Minister of Finance

Honourable Speaker and Deputy Speaker
Honourable Premier and Cabinet Colleagues
 Honourable Leader of the Opposition
Honourable members of the Western Cape Legislature
Colleagues
Citizens of the Western Cape

The Western Cape Provincial Treasury Budget is delivered within the context of Western Cape Provincial Strategic Goals and specifically Strategic Goal 5 which aims to embed good governance across the Western Cape.  Our success in this regard is well documented in the most recent Auditor General’s Report in respect of the PFMA (2013/14) as well as the MFMA (2013/14) which reveals that the Western Cape Government’s initiatives to improve the standard of financial governance amongst municipalities in the Western Cape are beginning to bear fruit. Twenty-nine of the 30 municipalities achieved an unqualified audit, 17 of these being clean. This represents approximately half of the total number of municipalities which received clean audits in South Africa. The AGSA’s report further highlighted that the quality of the annual reports had increased by 20% over the past two audit periods.

These improved audit outcomes can be attributed to the quality of leadership and good governance practices within our municipalities as well as the Western Cape Provincial Treasury’s Municipal Governance Review Outlook (MGRO) process which is an initiative aimed at improving clean governance in municipalities. Implemented in 2012 it was borne out of the realization that if we hope to improve financial governance Provincial Treasury and all  municipalities need to put measures in place that are focused on  achieving this.  Provincial Treasury therefore undertook to strengthen its support to municipalities to promote good governance, strengthen financial management and encourage accountability.

The MGRO process solely focuses on attaining clean governance and thus reducing negative audit outcomes.   One important aspect of the MGRO process is the concentration on the Governance Action Plans (GAPs) prepared by municipalities and to what extent it is supported by the Western Cape Government.   This GAP has therefore two components to it:

What the municipality needs to do to realise good governance, and
What Provincial Treasury and the Provincial Department of Local Government need to do to support the municipality to achieve improved audit outcomes.

Once drafted, GAPs are owned by the respective municipality and its implementation is monitored by the Provincial Treasury and the Provincial Department of Local Government. These plans also assist in identifying the need for any training interventions.

The areas covered by the GAPS are:

Predetermined objectives (PDOs)
Financial statements
IT controls
Expenditure management
HR management
Supply Chain Management (SCM)
Asset management (Inventory, registers, stock and disposal management); and
Internal controls

While the MGRO process has certainly had a positive impact on the audit outcomes two areas of concern highlighted by the AGSA will receive further attention during this year.

Firstly, the slow response of leadership when it comes to addressing the root cause of poor audit outcomes; and secondly, the lack of consequences for poor performance and transgressions by municipalities.

This is also a matter with both the Premier and the Auditor General agrees on.

Given these areas of concern, Honourable Speaker, the Western Cape Government is determined to ensure that a culture of financial accountability becomes firmly entrenched in the province. Leadership within the municipalities must accept accountability and be held responsible. The value of this is also highlighted by the AGSA report, which confirms that where the political leadership within municipalities take their oversight roles seriously audit outcomes generally showed an improvement.

Public representatives and government officials must accept that they are responsible to all citizens for their decisions and actions. They must provide information about their decisions and about how they were taken, give reasons for their actions and those who are guilty of impropriety must be sanctioned.

The National Development Plan (NDP) makes a strong case for what it calls “The Capable State”.  It argues that to achieve the vision of a capable state we will have to amongst others “strengthen delegation, accountability and oversight and make it easier for citizens to hold public servants and politicians accountable, particularly for the quality of service delivery”.  The NDP’s call for a capable state is embraced by the Western Cape. We will therefore, in partnership with all municipalities in the province, continue to work towards ensuring improved financial accountability and audit outcomes which translates into better service delivery for the citizens as well as increased investment, economic growth and job creation.

The next phase of the journey is to translate good governance into greater improvements in service delivery and the creation of public value. Cleans audits should no longer be the end goal, but rather a platform to create improved service delivery and more importantly, creating  public value which leads to a better quality of life for the citizens of the Western Cape.

Speaker to achieve the above Provincial Treasury is allocated a budget of R262.029 million in the 2015/16 financial year.

Speaker, the 2015/16 departmental budget is allocated as follows:

Administration receives an amount of R52.058 million.

In line with the NDP’s aim to increase the pool of skilled people by ensuring that the public service and local government become careers of choice for graduates who wish to contribute to the development of the country I can announce, Speaker, the Department’s bursary scheme will be expanded. Currently there are fifty-five bursary holders which will be increased eighty-four during this financial year.

Speaker,  I can today also announce that the winner of the 2015 Western Cape Treasury Bursary  Competition is Nerita Kluyts of Bloemhof Girls High School, Shandre Jansen of George High School (second) and Carla Hefer, Bloemhof Girls High School (third). Sustainable Resource Management receives an amount of R116.418 million which includes priority funding allocation of R24.831 million (I referred to earlier) which is ring-fenced for municipal financial management improvement support grants.

Asset Management is allocated an amount of R60.078 million. This programme will focus on the roll out and implementation of new financial systems, the strengthening of the supply chain management in municipalities as well as strategic sourcing/procurement strategies which will be developed to enhance Supply Chain Management efficiencies.

An amount of R33.475 million is allocated towards the enhancement of financial governance.

This programme aims to drive the functioning of provincial internal control units and improve financial management.

The main purpose of the financial assistance within the municipalities is to improve overall financial governance. An important aspect of this is the identification and close monitoring of the top ten infrastructure projects in each municipal district.

Oversight over infrastructure projects will be enhanced with increased levels of monitoring and quarterly reporting.

Speaker, the following earmarked priority allocations are worth noting:

An amount of R24.831 million is allocated towards local government municipal support funding

The main purpose of the financial assistance within the municipalities is to improve overall financial governance within municipalities, inclusive of optimising administration of revenue, improving credibility and responsiveness, municipal budgets, improving municipal audit outcomes and assisting the LG’s to reduce institutional challenges.  Part of this amount will be released to the Department of Local Government during 2015/16.

An amount of R4.966 million is allocated towards the development and implementation of Strategic Sourcing/procurement strategies.

The support funding will be utilised for initiatives to assist the Chief Procurement Officer to rollout of strategic sourcing projects and to improve procurement efficiency within all provincial departments, as well as ensuring better procurement planning.  This will also include improved dashboard information.

Honourable Speaker, today I announce that part of the earmarked allocation will be set aside to launch the chartered accountant academy in the 2015/16 financial year.

R6.059 million is allocated for the further roll out of LOGIS.

The funds earmarked under this allocation will be utilised to enhance the integrity of data to conform to the new Integrated Financial Management System (IFMS) standards that will be implemented in the next couple of years.  These steps are very important as the new IFMS will be accrual based and also integrate the current BAS, PERSAL and LOGIS systems into one single system.

Speaker, I conclude by highlighting that the drive to enhancing financial governance is resulting in significant improvement in the provincial audit outcomes. This we will continue to do as we strive to create greater public value for the citizens of the Western Cape.

The creation of public value will be given strengthened by some key policy initiatives which will be given further attention in the 2015/16 financial year. These include:

Fiscal Policy research and analysis on provincial departments and municipalities to inform the fiscal policy framework and budget policy
Municipal investment and borrowing policies
Procurement policy planning to support departments and municipalities to promote budget planning, efficiency in spending, strategic sourcing and provide structured support programmes to improve supply chain governance.

Honourable Speaker, a key focus for this year is to ensure that we create public value through good governance.

Honourable Speaker, we are determined to implement the National Development Plan and create public value through our various programmes and projects of the Provincial Treasury.

Speaker, it is now my honour to table the Provincial Treasury’s Budget of R262.029 million for the 2015/16 for consideration in the House.

I thank you Speaker.