Madam Speaker
The Provincial Treasury plays a pivotal role in coordinating and distributing funds between departments, and balancing the demands for social services and the need to stimulate economic development and growth. This is to be achieved in what is accepted to be a depressed economic environment, with a knock-on effect on tax revenues, and the future over the medium term does not look very encouraging.
KwaZulu-Natal, like all provinces is highly dependent on national income flows – in fact well over 90% of the KZN budget is supplied by National Treasury, and there are limited options to generate revenue from within the province. In times of economic strain, Provinces have to run a particularly tight ship. In KwaZulu-Natal, we have the added challenge where a very significant portion of the budget is spent on the social sector.
As custodians of provincial finances, the Finance MEC’s have to lay a strong foundation for the best possible return on resources expended, and be the ken negotiators with the Premier and the fellow MECs in how to improve efficiency within their administrations and best achieve service delivery targets in their provinces.
The roadmap for doing so is provided in the PFMA and MFMA. The IFP welcomes the MEC’s attitude during her budget presentation which reveals a genuine commitment to increased transparency and efficiency. This is critical to kickstarting KwaZulu-Natal’s economic growth which requires a concerted effort between business, government and labour.
In this context, then, the IFP will lend the Department its full support as it strives to:
- Tighten expenditure and cash management
- Tighten supply chain and asset management
- Improve accounting standards and transparency
- Sharpen control over our financial systems and associated data integrity
- Improve infrastructure spending and
- Assist accounting officers and departmental CFOs to improve systems.
- Focus on core service delivery items.
The IFP also realises the critical role that Treasury plays regarding Municipal expenditure and the challenges that still remain in respect of:
- The compliance and inclusivity of the budget processes;
- The capacity to deliver on a range of financial management requirements, including accounting, cash management, investments and borrowing; and
- Supply chain management, infrastructure spending and revenue management.
In respect of the existing civil service, the IFP notes that in line with the existing moratorium, the increases in “compensation of employees” have been limited, and relate to the filling of “critical posts”. This is to be applauded and the IFP welcomes the undertaking[1] that the department will not fill any posts in the 2016/2017 MTEF in line with the MTEF budget cuts.
However, there are certain aspects in respect of which the budget in Vote 6 fails to live up to these ideals.
- Firstly, not enough has been done by Treasury to ensure that provincial departments and the various municipalities properly implement their own SCM policies and the requirements of the PFMA and MFMA. Our law reports are replete with examples of failures to properly follow the legislated process – for example eThekwini appears to be a repeat offender at failing to award its tenders within the tender validity period.[2] These administrative failures have huge cost implications, not only in terms of the legal fees which are expended in defending invalidity awarded contracts, but also in setting aside the contracts themselves and starting afresh. Our law is clear. The Constitutional Court has confirmed that when an organ of state becomes aware of an irregularity in the procurement process, it has an obligation itself to approach a court to have the invalid decision set aside. Invariably this does not happen and entities, including the Provincial departments, are far more likely to defend their unlawful decisions.[3] Treasury, as the Department responsible for expenditure within KwaZulu-Natal needs to take greater responsibility for ensuring that these irregularities happen less often and also that once an irregularity is identified, the proper process it followed to rectify it. If this is done, there will be significant savings in amounts saved on litigation and in keeping SCM costs down.
- Secondly, the IFP notes with concern the fact that Provincial made an application for an additional R29 million allocation in the 2016/17 financial year and has requested further additional amounts for each of the MTEF years under consideration.[4]
The undertaking to pay R12 million for “biometric scanners for all provincial departments to provide and additional layer of security for the BAS accounting system and the PERSAL payroll system” is highly questionable.[5]
Are we receiving optimal tax generation from the Liquor Authority and Vehicle Licences and making sure these entities are self- sustaining otherwise they are meaningless and inefficient.
In sum then, the IFP supports the Provincial Treasury in its drive to be the force that guides all the other departments to stay on track with their own financial and fiscal constraints and also to assist each department to deliver on the promises made.
The greatest challenge facing Vote 6 is to maximise the impact that the Treasury has on steering all other departments to spend their allocations efficiently and effectively, and also to provide the guidance and oversight regarding SCM issues which is so badly needed.
To do so, the MEC will have to ensure that there is greater attention paid to budget implementation, better transparency in budget planning and execution, that relevant legislation is complied with and that timely interventions are made where necessary. All other MECs and the Premier must stand together with the MEC for Finance, alongside the mayors and councillors of local and district municipalities to stick to the law, and to stick to their budgets.
The budget presented for consideration under Vote 6 goes some way towards ensuring this, but the proof of the pudding is in the eating, and the proof of the budget will be in the implementation and monitoring. The IFP pledges its support to making this budget a success.
I thank you,
Contact:
Mr Lourens De Klerk
MPL
082 557 1579
[1] Page 320.
[2] See latest decision Secureco / eThekwini of Lopes J on 1 April 2016.
[3] Kirland v MEC for Health, 2014.
[4] Page 16 of the budget.
[5] Page 17 of the budget.
