Budget speech of the Gauteng Department of Finance for the financial year 2010/11, presented by MEC Mandla Nkomfe
28 May 2010
Members of the Executive Council (MECs)
Leaders of political parties
Comrades and friends
It gives me great pleasure to address you on this occasion of the tabling of the newly established Department of Finance's budget vote. Madam Speaker, in the past financial year of 2009/10, administrators of the then Gauteng Treasury and the Gauteng Shared Service Centre were involved the establishment of a new Department of Finance.
This was an amalgamation of the said departments, which resulted in the formulation and adoption of a five year strategic plan. This blueprint defines the purpose and strategic intent of the GDF, and conforms to its mandate and legal framework, which is:
"To enhance the Department of Finance's oversight and activist role and assist the province in ensuring that the resources (financial and non-financial) allocated to departments are effectively and efficiently utilised. And more importantly, are used to ensure the achievement of the Gauteng provincial government's priorities. The Gauteng Department of Finance will also seek to enhance and improve its financial systems, resource management and reporting".
Honourable Speaker, this strategic intent will guide the activities of the department during the next four years. As such, we are committed to do whatever it takes to achieve these objectives. This is so, because we believe in the inherent desire of human beings to improve other people's lives, more especially the downtrodden, and the disadvantaged majority.
Madam Speaker, to give effect to what we mean as a department, please allow me to borrow from the Poem of Novel Literati from the Diaspora, Professor Ben Okri, which is entitled, Is Humanity Exhausted? I quote:
"They are only exhausted who think
That they have arrived, at their final destination
The end of their road, with all their dreams achieved
And with no new dreams to hold
"Exhaustion is a mental thing
The absence of a spiritual viewpoint
A universal vision
A sense of new journeys
"There is no exhaustion
When you can still visualise
A better life for those who suffer
Visualise universal justice.
A leavening of the greater dough of humanity
Uplifting the multitudes".
Madam Speaker, we are an "activist", developmental, and interventionist department, providing strategic and operational support to the province, towards the achievement of inclusive growth". As a result, exhaustion cannot be part of us. We are restless, energetic, and an ever focused Department. Exhaustion does not exist in our vocabulary. Exhaustion is just but:
"A mental thing
The absence of a spiritual viewpoint
A universal vision
A sense of new journeys
Exhaustion, honourable members, is absent in the lexicon of the Department of Finance. We are a tireless and hardworking team, which is driven by the desire to improve the lives of our people for the better.
Let me deal with the overview of each programme of the department and how we are going to deliver on the tasks ahead.
Madam Speaker, our total budget for the financial year 2010/11 is R1.5 billion. These resources will be efficiently employed in funding the various outcomes as identified by this government.
Sustainable resource management
The developmental state must ensure that it is forward looking in its planning. It must develop a thorough understanding of the operational environment and the forces that have a bearing on it, so that its decision making processes are informed by an objective reality.
As such, sustainability is a critical factor in the conduct of our work. We have implemented an effective turnaround strategy to stabilise provincial finances, and to maximise our prospects for generating alternative funding sources.
Therefore, this programme will continue to play a pivotal role in providing primary and secondary research, which will be deployed to support our public financial management systems, and fiscal policy, and thus inform our expenditure choices to attain our agreed outcomes.
Our other priorities for the current financial year are to provide technical support and co-funding to the Chris Hani Baragwanath hospital's health village and to the George Mukhari projects.
In order to achieve these goals, we will apply the public private partnerships funding and project management concept to attract private sector resources.
We will also strengthen the monitoring capacity of the Executive Infrastructure Management Committee and of the Provincial Infrastructure Management Committee. By so doing, we will make it possible for them to effectively evaluate progress achieved on all provincial infrastructure projects.
In addition, and to facilitate greater public participation by legitimate stakeholders in provincial budgeting processes, we intend to use the budget adjustment framework to solicit suggestions from civil society on how we could approach the funding of government adopted outcomes.
We are also exploring innovative opportunities of spreading our technological prowess, and in the process, increase revenue generation.
Madam Speaker, we regard financial management as a central component of ensuring that we have stringent planning methodologies and accountability within government. In the past, we experienced major challenges in the management and operation of our financial systems.
This led to misallocations and erroneous transactions. To this end, we are pleased to report that we have since provided the necessary training to departments, especially in areas such as the Standard Charter of Accounting.
Another equally important link is that of local government. We also made deliberate efforts to enhance the financial capacity of our local municipalities. These decisions were informed by our aspirations of improving intergovernmental cooperation, and accurate budget forecasting among the three spheres of government.
In keeping with this commitment, we then established appropriate fora, through which we engage on matters of mutual interest. These include the:
* Chief Financial Officer's Fora (technical) and the
* Municipal Finance Indaba (political)
We are certain that in good time, given the evolution and maturity of these structures, we will collectively deliver with greater efficiency, and in a sustainable manner.
In the process, service delivery will improve, whilst we derive maximum value for public money spent. We also pledge to undertake the following assignments during the current financial year:
* review non-compliance with the Public Finance Management Act (PFMA) and Treasury regulations, and implement corrective measures where appropriate
* finalise monitoring guidelines for compliance with the supply chain management policy by departments and municipalities
* conclude the incorporation of the Metsweding district municipality into the City of Tshwane
* finalise and implement the financial misconduct framework for accounting officers.
Madam Speaker, over the past few years, local government has been under rigorous public scrutiny, as reflected through what has been termed service delivery protests. It is therefore important that we enhance our support to this sphere of government which is closer to the communities.
We will ensure that our concerted efforts enable local municipalities to meet their stated obligations to our communities, and in a manner that is visibly effective.
Provincial accounting services
The Provincial Accounting programme is going to serve as the nerve centre for our quest to ensure that we prudently deploy all resources at our disposal. Through this programme, we will ensure that our accounting and treasury systems function optimally at all times, in both management and operational terms.
We are thus inspired to realise and exceed our strategic objectives of achieving clean external audits for provincial departments and municipalities alike. This is particularly critical for municipalities, who are required to serve as centres of excellence, utilising best service delivery practices.
We also recognise that our capacity to deliver depends on the calibre of our human resources. In this regard, we will ascertain that we provide suitable training on the application of the Standard Charter of Accounting.
One of our most important obligations is the appointment of a provincial banker. We envisage that this corporate bank will not be just another transactional banker.
In contrast, we are looking for a strategic partner, who will contribute to the realisation of our goal to be the best manager of public resources. This partner must also have the necessary capacity to understand our developmental agenda, be prepared to act in concert with us in curbing fraud, and any attempts to corrupt or defraud the state.
The programme will also be a catalyst in our drive to build a state that is responsive to the needs of our people. It will also contribute to the growth of the economy and the creation of job opportunities.
It is imperative therefore that we pay our service providers within time frames that are defined in the Public Finance Management Act. This will strengthen and sustain the small, medium and micro enterprises (SMME) sector, but also enhance the image of the provincial government as a responsible debtor who settles her financial obligations on time.
To this end, we are working tirelessly to ensure that our information and communication technology (ICT) systems are integrated. An important factor that relates to effective systems integration is for this programme to receive useful management information on Procure to Pay, so that it can respond correctly to all emerging challenges.
Madam Speaker, the environment in which the developmental state pursues its developmental goals must be predictable. It must ensure that decision making processes are clearly defined, provides for accountability, continuous monitoring, and evaluation of implemented departmental programmes.
In order to achieve these milestones, we will continue to proactively evaluate the efficacy of our internal control systems. This is to ensure that our operating capacity, ICT systems and management procedures continue to provide reasonable assurances that departmental objectives can be achieved uninterrupted.
In this regard, we implemented suitable control measures to ensure that we realise our objective of achieving clean audits for the provincial government by 2014.
To achieve this objective, we will invest sufficient resources in our internal audit function. This capability will enable us to undertake comprehensive audits of our financial and non-financial information.
Accordingly, the predictability of our operating environment compels us to develop relevant early warning systems that will equip our departments to identify all applicable risks timely and moderate them efficiently.
Madam Speaker, attracting and retaining qualified audit professionals remains a major challenge. In this regard, we have observed a disturbing trend, where, as soon as our internal auditors gain enough experience to function without supervision, we lose them to other organs of state, or to the private sector.
We have also learnt that the high demand for these professionals is fuelled by the premium placed by all organisations on risk management and compliance matters. While we lament this state of affairs, we also take comfort in the fact that we are contributing to the development of scarce skills that our country desperately needs.
To illustrate the veracity of this challenge, our internal auditor's vacancy rate was a staggering 50 percent during the 2008/09 financial year. However, in the 2009/10 financial year, this reduced to almost half of the previous year to 28.5 percent. Our target for the 2010/11 financial is year 18 percent.
Furthermore, in order to reverse the high turnover rate of our auditors, we are currently revising our human capital management strategy. We will re-evaluate all job levels, compensation programmes, non–monetary employee benefits, personal development and career improvement.
Procure to Pay
Madam Speaker, the Procure to Pay programme, is an essential feature of our efforts to stimulate economic growth. Through this programme, we seek to ensure that we enhance service delivery by targeting start-up companies operating in the small, medium, and micro enterprise business sector. In order to intervene meaningfully therein, we devoted last year's energies on improving our procurement and payment systems.
Madam Speaker, we are delighted to inform the house that, our procurement programmes were awarded the coveted International Organisation for Standardisation (ISO): 9001 certification of 2008. This award confirmed the efficacy of our procurement programmes.
Part of these improvements included rigorous contract management procedures which enabled us to thwart numerous attempts to undermine our procurement processes. Simultaneously, we successfully negotiated and realised cost savings of some 16.8 percent on the procurement of medical equipment, 24 percent on cellular services, 16 percent on capital assets, and seven percent on travel services.
Madam Speaker, the department has established a database of pre-approved vendors. This pre-approved vendors system is aimed exclusively at service providers that are owned and managed by targeted groups. It is also restricted to purchases valued at R500 000 or less.
We are pleased to bring to the attention of the house, that this initiative has enabled us to successfully implement a rotation system of selecting service providers. This can be credited to our database which is now regionalised and thus facilitates procurement on a localised basis.
As a result, we processed and awarded a total of 80 tenders that were valued at R2.2 billion directly to the SMME sector.
Madam Speaker, working together with the Department of Agriculture and Rural Development, and the Department of Economic Development, we will ensure that emerging farmers supply increased volumes of agricultural products consumed in the province.
This will go a long way in ensuring that we achieve our provincial outcome of creating decent work for sustainable livelihoods and thus contribute to a growing and inclusive economy.
In order to broaden our empowerment efforts, whilst simultaneously enhancing the maintenance of our provincial assets, we intend to further expand the involvement of SMMEs especially Broad-Based Black Economic Empowerment (BBBEE) suppliers.
Initially, we will concentrate on SMMEs who have been accredited by the original equipment manufacturer agents. We will procure their services for the maintenance of our medical equipment in the respective regions of the province.
Our overall drive is to ensure that we provide adequate business opportunities for SMME's so that they can develop sufficient capacity that will enable them to expand and compete for opportunities in the ICT, finance and other high value industries.
Technology Support Services
The Technology Support Services programme has evolved from being a mere provider of ICT platforms, into a reliable enabler that can interface with other strategic partners.
It currently enables the provision of flexible and adaptable information and communication technology infrastructure, coupled with applications to support the business requirements of the provincial government. We are currently exploring alternative opportunities for extending these services beyond organised business and governments, but to swiftly incorporate civil society as well.
This will be achieved by connecting communities into the Gauteng Online facilities, provide a sustainable school based e-learning environment, whilst maximising learner experiences. We consider this innovation as a catalyst for actualising the developmental state's agenda of developing a socially inclusive and cohesive society.
Hence, during the previous financial year, we installed desktop computers in 1 455 government school premises. Of the 1 455,348 were in newly built classrooms, and the remaining 1107 were in refurbished schools.
Hire to retire
Madam Speaker, the Hire to Retire programme is our interface with members of the public who aspire to join the public service. It is through this programme that we identify suitably qualified candidates who can help in our quest to deliver quality services to our people.
Some of the challenges faced by this programme are the high volumes of paper consumed in printing curriculum vitae's (CV's), leave forms and employees exit documents.
Internally, the administration of leave applications continues to dog the department. In this regard and in order to control our operating costs, whilst enhancing the quality of transversal services provided, we have automated the administration of leave.
This project has been implemented in ten departmental head offices. It will be followed by the integration of payroll services in our human resources administrative function. This is another attempt with which we seek to eliminate delays in pension payouts, improve the management of allowances for departments, entities, especially the Departments of Community Safety, Health, Roads and Transport.
I am pleased to announce that we have successfully completed the integration of the Professional Job Centre, which is located inside the Maponya Thusong Service Centre. We now await The Presidency to officially launch this programme.
The Corporate Services unit provides tactical and administrative support to the department. This programme provides, amongst others, strategic planning capacity, corporate performance, monitoring, and evaluation services to support our operations.
Through this programme, we also execute our statutory obligations pertaining to occupational health and safety, employment equity, interventions to advance youth development, and the empowerment of women and people with disabilities.
The Corporate Services function also serves as the first point of contact between the Department of Finance and other provincial departments, notably through the document management centre and the contact centre.
Within the document management centre, our strategic intent for the current year is to improve our document tracking capability, the provision of reports, and to increase customer satisfaction.
During the past financial year, we undertook a comprehensive review of the contact centre to align its operations with the newly adopted outcomes and priorities of the province. This exercise was informed by the need to ensure financial sustainability, cost effectiveness, and quality customer service.
The results of our investigations suggested that provincial objectives would be realised better with the contact centre being managed by the department. Against this background, we will be transferring the management of this contact centre back to the Gauteng provincial government.
Consequently, we have, by mutual consent cancelled this contract with the service provider that was managing this operation. From next month, the contact centre will be managed by the Department of Finance on behalf of the Gauteng provincial government.
The Gauteng Funding Agency
The Novel Literati makes an important point about the need for us to continuously re-assess our journey. In this regard he says and I quote:
"We didn't notice how they hinted that nothing is ever finished, that struggles are never truly concluded, that sometimes we have to re-dream our lives, and that life can always be used to create more light".
The Executive Council has taken a decision that, as part of the whole re-organisation and reconfiguration of the institutional landscape of the Gauteng provincial government; the Gauteng Partnership Fund and the Gauteng Fund project office will merge to form a single entity, which will be known as the Gauteng Funding Agency.
So far, we have achieved significant progress in this regard. Let me hasten to say that we have conducted due diligence studies which sought to address the recommendations of the Auditor-General before embarking on this process. We are therefore, confident that we will complete this merger and establishment by the second quarter of this financial year.
The strategic objective of this agency is "to be a centre of excellence in the public sector in strategic infrastructure financing solutions". It will become Gauteng's "one-stop service centre", to convert project ideas into funded infrastructure projects.
Through this agency, Gauteng will be in a position to secure alternative financing sources, create new revenue streams, ensure cost efficiencies, and consolidate all resources to achieve economies of scale.
So far, the Executive Council has prioritised critical capital projects that require alternative funding in the following sectors: health, education, roads, human settlements, water treatment and the Kopanong precinct. The Gauteng Funding Agency has earnestly begun its work of developing these projects into bankable businesses that would attract private sector investment.
Madam Speaker having outlined to the house the five year strategic plan of the Department of Finance, a plan that will guide our work for the next coming years, and the 20010/11 budget priorities, we recommit ourselves to work harder, in order to achieve and exceed our stated objectives.
We also wish to urge honourable members of the house, particularly members of the Portfolio Committee on Finance to join us in this journey of better managing the public purse.
Madam Speaker, the people of Gauteng have given us an important and valuable opportunity to partner with them to improve their lives for the better. We cannot rest nor lose sight of that responsibility. None of us, honourable members, can afford to be exhausted:
"When we can still visualise
A better life for those who suffer
Visualise universal justice
A leavening of the greater dough of humanity
Uplifting the multitudes"
In conclusion Madam Speaker, allow me to thank the Portfolio Committee on Finance under the leadership of Honourable Hope Mankoane Papo for their continued support and supervision.
One cannot forget to appreciate, the vibrant, interrogative and combat ready the Standing Committee on Public Accounts (SCOPA). Their sterling work, under the leadership of Mr Makama, guaranteed that all accounting officers took responsibility and ownership for their actions.
Madam Speaker, let me take this opportunity to welcome to my team an esteemed individual who has been guided by professional ethics throughout his working career. He is a hard worker indeed, a people's servant and now the new Head of the Department, Mr Stewart Lumka. We warmly welcome you sir, and look forward to a productive working relationship with you.
I would also like to thank Ms Nomfundo Tshabalala, our Head of the Treasury division, who has been our acting head of department since the establishment of the Department of Finance. Siyabonga MaTshabalala for steering the ship with dignity, honesty and integrity. We truly appreciate and acknowledge your tireless efforts in managing public funds.
Finally, let me extend my gratitude to the hardworking team that is the staff of the Department of Finance. These are activists and advocates of the Public Financial Management Act, the Municipal Finance Management Act (MFMA), innovators and tireless workers.
My gratitude goes to them for their continued effort in supporting, educating, motivating, encouraging and often disciplining us to comply with the stated financial legislation.
I thank you
Issued by: Department of Finance, Gauteng Provincial Government
28 May 2010
Issued by: Gauteng Provincial Government
28 May 2010
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