- Act as a facilitating or change agent towards achieving those socio-economic objectives that would contribute to the greater well being of the general public; and
- Promote the effective utilisation and safeguarding of provincial assets.
In his State of the Province address on 16 February 2007, Premier Rasool presented Governance as one of the "ten programmes of concrete, on-the-ground delivery, designed to make a difference for people?". Following on this, I prioritised the programme by setting responsive and responsible governance as one of the four themes in my Provincial Budget speech. Let me remind the House that the Provincial Treasury, as custodian of our Province's financial resources, centres on the three pillars of financial management, namely: Internal Control, Risk Management and Good Governance. "You can not do all the good the world needs, but the world needs all the good you can do." (Anon)
As the name implies, this programme essentially focuses on the staff functions of Provincial Treasury to ensure that the department has the necessary skills and resources to enable myself and my Head Official of Treasury to attain strategic direction in line with our functional responsibilities. I will focus on Corporate Services and Financial Management.
Corporate services
Mr Speaker, the role of Human Resource Management has always been mainly determined by legislative mandates. However, the sub-programme is being repositioned towards building and strengthening internal capacity and being the driver of transformation in its wider application in the department.
The implementation of the external internship programme commenced this year with the hope that at the end of the contracted period the appointees will be ready to be absorbed into the labour market, preferably, within Provincial Treasury or the wider Provincial Government. This programme is geared at targeting the scarce skills requirements of Provincial Treasury and meeting the underlying objectives of iKapa Elihlumayo and ASGISA. Human Resources will also foster leadership development and performance management.
In essence the key challenge for Corporate Services in the coming years will be to stabilise the Treasury team by focusing on retaining the current skills base together with short and long-term skills development programmes.
The Office of the CFO has many diverse roles that consist of Management Accounting, Financial Accounting, Supply Chain Management, Auxiliary Services, Internal Control and Risk Management as well as providing Registry services. All these roles have to be executed within stringent legislative prescripts and regulations, which leave little room for errors.
For the second consecutive financial year, the Provincial Treasury has attained one of its key targets of staying within one percent under-spending on its adjusted budget. Mr Speaker, it is my intention to continue on this trend by staying within the voted amount of R 119, 001 million for my Vote in 2007/08 too.
The R 15, 245 million or 11.4 percent decrease on the 2006/07 main estimates is primarily due to the decentralisation of State Information Technology Agency (SITA) costs to provincial departments.
Financial Management inter alia set themselves the following priorities for 2007/08:
- Enhanced Management Accounting to ensure that performance measures in our 2007/08 Annual Performance Plan (APP) are better planned and to provide efficient accounts control and ensure all payments are within set time limits.
- Manage risk management strategies and improve internal control management.
- Co-ordinate all the said activities within the sub-programme and obtain the co-operation of all directorates within Provincial Treasury.
This programme houses the research arm of the Provincial Treasury, in the main socio-economic analysis, fiscal policy, budget allocation and the monitoring thereof.
The unit's main function is to determine and evaluate economic parameters and socio-economic imperatives within a provincial and national macroeconomic context. This is to better inform resource allocation in the province, which in turn contributes towards the achievement of iKapa Elihlumayo. The unit is strategically positioned to influence service delivery through applied research that encourages implementation of research findings by sector departments. For the unit to function in such a competitive environment, building internal capacity is important.
Mr Speaker, for 2007/08, we acknowledge the limitations associated with skills retention in furthering our endeavours to deepen our analytical capacity. Our approach to recruitment is innovative, identifying candidates with potential and intentionally targeting those graduates that are underemployed to our talent pool to "practically" deal with the skills mismatch. On that note, as the Provincial Treasury's economic analysis brand strengthens, we will continue sharing the emerging trends and our understanding of the Western Cape 's socio-economic environment.
In addition, the SEP-LG will move a step further by building on the initial publications as a monitoring tool to assess and better understand the depth of regional economic activity, following the findings of the first iteration. We would also like to be rolling out economic analysis training to municipalities and further strengthen the team's capacity to be better equipped to deliver on our objectives. By its very nature the work performed by this unit have medium and long-term results. As a Chinese proverb says, "With time and patience the mulberry leaf becomes a silk gown."
The main aim of the unit is to enable the provincial government to finance its service delivery objectives that will incorporate the optimisation of the current revenue base and exploiting the revenue potential of other sources.
The focus for 2007/08 will be on:
- Delivering a credible medium-term fiscal framework leading to sustainable medium-term expenditure budgets.
- Expansion of the own revenue base inclusive of legislative processes to enable tabling of required legislation on the fuel levy and the finalisation of research around a range of possible tourism related levies.
This fairly new unit came into being as necessitated by the implementation of the MFMA with the aim of providing professional advice and support on local government revenue collection and fiscal policy. The Unit has identified the following strategic objectives for 2007/08:
- Improve input-output sequencing of information and the quality thereof within the municipal budget processes.
- Develop effectiveness of the local government in-year revenue monitoring system towards attaining level three auditable municipalities.
- Provide policy advice, effective technical and strategic support and a change agent service to municipalities.
For the unit to succeed, it is imperative to recruit and retain suitable staff and build internal capacity and strategic relationships with all stakeholders, primarily municipalities but also external role players.
Budget Office, as the unit is commonly known, drives the annual provincial budget process and also provides guidance for and oversight over local government budgets.
For the third year in succession, Provincial Treasury in co-operation with Local Government and Housing and Economic Development undertook detailed assessments of municipal draft budgets and associated IDP, LED and financial health assessments. The process for assessing quarterly non-financial performance of provincial departments has been enhanced and should move to a higher level in the coming year.
For 2007/08 the focus will be on deepening post-LGMTEC engagements and assessing municipal Service Delivery Budget Implementation Plans (SDBIP). The unit will also work on improving alignment between provincial priorities and local government IDP's and improving the quality and transparency of local government budgets. On the provincial government side, the two main outputs will be the Budget Overview and the Medium Term Budget Policy Statement. The Budget Office will also embark on a baseline analysis exercise that will be refined over years to come.
Provincial Government Finance
This sub-programme is tasked with ensuring efficient budget application in provincial departments. This includes the development of efficiency measures, integral to the in-year expenditure monitoring system and the development of more refined financial performance indicators.
One of the focus areas in 2006/07 was on fiscal discipline within budget programmes in provincial departments. The unit also took steps to improve the quality of financial management, which inter alia included deepening the credibility of Budget 2007 by linking national and provincial priorities with budget allocations, and augmenting the IYM reporting information.
A key challenge for 2007/08 is to, in association with the Budget Office, build the analytical capacity both in the Provincial Treasury and provincial departments to better link service delivery relative to that of expenditure performance and further enhancing the credibility of budget allocations.
The MFMA mandates the Provincial Treasury, in partnership with National Treasury to monitor financial compliance for municipalities and municipal entities in the province. National Treasury has delegated 28 municipalities to the Province while retaining two of the 30. In essence the unit is actively involved with the implementation of the MFMA by facilitating initiatives and creating a conducive environment for smooth implementation. The sub-programme also made considerable progress in respect of its roles and responsibilities as required by the MFMA and includes some of the following:
- Full nominal compliance in the submission of municipal IYM's, inclusive of the quarterly publication of the outcomes per municipality and the tabling of the IYM information in this House in line with the MFMA requirements;
- Quarterly IYM site visits to municipalities to enhance the quality of reporting and strengthened intergovernmental relations; and
- The successful planning, coordination and implementation of the LGMTEC processes.
A major focus of this sub-programme will be on improved and substantive compliance with municipal financial management legislation, policies, regulations and practices to contribute towards attaining a level three-capability audit rating at the municipal sphere and to build and consolidate on the gains made during the previous year.
PROGRAMME 3: ASSET AND LIABILITIES MANAGEMENT
This programme aims to provide policy direction, facilitating the effective and efficient management of physical and financial assets, PPPs and liabilities.
This sub-programme is responsible for the management and control of the Provincial Revenue Fund that consists of the provincial exchequer account and fourteen departmental bank accounts. One of the accomplishments for 2006/07 was the smooth switch in bank tenders from ABSA to Nedbank on 1 April 2007.
The main challenges are credible annual cash flow projections to minimise deviations from actual payments, cash positive banking accounts at all times with minimal balances, and that any funds not immediately required to defray expenditure are invested at various financial institutions in line with Treasury's investment policy.
Moveable Asset Management
The unit is tasked with the stewardship of Supply Chain Management at both provincial and municipal level. It aims to provide strategic leadership and support and develop guidelines to ensure effective supply chain management of goods and services. In 2006/07 the unit performed SCM assessments in provincial departments and engaged municipalities on the implementation of SCM policies. This team also facilitated the arrangements of transversal contracts and the implementation of asset management requirements within the province.
For the new financial year this team endeavours to establish a centre for excellence to render strategic support and training, and drive best practices in SCM units. The unit will also promote and facilitate the Asset Management Reform Strategy in conjunction with National Treasury.
Immoveable Asset Management
Mr Speaker, this team is responsible for two key areas in the province. The first focus area is to facilitate the effective and efficient management of immovable assets. Secondly, the unit aims to elicit sustainable PPP projects. During 2006/07 the team provided support for the implementation of the new framework "toolkit" for infrastructure best practices and engaged Public Works on specific areas on Property Management to be monitored by Provincial Treasury.
The focus for 2007/08 will be on the further rollout of IDIP (Infrastructure Delivery Improvement Programme), providing assistance and support in the implementation of the envisaged Government Immovable Asset Management Act (GIAMA), marketing PPP's externally, engaging core departments and municipalities on problem areas around PPP projects, and monitoring completed PPP projects to determine value-for-money and affordability aspects.
The Systems team provides for the oversight, enhancement and management of existing financial systems and the transition to the Integrated Financial Management System (IFMS). The systems currently in use are the Basic Accounting System (BAS), the Personnel and Salary Administration System (PERSAL), The Logistical Information System (LOGIS), and Vulindlela (Management Information System).
As stated earlier in this speech, SITA costs have been decentralised to the various departments from 1 April 2007 with the aim of further improving efficiency and user management of the different systems in use. However, the unit will still be responsible for the implementation, management and user training as required by the departments.
This programme aims to enhance performance-orientated financial management.
The main purpose of this unit is to ensure that financial reporting is a full and true reflection of the financial position of the province, including municipalities. The unit implemented a financial management improvement plan for departments and public entities as necessitated by issues raised by the Auditor-General (AG) in the 2005/06 audits. Accounting services has, therefore, been actively involved in identifying and monitoring remedial steps instituted by departments and public entities to address financial management improvements.
For 2007/08 the unit will continue to assist departments in the transition from the modified cash basis of accounting to the accrual basis of accounting. This will be a gradual process and ongoing training and capacity building will be provided to departments as a prerequisite. With regard to capacity building in municipalities, training interventions are also planned in consultation with National Treasury in order to improve on their reporting outcomes.
The responsibility of Norms and Standards has been broadened to include the co-ordinating of the oversight support function for public entities within the province. A Provincial Treasury Action Plan was compiled based on the analysis of all the Auditor General reports, management letters and overarching issues raised in the respective Internal Audit reports. The purpose of the action plan was to identify transversal issues that require remedial steps.
For 2007/08 the following quality improvement measures are planned by the unit:
- To develop a process to ensure a co-ordinated approach to assist departments to reach a Level 4 auditable organisation.
- Revising the current monitoring tool for public entities to include high-level governance process and to co-ordinate their oversight functions.
This sub-programme encompasses both Enterprise Risk Management and Governance Systems. The departmental Risk Management units were approved followed by a recruitment drive and training for all the departments. During 2007/08 the unit will drive and promote risk management awareness programmes for the Audit Committees that will lead to more rigorous monitoring of management responsibilities in respect of risk management. The unit also intends to promote governance awareness within departments and the framework will be effected in the 2007/08 financial year. Other quality improvement measures are:
- To drive the implementation of risk management and governance rollouts more rigorously.
- To form close co-operation and co-ordination with all Provincial Government assurance providers to capitalise on synergies.
- Provide ongoing training and support to chief risk officers to enable them to operate more effectively and add value to the departments.
The organisational structure for the Internal Audit unit was completed and approved by the Cabinet in the fourth quarter of 2006/07. The approval of the organisational structure will result in an increase of the staff establishment from 24 to 92 staff members, to be phased in over a three-year period. This will enable the provincial government to recruit and capacitate the staff required to take over the service from the external service provider within the next two to three years.
For 2007/08 the following improvement measures are inter alia envisaged:
- Recruit and train adequate resources to take over the function from the service provider.
- Providing ongoing training to audit committee members and clarifying the reporting relationships between audit committees, Accounting Officers, Executive Authorities and Standing committees.
- Increasing the number of audit committees in the Province to enable them to deal more effectively with the departments they serve.
Mr Speaker, it is with pleasure that today I present you with the findings from the "Perceptions of Government Performance and Service Delivery: A Population Survey of the Western Cape ". In 2004, Provincial Treasury put forward the idea of conducting a survey to measure opinions and develop a benchmark for attitudes on service delivery in the Province. The results of this survey are important because:
- They provide a direct link between service delivery and peoples' perceptions of service delivery;
- They provide a snapshot and raise questions to help government to better understand progress and target strategies for service delivery in the Western Cape
- They can be used as a management tool to judge our performance as government and to further refine the responsiveness of our strategies to peoples' needs.
- They allow us to link perceptions on service delivery to how we allocate funds to different service priorities.
At the end of 2005 and early in 2006, interviews and surveys were conducted with different stakeholders, ranging from ordinary citizens to provincial and municipal managers. The report being released today represents the key findings from a representative survey of the population of the Western Cape . A total of 4 039 adults living in the Western Cape were interviewed. The report also looks at how people perceive their socio-economic conditions and what they see as the most important socio-economic challenges for government. When asked about the most important challenges facing the Province, the majority of respondents identified crime, unemployment and housing. Nearly a third of respondents (29%) rated crime as their first most important problem. Unemployment is the second most often mentioned problem, and was rated as the primary problem by 17% of respondents. Third came housing, which was selected by 12% of respondents as the most important problem. The results help us to gain a better understanding of how our people view and experience government service delivery. If we are to improve service delivery, we must listen to those people who use those services and to whom we are accountable.
CLOSING REMARKS
In the words of Hubert Humphrey, " ?the moral test of government is how that government treats those who are in the dawn of line, the children; those who are in the twilight of life, the elderly; those who are in the shadows of life; the sick, the needy and the handicapped."
It is with this in mind that we are committed to delivering on each of its objectives to ensure that the mandate of those who put us in power is fulfilled. A lot of work still lies ahead, but I believe we have laid a solid foundation to ensure future success for all the Provincial departments. To Dr Stegmann and his Treasury team, thank you all for your hard work and dedication. Our former President Nelson Mandela once said "And as we let our own light shine, we unconsciously give other people permission to do the same". Thank you again for your leadership and guidance.
