Estimates of National Expenditure 2003: training by the National Treasury

JOINT BUDGET COMMITTEE
28 February 2003
ESTIMATES OF NATIONAL EXPENDITURE 2003: TRAINING BY THE NATIONAL TREASURY

Chairperson: Mr G Doidge (ANC)

Documents handed out:
The following documents will be available here shortly.
Treasury PowerPoint Presentation: Estimates of National Expenditure 2003
A Guide To The 2003 Budget For Members Of Parliament

SUMMARY
Members of the Joint Budget Committee as well as Chairpersons of Committees were trained on the budget process by National Treasury. The training covered estimates of national expenditure, the medium term expenditure framework, division of revenue and the work of the medium term expenditure committee. Members raised the issue of the role played by Parliament in the budget process and noted that there was agreement that Parliament should play a more active role. In response Treasury said that they were giving continuous attention to the role of Parliament in the budget process as well as the research capacity of Parliament.

MINUTES
Overview of the Estimates of National Expenditure
The ENE is an outcome of an administrative and executive process. It is an expression of National Government's medium term service delivery, policy developments and performance, alongside a three year spending plan. Measurable objectives are introduced for each programme. It provides Parliament with a clear statement of the spending aims of programmes.

Medium Term Expenditure Framework (MTEF) Budget Process
The new budget cycle starts almost directly after the budget is tabled in February. Prioritisation of expenditure takes place from April to September. The preparation of budget submissions by Departments takes place from April to August.
The Macroeconomic Framework, Fiscal Policy and Division of Revenue (DoR) is finalised between July and September. The Medium Term Expenditure Committee (MTEC) recommendations are also finalised between August and September.

The Medium Term Budget Policy Statement (MTBPS) is finalised during the period October - November. The Medium Term Economic Framework is finally approved during October - December and Budget Documents are prepared during November - March.

Macroeconomic Framework, Fiscal Policy and Division of Revenue
The expected outcome is the equitable division of national revenue between the three spheres of government. The vertical division of revenue between national, provincial and local government is as a result of a political outcome. The horizontal division is based on spending priorities and Department plans.

Medium Term Expenditure Committee (MTEC)
The expected outcome is the preparation of new MTEF recommendations for Executive consideration and approval. The MTEC need to evaluate competing demands on the basis of business plans. It needs to evaluate new policies and the expansion of existing outputs, and its impact on indicative allocations. Where necessary, the MTEC need to negotiate increases to 'baseline' allocations. Parallel structures need to be set up at national and provincial level.

Preparation for Budget
The expected outcome is to prepare new MTEF recommendations for Executive consideration and approval. The role of Cabinet is to approve the new MTEF. The role of Departments is:
-To revise Strategic Plans.
-To reprioritise within allocations to programmes
-To prepare the ENE. The ENE is then tabled in Parliament at the time of the Budget Speech.

Recent Reforms
The most important reform is to provide Measurable Objectives for each programme.
This refers to Section 27(4) of the Public Finance Management Act (PFMA).
Quantifiable results within the MTEF period are needed. There has been a shift of focus to outputs and their impact. A more descriptive output information table, which considers quality, quantity and timeliness measures has been presented. There is more reporting on recent outputs. There is more selective reporting on Public Entities. A new infrastructure expenditure table has been introduced.

ENE outline
The ENE presents information on accountability, departmental aims, programme purpose and measurable objectives, strategic overview, expenditure estimates and trends, and departmental receipts.

A checklist for 2003 Estimates of National Expenditure was presented. (please see attached powerpoint presentation on Estimates of National Expenditure 2003)

Discussion
Mr S Manie (ANC) remarked that this training programme has been a remarkable improvement on previous programmes.

Mr Y Carriem (ANC) complained about the lack of research capacity in Parliament, which leads to the inability of Parliament to rely on rigorous and high quality research, which in turn makes it impossible for Committees to have informed engagements with policy. He also explained that this issue has been raised with the National Treasury several times and that there is agreement, but that nothing was being done to address the problem in terms of more budgetary allocations to Parliament for this purpose.

Mr J Cronin (ANC) addressed the issue of the role played by Parliament in the budget process. He asked whether Parliament is still just seen as the recipient of the budget, and how Parliament could play a more active role. This issue has also been addressed with National Treasury before, and there is general agreement that Parliament should play a more active role. Once again, these discussions do not seem to materialize into any action.

Mr Cole responded that the National Treasury was giving attention to the issue of research capacity in Parliament. Furthermore, he explained that the National Treasury was giving continuous attention to the role of Parliament in the budget process, and that there need to be further deliberations.

The training session was adjourned.