Briefing Workshop on Budget Process

Meeting report

MINERALS AND ENERGY PORTFOLIO COMMITTEE
12 March 2003
BRIEFING WORKSHOP ON BUDGET PROCESS

Chairperson: Mr M Goniwe (ANC)

Documents handed out:
Department presentation on Budget process
Checklist (see Appendix)
Minerals & Energy Department Budget (Vote 30)

SUMMARY
In anticipation of a briefing by the Department the following week on its budget and programmes for 2003, the meeting focused on a presentation by National Treasury aimed at providing context to the budgetary process. In particular, the rationale underpinning recent reforms to this process were explained and pointers given in respect of departmental budget scrutiny and the need for ongoing engagement with representatives of the Department on matters of performance and delivery.

MINUTES
Medium Term Expenditure Framework (MTEF) budgetary process
The Chair explained that the meeting would focus on a presentation aimed at providing information on the budgetary process that would assist the Committee in scrutinising Budget Vote 31 (Minerals and Energy) in preparation for a briefing from the Department on 19 March 2003. A researcher from Parliament's Information Services would be present to provide his perspectives where appropriate. He urged committee members to appraise themselves fully of the details of the departmental budget and to engage incisively with representatives of the Department on its contents, since this process would impact significantly on the adequate fulfilment of the committee's oversight function.

Dr N Cole, Director: Budget and Reform, National Treasury, presented a comprehensive account of the Medium Term Expenditure Framework (MTEF) budgetary process, its role players and the factors informing each departmental budget vote. Recent reforms had sought to introduce measurable objectives for each departmental programme with quantifiable outcomes within the MTEF period 2003-5, placing increasing emphasis on detailed output information indicating quality, quantity and related time-frames. With this in mind, Dr Cole suggested that members of the committee might need to ask not only whether specific departmental objectives are affordable, but also whether they can be achieved with the resources available. Where objectives have not been met or delivery has not taken place, the departments concerned need not only to be asked why, but what measures are planned to rectify the situation. He referred members to the annual reports produced by each department as a useful resource in researching performance indicators.

Mr E Lucas (IFP) enquired how input from the committee could influence a process that had already been completed.

In response, Dr Cole conceded that a more structured approach was needed for tabling the recommendations of portfolio committees since the purpose of the discussions that inevitably ensued was to inform the next budgetary process and the two outer years for which medium-term expenditure was being estimated.

Mr M Ramodike (UDM) enquired about the availability of guidelines to which the committee could refer in determining the extent of the Department's compliance with the requirements of National Treasury in preparing the budget.

Mr N Ngcobo (ANC) asked what measures are taken when a particular objective has not been achieved.

In response, Dr Cole advised that Treasury guidelines on the format and focus of the MTEF process had, to date, been made available to the Department and would in future be distributed to members of the committee. Guidelines for the 2004/2005 process would be circulated in May. The issue of non-delivery on specific objectives was currently being explored by the Office of the Auditor General and it was anticipated that spending trends and output-expenditure comparisons over preceding years would inform an ongoing review of departmental baselines.

Mr Goniwe (ANC) commented that guidelines on budgetary process indicators would be useful to committee members in their efforts to meet the requirements of their oversight role and function.

Dr Cole then used examples drawn from the current budget vote to illustrate what members might need to look for in reading the departmental budget and identifying issues to be addressed during the course of the briefings concerned. Referring to the tables in Vote 31.1, he advised members of the committee that tables would in future comply with Government Financial Statistics (GFS) requirements which would facilitate international comparisons on specific budgetary items. He suggested that the committee might benefit from a workshop on the GFS format and the new economic classifications that would replace the standard items of expenditure currently in use.

Mr Ngcobo (ANC) enquired how expenditure forecasts for the two outer years are calculated.

Dr Cole replied that these calculations are based on the macroeconomic assumptions underpinning medium-term budgeting and the need to create a level of certainty in the predictions entailed. To date, no departmental budgets had been decreased during any one MTEF period, a clear indication of the reliability of the assumptions concerned. Macroeconomic modelling attempted to make the necessary allowances for potential volatility in the global economy.

He suggested that questions on specific aspects of the budget vote be addressed to representatives of the Department at the forthcoming briefings.

Ms E Ngaleka (ANC) expressed concern about the high level of expenditure on personnel, enquiring how this compares with international trends and best practice.

Dr Cole responded that personnel expenditure tends to differ between departments and is generally determined by departmental function and, by implication, the number and calibre of personnel required. He suggested that the administration budget might be a more reliable performance indicator when compared with key programme budgets over the same period.

In closing, Dr Cole referred members of the committee to a checklist to which they might wish to refer in preparing questions for the forthcoming budgetary briefing. Noting that the task of the committee in respect of the budgetary process is to appropriate funds for each departmental programme concerned, he again emphasised the need for measurable objectives and quantifiable outcomes in the context of policy developments that are in keeping with the strategic priorities of Government.

The meeting was adjourned.