Budget Process update: briefing

Meeting report

JOINT BUDGET COMMITTEE
12 August 2003
BUDGET PROCESS UPDATE: BRIEFING

Chairpersons: Mr Nene (ANC), Mr Ralane (NCOP, ANC)

Relevant documents:
Treasury Presentation: Budget Process Update

SUMMARY
The Treasury noted the key dates for this year's Medium Term Expenditure Framework 2004/5 Budget process. It also looked at the economic outlook and the government's strategic priorities both nationally, provincially and at the municipal level. It was made clear that the allocations for the 2004/5 Budget would be less than estimated previously. This was due to the slowdown of the global economy, the stronger Rand and high interest rates which would cause less revenue to be gathered.

The Committee also decided to give members more time to look at the expenditure statements of April, May and June in more detail.

MINUTES
Mr Neil Cole (Director Budget Reform: Budget Office, Treasury) presented the briefing on the Medium Term Expenditure Framework 2004/5 Budget process (see document).

Discussion
Mr Hanekom (ANC) asked about departmental budgeting. He wanted to know to what extent Parliament's portfolio committees engage with departments during their budgeting process.

Mr Cole replied that no engagement takes place as far as he knows and that each department is responsible for their own budgeting.

Mr Nene stressed the importance of this issue as it is currently unclear whether Parliament could or should engage with the departments.

Dr Koornhof (ANC) enquired from Mr Cole what he sees the role of the Joint Budget Committee and where they should play a role in the current financial year.

Mr Cole replied that budgets get planned a year ahead. Now would be the time to engage the Treasury to get involved in the 2004/5 Medium Term Expenditure Framework. He added that they could get involved in September with the Medium Term Expenditure Committee when the Treasury goes into discussions with the departments. He also suggested that the Joint Budget Committee use department's Estimates for National Expenditure to hold them accountable.

Mr Hanekom stated that the departments' Chief Financial Officers are critical in helping the Directors-General with financial planning. He asked Mr Cole for his overall assessment on this situation.

Mr Cole confirmed that the quality of financial planning does vary. It was not surprising that it does relate to how strictly the departments have applied the criteria for Chief Financial Officers according to the Public Finance Management Act. Some departments for instance appointed Chartered Accountants as consultants. This led to better accounting but not necessarily to better financial planning and budgeting.

Dr Koornhof asked who determines the priorities for the three spheres of government and whether Parliament plays a role or has a role to play.

Mr Cole answered that he can not comment on Parliament's role. The priorities are the responsibility of the Cabinet. First, discussions are tabled in January at the Lekgotla. That leads to the Medium Term Strategic Framework document that indicates the key themes and how they should be translated into budget priorities.

Mr Hanekom asked whether we are budget-wise ready for the rollout of Neviropene.

Mr Cole replied that some would say we have been ready for a while. He stressed that the Department of Health would have to work out the details. He added that it is economically affordable and comes down to a reprioritisation of the budget.

Dr Cwele (ANC) commented on the issue of school fees. He did not see it mentioned under the list of priorities and asked whether it was part of the detail.

Mr Cole joked that there was this perception that the Treasury knows everything that goes on in all the other departments. He referred the question to the Department of Education.

Meeting adjourned.