Western Cape Appropriation Bill: Vote 3 Provincial Treasury

Meeting report

Mr David Maynier, Western Cape Provincial Minister of finance and Economic Opportunities, Mr David Savage, Head of Department: Provincial Treasury, and Ms Julinda Gantana: Chief Director: Public Finance, made the presentation on the 2020/21 Provincial budget vote 3 and on adjustments that had been made to the appropriation bill to the Committee.

In his opening statement, Mr Maynier referred to the Provincial Treasury’s vision statement, that it was committed to building a strong and capable treasury that was committed to changing people’s lives. He said that treasuries around the world were often accused of what the economist Keynes described as “winter’s scepticism,” in order to combat what they saw as enthusiasm to spend too much money or risk spending money incorrectly. He said the Provincial Treasury wanted to be outward facing and responsive to the departments and local municipalities that they served.

Mr Savage built on Mr Maynier’s comments, and said the challenges the Provincial Treasury face were quiet dynamic, but it was still committed to playing an enabling role with its partners, such as provincial departments and municipalities. It had to implement strategic decisions and resource analogy in the budget-making process. The Provincial Treasury had quite a dynamic role to play between being a regulatory body and also being an enabling and supportive partner to provincial departments and local municipalities. This required it to focus a lot on how they supported the dynamic development capability within the public sector.

The Provincial Treasury core mandate issues were quality and oversight on fiscal policy management, financial governance, and asset management. It was always looking to sharpen its tools for effective delivery on these mandates. He said the budget for this financial year as a whole tried to respond to challenges faced in quite an uncertain context, but there were particular challenges that the budget would address, such as supply chain management (SCM) processes, infrastructure and local government, and it would adopt an outward looking programme of activities in the next year.

Discussion

The Chairperson said she would allow Members to make comments and ask questions regarding the budget vote 3, and encouraged them to address anything that concerned them.

Mr A van der Westhuizen (DA) asked about supply chain processes, and whether public entities were getting value for money in terms of the legislation when it came to the procurement of goods and services. He referred to a recent question he had submitted to the Minister of Local Government, asking him to get a sample of 10 municipalities to provide him with the price they paid for 80 gram bond copy paper, and it had been found that there was a variation of up to 40%, with the smaller municipalities coming in at a lower price. He said this was surely a sign that the government was not always getting value for money when procuring goods and services. He had noted that the Provincial Treasury aimed to capacitate the SCM processes, but it also needed to assist local governments with their financial processes, and he wanted to know what interventions it was planning and whether or not these interventions would assist in solving the problems. He asked how the Provincial Treasury could increase its income, and how it assisted other government departments to get funding through economic grants from the national government.

Mr D Mitchell (DA) asked about the infrastructure spending per municipality, and how it correlated with the Municipal Infrastructure Grant (MIG). He also wanted to know about the central Karoo area, where R104 million had been made available, and whether that money would be used for infrastructure such as fixing the road. This was vital, as the gravel road was currently affecting the delivery of feed for farmers. What would the Provincial Treasury be doing to ensure that funds were spent on infrastructure issues in the area?

Ms N Nkondlo (ANC) referred to the responsibility of the Provincial Treasury to monitor and act as an oversight body over departments and local municipalities when it came to budgets, and wanted to know how it would rate its ability to monitor and perform its oversight duties, and what could be done to improve its ability in this regard. On the question of financing, she highlighted the R5 million which had been unspent for the previous financial year, which was a re-allocation of the unspent financial good governance grant. While going through the Gazette, she had found three different grants speaking on the same issues, and asked why the Department was spending money in such a way. Could these grants not be consolidated into one particular grant? Would the Treasury be able to identify and address some of the many indicators it was trying to achieve? Why had this R5 million been unspent?

Mr L Mvimbi (ANC) wanted an explanation for the difference between “local government 1” and “local government 2,” referred to in the presentation, and how this affected the allocation of funds. Considering the amount of resources that were being given to municipalities, why were some of them still receiving unqualified audits? He pointed out that where the presentation had referred to “social benefits,” this was actually “employee benefits.” The term “social benefits” was actually deceiving, as it implied that they might be to the benefit of communities.

The Chairperson commented that in the summary of estimates for financial governance, she could not find a particular thing that was said in the budget speech about the Provincial Treasury assisting municipalities with their procurement if they wanted to purchase power from independent producers. She asked what that process would be -- how it would start, and how much had been put aside for it. She also wanted an update on the vacancy rate, and what had been done to fill vacancies.

Department’s Response

Mr Savage said that Members had raised an excellent point about fixing the gravel roads, as this had only worsened the economic conditions brought on by the drought. The responsibility for the budget preparation and execution lay with the Department of Transport, and the Treasury only focused on monitoring and trying to support quality infrastructure projects. He said that the Department’s monitoring abilities had improved, and the focus had been on standardising monitoring protocols. The infrastructure management programme was also intended to address this issue, but had not yet been rolled out yet at the municipal level. It was on the agenda to roll it out at the local government level.

The Treasury’s focus at the local government level had been on developing their core systems, which allowed them to monitor municipalities better through the digitisation of the platform which enabled municipalities to upload data easily.

Regarding the issue of multiple grants addressing the same problems, he said the Department was reviewing the grant framework. He explained that this situation existed because each grant was related to a specific programme in the municipalities, but at different levels. The review was aimed at changing the framework.

Mr Savage referred to Treasury’s aims for local government, and why there was a need for the different levels of support, and said its role differed from time to time, depending on the issues facing municipalities. There were also various local government teams which focused particularly on providing strategic support to municipalities.

He said “local government 1” and “local government 2” was simply a method of dividing the workload among teams, and did not affect any form of funding.

Ms Gantana responded to the question about the gravel road, and said the Department was also looking at other sources which may help with the road infrastructure problem in that area.

The money for purchasing electricity from independent power producers would appear in the next mid-term budget, as it had not been approved by National Treasury yet, and it was a very complex issue.

She referred to the supply chain management question, and said that different municipalities bought from different providers, and there were certain socio-economic conditions faced by municipalities which were taken into account, and they would sometime insist on procuring local services. There were also clear rules on how municipalities had to procure services.

Ms Gatana said that social benefits referred to benefits paid to previous employees, and were paid only once every four years. It was labelled “social benefits” since these payments were for previous employees, and did not occur regularly.

Regarding the vacancy rate, most vacancies were in the process of being filled and there had been new vacancies due to retirements. The hiring process had already started in February and by the end of April all processes would be finished.

The grant review processes should be completed by the end of August.

Discussion

Ms Nkondlo asked where the Provincial Treasury was with collection of data from municipalities. At what point would the Department be able to provide the Committee with details of the information, as there was already a system in place which integrated the data from different municipalities for the Provincial Treasury. She was disappointed that the Department had not done much in terms of gender-based budgeting. She also asked what its plans around social justice transformation were, and what pieces of land it would be buying.

The Chairperson asked what systems were being put in place for the 4th industrial revolution in order for processes to be carried out more easily. Were there on-line systems to make it easier for citizens to use public services? She also referred to the alternative sources the Treasury was looking at to deal with the gravel road, and asked whether there could be public private partnerships, as farmers had already taken the initiative in fixing parts of the road.

Response

Mr Savage says that there were some challenges around the quality of the data received from municipalities, and Treasury was always trying to verify its accuracy. The Department was processing the data so it could be used in its monitoring efforts.

On the Department’s readiness for the 4th industrial revolution, discussions were currently under way within the departments.

Regarding alternative financing sources for the gravel road, proper project preparation was the most crucial factor, and a team would be put in place for this. Another alternative was convenience contracts, which allowed the Department to call on contractors when a need arose, who would work together with the Department of Transport in completing the project.

Mr Maynier responded that there would be additional transfers dealing with gender-based violence, and these would be made to the Department of Social Development. The Department would assist municipalities in providing, and helping them to procure, land for social housing. When additional funding became available, the Treasury would adopt a ready-to-spend approach on impactful projects.

The Chairperson thanked the Minister of Finance and his team for presenting the bill, and for answering all the questions.

Mr Van der Westhuizen moved the adoption of Budget Vote 3, without any amendments, and Mr Mitchell seconded.  

Ms Nkondlo said that the ANC reserved its right not to reveal its vote.

The Chairperson adopted the Budget vote.

The adoption of minutes was deferred to the Committee’s next meeting.

The meeting was adjourned.