ATC121115: Report of the Standing Committee on Appropriations on the 2012 Medium Term Budget Policy Statement, dated 14 November 2012
THE STANDING COMMITTEE ON APPROPRIATIONS ON THE 2012 MEDIUM TERM BUDGET POLICY
STATEMENT, DATED 14 NOVEMBER 2012
considered and heard comments from identified stakeholders on the 2012 Medium
Term Budget Policy Statement, the Standing Committee on Appropriations reports
Minister of Finance tabled the Medium Term Budget Policy Statement (MTBPS) on
25 October 2012 as required by section 6 (1) of the Money Bill Amendment
Procedures and Related Matters Act, No. 9 of 2009 (the Act), outlining the
budget priorities of government for the medium term. The MTBPS was tabled
together with the Division of Revenue Amendment Bill [B33 - 2012] and the Adjustments
Appropriation Bill [B32 - 2012] in Parliament. Part of the MTBPS was referred
to the Standing and Select Committees on Appropriations for consideration and
report. This was done in accordance with their respective mandates as outlined
in the Act. Among its responsibilities, as per Section 6 (8), in respect of the
MTBPS, the Committee was required to consider and report on the following
priorities of national government for the next three years;
division of revenue between the spheres of government and between arms of
government within a sphere for the next three years; and
substantial adjustments to conditional grants to provinces and local
government, if any.
MTBPS provides an overview of governments key spending areas as the setting
for detailed sectoral policies and departmental programmes that will accompany
the 2013 budget. The Committee, in order to deepen democracy, good governance
and promote public participation during the budget process, public comments
were invited. To give effect to this process a number of stakeholders were
Public Service Commission (PSC);
Human Sciences Research Council (HSRC); and
Financial and Fiscal Commission (FFC).
response to the advertisement that was placed in national newspapers, the
Committee also received a written submission from Earth Life Africa.
The MTBPS was tabled amidst
challenges of subdued growth in the worlds economy. The global outlook
continues to deteriorate as the European debt and banking crisis remain
It is against this background that
the Committee engaged with the public and identified stakeholders on the MTBPS.
2. Medium Term Expenditure Framework
the Fourth Parliament, government adopted an outcome based approach and
prioritised its resources in the following areas:
quality of education and skills development;
provision of quality
driving a more
comprehensive rural development strategy; and
the fight against
crime and corruption.
In the 2012 policy
statement the Minister of Finance pointed out that in order for Government to
afford its priorities now and in the future, the rate of growth in public
spending must be moderated. The
increase funds available beyond the 2012 budget baseline. The spending
framework takes account of the need to increase efficiency of existing
allocations to improve public services.
The proposed medium term
budget framework proposes a total appropriation of R1.05 trillion in 2013/14,
R1.14 trillion in 2014/15 and R1.23 trillion in 2015/16. This translates into
expenditure growth of around 8 per cent a year or 3 per cent in real terms.
Debt service costs will increase from R98.6
billion in 2013/14 to R106.8 billion in 2014/15 and reach R114.8 billion in the
2015/16 financial year.
Debt service costs
continue to outpace the overall growth in expenditure In particular; the costs
of servicing government debt are projected to grow at an annual average of 8.9
percent in nominal terms over the medium term.
The 2013/14 medium term
budget framework allocates 47 per cent to national departments, 44 per cent to
provincial departments and 9 per cent to local government. Budget allocations
to the national sphere increase by 7.4 per cent over the MTEF period, provincial
allocations increase by 7.1 per cent and local government allocations increase
by 9.1 per cent. The reprioritisation of funds in the next three years amounts
to R40 billion. National Treasury considered the requirements of the
public-sector wage bill, education and health in the share of additional
allocations for the provincial sphere. Increased infrastructure investment and
costs emanating from the wage bill were key considerations on additional
allocations whilst infrastructure priorities were the main drivers for
adjustments to the local government sphere allocations.
Expenditure in health
services is projected to moderate in the 2013/14 medium term budget framework.
This follows significant growth in health spending in the past five years which
averaged 15.8 percent per annum. Priority areas in health spending over the
medium term will be on the roll-out of an improved diagnostic test to tuberculosis,
additional allocations for the HIV/AIDS programme and investments in health and
In social development,
the number of grant beneficiaries is forecast to increase from 16.2 million in
2012/13 to 17.3 million in 2015/16. The budget provides for the recruitment of
graduates from the social worker scholarship programme. The sector is to
realise savings of about R450 million per year as a result of the new grants
administration contract. Savings realised will be allocated to improvements in
the South African Social Security Agencys (SASSA) infrastructure system.
Priority areas in the education
function for the medium term are to improve the quality of educational
outcomes, develop a skilled and capable workforce and the promotion of an
inclusive citizenship. The education function remains the largest expenditure
item in the budget framework, increasing from R234 billion in 2012/13 to R268.9
billion in 2014/15. Additional funds flowing from internal reprioritisation
will be allocated to the Education Infrastructure Grant
to provinces and the Community Library Grant to support the
construction of new universities in
Funding for the local
government and housing function grows by an annual average of 9.0 per cent in
the medium term from R121.7 billion in 2012/13 to R157.5 billion in 2015/16.
Due to slow spending on the Municipal Infrastructure Grant, funds are to be reprioritised
to a new interim water supply programme. The provision of water and sanitation
services has expanded steadily over time with just over 10 million households
serviced in 2011/12. Additional funding will be allocated to regional bulk
water supply, acid mine drainage, De Hoop Dam pipelines, a pipeline from Flag
and waste water
Government is committed
to expanding employment opportunities through active labour market policies and
investments in a variety of public works and special employment programmes.
Additional funding will be provided in the medium term to the Department of
Labours public employment services. The Department of Public Works will spend
over R4 billion in incentive grants to expanded public works projects
implemented in the provincial and local government sphere. The 2013/14 MTEF
provides for R7.6 billion for the Community Works Programme (CWP) and R8.5
billion for environmental programmes. The budget will include funding for non-governmental
organisations (NGOs) that participate in non-state sector employment
programmes. While there has been slow progress in establishing administrative
capacity for the Employment Creation Facilitation Fund (Jobs Fund), an amount
of R9 billion is expected to be committed to the fund over a five year period.
The budget framework
provides for growth in funding for transport, energy and communication from
R83.5 billion in 2012/13 to R105.1 billion in the 2015/16 financial year.
Government recognises that investment in infrastructure is central to improving
competitiveness, modernising the economy and enhancing the growth potential of
the economy. The 2013/14 budget will focus on national public transport,
national road upgrades, provincial road maintenance, electrification upgrades
and information communications technology (ICT) investment. Expenditure on rail
services is projected to grow an average annual rate of 19.7 percent in the
medium term. Funding will be allocated for upgrades to municipal electricity
distribution. Additional allocations will be set aside for digital television
broadcasting and a new broadband strategy once approved by Cabinet.
Government is committed
to efforts geared at improving the growth potential of the economy. Funding
allocations for government economic services will increase from R44.6 billion
in 2012/13 to R52.6 billion in 2015/16. The Departments of Agriculture,
Forestry and Fisheries; and Rural Development and Land Reform account for over
50 per cent of spending on economic services.
The National Youth Rural Services Corps (NAYRSEC) has recruited
8 000 young people to work in rural communities. The 2013/14 budget makes
available over R10 billion for the economic competitiveness support package
announced in 2011. There will be additional resources allocated to the
Department of Minerals Resources for support
for the beneficiation strategy, regulatory obligations associated with shale
gas exploration, the rehabilitation of the approximately 6 000 derelict
and ownerless mines and the implementation of amendments to the National
Environmental Management Act.
The budget framework
provides for growth in allocations in the general public services function of
5.2 per cent a year from R53.3 billion in 2012/13 to R62.1 billion in 2015/16.
The Department of Public Works is allocated R400 million for the implementation
of its turnaround strategy to stabilise its operations. The turnaround strategy
includes clean audit interventions, anti-corruption and maladministration
initiatives and improvements in technical capacity.
Consolidated spending on
defence, public order and safety will grow at an annual average rate of 6.2 per
cent in the medium term from R141.7 billion in 2012/13 to R169.8 billion in
2015/16. The serious crime rate per 100 000 of the population has declined
from 4 299 in 2008/09 to 4 126 in 2011/12. Priority areas for
reprioritised funds within the Department of Police are to support expanded
detective and forensic capability.
3. Public Hearings
3.1 Public Service Commission
The Public Service
Commission was invited to comment on the 2012 MTBPS.
In its submission it addressed the following
Government expenditure vs. performance outcomes;
The quality of performance information;
Service delivery improvement;
Filing of Performance Agreements (
by Heads of Department (
National Anti-Corruption Hotline; and
Financial Disclosure Framework and Financial Misconduct;
and Efficient Performance
Quality of service delivery with focus on electricity,
access to water, education, health, and housing;
Delivery in relation to need; and
Unemployment and government programmes
Reflections on the public service wage bill;
Areas of focus included organisational design and human
resource planning, vacancy rate, average time it takes to fill posts, average
tenure by SMS members, Human Resources Development and critical skills; and
Management of Discipline
In its submission, the Public
Service Commission (the Commission) noted that deficiencies in the public
service are partly responsible for the lack of success in accelerating
development in post-apartheid
The Commission pointed
out that government recognised the need for improvements in public service but
this needed to be supported by realistic and achievable plans. Over 74 per cent
of departments assessed themselves as either non-compliant or only partially
compliant in service delivery improvement requirements. Moreover, overall
compliance with the submission of Performance Agreements (
of Head of Department (
) was 57 per cent
nationally and 73 per cent provincially.
The Commission noted that
capacity to deal with cases
reported to the National Anti-Corruption Hotline. There are no consequences
imposed for incidents of irregular, fruitless, wasteful and unauthorised
expenditure. The Commission assessed financial disclosures of Senior Management
Service (SMS) members and found that only 48 per cent of national and
provincial departments complied with the financial disclosure framework. The
financial disclosures of a selected number of departments indicated that just
over a third of SMS members had potential conflicts of interest.
The Committee was
concerned about the accessibility of the findings and recommendations of the
Commission to Cabinet. The Commission indicated that it made regular
submissions to Cabinet on all its findings.
3.1.2 Effective and Efficient Performance
The Commission noted that
while there have been expansions in the levels of delivery of basic services;
these have paradoxically been followed by rising levels of service delivery
protests. In a recent survey on the levels of satisfaction with service at a
public health facility, over 62 per cent of respondents said they were very
satisfied with the service rendered. Survey results reveal that the main
concerns of those enrolled at educational institutions were a lack of books,
high tuition fees and large classes. Government needed to communicate its
achievements more directly to citizens.
high at 25 per cent (narrow definition) and highly skewed with the largest
number of the unemployed concentrated in the former homelands. The Commission
saw the provision of short term employment programmes as a rational and
appropriate response to expanding employment. The Expanded Public Works
Programme (EPWP) created work opportunities for over 3 million individuals in
2011/12 whilst the CWP had over 100 000 participants in 2011/12. The CWP
was viewed as more developmental as it was more community oriented and focused
on local priorities. However, it was noted that the size of these government
employment programmes was still relatively small.
Approximately 17 million
people or 30 per cent of
An additional challenge
to the effective implementation of governments rural development programmes
were the high costs incurred. For example, implementing the Community Rural
Development Programme (CRDP) in
cost the State
R200 000 per household in the provision of housing units and community
amenities. The CRDP rollout illustrated that taking the programme to scale is
not viable and the work done by the Department of Rural development and Land
reform is a duplication of work done by other departments.
The establishment of the
NARYSEC has contributed to youth employment and skills development in rural
areas but employment in rural areas is still lower today than it was in 2009.
The effective implementation of rural development programmes and expansion in
the Community Programmes were seen as critical in the alleviation of
unemployment in rural areas.
performance in many instances is uneven and inconsistent. A contributing factor
is the complex regulatory framework which promotes compliance over effective
service delivery. Public services need to be systematic and comprehensive.
Examples include the inadequate provision of extension services to emerging
farmers following the granting of farm land.
3.1.3 Human Capital Management
The MTBPS shows that
personnel spending have increased from 33 per cent of total government
expenditure in 2008/09 to 35 per cent in 2012/13. The 2013 Budget framework
seeks to limit the share for compensation of employees of total expenditure to
34 per cent in 2015/16.
The Commission viewed the
signing of the multi-year public service wage agreement as a positive step in
containing the State wage bill. There was however a need to link wage and
salary increases to productivity. The Commission was also supportive of the
announcement by the Department of Public Service and Administration (DPSA) of
the development of principles that would govern increases in remuneration
wherein salary increases were based on productivity and performance improvements.
With regards to human
resource strategies of government departments, over 65 per cent of departments
rated themselves as not complying with the prescripts of organisational design
and ensuring that all positions on the approved structure were funded. Just fewer
than 90 per cent of departments had vacancy rates of above 10 per cent for
professionals and Senior Management Service (SMS) members. The Commission was
concerned that human resource management frameworks had become too complex. The
States human resource strategies needed to be streamlined and simplified.
In respect of human
resource development, results of a study on a sample of 30 departments found
that 43 per cent of the sampled departments had never conducted a skills audit.
Distribution of personnel was skewed in some departments resulting in high
concentrations of lower and semi-skilled employees. The Commission pointed out
the need to improve opportunities for specialisation in skilled occupations. Addressing
the skills shortages in specialised personnel such as architects, town and
traffic planners, engineers, quantity surveyors, chemists, etc was critical in
attaining the objectives of governments human resource development plans.
The Commission was
concerned at the short tenure by SMS members on a given salary band. In a sample
of 11 departments assessed by the Commission, the average tenure of employees
on salary level 14 was three years before being promoted to salary level 15.
This was deemed as insufficient to consolidate the necessary experience. Concern
was also expressed at the poor management of discipline within the public
service which was characterised by long periods of precautionary suspensions
due to the poor management of disciplinary proceedings.
The State needed to
reconfigure its overarching approach to human capital management and human
resource regulatory framework so that it became more sensitive to the unique
challenges facing the country and capacity constraints that permeate the public
service. The Commission pointed out that it was unrealistic to expect each
state entity to take responsibility of its own human resource management and development
practices. The Committee noted and supported the signing of the multi-year
public service wage agreement.
Committee noted the findings by the Public Service Commission on the lack of usefulness
and the lack of reliability of the information contained in Annual Reports.
Concern was expressed by the
Committee at the level of compliance to the financial disclosure framework by
SMS members of state entities and the potential conflicts of interests arising
from SMS members ownership of companies that deal directly with the state.
The Committee notes with
concern the compliance oriented approach that has developed in the public
service. In particular, the cumbersome human resource management frameworks do
not seem to position government for effective and efficient service delivery.
3.2 Human Sciences Research Council
The Human Sciences
Research Council (HSRC) was invited to comment on the 2012 MTBPS.
In its submission it addressed the following issues:
What can be done to ensure that the health system is ready
for the implementation of the National Health Insurance (NHI)?
What can be done to improve the delivery of schools
and quality education?
Which areas of Governments core delivery mandate can
realise the most jobs?
How can these be unlocked?
What can be done to improve the effective delivery of
governments infrastructure programme?
How can expenditure be improved to attain the best
outcomes with regard to rural development?
The MTBPS makes provision
for spending on healthcare in the medium term on a number of priority areas
which include the rollout of an improved diagnostic test to tuberculosis,
additional allocations for the HIV/AIDS programme and investments in health and
hospital infrastructure. National Treasury indicated that the provision of
additional funding for the National Health Insurance (NHI) would be dependent
on progress on institutional reforms and progress on the capacity of the health
system to provide services.
The HSRC outlined the main
objectives of NHI as the creation of a single fund which consolidated all risks
into one fund, procured services on behalf of the entire population, improve
the resourcing of the public health sector and improve the quality of health
services for all. While there were a number of initiatives underway in the
planning phase of the NHI, the Council was concerned that these were concurrent
with a decline in government health expenditure.
With regards to the performance of
the NHI conditional grant, the Council pointed out a number of factors that were
hampering the rollout of the grant. The budget allocations for the NHI were
deemed inadequate for visible and meaningful demonstration of the various
components of NHI and there were challenges such as lack of delegations to
teams managing NHI Pilot sites and Supply Chain Management issues. The Council suggested
that the NHI conditional grant be changed from a Schedule 5 to a Schedule 7
The HSRC also pointed out that the
establishment of a NHI fund was required. The Department of Health can establish
a shadow operational unit for the NHI fund. The shadow unit should be
capacitated and resourced to undertake preparatory work for the implementation
of the NHI. The Council viewed the shadow unit as a crucial institutional
infrastructure for delivery. This will ensure that NHI is understood in a
coherent manner that is consistent across provinces.
The Council pointed out the need to
establish ICT infrastructure for NHI that will consolidate all data for the
entire population and link with systems of other entities such as the
Department of Home Affairs. The NHI will also need to develop a risk system
that will detect and manage cases of fraud such as the overcharging of services
rendered and link the system with the South African Revenue Services (SARS).
The HSRC pointed out that the Department
of Health (
) should add an additional 10 pilot
districts as per the green paper and these should seek to address the design
and test of a sub-national structure of the NHI fund; and
to pilot test models for the integration of public and private sectors in the
provision of healthcare.
While the Committee noted efforts at
of funds within the Department of Health for
the medium term. The Committee was concerned at the impact that moderate budget
increases for the health sector will have on the implementation of the National
Health Insurance (NHI) and to allocations for medical goods and services such
as medicines and medical equipment.
The HSRC noted that implementation of the NHI has been
hampered by a lack of a common understanding of operational requirements of the
project by the different spheres of government. The main concern was that there
existed competing action plans from the different spheres of government in the
implementation of common policy objectives.
The Committee noted the Councils suggestion for the
NHI conditional grant to be changed from a Schedule 5 grant to a Schedule 7
grant. The NHI grant should be able to cover services at Primary Health Care
The 2012 MTBPS maintains the
spending trajectory of government in terms of preserving the resource envelope
for critical government priorities such as education. The largest share of
consolidated government expenditure, R234 billion, goes to education and
related activities for the 2012/13 financial year.
The Council was concerned at the
prevailing inequalities that permeate the South African school system.
The education system has been unable
to significantly reduce infrastructure inequalities and personnel deficits in
schools among disadvantaged communities in the 18 years of democracy. Poor
quality education significantly limited the future success of learners in the
to infrastructure shortfalls, out of the 24 793 total number of schools in
the country, 14 per cent did not have access to electricity, 10 per cent had no
access to clean water and 93 per cent had no stocked library. A
schools environment that facilitates effective
teaching and learning would need to cater for classrooms according to the
enrolment as per the teacher- learner ratio.
was concerned at the high levels of under spending on infrastructure budgets by
provinces. Provinces that showed vast under-expenditure were the
The Council urged
for the finalisation of National Norms and Standards for Schools
infrastructure. While calls for submission on National Norms and Standards were
released in 2008, the formalisation of norms and standards has yet to be finalised.
The Council viewed the formalisation of official norms and standards as
critical in providing guidance to the development of basic indicators of
results in the roll-out of schools infrastructure, there needed to be clear
roles defined for the Department of Basic Education and the Department of
Public Works. While the
National Education Infrastructure Management System (
and other indicators could be used to cost and implement a multi-year budget to
address deficits, systems need to be developed to effectively connect public
works and the schooling system.
The Committee noted the high degree of
under-expenditure in the ASIDI programme and was further concerned about the
possible under expenditure for this grant in the 2012/13 financial year
The Committee noted that the formalisation of norms
and standards for schools infrastructure was important for the roll-out of a
uniform quality schools infrastructure nationally.
Concern was expressed by the HSRC at the lack of
clearly defined roles for the Department of Basic Education and the Department
of Public Works in the roll-out of schools infrastructure.
noted that employment gains have decelerated in the past year as growth in the domestic
economy continued to slow. The number of persons employed in the public sector
increased by 38 000 whilst that of the private sector increased by
87 000. An additional 1.1 million South Africans have been classified as
discouraged since the end of 2008.
noted that efforts at accelerating job creation needed to be evaluated in the context
of global and domestic economic developments. In terms of the global context,
there were real concerns regarding the uncertainties in the
In terms of
the domestic context, ongoing industrial disputes posed a significant threat to
the economys growth trajectory, business confidence remained weak, private
sector investment needs to increase and there has been a decline in foreign
direct investment. However, positive developments include the maintenance of
fiscal stability and increased public infrastructure investment.
noted that the budget framework provided for a real increase in spending
although this would cater mainly for the higher government wage bill. The Government
needs to increase efforts at improving the quality of spending. In particular,
the Council urged for a shift in the spending composition towards
infrastructure investment, industrial policy and expanding the social wage.
There should be less spending on consumption items such as administrative
costs, staff salaries and wasteful spending.
the Council, the main area of job growth would be in Governments public works
programme. Projections indicate increased employment in infrastructure,
construction, agriculture, manufacturing, mining; green economy and even more
substantial increases in jobs for tourism, business services and consumer
pointed to uncertainties on how to effectively promote labour absorbing growth.
The relationship between the private and public sector remained unclear. There
are still no firm proposals on alleviating youth unemployment. There remained
uncertainties on the strategy and practical implementation of the Jobs Fund.
The Council emphasised that addressing these uncertainties was critical in
efforts to expand the countrys levels of employment.
The 2012 budget provided
for R844.5 billion in planned and approved public sector infrastructure projects.
The 2012 MTBPS allocated funds to social and community infrastructure projects
such as schools, health facilities, and secondary roads. The bulk of the
spending on infrastructure was to be financed from the balance sheets of State
Owned Entities (
). Costs would be recovered by
charges levied on users.
With regards to
infrastructure delivery, the Council cited a number of challenges that needed
to be addressed and these include:
Weak implementation capacity that causes significant delays
and cost over-runs
Poor project planning
Poor coordination amongst government agencies and spheres of
Lack of partnerships between government and the private
The Council welcomed the formation
of the Presidential Infrastructure Coordinating Commission (PICC). The PICC was
formed to coordinate and accelerate the long term infrastructure build. The
Council viewed the PICC as an important step in enhancing collaboration amongst
State entities and removing barriers to inefficiencies. The Council also urged
for the inclusion of participatory elements in Governments plans for improving
the delivery of infrastructure.
In the MTBPS it is stated
that government needs to improve on the overall effectiveness of infrastructure
delivery and locate efficiencies within the delivery chain. There is
recognition that large scale projects have the potential for corruption and
maladministration. The Council has forged links with the Construction Sector
Transparency Initiative (COST) whose aim was to ensure transparency at every
stage of the infrastructure development process.
COST will complement rather than replace the
states existing supervision and regulatory framework. The Council viewed the
rollout of the initiative as key in enhancing the levels of transparency in the
delivery of major infrastructure and ensuring that communities obtain value for
money on infrastructure projects.
The Committee supported proposals for a participatory
approach that involve communities in the delivery of government infrastructure
programmes. Initiatives such as COST may improve levels of transparency in the
rollout of large infrastructure projects.
3.2.5 Rural Development
The budget framework makes provision
for funding allocations of R15 billion to rural development, land reform and
agricultural development. However, the budget allocation to the lead
departments in the implementation of rural development constituted less than
two per cent of the total national budget. HSRC indicated that current levels
of spending on rural development was far below the 2003 Maputo Declaration
which stated that every Southern African Development Community (SADC) member is
to allocate 10 per cent of the national budget for agricultural development.
The Council noted that 62 per cent
of land reform expenditure is now allocated towards the "proactive land
acquisition" by the state. Direct land grant transfers to beneficiaries have
fallen from 47 per cent in 2009/10 to 22 per cent in the 2012/13 financial year.
However, the main concern was the lack of emphasis on the importance of
smallholder farming. HSRC indicated smallholder farming has been successful in
emerging economies such as
The Council urged for the
development of new infrastructure and the revitalization of old infrastructure
in rural areas. The Council welcomed projects such as the I-school
The Council indicated that the
NARYSEC was a core focus of the rural development programme and constituted
over 40 per cent of the programmes budget allocation.
For each year over the MTEF, 5 000 new youths
will be enrolled in NARYSEC. The Committee was concerned at the lack of a
visible link between NARYSEC and the National Youth Development Agency (NYDA).
The Council highlighted the sharp
fall in primary agricultural employment in the past decade. Employment in
primary agriculture has declined from 2.5 million workers in 2000 to less than a
million in 2011. In terms of state support, small farm households do appear to
have access to state sponsored Agricultural Development Support (ADS). However,
the Council had concerns with reported beneficiary numbers and could not
ascertain the impact that ADS is having on the livelihoods of small farm
With regards to household food
security, 3.2 million households were deemed to be food insecure in 2011. The
Council indicated that rapid food price inflation was a real threat to food
security. Food distribution was regarded as the main challenge to ensuring food
security rather than food production. Hence food distribution should be the
main area of focus for policy development.
The Committee is concerned at the high number of food
insecure households in the country which constituted 21.5 per cent of total
households in 2011. The Committee noted the importance of food distribution in
increasing the number of food secure households.
The Committee notes government support to small farm
households through the Agricultural Development Support (ADS). However, the
Committee was concerned at the lack of a visible impact of the programme on the
livelihoods of small farm households.
3.3 Financial and Fiscal Commission
The Financial and Fiscal Commission (FFC) in its
submission welcomed the 2012 MTBPS and viewed the proposed budget framework as
reflective of the recommendations that the FFC has made over the years. The
Commission stated that economic growth has come in slower than expected and
this has been exacerbated by internal strife in the labour markets resulting in
a downward revision of revenue by R5 billion and a higher than projected budget
deficit. However, the Commission was also of the view that growth and
The Commission was broadly supportive of governments
initiatives at job creation which seek to focus on active labour market
policies and amended labour legislation. Furthermore, FFC supported proposed supplementary
funding for maintaining factories providing jobs for disabled workers,
expansion of employment opportunities through public works and special
employment programmes (including EPWP and CWP).
The FFC noted that Government has now made many
proposals to stimulate job creation that include promoting education and skills
development, the Manufacturing Competitiveness Enhancement Programme, the Jobs
Fund, a Youth Subsidy, the Community Works and Expanded Public Works Programmes
and the investment infrastructure programme. However, the Commission was
concerned at the muted response to these proposals by business and labour.
There was a need to foster cooperation amongst all parties on initiatives that
seek to broaden employment.
With regard to education, it was
stated that due consideration should be made for operational costs of school
infrastructure such as the safeguarding, maintenance and operation of completed
school infrastructure. The Commission indicated that most schools did not have
the required conditions for effective learning outcomes and this impacted learners
from disadvantaged backgrounds and disabled learners disproportionately.
The Commission cautioned against fiscal consolidation
through the indiscriminate cutting of education expenditure such as delayed or
decreased funding to schools as there were concerns about the associated
capability losses. Cost cutting should be done in a prudent manner that will
not negatively affect educational outcomes.
The budget framework provides for 0.2 per cent real
growth in health spending over the MTEF. FFC welcomed governments efforts at
obtaining value for money from health spending. However, the Commission was
concerned at the impact of fiscal consolidation to the quality of health care
in an environment where provinces put salaries as a first claim on the
above medicines and the maintenance and upkeep of
medical equipment. There will need to be tighter monitoring of health budgets
in the medium term.
Given the efficiency challenges plaguing provincial
Health Departments, the Commission suggested that human resource, financial
management and procurement should be devolved to hospital management to in
order to improve efficiencies. Furthermore, FFC called for the establishment of
norms and standards that will define the level of service that should be
expected from public health facilities.
With regard to social development, the budget
framework reprioritises funds already in the baseline towards strengthening
selected child welfare programmes, improving SASSA infrastructure and systems,
and the employment of additional social workers. The Commission was concerned
that provincial departments of social development were internally prioritizing
away from transfers to NGOs to personnel costs and goods and services. This
will have a negative effect on the resource envelope available to NGOs.
The MTBPS proposes a number of reforms in the
conditional grant frameworks with a view to improve conditional grant spending
in the provincial and local spheres of government. The MTBPS calls for a
performance linked and demand driven conditional framework for provinces. The
FFC supports the reform in principle but calls for caution in its
implementation as it may entrench inter-provincial inequities. The other main
concerns with the conditional framework were the continual proliferation of
grants, shortcomings of national departments in administering grant frameworks
and the need to make transferring officers more accountable for grant
The Commission indicated that it was important to
strengthen the monitoring and evaluation of local government grant outcomes as
improved spending was not always linked with better outcomes.
In pursuing constitutional interventions in local
government, the State had to be mindful of balancing capacity and
accountability. The FFC proposed for enabling legislation for constitutional
interventions that foster the current accountability and oversight frameworks
of government. The main concern was that punitive measures may be
counterproductive. The Commission recommended that a framework be developed for
Section 100 interventions. The framework should outline the parameters for the
intervention, contain clearly defined roles and responsibilities for all
stakeholders and define clear timelines.
Earth Life proposed the following with regard to the
The Department of Energy should complete an accurate cost
analysis of proposed future nuclear energy that takes account of all relevant
information. The provision of R1.7 billion allocated to the South African
Nuclear Energy Corporation (NECSA) should not be approved until:
Integrated Resource Plan (IRP) has been revised so as to
address the shortcomings of the IRP 2010 relating to the costing of the nuclear
program and should include:
an accurate cost analysis of nuclear energy procurement
all relevant information not included in the IRP 2010
an update of information that has arisen in the two years
since the IRP 2010;
The Department of Energy should be required to act in a more
transparent manner, providing adequate information to the public and Parliament
as to its intentions and the decisions being taken regarding this proposed
That funds budgeted for large-scale energy procurement
should be conditional on greater parliamentary oversight;
That there is a risk that
4. Committee Concerns and Findings
Having considered all the submissions made by the
above stakeholders, the Committee identified the following findings and areas
The Committee notes that the
Division of Revenue Bill contains clauses that specify criteria and conditions
in which infrastructure funds may be allocated and the Committees view is that
similar conditions should be incorporated into the Appropriation Bill.
The Committee noted with concern the
slow implementation of the Job Fund.
The Committee noted the declared
savings of R3.021 billion in 2012/13 by national departments and envisaged
savings in the medium term. The Committee however expressed concern at the lack
of distinction between savings and under expenditure as well as the adverse
effect of under expenditure on the performance by departments.
The Committee welcomed the reforms
aimed at improving the conditional grant frameworks for provincial and local
government but remained concerned at the cost of employing implementing agents.
The Committee expressed concern about
the planning in the longer term by departments given the advantage that they
should derive from the Medium Term Expenditure Framework.
The Committee welcomed the
additional funding made available for infrastructure projects administered by
the Department of Water Affairs but
remain concerned at the readiness of the Department to
implement the projects given the persistent under expenditure on infrastructure
projects over the years.
The Committee welcomed the Public
Service Commissions proposal to develop a legal framework that will empower
the Commission to enforce compliance with its recommendations.
The Committee noted governments commitment
for more prudent expenditure by departments however, it is the Committees view
that such reprioritisation of funds should not be done at the expense of
The Committee noted the challenges experienced
by national departments to administer grant frameworks and stressed the need to
make transferring entities more accountable for the performance achieved by way
of transferred funds.
The Committee noted with concern the
shifting of funds originally budgeted for filling vacant positions; and the
extent to which this could negatively affect service delivery and budget
performance over the Medium Term Expenditure Framework (MTEF) period.
The Committee is concerned about the decentralisation of
infrastructure development to departments without such departments having the
necessary capacity or skills to perform the tasks or where the tasks allocated
fall outside the core functions of the departments.
5. Committee Recommendations
on the findings in section 4 above, the Standing Committee on Appropriations recommends
The National Treasury reports to
Declared savings and projected
underspending by departments and the effect thereof on performance targets of
departments. The minimisation of costs associated with the employment of implementing
agents for delivery of infrastructural programmes.
The possibility of reviewing the MTEF
budgeting framework so as to strengthen the management, planning and spending
in government departments to ensure credible budgets.
The Department of Water Affairs
submits a report on:
The Turnaround plan outlining its
readiness to implement and effectively deliver on its infrastructure programme.
The human resource capacity and
concomitant skills required for effective service delivery.
The immediate steps to eliminate the
backlog on issuing of water distribution licences.
The Department of Public Service and
Puts in place measures to ensure
full compliance with financial disclosure frameworks and mechanisms to detect
and prevent potential conflicts of interest particularly as far as officials
transacting with the state are concerned.
Ensures the filling of funded vacancies
within six months.
The Department of Basic Education
expedites the process of formalising norms and standards for schools
The National Treasury puts in place
measures to ensure that transferring entities are held accountable for the
administration and performance of the conditional grants.
The Department of Performance
Monitoring and Evaluation reviews the performance of agricultural support
programmes and their impact on the livelihoods of people residing in rural
Report to be considered.
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