Appropriation Bill 2022 - Budget Vote 3: Provincial Treasury

Today, Minister Maynier tabled the Main Appropriation of Vote 3: Provincial Treasury.

1. Introduction 

Last week, we tabled “A Budget to Push Forward”, so that we can get up, so that we can get out, so that we can push forward and so that we can do even better in the Western Cape. 

And today, we table the main budget for Provincial Treasury [Vote 3], in the amount of R321.6 million for the 2022/23 financial year, to deliver on four strategic objectives:  

• Integrated Provincial Governance; 
• Efficient Infrastructure Investment; 
• Strategic Supply Chain Management; and 
• Effective Local Governance. 

2. Integrated Provincial Governance 

Provincial Treasury continues to strengthen governance in the Western Cape through:  

• A rigorous strategic budget process; 
• Integrated management information; 
• Improved audit processes; and 
• Integrated assurance. 

And Provincial Treasury is leading from the front to strengthen governance in the Western Cape.

Which is why in the last financial year:  

• we had 84% of departments and public entities achieving clean audits; and
• we remained top of provincial rankings when it comes to having the least irregular expenditure and fruitless and wasteful expenditure in South Africa.

Provincial Treasury works hard to support departments and public entities and the results are testament to strong financial governance in the Western Cape.

Provincial Treasury have developed a rigorous strategic budgeting processes, which is focused, not just on immediate spending pressures, but also on anticipating and accommodating future spending pressures and risks.

Which is why our Fiscal Futures project, will evaluate the best options available to maintain the long-term fiscal sustainability of provincial government in the Western Cape. 

And, which is why we have allocated R1.8 million to better understand future fiscal trends to ensure fiscal sustainability in the Western Cape

To deal with spending pressures through proactive restructuring measures, we have established a Fiscal Transition Support Facility, which provides fiscal support for the once-off, upfront costs of investment in new service delivery approaches and technology that will achieve long-term savings and improved outcomes over time.

To support the implementation of specific departmental interventions that will achieve long term savings for the department and improve outcomes, we have allocated R30.5 million over the medium term in the Western Cape.

While we are in a better fiscal position now, there is a question about how long it will last because there are very serious downside risks to the economic outlook in South Africa.

We have been hit hard by the pandemic, and we expect a gradual recovery, but there are significant downside risks, and provincial budgets are not likely to increase in real terms, despite the huge spending pressures building up in provinces across South Africa.

A major risk to the South African economy over the last decade has been rising government expenditure without corresponding growth in economic output, productivity or efficiency.

Which is why we will continue to conduct expenditure reviews to assess the efficiency, effectiveness and performance of selected programmes, in the Western Cape.

3. Efficient Infrastructure Investment 

To drive economic growth and create jobs, Provincial Treasury continues to support the efficient delivery of infrastructure in the Western Cape.

The short-term benefits of expanding our infrastructure investment programme will include jobs associated with investment activities, while longer term benefits come from greater productivity and competitiveness.

Which is why we have allocated a total of R10.0 billion for investment in infrastructure in 2022/23 in the Western Cape.

To push forward, and achieve ambitious infrastructure growth, we must invest in the preparation of infrastructure projects so that we have a pipeline of shovel-ready infrastructure projects in the Western Cape. 

Which is why, last week, I announced that we will allocate R87.7 million through the Project Preparation Facility over the medium term, of which R34.0 million is allocated in the 2022/23 financial year.

To push forward, we must also get the infrastructure management system right in the Western Cape. 

Which is why we are now preparing to withdraw Provincial Treasury Instruction 16B, which will make Transport and Public Works the preferred, but not exclusive, implementer of infrastructure in the Western Cape, which will bring much needed competition into the infrastructure space.

And, because the committees of this parliament play a critical role in monitoring infrastructure spending in the Western Cape, we will: 

• continue to provide consolidated quarterly reports on infrastructure spending performance to the Budget Committee; and 
• begin providing bespoke quarterly reports on infrastructure spending performance: 
  • to the Standing Committee on Education; 
  • to the Standing Committee on Health; and 
  • to the Standing Committee on Transport and Public Works. 

We hope these reports will support the committees to monitor infrastructure spending so that we can push forward in the Western Cape. 

4. Strategic Supply Chain Management 

Supply Chain Management reform will continue to play a critical role in sustaining financial capability maturity, driving value for money, and strengthening compliance with governance requirements in the Western Cape.

Which is why Provincial Treasury continues to support strategic procurement in the Western Cape by constantly evaluating our supply chains for opportunities to increase value for money, while also ensuring compliance.  

To support and execute Supply Chain Management reform, the Provincial Treasury is allocated an additional R3 million the 2022/23 financial year, and a further once-off allocation of R1.5 million in 2022/23 for Supply Chain Management reform to drive value for money in the Western Cape.

A key mechanism of this strategy will be e-Procurement and Technology Enablement through our e-Procurement Solution (ePS), which will enhance the competitiveness of suppliers, and provide business communities with a convenient and effective platform.

Additional technology support will focus on enhancement to an automated Procurement Planning Toolkit, and the enhancement of data processing and business intelligence capability to provide insight into provincial procurement and thereby improving value for money in purchasing.

Provincial Treasury continues to lead the way in procurement transparency by being the first provincial government to disclose detailed information on COVID-19 related expenditure.  

We now:

• publish a detailed monthly Procurement Disclosure Report;  
• publish a detailed quarterly Procurement Disclosure Report; and
• publish a detailed annual Procurement Disclosure Report on COVID-19 related expenditure in the Western Cape.  

This week, we will publish our twenty-first monthly Procurement Disclosure Report on Covid-19 related expenditure in the Western Cape.

To push forward, and remain the most transparent province when it comes to procurement, we will also:

• explore publishing approved procurement plans to provide potential suppliers with information about the opportunities available to supply goods and services to provincial government;
• explore publishing detailed information of transactions on more commodities, as we build our datasets and information processing capabilities, to expand the scope of our procurement disclosure reports; and
• explore implementing our own dashboard system, for the disclosure of detailed information on procurement, to supplement the system currently utilized by National Treasury.

5. Effective Local Governance 

Provincial Treasury continues to support effective local governance, working closely with vulnerable municipalities to manage risks and improve their financial stability in the Western Cape.

A good example of this is the Financial Recovery Plan for the Beaufort West Municipality.

The Plan, which was prepared by the Municipal Financial Recovery Service at National Treasury, is the result of extensive consultations, online, in-person meetings and workshops with the Municipality, the Municipality’s principal creditors, community members, Provincial Treasury, Department of Local Government, Organised Labour, and the South African Local Government Association.

The Plan adopts a strategic, focused approach which is time-bound yet comprehensive enough to ensure that the underlying causes of the financial crisis are adequately addressed.

To achieve this objective, the Plan presents a phased approach to recovery, differentiating between issues to be addressed in the short, medium, and long term.

The Plan is divided into three distinct but interdependent phases. These include:

• a Rescue Phase (Phase 1), which focuses primarily on cash and restoring the cash position of the municipality;
• a Stabilisation Phase (Phase 2), which expands on the financial indicators to be monitored and emphasises key governance and institutional issues which must simultaneously be addressed; and
• a Sustainability Phase (Phase 3), to secure the gains of the plan and ensures the long-term financial sustainability of the municipality.

We anticpate that the municipality can achieve a cash-backed funded budget position within three years, provided the measures outlined in the Financial Recovery Plan, are successfully implemented by the Beaufort West Municipality.

6. Conclusion 

I am constantly impressed by the professionalism, dedication and innovation of Provincial Treasury.

So, I would also like to warmly congratulate one of our Provincial Treasury employees’, Jenine Mostert, for winning a Gold Award for the ‘Inspirational Support Employee’ in the ‘Best Researcher of the Year’ category at the 2022 Batho Pele Excellence Awards this week.

Jenine Mostert has been instrumental in contributing to the now regular production of the monthly, quarterly, and annual procurement disclosure reports, which is the gold standard of procurement transparency in South Africa.

She has also been the lead team member who designed the dashboard for the procurement disclosure reports, which will soon to be launched by Provincial Treasury.

I would also like to thank the Provincial Treasury’s Head Official, David Savage, and all the Provincial Treasury officials, for their fantastic efforts to deliver a “A Budget to Push Forward” so that we can get up, so that we can get out, so that we can push forward and so that we can do even better in the Western Cape. 

I thank you!