2024/25 Budget Vote 3: A Provincial Treasury you can trust

Speech by Deidré Baartman

Minister of Finance

Vote 3: Adjustment Budget Debate

Western Cape Provincial Parliament

Cape Town

06 December 2024

Introduction

Honourable Speaker,

Last week, we tabled “A Budget to Weather the Storm”. An Adjustment budget which highlights the Western Cape’s resilience and recovery in the face of economic and fiscal upheaval.

The current fiscal environment requires the Provincial Treasury to be proactive and responsive in its approach to managing public funds effectively and efficiently – not only within the general Western Cape Government ecosystem, but also within the Provincial Treasury.

A Provincial Treasury you can trust 

In order to ensure that the Western Cape’s financial position holds steady, the Provincial Treasury identified key values for the medium term – Fairness, Trust, Value-for-Money, Innovation; and we’ve made significant progress so far. Today, I wish to focus mostly on being a Provincial Treasury you can Trust. Because it is important that the people of the Western Cape can Trust that we know how to sail our ship.

In order to foster trust, I engaged with various Finance MMCs across districts in the Western Cape prior to the MTBPS to gage them on opportunities and risks facing our municipalities.

As an enabling and reliable partner, we are hosting the Provincial Budget and Governance Forum this coming Monday with municipalities to enhance governance and budget alignment. We further established a Municipal Intelligence Team to enhance municipal support and collaboration; and continued the implementation of the Automated Internal Audit System to strengthen internal audit capacity.

We are prioritising support for municipal financial sustainability. This past financial year Provincial Treasury evaluated municipal budgets through the Strategic Integrated Municipal Budgeting Engagement to ensure cohesive planning; monitored budget implementation and performance through quarterly municipal performance assessments; we provided detailed feedback to municipalities on their annual reports; reviewed Service Delivery and Budget Implementation Plans for compliance with the MFMA; allocated financial assistance to improve governance through the Municipal Financial Recovery Services Grant; and fostered collaboration and knowledge-sharing on fiscal challenges through the CFO Forum.

Speaker, trust also means that it is important that what we are say and what we do correctly reflects in our financial statements – for the second consecutive year Western Cape Government departments and entities achieved 100% unqualified audits. The Provincial Treasury boasts its 11th clean audit this year – a testament of resilience despite a tough fiscal environment.

The 2024/25 Adjustment Budget for Vote 3: Provincial Treasury at R306.171 million reflects the strategic priorities of the Department. We have however had to revise our budget downwards. This reduction in the Department’s budget represents a net decrease, adjusted from R339.777 million in the Main 2024/25 Budget, approximately R30.606 million.

The majority of the reductions is due to releasing Compensation of Employees (CoE) funds back to the Provincial Revenue Fund as a result of a revised recruitment plan and a revised fiscal consolidation strategy.

In terms of accounting changes in the budget, we will see particular shifts between units in order to maximise efficiency within the Department. Additionally, funding has been reallocated for research to outer financial years.

This adjustment presented us with a variety of challenges but also opportunities. It has forced us to look closely at the Department’s long term viability, rethink our approach to internal operations, and lay the groundwork for future sustainability.

We are thus realigning R23.4 million in COE savings, a significant adjustment which is largely due to our revised recruitment plan due to fiscal consolidation, as well as delays in filling vacant funded posts, internal promotions, attrition, and deferment of graduate trainees.

Trust means indicating why we have COE savings, rollovers, and realignments in our budget.

We will –

• Reallocate R3.5 million to the 2026/27 and 2027/28 financial years for dedicated capacity to develop and implement institutional funding strategy for the Western Cape Government. This will support our work on Alternative and Blended Financing;
• Reallocate R4.3 million to 2025/26 for the purpose of economic analysis research and to appoint an Infrastructure panel of experts to support our work on Alternative and Blended Finance through the evaluation of infrastructure projects;
• Reallocate R3 million to 2025/26 to cover legal fees, expenses related to Smart Procurement Conference to support financial sustainability in municipalities, and the appointment of Business & Data Analyst; and
• Reallocate R1 million to 2025/26 for the appointment of resources dedicated to advancing the mSCOA strategy, which will support municipalities.

Speaker, for the 2025 financial year, we will however reassess capacity constraints and funding requirements within Provincial Treasury as well as update our talent strategy, because doing more with less for more people comes at a cost – it risks adverse affects on our officials’ mental and emotional wellbeing. We need to address these risks in the upcoming financial year.

We will further rollover R432 000, of which R135 000 for previous committed office furniture procured to replace obsolete furniture as part of a culture rebrand; R230 000 for research related to 20th & 21st Gambling and Racing Amendment Bills; and R67 000 to cover legal fees related to the 2023 wage agreement dispute.

Speaker, you will see a notable  reduction in consultancy services related to Information and Communication Technology (ICT) projects across programmes and identified savings as we had fewer mobile devices and travel and subsistence claims. These funds will be allocated towards funding critical Goods and Services needs within the Department.

R122 000 in additional provisions have been made for training and development for the Chartered Accountant Academy trainees; and R157 000 in provisions have been made for audit fees, ensuring compliance and oversight.

However, necessary adjustments were made to the Western Cape Municipal Financial Recovery Services Grant which has been reduced by R1.690 million, bringing the total allocation down to R310 000, which will be directed to support the Beaufort West Municipality. We will be increasing the allocation for the Western Cape Financial Management Capability Grant by R2.663 million, raising the total to R20.423 million. These allocations are in line with our commitment to municipal financial sustainability.

Finally, we will shift R830 000 to Vote 1: Department of the Premier to co-fund the shortfall of Microsoft licenses which will be allocated to Provincial Treasury. This is due to the Rand/Dollar exchange rate increase.

Speaker,

We are having to more with less, for more people; but we are committed to remaining a Provincial Treasury you can Trust, as be part of a strong Western Cape Government team, to weather the storms we face.

Acknowledgements

Honourable Speaker,

As I conclude, I want to take a moment to remember one of our dear colleagues, Ean Steenkamp-Cairns, who sadly passed away last month. Ean dedicated nine years to public service and was deeply admired and respected across the Western Cape Government.

Ean was also an incredible support during my first months in this role and I am deeply grateful for the assistance he offered and the contributions he made – from drafting my Ministerial online biography to organising our very first Provincial Treasury FinTech event with the FinTech Association of South Africa, Banking Association of South Africa, Payments Association of South Africa, and other key stakeholders within the Finance sector. He was authentic and kind and cared deeply for his colleagues, who have not had time to mourn him while having to work against the clock to put an Adjustment Budget together. May you rest in heavenly peace.

Speaker, I would also like to pay tribute to my late friend and admiral finance sparring-colleague, Governor Tito Mboweni – I remember the day when I first got elected as a public representative. You were furious, exclaiming how ‘[W]e did not want this for you”, referring to many of our parents’ conservative dreams for us to become doctors, lawyers, accountants, engineers. It was a different generation. Wow – I wonder what you would have said today, as I stand here walking around in shoes that may never fit. I’m hoping someone up there you have found someone to debate art, beauty and history with – from the history of the South African Reserve Bank to the origins of money. Thank you and I hope you are resting in peace.

As a table this Vote today, I do so with a full appreciation for Team Finance, who have had to pull together during this difficult period, while also having to manoeuvre and navigate a complex and challenging budget period.

I want to thank our head of Treasury, Julinda Gantana, and the rest of the senior management team in the Department, Analiese Pick, Taryn van de Rheede, Paul Pienaar, Michelle Nicholas, Ziyaad Majiet and Malcolm Booysen for their steady leadership. I also want to thank each and every staff member in the Provincial Treasury for the late nights and long hours that they have invested into getting us through this budget period. Your sacrifices and contributions are truly appreciated.

The Provincial Treasury, under the leadership of Ms Gantana, is truly a shining example of the excellence within the staff complement of the Western Cape Government.

I would also like to thank my team in the Finance Ministry – Dr Grant Caswell, Marshallé Frederiks for your key technical insights and expertise; and to Christian Marnewick, Sandra Francisco, Igshaan Davids, Edwina Herman, and Gaynor Lucas for your hard work, efficient operations, and logistical arrangements.

Thank you to Team Finance’s unwavering commitment to Fairness, Trust, Value-for-Money and Innovation.

Conclusion

Honourable Speaker,

As I mentioned earlier, we are having to do more with less. And while difficult decisions have been made, they were taken with the future financial sustainability of the Western Cape Government and the people of our province in mind. We continue to aim to being a Provincial Treasury you can Trust.

I hereby table the Vote 3 Adjustment Budget for Provincial Treasury for the 2024/25 financial year for deliberation.

Thank you.