The Gauteng 2012 Medium Term Budget Policy Statement

22 Nov 2011

The Gauteng Provincial Budget is expected to increase at an annual average rate of 5% over the 2012 Medium Term Expenditure Framework (MTEF); growing steadily from an estimated R72.105-billion in 2012/2013 to R75.720-billion in 2013/2014 before reaching R79.613-billion in the 2014/2015 financial year.

This is according to the 2011 Medium Term Budget Policy Statement (MTBPS), which was presented to the Gauteng Provincial Legislature by MEC for Finance Mr. Mandla Nkomfe today.

The 2011 MTBPS outlines how funding is allocated to achieve the priorities, outcomes and outputs of the Gauteng Provincial Government (GPG). The publication takes into account the available fiscal resources, and demonstrates how the Provincial Budget is utilised to continuously improve service delivery to the citizens of Gauteng.

The 2012 MTEF is characterised by modest increases in allocations, and this is a direct consequence of slow economic growth that has negatively impacted government revenues.

"Fiscal constrains force governments to choose carefully between competing objectives and needs. Difficult decisions are required to ensure that scarce resources are directed towards financing our priorities and more effective service delivery, while ensuring that debt levels are sustainable," MEC Nkomfe said.

Own revenue projections over the MTEF will increase by 6%. This is due to revenue enhancement measures that are currently being implemented in the Department of Roads and Transport, Department of Infrastructure Development and the Department of Health and Social Development.

However, the fiscal framework will remain tight."There will be very limited room for expansion of current services and for this reason the province will continue to promote progressive, efficient and effective expenditure that achieves as much as possible with the available resources," MEC Nkomfe added.

In line with the country's fiscal framework, estimated allocations for education, health and social development will account for more than 70% of the total budget over the MTEF. These three services constitute the social sector and it is the primary responsibility of government to provide education, health and social services to citizens.

In addition to the above, GPG will allocate resources to programmes aimed at achieving inclusive economic growth. In this regard, the provincial government will continue to invest in infrastructure to stimulate the economy and create job opportunities. The provincial government will also ensure that programmes designed to address the challenge of youth unemployment are adequately funded over the MTEF.

1. Financial stability and service delivery in tight fiscal environment

It is the responsibility of the Gauteng Department of Finance to ensure that resources allocated to departments are used for their intended purpose, as required by the regulatory framework. Therefore, as part of our overall strategy to improve the finances of the provincial government over the MTEF, we are working on a comprehensive plan that would see us clearing accruals that are a serious burden to the fiscus.

GDF will ensure that all departments efficiently manage human capital and maximise production; while also ensuring adherence to approved and funded spending plans.

Furthermore, the department will focus on improving efficiencies in the process of procuring goods and services, and strengthen financial controls. This will be done through:

• Ring-fencing conditional grants and infrastructure funds to ensure that suppliers are paid on time;
• Ensuring that the age analysis of accruals is less than 30 days in a given month;
• Ensure that departments operate within the agreed cash forecasts and/or allocations;
• Reduce substantially the unauthorised expenditure.

2. Mid-year review (2011/2012 financial year

GPG departments spent R32.499-billion or 48% of the 2011/2012 Provincial Budget of R67.9-billion in the first two quarters of the financial year.

This is an indication that the provincial government is making progress in implementing programmes aimed at accelerating service delivery to citizens in order to realise the 8 priority outcomes outlined in its Medium Term Strategic Framework. These are:

1. Quality education
2. A long and healthy life for all South Africans
3. Decent employment through inclusive growth
4. Ensuring all people in South Africa are and feel safe
5. Vibrant, equitable and sustainable rural communities contributing towards food security for all
6. Sustainable human settlements and improved quality of household life
7. A responsive, accountable, efficient and effective local government system
8. An efficient, effective and development-oriented public service, and an empowered, fair and inclusive citizenship

Total expenditure on goods and services during this period amounted to R7.893-billion.The provincial government has in the period under review made total transfers and subsidies of R5.872-billion, R1.502-billion of which went to departmental agencies and accounts.

The social sector comprising Gauteng Department of Education (GDoE) and the Gauteng Department of Health and Social Development (GDHSD) accounted for the larger share of expenditure in the period under review.

As at the end of the second quarter of this financial year, GDoE had spent 50% of its total allocation of R25.965-billion. The spending was driven by, amongst other things, transfers to non-profit learning institutions - the Further Education and Training Colleges.The Health branch of GDHSD also spent reported significant expenditure during this period.

MEC Nkomfe said over the past two months GPG held the Premier Budget Committee (PBC) and the Finance Lekgotla and resolved to address financial challenges experienced by the Health branch of GDHSD. As part of this strategy "GDFwill identify possible under-spending which should be surrendered to the Provincial Revenue Fund for reallocation to Health to address accruals since the department was experiencing significant pressures in paying historical debts. The provincial government is of the view that this strategy will lead to full payment of accruals before this term of office comes to an end".

Furthermore, MEC Nkomfe said GDF will work closely with the Department of Infrastructure Development (DID) to enhance infrastructure expenditure. "GDF together with the DID has developed a joint program to accelerate infrastructure spending. The program includes identifying quick wins within infrastructure allocation to ensure that this pattern is reduced; more emphasis is to be directed towards the maintenance of our health facilities," MEC Nkomfe said.

3. Adjustment Budget 2012/2013

Allocations are as followed:

The 2011 Adjustment Budget represents the mid-point of the 2009-2014 term of governance, while the 2012 MTEF will take the current provincial government to the end of its term. Therefore GPG will use this adjustment budget process and the 2012 MTEF to consolidate its programmes that support the Programme of Action towards 2014.

The revenue adjustments are mainly in the form of the equitable share allocation, conditional grants and provincial own revenue which amounts to R539.14-million, R87.74-million and R87.9-million respectively. Furthermore, an amount of R526.57 million is made available from the Provincial Revenue Fund to finance provincial rollovers from the previous financial year.

• The Department of Local Government and Housing will receive an additional amount of R20-million to assist with the incorporation of Metsweding District into Tshwane Metropolitan Municipality. The allocated funds will cater for the amalgamation of the Metsweding Persal System into Tshwane, ensure that the IT system of both municipalities are linked up, the assets register is linked up with Tshwane register and operationally to ensure that the Metsweding region continues to function properly.
• The Office of the Premier receives an additional funding from GPG amounting to R5.92 million in lieu of goods and services to cover the costs incurred for two state funerals that were declared in the province;
• The total amount of direct charges allocated to the Legislature did not cover the full cost of payments for the office bearers; as a result, the Legislature utilised their own funding to cover the shortfall amounting to R2.72-million. This amount is therefore allocated to the Legislature to augment payment of direct charges relating to the remuneration of the members of the provincial legislature;
• Health receives an additional total funding of R272.21-million comprised of R2.21 million for capacity building for infrastructure delivery, and R270-million to deal with budgetary pressures. An amount of R100-million is suspended from this amount for maintenance to the Provincial Revenue Fund and will be reallocated to the department when there is progress on spending by the implementing agent. The net allocation to Health amounts to R172.21-million.
• Education receives an amount of R3.09-million for capacity building of personnel in infrastructure. The capacity building includes training in project management as well as the respective technical skills required by the personnel with respect to infrastructure planning
• The Gautrain Management Agency (GMA) has been allocated a loan amount to the tune of R261.21-million. A total of R145.19-million is suspended to the Provincial Revenue Fund for the loan repayment. A balance of R116.02 million is being transferred to the GMA.

Issued by Gauteng Finance, November 22 2011

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