Modern, Growing, Successful Province

Provincial Medium Term Budget Policy Statement

Address to the Provincial Legislature on the tabling of the Northern Cape Adjustment Appropriation Bill 2014 and Provincial Medium Term Budget Policy Statement By Mr. John Block, MPL, MEC for Finance, Economic Development and Tourism.


14 november 2014

Honourable Speaker
Honourable Premier, Ms Sylvia Lucas
Members of the Executive Council
Members of the Northern Cape Legislature
Mayors and Councillors present here today
Heads of Departments
Ladies and gentlemen


Today we place before this august house, the Adjustment Appropriation Bill. The Bill invites the Legislature to consider changes in spending estimates for the 2014/15 financial year as set out in details in the Adjusted Estimates of Provincial Revenue and Expenditure. The Adjusted Estimates of Provincial Expenditure that we table today revises the Estimates set out in the main budget.

Alongside the Adjusted Estimates of Provincial Revenue and Expenditure, we lay before this House the 2015 Medium Term Budget Policy Statement. This is the framework that we will use when finalising the budget that will be tabled next year. The statement sets out our economic outlook for the next three years and the fiscal framework within which the 2015 MTEF budget will be compiled. It outlines policy matters that shape next year’s Medium Term Expenditure Framework.

Honourable Members, objectives of public resource management calls for government to be effective, responsive to the needs of the poor and accountable to its citizens. While these objectives are of a continuing nature in public resource management, they reflect the changing realities. Together, they offer a formidable agenda that underpins effective budget planning and execution. 

Honourable Speaker, allow me to once again reiterate that South Africa is better than it was before and that it is a great place to live in. Today is better than yesterday, and tomorrow will be better than today. We can assert this confidently because our progress is recorded and measured. Some of our greatest achievements have been confirmed by the World Bank country director for South Africa, Asad Alam, when he indicated that South Africa is the best among its peers in lifting people out of poverty over the past 20 years as a result of its fiscal policy. He said, “The bottom line is that South Africa’s fiscal policy system is very progressive given that the rate of extreme poverty fell from 34.4 per cent of population to 16.5 per cent after its use of cash transfers such as child support and disability grants, including old age pensions.”

Honourable Speaker, this success is the outcome of 20 years democratic process that has allowed the people of South Africa to choose their representatives and they, in turn, are working tirelessly to achieve their aspirations.

Honourable Members, I by no means, am claiming that we are there as yet. I am also mindful of the enormity of the challenges that continue to lie ahead. However, I can greatfully and with humility, inform this House that our fiscal policies are sound and progressive.

We will continue with actions to keep our democracy strong and working for all our people: action to strengthen education and health systems, action to build stronger families and communities, and a safer environment. We will not pause to pursue opportunities for our people. As a government, we will continue as to give all our people the tools they need to make the most of their own lives by working together. The people of this country expect us all to work together as partners, not partisans. They put us all right here in the same boat, they gave us all oars or rowers, and we need to steer the boat forward. As a ruling party in the government we have shown the direction.

Economic Outlook

Honourable Speaker, the global economy is experiencing an uncertain economic outlook. Furthermore, the world economy is on a trajectory of slow recovery which is irregular in nature and going forth the growth will largely be country specific. However, the emerging market economies and Sub-Saharan Africa continue to enjoy relatively high levels of growth. Therefore, questions remain on how to generate growth and reduce inequality as well as bridging the gap between what is required from government and what can be afforded. Consequently, this is putting more pressure on government to achieve more with less.

The expected growth of the national economy for 2014 had to be revised downwards from an expected 2.7 per cent to 1.4 per cent. It is projected that growth will only reach 3 per cent in 2017. This growth will be supported mainly by the completion of electricity and transport infrastructure projects. Slower growth is in part due to a weak global environment with a slowdown in Europe, China and other emerging economies. Other factors hindering faster growth in the country are energy constraints, labour market disruptions, skills shortages, administrative shortcomings and difficulties in industrial transformation.

Over the past twenty years South Africa has expanded education and health care, broadened economic participation and extended income support to the most vulnerable. Despite this, there are still challenges with low income levels, poverty and inequality. South Africa is still a net importing country, but government aims to improve export performance and to move away from consumption-led, debt-reliant expansion.

Headline inflation for South Africa is projected to exceed the upper limit of the target range this year by 0.3 percentage points, thereafter retreating back within range in the medium term. This could have implications for the repo rate which changes the costs of lending and in turn can constrain credit expansion by households and businesses due to the high cost of lending. This again impacts negatively on GDP growth.

Due to slower than expected growth, tax revenue is below initial budget projections. Government debt continues to rise as a percentage of GDP. This is not in itself a bad thing if it was to finance investment in future productive capacity, but there is not enough investment currently.

To improve provincial growth prospects and creation of employment opportunities, there is potential to enlarge the footprints of agro-processing and mineral beneficiation. Following the NDP as well as other policy and strategy documents of national government it is of utmost importance for the province to grow and to contribute to the growth of the national economy.

The Economy and Unemployment chapter of the NDP identifies the minerals and metal cluster as being pivotal to economic growth and as such the Presidential Infrastructure Co-ordinating Commission has identified the Northern Cape as one of the sites for a Strategic Infrastructure Project to optimize the economic benefits from the Gamagara mining corridor which has over 80 per cent of the world’s manganese deposits. The building of a railway line and a manganese sinter in the Northern Cape is intended to ensure that large-scale mineral beneficiation becomes a reality for the province. Between the second quarter of 2013 and the second quarter of 2014, employment rate increased on a national level, however the Northern Cape was one of the two provinces, together with the Free State to record a decline in employment in this period, with employment declining by 4 000. Between the first two consecutive quarters of 2014, the Northern Cape was amongst the other three provinces which included KwaZulu Natal and Western Cape to experience a drop of 11 000 in employment.

Between quarter one and two of 2014, the official unemployment rate increased by 0.3 percentage points for South Africa. In this quarter the Northern Cape’s official unemployment rate increased by 3.3 percentage points which was the largest increase amongst the provinces over this period. The expanded unemployment rate of the province is substantially higher than the national expanded unemployment rate.

Even in such limiting economic conditions, Northern Cape Provincial Government should continue to provide value for money by effectively managing spending and minimise costs. Resources should also be adequately allocated in line with the policy priorities and developmental objectives outlined in the Northern Cape Provincial Growth and Development Strategy (NCPGDS), Millennium Development Goals (MDG), National Development Plan (NDP), Medium Term Strategic Framework 2014-2019 (MTSF) and the 14 Government Outcomes.

Honourable Speaker, in 2013 the executive council under the leadership of the Premier pledged to improve the provincial audit outcomes for the 2013/14 financial year.  The leadership of the province set the right tone to the operational levels of our institution and that brought about good results. Departments and their entities worked tirelessly to achieve the milestone as 13 departments and 10 public entities were subjected to an external audit by the Auditor General. Ten departments and 5 public entities received unqualified audit opinions of which five received clean audit reports namely: Provincial Treasury, Department of Economic Development and Tourism, Department of Social Development and the Department of Environment and Nature Conservation and the Northern Cape Tourism Authority. A “clean” report means that the department practiced sound financial management for the year in question. Their statements were deemed credible and complied with all statutory requirements. In other words, everything was accounted for and all monies were properly spent and managed.

The remaining three departments and five (5) public entities received qualified audit opinions.  This is a second year in a row where no disclaimer of opinion was expressed by the office of the Auditor General. This is an indication that our intensified efforts towards having a clean administration are bearing fruit.  We are indeed making strides in ensuring good governance through better accountability to the citizens of the province.

Honorable Speaker, payment of creditors within 30 days is a lawful practice and it has to be abided to by all provincial departments and their entities. Decreasing levels of non-compliance were noticed for the first two quarters of the financial year where the number of invoices that were recorded as late payments declined from 1 999    (R45. 6 million) in April 2014 to 548 (R16.7 million) by September 2014. While the reduction is highly commendable, what remains a primary concern in the second quarter is the exponential increase of invoices older than 30 days not yet paid. In June 2014, 5082 invoices older than 30 days were not yet paid, which was the highest level ever. However we noticed a steady decline in the following months and reported only an amount of 4132. Though the number of invoices is decreasing the rand value is increasing.

It is therefore imperative that stricter measures are put in place by those charged with administration responsibilities to ensure that the laws of the country are complied with and enforced.  Provincial Treasury undertakes to continually monitor the payments and report quarterly statistics to the executive council as a means of enforcing timeous payments to SMMEs.

Honourable Speaker, our Province is still confronted by severe administrative shortcomings and skill shortage, particularly in the accounting and numeracy disciplines. Provincial Treasury partnered with Association for Accounting Technicians (AAT) and South African Institute of Charted Accountants (SAICA) in attempt to respond to the challenges. This partnership is referred to as AAT in some sectors of our government.

Honourable Speaker, the governance structures of the province keep on improving. This has contributed significantly to the improvement of the control environment at provincial government level as well as the improved audit outcomes for 2013/14 financial year. Provincial Treasury accommodates administratively the provincial shared internal audit unit and Audit Committees for the 12 provincial departments.

Honourable Speaker, Provincial Treasury embarked on a Biometric Aided Headcount project from the 21 July 2014 to 15 August 2014 to eliminate ghost workers and to update personnel related information. Due to the high number of employees that had not been verified on the date of closure, the project was extended until 02 September 2014. As at the end of October, 254 officials did not pitch up for verification and their salaries in this regard had been frozen. Total projected costs based on the number of unverified personnel amount to R5 million up to the end of current financial year, which will total to R10 million per annum going forward.

Unauthorised Expenditure and Debt Redemption Strategy

Honourable Speaker, I am proud to inform this House today that we have turned things around. Our short-term pain in return for long-term and meaningful benefits has paid off. During the 2013/14 financial year we reduced unauthorised expenditure from R932 million to R217 million and in the current financial year, it will further be reduced to only R61 million. This means that in the 2015/16 financial year the debt redemption strategy will fulfil its obligation and therefore resources will be unlocked to be utilised to address some pressing priorities which need urgent attention.

Let me take this opportunity and caution all departments that any unauthorised expenditure incurred after 2012/13 financial year will be a first charge against the vote concerned.

Honourable Speaker, appropriated budget is law and overspending the budget result to unauthorised expenditure. Sections 38(1) and 39(2) of Public Finance Management Act requires accounting officers to take effective and appropriate steps to prevent unauthorised expenditure. This includes irregular, fruitless and wasteful expenditure. Section 45 further requires that an official in a department must take effective and appropriate steps to prevent, within that official’s area of responsibility, any unauthorised expenditure, irregular expenditure or fruitless and wasteful expenditure. Honourable Speaker, Section 63 requires that Executive authorities of departments must perform their statutory functions within the limits of the funds authorized for the relevant vote, section 64 sub section (1) further states that any directive by an executive authority of a department to the accounting officer of the department having financial implications for the department must be in writing and sub section (2) states that if implementation of the directive is likely to result in unauthorised expenditure, the accounting officer will be responsible for any resulting unauthorised expenditure unless the accounting officer has informed the executive authority in writing of the likelihood of that unauthorised expenditure. The Public Finance Management Act (PFMA) further require an accounting officer to take effective and appropriate disciplinary steps against any official in the service of the department who makes or permits an unauthorised expenditure, irregular expenditure or fruitless and wasteful expenditure.

Municipal Support

Honourable Speaker, it is the primary responsibility of local government to provide basic services to the communities at large. The millions of voters have given our elected councillors a clear mandate to accelerate service delivery towards achieving the goal of a better life for all. Part of the challenge in this regard is the capacity of local government structure which arises from the absence of people with necessary skills that are critical for the efficient infrastructure and service delivery to communities. We need to attend systematically to this issue because it cannot be afforded that after 20 years of democracy we still have municipalities that struggle to deliver basic services to the communities because of lack of capacity.

Honourable Speaker, proper accountability and oversight in local governance are the cornerstone and essential building block to ensure that communities and investors, local and global, have confidence in our government. These two must be enforced to promote unconditional commitment to good governance, responsible financial management and improved service delivery.

Honourable Speaker, in terms of Section 154(1) of the Constitution of the Republic of South Africa, the national and provincial governments, by legislative and other measures, must support and strengthen the capacity of municipalities to manage their own affairs, to exercise their powers and effectively perform their functions as expected. This however, does not substitute the necessary skills within the municipalities. President Zuma, in his address during 2014 Presidential Local Government Summit said, “Chief Financial Officers should be skilled in what they are doing, engineers and other technical staff should also be experts in what they have been employed to do. In my view, that is a key solution to the problems facing local government.” The President further reiterated government’s commitment to support struggling municipalities to make sure that they are fully functional and efficient. He further warned that if the municipalities do not show any signs of improvement despite the support, there will be no alternative but to use all constitutional powers and legislative opportunities in the quest to ensure that our communities are served better.

Honourable Speaker, municipalities are at the coalface of service delivery. Yet many of them struggle to maintain their financial viability.

As I indicated previously, the municipal finance environment is characterised by the following challenges:

Inappropriate use of conditional grants which leads to the under-utilisation of grants on capital expenditure;
Inadequately skilled financial management staff;
Lack of accurate financial and performance reporting and consequently poor decision making;
Lack of adequate policies, procedures and appropriate delegations of authority;
Poor controls and governance;
Inadequate billing systems, poor collections and hence escalating debt;
Lack of proper supply chain practices.

Honourable Speaker, Provincial Treasury will be launching a program called the Municipal Support Program. The aim behind this program is to assist the municipalities to improve their capacity, meet their financial obligations and commitments which will ensure that they are able to provide services to their respective communities. The project seeks to identify the causes of financial problems experienced by municipalities, to develop and implement measures through a structured plan to address these issues and place the municipality into a sound financial position. The program will focus on the following areas:

Getting the basics of financial recordkeeping and reconciliations right;
Quality of financial reporting;
Cash flow management and liquidity
Proper controls (including information technology)and governance
Credible budget formulation
Process and Quality of performance reports
Supply chain management; and

Honourable Speaker, some progress has been made with regard to revenue, cash flow and outstanding debt management support as these areas are a problem in almost all municipalities in the province. The ability of municipal officials to prepare cash flow statements with credible projections and credible own revenue budgets including poor debt management is a matter of great concern and this need urgent attention. In this regard, Provincial Treasury created a special unit within its structure to deal specifically with these problems. The unit has already started with its interventions, however, the problem is that the majority of municipalities do not show any commitment to implement Provincial Treasury’s recommendations. For the intervention to bare fruits we require willingness and commitment from the side of the municipalities. The municipalities themselves need to display leadership and commitment and this, in turn, will increase their success.

Honourable Speaker, one of the key support functions envisaged for district municipalities is the capacity building of its constituent local municipalities. However, many district municipalities lack the technical skills and capacity to assist local municipalities. Indeed, some local municipalities have questioned whether districts have capacity to provide much needed support to under capacitated local municipalities.

The shared services approach has been identified as a potential mechanism for district municipalities to provide supportive role to local municipalities and serve as a potential platform for sharing of services between municipalities. Shared services have the potential to yield a host of benefits, this option will significantly ease some of the capacity constraints that some of the local municipalities are grappling with.

In this regard Provincial Treasury will embark on a programme to strengthen the shared services within the districts. This will be done by deploying experts in various areas of financial management so as to strengthen their capacity to assist local municipalities.

Fiscal framework

Honourable Speaker, the province is faced with difficult choices between what is required and what is available for the 2014 Adjustment Budget and therefore we need to be steadfast in our quest to do more with less.

We have achieved much over the past 5 years, our provincial fiscal framework is sound despite continuous reductions in the equitable share, we have not utilised our overdraft facility for the past three years, and rather we have earned interests amounting to R71 million during the same period. But we are not making enough progress in collecting and raising much needed own revenue especially in the areas of medical aid fees and the disposal of our asset portfolio in respect of unused government buildings. Own Revenue collection has been identified as an important priority in the current administration, this can’t be over emphasised  in view of the proposed budgetary cuts over the 2015 MTEF. We need to optimise our revenue base to minimise the impact of the continuous reduction in the provincial equitable share.

Honourable Speaker, allow me to share and inform Honourable Members that for the first time ever, National Treasury did not provide any additional money for the shortfall in respect of the Improvement in Conditions of Service (ICS). As we are all aware, provinces are not involved in the negotiations of salary increases. These discussions are bargained and agreed upon nationally, so it cannot therefore be proper that provinces are expected to foot the bill when the adjustments are higher than the budgeted amounts. I can however, confirm that national government has not compensated us for the difference of 0.9 per cent and this is not provided for in the 2014/15 budget baselines of all departments. This shortfall amount to             R65 million in the current financial year and R286 million over the 2014/15 MTEF.

Honourable Speaker, as I indicated earlier that this adjustment budget is mainly funded through reprioritisation, we have managed to provide ICS to the department of Health and Education through our own provincial resources and rest of the departments will have to reprioritize within their respective baselines to make good the difference of 0.9 per cent. It must be noted that as a result of the projected under spending especially in personnel in other departments, the non-funding of ICS impact will be minimal.

Honourable Speaker, during the MTBPS in October, the Minister of Finance indicated that the revised revenue estimate is R956 billion, leaving a deficit on the main budget of R180 billion. After factoring out surplus funds, the net consolidated budget deficit amount to R153 billion or 4.1 per cent of the GDP. This trajectory will have a ripple effect on our 2015 MTEF budget as national government reduces the budget deficit further over the medium term.

Honourable Speaker, in line with national government’s approach on fiscal consolidation, the provincial equitable share has been reduced with an amount of R86.6 million, R154.6 million and R11.5 million respectively in each year of the 2015 MTEF. These reductions consolidated amount to R254 million over the 2015 MTEF. After in depth analysis by Provincial Treasury on the impact these reductions will have in Health and Education, we managed to completely protect their baselines from the budget cuts. With regard to other departments, about 85 per cent of the cut has been contained using provincial unallocated reserves. The departments will therefore be expected to manoeuvre within their budget ceilings to fund all existing pressures and new additional priorities over the MTEF.

The average growth in the total provincial budget between 2012/13 to 2017/18 financial years is 4.3 per cent, however this growth is influenced by the reduction in the provincial equitable share over the 2015 MTEF which amount to R398 million. The average growth of the total provincial budget over the 2015 MTEF is only 2 per cent. Despite this below inflation growth in the total provincial budget, Provincial Treasury has managed to maintain departmental baselines to grow at least by 4.9 per cent, compared to the growth in the total provincial budget of only 2 per cent.

Honourable Speaker, when one look at the disaggregated components of the provincial fiscal framework over the 2015 MTEF, the equitable share grows with an average of 4.1 per cent, conditional grants shows an average decline of 4 per cent  while own receipts grows with an average of 4 per cent over the same period. We need to take note that the average growth in all the components of the fiscal framework is below the projected average CPI of 5.5 per cent over the same period. This is a clear demonstration of the impact of fiscal consolidation as indicated by the Minister of Finance in his Medium Term Budget Policy Statement (MTBPS).

The below inflation growth on the provincial equitable share is mainly influenced by two factors; the revised provincial equitable baseline for the 2015 MTEF was used to calculate the province’s equitable share allocation through the equitable share formula. However to provide protection to province’s with material declining shares of the equitable share following the 2011 census updates, the additional cushioning support that was meant to end in the 2015 financial year was extended to the 2016/17 financial year thereby reducing our provincial equitable share. The other factor relates to the function shifts of the Adult Education and Training and the Further Education & Training to the national department of Higher Education and Training and the shifting of Port Health Service to the national department of Health, and these shifts are effective from 1 April 2015.

Honourable Speaker, there is evidence of poor budgeting for compensation of employees of in some departments. Cost of living adjustments are directly linked to CPI projections and departments will have to find further efficiencies to fund increases in compensation of employees without crowding out spending on complimentary goods and services. Fiscal cliff happens when the government’s public sector wage bill together with social grants expenditure equal government revenue, this means that no resources are available to provide for other core services. If personnel numbers are not managed effectively this situation will prevail and our fiscal space will not be able to accommodate other service delivery programmes. In an attempt to contain and manage personnel better, National Treasury is currently rolling out a new personnel costing model to help departments plan and forecast personnel costs better and efficiently.

Honourable Speaker and Members, we have observed that some departments are not complying with the Instruction Note 1 of 2013 which deals with the cost containment measures, Provincial Treasury will enforce cost containment measures to identify goods and services expenditure that can be eliminated without affecting core programmes. The concomitant savings from the cost containment measures will be redirected towards new priorities.

Provincial Adjustment Estimates

I now turn to the Adjustment Appropriation for the current fiscal year.

The PFMA is clear and specific on what can be included in the adjustment appropriation bill.  An adjustment appropriation bill may only provide for:

The appropriation of funds that have become available to the province.
Unforeseeable and unavoidable expenditure;
Any expenditure in terms of section 25 of the PFMA;
Money to be appropriated for expenditure already announced by the MEC for Finance during the tabling of the annual budget;
Shifting of funds between and within votes:
Utilization of savings under a main division within a vote in terms of section 43 of PFMA;
Rollover of unspent funds, i.e. conditional grants & equitable share from the preceding financial year.

Honourable Speaker, the funding of provincial priorities including ICS have been funded completely using provincial resources. The choices and allocations made in this budget certainly do not provide for all the needs identified during the budget forums such as the Provincial Medium Term Expenditure Committee (PMTEC)’s, MEC’s bilaterals and Budget Lekgotla. Funded choices culminate from transparent and robust processes with all departments. These funding proposals were particularly complicated by the shortfall in ICS that I already indicated that the province had to provide for the department of Health and Education to avoid the risk of over spending in personnel. The only additional funds received from national is an amount of R30 million in respect of Health Facility Revitalization Grant which has been converted from indirect to a direct provincial conditional grant.

An amount of R50 million was also received at the end of the 2013/14 financial year for emergency drought relief and is made available in this adjustment. These funds are solely for the purpose of responding to the immediate needs of the disaster that has occurred and with the aim to alleviate its immediate consequences. The allocation is made available to the Department of Agriculture, Land Reform and Rural Development for the provision of animal fodder in the John Taolo Gaetsiwe District Municipality, Namakwa District Municipality and the Frances Baard District Municipality.

Honourable Speaker, as in the previous financial years there are some adjustments to the original appropriation in the current financial year. These adjustments are set out in the Northern Cape Adjustment Appropriation Bill and explained in detail in the revised appropriations by vote in the adjustment estimates of provincial revenue and expenditure.

The total original provincial budget of R13.1 billion will be adjusted with an additional amount of R342 million which will increase our adjusted budget to R13.5 billion and this represent a 3 per cent increase to the main budget. Included in this total is an amount of R37 million in respect of approved conditional grants roll overs, additional conditional grants adjustments amounts to R80 million, an amount of R75.9 million which relates to approved equitable share roll overs, an amount of R41 million is provided for ICS shortfall.

Sources of funding includes declared savings amounting to R3.5 million as a result of unfilled budgeted posts, an amount of R40 million is declared savings from the department of Health as a result of unfilled budgeted posts and this amount has been reprioritized to provide for the ICS shortfall in Health and Education, an amount of R3.9 million is also provided for other personnel adjustments including Statutory, technical personnel in department of Agriculture, land Reform and Rural Development and the appointment of professional librarians in districts. An amount of R136 million has been made available from our own reserves to fund various pressures across departments and an amount of R11 million relate to donor funding from Kumba Iron Ore towards the Kimberley Diamond Cup (KDC).

Honourable Speaker, the total additional funding from national amount to             R80 million in respect of conditional grants adjustments, Furthermore, an amount R30 million has been provided for the Health Facility Revitalization Grant which is a conversion of the Indirect Provincial Conditional Grant to a Direct Provincial Conditional Grant.

Departmental allocations

The Department of Education has been allocated an additional R47.9 million of which an amount of R23 million is provided for the shortfall in ICS, as already indicated, National Treasury did not provide for this shortfall. An additional amount of     R11 million has been provided to deal with budget pressure as a result of increase in learner numbers which includes schools norms and standards.

The Northern Cape Department of Education was the first province in the country to feed learners in secondary schools which were excluded in the grant framework as it provided only for Primary schools. The framework was subsequently changed to accommodate secondary schools in quintile 1 and 3 this however excludes quintile 4 and 5.

The ranking of schools is based on pro poor factors which determines the quintiles based on a technical criterion. For an example two schools serving the same community have different quintile rankings but one is classified as quintile 3 and the other quintile 4, simply because the quality of housing may be slightly better than the other area despite the fact that poverty levels are the same yet one will benefit and the other does not. Furthermore the use of quintiles to determine school funding does not account for the true distribution of poverty hence  the school nutrition grant is not responsive as it is calculated from quintile 1 and 3 percentages as determined nationally and therefore many schools are not been funded at an adequate level, the adequacy level.

To address this discrepancy the province has once again taken an initiative to feed quintiles 4 and 5 in secondary schools using our own equitable share and therefore an amount of R9 million is made available as a top up to the grant to allow learners in these quintiles to receive meals.

Department of Health has been allocated an additional amount of R61.7 million of which an amount of R17 million is provided for ICS shortfall. An amount of       R26.7 million is in respect of national conditional grants has been approved to be rolled over from 2013/14 financial year to the current financial year. A further amount in respect of the equitable share of R26.6 million has been approved to be rolled over in respect of the equitable share to the current financial year and an additional amount of R30 million has been provided for the Health Facility Revitalization Grant for infrastructure improvement. An amount of R40 million has been declared as a savings and suspended from the Department.

Department of Social Development has been allocated an additional amount of   R9.4 million, of which an amount of R2.9 million has been approved to be rolled over to the current financial year. An amount of R6.4 million has been shifted from the Department of Roads and Public Works to the Department of Social Development to create 330 Expanded Public Works Programme (EPWP) job opportunities in rural soup kitchens.

Department of Sport, Arts and Culture has been allocated an additional amount of R20.1 million of which an amount of R9.1 million in respect of conditional grants has been approved to be rolled over to the current financial year. Furthermore, an amount of R4 million has been rolled over in respect of Multi-purpose Sports centre for the completion of the project.

The department has also been allocated an amount of R1 million for the appointment of librarians and a further R10 million for the 20 years of Democracy celebrations is provided.

Department of Agriculture, Land Reform and Rural Development has been allocated an additional amount of R60.9 million, of which R50 million has been provided for emergency drought relief in the John Taolo Gaetsiwe District Municipality, Namakwa District Municipality and the Frances Baard District Municipality. This amount was received by the province at the end of the 2013/14 financial year. R4.7 million relates to approved conditional grants roll overs in respect of Comprehensive Agricultural Support Programme (CASP) and Illitsima/Letsema Grants. Furthermore, the department has been allocated an amount of R3 million for the filling of technical agricultural posts, and R3.2 million in respect of discontinued Infrastructure Grant to Provinces has also been provided to compensate the shortfall for infrastructure projects that has been funded through equitable share.

Department of Roads and Public Works has been allocated an amount of             R50 million during 2013/14 financial year for Kgotso pula Nala project, of which an amount of R4 million remain unspent at the end of 2013/14 financial year. Of this amount R2.5 million relates to outstanding transfers to Hantam municipality and R1.5 million to Magareng municipality for Kgotso Pula Nala. The department received an amount of R10 million during the 2013/14 adjustment budget as earmarked funds for township Revitalization projects. At the end of March 2014, R6.3 million had been paid towards the projects and the balance of R3.6 million is requested to finalise the construction of a bridge and upgrades to the community hall. An amount of R2.9 million is approved as a rollover for bloodhound project which could not be finalised as a result of rainfall.

An amount of R30 million has been allocated to fund the on-going conditional assessment of provincial immovable properties. The issue of conditional assessment of immovable assets is consistently reflected in the audit report of the department of Public Works and this will remain a challenge until all immovable assets are assessed and therefore this amount is intended towards that purpose.

Honourable Speaker, during the 2013/14 budget adjustment estimate period, the department was tasked with the implementation of the Clean Sol Plaatjie job creation project. An amount of R12 million was allocated for this project to appoint at least 900 EPWP beneficiaries. Due to its success an additional amount of R14 million for the Sol Plaatjie cleaning project, this intervention will see 700 job opportunities created between November 2014 up to the end of the March 2015. This intervention provide immediate relieve to families without any income.

Department of Cooperative Governance, Human Settlement and Traditional Affairs has been allocated an additional amount of R3.2 million of which an amount of   R2.1 million in respect of capital expenditure is rolled over to the current financial year while an amount of R1 million has been added to the department’s budget for the upgrading of security systems at the JS Du Plooy building. This is necessary due to the frequent break-ins which may compromise the safety of staff and confidentiality of information in the department.

Department of Economic Development has been allocation an additional amount of R37.7 million of which an amount of R20 million has been provided for the Kimberley Diamond Cup. An amount of R3 million has been allocated for the recently hosted BRICS Expo. An amount of R3.4 million has been provided to Public Entities to augment the shortfall in operational costs which relate mainly to the appointment of additional personnel in the offices of the CFO’s for Gambling and Liquor Boards.

Honourable Speaker, Kumba Iron Ore donated R11 million for the successful hosting of the Kimberley Diamond Cup.

Department of Environment and Nature Conservation has been allocated an additional amount of R1.3 million for the procurement of fleet for various nature reserves.

Office of the Premier has been allocated an additional amount of R21.4 million of which R5.8 million relates to approved roll overs in respect of equitable share. An amount of R5.3 million is provided for the completion of Provincial Human Development inherited from SASSETA. This is a multi-dimensional tailored training and development solution that seeks to respond to some of the training and development challenges in the Renosterberg, Vanderkloof, Petrusville, and Phillipstown municipalities. The training skills identified are in agriculture, security, sewing and refrigeration, while R5.9 million is provided for the Provincial Media Communication to provide for the partnership between government and print media, which is responsible for communicating and profiling provincial governments work this is aimed at ensuring that key government projects and success stories of the province are covered both in the province and nationally. An amount of R3.7 million is provided for the Provincial Wide Communication Strategy.

Provincial Legislature has been allocated an additional amount of R3 million, mainly for the security upgrades and services.

Provincial Treasury has been allocated an additional amount of R11.1 million of which an amount of R9.1 million relates to approved roll overs in respect of equitable share an amount of R5 million for the completion of the biometric aided head count, an amount of R2.5 million for internal audit service providers, An amount of R1.9 million has been made available mainly for the intervention in the department of Health. Furthermore an amount of R3.5 million in respect of declared savings has been suspended.

Department of Transport, Safety and Liaison has been allocated an additional amount of R5.5 million of which an amount of R4.2 million has been approved as a roll over is in respect of leaner Transport approved equitable share roll overs and an amount of R1.2 million for capital assets requirements.


Governing is about making choices. The privilege of hard-won democracy carries with it the profound responsibility to make these choices, rather than have them imposed on us. We make these choices guided by our vision of a people-centred society in which the interests of the poor are advanced.

We will continue to pursue fiscal policies aimed at overcoming poverty and inequality through sustainable growth. Our responsibility is to invest in our people by spending on infrastructure and education; by facilitating the development of skills so that we can take part in the increasingly knowledge oriented economy of the world and respond effectively to the social challenges before us.

Honourable Members will appreciate that taking into account the slowdown in the international economy and in our own growth rate that has been experienced this year, it is that much more critical that our allocations should be well-targeted and our spending programmes should be effective and well-managed.

Honourable Speaker, let me take this opportunity to acknowledge the contribution made by the former Head Official of Provincial Treasury whose contract ended at the end of October 2014. He played a significant role in building and strengthening Provincial Treasury. On behalf of Provincial Treasury and the entire ‘team finance’, we wish him well in his future endeavours.

In conclusion Honourable Speaker, my gratitude goes to the Honourable Premier, Me Sylvia Lucas for her guidance and support, the Treasury Committee, Executive Council colleagues for their many contributions and critical inputs in shaping the adjustment budget, and the ministerial staff led by Ms. Jean Wilson for their continued unwavering support.

I am exceedingly thankful to the staff of Provincial Treasury especially the budget office and the related directorates that support the preparation of the adjustment estimates for their diligence and professionalism for the quality of advice and work they have provided under the leadership and guidance of the Acting HOD Mr. Vuyisile Gumbo. We will give Mr Gumbo all our support to ensure we take provincial treasury to a higher level.

Honourable Speaker, I hereby table the Adjustment Appropriation Bill 2014 and the Provincial Medium Term Budget Policy Statement.

I thank you.

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