DPME presentation to SCOA 2 May 2016 Plan – Budget Alignment Is the government budget resourcing priorities? DPME presentation to SCOA 2 May 2016

Overview The budget and economic transformation The priorities (NDP 2012-2030): targets and levers Alignment 1: Priorities versus broad spending areas Alignment 2: Making an impact Progress against targets Improving alignment - prioritisation Reallocation (funding priorities) Improving efficiency Transformative impact Removing blockages/searching for synergies & cooperation

ECONOMIC EMANCIPATION Lus SONA (9/02/17) confirmed role of budget in economic transformation Unequal & low incomes TRANSFORM fundamental change in the structure, systems, institutions and patterns of ownership, management and control of the economy in favour of all South Africans Skewed property ownership ECONOMIC EMANCIPATION Concentrated Ownership of firms Levers: Legislation Regulations; Licensing Budget & procurement; BBEE Charters TO ACHIEVE Domination of white, male management Jobs & Incomes for Inclusive Growth Sub-contract 30% Criminalising collusion A united, democratic, non-sexist, non-racial and prosperous South Africa Competition Act Empower women Land market & property registrations Farmers, land reform & restitution Black Industrialists Programme SMMEs & ICT/cost of data Access to universities Fight crime & corruption Mining ownership, state participation & MPRDA International Relationships & trade 23

NDP priorities: targets NDP (outcome) targets Intermediate objectives 11 million additional jobs Prosperity (No poverty) Jobs & Incomes for Inclusive Growth 39% to zero Equality (Reduce inequality) 5.4% per year Gini from 0.69 to 0.6

NDP priorities: Levers (“pillars”) (see p.26) Strong Economy Prosperity (No poverty) Jobs & Incomes for Inclusive Growth Citizens with capabilities Equality (Reduce inequality) Capable State/ Active Citizens

Prosperity (No poverty) Equality (Reduce inequality) NDP priorities: Levers (“pillars”) & budget function groups “ECONOMIC SERVICES“ : Infrastructure (Eco & household), regulation, support (incentives), skills & PSET Prosperity (No poverty) Jobs & Incomes for Inclusive Growth ADMINISTRATIVE SERVICES; Efficient public sector, active citizens; justice & policing Equality (Reduce inequality) SOCIAL SERVICES: ECD & basic education, health, social protection; Sport, Culture

Alignment? Proportions Funding Allocation Levers (NDP pillars) ECONOMIC SERVICES – Opportunities& cost of business 2017/18 R515 b 33% GOV & ADMIN SERVICES - Capable state, active citizens, cost of business/living R269 b 17% SOCIAL SERVICES – Capabilities & cost of living R610 b 39% Debt Service Cost R162 b 10% Reserve R6 b 0% TOTAL GOVT SPEND R1 563 b 100%

33% 17% 39% ECONOMIC SERVICES – Opportunities& cost of business Function Groups ECONOMIC SERVICES – Opportunities& cost of business 2017/18 6. Economic Affairs R215 b 14% 33% 7. Human Settlements & Mun Infras R196 b 13% 8. Agriculture, Rur Devt & Land Reform R27 b 2% 2. PSET R78 b 5% GOV & ADMIN SERVICES - Capable state, active citizens, cost of business/living 5. Defence, Public order & Safety R199 b 13%. 17% 9. General Public Services R71 b 5% SOCIAL SERVICES – Capabilities & cost of living 1. Basic Education R243 b 16% 39% 3. Health R187 b 12% 4. Social Protection R180 b. 12%.

Change/Trends 2017/18 2019/20 6. Economic Affairs 13.8% 13.4% R215 b 13.8% R244 b 13.4% 7. Human Settlements & Mun Infras R196 b 12.5% R226 b 12.5% 8. Agriculture, Rur Devt & Land ReF R27 b 1.7% R30 b 1.6% 2. PSET R78 b R90 b 5.0% 5% 5. Defence, Public order & Safety R199 b 12.7%. R225 b 12.4%. 9. General Public Services R71 b 4.5% R76 b 4.2% 1. Basic Education R243 b 15.5% R280 b 15.4% 3. Health R187 b 12% R217 b 12% 4. Social Protection R180 b. 11.5%. R209 b. 11.5%.

ECONOMIC SERVICES – Opportunities& cost of business 2016/17 2019/20 32.9% 32.6% GOV & ADMIN SERVICES - Capable state, active citizens, cost of business/living 17.2% 16.9% SOCIAL SERVICES – Capabilities & cost of living 39.1% 38.9%

Prosperity (No poverty) Equality (Reduce inequality) Alignment in terms of impact? Progress 2010 to 2015 Target 2.8 million Actual 2 million 27% Prosperity (No poverty) Jobs & Incomes for Inclusive Growth ? 0.66 Equality (Reduce inequality) ? 5.5% per year 2.1 % per year

Strengthening alignment Range of budget reforms over last 2 decades to strengthen alignment: Programme budgets & outcome orientation (PFMAs “measurable objectives”) Three-year budgets (MTEF) & MTBPS Ministers Committee on the Budget (MINCOMBUD) & MTEC process Strong performance in international transparency rankings Refinement of role of Parliament and Parliamentary Budget Office Cabinet now taking it forward (2016 Mid-year Lekgotla) and asking for a strong prioritisation process (managed by DPME & National Treasury) Further distillation of priorities in current context (focus) Assess allocations against these priorities

Prioritisation involves answering 4 questions: Have we got the right approach or are there key policy decisions required/outstanding? Road infrastructure and tolling Broadband allocation and ICT strategy Are we spending efficiently? Can we save or improve value for money? Basic education Universities and skills funding Procurement Can we improve the transformative impact of spending Human settlements and transport subsidies Are there areas where funding is a inadequate fro what we have to achieve Post-Secondary education and training - TVET Health and Early childhood development

Thank You