1 FINANCIAL AND FISCAL COMMISSION 2007/2008 ANNUAL REPORT

2 Mandate Sections 220, 221, 222 and related Sections 214(2), 219(5), 228(2)(b), 229(5), 230(2), 230A(2) of the Constitution of the Republic of South Africa Act No. 108 of 1996 as amended The Constitution provides among others that the Commission is an independent, objective, impartial and unbiased advisory institution on  the division of revenue among the three spheres of government  any other financial and fiscal matters

3 Enabling Legislation The Intergovernmental Fiscal Relations Act No. 97 of 1997 as amended, The Financial and Fiscal Commission Act No. 99 of 1997 as amended, The Municipal Systems Act No. 32 of 2000 as amended, The Provincial Tax Regulation Process Act No. 53 of 2001 as amended, The Municipal Finance Management Act No. 56 of 2003 as amended, The Intergovernmental Relations Framework Act No. 13 of 2005 as amended, and The Municipal Fiscal Powers and Functions Act No. 12 of 2007.

4 Highlights/Achievements Annual Submission for the Division of Revenue 2008 MTEF Submission on the 2008 Division of Revenue Bill Submission on the Public Finance Management Bill Submission on the Local Government Laws Amendment Bill Submission on the Municipal Fiscal Powers and Functions Bill

5 Highlights/Achievements Research tools developed in-house  Constitutionally Mandated Basic Services (CMBS) Model  Energy Computable General Equilibrium (CGE) Model  Social Accounting Matrix (SAM)

6 Highlights/Achievements Stakeholder Advisories  Free State Provincial Treasury, KwaZulu-Natal Provincial Treasury Assistance to other African countries on intergovernmental fiscal relations systems and efforts at fiscal decentralisation  DRC, Sudan A number of publications from Commissioners and the research staff

7 Challenges Critical skills flight  Primarily in the research team but also in the support services  Commission intervention through development of retention strategy Compliance  Budget constraints impact on rolling out strategies around compliance with myriad of legislation such as PAIA, PFMA Financial and non-financial resource constraints

8 Commission End of terms of Commissioners  Prof Antony Melck, Mr. Kamalasen Chetty and Mr. Jaya Josie (Deputy Chairperson) Gugu Moloi (resigned) Appointment of new Commissioners  Mr. David Savage (National), Mr. Bongani Khumalo National and Deputy Chairperson), Mr. Krish Kumar (Local) and Ms Nelisiwe Shezi (Provincial) Commission Meetings  Attendance (see report) Remuneration of Commissioners  Work still on-going on resolving the matter (see report) Code of Ethics  Work in progress for finalisation in 2008

9 Commission Commission Committees  Audit Committee New Chairperson appointed Need to align with FFC Act which specifies that all Committees shall be chaired by a Commissioner  Remuneration and Performance Review Committee  Research Committee Stakeholder Relations  Legislatures and government (national and provincial)  NGO Sector  Organised local government

10 Performance Research Output Compliance with Constitutional and Legislative Mandate  Response to 2007 Division of Revenue Bill  2007 Annual Submission on the Division of Revenue  Annual Report 2006/2007  Comment on 2008 Public Finance Management Bill  Comment on 2007 Local Government Amendment Bill Publications

11 Management Remuneration Strategy and Policies  Finalised and first phase implementation Retention Strategy and Policies  Finalised and first phase implementation Employment Equity  Report indicates reasonable progress Risk Management Framework  Reviewed annually

12 Management Fraud Prevention  Reviewed annually Performance Based Budgeting  Cost centres are in operation  National Treasury Framework for reporting customised for the Commission and in use Utilisation of Consultants  Mostly in the research program External Supplier Appointments  Focus on HDI’s

/2008 Financials The FFC has been given an unqualified audit report by the Auditor-General for the 2007/2008 FY There were no matters of emphasis

14 Revenue: 2007/2008 Approved Allocation20,178,000 Foreign Donations298,941 Adjustments7,318,241 Other Income148,560 Total27,943,742

/8 Financial Performance

16 Personnel Cost Split

17 MTEF and Change in Baseline

18 Drivers for change in Baseline Retention and attraction of skills in RRP Stakeholder management and liaison Increasing the participation of non-full time Commissioners Financing of all research projects Revamping and upgrading the IT systems  Hardware and Software Rental of premises  DPW has not transferred money for rental of premises Compliance

19 Conclusion Thank You